Highwoods Offloads Non-Core Asset - Analyst Blog
March 14 2012 - 11:15AM
Zacks
Highwoods Properties
Inc. (HIW), a real estate investment trust (REIT), has
recently sold a non-core asset in Kansas City for $11.0 million.
The asset sale is part of the long-term strategy of the company to
improve the overall quality of its portfolio through the disposal
of non-core assets and the development and acquisition of infill
core assets.
Highwoods sold a 96-unit vacant
apartment building in Country Club Plaza in Kansas City to a local
multi-family developer/owner. The company is expected to record a
non-FFO (fund from operations) gain of $5.1 million in first
quarter 2012 in association with the asset sale. Fund from
operations, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income. Highwoods intends to utilize the
proceeds from the transaction to repay debt under its unsecured
revolving credit facility.
With the recent asset sale
transaction, Highwoods has 2.3 million square feet of office and
retail space exclusively located in and around the Country Club
Plaza region. The company is presently repositioning its portfolio
to focus on stronger long-term markets and newer assets. A large
part of the company’s portfolio is now concentrated in the
high-growth Sun Belt markets, which provide above-average job
growth owing to its long-term demographic trends.
Based in Raleigh, North Carolina,
Highwoods owns and operates its properties through its wholly-owned
subsidiary Highwoods Realty Limited Partnerships. The company owns
office, industrial, retail, and service center properties,
including development projects and apartment units across the U.S.
It also provides customer-related and fee-based real estate
management services for its properties as well as for third-party
clients.
Highwoods is one of the biggest
owners and operators of suburban office, industrial and retail
properties in the Southeastern and Midwestern U.S., providing a
complete line of real estate services to its customers and third
parties through a fully-integrated organization. The core markets
of the company include Florida, Georgia, Iowa, Maryland, Missouri,
Mississippi, North Carolina, South Carolina, Tennessee and
Virginia.
We maintain our long-term ‘Neutral’
recommendation on Highwoods, which currently retains a Zacks #3
Rank that translates into a short-term ‘Hold’ rating. We also have
a ‘Neutral’ recommendation and a Zacks #2 Rank (short-term ‘Buy’)
for Cousins Properties Inc. (CUZ), one of the
competitors of Highwoods.
COUSIN PROP INC (CUZ): Free Stock Analysis Report
HIGHWOODS PPTYS (HIW): Free Stock Analysis Report
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