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

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FORWARD-LOOKING INFORMATION

We make 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, we claim the protections of
the safe harbor for forward-looking statements contained in such Sections.
Forward-looking statements are subject to substantial risks and uncertainties,
many of which are difficult to predict and are generally beyond our control.
These forward-looking statements include information about possible or assumed
future results of our business, financial condition, liquidity, results of
operations, plans and objectives. When we use the words "believe," "expect,"
"anticipate," "estimate," "plan," "continue," "intend," "should," "may" or
similar expressions, it intends to identify forward-looking statements.
Statements regarding the following subjects, among others, may be
forward-looking: the macro- and micro-economic impact of the COVID-19 pandemic,
increasing interest rates and inflation; the severity and duration of the
COVID-19 pandemic, including the emergence and spread of COVID-19 variants;
actions taken by governmental authorities to contain the COVID-19 pandemic or
treat its impact; the efficacy of the vaccines or other remedies and the speed
of their distribution and administration; the impact of the COVID-19 pandemic on
our financial condition, results of operations, liquidity and capital resources;
market trends in our industry, interest rates, real estate values, the debt
securities markets or the general economy; the demand for commercial real estate
loans; our business and investment strategy; our operating results; actions and
initiatives of the U.S. government and governments outside of the United States,
changes to government policies and the execution and impact of these actions,
initiatives and policies; the state of the economy generally or in specific
geographic regions; economic trends and economic recoveries; our ability to
obtain and maintain financing arrangements, including secured debt arrangements
and securitizations; the timing and amount of expected future fundings of
unfunded commitments; the availability of debt financing from traditional
lenders; the volume of short-term loan extensions; the demand for new capital to
replace maturing loans; expected leverage; general volatility of the securities
markets in which we participate; changes in the value of our assets; the scope
of our target assets; interest rate mismatches between our target assets and any
borrowings used to fund such assets; changes in interest rates and the market
value of our target assets; changes in prepayment rates on our target assets;
effects of hedging instruments on our target assets; rates of default or
decreased recovery rates on our target assets; the degree to which hedging
strategies may or may not protect us from interest rate volatility; impact of
and changes in governmental regulations, tax law and rates, accounting, legal or
regulatory issues or guidance and similar matters; our continued maintenance of
our qualification as a real estate investment trust ("REIT") for U.S. federal
income tax purposes; our continued exclusion from registration under the
Investment Company Act of 1940, as amended (the "1940 Act"); the availability of
opportunities to acquire commercial mortgage-related, real estate-related and
other securities; the availability of qualified personnel; estimates relating to
our ability to make distributions to our stockholders in the future; our present
and potential future competition; and unexpected costs or unexpected
liabilities, including those related to litigation.

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.
Refer to "Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q and our
Annual Report. These and other risks, uncertainties and factors, including those
described in the annual, quarterly and current reports that we file with the
SEC, could cause our actual results to differ materially from those included in
any forward-looking statements we make. 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, 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.

Overview

We are a Maryland corporation and have elected to be taxed as a REIT for U.S.
federal income tax purposes. We primarily originate, acquire, invest in and
manage performing commercial first mortgage loans, subordinate financings, and
other commercial real estate-related debt investments. These asset classes are
referred to as our target assets.

We are externally managed and advised by the Manager, an indirect subsidiary of Apollo, a high-growth global alternative asset manager with assets under management of approximately $515.0 billion of the June 30, 2022.

The Manager is led by an experienced team of senior real estate professionals
who have significant expertise in underwriting and structuring commercial real
estate financing transactions. We benefit from Apollo's global infrastructure
and operating platform, through which we are able to source, evaluate and manage
potential investments in our target assets.

Current market conditions

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During the first quarter of 2020, there was a global outbreak of COVID-19, which
was declared by the World Health Organization as a pandemic. The ongoing
COVID-19 pandemic has adversely impacted global economic activity and has
contributed to significant volatility in financial markets. Due to various
uncertainties, including the rise of new variants, the severity of such new
variants, disparities in vaccination rates and vaccine hesitancy, the ultimate
duration of the pandemic, and additional actions that may be taken by
governmental authorities, further business risks could arise. Although more
normalized activities have resumed and there has been improved global economic
activity due to global and domestic vaccination efforts, we are not in a
position to estimate the ultimate impact COVID-19 and its variants will have on
our business and the economy as a whole, including longer-term macroeconomic
effects on supply chains, inflation and labor shortages. For example, in
response to recent inflationary pressure, the U.S. Federal Reserve and other
global central banks have raised interest rates in 2022 and have indicated
likely further interest rate increases. The effects of COVID-19 and its variants
have adversely impacted the value of our assets, business, financial condition,
results of operations and cash flows, and our ability to operate successfully.
Some of the factors that impacted us to date and may continue to affect us are
outlined in Item 1A. "Risk Factors."

Significant Accounting Policies and Use of Estimates

A summary of our critical accounting policies is set forth in our Annual Report
under "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Critical Accounting Policies and Use of Estimates."

Real estate owned (and related debts)

From time to time, we may obtain legal title to the collateral from our loans
due to non-performance. This acquisition of real estate is accounted for using
the acquisition method under Accounting Standards Codification ("ASC") Topic
805, "Business Combinations." We recognize and measure identifiable assets
acquired, liabilities assumed and any non-controlling interest in the acquiree,
if applicable, based on their relative fair values. Once real estate assets have
been recorded at fair value they are evaluated for impairment on a quarterly
basis. Please refer to "Note 2 - Summary of Significant Accounting Policies,"
"Note 3 - Fair Value Disclosure," and "Note 5 - Assets and Liabilities Related
to Real Estate Owned" for more information regarding real estate owned and our
valuation methodology.

Real estate assets acquired may include land, building, furniture, fixtures and
equipment ("FF&E"), and intangible assets. The fair value of land is determined
by utilizing the market or sales comparison approach, which compares the
property to similar properties in the marketplace. Although we exercise
significant judgment to identify similar properties, and may also consult
independent third-party valuation experts to assist, our assessment of fair
value is subject to uncertainty and sensitive to our selection of comparable
properties.

We estimate the fair value of any building and FF&E by the cost approach which
measures fair value as the replacement cost of these assets. This approach also
requires significant judgment, and our estimate of replacement cost could vary
from actual replacements costs.

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

From time to time, real estate assets are classified as held for sale in the
period in which the six criteria under ASC Topic 360, "Property, Plant, and
Equipment" are met: (1) we commit to a plan and have the authority to sell the
asset; (2) the asset is available for sale in its current condition; (3) we have
initiated an active marketing plan to locate a buyer for the asset; (4) the sale
of the asset is both probable and expected to qualify for full sales recognition
within a period of 12 months; (5) the asset is being actively marketed for sale
at a price that is reflective of its current fair value; and (6) we do not
anticipate changes to our plans to sell the asset. Once a real estate asset is
classified as held for sale, depreciation is no longer recorded, and the asset
is reported at the lower of its carrying value or fair value less cost to sell.


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We determine the fair value of the real estate asset classified as held for sale
using valuation methodologies appropriate to what is included within the
disposal group, such as the market or sales comparison approach for land and the
cost approach for any building and FF&E. Although we exercise significant
judgment in generating the assumptions employed in these methodologies,
ultimately, the real estate asset's fair value is subject to uncertainty, as the
actual sales price of the real estate asset could differ from those assumed in
our valuations. Further, if it is determined that the asset should be reported
at its carrying value, the actual sales price of the real estate asset could
also differ from this amount.

Current Expected Credit Losses (“CECL”)

We measure and record potential expected credit losses related to our loan
portfolio in accordance with the CECL Standard. The CECL Standard requires an
entity to consider historical loss experience, current conditions, and a
reasonable and supportable forecast of the macroeconomic environment. The FASB
recognizes the WARM method as an acceptable approach for computing current
expected credit losses. We have adopted the WARM method to determine the General
CECL Allowance for the majority of loans in our portfolio, applied on a
collective basis by assets with similar risk characteristics. If we determine
that a borrower or sponsor is experiencing financial difficulty, we will record
loan-specific allowances (our Specific CECL Allowance). Refer to "Note 2 -
Summary of Significant Accounting Policies" to our consolidated financial
statements of our most recent annual report on Form 10-K and "Note 4 Commercial
Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for further
discussion regarding CECL.

General allowance CECL

There are various significant assumptions required to estimate our General CECL
Allowance which include deriving and applying an annual historical loss rate,
forecasting and analyzing the impacts of macroeconomic conditions and the timing
of expected repayments, satisfactions and future fundings.

We derive an annual historical loss rate based on a CMBS database with
historical losses from 1998 through the third quarter of 2022 provided by a
third party, Trepp LLC. We apply various filters to arrive at a CMBS dataset
most analogous to our current portfolio from which to determine an appropriate
historical loss rate. Selecting these filters requires the use of significant
judgment. The historical loss rate, and ultimately General CECL Allowance we
calculated, is sensitive to the CMBS dataset that we select.

We adjust our determined annual historical loss rate based on our outlook of the
macroeconomic environment, for a reasonable and supportable forecast
period-which we have determined to be one year. We determine our expectations
for the macroeconomic environment by analyzing various market factors and assess
the potential impact on our portfolio. This assessment requires the use of
significant judgment in selecting relevant market factors and our expectations
of the future macroeconomic environment. The future macroeconomic environment is
subject to uncertainty as the actual future macroeconomic environment could vary
from our expectations, which will impact our General CECL Allowance.

Additionally, there are assumptions provided to us by the Manager that represent
their best estimate as to expected loan maturity dates, future fundings, and
timing of loan repayments. These assumptions, although made with the most
available information at the time of the estimate, are subjective and actual
activity may not follow the estimated schedule. These assumptions impact the
future balances that the loss rate will be applied to and as such impact our
General CECL Allowance. As we acquire new loans and the Manager monitors loan
and sponsor performance, these estimates may change each period.

Specific CECL allowance

When we determine that a borrower or sponsor is experiencing financial
difficulty, we evaluate the related loan for loan-specific allowances, under the
practical expedient per the guidance. Determining that a borrower or sponsor is
experiencing financial difficulty requires the use of significant judgment and
can be based on several factors subject to uncertainty. These factors can
include, but are not limited to, whether cash from the borrower's operations are
sufficient to cover current and future debt service requirements, the borrower's
ability to potentially refinance the loan, and other circumstances that can
affect the borrower's ability to satisfy their obligations in accordance the
terms of the loan. When utilizing the practical expedient for collateral
dependent loans, the loan loss provision is determined as the difference between
the fair value of the underlying collateral, adjusted for estimated costs to
sell when applicable, and the carrying value of the loan (prior to the loan loss
provision), as repayment or satisfaction of a loan is dependent on a sale of the
underlying collateral. Collateral-dependent loans evaluated for a Specific CECL
Allowance are removed from the General CECL pool.

The fair value of the underlying collateral is determined by using method(s)
such as discounted cash flow, the market approach, or direct capitalization
approach. These methods require the use of key unobservable inputs, which are
inherently uncertain and subjective. Our estimate of fair value is sensitive to
both the valuation methodology selected and inputs used. Determining a suitable
valuation method and selecting the appropriate key unobservable inputs and
assumptions requires significant judgment and consideration of factors specific
to the underlying collateral being assessed. Additionally, the key
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unobservable inputs and assumptions used may vary depending on the information
available to us and market conditions as of the valuation date. As such, the
fair value that we derive and use in calculating our Specific CECL Allowance, is
subject to uncertainty and any actual losses, if incurred, could differ
materially from our provision.

Refer to “Note 2 – Summary of Significant Accounting Policies” to our Consolidated Financial Statements in our most recent Annual Report on Form 10-K for a complete listing and description of our significant accounting policies.

Operating results

All non-USD denominated assets and liabilities are translated to USD at the
exchange rate prevailing at the reporting date and income, expenses, gains, and
losses are translated at the prevailing exchange rate on the dates that they
were recorded.

Loan Portfolio Overview

The following table presents certain information regarding our loan portfolio in September 30, 2022 (in thousands of dollars):

                                                                                                    Weighted Average                                                          Equity at
                                                                     Weighted-Average Coupon          All-in Yield            Secured Debt                                    carrying
            Description                      Carrying Value                    (1)                       (1)(2)             Arrangements (3)       Cost of Funds(4)           value(5)
Commercial mortgage loans, net             $     8,013,469                             5.7  %                  6.5  %       $   5,364,119                     4.3  %       $  2,649,350
Subordinate loans and other lending                717,837                             6.5  %                  7.1  %                   -                       -               717,837
assets, net
Total/Weighted-Average                     $     8,731,306                             5.8  %                  6.5  %       $   5,364,119                     4.3  %       $  3,367,187


——-

(1)  Weighted-Average Coupon and Weighted-Average All-in Yield are based on the
applicable benchmark rates as of September 30, 2022 on the floating rate loans.
(2)   Weighted-Average All-in Yield includes the amortization of deferred
origination fees, loan origination costs and accrual of both extension and exit
fees. Weighted-Average All-in Yield excludes the benefit of forward points on
currency hedges relating to loans denominated in currencies other than USD.
(3)  Gross of deferred financing costs of $13.5 million.
(4)  Cost of funds includes weighted average spread and applicable benchmark
rates as of September 30, 2022 on secured debt arrangements.
(5)  Represents loan portfolio at carrying value less secured debt outstanding.

The following table sets out the details of our commercial mortgage portfolio and our portfolio of subordinated loans and other loan assets, on a loan-by-loan basis, at September 30, 2022 (in millions of dollars):

Commercial Mortgage Portfolio

                                                                                                                                   Construction
   #              Property Type              Risk Rating         

Date of origination Amortized cost Unfunded commitment Loan

       3rd Party Subordinate Debt    Fully-extended Maturity            
Location
1        Hotel                                    3                  10/2019                  $304                 $28                                           Y                        08/2024           Various, Spain
2        Hotel                                    3                  11/2021                   186                  20                                           Y                        11/2026           Various, UK/Ireland
3        Hotel                                    3                  05/2022                   178                  25                                           Y                        06/2027           Napa Valley, CA
4        Hotel                                    3                  04/2018                   152                  -                                                                     04/2023           Honolulu, HI
5        Hotel                                    3                  07/2021                   146                  33                                                                    08/2026           Various, US
6        Hotel                                    3                  09/2015                   146                  -                                                                     06/2024           Manhattan, NY
7        Hotel                                    3                  11/2021                   123                  41                  Y                                                 12/2026           St. Thomas, USVI
8        Hotel                                    3                  08/2019                   117                  -                                                                     08/2024           Puglia, Italy
9        Hotel                                    3                  10/2021                   99                   -                                                                     11/2026           New Orleans, LA
10       Hotel(3)(6)                              5                  03/2017                   98                   -                                                                     10/2022           Atlanta, GA
11       Hotel                                    3                  11/2018                   90                   -                                                                     12/2023           Vail, CO
12       Hotel                                    3                  12/2019                   60                   -                                                                     01/2025           Tucson, AZ
13       Hotel                                    3                  05/2021                   59                   2                                            Y                        06/2026           Fort Lauderdale, FL
14       Hotel                                    3                  05/2019                   52                   -                                                                     06/2024           Chicago, IL
15       Hotel                                    3                  12/2015                   42                   -                                                                     08/2024           St. Thomas, USVI
16       Hotel                                    3                  10/2021                   39                   39                                                                    10/2026           Lake Como, Italy
17       Hotel                                    3                  02/2018                   27                   -                                                                     11/2024           Pittsburgh, PA
18       Hotel                                    3                  12/2021                   21                   28                                                                    06/2025           Dublin, Ireland
19       Office                                   3                  01/2020                   224                  66                                           Y                        02/2025           Long Island City, NY
20       Office                                   3                  03/2022                   218                  47                                           Y                        04/2027           Manhattan, NY
21       Office                                   3                  02/2020                   188                  -                                                                     02/2025           London, UK
22       Office                                   3                  06/2019                   183                  13                                                                    08/2026           Berlin, Germany


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23     Office                               3         02/2022        144           -                              06/2025    Milan, Italy
24     Office                               3         02/2022        128          384           Y                 02/2027    London, UK
25     Office                               3         11/2017        121           -                              01/2023    Chicago, IL
26     Office(1)                            3         12/2017        103           -                      Y       10/2022    London, UK
27     Office                               3         06/2022        87            -                              06/2025    Rome, Italy
28     Office                               3         03/2018        86            -                      Y       07/2023    Chicago, IL
29     Office                               3         11/2021        33            38           Y                 11/2025    Milan, Italy
30     Retail                               3         04/2022        417           34                             04/2027    Various, UK
31     Retail                               3         10/2021        362           -                              10/2026    Various, UK
32     Retail                               3         08/2019        249           -                      Y       09/2025    Manhattan, NY
33     Retail                               3         05/2022        155           -                              06/2027    Various, US
34     Retail(3)                            5         11/2014        104           -                              09/2023    Cincinnati, OH
35     Residential(4)                       3         08/2022        354           4                              09/2024    Manhattan, NY
36     Residential                          3         12/2021        195           15                             12/2026    Various, UK
37     Residential                          3         12/2018        136           43                     Y       12/2023    Manhattan, NY
38     Residential                          3         12/2021        101           31                             01/2027    Manhattan, NY
39     Residential                          3         05/2022        89            4                              06/2027    Manhattan, NY
40     Residential                          3         05/2021        82            -                      Y       05/2026    Cleveland, OH
41     Residential                          3         12/2019        60            7                      Y       11/2025    Boston, MA
42     Residential                          3         04/2014        59            -                              07/2023    Various
43     Residential                          3         11/2014        50            -                              06/2023    Various, US
44     Residential                          3         12/2021        32            -                      Y       01/2026    Hallandale Beach, FL
45     Healthcare                           3         03/2022        372           -                              03/2027    Various, MA
46     Healthcare                           3         10/2019        180           -                              10/2024    Various, UK
47     Mixed Use                            3         12/2019        281           88           Y         Y       06/2025    London, UK
48     Mixed Use                            3         03/2022        134           42                     Y       03/2027    Brooklyn, NY
49     Mixed Use                            3         06/2022        59            58           Y         Y       06/2026    London, UK
50     Mixed Use                            3         12/2019        39            -                              09/2023    London, UK
51     Parking Garages                      3         05/2021        270           5                              05/2026    Various, US
52     Industrial                           3         03/2021        232           -                              05/2026    Various, Sweden
53     Portfolio(2)                         3         06/2021        207           20                             06/2026    Various, Germany
54     Caravan Parks                        3         02/2021        183           -                              02/2028    Various, UK
55     Urban Predevelopment(3)              5         01/2016        176           -                              09/2023    Miami, FL
       General CECL Allowance                                       (19)
       Subtotal / Weighted-Average
       Commercial Mortgage Loans           3.1                     $8,013        $1,115                          3.1 Years


Portfolio of subordinated loans and other loan assets

   #                 Property Type                 Risk Rating       

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

         Location
1        Residential(4)                                 3                05/2020                $232                    $-                                                 Y                       09/2024          Manhattan, NY
2        Residential(4)                                 3                06/2015                 187                    13                                                 Y                       09/2024          Manhattan, NY
3        Residential(3)(4)                              5                11/2017                 52                     -                                                  Y                       09/2024          Manhattan, NY
4        Office                                         3                01/2019                 100                    -                                                                          12/2025          Manhattan, NY
5        Office                                         3                08/2017                  8                     -                                                                          09/2024          Troy, MI
6        Healthcare(5)                                  3                07/2019                 51                     -                                                  Y                       06/2024          Various, US
7        Hotel                                          3                06/2015                 23                     -                                                                          07/2025          Phoenix, AZ
8        Hotel                                          3                06/2018                 20                     -                                                                          06/2023          Las Vegas, NV
9        Industrial                                     2                05/2013                 32                     -                                                                          05/2023          Various, US
10       Mixed Use                                      3                02/2019                 16                     -                                                                          10/2022          London, UK
         General CECL Allowance                                                                  (3)
         Subtotal / Weighted-Average
         Subordinate Loans and Other Lending
         Assets                                        3.1                                      $718                   $13                                                                        2.0 Years


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                   Total / Weighted-Average
                   Loan Portfolio              3.1      $8,731   $1,128         3.0 Years


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(1)Includes $22.7 million of a subordinate participation sold accounted for as
secured borrowing.
(2)Includes portfolio of office, industrial, and retail property types.
(3)Amortized cost for these loans is net of the recorded Specific CECL
Allowance.
(4)Loans are secured by the same property.
(5)Single Asset, Single Borrower CMBS.
(6)Loan went into maturity default subsequent to the quarter ended September 30,
2022.


Our average asset and debt balances for the nine months ended September 30, 2022
were (in thousands of dollars):

                                                   Average month-end 

balances for the nine months ended

                                                                    September 30, 2022
Description                                                 Assets                     Related debt
Commercial mortgage loans, net                     $           7,977,494          $         5,039,066
Subordinate loans and other lending assets,
net                                                              786,893                            -
Subordinate loans, held for sale                                     833                            -


Portfolio Management

Due to the impact of COVID-19, including longer-term macroeconomic effects on
supply chains, inflation and labor shortages, some of our borrowers have
experienced challenges which have prevented the execution of their business
plans and in some cases, resulted in temporary closures. As a result, we have
worked with borrowers to execute loan modifications which are typically coupled
with additional equity contributions from borrowers. Loan modifications to date
have included repurposing of reserves, temporary deferrals of interest or
principal, and partial deferral of coupon interest as payment-in-kind interest.


Investment Activity

During the nine months ended September 30, 2022, we committed $3.5 billion of
capital to loans ($2.8 billion was funded at closing). In addition, during the
nine months ended September 30, 2022, we received $1.5 billion in repayments and
funded $0.5 billion for commitments closed prior to 2022.

Net income available to common shareholders

For the nine months ended September 30, 2022 and 2021, our net income available
to common stockholders was $260.0 million, or $1.66 per diluted share of common
stock, and $176.5 million, or $1.18 per diluted share of common stock,
respectively.

Operating results

The following table sets forth information regarding our condensed consolidated
results of operations and certain key operating metrics compared to the most
recently reported period ($ in thousands):
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                                                                Three months ended
                                                      September 30,           June 30, 2022           Q3'22 vs. Q2'22
                                                           2022
Net interest income:
Interest income from commercial mortgage loans       $     120,821          $       99,386          $         21,435
Interest income from subordinate loans and other            13,354                  14,530                    (1,176)
lending assets
Interest expense                                           (72,302)                (56,529)                  (15,773)
Net interest income                                         61,873                  57,387                     4,486
Operations related to real estate owned:
Revenue from real estate owned operations                   14,428                  18,630                    (4,202)
Operating expenses related to real estate owned            (13,308)                (13,134)                     (174)

Net income related to real estate owned                      1,120                   5,496                    (4,376)
Operating expenses:
General and administrative expenses                         (7,184)                 (7,130)                      (54)
Management fees to related party                            (9,719)                 (9,632)                      (87)
Total operating expenses                                   (16,903)                (16,762)                     (141)
Other income                                                   285                      68                       217
Realized gain on investments                                43,577                       -                    43,577

Cancellation of loan losses – CECL specific deduction, 53,000

          3,000                    50,000

report

Reversal of (provision for) loan losses - General            2,564                  (2,056)                    4,620
CECL Allowance, net
Gain on foreign currency forward contracts                 129,252                 105,213                    24,039
Foreign currency translation loss                          (92,782)                (84,838)                   (7,944)
Gain on interest rate hedging instruments                    1,044                   3,443                    (2,399)
Net income                                                   $183,030                 $70,951                  $112,079



Net Interest Income

Net interest income increased by $4.5 million during the three months ended
September 30, 2022 compared to the three months ended June 30, 2022. The
increase in interest income was primarily due to higher average index rates in
the current period: average U.S. LIBOR increased by 1.48%, average U.S. SOFR
increased by 1.50%, average Daily SONIA increased by 0.66% from the three months
ended June 30, 2022 to the three months ended September 30, 2022. Average
EURIBOR increased by 0.49% during three months ended September 30, 2022 above
the 0.0% floors taken during the three months ended June 30, 2022. The increase
in interest expense was primarily due to (i) higher average index rates in the
current period, as noted above, and (ii) an increase in the weighted average
balance of our outstanding debt facilities by $135.2 million for the three
months ended September 30, 2022, as compared to three months ended June 30,
2022, which was partially offset by a decrease in interest expense related to
the payoff of the 2022 Notes.

Transactions related to real estate held

In 2017, we originated a $20.0 million junior mezzanine loan which was
subordinate to: (i) a $110.0 million mortgage loan, and (ii) a $24.5 million
senior mezzanine loan, secured by a full-service luxury hotel in Washington,
D.C. On May 24, 2021, we acquired legal title to the hotel through a
deed-in-lieu of foreclosure and the criteria for held-for-sale classification in
ASC Topic 360, "Property, Plant, and Equipment" were not met. The assets and
liabilities related to the hotel were assumed at their estimated fair value at
acquisition and presented net of accumulated depreciation and impairment
charges. As of March 1, 2022, the related assets and liabilities were
transferred to assets and liabilities related to real estate owned, held for
sale, as due to our marketing efforts on the property, as well as other
developments, it now met the criteria for held for sale. Results of operations
from the hotel are comprised of operating revenue, expenses and real estate
asset depreciation. As of March 1, 2022, we ceased recording depreciation on the
building and FF&E on the condensed consolidated statement of operations as the
property was transferred to held for sale at such date.

The hotel operations generated $1.1 million of net income during the three
months ended September 30, 2022 compared to $5.5 million of net income during
the three months ended June 30, 2022. The decrease in net income from hotel
operations primarily relates to the decrease in hotel occupancy and events held
due to seasonality of hotel operations during the three months ended
September 30, 2022 compared to the three months ended June 30, 2022.

Refer to “Note 5 – Assets and liabilities related to owned properties” for more information on our impairment and realized losses on owned properties.

                                       40
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Functionnary costs

General and administrative expenses

General and administrative expenses remained generally the same for the three months ended September 30, 2022 compared to the three months ended June 30, 2022.

Management fees to a related party

Management fees remained generally the same for the three months ended
September 30, 2022 compared to the three months ended June 30, 2022.

Other income

Other income generally remained the same for the three months ended
September 30, 2022 compared to the three months ended June 30, 2022.

Gain realized on investments

During the three months ended September 30, 2022, a $43.6 million realized gain
on investments was recorded in connection with the title acquisition for one of
our first mortgage loans secured by a multifamily development in Brooklyn, NY.
The gain reflects the difference between the fair value of the property and the
carrying value of the loan at the time of acquisition.

Refer to “Note 5 – Assets and liabilities related to properties held” for more information on our realized gains on investments.

Loan loss reversals – CECL specific provision, net

Our Specific CECL Allowance decreased by $53.0 million during the three months
ended September 30, 2022. We reversed $53.0 million of previously recorded
Specific CECL allowance on an urban predevelopment first mortgage loan in Miami,
FL, because the collateral which secures the loan is under contract to be sold
in the near term at a higher value than carrying value of the loan pre-reversal.

During the three months ended June 30, 2022, we reversed $10.0 million of
previously recorded allowance on a loan related to a multifamily development in
Brooklyn, NY, due to market rent growth and value created from development
activities, which was partially offset by a $7.0 million allowance on a loan
secured by a hotel in Atlanta, GA resulting from the hotel having a slower than
expected recovery from the COVID-19 pandemic.

Refer to "Note 2 - Summary of Significant Accounting Policies" and "Note 4 -
Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for
additional information related to our Specific CECL Allowance.

Reversal of (provision for) loan losses – CECL general provision, net

Our General CECL Allowance decreased by $2.6 million during the three months
ended September 30, 2022 compared to the three months ended June 30, 2022 due to
portfolio seasoning and sale of unfunded commitments, which was partially offset
by one new loan origination and a more adverse macroeconomic outlook.. The
General CECL Allowance increased by $2.1 million during the three months ended
June 30, 2022 compared to the three months ended March 31, 2022 as a result of
new loan originations and a more adverse macroeconomic outlook.

Refer to "Note 2 - Summary of Significant Accounting Policies" and "Note 4 -
Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" for
additional information related to our General CECL Allowance.

Foreign exchange loss and gain on derivative instruments

We use forward currency contracts to economically hedge interest and principal
payments due under our loans denominated in currencies other than USD. When
gains and losses on foreign currency translation and derivative instruments are
evaluated on a combined basis, the net impact for the three months ended
September 30, 2022 and June 30, 2022 was a $36.5 million and $20.4 million gain,
respectively.

The increase from the previous quarter represents a timing difference between
the valuation on the foreign currency forward contracts, which are valued using
spot rates, forward point estimates, and discount factors, and the foreign
currency translation calculation which uses only spot rates. Additionally, as
rates fell significantly during the quarter our unrealized gain
                                       41
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from derivative instruments, including derivative instruments related to our
future expected interest cash flow, increased. As derivative instruments related
to our future expected interest cash flow have no offset in foreign currency
(loss) they are accounting for some of the variance noted above.

Gain on rate hedges

During the second quarter of 2020, we entered into a three-year interest rate
cap to cap LIBOR at 0.75%. During the three months ended September 30, 2022 and
June 30, 2022, the interest rate cap had an unrealized gain of $1.0 million and
$3.4 million, respectively. The decrease in the unrealized gain is a result of
the nearing maturity of the cap offset by the current interest rate forward
curve.


Subsequent Events

Refer to “Note 20 – Subsequent Events” to the accompanying condensed consolidated financial statements for information on significant transactions that occurred after September 30, 2022.

Contractual obligations, liquidity and capital resources

Liquidity is a measure of our ability to meet potential cash requirements,
including ongoing commitments to fund and maintain our assets and operations,
repay borrowings, make distributions to our stockholders and other general
business needs. We utilize various sources of cash in order to meet our
liquidity needs in the next twelve months, which is considered the short-term,
and the longer term.

Our current debt obligations consist of $1.5 billion of corporate debt at face
value and $5.4 billion of asset financings. Our corporate debt includes: (i)
$779.3 million of term loan borrowings, (ii) $500.0 million of senior secured
notes, and (iii) $230.0 million of convertible notes. Our asset specific
financings are generally tied to the underlying loans and we anticipate
repayments of $765.0 million of secured debt arrangements in the short term.
Specifics about our secured debt arrangements and corporate debt maturities and
obligations are discussed below.

In addition to our debts, as of September 30, 2022we have had $1.1 billion unfunded loan commitments. We expect approximately
$565.2 million will be financed to existing short-term borrowers.

We have various sources of liquidity that we are able to use to satisfy our
short and long term obligations. As of September 30, 2022, we had $319.3 million
of cash on hand. As of September 30, 2022, we also held approximately $1.1
billion of unencumbered assets, consisting of $517.8 million of senior mortgages
and $534.1 million of mezzanine loans. Depending on market conditions, we may
utilize additional borrowings as a source of cash, which may also include
additional secured debt arrangements as well as other borrowings or conduct
additional public and private debt and equity offerings.

We maintain policies relating to our use of leverage. See “Leverage Policies” below. In the future, we may seek to raise additional equity or debt capital or incur other forms of debt to fund future investments or refinance maturing debt.

We generally intend to hold our assets for investment purposes, although we may sell some of our investments to manage our interest rate risk and liquidity needs, to meet other business objectives, operation and adapt to market conditions.

To maintain our qualification as a REIT under the Internal Revenue Code, we must
distribute annually at least 90% of our REIT taxable income, determined without
regard to the deduction for dividends paid and excluding net capital gain. These
distribution requirements limit our ability to retain earnings and replenish or
increase capital for operations.

We also have interests in two unconsolidated joint ventures, each of which owns
underlying properties that secure one of our first mortgage loans, respectively
and are accounted for as off-balance-sheet arrangements. The unconsolidated
joint ventures were deemed to be Variable Interest Entities ("VIEs"), of which
we are not the primary beneficiary. Accordingly, the VIEs are not consolidated
in our condensed consolidated financial statements as of September 30, 2022. Our
maximum exposure to loss from these commercial mortgage loans is limited to
their carrying value, which as of September 30, 2022 was $227.2 million.
Although there is risk of loss we have no contractual obligation to fund any
additional capital into the joint ventures.

Borrowings under various financing agreements

The table below summarizes the unpaid balances and maturities of our various financings:

                                       42
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                                                     September 30, 2022                                     December 31, 2021
                                           Borrowings                Maturity (2)                Borrowings                 Maturity (2)
                                         Outstanding(1)                                        Outstanding(1)
Secured credit facilities              $      3,648,950              January 2026            $      2,256,646               October 2025
Barclays Private Securitization               1,715,169              January 2026                   1,902,684               August 2024
Total Secured debt arrangements        $      5,364,119                                      $      4,159,330
Senior secured term loans              $        779,250              January 2027            $        785,250               January 2027
Senior secured notes                            500,000                June 2029                      500,000                June 2029
Convertible senior notes                        230,000              October 2023                     575,000              February 2023
Total Borrowings                       $      6,873,369                                      $      6,019,580


-------
(1)Borrowings Outstanding represent principal balances as of the respective
reporting periods.
(2)Maturity dates represent weighted average maturities based on borrowings
outstanding and assumes extensions at our option are exercised with consent of
financing providers, where applicable.

Secured credit facilities

As of September 30, 2022, we had entered into secured debt arrangements with
seven secured credit facilities through wholly-owned subsidiaries. Terms under
various master repurchase agreements vary by secured credit facility.

Refer to “Note 7 – Secured credit arrangements, net” to our condensed consolidated financial statements for additional information regarding our secured credit facilities.

Barclays Private Securitization

In June 2020, through a newly formed entity, we entered into a private
securitization with Barclays Bank plc. As of September 30, 2022, we had £936.9
million, €491.8 million, and kr2.1 billion ($1.7 billion assuming conversion
into USD) of borrowings outstanding under the Barclays Private Securitization
secured by certain of our commercial mortgage loans.

Refer to "Note 7 - Secured Debt Arrangements, Net" of our Condensed Consolidated
Financial Statements for additional disclosure regarding our Barclays Private
Securitization.

Senior Secured Term Loans

In May 2019we entered $500.0 million Term loan 2026 and in March 2021we entered $300.0 million Term Loan 2028 (collectively Term Loans). The outstanding principal balance of term loans at September 30, 2022
and December 31, 2021 has been $779.3 million and $785.3 millionrespectively.

Refer to "Note 8 - Senior Secured Term Loans, Net" of our Condensed Consolidated
Financial Statements for additional disclosure regarding our 2026 Term Loan and
2028 Term Loan."

Senior Secured Notes

In June 2021, we issued $500.0 million of 4.625% Senior Secured Notes due 2029
(the "2029 Notes"), for which we received net proceeds of $495.0 million, after
deducting initial purchasers' discounts and commissions. The 2029 Notes had a
carrying value of $494.6 million and $494.1 million, net of deferred financing
costs of $5.4 million and $5.9 million, as of September 30, 2022 and
December 31, 2021, respectively.

Refer to “Note 9 – Senior Secured Notes, Net” to our condensed consolidated financial statements for additional information regarding our 2029 Notes.

Senior Convertible Bonds

In two separate offerings during 2017, we issued an aggregate principal amount
of $345.0 million of 4.75% Convertible Senior Notes due 2022 (the "2022 Notes"),
for which we received $337.5 million, after deducting the underwriting discount
and offering expenses. During the third quarter of 2022, we repaid the $345.0
million aggregate principal amount of the 2022 Notes.

During the fourth quarter of 2018, we issued $230.0 million of 5.375%
Convertible Senior Notes due 2023, for which we received $223.7 million after
deducting the underwriting discount and offering expenses. At September 30,
2022, the 2023 Notes had a carrying value of $229.2 million and an unamortized
discount of $0.8 million.
                                       43
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Refer to “Note 10 – Convertible Senior Notes, Net” to our condensed consolidated financial statements for additional information regarding our convertible notes.

Rate of endettement

The following table shows our debt ratio:

                                      September 30, 2022      December 31, 2021
          Debt to Equity Ratio(1)            2.8                     2.4


-------
(1)Represents total debt less cash and loan proceeds held by servicer (recorded
with Other Assets, refer to "Note 6 - Other Assets" for more information) to
total stockholders' equity.


Leverage Policies

We use leverage for the sole purpose of financing our portfolio and not for the
purpose of speculating on changes in interest rates. In addition to our secured
debt arrangements and senior secured term loan, we access additional sources of
borrowings. Our charter and bylaws do not limit the amount of indebtedness we
can incur; however, we are subject to and carefully monitor the limits placed on
us by our credit providers and those that assign ratings on our company.

At September 30, 2022, our debt-to-equity ratio was 2.8 and our portfolio was
comprised of $8.0 billion of commercial mortgage loans and $717.8 million of
subordinate loans and other lending assets. In order to achieve our return on
equity, we generally finance our mortgage loans with 2.0 to 3.0 turns of
leverage and generally do not finance our subordinate loans and other lending
assets given built-in inherent structural leverage.

Investment guidelines

Our current investment guidelines, approved by our Board of Directors, include the following:

• no investment will be made that would prevent us from qualifying as a REIT for
WE for federal income tax purposes;

•no investment will be made which would require us to register as an investment company under the 1940 Act;

•the investments will be mainly in our target assets;

•no more than 20% of our net equity (on a consolidated basis) will be invested
in any single investment at the time of the investment; in determining
compliance with the investment guidelines, the amount of the investment is the
net equity in the investment (gross investment less amount of third-party
financing) plus the amount of any recourse on the financing secured by the
investment; and

•until appropriate investments can be identified, the Manager may invest the
proceeds of any offering in interest bearing, short-term investments, including
money market accounts and/or funds, that are consistent with our intention to
qualify as a REIT.

The Board of Directors must approve any modification or waiver of these investment guidelines.

Dividends

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

Of the September 30, 2022and December 31, 2021 we had 6,770,393 Series B-1 Preferred Shares outstanding. The Series B-1 Preferred Shares pay cumulative cash dividends, which are payable quarterly in equal amounts in arrears on the 15th day of each month of January, April, July and October: at a rate of 7.25% per annum from $25.00 liquidation preference per share.

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Except under certain limited circumstances, the Series B-1 Preferred Stock is
generally not convertible into or exchangeable for any other property or any
other of our securities at the election of the holders. On and after July 15,
2026, we may, at our option, redeem the shares at a redemption price of $25.00,
plus any accrued unpaid dividends to, but not including, the date of the
redemption.

The following table details our dividend activity:

                                                    Three months ended                                               Nine months ended
Dividends declared per share
of:                                September 30, 2022                September 30, 2021             September 30, 2022                September 30, 2021
Common Stock                             $0.35                             $0.35                          $1.05                             $1.05
Series B Preferred Stock                  N/A                               N/A                            N/A                               1.00
Series B-1 Preferred Stock                0.45                              0.45                           1.35                              0.45



On July 15, 2021, we exchanged all 6,770,393 shares outstanding of our 8.00%
Fixed-to-Floating Series B Cumulative Redeemable Perpetual Preferred Stock, par
value $0.01 per share ("Series B Preferred Stock"), with a liquidation
preference of $25.00 per share, for 6,770,393 shares of 7.25% Series B-1
Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share
("Series B-1 Preferred Stock"), with a liquidation preference of $25.00 per
share, pursuant to an exchange agreement with the two existing shareholders.

Non-GAAP Financial Measures

Distributable Earnings

Distributable Earnings, a non-GAAP financial measure, is defined as net income
available to common stockholders, computed in accordance with GAAP, adjusted for
(i) equity-based compensation expense (a portion of which may become cash-based
upon final vesting and settlement of awards should the holder elect net share
settlement to satisfy income tax withholding), (ii) any unrealized gains or
losses or other non-cash items (including depreciation and amortization related
to real estate owned) included in net income available to common stockholders,
(iii) unrealized income from unconsolidated joint ventures, (iv) foreign
currency gains (losses), other than (a) realized gains/(losses) related to
interest income, and (b) forward point gains/(losses) realized on our foreign
currency hedges, (v) the non-cash amortization expense related to the
reclassification of a portion of the Convertible Notes to stockholders' equity
in accordance with GAAP, and (vi) provision for loan losses. Distributable
Earnings may also be adjusted to exclude certain other non-cash items, as
determined by the Manager and approved by a majority of our independent
directors.

For the three and nine months ended September 30, 2022, our Distributable
Earnings were $95.9 million, or $0.67 per share, and $194.8 million, or $1.36
per share, respectively, as compared to $49.2 million, or $0.35 per share, and
$143.6 million, or $1.01 per share, respectively, for the same period in the
prior year.

The weighted-average diluted shares outstanding used for Distributable Earnings
per weighted-average diluted share has been adjusted from weighted-average
diluted shares under GAAP to exclude shares issued from a potential conversion
of the Convertible Notes. Consistent with the treatment of other unrealized
adjustments to Distributable Earnings, these potentially issuable shares are
excluded until a conversion occurs, which we believe is a useful presentation
for investors. We believe that excluding shares issued in connection with a
potential conversion of the Convertible Notes from our computation of
Distributable Earnings per weighted average diluted share is useful to investors
for various reasons, including the following: (i) conversion of Convertible
Notes to shares requires both the holder of a note to elect to convert the
Convertible Note and for us to elect to settle the conversion in the form of
shares (ii) future conversion decisions by note holders will be based on our
stock price in the future, which is presently not determinable; (iii) the
exclusion of shares issued in connection with a potential conversion of the
Convertible Notes from the computation of Distributable Earnings per
weighted-average diluted share is consistent with how we treat other unrealized
items in our computation of Distributable Earnings per weighted-average diluted
share; and (iv) we believe that when evaluating our operating performance,
investors and potential investors consider our Distributable Earnings relative
to our actual distributions, which are based on shares outstanding and not
shares that might be issued in the future.

The table below summarizes the reconciliation between the GAAP weighted average diluted shares and the weighted average diluted shares used for distributable income:

                                       45
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                                                     Three months ended September 30,                                     Nine months ended September 30,
                                                 2022                                  2021                          2022                                  2021
Weighted-Averages                               Shares                                Shares                        Shares                                Shares
Diluted shares - GAAP                         164,350,132                             170,884,172                 169,252,602                             170,836,682
Potential shares issued under                 (21,187,719)                            (28,533,271)                (26,057,847)                          

(28,533,271)

conversion of the Convertible Notes
Unvested RSUs                                           -                                       -                           -                                       -
Diluted shares - Distributable
Earnings                                      143,162,413                             142,350,901                 143,194,755                             142,303,411



As a REIT, U.S. federal income tax law generally requires us to distribute
annually at least 90% of our REIT taxable income, without regard to the
deduction for dividends paid and excluding net capital gains, and that we pay
tax at regular corporate rates to the extent that we annually distribute less
than 100% of our net taxable income. Given these requirements and our belief
that dividends are generally one of the principal reasons stockholders invest in
a REIT, we generally intend over time to pay dividends to our stockholders in an
amount equal to our net taxable income, if and to the extent authorized by our
board of directors. Distributable Earnings is a key factor considered by the
board of directors in setting the dividend and as such we believe Distributable
Earnings is useful to investors.

As discussed in "Note 5 - Assets and Liabilities Related to Real Estate Owned",
during the three and nine months ended September 30, 2022, we recorded a
$43.6 million realized gain on investments reflecting the difference between the
fair value of a multifamily development property located in Brooklyn, NY
acquired through a deed-in-lieu of foreclosure and the amortized cost of the
loan at the time of foreclosure.

As discussed in "Note 5 - Assets and Liabilities Related to Real Estate Owned"
during the three and nine months ended September 30, 2021, we recorded
$20.0 million realized loss on investments reflecting the difference between the
fair value of a hotel acquired through a deed-in-lieu of foreclosure and the
amortized cost of the loan at the time of foreclosure. Additionally, during the
nine months ended September 30, 2021, we recorded an impairment of $0.6 million
on our real estate owned, held for sale due to increased costs to sell.

We also believe it is useful to our investors to present Distributable Earnings
prior to realized gains (losses) and impairments on real estate owned and
investments to reflect our operating results because (i) our operating results
are primarily comprised of earning interest income on our investments net of
borrowing and administrative costs, which comprise our ongoing operations and
(ii) it has been a useful factor related to our dividend per share because it is
one of the considerations when a dividend is determined. We believe that our
investors use Distributable Earnings and Distributable Earnings prior to
realized gains (losses) and impairments on real estate owned and investments, or
a comparable supplemental performance measure, to evaluate and compare the
performance of our company and our peers.

A significant limitation associated with Distributable Earnings as a measure of
our financial performance over any period is that it excludes unrealized gains
(losses) from investments. In addition, our presentation of Distributable
Earnings may not be comparable to similarly-titled measures of other companies,
that use different calculations. As a result, Distributable Earnings should not
be considered as a substitute for our GAAP net income as a measure of our
financial performance or any measure of our liquidity under GAAP. Distributable
Earnings are reduced for realized losses on loans which include losses that
management believes are near certain to be realized.

The table below summarizes the reconciliation from net income available to
common stockholders to Distributable Earnings and Distributable Earnings prior
to realized gains (losses) and impairments on real estate owned and investments
($ in thousands):
                                       46
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                                                            Three months ended September 30,                  Nine months ended September 30,
                                                              2022                      2021                    2022                     2021
Net income available to common stockholders           $          179,962    

$57,266 $260,015 $176,522
Adjustments: stock-based compensation expense

                                  4,518                  4,405                    13,734                 13,149
Gain on foreign currency forwards                               (129,252)               (32,947)                 (257,227)               (39,653)
Foreign currency loss, net                                        92,782                 24,413                   210,138                 27,808
Unrealized loss (gain) on interest rate cap                       (1,044)                    75                   (10,808)                  (171)
Realized gains (losses) relating to interest income                2,908                   (219)                    8,020                 (1,558)
on foreign currency hedges, net
Realized gains relating to forward points on foreign               1,545                     63                     8,168                     75
currency hedges, net
Amortization of the convertible senior notes related                   -                    824                         -                  2,436
to equity reclassification
Depreciation and amortization on real estate owned                     -                  1,096                       704                  1,548

Release of current expected allowance for credit losses, net

                                                              (55,564)                (5,766)                  (37,897)               (36,590)
Realized (gains) losses and impairments on real                  (43,577)                     -                   (43,577)                20,550
estate owned and investments
Total adjustments:                                              (127,684)                (8,056)                 (108,745)               (12,406)
Distributable Earnings prior to realized gains
(losses) and impairments on real estate owned and     $           52,278    

$49,210 $151,270 $164,116
investments

Realized gains (losses) and impairments on real       $           43,577          $           -          $         43,577          $     (20,550)

land ownership and investments

Distributable Earnings                                $           95,855    

$49,210 $194,847 $143,566
Diluted distributable earnings per share before realized gains (losses) and write-downs on real dollars

             0.37          $        0.35          $           1.06          $        1.15
estate owned and investments
Diluted Distributable Earnings per share of common    $             0.67          $        0.35          $           1.36          $        1.01

Stock

Weighted-average diluted shares - Distributable              143,162,413            142,350,901               143,194,755            142,303,411
Earnings



Book Value Per Share

The table below calculates our book value per share ($ in thousands, except per
share data):
                                                     September 30, 2022           December 31, 2021
Stockholders' Equity                               $         2,407,685          $         2,294,626

   Series B-1 Preferred Stock (Liquidation
Preference)                                                   (169,260)                    (169,260)
Common Stockholders' Equity                        $         2,238,425          $         2,125,366
Common Stock                                               140,595,995                  139,894,060
Book value per share                               $             15.92          $             15.19

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

                                                                          Book value per share
Book value per share at December 31, 2021                               $               15.19

General CECL Allowance                                                                   0.28

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

                             $               15.47
Earnings in excess of dividends                                                          0.02
Realized gain on investments                                                             0.31
Net unrealized gain on currency and interest rate hedges                                 0.29
Reversal of Specific CECL Allowance                                                      0.18


                                       47
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Vesting and delivery of RSUs                                                       (0.12)
Adoption of ASU 2020-06                                                            (0.02)
Other                                                                              (0.01)

Book value per share at September 30, 2022 before CECL general provision and depreciation and amortization

                             $   

16.12

General CECL Allowance and depreciation and amortization                    

(0.20)

Book value per share at September 30, 2022                              $   

15.92



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