Apollo Commercial Real Estate Finance, Inc. Completes over $1.4 Billion of Transactions in 2016
January 09 2017 - 8:30AM
Business Wire
Apollo Commercial Real Estate Finance, Inc. (the “Company” or
“ARI”) (NYSE:ARI) today announced with the completion of the
Company’s investment activity in December, ARI has committed to and
funded over $1.4 billion of investments in 2016, a record year for
the Company. In addition, prior to year-end the Company completed
the sale of the remaining Apollo Residential Mortgage, Inc.
(“AMTG”) assets, which generated approximately $33.0 million of
additional capital. With the completion of the AMTG acquisition and
the December common stock offering, ARI ended the year with an
equity capitalization of approximately $2.0 billion.
“ARI had a transformative year in 2016 with respect to capital
formation and capital deployment,” said Stuart Rothstein, Chief
Executive Officer and President of ARI. “The successful acquisition
of AMTG and the December common stock offering increased the
Company’s capital base and generated approximately $600 million of
incremental investable capital. As a result, ARI committed to and
funded over $1.4 billion of commercial real estate debt
transactions in 2016 and the Company’s investment portfolio
surpassed the $3.0 billion mark at year end. The recent capital
raising activity coupled with the expansion of the Company’s
financing sources has positioned ARI to enter 2017 with dry powder
for new investments and the Company has built a robust
pipeline.”
Investment Activity
ARI closed an $80 million first mortgage loan ($50 million of
which was funded at closing) secured by a retail strip center in
the West Hollywood neighborhood of Los Angeles, California that is
to be redeveloped into a luxury mixed-use property. The floating
rate loan has a 24-month initial term with two one-year extension
options and an appraised loan-to-value (“LTV”) of approximately
61%. The loan has been underwritten to generate a levered internal
rate of return (“IRR”)(1) of approximately 17%.
In addition, ARI funded an incremental $37.5 million during the
fourth quarter for previously closed transactions.
2016 Investment Summary
ARI committed to and funded over $1.4 billion of commercial real
estate loan transactions in 2016, including:
- $860.8 million of first mortgage loans
($783.1 million of which were funded at closing), which were
underwritten to generate a weighted average levered IRR(1) of
approximately 16%; the first mortgage loans were secured by a
mixture of property types including office, mixed-use, data center,
hospitality and retail in a variety of locations, including
Chicago, Boston, Miami, New York City, Los Angeles and Northern
Virginia;
- $430.3 million of subordinate loans,
($349.1 million of which were funded at closing), which were
underwritten to generate a weighted average IRR(1) of approximately
13%; the subordinate loans were secured by a mixture of property
types including condominium development, hospitality and healthcare
in a variety of locations including New York City and London;
and
- $140.1 million of fundings for
previously closed loans;
“ARI significantly expanded the Company’s floating-rate first
mortgage investment activity in 2016, as the increase in the
Company’s capital base and funding sources enabled ARI to complete
larger transactions,” said Scott Weiner, Chief Investment Officer
of the manager of ARI. “We believe the Company continues to develop
a reputation with commercial real estate owners, brokers and
lenders as a best-in-class provider of capital solutions. As we
look ahead to 2017, we are confident in our ability to build upon
ARI’s existing momentum, further grow and diversify the Company’s
high quality investment portfolio and expand our operating
platform.”
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 $189
billion of assets under management as of September 30, 2016.
Additional information can be found on the Company's website at
www.apolloreit.com.
(1) The underwritten IRRs 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. 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 presented above. 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 its
investments 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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For Apollo Commercial Real Estate Finance, Inc.Hilary
Ginsberg, 212-822-0767Investor Relations
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