Case study: Does track record matter?
Apollo grew its real estate AUM from $77B to $110B this week with its acquisition of Bridge. But what did it get?
---- Quick background ----
Six months ago, Apollo agreed to buy Bridge for $1.5B. The deal closed earlier this week.
---- M&A rationale ----
Apollo's stated rationale when the deal was announced:
-- "Massive opportunity in real assets" / $10-12T in addressable market
-- "Accelerates our real estate investing and origination capabilities"
-- "Highly complementary strategic fit"
-- "Strong alignment with established franchise"
-- "Financially attractive for shareholders"
-- "Turnkey access to new segments of real estate landscape"
-- Grows Apollo's real estate AUM from $77B to $110B
Interestingly missing from Apollo's acquisition presentation?
Any mention of Bridge's track record.
---- Track record details ----
Here's Bridge's fund track record by strategy:
-- SFR: 13% IRR ($325M)
-- Secondaries*: 12% IRR ($6.3B)
-- Multifamily: 11% IRR ($5.5B)
-- Debt Funds: 8% ($5.6B)
-- Workforce Housing: 5% ($2.4B)
-- Seniors Housing: 0% ($1.5B)
-- Industrial: -3% ($336M)
-- Opportunity Zones: -4% ($950M)
-- Office**: -36% ($781M)
* Bridge's secondaries experience came from its acquisitions of secondaries manager Newbury for $320M in 2024.
** Office IRR experience is worse than presented because Fund II's IRR was so rough the calculation was NA (launched in 2020).
---- Takeaways ----
1. Bridge lit up the market with its fundraising:
Bridge raised $16B over the last five years.
Investors were particularly attracted to its sector specific strategies.
2. Overall IRR experience:
Total: 7% average IRR on $24B of committed capital.
Without Newbury: 4% IRR on $18B.
Without Newbury and Debt: 2% IRR on $12B.
3. Pays to be in the right place at the right time:
Bridge's challenges were largely timing related. Most of its funds were launched near the peak of the market. But something else that comes from peak capital during consolidation? Big managers will pay to get bigger.
Bridge's stock price is up about 20% since the Apollo acquisition was announced.
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