Daniel Kline loves Philadelphia. But he's not putting his fund's millions to work around here.

"The city has so many great reasons for people to want to rent and live here," says Kline, who named his real estate investment firm Delancey Street Capital after one of Society HIll's premier residential addresses. "I grew up here, went to school here (Wharton, and Akiba), learned the business from Mitch Morgan here." His Morgan Properties Inc. used the late recession to buy cheap and expand fast, becoming at one point the biggest apartment landlord in New Jersey.

Kline left Morgan and set up Delancey in the spring of 2013 and began hunting properties in Pennsylvania and Maryland. In that time Kline has invested $35 million -- none of it in the Philadelphia area. His firm's latest buy is Sail Cloth Factory Apartments -- $12.9 million for 107 units in a converted downtown Baltimore ship-supply loft factory building -- in a neighborhood Kline is sure will support both improvements (24-hour valet and gym, roof deck, free Internet and yoga), and higher rents, squeezed between a big state college campus and a university medical center. In fact, all his deals have been in Maryland, not Pa.

Are there no longer properties like that available for upgrade in the eds-and-meds neighborhoods in and around Center City? "I would love to buy in Philly -- once the prices come down," Kline told me. But there are "huge amounts of rental supply coming on line that will push rents down here," he added, citing projects-in-progress, cranes rising and zoning approvals from City Line to North and South Broad and both rivers.

Plus investors and lenders from New York and elsewhere have already flooded into Philadelphia, "driv(ing) prices to ridiculously high levels."

He notes that Morgan, too, is buying buildings in Maryland these days. 

I asked veteran multifamliy broker Spencer Yablon at CBRE in Wayne, Pa. "He's doing a good job," he said, of Kline's Delancey deals.  "But there's more deals getting done down in Washington and Baltimore than there is in Philadelphia, there are more sellers, so it's easier to get hold of assets in those markets.

"We actually see lower yields down there." (Kline says that's around Washington, not Baltimore, where he's active.) "That's why money from New York and other places on the East Coast wants to be in Philadelphia. Philly is very stable compared to a lot of other markets."

What about all the new construction here? "It feels like you have a lot of construction right now, but it's far less consturction historically than a lot of other markets. We don't feel we're overbuilt." Occupancy rates could drop a bit short-term as new buildings open, "but the fundamentals are solid. We have a ways to go."