CEO Monthly June 2017

CEO MONTHLY / JUNE 2017 13 , Government Properties Income Trust on June 28th announced that its board of trustees has unanimously approved a definitive merger agreement to acquire all the outstanding common shares of First Potomac Realty Trust. Government Properties Income Trust to Acquire First Potomac Realty Trust for Approximately $1.4 Billion Government Properties Income Trust announced that its Board of Trustees has unanimously approved a definitive merger agreement to acquire all the outstanding common shares of First Potomac Realty Trust for an aggregate transaction value of approximately $1.4 billion, including $11.15 per FPO common share in cash and the repayment or assumption of FPO debt. This transaction is subject to the approval of at least a majority of FPO’s common shareholders and other customary conditions and is expected to close prior to year- end 2017. David Blackman, President and Chief Operating Officer of GOV, made the following statement: “The acquisition of FPO enables GOV to expand its business strategy to include the acquisition, ownership and operation of office properties leased to both government and private sector tenants in the metropolitan Washington, D.C. market area. The metropolitan Washington, D.C. market area is one of the largest office markets in the U.S. and the nation’s largest beneficiary of spending by the U.S. government. Outside of the metropolitan Washington, D.C. market area, GOV will continue to focus on acquiring, owning and operating office properties that are majority leased to government tenants.” “In addition to this transaction providing GOV with new potential growth opportunities, we expect to realise approximately $11 million of annual general and administrative expense savings compared to FPO on a stand- alone basis. We are also pleased that we were able to achieve an attractive per share purchase price.” GOV believes FPO has high quality office and industrial properties that are well located primarily in the metropolitan Washington, D.C. market area. FPO’s portfolio includes 39 properties (74 buildings) with approximately 6.5 million square feet that was 92.2% leased as of March 31, 2017, (including two joint venture properties which are 50% and 51% owned by FPO). As of March 31, 2017, government and other investment grade rated tenants represented approximately 43.9% of FPO’s total annualised rental income. As of March 31, 2017, and pro forma for GOV’s acquisition of FPO, GOV’s portfolio and selected operating metrics would have been: • $4.1 billion of consolidated gross assets; • 113 properties (170 buildings) with approximately 18.0 million square feet that are 94.1% leased for 4.9 years based on weighted average annualised rental income; • 71.7% of total annualised rental income from government and other investment grade rated tenants; • 59.9% of total annualised rental income from government tenants; • properties located in 31 states and Washington, D.C. and; • 54.3% of total annualised rental income from the metropolitan Washington, D.C. market area.