Apollo Global Management is liquidating its publicly traded REIT focused solely on commercial real estate debt after selling its $9B in assets to another subsidiary.
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The asset management giant is shuttering Apollo Commercial Real Estate Finance Inc., a diversified debt REIT trading under the ticker ARI, it announced Monday.
ARI came to the decision six months after it reached a deal to sell most of its assets to Athene Holdings, an insurance firm Apollo acquired in 2022. ARI plans to sell its remaining assets, including equity stakes in a handful of properties, and distribute proceeds and remaining cash on hand to shareholders.
The decision to wind down operations comes after a strategic review of alternatives that began in January along with the sale agreement.
“After carefully evaluating a broad range of real estate-related strategies and potential transactions, the board has determined that the dissolution of the Company, the liquidation of its assets and the winding up of its business and affairs are advisable and in the best interest of the Company and ARI stockholders,” ARI CEO Stuart Rothstein said in a statement.
Shares in the REIT were trading up more than 2 percentage points Tuesday to nearly $11 per share, giving it a $1.4B market capitalization. The deal comes at a time when REIT valuations have lagged the private sector.
Athene's purchase price amounted to 99.7% of the par value of the $9B in loan commitments and a roughly 23% premium on the REIT’s share price at the time.
The portfolio was distributed across residential properties, which made up 29% of holdings, office assets at 23%, hotels at 19% and industrial properties at 11%, according to the REIT’s first-quarter filings published in April. The weighted average fully extended remaining loan term was three years.
After the $9B sale, ARI said it would have roughly $1.4B in cash and remaining equity interests in a handful of assets, including The Mayflower Hotel in D.C., the Courtland Grand Hotel in Atlanta, a newly built 591-unit multifamily tower in Brooklyn and two former hospitals it acquired from the landlord of bankrupt Steward Health Care.
ARI's board said at the time it would recommend a liquidation if the strategic review didn’t offer a new growth strategy or M&A opportunity. In the filing Monday, the board said it planned to file a more detailed plan with regulators outlining its liquidation strategy.
The REIT is the latest to announce plans to shutter amid a wave of M&A activity in public markets that began last year.
Denver-based Apartment Investment and Management Co., better known as Aimco, was one of the first REITs to look for the exits, announcing a plan in November to sell off the 15 properties it was holding on to after a string of other sales.
That same month, multifamily REIT Elme Communities sold 19 properties for $1.6B and secured a $520M loan to fund the liquidation of its remaining assets. But the REIT’s sell-off has been bumpy, with management twice cutting its forecasted distributions to shareholders from the sale of its remaining properties.
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