Apollo Commercial Real Estate Finance, Inc. (ARI, Financial) has released its first quarter results for 2025, highlighting the challenges posed by elevated repayments at the close of 2024. The company's capital deployment in the first quarter reached a total of $650 million.
Despite the repayment pressures, ARI continues to concentrate on advancing its core assets. The company remains committed to reallocating its capital effectively into new loan origination opportunities. This strategic focus aims to bolster ARI’s financial performance in the upcoming quarters.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for Apollo Commercial Real Estate Finance Inc (ARI, Financial) is $9.50 with a high estimate of $10.00 and a low estimate of $9.00. The average target implies an upside of 4.51% from the current price of $9.09. More detailed estimate data can be found on the Apollo Commercial Real Estate Finance Inc (ARI) Forecast page.
Based on the consensus recommendation from 6 brokerage firms, Apollo Commercial Real Estate Finance Inc's (ARI, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Apollo Commercial Real Estate Finance Inc (ARI, Financial) in one year is $8.41, suggesting a downside of 7.48% from the current price of $9.09. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Apollo Commercial Real Estate Finance Inc (ARI) Summary page.
ARI Key Business Developments
Release Date: February 11, 2025
- 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.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Apollo Commercial Real Estate Finance Inc (ARI, Financial) 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.
Negative Points
- 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.
