Highwoods Properties(US:HIW)2024-04-24 19:42Financial Data and Key Metrics Changes - The company reported FFO of $0.89 per share and same property cash NOI growth of 0.3% [85] - Occupancy dipped modestly to 88.5% [85] - The 2024 FFO outlook was updated to a range of $3.46 to $3.61 per share, reflecting a $0.015 reduction at the midpoint due to higher interest rates and the dilutive impact of asset sales [15][121] Business Line Data and Key Metrics Changes - The company signed 922,000 square feet of second generation leases, including over 400,000 square feet of new leases [119] - The development pipeline is now valued at $506 million, with 157,000 square feet of first generation leases signed during the quarter, resulting in a 41% lease rate [122] - The 23Springs project in Uptown Dallas is now 54% pre-leased, one year before completion [127] Market Data and Key Metrics Changes - Tampa recorded the highest leasing volume in the quarter with 267,000 square feet signed [128] - Atlanta signed 199,000 square feet for the quarter, with 160,000 square feet being new leases, marking the greatest share of new leasing across the portfolio [129] - Raleigh, Nashville, Dallas, and Charlotte were highlighted as top-performing cities, contributing to strong leasing activity [101] Company Strategy and Development Direction - The company plans to sell up to an additional $150 million in non-core properties, with a focus on improving portfolio quality and cash flow growth [6][84] - The company does not expect to announce new development projects during the year due to challenging market conditions [88] - The strategy emphasizes creating high-quality office experiences in desirable business districts to attract tenants [120] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds in the office sector but remains optimistic about future demand due to the quality of the portfolio and strategic locations [9] - The company expects occupancy to trough in the first half of next year but believes it will be at a higher level than previously anticipated [105] - Management noted that the leasing environment remains competitive, with a focus on maintaining occupancy over pushing rental rates [11] Other Important Information - The company has $850 million of available liquidity, which increased to $915 million following recent asset sales [131] - The company is not planning any capital raising for the year, relying on existing liquidity and construction loans for development projects [62] Q&A Session All Questions and Answers Question: What does retention look like in '24 excluding known move-outs? - Management indicated that retention levels would be around 40% when excluding known move-outs, which would be higher if those were included [60] Question: What is the outlook for acquisitions given current market conditions? - Management stated that the acquisition environment is challenging due to high pricing and quality concerns, but they remain interested in quality assets [31] Question: Will there be continued degradation in net effective rents across the portfolio? - Management expressed optimism about holding net effective rents steady, despite current tenant market conditions [34][36] Question: Can you provide an update on the leasing activity in Dallas? - Management reported strong leasing activity at 23Springs, with significant interest and several prospects in the pipeline [47] Question: What are the expectations for future growth opportunities? - Management highlighted a focus on capital recycling and improving cash flow through strategic asset sales and potential acquisitions in the future [44][50]