Federal Capital Partners
FCP’s hard-working, skilled team has made it a leader in its market. By Alan Dorich
Sometimes investment companies will ignore undercapitalized and undermanaged properties. But Federal Capital Partners® (FCP) often sees these locations as places with potential, Senior Vice President David Ohlrich says.
“We’re looking for opportunities where someone may not have been paying attention or may be struggling,” he says. “We will step in, invest capital to clean up the physical asset, bring in a fresh management team and materially improve the on-site experience.”
These investments can include freshening up the exteriors with new roofs, siding, paint, new windows, improved or refurbished landscaping, new asphalt, as well as interior unit renovations, and common area upgrades, Ohlrich says. “[We focus] on improving the resident experience,” he says.
Based in Chevy Chase, Md., FCP invests in all asset classes and provides equity, preferred equity and structured debt investments for commercial and residential real estate. Ohlrich says the company started operations in 1999 and has invested more than $4 billion in multifamily, commercial and industrial assets since then.
“Over the years, the firm grew from the original founding partnership group to a team of 45 professionals today,” he says, noting that Managing Partner Tom Carr joined partners Esko Korhonen, Lacy Rice and Alex Marshall in 2007 to help it raise its first equity fund of $240 million in 2008. “We raised a second fund [of] $529 million in 2012.”
That allowed FCP to expand its platform from the Washington, D.C., Metro Area to Philadelphia and into the Carolinas and Tennessee, Ohlrich says. “We are currently in the process of raising a third fund that will allow us to continue to expand the company’s platform up and down the east coast.
Today, FCP has 70 assets with 16,000 multifamily units and approximately 1.5 million square feet of commercial space. “We recently acquired three properties in Atlanta as well as one in Tampa, [Fla.],” Ohlrich says. Other investments are in Orlando, Charleston, SC, and Boston.
Ohlrich joined FCP 10 years ago. “I’ve been in this type of role for about 20 years,” he says, noting that his previous experience included nearly a decade with Equity Residential.
He credits FCP’s success to its ability to identify the right deals for its platform. “The first step is to identify and buy properties at discounts to replacement cost and then execute on the business plan which involves renovation and repositioning to improve the asset.
“We are good at what we do,” he says. “We hire smart, passionate people and we work hard. As a result, we have created a leadership position for ourselves in the market. It’s the result of good timing, good people and relentless discipline in our due diligence.”
FCP’s recent projects include the Icon in Philadelphia, which involved the redevelopment of a historic office property into a stunning apartment building, Ohlrich says. “It is now one of the most luxurious properties in downtown Philadelphia, and has won awards for the historic preservation and redevelopment,” he says.
The company also acquired and repositioned West Village, a group of former tobacco buildings in the rapidly redeveloping downtown of Durham, N.C. that had previously been redeveloped into apartments but run into financial difficulty. FCP repositioned the property, including building out a brand new high profile leasing office and a state of the art gym, before building an additional residential property on the site, Ohlrich explains.
“It took a while to complete this complicated acquisition but once we did, we brought in a new manager, completed a number of deferred maintenance projects, focused our attention on improving the retail presence with some great new restaurants, completed a full rebranding and ultimately built an additional 156 units on the site,” he recalls. “West Village ultimately created a better sense of connection in the community between downtown Durham and Duke University.”
Ohlrich is also proud of FCP’s redevelopment of the Cigar Factory in Charleston, S.C., which was developed from a 135-year-old space that had a legendary life as a cotton manufacturing facility. “It was being redeveloped as condominiums, and got into some financial difficulty,” he recalls.
“We teamed up with some great local partners and converted the property to office and retail space” he recalls. “It is a beautiful restored property today, is once again contributing to the fabric and economy of Charleston and is now leased in the mid 90 percent range [today].”
As part of its capital improvement program, FCP focuses strongly on sustainability, Ohlrich says. “We look pretty hard at opportunities to improve our energy use profile within the bounds of what’s available in the market,” he says.
This includes finding ways to make buildings more efficient. When looking at ways to improve its projects’ water use, FCP has employed many of the approaches used today including low-flow toilets and shower heads, and employs systems to monitor water usage “so we can address issues as soon they come up,” Ohlrich says. The company also utilizes LED lighting and takes advantages of government programs designed for encouraging energy efficiency.
“We work with several groups, including Energesco, who assists with many of the energy efficiency projects, and Manhattan Energy in deregulated markets, who helps us with our energy purchasing,” he says, noting that going green can be more challenging for residential projects than commercial.
“Many residential properties are individually metered or sub-metered,” Ohlrich says, meaning the cost savings do not necessarily tie directly to the invested dollars. “We have to evaluate the opportunities that exist to determine how both the resident and the owner may be able to benefit from the projects.”
FCP carefully chooses its subcontractors and vendors for each project, Ohlrich says. “Who we use is of course going to be dependent on the type of project we’re working on,” he says.
“If we’re working on a straight, value add garden-style deal, we’re looking for folks that will provide a good service at the right price,” he says. “The vendors that we use are folks that we trust, know what we need done, how we want it done, and can do it for the best price.”
“Our partners and vendors listen to us, come back with ideas and cooperate with us,” Ohlrich continues. They are a valuable part of the company’s team.
“We try to keep a stable [of subs for] different situations,” he says. “[A specific vendor] can be a good partner for us and help us get to the end game.”
As FCP takes on more projects with its partners, it plans for growth, Ohlrich says. “We’d like to continue to expand our whole platform,” he states. “We want to grow as it makes sense within the markets we’re in and potentially into new markets and product types where we see opportunity.”