CUZ Cousins Properties Inc

Highwoods Properties Inc (HIW) reported second quarter 2011 FFO (fund from operations) of $45.8 million or 60 cents per share compared  with $48.7 million or  64 cents per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. Reported FFO also missed  the Zacks Consensus Estimate by two cents.

Excluding one time charges, FFO in the second quarter of 2011 stood at 63 cents per share compared with 65 cents per share in the year-earlier quarter

Total revenue during the quarter was $117.1 million compared with $113.8 million in the year-earlier quarter.

Average in-place cash rental rates during the quarter inched down 0.4% year over year across the entire portfolio. For the office portfolio, rent increased 5.5% (GAAP) but decreased 5.0% (cash) on a year-over-year basis, while for the industrial and retail portfolio rent  plunged 9.6% (GAAP) and 18.5% (cash), and plummeted 0.3% (GAAP) and 14.8% (cash), respectively.

Overall occupancy in the wholly-owned portfolio was 89.9% at quarter end. Same-store NOI (net operating income), excluding straight line rent and lease termination fees, for the three months ended June 30, 2011, spiked 1.5% from the corresponding period of 2010. During the reported quarter, the company neither acquired a property nor sold any assets.

Subsequent to the second quarter of 2011, Highwoods signed long-term lease agreements with two companies, totaling 112,000 square feet of space at the company’s Independence Park office building in Tampa, bringing leasing to 100%. One company signed a lease for 62,000 square feet, which is scheduled to commence in April 2012 and another signed a lease for 50,000 square feet that is scheduled to commence by May 2012.

Highwoods remains optimistic that it will further add Class A office properties to its portfolio. The company remains bullish on the long-term performance of Tampa and in particular the Westshore sub market.

At quarter end, Highwoods had $9.2 million in cash and cash equivalents. In addition, the company executed a new $475 million unsecured revolving credit facility replacing the company’s existing $400 million facility. For full-year 2011, Highwoods increased its FFO guidance from the range of $2.41-$2.57 per share to $2.48-$2.56 per share.

Highwoods currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Cousins Properties Inc. (CUZ), also holds a Zacks #3 Rank

 
COUSIN PROP INC (CUZ): Free Stock Analysis Report
 
HIGHWOODS PPTYS (HIW): Free Stock Analysis Report
 
Zacks Investment Research