RALEIGH – Highwoods Properties Inc. (HIW) on Tuesday reported a key measure of profitability in its fourth quarter. The results matched Wall Street expectations. And CEO Ted Klinck sees good news coming in the year ahead.
In a lengthy statement issued with Highwoods’ results, Klinck recalled how the company responded to the pandemic and what he expects in the future:
“We delivered strong financial and operating results in the fourth quarter and for the full year. Fourth quarter FFO was the highest in our history, and we were above the high-end of our upwardly revised full year outlook even when excluding land sale gains. Further, leasing activity continued to improve, with 884,000 square feet of second gen leases signed in the quarter, including 284,000 square feet of new leases, which helped push occupancy to 91.2% at the end of the year.
“At the beginning of the pandemic, we quickly adapted to the changing environment by lowering expenses, ensuring rent collections, shoring up lease renewals, selling non-core properties and increasing our liquidity. In 2021, we significantly improved the quality of our portfolio and our long-term outlook by acquiring over $800 million of high quality office buildings in the BBDs of Raleigh and Charlotte, selling over $380 million of non-core assets and delivering $356 million of highly leased development, all while maintaining a fortress balance sheet.
“As we turn to 2022, we are well-positioned for continued growth. First, our 2021 development deliveries will drive higher NOI and further strengthen our cash flows. Second, we have begun to replenish our development pipeline, having announced two projects in the past three months, and we have the potential for additional development with our well-located land bank that can support $2.3 billion of future office. Third, our leasing volumes have improved meaningfully since the onset of the pandemic, which should result in higher occupancy going forward and provide organic growth potential from our in-service portfolio. Finally, our balance sheet is in excellent shape and we have ample liquidity to capitalize on additional investment opportunities.”
The real estate investment trust, based in Raleigh, said it had funds from operations of $104.1 million, or 97 cents per share, in the period.
The average estimate of five analysts surveyed by Zacks Investment Research was for funds from operations of 97 cents per share.
Funds from operations is a closely watched measure in the REIT industry. It takes net income and adds back items such as depreciation and amortization.
The company said it had net income of $124.9 million, or $1.19 per share.
The real estate investment trust posted revenue of $203.2 million in the period, topping Street forecasts. Three analysts surveyed by Zacks expected $200.1 million.
For the year, the company reported funds from operations of $403.9 million, or $3.77 per share. Revenue was reported as $768 million.
Highwoods Properties expects full-year funds from operations in the range of $3.76 to $3.92 per share.
