First Potomac Realty Trust (NYSE: FPO), a real estate investment trust that acquires and operates industrial and flex properties in the Washington, D.C. metropolitan area and other major markets in Virginia and Maryland, reported results for the first quarter ended March 31, 2004, the Company's first complete quarter of operations subsequent to its initial public offering, which closed on October 28, 2003.

The net loss for the Company for the first quarter of 2004 was $0.2 million compared with a net loss of $0.9 million for the First Potomac Predecessor for the first quarter of 2003. First quarter 2004 results include a non-cash charge of $0.2 million, or $0.02 per diluted share, for the write-off of deferred financing costs associated with the restructuring of a mortgage loan as discussed in more detail below. For the three months ended March 31, 2004, the Company's funds from operations were $2.4 million, or $0.24 per diluted share (after the charge related to the write-off of deferred financing costs of $0.02 per diluted share).

The Company's pre-IPO portfolio was 94% leased as of March 31, 2004, and the Company's entire portfolio, including the four assets that it acquired in the fourth quarter of 2003, was 90% leased. A breakout of the Company's assets as well as additional information regarding the Company's results of operations can be found in the Company's First Quarter 2004 Supplemental Financial Report, which is posted on the Company's website (www.first-potomac.com).

Douglas J. Donatelli, chief executive officer of First Potomac Realty Trust stated, "The completion of our first full quarter of operations as a public company represents another early step in the execution of our business plan to focus on industrial and flex properties in the economically strong southern Mid-Atlantic region. Our properties performed well, producing a 4.0% increase in same-property NOI. We completed approximately 175,000 square feet of leasing in the quarter with a 93% tenant retention rate and average rental rate increases of 18% for new leases and 4% for renewal leases. Leasing activity at our properties is strong as our markets continue to benefit from the improvement in the economy as well as increased spending and investment by the U.S. Government and government contractors.

"While we did not complete any new acquisitions during the first quarter, we announced the acquisition of Herndon Corporate Center for $20.5 million just after the quarter ended and expect to reach our post-IPO goal of $150 million in acquisitions by mid year. We capped the quarter with the declaration of a $0.20 per share dividend."

Acquisitions

Herndon Corporate Center - On April 27, 2004, the Company acquired Herndon Corporate Center, a 127,353-square-foot, single-story flex property in Herndon, Virginia, for $20.5 million. The acquisition was financed with the Company's available cash, borrowings under the Company's revolving line of credit and the assumption of a $9.1 million, fixed-rate first mortgage loan. The property is currently 100% leased to 14 tenants, with the U.S. Government being the largest tenant, occupying 23% of the space. Based upon leases in place, Herndon Corporate Center is expected to generate first year net operating income of $1.9 million, representing a 9.3% return on the purchase price.