10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2012

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

Commission File Number: 001-34452

Apollo Commercial Real Estate Finance, Inc.

(Exact name of Registrant as specified in its charter)

Maryland	27-0467113
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

Apollo Commercial Real Estate Finance, Inc.

c/o Apollo Global Management, LLC

9 West 57th Street, 43rd Floor,

New York, New York 10019

(Address of Registrant’s principal executive offices)

(212) 515–3200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

As of November 2, 2012, there were 28,044,106 shares, par value $0.01, of the registrant’s common stock issued and outstanding.

Table of Contents

	Page
Part I — Financial Information
ITEM 1. Financial Statements		3
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk		32
ITEM 4. Controls and Procedures		33
Part II — Other Information
ITEM 1. Legal Proceedings		34
ITEM 1A. Risk Factors		34
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds		34
ITEM 3. Defaults Upon Senior Securities		34
ITEM 4. Mine Safety Disclosures		34
ITEM 5. Other Information		34
ITEM 6. Exhibits		34

2

Part I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

Apollo Commercial Real Estate Finance, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands—except share and per share data)

	September 30, 2012		December 31, 2011
Assets:
Cash	$	67,994	$	21,568
Securities available-for-sale, at estimated fair value		81,405		302,543
Securities, at estimated fair value		218,185		251,452
Commercial mortgage loans, held for investment		104,101		109,006
Subordinate loans, held for investment		196,177		149,086
Repurchase agreements, held for investment		10,975		47,439
Principal and interest receivable		4,107		8,075
Deferred financing costs, net		1,090		2,044
Other assets		207		17
Total Assets	$	684,241	$	891,230
Liabilities and Stockholders’ Equity
Liabilities:
Borrowings under repurchase agreements	$	242,970	$	290,700
TALF borrowings		—		251,327
Derivative instruments, net		251		478
Accounts payable and accrued expenses		1,965		1,746
Payable to related party		1,520		1,298
Dividends payable		10,114		8,703
Total Liabilities		256,820		554,252
Stockholders’ Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized and 3,450,000 shares outstanding in 2012		35		—
Common stock, $0.01 par value, 450,000,000 shares authorized, 20,572,112 and 20,561,032 shares issued and outstanding in 2012 and 2011, respectively		206		206
Additional paid-in-capital		422,273		336,209
Retained earnings		4,808		—
Accumulated other comprehensive income		99		563
Total Stockholders’ Equity		427,421		336,978
Total Liabilities and Stockholders’ Equity	$	684,241	$	891,230

See notes to unaudited condensed consolidated financial statements.

3

Apollo Commercial Real Estate Finance, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations (Unaudited)

(in thousands—except share and per share data)

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Net interest income:
Interest income from securities	$	3,674		$	6,316		$	12,227		$	19,419
Interest income from commercial mortgage loans		2,825			2,276			7,851			6,886
Interest income from subordinate loans		6,144			3,784			17,316			8,861
Interest income from repurchase agreements		2,361			1,576			5,920			3,188
Interest expense		(1,768	)		(3,716	)		(6,939	)		(10,836	)
Net interest income		13,236			10,236			36,375			27,518
Operating expenses:
General and administrative expenses (includes $1,276 and $3,244 of non-cash stock based compensation in 2012 and $418 and $1,154 in 2011, respectively)		(2,430	)		(1,297	)		(7,229	)		(4,089	)
Management fees to related party		(1,518	)		(1,241	)		(4,099	)		(3,430	)
Total operating expenses		(3,948	)		(2,538	)		(11,328	)		(7,519	)
Interest income from cash balances		—			2			1			10
Realized gain on sale of securities		—			—			262			—
Unrealized gain (loss) on securities		3,010			(1,511	)		6,473			(118	)
Loss on derivative instruments (includes $40 and $228 of unrealized gains in 2012 and $202 and $1,291 of unrealized losses in 2011, respectively)		(87	)		(677	)		(569	)		(2,679	)
Net income		12,211			5,512			31,214			17,212
Preferred dividends		(1,219	)		—			(1,219	)		—
Net income available to common stockholders	$	10,992		$	5,512		$	29,995			17,212
Basic and diluted net income per share of common stock	$	0.52		$	0.28		$	1.43		$	0.93
Basic and diluted weighted average common shares outstanding		20,992,312			19,647,989			20,983,429			18,261,294
Dividend declared per share of common stock	$	0.40		$	0.40		$	1.20		$	1.20

See notes to unaudited condensed consolidated financial statements.

4

Apollo Commercial Real Estate Finance, Inc. and Subsidiaries

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

(in thousands)

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Net income available to common stockholders	$	10,992		$	5,512		$	29,995		$	17,212
Change in net unrealized gain (loss) on securities available-for-sale		(876	)		(2,355	)		(464	)		(5,872	)
Comprehensive income	$	10,116		$	3,157		$	29,531		$	11,340

See notes to unaudited condensed consolidated financial statements.

5

Apollo Commercial Real Estate Finance, Inc. and Subsidiaries

Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)

(in thousands—except share data)

	Preferred Stock				Common Stock				Additional Paid In Capital			Retained Earnings			Accumulated Other Comprehensive Income			Total
	Shares		Par		Shares		Par
Balance at January 1, 2012		—		—		20,561,032	$	206	$	336,209		$	—		$	563		$	336,978
Vesting of restricted stock pursuant to Equity Incentive Plan		—		—		—		—		3,244			—			—			3,244
Issuance of restricted stock		—		—		11,080		*		—			—			—			*
Issuance of preferred stock		3,450,000		35		—		—		86,215			—			—			86,250
Offering costs		—		—		—		—		(3,395	)		—			—			(3,395	)
Net income		—		—		—		—		—			31,214			—			31,214
Change in net unrealized gain on securities available-for-sale		—		—		—		—		—			—			(464	)		(464	)
Dividends on preferred stock		—		—		—		—		—			(1,219	)		—			(1,219	)
Dividends on common stock		—		—		—		—		—			(25,187	)		—			(25,187	)
Balance at September 30, 2012		3,450,000	$	35		20,572,112	$	206	$	422,273		$	4,808		$	99		$	427,421

* Rounds to zero.

See notes to unaudited condensed consolidated financial statements.

6

Apollo Commercial Real Estate Finance, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows (Unaudited)

(in thousands)

	For nine months ended September  30, 2012			For nine months ended September  30, 2011
Cash flows provided by operating activities:
Net income	$	31,214		$	17,212
Adjustments to reconcile net income to net cash provided by operating activities:
Premium amortization and (discount accretion), net		569			5,876
Amortization of deferred financing costs		1,551			1,088
Restricted stock amortization expense		3,244			1,153
Unrealized gain (loss) on securities		(6,473	)		118
Unrealized gain (loss) on derivative instruments		(228	)		1,291
Realized gain on sale of security		(262	)		—
Changes in operating assets and liabilities:
Accrued principal and interest receivable, less purchased interest		2,608			(3,733	)
Other assets		(190	)		(82	)
Accounts payable and accrued expenses		405			1,064
Payable to related party		222			558
Net cash provided by operating activities		32,660			24,545
Cash flows used in investing activities:
Proceeds from sale of securities available-for-sale		121,338			—
Proceeds from sale of securities at estimated fair value		16,918			—
Funding of securities at estimated fair value		(70,676	)		—
Funding of commercial mortgage loans		(17,883	)		(8,800	)
Funding of subordinate loans		(46,180	)		(64,858	)
Funding of repurchase agreements		—			(47,439	)
Principal payments received on securities available-for-sale		99,191			39,666
Principal payments received on securities at estimated fair value		92,009			16,668
Principal payments received on commercial mortgage loans		24,541			9,303
Principal payments received on subordinate loans		26			26
Principal payments received on repurchase agreements		36,464			—
Net cash provided by (used in) investing activities		255,748			(55,434	)
Cash flows from financing activities:
Proceeds from issuance of preferred stock		86,250			—
Proceeds from issuance of common stock		—			49,980
Payment of offering costs		(3,083	)		(1,692	)
Payment of deferred underwriting fee		—			(10,000	)
Repayments of TALF borrowings		(251,327	)		(33,233	)
Proceeds from repurchase agreement borrowings		313,860			69,014
Repayments of repurchase agreement borrowings		(361,590	)		(14,937	)
Deferred financing costs		(1,097	)		(500	)
Dividends on common stock		(24,995	)		(21,187	)
Net cash provided by (used in) financing activities		(241,982	)		37,445
Net decrease in cash and cash equivalents		46,426			6,556
Cash and cash equivalents, beginning of period		21,568			37,894
Cash and cash equivalents, end of period	$	67,994		$	44,450
Supplemental disclosure of cash flow information:
Interest paid	$	5,872		$	11,099
Supplemental disclosure of non-cash financing activities:
Dividend declared, not yet paid	$	10,114		$	8,542
Deferred financing costs, not yet paid	$	—		$	500
Offering costs payable	$	338		$	529

See notes to unaudited condensed consolidated financial statements.

7

Apollo Commercial Real Estate Finance Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(in thousands—except share and per share data)

Note 1 – Organization

Apollo Commercial Real Estate Finance, Inc. (together with its consolidated subsidiaries, is referred to throughout this report as the “Company,” “ARI,” “we,” “us” and “our”) is a real estate investment trust (“REIT”) that primarily originates, acquires, invests in and manages performing commercial first mortgage loans, commercial mortgage-backed securities (“CMBS”), subordinate financings and other commercial real estate-related debt investments in the United States. These asset classes are referred to as the Company’s target assets.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include the Company’s accounts and those of its consolidated subsidiaries. All significant intercompany amounts have been eliminated. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company’s most significant estimates include the fair value of financial instruments. Actual results could differ from those estimates.

These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included.

The Company currently operates in one business segment.

Recent Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (the “FASB”) issued guidance requiring additional disclosure information about offsetting and related arrangements. Entities will be required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on a basis of GAAP and those entities that prepare their financial statements on the basis of International Financial Reporting Standards (“IFRS”). The guidance is effective for periods beginning on or after January 1, 2013, and interim periods within those annual periods. While the adoption of this guidance will impact the Company’s disclosure, the Company does not believe that the adoption of this guidance will have a significant effect on its consolidated financial statements.

In September 2012, the FASB decided to remove the scope exception for mortgage REITs and require a mortgage REIT that meets the requirements to be an investment company under GAAP to follow investment company guidance. The FASB is currently in the process of redeliberations and will continue to consider feedback received on this Exposure Draft. The Company is currently evaluating the potential impact that the proposal would have on the Company’s consolidated financial statements. This exposure draft is not related to, nor does it impact the Company’s exemption from registering as an Investment Company under the 1940 Act.

8

Note 3 – Fair Value Disclosure

GAAP establishes a hierarchy of valuation techniques based on observable inputs utilized in measuring financial instruments at fair values. Market based or observable inputs are the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:

Level I — Quoted prices in active markets for identical assets or liabilities.

Level II — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

Level III — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used.

While the Company anticipates that its valuation methods will be appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The Company will use inputs that are current as of the measurement date, which may include periods of market dislocation, during which price transparency may be reduced.

The estimated fair value of the AAA-rated CMBS portfolio is determined by reference to market prices provided by certain dealers who make a market in these financial instruments. Broker quotes are only indicative of fair value and may not necessarily represent what the Company would receive in an actual trade for the applicable instrument. Management performs additional analysis on prices received based on broker quotes to validate the prices and adjustments are made as deemed necessary by management to capture current market information. The estimated fair values of the Company’s securities are based on observable market parameters and are classified as Level II in the fair value hierarchy.

The estimated fair values of the Company’s derivative instruments are determined using a discounted cash flow analysis on the expected cash flows of each derivative. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The fair values of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected cash flows are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. The Company’s derivative instruments are classified as Level II in the fair value hierarchy.

The following table summarizes the levels in the fair value hierarchy into which the Company’s financial instruments were categorized as of September 30, 2012:

	Fair Value as of September 30, 2012
	Level I		Level II			Level III		Total
CMBS – AAA-rated (Available-for-Sale)	$	—	$	81,405		$	—	$	81,405
CMBS – AAA-rated (Fair Value Option)		—		143,946			—		143,946
CMBS – Hilton (Fair Value Option)		—		74,239			—		74,239
Interest rate swaps		—		(252	)		—		(252	)
Interest rate caps		—		1			—		1
Total	$	—	$	299,339		$	—	$	299,339

9

The following table summarizes the levels in the fair value hierarchy into which the Company’s financial instruments were categorized as of December 31, 2011:

	Fair Value as of December 31, 2011
	Level I		Level II			Level III		Total
CMBS – AAA-rated (Available-for-Sale)	$	—	$	302,543		$	—	$	302,543
CMBS – AAA-rated (Fair Value Option)		—		251,452			—		251,452
Interest rate swaps		—		(666	)		—		(666	)
Interest rate caps		—		188			—		188
Total	$	—	$	553,517		$	—	$	553,517

Note 4 – Debt Securities

During June 2012, the Company purchased CMBS with a face amount of $74,854 for which the obligors are certain special purpose entities formed in 2010 to hold substantially all of the assets of Hilton Worldwide, Inc. (the “Hilton CMBS”). The Hilton CMBS has a current interest rate of one-month LIBOR+1.75% which increases to LIBOR+2.30% on November 12, 2012, LIBOR+3.30% on November 12, 2013 and LIBOR+3.80% on November 12, 2014. The Hilton CMBS receives principal repayments according to a schedule that is approximately equivalent to a 16-year amortization schedule and has a yield of 5.6%. The Hilton CMBS was purchased for $70,655 and financed with $49,459 of borrowings under the Company’s master repurchase agreement with Wells Fargo Bank, N.A. (the “Wells Facility”), which was amended to provide up to $100,000 of additional financing for the Hilton CMBS. See Note 8 – Borrowings for a description of the Wells Facility. The Company has elected the fair value option for the Hilton CMBS.

At September 30, 2012, the Company had AAA-rated CMBS with an aggregate face value of $219,706, which were also pledged to secure borrowings under the Wells Facility.

The amortized cost and estimated fair value of the Company’s debt securities at September 30, 2012 are summarized as follows:

Security Description	Face Amount		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
CMBS – AAA-rated (Available-for-Sale)	$	79,435	$	81,306	$	296	$	(197	)	$	81,405
CMBS – AAA-rated (Fair Value Option)		140,271		142,475		1,648		(177	)		143,946
CMBS – Hilton (Fair Value Option)		74,054		70,521		3,718		—			74,239
Total	$	293,760	$	294,302	$	5,662	$	(374	)	$	299,590

The gross unrealized loss related to the available-for-sale securities results from the fair value of the securities falling below the amortized cost basis. These unrealized losses are primarily the result of market factors other than credit impairment and the Company believes the carrying value of the securities are fully recoverable over their expected holding period. Management does not intend to sell or expect to be forced to sell the securities prior to the Company recovering the amortized cost. Additionally, all unrealized losses on securities available-for-sale at September 30, 2012 have existed for less than twelve months. As such, management does not believe any of the securities are other than temporarily impaired.

During March 2012, the Company sold CMBS with an amortized cost of $137,423 resulting in a net realized gain of $262, which was comprised of realized gains of $345 and realized losses of $83. The sale generated proceeds of $14,621 after the repayment of $123,064 of borrowings under the Wells Facility.

10

The amortized cost and estimated fair value of the Company’s debt securities at December 31, 2011 are summarized as follows:

Security Description	Face Amount		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
CMBS – AAA-rated (Available-for-Sale)	$	298,598	$	301,980	$	810	$	(247	)	$	302,543
CMBS – AAA-rated (Fair Value Option)		248,209		252,736		—		(1,284	)		251,452
Total	$	546,807	$	554,716	$	810	$	(1,531	)	$	553,995

The overall statistics for the Company’s AAA-rated CMBS investments calculated on a weighted average basis assuming no early prepayments or defaults as of September 30, 2012 and December 31, 2011 are as follows:

	September 30, 2012			December 31, 2011
Credit Ratings *		AAA			AAA
Coupon		5.6	%		5.6	%
Yield		4.2	%		4.3	%
Weighted Average Life		2.1 years			1.2 years

* Ratings per Fitch, Moody’s or S&P.

The percentage vintage, property type, and location of the collateral securing the Company’s AAA-rated CMBS investments calculated on a weighted average basis as of September 30, 2012 and December 31, 2011 are as follows:

Vintage	September 30, 2012			December 31, 2011
2006		3	%		7	%
2007		97			93
Total		100	%		100	%

Property Type	September 30, 2012			December 31, 2011
Office		40.5	%		36.5	%
Retail		23.3			26.6
Multifamily		12.9			13.1
Hotel		10.4			10.8
Other *		12.9			13.0
Total		100	%		100	%

* No other individual category comprises more than 10% of the total.

Location	September 30, 2012			December 31, 2011
South Atlantic		22.1	%		23.0	%
Middle Atlantic		21.3			21.9
Pacific		23.9			21.0
Other *		32.7			34.1
Total		100	%		100	%

* No other individual category comprises more than 10% of the total.

11

Note 5 – Commercial Mortgage Loans

The Company’s commercial mortgage loan portfolio was comprised of the following at September 30, 2012:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon			Amortization Schedule	Property Size	Appraised LTV (1)
Hotel - NY, NY	Jan-10	Feb-15	$	32,000	$	31,633	$	31,633		8.25	%	30 year	151 rooms		40	%
Office Condo (Headquarters) - NY, NY	Feb-10	Feb-15		28,000		27,480		27,480		8.00		30 year	73,419 sq. ft.		53	%
Hotel - Silver Spring, MD	Mar-10	Apr-15		26,000		25,351		25,351		9.00		25 year	263 rooms		56	%
Mixed Use – South Boston, MA (2)	Apr-12	Dec-12		23,844		23,844		19,637		1.98		Interest only	20 acres		28	%
Total/Weighted Average			$	109,844	$	108,308	$	104,101		6.98	%

(1) Appraised loan-to-value (“LTV”) represents the current debt balance (through the Company’s last dollar of exposure) as a percentage of the value of the property as of the date of investment for all loans except the New York, NY hotel loan. The value of the property underlying the $32,000 New York, NY hotel loan is as of March 2011.

(2) This loan is a senior sub-participation interest in a $120,000 first mortgage that bears interest at a rate of LIBOR plus 172 basis points and includes a one-year extension option subject to repayment of $33,000 of the entire first mortgage (of which the Company will receive its pro rata portion) and the payment of a 0.50% fee of the outstanding balance of the entire first mortgage.

During April 2012, a $24,000 two-year fixed rate first mortgage loan on a 155-room boutique hotel in midtown Manhattan was repaid. The loan had an interest rate of 8.00%. The Company repaid $15,444 of borrowings under the Company’s $100,000 master repurchase facility entered into with JPMorgan Chase Bank, N.A. (the “JPMorgan Facility”) in conjunction with this repayment.

The Company’s commercial mortgage loan portfolio was comprised of the following at December 31, 2011:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon			Amortization Schedule	Property Size	Appraised LTV *
Hotel - NY, NY	Jan-10	Feb-15	$	32,000	$	31,798	$	31,798		8.25	%	30 year	151 rooms		40	%
Office Condo (Headquarters) - NY, NY	Feb-10	Feb-15		28,000		27,644		27,644		8.00		30 year	73,419 sq. ft.		53	%
Hotel - Silver Spring, MD	Mar-10	Apr-15		26,000		25,564		25,564		9.00		25 year	263 rooms		57	%
Hotel – NY, NY	Aug-10	Aug-12		24,000		24,000		24,000		8.00		Interest only	155 rooms		40	%
Total/Weighted Average			$	110,000	$	109,006	$	109,006		8.31	%

* Appraised LTV represents the current debt balance (through the Company’s last dollar of exposure) as a percentage of the value of the property as of the date of investment for all loans except the New York, NY hotel loan. The value of the property underlying the $32,000 New York, NY hotel loan is as of March 2011.

The Company evaluates its loans for possible impairment on a quarterly basis. The Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan by loan basis. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash from operations are sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan, and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates. Such loan loss analyses are completed and reviewed by asset management and finance personnel, who utilize various data sources, including (i) periodic financial data such as debt service coverage ratio, property occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and discussions

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with market participants. An allowance for loan loss is established when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. The Company has determined that an allowance for loan losses was not necessary at September 30, 2012 and December 31, 2011.

Note 6 – Subordinate Loans

The Company’s subordinate loan portfolio was comprised of the following at September 30, 2012:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon			Amortization Schedule	Appraised LTV (1)
Senior Mezz - Retail - Various	Dec-09	Dec-19	$	30,000	$	30,000	$	30,000		12.24	%	Interest only (2)		68	%
Junior Mezz - Retail - Various	Dec-09	Dec-19		20,000		20,000		20,000		14.00		Interest only (2)		72	%
Office - Michigan	May-10	Jun-20		9,000		8,923		8,923		13.00		25 year		68	%
Ski Resort - California	Apr-11	May-17		40,000		40,000		39,808		14.00		Interest only (3)		56	%
Hotel Portfolio – New York (4)	Aug-11	July-13		25,000		25,000		25,000		11.49		Interest only (5)		60	%
Retail Center – Virginia (6)	Oct-11	Oct-14		25,000		25,953		25,953		14.00		Interest only (6)		74	%
Hotel– New York (7)	Jan-12	Feb-14		15,000		15,000		14,968		12.00		Interest only (7)		63	%
Hotel– New York (8)	Mar-12	Mar-14		15,000		15,000		15,000		11.50		Interest only (8)		65	%
Mixed Use – North Carolina	Jul-12	Jul-22		6,525		6,525		6,525		11.10		Interest only		77	%
Office Complex - Missouri	Sept-12	Oct-22		10,000		10,000		10,000		11.75		30 year		72	%
Total/Weighted Average			$	195,525	$	196,401	$	196,177		12.75	%

(1) Appraised LTV represents the current debt balance (through the Company’s last dollar of exposure) as a percentage of the value of the property as of the date of investment.

(2) Prepayments are prohibited prior to the fourth year of the loan and any prepayments thereafter are subject to prepayment penalties ranging from 5% to 1%.

(3) Prepayments are prohibited prior to the third year of the loan and any prepayments thereafter are subject to prepayment penalties ranging from 5% to 1%.

(4) Includes a LIBOR floor of 1% and three one-year extension options subject to certain conditions and the payment of a 0.25% fee for the fourth and fifth year extensions.

(5) Prepayments are prohibited prior to February 2013 and any prepayments thereafter are subject to spread maintenance premiums.

(6) Interest rate of 14.0% includes a 10.0% current payment with a 4.0% accrual. There are two one-year extension options subject to certain conditions.

(7) Includes a 1.00% origination fee, a one-year extension option subject to certain conditions and a 0.50% extension fee as well as a 1.50% exit fee.

(8) Includes a LIBOR floor of 0.50%, two one-year extension options subject to certain conditions and the payment of a 0.50% fee for the second extension.

During June 2012, the Company modified the $40,000 subordinate loan secured by a ski resort in California. The modification was completed in connection with a modification of both the senior and junior loans in order to provide financial covenant relief to the borrower and included the addition of a 0.5% amendment fee and a 1.0% exit fee upon repayment of the loan. In addition, the interest rate on the mezzanine loan was increased by 0.75% to 14% until the earlier of (i) the loan being back in compliance with its original covenants; or (ii) April 2014. As of September 30, 2012, the mezzanine loan was current on its interest payments to the Company. All of the additional remuneration will be recognized over the remaining life of the loan.

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The Company’s subordinate loan portfolio was comprised of the following at December 31, 2011:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Coupon			Amortization Schedule	Appraised LTV (1)
Senior Mezz - Retail - Various	Dec-09	Dec-19	$	30,000	$	30,000		12.24	%	Interest only (2)		68	%
Junior Mezz - Retail - Various	Dec-09	Dec-19		20,000		20,000		14.00		Interest only (2)		73	%
Office - Michigan	May-10	Jun-20		9,000		8,950		13.00		25 year		69	%
Ski Resort - California	Apr-11	May-17		40,000		40,000		13.25		Interest only (2)		64	%
Hotel Portfolio – New York (3)	Aug-11	July-13		25,000		25,000		11.49		Interest only (4)		60	%
Retail Center – Virginia (5)	Oct-11	Oct-14		25,000		25,136		14.00		Interest only (5)		74	%
Total/Weighted Average			$	149,000	$	149,086		13.00	%

(1) Appraised LTV represents the current debt balance (through the Company’s last dollar of exposure) as a percentage of the value of the property as of the date of investment.

(2) Prepayments are prohibited prior to the third year of the loan and any prepayments thereafter are subject to prepayment penalties ranging from 5% to 0%.

(3) Includes a LIBOR floor of 1% and three one-year extension options subject to certain conditions.

(4) Prepayments are prohibited prior to February 2013 and any prepayments thereafter are subject to spread maintenance premiums.

(5) Interest rate of 14.0% includes a 10.0% current payment with a 4.0% accrual. There are two one-year extension options subject to certain conditions.

The Company evaluates its loans for possible impairment on a quarterly basis. See Note 5 – Commercial Mortgage Loans for a summary of the metrics reviewed. The Company has determined that an allowance for loan loss was not necessary at September 30, 2012 and December 31, 2011.

Note 7 – Repurchase Agreement

During 2011, the Company funded a $47,439 investment structured in the form of a repurchase facility secured by a Class A-2 CDO bond. The $47,439 of borrowings provided under the facility financed the purchase of a CDO bond with an aggregate face amount of $68,726, representing an advance rate of 69% on the CDO bond’s face amount. The Class A-2 CDO bond, originally rated AAA/Aaa, is currently rated A-/Baa1. The CDO is comprised of 58 senior and subordinate commercial real estate debt positions and commercial real estate securities with the majority of the debt and securities underlying the CDO being first mortgages.

The repurchase facility bears interest at 13.0% (10.0% current pay with a 3.0% accrual) on amounts outstanding and has an initial term of 18 months with three six-month extensions options available to the borrower. Any principal repayments that occur prior to the 21st month are subject to a make-whole provision at the full 13.0% interest rate.

During the nine months ended September 30, 2012, the Company received $36,464 of principal repayments related to this repurchase agreement as well as $1,817 of make-whole interest payments.

Note 8 – Borrowings

At September 30, 2012 and December 31, 2011, the Company’s borrowings had the following debt balances, weighted average maturities and interest rates:

	September 30, 2012								December 31, 2011
	Debt Balance		Weighted Average Remaining Maturity			Weighted Average Rate			Debt Balance		Weighted Average Remaining Maturity			Weighted Average Rate
Wells Facility borrowings	$	242,967		1.3 years	*		1.6	%	$	221,980		1.6 years	*		1.8	%	*
JPMorgan Facility borrowings		3		0.3 years			2.7	%		68,720		0.9 years			3.3	%	**
TALF borrowings		—		—			—	%		251,327		1.3 years			2.8	%	Fixed
Total/Weighted Average	$	242,970		1.3 years			1.9	%	$	542,027		1.3 years			2.5	%

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* Assumes extension options on the Wells Facility with respect to the Hilton CMBS are exercised. See below for a description of the Wells Facility. Borrowings outstanding under the Wells Facility bear interest at a LIBOR plus 125 basis points, 150 basis points or 235 basis points depending on the collateral pledged.

** During April 2012, the Company amended the JPMorgan Facility to reduce the interest rate spread by 50 basis points to LIBOR + 250 basis points.

At September 30, 2012, the Company’s borrowings had the following remaining maturities:

	Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years		Total
Wells Facility borrowings*	$	196,275	$	4,914	$	41,778	$	—	$	242,967
JPMorgan Facility borrowings		3		—		—		—		3
Total	$	196,278	$	4,914	$	41,778	$	—	$	242,970

* Assumes extension options on Wells Facility with respect to the Hilton CMBS are exercised. See below for a description of the Wells Facility.

At September 30, 2012, the Company’s collateralized financings were comprised of borrowings outstanding under JPMorgan Facility and the Wells Facility. The table below summarizes the outstanding balances at September 30, 2012 as well as the maximum and average balances for the nine months ended September 30, 2012.

			For the nine months ended September 30, 2012
	Balance at September  30, 2012		Maximum Month-End Balance		Average Month-End Balance
Wells Facility borrowings	$	242,967	$	469,147	$	299,061
JPMorgan Facility borrowings		3		68,720		48,699
TALF borrowings		—		251,327		25,133
Total	$	242,970

The Wells Facility was entered into in August 2010 which has a term of one year, with two one-year extensions available at the Company’s option, subject to certain restrictions, and upon the payment of an extension fee equal to 25 basis points on the then outstanding balance of the facility for each one-year extension. In August 2012, the Company exercised the final one-year extension of the term of the Wells Facility and extended the maturity date to August 2013 (except with respect to $100,000 of capacity under the facility to finance the Hilton CMBS described below). During December 2011, the Company, through an indirect wholly-owned subsidiary, entered into an amendment letter related to the Wells Facility to increase its maximum permitted borrowing under the facility from $250,000 to $506,000. The Company utilized the additional capacity under the Wells Facility to refinance all of the Company’s outstanding TALF debt during January 2012 at a rate of LIBOR plus 150 basis points.

Prior to the refinancing, the Company had TALF borrowings totaling $250,293 with a weighted average cost of funds of 2.8%. The increased borrowings under the Wells Facility related to this collateral totaled $264,401 and the Company entered into interest rate swap agreements with an initial aggregate notional value of $56,273 to economically hedge a portion of this floating-rate debt. During the nine months ended September 30, 2012, the Company repaid $169,809 of debt under the Wells Facility upon receiving paydowns from the Company’s CMBS and $123,064 upon the sale of a portion of the Company’s CMBS portfolio.

The Wells Facility was further amended during the second quarter of 2012 to provide an additional $100,000 of financing capacity for the purchase of Hilton CMBS at a rate of LIBOR plus 235 basis points with respect to borrowings secured by the Hilton CMBS. The additional $100,000 of capacity to finance the Hilton CMBS matures in November 2014 and may be extended for an additional year upon the payment of an extension fee equal to 0.50% on the then aggregate outstanding repurchase price for all such assets.

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The Company entered into the JPMorgan Facility in January 2010 to finance the Company’s first mortgage loans and investment grade CMBS. During April 2012, the Company amended the JPMorgan Facility to reduce the interest rate spread by 50 basis points to LIBOR + 2.50%. The Company has borrowed under this facility from time to time as needed to fund the acquisition of additional assets. Upon the closing of the Company’s 8.625% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”) offering August 2012, the Company repaid $53,014 of the Company’s outstanding borrowings under the JPMorgan Facility.

The Company’s repurchase agreements are subject to certain financial covenants and the Company was in compliance with these covenants at September 30, 2012.

Note 9 – Derivative instruments

The Company uses interest rate swaps and caps to manage exposure to variable cash flows on portions of its borrowings under repurchase agreements. The Company’s repurchase agreements bear interest at a LIBOR-based variable rate and increases in LIBOR could negatively impact earnings. Interest rate swap and cap agreements allow the Company to receive a variable rate cash flow based on LIBOR and pay a fixed rate cash flow, mitigating the impact of this exposure.

The Company entered into interest rate swaps and forward-starting caps in an effort to economically hedge a portion of its floating-rate interest payments due under the Wells Facility as well as potential extensions of the collateral securing the Wells Facility borrowings. The Company’s derivative instruments consist of the following at September 30, 2012 and December 31, 2011:

		September 30, 2012						December 31, 2011
	Balance Sheet Location	Notional Value			Estimated Fair Value			Notional Value			Estimated Fair Value
Interest rate swaps	Derivative instruments	$	90,266		$	(252	)	$	241,850		$	(666	)
Interest rate caps	Derivative instruments		206,469	*		1			26,189	*		188
Total derivative instruments					$	(251	)				$	(478	)

* Represents the notional values at September 30, 2012 and December 31, 2011 but does not include forward-starting notionals.

The Company has an agreement with its derivative counterparty that contains a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

The following table summarizes the amounts recognized on the consolidated statements of operations related to the Company’s derivatives for the three and nine months ended September 30, 2012 and 2011.

		For the three months ended September 30						For the nine months ended September 30
	Location of Loss Recognized in Income	2012			2011			2012			2011
Interest rate swaps	Loss on derivative instruments – realized *	$	(127	)	$	(475	)	$	(796	)	$	(1,388	)
Interest rate swaps	Loss on derivative instruments – unrealized		50			343			414			(1,923	)
Interest rate caps	Loss on derivative instruments – unrealized		(10	)		(545	)		(187	)		632
Total		$	(87	)	$	(677	)	$	(569	)	$	(2,679	)

* Realized losses represent net amounts accrued for the Company’s derivative instruments during the period.

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Note 10 – Related Party Transactions

Management Agreement

In connection with the Company’s initial public offering (“IPO”) in September 2009, the Company entered into a management agreement (the “Management Agreement”) with ACREFI Management, LLC (the “Manager”), which describes the services to be provided by the Manager and its compensation for those services. The Manager is responsible for managing the Company’s day-to-day operations, subject to the direction and oversight of the Company’s board of directors.

Pursuant to the terms of the Management Agreement, the Manager is paid a base management fee equal to 1.5% per annum of the Company’s stockholders’ equity (as defined in the Management Agreement), calculated and payable (in cash) quarterly in arrears.

The current term of the Management Agreement expires on September 29, 2013, and is automatically renewed for successive one-year terms on each anniversary thereafter. The Management Agreement may be terminated upon expiration of the one-year terms only upon the affirmative vote of at least two-thirds of the Company’s independent directors, based upon (1) unsatisfactory performance by the Manager that is materially detrimental to the Company or (2) a determination that the management fee payable to the Manager is not fair, subject to the Manager’s right to prevent such a termination based on unfair fees by accepting a mutually acceptable reduction of management fees agreed to by at least two-thirds of the Company’s independent directors. The Manager must be provided with written notice of any such termination at least 180 days prior to the expiration of the then existing term and will be paid a termination fee equal to three times the sum of the average annual base management fee during the 24-month period immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination. Following a meeting by the Company’s independent directors on March 29, 2012 with respect to the Management Agreement, which included a discussion of the Manager’s performance and the level of the management fees thereunder, the Company did not provide notice of termination of the Management Agreement to the Manager.

For the three and nine months ended September 30, 2012, respectively, the Company incurred approximately $1,518 and $4,099 in base management fees. For the three and nine months ended September 30, 2011, respectively, the Company incurred approximately $1,241 and $3,430 in base management fees. In addition to the base management fee, the Company is also responsible for reimbursing the Manager for certain expenses paid by the Manager on behalf of the Company or for certain services provided by the Manager to the Company. For the three and nine months ended September 30, 2012, respectively, the Company recorded expenses totaling $203 and $721 related to reimbursements for certain expenses paid by the Manager on behalf of the Company. For the three and nine months ended September 30, 2011, respectively, the Company recorded expenses totaling $127 and $442 related to reimbursements for certain expenses paid by the Manager on behalf of the Company. Expenses incurred by the Manager and reimbursed by the Company are reflected in the respective consolidated statement of operations expense category or the consolidated balance sheet based on the nature of the item.

Included in payable to related party on the consolidated balance sheet at September 30, 2012 and December 31, 2011, respectively, is approximately $1,520 and $1,298 for base management fees incurred but not yet paid.

Note 11 – Share-Based Payments

On September 23, 2009, the Company’s board of directors approved the Apollo Commercial Real Estate Finance, Inc., 2009 Equity Incentive Plan (the “LTIP”). The LTIP provides for grants of restricted common stock, restricted stock units (“RSUs”) and other equity-based awards up to an aggregate of 7.5% of the issued and outstanding shares of the Company’s common stock (on a fully diluted basis). The LTIP is administered by the compensation committee of the Company’s board of directors (the “Compensation Committee”) and all grants under the LTIP must be approved by the Compensation Committee.

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The Company recognized stock-based compensation expense of $1,276 and $3,244 for the three and nine months ended September 30, 2012, respectively, related to restricted stock and RSU vesting. The Company recognized stock-based compensation expense of $418 and $1,154 for the three and nine months ended September 30, 2011, respectively, related to restricted stock and RSU vesting. The following table summarizes the grants of RSUs during the nine months ended September 30, 2012:

Type	Date	Shares		RSUs			Estimate Fair Value on Grant Date		Initial Vesting	Final Vesting
Forfeiture*	February 2012		—		(1,875	)		n/a	n/a	n/a
Grant	March 2012		—		20,000		$	310	March 2013	March 2015
Grant	April 2012		9,584		—		$	150	July 2012	April 2015
Grant	August 2012		1,496		—		$	25	July 2013	July 2015
Total			11,080		18,125

* Represents RSUs forfeited by a former employee of the Manager in connection with such employee’s resignation from the Manager.

Below is a summary of expected restricted stock and RSU vesting dates as of September 30, 2012.

Vesting Date	Shares Vesting		RSU Vesting		Total Awards
October 2012		11,883		11,043		22,926
January 2013		2,507		93,749		96,256
March 2013		—		6,666		6,666
April 2013		2,505		834		3,339
July 2013		3,273		834		4,107
October 2013		1,189		416		1,605
January 2014		1,564		93,335		94,899
March 2014		—		6,667		6,667
April 2014		1,568		417		1,985
July 2014		2,100		—		2,100
January 2015		796		—		796
March 2015		—		6,667		6,667
April 2015		800		—		800
July 2015		500		—		500
		28,685		220,628		249,313

Note 12 – Stockholders’ Equity

Dividends. For 2012, the Company declared the following dividends on its common stock:

Declaration Date	Record Date	Payment Date	Amount
February 28, 2012	March 31, 2012	April 12, 2012	$	0.40
May 3, 2012	June 29, 2012	July 12, 2012	$	0.40
August 6, 2012	September 28, 2012	October 12, 2012	$	0.40

For 2012, the Company declared the following dividends on its Series A Preferred Stock:

Declaration Date	Record Date	Payment Date	Amount
September 13, 2012	September 28, 2012	October 15, 2012	$	0.4432

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Preferred Offering. On August 1, 2012, the Company completed an underwritten public offering of 3,450,000 shares of its 8.625% Series A Cumulative Redeemable Perpetual Preferred Stock with a liquidation preference of $25.00 per share including 450,000 shares issued pursuant to the underwriters option to purchase additional shares. Net proceeds from the offering, after the underwriting discount and estimated offering expenses payable by the Company, were approximately $83,183.

Note 13 – Fair Value of Financial Instruments

The following table presents the carrying value and estimated fair value of the Company’s financial instruments not carried at fair value on the consolidated balance sheet at September 30, 2012 and December 31, 2011:

	September 30, 2012						December 31, 2011
	Carrying Value			Estimated Fair Value			Carrying Value			Estimated Fair Value
Cash and cash equivalents	$	67,994		$	67,994		$	21,568		$	21,568
Commercial first mortgage loans		104,101			111,886			109,006			116,516
Subordinate loans		196,177			200,427			149,086			154,778
Repurchase agreements		10,975			10,975			47,439			47,415
TALF borrowings		—			—			(251,327	)		(256,171	)
Borrowings under repurchase agreements		(242,970	)		(242,970	)		(290,700	)		(290,700	)

To determine estimated fair values of the financial instruments listed above, market rates of interest, which include credit assumptions, are used to discount contractual cash flows. The estimated fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments. The use of different market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts. The Company’s commercial first mortgage loans, subordinate loans and repurchase agreements are carried at amortized cost on the condensed consolidated financial statements and are classified as Level III in the fair value hierarchy.

Note 14 – Net Income per Share

GAAP requires use of the two-class method of computing earnings per share for all periods presented for each class of common stock and participating security as if all earnings for the period had been distributed. Under the two-class method, during periods of net income, the net income is first reduced for dividends declared on all classes of securities to arrive at undistributed earnings. During periods of net losses, the net loss is reduced for dividends declared on participating securities only if the security has the right to participate in the earnings of the entity and an objectively determinable contractual obligation to share in net losses of the entity.

The remaining earnings are allocated to common stockholders and participating securities to the extent that each security shares in earnings as if all of the earnings for the period had been distributed. Each total is then divided by the applicable number of shares to arrive at basic earnings per share. For the diluted earnings, the denominator includes all outstanding common shares and all potential common shares assumed issued if they are dilutive. The numerator is adjusted for any changes in income or loss that would result from the assumed conversion of these potential common shares.

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The table below presents basic and diluted net (loss) income per share of common stock using the two-class method for the three and nine months ended September 30, 2012 and 2011:

	For the three months ended September 30						For the nine months ended September 30
	2012			2011			2012			2011
Numerator:
Net income	$	12,211		$	5,512		$	31,214		$	17,212
Preferred dividends		(1,219	)		—			(1,219	)		—
Net income available to common stockholders		10,992			5,512			29,995			17,212
Dividends declared on common stock		(8,229	)		(8,224	)		(24,682	)		(22,270	)
Dividends on participating securities		(168	)		(173	)		(505	)		(270	)
Net income (loss) attributable to common stockholders	$	2,595		$	(2,885	)	$	4,808		$	(5,328	)
Denominator:
Weighted average shares of common stock outstanding		20,992,312			19,647,989			20,983,429			18,261,294
Basic and diluted net income (loss) per weighted average share of common stock
Distributable Earnings	$	0.40		$	0.42		$	1.20		$	1.22
Undistributed income (loss)		0.12			(0.14	)		0.23			(0.29	)
Basic and diluted net income (loss) per share of common stock	$	0.52		$	0.28		$	1.43		$	0.93

For the three and nine months ended September 30, 2011, respectively, unvested RSUs of 318,606 and 187,906 were excluded from the calculation of diluted net loss per share because the effect was anti-dilutive.

Note 15 – Subsequent Events

Dividends. On November 1, 2012, the Company declared a dividend of $0.40 per share of common stock which is payable on January 14, 2013 to common stockholders of record on December 31, 2012.

Stockholders’ Equity. On October 9, 2012, the Company completed a follow-on public offering of 7,000,000 shares of its common stock at a price of $16.81 per share. On November 1, 2012, the underwriters partially exercised their option to purchase additional shares of common stock and purchased 404,640 shares of common stock at $16.81 per share. The aggregate net proceeds from the entire offering, including proceeds from the sale of the additional shares, are estimated to be approximately $124,182, after deducting estimated offering expenses payable by the Company.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING INFORMATION

The Company makes forward-looking statements herein and will make forward-looking statements in future filings with the Securities and Exchange Commission (“SEC”), press releases or other written or oral communications within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). For these statements, the Company claims the protections of the safe harbor for forward-looking statements contained in such Section. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company’s control. These forward-looking statements include information about possible or assumed future results of the Company’s business, financial condition, liquidity, results of operations, plans and objectives. When the Company uses the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions, it intends to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: market trends in the Company’s industry, interest rates, real estate values, the debt securities markets or the general economy or the demand for commercial real estate loans; the Company’s business and investment strategy; operating results and potential asset performance; actions and initiatives of the U.S. government and changes to U.S. government policies and the execution and impact of these actions, initiatives and policies; the state of the U.S. economy generally or in specific geographic regions; economic trends and economic recoveries; the Company’s ability to obtain and maintain financing arrangements, including securitizations; the anticipated shortfall of debt financing from traditional lenders; the volume of short-term loan extensions; the demand for new capital to replace maturing loans; expected leverage; general volatility of the securities markets in which the Company participates; changes in the value of the Company’s assets; the scope of the Company’s target assets; interest rate mismatches between the Company’s target assets and any borrowings used to fund such assets; changes in interest rates and the market value of the Company’s target assets; changes in prepayment rates on the Company’s target assets; effects of hedging instruments on the Company’s target assets; rates of default or decreased recovery rates on the Company’s target assets; the degree to which hedging strategies may or may not protect the Company from interest rate volatility; impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters; the Company’s ability to maintain its qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes; the Company’s ability to maintain its exemption from registration under the Investment Company Act of 1940 (the “1940 Act”); the availability of opportunities to acquire commercial mortgage-related, real estate-related and other securities; the availability of qualified personnel; estimates relating to the Company’s ability to make distributions to its stockholders in the future; and the Company’s understanding of its competition.

The forward-looking statements are based on the Company’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to it. Forward-looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the Company. See Item “1A - Risk Factors” of the Company’s annual report on Form 10-K. These and other risks, uncertainties and factors, including those described in the annual, quarterly and current reports that the Company files with the SEC, could cause its actual results to differ materially from those included in any forward-looking statements the Company makes. All forward-looking statements speak only as of the date they are made. New risks and uncertainties arise over time and it is not possible to predict those events or how they may affect us. Except as required by law, the Company is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

The Company is a REIT that primarily originates, acquires, invests in and manages performing commercial first mortgage loans, CMBS, subordinate financings and other commercial real estate-related debt investments in the United States. These asset classes are referred to as the Company’s target assets.

The Company is externally managed and advised by ACREFI Management, LLC (the “Manager”), an indirect subsidiary of Apollo Global Management, LLC, together with its subsidiaries, (“Apollo”), a leading global alternative investment manager with a contrarian and value oriented investment approach in private equity, credit-oriented capital markets and real estate. Apollo had total assets under management of approximately $105 billion as of June 30, 2012.

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The Manager is led by an experienced team of senior real estate professionals who have significant experience in commercial property investing, financing and ownership. The Manager benefits from the investment, finance and managerial expertise of Apollo’s private equity, credit-oriented capital markets and real estate investment professionals. The Company believes its relationship with Apollo provides the Company with significant advantages in sourcing, evaluating, underwriting and managing investments in the Company’s target assets.

Market Overview

In the first half of 2012, the commercial real estate lending market continued to slowly recover from the downturn experienced as part of the correction in the global financial markets which began in mid-2007. The Company estimates that from 2012 to 2015, there is in excess of $1 trillion of commercial real estate debt that is scheduled to mature and this presents a compelling opportunity for the Company to invest capital in its target assets at attractive risk adjusted returns. While the volume of impending maturities and the need for refinancing is significant, the demand for new capital to refinance maturing commercial mortgage debt continues to be somewhat tapered by the granting of extensions by lenders across the commercial mortgage loan industry. The Company believes that the significant long-term opportunity still remains for lenders to capitalize on the impending maturity wall despite the fact that the volume of loan modifications has had a meaningful impact on the timing of the maturities and the related opportunity.

Recent action by the Federal Reserve has sent spreads to post-crisis lows and will likely result in a wave of refinancing and new issue during the remainder of 2012 and into the beginning of 2013. In the first nine months of 2012, approximately $31 billion of CMBS was issued in the United States, an increase of approximately 15% over the same period in 2011. In the third quarter alone, approximately $13 billion of CMBS was issued. Since early 2010, approximately $75 billion of CMBS has been issued in the United States. While this is significantly less than the $229 billion that was issued in 2007, it is clear evidence that the lending market for commercial real estate has begun to stabilize and continues to grow.

Despite the recent strength of the CMBS market, the pace of CMBS issuance is still moderate relative to the peak of the market, and lenders still appear to be more focused on stabilized cash flowing assets with lower loan-to-value ratios. This should continue to provide the Company with increased opportunities to originate mezzanine financings with respect to those parts of the financing capital structure which are unsuitable to be sold as part of CMBS.

Critical Accounting Policies

A summary of the Company’s accounting policies is set forth in its annual report on Form 10-K for the year ended December 31, 2011 under Item 7 – Management Discussion and Analysis – Critical Accounting Policies.

Financial Condition and Results of Operations

(in thousands—except share and per share data)

Investment Activity

Commercial mortgage loans. During March 2012, the Company closed a $15,000 mezzanine loan secured by a pledge of the equity interest in a borrower that owns a 226-room hotel in midtown Manhattan. The mezzanine loan is part of a $70,000, four-year (two-year initial term with two one-year extension options) floating-rate whole loan originated on February 15, 2012 to refinance the property. The interest rate on the mezzanine loan is one-month LIBOR+11.00% with a 0.50% LIBOR floor and 0.50% fee for the second extension. The mezzanine loan has been underwritten to generate an IRR of approximately 12.8%. See “—Investments” for a discussion of how IRR is calculated.

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During April 2012, the Company purchased two senior sub-participation interests (an aggregate face of $23,844) in a first mortgage loan (the “Loan”) with a current balance of $120,000 which is secured by over 20 acres of land in South Boston, Massachusetts. The land is currently used as parking with approximately 3,325 spaces, but the various parcels that comprise the site are entitled for over 5.8 million of buildable square feet. The two senior sub-participation interests have a 27.5% LTV (based on a current appraisal) and a debt yield of 8.2% (based on the Manager’s underwritten net operating income for the parking operations).

The aggregate purchase price of the two senior sub-participation interests was $18,599 (including a 3% brokerage fee which will be expensed during the period ending June 30, 2012). The senior sub-participations each have an interest rate of one-month LIBOR + 1.72% and mature in December 2012. Upon the repayment of $33,000 of the Loan (of which the Company will receive its pro-rata share) and the payment of an extension fee equal to 0.50% of the outstanding balance of the Loan, the Loan, including the senior sub participation interests, can be extended through December 2013. Assuming the extension occurs, the senior sub-participation interests have been underwritten to generate an IRR of approximately 21.7%. See “—Investments” for a discussion of how IRR is calculated.

During April 2012, a $24,000 two-year fixed rate first mortgage loan on a 155-room boutique hotel in midtown Manhattan was repaid. The loan had an interest rate of 8.00%. The Company repaid $15,444 of borrowings under the JPMorgan Facility in conjunction with this repayment.

Subordinate loans. During January 2012, the Company closed a $15,000 mezzanine loan secured by a pledge of the equity interests in a borrower that purchased a 165-room hotel in midtown Manhattan. The mezzanine loan is part of a $80,000, three-year (two year initial term with one one-year extension option) financing package split into a $65,000 first mortgage loan and a $15,000 mezzanine loan. The mezzanine loan is an interest-only fixed rate loan that bears interest at 12.00%, with a 1.00% origination fee, a 0.50% extension fee and a 1.50% exit fee. The mezzanine loan has an appraised LTV of approximately 60% and has been underwritten to generate an IRR of approximately 14.0%. See “—Investments” for a discussion of how IRR is calculated.

During June 2012, the Company modified the $40,000 subordinate loan secured by a ski resort in California. The modification was completed in connection with a modification of both the senior and junior loans in order to provide financial covenant relief to the borrower and included the addition of a 0.5% amendment fee and a 1.0% exit fee upon repayment of the loan. In addition, the interest rate on the mezzanine loan was increased by 0.75% to 14% until the earlier of (i) the loan being back in compliance with its original covenants; or (ii) April 2014. As of September 30, 2012, the mezzanine loan was current on its interest payments to the Company. All of the additional remuneration will be recognized over the remaining life of the loan.

During July 2012, the Company closed a $6,525 mezzanine loan secured by a pledge of the equity interest in a borrower that owns a mixed use project, which consists of 55,585 square feet of Class-A retail and 114,476 square feet of Class-A office in Chapel Hill, North Carolina. The mezzanine loan is part of a new $40,000 10-year fixed-rate financing comprised of a $33,475 first mortgage and the $6,525 mezzanine loan. The whole loan amortizes on a 30-year schedule but all amortization is applied to the first mortgage. The mezzanine loan is an interest-only, fixed rate loan that has an interest rate of 11.1%. The mezzanine loan has an appraised LTV of approximately 77% and has been underwritten to generate an IRR of approximately 12%. See “—Investments” for a discussion of how IRR is calculated.

During September 2012, the Company originated a $10,000 mezzanine loan secured by a pledge of the equity interests in a borrower that owns an 845,241 square foot Class A office tower complex in downtown Kansas City, Missouri. The office tower complex is comprised of a 34-story office tower, a 10-story office building, a two story office building, two separate parking garages comprising 2,470 parking spaces and approximately 30,000 square feet of ground-floor retail. The mezzanine loan is part of a $70,000, 10-year fixed-rate financing with 30-year amortization that will be comprised of the mezzanine loan and a $60,000 first mortgage loan. The interest rate on the mezzanine loan is 11.75%. The mezzanine loan has an appraised loan to value of 72% and has been underwritten to generate an IRR of approximately 12.6%. See “—Investments” for a discussion of how IRR is calculated.

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AAA-rated CMBS – During March 2012, the Company sold AAA-rated CMBS with an amortized cost of $137,423 resulting in net realized gains of $262. The sale generated proceeds of $14,621 after the repayment of $123,064 of debt under the Wells Facility.

Hilton CMBS - During June 2012, the Company purchased CMBS with a face amount of $74,854 for which the obligors are certain special purpose entities formed to hold substantially all of the assets of Hilton Worldwide, Inc. (the “Hilton CMBS”). The Hilton CMBS has a current interest rate of one-month LIBOR+1.75% which increases to LIBOR+2.30% on November 12, 2012, LIBOR+3.30% on November 12, 2013 and LIBOR+3.80% on November 12, 2014, and an estimated LTV of approximately 35% to 45%. The Hilton CMBS receives principal repayments according to a schedule that is approximately equivalent to a 16-year amortization schedule. The Hilton CMBS was purchased for $70,655 and financed with $49,459 of borrowings under the Wells Facility, which was amended to provide up to $100,000 of additional financing for the Hilton CMBS. This portion of the Wells Facility matures in November 2014 and may be extended for an additional year upon the payment of an extension fee equal to 0.50% on the then aggregate outstanding repurchase price for all such assets.

Investments

The following table sets forth certain information regarding the Company’s investments at September 30, 2012:

Description	Face Amount		Amortized Cost		Weighted Average Yield			Remaining Weighted Average Life (years)		Debt		Cost of Funds			Remaining Debt Term (years)*		Equity at cost		Current Weighted Average IRR **			Levered Weighted Average IRR ***
CMBS – AAA	$	219,706	$	223,781		4.2	%		2.1	$	194,069		1.8	%		0.9	$	29,712		15.6	%		15.6	%
CMBS - Hilton		74,054		70,521		5.6			3.1		48,898		2.6			3.1		21,623		11.7			11.7
First mortgages		108,308		104,101		11.3			2.1		3		2.7			0.3		104,098		11.3			20.2
Subordinate loans		196,401		196,177		13.2			5.4		—		—			—		196,177		13.9			13.9
Repurchase agreements		10,975		10,975		13.0			1.5		—		—			—		10,975		13.7			13.7
Total	$	609,444	$	605,555		8.7	%		3.3	$	242,970		1.9	%		1.3	$	362,585		13.1	%		14.9	%

* Assumes extension options on Wells Facility with respect to the Hilton CMBS are exercised. See “—Borrowings under Various Financing Arrangements” for a discussion of the Wells Facility.

** The internal rates of return (“IRR”) for the investments shown in the above table reflect the returns underwritten by the Manager, calculated on a weighted average basis assuming no dispositions, early prepayments or defaults but assumes extensions as well as the cost of borrowings and derivative instruments under the Wells Facility. IRR is the annualized effective compounded return rate that accounts for the time-value of money and represents the rate of return on an investment over a holding period expressed as a percentage of the investment. It is the discount rate that makes the net present value of all cash outflows (the costs of investment) equal to the net present value of cash inflows (returns on investment). It is derived from the negative and positive cash flows resulting from or produced by each transaction (or for a transaction involving more than one investment, cash flows resulting from or produced by each of the investments), whether positive, such as investment returns, or negative, such as transaction expenses or other costs of investment, taking into account the dates on which such cash flows occurred or are expected to occur, and compounding interest accordingly. There can be no assurance that the actual IRRs will equal the underwritten IRRs shown in the table. See “Risk Factors — The Company may not achieve its targeted internal rate of return on its investments which may lead to future returns that may be significantly lower than anticipated” included in the Company’s annual report on Form 10-K for the year ended December 31, 2011 for a discussion of some of the factors that could adversely impact the returns received by the Company from the investments shown in the table over time.

*** Substantially all of the Company’s borrowings under the JPMorgan Facility were repaid upon the closing of the Company’s Series A Preferred Stock offering in August 2012. The Company’s ability to achieve its underwritten leveraged weighted average IRR with regard to its portfolio of first mortgage loans is additionally dependent upon the Company reborrowing approximately $53,000 under the JPMorgan Facility or any replacement facility. Without such reborrowing, the leveraged weighted average IRRs will be as indicated in the current weighted average IRR column above.

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Net Interest Income

The following table sets forth certain information regarding the Company’s net investment income for the three and nine months ended September 30, 2012 and 2011:

	Three months ended September 30,												Nine months ended September 30,
	2012			2011			Change (amount)			Change (%)			2012			2011			Change (amount)			Change (%)
Interest income from:
Securities	$	3,674		$	6,316		$	(2,642	)		41.8	%	$	12,227		$	19,419		$	(7,192	)		(37.0	)%
Commercial mortgage loans		2,825			2,276			549			24.1	%		7,851			6,886			965			14.0	%
Subordinate loans		6,144			3,784			2,360			62.4	%		17,316			8,861			8,455			95.4	%
Repurchase agreements		2,361			1,576			785			49.8	%		5,920			3,188			2,732			85.7	%
Interest expense		(1,768	)		(3,716	)		1,948			(52.4	)%		(6,939	)		(10,836	)		3,897			(36.0	)%
Net interest income	$	13,236		$	10,236		$	3,000			29.3	%	$	36,375		$	27,518		$	8,857			32.2	%

Net interest income for the three and nine months ended September 30, 2012, respectively, increased $3,000, or 29.3%, and $8,857, or 32.2%, from the same periods in 2011. The increase is primarily the result of additional interest income from subordinate loans and repurchase agreements offset by a decline in interest income from securities. The decline in interest from securities for the three and nine months ended September 30, 2012, respectively, of $2,642, or 41.8%, and $7,192, or 37.0%, is attributable to the repayment of these securities as they near maturity. The increase in interest income for the three and nine months ended September 30, 2012, related to subordinate loans and repurchase agreements of $2,360, or 62.4%, and $8,455, or 95.4%, respectively, is primarily attributable to the full deployment of capital raised from the Company’s follow-on offering in July 2011 as well as the deployment of additional investable capital generated with the refinancing of the Company’s TALF debt. The increase in interest income for the three and nine months ended September 30, 2012, related to repurchase agreements of $785, or 49.8%, and $2,732, or 85.7%, respectively, is primarily attributable to $1,817 of make-whole interest payments received during the nine months ended September 30, 2012.

Interest expense for the three and nine months ended September 30, 2012, respectively, decreased $1,948, or 52.4%, and $3,897, or 36.0%, from the same periods in 2011. The decrease is primarily the result of the refinancing of the Company’s TALF debt with borrowings under the Wells Facility as well as the repayment of debt as the related CMBS have been repaid. In addition, the Company repaid substantially all of the borrowings outstanding under the JPMorgan Facility upon the close of the Company’s Series A Preferred Stock offering in August 2012.

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Operating Expenses

The following table sets forth the Company’s operating expenses for the three and nine months ended September 30, 2012 and 2011.

	Three months ended September 30,									Nine months ended September 30,
	2012		2011		Change (amount)		Change (%)			2012		2011		Change (amount)		Change (%)
General and administrative expense	$	1,154	$	879	$	275		31.3	%	$	3,985	$	2,935	$	1,050		35.8	%
Stock-based compensation expense		1,276		418		858		205.3	%		3,244		1,154		2,090		181.1	%
Management fee expense		1,518		1,241		277		22.3	%		4,099		3,430		669		19.5	%
Total operating expense	$	3,948	$	2,538	$	1,410		55.6	%	$	11,328	$	7,519	$	3,809		50.7	%

General and administrative expense for the three and nine months ended September 30, 2012, respectively, increased $275, or 31.3%, and $1,050 or 35.8%, from the same periods in 2011. The increase is primarily attributable one-time expenses related to the closing of loans during the three and nine months ended September 30, 2012.

Stock-based compensation expense for the three and nine months ended September 30, 2012, respectively, increased $858, or 205.3%, and $2,090, or 181.1%, from the same periods in 2011. The increase is primarily attributable to the grant of 308,750 RSUs during August 2011 as well as the increase in the price of the Company’s stock since the end of 2011. Share-based payments are discussed further in the accompanying consolidated financial statements - Note 11 – Share-Based Payments.

Management fee expense for the three and nine months ended September 30, 2012, respectively, increased $277, or 22.3%, and $669, or 19.5%, from the same periods in 2011. The increase is primarily attributable to increases in the Company’s stockholders’ equity (as defined in the Management Agreement) as a result of the Company’s follow-on equity offering that was completed in July 2011 and to a lesser extent the Series A Preferred Stock offering that closed in August 2012. Management fees and the relationship between the Company and its Manager are discussed further in the accompanying consolidated financial statements - Note 10 - Related Party Transactions.

Realized and unrealized gain/loss

In order to mitigate interest rate risk resulting from the Company’s floating-rate borrowings under the Wells Facility, the Company has entered into interest rate swaps and caps which are intended to economically hedge the a portion of its floating-rate borrowings through the expected maturity of the underlying collateral as well as the potential extension of the underlying collateral.

The Company has elected not to pursue hedge accounting for these derivative instruments and records the change in estimated fair value related to these interest rate agreements in earnings. The Company also elected to record the change in estimated fair value related to certain CMBS securing the Wells Facility in earnings by electing the fair value option. These elections allow the Company to align the change in the estimated fair value of the Wells Facility collateral and related interest rate derivatives without having to apply complex hedge accounting provisions.

During March 2012, the Company sold CMBS with an amortized cost of $137,423 resulting in net realized gains of $262. The sale generated proceeds of $14,621 after the repayment of $123,064 of debt under the Wells Facility.

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The following amounts related to realized and unrealized gains (losses) on the Company’s CMBS and derivative instruments are included in the Company’s consolidated statement of operations for three and nine months ended September 30, 2012 and 2011:

		For the three months ended September 30,						For the nine months ended September 30,
	Location of Gain (Loss) Recognized in Income	2012			2011			2012			2011
Securities	Realized gain on sale of securities	$	—		$	—		$	262		$	—
Securities	Unrealized gain (loss) on securities		3,010			(1,511	)		6,473			(118	)
Interest rate swaps	Loss on derivative instruments – realized *		(127	)		(475	)		(796	)		(1,388	)
Interest rate swaps	Loss on derivative instruments – unrealized		50			343			414			(1,923	)
Interest rate caps	Loss on derivative instruments – unrealized		(10	)		(545	)		(187	)		632
Total		$	2,923		$	(2,188	)	$	6,166		$	(2,797	)

* Realized losses represent net amounts expensed related to the exchange of fixed and floating rate cash flows for the Company’s derivative instruments during the period.

Dividends

For 2012, the Company declared the following dividends:

Declaration Date	Record Date	Payment Date	Amount
February 28, 2012	March 31, 2012	April 12, 2012	$	0.40
May 3, 2012	June 29, 2012	July 12, 2012	$	0.40
August 6, 2012	September 28, 2012	October 12, 2012	$	0.40

For 2012, the Company declared the following dividends on its Series A Preferred Stock:

Declaration Date	Record Date	Payment Date	Amount
September 13, 2012	September 28, 2012	October 15, 2012	$	0.4432

Subsequent Events

Dividends. On November 1, 2012, the Company declared a dividend of $0.40 per share of common stock which is payable on January 14, 2013 to common stockholders of record on December 31, 2012.

Stockholders’ Equity. On October 9, 2012, the Company completed a follow-on public offering of 7,000,000 shares of its common stock at a price of $16.81 per share. On November 1, 2012, the underwriters partially exercised their option to purchase additional shares of common stock and purchased 404,640 shares of common stock at $16.81 per share. The aggregate net proceeds from the entire offering, including proceeds from the sale of the additional shares, are estimated to be approximately $124,182, after deducting estimated offering expenses payable by the Company.

Liquidity and capital resources

Liquidity is a measure of the Company’s ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain its assets and operations, make distributions to its stockholders and other general business needs. The Company’s cash is used to purchase or originate target assets, repay principal and interest on borrowings, make distributions to stockholders and fund operations. The Company’s liquidity position is closely monitored and the Company believes it has sufficient current liquidity and access to additional liquidity to meet financial obligations for at least the next twelve months. The Company’s primary sources of short-term and long-term liquidity are as follows:

Cash Generated from Operations

Cash from operations is generally comprised of interest income from the Company’s investments, net of any associated financing expense, principal repayments from the Company’s investments, net of associated financing repayments, proceeds from the sale of investments, and changes in working capital balances. See Financial Condition and Results of Operations – Investments for a summary of interest rates and weighted average lives related to the Company’s investment portfolio at September 30, 2012. While there are no contractual paydowns related to the Company’s CMBS, periodic paydowns do occur. Repayments on the debt secured by the Company’s CMBS occur in conjunction with the paydowns on the collateral pledged.

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Borrowings Under Various Financing Arrangements

In January 2010, the Company entered into the JPMorgan Facility, pursuant to which the Company may borrow up to $100,000 in order to finance the origination and acquisition of commercial first mortgage loans and investment grade CMBS. Prior to April 2012, amounts borrowed under the JPMorgan Facility accrued interest at a spread of 3.00% over one-month LIBOR with no floor. During April 2012, the Company amended the JPMorgan Facility to reduce the interest rate spread by 50 basis points to LIBOR + 2.50%. Advance rates under the JPMorgan Facility typically range from 65% to 90% on the estimated fair value of the pledged collateral depending on its loan-to-value. Margin calls will occur any time the outstanding loan balance exceeds the lender’s required advance in accordance with agreed upon advance rates by more than $250. The JPMorgan Facility has a term of one-year, with two one-year extensions available at the Company’s option and upon the payment of the $500 extension fee for each one-year extension. During January 2012, the Company exercised the second of the two extension options. The extended maturity date is January 4, 2013. The Company is focused on the upcoming maturity date of the JPMorgan Facility and is in early stage discussions with JPMorgan Chase Bank, N.A. and other potential lenders to extend or replace this facility. There is no assurance that this facility can be renewed on acceptable terms. The JPMorgan Facility contains, among others, the following restrictive covenants: (1) negative covenants relating to restrictions on the Company’s operations which would cease to allow the Company to qualify as a REIT and (2) financial covenants to be met by the Company when the repurchase facility is being utilized, including a minimum consolidated tangible net worth covenant ($125,000), maximum total debt to consolidated tangible net worth covenant (3:1), a minimum liquidity covenant (the greater of 10% of total consolidated recourse indebtedness and $12,500) and a minimum net income covenant ($1 during any four consecutive fiscal quarters). Additionally, beginning on the 91st day following the closing date and depending on the utilization rate of the facility, a portion of the undrawn amount may be subject to non-use fees. Subsequent to September 30, 2010, the non-use fee has been waived by the lender. The Company repaid substantially all of the borrowings outstanding under the JPMorgan Facility upon the closing of the Company’s Series A Preferred Stock offering in August 2012 and had $3 of borrowings outstanding under the JPMorgan Facility at September 30, 2012. The Company anticipates reborrowing under the JP Morgan Facility as additional capital is deployed. The Company’s ability to achieve its underwritten levered weighted average IRRs discussed above under “ –Investments,” depends upon the Company reborrowing approximately $53,000 under the JPMorgan Facility or any replacement facility.

During August 2010, the Company, through an indirect wholly-owned subsidiary, entered into the Wells Facility pursuant to which the Company may borrow up to $250,000 in order to finance the acquisition of CMBS. The Wells Facility has a term of one year, with two one-year extensions available at the Company’s option, subject to certain restrictions, and upon the payment of an extension fee equal to 25 basis points on the then outstanding balance of the facility for each one-year extension. In August 2012, the Company exercised the final one-year extension of the term of the Wells Facility and extended the maturity date to August 2013 (except with respect to $100,000 of capacity under the facility to finance the Hilton CMBS described below). Advances under the Wells Facility accrue interest at a per annum pricing rate equal to the sum of (i) 30 day LIBOR and (ii) a pricing margin of 1.25%. The purchase price of the CMBS is determined on a per asset basis by applying an advance rate schedule agreed upon by the Company and Wells Fargo. Advance rates under the Wells Facility typically range from 85% to 90% on the face amount of the underlying collateral depending on the weighted average life of the collateral pledged. Margin calls will occur any time the outstanding loan balance exceeds the lender’s required advance in accordance with agreed upon advance rates by more than $250. The Wells Facility contains, among others, the following restrictive covenants: (1) negative covenants intended to restrict the Company from failing to qualify as a REIT and (2) financial covenants to be met by the Company, including a minimum net asset value covenant (which shall not be less than an amount equal to (i) $100,000, (ii) 75% of the greatest net asset value during the prior calendar quarter, and (iii) 65% of the greatest net asset value during the prior calendar year), a maximum total debt to consolidated tangible net worth covenant (8:1), a minimum liquidity covenant ($2,500), and a minimum EBITDA to interest expense covenant (1.5:1). The Company has agreed to provide a limited guarantee of up to 15%, or a maximum of $37,500, of the obligations of its indirect wholly-owned subsidiary under the Wells Facility.

During December 2011, the Company, through an indirect wholly-owned subsidiary entered into an amendment letter (the “Amendment Letter”) related to the Wells Facility to increase its maximum permitted

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borrowing under the facility from $250,000 to $506,000 in order to pay down its TALF borrowings and to finance the CMBS that had been financed under the TALF program. The Amendment Letter additionally adjusts the pricing margin for all assets financed under the Wells Facility occurring after December 22, 2011 from 1.25% to 1.50%, and adds a minimum liquidity covenant, requiring the Company to maintain at all times an amount in Repo Liquidity (as generally defined under the Wells Facility to include all amounts held in the collection account established under the Facility for the benefit of Wells Fargo Bank, N.A., cash, cash equivalents, super-senior CMBS rated AAA by at least two rating agencies, and total amounts immediately and unconditionally available on an unrestricted basis under all outstanding capital commitments, subscription facilities and secured revolving credit or repurchase facilities) no less than the greater of 10% of total consolidated recourse indebtedness of the Company and $12,500. Advances under the Wells Facility accrue interest at a per annum pricing rate equal to the sum of (i) 30 day LIBOR and (ii) the applicable pricing margin.

The Company refinanced its TALF borrowings with borrowings under the Wells Facility during January 2012 and subsequently sold a portion of the CMBS securing the Wells Facility borrowings and repaid the related borrowings during March 2012.

The Wells Facility was further amended during the second quarter of 2012 to provide an additional $100,000 of financing capacity for the purchase of Hilton CMBS as a rate of LIBOR plus 235 basis points. This portion of the Wells Facility matures in November 2014 and may be extended for an additional year upon the payment of an extension fee equal to 0.50% on the then aggregate outstanding repurchase price for all such assets.

At September 30, 2012, the Company had $242,967 of borrowings outstanding under the Wells Facility secured by AAA-rated CMBS held by the Company.

Cash Generated from Offerings

As of September 30, 2012, the Company has raised gross proceeds of approximately $377,052 through its IPO and concurrent private placement as well as follow-on common stock offerings. Net proceeds (after deducting underwriting fees and expenses) from these offerings were approximately $357,090.

On August 1, 2012, the Company completed an underwritten public offering of 3,450,000 shares of its 8.625% Series A Cumulative Redeemable Perpetual Preferred Stock with a liquidation preference of $25.00 per share, including 450,000 shares issued pursuant to the underwriters option to purchase additional shares. Net proceeds from the offering, after the underwriting discount and estimated offering expenses payable by the Company, were approximately $83,074.

Other Potential Sources of Financing

The Company’s primary sources of cash currently consist of the $67,994 of cash available at September 30, 2012, principal and interest the Company receives on its portfolio of assets as well as available borrowings under the JPMorgan Facility and Wells Facility. The Company expects its other sources of cash to consist of cash generated from operations, and the possible prepayments of principal received on the Company’s portfolio of assets. Such prepayments are difficult to estimate in advance. At September 30, 2012, substantially all of the $100,000 of borrowing capacity under the JPMorgan Facility was available; however, the Company would need to acquire additional commercial first mortgage loans or investment grade CMBS in order to utilize all of that capacity. Depending on market conditions the Company may utilize additional borrowings as a source of cash, which borrowings may also include additional repurchase agreements as well as other borrowings such as credit facilities.

The Company maintains policies relating to its borrowings and use of leverage. See “Leverage policies” below. In the future, the Company may seek to raise further equity capital, issue debt securities or engage in other forms of borrowings in order to fund future investments or to refinance expiring indebtedness.

The Company generally intends to hold its target assets as long-term investments, although it may sell certain of its investments in order to manage its interest rate risk and liquidity needs, meet other operating objectives and adapt to market conditions.

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To maintain its status as a REIT under the Code, the Company must distribute annually at least 90% of its taxable income. These distribution requirements limit the Company’s ability to retain earnings and thereby replenish or increase capital for operations.

Leverage policies

The Company uses leverage for the sole purpose of financing its portfolio and not for the purpose of speculating on changes in interest rates. In addition to the Wells Facility and the JPMorgan Facility, in the future the Company may access additional sources of borrowings. The Company’s charter and bylaws do not limit the amount of indebtedness the Company can incur; however, the Company is limited by certain financial covenants under its repurchase agreements. Consistent with the Company’s strategy of keeping leverage within a conservative range, the Company expects that its total borrowings on its target assets will be in an amount that is approximately 35% of the value of its total loan portfolio.

Contractual obligations and commitments

The Company’s contractual obligations including expected interest payments as of September 30, 2012 are summarized as follows:

	Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years		Total
Wells Facility borrowings*	$	199,900	$	7,254	$	41,962	$	—	$	249,116
JPMorgan Facility borrowings**		3				—		—		3
Total	$	199,903	$	7,254	$	41,962	$	—	$	249,119

* Assumes extension options with respect to the Hilton CMBS are exercised. Interest payments include the cost of borrowings as well as derivative instruments for interest payments due under the Wells Facility. See “Borrowings Under Various Financing Arrangements” above for further discussion.

** Assumes current LIBOR of 0.24% for interest payments due under the JPMorgan Facility. See “Borrowings Under Various Financing Arrangements” above for further discussion.

The table above does not include amounts due under the Management Agreement as those obligations, discussed below, do not have fixed and determinable payments.

On September 23, 2009, the Company entered into the Management Agreement with the Manager pursuant to which the Manager is entitled to receive a management fee and the reimbursement of certain expenses.

Management Agreement. Pursuant to the Management Agreement, the Manager is entitled to a base management fee calculated and payable quarterly in arrears in an amount equal to 1.5% of the Company’s stockholders’ equity (as defined in the Management Agreement), per annum. The Manager will use the proceeds from its management fee in part to pay compensation to its officers and personnel. The Company does not reimburse its Manager or its affiliates for the salaries and other compensation of their personnel, except for the allocable share of the compensation of (1) the Company’s Chief Financial Officer based on the percentage of his time spent on the Company’s affairs and (2) other corporate finance, tax, accounting, internal audit, legal, risk management, operations, compliance and other non-investment professional personnel of the Manager or its affiliates who spend all or a portion of their time managing the Company’s affairs based on the percentage of time devoted by such personnel to the Company’s affairs. The Company is also required to reimburse its Manager for operating expenses related to the Company incurred by its Manager, including expenses relating to legal, accounting, due diligence and other services. Expense reimbursements to the Manager are made in cash on a monthly basis following the end of each month. The Company’s reimbursement obligation is not subject to any dollar limitation.

The current term of the Management Agreement expires on September 29, 2013 and is automatically renewed for successive one-year terms on each anniversary thereafter. The Management Agreement may be terminated upon expiration of the one-year terms only upon the affirmative vote of at least two-thirds of the Company’s independent

30

directors, based upon (1) unsatisfactory performance by the Manager that is materially detrimental to the Company or (2) a determination that the management fee payable to the Manager is not fair, subject to the Manager’s right to prevent such a termination based on unfair fees by accepting a mutually acceptable reduction of management fees agreed to by at least two-thirds of the Company’s independent directors. The Manager must be provided with written notice of any such termination at least 180 days prior to the expiration of the then existing term and will be paid a termination fee equal to three times the sum of the average annual base management fee during the 24-month period immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination. Amounts payable under the Company’s Management Agreement are not fixed and determinable. Following a meeting by the Company’s independent directors on March 29, 2012 with respect to the Management Agreement, which included a discussion of the Manager’s performance and the level of the management fees thereunder, the Company did not provide notice of termination of the Management Agreement to the Manager.

Off-balance sheet arrangements

The Company does not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured investment vehicles, or special purpose or variable interest entities, established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Further, the Company has not guaranteed any obligations of unconsolidated entities or entered into any commitment to provide additional funding to any such entities.

Dividends

The Company intends to continue to make regular quarterly distributions to holders of its common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. The Company generally intends over time to pay dividends to its stockholders in an amount equal to its net taxable income, if and to the extent authorized by its board of directors. Any distributions the Company makes will be at the discretion of its board of directors and will depend upon, among other things, its actual results of operations. These results and the Company’s ability to pay distributions will be affected by various factors, including the net interest and other income from its portfolio, its operating expenses and any other expenditures. If the Company’s cash available for distribution is less than its net taxable income, the Company could be required to sell assets or borrow funds to make cash distributions or the Company may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities.

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

The Company seeks to manage its risks related to the credit quality of its 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 its capital stock. While risks are inherent in any business enterprise, the Company seeks to quantify and justify risks in light of available returns and to maintain capital levels consistent with the risks the Company undertakes.

Credit risk

One of the Company’s strategic focuses is acquiring assets that it believes to be of high credit quality. The Company believes this strategy will generally keep its credit losses and financing costs low. However, the Company is subject to varying degrees of credit risk in connection with its other target assets. The Company seeks to mitigate this risk by seeking to acquire high quality assets, at appropriate prices given anticipated and unanticipated losses, and by deploying a value-driven approach to underwriting and diligence, consistent with the Manager’s historical investment strategy, with a focus on current cash flows and potential risks to cash flow. The Company enhances its due diligence and underwriting efforts by accessing the Manager’s knowledge base and industry contacts. Nevertheless, unanticipated credit losses could occur which could adversely impact the Company’s operating results.

Interest rate risk

Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond the Company’s control. The Company is subject to interest rate risk in connection with its target assets and its related financing obligations.

To the extent consistent with maintaining the Company’s REIT qualification, the Company seeks to manage risk exposure to protect its portfolio of financial assets against the effects of major interest rate changes. The Company generally seeks to manage this risk by:

• attempting to structure its financing agreements to have a range of different maturities, terms, amortizations and interest rate adjustment periods;

• using hedging instruments, interest rate swaps and interest rate caps; and

• to the extent available, using securitization financing to better match the maturity of the Company’s financing with the duration of its assets.

At September 30, 2012, all of the Company’s borrowings under repurchase agreements are floating-rate borrowings. The Company also has interest rate swaps with an outstanding notional amount of $90,266 and floating rate subordinate loans with a face amount of $23,844, resulting in net variable rate exposure of $128,860. A 50 basis point increase in LIBOR would increase the quarterly interest expense related to the $128,860 in variable rate exposure by $161. Any such hypothetical impact on interest rates on the Company’s variable rate borrowings does not consider the effect of any change in overall economic activity that could occur in a rising interest rate environment. Further, in the event of a change in interest rates of that magnitude, the Company may take actions to further mitigate the Company’s exposure to such a change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, this analysis assumes no changes in the Company’s financial structure.

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. The Company does not anticipate facing prepayment risk on most of its portfolio of assets since the Company anticipates that most of the commercial loans held directly by the Company or securing the Company’s CMBS assets will contain provisions preventing prepayment or imposing prepayment penalties in the event of loan prepayments.

32

Market risk

Market value risk. The Company’s available-for-sale securities and securities at estimated fair value are reflected at their estimated fair value. The change in estimated fair value of securities available-for-sale is reflected in accumulated other comprehensive income while the change in estimated fair value of securities at estimated fair value is reflected as a component of net income. The estimated fair value of these securities fluctuates primarily due to changes in interest rates and other factors. Generally, in a rising interest rate environment, the estimated fair value of these securities would be expected to decrease; conversely, in a decreasing interest rate environment, the estimated fair value of these securities would be expected to increase. As market volatility increases or liquidity decreases, the fair value of the Company’s assets may be adversely impacted.

Real estate risk. Commercial mortgage assets are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans or loans, as the case may be, which could also cause the Company to suffer losses.

Inflation

Virtually all of the Company’s assets and liabilities will be interest rate sensitive in nature. As a result, interest rates and other factors influence the Company’s performance far more so than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. The Company’s financial statements are prepared in accordance with GAAP and distributions are declared in order to distribute at least 90% of its REIT taxable income on an annual basis in order to maintain the Company’s REIT qualification. In each case, the Company’s activities and balance sheet are measured with reference to historical cost and/or fair market value without considering inflation.

ITEM 4. Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer, based on their evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) required by paragraph (b) of Rule 13a-15 or Rule 15d-15, have concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to give reasonable assurances to the timely collection, evaluation and disclosure of information relating to the Company that would potentially be subject to disclosure under the Exchange Act, and the rules and regulations promulgated thereunder.

During the period ended September 30, 2012, there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.

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PART II — OTHER INFORMATION

ITEM 1. Legal Proceedings

From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of business. As of September 30, 2012, the Company was not involved in any material legal proceedings.

ITEM 1A. Risk Factors

There are no material changes to the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, with the exception of the risk factor below.

Regulation as a commodity pool operator could subject the Company to additional regulation and compliance requirements which could materially adversely affect its business and financial condition.

The Dodd-Frank Act extended the reach of commodity regulations for the first time to include not just traditional futures contracts but also derivative contracts commonly referred to as “swaps” and “caps.” As a consequence of this change, any investment fund that trades in swaps or caps may be considered a “commodity pool,” which would cause its operator to be regulated as a “commodity pool operator” (“CPO”). The new requirements, which become effective on December 31, 2012 for those who become CPOs solely because of the use of swaps by the relevant commodity pool, obligate CPOs to register with the National Futures Association (the “NFA”), comply with NFA rules, and become regulated by the U.S. Commodity Futures Trading Commission (the “CFTC”), including with respect to disclosure and reporting.

Based on previous interpretations issued by the CFTC staff relating to entities that used traditional futures contracts in a limited manner and as an incidental part of their businesses, the Company intends to seek a no-action letter from the staff of the CFTC stating that neither the Manager nor its directors should be required to register as commodity pool operators and should not be subject to CPO regulation and compliance. In the event that the Company is unable to obtain the no action letter or if appropriate alternative guidance is not provided, including by the CFTC or its staff, the Company may be required to reduce or eliminate its use of interest rate swaps and/or caps or vary the manner it deploys interest rate swaps and/or caps in its business. Alternatively, the Manager or directors may be required to register with the NFA as commodity pool operators which will require compliance with NFA rules and subject the Manager or directors to regulation by the CFTC. In the event registration for the Manager or directors is required but is not obtained, the Manager or directors may be subject to fines, penalties and other civil or governmental actions or proceedings, any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.

In addition, the no action request to be submitted by the Company will include factual representations relating to the conduct of the Company’s business, including that the amount of income the Company receives from swap transactions during any year will not exceed five percent of the Company’s gross income for that year, and that the initial margin and option premiums from such swaps will not exceed one percent of the fair market value of the Company’s total assets. The need to operate within these parameters could limit the use of interest rate swaps by the Company below the level that the Manager would otherwise consider optimal or may lead to the registration of the Manager or directors as commodity pool operators, which will subject the Company to additional regulatory oversight, compliance and costs.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

ITEM 6. Exhibits

(a) Exhibits

Exhibit No.	Description
3.1*	Articles of Amendment and Restatement of Apollo Commercial Real Estate Finance, Inc., incorporated by reference to Exhibit 3.1 of the Registrant’s Form S-11, as amended (Registration No. 333-160533).
3.2*	Articles Supplementary designating Apollo Commercial Real Estate Finance, Inc.’s 8.625% Series A Cumulative Redeemable Perpetual Preferred Stock, liquidation preference $25.00 per share, par value $0.01 per share, incorporated by reference to Exhibit 3.3 of the Registrant’s Form 8-A filed on July 30, 2012 (File No.: 001-34452).
3.3*	By-laws of Apollo Commercial Real Estate Finance, Inc., incorporated by reference to Exhibit 3.2 of the Registrant’s Form S-11, as amended (Registration No. 333-160533).
4.1*	Specimen Stock Certificate of Apollo Commercial Real Estate Finance, Inc., incorporated by reference to Exhibit 4.1 of the Registrant’s Form S-11, as amended (Registration No. 333-160533).
4.2*	Form of stock certificate evidencing the 8.625% Series A Cumulative Redeemable Perpetual Preferred Stock, liquidation reference $25.00 per share, par value $0.01 per share, incorporated by reference to Exhibit 4.1 of the Registrant’s Form 8-A filed on July 30, 2012 (File No.: 001-34452).
31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.DEF**	XBRL Taxonomy Extension Definition Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase

* Incorporated by reference.

** These interactive data files are furnished and not deemed filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act, and are not deemed filed for purposes of Section 18 of the Exchange Act, and otherwise are not subject to liability under those sections.

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	APOLLO COMMERCIAL REAL ESTATE FINANCE, INC.
November 8, 2012	By:	/s/ Stuart A. Rothstein
		Stuart A. Rothstein
		President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

35

EXHIBIT INDEX

Exhibit No.	Description
3.1*	Articles of Amendment and Restatement of Apollo Commercial Real Estate Finance, Inc., incorporated by reference to Exhibit 3.1 of the Registrant’s Form S-11, as amended (Registration No. 333-160533).
3.2*	Articles Supplementary designating Apollo Commercial Real Estate Finance, Inc.’s 8.625% Series A Cumulative Redeemable Perpetual Preferred Stock, liquidation preference $25.00 per share, par value $0.01 per share, incorporated by reference to Exhibit 3.3 of the Registrant’s Form 8-A filed on July 30, 2012 (File No.: 001-34452).
3.3*	By-laws of Apollo Commercial Real Estate Finance, Inc., incorporated by reference to Exhibit 3.2 of the Registrant’s Form S-11, as amended (Registration No. 333-160533).
4.1*	Specimen Stock Certificate of Apollo Commercial Real Estate Finance, Inc., incorporated by reference to Exhibit 4.1 of the Registrant’s Form S-11, as amended (Registration No. 333-160533).
4.2*	Form of stock certificate evidencing the 8.625% Series A Cumulative Redeemable Perpetual Preferred Stock, liquidation reference $25.00 per share, par value $0.01 per share, incorporated by reference to Exhibit 4.1 of the Registrant’s Form 8-A filed on July 30, 2012 (File No.: 001-34452).
31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.DEF**	XBRL Taxonomy Extension Definition Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase

* Incorporated by reference

** These interactive data files are furnished and not deemed filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act, and are not deemed filed for purposes of Section 18 of the Exchange Act, and otherwise are not subject to liability under those sections.

36

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

I, Stuart A. Rothstein, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Apollo Commercial Real Estate Finance, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrants’ other certifying officer(s) and I* are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrants’ other certifying officer(s) and I* have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

37

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2012	By:	/s/ Stuart A. Rothstein
	Name:	Stuart A. Rothstein
	Title:	President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary

* Stuart A. Rothstein serves as the registrant’s principal executive officer and principal financial officer.

38

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

18 U.S. C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, the President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary of Apollo Commercial Real Estate Finance, Inc. (the “Company”), hereby certifies to the best of his knowledge on the date hereof, pursuant to 18 U.S.C. 1350(a), as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 (the “Form 10-Q”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2012	By:	/s/ Stuart A. Rothstein
	Name:	Stuart A. Rothstein
	Title:	President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary

Pursuant to the Securities and Exchange Commission Release 33-8238, dated June 5, 2003, this certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference in any registration statement of the Company filed under the Securities Act of 1933, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Percentage Vintage, Property Type, and Location of Collateral Securing Company's AAA-Rated CMBS Investments Calculated on Weighted Average Basis (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	100.00%	100.00%
South Atlantic
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	22.10%	23.00%
Middle Atlantic
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	21.30%	21.90%
Pacific
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	23.90%	21.00%
Other
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	32.70%	34.10%
Office Complex - Missouri
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	40.50%	36.50%
Retail
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	23.30%	26.60%
Multifamily
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	12.90%	13.10%
Hotel
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	10.40%	10.80%
Other
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	12.90%	13.00%
2006
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	3.00%	7.00%
2007
Mortgage Loans on Real Estate [Line Items]
Percentage Vintage	97.00%	93.00%

XML

Summary of Expected Restricted Stock and RSU Vesting Dates (Detail)	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	249,313
October 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	October 2012
Number of shares vesting	22,926
January 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	January 2013
Number of shares vesting	96,256
March 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	March 2013
Number of shares vesting	6,666
April 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	April 2013
Number of shares vesting	3,339
July 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	July 2013
Number of shares vesting	4,107
October 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	October 2013
Number of shares vesting	1,605
January 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	January 2014
Number of shares vesting	94,899
March 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	March 2014
Number of shares vesting	6,667
April 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	April 2014
Number of shares vesting	1,985
July 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	July 2014
Number of shares vesting	2,100
January 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	January 2015
Number of shares vesting	796
March 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	March 2015
Number of shares vesting	6,667
April 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	April 2015
Number of shares vesting	800
July 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Date	July 2015
Number of shares vesting	500
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	28,685
Restricted Stock | October 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	11,883
Restricted Stock | January 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	2,507
Restricted Stock | April 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	2,505
Restricted Stock | July 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	3,273
Restricted Stock | October 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	1,189
Restricted Stock | January 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	1,564
Restricted Stock | April 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	1,568
Restricted Stock | July 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	2,100
Restricted Stock | January 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	796
Restricted Stock | April 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	800
Restricted Stock | July 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	500
RSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	220,628
RSU | October 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	11,043
RSU | January 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	93,749
RSU | March 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	6,666
RSU | April 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	834
RSU | July 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	834
RSU | October 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	416
RSU | January 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	93,335
RSU | March 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	6,667
RSU | April 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	417
RSU | March 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vesting	6,667

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Summary of Outstanding Balances, Maximum and Average Balances of Borrowings (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Balance at September 30, 2012	$ 242,970	$ 542,027
Wells Facility Borrowings [Member]
Debt Instrument [Line Items]
Balance at September 30, 2012	242,967	221,980
For the nine months ended Maximum Month-End Balance	469,147
September 30, 2012 Average Month-End Balance	299,061
JPMorgan Facility Borrowings
Debt Instrument [Line Items]
Balance at September 30, 2012	3	68,720
For the nine months ended Maximum Month-End Balance	68,720
September 30, 2012 Average Month-End Balance	48,699
TALF Borrowings
Debt Instrument [Line Items]
Balance at September 30, 2012		251,327
For the nine months ended Maximum Month-End Balance	251,327
September 30, 2012 Average Month-End Balance	$ 25,133

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Stockholders' Equity Common Stock (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Class of Stock [Line Items]
Dividend Amount	$ 0.40	$ 0.40	$ 1.20	$ 1.20
Dividend 1 [Member]
Class of Stock [Line Items]
Dividend Amount			$ 0.4
Dividend 1 [Member] | Common Stock
Class of Stock [Line Items]
Declaration Date			Feb. 28, 2012
Record Date			Mar. 31, 2012
Payment Date			Apr. 12, 2012
Dividend 2 [Member]
Class of Stock [Line Items]
Dividend Amount			$ 0.4
Dividend 2 [Member] | Common Stock
Class of Stock [Line Items]
Declaration Date			May 03, 2012
Record Date			Jun. 29, 2012
Payment Date			Jul. 12, 2012
Dividend Three [Member]
Class of Stock [Line Items]
Dividend Amount			$ 0.4
Dividend Three [Member] | Common Stock
Class of Stock [Line Items]
Declaration Date			Aug. 06, 2012
Record Date			Sep. 28, 2012
Payment Date			Oct. 12, 2012

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Borrowings - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended	6 Months Ended	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Jun. 30, 2012 Wells Facility Borrowings [Member]	Sep. 30, 2012 Wells Facility Borrowings [Member]	Sep. 30, 2012 JPMorgan Facility Borrowings	Sep. 30, 2012 JPMorgan Facility Borrowings Series A Cumulative Preferred Stock [Member]	Sep. 30, 2012 JPMorgan Facility Borrowings Jp Morgan	Dec. 31, 2011 Beginning Balance of Wells Facility Borrowings Member	Sep. 30, 2012 TALF Borrowings	Sep. 30, 2012 Minimum Wells Facility Borrowings [Member]	Sep. 30, 2012 Maximum Wells Facility Borrowings [Member]
Debt Instrument [Line Items]
Basis point	1.75%		2.35%	2.35%	2.50%			1.50%		1.25%	1.50%
Interest rate spread					0.0050
Extension option				1 year
Number of extension period				2 years
Maturity period				1 year
Number of extension period, exercised				1 year
Increase maximum permitted borrowing, minimum amount		$ 250,000
Increase maximum permitted borrowing, maximum amount		506,000	100,000
Aggregate borrowings outstanding under the Wells Facility									250,293
Weighted average cost of funds									2.80%
Increased borrowings related to collateral	264,401
Interest rate swap agreements with an initial aggregate notional amount	56,273
Debt repaid	169,809
Debt Repaid upon Sale of Collateral	123,064
Extension fee			0.50%
Reduce interest rate spread					Interest rate spread by 50 basis points to LIBOR + 2.50%.
Series A Cumulative Redeemable Perpetual Preferred Stock						8.625%
outstanding borrowings							$ 53

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Carrying Value and Estimated Fair Value of Company's Financial Instruments

The following table presents the carrying value and estimated fair value of the Company’s financial instruments not carried at fair value on the consolidated balance sheet at September 30, 2012 and December 31, 2011:

	September 30, 2012						December 31, 2011
	Carrying Value			Estimated Fair Value			Carrying Value			Estimated Fair Value
Cash and cash equivalents	$	67,994		$	67,994		$	21,568		$	21,568
Commercial first mortgage loans		104,101			111,886			109,006			116,516
Subordinate loans		196,177			200,427			149,086			154,778
Repurchase agreements		10,975			10,975			47,439			47,415
TALF borrowings		—			—			(251,327	)		(256,171	)
Borrowings under repurchase agreements		(242,970	)		(242,970	)		(290,700	)		(290,700	)

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Stockholders' Equity - Additional Information (Detail) (Series A Preferred Stock, USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Aug. 01, 2012
Class of Stock [Line Items]
Preferred stock shares issued		3,450,000
Dividend rate of Series A cumulative redeemable perpetual preferred stock	8.625%
Net proceeds from the offering	$ 83,183
Public Offering [Member]
Class of Stock [Line Items]
Liquidation preference		25.00
Shares issued to the underwriters option to purchase additional shares		450,000

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Fair Value Disclosure (Tables)

9 Months Ended

Sep. 30, 2012

Summarizes Levels in Fair Value Hierarchy of Financial Instruments

The following table summarizes the levels in the fair value hierarchy into which the Company’s financial instruments were categorized as of September 30, 2012:

	Fair Value as of September 30, 2012
	Level I		Level II			Level III		Total
CMBS – AAA-rated (Available-for-Sale)	$	—	$	81,405		$	—	$	81,405
CMBS – AAA-rated (Fair Value Option)		—		143,946			—		143,946
CMBS – Hilton (Fair Value Option)		—		74,239			—		74,239
Interest rate swaps		—		(252	)		—		(252	)
Interest rate caps		—		1			—		1
Total	$	—	$	299,339		$	—	$	299,339

The following table summarizes the levels in the fair value hierarchy into which the Company’s financial instruments were categorized as of December 31, 2011:

	Fair Value as of December 31, 2011
	Level I		Level II			Level III		Total
CMBS – AAA-rated (Available-for-Sale)	$	—	$	302,543		$	—	$	302,543
CMBS – AAA-rated (Fair Value Option)		—		251,452			—		251,452
Interest rate swaps		—		(666	)		—		(666	)
Interest rate caps		—		188			—		188
Total	$	—	$	553,517		$	—	$	553,517

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Summary of Amounts Recognized on Consolidated Statements of Operations Related to Company's Derivatives (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
Derivative Instruments, Gain (Loss) [Line Items]
Total	$ (87)		$ (677)		$ (569)		$ (2,679)
Interest Rate Swap
Derivative Instruments, Gain (Loss) [Line Items]
Loss on derivative instruments - realized	(127)	[1]	(475)	[1]	(796)	[1]	(1,388)	[1]
Loss on derivative instruments - unrealized	50		343		414		(1,923)
Interest Rate Cap
Derivative Instruments, Gain (Loss) [Line Items]
Loss on derivative instruments - unrealized	$ (10)		$ (545)		$ (187)		$ 632

[1] Realized losses represent net amounts accrued for the Company's derivative instruments during the period.

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Subordinate Loan Portfolio (Detail) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Jun. 30, 2012
Mortgage Loans on Real Estate [Line Items]
Original Face Amount	$ 195,525	$ 149,000
Current Face Amount	196,401	149,086
Carrying Value	196,177
Coupon	12.75%	13.00%
Senior Mezz - Retail - Various
Mortgage Loans on Real Estate [Line Items]
Date of Investment	2009-12	2009-12
Maturity Date	2019-12	2019-12
Original Face Amount	30,000	30,000
Current Face Amount	30,000	30,000
Carrying Value	30,000
Coupon	12.24%	12.24%
Appraised LTV (1)	68.00%	68.00%
Junior Mezz - Retail - Various
Mortgage Loans on Real Estate [Line Items]
Date of Investment	2009-12	2009-12
Maturity Date	2019-12	2019-12
Original Face Amount	20,000	20,000
Current Face Amount	20,000	20,000
Carrying Value	20,000
Coupon	14.00%	14.00%
Appraised LTV (1)	72.00%	73.00%
Office - Michigan
Mortgage Loans on Real Estate [Line Items]
Date of Investment	2010-05	2010-05
Maturity Date	2020-06	2020-06
Original Face Amount	9,000	9,000
Current Face Amount	8,923	8,950
Carrying Value	8,923
Coupon	13.00%	13.00%
Amortization Schedule	25 years	25 years
Appraised LTV (1)	68.00%	69.00%
Ski Resort - California
Mortgage Loans on Real Estate [Line Items]
Date of Investment	2011-04	2011-04
Maturity Date	2017-05	2017-05
Original Face Amount	40,000	40,000
Current Face Amount	40,000	40,000	40,000
Carrying Value	39,808
Coupon	14.00%	13.25%
Appraised LTV (1)	56.00%	64.00%
Hotel Portfolio - New York
Mortgage Loans on Real Estate [Line Items]
Date of Investment	2011-08	2011-08
Maturity Date	2013-07	2013-07
Original Face Amount	25,000	25,000
Current Face Amount	25,000	25,000
Carrying Value	25,000
Coupon	11.49%	11.49%
Appraised LTV (1)	60.00%	60.00%
Retail Center - Virginia
Mortgage Loans on Real Estate [Line Items]
Date of Investment	2011-10	2011-10
Maturity Date	2014-10	2014-10
Original Face Amount	25,000	25,000
Current Face Amount	25,953	25,136
Carrying Value	25,953
Coupon	14.00%	14.00%
Appraised LTV (1)	74.00%	74.00%
Hotel New York
Mortgage Loans on Real Estate [Line Items]
Date of Investment	2012-01	2010-01
Maturity Date	2014-02	2015-01
Original Face Amount	15,000
Current Face Amount	15,000
Carrying Value	14,968
Coupon	12.00%
Appraised LTV (1)	63.00%	40.00%
Hotel - New York
Mortgage Loans on Real Estate [Line Items]
Date of Investment	2012-03	2010-08
Maturity Date	2014-03	2012-08
Original Face Amount	15,000
Current Face Amount	15,000
Carrying Value	15,000
Coupon	11.50%
Appraised LTV (1)	65.00%	40.00%
Mixed Use - North Carolina
Mortgage Loans on Real Estate [Line Items]
Date of Investment	2012-07
Maturity Date	2022-07
Original Face Amount	6,525
Current Face Amount	6,525
Carrying Value	6,525
Coupon	11.10%
Appraised LTV (1)	77.00%
Office Complex - Missouri
Mortgage Loans on Real Estate [Line Items]
Date of Investment	2012-09
Maturity Date	2022-10
Original Face Amount	10,000
Current Face Amount	10,000
Carrying Value	$ 10,000
Coupon	11.75%
Amortization Schedule	30 years
Appraised LTV (1)	72.00%

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Debt Securities (Detail) (Debt Securities, USD $)	Sep. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Face Amount	$ 293,760	$ 546,807
Amortized Cost	294,302	554,716
Gross Unrealized Gain	5,662	810
Gross Unrealized Loss	(374)	(1,531)
Estimated Fair Value	299,590	553,995
CMBS-AAA-rated (Available-for-Sale)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Face Amount	79,435	298,598
Amortized Cost	81,306	301,980
Gross Unrealized Gain	296	810
Gross Unrealized Loss	(197)	(247)
Estimated Fair Value	81,405	302,543
CMBS-AAA-rated (Fair Value Option)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Face Amount	140,271	248,209
Amortized Cost	142,475	252,736
Gross Unrealized Gain	1,648
Gross Unrealized Loss	(177)	(1,284)
Estimated Fair Value	143,946	251,452
CMBS - Hilton (Fair Value Option)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Face Amount	74,054
Amortized Cost	70,521
Gross Unrealized Gain	3,718
Estimated Fair Value	$ 74,239

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Share-Based Payments - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 23, 2009
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of issued and outstanding shares of common stock provides for grants of restricted common stock, restricted stock units and other equity-based awards					7.50%
Recognized stock-based compensation expense	$ 1,276	$ 418	$ 3,244	$ 1,154

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Subsequent Events - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended		1 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Oct. 09, 2012 Subsequent Event	Sep. 30, 2012 Dividend Declared [Member]
Subsequent Event [Line Items]
Dividend declared per share of common stock	$ 0.40	$ 0.40	$ 1.20	$ 1.20		$ 0.40
Declaration Date						Nov. 01, 2012
Payment Date						Jan. 14, 2013
Record Date						Dec. 31, 2012
Public offering					7,000,000
Additional common stock purchased	404,640		404,640
Common stock per share	$ 16.81		$ 16.81
Aggregate net proceeds				$ 49,980	$ 124,182

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Remaining Maturities of Borrowings (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Debt Instrument [Line Items]
Less than 1 year	$ 196,278
1 to 3 years	4,914
3 to 5 years	41,778
More than 5 years
Total	242,970
Wells Facility Borrowings [Member]
Debt Instrument [Line Items]
Less than 1 year	196,275	[1]
1 to 3 years	4,914	[1]
3 to 5 years	41,778	[1]
More than 5 years		[1]
Total	242,967	[1]
JPMorgan Facility Borrowings
Debt Instrument [Line Items]
Less than 1 year	3
More than 5 years
Total	$ 3

[1] Assumes extension options on Wells Facility with respect to the Hilton CMBS are exercised. See below for a description of the Wells Facility.

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Organization

9 Months Ended

Sep. 30, 2012

Organization

Note 1 – Organization

Apollo Commercial Real Estate Finance, Inc. (together with its consolidated subsidiaries, is referred to throughout this report as the “Company,” “ARI,” “we,” “us” and “our”) is a real estate investment trust (“REIT”) that primarily originates, acquires, invests in and manages performing commercial first mortgage loans, commercial mortgage-backed securities (“CMBS”), subordinate financings and other commercial real estate-related debt investments in the United States. These asset classes are referred to as the Company’s target assets.

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Subordinate Loans - Additional Information (Detail) (USD $)	6 Months Ended	9 Months Ended	12 Months Ended
	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2011
Mortgage Loans on Real Estate [Line Items]
Interest rate		12.75%	13.00%
Exit fee	1.00%
Loan closed/ First mortgage		$ 196,401	$ 149,086
Amendment fee	0.50%
Hotel Portfolio - New York
Mortgage Loans on Real Estate [Line Items]
Prohibition period for prepayments		February 2013
Interest rate		11.49%	11.49%
Loan closed/ First mortgage		25,000	25,000
Retail Center - Virginia
Mortgage Loans on Real Estate [Line Items]
Extension options		Two one-year
Interest rate		14.00%	14.00%
Current pay interest rate		10.00%
Accrual interest rate		4.00%
Loan closed/ First mortgage		25,953	25,136
Hotel New York
Mortgage Loans on Real Estate [Line Items]
Extension options		One-year
Interest rate		12.00%
Percentage of origination fee		1.00%
Fee payment for extensions		0.50%
Exit fee		1.50%
Loan closed/ First mortgage		15,000
Hotel - New York
Mortgage Loans on Real Estate [Line Items]
LIBOR rate		0.50%
Extension options		Two one-year
Debt instrument description		Includes a LIBOR floor of 0.50%, two one-year extension options subject to certain conditions and the payment of a 0.50% fee for the second extension.
Interest rate		11.50%
Fee payment for extensions		0.50%
Loan closed/ First mortgage		15,000
Ski Resort - California
Mortgage Loans on Real Estate [Line Items]
Interest rate		14.00%	13.25%
Loan closed/ First mortgage	$ 40,000	$ 40,000	$ 40,000
Interest rate on the mezzanine loan minimum	0.75%
Interest rate on the mezzanine loan maximum		14.00%
December 2011 [Member] | Hotel Portfolio - New York
Mortgage Loans on Real Estate [Line Items]
LIBOR rate		1.00%
Extension options		Three one-year
Debt instrument description		Includes a LIBOR floor of 1% and three one-year extension options subject to certain conditions.
Prohibition period for prepayments		February 2013
September 2012 [Member] | Hotel Portfolio - New York
Mortgage Loans on Real Estate [Line Items]
Fee payment for extensions		0.25%
LIBOR rate		1.00%
Extension options		Three one-year
Debt instrument description		Includes a LIBOR floor of 1% and three one-year extension options subject to certain conditions and the payment of a 0.25% fee for the fourth and fifth year extensions.
Maximum | December 2011 [Member]
Mortgage Loans on Real Estate [Line Items]
Fee payment for extensions		5.00%
Maximum | September 2012 [Member]
Mortgage Loans on Real Estate [Line Items]
Fee payment for extensions		5.00%
Maximum | September 2012 [Member] | Ski Resort - California
Mortgage Loans on Real Estate [Line Items]
Fee payment for extensions		5.00%
Minimum | December 2011 [Member]
Mortgage Loans on Real Estate [Line Items]
Fee payment for extensions		0.00%
Minimum | September 2012 [Member]
Mortgage Loans on Real Estate [Line Items]
Fee payment for extensions		1.00%
Minimum | September 2012 [Member] | Ski Resort - California
Mortgage Loans on Real Estate [Line Items]
Fee payment for extensions		1.00%

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Borrowings (Tables)

9 Months Ended

Sep. 30, 2012

Weighted Average Maturities and Interest Rates of Borrowings

At September 30, 2012 and December 31, 2011, the Company’s borrowings had the following debt balances, weighted average maturities and interest rates:

	September 30, 2012								December 31, 2011
	Debt Balance		Weighted Average Remaining Maturity			Weighted Average Rate			Debt Balance		Weighted Average Remaining Maturity			Weighted Average Rate
Wells Facility borrowings	$	242,967		1.3 years	*		1.6	%	$	221,980		1.6 years	*		1.8	%	*
JPMorgan Facility borrowings		3		0.3 years			2.7	%		68,720		0.9 years			3.3	%	**
TALF borrowings		—		—			—	%		251,327		1.3 years			2.8	%	Fixed
Total/Weighted Average	$	242,970		1.3 years			1.9	%	$	542,027		1.3 years			2.5	%

* Assumes extension options on the Wells Facility with respect to the Hilton CMBS are exercised. See below for a description of the Wells Facility. Borrowings outstanding under the Wells Facility bear interest at a LIBOR plus 125 basis points, 150 basis points or 235 basis points depending on the collateral pledged.

** During April 2012, the Company amended the JPMorgan Facility to reduce the interest rate spread by 50 basis points to LIBOR + 250 basis points.

Remaining Maturities of Borrowings

At September 30, 2012, the Company’s borrowings had the following remaining maturities:

	Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years		Total
Wells Facility borrowings*	$	196,275	$	4,914	$	41,778	$	—	$	242,967
JPMorgan Facility borrowings		3		—		—		—		3
Total	$	196,278	$	4,914	$	41,778	$	—	$	242,970

Summary of Outstanding Balances, Maximum and Average Balances of Borrowings

borrowings outstanding under JPMorgan Facility and the Wells Facility. The table below summarizes the outstanding balances at September 30, 2012 as well as the maximum and average balances for the nine months ended September 30, 2012.

			For the nine months ended September 30, 2012
	Balance at September  30, 2012		Maximum Month-End Balance		Average Month-End Balance
Wells Facility borrowings	$	242,967	$	469,147	$	299,061
JPMorgan Facility borrowings		3		68,720		48,699
TALF borrowings		—		251,327		25,133
Total	$	242,970

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Subordinate Loans (Tables)

9 Months Ended

Sep. 30, 2012

December 2011 [Member]

Company's Subordinate Loan Portfolio

The Company’s subordinate loan portfolio was comprised of the following at December 31, 2011:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Coupon			Amortization Schedule	Appraised LTV (1)
Senior Mezz - Retail - Various	Dec-09	Dec-19	$	30,000	$	30,000		12.24	%	Interest only (2)		68	%
Junior Mezz - Retail - Various	Dec-09	Dec-19		20,000		20,000		14.00		Interest only (2)		73	%
Office - Michigan	May-10	Jun-20		9,000		8,950		13.00		25 year		69	%
Ski Resort - California	Apr-11	May-17		40,000		40,000		13.25		Interest only (2)		64	%
Hotel Portfolio – New York (3)	Aug-11	July-13		25,000		25,000		11.49		Interest only (4)		60	%
Retail Center – Virginia (5)	Oct-11	Oct-14		25,000		25,136		14.00		Interest only (5)		74	%
Total/Weighted Average			$	149,000	$	149,086		13.00	%

September 2012 [Member]

Company's Subordinate Loan Portfolio

The Company’s subordinate loan portfolio was comprised of the following at September 30, 2012:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon			Amortization Schedule	Appraised LTV (1)
Senior Mezz - Retail - Various	Dec-09	Dec-19	$	30,000	$	30,000	$	30,000		12.24	%	Interest only (2)		68	%
Junior Mezz - Retail - Various	Dec-09	Dec-19		20,000		20,000		20,000		14.00		Interest only (2)		72	%
Office - Michigan	May-10	Jun-20		9,000		8,923		8,923		13.00		25 year		68	%
Ski Resort - California	Apr-11	May-17		40,000		40,000		39,808		14.00		Interest only (3)		56	%
Hotel Portfolio – New York (4)	Aug-11	July-13		25,000		25,000		25,000		11.49		Interest only (5)		60	%
Retail Center – Virginia (6)	Oct-11	Oct-14		25,000		25,953		25,953		14.00		Interest only (6)		74	%
Hotel– New York (7)	Jan-12	Feb-14		15,000		15,000		14,968		12.00		Interest only (7)		63	%
Hotel– New York (8)	Mar-12	Mar-14		15,000		15,000		15,000		11.50		Interest only (8)		65	%
Mixed Use – North Carolina	Jul-12	Jul-22		6,525		6,525		6,525		11.10		Interest only		77	%
Office Complex - Missouri	Sept-12	Oct-22		10,000		10,000		10,000		11.75		30 year		72	%
Total/Weighted Average			$	195,525	$	196,401	$	196,177		12.75	%

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Stockholders' Equity Preferred Stock (Detail) (USD $)	9 Months Ended
	Sep. 30, 2012
Class of Stock [Line Items]
Dividend Amount	$ 0.4432
Dividend 1 [Member] | Preferred Stock
Class of Stock [Line Items]
Declaration Date	Sep. 13, 2012
Dividend 2 [Member] | Preferred Stock
Class of Stock [Line Items]
Record Date	Sep. 28, 2012
Dividend Three [Member] | Preferred Stock
Class of Stock [Line Items]
Payment Date	Oct. 15, 2012

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Repurchase Agreement (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Securities
Repurchase Agreement Counterparty [Line Items]
Investment in the form of repurchase facility secured by Class A-2 CDO bond	$ 47,439
Total balance of the Company's investment in the repurchase facility	47,439
Interest rate for repurchase facility	13.00%
Current pay interest rate	10.00%
Accrual interest rate	3.00%
Initial term for repurchase facility	18 months with three six-month extensions options
Interest rate for principal repayments that occur prior to the 21st month are subject to a make-whole provision	13.00%
Aggregate face amount of borrowings under repurchase facility	68,726
Advance rate on CDO bond's face amount in percentage	69.00%
Number of senior and subordinate commercial real estate debt positions and commercial real estate securities included in CDO	58
Principal payments received on repurchase agreements	36,464
make-whole interest payment	$ 1,817

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Derivative instruments (Tables)

9 Months Ended

Sep. 30, 2012

Company's Derivative Instruments, Weighted Average Maturities and Interest Rates

The Company’s derivative instruments consist of the following at September 30, 2012 and December 31, 2011:

		September 30, 2012						December 31, 2011
	Balance Sheet Location	Notional Value			Estimated Fair Value			Notional Value			Estimated Fair Value
Interest rate swaps	Derivative instruments	$	90,266		$	(252	)	$	241,850		$	(666	)
Interest rate caps	Derivative instruments		206,469	*		1			26,189	*		188
Total derivative instruments					$	(251	)				$	(478	)

* Represents the notional values at September 30, 2012 and December 31, 2011 but does not include forward-starting notionals.

Summary of Amounts Recognized on Consolidated Statements of Operations Related to Company's Derivatives

The following table summarizes the amounts recognized on the consolidated statements of operations related to the Company’s derivatives for the three and nine months ended September 30, 2012 and 2011.

		For the three months ended September 30						For the nine months ended September 30
	Location of Loss Recognized in Income	2012			2011			2012			2011
Interest rate swaps	Loss on derivative instruments – realized *	$	(127	)	$	(475	)	$	(796	)	$	(1,388	)
Interest rate swaps	Loss on derivative instruments – unrealized		50			343			414			(1,923	)
Interest rate caps	Loss on derivative instruments – unrealized		(10	)		(545	)		(187	)		632
Total		$	(87	)	$	(677	)	$	(569	)	$	(2,679	)

* Realized losses represent net amounts accrued for the Company’s derivative instruments during the period.

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Share-Based Payments (Tables)

9 Months Ended

Sep. 30, 2012

Summary of Grants of RSUs

The following table summarizes the grants of RSUs during the nine months ended September 30, 2012:

Type	Date	Shares		RSUs			Estimate Fair Value on Grant Date		Initial Vesting	Final Vesting
Forfeiture*	February 2012		—		(1,875	)		n/a	n/a	n/a
Grant	March 2012		—		20,000		$	310	March 2013	March 2015
Grant	April 2012		9,584		—		$	150	July 2012	April 2015
Grant	August 2012		1,496		—		$	25	July 2013	July 2015
Total			11,080		18,125

* Represents RSUs forfeited by a former employee of the Manager in connection with such employee’s resignation from the Manager.

Summary of Expected Restricted Stock and RSU Vesting Dates

Below is a summary of expected restricted stock and RSU vesting dates as of September 30, 2012.

Vesting Date	Shares Vesting		RSU Vesting		Total Awards
October 2012		11,883		11,043		22,926
January 2013		2,507		93,749		96,256
March 2013		—		6,666		6,666
April 2013		2,505		834		3,339
July 2013		3,273		834		4,107
October 2013		1,189		416		1,605
January 2014		1,564		93,335		94,899
March 2014		—		6,667		6,667
April 2014		1,568		417		1,985
July 2014		2,100		—		2,100
January 2015		796		—		796
March 2015		—		6,667		6,667
April 2015		800		—		800
July 2015		500		—		500
		28,685		220,628		249,313

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Condensed Consolidated Statement of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows provided by operating activities:
Net income	$ 31,214	$ 17,212
Adjustments to reconcile net income to net cash provided by operating activities:
Premium amortization and (discount accretion), net	569	5,876
Amortization of deferred financing costs	1,551	1,088
Restricted stock amortization expense	3,244	1,153
Unrealized gain (loss) on securities	(6,473)	118
Unrealized gain (loss) on derivative instruments	(228)	1,291
Realized gain on sale of security	(262)
Changes in operating assets and liabilities:
Accrued principal and interest receivable, less purchased interest	2,608	(3,733)
Other assets	(190)	(82)
Accounts payable and accrued expenses	405	1,064
Payable to related party	222	558
Net cash provided by operating activities	32,660	24,545
Cash flows used in investing activities:
Proceeds from sale of securities available-for-sale	121,338
Proceeds from sale of securities at estimated fair value	16,918
Funding of securities at estimated fair value	(70,676)
Funding of commercial mortgage loans	(17,883)	(8,800)
Funding of subordinate loans	(46,180)	(64,858)
Funding of repurchase agreements		(47,439)
Principal payments received on securities available-for-sale	99,191	39,666
Principal payments received on securities at estimated fair value	92,009	16,668
Principal payments received on commercial mortgage loans	24,541	9,303
Principal payments received on subordinate loans	26	26
Principal payments received on repurchase agreements	36,464
Net cash provided by (used in) investing activities	255,748	(55,434)
Cash flows from financing activities:
Proceeds from issuance of preferred stock	86,250
Proceeds from issuance of common stock		49,980
Payment of offering costs	(3,083)	(1,692)
Payment of deferred underwriting fee		(10,000)
Repayments of TALF borrowings	(251,327)	(33,233)
Proceeds from repurchase agreement borrowings	313,860	69,014
Repayments of repurchase agreement borrowings	(361,590)	(14,937)
Deferred financing costs	(1,097)	(500)
Dividends on common stock	(24,995)	(21,187)
Net cash provided by (used in) financing activities	(241,982)	37,445
Net decrease in cash and cash equivalents	46,426	6,556
Cash and cash equivalents, beginning of period	21,568	37,894
Cash and cash equivalents, end of period	67,994	44,450
Supplemental disclosure of cash flow information:
Interest paid	5,872	11,099
Supplemental disclosure of non-cash financing activities:
Dividend declared, not yet paid	10,114	8,542
Deferred financing costs, not yet paid		500
Offering costs payable	$ 338	$ 529

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2012

Common Stock

Stockholders' Equity

Dividends. For 2012, the Company declared the following dividends on its common stock:

Declaration Date	Record Date	Payment Date	Amount
February 28, 2012	March 31, 2012	April 12, 2012	$	0.40
May 3, 2012	June 29, 2012	July 12, 2012	$	0.40
August 6, 2012	September 28, 2012	October 12, 2012	$	0.40

Preferred Stock

Stockholders' Equity

the Company declared the following dividends on its Series A Preferred Stock:

Declaration Date	Record Date	Payment Date	Amount
September 13, 2012	September 28, 2012	October 15, 2012	$	0.4432

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Commercial Mortgage Loans (Detail) (USD $)	1 Months Ended	9 Months Ended	12 Months Ended
	Apr. 30, 2012 Room	Sep. 30, 2012	Dec. 31, 2011
Mortgage Loans on Real Estate [Line Items]
Original Face Amount	$ 24,000	$ 109,844	$ 110,000
Current Face Amount		108,308	109,006
Carrying Value		104,101	109,006
Coupon	8.00%	6.98%	8.31%
Property Size	155
Hotel NY NY [Member]
Mortgage Loans on Real Estate [Line Items]
Date of Investment		2010-01
Maturity Date		2015-02
Original Face Amount		32,000
Current Face Amount		31,633
Carrying Value		31,633
Coupon		8.25%
Amortization Schedule		30 years
Appraised LTV		40.00%
Office Condo [Member]
Mortgage Loans on Real Estate [Line Items]
Date of Investment		2010-02	2010-02
Maturity Date		2015-02	2015-02
Original Face Amount		28,000	28,000
Current Face Amount		27,480	27,644
Carrying Value		27,480	27,644
Coupon		8.00%	8.00%
Amortization Schedule		30 years	30 years
Property Size		73,419
Appraised LTV		53.00%	53.00%
Hotel Silver Spring [Member]
Mortgage Loans on Real Estate [Line Items]
Date of Investment		2010-03	2010-03
Maturity Date		2015-04	2015-04
Original Face Amount		26,000	26,000
Current Face Amount		25,351	25,564
Carrying Value		25,351	25,564
Coupon		9.00%	9.00%
Amortization Schedule		25 years	25 years
Appraised LTV		56.00%	57.00%
Mixed Use - South Boston, MA (2) [Member]
Mortgage Loans on Real Estate [Line Items]
Date of Investment		2012-04
Maturity Date		2012-12
Original Face Amount		23,844
Current Face Amount		23,844
Carrying Value		19,637
Coupon		1.98%
Appraised LTV		28.00%
Hotel New York
Mortgage Loans on Real Estate [Line Items]
Date of Investment		2012-01	2010-01
Maturity Date		2014-02	2015-01
Original Face Amount			32,000
Current Face Amount			31,798
Carrying Value			31,798
Coupon			8.25%
Amortization Schedule			30 years
Appraised LTV		63.00%	40.00%
Hotel - New York
Mortgage Loans on Real Estate [Line Items]
Date of Investment		2012-03	2010-08
Maturity Date		2014-03	2012-08
Original Face Amount			24,000
Current Face Amount			24,000
Carrying Value			$ 24,000
Coupon			8.00%
Appraised LTV		65.00%	40.00%

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Summary of Grants of RSUs (Detail) (USD $)	9 Months Ended
	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Date	February 2012
Forfeiture*	(1,875)
Grant	11,080
RSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Date	March 2012
Grant	Mar. 01, 2013
Final vesting	Mar. 01, 2015
Grant	310
Grant	20,000
Total	18,125
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Date	April 2012
Grant	Jul. 01, 2012
Final vesting	Apr. 01, 2015
Grant	150
Grant	9,584
Other Equity Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Date	August 2012
Grant	Jul. 01, 2013
Final vesting	Apr. 01, 2015
Grant	25
Grant	1,496

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets:
Cash	$ 67,994	$ 21,568
Securities available-for-sale, at estimated fair value	81,405	302,543
Securities, at estimated fair value	218,185	251,452
Commercial mortgage loans, held for investment	104,101	109,006
Subordinate loans, held for investment	196,177	149,086
Repurchase agreements, held for investment	10,975	47,439
Principal and interest receivable	4,107	8,075
Deferred financing costs, net	1,090	2,044
Other assets	207	17
Total Assets	684,241	891,230
Liabilities:
Borrowings under repurchase agreements	242,970	290,700
TALF borrowings		251,327
Derivative instruments, net	251	478
Accounts payable and accrued expenses	1,965	1,746
Payable to related party	1,520	1,298
Dividends payable	10,114	8,703
Total Liabilities	256,820	554,252
Stockholders' Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized and 3,450,000 shares outstanding in 2012	35
Common stock, $0.01 par value, 450,000,000 shares authorized, 20,572,112 and 20,561,032 shares issued and outstanding in 2012 and 2011, respectively	206	206
Additional paid-in-capital	422,273	336,209
Retained earnings	4,808
Accumulated other comprehensive income	99	563
Total Stockholders' Equity	427,421	336,978
Total Liabilities and Stockholders' Equity	$ 684,241	$ 891,230

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Weighted Average Maturities and Interest Rates (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Debt Balance	$ 242,970	$ 542,027
Weighted Average Remaining Maturity	1 year 3 months 18 days	1 year 3 months 18 days
Weighted Average Rate	1.90%	2.50%
Wells Facility Borrowings [Member]
Debt Instrument [Line Items]
Debt Balance	242,967	221,980
Weighted Average Remaining Maturity	1 year 3 months 18 days	1 year 7 months 6 days
Weighted Average Rate	1.60%	1.80%
JPMorgan Facility Borrowings
Debt Instrument [Line Items]
Debt Balance	3	68,720
Weighted Average Remaining Maturity	3 months 18 days	10 months 24 days
Weighted Average Rate	2.70%	3.30%
TALF Borrowings
Debt Instrument [Line Items]
Debt Balance		$ 251,327
Weighted Average Remaining Maturity		1 year 3 months 18 days
Weighted Average Rate		2.80%

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Condensed Consolidated Statement of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net income available to common stockholders	$ 10,992	$ 5,512	$ 29,995	$ 17,212
Change in net unrealized gain (loss) on securities available-for-sale	(876)	(2,355)	(464)	(5,872)
Comprehensive income	$ 10,116	$ 3,157	$ 29,531	$ 11,340

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Basic and Diluted Net (Loss) Income per Share of Common Stock Using Two-Class Method (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Numerator:
Net income	$ 12,211	$ 5,512	$ 31,214	$ 17,212
Preferred dividends	(1,219)		(1,219)
Net income available to common stockholders	10,992	5,512	29,995	17,212
Dividends declared on common stock	(8,229)	(8,224)	(24,682)	(22,270)
Dividends on participating securities	(168)	(173)	(505)	(270)
Net income (loss) attributable to common stockholders	$ 2,595	$ (2,885)	$ 4,808	$ (5,328)
Denominator:
Weighted average shares of common stock outstanding	20,992,312	19,647,989	20,983,429	18,261,294
Basic and diluted net income (loss) per weighted average share of common stock
Distributable Earnings	$ 0.40	$ 0.42	$ 1.20	$ 1.22
Undistributed income (loss)	$ 0.12	$ (0.14)	$ 0.23	$ (0.29)
Basic and diluted net income (loss) per share of common stock	$ 0.52	$ 0.28	$ 1.43	$ 0.93

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Fair Value Disclosure - Summarizes levels in fair value hierarchy of financial instruments (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	$ 299,339	$ 553,517
CMBS-AAA-rated (Available-for-Sale)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	81,405	302,543
CMBS-AAA-rated (Fair Value Option)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	143,946	251,452
CMBS - Hilton (Fair Value Option)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	74,239
Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	252	666
Interest Rate Cap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	1	188
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	299,339	553,517
Level 2 | CMBS-AAA-rated (Available-for-Sale)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	81,405	302,543
Level 2 | CMBS-AAA-rated (Fair Value Option)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	143,946	251,452
Level 2 | CMBS - Hilton (Fair Value Option)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	74,239
Level 2 | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	252	666
Level 2 | Interest Rate Cap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
CMBS and Interest rate, Total	$ 1	$ 188

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Net Income per Share

9 Months Ended

Sep. 30, 2012

Net Income per Share

Note 14 – Net Income per Share

GAAP requires use of the two-class method of computing earnings per share for all periods presented for each class of common stock and participating security as if all earnings for the period had been distributed. Under the two-class method, during periods of net income, the net income is first reduced for dividends declared on all classes of securities to arrive at undistributed earnings. During periods of net losses, the net loss is reduced for dividends declared on participating securities only if the security has the right to participate in the earnings of the entity and an objectively determinable contractual obligation to share in net losses of the entity.

The remaining earnings are allocated to common stockholders and participating securities to the extent that each security shares in earnings as if all of the earnings for the period had been distributed. Each total is then divided by the applicable number of shares to arrive at basic earnings per share. For the diluted earnings, the denominator includes all outstanding common shares and all potential common shares assumed issued if they are dilutive. The numerator is adjusted for any changes in income or loss that would result from the assumed conversion of these potential common shares.

The table below presents basic and diluted net (loss) income per share of common stock using the two-class method for the three and nine months ended September 30, 2012 and 2011:

	For the three months ended September 30						For the nine months ended September 30
	2012			2011			2012			2011
Numerator:
Net income	$	12,211		$	5,512		$	31,214		$	17,212
Preferred dividends		(1,219	)		—			(1,219	)		—
Net income available to common stockholders		10,992			5,512			29,995			17,212
Dividends declared on common stock		(8,229	)		(8,224	)		(24,682	)		(22,270	)
Dividends on participating securities		(168	)		(173	)		(505	)		(270	)
Net income (loss) attributable to common stockholders	$	2,595		$	(2,885	)	$	4,808		$	(5,328	)
Denominator:
Weighted average shares of common stock outstanding		20,992,312			19,647,989			20,983,429			18,261,294
Basic and diluted net income (loss) per weighted average share of common stock
Distributable Earnings	$	0.40		$	0.42		$	1.20		$	1.22
Undistributed income (loss)		0.12			(0.14	)		0.23			(0.29	)
Basic and diluted net income (loss) per share of common stock	$	0.52		$	0.28		$	1.43		$	0.93

For the three and nine months ended September 30, 2011, respectively, unvested RSUs of 318,606 and 187,906 were excluded from the calculation of diluted net loss per share because the effect was anti-dilutive.

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Debt Securities - Additional Information (Detail) (USD $)	3 Months Ended	6 Months Ended	9 Months Ended		3 Months Ended					3 Months Ended		1 Months Ended	3 Months Ended
	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 CMBS - Hilton (Fair Value Option)	Nov. 12, 2014 Subsequent Event	Nov. 12, 2013 Subsequent Event	Nov. 12, 2012 Subsequent Event	Sep. 30, 2012 AAA Rated CMBS	Mar. 31, 2012 Beginning Balance of Wells Facility Borrowings Member	Dec. 31, 2011 Beginning Balance of Wells Facility Borrowings Member	Jun. 30, 2012 Beginning Balance of Wells Facility Borrowings Member CMBS - Hilton (Fair Value Option)	Jun. 30, 2012 Beginning Balance of Wells Facility Borrowings Member CMBS - Hilton (Fair Value Option)
Debt Instrument [Line Items]
Face value of CBMS acquired		$ 74,854,000
Debt instrument description		LIBOR
Interest rate of CMBS			1.75%			3.80%	3.30%	2.30%			1.50%
Percentage Of Debt Yield				5.60%
Purchase value of Hilton CMBS					70,655,000
Borrowings for purchase of Hilton CMBS													49,459,000
Additional financing for Hilton CMBS												100,000,000
Aggregate face value									219,706,000
Amortized cost			137,423,000
Realized gain on sale of securities	262,000		262,000
Realized gains	345,000
Realized losses	83,000
Proceeds from Sale	14,621,000
Proceeds from borrowings										$ 123,064,000

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements include the Company’s accounts and those of its consolidated subsidiaries. All significant intercompany amounts have been eliminated. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company’s most significant estimates include the fair value of financial instruments. Actual results could differ from those estimates.

These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included.

The Company currently operates in one business segment.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (the “FASB”) issued guidance requiring additional disclosure information about offsetting and related arrangements. Entities will be required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on a basis of GAAP and those entities that prepare their financial statements on the basis of International Financial Reporting Standards (“IFRS”). The guidance is effective for periods beginning on or after January 1, 2013, and interim periods within those annual periods. While the adoption of this guidance will impact the Company’s disclosure, the Company does not believe that the adoption of this guidance will have a significant effect on its consolidated financial statements.

In September 2012, the FASB decided to remove the scope exception for mortgage REITs and require a mortgage REIT that meets the requirements to be an investment company under GAAP to follow investment company guidance. The FASB is currently in the process of redeliberations and will continue to consider feedback received on this Exposure Draft. The Company is currently evaluating the potential impact that the proposal would have on the Company’s consolidated financial statements. This exposure draft is not related to, nor does it impact the Company’s exemption from registering as an Investment Company under the 1940 Act.

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Condensed Consolidated Statement of Changes in Stockholders Equity (USD $) In Thousands, except Share data		Total	Preferred Stock	Common Stock	Additional Paid In Capital	Retained Earnings	Accumulated Other Comprehensive Income
Beginning balance at Dec. 31, 2011		$ 336,978		$ 206	$ 336,209		$ 563
Beginning balance, shares at Dec. 31, 2011				20,561,032
Vesting of restricted stock pursuant to Equity Incentive Plan		3,244			3,244
Issuance of restricted stock	[1]
Issuance of restricted stock, shares				11,080
Issuance of preferred stock		86,250	35		86,215
Issuance of preferred stock, shares			3,450,000
Offering costs		(3,395)			(3,395)
Net income		31,214				31,214
Change in net unrealized gain on securities available-for-sale		(464)					(464)
Dividends on preferred stock		(1,219)				(1,219)
Dividends on common stock		(25,187)				(25,187)
Ending balance at Sep. 30, 2012		$ 427,421	$ 35	$ 206	$ 422,273	$ 4,808	$ 99
Ending balance, shares at Sep. 30, 2012			3,450,000	20,572,112

[1] * Rounds to zero.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares outstanding	3,450,000	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	450,000,000	450,000,000
Common stock, shares issued	20,572,112	20,561,032
Common stock, shares outstanding	20,572,112	20,561,032

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Derivative instruments

9 Months Ended

Sep. 30, 2012

Derivative instruments

Note 9 – Derivative instruments

The Company uses interest rate swaps and caps to manage exposure to variable cash flows on portions of its borrowings under repurchase agreements. The Company’s repurchase agreements bear interest at a LIBOR-based variable rate and increases in LIBOR could negatively impact earnings. Interest rate swap and cap agreements allow the Company to receive a variable rate cash flow based on LIBOR and pay a fixed rate cash flow, mitigating the impact of this exposure.

The Company entered into interest rate swaps and forward-starting caps in an effort to economically hedge a portion of its floating-rate interest payments due under the Wells Facility as well as potential extensions of the collateral securing the Wells Facility borrowings. The Company’s derivative instruments consist of the following at September 30, 2012 and December 31, 2011:

		September 30, 2012						December 31, 2011
	Balance Sheet Location	Notional Value			Estimated Fair Value			Notional Value			Estimated Fair Value
Interest rate swaps	Derivative instruments	$	90,266		$	(252	)	$	241,850		$	(666	)
Interest rate caps	Derivative instruments		206,469	*		1			26,189	*		188
Total derivative instruments					$	(251	)				$	(478	)

* Represents the notional values at September 30, 2012 and December 31, 2011 but does not include forward-starting notionals.

The Company has an agreement with its derivative counterparty that contains a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

The following table summarizes the amounts recognized on the consolidated statements of operations related to the Company’s derivatives for the three and nine months ended September 30, 2012 and 2011.

		For the three months ended September 30						For the nine months ended September 30
	Location of Loss Recognized in Income	2012			2011			2012			2011
Interest rate swaps	Loss on derivative instruments – realized *	$	(127	)	$	(475	)	$	(796	)	$	(1,388	)
Interest rate swaps	Loss on derivative instruments – unrealized		50			343			414			(1,923	)
Interest rate caps	Loss on derivative instruments – unrealized		(10	)		(545	)		(187	)		632
Total		$	(87	)	$	(677	)	$	(569	)	$	(2,679	)

* Realized losses represent net amounts accrued for the Company’s derivative instruments during the period.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 02, 2012
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Trading Symbol	ARI
Entity Registrant Name	Apollo Commercial Real Estate Finance, Inc.
Entity Central Index Key	0001467760
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		28,044,106

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Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions

Note 10 – Related Party Transactions

Management Agreement

In connection with the Company’s initial public offering (“IPO”) in September 2009, the Company entered into a management agreement (the “Management Agreement”) with ACREFI Management, LLC (the “Manager”), which describes the services to be provided by the Manager and its compensation for those services. The Manager is responsible for managing the Company’s day-to-day operations, subject to the direction and oversight of the Company’s board of directors.

Pursuant to the terms of the Management Agreement, the Manager is paid a base management fee equal to 1.5% per annum of the Company’s stockholders’ equity (as defined in the Management Agreement), calculated and payable (in cash) quarterly in arrears.

The current term of the Management Agreement expires on September 29, 2013, and is automatically renewed for successive one-year terms on each anniversary thereafter. The Management Agreement may be terminated upon expiration of the one-year terms only upon the affirmative vote of at least two-thirds of the Company’s independent directors, based upon (1) unsatisfactory performance by the Manager that is materially detrimental to the Company or (2) a determination that the management fee payable to the Manager is not fair, subject to the Manager’s right to prevent such a termination based on unfair fees by accepting a mutually acceptable reduction of management fees agreed to by at least two-thirds of the Company’s independent directors. The Manager must be provided with written notice of any such termination at least 180 days prior to the expiration of the then existing term and will be paid a termination fee equal to three times the sum of the average annual base management fee during the 24-month period immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination. Following a meeting by the Company’s independent directors on March 29, 2012 with respect to the Management Agreement, which included a discussion of the Manager’s performance and the level of the management fees thereunder, the Company did not provide notice of termination of the Management Agreement to the Manager.

For the three and nine months ended September 30, 2012, respectively, the Company incurred approximately $1,518 and $4,099 in base management fees. For the three and nine months ended September 30, 2011, respectively, the Company incurred approximately $1,241 and $3,430 in base management fees. In addition to the base management fee, the Company is also responsible for reimbursing the Manager for certain expenses paid by the Manager on behalf of the Company or for certain services provided by the Manager to the Company. For the three and nine months ended September 30, 2012, respectively, the Company recorded expenses totaling $203 and $721 related to reimbursements for certain expenses paid by the Manager on behalf of the Company. For the three and nine months ended September 30, 2011, respectively, the Company recorded expenses totaling $127 and $442 related to reimbursements for certain expenses paid by the Manager on behalf of the Company. Expenses incurred by the Manager and reimbursed by the Company are reflected in the respective consolidated statement of operations expense category or the consolidated balance sheet based on the nature of the item.

Included in payable to related party on the consolidated balance sheet at September 30, 2012 and December 31, 2011, respectively, is approximately $1,520 and $1,298 for base management fees incurred but not yet paid.

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Condensed Consolidated Statement of Operations (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net interest income:
Interest income from securities	$ 3,674	$ 6,316	$ 12,227	$ 19,419
Interest income from commercial mortgage loans	2,825	2,276	7,851	6,886
Interest income from subordinate loans	6,144	3,784	17,316	8,861
Interest income from repurchase agreements	2,361	1,576	5,920	3,188
Interest expense	(1,768)	(3,716)	(6,939)	(10,836)
Net interest income	13,236	10,236	36,375	27,518
Operating expenses:
General and administrative expenses (includes $1,276 and $3,244 of non-cash stock based compensation in 2012 and $418 and $1,154 in 2011, respectively)	(2,430)	(1,297)	(7,229)	(4,089)
Management fees to related party	(1,518)	(1,241)	(4,099)	(3,430)
Total operating expenses	(3,948)	(2,538)	(11,328)	(7,519)
Interest income from cash balances		2	1	10
Realized gain on sale of securities			262
Unrealized gain (loss) on securities	3,010	(1,511)	6,473	(118)
Loss on derivative instruments (includes $40 and $228 of unrealized gains in 2012 and $202 and $1,291 of unrealized losses in 2011, respectively)	(87)	(677)	(569)	(2,679)
Net income	12,211	5,512	31,214	17,212
Preferred dividends	(1,219)		(1,219)
Net income available to common stockholders	$ 10,992	$ 5,512	$ 29,995	$ 17,212
Basic and diluted net income per share of common stock	$ 0.52	$ 0.28	$ 1.43	$ 0.93
Basic and diluted weighted average common shares outstanding	20,992,312	19,647,989	20,983,429	18,261,294
Dividend declared per share of common stock	$ 0.40	$ 0.40	$ 1.20	$ 1.20

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Debt Securities

9 Months Ended

Sep. 30, 2012

Debt Securities

Note 4 – Debt Securities

During June 2012, the Company purchased CMBS with a face amount of $74,854 for which the obligors are certain special purpose entities formed in 2010 to hold substantially all of the assets of Hilton Worldwide, Inc. (the “Hilton CMBS”). The Hilton CMBS has a current interest rate of one-month LIBOR+1.75% which increases to LIBOR+2.30% on November 12, 2012, LIBOR+3.30% on November 12, 2013 and LIBOR+3.80% on November 12, 2014. The Hilton CMBS receives principal repayments according to a schedule that is approximately equivalent to a 16-year amortization schedule and has a yield of 5.6%. The Hilton CMBS was purchased for $70,655 and financed with $49,459 of borrowings under the Company’s master repurchase agreement with Wells Fargo Bank, N.A. (the “Wells Facility”), which was amended to provide up to $100,000 of additional financing for the Hilton CMBS. See Note 8 – Borrowings for a description of the Wells Facility. The Company has elected the fair value option for the Hilton CMBS.

At September 30, 2012, the Company had AAA-rated CMBS with an aggregate face value of $219,706, which were also pledged to secure borrowings under the Wells Facility.

The amortized cost and estimated fair value of the Company’s debt securities at September 30, 2012 are summarized as follows:

Security Description	Face Amount		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
CMBS – AAA-rated (Available-for-Sale)	$	79,435	$	81,306	$	296	$	(197	)	$	81,405
CMBS – AAA-rated (Fair Value Option)		140,271		142,475		1,648		(177	)		143,946
CMBS – Hilton (Fair Value Option)		74,054		70,521		3,718		—			74,239
Total	$	293,760	$	294,302	$	5,662	$	(374	)	$	299,590

The gross unrealized loss related to the available-for-sale securities results from the fair value of the securities falling below the amortized cost basis. These unrealized losses are primarily the result of market factors other than credit impairment and the Company believes the carrying value of the securities are fully recoverable over their expected holding period. Management does not intend to sell or expect to be forced to sell the securities prior to the Company recovering the amortized cost. Additionally, all unrealized losses on securities available-for-sale at September 30, 2012 have existed for less than twelve months. As such, management does not believe any of the securities are other than temporarily impaired.

During March 2012, the Company sold CMBS with an amortized cost of $137,423 resulting in a net realized gain of $262, which was comprised of realized gains of $345 and realized losses of $83. The sale generated proceeds of $14,621 after the repayment of $123,064 of borrowings under the Wells Facility.

The amortized cost and estimated fair value of the Company’s debt securities at December 31, 2011 are summarized as follows:

Security Description	Face Amount		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
CMBS – AAA-rated (Available-for-Sale)	$	298,598	$	301,980	$	810	$	(247	)	$	302,543
CMBS – AAA-rated (Fair Value Option)		248,209		252,736		—		(1,284	)		251,452
Total	$	546,807	$	554,716	$	810	$	(1,531	)	$	553,995

The overall statistics for the Company’s AAA-rated CMBS investments calculated on a weighted average basis assuming no early prepayments or defaults as of September 30, 2012 and December 31, 2011 are as follows:

	September 30, 2012			December 31, 2011
Credit Ratings *		AAA			AAA
Coupon		5.6	%		5.6	%
Yield		4.2	%		4.3	%
Weighted Average Life		2.1 years			1.2 years

* Ratings per Fitch, Moody’s or S&P.

The percentage vintage, property type, and location of the collateral securing the Company’s AAA-rated CMBS investments calculated on a weighted average basis as of September 30, 2012 and December 31, 2011 are as follows:

Vintage	September 30, 2012			December 31, 2011
2006		3	%		7	%
2007		97			93
Total		100	%		100	%

Property Type	September 30, 2012			December 31, 2011
Office		40.5	%		36.5	%
Retail		23.3			26.6
Multifamily		12.9			13.1
Hotel		10.4			10.8
Other *		12.9			13.0
Total		100	%		100	%

* No other individual category comprises more than 10% of the total.

Location	September 30, 2012			December 31, 2011
South Atlantic		22.1	%		23.0	%
Middle Atlantic		21.3			21.9
Pacific		23.9			21.0
Other *		32.7			34.1
Total		100	%		100	%

* No other individual category comprises more than 10% of the total.

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Fair Value Disclosure

9 Months Ended

Sep. 30, 2012

Fair Value Disclosure

Note 3 – Fair Value Disclosure

GAAP establishes a hierarchy of valuation techniques based on observable inputs utilized in measuring financial instruments at fair values. Market based or observable inputs are the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:

Level I — Quoted prices in active markets for identical assets or liabilities.

Level II — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

Level III — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used.

While the Company anticipates that its valuation methods will be appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The Company will use inputs that are current as of the measurement date, which may include periods of market dislocation, during which price transparency may be reduced.

The estimated fair value of the AAA-rated CMBS portfolio is determined by reference to market prices provided by certain dealers who make a market in these financial instruments. Broker quotes are only indicative of fair value and may not necessarily represent what the Company would receive in an actual trade for the applicable instrument. Management performs additional analysis on prices received based on broker quotes to validate the prices and adjustments are made as deemed necessary by management to capture current market information. The estimated fair values of the Company’s securities are based on observable market parameters and are classified as Level II in the fair value hierarchy.

The estimated fair values of the Company’s derivative instruments are determined using a discounted cash flow analysis on the expected cash flows of each derivative. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The fair values of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected cash flows are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. The Company’s derivative instruments are classified as Level II in the fair value hierarchy.

The following table summarizes the levels in the fair value hierarchy into which the Company’s financial instruments were categorized as of September 30, 2012:

	Fair Value as of September 30, 2012
	Level I		Level II			Level III		Total
CMBS – AAA-rated (Available-for-Sale)	$	—	$	81,405		$	—	$	81,405
CMBS – AAA-rated (Fair Value Option)		—		143,946			—		143,946
CMBS – Hilton (Fair Value Option)		—		74,239			—		74,239
Interest rate swaps		—		(252	)		—		(252	)
Interest rate caps		—		1			—		1
Total	$	—	$	299,339		$	—	$	299,339

The following table summarizes the levels in the fair value hierarchy into which the Company’s financial instruments were categorized as of December 31, 2011:

	Fair Value as of December 31, 2011
	Level I		Level II			Level III		Total
CMBS – AAA-rated (Available-for-Sale)	$	—	$	302,543		$	—	$	302,543
CMBS – AAA-rated (Fair Value Option)		—		251,452			—		251,452
Interest rate swaps		—		(666	)		—		(666	)
Interest rate caps		—		188			—		188
Total	$	—	$	553,517		$	—	$	553,517

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Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events

Note 15 – Subsequent Events

Dividends. On November 1, 2012, the Company declared a dividend of $0.40 per share of common stock which is payable on January 14, 2013 to common stockholders of record on December 31, 2012.

Stockholders’ Equity. On October 9, 2012, the Company completed a follow-on public offering of 7,000,000 shares of its common stock at a price of $16.81 per share. On November 1, 2012, the underwriters partially exercised their option to purchase additional shares of common stock and purchased 404,640 shares of common stock at $16.81 per share. The aggregate net proceeds from the entire offering, including proceeds from the sale of the additional shares, are estimated to be approximately $124,182, after deducting estimated offering expenses payable by the Company.

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Share-Based Payments

9 Months Ended

Sep. 30, 2012

Share-Based Payments

Note 11 – Share-Based Payments

On September 23, 2009, the Company’s board of directors approved the Apollo Commercial Real Estate Finance, Inc., 2009 Equity Incentive Plan (the “LTIP”). The LTIP provides for grants of restricted common stock, restricted stock units (“RSUs”) and other equity-based awards up to an aggregate of 7.5% of the issued and outstanding shares of the Company’s common stock (on a fully diluted basis). The LTIP is administered by the compensation committee of the Company’s board of directors (the “Compensation Committee”) and all grants under the LTIP must be approved by the Compensation Committee.

The Company recognized stock-based compensation expense of $1,276 and $3,244 for the three and nine months ended September 30, 2012, respectively, related to restricted stock and RSU vesting. The Company recognized stock-based compensation expense of $418 and $1,154 for the three and nine months ended September 30, 2011, respectively, related to restricted stock and RSU vesting. The following table summarizes the grants of RSUs during the nine months ended September 30, 2012:

Type	Date	Shares		RSUs			Estimate Fair Value on Grant Date		Initial Vesting	Final Vesting
Forfeiture*	February 2012		—		(1,875	)		n/a	n/a	n/a
Grant	March 2012		—		20,000		$	310	March 2013	March 2015
Grant	April 2012		9,584		—		$	150	July 2012	April 2015
Grant	August 2012		1,496		—		$	25	July 2013	July 2015
Total			11,080		18,125

* Represents RSUs forfeited by a former employee of the Manager in connection with such employee’s resignation from the Manager.

Below is a summary of expected restricted stock and RSU vesting dates as of September 30, 2012.

Vesting Date	Shares Vesting		RSU Vesting		Total Awards
October 2012		11,883		11,043		22,926
January 2013		2,507		93,749		96,256
March 2013		—		6,666		6,666
April 2013		2,505		834		3,339
July 2013		3,273		834		4,107
October 2013		1,189		416		1,605
January 2014		1,564		93,335		94,899
March 2014		—		6,667		6,667
April 2014		1,568		417		1,985
July 2014		2,100		—		2,100
January 2015		796		—		796
March 2015		—		6,667		6,667
April 2015		800		—		800
July 2015		500		—		500
		28,685		220,628		249,313

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Repurchase Agreement

9 Months Ended

Sep. 30, 2012

Repurchase Agreement

Note 7 – Repurchase Agreement

During 2011, the Company funded a $47,439 investment structured in the form of a repurchase facility secured by a Class A-2 CDO bond. The $47,439 of borrowings provided under the facility financed the purchase of a CDO bond with an aggregate face amount of $68,726, representing an advance rate of 69% on the CDO bond’s face amount. The Class A-2 CDO bond, originally rated AAA/Aaa, is currently rated A-/Baa1. The CDO is comprised of 58 senior and subordinate commercial real estate debt positions and commercial real estate securities with the majority of the debt and securities underlying the CDO being first mortgages.

The repurchase facility bears interest at 13.0% (10.0% current pay with a 3.0% accrual) on amounts outstanding and has an initial term of 18 months with three six-month extensions options available to the borrower. Any principal repayments that occur prior to the 21st month are subject to a make-whole provision at the full 13.0% interest rate.

During the nine months ended September 30, 2012, the Company received $36,464 of principal repayments related to this repurchase agreement as well as $1,817 of make-whole interest payments.

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Net Income per Share - Additional Information (Detail)	3 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2011
Earnings Per Share [Line Items]
Unvested RSUs	318,606	187,906

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Commercial Mortgage Loans

9 Months Ended

Sep. 30, 2012

Commercial Mortgage Loans

Note 5 – Commercial Mortgage Loans

The Company’s commercial mortgage loan portfolio was comprised of the following at September 30, 2012:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon			Amortization Schedule	Property Size	Appraised LTV (1)
Hotel - NY, NY	Jan-10	Feb-15	$	32,000	$	31,633	$	31,633		8.25	%	30 year	151 rooms		40	%
Office Condo (Headquarters) - NY, NY	Feb-10	Feb-15		28,000		27,480		27,480		8.00		30 year	73,419 sq. ft.		53	%
Hotel - Silver Spring, MD	Mar-10	Apr-15		26,000		25,351		25,351		9.00		25 year	263 rooms		56	%
Mixed Use – South Boston, MA (2)	Apr-12	Dec-12		23,844		23,844		19,637		1.98		Interest only	20 acres		28	%
Total/Weighted Average			$	109,844	$	108,308	$	104,101		6.98	%

(1) Appraised loan-to-value (“LTV”) represents the current debt balance (through the Company’s last dollar of exposure) as a percentage of the value of the property as of the date of investment for all loans except the New York, NY hotel loan. The value of the property underlying the $32,000 New York, NY hotel loan is as of March 2011.

(2) This loan is a senior sub-participation interest in a $120,000 first mortgage that bears interest at a rate of LIBOR plus 172 basis points and includes a one-year extension option subject to repayment of $33,000 of the entire first mortgage (of which the Company will receive its pro rata portion) and the payment of a 0.50% fee of the outstanding balance of the entire first mortgage.

During April 2012, a $24,000 two-year fixed rate first mortgage loan on a 155-room boutique hotel in midtown Manhattan was repaid. The loan had an interest rate of 8.00%. The Company repaid $15,444 of borrowings under the Company’s $100,000 master repurchase facility entered into with JPMorgan Chase Bank, N.A. (the “JPMorgan Facility”) in conjunction with this repayment.

The Company’s commercial mortgage loan portfolio was comprised of the following at December 31, 2011:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon			Amortization Schedule	Property Size	Appraised LTV *
Hotel - NY, NY	Jan-10	Feb-15	$	32,000	$	31,798	$	31,798		8.25	%	30 year	151 rooms		40	%
Office Condo (Headquarters) - NY, NY	Feb-10	Feb-15		28,000		27,644		27,644		8.00		30 year	73,419 sq. ft.		53	%
Hotel - Silver Spring, MD	Mar-10	Apr-15		26,000		25,564		25,564		9.00		25 year	263 rooms		57	%
Hotel – NY, NY	Aug-10	Aug-12		24,000		24,000		24,000		8.00		Interest only	155 rooms		40	%
Total/Weighted Average			$	110,000	$	109,006	$	109,006		8.31	%

* Appraised LTV represents the current debt balance (through the Company’s last dollar of exposure) as a percentage of the value of the property as of the date of investment for all loans except the New York, NY hotel loan. The value of the property underlying the $32,000 New York, NY hotel loan is as of March 2011.

The Company evaluates its loans for possible impairment on a quarterly basis. The Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan by loan basis. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash from operations are sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan, and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates. Such loan loss analyses are completed and reviewed by asset management and finance personnel, who utilize various data sources, including (i) periodic financial data such as debt service coverage ratio, property occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and discussions with market participants. An allowance for loan loss is established when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. The Company has determined that an allowance for loan losses was not necessary at September 30, 2012 and December 31, 2011.

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Subordinate Loans

9 Months Ended

Sep. 30, 2012

Subordinate Loans

Note 6 – Subordinate Loans

The Company’s subordinate loan portfolio was comprised of the following at September 30, 2012:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon			Amortization Schedule	Appraised LTV (1)
Senior Mezz - Retail - Various	Dec-09	Dec-19	$	30,000	$	30,000	$	30,000		12.24	%	Interest only (2)		68	%
Junior Mezz - Retail - Various	Dec-09	Dec-19		20,000		20,000		20,000		14.00		Interest only (2)		72	%
Office - Michigan	May-10	Jun-20		9,000		8,923		8,923		13.00		25 year		68	%
Ski Resort - California	Apr-11	May-17		40,000		40,000		39,808		14.00		Interest only (3)		56	%
Hotel Portfolio – New York (4)	Aug-11	July-13		25,000		25,000		25,000		11.49		Interest only (5)		60	%
Retail Center – Virginia (6)	Oct-11	Oct-14		25,000		25,953		25,953		14.00		Interest only (6)		74	%
Hotel– New York (7)	Jan-12	Feb-14		15,000		15,000		14,968		12.00		Interest only (7)		63	%
Hotel– New York (8)	Mar-12	Mar-14		15,000		15,000		15,000		11.50		Interest only (8)		65	%
Mixed Use – North Carolina	Jul-12	Jul-22		6,525		6,525		6,525		11.10		Interest only		77	%
Office Complex - Missouri	Sept-12	Oct-22		10,000		10,000		10,000		11.75		30 year		72	%
Total/Weighted Average			$	195,525	$	196,401	$	196,177		12.75	%

(1) Appraised LTV represents the current debt balance (through the Company’s last dollar of exposure) as a percentage of the value of the property as of the date of investment.

(2) Prepayments are prohibited prior to the fourth year of the loan and any prepayments thereafter are subject to prepayment penalties ranging from 5% to 1%.

(3) Prepayments are prohibited prior to the third year of the loan and any prepayments thereafter are subject to prepayment penalties ranging from 5% to 1%.

(4) Includes a LIBOR floor of 1% and three one-year extension options subject to certain conditions and the payment of a 0.25% fee for the fourth and fifth year extensions.

(5) Prepayments are prohibited prior to February 2013 and any prepayments thereafter are subject to spread maintenance premiums.

(6) Interest rate of 14.0% includes a 10.0% current payment with a 4.0% accrual. There are two one-year extension options subject to certain conditions.

(7) Includes a 1.00% origination fee, a one-year extension option subject to certain conditions and a 0.50% extension fee as well as a 1.50% exit fee.

(8) Includes a LIBOR floor of 0.50%, two one-year extension options subject to certain conditions and the payment of a 0.50% fee for the second extension.

During June 2012, the Company modified the $40,000 subordinate loan secured by a ski resort in California. The modification was completed in connection with a modification of both the senior and junior loans in order to provide financial covenant relief to the borrower and included the addition of a 0.5% amendment fee and a 1.0% exit fee upon repayment of the loan. In addition, the interest rate on the mezzanine loan was increased by 0.75% to 14% until the earlier of (i) the loan being back in compliance with its original covenants; or (ii) April 2014. As of September 30, 2012, the mezzanine loan was current on its interest payments to the Company. All of the additional remuneration will be recognized over the remaining life of the loan.

The Company’s subordinate loan portfolio was comprised of the following at December 31, 2011:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Coupon			Amortization Schedule	Appraised LTV (1)
Senior Mezz - Retail - Various	Dec-09	Dec-19	$	30,000	$	30,000		12.24	%	Interest only (2)		68	%
Junior Mezz - Retail - Various	Dec-09	Dec-19		20,000		20,000		14.00		Interest only (2)		73	%
Office - Michigan	May-10	Jun-20		9,000		8,950		13.00		25 year		69	%
Ski Resort - California	Apr-11	May-17		40,000		40,000		13.25		Interest only (2)		64	%
Hotel Portfolio – New York (3)	Aug-11	July-13		25,000		25,000		11.49		Interest only (4)		60	%
Retail Center – Virginia (5)	Oct-11	Oct-14		25,000		25,136		14.00		Interest only (5)		74	%
Total/Weighted Average			$	149,000	$	149,086		13.00	%

(1) Appraised LTV represents the current debt balance (through the Company’s last dollar of exposure) as a percentage of the value of the property as of the date of investment.

(2) Prepayments are prohibited prior to the third year of the loan and any prepayments thereafter are subject to prepayment penalties ranging from 5% to 0%.

(3) Includes a LIBOR floor of 1% and three one-year extension options subject to certain conditions.

(4) Prepayments are prohibited prior to February 2013 and any prepayments thereafter are subject to spread maintenance premiums.

(5) Interest rate of 14.0% includes a 10.0% current payment with a 4.0% accrual. There are two one-year extension options subject to certain conditions.

The Company evaluates its loans for possible impairment on a quarterly basis. See Note 5 – Commercial Mortgage Loans for a summary of the metrics reviewed. The Company has determined that an allowance for loan loss was not necessary at September 30, 2012 and December 31, 2011.

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Borrowings

9 Months Ended

Sep. 30, 2012

Borrowings

Note 8 – Borrowings

At September 30, 2012 and December 31, 2011, the Company’s borrowings had the following debt balances, weighted average maturities and interest rates:

	September 30, 2012								December 31, 2011
	Debt Balance		Weighted Average Remaining Maturity			Weighted Average Rate			Debt Balance		Weighted Average Remaining Maturity			Weighted Average Rate
Wells Facility borrowings	$	242,967		1.3 years	*		1.6	%	$	221,980		1.6 years	*		1.8	%	*
JPMorgan Facility borrowings		3		0.3 years			2.7	%		68,720		0.9 years			3.3	%	**
TALF borrowings		—		—			—	%		251,327		1.3 years			2.8	%	Fixed
Total/Weighted Average	$	242,970		1.3 years			1.9	%	$	542,027		1.3 years			2.5	%

* Assumes extension options on the Wells Facility with respect to the Hilton CMBS are exercised. See below for a description of the Wells Facility. Borrowings outstanding under the Wells Facility bear interest at a LIBOR plus 125 basis points, 150 basis points or 235 basis points depending on the collateral pledged.

** During April 2012, the Company amended the JPMorgan Facility to reduce the interest rate spread by 50 basis points to LIBOR + 250 basis points.

At September 30, 2012, the Company’s borrowings had the following remaining maturities:

	Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years		Total
Wells Facility borrowings*	$	196,275	$	4,914	$	41,778	$	—	$	242,967
JPMorgan Facility borrowings		3		—		—		—		3
Total	$	196,278	$	4,914	$	41,778	$	—	$	242,970

* Assumes extension options on Wells Facility with respect to the Hilton CMBS are exercised. See below for a description of the Wells Facility.

At September 30, 2012, the Company’s collateralized financings were comprised of borrowings outstanding under JPMorgan Facility and the Wells Facility. The table below summarizes the outstanding balances at September 30, 2012 as well as the maximum and average balances for the nine months ended September 30, 2012.

			For the nine months ended September 30, 2012
	Balance at September  30, 2012		Maximum Month-End Balance		Average Month-End Balance
Wells Facility borrowings	$	242,967	$	469,147	$	299,061
JPMorgan Facility borrowings		3		68,720		48,699
TALF borrowings		—		251,327		25,133
Total	$	242,970

The Wells Facility was entered into in August 2010 which has a term of one year, with two one-year extensions available at the Company’s option, subject to certain restrictions, and upon the payment of an extension fee equal to 25 basis points on the then outstanding balance of the facility for each one-year extension. In August 2012, the Company exercised the final one-year extension of the term of the Wells Facility and extended the maturity date to August 2013 (except with respect to $100,000 of capacity under the facility to finance the Hilton CMBS described below). During December 2011, the Company, through an indirect wholly-owned subsidiary, entered into an amendment letter related to the Wells Facility to increase its maximum permitted borrowing under the facility from $250,000 to $506,000. The Company utilized the additional capacity under the Wells Facility to refinance all of the Company’s outstanding TALF debt during January 2012 at a rate of LIBOR plus 150 basis points.

Prior to the refinancing, the Company had TALF borrowings totaling $250,293 with a weighted average cost of funds of 2.8%. The increased borrowings under the Wells Facility related to this collateral totaled $264,401 and the Company entered into interest rate swap agreements with an initial aggregate notional value of $56,273 to economically hedge a portion of this floating-rate debt. During the nine months ended September 30, 2012, the Company repaid $169,809 of debt under the Wells Facility upon receiving paydowns from the Company’s CMBS and $123,064 upon the sale of a portion of the Company’s CMBS portfolio.

The Wells Facility was further amended during the second quarter of 2012 to provide an additional $100,000 of financing capacity for the purchase of Hilton CMBS at a rate of LIBOR plus 235 basis points with respect to borrowings secured by the Hilton CMBS. The additional $100,000 of capacity to finance the Hilton CMBS matures in November 2014 and may be extended for an additional year upon the payment of an extension fee equal to 0.50% on the then aggregate outstanding repurchase price for all such assets.

The Company entered into the JPMorgan Facility in January 2010 to finance the Company’s first mortgage loans and investment grade CMBS. During April 2012, the Company amended the JPMorgan Facility to reduce the interest rate spread by 50 basis points to LIBOR + 2.50%. The Company has borrowed under this facility from time to time as needed to fund the acquisition of additional assets. Upon the closing of the Company’s 8.625% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”) offering August 2012, the Company repaid $53,014 of the Company’s outstanding borrowings under the JPMorgan Facility.

The Company’s repurchase agreements are subject to certain financial covenants and the Company was in compliance with these covenants at September 30, 2012.

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Net Income per Share (Tables)

9 Months Ended

Sep. 30, 2012

Basic and Diluted Net (Loss) Income per Share of Common Stock Using Two-Class Method

The table below presents basic and diluted net (loss) income per share of common stock using the two-class method for the three and nine months ended September 30, 2012 and 2011:

	For the three months ended September 30						For the nine months ended September 30
	2012			2011			2012			2011
Numerator:
Net income	$	12,211		$	5,512		$	31,214		$	17,212
Preferred dividends		(1,219	)		—			(1,219	)		—
Net income available to common stockholders		10,992			5,512			29,995			17,212
Dividends declared on common stock		(8,229	)		(8,224	)		(24,682	)		(22,270	)
Dividends on participating securities		(168	)		(173	)		(505	)		(270	)
Net income (loss) attributable to common stockholders	$	2,595		$	(2,885	)	$	4,808		$	(5,328	)
Denominator:
Weighted average shares of common stock outstanding		20,992,312			19,647,989			20,983,429			18,261,294
Basic and diluted net income (loss) per weighted average share of common stock
Distributable Earnings	$	0.40		$	0.42		$	1.20		$	1.22
Undistributed income (loss)		0.12			(0.14	)		0.23			(0.29	)
Basic and diluted net income (loss) per share of common stock	$	0.52		$	0.28		$	1.43		$	0.93

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Related Party Transactions - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Related Party Transaction [Line Items]
Base management fees	$ 1,518	$ 1,241	$ 4,099	$ 3,430
Base management fees incurred but not yet paid	1,520		1,520		1,298
Management [Member]
Related Party Transaction [Line Items]
Rate of management fees			1.50%
Period of termination			180 days
Period to be considered, for average annual base management fee			24 months
Base management fees	1,518	1,241	4,099	3,430
Total expenses related to reimbursements	203	127	721	442
Base management fees incurred but not yet paid	$ 1,520		$ 1,520		$ 1,298

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2012

Fair Value of Financial Instruments

Note 13 – Fair Value of Financial Instruments

The following table presents the carrying value and estimated fair value of the Company’s financial instruments not carried at fair value on the consolidated balance sheet at September 30, 2012 and December 31, 2011:

	September 30, 2012						December 31, 2011
	Carrying Value			Estimated Fair Value			Carrying Value			Estimated Fair Value
Cash and cash equivalents	$	67,994		$	67,994		$	21,568		$	21,568
Commercial first mortgage loans		104,101			111,886			109,006			116,516
Subordinate loans		196,177			200,427			149,086			154,778
Repurchase agreements		10,975			10,975			47,439			47,415
TALF borrowings		—			—			(251,327	)		(256,171	)
Borrowings under repurchase agreements		(242,970	)		(242,970	)		(290,700	)		(290,700	)

To determine estimated fair values of the financial instruments listed above, market rates of interest, which include credit assumptions, are used to discount contractual cash flows. The estimated fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments. The use of different market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts. The Company’s commercial first mortgage loans, subordinate loans and repurchase agreements are carried at amortized cost on the condensed consolidated financial statements and are classified as Level III in the fair value hierarchy.

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Debt Securities (Tables)

9 Months Ended

Sep. 30, 2012

Amortized Cost and Estimated Fair Value

The amortized cost and estimated fair value of the Company’s debt securities at September 30, 2012 are summarized as follows:

Security Description	Face Amount		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
CMBS – AAA-rated (Available-for-Sale)	$	79,435	$	81,306	$	296	$	(197	)	$	81,405
CMBS – AAA-rated (Fair Value Option)		140,271		142,475		1,648		(177	)		143,946
CMBS – Hilton (Fair Value Option)		74,054		70,521		3,718		—			74,239
Total	$	293,760	$	294,302	$	5,662	$	(374	)	$	299,590

The gross unrealized loss related to the available-for-sale securities results from the fair value of the securities falling below the amortized cost basis. These unrealized losses are primarily the result of market factors other than credit impairment and the Company believes the carrying value of the securities are fully recoverable over their expected holding period. Management does not intend to sell or expect to be forced to sell the securities prior to the Company recovering the amortized cost. Additionally, all unrealized losses on securities available-for-sale at September 30, 2012 have existed for less than twelve months. As such, management does not believe any of the securities are other than temporarily impaired.

During March 2012, the Company sold CMBS with an amortized cost of $137,423 resulting in a net realized gain of $262, which was comprised of realized gains of $345 and realized losses of $83. The sale generated proceeds of $14,621 after the repayment of $123,064 of borrowings under the Wells Facility.

The amortized cost and estimated fair value of the Company’s debt securities at December 31, 2011 are summarized as follows:

Security Description	Face Amount		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
CMBS – AAA-rated (Available-for-Sale)	$	298,598	$	301,980	$	810	$	(247	)	$	302,543
CMBS – AAA-rated (Fair Value Option)		248,209		252,736		—		(1,284	)		251,452
Total	$	546,807	$	554,716	$	810	$	(1,531	)	$	553,995

Overall Statistics for the Company's CMBS Investments Calculated on a Weighted Average Basis

The overall statistics for the Company’s AAA-rated CMBS investments calculated on a weighted average basis assuming no early prepayments or defaults as of September 30, 2012 and December 31, 2011 are as follows:

	September 30, 2012			December 31, 2011
Credit Ratings *		AAA			AAA
Coupon		5.6	%		5.6	%
Yield		4.2	%		4.3	%
Weighted Average Life		2.1 years			1.2 years

* Ratings per Fitch, Moody’s or S&P.

Percentage Vintage, Property Type, and Location of the Collateral Securing the Company's CMBS Investments Calculated on a Weighted Average Basis

The percentage vintage, property type, and location of the collateral securing the Company’s AAA-rated CMBS investments calculated on a weighted average basis as of September 30, 2012 and December 31, 2011 are as follows:

Vintage	September 30, 2012			December 31, 2011
2006		3	%		7	%
2007		97			93
Total		100	%		100	%

Property Type	September 30, 2012			December 31, 2011
Office		40.5	%		36.5	%
Retail		23.3			26.6
Multifamily		12.9			13.1
Hotel		10.4			10.8
Other *		12.9			13.0
Total		100	%		100	%

* No other individual category comprises more than 10% of the total.

Location	September 30, 2012			December 31, 2011
South Atlantic		22.1	%		23.0	%
Middle Atlantic		21.3			21.9
Pacific		23.9			21.0
Other *		32.7			34.1
Total		100	%		100	%

* No other individual category comprises more than 10% of the total.

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Company's Derivative Instruments, Weighted Average Maturities and Interest Rates (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012		Dec. 31, 2011
Derivative Instruments, Gain (Loss) [Line Items]
Value	$ 56,273
Fair Value	(251)		(478)
Interest Rate Swap
Derivative Instruments, Gain (Loss) [Line Items]
Value	90,266		241,850
Fair Value	(252)		(666)
Interest Rate Cap
Derivative Instruments, Gain (Loss) [Line Items]
Value	206,469	[1]	26,189	[1]
Fair Value	$ 1		$ 188

[1] Represents the notional values at September 30, 2012 and December 31, 2011 but does not include forward-starting notionals.

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Commercial Mortgage Loans - Additional information (Detail) (USD $)	1 Months Ended	9 Months Ended	12 Months Ended
	Apr. 30, 2012 Room	Sep. 30, 2012	Dec. 31, 2011
Mortgage Loans on Real Estate [Line Items]
Senior sub-participation interest in New York, NY Hotel Loan		$ 120,000
Interest rate on New York, NY Hotel Loan		1.72%
Repayment of first mortgage		33,000
Mortgage loan fee percentage		0.50%
Repayment of mortgage loan	24,000	109,844	110,000
Rate of Commercial Mortgage loan	2 years
Company's master repurchase facility	100,000
Repayment of JP Morgan Facility	$ 15,444
Number of rooms in boutique hotel	155
Coupon rate of loan	8.00%	6.98%	8.31%

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Condensed Consolidated Statement of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
General and administrative expenses, non-cash stock based compensation	$ 1,276	$ 418	$ 3,244	$ 1,154
Unrealized gains (loss) on derivative instruments	$ 40	$ (202)	$ 228	$ (1,291)

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include the Company’s accounts and those of its consolidated subsidiaries. All significant intercompany amounts have been eliminated. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company’s most significant estimates include the fair value of financial instruments. Actual results could differ from those estimates.

These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included.

The Company currently operates in one business segment.

Recent Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (the “FASB”) issued guidance requiring additional disclosure information about offsetting and related arrangements. Entities will be required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on a basis of GAAP and those entities that prepare their financial statements on the basis of International Financial Reporting Standards (“IFRS”). The guidance is effective for periods beginning on or after January 1, 2013, and interim periods within those annual periods. While the adoption of this guidance will impact the Company’s disclosure, the Company does not believe that the adoption of this guidance will have a significant effect on its consolidated financial statements.

In September 2012, the FASB decided to remove the scope exception for mortgage REITs and require a mortgage REIT that meets the requirements to be an investment company under GAAP to follow investment company guidance. The FASB is currently in the process of redeliberations and will continue to consider feedback received on this Exposure Draft. The Company is currently evaluating the potential impact that the proposal would have on the Company’s consolidated financial statements. This exposure draft is not related to, nor does it impact the Company’s exemption from registering as an Investment Company under the 1940 Act.

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Carrying Value and Estimated Fair Value of Company's Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
Cash and cash equivalents, at carrying value	$ 67,994	$ 21,568	$ 44,450	$ 37,894
Commercial first mortgage loans, at carrying value	104,101	109,006
Subordinate loans, at carrying value	196,177	149,086
Repurchase agreements, at carrying value	10,975	47,439
TALF borrowings, at carrying value		(251,327)
Borrowings under repurchase agreements, at carrying value	(242,970)	(290,700)
Cash and cash equivalents, estimated fair value	67,994	21,568
Commercial first mortgage loans, estimated fair value	111,886	116,516
Repurchase agreements, estimated fair value	10,975	47,415
TALF borrowings, estimated fair value		(256,171)
Borrowings under repurchase agreements, estimated fair value	(242,970)	(290,700)
Commercial Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Subordinate loans, estimated fair	$ 200,427	$ 154,778

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Commercial Mortgage Loans (Tables)

9 Months Ended

Sep. 30, 2012

December 2011 [Member]

Commercial Mortgage Loan Portfolio

The Company’s commercial mortgage loan portfolio was comprised of the following at December 31, 2011:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon			Amortization Schedule	Property Size	Appraised LTV *
Hotel - NY, NY	Jan-10	Feb-15	$	32,000	$	31,798	$	31,798		8.25	%	30 year	151 rooms		40	%
Office Condo (Headquarters) - NY, NY	Feb-10	Feb-15		28,000		27,644		27,644		8.00		30 year	73,419 sq. ft.		53	%
Hotel - Silver Spring, MD	Mar-10	Apr-15		26,000		25,564		25,564		9.00		25 year	263 rooms		57	%
Hotel – NY, NY	Aug-10	Aug-12		24,000		24,000		24,000		8.00		Interest only	155 rooms		40	%
Total/Weighted Average			$	110,000	$	109,006	$	109,006		8.31	%

September 2012 [Member]

Commercial Mortgage Loan Portfolio

The Company’s commercial mortgage loan portfolio was comprised of the following at September 30, 2012:

Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon			Amortization Schedule	Property Size	Appraised LTV (1)
Hotel - NY, NY	Jan-10	Feb-15	$	32,000	$	31,633	$	31,633		8.25	%	30 year	151 rooms		40	%
Office Condo (Headquarters) - NY, NY	Feb-10	Feb-15		28,000		27,480		27,480		8.00		30 year	73,419 sq. ft.		53	%
Hotel - Silver Spring, MD	Mar-10	Apr-15		26,000		25,351		25,351		9.00		25 year	263 rooms		56	%
Mixed Use – South Boston, MA (2)	Apr-12	Dec-12		23,844		23,844		19,637		1.98		Interest only	20 acres		28	%
Total/Weighted Average			$	109,844	$	108,308	$	104,101		6.98	%

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Schedule of Overall Statistics for AAA-Rated CMBS Investments Calculated on Weighted Average Basis Assuming No Early Prepayments or Defaults (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Coupon	5.60%	5.60%
Yield	4.20%	4.30%
Weighted Average Life	2 years 1 month 6 days	1 year 2 months 12 days

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Stockholders' Equity

9 Months Ended

Sep. 30, 2012

Stockholders' Equity

Note 12 – Stockholders’ Equity

Dividends. For 2012, the Company declared the following dividends on its common stock:

Declaration Date	Record Date	Payment Date	Amount
February 28, 2012	March 31, 2012	April 12, 2012	$	0.40
May 3, 2012	June 29, 2012	July 12, 2012	$	0.40
August 6, 2012	September 28, 2012	October 12, 2012	$	0.40

For 2012, the Company declared the following dividends on its Series A Preferred Stock:

Declaration Date	Record Date	Payment Date	Amount
September 13, 2012	September 28, 2012	October 15, 2012	$	0.4432

Preferred Offering. On August 1, 2012, the Company completed an underwritten public offering of 3,450,000 shares of its 8.625% Series A Cumulative Redeemable Perpetual Preferred Stock with a liquidation preference of $25.00 per share including 450,000 shares issued pursuant to the underwriters option to purchase additional shares. Net proceeds from the offering, after the underwriting discount and estimated offering expenses payable by the Company, were approximately $83,183.