Highwoods Announces $98M of Non-Core Asset Sales

Rhea-AI Summary

Highwoods Properties (NYSE:HIW) has successfully sold the FBI Tampa Field Office for $70.4 million. The company anticipates the sale of its remaining office buildings in Greensboro, totaling 299,000 square feet and currently 88.2% occupied, for $20.3 million. These properties projected annual GAAP net operating income of $6.3 million. Additionally, a non-core land parcel was sold for $6.9 million. Highwoods has now sold $464 million in non-core properties since mid-2021 and aims to restore its balance sheet metrics by mid-2022.

Positive

• Sold FBI Tampa Field Office for $70.4 million.
• Pending sale of remaining Greensboro office buildings expected to close for $20.3 million.
• Projected annual GAAP NOI of $6.3 million from sold properties.
• Successfully sold an 8.9-acre land parcel for $6.9 million.
• Achieved $464 million in non-core property sales since mid-2021.

Negative

• None.

RALEIGH, N.C., May 19, 2022 (GLOBE NEWSWIRE) -- Highwoods Properties, Inc. (NYSE:HIW) has sold the FBI Tampa Field Office, a 138,000 square foot office building developed by Highwoods as a build-to-suit for the FBI in 2005 and renewed under a long-term lease in 2020, for $70.4 million. The Company also expects to close on the sale of its last remaining office buildings in Greensboro, which total 299,000 square feet and are 88.2% occupied, later this quarter or early in the third quarter for $20.3 million. In 2022, these office buildings were projected to generate $6.3 million of annual GAAP net operating income and $5.7 million of annual cash net operating income, which includes the impact of free rent.

The Company has also sold an 8.9-acre non-core land parcel adjacent to its One Independence office building in Tampa’s Westshore BBD for $6.9 million to a developer who plans to construct apartment units. The Company expects to record $2.3 million of land sale gains (included in FFO) in the second quarter.

Ted Klinck, President and CEO, said, “We are pleased with the continued execution of our non-core asset dispositions. With these sales, we will have sold $464 million of non-core properties since we announced our acquisition of a portfolio of office properties from PAC in mid-2021 and remain on pace to return our balance sheet to pre-acquisition metrics by the middle of 2022.”

About Highwoods
Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW) real estate investment trust (“REIT”) and a member of the S&P MidCap 400 Index. The Company is a fully-integrated office REIT that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa. For more information about Highwoods, please visit our website at www.highwoods.com.

Forward-Looking Statements
Some of the information in this press release may contain forward-looking statements. Such statements include, in particular, statements about our plans, strategies and prospects such as the following: the planned sales of non-core assets and expected pricing and impact with respect to such sales, including the tax impact of such sales; the expected financial and operational results and the related assumptions underlying our expected results, including but not limited to potential losses related to customer difficulties, anticipated building usage and expected economic activity due to COVID-19; the continuing ability to borrow under the Company’s revolving credit facility; the anticipated total investment, projected leasing activity, estimated replacement cost and expected net operating income of acquired properties and properties to be developed; and expected future leverage of the Company. You can identify forward-looking statements by our use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue” or other similar words. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that our plans, intentions or expectations will be achieved.

Factors that could cause actual results to differ materially from Highwoods' current expectations include, among others, the following: closing of the planned disposition of our remaining office buildings in Greensboro may not occur on the terms described in this press release or at all; buyers may not be available and pricing may not be adequate with respect to the planned dispositions of non-core assets; comparable sales data on which we based our expectations with respect to the sales price of the non-core assets may not reflect current market trends; the extent to which the ongoing COVID-19 pandemic impacts our financial condition, results of operations and cash flows depends on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic and its impact on the U.S. economy and potential changes in customer behavior that could adversely affect the use of and demand for office space; the financial condition of our customers could deteriorate or further worsen, which could be further exacerbated by the COVID-19 pandemic; our assumptions regarding potential losses related to customer financial difficulties due to the COVID-19 pandemic could prove incorrect; counterparties under our debt instruments, particularly our revolving credit facility, may attempt to avoid their obligations thereunder, which, if successful, would reduce our available liquidity; we may not be able to lease or re-lease second generation space, defined as previously occupied space that becomes available for lease, quickly or on as favorable terms as old leases; we may not be able to lease newly constructed buildings as quickly or on as favorable terms as originally anticipated; we may not be able to complete development, acquisition, reinvestment, disposition or joint venture projects as quickly or on as favorable terms as anticipated; development activity in our existing markets could result in an excessive supply relative to customer demand; our markets may suffer declines in economic and/or office employment growth; unanticipated increases in interest rates could increase our debt service costs; unanticipated increases in operating expenses could negatively impact our operating results; natural disasters and climate change could have an adverse impact on our cash flow and operating results; we may not be able to meet our liquidity requirements or obtain capital on favorable terms to fund our working capital needs and growth initiatives or repay or refinance outstanding debt upon maturity; and the Company could lose key executive officers.

This list of risks and uncertainties, however, is not intended to be exhaustive. You should also review the other cautionary statements we make in “Risk Factors” set forth in our 2021 Annual Report on Form 10-K. Given these uncertainties, you should not place undue reliance on forward-looking statements. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements to reflect any future events or circumstances or to reflect the occurrence of unanticipated events.

Contact:		Brendan Maiorana Executive Vice President and Chief Financial Officer brendan.maiorana@highwoods.com 919-872-4924

FAQ

What is the recent sale price of the FBI Tampa Field Office by HIW?

Highwoods Properties sold the FBI Tampa Field Office for $70.4 million.

When is Highwoods expected to close the sale of its Greensboro office buildings?

Highwoods expects to close the sale of remaining office buildings in Greensboro later this quarter or early in the third quarter.

What is the projected annual GAAP net operating income from the sold properties?

The sold properties were projected to generate $6.3 million of annual GAAP net operating income.

How much non-core property has HIW sold since mid-2021?

Highwoods has sold $464 million of non-core properties since mid-2021.

What was the sale price of the non-core land parcel adjacent to One Independence?

The non-core land parcel was sold for $6.9 million.