Latest news with #StuartRothstein
Yahoo
26-04-2025
- Business
- Yahoo
Apollo Commercial Real Estate Finance Inc (ARI) Q1 2025 Earnings Call Highlights: Strong Loan ...
Distributable Earnings: $33 million or $0.24 per share. GAAP Net Income: $23 million or $0.16 per diluted share. Loan Portfolio Carrying Value: $7.7 billion at quarter end. Loan Originations: $650 million in new commitments and $73 million in add-on funding. Loan Repayments: $93 million during the quarter. Weighted Average Yield: 7.9% on the loan portfolio. Debt-to-Equity Ratio: 3.5 times at quarter end. Total Liquidity: $218 million. Book Value Per Share: $12.66, excluding general CECL allowance and depreciation. Warning! GuruFocus has detected 6 Warning Signs with ARI. Release Date: April 25, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Apollo Commercial Real Estate Finance Inc (NYSE:ARI) committed to $650 million of new loans in Q1, with a strong focus on residential properties and data centers. The company completed an additional four transactions totaling over $700 million post-quarter end, bringing year-to-date volume to $1.5 billion. ARI's loan portfolio grew to $7.7 billion, up from $7.1 billion at year-end, with a weighted average yield of 7.9%. The company successfully reduced its net exposure on the 111 West 57th Street project by $29 million due to strong sales momentum. ARI has a robust presence in the European market, supported by a dedicated team in London, which provides a competitive advantage in sourcing and managing assets. Q1 earnings were slightly below the current quarterly dividend rate, covering only 96% of the dividends. The general CECL allowance increased by $4 million, reflecting a cautious stance on the macroeconomic outlook. There is increased capital markets volatility and recessionary fears, which could impact the real estate market. The company faces potential risks in the hospitality sector if a recession occurs, due to the quick movement of cash flows in this asset class. The balance of the 111 West 57th Street project increased from $390 million at year-end to $403 million due to additional costs. Q: Can you provide an update on the specific CECL tied to 111 West 57th and Liberty Center? A: Stuart Rothstein, CEO, explained that the specific CECL is primarily tied to these two assets. They expect to sell the Liberty Center asset later this year and are confident in its valuation. Sales momentum at 111 West 57th is positive, and they anticipate more capital coming through resolutions by the end of the year. Q: How is the current market volatility affecting loan repayments and new money deployment? A: Stuart Rothstein noted that the market remains robust, with credit market volatility being more muted than in equity markets. They do not anticipate a slowdown in transactions. The main concern is whether a potential recession would be shallow or prolonged, but currently, the need to deploy capital outweighs recession fears. Q: With the senior mezz loan A at 111 West 57th becoming senior, will you start recognizing interest income again? A: Stuart Rothstein clarified that they will not turn income back on, as it would effectively mean paying themselves. Instead, they will keep income turned off and any better-than-expected recovery will come through reserve recovery rather than near-term income. Q: Can you provide updates on the Berlin and Chicago office assets, as well as the Manhattan office and Cleveland multifamily? A: Scott Weiner, CIO, stated that the Berlin office is working on a modification with new equity and a major lease, expecting it to improve. The Chicago office has seen positive leasing and additional equity. The Manhattan office is exploring recapitalization and potential conversion to multifamily. The Cleveland multifamily is performing well with new management and capital. Q: How is ARI managing its European exposure, and what advantages does it offer? A: Stuart Rothstein explained that ARI has a dedicated team in London, led by Ben Eppley, managing European operations. The lack of an active securitization market in Europe allows ARI to handle larger deals, providing a competitive advantage. They hedge everything back to dollars to avoid FX risks. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
12-02-2025
- Business
- Yahoo
Apollo Commercial Real Estate Finance Inc (ARI) Q4 2024 Earnings Call Highlights: Strong Loan ...
New Loan Originations (Q4 2024): $782 million. Total Loan Origination Volume (2024): $1.9 billion. Loan Portfolio (Year-End 2024): 46 loans totaling $7.1 billion. Distributable Earnings (Q4 2024): $45 million or $0.32 per share. GAAP Net Income (Q4 2024): $38 million or $0.27 per diluted share. Distributable Earnings (Full Year 2024): $190 million or $1.33 per share. GAAP Net Loss (Full Year 2024): Negative $132 million or negative $0.97 per share. Dividend Coverage (Q4 2024): 128%. Dividend Coverage (Full Year 2024): 111%. Weighted Average Unlevered Yield: 8.1%. Loan Repayments (Q4 2024): $830 million. Debt-to-Equity Ratio (Year-End 2024): 3.2 times. Total Liquidity (Year-End 2024): Over $380 million. Book Value Per Share (Excluding CECL and Depreciation): $12.77. Warning! GuruFocus has detected 5 Warning Signs with ARI. Release Date: February 11, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Apollo Commercial Real Estate Finance Inc (NYSE:ARI) experienced a robust level of repayment activity and was very active in deploying capital in 2024, originating $1.9 billion in new loans. The company reported distributable earnings of $45 million or $0.32 per share for the fourth quarter, with a strong dividend coverage of 128% for the quarter. ARI's newly originated loans were underwritten to generate attractive risk-adjusted returns, benefiting from wider spreads and higher base rates. The company has a strong origination pipeline of over $1 billion for the first half of 2025, indicating potential growth in the loan portfolio. ARI's portfolio is diversified across a broad spectrum of property types and geographies, with more than half of the originations in the U.K., leveraging Apollo's dominant market position in Europe. ARI reported a GAAP net loss available to stockholders of negative $132 million or negative $0.97 per share for the full year. The company had another quarter of elevated loan repayments, totaling $830 million, which outpaced new loan closings and add-on fundings, leading to a decrease in the loan portfolio balance. There is a substantial specific reserve, and the company is working on dimensionalizing the big risks within the portfolio, which could translate into realized losses. The company anticipates that quarterly earnings in 2025 will be lower compared to Q4 2024 due to the impact of rate cuts executed by the Fed. Some of ARI's assets, such as the Brooklyn multifamily development and certain REO hotels, are non-income-producing and require strategic management to convert into higher return opportunities. Q: Can you provide insight into the specific reserve and how it might translate into realized losses or transactions this year? A: Stuart Rothstein, CEO: We expect to start recovering capital tied up in the 111 West 57th project this year, which will be redeployed into performing assets. The Cincinnati asset, Liberty Center, is over 90% leased, and we might move it into the market later this year. The Brooklyn REO will start taking tenants later this year, with potential sale or refinancing early next year. We anticipate seeing underperforming capital being put to work more productively in the latter part of this year and into next year. Q: Could you discuss the geographic and property type opportunities you are seeing? A: Scott Weiner, CIO: We are seeing increased activity across all sectors and geographies. Multifamily, senior housing, student housing, and data centers are areas of focus. In Europe, particularly the U.K., we find interesting opportunities. We are involved in both acquisitions and refinancings, with no distressed situations. Q: What is the outlook for the REO hotels in D.C. and Atlanta? A: Scott Weiner, CIO: The D.C. hotel is performing well and could be tested in the market later this year. The Atlanta hotel is being evaluated for the best business model and cash flow improvement. Both assets are contributing to income, and we will consider selling if the right price is offered. Q: Is it feasible for the loan portfolio to grow to $7.5 billion or $8 billion in the next six to twelve months? A: Scott Weiner, CIO: Yes, it is feasible. We have a large pipeline of deals closing, and with available capital and leverage, the portfolio could grow by $0.5 billion to $1 billion. Q: Are you seeing more new business plans and priorities in bridge loans, or is it still refinancing existing projects? A: Stuart Rothstein, CEO: We are seeing more investors coming off the sidelines and looking to deploy capital into assets with long-term potential. While the office space remains challenging, sectors like data centers, multifamily, and industrial are seeing increased activity. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
