Apollo Commercial Real Estate Finance, Inc. (the “Company” or
“ARI”) (NYSE:ARI), today announced the Company closed four
commercial real estate loan transactions totaling $325.5 million
and funded $16.6 million for previously closed loans, bringing
year-to-date total capital commitment and deployment to
approximately $749.0 million. ARI also announced the Company closed
a new credit facility with Deutsche Bank to fund first mortgage
investments.
Commenting on the new transactions and the facility, Scott
Weiner, Chief Investment Officer of the Company’s manager, said:
“Over the past few months, ARI built a strong pipeline of
commercial real estate debt investments in anticipation of the
approximately $400 million of investable capital the Company
generated from the acquisition of Apollo Residential Mortgage, Inc.
(“AMTG”) and the subsequent sale of AMTG assets. As a result, ARI
had a very active September and closed four first mortgage loan
transactions totaling $325.5 million, representing a mix of
property types and locations. In addition, ARI closed a new credit
facility with Deutsche Bank to finance first mortgage loan
investments, further diversifying the Company’s funding sources and
providing ARI with incremental financing to fund our active
investment pipeline.”
Investment Activity
ARI closed a $133.0 million first mortgage loan ($128.0 million
of which was funded at closing) secured by a 735,382 square foot
office building located in the North Michigan Avenue retail
corridor of Chicago which will be redeveloped into a mixed use
project. The floating rate loan has a two-year initial term with
two two-year extension options and an appraised loan-to-value
(“LTV”) of approximately 58%. The loan has been underwritten to
generate a levered internal rate of return (“IRR”)(1) of
approximately 14%.
ARI closed a $105.0 million first mortgage loan ($78.1 million
of which was funded at closing) secured by a newly- constructed,
612-key full service hotel located in the Times Square district of
New York City. The loan is part of a $215.0 million financing which
consists of ARI’s $105.0 million loan and another $110.0 million
pari passu loan. The floating rate loan has a two-year initial term
with three one-year extension options and an appraised LTV of
approximately 62%. The loan has been underwritten to generate a
levered IRR(1) of approximately 14%.
ARI closed an $80.0 million first mortgage loan (all of which is
expected to be funded by year end) secured by a to-be-developed
data center in Manassas, Virginia which has been substantially
pre-leased on a long-term basis to a credit tenant. The loan is
part of a $365.0 million financing which consists of ARI’s $80.0
million loan and additional pari passu notes totaling $285.0
million. The fixed-rate loan has a three-year term and an
underwritten, as-stabilized LTV of approximately 55%. The loan has
been underwritten to generate a levered IRR(1) of approximately
14%.
ARI closed a $7.5 million first mortgage loan secured by a 6,500
square foot retail property. The loan is cross-collateralized and
cross-defaulted with the $121.4 million of financing ARI has
provided to the same borrower in connection with the aggregation of
retail parcels for redevelopment in downtown Brooklyn, New York.
The total floating rate financing has a remaining six month term
and an appraised LTV of approximately 60%.
Funding of Previously Closed Loans
- Since July 27, 2016, ARI has funded $16.6 million for previously
closed loans.
Loan Repayments – Since July 27,
2016, ARI received $122.9 million from loan repayments and
condominium sales. The loans that fully repaid include a
subordinate loan on an office building in Michigan, a first
mortgage predevelopment loan for a condominium conversion in New
York City and a subordinate predevelopment loan for a condominium
conversion in London.
Credit Facility
ARI entered into a master repurchase agreement with Deutsche
Bank AG (the “DB Facility”) to provide up to $300.0 million of
advances in connection with financing first mortgage loans. The DB
Facility has a one year term with two one-year extension options
and will accrue interest at a per annum pricing equal to the sum of
one-month LIBOR plus an applicable spread.
About Apollo Commercial Real Estate Finance, Inc.
Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) is a
real estate investment trust that primarily originates, invests in,
acquires and manages performing commercial real estate first
mortgage loans, subordinate financings, commercial mortgage-backed
securities and other commercial real estate-related debt
investments. The Company is externally managed and advised by
ACREFI Management, LLC, a Delaware limited liability company and an
indirect subsidiary of Apollo Global Management, LLC, a leading
global alternative investment manager with approximately $186.3
billion of assets under management as of June 30, 2016.
Additional information can be found on the Company's website at
www.apolloreit.com.
(1) The underwritten IRR for the investments shown above reflect
the returns underwritten by ACREFI Management, LLC, the Company’s
external manager, taking into account leverage and calculated on a
weighted average basis assuming no dispositions, early prepayments
or defaults but assuming that extension options are exercised and
that the cost of borrowings remains constant over the remaining
term. With respect to certain loans, the underwritten IRR
calculation assumes certain estimates with respect to the timing
and magnitude of future fundings for the remaining commitments and
associated loan repayments, and assumes no defaults. IRR is the
annualized effective compounded return rate that accounts for the
time-value of money and represents the rate of return on an
investment over a holding period expressed as a percentage of the
investment. It is the discount rate that makes the net present
value of all cash outflows (the costs of investment) equal to the
net present value of cash inflows (returns on investment). It is
derived from the negative and positive cash flows resulting from or
produced by each transaction (or for a transaction involving more
than one investment, cash flows resulting from or produced by each
of the investments), whether positive, such as investment returns,
or negative, such as transaction expenses or other costs of
investment, taking into account the dates on which such cash flows
occurred or are expected to occur, and compounding interest
accordingly. There can be no assurance that the actual IRRs will
equal the underwritten IRRs shown in the table. See “Item
1A—Risk Factors—The Company may not achieve its underwritten
internal rate of return on its investments which may lead to future
returns that may be significantly lower than anticipated” included
in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2015 for a discussion of some of the factors that
could adversely impact the returns received by the Company from the
investments shown over time.
Forward-Looking Statements
Certain statements contained in this press release constitute
forward-looking statements as such term is defined in Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and such statements
are intended to be covered by the safe harbor provided by the same.
Forward-looking statements are subject to substantial risks and
uncertainties, many of which are difficult to predict and are
generally beyond the Company's control. These forward-looking
statements include information about possible or assumed future
results of the Company's business, financial condition, liquidity,
results of operations, plans and objectives. When used in this
release, the words "believe," "expect," "anticipate," "estimate,"
"plan," "continue," "intend," "should," "may" or similar
expressions are intended to identify forward-looking statements.
Statements regarding the following subjects, among others, may be
forward-looking: the return on equity; the yield on investments;
the ability to borrow to finance assets; and risks associated with
investing in real estate assets, including changes in business
conditions and the general economy. For a further list and
description of such risks and uncertainties, see the reports filed
by the Company with the Securities and Exchange Commission. The
forward-looking statements, and other risks, uncertainties and
factors are based on the Company's beliefs, assumptions and
expectations of its future performance, taking into account all
information currently available to the Company. Forward-looking
statements are not predictions of future events. The Company
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
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Apollo Commercial Real Estate Finance, Inc.Hilary Ginsberg,
212-822-0767
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