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First Potomac Closes Financing

Zacks Equity Research

First Potomac Realty Trust (FPO), a real estate investment trust (:REIT), recently announced the closing of a secured financing transaction worth $68.4 million. The 5-year loan bears a fixed interest rate of 4.2% over a 30-year amortization schedule.

The financing has been secured by Redland Corporate Center, a Class A multi-story office property located in the I-270 Corridor in Rockville, Maryland.. The net proceeds from the transaction will be utilized to repay a portion of the balance outstanding under First Potomac’s unsecured revolving credit facility.

The strategic move is aimed towards reducing its cost of capital and capitalizing on future growth opportunities. With this deal, First Potomac intends to improve its liquidity in the near term and improve its financial flexibility.

As of June 30, 2012, First Potomac had $928.8 million of debt outstanding and cash and cash equivalents of $16.1 million.  Earlier in June 2012, the company prepaid the entire $75.0 million principal balance of its Series A and Series B senior notes.

Headquartered in Bethesda, Maryland, First Potomac focuses on the ownership, management, development and redevelopment of office and industrial properties in the greater Washington, D.C. region. The successful acquisition and investment strategy of the company is based on its experience of opportunities utilized in the real estate market.  As of June 30, 2012, the company's consolidated portfolio totalled approximately 14 million square feet.

First Potomac currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We also have a long-term Neutral recommendation on the stock. One of its competitors, Washington Real Estate Investment Trust (WRE), holds a Zacks #4 Rank, which implies a short term Sell rating.

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