Highwoods Properties, Inc. HIW announced that it has collected 99% of its June contractually required rents, maintaining the same level of collection with that of May and April.
The company has approved the temporary rent deferrals to its tenants, representing 1.2% of the annual rental revenues so far this year. This includes the rent deferrals reported by the company in the Apr 28 first-quarter earnings release and Jun 20 business update. The company also reported that all of its building and parking facilities have remained open for operations.
Additionally, Highwoods informed it has signed a long-term, full-building lease renewal agreement for 138,000 square foot of space with the Federal Bureau of Investigation (FBI) in Tampa, FL. This was the company’s largest lease expiration remaining in 2020. It had developed the FBI’s Tampa Field office as a build-to-suit in 2005.
Highwoods has also announced some non-core property dispositions. The company sold two office buildings, Centrum and Colonnade, in Memphis for $23.3 million. The properties comprise 169,000 square feet of space in total and 89% occupied. The company is likely to record non-funds from operations (FFO) gains of $9.6 million in third-quarter 2020 from these sales.
With macroeconomic uncertainties and a spike in unemployment, demand for office space is likely to be affected. Rent collection during these times has become particularly difficult and is likely to remain so in the near term. However, strength in rent collections indicates Highwoods’ high-quality tenant roster and will support its revenues. Also, the lease renewal indicates the decent demand for the company’s properties. Moreover, the company’s asset sales in Memphis are in sync with its market-rotation plan, per which it aims to fortify the BBD office focus, and exit Greensboro and Memphis.
Shares of this Zacks Rank #3 (Hold) company have declined 13.2% over the past year compared with the industry's fall of 6.4%.
Stocks to Consider
City Office REIT, Inc.’s CIO Zacks Consensus Estimate for 2020 funds from operations (FFO) per share moved 13.3% north to $1.11 over the past two months. The stock currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
MGM Growth Properties LLC’s MGP Zacks Consensus Estimate for the current year’s FFO per share moved 5.3% north to $2.39 over the past two months. The stock currently sports a Zacks Rank of 1.
Alexandria Real Estate Equities, Inc.’s ARE Zacks Consensus Estimate for the ongoing-year FFO per share moved marginally upward to $7.27 over the past two months. The stock currently carries a Zacks Rank of 2 (Buy).
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