Highwoods Properties Inc. (HIW - Free Report) reported second-quarter 2016 funds from operations (“FFO”) of 82 cents per share, which beat the Zacks Consensus Estimate by 2 cents. 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 12.3% year over year to $166.9 million. The top line surpassed the Zacks Consensus Estimate of $164.1 million.
Quarter in Detail
Highwoods leased 907,000 square feet of second-generation office space during the quarter. Same property cash NOI rose 4.5% year over year.
During second-quarter 2016, Highwoods acquired land in the Maryland Farms submarket of Nashville for $9 million. Also, the company sold one building in Kansas City for $14.2 million.
As of Jun 30, 2016, Highwoods had $2.4 million of cash and cash equivalents, down from $5 million as of Dec 31, 2015.
2016 Outlook
Highwoods has narrowed its 2016 FFO outlook to $3.20–$3.28, from the earlier guidance of $3.18–$3.30. The Zacks Consensus Estimate of $3.25 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 Apple Hospitality REIT, Inc. (APLE - Free Report) , CoreSite Realty Corporation (COR - Free Report) and CubeSmart (CUBE - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy).
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 Properties Inc. (HIW - Free Report) reported second-quarter 2016 funds from operations (“FFO”) of 82 cents per share, which beat the Zacks Consensus Estimate by 2 cents. 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 12.3% year over year to $166.9 million. The top line surpassed the Zacks Consensus Estimate of $164.1 million.
Quarter in Detail
Highwoods leased 907,000 square feet of second-generation office space during the quarter. Same property cash NOI rose 4.5% year over year.
During second-quarter 2016, Highwoods acquired land in the Maryland Farms submarket of Nashville for $9 million. Also, the company sold one building in Kansas City for $14.2 million.
As of Jun 30, 2016, Highwoods had $2.4 million of cash and cash equivalents, down from $5 million as of Dec 31, 2015.
2016 Outlook
Highwoods has narrowed its 2016 FFO outlook to $3.20–$3.28, from the earlier guidance of $3.18–$3.30. The Zacks Consensus Estimate of $3.25 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 Apple Hospitality REIT, Inc. (APLE - Free Report) , CoreSite Realty Corporation (COR - Free Report) and CubeSmart (CUBE - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy).
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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