Apollo Commercial Real Estate Finance, Inc. (the “Company” or
“ARI”) (NYSE:ARI) today reported results for the quarter and year
ended December 31, 2022.
Net income (loss) attributable to common
stockholders per diluted share of common stock was ($0.06) and
$1.68 for the quarter and year ended December 31, 2022,
respectively. Distributable Earnings (a non-GAAP financial measure
defined below) and Distributable Earnings prior to realized gains
(losses) on real estate owned and investments per share of common
stock was $0.31 and $0.48 and $1.67 and $1.54 for the quarter and
year ended December 31, 2022, respectively.
“For 2022, ARI’s senior floating rate loan
portfolio produced stable Distributable Earnings comfortably in
excess of the common stock dividend,” said Stuart Rothstein, Chief
Executive Officer and President of the Company. “Importantly,
given the robust level of loan originations over the past 18
months, we believe ARI’s portfolio remains well positioned to
continue generating Distributable Earnings in excess of the common
stock dividend, while being strategic and opportunistic with
respect to new capital deployment. In addition, given ARI's
proactive approach to balance sheet management, ARI diversified and
expanded its financing sources throughout 2022 and ended the year
with ample liquidity.”
ARI issued a detailed presentation of the
Company’s quarter and year ended December 31, 2022 results, which
can be viewed at www.apollocref.com.
Conference Call and Webcast:The
Company will hold a conference call to review fourth quarter
results on February 9, 2023, at 10am ET. To register for the call,
please use the following link:
https://register.vevent.com/register/BIdac9d106e40746bea84b848fb3cb70bc
After you register, you will receive a dial-in number and unique
pin. The Company will also post a link in the Stockholders’ section
on ARI’s website for a live webcast. For those unable to listen to
the live call or webcast, there will be a webcast replay link
posted in the Stockholders’ section on ARI’s website approximately
two hours after the call.
Distributable
Earnings“Distributable Earnings”, a non-GAAP financial
measure, is defined as net income available to common stockholders,
computed in accordance with GAAP, adjusted for
(i) equity-based compensation expense (a portion of which may
become cash-based upon final vesting and settlement of awards
should the holder elect net share settlement to satisfy income tax
withholding), (ii) any unrealized gains or losses or other
non-cash items (including depreciation and amortization related to
real estate owned) included in net income available to common
stockholders, (iii) unrealized income from unconsolidated joint
ventures, (iv) foreign currency gains (losses), other than (a)
realized gains/(losses) related to interest income, and (b) forward
point gains/(losses) realized on the Company’s foreign currency
hedges, (v) the non-cash amortization expense related to the
reclassification of a portion of the Company’s convertible senior
notes (the “Notes”) to stockholders’ equity in accordance with
GAAP, and (vi) provision for loan losses.
The weighted-average diluted shares outstanding
used for Distributable Earnings per weighted-average diluted share
has been adjusted from weighted-average diluted shares under GAAP
to exclude shares issued from a potential conversion of the Notes.
Consistent with the treatment of other unrealized adjustments to
Distributable Earnings, these potentially issuable shares are
excluded until a conversion occurs, which the Company believes is a
useful presentation for investors. The Company believes that
excluding shares issued in connection with a potential conversion
of the Notes from its computation of Distributable Earnings per
weighted-average diluted share is useful to investors for various
reasons, including the following: (i) conversion of Notes to shares
requires both the holder of a Note to elect to convert the Note and
for the Company to elect to settle the conversion in the form of
shares; (ii) future conversion decisions by Note holders will be
based on the Company’s stock price in the future, which is
presently not determinable; (iii) the exclusion of shares issued in
connection with a potential conversion of the Notes from the
computation of Distributable Earnings per weighted-average diluted
share is consistent with how the Company treats other unrealized
items in its computation of Distributable Earnings per
weighted-average diluted share; and (iv) the Company believes that
when evaluating its operating performance, investors and potential
investors consider the Company’s Distributable Earnings relative to
its actual distributions, which are based on shares outstanding and
not shares that might be issued in the future.
As a REIT, U.S. federal income tax law
generally requires the Company to distribute annually at least 90%
of its REIT taxable income, without regard to the deduction for
dividends paid and excluding net capital gains, and that the
Company pay tax at regular corporate rates to the extent that it
annually distributes less than 100% of its net taxable income.
Given these requirements and the Company’s belief that dividends
are generally one of the principal reasons shareholders invest in a
REIT, the Company generally intends over time to pay dividends to
its stockholders in an amount equal to its net taxable income, if
and to the extent authorized by the Company’s board of directors.
Distributable Earnings is a key factor considered by the Company’s
board of directors in setting the dividend and as such the Company
believes Distributable Earnings is useful to investors.
During the year ended December 31, 2022, the
Company recorded in the condensed consolidated statement of
operations a realized gain related to the asset acquisition of one
of our first mortgage loans and transfer to real estate owned.
Additionally, during the same period, the Company recorded realized
losses related to the repayment of a commercial mortgage loan
secured by an urban predevelopment property in conjunction with the
sale of the underlying property and a write-off of a previously
impaired commercial mortgage loan secured by a hotel property as
result of an expected deed in lieu of foreclosure.
The Company believes it is useful to its
investors to also present Distributable Earnings prior to realized
gains (losses) and impairments on real estate owned and investments
to reflect its operating results because (i) the Company’s
operating results are primarily comprised of earning interest
income on its investments net of borrowing and administrative
costs, which comprise the Company’s ongoing operations and (ii) it
has been a useful factor related to the Company’s dividend per
share because it is one of the considerations when a dividend is
determined. The Company believes that its investors use
Distributable Earnings and Distributable Earnings prior to realized
gains (losses) and impairments on real estate owned and
investments, or a comparable supplemental performance measure, to
evaluate and compare the performance of the Company and its
peers.
A significant limitation associated with
Distributable Earnings as a measure of the Company’s financial
performance over any period is that it excludes unrealized gains
(losses) from investments. In addition, the Company’s presentation
of Distributable Earnings may not be comparable to similarly-titled
measures of other companies, that use different calculations. As a
result, Distributable Earnings should not be considered as a
substitute for the Company’s GAAP net income as a measure of its
financial performance or any measure of its liquidity under GAAP.
Distributable Earnings are reduced for realized losses on loans
which include losses that management believes are near certain to
be realized.
A reconciliation of Distributable Earnings, and
Distributable Earnings prior to realized gains (losses) and
impairments on real estate owned and investments, to GAAP net
income (loss) available to common stockholders is included in the
detailed presentation of the Company’s quarter and year ended
December 31, 2022 results, which can be viewed at
www.apollocref.com.
About Apollo Commercial Real Estate
Finance, Inc. Apollo Commercial Real Estate Finance, Inc.
(NYSE: ARI) is a real estate investment trust that primarily
originates, acquires, invests in and manages performing commercial
first mortgage loans, subordinate financings and other commercial
real estate-related debt investments. The Company is externally
managed and advised by ACREFI Management, LLC, a Delaware limited
liability company and an indirect subsidiary of Apollo Global
Management, Inc., a high-growth, global alternative asset manager
with approximately $523 billion of assets under management at
September 30, 2022.
Additional information can be found on the
Company’s website at www.apollocref.com.
Forward-Looking
StatementsCertain statements contained in this press
release constitute forward-looking statements as such term is
defined in Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
and such statements are intended to be covered by the safe harbor
provided by the same. Forward-looking statements are subject to
substantial risks and uncertainties, many of which are difficult to
predict and are generally beyond the Company’s control. These
forward-looking statements include information about possible or
assumed future results of the Company’s business, financial
condition, liquidity, results of operations, plans and objectives.
When used in this release, the words believe, expect, anticipate,
estimate, plan, continue, intend, should, may or similar
expressions, are intended to identify forward-looking statements.
Statements regarding the following subjects, among others, may be
forward-looking: macro- and micro-economic impact of the COVID-19
pandemic, increasing interest rates and inflation; market trends in
the Company’s industry, real estate values, the debt securities
markets or the general economy; the timing and amounts of expected
future fundings of unfunded commitments; the return on equity; the
yield on investments; the ability to borrow to finance assets; the
Company’s ability to deploy the proceeds of its capital raises or
acquire its target assets; and risks associated with investing in
real estate assets, including changes in business conditions and
the general economy. For a further list and description of such
risks and uncertainties, see the reports filed by the Company with
the Securities and Exchange Commission. The forward-looking
statements, and other risks, uncertainties and factors are based on
the Company’s beliefs, assumptions and expectations of its future
performance, taking into account all information currently
available to the Company. Forward-looking statements are not
predictions of future events. The Company disclaims any intention
or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
CONTACT: |
Hilary
Ginsberg |
|
Investor Relations |
|
(212) 822-0767 |
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