Apollo Closes $758M Investment Fund

NEW YORK CITY-Locally based Apollo Real Estate Advisors has closed Apollo Value Enhancement Fund VII LP, with a total of $758 million. The flexible investment strategy of Apollo’s Value Enhancement Funds is to focus on existing, income-producing US properties which present opportunities to increase value.

Apollo Value Enhancement Fund VII will continue Apollo’s value-added strategy of investing in real estate assets primarily in major markets in the US. The fund will seek to create a diversified portfolio across major property types, according to Steven Wolf, Apollo, a partner who oversees the firm’s Value Enhancement Funds. The fund was formed in August 2007, Wolf tells GlobeSt.com, and the initial target was $750 million, which Apollo achieved.

Fund investments include 500 1st St. NW in Washington, DC, a 129,000-sf office building. The nine-story building, which also has two underground parking levels, is located on 1st St. NW and East Street NW, just two blocks from Union Station and four blocks from the US Capitol. Apollo plans approximately $7 million in building improvements in conjunction with the lease renewal of the current tenant, the US General Services Administration on behalf of the Department of Justice, which currently has a 10-year lease, Wolf says in a prepared statement.

Apollo Value Enhancement Fund VII also purchased the 500-room Hilton DallasLincoln Centre, as GlobeSt.com recently reported, for $102 million from Ashford Hospitality Trust Inc. The $72-million sale was been bundled with a $30-million cap-ex plan for the 3.2-acre hotel component of the landmark 1.6-million-sf office complex. The 20-story glass curtained hotel tower is located prominently within Lincoln Centre, a premier class A complex in North Dallas encompassing 1.6 million sf.

“We are very gratified with the response from our investors to the new Value Enhancement Fund,” Wolf said. “We continue to see compelling opportunities where our team can apply its deep real estate expertise to add value in the current environment.” Wolf said Apollo plans approximately $30 million in hotel renovations that will include renovated guest rooms and bathrooms; the construction of 13,000 sf of additional ballroom, meeting and pre-function space; and the reconfiguration and rebranding of the existing food and beverage outlets.

Apollo acquired the Value Enhancement Funds in 2004. Since the inception of the first fund in 1993, Value Enhancement Fund I through VI have invested in more than 140 transactions with an aggregate value of $5.9 billion. According to the company’s website, its investment approach uses a bottom-up real estate analysis but considers factors such as the macroeconomic environment, the direction of the business cycle and local real estate market conditions. The firm, which pursues assets that are held by a variety of holder-types, notes that its objective it to create a balanced portfolio of opportunistic assets as far as geographical spread and asset class is concerned.