Apollo Commercial Real Estate Finance, Inc

Thank you, operator. Good morning and thank you for joining us on the Apollo Commercial Real Estate Finance second quarter 2025 earnings call. I'm joined today as usual by Scott Weiner, our Chief Investment Officer, and Anastasia Maranova, our Chief Financial Officer. ARI delivered strong performance in the second quarter of 2025, marked by significant progress across originations, portfolio management and balance sheet optimization. Velocity in loan originations increased as we committed to $1.4 billion of new loans during the quarter, quickly redeploying capital we have received back from both repayments and ARI's focus assets. Year to date, ARI has committed $2 billion to new loans. Repayments in the portfolio continue to track expectations with borrowers making progress on their business loans, having multiple options for refinancing. As evidenced by the second quarter activity, we are confident in our ability to redeploy this capital into newly originated loans and continue to identify attractive opportunities across both the United States and Western Europe. ARI continues to benefit from the breadth of Apollo's real estate credit platform and the team's robust originations pipeline to access transaction flow that matches capital received from repayments, eliminating cash drag and enabling ARI to build the diversified loan portfolio. Three of the loans closed in the second quarter were secured by residential properties, continuing ARI's thematic overweight to a sector benefiting from strong secular tailwinds. Loans on residential properties now comprise approximately 25% of ARI's portfolio, representing ARI's largest property type concentration. Importantly, approximately two thirds of the residential loans in ARI's portfolio have originated over the past 24 months, benefiting from evaluation reset and enhanced credit quality. In Europe, which represents approximately 50% of ARI's portfolio and 18% of originations year to date, the market is gaining momentum, benefiting from leashed interest rate cuts that have re-energized acquisition activity. Our local team is capitalizing on this resurgence with a healthy pipeline across property types and we continue to believe ARI's international diversification remains a strategic advantage. Turning now to the loan portfolio and a progress update on our focus assets, at quarter end, the carrying value of ARI's portfolio had increased 12% from the prior quarter and was comprised of 53 loans totaling approximately $8.6 billion. No additional asset-specific Cecil allowances were recorded during the quarter. We saw continued sales momentum at 111 West 57th Street with nine units closed during the quarter, generating $170 million in proceeds, 141 million of which reduced ARI's basis following the full repayment of the senior loan in April. ARI is now senior in the capital stack and all future proceeds will go directly to repaying its exposure. At the Brook, ARI's multifamily development in Brooklyn, the leasing office opened in June and tenant move-ins began this month, marking an important milestone in the asset's progress. Lastly, in Cincinnati, the marketing process for Liberty Center has commenced as we pursue exiting the asset. We remain intensely focused on executing our value maximization plans for our focus assets, which is integral to our strategy of converting underperforming capital into higher yielding reinvestment opportunities. Excuse me. We expect this capital rotation will continue to have a positive impact on ARI's earnings in the latter half of 2025 and throughout 2026. Before I turn the call over to Anastasia, I want to highlight the strong execution we had in connection with the refinancing of our outstanding term loan B facilities in the past quarter. In June, we completed a new five-year floating rate, $750 million term loan B, which repaid our existing two term loan Bs, which had pending maturities in 2026 and 2028 respectively. The new loan bears interest at SOFR plus 3 1⁄4% and enabled ARI to term out liabilities at attractive pricing with a well-diversified roster of high quality investors, highlighting the market's confidence in ARI. Following the refinancing, ARI's next corporate debt maturity is now not until June of 2029. With that, I will turn the call over to Anastasia to review ARI's financial results for the year.

Thank you, Stuart, and good morning, everyone. ARI reported distributable earnings of $36 million or $0.26 per share of common stock for the first quarter with gap net income of 18 million or 12 cents per diluted share of common stock. Distributable earnings for the second quarter of 2025 represent an 8% increase over the first quarter and provide dividend coverage of about 104 times. Our loan portfolio ended the quarter with a carrying value of 8.6 billion up from 7.7 billion at the end of Q1. The weighted average unleveraged yield of our portfolio was 7.8%. As Stuart mentioned, we had a strong quarter of loan origination, totaling 1.4 billion in commitments. We also completed an additional 394 million in add-on funding for previously closed loans. Year to date, ARI has originated over 2 billion of new commitments and completed a total of 467 million of add-on funding for previously closed loans. Repayments and sales totaled 631 million during the quarter. Importantly, with the continuous redeployment, 41% of our loan portfolio at the quarter end was originated post the 2022 rapid rise in interest rates and subsequent reset in property valuation. With respect to risk ratings, the weighted average risk rating of the portfolio at quarter end was 3.0, unchanged from the previous quarter end. There were no asset specific CISL allowances recorded during the quarter and no downgrades in risk ratings across the portfolio. Our general CISL allowance increased this quarter by 3.1 million, reflecting growth of the loan portfolio from the previous quarter end. Total CISL allowance and percentage points of the loan portfolio amortized cost basis is down slightly quarter over quarter, from 475 basis points to 429 basis points. Subsequent to quarter end, Apollo and the Commonwealth of Massachusetts reached a settlement agreement in which the Commonwealth agreed to pay us and other Apollo co-lenders an additional 44 million as compensation for the previous taking of the hospital by eminent domain. ARI's share of these proceeds is approximately 18 million. The payment is expected to be received before the end of August and the lawsuit will be dismissed with prejudice with all related claims released. These proceeds will result in book value per share of pickup for ARI in the following quarter and will be recycled into new loan origination leading to further upside to earnings. Moving on to the right hand side of the balance sheet. During the quarter, we were very active with optimizing our liabilities. In addition to the refinancing of our term loans that Stuart mentioned, we closed three new secured credit facilities and upsized an existing credit facility, which provided an additional 1.4 billion of aggregate borrowing capacity. Liquidity in the secured borrowing market continues to be plentiful as lenders get favorable capital treatment for this facility and in many instances prefer them over directly lending to properties. The company entered the quarter with 208 million of total liquidity comprised of cash on hand, committed on drawn credit capacity on existing facilities and loan proceeds held by the services. Our book value per share excluding general Cecil allowance and depreciation was $12.59, a slight decrease from last quarter. With that, I would like to turn the call back to Stuart Rosting.

Thank you, Anastasia. Before we turn the call back to the operators to start with questions, I just wanna highlight that from those of us at Apollo, our thoughts and prayers are with our friends and colleagues at Blackstone after the senseless tragedy that took place there this past Monday. We have heavy hearts and I'm sure many of you on the call do as well. With that, I will turn the call over to the operator.