Highwoods Properties' (HIW) Q4 FFO Meets Estimates, Up Y/Y

Highwoods Properties Inc. (NYSE:HIW) reported fourth-quarter 2018 funds from operations (FFO) of 86 cents per share, meeting the Zacks Consensus Estimate. The figure also compares favorably with the year-ago tally of 84 cents.

Results indicate growth in average in-place office cash rent per square foot and GAAP rent for second-generation office space. Additionally, the company witnessed growth in same-property cash NOI.

Rental and other revenues of $181.4 million surpassed the Zacks Consensus Estimate of $179.3 million. Further, the reported figure outpaced the year-earlier tally of $175.9 million.

For full-year 2018, FFO per share came in at $3.45, surpassing the Zacks Consensus Estimate of $3.44. The figure improved 1.8% year over year. Revenues for full-year 2018 improved 2.5% year over year to $720 million. The revenue figure also beat the Zacks Consensus Estimate of $717.06 million.

Quarter in Detail

Highwoods leased 918,000 square feet of second-generation office space during the fourth quarter. Moreover, same-property cash NOI inched up 1.5% year over year.

At the end of the quarter under review, the company’s development pipeline totaled $691 million and was 92.9% pre-leased. During the quarter, it placed an industrial property worth $8 million in service which was 100% occupied.
In addition, Highwoods sold non-core assets, spanning 323,000 square feet, for $54.5 million.

Notably, it did not issue any shares under the ATM program.

As of Dec 31, 2018, Highwoods had around $3.8 million of cash and cash-equivalents compared with $3.3 million reported as of Dec 31, 2017.

2018 Outlook

Highwoods expects 2019 FFO per share of $3.44-$3.56. The Zacks Consensus Estimate for the same is currently pinned at $3.50.

Dividend Update

On Feb 5, Highwoods announced fourth-quarter 2018 common stock cash dividend of 47.5 cents per share, indicating a sequential hike of 2.7%. The dividend will be paid on Mar 5, to shareholders on record as of Feb 19, 2019.

Our Viewpoint

The company’s recent dividend hike indicated the underlying strength of its cash flows. Additionally, continued focus on Highwoods’ development pipeline will likely be conducive to long-term growth.

Nonetheless, the company witnessed a decline in straight-line rental income during the Dec-end quarter as compared to the prior year. Also, management predicts non-core dispositions to have a dilutive impact of approximately 1.90 cents on its 2019 FFO per share.

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

Performance of Other REITs

Duke Realty Corporation’s (NYSE:DRE) fourth-quarter 2018 core FFO per share of 35 cents came in line with the Zacks Consensus Estimate. Moreover, the figure came in a nickel ahead of the prior-year figure of 30 cents.

Alexandria Real Estate Equities, Inc. (NYSE:ARE) reported fourth-quarter 2018 adjusted FFO of $1.68 per share, missing the Zacks Consensus Estimate by a whisker.

Boston Properties Inc.’s (NYSE:BXP) fourth-quarter 2018 FFO per share of $1.59 also missed the Zacks Consensus Estimate of $1.68. The figure, however, came in 7% higher than the prior-year tally.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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