SOURCE: Apollo Commercial Real Estate Finance, Inc.

Apollo Commercial Real Estate Finance, Inc.

October 05, 2010 09:25 ET

Apollo Commercial Real Estate Finance, Inc. Announces Additional Investment Activity

NEW YORK, NY--(Marketwire - October 5, 2010) -  Apollo Commercial Real Estate Finance, Inc. (the "Company") (NYSE: ARI) announced today the deployment of $39.7 million of equity through the acquisition of seven AAA-rated commercial mortgage-backed securities ("CMBS") with an aggregate face amount of $271.3 million, an aggregate cost of $282.4 million and a weighted average life of approximately 1.9 years. The CMBS was financed with $242.7 million of floating-rate borrowings under the Company's $250.0 million repurchase facility with Wells Fargo Bank, N.A. (the "Wells Facility"). 

The Company entered into interest rate swaps and cap agreements in order to mitigate the interest rate risk under the Wells Facility, resulting in a weighted average cost of funds of 2.2% and an expected total return of approximately 11.6% on the $39.7 million of equity. The 11.6% return on equity is a base case return that does not assume any extensions, dispositions, early prepayments or defaults.

Scott Weiner, Chief Investment Officer of the Company's Manager commented, "We are pleased with the deployment of another $39.7 million of equity at what we believe to be very attractive risk adjusted returns. While the portfolio under the Wells Facility is expected to return 11.6% under a base case scenario, the Wells Facility provides financing to accommodate extensions of approximately ten months which, if utilized, would result in increased returns to our shareholders."

About Apollo Commercial Real Estate Finance, Inc.

Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) is a commercial real estate finance company that originates, acquires, invests in and manages senior performing commercial real estate mortgage loans, commercial mortgage-backed securities, and other commercial real estate-related debt investments in the U.S. The Company is externally managed and advised by ACREFI Management, LLC, a Delaware limited liability company, an indirect subsidiary of Apollo Global Management, LLC. 

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of 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 our control. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. When we use the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may" or similar expressions, we intend to identify forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including, among other things, those described under the headings "Summary," "Risk Factors," and "Forward-Looking Statements" in our registration statement on Form S-11 (Commission File No. 333-166478), as amended, and the documents incorporated in the registration statement, including  in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010.  Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors, among others, that may affect our actual results include: market trends in our industry, interest rates, real estate values, the debt securities markets or the general economy or the demand for commercial real estate loans; our business and investment strategy; our projected operating results; actions and initiatives of the U.S. government, including the TALF, and changes to U.S. government policies and the execution and impact of these actions, initiatives and policies; the state of the U.S. economy generally or in specific geographic regions; economic trends and economic recoveries; our ability to obtain and maintain financing arrangements, including securitizations; the amount of commercial mortgage loans requiring refinancing over the 2011 to 2015 period; the anticipated shortfall of debt financing from traditional lenders; the volume of short-term loan extensions; the demand for new capital to replace maturing loans; our expected leverage; general volatility of the securities markets in which we participate; changes in the value of our assets; interest rate mismatches between our target assets and any borrowings used to fund such assets; changes in interest rates and the market value of our target assets; changes in prepayment rates on our target assets; effects of hedging instruments on our target assets; rates of default or decreased recovery rates on our target assets; the degree to which our hedging strategies may or may not protect us from interest rate volatility; impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; our ability to maintain our exemption from registration under the Investment Company Act of 1940; availability of opportunities to acquire commercial mortgage-related, real estate-related and other securities; availability of qualified personnel; estimates relating to our ability to make distributions to our stockholders in the future; and our understanding of our competition; and other factors not presently identified.