Edward Fritsch, president and CEO of Highwoods Properties, Inc. (NYSE: HIW), joined REIT.com for a CEO Spotlight video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.
Fritsch reflected on his company’s significant refocusing of its portfolio over the last several years and indicated that it remains a work in progress.
“We feel like there’s no finish line in business, that it’s a constant culling process and that you continually look at what you have and the dynamics of the market,” he said.
Fritsch noted that the refocusing shift started in 2005 when the company launched its strategic plan, “and we’ve changed our portfolio dramatically since then.”
In the last three years, Highwoods has been active on the acquisition side of its business, according to Fritsch. That activity has been supplemented by development and dispositions. In 2013 alone Highwoods has done about $1 billion of activity in development, acquisitions and dispositions, he said.
“We’ve been active, we’re pleased with it, and there’s still work to be done, given the ‘no finish line’ mantra,” Fritsch said.
Turning to the office market, Fritsch reported that Highwoods has been fortunate to identify “a number of acquisitions that have been very meaningful to our portfolio under terms which we found to be attractive.” But Highwoods has also found build-to-suit opportunities “where we’ve been able to put a significant component of our inventory land into play by doing build to suits and expand our synergies within that market.” Fritsch noted that Highwoods has been active on both ends of the office market and wouldn’t choose one over the other, but added that “it’s very important to be contemplative about which you’re doing when.”
Looking ahead to 2014, Fritsch predicted “another year of businesses punching through government obstacles” to growth. Businesses have more cash on their balance sheets than ever, he observed, along with low amounts of debt. Credit markets, meanwhile, remain largely untapped, he said. Fritsch added that Highwoods is anticipating good leasing activity in the coming year with higher rents in certain markets, boosted in part by the absence of any measurable amount of new development.
“We’re fairly bullish on 2014,” Fritsch said.