US - Apollo Real Estate Advisors is hoping to take advantage of the turbulent market conditions to seize opportunities in distressed debt funds for the benefit of pension funds, but buying debt funds at discounted prices from banks.
The international real estate fund manager with USD $11.6bn of equity commitments, currently operates a mixture of valued-added, opportunistic and debt funds, but plans to concentrate more on senior debt funds, according to Richard Williams, vice president at Apollo Real Estate Advisors.
"The financial crisis has provided us with an opportunity," said Williams.
"We see there are a lot of banks that need to sell their debt. Right now, the paper is cheaper than the brick and as the crisis evolves the opportunities seem more crystallised.
"We see senior debts as being the opportunity in the market. Mezzanine debt forces you to scrape the bottom of the market, so we feel that senior loans offer the best risk-adjusted opportunities at the moment," continued Williams.
The firm has committed just $6.2m in equity to opportunistic and debt funds to date.
But Andrea Orlandi, director at Apollo Real Estate Advisors, believes the financial crisis has caused the firm's investment strategy to evolve and insistd it is "still in the market to buy assets".
"In the medium to long-term, this is very good for us. There is less liquidity, less capital and with all the volatility more investors are pulling out of the market, so it is a good time for opportunity funds to be in the market," said Orlandi.
Apollo Real Estate Advisors announced last week it is changing its name to AREA Property Partners from 2009. (See earlier IPE Real Estate story: Apollo plans to rebrand)
The move is designed to eliminate confusion between the firm and its previous affiliations with Apollo Global Management, which ended in 2000.
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