Apollo Commercial Real Estate Finance, Inc. Closes $123 Million of Commercial Real Estate Loans

NEW YORK--()--Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today announced the Company closed two first mortgage and two subordinate loan transactions totaling $123 million, $107 million of which was funded at closing. The Company also funded an additional $35 million for previously closed transactions. With the closing of these transactions, ARI has committed to invest $281 million of equity into $443 million of investments year-to-date and has deployed a total of $91 million to fund previously closed transactions.

“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”

ARI also announced today that the Company amended the master repurchase facility with JPMorgan Chase Bank, N.A. to increase the borrowing capacity to $400 million from $300 million.

Commenting on the new transactions, Scott Weiner, the Chief Investment Officer of the Company’s manager, said: “We believe ARI’s origination momentum continues to benefit from the Company’s reputation as a creative capital solutions provider to our clients. These well-structured transactions are with both new and repeat clients and, we believe, demonstrate the breadth of ARI’s platform.”

Investment Activity

ARI closed a $45 million first mortgage loan secured by 63,000 square feet of existing retail space for re-development that spans a full block in the South Beach section of Miami, Florida. The floating-rate loan has an 18-month initial term, with two, six-month extension options and a loan-to-capitalization (“LTC”) of 65%. The loan has been underwritten to generate an internal rate of return (“IRR”)(1) of approximately 8% on an unlevered basis.

ARI closed a $33 million first mortgage loan ($17 million of which was funded at closing) secured by two adjacent retail properties aggregating 16,000 square feet for re-development in the Design District of Miami, Florida. The floating rate loan has a two-year term and an LTC of 60%. The loan has been underwritten to generate an IRR(1) of approximately 8% on an unlevered basis.

ARI closed a $25 million mezzanine loan secured by the pledge of the equity interests in a 744-key full-service resort hotel located in Phoenix, Arizona. The fixed-rate loan has a ten-year term and is part of a $120 million financing, which includes a $95 million first mortgage loan and ARI’s mezzanine loan. The subordinate financing has an appraised loan-to-value (“LTV”) of 58% and was underwritten to generate an IRR(1) of approximately 12%.

ARI closed a $20 million junior mezzanine loan secured by the pledge of the equity interests in a 584-key, full-service hotel located in Washington, D.C. The floating-rate loan has a two-year initial term, with two, one-year extension options and is part of a $160 million financing, which includes a $115 million first mortgage loan, a $25 million senior mezzanine loan and ARI’s junior mezzanine loan. The junior mezzanine loan has an appraised LTV of 61% and was underwritten to generate an IRR(1) of approximately 12%.

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 $162.9 billion of assets under management at March 31, 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 reflect 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.

Contacts

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

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