Highwoods Properties: Strong Financial Performance and Strategic Growth Plans
2024-03-05
Highwoods Properties, a real estate investment trust (REIT) specializing in office properties, recently conducted its fourth quarter 2023 earnings call, which brought together key figures such as CEO Ted Klinck, COO Brian Leary, CFO Brendan Maiorana, and Manager of Finance and Corporate Strategy Hannah True. During the call, a range of crucial business matters were deliberated.
Ted Klinck emphasized the company's strategic priorities for the upcoming years, which encompassed enhancing the portfolio's quality, securing the rent roll, driving future occupancy, preparing for potential investment opportunities, and upholding a top-tier balance sheet. Highwoods Properties expressed particular optimism regarding the Sunbelt market demographics and their potential to generate enduring value for shareholders.
The discussion also delved into the financial performance for the fourth quarter and full year of 2023. Highwoods Properties achieved an FFO (Funds From Operations) of $0.99 per share in the fourth quarter, with the full-year 2023 FFO standing at $3.83 per share. The core 2023 FFO, excluding exceptional items, reached $3.75 per share, slightly surpassing the midpoint of their initial projections.
Leasing trends and market insights for 2024 were highlighted by Highwoods Properties, noting that the company had executed over 500,000 square feet of second-generation leases in 2024, encompassing new leases and expansions since January 1st. The implementation of return-to-work initiatives and mandates was observed to be boosting physical occupancy, with an anticipated gradual rise in occupancy levels throughout the year.
The company's strategic approach to investment opportunities in the current market was also a focal point. Highwoods Properties is actively monitoring the market for potential acquisitions while concurrently concentrating on backfills and lease-up activities. Their strategy involves seeking assets below replacement cost and being willing to undertake leasing risks at the right price, with acquisitions anticipated to yield superior returns compared to development over the next few years.
Regarding the company's balance sheet and capital plan, Highwoods Properties boasts a robust balance sheet with over $900 million in existing liquidity and no consolidated debt maturities until May 2026. In 2023, the company raised close to $600 million of debt capital, positioning itself strongly for the forthcoming years.
In conclusion, Highwoods Properties maintains an optimistic outlook on its future prospects. The company sees substantial organic growth potential within its current operating portfolio and possesses a $518 million development pipeline that is expected to deliver significant upside in the near future. Backed by a solid balance sheet, ample liquidity, and a steadfast focus on strategic priorities, Highwoods Properties is well-equipped to generate long-term value for its shareholders.