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RALEIGH, NC-Locally headquartered Highwoods Properties Inc. is under contract to sell 2.4 million sf in 38 office buildings and 30 acres of excess land for $228 million. The buyer is a joint venture of Orlando-based Capital Partners Inc. and Lehman Brothers. A source at Capital Partners tells GlobeSt.com the company is run by former Highwoods executives who, in 1997, sold their previous Florida real estate company and its 6.5-million-sf portfolio to Highwoods for $622 million.The properties involved in this current transaction are all of Highwoods properties in Charlotte–1.5 million sf of buildings and 28 acres of land–and all of its properties in Sabal Park in Tampa, FL– 940,000 sf in 15 buildings and two acres of land. The properties average 17 years old, have an average vacancy of 24% and generate yearly cash net operating income of $16.8 million, according to Highwoods.Capital Partners has put down $4 million of non-refundable earnest money. The transaction is expected to close in July. Shortly thereafter, Highwoods will close its Charlotte office. The assets being sold as “older properties in submarkets where we don’t have a dominant market share,” according to a prepared statement by Highwoods chief executive Ed Fritsch. For example, in Sabal Park, Highwoods owns less than 25% of the properties in the park. Neither Fritsch nor Capital Partners owner Jim Heistand were available Tuesday morning for further comment. The portfolio sale will take the company three-quarters of the way toward its goal of selling $300 million in non-core assets this year, according to its statement. The disposition push is part of a plan to improve the overall quality of its portfolio, which consists of 39.5 million sf of office, industrial and retail properties and 1,100 acres of developable land.Highwoods will clear $225 million on the deal, money it will use to repurchase and/or redeem some of its outstanding 8% preferred stock, according to its statement. Highwoods also anticipates using the proceeds to pay off a $26.2 million, 8.2% secured loan that is callable on Aug. 1, 2005 and pay down a portion of its revolving credit facility. Capital Partners predecessor, Associated Capital Partners, was one of the largest owners of office space in Florida when it was acquired by Highwoods in 1997. Heistand, the majority Associated Capital Partners, and his partners joined Highwoods for a period of time before forming Capital Partners. Capital Partners is focused on becoming one of the biggest private office-space owners in the Southeast. The acquisitions will boost Capital Partners’ portfolio to 7.1 million sf of office space in Orlando, Charlotte, Atlanta, Jacksonville, Tampa, Fort Lauderdale and Tallahassee.

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