SOURCE: Apollo Commercial Real Estate Finance, Inc.

Apollo Commercial Real Estate Finance, Inc.

May 20, 2013 16:15 ET

Apollo Commercial Real Estate Finance, Inc. Closes Two Mezzanine Loan Transactions Totaling $76 Million

NEW YORK, NY--(Marketwired - May 20, 2013) - Apollo Commercial Real Estate Finance, Inc. (the "Company" or "ARI") (NYSE: ARI) today announced the closing of two mezzanine loan transactions totaling $76 million. ARI provided a $32 million mezzanine loan for the refinancing of a 15-property portfolio of warehouse facilities located throughout the United States. In addition, the Company provided a $44 million mezzanine loan in connection with the purchase of five adjacent commercial buildings in New York City that are expected to be converted into multifamily rental apartments. Combined, the two transactions have an underwritten weighted average internal rate of return ("IRR") of approximately 13%(1).

With these closings, ARI's 2013 investment activity year-to-date totaled $179 million of commercial real estate debt transactions with an underwritten weighted average IRR of approximately 14%(1).

"The diversity of these two well-structured transactions underscores the depth of ARI's commercial real estate debt platform," said Scott Weiner, Chief Investment Officer of the Company's Manager. "The mezzanine loan for the warehouse portfolio has a 10-year term and strong, well-capitalized sponsorship. The mezzanine loan for the NYC multifamily conversion represents a bespoke transaction in a prime location for one of New York City's premier real estate developers, who also is a repeat borrower for ARI. Both transactions are expected to provide attractive, risk adjusted returns for ARI's growing commercial real estate debt portfolio."

Mezzanine Loan for Portfolio of Warehouse Facilities 
The Company provided a $32 million mezzanine loan secured by a pledge of the equity interests in a borrower that owns a portfolio of 15 warehouse facilities totaling 2.8 million square feet spanning nine states. The mezzanine loan is part of a $322 million, 10-year fixed rate loan comprised of a $220 million first mortgage (with a 25-year amortization schedule), a $70 million senior mezzanine loan and ARI's $32 million junior mezzanine loan. ARI's loan basis represents a loan-to-value of 75%. The mezzanine loan has been underwritten to generate an IRR of approximately 12%(1).

Mezzanine Loan for New York City Multifamily Conversion
The Company provided a $44 million mezzanine loan secured by the pledge of the equity interests in a borrower that acquired five adjacent commercial buildings totaling approximately 411,000 gross square feet that are expected to be converted into multifamily rental apartments in the Gramercy Park neighborhood of New York City. The mezzanine loan is part of a $128 million, fifteen-month (one-year initial term with one three-month extension option) floating rate loan comprised of a $84 million first mortgage and ARI's $44 million mezzanine loan. ARI's loan basis represents a 78% underwritten loan-to-value. The mezzanine loan has been underwritten to generate an IRR of approximately 14%(1).

(1)  The IRRs for the investments detailed in this press release reflect the returns underwritten by ACREFI Management, LLC, the Company's external manager. They are calculated on a weighted average basis assuming no dispositions, early prepayments or defaults but do assume that extension options are exercised. With respect to the mezzanine loan for the New York City condominium construction that closed in January 2013, the IRR calculation assumes certain estimates with respect to the timing and magnitude of future fundings for the remaining commitments and associated loan repayments, as well as assuming 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 the actual IRRs will equal the underwritten IRRs shown in the table and elsewhere in this press release. See "Risk Factors" in the reports filed by the Company with the Securities and Exchange Commission for a discussion of some of the factors that could adversely impact the returns received by the Company from the investments shown in the table over time. 

About Apollo Commercial Real Estate Finance, Inc.
Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) is a commercial mortgage real estate investment trust that primarily 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 throughout the U.S. 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 $114 billion of assets under management at March 31, 2013. 

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, except as required by law.

Contact Information

  • CONTACT:
    Hilary Ginsberg
    Investor Relations
    (212) 822-0767