Entering text into the input field will update the search result below

Apollo Commercial Real Estate Finance - A Dividend Yield Too Good To Be True

Ambrogio Pili profile picture
Ambrogio Pili


  • ARI is a commercial mortgage REIT with an interesting loan portfolio.
  • ARI has a fantastic total return performance.
  • Earnings per share dilution due to recursive new share emission to pay dividends.
  • Unsustainable dividend yield from operating activities.

Editor's note: Seeking Alpha is proud to welcome Ambrogio Pili as a new contributor. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Active contributors also get free access to SA PREMIUM. Click here to find out more »

Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI) is a commercial mortgage REIT (cm-REIT) whose stock market price has shown low volatility jointly with very high dividend yield. These are two exciting characteristics for all investors looking for a bond-like asset in a world of ultra-low interest rates. ARI is an enticing source of income and a valid way to diversify portfolio, but the dividend yield is unsustainable in the long term.


ARI is a commercial mortgage REIT (cm-REIT) externally managed by ACREFI Management, LLC (the Manager) an indirect subsidiary of Apollo Global Management, Inc. a leading global alternative investment company with a contrarian and value-oriented investment approach in private equity, credit, and real estate.

ARI tries to mitigate the conflict of interest between managers and shareholders adopting a minimum equity ownership guidelines requiring each independent director to maintain a minimum number of shares of Common Stock having a market value equal to or greater than a multiple of three times such independent director's annual cash retainer (excluding any portion of the retainer fee representing additional compensation for being a committee chairman). These mandatory ownership guidelines are intended to create a clear standard that encourages independent directors to remain invested in the performance of stock prices.

Under the Management Agreement, ARI pays the Manager (who is Apollo Global Management, Inc.) a management fee equal to 1.5% per annum of stockholders' equity, calculated and payable (in cash) quarterly in arrears.

The ARI's executive officers are employees of Apollo Global Management, Inc. or one of its affiliates, and therefore

This article was written by

Ambrogio Pili profile picture
Graduated in Economics and Finance. Credit union and financial guarantee business. Enthusiast analyst of value investing, contrarian and income strategies.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (8)

Plz comment to the following idea: If ARI wants to rebuy its shares then they would plan to reduce share price as much as possible. Hence they announce share buyback et al to drop share price such as occurred today below $10. Note the book value is $16. Here is the kicker from my viewpoint, a corporate raider such as Ichan would buy ARi and sell it off piece by piece. In that event, share price would possibly increase.

In the meantime, ARI can borrow money practically free due to fed drop to zero. This means to me that ARI is really a good deal right now. And I would like to commentary to show me I either right or wrong in my thinking. Plz comment on this idea. I really want to buy ARI right now as this appears like a great chance to make money coming and going.
Pinguino Investments profile picture
Didn’t ARI just reduce its dividend? If it’s unsustainable, why didn’t they reduce it to sustainable levels?
Ambrogio Pili profile picture
Hi Pinguino Investments. I think they want to mantain a high dividend to catch shareholders. Try to analyze the Consolidated Statement of Cash Flows at www.apolloreit.com/... (pp.64-65 of the pdf).
I did not find anything of value on pp 64-65. I read it twice. I then looked at SCF to observe 2019 was better than 2018. Net Income was up as was cash from operations. QonQ earnings up. Quarterly earnings doubled. Dividends paid essentially flat at 1.46. What did you see that was so alarming?
Everything is getting trampled by panic & short selling.
Certainly below BV now
What has happened to commercial mortgage real estate as a safe-haven investment? Same with Utilities? Have evaluation methods changed? Or, are we looking at poor management?
Ambrogio Pili profile picture
Certain mREITs can be an opportunity yet until short term interest rates remain low
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About ARI

SymbolLast Price% Chg
Div Rate (TTM)
Yield (TTM)
Short Interest
Market Cap
Compare to Peers

More on ARI

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.