Preferred Apartment Communities, Inc. (“PAC” or the “Company”) today announced that the Company has entered into an agreement to sell a portfolio of seven office properties and one office real estate loan investment to Highwoods Properties, Inc. for an aggregate purchase price of $717.5 million, including the assumption of debt. The transactions are expected to close in the third quarter of 2021 and are subject to customary closing conditions. The transactions have been unanimously approved by the Company’s Board of Directors. Highwoods is posting $50 million of earnest money deposits that are non-refundable except in limited circumstances. The portfolio was marketed by JLL.
“We are very pleased to announce this strategic agreement to sell the substantial majority of our office portfolio to Highwoods Properties. This sale will build upon our strategy to simplify our business platform that commenced with the sale of our student housing portfolio in the 2nd half of 2020. Upon closing, PAC’s real estate portfolio will be further streamlined with an increased primary weighting on our core Class A suburban Sunbelt multifamily business and our complementary 100% grocery-anchored Sunbelt retail investments. As we did with the student housing sale, we intend to utilize the cash proceeds generated from this sale (i) to continue to realign our balance sheet through calls and/or redemptions of our Series A preferred shares, (ii) to continue growing our core portfolio through acquisitions and real estate loan investments, and (iii) for other corporate purposes. Highwoods has demonstrated their commitment to this significant transaction and their sector experience throughout the process, and both groups worked very well together during the due diligence phase,” stated Joel T. Murphy, Preferred Apartment Communities’ President and Chief Executive Officer.
Mr. Murphy continued, “We will remain focused on maximizing the value of our few remaining office assets through prudent asset management and then effect a complete exit from the office sector through a controlled and well-navigated disposition process over time. We are grateful to the entire team at PAC for their hard work and commitment throughout this process, and particularly so to the professionals in our office group who assembled and operated this high quality portfolio of assets over these past five years.”
The portfolio includes seven properties and one real estate loan investment:
As part of the transaction, PAC will separately market Armour Yards and 251 Armour for sale to a third party. The Armour Yards and 251 Armour transaction may close earlier or later than the third quarter of 2021 depending on whether PAC chooses to sell them to a third party purchaser or requires Highwoods to purchase them (with an outside date in the first quarter of 2022).
The financial impacts of these planned disposition and investment activities were not included in the Company’s 2021 Core FFO per share guidance released on March 1, 2021. The Company anticipates that the transaction will reduce Core FFO following closing but this may be offset to some extent based on the use of the proceeds, the timing of redeployment of proceeds, and G&A savings. The Company will provide updated 2021 Core FFO guidance as part of its first quarter earnings release on May 10, 2021.
JLL acted as exclusive real estate advisor, Goldman Sachs & Co. LLC acted as exclusive financial advisor, and King & Spalding LLP acted as legal advisor to PAC.
About Preferred Apartment Communities, Inc.
Preferred Apartment Communities, Inc. is a real estate investment trust engaged primarily in the ownership and operation of Class A multifamily properties, with select investments in grocery-anchored shopping centers and Class A office buildings. Preferred Apartment Communities’ investment objective is to generate attractive, stable returns for stockholders by investing in income-producing properties and acquiring or originating real estate loans. As of December 31, 2020, the Company owned or was invested in 116 properties in 13 states, predominantly in the Southeast region of the United States. Learn more at www.pacapts.com.
The SEC has declared effective the registration statement (including prospectus) filed by the Company for each of the offerings to which this communication may relate. Before you invest, you should read the final prospectus, and any prospectus supplements, forming a part of the registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the offering to which this communication may relate. In particular, you should carefully read the risk factors described in the final prospectus and in any related prospectus supplement and in the documents incorporated by reference in the final prospectus and any related prospectus supplement to which this communication may relate. You may obtain these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the Company or its dealer manager, Preferred Capital Securities, LLC, with respect to its Series A1/M1 Redeemable Preferred Stock Offering, will arrange to send you a prospectus if you request it by calling John A. Isakson at (770) 818-4109, 3284 Northside Parkway NW, Suite 150, Atlanta, Georgia 30327.