Highwoods Properties(HIW)2025-04-29 20:03Occupancy and Leasing - Average occupancy in the office portfolio decreased from 87.1% as of December 31, 2024, to 85.5% as of March 31, 2025, with expectations to range from 85.0% to 86.0% for the remainder of 2025[118] - Annualized rental revenues from new and renewal leases signed in the first quarter were $35.88 per rentable square foot, 12.8% higher compared to previous leases in the same office spaces[121] - The average term for new leases signed in the first quarter was 6.1 years, while renewals had an average term of 4.7 years[119] Financial Performance - Consolidated same property net operating income (NOI) was $3.1 million, or 2.3%, lower in the first quarter of 2025 compared to 2024, with expectations for lower NOI for the remainder of 2025[124] - NOI was $5.5 million, or 3.9%, lower in the first quarter of 2025 compared to 2024, primarily due to lower consolidated same property NOI and lost NOI from property dispositions[125] - Rental and other revenues decreased by $10.9 million, or 5.2%, in Q1 2025 compared to Q1 2024, primarily due to lower same property revenues and lost revenue from property dispositions[138] - Operating expenses were $5.4 million, or 7.7%, lower in Q1 2025 compared to Q1 2024, mainly due to lower same property operating expenses and lost expenses from property dispositions[139] - Depreciation and amortization expense decreased by $2.3 million, or 3.1%, in Q1 2025 compared to Q1 2024, primarily due to property dispositions[140] - Interest expense increased by $0.1 million, or 0.2%, in Q1 2025 compared to Q1 2024, with expectations for higher interest expenses for the remainder of 2025[142] - Gains on disposition of property were $75.0 million higher in Q1 2025 compared to Q1 2024, primarily related to building dispositions in Tampa[144] - Diluted earnings per common share increased by $0.66 in Q1 2025 compared to Q1 2024 due to an increase in net income[146] - Net cash provided by operating activities was $46.3 million in Q1 2025, down $26.1 million from $72.4 million in Q1 2024[148] - Funds from operations (FFO) for the three months ended March 31, 2025, were $92.3 million, compared to $96.6 million for the same period in 2024, reflecting a decrease of approximately 4.5%[180] - FFO available for common stockholders per share was $0.83 for Q1 2025, down from $0.89 in Q1 2024, representing a decline of about 6.7%[180] Capitalization and Liquidity - As of March 31, 2025, the leverage ratio was 42.8%, with approximately $18 million of existing cash and $145.0 million drawn on a $750.0 million revolving credit facility[129] - The company expects to meet long-term liquidity needs through existing cash, borrowings under the revolving credit facility, and proceeds from the sale of non-core assets[133] - The company anticipates that available cash and cash equivalents will be adequate to meet short-term liquidity requirements, including operating expenses and capital expenditures[131] - As of March 31, 2025, the Company had $20.1 million in cash and cash equivalents, with an unused revolving credit facility capacity of $599.9 million[169] - The Company anticipates that existing cash and revenues will be sufficient to cover operating expenses, interest, and dividends[168] Property Transactions - The company acquired Advance Auto Parts Tower for $137.9 million during Q1 2025[153] - The company sold three buildings in Tampa and land in Pittsburgh for a total sales price of $146.3 million, recording net gains of $82.2 million[154] - The Company expects to sell up to $150 million of non-core properties during the remainder of 2025[172] Portfolio and Asset Management - The Company aims to continuously upgrade the quality of its office portfolio through acquisitions, dispositions, and development to deliver sustainable value for stockholders[134] - The company maintains a diverse customer base, with only Bank of America (3.9%) and Asurion (3.6%) accounting for more than 3% of annualized GAAP revenues as of March 31, 2025[122] - The same property portfolio consisted of 148 properties with 26.3 million rentable square feet as of March 31, 2025, down from 152 properties and 27.2 million square feet as of December 31, 2024[182] Dividends and Shareholder Returns - The Company declared a cash dividend of $0.50 per share of Common Stock, payable on June 10, 2025[166] - The Company has an effective automatic shelf registration statement allowing for the sale of an indefinite amount of common and preferred stock, as well as debt securities[170]