It's not that a San Diego multifamily investor dislikes San Diego apartments. They're just so darn expensive right now. MG Properties Group just purchased Trillium Papago Apartments, a 270-unit luxury apartment complex in Phoenix for $36.2M. And this is the firm's fourth buy in the past six months—totaling 700 units and $125M in value. Just not in San Diego. What gives? To get our answer, we asked MG's Paul Kaseburg (the guy, not the giant stuffed elephant). “This is an excellent example of our current target transaction profile. We are focused on high-quality properties in good locations, where we can lock in long-term debt and generate consistent income,” Paul says.

Although MG likes value-add deals, they have been hard to find nowadays, especially in San Diego, Paul says. It has to do with San Diego's economy. “San Diego tends to be less volatile than other Western markets and seems to command a relative pricing premium in good times and bad. Many value-add transactions here are aggressively priced at the moment,” he says. So the firm is also shopping in Arizona, Colorado, Nevada, Oregon and Washington. But it's still buying in California when the right opportunities present themselves, as they did last year with The Marquee, a 236-unit complex in North Hollywood for $27M (here); Tuscany Ridge, a 220 unit property in Temecula for $39M; Sterling Village, 186 units in Vallejo for $30M; and Bella Vista, 72 units in Napa for $14M.

As for Trillium (here), it's a market where MG has been a landlord for a decade with nearly 1,500 units. “Phoenix fundamentals were slower to recover after the downturn, but it has been extremely strong for us over the past 18 months. Although Phoenix has a history of volatility, we see real opportunity for growth in the market over the long term,” Paul says. MG plans to rebrand the property into Ascent at Papago Park and complete renovations of the pool and common areas to help push up rents.