First Potomac Realty Trust
) recently priced an equity offering of 6.5 million shares at
$14.70 per share as part of its effort to infuse capital and
repay debt. The offering was upsized from the original number of
6 million shares to 6.5 million shares.
In a bid to cover over-allotments, the company provided a
30-day option to underwriters for purchasing an additional
975,000 shares at the same price (less the underwriting
discount). The transaction is expected to close by May 24,
This real estate investment trust (REIT) expects to generate
net proceeds of roughly $91.1 million from the transaction,
excluding the underwriting discount and estimated offering costs.
The net proceeds will be utilized mainly for paying off the
outstanding debt under secured term loans and part of the
outstanding debt under its unsecured revolving credit facility.
First Potomac also intends to use the amount for general
A consortium of banking giants supported First Potomac in the
equity offering. Wells Fargo Securities of
Wells Fargo & Company
) and KeyBanc Capital Markets of
) acted as joint book-running managers. On the other hand,
), BMO Capital Markets, PNC Capital Markets LLC, RBC Capital
Markets and Raymond Jamesacted as co-lead managers.
Though this public offering will result in share dilution for
First Potomac, the payment of debt is encouraging as it will
reduce interest expenses. Moreover, it will help in achieving
financial flexibility and will position it favorably for
investment opportunities and acquisitions, which will
consequently go a long way in enhancing top-line growth.
Notably, as of Mar 31, 2013, First Potomac had cash and cash
equivalents of $17.8 million, up from $9.4 million as of Dec 31,
2012. Also, the company had outstanding debt of $954.9 million,
of which $355.4 million was fixed-rate debt and $350.0 million
was variable-rate debt (that had been switched to a fixed
interest rate) at the end of first quarter 2013. The remaining
$249.5 million was variable-rate debt, which comprised one
mortgage loan and borrowings under its secured term loans and
unsecured revolving credit facility.
Currently, First Potomac carries a Zacks Rank #3 (Hold).
FIRST POTOMAC (FPO): Free Stock Analysis
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MORGAN STANLEY (MS): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
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