Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) has announced a transformative transaction that will reshape its balance sheet and strategic future. The mortgage REIT plans to sell substantially all of its loan portfolio, a move that signals a fundamental pivot for the company and raises questions about its long-term direction and shareholder returns.
Strategic Divestiture and Liquidity Injection
In a deal unveiled last Wednesday, ARI has agreed to sell its entire loan portfolio, valued at approximately $9 billion, to Athene Holding Ltd. The purchase price represents 99.7% of the aggregate principal balance of the loan obligations. Upon closing, which is currently scheduled for the second quarter of 2026, Apollo Commercial Real Estate Finance anticipates a net cash inflow of roughly $1.4 billion after accounting for financing costs and transaction expenses.
The company’s board of directors has already approved the transaction, though it remains subject to shareholder and regulatory approvals. Notably, ARI will retain the majority of its direct real estate investments, which were carried at about $446 million as of the end of September 2025.
Market Validation and Revised Outlook
The market’s response to the announcement has been notably positive. S&P Global Ratings promptly revised its outlook on ARI from “Stable” to “Positive.” The rating agency cited the expected successful execution of the portfolio sale and the company’s prudent approach to managing its significantly enhanced liquidity position. Furthermore, the sale price is viewed as a validation of the portfolio’s book value, as it commands a premium to the current trading levels.
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Concurrently, the company declared its intention to pay a quarterly dividend of $0.25 per share for the first quarter of 2026. Management has stated a goal to maintain an annualized dividend yield of approximately 8% on the anticipated book value per share following the completion of the sale.
A Fork in the Road: Reinvestment or Wind-Down
The capital generated from this monumental sale is earmarked for reinvestment into short-term, REIT-qualifying assets. The firm’s new investment focus will center on investment-grade commercial mortgage-backed securities (CMBS) and similar credit-oriented instruments.
However, the company has also outlined a contingency plan. Should a definitive investment strategy for the substantial capital not be implemented by the end of 2026, management is prepared to evaluate alternative options. This scenario explicitly includes the potential for a full liquidation of the REIT. Therefore, the coming quarters will be critical in determining whether ARI reemerges as a specialized finance entity or ultimately returns capital to its shareholders.
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