Highwoods Sells Non-Core Assets

Highwoods Properties Inc. (HIW - Analyst Report), a real estate investment trust (REIT), has recently sold non-core assets in Winston-Salem for $15.0 million. The asset sale is part of the long-term strategy of the company to exit from Winston-Salem and instead focus on high-growth Sun Belt markets.

The properties sold by Highwoods included a five-storied office building spanning 135,533 square feet of space and an adjacent three-acre undeveloped site. The office property was sold for $13.7 million, while the land parcel was sold for $1.3 million. The building was 80% leased prior to the sale and generated approximately $1.5 million of net operating income annually on an average.

With the recent asset sale transaction, Highwoods has reduced its presence in the Winston-Salem market from its peak value of 2.8 million square feet of space to 773,000 square feet – a 72% reduction of the total square footage in the region. Highwoods 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. Highwoods owns or has management interests in 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 #3 Rank for Cousins Properties Inc. (CUZ - Analyst Report), one of the competitors of Highwoods.  

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