Apollo Management, the private equity firm founded by Leon Black, signed a preliminary agreement to buy Citigroup’s property investment unit.

Apollo will get about $12.5bn in gross assets. This will give Apollo exposure to Europe for the first time. It will also acquire the team of 60 professionals employed by Citi.

Apollo was believed to have had an inside track against other bidders since its head of real estate, Joe Azrack, once headed the Citi real estate unit. Mr Azrack left Citi in June 2008 as part of a number of high-profile departures from the bank against a backdrop of heavy losses in real estate. At that time, the value of the portfolio was said to consist of around $13.5bn of equity investments in commercial real estate.

Apollo recently hired Grant Kelley and a team of investors in Hong Kong to grow Apollo’s real estate efforts in Asia.