First Potomac (FPO) to Sell Storey Park in Washington, D.C.
First Potomac Realty Trust FPO is set to sell Storey Park, a development site located in the NoMa submarket of Washington, D.C., for gross proceeds of $54.5 million. The move is in sync with its previously disclosed plan of $350 million worth of asset dispositions.
Notably, this mixed-use development – Storey Park – which is on the site of the former Greyhound bus terminal at 1005 First Street, NE in Washington, D.C., can put up more than 700,000 square feet of development. It was acquired in Aug 2011 by First Potomac and Perseus Realty, LLC through a joint venture. First Potomac has a 97% economic interest in this JV.
Now a binding contract has been entered into in connection with the sale to 1005 First, LLC, a partnership between Perseus Realty, LLC and W-G Capital, LLC, an affiliate of Four Points, LLC and Greencourt Capital. The sale is expected to close by the end of July, conditioned upon closing norms. With the sale proceeds, First Potomac plans to meet up its redemption of the remaining $15 million of Series A preferred shares and/or retire outstanding debt.
This sale of Storey Park to First Potomac’s existing JV partner, Perseus Realty, marks a noteworthy stride toward the company’s strategic plan that is aimed at lowering the risk of the company’s portfolio, balance sheet de-leveraging and maximization of the value of its assets.
The plan involves some non-core asset dispositions, addressing expiring leases, managing overhead and such other steps. In fact, the Storey Park sale completion would result in more than $200 million worth of non-core assets sale, which were specified as part of the disposition plan in February.
On the other hand, the company has scope to capitalize on growth opportunities in the Washington, D.C., office market. This market, which had its share of troubles in the recent past, is rebounding and gaining from the shifting of people from other regions to Washington with a notable portion being the millennials who are migrating for jobs.
First Potomac currently has a Zacks Rank #3 (Hold). However, investors interested in the REIT industry may consider stocks like Mack-Cali Realty Corp. CLI, PS Business Parks Inc. PSB and Whitestone REIT WSR. Both these stocks carry a Zacks Rank #2 (Buy).
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