ROCKVILLE, MD-First Potomac Realty Trust has closed a $68.4 million mortgage secured by a value-add acquisition it made more than a year ago: Redland Corporate Center. The mortgage has a five year term, a fixed interest rate of 4.2%, and a 30 year amortization schedule. First Potomac will use the proceeds to repay a portion of the balance outstanding under its unsecured revolving credit facility.
The refinancing is part of the REIT’s strategy to shore up its balance sheet profile, according to CEO and chairman Douglas J. Donatelli. Besides increasing its liquidity, he says in a prepared statement, the refinancing allows the REIT to take advantage of the current low interest rate environment.
Redland could arguably serve as a poster child for First Potomac’s ability to turn properties around. It acquired Redland Corporate Center II and III in November 2010 from Perseus Realty. Redland III was 100% leased to BAE Systems at the time of the trade, but Redland II, a 210,862 square foot building, was largely empty, for an aggregate occupancy rate of 40%.
Now the REIT has brought the property to stabilization, Donatelli says, “which gave us the opportunity to put permanent financing in place. The rate and term fit well with our overall capital structure, and we plan to take additional steps to improve our liquidity in the near future.”
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