Highwoods Properties Inc. (HIW - Analyst Report), a real estate investment trust (REIT), recently acquired its second Class A multi-tenant office building – EQT Plaza – situated in Pittsburgh for $91.2 million. With the acquisition, the company expanded its footprint in downtown Pittsburgh by 40%.
Highwoods funded the transaction with the proceeds of at-the-market (ATM) stock offering programs, borrowings under its revolving credit facility and non-core assets sale. The purchase also represents an investment worth $99.2 million, including $8 million for further renovations. Highwoods expects the acquired property to generate cash and net operating income (on a reported basis) worth $7 million and $8.8 million, respectively, in 2013.
The 32-story and 616,000 square feet EQT Plaza, a major and distinctive skyscraper in downtown Pittsburgh, is named for its largest anchor tenant - EQT Corporation (EQT - Analyst Report). The property is positioned on Liberty Avenue in the center of the Cultural District. EQT Plaza is currently 92.2% occupied and boasts renowned tenants such as American International Group, Inc. (AIG - Analyst Report), Cohen & Grigsby, McGuireWoods and Fox Rothschild.
Highwoods expect occupancy at EQT Plaza to increase to 95.9% by the third quarter of 2013, with the execution of leases in hand. The company also expects EQT Plaza to complement its previously acquired property in Pittsburgh - PPG Place. The company now has roughly $300 million worth of property in Pittsburgh, its fifth-largest office market.
Highwoods is currently 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 long-term demographic trends.
Highwoods is one of the biggest owners and operators of suburban office, industrial and retail properties in Southeastern and Midwestern U.S. The REIT provides a complete line of real estate services to its customers and third parties through a fully-integrated organization. As of September 30, 2012, Highwoods owned 333 properties spanning around 34.1 million square feet. The core markets include Mississippi, North Carolina, South Carolina, Florida, Pennsylvania, Georgia, Maryland, Missouri and Virginia.
We currently have long-term Neutral recommendation on Highwoods. It carries a short-term Zacks #2 Rank (Buy).