Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI) Q3 2023 Earnings Call October 31, 2023 10:00 AM ET Company Participants Stuart A. Rothstein - Chief Executive Officer Scott Weiner - Chief Investment Officer Anastasia Mironova - Chief Financial Officer Conference Call Participants Sarah Barcomb - BTIG Stephen Laws - Raymond James Richard Shane - JP Morgan Jade Rahmani - KBW Operator I would like to remind everyone that today's call and webcast are being recorded. Please note that they are the property ...

Financial Performance - The net income available to common stockholders for Q3 2023 was $43.0 million, or $0.30 per diluted share, compared to $180.0 million, or $1.13 per diluted share in Q3 2022[217]. - For the nine months ended September 30, 2023, the net income available to common stockholders was $2.4 million, or $0.00 per diluted share, down from $260.0 million, or $1.66 per diluted share in the same period of 2022[217]. - Net income before taxes for Q3 2023 was $46.6 million, a substantial increase from a net loss of $83.4 million in Q2 2023[233]. - The net income for the nine months ended September 30, 2023 was $11.6 million, a decrease from $269.2 million in the same period of 2022[235]. - Distributable Earnings for the three months ended September 30, 2023, were $52.7 million, or $0.37 per share, compared to $95.9 million, or $0.67 per share, for the same period in the prior year[277]. - Net income related to real estate owned increased by $0.8 million for the nine months ended September 30, 2023, primarily driven by a $4.3 million increase in net income from hotel operations[237]. - The company reported a net realized loss on investments of $43,577,000 for the nine months ended September 30, 2023[285]. Assets and Liabilities - As of June 30, 2023, the company has approximately $617.1 billion in assets under management[186]. - As of September 30, 2023, total debt obligations amounted to $6.6 billion, including $1.4 billion of corporate debt and $5.1 billion of asset-specific financings[254]. - The company's portfolio comprised $7.6 billion in commercial mortgage loans and $0.4 billion in subordinate loans and other lending assets as of September 30, 2023[270]. - The total carrying value of commercial mortgage loans was $7,561.3 million, with a weighted average coupon of 9.4% and a weighted average all-in yield of 9.3%[207]. - The total unfunded commitment for the commercial mortgage loan portfolio was $693 million as of September 30, 2023[211]. - The company had $693.1 million of unfunded loan commitments as of September 30, 2023, with an expectation to fund approximately $441.5 million to existing borrowers in the short term[254]. Revenue and Income Sources - Revenue from real estate owned operations was $20.9 million in Q3 2023, down from $29.2 million in Q2 2023, resulting in a net income related to real estate owned of $1.0 million, compared to $7.0 million in the previous quarter[222]. - Revenue from real estate owned operations for the nine months ended September 30, 2023 was $66.3 million, up from $42.1 million in the same period of 2022[235]. - Other income, net decreased by $0.9 million to $1.5 million in Q3 2023, primarily due to a $1.0 million expense related to a junior mezzanine loan[225]. - Other income, net increased by $4.2 million during the nine months ended September 30, 2023, due to higher bank interest earned from cash balances and money market funds[242]. Loan and Investment Management - The company primarily originates, acquires, invests in, and manages performing commercial first mortgage loans and related debt investments[186]. - The company utilizes the WARM method to determine a General CECL Allowance for the majority of loans in its portfolio, which is sensitive to historical loss rates and macroeconomic conditions[197][198]. - The company evaluates loan-specific allowances when a borrower is experiencing financial difficulty, which requires significant judgment[201]. - The fair value of collateral for loans is determined using methods such as discounted cash flow and market approach, which are subject to uncertainty[202]. - The company has worked with borrowers to execute loan modifications due to challenges arising from COVID-19, including temporary deferrals of interest or principal[214]. - The General CECL Allowance decreased by $5.8 million in Q3 2023, compared to an increase of $2.1 million in Q2 2023, driven by portfolio seasoning and loan repayments[228]. - The Specific CECL Allowance increased by $59.5 million during the nine months ended September 30, 2023, compared to a net decrease of $26.0 million in the same period of 2022[245]. Market Conditions and Risks - The ongoing COVID-19 pandemic and geopolitical events have contributed to significant volatility in financial markets, impacting the company's operations[187]. - The company aims to manage interest rate risk by structuring financing agreements with varying maturities and using hedging instruments[292]. - The estimated hypothetical impact on net interest income for a 50 basis point increase in interest rates is an increase of $5,268,000 for the twelve-month period following September 30, 2023[294]. - The company has a strategic focus on acquiring high credit quality assets to mitigate credit risk and maintain low financing costs[291]. Management and Governance - The company is externally managed by an experienced team from Apollo, benefiting from its global infrastructure[186]. - The company’s financial statements are prepared in accordance with GAAP, requiring estimates and assumptions that involve significant judgment[189]. - The company is subject to investment guidelines that restrict investments to ensure compliance with REIT regulations and avoid registration as an investment company[271]. Shareholder Returns - The company intends to continue making regular quarterly distributions, with dividends declared per share of $0.35 for common stock and $0.45 for Series B-1 Preferred Stock as of September 30, 2023[275]. - Book value per share as of September 30, 2023, was $14.45, down from $15.54 as of December 31, 2022[286]. - Diluted Distributable Earnings per share prior to net realized loss on investments for the nine months ended September 30, 2023, was $0.37, consistent with the same period in 2022[285].

Financial Data and Key Metrics Changes - The company reported distributable earnings prior to net realized losses of $65.8 million or $0.46 per share, with a common stock dividend maintained at $0.35 per share, resulting in a dividend coverage ratio of 131% and a dividend yield of 12.4% as of June 30 [11] - GAAP net loss was $86.5 million or $0.62 per diluted share, with the portfolio ending the quarter at an outstanding principal balance of $8.6 billion and a weighted average unlevered yield of 8.6% [11][12] - The company recorded a $126 million Specific CECL Allowance on the junior mezzanine A loan and increased the allowance on the junior mezzanine B loan by $15.5 million, resulting in a total write-off of $82 million [12][13] Business Line Data and Key Metrics Changes - The loan portfolio saw positive events, including a significant lease agreement for a major office construction loan, which de-risked the transaction [6] - Year-to-date, the company received $595 million in full or partial loan repayments, with an additional $300 million expected in Q3 [7] - The Mayflower Hotel's net cash flow has exceeded pre-pandemic levels, indicating strong operating performance [7] Market Data and Key Metrics Changes - The real estate market is experiencing a recalibration phase, with negative sentiment affecting transaction volumes and valuations [5] - Concerns regarding refinancing risks and potential economic slowdown persist, impacting buyer-seller dynamics [5] Company Strategy and Development Direction - The company is focused on maintaining robust liquidity and diversifying its lender base, having entered into a new secured borrowing facility [9] - The strategy includes active engagement with borrowers to inject additional equity into transactions in exchange for extended loan terms [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the pricing perspective for the Steinway project, despite dialing back expectations on timing [15] - The company remains optimistic about covering dividends through the end of the year, despite challenges posed by the Steinway project and the expired interest rate cap [23][29] Other Important Information - The company repurchased $37 million of convertible notes during the quarter, reducing the outstanding balance to $176 million [9] - The debt-to-equity ratio at quarter-end was 2.9x, with $857 million of unencumbered real estate assets [13] Q&A Session Summary Question: Concerns about Steinway Tower and loss potential - Management indicated that they have ring-fenced loss potential and are confident in pricing despite reduced expectations on timing [15] Question: Remaining units and potential write-downs - Management acknowledged better interest at the penthouse level but emphasized the need to sell units regardless of their location in the building [19] Question: Dividend implications and earnings projections - Management projected that the dividend will be comfortably covered through the end of the year, despite the impact of the interest rate cap and non-accrual status of Steinway [23][29] Question: Update on REO assets and hotel performance - The Atlanta Hotel has been rebranded and is under active dialogue for sale, while the Mayflower Hotel is performing better than pre-COVID levels [25][26] Question: Liquidity plans and sources - The company plans to maintain excess liquidity, with unencumbered assets and repayment activity as potential sources of liquidity [40] Question: Appetite for new lending - Management indicated that while there are attractive deals available, the focus remains on maintaining liquidity for existing operations [44]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________ Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ FORM 10-Q __________________________________ (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2023 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1 ...

Q1 2023 Financial Results Apollo Commercial Real Estate Finance, Inc. April 2023 Unless otherwise noted, information as ofMarch 31, 2023 It should not be assumed that investments made in the future will be profitable or will equal the performance of the investmentsshown in this document. Forward Looking Statements and Other Disclosures ...

Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI) Q1 2023 Earnings Conference Call April 27, 2023 9:00 AM ET Company Participants Stuart Rothstein - President and Chief Executive Officer Anastasia Mironova - Chief Financial Officer Conference Call Participants Sarah Barcomb - BTIG Richard Shane - JP Morgan Jade Rahmani - KBW Steve DeLaney - JMP Securities Stephen Laws - Raymond James Operator [Abrupt start] I would like to remind everyone that today's call and webcast are being recorded. Please note th ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________ Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ FORM 10-Q __________________________________ (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2023 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of ...

Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI) Q4 2022 Earnings Conference Call February 9, 2023 10:00 AM ET Corporate Participants Stuart Rothstein - President and Chief Executive Officer Anastasia Mironova - Chief Financial Officer Conference Call Participants Steve DeLaney - JMP Securities Stephen Laws - Raymond James Jade Rahmani - KBW Eric Hagen - BTIG Rick Shane - JPMorgan Operator Good day and welcome to the Q4 2022, Apollo Commercial Real Estate Finance, Inc.'s Earnings Conference Call. At t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________ Emerging growth company ☐ FORM 10-K __________________________________ (Mark One) ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2022 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 001-34452 ______________________________ ...