PHILADELPHIA-Denver-based Apartment Investment and Management Co. has inked a partnership agreement with the University of Pennsylvania to acquire a majority stake in the 15-story apartment building at 3900 Chestnut St. in University City. Randy Fein, EVP of Aimco’s university communities division, tells it will invest $9 million in renovation and upgrades.

Citing a confidentiality agreement, he declines to disclose either the price or Aimco’s proportion of ownership, but says, that while it becomes majority owner, “the University retains a significant equity interest in the property.” The building, which dates back to the 1920s, contains 315 residential units. “Most are one-bedroom units with a sprinkling of studios and two-bedroom units,” he says, adding that the building is 98% occupied. A university spokesman also declined to disclose Aimco’s investment.

Initial rehabilitation will focus on life-safety upgrades, such as sprinklers, a reorganized fire prevention system, pressurized stairwells and electrical capacity to suit today’s demands. “There will be some cosmetic improvements, but nothing significant,” Fein says.

The acquisition comes from a $225-million equity fund established between Aimco and California State Teachers’ Retirement System in 2003 to invest in student-related properties. This is the JV’s first, but not last, acquisition at U. of Penn. “We have an ambitious plan to add units with Penn as a partner over the next few years,” Fein says, declining to project a total number of units. “All will be in existing buildings,” he says. “The objective for us and CalSTRS is to become part of the fabric of the Penn campus.”

Fein says approximately a third of the fund has been spent. Other student housing partnership acquisitions are at Notre Dame, Duke and California State. Aimco’s university communities div. is one of the largest operators of student-related housing in the US, “and an area of expansion for us,” Fein adds. He cites the market’s advantages of “great demographics and certainty of cash flow.”

Of the Aimco partnership, Omar Blaik, SVP of the University of Pennsylvania, says in a statement, “This property will benefit from the expertise and resources they will bring to bear on important core operating systems … and overall facility management needed to enhance the quality of life for the buildings’ residents.”

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