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Highwoods (HIW) Forms 50/50 JV to Develop Midtown East in Tampa
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Highwoods Properties, Inc. (HIW - Free Report) recently formed a 50/50 joint venture (JV) with The Bromley Companies to construct Midtown East in Tampa’s Westshore submarket. The move is part of the company’s efforts to expand in the high-growth best business districts (BBD) markets.
Midtown East is a multi-customer office development project in the mixed-use Midtown Tampa project. The construction for the same is slated to begin in first-quarter 2023 with a scheduled completion date in first-quarter 2025 and a pro forma stabilization date in second-quarter 2026.
Highwoods owns an 80% interest in the JV with The Bromley Companies that developed and owns Midtown West, a 150,000 square feet office project. The project was completed in second-quarter 2021 for $71 million. As of Sep 30, 2022, the property was 92.5% leased.
Once completed, the recently formed JV between the two entities will own 134,000 square feet of the 432,000 square feet tower, which comprises five floors of office (floors 10 through 15) and ground-level retail. The remaining Midtown East will serve as the future headquarters of Tampa Electric and Peoples Gas.
The total investment for the JV’s share of the overall Midtown East project is estimated to be around $83 million (at 100%).
Per Ted Klinck, president and CEO of Highwoods, “The proven success of Midtown West, which broke ground in the fourth quarter of 2019 and leased up according to pro forma even in the midst of a global pandemic, has demonstrated how quickly Midtown Tampa has become the premier office destination for growing companies in Tampa.”
Highwoods has been making concerted efforts to expand its footprint in the high-growth BBD markets and enhance its portfolio quality on the back of acquisitions and development.
Its development projects in key markets, which are likely to generate considerable annual net operating income upon completion and stabilization, augur well for its long-term growth.
In July 2022, Highwoods formed a 50/50 joint venture with Granite Properties to develop Granite Park Six in the Frisco/Plano BBD with an anticipated total investment of $200 million (at 100%) and 23Springs in the core of Uptown BBD with an expected total investment of $460 million (at 100%).
This marked the company’s entry into the Dallas market. HIW intends to fund these developments by disposing of assets in Pittsburgh over the next few years.
Additionally, in August 2022, Highwoods acquired 650 South Tryon, located in Charlotte’s dynamic Uptown CBD submarket, for $203 million. The move was in sync with the company’s expansion effort in the Charlotte market.
With a solid balance-sheet position and ample financial flexibility, Highwoods remains well-positioned to capitalize on long-term growth opportunities.
Shares of HIW, carrying a Zacks Rank #3 (Hold), have gained 8.7% in the quarter-to-date period compared with the industry’s growth of 8%.
The Zacks Consensus Estimate for VICI Properties’ current-year FFO per share is pegged at $1.92.
The Zacks Consensus Estimate for Lamar Advertising’s 2022 FFO per share is pegged at $7.34.
The Zacks Consensus Estimate for Chatham Lodging Trust’s ongoing year’s FFO per share is pegged at $1.17.
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 (HIW) Forms 50/50 JV to Develop Midtown East in Tampa
Highwoods Properties, Inc. (HIW - Free Report) recently formed a 50/50 joint venture (JV) with The Bromley Companies to construct Midtown East in Tampa’s Westshore submarket. The move is part of the company’s efforts to expand in the high-growth best business districts (BBD) markets.
Midtown East is a multi-customer office development project in the mixed-use Midtown Tampa project. The construction for the same is slated to begin in first-quarter 2023 with a scheduled completion date in first-quarter 2025 and a pro forma stabilization date in second-quarter 2026.
Highwoods owns an 80% interest in the JV with The Bromley Companies that developed and owns Midtown West, a 150,000 square feet office project. The project was completed in second-quarter 2021 for $71 million. As of Sep 30, 2022, the property was 92.5% leased.
Once completed, the recently formed JV between the two entities will own 134,000 square feet of the 432,000 square feet tower, which comprises five floors of office (floors 10 through 15) and ground-level retail. The remaining Midtown East will serve as the future headquarters of Tampa Electric and Peoples Gas.
The total investment for the JV’s share of the overall Midtown East project is estimated to be around $83 million (at 100%).
Per Ted Klinck, president and CEO of Highwoods, “The proven success of Midtown West, which broke ground in the fourth quarter of 2019 and leased up according to pro forma even in the midst of a global pandemic, has demonstrated how quickly Midtown Tampa has become the premier office destination for growing companies in Tampa.”
Highwoods has been making concerted efforts to expand its footprint in the high-growth BBD markets and enhance its portfolio quality on the back of acquisitions and development.
Its development projects in key markets, which are likely to generate considerable annual net operating income upon completion and stabilization, augur well for its long-term growth.
In July 2022, Highwoods formed a 50/50 joint venture with Granite Properties to develop Granite Park Six in the Frisco/Plano BBD with an anticipated total investment of $200 million (at 100%) and 23Springs in the core of Uptown BBD with an expected total investment of $460 million (at 100%).
This marked the company’s entry into the Dallas market. HIW intends to fund these developments by disposing of assets in Pittsburgh over the next few years.
Additionally, in August 2022, Highwoods acquired 650 South Tryon, located in Charlotte’s dynamic Uptown CBD submarket, for $203 million. The move was in sync with the company’s expansion effort in the Charlotte market.
With a solid balance-sheet position and ample financial flexibility, Highwoods remains well-positioned to capitalize on long-term growth opportunities.
Shares of HIW, carrying a Zacks Rank #3 (Hold), have gained 8.7% in the quarter-to-date period compared with the industry’s growth of 8%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are VICI Properties (VICI - Free Report) , Lamar Advertising (LAMR - Free Report) and Chatham Lodging Trust REIT (CLDT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for VICI Properties’ current-year FFO per share is pegged at $1.92.
The Zacks Consensus Estimate for Lamar Advertising’s 2022 FFO per share is pegged at $7.34.
The Zacks Consensus Estimate for Chatham Lodging Trust’s ongoing year’s FFO per share is pegged at $1.17.
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.