NEW YORK CITY-Kushner Cos. has snapped up a portfolio of 4,681 distressed apartment units in Ohio, Indiana and Pennsylvania. Kushner partnered with Apollo Property Management and Square Mile Capital, a private equity firm specializing in distressed assets, on the deal. Savills served as a financial advisor to the exisiting borrowers and to Apollo on the deal.

Many of the properties acquired, principal Jared Kushner says, are underperforming in promising, or well-performing markets. Case in point: Pittsburgh, where Kushner acquired about 1,054 units at Leland Point Apartments.

“The Pittsburgh market is on fire and we’re very excited to have a real presence in the market at this point in time,” Kushner tells GlobeSt.com. “It’s going to undergo a major, major capex program to really upgrade it so that it can be one of the best jobs in the marketplace.”

Also included in the portfolio Kushner acquired in the deal were Cedarwood Village and Dorchester Village in Cleveland, OH (949 units); Park Valley, Ferncrest, Renata and Bavarian Woods in Cincinnati, OH (806 units); Abbey Run, Georgetown Village, Miracle Manor, Sunnydale and Hunters Ridge in Toledo, OH (1,100 units) and Coppertree in Speedway, IN (772 units).

“It was a very distressed play,” Kushner says of the deal. “We essentially created a deal where the former capitalization is about $172 million and we’ll be all in for about $90 million. We’re invested in about $10 million to $15 million in capex and bought the note pretty cheap.”

As for the partners, Kushner says that it’s the first deal they’ve done with Apollo, adding that “we’ve been looking at some stuff with them for a while.” Kushner and Square Mile Capital, his former employer, have put deals together before.

“The opportunity that was presented with this transaction was really a hallmark of the distressed real estate cycle that we’re in,” Square Mile managing principal Craig Solomon says. “For us it was an opportunity to enter into the Midwest market in a big way, with properties that have limited deferred maintenance, with the exception of the Pittsburgh asset, for which we plan a substantial renovation.”

Kushner echoes this, adding that most of the properties are operating at occupancy rates in the low 70s, despite being in markets where rates run at around 94 percent. “We think the basis is phenomenal,” he says. “It’s in some great markets and it gives us a critical mass in those markets to be more inquisitive.”