Apollo Global has launched a $600 million vehicle to originate and acquire real estate debt in the US, following hot on the heels of private equity rivals Starwood Capital and Colony Capital.
Apollo Commercial Real Estate Finance Inc. (ACREFI) will target $600 million and focus on originating and acquiring US whole loans, CMBS, commercial real estate corporate debt and B-notes, according to regulatory filings.
ACREFI will be led by Joseph Azrack, managing partner of Apollo Global’s real estate operations and former president of Citi Property Investors. Ex-Barclays Capital managing director Scott Weidner will serve as chief investment officer. The vehicle will register as a REIT.
Apollo said in the filing the dislocation in the commercial real estate capital markets had resulted in a “compelling opportunity”, with debt maturities set to vastly outpace debt availability over the next three years.
“In the near to medium term, we anticipate a significant opportunity to originate and purchase senior performing commercial real estate mortgage loans and other debt investments at attractive yields, high debt service coverage ratios, and low loan-to-values on high quality real estate-related assets,” Apollo added.
Apollo is the latest in a line of private equity real estate fund managers to file IPOs for debt vehicles. Starwood Capital hopes to raise $500 million for Starwood Property Trust, while Colony Capital hopes to raise $500 million for Colony Financial. All three platforms intend to take advantage of distressed US real estate debt and register as real estate investment trusts.
Apollo said it would initially acquire assets without leverage, but hoped to qualify for some financing under the US government’s Term Asset-Backed Securities Loan Facility (TALF) for certain CMBS investments.
ACREFI will target senior debt positions secured against real estate in major US metropolitan areas. ACERFI’s investment committee will comprise Azrack; Weidner; partner of Apollo Private Equity Eric Press; Apollo co-founder and senior managing director Marc Rowan; Apollo chief operating officer Henry Silverman and managing partner of Apollo’s capital markets business James Zelter.
As of 31 March this year, Apollo managed 13 debt-focused funds and hedge funds with $12.9 billion assets under management, the firm said in the filing. The buyout shop had invested a total of $16.5 billion of equity in debt securities between September 2007 and March 2009.