Highwoods Properties Inc. (HIW - Analyst Report), a real estate investment trust (REIT), has recently acquired Two Alliance Center – a Class A office property with structured parking space in the Buckhead submarket of Atlanta. Highwoods invested an aggregate of $146.7 million for the 29-storey, 492,000 square feet building, including $0.8 million of planned near-term renovations.
The acquired property is located in close proximity to two upscale malls titled Phipps Plaza and Lenox Square Mall, and luxury hotels such as the Ritz-Carlton and the Mandarin Oriental. At the same time, the building provides easy access to several public transportation facilities – one of the pre-requisites of an office property that is likely to employ a significant chunk of workers. Besides its strategic location, the property offers a host of amenities that include a fitness center, conference facilities, and a full-service bistro.
Highwoods funded the transaction from the proceeds of its at-the-market (ATM) stock offering programs, borrowings under its revolving credit facility, and available cash. Since July 26, the company has reportedly sold nearly 2.4 million shares under its ATM programs, raising net proceeds of $77.5 million. The acquisition is expected to be accretive to earnings with a strong occupancy and no near-term lease expirations until 2017.
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 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.