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Analyst Blog

Highwoods Properties, Inc. (HIW - Analyst Report) recently announced that it has obtained a new seven-year unsecured term loan worth $225 million. The proceeds of the term loan will enable the company to reduce the outstanding balance on its $475 million unsecured revolving credit facility.

The company had previously executed forward-starting swaps aggregating $225 million that ensured the LIBOR rate for the seven-year life of the loan remained unchanged at 1.678%.

This transaction further enhances Highwoods' debt maturity period and helps maintain a flexible balance sheet with ample liquidity, which enables it to capitalize on potential acquisitions and build-to-suit development opportunities that will create long-term value for its shareholders.

Highwoods reported FFO (funds from operations) of $42.7 million or 56 cents per share in the third quarter of 2011 compared with $43.2 million or 57 cents per share in the year-earlier quarter. Funds 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 is one of the largest 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. This provides significant upside potential for the company.

Highwoods currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Cousins Properties Inc (CUZ - Analyst Report) holds a Zacks #3 Rank.

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