Industrial/Flex REIT Wins $100M Financing Deal

BETHESDA, MD-A $100-million financing package has just closed for First Potomac Realty Trust. The industrial and flex property REIT secured a 10-year loan at a fixed rate of 5.19%. For the first five years, the company will make interest only payments on the loan and will then have a 30-year amortization for the remaining payment period.

First Potomac relied on the assistance of Penrose Financial Services LLC senior vice president David Redmond. First Potomac has already collected $65 million of the financing, which is being provided by Jackson National Life Insurance Co., and will be in receipt of the remaining $35 million by Dec. 31 of this year. Northmarq Capital Inc. also had a role in the transaction, serving as an advisor for the REIT.

First Potomac put up seven of properties totaling just over 1.3 million sf from its 92-building, 6.2-million-sf industrial/flex portfolio for collateral on the loan, with five properties securing the first segment of the loan and two other properties guaranteeing the second, lesser segment. The first five assets include Columbia, MD's 135,000-sf Rumsey Center and 140,000-sf Snowden Center; the 80,000-sf Greenbrier Technology Center II in Chesapeake, VA; the 90,000-sf Norfolk Business Center in Norfolk, VA; and Alexandria, VA's Alexandria Corporate Park, totaling approximately 278,100 sf. The final two properties are the 507,000-sf Plaza 500 in Alexandria and the Herndon, VA-based Van Buren Business Park, offering 107,000 sf. "The solid company and the stable and well located properties attracted a great deal of interest from the lending community," Redmond tells GlobeSt.com. "As a result we were able to structure a very favorable financing package on behalf of the borrower."

Funds from the transaction will be used for multiple purposes including the replacement of the company's floating-rate mortgage, as well as the reduction of its existing unsecured credit facility to $16.5 million; the company entered into a new $75-million unsecured credit facility in December 2004. The remaining $35 million will be used to defease a 7.26% fixed-rate mortgage loan that is scheduled to mature in December 2007. "This financing provides us with significant flexibility, which when combined with the attractive fixed-interest rate, positions us extremely well for continued growth," First Potomac CFO Barry Bass says. "This financing is consistent with the disciplined approach we have taken toward our balance sheet while funding our substantial growth over the last two years."