Gradual Process of Restoring Liquidity to US Housing Market Continues.
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/ By Clive Minchom /
According to sources, Deutsche Bank is to provide a US$200 million facility to Apollo Global Management to purchase US single family homes for rental purposes. Such a loan will allow Apollo to acquire, renovate and then rent out the properties the source said, though the deal is not yet officially announced. Apollo, a private equity firm, was founded in 1990 and today manages US$114 billion worth of assets, and is an investor in Haven Realty Capital which already manages about 1, 000 houses in Nevada, Illinois and California.
Private equity firms are currently among the biggest purchasers of foreclosed houses now turned them into rental units. The reported new bank line to Apollo is at least the third by Frankfurt-based Deutsche Bank to money managers who are seeking to take advantage of the recovering housing market following its worst crash in 2008 since 1929.
Deutsche Bank in March also led a syndicate of lenders offering Blackstone Group, currently actually one of the largest U.S. owners of single-family homes with about 26, 000 houses, providing an expansion of a house-purchase credit line to $2.1 billion from $600 million. It also arranged a $100 million loan for asset manager Five Ten Capital the following month. A spokesperson for the bank, declined to comment on the new Apollo credit line, as did a spokesperson for New York-based Apollo itself.
It is not without a good deal of irony that Wall Street, having first having helped create the crisis of 2008 in the first place by inventing new forms of syndicated packaging of sub-prime mortgages sold to institutions, that proved to be systemically toxically risky, is now contributing to the solution with the purchasing of defaulted-homes in large volumes that are then syndicated out to private equity buyers as home rental packages. Indeed private equity firms are now among the biggest buyers of foreclosed and distressed homes across the U.S. to turn into rentals. This offers yield to institutions in a different – and much safer – way than the toxic mortgage packages themselves did, and moreover is in many cases doing so with the same underlying real estate assets. Plus ça change….
About Apollo Global Management
Apollo is a leading global alternative investment manager with offices in New York, Los Angeles, Houston, London, Frankfurt, Luxembourg, Singapore, Mumbai and Hong Kong. Apollo had assets under management of more than $114 billion as of March 31, 2013, in private equity, credit and real estate funds invested across a core group of nine industries where Apollo has considerable knowledge and resources.
Since its founding in 1990, Apollo grew to become one of the world’s largest alternative asset managers, based on an integrated business model which combines equity, credit, and real estate platforms and an extensive and diverse intellectual capital base together with an international presence. With a strong management team Apollo claims to operate the businesses they acquire in an integrated manner, to them an important point of difference from other alternative asset managers. Apollo states it also has expertise in distressed asset purchasing investing and an ability to invest capital and grow assets under management through troughs of economic cycles. The company also claims an “edge” in investing by combining industries expertise, the thorough understanding of complexity, and the use of strategic platforms to create and profit from proprietary investment opportunities. On the relationship side, in order to have successfully raised so much money Apollo has clearly demonstrated the value of its long-standing investor relationships, which include many of the world’s most prominent alternative asset investors. A demonstrated track record of generating attractive long-term risk-adjusted returns obviously also helps. It seems Apollo has built a major brand in the world of finance in the thirty years or so since its founding, and has also managed to maintain an extremely sound reputation along the way, which is not always easy in the world of private equity and finance.
About Leon Black
Leon Black is the Chairman of the Board, Chief Executive Officer and a Director of Apollo Global Management, LLC and a Managing Partner of Apollo Management, L.P. which he founded in 1990 to manage investment capital on behalf of a group of institutional investors, focusing on corporate restructuring, leveraged buyouts, and taking minority positions in growth-oriented companies. From 1977 to 1990, Mr. Black worked at Drexel Burnham Lambert Incorporated, where he served as Managing Director, head of the Mergers & Acquisitions Group and co-head of the Corporate Finance Department. He serves on the boards of directors of Apollo Global Management, LLC, Sirius XM Radio Inc., The New York City Partnership and the general partner of AP Alternative Assets.
Mr. Black is a trustee of The Museum of Modern Art, Mt. Sinai Hospital, The Metropolitan Museum of Art, Prep for Prep, and The Asia Society. He is also a member of The Council on Foreign Relations. Mr. Black is also a member of the boards of FasterCures and the Port Authority Task Force. He graduated summa cum laude from Dartmouth College with a major in Philosophy and History and received an MBA from Harvard Business School.
Two months after the May 2012 anonymous purchase of one of four versions of Edvard Munch’s The Scream, The Wall Street Journal reported that Black had been the one who had paid $119.9 million for the pastel, the highest price ever paid for a work of art at auction.
Black’s spending in the art world is said have transformed the international art market in recent years, along with other billionaire buyers. His collection is said to worth $750 million. His impressive and varied collection is housed in his home, dealers descriptions of his Park Avenue apartment describe it as practically brimming with an eclectic mix of art styles from an array of periods.
Black’s interest in art apparently derives from his mother and aunt, who was an art dealer. In October 2012 it was reported that he was acquiring the art book publisher Phaidon for an undisclosed amount. Phaidon, which is based in London, publishes about 60 books per year- mostly top quality coffee table art-books.