Prometheus Billionaire Emerges With San Francisco Rentals

The apartments at City Square in
Cupertino, California, feature an on-site gym and private decks
that overlook the property’s amphitheater, Olympic pool and spa.

The gray, five-story luxury building, where a second-floor
two-bedroom apartment was recently listed for $3,293 a month, is
“the perfect home after every amazing, exciting, exhausting
day” in the town where Apple Inc. (AAPL) employs 15,000 people and
more than 60 other technology companies have offices, according
to a listing on Prometheus Real Estate Group’s website.

Prometheus owns about 11,000 similar residences across the
San Francisco Bay area, making it the region’s largest closely
held owner of apartments, according to its website. Founded in
1965, the company has a value of $2.3 billion, according to data
compiled by Bloomberg, and has made its 86-year-old founder,
Sanford Diller, a billionaire.

“We have a steadfast policy as a family and business to
not release our net worth and keep all financial information
private,” Jackie Safier, Diller’s daughter and Prometheus’
president, said in an August e-mail.

Prometheus, which Diller owns through a revocable trust
with his wife, Helen, according to court documents and
regulatory filings, controls buildings in cities such as Santa
Clara
and San Jose, where average monthly rents are about
$2,500, and Mountain View and Cupertino, where they approach
$3,000 a month, according to data compiled by apartment-researcher Axiometrics Inc.

‘Phenomenal Growth’

Vacancies are lower, rents are rising faster, and property
values are higher in the Bay area compared to national averages
according to Stephanie McCleskey, vice president of research at
Axiometrics. Rents grew at a rate of 7 to 11 percent year-over-year in Bay area cities in August, compared to 4.1 percent
nationally, she said.

“It’s absolutely phenomenal growth,” McCleskey said in a
phone interview. “New apartments are filling up about twice as
fast as they are in other parts of the country.”

Diller began developing and acquiring real estate in the
mid-1960s after getting a law degree from the University of San
Francisco
. Today, his apartment properties run up and down the
west coast from Los Angeles to Seattle, according to Prometheus’
website. It also has 807,144 square feet of office space in the
San Francisco Bay area.

Prometheus wholly owns about two-thirds of the 17,581
apartment units it operates, and manages other properties on
behalf of Northwestern Mutual Life Insurance Co., billionaire
John Sobrato and others, according to its website.

Expansion Plans

The company is building units in Mountain View, California,
where Google Inc. (GOOG), the world’s largest search-engine company, is
headquartered. It operates 1,684 apartments and plans to build
526 additional units in the city, according to an article posted
on its website.

“Quarter after quarter after quarter, the top multifamily
markets are New York and San Francisco,” Keven Lindemann,
director of the real estate group at SNL Financial, said in a
phone interview from the company’s Charlottesville, Virginia
office. “Strong employment figures translate into significant
demand in the multifamily market.”

The average sale price for San Francisco apartments since
2013 is $322,462, Lindemann said.

Family Foundation

The billionaire made headlines in 2003 when he and his wife
Helen donated $35 million to construct a cancer research center
at The University of California San Francisco, the largest-ever
donation to the school.

The Helen Diller Family Foundation continues to donate to
Bay area Jewish causes and had $37 million in assets according
to a 2012 tax filing. It’s a member of The Jewish Community
Federation of San Francisco, the Peninsula, Marin and Sonoma
Counties, where Diller’s son-in-law, Dan Safier, is a director.
The federation had $675 million in assets in 2012, according to
a filing.

“If there’s one concern, its what happens if employment
growth slows down,” SNL’s Lindemann said.

To contact the reporter on this story:
Caleb Melby in New York at
cmelby@bloomberg.net

To contact the editors responsible for this story:
Peter Newcomb at
pnewcomb2@bloomberg.net
Matthew G. Miller

Article source: http://www.bloomberg.com/news/2014-09-18/prometheus-billionaire-emerges-with-san-francisco-rentals.html

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