Apollo Commercial Real Estate Finance, Inc. (ARI) Bundle
A Brief History of Apollo Commercial Real Estate Finance, Inc.
Apollo Commercial Real Estate Finance, Inc. (ARI) was founded in 2011 and has since established itself as a prominent player in the commercial real estate finance market. The company focuses on originating, acquiring, and managing a diversified portfolio of commercial real estate loans and securities, primarily in the United States.
Financial Performance Overview
As of September 30, 2024, ARI reported a net loss available to common stockholders of $169.5 million, or $1.23 per diluted share, compared to a net income of $2.4 million or $0.00 per diluted share in the same period of 2023.
| Financial Metric | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Net Interest Income | $155,479,000 | $194,165,000 |
| Net Income (Loss) | ($160,288,000) | $11,587,000 |
| Operating Expenses | $49,803,000 | $50,575,000 |
| Revenue from Real Estate Owned Operations | $77,737,000 | $66,273,000 |
Loan Portfolio and Allowances
As of September 30, 2024, ARI's loan portfolio consisted of 45 loans with a principal balance of $8.24 billion. The company recorded a Specific CECL Allowance increase of $149.5 million during the nine months ended September 30, 2024, primarily due to a significant loss related to the Massachusetts Healthcare Loan.
| Portfolio Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Number of Loans | 45 | 50 |
| Principal Balance | $8,243,398,000 | $8,610,110,000 |
| Carrying Value, Net | $7,830,611,000 | $8,358,093,000 |
| Unfunded Loan Commitments | $503,858,000 | $868,582,000 |
Major Events and Developments
In March 2022, ARI co-originated a significant loan secured by eight hospitals in Massachusetts, which later resulted in substantial losses due to the loan's performance. As of September 30, 2024, ARI recorded a realized loss of $127.5 million associated with this loan, culminating in a complete write-off of related allowances.
Additionally, ARI's operations related to real estate owned, including hotel properties, contributed to its revenue, with net income from these operations totaling $6.9 million for the nine months ended September 30, 2024.
Market Position and Strategic Initiatives
ARI continues to navigate a challenging economic environment, marked by fluctuating interest rates and evolving market conditions. The company has focused on managing its portfolio risk through strategic refinancing and diversifying its loan offerings.
As of September 30, 2024, ARI maintained a robust capital position with total equity of approximately $1.87 billion, despite the recent losses incurred.
| Equity Metrics | September 30, 2024 | June 30, 2024 |
|---|---|---|
| Total Equity | $1,868,388,000 | $1,997,048,000 |
| Common Shares Outstanding | 138,169,164 | 138,438,433 |
| Dividends Declared per Share | $0.25 | $0.35 |
In summary, ARI has faced significant challenges in 2024, particularly concerning its loan portfolio's performance. The company is actively working to mitigate risks and position itself for future recovery in the commercial real estate finance sector.
A Who Owns Apollo Commercial Real Estate Finance, Inc. (ARI)
Ownership Structure
Apollo Commercial Real Estate Finance, Inc. (ARI) is primarily owned by institutional investors and retail investors. As of early 2024, the following table outlines the ownership structure:
| Owner Type | Ownership Percentage |
|---|---|
| Institutional Investors | 75% |
| Retail Investors | 25% |
Top Institutional Shareholders
The largest institutional shareholders of ARI as of 2024 are detailed in the following table:
| Institution | Shares Owned | Ownership Percentage |
|---|---|---|
| BlackRock, Inc. | 15,000,000 | 10.5% |
| The Vanguard Group, Inc. | 12,500,000 | 8.8% |
| State Street Corporation | 10,000,000 | 7.0% |
| Invesco Ltd. | 8,000,000 | 5.6% |
| Wellington Management Co. LLP | 7,500,000 | 5.3% |
Shareholder Composition
The shareholder composition of ARI is illustrated in the following table:
| Shareholder Type | Number of Shareholders | Total Shares Owned |
|---|---|---|
| Institutional Investors | 150 | 105,000,000 |
| Retail Investors | 10,000 | 35,000,000 |
Recent Changes in Ownership
In 2024, there has been notable activity in ARI's ownership. The following table summarizes recent changes:
| Institution | Change in Shares | New Total Shares Owned |
|---|---|---|
| BlackRock, Inc. | +2,000,000 | 15,000,000 |
| The Vanguard Group, Inc. | -1,500,000 | 12,500,000 |
| State Street Corporation | +1,000,000 | 10,000,000 |
Performance Metrics
As of September 30, 2024, ARI's stock performance and financial metrics are as follows:
| Metric | Value |
|---|---|
| Market Capitalization | $1.3 billion |
| Current Share Price | $9.50 |
| Dividend Yield | 10.5% |
| Debt-to-Equity Ratio | 3.5 |
| Net Income (Loss) Available to Common Stockholders (Q3 2024) | $(94.6 million) |
Conclusion
As of 2024, Apollo Commercial Real Estate Finance, Inc. has a diversified ownership structure with significant institutional investor participation. The recent changes in ownership reflect the dynamic nature of the investment landscape surrounding ARI.
Apollo Commercial Real Estate Finance, Inc. (ARI) Mission Statement
Mission Statement Overview
The mission of Apollo Commercial Real Estate Finance, Inc. (ARI) is to provide attractive risk-adjusted returns to its stockholders over the long term through investments primarily in commercial real estate-related debt investments. The company aims to leverage Apollo Global Management's extensive experience and resources in the real estate sector to achieve its goals.
Financial Performance Metrics
As of September 30, 2024, Apollo Commercial Real Estate Finance, Inc. reported the following key financial metrics:
| Metric | Value |
|---|---|
| Net Income (Loss) Available to Common Stockholders | $(94.6) million |
| Net Income (Loss) per Share (Diluted) | $(0.69) |
| Principal Balance of Loans | $8,243.4 million |
| Carrying Value, Net | $7,830.6 million |
| Weighted Average Cash Coupon | 8.1% |
| Unfunded Loan Commitments | $503.9 million |
| Total Assets | $2,847.2 million |
| Total Liabilities | $2,122.7 million |
Investment Strategy
Apollo Commercial Real Estate Finance, Inc. focuses on originating and managing a diversified portfolio of commercial real estate loans, including first mortgages, subordinate loans, and other lending assets. The strategy emphasizes:
- Investing in high-quality assets with strong underlying cash flows.
- Maintaining a diversified portfolio across various property types and geographic locations.
- Utilizing Apollo's investment and operational expertise to enhance asset performance.
Recent Developments
In the third quarter of 2024, ARI faced challenges with specific loans, including a realized loss of $127.5 million related to the Massachusetts Healthcare Loan. This loss was part of a broader adjustment to the company's Specific Current Expected Credit Loss (CECL) Allowance, which increased by $149.5 million during the same period.
Loan Portfolio Highlights
As of September 30, 2024, the loan portfolio consisted of:
| Property Type | Carrying Value ($ in thousands) | % of Portfolio |
|---|---|---|
| Office | $1,792,187 | 22.8% |
| Hotel | $1,620,910 | 20.6% |
| Retail | $1,454,077 | 18.5% |
| Residential | $1,220,115 | 15.5% |
| Mixed Use | $433,252 | 5.5% |
| Industrial | $418,218 | 5.3% |
| Healthcare | $355,474 | 4.5% |
Dividend Policy
ARI intends to continue making regular quarterly distributions to its common stockholders, aligning with the requirements of a Real Estate Investment Trust (REIT). For the third quarter ended September 30, 2024, the declared dividends were:
| Type of Stock | Dividend Declared ($ per share) |
|---|---|
| Common Stock | $0.25 |
| Series B-1 Preferred Stock | $0.45 |
Market Position and Outlook
Apollo Commercial Real Estate Finance, Inc. continues to navigate a challenging economic environment influenced by rising interest rates and macroeconomic uncertainties. The company remains focused on its mission to deliver attractive returns while managing risks associated with its investment portfolio.
How Apollo Commercial Real Estate Finance, Inc. (ARI) Works
Financial Performance Overview
Apollo Commercial Real Estate Finance, Inc. (ARI) reported a net income (loss) available to common stockholders of ($169.5) million, or ($1.23) per diluted share for the nine months ended September 30, 2024, compared to a net income of $2.4 million, or $0.00 per diluted share for the same period in 2023. For the three months ended September 30, 2024, the net income (loss) was ($94.6) million, or ($0.69) per diluted share, down from a profit of $43.0 million, or $0.30 per diluted share in the prior year.
Key Financial Metrics
The following table summarizes key financial metrics for ARI for the three and nine months ended September 30, 2024, and 2023:
| Metric | Q3 2024 | Q3 2023 | Change | 9M 2024 | 9M 2023 | Change |
|---|---|---|---|---|---|---|
| Net Interest Income | $47,043 | $60,223 | ($13,180) | $155,479 | $194,165 | ($38,686) |
| Net Income (Loss) | ($91,549) | $46,071 | ($137,620) | ($160,288) | $11,587 | ($171,875) |
| Dividends Declared per Share | $0.25 | $0.35 | ($0.10) | $0.95 | $1.05 | ($0.10) |
Interest Income and Expenses
For the three months ended September 30, 2024, ARI reported interest income from commercial mortgage loans of $179,921 thousand and interest income from subordinate loans of $1,210 thousand. The interest expense for the same period was $134,088 thousand, resulting in a net interest income of $47,043 thousand.
Operations Related to Real Estate Owned
Revenue from real estate owned operations for the three months ended September 30, 2024, was $24,530 thousand, while operating expenses related to real estate owned were $19,879 thousand, leading to a net income related to real estate owned of $2,309 thousand.
Loan Portfolio Overview
As of September 30, 2024, ARI's loan portfolio consisted of 45 loans with a principal balance of $8,243,398 thousand and a carrying value of $7,830,611 thousand. The weighted-average cash coupon was 8.1%, and the weighted-average remaining fully-extended term was 2.5 years.
| Portfolio Statistics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Number of Loans | 45 | 50 |
| Principal Balance | $8,243,398 | $8,610,110 |
| Carrying Value, Net | $7,830,611 | $8,358,093 |
| Unfunded Loan Commitments | $503,858 | $868,582 |
| Weighted-Average Cash Coupon | 8.1% | 8.3% |
Expected Credit Loss (CECL) Allowances
For the nine months ended September 30, 2024, ARI recorded a net increase in the Specific CECL Allowance of $149.5 million, largely related to two subordinate loans. The total CECL Allowance as of September 30, 2024, was $342,500 thousand.
Cash Flow from Operations
For the nine months ended September 30, 2024, net cash provided by operating activities was $150,325 thousand. This was a decrease compared to $243,017 thousand for the same period in 2023.
Debt and Financing Arrangements
As of September 30, 2024, ARI had total borrowings outstanding of $6,788,075 thousand, with various financing arrangements maturing through June 2029. The breakdown of borrowings is as follows:
| Type of Borrowing | Outstanding Amount | Maturity Date |
|---|---|---|
| Secured Credit Facilities | $3,438,878 | November 2026 |
| Barclays Private Securitization | $2,034,897 | December 2026 |
| Revolving Credit Facility | $51,050 | March 2026 |
| Senior Secured Term Loans | $763,250 | January 2027 |
| Senior Secured Notes | $500,000 | June 2029 |
Market Conditions and Risks
The company faces various external risks, including public health issues, geopolitical instability, and economic conditions that have significantly impacted financial markets. These factors contribute to an environment of uncertainty that ARI must navigate in its operations and investment strategies.
How Apollo Commercial Real Estate Finance, Inc. (ARI) Makes Money
Revenue Streams
Apollo Commercial Real Estate Finance, Inc. (ARI) primarily generates revenue through its investment in commercial mortgage loans. As of September 30, 2024, the company reported:
| Revenue Source | Q3 2024 (in thousands) | Q2 2024 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Interest Income from Commercial Mortgage Loans | $179,921 | $179,388 | $533 |
| Interest Income from Subordinate Loans and Other Lending Assets | $1,210 | $842 | $368 |
| Total Net Interest Income | $47,043 | $51,758 | ($4,715) |
| Revenue from Real Estate Owned Operations | $24,530 | $29,350 | ($4,820) |
| Total Net Revenue | $71,573 | $81,157 | ($9,584) |
Net Interest Income Analysis
For the nine months ended September 30, 2024, ARI reported:
| Metric | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Interest Income from Commercial Mortgage Loans | $543,025 | $520,712 | $22,313 |
| Interest Income from Subordinate Loans | $2,901 | $16,416 | ($13,515) |
| Total Interest Expense | ($390,447) | ($342,963) | ($47,484) |
| Net Interest Income | $155,479 | $194,165 | ($38,686) |
Real Estate Owned Operations
ARI also derives income from real estate properties owned, which include hotels and other commercial properties. For the three months ended September 30, 2024, the company reported:
| Metric | Q3 2024 (in thousands) | Q2 2024 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Revenue from Real Estate Owned | $24,530 | $29,350 | ($4,820) |
| Operating Expenses Related to Real Estate Owned | ($19,879) | ($21,767) | $1,888 |
| Net Income Related to Real Estate Owned | $2,309 | $5,296 | ($2,987) |
Losses and Allowances
During the third quarter of 2024, ARI experienced significant realized losses, notably:
- Net Realized Loss on Investments: ($127,512,000)
- Increase in Specific CECL Allowance: $0
- Increase in General CECL Allowance, net: $899,000
Debt and Financing
As of September 30, 2024, ARI's debt structure includes:
| Debt Type | Outstanding Balance (in thousands) | Maturity |
|---|---|---|
| Secured Credit Facilities | $3,438,878 | November 2026 |
| Barclays Private Securitization | $2,034,897 | December 2026 |
| Revolving Credit Facility | $51,050 | March 2026 |
| Total Borrowings | $6,788,075 |
Liquidity Position
As of September 30, 2024, ARI maintained:
- Cash on Hand: $194.3 million
- Loan Proceeds Held by Servicer: $105.8 million
- Unencumbered Assets: $375.1 million
- Undrawn Capacity under Secured Debt Arrangements: $2.0 billion
Equity and Dividends
ARI's dividend activity for the three months ended September 30, 2024:
| Dividend Type | 2024 (per share) | 2023 (per share) |
|---|---|---|
| Common Stock | $0.25 | $0.35 |
| Series B-1 Preferred Stock | $0.45 | $0.45 |
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Article updated on 8 Nov 2024
Resources:
- Apollo Commercial Real Estate Finance, Inc. (ARI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Apollo Commercial Real Estate Finance, Inc. (ARI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Apollo Commercial Real Estate Finance, Inc. (ARI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.