Highwoods Closes Acquisition of Office Assets from Preferred Apartment Communities, Inc.
Highwoods Properties, Inc. (NYSE:HIW) has acquired a portfolio of office assets from Preferred Apartment Communities, Inc. (NYSE:APTS) for a total investment of $683 million. This includes $28 million for building improvements and $4 million in transaction costs. The portfolio consists of four Class A office buildings in Charlotte and Raleigh, totaling 1.63 million square feet, and a mixed-use redevelopment site in Atlanta. The properties are 94% occupied, projected to generate $38.3 million in cash net operating income, with financing partly through a $200 million bridge loan.
- Acquisition of four Class A office assets and a redevelopment site enhances portfolio with significant market presence.
- Projected cash net operating income of $38.3 million provides strong revenue potential.
- Properties are 94% occupied, indicating stable cash flow.
- Total investment of $683 million may strain financial resources.
- Assumption of secured loans totaling $407 million could increase leverage risk.
- Integration of new assets may present operational challenges.
| Asset | Strategy | Market | Submarket/BBD | SF |
| 150 Fayetteville | Core | Raleigh | CBD | 560,000 |
| CAPTRUST Tower | Core | Raleigh | North Hills | 300,000 |
| Capitol Towers | Core | Charlotte | SouthPark | 479,000 |
| Morrocroft Centre | Core | Charlotte | SouthPark | 291,000 |
| Galleria 75 Redevelopment Site | Core | Atlanta | Cumberland/Galleria |
RALEIGH, N.C., July 29, 2021 (GLOBE NEWSWIRE) -- Highwoods Properties, Inc. (NYSE:HIW) has closed the acquisition of a portfolio of office assets from Preferred Apartment Communities, Inc. (NYSE:APTS) (“PAC”). The portfolio consists of four Class A office assets in Charlotte and Raleigh and one mixed-use redevelopment site in Atlanta.
The Company’s total investment is expected to be
The core office buildings in Charlotte and Raleigh, which encompass 1,630,000 square feet in total and are currently
With respect to non-core assets the Company had previously agreed to acquire from PAC, the mezzanine loan related to a recently constructed office building in Atlanta was paid off in full by the third party borrower and PAC has elected to sell Armour Yards, a multi-building creative office project in Atlanta, to a third party.
The Company funded the initial cash portion of the purchase price with a combination of restricted cash held in escrow as the result of recent non-core asset sales and a
The Company’s long-term plan is to fund the acquisition primarily by accelerating the sale of
About Highwoods
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.
When considering such forward-looking statements, you should keep in mind important factors that could cause our actual results to differ materially from those contained in any forward-looking statement, including the following: buyers may not be available and pricing may not be adequate with respect to planned dispositions of non-core assets; comparable sales data on which we based our expectations with respect to the sales price of 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 2020 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 of Finance and Treasurer | |
| brendan.maiorana@highwoods.com | |
| 919-872-4924 |
FAQ
What does Highwoods Properties' acquisition involve?
How much is Highwoods investing in building improvements?
What is the expected cash net operating income from the acquired properties?
What financing did Highwoods use for the acquisition?
What are the risks associated with the acquisition?
