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Highwoods acquires buildings in Atlanta and Pittsburgh for $300 million

Highwoods Properties, which has been seeking ways to take advantage of its strong balance sheet, announced today that it has invested $300 million to acquire properties in Pittsburgh and Atlanta.

The Pittsburgh acquisition is particularly noteworthy for the Raleigh real estate investment trust, as it represents the first new market Highwoods has entered since 1998, when it bought property in Kansas City.

Highwoods is among the largest office landlords in the Southeast.

Highwoods paid $214.1 million for PPG Place in Pittsburgh, a six building complex that includes 1.54 million square feet of office space.

That price includes $17.1 million in building improvements and $8.1 million in tenant improvements promised under existing leases.

PPG Place is 81.2 percent leased.

In Atlanta, Highwoods bought Riverwood 100, a 24-story building with half a million square feet of office space, for $86.3 million.

That price includes $5.6 million in planned building improvements and $2.4 million in tenant improvements.

Riverwood 100 is 87 percent leased.
 

Highwoods doesn't expect PNC-RBC deal to hurt downtown office tower

On a conference call with analysts last week, Highwoods Properties CEO Ed Fritsch was asked what impact the pending acquisition of RBC Bank by PNC Financial Group would have on the Raleigh real estate investment trust's downtown office tower.

RBC occupies 131,000 square feet of space in its namesake tower on Fayetteville Street. The company signed a 20-year lease with Highwoods when the building opened in 2008.

The law firm Poyner Spruill, which does some work for RBC, also occupies about 75,000 square feet in the building.

Fritsch said Highwoods officials have not yet met with Jim Rohr, PNC's CEO.

But he said Poyner Spruill has indicated it doesn't expect the merger to cause it to reevaluate its space needs.

"They don't see any material impact to the way that they need and consume space," he said. "And in fact they continue to add head count to their firm."

As for PNC, Fritsch said PNC's public statements about the merger have indicated they like the presence of the RBC Tower. He also noted that PNC, which is based in Pittsburgh, does not have any existing infrastructure in the Southeast.

"There's no doubt that there's significant signage opportunities that are on display now," Fritsch said. "He [Rohr] has mentioned that that's an attraction to them."
 

Highwoods buys more property in Tampa

Highwoods Properties is expanding its footprint in Florida.

The Raleigh-based real-estate investment trust announced today that it has bought a vacant, 117,000 square-foot office building and a 33-acre development site located near Tampa's airport for about $17.6 million.

The site, in the Westshore submarket, includes room for up to 524,000 square feet of future office space.

Real estate markets entering Era of Less

The Urban Land Institute held its annual "Emerging Trends in Real Estate" event this morning in downtown Raleigh.

This is the 32nd edition of ULI's Emerging Trends report, which is based on interviews with 875 professionals in the real estate community as well as changes in the major financial sectors.

The report declares that real estate markets in 2011 are entering something called "The Era of Less," that will be characterized by -- you guessed it -- less returns, less credit, less demand for space and, in general, a shrunken real estate industry. 

While this Era of Less may not seem like much, it actually is an improvement over what Emerging Trends and other real estate prognosticators have been saying in recent years.

Stephen Blank, the ULI Senior Resident Fellow of Finance, presented the 2011 report during this morning's event held at the Fletcher Opera Theater in the Progress Center for the Performing Arts.

He said the market should come off the bottom a bit in 2011, which the biggest beneficiaries being gateway cities like Washington D.C. and New York City and asset classes such as multi-family apartments.

The Triangle, it was noted several times this morning, is now on the radar screen of many institutional investors and has the type of knowledge-based jobs that are seen as a key component of the country's economic recovery.

Among the clouds hanging over the real estate market: $1.5 trillion in loans that will need to be refinanced over the next five years.

Blank always highlights some choice quotes from ULI's interviews.

Highwoods sells Iowa properties

Highwoods Properties' continues pruning its portfolio.

The Raleigh-based real-estate investment trust announced this morning that it has sold its stake in 2.5 million square feet of properties in Des Moines for $15 million in cash.

As it looks to bolster its financial results, Highwoods has sold properties in other "non-core" markets where it doesn't have a major foothold. Last year, the company sold $88.8 million of older properties with lower occupancies.

Selling properties give Highwoods additional money to repay debt or to acquire other buildings in stronger markets. The company is one of the largest office landlords in the Southeast.

In Des Moines, the properties sold included 1.7 million square feet of offices, 788,000 square feet of industrial, 45,000 square feet of retail and 418 apartment units. Highwoods bought its stake in those properties in 1998.

"While Des Moines historically has been a good investment for the company, we believe the time is right to exit these joint ventures," Highwoods CEO Ed Fritsch said in a prepared statement.

Highwoods' shares fell 66 cents this morning to $31.48. The stock is up 45 percent in the past year.

Highwoods first quarter earnings meet Wall Street estimates

Highwoods Properties, the largest suburban office landlord in the Southeast, reported first-quarter results late Wednesday that narrowly beat Wall Street estimates.

The Raleigh real estate investment trust's 35 million square-foot portfolio was 87.8 percent occupied at the end of the year, down from 88.8 percent occupied in the four quarter.

Highwoods reported funds from operations, a profitability measure for REITs, of 61 cents per share, compared with 70 cents per share in the first quarter of 2009.

The company's FFO was just slightly above the average estimate of analysts who follow the company. It remains within the range of the company's FFO guidance for the year of between $2.31 to $2.49 per share.

"We continue to outperform in our core markets, with occupancy in our office portfolio exceeding market occupancy by 680 basis points at quarter end," said Ed Fritsch, Highwoods chief executive, in a statement. "This is a reflection of the improvements made to our portfolio over the past five years, the hard work of our leasing team and our strong balance sheet, which gives us a distinct advantage over our local competition."

Highwoods stock closed today at $32.55, up 10 cents. The stock has risen 18 percent since Feb. 10.

Oh Project Prince and Project Cardinal, what hath forsaken you?

It's been a while since we heard anything about the fate of Project Prince and Project Cardinal, two economic development projects that had the potential to bring two major companies to Raleigh.

The companies behind the code-named projects were widely rumored to be Radio Shack (Prince) and Fannie Mae (Cardinal). Radio Shack is currently based in Fort Worth, Tex. while Fannie Mae has headquarters in Washington D.C. and major operations in Dallas.

On today's Highwoods Properties conference call, CEO Ed Fritsch was asked about the two projects by an analyst.

After saying that Highwoods did not know who the mystery companies were, Fritsch said the trail appears to have gone cold.

"We haven't heard much on them lately," Fritsch said.

Fritsch was also asked whether the leasing environment has improved in recent months in the markets where Highwoods operates.

Fritsch said the company is seeing more activity on the leasing front but it's not yet resulting in a lot of deals getting signed.

Fritsch said the Raleigh real estate investment trust believes its strong balance sheet is giving it an advantage in a leasing environment where brokers have become much more worried about a landlord's health and ability to pay out commissions.

Highwoods fourth quarter earnings meet Wall Street estimates

Highwoods Properties, the largest suburban office landlord in the Southeast, reported fourth-quarter results late today that met Wall Street estimates for the year.

The Raleigh real estate investment trust's 35 million square-foot portfolio was 88.8 percent occupied at the end of the year, up from 87.8 percent occupied in the third quarter.

Highwoods reported funds from operations, a profitability measure for REITs, of $2.61 cents per share for the year, compared to $2.77 per share for 2008. Funds from operations for the fourth quarter was 42 cents per share, compared to 19 cents per share in the fourth quarter of 2008.

Ed Fritsch, Highwoods chief executive, said in a statement that the company's balance sheet was strengthened during 2009. The company has focused on paying down debt and using its healthy balance sheet to retain and win new tenants during the downturn.

“Today we have cash on hand, no borrowings on our new $400 million credit facility and only $138 million of debt maturing through year-end 2011,” Fritsch said.

During the fourth quarter, Highwoods added $95 million in office development, including two new buildings built for the federal government. The company sold $88.8 million worth of properties.

Results were released after regular trading on the New York Stock Exchange. Shares fell 16 cents to close at 27.53. The stock has fallen 15 percent since the beginning of the year.

Highwoods 3rd Quarter results beat Wall Street estimates

Highwoods Properties,
the largest suburban office landlord in the Southeast, reported
third-quarter results late today that beat Wall Street estimates.

The Raleigh real estate investment trust continues to benefit
from its strategy of paying down debt and using its healthy balance
sheet to focus on retaining and winning new tenants during the downturn.

The company’s 35 million square-foot portfolio was 87.8 percent
occupied at the end of the quarter, down slightly from the second
quarter.

“We continue to focus on leasing and operating our existing
portfolio of high-quality, differentiated assets as effectively and
efficiently as possible,” Ed Fritsch, Highwood’s chief executive said
in a statement.

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