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Highwoods (HIW) Q1 FFO Miss Estimates, '24 View Revised
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Highwoods Properties Inc. (HIW - Free Report) reported first-quarter 2024 funds from operations (FFO) per share of 89 cents, missing the Zacks Consensus Estimate of 90 cents. The figure was also lower than the prior-year quarter’s 98 cents.
Quarterly results reflect a fall in occupancy and higher operating expenses. It also revised its outlook for 2024.
Rental and other revenues came in at $211.3 million, outpacing the Zacks Consensus Estimate of $207 million.
On a year-over-year basis, rental and other revenues fell marginally, while FFO per share declined 9.2%.
According to Ted Klinck, president and CEO of HIW, “Our high-quality portfolio in the BBDs of our SunBelt markets is generating strong demand from customers and prospects. We followed strengthening leasing volume late in 2023 with robust 2nd gen new leasing of over 400,000 square feet to begin the year and 157,000 square feet of 1st gen leases. We continued to improve our portfolio quality and long-term cash flow outlook by selling nearly $80 million of non-core properties in the first four months of the year.”
Quarter in Detail
Highwoods leased 922,000 square feet of second-generation office space in the first quarter, including 423,000 square feet of new leases. Moreover, the present development pipeline aggregates $506 million (at HIW share). It is 41% pre-leased on a dollar-weighted basis.
Operating expenses were $156.6 million, up 5.3% on a year-over-year basis. We estimated the metric to be $156.7 million.
The average in-place cash rent was up 5.7% per square foot from the prior-year quarter, while the dollar-weighted average term was 6.7 years.
At the end of the reported quarter, HIW’s in-service portfolio occupancy (at HIW share) declined 110 basis points year over year to 88.5%. We estimated the same to be 88.9%.
The same-property cash net operating income (NOI) increased marginally year over year to $141.5 million.
During the first quarter, Highwoods disposed of two non-core office buildings aggregating $16.9 million in Raleigh.
Balance-Sheet Position
The company exited the first quarter with $16.4 million of cash and cash equivalents, down from $25.1 million reported as of Dec 31, 2023.
The reported net debt-to-adjusted EBITDAre ratio was 6.09 compared with 6.13 at the end of Dec 31, 2023.
2024 Guidance
Highwoods revised its guidance for 2024.
The company now expects FFO per share to be in the range of $3.46-$3.61, revised from the prior guided range of $3.46-$3.64. The Zacks Consensus Estimate for the same is currently pegged at $3.57.
HIW expects same-property cash NOI, excluding termination fees, to be between 0.5% and 2%. The average occupancy is anticipated between 87% and 89%, unchanged from the prior guided range.
Highwoods currently carries a Zacks Rank #3 (Hold).
Highwoods Properties, Inc. Price, Consensus and EPS Surprise
We are looking forward to the earnings releases of other REITs like Welltower (WELL - Free Report) and SBA Communications (SBAC - Free Report) , which are slated to report their results on Apr 29.
The Zacks Consensus Estimate for Welltower’s first-quarter 2024 FFO per share is pegged at 94 cents, implying a year-over-year increase of 10.6%. WELL currently carries a Zacks Rank of #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SBA Communications’ first-quarter 2024 FFO per share is pegged at $3.30, suggesting year-over-year growth of 5.4%. SBAC currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.
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Highwoods (HIW) Q1 FFO Miss Estimates, '24 View Revised
Highwoods Properties Inc. (HIW - Free Report) reported first-quarter 2024 funds from operations (FFO) per share of 89 cents, missing the Zacks Consensus Estimate of 90 cents. The figure was also lower than the prior-year quarter’s 98 cents.
Quarterly results reflect a fall in occupancy and higher operating expenses. It also revised its outlook for 2024.
Rental and other revenues came in at $211.3 million, outpacing the Zacks Consensus Estimate of $207 million.
On a year-over-year basis, rental and other revenues fell marginally, while FFO per share declined 9.2%.
According to Ted Klinck, president and CEO of HIW, “Our high-quality portfolio in the BBDs of our SunBelt markets is generating strong demand from customers and prospects. We followed strengthening leasing volume late in 2023 with robust 2nd gen new leasing of over 400,000 square feet to begin the year and 157,000 square feet of 1st gen leases. We continued to improve our portfolio quality and long-term cash flow outlook by selling nearly $80 million of non-core properties in the first four months of the year.”
Quarter in Detail
Highwoods leased 922,000 square feet of second-generation office space in the first quarter, including 423,000 square feet of new leases. Moreover, the present development pipeline aggregates $506 million (at HIW share). It is 41% pre-leased on a dollar-weighted basis.
Operating expenses were $156.6 million, up 5.3% on a year-over-year basis. We estimated the metric to be $156.7 million.
The average in-place cash rent was up 5.7% per square foot from the prior-year quarter, while the dollar-weighted average term was 6.7 years.
At the end of the reported quarter, HIW’s in-service portfolio occupancy (at HIW share) declined 110 basis points year over year to 88.5%. We estimated the same to be 88.9%.
The same-property cash net operating income (NOI) increased marginally year over year to $141.5 million.
During the first quarter, Highwoods disposed of two non-core office buildings aggregating $16.9 million in Raleigh.
Balance-Sheet Position
The company exited the first quarter with $16.4 million of cash and cash equivalents, down from $25.1 million reported as of Dec 31, 2023.
The reported net debt-to-adjusted EBITDAre ratio was 6.09 compared with 6.13 at the end of Dec 31, 2023.
2024 Guidance
Highwoods revised its guidance for 2024.
The company now expects FFO per share to be in the range of $3.46-$3.61, revised from the prior guided range of $3.46-$3.64. The Zacks Consensus Estimate for the same is currently pegged at $3.57.
HIW expects same-property cash NOI, excluding termination fees, to be between 0.5% and 2%. The average occupancy is anticipated between 87% and 89%, unchanged from the prior guided range.
Highwoods currently carries a Zacks Rank #3 (Hold).
Highwoods Properties, Inc. Price, Consensus and EPS Surprise
Highwoods Properties, Inc. price-consensus-eps-surprise-chart | Highwoods Properties, Inc. Quote
Upcoming Earnings Releases
We are looking forward to the earnings releases of other REITs like Welltower (WELL - Free Report) and SBA Communications (SBAC - Free Report) , which are slated to report their results on Apr 29.
The Zacks Consensus Estimate for Welltower’s first-quarter 2024 FFO per share is pegged at 94 cents, implying a year-over-year increase of 10.6%. WELL currently carries a Zacks Rank of #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SBA Communications’ first-quarter 2024 FFO per share is pegged at $3.30, suggesting year-over-year growth of 5.4%. SBAC currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.