Highwoods Properties (HIW) Q2 FFO & Revenues Top Estimates
Zacks Investment Research | Jul 23, 2019 09:21PM ET
Highwoods Properties Inc.’s (NYSE:HIW) second-quarter funds from operations (FFO) per share of 87 cents surpassed the Zacks Consensus Estimate of 85 cents. The figure remained flat year over year.
The company recorded year-over-year growth in same-property cash net operating income (NOI). Moreover, rents improved on both GAAP and cash basis.
Particularly, rental and other revenues of approximately $184.1 million in the quarter outpaced the Zacks Consensus Estimate of $179.9 million. Further, the reported figure compares favorably with the year-earlier quarter’s reported tally of around $178.8 million.
Quarter in Detail
Highwoods leased 1.1 million square feet of second-generation office space during the second quarter. Rents were up 16.8% on a GAAP basis and 2.5% on a cash basis.
Same-property cash NOI) grew 3.1% year over year and 4.6% excluding the effect from Laser Spine’s sudden closure. The company ended the second quarter with occupancy of 90.9%.
At the end of the second quarter, Highwoods’ development pipeline totaled $503 million and was 80.3% pre-leased. During the quarter, the company placed two office properties in service, involving estimated investment of $203 million in aggregate. These properties were 98.4% occupied.
As of Jun 30, 2019, Highwoods had around $4.5 million of cash and cash-equivalents compared with around $3.8 million reported as of Dec 31, 2018. The company did not issue any shares under the ATM program.
2019 Outlook
Highwoods has revised its 2019 FFO per share guidance to $3.32-$3.38 from $3.29-$3.39 issued earlier. The Zacks Consensus Estimate for the same is currently pinned at $3.32.
Further, for the ongoing year, dispositions and acquisitions are anticipated in the range of $100 million to $150 million and up to $200 million, respectively.
Our Viewpoint
The U.S. office market continues to witness methodical growth. This comes at a time when the U.S economy is at its now record-long, economic expansion cycle. In fact, employment growth remained sturdy, with the April-June quarter adding 171,000 new jobs on an average. As the labor market maintains its hiring levels, it has likely supported healthy leasing activity for Highwood Properties.
Further, the renewed outlook for 2019 FFO per share has also boosted confidence in the company’s operating performance.
Highwoods Properties, Inc. Price, Consensus and EPS Surprise
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