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What changed in Apollo Commercial Real Estate Finance, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Apollo Commercial Real Estate Finance, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+572 added−523 removedSource: 10-K (2026-02-10) vs 10-K (2025-02-10)

Top changes in Apollo Commercial Real Estate Finance, Inc.'s 2025 10-K

572 paragraphs added · 523 removed · 381 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

223 edited+105 added−95 removed146 unchanged
Biggest changeSee notes to consolidated financial statements. 63 Apollo Commercial Real Estate Finance, Inc. and Subsidiaries Consolidated Statement of Operations (in thousands—except share and per share data) Year Ended December 31, 2024 2023 2022 Net interest income: Interest income from commercial mortgage loans $ 699,389 $ 701,002 $ 456,513 Interest income from subordinate loans and other lending assets 3,542 17,280 55,590 Interest expense ( 503,949 ) ( 466,110 ) ( 270,525 ) Net interest income $ 198,982 $ 252,172 $ 241,578 Revenue from real estate owned operations 104,689 92,419 62,062 Total net revenue $ 303,671 $ 344,591 $ 303,640 Operating expenses: General and administrative expenses (includes equity-based compensation of $ 16,468 , $ 17,444 and $ 18,252 in 2024, 2023 and 2022, respectively) $ ( 29,649 ) $ ( 29,520 ) $ ( 29,662 ) Management fees to related party ( 36,120 ) ( 37,978 ) ( 38,419 ) Operating expenses related to real estate owned ( 81,683 ) ( 72,759 ) ( 52,368 ) Depreciation and amortization on real estate owned ( 11,668 ) ( 8,248 ) ( 704 ) Total operating expenses $ ( 159,120 ) $ ( 148,505 ) $ ( 121,153 ) Other income, net $ 4,498 $ 4,616 $ 2,494 Decrease (increase) in current expected credit loss allowance, net ( 155,784 ) ( 59,428 ) 17,623 Foreign currency translation gain (loss) ( 37,476 ) 52,031 ( 116,399 ) Gain (loss) on foreign currency forward contracts (includes unrealized gains (losses) of $ 29,687 , ($ 91,434 ) and $ 104,159 in 2024, 2023 and 2022, respectively) 52,590 ( 48,213 ) 146,981 Gain (loss) on interest rate hedging instruments (includes unrealized gains (loss es) of ($ 1,373 ), ($ 10,098 ) and $ 7,692 in 2024, 2023 and 2022, respectively) 570 ( 414 ) 13,363 Net realized loss on investments ( 128,191 ) ( 86,604 ) 18,683 Gain on extinguishment of debt — 495 — Net income (loss) before taxes $ ( 119,242 ) $ 58,569 $ 265,232 Income tax provision ( 394 ) ( 442 ) — Net income (loss) $ ( 119,636 ) $ 58,127 $ 265,232 Preferred dividends ( 12,272 ) ( 12,272 ) ( 12,272 ) Net income (loss) available to common stockholders $ ( 131,908 ) $ 45,855 $ 252,960 Net income (loss) per share of common stock: Basic $ ( 0.97 ) $ 0.29 $ 1.77 Diluted $ ( 0.97 ) $ 0.29 $ 1.68 Basic weighted-average shares of common stock outstanding 139,674,140 141,281,286 140,534,635 Diluted weighted-average shares of common stock outstanding 139,674,140 141,281,286 165,504,660 Dividend declared per share of common stock $ 1.20 $ 1.40 $ 1.40 See notes to consolidated financial statements. 64 Apollo Commercial Real Estate Finance, Inc. and Subsidiaries Consolidated Statement of Changes in Stockholders' Equity (in thousands—except share and per share data) Preferred Stock Common Stock Additional Paid-In- Accumulated Shares Par Shares Par Capital Deficit Total Balance at December 31, 2021 6,770,393 $ 68 139,894,060 $ 1,399 $ 2,721,042 $ ( 427,883 ) $ 2,294,626 Adoption of ASU 2020-06, see Note 2 — — — — ( 15,408 ) 11,992 ( 3,416 ) Capital increase related to Equity Incentive Plan — — 701,935 7 11,273 — 11,280 Net Income — — — — — 265,232 265,232 Dividends declared on preferred stock - $ 1.81 per share — — — — — ( 12,272 ) ( 12,272 ) Dividends declared on common stock and RSUs - $ 1.40 per share — — — — — ( 200,946 ) ( 200,946 ) Balance at December 31, 2022 6,770,393 $ 68 140,595,995 $ 1,406 $ 2,716,907 $ ( 363,877 ) $ 2,354,504 Capital increase related to Equity Incentive Plan — — 762,610 8 10,581 — 10,589 Net Income — — — — — 58,127 58,127 Dividends declared on preferred stock - $ 1.81 per share — — — — — ( 12,272 ) ( 12,272 ) Dividends declared on common stock and RSUs - $ 1.40 per share — — — — — ( 202,215 ) ( 202,215 ) Balance at December 31, 2023 6,770,393 $ 68 141,358,605 $ 1,414 $ 2,727,488 $ ( 520,237 ) $ 2,208,733 Capital increase related to Equity Incentive Plan — — 829,436 8 8,981 — 8,989 Repurchase of common stock — — ( 4,013,405 ) ( 40 ) ( 40,768 ) — ( 40,808 ) Net Loss — — — — — ( 119,636 ) ( 119,636 ) Dividends declared on preferred stock - $ 1.81 per share — — — — — ( 12,272 ) ( 12,272 ) Dividends declared on common stock and RSUs - $ 1.20 per share — — — — — ( 170,525 ) ( 170,525 ) Balance at December 31, 2024 6,770,393 $ 68 138,174,636 $ 1,382 $ 2,695,701 $ ( 822,670 ) $ 1,874,481 See notes to consolidated financial statements. 65 Apollo Commercial Real Estate Finance, Inc. and Subsidiaries Consolidated Statement of Cash Flows (in thousands) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income (loss) $ ( 119,636 ) $ 58,127 $ 265,232 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Amortization of discount/premium and payment-in-kind interest ( 29,969 ) ( 30,845 ) ( 50,966 ) Amortization of deferred financing costs 17,418 15,962 12,034 Equity-based compensation 16,468 17,444 18,252 Increase (decrease) in current expected credit loss allowance, net 155,784 59,428 ( 17,623 ) Foreign currency loss (gain) 110,430 ( 40,922 ) 97,330 Unrealized loss (gain) on foreign currency contracts ( 29,687 ) 91,434 ( 104,159 ) Unrealized loss (gain) on interest rate hedging instruments 1,373 10,098 ( 7,692 ) Depreciation and amortization on real estate owned 11,668 8,248 704 Gain on extinguishment of debt — ( 495 ) — Net realized loss (gain) on investment 128,191 86,604 ( 18,683 ) Changes in operating assets and liabilities: Proceeds received from payment-in-kind interest — 15,407 83,731 Other assets 14,954 ( 13,367 ) ( 22,910 ) Payment for interest rate cap ( 429 ) ( 2,317 ) — Accounts payable, accrued expenses and other liabilities ( 75,483 ) ( 769 ) 12,500 Payable to related party ( 825 ) ( 175 ) ( 45 ) Net cash provided by operating activities $ 200,257 $ 273,862 $ 267,705 Cash flows from investing activities: New funding of commercial mortgage loans ( 1,244,414 ) ( 456,167 ) ( 3,027,742 ) Add-on funding of commercial mortgage loans ( 573,076 ) ( 376,060 ) ( 483,795 ) Add-on funding of subordinate loans ( 54,302 ) ( 96,879 ) ( 113,124 ) Proceeds received from the repayment and sale of commercial mortgage loans 2,426,276 1,093,181 1,874,933 Proceeds received from the repayment of subordinate loans and other lending assets 23,122 75,271 279,336 Proceeds received from the sale of other assets (1) 91,892 — — Distributions from equity method investment (1) 9,023 — — Origination fees, other fees, and cost recovery proceeds received on commercial mortgage loans, and subordinate loans, net 39,554 13,936 46,874 Increase (decrease) in collateral related to derivative contracts, net 28,600 ( 112,800 ) 117,200 Capital expenditures on real estate owned assets ( 169,506 ) ( 72,631 ) ( 33,035 ) Cash received from hotel title assumption — 569 — Net cash provided by (used in) investing activities $ 577,169 $ 68,420 $ ( 1,339,353 ) Cash flows from financing activities: Proceeds from secured debt arrangements 1,998,197 806,843 2,836,372 Proceeds related to financing on real estate owned 162,827 — 164,835 Repayments of secured debt arrangements ( 2,584,949 ) ( 679,339 ) ( 1,453,921 ) Repayments of senior secured term loan principal ( 8,000 ) ( 8,000 ) ( 8,000 ) Repayments and repurchases of convertible notes — ( 229,506 ) ( 345,000 ) Payment of deferred financing costs ( 10,873 ) ( 12,212 ) ( 16,494 ) Payment of withholding tax on RSU delivery ( 7,479 ) ( 6,855 ) ( 6,972 ) Repurchase of common stock ( 40,810 ) — — Dividends on common stock ( 185,949 ) ( 202,019 ) ( 200,574 ) Dividends on preferred stock ( 12,272 ) ( 12,272 ) ( 12,272 ) Net cash provided by (used in) financing activities $ ( 689,308 ) $ ( 343,360 ) $ 957,974 See notes to consolidated financial statements. 66 Apollo Commercial Real Estate Finance, Inc. and Subsidiaries Consolidated Statement of Cash Flows (Continued) (in thousands) Year Ended December 31, 2024 2023 2022 Net increase (decrease) in cash and cash equivalents, including cash classified within assets related to real estate owned, held for sale $ 88,118 $ ( 1,078 ) $ ( 113,674 ) Decrease (increase) in cash classified within assets related to real estate owned, held for sale 577 5,100 ( 5,677 ) Net increase (decrease) in cash and cash equivalents $ 88,695 $ 4,022 $ ( 119,351 ) Cash and cash equivalents beginning of period 225,438 222,030 343,106 Effects of foreign currency translation on cash and cash equivalents 3,263 ( 614 ) ( 1,725 ) Cash and cash equivalents end of period $ 317,396 $ 225,438 $ 222,030 Supplemental disclosure of cash flow information: Interest paid $ 495,491 $ 443,626 $ 246,370 Income tax paid 34 795 — Change in loan proceeds held by servicer 44,572 2,900 ( 192 ) Supplemental disclosure of non-cash investing and financing activities: Dividend declared, not yet paid $ 38,484 $ 53,407 $ 53,711 Change in participation sold — ( 25,130 ) ( 1,934 ) Assumption of real estate — 75,000 270,035 Assumption of other assets related to real estate owned — 2,827 — Assumption of accounts payable, accrued expenses and other liabilities related to real estate owned — ( 3,396 ) — Transfer of assets to assets related to real estate owned, held for sale — 79,021 155,542 Transfer of assets related to real estate owned, held for sale to assets related to real estate owned held for investment, net 70,688 151,676 — Transfer of assets related to real estate owned, held for sale to other assets 2,280 4,357 — Transfer of liabilities to liabilities related to real estate owned, held for sale — 1,438 7,156 Transfer of liabilities related to real estate owned, held for sale to accounts payable, accrued expenses and other liabilities 3,937 7,163 — Transfer of commercial mortgage loan to other assets 20,073 — — Note receivable, held for sale (1) 41,200 — — Restructuring of commercial mortgage loan to subordinate loan 74,304 — — (1) Related to our former Massachusetts Healthcare Loan, as defined and discussed in "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net." See notes to consolidated financial statements. 67 Apollo Commercial Real Estate Finance, Inc. and Subsidiaries Notes to Consolidated Financial Statements Note 1 – Organization Apollo Commercial Real Estate Finance, Inc.
Biggest change(3) Inc ludes $ 5,759 and $ 5,948 of General CECL Allowance related to unfunded commitments on commercial mortgage loans and subordinate loans, net in 2025 and 2024 , respectively. 66 Apollo Commercial Real Estate Finance, Inc. and Subsidiaries Consolidated Statement of Operations (in thousands—except share and per share data) Year Ended December 31, 2025 2024 2023 Net interest income: Interest income from commercial mortgage loans $ 625,493 $ 699,389 $ 701,002 Interest income from subordinate loans and other lending assets 1,288 3,542 17,280 Interest expense ( 460,089 ) ( 503,949 ) ( 466,110 ) Net interest income $ 166,692 $ 198,982 $ 252,172 Revenue from real estate owned operations 104,897 104,689 92,419 Total net revenue $ 271,589 $ 303,671 $ 344,591 Operating expenses: General and administrative expenses (includes equity-based compensation of $ 13,631 , $ 16,468 and $ 17,444 in 2025, 2024 and 2023, respectively) $ ( 27,410 ) $ ( 29,649 ) $ ( 29,520 ) Management fees to related party ( 34,165 ) ( 36,120 ) ( 37,978 ) Operating expenses related to real estate owned ( 85,213 ) ( 81,683 ) ( 72,759 ) Depreciation and amortization on real estate owned ( 11,173 ) ( 11,668 ) ( 8,248 ) Total operating expenses $ ( 157,961 ) $ ( 159,120 ) $ ( 148,505 ) Other income, net $ 7,872 $ 4,498 $ 4,616 Income from equity method investment $ 15,413 $ — $ — Decrease (Increase) in current expected credit loss allowance, net ( 3,229 ) ( 155,784 ) ( 59,428 ) Foreign currency translation gain (loss) 99,483 ( 37,476 ) 52,031 Gain (loss) on foreign currency forward contracts (includes unrealized gains (losses) of ($ 84,545 ), $ 29,687 and ($ 91,434 ) in 2025, 2024 and 2023, respectively) ( 98,703 ) 52,590 ( 48,213 ) Gain (loss) on interest rate hedging instruments (includes unrealized gains (losses) of ($ 379 ), ($ 1,373 ) and ($ 10,098 ) in 2025, 2024 and 2023, respectively) 23 570 ( 414 ) Net realized loss on investments ( 7,436 ) ( 128,191 ) ( 86,604 ) Gain on extinguishment of debt — — 495 Net income (loss) before taxes $ 127,051 $ ( 119,242 ) $ 58,569 Income tax provision ( 331 ) ( 394 ) ( 442 ) Net income (loss) $ 126,720 $ ( 119,636 ) $ 58,127 Preferred dividends ( 12,272 ) ( 12,272 ) ( 12,272 ) Net income (loss) available to common stockholders $ 114,448 $ ( 131,908 ) $ 45,855 Net income (loss) per share of common stock: Basic $ 0.81 $ ( 0.97 ) $ 0.29 Diluted $ 0.81 $ ( 0.97 ) $ 0.29 Basic weighted-average shares of common stock outstanding 138,868,602 139,674,140 141,281,286 Diluted weighted-average shares of common stock outstanding 138,868,602 139,674,140 141,281,286 Dividend declared per share of common stock $ 1.00 $ 1.20 $ 1.40 67 Apollo Commercial Real Estate Finance, Inc. and Subsidiaries Consolidated Statement of Changes in Stockholders' Equity (in thousands—except share and per share data) Preferred Stock Common Stock Additional Paid-In- Accumulated Shares Par Shares Par Capital Deficit Total Balance at December 31, 2022 6,770,393 $ 68 140,595,995 $ 1,406 $ 2,716,907 $ ( 363,877 ) $ 2,354,504 Capital increase related to Equity Incentive Plan — — 762,610 8 10,581 — 10,589 Net Income — — — — — 58,127 58,127 Dividends declared on preferred stock - $ 1.81 per share — — — — — ( 12,272 ) ( 12,272 ) Dividends declared on common stock and RSUs - $ 1.40 per share — — — — — ( 202,215 ) ( 202,215 ) Balance at December 31, 2023 6,770,393 $ 68 141,358,605 $ 1,414 $ 2,727,488 $ ( 520,237 ) $ 2,208,733 Capital increase related to Equity Incentive Plan — — 829,436 8 8,981 — 8,989 Repurchase of common stock — — ( 4,013,405 ) ( 40 ) ( 40,768 ) ( 40,808 ) Net Loss — — — — — ( 119,636 ) ( 119,636 ) Dividends declared on preferred stock - $ 1.81 per share — — — — — ( 12,272 ) ( 12,272 ) Dividends declared on common stock and RSUs - $ 1.20 per share — — — — — ( 170,525 ) ( 170,525 ) Balance at December 31, 2024 6,770,393 $ 68 138,174,636 $ 1,382 $ 2,695,701 $ ( 822,670 ) $ 1,874,481 Capital increase related to Equity Incentive Plan — — 769,195 7 8,615 — 8,622 Net Income — — — — — 126,720 126,720 Dividends declared on preferred stock - $ 1.81 per share — — — — — ( 12,272 ) ( 12,272 ) Dividends declared on common stock and RSUs - $ 1.00 per share — — — — — ( 141,461 ) ( 141,461 ) Balance at December 31, 2025 6,770,393 $ 68 138,943,831 $ 1,389 $ 2,704,316 $ ( 849,683 ) $ 1,856,090 68 Apollo Commercial Real Estate Finance, Inc. and Subsidiaries Consolidated Statement of Cash Flows (in thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income (loss) $ 126,720 $ ( 119,636 ) $ 58,127 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Amortization of discount/premium, deferred fees and payment-in-kind interest ( 33,098 ) ( 29,969 ) ( 30,845 ) Amortization of deferred financing costs 17,217 17,418 15,962 Straight-line rent amortization ( 985 ) — — Equity-based compensation 13,631 16,468 17,444 Increase in current expected credit loss allowance, net 3,229 155,784 59,428 Foreign currency loss (gain) ( 99,124 ) 110,430 ( 40,922 ) Unrealized loss (gain) on foreign currency contracts 84,545 ( 29,687 ) 91,434 Unrealized loss on interest rate hedging instruments 379 1,373 10,098 Depreciation and amortization on real estate owned 11,173 11,668 8,248 Income from equity method investment ( 15,413 ) — — Gain on extinguishment of debt — — ( 495 ) Net realized loss on investment 7,436 128,191 86,604 Changes in operating assets and liabilities: Proceeds received from payment-in-kind interest 39,136 — 15,407 Other assets ( 20,063 ) 14,954 ( 13,367 ) Payment for interest rate cap ( 8 ) ( 429 ) ( 2,317 ) Accounts payable, accrued expenses and other liabilities 7,862 ( 75,483 ) ( 769 ) Payable to related party ( 116 ) ( 825 ) ( 175 ) Net cash provided by operating activities $ 142,521 $ 200,257 $ 273,862 Cash flows from investing activities: New funding of commercial mortgage loans ( 3,034,291 ) ( 1,244,414 ) ( 456,167 ) Add-on funding of commercial mortgage loans ( 864,153 ) ( 573,076 ) ( 376,060 ) Add-on funding of subordinate loans ( 35,212 ) ( 54,302 ) ( 96,879 ) Proceeds received from the repayment and sale of commercial mortgage loans 2,452,871 2,426,276 1,093,181 Proceeds received from the repayment of subordinate loans and other lending assets 176,561 23,122 75,271 Proceeds and payments received of notes receivable, held for sale 39,964 — — Contributions to equity method investment ( 6,044 ) — — Distributions from equity method investment 18,128 9,023 — Origination fees, other fees, and cost recovery proceeds received on commercial mortgage loans, and subordinate loans, net 46,986 39,554 13,936 Increase (decrease) in collateral related to derivative contracts, net ( 81,860 ) 28,600 ( 112,800 ) Capital expenditures on real estate owned assets ( 100,210 ) ( 169,506 ) ( 72,631 ) Proceeds received from the sale of other assets (1) — 91,892 — Cash received from hotel title assumption — — 569 Net cash provided by (used in) investing activities $ ( 1,387,260 ) $ 577,169 $ 68,420 69 Apollo Commercial Real Estate Finance, Inc. and Subsidiaries Consolidated Statement of Cash Flows (Continued) (in thousands) Year Ended December 31, 2025 2024 2023 Cash flows from financing activities: Proceeds from secured debt arrangements 3,751,581 1,998,197 806,843 Proceeds related to financing on real estate owned 98,136 162,827 — Repayments of secured debt arrangements ( 2,582,784 ) ( 2,584,949 ) ( 679,339 ) Repayments of senior secured term loan principal ( 15,000 ) ( 8,000 ) ( 8,000 ) Repayments and repurchases of convertible notes — — ( 229,506 ) Payment of deferred financing costs ( 22,784 ) ( 10,873 ) ( 12,212 ) Payment of issuance discount ( 5,625 ) — — Payment of withholding tax on RSU delivery ( 5,008 ) ( 7,479 ) ( 6,855 ) Repurchase of common stock — ( 40,810 ) — Dividends on common stock ( 141,276 ) ( 185,949 ) ( 202,019 ) Dividends on preferred stock ( 12,272 ) ( 12,272 ) ( 12,272 ) Net cash provided by (used in) financing activities $ 1,064,968 $ ( 689,308 ) $ ( 343,360 ) Net increase (decrease) in cash and cash equivalents, including cash classified within assets related to real estate owned, held for sale $ ( 179,771 ) $ 88,118 $ ( 1,078 ) Decrease in cash classified within assets related to real estate owned, held for sale — 577 5,100 Net increase (decrease) in cash and cash equivalents $ ( 179,771 ) $ 88,695 $ 4,022 Cash and cash equivalents beginning of period 317,396 225,438 222,030 Effects of foreign currency translation on cash and cash equivalents 2,200 3,263 ( 614 ) Cash and cash equivalents end of period $ 139,825 $ 317,396 $ 225,438 Supplemental disclosure of cash flow information: Interest paid $ 455,658 $ 495,491 $ 443,626 Income tax paid 194 34 795 Change in loan proceeds held by servicer ( 46,692 ) 44,572 2,900 Supplemental disclosure of non-cash investing and financing activities: Dividend declared, not yet paid $ 38,668 $ 38,484 $ 53,407 Change in participation sold — — ( 25,130 ) Assumption of real estate — — 75,000 Assumption of other assets related to real estate owned — — 2,827 Assumption of accounts payable, accrued expenses and other liabilities related to real estate owned — — ( 3,396 ) Transfer of assets to assets related to real estate owned, held for sale — — 79,021 Transfer of assets related to real estate owned, held for sale to assets related to real estate owned, held for investment, net — 70,688 151,676 Transfer of assets related to real estate owned, held for sale to other assets — 2,280 4,357 Transfer of liabilities to liabilities related to real estate owned, held for sale — — 1,438 Transfer of liabilities related to real estate owned, held for sale to accounts payable, accrued expenses and other liabilities — 3,937 7,163 Transfer of commercial mortgage loan to other assets — 20,073 — Note receivable, held for sale (1) — 41,200 — Restructuring of commercial mortgage loan to subordinate loan — 74,304 — Loan modification accounted for as a new loan 262,303 — — Restructuring of subordinate loan to commercial mortgage loan 148,034 (1) Related to our former Massachusetts Healthcare Loan, as defined and discussed in "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets , Net" and "Note 6 – Other Assets". 70 Apollo Commercial Real Estate Finance, Inc. and Subsidiaries Notes to Consolidated Financial Statements Note 1 – Organization Apollo Commercial Real Estate Finance, Inc.
The General CECL Allowance on subordinate loans is calculated by incorporating both the loan balance of the position(s) of the structurally senior third-party lender(s) and the balance of our subordinate loan(s).
The General CECL Allowance on subordinate loans is calculated by incorporating both the loan balance of the position(s) of the structurally senior third-party lender(s) and the balance of our subordinate loan(s).
D.C. Hotel In 2021, we acquired legal title to the D.C. Hotel, which previously secured two subordinate loans, through a deed-in-lieu of foreclosure. In accordance with ASC 805, we consolidated the hotel's assets and liabilities at their respective fair values. Refer to "Note 3 – Fair Value Disclosure" for full discussion of non-recurring fair value measurements.
Refer to "Note 3 – Fair Value Disclosure" for full discussion of non-recurring fair value measurements. D.C. Hotel In 2021, we acquired legal title to the D.C. Hotel, which previously secured two subordinate loans, through a deed-in-lieu of foreclosure. In accordance with ASC 805, we consolidated the hotel's assets and liabilities at their respective fair values.
(2) Assumes underlying loans extend to fully extended maturity and extensions at our option are exercised.
(2) Assumes underlying loans extend to fully extended maturity and extensions at our option are exercised.
The plaintiffs alleged that the defendants tortiously interfered with the plaintiffs' joint venture agreement with the developers of the project, and that the defendants aided and abetted breaches of fiduciary duty by the developers of the project. The plaintiffs alleged the loss of a $ 70.0 million investment plus punitive damages.
Plaintiffs alleged that the defendants tortiously interfered with the Plaintiffs' joint venture agreement with the developers of the project, and that the defendants aided and abetted breaches of fiduciary duty by the developers of the project. The Plaintiffs alleged the loss of a $ 70.0 million investment plus punitive damages.
During the year ended December 31, 2023, we recorded a $ 86.6 million realized loss on investments comprised of (i) a $ 4.8 million realized loss related to the acquisition of the Atlanta Hotel through a deed-in-lieu of foreclosure and (ii) a $ 82.0 million realized loss representing a write-off of previously recorded Specific CECL Allowance on one of our subordinate loans secured by an ultra-luxury residential property in Manhattan, NY.
During the year ended December 31, 2023, we recorded an $ 86.6 million realized loss on investments comprised of (i) a $ 4.8 million realized loss related to the acquisition of the Atlanta Hotel through a deed-in-lieu of foreclosure and (ii) a $ 82.0 million realized loss representing a write-off of previously recorded Specific CECL Allowance on one of our subordinate loans secured by an ultra-luxury residential property in Manhattan, NY.
The following table summarizes the terms of the Term Loans as of December 31, 2024 ($ in thousands): 93 Principal Amount Unamortized Issuance Discount (1) Deferred Financing Costs (1) Carrying Value Rate Maturity Date 2026 Term Loan $ 472,500 $ ( 476 ) $ ( 2,778 ) $ 469,246 2.86 % 5/15/2026 2028 Term Loan 288,750 ( 1,357 ) ( 2,429 ) 284,964 3.61 % 3/11/2028 Total $ 761,250 $ ( 1,833 ) $ ( 5,207 ) $ 754,210 (1) Unamortized issuance discount and deferred financing costs will be amortized to interest expense over remaining life of respective Term Loans.
The following table summarizes the terms of the 2026 and 2028 Term Loans as of December 31, 2024 ($ in thousands): Principal Amount Unamortized Issuance Discount (1) Deferred Financing Costs (1) Carrying Value Rate (2) Maturity Date 2026 Term Loan $ 472,500 $ ( 476 ) $ ( 2,778 ) $ 469,246 + 2.86 % 5/15/2026 2028 Term Loan 288,750 ( 1,357 ) ( 2,429 ) 284,964 + 3.61 % 3/11/2028 Total $ 761,250 $ ( 1,833 ) $ ( 5,207 ) $ 754,210 (1) Unamortized issuance discount and deferred financing costs will be amortized to interest expense over remaining life of respective term loans.
Commercial mortgage loans currently financed under the Barclays Securitization are denominated in GBP, EUR and SEK. The Barclays Private Securitization does not include 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.
Commercial mortgage loans currently financed under the Barclays Securitization are denominated in GBP, EUR, and SEK. 92 The Barclays Private Securitization does not include 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 subordinate loans, by virtue of being the first loss position, are required to absorb losses prior to the senior position(s) being impacted, resulting in a higher 70 percentage allowance attributable to the subordinate loan. The General CECL Allowance on unfunded loan commitments is time-weighted based on our expected commitment to fund such obligations.
The subordinate loans, by virtue of being the first loss position, are required to absorb losses prior to the senior position(s) being impacted, resulting in a higher percentage allowance attributable to the subordinate loan. The General CECL Allowance on unfunded loan commitments is time-weighted based on our expected commitment to fund such obligations.
Additionally, we have made an accounting policy election to exclude accrued interest receivables from the amortized cost basis of the related commercial mortgage loans and subordinate loans and other lending assets in determining the General CECL Allowance, as any uncollectible accrued interest receivable is written off in a timely manner.
Additionally, we have made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of the related commercial mortgage loans and subordinate loans and other lending assets in determining the General CECL Allowance, as any uncollectible accrued interest receivable is written off in a timely manner.
Note 9 – Senior Secured Notes, Net In June 2021, we issued $ 500.0 million of 4.625 % 2029 Notes, for which we received net proceeds of $ 495.0 million, after deducting initial purchasers' discounts and commissions. The 2029 Notes will mature on June 15, 2029, unless earlier repurchased or redeemed.
Note 9 – Senior Secured Notes, Net In June 2021, we issued $ 500.0 million of 4.625 % Senior Secured Notes due 2029 (the "2029 Notes"), for which we received net proceeds of $ 495.0 million, after deducting initial purchasers' discounts and commissions. The 2029 Notes will mature on June 15, 2029, unless earlier repurchased or redeemed.
Discount or transaction expenses are deferred and amortized through the maturity. Interest paid in accordance with senior secured notes is recorded in interest expense. Senior Secured Term Loans We include senior secured term loans (the "Term Loans") in our consolidated balance sheets as a liability, net of original issue discount and deferred financing costs.
Discount or transaction expenses are deferred and amortized through the maturity. Interest paid in accordance with senior secured notes is recorded in interest expense. 76 Senior Secured Term Loans We include senior secured term loans (the "Term Loans") in our consolidated balance sheets as a liability, net of original issue discount and deferred financing costs.
For loans placed on nonaccrual, the interest rate used in calculating weighted-average cash coupon is 0 %. (4) Assumes all extension options are exercised. (5) Expected term represents our estimated timing of repayments as of the specified dates. Excludes risk-rated 5 loans.
For loans placed on nonaccrual, the interest rate used in calculating weighted-average cash coupon is 0 %. (4) Assumes all extension options are exercised. (5) Expected term represents our estimated timing of repayments as of the specified dates. Excludes risk-rated five loans.
The General CECL Allowance on unfunded commitments is recorded as a liability on our consolidated balance sheets within accounts payable, accrued expenses and other liabilities. The considerations in estimating our General CECL reserve for unfunded loan commitments are similar to those used for the related outstanding loans receivable.
The General CECL Allowance on unfunded commitments is recorded as a liability on our consolidated balance sheets within accounts payable, accrued expenses and other liabilities. The considerations in estimating our General CECL allowance for unfunded loan commitments are similar to those used for the related outstanding loans receivable.
The CODM evaluates performance and allocates resources based on consolidated net income (loss), which is also reported as consolidated net income (loss) on our consolidated statement of operations. Our consolidated net income (loss) is 103 primarily derived through the difference between the interest income earned on our loans and the cost at which we are able to finance them.
The CODM evaluates performance and allocates resources based on consolidated net income (loss), which is also reported as consolidated net income (loss) on our consolidated statement of operations. Our consolidated net income (loss) is primarily derived through the difference between the interest income earned on our loans and the cost at which we are able to finance them.
These losses were partially offset by a $ 0.2 million gain on investments recorded in connection with the sale of our entire interest in three commercial loans secured by properties in Europe and a partial interest in one commercial loan secured by property located in London, United Kingdom.
These losses were partially offset by a $ 0.2 million gain on investments recorded in connection with the sale of our entire interest in three commercial loans secured by properties in Europe and a partial interest in one commercial loan secured by property located in London, United Kingdom. 3.
For the remainder of the loan portfolio, we record a general allowance ("General CECL Allowance", and together with 69 Specific CECL Allowance, "CECL Allowances") on a collective basis by assets with similar risk characteristics. Subsequent changes to the CECL Allowance are recognized through net income on our consolidated statement of operations.
For the remainder of the loan portfolio, we record a general allowance ("General CECL Allowance," and together with Specific CECL Allowance, "CECL Allowances") on a collective basis by assets with similar risk characteristics. Subsequent changes to the CECL Allowance are recognized through net income on our consolidated statement of operations.
We have determined that the issuer of this securitization, ACRE Debt 2 PLC, is a VIE of which we were deemed to be the primary beneficiary, because we have the power to direct the activities of the VIE, and therefore, we consolidated the operations of this entity in accordance 68 with GAAP.
We have determined that the issuer of this securitization, ACRE Debt 2 PLC, is a VIE of which we were deemed to be the primary beneficiary, because we have the power to direct the activities of the VIE, and therefore, we consolidated the operations of this entity in accordance with GAAP.
We use inputs that are current as of the measurement date, which may include periods of market dislocation, during which price transparency may be reduced. Forward Currency Contracts The fair values of foreign exchange forwards are determined by comparing the contracted forward exchange rate to the current market exchange rate.
We use inputs that are current as of the measurement date, which may include periods of market dislocation, during which price transparency may be reduced. Forward Currency Contracts The fair values of foreign exchange ("Fx") forwards are determined by comparing the contracted forward exchange rate to the current market exchange rate.
Senior Secured Notes In June 2021, Apollo Global Securities, LLC, an affiliate of the Manager, served as one of the eight initial purchasers in the issuance of our 2029 Notes and received $ 0.4 million of initial purchasers' discounts and commissions.
Senior Secured Notes 100 In June 2021, Apollo Global Securities, LLC, an affiliate of the Manager, served as one of the eight initial purchasers in the issuance of our 2029 Notes and received $ 0.4 million of initial purchasers' discounts and commissions.
The collateral assets of the securitization are included in commercial mortgage loans, net on our consolidated balance sheets. The liabilities of the securitization to the senior note holders, excluding the notes held by us, are included in secured debt arrangements, net on our consolidated balance sheet.
The collateral assets 71 of the securitization are included in commercial mortgage loans, net on our consolidated balance sheets. The liabilities of the securitization to the senior note holders, excluding the notes held by us, are included in secured debt arrangements, net on our consolidated balance sheet.
Estimates of fair value for cash and cash equivalents, senior secured notes, net, and Term Loans, net are measured using observable Level I inputs as defined in "Note 3 – Fair Value Disclosure." Estimates of fair value for all other financial instruments in the table above are measured using significant estimates, or unobservable Level III inputs as defined in "Note 3 – Fair Value Disclosure." Note 20 – Net Income (Loss) per Share ASC Topic 260, "Earnings Per Share" requires the use of the two-class method of computing both basic and diluted earnings (loss) per share for all periods presented for each class of common stock and participating securities.
Estimates of fair value for cash and cash equivalents, Senior Secured Notes, net, and Term Loans, net are measured using observable Level I inputs as defined in "Note 3 – Fair Value Disclosure." Estimates of fair value for all other financial instruments in the table above are measured using significant estimates, or unobservable Level III inputs as defined in "Note 3 – Fair Value Disclosure." Note 18 – Net Income (Loss) per Share ASC Topic 260, "Earnings Per Share" requires the use of the two-class method of computing both basic and diluted earnings (loss) per share for all periods presented for each class of common stock and participating securities.
Assets and liabilities 72 denominated in currencies other than USD 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.
Assets and liabilities denominated in currencies other than USD 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.
We derive an annual historical loss rate based on a commercial mortgage-backed securities ("CMBS") database with historical losses from 1998 through the fourth quarter of 2024 provided by a third party, Trepp LLC ("Trepp"). We apply various filters to arrive at a CMBS dataset most analogous to our current portfolio from which to determine an appropriate historical loss rate.
We derive an annual historical loss rate based on a commercial mortgage-backed securities ("CMBS") database with historical losses from 1998 through the fourth quarter of 2025 provided by a third party, Trepp LLC ("Trepp"). We apply various filters to arrive at a CMBS dataset most analogous to our current portfolio from which to determine an appropriate historical loss rate.
During the first quarter of 2024, we determined that the sale to a third party from whom we received an unsolicited offer was no longer probable, and we are not actively marketing the property for sale. Therefore, the Atlanta Hotel no longer met the criteria for held for sale and was reclassified to real estate owned, held for investment.
During the first quarter of 2024, we determined that the sale to a third party from whom we received an unsolicited offer was no longer probable, and we were not actively marketing the property for sale. Therefore, the Atlanta Hotel no longer met the criteria for held for sale and was reclassified to real estate owned, held for investment.
As of December 31, 2024 and 2023, the fees payable to the AIFM were de minimis. Atlas Facility In February 2023, in connection with the acquisition by certain subsidiaries of Atlas, which is a wholly-owned investment of a fund managed by an affiliate of the Manager, the Credit Suisse Facility was acquired by Atlas.
As of December 31, 2025 and December 31, 2024, the fees payable to the AIFM were de minimis. Atlas Facilities In February 2023, in connection with the acquisition by certain subsidiaries of Atlas, which is a wholly-owned investment of a fund managed by an affiliate of the Manager, the Credit Suisse Facility was acquired by Atlas.
Our major tax jurisdictions are U.S. federal, New York State and New York City and the statute of limitations is open for all jurisdictions for the years 2021 through 2024. We do not have any unrecognized tax benefits and do not expect a change in our position for unrecognized tax benefits in the next 12 months.
Our major tax jurisdictions are U.S. federal, New York State and New York City and the statute of limitations is open for all jurisdictions for the years 2021 through 2025. We do not have any unrecognized tax benefits and do not expect a change in our position for unrecognized tax benefits in the next 12 months.
The standard requires the use of significant judgment to arrive at an estimated credit loss. We derived an annual historical loss rate based on a CMBS database with historical losses from 1998 through the fourth quarter of 2024 provided by a third party, Trepp LLC.
The standard requires the use of significant judgment to arrive at an estimated credit loss. We derived an annual historical loss rate based on a CMBS database with historical losses from 1998 through the fourth quarter of 2025 provided by a third party, Trepp LLC.
These loans are recorded at the lower of amortized cost or fair value, less selling costs, unless the fair value option was elected at the time of origination. If the loan's fair value, less selling costs, is determined to be less than its amortized cost, a 75 fair value adjustment may be recorded through a valuation allowance.
These loans are recorded at the lower of amortized cost or fair value, less selling costs, unless the fair value option was elected at the time of origination. If the loan's fair value, less selling costs, is determined to be less than its amortized cost, a 78 fair value adjustment may be recorded through a valuation allowance.
AmBase Corporation: On June 28, 2018, AmBase Corporation, 111 West 57th Street Manager Funding LLC and 111 West 57th Investment LLC commenced a now-dismissed action captioned AmBase Corporation et al v. ACREFI Mortgage Lending, LLC et al (No 653251/2018) in New York Supreme Court (the "Apollo Action").
AmBase Corporation: On June 28, 2018, AmBase Corporation, 111 West 57th Street Manager Funding LLC and 111 West 57th Investment LLC (together, "Plaintiffs") commenced a now-dismissed action captioned AmBase Corporation et al v. ACREFI Mortgage Lending, LLC et al (No 653251/2018) in New York Supreme Court (the "Apollo Action").
Covenants The 2029 Notes include certain covenants including a requirement that we maintain a ratio of total unencumbered assets to total pari-passu indebtedness of at least 1.20 :1. As of December 31, 2024 and December 31, 2023 , we were in compliance with all covenants.
Covenants The 2029 Notes include certain covenants including a requirement that we maintain a ratio of total unencumbered assets to total pari-passu indebtedness of at least 1.20 :1. As of December 31, 2025 and December 31, 2024 , we were in compliance with all covenants.
See further discussion in "Note 21 – Segment Reporting." Principles of Consolidation We consolidate all entities that we control through either majority ownership or voting rights. In addition, we consolidate all variable interest entities ("VIEs") of which we are considered the primary beneficiary.
See further discussion in "Note 19 – Segment Reporting." Principles of Consolidation We consolidate all entities that we control through either majority ownership or voting rights. In addition, we consolidate all variable interest entities ("VIEs") of which we are considered the primary beneficiary.
Note 15 – Related Party Transactions Management Agreement In connection with our initial public offering in September 2009, we entered into a management agreement (the "Management Agreement") with the Manager, which describes the services to be provided by the Manager and its compensation for those services.
Note 13 – Related Party Transactions Management Agreement In connection with our initial public offering in September 2009, we entered into a management agreement (the "Management Agreement") with the Manager, which describes the services to be provided by the Manager and its compensation for those services.
The unrealized gain or loss related to the interest rate cap was recorded net under unrealized gain on interest rate hedging instruments in our consolidated statement of operations. During 2022 and 2023 through the interest rate cap maturity, LIBOR exceeded the cap rate of 0.75 %.
The unrealized gain or loss related to the interest rate cap was recorded net under unrealized gain on interest rate hedging instruments in our consolidated statement of operations. During 2023 through the interest rate cap maturity, LIBOR exceeded the cap rate of 0.75 %.
The impact of macroeconomic conditions on the commercial real estate markets and global capital markets, including increased interest rates, foreign currency fluctuations, changes to fiscal and monetary policy, slower economic growth or recession, labor shortages, and recent distress in the banking sector, may make it more difficult to meet or satisfy these covenants in the future.
The impact of macroeconomic conditions on the commercial real estate markets and global capital markets, including increased interest rates, foreign currency fluctuations, changes to fiscal and monetary policy, slower economic growth or recession, labor shortages, and recent distress in the banking sector, may make it more difficult to meet or satisfy our debt covenants in the future.
See further discussion in "Note 7 - Secured Debt Arrangements, Net." Unconsolidated Joint Ventures In September 2018, we entered a joint venture with Turner Consulting II, LLC ("Turner Consulting"), through an entity which owns the underlying property that secures our loan. Turner Consulting contributed 10 % of the venture’s equity and we contributed 90 %.
See further discussion in "Note 7 - Secured Debt Arrangements, Net." Unconsolidated Joint Ventures In September 2018, we entered a joint venture with Turner Consulting II, LLC ("Turner Consulting"), through an entity which owns the underlying property that secures our loan. Turner Consulting contributed 10 % of the venture' s equity and we contributed 90 %.
The 2029 Notes are secured by a first-priority lien, and rank pari-passu in right of payment with all of our existing and future first lien obligations, including indebtedness under the Term Loans. The 2029 Notes were issued at par and contain covenants relating to liens, indebtedness, and investments in non-wholly owned entities.
The 2029 Notes are secured by a first-priority lien, and rank pari-passu in right of payment with all of our existing and future first lien obligations, including indebtedness under the 2030 Term Loan. The 2029 Notes were issued at par and contain covenants relating to liens, indebtedness, and investments in non-wholly owned entities.
Note 14 – Income Taxes We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2009.
Note 12 – Income Taxes We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2009.
As of both December 31, 2024 and 2023, we were in a net asset position with all of our derivative counterparties and did not have any collateral posted under these derivative contracts.
As of December 31, 2024, we were in a net asset position with all of our derivative counterparties and did not have any collateral posted under these derivative contracts.
Following a meeting of our independent directors in February 2025, which included a discussion of the Manager's performance and the level of the management fees thereunder, we determined not to seek termination of the Management Agreement.
Following a meeting of our independent directors in February 2026, which included a discussion of the Manager's performance and the level of the management fees thereunder, we determined not to seek termination of the Management Agreement.
(5) Other items primarily consist of purchase discounts or premiums, cost recovery interest, exit fees, and deferred origination expenses. (6) $ 5.9 million of the General CECL Allowance 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 consolidated balance sheet.
(4) Other items primarily consist of purchase discounts or premiums, cost recovery interest, exit fees, and deferred origination expenses. (5) $ 5.8 million of the General CECL Allowance 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 consolidated balance sheet.
Included in payable to related party on our consolidated balance sheets at December 31, 2024 and 2023 is approximately $ 8.7 million and $ 9.6 million , respectively, for base management fees incurred but not yet paid under the Management Agreement.
Included in payable to related party on our consolidated balance sheets at December 31, 2025 and December 31, 2024 is approximately $ 8.6 million and $ 8.7 million , respectively, for base management fees incurred but not yet paid under the Management Agreement.
Substantially all of the Company's cash on deposit is in interest bearing accounts with major financial institutions and exceeds federally insured limits. As of both December 31, 2024 and 2023, we had no restricted cash on our consolidated balance sheets.
Substantially all of the Company's cash on deposit is in interest bearing accounts with major financial institutions and exceeds federally insured limits. As of December 31, 2025 and 2024 , we had no restricted cash on our consolidated balance sheets.
The complaint named as defendants (i) a wholly-owned subsidiary of the Company (the "Subsidiary"), (ii) the Company, and (iii) certain funds managed by Apollo, who were co-lenders on a mezzanine loan against the development of a residential condominium building in Manhattan, New York.
The complaint named as defendants (i) a wholly-owned subsidiary of the Company (the "Subsidiary"), (ii) the Company, and (iii) certain funds managed by Apollo, who were co-lenders on a mezzanine loan against the development of a residential condominium building in Manhattan, NY.
Note 11 – Derivatives 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, EUR and SEK) for an agreed upon amount of USD at various dates through August 2027.
Note 10 – Derivatives 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, EUR and SEK) for an agreed upon amount of USD at various dates through August 2029.
Italian Direct Lending Structure In the fourth quarter of 2021, we formed an Italian closed-end alternative investment fund (the "AIF"), managed by Apollo Investment Management Europe (Luxembourg) S.A R.L, a regulated alternative investment fund manager (the "AIFM"), an affiliate of the Manager. The management fees incurred during years ended December 31, 2024, 2023 and 2022, respectively, were de minimis.
Italian Direct Lending Structure In the fourth quarter of 2021, we formed an Italian closed-end alternative investment fund, managed by Apollo Investment Management Europe (Luxembourg) S.A R.L, a regulated alternative investment fund manager (the "AIFM"), an affiliate of the Manager. The management fees incurred during the years ended December 31, 2025 and 2024, respectively were de minimis.
(2) Includes loan principal, interest, and other fees held by our third-party servicers as of the balance sheet date and remitted during subsequent remittance cycle. (3) Includes General CECL Allowance related to unfunded commitments on commercial mortgage loans, net of $ 2.1 million and $ 2.5 million as of December 31, 2024 and December 31, 2023, respectively.
(2) Includes loan principal, interest, and other fees held by our third-party servicers as of the balance sheet date and remitted during subsequent remittance cycle. (3) Includes General CECL Allowance related to unfunded commitments on commercial mortgage loans, net of $ 1.0 million and $ 2.1 million as of December 31, 2025 and December 31, 2024, respectively.
The term of the Management Agreement was automatically renewed for a successive one-year term in September 2024 and will automatically renew on each anniversary thereafter.
The term of the Management Agreement was automatically renewed for a successive one-year term in September 2025 and will automatically renew on each anniversary thereafter.
Note 17 – Stockholders' Equity Our authorized capital stock consists of 450,000,000 shares of common stock, $ 0.01 par value per share and 50,000,000 shares of preferred stock, $ 0.01 par value per share.
Note 15 – Stockholders' Equity Our authorized capital stock consists of 450,000,000 shares of common stock, $ 0.01 par value per share and 50,000,000 shares of preferred stock, $ 0.01 par value per share.
(4) $ 5.9 million and $ 4.0 million of the General CECL Allowance for 2024 and 2023, respectively, 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 consolidated balance sheets.
(4) $ 5.8 million and $ 5.9 million of the General CECL Allowance for 2025 and 2024, respectively, 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 consolidated balance sheets.
(4) $ 5.9 million and $ 4.0 million of the General CECL Allowance for 2024 and 2023 , respectively, 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 consolidated balance sheets.
(4) $ 5.8 million and $ 5.9 million of the General CECL Allowance for 2025 and 2024 , respectively, 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 consolidated balance sheets.
The adjustment is a reduction of capital related to our Equity Incentive Plans and is presented net of increases of capital related to our Equity Incentive Plans in our consolidated statement of changes in stockholders' equity.
The adjustment is a reduction of capital related to our equity incentive plan and is presented net of increases of capital related to our equity incentive plan in our consolidated statement of changes in stockholders' equity.
As of December 31, 2024, the approximate dollar value of shares that may yet be purchased under our stock repurchase program was $ 131.6 million . Note 18 – Commitments and Contingencies Legal Proceedings From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business.
As of December 31, 2025, the approximate dollar value of shares that may yet be purchased under our stock repurchase program was $ 131.6 million . Note 16 – Commitments and Contingencies Legal Proceedings From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business.
Revenue from the operation of the hotel property is recognized when guestrooms are occupied or services have been rendered. Revenues are recorded net of any discounts and sales and other taxes collected from customers. Revenues consist of room sales, food and beverage sales and other hotel revenues.
Hotel revenue is recognized when guestrooms are occupied or services have been rendered and are recorded net of any discounts and sales and other taxes collected from customers. Hotel revenues consist of room sales, food and beverage sales and other hotel revenues.
Our interest rate caps are classified as Level II in the fair value hierarchy and manage our exposure to variable cash flows on certain of our borrowings. As of December 31, 2024, we held two interest rate caps: one related to financing on a full service luxury hotel in Washington D.C. ( "D.C.
Our interest rate caps are classified as Level II in the fair value hierarchy and manage our exposure to variable cash flows on certain of our borrowings. As of December 31, 2025 , we held one interest rate cap related to financing on a full service luxury hotel in Washington D.C. ("D.C. Hotel").
The amortized cost basis, net of Specific CECL Allowance, for loans on nonaccrual was $ 486.8 million and $ 693.7 million as of December 31, 2024 and December 31, 2023, respectively. Under certain circumstances, we may apply the cost recovery method under which interest collected on a loan reduces the loan's amortized cost.
The amortized cost basis, net of Specific CECL Allowance, for loans on nonaccrual was $ 312.7 million and $ 486.8 million as of December 31, 2025 and December 31, 2024, respectively. Under certain circumstances, we may apply the cost recovery method under which interest collected on a loan reduces the loan's amortized cost.
Loan Modifications Pursuant to ASC 326 During the twelve months ended December 31, 2024, we provided the following loan modifications that require disclosure pursuant to ASC 326.
Loan Modifications Pursuant to ASC 326 During the twelve months ended December 31, 2025, we provided the following loan modifications that require disclosure pursuant to ASC 326.
The adjustment was $ 7.5 million , $ 6.9 million and $ 7.0 million for the years ended December 31, 2024, 2023 and 2022 , respectively.
The adjustment was $ 5.0 million , $ 7.5 million , and $ 6.9 million for the years ended December 31, 2025, 2024 and 2023 , respectively.
The realized gains were a result of the increase in the current interest rate forward curve, partially offset by the nearing maturity of the cap. In September 2023, we entered into an interest rate cap with an original maturity of October 1, 2024 and a notional amount of $ 164.8 million.
The realized gain was a result of the increase in the current interest rate forward curve, partially offset by the nearing maturity of the cap. In September 2023, we entered into an interest rate cap with an original maturity of October 1, 2024 and a notional amount of $ 164.8 million.
(2) $ 5.9 million and $ 4.0 million of the General CECL Allowance for 2024 and 2023 , respectively, 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 consolidated balance sheets.
(2) $ 5.8 million and $ 5.9 million of the General CECL Allowance for 2025 and 2024 , respectively, 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 consolidated balance sheets.
For the years ended December 31, 2024 and 2023, we received $ 9.1 million and $ 2.5 million , respectively, in interest that reduced amortized cost under the cost recovery method.
For the years ended December 31, 2025 and 2024, we received $ 1.2 million and $ 9.1 million , respectively, in interest that reduced amortized cost under the cost recovery method.
Certain of our lenders are contractually obligated to fund their ratable portion of these loan commitments over time, while other lenders have some degree of discretion over future loan funding obligations. The total unfunded commitment is expected to be funded over the remaining 4.5 years weighted-average tenor of these loans.
Certain of our lenders are contractually obligated to fund their ratable portion of these loan commitments over time, while other lenders have some degree of discretion over future loan funding obligations. The total unfunded commitment is expected to be funded over the remaining 4.1 ye ars weighted-average tenor of these loans.
Other items primarily consist of purchase discounts or premiums, exit fees and deferred origination expenses, as well as $ 9.1 million , $ 2.5 million , and $ 3.2 million in cost recovery proceeds in 2024, 2023 , and 2022, respectively. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 106
Other items primarily consist of purchase discounts or premiums, exit fees and deferred origination expenses, as well as $ 1.2 million , $ 9.1 million , and $ 2.5 million in cost recovery proceeds in 2025, 2024 , and 2023, respectively. 111 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.
As of December 31, 2024 For the twelve months ended December 31, 2024 Balance Collateral (1) Maximum Month-End Balance Average Month-End Balance JPMorgan Facility $ 1,033,504 1,832,859 1,063,261 $ 969,759 Deutsche Bank Facility 123,434 199,217 278,703 201,020 Goldman Sachs Facility - USD — — 11,620 2,903 Goldman Sachs Facility - GBP 373,706 485,054 390,163 251,571 Atlas Facility 462,886 702,927 758,201 640,453 HSBC Facility 627,646 839,123 672,422 653,182 Barclays Facility 321,546 420,774 353,153 242,792 MUFG Securities Facility 171,972 209,493 211,057 197,420 Churchill Facility 121,289 161,264 126,080 123,684 Santander Facility - USD — — 67,500 56,250 Santander Facility - EUR — — 54,677 22,684 Barclays Private Securitization 1,587,779 2,182,088 2,249,538 2,041,421 Revolving Credit Facility — — 150,000 38,796 Total $ 4,823,762 $ 7,032,800 (1) Represents the amortized cost balance of commercial loan collateral assets and the value of net real estate assets of real property owned collateral assets. 92 The table below summarizes the outstanding balances at December 31, 2023, as well as the maximum and average month-end balances for the year ended December 31, 2023 for our borrowings under secured debt arrangements ($ in thousands).
As of December 31, 2024 For the year ended December 31, 2024 Balance Collateral (1) Maximum Month-End Balance Average Month-End Balance JPMorgan Facility $ 1,033,504 $ 1,832,859 $ 1,063,261 $ 969,759 Deutsche Bank Facility 123,434 199,217 278,703 201,020 Goldman Sachs Facility - USD — — 11,620 2,903 Goldman Sachs Facility - GBP 373,706 485,054 390,163 251,571 Atlas Facility 462,886 702,927 758,201 640,453 HSBC Facility 627,646 839,123 672,422 653,182 Barclays Facility 321,546 420,774 353,153 242,792 MUFG Securities Facility 171,972 209,493 211,057 197,420 Churchill Facility 121,289 161,264 126,080 123,684 Santander Facility - USD — — 67,500 56,250 Santander Facility - EUR — — 54,677 22,684 Barclays Private Securitization 1,587,779 2,182,088 2,249,538 2,041,421 Revolving Credit Facility — — 150,000 38,796 Total $ 4,823,762 $ 7,032,800 (1) Represents the amortized cost balance of commercial loan collateral assets and the value of net real estate assets of real property owned collateral assets.
The following table summarizes the levels in the fair value hierarchy into which our assets and liabilities with recurring fair value measurements were categorized as of December 31, 2024 and December 31, 2023 ($ in thousands): Fair Value as of December 31, 2024 Fair Value as of December 31, 2023 Level I Level II Level III Total Level I Level II Level III Total Recurring fair value measurements: Foreign currency forward, net $ — $ 57,753 $ — $ 57,753 $ — $ 28,065 $ — $ 28,065 Interest rate cap assets — 416 — 416 — 1,360 — 1,360 Note receivable, held for sale — — 41,200 41,200 — — — — Total financial instruments $ — $ 58,169 $ 41,200 $ 99,369 $ — $ 29,425 $ — $ 29,425 Non-recurring Fair Value Measurements Real Estate Owned Property acquired through foreclosure or deed-in-lieu of foreclosure is classified as real estate owned and recognized at fair value on our consolidated balance sheet upon acquisition in accordance with ASC Topic 805, "Business Combinations" ("ASC 805").
The following table summarizes the levels in the fair value hierarchy into which our assets and liabilities with recurring fair value measurements were categorized as of December 31, 2025 and December 31, 2024 ($ in thousands): Fair Value as of December 31, 2025 Fair Value as of December 31, 2024 Level I Level II Level III Total Level I Level II Level III Total Recurring fair value measurements: Foreign currency forwards, net $ — $ ( 26,791 ) $ — $ ( 26,791 ) $ — $ 57,753 $ — $ 57,753 Interest rate cap assets — — — — — 416 — 416 Note receivable, held for sale — — — — — — 41,200 41,200 Total financial instruments $ — $ ( 26,791 ) $ — $ ( 26,791 ) $ — $ 58,169 $ 41,200 $ 99,369 Non-recurring Fair Value Measurements Real Estate Owned Property acquired through foreclosure or deed-in-lieu of foreclosure is classified as real estate owned and recognized at fair value on our consolidated balance sheet upon acquisition in accordance with ASC Topic 805, "Business Combinations" ("ASC 805").
Common Stock Repurchases. During the year ended December 31, 2024, we repurchased 4,013,405 shares, of our common stock at a weighted-average price of $ 10.15 per share. There was no common stock repurchase activity during the years ended December 31, 2023 and 2022.
During the year ended December 31, 2024 , we repurchased 4,013,405 shares of our common stock at a weighted-average price of $ 10.15 per share, respectively. There was no common stock repurchase activity during the year ended December 31, 2023.
(2) Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional disclosure related to the General CECL Allowance on unfunded commitments as of December 31, 2024 and 2023, res pectively.
(2) Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional disclosure related to the General CECL Allowance on unfunded commitments as of December 31, 2025 and December 31, 2024 , respectively .
Our loan portfolio consisted of 95 % and 99 % floating rate loans, based on amortized cost, net of Specific CECL Allowance, as of December 31, 2024 and December 31, 2023, respectively.
Our loan portfolio consisted of 96 % and 95 % floating rate loans, based on amortized cost, net of Specific CECL Allowance, as of December 31, 2025 and December 31, 2024, respectively.
Covenants The financial covenants of the Term Loans include the requirements that we maintain: (i) a maximum ratio of total recourse debt to tangible net worth of 4 :1; and (ii) a ratio of total unencumbered assets to total pari-passu indebtedness of at least 2.50 :1.
The financial covenants of the 2026 and 2028 Term Loans included the requirement that we maintain: (i) a maximum ratio of total recourse debt to tangible net worth of 4 :1; and (ii) a ratio of total unencumbered assets to total pari-passu indebtedness of at least 2.50 :1.
(3) Other includes Northeast ( 0.6 %), Mid-Atlantic ( 1.4 %), Southwest ( 1.5 %) and Other ( 1.3 %) in 2024 , and Northeast ( 5.0 %), Mid-Atlantic ( 1.1 %), Southwest ( 1.7 %) and Other ( 1.1 %) in 2023.
(3) Other includes Southwest ( 4.2 %), Northeast ( 3.5 %), Mid-Atlantic ( 1.7 %) and Other ( 0.4 %) in 2025 and Southwest ( 1.5 %), Northeast ( 0.6 %), Mid-Atlantic ( 1.4 %), and Other ( 1.3 %) in 2024.
We use our interest rate cap to hedge our exposure to variable cash flows on our construction financing. The interest rate cap effectively limits SOFR from exceeding 4.00 % which results in the maximum all-in coupon on our construction financing of 6.55 %.
During September 2024, we extended our interest rate cap to October 2025. We use our interest rate cap to hedge our exposure to variable cash flows on our construction financing. The interest rate cap effectively limits SOFR from exceeding 4.00 % which results in the maximum all-in coupon on our construction financing of 6.55 %.
To manage our exposure to variable cash flows on our borrowings under this mortgage, we entered into an interest rate cap in June 2024. As of December 31, 2024, the fair value of the interest rate cap was de minimis. Refer to "Note 11 – Derivatives" for additional detail.
To manage our exposure to variable cash flows on our borrowings under this mortgage, we entered into an interest rate cap in June 2024. As of both December 31, 2025 and December 31, 2024, the fair value of the interest rate cap was de minimis. Refer to "Note 10 – Derivatives" for full detail.
As of December 31, 2024 and 2023, there were no material deferred tax assets or liabilities. As of December 31, 2024 , we had net operating losses of $ 9.3 million and capital losses of $ 25.2 million that may be carried forward for use in subsequent periods.
As of December 31, 2025, December 31, 2024, and December 31, 2023, there were no material deferred tax assets or liabilities. 99 As of December 31, 2025, we had net operating los ses of $ 6.2 million and capital losses of $ 25.2 million that may be carried forward for use in subsequent periods.
As of December 31, 2024, 138,174,636 shares of common stock were issued 100 and outstanding and 6,770,393 shares of our 7.25 % Series B-1 Cumulative Redeemable Perpetual Preferred Stock ("Series B-1 Preferred Stock") were issued and outstanding. The Series B-1 Preferred Stock, with a par value $ 0.01 per share, have a liquidation preference of $ 25.00 per share. Dividends.
As of December 31, 2025, 138,943,831 shares of common stock were issued and outstanding and 6,770,393 shares of our 7.25 % Series B-1 Cumulative Redeemable Perpetual Preferred Stock ("Series B-1 Preferred Stock") were issued and outstanding. The Series B-1 Preferred Stock, with a par value $ 0.01 per share, have a liquidation preference of $ 25.00 per share. 102 Dividends.
As such, during the years ended December 31, 2024 and 2023, we realized gains from the interest rate cap in the amount of $ 1.9 million a nd $ 0.6 million, respectively, which are included in gain (loss) on interest rate hedging instruments in our consolidated statement of operations.
As such, we reali zed gains from the interest rate cap in the 98 amount of $ 0.4 million , $ 1.9 million , and $ 0.6 million during the years ended December 31, 2025, 2024 and 2023, respectively, which are included in gain (loss) on interest rate hedging instruments in our consolidated statement of operations.
The entity was deemed to be a variable interest entity ("VIE"), and we determined that we are not the primary beneficiary of that VIE as we do not have the power to direct the entity's activities. During the second quarter of 2024, the loan's maturity was extended from September 2024 to September 2025.
The entity was deemed to be a variable i nterest entity ("VIE"), and we determined that we are not the primary beneficiary of that VIE as we do not have the power to direct the entity's activities. During the third quarter of 2025, the loan's maturity was extended from September 2025 to September 2026.
During the fourth quarter of 2024, five of the seven hospitals were sold to third parties in accordance with the previously executed purchase and sale agreements, and the proceeds were allocated among us and other Apollo Co-Lenders based on our pro-rata interests in the Massachusetts Healthcare Loan.
During the fourth quarter of 2024, five of the seven hospitals were sold to third parties and the proceeds were allocated among us and other Apollo Co-Lenders based on our pro-rata interests in the Massachusetts Healthcare Loan.
The CECL Standard requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment. The FASB recognizes the weighted average remaining maturity ("WARM") method as an acceptable approach for computing current expected credit losses. We utilize the WARM method to determine a General CECL Allowance for a majority of our portfolio.
The CECL Standard requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment. The FASB recognizes the weighted average remaining maturity ("WARM") method as an acceptable approach for computing current expected credit losses.
As of December 31, 2024 and December 31, 2023, the carrying value of the construction financing included within debt related to real estate owned, held for investment, net on our consolidated balance sheets was $ 252.0 million , net of $ 2.0 million in deferred financing costs and $ 161.6 million , net of $ 3.2 million in deferred financing costs, respectively.
As of December 31, 2025 and December 31, 2024, the carrying value of the construction financing included within debt related to real estate owned, held for investment, net on our consolidated balance sheets was $ 351.4 million , net of $ 0.7 million in deferred financing costs and $ 252.0 million , net of $ 2.0 million in deferred financing costs, respectively.
As of December 31, 2024 and December 31, 2023, the fair value of the interest rate cap was $ 0.4 million and $ 1.4 million , respectively, and recorded within derivative assets, net on our consolidated balance sheet. Refer to "Note 11 – Derivatives" for additional detail.
As of December 31, 2024, the fair value of the interest rate cap was $ 0.4 million and recorded within derivative assets, net on our consolidated balance sheet. Refer to "Note 10 – Derivatives" for full detail.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeCertain provisions of the Maryland General Corporation Law ("MGCL") may have the effect of deterring a third party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock including: • "business combination" provisions of the MGCL that, subject to limitations, prohibit certain business combinations between us and an "interested stockholder" (defined generally as any person who beneficially owns 10% or more of our then outstanding voting stock or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of our then outstanding voting stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder and, thereafter, impose fair price and/or supermajority stockholder voting requirements on these combinations; • "control share" provisions of the MGCL that provide that a holder of "control shares" of a Maryland corporation (defined as shares which, when aggregated with all other shares controlled by the stockholder (except solely by virtue of a revocable proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding "control shares") has no voting rights with respect to such shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and personnel who are also directors; and • "unsolicited takeover" provisions of the MGCL that permit our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement takeover defenses, some of which (for example, a classified board) we do not yet have. 14 As permitted by the MGCL, our board of directors has by resolution exempted from the "business combination" provision of the MGCL business combinations (1) between us and any other person, provided that such business combination is first approved by our board of directors (including a majority of our directors who are not affiliates or associates of such person) and (2) between us and Apollo and its affiliates and associates and persons acting in concert with any of the foregoing.
Biggest changeCertain provisions of the Maryland General Corporation Law ("MGCL") may have the effect of deterring a third party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock including: • "business combination" provisions of the MGCL that, subject to limitations, prohibit certain business combinations between us and an "interested stockholder" (defined generally as any person who beneficially owns 10% or more of our then outstanding voting stock or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of our then outstanding voting stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder and, thereafter, impose fair price and/or supermajority stockholder voting requirements on these combinations; • "control share" provisions of the MGCL that provide that a holder of "control shares" of a Maryland corporation (defined as shares which, when aggregated with all other shares controlled by the stockholder (except solely by virtue of a revocable proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding "control shares") has no voting rights with respect to such shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and personnel who are also directors; and • "unsolicited takeover" provisions of the MGCL that permit our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement takeover defenses, some of which (for example, a classified board) we do not yet have.
In general, Rule 3a-7 excludes from the 1940 Act issuers that limit their activities as follows: • the issuer issues securities, the payment of which depends primarily on the cash flow from "eligible assets," which are assets that by their terms convert into cash within a finite time period; • the securities sold are fixed-income securities rated investment grade by at least one rating agency except that fixed- income securities which are unrated or rated below investment grade may be sold to institutional accredited investors and any securities may be sold to "qualified institutional buyers" and to persons involved in the organization 15 or operation of the issuer; • the issuer acquires and disposes of eligible assets (1) only in accordance with the agreements pursuant to which the securities are issued and (2) so that the acquisition or disposition does not result in a downgrading of the issuer's fixed-income securities and (3) the primary purpose of which is not recognizing gains or decreasing losses resulting from market value changes; and • unless the issuer is issuing only commercial paper, the issuer appoints an independent trustee, takes reasonable steps to transfer to the trustee an ownership or perfected security interest in the eligible assets, and meets rating agency requirements for commingling of cash flows.
In general, Rule 3a-7 excludes from the 1940 Act issuers that limit their activities as follows: • the issuer issues securities, the payment of which depends primarily on the cash flow from "eligible assets," which are assets that by their terms convert into cash within a finite time period; • the securities sold are fixed-income securities rated investment grade by at least one rating agency except that fixed- income securities which are unrated or rated below investment grade may be sold to institutional accredited investors and any securities may be sold to "qualified institutional buyers" and to persons involved in the organization or operation of the issuer; • the issuer acquires and disposes of eligible assets (1) only in accordance with the agreements pursuant to which the securities are issued and (2) so that the acquisition or disposition does not result in a downgrading of the issuer's fixed-income securities and (3) the primary purpose of which is not recognizing gains or decreasing losses resulting from market value changes; and • unless the issuer is issuing only commercial paper, the issuer appoints an independent trustee, takes reasonable steps to transfer to the trustee an ownership or perfected security interest in the eligible assets, and meets rating agency requirements for commingling of cash flows.
Incurring substantial debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that: • our cash flow from operations may be insufficient to make required payments of principal of and interest on the debt or we may fail to comply with all of the other covenants contained in the debt documents, which is likely to result in (i) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision) that we may be unable to repay from internal funds or to refinance on favorable terms, or at all, (ii) our inability to borrow unused amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements and/or (iii) the loss of some or all of our assets to foreclosure or sale; • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase with higher financing costs; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions or other purposes; and • we may not be able to refinance debt that matures prior to the investment it was used to finance on favorable terms, or at all.
Incurring substantial debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that: 20 • our cash flow from operations may be insufficient to make required payments of principal of and interest on the debt or we may fail to comply with all of the other covenants contained in the debt documents, which is likely to result in (i) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision) that we may be unable to repay from internal funds or to refinance on favorable terms, or at all, (ii) our inability to borrow unused amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements and/or (iii) the loss of some or all of our assets to foreclosure or sale; • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase with higher financing costs; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions or other purposes; and • we may not be able to refinance debt that matures prior to the investment it was used to finance on favorable terms, or at all.
Net operating income of an income-producing property can be affected by, among other things: tenant mix, success of tenant businesses, property management decisions, property location and condition, competition from comparable types of properties (including properties located in opportunity zones), changes in laws that increase operating expense or limit rents that may be charged, any need to address environmental contamination at the property, the occurrence of any uninsured casualty at the property, changes in national, regional or local economic conditions and/or specific industry segments, declines in regional or local real estate values, declines in regional or local rental or occupancy rates, increases in interest rates, real estate tax rates and other operating expenses, changes in governmental rules, regulations and fiscal policies, environmental, climate and other ESG-related legislation and tax legislation, acts of God, regional, national or global outbreaks, epidemics and pandemics, geopolitical events, terrorism, social unrest, civil disturbances or other calamities.
Net operating income of an income-producing property can be affected by, among other things: tenant mix, success of tenant businesses, property management decisions, property location and condition, competition from comparable types of properties (including properties located in opportunity zones), changes in laws that increase operating expense or limit rents that may be charged, any need to address environmental contamination at the property, the occurrence of any uninsured casualty at the property, changes in national, 25 regional or local economic conditions and/or specific industry segments, declines in regional or local real estate values, declines in regional or local rental or occupancy rates, increases in interest rates, real estate tax rates and other operating expenses, changes in governmental rules, regulations and fiscal policies, environmental, climate and other ESG-related legislation and tax legislation, acts of God, regional, national or global outbreaks, epidemics and pandemics, geopolitical events, terrorism, social unrest, civil disturbances or other calamities.
In the event we own a mezzanine loan that does not meet the safe harbor, or a loan that has undergone a "significant modification," the IRS could challenge such loan ' s treatment as a real estate asset for purposes of the REIT asset and income tests and, if such a challenge were sustained, or if such loan otherwise adversely impacted our REIT asset and income tests, we could 33 fail to qualify as a REIT, unless we are able to qualify for a statutory REIT "savings" provision, which may require us to pay a significant penalty tax to maintain our REIT qualification.
In the event we own a mezzanine loan that does not meet the safe harbor, or a loan that has undergone a "significant modification," the IRS could challenge such loan ' s treatment as a real estate asset for purposes of the REIT asset and income tests and, if such a challenge were sustained, or if such loan otherwise adversely impacted our REIT asset and income tests, we could fail to qualify as a REIT, unless we are able to qualify for a statutory REIT "savings" provision, which may require us to pay a significant penalty tax to maintain our REIT qualification.
Under the terms of the Management Agreement, the Manager, its officers, members, managers, directors, personnel, any person controlling or controlled by the Manager and any person providing services to the Manager (including 28 Apollo) are not liable to us, any of our subsidiaries, our stockholders or partners or any subsidiary's stockholders or partners for acts or omissions performed in accordance with and pursuant to the Management Agreement, except by reason of acts constituting bad faith, willful misconduct, gross negligence, or reckless disregard of their duties under the Management Agreement.
Under the terms of the Management Agreement, the Manager, its officers, members, managers, directors, personnel, any person controlling or controlled by the Manager and any person providing services to the Manager (including Apollo) are not liable to us, any of our subsidiaries, our stockholders or partners or any subsidiary's stockholders or partners for acts or omissions performed in accordance with and pursuant to the Management Agreement, except by reason of acts constituting bad faith, willful misconduct, gross negligence, or reckless disregard of their duties under the Management Agreement.
We believe that we have been organized and operated and intend to continue to be organized and to operate in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2009, but we have not requested and do not intend to request a ruling from the Internal Revenue Service (the "IRS") that we so qualify.
We believe that we have been organized and operated and intend to continue to be organized and to operate in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 32 31, 2009, but we have not requested and do not intend to request a ruling from the Internal Revenue Service (the "IRS") that we so qualify.
In addition, if the lender is a broker or dealer subject to the Securities Investor Protection Act of 1970, or an insured depository institution subject to the Federal Deposit Insurance Act, our ability to exercise our rights to recover our securities under a secured debt arrangement or to be compensated for any damages resulting from the lender's insolvency may be further limited by those statutes.
In addition, if the lender is a broker or dealer subject to the Securities Investor Protection Act of 1970, or an insured depository institution subject to the Federal Deposit Insurance Act, our ability to exercise our rights to recover our securities under a secured debt arrangement or to be compensated for any damages resulting from the 22 lender's insolvency may be further limited by those statutes.
Our qualification as a REIT and exemption from U.S. federal income tax with respect to certain assets may be dependent on the accuracy of legal opinions or advice rendered or given or statements by the issuers of assets that we acquire, and the inaccuracy of any such opinions, advice or statements may adversely affect our REIT qualification and result in significant corporate-level tax.
Our qualification as a REIT and exemption from U.S. federal income tax with respect to certain assets may be dependent on the accuracy of legal opinions or advice rendered or given or statements by the issuers of assets that we acquire, and the 37 inaccuracy of any such opinions, advice or statements may adversely affect our REIT qualification and result in significant corporate-level tax.
The successful securitization of our portfolio investments might expose us to losses as the commercial real estate investments in which we do not sell interests will tend to be those that are riskier and more likely to generate losses. Securitization financings could also restrict our ability to sell assets when it would otherwise be advantageous to do so.
The successful securitization of our portfolio investments might expose us to losses as the commercial real estate investments in which we do not sell interests will tend to be those that are riskier and more likely to 21 generate losses. Securitization financings could also restrict our ability to sell assets when it would otherwise be advantageous to do so.
In the event we utilize such financing arrangements, they may involve the risk that the 19 market value of our assets pledged or sold by us to the secured debt arrangements counterparty or provider of the credit facility may decline in value, in which case the lender may require us to provide additional collateral or to repay all or a portion of the funds advanced.
In the event we utilize such financing arrangements, they may involve the risk that the market value of our assets pledged or sold by us to the secured debt arrangements counterparty or provider of the credit facility may decline in value, in which case the lender may require us to provide additional collateral or to repay all or a portion of the funds advanced.
For additional information regarding our Specific CECL Allowance, refer to " Specific CECL Allowance " under "Note 4 - Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" in our consolidated financial statements. 23 In addition, we record a general reserve in accordance with the CECL Standard on the remainder of the loan portfolio ("General CECL Allowance").
For additional information regarding our Specific CECL Allowance, refer to " Specific CECL Allowance " under "Note 4 - Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" in our consolidated financial statements. In addition, we record a general reserve in accordance with the CECL Standard on the remainder of the loan portfolio ("General CECL Allowance").
Thus, while we intend to operate so that we will qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual 31 determinations, and the possibility of future changes in our circumstances, no assurance can be given that we will so qualify for any particular year.
Thus, while we intend to operate so that we will qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in our circumstances, no assurance can be given that we will so qualify for any particular year.
In addition, events or conditions that have not been anticipated may occur and may have a significant effect on the actual rate of return received on our target assets. If these assumptions fail to materialize, future returns on our investments may be significantly lower than underwritten returns.
In addition, events or conditions that have not been anticipated may occur and may have a significant effect on the actual rate of return received on our target 23 assets. If these assumptions fail to materialize, future returns on our investments may be significantly lower than underwritten returns.
Apollo retains the right to continue using the "Apollo" name. We cannot preclude Apollo from licensing or transferring the ownership of the "Apollo" name to third parties, some of whom may compete with us. Consequently, we would be unable to prevent any damage to goodwill that may occur as a result of the activities of Apollo or others.
Apollo retains the right to continue using the "Apollo" name. We cannot preclude Apollo from licensing or transferring the ownership of the "Apollo" name to third parties, some of whom may compete 30 with us. Consequently, we would be unable to prevent any damage to goodwill that may occur as a result of the activities of Apollo or others.
If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, their ratings of our investments in the future, the value of these investments could significantly decline, which would adversely affect the value of our investment portfolio and could result in 22 losses upon disposition.
If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, their ratings of our investments in the future, the value of these investments could significantly decline, which would adversely affect the value of our investment portfolio and could result in losses upon disposition.
In such event, Apollo's ability to operate as an integrated asset management platform will be restricted and the Manager's resources may be limited. We are dependent on the Manager and its key personnel for our success and upon their access to Apollo's investment professionals and partners.
In such event, Apollo's ability to operate as an integrated asset management platform will be restricted and the Manager's resources may be limited. 31 We are dependent on the Manager and its key personnel for our success and upon their access to Apollo's investment professionals and partners.
If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences.
If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of 33 the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences.
In addition, we offer no 30 assurance that the Manager will remain our investment manager, that we will continue to have access to the Manager ' s or Apollo ' s executive officers and other investment professionals, or that we will be able to find a suitable replacement for the Manager if the Management Agreement is terminated.
In addition, we offer no assurance that the Manager will remain our investment manager, that we will continue to have access to the Manager ' s or Apollo ' s executive officers and other investment professionals, or that we will be able to find a suitable replacement for the Manager if the Management Agreement is terminated.
While we have implemented risk management and contingency plans and taken preventive measures and other precautions, no predictions of specific scenarios can be made with certainty and such measures may not adequately predict the impact on our business from such events.
While we have implemented risk management and contingency plans and taken preventive 14 measures and other precautions, no predictions of specific scenarios can be made with certainty and such measures may not adequately predict the impact on our business from such events.
Changes in interest rates will affect our operating results as such changes will affect the interest we receive on any floating rate interest (such as SOFR or SONIA) bearing assets and the financing cost of our floating rate debt, as well as our interest rate 20 swap that we may utilize for hedging purposes.
Changes in interest rates will affect our operating results as such changes will affect the interest we receive on any floating rate interest (such as SOFR or SONIA) bearing assets and the financing cost of our floating rate debt, as well as our interest rate swap that we may utilize for hedging purposes.
Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect the Manager's ability to invest in, sell and securitize loans, which would materially and adversely affect our results of operations, financial condition, liquidity and business and our ability to pay dividends to stockholders.
Any sustained period of increased payment delinquencies, foreclosures or losses could 27 adversely affect the Manager's ability to invest in, sell and securitize loans, which would materially and adversely affect our results of operations, financial condition, liquidity and business and our ability to pay dividends to stockholders.
("ACREFI III TRS"), a 32 Delaware corporation that is indirectly wholly owned by us, and ACRE Debt 2 PLC ("ACRE Debt TRS"), a UK public limited company that we own an interest in, to treat each of ACREFI TRS, ARM TRS, ACREFI II TRS, ACREFI III TRS, and ACRE Debt TRS as a TRS of ours.
("ACREFI III TRS"), a Delaware corporation that is indirectly wholly owned by us, and ACRE Debt 2 PLC ("ACRE Debt TRS"), a UK public limited company that we own an interest in, to treat each of ACREFI TRS, ARM TRS, ACREFI II TRS, ACREFI III TRS, and ACRE Debt TRS as a TRS of ours.
None of us, the Manager or Apollo have experienced any material breach of cybersecurity. However, we can provide no assurance that the networks and systems that we, the Manager, Apollo or our third-party service 11 providers have established, or use will be effective.
None of us, the Manager or Apollo have experienced any material breach of cybersecurity. However, we can provide no assurance that the networks and systems that we, the Manager, Apollo or our third-party service providers have established, or use will be effective.
Owning and operating real property involves risks that are different (and in many ways more significant) than the risks 24 faced in owning an asset secured by that property, which could result in losses that harm our results of operations and financial condition.
Owning and operating real property involves risks that are different (and in many ways more significant) than the risks faced in owning an asset secured by that property, which could result in losses that harm our results of operations and financial condition.
Certain provisions in the indentures governing the 2029 Notes could delay or prevent an otherwise beneficial takeover or takeover attempt of us. Certain provisions in the 2029 Notes and the indentures governing the 2029 Notes could make it more difficult or more expensive for a third party to acquire us.
Certain provisions in the indentures governing the 2029 Notes could delay or prevent an otherwise beneficial takeover or takeover attempt of us. 18 Certain provisions in the 2029 Notes and the indentures governing the 2029 Notes could make it more difficult or more expensive for a third party to acquire us.
To the extent our borrowing costs increase faster than the interest income earned from our floating-rate loans, such increases may adversely affect our cash flows. 26 Our real estate assets are subject to risks particular to real property.
To the extent our borrowing costs increase faster than the interest income earned from our floating-rate loans, such increases may adversely affect our cash flows. Our real estate assets are subject to risks particular to real property.
If that partnership or limited liability company owned non-qualifying assets, earned non-qualifying income, or earned prohibited transaction income, we may not be able to satisfy all of the REIT income or asset tests or could be subject to prohibited transaction tax.
If that partnership or 35 limited liability company owned non-qualifying assets, earned non-qualifying income, or earned prohibited transaction income, we may not be able to satisfy all of the REIT income or asset tests or could be subject to prohibited transaction tax.
These alternative exclusions or exemptions may impose limitations on a subsidiary's organizational form, the types of assets that such subsidiary may hold or require such subsidiary to qualify under a banking, insurance or other regulatory regime.
These alternative exclusions 17 or exemptions may impose limitations on a subsidiary's organizational form, the types of assets that such subsidiary may hold or require such subsidiary to qualify under a banking, insurance or other regulatory regime.
Co-investors may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position 27 to take actions contrary to our policies or objectives.
Co-investors may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives.
Our stockholders' equity for the purposes of calculating the base management fee is not the same as, and could be greater than, the amount of stockholders' equity 29 shown on our consolidated financial statements.
Our stockholders' equity for the purposes of calculating the base management fee is not the same as, and could be greater than, the amount of stockholders' equity shown on our consolidated financial statements.
While we will be monitoring the aggregate value of the securities of our TRSs and intend to conduct our affairs so that such securities will represent less than 20% of the value of our total assets, there can be no assurance that we will be able to comply with the TRS limitation in all market conditions.
While we will be monitoring the aggregate value of the securities of our TRSs and intend to conduct our affairs so that such securities will represent less than 25% of the value of our total assets, there can be no assurance that we will be able to comply with the TRS limitation in all market conditions.
If investors subject to such legislation viewed us, our policies, or our practices, as being in contradiction of such “anti-ESG” policies, legislation or legal opinions, such investors may not invest in us, which could negatively affect our financial performance. Certain provisions of Maryland law could inhibit changes in control.
If investors subject to such legislation viewed us, our policies, or our practices, as being in contradiction of such "anti-ESG" policies, legislation or legal opinions, such investors may not invest in us, which could negatively affect our financial performance. 15 Certain provisions of Maryland law could inhibit changes in control.
We cannot predict the terms of each B Note investment. Similar to our B Note strategy, we may originate or acquire mezzanine loans, which are loans made to property owners that are secured by pledges of the borrower's ownership interests, in whole or in part, in entities that directly or indirectly own the real property.
Similar to our B Note strategy, we may originate or acquire mezzanine loans, which are loans made to property owners that are secured by pledges of the borrower's ownership interests, in whole or in part, in entities that directly or indirectly own the real property.
Our assets include loans that are denominated in currencies other than USD or are secured by assets located outside the United States. As of December 31, 2024, $3.7 billion, or 51.8%, of our assets (by carrying value) were comprised of such loans.
Our assets include loans that are denominated in currencies other than USD or are secured by assets located outside the United States. As of December 31, 2025, $3.8 billion, or 43.3%, of our assets (by carrying value) were comprised of such loans.
Credit facilities and secured debt arrangements that we may use to finance our assets may require us to provide additional collateral or pay down debt. As of December 31, 2024, we had secured debt arrangements in place, with an aggregate borrowing capacity of approximately $6.9 billion.
Credit facilities and secured debt arrangements that we may use to finance our assets may require us to provide additional collateral or pay down debt. As of December 31, 2025, we had secured debt arrangements in place, with an aggregate borrowing capacity of approximately $7.8 billion.
In addition, in general, no more than 5% of the value of our assets (other than government securities and securities that are qualifying real estate assets) can consist of the securities of any one issuer, no more than 20% of the value of our total securities can be represented by securities of one or more taxable REIT subsidiaries ("TRSs") and not more than 25% of the value of our assets can consist of debt instruments issued by publicly offered REITs that are not secured by real property.
In addition, in general, no more than 5% of the value of our assets (other than government securities and securities that are qualifying real estate assets) can consist of the securities of any one issuer, not more than 25% of the value of our assets can consist of debt instruments issued by publicly offered REITs that are not secured by real property, and, for taxable years beginning on or after January 1, 2026, no more than 25% (20% for prior taxable years) of the value of our total assets can be represented by securities of one or more taxable REIT subsidiaries ("TRSs").
In addition, certain states now require that relevant state entities or managers/administrators of state investments make investments based solely on pecuniary factors without consideration of environmental, social and governance factors.
In addition, certain jurisdictions now require that relevant government entities or managers/administrators of government investments make investments based solely on pecuniary factors without consideration of non-pecuniary environmental, social and governance factors.
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13 "Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments (Topic 326)" ("ASU 2016-13") and in April 2019, the FASB issued ASU 2019-04 "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments" ("ASU 2019-04") (collectively, the "CECL Standard").
Allowances for loan losses are difficult to estimate. 24 In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13 "Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments (Topic 326)" ("ASU 2016-13") and in April 2019, the FASB issued ASU 2019-04 "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments" ("ASU 2019-04") (collectively, the "CECL Standard").
So-called “anti-ESG” sentiment has also gained momentum across the U.S., with several states having enacted or proposed “anti-ESG” policies, legislation, or issued related legal opinions.
So-called "anti-ESG" sentiment has also gained momentum across the U.S., with several states having enacted or proposed “anti-ESG” policies, legislation, or issued executive orders and legal opinions.
As a result, our ability to vary our portfolio in response to changes in economic and other conditions may be relatively limited, which could adversely affect our results of operations and financial condition. Allowances for loan losses are difficult to estimate.
As a result, our ability to vary our portfolio in response to changes in economic and other conditions may be relatively limited, which could adversely affect our results of operations and financial condition.
If we failed to maintain our excluded status under the 1940 Act and became regulated as an investment company, our ability to, among other things, use leverage would be substantially reduced and, as a result, we would be unable to conduct our business as described in this annual report on Form 10-K. 16 If our subsidiaries fail to maintain an exclusion or exemption from registration pursuant to the 1940 Act, we could, among other things, be required either to (a) change the manner in which we conduct our operations to avoid being required to register as an investment company, (b) effect sales of our assets in a manner that, or at a time when, we would not otherwise choose to do so, or (c) register as an investment company, any of which could negatively affect the value of our common stock, the sustainability of our business model, and our ability to make distributions which could have an adverse effect on our business and the market price for shares of our common stock.
If our subsidiaries fail to maintain an exclusion or exemption from registration pursuant to the 1940 Act, we could, among other things, be required either to (a) change the manner in which we conduct our operations to avoid being required to register as an investment company, (b) effect sales of our assets in a manner that, or at a time when, we would not otherwise choose to do so, or (c) register as an investment company, any of which could negatively affect the value of our common stock, the sustainability of our business model, and our ability to make distributions which could have an adverse effect on our business and the market price for shares of our common stock.
The failure of a loan, including a mezzanine loan or modified loan, to qualify as a real estate asset could adversely affect our ability to qualify as a REIT.
The failure of a loan, including a mezzanine loan or modified loan, to qualify as a real estate asset, or the failure of certain arrangements relating to our hotels to satisfy the REIT requirements, could adversely affect our ability to qualify as a REIT.
We may fail to recalculate, readjust and execute hedges in an efficient manner. 21 While we may enter into such transactions seeking to reduce currency or interest rate risks, unanticipated changes in currency or interest rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions.
While we may enter into such transactions seeking to reduce currency or interest rate risks, unanticipated changes in currency or interest rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions.
As a result, we and our stockholders have rights against our directors and officers that are more limited than might otherwise exist and, in the event that actions taken by any of our directors or officers impede the performance of our company, your and our ability to recover damages from such director or officer will be limited. 17 Our charter contains provisions that make removal of our directors difficult, which could make it difficult for stockholders to effect changes to our management.
As a result, we and our stockholders have rights against our directors and officers that are more limited than might otherwise exist and, in the event that actions taken by any of our directors or officers impede the performance of our company, your and our ability to recover damages from such director or officer will be limited.
If ACREFI II TRS and ACRE Debt TRS were subject to U.S. federal income tax on all or a portion of its income, this would reduce the amount of cash it had available for distributions to us, which could in turn reduce the amount of cash we are able to distribute to our stockholders.
If ACREFI II TRS and ACRE Debt TRS were subject to U.S. federal income tax on all or a portion of its income, this would reduce the amount of cash it had available for distributions to us, which could in turn reduce the amount of cash we are able to distribute to our stockholders. 34 The failure of mortgage loans subject to a secured debt arrangement to qualify as a real estate asset would adversely affect our ability to qualify as a REIT.
These limitations may prevent us from using certain techniques to maximize our returns from securitization transactions. 34 Although our use of TRSs may be able to partially mitigate the impact of meeting the requirements necessary to maintain our qualification as a REIT, our ownership of and relationship with our TRSs is limited and a failure to comply with the limits would jeopardize our REIT qualification and may result in the application of a 100% excise tax.
Although our use of TRSs may be able to partially mitigate the impact of meeting the requirements necessary to maintain our qualification as a REIT, our ownership of and relationship with our TRSs is limited and a failure to comply with the limits would jeopardize our REIT qualification and may result in the application of a 100% excise tax.
Dividends will be declared and paid at the discretion of our board of directors and will depend on our REIT taxable earnings, our financial condition, maintenance of our REIT qualification and such other factors as the board may deem relevant from time to time. Our ability to pay dividends may be negatively impacted by adverse changes in our operating results.
Dividends will be declared and paid at the discretion of our board of directors and will depend on our REIT taxable earnings, our financial condition, maintenance of our REIT qualification and such 13 other factors as the board may deem relevant from time to time.
Therefore, in order to avoid the prohibited transactions tax, we may choose not to engage in certain sales of loans, other than through a TRS, and we may be required to limit the structures we use for our securitization transactions, even though such sales or structures might otherwise be beneficial for us. 35 We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of shares of our common stock.
Therefore, in order to avoid the prohibited transactions tax, we may choose not to engage in certain sales of loans, other than through a TRS, and we may be required to limit the structures we use for our securitization transactions, even though such sales or structures might otherwise be beneficial for us.
Significant losses related to our B Notes or mezzanine loans would result in operating losses for us and may limit our ability to make distributions to our stockholders. 25 Our commercial real estate corporate debt assets and loans and debt securities of commercial real estate operating or finance companies will be subject to the specific risks relating to the particular company and to the general risks of investing in real estate-related loans and securities, which may result in significant losses.
Our commercial real estate corporate debt assets and loans and debt securities of commercial real estate operating or finance companies will be subject to the specific risks relating to the particular company and to the general risks of investing in real estate-related loans and securities, which may result in significant losses.
In addition, subject to maintaining our qualification as a REIT, we pursue various hedging strategies to seek to reduce our exposure to adverse changes in currencies and interest rates.
In addition, subject to maintaining our qualification as a REIT, we pursue various hedging strategies to seek to reduce our exposure to adverse changes in currencies and interest rates. We may fail to recalculate, readjust and execute hedges in an efficient manner.
Our access to sources of financing depends upon a number of factors over which it has little or no control, including: • general market conditions; • the market's view of the quality of our assets; • the market's perception of our growth potential; • our eligibility to participate in and access capital from programs established by the U.S. government; • our current and potential future earnings and cash distributions; and • the market price of the shares of our common stock. 18 Weakness in the capital and credit markets could adversely affect one or more lenders and could cause one or more lenders to be unwilling or unable to provide us with financing or to increase the costs of that financing.
Our access to sources of financing depends upon a number of factors over which it has little or no control, including: • general market conditions; • the market's view of the quality of our assets; • the market's perception of our growth potential; • our eligibility to participate in and access capital from programs established by the U.S. government; • our current and potential future earnings and cash distributions; and • the market price of the shares of our common stock.
Moreover, we could face limitations in selling equity interests in these securitizations to outside investors, or selling any debt securities issued in connection with these securitizations that might be considered to be equity interests for tax purposes.
Moreover, we could face limitations in selling equity interests in these securitizations to outside investors, or selling any debt securities issued in connection with these securitizations that might be considered to be equity interests for tax purposes. These limitations may prevent us from using certain techniques to maximize our returns from securitization transactions.
ACREFI TRS, ARM TRS, and ACREFI III TRS and any other domestic TRSs that we may form will pay U.S. federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but will not be required to be distributed to us, unless necessary to maintain our REIT qualification.
The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm ' s-length basis. 36 ACREFI TRS, ARM TRS, and ACREFI III TRS and any other domestic TRSs that we may form will pay U.S. federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but will not be required to be distributed to us, unless necessary to maintain our REIT qualification.
In addition, fluctuations in exchange rates between foreign currencies and USD could expose us to foreign currency risk. All of the foregoing could adversely affect the book value of our assets and the income from those assets. We maintain cash balances in our bank accounts that exceed the Federal Deposit Insurance Corporation insurance limitation.
In addition, fluctuations in exchange rates between foreign currencies and USD could expose us to foreign currency risk. All of the foregoing could adversely affect the book value of our assets and the income from those assets.
Future litigation or administrative proceedings could have a material and adverse effect on our business, financial condition and results of operations. We may from time to time be involved in legal proceedings, administrative proceedings, claims and other litigation. In addition, we have agreed to indemnify the Manager and certain of its affiliates against certain liabilities pursuant to the Management Agreement.
Future litigation or administrative proceedings could have a material and adverse effect on our business, financial condition and results of operations. 19 We may from time to time be involved in legal proceedings, administrative proceedings, claims and other litigation.
In the normal course of business, we and our third-party service providers collect and retain certain personal information provided by borrowers, employees and vendors. We also rely extensively on computer systems to process transactions and manage our business.
Additionally, the cost of maintaining such systems and processes, procedures and internal controls may increase from its current level. 12 In the normal course of business, we and our third-party service providers collect and retain certain personal information provided by borrowers, employees and vendors. We also rely extensively on computer systems to process transactions and manage our business.
We regularly maintain cash balances at banks domiciled in the United States in excess of the Federal Deposit Insurance Corporation insurance limit. The failure of such bank could result in the loss of a portion of such cash balances in excess of the federally insured limit, which could materially and adversely affect our financial position.
The failure of such bank could result in the loss of a portion of such cash balances in excess of the federally insured limit, which could materially and adversely affect our financial position.
A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 20% of the value of a REIT ' s assets may consist of stock or securities of one or more TRSs.
A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS.
Certain investors are increasingly taking into account climate-related factors in determining whether to invest in companies.
We also face risks associated with evolving climate- related business trends. Certain investors are increasingly taking into account climate-related factors in determining whether to invest in companies.
B Notes are commercial real estate loans secured by a first mortgage on a single large commercial property or group of related properties and subordinated to a senior interest, referred to as an A Note. As a result, if a borrower defaults, there may not be sufficient funds remaining for B Note owners after payment to the A Note owners.
B Notes are commercial real estate loans secured by a first mortgage on a single large commercial 26 property or group of related properties and subordinated to a senior interest, referred to as an A Note.
The SEC staff has determined in various no-action letters that qualifying assets for this purpose include senior, first ranking mortgage loans, certain B Notes and mezzanine loans that satisfy various conditions specified in such SEC staff no-action letters. Neither the SEC nor its staff has, however, published guidance in respect of Section 3(c)(5)(C) regarding some of our other target assets.
The SEC staff has determined in various no-action 16 letters that qualifying assets for this purpose include senior, first ranking mortgage loans, certain B Notes and mezzanine loans that satisfy various conditions specified in such SEC staff no-action letters.
We cannot predict the ultimate content, timing, or effect of legislative, regulatory and other actions under the new U.S. administration, nor is it possible at this time to estimate the impact of any such actions which could have a dramatic impact on our business, results of operations and financial condition. 12 The Manager may be unable to operate us within the parameters that allow the Manager to be exempt from regulation as a commodity pool operator, which would subject us to additional regulation and compliance requirements, and could materially adversely affect our business and financial condition.
We cannot predict the ultimate content, timing, or effect of legislative, regulatory and other actions under the new U.S. administration, nor is it possible at this time to estimate the impact of any such actions which could have a dramatic impact on our business, results of operations and financial condition.
The failure of mortgage loans subject to a secured debt arrangement to qualify as a real estate asset would adversely affect our ability to qualify as a REIT. When we enter into certain secured debt arrangements, we will nominally sell certain of our assets to a counterparty and simultaneously enter into an agreement to repurchase the sold assets.
When we enter into certain secured debt arrangements, we will nominally sell certain of our assets to a counterparty and simultaneously enter into an agreement to repurchase the sold assets.
B Notes reflect similar credit risks to comparably rated commercial mortgage-backed securities ("CMBS"). However, since each transaction is privately negotiated, B Notes can vary in their structural characteristics and risks. For example, the rights of holders of B Notes to control the process following a borrower default may be limited in certain investments.
As a result, if a borrower defaults, there may not be sufficient funds remaining for B Note owners after payment to the A Note owners. B Notes reflect similar credit risks to comparably rated commercial mortgage-backed securities ("CMBS"). However, since each transaction is privately negotiated, B Notes can vary in their structural characteristics and risks.
For example, boycott bills in certain states target financial institutions that are perceived as “boycotting” or “discriminating against” companies in certain industries (e.g., energy and mining) and prohibit state entities from doing business with such institutions and/or investing the state’s assets through such institutions.
For example, anti-boycott legislation in certain states target financial institutions that are perceived as "boycotting" or "discriminating against" companies in certain industries (e.g., energy and mining) and prohibit government entities from doing business with such institutions and/or investing the government's assets through such institutions. Similar policies have been implemented or are being proposed at the federal level.
We cannot predict the unintended consequences and market distortions that may stem from far-ranging governmental intervention in the economic and financial system or from regulatory reform of the oversight of financial markets. The laws and regulations governing our operations, as well as their interpretation, may change from time to time, and new laws and regulations may be enacted.
Our ability to pay dividends may be negatively impacted by adverse changes in our operating results. We cannot predict the unintended consequences and market distortions that may stem from far-ranging governmental intervention in the economic and financial system or from regulatory reform of the oversight of financial markets.
New climate change-related regulations or interpretations of existing laws may result in enhanced disclosure obligations that could negatively affect us and materially increase our regulatory burden.
New climate change-related regulations or interpretations of existing laws may result in enhanced disclosure obligations that could negatively affect us and materially increase our regulatory burden. Increased regulations generally increase the costs to us, and those higher costs may continue to increase if new laws require additional resources, including spending more time, hiring additional personnel, and/or investing in new technologies.
The Management Agreement was negotiated between related parties and its terms, including fees payable to the Manager, may not be as favorable to us as if they had been negotiated with an unaffiliated third party.
In any of these or other capacities, Apollo and/or the Manager may receive market-based fees for their roles, but only if approved by a majority of our independent directors. 29 The Management Agreement was negotiated between related parties and its terms, including fees payable to the Manager, may not be as favorable to us as if they had been negotiated with an unaffiliated third party.
Also, as a result of this competition, we may not be able to take advantage of attractive opportunities from time to time, and we can offer no assurance that we will be able to identify and acquire assets that are consistent with our objectives. 10 Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, a misappropriation of funds, and/or damage to our business relationships, all of which could negatively impact our financial results.
Also, as a result of this competition, we may not be able to take advantage of attractive opportunities from time to time, and we can offer no assurance that we will be able to identify and acquire assets that are consistent with our objectives.
Such attention diverts time and other resources from other activities and there is no assurance that such efforts will be effective. Additionally, the cost of maintaining such systems and processes, procedures and internal controls may increase from its current level.
Such attention diverts time and other resources from other activities and there is no assurance that such efforts will be effective.
For example, if we seek to securitize our commercial mortgage loans, Apollo and/or the Manager may act as collateral manager. In any of these or other capacities, Apollo and/or the Manager may receive market-based fees for their roles, but only if approved by a majority of our independent directors.
For example, if we seek to securitize our commercial mortgage loans, Apollo and/or the Manager may act as collateral manager.
The inaccuracy of any such opinions, advice or statements may adversely affect our REIT qualification and result in significant corporate-level tax. Item 1B. Unresolved Staff Comments. None.
The inaccuracy of any such opinions, advice or statements may adversely affect our REIT qualification and result in significant corporate-level tax. RISKS RELATED TO THE ASSET SALE While the Asset Sale is pending, we are subject to uncertainty and contractual restrictions that could disrupt our business. On January 27, 2026, we entered into the Purchase Agreement.
Removed
Increased regulations generally increase the costs to us, and those higher costs may continue to increase if new laws require additional resources, including spending more time, hiring additional personnel, and/or investing in new technologies. 13 We also face risks associated with evolving climate- related business trends.
Added
Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, a misappropriation of funds, and/or damage to our business relationships, all of which could negatively impact our financial results.
Removed
The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm ' s-length basis.
Added
The laws and regulations governing our operations, as well as their interpretation, may change from time to time, and new laws and regulations may be enacted.
Added
The Manager may be unable to operate us within the parameters that allow the Manager to be exempt from regulation as a commodity pool operator, which would subject us to additional regulation and compliance requirements, and could materially adversely affect our business and financial condition.
Added
As permitted by the MGCL, our board of directors has by resolution exempted from the "business combination" provision of the MGCL business combinations (1) between us and any other person, provided that such business combination is first approved by our board of directors (including a majority of our directors who are not affiliates or associates of such person) and (2) between us and Apollo and its affiliates and associates and persons acting in concert with any of the foregoing.
Added
Neither the SEC nor its staff has, however, published guidance in respect of Section 3(c)(5)(C) regarding some of our other target assets.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe full AGM board of directors or the AGM audit committee receives presentations and reports on cybersecurity risks from AGM ' s CSO or CISO, as well as from AHL ' s CISO, at least annually . 37 AGM ' s CISO, in coordination with the Apollo Technology and ERM teams, works collaboratively across Apollo to implement a program designed to protect its information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance with its incident response and recovery plans.
Biggest changeAGM ' s CISO, in coordination with the Apollo Technology and ERM teams, works collaboratively across Apollo to implement a program designed to protect its information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance with its incident response and recovery plans.
Apollo utilizes a cross-functional approach involving stakeholders across multiple departments, including Apollo Compliance, Legal, Technology, Operations, Risk and others, aimed at identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that 36 provide for the prompt escalation of potentially material cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management, in consultation with our management and our board of directors, as applicable, in a timely manner. • Technical Safeguards.
Apollo utilizes a cross-functional approach involving stakeholders across multiple departments, including Apollo Compliance, Legal, Technology, Operations, Risk and others, aimed at identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of potentially material cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management, in consultation with our management and our board of directors, as applicable, in a timely manner. • Technical Safeguards.
The Cyber Security Working Group is chaired by AGM's CISO and has representation from Apollo ' s Technology, Legal, Compliance, and ERM teams. The group meets at least once a quarter to discuss cybersecurity and risk mitigation activities, among other topics.
The Cyber Security Working Group is chaired by AGM's CISO and has representation from Apollo ' s Technology, Legal, Compliance, and ERM teams. The group generally meets at least once a quarter to discuss cybersecurity and risk mitigation activities, among other topics.
Apollo regularly engages third parties, including auditors and consultants, to perform assessments on its cybersecurity measures, including information security maturity assessments, audits and independent reviews of its information security control environment and operating effectiveness.
Apollo 40 regularly engages third parties, including auditors and consultants, to perform assessments on its cybersecurity measures, including information security maturity assessments, audits and independent reviews of its information security control environment and operating effectiveness.
AGM's CISO regularly reports to the ORF regarding cyber risk, and the ORF in turn reports to the AGRC on a quarterly basis, noting any cyber updates when necessary or appropriate.
AGM's CISO regularly reports to the ORF regarding cyber risk, and the ORF in turn generally reports to the AGRC on a quarterly basis, noting any cyber updates when necessary or appropriate.
The results of such assessments, audits and reviews are reported to Apollo ' s risk management function, and Apollo adjusts its cybersecurity policies and practices as necessary based on the information provided by these assessments, audits and reviews. C ybersecurity threat risks have not materially affected our company, including our business strategy, results of operations or financial condition.
The results of such assessments, audits and reviews are reported to Apollo ' s risk management function, and Apollo adjusts its cybersecurity policies and practices as necessary based on the information provided by these assessments, audits and reviews. Cybersecurity threat risks have not materially affected our company, including our business strategy, results of operations or financial condition.
The AGM board of directors, the AGM audit committee, the AGRC, the ORF and the Cyber Security Working Group receive regular updates on Apollo ' s information technology, cybersecurity risk profile and strategy, and risk mitigation plans from Apollo ' s risk management professionals, the AGM's Chief Security Officer ("CSO"), AGM's CISO, other members of management and relevant management committees and working groups.
The AGM board of directors, the AGM audit committee, the AGRC, the ORF and the Cyber Security Working Group receive regular updates on Apollo ' s information technology, cybersecurity risk profile and strategy, and risk mitigation plans from Apollo ' s risk management professionals, AGM's CISO, other members of management and relevant management committees and working groups.
These discussions provide a mechanism for the identification of cybersecurity threats and incidents, assessment of cybersecurity risk profile or certain newly identified risks relevant to our company, the Manager, and evaluation of the adequacy of our cybersecurity program (as coordinated through the Manager and Apollo), including risk mitigation, compliance and controls. Item 2.
These discussions provide a mechanism for the identification of cybersecurity threats and incidents, assessment of cybersecurity risk profile or certain newly identified risks relevant to our company, the Manager, and evaluation of the adequacy of our cybersecurity program (as coordinated through the Manager and Apollo), including risk mitigation, compliance and controls. 41
Removed
AGM ' s CSO holds an undergraduate degree in Management Information Systems and Business Administration, which he received magna cum laude.
Added
The full AGM board of directors or the AGM audit committee receives presentations and reports on cybersecurity risks from AGM ' s CISO, as well as from AHL ' s CISO, at least annually .
Removed
He has over 25 years of cyber-related experience, having served in various roles in technology and cybersecurity, including as Head of IT Risk Management, Executive Director of IT & Risk Compliance, and Global IT Risk Evaluation Lead at large financial institutions and consulting firms. He was also previously AGM ' s CISO for nearly eight years.
Removed
AGM ' s CISO holds a master ' s degree in Business Information Systems and has served in various roles in information technology and information security for over 25 years across a number of large financial institutions, including as Director, Cybersecurity and Risk.
Removed
Properties Our principal executive office is located at 9 West 57th Street, New York, New York 10019, telephone 212-515-3200.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. Refer to "Note 18 - Commitments and Contingencies" for further detail regarding legal proceedings. Item 4. Mine Safety Disclosures Not Applicable. PART II
Biggest changeItem 3. Legal Proceedings From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. Refer to "Note 18 - Commitments and Contingencies" for further detail regarding legal proceedings. Item 4. Mine Safety Disclosures Not Applicable. 42 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph assumes that $100 was invested on December 31, 2019 in our common stock, the S&P 500 and the FNMRC Index and that all dividends were reinvested without the payment of any commissions. There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below.
Biggest changeThe graph assumes that $100 was invested on December 31, 2020 in our common stock, the S&P 500 and the FNMRC Index and that all dividends were reinvested without the payment of any commissions.
The 420 holders of record include Cede & Co., which holds shares as nominee for The Depository Trust Company, which itself holds shares on behalf of the beneficial 38 owners of our common stock. Such information was obtained through our registrar and transfer agent, based on the results of a broker search.
The 395 holders of record include Cede & Co., which holds shares as nominee for The Depository Trust Company, which itself holds shares on behalf of the beneficial owners of our common stock. Such information was obtained through our registrar and transfer agent, based on the results of a broker search.
Stockholder Return Performance The following graph is a comparison of the cumulative total stockholder return on shares of our common stock, the Standard & Poor's 500 (the "S&P 500"), and the FTSE Nareit All Mortgage Capped Index (the "FNMRC Index"), a published industry index, from December 31, 2019 to December 31, 2024.
Stockholder Return Performance The following graph is a comparison of the cumulative total stockholder return on shares of our common stock, the Standard & Poor's 500 (the "S&P 500"), and the FTSE Nareit All Mortgage Capped Index (the "FNMRC Index"), a published industry index, from December 31, 2020 to December 31, 2025.
Item 5. Market for Registrant ' s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on the New York Stock Exchange, under the symbol "ARI." Holders As of February 7, 2025, we had 420 registered holders of our common stock.
Item 5. Market for Registrant ' s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on the New York Stock Exchange, under the symbol "ARI." Holders As of February 9, 2026, we had 395 registered holders of our common stock.
Removed
Period Ending 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Apollo Commercial Real Estate Finance, Inc. 100.00 71.42 92.62 86.34 107.36 89.41 S&P 500 100.00 118.39 152.34 124.72 157.48 196.85 FTSE Nareit AMC Index 100.00 80.37 93.88 68.62 78.98 78.73 Recent Sales of Unregistered Securities None. 39 Recent Purchases of Equity Securities We did not repurchase any of our equity securities during the fourth quarter of 2024.
Added
There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below. 43 Period Ending 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Apollo Commercial Real Estate Finance, Inc. 100.00 133.97 123.40 151.73 127.52 155.20 S&P 500 100.00 128.68 105.35 133.02 166.27 195.96 FTSE Nareit AMC Index 100.00 116.81 85.38 98.27 97.96 111.60 Recent Sales of Unregistered Securities None.
Added
Recent Purchases of Equity Securities We did not repurchase any of our equity securities during the three months or year ended December 31, 2025. Item 6. [Reserved] 44

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeInvestment 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 for U.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 net equity (on a consolidated basis) will be invested in any single investment at the time of the investment; in determining compliance with the investment guidelines, the amount of the investment is the net equity in the investment (gross investment less amount of third-party financing) plus the amount of any recourse on the financing secured by 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.
Biggest changeAccordingly, 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): 49 Year Ended December 31, 2025 2024 Net income (loss) available to common stockholders $ 114,448 $ (131,908 ) Adjustments: Equity-based compensation expense 13,631 16,468 Loss (gain) on foreign currency forwards 98,703 (52,590 ) Foreign currency loss (gain), net (99,483 ) 37,476 Unrealized loss on interest rate cap 379 1,373 Realized gains relating to interest income on foreign currency hedges, net 524 4,054 Realized gains relating to forward points on foreign currency hedges, net 6,091 18,991 Depreciation and amortization on real estate owned 11,173 11,668 Increase (decrease) in current expected credit loss allowance, net 3,229 155,784 Realized loss on investments 7,436 128,191 Realized gain on litigation settlement (17,394 ) — Total adjustments: 24,289 321,415 Distributable Earnings prior to realized loss on investments and realized gain on litigation settlement $ 138,737 $ 189,507 Realized loss on investments $ (7,436 ) $ (128,191 ) Realized gain on litigation settlement 17,394 — Distributable Earnings $ 148,695 $ 61,316 Diluted Distributable Earnings per share prior to realized loss on investments and realized gain on litigation settlement $ 0.98 $ 1.33 Diluted Distributable Earnings per share of common stock $ 1.05 $ 0.43 Weighted-average diluted shares - Distributable Earnings 141,202,817 142,275,843 Book Value Per Share The following table calculates our book value per share ($ in thousands, except per share data): December 31, 2025 December 31, 2024 Stockholders' Equity $ 1,856,090 $ 1,874,481 Series B-1 Preferred Stock (Liquidation Preference) (169,260 ) (169,260 ) Common Stockholders' Equity $ 1,686,830 $ 1,705,221 Common Stock 138,943,831 138,174,636 Book value per share $ 12.14 $ 12.34 Investment Guidelines Our current investment guidelines, approved by our board of directors, are comprised of the following: 1. no investment will be made that would cause us to fail to qualify as a REIT for U.S. federal income tax purposes; 2. no investment will be made that would cause us to register as an investment company under the 1940 Act; 3. investments will be predominantly in our target assets; 4. no more than 20% of our net equity (on a consolidated basis) will be invested in any single investment at the time of the investment; in determining compliance with the investment guidelines, the amount of the investment is the net equity in the investment (gross investment less amount of third-party financing) plus the amount of any recourse on the financing secured by the investment; and 5. 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. 50 The board of directors must approve any change in or waiver to these investment guidelines.
(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 $8.8 million.
(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 $8.7 million.
Due to various uncertainties caused by such external events and recent macroeconomic trends, including inflation and higher interest rates, further business risks could arise. Some of the factors that impacted us to date and may continue to affect us are outlined in Item 1A.
Due to various uncertainties caused by such external events and recent macroeconomic trends, including inflation and higher interest rates, further business risks could arise. Some of the factors that impacted us to date and may continue to affect us are outlined in Item 1A. "Risk Factors".
This assessment requires the use of significant judgment in selecting relevant market factors and analyzing their correlation with historical loss rates. The future macroeconomic environment is subject to uncertainty as the actual future macroeconomic environment could vary from our expectations.
This assessment requires the use of significant judgment in selecting relevant market factors and 57 analyzing their correlation with historical loss rates. The future macroeconomic environment is subject to uncertainty as the actual future macroeconomic environment could vary from our expectations.
Discussions of prior period items and year-to-year comparisons between fiscal years ended December 31, 2023 and 2022 can be found in our "Management ' s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our annual report on Form 10-K for the fiscal year ended December 31, 2023.
Discussions of prior period items and year-to-year comparisons between fiscal years ended December 31, 2024 and 2023 can be found in our "Management ' s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our annual report on Form 10-K for the fiscal year ended December 31, 2024.
We derive an annual historical loss rate based on a CMBS database with historical losses from 1998 through the fourth quarter of 2024 provided by a third party, Trepp LLC ("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.
We derive an annual historical loss rate based on a CMBS database with historical losses from 1998 through the fourth quarter of 2025 provided by a third party, Trepp LLC ("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.
We generally intend over time to pay dividends to our stockholders in an 53 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.
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 55 at the discretion of our board of directors and depend upon, among other things, our actual results of operations.
We apply these various factors on a case-by-case basis depending on the facts and circumstances for each loan, and the different factors may be given different weightings in different situations. As of December 31, 2024, the weighted-average risk rating of the loan portfolio was 3.0.
We apply these various factors on a 53 case-by-case basis depending on the facts and circumstances for each loan, and the different factors may be given different weightings in different situations. As of December 31, 2025, the weighted-average risk rating of the loan portfolio was 3.0.
We believe it is useful to our investors to present Distributable Earnings prior to net realized loss on investments and gain on extinguishment of debt 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.
Distributable Earnings Prior to Realized Loss on Investments and Realized Gain from Litigation Settlement 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.
Please refer to "Note 3 – Fair Value Disclosure" and "Note 5 – Assets and Liabilities Related to Real Estate Owned" for more information regarding real estate owned and our valuation methodology as well as "Note 2 – Summary of Significant Accounting Policies" to our consolidated financial statements.
Please refer to "Note 3 – Fair Value Disclosure" and "Note 5 – Real Estate Owned" for more information regarding real estate owned and our valuation methodology as well as "Note 2 – Summary of Significant Accounting Policies" to our consolidated financial statements.
(2) $5.9 million of the General CECL Allowance for 2024 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 consolidated balance sheets.
(2) $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 consolidated balance sheets.
(4) Cost of funds includes weighted-average spread and applicable benchmark rates as of December 31, 2024 on secured debt arrangements.
(4) Cost of funds includes weighted-average spread and applicable benchmark rates as of December 31, 2025 on secured debt arrangements.
As of December 31, 2024, our portfolio's weighted-average origination loan to value ("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.
As of December 31, 2025, our portfolio's weighted-average origination loan to value ("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.
Refer to "Note 2 – Summary of Significant Accounting Policies" and "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for further discussion regarding our Specific CECL Allowance. Refer to "Note 2 – Summary of Significant Accounting Policies" to our consolidated financial statements for the complete listing and description of our significant accounting policies. 56
Refer to "Note 2 – Summary of Significant Accounting Policies" and "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for further discussion regarding our Specific CECL Allowance. Refer to "Note 2 – Summary of Significant Accounting Policies" to our consolidated financial statements for the complete listing and description of our significant accounting policies. Supplemental U.S.
Item 7. Management ' s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our financial statements and accompanying notes included in Item 8. "Financial Statements and Supplementary Data" of this annual report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our financial statements and accompanying notes included in Item 8. "Financial Statements and Supplementary Data" of this annual report on Form 10-K.
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 $751.0 billion as of December 31, 2024. The Manager is led by an experienced team of senior real estate professionals who have significant expertise in underwriting and structuring commercial real estate financing transactions.
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. The Manager is led by an experienced team of senior real estate professionals who have significant expertise in underwriting and structuring commercial real estate financing transactions.
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 consolidated statement of operations as discussed above.
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 December 31, 2024 consolidated statement of operations.
We believe that our investors use Distributable Earnings and Distributable Earnings prior to net realized loss on investments and gain on extinguishment of debt, or a comparable supplemental performance measure, to evaluate and compare the performance of our company and our peers.
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.
Net realized loss on investments During the year ended December 31, 2024, we recorded a $128.2 million net realized loss on investments, consisting of (i) a $127.5 million realized loss related to the extinguishment of the Massachusetts Healthcare Loan (as defined in "Note 4 - 42 Commercial Mortgage Loans and Other Lending Assets, Net"), and (ii) a $0.7 million realized loss related to the sale of a commercial mortgage loan collateralized by a hotel property located in Honolulu, HI.
Comparatively, during the year ended December 31, 2024, we recorded a $128.2 million net realized loss on investments, consisting of (i) a $127.5 million realized loss related to the extinguishment of the Massachusetts Healthcare Loan, and (ii) a $0.7 million realized loss related to the sale of a commercial mortgage loan collateralized by a hotel property located in Honolulu, HI.
"Risk Factors." Results of Operations Our results of operations discuss fiscal years ended December 31, 2024 and 2023 items and year-to-year comparisons between fiscal years ended December 31, 2024 and 2023.
Results of Operations Our results of operations discuss fiscal years ended December 31, 2025 and 2024 items and year-to-year comparisons between fiscal years ended December 31, 2025 and 2024.
Debt-to-Equity Ratio The following table presents our debt-to-equity ratio: December 31, 2024 December 31, 2023 Debt to Equity Ratio (1) 3.2 3.0 (1) Represents total debt less cash and net loan proceeds held by servicer (recorded with Other Assets, see "Note 6 – Other Assets" for more information) to total stockholders' equity, gross of General CECL Allowance.
Debt-to-Equity Ratio The following table presents our debt-to-equity ratio: December 31, 2025 December 31, 2024 Debt to Equity Ratio (1) 4.1 3.2 (1) Represents total debt less cash and net loan proceeds held by servicer (recorded with Other Assets, see "Note 6 – Other Assets" for more information) to total stockholders' equity.
Refer to "Note 7 – Secured Debt Arrangements, Net" of our consolidated financial statements for additional disclosure regarding our Revolving Credit Facility.
Refer to "Note 7 – Secured Debt Arrangements, Net" of our consolidated financial statements for additional disclosure regarding our secured credit facilities, Barclays Private Securitization, and revolving credit facility.
Our corporate debt includes $761.3 million of term loan borrowings and $500.0 million of senior secured notes. Our asset specific financings are generally tied to the underlying loans, and we anticipate repayments of $1.0 billion of secured debt arrangements in the short term. Specifics about our secured debt arrangements and corporate debt maturities and obligations are discussed below.
Our corporate debt includes $746.3 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 $0.7 billion of secured debt arrangements in the short term. Specifics about our secured debt arrangements and corporate debt maturities and obligations are discussed below.
We utilize various sources of cash in order to meet our liquidity needs in the next twelve months, which is considered the short-term, and the longer term. 51 Our current debt obligations consist of $1.3 billion, at face value, of corporate debt, $4.8 billion of asset specific financings, and $327.7 million of debt related to real estate owned, held for investment.
We utilize various sources of cash in order to meet our liquidity needs in the next twelve months, which is considered the short-term, and the longer term. Our current debt obligations consist of $1.2 billion, at face value, of corporate debt, $6.3 billion of secured debt arrangements, and $425.8 million of debt related to real estate owned, held for investment.
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.
There were no incremental shares included in the years ended December 31, 2025 and 2024 48 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.
Borrowings Under Various Financing Arrangements The following table summarizes the outstanding balances and maturities for our various financing arrangements: December 31, 2024 December 31, 2023 Borrowings Outstanding (1) Maturity (2) Borrowings Outstanding (1) Maturity (2) Secured Credit Facilities $ 3,235,982 November 2026 $ 3,247,652 June 2026 Barclays Private Securitization (3) 1,587,780 May 2027 2,157,157 June 2026 Revolving Credit Facility — March 2026 147,000 February 2025 Total Secured Debt Arrangements 4,823,762 5,551,809 Debt Related to Real Estate Owned 327,662 July 2027 164,835 August 2027 Senior Secured Term Loans 761,250 January 2027 769,250 January 2027 Senior Secured Notes 500,000 June 2029 500,000 June 2029 Total Borrowings $ 6,412,674 $ 6,985,894 (1) Borrowings Outstanding represent principal balances as of the respective reporting periods.
Borrowings Under Various Financing Arrangements The following table summarizes the outstanding balances and maturities for our various financing arrangements: December 31, 2025 December 31, 2024 Borrowings Outstanding (1) Maturity (2) Borrowings Outstanding (1) Maturity (2) Secured Credit Facilities (3) $ 4,733,301 November 2029 $ 3,235,982 November 2026 Barclays Private Securitization (4) 1,543,925 January 2028 1,587,780 May 2027 Revolving Credit Facility — August 2028 — March 2026 Total Secured Debt Arrangements 6,277,226 4,823,762 Debt Related to Real Estate Owned 425,799 July 2027 327,662 July 2027 Senior Secured Term Loans (5) 746,250 June 2030 761,250 January 2027 Senior Secured Notes 500,000 June 2029 500,000 June 2029 Total Borrowings $ 7,949,275 $ 6,412,674 (1) Borrowings Outstanding represent principal balances as of the respective reporting periods.
Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail.
Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" and "Note 6 – Other Assets" for further discussion.
The accounting policies and estimates that we consider to be most critical to an investor's understanding of our financial results and condition and require complex management judgment are discussed below.
The accounting policies and estimates that we consider to be most critical to an investor's understanding of our financial results and condition and require complex management judgment are discussed below. There have been no material changes to our Critical Accounting Policies described under "Item 7.
Selection of a forecast period is a matter of judgment and our General CECL Allowance is sensitive to this input. 55 We develop our expectations for the future macroeconomic environment and its potential impact on the performance of loans in our portfolio by analyzing various market factors, such as unemployment rate, market liquidity and price indexes relevant to commercial real estate sector.
We develop our expectations for the future macroeconomic environment and its potential impact on the performance of loans in our portfolio by analyzing various market factors, such as unemployment rate, market liquidity and price indexes relevant to commercial real estate sector.
The table below summarizes the reconciliation from weighted-average diluted shares under GAAP to the weighted-average diluted shares used for Distributable Earnings: Year Ended December 31, 2024 2023 Weighted-Averages Shares Shares Diluted shares - GAAP 139,674,140 141,281,286 Unvested Restricted Stock Units ("RSUs"), net (1) 2,601,703 2,932,284 Diluted shares - Distributable Earnings 142,275,843 144,213,570 (1) Unvested RSUs are net of incremental shares assumed repurchased under the treasury stock method, if dilutive.
The table below summarizes the reconciliation from weighted-average diluted shares under GAAP to the weighted-average diluted shares used for Distributable Earnings: Year Ended December 31, 2025 2024 Weighted-Averages Shares Shares Diluted shares - GAAP 138,868,602 139,674,140 Unvested RSUs, net (1) 2,334,215 2,601,703 Diluted shares - Distributable Earnings 141,202,817 142,275,843 (1) Unvested RSUs are net of incremental shares assumed repurchased under the treasury stock method, if dilutive.
As of December 31, 2024 and December 31, 2023, we had 6,770,393 shares of our Series B-1 Preferred Stock (as defined in "Note 17 - Stockholders' Equity") outstanding.
As of December 31, 2025 and December 31, 2024, we had 6,770,393 shares of our Series B-1 Preferred Stock outstanding.
Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail. Operations Related to Real Estate Owned Net income related to real estate owned remained generally the same for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail. Operations Related to Real Estate Owned For the year ended December 31, 2025, we recorded net income related to real estate owned of $8.5 million, compared to net income of $11.3 million for the year ended December 31, 2024.
We fully repaid the remaining principal of the 2023 Notes in cash at par during the fourth quarter of 2023. Increase in Specific CECL Allowance, net During the year ended December 31, 2024, we recorded a net increase in our Specific CECL Allowance of $149.5 million, related to two of our subordinate loans.
Comparatively, during the year ended December 31, 2024, we recorded a net increase in our Specific CECL Allowance of $149.5 million related to two of our subordinate loans.
At December 31, 2024, our debt-to-equity ratio was 3.2 and our portfolio was comprised of $6.7 billion of commercial mortgage loans and $0.4 billion of subordinate loans and other lending assets.
At December 31, 2025, our debt-to-equity ratio was 4.1 and our portfolio was comprised of $8.7 billion of commercial mortgage loans and $0.1 billion of subordinate loans.
Although we exercise significant judgment to identify similar properties, and 54 may also consult independent third-party valuation experts to assist, our assessment of fair value is subject to uncertainty and sensitive to our selection of comparable properties.
Although we exercise significant judgment to identify similar properties, and may also consult independent third-party valuation experts to assist, our assessment of fair value is subject to uncertainty and sensitive to our selection of comparable properties. 56 When determining the fair value of real estate assets under the cost approach, we measure fair value as the replacement cost of these assets.
(2) Includes average month end asset and debt balance of a commercial mortgage loan, held for sale. Portfolio Management Our portfolio benefits from our core investment strategy whereby we target assets that are secured by institutional quality real estate throughout the United States and Europe. As discussed in Item 1.
Portfolio Management Our portfolio benefits from our core investment strategy whereby we target assets that are secured by institutional quality real estate throughout the United States and Europe. As discussed in Item 1.
In accordance ASC 820, we may utilize the income, market or cost approach (or combination thereof) to determine fair value.
Real estate assets acquired may include land, building, FF&E, and intangible assets. In accordance ASC 820, we may utilize the income, market, or cost approach (or combination thereof) to determine fair value.
Our average asset and debt balances for the year ended December 31, 2024 were ($ in thousands): Average month-end balances for the year ended December 31, 2024 (1) Description Assets Related debt Commercial mortgage loans (2) $ 7,789,546 $ 5,441,935 Subordinate loans 643,342 — Note receivable, held for sale 3,433 — (1) Average month-end balances reflect principal and borrowings outstanding for assets and related debt, respectively.
Our average asset and debt balances for the year ended December 31, 2025 were ($ in thousands): Average month-end balances (1) Description Assets Related debt Commercial mortgage loans $ 8,123,042 $ 5,786,418 Subordinate loans 513,006 — Note receivable, held for sale 20,600 — (1) Average month-end balances reflect principal and borrowings outstanding for assets and related debt, respectively.
This robust monitoring process includes continuous assessment of asset level performance against underwritten criteria, changes in borrowers' financial position, as well as the impact of macroeconomic trends and microeconomic developments on loan assets and respective underlying collateral performance. 50 In addition to ongoing asset management, as further described in "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" to our consolidated financial statements, we perform a quarterly review of our portfolio whereby each loan is assigned a risk rating of "1" through "5," from less risk to greater risk, respectively.
In addition to ongoing asset management, as further described in "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" to our consolidated financial statements, we perform a quarterly review of our portfolio whereby each loan is assigned a risk rating of "1" through "5," from less risk to greater risk, respectively.
Refer to "Note 11 – Derivatives" for full discussion of interest rate caps. Subsequent Events Refer to "Note 22 – Subsequent Events" to the accompanying consolidated financial statements for disclosure regarding significant transactions that occurred subsequent to December 31, 2024.
Subsequent Events Refer to "Note 20 – Subsequent Events" to the accompanying consolidated financial statements for disclosure regarding significant transactions that occurred subsequent to December 31, 2025.
Loan Portfolio Overview Loan Portfolio Details The following table sets forth certain information regarding our loan portfolio as of December 31, 2024 ($ in thousands): Description Carrying Value Weighted-Average Coupon (1) Weighted-Average All-in Yield (1)(2) Secured Debt Arrangements (3) Cost of Funds (4) Equity at cost (5) Commercial mortgage loans, net $ 6,715,347 8.0 % 8.5 % $ 4,823,762 6.6 % $ 1,891,585 Subordinate loans, net 388,809 0.0 % 0.0 % — — 388,809 Total Loans/Weighted-Average $ 7,104,156 7.5 % 8.1 % $ 4,823,762 6.6 % $ 2,280,394 Note receivable, held for sale 41,200 5.4 % 5.6 % — — 41,200 Total/Weighted-Average $ 7,145,356 7.5 % 8.0 % $ 4,823,762 6.6 % $ 2,321,594 (1) Weighted-Average Coupon and Weighted-Average All-in Yield are based on the applicable benchmark rates as of December 31, 2024 on the floating rate loans.
Loan Portfolio Overview Loan Portfolio Details The following table sets forth certain information regarding our loan portfolio as of December 31, 2025 ($ in thousands): Description Carrying Value Weighted-Average Coupon (1) Weighted-Average All-in Yield (1)(2) Secured Debt Arrangements (3) Cost of Funds (4) Equity at cost (5) Commercial mortgage loans, net $ 8,712,018 6.6 % 7.4 % $ 6,277,226 5.5 % $ 2,434,792 Subordinate loans, net 62,198 0.0 % 0.0 % — — 62,198 Total/Weighted-Average $ 8,774,216 6.5 % 7.3 % $ 6,277,226 5.5 % $ 2,496,990 (1) Weighted-Average Coupon and Weighted-Average All-in Yield are based on the applicable benchmark rates as of December 31, 2025 on the floating rate loans.
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.
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.
(2) Loans are secured by the same property. (3) Includes portfolio of office, industrial, and retail property types. (4) Loan matured in September 2024. Negotiations with sponsor currently in process. (5) Total may not foot due to rounding.
(2) Loans are secured by the same property. (3) Modified loan treated as a new origination for accounting purposes. (4) Includes portfolio of office, industrial, and retail property types. (5) Total may not foot due to rounding.
Real Estate Owned (and Related Debt) In order to maximize recovery against a defaulted loan, we may assume legal title or physical possession of the underlying collateral through foreclosure or deed-in-lieu of foreclosure.
Real Estate Owned (and Related Debt) In order to maximize recovery against a defaulted loan, we may assume legal title or physical possession of the underlying collateral through foreclosure or deed-in-lieu of foreclosure. Foreclosed properties are classified as real estate owned and recognized at fair value on our consolidated balance sheets in accordance with the acquisition method under ASC 805.
(3) As of December 31, 2024, we had £716.8 million, €493.9 million, and kr2.0 billion ($1.6 billion assuming conversion into USD as of December 31, 2024) of borrowings outstanding under the Barclays Private Securitization secured by certain of our commercial mortgage loans. Secured Credit Facilities As of December 31, 2024, we had nine secured credit counterparties through wholly-owned subsidiaries.
(4) As of December 31, 2025, we had £698.3 million, €335.1 million, and kr1.9 billion ($1.5 billion assuming conversion into USD as of December 31, 2025) of borrowings outstanding under the Barclays Private Securitization secured by certain of our commercial mortgage loans.
When determining the fair value of real estate assets under the cost approach, we measure fair value as the replacement cost of these assets. This approach also requires significant judgment, and our estimate of replacement cost could vary from actual replacements costs.
This approach also requires significant judgment, and our estimate of replacement cost could vary from actual replacements costs.
Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail. 43 Foreign currency translation gain and loss on derivative instruments Foreign currency gains and losses on derivative instruments are evaluated on a combined basis and the net impact for the year ended December 31, 2024 and year ended December 31, 2023 was a net gain of $15.1 million and $3.8 million, respectively.
Foreign currency translation gain and loss on derivative instruments Foreign currency gains and losses on derivative instruments are evaluated on a combined basis and the net impact for the years ended December 31, 2025 and 2024 were net gains of $0.8 million and $15.1 million, respectively.
We also had $2.1 billion of undrawn capacity under our secured debt arrangements and $134.5 million of additional capacity on our construction financing secured by our Brooklyn Multifamily Development property (as defined in "Note 3 - Fair Value Disclosure"), which is available to fund future construction costs. We maintain policies relating to our use of leverage. See "Leverage Policies" above.
Additionally, as of December 31, 2025, we held approximately $431.1 million of unencumbered assets and have $36.3 million of additional capacity on our construction financing secured by our Brooklyn Multifamily Development property which is available to fund future construction costs. We maintain policies relating to our use of leverage. See "Leverage Policies" above.
Net Income (Loss) Available to Common Stockholders For the years ended December 31, 2024 and 2023, our net income (loss) available to common stockholders was ($131.9) million, or ($0.97) per diluted share of common stock, and $45.9 million, or $0.29 per diluted share of common stock, respectively. 41 Operating Results The following table sets forth information regarding our consolidated results of operations and certain key operating metrics for the years ended December 31, 2024 and 2023 ($ in thousands): Years Ended December 31, 2024 December 31, 2023 2024 vs 2023 Net interest income: Interest income from commercial mortgage loans $ 699,389 $ 701,002 $ (1,613 ) Interest income from subordinate loans and other lending assets 3,542 17,280 (13,738 ) Interest expense (503,949 ) (466,110 ) (37,839 ) Net interest income 198,982 252,172 (53,190 ) Operations related to real estate owned: Revenue from real estate owned operations 104,689 92,419 12,270 Operating expenses related to real estate owned (81,683 ) (72,759 ) (8,924 ) Depreciation and amortization on real estate owned (11,668 ) (8,248 ) (3,420 ) Net income related to real estate owned 11,338 11,412 (74 ) Operating expenses: General and administrative expenses (29,649 ) (29,520 ) (129 ) Management fees to related party (36,120 ) (37,978 ) 1,858 Total operating expenses (65,769 ) (67,498 ) 1,729 Other income, net 4,498 4,616 (118 ) Net realized loss on investments (128,191 ) (86,604 ) (41,587 ) Realized gain on extinguishment of debt — 495 (495 ) Increase in Specific CECL Allowance (149,500 ) (59,500 ) (90,000 ) Decrease (increase) in General CECL Allowance, net (6,284 ) 72 (6,356 ) Gain (loss) on foreign currency forward contracts 52,590 (48,213 ) 100,803 Foreign currency translation gain (loss) (37,476 ) 52,031 (89,507 ) Gain (loss) on interest rate hedging instruments 570 (414 ) 984 Net income (loss) before taxes $ (119,242 ) $ 58,569 $ (177,811 ) Income tax provision (394 ) (442 ) 48 Net income (loss) $ (119,636 ) $ 58,127 $ (177,763 ) Net Interest Income Net interest income decreased by $53.2 million during the year ended December 31, 2024 compared to the year ended December 31, 2023.
Net Income (Loss) Available to Common Stockholders For the years ended December 31, 2025 and 2024, our net income (loss) available to common stockholders was $114.4 million, or $0.81 per diluted share of common stock, and ($131.9) million, or ($0.97) per diluted share of common stock, respectively. 45 Operating Results The following table sets forth information regarding our consolidated results of operations and certain key operating metrics for the years ended December 31, 2025 and 2024 ($ in thousands): Year ended December 31, 2025 December 31, 2024 Change Net interest income: Interest income from commercial mortgage loans $ 625,493 $ 699,389 $ (73,896 ) Interest income from subordinate loans and other lending assets 1,288 3,542 (2,254 ) Interest expense (460,089 ) (503,949 ) 43,860 Net interest income 166,692 198,982 (32,290 ) Operations related to real estate owned: Revenue from real estate owned operations 104,897 104,689 208 Operating expenses related to real estate owned (85,213 ) (81,683 ) (3,530 ) Depreciation and amortization on real estate owned (11,173 ) (11,668 ) 495 Net income related to real estate owned 8,511 11,338 (2,827 ) Operating expenses: General and administrative expenses (27,410 ) (29,649 ) 2,239 Management fees to related party (34,165 ) (36,120 ) 1,955 Total operating expenses (61,575 ) (65,769 ) 4,194 Other income, net 7,872 4,498 3,374 Income from equity method investment 15,413 — 15,413 Net realized loss on investments (7,436 ) (128,191 ) 120,755 Decrease (increase) in Specific CECL Allowance 4,500 (149,500 ) 154,000 Increase in General CECL Allowance, net (7,729 ) (6,284 ) (1,445 ) Gain (loss) on foreign currency forward contracts (98,703 ) 52,590 (151,293 ) Foreign currency translation gain (loss) 99,483 (37,476 ) 136,959 Gain on interest rate hedging instruments 23 570 (547 ) Net income (loss) before taxes $ 127,051 $ (119,242 ) $ 246,293 Income tax provision (331 ) (394 ) 63 Net income (loss) $ 126,720 $ (119,636 ) $ 246,356 Net Interest Income Net interest income decreased by $32.3 million during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Critical Accounting Policies and Use of Estimates Our financial statements are prepared in accordance with GAAP, which requires the use of estimates and assumptions that involve the exercise of judgment and use of assumptions as to future uncertainties.
The following table details our dividend activity: Year Ended December 31, Dividends declared per share of: 2025 2024 Common Stock $ 1.00 $ 1.20 Series B-1 Preferred Stock $ 1.81 $ 1.81 Critical Accounting Policies and Use of Estimates Our financial statements are prepared in accordance with GAAP, which requires the use of estimates and assumptions that involve the exercise of judgment and use of assumptions as to future uncertainties.
(5) Represents loan portfolio at carrying value less secured debt outstanding. 48 The following table provides additional details of our commercial mortgage loans, subordinate loans, and other lending assets portfolio as of December 31, 2024 ($ in millions): Commercial Mortgage Loan Portfolio # Property Type Risk Rating Origination Date Amortized Cost Unfunded Commitment Construction Loan 3rd Party Subordinate Debt Fully-extended Maturity Location 1 Office 2 02/2022 $ 463 $ 223 Y 12/2028 London, UK 2 Office 3 03/2022 256 11 Y 04/2027 Manhattan, NY 3 Office 3 01/2020 226 25 Y 03/2028 Long Island City, NY 4 Office 4 06/2019 207 — 08/2026 Berlin, Germany 5 Office 3 02/2020 172 5 03/2025 London, UK 6 Office 3 02/2022 153 — 06/2025 Milan, Italy 7 Office 3 11/2022 100 — 09/2026 Chicago, IL 8 Office 4 03/2018 73 — Y 01/2026 Chicago, IL 9 Hotel 3 12/2023 281 — 12/2028 Various, Europe 10 Hotel 3 10/2019 248 15 08/2027 Various, Spain 11 Hotel 3 05/2022 200 5 Y 06/2027 Napa Valley, CA 12 Hotel 3 07/2021 180 — 08/2026 Various, US 13 Hotel 3 09/2015 140 — 12/2026 Manhattan, NY 14 Hotel 3 06/2024 131 — 06/2029 St.
(5) Represents loan portfolio at carrying value less secured debt outstanding. 51 The following table provides additional details of our commercial mortgage loan portfolio and subordinate loan portfolio as of December 31, 2025 ($ in millions): Commercial Mortgage Loan Portfolio # Property Type Risk Rating Origination Date Amortized Cost Unfunded Commitment Construction Loan 3rd Party Subordinate Debt Fully-extended Maturity Location 1 Residential 3 12/2021 $ 247 $ 9 02/2027 Various, UK 2 Residential 3 08/2025 237 15 09/2030 Various, US 3 Residential 3 11/2025 225 22 Y 11/2030 Manhattan, NY 4 Residential 3 08/2024 157 — 08/2029 Various, UK 5 Residential 3 04/2024 157 — 05/2029 Emeryville, CA 6 Residential 3 04/2025 153 — 04/2030 Various, US 7 Residential 3 04/2025 148 — 05/2030 Jersey City, NJ 8 Residential 3 09/2025 141 42 Y 09/2030 Charlotte, NC 9 Residential 3 03/2025 130 2 Y 04/2029 Port St.
Thomas, USVI 17 Hotel 3 12/2024 84 2 Y 01/2030 Indianapolis, IN 18 Hotel 3 12/2024 74 — Y 12/2029 New Orleans, LA 19 Hotel 3 05/2019 46 — 12/2025 Chicago, IL 20 Residential 3 12/2021 226 11 12/2026 Various, UK 21 Residential 3 07/2024 187 — 07/2029 Various, UK 22 Residential 3 03/2023 161 — 04/2026 Various, US 23 Residential 3 04/2024 156 — 05/2029 Emeryville, CA 24 Residential 3 08/2024 146 — 08/2029 Various, UK 25 Residential 3 10/2024 103 — 11/2029 Various, US 26 Residential 3 06/2024 99 — 07/2029 Washington, DC 27 Residential 3 05/2021 76 — 05/2027 Cleveland, OH 28 Residential 2 12/2021 12 — 01/2027 Manhattan, NY 29 Retail 3 04/2022 479 21 04/2027 Various, UK 30 Retail 3 08/2019 250 — Y 09/2025 Manhattan, NY 31 Retail (1) 5 11/2014 97 — 09/2025 Cincinnati, OH 32 Retail 2 05/2022 85 — 06/2027 Various, US 33 Retail 3 12/2024 — 382 07/2030 London, UK 34 Mixed Use 3 12/2019 209 — Y 11/2025 London, UK 35 Mixed Use 3 03/2022 154 24 Y 03/2027 Brooklyn, NY 36 Industrial 3 03/2021 223 — 05/2026 Various, Sweden 37 Industrial 3 08/2024 132 94 Y 08/2029 Various, UK 38 Pubs 3 12/2023 207 — Y 01/2029 Various, UK 39 Caravan Parks 3 02/2021 196 — 02/2028 Various, UK 40 Portfolio (3) 3 06/2021 186 14 06/2026 Various, Germany 41 Urban Predevelopment 3 12/2022 134 — 01/2026 Miami, FL General CECL Allowance (30 ) Subtotal / Weighted-Average Commercial Mortgage Loans 3.0 $ 6,715 $ 841 2.6 Years 49 Subordinate Loan Portfolio # Property Type Risk Rating Origination Date Amortized Cost Unfunded Commitment Construction Loan 3rd Party Subordinate Debt Fully-extended Maturity Location 1 Residential (2) 3 06/2015 $ 288 — 11/2025 Manhattan, NY 2 Residential (2) 3 08/2022 74 — 11/2025 Manhattan, NY 3 Residential (1)(2) 5 05/2020 28 — 11/2025 Manhattan, NY 4 Office (1)(4) 5 08/2017 — — 09/2024 Troy, MI General CECL Allowance (1 ) Subtotal / Weighted-Average Subordinate Loans 3.1 $ 389 $ — 0.8 Years Other Lending Assets Portfolio # Asset Type Risk Rating Origination Date Fair Value Unfunded Commitment Construction Loan 3rd Party Subordinate Debt Fully-extended Maturity Location 1 Note Receivable N/A 10/2024 $ 41 — 10/2029 N/A General CECL Allowance — Subtotal / Weighted-Average Notes Receivable, Held for Sale N/A $ 41 $ — 4.8 Years Total / Weighted-Average Loan Portfolio (5) 3.0 $ 7,145 $ 841 2.5 Years (1) Amortized cost for these loans is net of the recorded Specific CECL Allowance.
Thomas, USVI 35 Hotel 3 12/2024 84 2 Y 01/2030 Indianapolis, IN 36 Hotel 3 12/2025 82 — 04/2027 Manhattan, NY 37 Hotel 3 12/2024 75 — Y 12/2029 New Orleans, LA 38 Hotel (1) 5 05/2019 43 — 02/2026 Chicago, IL 39 Industrial 3 03/2021 261 — 05/2027 Various, Sweden 40 Industrial 3 04/2025 244 4 05/2030 Various, US 41 Industrial 3 08/2024 204 20 08/2029 Various, UK 42 Industrial 3 11/2025 181 27 12/2030 Various, US 43 Industrial 3 08/2025 80 53 08/2030 Various, Europe 44 Data Center 3 03/2025 208 91 Y Y 02/2030 West Jordan, UT 45 Data Center 3 05/2025 194 203 Y 06/2030 Abilene, TX 46 Data Center 3 04/2025 158 — 02/2029 Slough, UK 47 Retail 3 12/2024 199 142 07/2030 London, UK 48 Retail (1) 5 11/2014 96 — 09/2026 Cincinnati, OH 49 Mixed Use 3 03/2022 154 14 03/2029 Brooklyn, NY 50 Mixed Use 3 05/2025 148 — 05/2027 London, UK 51 Urban Predevelopment 3 12/2022 135 — 02/2026 Miami, FL 52 Urban Predevelopment 3 10/2025 94 50 11/2030 Miami, FL 53 Pubs 3 12/2023 220 — Y 01/2029 Various, UK 54 Portfolio (4) 3 06/2021 200 10 06/2027 Various, Germany General CECL Allowance (39 ) Subtotal / Weighted-Average Commercial Mortgage Loans 3.0 $ 8,712 $ 1,038 3.2 Years 52 Subordinate Loan Portfolio # Property Type Risk Rating Origination Date Amortized Cost Unfunded Commitment Construction Loan 3rd Party Subordinate Debt Fully-extended Maturity Location 1 Residential (2) 3 06/2015 $ 34 — 11/2026 Manhattan, NY 2 Residential (1)(2) 5 05/2020 28 — 11/2026 Manhattan, NY General CECL Allowance — Subtotal / Weighted-Average Subordinate Loans 3.9 $ 62 $ — 0.8 Years Total / Weighted-Average Loan Portfolio (5) 3.0 $ 8,774 $ 1,038 3.2 Years (1) Amortized cost for these loans is net of the recorded Specific CECL Allowance.
The Term Loans are amortizing with repayments of 0.25% per quarter of the total committed principal. Refer to "Note 8 – Senior Secured Term Loans, Net" of our consolidated financial statements for additional disclosure regarding our 2026 Term Loan and 2028 Term Loan.
Refer to "Note 8 – Senior Secured Term Loans, Net" and "Note 9 – Senior Secured Notes, Net" of our consolidated financial statements for additional disclosure regarding our Senior Secured Term Loans and Senior Secured Notes, respectively.
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.
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. 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.
The following table presents the carrying value of our loans by internal risk rating as of December 31, 2024 ($ in thousands): Risk Rating Number of Loans Total (1) % of Portfolio 1 — $ — — % 2 3 560,180 7.9 % 3 37 6,169,860 86.4 % 4 2 279,732 3.9 % 5 3 125,220 1.8 % Total 45 $ 7,134,992 100.0 % General CECL Allowance (2) (30,836 ) Total carrying value, net $ 7,104,156 (1) Net of Specific CECL Allowance.
The following table presents the carrying value of our loans by internal risk rating as of December 31, 2025 ($ in thousands): Risk Rating Number of Loans Total (1) % of Portfolio 1 — $ — — % 2 1 654,594 7.4 % 3 51 7,918,714 89.9 % 4 1 73,112 0.8 % 5 3 166,550 1.9 % Total 56 $ 8,812,970 100.0 % General CECL Allowance (2) (38,754 ) Total carrying value, net $ 8,774,216 (1) Net of Specific CECL Allowance.
Investment Activity During the year ended December 31, 2024, we committed $1.9 billion of capital to new loans ($1.3 billion was funded at closing), and provided $627.4 million of add-on fundings, including £168 million ($213 million in USD) to a first mortgage loan 47 secured by a portfolio of pubs across the United Kingdom, that was originated in December 2023.
Investment Activity During the year ended December 31, 2025, we committed $4.4 billion of capital to new loans ($3.3 billion was funded at closing), and provided $899.4 million of add-on fundings. During the year ended December 31, 2025, we received $2.9 billion in repayments and sales of loans and other lending assets.
Dividends We intend to continue to make regular quarterly distributions to holders of our common stock.
Refer to "Note 5 – Real Estate Owned" of our consolidated financial statements for additional disclosure regarding our debt related to real estate owned. Dividends We intend to continue to make regular quarterly distributions to holders of our common stock.
During the first quarter of 2024, we recorded a $142.0 million Specific CECL Allowance related to a mezzanine loan secured by an ultra-luxury residential property in Manhattan, NY, primarily attributable to a reduction in list pricing of remaining units and slower sales pace at the property.
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.
The decrease was primarily due to a decrease in stockholders' equity (as defined in the Management Agreement) as a result of increased Specific CECL Allowance and realized losses on investments recorded during the year ended December 31, 2024.
Management fees expense decreased by $2.0 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was primarily due to a decrease in Stockholders' Equity (as defined in the Management Agreement) during the year ended December 31, 2025.
Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" and "Note 5 – Real Estate Owned" for additional detail.
The increases were primarily related to loan originations and the impacts of extending our expected loan repayment dates. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail.
Petersburg, FL 15 Hotel 3 06/2024 106 9 07/2029 Brooklyn, NY 16 Hotel 3 11/2021 87 — 12/2026 St.
Petersburg, FL 32 Hotel 3 08/2025 123 4 Y 09/2030 San Diego, CA 33 Hotel 3 06/2024 110 5 07/2029 Brooklyn, NY 34 Hotel 3 11/2021 87 — 12/2026 St.
The $82.0 million write-off of Specific CECL Allowance was recorded as a realized loss within net realized loss on investments in our 2023 consolidated statement of operations as discussed above. Refer to "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail.
Refer to "Note 3 – Fair Value Disclosure" and "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for additional detail. Decrease (increase) in Specific CECL Allowance, net During the year ended December 31, 2025, we recorded a net decrease in our Specific CECL Allowance of $4.5 million.
This net decrease was primarily attributable to a decrease in interest income from (i) higher average balance of loans on non-accrual in 2024, (ii) realization of a loss on investment during 2024, and (iii) modifying two commercial mortgage loans from floating to fixed rate terms in 2024.
This decrease was primarily attributable to lower average index rates during the year ended December 31, 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.
(2) Maturity dates represent the weighted-average maturities based on borrowings outstanding, and assume that all extension options are exercised at our discretion, subject to the consent of financing providers where applicable.
(2) Maturity dates represent weighted-average maturities based on borrowings outstanding and assumes extensions at our option are exercised with consent of financing providers, where applicable. (3) As of December 31, 2025, we had six secured credit counterparties through wholly-owned subsidiaries.
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 year ended December 31, 2024, our Distributable Earnings were $61.3 million, or $0.43 per share, as compared to $157.5 million, or $1.09 per share for the prior year.
Distributable Earnings are reduced for realized losses and increased for realized gains. For the year ended December 31, 2025, our Distributable Earnings were $148.7 million, or $1.05 per share, as compared to $61.3 million, or $0.43 per share for the prior year.
In addition to our debt obligations, as of December 31, 2024, we had $840.6 million of unfunded loan commitments. We expect that approximately $396.9 million will be funded to existing borrowers in the short term.
In addition to our debt obligations, as of December 31, 2025, we had $1.0 billion of unfunded loan commitments.
The net gain for the year ended December 31, 2024 was higher than the net gain for the year ended December 31, 2023 due to lower forward point estimates. Gain (loss) on interest rate hedges During the year ended December 31, 2024, we recorded a net gain of $0.6 million on our interest rate caps.
The decrease in the net gain for the year ended December 31, 2025 compared to the year ended December 31, 2024 was predominantly due to higher forward point estimates for the year ended December 31, 2025.
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. 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.
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. Proposed Transactions with Athene On January 27, 2026, we entered into the Purchase Agreement with Athene.
Removed
In April 2024, the SEC chose to stay its newly adopted climate disclosure rules, pending the completion of judicial review. We are currently evaluating the impact of the new rule, if the stay is lifted, on our disclosures.
Added
In connection with the Asset Sale, we also entered into the Management Agreement Side Letter with Operating LLC and the Manager, and the Expense Reimbursement Letter Agreement with Apollo Management Holdings. The Company is externally managed and advised by the Manager, which is a subsidiary of Apollo, and each of Athene and Apollo Management Holdings is a subsidiary of Apollo.
Removed
Management Fees Management fees expense decreased by $1.9 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Added
The Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Purchase Agreement, Athene will purchase from the Company, and the Company will sell to Athene, the Loans as of the Closing, other than two loans with a combined total principal balance of $146 million, as of December 31, 2025, currently held by the Company which are expected to be repaid prior to the Closing.
Removed
Comparatively, during the year ended December 31, 2023, we recorded a net realized loss on investments of $86.6 million, consisting of (i) a $4.8 million realized loss related to the acquisition of the Atlanta Hotel through a deed-in-lieu of foreclosure and (ii) a $82.0 million realized loss on investments representing a write-off of previously recorded Specific CECL Allowance on one of our subordinate loans secured by an ultra-luxury residential property in Manhattan, NY.
Added
Refer to "Note 20 - Subsequent Events" to the accompanying consolidated financial statements for further detail.
Removed
These losses were partially offset by a $0.2 million gain on investments recorded in connection with the sale of our entire interest in three commercial loans secured by properties in Europe and a partial interest in one commercial loan secured by property located in London, UK.
Added
The decrease in net income is primarily due to an increase in operating expenses related to the Brooklyn Multifamily Development, as the property reached substantial completion during the second half of 2025 and the lease-up of the property continues to ramp up.
Removed
Gain on Extinguishment of Debt During the year ended December 31, 2023, we repurchased $53.9 million aggregate principal amount of the 5.375% Convertible Senior Notes due 2023 (the "2023 Notes" or "Convertible Notes") at a weighted average price of 99.1%. As a result of this transaction, we recognized a $0.5 million gain on extinguishment of debt.
Added
We recorded a net loss from the property's operations of $1.3 million during the year ended December 31, 2025. There was no such activity during the year ended December 31, 2024 as the property was still under construction with no revenue streams generated and all expenses being capitalized.
Removed
During the second quarter of 2024, we recorded a Specific CECL Allowance of $7.5 million on a subordinate loan secured by our interest in a Class A office building in Troy, MI, attributable to low occupancy and limited leasing activity in the property's submarket.
Added
Refer to "Note 5 – Real Estate Owned" for full discussion of operations related to real estate owned. 46 Operating Expenses General and administrative expenses decreased by $2.2 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a decrease in amortization of RSUs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe following table estimates the hypothetical impact on our net interest income for the twelve-month period following December 31, 2024, assuming an immediate increase or decrease of 50 basis points in the applicable interest rate benchmark by currency ($ in thousands, except per share data): 50 basis point increase 50 basis point decrease Currency Net floating rate assets subject to interest rate sensitivity (1) Increase to net interest income (2)(3) Increase to net interest income (per share) (2)(3) Decrease to net interest income (2)(3) Decrease to net interest income (per share) (2)(3) USD $ (217,959 ) $ (321 ) $ — $ 1,240 $ 0.01 GBP 607,838 3,039 0.02 (3,039 ) (0.02 ) EUR 318,155 1,591 0.01 (1,489 ) (0.01 ) SEK 44,798 224 — (224 ) — Total: $ 752,832 $ 4,533 $ 0.03 $ (3,512 ) $ (0.02 ) (1) Excludes floating rate loans on nonaccrual (2) Any such hypothetical impact on interest rates on our variable rate borrowings does not consider the effect of any change in overall economic activity that could occur in a rising or falling interest rate environment.
Biggest changeThe following table estimates the hypothetical impact on our net interest income for the twelve-month period following December 31, 2025, assuming an immediate increase or decrease of 50 basis points in the applicable interest rate benchmark by currency ($ in thousands, except per share data): 50 basis point increase 50 basis point decrease Currency Net floating rate assets subject to interest rate sensitivity (1) Increase to net interest income (2)(3) Increase to net interest income (per share) (2)(3) Decrease to net interest income (2)(3) Decrease to net interest income (per share) (2)(3) USD $ 216,560 $ 1,088 $ 0.01 $ 290 $ 0.00 GBP 604,996 3,025 0.02 (3,025 ) (0.02 ) EUR 282,443 1,412 0.01 (1,412 ) (0.01 ) SEK 52,319 262 0.00 (262 ) (0.00 ) Total: $ 1,156,318 $ 5,787 $ 0.04 $ (4,409 ) $ (0.03 ) (1) Excludes floating rate loans on nonaccrual (2) Any such hypothetical impact on interest rates on our variable rate borrowings does not consider the effect of any change in overall economic activity that could occur in a rising or falling interest rate environment.
(3) Certain of our floating rate loans are subject to index floors. 57 Prepayment Risk Prepayment risk is the risk that principal will be repaid at a different rate than anticipated, causing the return on an asset to be less than expected. In certain cases, we adapt to prepayment risk by stating prepayment penalties in loan agreements.
(3) Certain of our floating rate loans are subject to index floors. 60 Prepayment Risk Prepayment risk is the risk that principal will be repaid at a different rate than anticipated, causing the return on an asset to be less than expected. In certain cases, we adapt to prepayment risk by stating prepayment penalties in loan agreements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We seek to manage our risks related to the credit quality of our assets, interest rates, liquidity, prepayment speeds, and market value, while, at the same time, seeking to provide an opportunity to stockholders to realize attractive risk-adjusted returns through ownership of our capital stock.
Item 7A. Quantitative and Quali tative Disclosures About Market Risk We seek to manage our risks related to the credit quality of our assets, interest rates, liquidity, prepayment speeds, and market value, while, at the same time, seeking to provide an opportunity to stockholders to realize attractive risk-adjusted returns through ownership of our capital stock.
We seek to mitigate this exposure through foreign currency forward contracts, which match the net principal and interest of our foreign currency loans and secured debt arrangements. 58
We seek to mitigate this exposure through foreign currency forward contracts, which match the net principal and interest of our foreign currency loans and secured debt arrangements. 61

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