Highwoods Properties Inc. (NYSE:HIW) reported first-quarter 2018 funds from operations (FFO) of 85 cents per share, beating the Zacks Consensus Estimate of 82 cents. It also compares favorably with the year-ago tally of 80 cents.
Results indicate growth in same-property cash net operating income (NOI) and higher net effective rents for second-generation office space.
Total revenues for the quarter rose 6.2% year over year to $180 million. Moreover, the top line outpaced the Zacks Consensus Estimate of $177 million.
Quarter in Detail
Highwoods leased 857,000 square feet of second-generation office space during the first quarter. Same-property cash NOI climbed 2.9% year over year.
During the reported quarter, the company acquired two development parcels, spanning nine acres in CBD Nashville, for a total price of $50.3 million.
The company also issued 10-year notes worth $350 million at an effective interest rate of 4.06%. Notably, it did not issue any shares under the ATM program.
As of Mar 31, 2018, Highwoods had $31 million of cash and cash-equivalents compared with $3.3 million reported as of Dec 31, 2017.
2018 Outlook Raised
Highwoods expects 2018 FFO per share of $3.37-$3.47, up from the previous range of $3.35-$3.47. The Zacks Consensus Estimate for the same is currently pegged at $3.42.
Our Viewpoint
Highwoods’ improving operating performance looks encouraging. Notably, the company’s efforts to expand its footprint in high-growth markets and enhance portfolio quality through accretive buyouts drove the stellar performance.
Furthermore, its focus on high-quality office assets in best business districts (BBDs) enabled the company to achieve high rent growth and active pre-leasing of pipeline.
However, escalating operating and interest expenses remained headwinds. Further, asset concentration in a few markets exposes Highwoods to any economic or political downturn.
Highwoods Properties, Inc. Price, Consensus and EPS Surprise
Highwoods currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (NYSE:ARE) , Regency Centers Corporation (NYSE:REG) and Welltower Inc. (NYSE:WELL) . Alexandria and Regency Centers are scheduled to release results on Apr 30, while WELL is slated to report its numbers on May 1.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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