Q2 2012 Philadelphia, Pennsylvania Apartment Property Sales Analysis

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Q2 2012 Philadelphia, Pennsylvania Apartment Property Sales Analysis

Metro Volume and Pricing

The pace of Philadelphia single property apartment investment sales remained modest in the second quarter, as five properties changed hands for $54.4 million at a mean price of $113,100 per unit.* The mean price was the highest since the second quarter of 2010, and nearly double the average of $56,650 for all transactions in 2011. The quarter’s largest sale was the 240-unit Chestnut Hill apartments in Philadelphia, which sold for $16.75 million ($69,792 per unit) in April. Korman Residential Properties Inc. sold it to 7600 Cht Holdings LP. A total of 2,403 units have sold over the past 12 months, or 1.2% of the inventory.

Top Submarkets

The Germantown submarket, within the City of Philadelphia, led the other 27 in apartment units sold and dollar value changing hands in the past four quarters at 714 and $38 million. Center City, as one would expect, led in average price per unit at $368,714, but for just 70 units sold.

Cap Rate Comparisons and Forecasts

While quarterly cap rates are erratic, depending on the circumstances of the small number of sales, the mean tends to be below the U.S. average in Philadelphia. The 5.8% mean cap rate for the second quarter was up 90 basis points from the quarter before, but below the annual mean cap rate for most years since 2004. The rolling 12 month cap rate of 6.2% is down 140 basis points from the prior quarter, following two low quarterly means in a row. It is expected to remain within 30 basis points of its current level through 2016.