Azrack to change role at Apollo

The global head of the New York-based private equity firm’s real estate group is due to move into a less active role as the platform’s chairman in 2013, as part of a long-term succession plan for the business.

Joseph Azrack, the global head of real estate at Apollo Global Management, is expected to transition his role at the firm from managing partner to chairman of the real estate group, according to a filing with the US Securities and Exchange Commission.

Azrack entered into an agreement with Apollo on June 1, under which the firm may elect to move Azrack into the chairman position at any time after 31 December, or Azrack himself may elect to transition to the role at any time after 30 June 2013, the document said. The firm did not indicate in the filing the reason for the transition, but it stated that Azrack would receive base pay of $1 million per year as managing partner and $350,000 as chairman. Apollo declined to comment beyond the filing, but sources familiar with the matter said additional details regarding a succession plan for the real estate platform have not yet been determined.

However, PERE understands that Apollo has been in talks with Azrack over the past several months to plan for the long-term management of Apollo Global Real Estate. As chairman, Azrack would take on a less active role at the firm, but he would continue to vet any new potential real estate investments before they would be presented to Apollo’s real estate investment committee, which includes Azrack; Leon Black, Apollo’s chairman and chief executive; senior managing directors Joshua Harris and Marc Rowan; and other senior investment professionals.

Azrack, 65, also remains responsible for the business, even as the day-to-day operations are handled by Apollo’s regional real estate teams, whose senior members include Coburn Packard, Scott Weiner, Robert Scoville and Stuart Rothstein in the US; Roger Orf and Chris DeMestre in Europe; and Grant Kelley and Peter Succoso in Asia.

A 30-year industry veteran, Azrack joined Apollo in August 2008 to lead the firm’s new real estate group, having previously built and led Citigroup’s Citi Property Investors (CPI) real estate funds platform. Under his leadership, Apollo’s real estate AUM grew from virtually nothing to $8.6 billion as of 31 March. However, much of that growth came from the firm’s 2010 takeover of the CPI business, which added $3.6 billion in real estate AUM and gave Apollo Global Real Estate an immediate presence in Europe and Asia.

Apollo’s real estate platform has weathered its share of challenges, including the capital raise for its AGRE US Real Estate Fund, which was launched in 2011 but had raised just $385 million of its $650 million target as of the end of the first quarter this year.  The departures of Apollo’s North American head of real estate Raymond Mikulich, the fund’s chief capital-raiser Jon Thompson and others earlier this year were partly the result of the vehicle not having attracted enough capital to support the team, according to sources familiar with the matter.

Following the close of the first quarter, however, AGRE US Real Estate received a couple of sizable commitments from investors, including $150 million from the Teacher Retirement System of Texas, and held a final close of $713 million in commitments in April. The fund, which has made three investments to date, also is expected to announce other deals in the near future, sources said.