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Highwoods (HIW) Expands in Dallas, Acquires McKinney & Olive
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Highwoods Properties, Inc. (HIW - Free Report) , in a 50/50 joint venture (JV) with Granite Properties, has announced the acquisition of McKinney & Olive, a trophy mixed-use asset spanning 557,000 square feet situated in the heart of Uptown Dallas.
Highwoods has been making concerted efforts to improve the quality of its overall portfolio by expanding its footprint in the high-growth best-business-districts (BBD) markets. The company’s latest buyout is in sync with this strategy.
The latest buyout comprises 507,000 square feet of multi-customer office space, 50,000 square feet of retail space and a one-acre piazza surrounded by walkable amenities that are a few steps away from Klyde Warren Park and the Dallas Arts District. At present, the property, which was delivered in 2016, is 99% leased.
The JV’s total investment (at 100%) is anticipated to be around $394.7 million. This is inclusive of $1.7 million of near-term building improvements and $2.0 million of transaction costs.
It is expected that during 2023, McKinney & Olive will generate cash net operating income (NOI) of $22 million (at 100%) and GAAP NOI of $26.2 million (at 100%).
Per Ted Klinck, president and CEO, HIW, “McKinney & Olive is a solid bull’s eye with its prime infill location in a top tier submarket and financially sound, diversified customer base. Plus, with rents estimated to be 35% below-market, McKinney & Olive provides meaningful NOI upside potential.”
Earlier, in July 2022, Highwoods formed a 50/50 JV 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, a mixed-use development encompassing 626,000 square feet of multi-customer office and 16,000 square feet of retail, 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.
Notably, McKinney & Olive is situated just four blocks from 23Springs and has easy access to Dallas North Tollway, Woodall Rogers Freeway, I-75 and public transportation.
In addition, this December, Highwoods formed a 50/50 JV with The Bromley Companies to construct Midtown East in Tampa’s Westshore submarket to keep up with its strategy of expanding in the high-growth BBD markets.
In August 2022, Highwoods acquired 650 South Tryon, located in Charlotte’s dynamic Uptown CBD submarket, for $203 million. The move was part of the company’s expansion effort in the Charlotte market.
Moreover, HIW’s disciplined capital-recycling strategy adds to its balance-sheet strength, poising it well to capitalize on long-term growth opportunities.
Shares of HIW, carrying a Zacks Rank #3 (Hold), have gained 3.2% in the quarter-to-date period compared with its industry’s growth of 2.5%.
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) Expands in Dallas, Acquires McKinney & Olive
Highwoods Properties, Inc. (HIW - Free Report) , in a 50/50 joint venture (JV) with Granite Properties, has announced the acquisition of McKinney & Olive, a trophy mixed-use asset spanning 557,000 square feet situated in the heart of Uptown Dallas.
Highwoods has been making concerted efforts to improve the quality of its overall portfolio by expanding its footprint in the high-growth best-business-districts (BBD) markets. The company’s latest buyout is in sync with this strategy.
The latest buyout comprises 507,000 square feet of multi-customer office space, 50,000 square feet of retail space and a one-acre piazza surrounded by walkable amenities that are a few steps away from Klyde Warren Park and the Dallas Arts District. At present, the property, which was delivered in 2016, is 99% leased.
The JV’s total investment (at 100%) is anticipated to be around $394.7 million. This is inclusive of $1.7 million of near-term building improvements and $2.0 million of transaction costs.
It is expected that during 2023, McKinney & Olive will generate cash net operating income (NOI) of $22 million (at 100%) and GAAP NOI of $26.2 million (at 100%).
Per Ted Klinck, president and CEO, HIW, “McKinney & Olive is a solid bull’s eye with its prime infill location in a top tier submarket and financially sound, diversified customer base. Plus, with rents estimated to be 35% below-market, McKinney & Olive provides meaningful NOI upside potential.”
Earlier, in July 2022, Highwoods formed a 50/50 JV 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, a mixed-use development encompassing 626,000 square feet of multi-customer office and 16,000 square feet of retail, 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.
Notably, McKinney & Olive is situated just four blocks from 23Springs and has easy access to Dallas North Tollway, Woodall Rogers Freeway, I-75 and public transportation.
In addition, this December, Highwoods formed a 50/50 JV with The Bromley Companies to construct Midtown East in Tampa’s Westshore submarket to keep up with its strategy of expanding in the high-growth BBD markets.
In August 2022, Highwoods acquired 650 South Tryon, located in Charlotte’s dynamic Uptown CBD submarket, for $203 million. The move was part of the company’s expansion effort in the Charlotte market.
Moreover, HIW’s disciplined capital-recycling strategy adds to its balance-sheet strength, poising it well to capitalize on long-term growth opportunities.
Shares of HIW, carrying a Zacks Rank #3 (Hold), have gained 3.2% in the quarter-to-date period compared with its industry’s growth of 2.5%.
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.