Apollo targeting US$1b for US real estate fund

New York

APOLLO Global Management has started talking to investors about its third US real estate fund, according to people familiar with the matter.

The firm is poised to formally begin raising at least US$1 billion for the fund in January, said the people, who asked not to be identified because the details are private.

New York-based Apollo's newest US real estate fund aims to deliver gross returns, or returns before fees, of 18 per cent by investing in industrial, senior housing, hotels, manufactured housing and grocery-anchored retail properties and companies, the people said. An Apollo spokesman declined to comment.

The fundraising coincides with a relatively slow period for institutional investors in real estate.

Globally, US$24 billion was raised by 53 funds in the three months ended Sept 30, the lowest quarterly total in the past five years, according to data compiled by Preqin.

Apollo last month agreed to buy the Holiday Inn San Francisco near Fisherman's Wharf from RLJ Lodging Trust, one of the people said. RLJ disclosed the hotel's sale for US$75.3 million, without identifying its buyer.

Separately last month, Bloomberg News reported Apollo is seeking buyers for a portfolio of 1,400 single-family rental homes.

Apollo's real estate arm is part of the firm's smallest unit, real assets, which had US$15.4 billion under management as of Sept. 30.

Its private equity and credit groups oversee US$72.2 billion and US$182.6 billion, respectively. BLOOMBERG