Strategic acquisition creates future development opportunity
WASHINGTON, Aug. 7 -- Republic Property Trust
(NYSE: RPB) announced today that it has entered into a binding agreement to
acquire the fee interest in Dulles Park Technology Center ("Dulles Park")
from Cornerstone Real Estate Advisors, for a purchase price of
approximately $48.3 million or $267 per rentable square foot. Dulles Park
is a five-story Class A office building totaling approximately 181,000
rentable square feet on a site of 7.6 acres. The property is located in
Herndon, Virginia and is adjacent to Campus at Dulles Technology Center
("Campus"), a seven building office park currently owned by Republic
Property Trust. The transaction is expected to close in September 2006.
Completed in 1999, Dulles Park is a high profile property with frontage
along the Dulles Toll Road. The property is within one city block of the
proposed Route 28 Metrorail Station. Based on a preliminary analysis of
existing and comprehensive plan zoning densities for the Metrorail Station
areas, the Company believes that, by combining the land areas of Dulles
Park and the Campus properties, it can secure additional office and
mixed-use development on the property. The Company intends to pursue
increased densities for the site, but has no current plans to develop a new
office building.
The Company is acquiring the Property approximately 70% occupied by
high quality credit tenants including U.S. government agencies, IBM and
government contractors. The Company believes that average in-place rents of
approximately $25 per square foot are below the market rate of
approximately $28 per square foot. The Company believes that significant
leasing opportunities exist since market rents are projected to rise to
keep pace with growing demand for space in Herndon, particularly for space
with such high visibility and proximity to the Dulles Toll Road.
Chief Executive Officer Mark Keller commented that "our acquisition of
Dulles Park represents a singular opportunity to gain Dulles Toll Road
frontage to enhance our Campus office park, while simultaneously obtaining
7.6 acres of surface parking area that can potentially be developed with an
additional office building. The potential to develop additional office
space at no additional land costs is a big benefit for us. Similar to our
recent acquisition of WillowWood I & II, our acquisition of Dulles Park is
in-keeping with our strategy to pursue office building assets in close
proximity to our existing properties, to obtain potential operating
efficiencies, and therefore, an improved return on investment. We see
Dulles Park as an exceptional opportunity to increase FFO through our
leasing and management efforts."
The initial capitalization rate is 5.23% on purchase price, which
reflects the 30% existing vacancy. At stabilization, the capitalization
rate on purchase price is projected to increase to above 7%. By creating
operating efficiencies, the property should provide further increases in
overall returns. Even though the Company is taking on additional vacancy in
the Dulles Corner market by acquiring Dulles Park, it believes the
acquisition will add value and growth to our portfolio. Mr. Keller also
noted that "due to leasing the existing office space at Presidents Park
currently being used by our Virginia- based employees, we intend to move
the Company's Virginia offices to Dulles Park." Upon purchasing Dulles
Park, Republic Property Trust's portfolio will consist of 13 Class A office
properties, representing approximately 2.4 million square feet, in Greater
Washington, D.C.
About Republic Property Trust
Republic Property Trust is a fully integrated, self-administered and
self- managed real estate investment trust formed to own, operate, lease,
acquire and develop primarily Class A office properties. The Company's
current portfolio is focused in the Washington, D.C. metropolitan, or
Greater Washington, D.C., market. Republic Property Trust also selectively
seeks fee-based development opportunities for all real estate classes.
Safe Harbor
Certain statements in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results
of the Company to differ materially from historical results or from any
results expressed or implied by such forward-looking statements, including
without limitation: national and local economic, business, real estate and
other market conditions; the competitive environment in which the Company
operates; financing risks; property management risks; the level and
volatility of interest rates; financial stability of tenants; the Company's
ability to maintain its status as a REIT for federal income tax purposes;
acquisition, disposition, development and joint venture risks; potential
environmental and other liabilities; and other factors affecting the real
estate industry generally. The Company refers you to the documents filed by
the Company from time to time with the Securities and Exchange Commission,
which discuss these and other factors that could adversely affect the
Company's results of operation.
