Looking down at Providence’s financial district from the 12th floor of the Turks Head Building, FB Capital Partners Managing Director Gary Brandeis said his Philadelphia-based firm did plenty of research – and liked what they found – before investing more than $24 million in Rhode Island.

“It’s really the sweet spot of our investment strategy,” he said recently of his firm’s first New England purchases, both in Providence. “As a boutique shop, we’re focusing on what we call smaller, dynamic cities and finding the best buildings in those markets.”   During February, FB Capital finalized its $17.55 million Turks Head purchase. It was the second of two deals between the firm and Granoff Associates, which also sold the Union Trust Building to FB Capital Partners for $6.55 million in July 2007.  Brandeis said the local economy – based on the diversity of local universities, large corporate headquarters and the state government – makes buying Providence real estate a quality investment.

And interior and technology improvements are part of the firm’s national strategy. At the moment 35 tenants occupy 85 percent of the 150,000-square-foot Turks Head building. And Brandeis said FB Capital will hopefully increase that percentage, which will come “from being a good landlord. If you improve it, and take care of it, they’ll want to work here.”  At the Turks Head building, the façade is in good condition (the curve of the front is “a significant reason why people would want to be in this building,” Brandeis said). The elevator rugs already have been replaced, and the staff lounge is soon to be redone.  The “lounge” is now a bland, linoleum-tiled room with a fridge, one table and dull lighting. “Would you want to spend time here?” asked Brandeis, pointing to the 4-inch television.  At the Union Trust Building, Wi-Fi Internet access is now available throughout, making it an “iBuilding.” Similar technology updates will be made at the Turks Head Building.

“We’re a professional real estate investment company, it’s what we do for a living,” Brandeis said. “So we think we’re pretty good at finding the right assets, structuring the right kind of deals and making a go of it.” FB Capital Partners isn’t the only out-of-state firm interested in downtown Providence. The state’s tallest building, the Bank of America tower, was sold for $33 million to Burlington, Mass.-based High Rock Westminster Street LLC in early February.

Charles T. Francis, CB Richard Ellis – N.E.’s R.I. president and partner, said big real estate sales to out-of-state investors are becoming increasingly “normal” for Rhode Island.  “For years, nobody was interested in downtown Providence real estate from an investment point of view,” said the 35-year Ocean State real estate veteran. “Now … people from outside the state have taken a very serious look at our state and find it to be attractive in many ways.”  The trend is set to continue too, he added. Francis says there are a few other big sales on the horizon, but he declined to say which buildings would be involved and when the sales will be announced.

According to the 2007 Rodman Report, released March 7, the 2008 commercial and industrial markets in Rhode Island will “see stability for the next year, but caution among market participants.”   The 48 commercial transactions in the state during 2007 represented a 43-percent increase over the same 2006 sales. But during 2007, the median value per square foot for Rhode Island office buildings dropped to $128 from $139, according to the report, released annually by Providence-based Rodman Real Estate Inc.  The 150,000-square-foot Turks Head Building sold for about $117 per square foot. By providing better amenities, Brandeis hopes to increase its value. “People think real estate is this mystery business, that you have to have a 140 IQ to figure it out,” he quipped. “But it’s really simple. It’s providing a good product at the right price.”