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Every Friday, join us as we dive into the latest in real estate multifamily with David Moghavem, Head of East Coast Acquisitions at Trion Properties. David invites top experts who know the ins, outs, and trends shaping the real estate multifamily market across the nation!
Whether you’re a seasoned investor or just curious about where the next big opportunity might be, Deal Flow Friday brings you the weekly inside scoop on what’s hot, what’s not, and what to watch for in today’s ever-evolving real estate scene.
David Moghavem (01:31)
All right, welcome to another episode of Deal Flow Friday. I'm your host, David Mogavum. And today we got Jeff Gleiberman, the president of MG Properties. Jeff, it's an honor to have you. MG Properties is the gold standard when it comes to multifamily operators and syndicators. And so to have the president and to have the Gleiberman family, one of the Gleiberman family members on the pod, I know how your dad started MG, so.
to keep that going and to have you on the pod is truly an honor. So welcome.
Jeff Gleiberman (02:05)
Thank you. Yeah, very excited to be here and interesting time in the market. So I'm sure we'll have a lot to discuss.
David Moghavem (02:11)
Definitely interesting time. First of all, for those of you who don't know, MG Properties, one of the biggest national multifamily operators in the nation, 32,000 units across 115 plus communities, six states, and they're a top 50 US multifamily owner per NMHC. Am I gonna see you at NMHC, by the way? You're gonna be there?
Jeff Gleiberman (02:32)
Be there, that's like our Super Bowl. They're all week, meetings nonstop.
David Moghavem (02:35)
Exactly. It's
the Super Bowl, the 30 minute backs to backs to backs and it's always a good time. So, Jeff, really, really good to have you. I wanted to kick it off. Just what I was saying, know, MG properties, you guys really are the gold standard when it comes to raising equity, building a syndication platform. You guys are vertically integrated. So are we at Triumph Properties. And there's so many benefits to that, especially in a
choppy environment. There's an uncoined term, think, out of multi-family syndicators that say, let's build a platform the MG way. And I guess I want to first ask you, what does the MG way mean to you?
Jeff Gleiberman (03:20)
That's a good question. I appreciate the kind words and compliments there. You know, we love what we do and, and really enjoy the business. But I think that becoming an expert and being extremely specialized is very important to us. So we don't want to get distracted with lots of different investment ideas or options. And we have done over 200 deals over the last 35 years.
And they've all almost looked identical. They've all been existing apartment buildings that are stabilized. We can come in, add value either through management upgrades, through renovation and improvements. And so really being super specialized and just trying to be the best at doing one thing has been really important to us.
David Moghavem (04:10)
Yeah, and I would say to add to that specialization and having the copy and paste recipe, putting that into different markets seems to be how we diversify is geographically. And you you guys being in six different states, it sounds like you guys have diversified geographically as well. What are some of the markets that you guys are in right now? And talk to us a little bit about which markets of those you're excited about.
Jeff Gleiberman (04:39)
Yeah. Diversification is really important, especially these days with political risks and with job relocations and just different things that go on in different markets. So we are from San Diego. And for the first eight years, we did about 50 deals just in San Diego. And San Diego is a pretty low traded market. There's not a lot of sales. So as we're growing our business, we needed to expand to new markets. So about every five years we've added a new market.
We're in seven states today and we ⁓ went all up the coast through California, up into Oregon, Washington, Arizona, Nevada, Colorado, and Texas. And ⁓ we typically focus on sub markets a little bit more than the total market. So we were really trying to buy one deal in every market in a specific sub market that we're targeting every year. And this year we've been pretty active. We'll end up closing.
eight or nine deals, which will be about a billion in acquisition. So a little bit less than what we're used to, but, still very good for this market. And, yeah, no, we're, very happy with it. And we would probably set our goals a little higher than that, but, still very, very happy with it. We're seeing very choppy performance right now. So we're seeing the coasts. We're seeing, Washington, Oregon, California performing.
David Moghavem (05:43)
Amazing.
I think anyone will be happy with that right now.
Jeff Gleiberman (06:06)
pretty well and seeing positive rent growth and there's not been a lot of new supply there and there's been good job growth. And then we're seeing some of the inland areas with negative rent growth and worse performance such as Nevada and Arizona and then Colorado being ⁓ the worst performing market in our portfolio now.
David Moghavem (06:07)
Mm-hmm.
yeah. And I think there's correlation there, right? Supply. The coastal markets didn't see that glut of supply as much as the markets that you were just saying that are pretty more inland. Do you think there's more to it than just supply? Or do you think there's a different trend that maybe people aren't talking about?
Jeff Gleiberman (06:42)
I think it's pretty much supply. Yeah. Just significant supply with, you know, not a lot of absorption, so not a lot of demand. And we're still seeing a lot of demand in Phoenix. There's a lot of job growth there. The properties are still performing relatively strong there. ⁓ maybe slightly negative, but in, in like a Denver, there's just been not very many job growth opportunities and there's been tons of supply on the buy side.
that can sometimes lead to some of the best buys we've seen in our, in our history. So we're not counting out buying in Denver. It'd have to be a really great deal, great location, great price. But as there's more stress on owners and in markets that are feeling, you know, negative rents or other types of stress sometimes leads to good opportunities.
David Moghavem (07:30)
Yeah, and you were mentioning how, you you're not red taping Denver, but it's got to check, you know, almost every box. What I'm finding, especially in Denver, is there's that huge disconnect in pricing when it does check every box, you're seeing yields really compress to really tight levels that don't really match the sentiment of the market. But if it doesn't check, you know, either one or two of those boxes, you have
Virtually no capital or very little capital chasing some of those deals whether it's vintage or whether it's not in the right location so as Someone like mg who you guys have longer term holds you guys see long term you guys have been through multiple cycles Are you riding that wave of you know the two thousands and newer? Yes, it's a tight yield relative. Maybe to what else is trading out there, but relative historically It's a good yield
And in 10 years, this would be a good goodbye. Or are you going a little more contrarian where you're saying, hey, there's too much capital, institutional capital chasing those 2000s and newer. Maybe we play a little in a sub-institutional space. I'd love to get your take on that.
Jeff Gleiberman (08:41)
Yeah, there's a couple of good points there. I'll start with the question. So I would say a little bit of both, mostly leaning towards ⁓ following the trend of buying better location, 2000s and newer with ⁓ a lot of the things that we really like to see in the properties. But on the other side, we are underwriting more deals that we wouldn't have underwrote in the past. So
We are looking at some older deals, some value add deals, and a lot of the times there's too big of a price disconnect, as you mentioned earlier, and they don't trade and they don't end up selling. But a few times we have seen some really, really good purchases. We bought a 80s construction deal earlier this year, value add play in Kent, just outside of Seattle, kind of close to the airport there. And it
has been doing really well, ⁓ had really good yield. It was a high five cap rate. We locked in a seven year loan around 5%. So some of the better cash flow that we've seen. So I say we're doing a little mix of both.
David Moghavem (09:52)
Yeah. And I think one of the points on maybe like an eighties vintage deal is you see how you have a really strong cap rate, but you also need a factor in some of the deferred that might be coming up with it, especially as it's hitting its 50 year life, 40, 50 year life. Now the plumbing is starting to pass its useful life. Now some of the, ⁓ the other features of the property roofs siding, things like that might be passing its useful life. So I know we're going broad brush here.
but are you seeing that you're getting paid for the premium in yield on maybe some of the older vintage assets where you're like, okay, net of deferred, you're kind of at the similar yield that maybe the 2000s in you are at, might as well buy new, you know what you're getting yourself into, we're holding this long term anyways, or are you seeing that maybe there is a asymmetric premium on some of the older stuff right now?
Jeff Gleiberman (10:49)
It's been pretty rare to find that, that premium on the older stuff. would say we bought an older deal in Reno last year. We bought the deal I just mentioned in Seattle and then maybe one other over the last two years. So we're underwriting tons of them, but we're just not finding that real premium to buy those. So we've mostly been focusing on that 2000s and newer. And then to one of your earlier points on, on markets, we were talking about Denver and
how it asked me to check every box. And one other market that we need a lot of boxes checked is Los Angeles as well. So we own in Los Angeles. It has significant political risk and with the mansion tax passing and other things, that's just a market where we want to buy because there's not a lot of new supply and there's lots of job growth, but it really needs to hit every box just with some of the kind of policies and the political risk.
David Moghavem (11:48)
Yeah, as an LA native, I can definitely resonate with that sentiment. think the political risk in LA coming out of the fires where there was a eviction moratorium or coming out of COVID when there was that and some of the entertainment industry getting hollowed out there, it's been really tough. Demand is still there somewhat, but is it worth the political risk that's
Hard to quantify, I don't know.
Jeff Gleiberman (12:19)
Yeah, and that's kind of what we're feeling too. So just kind of just thinking about markets in general. ⁓ We're being a little bit more picky in some markets than others, but still able to find deals and make deals work today.
David Moghavem (12:19)
⁓
Yeah, so you got a deal in Kent down a deal in Reno. guess overall, what were some of the markets that you felt were penciling really well and had the good, you know, had good tailwinds for you to get comfortable closing on deals there?
Jeff Gleiberman (12:50)
⁓ California, ⁓ is having positive rent growth, good performance. So it's been, ⁓ a little easier to buy in those markets today, especially with a lot of people not wanting to buy in California. So that could be a little bit of what you, talked about earlier with where we're going a little bit against what others are doing, but we bought a big deal in San Diego early in the year. We bought a deal in Anaheim, kind of middle of the year. And then, we also closed a deal in Las Vegas.
Vegas has been doing relatively well and does not have a lot of new supply too. And then we bought a deal in Dallas. a little mix of almost all the areas that we look, or almost every state that we're in, ⁓ nothing in ⁓ Oregon this year.
David Moghavem (13:38)
Yeah, and I guess what are some of like the common traits on some of these deals? you guys it sounds like, you know, historically you guys have been more three stories garden style type of product. it similar? Same of that in these markets or are you guys buying urban core product as well?
Jeff Gleiberman (13:57)
historically we've been, you know, almost all suburban two, three story walkup product garden style. And then we bought a large portfolio with a institution, ⁓ middle of last year. ⁓ and it was a 10 property portfolio and two, ⁓ kind of high rises came in that portfolio and it opened our eyes a little bit to the basis buys and some of the recovery of the urban areas. So we did also buy a,
deal earlier this year. That was a high rise. And we're also under contract right now and closing on one early next year as well. And those are significant discount to replacement cost basis buys that still have positive cash flow, but not as much as some of the suburban product.
David Moghavem (14:45)
Right. Those basis plays are very interesting depending on the market. think, you know, like in Portland, for instance, the urban core trading deep, deep below replacement cost basis. Buildings that cost, you know, 350, 400 a door trading 200s a door. And it's very compelling. Your yield is tight. Right. And so you're trading yield for for basis.
Jeff Gleiberman (14:59)
Yeah, no.
David Moghavem (15:11)
But if you could get comfortable with the absorption, get comfortable ⁓ and believe, you know, back to urban core, maybe not back to where it was before, but even some sort of absorption, because supply isn't really being built in this environment, I think you're going to really like that buy.
Jeff Gleiberman (15:27)
Exactly what we're seeing. Yeah. And Portland, you know, we were hearing about sub 200 a unit high rises selling and it's, 500 plus a unit to build that type of product. So mean, less than 50 % of replacement costs. And we're seeing that in other major markets as well. The two high rises that we purchased are both in San Diego. San Diego is the market that we know the best. It's our backyard and we've been here the longest. So feel really good about the locations and the properties that we purchased, but
We are looking at other markets for those plays too.
David Moghavem (15:59)
So on that note, like what's your target metric of choice? I'm sure with the high rise, you're thinking maybe a little less about yield and thinking more about basis as a discount to replacement costs, but maybe on like your three story walkup, garden style, suburban, what's your target metric of choice that's really making you excited about a deal?
Jeff Gleiberman (16:20)
So about 70 to 75 % of our business is a high net worth syndication model where we raise money from private individuals. And that's kind of what we've mostly been talking about today, but 25 to 30 % of our business is a JV model as well. partner with large institutional partners as well. So they both have different things that they're looking for. So on the private side, it's mostly cash on cash, the yearly distribution.
And then with the bonus depreciation coming back this year with the big, beautiful bill, that's ⁓ brought an influx of investors back as well. So, you know, significant appreciation comes from these properties and large passive losses that offsets the income. So we wish we were seeing higher cash flows today. Most of the cash flows are in the four to five and a half percent range over a seven to 10 year hold.
David Moghavem (16:52)
Mm-hmm.
Jeff Gleiberman (17:11)
which is lower than we've seen historically, but cash on cash is the main metric for the private group. And then IRR total return is the main metric typically for the, the JV partners. And both like to see a little bit of both, but those are, they favor one or the other.
David Moghavem (17:30)
Yeah, I think cash is king right now, right? Everyone's kind of focusing on that cash on cash. It wasn't like that free rate hike. I think everyone was focused more on stabilized return on costs on upside on, you know, everyone was talking about trade outs and where you can get that yield to pro forma rather than what it is today. That's completely flipped upside down. And so I guess on on your side, you you guys self manage, you guys do run a perform these renovations. I don't know how it is for you guys, but for us.
there's very little ROI when it comes to some of the renovations. so pushing NOI to where it needs to be is a tougher sell and tougher to bank on where you kind of need a focus on that year one cash on cash. Is that pretty much what you're seeing as well? That just the ROI is just not there on some of these renovations or is there some markets where you're seeing maybe there are some, there is a ROI
Jeff Gleiberman (18:26)
No, on the renovations, it's kind of difficult in this market, obviously, with rents staying pretty flat or going down. We obviously do our own self-management and ⁓ construction management, asset management, everything in-house. So we've got a thousand team members now and we can get some good cost savings. we're seeing more upside on. ⁓ We have a great insurance program that usually can save
on properties that we're buying. ⁓ Just some economies of scale and some management upside, but it is difficult on the value add to make that work.
David Moghavem (19:06)
I guess switching gears a little bit, kind of wanted to get your predictions on 2026 One of the common themes every time we're at NMHC is everyone trying to extend and pretend and sellers not meeting the market.
buyers being at one place, but sellers being a little bit above that and the bid ask spread continuing on and trying to get workouts. Do you think 2026 is going to be more of the same with that? Or you think this is the year where the extend and pretend is over and sellers start to capitulate.
Jeff Gleiberman (19:39)
So just this morning they had another rate decrease. So that was three in a row there. That should impact the market a little bit or give some direction to people. But in general, I think it's going to be a lot of the same next year where the inland markets that had the most supply will be underperforming. The coastal markets that had the least supply will be overperforming.
David Moghavem (19:44)
Mm-hmm.
Jeff Gleiberman (20:04)
we started to see some lenders take back properties and we're seeing those on the market now. Typically they're, worth less than the loan balance. So I don't know if the lender lists are real sellers or not, but we'll, we'll, we'll start to see more and more of it next year, but it's not going to be majorly different.
David Moghavem (20:23)
it's interesting of where the lenders head is at for some of these, right? Because I think they also understand that the property is not worth the loan balance, but they also do have an incentive of meeting the market because I feel like they need a recycle, either recycle capital, redistribute capital back in order to kind of move on, close the fund, get their new fund going.
I don't know. Do you think they're going to meet the market on some of these or is there a reason why they wouldn't or a reason why you think they would?
Jeff Gleiberman (20:58)
Well, we thought that they would earlier and so we still think they will, but for some reason they're not. it's kind of hard to project what's going to happen, ⁓ I don't think these lenders want to own real estate, manage real estate. So they should want to get them off their books. It's just, they don't want to take that loss, but eventually they're going to have to, or there's going to have to be a market recovery.
David Moghavem (21:22)
Yeah. Yeah, no, fair enough. Fair enough. So I guess what's the major trend or headwind ⁓ operationally that you're keeping an eye out for in 2026?
Jeff Gleiberman (21:34)
There's a, there's a operationally, are seeing a decent amount of turnover in the field. So, you know, on the maintenance management leasing side, there's just a lot of movement in that world from people moving different companies. And so really trying to focus on, ⁓ you know, we, we've grown significantly, but we're still a family company. So we're really trying to keep that family feel. And, ⁓ as we grow more institutionally.
And hopefully we can keep team members for as long as we can, especially the good ones. So that's been a little bit of a ⁓ headwind. Another one is obviously that new supply. So concessions have gone up considerably. We're seeing, you know, it's more of a concessionary environment and having to deal with that has been a little bit difficult as well.
David Moghavem (22:27)
Yeah, and I would add to that personally, I'm starting to see bad debt creep up in all of our markets across the board. Some worse than others. Some got hit earlier than others. But what's interesting is every market's treating it a little differently, right? You have some markets where the municipalities are giving landlords the tools to...
evict quicker, process WRITs quicker, and then you have some markets where they're completely backlogged, they're completely backwards. Some markets even giving moratoriums. I think bad debt, people are stretched thin right now, at least in the spaces we play in, in first ring suburbs. And we're really seeing that creep up. I don't know if that's something you're seeing in your portfolio.
Jeff Gleiberman (23:11)
Not a whole lot, but also we've implemented some new AI tools that have helped with the onboarding and selection process of residents. And it's catching a lot of ⁓ false ⁓ pay stubs and fraud upfront. ⁓ There's so many prop tech tools these days. I can't even remember the name of that one, but it's pretty interesting the amount of prop tech that we get pitched every week.
David Moghavem (23:27)
Mm-hmm, which one are you using?
Yeah.
Jeff Gleiberman (23:41)
I know this one is working really well though. I'll get you the day of later. I just can't remember it off the top of my head. Do know which one you use?
David Moghavem (23:47)
Yeah, so we used snapped for some time and snap was working well, but then the frauders started catching on and they were able to get through snap. So now we use two dots and two dots is interesting because they catch. So like these, these frauders are insane. They, they make these fake social security numbers and they start applying with fake socials and snap doesn't usually catch that. But two dots does.
And we were able to catch that and our, yes, obviously our denials are much higher, but our bad debt has improved substantially in some of the markets where we were running into some bad debt issues just because they were getting through the fraud detection tools.
Jeff Gleiberman (24:32)
Yeah, no, yeah. I'm pretty sure we're using that. The second one you mentioned, I hadn't heard of the first one, but the second one sounds familiar, but I'll get you the name. But yeah, it's been definitely increasing denial significantly because there's so much fraud out there, but then it's really helping with the bad trends for sure.
David Moghavem (24:50)
do you expect at MG that your guys's acquisition activity is going to pick up from before? I know you were also mentioning you guys weren't selling ⁓ in the past couple of years. Now, now you are deciding to sell this year. We'd like to hear a little bit about, your buy buying activity predictions and your selling activity.
Jeff Gleiberman (25:10)
Yeah. And in 2023, 24, we really weren't sellers, didn't sell much at all. And then as pricing started to recover and some markets started to recover this year, we started selling again, some of the deals that would achieve the highest price. that checked a lot of boxes for people, good locations, good properties, having strong trends. And we did see really good ⁓ outcomes on all those sales. So we will probably do something similar next year.
selling select properties. And then, you know, our goal is to find as many good deals as we can. If we don't find any, then obviously we, you know, we, we do everything syndication deal by deal. So we don't have any funds or anything raised up front, but there's plenty of opportunity out there. So if, if I think we're going to end up at about a billion in acquisitions this year, our goal would probably be slightly more next year, 1.2, 1.3 billion. And, um,
Hopefully we can continue the positive growth of the company and the trends that we're seeing.
David Moghavem (26:14)
I wanted to touch on this while, while I have you. So you guys self manage, we self manage to me personally, you know, this is actually like my first real down cycle, ⁓ being in the industry for like 10 years, you've been through multiple cycles and I realized the importance of self management. I realized through this down cycle that you gotta be hands on, whether as during the bull run.
You can always get saved by rent growth if you missed some expense pro forma or you weren't really on the ball. Talk to me a little bit about what's the most important attribute or reason that you guys self manage.
Jeff Gleiberman (26:52)
Yeah, it started from the very first days of our company. The business was run out of my house. My dad was an accountant. He started buying properties, putting syndications on the side and he was everything. He was the manager, the leaser, the maintenance. did all, he was the accountant. mean, he was, it was just a one man show. So since the beginning, we always wanted to have our pulse on every part of the business. And now that we've been through four or five different types of cycles, it's even more important on
how you need to pivot and make fast decisions and put people in the right places that have the right skills. So it has been a huge key to our success to have everything in-house and have be fully vertically integrated. And it's been a big part of our DNA.
David Moghavem (27:40)
Yeah, yeah, I think it's it's really our our ethos at this point. Also, I try on and I think the at a time where there's so many other operators and so many multifamily operators out there, I think the ones that are self-managing really deliver true value to to a deal and is a true value to a platform. I think anyone can pick and choose what markets work. And there are cycles that show that not every
market is going to be a bull run and some can go through barons. But at least if you have self-management, you can minimize some of the pain during a down cycle and you can really capitalize on some of the upside then squeeze juice out of some and get real ROI on some of it through self-management.
Jeff Gleiberman (28:25)
Yeah, you can catch so many little things and just really be on top of everything when you have full control. And also it just helps so much for market knowledge and for acquisitions as well. So right now we have a deal under contract that's going to close early next year in San Diego. We own the property right next door, 255 units, and we're buying an additional 185 units. So we're seeing the real trends in that market and how the rents are.
going up and how this area has been improving significantly. And then we can make decisions based off that, where we buy and what we do at the property. And then we can even share employees between the properties, which saves on expenses too, and then have a lot of economies of scale that way. So that's just one example that we're dealing with right now, but that happens all the time.
David Moghavem (29:13)
Yeah, you have your own data from one of your properties next door that other groups that are chasing that same deal don't have. And then you have your scales of economy. for us, that's even saved us to not buy a deal, right? Where people are bidding on a deal and we're like, hey, you know, we're getting negative trade outs here. We might be catching a falling knife that maybe other groups don't see. And we've passed on deals because of, because we own next door and we know what the reality is boots on the ground.
So it works both ways.
Jeff Gleiberman (29:42)
Yeah,
I mean, I 100 % agree that it works just as well that side. mean, we've made plenty of mistakes throughout the years and bought every type of deal that has every type of construction and area. And we know exactly what we do not want. you know, staying away from things like galvanized plumbing, obviously tons of issues with that ⁓ in terms of repairs and maintenance and expenses and just other little things about being, you know,
David Moghavem (30:01)
Mm-hmm.
Jeff Gleiberman (30:09)
too close to something or too far from something. So yeah, you just learn so much through that.
David Moghavem (30:15)
Yeah, I love that you said Galvin is plumbing. Galvy plumbing. It's the return on headache on that is is not worth it. Low return on headache. Yeah.
Jeff Gleiberman (30:25)
Now you
buy one of those deals and you never buy another one again.
David Moghavem (30:28)
Exactly, All right, so last question, Jeff. I got to ask this, know, as other emerging sponsors coming out and the audience wants to know what advice you would give emerging sponsors looking to go the MG model that you guys have built such an incredible syndication platform.
Jeff Gleiberman (30:50)
Yeah, one of the biggest things that we always get asked and that's always pointed out and is been important to us since the beginning is just a lot of skin in the game. We want to be aligned with our partners and it just helps gain trust and grow the business. that probably had us grow slower because we had to invest significant capital in all of our deals. But, you know, after 35 years now we're growing pretty
quickly and have a lot of good opportunity, but we never have less than 10 % of the equity of any deal. So, and usually we're, much higher. So it's just a, that's been a big, ⁓ important, ⁓ another piece of our DNA. And then, that we've talked, we've touched on it plenty, but the vertical integration, just having the full control, the, all the knowledge, those, those are two of the biggest, biggest, ⁓ important things we see.
David Moghavem (31:49)
Yep, I can agree with that. And Jeff, I really appreciate you hopping on. was great to have you. Great to meet you. And I'm looking forward to linking up, you know, at MHC. It probably sucks it's not in San Diego this year and you have to take a flight, on a flight to Vegas. ⁓ I always enjoyed the San Diego ones. I didn't really like the Orlando ones, but I really enjoyed the San Diego one. ⁓ to see that now move. Huh? Yeah.
Jeff Gleiberman (32:13)
Yeah, we'd rather have it in our backyard. We'd much rather have
it in our backyard, but at least we have a 45 minute flight while you're coming from East Coast. That's not too fun.
David Moghavem (32:24)
Yeah, exactly. That's not a fun flight, but Vegas, can't complain. Maybe after a couple days, you can't complain, but you can't complain, so.
Jeff Gleiberman (32:34)
Yeah, we'll be coming back a little tired.
David Moghavem (32:35)
Alright Jeff,
yeah, great to have you on, appreciate it and take care.
Jeff Gleiberman (32:42)
Thanks for having me. Good seeing you.