Apollo targets €1bn for European real estate debt fund

Apollo Global Management is targeting €1bn (£854.8m) for a European real estate debt strategy, PERE has reported.

Apollo Real Estate Debt – Europe Fund I is the firm’s first commingled fund dedicated to European real estate loans, according to PERE.

Apollo has been investing in real estate in 2009 and set up the credit team in 2013. It managed $48bn in commercial real estate credit at the end of 2023, of which $11bn was in Europe.

The new fund will target senior secured, subordinated and whole loans and aim to deliver a net levered IRR of 11 per cent. The strategy is set to be classified as an Article 8 fund under the Sustainable Finance Disclosure Regulation.

Apollo declined to comment.

Read more: $500bn opportunity for commercial real estate private debt

The €1.5trn real estate finance was once dominated by the banks, but alternative lenders now represent around 39 per cent of the outstanding debt in the UK and between 10 and 15 per cent in Continental Europe.

And Apollo is not the only group looking to benefit from the increased opportunity. M&G recently raised £350m in a first close for its real estate debt funds, seeking potentially double-digit returns available from direct commercial real estate loans in Europe.

But there are also concerns, with some warning that the commercial real estate debt market is nearing a “reckoning” as many loans reach maturity.

Read more: Commercial real estate debt crisis looms as loans mature

Read more: M&G closes on £350m real estate debt funds