The US fund manager is raising its fourth fund and negotiating on new deals in Europe
Apollo Real Estate Advisors LP is a New York-based investment management firm founded in 1993, which is the advisor and general partner in three real estate investment funds. A fourth fund, Apollo Real Estate Investment Fund IV, will see its first closing this summer, with an anticipated equity commitment by its final closing of more than $1bn.
The first three funds have raised a combined $2.2bn in equity and invested in 145 transactions across a diverse range of property assets valued at more than $7bn. Typical investors are US state pension funds, corporate pension funds, insurance companies and university endowment funds, according to partner William Benjamin.
Between 15% and 20% of the funds’ investments are in Europe; a similar allocation to Europe is expected for the fourth fund.
Investments in Europe are made through a joint venture with London-based Pelham Partners. Apollo and Pelham have been active since 1995 throughout Europe, from Scandinavia to Russia, with particular emphasis to date on the UK and France. It has teamed up with local players such as John Beckwith’s Portfolio Holdings in the UK, and Jordi Robinat and David Stein in Spain.
Apollo Real Estate Advisors employs around 30 real estate professionals in its New York offices; the chairman is William Mack.
The firm aims for an annual internal rate of return of more than 20%, and has so far been able to achieve this, according to Benjamin. The limited partnership funds are typically created with a three- to six-year lifetime; the first fund has already begun to wind down and has distributed more than 130% of the original investment to its backers, adds Benjamin.
“Most of our investments are property-based, so the exit strategy will usually be private market sales to institutional buyers,” he says.
But alongside the pure property deals, the Apollo funds have also taken stakes in a range of quoted US operating companies. These include a 25% holding in Koger Equity office Reit, and 10% of Central Parking Corporation. Apollo owns small stakes in both CB Richard Ellis and Insignia Group. And it is part of a consortium that is injecting $1bn to bail out the troubled hotel Reit Patriot American Hospitality.
It has also invested in the more financially driven areas of the US property market. In April, Apollo teamed up with mortgage specialist REMICap to form ARCap Reit, a real estate investment trust that will buy low-rated, high-yielding, commercial mortgage-backed securities. The initial capital investment from each of the parties is $25m, with a further $75m of equity being invested by five institutions.
Last year, Apollo and Pelham were part of a consortium that invested $100m in the UK-based business centre operator Regus. Current deals in Europe include a £93m joint venture with Reit Asset Management in the UK, and a €45.73m (FFr300m) portfolio acquisition in France.
Apollo was set up by Leon Black, a former banker at Drexel Burnham Lambert, which collapsed in 1990 after a series of junk bond losses. While Black is an investor and board member of Apollo Real Estate Advisors, his more high-profile investments are carried out through a separate corporate investment vehicle Apollo Management. These include National Realty Trust, a joint venture with the controversial Cendant group to buy estate agencies in the US.
Apollo Real Estate Advisors LP
1301 Avenue of the Americas,
38th floor,
New York
New York 10019
tel +1 212 261 4022
fax + 1 212 261 4060
