First Potomac Realty Trust (FPO) penned 2 lease deals at 1211 Connecticut Avenue, NW in Washington, D.C. The leases, which are long term in duration, are for 31,766 square feet of space and cover two full floors.
The first lease deal is penned with the global peace and security think tank – The Henry L. Stimson Center. The lease duration is 10 years and spans 15,883 square feet of space. The second lease deal is inked with The Center for International Private Enterprise and involves 15,883 square feet of space with a 12 year duration.
We expect the lease deals to boost this real estate investment trust’s (REIT) rental revenues and strengthen its tenant base. With the long term deals signed prior to the moving out of the current tenant, the building's above market occupancy rate would be retained as well as the company’s revenue flow will be secured for an extended period.
While the Office REITs have just started to benefit from the growth in jobs and lower new supply, the pace of improvement is expected to be tepid as a result of the space efficiency strategies adopted by companies.
Notably, First Potomac, which owns, manages, develops and redevelops office, business parks and industrial properties in the greater Washington D.C. region, undertook a $6.25 million renovation program for this building last summer. The company had made efforts to refurbish the building's entrance, lobby, common areas, and restrooms. The company is in the last leg of its renovation work that is slated to be accomplished in the spring of 2014.
First Potomac currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry worth considering include Winthrop Realty Trust (FUR), Cousins Properties Incorporated (CUZ) and Liberty Property Trust (LRY). While Winthrop Realty carries a Zacks Rank #1 (Strong Buy), Cousins Properties and Liberty Property have a Zacks Rank #2 (Buy).
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