NEW YORK--(BUSINESS WIRE)--Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today announced the Company closed one first mortgage and two subordinate loan transactions totaling $127.9 million and funded $21.5 million for previously closed loans, resulting in $148.3 million of capital deployed. With the closing of these transactions, ARI has committed to invest over $243.3 million of equity into $321.1 million of investments year-to-date and has deployed an additional $69.4 million to fund previously closed transactions.
In addition, ARI announced the Company, through a wholly owned subsidiary, became a member of the Federal Home Loan Bank of Indianapolis (“FHLBI”).
“ARI continues to expand the Company’s direct loan origination platform through structuring creative financing solutions for our clients,” said Stuart Rothstein, Chief Executive Officer of ARI. “Both of the subordinate transactions were with repeat borrowers and were underwritten and structured to meet our borrower’s needs, while providing ARI with attractive, risk-adjusted returns. Beyond these recent closings, the Company has a very robust investment pipeline and continues to identify interesting first mortgage and subordinate loan transactions. In addition, we are pleased to announce that through a wholly owned subsidiary, ARI has gained membership in the FHLBI, which provides ARI with further capital flexibility.”
In April, ARI closed a $37.5 million financing, consisting of a $22.0 million mezzanine loan and a $15.5 million preferred equity investment for two multifamily properties, totaling 621 units of collateral located in Southern Florida. The floating-rate financing has a two-year initial term and three, one-year extension options. The repeat borrower, an international commercial real estate owner and operator, provided a $25 million payment guarantee on ARI’s financing. The subordinate financing has an appraised loan-to-value (“LTV”) of 89% and was underwritten to generate an internal rate of return (“IRR”)(1) of approximately 14%.
In June, ARI closed a $45 million mezzanine loan secured by a portfolio of 36 office, flex and industrial properties totaling approximately 3.5 million square feet located throughout Long Island, New York. The floating rate mezzanine loan has a two-year initial term, with three, one-year extension options and is part of a $200 million financing which consists of a $155 million first mortgage loan and ARI’s $45 million mezzanine loan. The mezzanine loan has an appraised LTV of 79% and has been underwritten to generate an IRR(1) of approximately 12%.
Also in June, ARI acquired a $45.4 million pari passu note that is part of a $227 million first mortgage loan secured by a portfolio of 21 limited service and extended stay hotels totaling 2,690 keys throughout 13 states. The floating rate loan has a two-year term with one, one-year extension option. The first mortgage loan has an appraised LTV of 63% and has been underwritten to generate an IRR(1) of approximately 8% on an unlevered basis. ARI anticipates financing the loan, and on a levered basis, the loan was underwritten to generate an IRR(1) of approximately 16%.
In June, ARI received a full principal repayment totaling $22.5 million from a mezzanine loan secured by a mixed use property located in Pittsburgh, Pennsylvania.
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 $162.9 billion of assets under management at March 31, 2015.
Additional information can be found on the Company's website at www.apolloreit.com.
(1) The underwritten IRR for the investments listed in this press release reflect the returns underwritten by ACREFI Management, LLC, the Company’s external manager (the “Manager”), calculated on a weighted average basis assuming no dispositions, early prepayments or defaults. 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 this press release. 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, 2014 for a discussion of some of the factors that could adversely impact the returns received by the Company from the investments shown in this press release over time.
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.