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The call reflected a largely positive restructuring outcome driven by the successful $9.0B portfolio sale, a strengthened liquidity position (~$1.3B cash), debt paydown and a clear path for deleveraging and return of capital. Operational bright spots include leasing momentum at the Brook and strong performance at the Mayflower hotel, alongside accretive share repurchases and an affirmed dividend target (~8% yield on book value). Offsetting items were a modest decline in net interest income (-7.7%), higher interest expense (+8.6%), a small drop in book value per share (-~1.1%), remaining nonaccrual exposure ($42M hotel loan), and execution/timing risk around resolving the remaining REO assets and finalizing a strategic path. Overall, the positives from the transaction, balance sheet de-risking, and shareholder actions outweigh the near-term operational and market headwinds.
On the call management provided quantitative guidance and near-term milestones: ARI completed the sale of its $9.0 billion loan portfolio and now holds approximately $1.3 billion of cash plus four REO assets with roughly $900 million gross value (two assets — the Brook and the Mayflower — represent ~80% of REO net equity value), with the Brook ~80% leased at market rates and ~70% leased for affordable units (95% of units selected) and expected to stabilize by this summer, the Mayflower generating net cash flow well ahead of budget in Q1 with further upside expected, the Courtland Grand underperforming in Q1 but expected to be brought in line for the year via business‑interruption insurance and World Cup demand, and two former hospital assets totaling about $24 million book value undergoing rezoning discussions; Q1 2026 financials included net income available to common of $23 million ($0.16/diluted share), distributable earnings of $31 million ($0.22/diluted share), net interest income of $36 million (vs. $39 million in Q1 2025), interest income from commercial mortgage loans of $150 million (up from $144 million, driven by ~$1.2 billion portfolio growth on an amortized cost basis), and interest expense of $114 million (up from $105 million); book value per share was $12.01 at 3/31/26 (vs. $12.14 at 12/31/25) with pro forma BVPS of $12.15 at closing of the portfolio sale, share repurchases totaled ~6.8 million shares YTD (2.9M in Q1 at $10.52 avg; 3.9M post‑quarter at $10.72 avg) producing $0.07 BVPS accretion YTD ($0.03 Q1, $0.04 Q2) and a new $150 million repurchase authorization was approved, the Board will announce the Q2 dividend a few weeks before quarter end (targeting an ~8% annualized dividend yield on book value per share, with future dividends likely to include a significant return of capital), and management expects to provide meaningful strategic clarity within the next few months while maintaining conservative, largely unlevered liquidity (REIT asset tests are measured at quarter end, income test annually).
Closed sale of the company's $9.0 billion loan portfolio to Athene on April 24, resulting in repayment of secured financing facilities and other indebtedness and delivering a compelling premium to ARI stockholders.
Post-transaction ARI holds approximately $1.3 billion of cash and 4 REO assets with roughly $900 million gross value (net equity concentrated: ~80% of REO net equity in two assets: the Brook and the Mayflower).
Fully repaid outstanding Term Loan B and deposited funds to satisfy senior secured notes, which will be redeemed at par on or about June 15, materially de-risking the balance sheet.
Reported net income available to common stockholders of $23 million ($0.16 per diluted share) and distributable earnings of $31 million ($0.22 per diluted share) for Q1 2026.
Interest income from commercial mortgage loans rose to $150 million from $144 million versus Q1 2025, an increase of ~4.2%, driven by approximately $1.2 billion of loan portfolio growth on an amortized cost basis despite lower average index rates.
Repurchased ~2.9 million shares in Q1 at a weighted average price of $10.52 and an additional ~3.9 million shares post-quarter at $10.72 (total YTD ~6.8 million), delivering approximately $0.07 of book value per share accretion YTD; Board authorized up to $150 million for future repurchases.
Brook (multifamily): market-rate ~80% leased, affordable units ~70% leased, 95% of units selected, expected stabilization by summer. Mayflower Hotel (Washington, D.C.): strong Q1 with net cash flow ahead of budget driven by margin improvements and higher occupancy; expecting continued YOY improvement.
Company intends to continue quarterly dividends while exploring strategic options and reiterated a target dividend approximately equal to an ~8% annualized dividend yield on book value per share; Board will declare dividends per customary schedule.
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. In addition, we will be discussing certain non-GAAP measures on this call, which management believes are relevant to assessing the company's financial performance. These measures are reconciled to the GAAP figures in our earnings presentation, which is available in the Stockholders section of our website.
We do not undertake any obligation to update our forward-looking statements or projections unless required by law. To obtain copies of our latest SEC filings, please visit our website at www.apollocref.com or call us at (212) 515-3200. At this time, I'd like to turn the call over to the company's Chief Executive Officer, Stuart Rothstein.
Thank you, operator. Good morning, and thank you for joining us on the Apollo Commercial Real Estate Finance, Inc. First Quarter 2026 Earnings Call. I am joined today by Anastasia Mironova, our Chief Financial Office...