CHARLOTTE, NC – Publicly-traded REIT Highwoods Properties Inc. plans to expand its presence in the Charlotte, NC market with two acquisitions.
The firm has agreed to acquire 650 South Tryon at Legacy Union in the city’s uptown central business district submarket for an expected investment of $203 million, including $3.9 million of anticipated leasing capital expenditures to bring the property to stabilization. The 367,000-square-foot, trophy, LEED gold-certified office building delivered in late 2020 and is currently 78% leased. The asset is situated adjacent and connected to Highwoods Properties’ Bank of America Tower at Legacy Union.
The firm’s total investment for 650 South Tryon at Legacy Union is net of $5.1 million of free rent and other rent-related credits, anticipated from the seller at closing. Under GAAP, such credits are recorded as a reduction in the investment cost rather than as rental income. For 650 South Tryon at Legacy Union, Highwoods Properties estimates annual GAAP to be $11.2 million and cash net operating income to be $10.8 million, upon stabilization, which is projected to occur during 2024.
Highwoods Properties expects the acquisition of 650 South Tryon at Legacy Union to close in Q3 2022, subject to customary closing conditions. The firm is posting earnest money deposits of $22.5 million, which are non-refundable except in limited circumstances.
For the second acquisition, Highwoods Properties has agreed to purchase a mixed-use development site in Charlotte’s South End submarket for $27 million. Located at 1426 South Tryon St., the company is tentatively planning to develop a mixed-use property, which will offer 300,000 square feet of office space and 250 apartment units. The site currently features an existing, 24,000-square-foot, low-rise building, which is 57% leased to tenants on short-term leases.
Highwoods Properties expects the acquisition of 1426 South Tryon to closed in Q2 2022, subject to customary closing conditions. The firm has posted earnest money deposits of $6.1 million, which are non-refundable except in limited circumstances.
“Less than three years ago, we announced our plan to enter the dynamic Charlotte market, which had been at the top of our list for future market expansion,” states Highwoods Properties president and CEO Ted Klinck. “With the acquisition of 650 South Tryon at Legacy Union, our high-quality Charlotte portfolio, which encompasses nearly two million square feet in two BBDs, Uptown and SouthPark, will account for more than 10% of our overall NOI. Plus, with a very well-located mixed-use development site in the heart of the South End BBD, we are now poised to use our proven development expertise to capitalize on further growth in Charlotte.”