Apollo Commercial Real Estate Finance to Sell Loan Portfolio to Athene, Targets $12.05 Book Value

Key Points

• Apollo Commercial Real Estate Finance agreed to sell its loan portfolio to Athene for a purchase price equal to 99.7% of total loan commitments (excluding two loans totaling $146 million), and expects the deal to leave ARI with a common equity book value per share of about $12.05 and roughly $1.4 billion of net cash.
• Management says the sale—which carries a 23% premium to recent trading levels and has no financing contingency—is designed to close a long-running valuation gap; the transaction includes a 25-day go-shop, requires stockholder approval, and is expected to close in the second quarter.
• Post-close, ARI will retain about $466 million of net equity in real estate, remain a REIT, intends to pay a $0.25 Q1 dividend and target an ~8% annualized yield, while Apollo agreed to a 50% reduction in its annual management fee (paid in stock) and to reimburse up to $10 million; management will pursue strategic options, including M&A or potential dissolution if no plan is adopted by year-end.

Apollo Commercial Real Estate Finance NYSE: ARI outlined plans to sell its loan portfolio to Athene in a transaction that Chief Executive Officer Stuart Rothstein described as “transformational” for the company and its common stockholders. Management said the deal is intended to address a persistent discount between ARI’s public market valuation and the underlying value of its assets.

Portfolio sale to Athene and expected book value impact

Rothstein said ARI entered into a definitive agreement with Athene to sell ARI’s loan portfolio for a purchase price of 99.7% based on total loan commitments, net of asset-specific CECL reserves. The purchase price excludes two loans with a principal balance of $146 million that are expected to be repaid prior to closing.

After repayment of “substantially all” financing facilities and other indebtedness, and after estimated transaction expenses, the company expects to have a common equity book value per share of approximately $12.05, according to Rothstein.

Rothstein said the loan portfolio is being sold to Athene, which he called a “high conviction buyer,” noting Athene’s familiarity with the portfolio and its “aligned position” in the capital structure alongside ARI across nearly 50% of the loans.

Cash, dividends, and retained real estate holdings

ARI expects the transaction to deliver approximately $1.4 billion of net cash. Rothstein added that ARI will retain all net equity interests in real estate properties held by the company, which he said totaled approximately $466 million as of Sept. 30, 2025.

Following the closing, management said ARI intends to continue to qualify as a REIT for tax purposes. Rothstein said the company expects to pay a first-quarter dividend of $0.25 per share, consistent with the recent quarterly dividend level, subject to board approval. He also said ARI intends to continue paying a quarterly dividend, subject to board approval, targeting an approximately 8% annualized yield based on post-transaction book value per share.

Rationale: closing the valuation gap

Rothstein said ARI’s common stock, along with most commercial mortgage REIT peers, has traded at an average of about 0.76 of net book value for a number of years, despite what he characterized as improving underlying credit quality and the portfolio’s cash-generating nature. He said “the intrinsic value” of ARI’s investment portfolio has not been reflected in the public stock price.

He also pointed to strong private-market demand for “attractive yield-generating assets” like ARI’s, calling such assets “highly valued” and “in short supply.” Rothstein said the transaction is designed to monetize the portfolio in a single sale and “validate book value,” and he emphasized that the deal includes no financing contingency, which he said delivers certainty of execution.

Management said the purchase price represents a “meaningful” 23% premium to ARI’s recent trading levels and multiyear average price-to-book ratio, noting that over the past four years ARI shares have traded at an average of approximately 0.77 times book value.

Strategic review and potential outcomes

Rothstein said ARI’s management team and board will use the remainder of the year to evaluate commercial real estate-related strategies designed to reposition the company and unlock additional value. He said ARI expects to leverage Apollo’s broader investment platform and origination capabilities as it considers new approaches, and also highlighted potential strategic M&A opportunities, subject to stockholder approval where required.

In response to analyst questions, Rothstein said management plans to take a broad view of possible strategies while maintaining the desire to keep ARI a real estate vehicle and a REIT for tax purposes. He discussed interest in approaches that may combine credit with “credit-adjacent equity strategies” or “hybrid strategies,” and said ARI has historically sought ways to expand beyond a lender model where returns are limited to principal plus interest.

Rothstein also said that if a new asset strategy or strategic transaction is not identified by year-end, Apollo intends to recommend that ARI’s board explore all strategic alternatives, including dissolution.

Governance, fees, and timeline

The CEO said the transaction was approved by ARI’s board following the unanimous recommendation of a special committee comprised of three independent directors, advised by independent legal and financial advisors. Completion of the deal is subject to stockholder approval.

As part of the post-transaction evaluation period, Rothstein said Apollo agreed to a 50% reduction in ARI’s annual management fee rate, with the fee paid in shares of ARI common stock. He also said Apollo agreed to reimburse up to $10 million of ARI’s transaction expenses.

Rothstein said the deal includes a 25-day go-shop period during which the special committee will solicit additional interest in the portfolio. That process will be followed by a proxy statement filing and a stockholder vote. Assuming approval and customary closing conditions, Rothstein said the company expects the transaction to close in the second quarter.

During the Q&A, Rothstein said details of the process and any competing interest would be addressed in the proxy, noting that the go-shop period remains underway.

About Apollo Commercial Real Estate Finance NYSE: ARI

Apollo Commercial Real Estate Finance, Inc NYSE: ARI is a real estate finance company structured as a real estate investment trust (REIT). The company focuses on originating, acquiring and managing a diversified portfolio of commercial real estate debt and preferred equity investments. As an externally managed vehicle, ARI leverages the expertise and resources of an affiliate of Apollo Global Management, a leading global alternative investment manager.

ARI's investment strategy is centered on providing first mortgage loans, mezzanine debt financing, bridge loans and preferred equity across a broad range of property types, including office, retail, industrial and multifamily assets.

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