Form type: 10-Q
Period end: 2026-03-31
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | |
|---|---|---|
| Revenue | 58,634,000 | 65,816,000 |
| Total Revenue | ||
| Total COGS | ||
| Gross Profit | ||
| Depreciation and amortization | 3,981,000 | 0 |
| General and administrative | 5,952,000 | 6,652,000 |
| Income tax expense (benefit) | 230,000 | 116,000 |
| Other income statement items (derived) | -4,092,000 | 1,270,000 |
| Other operating expenses | 26,336,000 | 31,787,000 |
| Total Expenses | ||
| Net Income | ||
| Less: preferred stock dividends | -3,068,000 | -3,068,000 |
| Net income (loss) available to common stockholders | ||
| Basic earnings per share |
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Assets | ||
| Cash and cash equivalents | 126,847,000 | 139,825,000 |
| Interest receivable | 58,401,000 | 70,833,000 |
| Mortgage loans held for investment, net | 8,881,618,000 | 8,774,216,000 |
| Other assets (derived) | 168,002,000 | 73,146,000 |
| Real estate investments, net | 852,115,000 | 842,947,000 |
| Total Assets | ||
| Liabilities | ||
| Borrowings under credit facilities | 1,100,000,000 | 941,300,000 |
| Distributions payable | 37,819,000 | 38,668,000 |
| Other liabilities (derived) | 7,137,471,000 | 7,064,909,000 |
| Total Liabilities | ||
| Equity | ||
| Stockholders equity | 1,811,693,000 | 1,856,090,000 |
| Total Equity | ||
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | |
|---|---|---|
| Operating activities | ||
| Net income | 26,227,000 | 25,991,000 |
| Depreciation and amortization | 3,981,000 | 2,456,000 |
| Stock-based compensation | 3,047,000 | 3,430,000 |
| Changes in operating assets and liabilities, net | -20,694,000 | 7,439,000 |
| Net cash from operating activities | ||
| Investing activities | ||
| Investing activities, net | -226,734,000 | -457,704,000 |
| Net cash from investing activities | - | - |
| Financing activities | ||
| Financing activities, net | 200,808,000 | 266,342,000 |
| Net cash from financing activities | ||
| Effect of exchange rate changes on cash | ||
| Net change in cash | - | - |
| Cash at beginning of period | 317,396,000 | |
| Cash at end of period | 166,424,000 | |
| Amount | |
|---|---|
| Balance at beginning of period | 1,856,090,000 |
| Net income | 26,227,000 |
| Other equity movements | -70,624,000 |
| Balance at end of period | 1,811,693,000 |
Apollo Commercial Real Estate Finance, Inc. is a public reporting company classified under Real Estate Investment Trusts. The accompanying unaudited condensed financial statements have been prepared from the Company's connected books and records as of and for the period ended March 31, 2026, and reflect all adjustments that management considers necessary for a fair presentation of the interim periods presented. The following discussion should be read together with our unaudited consolidated financial statements and related notes. The results of operations for the interim period are not necessarily indicative of the results that may be expected for the full fiscal year.
For the period ended March 31, 2026, revenue was $58,634,000 compared to $65,816,000 in the comparable prior-year period, a decrease of 10.9%. The decline in revenue was accompanied by a decrease in interest receivable to $58,401,000 from $61,047,000, or 4.3%, and the reduction of loans receivable, net to $0 from $499,900,000, a decrease of 100.0%, partially offset by growth in mortgage loans held for investment, net to $8,881,618,000 from $7,687,086,000, an increase of 15.5%. Net income for the period was $26,227,000. Basic earnings per share was $0.16 for the period, computed using weighted-average basic shares outstanding of 139,110,347.
Total debt was $8,275,290,000 at March 31, 2026, including borrowings under credit facilities of $1,100,000,000, an increase of 103.6% from $540,400,000 in the prior period. Other liabilities were $7,137,471,000 at period end, compared with $6,344,838,000 in the prior period, an increase of 12.5%. Cash and cash equivalents were $126,847,000 at period end, a decrease of 23.8% from $166,424,000. The Company's primary market risk exposure is interest rate risk on cash, cash equivalents, and short-term investments, and the Company does not have material foreign currency or commodity price exposure.
Total stockholders' equity was $1,811,693,000 at March 31, 2026, a decrease of 2.6% from $1,860,608,000 in the prior period. Distributions payable were $37,819,000 at period end, a decrease of 1.4% from $38,347,000. Forward-looking considerations affecting the Company include estimates relating to its ability to make distributions to stockholders in the future, its continued exclusion from registration under the Investment Company Act of 1940, and the potential benefits and effects of the Asset Sale and the amount and use of proceeds therefrom. Such forward-looking statements are based on the Company's beliefs, assumptions and expectations of future performance, taking into account all information currently available, and are not predictions of future events.
| Current | Prior | |
|---|---|---|
| Borrowings under credit facilities | 1,100,000,000 | 941,300,000 |
| Total debt | 1,100,000,000 | 941,300,000 |
| Current | Prior | |
|---|---|---|
| Real estate investments, net | 852,115,000 | 842,947,000 |
| Total property and equipment | 852,115,000 | 842,947,000 |
| Current | Prior | |
|---|---|---|
| Stockholders equity | 1,811,693,000 | 1,856,090,000 |
| Total stockholders' equity | 1,811,693,000 | 1,856,090,000 |
Apollo Commercial Real Estate Finance, Inc. is a public reporting company classified under Real Estate Investment Trusts. For the period ended March 31, 2026, revenue was $58,634,000, a decrease of 10.9% from $65,816,000 in the comparable prior-year period, reflecting lower income from our investment portfolio, including a decline in interest receivable of 4.3% to $58,401,000 from $61,047,000 and the reduction of loans receivable, net to $0 from $499,900,000. Net income for the period was $26,227,000, or $0.16 of basic earnings per share on weighted-average basic shares outstanding of 139,110,347.
Operating expenses reflected several offsetting movements: general and administrative expense decreased 10.5% to $5,952,000 from $6,652,000, and other operating expenses decreased 17.1% to $26,336,000 from $31,787,000. These decreases were partially offset by depreciation and amortization of $3,981,000, compared to $0 in the prior period, consistent with real estate investments, net of $852,115,000 recorded in the current period compared to $0 in the prior period. Other income statement items contributed income of $4,092,000 in the current period compared to expense of $1,270,000 in the prior period. Income tax expense increased 98.3% to $230,000 from $116,000.
Cash and cash equivalents were $126,847,000 at March 31, 2026, compared to $166,424,000 in the prior period, a decrease of 23.8%. The decrease in cash was accompanied by growth in our investment portfolio, as mortgage loans held for investment, net increased 15.5% to $8,881,618,000 from $7,687,086,000, funded in part by increased leverage, with borrowings under credit facilities of $1,100,000,000 compared to $540,400,000 in the prior period, an increase of 103.6%, and other liabilities of $7,137,471,000 compared to $6,344,838,000, an increase of 12.5%. Stockholders' equity was $1,811,693,000 at period end, a decrease of 2.6% from $1,860,608,000, and distributions payable were $37,819,000 compared to $38,347,000, a decrease of 1.4%. Our primary market risk exposure is interest rate risk on cash, cash equivalents, and short-term investments, and we do not have material foreign currency or commodity price exposure. Management believes that our cash and cash equivalents, together with amounts available under our credit facilities and cash flows from operations, will be sufficient to meet our liquidity and capital requirements for at least the next twelve months.
We are subject to market risks in the ordinary course of our business, and our primary market risk exposure is interest rate risk on cash, cash equivalents, and short-term investments. Changes in prevailing interest rates may affect both the income we earn on our interest-bearing assets and the cost of our interest-bearing liabilities. As of March 31, 2026, we held cash and cash equivalents of $126,847,000, compared to $166,424,000 at the prior period end, a decrease of 23.8%, and interest receivable of $58,401,000, compared to $61,047,000, a decrease of 4.3%. Our interest-earning asset base is composed principally of mortgage loans held for investment, net, of $8,881,618,000, which increased 15.5% from $7,687,086,000 in the prior period. For the three months ended March 31, 2026, interest income from commercial mortgage loans was $149,989,000, compared to $159,500,000 for the three months ended December 31, 2025, interest expense was $113,922,000 compared to $115,486,000, and net interest income was $36,067,000 compared to $44,102,000. Because the yields on our assets and the costs of our borrowings respond to movements in market interest rates, changes in those rates could affect our net interest income and results of operations in future periods.
Our exposure to interest rate risk also arises from our financing arrangements. Borrowings under credit facilities were $1,100,000,000 as of March 31, 2026, compared to $540,400,000 in the prior period, an increase of 103.6%, and our total liabilities were $8,275,290,000. To the extent our borrowings bear interest at floating rates, an increase in market interest rates would increase our interest expense, while a decrease in rates would reduce it, and the effect on our results would depend in part on the extent to which changes in the rates on our interest-earning assets offset changes in our borrowing costs. [COMPLETE: quantitative sensitivity analysis showing the estimated impact of a hypothetical change in interest rates on net interest income and the fair value of interest-rate-sensitive instruments.]
We do not have material foreign currency or commodity price exposure. We continue to monitor our market risk exposures and may in the future employ strategies intended to mitigate the impact of adverse changes in interest rates on our financial condition and results of operations.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, as of March 31, 2026, the end of the period covered by this quarterly report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. The certifications of our principal executive officer and principal financial officer required pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350 are filed or furnished as Exhibits 31.1, 31.2, 32.1 and 32.2 to this report.
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. [COMPLETE: Management must review and formally adopt the conclusion language set forth above before this report is filed.]
From time to time, Apollo Commercial Real Estate Finance, Inc. is involved in legal proceedings arising in the ordinary course of business. While the outcome of any such matters cannot be predicted with certainty, management does not currently believe that any pending matter is material to the company's financial statements.
The company continuously evaluates the legal proceedings to which it may become subject in the ordinary course of business, and, as of March 31, 2026, management has concluded that no pending matter is expected to be material to the company's financial statements.
The following discussion supplements the risk factors previously disclosed in our filings with the Securities and Exchange Commission, and investors should carefully consider these risks in evaluating an investment in our securities. Our primary market risk exposure is interest rate risk on cash, cash equivalents, and short-term investments, and changes in prevailing interest rates could adversely affect our net interest income, the value of our investment portfolio, and our results of operations. Statements regarding, among other subjects, higher interest rates and inflation, market trends in our industry, real estate values, the debt securities markets or the general economy, the demand for commercial real estate loans, and our business and investment strategy may be forward-looking, and actual results may differ materially from those expressed in any forward-looking statements. As a company classified under Real Estate Investment Trusts, our performance is closely tied to conditions in the commercial real estate market, and deterioration in real estate values or borrower credit quality could adversely affect our financial condition.
Our recent operating results reflect the sensitivity of our business to these conditions. For the period ended March 31, 2026, revenue was $58,634,000 compared to $65,816,000 in the comparable prior-year period, a decrease of 10.9%. The decline in revenue was accompanied by a decrease in interest receivable to $58,401,000 from $61,047,000, or 4.3%, and the reduction of loans receivable, net to $0 from $499,900,000, a decrease of 100.0%, partially offset by growth in mortgage loans held for investment, net to $8,881,618,000 from $7,687,086,000, an increase of 15.5%. Net income for the period was $26,227,000, and there can be no assurance that we will be able to maintain this level of profitability if revenue trends continue or if credit conditions in our portfolio deteriorate.
Our use of leverage magnifies the risks associated with our investments and could adversely affect our liquidity and financial flexibility. Borrowings under credit facilities increased to $1,100,000,000 from $540,400,000, an increase of 103.6%, while cash and cash equivalents declined to $126,847,000 from $166,424,000, a decrease of 23.8%. Total liabilities of $8,275,290,000 substantially exceed total stockholders' equity of $1,811,693,000, which declined 2.6% from $1,860,608,000 in the prior period. A high degree of leverage increases our exposure to rising borrowing costs, margin calls, and refinancing risk, and any inability to access financing on favorable terms could materially and adversely affect our business, results of operations, and ability to make distributions to our stockholders.
In addition, we are involved in legal proceedings arising in the ordinary course of business from time to time. Management does not currently believe any pending matter is material to the financial statements, but adverse developments in existing or future proceedings could result in unanticipated costs or liabilities. We do not have material foreign currency or commodity price exposure; however, the interest rate and credit risks described above, together with broader economic uncertainty, could individually or in the aggregate have a material adverse effect on our business, financial condition, and results of operations.
The following disclosure is provided pursuant to Item 408(a) of Regulation S-K regarding Rule 10b5-1 trading arrangements of the directors and officers of Apollo Commercial Real Estate Finance, Inc. for the quarterly period ended March 31, 2026. [COMPLETE: Rule 10b5-1 trading arrangement adoptions and terminations from the D&O questionnaires]