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HIW - Highwoods Properties Inc News Story

$44.88 -0.7  -1.6%

Last Trade - 27/10/21

Large Cap
Market Cap £3.45bn
Enterprise Value £5.35bn
Revenue £530.5m
Position in Universe 1533rd / 7275

Highwoods Closes Acquisition of Office Assets from Preferred Apartment Communities, Inc.

Thu 29th July, 2021 10:00pm
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 Asset                           Strategy  Market     Submarket/BBD        SF       
 150 Fayetteville                Core      Raleigh    CBD                  560,000  
 CAPTRUST Tower                  Core      Raleigh    North Hills          300,000  
 Capitol Towers                  Core      Charlotte  SouthPark            479,000  
 Morrocroft Centre               Core      Charlotte  SouthPark            291,000  
 Galleria 75 Redevelopment Site  Core      Atlanta    Cumberland/Galleria           

RALEIGH, N.C., July 29, 2021 (GLOBE NEWSWIRE) -- Highwoods Properties, Inc.
(NYSE:HIW) has closed the acquisition of a portfolio of office assets from
Preferred Apartment Communities, Inc. (NYSE:APTS) (“PAC”). The portfolio
consists of four Class A office assets in Charlotte and Raleigh and one
mixed-use redevelopment site in Atlanta.

The Company’s total investment is expected to be $683 million, which
includes $28 million of near-term building improvements and $4 million of
transaction costs. The transaction includes the assumption of four secured
loans estimated to be recorded at fair value of $407 million in the aggregate,
with a weighted average effective interest rate of 3.5% and a weighted average
maturity of 10.7 years.

The core office buildings in Charlotte and Raleigh, which encompass 1,630,000
square feet in total and are currently 94% occupied, are projected to generate
cash net operating income of $38.3 million and GAAP net operating income of
$42.8 million in the first four quarters following closing. The mixed-use
redevelopment site in Atlanta is valued at approximately $20 million.
With respect to non-core assets the Company had previously agreed to acquire
from PAC, the mezzanine loan related to a recently constructed office building
in Atlanta was paid off in full by the third party borrower and PAC has
elected to sell Armour Yards, a multi-building creative office project in
Atlanta, to a third party.

The Company funded the initial cash portion of the purchase price with a
combination of restricted cash held in escrow as the result of recent non-core
asset sales and a $200 million, six-month unsecured bridge facility from
JPMorgan Chase Bank, N.A. The bridge facility, which also closed on July
29(th), bears interest at LIBOR plus 85 basis points, can be extended at the
Company’s option for an additional six-month period and contains financial
and other covenants that are similar to the covenants under the Company’s
$750 million unsecured revolving credit facility.

The Company’s long-term plan is to fund the acquisition primarily by
accelerating the sale of $500 to $600 million of non-core assets currently
owned by the Company. The Company expects to return its balance sheet metrics
to current levels by mid-2022. Approximately $250 million of the planned
dispositions are expected to qualify for tax-deferred treatment under Section
1031 of the Internal Revenue Code.

About Highwoods
Some of the information in this press release may contain forward-looking
statements. Such statements include, in particular, statements about our
plans, strategies and prospects such as the following: the planned sales of
non-core assets and expected pricing and impact with respect to such sales,
including the tax impact of such sales; the expected financial and operational
results and the related assumptions underlying our expected results, including
but not limited to potential losses related to customer difficulties,
anticipated building usage and expected economic activity due to COVID-19; the
continuing ability to borrow under the Company’s revolving credit facility;
the anticipated total investment, projected leasing activity, estimated
replacement cost and expected net operating income of acquired properties and
properties to be developed; and expected future leverage of the Company. You
can identify forward-looking statements by our use of forward-looking
terminology such as “may,” “will,” “expect,” “anticipate,”
“estimate,” “continue” or other similar words. Although we believe
that our plans, intentions and expectations reflected in or suggested by such
forward-looking statements are reasonable, we cannot assure you that our
plans, intentions or expectations will be achieved.

When considering such forward-looking statements, you should keep in mind
important factors that could cause our actual results to differ materially
from those contained in any forward-looking statement, including the
following: buyers may not be available and pricing may not be adequate with
respect to planned dispositions of non-core assets; comparable sales data on
which we based our expectations with respect to the sales price of non-core
assets may not reflect current market trends; the extent to which the ongoing
COVID-19 pandemic impacts our financial condition, results of operations and
cash flows depends on future developments, which are highly uncertain and
cannot be predicted with confidence, including the scope, severity and
duration of the pandemic and its impact on the U.S. economy and potential
changes in customer behavior that could adversely affect the use of and demand
for office space; the financial condition of our customers could deteriorate
or further worsen, which could be further exacerbated by the COVID-19
pandemic; our assumptions regarding potential losses related to customer
financial difficulties due to the COVID-19 pandemic could prove incorrect;
counterparties under our debt instruments, particularly our revolving credit
facility, may attempt to avoid their obligations thereunder, which, if
successful, would reduce our available liquidity; we may not be able to lease
or re-lease second generation space, defined as previously occupied space that
becomes available for lease, quickly or on as favorable terms as old leases;
we may not be able to lease newly constructed buildings as quickly or on as
favorable terms as originally anticipated; we may not be able to complete
development, acquisition, reinvestment, disposition or joint venture projects
as quickly or on as favorable terms as anticipated; development activity in
our existing markets could result in an excessive supply relative to customer
demand; our markets may suffer declines in economic and/or office employment
growth; unanticipated increases in interest rates could increase our debt
service costs; unanticipated increases in operating expenses could negatively
impact our operating results; natural disasters and climate change could have
an adverse impact on our cash flow and operating results; we may not be able
to meet our liquidity requirements or obtain capital on favorable terms to
fund our working capital needs and growth initiatives or repay or refinance
outstanding debt upon maturity; and the Company could lose key executive

This list of risks and uncertainties, however, is not intended to be
exhaustive. You should also review the other cautionary statements we make in
“Risk Factors” set forth in our 2020 Annual Report on Form 10-K. Given
these uncertainties, you should not place undue reliance on forward-looking
statements. We undertake no obligation to publicly release the results of any
revisions to these forward-looking statements to reflect any future events or
circumstances or to reflect the occurrence of unanticipated events.

 Contact:  Brendan Maiorana                                   
           Executive Vice President of Finance and Treasurer  


GlobeNewswire, Inc. 2021
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