Apollo Commercial Real Estate Finance (ARI) Closes $325.5M Worth of Real Estate Transactions

October 4, 2016 8:47 AM EDT

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Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) announced the Company closed four commercial real estate loan transactions totaling $325.5 million and funded $16.6 million for previously closed loans, bringing year-to-date total capital commitment and deployment to approximately $749.0 million. ARI also announced the Company closed a new credit facility with Deutsche Bank to fund first mortgage investments.

Commenting on the new transactions and the facility, Scott Weiner, Chief Investment Officer of the Company’s manager, said: “Over the past few months, ARI built a strong pipeline of commercial real estate debt investments in anticipation of the approximately $400 million of investable capital the Company generated from the acquisition of Apollo Residential Mortgage, Inc. (“AMTG”) and the subsequent sale of AMTG assets. As a result, ARI had a very active September and closed four first mortgage loan transactions totaling $325.5 million, representing a mix of property types and locations. In addition, ARI closed a new credit facility with Deutsche Bank to finance first mortgage loan investments, further diversifying the Company’s funding sources and providing ARI with incremental financing to fund our active investment pipeline.”

Investment Activity

ARI closed a $133.0 million first mortgage loan ($128.0 million of which was funded at closing) secured by a 735,382 square foot office building located in the North Michigan Avenue retail corridor of Chicago which will be redeveloped into a mixed use project. The floating rate loan has a two-year initial term with two two-year extension options and an appraised loan-to-value (“LTV”) of approximately 58%. The loan has been underwritten to generate a levered internal rate of return (“IRR”)(1) of approximately 14%.

ARI closed a $105.0 million first mortgage loan ($78.1 million of which was funded at closing) secured by a newly- constructed, 612-key full service hotel located in the Times Square district of New York City. The loan is part of a $215.0 million financing which consists of ARI’s $105.0 million loan and another $110.0 million pari passu loan. The floating rate loan has a two-year initial term with three one-year extension options and an appraised LTV of approximately 62%. The loan has been underwritten to generate a levered IRR(1) of approximately 14%.

ARI closed an $80.0 million first mortgage loan (all of which is expected to be funded by year end) secured by a to-be-developed data center in Manassas, Virginia which has been substantially pre-leased on a long-term basis to a credit tenant. The loan is part of a $365.0 million financing which consists of ARI’s $80.0 million loan and additional pari passu notes totaling $285.0 million. The fixed-rate loan has a three-year term and an underwritten, as-stabilized LTV of approximately 55%. The loan has been underwritten to generate a levered IRR(1) of approximately 14%.

ARI closed a $7.5 million first mortgage loan secured by a 6,500 square foot retail property. The loan is cross-collateralized and cross-defaulted with the $121.4 million of financing ARI has provided to the same borrower in connection with the aggregation of retail parcels for redevelopment in downtown Brooklyn, New York. The total floating rate financing has a remaining six month term and an appraised LTV of approximately 60%.

Funding of Previously Closed Loans - Since July 27, 2016, ARI has funded $16.6 million for previously closed loans.

Loan Repayments – Since July 27, 2016, ARI received $122.9 million from loan repayments and condominium sales. The loans that fully repaid include a subordinate loan on an office building in Michigan, a first mortgage predevelopment loan for a condominium conversion in New York City and a subordinate predevelopment loan for a condominium conversion in London.

Credit Facility

ARI entered into a master repurchase agreement with Deutsche Bank AG (the “DB Facility”) to provide up to $300.0 million of advances in connection with financing first mortgage loans. The DB Facility has a one year term with two one-year extension options and will accrue interest at a per annum pricing equal to the sum of one-month LIBOR plus an applicable spread.



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