As the commercial real estate industry deals with unprecedented distress, powder-heavy firms are circling opportunities to make advantageous deals.
Apollo Global Management co-president James Zelter referenced commercial real estate lending when asked for a high-conviction call, according to his comments at the Bloomberg Credit Forum in London this week reported by the outlet. He suggested “marshaling resources” around all elements of the commercial sector as restructuring and refinancings come up.
Zelter noted Apollo’s focus would be on senior lending and that the firm was doing more deals with investment grade and large companies. He added that there would be “some big fat pitches out there.”
Apollo is one of New York City’s largest lenders, ranking sixth among the city’s top lenders in a recent analysis by The Real Deal recorded in city records between July 2022 and July 2023. Apollo Capital, an arm of Apollo Global Management, made $1.3 billion in loans over that period, $1.1 billion of which was diverted to commercial properties. The previous year, Apollo issued just $232 million in real estate loans in the city.
An example of Apollo’s eagerness to lend came about in the spring, when it teamed with Madison Realty Capital on a $400 million loan to refinance the Rabsky Group’s project at 625 Fulton Street in Fort Greene, Brooklyn. The project will deliver more than 1,000 housing units to the neighborhood.
Apollo Commercial Real Estate Finance, the company’s real estate investment trust, last month wrote off a junior mezzanine B loan at 111 West 57th Street in Midtown Manhattan. Apollo absorbed an $82 million hit from the write-off, which Apollo Commercial CEO Stuart Rothschild attributed to diminished sales velocity at the condo building, developed by Michael Stern’s JDS Development Group and Property Markets Group.
One of the biggest bones of contention for commercial real estate lenders and landlords alike is the dramatic rise of interest rates in the past 18 months. The Federal Reserve put a pause raising rates, a largely expected move in the agency’s fight against inflation.
— Holden Walter-Warner
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Development
New York
Rabsky Group signs $400M refi for Fort Greene project
Commercial
New York
Apollo writes off mezz at 111 West 57th Street