UNITED STATES - Apollo Real Estate Advisors was able to reach its capital raising target for its latest commingled fund, Apollo Value Enhancement Fund VII.
The real estate manager raised $758m (€474m) for the commingled fund. The targeted equity raise was $750m.
This fund shows that US pension funds are still interested in value-added real estate. Many investors believe that this kind of real estate will be more affected by the economic downturn than other areas creating new investment opportunities in the marketplace.
Commitments to the commingled fund include pension fund capital and are projected to achieve gross IRRs of 15% to 18%.
The total capitalisation for the fund is $2.5bn, achieved through the use of leverage and additional investment capability through co-investments.
Apollo Real Estate has two assets in the fund. One is 500 1st Street N.W. in Washington, D.C. The 129,000sf office building was purchased for $44.9m.
The real estate manager is planning renovation of approximately $7m. The property is leased to the US General Services Administration on behalf of the Department of Justice.
Apollo Real Estate has acquired the Hilton Dallas Lincoln Centre for $72.3m for Fund VII. This is a 500-room hotel in north Dallas. A $30m upgrade to the property is planned.
Fund VII is a commingled fund that only invests in the US. Most of the capital will be placed into the major centres in the country. The property types being considered are office, industrial, retail, apartments and hotels. The commingled fund has an eight-year term with some extension options.