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Apollo Global: How Investor Interest in Real Estate Could Help

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What to expect in Q2 2018

In the second half of 2018, Apollo Global Management’s (APO) real estate business could see a negative impact due to expectations of interest rate hikes. Higher rates could make borrowing expensive, and investors might resist real estate investments. A fall in investments could, in turn, impact prices.

However, investors might consider real estate investments despite higher rates. That’s because some investors might opt to deploy their capital toward real estate since equities are expected to be volatile amid trade tensions. If that happens, it could result in higher prices, which could boost the returns of Apollo’s real estate funds.

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Q1 2018 performance

Apollo’s real assets segment ended the first quarter with managed assets of $13 billion. In the same period, the segment saw inflows of $1.1 billion. It had management fees of $17.9 million in the first quarter compared to $16.3 million in Q1 2017.

The segment’s revenues declined from $20.7 million in Q1 2017 to $18 million in Q1 2018 due to declining advisory and transaction fees, principal investment income, and performance fees. In the first quarter, the segment’s realizations were $412 million.

As of July 25, Apollo Global Management has a market capitalization of $14.3 billion. Other alternative asset managers (XLF) have the following market caps:

  • KKR & Co. (KKR): $13.7 billion
  • Carlyle Group (CG): $7.9 billion
  • Blackstone Group (BX): $42.8 billion
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