Apollo Commercial Real Estate Finance 8K Reports | ARI 5 Nov 13

November 5, 2013

Q3 2013

Information is as of September 30, 2013 except as otherwise noted.

It should not be assumed that investments made in the future will be profitable or will equal the performance of investments in this document.

Supplemental Financial Information Presentation

Exhibit 99.2

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

Legal Disclaimer

We make forward-looking statements in this presentation and other filings we make with the SEC within the meaning of

Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended,

and such statements are intended to be covered by the safe harbor provided by the same. Forward-looking statements are

subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control.

These forward-looking statements include information about possible or assumed future results of our business, financial

condition, liquidity, results of operations, plans and objectives. When we use the words “believe,” “expect,” “anticipate,”

“estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions, we intend to identify forward-looking

statements. Statements regarding the following subjects, among others, may be forward-looking: our business and

investment strategy; our operating results; our ability to obtain and maintain financing arrangements; the return on equity,

the yield on investments and risks associated with investing in real estate assets, including changes in business conditions

and the general economy.

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking

into account all information currently available to us. Forward-looking statements are not predictions of future events.

These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are

known to us. Some of these factors are described under “Risk Factors,” and “Management’s Discussion and Analysis of

Financial Condition and Results of Operations” as included in Apollo Commercial Real Estate Finance, Inc.’s (“ARI”)

Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and other periodic reports filed with the

Securities and Exchange Commission. If a change occurs, our business, financial condition, liquidity and results of

operations may vary materially from those expressed in our forward-looking statements. Any forward-looking statement

speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to

predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to,

update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This presentation may contain statistics and other data that in some cases has been obtained from or compiled from

information made available by third-party service providers.

Past performance is not indicative nor a guarantee of future returns.

Index performance and yield data are shown for illustrative purposes only and have limitations when used for comparison

or for other purposes due to, among other matters, volatility, credit or other factors (such as number and types of

securities). Indices are unmanaged, do not charge any fees or expenses, assume reinvestment of income and do not employ

special investment techniques such as leveraging or short selling. No such index is indicative of the future results of any

investment by ARI.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

Apollo Commercial Real Estate Finance, Inc.

2013 Third Quarter Earnings Call

November 5, 2013

Stuart Rothstein

Chief Executive Officer and President

Scott Weiner

Chief Investment Officer of the Manager

Megan Gaul

Chief Financial Officer, Treasurer and Secretary

Hilary Ginsberg

Investor Relations Manager

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Financial Summary

(1)

Operating Earnings is a non-GAAP financial measure that is used by the Company to approximate cash available for distribution and is defined by the Company as net income, computed in accordance with GAAP, adjusted for (i) equity-based compensation expense (a

portion of which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding) and (ii) any unrealized gains or losses or other non-cash items included in net income. Please see slide

22 for a reconciliation of Operating Earnings and Operating Earnings per Share to GAAP net income and GAAP net income per share.

(2)

Fixed

charge

coverage

EBITDA

divided

interest

expense

plus

the

preferred

stock

dividends.

Income Statement

September 30, 2013

September 30, 2012

% Change

September 30, 2013

September 30, 2012

% Change

19,671

15,004

31.1%

55,995

43,314

29.3%

(885)

(1,768)

-49.9%

(2,909)

(6,939)

-58.1%

Net interest income (in thousands)

18,786

13,236

41.9%

53,086

36,375

45.9%

0.35

0.44

-20.5%

1.05

1.27

-17.3%

37,379,469

20,992,312

78.1%

35,103,285

20,983,429

67.3%

Balance sheet

September 30, 2013

December 31, 2012

% Change

843,053

669,478

25.9%

615,253

444,320

38.5%

Common stockholders equity

596,637

460,674

29.5%

86,250

227,167

225,158

0.9%

0.5x

5.5x

3.3x

Three Months Ended

Nine Months Ended

Interest income

(in thousands)

Interest expense

(in thousands)

Operating earnings per share

(1)

Diluted weighted average common shares

outstanding

Investments at amortized cost (in thousands)

Net equity in investments at cost (in thousands)

Preferred stockholders equity

Debt to common equity

Outstanding borrowings

(in thousands)

Fixed charge coverage

(2)

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

$0.20

$0.29

$0.42

$0.39

$0.31

$0.40

$0.41

$0.31

$0.32

$0.38

$0.44

$0.35

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

Nine Months Ended

September30, 2010

Nine Months Ended

September 30, 2011

Nine Months Ended

September 30, 2012

Nine Months Ended

September 30, 2013

$0.35

$0.40

$0.35

$0.40

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

Nine Months Ended

September 30, 2010

Nine Months Ended

September 30, 2011

Nine Months Ended

September 30, 2012

Nine Months Ended

September 30, 2013

4.3%

6.8%

10.4%

9.6%

6.7%

9.6%

10.0%

7.8%

6.5%

9.3%

10.8%

8.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Nine Months Ended

September 30, 2010

Nine Months Ended

September 30, 2011

Nine Months Ended

September 30, 2012

Nine Months Ended

September 30, 2013

ARI –

Historical Overview

Operating Earnings per Share

(1)

Dividends per Common Share

Net Interest Income ($000s)

Return on Common Equity Based on Operating Earnings

(2)

$0.83

$1.07

$1.27

$1.05

$14,459

$27,519

$36,374

$53,086

$1.10

$1.20

$3,902

$7,599

$11,187

$17,067

$5,056

$9,684

$11,951

$17,233

$5,501

$10,236

$13,236

$18,786

$8,000

$16,000

$24,000

$32,000

$40,000

$48,000

$56,000

Nine Months Ended

September 30, 2010

Nine Months Ended

September 30, 2011

Nine Months Ended

September 30, 2012

Nine Months Ended

September 30, 2013

(1)

upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding) and (ii) any unrealized gains or losses or other non-cash items included in net income. Please see slide 22 for a reconciliation of Operating Earnings and Operating Earnings per Share

to GAAP net income and GAAP net income per share.

(2)

Return on common equity is calculated as annualized Operating Earnings for the period as a percentage of average stockholders equity for the period.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

$1.09

$1.47

$1.50

$0.39

$0.31

$0.35

$0.00

$0.40

$0.80

$1.20

$1.60

$2.00

2010

2011

2012

YTD 2013

ARI –

Historical Overview

Operating Earnings per Share

(1)

cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding) and (ii) any unrealized gains or losses or other non-cash items included in net income. Please see slide 22 for a reconciliation of Operating Earnings and Operating

Earnings per Share to GAAP net income and GAAP net income per share.

(2)

Return on common equity is calculated as annualized Operating Earnings for the period as a percentage of average stockholders equity for the period.

Dividends per Common Share

Net Interest Income ($000s)

Return on Common Equity Based on Operating Earnings

(2)

$1.50

$1.60

$0.40

$0.00

$0.40

$0.80

$1.20

$1.60

$2.00

2010

2011

2012

YTD 2013

$1.20

$1.05

6.9%

9.6%

7.8%

8.9%

0.0%

3.0%

6.0%

9.0%

12.0%

Q4 2012

Q1 2013

Q2 2013

Q3 2013

$53,086

$21,771

$38,464

$48,677

$17,067

$17,233

$18,786

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

2010

2011

2012

YTD 2013

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Q3 Highlights

Financial Results & Earnings Per Share

Operating

Earnings

for

the

quarter

ended

September

30,

2013

$13.3

million,

$0.35

per

diluted

common

(1)

–

Net interest income of $18.8 million for Q3 2013

–

Total expenses of $4.4 million, comprised of management fees of $2.6 million, G&A of $1.0 million and non-cash stock

based compensation of $0.8 million

–

GAAP

net

income

available

common

stockholders

for

the

quarter

ended

September

30,

2013

$11.0

million,

$0.29 per diluted common share

Dividends

Declared a dividend of $0.40 per share of common stock for the quarter ended December 31, 2013

–

9.9%

annualized

dividend

yield

based

$16.17

closing

price

November

2013

Declared a dividend on the Company’s 8.625% Series A Cumulative Redeemable Perpetual Preferred Stock of

$0.5391 per share for stockholders of record on September 30, 2013

(1)

for (i) equity-based compensation expense (a portion of which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding) and (ii) any

unrealized gains or losses or other non-cash items included in net income. Please see slide 22 for a reconciliation of Operating Earnings and Operating Earnings per Share to GAAP net income and GAAP net income per

share.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Q3 Highlights

Investment and Portfolio Activity

–

$14.0 million fixed rate mezzanine loan (purchased for $13.6 million or ~ 97% of face value)

secured by a pledge of the equity interests in the owner of the office component of a 432,717

square foot building located in downtown New York City

–

Nine-year remaining term

–

Underwritten

Loan-to-Value

(“LTV”)

70%

–

Underwritten IRR

(1)

~ 13%

–

$22.5 million floating rate mezzanine loan secured by a pledge of the equity interests in the

owner of a mixed-use property consisting of (i) a 27-story multi-tenant office building, (ii) an

adjoining 616-key convention center hotel, and (iii) a 479-space underground parking garage

–

Five-year term (three-year initial term and two one-year extension options)

–

Appraised LTV

69%

–

Underwritten IRR

(1)

~ 12%

(1)

The IRR for the investments shown in this presentation reflect the returns underwritten by ACREFI Management, LLC, the Company’s external manager (the “Manager”), calculated on a weighted average basis assuming no dispositions, early

prepayments or defaults but assuming that extension options are exercised and that the cost of borrowings under the master repurchase agreement with Wells Fargo Bank, N.A. (the “Wells Facility”) remains constant over the remaining terms and

extension terms under this facility. With respect to certain loans, the IRR calculation assumes certain estimates with respect to the timing and magnitude of future fundings for the remaining commitments and associated loan repayments, and assumes no

defaults. IRR is the annualized effective compounded return rate that accounts for the time-value of money and represents the rate of return on an investment over a holding period expressed as a percentage of the investment. It is the discount rate that

makes the net present value of all cash outflows (the costs of investment) equal to the net present value of cash inflows (returns on investment). It is derived from the negative and positive cash flows resulting from or produced by each transaction (or for a

transaction involving more than one investment, cash flows resulting from or produced by each of the investments), whether positive, such as investment returns, or negative, such as transaction expenses or other costs of investment, taking into account

the dates on which such cash flows occurred or are expected to occur, and compounding interest accordingly. There can be no assurance that the actual IRRs will equal the underwritten IRRs shown in the table. See “Item 1A—Risk Factors—The

Company may not achieve its underwritten internal rate of return on its investments which may lead to future returns that may be significantly lower than anticipated” included in the Company’s Annual Report on Form 10-K for the year ended

December 31, 2012 for a discussion of some of the factors that could adversely impact the returns received by the Company from the investments shown in the table over time.

Mezzanine Loan – Office Building, New York, NY

Mezzanine Loan – Mixed Use Property, Pittsburgh, PA

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Q3 Highlights

Investment and Portfolio Activity (cont.)

Whole Loan

–

Condominium Conversion, New York City

$62.4 million whole loan, which is split into a $33.0 million first mortgage and a $29.4 million mezzanine

loan,

secured

the

pledge

the

equity

interests

the

owner

eight-story

commercial

building

being

converted into a 12-story luxury residential condominium consisting of eight units and 3,600 sq. ft. of

ground floor retail

Three year term (two-year initial term and one one-year extension option)

Appraised loan-to-net-sellout

–

55%

Underwritten IRR

(1)

~ 14%

Commercial Mortgage Backed Securities (“CMBS”) Investment and UBS Facility

$20.6 million of equity deployed to acquire legacy CMBS originally rated AAA with an aggregate purchase

price of $91.4 million and a weighted average life of approximately 3.8 years

Underwritten IRR

(1)

~ 15%

To finance the purchase, the Company entered into a new master repurchase agreement with UBS AG (the

“UBS Facility”), which provides for a maximum aggregate purchase price of $133.3 million and has a four-

year term, plus a one-year extension option

(1)

The IRR for the investments shown in this presentation reflect the returns underwritten by the Manager, calculated on a weighted average basis assuming no dispositions, early prepayments or defaults but assuming that extension options are exercised and that the cost of

borrowings under the Wells Facility remains constant over the remaining terms and extension terms under this facility. With respect to certain loans, the IRR calculation assumes certain estimates with respect to the timing and magnitude of future fundings for the remaining

commitments and associated loan repayments, and assumes no defaults. IRR is the annualized effective compounded return rate that accounts for the time-value of money and represents the rate of return on an investment over a holding period expressed as a percentage of

the investment. It is the discount rate that makes the net present value of all cash outflows (the costs of investment) equal to the net present value of cash inflows (returns on investment). It is derived from the negative and positive cash flows resulting from or produced by

each transaction (or for a transaction involving more than one investment, cash flows resulting from or produced by each of the investments), whether positive, such as investment returns, or negative, such as transaction expenses or other costs of investment, taking into

account the dates on which such cash flows occurred or are expected to occur, and compounding interest accordingly. There can be no assurance that the actual IRRs will equal the underwritten IRRs shown in the table. See “Item 1A—Risk Factors—The Company may not

achieve its underwritten internal rate of return on its investments which may lead to future returns that may be significantly lower than anticipated” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of some of the

factors that could adversely impact the returns received by the Company from the investments shown in the table over time.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

Investment and Portfolio Activity (cont.)

Repayments

–

Principal repayment from two senior sub-participation interests in a first mortgage loan ($23.8 million of aggregate face

value) that the Company purchased for $17.9 million; Realized IRR ~ 25%

Minority Participation in KBC Bank Deutschland AG Investment

–

Commitment to invest up to $50 million (€38 million)

together with other affiliates of Apollo Global Management, LLC,

representing

21%

ownership

interest

scalable

German

banking

platform

–

Expected to close within nine months, pending antitrust and regulatory approval

Portfolio Summary

Total investments with an amortized cost of $843 million at September 30, 2013

Current

weighted

average

underwritten

IRR

approximately

12.9%

and

levered

weighted

average

underwritten

IRR

approximately

13.9%

September

30,

2013

(1)

Book Value Per Share

GAAP book value of $16.18 per share as of September 30, 2013

Fair

value

$16.44

per

September

30,

2013

(2)

ARI –

Q3 Highlights

(1)

under the Wells Facility remains constant over the remaining terms and extension terms under this facility. With respect to certain loans, the IRR calculation assumes certain estimates with respect to the timing and magnitude of future fundings for the remaining commitments and

associated loan repayments, and assumes no defaults. IRR is the annualized effective compounded return rate that accounts for the time-value of money and represents the rate of return on an investment over a holding period expressed as a percentage of the investment. It is the discount

rate that makes the net present value of all cash outflows (the costs of investment) equal to the net present value of cash inflows (returns on investment). It is derived from the negative and positive cash flows resulting from or produced by each transaction (or for a transaction involving

more than one investment, cash flows resulting from or produced by each of the investments), whether positive, such as investment returns, or negative, such as transaction expenses or other costs of investment, taking into account the dates on which such cash flows occurred or are

expected to occur, and compounding interest accordingly. There can be no assurance that the actual IRRs will equal the underwritten IRRs shown in the table. See “Item 1A—Risk Factors—The Company may not achieve its underwritten internal rate of return on its investments which

may lead to future returns that may be significantly lower than anticipated” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of some of the factors that could adversely impact the returns received by the Company from the

investments shown in the table over time. In addition, substantially all of the Company’s borrowings under the Company’s master repurchase agreement with JP Morgan Chase Bank, N.A. (the “ JPMorgan Facility”) were repaid. The Company's ability to achieve its underwritten

levered weighted average IRR with regard to its portfolio of first mortgage loans is additionally dependent upon the Company re-borrowing approximately $53,000 under the JPMorgan Facility or any replacement facility. Without such re-borrowing, the levered weighted average IRRs

will be the current weighted average IRR.

(2)

The Company carries loans at amortized cost and its CMBS are marked to market. Management has estimated that the fair value of the Company’s financial assets at September 30, 2013 was approximately $10.0 million greater than the carrying value of the Company’s investment

portfolio as of the same date. This represents a premium of $0.26 per share over the Company's GAAP book value as of September 30, 2013.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Subsequent Events

Investment Activity

Mezzanine

Participations

–

Healthcare

Portfolio

$47 million of mezzanine participations secured by a pledge of the equity interests in a borrower that

owns a healthcare portfolio consisting of 193 skilled nursing facilities, long-term acute care hospitals and

senior housing facilities

Remaining 9-month term

Underwritten

LTV

(inclusive

cash

held

collateral)

–

58%

Underwritten IRR

(1)

~ 12%

CMBS Investment

Acquired legacy CMBS originally rated AAA with an aggregate purchase price of $18.0 million and a

weighted average life of approximately 3.6 years

Total

equity

deployed

CMBS

YTD

$24.6

million

Loan Repayment

Principal

repayment

from

$25

million

mezzanine

loan

secured

portfolio

hotels

New

York

City

Realized IRR ~ 12%

(1) The IRR for the investments shown in this presentation reflect the returns underwritten by the Manager, calculated on a weighted average basis assuming no dispositions, early prepayments or defaults but assuming that extension options are exercised and that

the cost of borrowings under the Wells Facility remains constant over the remaining terms and extension terms under this facility. With respect to certain loans, the IRR calculation assumes certain estimates with respect to the timing and magnitude of future

fundings for the remaining commitments and associated loan repayments, and assumes no defaults. IRR is the annualized effective compounded return rate that accounts for the time-value of money and represents the rate of return on an investment over a

holding period expressed as a percentage of the investment. It is the discount rate that makes the net present value of all cash outflows (the costs of investment) equal to the net present value of cash inflows (returns on investment). It is derived from the

negative and positive cash flows resulting from or produced by each transaction (or for a transaction involving more than one investment, cash flows resulting from or produced by each of the investments), whether positive, such as investment returns, or

negative, such as transaction expenses or other costs of investment, taking into account the dates on which such cash flows occurred or are expected to occur, and compounding interest accordingly. There can be no assurance that the actual IRRs will equal the

underwritten IRRs shown in the table. See “Item 1A—Risk Factors—The Company may not achieve its underwritten internal rate of return on its investments which may lead to future returns that may be significantly lower than anticipated” included in the

Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of some of the factors that could adversely impact the returns received by the Company from the investments shown in the table over time.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Portfolio Overview

Asset Type

($000s)

Amortized

Cost

Borrowings

Equity

at Cost

(1)

Remaining

Weighted

Average Life

(years )

(2)

Current

Weighted

Average

IRR

(3)(4)

Levered

Weighted

Average

IRR

(5)

First

Mortgage

Loans

(3)

$160,893

$160,890

2.2

10.7%

14.5%

Subordinate Loans

394,554

4.1

13.4

CMBS

218,019

180,626

36,760

2.2

15.4

Hilton CMBS

69,587

46,538

23,049

0.1

16.6

Investments at September 30, 2013

$843,053

$227,167

$615,253

3.0 Years

12.9%

13.9%

As of September 30, 2013.

(1)

(2)

(3)

(4)

(5)

Includes $15.8 million of restricted cash related to the UBS Facility and $16.4 million of future borrowings related to unsettled trades at September 30, 2013.

Remaining Weighted Average Life assumes all extension options are exercised.

Borrowings under the JPMorgan Facility bear interest at LIBOR plus 250 basis points, or 2.7% at September 30, 2013. The IRR calculation further assumes the JPMorgan Facility or any replacement facility will remain available over the

life of these investments.

The IRR for the investments shown in this table reflect the returns underwritten by the Manager, calculated on a weighted average basis assuming no dispositions, early prepayments or defaults but assuming that extension options are

exercised and that the cost of borrowings under the Wells Facility remains constant over the remaining terms and extension terms under this facility. With respect to certain loans, the IRR calculation assumes certain estimates with respect

to the timing and magnitude of future fundings for the remaining commitments and associated loan repayments, and assumes no defaults. IRR is the annualized effective compounded return rate that accounts for the time-value of money and

represents the rate of return on an investment over a holding period expressed as a percentage of the investment. It is the discount rate that makes the net present value of all cash outflows (the costs of investment) equal to the net present

value of cash inflows (returns on investment). It is derived from the negative and positive cash flows resulting from or produced by each transaction (or for a transaction involving more than one investment, cash flows resulting from or

produced by each of the investments), whether positive, such as investment returns, or negative, such as transaction expenses or other costs of investment, taking into account the dates on which such cash flows occurred or are expected to

occur, and compounding interest accordingly. There can be no assurance that the actual IRRs will equal the underwritten IRRs shown in the table. See “Item 1A—Risk Factors—The Company may not achieve its underwritten internal rate of

return on its investments which may lead to future returns that may be significantly lower than anticipated” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of some of the

factors that could adversely impact the returns received by the Company from the investments shown in the table over time

Substantially all of the Company’s borrowings under the JPMorgan Facility were repaid. The Company's ability to achieve its underwritten levered weighted average IRR with regard to its portfolio of first mortgage loans is additionally

dependent upon the Company re-borrowing approximately $53,000 under the JPMorgan Facility or any replacement facility. Without such re-borrowing, the levered weighted average IRRs will be as indicated in the current weighted

average IRR column above.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Portfolio Overview

Diversified Investment Portfolio with Amortized Cost Basis of $843 million

Net Invested Equity at Amortized Cost Basis

Gross Assets at Amortized Cost Basis

CMBS

26%

First Mortgages

19%

Subordinate

Loans

47%

CMBS

CMBS -

Hilton

First Mortgages

26%

Subordinate

Loans

64%

CMBS -

Hilton

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Portfolio Diversification

The portfolio is diversified by property type and geographic location

Geographic Diversification by Net Equity

Property Type by Net Equity

(1)

Other category includes the subordinate financing on a ski resort

Securities

12%

Residential

32%

Hotel

27%

Office

Retail

Mixed

Use/Other(1)

11%

Industrial

New York City

50%

Northeast

(excluding NYC)

Securities

12%

Southeast

Mid

Atlantic

Midwest

10%

West

11%

Southwest

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI

–

Loan

Portfolio

Maturity

and

Type

Fully

Extended

Loan

Maturity

Schedule

($000s)

(1)(2)

(1)

Based upon Face Amount of Loans; Does not include CMBS.

(2)

For the NYC condominium conversion loan that closed in December 2012 and the NYC condominium conversion loan that closed in September 2013, the maturities reflect the fully funded amounts of the loans.

Loan Position and Rate Type

(1)

$44.0

$116.7

$158.3

$120.0

$112.0

$8.9

$30.4

$32.0

$30

$60

$90

$120

$150

$180

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

42% Floating Rate/58% Fixed Rate

Senior Loan Fixed

15%

Subordinate Loan

Fixed

43%

Subordinate Loan

Floating

28%

Senior Loan

Floating

14%

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Loan Portfolio –

Loan Level LTV (Through Last Invested Dollar)

(1)

Both loans are for the same property; Ending LTV for the Condominium Conversion mezzanine loan is based upon the committed amount of $35 million.

(2)

Both loans are for the same property; Ending LTV for the Condominium Conversion mezzanine loan is based upon the committed amount of $29.4 million.

First Mortgage Loans

Subordinate Financings

10%

20%

30%

40%

50%

60%

70%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Description ($ in thousands)

Location

Balance at

September 30,

2013

Starting

LTV

Ending

LTV

Subordinate -

Condo Development

New York

64,612

33%

45%

Subordinate -

Hotel Portfolio

Various

48,697

53%

60%

Subordinate -

Multifamily Conversion

New York

44,000

51%

78%

Subordinate -

Ski Resort

California

40,000

37%

57%

Subordinate -

Industrial Portfolio

Various

32,000

67%

74%

Subordinate -

Hotel Portfolio

New York

25,000

56%

60%

Subordinate -

Hotel Portfolio

Minnesota

24,840

57%

69%

Subordinate -

Mixed Use

Pennsylvania

22,500

54%

69%

Subordinate -

Retail

Virginia

22,216

60%

72%

Subordinate -

Multifamily Conversion

New York

18,000

48%

60%

Subordinate -

Hotel

New York

15,000

56%

69%

Subordinate -

Office

New York

14,000

61%

70%

Subordinate -

Office

Missouri

9,883

61%

71%

Subordinate -

Office

Michigan

8,879

42%

54%

Subordinate -

Mixed Use

North Carolina

6,525

64%

76%

Subordinate -

Condo Conversion

(1)

New York

350

31%

55%

Subordinate -

Condo Conversion

(2)

New York

294

29%

55%

Total

396,796

Description ($ in thousands)

Location

Balance at

September 30,

2013

Starting

LTV

Ending

LTV

First Mortgage -

Condo Conversion

(1)

New York

45,000

31%

First Mortgage -

Condo Conversion

(2)

New York

33,000

42%

First Mortgage -

Hotel

New York

31,385

35%

First Mortgage -

Office

New York

27,235

62%

First Mortgage -

Hotel

Maryland

25,033

29%

Total

161,653

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

CMBS Portfolio

Face

Amortized

Cost

Remaining Weighted

Average Life with

Extensions (years)

Estimated

Fair Value

Debt

Net

Equity at

Cost

(1)

CMBS

$217,290

$218,019

2.2

$217,537

$180,626

$36,760

CMBS –

Hilton

70,682

69,587

0.1

70,682

$46,538

23,049

CMBS

–

Total

$287,972

$287,606

1.7 Years

$288,219

$227,164

$59,809

CMBS

CUSIP

Description

07388YAB8

BSCMS 07-PW16 A2

12513YAC4

CD 2007-CD4 A2B

61754KAC9

MSC 07-IQ14 A2

92978YAB6

WBCMT 07-C32 A2

36246LAB7

GSMS 2007-GG10 A2

61751NAD4

MSC 2007-HQ11 A31

46631BAJ4

JPMCC 2007-LD11 AM

92978TAB7

WBCMT 2007-C31 A2

CMBS

CUSIP

Description

59025KAG7

MLMT 2007-C1 AM

22546BAH3

CSMC 2007-C5 AM

36159XAH3

GECMC 2007-C1 AM

CMBS

–

Hilton

CUSIP

Description

05956KAA6

BALL 2010-HLTN

(1)

Includes $15.8 million of restricted cash related to the UBS Facility and $16.4 million of future borrowings related to unsettled trades at September 30, 2013

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

Portfolio Metrics

–

Quarterly Migration Summary

Portfolio Metrics ($ in thousands)

Q3 2013

Q2 2013

Q1 2013

Q4 2012

Q3 2012

(Investment balances represent amortized cost)

First Mortgage Loans

160,893

143,492

142,833

142,921

104,101

Subordinate Loans

394,554

354,865

286,569

246,246

196,177

Repurchase Agreement

6,598

10,975

CMBS

218,019

165,553

188,824

203,463

223,781

CMBS -

Hilton

69,587

69,521

69,912

70,250

70,521

Total Investments

843,053

733,431

688,138

669,478

605,555

(Investment balances represent net equity, at cost)

First Mortgage Loans

160,890

143,489

142,830

142,918

104,098

Subordinate Loans

394,554

354,865

286,569

246,246

196,177

Repurchase Agreement

6,598

10,975

CMBS

36,760

(2)

21,353

24,620

26,636

29,712

CMBS -

Hilton

23,049

22,412

22,175

21,922

21,623

Net Equity in Investments at Cost

615,253

542,119

476,194

444,320

362,585

Weighted Average IRR

(1)

13.9%

(3)

14.2%

(3)

14.2%

(3)

14.1%

(3)

14.9%

Weighted Average Duration

3.0 Years

3.1 Years

3.3 Years

Loan Portfolio Weighted Average Ending LTV

(4)

55.0%

56.0%

53.6%

55.6%

58.0%

Borrowings

227,167

191,312

211,944

225,158

242,970

(1)

of borrowings under the Wells Facility remains constant over the remaining terms and extension terms under this facility. With respect to certain loans, the IRR calculation assumes certain estimates with respect to the timing and magnitude of future fundings for the

remaining commitments and associated loan repayments, and assumes no defaults. IRR is the annualized effective compounded return rate that accounts for the time-value of money and represents the rate of return on an investment over a holding period expressed as

a percentage of the investment. It is the discount rate that makes the net present value of all cash outflows (the costs of investment) equal to the net present value of cash inflows (returns on investment). It is derived from the negative and positive cash flows resulting

from or produced by each transaction (or for a transaction involving more than one investment, cash flows resulting from or produced by each of the investments), whether positive, such as investment returns, or negative, such as transaction expenses or other costs of

investment, taking into account the dates on which such cash flows occurred or are expected to occur, and compounding interest accordingly. There can be no assurance that the actual IRRs will equal the underwritten IRRs shown in the table. See “Item 1A—Risk

Factors—The Company may not achieve its underwritten internal rate of return on its investments which may lead to future returns that may be significantly lower than anticipated” included in the Company’s Annual Report on Form 10-K for the year ended

December 31, 2012 for a discussion of some of the factors that could adversely impact the returns received by the Company from the investments shown in the table over time

(2)

Includes $15.8 million of restricted cash related to the UBS Facility and $16.4 million of future borrowings related to unsettled trades at September 30, 2013.

(3)

Represents an underwritten levered weighted average IRR. The Company's ability to achieve the underwritten levered weighted average IRR, additionally depends upon the Company re-borrowing approximately $53,000 under the JPMorgan Facility or any

replacement facility with regard to its portfolio of first mortgage loans. Without such re-borrowing, the levered weighted average IRR will be significantly lower than the amount shown above, as indicated in the weighted average IRR column on page 11.

(4)

Does not include CMBS.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI had total borrowings outstanding of $227.2 million at September 30, 2013:

ARI’s

borrowings

had

the

following

remaining

maturities

September

30,

2013:

Financing Overview

Facility ($000s)

Debt Balance

Weighted Average

Remaining

Maturity

(1)

Cost of Funds

Wells Facility

(2)

$156,969

0.9

1.4%

UBS Facility

70,195

5.0

2.9%

JPMorgan Facility

1.3

2.7%

Total Borrowings at September 30, 2013

$227,167

2.2 Years

1.9%

Facility ($000s)

Less than 1 year

1 to 3 years

3 to 5 years

Total

Wells Facility

(2)

$156,969

UBS Facility

70,195

JPMorgan Facility

Total Borrowings at September 30, 2013

$156,969

$70,195

$227,167

(1)

Assumes extension options on the JP Morgan Facility and the UBS Facility are exercised.

(2)

At September 30, 2013, the interest rate with respect to outstanding borrowings used to finance CMBS was LIBOR plus 105bps and the interest rate with respect to outstanding borrowings used to finance the Hilton CMBS

was LIBOR plus 175bps.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

Financials

Consolidated Balance Sheets

(in thousands—except share and per share data)

September 30, 2013

December 31, 2012

Assets:

Cash

86,824

108,619

Restricted cash

15,794

Securities available-for-sale, at estimated fair value

37,559

67,079

Securities, at estimated fair value

250,660

211,809

Commercial mortgage loans, held for investment

160,893

142,921

Subordinate loans, held for investment

394,554

246,246

Repurchase agreements, held for investment

6,598

Interest receivable

5,673

4,277

Deferred financing costs, net

794

678

Other assets

203

Total Assets

952,751

788,430

Liabilities and Stockholders' Equity

Liabilities:

Borrowings under repurchase agreements

227,167

225,158

Investments purchased, not yet settled

21,299

Derivative instruments, net

155

Accounts payable and accrued expenses

1,719

1,265

Payable to related party

2,656

2,037

Dividends payable

17,023

12,891

Total Liabilities

269,864

241,506

Stockholders' Equity:

Preferred stock, $0.01 par value, 50,000,000 shares authorized and 3,450,000 shares issued and outstanding in 2013

and 2012

Common stock, $0.01 par value, 450,000,000 shares authorized 36,883,467 and 28,044,106 shares issued and

outstanding in 2013 and 2012, respectively

369

280

Additional paid-in-capital

696,337

546,065

Retained earnings (accumulated deficit)

(13,235)

574

Accumulated other comprehensive loss

(619)

(30)

Total Stockholders' Equity

682,887

546,924

Total Liabilities and Stockholders' Equity

952,751

788,430

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

Consolidated Statement of Operations

September 30,

2013

September 30,

2012

September 30,

2013

September 30,

2012

Net interest income:

Interest income from securities

2,533

3,674

8,634

12,227

Interest income from commercial mortgage loans

4,954

2,825

12,222

7,851

Interest income from subordinate loans

12,184

6,144

35,137

17,316

Interest income from repurchase agreements

2,361

5,920

Interest expense

(885)

(1,768)

(2,909)

(6,939)

Net interest income

18,786

13,236

53,086

36,375

Operating expenses:

General and administrative expenses (includes $784 and $2,095 of

equity-based compensation in 2013 and $1,276 and $3,244 in 2012,

respectively)

(1,793)

(2,430)

(5,126)

(7,229)

Management fees to related party

(2,625)

(1,518)

(7,384)

(4,099)

Total operating expenses

(4,418)

(3,948)

(12,510)

(11,328)

Interest income from cash balances

Realized gain on sale of securities

262

Unrealized gain (loss) on securities

(1,472)

3,010

(3,973)

6,473

Loss

derivative

instruments

(includes

unrealized

gains

$25

and

$155 in 2013 and $40 and $228 in 2012, respectively)

(87)

(1)

(569)

Net income

12,900

12,211

36,621

31,214

Preferred dividends

(1,859)

(1,219)

(5,580)

(1,219)

Net income available to common shareholders

11,041

10,992

31,041

29,995

Basic and diluted net income per share of common stock

0.29

0.52

0.88

1.43

Basic weighted average shares of common stock outstanding

36,883,002

20,571,478

34,647,941

20,567,772

Diluted weighted average shares of common stock outstanding

37,379,469

20,992,312

35,103,285

20,983,429

Dividend declared per share of common stock

0.40

1.20

Three months ended

Nine months ended

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

Reconciliation of Operating Earnings to Net Income

September 30, 2013

Earnings Per Share

(Diluted)

September 30, 2012

Earnings Per Share

(Diluted)

Operating Earnings:

Net income available to common stockholders

$11,041

$0.29

$10,992

$0.52

Adjustments:

Unrealized (gain)/loss on securities

1,472

0.04

(3,010)

(0.14)

Unrealized gain on derivative instruments

(25)

(40)

Equity-based compensation expense

784

0.02

1,276

0.06

Total adjustments:

2,231

0.06

(1,774)

(0.08)

Operating Earnings

13,272

$0.35

$9,218

$0.44

Basic weighted average common shares outstanding

36,883,002

20,571,478

Diluted weighted average common shares outstanding

37,379,469

20,992,312

Three Months Ended

September 30, 2013

Earnings Per Share

(Diluted)

September 30, 2012

Earnings Per Share

(Diluted)

Operating Earnings:

Net income available to common stockholders

$31,041

$0.88

$29,995

$1.43

Adjustments:

Unrealized (gain)/loss on securities

3,973

0.11

(6,473)

(0.31)

Unrealized gain on derivative instruments

(155)

(228)

(0.01)

Equity-based compensation expense

2,095

0.06

3,244

0.16

Total adjustments:

5,913

0.17

(3,457)

(0.16)

Operating Earnings

36,954

$1.05

$26,538

$1.27

Basic weighted average common shares outstanding

36,647,941

20,567,772

Diluted weighted average common shares outstanding

35,103,285

20,983,429

Nine Months Ended

Financial

Metrics

–

Quarterly

Migration

Summary

(1)

portion of which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding)

and (ii) any unrealized gains or losses or other non-cash items included in net income. Please see slide

22 for a reconciliation of Operating Earnings and Operating Earnings per Share to GAAP net income and GAAP net income per share.

(2)

The Company carries loans at amortized cost and its CMBS securities are marked to market. Management estimates the fair value of the Company’s financial assets.

(3)

Return on common equity is calculated as annualized Operating Earnings for the period as a percentage of average stockholders equity for the period.

Financial Metrics

($ in thousands, except per share data)

Q3 2013

Q2 2013

Q1 2013

Q4 2012

Q3 2012

Net Interest Income

18,786

17,233

17,067

12,303

13,236

Management Fee

2,625

2,600

2,160

2,040

1,518

General and Administrative Costs

1,009

1,012

935

1,154

Non-Cash Stock Based Compensation

784

428

883

380

1,276

Net Income Available to Common Stockholders

11,041

9,929

10,072

7,108

10,992

GAAP Diluted EPS

0.29

0.27

0.33

0.26

0.52

Operating Earnings

(1)

13,272

11,721

11,963

7,375

9,218

Operating EPS

(1)

0.35

0.31

0.39

0.27

0.44

Distributions Declared to Common Stockholders

0.40

GAAP Book Value per Common Share

16.18

16.26

16.41

16.43

16.58

Fair Value per Common Share

(2)

16.44

16.55

16.71

16.84

17.16

Total Stockholders' Equity

682,887

685,994

691,185

546,924

427,421

Diluted weighted average common shares outstanding

37,379,469

37,373,885

30,105,939

27,608,787

20,992,312

Return

Common

Equity

Based

Operating

Earnings

(3)

8.9%

7.8%

9.6%

6.8%

10.8%

Apollo Commercial Real Estate Finance (ARI) 8-KApollo Commercial Real Estate Finance, Inc. Reports