Net income: $0.30 per diluted share for the fourth quarter and $0.29 for the full year 2023.
Distributable earnings: $0.36 per share for the fourth quarter, $1.09 per share for the year, and adjustments totaling $1.69 per share.
Realized Losses and Realized Gains: Realized losses on investments are offset by gains from extinguishment of debt.
Dividend Strategy: ARI aims to match dividends to net taxable income, reflecting its commitment to returning profits to shareholders.
New Loan Issuance: Two new loan issuance transactions were committed in the fourth quarter of 2023.
Asset Management: Proactive approach in managing loan portfolio and optimizing balance sheet.
On February 6, 2024, Apollo Commercial Real Estate Finance Inc (NYSE:ARI) released its 8-K report detailing its financial performance for the fourth quarter and full year ended December 31, 2023. ARI, a real estate investment trust, is primarily focused on originating and managing commercial real estate related debt investments. With a majority of its portfolio in residential and hotel properties, ARI has established a strong presence in New York City and is diversified both in the United States and internationally.
Performance in harsh environments
Despite the challenging macroeconomic environment, ARI reported diluted net earnings per share of $0.30 for the fourth quarter and $0.29 for the full year. The company's distributable earnings, a non-GAAP financial measure, were $0.36 per share for the quarter and $1.09 for the full year, or $1.69 per share adjusted to exclude net realized investment losses and gains on debt extinguishment.
Stuart Rothstein, CEO and President of ARI, commented on the company's resilience: “Despite the challenging macro environment over the past year, ARI has delivered strong performance and a consistently stable dividend to shareholders in 2023.” He highlighted active management of the loan portfolio and balance sheet optimization as key factors in preparing ARI for new opportunities.
The company has been aggressive in managing its loan portfolio and optimizing its balance sheet, positioning it to be on the offensive as the year progresses. We had two committed new loan origination transactions in the fourth quarter and continue to allocate capital opportunistically in line with Apollo's broader commercial real estate credit platform. – Stuart Rothstein, CEO and President
Financial Highlights and Strategic Dividend Approach
ARI's 2023 financial performance reflects the company's strategic approach to navigating the real estate market. The company's ability to maintain a stable dividend even in volatile market conditions is a testament to its robust asset management and strategic financial planning. ARI's commitment to matching dividends with net taxable income highlights the company's dedication to shareholder returns, a key factor for REIT investors.
The story continues
The company recorded realized losses on subordinated loans secured by ultra-luxury residential properties and realized losses related to the acquisition of hotel properties through deeds in lieu of foreclosure, partially offset by realized gains on the extinguishment of debt related to the convertible notes.
ARI's detailed financial results, including a reconciliation of distributable earnings to GAAP net income, are publicly available on the company's website, providing transparency and valuable insight to investors.
Future outlook
As ARI moves forward, its focus on earning interest income from its investments, net of borrowing and management fees, will remain a pillar of its business. The company's strategic capital allocation, particularly new lending transactions, demonstrates a forward-thinking approach to growth and value creation.
ARI's 2023 performance was characterized by both achievements and challenges, but the company's strategic portfolio management and dividend approach position it to navigate the complexities of the commercial real estate market and continue to deliver value to shareholders.
For more information regarding ARI's financial performance and strategic outlook, investors are encouraged to review the full earnings presentation and participate in the conference call and webcast scheduled for February 7, 2024.
For more information, please see Apollo Commercial Real Estate Finance Inc's full 8-K earnings release here.
This article was originally published on GuruFocus.