UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
811-22933
(Investment Company Act file number)
Apollo Diversified Real Estate Fund
(Exact name of registrant as specified in charter)
Apollo Global Management, Inc.
9 West 57th Street, New York
New York 10019
(Address of principal executive offices)
(212) 515-3200
(Registrant's telephone number, including area code)
ALPS Fund Services, Inc.
1290 Broadway, Suite 1000
Denver, CO 80203
(Name and address of agent for service)
Copy to:
Terrence O. Davis, Esq.
DLA Piper LLP
1201 W Peachtree St NE
Suite 2900
Atlanta, GA 30309
Date of fiscal year end: September 30
Date of reporting period: October 1, 2023 – September 30, 2024
Item 1. Reports to Stockholders.
APOLLO DIVERSIFIED REAL ESTATE FUND
Table of Contents
| Shareholder Letter | 3 |
| Portfolio Update | 17 |
| Schedule of Investments | 19 |
| Statement of Assets and Liabilities | 23 |
| Statement of Operations | 24 |
| Statements of Changes in Net Assets | 25 |
| Statement of Cash Flows | 27 |
| Financial Highlights | 28 |
| Notes to Financial Statements | 39 |
| Report of Independent Registered Public Accounting Firm | 54 |
| Additional Information | 55 |
| Trustees and Officers | 56 |
| Service Providers | 58 |
| Privacy Notice | 59 |
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APOLLO DIVERSIFIED REAL ESTATE FUND
Shareholder Letter (Unaudited)
| Randy I. Anderson, Ph.D., CRE | Spencer J. Propper |
| | |
| Portfolio Manager | Portfolio Manager |
| Apollo Diversified Real Estate Fund | Apollo Diversified Real Estate Fund |
Dear Fellow Shareholders,
We are pleased to present the Apollo Diversified Real Estate Fund (the “Fund”) annual report. We greatly appreciate the support of our shareholders, and we seek to remain true to the Fund’s stated objective of delivering returns comprised of income and appreciation with moderate volatility and low correlation to the broader markets.
The Fund’s favorable portfolio positioning has continued to benefit performance during the year, with the Fund’s load-waived Class A shares delivering a total net return of +4.87% year-to-date through September 30, 2024.1 This performance is a testament to the Fund’s actively managed investment strategy that seeks to maximize return per unit of risk across the four quadrants of the commercial real estate investable universe (private equity, private debt, public equity, and public debt). The Fund’s strong performance has been a standout, with the Fund’s load-waived Class A shares delivering the best returns among real estate interval funds in the trailing 1-year, 3-year, 5-year, and since Fund inception periods as of September 30, 2024.1 As discussed later in this letter, this outperformance has been attributable to the Fund’s dynamic approach to portfolio allocation and relative value framework. From the Fund’s inception on June 30, 2014, through September 30, 2024, the Fund’s load-waived Class A shares generated a(n):1
|  | Total cumulative return of 76.73% and a 5.71% annualized return. |
| | Sharpe ratio of 0.88. |
| | Standard deviation of 4.56%, which is in line with the standard deviation for the Bloomberg U.S. Aggregate Bond Index (4.89%). |
| | Alpha of 1.98%. |
| | Beta of 0.17. |
The Federal Reserve’s (the “Fed”) statutory mandate is to promote maximum employment and stable prices, or what is commonly called the “dual mandate”.3 The surge in demand, coupled with excess savings consumers accumulated during and following the COVID pandemic, drove prices of goods and services higher, reaching a peak year-over-year rate of change of 9.1% in June of 2022.4 After more than two years in the most recent rate hiking cycle, much progress has been made in the Fed’s efforts to moderate price appreciation. Inflation appears to be cooling at a consistent pace, with the September 2024 year-over-year inflation reading of 2.4% registering far below the peak from over two years ago.4 Despite more restrictive capital market conditions, the U.S. economy has continued to expand with Q3 real Gross
Past performance is not indicative of future results. Shares may be worth more or less than original cost when redeemed. Investing involves risk, including loss of principal. Actual results may vary. Fund performance based on load-waived, Class A shares and does not reflect any sales charge. The maximum sales charge for Class A shares is 5.75%. As of 9/30/24, the Fund’s load-waived Class A share had a ten-year annualized return of 5.69%, a five-year annualized return of 4.21% and a one-year return of 7.82%. As of 9/30/24, the Fund’s Class A share with load (adjusted for initial maximum sales charge of 5.75%) had a since inception annualized return of 5.10%, a ten-year annualized return of 5.06%, a five-year annualized return of 2.98%, and one-year return of 1.62%. Per the Fund’s most recent prospectus the total annual expense ratio without any fee waiver or reimbursement is 2.03% for Class A shares. Certain of these returns reflect the impact of fee waivers and expense limitation and reimbursement agreements in effect during the given period. The Fund’s current expense limitation and reimbursement agreement will remain in effect at least through May 31, 2025. The fees and expenses provided herein are as of the date of the Fund’s most recent prospectus and are qualified in their entirety by the Fund’s prospectus. Actual expenses may be greater or less than shown. Fees and expenses can vary materially. These expense figures should not be considered a representation of future expenses. Subject to change without notice. Fund returns presented herein include the reinvestment of distributions and are net of all Fund expenses, including management fees and general and administrative expenses, but exclude any applicable share class sales charge and fees paid by investors to their financial intermediary. Fund returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. If the deduction of such fees was reflected, the performance would be lower. The most recent performance is available at www.apollo.com/adref or by calling 888.926.2688. Due to financial statement adjustments, performance information presented herein for the Fund differs from the Fund’s financial highlights which are prepared in accordance with U.S. GAAP. Such differences generally are attributable to valuation adjustments to certain of the Fund’s investments which are reflected in the financial statements.
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APOLLO DIVERSIFIED REAL ESTATE FUND
Domestic Product growing by 2.8%.5 The U.S. consumer has been the backbone of this economic strength, benefitting from favorable labor market dynamics which have driven strong job and wage growth with average hourly earnings increasing 4.0% year-over-year as of September, outpacing inflation during the same period.4 September’s jobs report was robust with the unemployment rate falling 10 basis points month over month to 4.1%, while the labor force expanded with nonfarm payrolls rising by 254,000 in September, beating consensus estimates.4 With inflation moderating, the Fed decided to cut the policy target rate by 50 basis points following their meeting on September 18, 2024, the first cut in four years, in an effort to balance their dual mandate and achieve a so called “soft landing”. Market participants continue to analyze and scrutinize real-time economic readings to calibrate the magnitude of additional cuts moving forward. Ongoing adjustments to Fed policy, the results of the U.S. Presidential election, and continuing global geopolitical conflicts all have the potential to drive additional volatility moving into the end of the year, which, in our view, may present an attractive entry point for certain risk assets.
Increased investment activity, steadying property valuations, and moderating long-term yields continue to provide a favorable backdrop for commercial real estate fundamentals, with many property sectors registering occupancy rates and net operating income growth in line with or better than long-term averages. This relative strength in operating fundamentals has not been uniformly felt across property types, resulting in heightened levels of dispersion in property sector performance. In contrast to many headlines claiming that the real estate industry faces broad challenges, we have been writing for some time that specific property types (e.g. office) and certain high-risk strategies account for the majority of headwinds. Property sectors that benefit from strong secular demand (demographic changes, technological innovation, and shifting consumer behavior) have demonstrated superior operating fundamentals when compared to property types that rely on broad economic growth to drive positive investment outcomes. Sectors that benefit from secular demand drivers include the industrial, multifamily, and specialty (such as student housing) property types and comprise the Fund’s high-conviction themes. As of October 1, 2024, 91% of the Fund’s private equity real estate portfolio was allocated to our high-conviction sectors.2 In an environment characterized by disparate performance across property sectors, active management continues to drive outsized investment performance. During the trailing one-year period ended June 30, 2024, the Fund’s private real estate portfolio delivered +4.18% of excess return relative to the NCREIF ODCE Index, an illustration of the Fund’s favorable portfolio positioning.6
Property fundamentals for the industrial sector remained healthy in the third quarter of 2024, driven by strong demand from ongoing e-commerce adoption and supply chains adjusting to accommodate the rapid delivery of goods to end consumers. Further, on- and near-shoring trends continue to support demand for well-located, well-distributed, and more resilient supply chain networks that can adapt to the changing global manufacturing landscape. In recent quarters, elevated new supply has softened fundamentals in certain markets, with the national vacancy rate increasing 10 basis points quarter-over-quarter to 5.8% as of Q3 2024, but remaining well below the long-term average according to data from CBRE Econometric Advisors.7 Leasing activity has observed some recent positive momentum with Amazon returning to many major markets as they seek to double the number of same- and next-day delivery centers, further bolstering their supply chain capacity and efficiency.8 According to Prologis Research, completions are expected to decrease by 42% in the second half of 2024 compared to the first half of the year, with low levels of new deliveries extending through early 2025.9 Limited new supply coupled with ongoing secular demand growth may create a favorable operating environment for logistics real estate moving forward.
The multifamily property type delivered solid operating fundamentals during the third quarter of 2024. The national occupancy rate expanded by 20 basis points quarter-over-quarter, registering at 95% as of Q3 2024 according to data from CBRE Econometric Advisors.7 Net absorption continues to surge with approximately 153,000 units being absorbed in the third quarter, marking the highest quarterly reading since 2021 and remaining well above the long-term average, according to CBRE Econometric Advisors.7 Despite elevated deliveries over the past two years, the U.S. remains grossly undersupplied in number of housing units, an issue that has been nearly two decades in the making. Further, new construction starts in Q3 have fallen by 29% from the recent historical average, according to data from the Census Bureau, as inflationary pressure and elevated rates provide headwinds to development.10 The decline in new starts is expected to reduce annual deliveries by 22% and 14% in 2025 and 2026, respectively, based on data from CBRE Econometric Advisors.7 Additionally, the for-sale housing market continues to grapple with availability and affordability challenges. Availability of for-sale homes remains low as many existing homeowners have in-place mortgages at interest rates far below prevailing market rates, limiting mobility. Affordability for new potential homebuyers also remains a challenge as increased borrowing costs coupled with still elevated home prices make homeownership increasingly less affordable particularly when compared to rental housing alternatives.
The specialty sector is comprised of property types that are built for a specific purpose and generally benefit from unique supply and demand characteristics. One such property type is student housing, which consists of properties that provide housing for college and university students as an alternative to traditional on-campus housing. Institutional quality student housing assets are generally located in close proximity to campus and nearby entertainment, offering students a professionally managed, highly-amenitized property that is often preferred by both students and parents alike. The student housing property type benefits from structural demographic demand drivers as more students attend higher education institutions, particularly the top ranked public and private colleges and universities across the country. According to data from RealPage Analytics, roughly 92.8% of the beds at the core 175 universities tracked by RealPage were leased for the Fall 2024 academic year as of August, marking the end of the pre-lease season.11 This result remained ahead of pre-COVID norms albeit slightly below the robust pre-leasing rate observed in the years immediately following the pandemic.11
Past performance is not indicative of future results. Holdings and allocations are subject to change without notice. Diversification does not eliminate the risk of experiencing investment losses.
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APOLLO DIVERSIFIED REAL ESTATE FUND
Within retail, grocery-anchored (necessity) neighborhood centers remain a standout in terms of operating fundamentals and performance as strong consumption has been supportive of retail activity broadly. The availability rate for neighborhood centers was flat quarter-over-quarter, registering at 6.5% as of Q3 2024 and remaining at an all-time low for the property type based on data from CBRE Econometric Advisors.7 New completions remain historically low with just 0.05% of existing stock being added in the third quarter, far below the historical average.7 Muted new supply has persisted in recent years allowing owners to drive rental rate growth. According to data from CBRE Econometric advisors, rents for neighborhood centers grew by 2.6% year-over-year as of Q3 2024, which is above the long-term average.7 The current supply dynamic within the retail sector may provide stability in operating fundamentals in the near-term as tenants compete for the existing stock.
The office property type remains the most challenged across the commercial real estate sectors. The national vacancy rate was flat quarter-over-quarter at 19.0% as of Q3 2024, remaining at the highest level since the early 1990s according to data from CBRE Econometric Advisors.7 However, the sector delivered the second consecutive quarter of positive net absorption during Q3 2024, snapping a preceding streak of six consecutive quarters of negative net absorption.7 Moving forward, elevated vacancy coupled with ongoing reassessments of space needs by occupiers is anticipated to remain a headwind for the property type. Performance is expected to be bifurcated across quality and location with the highest quality assets in the best locations being relative winners. Commoditized, Class B and C office assets are likely to continue to bear the brunt of the challenges facing the sector going forward. It is important to note that the Fund has consistently been underweight the office property type relative to the NCREIF ODCE Index, which has been a contributor to positive relative returns. The Fund’s portfolio management team has positioned the Fund in favor of our high-conviction themes leaving private equity office exposure at approximately 200 basis points of the Fund, as of October 1, 2024.2
The Fund remains grounded in the research that underpins the investment strategy. We believe that a combination of both public and private real estate in a portfolio may provide important diversification benefits as well as risk mitigation and alpha generation opportunities. The Fund’s portfolio management team employs a dynamic active management approach to asset allocation through the utilization of a relative value framework which analyzes opportunities across the real estate investable universe: private equity, private debt, public equity and public debt. This approach allows the Fund to shift allocations as conditions change, to benefit from periods of pricing dislocation. Over the past several quarters, the Fund’s portfolio management team has maintained an elevated level of exposure to publicly traded REITs as pricing appeared favorable for these securities. This positioning has positively contributed to overall Fund returns as publicly traded REITs have rallied significantly over the past year. Publicly traded REITs generally have historically performed well following a Fed policy shift, returning +9.3%, +13.9%, and +20.1% in the subsequent 90-day, 180-day, and one-year periods following the end of Fed tightening, outperforming publicly traded equities in each period.12
As always, the Fund’s portfolio management team, along with the Fund’s underlying private fund partners, continue to seek attractive risk-adjusted return opportunities across real estate markets. We believe the Fund’s portfolio positioning, focus on high-quality assets within the Fund’s high-conviction sectors, underlying diversification and ability to take advantage of opportunities across both public and private markets, may help deliver a differentiated return profile to our investors. We are excited about the Fund’s future prospects and believe it is well positioned to take advantage of investment opportunities as they arise.
We thank you for your continued confidence and support.
| Sincerely, | | | |
 | |  | |
| Randy I. Anderson, Ph.D., CRE | | Spencer J. Propper | |
| Portfolio Manager, Apollo Diversified Real Estate Fund | | Portfolio Manager, Apollo Diversified Real Estate Fund | |
Apollo Diversified Real Estate Fund is a closed-end management investment company that is operated as an interval fund. Limited liquidity is provided to shareholders only through the Fund’s quarterly repurchase offers for no less than 5% of the Fund’s shares outstanding at net asset value. The Fund is only suitable for investors who can bear the risks associated with the limited liquidity of the Fund and should be viewed as a long-term investment. There is no guarantee that an investor will be able to sell all the shares that the investor desires to sell in the repurchase offer. There is no secondary market for the Fund’s shares and none is expected to develop. Please see the Fund’s current prospectus for further information on the Fund’s objective, strategy and risk factors.
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APOLLO DIVERSIFIED REAL ESTATE FUND
Overall Portfolio Exposure as of October 1, 2024 (Unaudited)
| Private Real Estate Exposure13 | 58% |
| Cortland Growth and Income Fund | 5.35% |
| CBRE U.S. Logistics Partners | 5.03% |
| Morgan Stanley Prime Property Fund | 3.66% |
| Clarion Lion Properties Fund | 3.55% |
| Ventas Life Science and Healthcare Real Estate Fund | 3.45% |
| CBRE U.S. Core Partners | 3.23% |
| TA Realty Logistics Fund | 3.03% |
| Dream U.S. Industrial Fund | 3.00% |
| Oaktree Real Estate Income Fund | 2.52% |
| Clarion Lion Industrial Trust | 2.46% |
| Article Student Living Income and Growth Fund14 | 2.06% |
| Prologis Targeted U.S. Logistics Fund | 1.98% |
| TA Realty Core Property Fund | 1.91% |
| Clarion Gables Multifamily Trust | 1.80% |
| Manulife U.S. Real Estate Fund | 1.02% |
| Stockbridge Smart Markets Fund | 1.01% |
| Affinius U.S. Government Building Fund | 0.80% |
| Sentinel Real Estate Fund | 0.66% |
| Sagard U.S. Property Fund15 | 0.59% |
| Prudential PRISA | 0.53% |
| Heitman America Real Estate Trust | 0.28% |
| BGO Diversified U.S. Property Trust | 0.24% |
| UBS Trumbull Property Fund | 0.19% |
| Private Real Estate Equity | 48.35% |
| CBRE U.S. Credit Partners | 2.45% |
| Third Point Private CRE Credit Fund | 2.34% |
| Brookfield Senior Mezzanine Real Estate Finance Fund | 1.61% |
| JP Morgan U.S. Real Estate Core Mezzanine Debt Fund | 0.87% |
| ARES Real Estate Enhanced Income Fund | 0.83% |
| Heitman Core Real Estate Debt Income Trust | 0.76% |
| CrossHarbor Strategic Debt Fund | 0.62% |
| Voya Commercial Mortgage Lending Fund | 0.13% |
| Private Real Estate Debt | 9.61% |
| Public Real Estate Exposure & Cash16 | 42% |
| Public Real Estate Equity | 37.44% |
| Cash and Short-Term Investments | 1.81% |
| Preferred Securities | 1.76% |
| Mortgage-Backed Securities | 1.03% |
Diversification does not eliminate the risk of experiencing investment losses. Holdings and allocations are subject to change without notice.
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APOLLO DIVERSIFIED REAL ESTATE FUND
Private Fund Diversification as of October 1, 2024 (Unaudited)
Through its investment in private funds, Apollo Diversified Real Estate Fund offers access to private markets and immediate diversification by property sector, geography, and manager.
| Institutional Real Estate Managers:17 | 31 |
| Investments:17 | 3,891 |
| Gross Asset Value:17 | $253.13 Billion |
| Occupancy:18 | 93% |
| Leverage:18 | 34% |
Private Real Estate Exposure:
Geographic Diversification17
| Property Sector | Percentage
of Total Fund
Assets | Percentage
of Private
Fund Assets17 | Highlights17 |
| Industrial | 22.80% | 39.34% | 2,191 investments boasting over 738 million square feet of industrial assets including facilities that support the fast-growing e-commerce logistics industries. |
| Private Real Estate Equity | 21.99% | 37.95% |
| Private Real Estate Debt | 0.81% | 1.39% |
| Multifamily | 19.37% | 33.43% | 715 apartment investments comprised of over 223,000 units diversified across high-growth markets. |
| Private Real Estate Equity | 13.86% | 23.91% |
| Private Real Estate Debt | 5.51% | 9.52% |
| Specialty | 8.09% | 13.95% | 204 investments spanning over 25 million square feet of life sciences facilities, healthcare assets, and government buildings, together with more than 30,000 student housing beds across the country. |
| Private Real Estate Equity | 7.93% | 13.68% |
| Private Real Estate Debt | 0.16% | 0.27% |
| Office | 4.16% | 7.17% | 195 high-quality office investments in diverse, high-demand metropolitan areas representing over 83 million square feet of space. |
| Private Real Estate Equity | 2.04% | 3.51% |
| Private Real Estate Debt | 2.12% | 3.66% |
| Retail | 1.57% | 2.71% | 156 investments with more than 37 million square feet of retail space. |
| Private Real Estate Equity | 1.32% | 2.28% |
| Private Real Estate Debt | 0.25% | 0.43% |
| Other | 1.47% | 2.54% | 413 investments comprised of self-storage facilities, parking garages, and land. |
| Private Real Estate Equity | 1.19% | 2.06% |
| Private Real Estate Debt | 0.28% | 0.48% |
| Hospitality | 0.50% | 0.86% | 17 investments representing over 4,500 keys across the country. |
| Private Real Estate Equity | 0.02% | 0.03% |
| Private Real Estate Debt | 0.48% | 0.83% |
Diversification does not eliminate the risk of experiencing investment losses. Holdings and allocations are subject to change without notice.
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APOLLO DIVERSIFIED REAL ESTATE FUND
Private Fund Summaries (Unaudited)
 | Affinius U.S. Government Building Fund seeks to provide investors with attractive, risk-adjusted returns generated by the acquisition, build to suit development and operation of buildings located in the United States and leased or intended to be leased to U.S. federal, state and local governments and government agencies and departments. |
 | ARES Real Estate Enhanced Income Fund is an open-end real estate debt fund with a principal objective to generate current income with an emphasis on principal protection by creating a diversified portfolio of first mortgage loans secured by commercial real estate across major property types, which primarily includes multifamily, industrial, retail, office and hospitality properties. The ARES Real Estate Enhanced Income Fund will focus on the disciplined origination of first mortgage loans secured by commercial real estate assets with strong sponsorship and located in major markets within the United States. |
 | Article Student Living Income and Growth Fund14 is an open-end private equity real estate fund that is focused exclusively on the student housing sector. The Fund aims to acquire institutional student housing properties at large public and private universities in the United States. |
 | BGO Diversified U.S. Property Fund is an open-end core real estate private equity fund that invests in a portfolio of institutional-quality real estate assets in the U.S. BGO Diversified’s investment strategy is focused on maintaining stable income, building a diversified modern portfolio, using moderate leverage, and providing superior liquidity. BGO Diversified upholds a strong commitment to the principles of Responsible Property Investing. |
 | Brookfield Senior Mezzanine Real Estate Finance Fund is an open-end senior real estate debt fund focused on providing primarily floating rate financing secured by commercial property primarily located in the U.S. and secured by generally well-leased/light transitional commercial real estate properties that generate significant cash flow. Brookfield Senior Mezzanine Real Estate Finance Fund will primarily focus on creating investment positions by originating floating rate whole loans, syndicating the first mortgage and retaining the mezzanine exposure. |
 | CBRE U.S. Core Partners is an open-end core fund that purchases and operates high-quality, income-producing office, industrial, retail, and multifamily assets in select major U.S. metropolitan markets that exhibit strong growth demographics. |
| CBRE U.S. Credit Partners is an open-end private debt fund focused on generating current income by constructing a portfolio of first mortgage loans and subordinated debt secured by high-quality income-producing commercial real estate diversified by product type and geography. |
| CBRE U.S. Logistics Partners is an open-end private equity real estate fund focused exclusively on the industrial sector. The Fund aims to acquire modern, highly-functional, stabilized logistics assets located in major population and consumption centers while simultaneously implementing a build-to-core strategy capitalizing on major metro markets with favorable supply and demand dynamics. |
 | Clarion Gables Multifamily Trust provides investors access to a high-quality multifamily portfolio with a best-in-class operator and fund manager. Gables is a market-leading, vertically-integrated multifamily real estate company with a 34-year history in the management, construction, development, acquisition and disposition of multifamily communities in the United States. |
| Clarion Lion Industrial Trust is a private REIT focused on the industrial property sector in North America. Clarion Lion Industrial Trust invests primarily in big-box warehouse and distribution centers, with an emphasis on large, core industrial markets throughout the United States. |
| Clarion Lion Properties Fund is a core private REIT with interests in a diversified portfolio of primarily institutional quality real estate assets and related investments located throughout the U.S. The investment objective is to provide a strong income return with potential for long-term capital appreciation. |
 | Cortland Growth and Income Fund, a leading Southern United States focused multifamily owner and operator, is a domestic multifamily open-end core-plus fund focused on acquiring best-in-class, income producing properties in U.S. growth markets. |
 | CrossHarbor Strategic Debt Fund is an open-end debt fund that seeks to generate compelling risk-adjusted current and total returns for investors by originating and managing first mortgage loans secured by core, core-plus, and value-add commercial real estate located throughout the United States. |
 | Dream U.S. Industrial Fund is an open-end private equity real estate fund focused exclusively on the industrial sector. The Fund seeks to acquire and develop a portfolio of high-quality and functional industrial assets in strategic markets throughout the United States. The Fund will target core and core-plus assets including bulk distribution, last-mile warehousing, business parks, and light industrial assets in secondary interior distribution markets with a primary focus on markets experiencing strong economic and demographic fundamentals. |
 | Heitman America Real Estate Trust is an open-end core commingled fund. Heitman America Real Estate Trust’s core strategy encompasses stabilized investments with low to moderate leverage and seeks to objectively minimize risk through diversification in property type, geographic location, and tenant composition. |
| Heitman Core Real Estate Debt Income Trust is an open-ended, commingled fund, that originates and services first mortgage loans secured by income-producing U.S. commercial real estate. Heitman Core Real Estate Debt Income Trust will seek to originate senior debt financing to high-quality real estate operators in both primary and specialty property sectors. |
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APOLLO DIVERSIFIED REAL ESTATE FUND
Private Fund Summaries (Unaudited)
 | JP Morgan U.S. Real Estate Core Mezzanine Debt Fund pursues a disciplined, income-producing strategy achieved primarily by investing in a portfolio of real estate and real estate-related assets, consisting of mezzanine debt, B-notes, mortgages, and preferred equity investments. It focuses on the four primary property types including office, multifamily, industrial, and retail, owned and operated by experienced and financially capable sponsors with strong performance experience across investment cycles. |
 | Manulife U.S. Real Estate Fund is a U.S. open-end core-plus fund that will target properties located in major U.S. markets, with the objective of preserving capital while delivering a combination of income and long-term capital appreciation. The Manulife U.S. Real Estate Fund will target an allocation of 60% core-plus assets and 40% core investments. |
 | Morgan Stanley Prime Property Fund is an open-end core fund with a focus on office, retail, multifamily, industrial, self storage and hotel properties located in major real estate markets throughout the United States. |
 | Oaktree Real Estate Income Fund is an open-ended fund that targets investments in commercial real estate, primarily office, multifamily and industrial assets. Oaktree Real Estate Income Fund intends to create value by investing in assets that require modest leasing and capital expenditures. |
 | Prologis Targeted U.S. Logistics Fund launched in 2004 as an open-ended, co-investment venture formed by Prologis to partner with institutional investors in acquiring, operating, and disposing of high-quality logistics facilities in key target markets across the U.S. The Fund seeks enhanced returns through actively managing, repositioning and renovating portfolio-owned assets. |
 | Prudential PRISA is organized as a perpetual life, open-ended, commingled fund to invest primarily in core, well-leased, operating real estate assets located in the United States, with an emphasis on income. PRISA is Prudential Real Estate Investors (“PREI”) flagship fund, and represents one of the oldest and largest U.S. core real estate funds available in the marketplace. |
 | Sagard U.S. Property Fund15 is an open-end real estate fund consisting of a diversified portfolio of institutional quality, income producing assets broadly allocated by property type and geographic location. Sagard U.S. Property Fund employs a core plus strategy intertwined with a disciplined risk management process in seeking to achieve its performance objectives. |
 | Sentinel Real Estate Fund is a multifamily focused, core private REIT that emphasizes acquisitions of stabilized assets with in-place income with the goal of providing a substantial portion of investor returns in the form of distributed cash. |
 | Stockbridge Smart Markets Fund is an open-end core fund that aims to capture performance in excess of the ODCE Index by acquiring assets in “smart markets” characterized by educated, stable and fast-growing employment bases. The Smart Market Fund’s target market strategy is based on the principle that real estate demand is dependent on jobs which are increasingly being created where there are educated work forces in the U.S. |
 | TA Realty Core Property Fund invests and operates a diversified portfolio of commercial real estate assets across industrial, multifamily, office and retail property types. TA Realty Core Property Fund has three primary objectives: build and operate a first-class portfolio of institutional quality core real estate assets, generate consistent outperformance versus industry benchmarks and provide outstanding client service to investors. |
| TA Realty Logistics Fund is an open-end private equity real estate fund focused exclusively on the industrial sector. The Fund seeks to assemble a diversified portfolio of well-located logistics facilities in major distribution hubs and last-mile locations. The Fund targets mainly metropolitan areas of the United States that have population growth, economic growth, market economic diversity, supply constraints, liquidity, volatility, and relative yield necessary to create attractive long-term investment returns. |
 | Third Point Private CRE Credit Fund focuses primarily on investing in a diversified portfolio of primarily U.S. commercial real estate debt investments, generally within the mezzanine position of the capital stack. The Fund focuses on building and maintaining a portfolio of assets that are intended to provide strong risk adjusted returns in all cycles, with emphasis on stable cash flows. |
 | UBS Trumbull Property Fund is an open-end, diversified Core fund focusing on the four main property types, with a small exposure to hotels. UBS Trumbull Property Fund focuses on top markets for high-quality Core, institutional real estate assets. |
 | Ventas Life Science and Healthcare Real Estate Fund is an open-ended investment vehicle formed by Ventas, Inc. to invest in high-quality healthcare properties, with a focus on the life science, medical office building, and seniors housing asset classes, in target markets primarily in the United States. The Fund’s primary objective is to generate attractive returns and cash flow with an emphasis on long-term capital growth through investment focused on the healthcare real estate sector. |
 | Voya Commercial Mortgage Lending Fund is a perpetual life, open-ended, commercial mortgage debt fund. The Fund’s investment objective is to generate consistent current income with attractive risk-adjusted returns, while seeking to preserve capital through risk management of the portfolio of commercial mortgage loans and balance sheet management at the Fund level. The Fund will generally seek to achieve its investment objective by applying disciplined credit underwriting to identify and originate a diversified pool of commercial real estate loans located throughout the U.S., in primary, secondary and select tertiary markets. |
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APOLLO DIVERSIFIED REAL ESTATE FUND
Fund Sub-Advisers (Unaudited)
Aon Investments USA Inc.
| Aon Investments USA Inc., an indirect wholly-owned subsidiary of Aon plc, provides ongoing research, opinions and recommendations to the portion of the Fund’s investment portfolio that is allocated to private, institutional real estate investment funds managed by institutional investment managers. Aon Investments had approximately $123.3 billion in assets under management in the U.S. as of June 30, 2024 and provides Apollo Real Estate Fund Adviser with the same level of research and due diligence as the nation’s top endowments, universities and pension funds. | |  |
CenterSquare Investment Management LLC
CenterSquare Investment Management LLC (“CenterSquare”) manages the portion of the Fund’s investment portfolio that is allocated to public real estate securities. CenterSquare has been managing real estate securities portfolios since 1995, across multiple strategies and market cycles and had approximately $15 billion in real estate assets under management as of September 30, 2024. | |  |
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APOLLO DIVERSIFIED REAL ESTATE FUND
Glossary
Alpha: A measure of risk-adjusted return implying how much a fund/manager outperformed its benchmark, given its risk profile.
Annualized Return: Calculated by annualizing cumulative return (i.e., adjusting it for a period of one year). Annualized return includes capital appreciation and assumes a reinvestment of dividends and distributions.
Basis Point (bps): A unit of measure used to describe the percentage change. One basis point is equivalent to 0.01% (1/100th of a percent) or 0.0001 in decimal form.
Beta: A measure of systematic risk (volatility), or the sensitivity of a fund to movements in a benchmark. A beta of 1 implies that you can expect the movement of a fund’s return series to match that of the benchmark used to measure beta. A value of less than 1 implies that the fund is less volatile than the index.
Bloomberg U.S. Aggregate Bond Index: An unmanaged index of domestic investment-grade bonds, including corporate, government and mortgage-backed securities.
Correlation: A statistical measure of how two securities move in relation to each other. A correlation ranges from -1 to 1. A positive correlation of 1 implies that as one security moves, either up or down, the other security will move in lockstep, in the same direction. A negative correlation of -1 indicates that the securities will move in the opposite direction. If the correlation is 0, the movements of the securities are said to have no correlation; they are completely random.
Cumulative Return: The compound return of an investment. It includes capital appreciation and assumes a reinvestment of dividends and distributions.
FTSE NAREIT All Equity REITs Index: A free-float adjusted, market capitalization-weighted index of U.S. equity REITs. Constituents of the index include all tax-qualified REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property.
Gross Domestic Product (GDP): A comprehensive measure of U.S. economic activity. GDP measures the value of the final goods and services produced in the United States.
Net Asset Value (NAV): Represents a fund’s per-share price. NAV is calculated by dividing a fund’s total net assets by its number of shares outstanding.
NCREIF Fund Index – Open End Diversified Core Equity (NFI-ODCE or NCREIF ODCE Index): An index of investment returns reporting on both a historical and current basis the results of certain open-end commingled funds pursuing a core investment strategy. The NFI-ODCE Index is capitalization-weighted.
Net Operating Income (NOI): A calculation used to analyze real estate investments that generate income. Net operating income equals all revenue from the property minus necessary operating expenses.
S&P 500 Index: An index based on market cap of the 500 largest companies having stock listed on the New York Stock Exchange (NYSE) or NASDAQ.
Sharpe Ratio: Measures risk-adjusted returns by calculating the excess return (above the risk-free rate) per unit of risk (standard deviation). The higher the ratio, the better the risk-adjusted returns. The average three-month U.S. Treasury T-bill auction was used as the risk-free rate in this material.
Standard Deviation: Measures the average deviations of a return series from its mean, and is often used as a measure of volatility/risk. A large standard deviation implies that there have been large swings in the return series of the manager.
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APOLLO DIVERSIFIED REAL ESTATE FUND
Important Disclosure Information (Unaudited)
This material is neither an offer to sell nor a solicitation to purchase any security. Investors should carefully consider the investment objectives, risks, charges and expenses of Apollo Diversified Real Estate Fund (the “Fund”). This information and other important details about the Fund are contained in the prospectus, which can be obtained by visiting www.apollo.com/adref. Please read the prospectus carefully before investing.
All Morningstar calculations and metrics are based on monthly data. CALCULATIONS AND METRICS REFLECT THE FUND’S LOAD-WAIVED, CLASS A SHARE (NASDAQ: GIREX). Investors of the load-waived class A share do not pay a front-end sales load/charge. The maximum sales charge is 5.75% for Class A shares. The Fund offers multiple different classes of shares. An investment in any share class of the Fund represents an investment in the same assets of the Fund. However, the purchase restrictions, ongoing fees, expenses, and performance for each share class are different. For more information on the differences in share classes, refer to the applicable prospectus, which can be found at www.apollo.com/adref.
Past performance is not indicative of future results. Fund returns presented herein include the reinvestment of distributions and are net of all Fund expenses, including management fees and general and administrative expenses, but, unless otherwise noted, exclude any applicable share class sales charge and fees paid by investors to their financial intermediary. Fund returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. If the deduction of such fees was reflected, the performance would be lower. Investing in the Fund involves risks, including the risk that you may receive little or no return on your investment or that you may lose part or all of your investment. The ability of the Fund to achieve its investment objective depends, in part, on the ability of the Adviser to effectively allocate the assets of the Fund among the various securities and investments in which the Fund invests. There can be no assurance that the actual allocations will be effective in achieving the Fund’s investment objective or delivering positive returns. Current performance may be lower or higher than the performance quoted. The most recent performance is available at www.apollo.com/adref or by calling 888.926.2688.
Certain of these returns reflect the impact of fee waivers and expense limitation and reimbursement agreements in effect during the given period. The Fund’s current expense limitation and reimbursement agreement will remain in effect at least through 5/31/25. The fees and expenses provided herein are as of the date of the Fund’s most recent prospectus and are qualified in their entirety by the Fund’s prospectus.
The Fund’s inception date was 6/30/14. Per the Fund’s prospectus dated 2/1/24, as supplemented 8/13/24, the total annual expense ratio is 2.03% for Class A shares, 2.79% for Class C shares, 1.78% for Class I shares, 2.27% for Class L shares, and 2.53% for Class M shares. The Fund’s investment adviser (the “Adviser”) and the Fund have entered into an expense limitation and reimbursement agreement (the “Expense Limitation Agreement”) under which the Adviser has agreed contractually to waive its fees and to pay or absorb the ordinary operating expenses of the Fund (including offering expenses, but excluding interest, brokerage commissions, acquired fund fees and expenses and extraordinary expenses), to the extent that they exceed 1.91% per annum of the Fund’s average daily net assets attributable to Class A shares, 2.66% per annum of the Fund’s average daily net assets attributable to Class C shares, 1.66% per annum of the Fund’s average daily net assets attributable to Class I shares, 2.16% per annum of the Fund’s average daily net assets attributable to Class L shares, 2.41% per annum of the Fund’s average daily net assets attributable to Class M shares; (the “Expense Limitation”). In consideration of the Adviser’s agreement to limit the Fund’s expenses, the Fund has agreed to repay the Adviser in the amount of any fees waived and Fund expenses paid or absorbed, subject to the limitations that: (1) the reimbursement will be made only for fees and expenses incurred not more than three years from the date in which they were incurred; and (2) the reimbursement may not be made if it would cause the lesser of the Expense Limitation in place at the time of waiver or at the time of reimbursement to be exceeded. The Expense Limitation Agreement will remain in effect, at least until 5/31/25, unless and until the Board approves its modification or termination. This agreement may be terminated only by the Board on 60 days written notice to the Adviser. After 5/31/25, the Expense Limitation Agreement may be renewed at the Adviser’s and Board’s discretion.
The Fund is a closed-end management investment company that is operated as an interval fund. The shares have no history of public trading, nor is it intended that the shares will be listed on a public exchange at this time. No secondary market is expected to develop for the Fund’s shares. Limited liquidity is provided to shareholders only through the Fund’s quarterly repurchase offers for no less than 5% and no more than 25% of the Fund’s shares outstanding at net asset value. There is no guarantee that an investor will be able to sell all the shares that the investor desires to sell in the repurchase offer. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Due to these restrictions, an investor should consider an investment in the Fund to be of limited liquidity. The Fund is suitable only for investors who can bear the risks associated with the limited liquidity of the Fund and should be viewed as a long-term investment. Investing in the Fund is speculative and involves a high degree of risk, including the risks associated with leverage and the risk of a substantial loss of investment. There is no guarantee that the investment strategies will work under all market conditions. You should carefully consider which class of shares to purchase.
Investors in the Fund should understand that the net asset value (“NAV”) of the Fund will fluctuate, which may result in a loss of the principal amount invested. The Fund’s investments may be negatively affected by the broad investment environment and capital markets in which the Fund invests, including the real estate market, the debt market and/or the equity securities market. The value of the Fund’s investments will increase or decrease based on changes in the prices of the investments it holds. This will cause the value of the Fund’s shares to increase or decrease. The Fund is “diversified” under the Investment Company Act of 1940. Diversification does not eliminate the risk of experiencing investment losses. Holdings are subject to change without notice. The Fund is not intended to be a complete investment program.
The Fund will not invest in real estate directly, but, because the Fund will concentrate its investments in securities of REITs and other real estate industry issuers, its portfolio will be significantly impacted by the performance of the real estate market and may experience more volatility and be exposed to greater risk than a more diversified portfolio. The value of companies engaged in the real estate industry is affected by: (i) changes in general economic and market conditions; (ii) changes in the value of real estate properties; (iii) risks related to local economic conditions, overbuilding and increased competition; (iv) increases in property taxes and operating expenses; (v) changes in zoning laws; (vi) casualty and condemnation losses; (vii) variations in rental income, neighborhood values or the appeal of property to tenants; (viii) the availability of financing and (ix) changes in interest rates and leverage. The value of securities of companies in the real estate industry may go through cycles of relative underperformance and outperformance in comparison to equity securities markets in general. By investing in the Fund, a shareholder will not be deemed to be an investor in any underlying fund and will not have the ability to exercise any rights attributable to an investor in any such underlying fund related to their investment. The Fund’s investment in Private Investment Funds will require it to bear a pro rata share of the vehicles’ expenses, including management and performance fees. Also, once an investment is made in a Private Investment Fund, neither the Adviser nor any Sub-Adviser will be able to exercise control over investment decisions made by the Private Investment Fund. The Fund may invest in securities of other investment companies, including ETFs. The Fund will indirectly bear its proportionate share of any management fees and other expenses paid by investment companies in which it invests, in addition to the management fees (and other expenses) paid by the Fund.
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APOLLO DIVERSIFIED REAL ESTATE FUND
The Fund is advised by Apollo Real Estate Fund Adviser, LLC (“AREFA”). AREFA is registered as an investment adviser with the SEC pursuant to the provisions of the 1940 Act, as amended. AREFA is an indirect majority- owned subsidiary of Apollo Global Management, Inc. The Fund’s private real estate funds allocation is sub-advised by Aon Investments USA Inc. (“Aon”), an Aon Company. Aon is registered as an investment adviser with the SEC pursuant to the provisions of the 1940 Act. The Fund’s public real estate securities allocation is sub-advised by CenterSquare Investment Management LLC (“CenterSquare”). CenterSquare is an investment adviser registered with the SEC pursuant to the provisions of the 1940 Act. Registration with the SEC does not constitute an endorsement by the SEC nor does it imply a certain level of skill or training.
This material may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express written consent of Apollo Global Management, Inc. (together with its subsidiaries, “Apollo”).
This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product or be relied upon for any other purpose. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. It should not be assumed that any investment will be profitable or will equal the performance of the fund(s) or any securities or any sectors mentioned herein. Information contained herein has been obtained from sources deemed to be reliable, but not guaranteed. Apollo Global Management, Inc. and its affiliates do not provide tax, legal or accounting advice. This material is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. This material represents views as of the date of this presentation and is subject to change without notice of any kind.
This material may contain certain forward-looking statements. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. As a result, investors should not rely on such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to: uncertainties relating to changes in general economic and real estate conditions; uncertainties relating to the implementation of our investment strategy; uncertainties relating to capital proceeds; and other risk factors as outlined in the Fund’s prospectus, statement of additional information, annual report and semi-annual report filed with the SEC.
During the fiscal year ending September 30, 2024, the Fund paid distributions of $241,625,981 to its investors, consisting of distributions of $105,139,318 paid and $136,486,663 that was reinvested through the Fund’s distribution reinvestment program.
During the fiscal year ending September 30, 2024, the Fund recorded dividends and distributions from the Fund’s underlying investments totaling $176,884,769, and realized loss on its investments totaling $27,874,876, and fees and expenses of $117,611,423.
The Fund intends to qualify annually as a regulated investment company under the Internal Revenue Code of 1986, as amended, and intends to distribute at least 90% of its annual net taxable income to its investors. While distributions are not guaranteed, the Fund’s distribution policy is to make quarterly distributions to shareholders. In connection with the quarterly distribution policy, the Fund does not target a per share distribution and the level of quarterly distributions per share on a cash basis is not fixed, including any return of capital. Shareholders should not assume that the source of a distribution from the Fund is net profit. All or a portion of the Fund’s distributions during the most recent fiscal year is estimated to include return of capital, in part due to the character of the distributions received from the Fund’s underlying real estate holdings. The final determination of the tax characteristics of all distributions will be made after the end of the calendar year.
Please refer to the Fund’s most recent Section 19(a) notice for an estimate of the composition of the Fund’s most recent distribution, available at www.apollo.com/adref, and the Fund’s semi-annual or annual reports filed with the U.S. Securities and Exchange Commission (the “SEC”) and available on the Fund’s website for additional information regarding the composition of distributions. The Fund’s distributions may be affected by numerous factors, including but not limited to changes in Fund expenses including the amount of expenses waived by the Fund’s Adviser, investment performance, realized and projected market returns, fluctuations in market interest rates, and other factors. There is no assurance that the Fund’s distribution rate will be sustainable in the future nor are distributions guaranteed.
The following chart presents the quarterly changes to the NAV, total return, and cumulative total return for load-waived Class A shares since inception.1
| Period Ending | NAV Return | Total Return | Cumulative Total Return |
| 6/30/14 | N/A | N/A | N/A |
| 9/30/14 | 0.44% | 1.65% | 1.65% |
| 12/31/14 | 2.11% | 3.40% | 5.10% |
| 3/31/15 | 0.98% | 2.28% | 7.50% |
| 6/30/15 | -1.24% | 0.06% | 7.56% |
| 9/30/15 | 1.13% | 2.47% | 10.21% |
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APOLLO DIVERSIFIED REAL ESTATE FUND
| Period Ending | NAV Return | Total Return | Cumulative Total Return |
| 12/31/15 | 1.01% | 2.34% | 12.79% |
| 3/31/16 | 1.00% | 2.33% | 15.42% |
| 6/30/16 | 0.95% | 2.28% | 18.05% |
| 9/30/16 | -0.04% | 1.28% | 19.57% |
| 12/31/16 | -0.26% | 1.05% | 20.83% |
| 3/31/17 | -0.15% | 1.17% | 22.24% |
| 6/30/17 | 0.26% | 1.59% | 24.18% |
| 9/30/17 | 0.00% | 1.32% | 25.83% |
| 12/31/17 | 0.90% | 2.23% | 28.64% |
| 3/31/18 | -0.97% | 0.34% | 29.08% |
| 6/30/18 | 1.24% | 2.58% | 32.41% |
| 9/30/18 | 0.11% | 1.43% | 34.31% |
| 12/31/18 | -1.04% | 0.27% | 34.67% |
| 3/31/19 | 2.10% | 3.45% | 39.33% |
| 6/30/19 | 0.15% | 1.47% | 41.38% |
| 9/30/19 | 0.40% | 1.73% | 43.82% |
| 12/31/19 | -0.11% | 1.21% | 45.56% |
| 3/31/20 | -6.70% | -5.46% | 37.61% |
| 6/30/20 | -2.63% | -1.34% | 35.77% |
| 9/30/20 | 0.00% | 1.33% | 37.57% |
| 12/31/20 | 1.41% | 2.76% | 41.37% |
| 3/31/21 | 2.07% | 3.42% | 46.20% |
| 6/30/21 | 3.66% | 5.04% | 53.56% |
| 9/30/21 | 3.15% | 4.52% | 60.51% |
| 12/31/21 | 7.21% | 8.62% | 74.35% |
| 3/31/22 | 2.85% | 4.21% | 81.69% |
| 6/30/22 | -0.92% | 0.38% | 82.39% |
| 9/30/22 | -3.80% | -2.53% | 77.78% |
| 12/31/22 | -3.26% | -1.97% | 74.28% |
| 3/31/23 | -2.36% | -1.06% | 72.43% |
| 6/30/23 | -2.71% | -1.43% | 69.97% |
| 9/30/23 | -4.82% | -3.57% | 63.91% |
| 12/31/23 | 1.47% | 2.82% | 68.52% |
| 3/31/24 | -3.59% | -2.32% | 64.62% |
| 6/30/24 | -0.69% | 0.62% | 65.65% |
| 9/30/24 | 5.30% | 6.69% | 76.73% |
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APOLLO DIVERSIFIED REAL ESTATE FUND
Endnotes
Important Note on Index Performance: Index performance is shown for illustrative purposes only and has limitations when used for comparison or for other purposes due to, among other matters, volatility, credit or other factors (such as number of investments, recycling or reinvestment of distributions, and types of assets). It may not be possible to directly invest in one or more of these indices and the holdings of the Fund may differ markedly from the holdings of any such index in terms of levels of diversification, types of securities or assets represented and other significant factors. Indices are unmanaged, do not charge any fees or expenses, assume reinvestment of income and do not employ special investment techniques such as leveraging or short selling. No such index is indicative of the future results of the Fund. There can be no assurances that any of the trends described herein will continue or will not reverse. Past events and trends do not imply, predict or guarantee, and are not necessarily indicative of future events or results.
| 1. | Past performance is not indicative of future results. Shares may be worth more or less than original cost when redeemed. Investing involves risk, including loss of principal. Actual results may vary. Fund returns presented herein include the reinvestment of distributions and are net of all Fund expenses, including management fees and general and administrative expenses, but, unless otherwise noted, exclude any applicable share class sales charge and fees paid by investors to their financial intermediary. Fund returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. If the deduction of such fees was reflected, the performance would be lower. Current performance may be lower or higher than the performance quoted. The most recent performance is available at www.apollo.com/adref or by calling 888.926.2688. As of September 30, 2024, the Fund’s load-waived, Class A share had a one-year return of 7.82%, a five-year annualized return of 4.21%, and a ten-year annualized return of 5.69%. As of September 30, 2024, the Fund’s Class A share with load (adjusted for initial maximum sales charge of 5.75%) had a one-year return of 1.62%, a five-year annualized return of 2.98%, and a ten-year annualized return of 5.06%. Class A share inception date: June 30, 2014. Alpha and beta calculation benchmark: S&P 500. The Fund’s interval fund peers include: Versus Capital Multi-Manager Real Estate Income Fund (VCMIX), Bluerock Total Income+ Real Estate Fund (TIPRX), and Goldman Sachs Real Estate Diversified Income Fund (GSRDX). Please note that Versus Capital Multi-Manager Real Estate Income Fund does not offer A shares and as such, I shares of the Versus Capital Multi-Manager Real Estate Income Fund are used in this comparison. Class I shares are not subject to a front-end sales load. |
| 2. | Fund holdings as of October 1, 2024. Fund size based on Gross Asset Value (GAV). Occupancy calculation is based on the Fund’s allocation to private real estate equity funds. Occupancy is the rate of which underlying properties are occupied, typically through leases. Leverage is the utilization of borrowings by the Fund’s underlying private real estate equity funds and does not represent the Fund’s direct use of leverage. The use of leverage increases investment risk and the potential for increased loss and could adversely affect market value of the Fund’s underlying private investment funds in periods of rising interest rates. Fund holdings are subject to change without notice. Diversification does not eliminate the risk of experiencing investment losses. The Fund is not intended to be a complete investment program. |
| 4. | Bureau of Labor Statistics; U.S. Department of Labor; Bloomberg. |
| 5. | Bureau of Economic Analysis; U.S. Department of Commerce; Bloomberg. |
| 6. | Apollo Analysts, NCREIF Fund Index - Open End Diversified Core Equity Index (NFI-ODCE Index). The Fund’s private real estate portfolio is comprised of both private real estate equity and private real estate debt investments. The NFI-ODCE Index is a capitalization weighted index of investment returns reporting on both a historical and current basis the results of certain open-end commingled funds pursuing a core investment strategy. As of June 30, 2024, the Fund’s private real estate portfolio had a trailing one-year return of -5.82% and the NFI- ODCE Index had a trailing one-year return of -9.99%. |
| 7. | CBRE Econometric Advisors. |
| 10. | U.S. Census Bureau and U.S. Department of Housing and Urban Development. The recent historical average represents the quarterly average construction starts between 2021 and 2022. |
| 11. | RealPage Market Analytics. |
| 12. | CenterSquare Investment Management LLC. As of May 5, 2023. Average of returns beginning 3/31/1995, 6/30/2000, 6/30/2006, and 12/31/2018. Public Equities are represented by the S&P 500 Index. Public REITs are represented by the FTSE Nareit All Equity REITs Index. “Fed tightening” refers to periods when the Fed increases the federal funds target rate. |
| 13. | Represents the Fund’s direct holdings in private funds in which the underlying holdings of each respective private fund generally consist of real estate-related interests that are not publicly traded. Holdings and allocations are subject to change without notice. |
| 14. | Formerly known as CA Student Living Income and Growth Fund. |
| 15. | Formerly known as GWL U.S. Property Fund. |
| 16. | Represents (i) the Fund’s direct holdings in publicly traded, real estate-related securities; (ii) the Fund’s holdings in private funds and registered investment companies in which the underlying holdings are generally publicly traded; and (iii) cash and short-term investments. Holdings and allocations are subject to change without notice. |
| 17. | Metrics express the Fund’s portfolio allocated to private funds in which the underlying holdings of such private funds generally consist of real estate-related interests that are not publicly traded as of October 1, 2024. Underlying data and statistics of the Fund’s private real estate exposure generally as of June 30, 2024, however, in limited circumstances, data for certain private funds is as of the most recent quarter end. Holdings are subject to change without notice. Diversification does not eliminate the risk of experiencing investment losses. |
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APOLLO DIVERSIFIED REAL ESTATE FUND
Endnotes (Continued)
| 18. | Calculations based on the Fund’s allocation to private real estate equity funds as of October 1, 2024. Occupancy is the rate of which underlying properties are occupied, typically through leases. Leverage is the utilization of borrowings by the Fund’s underlying private real estate equity funds and does not represent the Fund’s direct use of leverage. The use of leverage increases investment risk and the potential for increased loss and could adversely affect market value of the Fund’s underlying private investment funds in periods of rising interest rates. |
16
| Apollo Diversified Real Estate Fund | Portfolio Update |
September 30, 2024 (Unaudited)
Performance (for the periods ended September 30, 2024)
| | | | Annualized | |
| | 6 Month | 1 Year | 3 Year | 5 Year | 10 Year | Since
Inception | Inception
Date |
| Apollo Diversified Real Estate Fund – A – With Load* | 0.33% | 1.03% | 1.06% | 3.01% | 5.00% | 5.12% | 6/30/14 |
| Apollo Diversified Real Estate Fund – A – Without Load | 6.44% | 7.18% | 3.08% | 4.24% | 5.62% | 5.73% | 6/30/14 |
| Apollo Diversified Real Estate Fund – C – With Load** | 5.03% | 5.32% | 2.29% | 3.45% | – | 4.54% | 8/7/15 |
| Apollo Diversified Real Estate Fund – C – Without Load | 6.03% | 6.32% | 2.29% | 3.45% | – | 4.54% | 8/7/15 |
| Apollo Diversified Real Estate Fund – I – NAV | 6.60% | 7.47% | 3.35% | 4.51% | – | 5.59% | 8/7/15 |
| Apollo Diversified Real Estate Fund – M – NAV | 6.20% | 6.64% | 2.57% | 3.73% | – | 4.67% | 11/16/16 |
| Apollo Diversified Real Estate Fund – L – With Load*** | 1.82% | 2.38% | 1.36% | 3.10% | – | 4.20% | 4/24/17 |
| Apollo Diversified Real Estate Fund – L – Without Load | 6.33% | 6.91% | 2.84% | 4.00% | – | 4.81% | 4/24/17 |
| S&P 500® Total Return Index | 10.42% | 36.35% | 11.91% | 15.98% | 13.38% | 13.15% | 6/30/14 |
| Bloomberg U.S. Aggregate Bond Index | 5.26% | 11.57% | -1.39% | 0.33% | 1.84% | 1.81% | 6/30/14 |
| * | Adjusted for initial maximum sales charge of 5.75%. |
| ** | Adjusted for contingent deferred sales charge of 1.00%. |
| *** | Adjusted for initial maximum sales charge of 4.25%. |
The S&P 500® Total Return Index is an unmanaged index of 500 common stocks chosen for market size, liquidity and industry group representation. It is a market-value weighted index. The index is not actively managed and does not reflect any deduction for fees, expenses or taxes.
The Bloomberg U.S. Aggregate Bond Index measures the performance of the U.S. investment grade bond market. The index is not actively managed and does not reflect any deduction for fees, expenses or taxes.
Indexes are not actively managed and do not reflect deduction of fees, expenses or taxes. An investor cannot invest directly into an index. Index performance does not represent actual Fund or portfolio performance, nor does it represent actual performance of the Fund's Adviser or sub-advisers. Past performance is not indicative of future results. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed. Investing involves risk, including loss of principal. Fund returns presented herein include the reinvestment of distributions and are net of all Fund expenses, including management fees and general and administrative expenses, but exclude any applicable share class sales charge and fees paid by investors to their financial intermediary, unless otherwise noted. Fund returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. If the deduction of such fees was reflected, the performance would be lower. Investing in the Fund involves risks, including the risk that you may receive little or no return on your investment or that you may lose part or all of your investment. The ability of the Fund to achieve its investment objective depends, in part, on the ability of the Adviser to effectively allocate the assets of the Fund among the various securities and investments in which the Fund invests. There can be no assurance that the actual allocations will be effective in achieving the Fund's investment objective or delivering positive returns. Current performance may be lower or higher than the performance quoted. The most recent performance is available at www.apollo.com/adref or by calling 888.926.2688.
Class A shares are offered subject to a maximum sales charge of 5.75% of the offering price. Class L shares are offered subject to a maximum sales charge of 4.25% of the offering price. Class C, Class I and Class M shares are offered at net asset value. Class C shares may be subject to a 1.00% contingent deferred sales charge on shares redeemed during the first 365 days after their purchase. The Fund’s investment adviser has contractually agreed to waive its fees and to pay or absorb the ordinary annual operating expenses of the Fund (including offering expenses, but excluding taxes, interest, brokerage commissions, acquired fund fees and expenses and extraordinary expenses), to the extent that they exceed 1.91%, 2.66%, 1.66%, 2.41% and 2.16% per annum of the Fund’s average daily net assets attributable to Class A, Class C, Class I, Class M and Class L shares, respectively. The Expense Limitation Agreement will remain in effect for Class A, Class C, Class I, Class L and Class M shares, at least until May 31, 2025, unless and until the Fund's Board of Trustees (the "Board”) approves its modification or termination. Please review the Fund’s Prospectus for more details regarding the Fund’s fees and expenses.
| Annual Report | September 30, 2024 | 17 |
| Apollo Diversified Real Estate Fund | Portfolio Update |
September 30, 2024 (Unaudited)
Performance of $10,000 Initial Investment (as of September 30, 2024)
The graph shown above represents historical performance of a hypothetical investment of $10,000 in the Fund since inception. Past performance is not indicative of future results. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed. Investing involves risk, including loss of principal. Fund returns presented herein include the reinvestment of distributions and are net of all Fund expenses, including management fees and general and administrative expenses, but exclude any applicable share class sales charge and fees paid by investors to their financial intermediary, unless otherwise noted. Fund returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. If the deduction of such fees was reflected, the performance would be lower. Investing in the Fund involves risks, including the risk that you may receive little or no return on your investment or that you may lose part or all of your investment. The ability of the Fund to achieve its investment objective depends, in part, on the ability of the Adviser to effectively allocate the assets of the Fund among the various securities and investments in which the Fund invests. There can be no assurance that the actual allocations will be effective in achieving the Fund's investment objective or delivering positive returns. Current performance may be lower or higher than the performance quoted. The most recent performance is available at www.apollo.com/adref or by calling 888.926.2688.
Sector Allocation (as a % of Net Assets)
| Private Investment Funds | 64.80% |
| Publicly Traded Securities | 40.75% |
| Preferred Stocks | 1.90% |
| Short Term Investment | 0.05% |
| Liabilities in Excess of Other Assets | -7.50% |
| Total | 100.00% |
| 18 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Schedule of Investments |
| Description | | Shares | | | Value
(Note 2) | |
| REAL ESTATE INVESTMENT TRUSTS (105.55%)(a) | | | | | | | | |
| | | | | | | | | |
| Private Investment Funds (64.80%) | | | | | | | | |
| Affinius U.S. Government Building Fund | | | N/A | | | $ | 39,184,196 | |
| Ares Real Estate Enhanced Income Fund, L.P. | | | N/A | | | | 39,926,943 | |
| Article Student Living Income and Growth L.P. | | | 85,518 | | | | 99,071,280 | |
| BGO Diversified US Property Fund, L.P. | | | 4,956 | | | | 11,928,230 | |
| Brookfield Senior Mezzanine Real Estate Finance Fund | | | 108,234 | | | | 76,046,839 | |
| CBRE U.S. Core Partners, L.P. | | | 98,472,772 | | | | 156,910,652 | |
| CBRE U.S. Credit Partners, L.P. | | | 118,171 | | | | 119,277,469 | |
| CBRE U.S. Logistics Partners, L.P. | | | 187,588,371 | | | | 249,902,681 | |
| Clarion Gables Multifamily Trust, L.P. | | | 62,404 | | | | 87,646,401 | |
| Clarion Lion Industrial Trust, L.P. | | | 38,909 | | | | 143,323,036 | |
| Clarion Lion Properties Fund, L.P. | | | 117,819 | | | | 172,772,244 | |
| Cortland Growth and Income Fund, L.P. | | | 221,330 | | | | 261,771,577 | |
| CrossHarbor Strategic Debt Fund, L.P. | | | N/A | | | | 31,817,324 | |
| Dream U.S. Industrial Fund, L.P. | | | 88,559 | | | | 147,761,998 | |
| Heitman America Real Estate Trust, L.P. | | | 11,138 | | | | 13,685,645 | |
| Heitman Core Real Estate Debt Income Trust | | | 48,790 | | | | 39,605,281 | |
| JPM U.S. Real Estate Mezzanine Debt Fund, L.P. | | | 614,272 | | | | 61,590,601 | |
| Manulife U.S. Real Estate Fund, L.P. | | | 39,676 | | | | 50,003,031 | |
| Morgan Stanley Prime Property Fund | | | 9,202 | | | | 178,421,851 | |
| Oaktree Real Estate Income Fund, L.P. | | | N/A | | | | 145,163,057 | |
| Principal Real Estate Liquid Debt Fund, L.P. | | | 2,176,607 | | | | 49,747,633 | |
| PRISA, L.P. | | | 13,135 | | | | 25,942,085 | |
| Prologis Targeted U.S. Logistics Fund, L.P. | | | 15,046 | | | | 41,693,302 | |
| Sagard U.S. Property Fund(b) | | | N/A | | | | 28,740,922 | |
| Sentinel Real Estate Fund, L.P. | | | 334 | | | | 34,721,147 | |
| Stockbridge Smart Markets Fund, L.P. | | | 31,351 | | | | 53,214,756 | |
| TA Realty Core Property Fund, L.P. | | | 86,956 | | | | 110,489,112 | |
| TA Realty Logistics Fund, L.P. | | | 145,426 | | | | 148,153,915 | |
| Third Point Private CRE Credit Fund L.P. | | | 118,517 | | | | 113,866,188 | |
| UBS Trumbull Property Fund | | | 1,128 | | | | 9,784,639 | |
| Ventas Life Science and Healthcare Real Estate Fund | | | 153,730 | | | | 170,590,048 | |
| Voya Commercial Mortgage Lending Fund, L.P. | | | N/A | | | | 6,309,031 | |
| TOTAL PRIVATE INVESTMENT FUNDS | | | | | | | | |
| | | | | | | | | |
| (Cost $2,608,446,511) | | | | | | | 2,919,063,114 | |
| | | | | | | | | |
| Publicly Traded Securities (40.75%) | | | | | | | | |
| Agree Realty Corp. | | | 423,250 | | | | 31,883,422 | |
| Alexandria Real Estate Equities, Inc. | | | 189,800 | | | | 22,538,750 | |
| American Healthcare REIT, Inc. | | | 677,920 | | | | 17,693,712 | |
| Americold Realty Trust, Inc. | | | 586,640 | | | | 16,584,313 | |
| Apple Hospitality REIT, Inc. | | | 475,670 | | | | 7,063,700 | |
| Brixmor Property Group, Inc. | | | 1,412,600 | | | | 39,355,036 | |
| Broadstone Net Lease, Inc., Class A | | | 734,900 | | | | 13,926,355 | |
| BXP, Inc. | | | 390,300 | | | | 31,403,538 | |
| Camden Property Trust | | | 365,890 | | | | 45,198,392 | |
| CareTrust REIT, Inc. | | | 281,510 | | | | 8,687,399 | |
| Cousins Properties, Inc. | | | 861,100 | | | | 25,385,228 | |
| CubeSmart | | | 241,600 | | | | 13,005,328 | |
| DiamondRock Hospitality Co. | | | 1,029,430 | | | | 8,986,924 | |
| Digital Realty Trust, Inc. | | | 533,880 | | | | 86,397,800 | |
| Annual Report | September 30, 2024 | 19 |
| Apollo Diversified Real Estate Fund | Schedule of Investments |
| Description | | Shares | | | Value
(Note 2) | |
| Publicly Traded Securities (continued) | | | | | | | | |
| Douglas Emmett, Inc. | | | 609,253 | | | $ | 10,704,575 | |
| EastGroup Properties, Inc. | | | 82,480 | | | | 15,408,914 | |
| EPR Properties | | | 72,450 | | | | 3,552,948 | |
| Equinix, Inc. | | | 160,777 | | | | 142,710,489 | |
| Equity Residential | | | 861,777 | | | | 64,167,915 | |
| Extra Space Storage, Inc. | | | 440,000 | | | | 79,283,600 | |
| First Industrial Realty Trust, Inc. | | | 685,540 | | | | 38,376,529 | |
| Healthpeak Properties, Inc. | | | 1,952,530 | | | | 44,654,361 | |
| Host Hotels & Resorts, Inc. | | | 1,778,610 | | | | 31,303,536 | |
| InvenTrust Properties Corp. | | | 328,767 | | | | 9,327,120 | |
| Invitation Homes, Inc. | | | 1,613,740 | | | | 56,900,472 | |
| Iron Mountain, Inc. | | | 342,180 | | | | 40,661,249 | |
| Kilroy Realty Corp. | | | 297,000 | | | | 11,493,900 | |
| Kimco Realty Corp. | | | 2,432,860 | | | | 56,491,009 | |
| Lamar Advertising Co., Class A | | | 148,360 | | | | 19,820,896 | |
| Lineage, Inc. | | | 215,460 | | | | 16,887,755 | |
| LXP Industrial Trust | | | 463,935 | | | | 4,662,547 | |
| Macerich Co. | | | 483,950 | | | | 8,827,248 | |
| National Health Investors, Inc. | | | 72,040 | | | | 6,055,682 | |
| National Retail Properties, Inc. | | | 518,650 | | | | 25,149,339 | |
| NETSTREIT Corp. | | | 388,680 | | | | 6,424,880 | |
| Omega Healthcare Investors, Inc. | | | 570,710 | | | | 23,227,897 | |
| Phillips Edison & Co., Inc. | | | 298,728 | | | | 11,265,033 | |
| Prologis, Inc. | | | 1,083,400 | | | | 136,811,752 | |
| Public Storage | | | 154,100 | | | | 56,072,367 | |
| Realty Income Corp. | | | 1,061,900 | | | | 67,345,698 | |
| Retail Opportunity Investments Corp. | | | 1,509,700 | | | | 23,747,581 | |
| Rexford Industrial Realty, Inc. | | | 515,130 | | | | 25,916,190 | |
| Ryman Hospitality Properties, Inc. | | | 45,400 | | | | 4,868,696 | |
| Simon Property Group, Inc. | | | 350,400 | | | | 59,224,608 | |
| Sun Communities, Inc. | | | 371,058 | | | | 50,148,489 | |
| UDR, Inc. | | | 1,575,200 | | | | 71,419,568 | |
| Ventas, Inc. | | | 1,051,330 | | | | 67,421,793 | |
| VICI Properties, Inc. | | | 1,564,610 | | | | 52,117,159 | |
| Vornado Realty Trust | | | 266,430 | | | | 10,497,342 | |
| Welltower, Inc. | | | 877,290 | | | | 112,319,439 | |
| Xenia Hotels & Resorts, Inc. | | | 137,147 | | | | 2,025,661 | |
| TOTAL PUBLICLY TRADED SECURITIES | | | | | | | | |
| | | | | | | | | |
| (Cost $1,418,558,894) | | | | | | | 1,835,404,134 | |
| | | | | | | | | |
| TOTAL REAL ESTATE INVESTMENT TRUSTS | | | | | | | | |
| | | | | | | | | |
| (Cost $4,027,005,405) | | | | | | | 4,754,467,248 | |
| Description | | Coupon
Rate | | | Shares | | | Value
(Note 2) | |
| PREFERRED STOCKS (1.90%)(c) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Agree Realty Corp., Series A | | | 4.25 | % | | | 90,000 | | | | 1,899,900 | |
| American Homes 4 Rent, Series G | | | 5.88 | % | | | 43,000 | | | | 1,086,610 | |
| American Homes 4 Rent, Series H | | | 6.25 | % | | | 199,306 | | | | 4,992,615 | |
| Chatham Lodging Trust, Series A | | | 6.63 | % | | | 46,000 | | | | 1,064,900 | |
| 20 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Schedule of Investments |
| Description | | Coupon
Rate | | | Shares | | | Value
(Note 2) | |
| PREFERRED STOCKS (continued) | | | | | | | | | | | | |
| DiamondRock Hospitality Co., Series A | | | 8.25 | % | | | 89,516 | | | $ | 2,282,658 | |
| Digital Realty Trust, Inc., Series J | | | 5.25 | % | | | 58,000 | | | | 1,407,080 | |
| Digital Realty Trust, Inc., Series K | | | 5.85 | % | | | 195,000 | | | | 4,859,400 | |
| Digital Realty Trust, Inc., Series L | | | 5.20 | % | | | 57,000 | | | | 1,354,320 | |
| DigitalBridge Group, Inc., Series I | | | 7.15 | % | | | 89,000 | | | | 2,284,630 | |
| DigitalBridge Group, Inc., Series J | | | 7.13 | % | | | 34,500 | | | | 885,270 | |
| EPR Properties, Series G | | | 5.75 | % | | | 114,706 | | | | 2,637,091 | |
| Federal Realty Investment Trust, Series C | | | 5.00 | % | | | 121,000 | | | | 2,802,360 | |
| Global Net Lease, Inc., Series A | | | 7.25 | % | | | 9,255 | | | | 212,402 | |
| Hudson Pacific Properties, Inc., Series C | | | 4.75 | % | | | 129,000 | | | | 1,769,880 | |
| Kimco Realty Corp., Series L | | | 5.13 | % | | | 44,000 | | | | 1,056,880 | |
| Kimco Realty Corp., Series M | | | 5.25 | % | | | 121,000 | | | | 3,004,430 | |
| National Storage Affiliates Trust, Series A | | | 6.00 | % | | | 191,000 | | | | 4,773,090 | |
| Pebblebrook Hotel Trust, Series E | | | 6.38 | % | | | 127,246 | | | | 2,787,960 | |
| Pebblebrook Hotel Trust, Series F | | | 6.30 | % | | | 40,594 | | | | 901,998 | |
| Pebblebrook Hotel Trust, Series G | | | 6.38 | % | | | 118,400 | | | | 2,614,272 | |
| Pebblebrook Hotel Trust, Series H | | | 5.70 | % | | | 58,000 | | | | 1,148,400 | |
| Public Storage, Series F | | | 5.15 | % | | | 43,000 | | | | 1,073,710 | |
| Public Storage, Series G | | | 5.05 | % | | | 21,776 | | | | 540,045 | |
| Public Storage, Series H | | | 5.60 | % | | | 133,000 | | | | 3,311,700 | |
| Public Storage, Series I | | | 4.88 | % | | | 11,000 | | | | 255,860 | |
| Public Storage, Series J | | | 4.70 | % | | | 19,000 | | | | 426,930 | |
| Public Storage, Series L | | | 4.63 | % | | | 102,000 | | | | 2,235,840 | |
| Regency Centers Corp., Series A | | | 6.25 | % | | | 105,052 | | | | 2,692,483 | |
| Regency Centers Corp., Series B | | | 5.88 | % | | | 21,500 | | | | 523,525 | |
| Rexford Industrial Realty, Inc., Series B | | | 5.88 | % | | | 134,000 | | | | 3,236,100 | |
| Rexford Industrial Realty, Inc., Series C | | | 5.63 | % | | | 90,000 | | | | 2,162,700 | |
| Saul Centers, Inc., Series D | | | 6.13 | % | | | 97,814 | | | | 2,270,899 | |
| Saul Centers, Inc., Series E | | | 6.00 | % | | | 52,500 | | | | 1,238,475 | |
| SITE Centers Corp., Series A | | | 6.38 | % | | | 152,000 | | | | 3,684,480 | |
| SL Green Realty Corp., Series I | | | 6.50 | % | | | 75,000 | | | | 1,839,000 | |
| Summit Hotel Properties, Inc., Series E | | | 6.25 | % | | | 94,000 | | | | 1,971,180 | |
| Summit Hotel Properties, Inc., Series F | | | 5.88 | % | | | 31,780 | | | | 666,744 | |
| Sunstone Hotel Investors, Inc., Series H | | | 6.13 | % | | | 154,000 | | | | 3,451,140 | |
| Sunstone Hotel Investors, Inc., Series I | | | 5.70 | % | | | 76,000 | | | | 1,663,640 | |
| Vornado Realty Trust, Series L | | | 5.40 | % | | | 137,122 | | | | 2,580,636 | |
| Vornado Realty Trust, Series M | | | 5.25 | % | | | 81,750 | | | | 1,465,778 | |
| Vornado Realty Trust, Series N | | | 5.25 | % | | | 82,000 | | | | 1,470,260 | |
| Vornado Realty Trust, Series O | | | 4.45 | % | | | 62,500 | | | | 1,021,250 | |
| | | | | | | | | | | | | |
| TOTAL PREFERRED STOCKS | | | | | | | | | | | | |
| (Cost $85,402,490) | | | | | | | | | | | 85,608,521 | |
| | | 7-Day
Yield | | | Shares | | | Value
(Note 2) | |
| SHORT TERM INVESTMENT (0.05%) | | | | | | | | | | | | |
| MSILF Treasury Portfolio (Institutional Class) | | | 4.70 | % | | | 2,407,133 | | | | 2,407,133 | |
| | | | | | | | | | | | | |
| TOTAL SHORT TERM INVESTMENT | | | | | | | | | | | | |
| (Cost $2,407,133) | | | | | | | | | | | 2,407,133 | |
| Annual Report | September 30, 2024 | 21 |
| Apollo Diversified Real Estate Fund | Schedule of Investments |
| | | Shares | | | Value
(Note 2) | |
| TOTAL INVESTMENTS (107.50%) | | | | | | | | |
| (Cost $4,114,815,028 ) | | | | | | | 4,842,482,902 | |
| | | | | | | | | |
| Liabilities in Excess of Other Assets (7.50%) | | | | | | | (337,969,058 | ) |
| NET ASSETS (100.00%) | | | | | | $ | 4,504,513,844 | |
| (a) | A portion of these securities are held as collateral for the outstanding Lines of Credit. |
| (b) | Effective April 25, 2024, GWL U.S. Property Fund, L.P. changed its name to Sagard U.S. Property Fund. |
| (c) | These securities have no contractual maturity date, are not redeemable and contractually pay an indefinite stream of dividends. |
Common Abbreviations:
| Co. | - | Company |
| Corp. | - | Corporation |
| Inc. | - | Incorporated |
| LLC | - | Limited Liability Company |
| L.P. | - | Limited Partnership |
| REIT | - | Real Estate Investment Trust |
See Notes to Financial Statements.
| 22 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Statement of Assets and Liabilities |
| ASSETS | | | |
| Investments, at fair value (Cost $4,114,815,028) | | $ | 4,842,482,902 | |
| Cash | | | 88,891 | |
| Receivable for investments sold | | | 45,737,865 | |
| Dividend receivable | | | 24,038,642 | |
| Receivable for shares sold | | | 2,133,842 | |
| Prepaid expenses and other assets | | | 185,143 | |
| Interest receivable | | | 49,424 | |
| Total Assets | | | 4,914,716,709 | |
| LIABILITIES | | | | |
| Payable for lines of credit (Note 7) | | | 399,200,000 | |
| Payable for investment advisory fees (Note 4) | | | 5,321,053 | |
| Payable for lines of credit interest expense (Note 7) | | | 2,824,125 | |
| Payable for distribution fees (Note 4) | | | 907,788 | |
| Payable for investments purchased | | | 474,800 | |
| Payable for shares redeemed | | | 389,557 | |
| Payable for printing fees | | | 334,473 | |
| Payable for legal fees | | | 217,223 | |
| Payable for shareholder servicing fees (Note 4) | | | 212,379 | |
| Payable for transfer agency fees (Note 4) | | | 171,476 | |
| Payable for administration fees (Note 4) | | | 116,566 | |
| Accrued expenses and other liabilities | | | 33,425 | |
| Total Liabilities | | | 410,202,865 | |
| Commitments and contingencies (Note 3) | | | | |
| NET ASSETS | | $ | 4,504,513,844 | |
| NET ASSETS CONSIST OF | | | | |
| Paid-in capital | | $ | 3,489,529,793 | |
| Total distributable earnings | | | 1,014,984,051 | |
| NET ASSETS | | $ | 4,504,513,844 | |
| PRICING OF SHARES | | | | |
| Class A: | | | | |
| Net asset value | | $ | 25.88 | |
| Net assets | | $ | 550,333,369 | |
| Shares of beneficial interest outstanding (unlimited number of shares, no par value common stock authorized) | | | 21,264,737 | |
| Maximum offering price per share ((NAV/0.9425), based on maximum sales charge of 5.75% of the offering price) | | $ | 27.46 | |
| Class C: | | | | |
| Net asset value and maximum offering price | | $ | 24.17 | |
| Net assets | | $ | 408,799,172 | |
| Shares of beneficial interest outstanding (unlimited number of shares, no par value common stock authorized) | | | 16,913,792 | |
| Class I: | | | | |
| Net asset value and maximum offering price | | $ | 26.49 | |
| Net assets | | $ | 2,417,747,230 | |
| Shares of beneficial interest outstanding (unlimited number of shares, no par value common stock authorized) | | | 91,284,734 | |
| Class M: | | | | |
| Net asset value and maximum offering price | | $ | 24.90 | |
| Net assets | | $ | 1,047,854,417 | |
| Shares of beneficial interest outstanding (unlimited number of shares, no par value common stock authorized) | | | 42,085,642 | |
| Class L: | | | | |
| Net asset value | | $ | 25.45 | |
| Net assets | | $ | 79,779,656 | |
| Shares of beneficial interest outstanding (unlimited number of shares, no par value common stock authorized) | | | 3,134,739 | |
| Maximum offering price per share ((NAV/0.9575), based on maximum sales charge of 4.25% of the offering price) | | $ | 26.58 | |
See Notes to Financial Statements.
| Annual Report | September 30, 2024 | 23 |
| Apollo Diversified Real Estate Fund | Statement of Operations |
| | | For the Year Ended
September 30, 2024 | |
| INVESTMENT INCOME | | | | |
| Dividend Income (Note 2) | | $ | 160,288,097 | |
| Interest income | | | 763,716 | |
| Total Investment Income | | | 161,051,813 | |
| | | | | |
| EXPENSES | | | | |
| Investment advisory fees (Note 4) | | | 69,524,849 | |
| Administration fees (Note 4) | | | 1,436,992 | |
| Transfer agency fees (Note 4) | | | 3,052,815 | |
| Shareholder servicing fees (Note 4) | | | | |
| Class A | | | 1,425,748 | |
| Class C | | | 1,064,713 | |
| Class L | | | 192,990 | |
| Distribution fees (Note 4) | | | | |
| Class C | | | 3,194,138 | |
| Class M | | | 7,931,531 | |
| Class L | | | 193,990 | |
| Lines of Credit interest expense (Note 7) | | | 26,610,661 | |
| Reports to shareholders and printing fees | | | 1,125,772 | |
| Legal fees | | | 1,071,496 | |
| Insurance fees | | | 364,325 | |
| Custody fees | | | 219,806 | |
| Compliance fees (Note 4) | | | 218,118 | |
| Trustees' fees (Note 4) | | | 193,843 | |
| State registration fees | | | 165,195 | |
| Audit and tax fees | | | 45,137 | |
| Other expenses | | | 121,968 | |
| Total Expenses | | | 118,154,087 | |
| Fees waived/expenses reimbursed by Adviser (Note 4) | | | (542,664 | ) |
| Net Expenses | | | 117,611,423 | |
| Net Investment Income | | | 43,440,390 | |
| Net realized gain on investments | | | 24,604,771 | |
| Net change in unrealized appreciation on investments | | | 234,717,485 | |
| NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS | | | 259,322,256 | |
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 302,762,646 | |
See Notes to Financial Statements.
| 24 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Statements of Changes in Net Assets |
| | | For the
Year Ended
September 30, 2024 | | | For the
Year Ended
September 30, 2023 | |
| OPERATIONS: | | | | | | | | |
| Net investment income | | $ | 43,440,390 | | | $ | 94,371,154 | |
| Net realized gain/(loss) on investments | | | 24,604,771 | | | | (24,149,515 | ) |
| Net change in unrealized appreciation/(depreciation) on investments | | | 234,717,485 | | | | (480,829,440 | ) |
| Net Increase/(Decrease) in Net Assets Resulting from Operations | | | 302,762,646 | | | | (410,607,801 | ) |
| DISTRIBUTIONS TO SHAREHOLDERS: | | | | | | | | |
| Class A | | | | | | | | |
| From distributable earnings | | | (2,732,160 | ) | | | – | |
| From return of capital | | | (27,433,680 | ) | | | (36,617,515 | ) |
| Class C | | | | | | | | |
| From distributable earnings | | | (1,988,968 | ) | | | – | |
| From return of capital | | | (20,214,928 | ) | | | (27,055,991 | ) |
| Class I | | | | | | | | |
| From distributable earnings | | | (11,476,884 | ) | | | – | |
| From return of capital | | | (118,002,489 | ) | | | (153,698,721 | ) |
| Class M | | | | | | | | |
| From distributable earnings | | | (4,891,381 | ) | | | – | |
| From return of capital | | | (50,652,354 | ) | | | (66,719,886 | ) |
| Class L | | | | | | | | |
| From distributable earnings | | | (373,742 | ) | | | – | |
| From return of capital | | | (3,859,395 | ) | | | (4,906,005 | ) |
| Total Distributions to Shareholders | | | (241,625,981 | ) | | | (288,998,118 | ) |
| BENEFICIAL INTEREST TRANSACTIONS: | | | | | | | | |
| Class A | | | | | | | | |
| Shares sold | | | 11,630,172 | | | | 48,601,011 | |
| Distributions reinvested | | | 17,121,774 | | | | 20,950,645 | |
| Shares redeemed | | | (118,615,471 | ) | | | (89,765,757 | ) |
| Exchanged out | | | (7,539,583 | ) | | | (7,317,931 | ) |
| Class C | | | | | | | | |
| Shares sold | | | 5,242,268 | | | | 19,891,809 | |
| Distributions reinvested | | | 12,730,268 | | | | 15,632,823 | |
| Shares redeemed | | | (63,842,091 | ) | | | (56,259,544 | ) |
| Exchanged out | | | (16,852,192 | ) | | | (13,382,557 | ) |
| Class I | | | | | | | | |
| Shares sold | | | 211,549,232 | | | | 450,609,596 | |
| Distributions reinvested | | | 63,390,846 | | | | 81,976,660 | |
| Shares redeemed | | | (616,746,840 | ) | | | (628,455,234 | ) |
| Exchanged in | | | 25,617,913 | | | | 26,754,816 | |
| Class M | | | | | | | | |
| Shares sold | | | 10,234,049 | | | | 25,311,528 | |
| Distributions reinvested | | | 40,542,735 | | | | 50,345,991 | |
| Shares redeemed | | | (153,481,063 | ) | | | (192,504,523 | ) |
| Exchanged out | | | (298,961 | ) | | | (5,728,356 | ) |
| Class L | | | | | | | | |
| Shares sold | | | 667,603 | | | | 5,445,675 | |
| Distributions reinvested | | | 2,701,040 | | | | 3,208,791 | |
| Shares redeemed | | | (9,778,236 | ) | | | (10,815,589 | ) |
| Exchanged out | | | (927,177 | ) | | | (325,972 | ) |
| Net Decrease in Net Assets Derived from Beneficial Interest Transactions | | | (586,653,714 | ) | | | (255,826,118 | ) |
| Net decrease in net assets | | | (525,517,049 | ) | | | (955,432,037 | ) |
See Notes to Financial Statements.
| Annual Report | September 30, 2024 | 25 |
| Apollo Diversified Real Estate Fund | Statements of Changes in Net Assets |
| | | For the
Year Ended
September 30, 2024 | | | For the
Year Ended
September 30, 2023 | |
| NET ASSETS: | | | | | | | | |
| Beginning of year | | | 5,030,030,893 | | | | 5,985,462,930 | |
| End of year | | $ | 4,504,513,844 | | | $ | 5,030,030,893 | |
| Other Information | | | | | | | | |
| BENEFICIAL INTEREST TRANSACTIONS: | | | | | | | | |
| Class A | | | | | | | | |
| Beginning shares | | | 25,153,197 | | | | 26,141,537 | |
| Shares sold | | | 461,829 | | | | 1,738,247 | |
| Distributions reinvested | | | 678,662 | | | | 776,054 | |
| Shares redeemed | | | (4,729,888 | ) | | | (3,238,015 | ) |
| Shares transferred out | | | (299,063 | ) | | | (264,626 | ) |
| Net decrease in shares outstanding | | | (3,888,460 | ) | | | (988,340 | ) |
| Ending shares | | | 21,264,737 | | | | 25,153,197 | |
| Class C | | | | | | | | |
| Beginning shares | | | 19,582,835 | | | | 20,867,730 | |
| Shares sold | | | 221,876 | | | | 750,253 | |
| Distributions reinvested | | | 538,252 | | | | 613,028 | |
| Shares redeemed | | | (2,715,457 | ) | | | (2,150,679 | ) |
| Shares transferred out | | | (713,714 | ) | | | (497,497 | ) |
| Net decrease in shares outstanding | | | (2,669,043 | ) | | | (1,284,895 | ) |
| Ending shares | | | 16,913,792 | | | | 19,582,835 | |
| Class I | | | | | | | | |
| Beginning shares | | | 103,672,874 | | | | 106,105,048 | |
| Shares sold | | | 8,231,935 | | | | 15,903,550 | |
| Distributions reinvested | | | 2,457,294 | | | | 2,976,650 | |
| Shares redeemed | | | (24,072,461 | ) | | | (22,243,476 | ) |
| Shares transferred in | | | 995,092 | | | | 931,102 | |
| Net decrease in shares outstanding | | | (12,388,140 | ) | | | (2,432,174 | ) |
| Ending shares | | | 91,284,734 | | | | 103,672,874 | |
| Class M | | | | | | | | |
| Beginning shares | | | 46,358,337 | | | | 50,907,845 | |
| Shares sold | | | 417,842 | | | | 934,225 | |
| Distributions reinvested | | | 1,666,488 | | | | 1,923,638 | |
| Shares redeemed | | | (6,344,511 | ) | | | (7,199,616 | ) |
| Shares transferred out | | | (12,514 | ) | | | (207,755 | ) |
| Net decrease in shares outstanding | | | (4,272,695 | ) | | | (4,549,508 | ) |
| Ending shares | | | 42,085,642 | | | | 46,358,337 | |
| Class L | | | | | | | | |
| Beginning shares | | | 3,432,235 | | | | 3,522,234 | |
| Shares sold | | | 26,824 | | | | 195,170 | |
| Distributions reinvested | | | 108,719 | | | | 120,416 | |
| Shares redeemed | | | (395,962 | ) | | | (393,695 | ) |
| Shares transferred out | | | (37,077 | ) | | | (11,890 | ) |
| Net decrease in shares outstanding | | | (297,496 | ) | | | (89,999 | ) |
| Ending shares | | | 3,134,739 | | | | 3,432,235 | |
See Notes to Financial Statements.
| 26 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Statement of Cash Flows |
| | | For the Year Ended
September 30, 2024 | |
| Operating Activities: | | | | |
| Net increase in net assets resulting from operations | | $ | 302,762,646 | |
| Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: | | | | |
| Purchase of investments | | | (705,622,436 | ) |
| Proceeds from sale of investments | | | 1,295,153,252 | |
| Net sales of short-term investments | | | 2,633,833 | |
| Net realized gain on investments | | | (24,604,771 | ) |
| Net change in unrealized appreciation on investments | | | (234,717,485 | ) |
| Change in operating assets and liabilities: | | | | |
| Dividend receivables | | | 3,203,555 | |
| Interest receivables | | | 682,989 | |
| Prepaid expenses and other assets | | | 384,003 | |
| Payable for investment advisory fees | | | (965,097 | ) |
| Payable for distribution fees | | | (126,552 | ) |
| Payable for shareholder servicing fees | | | (45,225 | ) |
| Payable for transfer agency fees | | | 171,476 | |
| Payable for lines of credit interest expense | | | 1,680,251 | |
| Payable for administration fees | | | (153,602 | ) |
| Payable for trustees’ fees | | | (3,659 | ) |
| Payable for legal fees | | | 58,752 | |
| Payable for audit and tax fees | | | (28,500 | ) |
| Payable for custody fees | | | (39,885 | ) |
| Payable for printing fees | | | (87,107 | ) |
| Accrued expenses and other liabilities | | | 12,420 | |
| Net cash provided by operating activities | | | 640,348,858 | |
| | | | | |
| Financing Activities: | | | | |
| Net cash borrowed on lines of credit | | | 187,450,000 | |
| Proceeds from shares sold | | | 238,816,627 | |
| Payment of shares redeemed | | | (962,147,198 | ) |
| Distributions paid to shareholders | | | (105,139,318 | ) |
| Net cash used in financing activities | | | (641,019,889 | ) |
| | | | | |
| Cash and cash equivalents, beginning of year | | $ | 759,922 | |
| Cash and cash equivalents, end of year | | $ | 88,891 | |
| | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
| Non-cash financing activities not included herein consist of reinvestment of distributions of: | | $ | 136,486,663 | |
| Cash paid during the period for interest from bank borrowing: | | $ | 24,930,410 | |
See Notes to Financial Statements.
| Annual Report | September 30, 2024 | 27 |
| Apollo Diversified Real Estate Fund – Class A | Financial Highlights |
For a Share Outstanding Throughout the Years Presented
| | | For the Year
Ended
September 30,
2024 | | | For the Year
Ended
September 30,
2023 | | | For the Year
Ended
September 30,
2022 | | | For the Year
Ended
September 30,
2021 | | | For the Year
Ended
September 30,
2020 | |
| Net asset value, beginning of year | | $ | 25.45 | | | $ | 28.93 | | | $ | 27.67 | | | $ | 24.93 | | | $ | 27.36 | |
| | | | | | | | | | | | | | | | | | | | | |
| INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | 0.25 | | | | 0.48 | | | | 0.35 | | | | 0.39 | | | | 0.38 | |
| Net realized and unrealized gain/(loss) | | | 1.52 | | | | (2.53 | ) | | | 2.47 | | | | 3.74 | | | | (1.46 | ) |
| Total from investment operations | | | 1.77 | | | | (2.05 | ) | | | 2.82 | | | | 4.13 | | | | (1.08 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| DISTRIBUTIONS: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.12 | ) | | | – | | | | (0.04 | ) | | | (0.15 | ) | | | (0.36 | ) |
| From net realized gain on investments | | | – | | | | – | | | | (0.39 | ) | | | (0.19 | ) | | | – | |
| Return of capital | | | (1.22 | ) | | | (1.43 | ) | | | (1.13 | ) | | | (1.05 | ) | | | (0.99 | ) |
| Total distributions(b) | | | (1.34 | ) | | | (1.43 | ) | | | (1.56 | ) | | | (1.39 | ) | | | (1.35 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net increase/(decrease) in net asset value | | | 0.43 | | | | (3.48 | ) | | | 1.26 | | | | 2.74 | | | | (2.43 | ) |
| Net asset value, end of year | | $ | 25.88 | | | $ | 25.45 | | | $ | 28.93 | | | $ | 27.67 | | | $ | 24.93 | |
| TOTAL RETURN(c) | | | 7.18 | % | | | (7.27 | )% | | | 10.19 | % | | | 17.00 | % | | | (3.96 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000s) | | $ | 550,333 | | | $ | 640,222 | | | $ | 756,171 | | | $ | 719,324 | | | $ | 735,511 | |
| Ratios to Average Net Assets (including interest expense) | | | | | | | | | | | | | | | | | | | | |
| Ratio of expenses to average net assets excluding fee waivers and reimbursements/recoupment of previously waived fees(d) | | | 2.49 | % | | | 2.03 | % | | | 1.98 | % | | | 1.97 | % | | | 1.95 | % |
| Ratio of expenses to average net assets including fee waivers and reimbursements/recoupment of previously waived fees(d) | | | 2.48 | % | | | 2.03 | % | | | 1.98 | % | | | 1.98 | % | | | 1.97 | % |
| Ratio of net investment income to average net assets including fee waivers and reimbursements(d)(e) | | | 0.99 | % | | | 1.74 | % | | | 1.16 | % | | | 1.48 | % | | | 1.45 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Ratios to Average Net Assets (excluding interest expense) | | | | | | | | | | | | | | | | | | | | |
| Ratio of expenses to average net assets excluding fee waivers and reimbursements/recoupment of previously waived fees(d) | | | 1.92 | % | | | 1.87 | % | | | 1.87 | % | | | 1.89 | % | | | 1.89 | % |
| Ratio of expenses to average net assets including fee waivers and reimbursements/recoupment of previously waived fees(d) | | | 1.91 | % | | | 1.87 | % | | | 1.87 | % | | | 1.90 | % | | | 1.91 | % |
| Ratio of net investment income to average net assets excluding fee waivers and reimbursements(d)(e) | | | 1.55 | % | | | 1.90 | % | | | 1.27 | % | | | 1.57 | % | | | 1.53 | % |
| Portfolio turnover rate | | | 15 | % | | | 16 | % | | | 19 | % | | | 42 | % | | | 51 | % |
See Notes to Financial Statements.
| 28 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund – Class A | Financial Highlights |
For a Share Outstanding Throughout the Years Presented
| (a) | Calculated using the average shares method. |
| (b) | Total distributions during a calendar year generally will be made from the Fund’s net investment income, net realized gains on investments and net unrealized gains on investments, if any. The portion of distributions paid not attributable to net investment income or net realized gains on investments, if any, is distributed from the Fund’s assets and is treated by shareholders as a nontaxable distribution (“Return of Capital”) for tax purposes. Return of capital is a tax concept, not an economic concept. The tax character of the Fund’s distributions, in isolation, does not reveal much information about whether the distributions are supported by the Fund’s returns. Reported distributions from net investment income and realized gains on investments are not an indication as to whether or not the Fund’s distributions are supported by the Fund’s returns. The characteristics of the Fund’s distributions may include net investment income and realized capital gains in years in which it incurs an economic loss due to unrealized losses not being recognized for tax purposes. A common method in which to determine if the Fund’s distributions are supported by economic returns is to examine the Fund’s Net Asset Value (“NAV”) over the course of a year. If the Fund’s NAV has increased, the Fund will have economically earned more than it has distributed, regardless of whether such distributions are reported as being from net investment income, net realized gains on investments or return of capital. If the Fund’s NAV decreases, the Fund will have distributed more than it has economically earned or it will have incurred an economic loss. |
| (c) | Total returns are for the period indicated. Total returns would have been lower/higher had certain expenses not been waived or recouped by the Adviser during the years ended September 30, 2020, 2021, and September 30, 2024. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return does not include sales load. |
| (d) | The ratios of expenses to average net assets and net investment income to average net assets do not reflect the expenses of the underlying private real estate funds in which the Fund invests which typically range from 0.80% to 1.00% on an annual basis. However, the Fund invests in each underlying private real estate investment fund based upon the net asset value of each such fund which reflects the costs of investing in the applicable fund, including the management fee of the underlying fund and other operating expenses. The net asset value of each underlying private real estate investment fund is incorporated into the ratios described above. |
| (e) | Recognition of net investment income is affected by the timing and declaration of dividends by the underlying investments in which the Fund invests. |
See Notes to Financial Statements.
| Annual Report | September 30, 2024 | 29 |
| Apollo Diversified Real Estate Fund – Class C | Financial Highlights |
For a Share Outstanding Throughout the Years Presented
| | | For the Year
Ended
September 30,
2024 | | | For the Year
Ended
September 30,
2023 | | | For the Year
Ended
September 30,
2022 | | | For the Year
Ended
September 30,
2021 | | | For the Year
Ended
September 30,
2020 | |
| Net asset value, beginning of year | | $ | 23.96 | | | $ | 27.44 | | | $ | 26.44 | | | $ | 24.00 | | | $ | 26.54 | |
| INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | 0.06 | | | | 0.26 | | | | 0.12 | | | | 0.18 | | | | 0.18 | |
| Net realized and unrealized gain/(loss) | | | 1.40 | | | | (2.39 | ) | | | 2.36 | | | | 3.59 | | | | (1.41 | ) |
| Total from investment operations | | | 1.46 | | | | (2.13 | ) | | | 2.48 | | | | 3.77 | | | | (1.23 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| DISTRIBUTIONS: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.11 | ) | | | – | | | | (0.03 | ) | | | (0.13 | ) | | | (0.35 | ) |
| From net realized gain on investments | | | – | | | | – | | | | (0.39 | ) | | | (0.19 | ) | | | – | |
| Return of capital | | | (1.14 | ) | | | (1.35 | ) | | | (1.06 | ) | | | (1.01 | ) | | | (0.96 | ) |
| Total distributions(b) | | | (1.25 | ) | | | (1.35 | ) | | | (1.48 | ) | | | (1.33 | ) | | | (1.31 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net increase/(decrease) in net asset value | | | 0.21 | | | | (3.48 | ) | | | 1.00 | | | | 2.44 | | | | (2.54 | ) |
| Net asset value, end of year | | $ | 24.17 | | | $ | 23.96 | | | $ | 27.44 | | | $ | 26.44 | | | $ | 24.00 | |
| TOTAL RETURN(c) | | | 6.32 | % | | | (7.95 | )% | | | 9.38 | % | | | 16.13 | % | | | (4.68 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000s) | | $ | 408,799 | | | $ | 469,153 | | | $ | 572,528 | | | $ | 513,220 | | | $ | 499,225 | |
| Ratios to Average Net Assets (including interest expense) | | | | | | | | | | | | | | | | | | | | |
| Ratio of expenses to average net assets excluding fee waivers and reimbursements/recoupment of previously waived fees(d) | | | 3.25 | % | | | 2.79 | % | | | 2.73 | % | | | 2.72 | % | | | 2.71 | % |
| Ratio of expenses to average net assets including fee waivers and reimbursements/recoupment of previously waived fees (d) | | | 3.23 | % | | | 2.79 | % | | | 2.73 | % | | | 2.73 | % | | | 2.72 | % |
| Ratio of net investment income to average net assets including fee waivers and reimbursements(d)(e) | | | 0.24 | % | | | 0.98 | % | | | 0.41 | % | | | 0.72 | % | | | 0.71 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Ratios to Average Net Assets (excluding interest expense) | | | | | | | | | | | | | | | | | | | | |
| Ratio of expenses to average net assets excluding fee waivers and reimbursements/recoupment of previously waived fees(d) | | | 2.68 | % | | | 2.63 | % | | | 2.62 | % | | | 2.64 | % | | | 2.65 | % |
| Ratio of expenses to average net assets including fee waivers and reimbursements/recoupment of previously waived fees(d) | | | 2.66 | % | | | 2.63 | % | | | 2.62 | % | | | 2.65 | % | | | 2.66 | % |
| Ratio of net investment income to average net assets excluding fee waivers and reimbursements(d)(e) | | | 0.80 | % | | | 1.14 | % | | | 0.52 | % | | | 0.81 | % | | | 0.78 | % |
| Portfolio turnover rate | | | 15 | % | | | 16 | % | | | 19 | % | | | 42 | % | | | 51 | % |
See Notes to Financial Statements.
| 30 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund – Class C | Financial Highlights |
For a Share Outstanding Throughout the Years Presented
| (a) | Calculated using the average shares method. |
| (b) | Total distributions during a calendar year generally will be made from the Fund’s net investment income, net realized gains on investments and net unrealized gains on investments, if any. The portion of distributions paid not attributable to net investment income or net realized gains on investments, if any, is distributed from the Fund’s assets and is treated by shareholders as a nontaxable distribution (“Return of Capital”) for tax purposes. Return of capital is a tax concept, not an economic concept. The tax character of the Fund’s distributions, in isolation, does not reveal much information about whether the distributions are supported by the Fund’s returns. Reported distributions from net investment income and realized gains on investments are not an indication as to whether or not the Fund’s distributions are supported by the Fund’s returns. The characteristics of the Fund’s distributions may include net investment income and realized capital gains in years in which it incurs an economic loss due to unrealized losses not being recognized for tax purposes. A common method in which to determine if the Fund’s distributions are supported by economic returns is to examine the Fund’s Net Asset Value (“NAV”) over the course of a year. If the Fund’s NAV has increased, the Fund will have economically earned more than it has distributed, regardless of whether such distributions are reported as being from net investment income, net realized gains on investments or return of capital. If the Fund’s NAV decreases, the Fund will have distributed more than it has economically earned or it will have incurred an economic loss. |
| (c) | Total returns are for the period indicated. Total returns would have been lower/higher had certain expenses not been waived or recouped by the Adviser during the years ended September 30, 2020, 2021, and September 30, 2024. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return does not include sales load. |
| (d) | The ratios of expenses to average net assets and net investment income to average net assets do not reflect the expenses of the underlying private real estate funds in which the Fund invests which typically range from 0.80% to 1.00% on an annual basis. However, the Fund invests in each underlying private real estate investment fund based upon the net asset value of each such fund which reflects the costs of investing in the applicable fund, including the management fee of the underlying fund and other operating expenses. The net asset value of each underlying private real estate investment fund is incorporated into the ratios described above. |
| (e) | Recognition of net investment income is affected by the timing and declaration of dividends by the underlying investments in which the Fund invests. |
See Notes to Financial Statements.
| Annual Report | September 30, 2024 | 31 |
| Apollo Diversified Real Estate Fund – Class I | Financial Highlights |
| | For a Share Outstanding Throughout the Years Presented |
| | | For the Year Ended September 30, 2024 | | | For the Year Ended September 30, 2023 | | | For the Year Ended September 30, 2022 | | | For the Year Ended September 30, 2021 | | | For the Year Ended September 30, 2020 | |
| Net asset value, beginning of year | | $ | 25.98 | | | $ | 29.45 | | | $ | 28.10 | | | $ | 25.25 | | | $ | 27.65 | |
| INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | 0.32 | | | | 0.56 | | | | 0.44 | | | | 0.46 | | | | 0.45 | |
| Net realized and unrealized gain/(loss) | | | 1.56 | | | | (2.57 | ) | | | 2.49 | | | | 3.80 | | | | (1.48 | ) |
| Total from investment operations | | | 1.88 | | | | (2.01 | ) | | | 2.93 | | | | 4.26 | | | | (1.03 | ) |
| | | | | | | | | | | | | | | | | | | | |
| DISTRIBUTIONS: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.12 | ) | | | – | | | | (0.05 | ) | | | (0.15 | ) | | | (0.37 | ) |
| From net realized gain on investments | | | – | | | | – | | | | (0.39 | ) | | | (0.19 | ) | | | – | |
| Return of capital | | | (1.25 | ) | | | (1.46 | ) | | | (1.14 | ) | | | (1.07 | ) | | | (1.00 | ) |
| Total distributions(b) | | | (1.37 | ) | | | (1.46 | ) | | | (1.58 | ) | | | (1.41 | ) | | | (1.37 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net increase/(decrease) in net asset value | | | 0.51 | | | | (3.47 | ) | | | 1.35 | | | | 2.85 | | | | (2.40 | ) |
| Net asset value, end of year | | $ | 26.49 | | | $ | 25.98 | | | $ | 29.45 | | | $ | 28.10 | | | $ | 25.25 | |
| TOTAL RETURN(c) | | | 7.47 | % | | | (7.00 | )% | | | 10.45 | % | | | 17.31 | % | | | (3.75 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000s) | | $ | 2,417,747 | | | $ | 2,693,671 | | | $ | 3,125,198 | | | $ | 1,947,652 | | | $ | 1,624,344 | |
| Ratios to Average Net Assets (including interest expense) | | | | | | | | | | | | | | | | | | | | |
| Ratio of expenses to average net assets excluding fee waivers and reimbursements/recoupment of previously waived fees(d) | | | 2.25 | % | | | 1.78 | % | | | 1.71 | % | | | 1.72 | % | | | 1.71 | % |
| Ratio of expenses to average net assets including fee waivers and reimbursements/recoupment of previously waived fees (d) | | | 2.23 | % | | | 1.78 | % | | | 1.71 | % | | | 1.73 | % | | | 1.72 | % |
| Ratio of net investment income to average net assets including fee waivers and reimbursements(d)(e) | | | 1.24 | % | | | 1.99 | % | | | 1.45 | % | | | 1.72 | % | | | 1.71 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Ratios to Average Net Assets (excluding interest expense) | | | | | | | | | | | | | | | | | | | | |
| Ratio of expenses to average net assets excluding fee waivers and reimbursements/recoupment of previously waived fees(d) | | | 1.68 | % | | | 1.62 | % | | | 1.60 | % | | | 1.65 | % | | | 1.65 | % |
| Ratio of expenses to average net assets including fee waivers and reimbursements/recoupment of previously waived fees(d) | | | 1.66 | % | | | 1.62 | % | | | 1.60 | % | | | 1.66 | % | | | 1.66 | % |
| Ratio of net investment income to average net assets excluding fee waivers and reimbursements(d)(e) | | | 1.80 | % | | | 2.15 | % | | | 1.56 | % | | | 1.80 | % | | | 1.79 | % |
| Portfolio turnover rate | | | 15 | % | | | 16 | % | | | 19 | % | | | 42 | % | | | 51 | % |
See Notes to Financial Statements.
| 32 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund – Class I | Financial Highlights |
| | For a Share Outstanding Throughout the Years Presented |
| (a) | Calculated using the average shares method. |
| (b) | Total distributions during a calendar year generally will be made from the Fund’s net investment income, net realized gains on investments and net unrealized gains on investments, if any. The portion of distributions paid not attributable to net investment income or net realized gains on investments, if any, is distributed from the Fund’s assets and is treated by shareholders as a nontaxable distribution (“Return of Capital”) for tax purposes. Return of capital is a tax concept, not an economic concept. The tax character of the Fund’s distributions, in isolation, does not reveal much information about whether the distributions are supported by the Fund’s returns. Reported distributions from net investment income and realized gains on investments are not an indication as to whether or not the Fund’s distributions are supported by the Fund’s returns. The characteristics of the Fund's distributions may include net investment income and realized capital gains in years in which it incurs an economic loss due to unrealized losses not being recognized for tax purposes. A common method in which to determine if the Fund’s distributions are supported by economic returns is to examine the Fund’s Net Asset Value (“NAV”) over the course of a year. If the Fund’s NAV has increased, the Fund will have economically earned more than it has distributed, regardless of whether such distributions are reported as being from net investment income, net realized gains on investments or return of capital. If the Fund’s NAV decreases, the Fund will have distributed more than it has economically earned or it will have incurred an economic loss. |
| (c) | Total returns are for the period indicated. Total returns would have been lower/higher had certain expenses not been waived or recouped by the Adviser during the years ended September 30, 2020, 2021, and September 30, 2024. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return does not include sales load. |
| (d) | The ratios of expenses to average net assets and net investment income to average net assets do not reflect the expenses of the underlying private real estate funds in which the Fund invests which typically range from 0.80% to 1.00% on an annual basis. However, the Fund invests in each underlying private real estate investment fund based upon the net asset value of each such fund which reflects the costs of investing in the applicable fund, including the management fee of the underlying fund and other operating expenses. The net asset value of each underlying private real estate investment fund is incorporated into the ratios described above. |
| (e) | Recognition of net investment income is affected by the timing and declaration of dividends by the underlying investments in which the Fund invests. |
See Notes to Financial Statements.
| Annual Report | September 30, 2024 | 33 |
| Apollo Diversified Real Estate Fund – Class M | Financial Highlights |
| | For a Share Outstanding Throughout the Years Presented |
| | | For the Year Ended September 30, 2024 | | | For the Year Ended September 30, 2023 | | | For the Year Ended September 30, 2022 | | | For the Year Ended September 30, 2021 | | | For the Year Ended September 30, 2020 | |
| Net asset value, beginning of year | | $ | 24.61 | | | $ | 28.11 | | | $ | 27.02 | | | $ | 24.46 | | | $ | 26.98 | |
| | | | | | | | | | | | | | | | | | | | | |
| INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | 0.12 | | | | 0.33 | | | | 0.20 | | | | 0.25 | | | | 0.25 | |
| Net realized and unrealized gain/(loss) | | | 1.46 | | | | (2.44 | ) | | | 2.40 | | | | 3.67 | | | | (1.44 | ) |
| Total from investment operations | | | 1.58 | | | | (2.11 | ) | | | 2.60 | | | | 3.92 | | | | (1.19 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| DISTRIBUTIONS: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.11 | ) | | | – | | | | (0.03 | ) | | | (0.14 | ) | | | (0.35 | ) |
| From net realized gain on investments | | | – | | | | – | | | | (0.39 | ) | | | (0.19 | ) | | | – | |
| Return of capital | | | (1.18 | ) | | | (1.39 | ) | | | (1.09 | ) | | | (1.03 | ) | | | (0.98 | ) |
| Total distributions (b) | | | (1.29 | ) | | | (1.39 | ) | | | (1.51 | ) | | | (1.36 | ) | | | (1.33 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net increase/(decrease) in net asset value | | | 0.29 | | | | (3.50 | ) | | | 1.09 | | | | 2.56 | | | | (2.52 | ) |
| Net asset value, end of year | | $ | 24.90 | | | $ | 24.61 | | | $ | 28.11 | | | $ | 27.02 | | | $ | 24.46 | |
| TOTAL RETURN (c) | | | 6.64 | % | | | (7.71 | )% | | | 9.64 | % | | | 16.45 | % | | | (4.44 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000s) | | $ | 1,047,854 | | | $ | 1,140,868 | | | $ | 1,430,890 | | | $ | 1,136,373 | | | $ | 942,531 | |
| Ratios to Average Net Assets (including interest expense) | | | | | | | | | | | | | | | | | | | | |
| Ratio of expenses to average net assets excluding fee waivers and reimbursements/recoupment of previously waived fees (d) | | | 3.00 | % | | | 2.53 | % | | | 2.47 | % | | | 2.47 | % | | | 2.46 | % |
| Ratio of expenses to average net assets including fee waivers and reimbursements/recoupment of previously waived fees (d) | | | 2.99 | % | | | 2.53 | % | | | 2.47 | % | | | 2.47 | % | | | 2.46 | % |
| Ratio of net investment income to average net assets including fee waivers and reimbursements(d)(e) | | | 0.49 | % | | | 1.23 | % | | | 0.67 | % | | | 0.99 | % | | | 0.98 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Ratios to Average Net Assets (excluding interest expense) | | | | | | | | | | | | | | | | | | | | |
| Ratio of expenses to average net assets excluding fee waivers and reimbursements/recoupment of previously waived fees (d) | | | 2.42 | % | | | 2.37 | % | | | 2.36 | % | | | 2.40 | % | | | 2.40 | % |
| Ratio of expenses to average net assets including fee waivers and reimbursements/recoupment of previously waived fees (d) | | | 2.41 | % | | | 2.37 | % | | | 2.36 | % | | | 2.40 | % | | | 2.40 | % |
| Ratio of net investment income to average net assets excluding fee waivers and reimbursements (d)(e) | | | 1.06 | % | | | 1.39 | % | | | 0.78 | % | | | 1.06 | % | | | 1.04 | % |
| Portfolio turnover rate | | | 15 | % | | | 16 | % | | | 19 | % | | | 42 | % | | | 51 | % |
See Notes to Financial Statements.
| 34 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund – Class M | Financial Highlights |
| | For a Share Outstanding Throughout the Years Presented |
| (a) | Calculated using the average shares method. |
| (b) | Total distributions during a calendar year generally will be made from the Fund’s net investment income, net realized gains on investments and net unrealized gains on investments, if any. The portion of distributions paid not attributable to net investment income or net realized gains on investments, if any, is distributed from the Fund’s assets and is treated by shareholders as a nontaxable distribution (“Return of Capital”) for tax purposes. Return of capital is a tax concept, not an economic concept. The tax character of the Fund’s distributions, in isolation, does not reveal much information about whether the distributions are supported by the Fund’s returns. Reported distributions from net investment income and realized gains on investments are not an indication as to whether or not the Fund’s distributions are supported by the Fund’s returns. The characteristics of the Fund's distributions may include net investment income and realized capital gains in years in which it incurs an economic loss due to unrealized losses not being recognized for tax purposes. A common method in which to determine if the Fund’s distributions are supported by economic returns is to examine the Fund’s Net Asset Value (“NAV”) over the course of a year. If the Fund’s NAV has increased, the Fund will have economically earned more than it has distributed, regardless of whether such distributions are reported as being from net investment income, net realized gains on investments or return of capital. If the Fund’s NAV decreases, the Fund will have distributed more than it has economically earned or it will have incurred an economic loss. |
| (c) | Total returns are for the period indicated. Total returns would have been lower had certain expenses not been waived or recouped by the Adviser during the year ended September 30, 2024. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return does not include sales load. |
| (d) | The ratios of expenses to average net assets and net investment income to average net assets do not reflect the expenses of the underlying private real estate funds in which the Fund invests which typically range from 0.80% to 1.00% on an annual basis. However, the Fund invests in each underlying private real estate investment fund based upon the net asset value of each such fund which reflects the costs of investing in the applicable fund, including the management fee of the underlying fund and other operating expenses. The net asset value of each underlying private real estate investment fund is incorporated into the ratios described above. |
| (e) | Recognition of net investment income is affected by the timing and declaration of dividends by the underlying investments in which the Fund invests. |
See Notes to Financial Statements.
| Annual Report | September 30, 2024 | 35 |
| Apollo Diversified Real Estate Fund – Class L | Financial Highlights |
| | For a Share Outstanding Throughout the Years Presented |
| | | For the Year Ended September 30, 2024 | | | For the Year Ended September 30, 2023 | | | For the Year Ended September 30, 2022 | | | For the Year
Ended September 30, 2021 | | | For the Year Ended September 30, 2020 | |
| Net asset value, beginning of year | | $ | 25.09 | | | $ | 28.58 | | | $ | 27.40 | | | $ | 24.74 | | | $ | 27.22 | |
| | | | | | | | | | | | | | | | | | | | | |
| INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | | | | | | | | | | |
| Net investment income(a) | | | 0.19 | | | | 0.41 | | | | 0.27 | | | | 0.32 | | | | 0.31 | |
| Net realized and unrealized gain/(loss) | | | 1.48 | | | | (2.49 | ) | | | 2.45 | | | | 3.71 | | | | (1.45 | ) |
| Total from investment operations | | | 1.67 | | | | (2.08 | ) | | | 2.72 | | | | 4.03 | | | | (1.14 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| DISTRIBUTIONS: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.11 | ) | | | – | | | | (0.04 | ) | | | (0.14 | ) | | | (0.35 | ) |
| From net realized gain on investments | | | – | | | | – | | | | (0.39 | ) | | | (0.19 | ) | | | – | |
| Return of capital | | | (1.20 | ) | | | (1.41 | ) | | | (1.11 | ) | | | (1.04 | ) | | | (0.99 | ) |
| Total distributions (b) | | | (1.31 | ) | | | (1.41 | ) | | | (1.54 | ) | | | (1.37 | ) | | | (1.34 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net increase/(decrease) in net asset value | | | 0.36 | | | | (3.49 | ) | | | 1.18 | | | | 2.66 | | | | (2.48 | ) |
| Net asset value, end of year | | $ | 25.45 | | | $ | 25.09 | | | $ | 28.58 | | | $ | 27.40 | | | $ | 24.74 | |
| TOTAL RETURN (c) | | | 6.91 | % | | | (7.46 | )% | | | 9.93 | % | | | 16.75 | % | | | (4.20 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000s) | | $ | 79,780 | | | $ | 86,118 | | | $ | 100,675 | | | $ | 88,449 | | | $ | 78,213 | |
| Ratios to Average Net Assets (including interest expense) | | | | | | | | | | | | | | | | | | | | |
| Ratio of expenses to average net assets excluding fee waivers and reimbursements/recoupment of previously waived fees (d) | | | 2.73 | % | | | 2.27 | % | | | 2.21 | % | | | 2.21 | % | | | 2.20 | % |
| Ratio of expenses to average net assets including fee waivers and reimbursements/recoupment of previously waived fees (d) | | | 2.73 | % | | | 2.27 | % | | | 2.21 | % | | | 2.21 | % | | | 2.20 | % |
| Ratio of net investment income to average net assets including fee waivers and reimbursements(d)(e) | | | 0.75 | % | | | 1.50 | % | | | 0.93 | % | | | 1.24 | % | | | 1.19 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Ratios to Average Net Assets (excluding interest expense) | | | | | | | | | | | | | | | | | | | | |
| Ratio of expenses to average net assets excluding fee waivers and reimbursements/recoupment of previously waived fees (d) | | | 2.15 | % | | | 2.11 | % | | | 2.10 | % | | | 2.13 | % | | | 2.14 | % |
| Ratio of expenses to average net assets including fee waivers and reimbursements/recoupment of previously waived fees (d) | | | 2.15 | % | | | 2.11 | % | | | 2.10 | % | | | 2.13 | % | | | 2.14 | % |
| Ratio of net investment income to average net assets excluding fee waivers and reimbursements (d)(e) | | | 1.33 | % | | | 1.66 | % | | | 1.04 | % | | | 1.32 | % | | | 1.25 | % |
| Portfolio turnover rate | | | 15 | % | | | 16 | % | | | 19 | % | | | 42 | % | | | 51 | % |
See Notes to Financial Statements.
| 36 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund – Class L | Financial Highlights |
| | For a Share Outstanding Throughout the Years Presented |
| (a) | Calculated using the average shares method. |
| (b) | Total distributions during a calendar year generally will be made from the Fund’s net investment income, net realized gains on investments and net unrealized gains on investments, if any. The portion of distributions paid not attributable to net investment income or net realized gains on investments, if any, is distributed from the Fund’s assets and is treated by shareholders as a nontaxable distribution (“Return of Capital”) for tax purposes. Return of capital is a tax concept, not an economic concept. The tax character of the Fund’s distributions, in isolation, does not reveal much information about whether the distributions are supported by the Fund’s returns. Reported distributions from net investment income and realized gains on investments are not an indication as to whether or not the Fund’s distributions are supported by the Fund’s returns. The characteristics of the Fund's distributions may include net investment income and realized capital gains in years in which it incurs an economic loss due to unrealized losses not being recognized for tax purposes. A common method in which to determine if the Fund’s distributions are supported by economic returns is to examine the Fund’s Net Asset Value (“NAV”) over the course of a year. If the Fund’s NAV has increased, the Fund will have economically earned more than it has distributed, regardless of whether such distributions are reported as being from net investment income, net realized gains on investments or return of capital. If the Fund’s NAV decreases, the Fund will have distributed more than it has economically earned or it will have incurred an economic loss. |
| (c) | Total returns are for the period indicated. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total return does not include sales load. |
| (d) | The ratios of expenses to average net assets and net investment income to average net assets do not reflect the expenses of the underlying private real estate funds in which the Fund invests which typically range from 0.80% to 1.00% on an annual basis. However, the Fund invests in each underlying private real estate investment fund based upon the net asset value of each such fund which reflects the costs of investing in the applicable fund, including the management fee of the underlying fund and other operating expenses. The net asset value of each underlying private real estate investment fund is incorporated into the ratios described above. |
| (e) | Recognition of net investment income is affected by the timing and declaration of dividends by the underlying investments in which the Fund invests. |
See Notes to Financial Statements.
| Annual Report | September 30, 2024 | 37 |
| Apollo Diversified Real Estate Fund | Financial Highlights |
| | For a Share Outstanding Throughout the Years Presented |
Information about the Fund's senior securities is shown in the following table:
| | | For the Year Ended September 30, 2024 | | | For the Year Ended September 30, 2023 | | | For the Year Ended September 30, 2022 | | | For the Year Ended September 30, 2021 | | | For the Year Ended September 30, 2020 | |
| Lines of Credit Total Amount Outstanding (000's) | | $ | 399,200 | | | $ | 211,750 | | | $ | 172,750 | | | $ | 139,000 | | | | N/A | |
| Asset Coverage Per $1,000 of Lines of Credit Outstanding(a) | | $ | 12,284 | | | $ | 24,755 | | | $ | 35,648 | | | $ | 32,691 | | | | N/A | |
| (a) | Calculated by subtracting the Fund’s total liabilities (excluding the indebtedness represented by the Lines of Credit) from the Fund’s total assets and dividing by the total amount outstanding on the Lines of Credit. The Asset Coverage ratio is then multiplied by $1,000 to determine the "Asset Coverage Per $1,000 of Lines of Credit Outstanding." |
See Notes to Financial Statements.
| 38 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
1. ORGANIZATION
Apollo Diversified Real Estate Fund (the "Fund") is registered with the U.S. Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, closed-end management investment company. The Fund engages in a continuous offering of shares and operates as an interval fund that offers quarterly repurchases of shares at Net Asset Value (“NAV”). The Fund was organized as a statutory trust on November 5, 2013, under the laws of the State of Delaware. The Fund commenced operations on June 30, 2014 and is authorized to issue an unlimited number of shares with no par value. The Fund’s investment adviser is Apollo Real Estate Fund Adviser, LLC (the "Adviser"), a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries ("Apollo"). The investment objective of the Fund is to generate a return comprised of both current income and capital appreciation with moderate volatility and low correlation to the broader markets. The Fund pursues its investment objective by strategically investing across private institutional real estate investment funds as well as a diversified set of public real estate securities.
The Fund currently offers Class A, Class C, Class I, Class M and Class L shares. Class A shares commenced operations on June 30, 2014, Class C and Class I shares commenced operations on August 10, 2015, Class M shares commenced operations on November 17, 2016 and Class L shares commenced operations on April 25, 2017. The sales load payable by each investor depends on the amount invested, and the class of shares invested into, by such investor in the Fund. Class A and Class L shares are offered subject to a maximum sales charge of 5.75% and 4.25%, respectively, of their offering price. Class C, Class I and Class M shares are offered at net asset value. Class C shares may be subject to a 1.00% contingent deferred sales charge on shares redeemed during the first 365 days after their purchase. Each class represents an interest in the same assets of the Fund and classes are identical except for differences in their sales charge structures and ongoing service and distribution charges. All classes of shares have equal voting privileges except that each class has exclusive voting rights with respect to its service and/or distribution plans. The Fund's income, expenses (other than class specific service and distribution fees) and realized and unrealized gains and losses are allocated proportionately each day based upon the relative net assets of each class.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the Fund in preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Fund is considered an investment company following accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946 – Financial Services – Investment Companies. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.
Determination of the Fund’s Net Asset Value – The net asset value per share for the Fund is determined following the close of regular trading on the New York Stock Exchange (“NYSE”), generally 4:00 p.m. Eastern time, on each day the NYSE is open for trading. Each of the Fund’s share classes will be offered at net asset value plus the applicable sales load, if any. The Fund’s net asset value per share is calculated, on a class-specific basis, by dividing the value of the Fund’s net assets by the total number of shares outstanding. The Fund’s net asset value per share is calculated, on a class specific basis, by dividing the value of the Fund’s total assets (the value of the securities the Fund holds plus cash or other assets, including interest accrued but not yet received), less accrued expenses and other liabilities of the Fund, by the total number of shares outstanding.
Valuation of the Fund's Portfolio – The Board has adopted procedures pursuant to which the Fund will value its investments (the “Valuation Policy and Procedures”). In accordance with the Valuation Policy and Procedures, the Fund’s portfolio investments for which market quotations are readily available are valued at market value. Investments for which market quotations are not readily available or are deemed to be unreliable are valued at fair value as determined in good faith pursuant to Rule 2a-5 under the 1940 Act. As permitted by Rule 2a-5 under the 1940 Act, the Board has designated the Adviser as the Fund’s valuation designee (“Valuation Designee”) to perform fair value determinations relating to all portfolio investments. The Adviser carries out its designated responsibilities as Valuation Designee through various teams pursuant to the Valuation Policy and Procedures which govern the Valuation Designee’s selection and application of methodologies and independent pricing services for determining and calculating the fair value of portfolio investments. The Valuation Designee will fair value portfolio investments utilizing inputs from various external and internal sources including, but not limited to, independent pricing services, dealer quotation reporting systems, independent third-party valuation firms and proprietary information. When determining the fair value of an investment, one or more fair value methodologies may be used. Fair value determinations will be based upon all available factors that the Valuation Designee deems relevant at the time of the determination. Fair valuation involves subjective judgments, and it is possible that the fair value determined for a security may differ materially from the value that could be realized upon the sale of the security.
| Annual Report | September 30, 2024 | 39 |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
Valuation of Public Securities – The Fund’s portfolio investments for which market quotations are readily available are valued at market value. Market value is generally determined on the basis of official exchange (e.g., NYSE or NASDAQ) closing prices or the last reported sales prices. Portfolio investments listed on more than one exchange will generally be valued at the last quoted sale price on the exchange on which the security is principally traded. Portfolio investments traded on a foreign exchange are valued as of the close of the NYSE at the closing price of such investments in their principal trading market but may be fair valued if subsequent events occurring before the computation of net asset value have materially affected the value of the securities. Trading may take place in foreign investments held by the Fund at times when the Fund is not open for business. To the extent certain of the Fund’s portfolio investments are traded in the over-the-counter market, such investments are valued on the basis of quotations obtained from independent pricing services. If such quotations are not readily available or become unreliable, the Valuation Designee may recommend valuation through other means.
Valuation of Private Investment Funds – The Fund’s allocation to Private Investment Funds generally includes open-end private investment funds that elect to be treated as REITs for tax purposes. The Private Investment Funds generally include private funds investing in real estate assets (“Private Equity Funds”) and private funds investing in debt instruments secured or otherwise supported by real estate assets (“Private Debt Funds”). The sponsors or agents of the Private Investment Funds measure their investment assets at fair value and report a NAV per share no less frequently than quarterly (“Sponsor NAV”). The Private Investment Funds have generally adopted valuation practices consistent with the valuation standards and techniques established by professional industry associations that advise the institutional real estate investment community. Such valuation standards seek general application of U.S. Generally Accepted Accounting Principles (GAAP) fair value standards, uniform appraisal standards and the engagement of independent valuation advisory firms.
The valuations of the Private Investment Funds have a considerable impact on the Fund’s NAV as a significant portion of the Fund’s assets are invested in Private Investment Funds. Market and dealer quotations are generally not readily available for the Private Investment Funds in which the Fund invests, and as such, the Fund utilizes Sponsor NAVs or other valuation methodologies when determining the fair value of the Private Investment Funds. The Fund may also use a third-party valuation specialist to assist in determining fair value of the Private Investment Funds held in the Fund’s portfolio.
ASC 820 allows the Fund, as a practical expedient, to estimate the fair value of the Private Investment Funds by using the NAV per share of each respective investment as of the Fund’s measurement date. Under ASC 820, investments utilizing the practical expedient are not to be categorized in the fair value hierarchy described below and included in the Fund’s financial statements but rather, the number of investments measured using the NAV practical expedient is disclosed to permit reconciliation of the fair value of investments in the hierarchy to the corresponding line items in the Fund’s balance sheet.
Private Equity Funds. The Private Equity Funds produce Sponsor NAVs no less frequently than quarterly. Such Sponsor NAVs are reviewed by the Adviser upon receipt and subsequently applied to the Fund’s NAV following consultation with the Private Equity Fund sponsor, if necessary. In between receipt of Sponsor NAVs, where applicable, the value of each Private Equity Fund is adjusted daily by the change in a proprietary index (the “Index”) that the Fund’s Board has deemed representative of the private equity real estate market. This process is applied daily to each respective Private Equity Fund until the receipt of the next Sponsor NAV. Certain of the Private Equity Funds may provide the Adviser with a daily valuation and in such instances the Index is not applied. The Index seeks to reflect market conditions of the broader private equity real estate market in an effort to ensure any such changes in market conditions are reflected in the NAV of the Fund. The Index is comprised of private real estate investment funds (“Index Constituents”) that produce a daily NAV and generally hold institutional quality assets. The Index is monitored by the Adviser on a regular basis, and the Adviser will consult with the Valuation Committee if monitoring suggests a modification to the Index Constituents or other change(s) to the Index to better reflect market conditions. Further, in the event that a Sponsor NAV is not provided by a Private Equity Fund following the conclusion of such Private Equity Fund’s valuation period, the Adviser shall inform the Valuation Committee and a meeting may be called to determine fair value.
Private Debt Funds. The Private Debt Funds produce Sponsor NAVs no less frequently than quarterly. Such Sponsor NAVs are reviewed by the Adviser upon receipt and subsequently applied to the Fund’s NAV following consultation with the Private Debt Fund sponsor, if necessary. The Fund will, in certain cases, accrue income on a daily basis for each Private Debt Fund based on the prior period’s distribution rate and/or guidance provided by each respective Private Debt Fund sponsor. In the event that a Sponsor NAV is not provided by a Private Debt Fund following the conclusion of such Private Debt Fund’s valuation period, or if the Adviser becomes aware of an event warranting an update to a Private Debt Fund valuation, the Adviser shall inform the Valuation Committee and a meeting may be called to determine fair value.
| 40 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
Fair Value Measurements – A three-tier hierarchy has been established to classify fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available. In accordance with the authoritative guidance on fair value measurements and disclosure under U.S. GAAP, the Fund discloses fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value:
Level 1 – Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;
Level 2 – Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability at the measurement date; and
Level 3 – Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
An investment level within the fair value hierarchy is based on the lowest level input, individually or in the aggregate, that is significant to fair value measurement. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk or liquidity associated with investing in those securities. The valuation techniques used by the Fund to measure fair value during the year ended September 30, 2024 maximized the use of observable inputs and minimized the use of unobservable inputs. For the year ended September 30, 2024, the Fund did not use unobservable inputs (Level 3) when determining fair value. The following is a summary of the fair valuations according to the inputs used in valuing the Fund’s investments as of September 30, 2024:
| Investments in Securities at Value | | Level 1 - Quoted Prices | | | Level 2 - Other Significant Observable Inputs | | | Level 3 - Significant Unobservable Inputs | | | Total | |
| Real Estate Investment Trusts | | | | | | | | | | | | | | | | |
| Private Investment Funds (Measured at net asset value)(a) | | $ | – | | | $ | – | | | $ | – | | | $ | 2,919,063,114 | |
| Publicly Traded Securities | | | 1,835,404,134 | | | | – | | | | – | | | | 1,835,404,134 | |
| Preferred Stocks | | | 85,608,521 | | | | – | | | | – | | | | 85,608,521 | |
| Short Term Investment | | | 2,407,133 | | | | – | | | | – | | | | 2,407,133 | |
| Total | | $ | 1,923,419,788 | | | $ | – | | | $ | – | | | $ | 4,842,482,902 | |
| (a) | In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Investments. |
The carrying and fair value of the Fund's debt obligation as of September 30, 2024, for which the Fund has determined would be categorized as Level 2 in the fair value hierarchy was $399,200,000.
Investment Transactions – Investment security transactions are accounted for on trade date. Gains and losses on securities sold are determined on a specific identification basis. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the security received.
Investment Income – Interest income is accrued and recorded on a daily basis including income earned from money market funds. Dividend income is recorded on the ex-dividend date.
| Annual Report | September 30, 2024 | 41 |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
Distributions to Shareholders – Distributions from net investment income, if any, will be declared and paid quarterly. Distributions of net realized capital gains, if any, will be declared and paid annually. Income and capital gains distributions are determined in accordance with income tax regulations, which may differ from U.S. GAAP. Distributions to shareholders are recorded on the ex-dividend date.
Distributions from Underlying Investments – For the year ended September 30, 2024, the Fund received gross distributions of $195,092,994. The tax character of distributions may take several forms, including dividends, capital gains, and/or return of capital. Dividend Income as disclosed in the Fund’s Statement of Operations reflects distributions received net of tax and other miscellaneous adjustments.
Unfunded Commitments – Typically, when the Fund invests in a Private Investment Fund, the Fund makes a commitment to invest a specified amount of capital in the applicable Private Investment Fund. The capital commitment may be drawn by the general partner of the Private Investment Fund either all at once or through a series of capital calls at the discretion of the general partner. Thus, an Unfunded Commitment represents the portion of the Fund’s overall capital commitment to a particular Private Investment Fund that has not yet been called by the general partner of the Private Investment Fund. Unfunded Commitments may subject the Fund to certain risks. For example, the Fund may be required to: liquidate other portfolio investments, potentially at inopportune times, in order to obtain the cash needed to satisfy its obligations with respect to a capital call; borrow under a line of credit which may result in additional expenses to the Fund; or, to the extent a buyer can be identified and subject to the provisions of the limited partnership agreement of the relevant Private Investment Fund, seek to sell/assign the interest subject to the capital call to a third party thereby eliminating the obligation. In addition, should the Fund be unable to satisfy its commitment obligation on a timely basis and defaults on a called capital commitment, the underlying Private Investment Fund, pursuant to its limited partnership agreement, typically has a number of potential remedies, including, by way of illustration, a reallocation of the Fund's defaulted commitment amount to other limited partners, a reallocation of a portion of the Fund's existing interest to the other limited partners as a penalty for the default, or the general partner of underlying Private Investment Fund could sue the Fund for breach of contract. As of September 30, 2024, the Fund had total Unfunded Commitments in the amount of $85,000,000.
Indemnification – The Fund indemnifies its Officers and Trustees for certain liabilities that may arise from the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on industry experience, the Fund expects the risk of loss due to these warranties and indemnities to be remote.
Federal Income Taxes – The Fund intends to continue to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and will distribute all of its taxable income, if any, to shareholders. Accordingly, no provision for federal income taxes is required in the financial statements.
The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken in the Fund’s tax returns for open tax years or expected to be taken in the Fund’s 2024 returns.
3. GENERAL COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Fund's investment activities involve commitments to, executions, settlement and financing of, various transactions resulting in receivables from, and payables to, brokers, dealers and other counter parties. These activities may expose the Fund to risk in the event that such parties are unable to fulfill contractual obligations. Management does not anticipate any material losses from counterparties with whom it conducts business. Consistent with standard business practice, the Fund enters into contracts that contain a variety of indemnifications, and may be engaged from time to time in various legal actions. However, the Fund expects the risk of material loss to be remote.
| 42 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
As of September 30, 2024, the Fund had unfunded commitments outstanding, as detailed below:
| Value | | | Fund Name | | Redemption Frequency | | Redemption Notice (Days) | | | Unfunded Commitment as of September 30, 2024 | |
| $ | 39,184,196 | | | Affinius U.S. Government Building Fund | | Quarterly | | | 60 | | | $ | 0 | |
| | 39,926,943 | | | Ares Real Estate Enhanced Income Fund, L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 99,071,280 | | | Article Student Living Income and Growth L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 11,928,230 | | | BGO Diversified US Property Fund, L.P. | | Quarterly | | | 45 | | | | 0 | |
| | 76,046,839 | | | Brookfield Senior Mezzanine Real Estate Finance Fund | | Quarterly | | | 90 | | | | 0 | |
| | 156,910,652 | | | CBRE U.S. Core Partners, L.P. | | Quarterly | | | 60 | | | | 0 | |
| | 119,277,469 | | | CBRE U.S. Credit Partners, L.P. | | Quarterly | | | 60 | | | | 0 | |
| | 249,902,681 | | | CBRE U.S. Logistics Partners, L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 87,646,401 | | | Clarion Gables Multifamily Trust, L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 143,323,036 | | | Clarion Lion Industrial Trust, L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 172,772,244 | | | Clarion Lion Properties Fund, L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 261,771,577 | | | Cortland Growth and Income Fund, L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 31,817,324 | | | CrossHarbor Strategic Debt Fund, L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 147,761,998 | | | Dream U.S. Industrial Fund, L.P. | | Quarterly | | | 90 | | | | 35,000,000 | |
| | 13,685,645 | | | Heitman America Real Estate Trust, L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 39,605,281 | | | Heitman Core Real Estate Debt Income Trust | | Quarterly | | | 90 | | | | 0 | |
| | 61,590,601 | | | JPM U.S. Real Estate Mezzanine Debt Fund, L.P. | | Quarterly | | | 60 | | | | 0 | |
| | 50,003,031 | | | Manulife U.S. Real Estate Fund, L.P. | | Quarterly | | | 60 | | | | 0 | |
| | 178,421,851 | | | Morgan Stanley Prime Property Fund | | Quarterly | | | 90 | | | | 0 | |
| | 145,163,057 | | | Oaktree Real Estate Income Fund, L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 49,747,633 | | | Principal Real Estate Liquid Debt Fund, L.P. | | Monthly | | | 20 | | | | 0 | |
| | 25,942,085 | | | PRISA, L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 41,693,302 | | | Prologis Targeted U.S. Logistics Fund, L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 28,740,922 | | | Sagard U.S. Property Fund | | Quarterly | | | 90 | | | | 0 | |
| | 34,721,147 | | | Sentinel Real Estate Fund, L.P. | | Quarterly | | | N/A** | | | | 0 | |
| | 53,214,756 | | | Stockbridge Smart Markets Fund, L.P. | | Quarterly | | | 45 | | | | 0 | |
| | 110,489,112 | | | TA Realty Core Property Fund, L.P. | | Quarterly | | | 45 | | | | 0 | |
| | 148,153,915 | | | TA Realty Logistics Fund, L.P. | | Quarterly | | | 45 | | | | 0 | |
| | 113,866,188 | | | Third Point Private CRE Credit Fund L.P. | | Quarterly | | | 90 | | | | 0 | |
| | 9,784,639 | | | UBS Trumbull Property Fund | | Quarterly | | | 60 | | | | 0 | |
| | 170,590,048 | | | Ventas Life Science and Healthcare Real Estate Fund | | Quarterly | | | 90 | | | | 50,000,000 | |
| | 6,309,031 | | | Voya Commercial Mortgage Lending Fund, L.P. | | Quarterly | | | 90 | | | | 0 | |
| $ | 2,919,063,114 | | | | | | | | | | | $ | 85,000,000 | |
| ** | Written notice required for redemption, no minimum timeline required. |
4. ADVISORY FEES, ADMINISTRATION FEES AND OTHER AGREEMENTS
Investment Advisory
Pursuant to the Investment Advisory Agreement with the Fund (“Advisory Agreement”), the Adviser is entitled to an investment advisory fee, computed daily and payable monthly at an annual rate of 1.50% of the average daily net assets of the Fund.
The Adviser and the Fund have entered into an expense limitation and reimbursement agreement (the “Expense Limitation Agreement”) under which the Adviser has agreed contractually to waive its fees and to pay or absorb the ordinary annual operating expenses of the Fund (including organizational and offering expenses, but excluding taxes, interest, brokerage commissions, acquired fund fees and expenses and extraordinary expenses) so that the total annual operating expenses of the Fund do not exceed 1.91% per annum of Class A average daily net assets, 2.66% per annum of Class C average daily net assets, 1.66% per annum of Class I average daily net assets, 2.41% per annum of Class M average daily net assets and 2.16% per annum of Class L average daily net assets (the “Expense Limitations”). The Expense Limitation Agreement will remain in effect until May 31, 2025, unless and until the Trustees approve its modification or termination. The Expense Limitation Agreement may not be terminated by the Adviser. In consideration of the Adviser’s agreement to limit the Fund’s expenses, the Fund has agreed to repay the Adviser in the amount of any fees waived and Fund expenses paid or absorbed, subject to the limitations that: (1) the reimbursement for fees and expenses will be made only if payable not more than three years from the date on which they were incurred; and (2) the reimbursement may not be made if it would cause the lesser of the Expense Limitations in place at the time of waiver or at the time of reimbursement to be exceeded.
| Annual Report | September 30, 2024 | 43 |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
During the year ended September 30, 2024, fees waived by the Fund totaled $542,664. The balance of recoupable expenses for the Fund are as follows:
| Expires September 30, 2025 | | | Expires September 30, 2026 | | | Expires September 30, 2027 | |
| $ | 0 | | | $ | 0 | | | $ | 542,664 | |
During the year ended September 30, 2024, previously recoupable expenses totaling $0 expired.
Sub-advisory services are provided to the Fund pursuant to agreements between the Adviser and both Aon Investments USA Inc. (“Aon”) and CenterSquare Investment Management LLC. (“CenterSquare” and collectively with Aon, the “Sub-Advisers”). Under the terms of the respective sub-advisory agreement, the Adviser compensates each Sub-Adviser based on a portion of the Fund’s average daily net assets which have been allocated to such Sub-Adviser to manage. Fees paid to each Sub-Adviser are not an expense of the Fund. The fee tables are as follows:
| Annual Sub-Advisory Fee Rate as a Percentage of Average Daily Net Assets Managed by CenterSquare | |
| $0 - $50M | 0.50% |
| $50 - $100M | 0.45% |
| $100 - $150M | 0.40% |
| Over $150M | 0.35% |
| Annual Sub-Advisory Fee Rate as a Percentage of Average Daily Net Assets Advised by Aon | |
| $0 - $500M | 0.15% |
| $500 - $750M | 0.125% |
| $750M - $1B | 0.10% |
| Over $1B | 0.07% |
Fund Administrator and Accounting Fees and Expenses
ALPS Fund Services, Inc. serves as the Fund’s administrator and accounting agent (the “Administrator”) and receives customary fees from the Fund for such services. The Administrator is also reimbursed by the Fund for certain out of pocket expenses.
Transfer Agency Fees and Expenses
SS&C GIDS, Inc. (formerly known as DST Systems, Inc.) serves as transfer, distribution paying and shareholder servicing agent for the Fund and receives customary fees from the Fund for such services.
Custody Fees and Expenses
UMB Bank, N.A. serves as the Fund’s custodian and receives customary fees from the Fund for such services.
Distribution and Shareholder Servicing Fees and Expenses
The Fund has entered into a Distribution Agreement with ALPS Distributors, Inc. (the “Distributor”) to provide distribution services to the Fund. The Distributor serves as principal underwriter of shares of the Fund. Under the Distribution Agreement the Fund’s Class C and Class M shares will pay to the Distributor a Distribution Fee that will accrue at an annual rate equal to 0.75% of the Fund’s average daily net assets attributable to Class C and Class M shares, payable on a monthly basis. Class L shares will pay to the Distributor a Distribution Fee that will accrue at an annual rate equal to 0.25% of the Fund’s average daily net assets attributable to Class L shares, payable on a monthly basis. For the year ended September 30, 2024, Class C, Class M and Class L shares incurred distribution fees of $3,194,138, $7,931,531 and $193,990, respectively. Class A and Class I shares are not currently subject to a Distribution Fee. Under the Shareholder Services Plan, the Fund’s Class A, Class C and Class L shares may pay up to 0.25% per year of their average daily net assets for such services. Class I and Class M shares are not currently subject to a shareholder services fee. For the year ended September 30, 2024, Class A, Class C and Class L shares incurred shareholder servicing fees of $1,425,748, $1,064,713 and $192,990, respectively.
The Distributor has entered into a wholesale marketing agreement with Griffin Capital Securities, LLC, a registered broker-dealer affiliate of the Adviser. Pursuant to the terms of the wholesale marketing agreement, Griffin Capital Securities, LLC will seek to market and otherwise promote the Fund through various wholesale distribution channels, including regional and independent retail broker-dealers, wirehouses and registered investment advisers.
| 44 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
September 30, 2024
Officer and Trustee Compensation
Each Independent Trustee receives an annual retainer of $57,750, paid quarterly, as well as reimbursement for any reasonable expenses incurred attending the meetings and $500 per Independent Trustee per each special telephonic meeting (exclusive of one special telephonic meeting per year). The Chair of the Audit Committee receives an additional $15,750 annually. None of the executive officers, with the exception of the Chief Compliance Officer, receive compensation from the Fund. Certain Trustees and officers of the Fund are also officers of the Adviser and are not paid by the Fund for serving in such capacities.
5. PURCHASES AND SALES OF INVESTMENT SECURITIES
The cost of purchases and proceeds from the sale of securities, other than short-term securities, for the year ended September 30, 2024 were as follows:
| | | | Purchases of Securities | | | Proceeds from Sales of Securities | |
| | | | | $ | 726,710,923 | | | $ | 1,326,181,633 | |
6. TAX BASIS INFORMATION
Distributions are determined in accordance with federal income tax regulations, which differ from U.S. GAAP, and, therefore, may differ significantly in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences.
For the year ended September 30, 2024, the following reclassifications were recorded to reflect tax character. These differences had no effect on operations or net assets and were primarily attributed to book/tax distribution differences and non-deductible expenses.
| | | | Paid-in Capital | | | Total Distributable Earnings | |
| | | | | $ | (42,003 | ) | | $ | 42,003 | |
The tax character of distributions paid for each of the fiscal years were as follows:
| Year | | | Ordinary Income | | | Long-Term Capital Gain | | | Return of Capital | |
| 2024 | | | $ | 21,463,135 | | | $ | – | | | $ | 220,162,846 | |
| 2023 | | | $ | – | | | $ | – | | | $ | 288,998,118 | |
As of September 30, 2024, the components of accumulated earnings/(deficit) on a tax basis were as follows:
| Accumulative Capital Gains/(Losses) | | | Other cumulative effect of
timing differences | | | Net unrealized
appreciation/(depreciation)
on investments | | | Total | |
| $ | (20,204,036 | ) | | $ | (29,802,267 | ) | | $ | 1,064,990,354 | | | $ | 1,014,984,051 | |
As of September 30, 2024, net unrealized appreciation of investments based on the federal tax cost was as follows:
Gross Appreciation (excess
of value over tax cost) | | | Gross Depreciation (excess of
tax cost over value) | | | Net Unrealized
Appreciation/(Depreciation) | | | Cost of Investments for
Income Tax Purposes | |
| $ | 1,202,554,098 | | | $ | (137,563,744 | ) | | $ | 1,064,990,354 | | | $ | 3,777,492,548 | |
| Annual Report | September 30, 2024 | 45 |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
September 30, 2024
Under current law, capital losses maintain their character as short-term or long-term and are carried forward to the next tax year without expiration. As of the current fiscal year end, the following amounts are available as carry forwards to the next tax year:
| | | | Short-Term | | | Long-Term | |
| | | | | $ | - | | | $ | 20,204,036 | |
Capital loss carryovers used during the period ended September 30, 2024, were $29,190,869.
The Fund elects to defer to the period ending September 30, 2024, late year ordinary losses in the amount of $29,802,267.
The difference between book basis and tax basis distributable earnings and unrealized appreciation/(depreciation) is primarily attributable to the tax deferral of losses on wash sales, investments in partnerships, and certain other investments.
7. LINES OF CREDIT
During the year ended September 30, 2024, the Fund had secured bank lines of credit through BNP Paribas Prime Brokerage International, Ltd. (“BNP”) and Bank of America N.A (“Bank of America”) subject to the limitations of the 1940 Act for borrowings.
Borrowings under the BNP arrangement bear interest at Overnight Bank Funding Rate plus a spread of 60 basis points at the time of borrowing. The BNP arrangement was amended during the period to include a maximum commitment of $1,100,000,000 which may be increased on request of the Fund, with approval by BNP, up to a certain percentage of the Fund's market value attributable to publicly traded real estate securities. In connection therewith, the Fund is also required to pay an unused commitment fee rate equal to 40 basis points per annum on any unused borrowings. During the year ended September 30, 2024, the Fund had outstanding borrowings for 366 days and incurred $23,333,741 of interest expense related to its outstanding borrowings under the BNP arrangement. For the 366 days during which the Fund had outstanding borrowings under the BNP arrangement, average borrowings were $389,369,812 and the average interest rate was 5.91%. The Fund incurred $760,670 of total unused commitment fees, which is included in the lines of credit interest expense line item on the Statement of Operations. As of September 30, 2024, the Fund had outstanding borrowings of $399,200,000 under the BNP arrangement. As collateral for outstanding borrowings, the Fund grants BNP a first position security interest in and lien on securities of any kind or description held by the Fund in the respective collateral accounts at the Fund’s custodian.
In connection with the use of the BNP arrangement, the Fund permits the lender, subject to certain conditions, to rehypothecate (i.e., lend to other counterparties) portfolio securities pledged by the Fund up to the amount of the loan balance outstanding. The terms of the BNP arrangement provide that the Fund continue to receive dividends and interest on rehypothecated securities. The Fund has the right under the BNP arrangement to recall rehypothecated securities from BNP on demand. If BNP fails to deliver a recalled security in a timely manner, the BNP arrangement provides for compensation by BNP to the Fund for any fees or losses related to the failed delivery or, in the event a recalled security will not be returned by BNP, for the Fund, upon notice to BNP, to reduce the loan balance outstanding by the amount of the recalled security failed to be returned. As of September 30, 2024, BNP rehypothecated $418,417,036 in securities pledged by the Fund as collateral pursuant to the BNP arrangement, and during the fiscal year ended September 30, 2024, the Fund received cash compensation in the form of a reduction in amounts owed under the BNP arrangement of $25,506.
Borrowings under the Bank of America arrangement bear interest based on an applicable Secured Overnight Financing Rate (SOFR) rate plus a spread of 220 basis points and an applicable SOFR adjustment. The Fund is also required to pay an unused commitment fee rate equal to 55 basis points per annum on any unused borrowings. The Bank of America arrangement is subject to a maximum commitment of $450,000,000 although the Fund may request an increase to the maximum commitment subject to certain conditions. During the period October 1, 2023, to September 30, 2024, the Fund had no outstanding borrowings and incurred no interest expense related to borrowings under the Bank of America arrangement. The Fund incurred $2,516,250 of total unused commitment fees, which is included in the lines of credit interest expense line item on the Statement of Operations. As collateral for outstanding borrowings, the Fund grants Bank of America a first position security interest in and lien on securities of any kind or description held by the Fund in the respective collateral accounts at the Fund's custodian.
On September 25, 2024, Bank of America arrangement was extended until at least September 24, 2025.
| 46 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
September 30, 2024
8. REPURCHASE OFFERS
As a continuously offered, closed-end interval fund, the Fund has adopted a fundamental policy in which it offers to repurchase at net asset value no less than 5% of the outstanding shares of the Fund once each quarter. If shareholders tender for repurchase more than the amount in a repurchase offer, the Fund may, but is not required to, repurchase an additional amount of shares not to exceed 2% of the outstanding shares of the Fund on the repurchase request deadline. If the Fund determines not to repurchase more than the amount in a repurchase offer, or if shareholders tender shares in an amount exceeding the amount in a repurchase offer plus 2% of the outstanding shares on the repurchase request deadline, the Fund will repurchase the shares on a pro rata basis. It is possible that a repurchase offer may be oversubscribed and as such there is no guarantee that shareholders will be able to sell all of the shares they desire to sell in a quarterly repurchase offer, although each shareholder will have the right to require the Fund to purchase at least 5% of such shareholder’s shares in each quarterly repurchase. Liquidity will be provided to shareholders only through the Fund’s quarterly repurchase offers. Shareholders will receive written notice of each quarterly repurchase offer ("Repurchase Offer Notice") that includes the date the repurchase offer period ends ("Repurchase Request Deadline") and the date the repurchase price will be determined ("Repurchase Pricing Date"). Shares will be repurchased at the NAV per share determined on the Repurchase Pricing Date.
During the year ended September 30, 2024, the Fund completed four quarterly repurchase offers in which the Fund offered to repurchase up to 5% of its outstanding shares as of each respective Repurchase Request Deadline. Shareholder repurchase requests received by the Fund in good order by the November 7, 2023, February 6, 2024, May 7, 2024 and August 6, 2024 Repurchase Request Deadlines exceeded the number of Fund shares subject to each repurchase offer and, as such, the Fund determined to repurchase shares on a pro rata basis. Accordingly, the Fund repurchased approximately 48% of the total number of shares tendered for repurchase on November 7, 2023, approximately 50% of the total number of shares tendered for repurchase on February 6, 2024, approximately 43% of the total number of shares tendered for repurchase on May 7, 2024, and approximately 40% of the total number of shares tendered for repurchase on August 6, 2024. The results of the aforementioned repurchase offers were as follows:
| | Repurchase Offer #1 | Repurchase Offer #2 | Repurchase Offer #3 | Repurchase Offer #4 |
| Commencement Date | September 28, 2023 | December 28, 2023 | March 8, 2024 | June 27, 2024 |
| Repurchase Request Deadline | November 7, 2023 | February 6, 2024 | May 7, 2024 | August 6, 2024 |
| Repurchase Pricing Date | November 7, 2023 | February 6, 2024 | May 7, 2024 | August 6, 2024 |
| Amount Repurchased | $253,932,148 | $244,665,962 | $232,292,558 | $231,573,034 |
| Shares Repurchased | 9,998,411 | 9,703,802 | 9,415,173 | 9,140,893 |
9. PRINCIPAL RISK FACTORS
The following list is not intended to be a comprehensive listing of all of the potential risks associated with the Fund. For a more comprehensive list of potential risks the Fund may be subject to, please refer to the Fund’s Prospectus and Statement of Additional Information (“SAI”).
Cybersecurity Risk – Cybersecurity refers to the combination of technologies, processes and procedures established to protect information technology systems and data from unauthorized access, attack or damage. The Fund and its affiliates and third-party service providers are subject to cybersecurity risks. Cybersecurity risks have significantly increased in recent years and the Fund could suffer such losses in the future. The Fund’s and its affiliates’ and third-party service providers’ computer systems, software, and networks may be vulnerable to unauthorized access, computer viruses or other malicious code, and other events that could have a security impact. If one or more of such events occur, this potentially could jeopardize confidential and other information, including nonpublic personal information and sensitive business data, processed and stored in, and transmitted through, computer systems and networks, or otherwise cause interruptions or malfunctions in the Fund’s operations or the operations of their respective affiliates and third-party service providers. This could result in significant losses, reputational damage, litigation, regulatory fines or penalties, or otherwise adversely affect the Fund’s business, financial condition or results of operations. Privacy and information security laws and regulation changes, and compliance with those changes, may result in cost increases due to system changes and the development of new administrative processes. In addition, the Fund may be required to expend significant additional resources to modify the Fund’s protective measures and to investigate and remediate vulnerabilities or other exposures arising from operational and security risks.
Concentration of Credit Risk – The Fund places its cash with one banking institution, which is insured by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC limit is $250,000. At various times throughout the year, the amount on deposit may exceed the FDIC limit and subject the Fund to a credit risk. The Fund does not believe that such deposits are subject to any unusual risk associated with investment activities. The Fund may invest cash balances in an open-end Money Market Mutual Fund (“Money Market Fund”). The Money Market Fund is valued at its closing NAV. The Money Market Fund is not subject to FDIC insurance.
Distribution Policy Risk – The Fund’s distribution policy is to make quarterly distributions to shareholders. All or a portion of a distribution may consist solely of a return of capital (i.e. from your original investment) and not a return of net profit. Shareholders should not assume that the source of a distribution from the Fund is net profit. Shareholders should note that return of capital will reduce the tax basis of their shares and potentially increase the taxable gain, if any, upon disposition of their shares.
| Annual Report | September 30, 2024 | 47 |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
September 30, 2024
General Market Conditions Risk – An investment in shares is subject to investment risk, including the possible loss of the entire principal amount invested. An investment in shares represents an indirect investment in the securities owned by the Fund. The value of these securities, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of your shares at any point in time may be worth less than the value of your original investment, even after taking into account any reinvestment of distributions. The Fund may also use leverage, which would magnify the Fund’s investment, market and certain other risks.
Various sectors of the global financial markets have been experiencing an extended period of adverse conditions. Market uncertainty has increased dramatically, particularly in the United States and Europe, and adverse market conditions have expanded to other markets. These conditions have resulted in disruption of markets, periods of reduced liquidity, greater volatility, general volatility of spreads, an acute contraction in the availability of credit and a lack of price transparency. These volatile and often difficult global market conditions have episodically adversely affected the market values of real estate, and other securities and this volatility may continue and conditions could even deteriorate further. Some of the largest banks and companies across many sectors of the economy in the United States and Europe have declared bankruptcy, entered into insolvency, administration or similar proceedings, been nationalized by government authorities, and/or agreed to merge with or be acquired by other banks or companies that had been considered their peers. The long-term impact of these events is uncertain, but could continue to have a material effect on general economic conditions, consumer and business confidence and market liquidity.
Major public health issues, such as COVID-19, have at times, and may in the future impact the Fund. The COVID-19 pandemic caused substantial market volatility and global business disruption and impacted the global economy in significant and unforeseen ways. Any public health emergency, including the COVID-19 pandemic or any outbreak of other existing or new epidemic diseases or the threat thereof, and the resulting financial and economic market uncertainty, could have a material adverse impact on the Fund or its investments.
Moreover, changes in interest rates, travel advisories, quarantines and restrictions, disrupted supply chains and industries, impact on labor markets, reduced liquidity or a slowdown in U.S. or global economic conditions resulting from a future public health crisis may also adversely affect the Fund or its investments. COVID-19, or any other health crisis and the current or any resulting financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to the Fund’s NAV, performance, financial condition, results of operations, ability to pay distributions, and portfolio liquidity, among other factors.
Economic problems in a single country are increasingly affecting other markets and economies, and a continuation of this trend could adversely affect global economic conditions and world markets. Uncertainty and volatility in the financial markets and political systems of the U.S. or any other country, including volatility as a result of the ongoing conflicts between Russia and Ukraine and Israel and Hamas and the rapidly evolving measures in response, may have adverse spill-over effects into the global financial markets generally.
Failure of Financial Institutions and Sustained Financial Market Illiquidity Risk – The failure of certain financial institutions, namely banks, may increase the possibility of a sustained deterioration of financial market liquidity, or illiquidity at clearing, cash management and/or custodial financial institutions. The failure of a bank (or banks) with which the Fund and/or the Fund’s underlying investments have a commercial relationship could adversely affect, among other things, the Fund and/or the Fund’s underlying investments’ ability to pursue key strategic initiatives, including by affecting the Fund’s ability to borrow from financial institutions on favorable terms.
Inflation and Interest Rate Risk – Inflation risk is the risk that the value of certain assets or income from the Fund’s investments will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Fund and its distributions can decline.
In addition, during any periods of rising inflation, the dividend rates or borrowing costs associated with the Fund’s use of leverage would likely increase, which would tend to further reduce returns to shareholders. Deflation risk is the risk that prices throughout the economy decline over time—the opposite of inflation. Deflation may have an adverse effect on the creditworthiness of issuers and may make issuer defaults more likely, which may result in a decline in the value of the Fund’s portfolio. It cannot be predicted with certainty when, or how, these policies will change, but actions by the Federal Reserve and other central bankers may have a significant effect on interest rates and on the U.S. and world economies generally. Market volatility, rising interest rates, uncertainty around interest rates and/or unfavorable economic conditions could adversely affect our business.
Due to global supply chain disruptions, a rise in energy prices, strong consumer demand as economies continue to reopen and other factors, inflation has accelerated in the U.S. and globally. Recent inflationary pressures have increased the costs of labor, energy and raw materials and have adversely affected consumer spending, economic growth and portfolio companies’ operations. If such portfolio companies are unable to pass any increases in their costs of operations along to their customers, it could adversely affect their operating results and impact their ability to pay interest and principal on their loans, particularly if interest rates rise in response to inflation. In addition, any projected future decreases in a portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments could result in future realized or unrealized losses and therefore reduce our net assets resulting from operations.
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| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
September 30, 2024
Additionally, the Federal Reserve has raised, and has indicated its intent to continue raising, certain benchmark interest rates in an effort to combat inflation. As such, inflation may continue in the near to medium-term, particularly in the U.S., with the possibility that monetary policy may tighten in response. It cannot be predicted with certainty when, or how, these policies will change, but actions by the Federal Reserve and other central bankers may have a significant effect on interest rates and on the U.S. and world economies generally. Market volatility, rising interest rates, uncertainty around interest rates and/or unfavorable economic conditions could adversely affect our business.
Liquidity Risk – The Fund is a closed-end investment company structured as an “interval fund” and designed for long-term investors. Unlike many closed-end investment companies, the Fund’s shares are not listed on any securities exchange and are not publicly traded. There currently is no secondary market for the shares and the Adviser does not expect that a secondary market will develop. Limited liquidity is provided to shareholders only through the Fund’s quarterly repurchase offers for no less than 5% of the Fund’s shares outstanding at net asset value. There is no guarantee that shareholders will be able to sell all of the shares they desire in a quarterly repurchase offer. The Fund’s investments are also subject to liquidity risk. Liquidity risk exists when particular investments of the Fund would be difficult to purchase or sell, possibly preventing the Fund from selling such illiquid securities at an advantageous time or price, or possibly requiring the Fund to dispose of other investments at unfavorable times or prices in order to satisfy its obligations.
Mortgage-Backed Securities Risk – Mortgage-backed securities represent interests in “pools” of mortgages and often involve risks that are different from or possibly more acute than risks associated with other types of debt instruments. When the Fund invests in mortgage- backed securities, the Fund is subject to the risk that, if the underlying borrowers fail to pay interest or repay principal, the assets backing these securities may not be sufficient to support payments on the securities.
Prepayment risk is associated with mortgage-backed securities. If interest rates fall, the underlying debt may be repaid ahead of schedule, reducing the value of the Fund’s investments. If interest rates rise, there may be fewer prepayments, which would cause the average bond maturity to rise, increasing the potential for the Fund to lose money. The value of these securities may be significantly affected by changes in interest rates, the market’s perception of issuers, and the creditworthiness of the parties involved. The ability of the Fund to successfully utilize these instruments may depend on the ability of the Adviser to forecast interest rates and other economic factors correctly. These securities may have a structure that makes their reaction to interest rate changes and other factors difficult to predict, making their value highly volatile. The credit risk on such securities is affected by borrowers defaulting on their loans. The values of assets underlying mortgage-backed securities may decline and, therefore, may not be adequate to cover underlying investors. Many of the risks of investing in MBS reflect the risks of investing in the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants.
Preferred Securities Risk – There are various risks associated with investing in preferred securities, including credit risk, interest rate risk, deferral and omission of distributions, subordination to bonds and other debt securities in a company’s capital structure, limited liquidity, limited voting rights and special redemption rights. Interest rate risk is, in general, the risk that the price of a preferred security falls when interest rates rise. Securities with longer maturities tend to be more sensitive to interest rate changes. Credit risk is the risk that an issuer of a security may not be able to make principal and interest or dividend payments on the security as they become due. Holders of preferred securities may not receive dividends, or the payment can be deferred for some period of time. In bankruptcy, creditors are generally paid before the holders of preferred securities.
Private Investment Fund Risk – The Fund’s investment in Private Investment Funds will require it to bear a pro rata share of the vehicles’ expenses, including management and performance fees. The fees the Fund pays to invest in a Private Investment Fund may be higher than if the manager of the Private Investment Fund managed the Fund’s assets directly. The incentive fees charged by certain Private Investment Funds may create an incentive for its manager to make investments that are riskier and/or more speculative than those it might have made in the absence of an incentive fee. The Private Investment Funds are not publicly traded and therefore may not be as liquid as other types of investments. Furthermore, Private Investment Funds, like the other Underlying Funds in which the Fund may invest, are subject to specific risks, depending on the nature of the vehicle and also may employ leverage such that their returns are more than one times that of their benchmark which will amplify losses suffered by the Fund when compared to unleveraged investments. For example, these Private Investment Funds need not have independent boards, shareholder approval of advisory contracts may not be required, and the Private Investment Funds may utilize leverage and may engage in joint transactions with affiliates. These characteristics present additional risks for shareholders.
The managers of Private Investment Funds may draw down on the Fund’s capital commitment all at once or in a series of capital calls. The portion of the Fund’s commitment to a Private Investment Fund that has not been called is referred to as an “unfunded commitment.” The Fund may have a contractual obligation to provide capital to meet its unfunded commitment when the managers of a Private Investment Fund draws upon the commitment. Pursuant to regulations governing unfunded commitments, at the time the Fund enters into an unfunded commitment, it must have a reasonable belief that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as they come due. These regulations could reduce the Fund’s flexibility to make investments in Private Investment Funds and require the Fund to modify its investment strategies. In order to meet its obligations, and these regulatory requirements, the Fund may be required to hold a substantial amount of its assets in money market securities, cash or cash equivalents, possibly for prolong periods of time; liquidate portfolio securities at an inopportune time; or borrow under a line of credit. This could make it difficult or impossible to take or liquidate a position in a particular security at a price consistent with the Adviser’s strategy.
| Annual Report | September 30, 2024 | 49 |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
September 30, 2024
Investment in Private Investment Funds carries the risk of loss due to Private Investment Funds’ fraud, intentional or inadvertent deviations from a predefined investment strategy (including excessive concentration, directional investing outside of predefined ranges, excessive leverage or new capital markets), or poor judgment. During the lifetime of the Fund, there could be material changes in one or more Private Investment Funds, including changes in control and mergers. The effect of such changes on a Private Investment Fund cannot be predicted but could be material and adverse. Given the limited liquidity of the Private Investment Funds, the Fund may not be able to alter its portfolio allocation in sufficient time to respond to any such changes, resulting in substantial losses from risks of Private Investment Funds.
Real Estate Industry Concentration Risk – Because the Fund will concentrate its investments in real estate securities, its portfolio will be significantly impacted by the performance of the real estate market and may experience more volatility and be exposed to greater risk than a more diversified portfolio. In addition, the Fund may invest in real estate equity or debt and therefore may be subject to risks similar to those associated with direct investment in real property. The value of the Fund’s shares will be affected by factors affecting the value of real estate and the earnings of companies engaged in the real estate industry. These factors include, among others: (i) changes in general economic and market conditions; (ii) changes in the value of real estate properties; (iii) risks related to local economic conditions, overbuilding and increased competition; (iv) increases in property taxes and operating expenses; (v) changes in zoning laws; (vi) casualty and condemnation losses; (vii) variations in rental income, neighborhood values or the appeal of property to tenants; (viii) the availability of financing and (ix) changes in interest rates. Many real estate companies utilize leverage, which increases investment risk and could adversely affect a company’s operations and market value in periods of rising interest rates. The value of securities of companies in the real estate industry may go through cycles of relative under-performance and over-performance in comparison to equity securities markets in general. As of September 30, 2024, the Fund had 107.45% of the value of its net assets invested within the real estate industry.
There are also special risks associated with particular real estate sectors, or real estate operations generally, as described below:
Retail Properties. Retail properties are affected by the overall health of the economy and may be adversely affected by, among other things, the growth of alternative forms of retailing, bankruptcy, departure or cessation of operations of a tenant, a shift in consumer demand due to demographic changes, changes in spending patterns and lease terminations.
Office Properties. Office properties are affected by the overall health of the economy, and other factors such as a downturn in the businesses operated by their tenants, obsolescence and non-competitiveness.
Industrial Properties. Industrial properties are affected by the overall health of the economy and other factors such as downturns in the manufacture, processing and shipping of goods.
Hospitality Properties. The risks of hotel, motel and similar hospitality properties include, among other things, the necessity of a high level of continuing capital expenditures, competition, increases in operating costs which may not be offset by increases in revenues, dependence on business and commercial travelers and tourism, increases in fuel costs and other expenses of travel, and adverse effects of general and local economic conditions. Hotel properties tend to be more sensitive to adverse economic conditions and competition than many other commercial properties.
Healthcare and Life Sciences Properties. Healthcare and life sciences properties and healthcare providers are affected by several significant factors, including federal, state and local laws governing licenses, certification, adequacy of care, pharmaceutical distribution, rates, equipment, personnel and other factors regarding operations, continued availability of revenue from government reimbursement programs and competition on a local and regional basis. The failure of any healthcare operator to comply with governmental laws and regulations may affect its ability to operate its facility or receive government reimbursements.
Student Housing Properties. Student housing properties are affected by seasonal leasing, cash flow risks, and are subject to unique demand drivers.
Multifamily Properties. The value and successful operation of a multifamily property may be affected by a number of factors such as the location of the property, the ability of the management team, the level of mortgage interest rates, the presence of competing properties, adverse economic conditions in the locale, oversupply and rent control laws or other laws affecting such properties.
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| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
September 30, 2024
Residential Properties. Residential properties can be significantly affected by the national, regional and local real estate markets. This segment of the real estate industry also is sensitive to interest rate fluctuations which can cause changes in the availability of mortgage capital and directly affect the purchasing power of potential homebuyers. Thus, residential properties can be significantly affected by changes in government spending, consumer confidence, demographic patterns and the level of new and existing home sales.
Shopping Centers. Shopping center properties are dependent upon the successful operations and financial condition of their tenants, particularly certain of their major tenants, and could be adversely affected by bankruptcy of those tenants. In some cases a tenant may lease a significant portion of the space in one center, and the filing of bankruptcy could cause significant revenue loss, including the loss of revenue from smaller tenants with co-tenancy rights. Like others in the commercial real estate industry, community centers are subject to environmental risks and interest rate risk. They also face the need to enter into new leases or renew leases on favorable terms to generate rental revenues. Community center properties could be adversely affected by changes in the local markets where their properties are located, as well as by adverse changes in national economic and market conditions.
Self-Storage Properties. The value and successful operation of a self-storage property may be affected by a number of factors, such as the ability of the management team, the location of the property, the presence of competing properties, changes in traffic patterns and effects of general and local economic conditions with respect to rental rates and occupancy levels.
Other factors may contribute to the risk of real estate investments:
Development Issues. Certain real estate companies may engage in the development or construction of real estate properties. These companies in which the Fund invests (“portfolio companies”) are exposed to a variety of risks inherent in real estate development and construction, such as the risk that there will be insufficient tenant demand to occupy newly developed properties, and the risk that prices of construction materials or construction labor may rise materially during the development.
Lack of Insurance. Certain of the portfolio companies in the Fund’s portfolio may fail to carry comprehensive liability, fire, flood, earthquake extended coverage and rental loss insurance, or insurance in place may be subject to various policy specifications, limits and deductibles. Should any type of uninsured loss occur, the portfolio company could lose its investment in, and anticipated profits and cash flows from, a number of properties and, as a result, adversely affect the Fund’s investment performance.
Dependence on Tenants. The value of the Fund’s portfolio companies’ properties and the ability of these companies to make distributions to their shareholders depends upon the ability of the tenants at the properties to generate enough income in excess of their tenant operating expenses to make their lease payments. Changes beyond the control of our portfolio companies may adversely affect their tenants’ ability to make their lease payments and, in such event, would substantially reduce both their income from operations and ability to make distributions to our portfolio companies and, consequently, the Fund.
Financial Leverage. Real estate companies may be highly leveraged and financial covenants may affect the ability of real estate companies to operate effectively.
Environmental Issues. In connection with the ownership (direct or indirect), operation, management and development of real properties that may contain hazardous or toxic substances, a portfolio company may be considered an owner, operator or responsible party of such properties and, therefore, may be potentially liable for removal or remediation costs, as well as certain other costs, including governmental fines and liabilities for injuries to persons and property. The existence of any such material environmental liability could have a material adverse effect on the results of operations and cash flow of any such portfolio company and, as a result, the amount available to make distributions on shares of the Fund could be reduced.
Financing Issues. Financial institutions in which the Fund may invest are subject to extensive government regulation. This regulation may limit both the amount and types of loans and other financial commitments a financial institution can make, and the interest rates and fees it can charge. In addition, interest and investment rates are highly sensitive and are determined by many factors beyond a financial institution’s control, including general and local economic conditions (such as inflation, recession, money supply and unemployment) and the monetary and fiscal policies of various governmental agencies such as the Federal Reserve Board. These limitations may have a significant impact on the profitability of a financial institution since profitability is attributable, at least in part, to the institution’s ability to make financial commitments such as loans. Profitability of a financial institution is largely dependent upon the availability and cost of the institution’s funds, and can fluctuate significantly when interest rates change.
Rehypothecated Securities Risk – In connection with the use of the BNP arrangement for leverage, the Fund permits the lender, subject to certain conditions, to rehypothecate (i.e., lend to other counterparties) portfolio securities pledged by the Fund up to the amount of the loan balance outstanding. The terms of the BNP arrangement provide that the Fund continue to receive dividends and interest on rehypothecated securities. The Fund has the right under the BNP arrangement to recall rehypothecated securities from BNP on demand. If BNP fails to deliver a recalled security in a timely manner, the BNP arrangement provides for compensation by BNP to the Fund for any fees or losses related to the failed delivery or, in the event a recalled security will not be returned by BNP, for the Fund, upon notice to BNP, to reduce the loan balance outstanding by the amount of the recalled security failed to be returned. The terms of the BNP arrangement pursuant to which portfolio securities pledged by the Fund are rehypothecated may provide for receipt by the Fund, either directly or indirectly through a reduction in the costs associated with the BNP arrangement, of a portion of the fees earned by BNP in connection with the rehypothecation of such portfolio securities. Rehypothecation by BNP of the Fund’s pledged portfolio securities entails risks, including the risk that BNP will be unable or unwilling to return rehypothecated securities, which could result in, among other things, the inability of the Fund to find suitable investments to replace the unreturned securities, thereby impairing the ability the Fund to achieve its investment objective.
| Annual Report | September 30, 2024 | 51 |
| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
September 30, 2024
REIT Risk – Investments (directly or indirectly) in REITs will subject the Fund to various risks. REIT share prices may decline because of adverse developments affecting the real estate industry and real property values. In general, real estate values can be affected by a variety of factors, including supply and demand for properties, the economic health of the country or of different regions, and the strength of specific industries that rent properties. REITs often invest in highly leveraged properties. Returns from REITs, which typically are small or medium capitalization stocks, may trail returns from the overall stock market. In addition, changes in interest rates may hurt real estate values or make REIT shares less attractive than other income-producing investments. REITs are also subject to heavy cash flow dependency, defaults by borrowers and self-liquidation.
Qualification as a REIT under the Code in any particular year is a complex analysis that depends on a number of factors. There can be no assurance that an entity in which the Fund invests with the expectation that it will be taxed as a REIT will, in fact, qualify as a REIT. An entity that fails to qualify as a REIT would be subject to a corporate level tax, would not be entitled to a deduction for dividends paid to its shareholders and would not pass through to its shareholders the character of income earned by the entity. If the Fund were to invest in an entity that failed to qualify as a REIT, such failure could significantly reduce the Fund’s yield on that investment. REITs can be classified as equity REITs, mortgage REITs, and hybrid REITs. Equity REITs invest primarily in real property and earn rental income from leasing those properties. They may also realize gains or losses from the sale of properties. Equity REITs will be affected by conditions in the real estate rental market and by changes in the value of the properties they own. Mortgage REITs invest primarily in mortgages and similar real estate interests and receive interest payments from the owners of the mortgaged properties. Mortgage REITs will be affected by changes in creditworthiness of borrowers and changes in interest rates. Hybrid REITs invest both in real property and in mortgages. Equity and mortgage REITs are dependent upon management skills, may not be diversified and are subject to the risks of financing projects.
Dividends paid by REITs will not generally qualify for the reduced U.S. federal income tax rates applicable to qualified dividends under the Code. See “U.S. Federal Income Tax Matters.” The Fund’s investments in REITs may include an additional risk to shareholders. Some or all of a REIT’s annual distributions to its investors may constitute a non-taxable return of capital. Any such return of capital will generally reduce the Fund’s basis in the REIT investment, but not below zero. To the extent the distributions from a particular REIT exceed the Fund’s basis in such REIT, the Fund will generally recognize gain. In part because REIT distributions often include a nontaxable return of capital, Fund distributions to shareholders may also include a nontaxable return of capital. Shareholders that receive such a distribution will also reduce their tax basis in their shares of the Fund, but not below zero. To the extent the distribution exceeds a shareholder’s basis in the Fund’s shares, such shareholder will generally recognize a capital gain. The Fund does not have any investment restrictions with respect to investments in REITs.
Transition from LIBOR Risk – Although the London Interbank Offered Rate (“LIBOR”) is no longer published as of June 30, 2023, holding of certain of the Fund’s underlying investments may still include a LIBOR reference rate. The elimination of LIBOR and transition to other reference rates, or any other changes or reforms to the determination or supervision of reference rates, could have an adverse impact on the market for, or value of, any securities or payments linked to those reference rates, which may adversely affect Fund performance and/or NAV. Uncertainty and risk still remain regarding the willingness and ability of issuers and lenders to include revised provisions in new and existing contracts or instruments. Consequently, the transition away from LIBOR to other reference rates may still lead to increased volatility and illiquidity in markets that have historically been tied to LIBOR, fluctuations in values of LIBOR-related investments or investments in issuers that utilize LIBOR, increased difficulty in borrowing or refinancing and diminished effectiveness of hedging strategies, potentially adversely affecting Fund performance.
Furthermore, the risks associated with the discontinuation of LIBOR and transition to alternative rates may be exacerbated if the work necessary to effect an orderly transition to an alternative reference rate is not completed in a timely manner. The ultimate impact of the discontinuance of LIBOR on the Fund remains uncertain and may result in losses to the Fund. The U.S. Federal Reserve, based on the recommendations of the New York Federal Reserve’s Alternative Reference Rate Committee (comprised of major derivative market participants and their regulators), has begun publishing the Secured Overnight Financing Rate (referred to as “SOFR”), which is their preferred alternative rate for U.S. dollar LIBOR. Proposals for alternative reference rates for other currencies have also been announced or have already begun publication. Markets are in the process of developing in response to these new rates. Although financial regulators and industry working groups have suggested alternative reference rates, such as the European Interbank Offer Rate, the Sterling Overnight Interbank Average Rate and SOFR, there has been no global consensus as to an alternative rate and the process for amending existing contracts or instruments to transition away from LIBOR remains incomplete.
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| Apollo Diversified Real Estate Fund | Notes to Financial Statements |
September 30, 2024
Use of Leverage by the Fund – Although the Fund has the option to borrow, including through the Credit Facilities, there are significant risks that may be assumed in connection with such borrowings. Investors in the Fund should consider the various risks of financial leverage, including, without limitation, the matters described below. There is no assurance that a leveraging strategy would be successful. Financial leverage involves risks and special considerations for shareholders including: (i) the likelihood of greater volatility of NAV of the shares than a comparable portfolio without leverage; (ii) the risk that fluctuations in interest rates on borrowings and short-term debt that the Fund must pay will reduce the return to the shareholders; (iii) the effect of financial leverage in a market experiencing rising interest rates, which would likely cause a greater decline in the NAV of the shares than if the Fund were not leveraged; and (iv) the potential for an increase in operating costs, which may reduce the Fund’s total return. In the event that the Fund would be required to sell assets at a loss, including in order to redeem or pay off any borrowing, such a sale would reduce the Fund’s NAV and may make it difficult for the NAV to recover. The Fund nevertheless may continue to use financial leverage if the Adviser expects that the benefits to the shareholders of maintaining the leveraged position likely would outweigh a resulting reduction in the current return.
Certain types of borrowings by the Fund would result in the Fund being subject to covenants in credit agreements relating to asset coverage and Fund composition requirements that are more stringent than those currently imposed on the Fund by the 1940 Act. In addition, borrowings by the Fund may be made on a secured basis. The Custodian will then either segregate the assets securing the Fund’s borrowings for the benefit of the Fund’s lenders or arrangements will be made with a suitable sub-custodian. If the assets used to secure a borrowing decrease in value, the Fund may be required to pledge additional collateral to the lender in the form of cash or securities to avoid liquidation of those assets. In the event of a default, the lenders will have the right, through the Custodian, to redeem the Fund’s investments in underlying Investment Funds without consideration of whether doing so would be in the best interests of the Fund’s shareholders. The rights of any lenders to the Fund to receive payments of interest on and repayments of principal of borrowings will be senior to the rights of the Fund’s shareholders, and the terms of the Fund’s borrowings may contain provisions that limit certain activities of the Fund and could result in precluding the purchase of instruments that the Fund would otherwise purchase.
The use of financial leverage involves financial risk and would increase the exposure of the Fund’s investment returns to adverse economic factors such as rising interest rates, downturns in the economy or deterioration in the condition of the investments. There would be a risk that operating cash flow available to the Fund would be insufficient to meet required payments and a risk that it would not be possible to refinance existing indebtedness or that the terms of such refinancing would not be as favorable as the terms of existing indebtedness. Borrowings by the Fund may be secured by any or all of the assets of the Fund, with the consequences that the Fund may lose more than its equity stake in any one investment, and may lose all of its capital.
Valuation of Private Investment Funds – While the valuation of the Fund’s publicly-traded securities are more readily ascertainable, the Fund’s ownership interest in Private Investment Funds are not publicly traded and the Fund will depend on the institutional asset manager to a Private Investment Fund to provide a valuation of the Fund’s investment. Moreover, the valuation of the Fund’s investment in a Private Investment Fund, as provided by an institutional asset manager as of a specific date, may vary from the fair value of the investment that may be obtained if such investment were sold to a third party. For information about the value of the Fund’s investment in Private Investment Funds, the Adviser will be dependent on information provided by the Private Investment Funds, including quarterly unaudited financial statements which if inaccurate could adversely affect the Adviser’s ability to value accurately the Fund’s shares.
10. SUBSEQUENT EVENTS
Subsequent events after the date of the Statement of Assets and Liabilities have been evaluated through the date the financial statements were issued.
As outlined in the Fund’s Quarterly Repurchase Offer Notice dated September 26, 2024, the Fund offered to repurchase up to 5% of its outstanding shares at the net asset value of such shares on November 5, 2024. Shareholder repurchase requests received by the Fund in good order by November 5, 2024, exceeded the number of shares subject to the Repurchase Offer and, as such, the Fund determined to repurchase shares on a pro rata basis. Accordingly, the Fund repurchased approximately 43% of the total number of shares tendered for repurchase by the Repurchase Deadline, which resulted in 8,791,512 shares being repurchased for $228,360,852.
Management has determined that there were no other subsequent events to report through the issuance of these financial statements.
| Annual Report | September 30, 2024 | 53 |
| | Report of Independent Registered |
| Apollo Diversified Real Estate Fund | Public Accounting Firm |
To the Shareholders and Board of Trustees of
Apollo Diversified Real Estate Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Apollo Diversified Real Estate Fund (the “Fund”) as of September 30, 2024, the related statements of operations and cash flows for the year then ended, the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of September 30, 2024, the results of its operations and cash flows for the year then ended, and the changes in net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
The Fund’s financial highlights for the years ended September 30, 2022, and prior, were audited by other auditors whose report dated November 25, 2022 expressed an unqualified opinion on those financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2024, by correspondence with the custodian and brokers and other appropriate parties. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Fund’s auditor since 2023.
COHEN & COMPANY, LTD.
Philadelphia, Pennsylvania
November 26, 2024
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| Apollo Diversified Real Estate Fund | Additional Information |
September 30, 2024 (Unaudited)
1. PROXY VOTING POLICIES AND VOTING RECORD
Information regarding how the Fund voted proxies relating to portfolio securities held by the Fund during the most recent 12-month period ending June 30 will be available (1) without charge, upon request, by calling the Fund toll-free at 1-888-926-2688; (2) on the Fund’s website at www.apollo.com/adref; and (3) on the SEC’s website at http://www.sec.gov. In addition, a copy of the Fund’s proxy voting policies and procedures are also available by calling toll-free at 1-888-926-2688 and will be sent within three business days of receipt of a request.
2. QUARTERLY PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the SEC’s web site at http://www.sec.gov.
| Annual Report | September 30, 2024 | 55 |
| Apollo Diversified Real Estate Fund | Trustees and Officers |
September 30, 2024 (Unaudited)
A list of the Trustees and executive officers of the Trust and their principal occupation and other directorships over the last five years are shown below. Unless otherwise noted, the address of each Trustee and Officer is 9 West 57th Street, New York, New York 10019. The SAI includes additional information about the Fund’s Trustees. The SAI is available upon request and without charge by writing the Fund at Apollo Diversified Real Estate Fund, c/o SS&C GIDS, Inc, PO Box 21933, Kansas City MO 64121-9133 or for overnight mail 430 W 7th St, Kansas City, MO 64105-1407, or by calling toll-free 1-888-926-2688.
INDEPENDENT TRUSTEES
Name and
Birth Year | Position/Term
of Office* | Principal Occupation
During Past Five Years | Number of
Portfolios in
Fund Complex**
Overseen
by Trustee | Other Directorships held by
Trustee During Last Five Years |
Nathan Headrick
(1974) | Trustee Since 2014 | Managing Director, BluWater Group (financial services firm), 2019 - present; Managing Director and Founder, Triloma Financial Group (private equity firm), 2013 - 2019. | 1 | Apollo Diversified Credit Fund, 2017 - 2022. |
Robb Chapin
(1962) | Trustee Since 2014 | Co-Founder and Chairman, Channel Markers Advisors, 2024 - present; Chief Executive Officer and Co-Chief Investment Officer, Bridge Seniors Housing Fund Manager, LLC (real estate fund management), 2013 - 2024. | 1 | Vice Chairman, KARE, 2024 - present; Advisory Board, Nova Scientific, 2024 - present; Bridge Seniors Housing & Medical Properties Fund, LP (real estate fund), 2013 – present; Apollo Diversified Credit Fund, 2017 – 2022. |
Ira Cohen
(1959) | Trustee Since 2014 | Executive Vice President, Recognos Financial (financial data services firm), 2015 - present; and Chief Executive Officer, Ira Cohen Consulting, LLC (mutual fund operations consulting firm), 2005 - present. | 1 | Valued Advisers Trust (all series), 2010 - present; Angel Oak Credit Opportunities Term Trust, 2021 – present; Angel Oak Financial Strategies Income Term Trust, 2018 - present; Angel Oak Strategic Credit Fund, 2017 - present; and Angel Oak Funds Trust (for all of its series), 2014 – present; Apollo Diversified Credit Fund, 2017 – 2022; Angel Oak Dynamic Financial Strategies Income Term Trust, 2019 – 2022. |
| 56 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Trustees and Officers |
September 30, 2024 (Unaudited)
INTERESTED TRUSTEES AND OFFICERS
Name and
Birth Year | Position/Term
of Office* | Principal Occupation
During Past Five Years | Number of
Portfolios in
Fund Complex**
Overseen
by Trustee | Other Directorships held by
Trustee During Last Five Years |
Randy Anderson
(1968) | Chairman, Secretary and Trustee Since 2014 and President Since 2022 | Partner, Apollo Global Management, Inc., 2022 – present; Chief Economist, Griffin Capital Company, LLC, 2014 - 2022; Chief Executive Officer, Griffin Capital Asset Management Company, LLC, 2021 - 2022; Chief Investment Officer, Griffin Capital Advisor, LLC, 2014 - 2022; Chief Investment Officer, Griffin Capital Credit Advisor, LLC, 2017 - 2022; President, Griffin Capital Asset Management Company, LLC, 2014 - 2022. | 1 | Co-Chief Executive Officer, Co-President and Director, Apollo Realty Income Solutions, Inc., 2022- present; Chairman, Secretary and Trustee, Apollo Diversified Credit Fund, 2017 – 2022. |
Kenneth Seifert
(1978) | Treasurer and Chief Financial Officer Since 2022 | Controller, Principal and Director, Apollo Global Management, Inc. and affiliates since 2021 and 2017, respectively. Treasurer and Chief Financial Officer of Apollo Diversified Credit Fund and Apollo S3 Private Markets Fund since 2022 and 2024, respectively. Treasurer and Chief Financial Officer of Apollo Senior Floating Rate Fund and Apollo Tactical Income Fund 2021 to 2024, Controller 2017 to 2021. | N/A | N/A |
Ryan Del Giudice
(1990) | Chief Compliance Officer Since 2018, Vice President and Assistant Secretary Since 2020 | Principal, Apollo Global Management, Inc., 2022 to present; Chief Compliance Officer, Apollo Diversified Credit Fund, 2018 to present; Chief Compliance Officer, MidCap Financial Investment Corporation, Apollo Debt Solutions BDC, 2023 to present; Chief Compliance Officer, Middle Market Apollo Institutional Private Lending and Apollo S3 Private Markets Fund, 2024 to present; Chief Compliance Officer, Apollo Tactical income Fund Inc. and Apollo Senior Floating Rate Fund Inc., 2023 to 2024; Chief Compliance Officer, Griffin Capital Asset Management Company, LLC, 2017 to 2022. | N/A | N/A |
| * | The term of office for each Trustee and officer listed above will continue indefinitely. |
| ** | Fund Complex” comprises registered investment companies for which the Adviser or an affiliate of the Adviser serves as investment adviser. The Fund Complex is currently comprised of: the Fund, Apollo Debt Solutions BDC, Apollo Diversified Credit Fund, Middle Market Apollo Institutional Private Lending, Apollo S3 Private Markets Fund, and MidCap Financial Investment Corporation. |
| Annual Report | September 30, 2024 | 57 |
| Apollo Diversified Real Estate Fund | Service Providers |
September 30, 2024 (Unaudited)
Investment Adviser
Apollo Real Estate Fund Adviser, LLC
9 W 57th Street, New York, NY 10019
Investment Sub-Advisers
Aon Investments USA Inc.
200 East Randolph Street, Suite 1500, Chicago, IL 60601
CenterSquare Investment Management LLC
630 West Germantown Pike, Suite 300, Plymouth Meeting, PA 19462
Administrator
ALPS Fund Services, Inc.
1290 Broadway, Suite 1000, Denver, CO 80203
Custodian
UMB Bank, N.A.
1010 Grand Blvd., Kansas City, Missouri 64106
Distributor
ALPS Distributors, Inc.
1290 Broadway, Suite 1000, Denver, CO 80203
Independent Registered Public Accounting Firm
Cohen & Company, Ltd.
1835 Market Street, Suite 310, Philadelphia, PA 19103
Legal Counsel
DLA Piper, LLP (US)
One Atlantic Center, 1201 West Peachtree Street, Suite 2900, Atlanta, GA 30309
Transfer Agent and DRIP Administrator
SS&C GIDS, Inc.
330 W 9th Street, Kansas City, MO 64105
| 58 | 1.888.926.2688 | www.apollo.com |
| Apollo Diversified Real Estate Fund | Privacy Notice |
September 30, 2024 (Unaudited)
DATA PRIVACY NOTICE
What Information Do We Have About You?
Apollo Real Estate Fund Adviser, LLC (“AREFA” or “we”) may have collected your personal information in connection with your investment in Apollo Diversified Real Estate Fund (the “Fund”). This information can include your name, social security number or tax identification number, wire transfer instructions, account transactions, transaction history, and investment experience. Additionally, we may collect nonpublic personal information about you via our website, including any information captured through the use of our “cookies.”
With Whom Do We Share Your Personal Information?
We may share the information we collect with our affiliates and nonaffiliated third parties for our everyday business purposes, such as to process your transactions, maintain your investments in the Fund, and to respond to court orders and legal investigations. We also provide such information to our affiliates, attorneys, banks, auditors, securities brokers and service providers as may be necessary to facilitate the acceptance and management of your account or your investments in the Fund and to enable them to perform services on our behalf. We do not sell your personal information to third parties for their independent use.
Protecting the Confidentiality of Our Investor Information
We take our responsibility to protect the privacy and confidentiality of your personal information very seriously. As such, we maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information, although you should be aware that data protection cannot be guaranteed. We restrict access to nonpublic personal information about you to our employees and agents who need to know such information to provide products or services to you. Our control policies, for example, authorize access to investor information only by individuals who need such access to do their work.
Opt-Out Notice
We reserve the right to disclose all nonpublic personal information about you to a nonaffiliated third party as discussed above. If you wish to limit the distribution of your personal information with our affiliates and nonaffiliated third parties, as described herein, you may do so by:
| • | Calling (212) 515-3450; or |
| • | Writing us at the following address: |
Apollo Real Estate Fund Adviser, LLC
c/o: Apollo Diversified Real Estate Fund
9 West 57th Street, New York, NY 10019
Attn: Ryan Del Giudice
The ability to opt-out of disclosure of nonpublic personal information about you applies to your investment in the Fund but may not apply to arrangements necessary to effect or administer a transaction in shares of the Fund or maintain or service your account.
If you choose to write or call us, your request should include your name, address, telephone number and account number(s) to which the opt-out applies and the extent to which your personal information shall be withheld. If you are a joint account owner, we will apply those instructions to the entire account. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.
Please understand that if you limit our sharing or our affiliated companies’ use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies’ products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.
If your shares are held in “street name” at a bank or brokerage, we do not have access to your personal information, and you should refer to your bank’s or broker’s privacy policies for a statement of the treatment of your personal information.
If you have any questions regarding this policy, please feel free to contact privacy@apollo.com.
| Annual Report | September 30, 2024 | 59 |
 | 9 West 57th Street,
New York, NY 10019 | 212.515.3200
www.apollo.com/adref |
| Not a deposit | May lose value | No bank guarantee |
Not insured by the FDIC, NCUA or any other
government agency |
This material must be accompanied or preceded by a prospectus.
Apollo Global Securities, LLC (“AGS”) and Griffin Capital Securities, LLC (“GCS”), Members of FINRA and SIPC, are subsidiaries of Apollo Global Management, Inc. AGS conducts Apollo’s capital markets business and certain of its product marketing and distribution and GCS is a wholesale marketing agent for Apollo -sponsored products. ALPS Distributors, Inc. (1290 Broadway, Suite 1000, Denver, CO 80203, Member FINRA) is the distributor of Apollo Diversified Real Estate Fund. Apollo Global Management, Inc. and ALPS Distributors, Inc. are not affiliated.
| GFC001719 | Exp. 11.30.25 | ADREF-IU397470-1124A |
Item 2. Code of Ethics.
| (a) | Apollo Diversified Real Estate Fund (the “Fund”) has adopted a Code of Ethics that applies to the Fund's principal executive officer and principal financial officer. |
| (c) | During the period covered by this report, there were no amendments to the Fund’s Code of Ethics. |
| (d) | During the period covered by this report, the Fund had not granted any express or implicit waivers from the Code of Ethics. |
| (f) | The Fund’s Code of Ethics is attached hereto as exhibit 19(a)(1). |
Item 3. Audit Committee Financial Expert.
The Board of Trustees (the “Board”) of the Fund has determined that the Fund has at least one audit committee financial expert serving on its Audit Committee. The Board has designated Ira Cohen as the Fund’s audit committee financial expert. Mr. Cohen is “independent” as defined in paragraph (a)(2) of Item 3 to Form N-CSR.
Item 4. Principal Accountant Fees and Services.
| (a) | Audit Fees: For the Fund’s last two fiscal years ended September 30, 2023 and September 30, 2024, the aggregate fees billed for professional services rendered by the principal accountant for the audit of the Fund’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $25,500 and $40,000 respectively. |
| (b) | Audit-Related Fees: For the Fund’s last two fiscal years ended September 30, 2023 and September 30, 2024, the aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Fund’s financial statements and not otherwise reported under paragraph (a) of Item 4 of this report were $0 and $0, respectively. |
| (c) | Tax Fees: For the Fund’s last two fiscal years ended September 30, 2023 and September 30, 2024, the aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning, which were comprised of the preparation of excise filings and income tax returns for the Fund were $3,000 and $5,000, respectively. |
| (d) | All Other Fees: For the Fund’s last two fiscal years ended September 30, 2023 and September 30, 2024, the aggregate fees billed for products and services other than the services reported in paragraphs (a) through (c) of Item 4 of this report, were provided by the principal accountant, $0 and $0, respectively. |
| (e) | (1) | The Fund’s Audit Committee is required to pre-approve all audit services and, when appropriate, any non-audit services (including audit-related, tax and all other services) to the Fund. The Fund’s Audit Committee also is required to pre-approve, when appropriate, any non-audit services (including audit-related, tax and all other services) to its adviser, or any entity controlling, controlled by or under common control with its adviser that provides ongoing services to the Fund, to the extent that the services may be determined to have an impact on the operations or financial reporting of the Fund. |
| (2) | Percentages of Services Approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
| | 2024 | 2023 |
| Audit Related Fees | 0% | 0% |
| Tax Fees | 0% | 0% |
| Other Fees | 0% | 0% |
| (f) | Not applicable to the Fund. |
| (g) | For the Fund’s last two fiscal years ended September 30, 2023 and September 30, 2024, the aggregate non-audit fees for services rendered to the Fund, the Fund’s investment adviser and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Fund were $3,000 and $5,000, respectively. |
| (h) | The Fund's Audit Committee has considered whether the provision of non-audit services to the Fund's investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Fund, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant's independence. |
Item 5. Audit Committee of Listed Registrants.
The Fund is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
Item 6. Investments.
| (a) | The schedule of investments is included as part of the Reports to Stockholders filed under Item 1 of this report. |
| (b) | Not applicable to the Fund. |
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
Not applicable to the Fund.
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Not applicable to the Fund.
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
Not applicable to the Fund.
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies.
Not applicable to the Fund.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
The Board did not approve any investment advisory contracts during the Fund’s most recent fiscal half year.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
The proxy voting policies and procedures of Apollo Real Estate Fund Adviser, LLC and CenterSquare Investment Management LLC are attached hereto as exhibit EX 99.Item 12.
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
(a)(1) The following Portfolio Managers have day-to-day management responsibility of the Fund’s portfolio as of the date of the filing of this Form N-CSR:
Randy I. Anderson Ph.D., CRE — Dr. Anderson is Partner, Real Assets at Apollo. Dr. Anderson serves as the Chairman of the Fund’s Board of Trustees and one of the Fund’s Portfolio Managers, positions he has held since inception. He also has served as the President of the Fund since May 2022. Dr. Anderson has served as a member of the Investment Committee of the Fund’s adviser since the Fund’s inception in 2014. Dr. Anderson has also served as the Co-Chief Executive Officer, Co-President and a director of Apollo Realty Income Solutions, Inc. since June 2022. Dr. Anderson has been a member of the Investment Committee of ARIS Management, LLC, the investment adviser to Apollo Realty Income Solutions, Inc. since June 2022. Previously, Dr. Anderson served as the Chief Economist of Griffin Capital Company, LLC, a position he has held from 2014 to 2022. In addition, Dr. Anderson served as Chief Executive Officer of Griffin Capital Asset Management Company, LLC, from 2021 to 2022. Dr. Anderson previously served as President of Griffin Capital Asset Management Company, LLC from 2015 to 2020.
From 2012-2013, Dr. Anderson held several senior executive positions at Bluerock Real Estate LLC, including founding partner of the Bluerock Total Income Plus Real Estate Fund, where he was the Portfolio Manager. Dr. Anderson served as the Howard Phillips Eminent Scholar Chair and Professor of Real Estate at the University of Central Florida from 2008 through 2013, where he was responsible for growing the real estate program, including the establishment of the Professional MS in Real Estate. While at the University of Central Florida, Dr. Anderson was a member of the University Foundation Investment Sub-Committee which provides investment advice for the endowment, was the academic member of the Florida Association of Realtors Education Foundation Advisory Board, and was an ex-officio board member of the Central Florida Commercial Association of Realtors. In 2007, Dr. Anderson was President, Chief Executive Officer, and founding partner of Franklin Square Capital Partners, where he helped establish, strategically organize, and capitalize the firm. From 2005 through 2007, Dr. Anderson also served as Chief Economist for CNL Financial Group as well as Divisional President for CNL Real Estate Advisors. Prior to CNL, Dr. Anderson was the Chief Economist and Director of Research for the Marcus and Millichap Company from 2002 through 2005 and Vice President of Research at Prudential Real Estate Advisors from 2001 through 2002.
Dr. Anderson is a former co-editor of the Journal of Real Estate Portfolio Management and the Journal of Real Estate Literature. Dr. Anderson received the Kinnard Young Scholar Award from the American Real Estate Society, an award which recognizes outstanding real estate scholarship for young academics, served as the Executive Director for the American Real Estate Society, was named a Homer Hoyt Fellow and a NAIOP Distinguished Fellow, and has been invited to guest lecture at leading global universities. Dr. Anderson received his B.A. in Finance from North Central College in 1991 as a Presidential Scholar and holds a Ph.D. in Finance as a Presidential Fellow from the University of Alabama, where he graduated with highest distinction in 1996.
Spencer J. Propper — Mr. Propper is Partner, Real Assets at Apollo. Mr. Propper serves as one of the Fund’s Portfolio Managers and has served as a member of the Investment Committee of the Fund’s adviser since the Fund’s inception in 2014. Mr. Propper has also served as the Co-Chief Investment Officer of Apollo Realty Income Solutions, Inc. and a member of the Investment Committee of ARIS Management, LLC since June 2022. Previously, Mr. Propper served as Managing Director of Griffin Capital Company, LLC and Chief Operating Officer of Griffin Capital Asset Management Company, LLC. Prior to his roles with the Fund and the Adviser, Mr. Propper was a Director at Lakemont Group, a boutique real estate investment banking and consulting firm. Within this role Mr. Propper provided portfolio management services to the Bluerock Total Income Plus Real Estate Fund. Additionally, at the Lakemont Group, Mr. Propper was responsible for overseeing projects for a variety of clients including pension funds, private equity firms and publicly traded real estate companies and specialized in structured finance, market analysis and strategic due diligence. Mr. Propper holds a Master of Business Administration and Bachelor of Science in Finance and Real Estate from the University of Central Florida.
| (a)(2) | As of September 30, 2024, Dr. Anderson and Mr. Propper were responsible for the management of the following types of accounts in addition to the Fund (asset values have been estimated): |
Other Accounts
By Type | Total Number
of Accounts by
Account Type | Total Assets By
Account Type | Number of
Accounts by
Type Subject to a
Performance Fee | Total Assets By
Account Type
Subject to a
Performance Fee |
| Registered Investment Companies | 0 | $0 | 0 | $0 |
| Other Pooled Investment Vehicles 1 | 1 | $1,162,537,547 | 1 | $54,127,748.19 |
| Other Accounts | 0 | $0 | 0 | $0 |
Material Conflicts of Interest:
As a general matter, certain conflicts of interest may arise in connection with a portfolio manager's management of a fund's investments, on the one hand, and the investments of other accounts for which the portfolio manager is responsible, on the other. For example, it is possible that the various accounts managed could have different investment strategies that, at times, might conflict with one another to the possible detriment of the Fund. Alternatively, to the extent that the same investment opportunities might be desirable for more than one account, possible conflicts could arise in determining how to allocate them. Other potential conflicts might include conflicts created by specific portfolio manager compensation arrangements, and conflicts relating to selection of brokers or dealers to execute Fund portfolio trades and/or specific uses of commissions from Fund portfolio trades (for example, research, or "soft dollars," if any). The Adviser has adopted policies and procedures and has structured its portfolio managers' compensation in a manner reasonably designed to safeguard the Fund from being negatively affected as a result of any such potential conflicts. In addition, certain conflicts of interest may arise from the Adviser's arrangements with affiliated investment advisers.
| (a)(3) | The Adviser’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. As of the date of the Fund's most recent fiscal year ended September 30, 2024, the principal components of compensation include base compensation and discretionary compensation. |
| ● | Base Compensation. Generally, portfolio managers receive an annual salary that is consistent with the market rate of annual salaries paid to similarly situated investment professionals. |
| ● | Discretionary Compensation. Portfolio managers also receive discretionary compensation generally consisting of two components: an annual bonus and carried interest. |
| ● | Annual Bonus. Generally, a portfolio manager receives an annual bonus based on such person’s individual performance, operational performance for the Apollo-advised funds for which such person serves, and such portfolio manager’s impact on the overall operating performance and potential to contribute to long-term value and growth. A portion of each annual bonus may be deferred and, at the discretion of Apollo, may be in the form of cash or equity of an Apollo entity, such as restricted stock units of Apollo Global Management, Inc. |
| ● | Carried Interest. Generally, a portfolio manager receives carried interests with respect to the Apollo-advised funds for which such person serves as a portfolio manager, subject to standard terms and conditions, including vesting. |
| (a)(4) | As of September 30, 2024, Dr. Anderson and Mr. Propper did not have direct beneficial ownership in Fund shares. |
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliates Purchasers.
None.
Item 15. Submission of Matters to a Vote of Security Holders.
No changes have occurred.
Item 16. Controls and Procedures.
| (a) | Based on an evaluation of the Fund’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the 1940 Act), the Fund’s principal executive officer and principal financial officer have concluded that the Fund’s disclosure controls and procedures are effective as of a date within 90 days of the filing date of this report. |
| (b) | There were no significant changes in the Fund’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Fund’s internal control over financial reporting. |
Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
| (a) | For the fiscal year ended September 30, 2024, the Registrant had the following dollar amounts of income and fees/compensation related to its securities lending activities: |
| | | Total | |
| Gross income from securities lending activities | | | $25,506 | |
| Fees and/or compensation for securities lending activities and related services | | | | |
| Fees paid to securities lending agent from a revenue split | | | — | |
| Fees paid for cash collateral management services (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in the revenue split | | | — | |
| Administrative fees that are not included in the revenue split | | | — | |
| Indemnification fee not included in the revenue split | | | — | |
| Rebates paid to borrowers | | | — | |
| Other fees relating to the securities lending program not included in the revenue split | | | — | |
| Aggregate fees/compensation for securities lending activities and related services | | | $25,506 | |
| Net income from securities lending activities | | | $25,506 | |
| (b) | During the Registrant’s most recent fiscal year ended September 30, 2024, BNP Paribas Securities Corp. (“BNPP”) served as the Registrant’s securities lending agent. |
In connection with the use of a Credit Facility (the "BNP Credit Facility") with BNP Paribas Prime Brokerage International, Ltd. ("BNPP BI"), an affiliate of BNPP, the Fund permits the lender, subject to certain conditions, to rehypothecate (i.e., lend to other counterparties) portfolio securities pledged by the Fund up to the amount of the loan balance outstanding. The terms of the BNP Credit Facility provide that the Fund continues to receive dividends and interest on rehypothecated securities. The Fund also has the right under the BNP Credit Facility to recall rehypothecated securities from BNPP on demand. If BNPP fails to deliver a recalled security in a timely manner, the BNP Credit Facility provides for compensation by BNPP to the Fund for any fees or losses related to the failed delivery or, in the event a recalled security will not be returned by BNP, for the Fund, upon notice to BNPP, to reduce the loan balance outstanding by the amount of the recalled security failed to be returned.
As a securities lending agent, BNPP is responsible for the implementation and administration of the Registrant’s securities lending activities pursuant to the rehypothecation component of the BNP Credit Facility. BNPP, as a general matter, performs various services, including the following:
| | ● | Monitoring daily the value of the loaned securities and collateral (i.e., the collateral posted by the party borrowing); |
| | ● | Negotiation of loan terms; |
| | ● | Selection of securities to be loaned; |
| | ● | Recordkeeping and account servicing; |
| | ● | Monitoring of dividend activity and material proxy votes relating to loaned securities; and |
| | ● | Arranging for return of loaned securities to the Registrant at loan termination. |
The Fund does not compensate BNPP for its securities lending related services directly. As of September 30, 2024, BNPP rehypothecated $418,417,036 in securities pledged by the Fund as collateral pursuant to the BNP Credit Facility, and during the fiscal year ended September 30, 2024, the Fund received cash compensation in the form of a reduction in amounts owed under the BNP Credit Facility of $25,506.
Item 18. Recovery of Erroneously Awarded Compensation.
Item 19. Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
APOLLO DIVERSIFIED REAL ESTATE FUND
| By: | /s/ Randy Anderson | |
| | Randy Anderson | |
| | Chairman and President (Principal Executive Officer) |
| | |
| Date: | December 6, 2024 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| By: | /s/ Randy Anderson | |
| | Randy Anderson | |
| | Chairman and President (Principal Executive Officer) |
| | |
| Date: | December 6, 2024 | |
| | |
| By: | /s/ Kenneth Seifert | |
| | Kenneth Seifert | |
| | Treasurer and Chief Financial Officer (Principal Financial Officer) |
| | |
| Date: | December 6, 2024 | |
