MG Properties’ Strategy Shift
- Oct 26, 2018
MG Properties Group, based in San Diego, focuses on the acquisition, development, rehabilitation and management of apartment communities throughout the western United States.
Over the last 26 years, CEO Mark Gleiberman has steered the company to the acquisition of more than 140 properties totaling approximately 20,000 units, and the management of more than 17,000 apartment homes in 55 communities in high-growth cities in California, Arizona, Nevada, Washington and Oregon, worth more than $2 billion combined.
In October, the company acquired Carillon Apartment Homes, a 264-unit community in Woodland Hills, Calif., for $93 million. In February, MG Properties Group acquired Thorncroft Farms Apartments, a 340-unit multifamily community in Hillsboro, Ore., for $97.5 million.
Talk about MG Properties Group focus and the areas you serve.
Gleiberman: Historically, we have been a value-add buyer. We have in-house property management, in-house construction management, but there has been a bit of a shift in the last year or two, as we have seen the value-add deals getting extremely competitive and bid up in price. In that time, we shifted a bit to deals we would not have previously thought about buying, we are now buying. This includes more brand-new construction.
What was your investment strategy in 2018?
Gleiberman: The shift to the more core, core-plus is part of our strategy, but we have return parameters and we’re probably shooting for more of a 10-year, cash-on-cash return in the 7 percent range. We do tend to be more of a long-term holder historically. We look very closely at the property specifics and submarket specifics, but there’s no area we would redline at this point. We have been more aggressive recently in Nevada and in Portland, but we’re geographically open to buying in the markets we deal in.
What constitutes a property worth acquiring?
Gleiberman: As we underwrite, if we can hit out return parameters. We do prefer a bit newer, but we’re willing to go to an ’80s or ’90s product if the return is slightly better in exchange for the additional risk.
Once you acquire a new property, how do you make it worthy of the MG Property Group name?
Gleiberman: On value-adds, we have done very extensive renovations. We think it’s important to have the right balance of bang for the buck in renovations, so we don’t want to over improve. We’re typically going to be in B areas, and ideally want to see at least a 15 percent return on the renovation money we are putting into a property. It’s really dictated by the property itself in terms of condition and the area.
MG Properties Group’s motto is “Enriching Lives Through Better Communities.” How does that play into the company philosophy?
Gleiberman: We very much do try to follow that and it’s kind of a three-prong process. It’s enriching the residents of the community by providing the appropriate and service and value to them that they expect; enriching our investors in terms of the outstanding returns we have consistently delivered the past 26 years; and enriching the employees through opportunity and growth.
What’s on your radar in 2019?
Gleiberman: No major changes. We’ve been fairly disciplined throughout our history. We are potentially targeting Denver and/or Salt Lake City as a new market. Typically, when we enter a new market, we like to enter with a portfolio or particularly large property. Sometimes it’s harder to break in. Otherwise, we will continue in our existing market, unless there is a shift. We are closely watching some new construction that appears to be priced reasonably well in relative to the value-add deals. Numbers-wise, we are probably looking in the $800 million to $900 million range.