First Potomac Buys 11 Dupont Circle
- Sep 26, 2014
First Potomac Realty Trust is adding to its Washington, D.C., office holdings with the purchase of 11 Dupont Circle, a nine-story, 155,713-square-foot mixed-use building, for $89 million.
The Bethesda, Md.-based REIT now owns seven buildings with more than 1 million square feet in the District of Columbia.
“The acquisition of 11 Dupont Circle continues First Potomac’s strategic initiative to acquire, own and operate high-quality office properties in the Washington, D.C., metropolitan area. The property has a diverse tenant roster and excellent access to public transportation and amenities,” Nicholas Smith, First Potomac chief investment officer, said in a release. “We are thrilled to own an asset in one of the most dynamic and vibrant submarkets, which is home to a number of influential organizations, global institutions and the prestigious Embassy Row.”
The REIT did not disclose the identity of the seller, but numerous media outlets in Washington, D.C., are reporting that it was Blackrock Realty. The Washington Business Journal said an entity acquired the building through Blackrock in 2006.
Cassidy Turley began marketing the property in May. In its marketing material, it stated, “11 Dupont Circle is a rare opportunity to purchase a fully leased property with upside potential in D.C.’s highest-barriers-to-entry submarket.”
The building, which has 11,692 square feet of retail on the ground level, is fully leased to 15 tenants. Cassidy Turley said the building, constructed in 1974 and renovated in 2004, has historically had at least 98 percent leasing, “further demonstrating the perpetual demand for properties in the Dupont Circle market.”
The property, which has below-grade parking, is one block from the Dupont Circle Metro station. It is surrounded by restaurants, hotels, entertainment and transportation options.
First Potomac said the purchase was funded through a draw on its revolving line of credit. The REIT is also selling its Richmond, Va., portfolio, which includes Chesterfield Business Center, Hanover Business Center, Park Central and Virginia Technology Center. Sale of the portfolio could close in the fourth quarter or early 2015. First Potomac said the planned sale is consistent with its capital recycling strategy.
The REIT — which owns, operates, develops and redevelops commercial real estate in the greater Washington, D.C., region — has a portfolio of more than 9 million square feet. The properties consist of office buildings, business parks and office/retail assets in the District of Columbia, Maryland and Virginia.
In July, First Potomac paid $41 million for a five-story, 130,048-square-foot, Class A office building in Reston, Va. At the same time, the REIT sold the Corporate Campus at Ashburn Center, a 194,184-square-foot, single-story business park also in Virginia, for the same amount.
The REIT made another D.C. purchase in April, when it acquired a 12-story, 117,093-square-foot office building at 1401 K. St., N.W., for $58 million.
In its Washington D.C., Survey of Office Space for the second quarter, Cassidy Turley noted that sales slowed to $950 million, down from strong first-quarter sales activity of $2.4 billion. The firm, which noted that the region typically sees about $5.5 billion in office transactions a year, predicted 2014 will be “an above-average year in terms of overall investment volume,” because of the “robust pipeline of buildings on the market.” Cassidy Turley said the District of Columbia typically represents about 15 percent of the region’s annual office building sales, but this year D.C. already accounts for more than 50 percent of the sales volume.