WASHINGTON, DC—Don't look now, but Federal Capital Partners is making inroads in another market that is not the Washington DC area. This week the Chevy Chase, MD-based company announced it has recapitalized two multifamily communities in Charleston, SC and Charlotte, NC.

The two properties are Plantation Oaks, a 264 unit apartment community in Charleston. The property in Charlotte is the 240-unit York Ridge.

The owner, High Real Estate Group LLC, will retain an ownership interest in the portfolio and continue to provide property management services.

FCP is also building in this part of the Eastern Seaboard. Shortly before these transactions were announced, FCP unveiled the details behind an apartment community it is developing with Terwilliger Pappas Multifamily Partners. Called the Solis Ballantyne, it will be a 194-unit apartment in South Charlotte's Ballantyne submarket. In April of this year, Terwilliger Pappas and FCP started construction on Solis Waverly, a 375-home community next to a new Whole Foods Market in the Waverly planned development. Solis Ballantyne and Solis Waverly were the first equity investments in Charlotte for FCP.

FCP's reason for growing its footprint in this market -- the recapitalization represents its third and fourth investments here –- is straightforward. As FCP Vice President Bryan Kane put it when the deal was announced, Charleston and Charlotte both show strong positive job and population growth patterns.

All true, but it doesn't entirely answer the question of why the Carolinas and more importantly, how the company made the transition from a local buyer of value add properties to this new version of FCP that swoops -- or so it seems -- into new markets and is able to identify similar diamonds in the rough.

Managing Partners With National Experience

It is here that we should reflect on FCP's beginnings – as well as the pedigree of its founders. Both explain how FCP has expanded from its DC area focus to such states as New Jersey, Pennsylvania, Delaware, West Virginia and now the Carolinas.

FCP was founded by Lacy Rice and Esko Korhonen, who first worked together as principals at The Carlyle Group. Alex Marshall, previously a member of the Real Estate Group at JP Morgan Partners, joined the firm in 2002. In 2007, Thomas Carr, former chairman and CEO of CarrAmerica Realty joined the company as the fourth managing partner.

If you think about it, their respective and collective backgrounds all but scream national experience.

Indeed, Carr tells GlobeSt.com, the idea of going national was tossed about early on even as the company prepped to invest the proceeds of its first fund. That original fund, vintage 2008, was mostly invested in the DC area, with perhaps 20% invested in nearby markets. The second fund, which launched three years later, was about 50% invested in DC, with the remaining half invested elsewhere.

Today, Carr said, "we continue to invest up and down the East Coast."

Carr declined to discuss any current fundraising activities FCP might be doing.

The reasons for FCP's geographic diversification are what one might expect: diversification, in general, is a good thing, especially when one's core investment portfolio is in Washington DC. "We have found DC is a diversifier of its own," he said. "When it is quiet other parts of the nation are booming and vice versa."

The more interesting question is how FCP expanded its scope. To hear Carr tell it, the company's formula for success is, like its decision to move into the Carolinas, straightforward.

1. Humility and a lot of it when FCP first enters a market. "Any one who isn't humble about his lack of local market expertise or knowledge is liable to make mistakes."

2. Develop that aforementioned local market knowledge through a lot of visits and, in the case of Raleigh, eventually establishing a local office.

3. Take all the time needed. Two years is about what it takes to understand an entirely new market, Carr said.

4. A group approach to the investment decision-making process. Every investment the company makes is vetted by the entire firm. If an analyst doesn't agree or sees a problem, the investment is halted or at least paused until there is consensus – or until the investment is scrapped. And that has happened, Carr said.

This painstaking approach is worth the effort, he said. It is how the company zeroed in on Raleigh as an opportunity a few years ago. "Today Raleigh has had more office absorption than DC." What is particularly noteworthy is the size of the Triangle office market is 50 million square feet, while DC's is 300 million.

Carr may not be willing to discuss the company's fundraising but he does tip his hand as to what new market the company is currently scooping: South Florida.

"We have had our people going down there for visits for a while now," he said.