'Apollo Management to buy Citigroup's property unit'

Apollo Management has agreed to buy Citigroup's real estate investment unit, according to a report by newswire Bloomberg.

The purchase of Citi Property Investors will more than triple New York-based Apollo’s real estate assets, said the person, who asked not to be named because the negotiations are private. The portfolio includes 65 investments in 26 countries with a net asset value of $3.5 billion, the person said.

Citigroup, which is 27 percent-owned by the U.S. Treasury Department, has been under pressure from regulators to sell assets to shore up its balance sheet. The New York-based bank valued the property assets at $12.5 billion as of June, according to its Web site.

“Apollo is getting a lot of good assets with a lot of good sponsors because I think Citi was good at it,” said Gary Mozer, principal at George Smith Partners, a real estate investment banking firm in Los Angeles. “They were just a victim of the times.”

U.S. commercial prices dropped 41 percent from their October 2007 peak through the end of last year, Moody’s Investors Service said Feb. 22. Citi’s property portfolio includes assets in Asia, Europe and the U.S., the person familiar with the deal said.

Apollo signed a letter of intent and the deal may take as long as three months to close, the person said. The company plans to keep the Citi Property staff, according to the person.

Kelly Nugent, an outside spokeswoman for Apollo, and Shannon Bell, a Citigroup spokeswoman, declined to comment.