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 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.apolloreit.com or call us at 212-515-3200. At this time, I'd like to turn the call over to Company's Chief Executive Officer, Stuart Rothstein.

Thank you, Operator. Good morning, and thank you all for joining us on the Apollo Commercial Real Estate Finance year-end 2021 earnings call. I am joined today, as usual, by Scott Wiener, our Chief Investment Officer. ARI delivered strong operational and financial results in 2021, and I am extremely proud of the effort and performance of our team. We committed to $3.2 billion of new mortgages on behalf of ARI, and grew its mortgage portfolio to $7.9 billion at year end, a 20% annual increase. Apollo continued to invest in talent, growing the commercial real estate credit team to 40 investment professionals in the US and Europe, broadening both originations and asset management capabilities. We fortified the balance sheet through the addition of $800 million of term leverage throughout the year, extending maturities at an attractive cost and increasing the pool of unencumbered assets to $1.9 billion at year end. Most importantly, our efforts resulted in a well-covered dividend to ARI shareholders. 2021 was a record year for real estate transaction volume, leading to a record year for commercial real estate loan originations. As discussed throughout the year, there was robust competition in the lending market and a variety of financing options available to borrowers from CMBS, banks and insurance companies, debt funds, and mortgage rates. In this market environment, relationships, reputation, and track record are critical components of success and we believe ARI's strong performance is reflective of the core advantages that Apollo's commercial real estate credit platform continues to provide the company. Across commercial real estate credit, Apollo completed $13 billion of transactions in 2021 and strengthened its position as a leading global provider of commercial real estate financing. There are a few themes from our originations activity in 2021 worth mentioning. First, the scale and expertise of Apollo's commercial real estate credit platform enabled ARI to participate in several larger transactions that were co-originated alongside other Apollo funds, which led to meaningful deployment on behalf of ARI. Next, I again want to highlight the success we achieved in Europe. Over 60% of ARI's 2021 origination volume was for transactions in Western Europe, as our well-established European commercial real estate credit team continues to do an excellent job disintermediating traditional financial institutions and capturing market share. The types of transactions, quality of equity sponsorship, and deal structures for ARI's European loans are very similar to the transactions we complete in the United States, and we expect to remain active in Europe in 2022. Lastly, I want to highlight that 60% of our 2021 deals were with repeat borrowers, many of whom are top tier global sponsors. ARI also closed transactions with eight new borrower relationships, totaling $1.3 billion, and we are very focused on converting those new borrowers into repeat clients. Importantly, our investment momentum has carried into 2022. To date, we have already closed approximately $275 million in new loan commitments. and I anticipate that we will close approximately another $2 billion of commitments prior to the end of the first quarter. While ARI's pace of originations and deployment is benefiting from the strength of the real estate capital markets, that strength is also reflected in the significant amount of repayment activity in ARI's portfolio. During 2021, ARI received $1.9 billion of repayments with over 40% of the total occurring in the fourth quarter. Notably, ARI received repayments from over $300 million of hotel loans, approximately $560 million of loans collateralized by for sale residential projects, and over $850 million from loan exposures across a variety of property types in New York City. As a result, our overall net exposure to New York City was reduced to 25% as compared to 36% at the end of 2020. Pivoting to the portfolio, we remain focused on proactive asset management. Our loan portfolio totaled $7.9 billion at year end, and there were no material changes to the credit quality of the portfolio or to our credit outlook since our last call. Notably, subsequent to quarter end, The Oxford Circus Retail property, collateralizing one of ARI's largest outstanding loans, was sold for an amount well in excess of basis, resulting in full repayment of principal, plus all accrued contractual and default interest. Shifting to financial performance, ARI reported distributable earnings per share for the year of $1.48 per share, resulting in dividends resulting in a dividend coverage ratio of 106% for the $1.40 common stock dividend. As I have discussed previously, the Board of Directors looks at multiple factors when setting the dividend, including asset level returns and the return on equity from new originations, factoring in financing costs and the appropriate leverage level for the company. The board also seeks to take a longer term view on achievable distributable earnings and seeks to limit the impact of quarterly fluctuations. Our goal is to provide a stable dividend without deploying capital into loans with a higher risk profile or using excessive leverage. At present, we anticipate the annual dividend for 2022 will be consistent with the existing dividend run rate subject to the board's approval. As is customary, our first quarter dividend for 2022 will be announced in March. I also want to highlight some of our capital market achievements in 2021. Throughout the year, we acted opportunistically to strengthen ARI's balance sheet and term out leverage when economically feasible. We added $800 million of term leverage during the year with successful issuances of both a term loan B and secured notes. ARI ended the year with $1.9 billion of unencumbered assets, which we believe is one of the highest levels amongst our peer set. Importantly, we remain conservative with respect to leverage, with the company's debt-to-equity ratio at 2.4 times at year end, consistent with the ongoing portfolio shift into first mortgages. Finally, we announced the appointment of Anastasia Marinova, a seasoned mortgage REIT professional to the position of Chief Financial Officer of ARI, and she will join us early in the second quarter. I want to thank the team at Apollo dedicated to ARI for all of their hard work this past year, and I look forward to reporting on ARI's achievements as we progress into 2022. And with that, we will open the call up for questions. Operator?

As a reminder, to ask a question, you will need to press star one on your telephone To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Doug Harder from Credit Suisse. Your line is now open.