NEW YORK--(BUSINESS WIRE)--Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI), today announced the Company closed a commercial real estate loan transaction totaling $130.0 million, bringing year-to-date total capital commitment and deployment to approximately $879.0 million. ARI also announced the Company received $34.5 million from the repayment of a first mortgage loan secured by a multifamily property in Brooklyn, NY.
ARI closed a $130.0 million junior mezzanine loan secured by the equity interests in a portfolio of 155 healthcare properties representing 18,662 licensed beds across 20 states. The mezzanine loan is part of a $1.05 billion whole loan which consists of a $710.0 million first mortgage loan, a $165.0 million senior mezzanine loan provided by investment funds managed by subsidiaries of Apollo Global Management, LLC (together with its subsidiaries, “Apollo”) and a $175 million junior mezzanine loan, which includes ARI’s $130.0 million loan and $45.0 million of pari passu junior mezzanine loans provided by investment funds managed by Apollo. The whole loan is being used to refinance existing debt on the portfolio, which includes a $39.0 million mezzanine loan provided by ARI in 2014, which was repaid. The floating rate junior mezzanine loan has a two-year initial term with three two-year extension options and an appraised loan-to-value of approximately 62%. The junior mezzanine loan has been underwritten to generate an internal rate of return (“IRR”)(1) of approximately 12%.
Commenting on the transaction, Scott Weiner, Chief Investment Officer of the Company’s manager, said: “This transaction demonstrates ARI’s commitment to provide the Company’s borrowers with creative capital solutions. For this transaction, ARI worked with an existing borrower to tailor the loan for their specific financing needs, while at the same time generating an attractive, risk-adjusted return for ARI.”
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 investment shown above reflects 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 IRR will equal the underwritten IRR 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.
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.