Apollo's €2.7bn distressed debt fund to target European real estate

Apollo Global Management is seeking to raise €2.7bn for a European distressed debt fund that will invest in real estate non-performing loans (NPLs).

The Apollo European Principal Finance Fund III will invest in hospitality and residential real estate NPLs, alongside servicing and lending platforms, consumer loans, distressed shipping loans and small-to-medium-enterprise (SME) loans, according to one of its investors.

The focus will be on the UK, Ireland, Spain, Germany and Italy.

The Teachers’ Retirement System of Louisiana is committing $50m (€47.2m) to the fund, according to a board meeting document.

The pension fund was advised to invest in the fund by investment consultant Hamilton Lane on the basis of strong performance from previous funds in the series.

Hamilton Lane said the first and second funds generated net internal rates of return of 14.3% and 10.2%, respectively.

Louisiana Teachers is also committing $100m to Carlyle Realty Partners VIII, an opportunity fund.

The Carlyle Group is aiming to raise between $4bn and $5bn for the fund, according to Louisiana Teachers.

The fund will aim to invest in approximately 200 US real estate assets, using 70% leverage.

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