Apollo Commercial Real Estate Finance, Inc. Completes Two Mezzanine Loan Transactions Totaling $72 Million and Expands Financing Facilities

NEW YORK--(BUSINESS WIRE)--Feb. 5, 2015-- Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today announced the Company completed two mezzanine loan transactions totaling $72 million. In addition, ARI announced the Company amended the master repurchase facility with JPMorgan Chase Bank, N.A. (the “JPMorgan Facility”) to increase the borrowing capacity to $300 million, lower the interest rate on current balances, enable financing of loans associated with properties located in England and Wales and extend the maturity date. ARI also entered into a new $52 million financing facility with Goldman Sachs (the “Goldman Sachs Facility”), which is secured by ARI’s investment in a first mortgage loan on an international portfolio of destination homes.

“After a very active 2014, ARI’s momentum is continuing into the new year with the completion of two well-structured mezzanine transactions,” said Stuart Rothstein, Chief Executive Officer of ARI. “We believe the macro environment remains very favorable for commercial real estate and as a result, ARI continues to see robust deal flow. The expansion of the JPMorgan Facility combined with the new Goldman Sachs Facility provides ARI with additional capital flexibility to fund new transactions and grow the portfolio.”

Mezzanine Loans

In January, ARI closed a £35 million (approximately $52 million) mezzanine loan secured by a portfolio of 44 senior housing facilities located throughout the United Kingdom. The five-year, floating-rate mezzanine loan is part of a £224 million whole loan, which includes a £164.1 million first mortgage loan and a £59.7 million mezzanine loan. The remaining £24.7 million of the mezzanine loan was acquired by investment funds affiliated with Apollo Global Management, LLC. The mezzanine loan has an appraised loan-to-value of 70% and was underwritten to generate an internal rate of return (“IRR”)⁽¹⁾ of approximately 10%.

In February, ARI closed a $20 million mezzanine loan secured by a 488-key full service hotel located in Burbank, California. The five-year, fixed rate mezzanine loan is part of a $90 million financing which consists of a $70 million first mortgage loan and ARI’s $20 million mezzanine loan. The mezzanine loan has an appraised loan-to-value of 74% and has been underwritten to generate an IRR⁽¹⁾ of approximately 11%.

Commenting on the transactions, Scott Weiner, the Chief Investment Officer of the Company’s Manager, said: “The closing of the senior housing transaction marks ARI’s second loan in the United Kingdom as the Company continues to expand ARI’s loan origination efforts throughout Western Europe. The mezzanine loan for the hotel was structured with five years of call protection at an attractive fixed rate with a well-capitalized borrower.”

Credit Facilities

In January, ARI amended the JPMorgan Facility to increase the borrowing capacity from $175 million to $300 million. In addition, the JPMorgan Facility now has a two-year term plus a one-year extension option and the interest rate spread ranges from LIBOR + 2.25% to LIBOR +4.75% depending on the collateral pledged, which may include mortgage and mezzanine loans secured by properties located in the United States, England or Wales.

In February, ARI entered into the $52 million Goldman Sachs Facility. The interest rate on the Goldman Sachs facility is LIBOR + 3.5% and the facility is secured by ARI’s first mortgage loan on a portfolio of international destination homes. The maturity date on the Goldman Sachs Facility is the earlier of April 30, 2019 or the repayment or sale of the pledged first mortgage loan.

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 $164 billion of assets under management at September 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 this press release over time.

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; 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.

Source: Apollo Commercial Real Estate Finance, Inc.

Apollo Commercial Real Estate Finance, Inc.
Investor Relations
Hilary Ginsberg, 212-822-0767