Highwoods Properties Inc. (HIW), a real estate investment trust (:REIT), has recently completed its at-the-market (:ATM) stock offering program worth $150 million that it had initiated in May 2011. The company sold over 1 million shares subsequent to the second quarter of 2012, raising net proceeds of $33.4 million.
The strategic efforts were aimed to increase the liquidity of the company. Furthermore, Highwoods is divesting its non-core assets to raise additional cash. The asset sale is also part of the long-term strategy of the company to focus on high-growth Sun Belt markets, which provide above-average job growth owing to its long-term demographic trends.
However, besides improving the short-term liquidity, an increase in the number of outstanding shares could prove to be an additional burden for the company in the long run considering its steady dividend payout strategy. Highwoods has also historically promulgated a dividend reinvestment and direct stock purchase plan through which stockholders may purchase additional shares of the company by reinvesting some or all of the cash dividends received on the common shares.
Based in Raleigh, North Carolina, Highwoods owns and operates its properties through its wholly-owned subsidiary Highwoods Realty Limited Partnerships. The company owns office, industrial, retail and service center properties, including development projects and apartment units across the U.S. It also provides customer-related and fee-based real estate management services for its properties as well as for third-party clients.
Highwoods is one of the biggest owners and operators of suburban office, industrial and retail properties in the Southeastern and Midwestern U.S., providing a complete line of real estate services to its customers and third parties through a fully-integrated organization. The core markets of the company include Florida, Georgia, Iowa, Maryland, Missouri, Mississippi, North Carolina, South Carolina, Tennessee and Virginia.
We maintain our long-term Neutral recommendation on Highwoods, which currently retains a Zacks #3 Rank that translates into a short-term Hold rating. We also have a Neutral recommendation and a Zacks #3 Rank for Cousins Properties Inc. (CUZ), one of the competitors of Highwoods.
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