Apollo Commercial Real Est. Finance Inc. (NYSE:ARI) announced it will offer the public sale of 10 million shares of its common stock. The underwriters of the deal will be offered a 30-day option to purchase an additional 1.5 million shares. ARI will use the money from the sale to repay the company’s credit loan from JP Morgan Chase Bank. If there is anything left from that, it will be used to pursue acquisitions including mortgage loans, financings and other mortgage backed securities. It might also use some off the funds for general purposes but the main focus remains eliminating the debt to JP Morgan Chase. JP Morgan will book the deal along with Bank of America and Citigroup.
The company recently reported earnings and had a strong 2014. It showed a diluted EPSof $1.69, which was an increase over the previous year of 17%. They committed to invest $1.1 billion of equity to be used for commercial real estate debt investments and raised another $158 in capital through the sale of its common stock. They also sold $254 million of the company’s Convertible Senior Notes, that are payable in 2019. They also raised their quarterly dividend by 10%, showing strength in their balance sheet and adding substantial shareholder value.
The Apollo Commercial Real Est. Finance Inc. (NYSE:ARI) has been focusing on debt reduction and has utilized public offerings to its advantage. Over the past year, it participated in several other offerings that included common stock and convertibles. Apollo Commercial Real Estate Inc. is a REIT. It invests in and acquires commercial mortgage loans, sub financings, CMBS and a variety of real estate debt investments. It is managed by an outside entity, ACREFI Management.
The stock exploded and is trading at its all-time highs. It has strong support at $16.78 but it doesn’t look like it will see that level anytime soon. Momentum is very strong and unless it violates its MA at $16.69, the stock is very healthy.