Core Insights - The article promotes a portfolio strategy that generates income without the need for selling assets, aiming to simplify retirement investing [1] - It emphasizes the importance of community and education in investment decisions, suggesting that investors should not navigate the market alone [2] Group 1: Portfolio Features - The service offers a model portfolio with buy/sell alerts, catering to both conservative and aggressive investors through preferred and baby bond portfolios [2] - Additional features include dividend and portfolio trackers, regular market updates, and an active chat community with service leaders [2] Group 2: Investment Philosophy - The investment philosophy centers on community engagement and educational support, reinforcing the idea that collective knowledge enhances investment success [2] - The service closely monitors positions and provides exclusive buy and sell alerts to its members, indicating a proactive management approach [4]

Group 1 - American Healthcare REIT (AHR) has returned 49.4% year-to-date, significantly outperforming the average Finance sector gain of 13% [4] - AHR is part of the Finance sector, which includes 869 individual stocks and currently holds a Zacks Sector Rank of 1, indicating strong performance relative to other sectors [2] - The Zacks Rank system, which emphasizes earnings estimates and revisions, currently gives AHR a Zacks Rank of 2 (Buy), suggesting a positive earnings outlook [3] Group 2 - The Zacks Consensus Estimate for AHR's full-year earnings has increased by 3.5% over the past quarter, reflecting improved analyst sentiment [4] - AHR is categorized under the REIT and Equity Trust - Other industry, which consists of 99 companies and has an average gain of 4.7% this year, further highlighting AHR's strong performance [6] - Apollo Commercial Finance (ARI), another Finance stock, has returned 20% year-to-date and has a Zacks Rank of 2 (Buy), indicating it is also performing well within the sector [5][7]

Mortgage Market Overview - Mortgage rates are currently at the lowest levels of 2025, with the average 30-year mortgage rate at 6.58% as of August 21, 2025, unchanged from the previous week and down from 6.91% at the start of 2025 [1][9] - The decline in mortgage rates reflects market optimism for potential Federal Reserve rate cuts later in the year, along with changing inflation and bond market dynamics [4] mREITs Performance and Outlook - mREITs such as Apollo Commercial Real Estate Finance (ARI), Annaly Capital Management (NLY), and Orchid Island Capital (ORC) are expected to benefit from lower mortgage rates, which are lifting mortgage originations and driving stronger refinancing activity [5][9] - With improving purchase originations and refinancing activities, mREITs are likely to see book value improvement as Agency market spreads tighten, enhancing net interest spread and financial performance [7][9] Apollo Commercial Real Estate Finance (ARI) - Apollo Commercial has a portfolio of $8.6 billion in loans, primarily secured by properties in the U.S. and European gateway cities, with 96% of its lending consisting of floating-rate loans [10] - Despite a 23.9% year-over-year decline in net interest income (NII) in the first half of 2025, NII is expected to rise due to declining mortgage rates, with a current dividend yield of 9.9% and a payout ratio of 96% [11] Annaly Capital Management (NLY) - Annaly manages an $89.5 billion portfolio, with a focus on residential credit, mortgage servicing rights (MSRs), and Agency mortgage-backed securities (MBS), which helps reduce volatility and interest rate sensitivity [14][15] - NLY's NII increased to $493.2 million in the first half of 2025 from $47.1 million a year ago, supported by improving purchase originations and refinancing, with a current dividend yield of 13.6% and a payout ratio of 99% [16][17] Orchid Island Capital (ORC) - Orchid focuses on Agency residential mortgage-backed securities (RMBS) and has seen its NII rise to $42.9 million in the first half of 2025, compared to net interest expenses of $3.2 million in the same period last year [22] - The company currently offers a dividend yield of 20.4% and has increased its dividend twice in the past five years, with earnings estimates indicating significant year-over-year growth of 450% and 39.7% for 2025 and 2026, respectively [23]

Group 1 - Apollo Commercial Finance (ARI) has returned 14.9% year-to-date, outperforming the Finance sector average of 8.5% [4] - The Zacks Rank for Apollo Commercial Finance is 1 (Strong Buy), indicating strong analyst sentiment and a positive earnings outlook [3] - The Zacks Consensus Estimate for ARI's full-year earnings has increased by 2.1% over the past quarter, reflecting improving analyst sentiment [3] Group 2 - Apollo Commercial Finance is part of the REIT and Equity Trust industry, which consists of 33 companies and is currently ranked 181 in the Zacks Industry Rank [6] - The average return for the REIT and Equity Trust industry is 0.6% year-to-date, indicating that ARI is performing significantly better [6] - American Healthcare REIT (AHR), another outperforming stock in the Finance sector, has returned 40.3% year-to-date [4]

Group 1 - David A. Johnson is the founder and principal of Endurance Capital Management, a New Jersey Limited Liability Company, with over 30 years of investment experience [1] - Johnson's investment strategy includes a diverse range of assets such as stocks, bonds, options, ETFs, REITs, real estate, closed-end funds, hedge funds, and private credit [1] - He holds a Master of Science (MS) Degree in Finance with a concentration in Investment Analysis from Boston University, a Certificate in Financial Planning, and an MBA from Fordham University [1]

Core Viewpoint - Apollo Commercial Finance (ARI) has received a Zacks Rank 1 (Strong Buy) upgrade, indicating a positive outlook for its stock price due to an upward trend in earnings estimates [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based solely on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade reflects a positive comment on Apollo Commercial Finance's earnings outlook, which is expected to favorably impact its stock price [4][6]. Impact of Earnings Estimates on Stock Prices - Changes in a company's future earnings potential, as shown by earnings estimate revisions, are strongly correlated with near-term stock price movements [5]. - Institutional investors often use earnings estimates to calculate the fair value of stocks, leading to significant price movements based on their buying or selling actions [5]. Performance of Zacks Rank System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [8]. - The upgrade of Apollo Commercial Finance to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [11]. Recent Earnings Estimate Revisions - For the fiscal year ending December 2025, Apollo Commercial Finance is expected to earn $1.05 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 3.2% over the past three months [9].

Financial Data and Key Metrics Changes - ARI reported distributable earnings of $36 million or $0.26 per share for Q2 2025, an 8% increase from the previous quarter, providing dividend coverage of about 104 times [7][11] - The carrying value of ARI's portfolio increased 12% from the prior quarter to approximately $8.6 billion, up from $7.7 billion at the end of Q1 [8][10] - The weighted average unlevered yield of the portfolio was 7.8% [8] Business Line Data and Key Metrics Changes - ARI committed $1.4 billion to new loans during Q2 2025, with year-to-date commitments totaling $2 billion [2][9] - Loans secured by residential properties now comprise approximately 25% of ARI's portfolio, representing the largest property type concentration [3] - The portfolio's risk rating remained stable at 3.0, with no downgrades or asset-specific CECL allowances recorded during the quarter [10] Market Data and Key Metrics Changes - Approximately 50% of ARI's portfolio is in Europe, which accounted for 18% of originations year-to-date, benefiting from recent interest rate cuts [3] - The market for acquisitions in Europe is gaining momentum, with a healthy pipeline across property types [3] Company Strategy and Development Direction - ARI is focused on executing value maximization plans for its focus assets, aiming to convert underperforming capital into higher-yielding reinvestment opportunities [5] - The company plans to continue capital rotation, which is expected to positively impact earnings in 2025 and throughout 2026 [5] - ARI's strategy includes maintaining a diversified loan portfolio and leveraging Apollo's real estate credit platform for transaction flow [2] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to redeploy capital into newly originated loans and identify attractive opportunities across the U.S. and Western Europe [2] - The management noted that the commercial real estate market is expected to remain robust through the end of the year, with increased deal flow and activity [34][35] - There is ongoing dialogue about potentially extending the duration of the portfolio, but no significant shift in strategy is expected at this time [38] Other Important Information - ARI completed a new five-year floating rate $750 million term loan B, which repaid existing loans with pending maturities in 2026 and 2028 [6] - The company ended the quarter with $2.8 billion in total liquidity, including cash on hand and committed undrawn credit capacity [12] - A settlement agreement with the Commonwealth of Massachusetts is expected to yield approximately $18 million for ARI, which will be recycled into new loan origination [11] Q&A Session Summary Question: What is the expected timeline for cash flow from the Brook asset? - Management anticipates meaningful progress on leasing by the end of the year, with the asset turning modestly cash flow positive in early next year [17] Question: Is there potential upside from land parcels near the Brook? - Discussions are ongoing regarding a small parcel that could increase density, but it is too early to predict the likelihood of success [22] Question: What is the plan for the capital structure and leverage? - Management plans to maintain current leverage levels while converting non-earning assets into earning assets to drive dividend growth [25] Question: How does the company view the commercial real estate transaction market? - Management is optimistic about the transaction market, noting increased activity and confidence in finding suitable opportunities [34] Question: Is ARI considering extending the duration of its portfolio? - While monitoring the situation, management does not expect a meaningful shift in strategy at this time [38] Question: What is the outlook for senior housing investments? - Management is focused on private pay senior housing, which is expected to benefit from favorable demographic trends [52]

Financial Performance - Net income available to common stockholders was $18 million, or $0.12 per diluted share[10] - Distributable Earnings reached $36 million, or $0.26 per diluted share[10] - The company declared common stock dividends of $0.25 per share, resulting in a dividend yield of 10.2%[10] Loan Portfolio - The total loan portfolio amounted to $8.6 billion with a weighted-average unlevered all-in yield of 7.8%, with 98% in first mortgages and 96% floating rate[10] - New loan commitments totaled $2.0 billion year-to-date, with $1.4 billion funded at close, and $1.4 billion in Q2, with $916 million funded at close[10] - Loan repayments and sales amounted to $724 million year-to-date, with $631 million in Q2[10] Capitalization and Liquidity - The company ended the quarter with a total common equity book value of $1.7 billion[10] - Total liquidity at the end of the quarter was $208 million, including $182 million in cash and $26 million available leverage[10] - A new $750 million Term Loan B due June 2030 was refinanced, bearing interest at SOFR + 3.25%[10] Real Estate Owned (REO) - Total REO held for investment had a net equity of $444 million, comprised of Brooklyn Multifamily Development ($289 million), D C Hotel ($85 million), and Atlanta Hotel ($70 million)[21] - Nine units at 111 West 57th Street closed, generating ~$170 million of net sales proceeds, ~$141 million of which reduced ARI's basis[23] Foreign Exchange Risk Mitigation - The company reported a total foreign loan capital stack of $4.307 billion, with $3.267 billion offset by local currency denominated secured debt arrangements[52] - The net equity of foreign loans was $1.041 billion[53]

Earnings Performance - Apollo Commercial Finance reported quarterly earnings of $0.26 per share, matching the Zacks Consensus Estimate, but down from $0.35 per share a year ago [1] - The company posted revenues of $43.07 million for the quarter, missing the Zacks Consensus Estimate by 1.28% and down from $51.76 million year-over-year [2] - Over the last four quarters, Apollo Commercial Finance has surpassed consensus EPS estimates two times but has not beaten revenue estimates [2] Stock Performance and Outlook - Apollo Commercial Finance shares have increased approximately 12.7% since the beginning of the year, outperforming the S&P 500's gain of 8.6% [3] - The company's earnings outlook is crucial for future stock performance, with current consensus EPS estimates at $0.29 for the coming quarter and $1.05 for the current fiscal year [7] Industry Context - The REIT and Equity Trust industry, to which Apollo Commercial Finance belongs, is currently ranked in the top 20% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Apollo's stock performance [5][6]

[Introduction & Disclosures](index=1&type=section&id=Introduction%20%26%20Disclosures) This section provides standard forward-looking statements and disclosures regarding investment performance and the use of the company name [Forward Looking Statements and Other Disclosures](index=2&type=section&id=Forward%20Looking%20Statements%20and%20Other%20Disclosures) This section outlines standard forward-looking statements and other disclosures, emphasizing that future investments may not be profitable and past performance is not indicative of future returns. It also clarifies the use of 'Apollo' in the presentation - Investments made in the future are not guaranteed to be profitable or to equal past performance[2](index=2&type=chunk) - Past performance is not indicative nor a guarantee of future returns[4](index=4&type=chunk) - The presentation contains forward-looking statements regarding financial results and future expectations, which are subject to various risks and uncertainties[3](index=3&type=chunk) [Q2 2025 Performance Summary](index=3&type=section&id=Q2%202025%20Performance%20Summary) This section details Apollo's Q2 2025 financial results, loan portfolio, capitalization, liquidity, and per-share metrics [Key Financial Highlights](index=3&type=section&id=Key%20Financial%20Highlights) Apollo Commercial Real Estate Finance, Inc. reported Q2 2025 net income of $18 million, or $0.12 per diluted share, and Distributable Earnings of $36 million, or $0.26 per diluted share. The company declared a common stock dividend of $0.25 per share, representing a 10.2% dividend yield Q2 2025 Financial Results | Metric | Value | | :------------------------------------- | :----------------------------------- | | Net income available to common stockholders | $18 million, or $0.12 per diluted share | | Distributable Earnings¹ | $36 million, or $0.26 per diluted share | | Declared common stock dividends | $0.25 per share (10.2% dividend yield) | [Loan Portfolio Overview](index=3&type=section&id=Loan%20Portfolio%20Overview) The total loan portfolio reached $8.6 billion in Q2 2025, characterized by a weighted-average unlevered all-in yield of 7.8%. The portfolio primarily consists of first mortgages (98%) and floating-rate loans (96%), with a weighted-average risk rating of 3.0 Q2 2025 Loan Portfolio Snapshot | Metric | Value | | :--------------------------------- | :------------------- | | Total loan portfolio | $8.6 billion | | W/a unlevered all-in yield² | 7.8% | | First mortgages | 98% | | Floating rate | 96% | | W/A risk rating | 3.0 | - Committed **$2.0 billion** to new loans year-to-date (**$1.4 billion** funded at close), with **$1.4 billion** committed in Q2 (**$916 million** funded at close)[5](index=5&type=chunk) - Loan repayments and sales totaled **$724 million** year-to-date, with **$631 million** occurring in Q2[5](index=5&type=chunk) [Capitalization and Liquidity](index=3&type=section&id=Capitalization%20and%20Liquidity) Apollo ended Q2 2025 with a total common equity book value of $1.7 billion and $208 million in total liquidity. The company refinanced its 2026 and 2028 term loans with a new $750 million Term Loan B due June 2030 and expanded its borrowing capacity by $1.4 billion through new and upsized credit facilities Q2 2025 Capitalization & Liquidity | Metric | Value | | :--------------------------------- | :------------------- | | Total common equity book value⁶ | $1.7 billion | | Total liquidity | $208 million | | Cash | $182 million | | Available leverage on secured debt | $26 million | - Refinanced 2026 and 2028 term loans with a new **$750 million Term Loan B** due **June 2030**, bearing interest at **SOFR + 3.25%**[5](index=5&type=chunk) - Closed three new secured credit facilities and upsized an existing one, providing an additional **$1.4 billion** of aggregate borrowing capacity[5](index=5&type=chunk) [Subsequent Events](index=3&type=section&id=Subsequent%20Events) Subsequent to the quarter end, Apollo received a full repayment of a $250 million first mortgage on a Manhattan retail property. Additionally, a settlement agreement was reached in a Massachusetts lawsuit, resulting in an additional $44 million payment ($18 million attributable to ARI) by August 20, 2025 - Received full repayment of a **$250 million** first mortgage secured by a retail property in Manhattan, NY[5](index=5&type=chunk) - A settlement agreement was reached in a Massachusetts lawsuit, where The Commonwealth agreed to pay Saint Elizabeth, LLC an additional **$44 million** (**$18 million** attributable to ARI) by **August 20, 2025**[5](index=5&type=chunk) [Per Share Metrics](index=4&type=section&id=Per%20Share%20Metrics) Apollo's Distributable Earnings per share increased to $0.26 in Q2 2025 from $0.25 in Q1 2025, covering the quarterly dividend of $0.25 per share. Book Value Per Share (post-CECL allowance & depreciation) slightly decreased to $12.07 in Q2 2025 from $12.18 in Q1 2025 Distributable Earnings Per Share & Quarterly Dividend | Metric | 1Q'25 | 2Q'25 | | :----------------------------- | :---- | :---- | | Distributable Earnings per Share¹ | $0.25 | $0.26 | | Quarterly Dividend | $0.25 | $0.25 | Book Value Per Share⁶ | Metric | 1Q'25 | 2Q'25 | | :------------------------------------------ | :------ | :------ | | BVPS Post-General CECL Allowance & Depreciation | $12.18 | $12.07 | | General CECL Allowance & Depreciation | $0.48 | $0.52 | - Q2 Dividend per share of **$0.25** was covered by Distributable Earnings¹ of **$0.26** per share[9](index=9&type=chunk) [Portfolio Activity and Real Estate Owned (REO)](index=5&type=section&id=Portfolio%20Activity%20and%20Real%20Estate%20Owned%20(REO)) This section reviews Apollo's Q2 and year-to-date portfolio activity, including new funding, repayments, and updates on Real Estate Owned assets [Q2 and 1H'25 Portfolio Activity](index=5&type=section&id=Q2%20and%201H%2725%20Portfolio%20Activity) Apollo demonstrated robust portfolio activity in Q2 2025, with $916 million in new funding and $394 million in add-on funding, offset by $631 million in repayments. Year-to-date, new funding reached $1,376 million and add-on funding $467 million, against $724 million in repayments Portfolio Activity (in $mm) | Activity | Q2'25 | 1H'25 | | :----------------- | :---- | :---- | | New Funding | $916 | $1,376 | | Add-on Funding | $394 | $467 | | Repayments | ($631) | ($724) | [REO Overview and Update](index=5&type=section&id=REO%20Overview%20and%20Update) As of June 30, 2025, Apollo's Real Estate Owned (REO) held for investment totaled $821 million in assets, with $444 million in net equity. Significant progress was made on the Brooklyn Multifamily Development, with initial residential TCO received and strong leasing momentum. For 111 West 57th Street, nine units closed, generating approximately $170 million in net sales proceeds, reducing ARI's basis by $141 million REO Held for Investment (as of June 30, 2025, in $mm) | Metric | Assets | Debt (A) | Net Equity | | :-------------------------- | :----- | :------- | :--------- | | Brooklyn Multifamily Development | $821 | ($304) | $289 | | D.C. Hotel | $158 | ($73) | $85 | | Atlanta Hotel | $70 | ($181) | $70 | | Total REO Held for Investment⁷ | $821 | ($377) | $444 | - Brooklyn Multifamily Development received initial residential TCO in **June**, with final TCO expected in **Q4**, and strong leasing momentum with move-ins commencing in **July 2025**[12](index=12&type=chunk) - **Nine units** closed at 111 West 57th Street, generating ~**$170 million** of net sales proceeds, with ~**$141 million** reducing ARI's basis after full repayment of third-party senior loan[13](index=13&type=chunk) [Loan Origination Highlights](index=6&type=section&id=Loan%20Origination%20Highlights) This section highlights new loan commitments in Q2 and 1H 2025, detailing their characteristics and notable originations [Q2 and 1H'25 New Commitments](index=6&type=section&id=Q2%20and%201H%2725%20New%20Commitments) Apollo originated $1.4 billion in new loan commitments in Q2 2025 and $2.0 billion year-to-date. These commitments were 100% first mortgages, predominantly floating rate, with weighted-average unlevered all-in yields of 8.0% (Q2) and 8.1% (1H'25), and weighted-average loan-to-value ratios of 59% (Q2) and 57% (1H'25) Q2 & 1H'25 Loan Origination Highlights | Metric | Q2 | 1H'25 | | :-------------------------- | :------- | :------- | | New Commitments Closed | $1.4 billion | $2.0 billion | | First Mortgages | 100% | 100% | | Weighted Average Unlevered All-in Yield³ | 8.0% | 8.1% | | Weighted Average Loan-to-Value | 59% | 57% | - Notable Q2 originations include a **$400 million** floating-rate senior loan for a pre-let data center development in the **Southwest US** and a **$186 million** floating-rate senior loan for a luxury residential-led mixed-use scheme in the **United Kingdom**[14](index=14&type=chunk)[16](index=16&type=chunk) [Detailed Loan Portfolio Analysis](index=8&type=section&id=Detailed%20Loan%20Portfolio%20Analysis) This section provides an in-depth analysis of Apollo's loan portfolio, covering overall characteristics, diversification, and specifics for various property types [Overall Portfolio Characteristics](index=8&type=section&id=Overall%20Portfolio%20Characteristics) Apollo's loan portfolio has a carrying value of $8.6 billion across 53 loans, with 98% being first mortgages and a weighted-average unlevered all-in yield of 7.8%. The portfolio maintains a weighted-average risk rating of 3.0, a loan-to-value of 57%, and a remaining fully-extended term of 2.7 years Loan Portfolio Key Characteristics | Metric | Value | | :------------------------------------ | :------------------- | | Carrying Value / Number of Loans | $8.6 billion / 53 Loans | | W/A Unlevered All-in Yield³ | 7.8% | | Loan Position | 98% First Mortgage | | W/A Portfolio Risk Rating⁹ | 3.0 | | W/A Portfolio Loan-to-Value(b) | 57% | | W/A Remaining Fully-Extended Term⁹ | 2.7 Years | - **41%** of the portfolio was originated **post-2022**, indicating a relatively recent vintage for a significant portion of assets[19](index=19&type=chunk) [Collateral and Geographic Diversification](index=8&type=section&id=Collateral%20and%20Geographic%20Diversification) The loan portfolio is diversified across various collateral types, with residential (25%), office (23%), and hotel (16%) being the largest segments. Geographically, the portfolio has significant exposure to the United Kingdom (36%), New York City (17%), and other European markets (13%) Collateral Diversification (by % of portfolio) | Collateral Type | Percentage | | :---------------- | :--------- | | Residential(d) | 25% | | Office | 23% | | Hotel | 16% | | Retail | 14% | | Industrial | 12% | | Mixed Use | 4% | | Other(c) | 6% | Geographic Diversification (by % of portfolio, in $mm) | Region | Total ($mm) | Percentage | | :------------- | :---------- | :--------- | | United Kingdom | $3,140 | 36% | | New York City | $1,497 | 17% | | Other Europe | $1,158 | 13% | | West | $899 | 10% | | Southeast | $804 | 9% | | Midwest | $560 | 7% | | Other(d) | $605 | 7% | | **Total** | **$8,664** | **100%** | [Office Loan Portfolio Specifics](index=10&type=section&id=Office%20Loan%20Portfolio%20Specifics) The office loan portfolio comprises 10 loans with a carrying value of $2.0 billion, all being first mortgages. It has a weighted-average loan-to-value of 51% and a risk rating of 2.7. A significant portion (42%) is located in London, UK, with maturities extending up to 2030 Office Loan Portfolio Key Metrics | Metric | Value | | :-------------------------- | :------------------- | | Number of Loans(a) | 10 Loans | | Carrying Value | $2.0 Billion | | First Mortgage⁹ | 100% | | W/A Loan-to-Value(b) | 51% | | W/A Risk Rating⁹ | 2.7 | - The largest commitment in the office portfolio is **$757 million** across **3 loans**, which are **100% leased** to credit tenants[25](index=25&type=chunk) Office Loan Portfolio Location Breakdown | Location | Percentage | | :--------------- | :--------- | | London, UK | 42% | | New York City | 24% | | Chicago, IL | 9% | | Various, United States | 9% | | Berlin, Germany | 5% | | Milan, Italy | 4% | | Other | 7% | [Senior Loan Portfolio Details](index=11&type=section&id=Senior%20Loan%20Portfolio%20Details) The detailed senior loan portfolio, totaling $8.518 billion in amortized cost, is segmented by property type, including residential, office, hotel, retail, industrial, mixed-use, and other categories. It shows varying levels of unfunded commitments and fully-extended maturities across different locations Senior Loan Portfolio Summary (in $mm) | Property Type | Amortized Cost | Unfunded Commitments | | :-------------- | :------------- | :------------------- | | Residential | $1,981 | $32 | | Office | $1,910 | $175 | | Hotel | $1,372 | $12 | | Retail | $1,161 | $166 | | Industrial | $1,001 | $591 | | Mixed Use | $313 | $27 | | Other | $780 | $16 | | **Subtotal - First Mortgage** | **$8,518** | **$1,019** | - The portfolio has a weighted-average fully-extended maturity of **2.7 years** for first mortgages[31](index=31&type=chunk) [Residential Senior Loans](index=11&type=section&id=Residential%20Senior%20Loans) The residential senior loan portfolio has an amortized cost of $1,981 million with $32 million in unfunded commitments. Loans are diversified across various locations including the UK and US, with maturities ranging from 2025 to 2030 - The largest residential loan (Loan 1) has an amortized cost of **$251 million**, originated in **December 2021**, and matures in **February 2027**, located in **various UK properties**[27](index=27&type=chunk) [Office Senior Loans](index=11&type=section&id=Office%20Senior%20Loans) The office senior loan portfolio totals $1,910 million in amortized cost, with $175 million in unfunded commitments. Key loans include a $651 million loan in London, UK, 100% leased by a credit tenant, maturing in December 2028 - Loan 16, secured by an office property in **London, UK**, has an amortized cost of **$651 million** and is **100% leased** by a credit tenant for a **20-year term**, maturing in **December 2028**[27](index=27&type=chunk) [Hotel Senior Loans](index=12&type=section&id=Hotel%20Senior%20Loans) The hotel senior loan portfolio has an amortized cost of $1,372 million and $12 million in unfunded commitments. Loans are spread across Europe and various US locations, with maturities up to 2030 - Loan 24, a hotel loan originated in **December 2023**, has an amortized cost of **$321 million** and matures in **December 2028**, located in **various European properties**[29](index=29&type=chunk) [Retail Senior Loans](index=12&type=section&id=Retail%20Senior%20Loans) The retail senior loan portfolio amounts to $1,161 million in amortized cost, with $166 million in unfunded commitments. It includes loans in the UK and US, with maturities ranging from 2025 to 2030 - Loan 34, a retail loan originated in **April 2022**, has an amortized cost of **$528 million** and **$22 million** in unfunded commitments, located in **various UK properties**, maturing in **April 2027**[29](index=29&type=chunk) [Industrial Senior Loans](index=12&type=section&id=Industrial%20Senior%20Loans) The industrial senior loan portfolio has an amortized cost of $1,001 million, with substantial unfunded commitments of $591 million. This segment includes construction loans and is diversified across Sweden, the US, and the UK - Loan 44, an industrial loan originated in **May 2025**, has **$400 million** in unfunded commitments and is a construction loan located in **Abilene, TX**, maturing in **June 2030**[29](index=29&type=chunk) [Mixed Use Senior Loans](index=13&type=section&id=Mixed%20Use%20Senior%20Loans) The mixed-use senior loan portfolio has an amortized cost of $313 million and $27 million in unfunded commitments, with properties in London, UK, and Brooklyn, NY, maturing between 2027 and 2029 - Loan 45, a mixed-use loan originated in **May 2025**, has an amortized cost of **$162 million** and **$10 million** in unfunded commitments, located in **London, UK**, maturing in **May 2027**[31](index=31&type=chunk) [Other Senior Loans](index=13&type=section&id=Other%20Senior%20Loans) The 'Other' senior loan category includes pubs, caravan parks, and a portfolio of office, industrial, and retail properties, totaling $780 million in amortized cost with $16 million in unfunded commitments. These loans are primarily located in the UK and Germany - Loan 47, a pubs loan originated in **December 2023**, has an amortized cost of **$226 million** and matures in **January 2029**, located in **various UK properties**[31](index=31&type=chunk) [Subordinate Loans and Other Lending Assets](index=14&type=section&id=Subordinate%20Loans%20and%20Other%20Lending%20Assets) Apollo's portfolio includes $146 million in subordinate loans with a weighted-average maturity of 0.3 years, primarily secured by residential properties in Manhattan, NY. Additionally, there is a corporate note classified as 'Other Lending Assets' with a fair value of $40 million and a weighted-average maturity of 4.3 years Subordinate Loan & Other Lending Assets Portfolio (in $mm) | Asset Type | Amortized Cost / Fair Value | Unfunded Commitments | W/A Maturity | | :-------------------------- | :-------------------------- | :------------------- | :----------- | | Subordinate Loans | $146 | - | 0.3 Years | | Other Lending Assets (Corporate Note) | $40 | - | 4.3 Years | | **Total Loans, Net** | **$8,625** | | | - Loan 53, an office subordinate loan, matured in **September 2024**, with negotiations with the sponsor currently in process[33](index=33&type=chunk) [Capital Structure and Risk Management](index=15&type=section&id=Capital%20Structure%20and%20Risk%20Management) This section examines Apollo's capital structure, foreign exchange risk mitigation strategies, and loan maturity and interest rate sensitivities [Capital Structure Composition](index=15&type=section&id=Capital%20Structure%20Composition) Apollo's capital structure is conservatively managed, with secured debt arrangements constituting 63% ($6,222 million) of total capital. Common equity book value represents 18% ($1,749 million), and the company has no corporate debt maturities until June 2029, having added $1.9 billion in financing capacity during 2025 Capital Structure Composition (in $mm) | Component | Amount ($mm) | Percentage | | :------------------------------------ | :----------- | :--------- | | Secured Debt Arrangements(a),(b),(c) | $6,222 | 63% | | Debt Related to Real Estate Owned | $379 | 4% | | Senior Notes | $1,250 | 13% | | Preferred Stock | $169 | 2% | | Common Equity Book Value(d) | $1,749 | 18% | - Apollo employs a conservative capital management strategy, with **10 secured debt arrangements** across **8 counterparties** and a **~73% weighted-average available advance rate**[36](index=36&type=chunk) - The company added **$1.9 billion** of financing capacity during 2025 and has no corporate debt maturities until **June 2029**[36](index=36&type=chunk) [Foreign Exchange Risk Mitigation](index=16&type=section&id=Foreign%20Exchange%20Risk%20Mitigation) Apollo actively mitigates foreign exchange risk by structuring secured debt arrangements in local currency and economically hedging net equity and net interest income of foreign loans through forward currency contracts. In Q2 2025, the company realized a $0.6 million gain from forward point impact on currency contracts hedging net equity, despite a $72 million loss on foreign currency forward contracts Foreign Exchange Rate Change (Local/USD) | Currency | % FX Change YoY | % FX Change QoQ | | :------- | :-------------- | :-------------- | | GBP | 6% | 9% | | EUR | 9% | 10% | | SEK | 10% | 12% | - Secured debt arrangements are structured in **local currency**, reducing FX exposure to **net equity** on foreign loans, with a **76% weighted average advance** on the total foreign loan portfolio[40](index=40&type=chunk) Q2 2025 Gain (Loss) on Net Equity & Forward Contracts (in $mm) | Metric | Total | | :------------------------------------ | :---- | | Net Gain on Foreign Loan Principal(e) | $71 | | Q2 gain (loss) on forward contracts(f) | ($72) | [Loan Maturities and Interest Rate Sensitivity](index=17&type=section&id=Loan%20Maturities%20and%20Interest%20Rate%20Sensitivity) Apollo's fully-extended loan maturities (net equity) are spread across future years, with $441 million maturing in 2025 and $430 million in 2026. Expected net future fundings are relatively low. The company's net interest income per share shows sensitivity to benchmark rates, particularly SOFR/LIBOR, with a +$0.01 impact for a 0.25% rate change Fully-Extended Loan Maturities and Expected Future Fundings by Net Equity (in $mm) | Year | Fully-Extended Maturities (Net Equity)(a) | Expected Net Future Fundings(a) | | :--------- | :---------------------------------------- | :------------------------------ | | 2025 | $441 | $16 | | 2026 | $430 | $4 | | 2027 | $402 | $20 | | 2028 | $363 | $20 | | 2029 & Beyond | $78 | $0 | Net Interest Income Sensitivity to Benchmark Rates (Per Share) | Index | Change in Benchmark Rate | Net Interest Income Per Share | | :---------- | :----------------------- | :---------------------------- | | SOFR/LIBOR | +0.25% | +$0.01 | | SOFR/LIBOR | -0.75% | -$0.03 | | EURIBOR | All changes | $0.00 | | SONIA | All changes | $0.00 | [Appendix](index=18&type=section&id=Appendix) This section includes consolidated financial statements and a reconciliation of GAAP net income to distributable earnings [Consolidated Balance Sheets](index=19&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Apollo reported total assets of $9.82 billion, an increase from $8.41 billion at December 31, 2024. This growth was primarily driven by an increase in commercial mortgage loans, net, which rose to $8.48 billion from $6.72 billion. Total liabilities also increased to $7.97 billion from $6.54 billion, mainly due to higher secured debt arrangements Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Total Assets | $9,816,957 | $8,411,591 | | Commercial mortgage loans, net | $8,479,438 | $6,715,347 | | Total Liabilities | $7,970,571 | $6,537,110 | | Secured debt arrangements, net | $6,213,188 | $4,814,973 | | Total Stockholders' Equity | $1,846,386 | $1,874,481 | [Consolidated Statement of Operations](index=20&type=section&id=Consolidated%20Statement%20of%20Operations) For Q2 2025, Apollo's net interest income decreased to $43.07 million from $51.76 million in Q2 2024, leading to a total net revenue of $70.90 million, down from $81.11 million year-over-year. Net income available to common stockholders for Q2 2025 was $17.67 million ($0.12 per diluted share), compared to $32.72 million ($0.23 per diluted share) in Q2 2024. The company reported a significant foreign currency translation gain of $73.71 million in Q2 2025, contrasting with a loss in the prior year, but also a substantial loss on foreign currency forward contracts Consolidated Statement of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net interest income | $43,070 | $51,758 | | Total net revenue | $70,902 | $81,108 | | Net income (loss) available to common stockholders | $17,671 | $32,717 | | Net income (loss) per diluted share of common stock | $0.12 | $0.23 | | Foreign currency translation gain (loss) | $73,705 | ($1,362) | | Gain (loss) on foreign currency forward contracts | ($82,139) | $6,377 | | Dividend declared per share of common stock | $0.25 | $0.35 | [Reconciliation of GAAP Net Income to Distributable Earnings](index=21&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Distributable%20Earnings) For Q2 2025, Apollo's Distributable Earnings were $36.42 million, or $0.26 per diluted share, derived from GAAP net income available to common stockholders of $17.67 million after various adjustments totaling $18.75 million. This represents an increase from Q1 2025, where Distributable Earnings were $33.24 million ($0.24 per diluted share) Reconciliation of GAAP Net Income to Distributable Earnings (in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :------------------------------------------ | :-------------- | :------------- | | Net income (loss) available to common stockholders | $17,671 | $22,923 | | Total adjustments | $18,745 | $10,312 | | Distributable Earnings | $36,416 | $33,235 | | Diluted Distributable Earnings per share of common stock | $0.26 | $0.24 | - Key adjustments include **equity-based compensation expense**, **losses on foreign currency forwards**, **foreign currency gains**, and **increases in current expected credit loss allowance**[52](index=52&type=chunk) [Footnotes](index=22&type=section&id=Footnotes) This section contains supplementary notes and explanations relevant to the financial report