Last summer Douglas J. Donatelli, chairman and chief executive of First Potomac Realty Trust, said that the company needed to double its real estate holdings in the next three to five years, a bold suggestion given that the company already owned 12.5 million square feet worth about $1.2 billion.
Just more than a year later, Donatelli is halfway there.
First Potomac, a real estate investment trust based in Bethesda, has made 23 investments totaling $746.6 million since 2009, when it returned to the market after a $91 million stock offering by purchasing Cloverleaf Center, a 174,000-square-foot office building in Germantown.
The pace of acquisitions has been dizzying: Three deals closed last November and another four deals closed in December, to close out 2010. When 2011 began, First Potomac racked up two more deals in February, one in March and two more in April.
In the process, First Potomac has remade itself from an owner of suburban and rural industrial properties and business parks to one also focused on Class A office buildings in some of Washington’s more expensive submarkets. First Potomac owned nothing in the District at the start of 2010, for instance, but it now owns seven D.C. properties and holds mezzanine financing stakes in two others.
Its most recent buy, of Greyhound’s bus terminal in Northeast D.C., also signals the company’s growing interest not only in being owners in D.C. and its closest suburbs, but in being developers as well. First Potomac announced last week that it had formed a partnership that would purchase the 1.6-acre Greyhound site with Perseus Realty for $46.75 million. Perseus will serve as First Potomac’s development partner much as Akridge, based in D.C., will serve a First Potomac’s partner in redeveloping the office building at 1200 17th St. NW.
In announcing the Greyhound deal, Nicholas Smith, First Potomac’s chief investment officer, emphasized the importance of public transit, including Virginia Railway Express and Maryland Area Regional Commuter train lines, in being able to attract tenants. “The attraction of being downtown and utilizing Metro and VRE and MARC and all the other transportation options, it’s just such a great place to invest,” Smith said.
Smith said that he expected the company to continue its buying spree with an ongoing focus on transportation. “If anything we’ve gotten more bullish on downtown Washington. The more we talk to tenants, the more we realize that transportation is going to drive everything,” he said.