Apollo is said to be targeting $1 billion for real estate fund

Apollo Global Management LLC has started talking to investors about its third U.S. real estate fund, according to people familiar with the matter. The firm is poised to formally begin raising at least $1 billion for the fund in January, said the people, who asked not to be identified because the details are private. New York-based Apollo’s newest U.S. real estate fund aims to deliver gross returns, or returns before fees, of 18% by investing in industrial, senior housing, hotels, manufactured housing and grocery-anchored retail properties and companies, the people said. An Apollo spokesman declined to comment. The fundraising coincides with a relatively slow period for institutional investors in real estate. Globally, $24 billion was raised by 53 funds in the three months ended Sept. 30, the lowest quarterly total in the past five years, according to data compiled by Preqin. Apollo last month agreed to buy the Holiday Inn San Francisco near Fisherman’s Wharf from RLJ Lodging Trust, one of the people said. RLJ disclosed the hotel’s sale for $75.3 million, without identifying its buyer. An RLJ representative didn’t immediately respond to requests for comment. Separately last month, Bloomberg News reported Apollo is seeking buyers for a portfolio of 1,400 single-family rental homes. Apollo’s real estate arm is part of the firm’s smallest unit, real assets, which had $15.4 billion under management as of Sept. 30. Its private equity and credit groups oversee $72.2 billion and $182.6 billion, respectively.