Apollo Commercial Swung to Loss as Liquidation Advanced
Book value fell to $8.47 a share after a special dividend and portfolio-sale charges.
Apollo Commercial Real Estate Finance (ARI), a commercial real-estate finance company, swung to a $349 million distributable loss as it completed a roughly $9 billion loan-portfolio sale and moved toward liquidation. The loss equaled $2.62 a diluted share, compared with distributable earnings of $30.7 million, or $0.22 a share, in the first quarter.
The Athene portfolio sale closed at a price based on 99.7% of total commitments, ending a transaction that was pending shareholder approval when announced in January. Apollo Commercial repaid the associated secured debt and corporate facilities, leaving construction financing on a Brooklyn multifamily property as its only debt at June 30.
GAAP net income available to common stockholders declined to $0.11 a diluted share from $0.16 in the first quarter and $0.18 in the fourth quarter of 2024. Distributable earnings before realized investment losses and debt-extinguishment losses fell to $0.15 a diluted share from $0.22 and $0.26, respectively, extending the decline in underlying earnings.
The portfolio exit brought $369.8 million of realized charges, including $339.1 million of net realized investment losses and $30.7 million tied to extinguishing debt. The sale itself produced a $338 million net realized loss, largely from the write-off of previously recorded credit-loss allowances, plus about $3 million related to the sale discount.
Apollo Commercial ended the quarter with $1.2 billion of cash, compared with the approximately $1.4 billion projected when the Athene agreement was announced and $2.2 billion of primarily cash assets reported immediately after the April closing. Common equity stood at $1.1 billion, below the roughly $1.7 billion forecast in January.
The company declared $3.75 a common share of dividends during the quarter, with a substantial portion expected to be treated as a return of capital. It also repurchased 8.6 million common shares at a weighted-average price of $10.85, adding $0.08 a share to book value.
Apollo Commercial filed a preliminary proxy seeking shareholder approval for complete liquidation and dissolution, advancing beyond its earlier position that dissolution would be considered if no new strategy or transaction was announced by year-end. It also redeemed all $169 million of its Series B-1 preferred stock in July, leaving common equity and real-estate-owned debt as the remaining capital structure.
The remaining real-estate-owned portfolio comprised four properties with $912 million of net assets and $541 million of net equity. A third party had signed a letter of intent to buy its Washington hotel, while the Atlanta hotel’s market-rate units were 99% leased and a $74 million mortgage on the Brooklyn property had been repaid.