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Highwoods Properties Inc.’s (HIW - Free Report) first-quarter 2022 funds from operations (FFO) per share of $1.03 surpassed the Zacks Consensus Estimate of 97 cents.
Rental and other revenues of $206.4 million outpaced the Zacks Consensus Estimate of $201.5 million.
On a year-over-year basis, the FFO per share increased 13.2%, while rental and other revenues climbed 12.3%.
Decent leasing activity and improvement in same-property cash net operating income (NOI) growth aided HIW’s results. Yet, the company’s shares have lost 1.5% since the release of first-quarter results.
According to Ted Klinck, president and CEO, “We have once again reported strong financial and operating results. The consistency of our performance prior to and throughout the pandemic validates the resiliency of our portfolio, platform and strategy. In the first quarter, we posted meaningful FFO and same property cash NOI growth.”
Quarter in Detail
Highwoods leased 658,000 square feet of second-generation office space in the first quarter, including 391,000 square feet of new leases. It also leased 23,000 square feet of first-generation office space during the quarter. Moreover, 615,000 square feet of Development Pipeline was pre-leased 55% for $283 million.
Operating expenses were $144.6 million, up 13.8% on a year-over-year basis.
The average in-place cash rent was up 4.2% per square foot from the prior-year quarter, while the dollar-weighted average term was 6.4 years. At the end of the reported quarter, office portfolio occupancy decreased from 91.2% as of Dec 31, 2021, to 91.1% on Mar 31, 2022.
Excluding the net impact of temporary rent deferral repayments, the same-property cash NOI increased 2.9% year over year to $199.3 million.
Portfolio Activity
Highwoods Properties signed two new leases in Tampa for a total of 183,000 square feet during the first quarter. The first is a 71,000 square foot lease at 5332 Avion in Tampa’s Westshore BBD totaling 5332 Avion’s lease to 95%. The second is a 112,000 square foot lease at One Independence in Tampa, also located at Tampa’s Westshore BBD.
During the reported quarter, the company sold land in Tampa for a sale value of $9.6 million and recorded a gain on disposition of property of $4.1 million.
Liquidity
Highwoods exited first-quarter 2022 with $18.7 million of cash and cash equivalents, down from $23.2 million reported as of Dec 31, 2021. The reported net debt-to-adjusted EBITDAre ratio was 5.3 compared to 5.1 at the end of Mar 31, 2021.
The company holds sufficient liquidity of $640 million from the available $750 million revolving credit facility.
Guidance
Highwoods Properties revised its 2022 FFO outlook. It now predicts FFO per share to lie in the range of $3.82-$3.98, up from the prior estimation of $3.76 to $3.92. The Zacks Consensus Estimate for the same is pegged at $3.87.
The same-property cash NOI, excluding termination fees and the net impact of temporary rent deferrals for the current year, is projected at 0.5-2%, while the year-end occupancy is estimated to be 91-92.5%. Planned building dispositions are expected to be in the band of $140-$190 million.
UDR Inc. (UDR - Free Report) reported first-quarter 2022 FFO as adjusted per share of 55 cents, in line with the Zacks Consensus Estimate. The figure is 17% higher than the prior-year quarter’s 47 cents.
UDR’s quarterly revenues climbed 18.5% year over year to $357.3 million. The top line surpassed the Zacks Consensus Estimate of $353.8 million.
An increase in revenues from rental income fueled the quarter’s top-line growth. Robust operating trends and strong pricing power were major contributing factors.
Essex Property Trust Inc. (ESS - Free Report) reported first-quarter 2022 core FFO per share of $3.37, beating the Zacks Consensus Estimate of $3.34. The figure also improved 9.8% from the year-ago quarter. Additionally, total revenues of $381.9 million surpassed the Zacks Consensus Estimate of $376.3 million. The figure increased 7.5% year over year.
Improvement in same-property revenues and net operating income during the quarter supported growth in ESS’ core FFO.
Equity Residential’s (EQR - Free Report) reported first-quarter 2022 normalized FFO per share of 77 cents, missing the Zacks Consensus Estimate of 80 cents. Rental income came in at $653.3 million, lagging the consensus mark of $658.07 million. Nonetheless, on a year-over-year basis, normalized FFO per share improved 13.2%, while rental income climbed 9.3%.
EQR’s normalized FFO grew based on strong lease demand, while same-store revenue witnessed growth driven by strong physical occupancy and improvement in pricing power.
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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Highwoods (HIW) Stock Down 1.5% Despite Q1 FFO & Revenue Beat
Highwoods Properties Inc.’s (HIW - Free Report) first-quarter 2022 funds from operations (FFO) per share of $1.03 surpassed the Zacks Consensus Estimate of 97 cents.
Rental and other revenues of $206.4 million outpaced the Zacks Consensus Estimate of $201.5 million.
On a year-over-year basis, the FFO per share increased 13.2%, while rental and other revenues climbed 12.3%.
Decent leasing activity and improvement in same-property cash net operating income (NOI) growth aided HIW’s results. Yet, the company’s shares have lost 1.5% since the release of first-quarter results.
According to Ted Klinck, president and CEO, “We have once again reported strong financial and operating results. The consistency of our performance prior to and throughout the pandemic validates the resiliency of our portfolio, platform and strategy. In the first quarter, we posted meaningful FFO and same property cash NOI growth.”
Quarter in Detail
Highwoods leased 658,000 square feet of second-generation office space in the first quarter, including 391,000 square feet of new leases. It also leased 23,000 square feet of first-generation office space during the quarter. Moreover, 615,000 square feet of Development Pipeline was pre-leased 55% for $283 million.
Operating expenses were $144.6 million, up 13.8% on a year-over-year basis.
The average in-place cash rent was up 4.2% per square foot from the prior-year quarter, while the dollar-weighted average term was 6.4 years.
At the end of the reported quarter, office portfolio occupancy decreased from 91.2% as of Dec 31, 2021, to 91.1% on Mar 31, 2022.
Excluding the net impact of temporary rent deferral repayments, the same-property cash NOI increased 2.9% year over year to $199.3 million.
Portfolio Activity
Highwoods Properties signed two new leases in Tampa for a total of 183,000 square feet during the first quarter. The first is a 71,000 square foot lease at 5332 Avion in Tampa’s Westshore BBD totaling 5332 Avion’s lease to 95%. The second is a 112,000 square foot lease at One Independence in Tampa, also located at Tampa’s Westshore BBD.
During the reported quarter, the company sold land in Tampa for a sale value of $9.6 million and recorded a gain on disposition of property of $4.1 million.
Liquidity
Highwoods exited first-quarter 2022 with $18.7 million of cash and cash equivalents, down from $23.2 million reported as of Dec 31, 2021. The reported net debt-to-adjusted EBITDAre ratio was 5.3 compared to 5.1 at the end of Mar 31, 2021.
The company holds sufficient liquidity of $640 million from the available $750 million revolving credit facility.
Guidance
Highwoods Properties revised its 2022 FFO outlook. It now predicts FFO per share to lie in the range of $3.82-$3.98, up from the prior estimation of $3.76 to $3.92. The Zacks Consensus Estimate for the same is pegged at $3.87.
The same-property cash NOI, excluding termination fees and the net impact of temporary rent deferrals for the current year, is projected at 0.5-2%, while the year-end occupancy is estimated to be 91-92.5%. Planned building dispositions are expected to be in the band of $140-$190 million.
Highwoods currently carries a Zacks Rank #4 (Sell).
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-eps-surprise-chart | Highwoods Properties, Inc. Quote
Performance of Other REITs
UDR Inc. (UDR - Free Report) reported first-quarter 2022 FFO as adjusted per share of 55 cents, in line with the Zacks Consensus Estimate. The figure is 17% higher than the prior-year quarter’s 47 cents.
UDR’s quarterly revenues climbed 18.5% year over year to $357.3 million. The top line surpassed the Zacks Consensus Estimate of $353.8 million.
An increase in revenues from rental income fueled the quarter’s top-line growth. Robust operating trends and strong pricing power were major contributing factors.
Essex Property Trust Inc. (ESS - Free Report) reported first-quarter 2022 core FFO per share of $3.37, beating the Zacks Consensus Estimate of $3.34. The figure also improved 9.8% from the year-ago quarter. Additionally, total revenues of $381.9 million surpassed the Zacks Consensus Estimate of $376.3 million. The figure increased 7.5% year over year.
Improvement in same-property revenues and net operating income during the quarter supported growth in ESS’ core FFO.
Equity Residential’s (EQR - Free Report) reported first-quarter 2022 normalized FFO per share of 77 cents, missing the Zacks Consensus Estimate of 80 cents. Rental income came in at $653.3 million, lagging the consensus mark of $658.07 million. Nonetheless, on a year-over-year basis, normalized FFO per share improved 13.2%, while rental income climbed 9.3%.
EQR’s normalized FFO grew based on strong lease demand, while same-store revenue witnessed growth driven by strong physical occupancy and improvement in pricing power.
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.