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Highwoods Properties Inc.’s (HIW - Free Report) third-quarter 2022 funds from operations (FFO) per share of $1.04 surpassed the Zacks Consensus Estimate of 97 cents. The figure climbed 8.3% year over year.
Quarterly results reflect robust leasing activity and improvement in rents. The top line grew year over year. However, the same-property cash net operating income (NOI) took a slight dip from the year-ago quarter’s figure.
Rental and other revenues came in at $206.9 million, outpacing the Zacks Consensus Estimate of $204.5 million. The figure increased 5.9% from the prior-year quarter’s $195.5 million.
According to Ted Klinck, president and CEO, “We leased over one million square feet of second gen office, including 518,000 square feet of new leases, our highest volume of new leasing since 2014, with net effective rents that were more than 20% above our prior five-quarter average. Importantly, we substantially backfilled our largest 2023 lease expiration.”
Quarter in Detail
Highwoods leased 1,035,000 square feet of second-generation office space in the third quarter, including 518,000 square feet of new leases. Moreover, the present development pipeline, which covers around 1.6 million square feet, aggregates $533 million (at HIW share). It is 29.8% pre-leased on a dollar-weighted basis.
Operating expenses were $150.5 million, up 9.5% on a year-over-year basis.
The average in-place cash rent was up 5.9% per square foot from the prior-year quarter, while the dollar-weighted average term was 7.4 years.
As of Sep 30, 2022, HIW’s in-service portfolio occupancy increased 30 basis points year over year to 90.7%.
Excluding the net impact of temporary rent deferral repayments, the same-property cash NOI decreased 1.1% year over year to $113.6 million.
Portfolio Activity
During the third quarter, Highwoods acquired SIX50 at Legacy Union, an office property encompassing 367,000 square feet in Uptown Charlotte, for $203 million.
HIW disposed of a mixed-use land parcel in Richmond for $23 million.
Liquidity
Highwoods exited the third quarter with $23.1 million of cash and cash equivalents, down from $25.1 million reported on Jun 30, 2022. The reported net debt-to-adjusted EBITDAre ratio was 5.6 compared with 5.2 at the end of Jun 30, 2022.
The company holds sufficient liquidity of $640 million from the available $750 million revolving credit facility.
2022 Guidance Raised
Highwoods raised its 2022 FFO per share outlook.
The company now predicts it to lie in the range of $4.02 to $4.04, up from the prior estimation of $3.92-$4.00. The Zacks Consensus Estimate for the same is pegged at $3.96.
HIW retained its guidance for same-property cash NOI, excluding termination fees and the net impact of temporary rent deferrals for the current year, at 0.5-2% and the year-end occupancy between 91% and 92%.
Also, planned acquisitions are expected to lie in the range of $203-$300 million while planned dispositions are expected to be in the band of $133-$200 million.
SL Green Realty Corp. (SLG - Free Report) reported third-quarter 2022 FFO per share of $1.66, beating the Zacks Consensus Estimate of $1.64. The company reported FFO per share of $1.83 in the prior-year quarter. On a pro-forma basis, FFO per share in the year-ago period was $1.78.
The results reflect better-than-anticipated revenues. SLG also witnessed decent leasing activity in the quarter and signed several significant leases at its properties. However, the same-store cash NOI fell year over year.
Crown Castle Inc. (CCI - Free Report) reported third-quarter 2022 adjusted FFO (AFFO) per share of $1.85, beating the Zacks Consensus Estimate of $1.83. Reported AFFO per share compared favorably with the year-ago period’s $1.77.
The rise in site-rental revenues amid elevated tower space demand aided CCI’s year-over-year top-line growth. It also announced a hike in its quarterly cash dividend payment.
Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported third-quarter 2022 AFFO per share of $2.13, surpassing the Zacks Consensus Estimate by a cent. The reported figure also compared favorably with the year-ago quarter’s $1.95.
Results reflect decent leasing activity and rental rate growth during the quarter. Year-over-year improvement in the top line was noticeable.
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) Tops Q3 FFO & Revenues Estimates, Ups View
Highwoods Properties Inc.’s (HIW - Free Report) third-quarter 2022 funds from operations (FFO) per share of $1.04 surpassed the Zacks Consensus Estimate of 97 cents. The figure climbed 8.3% year over year.
Quarterly results reflect robust leasing activity and improvement in rents. The top line grew year over year. However, the same-property cash net operating income (NOI) took a slight dip from the year-ago quarter’s figure.
Rental and other revenues came in at $206.9 million, outpacing the Zacks Consensus Estimate of $204.5 million. The figure increased 5.9% from the prior-year quarter’s $195.5 million.
According to Ted Klinck, president and CEO, “We leased over one million square feet of second gen office, including 518,000 square feet of new leases, our highest volume of new leasing since 2014, with net effective rents that were more than 20% above our prior five-quarter average. Importantly, we substantially backfilled our largest 2023 lease expiration.”
Quarter in Detail
Highwoods leased 1,035,000 square feet of second-generation office space in the third quarter, including 518,000 square feet of new leases. Moreover, the present development pipeline, which covers around 1.6 million square feet, aggregates $533 million (at HIW share). It is 29.8% pre-leased on a dollar-weighted basis.
Operating expenses were $150.5 million, up 9.5% on a year-over-year basis.
The average in-place cash rent was up 5.9% per square foot from the prior-year quarter, while the dollar-weighted average term was 7.4 years.
As of Sep 30, 2022, HIW’s in-service portfolio occupancy increased 30 basis points year over year to 90.7%.
Excluding the net impact of temporary rent deferral repayments, the same-property cash NOI decreased 1.1% year over year to $113.6 million.
Portfolio Activity
During the third quarter, Highwoods acquired SIX50 at Legacy Union, an office property encompassing 367,000 square feet in Uptown Charlotte, for $203 million.
HIW disposed of a mixed-use land parcel in Richmond for $23 million.
Liquidity
Highwoods exited the third quarter with $23.1 million of cash and cash equivalents, down from $25.1 million reported on Jun 30, 2022. The reported net debt-to-adjusted EBITDAre ratio was 5.6 compared with 5.2 at the end of Jun 30, 2022.
The company holds sufficient liquidity of $640 million from the available $750 million revolving credit facility.
2022 Guidance Raised
Highwoods raised its 2022 FFO per share outlook.
The company now predicts it to lie in the range of $4.02 to $4.04, up from the prior estimation of $3.92-$4.00. The Zacks Consensus Estimate for the same is pegged at $3.96.
HIW retained its guidance for same-property cash NOI, excluding termination fees and the net impact of temporary rent deferrals for the current year, at 0.5-2% and the year-end occupancy between 91% and 92%.
Also, planned acquisitions are expected to lie in the range of $203-$300 million while planned dispositions are expected to be in the band of $133-$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-eps-surprise-chart | Highwoods Properties, Inc. Quote
Performance of Other REITs
SL Green Realty Corp. (SLG - Free Report) reported third-quarter 2022 FFO per share of $1.66, beating the Zacks Consensus Estimate of $1.64. The company reported FFO per share of $1.83 in the prior-year quarter. On a pro-forma basis, FFO per share in the year-ago period was $1.78.
The results reflect better-than-anticipated revenues. SLG also witnessed decent leasing activity in the quarter and signed several significant leases at its properties. However, the same-store cash NOI fell year over year.
Crown Castle Inc. (CCI - Free Report) reported third-quarter 2022 adjusted FFO (AFFO) per share of $1.85, beating the Zacks Consensus Estimate of $1.83. Reported AFFO per share compared favorably with the year-ago period’s $1.77.
The rise in site-rental revenues amid elevated tower space demand aided CCI’s year-over-year top-line growth. It also announced a hike in its quarterly cash dividend payment.
Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported third-quarter 2022 AFFO per share of $2.13, surpassing the Zacks Consensus Estimate by a cent. The reported figure also compared favorably with the year-ago quarter’s $1.95.
Results reflect decent leasing activity and rental rate growth during the quarter. Year-over-year improvement in the top line was noticeable.
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.