We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Highwoods (HIW) Disposes Non-Core Assets Worth $79.4 Million
Read MoreHide Full Article
Highwoods Properties, Inc. (HIW - Free Report) recently announced $79.4 million of combined non-core asset disposition in Raleigh. The move comes as part of the company’s disciplined capital-recycling strategy that entails disposing of non-core assets and redeploying the proceeds in premium asset acquisitions and accretive development projects, and debt repayment.
Particularly, HIW sold eight office buildings aggregating 338,000 square feet in the west Raleigh submarket, across from Rex Hospital and one office building that was 97,000 square feet next to the Research Triangle Park.
With $16.9 million of non-core asset sales being closed in the first quarter of 2024, the remaining sales are expected to close early in the second quarter of 2024.
Highwoods utilized the resultant cash proceeds from the dispositions to pay the outstanding balance under its revolving credit facility and for general corporate purposes.
In addition, the company provided $6.2 million in non-recourse first mortgage seller financing in association with the sale of one building. The note can be prepaid at any time before its planned maturity in February 2025 without incurring penalties.
These combined properties together are 85% occupied, and in 2024, these properties are expected to provide $6 million in GAAP and cash net operating income (NOI).
Highwoods’ capital-recycling program highlights its prudent capital management practices and positions it well to capitalize on long-term growth opportunities while adding to its balance sheet strength. The company has made efforts to expand its footprint in high-growth BBD markets and improve the quality of the overall portfolio on the back of acquisitions and development.
In 2023, Highwoods divested its interest in four office buildings, namely One Independence Park, Riverbirch, 5000 North Park and The Ramparts of Brentwood, for $19.5 million, $20.7 million, $11 million and $32 million, respectively, resulting in the aggregate sales price of $83.3 million and recorded total gains on the disposition of property of $33.3 million.
Management expects to carry out disposition within $75 million to $200 million in 2024.
The company is also focused on development projects in key markets, which are likely to generate considerable annual NOI upon completion and stabilization. As of Dec 31, 2023, Highwoods’ development pipeline aggregated $517.6 million (at the company’s share) and encompassed around 1.6 million square feet.
However, competition from other industry players and a huge development outlay are likely to weigh on Highwoods. Also, the high interest rate environment adds to the company’s concerns.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have gained 3.9% against the industry’s downside of 5.6%.
The Zacks Consensus Estimate for SLG’s 2024 funds from operations (FFO) per share has been raised 12.2% northward over the past two months to $6.06.
The consensus estimate for OUT’s current-year FFO per share has moved marginally northward over the past week to $1.68.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Highwoods (HIW) Disposes Non-Core Assets Worth $79.4 Million
Highwoods Properties, Inc. (HIW - Free Report) recently announced $79.4 million of combined non-core asset disposition in Raleigh. The move comes as part of the company’s disciplined capital-recycling strategy that entails disposing of non-core assets and redeploying the proceeds in premium asset acquisitions and accretive development projects, and debt repayment.
Particularly, HIW sold eight office buildings aggregating 338,000 square feet in the west Raleigh submarket, across from Rex Hospital and one office building that was 97,000 square feet next to the Research Triangle Park.
With $16.9 million of non-core asset sales being closed in the first quarter of 2024, the remaining sales are expected to close early in the second quarter of 2024.
Highwoods utilized the resultant cash proceeds from the dispositions to pay the outstanding balance under its revolving credit facility and for general corporate purposes.
In addition, the company provided $6.2 million in non-recourse first mortgage seller financing in association with the sale of one building. The note can be prepaid at any time before its planned maturity in February 2025 without incurring penalties.
These combined properties together are 85% occupied, and in 2024, these properties are expected to provide $6 million in GAAP and cash net operating income (NOI).
Highwoods’ capital-recycling program highlights its prudent capital management practices and positions it well to capitalize on long-term growth opportunities while adding to its balance sheet strength. The company has made efforts to expand its footprint in high-growth BBD markets and improve the quality of the overall portfolio on the back of acquisitions and development.
In 2023, Highwoods divested its interest in four office buildings, namely One Independence Park, Riverbirch, 5000 North Park and The Ramparts of Brentwood, for $19.5 million, $20.7 million, $11 million and $32 million, respectively, resulting in the aggregate sales price of $83.3 million and recorded total gains on the disposition of property of $33.3 million.
Management expects to carry out disposition within $75 million to $200 million in 2024.
The company is also focused on development projects in key markets, which are likely to generate considerable annual NOI upon completion and stabilization. As of Dec 31, 2023, Highwoods’ development pipeline aggregated $517.6 million (at the company’s share) and encompassed around 1.6 million square feet.
However, competition from other industry players and a huge development outlay are likely to weigh on Highwoods. Also, the high interest rate environment adds to the company’s concerns.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have gained 3.9% against the industry’s downside of 5.6%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are SL Green Realty (SLG - Free Report) and OUTFRONT Media (OUT - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SLG’s 2024 funds from operations (FFO) per share has been raised 12.2% northward over the past two months to $6.06.
The consensus estimate for OUT’s current-year FFO per share has moved marginally northward over the past week to $1.68.
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.