Press Release
January 06, 2015

Apollo Commercial Real Estate Finance, Inc. Completes over $1.5 Billion of Commercial Real Estate Debt Transactions in 2014

Apollo Commercial Real Estate Finance, Inc. Completes over $1.5 Billion of Commercial Real Estate Debt Transactions in 2014

NEW YORK--(BUSINESS WIRE)--Jan. 6, 2015-- Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today announced the Company closed an $82.5 million mezzanine loan, $49 million of which was funded at closing, for the development of a mixed-use property on the Upper West Side of New York City. With the closing of this transaction, ARI has committed to invest over $1.1 billion of equity into $1.5 billion of transactions in 2014, the Company’s most active year since inception.

Commenting on the transaction, Scott Weiner, Chief Investment Officer of the Company’s manager, said: “The closing of this transaction culminates ARI’s most successful and active year of investing since going public in 2009. We are extremely proud of ARI’s performance in 2014 and we believe we have constructed a diversified portfolio of performing commercial real estate debt investments which produce an attractive, risk adjusted return. ARI’s investment pipeline remains robust and we look forward to an active year in 2015.”

Mezzanine Loan and Loan Repayment

In December, ARI closed an $82.5 million mezzanine loan ($49 million of which was funded at closing) for the development of a mixed-use property on the Upper West Side of New York City. The property will include 247 for-sale condominiums, 116 affordable multifamily units and approximately 90,000 square feet of commercial space and is being financed with $582.5 million of debt, which includes a $500 million first mortgage loan and ARI’s mezzanine loan. The floating-rate, mezzanine loan has a three-year initial term with two one-year extension options and an appraised loan-to-net-sellout of 58%. The first mortgage loan was underwritten to generate an internal rate of return (“IRR”)(1) of approximately 13%. Also in the fourth quarter, ARI received an $81 million principal repayment from a whole loan secured by a condominium conversion project in New York City.

2014 Investment Summary

ARI committed to invest over $1.1 billion of equity into $1.5 billion of transactions in 2014, including:

  • $792 million of equity into first mortgage loans, secured by a variety of property types including condominium developments, hotels and portfolios of destination homes. In addition, ARI completed the Company’s first transaction in which ARI funded a whole loan at closing and subsequently sold a participation to a third party;
  • $195 million of equity into subordinate loans, secured by a variety of property types including a ski resort, a healthcare portfolio, hotels, multifamily and condominium developments. In addition to expanding the Company’s geographic footprint in the United States, ARI completed the Company’s first transaction in the United Kingdom;
  • $75 million of equity invested into commercial mortgage backed securities (“CMBS”) with an aggregate purchase price of $375 million; and
  • €30.7 million ($39.5 million) investment in an entity that acquired a minority participation in KBC Bank Deutschland AG (“KBCD”), together with other investors, including other affiliates of Apollo Global Management, LLC (“Apollo”). Following the closing of the transaction, KBCD was renamed Bremer Kreditbank AG and will operate under the name BKB Bank;

“The diversity of transactions ARI completed in 2014 demonstrates the breadth of the commercial real estate credit platform Apollo has built over the past five years,” said Stuart Rothstein, Chief Executive Officer of ARI. “We believe the Company continues to develop a reputation with commercial real estate owners, brokers and lenders as a best-in-class provider of capital solutions. As we look ahead to 2015, we are confident in our ability to build upon ARI’s existing momentum, further grow and diversify the Company’s high quality investment portfolio and expand our operating platform.”

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.

Investor Relations
Hilary Ginsberg, 212- 822-0767