Company: ARI
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0000950170-25-017122
Chunk: 142

Company: Apollo Commercial Real Estate Finance, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 8
Chunk 142
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 construction financing included within debt related to real estate owned, held for investment, net on our consolidated balance sheets was $252.0 million, net of $2.0 million in deferred financing costs and $161.6 million, net of $3.2 million in deferred financing costs, respectively. The construction financing includes a maximum commitment of $388.4 million, an interest rate of SOFR +2.55%, and current maturity of August 2026, with an option to extend for one year, contingent upon meeting certain conditions. The construction financing agreement contains covenants requiring our unencumbered liquidity be greater than $100.0 million and our net worth be greater than $600.0 million. Under these covenants, our General CECL Allowance is added back to our net worth calculation. As of both December 31, 2024 and December 31, 2023, we were in compliance with these covenants.To manage our exposure to variable cash flows on our borrowings under this construction financing, we entered into an interest rate cap in September 2023, and extended in September 2024 for an additional year. As of December 31, 2024 and December 31, 2023, the fair value of the interest rate cap was $0.4 million and $1.4 million, respectively, and recorded within derivative assets, net on our consolidated balance sheet. Refer to "Note 11 – Derivatives" for additional detail.Atlanta HotelIn March 2017, we originated a first mortgage loan secured by the Atlanta Hotel. During the second quarter of 2022, due to slower than expected recovery from the COVID-19 pandemic, we deemed the borrower to be experiencing financial difficulty. Accordingly, we ceased accruing interest on the loan and recorded a $7.0 million Specific CECL Allowance. During the fourth quarter of 2022, we wrote off the $7.0 million previously recorded Specific CECL Allowance and reduced the principal balance of the loan which was recorded as a realized loss within net realized loss on investments in our December 31, 2022 consolidated statement of operations. In March 2023, we acquired legal title of the Atlanta Hotel through a deed-in-lieu of foreclosure and determined the fair value of net real estate assets to be $75.0 million in accordance with ASC 820. The fair value of the real estate owned is 

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categorized within Level III of the fair value hierarchy set forth