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BREAKING:

$535B CANADA BUDGET PROJECTS $39.8B DEFICIT, AIMS TO RESTORE ECONOMIC FAIRNESS

It seeks to ease the housing and affordability crisis by making older, wealthier Canadians pay more

Highwoods on Track With Rotation Plan With Memphis Asset Sales

Zacks Equity Research

Highwoods Properties HIW recently announced $89.6 million of office properties sale in Memphis. The move marks the first closing of sales under the company’s market-rotation plan, which entails exiting the Greensboro and Memphis markets and fortifying its portfolio in Best Business Districts (“BBD”) of higher-growth markets.

The company sold a 248,000-square-foot, single customer building — International Paper IV — for $76.4 million. The company also expects to close on the sale of a two-building office complex encompassing 84,000 square feet — Atrium I and II — before the end of this year for $13.2 million. In relation to these, the company expects to record non-FFO gains of around $29.3 million in fourth-quarter 2019.

Notably, Highwoods has been progressing well with its market-rotation plan and announced closing the acquisition of Bank of America Tower at Legacy Union last month. The company has shelled out $436 million as total investment for this transaction, which marks its entry into the CBD Charlotte.

Being part of the CBD Charlotte with the latest acquisition is a strategic move. This marks an iconic asset buyout in a prime infill location in a top-tier submarket, offering the company a solid footing in a higher-growth market and platform to expand its presence.

Meanwhile, the company has a two-phased plan for departure. In the first phase, it will be selling a hand-picked portfolio of assets in Greensboro and Memphis by mid-2020. The sales price will approximate the $436-million total investment for Bank of America Tower at Legacy Union. With its concerted efforts, Highwoods remains on track to complete the first phase on time. The rest of the assets will be sold in the second phase, which has no schedule planned as of now.

Highwoods has been making prudent moves to expand its footprint in high-growth markets and enhance portfolio quality. The company is following a disciplined capital-recycling strategy that entails disposing of non-core assets and investing the proceeds in premium asset acquisitions, and undertaking accretive development projects. It is currently focused on developing office properties in BBDs and therefore, the market-rotation plan is expected to help Highwoods ride on its growth trajectory over the long run.

Shares of this Zacks Rank #3 (Hold) company have gained 5.4% in the past three months, while its industry fell 3.5%.



Stocks to Consider

Prologis, Inc.’s PLD currently sports a Zacks Rank of 1 (Strong Buy). The company’s funds from operations (FFO) per share estimate for 2019 has been revised 0.3% upward to $3.31 in two months’ time. The stock has rallied 7.3% in six months’ time. You can see the complete list of today’s Zacks #1 Rank stocks here.

Duke Realty's DRE Zacks Consensus Estimate for the current-year FFO per share moved north to $1.44 in the past two months. This Zacks Rank #2 (Buy) company’s shares have gained 7.4% over the past six months.

Cousins Properties Incorporated’s CUZ Zacks Consensus Estimate for the ongoing-year FFO per share moved 2.1% north to $2.96 over the past two months. Shares of this Zacks Rank #2 company have gained 5.4% in six months’ time.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report
 
Cousins Properties Incorporated (CUZ) : Free Stock Analysis Report
 
Duke Realty Corporation (DRE) : Free Stock Analysis Report
 
Prologis, Inc. (PLD) : Free Stock Analysis Report
 
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