Highwoods Properties Inc. has sold International Paper IV, a 248,000-square-foot, single customer building, for $76.4 million and expects to close on the sale of Atrium I and II, a two-building office complex encompassing 84,000 square feet, prior to December 31, 2019 for $13.2 million. These office properties, located in Memphis, are a combined 96% occupied and are projected to generate $5.9 million of annual cash and GAAP net operating income in 2020.
The company expects to record non-FFO gains of approximately $29.3 million in the fourth quarter of 2019 in connection with these sales.
Ted Klinck, President and Chief Executive Officer of Highwoods Properties, said, “These sales are the first closings of our market rotation plan to exit the Greensboro and Memphis markets and reinvest that capital in the BBDs of higher-growth markets such as Charlotte. We are pleased with our progress to date and remain on track to complete the first phase by mid-2020.”
The sale of Atrium I and II is subject to customary closing conditions. The buyer’s contractual due diligence period has ended and the buyer has posted earnest money deposits that are non-refundable except in limited circumstances.
As previously revealed, the company has a two-phased plan to exit the Greensboro and Memphis markets. The first phase consists of selling a select portfolio of assets in Greensboro and Memphis by mid-2020 with a total sales price that approximates the $436 million total investment for Bank of America Tower at Legacy Union in Charlotte, which closed in November 2019. The second phase is the planned sale of the remaining assets in Greensboro and Memphis. There is no pre-determined timetable for the second phase.