Lead investors include insurance companies and a private endowment. A five-year-term credit facility has been provided to the fund by a GMAC affiliate.

While this is Apollo's first time establishing a fund with a co-sponsor, it's the second such venture for GIA. "Our two firms are leaders in the equity and debt businesses," says senior Apollo partner Lee Neibart. "It's a powerful combination. When Apollo began discussing expanding its investment activities into the mezzanine arena, it was natural to approach GMAC, which is the largest originator of commercial-property first-mortgage debt."

Borrowers may access the fund through some 35 GMAC production offices nationally as well as through referrals from the national network of local operating partners with whom Apollo has invested during the past 10 years. The fund will also cooperate with other senior lenders in capitalizing transactions, either through new originations of mezzanine and preferred equity positions or by acquisitions of interests in closed transactions.

"We expect to invest the available capital over the next 24 months," says Bill Scully, who with Rick Koenigsberger, is the Apollo partner charged with day-to-day management of the fund. Chuck Spetka, managing director of GIA, will be GMAC's primary contact. "As equity guys, we think we can offer a slightly different perspective in helping borrowers craft solutions for complex deals," Koenigsberger concludes.