Highwoods Properties Inc.
) announced the divestiture of several non-core assets worth
$88.8 million and an agreement to fully lease the 4301 Research
Commons laboratory/office building. Taking into consideration
these announcements, this real estate investment trust (REIT)
declared an increase in its funds from operations (FFO) per share
guidance range for full-year 2013.
Non-core Assets Divestiture
In particular, Highwoods offloaded Greenville-based 8
multi-tenant office properties for $58.2 million. These 78%
occupied assets are anticipated to garner $3.9 million and $4.5
million, respectively in cash and GAAP net operating income (NOI)
for full-year 2013.
Additionally, Highwoods sold a Pinellas County, Fla.-based
office building for $11.5 million. This 98% occupied property is
expected to contribute $0.9 million in 2013 cash and GAAP NOI.
Furthermore, the company disposed a multi-family development
project - Lofts at Weston - in Raleigh. The asset, which was
developed in a joint venture with Ravin Partners, was sold for
gross proceeds worth $38.3 million.
With these dispositions, as of Dec 20, Highwoods sold $286
million of non-core assets, bought Class A office properties
worth $549 million, raised $295 million of equity and disclosed
development projects of $206 million.
Apart from this divestitures, Highwoods inked a lease deal
with a core agency of the State of North Carolina at Research
Commons for 96,000 square feet of space. This included the full
let out of the 4301 Research Commons property.
Reflecting the benefits from the aforementioned transactions,
Highwoods upped its 2013 FFO per share guidance to $2.82 - $2.84
per share from $2.79 - $2.81 projected earlier.
We are encouraged by Highwoods' efforts to improve its
portfolio base and pave the way for bottom-line growth. Notably,
the company has been focusing on shifting its portfolio mix in
high growth markets and this Greenville-based divestiture of 8
out of total 9 assets is in line with the company's strategy. As
a matter of fact, Highwoods expects to offload the remaining one
property by early 2014.
Also, the full re-leasing of 4301 Research Commons property is
noteworthy and reflects the company's efforts to fill up its
vacant properties. Moreover, the guidance increase boosts
investors' confidence in the stock.
At present, Highwoods has a Zacks Rank #3 (Hold). Some
better-ranked stocks in the REIT-Equity trust - Othersector
SL Green Realty Corp.
EastGroup Properties Inc.
First Industrial Realty Trust Inc.
). All stocks carry a Zacks Rank #2 (Buy).
Note: Funds from operations, a widely accepted and reported
measure of REITs performance, are derived by adding
depreciation, amortization and other non-cash expenses to net
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