PHILADELPHIA-In a sign of the strength of Center City’s residential investment market, locally based Allan Domb Real Estate pays $20 million, or slightly more than $227,272 a unit, for the 88-unit rental building at 2031 Locust St. The seller is King of Prussia, PA-based Morgan Properties and GMAC Commercial Corp., based in Horsham, PA, which partnered in the purchase of this building in May 2003 for $11.5 million.

John McFadden and Robert Miller, SVPs in the local office of CB Richard Ellis, represented the seller. “The price sets a new benchmark for Philadelphia residential,” McFadden tells, adding, “the cap rate is below 5%, which is also an historical benchmark.”

The local office of Marcus & Millichap projects a $58,000 median price-per-unit for multifamily sales throughout the Philadelphia MSA this year. That median rose 24% last year and 19% the year before. The only recent sale that even approaches Domb’s ticket for 2031 Locust is a small, nine-unit property in West Chester, PA, which, according to M&M data, traded for $150,000 a unit.

The Locust St. building is part of the 15-property multifamily portfolio Morgan acquired from locally based Pennsylvania Real Estate Investment Trust. At the time, PREIT exited the multifamily market to become a retail-only REIT. GMACCM arranged $313 million in debt financing for Morgan’s purchase of the portfolio, and, on the advice of its subsidiary, GMAC Institutional Advisors LLC, also made a $90-million equity investment in the portfolio. Proceeds from this sale will be used to pay down the GMACCM debt.

Morgan’s president and CEO, Mitchell L. Morgan, says his company “does not typically invest in Downtown high-rise apartment buildings, and 2031 Locust was never intended to be a long-term holding for us. The sale is consistent with our strategy for the property.”

Published rental rates in the building range from $1,250 a month for a one-bedroom, one-bath, 451-sf unit, to $2,433 a month for a two-bedroom, plus den, two- to three-bath, 1,286-sf unit. An area real estate executive tells the building is “probably fully leased,” although could not confirm that. Calls to Domb were not returned by deadline. McFadden says Domb’s “stated intention is to keep the building as a rental property.”

This would be unusual for Domb, widely referred to here as the “condo king.” He lays claim to being “Philadelphia’s largest luxury condominium realtor,” and his firm’s approximately 22 Center City properties reach to all of the priciest Downtown locations, including Society Hill, Rittenhouse Square and Washington Square.

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