Apollo commercial mortgage transfer masks volatility
The guest argued that Apollo Global Management's sale of its commercial mortgage loan book to its affiliate Athene is a structural maneuver to shield volatile assets from mark-to-market accounting.
The argument
Responding to a viewer question about Apollo Commercial Real Estate Finance (ARI) selling its portfolio, the guest argued that shifting these assets to an insurance balance sheet allows them to be held at book value. He expressed concern that insurance companies are taking on illiquid, risky commercial mortgages and private credit.
The thesis, stress-tested
✓ What validates it
- ✓Potential liquidation or winding down of the ARI REIT
- ✓Regulatory scrutiny over insurance company holdings of private credit and commercial mortgages
▸ Risks discussed
- ▸Liquidity mismatches inside insurance balance sheets
- ▸Underlying commercial real estate asset deterioration
Hear it yourself
"Viewer Ryan would like to know, last month, Apollo Global's commercial mortgage REIT, ticker ARI, announced a landmark deal to sell its entire $9,000,000,000 loan book at 99.7% of par."
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