Apollo Commercial Real Estate Finance (ARI), the listed US debt investor, has completed $143.6m in new investments.
The REIT, which is managed by Apollo Global Management, has made a $50.2m CMBS acquisition and two loans totaling $93.4m – one of which was secured by a Times Square hotel in New York City.
Ari acquired a $28.3m fixed-rate mezzanine loan secured on the 795-key Crowne Plaza Times Square, located at 1605 Broadway and 48th Street, which features a 226,000 square foot office and retail condominium.
The company also closed on a 30-year, $65.1m floating-rate first mortgage loan for the development of a 40-unit luxury residential condominium in Bethesda, Maryland.
“ARI has had a strong start in the first six months of 2014,” said Scott Weiner, CIO of the company’s manager, Apollo GM subsidiary ACREFI Management, in a prepared statement.
He noted that so far this year the company has committed to invest in $595m worth of loans and CMBS. “The company continues to identify well structured transactions which offer attractive, risk adjusted returns and our pipeline remains robust,” he said.
The Crowne Plaza mezzanine loan has a remaining six-month term, a loan-to-value of 67%, and it was underwritten to generate an IRR of approximately 8%.
The loan is the largest belonging to Morgan Stanley’s Capital I Trust series 2007-XLF (MSCI 2007-XLF) portfolio. Fitch Ratings noted last month that cash flow on the property has declined over the previous two years due to increased ground lease payments, the loss of commercial revenue, and new franchise fee obligations. But it remained the healthiest of three remaining loans in the portfolio.
The Maryland loan has a six-month extension option, a projected appraised loan-to-net sellout of approximately 67% and has been underwritten to generate an internal rate of return (IRR) of approximately 14%.
ARI also acquired legacy CMBS that it said was formerly rated AAA with an aggregate purchase price of $50.2m using $40.2m of borrowings under the company’s master repurchase agreement with Deutsche Bank and $10m in equity. The CMBS have a weighted average life of 1.7 years and have been underwritten to generate an IRR of approximately 16.5%, the firm said.
Apollo’s CRE debt business invests for both ARI and separate accounts. Its deals in the last 12-18 months include $240m of senior debt for HFZ Capital Group for a portfolio of Manhattan properties sold by Westbrook and a £200m mezzanine loan for refinancing Chiswick Park for Blackstone before the asset’s sale to China Investment Corporation last January.