WASHINGTON, DC–First Potomac Realty Trust is being acquired by Government Properties Income Trust in a transaction that is valued at $1.4 billion including the assumption of debt, which includes $418 million and approximately $232 million of outstanding mortgage debt. Government Properties will acquire all of the outstanding shares of First Potomac, paying its shareholders $11.15 in cash per share at the transaction's close.

That represents a premium of 9.3% to First Potomac's share price on April 24, when the market began speculating that a deal was underway.

The transaction is subject to customary closing conditions, including approval by First Potomac shareholders at a special meeting. First Potomac's Board of Trustees has unanimously approved the merger agreement and has recommended approval of the merger by shareholders.

A Struggle, Then A Plan

First Potomac has been struggling to right itself following a years-long period of share value erosion. In 2015, First Potomac's former long-standing CEO Doug Donatelli and CIO Nicholas Smith abruptly resigned. Chief Operating Officer Robert Milkovich took on the role of CEO and said his first piece of business would be the execution of the sale of at least $200 million in assets. Thus began a period of strategic repositioning of the REIT that continues to this day.