![]() Information is as of September30, 2015, 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 Package – Q3 2015 October 30, 2015 Exhibit 99.2 |
![]() Forward Looking Statements and Other Disclosures This presentation may contain forward-looking statements that are 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 management’s control. These forward- looking statements may include information about possible or assumed future results of Apollo Commercial Real Estate Finance, Inc.’s (“ARI” or the “Company”) business, financial condition, liquidity, results of operations, plans and objectives. When used in this presentation, the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions, are intended to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: ARI’s business and investment strategy; ARI’s operating results; ARI’s ability to obtain and maintain financing arrangements; the return on equity, the yield on investments and risks associated with investing in real estate assets; and changes in business conditions and the general economy. The forward-looking statements are based on management’s beliefs, assumptions and expectations of future performance, taking into account all information currently available to ARI. 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 ARI. Some of these factors are described under “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in ARI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and other periodic reports filed with the Securities and Exchange Commission (“SEC”), which are accessible on the SEC’s website at www.sec.gov. If a change occurs, ARI’s business, financial condition, liquidity and results of operations may vary materially from those expressed in ARI’s 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 management to predict those events or how they may affect ARI. Except as required by law, ARI is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation contains information regarding ARI’s financial results that is calculated and presented on the basis of methodologies other than in accordance with accounting principles generally accepted in the United States (“GAAP”), including Operating Earnings and Operating Earnings per share. Please refer to slide 3 for a definition of “Operating Earnings” and the reconciliation of “Operating Earnings” to the applicable GAAP financial measure set forth on slide 18. 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. ARI makes no representation or warranty, expressed or implied, with respect to the accuracy, reasonableness or completeness of such information. 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. 1 |
![]() ARI Q3 2015 Earnings Call 2 October 30, 2015 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 |
![]() Financial Summary 3 (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 available to common stockholders, 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), (ii) any unrealized gains or losses or other non-cash items included in net income available to common stockholders, (iii) unrealized income from unconsolidated joint ventures, (iv) foreign currency gains/losses, and (v) the non-cash amortization expense related to the reclassification of a portion of the convertible senior notes to stockholders’ equity in accordance with GAAP. Please see slide 18 for a reconciliation of Operating Earnings and Operating Earnings per Share to GAAP Net Income and GAAP Net Income per share. (2) Includes Commercial Mortgage-Backed Securities (“CMBS”), held-to-maturity, which are net of a participation sold during June 2014. ARI presents the participation sold as both assets and non-recourse liabilities because the participation does not qualify as a sale according to GAAP. At September 30, 2015, ARI had one such participation sold with a carrying amount of $89,303. Subordinate loans also are net of a participation sold in February 2015. At September 30, 2015, this participation sold had a face amount of £19,900 and a carrying amount of $30,104. (3) Debt to common equity is net of participations sold. (4) Fixed charge coverage is EBITDA divided by interest expense plus the preferred stock dividends. ($ amounts in thousands, except per share data) Income Statement September 30, 2015 September 30, 2014 % Change September 30, 2015 September 30, 2014 % Change 51,878 $ 35,356 $ 46.7% 136,348 $ 85,559 $ 59.4% (13,187) $ (8,786) $ 50.1% (36,287) $ (15,802) $ 129.6% Net interest income 38,691 $ 26,570 $ 45.6% 100,061 $ 69,757 $ 43.4% Operating earnings (1) 31,742 $ 20,768 $ 52.8% 80,347 $ 52,805 $ 52.2% 0.53 $ 0.44 $ 20.5% 1.42 $ 1.24 $ 14.5% 59,934,008 47,068,929 27.3% 56,415,082 42,538,744 32.6% Balance sheet September 30, 2015 December 31, 2014 % Change 2,344,092 $ 1,618,623 $ 44.8% 1,608,678 $ 1,026,556 $ 56.7% Common stockholders' equity 1,098,145 $ 768,819 $ 42.8% 286,250 $ 86,250 $ 231.9% 735,437 $ 622,194 $ 18.2% Convertible senior notes 247,736 $ 246,464 $ 0.5% 0.9x 1.2x 3.1x 2.8x Three Months Ended Nine Months Ended Interest income Interest expense Operating earnings per diluted share (1) Diluted weighted average shares of common stock outstanding Investments at amortized cost (2) Net equity in investments at cost Preferred stockholders' equity Debt to common equity (3) Outstanding repurchase agreement borrowings Fixed charge coverage (4) |
![]() Historical Financial Overview 4 Operating Earnings ($000s) (1) Net Interest Income ($000s) Dividends per Share of Common Stock Operating Earnings per Share of Common Stock (1) (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 available tocommon stockholders, 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), (ii) any unrealized gains or losses or other non-cash items included in net income available to common stockholders, (iii) unrealized income from unconsolidated joint ventures, (iv) foreign currency gains/losses, and (v) the non-cash amortization expense related to the reclassification of a portion of the convertible senior notes to stockholders’ equity in accordance with GAAP. Please see slide 18 for a reconciliation of Operating Earnings and Operating Earnings per Share to GAAP Net Income and GAAP Net Income per share. $80,347 $100,061 $1.42 $1.32 $5,047 $8,796 $11,963 $13,991 $22,222 $7,086 $8,526 $11,721 $18,045 $26,385 $7,643 $9,218 $13,272 $20,768 $31,742 $8,277 $7,376 $14,488 $21,179 $0 $15,000 $30,000 $45,000 $60,000 $75,000 $90,000 2011 2012 2013 2014 2015 $7,599 $11,187 $17,067 $19,403 $28,554 $9,683 $11,951 $17,233 $23,784 $32,817 $10,236 $13,236 $18,786 $26,570 $38,691 $10,946 $12,303 $20,021 $27,049 $0 $15,000 $30,000 $45,000 $60,000 $75,000 $90,000 $105,000 $120,000 2011 2012 2013 2014 2015 $0.40 $0.40 $0.40 $0.40 $0.44 $0.40 $0.40 $0.40 $0.40 $0.44 $0.40 $0.40 $0.40 $0.40 $0.44 $0.40 $0.40 $0.40 $0.40 $0.00 $0.40 $0.80 $1.20 $1.60 $2.00 2011 2012 2013 2014 2015 $0.29 $0.42 $0.39 $0.37 $0.44 $0.40 $0.41 $0.31 $0.42 $0.45 $0.38 $0.44 $0.35 $0.44 $0.53 $0.39 $0.27 $0.39 $0.45 $0.00 $0.40 $0.80 $1.20 $1.60 $2.00 2011 2012 2013 2014 2015 |
![]() 5 Q3 Financial Highlights Financial Results & Earnings Per Share Operating Earnings for the quarter ended September 30, 2015 of $31.7 million, or $0.53 per diluted share of common stock, a 20.4% per share increase as compared to Operating Earnings of $20.8 million, or $0.44 per diluted share of common stock for the quarter ended September 30, 2014 (1) – Net interest income of $38.7 million – Total expenses of $6.2 million, comprised of management fees of $4.1 million, G&A of $1.3 million and equity-based compensation of $0.8 million – Net income available to common stockholders for the quarter ended September 30, 2015 of $23.5 million, or $0.39 per diluted share of common stock Dividends Declared a dividend of $0.44 per share of common stock for the quarter ended September 30, 2015 10.4% annualized dividend yield based on $16.87 closing price on October 28, 2015 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, 2015 Book Value GAAP book value of $16.35 per share as of September 30, 2015 (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 available to common stockholders, 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), (ii) any unrealized gains or losses or other non-cash items included in net income available to common stockholders, (iii) unrealized income from unconsolidated joint ventures, (iv) foreign currency gains/losses, and (v) the non-cash amortization expense related to the reclassification of a portion of the convertible senior notes to stockholders’ equity in accordance with GAAP. Please see slide 18 for a reconciliation of Operating Earnings and Operating Earnings per Share to GAAP Net Income and GAAP Net Income per share. |
![]() Q3 – New Investments and Funding 6 Summary of New Investments (1) Based upon committed amount of loan. (2) The Internal Rate of Return (“IRR”) for the investments shown in this presentation reflect the returns underwritten by ACREFI Management, LLC, the Company’s external manager (the “Manager”), taking into account leverage and 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 remains constant over the remaining term. 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 presentvalue 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 above. 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, 2014 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. Quarter Ended 9/30/2015 9-Months Ended 9/30/2015 Number of Loans Closed 5 17 Commitments to New Loans ($ in thousands) $331,480 $1,052,548 Funding of New Loans ($ in thousands) $269,369 $781,510 Fixed Rate %/Floating Rate % (1) 0%/100% 4%/96% First Mortgage %/Subordinate Loan % (1) 45%/55% 35%/65% Weighted Average Loan-to-Value 57% 57% Weighted Average Levered IRR (2) 14% 15% Funding of Previously Closed Loans ($ in thousands) $155,527 $199,143 |
![]() 7 Commercial Real Estate Debt Portfolio Overview (1) CMBS includes $30.1 million of restricted cash related to the Company’s master repurchase agreement with UBS AG (the “UBS Facility”). (2) Remaining Weighted Average Life assumes all extension options are exercised. (3) The underwritten IRR for the investments shown in this table reflect the returns underwritten by the Manager, taking into account leverage and 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 remains constant over the remaining term. With respect to certain loans, the underwritten 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, 2014 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. (4) 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 under the JPMorgan Facility or any replacement facility with similar terms with regard to its portfolio of first mortgage loans. Without such re-borrowing, the levered weighted average underwritten IRR will be lower than the amount shown above, as indicated in the current weighted average underwritten IRR column. (5) Subordinate loans include CMBS, held-to-maturity, which represents a loan the Company closed during May 2014 that was subsequently contributed to a securitization during August 2014. During May 2014, the Company closed a $155,000 floating-rate whole loan secured by the first mortgage and equity interests in an entity that owns a resort hotel in Aruba. During June 2014, the Company syndicated a $90,000 senior participation in the loan and retained a $65,000 junior participation. During August 2014, both the $90,000 senior participation and the Company's $65,000 junior participation were contributed to a CMBS securitization. In exchange for contributing its $65,000 junior participation, the Company received a CMBS secured solely by the $65,000 junior participation. ARI presents the participation sold as both assets and non-recourse liabilities because the participation does not qualify as a sale according to GAAP. At September 30, 2015, ARI had one such participation sold with a carrying amount of $89,303. (6) Subordinate loans also are net of a participation sold during February 2015. The Company presents the participations sold as both assets and non-recourse liabilities because the participation does not qualify as a sale according to GAAP. At September 30, 2015, the Company had one such participation sold with a face amount of £19,900 and a carrying amount of $30,104 Asset Type ($000s) Amortized Cost Borrowings Equity at Cost (1) Remaining Weighted Average Life (years) (2) Current Weighted Average Underwritten IRR (3) Fully-Levered Weighted Average Underwritten IRR (3)(4) First Mortgage Loans $ 905,681 $ 301,533 $ 604,148 3.1 12.1% 14.7% Subordinate Loans (5)(6) 926,304 - 896,200 4.3 13.2 13.2 CMBS 512,107 433,904 108,330 1.7 16.2 16.2 Investments at September 30, 2015 $ 2,344,092 $ 735,437 $ 1,608,678 3.3 Years 13.0% 13.9% |
![]() Commercial Real Estate Debt Portfolio Overview 8 Net Invested Equity at Amortized Cost Basis (1) Geographic Diversification by Net Equity Property Type by Net Equity (1) Subordinate loans include CMBS, held-to-maturity and are net of participations sold of $ 119,407. ARI presents the participations sold as both assets and non-recourse liabilities because the participation does not qualify as a sale according to GAAP. CMBS 8% First Mortgage Loans 42% Subordinate Loans 50% Securities 7% Residential - rental 11% Industrial 5% Hotel 24% Mixed Use 1% Office 2% Healthcare 6% Ski Resort 1% Retail 11% Residential - for sale 32% New York City 32% Northeast (excluding NYC) 5% Securities 7% Southeast 7% Mid-Atlantic 11% Midwest 15% West 8% Southwest 3% International 12% |
![]() Commercial Real Estate Loan Portfolio – Maturity and Type 9 Fully Extended Loan Maturities and Future Fundings (1)(2)(3)(4) (1) Based upon face amount of loans; Does not include CMBS, but does include CMBS, held-to-maturity. (2) Maturities reflect the fully funded amounts of the loans. (3) Subordinate loans include CMBS, held-to-maturity and are net of participations sold of $119,407. ARI presents the participations sold as both assets and non-recourse liabilities because the participation does not qualify as a sale according to GAAP. (4) Future funding dates are based upon the Manager’s projections and are subject to change. Loan Position and Rate Type (1)(3) 75% Floating Rate/25% Fixed Rate $- $154.9 $293.7 $218.6 $536.8 $785.2 $50.0 $105.1 $32.0 $- $25.0 $110.3 $187.6 $48.3 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Fully extended maturity Future funding commitment Senior Loan Fixed 8% Subordinate Loan Fixed 17% Subordinate Loan Floating 42% Senior Loan Floating 33% |
![]() Loan Portfolio – Loan Level LTV (Through Last Invested Dollar) 10 (1) This first mortgage loan is for the same property as the $2.5 million NYC hotel mezzanine loan listed on page 11. (2) LTV is based upon the fully committed loan amount of $65.1 million. (3) This first mortgage loan is for the same property as the $11.4 million NYC condo conversion mezzanine loan listed on page 11. (4) This first mortgage loan is for the same property as the $12.3 million NYC retail mezzanine loan listed on page 11. First Mortgage Loans Description ($ in thousands) Location Balance at 9/30/2015 Starting LTV Ending LTV First Mortgage - Retail Ohio 128,700 $ 0% 55% First Mortgage - Hotel (1) New York 97,807 $ 0% 47% First Mortgage - Destination homes Various 95,984 $ 0% 49% First Mortgage - Retail New York 85,770 $ 0% 57% First Mortgage - Condo development Maryland 80,000 $ 0% 65% First Mortgage - Pre-development loan New York 67,300 $ 0% 58% First Mortgage - Multifamily North Dakota 55,140 $ 0% 69% First Mortgage - Destination homes New York/Hawaii 50,000 $ 0% 75% First Mortgage - Hotel portfolio Various 45,400 $ 0% 63% First Mortgage - Pre-development loan Florida 45,000 $ 0% 75% First Mortgage - Multifamily New York 34,500 $ 0% 72% First Mortgage - Hotel Pennsylvania 34,000 $ 0% 65% First Mortgage - Condo development (2) Maryland 33,000 $ 0% 66% First Mortgage - Pre-development loan Florida 33,000 $ 0% 73% First Mortgage - Condo conversion (3) New York 24,131 $ 0% 34% First Mortgage - Retail (4) New York 1,653 $ 0% 34% Total/Weighted Average 911,385 $ 60% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% |
![]() 11 Loan Portfolio – Loan Level LTV (Through Last Invested Dollar) Subordinate Financings 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Description ($ in thousands) Location Balance at 9/30/2015 Starting LTV Ending LTV Subordinate - Condo development (1) New York 84,396 $ 32% 48% Subordinate - Condo development (2) New York 75,473 $ 50% 60% Subordinate - Hotels Various 75,000 $ 64% 70% Subordinate - Condo development (3) New York 73,072 $ 22% 42% Subordinate - Resort Hotel (4) Aruba 64,581 $ 34% 59% Subordinate - Pre-development loan (5) London 52,024 $ 45% 81% Subordinate - Healthcare portfolio (6) UK 51,958 $ 51% 69% Subordinate - Condo conversion New York 50,764 $ 39% 48% Subordinate - Healthcare portfolio Various 45,588 $ 56% 61% Subordinate - Industrial portfolio New York 45,000 $ 61% 79% Subordinate - Condo development (2) New York 30,000 $ 60% 63% Subordinate - Industrial portfolio Various 32,000 $ 64% 72% Subordinate - Hotel Arizona 25,000 $ 46% 58% Subordinate - Hotel portfolio Minnesota 24,261 $ 56% 67% Subordinate - Multifamily (7) Florida 22,000 $ 66% 80% Subordinate - Hotel Washington D.C. 20,000 $ 61% 69% Subordinate - Hotel California 20,000 $ 58% 74% Subordinate - Multifamily/Condo/Hotel Various 19,500 $ 79% 90% Preferred Equity - Multifamily (7) Florida 15,500 $ 80% 89% Subordinate - Ski resort Montana 15,000 $ 43% 56% Subordinate - Office New York 14,000 $ 61% 70% Subordinate - Retail (8) New York 12,347 $ 34% 73% Subordinate - Condo conversion (9) New York 11,437 $ 34% 50% Subordinate - Office Missouri 9,604 $ 59% 69% Subordinate - Office Michigan 8,769 $ 40% 52% Subordinate - Mixed-use North Carolina 6,525 $ 62% 74% Subordinate - Hotel (10) New York 2,562 $ 47% 52% Total/Weighted Average 906,361 $ 63% (1) LTV is based upon the fully funded loan amount of $60 million plus PIK interest. (2) LTV is based upon the fully committed loan amount of $105 million; Both loans are secured by the same property. The $30 million loan is structured as a corporate loan and has additional collateral. (3) LTV is based upon the fully funded loan amount of $275 million. (4) This is CMBS, held-to-maturity and is net of a participation sold. ARI presents the participation sold as both assets and non-recourse liabilities because the participation does not qualify as a sale according to GAAP. At September 30, 2015, this participation sold had a carrying amount of $89,303. (5) Based upon £31.2 face amount plus PIK converted to USD based upon the conversion rate on September 30, 2015. (6) Based upon £34.4 face amount converted to USD based upon the conversion rate on September 30, 2015, net of participation sold of $30,104. (7) Mezzanine loan and preferred equity are secured by the same portfolio of properties. (8) Loan is for the same property as the $1.6 million NYC retail first mortgage loan listed on page 10. (9) Loan is for the same property as the $24.1 million NYC condo conversion first mortgage loan listed on page 10. LTV for the mezzanine loan is based upon the fully committed amount of $29.4 million plus PIK interest. (10) Loan is for the same property as the $97.8 million NYC hotel first mortgage loan listed on page 10. |
![]() 12 CMBS Portfolio (1) Face Amortized Cost Remaining Weighted Average Life with Extensions (years) Estimated Fair Value Debt Net Equity at Cost (2) CMBS – Total $ 520,883 $ 512,107 1.7 Years $ 512,485 $ 433,904 $ 108,330 CUSIP Description 92978PAJ8 WBCMT 2006-C29 AJ 07388QAH2 BSCMS 2007-PW17 AJ 07401DAH4 BSCMS 2007PW18 AJ 46625YVZ3 JPMCC 2005-CB13 AJ 50180CAG5 LBUBS 2006-C7 AJ 60688CAJ5 MLCFC 2007-9 AJ 05947US25 BACM 2005-3 AJ 61756UAJ0 MSC 2007-1Q16 AJ 46629YAH2 JPMCC 2007-CB18AJ 173311QAE0 CGCMT 2007-C6 AJFX CUSIP Description 59025KAG7 MLMT 2007-C1 AM 22546BAH3 CSMC 2007-C5 AM 36159XAH3 GECMC 2007-C1 AM 46627QBC1 JMPCC 2006-CB15 AM 46631BAJ4 JPMCC 2007-LD11 AM 14986DAJ9 CD 2006-CD3 AJ 17311QBN9 CGCMT 2007-C6 AJ 17313KAK7 CGCMT 2008-C7 AJ 20047QAH8 COMM 2006-C7 AJ 61755YAK0 MSC 2007-IQ15 AJ (1) Does not include CMBS, held-to-maturity. (2) Includes $30.1 million of restricted cash related to the UBS Facility |
![]() Portfolio Metrics – Quarterly Migration Summary 13 (1) Subordinate loans include CMBS, held-to-maturity and are net of participations sold of $119,407. ARI presents the participations sold as both assets and non-recourse liabilities because the participation does not qualify as a sale according to GAAP. (2) The underwritten IRR for the investments shown in this presentation reflect the returns underwritten by the Manager, taking into account leverage and 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 remains constant over the remaining term. With respect to certain loans, the underwritten 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. Therecan 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, 2014 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 (3) Does not include CMBS. (4) Includes $30.1 million of restricted cash related to the UBS Facility. (5) Represents an underwritten levered weighted average IRR. The Company's ability to achieve the underwritten levered weighted average IRR additionally depends upon the Company re-borrowing under the JPMorgan Facility or any replacement facility with similar terms with regard to its portfolio of first mortgage loans. Without such re-borrowing, the levered weighted average underwritten IRR will be lower than the amount shown above, as indicated in the current weighted average underwritten IRR column on slide 7. (6) Net of participations sold. Portfolio Metrics ($ in thousands) Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 (Investment balances represent amortized cost) First Mortgage Loans 905,681 $ 704,040 $ 563,390 $ 458,520 $ 369,924 $ Subordinate Loans (1) 926,304 894,926 736,838 625,881 650,084 CMBS 512,107 511,412 510,740 534,222 511,445 Total Investments 2,344,092 $ 2,110,378 $ 1,810,968 $ 1,618,623 $ 1,531,453 $ (Investment balances represent net equity, at cost) First Mortgage Loans 604,148 $ 275,205 $ 421,862 $ 290,396 $ 247,202 $ Subordinate Loans (1) 896,200 847,968 707,201 625,881 650,084 CMBS 108,330 (4) 107,635 (4) 106,963 (4) 110,279 (4) 99,988 (4) Net Equity in Investments at Cost 1,608,678 $ 1,230,808 $ 1,236,026 $ 1,026,556 $ 997,274 $ Levered Weighted Average Underwritten IRR (2) 13.9% (5) 14.6% (5) 14.2% (5) 13.4% (5) 13.7% (5) Weighted Average Duration 3.3 Years 3.1 Years 3.0 Years 3.2 Years 3.0 Years Loan Portfolio Weighted Average Ending LTV (3) 61.0% 62.0% 62.0% 62.0% 58.0% Borrowings Under Repurchase Agreements 735,437 $ 878,352 $ 575,433 $ 622,194 $ 537,766 $ Convertible Senior Notes 247,736 $ 247,305 $ 246,881 $ 246,464 $ 246,054 $ Debt-to-Common Equity 0.9x (6) 1.2x (6) 0.9x (6) 1.2x (6) 1.1x (6) |
![]() Financing Overview and Interest Rate Sensitivity 14 Facility ($000s) Debt Balance Weighted Average Remaining Maturity (1) Weighted Average Rate UBS Facility $ 133,899 3.0 Years 2.8% Deutsche Bank Facility 300,005 2.5 Years 3.7 JPMorgan Facility 253,481 2.3 Years 2.5 Goldman Sachs Loan 48,052 3.6 Years 3.7 Total Borrowings at September 30, 2015 $ 735,437 2.5 Years 3.0% Variable Rate Investments & Liabilities Variable Rate Liabilities ARI anticipates a 0.5% increase in LIBOR results in approximately a $0.08 per diluted share of common stock increase in Operating Earnings annually (2) (1) Assumes extension options on the UBS Facility are exercised. (2) Based upon the Company’s portfolio as of September 30, 2015, any such hypothetical impact on interest rates on the Company’s variable rate borrowings does not consider the effect of any change in overall economic activity that could occur in a rising interest rate environment. Further, in the event of a change in interest rates of that magnitude, the Company may take actions to further mitigate the Company’s exposure to such a change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, this analysis assumes no changes in the Company’s financial structure. $1,480,206 $(346,956) $1,133,250 Variable Rate Assets Net Equity |
![]() 15 Financials |
![]() 16 Consolidated Balance Sheets (in thousands—except share and per share data) September 30, 2015 December 31, 2014 Assets: (Unaudited) Cash 20,158 $ 40,641 $ Restricted cash 30,127 30,127 Securities available-for-sale, at estimated fair value - 17,105 Securities, at estimated fair value 512,485 522,730 Securities, held-to-maturity 153,799 154,283 Commercial mortgage loans, held for investment 905,681 458,520 Subordinate loans, held for investment 861,808 561,182 Investment in unconsolidated joint venture 20,183 37,016 Derivative assets 246 4,070 Interest receivable 14,424 10,829 Deferred financing costs, net 8,125 7,444 Other assets 767 1,200 Total Assets 2,527,803 $ 1,845,147 $ Liabilities and Stockholders' Equity Liabilities: Borrowings under repurchase agreements 735,437 $ 622,194 $ Convertible senior notes, net 247,736 246,464 Participations sold 119,407 89,584 Accounts payable and accrued expenses 4,668 7,578 Payable to related party 4,100 3,240 Dividends payable 32,060 21,018 Total Liabilities 1,143,408 990,078 Stockholders' Equity: Preferred stock, $0.01 par value, 50,000,000 shares authorized: Series A Preferred stock, 3,450,000 shares issued and outstanding ($86,250 aggregate liquidation preference) in 2015 and 2014 35 35 Series B Preferred stock, 8,000,000 shares issued and outstanding ($200,000 aggregate liquidation preference) in 2015 80 - Common stock, $0.01 par value, 450,000,000 shares authorized 67,145,252 and 46,900,442 shares issued and outstanding in 2015 and 2014, respectively 671 469 Additional paid-in-capital 1,408,448 868,035 Retained earnings (accumulated deficit) (22,225) (10,485) Accumulated other comprehensive loss (2,614) (2,985) Total Stockholders' Equity 1,384,395 855,069 Total Liabilities and Stockholders' Equity 2,527,803 $ 1,845,147 $ |
![]() 17 Consolidated Statements of Operations September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 Net interest income: Interest income from securities 8,293 $ 6,129 $ 24,846 $ 12,914 $ Interest income from securities, held to maturity 2,956 2,219 9,050 2,219 Interest income from commercial mortgage loans 15,184 8,025 37,246 18,475 Interest income from subordinate loans 25,445 18,983 65,206 51,951 Interest expense (13,187) (8,786) (36,287) (15,802) Net interest income 38,691 26,570 100,061 69,757 Operating expenses: General and administrative expenses (includes $756 and $2,695 of equity-based compensation in 2015 and $308 and $1,096 in 2014, respectively) (2,099) (1,434) (6,512) (4,355) Management fees to related party (4,097) (3,193) (11,325) (8,725) Total operating expenses (6,196) (4,627) (17,837) (13,080) Income from unconsolidated joint venture 108 (88) 495 (88) Interest income from cash balances 239 21 252 26 Realized loss on sale of securities - - (443) - Unrealized gain on securities (6,926) (2,147) (5,792) 4,787 Foreign currency gain (2,165) (3,596) 3,424 (2,637) Loss on derivative instruments 2,096 3,026 (4,144) 1,933 Net income 25,847 $ 19,159 $ 76,016 $ 60,698 $ Preferred dividends (2,304) (1,860) (6,023) (5,580) Net income available to common stockholders 23,543 $ 17,299 $ 69,993 $ 55,118 $ Basic and diluted net income per share of common stock 0.39 $ 0.37 $ 1.24 $ 1.30 $ Basic weighted average shares of common stock outstanding 59,355,613 46,848,675 55,818,731 42,332,380 Diluted weighted average shares of common stock outstanding 59,934,008 47,068,929 56,415,082 42,538,744 Dividend declared per share of common stock 0.44 $ 0.40 $ 1.32 $ 1.20 $ Three months ended Nine months ended |
![]() 18 Reconciliation of Operating Earnings to Net Income September 30, 2015 Earnings Per Share (Diluted) September 30, 2014 Earnings Per Share (Diluted) Operating Earnings: Net income available to common stockholders 23,543 $ 0.39 $ $17,299 0.37 $ Adjustments: Equity-based compensation expense 756 0.01 308 0.01 Unrealized loss on securities 6,926 0.12 2,147 0.04 Unrealized (gain) on derivative instruments (2,096) (0.04) (3,026) (0.07) Foreign currency loss 2,165 0.04 3,596 0.08 Amortization of convertible senior notes related to equity reclassification 556 0.01 356 0.01 Income from unconsolidated joint venture (108) - 88 - Total adjustments: 8,199 0.14 3,469 0.07 Operating Earnings 31,742 $ 0.53 $ 20,768 $ 0.44 $ Basic weighted average shares of common stock outstanding 59,355,613 46,848,675 Diluted weighted average shares of common stock outstanding 59,934,008 47,068,929 Three Months Ended September 30, 2015 Earnings Per Share (Diluted) September 30, 2014 Earnings Per Share (Diluted) Operating Earnings: Net income available to common stockholders 69,993 $ 1.24 $ 55,118 $ 1.30 $ Adjustments: Equity-based compensation expense 2,695 0.05 1,096 0.03 Unrealized (gain)/loss on securities 5,792 0.10 (4,787) (0.11) Unrealized (gain)/loss on derivative instruments 4,144 0.07 (1,933) (0.05) Foreign currency (gain)/loss (3,424) (0.06) 2,637 0.06 Amortization of convertible senior notes related to equity reclassification 1,642 0.03 586 0.01 Income from unconsolidated joint venture (495) (0.01) 88 - Total adjustments: 10,354 0.18 (2,313) (0.06) Operating Earnings 80,347 $ 1.42 $ 52,805 $ 1.24 $ Basic weighted average shares of common stock outstanding 55,818,731 42,322,380 Diluted weighted average shares of common stock outstanding 56,415,082 42,538,744 Nine Months Ended |
![]() 19 Financial Metrics – Quarterly Migration Summary Financial Metrics ($ in thousands, except per share data) Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Net Interest Income 38,691 $ 32,817 $ 28,554 $ 27,049 $ 26,570 $ Management Fee 4,097 3,887 3,341 3,236 3,193 General and Administrative Costs 1,343 1,238 1,238 1,315 1,126 Non-Cash Stock Based Compensation 756 821 1,117 481 308 Net Income Available to Common Stockholders 23,543 $ 22,798 $ 23,653 $ 20,182 $ 17,299 $ GAAP Diluted EPS 0.39 $ 0.39 $ 0.47 $ 0.43 $ 0.37 $ Operating Earnings (1) 31,742 $ 26,385 $ 22,222 $ 21,179 $ 20,768 $ Operating Diluted EPS (1) 0.53 $ 0.45 $ 0.44 $ 0.45 $ 0.44 $ Distributions Declared to Common Stockholders 0.44 $ 0.44 $ 0.44 $ 0.40 $ 0.40 $ GAAP Book Value per Share of Common Stock 16.35 $ 16.41 $ 16.44 $ 16.39 $ 16.42 $ Total Stockholders' Equity 1,384,395 $ 1,044,844 $ 1,046,482 $ 855,069 $ 855,686 $ Diluted weighted average shares of common stock outstanding 59,934,008 59,022,217 50,171,687 47,085,617 47,068,929 Return on Common Equity Based on Operating Earnings (2) 12.8% 11.0% 10.9% 11.0% 10.8% (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 available to common stockholders, 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), (ii) any unrealized gains or losses or other non-cash items included in net income available to common stockholders, (iii) unrealized income from unconsolidated joint ventures, (iv) foreign currency gains/losses, and (v) the non-cash amortization expense related to the reclassification of a portion of the convertible senior notes to stockholders’ equity in accordance with GAAP. Please see slide 18 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. |