NEW YORK, NY -- (Marketwire) -- 01/11/13 -- Apollo Commercial Real Estate Finance, Inc. (the "Company" or "ARI") (NYSE: ARI) today announced the closing of two financing transactions totaling $140 million in committed capital for two separate New York City residential properties. With these closings, ARI's investment activity over the past twelve months totaled $274 million of committed equity for $324 million of commercial real estate debt investments with a weighted average underwritten internal rate of return ("IRR") of approximately 13%(1).
"We believe these investments demonstrate ARI's ability to effectively underwrite and structure complex transactions while generating attractive, risk adjusted returns," said Scott Weiner, Chief Investment Officer of the Company's Manager. "New York City continues to be one of the strongest residential markets in the country and new supply is being absorbed quickly. Both of these transactions have solid, well-capitalized sponsorship and will further enhance ARI's growing commercial real estate debt portfolio."
Whole Loan for New York City Condominium Conversion
The Company provided an $80 million whole loan commitment for a condominium conversion located in the TriBeCa neighborhood of New York City. At closing, the Company funded a $45 million first mortgage loan and $0.4 million of a $35 million mezzanine loan, the balance of which will be funded throughout the conversion process. The property will have 66 units with approximately 96,000 net salable square feet and approximately 3,000 square feet of ground floor retail space. The whole loan has an initial term of two years with two 12-month extension options, subject to additional project completion hurdles. The interest rate on the whole loan is LIBOR+8.5% with a LIBOR floor of 0.5%. ARI received a 1.0% origination fee and will receive a 1.0% exit fee on the fully funded balance of the loan. When fully funded, ARI's loan basis will represent an underwritten loan-to-net sellout of approximately 55%. The whole loan has been underwritten to generate an unlevered IRR of approximately 11%(1).
Mezzanine Loan for New York City Condominium Development
The Company provided a $60 million mezzanine loan commitment secured by a pledge of preferred equity interests in the owner of a to-be-developed 352,624 net saleable square foot, 57-story, 146-unit condominium tower also located in the TriBeCa neighborhood of New York City. The Company provided $46 million of financing at closing and will provide an additional $14 million within the next six months. The mezzanine loan will receive an interest rate of 13.25% and has a 1.0% origination fee and a 1.0% exit fee on the fully funded balance of the loan. When fully funded, the Company's loan basis will represent an underwritten loan-to-net sellout of approximately 54%. The mezzanine loan has a term of 54 months with one extension option of 12-months and has been underwritten to generate an IRR of approximately 16%(1).
"Since raising over $207 million of capital through our preferred and common stock offerings in the third and fourth quarter of last year, the Company has closed over $200 million of new investments and financing commitments with a weighted average underwritten IRR of approximately 13%(1)," said Stuart Rothstein, Chief Executive Officer of the Company. "As we look ahead to 2013, ARI's pipeline remains robust and we expect to build upon the momentum we have generated to further expand our debt portfolio."
(1) The IRRs for the investments detailed in this press release reflect the returns underwritten by ACREFI Management, LLC, the Company's external manager. The IRRs for the New York City condominium conversion investment and the New York City condominium development investment are calculated using the Company's external manager's underwritten assumptions regarding the estimates of the timing and magnitude of future fundings for the remaining commitments and associated loan repayments, as well as assuming no defaults. All other IRRs are calculated on a weighted average basis assuming no dispositions, early prepayments or defaults but assume extensions as well as the cost of borrowings and derivative instruments under the Company's master repurchase agreement with Wells Fargo Bank, N.A. There can be no assurance the actual IRRs will equal the underwritten IRRs shown 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 its investments 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 $110 billion of assets under management at September 30, 2012.
Additional information can be found on the Company's website at www.apolloreit.com.
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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