Apollo JV secures funding for Russian industrial development

Specialist property lender Hypo Real Estate is underwriting the construction of a large logistics complex in Moscow by Apollo Real Estate Advisors and its Israeli partner.

Apollo and joint venture partner Brack Capital have agreed a $45.5 million finance package with Hypo Real Estate for the construction of a 41,000 square meter development in Lobnia to the north of Moscow.

Hypo revealed the deal was inked three days ago for the construction, VAT and investment in the project, which is already fully pre let to an international tenant for a term of seven years.

The deal is the latest example of foreign investors aiming to fill Russia’s void in class A real estate via a range of strategies, including striking up joint venture partnerships and taking stakes in Russian development companies. Last year, US firm Moore Capital Management and Morgan Stanley Real Estate bought stakes in RosEuro, a Moscow-based developer which boast a $400 million logistics park in Krekshino among its largest projects. More recently, Guernsey-registered company, Raven Russia, formed a $750 million joint venture with Russian logistics provider Avalon Group which allows Raven to buy the company’s completed projects.

Meanwhile, foreign banks are stepping up activity in the country to service clients. Hypo, Eurohypo and Aareal bank are three examples of Europe-based banks active in the emerging territory.

Apollo’s real estate activities are headed up in Europe by managing partner, William Benjamin. Its latest European focused opportunity fund, Apollo European Real Estate Fund II, closed in February 2005 with commitments of $600 million (€426 million).