Enduring Family Co. Wins in Las Vegas Boom

June 6, 2007

Picerne Real Estate Group, a family-owned company in its eighth decade of operation, is witnessing the payoff from its program of tying up good sites at favorable prices in the early 2000s in the lucrative Southwest markets of Las Vegas and Phoenix. "We went on a significant land buying spree about five years ago, prior to the land price explosion," says David Picerne, president and CEO. Since then, the company has built about 15,000 units in Phoenix and 4,000 in Las Vegas.

Picerne's management portfolio totals 39,471 units in market-rate, military and tax credit housing in 22 states including Rhode Island, Florida, Texas, Michigan, Georgia and Tennessee. It currently has 2,000 units of multifamily housing under construction and another 2,500 units in the development pipeline, mostly on newly bought sites in Las Vegas and Phoenix, Picerne says.

One of the nation's largest developers and managers of privatized military housing, Picerne Military Housing has five military housing contracts on about 16,000 units. On the affordable housing side, Picerne owns Low Income Housing Tax Credit housing in 25 states, and is developing primarily in Florida and Puerto Rico.

Picerne Real Estate turned from its 1990s emphasis on merchant building to develop exclusively for its own account in the 2000s. One of the benefits of not having equity partners is that Picerne controls the timing of how long it can hold assets. "Our investment strategies have been longer term than those of some joint venture partners we have typically dealt with." A recently concluded program to sell its older properties—pre-1980s in the Northeast and pre-1990s in the Southeast and Southwest—enabled Picerne to redeploy its capital to update and upgrade its portfolio.

For the future, Picerne indicates that his company is ready to engage in third-party development again. "Going forward, from 2007 to '08, a good growth strategy will be to pursue a mix of developing projects for our own account and a return to some presales and joint ventures with outside partners," he says.

This year, Picerne says his company will be opening about 2,000 housing units, mostly in the Southwest. Properties recently opened include the 142-unit Aliante Apartment Homes in North Scottsdale; the 580-unit Presidio in North Las Vegas; and the 455-unit Preserve in North Las Vegas. Apparently, Picerne is benefiting from the strong Las Vegas market. The Presidio, for example, rented out 80 apartments in the first 30 days, with rents at $1.13 per square foot, says Rondetta Troutman, senior vice president.

Picerne Real Estate has carefully refined its mid-rise, garden-style apartments, now in their seventh or eighth generation, using feedback from residents to improve each generation of the product.

In the past year, Picerne's Florida group won a RFQ to develop commercial space and athletes' housing in Central American Village for the 2010 Central American Caribbean Games in Puerto Rico.