Apollo Commercial Real Estate Finance, Inc

I'd like to remind everyone that today's call and webcast are being recorded. Please note that they are the property of Apollo Commercial Real Estate Finance, Inc., and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our earnings press release. I'd also like to call to your attention to the customary safe harbor disclosures in our press release regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections, and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these statements and projections. In addition, we will still be discussing certain non-GAAP measures on this call, which management believes are relevant to assessing the company's financial performance. These measures are reconciled to GAAP figures in our earnings press release. which is available on the investor relations section of our website. We do not undertake any obligation to update our forward-looking statements or projections unless required by law. To obtain copies of our latest SEC filings, please visit our website at www.apolloreads.com or call us at 212-515-3200. At this time, I'd like to turn the call over to the company's Chief Executive Officer Stuart Rothstein.

Thank you, Operator. Good morning, and thank you for joining us on the Apollo Commercial Real Estate Finance third quarter 2020 earnings call. Joining me this morning is Jay Agrawal, our CFO, and Scott Wiener, the Chief Investment Officer of our manager. We hope that everyone listening continues to be safe and healthy as we all continue to navigate the challenging circumstances of the global COVID-19 pandemic. Before my comments with respect to ARI, it is worth spending a few minutes on what we are seeing in the market overall. Since our last earnings call, there has been a modest uptake in the overall level of commercial real estate transaction activity. Real estate has traditionally been a lagging indicator, and as such, the long-term impact of the pandemic-driven economic slowdown on commercial real estate is evolving slowly. Consistent with the broader capital markets, We believe that at present, there is ample liquidity in the real estate market. Real estate private equity funds are seeking to deploy record levels of dry powder, while at the same time, banks, insurance companies, credit funds, and other real estate lenders are open for business as capital searches for yield in a low-rate environment. It is also worth noting that the extremely low interest rate environment is enabling property owners that might be considered likely sellers to continue to cover debt service and play for time with respect to their assets. Even with excess capital in the system, transaction activity is recovering at a modest pace as potential buyers and sellers work through the process of price discovery, which continues to be affected by unknown timing with respect to the end of the pandemic. varying views on the potential long-term impact to various property types and the potential for elevated market volatility around the upcoming election. At this point, we believe the ultimate pace and path of the recovery will continue to be very much linked with the overall recovery of the overall economy. It is fair to say that six-plus months into the pandemic, there are strong views emerging with respect to a few property types, But in general, market uncertainty and differing views remain around most asset types and geographies. Ultimately, as we have always done, we will continue to take a bottoms-up approach to working through potential new transactions and addressing asset management issues. Turning to ARI's third quarter results, the company had another solid quarter as earnings covered the $0.35 per share common stock dividend, while we continue to preserve excess liquidity and maintain a thoughtful approach to evaluating new investment opportunities. Consistent with my prior comments, as we evaluate originating new loans, we measure that opportunity against the value we see in the current price of our common stock, which has been trading at approximately 60% of book value. As such, during the third quarter, we repurchased over 5 million shares of common stock, and subsequent to quarter end, we repurchased an additional 3 million shares, bringing our year-to-date total investment in common stock repurchases to $119 million, representing 13.8 million shares repurchased. With respect to the portfolio, conversations with our borrowers and equity sponsors generally remain constructive. Our borrowers are predominantly sophisticated, well-capitalized institutions and our ability to partner with them and offer well-structured capital solutions will continue to benefit us as we get to the other side of this pandemic and markets normalize. Our near-term strategy for ARI continues to emphasize ensuring adequate liquidity, fortifying the balance sheet, and opportunistically investing capital. Our efforts are greatly enhanced by the management and expertise brought to ARI from the broader Apollo platform, and specifically from the commercial real estate debt team, which has continued to be active in the market. With respect to liquidity, ARI ended the quarter with over $450 million of cash and undrawn credit capacity, in addition to over $1 billion of unencumbered loan assets. The balance sheet remains strong with our nearest corporate debt maturity in the third quarter of 2022 and healthy ongoing dialogues with our bank lenders. In terms of investing, I mentioned that our commercial real estate debt team is in the market looking at opportunities, and we will continue to consider transactions that offer attractive risk-adjusted returns while also continuing to consider the economic benefits of repurchasing our stock or other parts of our capital structure. It is also worth noting that some of ARI's investable capital is being invested into previously closed attractive investments which have future funding components. As a result, we have the benefit of known uses of capital within the portfolio, and we are not forced to be overly aggressive in pursuing new loans. Year to date, we have invested $343 million through future funding, with approximately $100 million of that invested during the third quarter. As always, all potential future uses of capital, will be evaluated with a focus on maximizing shareholder value. Before I turn the call over to Jay, I again want to take a moment to thank the entire team focused on ARI who have worked tirelessly and have shown immense dedication and determination in unprecedented circumstances. This is our third earnings call from home, and our team continues to work seamlessly. Given our excess liquidity and low leverage, our strong borrower and lender relationships, and the power, scale, and expertise of the entire Apollo platform, we believe ARI is well situated to navigate whatever lies ahead and will continue to communicate to our fellow stockholders when the situation warrants it. And with that, I will turn the call over to Jay to review our financial results.

Thank you, Stuart.