2009-10-08 22:14:03 -

First Potomac Realty Trust (NYSE: FPO), a regional leader in the ownership, management and development of business parks and industrial properties, announced that it has acquired Cloverleaf Center for $25.5 million. Cloverleaf Center is a class-A business park located in Germantown, Maryland in Montgomery County.

The 173,655 square-foot property was built in 2000 and consists of four one- and two-story office buildings. The multi-tenant property is currently 97% leased with no material lease expirations scheduled until August 2012. The property has a strong tenancy of primarily government contractors and technology companies and benefits from its close proximity to the Department of Energy. This acquisition further extends First Potomac’s presence in the I-270 Corridor submarket of Montgomery County.

First Potomac financed the acquisition

through a combination of debt and cash on hand. In connection with the purchase, the Company obtained a $17.5 million mortgage loan at a rate of 6.75% with a term of five years (plus two one-year extension options). The property is expected to generate a first-year unleveraged return of approximately 10.7% on a cash basis and 11.5% on an accrual basis.

Update on Third Quarter Capital Activity


First Potomac also provided an update regarding the Company’s controlled equity offering program and Exchangeable Senior Note repurchases. During the three months ended September 30, 2009, the Company sold 1.63 million common shares through its controlled equity offering program at a weighted average offering price of $10.68 per share, generating net proceeds of approximately $17.0 million.

The Company used approximately $8.8 million of the proceeds to fund the equity portion of the Cloverleaf acquisition. In addition, the Company used approximately $7.5 million to retire $8.5 million of the outstanding balance on its Exchangeable Senior Notes, representing a weighted average discount of approximately 12%. The note repurchases resulted in a gain of $640,000, or $0.02 per diluted share, net of deferred financing costs and original issue discount.

Douglas J. Donatelli, chief executive officer of First Potomac Realty Trust, stated “The Cloverleaf acquisition demonstrates the depth of our local market relationships and our ability to source high-quality acquisitions in our core markets. This transaction is unique in that it was sourced during the extreme dislocation of the economy in early 2009.
The park is strategically well-positioned in Montgomery County, where we already have a significant presence, and it complements our existing portfolio in the submarket. I’m pleased that we were able to complete this transaction while also improving our financial flexibility through the retirement of debt and the issuance of equity under our controlled equity offering program, continuing our adherence to a disciplined investment strategy.”

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, which along with government contractors, accounts for approximately 20% of the Company’s revenue.

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 conditions; the Company’s ability to timely lease or re-lease space at current or anticipated rents; changes in interest rates; changes in operating costs; the Company’s ability to complete acquisitions on acceptable terms; 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.



First Potomac Realty TrustBarry H. Bass, 301-986-9200Chief
Financial Officer bbass@first-potomac.com : mailto:bbass@first-potomac.com