Apollo Commercial Real Estate Finance(US:ARI)2025-10-30 20:16Financial Performance - For the three months ended September 30, 2025, net income available to common stockholders was $47.7 million, or $0.34 per diluted share, compared to a net loss of $94.6 million, or ($0.69) per diluted share for the same period in 2024[228]. - The company reported a net income before taxes of $51.0 million for the three months ended September 30, 2025, an increase of $30.2 million from the previous quarter[230]. - Distributable Earnings for the three months ended September 30, 2025, were $41.8 million, or $0.30 per share, compared to $36.4 million, or $0.26 per share, for the previous quarter[263]. - Net income available to common stockholders for the three months ended September 30, 2025, was $47,723,000, compared to $17,671,000 for June 30, 2025[268]. - Diluted Distributable Earnings per share increased to $0.30 for September 30, 2025, compared to $0.26 for June 30, 2025[268]. Revenue and Income Sources - Net interest income decreased by $3.0 million to $40.0 million for the three months ended September 30, 2025, primarily due to a lower average loan balance and lower average index rates[231]. - Income from equity method investment increased to $17.1 million for the three months ended September 30, 2025, compared to a net loss of $0.7 million in the previous quarter, driven by a $17.4 million gain on litigation settlement[233][234]. - Revenue from real estate owned operations declined by $1.99 million to $75.7 million for the nine months ended September 30, 2025, compared to $77.7 million in 2024[242]. - Net income from equity method investment was $15.7 million for the nine months ended September 30, 2025, attributed to a $17.4 million gain on litigation settlement[248]. Expenses and Allowances - Total operating expenses for the three months ended September 30, 2025, were $15.3 million, a slight increase from $14.9 million in the previous quarter[230]. - General and administrative expenses decreased by $2.5 million to $19.9 million for the nine months ended September 30, 2025, compared to $22.4 million in 2024[245]. - Management fees to related parties decreased by $1.8 million to $25.6 million for the nine months ended September 30, 2025, compared to $27.4 million in 2024[246]. - The Specific CECL Allowance decreased by $7.5 million during the three months ended September 30, 2025, due to a $1.3 million reversal and a $6.2 million write-off related to the Michigan Office Loan[235]. - The General CECL Allowance increased by $1.1 million during the three months ended September 30, 2025, driven by loan originations and extending expected repayment dates[236]. Asset and Loan Management - The company committed $3.1 billion of capital to new loans during the nine months ended September 30, 2025, with $2.2 billion funded at closing[271]. - The loan portfolio's carrying value as of September 30, 2025, was $8,303,645,000, with a weighted-average coupon of 6.9% and an all-in yield of 7.7%[272]. - The average month-end balance for commercial mortgage loans was $7.9 billion, with related debt of $5.8 billion for the nine months ended September 30, 2025[277]. - The company had $1.0 billion in unfunded loan commitments as of September 30, 2025, with an expectation to fund approximately $779.4 million in the short term[288]. - The portfolio's weighted-average origination loan-to-value (LTV) ratio was 57% as of September 30, 2025, indicating significant equity value[278]. Financial Position and Ratios - Book value per share decreased to $12.18 as of September 30, 2025, from $12.34 as of December 31, 2024[269]. - The debt-to-equity ratio increased to 3.8 as of September 30, 2025, compared to 3.2 at December 31, 2024[285]. - Total borrowings amounted to $7.6 billion as of September 30, 2025, up from $6.4 billion at December 31, 2024[293]. - The company maintained $245.9 million in cash on hand and $53.3 million in available borrowings under financing arrangements as of September 30, 2025[289]. Risk Management - The company seeks to manage interest rate risk by structuring financing agreements with varying maturities and using hedging instruments when appropriate[331]. - The company is subject to credit risk and aims to acquire high-quality assets to keep credit losses and financing costs low[327]. - Prepayment risk is managed by including prepayment penalties in loan agreements to mitigate the impact of principal repayment rates differing from expectations[332]. - Some loans and secured debt are denominated in foreign currencies, exposing the company to currency risk[335]. - The company uses foreign currency forward contracts to mitigate exposure related to fluctuations in currency rates[335]. Regulatory and Compliance - The company is obligated to distribute at least 90% of its REIT taxable income to stockholders annually to maintain REIT qualification[334]. - The OBBB legislation, effective January 1, 2026, relaxed the REIT asset test requirement for taxable REIT subsidiaries from 20% to 25% of the gross value of a REIT's assets[323].