PHILADELPHIA — Korman Communities has taken an ownership stake in the Benjamin Franklin House, a landmark apartment building along Chestnut Street near Philadelphia’s Old City historic area.
The Plymouth Meeting apartment owner declined to disclose details of the transaction other than it will take over the management of the building and is figuring out what to do with the property. Korman bought it from a Los Angeles-based partnership that also oversaw the management of the building at 834 Chestnut St. With the deal just wrapped up, it’s still too early for Korman to divulge what it plans to do with the property.
“We’re still evaluating what the right alternatives are,” said Brad Korman, co-president of Korman Communities. “It’s got great bones, a great location and all of the amenities you want. We’re very excited to be a part of it.”
This marks the second multifamily property acquisition for Korman in Center City and the company continues to look for opportunities between Washington, D.C., and New York. In Philadelphia, it owns One Rittenhouse Square at 135 S. 18th St., which carries the company’s AKA branding that caters to those desiring high-end extended stay accommodations in urban areas. It maintains an AVE brand for a similar type of apartment product in suburban locations.
Korman’s investment in the building makes sense, said Jim Sheehan, senior vice president at NorthMarq who represents buyers and sellers of multifamily properties in the region.
“Korman is uniquely qualified because of their suite business,” Sheehan said. “They have already done it on Rittenhouse Square, and it’s a natural for them. It’s also a good strategic move for Korman in light of the Lafayette building being converted as a hotel, the expansion of the convention center, and in the path of tourists, convention business and business.”
It’s seldom a multifamily building of this size gets traded in Philadelphia but when they do, investors swarm around them, said Ken Mallin of Mallin Panchelli Nadel, who has handled Center City apartment transactions.
“There’s tremendous interest in this property type from institutional investors and there’s a scarcity of product so when they do come available, investors are all over it,” Mallin said.
While the bulk of Philadelphia apartment buildings have traditionally been owned by local real estate investors and families, institutional money has increasingly been looking at Philadelphia because it’s a stable market, said Mallin, who predicted more such investors will continue to seek out deals.
“The Ben” was designed by Horace Trumbauer and constructed in 1925 as the Benjamin Franklin Hotel. It had a grand ballroom and lobby and at the time, and was the largest hotel in Philadelphia with 1,200 rooms. In 1986, the previous owners converted the 23-story building into an apartment complex with 420 units. It kept 125,000 square feet as office space. The ballroom, which can accommodate 350 people, is master leased by a catering company that arranges events in the space.
“There are great amenities in the building and our goal now is to bring that local expertise and management to it,” Korman said.
Natalie Kostelni, Reporter
Philadelphia Business Journal