Real estate investment trust (:REIT) – Highwoods Properties Inc. (HIW) – inked the leasing of 35,000 square feet at 2800 Century Center in Atlanta, on a long-term basis. The deal was penned with a high-credit global company.
With this deal, this property of Highwoods is currently 65% leased. Moreover, there are letters of intent outstanding for another 67,000 square feet and if inked, then the leasing will increase to 96% at 2800 Century Center.
As a matter of fact, 2800 Century Center enjoys high appeal as it is well accessible from I-85 and I-285. In addition to the above-mentioned deal and the letters of intent outstanding, encouragingly, a number of companies have shown their interest for an additional 64,000 square feet. Hence, with such strong demand for this property, the company has reiterated its guidance of 2800 Century Center being at least 92% leased by year end.
We view such developments at Highwoods positively as that would help enhance its top line. Moreover, we note that on the back of the successful implementation of its strategic plan, a large part of the company’s portfolio is now concentrated in the high-growth Sun Belt markets, which provide above-average job growth owing to long-term demographic trends. Also, a strong and flexible balance sheet enables Highwoods to capitalize on the potential acquisition opportunities to fuel its top-line growth.
Yet, despite the continued portfolio repositioning, Highwoods still has a large asset base in low-barriers-to-entry Southeastern markets, which historically have not been strong long-term office markets. This undermines the long-term growth potential of the company to some extent.
Highwoods currently holds a Zacks Rank #3 (Hold). However, other REITs that are performing better and deserve a look include CommonWealth REIT (CWH), Sunstone Hotel Investors Inc. (SHO) and CubeSmart (CUBE). The former two carry a Zacks Rank #1 (Strong Buy) while the latter has a Zacks Rank #2 (Buy).
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