Apollo’s real estate investment trust sold a $9 billion loan portfolio, shrinking the top real estate lender’s holdings and calling its future into question.
Apollo Commercial Real Estate Finance agreed to offload the loan book to another Apollo subsidiary, Athene Holding, Bisnow reported. The sale price is equivalent to 99.7 percent of the value of the Apollo REIT’s loan commitments and represented a 23 percent premium on the company’s stock price.
The sale, which is expected to close in the second quarter, will leave only two loans on the books for the Apollo REIT, totaling $146 million. Those loans are expected to be repaid before the deal closes.
Apollo Commercial Real Estate will still have $1.4 billion in cash on hand and ownership equity in $466 million worth of buildings, including the Mayflower Hotel in Washington, D.C., and a 561-unit Brooklyn multifamily building.
But with little left to show in terms of loans, the REIT may have nowhere to go without a new asset strategy or M&A activity. Following the sale, the board is expected to explore strategic alternatives and the Apollo board may recommend the dissolution of the REIT if a fresh strategy isn’t unveiled by year’s end.
Over the years, Apollo Commercial Real Estate has proven to be a major player in the financing world. Among the notable deals, Michael Dell’s MSD Partners and Apollo Commercial Real Estate Finance provided a $536 million loan to Jeff Gural’s GFP Real Estate, Nathan Berman’s Metro Loft and Rockwood Capital for a 1,300-unit conversion of 25 Water Street in Manhattan.
The loss of the Apollo REIT may not be as problematic for the commercial real estate financing world as it seems on the surface, though. Insurance companies are also major capital providers to the industry and private equity exposure to these insurance companies is driving CRE activity.
Apollo acquired Athene in 2022 for $11 billion in an all-stock deal. Eastdil Secured advised Athene on the debt deal.
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