Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2026, for Apollo Commercial Real Estate Finance, Inc. (ARI), a Maryland corporation taxed as a Real Estate Investment Trust (REIT). The reporting period is defined by a material strategic shift: on April 24, 2026, the Company sold its commercial real estate loan portfolio (the "Asset Sale") to Athene Holding Ltd., a subsidiary of Apollo Global Management, Inc., for approximately $8.6 billion. Following this transaction, ARI holds no commercial mortgage loans as of June 30, 2026. Subsequent to the quarter end, the Board of Directors announced a plan to dissolve the Company, liquidate assets, and wind up business affairs.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 |
|---|---|---|
| Total Net Revenue | $103.0 million | $136.7 million |
| Net Income | $52.0 million | $46.7 million |
| Net Income Available to Common Stockholders | $45.9 million | $40.6 million |
| Diluted EPS (Common) | $0.27 | $0.28 |
| Cash and Cash Equivalents (Ending) | $1,239.5 million | $177.6 million |
| Total Assets | $2,136.3 million | $9,901.0 million |
| Total Liabilities | $881.4 million | $8,044.9 million |
| Stockholders' Equity | $1,254.9 million | $1,856.1 million |
| Debt-to-Equity Ratio | 0.7 | 4.1 |
Note: The significant increase in cash and decrease in total assets/liabilities are direct results of the Asset Sale and subsequent debt repayments.
Material Changes vs. Prior Period
- Portfolio Liquidation: The Company sold its entire commercial mortgage loan portfolio (approx. $8.6 billion) in April 2026. Consequently, interest income from commercial mortgage loans dropped from $310.7 million (6 months 2025) to $191.7 million (6 months 2026), and the loan balance on the balance sheet is now zero.
- Debt Repayment: Proceeds from the Asset Sale were used to repay all secured debt arrangements ($6.9 billion), the senior secured term loan ($746.3 million), and senior secured notes ($500.0 million). As of June 30, 2026, the only outstanding debt is $371.4 million related to real estate owned (REO) properties.
- Realized Losses: The Company recorded a net realized loss on investments of $339.1 million and a loss on extinguishment of debt of $30.7 million during the six months ended June 30, 2026. These were offset by a decrease in current expected credit loss (CECL) allowance of $382.5 million due to the sale of the loan portfolio.
- Dividends: The Board declared a special common stock dividend of $3.75 per share for the quarter ended June 30, 2026 (totaling $4.00 for the six months), compared to $0.50 for the same period in 2025. This distribution is classified predominantly as a return of capital.
Outlook, Risks, and Management Commentary
- Dissolution Plan: On June 15, 2026, the Board determined that dissolution and liquidation are in the best interest of stockholders. A Special Meeting Proxy was filed on July 14, 2026, to vote on the Plan of Complete Liquidation and Dissolution. If approved, the Company will adopt the liquidation basis of accounting.
- Preferred Stock Redemption: Subsequent to the quarter end (July 15, 2026), the Company redeemed all outstanding Series B-1 Preferred Stock at $25.00 per share plus accrued dividends.
- Remaining Operations: Post-Asset Sale, the Company's operations are limited to managing three Real Estate Owned (REO) properties: the D.C. Hotel, the Brooklyn Multifamily Development, and the Atlanta Hotel. The Brooklyn Multifamily Development continues to generate rental income as lease-up ramps up.
- Risks: Primary risks include the uncertainty of the dissolution vote, potential litigation (including a reinstated claim against a subsidiary regarding a Manhattan development), and the execution of the liquidation plan. The Company no longer faces credit risk related to its former loan portfolio.
Investor Verification Checklist
- Dissolution Vote Status: Verify the outcome of the Special Meeting of Stockholders regarding the Plan of Complete Liquidation and Dissolution.
- Liquidation Timeline: Confirm the expected timeline for asset liquidation and final distributions to common stockholders.
- REO Property Valuations: Review the fair value assessments of the three remaining REO properties (D.C. Hotel, Brooklyn Multifamily, Atlanta Hotel) as these represent the core remaining assets.
- Legal Proceedings: Monitor the status of the reinstated claim against the Subsidiary in the "111 West 57th Investment LLC" case, which was remitted to the trial court in May 2026.
- Tax Treatment of Distributions: Consult tax advisors regarding the classification of the $3.75 special dividend and future liquidating distributions (return of capital vs. capital gains).