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Highwoods Extends Debt Maturity

HIW WFC

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Highwoods Properties Inc. (HIW - Analyst Report), a real estate investment trust (REIT), has recently extended the debt maturity of its term loan facility worth $200 million by about two additional years. Wells Fargo Securities LLC, part of Wells Fargo & Company (WFC - Analyst Report), acted as the Lead Arranger for the modified debt facility.

The term loan was originally scheduled to mature on February 25, 2016. With the extension, the term loan is presently due to mature on January 12, 2018. Besides extending the debt maturity, Highwoods was able to reduce its interest burden as the modified loan bears an interest at LIBOR plus 1.65%, compared to the original interest rate of LIBOR plus 2.20%.   

The strategic efforts are aimed to increase the liquidity of the company. Furthermore, Highwoods is divesting its non-core assets to raise additional cash. The asset sale is also part of the long-term strategy of the company to focus on 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.

As of June 30, 2012, Highwoods owned or had ownership interests in 338 in-service office, industrial and retail properties spanning approximately 34.6 million square feet, along with 581 acres of development land. 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.

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