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CHARLOTTE, NC-In two separate transactions, Highwoods Properties has sold non-core assets and plans to use a portion of the proceeds toward its development pipeline, which registers $424 million. Both transactions totaled $38.5 million.

The deals include 17 industrial and flex properties, totaling 586,000 sf, in Tampa and the Piedmont Triad. At the time of the sale, the assets were an average 92.2% occupancy and 21 years old. Highwoods officials put the combined yearly cash net operating income at approximately $2.7 million.

In Tampa, the locally based REIT sold Bay Vista Office Center, Bay Vista Garden I and Bay Vista Garden II to an undisclosed buyer. The 193,000-sf deal carried a $22-million price tag. The remaining 14 properties, with 393,000 sf in the Piedmont Triad, changed hands for $16.5 million.

The deals were just the latest in Highwoods' campaign to dispose of non-core assets. "With the closing of these two transactions, we have disposed of $240.5 million of non-core assets in 2006 and almost $600 million of non-core assets since January 2005," president and CEO Ed Fritsch explains in a statement. "These dispositions, combined with our development deliveries over the past two years, have significantly improved the quality of our overall portfolio.

"Our stated goal, which was revised upward earlier this year, is to sell up to $650 million of non-core properties by year-end 2007 and we are clearly on track to meet and, most likely, exceed that goal next year."

On the development side, Highwoods released plans to build a $5.5-million, 120,000-sf distribution facility in the airport submarket of the Triad. The start date is slated for first quarter 2007. The new facility will join two others Highwoods owns in Enterprise Park: Enterprise I, 85% occupied, and Enterprise II, 44% preleased.

"Since January 2005, we have commenced $425 million of development, exceeding the high end of our stated three-year goal. Our robust development pipeline, which is 47% preleased, is expected to generate cash yields of over 9%," Fritsch says. "This year we will deliver approximately $100 million of development and in 2007, approximately $150 million of development will be completed."

Instant Insights /

Highwoods Sells Non-Core Assets for $38M Plus

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