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Highwoods Properties (HIW) Closes Portfolio Sale Worth $119.7M
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Highwoods Properties, Inc. (HIW - Free Report) has completed the sale of two non-core office buildings for $119.7 million. With such moves, the company will prune its portfolio, enhance the overall portfolio quality and fund growth initiatives.
The property sold encompasses an 87,000-square-foot single-customer building, Stony Point VI, in Richmond and a 356,000-square-foot building, Crescent Center in Memphis. While the Richmond property was sold for $52.2 million, the Memphis property was disposed for $67.5 million.
The two office buildings encompass a total of 443,000 square feet and were a combined 80% occupied. They are projected to generate $6.5 million of annual cash net operating income and $7.5 million of annual GAAP net operating income in 2021.
Highwoods has been making efforts to expand its footprint in the high-growth markets and improve portfolio quality. In sync with such initiatives, it 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 July, Highwoods acquired a portfolio of office properties from Preferred Apartment Communities for $683 million. The company plans to accelerate the non-core asset disposition amounting to $500-$600 million by mid-2022, in order to match-fund the acquisition and expects half of its disposition to close by this year’s end. This acquisition has offered Highwoods the scope to enter two high-barrier-to-entry BBDs of SouthPark in Charlotte and North Hills in Raleigh.
Per management, “We have now sold $163 million of non-core properties since we announced our plan to acquire a portfolio of assets from PAC, placing us well on our way to meeting our disposition goal for 2021.”
With the sale, the company expects to record non-funds from operations gains of $37.3 million in the third quarter of 2021. Highwoods expects to return its balance-sheet metrics to the Mar 31, 2021 levels by mid-2022.
This Zacks Rank #2 (Buy) company has underperformed its industry over the past six months. Shares of Highwoods have appreciated 4%, while the industry has rallied 6.4% during this period. However, the trend in estimate revisions for 2021 FFO per share indicates a favorable outlook for the company.
Image Source: Zacks Investment Research
Other Key Picks
The Zacks Consensus Estimate for Condor Hospitality Trust, Inc.’s ongoing-year FFO per share has been revised significantly upward to 31 cents over the past two months. The company flaunts a Zacks Rank of 1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for CorePoint Lodging Inc.’s 2021 FFO per share has moved significantly upward to 99 cents over the past two months. The company currently sports a Zacks Rank of 1.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Highwoods Properties (HIW) Closes Portfolio Sale Worth $119.7M
Highwoods Properties, Inc. (HIW - Free Report) has completed the sale of two non-core office buildings for $119.7 million. With such moves, the company will prune its portfolio, enhance the overall portfolio quality and fund growth initiatives.
The property sold encompasses an 87,000-square-foot single-customer building, Stony Point VI, in Richmond and a 356,000-square-foot building, Crescent Center in Memphis. While the Richmond property was sold for $52.2 million, the Memphis property was disposed for $67.5 million.
The two office buildings encompass a total of 443,000 square feet and were a combined 80% occupied. They are projected to generate $6.5 million of annual cash net operating income and $7.5 million of annual GAAP net operating income in 2021.
Highwoods has been making efforts to expand its footprint in the high-growth markets and improve portfolio quality. In sync with such initiatives, it 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 July, Highwoods acquired a portfolio of office properties from Preferred Apartment Communities for $683 million. The company plans to accelerate the non-core asset disposition amounting to $500-$600 million by mid-2022, in order to match-fund the acquisition and expects half of its disposition to close by this year’s end. This acquisition has offered Highwoods the scope to enter two high-barrier-to-entry BBDs of SouthPark in Charlotte and North Hills in Raleigh.
Per management, “We have now sold $163 million of non-core properties since we announced our plan to acquire a portfolio of assets from PAC, placing us well on our way to meeting our disposition goal for 2021.”
With the sale, the company expects to record non-funds from operations gains of $37.3 million in the third quarter of 2021. Highwoods expects to return its balance-sheet metrics to the Mar 31, 2021 levels by mid-2022.
This Zacks Rank #2 (Buy) company has underperformed its industry over the past six months. Shares of Highwoods have appreciated 4%, while the industry has rallied 6.4% during this period. However, the trend in estimate revisions for 2021 FFO per share indicates a favorable outlook for the company.
Other Key Picks
The Zacks Consensus Estimate for Condor Hospitality Trust, Inc.’s ongoing-year FFO per share has been revised significantly upward to 31 cents over the past two months. The company flaunts a Zacks Rank of 1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for CorePoint Lodging Inc.’s 2021 FFO per share has moved significantly upward to 99 cents over the past two months. The company currently sports a Zacks Rank of 1.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.