Highwoods Buys JV Partner's 60% Stake In 5 CBD Orlando Office Buildings

(RTTNews) - Highwoods Properties, Inc. (HIW) reported acquiring its joint venture partner's 60% stake in HIW-KC Orlando, LLC, owning five office buildings encompassing 1.3 million square feet in CBD Orlando, for $113.3 million. The properties are valued at $195.9 million, including $7.0 million of planned near-term building improvements, which equates to a total asset value of $153 per square foot, a 40% discount to estimated replacement cost. The firm's total incremental investment is likely to be $117.5 million.

The properties are 82% leased and are anticipated to generate annual cash and GAAP net operating income of $14.0 million and $15.4 million, respectively. Further, Highwoods said it would record $1.1 million of deferred leasing commission income in the third quarter relating to this transaction. Nearly $0.1 million of acquisition costs would be expensed in the third quarter.

The company funded the equity portion of its purchase price with proceeds from its ATM program, non-core dispositions and borrowings under its revolving credit facility. Upon completion, the firm's leverage ratio, including preferred stock, is under 45%.