Highwoods Properties Inc. (HIW), a real estate investment trust (REIT), has recently sold two non-strategic assets in separate transactions as part of its long-term plan to focus on stronger long-term markets and newer assets. With the deal, the company completed $125 million worth of asset sale during the current fiscal year, which was well within its previously stated guidance.
The properties sold by Highwoods included Madison Park, a non-core office park in Winston-Salem for $12.9 million, and Chimney Rock, a non-core industrial park in Greensboro for $12.0 million. Spanning across 472,200 square feet, Madison Park comprised seven office buildings, which were 25 years old on an average and 51% occupied. On the other hand, Chimney Rock included six industrial buildings spanning 836,500 square feet, which were 25 years old on an average with 58% occupancy.
With the sale of Madison Park, Highwoods has moved closer toward realizing its long-term goal to exit Winston-Salem. Year to date, the company has reduced its wholly owned square footage in the region by about 71% and currently owns 818,000 square feet. Highwoods has also reorganized its portfolio in Greensboro to focus on newer strategic assets and its industrial holdings in the city include 35 buildings encompassing 2.5 million square feet that are 14 years old on an average and 92.9% occupied.
With continued portfolio repositioning, a large part of the company’s properties is now concentrated in high-growth Sun Belt markets, such as Atlanta, Nashville and Tampa, which should exhibit above-average job growth due to long-term demographic trends. The core markets of Highwoods include Florida, Georgia, Iowa, Maryland, Missouri, Mississippi, North Carolina, South Carolina, Tennessee and Virginia.
Based in Raleigh, North Carolina, Highwoods owns and operates its properties through its wholly owned subsidiary, Highwoods Realty Limited Partnerships. The company has interests in office, industrial, retail and service center properties, including development projects and apartment units. It also provides customer-related and fee-based real estate management services for its properties and third-party clients.
As of March 31, 2010, Highwoods had interests in 378 in-service office, industrial holdings and retail properties, spanning across 35.7 million square feet of gross leasable space, out of which 2.1 million square feet were located in Memphis. In addition, it also owned 581 acres of developable land.
We maintain our Neutral rating on Highwoods with a Zacks #3 Rank, which translates to a short-term “Hold” recommendation.
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