Apollo agreed to pay $ 1.2 billion for distressed real estate loans held by Credit Suisse Group

Apollo Global Management LLC agreed to pay $ 1.2 billion for distressed real estate loans held by Credit Suisse Group AG, according to a person familiar with the deal.

Mortgages are backed by buildings in Europe, said the person, who requested anonymity because the deal has not been made public.

The demand for commercial real estate loans has increased as banks around the world to strengthen balance sheets and start selling non-strategic real estate assets. Private equity firms TPG Capital and KKR & Co. really have competed ING Groep NV of the real estate investment unit, people familiar with the matter. Morgan Stanley said last month that the European real estate stocks will probably exceed the broader market in 2011.

Apollo, last month completed the purchase of real estate investment unit of Citigroup Inc., the addition of more than $ 3 billion in assets under management.

Rick Matthews, a spokesman for out of Apollo, declined comment, as Steven Vames, a spokesman for Credit Suisse.

The Wall Street Journal reported that the agreement with Credit Suisse today. Credit Suisse has already written loans below its par value of $ 2.8 billion, the Journal said.