Highwoods Properties Inc.
) declared the acquisition of its joint venture (JV) partner's
interests in 2 Atlanta-based Class Aoffice properties.
Concurrently, the company revealed the divestiture of its
Tampa-based non-core office asset. These moves are part of the
company's ongoing portfolio enhancement activity.
In particular, Highwoods bought its JV partner's 57% interest
in 10-story office buildings - Glenlake North and Glenlake South
- positioned in Atlanta's Central Perimeter submarket. The 82%
leased properties, spanning 505,000 square feet, were acquired
for $45.4 million.
With the valuation at $80.6 million, including planned
near-term building improvements worth $1.0 million, the assets
have a value per square foot of $159, signifying a 30+% discount
to the estimated replacement cost. Moreover, the total
incremental investment is projected to be around $46.0 million.
Management expects the acquired properties to generate full-year
cash and GAAP net operating income of $5.1 million and $6.0
The assumed secured debt portion for the property is projected
to be around $37.6 million. The company funded the remaining
equity portion, worth $24.0 million, of the purchase price with
proceeds generated from its recent equity offering of shares,
non-core divestitures and borrowings under its revolving credit
facility. Notably, management projects about $0.2 million of
acquisition costs to be expensed in the third quarter of
Highwoods divested a 2-story non-core office building - Anchor
Plaza - in Tampa. The 56% leased asset, spanning 98,000 square
feet, was sold for $11.6 million and generated a non-FFO gain of
We expect Highwoods' portfolio repositioning activity to boost
the company's occupancy growth and strengthen its position in one
of the best office markets of the U.S. Year-to-date, Highwoods
has vended non-core assets worth $80 million and acquired
high-quality properties worth $396 million. Moreover, the company
has another $129 million in its in-process development pipeline
Highwoods currently carries a Zacks Rank #2 (Buy). Other
better performing REITs include
Winthrop Realty Trust
SL Green Realty Corp
). While Winthrop carries a Zacks Rank #1 (Strong Buy), SL Green
and EastGroup both have a Zacks Rank #2.
EASTGROUP PPTYS (EGP): Free Stock Analysis
WINTHROP REALTY (FUR): Free Stock Analysis
HIGHWOODS PPTYS (HIW): Free Stock Analysis
SL GREEN REALTY (SLG): Free Stock Analysis
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