Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) reported a net loss of $131.9 million, or $0.97 per diluted share, for the fiscal year ended December 31, 2024, a significant decline from the net income of $45.9 million, or $0.29 per diluted share, recorded in the previous year. The company's total revenue decreased to $303.7 million from $344.6 million in 2023, primarily driven by a reduction in interest income from subordinate loans and an increase in interest expense. Net interest income fell to $199.0 million, down from $252.2 million in 2023, reflecting a decrease in interest income from both commercial mortgage loans and subordinate loans.
The company experienced notable changes in its loan portfolio, with total commercial mortgage loans decreasing to $6.7 billion from $7.9 billion year-over-year. The Specific Current Expected Credit Loss (CECL) Allowance increased significantly to $342.5 million, primarily due to a $149.5 million increase related to two subordinate loans and a major write-off of $127.5 million associated with the Massachusetts Healthcare Loan. The General CECL Allowance also rose to $36.8 million, reflecting the ongoing challenges in the commercial real estate market.
Strategically, Apollo Commercial Real Estate Finance continued to focus on its investment strategy, committing $1.9 billion to new loans during the year, with $1.3 billion funded at closing. The company also reported $2.5 billion in loan repayments and sales, indicating active management of its portfolio. As of December 31, 2024, the company held $752.6 million in real estate assets, which included properties acquired through foreclosure, such as the D.C. Hotel and the Brooklyn Multifamily Development.
Operationally, the company maintained a diversified portfolio, with approximately 95% of its loans being floating rate. The weighted-average loan-to-value ratio was reported at 57%, suggesting a conservative approach to leverage. The company also reported a debt-to-equity ratio of 3.2, indicating a significant reliance on leverage to finance its operations. As of the end of 2024, Apollo Commercial Real Estate Finance had $317.4 million in cash and $2.1 billion in undrawn capacity under its secured debt arrangements, providing a buffer for future investments.
Looking ahead, Apollo Commercial Real Estate Finance expressed caution regarding the macroeconomic environment, particularly in light of rising interest rates and inflation. The company indicated that these factors could impact its ability to generate income and maintain its REIT qualification. Management emphasized the importance of ongoing monitoring of market conditions and the performance of its loan portfolio to navigate potential challenges in the coming year.
About Apollo Commercial Real Estate Finance, Inc.
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