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."
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