Highwoods (HIW) Misses on Q3 FFO, Collects 99.7% October Rents
Highwoods Properties, Inc. HIW third-quarter 2020 funds from operations (FFO) per share of 86 cents missed the Zacks Consensus Estimate of 88 cents. The figure includes 5 cents from debt extinguishment charges and non-cash straight-line credit losses. Nonetheless, the reported figure improved 3.6% from the 83 cents reported in the year-ago period.
Rental and other revenues of $181 million in the third quarter decreased 3.4% year over year. Moreover, the reported figure marginally missed the Zacks Consensus Estimate of $181.7 million.
The company updated the full-year outlook in the wake of the coronavirus pandemic and the prevalent dismal market conditions.
With regard to its rental receipts, management announced that it has collected 99.7% of the contractually-required rents for the July-September quarter. Since Mar 1, 2020, rent deferrals granted to tenants represented 1.2% of its annualized rental revenues. The company also informed that it has collected 99.7% of October rental receipts.
Quarter in Detail
Highwoods leased 660,000 square feet of second-generation office space during the third quarter, including 190,000 square feet of new leases. Rents were up 5% on a cash basis.
At the end of the reported quarter, occupancy was 90.2%, shrinking 20 basis points sequentially.
Excluding the $1-million negative impact of temporary rent deferral agreements, same-property cash NOI increased 2.2% year over year.
As of Sep 30, 2020, Highwoods had $118.7 million of cash and cash-equivalents compared with $9.5 million reported as of Dec 31, 2019. The company exited the reported quarter with full availability of funds under its $600-million credit facility and a net debt-to-adjusted EBITDAre ratio of 5X.
In the third quarter, the company sold two non-core office buildings in Memphis for $23.3 million.
Guidance
Highwoods revised the current-year FFO per share guidance to $3.59-$3.61 from the $3.59-$3.68 guided earlier. The Zacks Consensus Estimate for the same is $3.61.
The company’s updated outlook included the impact of some assumptions. These include a $3.7-million debt extinguishment charge, $1.5-million non-cash credit losses of straight-line rent receivables and $1.3 million of estimated dilutive impact of planned non-core dispositions.
Same-property cash NOI is projected at 1-2% for 2020, while year-end occupancy is estimated to be 89-91%. Dispositions in 2020 (excluding the completed phase-one dispositions under the market rotation plan) are expected to be $151 million, while acquisitions are likely to be up to $200 million.
Highwoods Properties, Inc. Price, Consensus and EPS Surprise
Highwoods Properties, Inc. price-consensus-eps-surprise-chart | Highwoods Properties, Inc. Quote
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
Prologis, Inc. PLD reported third-quarter 2020 core FFO per share of 90 cents, beating the Zacks Consensus Estimate of 88 cents. However, results compared unfavorably with the year-ago figure of 97 cents. Excluding net promote income, core FFO per share came in at 92 cents in the quarter, up from the prior-year period’s 79 cents.
Alexandria Real Estate Equities, Inc. ARE delivered third-quarter FFO as adjusted of $1.83 per share, up 4.6% from the year-ago quarter’s $1.75. The reported figure is in line with the Zacks Consensus Estimate.
Mack-Cali Realty Corporation CLI is slated to report earnings results on Nov 4.
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.
Zacks’ 2020 Election Stock Report: In addition to the companies you learned about above, we invite you to learn more about profiting from the upcoming presidential election. Trillions of dollars will shift into new market sectors after the votes are tallied, and investors could see significant gains. This report reveals specific stocks that could soar: 6 if Trump wins, 6 if Biden wins. Check out the 2020 Election Stock Report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Prologis, Inc. (PLD) : Free Stock Analysis Report
Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report
MackCali Realty Corporation (CLI) : Free Stock Analysis Report
Alexandria Real Estate Equities, Inc. (ARE) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
