Highwoods Properties, Inc. HIW recently announced that it has completed the acquisition of Advance Auto Parts Tower for $138 million. The property — a 20-story, Class AA office tower, spanning around 346,000 square feet — is located in Raleigh’s mixed-use North Hills Best Business District (“BBD”).

Located adjacent to Highwoods’ owned CAPTRUST Tower, the property under consideration, built in 2020, is duly LEED-gold certified. As of Dec. 31, 2024, it is fully leased with a weighted average lease term of 8.2 years. Following the closing of the transaction, Advance Auto is estimated to generate cash net operating income of $11.0 million in the first four quarters.

Highwoods plans to finance the above acquisition by using the proceeds of the recent non-core asset sale in Tampa, FL. The move will aid HIW in meeting the growing demand for premier office properties with class-apart amenities.

Highwoods: In a Nutshell

Highwoods follows a disciplined capital-recycling strategy that entails disposing of non-core assets and redeploying the proceeds in premium asset acquisitions and accretive development projects. The above acquisition highlights the company’s efforts to expand its footprint in high-growth BBD markets and improve the quality of the overall portfolio through acquisitions and development.

Highwoods’ well-diversified tenant base, efforts to expand in the high-growth markets and balance sheet strength are its key growth drivers. However, competition from other players is likely to limit its pricing power and hurt profitability. High interest expenses add to its woes.

Over the past year, shares of this Zacks Rank #4 (Sell) company have risen 13.3%, outperforming the industry’s growth of 5.6%.

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Stocks to Consider

Some better-ranked stocks from the broader REIT sector are SBA Communications SBAC and Cousins Properties CUZ, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for SBA Communications’ 2025 FFO per share has been moved marginally northward to $12.91 over the past two months.

The consensus estimate for Cousins Properties’ 2025 FFO per share has been moved marginally upward to $2.78 over the past week.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.

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Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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