Treetop Development, a Teaneck, N.J.-based real estate firm formed by two high school friends, is making a second major investment in Philadelphia by renovating the 504-unit apartment towers at 5450 Wissahickon Ave. in East Falls.
Many commuters no doubt will drive by what is now known as Charter Court without noticing the new ownership.
But plenty of people live in East Falls, too, and "we were interested in buying it as a transport hub-based development," said Adam Mermelstein, co-founder of Treetop.
SEPTA's Queen Lane Regional Rail station "is just down the street, and East Falls is just a 15-minute ride to Center City," Mermelstein said during a recent tour of the project.
"We identified Philadelphia as a market where we capitalize on the student population and the growth of the universities," such as nearby Philadelphia University and Drexel University's medical school, he added.
Treetop saw the development of Rittenhouse Hill by Post Bros., the firm owned by Matthew and Michael Pestronk, as pioneering.
"We leveraged off of the buzz they created in this area," Mermelstein said. Post Commercial Real Estate's 624-unit Rittenhouse Hill renovation project is situated above the Wissahickon in Germantown.
Treetop is investing $7 million in the refurbishing of Charter Court, and about half the apartments have been renovated thus far, Mermelstein said.
"One wing of the lobby and some amenities have yet to be finished, as well as the pool," he said.
As tenants vacate, Treetop will renovate the remaining units of what formerly was known as School Lane House Apartments.
Among the obstacles Treetop faced: The buildings needed structural repairs.
Renovations to the apartment interiors include new Caesarstone countertops and refinished oak floors. A new heating system has been installed, as well as a glass-walled lobby with double-pane windows.
"Without that, it can be chilly in the lobby," Mermelstein said.
Blackney Hayes is the project's architect and designer.
"This was a C-class building and is now an A-minus building," Mermelstein said. Rents range from $1,000 for a one-bedroom apartment to $1,750 for a three-bedroom unit of about 1,100 square feet.
Treetop was formed in 2005, when Mermelstein and co-founder Azi Mendel circled back to work together after separate careers in real estate. After several projects in New York, they branched out into New Jersey and Pennsylvania, as well as other states.
Mermelstein started as a property manager, buying and overseeing rental buildings in New York City.
"When I got started, I didn't even know what Sheetrock was," he said, laughing.
Meanwhile, Mandel launched his career with a Manhattan real estate syndicate led by Marc Karasick, who has owned such trophy buildings as the Bank of America Center in San Francisco.
In 2011, Treetop purchased a 70-unit Housing Assistance Payment contract apartment complex in Chester. The two-building Section 8 complex, Benjamin Banneker Plaza, had been owned by real estate investment trust Apartment Investment & Management Co. (Aimco).
In the case of Charter Court, the property "was in need of updating," Mermelstein said.
"We view it as a value-add opportunity. We like the location. Rents are rising in Center City, and these secondary markets still in proximity to downtown are poised to take off," he said.
His advice for those getting into the real estate development business?
"We aim to buy big. A 20-unit building has the same things as a 500-unit building: one roof, one boiler. We'd rather own the one big building than 10 smaller ones," Mermelstein said.
Treetop now oversees about 3,000 market-rate apartments, a portfolio of about $500 million, as well as $150 million worth of affordable housing nationwide.
"Jump in and swim," he said. "I gained a lot of experience from starting at the bottom of the totem pole; I asked lots of questions.
"I make a mistake once, I don't make it again."