UPDATE 1-CS to sell large CRE portfolio to Apollo -source

* $2.8 bln portfolio; Apollo paying $1.2 bln -WSJ

* CS already marked loans well below face value -source

* CS providing debt financing for the deal -source (Rewrites throughout with new sourcing, background)

NEW YORK, Dec 23 (Reuters) - Private equity firm Apollo Management [APOLO.UL] is buying a large portfolio of soured commercial real estate loans from Credit Suisse (CSGN.VX), a source familiar with the matter said on Thursday.

The portfolio of loans, which has a face value of $2.8 billion, is being sold to Apollo for $1.2 billion, the Wall Street Journal reported earlier.

Credit Suisse has already marked the portfolio to well below its face value and is providing Apollo with debt financing for the deal, the source told Reuters.

Credit Suisse declined to comment, while Apollo did not have an immediate comment. The source is anonymous as the deal is not yet public.

The deal comes as banks look to offload soured property loans and clean up their books, while many firms like Apollo, Colony Capital and Starwood Capital Group look to buy into distressed portfolios at bargain prices.

Earlier this month, Sun Bancorp (SNBC.O) said it had sold an $87 million portfolio of commercial real estate loans. Last month, Citigroup Inc (C.N) sold a $1.4 billion portfolio of multifamily and commercial real estate loans to OneWest Bank, which is owned by private equity and hedge fund firms. [ID:nN11290573]

Apollo also bought Citigroup's real estate investment management group last month. [ID:nN12155438] (Reporting by Paritosh Bansal; Editing by Steve Orlofsky and Gunna Dickson)