Q1 2025 Financial Results Apollo Commercial Real Estate Finance, Inc. April 24, 2025 Unless otherwise noted, information as of It should not be assumed that investments made in the future will be profitable or will equal the performance of the investments shown in this document. March 31, 2025 Forward Looking Statements and Other Disclosures Q1 Summary Results This presentation may contain forward-looking statements that are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Se ...

Financial Data and Key Metrics Changes - Apollo Commercial Real Estate Finance reported distributable earnings of $33 million or $0.24 per share for Q1 2025, with GAAP net income of $23 million or $0.16 per diluted share, providing 96% coverage of the quarterly dividends [15][16] - The loan portfolio ended the quarter with a carrying value of $7.7 billion, up from $7.1 billion at year-end, with a weighted average yield of 7.9% [17][19] - The debt-to-equity ratio at quarter end was 3.5x, up from 3.2x at year-end, reflecting the recirculation of proceeds from repayments into new leveraged deals [22] Business Line Data and Key Metrics Changes - The first quarter saw continued velocity in loan originations, with $650 million of new loans committed, primarily secured by residential properties and a data center construction loan [9][10] - Loan repayments totaled $93 million during the quarter, which were quickly redeployed through new origination post-quarter end, amounting to $709 million in total commitments on new loans in Q2 to date [18][20] Market Data and Key Metrics Changes - The real estate market is experiencing modest spread widening and a more cautious tone, with a broad recession presenting the greatest risk to ongoing recovery [7][8] - Limited new supply due to tariff effects driving up construction costs is expected to positively impact long-term real estate values and fundamentals [8] Company Strategy and Development Direction - The company is focused on proactive asset management and executing plans on focus loans to maximize value recovery and convert capital into higher return opportunities [13] - The strategy includes financing developers of data centers with strong credit tenants and long-term leases, reflecting a commitment to sectors with strong secular tailwinds [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the loan portfolio's ability to produce distributable earnings that support the current quarterly dividend run rate, despite Q1 earnings being slightly below this rate [14][16] - The company anticipates a recovery in distributable earnings for the remaining quarters of 2025, driven by growth in the loan portfolio and recirculation of underperforming capital [16] Other Important Information - The company has defined pathways for each focus asset and is actively pursuing resolutions, with a focus on selling the Liberty Center asset in the latter part of the year [28] - The company ended the quarter with $218 million of total liquidity, comprised of cash on hand and committed undrawn credit capacity [22] Q&A Session Summary Question: Concerns about realizing losses on non-accruing assets - Management indicated that specific CECL allowances are tied to two assets, with plans to sell Liberty Center later this year and positive sales momentum for 111 West 57th Street [26][28] Question: Market impacts on loan repayments and new money deployment - Management noted that the market remains robust, with no anticipated slowdown in transactions despite recent volatility [34][36] Question: Updates on specific assets and portfolio growth - Management provided updates on various assets, indicating positive leasing activity and potential recapitalization strategies for the Manhattan office [56][63] Question: Exposure in the U.K. and Europe - Management explained that the company's European operations were established through relationships with U.S. sponsors and have developed a strong presence in the market over the past decade [87][90]

Core Viewpoint - The article compares Apollo Commercial Finance (ARI) and Ladder Capital (LADR) to determine which stock is more attractive to value investors [1] Group 1: Zacks Rank and Earnings Outlook - ARI has a Zacks Rank of 2 (Buy), indicating a positive earnings estimate revision trend, while LADR has a Zacks Rank of 4 (Sell) [3] - The improving earnings outlook for ARI positions it favorably in the Zacks Rank model [7] Group 2: Valuation Metrics - ARI has a forward P/E ratio of 9.28, compared to LADR's forward P/E of 10.57 [5] - ARI's PEG ratio is 0.23, indicating a favorable valuation relative to its expected earnings growth, while LADR's PEG ratio is 2.36 [5] - ARI's P/B ratio is 0.67, which is lower than LADR's P/B of 0.85, suggesting ARI is undervalued compared to its book value [6] - Based on these metrics, ARI earns a Value grade of B, while LADR receives a Value grade of C [6]

Financial Performance - Net income available to common stockholders was $23 million, or $0.16 per diluted share[7]. - Distributable Earnings totaled $33 million, or $0.24 per diluted share, with a declared common stock dividend of $0.25 per share, resulting in an 11.0% dividend yield[7]. - The company reported a net income available to common stockholders of $22,923,000, resulting in a net income per diluted share of $0.16[48]. - Distributable earnings for the three months ended March 31, 2025, were $33,235,000, translating to a diluted distributable earnings per share of $0.24[49]. - The company incurred total operating expenses of $38,439,000 during the same period[48]. - Preferred dividends paid amounted to $3,068,000, impacting the net income available to common stockholders[48]. Loan Portfolio - The total loan portfolio reached $7.7 billion, with a weighted-average unlevered all-in yield of 7.9% and 95% of loans being first mortgages[7]. - The total senior loan portfolio amounts to $7,319 million, with $989 million in unfunded commitments[28]. - The office loan segment has a subtotal of $1,706 million, with $251 million in unfunded commitments[26]. - The hotel loan segment totals $1,604 million, with $29 million in unfunded commitments[27]. - The residential loan segment has a subtotal of $1,477 million, with $27 million in unfunded commitments[27]. - The retail loan segment totals $2,958 million, with $414 million in unfunded commitments[27]. - The industrial loan segment amounts to $543 million, with $235 million in unfunded commitments[28]. - The mixed-use loan segment totals $317 million, with $18 million in unfunded commitments[28]. - The weighted-average risk rating of the loan portfolio is 3.0, with a loan-to-value ratio of 57%[19]. Funding and Liquidity - Committed $650 million to new loans, with $460 million funded at close, and loan repayments and sales amounted to $93 million[7]. - Total liquidity at the end of the quarter was $218 million, including $170 million in cash[7]. - The company funded $994 million across four new originations in Q2 2025, bringing year-to-date fundings to over $1.5 billion[31]. - The company expects net future fundings to be $934,000,000 in 2025, decreasing to $9,000,000 in 2029 and beyond[42]. - The company has a cash and cash equivalents balance of $166,424,000 as of March 31, 2025[46]. Debt and Capital Management - Upsized secured credit facility with JPMorgan by $500 million, increasing total capacity to $2 billion and extending maturity to March 2030[7]. - Closed two new secured credit facilities with an aggregate borrowing capacity of $690 million[7]. - The company has a debt to equity ratio of 3.5x, indicating a conservative capital management strategy[35]. - The foreign loan portfolio is structured to mitigate foreign exchange risk, with 73% of secured debt arrangements in local currency[39]. Revenue and Interest Income - Total net revenue for the three months ended March 31, 2025, was $65,816,000, with net interest income of $39,485,000[48]. - The interest income from commercial mortgage loans was $143,985,000, with an interest expense of $105,057,000[48]. Asset and Liability Overview - Total assets as of March 31, 2025, amounted to $8,784,193,000, while total liabilities were $6,923,585,000[46]. - The expected increase in net interest income sensitivity to benchmark rates is projected at $0.01 for each increase in rates[42].

Core Viewpoint - Apollo Commercial Finance (ARI) reported quarterly earnings of $0.24 per share, missing the Zacks Consensus Estimate of $0.25 per share, and down from $0.35 per share a year ago, indicating a -4% earnings surprise [1][2] Financial Performance - The company posted revenues of $39.49 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 11.53%, and down from $56.68 million year-over-year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates three times [2] Stock Performance - Apollo Commercial Finance shares have increased by approximately 5% since the beginning of the year, contrasting with the S&P 500's decline of -8.6% [3] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.27 on revenues of $44.75 million, and for the current fiscal year, it is $0.98 on revenues of $178.98 million [7] - The estimate revisions trend for Apollo Commercial Finance is currently favorable, resulting in a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The REIT and Equity Trust industry is currently ranked in the bottom 31% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8]

Financial Performance - For the three months ended March 31, 2025, net income available to common stockholders was $22.9 million, compared to a net loss of $107.6 million for the same period in 2024[214]. - The net income before taxes was $26.1 million for the three months ended March 31, 2025, compared to a net loss of $104.4 million for the same period in 2024[222]. - Distributable Earnings for the three months ended March 31, 2025, were $33.2 million, or $0.24 per share, compared to $50.5 million, or $0.35 per share, for the same period in 2024[241]. - Dividends declared for common stock were $0.25 per share for the three months ended March 31, 2025, down from $0.35 per share in the same period of 2024[279]. Revenue and Income Sources - Revenue from real estate owned operations increased by $2.5 million to $26.3 million for the three months ended March 31, 2025, compared to $23.9 million for the same period in 2024[222]. - Interest income from commercial mortgage loans decreased by $39.7 million to $144.0 million for the three months ended March 31, 2025, compared to $183.7 million for the same period in 2024[222]. - Net income related to real estate owned increased by $3.8 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to higher occupancy levels at the D.C. hotel and increased net income from the Atlanta Hotel[224]. Expenses and Allowances - Net interest income decreased by $4.0 million to $39.5 million for the three months ended March 31, 2025, primarily due to lower average index rates and a lower average loan balance[216]. - Total operating expenses decreased by $1.6 million to $15.2 million for the three months ended March 31, 2025, compared to $16.8 million for the same period in 2024[222]. - The General CECL Allowance increased by $4.0 million during the three months ended March 31, 2025, driven by a more adverse macroeconomic outlook[218]. - The General CECL Allowance increased by $4.0 million during the three months ended March 31, 2025, driven by a more adverse macroeconomic outlook and loan originations[231]. Loan Portfolio and Commitments - During the three months ended March 31, 2025, the company committed $650.2 million to new loans, with $460.5 million funded at closing[248]. - The company received $93.4 million in loan repayments and sales during the same period[248]. - As of March 31, 2025, the total carrying value of the loan portfolio is $7,687,086, with commercial mortgage loans at $7,285,022 and subordinate loans at $402,064[254][262]. - The total unfunded commitment for the commercial mortgage loan portfolio is $989 million[256]. - As of March 31, 2025, the company had $989.2 million in unfunded loan commitments, with an expectation to fund approximately $592.9 million to existing borrowers in the short term[269]. Debt and Equity - The debt-to-equity ratio increased to 3.5 as of March 31, 2025, compared to 3.2 at December 31, 2024[266]. - The company has current debt obligations totaling $1.3 billion in corporate debt, $5.2 billion in secured debt arrangements, and $348.2 million related to real estate owned[268]. - Total borrowings as of March 31, 2025, amounted to $6.84 billion, an increase from $6.41 billion as of December 31, 2024[273]. - The company has policies in place to manage leverage and may seek to raise additional equity or debt capital for future investments[271]. Asset Management and Risk - The company maintains a strong relationship with borrowers and actively manages assets through continuous performance assessments[260]. - The company focuses on acquiring high credit quality assets to keep credit losses and financing costs low, but remains subject to varying degrees of credit risk[300]. - Interest rate risk is influenced by fiscal and monetary policies, with a hypothetical impact on net interest income estimated for a 50 basis point change in interest rates[302]. - For a 50 basis point increase in interest rates, the total net interest income could increase by $5,370, while a decrease could lead to a reduction of $3,224[302]. - Prepayment risk is managed by including prepayment penalties in loan agreements to mitigate unexpected principal repayments[305]. - Currency risk is mitigated through foreign currency forward contracts that match the net principal and interest of foreign currency loans[308]. Valuation and Financial Reporting - A valuation allowance of $0.7 million was recorded for a commercial mortgage loan held for sale, reflecting a selling price of 99.5%[227]. - The fair value of underlying collateral is sensitive to valuation methodology and key unobservable inputs, impacting the Specific CECL Allowance[296]. - The company prepares financial statements in accordance with GAAP and distributes at least 90% of REIT taxable income to maintain REIT qualification[307].

Core Viewpoint - Apollo Commercial Real Estate Finance, Inc. reported a net income of $0.16 per diluted share and distributable earnings of $0.24 per diluted share for the first quarter of 2025, reflecting the impact of elevated repayments and capital deployment of $650 million [1][2]. Financial Performance - Net income attributable to common stockholders per diluted share was $0.16 for the quarter ended March 31, 2025 [1]. - Distributable Earnings per diluted share was $0.24 for the same period, which is a non-GAAP financial measure [1][4]. - The Company recorded no realized losses in the consolidated statement of operations during the three months ended March 31, 2025 [7]. Capital Deployment - The Company deployed $650 million in capital during the first quarter of 2025, focusing on redeploying capital into newly originated loans [2]. Dividend Policy - As a REIT, the Company is required to distribute at least 90% of its taxable income annually, and it intends to pay dividends in an amount equal to its net taxable income over time, subject to board authorization [5]. Company Overview - Apollo Commercial Real Estate Finance, Inc. is a real estate investment trust that primarily originates, acquires, invests in, and manages performing commercial first mortgage loans and related debt investments [10]. - The Company is externally managed by ACREFI Management, LLC, a subsidiary of Apollo Global Management, which had approximately $751 billion in assets under management as of December 31, 2024 [10].

Core Viewpoint - Apollo Commercial Real Estate Finance, Inc. (ARI) will hold a conference call on April 25, 2025, to discuss its first quarter 2025 financial results, which will be released on April 24, 2025, after market close [1] Company Overview - Apollo Commercial Real Estate Finance, Inc. is a real estate investment trust that focuses on originating, acquiring, investing in, and managing performing commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments [3] - The company is externally managed and advised by ACREFI Management, LLC, which is an indirect subsidiary of Apollo Global Management, Inc., a global alternative asset manager with approximately $751 billion in assets under management as of December 31, 2024 [3] Conference Call Details - The conference call will include a review of the first quarter 2025 performance, discussions on recent events, and a question-and-answer session [1] - Registration for the call can be completed through a provided link, and a live webcast will also be available on the company's website [2] - A replay of the webcast will be posted approximately two hours after the call for those unable to attend live [2] Additional Information - Further details can be found on the company's website at www.apollocref.com [4]

Group 1 - Apollo Commercial Finance (ARI) shares increased by 7.3% to $8.56, following a significant trading volume, contrasting with an 18.5% loss over the past four weeks [1] - The stock price surge is attributed to a broader market rally due to optimism from Trump's announcement of a 90-day pause on reciprocal tariffs for most trading partners, which is expected to ease cost pressures and improve profitability for mREITs [2] - The upcoming quarterly earnings for Apollo Commercial Finance are projected at $0.22 per share, reflecting a year-over-year decline of 37.1%, with revenues expected to be $42.77 million, down 24.6% from the previous year [3] Group 2 - The consensus EPS estimate for Apollo Commercial Finance has remained unchanged over the last 30 days, indicating that stock price increases may not be sustainable without earnings estimate revisions [4] - Apollo Commercial Finance is categorized under the Zacks REIT and Equity Trust industry, with a current Zacks Rank of 3 (Hold) [4] - Blackstone Mortgage Trust (BXMT), another company in the same industry, saw a 6.6% increase in its stock price, closing at $18.31, but has returned -15.1% over the past month [4]

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