Apollo Global Management co-founder Josh Harris is teaming up with multifamily investor Robert Morgenstern to buy more than $1 billion worth of apartments.
The private equity titan’s family firm, HRS Management, joined Morgenstern and his partner at their Canvas Property Group, Al Tylis, to launch a new investment vehicle targeting multifamily buildings in New York and other top-tier cities.
The joint venture, Canvas Investment Partners, will look to buy between $1 billion and $1.5 billion worth of properties over the next 12 months, Morgenstern told The Real Deal.
“We just closed and we’ve got a couple of deals we’re working through right now,” he said, adding the new venture will target institutional quality core-plus and light value-add properties around $100 million and up.
Morgenstern said he sees opportunities in a set of challenges facing the market now. The partnership, for example, can provide rescue capital to owners who bought properties several years ago now and are facing difficulties refinancing at higher interest rates.
”We think there are some artificial supply issues being created . . . that are putting upward pressure on free-market rents,” Morgenstern added, pointing to the expiration of 421a and a heated housing market that’s made it difficult for renters to become first-time buyers.
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Morgenstern said he connected with Harris through his Canvas partner Tylis, formerly the CEO of the asset manager NorthStar and a fellow owner of a professional sports team. Harris stepped down as a managing director at Apollo in the spring of last year.
Morgenstern is a former Wall Street money manager who switched careers in 2005 to become a residential broker at the firm Gumley Haft Kleier. Following the Great Financial Crisis he teamed up with a partner to launch the multifamily investment firm Stone Street Properties, which he sold in 2013.
The following year he started a new firm, Morgenstern Capital, to invest in properties. He said that from now on, all of his new investments will go through Canvas Investment Partners.
Canvas Property Group handles operations such as building management, leasing and accounting. The group also has a tech platform, Juliet Technologies.