Core Viewpoint - Highwoods Properties, Inc. has completed the acquisition of Advance Auto Parts Tower for $138 million, enhancing its portfolio in a high-growth business district [1][4]. Acquisition Details - The acquired property is a 20-story, Class AA office tower with approximately 346,000 square feet located in Raleigh's North Hills Best Business District [1]. - The building, constructed in 2020, is LEED-gold certified and is fully leased with a weighted average lease term of 8.2 years as of December 31, 2024 [2]. - Advance Auto is projected to generate cash net operating income of $11.0 million in the first four quarters following the acquisition [2]. Financing Strategy - Highwoods plans to finance the acquisition through proceeds from a recent non-core asset sale in Tampa, FL, aligning with its strategy to meet the demand for premier office properties [3][4]. Company Strategy - Highwoods employs a disciplined capital-recycling strategy, focusing on disposing of non-core assets and reinvesting in premium acquisitions and development projects [4]. - The acquisition reflects the company's commitment to expanding its presence in high-growth markets and enhancing its overall portfolio quality [4]. Growth Drivers and Market Position - Highwoods benefits from a well-diversified tenant base, expansion efforts in high-growth markets, and a strong balance sheet, which are key growth drivers [5]. - The company's shares have increased by 13.3% over the past year, outperforming the industry growth of 5.6% [5].

Core Insights - Highwoods Properties, Inc. has acquired Advance Auto Parts Tower for a total investment of $138 million, located in Raleigh's North Hills Best Business District [1] - The office tower spans 346,000 square feet, is 20 stories tall, and is LEED-gold certified, with a 100% lease rate as of December 31, 2024, and a weighted average lease term of 8.2 years [1] - The acquisition is expected to generate cash net operating income of $11.0 million and GAAP net operating income of $11.9 million in the first four quarters following the closing [2] Company Overview - Highwoods Properties, Inc. is a publicly-traded, fully-integrated office real estate investment trust (REIT) headquartered in Raleigh, focusing on owning, developing, acquiring, leasing, and managing properties in major business districts across several cities [3] - The company's vision is to lead the evolution of commercial real estate, creating environments that inspire collaboration and success among customers and shareholders [3]

Highwoods Properties (NYSE: HIW ) has long been a favorite of mine amongst the REIT sector ( XLRE ) as their properties are located in the Better Business Districts in some of the fastest growing cities like Dallas, Atlanta, Raleigh, and Nashville.Contributing analyst to the iREIT+Hoya Capital investment group. The Dividend Collectuh is not a registered investment professional nor financial advisor and these articles should not be taken as financial advice. This is for educational purposes only and I encour ...

Core Viewpoint - Highwoods Properties, Inc. has agreed to acquire Advance Auto Parts Tower, a 20-story, Class AA office tower in Raleigh, enhancing its portfolio in a high-demand area for premier office spaces [1][3]. Group 1: Acquisition Details - The Advance Auto Parts Tower spans approximately 346,000 square feet and is fully leased with a weighted average lease term of 8.2 years as of December 31, 2024 [1][2]. - The acquisition will be financed through proceeds from a recent non-core asset sale in Tampa, FL [2]. Group 2: Strategic Importance - This acquisition aligns with the growing demand for high-quality office spaces as companies emphasize return-to-office mandates [3]. - Highwoods aims to expand its presence in the North Hills mixed-use Best Business District, which has attracted numerous businesses and residents [4]. Group 3: Company Strategy and Performance - Highwoods follows a disciplined capital-recycling strategy, focusing on disposing of non-core assets and reinvesting in premium acquisitions and development projects [4]. - The company has seen its shares rise by 16.1% over the past year, outperforming the industry growth of 5.7% [5].

Core Viewpoint - Highwoods Properties, Inc. has agreed to acquire the Advance Auto Parts Tower, a 20-story, Class AA office building in Raleigh, which is fully leased and strategically located adjacent to another Highwoods property, the CAPTRUST Tower [2][4] Group 1: Acquisition Details - The Advance Auto Parts Tower spans 346,000 square feet and is LEED-gold certified, with a current weighted average lease term of 8.2 years as of December 31, 2024 [2] - The acquisition is expected to close within the next 30 days, with the company posting non-refundable earnest money deposits of $20 million [4] - The funding for this acquisition will be on a leverage-neutral basis, utilizing proceeds from the recent sale of non-core assets in Tampa [3] Group 2: Strategic Importance - The acquisition is seen as a strategic move to enhance Highwoods' presence in the North Hills mixed-use Best Business District, which has strong demographics attracting businesses and residents [4] - The company anticipates that this acquisition will be immediately accretive to cash flows and improve portfolio quality, while maintaining a neutral impact on near-term funds from operations (FFO) [4] Group 3: Company Overview - Highwoods Properties, Inc. is a publicly-traded real estate investment trust (REIT) focused on owning, developing, acquiring, leasing, and managing properties in prime business districts across several major cities [5] - The company's mission emphasizes creating exceptional environments and experiences to deliver greater value to customers and shareholders [5]

Financial Data and Key Metrics Changes - In Q4 2024, the company reported FFO of $0.85 per share, aligning with expectations, while the full year FFO was $3.61 per share, nearly 2% higher than the midpoint of the original outlook [13][42] - The company experienced a net loss of $3.7 million in Q4, which included a $24.6 million impairment charge [42] - The balance sheet remains strong with no debt maturities until 2026 and a pro forma debt-to-EBITDA ratio reduced to 6.1 times from 6.3 times [43][45] Business Line Data and Key Metrics Changes - The company leased 1.3 million square feet of second-generation space in Q4, including 370,000 square feet of new leases, contributing to a total of 4 million square feet leased for the year, the highest in a decade [14][30] - The weighted average lease term reached a record high of 7.5 years, indicating strong tenant commitment [14][31] Market Data and Key Metrics Changes - Nationally, the U.S. office market saw a decline in the overall vacancy rate for the first time in three years, with a 24% quarter-over-quarter increase in leasing activity [27][28] - The company ended the year with an occupancy rate of 87.1%, significantly higher than the market average, and 89.9% when including signed but not yet commenced leases [31] Company Strategy and Development Direction - The company is optimistic about future growth, citing significant upside potential in its core operating portfolio and development pipeline, with expectations of $30 million in NOI growth above the 2025 outlook [11][24] - The company plans to focus on organic growth through leasing high-quality properties and is targeting up to $150 million in additional non-core dispositions to fund future investments [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook for their markets, noting limited new supply and strong demand for high-quality office space [23][39] - The company anticipates a temporary trough in 2025 before resuming consistent same-store growth, with an average occupancy outlook of 85% to 86.5% [22][48] Other Important Information - The company has proactively raised $215 million through non-core dispositions and equity issuance to enhance its capital position for future acquisitions [10][44] - The development pipeline is now 59% leased, up from 49% in the previous quarter, indicating strong leasing momentum [20] Q&A Session Summary Question: Leasing outlook and larger vacancies - Management clarified that no leasing is included in the occupancy outlook for the four core assets with significant vacancies, with major leases not commencing until 2026 [58][60] Question: Acquisition targets and funding - The company is targeting both stabilized and opportunistic assets for acquisition, emphasizing a balanced approach to funding through both disposition proceeds and equity [65][70] Question: Impairment charge and asset sales - Management confirmed that the impairment charge on 625 Liberty Avenue is part of a long-term strategy to exit non-core markets like Pittsburgh, with no immediate updates on a sale [75] Question: Changes in leasing strategy - The leasing strategy remains robust, focusing on a mix of small and larger tenants, with a successful spec suite program in place [78] Question: Federal government leases - The company has diverse exposure to federal leases, primarily with essential agencies, and does not foresee significant risk from potential government changes [83] Question: Market performance expectations - Management expects all markets to recover, with Nashville and Charlotte showing strong performance, while Raleigh has been softer but is improving [92] Question: Land purchase at Century Center - The acquisition of land at Century Center allows for consolidated ownership and long-term flexibility, with potential for monetization of undeveloped land [95][96] Question: CapEx trends and dividend coverage - CapEx is expected to remain elevated due to leasing activities, with coverage likely to be lumpy in the short term but ultimately driving higher NOI and cash flow [106][108] Question: Development start conditions - Development starts are unlikely this year unless market rents exceed current expectations by 20% to 30% [110]

Core Insights - Highwoods Properties Inc. (HIW) reported fourth-quarter 2024 funds from operations (FFO) per share of 85 cents, matching the Zacks Consensus Estimate but lower than the prior year's 99 cents [1] - The company experienced healthy leasing activity with rent growth, although higher interest expenses impacted results [2] Financial Performance - Rental and other revenues for the fourth quarter were $205.5 million, exceeding the Zacks Consensus Estimate of $204.2 million but slightly below the prior year's $206.9 million [2] - For full-year 2024, FFO per share was $3.61, down from $3.83 in the previous year but in line with the consensus estimate; rental and other revenues decreased by 1% to $825.9 million, below the consensus mark of $828.9 million [3] Leasing Activity - Highwoods' average in-place cash rent increased by 3.1% per square foot year-over-year; however, the in-service portfolio occupancy declined by 90 basis points to 87.1% [4] - The company reported second-generation leasing activity of 1.3 million square feet in the fourth quarter, with a dollar-weighted average lease term of 6.8 years and GAAP rent growth of 12.2% [5] Expenses and Interest - Rental property and other expenses rose to $71.5 million, a 2.8% increase year-over-year; interest expenses increased by 5.6% to $37.3 million [6] Portfolio Activity - During the quarter, Highwoods sold a 170,000-square-foot non-core office building for $21.4 million and acquired land in Atlanta for $50.6 million; post-quarter, the company sold 616,000 square feet of non-core office buildings for $145 million [7] Balance Sheet - The company's total available liquidity exceeded $900 million, with a net debt-to-adjusted EBITDAre ratio of 6.29, up from 6.13 at the end of 2023 [8] 2025 Guidance - Highwoods anticipates 2025 FFO per share between $3.26 and $3.44, with the consensus estimate at $3.43; same-property cash NOI is expected to decline between -4.0% and -2.0% [9]

Core Insights - Highwoods Properties reported revenue of $205.53 million for the quarter ended December 2024, a decrease of 0.6% year-over-year, with an EPS of $0.85 compared to $0.36 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $204.19 million by 0.65%, while the EPS met the consensus estimate [1] Financial Performance Metrics - Lease termination fees, net, were reported at $1 million, significantly higher than the average estimate of $0.32 million, reflecting a year-over-year increase of 105.5% [4] - Contractual rents, net, amounted to $174.01 million, slightly above the average estimate of $173.98 million, but showed a year-over-year decline of 1.1% [4] - Other miscellaneous operating revenues were reported at $10.72 million, close to the estimated $10.79 million, with a year-over-year increase of 7.4% [4] - Cost recoveries billed under lease arrangements, net, were $17.51 million, exceeding the average estimate of $17.02 million, representing a year-over-year increase of 2.9% [4] - Straight-line rental income, net, was reported at $2.29 million, below the estimated $2.51 million, showing a significant year-over-year decrease of 34.3% [4] - Net Earnings Per Share (Diluted) was -$0.03, compared to the average estimate of $0.09 [4] Stock Performance - Over the past month, shares of Highwoods Properties returned +0.2%, while the Zacks S&P 500 composite increased by +4.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - Highwoods Properties reported quarterly funds from operations (FFO) of $0.85 per share, matching the Zacks Consensus Estimate, but down from $0.99 per share a year ago [1] - The company posted revenues of $205.53 million for the quarter, exceeding the Zacks Consensus Estimate by 0.65%, but slightly lower than the previous year's revenues of $206.86 million [2] Financial Performance - FFO for the last quarter was $0.85 per share, consistent with estimates, and the company has surpassed consensus FFO estimates two times in the last four quarters [1] - Revenues for the quarter were $205.53 million, which is a slight decrease from $206.86 million year-over-year, and the company has topped consensus revenue estimates two times over the last four quarters [2] Market Performance - Highwoods Properties shares have declined approximately 5.5% since the beginning of the year, contrasting with the S&P 500's gain of 3.1% [3] - The stock's immediate price movement will largely depend on management's commentary during the earnings call [3] Future Outlook - The current consensus FFO estimate for the upcoming quarter is $0.83 on revenues of $204.69 million, and for the current fiscal year, it is $3.43 on revenues of $828.26 million [7] - The estimate revisions trend for Highwoods Properties is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The REIT and Equity Trust - Other industry is currently in the bottom 30% of the Zacks industries, which may impact the stock's performance [8]

Core Insights - Highwoods Properties, Inc. has released its fourth quarter and full year 2024 results, indicating ongoing performance in the office real estate sector [1] Company Overview - Highwoods Properties, Inc. is a publicly-traded, fully-integrated office real estate investment trust (REIT) headquartered in Raleigh, focusing on owning, developing, acquiring, leasing, and managing properties in prime business districts across several major cities including Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond, and Tampa [2] - The company's vision is to lead the evolution of commercial real estate, aiming to create environments and experiences that inspire collaboration and achievement among customers and their teams, ultimately delivering greater value to shareholders [2]