Apollo mortgage REIT closes $349m of deals

Apollo Commercial Real Estate Finance has invested almost two-thirds of the equity raised in its IPO on first mortgages, mezzanine loans and CMBS.

Apollo Global Management’s mortgage REIT has deployed $127.8 million of it’s the equity it raised in its IPO originating first mortgages, mezzanine loans and buying CMBS securities.

Apollo Commercial Real Estate Finance (NYSE: ARI) said it had closed on $349 million of deals, including originating a $32 million first mortgage secured against a Manhattan hotel and originating a $30 million senior mezzanine loan and $20 million junior mezzanine loan for non-listed REIT Inland Western Retail Real Estate Trust.

ARI said in a statement the hotel first mortgage was provided with a 55 percent loan-to-value and interest rate of 8.25 percent. The Inland deal was part of a $625 million new origination financing that included $500 million of new investment grade CMBS and $125 million of mezzanine debt. The Inland loans are secured against 55 retail properties.

Apollo raised $208 million in its initial public offering last September, targeting commercial mortgage loans, CMBS and other real estate-related assets. Presenting its year-end activity report, ARI said it had also acquired $267 million of AAA-rated legacy CMBS, financed through the US government’s Term Asset-Backed Securities Loan Facility or TALF programme.

ARI invested $45.8 million in equity in the securities, which are comprised A2 and A3 tranches from nine securitisations that produce a levered current cash yield of approximately 18.9 percent.

Apollo Global last November said in securities filings it could launch a series of real estate funds “that focus on other opportunistic investments in distressed debt and equity recapitalisation transactions”. This week, Apollo Global Real Estate – led by Joseph Azrack – said it had hired former Colony Capital Asia chief executive Grant Kelley and his team to lead the firm’s push into Asia. A report by the Financial Times added Apollo was in the process of raising an Asia property fund targeting between $500 million and $1 billion.

Apollo Global is also in the final two bidding to acquire the $8 billion Citi Property Investors (CPI) business, put up for sale in August, alongside Australia's Macquarie Group.


A winner is expected to be chosen within a matter of days and weeks. The winner will be decided by Citigroup and placement agent Park Hill Group, which is representing the various LPs invested in CPIs three regional funds: CPI Capital Partners Europe, which closed on €1.16 billion in November 2006; CPI Partners North America, which closed on $600 million in November 2006; and CPI Capital Partners Asia Pacific, which closed on $1.29 billion in February 2007.