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Highwoods' (HIW) Q3 FFO Beats Estimates, Ups 2016 Outlook
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Highwoods Properties Inc. (HIW - Free Report) reported third-quarter 2016 funds from operations (“FFO”) of 82 cents per share, which beat the Zacks Consensus Estimate by a penny. Further, the bottom line improved 5 cents year over year. Results reflected strong growth in same-property net operating income (“NOI”) and average occupancy.
Total revenue for the quarter rose 10.2% year over year to $166.3 million. However, the top line came in below the Zacks Consensus Estimate of $169 million.
Quarter in Detail
Highwoods leased 867,000 square feet of second-generation office space during the quarter. Same property cash NOI rose 6.6% year over year.
During the third quarter, Highwoods acquired Charter Square, a 243,000 square foot office tower in CBD Raleigh, for a total investment of $83.5 million. It acquired fee simple title to a land in Pittsburgh for $18.5 million. Also, Highwoods acquired a development land parcel in CBD Raleigh for $5.8 million. On the disposition front, the company sold land in Tampa for $6.8 million.
As of Sep 30, 2016, Highwoods had $6.4 million of cash and cash equivalents, up from $5 million as of Dec 31, 2015.
2016 Outlook
Highwoods has revised its 2016 FFO outlook up to $3.26–$3.28, from the earlier projection of $3.20–$3.28. The Zacks Consensus Estimate of $3.26 falls within this range.
Our Viewpoint
Improving operating performance promises bright prospects for the company. In particular, Highwoods has been focusing on shifting its portfolio mix toward high-growth Sun Belt markets, where long-term favorable demographic trends are expected to drive above-average job growth.
However, a large development pipeline exposes the company to higher construction costs, lease-up risks and entitlement delays. Moreover, increasing competition in the space restricts its ability to command relatively higher rents.
Highwoods currently carries a Zacks Rank #3 (Hold).
Over the past one month period, the quarterly estimates for Ashford Hospitality Prime, CareTrust REIT and Seritage Growth Properties remained unchanged at 41 cents, 27 cents and 57 cents, respectively.
Note: All EPS numbers presented in this write-up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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Highwoods' (HIW) Q3 FFO Beats Estimates, Ups 2016 Outlook
Highwoods Properties Inc. (HIW - Free Report) reported third-quarter 2016 funds from operations (“FFO”) of 82 cents per share, which beat the Zacks Consensus Estimate by a penny. Further, the bottom line improved 5 cents year over year. Results reflected strong growth in same-property net operating income (“NOI”) and average occupancy.
Total revenue for the quarter rose 10.2% year over year to $166.3 million. However, the top line came in below the Zacks Consensus Estimate of $169 million.
Quarter in Detail
Highwoods leased 867,000 square feet of second-generation office space during the quarter. Same property cash NOI rose 6.6% year over year.
During the third quarter, Highwoods acquired Charter Square, a 243,000 square foot office tower in CBD Raleigh, for a total investment of $83.5 million. It acquired fee simple title to a land in Pittsburgh for $18.5 million. Also, Highwoods acquired a development land parcel in CBD Raleigh for $5.8 million. On the disposition front, the company sold land in Tampa for $6.8 million.
As of Sep 30, 2016, Highwoods had $6.4 million of cash and cash equivalents, up from $5 million as of Dec 31, 2015.
2016 Outlook
Highwoods has revised its 2016 FFO outlook up to $3.26–$3.28, from the earlier projection of $3.20–$3.28. The Zacks Consensus Estimate of $3.26 falls within this range.
Our Viewpoint
Improving operating performance promises bright prospects for the company. In particular, Highwoods has been focusing on shifting its portfolio mix toward high-growth Sun Belt markets, where long-term favorable demographic trends are expected to drive above-average job growth.
However, a large development pipeline exposes the company to higher construction costs, lease-up risks and entitlement delays. Moreover, increasing competition in the space restricts its ability to command relatively higher rents.
Highwoods currently carries a Zacks Rank #3 (Hold).
Investors interested in the REIT industry may consider stocks like Ashford Hospitality Prime, Inc. , CareTrust REIT, Inc. (CTRE - Free Report) and Seritage Growth Properties (SRG - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HIGHWOODS PPTYS Price, Consensus and EPS Surprise
HIGHWOODS PPTYS Price, Consensus and EPS Surprise | HIGHWOODS PPTYS Quote
Over the past one month period, the quarterly estimates for Ashford Hospitality Prime, CareTrust REIT and Seritage Growth Properties remained unchanged at 41 cents, 27 cents and 57 cents, respectively.
Note: All EPS numbers presented in this write-up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>