Apollo Commercial Real Estate Finance, Inc. Reports Fourth Quarter and Full Year 2024 Results

Rhea-AI Summary

Apollo Commercial Real Estate Finance (NYSE:ARI) has released its Q4 and full-year 2024 results. The company reported Q4 net income of $0.27 per diluted share, while showing a full-year net loss of ($0.97) per diluted share. Distributable Earnings per diluted share were $0.32 for Q4 2024 and $0.43 for the full year.

The company experienced significant portfolio activity in 2024, with $2.5 billion in repayments which were reinvested into new vintage, attractively priced loans. According to CEO Stuart Rothstein, ARI benefited from Apollo's real estate credit origination capabilities and a resurgence in real estate transaction activity throughout the year.

Positive

• Portfolio repayments of $2.5 billion successfully redeployed into new loans
• Q4 positive net income of $0.27 per diluted share
• Q4 Distributable Earnings of $0.32 per diluted share maintained stability

Negative

• Full-year net loss of ($0.97) per diluted share
• Annual Distributable Earnings declined to $0.43 from $1.33 year-over-year
• Realized losses from sale of Honolulu hotel loan and Massachusetts hospitals portfolio loan

Insights

Financial Analyst

The Q4 and FY2024 results for Apollo Commercial Real Estate Finance reveal a complex financial picture that requires careful interpretation. The Q4 net income of $0.27 per share shows operational resilience, while the full-year loss of ($0.97) reflects significant challenges, particularly from realized losses on specific assets.

The Distributable Earnings of $0.32 per share for Q4 and $1.33 for the full year (before realized losses) provide a clearer picture of ARI's core lending operations. This metric, important for REITs, better reflects the actual cash-generating capability of the portfolio and serves as a key determinant for dividend sustainability.

The $2.5 billion in portfolio repayments during 2024 demonstrates robust liquidity in certain market segments, while the successful redeployment into new vintage loans at attractive prices suggests opportunistic capital allocation in a higher-rate environment. However, the realized losses from the Hawaii hotel and Massachusetts hospitals portfolio highlight the ongoing stress in specific commercial real estate sectors, particularly hospitality and healthcare.

The divergence between GAAP and Distributable Earnings metrics underscores the impact of non-cash items and realized losses on reported results. This pattern is particularly relevant in the current commercial real estate environment, where property value adjustments and sector-specific challenges continue to influence portfolio performance. The company's focus on new vintage loans at higher rates indicates a strategic shift toward enhanced yield potential, though careful monitoring of credit quality remains essential given market uncertainties.

02/10/2025 - 04:15 PM

NEW YORK, Feb. 10, 2025 (GLOBE NEWSWIRE) -- Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today reported results for the quarter and year ended December 31, 2024.

Net income (loss) attributable to common stockholders per diluted share of common stock was $0.27 and ($0.97) for the quarter and year ended December 31, 2024, respectively. Distributable Earnings (a non-GAAP financial measure defined below) and Distributable Earnings prior to net realized loss on investments per diluted share of common stock were $0.32 and $0.32 for the quarter ended December 31, 2024, respectively, and $0.43 and $1.33 for the year ended December 31, 2024, respectively.

Commenting on 2024 performance, Stuart Rothstein, Chief Executive Officer and President of the Company, said:
“ARI had an active year of capital deployment in 2024, continuing to benefit from the strength and breadth of Apollo’s real estate credit origination capabilities.  A resurgence in real estate transaction activity over the past year led to $2.5bn of repayments in ARI’s portfolio and we successfully redeployed that capital into new vintage, attractively priced loans.”

ARI issued a detailed presentation of the Company’s quarter and year ended December 31, 2024 results, which can be viewed at www.apollocref.com.

Conference Call and Webcast
The Company will hold a conference call to review fourth quarter and year end results on February 11, 2025 at 10am ET. To register for the call, please use the following link:      

https://register.vevent.com/register/BI38e4ed2c79b3458581a16a9a003e6be1

After you register, you will receive a dial-in number and unique pin. The Company will also post a link in the Stockholders’ section on ARI’s website for a live webcast. For those unable to listen to the live call or webcast, there will be a webcast replay link posted in the Stockholders’ section on ARI’s website approximately two hours after the call.

Distributable Earnings
“Distributable Earnings,” a non-GAAP financial measure, is defined as net income available to common stockholders, computed in accordance with GAAP, adjusted for (i) equity-based compensation expense (a portion of which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding), (ii) any unrealized gains or losses or other non-cash items (including depreciation and amortization related to real estate owned) included in net income available to common stockholders, (iii) unrealized income from unconsolidated joint ventures, (iv) foreign currency gains (losses), other than (a) realized gains/(losses) related to interest income, and (b) forward point gains/(losses) realized on the Company’s foreign currency hedges, and (v) provision for current expected credit losses.

As a REIT, U.S. federal income tax law generally requires the Company to distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that the Company pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. Given these requirements and the Company’s belief that dividends are generally one of the principal reasons shareholders invest in a REIT, the Company generally intends over time to pay dividends to its stockholders in an amount equal to its net taxable income, if and to the extent authorized by the Company’s board of directors. Distributable Earnings is a key factor considered by the Company’s board of directors in setting the dividend and as such the Company believes Distributable Earnings is useful to investors.

During the year ended December 31, 2024, the Company recorded in the consolidated statement of operations realized losses on the sale of a commercial mortgage loan secured by a hotel in Honolulu, Hawaii, and the extinguishment of a commercial mortgage loan secured by a portfolio of eight hospitals in Massachusetts.

The Company believes it is useful to its investors to also present Distributable Earnings prior to net realized loss on investments and gain on extinguishment of debt, in applicable periods, to reflect its operating results because (i) the Company’s operating results are primarily comprised of earning interest income on its investments net of borrowing and administrative costs, which comprise the Company’s ongoing operations and (ii) it has been a useful factor related to the Company’s dividend per share because it is one of the considerations when a dividend is determined. The Company believes that its investors use Distributable Earnings and Distributable Earnings prior to net realized loss on investments and realized gain on extinguishment of debt, or a comparable supplemental performance measure, to evaluate and compare the performance of the Company and its peers.

A significant limitation associated with Distributable Earnings as a measure of the Company’s financial performance over any period is that it excludes unrealized gains (losses) from investments. In addition, the Company’s presentation of Distributable Earnings may not be comparable to similarly titled measures of other companies, that use different calculations. As a result, Distributable Earnings should not be considered as a substitute for the Company’s GAAP net income as a measure of its financial performance or any measure of its liquidity under GAAP. Distributable Earnings are reduced for realized losses on loans which include losses that management believes are near certain to be realized.

A reconciliation of Distributable Earnings to GAAP net income (loss) available to common stockholders is included in the detailed presentation of the Company’s quarter and year ended December 31, 2024 results, which can be viewed at www.apollocref.com.

About Apollo Commercial Real Estate Finance, Inc.
Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) is a real estate investment trust that primarily originates, acquires, invests in and manages performing commercial first mortgage loans, subordinate financings and other commercial real estate-related debt investments. The Company is externally managed and advised by ACREFI Management, LLC, a Delaware limited liability company and an indirect subsidiary of Apollo Global Management, Inc., a high-growth, global alternative asset manager with approximately $751 billion of assets under management at December 31, 2024.

Additional information can be found on the Company’s website at www.apollocref.com.

Forward-Looking Statements
Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company’s control. These forward-looking statements include information about possible or assumed future results of the Company’s business, financial condition, liquidity, results of operations, plans and objectives. When used in this release, the words believe, expect, anticipate, estimate, plan, continue, intend, should, may or similar expressions, are intended to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: higher interest rates and inflation; market trends in the Company’s industry, real estate values, the debt securities markets or the general economy; the timing and amounts of expected future fundings of unfunded commitments; the return on equity; the yield on investments; the ability to borrow to finance assets; the Company’s ability to deploy the proceeds of its capital raises or acquire its target assets; and risks associated with investing in real estate assets, including changes in business conditions and the general economy. For a further list and description of such risks and uncertainties, see the reports filed by the Company with the Securities and Exchange Commission. The forward-looking statements, and other risks, uncertainties and factors are based on the Company’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company. Forward-looking statements are not predictions of future events. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

CONTACT:		Hilary Ginsberg
		Investor Relations
		(212) 822-0767

FAQ

What was ARI's net income per share for Q4 2024?

ARI reported net income of $0.27 per diluted share for Q4 2024.

How much in loan repayments did ARI receive in 2024?

ARI received $2.5 billion in portfolio repayments during 2024.

What was ARI's full-year net loss per share in 2024?

ARI reported a full-year net loss of ($0.97) per diluted share for 2024.

What were ARI's Distributable Earnings per share for Q4 2024?

ARI's Distributable Earnings were $0.32 per diluted share for Q4 2024.

What significant asset sales did ARI complete in 2024?

ARI sold a commercial mortgage loan secured by a hotel in Honolulu and extinguished a loan secured by eight hospitals in Massachusetts.