AIMCO Extends Philly Footprint With $445M Portfolio Buy

The company acquired six communities in the metro with a total of 1,116 units from Dranoff Properties. The deal is expected to close in the second quarter of this year, except for the purchase of one property that is expected to close in the first half of 2019.
Southstar Lofts, at 521 S. Broad St.
Southstar Lofts, at 521 S. Broad St.

AIMCO has entered an agreement to buy the entire portfolio of multifamily assets owned by Dranoff Properties within the Philadelphia MSA. Six properties totaling 1,116 units will change ownership in a $445 million transaction. The deal is expected to close in the second quarter of this year, except for the purchase of one property that is expected to close in the first half of 2019.

The multifamily portfolio consists of four properties situated in downtown Philadelphia and one across the Delaware river in Camden, N.J., totaling 1,006 existing units. The sixth property, which is situated in the suburb of Ardmore,  comprises 110 units and is slated for completion next year. The traded assets also include a total of 185,000 square feet of office and retail space.

Luxury portfolio

Dranoff Properties’ portfolio consists of newly constructed buildings, the oldest assets being the 1999-built Locust on the Park at 201 S. 25th St. and The Left Bank at 3131 Walnut St., both of which received cosmetic renovations in 2017.

Southstar Lofts is located at 521 S. Broad St., with immediate access to Philadelphia’s central employers, upscale restaurants, the Pennsylvania Hospital and multiple public transportation options. The LEED Silver certified building was completed in 2014 and consists of six studios, 58 one-bedroom and 21 two-bedroom units, with a weighted average size of 785 square feet. Common amenities include a fitness center, business center, clubhouse and subterranean parking.

The other communities are the 146-unit 777 South Broad, at 777 S. Broad St. and the 341-unit The Victor at 1 Market St. in Camden. One Ardmore Place, currently under construction, is located at the intersection of Cricket Avenue and East Lancaster Avenue in Ardmore. It will comprise a total of 110 units.

Over the past 20 years, we’ve developed and assembled a portfolio of rental properties that has redefined luxury living in the Philadelphia region. With a pipeline of new and exciting projects on the horizon, the timing is right to sell six of our premier properties to AIMCO and become a major investor in the company. AIMCO’s expansion and commitment to Philadelphia make them ideal stewards of these trophy assets,” said Carl Dranoff, founder & CEO of Dranoff Properties, in a prepared statement.

Funding strategy

AIMCO will fund the acquisition using $290 million in property debt, $65 million borrowed from AIMCO’s bank line as well as $90 million in operating partnership units, issued at NAV of $53 per share. Additionally, the company will sell some of its lower-rated properties, including the 704-unit Chestnut Hill Village in northeast Philadelphia, to make the acquisition leverage neutral. AIMCO hired Citigroup to act as exclusive financial advisor in this transaction.

Following this acquisition, AIMCO will own 3,208 units in the Philadelphia area, accounting for approximately 10 percent of its gross asset value.

Image courtesy of AIMCO