Highwoods Properties Inc. (HIW) has acquired One Bank of America Plaza, an office building in CBD Raleigh. The company’s investment in this 17-story, 374,000-square foot property is estimated at $92.3 million, 25% lower than the projected replacement cost.
However, shares of Highwoods fell nearly 0.6% in yesterday’s regular trading session on the NYSE, on broader market concerns like growth and interest rate issues.
Strategically positioned on Fayetteville Street, the center of Raleigh’s downtown district, One Bank of America Plaza is leased 82.1% currently. The property is estimated to reap full-year 2015 GAAP net operating income of $6.2 million. The building boasts a diverse customer base that comprises healthcare, legal, technology and financial services industries.
On the other hand, Highwoods has been focusing on shifting its portfolio mix to high-growth markets and offloading its asset base in non-core markets. As part of that, the company sold 14 non-core buildings for $28.2 million.
The sale of these properties located in Greensboro and covering 379,000 square feet, helped Highwoods gain $4.7 million in the third quarter. The company has already sold $158.8 million worth of non-core buildings since the beginning of this year.
Notably, backed by its strategic portfolio repositioning plan, a large part of Highwoods’s portfolio is now concentrated in the high-growth Sun Belt markets, which provide above-average job growth prospects owing to long-term demographic trends. Yet stiff competition and interest rates issue remain plausible concerns for this stock.
Highwoods currently carries a Zacks Rank #3 (Hold). Investors interested in REITs may consider better-ranked stocks like DCT Industrial Trust Inc. (DCT), DiamondRock Hospitality Co. (DRH) and Gladstone Commercial Corp. (GOOD). All three stocks have a Zacks Rank #2 (Buy).
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