Real estate investment trust (REIT) -
Highwoods Properties Inc.
) - inked the leasing of 35,000 square feet at 2800 Century
Center in Atlanta, on a long-term basis. The deal was penned with
a high-credit global company.
With this deal, this property of Highwoods is currently 65%
leased. Moreover, there are letters of intent outstanding for
another 67,000 square feet and if inked, then the leasing will
increase to 96% at 2800 Century Center.
As a matter of fact, 2800 Century Center enjoys high appeal as it
is well accessible from I-85 and I-285. In addition to the
above-mentioned deal and the letters of intent outstanding,
encouragingly, a number of companies have shown their interest
for an additional 64,000 square feet. Hence, with such strong
demand for this property, the company has reiterated its guidance
of 2800 Century Center being at least 92% leased by year end.
We view such developments at Highwoods positively as that would
help enhance its top line. Moreover, we note that on the back of
the successful implementation of its strategic plan, a large part
of the company's portfolio is now concentrated in the high-growth
Sun Belt markets, which provide above-average job growth owing to
long-term demographic trends. Also, a strong and flexible balance
sheet enables Highwoods to capitalize on the potential
acquisition opportunities to fuel its top-line growth.
Yet, despite the continued portfolio repositioning, Highwoods
still has a large asset base in low-barriers-to-entry
Southeastern markets, which historically have not been strong
long-term office markets. This undermines the long-term growth
potential of the company to some extent.
Highwoods currently holds a Zacks Rank #3 (Hold). However, other
REITs that are performing better and deserve a look include
Sunstone Hotel Investors Inc.
). The former two carry a Zacks Rank #1 (Strong Buy) while the
latter has a Zacks Rank #2 (Buy).
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