8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 27, 2013

Apollo Commercial Real Estate Finance, Inc.

(Exact name of registrant as specified in its charter)

Maryland	001-34452	27-0467113
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

c/o Apollo Global Management, LLC 9 West 57th Street, 43rd Floor New York, New York	10019
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 515-3200

n/a

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. Results of Operations and Financial Condition.

On February 27, 2013, Apollo Commercial Real Estate Finance, Inc. (the “Company”) issued an earnings release announcing its financial results for the quarter ended December 31, 2012 and the fiscal year ended December 31, 2012. A copy of the earnings release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

On February 27, 2013, the Company posted supplemental financial information on the Investor Relations section of its website (www.apolloreit.com). A copy of the supplemental financial information is furnished as Exhibit 99.2 hereto and incorporated herein by reference.

The information in Item 2.02 of this Current Report, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, unless it is specifically incorporated by reference therein.

ITEM 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Earnings Release dated February 27, 2013
99.2	Supplemental Financial Information for the quarter ended December 31, 2012

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 hereunto duly authorized.

Apollo Commercial Real Estate Finance, Inc.
By:	/s/ Stuart A. Rothstein
	Name: Stuart A. Rothstein
	Title: President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary

Date: February 28, 2013

Exhibit Index

Exhibit No.	Description
99.1	Earnings Release dated February 27, 2013
99.2	Supplemental Financial Information for the quarter ended December 31, 2012

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	NYSE:ARI
CONTACT:       Hilary Ginsberg
Investor Relations
(212) 822-0767

APOLLO COMMERCIAL REAL ESTATE FINANCE, INC. REPORTS

FOURTH QUARTER AND FULL YEAR 2012 FINANCIAL RESULTS AND DECLARES

A $0.40 PER COMMON SHARE QUARTERLY DIVIDEND

New York, NY, February 27, 2013 – Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today reported financial results for the quarter and full year ended December 31, 2012.

Fourth Quarter 2012 Highlights

• Generated $12.3 million of net interest income from the Company’s $669 million investment portfolio, which had a current weighted average underwritten internal rate of return (“IRR”) of approximately 12.7% and a levered weighted average underwritten IRR of approximately 14.1% at December 31, 2012;

• Closed two loan transactions totaling $130.0 million of committed capital; and

• Completed an underwritten public offering of 7,404,640 shares of common stock at a price of $16.81 per share, raising net proceeds of $124.1 million.

Full Year 2012 Highlights

• Completed eight new commercial real estate debt transactions totaling $214.8 million of committed equity representing $264.3 million of investments with a weighted average underwritten IRR of approximately 13%;

• Raised $207.3 million of net proceeds through preferred and common stock offerings; and

• Lowered the cost of the Company’s financing facilities through:

• Refinancing of the TALF debt, which produced $14.1 million of additional investable capital, lowered the weighted average cost of funds by approximately 70 basis points and extended the term of the debt through August 2013; and

• Amending the Company’s repurchase facility with JPMorgan Chase Bank, N.A (the “JPMorgan Facility”) to reduce the interest rate by 50 basis points to LIBOR + 2.50%.

“2012 was a year of significant capital formation and portfolio growth for ARI, set against a backdrop of improving fundamentals in the commercial real estate markets,” said Stuart Rothstein, Chief Executive Officer of the Company. “The Company’s investment activity was robust, as we completed over $264 million of new transactions with a weighted average underwritten IRR of approximately 13%. ARI also was able to expand the Company’s capital base through both a preferred stock offering and a common stock offering, as well as lower its cost of capital through refinancing and amending its financing facilities. Importantly, the credit quality of our investments remained stable. As we look ahead to 2013, the Company has gotten off to a strong start, having closed three new transactions totaling $103 million of committed equity.”

Fourth Quarter and Full Year 2012 Operating Results

The Company reported Operating Earnings of $7.4 million, or $0.27 per share, for the three months ended December 31, 2012, as compared to Operating Earnings of $8.3 million, or $0.39 per share, for the three months ended December 31, 2011. The decrease in Operating Earnings per share primarily was due to the timing of the deployment of the capital raised from both the Company’s preferred stock offering and common stock offering. Net income available to common stockholders for the three months ended December 31, 2012 was $7.1 million, or $0.26 per share, as compared to net income available to common stockholders of $8.7 million, or $0.41 per share, for the three months ended December 31, 2011.

Commenting on fourth quarter financial performance, Mr. Rothstein stated: “The Company’s Operating Earnings per share in the fourth quarter of 2012 reflected the differential in timing between ARI’s capital raising and capital deployment activities. As we stated on our third quarter earnings call, we believe ARI’s Operating Earnings in the fourth quarter of 2012 would not be indicative of the future earnings capability of our investment portfolio. Subsequent to quarter end, the Company has significantly deployed the capital raised in 2012 and we believe we have a healthy pipeline for future investments.”

For the full year ended December 31, 2012, the Company reported Operating Earnings of $33.9 million, or $1.50 per share, representing a per share increase of 2% as compared to Operating Earnings of $28.1 million, or $1.47 per share for the full year ended December 31, 2011. Net income available to common stockholders for the full year ended December 31, 2012 was $37.1 million, or $1.64 per share, as compared to net income available to common stockholders of $25.9 million, or $1.35 per share, for the full year ended December 31, 2011.

Fourth Quarter Investment and Portfolio Activity

Mezzanine Loan – In November 2012, ARI closed a $50 million mezzanine loan secured by equity interests in a borrower that owns a portfolio of three full-service conference hotels located in Dallas, TX, Denver, CO and St. Louis, MO, totaling 3,981 keys. The mezzanine loan is part of a $410 million four-year (three-year initial term with one one-year extension option), floating rate loan refinancing comprised of a $295 million first mortgage and a $115 million mezzanine loan, which was subsequently bifurcated into a $65 million senior mezzanine loan and ARI’s $50 million junior mezzanine loan. ARI’s mezzanine loan has an interest rate of one-month LIBOR + 10.9%, 30-year amortization and an appraised loan-to-value (“LTV”) of approximately 61% or approximately $103,000 per key. ARI received a 0.5% origination fee when the loan closed. The mezzanine loan has been underwritten to generate an IRR of approximately 13%.

Whole Loan – In December, 2012, ARI provided an $80 million whole loan commitment for a condominium conversion located in the TriBeCa neighborhood of New York City. At closing, ARI funded a $45 million first mortgage loan and $0.4 million of a $35 million mezzanine loan, the balance of which ARI expects to be funded throughout the conversion process. The property will have 66 units with approximately 96,000 net salable square feet and approximately 3,000 square feet of ground floor retail space. The loans have an initial term of two years with two 12-month extension options, subject to the achievement of additional project completion hurdles. The interest rate on the whole loan is LIBOR+8.5% with a LIBOR floor of 0.5%. ARI received a 1.0% origination fee and expects to receive a 1.0% exit fee on the fully funded balance of the loan. When fully funded, ARI’s loan basis will represent an underwritten loan-to-net sellout of approximately 55%. The loans have been underwritten to generate an unlevered IRR of approximately 11%.

Quarter End Portfolio Summary

The following table sets forth certain information regarding the Company’s investments at December 31, 2012 ($ amounts in thousands):

Description	Amortized Cost		Weighted Average Yield			Debt		Cost of Funds			Equity at cost		Current Weighted Average IRR (1)			Levered Weighted Average IRR(2)
First mortgage loans	$	142,921		10.1	%	$	3		2.7	%	$	142,918		10.8	%		15.6	%
Subordinate loans		246,246		12.7			—		—			246,246		13.6			13.6
Repurchase agreements		6,598		13.0			—		—			6,598		13.7			13.7
CMBS – AAA		203,463		4.1			176,827		1.7			26,636		15.3			15.3
CMBS – Hilton		70,250		5.6			48,328		2.6			21,922		11.6			11.6
Total	$	669,478		8.8	%	$	225,158		1.9	%	$	444,320		12.7	%		14.1	%

(1) The IRRs for the investments shown in the above table and elsewhere in this press release reflect the returns underwritten by ACREFI Management, LLC, the Company’s external manager. They are calculated on a weighted average basis assuming no dispositions, early prepayments or defaults but does assume that extension options are exercised and that the cost of borrowings and derivative instruments under the Company’s master repurchase agreement with Wells Fargo Bank, N.A. (the “Wells Facility”) remain constant over the remaining terms and extension terms under the facility. The calculation also assumes

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extension options on the Wells Facility with respect to the Hilton CMBS are exercised. The IRRs for the New York City condominium conversion investment listed above and the New York City condominium development investment listed below are calculated using the Company’s external manager’s underwritten assumptions regarding the estimates of the timing and magnitude of future fundings for the remaining commitments and associated loan repayments, as well as assuming no defaults. There can be no assurance the actual IRRs will equal the underwritten IRRs shown in the table and elsewhere in this press release. See “Risk Factors” in the reports filed by the Company with the Securities and Exchange Commission 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.

(2) 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 levered weighted average IRR with regard to its portfolio of first mortgage loans is additionally dependent upon the Company re-borrowing approximately $53,000 under the JPMorgan Facility or any replacement facility. Without such re-borrowing, the levered weighted average IRRs will be as indicated in the current weighted average IRR column above.

Book Value

The Company’s GAAP book value per share at December 31, 2012 was $16.43. For purposes of GAAP accounting, the Company carries loans at amortized cost and its CMBS securities are marked to market. Management has estimated that the fair value of the Company’s financial assets at December 31, 2012 was approximately $11.5 million greater than the carrying value of the Company’s investment portfolio as of the same date. This represents a premium of $0.41 per share over the Company’s GAAP book value as of December 31, 2012, and results in an estimated market value per share of approximately $16.84.

Subsequent Events

New Investments – During the first quarter of 2013, ARI closed three transactions totaling $103 million of committed equity. The transactions include the following:

• $60 million mezzanine loan commitment secured by a pledge of preferred equity interests in the owner of a to-be-developed 352,624 net saleable square foot, 57-story, 146-unit condominium tower located in the TriBeCa neighborhood of New York City. When fully funded, the Company’s loan basis is expected to represent an underwritten loan-to-net sellout of approximately 54%. The mezzanine loan has been underwritten to generate an IRR of approximately 16%;

• $18 million mezzanine loan secured by a pledge of the equity interests in the owner of two buildings in midtown Manhattan. The buildings contain a total of 181,637 rentable square feet that is being converted into 215 multifamily rental units. The mezzanine loan has an appraised LTV of approximately 60% and has been underwritten to generate an IRR of approximately 13%; and

• $25 million mezzanine loan secured by a pledge of the equity interests in the owner of a portfolio of four hotels totaling 1,231 keys located in Rochester, Minnesota. The mezzanine loan has an appraised LTV of approximately 69% and has been underwritten to generate an IRR of approximately 12%.

Repayment of Investments – During the first quarter, ARI received principal repayment from the following investments:

• The repurchase agreement secured by CDO bonds was repaid in full. Upon the repayment, the Company realized a 17% IRR on its investment; and

• Two mezzanine loans totaling $50 million secured by a portfolio of retail shopping centers located throughout the United States were fully repaid. In connection with the repayment, the Company received a yield maintenance payment totaling $2.5 million. Including the yield maintenance payment, the Company realized a 15% IRR on its mezzanine loan investment.

Amendment to JP Morgan Facility – In February 2013, the Company amended its JPMorgan Facility to extend the term for two years (one year initial term with a 364 day extension option). Pricing on the JPMorgan Facility will remain at LIBOR+2.5% and ARI paid a 0.5% extension fee for the first year and will pay a 0.25% extension fee for the second year. The Company primarily uses the JPMorgan Facility to finance ARI’s first mortgage loan investments.

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Amendment to Wells Facility – In February 2013, the Company amended its Wells Facility to reduce the interest rate as follows: (i.) with respect to the outstanding borrowings used to provide financing for the AAA CMBS, the interest rate was reduced to LIBOR+1.05% from LIBOR+1.25% - 1.50% (depending on the collateral pledged); and (ii.) with respect to the outstanding borrowings used to provide financing for the Hilton CMBS, the interest rate was reduced to LIBOR+1.75% from LIBOR+2.35%. In addition, the maturity date of the Wells Facility with respect to the outstanding borrowings used to provide financing for the AAA CMBS was extended to March 2014.

Corporate Governance – In February 2013, the Board of Directors appointed Megan Gaul as Chief Financial Officer, Secretary and Treasurer of the Company, effective April 1, 2013. Ms. Gaul will assume these titles from Mr. Rothstein, who holds these titles in addition to his existing titles of Chief Executive Officer and President. Ms. Gaul previously served as the Controller of the Manager, a position she has held since she joined Apollo Global Management, the indirect owner of the Manager, in 2009.

Dividend – The Board of Directors declared a dividend of $0.40 per share of common stock, which is payable on April 12, 2013 to common stockholders of record on March 29, 2013. This is the eleventh consecutive quarter the Company has paid a $0.40 per common share dividend.

Annual Meeting – The Board of Directors also set March 6, 2013 as the record date for its 2013 Annual Meeting of Stockholders. The 2013 Annual Meeting of Stockholders will be held on May 2, 2013 at the offices of Clifford Chance US LLP at 31 West 52nd Street, New York, New York.

Definition of Operating Earnings

Operating Earnings is a non-GAAP financial measure that is used to approximate cash available for distribution and is defined by the Company as net income available to common stockholders, computed in accordance with GAAP, adjusted for (i) non-cash equity compensation expense (a portion of which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding) and (ii) any unrealized gains or losses or other non-cash items included in net income available to common stockholders. The table provided below reconciles Operating Earnings to net income available to common stockholders.

Reconciliation of Operating Earnings to Net Income Available to Common Stockholders

The tables below reconcile Operating Earnings and Operating Earnings per share with net income available to common stockholders and net income available to common stockholders per share for the three and twelve months ended December 31, 2012 and 2011 ($ amounts in thousands):

	Three Months Ended December  31, 2012			Earnings Per Share (Diluted)		Three Months Ended December  31, 2011			Earnings Per Share (Diluted)
Operating Earnings:
Net income available to common stockholders	$	7,108		$	0.26	$	8,669		$	0.41
Adjustments:
Unrealized gain on securities		(16	)		—		(600	)		(0.03	)
Unrealized gain on derivative instruments		(96	)		—		(426	)		(0.02	)
Non-cash stock-based compensation expense		380			0.01		634			0.03
Total adjustments:		268			0.01		(392	)		(0.02	)
Operating Earnings		7,376		$	0.27	$	8,277		$	0.39
Basic and diluted weighted average Common shares outstanding:		27,608,787					20,561,032

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	Twelve Months Ended December  31, 2012			Earnings Per Share (Diluted)			Twelve Months Ended December  31, 2011			Earnings Per Share (Diluted)
Operating Earnings:
Net income available to common stockholders	$	37,102		$	1.64		$	25,882		$	1.35
Adjustments:
Unrealized gain on securities		(6,489	)		(0.29	)		(481	)		(0.03	)
Unrealized gain (loss) on derivative instruments		(323	)		(0.01	)		865			0.05
Non-cash stock-based compensation expense		3,624			0.16			1,788			0.10
Total adjustments:		(3,188	)		(0.14	)		2,172			0.12
Operating Earnings	$	33,914		$	1.50		$	28,054		$	1.47
Basic and diluted weighted average common shares outstanding:		22,648,819						18,840,954

Teleconference Details:

Members of the public who are interested in participating in the Company’s fourth quarter and full year 2012 earnings teleconference call should dial from the U.S., (877) 263-2989, or from outside the U.S., (702) 928-7168, shortly before 10:00 a.m. on Thursday, February 28, 2013 and reference the Apollo Commercial Real Estate Finance, Inc. Teleconference Call (number 93491950). Please note the teleconference call will be available for replay beginning at 12:00 p.m. on Thursday, February 28, 2013, and ending at midnight on Thursday, March 7, 2013. To access the replay, callers from the U.S. should dial (855) 859-2056 and callers from outside the U.S. should dial (404) 537-3406, and enter conference identification number 93491950.

Webcast

The conference call will also be available on the Company’s website at www.apolloreit.com. To listen to a live broadcast, please go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. A replay of the call also will be available for 30 days on the Company’s website.

Supplemental Information

The Company provides supplemental financial information to offer more transparency into its results and make its reporting more informative and easier to follow. The supplemental financial information is available in the investor relations section of the Company’s website at www.apolloreit.com.

About Apollo Commercial Real Estate Finance, Inc.

Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) is a commercial mortgage real estate investment trust that primarily originates, invests in, acquires and manages senior performing commercial real estate mortgage loans, commercial mortgage-backed securities and other commercial real estate-related debt investments throughout the U.S. The Company is externally managed and advised by ACREFI Management, LLC, a Delaware limited liability company and an indirect subsidiary of Apollo Global Management, LLC, a leading global alternative investment manager with approximately $113 billion of assets under management at December 31, 2012.

Additional information can be found on the Company’s website at www.apolloreit.com.

Dividend Reinvestment Plan

The Company adopted a Direct Stock Purchase and Dividend Reinvestment Plan (the “Plan”). The Plan provides new investors and existing holders of the Company’s common stock with a convenient and economical method to purchase shares of its common stock. By participating in the Plan, participants may purchase additional shares of the Company’s common stock by reinvesting some or all of the cash dividends received on their shares of the Company’s common stock. In addition, the Plan permits participants to make optional cash investments of up to $10,000 per month, and, with the Company’s prior approval, optional cash investments in excess of $10,000 per month, for the purchase of additional shares of the Company’s common stock.

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The Plan is administered by a division of Wells Fargo Bank, N.A. (“Wells”). Stockholders and other persons may obtain a copy of the Plan prospectus and an enrollment form by contacting Wells at (800) 468-9716 or (651) 450-4064, if outside the United States, or visiting Wells’ website at www.shareowneronline.com.

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. 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 used in this release, the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions, are intended to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: the return on equity; the yield on investments; the ability to borrow to finance assets; the Company’s ability to deploy the proceeds of it’s capital raises or acquire its target assets; and risks associated with investing in real estate assets, including changes in business conditions and the general economy. For a further list and description of such risks and uncertainties, see the reports filed by the Company with the Securities and Exchange Commission. The forward-looking statements, and other risks, uncertainties and factors are based on the Company’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company. Forward-looking statements are not predictions of future events. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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Apollo Commercial Real Estate Finance, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands—except share and per share data)

	December 31, 2012			December 31, 2011
Assets:
Cash	$	108,619		$	21,568
Securities available-for-sale, at estimated fair value		67,079			302,543
Securities, at estimated fair value		211,809			251,452
Commercial mortgage loans, held for investment		142,921			109,006
Subordinate loans, held for investment		246,246			149,086
Repurchase agreements, held for investment		6,598			47,439
Principal and interest receivable		4,277			8,075
Deferred financing costs, net		678			2,044
Other assets		203			17
Total Assets	$	788,430		$	891,230
Liabilities and Stockholders’ Equity
Liabilities:
Borrowings under repurchase agreements	$	225,158		$	290,700
TALF borrowings		—			251,327
Derivative instruments, net		155			478
Accounts payable and accrued expenses		1,265			1,746
Payable to related party		2,037			1,298
Dividends payable		12,891			8,703
Total Liabilities		241,506		$	554,252
Stockholders’ Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized and 3,450,000 shares issued and outstanding in 2012		35			—
Common stock, $0.01 par value, 450,000,000 shares authorized, 28,044,106 and 20,561,032 shares issued and outstanding in 2012 and 2011, respectively		280			206
Additional paid-in-capital		546,065			336,209
Retained Earnings		574			—
Accumulated other comprehensive income (loss)		(30	)		563
Total Stockholders’ Equity		546,924			336,978
Total Liabilities and Stockholders’ Equity	$	788,430		$	891,230

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Apollo Commercial Real Estate Finance, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations

(in thousands—except share and per share data)

	Three months ended December 31,						Twelve months ended December 31,
	2012			2011			2012			2011
Net interest income:
Interest income from securities	$	3,120		$	5,904		$	15,347		$	25,323
Interest income from commercial mortgage loans		2,930			2,267			10,780			9,153
Interest income from subordinate loans		7,350			4,817			24,666			13,678
Interest income from repurchase agreements		366			1,576			6,286			4,764
Interest expense		(1,463	)		(3,618	)		(8,402	)		(14,454	)
Net interest income		12,303			10,946			48,677			38,464
Operating expenses:
General and administrative expenses (includes $380 and $3,624 of non-cash stock based compensation in 2012 and $634 and $1,788 in 2011, respectively)		(1,315	)		(1,563	)		(8,543	)		(5,652	)
Management fees to related party		(2,040	)		(1,297	)		(6,139	)		(4,728	)
Total operating expenses		(3,355	)		(2,860	)		(14,682	)		(10,380	)
Interest income from cash balances		6			1			7			13
Realized gain on sale of securities		—			—			262			—
Unrealized gain on securities		16			600			6,489			481
Loss on derivative instruments (includes $96 and $323 of unrealized gains in 2012 and $426 and ($865) of unrealized losses in 2011, respectively)		(2	)		(18	)		(572	)		(2,696	)
Net income	$	8,968		$	8,669			40,181		$	25,882
Preferred Dividends		(1,860	)		—			(3,079	)		—
Net income available to common stockholders	$	7,108		$	8,669		$	37,102		$	25,882
Basic and diluted net income per share of common stock	$	0.26		$	0.41		$	1.64		$	1.35
Basic and diluted weighted average common shares outstanding		27,297,600			20,561,032			22,648,819			18,840,954
Dividend declared per share of common stock	$	0.40		$	0.40		$	1.60		$	1.60

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EX-99.2

February 28, 2013

Supplemental Financial Information Presentation

Q4 2012

Information is as of December 31, 2012 except as otherwise noted. 

It should not be assumed that investments made in the future will be profitable or will equal the performance of investments in this document.

Exhibit 99.2

Legal Disclaimer

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

We make forward-looking statements in this presentation and other filings we make with the SEC within the meaning of Section 27A of the

Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be

covered by the safe harbor provided by the same. Forward-looking statements are subject to substantial risks and uncertainties, many of which

are difficult to predict and are generally beyond our control. These forward-looking statements include information about possible or assumed

future results of our business, financial condition, liquidity, results of operations, plans and objectives. When we use the words “believe,”

“expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions, we intend to identify forward-

looking statements. Statements regarding the following subjects, among others, may be forward-looking: our business and investment strategy;

our operating results; our ability to obtain and maintain financing arrangements; the return on equity, the yield on investments and risks

associated with investing in real estate assets, including changes in business conditions and the general economy.

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all

information currently available to us. 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 us. Some of these factors are described under

“Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as included in ARI’s Annual

Report on Form 10-K for the fiscal year ended December 31, 2011 and other periodic reports filed with the Securities and Exchange Commission.

If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-

looking statements. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and

it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to,

update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This presentation may contain statistics and other data that in some cases has been obtained from or compiled from information made available

by third-party service providers.

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Apollo Commercial Real Estate Finance, Inc.

2012 Fourth Quarter Earnings Call

February 28, 2013

Stuart Rothstein

Chief Executive Officer, President and Chief Financial Officer

Scott Weiner

Chief Investment Officer of the Manager

Megan Gaul

Controller of the Manager

Hilary Ginsberg

Investor Relations Manager

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

3

ARI –

Financial Summary

(1)

Operating Earnings is a non-GAAP financial measure that is used to approximate cash available for distribution and is defined by the Company as net income, computed in accordance with GAAP, adjusted for (i) non-cash equity compensation expense (a portion of

which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding) and (ii) any unrealized gains or losses or other non-cash items included in net income.  Please see slide 25 for a

reconciliation of Operating Earnings and Operating Earnings per Share to GAAP net income and GAAP net income per share.

(2)

Fixed rate debt refers to the TALF borrowings which were refinanced with the Wells repurchase facility during January 2012.

(3)

Fixed charge coverage is EBITDA divided by interest expense plus

the preferred stock dividends.

Income Statement

December 31, 2012

December 31, 2011

% Change

December 31, 2012

December 31, 2011

% Change

13,766

$      

14,564

$           

-5.5%

57,079

$      

52,918

$       

7.9%

(1,463)

$      

(3,618)

$             

-59.6%

(8,402)

$      

(14,454)

$      

-41.9%

Net interest income

(in thousands)

12,303

$      

10,946

$           

12.4%

48,677

$      

38,464

$       

26.6%

0.27

$         

0.39

$                

-30.8%

1.50

$         

1.47

$           

2.0%

27,608,787

20,561,032

34.3%

22,648,819

18,840,954

20.2%

Balance sheet

December 31, 2012

December 31, 2011

% Change

669,478

$    

860,247

$          

-22.2%

444,320

$    

318,220

$          

39.6%

Common stockholders equity

460,674

$    

336,978

$          

36.7%

86,250

$      

-

$                 

-

$           

251,327

$          

225,158

$    

290,700

$          

0.5x

1.6x

3.3x

3.9x

Three Months Ended

Twelve Months Ended

Interest income (in thousands)

Interest expense

(in thousands)

Operating earnings per share

(1)

Basic and diluted weighted average common

shares outstanding

Investments at amortized cost (in thousands)

Net equity in investments at cost (in thousands)

Preferred stockholders equity

Debt to common equity

Fixed rate debt

(in thousands)

(2)

Fixed charge coverage

(3)

Floating rate debt (in thousands)

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Historical Overview

Operating Earnings per Share

(1)

Dividends per Common Share

Net Interest Income ($000s)

Return on Common Equity Based on Operating Earnings 

(2)

$1.50

$1.60

$1.60

$0.00

$0.40

$0.80

$1.20

$1.60

$2.00

2010

2011

2012

$1.09

$1.47

$1.50

$0.00

$0.40

$0.80

$1.20

$1.60

2010

2011

2012

$21,771

$38,464

$48,677

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

2010

2011

2012

5.9%

8.9%

9.2%

0.0%

3.0%

6.0%

9.0%

12.0%

2010

2011

2012

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

4

(1)

Operating Earnings is a non-GAAP financial measure that is used to approximate cash available for distribution and is defined by the Company as net income, computed in accordance with GAAP, adjusted for (i) non-cash equity compensation

expense (a portion of which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding) and (ii) any unrealized gains or losses or other non-cash items

(2)

Return on common equity is calculated as annualized Operating Earnings for the period as a percentage of average stockholders equity for the period.

included in net income.  Please see slide 25 for a reconciliation of Operating Earnings and Operating Earnings per Share to GAAP net income and GAAP net income per share.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

5

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Q4 Highlights

Financial Results & Earnings Per Share

Operating Earnings for the quarter ended December 31, 2012 of $7.4 million, or $0.27 per diluted

common share

(1)

–

Decline

in

operating

earnings

primarily

due

to

the

timing

of

the

deployment

of

capital

raised

from

the

July

preferred stock offering and the October common stock offering

–

Net interest income of $12.3 million for Q4 2012

–

Total expenses of $3.3 million, comprised of management fees of $2.0 million, G&A of

$0.9 million and non-cash stock based compensation of $0.4 million

–

GAAP

net

income

available

to

common

stockholders

for

the

quarter

ended

December

31,

2012

of

$7.1

million,

or $0.26 per diluted common share

Dividends

Declared a dividend of $0.40 per share of common stock for the quarter ended March 31, 2013

–

Eleventh consecutive quarter of maintaining consistent dividend level

–

9.2% annualized dividend yield based on $17.36 closing price on February 26, 2013

Declared a dividend on the Company’s 8.625% Series A Cumulative Redeemable Perpetual Preferred

Stock of $0.5391 per share for stockholders of record on December 31, 2012

(1)

Operating Earnings is a non-GAAP financial measure that is used to approximate cash available for distribution and is defined by the Company as net income, computed in accordance with GAAP, adjusted for (i) non-cash

equity compensation expense (a portion of which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding) and (ii) any unrealized

gains or losses or other non-cash items included in net income.  Please see slide 25 for a reconciliation of Operating Earnings and Operating Earnings per Share to GAAP net income and GAAP net income per share.

5

6

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Q4 Highlights

Investment and Portfolio Activity

Mezzanine Loan, Hotel Portfolio

$50 million junior mezzanine loan secured by a pledge of the equity interest in a borrower that owns

three full-service conference hotels located in Dallas, TX, Denver, CO and St. Louis, MO, totaling 3,981

keys

Part of a new $410 million, four-year floating rate financing comprised of a $295 million first mortgage

loan and a $115 million mezzanine loan, which was bifurcated into a $65 million senior mezzanine loan

and the $50 million junior mezzanine loan

Appraised

LTV

–

61%;

Interest

rate

–

LIBOR

+

10.9%;

30-year

amortization;

Origination

Fee

–

0.5%

Underwritten IRR

(1)

~ 13%

Whole Loan, Condominium Conversion, New York, NY

$80

million

whole

loan

commitment

for

a

condominium

conversion

located

in

the

TriBeCa

neighborhood of NYC; The property will have 66 units with approximately 96,000 net salable square

feet and approximately 3,000 square feet of retail space

$45 million first mortgage loan and $0.4 million of a $35 million mezzanine loan were funded at

closing; the balance is expected to be funded throughout the conversion process

Initial term of two years, with two 12-month extensions, subject to completion hurdles

Interest rate –

LIBOR+8.5% (0.5% LIBOR floor); 1.0% origination fee; 1.0% exit fee

Underwritten

loan-to-net

sellout

(assuming

loan

is

fully

funded)

–

55%

Underwritten unlevered IRR

(1) ~

11%

(1)

The

internal

rates

of

return

(“IRR”)

for

the

investments

listed

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 Company’s master repurchase agreement with Wells Fargo Bank, N.A. (“Wells Facility”).   The calculation for the New York City whole loan also assumes certain estimates with respect to the timing and magnitude of

future fundings for the

remaining commitments and associated loan repayments, as well as

assuming no defaults.  There can be no assurance the actual IRRs will equal the underwritten IRRs shown. See “Risk Factors”

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 over time.

6

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Q4 Highlights

Capital Markets Activity

Common Stock Offering

Completed

an

underwritten

public

offering

of

7,404,460

shares

of

common

stock,

including

the

partial

exercise

of

the

underwriters’

option to purchase additional shares, raising net proceeds of approximately $124.1 million

Portfolio Summary

Total investments with an amortized cost of $669 million at December 31, 2012

Current

weighted

average

underwritten

IRR

of

approximately

12.7%

and

levered

weighted

average

underwritten

IRR

of approximately 14.1% at December 31, 2012

(1)

Book Value

GAAP book value of $16.43 per share as of December 31, 2012

Fair value of $16.84 per share as of December 31, 2012

(2)

ARI closed at $17.36 on February 26, 2013, a 5.7% premium to GAAP book value per share

(1)

The internal rates of return (“IRR”) for the investments listed 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. The calculation also assumes extension options on the Wells Facility with respect to the Hilton CMBS are exercised. The calculation for the New York City whole loan also assumes certain estimates with respect to the timing and magnitude of

future fundings for the remaining commitments and associated loan repayments, as well as assuming no defaults.There can be no assurance the actual IRRs will equal the underwritten IRRs shown. See “Risk Factors” 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 over time.  Substantially all of the Company’s borrowings under the Company's master repurchase facility with JPMorgan Chase

Bank, N.A. (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 levered weighted average underwritten IRR is additionally dependent upon the Company re-borrowing

approximately $53 million under the JPMorgan Facility or any replacement facility.  Without such re-borrowing, the levered weighted average IRR with regard to its portfolio of first mortgage loan will be significantly lower than the amount shown above, as indicated by the

current weighted average underwritten IRR above.

(2)

The Company carries loans at amortized cost and its CMBS securities are marked to market.  Management has estimated that the fair value of the Company’s financial assets at December 31, 2012 was approximately $11.5 million greater than the carrying value of the Company’s

investment portfolio as of the same date.  This represents a premium of $0.41 per share over the Company's GAAP book value as of December 31, 2012.

7

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Subsequent Events

Subsequent Events

Mezzanine Loan –

Multifamily Conversion, New York, NY

$18

million

mezzanine

loan

commitment

secured

by

a

pledge

of

the

equity

interests

in

the

owner

of

two buildings in Midtown Manhattan which contain a total of 181,637 rentable square feet that is being

converted into 215 multifamily units

Part of a $90 million, three year, interest only, floating rate financing comprised of the $18 million

mezzanine loan

and a $72 million first mortgage loan

Interest rate –

LIBOR+10.0%, increasing to LIBOR+11.0% as certain funding hurdles are met; 1.0%

origination fee

Underwritten

LTV

(assuming

first

mortgage

loan

is

fully

funded)

–

60%

Underwritten  IRR

(1)

~ 13%

Mezzanine Loan –

Hotel Portfolio, Rochester, MN

$25 million mezzanine loan secured by a pledge of the equity interests in the owner of a portfolio of

four hotels totaling 1,231 keys located in Rochester, Minnesota

Part of a $145 million, five-year, fixed-rate financing comprised of a $120 million first mortgage loan

and the $25 million mezzanine loan provided in connection with the acquisition of the portfolio

Interest

rate

–

11.0%;

Appraised

LTV

–

69%

Underwritten IRR

(1)

~ 12%

(1)

The internal rates of return (“IRR”) for the investments listed 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. There can be no assurance the actual IRRs will equal the underwritten IRRs shown. See “Risk Factors” 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 over time. 

8

ARI –

Subsequent Events (cont.)

Mezzanine

Loan

–

Condominium

Development,

New

York,

NY

$60

million

mezzanine

loan

commitment

secured

by

a

pledge

of

preferred

equity

interests

in

the

owner

of a to-be-developed 352,624 net saleable square foot, 57-story, 146-unit condominium tower located in

the TriBeCa neighborhood of New York City

$46 million funded at closing with the remaining $14 million expected to be funded in six months

following closing

Interest

rate

–

13.25%;

1.0%

origination

fee

and

1.0%

exit

fee

Initial term of 54 months, with one extension option for 12-months

Underwritten

loan-to-net

sellout

(assuming

loan

is

fully

funded)

–

55%;

Underwritten  IRR

(1)

~ 16%

Repayments

Principal repayment on two mezzanine loans totaling $50 million secured by a portfolio of shopping

centers

Received

$2.5

million

yield

maintenance

payment;

Total

realized

IRR

on

investment

–

15%

Full principal repayment on repurchase agreement secured by CDO bonds

Total

realized

IRR

on

investment

–

17%

9

(1)

The internal rates of return (“IRR”) for the investment listed reflects 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. The calculation for this investment also assumes

certain estimates with respect to the timing and magnitude of future fundings for the remaining commitments and associated loan repayments, as well as assuming no defaults.There

can be no assurance the actual IRRs will equal the underwritten IRRs shown. See “Risk Factors” 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 over time.

Total

YTD

2013

Investment

Activity

-

$103

million

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

Subsequent Events

10

ARI –

Subsequent Events (cont.)

Subsequent Events

Amendment to JP Morgan Facility

Extended the term of the facility for two years (one-year term with one, 364 day extension)

Pricing to remain at LIBOR+2.50%

ARI paid a 0.5% fee for the first year and will pay a 0.25% extension fee for the 364 day extension

Amendment to Wells Facility

Reduced

interest

rate

for

outstanding

borrowings

used

to

finance

AAA

CMBS

to

LIBOR+1.05%

from

LIBOR+1.25% -

1.50%

Reduced

interest

rate

for

outstanding

borrowings

used

to

finance

Hilton

CMBS

to

LIBOR+1.75%

from

LIBOR+2.35%

Extended

the

term

for

the

outstanding

borrowings

used

to

finance

the

AAA

CMBS

until

March

2014

Corporate Governance

Board of Directors appointed Megan Gaul to the positions of Chief Financial Officer, Treasurer and

Secretary, effective April 1, 2013

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

11

ARI –

Portfolio Overview

Asset Type

($000s)

Amortized

Cost

Borrowings

Equity

at Cost

Remaining

Weighted

Average Life    

(years )

(1)

Current

Weighted

Average

IRR

(2)(3)

Levered

Weighted

Average

IRR

(4)

First Mortgage Loans

(2)

$142,921

$3

$142,918

2.6

10.8%

15.6%

Subordinate Loans

246,246

-

246,246

4.7

13.6

13.6

Repurchase Agreements

6,598

-

6,598

1.2

13.7

13.7

CMBS -

AAA

203,463

176,827

26,636

1.8

15.3

15.3

CMBS -

Hilton

70,250

48,328

21,922

2.9

11.6

11.6

Investments at December 31, 2012

$669,478

$225,158

$444,320

3.1 Years

12.7%

14.1%

As of December 31, 2012.

(1)

Remaining Weighted Average Life assumes all extension options are exercised.

(2)

Borrowings under the Company’s master repurchase facility with JPMorgan (the “JPMorgan Facility”) bear interest at LIBOR plus 250 basis points, or 2.7% at December 31, 2012. The IRR calculation further assumes the JPM Facility or any replacement

facility will remain available over the life of these investments.

(3)

The 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. The calculation

also assumes extension options on the Wells Facility with respect to the Hilton CMBS are exercised.

The calculation for the New York City whole loan also assumes certain estimates with respect to

the timing and magnitude of future fundings for the remaining commitments and associated loan repayments, as well as assuming no

defaults.

There can be no assurance the actual IRRs will equal the underwritten IRRs shown in the table. See “Risk Factors”

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.

(4)

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 levered weighted average IRR with

regard to its portfolio of first mortgage loans is additionally dependent upon the Company re-borrowing approximately $53,000 under the JPMorgan Facility or any replacement facility.

Without such re-borrowing, the levered weighted average IRRs will be as

indicated in the current weighted average IRR column above.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

12

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI –

Portfolio Overview

Diversified Investment Portfolio with Amortized Cost Basis of $669 million

Net Invested Equity at Amortized Cost Basis

Gross Assets at Amortized Cost Basis

CMBS -

AAA

30%

CMBS -

Hilton

10%

First Mortgages

21%

Subordinate

Loans

37%

Repurchase

Agreements

1%

CMBS -

AAA

6%

CMBS -

Hilton

5%

First Mortgages

32%

Repurchase

Agreements

1%

Subordinate

Loans

55%

12

ARI –

Portfolio Diversification

The portfolio is diversified by property type and geographic location

Geographic Diversification by Net Equity

Property Type by Net Equity

(1)

Other category includes the subordinate financing on a ski resort and a first mortgage loan on a development site with income producing parking lots.

Securities

12%

Residential

10%

Hotel

36%

Office

11%

Retail

17%

Mixed

Use/Other(1)

14%

New York City

36%

Northeast

(excluding NYC)

5%

Securities

12%

Southeast

5%

Mid-Atlantic

12%

Midwest

7%

West

16%

Southwest

7%

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

13

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI

–

Loan

Portfolio

-

Maturity

and

Type

(1)

Based upon Face Amount of Loans; Does not include CMBS (AAA or Hilton) or repurchase agreement investment secured by CDO bond.

Fully Extended Loan Maturity Schedule ($000s)

(1)

Loan Position and Rate Type

(1)

14

$17.3

$-

$99.3

$116.2

$120.0

$-

$50.0

$8.9

$-

$16.5

$0

$20

$40

$60

$80

$100

$120

$140

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Senior Loan

Fixed

21%

Subordinate 

Loan Fixed

40%

Subordinate

Loan Floating

23%

Senior Loan

Floating

16%

15

ARI –

Loan Portfolio –

Loan Level LTV (Through Last Invested Dollar)

First Mortgage Loans

Subordinate Financing

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Description ($ in thousands)

Location

Balance at

December  31,

2012

Starting

LTV

Ending

LTV

(1)

Subordinate -

Hotel Portfolio

Various

49,950

$             

53%

61%

Subordinate -

Ski Resort

California

40,000

$             

29%

56%

Subordinate -

Retail

Various

30,000

$             

58%

68%

Subordinate -

Retail

Virginia

26,243

$             

60%

74%

Subordinate -

Hotel Portfolio

New York

25,000

$             

40%

60%

Subordinate -

Retail

Various

20,000

$             

58%

72%

Subordinate -

Hotel 

New York

15,000

$             

51%

63%

Subordinate -

Hotel

New York

15,000

$             

51%

65%

Subordinate -

Office

Missouri

9,979

$               

62%

72%

Subordinate -

Office

Michigan

8,912

$               

53%

68%

Subordinate -

Mixed Use

North Carolina

6,525

$               

65%

77%

Subordinate -

Condo Conversion

(2)

New York

350

$                  

31%

55%

Total

246,959

$          

Description ($ in thousands)

Location

Balance at

December  31,

2012

Starting

LTV

Ending

LTV

(1)

First Mortgage -

Condo Conversion

(2)

New York

45,000

$             

0%

31%

First Mortgage -

Hotel

New York 

31,571

$             

0%

40%

First Mortgage -

Office

New York

27,419

$             

0%

53%

First Mortgage -

Hotel

Maryland

25,273

$             

0%

56%

First Mortgage -

Parking/Development Site

(3)

Massachusetts

17,287

$             

0%

21%

Total

146,550

$          

(1)

Ending LTV represents the current loan balance as a percentage of the value as of the date of investment for all loans except the $31,633 New York, NY hotel loan, which is as of March 2011.

(2)

Both loans are for the same property; Ending LTV for the Condominium Conversion mezzanine loan is based upon the committed amount of $35 million.  

(3)

Ending LTV is based upon the aggregate face value ($23.8 million) of the senior sub-participation interests at the date of investment; ARI purchased the senior sub-participation interests for $17.8 million (75%

of face value).

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

16

ARI –

Senior Loan Portfolio

Description ($000’s)

Date of

Investment

Maturity

Date

(1)

Original

Face

Amount

Current Face

Amount

Coupon

Amortization

Schedule

Property

Size

LTV

(2)

Hotel

New York, NY

Jan-10

Feb-15

$32,000

$31,571

8.25%

30 year

151

rooms

40%

Office Condo (Headquarters)

New York, NY

Feb-10

Feb-15

28,000

27,419

8.00

30 year

73,419

sq. ft.

53%

Hotel

Silver Spring, MD

Mar-10

Apr-15

26,000

25,273

9.00

25 year

263

rooms

56%

Parking/Development Site

Boston, MA

Apr-12

Dec-13

23,844

17,287

1.98%

(L+1.72%)

Interest only

20 acres

21%

Condominium Conversion

(3)

New York, NY

Dec-12

Jan-15

45,000

45,000

9.00

Interest only

66 units

31%

Total

$154,844

$146,550

7.82%

(1)

Maturity date assumes all extension options are exercised.

(2)

LTV represents the current loan balance as a percentage of the value as of the date of investment for all loans except the $31,633 New York, NY hotel loan, which is as of March 2011.

(3)

Includes a 1.00% origination fee, a LIBOR floor of 0.50%, two one-year extension options subject to certain conditions and the payment of a 0.50% fee for each extension.

(4)

Interest rate includes 10% current payment with a 3% accrual.

Description ($000’s)

Date of

Investment

Maturity

Date

Original

Face

Amount

Current Face

Amount

Coupon

Amortization

Schedule

Property

Size

LTV

(2)

Repurchase Agreement

(4)

Sept-10

Mar-14

$47,439

$6,598

13.00%

Interest only

N/A

N/A

Total

$47,439

$6,598

13.00%

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

17

ARI –

Subordinate Loan Portfolio

Description ($000’s)

Date of

Investment

Maturity

Date

(1)

Original Face 

Amount

Current Face 

Amount 

Coupon

Amortization

Schedule

LTV

(2)

Senior Mezz –

Retail

Various

Dec-09

Dec-19

(3)

$30,000

$30,000

12.24%

Interest

only

68%

Junior Mezz –

Retail

Various

Dec-09

Dec-19

(3)

20,000

20,000

14.00

Interest

only

72%

Office

Troy, MI

May-10

Jun-20

9,000

8,912

13.00

25 year

68%

Ski Resort

Mammoth Lakes, CA

Apr-11

May-17

(4)

40,000

40,000

14.00

Interest

only

56%

Hotel Portfolio

New York,

NY

(5)

Aug-11

July-16

(6)

25,000

25,000

11.49

(L+10.49%)

Interest

only

60%

Retail Center

Woodbridge, Virginia 

(7)

Oct-11

Oct-16

(7)

25,000

26,243

14.00

Interest

only

74%

Hotel

New York, NY

(8)

Jan-12

Jan-15

15,000

15,000

12.00

Interest       

only

63%

Hotel

New York, NY

(9)

Mar-12

Feb-16

15,000

15,000

11.50

(L+11.00%)

Interest      

only

65%

(1)  Maturity date assumes all extension options are exercised.

(2)  LTV represents the current loan balance as a percentage of the value as of the date of investment.

(3) 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%. 

(4) 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%.

(5) 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.

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

(7) 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.

(8) 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.

(9) 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.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

18

Description ($000’s)

Date of

Investment

Maturity

Date

(1)

Original Face

Amount

Current Face

Amount

Coupon

Amortization

Schedule

LTV

(2)

Mixed Use

Chapel Hill, NC

July-12

July-22

6,525

6,525

11.10

Interest       

only

77%

Office

Kansas City, MO

Sept-12

Sept-22

10,000

9,979

11.75

30 year

72%

Hotel Portfolio

(3)

Various Locations

Nov-12

Nov-15

50,000

49,950

11.11

30 Year

61%

Condominium Conversion

(4)

New York, NY

Dec-12

Jan-15

350

350

9.00%

Interest Only

55%

Total

$245,875

$246,959

12.46%

ARI –

Subordinate Loan Portfolio (cont.)

(1)

Maturity date assumes all extension options are exercised.

(2)

LTV represents the current loan balance as a percentage of the value as of the date of investment.

(3)

Includes a 0.50% origination fee, a one-year extension option subject to certain conditions and a 0.25% extension fee.

(4)

Includes a 1.00% origination fee on the entire balance of the loan (funded and unfunded), a LIBOR floor of 0.50%, two one-year extension options subject to certain conditions and the payment of a 0.50% fee for each extension.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

19

ARI –

CMBS Portfolio

Face

Amortized

Cost

Remaining Weighted

Average Life with

Extensions (years)

Estimated

Fair Value

Debt

Net

Equity at

Cost

CMBS –

AAA

$200,104

$203,463

1.8

$205,327

$176,827

26,636

CMBS –

Hilton

73,239

70,250

2.9

73,561

48,328

21,922

CMBS –

Total

$273,343

273,713

2.1

$278,888

$225,155

$48,558

CMBS

-

AAA

CUSIP

Description

07388YAB8

BSCMS 07-PW16 A2

07401DAB7

BSCMS 2007-PW18 A2

12513YAC4

CD 2007-CD4 A2B

46629MAB1

JPMCC 2006-LDP8 A2

61754KAC9

MSC 07-IQ14 A2

92978YAB6

WBCMT 07-C32 A2

CMBS

-

AAA

CUSIP

Description

36246LAB7

GSMS 2007-GG10 A2

46630JAK5

JPMCC 2007-LDPX A2S

61751NAD4

MSC 2007-HQ11 A31

92978TAB7

WBCMT 2007-C31 A2

CMBS

–

Hilton

CUSIP

Description

05956KAA6

BALL 2010-HLTN

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

20

Portfolio Metrics –

Quarterly Migration Summary

(1)

The 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. The calculation

also assumes extension options on the Wells Facility with respect to the Hilton CMBS are exercised.

The calculation for the New York City whole loan also assumes certain estimates with respect to

the timing and magnitude of future fundings for the remaining commitments and associated loan repayments, as well as assuming no

defaults. 

There can be no assurance the actual IRRs will equal the underwritten IRRs shown in the table. See “Risk Factors”

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.

(2)

Represents an underwritten levered weighted

average

IRR.

The

Company's

ability

to

achieve

the

underwritten

levered

weighted

average

IRR,

additionally

depends

upon

the

Company

re-borrowing

approximately

$53,000

under

the

JPMorgan

Facility or any

replacement facility with regard to its portfolio of first mortgage loans.

Without such re-borrowing, the levered weighted average IRR will be significantly lower than the amount shown above, as indicated in the weighted average IRR column on page 11.

(3)

Does not include CMBS (AAA or Hilton) or repurchase agreement investment secured by CDO bond.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

Portfolio Metrics ($ in thousands)

Q4 2012

Q3 2012

Q2 2012

Q1 2012

Q4 2011

(Investment balances represent amortized cost)

First Mortgage Loans

142,921

$        

104,101

$        

103,320

$        

108,817

$        

109,006

$        

Subordinate Loans

246,246

196,177

179,602

179,336

149,086

Repurchase Agreement

6,598

10,975

41,696

47,439

47,439

CMBS -

AAA

203,463

223,781

280,697

330,413

554,716

CMBS -

Hilton

70,250

70,521

70,719

-

-

Total Investments

669,478

$        

605,555

$        

676,034

$        

666,005

$        

860,247

$        

(Investment balances represent net equity)

First Mortgage Loans

142,918

$        

104,098

$        

50,260

$         

40,210

$         

40,286

$         

Subordinate Loans

246,246

196,177

179,602

179,336

149,086

Repurchase Agreement

6,598

10,975

41,696

47,439

47,439

CMBS -

AAA

26,636

29,712

32,520

43,763

81,409

CMBS -

Hilton

21,922

21,623

21,260

-

-

Net Equity in Investments at Cost

444,320

$        

362,585

$        

325,338

$        

310,748

$        

318,220

$        

Weighted Average IRR

(1)

14.1%

(2)

14.9%

(2)

15.0%

14.7%

14.2%

Weighted Average Duration

3.1 Years

3.3 Years

2.9 Years

2.8 Years

2.2 Years

Loan Portfolio Weighted Average Ending LTV

(3)

55.6%

58.0%

57.1%

59.3%

58.8%

Borrowings

225,158

$        

242,970

$        

350,696

$        

355,257

$        

542,027

$        

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

ARI had total borrowings outstanding of $225 million at December

31, 2012

ARI’s borrowings had the following remaining maturities at December 31, 2012:

Financing Overview

Facility ($000s)

Debt Balance

Weighted

Average

Remaining

Maturity

(1)

Cost of

Funds

Hedged

Cost of

Funds

Wells Facility

(1)

$225,155

1.1 years

1.8%

1.9%

JP Morgan Facility

(2)

3

5 days

2.7%

2.7%

Total Borrowings at December 31, 2012

$225,158

1.1 years

1.8%

1.9%

Facility ($000s)

Less than 1

year

1 to 3 years

3 to 5 years

Total

Wells Facility

(1)

$179,068

$46,087

$-

$225,155

JP Morgan Facility

(2)

3

-

-

3

Total Borrowings at December 31, 2012

$179,071

$46,087

$-

$225,158

21

(1)

Assumes extension options on Wells Facility are exercised. At December 31, 2012, the interest rate on the outstanding borrowings on the Wells Facility was LIBOR plus 125bps,

150bps or 235bps depending on the collateral pledged.  In February, 2013, the Wells Facility was amended and the interest rate with respect to outstanding borrowings used to

finance AAA CMBS was reduced to LIBOR plus 105bps and the interest rate with respect to outstanding borrowings used to finance the Hilton CMBS was reduced to LIBOR plus

175bps.  In addition, the term of the Wells Facility with respect to the outstanding borrowings used to finance the Hilton CMBS was extended to March 2014.

The JP Morgan Facility was renewed for a term of two years (one year renewal with a 364 day extension) in February, 2013. 

(2)

22

Financials

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

23

Consolidated Balance Sheets

(in thousands—except share and per share data)

December 31, 2012

December 31, 2011

Assets:

Cash

108,619

$                 

21,568

$                  

Securities available-for-sale, at estimated fair value

67,079

302,543

Securities, at estimated fair value

211,809

251,452

Commercial mortgage loans, held for investment

142,921

109,006

Subordinate loans, held for investment

246,246

149,086

Repurchase agreements, held for investment

6,598

47,439

Principal and interest receivable

4,277

8,075

Deferred financing costs, net

678

2,044

Other assets

203

17

Total Assets

788,430

$                 

891,230

$                 

Liabilities and Stockholders' Equity

Liabilities:

Borrowings under repurchase agreements

225,158

$                 

290,700

$                 

TALF Borrowings

-

251,327

Derivative instruments, net

155

478

Accounts payable and accrued expenses

1,265

1,746

Payable to related party

2,037

1,298

Dividends payable

12,891

8,703

Total Liabilities

241,506

554,252

Stockholders' Equity:

Preferred stock, $0.01 par value, 50,000,000 shares authorized and 3,450,000 shares issued and outstanding in 2012

35

-

Common stock, $0.01 par value, 450,000,000 shares authorized 28,044,106 and 20,561,032 shares issued and

outstanding in 2012 and 2011, respectively

280

206

Additional paid-in-capital

546,065

336,209

Retained earnings

574

-

Accumulated other comprehensive income (loss)

(30)

563

Total Stockholders' Equity

546,924

336,978

Total Liabilities and Stockholders' Equity

788,430

$                 

891,230

$                 

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

24

Consolidated Statement of Operations

2012

2011

2012

2011

Net interest income:

Interest income from securities

3,120

$              

5,904

$              

15,347

$           

25,323

$           

Interest income from commercial mortgage loans

2,930

2,267

10,780

9,153

Interest income from subordinate loans

7,350

4,817

24,666

13,678

Interest income from repurchase agreements

366

1,576

6,286

4,764

Interest expense

(1,463)

(3,618)

(8,402)

(14,454)

Net interest income

12,303

10,946

48,677

38,464

Operating expenses:

General and administrative expenses (includes $380 and $3,624

of non-cash stock based compensation in 2012 and $634 and

$1,788 in 2011, respectively)

(1,315)

(1,563)

(8,543)

(5,652)

Management fees to related party

(2,040)

(1,297)

(6,139)

(4,728)

Total operating expenses

(3,355)

(2,860)

(14,682)

(10,380)

Interest income from cash balances

6

1

7

13

Realized gain on sale of securities

-

-

262

-

Unrealized gain on securities

16

600

6,489

481

Loss on derivative instruments (includes unrealized gains

(losses) of $96 and $323 in 2012 and $426 and $(865) in 2011,

respectively)

(2)

(18)

(572)

(2,696)

Net income

8,968

$           

8,669

$           

40,181

$         

25,882

$         

Preferred dividends

(1,860)

-

(3,079)

-

Net Income available to common shareholders

7,108

$           

8,669

$           

37,102

$         

25,882

$         

Basic and diluted net income per share of common stock   

0.26

$               

0.41

$               

1.64

$               

1.35

$               

Basic and diluted weighted average common shares outstanding

27,297,600

20,561,032

22,648,819

18,840,954

Dividend declared per share of common stock

0.40

$               

0.40

$               

1.60

$               

1.60

$               

Three months ended December 31,

Twelve months ended December 31,

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

Reconciliation of Operating Earnings to Net Income

December 31, 2012

Earnings Per Share

(Diluted)

December 31, 2011

Earnings Per Share

(Diluted)

Operating Earnings:

Net income available to common stockholders

$7,108

$0.26

$8,669

$0.41

Adjustments:

Unrealized gain on securities

(16)

-

(600)

(0.03)

Unrealized gain on derivative instruments

(96)

-

(426)

(0.02)

Non-cash stock-based compensation expense

380

0.01

634

0.03

Total adjustments:

268

0.01

(392)

(0.02)

Operating Earnings

7,376

$0.27

$8,277

$0.39

Basic and diluted weighted average common shares outstanding

27,608,787

20,561,032

Three Months Ended

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

December 31, 2012

Earnings Per Share

(Diluted)

December 31, 2011

Earnings Per Share

(Diluted)

Operating Earnings:

Net income available to common stockholders

$37,102

$1.64

$25,882

$1.35

Adjustments:

Unrealized gain on securities

(6,489)

(0.29)

(481)

(0.03)

Unrealized (gain) loss on derivative instruments

(323)

(0.01)

865

0.05

Non-cash stock-based compensation expense

3,624

0.16

1,788

0.10

Total adjustments:

(3,188)

(0.14)

2,172

0.12

Operating Earnings

33,914

$1.50

$28,054

$1.47

Basic and diluted weighted average common shares outstanding

22,648,819

18,840,954

Twelve Months Ended

25

26

Financial Metrics –

Quarterly Migration Summary

(1)

Operating Earnings is a non-GAAP financial measure that is used to approximate cash available for distribution and is defined by the Company as net income, computed in accordance with GAAP, adjusted for (i) non-cash equity compensation expense (a portion of

which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding)

and (ii) any unrealized gains or losses or other non-cash items included in net income.  Please see slide 25 for a

reconciliation of Operating Earnings and Operating Earnings per Share to GAAP net income and GAAP net income per share.

(2)

The Company carries loans at amortized cost and its CMBS securities are marked to market.  Management estimates the fair value of the Company’s financial assets.

(3)

Return on common equity is calculated as annualized Operating Earnings for the period as a percentage of average stockholders equity for the period.

COMMERCIAL REAL ESTATE FINANCE, INC. (“ARI”)

Financial Metrics

($ in thousands, except per share data)

Q4 2012

Q3 2012

Q2 2012

Q1 2012

Q4 2011

Net Interest Income

12,303

$         

13,236

$         

11,951

$         

11,187

$         

10,946

$         

Management Fee

2,040

1,518

1,292

1,289

1,297

General and Administrative Costs

935

1,154

1,876

953

929

Non-Cash Stock Based Compensation

380

1,276

886

1,083

634

Net Income Available to Common Stockholders

7,108

$           

10,992

$         

9,910

$           

9,093

$           

8,669

$           

GAAP Diluted EPS

0.26

$              

0.52

$              

0.47

$              

0.43

$              

0.41

$              

Operating Earnings

(1)

7,375

$           

9,218

$           

8,526

$           

8,795

$           

8,278

$           

Operating EPS

(1)

0.27

$              

0.44

$              

0.41

$              

0.42

$              

0.39

$              

Distributions Declared to Common Stockholders

0.40

$              

0.40

$              

0.40

$              

0.40

$              

0.40

$              

GAAP Book Value per Common Share

16.43

$           

16.58

$           

16.59

$           

16.46

$           

16.39

$           

Fair Value per Common Share

(2)

16.84

$           

17.16

$           

17.22

$           

17.04

$           

16.80

$           

Total Stockholders' Equity

546,924

$        

427,421

$        

341,518

$        

338,377

$        

336,978

$        

Return on Common Equity Based on Operating Earnings

(3)

6.8%

10.8%

10.0%

10.4%

9.8%