HIW Inks Build-to-Suit Deal with MetLife


Highwoods Properties Inc. (HIW) recently inked a build-to-suit deal with MetLife, Inc. (MET) for construction of offices for MetLife’s global technology and operations hub in the mixed-use Weston planned unit development (:PUD) in Cary, N.C. Weston spans 1,000 acres and is centrally positioned in the Research Triangle, which houses several high-tech firms.

The deal will strengthen Highwoods’ cash flow position and its ties with MetLife. Notably, Highwoods – the declarant of Weston mixed-use PUD – currently owns 8 operating assets (95.7% occupied) that span around 747,000 square feet in Weston.

Highwoods plans to invest about $110 million (which includes the value of existing owned land), for development of this 100% pre-leased project.  As per the deal, the company will construct 2 LEED-certified office buildings, spanning 213,500 square feet each, on 26.5 acres of a 40-acre Highwoods-owned site. This site is located in proximity to I-40 and Raleigh-Durham International Airport. The construction is expected to commence in late 2013 and will be completed during the first half of 2015.

Management remains upbeat about the long-term lease with a high-end customer like MetLife. This will provide steady rental revenues going forward. Moreover, the company expects to develop a third building on the 13.5 acres of waterfront land located nearby.

Including this build-to-suit project with MetLife, Highwoods’ total development pipeline (96% pre-leased) now has 928,000 square feet of wholly-owned projects and 215 multi-family units, in a 50% owned joint venture. The total investment now stands at approximately $238 million.

We expect the above-mentioned deal to drive the company’s top-line growth and strengthen its position in one of the most vibrant office markets of the U.S.

Highwoods currently carries a Zacks Rank #2 (Buy). Other better performing REITs include SL Green Realty Corp (SLG) and EastGroup Properties (EGP). Both these stocks have the same Zacks Rank as Highwoods. 

Read the Full Research Report on HIW

Read the Full Research Report on MET

Read the Full Research Report on SLG

Read the Full Research Report on EGP

Zacks Investment Research

More From Zacks.com
View Comments (0)