SOURCE: Apollo Commercial Real Estate Finance, Inc.

Apollo Commercial Real Estate Finance, Inc.

April 11, 2011 09:25 ET

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

NEW YORK, NY--(Marketwire - Apr 11, 2011) - Apollo Commercial Real Estate Finance, Inc. (the "Company" or "ARI") (NYSE: ARI) announced the closing of a $40.0 million subordinate loan. The subordinated loan is part of a $245 million newly originated financing that consists of $170 million of senior financing and a total of $75 million of subordinate financing, all of which is secured by a ski resort in California, which is one of the most visited ski resorts in the United States.

The subordinate loan bears interest at a rate of 13.25% and has a term of six years. Prepayments on the subordinate loan are prohibited prior to the third year of the loan and any prepayments prior to the fifth year of the loan are subject to prepayment penalties ranging from 5% to 1%. The entire $245 million financing represents an appraised loan-to-value of approximately 64% and a debt yield of 17.1% based on trailing twelve month financials.

Scott Weiner, Chief Investment Officer of the Company's Manager, commented, "We believe the transaction was well structured, including provisions within the financing requiring any excess cash flow after debt service and required reserves to be kept in the borrowing entity and amortization on the senior loan equal to $10.0 million per year. At a 13.25% coupon we believe the risk adjusted return from this investment will make a valuable contribution to our overall portfolio."

The Company also announced that it funded an additional $6.0 million under the previously disclosed repurchase facility secured by a Class A-2 CDO bond, currently rated A-/Baa1. This additional funding brings the total balance of the Company's investment in the repurchase facility to $47.4 million. The facility bears interest at 13.0% (10.0% current pay with a 3.0% accrual) on amounts outstanding and has an initial term of 18 months with three six-month extensions options available to the borrower. Any principal repayments that occur prior to the 21st month are subject to a make-whole provision at the full 13.0% interest rate.

With the completion of these investments, the Company has deployed approximately $293.2 million of equity capital and has investments with an adjusted cost basis of approximately $899.1 million as well as approximately $30 million of additional capacity available under its repurchase agreement with JPMorgan Chase Bank N.A.

To date, the Company's portfolio is comprised of investments with the following adjusted cost bases:

  • Newly originated first mortgage loans totaling $118.4 million
  • Newly originated mezzanine loans and subordinate financings totaling $99.0 million
  • Newly originated repurchase agreements totaling $47.4 million
  • AAA-rated commercial mortgage-backed securities ("CMBS") totaling $634.3 million

All of the Company's investments pay interest on a monthly basis and all, with the exception of the Company's CMBS, accrue interest based on an actual/360 convention.

About Apollo Commercial Real Estate Finance, Inc.
Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) is a commercial real estate finance company that originates, invests in, acquires 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. Additional information can be found on the Company's website at www.apolloreit.com.

Forward-Looking Statements
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.