Press Release
January 05, 2016

Apollo Commercial Real Estate Finance, Inc. Completes over $1.1 Billion of Transactions in 2015

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NEW YORK--(BUSINESS WIRE)--Jan. 5, 2016-- Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today announced the Company closed four investments totaling $201 million in December. With the closing of these transactions, ARI has committed to over $1.1 billion of investments in 2015, a record year for the Company. In addition, ARI announced the syndication of an additional $200 million of the mezzanine loan secured by a New York City luxury condominium tower currently under construction on West 57th Street, reducing ARI’s total commitment for the mezzanine loan to $75 million.

“We are extremely proud of ARI’s performance in 2015, a year in which we committed to over $1.1 billion of commercial real estate loans, grew our equity capitalization to over $1.4 billion and increased our dividend per share of common stock by 15%,” said Stuart Rothstein, Chief Executive Officer and President of the Company. “The diversity of ARI’s transactions in 2015 demonstrates the breadth of Apollo’s commercial real estate credit platform. ARI executed both senior and subordinate transactions throughout the United States, as well as in the United Kingdom, many of which were with repeat borrowers. As we enter 2016, the Company’s investment pipeline, including future fundings for previously closed loans, is robust and we look forward to an active year ahead.”

Investment Activity

ARI closed a £55.0 million ($82.0 million) mezzanine loan for the pre-development of a luxury residential project comprising 150,135 square feet of net saleable area in the Mayfair neighborhood of London, UK. The floating-rate loan has a nine-month initial term with a three-month extension option and is part of a £225 million financing consisting of a £125 senior loan and a £100 million mezzanine loan. Investment funds managed by Apollo Global Management, LLC and its subsidiaries (“Apollo”) acquired the remaining £45.0 million of the mezzanine loan, which is pari passu to ARI’s mezzanine loan. The mezzanine loan has a loan-to-cost of 59% and has been underwritten to generate an internal rate of return (“IRR”)(1) of approximately 14%.

ARI closed a $55 million ($54 million of which was funded at closing) first mortgage loan secured by a 262,282 square foot biomedical office and laboratory building located in Richmond, Virginia. The floating rate loan has a two-year initial term with two one-year extension options and an appraised loan-to-value (“LTV”) of 66%. The loan has been underwritten to generate a levered IRR(1) of approximately 16%.

ARI closed a $50.0 million mezzanine loan for the acquisition of a 468-key, all suite, full-service hotel located in the Times Square district of New York City. The floating-rate loan has a fifteen-month initial term with a three-month extension option and is part of a $425 million financing consisting of a $175 million first mortgage loan and a $250 million mezzanine loan. The first mortgage lender retained $100 million of the mezzanine loan and investment funds managed by Apollo acquired the remaining $100 million of the mezzanine loan, which is pari passu to ARI’s mezzanine loan. The mezzanine loan has an underwritten LTV of 73% and has been underwritten to generate an IRR(1) of approximately 16%.

ARI closed a $43.5 million first mortgage loan ($42.0 million of which was funded at closing) secured by a 180-key luxury resort located in St. Thomas, U.S. Virgin Islands. The floating rate loan has a two year initial term and three one-year extension options and an appraised LTV of 62%. The first mortgage loan was underwritten to generate a levered IRR(1) of approximately 13%.

In addition, during the fourth quarter of 2015, ARI funded an incremental $82.4 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 $161.8 billion of assets under management at September 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.

Source: Apollo Commercial Real Estate Finance, Inc.

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