APOLLO COMMERCIAL REAL ESTATE FINANCE, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

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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.
Overview
We are a Maryland corporation and have elected to be taxed as a REIT for U.S.
federal income tax purposes. We primarily originate, acquire, invest in and
manage performing commercial first mortgage loans, subordinate financings, and
other commercial real estate-related debt investments. These asset classes are
referred to as our target assets.
We are externally managed and advised by the Manager, an indirect subsidiary of
Apollo, a global, high-growth alternative asset manager with assets under
management of approximately $481.1 billion as of September 30, 2021.
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 benefit from Apollo's global infrastructure
and operating platform, through which we are able to source, evaluate and manage
potential investments in our target assets.
Current Market Conditions

During the first quarter of 2020, there was a global outbreak of COVID-19, which
was declared by the World Health Organization as a pandemic. In response to
COVID-19, the United States and numerous other countries declared national
emergencies, which has led to large scale quarantines as well as restrictions to
business deemed non-essential. Although more normalized activities have resumed,
we are not in a position to estimate the ultimate impact COVID-19 and its
variants will have on our business and the economy as a whole. We cannot predict
the potential impact related to both known and unknown risks, including future
quarantines, closures and other restrictions resulting from the outbreak. The
effects of COVID-19 have adversely impacted the value of our assets, business,
financial condition, results of operations and cash flows, and our ability to
operate successfully. Some of the factors that impacted us to date and may
continue to affect us are outlined in Item 1A. "Risk Factors."
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 most critical accounting
policies involve decisions and assessments that affect our reported assets and
liabilities, as well as reported revenues and expenses. We believe that all of
the decisions and assessments upon which these financial statements are based
are reasonable based upon information currently available to us. 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.
Real Estate Owned (and Related Debt)
From time to time we may obtain legal title to the collateral from our loans due
to non-performance. This acquisition of real estate is accounted for using the
acquisition method under Accounting Standards Codification ("ASC") Topic 805,
"Business Combinations." We recognize and measure identifiable assets acquired,
liabilities assumed and any non-controlling interest in the acquiree, if
applicable, based on their relative fair values. Once real estate assets have
been recorded at fair value they are evaluated for impairment on a quarterly
basis. Please refer to "Note 2 - Summary of Significant Accounting Policies,"
"Note 3 - Fair Value Disclosure," and "Note 5 - Real Estate Owned" for more
information regarding real estate owned and our valuation methodology.
Real estate assets acquired may include land, building, furniture, fixtures and
equipment ("FF&E"), and intangible assets. The fair value of land is determined
by utilizing the market or sales comparison approach, which compares the
property to similar properties in the marketplace. Although we exercise
significant judgement 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.
We estimate the fair value of any building and FF&E by the cost approach which
measures fair value as the replacement cost of these assets. This approach also
requires significant judgement, and our estimate of replacement cost could vary
from actual replacements costs.



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Once real estate assets have been recorded at fair value, they are evaluated for
impairment on a quarterly basis. We consider the following factors when
performing our impairment analysis: (i) Management, having the authority to
approve the action, commits to a plan to sell the asset; (ii) significant
negative industry and economic outlook or trends; (iii) expected material costs
necessary to extend the life or operate the real estate asset; and (iv) our
ability to hold and dispose of the real estate asset in the ordinary course of
business. A real estate asset is considered impaired when the sum of estimated
future undiscounted cash flows to be generated by the real estate asset over the
estimated remaining holding period is less than the carrying value of such real
estate asset. An impairment charge is recorded equal to the excess of the
carrying value of the real estate asset over the fair value. When determining
the fair value of a real estate asset for the purpose of assessing impairment,
we make certain assumptions including, but not limited to: consideration of
projected operating cash flows, intended holding period of the real estate,
comparable selling prices and projected cash flows from the eventual disposition
of the real estate based upon our estimate of a capitalization rate and discount
rate. While we exercise significant judgement in generating our assumptions, the
asset's fair value is subject to uncertainty, as actual operating cash flows and
disposition proceeds could differ from those assumed in our valuations.
Additionally, the output is sensitive to the assumptions used in calculating any
potential impairment.

Current Expected Credit Losses (“CECL”)

We measure and record potential expected credit losses related to our loan
portfolio in accordance with the CECL Standard. 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 have
adopted the WARM method to determine the General CECL Allowance for the majority
of loans in our portfolio, applied on a collective basis by assets with similar
risk characteristics. If we determine that a borrower or sponsor is experiencing
financial difficulty, we will record loan-specific allowances (our Specific CECL
Allowance). Please see "Note 2 - Summary of Significant Accounting Policies" and
"Note 4 Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets,
Net" for further discussion regarding CECL.

General CECL Allowance
There are various significant assumptions required to estimate our General CECL
Allowance which include deriving and applying an annual historical loss rate,
forecasting and analyzing the impacts of macroeconomic conditions and the timing
of expected repayments, satisfactions and future fundings.
We derive an annual historical loss rate based on a CMBS database with
historical losses from 1998 through the fourth quarter of 2021 provided by a
third party, Trepp LLC. 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. Selecting these filters requires the use of significant
judgement. The historical loss rate, and ultimately General CECL Allowance we
calculated, is sensitive to the CMBS dataset that we select.
We adjust our determined annual historical loss rate based on our outlook of the
macroeconomic environment, for a reasonable and supportable forecast
period-which we have determined to be one year. We determine our expectations
for the macroeconomic environment by analyzing various market factors and assess
the potential impact on our our portfolio. This assessment requires the use of
significant judgement in selecting relevant market factors and our expectations
of the future macroeconomic environment. The future macroeconomic environment is
subject to uncertainty as the actual future macroeconomic environment could vary
from our expectations, which will impact our General CECL Allowance.
Additionally, there are assumptions provided to us by the Manager that represent
their best estimate as to expected loan maturity dates, future fundings, and
timing of loan repayments. These assumptions, although made with the most
available information at the time of the estimate, are subjective and actual
activity may not follow the estimated schedule. These assumptions impact the
future balances that the loss rate will be applied to and as such impact our
General CECL Allowance. As we acquire new loans and the Manager monitors loan
and sponsor performance, these estimates may change each period.

Specific CECL Allowance
When we determine that a borrower or sponsor is experiencing financial
difficulty, we evaluate the related loan for loan-specific allowances, under the
practical expedient per the guidance. Determining that a borrower or sponsor is
experiencing financial difficulty requires the use of significant judgement and
can be based on several factors subject to uncertainty. These factors can
include, but are not limited to, whether cash from the borrower's operations are
sufficient to cover current and future debt service requirements, the borrower's
ability to potentially refinance the loan and other circumstances that can
affect the borrower's ability to satisfy their obligations in accordance the
terms of the loan. When utilizing the practical expedient for


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collateral dependent loans, the loan loss provision is determined as the
difference between the fair value of the underlying collateral, adjusted for
estimated costs to sell when applicable, and the carrying value of the loan
(prior to the loan loss provision), as repayment or satisfaction of a loan is
dependent on a sale of the underlying collateral.
The fair value of the underlying collateral is determined by using method(s)
such as discounted cash flow, the market approach, or direct capitalization
approach. These methods require the use of key unobservable inputs, which are
inherently uncertain and subjective. Our estimate of fair value is sensitive to
both the valuation methodology selected and inputs used. Determining a suitable
valuation method and selecting the appropriate key unobservable inputs and
assumptions requires significant judgment and consideration of factors specific
to the underlying collateral being assessed. Additionally, the key unobservable
inputs and assumptions used may vary depending on the information available to
us and market conditions as of the valuation date. As such, the fair value that
we derive and use in calculating our Specific CECL Allowance, is subject to
uncertainty and any actual losses, if incurred, could differ materially from our
provision.
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.
Results of Operations
All non-USD denominated assets and liabilities are translated to USD at the
exchange rate prevailing at the reporting date and income, expenses, gains, and
losses are translated at the prevailing exchange rate on the dates that they
were recorded.
Loan Portfolio Overview
The following table sets forth certain information regarding our loan portfolio
as of December 31, 2021 ($ in thousands):
                                                                   

Weighted average coupon Weighted average secured debt

                              Equity at
           Description                     Carrying Value                    (1)                     All-in Yield          Arrangements (3)       Cost of Funds(4)           cost(5)
                                                                                                        (1)(2)
Commercial mortgage loans, net           $     7,012,312                             4.1  %                   4.5  %       $   4,159,330                     2.0  %       $ 2,852,982
Subordinate loans and other                      844,948                             7.4  %                   7.8  %                   -                       -              844,948

loan assets, net

Total/Weighted-Average                   $     7,857,260                             4.5  %                   4.9  %       $   4,159,330                     2.0  %       $ 3,697,930


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(1)  Weighted-Average Coupon and Weighted-Average All-in Yield are based on the
applicable benchmark rates as of December 31, 2021 on the floating rate loans.
(2)   Weighted-Average All-in Yield includes the amortization of deferred
origination fees, loan origination costs and accrual of both extension and exit
fees. Weighted-Average All-in Yield excludes the benefit of forward points on
currency hedges relating to loans denominated in currencies other than USD.
(3)  Gross of deferred financing costs of $9.1 million.
(4)  Cost of funds includes weighted average spread and applicable benchmark
rates as of December 31, 2021 on secured debt arrangements.
(5)  Represents loan portfolio at amortized cost less secured debt outstanding.
The following table provides details of our commercial mortgage loan portfolio
and subordinate loan and other lending assets portfolio, on a loan-by-loan
basis, as of December 31, 2021 ($ in millions):
Commercial Mortgage Loan Portfolio
                                                                                                                                  Construction
   #              Property Type              Risk Rating         

Date of origination Amortized cost Unfunded commitment Loan

       3rd Party Subordinate Debt    Fully-extended Maturity            Location
1        Hotel                                    3                  10/2019                  $263                 $40                                          Y                        08/2024           Various, Spain
2        Hotel                                    3                  11/2021                   221                  26                                          Y                        11/2026           Various, UK/Ireland
3        Hotel                                    3                  04/2018                   152                  -                                                                    04/2023           Honolulu, HI
4        Hotel                                    3                  09/2015                   145                  -                                                                    06/2024           Manhattan, NY
5        Hotel                                    3                  07/2021                   139                  39                                                                   08/2026           Various, US
6        Hotel                                    3                  08/2019                   136                  -                                                                    08/2024           Puglia, Italy
7        Hotel                                    3                  05/2018                   115                  -                                                                    06/2024           Miami, FL
8        Hotel                                    3                  03/2017                   106                  -                                                                    03/2022           Atlanta, GA
9        Hotel                                    3                  10/2021                   99                   -                                                                    11/2026           New Orleans, LA
10       Hotel                                    3                  11/2018                   90                   -                                                                    12/2023           Vail, CO
11       Hotel                                    3                  12/2019                   60                   -                                                                    01/2025           Tucson, AZ
12       Hotel                                    3                  11/2021                   59                  104                  Y                                                12/2026           St. Thomas, USVI




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13     Hotel                                     3         05/2021         59             2                              06/2026    Fort Lauderdale, FL
14     Hotel                                     3         05/2019         52             -                              06/2024    Chicago, IL
15     Hotel                                     3         10/2021         44             47           Y                 10/2026    Lake Como, Italy
16     Hotel                                     3         12/2015         43             -                              08/2024    St. Thomas, USVI
17     Hotel                                     3         02/2018         26             1                              11/2024    Pittsburgh, PA
18     Hotel                                     3         12/2021         23             34           Y                 06/2025    Dublin, Ireland
19     Office                                    3         02/2020         227            -                              02/2025    London, UK
20     Office                                    3         01/2020         214            75                     Y       02/2025    Long Island City, NY
21     Office                                    3         06/2019         212            15                             08/2026    Berlin, Germany
22     Office                                    3         09/2019         189            -                              09/2023    London, UK
23     Office                                    3         10/2018         187            -            Y                 10/2023    Manhattan, NY
24     Office                                    3         11/2017         132            -                              01/2023    Chicago, IL
25     Office(1)                                 3         12/2017         123            -                      Y       07/2022    London, UK
26     Office                                    3         03/2018         86             -                      Y       04/2023    Chicago, IL
27     Office                                    3         12/2019         19             2                              04/2022    Edinburgh, Scotland
28     Office                                    3         11/2021         25             57           Y                 11/2025    Milan, Italy
29     Urban Retail                              3         12/2019         353            -                              12/2023    London, UK
30     Urban Retail                              3         08/2019         318            -                      Y       09/2024    Manhattan, NY
31     Industrial                                3         03/2021         284            -                              05/2026    Various, Sweden
32     Residential-for-sale: inventory           3         12/2021         180            57                             01/2027    Manhattan, NY
33     Residential-for-sale: construction        3         12/2018         105            74           Y         Y       12/2023    Manhattan, NY
34     Residential-for-sale: inventory           3         12/2021         102            -                      Y       01/2026    Hallandale Beach, FL
35     Residential-for-sale: inventory           3         12/2019         70             12                     Y       11/2025    Boston, MA
36     Residential-for-sale: inventory           3         01/2018         21             2                      Y       01/2023    Manhattan, NY
37     Residential-for-sale: inventory           3         06/2018          6             -                      Y       07/2022    Manhattan, NY
38     Residential-for-rent                      3         12/2021         236            18                             12/2026    Various, UK
39     Residential-for-rent                      3         05/2021         82             -                      Y       05/2026    Cleveland, OH
40     Residential-for-rent                      3         04/2014         60             -                              07/2023    Various
41     Residential-for-rent                      3         11/2014         50             -                              06/2023    Various, US
42     Residential-for-rent                      3         02/2020         50             1                              03/2024    Cleveland, OH
43     Portfolio(2)                              3         06/2021         267            27                             06/2026    Various, Germany
44     Parking Garages                           3         05/2021         269            5                              05/2026    Various, US
45     Healthcare                                3         10/2019         219            -                              10/2024    Various, UK
46     Caravan Parks                             3         02/2021         221            -                              02/2028    Various, UK
47     Multifamily Development(3)                5         03/2017         177            -                              07/2022    Brooklyn, NY
48     Urban Predevelopment(3)                   5         01/2016         122            -                              09/2022    Miami, FL
49     Retail center                             3         10/2021         311            -                              10/2026    Various, UK
50     Retail center(3)                          5         11/2014         105            -                              09/2022    Cincinnati, OH
51     Mixed Use                                 3         12/2019         127           710           Y         Y       06/2025    London, UK
52     Mixed Use                                 3         12/2019         54             -                              12/2024    London, UK
       General CECL Allowance                                             (23)
       Subtotal / Weighted-Average
       Commercial Mortgage Loans                3.1                      $7,012         $1,348                          3.1 Years



Portfolio of subordinated loans and other loan assets

    #                 Property Type                 Risk Rating       

Original date Amortized cost Unfunded commitment Construction loan Third-party subordinated debt Maturity fully extended

Site

1         Residential-for-sale: construction(4)          3                06/2015                $238                    $-                        Y                          Y                       03/2022          Manhattan, NY
2         Residential-for-sale: construction(4)          3                05/2020                 153                     -                        Y                          Y                       03/2022          Manhattan, NY
3         Residential-for-sale: construction(4)          4                11/2017                 82                      -                        Y                          Y                       03/2022          Manhattan, NY
4         Mixed Use                                      3                02/2019                 40                      -                        Y                                                  06/2022          London, UK
5         Mixed Use                                      3                12/2018                 42                      9                        Y                                                  12/2023          Brooklyn, NY
6         Mixed Use                                      3                07/2012                  7                      -                                                                           08/2022          Chapel Hill, NC




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7       Office                            3         01/2019        100           -                               12/2025    Manhattan, NY
8       Office                            3         07/2013        14            -                               07/2022    Manhattan, NY
9       Office                            3         08/2017         8            -                               09/2024    Troy, MI
10      Healthcare(5)                     3         07/2019        51            -                      Y        06/2024    Various, US
11      Healthcare(6)                     3         01/2019        32            -                               01/2024    Various, US
12      Healthcare(5)(6)                  3         02/2019        13            -                      Y        01/2034    Various, US
13      Industrial                        2         05/2013        32            -                               05/2023    Various, US
14      Hotel                             3         06/2015        24            -                               07/2025    Phoenix, AZ
15      Hotel                             3         06/2018        20            -                               06/2023    Las Vegas, NV
        General CECL Allowance                                    (11)
        Subtotal / Weighted-Average
        Subordinate Loans and Other
        Lending Assets                   3.1                      $845           $9                             1.3 Years

        Total / Weighted-Average
        Loan Portfolio                   3.1                     $7,857        $1,357                           2.9 Years


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(1)Includes $27.1 million of a subordinate participation sold accounted for as
secured borrowing.
(2)Includes portfolio of office, industrial, and retail property types.
(3)Amortized cost for these loans is net of the recorded Specific CECL
Allowance.
(4)Loans are secured by the same property.
(5)Single Asset, Single Borrower CMBS.
(6)Loan and Single Asset, Single Borrower CMBS are secured by the same
properties.

Our average asset and debt balances for the year ended December 31, 2021 were ($
in thousands):
                                                      Average month-end balances for the year ended
                                                                    December 31, 2021
Description                                                Assets                     Related debt
Commercial mortgage loans, net                     $          6,484,910          $         3,675,058
Subordinate loans and other lending assets,
net                                                             961,120                            -


Portfolio Management
Due to the impact of COVID-19, some of our borrowers have experienced
consequences which have prevented the execution of their business plans and in
some cases, resulted in temporary closures. As a result, we have worked with
borrowers to execute loan modifications which are typically coupled with
additional equity contributions from borrowers. Loan modifications to date have
included repurposing of reserves, temporary deferrals of interest or principal,
and partial deferral of coupon interest as payment-in-kind interest.
Investment Activity
During the year ended December 31, 2021, we committed $3.2 billion of capital to
loans ($2.8 billion was funded at closing). In addition, during the year ended
December 31, 2021, we received $1.9 billion in repayments and funded $522.0
million for loans closed prior to 2021.
For the years ended December 31, 2021 and 2020, our net income available to
common stockholders was $210.6 million, or $1.46 per diluted share of common
stock, and $4.8 million, or $0.01 per diluted share of common stock,
respectively.
Operating Results
The following table sets forth information regarding our consolidated results of
operations and certain key operating metrics compared to both the same period in
the previous year and the most recently reported period ($ in thousands):


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                                                                                  Year ended                                      2021 vs. 2020
                                                                          December 31, 2021                 December 31, 2020
Net interest income:
Interest income from commercial mortgage loans                                                $ 327,702                         $      309,134          $ 18,568
Interest income from subordinate loans and other lending                                        100,413                                118,435           (18,022)
assets
Interest expense                                                                               (162,522)                              (148,891)          (13,631)
Net interest income                                                                             265,593                                278,678           (13,085)
Operations related to real estate owned:
Revenue from real estate owned operations                                                        18,917                                      -          

18,917

Operating expenses related to real estate owned                                                 (19,923)                                     -          

(19,923)

Depreciation and amortization on real estate owned                                               (2,645)                                     -          

(2,645)

Net loss related to real estate owned                                                            (3,651)                                     -          

(3,651)

Operating expenses:
General and administrative expenses                                                             (28,845)                               (26,849)         

(1,996)

Management fees to related party                                                                (38,160)                               (39,750)            1,590
Total operating expenses                                                                        (67,005)                               (66,599)             (406)
Other income                                                                                      3,821                                  1,604             2,217
Realized loss on investments                                                                    (20,767)                               (47,632)           26,865
Realized losses and impairments on real estate owned                                               (550)                                     -          

(550)

Reversal of (provision for) loan losses - Specific CECL                                          30,000                               (115,000)         

145,000

Allowance, net
Reversal of (provision for) loan losses - General CECL                                            4,773                                (10,600)         

15,373

Allowance, net
Gain (loss) on foreign currency forward contracts                                                41,674                                 (9,743)         

51,417

Foreign currency translation gain (loss)                                                        (31,687)                                26,916          

(58,603)

Gain (loss) on interest rate hedging instruments                                                  1,314                                (39,247)           40,561
Net income                                                                                        $223,515                                $18,377          $205,138



For a comparison and discussion of our results of operations and other operating
and financial data for the fiscal years ended December 31, 2020 and December 31,
2019, see Part II, Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of our annual report on Form 10-K for the
fiscal year ended December 31, 2020, filed
with the SEC on February 10, 2021.

Net Interest Income
Net interest income decreased by $13.1 million during the year ended
December 31, 2021 compared to the same period in 2020. Interest income remained
nearly flat as the shift from subordinate loan interest to commercial mortgage
loan interest coincided with our increased focus on origination of secure first
commercial mortgage loans. Commercial mortgage interest increased due to our
average commercial mortgage loan balance increasing by approximately
$843 million from 2020 to 2021. The decrease in our subordinate loan interest
was primarily caused by a decreased of approximately $102 million in our average
subordinate loan balance as well as the cessation of interest accrual on the
Junior Mezzanine Loan (refer to "Note 4 - Commercial mortgages, Loans,
Subordinate Loans and Other Lending Assets, Net" for more information). In
connection with our commercial mortgage loan originations, our outstanding
borrowings under our secured debt arrangements increased by approximately $714
million from December 31, 2020 to December 31, 2021, which increased our debt
interest expense year over year by $13.6 million.
We recognized payment-in-kind ("PIK") interest of $47.7 million, and $46.7
million for the years ended December 31, 2021 and 2020, respectively.
We recognized $1.5 million and $0.2 million pre-payment penalties and
accelerated fees for the years ended December 31, 2021 and 2020, respectively.
Operations Related to Real Estate Owned
In 2017, we originated a $20.0 million junior mezzanine loan which was
subordinate to: (i) a $110.0 million mortgage loan, and (ii) a $24.5 million
senior mezzanine loan, secured by a full-service luxury hotel in Washington,
D.C. On May 24,


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2021, we acquired legal title to the hotel through a deed-in-lieu of foreclosure
and the criteria for held-for-sale classification in ASC Topic 360, "Property,
Plant, and Equipment" were not met. The assets and liabilities related to the
hotel were assumed at their estimated fair value at acquisition and presented
net of accumulated depreciation and impairment charges. Results of operations
from the hotel are comprised of operating revenue, expenses and real estate
asset depreciation. As the real estate owned was acquired on May 24, 2021,
$3.7 million of net loss from real estate owned is included in the consolidated
statement of operations for year ended December 31, 2021.
Refer to "Note 5 - Real Estate Owned" for more information related to our
impairment and realized losses on real estate owned.
Operating Expenses
General and administrative expenses
General and administrative expenses increased by $2.0 million for the year ended
December 31, 2021 compared to the same period in 2020. The increase was
primarily driven by a $1.2 million increase in general operating expenses,
attributable to a one-time arrangement fee incurred in connection with an
amendment to one of our senior secured term loans (refer to "Note 8 - Senior
Secured Term Loans, Net" for further discussion) and an $0.8 million increase in
non-cash restricted stock and RSU amortization related to shares of stock
awarded under the LTIPs.
Management fees to related party
Management fee expense decreased by $1.6 million during the year ended
December 31, 2021 compared to the same period in 2020. The decrease is primarily
attributable to a decrease in our stockholders' equity (as defined in the
Management Agreement) as a result of our common stock repurchase of 14,832,632
shares during the year ended December 31, 2020.
Other income
Other income increased by $2.2 million during the year ended December 31, 2021
as compared to the same period in 2020 due to a $3.7 million shared appreciation
fee related to a first mortgage loan secured by a portfolio of
residential-for-rent assets located in the United States. This was partially
offset by a decrease in interest income earned on our cash balance.
Realized loss on investments and Reversal of (provision for) loan losses -
Specific CECL Allowance, net
On May 24, 2021, we purchased a $24.5 million senior mezzanine loan at par and
acquired legal title to the underlying hotel through a deed-in-lieu of
foreclosure. We assumed the hotel's assets and liabilities (including the
$110.0 million mortgage loan) and recorded an additional $10.0 million charge
reflecting the difference between the fair value of the hotel's net assets and
the carrying amount of the loan. This $10.0 million loss on title assumption
plus the previously recorded Specific CECL Allowance of $10.0 million represents
a $20.0 million realized loss on investments.
Additionally, during the fourth quarter of 2021, we sold our interest in a
subordinate loan secured by a mixed-use property with an outstanding principal
of $41.9 million. We recorded a realized loss of approximately $0.8 million in
connection with this sale. This $0.8 million in connection with the
$20.0 million referenced above comprises the loss on investment in our
consolidated statement of operations.

In addition to the $10.0 million Specific CECL Allowance realized on property
discussed above, we reversed $20.0 million of previously recorded Specific CECL
Allowance on a multifamily development loan located in Brooklyn, NY due to a
more favorable market outlook as compared to when the allowance was taken. We
recorded no additional Special CECL Allowances during the year ended
December 31, 2021.
During the year ended December 31, 2020, we recorded $115.0 million of Specific
CECL Allowances and impairments net of $13.0 million in reversals of previously
recorded Specific CECL Allowances and impairments. Additional Specific CECL
Allowances and impairments of $128.0 million were recorded on four loans, one of
which had $47.0 million of previously recorded provisions for loan losses,
related to adverse effects from COVID-19. Reversals represent $10.0 million in
Specific CECL Allowances and $3.0 million in impairments to an equity position
held in other assets in our consolidated balance sheet from the payoff of a
loan.
The realized loss for the year ended December 31, 2020 is attributable to a
$15.0 million realized loss in connection with a troubled debt restructuring
("TDR"), $11.0 million realized loss related to a loan recapitalization,
$19.2 million realized loss as a result of loan sales or payoffs and
$2.4 million realized loss from a foreclosure.
Realized losses and impairment on real estate owned
During the first quarter of 2021, our real estate owned, held for sale asset was
reviewed for possible impairment due to a


                                       43
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change in expected time to sell the asset. A $0.6 million impairment loss was
recorded during the three months ended March 31, 2021, which was fully realized
when the property was sold during the second quarter of 2021. Refer to "Note 5 -
Real Estate Owned" for more information related to our impairment and realized
losses on real estate owned.
Reversal of (provision for) loan losses - General CECL Allowance, net
Our General CECL Allowance decreased by $4.8 million during the year ended
December 31, 2021 compared to an increase of $10.6 million during the same
period in 2020. The decrease in General CECL Allowance recorded during 2021 was
largely due to the improvement of projected macroeconomic conditions, as
compared to those at the beginning of the COVID-19 pandemic, as well as the
seasoning of our loan portfolio. Comparatively, the $10.6 million increase in
General CECL Allowance which was recorded from initial adoption on January 1,
2020 to December 31, 2020, was driven by an increase in our view of the
remaining expected term of our loan portfolio, as well as the macroeconomic
outlook resulting from the COVID-19 pandemic.
Refer to "Note 2 - Summary of Significant Accounting Policies" and "Note 4 -
Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for
additional information related to our General CECL Allowance.
Foreign currency gain (loss) and gain (loss) on derivative instruments
We use forward currency contracts to economically hedge interest and principal
payments due under our loans denominated in currencies other than USD. When
foreign currency gain and (loss) on derivative instruments are evaluated on a
combined basis, the net impact for the years ended December 31, 2021 and 2020
was $10.0 million and $17.2 million, respectively, of gain.
During the year ended December 31, 2020 there was a significant fall in USD
foreign exchange rates, caused by COVID-19, which increased our unrealized gain
from hedges on our future expected interest cash flows. As hedges on our future
expected interest cash flows have no offset in foreign currency gain (loss) it
caused the large balance noted above. Similarly the USD foreign exchange rates
decreased during 2021 and so the interest cash flow hedges increased in value
with no offset in foreign currency gain (loss).
Gain (loss) on interest rate hedges
In May 2019, we entered into a $500.0 million senior secured term loan (the
"2026 Term Loan"). During the second quarter of 2020, we entered into a
three-year interest rate cap to cap LIBOR at 0.75%. This effectively limits the
maximum all-in coupon on our 2026 Term Loan to 3.50%. During the years ended
December 31, 2021 and 2020, the interest rate cap had an unrealized gain (loss)
of $1.3 million and $0.1 million, respectively.
We previously used an interest rate swap to manage exposure to variable cash
flows on portions of our borrowings under our 2026 Term Loan. The interest rate
swap agreement allowed us to receive a variable rate cash flow based on LIBOR
and
pay a fixed rate cash flow. During the year ended December 31, 2020 we
recognized a net loss of $39.4 million on an interest rate swap, consisting of a
realized loss of $53.9 million, and unrealized gain of $14.5 million. During the
second quarter of 2020, we terminated this interest rate swap.

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, 2021.
Contractual Obligations, Liquidity, and Capital Resources
Liquidity is a measure of our ability to meet potential cash requirements,
including ongoing commitments to fund and maintain our assets and operations,
repay borrowings, make distributions to our stockholders and other general
business needs. 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 $1.9 billion, at face value, of
corporate debt and $4.2 billion of asset specific financings. Our corporate debt
includes $785.3 million of term loan borrowings, $500.0 million of senior
secured notes, and $575.0 million of convertible notes, of which $345.0 million
mature in August 2022. Our asset specific financings are generally tied to the
underlying loans and we anticipate repayments of $987.8 million of secured debt
arrangements in the short term. Specifics about our secured debt arrangements
and corporate debt maturities and obligations are discussed below.
In addition to our debt obligations, as of December 31, 2021, we had $1.4
billion of unfunded loan commitments. We


                                       44
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expect that approximately $689 million will be funded to existing borrowers in
the short term.
We have various sources of liquidity that we are able to use in order to satisfy
our short and long term obligations. As of December 31, 2021 we had $343.1
million of cash on hand. As of December 31, 2021 we also held approximately $1.9
billion of unencumbered assets, consisting of $1.1 billion of senior mortgages
and $856.0 million of mezzanine loans. Depending on market conditions, we may
utilize additional borrowings as a source of cash, which may also include
additional secured debt arrangements as well as other borrowings or conduct
additional public and private debt and equity offerings.
We maintain policies relating to our use of leverage. See "Leverage Policies"
below. In the future, we may seek to raise further equity or debt capital or
engage in other forms of borrowings in order to fund future investments or to
refinance expiring indebtedness.
We generally intend to hold our assets for investment, although we may sell
certain of our investments in order to manage our interest rate risk and
liquidity needs, meet other operating objectives and adapt to market conditions.
To maintain our qualification as a REIT under the Internal Revenue Code, we must
distribute annually at least 90% of our REIT taxable income, determined without
regard to the deduction for dividends paid and excluding net capital gain. These
distribution requirements limit our ability to retain earnings and replenish or
increase capital for operations.
We additionally have interests in two unconsolidated joint ventures, each of
which owns underlying properties that secure one of our first mortgage loans,
respectively and are accounted for as off-balance-sheet arrangements. The
unconsolidated joint ventures were deemed to be Variable Interest Entities
("VIEs"), of which we are not the primary beneficiary. Accordingly, the VIEs are
not consolidated in our consolidated financial statements as of December 31,
2021. Our maximum exposure to loss from these commercial mortgage loans is
limited to their carrying value, which as of December 31, 2021 was $227.3
million. Although there is risk of loss we have no contractual obligation to
fund any additional capital into the joint ventures.
Borrowings Under Various Financing Arrangements
The table below summarizes the outstanding balances and maturities for our
various financing arrangements:
                                                      December 31, 2021                                       December 31, 2020
                                           Borrowings                 Maturity (2)                Borrowings                 Maturity (2)
                                         Outstanding(1)                                         Outstanding(1)
Secured credit facilities              $      2,256,646               October 2025            $      2,591,937               November 2023
Barclays Private Securitization               1,902,684               August 2024                      857,728              September 2023
Total Secured debt arrangements               4,159,330                                              3,449,665
Senior secured term loans                       785,250               January 2027                     492,500                 May 2026
Senior secured notes                            500,000                June 2029                             -
Convertible senior notes                        575,000              February 2023                     575,000               February 2023
Total Borrowings                       $      6,019,580                                       $      4,517,165


——-

(1)Borrowings Outstanding represent principal balances as of the respective
reporting periods.
(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.
Secured Credit Facilities
As of December 31, 2021, we had entered into six secured credit facilities
through wholly-owned subsidiaries entered into through various secured debt
arrangements. Terms under various master repurchase agreements vary by secured
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


                                       45
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In June 2020, through a newly formed entity, we entered into a private
securitization with Barclays Bank plc, of which Barclays Bank plc retained
$782.0 million of senior notes (the "Barclays Private Securitization"). The
Barclays Private Securitization finances the loans that were previously financed
under the Barclays Facility - GBP/EUR. During the fourth quarter of 2021, we
pledged two additional commercial mortgage loans with outstanding principal
balances of $227.4 million (£165.0 million assuming conversion into USD) and
$187.4 million (kr1.6 billion assuming conversion into USD) as of . During the
quarter ended June 30, 2021, we pledged an additional commercial mortgage loan
with an outstanding principal balance of $281.7 million (€237.6 million assuming
conversion into USD), and pledged additional collateral of a financed loan of
$114.7 million (kr1.0 billion assuming conversion into USD).
As of December 31, 2021, we had $1.9 billion (£960.2 million, €328.9 million,
and kr2.1 billion assuming conversion into USD) of borrowings outstanding under
the Barclays Private Securitization secured by certain of our commercial
mortgage loans.
Refer to "Note 7 - Secured Debt Arrangements, Net" of our Consolidated Financial
Statements for additional disclosure regarding our Barclays Private
Securitization.
Senior Secured Term Loans
In May 2019, we entered into the $500.0 million senior secured term loan (the
"2026 Term Loan"). During the year ended December 31, 2021, we repaid $5.0
million of principal related to the 2026 Term Loan. The 2026 Term Loan bears
interest at LIBOR plus 2.75%, was issued at a price of 99.5%, and matures in May
2026.
In March 2021, we entered into the $300.0 million senior secured term loan (the
"2028 Term Loan" and, together with the 2026 Term Loan, the "Term Loans").
During the year ended December 31, 2021, we repaid $2.3 million of principal
related to the 2028 Term Loan. The 2028 Term Loan bears interest at LIBOR (with
a floor of 0.50%) plus 3.50%, was issued at a price of 99.0%, and matures in
March 2028.
The outstanding Term Loans principal balance as of December 31, 2021 and 2020
was $785.3 million and $492.5 million, respectively. The Term Loans contain
restrictions relating to liens, asset sales, indebtedness, and investments in
non-wholly owned entities. During the fourth quarter of 2021, we modified the
financial covenants of the Term Loans which included the following: (i)
increased our maximum ratio of total recourse debt to tangible net worth from
3:1 to 4:1, (ii) increased our maximum ratio of total unencumbered assets to
total pari-passu indebtedness from 1.25:1 to 2.50:1, and (iii) the unencumbered
asset definition was also amended to include residual repo equity. In
conjunction with the modification, we incurred $5.2 million in fees,
$3.9 million of which were consent fees paid to borrowers recorded as deferred
financing costs and $1.3 million of arrangement fees paid to the Term Loan
arranger recorded as general and administrative expenses. We were in compliance
with the applicable covenants as of December 31, 2021 and December 31, 2020.
Senior Secured Notes
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
offering expenses. The 2029 Notes will mature on June 15, 2029, unless earlier
repurchased or redeemed. 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.
As of December 31, 2021, the 2029 Notes had a carrying value of $494.1 million
net of deferred financing costs of $5.9 million. The 2029 Notes require that we
maintain a ratio of total unencumbered assets to total pari-passu indebtedness
of at least 1.20:1. We were in compliance with this covenant as of December 31,
2021.
Convertible Senior Notes
In two separate offerings during 2017, we issued an aggregate principal amount
of $345.0 million of 4.75% Convertible Senior Notes due 2022, for which we
received $337.5 million, after deducting the underwriting discount and offering
expenses. At December 31, 2021, the 2022 Notes had a carrying value of $343.1
million and an unamortized discount of $1.9 million.
During the fourth quarter of 2018, we issued $230.0 million of 5.375%
Convertible Senior Notes due 2023, for which we received $223.7 million after
deducting the underwriting discount and offering expenses. At December 31, 2021,
the 2023 Notes had a carrying value of $226.9 million and an unamortized
discount of $3.1 million.
Debt Covenants
The guarantees related to our secured debt arrangements contain the following
financial covenants: (i) tangible net worth must be greater than $1.25 billion
plus 75% of the net cash proceeds of any equity issuance after March 31, 2017
(ii) our ratio


                                       46
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of total indebtedness to tangible net worth cannot be greater than 3.75:1; and
(iii) our liquidity cannot be less than an amount equal to the greater of 5% of
total recourse indebtedness or $30.0 million. Under these covenants, our General
CECL Allowance is added back to our tangible net worth calculation.
We were in compliance with the covenants under each of our secured debt
arrangements at December 31, 2021 and December 31, 2020.
Debt-to-Equity Ratio
The following table presents our debt-to-equity ratio:
                                      December 31, 2021       December 31, 2020
          Debt to Equity Ratio (1)           2.4                     1.8


-------
(1)Represents total debt less cash and loan proceeds held by servicer (recorded
with Other Assets, see "Note 6 - Other Assets" for more information) to total
stockholders' equity.
Leverage Policies
We use leverage for the sole purpose of financing our portfolio and not for the
purpose of speculating on changes in interest rates. In addition to our secured
debt arrangements and senior secured term loan, we access additional sources of
borrowings. Our charter and bylaws do not limit the amount of indebtedness we
can incur; however, we are subject to and carefully monitor the limits placed on
us by our credit providers and those that assign ratings on our company.
At December 31, 2021, our debt-to-equity ratio was 2.4 and our portfolio was
comprised of $7.0 billion of commercial mortgage loans and $0.8 billion of
subordinate loans and other lending assets. In order to achieve our return on
equity, we generally finance our mortgage loans with 2.0 to 3.0 turns of
leverage and generally do not finance our subordinate loan portfolio given
built-in inherent structural leverage. Consequently, depending on our portfolio
mix, our debt-to-equity ratio may exceed our previously disclosed thresholds.
Investment Guidelines
Our current investment guidelines, approved by our board of directors, are
comprised of the following:
•no investment will be made that would cause us to fail to qualify as a REIT 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 cash equity (on a consolidated basis) will be invested
in any single investment at the time of the investment; and
•until appropriate investments can be identified, the Manager may invest the
proceeds of any offering in interest bearing, short-term investments, including
money market accounts and/or funds, that are consistent with our intention to
qualify as a REIT.
The board of directors must approve any change in or waiver to these investment
guidelines.
Dividends
We intend to continue to make regular quarterly distributions to holders of our
common stock. U.S. federal income tax law generally requires that a REIT
distribute annually at least 90% of our REIT taxable income, without regard to
the deduction for dividends paid and excluding net capital gains, and that we
pay tax at regular corporate rates to the extent that we annually distribute
less than 100% of our net taxable income. We generally intend over time to pay
dividends to our stockholders in an amount equal to our net taxable income, if
and to the extent authorized by our board of directors. Any distributions we
make are at the discretion of our board of directors and depend upon, among
other things, our actual results of operations. These results and our ability to
pay distributions are affected by various factors, including the net interest
and other income from our portfolio, our operating expenses and any other
expenditures. If our cash available for distribution is less than our net
taxable income, we could be required to sell assets or borrow funds to make cash
distributions or we may make a portion of the required distribution in the form
of a taxable stock distribution or distribution of debt securities.
The following table details our dividend activity:


                                       47
--------------------------------------------------------------------------------

                                                       Years ended
Dividends declared per share of:     December 31, 2021             December 31, 2020
Common Stock(1)                            $1.40                         $1.45
Series B Preferred Stock                    1.00                          2.00
Series B-1 Preferred Stock                  0.90                          N/A


-------
(1)As our aggregate 2021 distributions did not exceeded our 2021 earnings and
profits, $0.1055 of the January 2022 distribution declared in the fourth quarter
of 2021, and payable to common stockholders of record as of December 31, 2021,
will be treated as a 2021 distribution for U.S. federal income tax purposes.
On July 15, 2021, we exchanged all 6,770,393 shares outstanding of our 8.00%
Fixed-to-Floating Series B Cumulative Redeemable Perpetual Preferred Stock, par
value $0.01 per share ("Series B Preferred Stock"), with a liquidation
preference of $25.00 per share, for 6,770,393 shares of 7.25% Series B-1
Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share
("Series B-1 Preferred Stock"), with a liquidation preference of $25.00 per
share, pursuant to an exchange agreement with the two existing shareholders.
The Series B Preferred Stock entitled holders to receive dividends at a rate per
annum equal to the greater of (a) 8.00% and (b) a floating rate equal to the
3-month LIBOR rate as calculated on each applicable date of determination plus
6.46% of the $25.00 liquidation preference, and paid cumulative cash dividends,
which were payable quarterly in equal amounts in arrears on the 15th day of each
January, April, July and October.
As of December 31, 2021, we had 6,770,393 shares of Series B-1 Preferred Stock
outstanding. The Series B-1 Preferred Stock pay cumulative cash dividends, which
are payable quarterly in equal amounts in arrears on the 15th day of each
January, April, July and October: at a rate of 7.25% per annum of the $25.00 per
share liquidation preference. Except under certain limited circumstances, the
Series B-1 Preferred Stock is generally not convertible into or exchangeable for
any other property or any other of our securities at the election of the
holders. On and after July 15, 2026, we may, at our option, redeem the shares at
a redemption price of $25.00, plus any accrued unpaid dividends to, but not
including, the date of the redemption.
Non-GAAP Financial Measures
Distributable Earnings
Beginning in the fourth quarter of 2020 to more appropriately reflect the
principal purpose of the measure, "Operating Earnings" was relabeled
"Distributable Earnings", a non-GAAP financial measure. The definition continues
to be net income available to common stockholders, computed in accordance with
GAAP, adjusted for (i) equity-based compensation expense (a portion of which may
become cash-based upon final vesting and settlement of awards should the holder
elect net share settlement to satisfy income tax withholding), (ii) any
unrealized gains or losses or other non-cash items (including depreciation and
amortization related to real estate owned) included in net income available to
common stockholders, (iii) unrealized income from unconsolidated joint ventures,
(iv) foreign currency gains (losses), other than (a) realized gains/(losses)
related to interest income, and (b) forward point gains/(losses) realized on our
foreign currency hedges, (v) the non-cash amortization expense related to the
reclassification of a portion of the Convertible Notes to stockholders' equity
in accordance with GAAP, and (vi) provision for loan losses. Distributable
Earnings may also be adjusted to exclude certain other non-cash items, as
determined by the Manager and approved by a majority of our independent
directors. For year ended December 31, 2021, our Distributable Earnings were
$188.7 million, or $1.33 per share, as compared to $125.6 million, or $0.84 per
share, for the prior year.
The weighted-average diluted shares outstanding used for Distributable Earnings
per weighted-average diluted share has been adjusted from weighted-average
diluted shares under GAAP to exclude shares issued from a potential conversion
of the Convertible Notes. Consistent with the treatment of other unrealized
adjustments to Distributable Earnings, these potentially issuable shares are
excluded until a conversion occurs, which we believe is a useful presentation
for investors. We believe that excluding shares issued in connection with a
potential conversion of the Convertible Notes from our computation of
Distributable Earnings per weighted average diluted share is useful to investors
for various reasons, including the following: (i) conversion of Convertible
Notes to shares requires both the holder of a note to elect to convert the
Convertible Note and for us to elect to settle the conversion in the form of
shares (ii) future conversion decisions by note holders will be based on our
stock price in the future, which is presently not determinable; (iii) the
exclusion of shares issued in connection with a potential conversion of the
Convertible Notes from the computation of Distributable Earnings per
weighted-average diluted share is consistent with how we treat other unrealized
items in our computation of Distributable Earnings per weighted-average diluted
share; and (iv) we believe that when evaluating our operating performance,
investors and potential investors consider our Distributable Earnings relative
to our actual distributions, which are based on shares outstanding and not
shares that might be issued in the future.


                                       48
--------------------------------------------------------------------------------

For year ended December 31, 2021, 28,533,271 weighted-average potentially
issuable shares with respect to the Convertible Notes were included in the
dilutive earnings per share denominator. For year ended December 31, 2020, all
of the potentially issuable shares with respect to the Convertible Notes were
excluded from the calculation of diluted net loss per share because the effect
was anti-dilutive. Refer to "Note 19 - Net Income (Loss) per Share" for further
discussion.
The table below summarizes the reconciliation from weighted-average diluted
shares under GAAP to the weighted-average diluted shares used for Distributable
Earnings ($ in thousands, except Price):
                                                                            

Year ended the 31st of December,

                                                                          2021                              2020
Weighted-Averages                                                        Shares                            Shares
Diluted shares - GAAP                                                   168,402,515                       148,004,385
Potential shares issued under conversion of the Convertible             (28,533,271)                                -

Remarks

Unvested RSUs                                                             2,456,409                         2,030,467
Diluted shares - Distributable Earnings                                 142,325,653                       150,034,852



As a REIT, U.S. federal income tax law generally requires us to distribute
annually at least 90% of our REIT taxable income, without regard to the
deduction for dividends paid and excluding net capital gains, and that we pay
tax at regular corporate rates to the extent that we annually distribute less
than 100% of our net taxable income. Given these requirements and our belief
that dividends are generally one of the principal reasons stockholders invest in
a REIT, we generally intend over time to pay dividends to our stockholders in an
amount equal to our net taxable income, if and to the extent authorized by our
board of directors. Distributable Earnings is a key factor considered by the
board of directors in setting the dividend and as such we believe Distributable
Earnings is useful to investors.
As discussed in "Note 11 - Derivatives" we terminated our interest rate swap,
which we used to manage exposure to variable cash flows on our borrowings under
our senior secured term loan, in the second quarter of 2020 and recorded a
realized loss in our consolidated statement of operations. We have not had an
interest rate swap on our consolidated balance sheet since this termination. In
addition, as discussed in "Note 4 - Commercial Mortgage Loans, Subordinate Loans
and Other Lending Assets, Net," we recorded a net realized loss on the sale of
one of our subordinate loans during the year ended December 31, 2021 and a net
realized loss on the sale of seven of our commercial real estate loans, two
restructurings, one payoff of a previously impaired loan, and one foreclosure
during 2020.
We also believe it is useful to our investors to present Distributable Earnings
prior to realized losses and impairments on real estate owned, investments and
interest rate swap to reflect our operating results because (i) our operating
results are primarily comprised of earning interest income on our investments
net of borrowing and administrative costs, which comprise our ongoing operations
and (ii) it has been a useful factor related to our dividend per share because
it is one of the considerations when a dividend is determined. We believe that
our investors use Distributable Earnings and Distributable Earnings prior to
realized losses and impairments on real estate owned, investments and interest
rate swap, or a comparable supplemental performance measure, to evaluate and
compare the performance of our company and our peers.
A significant limitation associated with Distributable Earnings as a measure of
our financial performance over any period is that it excludes unrealized gains
(losses) from investments. In addition, our presentation of Distributable
Earnings may not be comparable to similarly-titled measures of other companies,
that use different calculations. As a result, Distributable Earnings should not
be considered as a substitute for our GAAP net income as a measure of our
financial performance or any measure of our liquidity under GAAP. Distributable
Earnings are reduced for realized losses on loans which include losses that
management believes are near certain to be realized.
The table below summarizes the reconciliation from net income available to
common stockholders to Distributable Earnings and Distributable Earnings prior
to realized losses and impairments on real estate owned, investments and
interest rate swap ($ in thousands):


                                       49
--------------------------------------------------------------------------------

                                                                    Year 

ended the 31st of December,

                                                                                2021                        2020
Net income available to common stockholders                             $          210,551          $            4,837

Adjustments:

Equity-based compensation expense                                                   17,633                      16,815
Unrealized gain on interest rate swap                                                    -                     (14,470)
(Gain) Loss on foreign currency forwards                                           (41,674)                      9,743
Foreign currency (gain) loss, net                                                   31,687                     (26,916)
Unrealized gain on interest rate cap                                                (1,314)                       (134)
Realized gains (losses) relating to interest income on                              (1,342)                      1,945
foreign currency hedges, net
Realized gains relating to forward points on foreign                                 1,994                       5,088
currency hedges, net
Amortization of the convertible senior notes related to                              3,272                       3,084
equity reclassification
Depreciation and amortization on real estate owned                                   2,645                           -
Provision for (reversal of) loan losses and impairments                            (34,773)                    125,600
Realized losses and impairments on real estate owned and                            21,317                      47,632

investments

Realized loss on interest rate swap                                                      -                      53,851
Total adjustments:                                                                    (555)                    222,238

Distributable profit before realized losses and impairments on properties held, investments and interest

             $          209,996          $          227,075
rate swap

Realized losses and impairments on real estate owned and                $          (21,317)         $          (47,632)
investments
Realized loss on interest rate swap                                                      -                     (53,851)
Distributable Earnings                                                  $   

$188,679 125,592 Diluted distributable earnings per share before realized losses and impairments on owned real estate, investments,

               $             1.48          $             1.51
and interest rate swap
Diluted Distributable Earnings per share of common stock                $             1.33          $             0.84
Weighted-average diluted shares - Distributable Earnings                       142,325,653                 150,034,852



Book Value Per Share

The table below calculates our book value per share ($ in thousands, except per
share data):
                                                     December 31, 2021            December 31, 2020
Stockholders' Equity                               $         2,294,626          $         2,270,529
   Series B Preferred Stock (Liquidation
Preference)                                                          -                     (169,260)
   Series B-1 Preferred Stock (Liquidation
Preference)                                        $          (169,260)         $                 -
Common Stockholders' Equity                        $         2,125,366          $         2,101,269
Common Stock                                               139,894,060                  139,295,867
Book value per share                               $             15.19          $             15.08


The table below shows the evolution of our book value per share:

                                              Book value per share
Book value per share at December 31, 2020    $               15.08

General CECL Allowance                                        0.30




                                       50
--------------------------------------------------------------------------------

Book value per share at December 31, 2020 before CECL general allowance

                                                               $   

15.38

Earnings in excess of dividends                                             

0.08

Net reversal of Specific CECL Allowance                                     

0.07

Net unrealized gain on currency hedges                                              0.04
Other                                                                              (0.02)
Vesting and delivery of RSUs                                                       (0.08)

Book value per share at December 31, 2021 before CECL general provision and depreciation and amortization

                             $   

3:47 p.m.

General CECL Allowance and depreciation and amortization                    

(0.28)

Book value per share at December 31, 2021                               $   

15.19



We believe that presenting book value per share with sub-totals prior to the
CECL Allowances and depreciation and amortization is useful for investors for
various reasons, including, among other things, analyzing our compliance with
financial covenants related to tangible net worth and debt-to-equity under our
secured debt arrangements and senior secured term loan, which permit us to add
the General CECL Allowance to our GAAP stockholders' equity. Given that our
lenders consider book value per share prior to the General CECL Allowance as an
important metric related to our debt covenants, we believe disclosing book value
per share prior to the General CECL Allowance is important to investors such
that they have the same visibility. We further believe that presenting book
value before depreciation and amortization is useful to investors since it is a
non-cash expense included in net income and is not representative of our core
business and ongoing operations.


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