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Highwoods Properties (HIW) Closes Portfolio Sale Worth $127.5M

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Highwoods Properties, Inc. (HIW - Free Report) recently announced the sale of its non-core assets in Greensboro and Memphis. The assets were sold for total gross proceeds of $127.5 million.

Reflecting positive investor sentiment, shares of the company appreciated 5% during Tuesday's trading session.

The properties sold comprise 7023 Albert Pick Road, a three-building office portfolio in Greensboro, and a medical office building portfolio in Greensboro and Memphis. Particularly, the 7023 Albert Pick Road property spans an area of about 49,500 square feet. The office portfolio encompasses an area of 292,400 square feet, while the medical office building portfolio spanning 284,700 square feet.

On a combined basis, the properties had occupancy of 91.3% at closing and are estimated to reap annual cash and GAAP net operating income (NOI) of $8.8 million for the year. Further, the company expects to realize non-funds from operations (FFO) gains of $52.4 million in the current quarter from the sales.

Highwoods has been making efforts to expand its footprint in high-growth markets and improve portfolio quality. In addition, the company is following a disciplined capital-recycling strategy that entails disposing of non-core assets, and investing the proceeds in premium asset acquisitions and for undertaking accretive development projects.

In sync with this strategy, in August 2019, Highwoods announced a market-rotation plan, per which the company aims to fortify its Best Business Districts ("BBD") office focus, and exit Greensboro and Memphis markets, through a two-phased planned departure.

Last November, Highwoods entered the thriving Charlotte market through the acquisition of Bank of America Tower. Moreover, the company sold a select portfolio of assets in Greensboro and Memphis, and completed the first phase of its market-rotation plan in first-quarter 2020.

The company is also continuing with its asset sales in these markets and particularly, in the third quarter, it sold two buildings in Memphis for a total sales price of $23.3 million. The sale was part of the second phase of its market rotation plan.

This Zacks Rank #3 (Hold) company has underperformed its industry over the past six months. Shares of Highwoods have appreciated 3.4%, while the industry has gained 15.8% during this period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Stocks to Consider

Innovative Industrial Properties, Inc.’s (IIPR - Free Report) Zacks Consensus Estimate for 2020 FFO per share moved 5.8% upward to $5.11 over the past month. The stock currently carries a Zacks Rank of 2 (Buy).

Alpine Income Property Trust, Inc.'s (PINE - Free Report) Zacks Consensus Estimate for the current-year FFO per share moved 1.7% north to $1.21 over the past month. The stock currently carries a Zacks Rank of 2.

City Office REIT, Inc.’s (CIO - Free Report) Zacks Consensus Estimate for the ongoing year’s FFO per share moved 2.6% upward to $1.17 over the past month. The stock holds a Zacks Rank of 2, at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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