Back to top

Highwoods Sheds Non-Core Assets to Improve Portfolio Mix

Read MoreHide Full Article

Highwoods Properties, Inc. (HIW - Free Report) recently announced the disposition of $54.5 million of non-core buildings. The move comes as part of the company’s concerted efforts to improve portfolio mix and beef up its long-term cash flow growth.

Specifically, the office properties included a 124,000-square-foot building in Alpharetta, GA - Two Point Royal, and a 199,000-square-foot, single customer building in northeast Tampa - Highwoods Preserve I. The asset sales led to reaping of combined gross proceeds of $54.5 million. However, in exchange for customary fees, Highwoods will continue to serve as property manager of Highwoods Preserve I. With regard to the sales, the company is slated to record non-FFO gains of around $20.7 million in the fourth quarter of 2018.

Highwoods has been making immense 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 off non-core assets and investing the proceeds in premium asset acquisitions and undertaking accretive development projects. The company is currently focused on Class A properties in BBD locations. In fact, the company sold a non-core industrial land parcel in Atlanta, spanning 24 acres for $2.1 million, in third-quarter 2018.

Moreover, encouragingly, a large part of the company’s portfolio is now concentrated in high growth Sun Belt markets, which have long-term favorable demographic trends and are expected to witness above-average job growth. This bodes well for Highwoods’ long-term growth.

Highwoods currently has a Zacks Rank #3 (Hold). The company’s shares have lost 16% of its value in three months’ time against the industry’s decline of 5.1%.

Stocks to Consider

Better-ranked stocks from the real-estate space include Lamar Advertising Company (LAMR - Free Report) , PS Business Parks, Inc. (PSB - Free Report) and Cousins Properties Incorporated (CUZ - Free Report) . Each of these stocks carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lamar’s FFO per share estimates for 2019 has been revised 1.4% upward to $5.89 in the last 30 days.

PS Business Parks’ Zacks Consensus Estimate for 2019 FFO per share moved 0.5% north to $6.58 in the past two months.

Cousins Properties’ FFO per share estimates for 2019 has remained unchanged in a month’s time at 64 cents.

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.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

More from Zacks Analyst Blog

You May Like

Published in