PRINCE GEORGE’S COUNTY, MD-United Investors Management Corp. has sold a four-property apartment portfolio to a joint venture between Foulger-Pratt and DLJ Real Estate Capital Partners. The 1,107-unit portfolio traded for $72 million, or $65,040 per unit. Transwestern's Dean Sigmon and Robin Williams brokered the deal.

It was the initial listing that the duo began working on when Sigmon joined Transwestern last year. They tell GlobeSt.com it is the largest portfolio trade in Prince George’s County since 2005. With an occupancy of 95%--one of the buildings has a 10% vacancy rate--the portfolio’s pro forma cap rate is in the high 6% to 7% range, Sigmon says. “It would be hard to justify an in-place cap rate because all four properties were clearly under managed.”

The new owners will be investing in upgrades, at roughly $12,000 to $14,000 per unit. Class B and C multifamily properties in general and those in Prince George’s in particular are becoming much more compelling to investors than even a few years ago, Williams says. For starters, jobs are increasing here and they are being provided by such employers as the military and the education sector. Also, apartment owners are finding that they can get sizable returns on a renovation.

Landlords are also finding it easier to pass utility costs onto residents, especially after a building has been renovated, Sigmon observed--which was a factor in the new owners’ calculations as they placed their bid. “Foulger-Pratt and DLJ saw there would be an immediate revenue opportunity by restructuring the utilities back to residents.” On average, he says, Prince George’s County multifamily sector is seeing between $125 to $150 per unit in rent premiums after a building has been renovated.

The two say they have two other properties in the mix that will trade shortly. One is a 500-unit plus property that is both value add and selling in distress. Williams says it is trading in the upper $50,000 per unit range.

They are also marketing an apartment building owned by Kettler in Hyattsville. The renovated building is in the best and final offer stage and the two brokers predict it will ultimately trade in the six cap range.

The four properties in the United Investors portfolio include the 404-unit Pennbrooke Terrace and Valleybrook Apartments, with 147 apartments, located in Forestville. In Cheverly, there is the 366-unit Cheverly Terrace and 190-unit Hanson Arms. Foulger-Pratt will serve as the developer, contractor and property manager. New York-based DLJ provided equity capital for the transaction.