First Potomac Spends $123 Million on Mid-Atlantic Portfolio

First Potomac Realty Trust has paid $123 million for a 1.4 million-sq. ft. industrial portfolio located in the Maryland suburbs of Washington, D.C. Including this transaction, the company has acquired $222 million in property since its initial public offering in October 2003.

The purchase was financed in part by the assumption of an existing $78 million fixed-rate first mortgage loan collateralized by all 14 of the portfolio’s properties. The 6.7% interest-bearing loan matures in September 2008. First Potomac funded the balance of the purchase price using proceeds from a recently completed follow-on offering. Based on current leases, the portfolio is expected to generate first-year net operating income of $11.1 million, which would represent a 9% return on the purchase price.

The portfolio consists of seven flex properties totaling 692,199 sq. ft.; three industrial properties totaling 371,440 sq. ft.; three multi-story office buildings totaling 133,561 sq. ft.; and one retail property totaling 201,350 sq. ft. The portfolio was 94% leased as of June 30.

"The closing of this transaction establishes First Potomac as a leading owner and acquirer of flex and industrial properties in our markets. This transaction will significantly increase our funds from operations and is tremendously accretive to our earnings," says Douglas Donatelli, CEO of First Potomac."In addition, this acquisition allows us to enter strong suburban Maryland submarkets where we expect to see future acquisition opportunities."

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