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Highwoods Properties' (HIW) Q3 FFO Tops Estimates, NOI Up
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Highwoods Properties Inc. (HIW - Free Report) reported third-quarter 2018 funds from operations (FFO) of 86 cents per share, beating the Zacks Consensus Estimate. Also, the figure remained unchanged year-over-year.
Results indicate growth in average in-place office cash rent per square foot and GAAP rent for second-generation office space. Also, the company witnessed growth in same-property cash net operating income (NOI).
Total revenues of $179.42 million surpassed the Zacks Consensus Estimate of $177.7 million. However, it compares unfavorably to the year-ago tally of $180.2 million.
Quarter in Detail
Highwoods leased 884,000 square feet of second-generation office space during the third quarter. Further, same-property cash NOI inched up 1.4% year over year.
At the end of the third quarter, the company’s development pipeline totaled $658 million and was 96% pre-leased. During the quarter, it placed two properties worth $67 million in service which were 84% leased.
Further, Highwoods sold a 24-acre industrial non-core land parcel for $2.1 million.
The company paid off bank term loan worth $10 million at LIBOR plus 110 basis points (bps). Notably, it did not issue any shares under the ATM program.
As of Sep 30, 2018, Highwoods had $5.3 million of cash and cash-equivalents compared with $3.2 million reported as of Dec 31, 2017.
2018 Outlook
Highwoods expects 2018 FFO per share of $3.42-$3.45, increasing the lower end and mid-point, from the previous range of $3.39-$3.45. The Zacks Consensus Estimate for the same is currently pinned at $3.43.
Our Viewpoint
Highwoods raised the mid-point of its 2018 FFO outlook. This indicates management’s positive view for the remaining 2018.
Nonetheless, the company witnessed year-over-year decline in straight-line rental income during the Sep-end quarter. Notably, the company faces intense competition from developers, owners and operators of office properties, as well as other commercial real estates. This restricts the company’s ability to attract and retain tenants at relatively higher rents than its competitors, thereby affecting the pricing power.
Further, interest-rate hike remains a concern for the company. This is because the company’s ability to refinance existing debt would be restricted, while the interest cost on new debt would increase. This could affect the company’s results and consequently dent its dividend payout. In fact, the company witnessed higher interest expenses year over year.
Highwoods Properties, Inc. Price, Consensus and EPS Surprise
We now look forward to the earnings releases of other REITs like Outfront Media (OUT - Free Report) , Vornado Realty Trust (VNO - Free Report) and UDR Inc. (UDR - Free Report) . All three companies are scheduled to release their quarterly figures on Oct 29.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Image: Bigstock
Highwoods Properties' (HIW) Q3 FFO Tops Estimates, NOI Up
Highwoods Properties Inc. (HIW - Free Report) reported third-quarter 2018 funds from operations (FFO) of 86 cents per share, beating the Zacks Consensus Estimate. Also, the figure remained unchanged year-over-year.
Results indicate growth in average in-place office cash rent per square foot and GAAP rent for second-generation office space. Also, the company witnessed growth in same-property cash net operating income (NOI).
Total revenues of $179.42 million surpassed the Zacks Consensus Estimate of $177.7 million. However, it compares unfavorably to the year-ago tally of $180.2 million.
Quarter in Detail
Highwoods leased 884,000 square feet of second-generation office space during the third quarter. Further, same-property cash NOI inched up 1.4% year over year.
At the end of the third quarter, the company’s development pipeline totaled $658 million and was 96% pre-leased. During the quarter, it placed two properties worth $67 million in service which were 84% leased.
Further, Highwoods sold a 24-acre industrial non-core land parcel for $2.1 million.
The company paid off bank term loan worth $10 million at LIBOR plus 110 basis points (bps). Notably, it did not issue any shares under the ATM program.
As of Sep 30, 2018, Highwoods had $5.3 million of cash and cash-equivalents compared with $3.2 million reported as of Dec 31, 2017.
2018 Outlook
Highwoods expects 2018 FFO per share of $3.42-$3.45, increasing the lower end and mid-point, from the previous range of $3.39-$3.45. The Zacks Consensus Estimate for the same is currently pinned at $3.43.
Our Viewpoint
Highwoods raised the mid-point of its 2018 FFO outlook. This indicates management’s positive view for the remaining 2018.
Nonetheless, the company witnessed year-over-year decline in straight-line rental income during the Sep-end quarter. Notably, the company faces intense competition from developers, owners and operators of office properties, as well as other commercial real estates. This restricts the company’s ability to attract and retain tenants at relatively higher rents than its competitors, thereby affecting the pricing power.
Further, interest-rate hike remains a concern for the company. This is because the company’s ability to refinance existing debt would be restricted, while the interest cost on new debt would increase. This could affect the company’s results and consequently dent its dividend payout. In fact, the company witnessed higher interest expenses year over year.
Highwoods Properties, Inc. Price, Consensus and EPS Surprise
Highwoods Properties, Inc. Price, Consensus and EPS Surprise | Highwoods Properties, Inc. Quote
Highwoods currently carries a Zacks Rank #4 (Sell).
You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We now look forward to the earnings releases of other REITs like Outfront Media (OUT - Free Report) , Vornado Realty Trust (VNO - Free Report) and UDR Inc. (UDR - Free Report) . All three companies are scheduled to release their quarterly figures on Oct 29.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>