First Potomac Realty Trust (NYSE:FPO) today announced that it has acquired Rivers Park I & II, a six-building, 306,656-square-foot flex/office property in Columbia, Maryland, for $42.3 million in cash from affiliates of General Growth Properties.
Rivers Park I & II are located on Guilford Road in Columbia less than one mile from I-95 and Route 29. The property has direct access to Route 32 and the nearby National Security Agency and Fort Meade, which are expected to benefit from the Base Realignment and Closure (BRAC) process by adding over 20,000 jobs over the next few years. The buildings are 100% leased, including vacancy leased back by the seller at closing.
The Rivers Park acquisition was funded in part by a $28 million first mortgage loan from U.S. Bank National Association. The loan has an initial term of three years with two one-year extension options. The loan bears interest at a spread over LIBOR, but the Company entered into a swap agreement that effectively fixes the rate on the loan at 5.97% for its initial three-year term. The balance of the proceeds were drawn on the Company's unsecured line of credit, which was subsequently paid down with proceeds from the Company's recently completed equity issuance.
First Potomac also announced that it completed the acquisition of Triangle Business Center, a four-building, 73,456-square-foot flex/office property in Baltimore, Maryland, for $4.5 million in cash in late August from affiliates of General Growth Properties. The business park is currently 68% leased.
In the aggregate, both properties are expected to generate a first-year unleveraged cash return of approximately 8.0% with a projected stabilized yield of 9.1%.
Commenting on these acquisitions, Nicholas R. Smith, First Potomac's chief investment officer, stated, "We have been very patient in the acquisitions market over the past year and a half because we did not feel pricing made sense. These acquisitions represent the kinds of opportunities that are becoming available for well-capitalized companies like First Potomac. Given our local presence and our concentration in this property type, we expect these assets to excel under our management. We intend to utilize our contacts in the market, including with the federal government, to benefit from the growth of the National Security Agency and Fort Meade. Our recent capital raise puts us in position to take advantage of similar opportunities going forward, but we will continue to be highly selective."
About First Potomac Realty Trust
First Potomac Realty Trust is a self-administered, self-managed real estate investment trust that focuses on owning, developing, redeveloping and operating industrial properties and business parks in the Washington, D.C. metropolitan area and other major markets in Virginia and Maryland. The Company's portfolio totals approximately 12 million square feet. The Company's largest tenant is the U.S. Government.
First Potomac Realty Trust's press releases are available at www.first-potomac.com or by contacting the Company at 301-986-9200.
Forward-Looking Statements
The forward-looking statements contained in this press release are subject to various risks and uncertainties. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that its expectations will be achieved. Certain factors that could cause actual results to differ materially from the Company's expectations include changes in general or regional economic and market conditions, the Company's ability to complete acquisitions on acceptable terms, failure of customary closing conditions and other risks detailed in the Company's Annual Report on Form 10-K and described from time to time in the Company's filings with the SEC. Many of these factors are beyond the Company's ability to control or predict. Forward-looking statements are not guarantees of performance. For forward-looking statements herein, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.