Highwoods Offloads Non-core Assets - Analyst Blog

By Zacks.com February 01, 2013, 06:30:01 PM EDT

Yesterday, Highwoods Properties Inc. ( HIW ) - a hybrid real estate investment trust (REIT) - announced the sale of two non-core office assets to an undisclosed buyer. The properties - Metrowest Commerce Center and the Cambridge at Metrowest - were sold for a combined cost of $14.6 million. This strategic move is at par with the company's ongoing portfolio restructuring initiative.

The abovementioned properties span 134,000 square feet and are fully occupied by Hilton Grand Vacations Company LLC. Highwoods, which will continue to manage the properties, expect these to generate net operating income of $1.3 million in 2013.

Highwoods is currently repositioning its portfolio to focus on stronger long-term markets and newer assets. A large part of its portfolio is now concentrated in the high-growth Sun Belt markets, which provide above-average job growth owing to long-term demographic trends.

Accordingly, in early January Highwoods acquired two new Class A Greensboro-based office buildings for $32.8 million from a subsidiary of CBL & Associates Properties Inc. ( CBL ) - a retail REIT. Also, the purchase of EQT Plaza - a class A multi-tenant office building - is worth mentioning as it expanded the company's footprint in downtown Pittsburgh by 40%.

We expect the divesture to improve Highwoods' office portfolio in Orlando and enable it to outperform competitive pressure. With the aforesaid assets sale, the company now has around 15 office properties in the city, comprising mainly of Class A CBD (Central Business District) properties.

Highwoods is scheduled to release its fourth-quarter 2012 results on Feb 12, after the market closes. The Zacks Consensus Estimate for the company's fourth-quarter FFO is currently pegged at 68 cents per share.

Zacks Earnings ESP (Read: Zacks Earnings ESP: A Better Method ) for Highwoods is 0.0% for the fourth quarter. This reduces the chance for a positive earnings surprise, despite the fact that the company carries a Zacks Rank #2 (Buy).

Other two real estate REITs - Simon Property Group Inc. ( SPG ) and Ventas Inc. ( VTR ) - carry the same Zacks Rank.

Note: FFO, a widely accepted and reported measure of the performance of REITs is derived by adding depreciation, amortization and other non-cash expenses to net income.



CBL&ASSOC PPTYS (CBL): Free Stock Analysis Report

HIGHWOODS PPTYS (HIW): Free Stock Analysis Report

SIMON PROPERTY (SPG): Free Stock Analysis Report

VENTAS INC (VTR): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Business, Stocks

Referenced Stocks: CBL, HIW, SPG, VTR



Latest News Video






Most Active by Volume:

Company Last Sale Change Net / %
PFE $ 29.40 0.24  0.82%
NOK $ 3.86 0.17  4.61%
S $ 7.32 0.10  1.39%
BAC $ 13.27 0.06  0.45%
GE $ 24.33 0.56  2.36%
MU $ 13.76 0.52  3.93%
SIRI $ 3.40 0.06  1.80%
MNKD $ 6.605 0.94  12.40%