June 29, 2010 (FinancialWire) — Highwoods Properties, Inc. (NYSE: HIW), an owner and operator of suburban office properties in the Southeast, said that it has sold, in separate transactions, Madison Park, a non-core office park in Winston-Salem, for $12.9 million, and Chimney Rock, a non-core industrial park in Greensboro, for $12 million.

Inclusive of these dispositions, Highwoods has sold $125 million of non-core assets in 2010, in-line with its previously stated guidance of $50 million to $150 million.

Madison Park consists of seven office buildings encompassing 472,200 square feet that are, on average, 25 years old and 51% occupied. According to Highwoods, Madison Park was expected to generate $1.2 million of net operating income for full year 2010.

As part of the Madison Park transaction, Highwoods received $4.5 million in cash and provided $8.4 million in non-recourse first mortgage seller financing. The three-year, interest-only note carries a 6% average interest rate. Assuming no default exists, the note can be extended by the buyer for two additional one-year periods, subject to an increase in the interest rate to 7% in the fourth year and to 8% in the fifth year.

Additionally, Highwoods provided a secured credit facility of up to $1.65 million to be used to fund 50% of future leasing-related capital expenditures for currently vacant space. This facility has the same terms as the $8.4 million first mortgage financing plus is fully recourse to the buyer.

The company said that a roughly $0.4 million gain on the sale of Madison Park will be deferred until the seller financing is repaid. Highwoods will provide property management services for these assets for customary fees.

Chimney Rock includes six industrial buildings encompassing 836,500 square feet that are, on average, 25 years old and 58% occupied. Chimney Rock was expected to generate $0.7 million of net operating income for full year 2010.

As part of the Chimney Rock transaction, Highwoods received $3.4 million in cash and provided $8.6 million in non-recourse first mortgage seller financing. The three-year, interest-only note carries a 6.25% average interest rate. Assuming no default exists, the note can be extended by the buyer for two additional one-year periods, subject to an increase in the interest rate to 7% in the fourth year and to 7.75% in the fifth year.

The company will report a roughly $0.3 million impairment charge in the second quarter related to this sale.

Also in connection with this sale, the company entered into a guarantee agreement with the buyer relating to an existing 237,500 square foot lease with one customer, who has leased space at Chimney Rock for 14 years.

North Carolina-based Highwoods Properties is a self-administered real estate investment trust that provides leasing, management, development, construction and other customer-related services for its properties and for third parties.

At March 31, 2010, the company owned or had an interest in 378 in-service office, industrial and retail properties encompassing roughly 35.7 million square feet. Highwoods also owned 581 acres of development land.

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