ARI - Earnings call transcript Q1 2024 | Apollo Commercial Real Estate Finance, Inc.

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Operator

I'd like to remind everyone that today's call and webcast are being recorded. Please note that they are the property of Apollo Commercial Real Estate Finance, Inc. and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our earnings press release. I'd also like to call your attention to the customary safe harbor disclosure in our press release regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections, and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these statements and projections.

be believes non-GAAP the are performance. will call, on company's we management which relevant addition, discussing measures certain this financial In to assessing measures our website. our figures available These the to which in of presentation, is in section Stockholders reconciled are earnings GAAP required undertake SEC unless I'd filings, or our at law. To do please or Rothstein. not our call statements of the call company's turn the Officer, www.apollocref.com (XXX) to time, obligation visit like any We obtain XXX-XXXX. At us update copies to forward-looking to projections by latest this Executive at our website over Chief Stuart

Stuart Rothstein

Call. you, joining and us morning, thank Commercial and on you morning Earnings of Apollo the those First Thank this Finance operator, Real you good Estate to XXXX Quarter

Scott we The ticking flow began more commercial see in As Chief an in needs our real property to with joined our estate Mironova, Anastasia life loan deal volumes and existing pending deal I put Investment to significant quarter, consensus Financial up. to in a and be am is funds Officer. In work, first market increase the Chief in by Weiner, signs of the Officer; usual, dry powder with combination level by having where they valuations. that reached maturities point must supported around increase borrowers of a transaction

ARI's rate economy, covered produced strength properties environment the and stable quarter across office floating the loan most positive markets. This in operating to the property exception increased earnings which remained by another benefit to continues fundamentals addition dividend. supported the operating portfolio ARI certain in In continued activity, transaction one its distributable in types to being with notable

there Building, will the repayment been my by has activity. indicated the later which well. Notably, a continues portfolio the exception in loans to in pickup and secured perform With actual I of remarks, ARI's address Steinway

repayments over received current tracking year. the $X the the expected ARI forecast of remainder total the another During billion $XXX is model of of quarter, million repayments and

during the transactions and capital, be anticipate is transactions. In opportunity potential active activity, well capital an to we ARI year, as the repurchase available increased of deploying to to ARI's potential continue pieces in investment structure. capital will repayment there both will assess deploy how of new Given as we determining more active pipeline

Turning now to Steinway.

During timing quarter, both of on reflecting the specific $XXX we subordinate the secured and recorded reduction expectations with the by a the to in million of a respect sale property, delay remaining CECL in pricing impact a loan the allowance units.

party, senior held new loans, reducing ARI's exposure exposure a with comprised by loan refinanced comprised ARI's ARI's a mezzanine by to was exposure, of end, $XXX a to a is reduce property party. the in quarter net As million portion third of refinancing, reserve, $XXX $XXX at million by net third the of asset of an thereby net provided $XXX a loan net to million approximately end. Subsequent further reduced at million the exposure approximately the mezzanine of the ARI's loans XXXX result on year-end to increased million. from senior and senior a subordinate loan $XXX effort now quarter Post X

quarterly over of call distribution for I results XXXX. With rate producing for I will for a the continue we the Before to the paid share $X.XX ARI's sufficient that, now turn dividend Anastasia, over remainder to distributable ARI financial Anastasia that and I common has of quarter. review ARI's to floating the want believe to turn highlight call stock per will portfolio consecutive earnings to the XX quarters, cover

Anastasia Mironova

CECL common earnings net XXth of stock, per or of $XXX West $X.XX share million to Thank ARI Street, for also diluted million known common XXX allowance you, the the $X.XX Stuart, Building. by quarter, as and GAAP share stock. Steinway subordinate was $XXX loan common good secured recorded morning, first In attributable of distributable loss everyone. stockholders reflecting per the reported

this additional rating of and no general compared for change the XXth specific loss to of of than increase nonaccrual earnings. The portfolio the the on unlevered which distributable allowance also XX XX, basis by increase allowance driven loan points an was yield from The the extended at end XXXX. for Street was was in we the basis average cost primarily was rate, attributable determining loan basis allowance with purposes increase As end ended carrying of not expected XXXX. This billion, weighted a CECL risk our taken with of stood quarter. CECL a higher a loan historical West was points CECL other [ portfolio portfolio. X XX status reminder, already the allowance, of the XXX general point and during database the additional obtained X.X to average quarter does of amortized at a than there March the weighted portfolio's pay allowance impact value The as X.X%, Trepp ] $X.X updates. ARI at

from of we including the the end at $XXX transaction, QX. add-on quarter, closed completed we $XXX previously U.K. million which loans, During pub funded closed fundings million for of the the

representing the investment quarter to buyer had no throughout for as to of amount reclassification, with date. depreciation was respective sales $X.X The the quarter held the held the first would As mentioned, million been in XX.X% development in the via generate sale investment ARI. received hotels catch-up due at period classification the for estate real mortgage work cash remained a we from positive million third-party conjunction longer recorded and above-grade of being of probable. In Atlanta changed repayments our of during secured million, the of the for whole end, the asset Brooklyn, hotel of recorded sheet hotel par. With sale in of the to we held the owned, the $XXX regard flow with received Stuart quarter. for total proceeds to to we from continues both Subsequent $XXX through on that during have balance multifamily the Honolulu

does depreciation As reminder, distributable balance side earnings. Shifting a to impact right our the expense of the sheet. not

Goldman facility in capacity the pub the a with million. the of secured During of total with quarter, $XXX U.K. Sachs closed The facility the loan. is ARI credit connection new funding

amended the of additional also capacity our upsized facility of year Atlas, extension the facility million X term an amended secured and credit X additional with $XXX with and providing We to option. years

compliance X.Xx until respect debt-to-equity Our was covenants maturities end at to all is ratio corporate with our with quarter debt borrowings. we have XXXX. reminder, as no and in May ARI a

to reflecting general allowance XXth on to QX. is of the general units also and with delivery $X.XX allowance Street, the Our book of reflecting specific ahead. in like XXX balance please excluding compared CECL the restricted attributed value we'd reserves that, at per go stock to $X.XX, depreciation. And $X Operator, the the and change the with CECL depreciation, West CECL $XX.XX open end the line $XX.XX decline to attributable questions. vesting as share, the was and of for and

Operator

Jade [Operator first Rahmani with KBW. question Instructions] Our from comes

Jade Rahmani

probably would helpful. could pretty the you some in-place target just at past summary there's consistent opportunity finance that Underwriting overview have be evaluate of with like flow. this you LTVs all? it or on could you point an returns your give maybe that, to criteria, seems if As cash give But the returns an outlook, overview lower to those hit an changed if at

Stuart Rothstein

sort works business look, implied of Yes. I where to think still model question, that high perspective our Jade, you your in the in from level.

probably high we are I lower returns. I which your with us super our equity finance we've that position high XX% the XXs Xs. today, as for probably we in our a at, high spreads it, do about And at again, low at, at level call can deploying we mid-teens it historically low ballpark XX% today again, SOFR think in deploy LTVs something agree something as today, think to could against U.S. at capital premise new X-handle that XXs, above with to and call done

own work from again, an as in back thinking capital, to look will deployment we're at as definitely for time repayment. to deploying we deploying remarks, capital, ROE I But from think our time market that our I we're do well. my indicated transactions things structure as may it new capital the with as capital seeing about ROEs offer in as both the well from a us are interesting things be And as So interesting there perspective. we're as comes will that

Jade Rahmani

you For the you maturities? expected outcomes loan had are example, thinking hotel Can upcoming sell to Hawaii How about loan, was close maturities? at decision a on April, I think, the to in that upcoming discuss credit extended par. maturity made fully

Stuart Rothstein

or sale, reached as indicated off sort this based borrowers repayments year. expect who billion pay this remarks, of indicated to about is out when expecting year. Look, $X have I my say on with worth have we're refinance that And through of either and I dialogue expecting us ongoing they in

expect that we us. takes So of are in things a I actually way, expected mature to or window place we would certainly a say, repayment to repay much positive high for this within level, year what

the in seeing just repay financing people So the optimistic terms activity just a somewhat at on transaction us of I maturity. would quarter, in loan has again, the been more based say tone overall markets and first overall path to

Operator

Our JPMorgan. Rick Shane from next with comes Instructions] question [Operator

Richard Shane

nonaccruals is the share ], I coupon you X Slide and average just that weighted little on Can that X.X% nonaccruals? the a compare portfolio dollars us Xs, basis, weighted I'm on in drag the the in X.X%. loan a all-in per when average the bit of tell and and yield Q confused from a has which cash unlevered [

Stuart Rothstein

of million a that the worth Look, we level, nonaccrual at it way sort on to reserves, is of of I million think of at end $XXX the think there's Rick, loans $XXX quarter. the high are about net

it's that is financed though Some even nonaccrual. on of

to it's for easier that Steinway light just $XXX-ish with to reduced and So April call and the respect post again what nonaccrual of do net of details in if amount million of was it's sort the is the Anastasia go of basis, an equity in happy to equity on well. as on transaction, and math, then through I you that that about sort referenced

Richard Shane

Slide coupon? like am ] And that the Q thought what XX the are said, I X.X% difference connecting nonaccruals, I X the coupon, yield [ X.X% X weighted recorded says Perfect. would was on all-in nonaccruals of missing again, a with which, the I Page cash at have footnote average the but on

Anastasia Mironova

math the and Yes, through there offline after you walk we take call. can the it

Operator

Jade Our next with KBW. Rahmani from comes question

Jade Rahmani

XXX units a quantity of XXth, give number On rough what of the West you could are? remaining

Stuart Rothstein

little. A

Jade, what think point, signature for minus about that still is need sold. or you or at be under contract out this they're still to plus If units XX

bit the half project. little than less a So

Jade Rahmani

And how many units are under contract?

Stuart Rothstein

under a we it, or X sign, contract what's to between call expect and it's handful, about what Today X.

Jade Rahmani

Okay.

would would on probably XX total XX, proceeds be So they generate that units?

Stuart Rothstein

of low say still right -- sold now? what -- be get Post to and you'd what's sort you'd XXs still Post process XX sold. in that have XX, We -- have again.

Jade Rahmani

at more low. was quite I Yes, that that's Okay. then million. I I just units. might there I around that outstanding reasonable? believe I using range the too be there's was looking indebtedness are also those in proceeds discounting and there's But a is and And on rough getting factor. know a expected $XXX pricing to net numbers

Stuart Rothstein

being million which of the on -- numbers debt so post value debt including in call call, $XXX to us light paid our that's sort where to-be-sold I light. nominal think mezz got retail a I we're some some And would that us is as million there's today, well. But in of round indicated a above it now there's today, refinance, what will of perspective, at million back, $XXX and get the sold. value loans, nominal say for a estimate our of I debt we some would and senior also be as marked, dollar cash then you're I outstanding and And value, say there $XXX way discounting They're excess from point, we to total our we've flows of that your is get still to condo last over come see combination of at on in view this for also and that right, it condos. units that where of has in loan. other

Jade Rahmani

enough. seeing the lot a of on Fair Okay. are And office portfolio, pressure then in we the still sector. office

your there wiggle how in to in the with definitely, work noted of structure opening room borrower. flexibility of lender but think is a driver I liability the remarks, is modifications much big that and you

Europe, you predominance So but that are I office you give be there, know a portfolio? in the could is seeing would in what the comment also helpful. if

Stuart Rothstein

one an Yes. office institution. office think a is think Look, most obviously, deal but XXX% I is feel major line. first completion respect like at fund with -- our to that we're at continuing on redevelopment I the of London, people, leased expectation this the to that very financial done, which in the to our point, exposure, all, And that biggest the because loan be that needs with work of we're exit in just positive finish obviously, by

funding a of most transactions as reserves then would a the In necessary of of some a terms time. and we portfolio for of some capital up capital year, coming we of for is to interest of handful for any TI protection sponsorship play as office the in the say broader needed of obviously into the will principal and rate stepped transactions had LC And that obviously, portfolio, last and mix time. transactions for paydowns, put where is in be our well. I more period view

across I been And product, not for the XX which definitely interest ground-up either which activity, created, newly created great at newly level deals We actually leasing sponsorship activity, continue portfolio, seeing decent we're think, this dialogue have products. for from point. with is, but or redevelopment, tenants has to leasing us productive that some

So But nothing borrowers. the with obviously, think there'll quarter. particular deal active level commentary this to to individual risen of dialogue I be continue has

Operator

back you. over would like Thank call to now I closing any Mr. for the Rothstein turn remarks. to

Stuart Rothstein

Anastasia morning. you. people Hilary participating are appreciate this and questions. everybody and And if I, available always, have as I follow-up Thank reachable

Operator

conference. This for you. participation. your Thank the concludes you Thank

now disconnect. may You

Apollo Commercial Real Estate Finance (ARI) 30 Apr 242024 Q1 Earnings call transcript