First Potomac Realty Trust will sell Washington-area industrial portfolio for $259 million

First Potomac Realty Trust said Monday that it has entered into two separate contracts to sell a portfolio of 24 industrial properties, consisting of about 4.3 million square feet, for $259 million. The majority of the industrial portfolio, 4 million square feet, is being sold to an affiliate of Blackstone Real Estate Partners VII for a purchase price of $241.5 million.

The balance of the holdings, a 236,000-square-foot property in Haymarket known as the I-66 Commerce Center, was sold separately to Corporate Office Properties Trust on May 7, for $17.5 million.

First Potomac, based out of Bethesda, Md., said in a press release that IndCor Properties – Blackstone’s national industrial portfolio company — will manage the properties being acquired by Blackstone.
Sixteen of the assets in that 23-building portfolio, representing about 2.6 million square feet, are located in Southern Virginia, and the remaining seven properties are located in the Baltimore, Maryland and Washington, D.C., submarkets.

According to First Potomac, Blackstone has secured the contract with a $15 million deposit. The transaction is expected to close by the end of the second quarter subject to customary closing conditions.

“The industrial portfolio transaction was well executed by Eastdil, and brought in a substantial number of qualified buyers,” Nicholas Smith, chief investment officer of First Potomac Realty Trust, said in a statement. “Thus far, the process has met all our expectations in regards to pricing, as well as secured a well-capitalized, quality buyer with the ability to close in a short period of time with limited contingencies.”

First Potomac announced the plan to sell the majority of its industrial portfolio in late January as part of the company’s strategic plan to refocus on office properties. The completion of the sale is expected to result in a greater concentration of high-quality office properties in the Washington, D.C. metropolitan area.

The company said it intends to use the proceeds from the sale to repay outstanding debt, improve balance sheet flexibility and take advantage of future opportunities to acquire office properties in the Washington, D.C. region.

“The sale of the industrial portfolio is the most critical step in our strategy of repositioning our portfolio to focus on high-quality office properties in the region,” said Douglas J. Donatelli, chairman and CEO of First Potomac. “We believe the sale, combined with the targeted portfolio management initiatives we have implemented, positions us well for continued growth in the greater Washington, D.C. office sector.”