Highwoods Beats, Narrows Outlook - Analyst Blog
November 10 2011 - 5:15AM
Zacks
Highwoods Properties
Inc (HIW) reported FFO (fund from
operations) of $42.7 million or 56 cents per share in the third
quarter of 2011 compared with $43.2 million or 57 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.
Excluding one-time charges,
reported FFO in the quarter stood at 65 cents per share compared
with 58 cents per share in the year-earlier quarter. Recurring FFO
was also surpassed the Zacks Consensus Estimate by 5 cents.
Total revenue during the quarter
was $122.1 million compared with $115.5 million in the prior-year
quarter. Total revenue was ahead of the Zacks Consensus Estimate of
$118 million.
Average in-place cash rental rates
during the quarter expanded 3.9% year over year across the entire
portfolio. For the office portfolio, rent spiked 1.4% (GAAP)
but decreased 12.4% (cash) on a year-over-year basis, while for the
industrial and retail portfolio rent decreased 2.3% (GAAP) and 8.8%
(cash), but increased 46.5% (GAAP) and 26.2% (cash),
respectively.
Overall occupancy in the
wholly-owned portfolio was 89.3% at the end of the reported
quarter.
The company leased 1.7 million
square feet of space, including 1.1 million square feet of office
space in the third quarter 2011. During the third quarter, the
company signed a 129,000 square foot lease with an existing
customer, comprising a 97,000 square foot renewal and a 32,000
square foot expansion, at Metrowest and Cambridge, two non-core
properties in Orlando.
Same-store NOI (net operating
income), excluding straight line rent and lease termination fees,
for the three months ended September 30, 2011, spiked 2.2% year
over year.
During the quarter, Highwoods
acquired two Class A office properties for a total consideration of
$300 million. Of the two acquired properties, one is a 1.54 million
square foot, six-building complex in Pittsburgh named PPG Place ,
and the other a 503,000 square foot property named Riverwood 100 in
Atlanta.
Subsequent to the end of the third
quarter 2011, Highwoods signed leases totaling 61,000 square feet
at these properties. This includes a full floor lease at PPG Place
totaling 23,000 square feet and two leases at Riverwood 100
totaling 38,000 square feet.
At quarter end, Highwoods had $11.1
million in cash and cash equivalents. For full-year 2011,
Highwoods narrowed its FFO outlook for fiscal 2011 from $2.52 -
$2.60 per share to $2.56 - $2.58 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) holds a Zacks #2 Rank, which
translates into a short-term Buy rating.
COUSIN PROP INC (CUZ): Free Stock Analysis Report
HIGHWOODS PPTYS (HIW): Free Stock Analysis Report
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