Pioneer of Luxury Apartments Puts Developments Up for Sale By SHELLY GARCIA Senior Reporter PCS, among the first developers to build luxury, multi-family complexes in the San Fernando Valley, has put a three-property apartment portfolio up for sale as it shifts a larger portion of its business into the senior housing segment. The Los Angeles-based developer, perhaps best known for building Premiere at Sherman Oaks, is seeking to raise money for new projects, including an upcoming, $70-million senior living condominium complex in Calabasas. “We believe we’re going to be making a shift away from the luxury residential segment and moving more towards senior housing,” said Paul Jennings, co-chairman and CEO of PCS. “I believe luxury apartments has gotten a little saturated.” PCS is continuing to build in the luxury apartment arena the company has a mixed-use project underway in Sherman Oaks which will feature apartments atop retail establishments, and it is completing another apartment community in Thousand Oaks but it will ease out of some luxury investments. The three properties on the market are Premiere Willis in Sherman Oaks and Premiere Hills in Woodland Hills along with Beverly Premiere in Los Angeles. The 248-unit portfolio is on the market for $75 million. Marcus & Millichap Real Estate Investment Brokerage is marketing the portfolio. “We have maximized the value on these three assets,” Jennings said. “They are great assets, but the REITs can get more value than we can because their source of funds is even cheaper than ours.” When PCS began building luxury apartments late in the 1990s, it was among the only developers focusing on that segment of the market with large-scale projects. Since then, a number of developers have moved into the segment and numerous luxury apartment complexes are now in planning or construction stages from Studio City to Woodland Hills. At the same time, record-low mortgage rates have taken a number of renters out of the market. While there has not been any erosion in rental rates as a result, owners are seeing some softening in occupancy rates and longer lead times to rent units. “Fundamentally, the luxury housing market is getting more competitive,” Jennings said. “REITs can do it more efficiently.” The company next month will begin selling condos in its 270-unit Sherman Village project at Riverside Drive and Whitsett Ave. The project has units for active seniors along with assisted living and skilled nursing facilities. PCS is planning a similar, so-called “continued care” development off Calabasas Parkway in Calabasas. Although work on entitlements is not scheduled to begin for some time, the company expects the complex will have 250 to 300 units. The condominium units sell in the range of $500,000 to $900,000. Jennings believes there is an emerging demand for housing that allows seniors to transition from independent to assisted living. “Our market is 65 and older,” Jennings said. “You can maintain an active life and when one of the spouses gets sick, you’ll have a guaranteed place. If you’re buying a condo unit, you’re controlling your destiny. If you rent, you have no real control.”
