The largest owner of suburban office properties in the Southesat says the company, Highwoods Properties, Inc. (NYSE: HIW), has executed contract to sell in a single transaction $143 million of non-core assets in Atlanta, Columbia and Tampa to Capital Partners Inc. (“CPI”).
The sale encompasses 29 properties and approximately 1.9 million square feet, including four industrial (flex) assets, 15 single story office assets and ten multi-story office buildings. Their average age and occupancy at September 30, 2005 were 18 years and 69.5%, respectively. These properties currently generate yearly cash net operating income of approximately $9.8 million.
While CPI has completed its due diligence and deposited $2.5 million of non-refundable earnest money, completion of the transaction remains subject to the absence of any materially adverse title defects and satisfaction of other customary closing conditions. This transaction is expected to close in January 2006.
From January 1, 2005, through September 30, the Company has sold 4.4 million square feet of office and industrial properties for gross proceeds of $336 million. It has used a portion of these proceeds to pay off $270 million of high coupon debt and preferred stock and to fund its development pipeline.
Assuming no additional dispositions, upon the closing of this transaction in January, the Company would have completed 13 sales transactions in seven markets since January 2005, generating approximately $479 million of gross proceeds.
Ed Fritsch, president and chief executive officer of Highwoods, stated, “Our goal, as outlined in our Strategic Management Plan, is to sell between $450 million to $550 million of non-core assets between 2005 and 2007. Exceeding the low end of this three-year goal at favorable cap rates in just over one year is a terrific achievement for our Company and speaks to the hard work and concentrated effort of our entire team. We plan to use a portion of the sales proceeds to retire additional high coupon preferred stock, which will strengthen our balance sheet, and to fund our expanding development pipeline.”