NEW YORK CITY-Completing a deal first reported eight months ago,an affiliate of Apollo Global Real Estate Management LP hasacquired Citi Property Investors, the real estate investmentmanagement group of Citigroup. Terms of the transaction were notdisclosed; CPI had more than $3 billion in assets under managementas of June 30.

As part of the transaction, a majority of CPI’s employees will joinAGRE, which will take over the management of a number of CPI’sfunds, including its flagship funds, CPI Capital Partners AsiaPacific LP, CPI Capital Partners Europe LP and CPI Capital PartnersNorth America LP. CPI has locations in Asia, Europe and NorthAmerica.

For some of those employees, the deal could be deja vu all overagain, as Joseph Azrack, AGRE’s managing partner and head since itsformation in 2008, was formerly president and CEO of CPI from 2004to ‘08. “I believe the global reach of this combined platform willstrengthen our ability to serve our investor base while growing aswe do so,” Azrack says in a release. I am also pleased to note thatwith the completion of this transaction, we have rounded out AGRE’sleadership team.”

Roger Orf, who most recently served as the president and CEO ofCPI, will now head up the AGRE Europe team. In that capacity, hejoins Ray Mikulich, head of AGRE North America, and Grant Kelley,head of AGRE Asia Pacific.

The combined group will be headquartered in New York with officesin London, Hong Kong, Mumbai and Los Angeles. The firm’s realestate investment team will work integrally with other Apolloinvestment groups to source, underwrite, structure and manageinvestments in commercial real estate assets, companies andoperating platforms, according to a release.

Both Bloomberg and the Wall Street Journal reported inMarch that an agreement had been reached for Apollo to buy CPI, andwas expected to close within a few months. Bloomberg reported thatthe move would more than triple the value of the private-equityfirm’s property assets, giving Apollo 65 real estate investments in26 countries with a net asset value of $3.5 billion.

At one time, that net asset value was considerably higher. TheWSJ reported that the CPI portfolio’s worth plummeted froma high of nearly $13 billion following Azrack’s departure. InMarch, the WSJ said CPI’s North America-focused fund,which raised $600 million from investors, declined in value at anaverage rate of 28.2% a year between December 2006 and June 2009,according to the annual report from New York State TeachersRetirement System.

CPI is part of Citi Holdings, a division formed in January 2009 tomanage illiquid assets and businesses that Citigroup plans to winddown as it focuses on core operations. The financial services giantat that time split into Citicorp and Citi Holdings, and CEO VikramPandit said in a statement, “In light of the opportunities we seein the market today, we believe this new structure will provide awide range of options going forward to continue strengthening ourcore franchise.”

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Law firm Paul Hastings represented Citi in Friday's CPI sale,while Sullivan & Cromwell advised Apollo.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.