RALEIGH - Highwoods Properties , Inc. (NYSE:HIW), a real estate investment trust (REIT) specializing in office properties, has completed the sale of several non-core assets in Raleigh. The transactions, which concluded in a series of deals, have generated gross proceeds of $79.4 million.
The first portion of these dispositions, amounting to $16.9 million, was finalized in the first quarter of 2024, with the balance being settled early in the second quarter.
The divested real estate portfolio includes eight office buildings totaling 338,000 square feet near Rex Hospital in the west Raleigh submarket, along with a 97,000-square-foot office building adjacent to Research Triangle Park.
Collectively, these properties boasted an 85% occupancy rate and were anticipated to produce approximately $6.0 million in net operating income for the year 2024, according to generally accepted accounting principles (GAAP) and cash expectations.
In an interesting move as part of the sale, Highwoods provided $6.2 million in seller financing for one of the buildings. This non-recourse first mortgage note is set to mature in February 2025, but it offers the flexibility of prepayment at any time without incurring penalties.
The proceeds from these property sales have been strategically used by Highwoods to reduce the outstanding balance on the company's revolving credit facility. Additionally, funds are being directed towards general corporate purposes.
Highwoods Properties, headquartered in Raleigh, operates predominantly in prime business districts across several major cities, including Atlanta, Charlotte, Dallas, Nashville, Orlando, Richmond, and Tampa. The company focuses on placemaking, aiming to create environments that foster collaboration and success for its tenants.
This latest move to divest non-core assets aligns with Highwoods' strategy to streamline its portfolio and strengthen its financial position. The information regarding this transaction is based on a press release statement from Highwoods Properties, Inc.
InvestingPro Insights
As Highwoods Properties, Inc. (NYSE:HIW) continues to refine its portfolio through strategic asset sales, investors and market watchers may find the following InvestingPro data points illuminating. The company currently holds a market capitalization of approximately $2.63 billion, and its Price to Earnings (P/E) Ratio stands at 17.48, reflecting market sentiment and the company's profitability potential.
Notably, Highwoods has demonstrated a solid track record of profitability, with a Gross Profit Margin of 67.81% over the last twelve months as of Q4 2023, emphasizing its efficiency in generating income relative to costs.
From the perspective of shareholder returns, Highwoods showcases a commendable dividend yield of 8.12%, as of the latest data. This is particularly significant for income-focused investors, especially considering that the company has not only paid but also maintained its dividend payments for an impressive 31 consecutive years.
Moreover, the InvestingPro Tips suggest that Highwoods' liquid assets surpass short-term obligations, providing the company with a level of financial flexibility that is reassuring to stakeholders.
The company's shares are trading near their 52-week high, currently at 93.8% of this peak, which could indicate a strong market confidence in the firm's prospects. Moreover, the significant price uptick of 32.67% over the last six months suggests a robust upward trend in the stock's performance.
For those looking to delve deeper into Highwoods Properties' financial health and future outlook, InvestingPro offers a wealth of additional tips. With the use of the coupon code PRONEWS24, new subscribers can enjoy an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further insights that could guide investment decisions.
As the company prepares for its next earnings date on April 23, 2024, it may be an opportune time for investors to evaluate Highwoods' position within the commercial real estate market, especially in light of its recent divestitures and ongoing strategy to optimize its asset portfolio. For a comprehensive analysis, including more InvestingPro Tips that relate to Highwoods Properties' performance and potential, interested parties can visit https://www.investing.com/pro/HIW.
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