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.
The bleeding hadn't stopped though: Several months later in 2016 its market cap fell below $700 million and First Potomac fell out of the Securities and Exchange Commission's category of Well-Known Seasoned Investor.
More recently, as First Potomac has sold off assets, the REIT began to stabilize.
“Over the last 18 months we have worked diligently to refine the company's portfolio, strengthen the balance sheet, and enhance First Potomac's corporate governance,” Milkovich says in a prepared statement.
“This transaction and the attractive value that shareholders will receive demonstrates the successful execution of these efforts and is a testament to the dedication of First Potomac's employees.”
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.
The bleeding hadn't stopped though: Several months later in 2016 its market cap fell below $700 million and First Potomac fell out of the Securities and Exchange Commission's category of Well-Known Seasoned Investor.
More recently, as First Potomac has sold off assets, the REIT began to stabilize.
“Over the last 18 months we have worked diligently to refine the company's portfolio, strengthen the balance sheet, and enhance First Potomac's corporate governance,” Milkovich says in a prepared statement.
“This transaction and the attractive value that shareholders will receive demonstrates the successful execution of these efforts and is a testament to the dedication of First Potomac's employees.”
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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.
