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 your attention to the customary safe harbor disclosure 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 be discussing certain non-GAAP financial 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 presentation, which is available in the stockholders 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.apolloreet.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, and good morning and thank you to those of us joining us on the Apollo Commercial Real Estate Finance first quarter 2021 earnings call. As usual, joining me this morning are Jay Agarwal and Scott Wiener. ARI is off to a solid start for 2021, committing to over $500 million of new transactions and reporting distributable earnings well in excess of the company's dividend per share. As I stated on our last earnings call, we entered this year focused on growing ARI's portfolio. That focus was based on confidence in the strength of the company's capital position, the performance of our existing loans, and the ability of Apollo's real estate credit team to originate attractive, risk-adjusted return opportunities for ARI. Continuing the trend we saw in the second half of 2020, the overall tone of the commercial real estate market remains positive as asset level performance is generally improving and transaction levels are increasing. The economy clearly is benefiting from the combination of COVID relief, fiscal stimulus, and the increasing pace of vaccinations. Specific to our business, we see both the strength of the real estate capital markets and increased investor optimism reflected in recent and anticipated loan repayments, sponsor support of their investments, and our growing pipeline of opportunities. During the quarter, ARI closed two large European loan transactions on behalf of one of our larger clients. In both transactions, the mandates were won due to a strong borrower relationship and the ability to speak for a sizable portion of the overall capital stack, which we were able to split with other vehicles managed by Apollo. ARI's affiliation with the broader Apollo real estate credit platform continues to be a key competitive advantage as it enables ARI to avail itself of the knowledge and resources within Apollo and to benefit from our collaborative efforts in winning large transaction mandates. Given existing available capital, as well as additional expected loan repayments, we are very focused on building a robust pipeline for ARI. Turning briefly to the existing portfolio, recent highlights include the full repayment of a sizable office loan and the repayment of a preferred equity investment in a New York City condo project. We have also seen meaningful sales activity within the properties underlying our residential for sale loans, consistent with recent news of the strengthening New York City housing market. Finally, several of our sponsors have made equity commitments to rebalance certain loans and replenish reserves, and we received a significant pay down on one of our Miami hotel loans. Turning now to the balance sheet, ARI completed a $300 million upsize of our term loan B during the first quarter. The loan has a seven-year term and bears interest at LIBOR plus 350 basis points with a 50 basis points LIBOR floor and was issued at a price of 99. Given the attractive pricing, we felt it was prudent to term out some of our financing as well as meaningfully increase our pool of unencumbered assets. Before I turn the call over to Jay, I just want to highlight the ability of ARI's existing portfolio to generate earnings that covered the 35 cent per share quarterly dividend at 1.1 times. This was achieved even while maintaining excess liquidity on the balance sheet throughout the quarter. Our common stock offers investors a dividend yield in excess of 9% on a stock that is trading slightly below book value, which we believe is extremely attractive in this current low yield environment. And with that, I will turn the call over to Jay to review our financial results.

Thank you, Stuart. We had a strong first quarter with earnings of $56.1 million, or $0.39 per share. Gap net income available to common stockholders was $55 million, or $0.37 per dilutive share. Our portfolio continues to perform well, generating earnings in excess of the quarterly dividend of $0.35 per share. As of March 31st, our general CECL reserve remained relatively stable quarter over quarter. Gap per value per share prior to the general CECL reserve was $15.35, compared to 1538 at the end of the fourth quarter. Minor decline was due to vesting of restricted stock, which was partially offset by earnings in excess of the dividend. At quarter end, our loan portfolio grew to $6.8 billion, with a weighted average unlevered yield of 6.2 percent in the remaining fully extended term of just around three years. Approximately 88 percent of our floating rate U.S. loans have LIBOR floors that are in the money, with a weighted average floor of 1.46 percent. In addition to the two new loans this quarter, we made $133 million of add-on fundings. Both the new loans were financed under our existing financing facilities. Our secure lenders continue to express a desire to grow their relationship with us. And in certain instances, we are seeing financing spreads at or below pre-COVID levels. Loan repayments for the quarter were $232 million from a combination of full and partial repayments. Lastly, with respect to our borrowings, we are in compliance with all covenants and continue to maintain strong liquidity. As of today, we have $290 million of liquidity and $1.5 billion in unfinanced loan assets. In addition, we have $200 million of potential liquidity available from previously encumbered mortgages. And with that, we'd like to open the line for questions. Operator, please go ahead.