PrivatePortfolio Group, LLC, entering its 25th year of operation in May 2022, has acquired and managed on behalf of affiliated entities 10,652 Class A apartment units, totaling $1.6 billion, spread among 30 communities in the Phoenix metropolitan region and 9 in the Seattle metropolitan region. The company was founded in order to gradually acquire a portfolio of approximately 10,000 luxury apartment units in the southwest and northwest region of the nation.

The company has acquired a total of 39 separate apartment communities and sold 23 apartment communities through the 3rd quarter of 2021 after a hold period averaging approximately 9 years and an average annualized net return of 23% after the return of invested capital. The portfolio geographic overlay in metro Phoenix has been approximately 29% North Scottsdale, 33% SE Valley (Chandler, Tempe, Gilbert), 25% NW Valley, 8% SW Valley and 5% in Central Phoenix. The portfolio geographic overlay in metro Seattle has been approximately 26% in South Lake Union, 31% in Capitol Hill, 15% in the Central Business District, 12% in Ballard and 16% in the University District.
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 a prudent financial structure including 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 50% to 65% and equity of 35% to 50%. The asset model must be able to withstand unstable and bearish conditions typical in the real estate cycle.
PPG’s primary thrust will continue to be focused on acquiring Class A apartment communities in the Phoenix and Seattle metro areas 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.
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.