Pacific Gulf to Control Group of 11 Apartment Sites

Pacific Gulf Properties Inc. said Wednesday that it is buying controlling interest in a portfolio of Southern California apartment projects valued at $72 million. The deal with a consortium of landowners headed by developer John Konwiser will add about $12 million to Pacific’s revenues and increase company assets about 35%.

The 11 apartment sites being sold include three active senior citizen projects and represent a total of 1,368 apartment units, increasing Pacific’s portfolio to 4,660 units.

Pacific said the apartments will be purchased as a real estate investment trust with the company serving as general partner and controlling an 80% interest.

The landowner consortium, representing 17 partnerships, will control the remaining 20% interest. Pacific said 270,000 to 300,000 limited partnership interests will be issued to consortium members. The limited partners will have the option to convert their interest into Pacific common stock on a one-for-one basis two years after the agreement is completed.

The deal should be closed by the end of next month, Pacific officials said.

Pacific officials said the company will contribute about $13.5 million in cash to the operating partnership, with $12 million earmarked to pay down and restructure the conventional debt securing a portion of the portfolio. The company expects to invest an additional $1.5 million over the next five years to improve the properties.

Pacific officials said the acquisition would move the company toward its goal of further penetrating the senior citizen housing market and tapping into tax-exempt financing opportunities.