Raleigh, NC-based real estate investment trust (REIT),
Highwoods Properties Inc.
) inked a lease deal with an existing customer for 91,000 square
foot of space at Highwoods Plaza II in Nashville. The deal, which
is long term in nature, reflects the decent demand for the
company's properties in this area.
This space was previously occupied by LifePoint Hospitals
(vacated in Feb 2014) for which Highwoods recently constructed a
203,000 square foot build-to-suit facility. The abovementioned
deal reflects a net extension of 32,000 square feet of space by
this current customer and with this, Highwoods has been able to
relet 71% of the former LifePoint space. The company also has
discussions underway for leasing the remaining 43,000 square feet
As a matter of fact, the Nashville market is recuperating well
from a tepid economy and is experiencing growth in population as
well as employment. Its economy is diverse and has significant
growth potential. Wage income is also improving while there is
rising demand for premium quality office space. Particularly, the
Brentwood submarket, where Highwoods Plaza II is situated, had a
vacancy of just 6% as of Mar 31.
We believe Highwoods' efforts to improve its portfolio base pave
the way for bottom-line growth in the future. In particular, the
company has been focusing on shifting its portfolio mix to high
growth markets and offloading its asset base in non-core markets.
Moreover, efficiency in releting space is encouraging and this
particular deal helps secure an additional ten years of lease
Highwoods is scheduled to report its first-quarter 2014 results
on Apr 29, after the closing bell. The Zacks Consensus Estimate
for funds from operations (FFO) for the quarter is currently
pegged at 71 cents, reflecting a year-over-year increase of
Highwoods currently carries a Zacks Rank #3 (Hold). Investors
interested in the REIT industry may also consider stocks like
Cousins Properties Incorporated
Duke Realty Corporation
). All three stocks have a Zacks Rank #2 (Buy).
FFO, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income.
COUSIN PROP INC (CUZ): Free Stock Analysis
DUKE REALTY CP (DRE): Free Stock Analysis
HIGHWOODS PPTYS (HIW): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
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