Highwoods Announces Recent Disposition Activity
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Insights
Highwoods Properties' recent divestiture of non-core assets represents a strategic move to streamline its portfolio and improve its balance sheet. By offloading these properties, the company is likely aiming to focus on higher-yielding core assets, a common practice within the real estate investment trust (REIT) industry. The occupancy rate of 85% is slightly below the national office market average, which hovers around 89% to 90%. This could indicate that the assets were not as profitable or central to the company's long-term strategy.
The use of proceeds to pay down the revolving credit facility is a prudent financial maneuver, as it reduces interest expenses and improves the company’s debt profile. Additionally, the provision of seller financing at a non-recourse level is an interesting detail. It suggests confidence in the buyer's ability to repay, while also providing Highwoods with a potential income stream through interest payments until the note matures. However, it also introduces a credit risk, albeit mitigated by the non-recourse nature of the loan.
From a market perspective, this transaction may signal Highwoods Properties' assessment of the Raleigh real estate market. The decision to sell could reflect an anticipation of a plateau or decline in property values or rental rates, especially in the west Raleigh submarket and areas adjacent to the Research Triangle Park. It's worth noting that dispositions in the real estate sector are closely watched by investors as they can indicate broader market trends.
Investors often view asset sales and the subsequent reduction of debt favorably, as these actions can lead to a more focused strategy and potentially higher returns on remaining assets. The timing of the sale and the use of funds could also be strategic, possibly aligning with market cycles to maximize financial outcomes. However, the impact on Highwoods' stock will largely depend on how effectively the company reinvests the proceeds and whether the market perceives the move as enhancing the company's growth prospects.
Sells
RALEIGH, N.C., April 04, 2024 (GLOBE NEWSWIRE) -- Highwoods Properties, Inc. (NYSE:HIW) has sold in a series of transactions non-core properties in Raleigh for combined gross proceeds of
On a combined basis, these properties are
As part of the sale of one building, the Company provided
The cash proceeds received from the dispositions have been used to reduce amounts outstanding on the Company’s revolving credit facility and for general corporate purposes.
About Highwoods
Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (“REIT”) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders. For more information about Highwoods, please visit our website at www.highwoods.com.
| Contact: | Brendan Maiorana |
| Executive Vice President and Chief Financial Officer | |
| brendan.maiorana@highwoods.com | |
| 919-872-4924 |
FAQ
How much did Highwoods Properties, Inc. (HIW) sell their non-core assets for?
What was the amount of gross proceeds from the dispositions closed in the first quarter of 2024?
How many office buildings were included in the properties sold by Highwoods Properties, Inc. (HIW)?
What is the occupancy rate of the properties sold by Highwoods Properties, Inc. (HIW)?
How much net operating income was projected to be generated from the properties in 2024?
What financing did Highwoods Properties, Inc. (HIW) provide as part of the sale of one building?
