Apollo Commercial Real Estate Finance has agreed to sell its $9bn commercial property loan portfolio to Athene Holding, the insurance arm of Apollo Global Management, in a transaction aimed at closing a long-running valuation gap.

The loan book is being sold at a price equal to 99.7% of loan commitments. The publicly listed REIT has consistently traded below book value, with shares averaging about 77% of book over the past four years.

“Like many peers in the sector, ARI’s common stock has traded below book value for an extended period and has not fully reflected the intrinsic value of the company’s loan portfolio,” said Stuart Rothstein, chief executive officer of Apollo Commercial Real Estate Finance, in a statement. 

The transaction includes a 25-day go-shop period and has been approved by the REIT’s board. It is expected to close in the second quarter.

Following completion, the REIT is expected to hold roughly $1.4bn of net cash. If a new strategy is not executed by year-end, Apollo may recommend exploring options including dissolution.

The deal highlights the advantage held by private capital vehicles, such as insurance platforms, in deploying capital into yield-generating assets at a time when public investors continue to apply steep discounts to commercial real estate stocks.

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