NEW YORK--(EON: Enhanced Online News)--Apollo Commercial Real Estate Finance, Inc. (the “Company” or “ARI”) (NYSE:ARI) today announced the Company closed two first mortgage loan transactions totaling $170.0 million. ARI also announced the Company received approximately $48.3 million from the repayment of a first mortgage loan secured by a newly constructed condominium development in Bethesda, Maryland. Year-to-date, ARI’s capital commitments and deployment total approximately $1.27 billion, including additional fundings for previously closed loans.
“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 closed a $105.0 million first mortgage loan secured by a 419,190 square foot office building located in the Midtown West submarket of New York City. The floating rate loan is part of a $220.0 million financing consisting of ARI’s $105.0 million first mortgage loan and a pari passu $115.0 million first mortgage loan. The loan has an eighteen month initial term with one six-month extension option and an appraised loan-to-value (“LTV”) of approximately 67%. The loan has been underwritten to generate a levered internal rate of return (“IRR”)(1) of approximately 16%.
ARI closed a $65.0 million first mortgage loan ($60.3 million of which was funded at closing) secured by two retail buildings occupying an entire city block in the Harlem submarket of New York City. The floating rate loan has an eighteen month initial term with one six-month extension option and an LTV of approximately 54%. The loan has been underwritten to generate a levered IRR(1) of approximately 16%.
Commenting on the transactions, Scott Weiner, the Chief Investment Officer of ARI’s manager, said: “New York City continues to be one of the strongest, most liquid markets in the world for commercial real estate investment. Both of these well-structured first mortgage transactions are with well-capitalized, top-quality sponsors and we believe will provide ARI with attractive, risk-adjusted returns.”
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 $189 billion of assets under management as of September 30, 2016.
Additional information can be found on the Company's website at www.apolloreit.com.
(1) The underwritten IRR for the investment shown above reflects the returns underwritten by ACREFI Management, LLC, the Company’s external manager, taking into account leverage and calculated on a weighted average basis assuming no dispositions, early prepayments or defaults but assuming that extension options are exercised and that the cost of borrowings remains constant over the remaining term. 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 IRR will equal the underwritten IRR presented above. 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, 2015 for a discussion of some of the factors that could adversely impact the returns received by the Company from its investments over time.
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.