First Potomac Realty Trust 8K Other Events | FPO 2 Nov 11

Exhibit 99.1

On October 27, 2011, First Potomac Realty Trust reported results for the three and nine months ended September 30, 2011.

Highlights:

•		Executed 1,134,000 square feet of leases, 443,000 square feet of which were new leases and 691,000 square feet were renewal leases, which reflected an 88% tenant retention rate.

•		Renewal leases included a 204,000 square foot lease with CareFirst BlueCross BlueShield at 840 First Street, NE, eliminating the Company’s largest 2013 lease expiration.

•		Entered into a $175.0 million unsecured term loan that is comprised of three-tranches with staggered maturity dates ranging from July 2016 to July 2018.

•		Acquired two properties through joint ventures located in Washington, D.C. for total consideration of $78.0 million and a property in Chesapeake, Virginia for $16.7 million.

The Company’s net loss increased for the three and nine months ended September 30, 2011 compared with the same periods in 2010 due to an increase in acquisition costs and impairment charges, which were partially offset by a gain related to the retirement of a contingent consideration obligation. During the nine months ended September 30, 2011, the Company acquired six properties compared with the acquisition of two properties for the nine months ended September 30, 2010. During the third quarter of 2011, the Company incurred a $3.1 million impairment charge on its Airpark Place property that reflects management’s shorter anticipated holding period for the property. The additional impairment charges incurred during the nine months ended September 30, 2011 and 2010 relate to properties that were subsequently disposed of by the Company. Funds from operations (“FFO”) and Core FFO increased for the three and nine months ended September 30, 2011 compared with the same periods in 2010. Compared with the same periods in 2010, same-property net operating income (“Same-Property NOI”) decreased 1.4% for the three months ended September 30, 2011, due to an increase in vacancy, and increased 0.2% for the nine months ended September 30, 2011, due to a decline in real estate taxes and property operating expenses. FFO, Core FFO and Same-Property NOI are non-GAAP financial measures. For a description of FFO, Core FFO and Same-Property NOI, including why management believes their presentation is useful, see “Non-GAAP Financial Measures” below. See pages 5 and 6 for a reconciliation of FFO and Core FFO to the Company’s net loss and see page 8 for a reconciliation of Same-Property NOI to the Company’s net loss.

The Company’s consolidated portfolio was 84.7% leased and 81.2% occupied at September 30, 2011 compared with 83.0% leased and 80.4% occupied at June 30, 2011. Excluding the Company’s fourth quarter 2010 acquisitions of Atlantic Corporate Park, which was vacant at acquisition, and Redland Corporate Center II, which was 99% vacant at acquisition, the Company’s consolidated portfolio was 86.1% leased and 83.5% occupied at September 30, 2011.

Acquisition

On July 19, 2011, the Company acquired Greenbrier Towers I & II in Chesapeake, Virginia for $16.7 million. The property consists of two office buildings totaling 172,000 square feet and is 86% leased to over 40 tenants. The acquisition was funded with proceeds from the sale of Aquia Commerce Center I & II and a draw on the Company’s unsecured revolving credit facility.

Development Joint Ventures

On August 4, 2011, the Company formed a joint venture with an affiliate of Perseus Realty, LLC to acquire the Greyhound Bus Terminal site at 1005 First Street, NE in Washington, D.C. for $46.8 million, of which, $38.4 million was paid at closing and the remaining $8.4 million will be paid in August 2013. The Company funded its share of the purchase price through a draw on its unsecured revolving credit facility. The site is currently occupied by the Greyhound Bus Terminal, which leased back the site under a ten-year lease agreement with a termination option after the second year. The Company estimates a 6.5% return on the lease-back. Greyhound has announced that it intends to relocate its operations to nearby Union Station, at which point the joint venture anticipates developing the 1.6 acre site, which can accommodate up to approximately 712,000 square feet of office space. However, there can be no assurance regarding the timing of Greyhound’s relocation or commencement of the development and, if commenced, no assurance regarding the timing of completion, the costs or the size of the development. The Company anticipates owning 97% of the joint venture when it is fully capitalized.

During the first quarter of 2011, the Company entered into a joint venture with an affiliate of the Akridge Company. On October 12, 2011, the joint venture acquired a property located in Washington, D.C. at 1200 17^th Street, NW for $39.6 million. The property currently consists of a land parcel that contains an 85,000 square foot office building. The joint venture intends to demolish the existing building and develop a new Class A 170,000 square foot office building. Construction is currently expected to commence in 2012 and is expected to be completed in late 2014. However, there can be no assurance that the development will be commenced and, if commenced, that it will be completed on time or on budget. The Company funded its share of the purchase price through a draw on its unsecured revolving credit facility and available cash. The Company anticipates owning a 95% interest in the joint venture when it is fully capitalized.

Balance Sheet

The Company had $872.4 million of debt outstanding at September 30, 2011. Of the total debt outstanding, $525.4 million was fixed-rate debt with a weighted average effective interest rate of 6.0% and a weighted average maturity of 2.8 years. At September 30, 2011, the Company’s variable-rate debt consisted of borrowings of $175.0 million on a three-tranche unsecured term loan, $142.0 million on its unsecured revolving credit facility and $30.0 million on a secured term loan.

On July 18, 2011, the Company entered into a three-tranche $175.0 million unsecured term loan. The unsecured term loan’s three tranches have maturity dates staggered in one-year intervals. Tranche A has an outstanding balance of $60.0 million at an interest rate of LIBOR plus 215 basis points and matures on July 18, 2016. Tranche B has an outstanding balance of $60.0 million at an interest rate of LIBOR plus 225 basis points and matures on July 18, 2017. Tranche C has an outstanding balance of $55.0 million at an interest rate of LIBOR plus 230 basis points and matures on July 18, 2018. The Company used the funds to pay down $117.0 million of the outstanding balance on its unsecured revolving credit facility, to repay its $50.0 million secured term loan and for other general corporate purposes.

On August 11, 2011, the Company repaid its $20.0 million secured term loan with a draw on its unsecured revolving credit facility. The Company’s interest coverage ratio was 2.4 times for the quarter ended September 30, 2011.

During the third quarter of 2011, the Company entered into five interest rate swap agreements that fixed LIBOR on $150.0 million of its variable rate debt. The table below summarizes the Company’s five new interest rate swap agreements.


			Interest Rate
	Notional		Contractual	Fixed LIBOR
Maturity Date	Amount		Component	Rate
July 2016	$	35 million	LIBOR		1.754	%
July 2016	25 million		LIBOR		1.7625	%
July 2017	30 million		LIBOR		2.093	%
July 2017	30 million		LIBOR		2.093	%
July 2018	30 million		LIBOR		1.660	%

Page 2 of 8

As of September 30, 2011, the Company had hedged $200.0 million of its variable rate debt through six interest rate swap agreements. At September 30, 2011, the Company’s variable-rate debt had a weighted average effective interest rate of 2.7% and a weighted average maturity of 3.4 years. After accounting for the interest rate swap agreements, the Company’s total debt had a weighted average effective interest rate of 5.1%

Dividends

On October 25, 2011, the Company declared a dividend of $0.20 per common share, equating to an annualized dividend of $0.80 per common share. The dividend is payable on November 11, 2011 to common shareholders of record as of November 4, 2011. The Company also declared a dividend of $0.484375 per share on its Series A Preferred Shares. The dividend is payable on November 15, 2011 to preferred shareholders of record as of November 4, 2011.

About First Potomac Realty Trust

First Potomac Realty Trust is a self-administered, self-managed real estate investment trust that focuses on owning, operating, developing and redeveloping office and industrial properties in the greater Washington, D.C. region. As of September 30, 2011, the Company’s portfolio totaled approximately 13.9 million square feet.

Non-GAAP Financial Measures

Funds from Operations— Funds from operations (“FFO”) represents net income (computed in accordance with U.S. generally accepted accounting principles (“GAAP”)), plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures and gains or losses on the sale of property. The Company also excludes, from its FFO calculation, any depreciation and amortization related to third parties from its consolidated joint venture. The Company considers FFO a useful measure of performance for an equity REIT because it facilitates an understanding of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, the Company believes that FFO provides a meaningful indication of its performance. The Company also considers FFO an appropriate performance measure given its wide use by investors and analysts. The Company computes FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity real estate investment trusts (“REITs”) and, accordingly, may not be comparable to such other REITs. Further, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties, nor is it indicative of funds available to fund the Company’s cash needs, including its ability to make distributions. The Company presents FFO per diluted share calculations that are based on the outstanding dilutive common shares plus the outstanding Operating Partnership units for the periods presented.

The Company’s presentation of FFO in accordance with the NAREIT white paper, or as adjusted by the Company, should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of the Company’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of its liquidity. The Company’s FFO calculations are reconciled to net income in the Company’s Consolidated Statements of Operations included below.

Page 3 of 8

Core FFO— The computation of FFO in accordance with NAREIT’s definition includes certain items that are not indicative of the results provided by the Company’s operating portfolio and affect the comparability of the Company’s period-over-period performance. These items include, but are not limited to, gains and losses on the retirement of debt, contingent consideration charges, acquisition costs and impairments to real estate assets. The Company provides a reconciliation of FFO to Core FFO below.

Same-Property NOI— Same Property Net Operating Income (“Same Property NOI”), defined as operating revenues (rental, tenant reimbursements and other revenues) less operating expenses (property operating expenses, real estate taxes and insurance) from the properties owned by the Company for the entirety of the periods presented, is a primary performance measure the Company uses to assess the results of operations at its properties. As an indication of the Company’s operating performance, Same Property NOI should not be considered an alternative to net income calculated in accordance with GAAP. A reconciliation of the Company’s Same Property NOI to net income from its consolidated statements of operations is presented below. The Same Property NOI results exclude corporate-level expenses, as well as certain transactions, such as the collection of termination fees, as these items vary significantly period-over-period thus impacting trends and comparability. Also, the Company eliminates depreciation and amortization expense, which are property level expenses, in computing Same Property NOI as these are non-cash expenses that are based on historical cost accounting assumptions and do not offer the investor significant insight into the operations of the property. This presentation allows management and investors to distinguish whether growth or declines in net operating income are a result of increases or decreases in property operations or the acquisition of additional properties. While this presentation provides useful information to management and investors, the results below should be read in conjunction with the results from the consolidated statements of operations to provide a complete depiction of total Company performance.

Forward Looking Statements

The forward-looking statements contained herein are subject to various risks and uncertainties. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that its expectations will be achieved. Certain factors that could cause actual results to differ materially from the Company’s expectations include changes in general or regional economic conditions; the Company’s ability to timely lease or re-lease space at current or anticipated rents; changes in interest rates; changes in operating costs; the Company’s ability to complete acquisitions on acceptable terms; the Company’s ability to manage its current debt levels and repay or refinance its indebtedness upon maturity or other required payment dates; the Company’s ability to obtain debt and/or financing on attractive terms, or at all; and other risks detailed in the Company’s Annual Report on Form 10-K and described from time to time in the Company’s filings with the SEC. Many of these factors are beyond the Company’s ability to control or predict. Forward-looking statements are not guarantees of performance. For forward-looking statements herein, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Page 4 of 8

FIRST POTOMAC REALTY TRUST
Consolidated Statements of Operations
(unaudited, amounts in thousands, except per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Revenues:
Rental	$	36,121		$	27,520		$	103,025		$	80,665
Tenant reimbursements and other		8,993			6,179			24,776			19,791


Total revenues		45,114			33,699			127,801			100,456


Operating expenses:
Property operating		11,211			7,672			31,476			24,272
Real estate taxes and insurance		4,253			2,948			12,284			9,339
General and administrative		4,354			3,475			12,546			10,859
Acquisition costs		1,737			361			4,475			2,025
Depreciation and amortization		16,088			10,608			45,381			30,487
Impairment of real estate asset		3,111			—			3,111			—
Contingent consideration related to acquisition of property		(1,487	)		—			(1,487	)		710


Total operating expenses		39,267			25,064			107,786			77,692


Operating income		5,847			8,635			20,015			22,764


Other expenses, net:
Interest expense		11,207			8,431			30,307			25,333
Interest and other income		(1,534	)		(89	)		(3,769	)		(285	)
Equity in losses of affiliates		81			75			112			134
Gain on early retirement of debt		—			—			—			(164	)


Total other expenses, net		9,754			8,417			26,650			25,018


(Loss) income from continuing operations before income taxes		(3,907	)		218			(6,635	)		(2,254	)


Benefit from income taxes		195			—			655			—


(Loss) income from continuing operations		(3,712	)		218			(5,980	)		(2,254	)


Discontinued operations:
Loss from operations of disposed properties		—			(3,153	)		(2,827	)		(3,412	)
Gain on sale of real estate properties		—			—			1,954			557


Loss from discontinued operations		—			(3,153	)		(873	)		(2,855	)


Net loss		(3,712	)		(2,935	)		(6,853	)		(5,109	)


Less: Net loss attributable to noncontrolling interests		265			55			469			103


Net loss attributable to First Potomac Realty Trust		(3,447	)		(2,880	)		(6,384	)		(5,006	)


Less: Dividends on preferred shares		(2,228	)		—			(6,239	)		—


Net loss available to common shareholders	$	(5,675	)	$	(2,880	)	$	(12,623	)	$	(5,006	)


Depreciation and amortization:
Real estate assets		16,088			10,608			45,381			30,487
Discontinued operations		—			284			520			1,099
Unconsolidated joint ventures		520			188			1,556			426
Consolidated joint venture		(21	)		—			(61	)		—
Gain on sale of real estate properties		—			—			(1,954	)		(557	)
Net loss attributable to noncontrolling interests in the Operating Partnership		(272	)		(55	)		(476	)		(103	)


Funds from operations (FFO)	$	10,640		$	8,145		$	32,343		$	26,346

Page 5 of 8

FIRST POTOMAC REALTY TRUST
Consolidated Statements of Operations
(unaudited, amounts in thousands, except per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010

Funds from operations (FFO)	$	10,640		$	8,145		$	32,343		$	26,346

Acquisition costs		1,737			361			4,475			2,025
Gain on early retirement of debt		—			—			—			(164	)
Contingent consideration related to acquisition of property		(1,487	)		—			(1,487	)		710
Impairment of real estate assets⁽¹⁾		3,111			3,448			5,821			4,013


Core FFO	$	14,001		$	11,954		$	41,152		$	32,930


Basic and diluted earnings per common share:
(Loss) income from continuing operations	$	(0.12	)	$	—		$	(0.25	)	$	(0.08	)
Loss from discontinued operations		—			(0.08	)		(0.02	)		(0.08	)

Net loss	$	(0.12	)	$	(0.08	)	$	(0.27	)	$	(0.16	)


Weighted average common shares outstanding:
Basic and diluted		49,308			37,269			49,275			34,804

FFO per share — basic and diluted	$	0.21		$	0.21		$	0.63		$	0.74
Core FFO per share — diluted	$	0.27		$	0.31		$	0.80		$	0.92

Weighted average common shares and units outstanding:
Basic		51,714			37,999			51,230			35,536
Diluted		51,830			38,165			51,380			35,718


⁽¹⁾		The impairment charge for the three months ended September 30, 2011 is included within continuing operations. All other impairment charges incurred during the nine months ended September 30, 2011 and 2010 are included within discontinued operations.

Page 6 of 8

FIRST POTOMAC REALTY TRUST
Consolidated Balance Sheets
(Amounts in thousands, except per share amounts)


	September 30, 2011			December 31, 2010
	(unaudited)
Assets:
Rental property, net	$	1,427,788		$	1,217,897
Cash and cash equivalents		14,646			33,280
Escrows and reserves		16,730			8,070
Accounts and other receivables, net of allowance for doubtful accounts of $3,138 and $3,246, respectively		7,935			7,238
Accrued straight-line rents, net of allowance for doubtful accounts of $360 and $849, respectively		16,337			12,771
Notes receivable, net		54,644			24,750
Investment in affiliates		24,338			23,721
Deferred costs, net		33,447			20,174
Prepaid expenses and other assets		18,331			14,230
Intangible assets, net		59,587			34,551


Total assets	$	1,673,783		$	1,396,682


Liabilities:
Mortgage loans	$	420,089		$	319,096
Exchangeable senior notes, net		30,357			29,936
Senior notes		75,000			75,000
Secured term loans		30,000			110,000
Unsecured term loan		175,000			—
Unsecured revolving credit facility		142,000			191,000
Accounts payable and other liabilities		50,902			16,827
Accrued interest		4,157			2,170
Rents received in advance		7,129			7,049
Tenant security deposits		5,574			5,390
Deferred market rent, net		5,049			6,032


Total liabilities		945,257			762,500


Noncontrolling interests in the Operating Partnership (redemption value of $36,419 and 16,122, respectively)		39,360			16,122

Equity:
Series A Preferred Shares, $25 par value, 50,000 shares authorized; 4,600 and 0 shares issued and outstanding, respectively		115,000			—
Common shares, $0.001 par value, 150,000 shares authorized; 50,061 and 49,922 shares issued and outstanding, respectively		50			50
Additional paid-in capital		795,480			794,051
Noncontrolling interests in consolidated partnerships		5,237			3,077
Accumulated other comprehensive loss		(5,405	)		(545	)
Dividends in excess of accumulated earnings		(221,196	)		(178,573	)


Total equity		689,166			618,060


Total liabilities, noncontrolling interests and equity	$	1,673,783		$	1,396,682

Page 7 of 8

FIRST POTOMAC REALTY TRUST
Same-Property Analysis
(unaudited, dollars in thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
Reconciliation of Same-Property NOI to Net Loss⁽¹⁾⁽²⁾	2011			2010			2011			2010
Same-Property:
Rental revenue	$	27,599		$	27,807		$	78,862		$	79,611
Tenant reimbursements and other revenue		6,120			5,949			17,453			18,105
Property operating expenses		(7,894	)		(7,735	)		(22,095	)		(23,233	)
Real estate taxes and insurance		(3,048	)		(2,924	)		(8,689	)		(9,083	)


Same-Property NOI		22,777			23,097			65,531			65,400


Non-same property NOI⁽³⁾		6,873			(18	)		18,510			1,445
Depreciation and amortization		(16,088	)		(10,608	)		(45,381	)		(30,487	)
General and administrative		(4,354	)		(3,475	)		(12,546	)		(10,859	)
Acquisition costs		(1,737	)		(361	)		(4,475	)		(2,025	)
Contingent consideration related to acquisition of property		1,487			—			1,487			(710	)
Impairment of real estate		(3,111	)		—			(3,111	)		—
Loss from discontinued operations		—			(3,153	)		(873	)		(2,855	)
Benefit from income taxes		195			—			655			—
Other expenses, net		(9,754	)		(8,417	)		(26,650	)		(25,018	)


Net Loss	$	(3,712	)	$	(2,935	)	$	(6,853	)	$	(5,109	)


⁽¹⁾		Same property comparisons are based upon those properties owned for the entirety of the periods presented. Same property results exclude the results of the following non same-properties: RiversPark I and II, Three Flint Hill, NW, Battlefield Corporate Center, Redland Corporate Center, Atlantic Corporate Park, 1211 Connecticut Ave, NW, 440 First Street, NW, 7458 Candlewood Road, 1750 H Street, NW, Aviation Business Park, Cedar Hill I & III, Merrill Lynch, 840 First Street, NE, One Fair Oaks, Greenbrier Towers I & II, 1005 First Street, NE, Davis Drive and Sterling Park – Building 7.

⁽²⁾		The Company acquired 500 First Street, NW on June 30, 2010. The property was the Company’s first acquisition in its Washington, D.C. region and is only included above in the quarter over quarter comparison as it was not owned by the Company for the entirety of the nine months ended September 30, 2010.

⁽³⁾		Non-same property NOI has been adjusted reflect a normalized management fee percentage in lieu of an administrative overhead allocation for comparative purposes.

Page 8 of 8

First Potomac Realty Trust (FPO) Inactive 8-KOther Events