First Potomac Picks Up $10M Asset

First Potomac generally doesn't disclose sellers but CFO Barry Bass tells GlobeSt.com that it acquired the properties from a life insurance company.

Two of the buildings, which total 53,611 sf, are fully leased to three tenants. They are expected to generate an unleveraged return of approximately 8.1% on both a cash and accrual basis, First Potomac executives say.

The third building is vacant, but with some capital improvements, it is expected to generate an unleveraged cash return of 9% to 10% on total cost.

"The seller wasn't willing to put that much money into it," Bass says. "We think if we put a little into it, it will significantly enhance its leaseability." Bass declined to say how much the company was thinking about investing in renovations.

Bass says the company likes Ammendale Commerce Center because it is close to one of its other properties - Indian Creek Court - in a growing submarket. "We are buying it at right price with good lease up opportunities." In a statement CIO Nicholas Smith notes the company acquired the property at well below replacement cost.