WASHINGTON, DC-First Potomac Realty has closed on the equity raise it announced earlier this week, taking about $155 million. Within a week, or possibly sooner, it will learn whether the underwriters will exercise their option to buy another 15% of the stock, which--at one million and a half shares--would bring in an additional $23 million in gross proceeds.
First Potomac CEO Doug Donatelli tells GlobeSt.com that he thinks it will happen--for a total of close to $180 million. “This is the largest equity raise that we have done to date and we went to market on a day that was not particularly good for REITs in general,” he says. “Potomac’s timing was impeccable, though, he adds. “We hit our 52-week high on Monday--the highest stock share since September 2008--at $16.97 per share.”
The equity raise will allow First Potomac to fund the deals it has in its pipeline and pay down its credit line, leaving it with $200 million in dry powder, Donatelli says. First Potomac is levering the equity raise by 50%. Assuming it will be able to close on its $300-million pipeline, its total debt will eventually come down to 45% once the line is paid down, he adds.
Donatelli expects the additional $200 million to be deployed by the first quarter 2011. According to a prospectus the REIT recently filed with the Securities and Exchange Commission, it will also be acquiring the following: Redland Corporate Center Phases II and III in Gaithersburg, MD for $85 million; 840 First St., NE, a 12-story, 248,500-square-foot office building for $90 million; Cedar Hill I and III as well as the Merrill Lynch Building, all of which are in Tyson’s Corner, VA; another Merrill Lynch Building in Columbia, MD for $33.8 million; two, four-story office buildings, each approximately 110,000 square feet, located in Northern Virginia for $22.5 million in cash; 1211 Connecticut Ave., an eight-story, 137,000-square-foot office building for $49.5 million in cash; and 7458 Candlewood Dr., a 295,000-square-foot warehouse building in Hanover, MD for approximately $22.6 million.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
