Executive Summary

Q1 2025 distributable earnings were $0.24 per diluted share and GAAP diluted EPS was $0.16; management flagged Q1 as a trough driven by elevated Q4 repayments and back‑weighted Q1 deployments, and expects distributable earnings to meet or exceed the dividend for the rest of 2025 .
S&P Global consensus “Primary EPS” was $0.22 vs actual $0.24 (beat) and revenue estimate was ~$49.4M vs S&P actual ~$61.8M (beat); company‑reported total net revenue was $65.8M, highlighting definitional differences in revenue [Values retrieved from S&P Global]* .
Loan portfolio grew to $7.7B with a 7.9% weighted‑average unlevered all‑in yield; origination momentum remained strong ($650M new commitments), and leverage/liquidity improved via facility upsizes and extensions (JPM capacity +$500M to $2B; DB extended to 2028) .
Focus asset progress: 111 West 57th Street unit sales reduced ARI exposure post‑quarter; ~$127M of additional executed/pending contracts could further shrink exposure; D.C. hotel REO is performing well and may be tested for sale later this year .
Potential stock catalysts: accelerating redeployment and originations, clarity on focus‑asset resolutions (111 W 57th, Liberty Center), sustained dividend coverage, and balance sheet capacity additions .

What Went Well and What Went Wrong

What Went Well

Strong origination pace and portfolio growth: $650M Q1 commitments, $73M add‑on fundings, portfolio to $7.7B at a 7.9% w/a unlevered yield; management reiterated robust pipelines in U.S. and Europe, including data centers and residential .
Liquidity and financing: Upsized JPM facility by $500M (to $2B) and extended maturities (JPM to 2030; DB to 2028), plus two new secured facilities (~$690M aggregate) supporting redeployment and returns .
Focus asset progress: 111 W 57th had Q1 closings (~$45M net proceeds) and post‑quarter actions fully repaid senior ahead of ARI with a ~$29M basis reduction; ~$95–$127M of signed/near‑signed contracts expected to further reduce exposure .

What Went Wrong

Q1 distributable earnings below dividend run‑rate (coverage ~96%): driven by timing of Q1 capital deployment and Q4 repayment surge, though management expects coverage in subsequent quarters .
Macro volatility and recession risk: management highlighted increased capital markets volatility, potential tariff impacts on construction costs, and hospitality sensitivity in downturn scenarios (near‑term risk) .
Non‑accrual/specific reserves remain a watch item: analysts called out ~$500M non‑accruing assets; management outlined resolution cadence (Liberty Center market sale in H2 2025, continued 111 W 57th progress) but timing remains lumpy .

Financial Results

Reported Results vs Prior Year and Prior Quarter

Metric	Q1 2024	Q4 2024	Q1 2025
Total net revenue ($USD Millions)	$80.54	$71.71*	$65.82
GAAP diluted EPS ($)	($0.76)	$0.27	$0.16
Distributable Earnings per diluted share ($)	$0.35	$0.32	$0.24

Note: Q4 2024 revenue shown from S&P Global actuals for consistency with estimate comparisons; company did not disclose “total net revenue” in Q4 press materials [Values retrieved from S&P Global]*.

Estimate Comparison (S&P Global)

Metric	Q4 2024	Q1 2025	Q2 2025
Primary EPS Consensus Mean ($)	0.225*	0.221*	0.250*
Primary EPS Actual ($)	-0.580*	0.240*	0.260*
Revenue Consensus Mean ($USD Millions)	48.20*	49.35*	48.40*
Revenue Actual ($USD Millions)	71.71*	61.81*	67.79*

Observations: Q1 2025 “Primary EPS” beat ($0.24 vs $0.22) and revenue beat (~$61.8M vs ~$49.4M); Q4 2024 S&P “Primary EPS” actual (-$0.58) differs from company’s GAAP diluted EPS ($0.27), reflecting metric definition differences for REITs [Values retrieved from S&P Global]*.

KPIs

KPI	Q1 2025
Total loan portfolio	$7.7B
W/A unlevered all‑in yield	7.9%
First mortgages (% of portfolio)	95%
Floating rate (% of portfolio)	95%
W/A risk rating	3.0
New commitments	$650M ($460M funded at close)
Repayments and sales	$93M
Add‑on fundings	$73M
Total liquidity	$218M (cash $170M; available leverage $48M)
Debt‑to‑equity ratio	3.5x
Dividend declared	$0.25 per share

Portfolio Breakdown (Carrying Value by Property Type, as of 3/31/2025)

Property Type	Carrying Value ($USD Millions)
Residential	$1,880
Office	$1,818
Hotel	$1,602
Retail	$955
Industrial	$598
Mixed Use	$317
Other	$550
Total	$7,722
General CECL Reserve	($35)
Carrying value, net	$7,687

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Distributable EPS vs dividend coverage	FY 2025	Expect lower vs Q4 but sufficient coverage near term	Q1 was trough; expect meet or exceed dividend for remaining quarters	Maintained/clarified
Repayments cadence	FY 2025	Not specified	Approximately $1.5B expected; lumpy, mid–late Q2 to mid–late Q3 timing	New
Dividend per share	Q1 2025	$0.25 declared (Mar 11, 2025)	$0.25 declared; unchanged	Maintained
Secured facility capacity/maturity	Ongoing	Pre‑Q1 capacity	JPM facility upsized by $500M to $2B (maturity to 2030); DB extended to 2028	Improved capacity/maturity

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
Macro volatility/tariffs/recession	Q4: Liquidity improving; 2025 activity expected	Increased volatility; tariffs could lift construction costs; recession risk with hospitality most sensitive	More cautious tone
Focus assets (111 W 57th, Liberty Center)	Q4: Pipeline of unit sales; potential H2 resolutions	Q1 closings ~$45M; post‑quarter senior repaid, ~$29M basis reduction; ~$95–$127M in contracts; Liberty Center sale targeted H2	Execution progressing
Originations and redeployment	Q4: $1.9B 2024 originations; 2025 pipeline >$1B	$650M Q1 commitments; $709M post‑quarter; $2.0B 1H commitments reported later	Acceleration
Data centers	Platform active; future ARI participation	Q1 included pre‑let data center construction loan; focus on long‑term credit tenants	Growing
Europe exposure and sourcing	Strong European origination engine; bank back‑leverage	London team, structural advantages (less securitization), hedged FX; large European portfolio	Strategic advantage sustained
Financing markets	Q4: Tightening spreads; ample warehouse financing; CRE CLO optionality not needed	Upsized/extended facilities; banks favor warehouse/back leverage; CLO still not preferred	Supportive

Management Commentary

“ARI’s first quarter earnings reflect the impact of elevated repayments at the end of fourth quarter of 2024 and the timing of our first quarter capital deployment, which totaled $650 million.” – Stuart Rothstein, CEO .
“As we look through the rest of the year, we see Q1 results representing a trough with distributable earnings per share expected to meet or exceed the quarterly dividend rate for the remaining quarters.” – Anastasia Mironova, CFO .
“Our strategy with data centers has been…pre‑leased to strong credit tenants with long‑term leases.” – Stuart Rothstein, CEO .
“We’re comfortable putting capital to work, expecting that the latter part of this year and the early part of next year, there will be more capital coming our way through resolutions.” – Stuart Rothstein, CEO .

Q&A Highlights

Specific reserves/non‑accrual cadence: Focused on 111 W 57th and Liberty Center; comfortable with reserves and expect recycling of capital as resolutions occur, supporting new deployments .
Macro/recession sensitivity: Hospitality most vulnerable near term; multifamily supported by secular demand; office recovery continues but could slow in a deep recession .
111 W 57th accounting: Despite senior position post‑quarter, income remains off to avoid basis pressure; recovery will flow through reserve releases rather than near‑term income .
Repayments outlook: ~$1.5B expected in 2025; lumpy with concentration from mid–late Q2 to mid–late Q3; redeployment aimed to avoid earnings drag .
Europe platform: Dedicated London team and structural market advantages (limited securitization), hedged FX; competitive edge on large transactions .
Financing approach: No equity issuance given valuation; new deployments funded by repayments/resolutions with modest leverage uptick from re‑levering performing assets .

Estimates Context

Q1 2025 beats: Primary EPS $0.24 vs $0.22 consensus; revenue ~$61.8M vs ~$49.4M consensus; company total net revenue was $65.8M (definitional differences vs S&P revenue) [Values retrieved from S&P Global]* .
Q4 2024: S&P “Primary EPS” actual (-$0.58) diverges from company GAAP diluted EPS ($0.27), underscoring metric definition differences for REITs; investors should anchor on distributable EPS for dividend coverage analysis [Values retrieved from S&P Global]*.
Q2 2025 (reported later): Primary EPS $0.26 vs $0.25 consensus (beat); revenue ~$67.8M vs ~$48.4M consensus (beat) [Values retrieved from S&P Global]* .

Key Takeaways for Investors

Q1 was a trough due to timing; management expects distributable earnings to cover the dividend for the rest of 2025—sustained coverage is a near‑term support for shares .
Redeployment is accelerating: originations, facility upsizes, and European/U.S. pipelines should lift earnings power as underperforming capital is recycled; watch H2 resolution milestones (Liberty Center, further unit sales at 111 W 57th) .
Balance sheet capacity is growing: facility expansions/extensions reduce refinancing risk and enhance flexibility; leverage likely to tick up modestly as capital shifts from non‑accrual/REO to levered first mortgages .
Portfolio mix favors defensive assets (residential, data centers) with floating‑rate exposure; hospitality remains the macro‑sensitive segment to monitor in downturn scenarios .
Estimate frameworks (S&P “Primary EPS” vs company GAAP/DE) can diverge for REITs; use distributable EPS for dividend coverage and S&P consensus for beat/miss tracking [Values retrieved from S&P Global]*.
Near‑term trading: catalysts include additional unit sales/resolutions and continued originations; risks include macro volatility, tariff‑driven cost pressure, and timing slippage in repayments .
Medium‑term thesis: Apollo platform sourcing, European edge, and back‑leverage access support scaled deployment into higher‑quality, senior mortgage opportunities, positioning ARI for ROE stability through cycle .

Values retrieved from S&P Global*

Apollo Commercial Real Estate Finance, Inc. (ARI)·Q1 2025 Earnings Summary