First Potomac's Market Cap Falls Below $700M

First Potomac trades at among the largest discounts to net asset value in the entire public REIT universe with 50% upside to Land and Buildings' estimated NAV of approximately $16. A weak Washington DC office market, high leverage and perceived capital allocation missteps have weighed on the stock, with the stock now at a greater than 8% implied cap rate.

…are well above the implied valuation of the stock suggesting strong investor demand for their properties. Same-store occupancy is strong with leased percent up to 91.8% as the portfolio is of higher quality than we believe investors perceive.

…suggest an improved capital allocation discipline, beginning with the recent authorization of a stock buyback program up to 5 million shares. To further unlock value we would expect to hear from management that they will stop acquiring assets and instead sell assets to facilitate share repurchases and deleveraging, including a pay down of the company's high cost preferred stock.

If after these steps are pursued the shares continue to trade at a steep discount to NAV, we would like to hear from management that they will consider all options to maximize shareholder value, including a sale of the company.