NEW YORK, NY -- (Marketwire) -- 02/04/13 -- Apollo Commercial Real Estate Finance, Inc. (the "Company" or "ARI") (NYSE: ARI) today announced the closing of two mezzanine financing transactions totaling $43 million. The first investment was an $18 million mezzanine loan secured by a pledge of the equity interests in the owner of two buildings in midtown Manhattan that will be converted into 215 multifamily rental units and the second investment was a $25 million mezzanine loan secured by a pledge of the equity interests in the owner of a portfolio of four hotels totaling 1,231 keys located in Rochester, Minnesota. Since the beginning of 2013, ARI has announced the closing of $183 million of new investments which have been underwritten to generate a weighted average IRR of 13%(1).
In addition, today ARI also announced a two year extension to the Company's master repurchase facility with JPMorgan Chase Bank, N.A. (the "JPMorgan Facility") as well as the repayment of two mezzanine loans secured by the equity interests in the owner of a portfolio of retail shopping centers totaling $50 million.
Mezzanine Loan for New York City Multifamily Conversion
The Company provided an $18 million mezzanine loan secured by a pledge of the equity interests in the owner of two buildings in midtown Manhattan. The buildings contain a total of 181,637 rentable square feet that is being converted into 215 multifamily rental units. The mezzanine loan is part of a $90 million, three-year (two-year initial term with one one-year extension option) interest-only, floating rate financing comprised of the mezzanine loan and a $72 million first mortgage loan. At the time of ARI's investment, the interest rate on the mezzanine loan was LIBOR+10.0% and will increase to LIBOR+11.0% as certain mortgage funding hurdles are met. ARI received a 1.0% transaction fee at closing. When the first mortgage loan is fully funded, the mezzanine loan will have an appraised loan-to-value of approximately 60% and has been underwritten to generate an IRR of approximately 13%(1).
Mezzanine Loan for Rochester, Minnesota Hotel Portfolio
The Company provided a $25 million mezzanine loan secured by a pledge of the equity interests in the owner of a portfolio of four hotels totaling 1,231 keys located in Rochester, Minnesota. The hotels are within walking distance of the Mayo Clinic, an internationally renowned health care facility that treats over one million patients annually from around the world. The mezzanine loan is part of a $145 million five-year, fixed rate loan, comprised of a $120 million first mortgage loan and the mezzanine loan, which was provided in connection with the acquisition of the portfolio. The interest rate on the mezzanine loan is 11.0%. The mezzanine loan has an appraised loan-to-value of approximately 69% and has been underwritten to generate an IRR of approximately 12%(1).
Amendment to JPMorgan Facility
The Company amended its JPMorgan Facility to extend the term for two years (one year initial term with a one year extension option). Pricing on the JPMorgan Facility will remain at LIBOR+2.5% and ARI will pay a 0.5% fee for the first year and a 0.25% extension fee for the second year. The Company primarily uses the JPMorgan Facility to finance ARI's first mortgage loan investments.
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