Highwoods Properties and USAA Real Estate Company Awarded 171,000 Square Foot Build-to-Suit Lease by U.S. General Services Administration
Highwoods Properties, Inc. (NYSE: HIW), the largest owner and operator of suburban office properties in the Southeast and NAIOP’s 2009 Developer of the Year, today announced that a joint venture (JV) between Highwoods and USAA Real Estate Company has been awarded a build-to-suit lease by the U.S. General Services Administration (GSA) to develop an approximately $45 million field office for the Federal Bureau of Investigation (FBI) in Charlotte, North Carolina. The approximate 171,000 square foot, five-story Class A office building and annex, with structured and surface parking, will be built on an approximate 11.6-acre parcel of land the JV is acquiring. This building will be Leadership in Energy and Environmental Design (“LEED”) certified. Construction is scheduled to commence in the first quarter of 2010 and is expected to be completed in the second quarter of 2011.
Ed Fritsch, president and chief executive officer of Highwoods, commented, “We are pleased to be developing a third field office for the FBI and further expanding our relationship with the GSA. We are also proud to partner with USAA Real Estate Company, a top quality firm for whom we have great respect. I congratulate our team for their hard work and continued success in leveraging our extensive knowledge and experience in working with the GSA to secure another 100% pre-leased development project. We also thank the GSA for their continued confidence in Highwoods.”
Highwoods will have a 10% ownership interest in the JV and will also receive a fee for developing the building. The total stabilized cash return, including fees, to Highwoods over the 15-year lease term is projected to be 11.5%.
Including the Charlotte FBI field office, the U.S. Government has recently awarded Highwoods $206 million of 100% long-term pre-leased development, encompassing eight projects totaling 1.2 million square feet. To date, Highwoods has delivered six of these developments, and is currently developing a $34.9 million, 110,000 square foot Class A office building for the FBI in Jackson, Mississippi.
“We are especially pleased to be working again with the GSA and the FBI as it provides another opportunity to further our already strong and positive working relationship with the two agencies” says T. Patrick Duncan, chairman and CEO of USAA Real Estate Company. “Also with their extensive office and GSA experience, we look forward to working with the Highwoods Team on this project and hopefully many more such developments in the future.”
This project will also nicely complement USAA Real Estate Company’s other GSA holdings purchased by their US Government Building Fund which continues to actively acquire GSA buildings across the country. One of the Fund’s holdings is the 430,000 square foot FBI Chicago Field Office which this year was awarded a Platinum-level Leadership in Energy and Environmental Design for Existing Buildings (LEED EBOM) award from the United States Green Building Council (USGBC). The facility is USGBC’s first LEED EBOM Platinum recipient in the world.
About USAA Real Estate Company
USAA Real Estate Company (“RealCo”), with over $5 billion of assets, provides co-investment, acquisition, build-to-suit and development services for corporate and institutional investors. The USAA portfolio consists of office, industrial, retail and hotel properties with annual volume transactions exceeding $3 billion. In 2009 RealCo was once again awarded the 2009 ENERGY STAR Sustained Excellence Award in recognition of its continued leadership in protecting the environment through energy efficiency and is the only real estate company in America that has won seven ENERGY STAR awards. USAA Real Estate Company is a subsidiary of USAA, which has served military families since 1922 and has become one of America’s leading financial services companies. For more information, visit www.usrealco.com.
About Highwoods Properties
Highwoods Properties, Inc., a member of the S&P MidCap 400 Index, is a fully integrated, self-administered real estate investment trust (“REIT”) that provides leasing, management, development, construction and other customer-related services for its properties and for third parties. At June 30, 2009, the Company owned or had an interest in 378 in-service office, industrial and retail properties encompassing approximately 35.2 million square feet. Highwoods also owned 580 acres of development land. Highwoods is based in Raleigh, North Carolina, and its properties and development land are located in Florida, Georgia, Iowa, Missouri, Mississippi, North Carolina, South Carolina, Tennessee and Virginia. For more information about Highwoods Properties, please visit our Web site at www.highwoods.com.
Certain matters discussed in this press release, such as the expected timing and impact of our development activity, are forward-looking statements within the meaning of the federal securities laws. These statements are distinguished by use of the words “will”, “expect”, “intends” and words of similar meaning. Although Highwoods believes that 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: the financial condition of our customers could deteriorate; unwaived defaults, if any, under our debt instruments could result in an acceleration of some of our outstanding debt; speculative development by others could result in excessive supply of office 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 space quickly or on as favorable terms as old leases; unexpected difficulties in obtaining additional capital to satisfy our future cash needs or unexpected increases in interest rates would increase our debt service costs; and others detailed in the Company’s 2008 Annual Report on Form 10-K and subsequent SEC reports.