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Apollo raises $1.4bn for European real estate

Fundraising by European-focussed opportunity real estate vehicles has reached $5 billion this year with the closing of Apollo Real Estate Advisors' third dedicated Euro fund.

Apollo Real Estate Advisors has raised $1.4 billion (€998 million) for its third dedicated European vehicle, Apollo European Real Estate III.

The vehicle dwarfs its previous fund, which closed in 2005 on $600 million. It also takes European focussed opportunity funds raised to date this year up to the $5 billion equity level. According to proprietary data from PERE magazine, more than $3.5 billion of equity has been raised by private equity real estate funds to deploy in Europe so far this year, excluding Apollo's vehicle. Blackstone is also in the market raising a mega-fund exclusively focussed on Europe, according to sources.

In a statement today, Apollo said it would invest up to 40 percent of the capital in the UK, up to 40 percent in Western Europe, including France, Germany, Switzerland, Italy and Spain and between 20 and 25 percent in Central and Eastern Europe. The make-up of the fund is similar to Apollo’s fund II, although the latest vehicle is more than double the size.

Apollo did not name investors confirming only that interest had come from the US, Europe, the Middle East and Australia. New York State Common Retirement Fund has confirmed its investment in the fund though, revealing in its monthly transaction report it had invested $150 million in December 2007.

Apollo has acquired several assets for its latest real estate vehicle including a large site in Istanbul, Turkey, earmarked for a shopping center. The firm has teamed up with Multi Turkmall, the Turkish subsidiary of Morgan Stanley-owned pan European shopping developer Multi. The JV purchased the Merter shopping centre site for €260 million ($380 million) with a further €325 million ($470 million) committed to its development. The firm has also partnered the Citrus Group in acquiring a portfolio of 15 up-market care homes in the north of England from Southern Cross Healthcare Group in a sale and leaseback transaction for £95 million ($185 million) and a joint venture with Taurus Eurasia in order to acquire and redevelop residential and commercial assets in Istanbul.