Highwoods Properties (HIW) Closes Portfolio Sale Worth $56M
Highwoods Properties' (HIW) sale of its non-core properties in Richmond and Raleigh is in line with its strategy of redeploying the transaction proceeds to growth endeavors.
Highwoods Properties, Inc. HIW announced the sale of non-core office assets in Richmond and Raleigh for $56 million. With such moves, Highwoods prunes its portfolio, enhances its overall portfolio quality and funds growth initiatives.
The Richmond property with two non-core office buildings— 4421 and 4401 Waterfront Drive—encompassing 97,000 square feet, was sold for $20.8 million. The Raleigh property —Progress Center—consisting of two in-service non-core office buildings enclosing 147,000 square feet and an associated development parcel was sold for $35 million.
These four office properties are 76% occupied on aggregate basis as of Sep 30, 2021. All the properties on a combined basis were projected to generate $2.7 million of GAAP net operating income and $2.6 million of cash net operating income in 2021.
Highwoods also closed its previously announced planned sale of three non-core buildings for an aggregate purchase price of $65.9 million. As of its Nov 8 announcement, the sold property comprised two office buildings, namely Smoketree and Cottonwood, encompassing 191,000 square feet in Raleigh, and Preserve V, an office building enclosing 175,000 square feet in Tampa. While the Raleigh property was sold for $35.5 million, the Tampa property was sold for $30.4 million.
Highwoods is 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 undertaking accretive developmental projects.
HIW expects a total gain of $92.9 million, including non-FFO gains and FFO gains of $83.5 million and $9.4 million respectively. Highwoods also expects to return its balance-sheet metrics to pre-acquisition levels within mid-2022.
Per management, “We are pleased to have already closed on $353 million of non-core 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.”
This presently Zacks Rank #3 (Hold) player has underperformed its industry year to date. Shares of Highwoods have appreciated 13.3% while the industry has rallied 31.1% during the period.
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Highwoods Properties, Inc. (HIW): Free Stock Analysis Report
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