COLUMBUS, IN-Piping Rock Partners Inc. has joined with a family investment office, both based in San Francisco, to pursue apartment properties in the secondary and tertiary markets in the Midwest. The yields are high and low risk compared to California properties, says the Piping Rock president.

The group recently bought a 120-unit apartment property here from T&R Properties for $4.7 million. The complex had a loan that was in default, but was not yet bank owned, says Piping Rock President Christopher Germain.

He says the deal was attractive for a number of reasons, including that his firm’s upfront cash fees at closing were less than 20 basis points of the total purchase price. The debt, which was privately placed with Piping Rock’s partner, consisted of a first and second mortgage totaling 90% loan to cost, with a blended interest rate below 5%.

Germain says that in California, prices are going up similar to the rise in prices in 2006 – but the job growth isn’t happening, and it’s not clear when it’s going to happen. In the Midwest. pricing is more disorganized, and investors are able to get a better yield with less risk, he tells GlobeSt.com.

He says the venture is looking to do more similar investment in the middle of the country. “We’ve backed off the West Coast for now. We’re looking for $10-$15 million deals that are under the radar here,” Germain says.