Fed: Commercial real estate prices showed some signs of stabilizing.

Fed: Commercial real estate prices showed some signs of stabilizing.

Apollo Commercial Real Estate Finance (ARI) reported its Q1 2025 earnings, delivering a distributable EPS of $0.24, which exceeded analyst expectations of $0.22. Despite a drop in net interest income, ARI shares experienced a 0.9% increase during after-hours trading.

Key Highlights:
- Distributable EPS: $0.24 (exceeding analyst expectations of $0.22)
- Net Interest Income: Dropped from $43.5 million to $39.5 million
- Share Price: Increased by 0.9% after-hours trading

Analyst Price Targets and Recommendations:
- One-Year Price Target: $9.50, offering a potential upside of 4.51% from the current price of $9.09
- Brokerage Recommendations: Average rating of 2.7, indicating a "Hold" rating

Investment Outlook:
- GuruFocus Estimates: Projected GF Value of $8.41 over the next year, suggesting a potential downside of 7.48% from the current price

Financial Results:
- Loan Portfolio: Total of $7.7 billion with a weighted-average unlevered all-in yield of 7.9%
- Capitalization & Liquidity: Total common equity book value of $1.8 billion and $218 million in total liquidity, including $170 million in cash

Portfolio Activity:
- New Commitments: Committed $650 million to new loans
- Repayments and Sales: $93 million in loan repayments and sales

Real Estate Portfolio:
- Brooklyn Multifamily Development: Construction progress continues, with initial TCO expected in Q2 2025 and move-ins in early Q3 2025
- D.C. Hotel and Atlanta Hotel: No significant changes reported

Conclusion:
While ARI's Q1 2025 earnings exceeded analyst expectations, the drop in net interest income and the mixed outlook from analysts suggest a cautious approach for investors. The company's strong liquidity position and continued portfolio activity provide some reassurance, but the overall investment outlook remains uncertain.

References:
[1] https://www.gurufocus.com/news/2803184/apollo-commercial-real-estate-finance-ari-beats-q1-2025-eps-estimates
[2] https://www.marketscreener.com/quote/stock/APOLLO-COMMERCIAL-REAL-ES-5587238/news/Apollo-Commercial-Real-Estate-Finance-Q1-2025-Quarterly-Supplemental-Information-49712048/