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Finmarc Acquires 26 Buildings Comprising 950,000 SF in Northern Virginia

First Potomac Realty Trust Sells the 8-Park Portfolio for $96 Million
March 28, 2016
Bethesda, MD-based Finmarc Management Inc. closed on the purchase of a 26-building portfolio comprised of approximately 950,000 square feet of commercial office, flex/office and warehouse space in the Northern Virginia region. First Potomac Realty Trust sold the portfolio for $96 million, or about $101 per square foot.

The buildings, which are located throughout Reston, Herndon, Manassas, Merrifield and Chantilly, are cumulatively 76% leased with more than 70 tenants.

Robert Milkovich, CEO of First Potomac Realty Trust, said the sale is the latest step in the company's plan to dispose of $350 million of assets. The REIT said it will use proceeds from the sale to redeem a portion of its outstanding preferred shares, which Milkovich said will strengthen the firm's balance sheet and improve its liquidity.

Neil Markus, a principal of Finmarc, commented his firm viewed the acquisition as an opportunity to establish a significant foothold in the Northern Virginia market. In addition to acquiring the portfolio for significantly below replacement cost, Markus said the value-add investment also offers the opportunity, and challenge, of leasing the 250,000 square feet of available space.

“Every fundamental exists in these sub-markets for immediate and long-term growth, including continued job and population expansion, the improvement of transportation systems and the proximity of the high-tech corridor and the federal government,” said Markus.

The sale by First Potomac represents the continued execution of that REIT’s previously announced plan to dispose of $350 million of assets. Proceeds from the sale will be used to strengthen its balance sheet and enhancing its portfolio composition.

Portfolio Component Descriptions

Reston Business Campus - Reston, VA: 85,000 square feet consisting of four single-story office buildings near the Fairfax County Parkway and the Dulles Toll Road in Reston.

Van Buren Office Park - Herndon, VA: 110,000 square feet consisting of five single-story office buildings off the Dulles Toll Road near the Fairfax County Parkway and Reston Town Center.

Herndon Corporate Center - Herndon, VA: 130,000 square feet consisting of four single-story office buildings. The project is off Herndon Parkway near Interstate 66, Route 28, the Dulles Toll Road and Washington Dulles International Airport.

Enterprise Center - Chantilly, VA: 190,000 square feet consisting of three single-story industrial/office buildings and one three-story office building. The project is off US Route 50 and adjacent to Washington Dulles International Airport.

Gateway Centre Manassas - Manassas, VA: 102,000 square feet consisting of three flex buildings. The project is positioned near Innovation Park, a public-private collaborative research, data center, government and bio-manufacturing campus.

Linden Business Center - Manassas, VA - 110,000 square feet consisting of three flex buildings. The project is positioned less than one mile from Gateway Centre Manassas and is within close proximity to Interstate 66 and VA Route 234.

Windsor @ Battlefield - Manassas, VA: 155,000 consisting of two flex/office buildings. The project is positioned just off Interstate 66 and near Northern Community College.

Prosperity Business Center - Merrifield, VA: 72,000 square feet consisting of a single-story warehouse building. The project is near the Dunn Loring Metro Station in Fairfax County.

"Because the entire portfolio has been maintained in excellent physical condition, we can immediately begin focusing on the marketing of the available spaces to build occupancy levels,” Finmarc's Markus continued. "We plan to re-introduce this portfolio and aggressively lease these buildings to the Northern Virginia marketplace.”

Finmarc currently owns and manages 72 office, flex, industrial and retail properties as well as several residential projects in the Mid-Atlantic area. The firm’s entire portfolio exceeds 5.7 million square feet of space.

Joseph Hoffman and Aaron Rosenfeld of the law firm Kelley Drye & Warren LLP represented Finmarc Management. James Meisel and Bruce Strasburg of HFF marketed the portfolio on behalf of First Potomac Realty Trust. For more information, refer to CoStar Comp ID #3549743.

Click here for more of this week’s value add and opportunistic real estate news. Late cycle CRE rebound could foretell higher REO property losses.

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