Apollo Residential Mortgage Inc
Apollo Residential Mortgage — Merger or Acquisition (March 2016)
28 slides from Apollo Residential Mortgage's merger presentation, Mar 8, 2016
Slide 1: Investor Presentation March 2016
Information is as of December 31, 2015, except as otherwise noted. It should not be assumed that investments made in the future will be profitable or will equal the performance of investments in this document. Investor Presentation March 2016
Slide 2: Forward Looking Statements and Other Disclosures
Forward Looking Statements and Other Disclosures This presentation may contain forward-looking statements that are within the meaning of 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 c
Slide 3: Company Overview
Company Overview Apollo Commercial Real Estate Finance, Inc. is a leading commercial real estate finance company focused on originating first mortgage and subordinate loans and investing in commercial mortgage-backed securities (“CMBS”) Ticker (NYSE) ARI Equity Capitalization(1) $1.4 billion Dividen
Slide 4: Investment Highlights
Investment Highlights See footnotes on page 21 Six-Year Track Record as an Innovative, Creative Global CRE Debt Provider Increased Dividend per share of Common Stock 15% in 2015 Robust CRE Transaction Volume Creates Strong Borrower Demand for Transitional and Subordinate Capital Stable and Diverse $
Slide 5: Agenda
Agenda Commercial Real Estate Market Overview ARI Strategy and Portfolio Overview Financial Overview
Slide 6: Macro Environment Continues to Create Compelling Opportunities
Macro Environment Continues to Create Compelling Opportunities CRE Market Positives Global flow of capital to the U.S. Increasing transaction volume Limited supply dynamic Positive operating fundamentals Continued job growth Most lenders maintaining their discipline with respect to underwriting Rate
Slide 7: CRE Property Market Overview
CRE Property Market Overview There is a Record High Level of Capital Available for Real Estate Investment Globally(8) Operating Fundamentals are Steady (9) U.S. CRE Transaction Volume Remains Robust(6) New Construction Remains Muted – Supply Growth for U.S. Office, Retail, Industrial and Multifamily
Slide 8: CRE Debt Market Overview
CRE Debt Market Overview Real Estate Debt Markets Have Recovered Since the Financial Crisis – Debt Issuance by Type Since 2003(10) ($bn) Average Loan-to-Value Remains Below Prior Peaks(11) CRE CDO and CLO Issuance Remains Benign(12) See footnotes on page 21 1H 2015 Annualized ($ millions)
Slide 9: Agenda
Agenda Commercial Real Estate Market Overview ARI Strategy and Portfolio Overview Financial Overview
Slide 10: Lending Strategy
Lending Strategy ARI’s Direct Origination Platform Offers First Mortgage and Subordinate Loans Across a Broad Spectrum of Property Types First Mortgage Loans Subordinate Loans Directly Originate with Borrower or Co-Originate with Senior Lender Underwrite and Structure Pro-Actively Asset Manage First
Slide 11: Portfolio Overview
Portfolio Overview Net Invested Equity at Amortized Cost Basis(18) See footnotes on page 21 Asset Type ($000s) Amortized Cost Borrowings Equity at Cost(13) Remaining Weighted Average Life (years)(14) Current Weighted Average Underwritten IRR(5) Fully-Levered Weighted Average Underwritten IRR(5)(15)
Slide 12: Portfolio Diversification
Portfolio Diversification Geographic Diversification by Net Equity Property Type by Net Equity Fully Extended Loan Maturities and Future Fundings (18)(19)(20)(21) Loan Position and Rate Type(18)(19) See footnotes on page 21 ($ in Millions)
Slide 13: Portfolio Evolution with Consistent Returns Since Inception
Portfolio Evolution with Consistent Returns Since Inception Past performance is not indicative nor a guarantee of future results. See footnotes on page 21 Weighted Average Levered IRR and Return on Equity (5)(23) ARI has shifted its portfolio composition to capitalize on market opportunities and gen
Slide 14: Sample First Mortgage
Sample First Mortgage Past performance is not indicative nor a guarantee of future results. See footnotes on page 21 $165 million, five-year floating rate loan for the development of the majority of the retail portion of a mixed-use lifestyle center in Cincinnati, OH; loan was originated in October,
Slide 15: Sample Subordinate Financing
Sample Subordinate Financing Past performance is not indicative nor a guarantee of future results. See footnotes on page 21 $60 million, 54-month fixed-rate loan for the development of a 352,624 net saleable square foot, 57-story, 146-unit condominium tower located in the Tribeca neighborhood of New
Slide 16: ARI to Acquire Apollo Residential Mortgage, Inc. (AMTG)
See footnotes on page 21 ARI to Acquire Apollo Residential Mortgage, Inc. (AMTG) On February 26, 2016, ARI announced a definitive agreement to acquire AMTG in a cash and stock transaction for approximately $641 million(24) Summary Terms Acquisition price equal to 89.25% of AMTG common book value as
Slide 17: Agenda
Agenda Commercial Real Estate Market Overview ARI Strategy Overview Financial Overview
Slide 18: Financing Overview and Interest Rate Sensitivity
Financing Overview and Interest Rate Sensitivity Variable Rate Investments & Liabilities ARI anticipates a 0.5% increase in LIBOR results in approximately a $0.09 per diluted share of common stock increase in Operating Earnings annually(30) Variable Rate Liabilities See footnotes on page 21 Facility
Slide 19: Conservative Balance Sheet Capitalization
Conservative Balance Sheet Capitalization Debt-to-Equity Ratio and Fixed Charge Coverage(31) See footnotes on page 21
Slide 20: Growth in Operating Earnings Has Led to Growth in Dividends
Growth in Operating Earnings Has Led to Growth in Dividends Operating Earnings and Dividends per share of Common Stock (32) See footnotes on page 21 10% Increase 5% Increase
Slide 21: ARI vs. Comparable Yields
ARI vs. Comparable Yields Comparable Yields(33) (34) See footnotes on page 21
Slide 22: Footnotes
Footnotes Includes common equity and preferred equity market capitalization outstanding as of December 31, 2015. Fourth quarter 2015 dividend per share of common stock of $0.46, annualized. Based on the $0.46 quarterly dividend per share of common stock, annualized and ARI’s closing common share pri
Slide 23: Appendix
Appendix
Slide 24: Loan Portfolio – Loan Level LTV: Senior Loans
Loan Portfolio – Loan Level LTV (Through Last Invested Dollar) Senior Loans This whole loan includes a first mortgage with an outstanding balance of $93,333 and a mezzanine loan with an outstanding balance of $12,347. LTV is based upon fully committed loan amount of $121,460. This whole loan include
Slide 25: Loan Portfolio – Loan Level LTV: Subordinate Loans
Loan Portfolio – Loan Level LTV (Through Last Invested Dollar) Subordinate Loans LTV is based upon the fully committed loan amount of $105,000; Both loans are secured by the same property. The $30,000 loan is structured as a corporate loan and has additional collateral. Based upon £55.0 million face
Slide 26: Consolidated Balance Sheet
Consolidated Balance Sheet [im thousands exceprshare and per share data) lasses c s ois S 40.641 3027 30,127, Scourites availabl-for-sale, at estimated fair value : 17,105 Scourites, at estimated fair value 522.730, Sect format 154283 Commercial mortgage leans, held for investment 458,520, Subordina
Slide 27: Consolidated Statement of Operations
Consolidated Statement of Operations
Slide 28: Reconciliation of Operating Earnings to Net Income
Reconciliation of Operating Earnings to Net Income Additional Information and Where You Can Find It In connection with the proposed transaction, ARI intends to file a registration statement on Form S-4 that will serve as a prospectus for the ARI shares to be issued as consideration in the proposed t
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