Apollo Commercial Real Estate Finance, Inc. Completes $346.3 Million Capital Deployment

NEW YORK--(BUSINESS WIRE)--Oct. 1, 2015-- Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today announced the Company deployed over $346.3 million of capital into four new commercial real estate loan transactions and for the funding of previously closed loans. In addition, the Company announced ARI received approximately $225 million from loan repayments and sales, including the repayment of $112 million of loans securing New York City residential properties, resulting in a net capital deployment of approximately $121.3 million. With the closing of these transactions, ARI has committed to over $1.0 billion of investments year-to-date.

“ARI continues to identify and originate well-structured commercial real estate first mortgage and mezzanine loan investments, across a broad spectrum of property types,” said Scott Weiner, Chief Investment Officer of the Company’s manager. “As demonstrated by three of the transactions completed, the Company is committed to working with our repeat borrowers to develop creative capital solutions, which offer them flexibility while seeking to provide ARI with attractive, risk-adjusted returns. With the completion of the capital raise last week, ARI has ample dry powder to fund the Company’s robust investment pipeline.”

Investment Activity

ARI closed a $153.5 million ($100.4 million of which was funded at closing) whole loan for the acquisition and redevelopment of a 317-key hotel in the NoMad neighborhood of New York City. The floating-rate loan has a three-year initial term, with two one-year extension options and is split into a $138.4 million first mortgage loan and a $15.1 million mezzanine loan. The whole loan has a loan-to-value (“LTV”) of 52% and has been underwritten to generate an internal rate of return (“IRR”)⁽¹⁾ of approximately 8% on an unlevered basis.

ARI acquired a $75 million intermediate mezzanine loan secured by the equity interests in a portfolio of Great Wolf Lodge resorts. The intermediate mezzanine loan is part of a $1.1 billion financing, comprised of a $715 million first mortgage loan, a $225 million senior mezzanine loan, ARI’s intermediate mezzanine loan and a $60 million junior mezzanine loan. The floating rate loan has a three-year initial term with four one-year extension options and an appraised LTV of 70%. The loan has been underwritten to generate an IRR⁽¹⁾ of approximately 13%.

ARI closed a $30.0 million secured corporate loan to one of the borrowers of a previously closed $82.5 million mezzanine loan issued in connection with the development of a mixed-use property on the Upper West Side of New York City. The corporate loan has been guaranteed by the borrower, an international owner and operator of commercial real estate. The corporate loan also is secured by the borrower’s interest in the mixed-use property. The floating-rate loan has a three-year initial term with a one-year extension option and was underwritten to generate an IRR⁽¹⁾ of approximately 14%.

ARI closed a $23.0 million whole loan ($14.0 million of which was funded at closing) in connection with the acquisition of a retail parcel in downtown Brooklyn. The whole loan is cross-collateralized and cross-defaulted with a $92.5 million first mortgage loan ARI originated in February 2015, as the retail property is on the same block as, but is not adjacent to, the buildings securing the first mortgage loan. The floating rate whole loan has an 18-month term (co-terminous with the remaining term on the first mortgage loan), an appraised LTV of 73% and was underwritten to generate an IRR⁽¹⁾ of approximately 10% on an unlevered basis.

In addition, since July 28, 2015, ARI has funded an incremental $133.1 million for previously closed transactions.

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 $162.5 billion of assets under management at June 30, 2015.

Additional information can be found on the Company's website at www.apolloreit.com.

(1) The underwritten IRR for the investments listed in this press release reflects the returns underwritten by ACREFI Management, LLC, the Company’s external 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, 2014 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; 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.

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Source: Apollo Commercial Real Estate Finance, Inc.

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