First Potomac Buys Reston Office for $41M; Sells Ashburn Office for $41M

RESTON, VA—First Potomac has clearly mastered the art of capital recycling: the REIT has acquired an office building in Reston for $41 million while selling, in a separate transaction, Corporate Campus in Ashburn Center, also for $41 million.

The new building is a step up for the REIT, says CIO Nicholas Smith. "We are trading from a single-story business park in a less desirable location to a high-quality office asset located near a Metro station," he says in a prepared statement.

First Potomac's acquisition is an office building two blocks away from an about-to-open Silver line Metro stop. The five-story property is located at 1775 Wiehle Ave. and it is a multi-tenanted fully leased building totaling 130,048 square feet. Normandy Real Estate Partners is the seller.

The property is stable, cash-flowing asset in "a strong submarket where we see future growth potential," Smith says. Its addition to the REIT's portfolio is also in line with its strategic plan to transform itself into an office-focused company.

The sale of Corporate Campus, located at Ashburn Center, meanwhile has secured a significant return on investment for the REIT. Ashburn Center is a 194,184 square-foot, single-story business park that First Potomac purchased in an off-market transaction in 2009 for approximately $14.7 million with a 45% occupancy rate. It went on to invest an additional $5 million in the property. It sold the property fully leased.

Year to date, First Potomac has acquired $99 million worth of office properties at a weighted average capitalization rate of approximately 6.4%. It has disposed of approximately $86 million of business parks at a weighted average capitalization rate of approximately 8.3%.