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- **Q2 Loan Originations Surpass $1.4B**: Year-to-date originations reach $2B, with 25% of portfolio in residential properties.
- **Focus Asset Progress**: 111 West 57th reduces basis by $141M; The Brook 500-unit multifamily development 15% leased.
- **Balance Sheet Strength**: $750M Term Loan refinanced, extending maturity to 2029. Liquidity at $208M, book value per share $12.59.
- **European Expansion**: 50% of portfolio in Europe, 18% of originations year-to-date.
- **Earnings Growth Potential**: 30-40% earnings growth from redeploying $300M+ in non-earning assets.
- **Dividend Policy**: Maintains 100% payout ratio, with quarterly reviews.

**【CEO Summary Section】**
- **Strong Q2 Performance**: Committed $1.4 billion in new loans, bringing year-to-date originations to $2 billion. Residential properties now comprise 25% of the portfolio, with 2/3 of these loans originated in the last 24 months.
- **Focus Asset Progress**: 111 West 57th Street generated $170 million in proceeds, reducing ARI's basis. The Brook multifamily development in Brooklyn opened its leasing office, with 15% of market-rate units leased. Liberty Center in Cincinnati is entering the marketing phase.
- **Balance Sheet Optimization**: Refinanced $750 million Term Loan B at SOFR + 3.25%, extending maturities to 2029. This highlights investor confidence and reduces cash drag.
- **European Growth**: 50% of the portfolio is in Europe, with year-to-date originations at 18%. Recent interest rate cuts are driving acquisition activity.

**【CFO Financial Commentary】**
- **Financial Results**: Q2 distributable earnings of $36 million ($0.26 per share), up 8% from Q1. GAAP net income was $18 million ($0.12 per share). Loan portfolio grew to $8.6 billion, with a weighted average unlevered yield of 7.8%.
- **CECL Allowance**: General CECL increased by $3.1 million due to portfolio growth, but no asset-specific allowances were recorded. Total CECL as a percentage of amortized cost decreased to 429 basis points.
- **Liquidity and Borrowing**: Secured $1.4 billion in new credit facilities, ending the quarter with $208 million in liquidity. Book value per share (excluding CECL) was $12.59.
- **Special Proceeds**: Received $18 million from a Massachusetts settlement, which will be redeployed into new loans.

**【Q&A Highlights】**
- **The Brook Update**: Expected to be cash flow positive by early 2026, with potential monetization in Q1-Q2 2026. Discussions ongoing to increase density through adjacent land parcels.
- **Portfolio Growth**: Leverage expected to remain around 4x, with capital redeployment driving 30-40% earnings growth. Non-earning assets (e.g., The Brook) will be converted into earning ones.
- **CRE Market Outlook**: Increased transaction activity in housing, seniors housing, and hotels. Office deals remain limited in ARI's strategy.
- **Dividend Policy**: Plans to maintain dividend payout of ~100% of earnings, with quarterly reviews. No material tax constraints on dividend growth.
- **Seniors Housing Focus**: Driven by demographic trends and supply-demand imbalance, with a focus on private-pay, independent living properties.

Apollo Commercial Real Estate Finance (ARI)-30 Jul 25-2025 Q2 Earnings call transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

ARI

ARI fundamentals

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