The Real Deal New York

Apollo, AR Capital call off $378M deal for Schorsch holdings

Transaction would have seen private equity giant control $19B in AR Capital assets

November 09, 2015 11:32AM

Leon Black Nicholas Schorsch

From left: Leon Black and Nicholas Schorsch

The deal that would have seen Leon Black’s Apollo Global Management acquire a majority of the holdings of Nicholas Schorsch’s AR Capital has fallen through.

The companies announced Monday that they mutually agreed to terminate the transaction — which would have seen Apollo own a controlling interest in a new company, AR Global Investments, representing a majority of AR Capital’s asset management business.

AR Global would have consisted of roughly $19 billion in assets currently overseen by AR Capital, with Apollo having agreed in August to acquire a 60 percent stake in the new company for $200 million in cash and $178 million in stock. The deal would have more than doubled Apollo’s real estate assets to around $27 billion.

The fallout from the failed transaction affects a variety of investment platforms and real estate investment trusts affiliated with Schorsch’s AR Capital, including the Michael Happel-led New York REIT. It also casts further doubt on the future of the embattled Schorsch’s real estate holdings, which were rocked by an accounting scandal last year.

New York REIT acknowledged the deal’s falling through on Monday, saying it “in no way affects our resolve to see our previously announced strategic initiatives through to a successful conclusion.” Those initiatives include Apollo co-founder Marc Rowan joining the New York REIT board last month.

Separately, New York REIT also announced the addition of two new directors to its board – Inlet Capital co-founder Keith Locker and Icahn Enterprises director James Nelson. The additions bring the REIT’s board of directors to seven members. – Rey Mashayekhi