Enhanced BBD Office Focus September 30, 2015
SA SAFE HARBOR ARBOR Certain matters in this presentation are forward-looking statements within the meaning of the federal securities laws, such as the following: the planned sale of all or substantially all of the Company’s wholly-owned Country Club Plaza (“Plaza”) assets and expected pricing and impact with respect to such sale, including the tax impact of such sale; anticipated total investment, projected leasing activity, estimated replacement cost and expected NOI of acquired properties and properties to be developed; and expected future leverage of the Company. These statements are distinguished by use of the words "will", "expect", "intend" and words of similar meaning. Although Highwoods believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from Highwoods' current expectations include, among others, the following: buyers may not be available and pricing may not be adequate with respect to the planned disposition of Plaza assets; comparable sales data on which we based our expectations with respect to the sale price of Plaza assets may not reflect current market trends; the financial condition of our customers could deteriorate; development activity by our competitors in our existing markets could result in excessive supply of properties relative to customer demand; development, acquisition, reinvestment, disposition or joint venture projects may not be completed as quickly or on as favorable terms as anticipated; we may not be able to lease or re-lease second generation space quickly or on as favorable terms as old leases; our markets may suffer declines in economic growth; we may not be able to lease our newly constructed buildings as quickly or on as favorable terms as originally anticipated; unanticipated increases in interest rates could increase our debt service costs; unanticipated increases in operating expenses could negatively impact our NOI; we may not be able to meet our liquidity requirements or obtain capital on favorable terms to fund our working capital needs and growth initiatives or to repay or refinance outstanding debt upon maturity; the Company could lose key executive officers; and others detailed in the Company’s 2014 Annual Report on Form 10-K and subsequent SEC reports.
ROCKET PITCH BUY BUY SELL Monarch Plaza & Monarch Tower SunTrust Financial Centre Country Club Plaza Buckhead Atlanta CBD Tampa Kansas City ENHANCED BBD OFFICE FOCUS ENHANCED BBD OFFICE FOCUS // 3
KEY HIGHLIGHTS ACCRETIVE GROWTH VALUE ADD CLEAR FUNDING PLAN Cap Rate Arbitrage Occupancy Upside Short Term Bridge Facility • • • Earnings Accretive Rent Growth No Additional Equity • • • Operating Synergies Leverage Neutral CAD Accretive • • • SIMPLIFIES STRENGHTHENS BBD OFFICE FRANCHISE TAX EFFICIENT Exits Retail Adds 3 BBD Trophy Towers Partial Reverse 1031 Exchange • • • G & A Savings Acquired Well-Below Replacement Cost Tax Gain Deferral • • • ENHANCED BBD OFFICE FOCUS // 4
MONARCH CENTRE BUCKHEAD (Atlanta)
MONARCH CENTRE NEXT DOOR NEIGHBORS to SYN YNER ERGIES GIES & One Alliance Center Two Alliance Center Superior Buckhead Location • 3 Points of Signaled Access • Direct Connectivity to GA 400 and Peachtree Road • Immediate Proximity to Ritz Carlton, Lenox Square & Phipps Plaza LOCA OCATI TION . N . LOCA OCATI TION . L . LOCA OCATION. ON. 20% 12% 1.9M SF GENERATIONAL STRATEGIC IC OPPORTUNITY INVE VESTM TMENT NT BELOW RENTS UNDER BUCKHEAD … NEVER TRADED REPLACEMENT MARKET OWNERSHIP COST Monarch Centre // 6
MONARCH CENTRE $303M OVERVIEW Market Atlanta Monarch Tower Submarket Buckhead Delivered 1997 Square Feet 896,000 Square Feet 528,000 Occupancy at Closing 88% Stories 25 Occupancy with Known 80% Near-Term Move-Outs Floor Plates 18,000 - 23,000 SF Parking 2.7/1,000 Sustainability LEED Silver Monarch Plaza • Alterations and Dry Cleaning • Athletic Club • Boutique Flower Shop Delivered 1983 • Concierge Service Shared On-Site • Enclosed Access to Ritz Carlton Square Feet 368,000 Amenities • Full-Service Bank and ATM • Multiple Conference Centers Stories 15 • New York Prime Steakhouse • Two Cafés Floor Plates 23,000 - 25,000 SF • Baker Donelson High Quality • JPMorgan Chase Rent Roll • Morgan Stanley MONARCH CENTRE// 7
Monarch Centre // MONARCH CENTRE// 8
Common area visuals Monarch Centre // MONARCH CENTRE// 9
Monarch Centre // 10 MONARCH CENTRE//
TOP 10 AFFLUENT U.S. COMMUNITIES ROBB REPORT WALKABLE 140,000 3 24/7 NO DEVELOPMENT SITES MARTA RAIL ENVIRONMENT REMAINING DAYTIME POPULATION STATIONS 300+ 82,000 RESIDENTS RESTAURANTS $2B 5,275 $32M THE ANNUAL RETAIL SALES FINANCIAL HOTEL NEW MARTA DISTRICT OF 250 100 PEDESTRIAN ROOMS ATLANTA BRIDGE STORES STORES 11
Three Points of Signaled Access 1 2 3 N Monarch Centre // 12
Lenox BRIDGE DGE square Monarch Plaza Two Alliance Center Three Alliance Center Late 2016 Monarch Tower One Alliance Center Phipps plaza The Domain at Phipps Plaza 319 Luxury Residences Early 2016 Early 2016 N Monarch Centre // 13
SUNTRUST FINANCIAL CENTRE TAMPA CBD SUNTRUST FINANCIAL CENTRE // 14
SUNTRUST FINANCIAL CENTRE 40% DEVELOPMENT PARTICIPATE STRATEGIC IC SITE IN CBD BELOW ADJACENT INVE VESTM TMENT NT RESURGENCE CITY BLOCK REPLACEMENT 1 ACRE COST 77% Occupancy with Known Near-Term Move-outs Highwoodtizin g $9.1M of Planned Improvements UPSI UPSIDE DE MOST RECOGNIZABLE WELL LOCATED TROPHY UNRIVALED 360 ° VIEWS CBD ASSET SUNTRUST FINANCIAL CENTRE // 15
SUNTRUST FINANCIAL CENTRE $124M OVERVIEW Market Tampa Submarket CBD Delivered 1992 Square Feet 528,000 Stories 35 Typical Floor Plate 20,000 SF Occupancy at Closing 89% Occupancy with Known Near-Term Move-Outs 77% 1.5/1,000 Parking 540 Embedded Parking 245 in Adjacent Deck/Lot Conference and Fitness Centers, On-Site Amenities Full-Service Bank, ATM , 124-Seat Restaurant and Sundry Shop Akerman Senterfitt High Quality Rent Roll GrayRobinson SunTrust SUNTRUST FINANCIAL CENTRE // 16
SUNTRUST FINANCIAL CENTRE // 17 SUNTRUST FINANCIAL CENTRE //
SunTrust Financial Centre SUNTRUST FINANCIAL CENTRE // SUNTRUST FINANCIAL CENTRE // 18
SunTrust Financial Centre SUNTRUST FINANCIAL CENTRE // SUNTRUST FINANCIAL CENTRE // 19
TAMPA CBD 20% $5B PUBLIC & PRIVATE INVESTMENTS PLANNED DAYTIME WORKFORCE INCREASE SINCE 2012 4M + EVENTS/PERFORMANCES ATTENDEES 12 2.6 MILE + RESIDENTIAL UNITS PARKS RIVERWALK 1,100+ 1,500+ 5,100+ $ 1 0 0 M I N V E S T E D UNDER SINCE PLANNED 10 2 CONSTRUCTION 2012 MUSEUMS & ART GALLERIES PERFORMING ARTS CENTERS 20
SUNTRUST FINANCIAL CENTRE AMALIE ARENA CONVENTION CENTER RIVERWALK USF MEDICAL SCHOOL ONE HARBOUR PLACE SUNTRUST FINANCIAL CENTRE // 21 SUNTRUST FINANCIAL CENTRE //
SUNTRUST FINANCIAL CENTRE TRANSACTION OVERVIEW Investment $126.1M $124.1M Building ($235/SF) Development Land (1 city block) $2.0M Below Replacement Cost 35% Year One GAAP Cap Rate 6.9% SUNTRUST FINANCIAL CENTRE // 22
COUNTRY CLUB PLAZA KANSAS CITY Country Club Plaza //
E S T A B L I S H E D I N 1 9 2 2 LONGEST LIFE OF ANY PLANNED SHOPPING CENTER IN THE COUNTRY THE FIRST MASTER-PLANNED SUBURBAN SHOPPING a CENTER IN THE U.S. WORLD'S FIRST SHOPPING CENTER DESIGNED TO ACCOMMODATE CUSTOMERS ARRIVING BY CAR … A L A N D M A R K D E S T I N A T I O N 24
T H E P L A Z A I S H O M E TO M A N Y LO C A L A N D N AT I O N A L E V E N TS 250K+ 200K+ 1920 S PLAZA ART FAIR VIS I TORS PLAZA LIGHTS VIS I TORS SPANISH-INFLUENCED ARCHITECTURE A N N U A LY A N N U A LY 39 STATUES, MURALS & TILE MOSAICS K N O W N B Y M A N Y A S 12M+ “RODEO DRIVE OF THE MIDWEST” SHOPPERS 40 % OF PLAZA VISITORS LIVE OUTSIDE THE CITY A N N U A LY 1 5 B LO C K S O F W A L K A B L E R E TA I L , D I N I N G , E N T E R TA I N M E N T & O F F I C E COUNTRY CLUB PLAZA // 25
COUNTRY CLUB PLAZA* OVERVIEW Market Kansas City Submarket Midtown/Plaza Established 1922 Square Feet In-Service: Retail 776,000 Office 617,000 Redevelopment: Retail 28,000 Occupancy In-Service: Retail 94% Office 99% Redevelopment: Retail 0% (Underway) Customers Retail 129 Office 97 Parking Spaces 5,600 *Wholly-Owned Data as of 6/30/15 COUNTRY CLUB PLAZA // 26
Gateway for top brands. COUNTRY CLUB PLAZA // 27
COUNTRY CLUB PLAZA // 31 COUNTRY CLUB PLAZA //
COUNTRY CLUB PLAZA // 32 COUNTRY CLUB PLAZA //
THE MECHANICS ENHANCED BBD OFFICE FOCUS
CLEAR FUNDING PLAN NEW BRIDGE FACILITY DEMONSTRATED SUPPORT FROM BANK PARTNERS COMPETITIVE PRICING $350M $250M $100M LIBOR PLUS 110 TOTAL OUTSTANDING AVAILABLE SIX-MONTH TERM SIX-MONTH EXTENSION OPTION THE MECHANICAL // 34
CLEAR FUNDING PLAN EXISTING REVOLVER AMPLE LIQUIDITY TO FUND WORKING CAPITAL AND DEVELOPMENT LIBOR PLUS 110 $210M $475M $265M TOTAL OUTSTANDING AVAILABLE SYNDICATE BANKS THE MECHANICAL // 35
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