Highwoods Properties, Inc. (HIW - Free Report) recently discussed the impact of the abrupt shut down of Laser Spine Institute — the company’s long-term tenant which occupies a facility at Avion Park in Tampa. Accordingly, the company also announced that balance write-offs associated with the building will affect its first-quarter 2019 and current-year funds from operations (FFO) per share performance.
Notably, Highwoods had rented out its six-story building, with 176,000 square feet of space, for Laser Spine Institute's headquarters and an ambulatory surgery center. However, the announcement of immediate closure of the health organization’s operations nationwide will likely affect the properties it occupied, including the Avion Park facility.
In fact, Highwoods anticipates to write-off lease incentives, straight-line rents receivable, as well as accounts and notes receivable related to the property, aggregating $11.8 million and around $12.2 million on Dec 31, 2018 and Mar 1, 2019, respectively. This includes non-cash items of approximately $6.8 million as of both dates.
The Mar 1, 2019 balance will be written-off in the ongoing quarter. Further, these charges will impact the company’s 2019 FFO per share. Consequently, Highwoods intends to provide a revised guidance for the current year’s FFO per share that was previously expected to be in the range of $3.44-$3.56.
Additionally, deferred leasing costs of $11.8 million as of Dec 31, 2018 and nearly $11.6 million as of Mar 1, 2019, relating to the building will be written off. While this will impact the company’s net income, its FFO will remain unaffected.
Nonetheless, with a strategic location in a best business district (BBD) of the Westshore submarket and proximity to the Tampa International Airport, management is optimistic about the property. In fact, a flexible design with 29,000-square-foot floor plates, above-market parking ratio, with covered parking, and other aspects will likely attract office tenants.
In fact, economic improvement and recovery in the job market have been facilitating the expansion of corporate sectors, leading firms to rent more space for accommodating the increased workforce. Amid this encouraging environment, demand for office spaces have remained favorable, stoking growth of companies like Boston Properties, Inc. (BXP - Free Report) , Cousins Properties Incorporated (CUZ - Free Report) , Kilroy Realty Corporation (KRC - Free Report) and Highwoods Properties.
Currently, Highwoods carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, the company’s portfolio in Tampa spans across 3.6 million square feet of space and was 95.3% occupied at year-end 2018.
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