Apollo Commercial Real Estate Finance, Inc.
For the period ended Sep 30, 2025. Filed Oct 30, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Oct 30, 2025
ARI$2.32-3.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-07-29.
0000950170-25-099645
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-10-30.
0001193125-25-258572
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 159 previous paragraphs and 167 current paragraphs.
112 unchanged; 38 reworded; 16 added; 7 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 13 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Income from Equity Method Investment
Current report
For the three months ended September 30, 2025, we recorded net income from equity method investment of $17.1 million compared to a net loss of $0.7 million for the three months ended June 30, 2025. The increase in net income attributable to the
Current report
Massachusetts Healthcare JV was due to a $17.4 million gain on litigation settlement recorded during the three months ended September 30, 2025. Refer to "Note 6 – Other Assets" and "Note 16 – Commitments and Contingencies" for additional information.
Current report
Our Specific CECL Allowance decreased by $7.5 million during the three months ended September 30, 2025, which was comprised of a $1.3 million reversal and a $6.2 million write-off of our Specific CECL Allowance related to the discounted payoff of our Michigan Office Loan. There was no change to our Specific CECL Allowance during the three months ended June 30, 2025. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional information.
Current report
Our General CECL Allowance increased by $1.1 million during the three months ended September 30, 2025 and by $3.1 million during the three months ended June 30, 2025, which in both periods was driven by the effect of loan originations as well as extending our expected loan repayment dates. The smaller increase during the three months ended September 30, 2025 is due to repayment activity in the quarter outpacing originations which led to the relative decrease of the loan portfolio quarter over quarter.
Current report
Operating Expenses
Current report
General and administrative expenses decreased by $2.5 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to a decrease in amortization of RSUs.
Current report
Income from Equity Method Investment
Current report
During the nine months ended September 30, 2025, we recorded net income from equity method investment of $15.7 million. The increase in net income attributable to the Massachusetts Healthcare JV was due to a $17.4 million gain on litigation settlement recorded during the nine months ended September 30, 2025. This income was partially offset with a net loss from operations of the Massachusetts Healthcare JV during the nine months ended September 30, 2025. There was no such activity during the nine months ended September 30, 2024, as the Massachusetts Healthcare JV was formed at the end of the third quarter of 2024.
Current report
Refer to "Note 6 – Other Assets" and "Note 16 – Commitments and Contingencies" for additional information.
Current report
During the nine months ended September 30, 2025, we recorded a $7.4 million net realized loss on investments, consisting of (i) a $1.2 million realized loss on the sale of a promissory note related to the sale of one of the eight hospitals that previously secured the Massachusetts Healthcare Loan and (ii) a $6.2 million realized loss related to the discounted payoff of the Michigan Office Loan.
Current report
During the nine months ended September 30, 2025, there was a $7.5 million decrease in our Specific CECL Allowance, which was comprised of a $1.3 million reversal and a $6.2 million write-off of our Specific CECL Allowance related to the discounted payoff of our Michigan Office Loan.
Current report
Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" and "Note 6 – Other Assets" for additional detail.
Current report
Distributable Earnings Prior to Realized Loss on Investments and Realized Gain from Litigation Settlement
Current report
During three months ended September 30, 2025, we recorded a realized loss on investments of $7.4 million consisting of (i) a $1.2 million realized loss on the sale of a promissory note previously recorded as Note receivable, held for sale and (ii) a $6.2 million realized loss related to the discounted payoff of the Michigan Office Loan. We also recorded a realized gain of $17.4 million within Income from equity method investment on our condensed consolidated statement of operations from a litigation settlement with the Commonwealth of Massachusetts relating to the Massachusetts Healthcare Loan. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net", "Note 6 – Other Assets" and "Note 16 – Commitments and Contingencies" for further discussion.
Current report
There were no realized losses on investments or realized gains on litigation settlement for the three months ended June 30, 2025.
Removed paragraphs (7)
Previous report
Net interest income increased by $3.6 million during the three months ended June 30, 2025, compared to the prior quarter, primarily due to loan portfolio growth driven by increased origination activity. The net increase was partially offset by higher debt balances on our secured debt arrangements during the same comparative period. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail.
Previous report
Our General CECL Allowance increased by $3.1 million during the three months ended June 30, 2025, primarily driven by the effect of loan originations as well as extending expected loan repayment dates for certain of our loans. The increase was partially offset by the favorable impacts of portfolio seasoning. Comparatively, our General CECL Allowance increased by $4.0 million during the three months ended March 31, 2025, primarily driven by a more adverse macroeconomic outlook as well as the effects of loan originations. The increase was partially offset by the favorable impacts of portfolio seasoning.
Previous report
Net income related to real estate owned increased by $2.7 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily attributable to higher net income from the Atlanta Hotel for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, as net income for the 2024 period was reduced by $3.6 million of catch-up depreciation recorded in the first quarter of 2024. This charge was recorded in connection with the reclassification of the property from held-for-sale to held-for-investment and represented depreciation that would have been recorded had the property been classified as held-for-investment throughout 2023 and the first quarter of 2024.
Previous report
Management Fees to Related Party
Previous report
During the three months ended June 30, 2025, we recorded a fair value adjustment of $1.2 million on a promissory note classified as held for sale (representing the difference between the note’s amortized cost and the note’s fair value as of June 30, 2025). The promissory note was subsequently sold in July 2025 at a price of 97.0%, upon which we reversed the valuation allowance and recorded an equivalent realized loss. Refer to "Note 4 - Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" and "Note 3 – Fair Value Disclosure" further discussion.
Previous report
Distributable Earnings Prior to Net Realized Loss on Investments
Previous report
Loan matured in September 2024. Negotiations with sponsor currently in process.
Reworded paragraphs (38)
Previous wording
We make forward-looking statements herein and will make forward-looking statements in future filings with the SEC, 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: higher interest rates and inflation; market trends in our industry, 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 the U.S. government and governments outside of the 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 for U.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 mor…
Excerpt shortened here; the source contains the full paragraph.
Current wording
We make forward-looking statements herein and will make forward-looking statements in future filings with the SEC, 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: higher interest rates and inflation; market trends in our industry, 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 the U.S. government and governments outside of the 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; the impact of a shutdown of the U.S. federal government; 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 for U.S. federal income tax purposes; our continued exclusion from registration under the Investment Company Act of 1940, as amended (the "1940 Act"); th…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
We are externally managed and advised by the Manager, an indirect subsidiary of Apollo, a global, high-growth alternative asset manager with assets under management of approximately $785.2 billion as of March 31, 2025.
Current wording
We are externally managed and advised by the Manager, an indirect subsidiary of Apollo, a global, high-growth alternative asset manager with assets under management of approximately $839.6 billion as of June 30, 2025.
Previous wording
In March 2024, the SEC adopted amendments to its rules under the Securities Act and the Exchange Act that require disclosure of certain climate-related information in registration statements and annual reports, when material. In April 2024, the SEC chose to stay its newly adopted climate disclosure rules, pending the completion of judicial review of certain legal challenges. In March 2025, the SEC voted to end its defense of the new rules. We are continuing to monitor the developments pertaining to the new rules and to evaluate the impact of these rules, if the stay is lifted, on our disclosures.
Current wording
In March 2024, the SEC adopted amendments to its rules under the Securities Act and the Exchange Act that require disclosure of certain climate-related information in registration statements and annual reports, when material. In April 2024, the SEC chose to stay its newly adopted climate disclosure rules, pending the completion of judicial review of certain legal challenges. In March 2025, the SEC voted to end its defense of the new rules. In September 2025, the U.S. Court of Appeals for the Eighth Circuit ordered that the litigation regarding the climate disclosure rules would be held in abeyance until such time as the SEC reconsider or renews its defense of the climate disclosure rules. We are continuing to monitor the developments pertaining to the new rules and to evaluate the impact of these rules, if the stay is lifted, on our disclosures.
Previous wording
For the three months ended June 30, 2025 and 2024, our net income available to common stockholders was $17.7 million, or $0.12 per diluted share of common stock, and $32.7 million, or $0.23 per diluted share of common stock, respectively.
Current wording
For the three months ended September 30, 2025 and 2024, our net income available to common stockholders was $47.7 million, or $0.34 per diluted share of common stock, and ($94.6) million, or ($0.69) per diluted share of common stock, respectively.
Previous wording
For the six months ended June 30, 2025 and 2024, our net income (loss) available to common stockholders was $40.6 million, or $0.28 per diluted share of common stock, and $(74.9) million, or $(0.54) per diluted share of common stock, respectively.
Current wording
For the nine months ended September 30, 2025 and 2024, our net income (loss) available to common stockholders was $88.3 million, or $0.62 per diluted share of common stock, and ($169.5) million, or ($1.23) per diluted share of common stock, respectively.
Previous wording
Net interest income decreased by $25.9 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This decrease was primarily driven by lower average index rates and a lower average loan balance in 2025 compared to 2024, which was partially attributable to the realization of a loss on investment during the third quarter of 2024.
Current wording
Net interest income decreased by $3.0 million during the three months ended September 30, 2025 compared to the three months ended June 30, 2025. The net decrease was primarily attributable to a lower average loan balance and lower average index rates during the three months ended September 30, 2025 compared to the three months ended June 30, 2025. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail.
Previous wording
For the three months ended June 30, 2025, we recorded net income related to real estate owned of $4.2 million, compared to net income of $3.1 million for the three months ended March 31, 2025. The increase in net income was primarily due to the seasonality of the D.C. Hotel's operations which led to $1.0 million higher net income from operations, prior to depreciation, during the three months ended June 30, 2025 as compared to the three months ended March 31, 2025. Refer to "Note 5 – Real Estate Owned" for further discussion of operations related to real estate owned.
Current wording
For the three months ended September 30, 2025, we recorded a net loss related to real estate owned of $0.7 million compared to net income of $4.2 million for the three months ended June 30, 2025. The net loss was primarily due to the seasonality of hotel operations which led to $2.8 million and $1.1 million lower net income from operations, prior to depreciation, for the D.C. Hotel and the Atlanta Hotel, respectively, during the three months ended September 30, 2025 as compared to the three months ended June 30, 2025. Additionally, the net loss in the current quarter is attributable to cessation of expense capitalization for a component of our Brooklyn Multifamily Development, which reached substantial completion during the quarter. Refer to "Note 5 – Real Estate Owned" for further discussion of operations related to real estate owned.
Previous wording
Valuation allowance, loans and other lending assets held for sale
Current wording
Decrease (increase) in valuation allowance, loans and other lending assets held for sale and net realized loss on investments
Previous wording
As of June 30, 2025 and March 31, 2025, we held a promissory note classified as held for sale. Notes held for sale are carried at the lower of amortized cost or fair value less costs to sell unless the fair value option is elected at origination. As of March 31, 2025, the note’s fair value was equal to its amortized cost and no valuation allowance was recorded during the three months ended March 31, 2025.
Current wording
As of June 30, 2025, we held a promissory note classified as held for sale. Notes held for sale are carried at the lower of amortized cost or fair value less costs to sell unless the fair value option is elected at origination. As of June 30, 2025, the note’s amortized cost exceeded its fair value. Accordingly, during the three months ended June 30, 2025, we recorded a fair value adjustment of $1.2 million (representing the difference between the note’s amortized cost and the note’s fair value as of June 30, 2025).
Previous wording
During the three months ended June 30, 2025, we recorded a fair value adjustment of $1.2 million (representing the difference between the note’s amortized cost and the note’s fair value as of June 30, 2025). The note was subsequently sold in July 2025 at a price of 97.0%, upon which we reversed the valuation allowance and recorded an equivalent realized loss. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" and "Note 3 – Fair Value Disclosure" further discussion.
Current wording
The note was subsequently sold during the three months ended September 30, 2025 at a price of 97.0%, upon which we reversed the $1.2 million valuation allowance and recorded an equivalent realized loss included within realized loss on investments on our condensed consolidated statement of operations for the three and nine months ended September 30, 2025. Additionally, during the three months ended September 30, 2025, we recognized a realized loss of $6.2 million related to the discounted payoff of our Michigan Office Loan. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" and "Note 3 – Fair Value Disclosure" for further discussion.
Previous wording
Foreign currency gains and losses on derivative instruments are evaluated on a combined basis and the net impact for the three months ended June 30, 2025 and the three months ended March 31, 2025 were a net loss of $8.4 million and a net gain of $1.6 million, respectively. The net loss for the three months ended June 30, 2025 compared to the net gain for three months ended March 31, 2025 was predominantly due to higher forward point estimates for the three months ended June 30, 2025.
Current wording
Foreign currency gains and losses on derivative instruments are evaluated on a combined basis and the net impact for the three months ended September 30, 2025 and the three months ended June 30, 2025 were a net gain of $7.3 million and a net loss of $8.4 million, respectively. The net gain for the three months ended September 30, 2025 compared to the net loss for three months ended June 30, 2025 was predominantly due to lower forward point estimates for the three months ended September 30, 2025.
Previous wording
The following table sets forth information regarding our condensed consolidated results of operations and certain key operating metrics for the six months ended June 30, 2025 and 2024 ($ in thousands):
Current wording
The following table sets forth information regarding our condensed consolidated results of operations and certain key operating metrics for the nine months ended September 30, 2025 and 2024 ($ in thousands):
Previous wording
Additionally, during the second quarter of 2024 we modified two of our commercial mortgage loans to convert from floating rate loans to fixed rate loans, which resulted in a decrease in net interest income earned during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail.
Current wording
Net interest income decreased by $32.9 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This decrease was primarily attributable to lower average index rates during the nine months ended September 30, 2025, realization of a loss on investment during the third quarter of 2024 and modification of two of our commercial mortgage loans converting them from floating rate loans to fixed rate loans during the second quarter of 2024. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail.
Previous wording
Refer to "Note 5 – Real Estate Owned" for full discussion of operations related to real estate owned.
Current wording
Net income related to real estate owned remained generally the same for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Refer to "Note 5 – Real Estate Owned" for full discussion of operations related to real estate owned.
Previous wording
Management fees expense decreased by $1.7 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease was primarily due to lower Stockholders' Equity (as defined in the Management Agreement) during the six months ended June 30, 2025.
Current wording
Management fees expense decreased by $1.8 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The decrease was primarily due to lower Stockholders' Equity (as defined in the Management Agreement) during the nine months ended September 30, 2025.
Previous wording
During the six months ended June 30, 2024, we recorded a $0.7 million net realized loss on investments related to the sale of a commercial mortgage loan collateralized by a hotel property located in Honolulu, HI. The loan was previously classified as held for sale and was sold at a price of 99.5%.
Current wording
During the nine months ended September 30, 2024, we recorded a $128.2 million net realized loss on investments, consisting of (i) a $0.7 million realized loss related to the sale of a commercial mortgage loan collateralized by a hotel property located in Honolulu, HI, which was previously classified as held for sale and was sold at a price of 99.5% and (ii) a $127.5 million realized loss related to the extinguishment of the Massachusetts Healthcare Loan.
Previous wording
Increase in Specific CECL Allowance, net
Current wording
Decrease (increase) in Specific CECL Allowance, net
Previous wording
During the six months ended June 30, 2025, there was no change in our Specific CECL Allowance. Comparatively, during the six months ended June 30, 2024, we recorded a $149.5 million Specific CECL Allowance related to two of our subordinate loans. This amount consisted of: (i) a $142.0 million allowance recorded in the first quarter of 2024 for a mezzanine loan secured by an ultra-luxury residential property in Manhattan, NY; and (ii) a $7.5 million allowance recorded during the second quarter of 2024 for a subordinate loan secured by our interest in a Class A office building in Troy, MI.
Current wording
Comparatively, during the nine months ended September 30, 2024, we recorded a $149.5 million Specific CECL Allowance related to two of our subordinate loans. This amount consisted of: (i) a $142.0 million allowance recorded in the first quarter of 2024 for a mezzanine loan secured by an ultra-luxury residential property in Manhattan, NY; and (ii) a $7.5 million allowance recorded during the second quarter of 2024 for the Michigan Office Loan. Additionally, we recorded an increase and subsequent write-off of $127.5 million of our Specific CECL Allowance related to the Massachusetts Healthcare Loan. The $127.5 million write-off was recorded as a realized loss within net realized loss on investments in our September 30, 2024 condensed consolidated statement of operations.
Previous wording
During the six months ended June 30, 2025, we recorded a net increase in our General CECL Allowance of $7.1 million. The increase was primarily driven by the effect of loan originations, which was partially offset by the favorable impacts of portfolio seasoning.
Current wording
During the nine months ended September 30, 2025, we recorded a net increase in our General CECL Allowance of $8.3 million. The increase was primarily driven by the effect of loan originations and extending our expected loan repayment dates, which was partially offset by the favorable impacts of portfolio seasoning.
Previous wording
During the six months ended June 30, 2024, we recorded a net increase in our General CECL Allowance of $8.4 million, primarily driven by new loan originations as well as a more adverse macroeconomic outlook. The increase was partially offset by the favorable impacts of portfolio seasoning.
Current wording
During the nine months ended September 30, 2024, we recorded a net increase in our General CECL Allowance of $7.5 million, primarily driven by new loan originations as well as a more adverse macroeconomic outlook on our office portfolio. The increase was partially offset by the favorable impacts of portfolio seasoning.
Previous wording
Foreign currency gains and losses on derivative instruments are evaluated on a combined basis and the net impact for the six months ended June 30, 2025 and six months ended June 30, 2024 was a net loss of $6.8 million and a net gain of $8.9 million, respectively. The net loss for the three months ended June 30, 2025, compared to the net gain for six months ended June 30, 2024, was predominantly due to higher forward point estimates for the three months ended June 30, 2025.
Current wording
Foreign currency gains and losses on derivative instruments are evaluated on a combined basis and the net impact for the nine months ended September 30, 2025 and nine months ended September 30, 2024 was a net gain of $0.5 million and a net gain of $9.4 million, respectively. The decrease in the net gain for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was predominantly due to higher forward point estimates for the nine months ended September 30, 2025.
Previous wording
For the three months ended June 30, 2025 and March 31, 2025, our Distributable Earnings were $36.4 million, or $0.26 per share, and $33.2 million, or $0.24 per share, respectively.
Current wording
For the three months ended September 30, 2025 and June 30, 2025, our Distributable Earnings were $41.8 million, or $0.30 per share, and $36.4 million, or $0.26 per share, respectively.
Previous wording
Unvested RSUs are net of incremental shares assumed repurchased under the treasury stock method, if dilutive. For the three months ended June 30, 2025 and March 31, 2025, there were 265,295 and 352,814 incremental shares included, respectively.
Current wording
Unvested RSUs are net of incremental shares assumed repurchased under the treasury stock method, if dilutive. For the three months ended September 30, 2025 and June 30, 2025, there were 723,285 and 265,295 incremental shares included, respectively.
Previous wording
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.
Current wording
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.
Previous wording
We believe it is useful to our investors to present Distributable Earnings prior to net realized loss on investments 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 net realized loss on investments, or a comparable supplemental performance measure, to evaluate and compare the performance of our company and our peers.
Current wording
We believe it is useful to our investors to present Distributable Earnings prior to realized loss on investments and realized gain from litigation settlement 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 loss on investments and realized gain from litigation settlement, or a comparable supplemental performance measure, to evaluate and compare the performance of our company and our peers.
Previous wording
There were no net realized losses on investments for the three months ended June 30, 2025 or the three months ended March 31, 2025. Accordingly, the table below summarizes the reconciliation from net income available to common stockholders to Distributable Earnings ($ in thousands):
Current wording
Accordingly, the table below summarizes the reconciliation from net income available to common stockholders to Distributable Earnings and Distributable Earnings prior to realized loss on investments and realized gain on litigation settlement ($ in thousands):
Previous wording
During the six months ended June 30, 2025, we committed $2.0 billion of capital to new loans ($1.4 billion was funded at closing), and provided $467.2 million of add-on fundings. During the six months ended June 30, 2025, we received $724.0 million in loan repayments and sales.
Current wording
During the nine months ended September 30, 2025, we committed $3.1 billion of capital to new loans ($2.2 billion was funded at closing), and provided $701.5 million of add-on fundings. During the nine months ended September 30, 2025, we received $2.1 billion in repayments and sales of loans and other lending assets.
Previous wording
Gross of deferred financing costs of $8.5 million.
Current wording
Gross of deferred financing costs of $9.5 million.
Previous wording
The following table provides additional details of our commercial mortgage loans, subordinate loans, and other lending assets portfolio as of June 30, 2025 ($ in millions):
Current wording
The following table provides additional details of our commercial mortgage loan portfolio and subordinate loan portfolio as of September 30, 2025 ($ in millions):
Previous wording
Our average asset and debt balances for the six months ended June 30, 2025 were ($ in thousands):
Current wording
Our average asset and debt balances for the nine months ended September 30, 2025 were ($ in thousands):
Previous wording
$5.1 million of the General CECL Allowance for 2025 is excluded from this table because it relates to unfunded commitments and has been recorded as a liability under accounts payable, accrued expenses and other liabilities in our condensed consolidated balance sheets.
Current wording
$5.8 million of the General CECL Allowance for 2025 is excluded from this table because it relates to unfunded commitments and has been recorded as a liability under accounts payable, accrued expenses and other liabilities in our condensed consolidated balance sheets.
Previous wording
At June 30, 2025, our debt-to-equity ratio was 4.1 and our portfolio was comprised of $8.5 billion of commercial mortgage loans and $0.1 billion of subordinate loans. 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.
Current wording
At September 30, 2025, our debt-to-equity ratio was 3.8 and our portfolio was comprised of $8.1 billion of commercial mortgage loans and $0.2 billion of subordinate loans. 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.
Previous wording
Our current debt obligations consist of $1.3 billion, at face value, of corporate debt, $6.2 billion of secured debt arrangements, and $378.6 million of debt related to real estate owned, held for investment. Our corporate debt includes $750.0 million of term loan borrowings and $500.0 million of senior secured notes. Our secured debt arrangements are generally term-matched to the underlying loans, and we anticipate repayments of $1.9 billion of secured debt arrangements in the short term. Specifics about our secured debt arrangements and corporate debt maturities and obligations are discussed below.
Current wording
Our current debt obligations consist of $1.2 billion, at face value, of corporate debt, $5.9 billion of secured debt arrangements, and $404.5 million of debt related to real estate owned, held for investment. Our corporate debt includes $748.1 million of term loan borrowings and $500.0 million of senior secured notes. Our secured debt arrangements are generally term-matched to the underlying loans, and we anticipate repayments of $0.8 billion of secured debt arrangements in the short term. Specifics about our secured debt arrangements and corporate debt maturities and obligations are discussed below.
Previous wording
In addition to our debt obligations, as of June 30, 2025, we had $1.0 billion of unfunded loan commitments. We expect that approximately $666.7 million will be funded to existing borrowers in the short term.
Current wording
In addition to our debt obligations, as of September 30, 2025, we had $1.0 billion of unfunded loan commitments. We expect that approximately $779.4 million will be funded to existing borrowers in the short term.
Previous wording
As of June 30, 2025, we had $177.6 million of cash on hand, $4.5 million of loan proceeds held by servicer, and $25.7 million of available borrowings under our financing arrangements based on existing collateral. We held approximately $310.5 million of unencumbered assets and $83.6 million of additional capacity on our construction financing secured by our Brooklyn Multifamily Development property which is available to fund future construction costs.
Current wording
Our primary sources of liquidity as of September 30, 2025 were represented with $245.9 million of cash on hand, $12.8 million of loan proceeds held by servicer, $53.3 million of available borrowings under our financing arrangements based on existing collateral and cash flows from operations. Additionally, we held approximately $359.5 million of unencumbered assets and have $57.6 million of additional capacity on our construction financing secured by our Brooklyn Multifamily Development property which is available to fund future construction costs.
Previous wording
As of June 30, 2025, we had seven secured credit counterparties through wholly-owned subsidiaries.
Current wording
As of September 30, 2025, we had six secured credit counterparties through wholly-owned subsidiaries.
Previous wording
As of June 30, 2025, we had £917.6 million, €311.9 million, and kr2.0 billion ($1.8 billion assuming conversion into USD as of June 30, 2025) of borrowings outstanding under the Barclays Private Securitization secured by certain of our commercial mortgage loans.
Current wording
As of September 30, 2025, we had £800.3 million, €335.2 million, and kr2.0 billion ($1.7 billion assuming conversion into USD as of September 30, 2025) of borrowings outstanding under the Barclays Private Securitization secured by certain of our commercial mortgage loans.
Previous wording
We derive an annual historical loss rate based on a CMBS database with historical losses from 1998 through the second quarter of 2025 provided by Trepp. We apply various filters to arrive at a CMBS dataset most analogous to our current portfolio from which we determine an appropriate historical loss rate. This historical loss rate, and ultimately the General CECL Allowance we derive, is sensitive to the CMBS dataset we select.
Current wording
We derive an annual historical loss rate based on a CMBS database with historical losses from 1998 through the third quarter of 2025 provided by Trepp. We apply various filters to arrive at a CMBS dataset most analogous to our current portfolio from which we determine an appropriate historical loss rate. This historical loss rate, and ultimately the General CECL Allowance we derive, is sensitive to the CMBS dataset we select.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Decrease in Specific CECL Allowance, net
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Valuation allowance, loans and other lending assets held for sale
Previous report — wording carried elsewhere
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.