HIW to Develop Build-to-Suit Asset - Analyst Blog

Highwoods Properties Inc. (HIW), a real estate investment trust (REIT), has recently announced that it would develop a new eight-storied building in Kansas City for law firm Polsinelli Shughart. The Class A office property spanning 192,000 square feet will serve as the headquarters for the law firm accommodating nearly 500 employees, including 300 lawyers.

At the same time, Highwoods signed an additional deal with yet another law firm Nexsen Pruet to lease 8,300 square feet of space at Glenlake Four building in Raleigh. Nexsen Pruet would relocate its employees from its present office at 201 Shannon Oaks Circle in Cary, North Carolina, to this newly leased Class A office building.

Based in Raleigh, North Carolina, Highwoods owns and operates its properties through its wholly owned subsidiary, Highwoods Realty Limited Partnerships. The company has interests in office, industrial, retail and service center properties, including development projects and apartment units. It also provides customer-related and fee-based real estate management services for its properties and third-party clients.

As of June 30, 2010, Highwoods had interests in 330 in-service office, industrial holdings and retail properties, spanning across 32.0 million square feet of gross leasable space. In addition, it also owned 581 acres of developable land.

Highwoods is also in the process of repositioning its portfolio to focus on stronger long-term markets and newer assets. A large part of the company's portfolio is now concentrated in high-growth Sun Belt markets, such as Atlanta, Nashville and Tampa, which should exhibit above-average job growth due to long-term demographic trends.

Currently, Highwoods carries a Zacks #3 Rank, which translates into a short-term Hold recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1-3 months. We maintain our long-term Neutral rating on Highwoods.