Highwoods Properties(US:HIW)2025-10-28 20:04Asset Management - The company expects to sell between $50 million and $500 million of assets over the next six months to acquire high-quality office buildings in core markets [129]. - The company acquired the Legacy Union parking garage for $110.2 million during Q3 2025, supporting 1.2 million square feet of office space [177]. - Gains on property dispositions increased by $5.3 million in Q3 2025 compared to Q3 2024, related to a building sale in Richmond [157]. - Rental and other revenues decreased by $2.6 million, or 1.2%, in Q3 2025 compared to Q3 2024, primarily due to property dispositions and lower occupancy rates [150]. - An impairment charge of $8.8 million was recorded in Q3 2025 for two non-core, out-of-service assets [152]. - Impairments of real estate assets for Q3 2025 were $8,800,000, with no impairments reported in Q3 2024 [208]. - The same property portfolio consisted of 146 properties encompassing 26.1 million rentable square feet as of September 30, 2025, down from 152 properties and 27.2 million rentable square feet as of December 31, 2024 [206]. Financial Performance - Consolidated same property net operating income (NOI) was $3.6 million, or 2.7%, lower in Q3 2025 compared to 2024 due to a decrease in same property revenues [136]. - NOI was $2.8 million, or 2.0%, lower in Q3 2025 compared to 2024, primarily due to lower consolidated same property NOI and lost NOI from property dispositions [137]. - Same property net operating income (NOI) for Q3 2025 was $135,640,000, down 2.4% from $139,315,000 in Q3 2024 [208]. - Same property cash NOI for Q3 2025 was $131,513,000, a decrease of 3.2% compared to $136,467,000 in Q3 2024 [208]. - Net income for Q3 2025 was $13,707,000, a decrease of 11.4% from $15,469,000 in Q3 2024 [208]. - Total cash flows for the nine months ended September 30, 2025, were $8.1 million, an increase of $5.7 million compared to the same period in 2024 [171]. - Funds from operations (FFO) for Q3 2025 were $95.375 million, with FFO available for common stockholders at $94.799 million, translating to $0.86 per share [204]. - Net operating income for the nine months ended September 30, 2025, was $408,144,000, a decline of 2.8% from $419,636,000 in the same period of 2024 [208]. - Gains on disposition of property for the nine months ended September 30, 2025, were $(87,889,000), compared to $(42,581,000) in the same period of 2024 [208]. Liquidity and Capital Structure - The company had approximately $35 million in cash and $211.0 million drawn on its $750.0 million revolving credit facility as of October 21, 2025 [142]. - The leverage ratio as of September 30, 2025, was 42.8%, with 111.6 million diluted shares of common stock outstanding [142]. - The company anticipates that available cash and cash equivalents will be adequate to meet short-term liquidity requirements, including operating expenses and capital expenditures [144]. - The company has no debt scheduled to mature prior to 2027, indicating a strong liquidity position for future obligations [147]. - As of September 30, 2025, the company had $220.0 million outstanding under its $750.0 million unsecured revolving credit facility, with an unused capacity of $529.9 million [181]. - The company modified its $200.0 million unsecured bank term loan, extending the maturity date from May 2026 to January 2029, with an interest rate of SOFR plus 95 basis points [182]. - The company is currently in compliance with financial covenants and expects to remain compliant for at least the next year [183]. - The company anticipates that available cash and cash flows from operations will be adequate to meet short-term liquidity requirements [192]. Revenue and Expenses - Annualized rental revenues from new and renewal leases signed in Q3 2025 were $40.13 per rentable square foot, representing an 18.3% increase compared to previous leases [133]. - Operating expenses increased by $0.2 million, or 0.3%, in Q3 2025 compared to Q3 2024, driven by higher expenses from recent acquisitions [151]. - Interest expense increased by $1.0 million, or 2.7%, in Q3 2025 compared to Q3 2024, primarily due to higher average debt balances [155]. - Interest expense for Q3 2025 was $38,475,000, an increase of 2.7% from $37,472,000 in Q3 2024 [208]. - General and administrative expenses for Q3 2025 were $8,995,000, a decrease of 9.1% from $9,898,000 in Q3 2024 [208]. - Depreciation and amortization expense decreased by $5.2 million, or 6.6%, in Q3 2025 compared to Q3 2024, mainly due to property dispositions [153]. - Depreciation and amortization for the nine months ended September 30, 2025, was $219,982,000, a decrease of 2.9% from $226,532,000 in the same period of 2024 [208]. - The company incurred $2.0 million in debt issuance costs related to the modified term loan, which are being amortized over the remaining term [182]. Shareholder Returns - The company declared a cash dividend of $0.50 per share of common stock, payable on December 9, 2025, to stockholders of record as of November 17, 2025 [190]. - Diluted earnings per common share increased by $0.21 in the nine months ended September 30, 2025, compared to the same period in 2024 [169]. - The company issued 1,550,588 shares of common stock at an average gross sales price of $31.82 per share, resulting in net proceeds of $48.6 million during Q3 2025 [180].