Investment Firm is Bullish on San Diego Market

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Evolve South Bay apartments in Carson is among the latest acquisitions by MG Properties based on Sorrento Valley. Photo courtesy of MG Properties

Evolve South Bay apartments in Carson is among the latest acquisitions by MG Properties based on Sorrento Valley. Photo courtesy of MG Properties

MG Properties, based in Sorrento Valley, has been especially active of late in scooping up California apartment complexes and is turning its attention in 2022 closer to home.

“San Diego is on our priority list for new acquisitions this year,” said Paul Kaseburg, chief investment officer of MG Properties.
“It has been a stable performer throughout cycles and is well positioned to benefit from job growth as the post-COVID recovery continues,” Kaseburg said. “For the past few years, we have been steadily buying in most of our markets throughout the Western U.S., both California and others. California has been slower to recover economically than other markets, so we have been finding more opportunities in California recently.”


Long term, Kaseburg said MG Properties remains “very bullish on the California economy, although it has some political risks that we are carefully evaluating.”


Fundamentals


In all, Kaseburg said that MG Properties owns 38 apartment projects in California, including seven in San Diego County totaling 2,300 apartments.


The San Diego properties include Pointe Luxe Apartment Homes in the Midway District, The Tech apartments near San Diego State University, Canyon Villa Apartments in Chula Vista, Block C Apartments in San Marcos, Marc San Marcos in San Marcos, Hendrix Apartments in Escondido, Waterleaf Apartments in Vista, and Preserve at Melrose in Vista.


Among recent acquisitions by MG Properties was the more than $130 million purchase in April of The Herald Apartments, a 215-unit complex in Placentia sold by Lyon Living of Newport Beach, and the May acquisition of Evolve South Bay in the Los Angeles suburb of Carson for an undisclosed price, sold by MBK Rental Living of Irvine.


“Placentia has excellent apartment fundamentals and there have been few similar acquisition opportunities in the Orange County market recently,” Kaseburg said. “We own one of the Herald’s closest rent comps, Union Place in Placentia, so we’re very comfortable with the submarket’s dynamics.”


Other Orange County properties owned by MG Properties include Pine at 6th in Long Beach and Madison Park in Anaheim.


The purchase of Evolve South Bay was MG Properties’ third apartment deal with MBK Rental and “presented unparalleled upside in the rapidly expanding Carson neighborhood just south of downtown Los Angeles,” according to MG Properties, taking just 12 months to lease up during the peak of the COVID pandemic.


Also in May, MG Properties bought a 275-apartment project, Vernona Apartments, in the Las Vegas suburb of Henderson, where the company already owns other apartment projects.


Attractive Investment


The company has purchased 20 communities overall in the last year, totaling over $2 billion in combined value and said that it is targeting further acquisitions in California, Washington, Oregon, Arizona, Nevada, Utah, Colorado and Texas.


“We are long-term investors who continue to believe that apartment housing is an attractive long-term strategy in comparison to other investment alternatives,” Kaseburg said. “We are starting to see some interesting investments as a result of the increase in interest rates and hope to take this opportunity to acquire high quality, well located properties at a discount to recent values.”


Kaseburg said that he expects “a moderation of growth in apartment fundamentals, specifically rent growth and occupancy, which have been unsustainably strong for the past 18 months.”


“That being said, apartment fundamentals remain strong with a shortage of housing stock combined with demand by the growing economy and healthy household balance sheets,” Kaseburg said. “Apartment values are impacted by changes in capital markets but are generally seen as an attractive investment in times of uncertainty and higher inflation.”

MG Properties
Founded: 1992
CEO: Mark Gleiberman
Headquarters: Sorrento Valley
Business: real estate investment
Employees: 600
Website: www.mgproperties.com
Contact: 858-345-9004
Notable: MG Properties manages more than 27,000 apartments in more than 95 communities with a total market value of more than $9 billion.





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