REAL ESTATE NEWS

Multifamily properties are trading below peak values, and MG Properties is buying at a discount to replacement cost. But lower prices alone are not enough to make deals work. Institutional investors still want returns that many acquisitions cannot deliver, leaving buyers to find properties that can perform without a quick rebound in values or a near-term decline in interest rates.

That divide is shaping MG Properties' investment strategy, where founder and CEO Mark Gleiberman is pursuing acquisitions with a seven- to 10-year holding period and fixed-rate financing. The firm is buying for the income it expects properties to generate over time, rather than counting on cheaper debt or more favorable exit pricing.

"We are buying today below replacement costs," Gleiberman said at the GlobeSt. Multifamily Fall Owners Forum 2026.

For investors, the opportunity comes with a condition: A discount must be large enough to account for local market weakness, financing costs and the time it may take for operating conditions to improve.

Buying Without Counting on a Quick Recovery

MG Properties is underwriting acquisitions with exit capitalization rates consistent with current levels. Its projections call for annual rent growth of about 3% to 3.5%, with occupancy potentially tightening.

Those assumptions emphasize what a property can earn during the holding period, rather than how much more a future buyer might pay. Gleiberman also said the company does not expect interest rates to decline in the short term.

The firm's long holding periods give it room to accept some near-term volatility. But that willingness does not extend to paying prices that fail to reflect current conditions.

The distinction matters as investors assess properties whose values have fallen from their peaks. A lower price can create an opening, but buyers still need achievable rents, manageable financing costs and enough operating upside to meet their return targets.

Improving Leasing Does Not Tell the Whole Story

The contrast between the Bay Area and Denver illustrates how differently those calculations can play out.

In the Bay Area, Gleiberman said leasing conditions have improved sharply. The market has shifted from one where owners offered concessions to one where those incentives have disappeared.

Denver is still working through overbuilding, despite significant job growth. MG Properties has been more hesitant to buy there because it believes prices have not adjusted enough to reflect those conditions.

For the firm, the question is not simply whether a market has long-term appeal. It is whether the acquisition price adequately accounts for the challenges an owner will face along the way.

That makes market and submarket selection especially important. MG Properties is willing to take short-term risk when it sees value over a longer holding period, but it remains selective about the price at which it takes that risk.

Institutional Return Targets Keep Capital on the Sidelines

Even when a buyer finds an attractive property, raising the capital to acquire it can be difficult.

Gleiberman said multifamily values remain well below their peaks from several years ago, while investor enthusiasm has cooled. He has seen more activity from buyers using 1031 exchange proceeds over the past six to 12 months, but institutional investors have been more hesitant to return.

He said their return expectations remain above what many available deals can support.

That gap limits the market's ability to turn lower property values into more transactions. Buyers need prices that satisfy their underwriting, sellers must be willing to accept them, and capital partners need a return that justifies investing.

For MG Properties, which uses a syndication model, an acquisition must satisfy both the property's investment case and investors' expectations. Finding a discounted asset is only part of that process.

Operating Gains Take on Greater Importance

With investors unable to rely on a rapid recovery in values, improving property income is taking on a larger role.

Joanna Zabriskie, president and CEO of BH Management, said owners are focusing on expense controls, operating efficiencies and disciplined renovation spending to improve net operating income. She said combining renovations with operational improvements has increased NOI.

Those gains give owners a way to improve performance without depending entirely on market appreciation. They also put greater weight on acquisition underwriting that identifies specific opportunities to raise income or control costs.

MG Properties is taking a similarly long-term view, expecting rent growth and tighter occupancy to support portfolio performance over time. Its willingness to buy now rests on pricing and financing that work under current conditions—not on an imminent market turnaround.

Lower values have opened the door to acquisitions. Whether investors can act on them depends on securing the right price, attracting capital and producing the operating results their projections require.

Check back with GlobeSt.com for more from the Multifamily Fall Owners Forum. 

Lender Pressure Creates Openings for Multifamily Buyers

Multifamily Owners Turn to Operating Savings to Protect Income

Source: GlobeSt/ALM