First Potomac Realty Trust (FPO) has shelled out $89 million for acquiring an office building located at 11 Dupont Circle, NW. The move comes as part of the company’s efforts to boost its portfolio with premium office properties in the Washington, D.C. metropolitan area.
Specifically, with the acquisition of this 155,713 square foot office building, First Potomac now boasts 7 premium office buildings in the District, spanning more than 1 million square feet. But the news failed to cheer investors and the shares were down 0.67% during Friday’s trading session on the NYSE.
Fully leased, this 9-story building enjoys a diversified tenant base with the roaster carrying 15 names. It enjoys good accessibility to public transportation and amenities. Strategically positioned in a premier live-work-play environment in Washington, D.C., the property also includes 11,692 square feet of retail space on the ground level.
In our view, this acquisition is a strategic fit for First Potomac. The deal is expected to help the company in leveraging the improving fundamentals of the submarket and augment its top line. The company financed this unencumbered property’s purchase by drawing on its revolving credit line.
On the other hand, First Potomac promoted its Richmond, Virginia portfolio for sale. This portfolio, comprising Chesterfield Business Center, Hanover Business Center, Park Central and Virginia Technology Center, is expected to be disposed by late fourth-quarter or early 2015. We believe such dispositions would help the company in reaping capital to reinvest in its growth needs.
First Potomac, which deals with office and business park properties in the greater Washington, D.C. region, currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT sector may consider better-ranked stocks like Cousins Properties Incorporated (CUZ), CubeSmart (CUBE) and DCT Industrial Trust Inc. (DCT). All these stocks hold a Zacks Rank #2 (Buy).
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