ATLANTA — Highwoods Properties Inc. (NYSE: HIW) has acquired its joint venture partner’s 57 percent interest in Glenlake North and South Towers, two Class A, 10-story office buildings with structured parking in Atlanta for $45.4 million.
The Raleigh, N.C.-based REIT now fully owns the properties and is planning to invest an additional $1 million in building improvements. As a result, Highwoods' total incremental investment is expected to be $46 million.
Located in Atlanta's Central Perimeter submarket with access to GA 400, the properties span 505,000 square feet and are valued at $80.6 million. The total asset value equates to $159 per square foot, which is at least a 30 percent discount to estimated replacement cost.
“These are solid assets in the Central Perimeter submarket, one of Atlanta's best business districts, which has absorbed over two million square feet during the past 18 months,” says Ed Fritsch, president and CEO of Highwoods.
The properties are 82 percent leased and are expected to generate full-year cash and net operating income of $5.1 million and $6 million, respectively.
“Owning 100 percent of these Atlanta properties will materially enhance our leasing process, fortify our position in the submarket, provide value enhancement through occupancy growth and further solidify our position as one of the larger owners of Class A office properties in the market's best business districts,” says Fritsch.
In July, Highwoods also acquired Anchor Plaza, a two-story, 98,000-square-foot office building in Tampa for $11.6 million. The property is currently 56 percent occupied and is expected to generate a net operating income of approximately $500,000 this year.
“We continue to actively cull our portfolio through the sale of non-differentiating properties that do not fit the strategic direction of our portfolio, including our Atlanta industrial properties,” Fritsch says. “Year-to-date, we've sold $80 million of non-core assets, acquired $396 million of high-quality properties and have another $129 million in our development pipeline that is 93 percent pre-leased.”
Highwoods Properties is a self-managed REIT that provides leasing, management, development, construction and other customer-related services for its properties and for third parties. As of March 30, the REIT owned or had an interest in 321 office, industrial and retail properties in eight states. The company’s stock price closed at $33.04 per share on Monday, down from trading at $33.18 per share one year ago.