Highwoods Properties, Inc. has added two high‑yielding best‑business‑district assets to its portfolio, acquiring a 492,000‑square‑foot mixed‑use complex in Raleigh’s central business district and a 173,000‑square‑foot office tower in Dallas’s Preston Center. The deals were executed through joint ventures with the North Carolina Investment Authority and Granite Properties, respectively, and are expected to contribute a combined $9.0 million of GAAP net operating income (NOI) and $7.5 million of cash NOI in 2026.
Bloc83, the Raleigh property, is held by Highwoods at a 10% stake with an option to increase to 50%. The joint venture is valued at $210.5 million and is 97% leased. The acquisition is part of Highwoods’ strategy to rotate into high‑growth BBD markets, and the property’s mixed‑use mix is expected to provide stable, diversified cash flows that are immediately accretive to the REIT’s free‑cash‑flow run rate.
The Terraces, located in Dallas’s Preston Center, is owned by Highwoods at an 80% stake in a $109.3 million venture that is 98% leased. The tower’s current rents are roughly 30% below market, creating a clear upside for NOI as leases roll and rents normalize. The acquisition deepens Highwoods’ partnership with Granite Properties and marks a strategic entry into a supply‑constrained Dallas BBD that is projected to support long‑term rent growth.
Highwoods is financing the acquisitions through its capital‑recycling program, which has already generated $65.9 million in non‑core asset sales in Q4 2025 and is expected to raise an additional $42.2 million within the next 45 days. The program is designed to keep the REIT’s leverage neutral by mid‑2026 while replacing older, capital‑intensive assets with higher‑yielding BBD properties. The immediate accretion to cash flow and the neutral impact on leverage reinforce the company’s focus on portfolio quality and sustainable growth.
Management highlighted the strategic fit of both properties, noting that Bloc83 adds 2.0 million square feet of high‑quality space to Highwoods’ Raleigh portfolio and that The Terraces expands the REIT’s presence in a high‑growth Dallas market. CEO Ted Klinck said the acquisitions “strengthen our portfolio quality and support our projected NOI growth trajectory for 2026‑27.” The deals are expected to enhance the REIT’s earnings profile, provide a margin‑neutral rotation, and position Highwoods to capture upside in two of the Sun Belt’s most resilient office markets.
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