NEW YORK--(BUSINESS WIRE)--Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today announced the Company closed a $15 million subordinate loan and deployed $29.3 million of equity for the acquisition of commercial mortgage backed securities (“CMBS”) with an aggregate purchase price of $146.3 million. In addition, ARI, together with other investors, including affiliates of Apollo Global Management, LLC (NYSE:APO), completed an investment in an entity that acquired a minority participation in KBC Bank Deutschland AG (“KBCD”), the German subsidiary of Belgian KBC Group NV (the “KBCD Transaction”).
Year-to-date, ARI has committed to invest over $754 million of equity into $1.06 billion of commercial real estate debt transactions, including the KBCD Transaction.
In August, ARI closed a $15 million fixed-rate subordinate loan secured by a top-tier ski resort located in Montana. ARI’s loan has a six-year term and an appraised loan-to-value of approximately 59%. The subordinate loan has been underwritten to generate an internal rate of return (“IRR”)(1) of approximately 15%.
From August 1 through September 30, 2014, ARI deployed $29.3 million of equity for the acquisition of CMBS with an aggregate purchase price of $146.3 million. ARI financed the CMBS utilizing $117.1 million of borrowings under the Company’s master repurchase agreement with Deutsche Bank AG. The CMBS have a weighted average life of 2.9 years and have been underwritten to generate an IRR(1) of approximately 18%.
On September 30, 2014, ARI, together with other investors, completed an investment in an entity that acquired a minority participation in KBCD. ARI invested approximately $39.5 million (€30.7 million) at closing. As of December 31, 2013, KBCD had total assets of €2,187 million. Following the closing of the transaction, KBCD was renamed Bremer Kreditbank AG and the bank will operate under the name BKB Bank.
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 first mortgage loans, subordinate financings, CMBS 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 $168 billion of assets under management at June 30, 2014.
(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, 2013 for a discussion of some of the factors that could adversely impact the returns received by the Company from the investments shown in the 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; the Company’s ability to deploy the proceeds of its capital raises or acquire its target 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.