Highwoods Properties (HIW) Closes Portfolio Sale in Atlanta
The sale of office properties in Atlanta is in sync with Highwoods Properties' (HIW) strategy to redeploy its proceeds for growth endeavors.
Highwoods Properties, Inc. HIW recently announced the sale of two office buildings in Atlanta. With such moves, the company prunes its portfolio, enhances the overall portfolio quality and funds growth initiatives.
The property sold encompasses a 248,000-square-foot office building, 5405 Windward Parkway, and a 145,000-square-foot office building, 50 Glenlake. While the first building was sold for $48 million, the second was disposed for $20.6 million.
In addition to these, Highwoods expects to close the sale of the three non-core buildings enclosing 366,000 square feet for $65.5 million before this year end.
These five office properties are 78% occupied on aggregate basis. All were projected to generate $7.8 million of GAAP net operating income and $7.3 million of cash net operating income in 2021.
Highwoods has been making efforts to expand its footprint in the high-growth markets and improve its portfolio quality. In sync with such initiatives, it is following a disciplined capital-recycling strategy that entails disposal of non-core assets while investing the proceeds in premium asset acquisitions and for undertaking accretive developmental projects.
InJuly, Highwoods acquired a portfolio of office properties from Preferred Apartment Communities APTS for $683 million. This acquisition offered the companya scope to enter two high-barrier-to-entry BBD’s of SouthPark in Charlotte and North Hills in Raleigh.
Per management, “With these sales, we will have closed on $297 million of dispositions since we first announced our $683 million acquisition of trophy office assets in the high-growth markets of Charlotte and Raleigh from Preferred Apartment Communities.”
The company plans to accelerate itsnon-core asset disposition amounting to $500-$600 million by mid-2022to match-fund the acquisition and expects half of its disposition to close by this year-end.
Highwoods also expects to return its balance-sheet metrics top re-acquisition levels within mid-2022 by improving its portfolio quality and providing a higher growth opportunity for its shareholders.
This presently Zacks Rank #2 (Buy) company has underperformed its industry over the past six months. Shares of Highwoods have appreciated 6% while the industry has rallied 9.8% during this period.
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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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