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Apollo Commercial Real Estate (ARI)
NYSE:ARI
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Apollo Real Estate
(NYSE:ARI)61Neutral
Positive Factors
Earnings Performance
ARI's 4Q NII of $42.5M was $2.1M above the estimate.
Loan Origination
ARI announced a new 2025 origination totaling $114M, which is viewed as an indication that the company's offensive trajectory is poised to continue.
Negative Factors
Dividend Cut
ARI declared a dividend of $0.25/sh for 3Q24; this represents a (28.6%) cut vs. the company's prior quarterly dividend of $0.35/sh.
Loan Portfolio Challenges
ARI downgraded its $341.9M loan on eight hospitals in MA from 3-rated to 4-rated.
Potential Loan Loss
ARI’s ultimate loss could exceed the initial $90M projection.
Apollo Real Estate (ARI) vs. S&P 500 (SPY)
Market Cap
$1.38B
Dividend Yield12.07%
Average Volume (3M)1.00M
Price to Earnings (P/E)―
Beta (1Y)1.23
Revenue Growth-9.71%
EPS Growth-426.57%
CountryUS
EmployeesN/A
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)-0.96
Shares Outstanding138,871,190
10 Day Avg. Volume906,215
30 Day Avg. Volume1,002,573
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)6.01
Price to Cash Flow (P/CF)7.00
P/FCF Ratio0.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$9.42Price Target Upside-5.61% Downside
Rating ConsensusHold
Number of Analyst Covering5
Apollo Real Estate Business Overview & Revenue Model
Company DescriptionApollo Commercial Real Estate Finance, Inc. is a real estate investment trust, which originates, acquires, invests in, and manages performing commercial real estate mortgage loans, subordinate financings, and other commercial real estate-related debt investments. It offers loan programs that include senior loans, subordinate debt, bridge loans, and preferred equity. The company was founded on June 29, 2009 and is headquartered in New York, NY.
How the Company Makes MoneyApollo Real Estate makes money primarily through rental income generated from its diverse portfolio of commercial and residential properties. The company also earns revenue from property management fees, leasing commissions, and advisory services provided to clients and investors. Additionally, ARI capitalizes on property appreciation by strategically acquiring and disposing of assets to achieve capital gains. Significant partnerships with financial institutions and real estate developers enhance its acquisition capabilities and expand its investment opportunities, further contributing to its earnings.
Apollo Real Estate Financial Statement Overview
Summary
Apollo Real Estate's financial statements reflect a mixed performance. The company shows potential with revenue growth and reduced debt, yet faces challenges in profitability and equity stability. Key strengths include a strong cash position and improved leverage. However, persistent negative net income and reduced stockholders' equity could affect future growth and financial health.Income Statement
The income statement shows a challenging profitability scenario. The gross profit margin was high at 100% in 2024 due to the absence of cost of goods sold, but the company reported a significant net loss of -$119.6 million, leading to a negative net profit margin. Revenue growth from 2023 to 2024 was modest at 6.5%, indicating some positive trajectory. However, the negative net income highlights issues in cost management or operational efficiency.45
Neutral
Balance Sheet
The balance sheet indicates a stable financial structure with total debt reduced to zero in 2024, improving the debt-to-equity ratio significantly. The equity ratio stands at 22.3% for 2024, suggesting moderate leverage. Despite these improvements, the company has shown declining stockholders’ equity over the years, which could pose long-term risks.55
Neutral
Cash Flow
Cash flow analysis reveals stable operating cash flow with a positive free cash flow in 2024. However, there is a decrease in operating cash flow from 2023, and the free cash flow to net income ratio is difficult to evaluate due to negative net income. Consistent positive free cash flow is a strength, but the fluctuations in net income require attention.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 303.67M | 285.16M | 65.12M | 278.31M | 210.58M | Gross Profit |
| 303.67M | 166.18M | -26.37M | 217.59M | 170.83M | EBIT |
| 274.02M | 0.00 | 472.52M | 223.51M | 18.38M | EBITDA |
| -634.86M | 0.00 | -704.00K | 0.00 | 0.00 | Net Income Common Stockholders |
| -119.64M | 58.13M | -5.29M | 223.51M | 18.38M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 317.40M | 225.44M | 222.03M | 343.11M | 325.50M | Total Assets |
| 8.41B | 9.30B | 9.57B | 8.42B | 6.94B | Total Debt |
| 6.39B | 6.95B | 2.30B | 2.01B | 1.23B | Net Debt |
| 6.07B | 6.73B | 2.08B | 1.67B | 909.39M | Total Liabilities |
| 6.54B | 7.09B | 7.21B | 6.12B | 4.67B | Stockholders Equity |
| 1.87B | 2.21B | 2.35B | 2.29B | 2.27B |
| Cash Flow | Free Cash Flow | |||
| 30.75M | 201.23M | 234.67M | 199.25M | 164.05M | Operating Cash Flow |
| 200.26M | 273.86M | 267.70M | 199.38M | 164.05M | Investing Cash Flow |
| 577.17M | 68.42M | -1.34B | -1.36B | -215.72M | Financing Cash Flow |
| -689.31M | -343.36M | 957.97M | 1.18B | -75.12M |
Apollo Real Estate Technical Analysis
Positive
9.98
Price Trends
9.23
Positive
9.00
Positive
9.22
Positive
Market Momentum
0.24
Positive
61.81
Neutral
51.41
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARI, the sentiment is Positive. The current price of 9.98 is above the 20-day moving average (MA) of 9.83, above the 50-day MA of 9.23, and above the 200-day MA of 9.22, indicating a bullish trend. The MACD of 0.24 indicates Positive momentum. The RSI at 61.81 is Neutral, neither overbought nor oversold. The STOCH value of 51.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARI.
Apollo Real Estate Risk Analysis
Apollo Real Estate disclosed 67 risk factors in its most recent earnings report. Apollo Real Estate reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Apollo Real Estate Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $6.70B | 18.06 | 5.59% | 9.66% | -0.97% | 3.75% | |
68 Neutral | $1.47B | 13.46 | 7.05% | 7.94% | -5.09% | 6.25% | |
63 Neutral | $682.05M | 11.27 | 6.45% | 11.29% | -10.05% | ― | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% | |
61 Neutral | $1.38B | ― | -6.38% | 12.07% | -9.71% | -426.57% | |
60 Neutral | $3.45B | ― | -5.39% | 10.85% | -12.86% | -182.05% | |
52 Neutral | $139.22M | ― | -28.15% | 10.53% | -26.87% | -189.15% |
* Real Estate Sector Average
Performance Comparison
ARI
Apollo Real Estate
9.98
0.35
3.63%
BXMT
Blackstone Mortgage
20.04
2.44
13.86%
STWD
Starwood Property
20.12
1.75
9.53%
LADR
Ladder Capital
11.64
1.71
17.22%
GPMT
Granite Point Mortgage
2.82
-1.50
-34.72%
TRTX
Tpg Re Finance
8.48
2.02
31.27%
Apollo Real Estate Earnings Call Summary
Earnings Call Date: Feb 10, 2025 | % Change Since: 9.79% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant achievements in loan originations, particularly in the UK, and a strong liquidity position. However, the company faces challenges with a GAAP net loss for 2024, a decrease in their loan portfolio balance, and expected lower earnings in 2025. While there are optimistic plans for redeploying capital and achieving higher returns, the balance of highlights and lowlights suggests a cautiously optimistic outlook.Highlights
Strong Loan Origination in Q4 2024
ARI originated $702 million worth of new loans in the fourth quarter, bringing total origination volume for the year to $1.9 billion.
Expanding Portfolio in Europe
More than half of ARI's loan origination in 2024 was in the UK, leveraging Apollo's strong market position in Europe to diversify the company's portfolio.
High Dividend Coverage
ARI's dividend was well covered with 128% coverage for the quarter and 111% for the full year.
Robust Liquidity Position
ARI ended the quarter with over $380 million of total liquidity, including cash on hand and undrawn credit capacity.
Decrease in Debt to Equity Ratio
The debt to equity ratio decreased to 3.2 times, down from 3.5 times at September 30.
Lowlights
GAAP Net Loss for 2024
ARI reported a GAAP net loss available to stockholders of $132 million or negative $0.97 per share for the full year.
Decrease in Loan Portfolio Balance
The loan portfolio balance decreased quarter over quarter due to elevated loan repayments totaling $830 million.
Expectations of Lower Earnings in 2025
Quarterly earnings in 2025 are expected to be lower compared to Q4 2024, with sufficient coverage for the dividend anticipated.
Substantial Specific Reserve
Concerns remain regarding the substantial specific reserve within the portfolio, with plans to claw back some capital tied up in specific projects.
Company Guidance
During the fourth quarter and full year 2024 earnings call for Apollo Commercial Real Estate Finance, Inc., the company highlighted several key metrics and projections. ARI originated $702 million in new loans in Q4, bringing the total origination volume for the year to $1.9 billion, with 30% of the loans in the portfolio being originated in the last two years. The year-end loan portfolio comprised 46 loans totaling $7.1 billion, with a weighted average unlevered yield of 8.1%. The company reported distributable earnings of $45 million or $0.32 per share for Q4 and $190 million or $1.33 per share for the full year. Despite a GAAP net loss of $132 million, the dividend coverage was strong at 128% for the quarter and 111% for the year. ARI anticipates increased transaction activity in 2025, leveraging a robust origination pipeline of over $1 billion for the first half of the year. The company maintains a debt-to-equity ratio of 3.2 times and ended the quarter with over $380 million in total liquidity.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.