Apollo Commercial Real Estate Finance, Inc.

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; 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.

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 $839.6 billion as of June 30, 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 $938.4 billion as of December 31, 2025.

Previous wording

Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail.

Current wording

On the Closing Date, pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, the Company sold its commercial real estate loan portfolio (other than loans that were repaid prior to closing and one loan with a principal balance of $46 million which is expected to repay after the Closing Date) to Athene for cash consideration of approximately $8.6 billion, which is based on 99.7% of the total commitment amount of such loans as of the Closing Date, subject to certain adjustments as provided in the Purchase Agreement. Please refer to "Note 20 - Subsequent Events" to the accompanying consolidated financial statements for further details.

Previous 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.

Current wording

For the three months ended March 31, 2026 and 2025, our net income available to common stockholders was $23.2 million, or $0.16 per diluted share of common stock, and $22.9 million, or $0.16 per diluted share of common stock, respectively.

Previous 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.

Current wording

Net interest income decreased by $8.0 million during the three months ended March 31, 2026 compared to the three months ended December 31, 2025. The net decrease was primarily attributable to lower average index rates during the three months ended March 31, 2026 compared to the three months ended December 31, 2025. Additionally, our commercial mortgage loan secured by a hotel in Chicago, IL was moved to nonaccrual status as of December 31, 2025, and no interest income was recorded on this loan during the three months ended March 31, 2026. Lastly, modifications to several of our loans resulted in interest rate decreases and further decreased interest income. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail.

Previous 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.

Current wording

For the three months ended March 31, 2026, we recorded net income related to real estate owned of $0.4 million compared to net income of $1.9 million for the three months ended December 31, 2025. The decrease in net income was primarily due to the seasonality of hotel operations, which led to $2.1 million and $0.5 million lower net income from operations, prior to depreciation, for the D.C. Hotel and the Atlanta Hotel, respectively, during the three months ended March 31, 2026 as compared to the three months ended December 31, 2025. The decrease was partially offset by an increase in operating income attributable to our Brooklyn Multifamily Development as the lease-up of the property continues to ramp up. Refer to "Note 5 – Real Estate Owned" for further discussion of operations related to real estate owned. at

Previous 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.

Current wording

Management fees expense decreased by $0.5 million for the three months ended March 31, 2026 compared to the three months ended December 31, 2025. The decrease was primarily due to lower Stockholders' Equity (as defined in the Management Agreement) during the three months ended March 31, 2026.

Previous wording

Decrease (increase) in Specific CECL Allowance, net

Current wording

Increase in Specific CECL Allowance, net

Previous wording

Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional information related to our General CECL Allowance.

Current wording

Our General CECL Allowance decreased by $3.3 million during the three months ended March 31, 2026 compared to a decrease of $0.5 million during the three months ended December 31, 2025. During both periods, the decrease was primarily due to the favorable impacts of portfolio seasoning, and partially offset by the effect of loan originations. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional information related to our General CECL Allowance.

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 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.

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 March 31, 2026 and the three months ended December 31, 2025 were a net loss of $0.3 million and a net gain of $0.3 million, respectively. The net loss for the three months ended March 31, 2026 compared to the net gain for three months ended December 31, 2025 was predominantly due to higher forward point estimates for the three months ended March 31, 2026.

Previous 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):

Current wording

The following table sets forth information regarding our condensed consolidated results of operations and certain key operating metrics for the three months ended March 31, 2026 and 2025 ($ in thousands):

Previous 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.

Current wording

Net interest income decreased by $3.4 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This decrease was primarily attributable to higher average debt balances as well as lower average index rates during the three months ended March 31, 2026, and modifications to several of our loans, resulting in spread decreases. The effects of lower interest rates were partially offset by a higher average loan balance during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail.

Previous wording

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 wording

General and administrative expenses decreased by $0.7 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to a decrease in amortization of RSUs as well as a decrease in legal expenses.

Previous wording

Increase in General CECL Allowance, net

Current wording

Decrease (increase) in General CECL Allowance, net

Previous 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.

Current wording

During the three months ended March 31, 2026, we recorded a net decrease in our General CECL Allowance of $3.3 million. The decrease was primarily driven by the favorable impacts of portfolio seasoning, which was partially offset by the effect of loan originations. Comparatively, during the three months ended March 31, 2025, we recorded a net increase in our General CECL Allowance of $4.0 million, 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 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.

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 March 31, 2026 and three months ended March 31, 2025 was a net loss of $0.3 million and a net gain of $1.6 million, respectively. The net loss for the three months ended March 31, 2026 compared to the net gain for the three months ended March 31, 2025 was predominantly due to higher forward point estimates for the three months ended March 31, 2026.

Previous 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.

Current wording

For the three months ended March 31, 2026 and December 31, 2025, our Distributable Earnings were $30.7 million, or $0.22 per share, and $37.2 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 September 30, 2025 and June 30, 2025, there were 723,285 and 265,295 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 March 31, 2026 and three months ended December 31, 2025, there were 599,484 and 405,421 incremental shares included, respectively.

Previous wording

Distributable Earnings Prior to Realized Loss on Investments and Realized Gain from Litigation Settlement

Current wording

Distributable Earnings Prior to Realized Loss on Investments

Previous 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.

Current wording

We believe it is useful to our investors to present Distributable Earnings prior to 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 realized loss on investments, or a comparable supplemental performance measure, to evaluate and compare the performance of our company and our peers.

Previous 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):

Current wording

There were no realized losses on investments for the three months ended March 31, 2026 or the three months ended December 31, 2025. Accordingly, the table below summarizes the reconciliation from net income available to common stockholders to Distributable Earnings ($ in thousands):

Previous 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.

Current wording

During the three months ended March 31, 2026, we committed $299.9 million of capital to a new loan (fully funded at closing), and provided $338.9 million of add-on fundings. During the three months ended March 31, 2026, we received $468.6 million in loan repayments.

Previous wording

Gross of deferred financing costs of $9.5 million.

Current wording

Gross of deferred financing costs of $10.9 million.

Previous wording

Our average asset and debt balances for the nine months ended September 30, 2025 were ($ in thousands):

Current wording

Our average asset and debt balances for the three months ended March 31, 2026 were ($ in thousands):

Previous wording

Our portfolio benefits from our core investment strategy whereby we target assets that are secured by institutional quality real estate throughout the United States and Europe. As discussed in Item 1. "Business—Investment Strategy" in our most recent Annual Report on Form 10-K, the Manager has implemented underwriting standards which place a particular emphasis on due diligence of prospective investments' sponsors and borrowers, as well as assessment of the risk/return profile and appropriate structure of each investment opportunity. As of September 30, 2025, our portfolio's weighted-average origination LTV ratio was 57%, excluding risk-rated "5" loans. This reflects significant equity value which we believe our loan sponsors would be committed to protect during periods of volatility and market disruption.

Current wording

Our portfolio benefits from our core investment strategy whereby we target assets that are secured by institutional quality real estate throughout the United States and Europe. As discussed in Item 1. "Business—Investment Strategy" in our most recent Annual Report on Form 10-K, the Manager has implemented underwriting standards which place a particular emphasis on due diligence of prospective investments' sponsors and borrowers, as well as assessment of the risk/return profile and appropriate structure of each investment opportunity. As of March 31, 2026, our portfolio's weighted-average origination LTV ratio was 59%, excluding risk-rated "5" loans. This reflects significant equity value which we believe our loan sponsors would be committed to protect during periods of volatility and market disruption.

Previous 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.

Current wording

$3.7 million of the General CECL Allowance for 2026 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 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.

Current wording

At March 31, 2026, our debt-to-equity ratio was 4.3 and our portfolio was comprised of $8.8 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.

Previous 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.

Current wording

Our current debt obligations consist of $1.2 billion, at face value, of corporate debt, $6.5 billion of secured debt arrangements, and $439.8 million of debt related to real estate owned, held for investment. Our corporate debt includes $744.4 million of term loan borrowings and $500.0 million of senior secured notes. Subsequent to quarter end, all corporate debt and secured debt arrangements were fully repaid using proceeds from the Asset Sale. Please refer to "Note 20 - Subsequent Events" for further details.

Previous 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.

Current wording

Our primary sources of liquidity as of March 31, 2026 were represented with $126.8 million of cash on hand, $101.7 million of loan proceeds held by servicer, $55.9 million of available borrowings under our financing arrangements based on existing collateral and cash flows from operations. Additionally, we held approximately $287.4 million of unencumbered assets and have $26.0 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 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.

Current wording

As of March 31, 2026, we had £662.6 million, €339.2 million, and kr1.9 billion ($1.5 billion assuming conversion into USD as of March 31, 2026) 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 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.

Current wording

We derive an annual historical loss rate based on a CMBS database with historical losses from 1998 through the first quarter of 2026 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.