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pollo Commercial Real Estate Finance Inc (ARI) reported strong Q2 2025 performance, driven by significant loan originations and portfolio management progress. New loan commitments reached $1.4 billion, with year-to-date commitments totaling $2 billion, showcasing robust capital redeployment. ARI's access to a diverse transaction flow through Apollo's real estate credit platform eliminated cash drag.

    The company's residential loan portfolio has benefited from a valuation reset and enhanced credit quality, with approximately 2/3 of loans originated in the past 24 months. ARI successfully refinanced its Term Loan B facilities, extending corporate debt maturity to June 2029, demonstrating market confidence.

    The carrying value of ARI's portfolio increased by 12% from Q1, but book value per share decreased slightly to $12.59. The general CECL allowance increased by $3.1 million due to portfolio growth, indicating potential risk exposure. Leverage remains around 4 times, with significant non-earning assets raising concerns about future leverage management.

    The office sector remains challenging, and ARI has avoided new office deals due to market conditions and portfolio concentration concerns. The company is focused on monetizing non-performing assets, such as the Brook development, which is expected to become cash flow positive early next year. A decision on whether to sell outright or bring in a partner is anticipated between Q1 and Q2 2026.

    Total liquidity stood at $208 million at quarter end, with new loan originations of $1.4 billion and add-on fundings of $394 million for previously closed loans. Repayments and sales totaled $631 million during the quarter. Book value per share, excluding general CECL allowance and depreciation, was $12.59.