Highwoods Properties Acquires EQT Plaza in Downtown Pittsburgh
Highwoods Properties (NYSE: HIW) today announced that it has acquired EQT Plaza, a 32-story, 616,000 square foot, Class A multi-tenant office building located in the heart of CBD Pittsburgh. Occupancy at EQT Plaza is 92.2% and, with executed leases in hand, will increase to 95.9% by the third quarter of 2013.
The Company's investment is expected to be $99.2 million, which includes $8.0 million of planned building improvements. The property is expected to generate full year 2013 cash and GAAP net operating income of $7.0 million and $8.8 million, respectively. The Company noted that $0.5 million of expensed acquisition costs will be recorded in the fourth quarter. Also, EQT Plaza is on a ground lease with 111 years of remaining term and annual rent of $1.0 million.
Ed Fritsch, president and chief executive officer of Highwoods, stated, "We are thrilled to expand our footprint by 40% in downtown Pittsburgh with the acquisition of another Class A office building. EQT Plaza's proximity to PPG Place, less than three blocks away, will enable us to garner a number of operating synergies and will heighten the Highwoods brand in downtown Pittsburgh. There are also opportunities to 'Highwoodtize' this property, further enhancing its appeal to current and prospective customers."
"Our investment in Pittsburgh has already exceeded our expectations. The downtown market is thriving, with competitive Class A office properties 94% leased. Occupancy at PPG Place is now expected to increase from 81.2% at acquisition to over 88% at year-end."
The Company funded this transaction with proceeds from its ATM program, non-core dispositions and borrowings under its revolving credit facility. No debt was assumed in connection with the transaction. Following closing, the Company's leverage ratio remains under 45%, well within its stated comfort zone.
The Company acquired 100% control of EQT Plaza as a result of its acquisition of Liberty Avenue Mezzanine, LLC in a business transaction that did not involve a deed transfer. Liberty Avenue Mezzanine, LLC was originally formed in January 2005.
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