Apollo Commercial Real Estate Finance, Inc. (ARI) Q3 2024 Earnings Call Transcript
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 31 2024
0mins
Should l Buy ARI?
Source: SeekingAlpha
Distributable Earnings $44 million or $0.31 per share, a decrease from the previous year due to impacts from watch-list loans.
GAAP Net Loss $95 million or negative $0.69 per diluted share, a significant decline attributed to a $128 million realized loss from the hospital loan resolution.
Loan Repayments $953 million, an increase of over $190 million compared to the first and second quarters combined, indicating a robust quarter for loan repayments.
Portfolio Carrying Value $7.8 billion, unchanged from the previous quarter.
Weighted Average Yield 8.5%, unchanged from the previous quarter.
CECL Allowance $381 million or $2.74 per share, relatively flat quarter-over-quarter, with a slight decrease in the general CECL allowance due to repayment activity.
Debt-to-Equity Ratio 3.5 times, indicating stable leverage with no corporate debt maturities until May 2026.
Total Liquidity Over $300 million, reflecting strong liquidity position with cash, undrawn credit capacity, and loan proceeds.
Book Value per Share $12.73, reflecting a decrease of $0.93 due to the realized loss on the Massachusetts Healthcare Loan.
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Analyst Views on ARI
Wall Street analysts forecast ARI stock price to rise
2 Analyst Rating
1 Buy
0 Hold
1 Sell
Hold
Current: 10.560
Low
9.50
Averages
10.75
High
12.00
Current: 10.560
Low
9.50
Averages
10.75
High
12.00
About ARI
Apollo Commercial Real Estate Finance, Inc. is a real estate investment trust. The Company primarily originates, acquires, invests in and manages performing commercial first mortgage loans, subordinate financings and other commercial real estate-related debt investments. Its principal business objective is to acquire its target assets in order to provide attractive risk- adjusted returns to its stockholders over the long term, primarily through dividends and secondarily through capital appreciation. Its investment strategy is to identify opportunities within its target assets through its manager and its affiliates as well as their platform, which integrates real estate experience with private equity and capital markets in transaction sourcing, underwriting, execution, asset operation, management and disposition. It targets assets that are secured by real estate throughout the United States and Europe. The Company is externally managed and advised by ACREFI Management, LLC.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Apollo Commercial Real Estate Finance Q4 2025 Earnings Call Insights
- Financial Performance Overview: Apollo Commercial Real Estate reported distributable earnings of $37 million in Q4 2025, translating to $0.26 per diluted share, with total distributable earnings for the year at $139 million, reflecting the company's efforts to stabilize cash flow.
- Asset Management Strategy: The management is actively managing its REO portfolio, particularly the Brook tower, which is currently 56% leased, with expectations to achieve stabilization later this year, aiming to enhance overall financial performance through optimized asset value.
- Loan Portfolio Dynamics: In Q4, the company committed $1.3 billion to new loans, with $1.1 billion funded, and the loan portfolio grew to approximately $8.8 billion by year-end, indicating strong activity and growth potential in the lending market.
- Future Outlook and Strategy: While no explicit future earnings guidance was provided, management emphasized a focus on leasing and stabilization of assets, while evaluating various strategies for capital deployment in response to market changes and investor feedback.
See More
Apollo Commercial Real Estate Finance Q4 Earnings Beat Expectations
- Earnings Surprise: Apollo Commercial Real Estate Finance (ARI) reported a Q4 non-GAAP EPS of $0.26, beating expectations by $0.02, demonstrating the company's resilience amid market fluctuations.
- Revenue Growth: The company achieved Q4 revenue of $73.25 million, a 4.0% year-over-year increase, surpassing market expectations by $27.02 million, indicating sustained growth potential in the commercial real estate sector.
- Stock Price Reaction: Despite the earnings beat, Apollo's stock fell by 1.87%, reflecting market uncertainty regarding future growth, which could impact investor confidence.
- Asset Sale Strategy: Apollo plans to sell approximately $9 billion in commercial real estate loans to Athene, aiming to optimize its balance sheet and enhance liquidity, potentially providing funding for future investments.
See More
Apollo Commercial Real Estate Finance Reports Q4 Adjusted EPS of $0.26, Exceeding IBES Estimate of $0.24
- Financial Performance: The adjusted EPS for Apollocommercial real estate finance in Q4 is reported at USD 0.26.
- Comparison with Estimates: This figure exceeds the IBES estimate, which was USD 0.24.
See More
Apollo Commercial Real Estate Earnings Announcement Scheduled
- Earnings Release Date: Apollo Commercial Real Estate Finance (ARI) is set to announce its Q4 earnings on February 10th after market close, with a consensus EPS estimate of $0.24, reflecting a 25% year-over-year decline.
- Performance Expectation Analysis: Historically, ARI has surpassed EPS estimates 88% of the time over the last two years, while only achieving a 13% beat on revenue estimates, indicating volatility in its earnings performance.
- EPS Estimate Changes: In the past three months, there have been two upward revisions to EPS estimates with no downward adjustments, suggesting increased market confidence in the company's future profitability.
- Asset Sale Dynamics: Apollo plans to sell approximately $9 billion in commercial real estate loans to Athene, which could significantly impact its balance sheet and future revenue structure.
See More
Apollo Commercial Real Estate Announces 2025 Distribution Tax Treatment
- Distribution Tax Classification: Apollo Commercial Real Estate Finance anticipates a $0.25 per share distribution for its common stock in 2025, which may qualify for a 20% deduction under Section 199A, demonstrating the company's commitment to shareholder returns.
- Preferred Stock Dividend Details: The company’s 7.25% Series B-1 preferred stock will also yield a $0.453125 per share distribution, ensuring stable returns for preferred shareholders and reflecting robust capital management strategies.
- Cash Distribution Treatment: The cash distribution on January 15, 2026, will be treated as a 2025 distribution, indicating transparency in tax handling and helping to bolster investor confidence in the company's financial practices.
- Investor Consultation Recommendation: The company encourages shareholders to consult tax advisors regarding their specific tax treatment, highlighting its commitment to shareholder interests and aiming to enhance understanding and trust in its distribution policies.
See More
Apollo Commercial Real Estate Finance Sells $9B Loan Portfolio to Athene Holding
- Loan Portfolio Sale: Apollo Commercial Real Estate Finance (ARI) announced the sale of a ~$9 billion commercial real estate loan portfolio to Athene Holding, with the purchase price based on 99.7% of total loan commitments, indicating strong market positioning.
- Stock Price Surge: Following the announcement, ARI's shares rose 4.35% in pre-market trading to $10.56, reflecting positive market sentiment and increased investor confidence in the company's prospects.
- Cash Flow Expectations: Post-transaction, ARI anticipates having ~$1.4 billion in net cash and ~$1.7 billion in common stockholders' equity, providing ample funding for future investments and strategic acquisitions.
- Strategic Evaluation Plan: ARI plans to spend the remainder of the year evaluating a range of commercial real estate-related strategies, including strategic M&A opportunities, aiming to enhance current yield and position its shares to trade at or above book value.
See More
Apollo Commercial Real Estate Finance Q4 2025 Earnings Call Insights
- Financial Performance Overview: Apollo Commercial Real Estate reported distributable earnings of $37 million in Q4 2025, translating to $0.26 per diluted share, with total distributable earnings for the year at $139 million, reflecting the company's efforts to stabilize cash flow.
- Asset Management Strategy: The management is actively managing its REO portfolio, particularly the Brook tower, which is currently 56% leased, with expectations to achieve stabilization later this year, aiming to enhance overall financial performance through optimized asset value.
- Loan Portfolio Dynamics: In Q4, the company committed $1.3 billion to new loans, with $1.1 billion funded, and the loan portfolio grew to approximately $8.8 billion by year-end, indicating strong activity and growth potential in the lending market.
- Future Outlook and Strategy: While no explicit future earnings guidance was provided, management emphasized a focus on leasing and stabilization of assets, while evaluating various strategies for capital deployment in response to market changes and investor feedback.
See More
Apollo Commercial Real Estate Finance Q4 Earnings Beat Expectations
- Earnings Surprise: Apollo Commercial Real Estate Finance (ARI) reported a Q4 non-GAAP EPS of $0.26, beating expectations by $0.02, demonstrating the company's resilience amid market fluctuations.
- Revenue Growth: The company achieved Q4 revenue of $73.25 million, a 4.0% year-over-year increase, surpassing market expectations by $27.02 million, indicating sustained growth potential in the commercial real estate sector.
- Stock Price Reaction: Despite the earnings beat, Apollo's stock fell by 1.87%, reflecting market uncertainty regarding future growth, which could impact investor confidence.
- Asset Sale Strategy: Apollo plans to sell approximately $9 billion in commercial real estate loans to Athene, aiming to optimize its balance sheet and enhance liquidity, potentially providing funding for future investments.
See More
Apollo Commercial Real Estate Finance Reports Q4 Adjusted EPS of $0.26, Exceeding IBES Estimate of $0.24
- Financial Performance: The adjusted EPS for Apollocommercial real estate finance in Q4 is reported at USD 0.26.
- Comparison with Estimates: This figure exceeds the IBES estimate, which was USD 0.24.
See More
Apollo Commercial Real Estate Earnings Announcement Scheduled
- Earnings Release Date: Apollo Commercial Real Estate Finance (ARI) is set to announce its Q4 earnings on February 10th after market close, with a consensus EPS estimate of $0.24, reflecting a 25% year-over-year decline.
- Performance Expectation Analysis: Historically, ARI has surpassed EPS estimates 88% of the time over the last two years, while only achieving a 13% beat on revenue estimates, indicating volatility in its earnings performance.
- EPS Estimate Changes: In the past three months, there have been two upward revisions to EPS estimates with no downward adjustments, suggesting increased market confidence in the company's future profitability.
- Asset Sale Dynamics: Apollo plans to sell approximately $9 billion in commercial real estate loans to Athene, which could significantly impact its balance sheet and future revenue structure.
See More
Apollo Commercial Real Estate Announces 2025 Distribution Tax Treatment
- Distribution Tax Classification: Apollo Commercial Real Estate Finance anticipates a $0.25 per share distribution for its common stock in 2025, which may qualify for a 20% deduction under Section 199A, demonstrating the company's commitment to shareholder returns.
- Preferred Stock Dividend Details: The company’s 7.25% Series B-1 preferred stock will also yield a $0.453125 per share distribution, ensuring stable returns for preferred shareholders and reflecting robust capital management strategies.
- Cash Distribution Treatment: The cash distribution on January 15, 2026, will be treated as a 2025 distribution, indicating transparency in tax handling and helping to bolster investor confidence in the company's financial practices.
- Investor Consultation Recommendation: The company encourages shareholders to consult tax advisors regarding their specific tax treatment, highlighting its commitment to shareholder interests and aiming to enhance understanding and trust in its distribution policies.
See More
Apollo Commercial Real Estate Finance Sells $9B Loan Portfolio to Athene Holding
- Loan Portfolio Sale: Apollo Commercial Real Estate Finance (ARI) announced the sale of a ~$9 billion commercial real estate loan portfolio to Athene Holding, with the purchase price based on 99.7% of total loan commitments, indicating strong market positioning.
- Stock Price Surge: Following the announcement, ARI's shares rose 4.35% in pre-market trading to $10.56, reflecting positive market sentiment and increased investor confidence in the company's prospects.
- Cash Flow Expectations: Post-transaction, ARI anticipates having ~$1.4 billion in net cash and ~$1.7 billion in common stockholders' equity, providing ample funding for future investments and strategic acquisitions.
- Strategic Evaluation Plan: ARI plans to spend the remainder of the year evaluating a range of commercial real estate-related strategies, including strategic M&A opportunities, aiming to enhance current yield and position its shares to trade at or above book value.
See More
