Lancaster, Calif., Portfolio Acquired by MG Properties Group

A four-property, 1,190-unit Lancaster, Calif., apartment portfolio has been acquired by San Diego-based MG Properties Group (MGPG) for a sale price of $91.75 million, with MGPG representing itself in the transaction.

San Diego—A four-property, 1,190-unit Lancaster, Calif., apartment portfolio has been acquired by San Diego-based MG Properties Group (MGPG) for a sale price of $91.75 million, with MGPG representing itself in the transaction.

The four properties, 416-unit Cordova Park, 320-unit Granada Villas, 314-unit Sienna Heights and 140-unit Woodlands West, are all situated along the I-14 freeway close to shopping, dining and movie-going venues, as well as public recreation facilities. The varying location characteristics and unit mix of the 22 to 28-year-old properties help the four appeal to a diverse mix of residents.

MGPG has a goal of increased resident satisfaction and retention at the properties, and aims to achieve that goal by addressing deferred maintenance items and renovating the properties’ exteriors and common areas.

“The seller certainly was within a conservation mode during the last few years of the downturn, and was investing the bare minimum capital to keep the properties operating,” Justin Smith, senior vice president of acquisitions for MGPG, tells MHN. “We’re investing about $5.5 million to really cure deferred maintenance the owner had incurred.”

As well, MGPG will emphasize employee training at its corporate MG University. And it will strive toward implementation of systems improvements, including revenue management to enhance operational efficiency. “For the tenants, we believe it will mean an enhanced living environment and value, resulting from improving the conditions of the properties and the customer service,” Smith says.

“We’re staffing the properties to more robust staffing levels to provide a more competitive customer service level and maintenance level for residents.”

MGPG faced very limited competition in its efforts to acquire the portfolio, Smith adds. “There were few buyers interested in acquiring a portfolio of this size in Lancaster,” he notes.

“The most aggressive buyers, such as the REITs and pension fund advisors are all but redlining markets that are secondary, such as Lancaster. That’s the reason there were few buyers offering on the portfolio.”

Though Lancaster is within Los Angeles County and appears quite accessible to the city on a map, it is actually a smaller municipality a full hour‘s drive from Los Angeles, Smith says. The area in which it is located, often referred to as the High Desert or the Antelope Valley, is remote and has its own distinct geography.

Residents of the four apartment communities will not have to wait long to see physical and service improvements from MGPG.

“We intend to invest the capital budget with the first 18 to 24 months,” Smith says. “The work will be done within two years.”

In the last 22 months, MGPG has acquired 3,391 units in 14 multifamily properties, together valued at $380 million. The company’s plans call for making an additional $200 million in new acquisitions within the next year.