PrivatePortfolio Group, LLC,
entering its 12th year of operation in May 2009, has acquired and managed
on behalf of affiliated entities 5,806 Class A apartment units spread
among 18 communities in the Phoenix Metropolitan region. The Company
was founded in order to gradually acquire a portfolio of approximately
10,000 luxury apartment units in the Southwestern region of the
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For year to date acquisitions, the portfolio geographic overlay in Metro Phoenix has been approximately 33% in the North Scottsdale area, 49% in the West Valley and 18% in Chandler or the SE Valley.
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The investment objective of each asset over a period of 6 to 10 years is to generate tax sheltered income during the early holding years and finally "realized capital gains" with favorable tax treatment upon sale. The specific goal is to incorporate prudent leverage and capitalization and reserves for each core asset in order to protect principal while realizing acceptable investment returns. On average, each community, a single asset entity, is acquired with debt of 60% to 65% and equity of 35% to 40%, although on occasion it may be higher or lower. The asset model must be able to withstand unstable and bearish conditions typical in the real estate cycle.
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PPG's primary thrust during 2008 continues to be focused on acquiring Class A apartment communities in the Phoenix Metro area with both current and long term investment return objectives during the hold period. The quality of the asset must be such that it can be dispositioned as a core asset holding to the “institutional type investor” at the end of the investment hold period or can seamlessly be converted to a condominium community if the market conditions are present to the Company or a condo conversion buyer.
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The Company sold 6 apartment communities in 2005 through the 1st quarter of 2008 after a hold period averaging approximately 6 years for $291 million versus a cost of $165 million including total equity of approximately $50 million. Average annualized return per year after return of capital was between 23% ~ 50% - (See Current Holdings).
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Pillar Communities, LLC is the Company’s wholly owned Management Company that is responsible for all day to day operations of each community. All finance, accounting, reporting, auditing, and analysis are conducted by Pillar on behalf of each asset. KPMG annually audits each separate entity as well as completing the K-1s and tax returns. (Pillar Communities website: pillarcommunities.com for location and details of each community)
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PrivatePortfolio Group, LLC -- references are the following:
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Legal Counsel (corporate & transactions)
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Legal Counsel (transactions)
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Accounting (tax & audit)
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Banking
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