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Highwoods (HIW) Misses Q4 FFO Estimates, Collects 99.7% Rents

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Highwoods Properties, Inc.’s (HIW - Free Report) fourth-quarter 2020 funds from operations (FFO) per share of 87 cents missed the Zacks Consensus Estimate of 88 cents. Also, the reported figure declined 4.4% from 91 cents recorded in the year-ago period.

Results were impacted by a decline in rental income and occupancy. The company has also provided the outlook for 2021.

Rental and other revenues of $179.9 million in the fourth quarter decreased 6.3% year over year. Moreover, the reported figure marginally missed the Zacks Consensus Estimate of $180.1 million.

For 2020, Highwoods reported FFO per share of $3.58, up 7.5% from the prior year’s $3.33 but missing the Zacks Consensus Estimate of $3.60. Total revenues of $736.9 million were up 0.13% year over year.

Regarding its rental receipts, management announced that it collected 99.7% of rents for the October-December quarter.

Per Management, “In the midst of the COVID-19 pandemic, we focused on lowering operating expenses, collecting rents, shoring up lease renewals, selling non-core properties and increasing our liquidity.”

Quarter in Detail

Highwoods leased 466,000 square feet of second-generation office space in the fourth quarter, including 160,000 square feet of new leases. In-place office cash rent was up 4.6% on a year-over-year basis.

At the end of the reported quarter, in-service occupancy was 90.3%.

Excluding the negative impacts of the temporary rent deferral agreements, same-property cash net operating income (NOI) increased 1.6% year over year.

As of Dec 31, 2020, Highwoods had $10.3 million of cash and cash-equivalents compared with $9.5 million reported as of Dec 31, 2019. The company exited the reported quarter with full availability of funds under its $600-million credit facility and a net debt-to-adjusted EBITDAre ratio of 5.0X.

In the fourth quarter, the company sold non-core office buildings in Memphis and Greensboro for $129.7 million.

Guidance

Highwoods expects 2021 FFO per share of $3.50-$3.66. The Zacks Consensus Estimate for the same is pegged at $3.60.

Same-property cash NOI is projected at 3-5% for 2021, while year-end occupancy is estimated to be 88.5-91.5%. Dispositions in 2021 are expected to be $100-$150 million, while acquisitions are likely to be up to $200 million.

Highwoods currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Highwoods Properties, Inc. Price, Consensus and EPS Surprise

 

Highwoods Properties, Inc. Price, Consensus and EPS Surprise

Highwoods Properties, Inc. price-consensus-eps-surprise-chart | Highwoods Properties, Inc. Quote

We now look forward to the earnings releases of other REITs like SBA Communications Corporation (SBAC - Free Report) , PS Business Parks, Inc. (PSB - Free Report) and Extra Space Storage (EXR - Free Report) , whichare slated to report fourth-quarter earnings on Feb 22.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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