Pa. agency paying $400k each for 227 Philly apartments

Pennsylvania's State Employees' Retirement System (SERS) is buying hundreds of Philadelphia luxury apartments, at $400,000 apiece.

Lowe Enterprises of Los Angeles, a longtime real estate buyer for SERS and other institutions, agreed last week to spend $105 million to buy the 227 apartments and 10,000 sq ft of stores at the Granary development, 20th and Callowhill Streets. The project earned Pearl Properties about $25 million over the $80 million in debt and equity it spent to build the project. Pearl is selling the apartments and stores, but keeping the heavy concrete Granary building on the premises.

Lowe didn't name its client, but it was simple to connect the dots: Lowe announced in September it was opening an office in Philadelphia to buy properties for SERS. SERS spokeswoman Pamela J. Hile and other sources confirm SERS is indeed the buyer. The apartments were priced at $400,000 each; the balance is for the retail units next door.

SERS says it buys real estate when it expects prices will go up. The pension system and its adviser expect high-end Philly apartments will get more expensive. Lowe, a longtime manager for SERS, collected $2.9 million in SERS fees last year. (As reported in my column in Sunday's Philadelphia Inquirer here.)