The Presidential City apartment complex along City Avenue in West Philadelphia has been sold to New York investment firm KKR for $357 million, a record price for an apartment property in Philadelphia.
The four-building development was sold by local real estate firm Post Brothers, which paid $51 million for the 1,015-unit property in 2012. The previous record for an apartment building was set last year with the more than $230 million sale of 1500 Locust St., a 612-unit building in Center City.
KKR (NYSE: KKR) made the acquisition through its KKR Real Estate Select Trust Inc. in a partnership with Mack Real Estate Group LLC. Mack’s management arm will oversee Presidential City’s operations.
Presidential City sits near the border of Philadelphia and Bala Cynwyd. The four main apartment buildings stand 12 stories alongside a 41,000-square-foot amenity center. Post Brothers bought the property in 2012, and the entire complex was subsequently overhauled, undergoing gut renovations that started in 2014 and totaled some $100 million.
The redevelopment involved re-skinning the façades, reconfiguring portions for 10,000 square feet of retail that includes a Panera, adding about 20,000 square feet of amenity spaces and renovating each unit from top to bottom.
Post Brothers President Matt Pestronk said the property’s renovations one of the main reasons KKR wanted to make the purchase. The development won’t need significant capital infused into it “for a very long time,” he said. Pestronk said Presidential City is nearly fully leased.
The complex was built in 1950 by John McShain, the building contractor behind the Pentagon, the Jefferson Memorial and a number of other high-profile buildings in Washington, D.C.
Post Brothers put Presidential City on the market about a year ago and it garnered significant interest, Pestronk said. He said there were multiple competitive offers from buyers of a similar prestige as KKR, but an existing relationship with the New York firm helped foster the sale.
“We sell things opportunistically,” Pestronk said, adding that the real estate firm will now look to redeploy the capital back into the market. Post Brothers owns land, primarily in Northern Liberties, where it can build another 700 to 1,000 units, Pestronk said. The firm is currently undertaking a $500 million addition to the Piazza in Northern Liberties.
“Everything we have under construction is more than a billion dollars, so we more than tripled down on the market,” Pestronk said. “We like to take some chips off the table, but there’s more large real estate to sell in the future.”
Pestronk said it is “a great sign” for the broader Philadelphia apartment market that an investor like KKR sees opportunity in the city.
JLL’s Mark Thomson, Carl Fiebig, Fran Coyne, Jose Cruz and Tyler Margraf brokered the sale on behalf of Post Brothers.
