Highwoods Properties Inc. ( HIW ), a real estate investment trust (REIT), has recently sold a non-core asset in Kansas City for $11.0 million. The asset sale is part of the long-term strategy of the company to improve the overall quality of its portfolio through the disposal of non-core assets and the development and acquisition of infill core assets.
Highwoods sold a 96-unit vacant apartment building in Country Club Plaza in Kansas City to a local multi-family developer/owner. The company is expected to record a non-FFO (fund from operations) gain of $5.1 million in first quarter 2012 in association with the asset sale. Fund from operations, 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. Highwoods intends to utilize the proceeds from the transaction to repay debt under its unsecured revolving credit facility.
With the recent asset sale transaction, Highwoods has 2.3 million square feet of office and retail space exclusively located in and around the Country Club Plaza region. The company is presently repositioning its portfolio to focus on stronger long-term markets and newer assets. 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 its long-term demographic trends.
Based in Raleigh, North Carolina, Highwoods owns and operates its properties through its wholly-owned subsidiary Highwoods Realty Limited Partnerships. The company owns office, industrial, retail, and service center properties, including development projects and apartment units across the U.S. It also provides customer-related and fee-based real estate management services for its properties as well as for third-party clients.
Highwoods is one of the biggest owners and operators of suburban office, industrial and retail properties in the Southeastern and Midwestern U.S., providing a complete line of real estate services to its customers and third parties through a fully-integrated organization. The core markets of the company include Florida, Georgia, Iowa, Maryland, Missouri, Mississippi, North Carolina, South Carolina, Tennessee and Virginia.
We maintain our long-term 'Neutral' recommendation on Highwoods, which currently retains a Zacks #3 Rank that translates into a short-term 'Hold' rating. We also have a 'Neutral' recommendation and a Zacks #2 Rank (short-term 'Buy') for Cousins Properties Inc. ( CUZ ), one of the competitors of Highwoods.