Apollo Management has struck a deal to buy Citigroup’s real estate investment arm, Citi Property Investors, effectively tripling the value of Apollo’s real estate assets, according to Bloomberg news. Its purchase of Citi Property will yield 65 real estate investments valued at $3.5 billion for the private equity investment firm. Ironically, it’s this real estate portfolio that Apollo real estate sector head Joseph Azrack helped assemble as Citigroup’s property investment director from 2004 to 2008. Matthew Anderson, a partner at research firm Foresight Analytics, said that Apollo may have brought Citigroup a certain comfort in the deal. “Having it go to Apollo is in a certain sense returning it to the previous management,” Anderson said. Citigroup’s move to sell comes on the heels of mounting pressure from federal officials, who have urged the company to shed some of its assets. The Treasury Department currently maintains a 27 percent ownership of the company.

Jewelry retailer Zales wants to sell the leases on up to 12 of its New York City stores, including those in prime locations like Fifth Avenue and Herald Square, in an attempt to raise capital, Reuters reported. The jeweler, which has been plagued by declining sales and market share, is also looking to unload leases on two stores each in the Bronx, Brooklyn and Queens, a listing on RCS Real Estate Advisors showed. Whether the jeweler will leave the stores or merely reduce its obligations through the sales was unclear. Zales, which has only $67 million left on a $600 million line of credit that requires $50 million in reserves, hired RCS last year to help restructure its lease portfolio and reduce costs. Last week, the company said it expects to have its finances back in order by May. The source of Zales’ new capital and financial stability could wind up being private equity firm Apollo Management, which is reportedly interested in taking on a stake. Zale closed 187 stores in 2009, but CEO Theo Killion said last week he was not expecting a “significant” number of store closings this year. [Reuters via NYT]