Developer Carl Dranoff is selling off his entire portfolio of rental properties in and around Philadelphia, as he turns his attention to new and ongoing big projects such as his planned South Broad Street condo towers and the soon-to-open One Theater Square apartments in Newark, N.J.
Denver-based investment trust Apartment Investment & Management Co. plans to pay $445 million for the package, which includes five properties comprising 665 existing apartments in Philadelphia, making it the city's biggest residential landlord. Also included in the deal are 341 units in Camden, 110 units under construction in Ardmore, and 185,000 square feet of office and retail space, Aimco and Dranoff Properties Inc. said in a release Monday.
"This will allow us to focus on the future, building new projects, which is the most fun," Dranoff said in an interview. "It gives me the opportunity to really put my energy and enthusiasm and vision into what lies ahead of us in our third decade."
Included in the sale are Locust on the Park in the Fitler Square neighborhood, 777 South Broad and Southstar Lofts on South Broad Street, the Left Bank in University City, the Victor in Camden, and One Ardmore Place in Lower Merion, which is under construction.
The sale will catapult Aimco to the top of the list of Philadelphia's biggest owners of rental units, adding to the 2,746 apartments it already owns at Park Town Place, Riverloft and the Sterling in Center City; Chestnut Hall in University City; and Chestnut Hill Village in the city's northwest.
That top-landlord spot is currently held by Philadelphia's PMC Property Group with 3,059 units, according to data compiled by market-tracker the CoStar Group.
Aimco moved to boost its Philadelphia footprint based on the city's growth in biomedical and other knowledge-intensive jobs, as well as its density and walkability, executive vice president Wes Powell, who led the portfolio's acquisition, said in an interview.
"It's a market we're comfortable with and generally high on," he said.
The acquisitions are expected to close before the end of June, except for the purchase of One Ardmore Place, which is expected to close during the first three months of 2019 after construction is completed, Dranoff said.
The buildings are being sold for a combination of cash and Aimco equity interest that will make Dranoff into one of the Denver company's largest noninstitutional investors, he said.
With the apartment buildings' sale, "we're going to be rocket-propelled into the future with a bunch of projects in our pipeline," Dranoff said.
Projects planned by Dranoff include the hotel-and-condo hybrid under the banner of Los Angeles-based SBE Entertainment Group's luxury SLS brand at Broad and Spruce Streets and a condo tower proposed for a block to the south on Pine Street.
Meanwhile, the 22-story One Theater Square —downtown Newark's first upscale residential project since 1960 — is scheduled to begin move-ins this summer.