Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Company Overview
- Ticker: ARI
- Current Price (July 14, 2025): $9.99 — Yahoo Finance
- Market Cap: ~$1.38 billion
- Industry: Mortgage REIT (Commercial Real Estate Finance)
Investment Thesis
Apollo Commercial Real Estate Finance is a mortgage REIT that provides senior‑secured loans for commercial properties via the Apollo platform. With its shares trading below book value and a 10% quarterly dividend, the company combines high current income with potential for book‑value recovery if credit conditions stabilize.
Business Model & Financial Positioning
- Generates net interest income from a ~$7.7 billion commercial real estate loan portfolio (office, multifamily, hospitality) — MarketBeat
- Distributable earnings cover ~96% of the $0.25 quarterly dividend — Investing.com
- Debt-to-equity ratio of ~3.7×; operating cash flow of ~$186 million to service ~$6.8 billion debt — WallStreetZen
Dividend & Yield
- Quarterly Dividend: $0.25
- Current Yield: 10.0% — Investing.com
- Payout ratio has remained stable but unchanged quarter-to-quarter
Valuation & Forward PEG Proxy
| Metric | Value / Estimate |
|---|---|
| Price/Book | 0.74× on book value of $13.57/share — MarketBeat |
| Forward P/E | ~15.8× (non‑GAAP EPS) |
| EPS Growth Forecast | +9.7% in 2026; +75.5% in 2027 — WallStreetZen |
| Forward PEG | ~1.6 (15.8 ÷ ~10% growth) |
| Sector Benchmark | REITs typically range 1.5–2.0×; ARI’s PEG sits near the lower end |
Analyst Ratings & Price Targets
- Coverage: 5 analysts (2 Buy, 3 Hold); consensus = Hold — MarketBeat
- 12‑Month Price Target: $9.00–$11.00; average $9.92 — StockAnalysis
Short Interest & Float
- Float: ~138 million shares — MarketBeat
- Short Interest: ~2.3% (~3.3 million shares) — MarketBeat
- Days to Cover: ~2.4 days; low short exposure may limit volatility from short‑term squeezes
Risks & Mitigating Factors
| Risk | Mitigation |
|---|---|
| Interest rate volatility | Portfolio includes floating‑rate assets that adjust to rate changes |
| Credit losses or defaults | Conservative underwriting standards and senior‑secured collateral |
| Dividend coverage | Earnings have historically covered distributions near 100% |
| High leverage | Operating cash flow supports debt service; portfolio repricing potential in improving markets |
Conclusion
ARI combines a high current dividend yield with a discount to tangible book value alongside coverage metrics that have historically supported its payout. Its forward PEG is in line with REIT sector norms, and leverage is backed by senior‑secured collateral. The stock may suit allocations seeking income generation, with a relative emphasis on stable distributions rather than capital‑growth exposure.
Disclaimer
This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The author is not a registered investment advisor. All opinions are the author’s own. Readers are encouraged to do their own research and consult with a licensed financial professional before making investment decisions.
