NEW YORK--(BUSINESS WIRE)--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.”
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.
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.
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.