The property, which is 92% occupied and was completed in 1997, represents MGPG’s first investment and market entry into Reno, Justin Smith, SVP of investments for MGPG, tells GlobeSt.com. “We are a western-region multifamily investor based in San Diego, and we’ve been investing outside of our home market for about eight years now. We viewed Reno as a qualified market in terms of a metro in the western region. Operationally and from an expertise standpoint, it always felt like a fit.”

Drawing MGPG to the property was Reno’s position as a market hard hit by job loss and declining single-family-housing prices, Smith continues. “This was an excellent basis play. The property had previously sold for roughly $140,000 per unit, and we picked it up for $84,000 per unit. That’s a very good basis to strike considering our expectation of the market recovery that’s just starting to unfold for apartments.”

Additionally, MGPG determined that the property’s yield had some arbitrage over the Bay area, southern California and Seattle—markets it typically invests in—and therefore would be able to generate a higher yield for the company, particularly with Fannie Mae financing at a historic low, Smith adds. “It’s been difficult to find those as prices have run up in the major metros.”

MGPG is wary of high-turnover commodity apartments in secondary markets where residents have a history of concession shopping, according to Lane Jorgensen, the company’s investments manager. “Manzanita Gate immediately stood out to us as a destination property in Reno, uniquely situated within walking distance of a desirable elementary school and high school as well as large public parks and a public library. By operating Manzanita Gate as a destination property, we will be able to reduce turnover, hold occupancies high and allow our staff to really focus on serving our residents.”

Manzanita Gate had been owned by the lender for nearly a year before the sale, and it was Smith’s understanding that there were other bidders involved. MGPG is planning a long-term hold on the property to “enjoy the operational cash flow,” having put 10-year-term financing on it from its lender.

The property offers a mix of one- and two-bedroom apartment homes that average 940 square feet. Each apartment has a washer and dryer. MGPG plans to complete minor interior upgrades, update the common areas and remedy deferred maintenance issues, particularly the roofs and windows, to improve resident quality of life.

Since December 2010, MGPG has completed seven apartment acquisitions totaling 1,648 units at a value of more than $215 million. Smith tells GlobeSt.com the company anticipates closing an additional $200 million in acquisitions within the next 12 months, including properties in Seattle, the Inland Empire and the Bay area. “[It] would be nice to have a little bigger presence than one asset in Reno, but it’s a really thinly traded market, so we expect that most of that $200 million will come from our current markets.”