First Potomac Realty acquires Cloverleaf Centre in suburban Washington DC for USD25.5m

Owner, manager and developer of business parks and industrial properties First Potomac Realty Trust (NYSE:FPO) reported on Thursday the acquisition of a class-A business park in Germantown, Maryland in Montgomery County for USD25.5m, extending its presence in the I-270 Corridor submarket of Montgomery County.

The 173,655 sqft multi-tenanted property has four one- and two-story office buildings with 97% leased out presently and none expiring until August 2012. The tenants are mainly government contractors and technology companies.

First Potomac financed the acquisition with debt and cash on hand, obtaining a five years USD17.5m mortgage loan at 6.75% with two one-year extension options. The company expects a first-year unleveraged cash return of approximately 10.7% and 11.5% on an accrual basis.

Additionally, First Potomac provided an update on a third quarter company controlled equity offering programme and exchangeable senior note repurchases and sold 1.63m common shares at USD10.68 per share, generating net proceeds of approximately USD17.0m and of which USD8.8m were used to fund the equity portion of the Cloverleaf acquisition.

Approximately USD7.5m of the above proceeds retired the outstanding balance of USD8.5m on its exchangeable senior notes, reflecting a weighted average discount of about 12%. The note repurchases gained USD640,000 or USD0.02 per diluted share, net of deferred financing costs and original issue discount for First Potomac.

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