Apollo Commercial Real Estate Finance(US:ARI)2020-07-30 22:49Financial Performance - For the three months ended June 30, 2020, net income available to common stockholders was $56.8 million, or $0.36 per diluted share[166]. - For the six months ended June 30, 2020, net income (loss) available to common stockholders was $(74.4) million, or $(0.50) per diluted share[166]. - The company reported a net loss of $74.4 million for the six months ended June 30, 2020, compared to a net income of $117.4 million for the same period in 2019[166]. - Operating Earnings were $(11.3) million, or $(0.07) per share, compared to $56.6 million, or $0.38 per share for the same period in the prior year[230]. - Operating earnings for the six months ended June 30, 2020, were $(11,250), a decrease from $51,438 for the same period in 2019[239]. - Net interest income decreased by $14.2 million (16.7%) and $22.4 million (13.4%) for the three and six months ended June 30, 2020, respectively, compared to the same periods in 2019[169]. - The company recognized a realized loss of $53.9 million from the termination of an interest rate swap during the second quarter of 2020[179]. - The company recorded a net realized loss on the sale of three construction loans and one hotel loan due to troubled debt restructuring[235]. Debt and Financing - The company's commercial mortgage loans net amounted to $5,343.4 million with a weighted average coupon of 4.8% and a weighted average all-in yield of 5.3% as of June 30, 2020[159]. - The total commercial real estate debt portfolio was valued at $6,387.8 million, with subordinate loans and other lending assets net at $1,044.4 million[159]. - The secured debt arrangements totaled $3,440.2 million, with a cost of funds at 2.2%[159]. - As of June 30, 2020, the company had $1.1 billion of corporate debt and $3.4 billion of asset-specific financings, with no corporate debt maturities until August 2022[183]. - The debt-to-equity ratio increased to 1.7 as of June 30, 2020, compared to 1.4 as of December 31, 2019[184]. - The company had $583.8 million in loans on cost recovery or non-accrual status as of June 30, 2020, compared to $199.1 million at the same date in 2019[169]. - The company had $1.5 billion of unfunded loan commitments as of June 30, 2020, primarily related to its commercial mortgage loan portfolio[221]. - The senior secured term loan outstanding balance was $495.0 million as of June 30, 2020, maturing in May 2026[207]. Management and Operations - The company is externally managed by Apollo, which has approximately $413.6 billion in assets under management as of June 30, 2020[153]. - The Management Agreement allows the Manager to receive a base management fee of 1.5% of stockholders' equity per annum, calculated quarterly[222]. - The Management Agreement may be terminated only upon a two-thirds vote of independent directors based on unsatisfactory performance or unfair management fees[224]. - The company does not have any off-balance sheet arrangements or relationships with unconsolidated entities[225]. Market Conditions and Risks - The ongoing COVID-19 pandemic has adversely impacted the company's financial condition, results of operations, and cash flows, with potential for continued economic disruption[156]. - The company has adopted the CECL Standard, which may affect its accounting policies[157]. - The company aims to manage interest rate risk through various financing structures and hedging instruments[246]. - The total floating rate assets subject to interest rate sensitivity amounted to $1,628,001 as of June 30, 2020[247]. Shareholder Information - The company repurchased 5,795,976 shares of common stock at a weighted-average price of $7.96 per share during the six months ended June 30, 2020[211]. - The company intends to continue making regular quarterly distributions to common stockholders, aiming to distribute at least 90% of REIT taxable income[226]. - The company had 6,770,393 shares of Series B Preferred Stock outstanding, with dividends at an initial rate of 8.00% per annum, payable quarterly[227]. - Book value per share decreased to $14.81 as of June 30, 2020, down from $16.03 as of December 31, 2019[240]. Allowance and Provisions - The Specific CECL Allowance recorded a total of $155.5 million during the six months ended June 30, 2020, partially offset by a $15.0 million reversal of a previously recorded allowance[177]. - The provision for loan losses for the three months ended June 30, 2020, was $(25,169), compared to $(15,000) for the same period in 2019[239].