Apollo Commercial Real Estate Finance Q4 Earnings Call Highlights

Apollo Commercial Real Estate Finance NYSE: ARI used its fourth-quarter and full-year 2025 earnings call to provide an update on the real estate owned (REO) assets it expects to retain following its previously announced plan to sell ARI’s loan portfolio to Athene. Management also reviewed quarterly results, portfolio activity, and balance sheet positioning, and addressed investor questions around the strategic path forward and the dividend.

Update on retained REO assets

Chief Executive Officer Stuart Rothstein said the company continues to actively manage its REO portfolio with an emphasis on improving run rate and cash flow while maximizing value at exit. He outlined progress across four retained assets.

The Brook (Brooklyn, New York) — Rothstein described The Brook as a newly built Class A multifamily tower with 591 residential units and about 20,000 square feet of ground-floor retail. The property was approximately 56% leased across market-rate units and “experiencing strong leasing momentum,” with leasing cited at roughly 20–40 units per month depending on the month. The retail component was 88% leased to Din Tai Fung, with occupancy expected next year. Management expects stabilization later this year and is also evaluating options to create additional value from an adjacent land parcel, which could affect the timing of a potential monetization.

The Mayflower (hotel) — Rothstein said ARI has implemented cost-savings initiatives and expects a “notable pickup” in net cash flow once those initiatives are completed. He added on the Q&A that, once cost actions are implemented and a higher net cash flow run rate is achieved, the company would be prepared to bring the asset to market.

The Courtland Grand (Atlanta hotel) — Management is executing value-add upgrades to rooms and common areas to help drive group business in 2026. Rothstein noted that a fire in October 2025 temporarily took some rooms offline, and the company is receiving business interruption insurance proceeds while evaluating restoration and insurance recovery paths to maximize value. He also said the fire has provided an opportunity to reassess the best way to achieve value at the property and that the company feels “pretty good” about the value at which it is currently carrying the asset.

Massachusetts pre-development portfolio (minority interest) — ARI holds a minority interest through a joint venture with other Apollo-affiliated vehicles in two former hospital sites. Rothstein said the company is working through zoning changes intended to increase the value of each site.

In response to a question about whether monetization decisions for the REO assets would depend on the company’s longer-term strategy, Rothstein said he did not currently view the REO portfolio as “critical” to where ARI may take the business and suggested the exit strategy for REO assets is largely “walled off” and focused on maximizing value.

Fourth-quarter and full-year results

Chief Financial Officer Anastasia Mironova reported fourth-quarter distributable earnings of $37 million, or $0.26 per diluted share. For the full year, distributable earnings totaled $139 million, or $0.98 per diluted share.

GAAP net income available to common stockholders was $26 million, or $0.18 per diluted share, for the fourth quarter, and $114 million, or $0.81 per diluted share, for the full year.

Credit and CECL commentary

Mironova said ARI recorded a $3 million specific CECL allowance in the quarter tied to a 2019-vintage commercial mortgage loan secured by a Chicago hotel. The loan had an outstanding principal balance of $45.5 million and was expected to pay off over the next few months. She noted there were no other charges to the specific CECL allowance during the quarter and said the overall credit profile remained stable.

The weighted average risk rating of the loan portfolio was 3.0, unchanged from the previous quarter and prior year, according to Mironova. She also said the balance of loans on nonaccrual declined by more than $170 million year over year, driven primarily by net proceeds from unit sales at 111 West Fifty-Seven, partially offset by the addition of the Chicago hotel loan to nonaccrual.

Mironova said ARI’s exposure to 111 West Fifty-Seven decreased by $250 million year over year and by $105 million quarter over quarter, with six contracts closed during the fourth quarter.

The general CECL allowance was flat versus the prior quarter at about $45 million. Total CECL allowance stood at $383 million at year-end, which equated to 418 basis points of the loan portfolio’s total amortized cost, down from 457 basis points a year earlier. Mironova attributed the decline to sequential portfolio growth year over year.

Originations, repayments, and portfolio composition

Mironova said the fourth quarter and full-year 2025 were marked by strong origination activity:

• Fourth quarter: $1.3 billion committed to new loans, with $1.1 billion funded at close, plus approximately $200 million of gross add-on fundings for previously closed loans.
• Full year: $4.4 billion committed to new loans, with $3.3 billion funded at close, plus about $900 million of gross add-on fundings.

Loan repayments and sales totaled $852 million in the fourth quarter and $2.9 billion for the full year, which Mironova said reflected continued borrower execution and portfolio rotation. She added that more than 60% of the loan portfolio was represented by post-2022 originations.

The activity contributed to loan portfolio growth of about $1.6 billion year over year on an amortized cost basis. ARI ended the year with a total loan portfolio of approximately $8.8 billion at amortized cost and a weighted average unlevered all-in yield of 7.3%.

Mironova also described portfolio characteristics, including 99% first mortgages and 96% floating-rate exposure, with a weighted average loan-to-value ratio of about 59%.

Liquidity, financing capacity, and dividend discussion

ARI ended the year with $151 million of total liquidity and more than $430 million of unencumbered assets, which Mironova said were primarily first mortgage loans and cash flow in REO assets. During 2025, the company added $1.8 billion of net financing capacity through four new secured credit facilities, an expansion of its revolving credit facility, and upsizing of several other facilities.

Book value per share was $12.14 at year-end, described as relatively flat versus the prior quarter.

During Q&A, Rothstein addressed the gap between book value and where the stock had been trading, saying investor feedback had been “overwhelmingly” positive about efforts to unlock value, but that investors were seeking clarity on the company’s path forward. He said the company is focused on progressing through the go-shop period and toward a proxy filing that will provide more information, and he suggested the valuation gap could narrow as the company provides additional clarity on strategy, including the possibility of dissolution.

On the dividend, Rothstein said the company envisioned paying a first-quarter dividend—subject to board approval—consistent with the recent run rate of $0.25 per share per quarter. He added that discussions with the board would continue as the company approaches a second-quarter decision, noting the interplay among dividends, strategy, dissolution considerations, and the appropriateness of returning capital to shareholders.

About Apollo Commercial Real Estate Finance NYSE: ARI

Apollo Commercial Real Estate Finance, Inc NYSE: ARI is a real estate finance company structured as a real estate investment trust (REIT). The company focuses on originating, acquiring and managing a diversified portfolio of commercial real estate debt and preferred equity investments. As an externally managed vehicle, ARI leverages the expertise and resources of an affiliate of Apollo Global Management, a leading global alternative investment manager.

ARI’s investment strategy is centered on providing first mortgage loans, mezzanine debt financing, bridge loans and preferred equity across a broad range of property types, including office, retail, industrial and multifamily assets.

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