LONDON, May 19 (Reuters) – Apollo Real Estate Advisors said on Monday that it was planning a $1 billion European real estate debt fund after absorbing the team from niche firm Stoneleigh Capital to run its new European property debt finance business.
In an email, the U.S. private equity group said it was “looking to fill the void left by lenders' retreat” by offering mezzanine credit finance to real estate investors and was eyeing opportunities to buy distressed property debt from banks.
Mezzanine debt is often used in funding leveraged buyouts by private equity firms. It ranks below senior debt but above equity.
Apollo said any future European property debt fund would be comparable with its existing U.S. property debt fund, Apollo Real Estate Finance Co., which has around $1 billion in capital commitments.
Apollo said it had hired David Ferguson and a team of debt specialists from Stoneleigh Capital — a joint venture between Ferguson and the Canadian Pension Fund CDP.
Apollo said it was eyeing various opportunities in all of the biggest economies in the European Union — including residential, hotel, office, retail and industrial property-related debt.
“There are substantial opportunities, particularly in western Europe and we already have a pipeline of transactions we are reviewing,” said William Benjamin, managing director of Apollo Real Estate Advisors in Europe.
“We see this as a major source of revenue for the foreseeable future.” In an interview with Reuters in March, Benjamin played down the possibility of an opportunistic European property debt fund because Europe was less “activist” than the United States.
(Reporting by William Kemble-Diaz and Sinead Cruise in London, Jonathan Stempel in Bangalore; Editing by David Holmes and David Hulmes)