Highwoods Buys Lincoln Plaza, Boosts CBD Orlando Reach

Highwoods Properties, Inc. (HIW) disclosed the buyout of a Class A office building – Lincoln Plaza – in CBD Orlando for an expected total investment of $68.3 million. The company acquired this asset with the aid of borrowings from revolving credit facility and proceeds from the ATM program and non-core asset divestitures.

Lincoln Plaza, spanning 246,000 square foot, is a 16-story multi-customer office property. The asset, which is located in the heart of downtown, is currently 82% occupied. With this buyout, Highwoods now has 1.5 million square feet of office space in CBD Orlando. This figure includes last year’s acquisition of its joint venture partner’s 60% stake in five office properties that stretch 1.3 million square feet.

We are encouraged with the abovementioned transaction of Highwoods, as it will boost its top line, going forward. Moreover, since the property is positioned in CBD Orlando, the city’s BBD (best business district), we believe it will enjoy solid demand for its office spaces as well.

Notably, this real estate investment trust (:REIT) projects to generate cash and GAAP net operating income of $4.1 million and $4.2 million, respectively, from the property in the coming year. Moreover, Highwoods expects to incur $0.3 million in acquisition costs from the deal in the fourth quarter.

As a matter of fact, Highwoods is making concerted efforts to expand its footprint in high growth markets through premium asset acquisitions and developments. Last month, the company revealed that it has been selected by Bridgestone Americas, Inc. for developing the latter’s new headquarters in the thriving SoBro district of downtown Nashville (read more: Highwoods to Build Bridgestone Americas' SoBro Headquarters). Such deals usher in good news for the shareholders of Highwoods.

Highwoods currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider better-ranked stocks like Cousins Properties Inc. (CUZ), DCT Industrial Trust Inc. (DCT) and Chambers Street Properties (CSG). All these stocks sport a Zacks Rank #2 (Buy).

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