I'd like to remind everyone that today's call and webcast are being recorded. Please note that they are the property of Apollo Commercial Real Estate Finance, Inc. and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our earnings press release. I'd also like to call your attention to the customary safe harbor disclosure in our press release regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections, and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these statements and projections. In addition, we will be discussing certain non-GAAP measures on this call, which management believes are relevant to assessing the company's financial performance. These measures are reconciled to GAAP figures in our earnings presentation, which is available in the Stockholders section of our website. We do not undertake any obligation to update our forward-looking statements or projections unless required by law. To obtain copies of our latest SEC filings, please visit our website at www.apollocref.com or call us at (212) 515-3200. At this time, I'd like to turn the call over to the company's Chief Executive Officer, Stuart Rothstein.

Thank you, operator, and good morning, and thank you to those of you joining us this morning on the Apollo Commercial Real Estate Finance First Quarter 2024 Earnings Call. As usual, I am joined by Scott Weiner, our Chief Investment Officer; and Anastasia Mironova, our Chief Financial Officer. In the first quarter, we began to see signs of life in the commercial real estate market with transaction volumes ticking up. The increase in deal flow is supported by a combination of significant dry powder in existing funds that needs to be put to work, more borrowers having reached a point where they must deal with pending loan maturities and an increase in consensus around property level valuations. In addition to increased transaction activity, operating fundamentals remained stable to positive across most property types supported by the continued strength in the economy, with the one notable exception being office properties in certain markets. This operating environment continues to benefit ARI and its floating rate loan portfolio produced another quarter in which ARI's distributable earnings covered the dividend. With the exception of the loans secured by the Steinway Building, which I will address later in my remarks, ARI's portfolio continues to perform well. Notably, there has been a pickup in actual and indicated repayment activity. During the quarter, ARI received $176 million of total repayments and the current forecast model is tracking another $1 billion of expected repayments over the remainder of the year. Given the increased repayment activity, we anticipate ARI will be more active in deploying capital during the year, and there is an active pipeline of potential transactions. In determining how to deploy available capital, we will continue to assess both potential new investment transactions as well as opportunities to repurchase pieces of ARI's capital structure. Turning now to Steinway. During the quarter, we recorded a $142 million specific CECL allowance on a subordinate loan secured by the property, reflecting both the impact of a reduction in pricing expectations and a delay in timing with respect to the sale of the remaining units. As a result of the increased reserve, ARI's net exposure on the asset comprised of a portion of the senior loan and 2 mezzanine loans reduced from approximately $594 million at year-end 2023 to $457 million at quarter end. Subsequent to quarter end, in an effort to further reduce ARI's net exposure, the property was refinanced with a new senior loan provided by a third party, thereby reducing ARI's net exposure by $108 million. Post the refinancing, ARI's net exposure is now comprised of approximately $357 million of mezzanine loans, subordinate to a $200 million senior loan held by a third party. Before I turn the call over to Anastasia, I want to highlight that ARI has now paid a $0.35 dividend per share of common stock for 16 consecutive quarters, and we believe ARI's floating rate portfolio will continue producing distributable earnings sufficient to cover the quarterly distribution for the remainder of 2024. With that, I will turn the call over to Anastasia to review ARI's financial results for the quarter.

Thank you, Stuart, and good morning, everyone. In the first quarter, ARI reported distributable earnings of $0.35 per share of common stock. GAAP net loss attributable to common stockholders was $108 million or $0.76 per diluted share of common stock, reflecting the $142 million CECL allowance recorded for the subordinate loan secured by 111 West 57th Street, also known as Steinway Building. As a reminder, this loan was already on nonaccrual status and the additional allowance does not impact distributable earnings. The weighted average risk rating of the portfolio was 3.0 and other than the 111 West 57th Street allowance, there was no additional specific CECL allowance taken during the quarter. The general CECL allowance stood at 42 basis points of the loan portfolio's amortized cost at March 31, a 6 basis point increase as compared to the end of 2023. This change was primarily driven by an increase in the historical loss rate, which we obtained from the Trepp database for the purposes of determining general CECL allowance for our portfolio. The increase was also attributable to extended expected loan payment updates. ARI's portfolio ended the quarter with a carrying value of $8.3 billion, with a weighted average unlevered yield of 9.1%, 40 basis points higher than at the end of 2023. During the quarter, we completed $322 million of add-on fundings from previously closed loans, including $213 million funded for the U.K. pub transaction, which we closed at the end of Q4. As Stuart mentioned, we received $176 million of total repayments during the quarter. Subsequent to quarter end, we received $135 million in proceeds from the sale of our first mortgage secured via hotel in Honolulu through the third-party at 99.5% of par. With regard to real estate owned, the above-grade work continues with the multifamily development in Brooklyn, and both of the hotels generate positive cash flow for ARI. The classification of Atlanta hotel on the balance sheet was changed during the quarter from held for sale to held for investment due to the sales of respective buyer no longer being probable. In conjunction with the reclassification, we recorded a catch-up depreciation of $3.6 million, representing the amount that would have been recorded had the asset remained as held for investment throughout the whole period to date. As a reminder, depreciation expense does not impact our distributable earnings. Shifting to the right side of the balance sheet. During the quarter, ARI closed a new secured credit facility with Goldman Sachs in connection with the funding of the U.K. pub loan. The total capacity of the facility is $159 million. We also amended and upsized our secured credit facility with Atlas, providing $114 million of additional capacity and amended the term of the facility to 2 years with an additional 1 year extension option. Our debt-to-equity ratio at quarter end was 3.3x and as a reminder, we have no corporate debt maturities until May 2026. ARI is in compliance with all covenants with respect to our borrowings. Our book value per share, excluding general CECL reserves and depreciation, was $13.59 as compared to $14.73 at the end of Q4. $1 of the decline is attributable to the specific CECL allowance on 111 West 57th Street, with the balance also reflecting $0.12 attributed to the vesting and delivery of restricted stock units and $0.07, reflecting the change in the general CECL allowance and depreciation. And with that, we'd like to open the line for questions.

Our first question comes from Jade Rahmani with KBW.

As you evaluate the outlook, could you give an overview or summary of your target returns at this point if those have changed at all? Underwriting criteria, it seems like there's probably an opportunity to hit pretty consistent returns to the past with lower LTVs maybe finance some in-place cash flow. But if you could just give an overview on that, that would be helpful.

Yes. Jade, look, I think from our perspective to where you sort of implied in your question, the business model still works on that high level. I think we can deploy our equity in low to mid-teens returns. And I agree with your premise that we could probably do that at lower LTVs today, which for us are probably high 50s, low 60s today as we think about deploying new capital at, again, super high level spreads above SOFR in the U.S. at call it something with a 3-handle and finance as we've done historically at, again, ballpark 70% to 80% against our position at something today, call it, high 1s. So again, the ROEs work as we're deploying capital, we're definitely seeing things in the market that are interesting from a deployment perspective. And as I indicated in my remarks, I think there will be things for us to do with our capital as it comes back from repayment. But as we're thinking about deploying capital, we will look both at new transactions as well as our own capital structure that may from time to time offer an interesting ROE as well.

Can you discuss expected credit outcomes on upcoming loan maturities? For example, the Hawaii hotel loan, I think, had a fully extended maturity in April, the decision was made to sell that at close to par. How are you thinking about upcoming maturities?

Look, as I indicated in my remarks, we're expecting about $1 billion worth of repayments this year. And when I say expecting that is based on ongoing dialogue with borrowers who have reached out and have indicated either through refinance or sale, they expect to pay us off this year. So I would say, at a high level, we expect in a positive way, much of what takes place this year for things that we expected to mature or certainly are within a repayment window to actually repay us. So again, based on the first quarter, I would say the overall tone has been somewhat more optimistic in terms of just overall transaction activity and people seeing a path in the financing markets to just repay us at loan maturity.

Our next question comes from Rick Shane with JPMorgan.

Can you just tell us in dollars and on a per share basis, the drag from nonaccruals? I'm a little bit confused when I compare the weighted average cash coupon in the quarterly report, which is 8.4% and that 0s, the nonaccruals and Slide 6 that has a weighted average unlevered all-in yield on the loan portfolio of 6.5%.

Look, I think at a high level, Rick, the way we think about it is sort of net of reserves, there's $550 million to $600 million worth of loans that are on nonaccrual at the end of the quarter. Some of that is financed even though it's on nonaccrual. So on an equity basis, it's about $375 million of net equity that is on nonaccrual and then that amount was reduced again in April in light of what I referenced with respect to the Steinway transaction, if it's easier post call just for sort of you and Anastasia to go through sort of the details and the math, happy to do that as well.

Perfect. And again, what am I missing connecting the 6.5% all-in yield on Slide 6 with the 8.4% weighted average cash coupon, which, like I said, I would have thought the difference was nonaccruals, but the footnote on Page 12 of the quarterly report says that nonaccruals are recorded at a 0 coupon?

Yes, we can take it offline and walk you through the math there after the call.

Our next question comes from Jade Rahmani with KBW.

On 111 West 57th, could you give a rough number of what the quantity of remaining units are?

A little. If you think about what is under contract or out for signature at this point, Jade, there are still plus or minus 25 units that still need to be sold. So a little bit less than half the project.

And how many units are under contract?

Today between what's under contract and what we expect to sign, it's about a handful, call it, 5 or 6.

Okay. So total that they would generate proceeds on would be probably 30, 31 units?

Post what is currently in process? We have around low 30s sold, and there are still 26 or 27 units that need to be sold.

Okay. Yes, I was just looking at expected net proceeds and I was getting to around $500 million. And I believe there's more indebtedness in that outstanding and then there is also a discounting factor. I might be using pricing that's too low. I know that there's quite a range on the units. But are those rough numbers reasonable?

I think you're underestimating the value. From our perspective, we still see there being some nominal value beyond your estimate of the current outstanding debt. This includes the condos that are set to be sold, a retail condo that holds value, and other cash flows we anticipate receiving. At this stage, considering where we've assessed it, we have a $200 million senior loan and, as I mentioned on our call, after the refinance, we are now at $357 million in mezzanine loans, totaling approximately $560 million in debt that we need to recoup. We believe there is nominal value exceeding that amount today, even when accounting for some discounted prices on the units to be sold.

Okay. Fair enough. And then on the office portfolio, we are still seeing a lot of pressure in the office sector. I think you noted that in your opening remarks, but definitely, the liability structure of the lender is a big driver of how much wiggle room there is in modifications and flexibility to work with borrower. So what are you seeing in the office portfolio? I know the predominance also is in Europe, but if you could give a comment there, that would be helpful.

Yes, I believe our main office exposure is a redevelopment project in London that is fully leased to a major financial institution. We are currently focused on completing the necessary work for that project, and I feel optimistic about exiting that loan successfully. In terms of our overall portfolio, last year we had some transactions where sponsors contributed additional capital to buy time. This capital has been allocated for various needs, including principal paydowns, funding reserves for tenant improvements and leasing commissions, as well as interest rate protection. We anticipate remaining involved in these office transactions for some time. We are actively engaging in productive discussions with sponsors across our portfolio, which currently includes around 10 deals. For the recently developed or redeveloped properties, we are observing a fair amount of leasing interest, although not exceptional. There will continue to be ongoing conversations with borrowers, but nothing has reached a point this quarter that warrants specific deal discussions.

Thank you. I would now like to turn the call back over to Mr. Rothstein for any closing remarks.

I appreciate everybody participating this morning. And as always, I, Hilary and Anastasia are reachable and available if people have follow-up questions. Thank you.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.