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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.

This story originally appeared on Zacks

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.

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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.

Zacks Investment ResearchImage Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks from the REIT sector are OUTFRONT Media OUT, Cedar Realty Trust CDR and Condor Hospitality Trust CDOR.

OUTFRONT Media flaunts a Zacks Rank #1 (Strong Buy) at present. Shares of OUT have gained 11% in the past six months.

The Zacks Consensus Estimate for OUTFRONT Media’s 2021 FFO per share has been raised 13.8% over the past two months. OUT’s 2021 FFO per share is expected to increase 45.71% from the year-ago reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Cedar Realty’s current-year FFO per share has been raised 2.6% to $2.36 in the past two months. Over the last four quarters, CDR’s FFO per share surpassed the consensus mark twice and missed the same on the other two occasions, the average surprise being 6.4%.

Currently, CDR sports a Zacks Rank of 1. Shares of Cedar Realty have appreciated 51.6% in the past six months.

The Zacks Consensus Estimate for Condor Hospitality Trust’s 2021 FFO per share has been raised 25.8% over the past two months. CDOR’s 2021 FFO per share is expected to increase significantly from the year-ago reported figure.

Condor Hospitality sports a Zacks Rank of 1 at present. Shares of CDOR have rallied 31.4% in the past six months.

Note: Anything related to earnings presented in this write-up represent FFO — a widely used metric to gauge the performance of REITs.

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Highwoods Properties, Inc. (HIW): Free Stock Analysis Report


Cedar Realty Trust, Inc. (CDR): Free Stock Analysis Report


OUTFRONT Media Inc. (OUT): Free Stock Analysis Report


Condor Hospitality Trust, Inc. (CDOR): Free Stock Analysis Report


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