WASHINGTON, DC—On Monday morning First Potomac Realty Trust announced that CEO Doug Donatelli and Chief Investment Officer Nicholas Smith were resigning from their respective positions. Chief Operating Officer Robert Milkovich will be assuming the role of CEO, in addition to his other responsibilities. He also joins the Board of Trustees, effective immediately. Milkovich's first piece of business will be the execution of the sale of at least $200 million in assets, he said in a prepared statement.
To outsiders these changes are unexpected. In the earnings call for the third quarter, held several days ago, there was no mention of an executive realignment. Donatelli hosted the call as usual, telling listeners that First Potomac "made solid progress," on its strategic plan in the third quarter.
But while the changes do seem sudden, the Board of Trustees had made a long and thoughtful deliberation before it came to its decisions, a spokesperson for First Potomac tells GlobeSt.com. "They felt now was the right time for a leadership transition." The spokesperson added she doesn't anticipate further changes.
Based on statements made by all of the principals, Donatelli and Smith are leaving First Potomac on good terms with the company.
A Strategic Plan
First Potomac has been moving to reposition its portfolio and investment orientation since 2013, focusing on urban core assets while selling off non-core assets in outlying areas. Earlier this year, for example, it sold a portfolio of office, office/flex and industrial buildings in Richmond, VA, for $60.3 million.
It recently tapped HFF to help it accelerate the sale of a number of Northern Virginia properties, presumably the ones that Milkovich referenced in his statement. First Potomac also recently secured Sage Capital Advisors to help it monetize its majority stake in a NoMa development site called Storey Park.
For the third quarter, First Potomac reported that its core FFO was flat at $15.3 million, compared to $15.4 million in the third quarter of 2014. First Potomac also continued to attack its balance sheet by refinancing debt, securing a construction loan, repurchasing common shares and "recasting our unsecured revolving credit facility and term loans to better align our bank facilities with our business objectives and reduce our interest expense," according to CFO Andy Blocher. The REIT is also in the late stages of a top-to-bottom review of expenses across the organization, Blocker also said.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
