Apollo Global Management Launches €1 Billion Dedicated European Real Estate Debt Fund

New York, United States – Apollo Global Management, an alternative asset manager, has recently introduced its first-ever European real estate debt fund called Apollo Real Estate Debt – Europe Fund I. The fund aims to secure €1 billion in commitments. Apollo is now seeking external cash to invest in European real estate loans, which is a new development for the company.

The fund will prioritize the creation of mortgages secured by premium commercial properties in the United Kingdom and Continental Europe. The targeted loans consist of senior secured, subordinate, and whole loans that are backed by stabilized, transitional, and development assets. The mortgages will have a variable interest rate and usually have a maximum duration of five years when dealing with institutional borrowers.

SUMMARY
– Apollo Global Management is launching its first dedicated European real estate debt fund, targeting €1 billion.
– The fund will invest in institutional-quality real estate across the UK and Continental Europe, targeting floating-rate mortgages with a maximum five-year term.
– The fund will include both levered and unlevered sleeves, targeting net levered and unlevered returns of 11% and 7%, respectively.
– Apollo has deployed $19 billion in European real estate credit since 2013 and believes current market conditions present an opportunity to ramp up investments.
– The fund is part of Apollo’s broader European real estate business, which has $23 billion in assets under management.

The Apollo Real Estate Debt – Europe Fund I will incorporate both leveraged and unleveraged components, providing different risk-reward characteristics. The leveraged sleeve is designed to have a net leveraged internal rate of return (IRR) of 11%, whilst the unleveraged sleeve is intended to achieve a net unleveraged return of 7%. The fund has been categorized as an Article 8 Fund according to the Sustainable Finance Disclosure Regulation of the European Commission, which demonstrates Apollo’s dedication to responsible investment practices.

Apollo perceives the present market conditions as a favorable occasion for making investments in real estate loans. The rise in interest rates has caused a decrease in real estate values, resulting in a greater need for refinancing, recapitalization, and sales. Apollo’s impressive history of success in lending for European real estate puts it in a favorable position to take advantage of this market opportunity.

“We believe it is an opportune time to ramp up investment in European real estate credit,” said an Apollo spokesperson. “As traditional real estate lending sources in Europe continue to retrench, we are seeing a greater need for our flexible and innovative financing solutions.”

European Fund for Apollo’s Investments in Real Estate Debt I am a part of Apollo’s extensive European real estate platform, which consists of 43 skilled investment experts and manages assets worth $23 billion as of June 2023. Apollo launched a European real estate credit team in 2013, which has been in charge of deploying about $19 billion in European real estate credit.

Apollo oversees a global portfolio of commercial real estate loan assets valued at $40 billion, specifically focusing on European real estate credit allocations amounting to $10.8 billion. Apollo’s three worldwide real estate initiatives, comprising income ways and platforms, co-investments, and special situations, have a combined value of $13 billion and $15 billion, respectively. The commercial real estate credit strategy is the most significant among the three options.

Benjamin Eppley, the former head of European real estate financing, and Andrew Baum, the former head of European real estate, are both part of the seasoned leadership team of the fund. They possess extensive expertise in the European real estate industry and have played a crucial role in establishing Apollo’s impressive reputation.

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