Apollo Global officially closes CPI deal

Eight months after being selected as the preferred bidder, the real estate arm of Leon Black’s buyout shop has formally taken over the Citi Property Investors platform and funds. Apollo is believed to have paid a ‘nominal’ fee for CPI.

Apollo Global Real Estate has officially closed on its deal to take over the Citi Property Investors’ platform.

Roughly eight months after being selected as the preferred bidder, the firm said CPI’s platform and three funds would now come under the leadership of Apollo Global’s managing partner, Joseph Azrack.

Apollo declined to comment on financial details, but the firm is believed to have paid a nominal fee upfront for the platform after a fierce bidding process that saw the New York-based firm fight off competition from Macquarie Capital, ING Real Estate Investment Management and Northwood Investors, among others.

Citigroup, which placed CPI on the market in August 2009 just four year after starting the platform, also potentially stands to benefit from future positive performances after the two firms predetermined an earn-out structure, sources familiar with the matter previously told PERE.

Apollo’s winning bid came as a result of garnering enough support from the LPs in CPI’s three funds: the €1.16 billion CPI Capital Partners Europe; the $600 million CPI Capital Partners North America; and the $1.29 billion CPI Capital Partners Asia Pacific – each of which closed between 2006 and 2007. Citigroup and CPI senior executives also had significant say in Apollo’s final selection being major investors in the funds – Citi’s typical capital commitment per fund was $200 million.

As part of the take-over, CPI president and chief executive officer Roger Orf becomes head of Apollo Global Real Estate Europe reporting to Azrack, and working alongside Apollo’s head of North America Ray Mikulich and Grant Kelley, head of Apollo’s real estate operations in Asia Pacific.

Azrack said in a statement the deal would strength Apollo Global’s investor base “while growing as we do so”. Paul, Hastings, Janofsky & Walker advised Citigroup.

CPI has lost a swath of executives after the sale was announced and during the run-up to Apollo Global's take-over. In July, Ravi Hansoty, the head of Asia at Citi Property Investors (CPI), left the firm, little more than one year after he replaced his predecessor David Schaefer, who joined DTZ Investment Management in March.

Others to have left CPI over the past year include the former head of North America Larry Ellman; ex-chief finance officer for Asia Marco Ho; and ex-head of China, Wendy Yao.