APOLLO COMMERCIAL REAL ESTATE FINANCE, INC. FORWARD-LOOKING INFORMATION We make forward-looking statements herein and will make forward-looking statements in future filings with theSEC , press releases or other written or oral communications within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For these statements, we claim the protections of the safe harbor for forward-looking statements contained in such Sections. 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, it intends to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: the macro- and micro-economic impact of the COVID-19 pandemic; the severity and duration of the COVID-19 pandemic; actions taken by governmental authorities to contain the COVID-19 pandemic or treat its impact; the efficacy of the vaccines or other remedies and the speed of their distribution and administration; the impact of the COVID-19 pandemic on our financial condition, results of operations, liquidity and capital resources; market trends in our industry, interest rates, real estate values, the debt securities markets or the general economy; the demand for commercial real estate loans; our business and investment strategy; our operating results; actions and initiatives of theU.S. government and governments outside ofthe United States , changes to government policies and the execution and impact of these actions, initiatives and policies; the state of the economy generally or in specific geographic regions; economic trends and economic recoveries; our ability to obtain and maintain financing arrangements, including secured debt arrangements and securitizations; the timing and amount of expected future fundings of unfunded commitments; the availability of debt financing from traditional lenders; the volume of short-term loan extensions; the demand for new capital to replace maturing loans; expected leverage; general volatility of the securities markets in which we participate; changes in the value of our assets; the scope of our target assets; interest rate mismatches between our target assets and any borrowings used to fund such assets; changes in interest rates and the market value of our target assets; changes in prepayment rates on our target assets; effects of hedging instruments on our target assets; rates of default or decreased recovery rates on our target assets; the degree to which hedging strategies may or may not protect us from interest rate volatility; impact of and changes in governmental regulations, tax law and rates, accounting, legal or regulatory issues or guidance and similar matters; our continued maintenance of our qualification as a REIT forU.S. federal income tax purposes; our continued exclusion from registration under the Investment Company Act of 1940, as amended (the "1940 Act"); the availability of opportunities to acquire commercial mortgage-related, real estate-related and other securities; the availability of qualified personnel; estimates relating to our ability to make distributions to our stockholders in the future; our present and potential future competition; and unexpected costs or unexpected liabilities, including those related to litigation. 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. See "Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q and our Annual Report. These and other risks, uncertainties and factors, including those described in the annual, quarterly and current reports that we file with theSEC , could cause our actual results to differ materially from those included in any forward-looking statements we make. All forward-looking statements speak only as of the date they are made. New risks and uncertainties arise over time and it is not possible 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. Overview We are aMaryland corporation and have elected to be taxed as a REIT forU.S. federal income tax purposes. We primarily originate, acquire, invest in and manage performing commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments. These asset classes are referred to as our target assets. We are externally managed and advised by the Manager, an indirect subsidiary of Apollo, a leading global alternative investment manager with a contrarian and value-oriented investment approach in private equity, credit and real estate with assets under management of approximately$455.5 billion as ofDecember 31, 2020 . The Manager is led by an experienced team of senior real estate professionalswho have significant expertise in underwriting and structuring commercial real estate financing transactions. We benefit from Apollo's global infrastructure and operating platform, through which we are able to source, evaluate and manage potential investments in our target assets. Current Market Conditions 31 -------------------------------------------------------------------------------- During the first quarter of 2020, there was a global outbreak of COVID-19, which was declared by theWorld Health Organization as a pandemic. In response to COVID-19,the United States and numerous other countries declared national emergencies, which has led to large scale quarantines as well as restrictions to business deemed non-essential. These responses to COVID-19 have disrupted economic activities and could have a significant continued adverse effect on economic and market conditions, and could result in a recession. As we are still in the midst of the COVID-19 pandemic we are not in a position to estimate the ultimate impact this will have on our business and the economy as a whole. The effects of COVID-19 have adversely impacted the value of our assets, business, financial condition, results of operations and cash flows, and our ability to operate successfully. Some of the factors that impacted us to date and may continue to affect us are outlined in "Item 1A. Risk Factors" of our Annual Report on Form 10-K. Please see "Liquidity and Capital Resources" below for additional discussion surrounding the ongoing impact we expect COVID-19 will have on our liquidity and capital resources. Critical Accounting Policies A summary of our critical accounting policies is set forth in our Annual Report under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Use of Estimates." Results of Operations All non-USD denominated assets and liabilities are translated to USD at the exchange rate prevailing at the reporting date and income, expenses, gains, and losses are translated at the prevailing exchange rate on the dates that they were recorded. Loan Portfolio Overview The following table sets forth certain information regarding our commercial real estate debt portfolio as ofMarch 31, 2021 ($ in thousands): Amortized
Weighted-Average Coupon Weighted Average Secured Debt
Equity at
Description Cost (1) All-in Yield Arrangements (3) Cost of Funds cost(4)
(1)(2)
Commercial mortgage loans, net $ 5,754,258 4.6 % 5.0 % $ 3,430,379 2.1 % $ 2,323,879
Subordinate loans and other 1,065,816 10.9 % 12.1 % - - 1,065,816
lending assets, net
Total/Weighted-Average $ 6,820,074 5.6 % 6.2 % $ 3,430,379 2.1 % $ 3,389,695
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(1) Weighted-Average Coupon and Weighted-Average All-in Yield are based on the
applicable benchmark rates as of March 31, 2021 on the floating rate loans.
(2) Weighted-Average All-in Yield includes the amortization of deferred
origination fees, loan origination costs and accrual of both extension and exit
fees. Weighted-Average All-in Yield excludes the benefit of forward points on
currency hedges relating to loans denominated in currencies other than USD.
(3) Gross of deferred financing costs of $11.8 million .
(4) Represents loan portfolio at amortized cost less secured debt outstanding.
The following table provides details of our commercial mortgage loan portfolio
and subordinate loan and other lending assets portfolio, on a loan-by-loan
basis, as of March 31, 2021 ($ in millions):
Commercial Mortgage Loan Portfolio
Construction
# Property Type Risk Rating Origination Date Amortized Cost Unfunded Commitment Loan Fully-extended Maturity Location
1 Urban Retail 3 12/2019 $352 $- 12/2023 London, UK
2 Urban Retail 3 08/2019 317 - 09/2024 Manhattan, NY
3 Hotel 3 10/2019 267 46 08/2024 Various
4 Office 3 02/2020 231 - 02/2025 London, UK
5 Healthcare 3 10/2019 228 31 10/2024 Various
6 Caravan Parks 3 02/2021 225 - 02/2028 Various, UK
7 Office 3 06/2019 207 26 11/2026 Berlin, Germany
8 Office 3 10/2018 198 2 01/2022 Manhattan, NY
9 Office 3 01/2020 198 90 02/2025 Long Island City, NY
10 Industrial 3 01/2019 197 7 02/2024 Brooklyn, NY
11 Office 3 09/2019 192 - 09/2023 London, UK
12 Industrial 3 03/2021 185 111 05/2026 Various
13 Hotel 3 04/2018 152 - 04/2023 Honolulu, HI
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14 Multifamily Development(1) 5 03/2017 152 - 12/2021 Brooklyn, NY
15 Hotel 3 09/2015 145 - 06/2024 Manhattan, NY
16 Office 3 10/2018 145 42 Y 10/2023 Manhattan, NY
17 Office 3 11/2017 144 - 01/2023 Chicago, IL
18 Hotel 3 08/2019 140 - 08/2024 Puglia, Italy
19 Office(2) 3 12/2017 121 - 07/2022 London, UK
20 Urban Retail(1) 5 01/2016 118 - 09/2021 Miami, FL
21 Office 3 04/2019 117 42 Y 09/2025 Culver City, CA
22 Hotel 3 05/2018 115 - 06/2023 Miami, FL
23 Retail center(1) 5 11/2014 106 - 09/2021 Cincinnati, OH
24 Hotel 3 03/2017 105 - 03/2022 Atlanta, GA
25 Hotel 3 11/2018 100 - 12/2023 Vail, CO
26 Residential-for-sale: inventory 3 12/2019 97 3 01/2023 Boston, MA
27 Office 3 03/2018 92 - 04/2023 Chicago, IL
28 Hotel 3 12/2017 82 - 12/2023 Manhattan, NY
29 Mixed Use 3 12/2019 80 1 12/2024 London, UK
30 Residential-for-sale: construction 3 12/2018 79 23 Y 01/2024 Hallandale Beach, FL
31 Residential-for-sale: construction 3 12/2018 71 107 Y 12/2023 Manhattan, NY
32 Residential-for-sale: inventory 3 01/2018 68 6 01/2023 Manhattan, NY
33 Hotel 3 08/2019 67 - 09/2022 Manhattan, NY
34 Residential-for-sale: construction 3 10/2015 66 - Y 08/2021 Manhattan, NY
35 Hotel 3 04/2018 64 - 05/2023 Scottsdale, AZ
36 Multifamily 3 04/2014 63 - 07/2023 Various
37 Hotel 3 09/2019 61 - 10/2024 Miami, FL
38 Hotel 3 12/2019 60 - 01/2025 Tucson, AZ
39 Multifamily 3 11/2014 54 - 11/2021 Various
40 Urban Predevelopment 3 12/2016 52 - 06/2022 Los Angeles, CA
41 Hotel 3 05/2019 52 - 06/2024 Chicago, IL
42 Multifamily 3 02/2020 50 1 03/2024 Cleveland, OH
43 Hotel 3 12/2015 42 - 08/2024 St. Thomas, USVI
44 Office 3 12/2019 37 2 12/2022 Edinburgh, Scotland
45 Mixed Use 3 12/2019 25 829 Y 06/2025 London, UK
46 Hotel 3 02/2018 22 5 11/2024 Pittsburgh, PA
47 Residential-for-sale: inventory 3 05/2018 18 - 05/2021 Manhattan, NY
48 Residential-for-sale: inventory 3 06/2018 13 - 07/2021 Manhattan, NY
General CECL Allowance (18)
Sub total / Weighted-Average
Commercial Mortgage Loans 3.1 $5,754 $1,374 2.9 Years
Subordinate Loan and Other Lending Assets Portfolio
# Property Type Risk Rating
Origination Date Amortized Cost Unfunded Commitment Construction Loan Fully-extended Maturity
Location
1 Residential-for-sale: construction(3) 3 06/2015 $226 - Y 06/2021 Manhattan, NY
2 Residential-for-sale: construction(3) 3 11/2017 153 - Y 06/2021 Manhattan, NY
3 Residential-for-sale: inventory(4) 3 12/2017 115 7 06/2022 Manhattan, NY
4 Office 3 01/2019 100 - 12/2025 Manhattan, NY
5 Residential-for-sale: construction 3 12/2017 79 4 Y 04/2023 Los Angeles, CA
6 Healthcare(5) 3 01/2019 75 - 01/2024 Various
7 Healthcare(6) 3 07/2019 51 - 06/2024 Various
8 Mixed Use 3 01/2017 42 - 02/2027 Cleveland, OH
9 Mixed Use 3 02/2019 40 - Y 12/2022 London, UK
10 Mixed Use 3 12/2018 34 17 Y 12/2023 Brooklyn, NY
11 Industrial 2 05/2013 32 - 05/2023 Various
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12 Hotel(1) 5 06/2015 28 - 12/2022 Washington, DC
13 Hotel 3 06/2015 24 - 07/2025 Phoenix, AZ
14 Hotel 3 06/2018 20 - 06/2023 Las Vegas, NV
15 Multifamily 3 05/2018 19 - 05/2028 Cleveland, OH
16 Healthcare(5)(6) 3 02/2019 17 - 01/2034 Various
17 Office 3 07/2013 14 - 07/2022 Manhattan, NY
18 Office 3 08/2017 8 - 09/2024 Troy, MI
19 Mixed Use 3 07/2012 7 - 08/2022 Chapel Hill, NC
General CECL Allowance (18)
Sub total / Weighted-Average
Subordinate Loans and Other
Lending Assets 3.0 $1,066 $28 2.1 Years
Total / Weighted-Average
Loan Portfolio 3.1 $6,820 $1,402 2.8 Years
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(1)Amortized cost for these loans is net of the recorded Specific CECL Allowance. (2)Includes$24.0 million of a subordinate participation sold accounted for as secured borrowing. (3)Both loans are secured by the same property. (4)Includes$26.7 million of a subordinate participation sold accounted for as secured borrowing. (5)Loan and Single Asset, Single Borrower CMBS are secured by the same properties. (6)Single Asset, Single Borrower CMBS.
Our average asset and debt balances for the three months ended
Average month-end balances for the three months ended
March 31, 2021
Description Assets Related debt
Commercial mortgage loans, net $ 5,815,991 $ 3,500,539
Subordinate loans and other lending assets,
net 1,083,394 -
Portfolio Management
Due to the impact of COVID-19, some of our borrowers have experienced
consequences which are preventing the execution of their business plans and in
some cases temporary closures. As a result, we have worked with borrowers to
execute loan modifications which are typically coupled with additional equity
contributions from borrowers. Loan modifications to date have included
repurposing of reserves, temporary deferrals of interest or principal, and
partial deferral of coupon interest as payment-in-kind interest.
Investment Activity
During the three months ended March 31, 2021 , we committed $527.7 million of
capital to loans ($417.2 million was funded at closing). In addition, during the
three months ended March 31, 2021 , we received $232.0 million in repayments and
funded $133.4 million for loans closed prior to 2021.
Net Income (Loss) Available to Common Stockholders
For the three months ended March 31, 2021 and 2020, our net income (loss)
available to common stockholders was $55.0 million , or $0.37 per diluted share
of common stock, and $(131.2) million , or $(0.86) per diluted share of common
stock, respectively.
Operating Results
In connection with our adoption of the amendment to Item 303 of Regulation S-K,
we are changing our basis of comparison to compare the current period to the
previous period rather than the same period in the previous year. As this is the
first filing in which this change is made, we are providing both comparisons.
The reason for this change is because we believe comparing the most recent
period allows us to provide a more meaningful discussion to changes in operating
results given our business and target assets.
The following table sets forth information regarding our condensed consolidated
results of operations and certain key operating metrics compared to both the
same period in the previous year and the most recently reported period ($ in
thousands):
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Three months ended Q1'21 vs. Three months ended Q1'21 vs.
March 31, 2021 December 31, Q4'20 March 31, 2021 March 31, Q1'20
2020 2020
Net interest income:
Interest income from $ 75,356 $ 77,116 $ (1,760) $ 75,356 $ 81,855 $ (6,499)
commercial mortgage loans
Interest income from
subordinate loans and other 31,459 22,944 8,515 31,459 34,018 (2,559)
lending assets
Interest expense (35,664) (35,364) (300) (35,664) (41,205) 5,541
Net interest income 71,151 64,696 6,455 71,151 74,668 (3,517)
Operating expenses:
General and administrative (6,940) (7,269) 329 (6,940) (6,531) (409)
expenses
Management fees to related (9,364) (9,598) 234 (9,364) (10,268) 904 party Total operating expenses (16,304) (16,867) 563 (16,304) (16,799) 495 Other income 92 125 (33) 92 760 (668) Realized loss on investments - (30,190) 30,190 - - - Realized losses and impairments on real estate (550) - (550) (550) - (550) owned Reversal of (provision for) loan losses - Specific CECL - 24,950 (24,950) - (150,000) 150,000 Allowance, net Reversal of (provision for) loan losses - General CECL 1,238 1,404 (166) 1,238 (33,465) 34,703 Allowance, net Gain (loss) on foreign currency forward contracts 9,800 (42,702) 52,502 9,800 70,491 (60,691) Foreign currency translation (7,449) 35,304 (42,753) (7,449) (37,949) 30,500 (gain) loss Gain (loss) on interest rate 357 (40) 397 357 (35,548) 35,905 hedging instruments Net income (loss)$58,335 $36,680 $21,655 $58,335 $(127,842) $186,177 Net Interest Income Net interest income increased by$6.5 million during the three months endedMarch 31, 2021 compared to the three months endedDecember 31, 2020 . This increase was primarily due to interest income on$417.2 million in originations and$133.4 million of add on fundings during the three months endedMarch 31, 2021 and was partially offset by$174.8 million of full repayments and$57.2 million of partial repayments during the three months endedMarch 31, 2021 and a$0.3 million increase in interest expense as a result of a$36.5 million increase in our average debt balance during the three months endedMarch 31, 2021 . We recognized PIK interest of$16.8 million , and$10.3 million for the three months endedMarch 31, 2021 andDecember 31, 2020 , respectively. We did not recognize any pre-payment penalties and accelerated fees for the three months endedMarch 31, 2021 andDecember 31, 2020 . Net interest income decreased$3.5 million during the three months endedMarch 31, 2021 compared to the three months endedMarch 31, 2020 . This decrease was primarily due to (i) three loans being placed on non-accrual at the end of the first quarter in 2020 and (ii) 1.29% decrease in the average one-month LIBOR for the three months endedMarch 31, 2021 compared to the three months endedMarch 31, 2020 . This decrease was partially offset by a$121.3 million decrease in outstanding secured debt arrangements as ofMarch 31, 2021 compared toMarch 31, 2020 . We recognized PIK interest of$16.8 million and$12.4 million for the three months endedMarch 31, 2021 and 2020, respectively. 35 -------------------------------------------------------------------------------- We did not recognize pre-payment penalties and accelerated fees for the three months endedMarch 31, 2021 . We recognized$0.2 million in pre-payment penalties and accelerated fees for the three months endedMarch 31, 2020 . Operating Expenses General and administrative expenses General and administrative expenses decreased by$0.3 million for the three months endedMarch 31, 2021 compared to the three months endedDecember 31, 2020 . The decrease was primarily driven by a$0.6 million decrease in general and administrative expenses offset by a$0.3 million increase in non-cash restricted stock and RSU amortization related to shares of stock awarded under the LTIPs. General and administrative expenses increased by$0.4 million for the three months endedMarch 31, 2021 compared to the three months endedMarch 31, 2020 . The increase was primarily driven by a$0.3 million increase in general and administrative expenses and a$0.1 million increase in non-cash restricted stock and RSU amortization related to shares of stock awarded under the LTIPs. Management fees to related party Management fee expense decreased by$0.2 million during the three months endedMarch 31, 2021 as compared to the three months endedDecember 31, 2020 . The decrease is primarily attributable to the time weighted impact of a decrease in our stockholders' equity (as defined in the Management Agreement) as a result of our common stock repurchase of 3,998,037 shares during the fourth quarter of 2020. Management fee expense decreased by$0.9 million during the three months endedMarch 31, 2021 compared to the three months endedMarch 31, 2020 . The decrease is primarily attributable to a decrease in our stockholders' equity (as defined in the Management Agreement) as a result of our common stock repurchase of 14,532,632 shares betweenApril 2020 andDecember 2020 . Realized loss on investment The loss for the three months endedDecember 31, 2020 is attributable to a$15.0 million realized loss in connection with a troubled debt restructuring,$11.0 million realized loss related to a loan recapitalization,$2.7 million realized loss as a result of a loan sale and$2.4 million realized loss from a foreclosure. There was no realized loss on investment during the three months endedMarch 31, 2021 and 2020. Impairment and realized losses on real estate owned During the first quarter of 2021, the real estate owned asset was reviewed for possible impairment due to a change in expected time to sell the asset. A$0.6 million impairment was recorded during the three months endedMarch 31, 2021 . Refer to "Note 5 - Real Estate Owned and Related Debt, Held for Sale" for more information related to our impairment and realized losses on real estate owned. There was no impairment or realized loss on real estate owned during the three months endedDecember 31, 2020 and there was no real estate owned on our condensed consolidated balance sheet as ofMarch 31, 2020 . Reversal of (provision for) loan losses - General CECL Allowance, net During the three months endedMarch 31, 2021 , our General CECL Allowance decreased by$1.2 million . The decrease is primarily related to the seasoning of our loan portfolio and acceleration of expected repayments, which were partially offset by new loan originations. Our General CECL Allowance decreased$34.7 million for three months endedMarch 31, 2021 compared to the three months endedMarch 31, 2020 . This decrease was largely due to improvement of economic conditions and seasoning of our loan portfolio. Refer to "Note 2 - Summary of Significant Accounting Policies" and "Note 4 - Commercial Mortgage, Subordinate Loans and Other Lending Assets, Net" for additional information related to our General CECL Allowance. Reversal of (provision for) loan losses - Specific CECL Allowance, net During the three months endedDecember 31, 2020 , we reversed$25.0 million of previously recorded Specific CECL Allowances and impairments by realizing those losses, which included$20.6 million on two mortgage loans,$1.4 million on one subordinate loan, and$3.0 million on an equity position held in other assets in our condensed consolidated balance sheet. Please see above for additional information related to realized loss on investments. 36 -------------------------------------------------------------------------------- During the three months endedMarch 31, 2020 , we recorded impairments on five new loans and increased the Specific CECL Allowance on two loans that previously had loan loss provisions, primarily due to the impact from COVID-19. There were no changes to the Specific CECL Allowance during the three months endedMarch 31, 2021 . Refer to "Note 4 - Commercial Mortgage, Subordinate Loans and Other Lending Assets, Net" for additional information related to our Specific CECL Allowance. Foreign currency gain (loss) and gain (loss) on derivative instruments We use forward currency contracts to economically hedge interest and principal payments due under our loans denominated in currencies other than USD. When foreign currency gain and (loss) on derivative instruments are evaluated on a combined basis, the net impact for the three months endedMarch 31, 2021 ,December 31, 2020 , andMarch 31, 2020 was$2.4 million ,$(7.4) million and$32.5 million , respectively. Gain (loss) on interest rate hedges In the second quarter of 2020, we entered into a three-year interest rate cap to cap LIBOR at 0.75%. This effectively limits the maximum all-in coupon on our 2026 Term Loan to 3.50%. During the three months endedMarch 31, 2021 andDecember 31, 2020 , the interest rate cap had an unrealized gain (loss) of$0.4 million and$(40.0) thousand , respectively. We previously used an interest rate swap to manage exposure to variable cash flows on portions of our borrowings under our 2026 Term Loan. The interest rate swap agreement allowed us to receive a variable rate cash flow based on LIBOR and pay a fixed rate cash flow. During the three months endedMarch 31, 2020 we had an unrealized loss on the interest rate swap of$35.5 million . During the second quarter of 2020, we terminated this interest rate swap. Dividends The following table details our dividend activity: Three months ended Dividends declared per share of: March 31, 2021 March 31, 2020 Common Stock$0.35 $0.40 Series B Preferred Stock 0.50 0.50 Subsequent Events Refer to "Note 19 - Subsequent Events" to the accompanying condensed consolidated financial statements for disclosure regarding significant transactions that occurred subsequent toMarch 31, 2021 . Liquidity and Capital Resources Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, make distributions to our stockholders and other general business needs. As ofMarch 31, 2021 , we had$1.4 billion of corporate debt and$3.4 billion of asset specific financings. We have no corporate debt maturities untilAugust 2022 . As ofMarch 31, 2021 , we had$294 million of cash on hand and$62.4 million of approved and undrawn capacity from our secured debt arrangements. In addition, we have a significant amount of unencumbered loan assets. In light of COVID-19 and its severe impact on the economy we have taken steps to increase our cash balances in order to maintain an adequate level of liquidity to meet future outflows. As the duration and severity of the COVID-19 pandemic, as well as the efficacy of the vaccines or other remedies and the speed of their distribution and administration, remain unknown, so does the impact it will have on our borrowers, lenders, and the economy as a whole. We will continue to closely monitor developments related to COVID-19 as it relates to our liquidity position and financial obligations. At this time we believe we have the ability to generate and obtain adequate amounts of cash to meet financial obligations. See "Contractual Obligations and Commitments" below for further detail. Debt-to-Equity Ratio The following table presents our debt-to-equity ratio: March 31, 2021 December 31, 2020 Debt to Equity Ratio (1) 1.9 1.8 ------- 37
-------------------------------------------------------------------------------- (1)Represents total debt less cash and loan proceeds held by servicer (recorded with Other Assets, see "Note 6 - Other Assets" for more information) to total stockholders' equity. Our primary sources of liquidity are as follows: Cash Generated from Operations Cash from operations is generally comprised of interest income from our investments, net of any associated financing expense, principal repayments from our investments, net of associated financing repayments, proceeds from the sale of investments, and changes in working capital balances. See "Results of Operations - Loan Portfolio Overview" above for a summary of interest rates related to our investment portfolio as ofMarch 31, 2021 . Borrowings Under Various Financing Arrangements JPMorgan Facility InNovember 2019 , through three indirect wholly-owned subsidiaries, we entered into a Sixth Amended and Restated Master Repurchase Agreement withJPMorgan Chase Bank, National Association . The JPMorgan Facility allows for$1.3 billion of maximum borrowings (with amounts borrowed in GBP and EUR converted to USD for purposes of calculating availability based on the greater of the spot rate as of the initial financing under the corresponding mortgage loan and the then-current spot rate) and matures inJune 2022 and has two one-year extensions available at our option, which are subject to certain conditions. The JPMorgan Facility enables us to elect to receive advances in USD, GBP, or EUR. Margin calls may occur any time at specified aggregate margin deficit thresholds. As ofMarch 31, 2021 , we had$1.1 billion (including £83.1 million and €60.0 million assuming conversion into USD) of borrowings outstanding under the JPMorgan Facility secured by certain of our commercial mortgage loans. DB Facility InMarch 2020 , through an indirect wholly-owned subsidiary, we entered into a Third Amended and Restated Master Repurchase Agreement with Deutsche Bank AG,Cayman Islands Branch,London Branch (the "DB Facility"). During the first quarter 2021, we amended the DB Facility to reduce the commitment from$1.0 billion to$700.0 million ($425.8 million drawn atMarch 31, 2021 ) for the sale and repurchase of eligible first mortgage loans secured by commercial or multifamily properties, located inthe United States ,United Kingdom and theEuropean Union , and enables us to elect to receive advances in USD, GBP, or EUR. The DB Facility matures inMarch 2022 , and has a one-year extension available at our option, subject to certain conditions. Margin calls may occur any time at specified aggregate margin deficit thresholds. As ofMarch 31, 2021 , we had$425.8 million of borrowings outstanding under the DB Facility secured by certain of our commercial mortgage loans. Goldman Facility InNovember 2017 , through an indirect wholly-owned subsidiary, we entered into a master repurchase and securities contract agreement withGoldman Sachs Bank USA , which provides advances up to$500.0 million and matures inNovember 2021 . In addition, the Goldman Facility contains a two-year amortization period subsequent to theNovember 2021 maturity, which allows for the refinancing or pay down of assets under the facility. Margin calls may occur any time at specified margin deficit thresholds. As ofMarch 31, 2021 , we had$322.2 million of borrowings outstanding under the Goldman Facility secured by certain of our commercial mortgage loans. CS Facility - USD InJuly 2018 , through an indirect wholly-owned subsidiary, we entered into a Master Repurchase Agreement with Credit Suisse AG, acting through itsCayman Islands Branch and Alpine Securitization Ltd , which provides for advances for the sale and repurchase of eligible commercial mortgage loans secured by real estate. The CS Facility - USD has an "evergreen" feature such that the facility continues unless terminated at any time by Credit Suisse with six months' notice. Margin calls may occur any time at specified aggregate margin deficit thresholds. As ofMarch 31, 2021 , we had$220.2 million of borrowings outstanding under the CS Facility - USD secured by certain of our commercial mortgage loans. HSBC Facility - EUR 38 -------------------------------------------------------------------------------- InJuly 2019 , through an indirect wholly-owned subsidiary, we entered into a secured debt arrangement withHSBC Bank plc , which provides for a single asset financing. The HSBC Facility - EUR was extended during the three months endedMarch 31, 2021 and matures inJuly 2022 . Margin calls may occur any time at specified aggregate margin deficit thresholds. As ofMarch 31, 2021 , we had$157.3 million (€134.1 million assuming conversion into USD) of borrowings outstanding under the HSBC Facility - EUR secured by one commercial mortgage loan. Barclays Facility - USD InMarch 2020 , through an indirect wholly-owned subsidiary, we entered into a secured debt arrangement pursuant to a Master Repurchase Agreement with Barclays Bank plc. The Barclays Facility - USD allows for$200.0 million of maximum borrowings and initially matures inMarch 2023 with extensions available at our option, subject to certain conditions. Margin calls may occur any time at specified aggregate margin deficit thresholds. As ofMarch 31, 2021 , we had$35.2 million of borrowings outstanding under the Barclays Facility - USD secured by one commercial mortgage loan. Barclays Private Securitization InJune 2020 , through a newly formed entity, we entered into a private securitization with Barclays Bank plc, of which Barclays Bank plc retained$782.0 million of senior notes. The Barclays Private Securitization finances the loans that were previously financed under the Barclays Facility - GBP/EUR. InJune 2020 , we pledged an additional commercial mortgage loan with an outstanding principal balance of £26.0 million and pledged additional collateral of a financed loan of €5.3 million as ofJune 30, 2020 . During the quarter endedMarch 31, 2021 , we pledged two additional commercial mortgage loans with outstanding principal balances of$227.4 million (£165.0 million assuming conversion into USD) and$187.4 million (kr1.6 billion assuming conversion into USD) as ofMarch 31, 2021 . The Barclays Private Securitization eliminates daily margining provisions and grants us significant discretion to modify certain terms of the underlying collateral including waiving certain loan-level covenant breaches and deferring or waiving of debt service payments for up to 18 months. The securitization includes LTV based covenants with significant headroom to previous levels included in the Barclays Facility - GBP/EUR. These deleveraging requirements are based on significant declines in the value of the collateral as determined by an annual third-party (engaged by us) appraisal process tied to the provisions of the underlying loan agreements. We believe this provides us with both cushion and predictability to avoid sudden unexpected outcomes and material repayment requirements. In addition to the pledge of the additional collateral noted above, we paid down the previous financing by €16.5 million (totaling$18.5 million in USD) and agreed to increase the financing spreads by 0.25%. The table below provides the borrowings outstanding (on an as converted basis) and weighted-average fully-extended maturities by currency for the assets financed under the Barclays Private Securitization as ofMarch 31, 2021 ($ in thousands): Borrowings outstanding Fully-Extended Maturity(1) Total/Weighted-Average GBP$879,815 July 2024 Total/Weighted-Average SEK 149,883 March 2022 Total/Weighted-Average EUR 143,600 February 2022(2) Total/Weighted-Average Securitization$1,173,298 December 2023
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(1)Assumes underlying loans extend to fully extended maturity and extensions at our option are exercised. (2)The EUR portion of the Barclays Private Securitization has an "evergreen" feature such that the facility continues for one year and can be terminated by either party on certain dates with, depending on the date of notice, a minimum of nine to twelve months' notice. As ofMarch 31, 2021 , we had$1.2 billion (£638.3 million, €122.4 million, and kr1.3 billion assuming conversion into USD) of borrowings outstanding under the Barclays Private Securitization secured by certain of our commercial mortgage loans. Debt Covenants The guarantees related to our secured debt arrangements contain the following financial covenants: (i) tangible net worth must be greater than$1.25 billion plus 75% of the net cash proceeds of any equity issuance afterMarch 31, 2017 (ii) our ratio of total indebtedness to tangible net worth cannot be greater than 3.75:1; and (iii) our liquidity cannot be less than an amount equal to the greater of 5% of total recourse indebtedness or$30.0 million . Under these covenants, our General CECL Allowance is added back to our tangible net worth calculation. 39
-------------------------------------------------------------------------------- We were in compliance with the covenants under each of our secured debt arrangements atMarch 31, 2021 andDecember 31, 2020 . Senior Secured Term Loan InMay 2019 , we entered into the$500.0 million 2026 Term Loan. During the three months endedMarch 31, 2021 , we repaid$1.3 million of principal related to the 2026 Term Loan. The 2026 Term Loan bears interest at LIBOR plus 2.75%, was issued at a price of 99.5%, and matures inMay 2026 . InMarch 2021 , we entered into the$300.0 million 2028 Term Loan. The 2028 Term Loan bears interest at LIBOR (with a floor of 0.50%) plus 3.50%, was issued at a price of 99.0%, and matures inMarch 2028 . The outstanding Term Loans principal balance as ofMarch 31, 2021 andDecember 31, 2020 was$791.3 million and$492.5 million , respectively. The Term Loans contain restrictions relating to liens, asset sales, indebtedness, and investments in non-wholly owned entities. The Term Loans include the following financial covenants: (i) our ratio of total recourse debt to tangible net worth cannot be greater than 3:1; and (ii) our ratio of total unencumbered assets to total pari-passu indebtedness must be at least 1.25:1. Convertible Senior Notes In two separate offerings during 2017, we issued an aggregate principal amount of$345.0 million of 4.75% Convertible Senior Notes due 2022, for which we received$337.5 million , after deducting the underwriting discount and offering expenses. AtMarch 31, 2021 , the 2022 Notes had a carrying value of$341.0 million and an unamortized discount of$4.0 million . During the fourth quarter of 2018, we issued$230.0 million of 5.375% Convertible Senior Notes due 2023, for which we received$223.7 million after deducting the underwriting discount and offering expenses. AtMarch 31, 2021 , the 2023 Notes had a carrying value of$225.7 million and an unamortized discount of$4.3 million . Other Potential Sources of Financing Our primary sources of cash currently consist of cash available, which was$294.1 million as ofMarch 31, 2021 , principal and interest payments we receive on our portfolio of assets, and available borrowings under our secured debt arrangements. We expect our other sources of cash to consist of cash generated from operations and prepayments of principal received on our portfolio of assets. Such prepayments are difficult to estimate in advance. Depending on market conditions, we may utilize additional borrowings as a source of cash, which may also include additional secured debt arrangements as well as other borrowings or conduct additional public and private debt and equity offerings. As ofMarch 31, 2021 we also held$1.5 billion of unencumbered assets, consisting of$428.9 million of senior mortgages and$1.1 billion of mezzanine loans. We maintain policies relating to our borrowings and use of leverage. See "Leverage Policies" below. In the future, we may seek to raise further equity or debt capital or engage in other forms of borrowings in order to fund future investments or to refinance expiring indebtedness. We generally intend to hold our target assets as long-term investments, although we may sell certain of our investments in order to manage our interest rate risk and liquidity needs, meet other operating objectives and adapt to market conditions. To maintain our qualification as a REIT under the Internal Revenue Code, we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain. These distribution requirements limit our ability to retain earnings and replenish or increase capital for operations. Leverage Policies We use leverage for the sole purpose of financing our portfolio and not for the purpose of speculating on changes in interest rates. In addition to our secured debt arrangements and senior secured term loan, we access additional sources of borrowings. Our charter and bylaws do not limit the amount of indebtedness we can incur; however, we are subject to and carefully monitor the limits placed on us by our credit providers and those that assign ratings on our Company. AtMarch 31, 2021 , our debt-to-equity ratio was 1.9 and our portfolio was comprised of$5.8 billion of commercial mortgage loans and$1.1 billion of subordinate loans and other lending assets. In order to achieve our return on equity, we generally finance our mortgage loans with 2.0 to 3.0 turns of leverage and generally do not finance our subordinate loan portfolio given built-in inherent structural leverage. Consequently, depending on our portfolio mix, our debt-to-equity ratio may exceed our previously disclosed thresholds. 40 -------------------------------------------------------------------------------- Investment Guidelines Our current investment guidelines, approved by our board of directors, are comprised of the following: •no investment will be made that would cause us to fail to qualify as a REIT forU.S. federal income tax purposes; •no investment will be made that would cause us to register as an investment company under the 1940 Act; •investments will be predominantly in our target assets; •no more than 20% of our cash equity (on a consolidated basis) will be invested in any single investment at the time of the investment; and •until appropriate investments can be identified, the Manager may invest the proceeds of any offering in interest bearing, short-term investments, including money market accounts and/or funds, that are consistent with our intention to qualify as a REIT. The board of directors must approve any change in or waiver to these investment guidelines. Contractual Obligations and Commitments Our contractual obligations including expected interest payments as ofMarch 31, 2021 are summarized as follows ($ in thousands): More Less than 1 2 to 3 3 to 5 than 5 year (1) 1 to 2 years(1) years (1) years (1) years (1) Total Secured debt arrangements(1)(2)$ 823,510 $
461,075
$ 3,600,713 Senior secured term loan(2) 36,286 35,938 35,660 70,138 764,239
942,261
Convertible senior notes 28,750 363,978 237,211 - -
629,939
Unfunded loan commitments (3) 692,202 423,524 275,416 2,387 - 1,393,529 Total$ 1,580,748 $ 1,284,515 $ 1,760,712 $ 1,176,228 $ 764,239 $ 6,566,442 ------- (1) Assumes underlying assets are financed through the fully extended maturity date of the secured debt arrangement. (2) Based on the applicable benchmark rates as of March 31, 2021 on the floating rate debt for interest payments due. (3) Based on fully extended maturity and our expected funding schedule, which is based upon the Manager's estimates based upon the best information available to the Manager at the time. There is no assurance that the payments will occur in accordance with these estimates or at all, which could affect our operating results. Refer to "Note 16 - Commitments and Contingencies" for further detail regarding unfunded loan commitments. Loan Commitments. As ofMarch 31, 2021 , we had$1.4 billion of unfunded loan commitments, comprised of$1.4 billion related to our commercial mortgage loan portfolio, and$28.5 million related to our subordinate loan portfolio. Management Agreement. OnSeptember 23, 2009 , we entered into the Management Agreement with the Manager pursuant to which the Manager is entitled to receive a management fee and the reimbursement of certain expenses. The table above does not include amounts due under the Management Agreement as those obligations do not have fixed and determinable payments. Pursuant to the Management Agreement, the Manager is entitled to a base management fee calculated and payable quarterly in arrears in an amount equal to 1.5% of our stockholders' equity (as defined in the Management Agreement), per annum. The Manager will use the proceeds from its management fee in part to pay compensation to its officers and personnel. We do not reimburse the Manager or its affiliates for the salaries and other compensation of their personnel, except for the allocable share of the compensation of (1) our Chief Financial Officer based on the percentage of time spent on our affairs and (2) other corporate finance, tax, accounting, internal audit, legal, risk management, operations, compliance and other non-investment professional personnel of the Manager or its affiliateswho spend all or a portion of their time managing our affairs based on the percentage of time devoted by such personnel to our affairs. We are also required to reimburse the Manager for operating expenses related to us incurred by the Manager, including expenses relating to legal, accounting, due diligence and other services. Expense reimbursements to the Manager are made in cash on a monthly basis following the end of each month. Our reimbursement obligation is not subject to any dollar limitation. The current term of the Management Agreement will expire onSeptember 29, 2021 . Absent certain action by the independent directors of our board of directors, as described below, the Management Agreement will automatically renew on each anniversary for a one-year term. The Management Agreement may be terminated upon expiration of the one-year term only upon the affirmative vote of at least two-thirds of our independent directors, based upon (1) unsatisfactory performance by the Manager that is materially detrimental to us or (2) a determination that the management fee payable to the Manager is not 41 -------------------------------------------------------------------------------- fair, subject to the Manager's right to prevent such a termination based on unfair fees by accepting a mutually acceptable reduction of management fees agreed to by at least two-thirds of our independent directors. The Manager must be provided with written notice of any such termination at least 180 days prior to the expiration of the then existing term and will be paid a termination fee equal to three times the sum of the average annual base management fee during the 24-month period immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination. Amounts payable under the Management Agreement are not fixed and determinable. Following a meeting by our independent directors inFebruary 2021 , which included a discussion of the Manager's performance and the level of the management fees thereunder, we determined not to terminate the Management Agreement. Forward Currency Contracts. We use forward currency contracts to economically hedge interest and principal payments due under our loans denominated in currencies other than USD. We have entered into a series of forward contracts to sell an amount of foreign currency (GBP, SEK and EUR) for an agreed upon amount of USD at various dates throughMay 2026 . These forward contracts were executed to economically fix the USD amounts of foreign denominated cash flows expected to be received by us related to foreign denominated loan investments. Refer to "Note 10- Derivatives, Net" to the accompanying condensed consolidated financial statements for details regarding our forward currency contracts. Interest Rate Cap. InJune 2020 , we entered into an interest rate cap for approximately$1.1 million . We use our interest rate cap to manage exposure to variable cash flows on our borrowings under our senior secured term loan by effectively limiting LIBOR from exceeding 0.75%. Refer to "Note 10- Derivatives, Net" to the accompanying condensed consolidated financial statements for details regarding our interest rate cap. Off-balance Sheet Arrangements As ofMarch 31, 2021 , we have interests in two unconsolidated joint ventures, each of which owns underlying properties that secure one of our first mortgage loans, respectively. The unconsolidated joint ventures were deemed to be VIEs, of which we are not the primary beneficiary. Accordingly, the VIEs are not consolidated in our condensed consolidated financial statements as ofMarch 31, 2021 . Our maximum exposure to loss from these commercial mortgage loans is limited to their carrying value, which as ofMarch 31, 2021 was$224.0 million . Dividends We intend to continue to make regular quarterly distributions to holders of our common stock.U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that we pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our net taxable income. We generally intend over time to pay dividends to our stockholders in an amount equal to our net taxable income, if and to the extent authorized by our board of directors. Any distributions we make are at the discretion of our board of directors and depend upon, among other things, our actual results of operations. These results and our ability to pay distributions are affected by various factors, including the net interest and other income from our portfolio, our operating expenses and any other expenditures. If our cash available for distribution is less than our net taxable income, we could be required to sell assets or borrow funds to make cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. As ofMarch 31, 2021 , we had 6,770,393 shares of Series B Preferred Stock outstanding, which entitles holders to receive dividends that are payable quarterly in arrears. The Series B Preferred Stock pay cumulative cash dividends, which are payable quarterly in equal amounts in arrears on the 15th day of each January, April, July and October: (i) from, and including, the original date of issuance of the Series B Preferred Stock to, but excluding,September 20, 2020 , at an initial rate of 8.00% per annum of the$25.00 per share liquidation preference; and (ii) from, and including,September 20, 2020 , at the rate per annum equal to the greater of (a) 8.00% and (b) a floating rate equal to the 3-month LIBOR rate as calculated on each applicable date of determination plus 6.46% of the$25.00 liquidation preference. Except under certain limited circumstances, the Series B Preferred Stock is generally not convertible into or exchangeable for any other property or any other of our securities at the election of the holders. We may, at our option, redeem the shares at a redemption price of$25.00 , plus any accrued unpaid distribution through the date of the redemption. Non-GAAP Financial Measures Distributable Earnings Beginning in the fourth quarter of 2020 to more appropriately reflect the principal purpose of the measure, "Operating Earnings" was relabeled "Distributable Earnings", a non-GAAP financial measure. The definition continues to be net income (loss) 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 42 -------------------------------------------------------------------------------- income available to common stockholders, (iii) unrealized income from unconsolidated joint ventures, (iv) foreign currency gains (losses), other than (a) realized gains/(losses) related to interest income, and (b) forward point gains/(losses) realized on our foreign currency hedges, (v) the non-cash amortization expense related to the reclassification of a portion of the Notes to stockholders' equity in accordance with GAAP, and (vi) provision for loan losses. Distributable Earnings may also be adjusted to exclude certain other non-cash items, as determined by the Manager and approved by a majority of our independent directors. For the three months endedMarch 31, 2021 and 2020, our Distributable Earnings were$56.1 million , or$0.39 per share, and$62.7 million , or$0.40 per share, respectively. The weighted-average diluted shares outstanding used for Distributable Earnings per weighted-average diluted share has been adjusted from weighted-average diluted shares under GAAP to exclude shares issued from a potential conversion of the Notes. Consistent with the treatment of other unrealized adjustments to Distributable Earnings, these potentially issuable shares are excluded until a conversion occurs, which we believe is a useful presentation for investors. We believe that excluding shares issued in connection with a potential conversion of the Notes from our computation of Distributable Earnings per weighted average diluted share is useful to investors for various reasons, including the following: (i) conversion of Notes to shares requires both the holder of a Note to elect to convert the Note and for us to elect to settle the conversion in the form of shares (ii) future conversion decisions by Note holders will be based on our stock price in the future, which is presently not determinable; (iii) the exclusion of shares issued in connection with a potential conversion of the Notes from the computation of Distributable Earnings per weighted-average diluted share is consistent with how we treat other unrealized items in our computation of Distributable Earnings per weighted-average diluted share; and (iv) we believe that when evaluating our operating performance, investors and potential investors consider our Distributable Earnings relative to our actual distributions, which are based on shares outstanding and not shares that might be issued in the future. For the three months endedMarch 31, 2020 , 28,533,271 weighted-average potentially issuable shares with respect to the Notes were excluded from weighted-average diluted shares outstanding because the effect was anti-dilutive (see "Note 18- Net Income (Loss) per Share" for additional information). The table below summarizes the reconciliation from weighted-average diluted shares under GAAP to the weighted-average diluted shares used for Distributable Earnings ($ in thousands, except Price): Three months ended March 31, 2021 2020 Weighted-Averages Shares Shares Diluted shares - GAAP 170,792,684 153,948,191 Potential shares issued under conversion of the Notes (28,533,271) - Unvested RSUs - 2,007,242 Diluted shares - Distributable Earnings 142,259,413 155,955,433 As a REIT,U.S. federal income tax law generally requires us to distribute annually at least 90% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that we pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our net taxable income. Given these requirements and our belief that dividends are generally one of the principal reasons stockholders invest in a REIT, we generally intend over time to pay dividends to our stockholders in an amount equal to our net taxable income, if and to the extent authorized by our board of directors. Distributable Earnings is a key factor considered by the board of directors in setting the dividend and as such we believe Distributable Earnings is useful to investors. As discussed in "Note 10 - Derivatives" we terminated our interest rate swap, which we used to manage exposure to variable cash flows on our borrowings under our senior secured term loan, in the second quarter of 2020 and recorded a realized loss in our condensed consolidated statement of operations. We have not had an interest rate swap on our condensed consolidated balance sheet since this termination. In addition, as discussed in "Note 4 - Commercial Mortgage, Subordinate Loans and Other Lending Assets, Net," we recorded a net realized loss on the sale of seven of our commercial real estate loans, two restructurings, one payoff of a previously impaired loan, and one foreclosure. We also believe it is useful to our investors to present Distributable Earnings prior to realized losses and impairments on real estate owned to reflect our operating results because (i) our operating results are primarily comprised of earning interest income on our investments net of borrowing and administrative costs, which comprise our ongoing operations and (ii) it has been a useful factor related to our dividend per share because it is one of the considerations when a dividend is determined. We believe that our investors use Distributable Earnings and Distributable Earnings prior to realized losses and impairments on real estate owned, or a comparable supplemental performance measure, to evaluate and compare the performance of our company and our peers. 43 -------------------------------------------------------------------------------- A significant limitation associated with Distributable Earnings as a measure of our financial performance over any period is that it excludes unrealized gains (losses) from investments. In addition, our presentation of Distributable Earnings may not be comparable to similarly-titled measures of other companies, that use different calculations. As a result, Distributable Earnings should not be considered as a substitute for our GAAP net income as a measure of our financial performance or any measure of our liquidity under GAAP. Distributable Earnings are reduced for realized losses on loans which include losses that management believes are near certain to be realized. The table below summarizes the reconciliation from net income available to common stockholders to Distributable Earnings and Distributable Earnings prior to realized losses and impairments on real estate owned ($ in thousands): Three
Months Ended
2021 2020
Net income (loss) available to common stockholders $ 54,950 $ (131,227)
Adjustments:
Equity-based compensation expense 4,387 4,263
Unrealized loss on interest rate swap - 35,548
Gain on foreign currency forwards (9,800) (70,491)
Foreign currency loss, net 7,449 37,949
Unrealized gain on interest rate cap (357) -
Realized gains (losses) relating to interest income on (620) 256
foreign currency hedges, net
Realized gains relating to forward points on foreign 6 2,171
currency hedges, net
Amortization of the convertible senior notes related to 800 754
equity reclassification
Provision for (reversal of) loan losses and impairments (1,238) 183,465
Total adjustments: 627 193,915
Distributable Earnings prior to realized losses and $ 55,577 $ 62,688
impairments on real estate owned
Realized losses and impairments on real estate owned 550 - Distributable Earnings $ 56,127 $ 62,688 Diluted Distributable Earnings per share prior to $ 0.39 $ 0.40
realized losses and impairments on real estate owned Diluted Distributable Earnings per share of common stock $
0.39 $ 0.40
Weighted-average diluted shares - Distributable Earnings 142,259,413
155,955,433
Book Value Per Share
The table below calculates our book value per share ($ in thousands, except per
share data):
March 31, 2021 December 31, 2020
Stockholders' Equity $ 2,275,753 $ 2,270,529
Series B Preferred Stock (Liquidation
Preference) (169,260) (169,260)
Common Stockholders' Equity $ 2,106,493 $ 2,101,269
Common Stock 139,848,875 139,295,867
Book value per share $ 15.06 $ 15.08
The table below shows the changes in our book value per share:
44
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Book value per share
Book value per share at December 31, 2020 $ 15.08
General CECL Allowance 0.30
Book value per share at
$ 15.38
Earnings in excess of dividends 0.04
Net unrealized gain on currency hedges 0.02
Vesting and delivery of RSUs (0.08)
Other (0.01)
Book value per share at
15.35
General CECL Allowance $ (0.29)
Book value per share at March 31, 2021 $ 15.06
We believe that presenting book value per share with sub-totals prior to the
CECL Allowances is useful for investors for various reasons, including, among
other things, analyzing our compliance with financial covenants related to
tangible net worth and debt-to-equity under our secured debt arrangements and
senior secured term loan, which permit us to add the General CECL Allowance to
our GAAP stockholders' equity. Given that our lenders consider book value per
share prior to the General CECL Allowance as an important metric related to our
debt covenants, we believe disclosing book value per share prior to the General
CECL Allowance is important to investors such that they have the same
visibility.
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