Highwoods Properties Inc.
), the Raleigh, NC-based real estate investment trust (REIT), is
focused on strengthening its leasing business and gearing up its
portfolio enhancement activity.
Last month, Highwoods inked a lease deal with a new customer for
28,000 square foot of space at Green V in Nashville. This space was
previously occupied by LifePoint (vacated in Feb 2014) for which
Highwoods constructed a 203,000 square foot build-to-suit facility,
earlier this year (read:
Highwoods Leases Green V in Nashville
In April, Highwoods declared first-quarter 2014 core funds from
operations (FFO) of 66 cents per share, missing the Zacks Consensus
Estimate by a nickel and the prior-year quarter figure by 2 cents.
One-time expenses like retirement plan-related costs and a bad
winter were the spoilers.
Nevertheless, on the back of successful implementation of its
strategic plan, a large part of the company's portfolio is now
concentrated in the high-growth Sun Belt markets, which provides
above-average job growth prospects owing to the long-term
demographic trends. In particular, the company's portfolio
restructuring activity positions it well in target markets.
Additionally, the strong and flexible balance sheet position and
rating upgrade by Fitch are commendable.
However, although Highwood's large development pipeline is
encouraging for its future growth, it increases operational risks.
Also, the current sluggish office environment and persistent office
space efficiency trends remain a concern for the company.
Alongside, with a gradual reduction in the Fed's support, interest
rates are expected to increase, which may in turn hurt the
rate-sensitive business of the company in the long run.
To gain deeper insight into Highwoods, you can refer to our
updated research report, which was issued on Jun 26, 2014.
Over the last 30 days, the Zacks Consensus Estimate for 2014 FFO
per share remained stable at $2.90. On the other hand, it moved up
by a penny to $3.04 for 2015. The stock currently has a Zacks Rank
Stocks That Warrant a Look
Investors interested in the REIT industry may consider stocks
Chatham Lodging Trust
The GEO Group, Inc.
Terreno Realty Corp.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
FFO, a widely used metric to gauge the performance of REITs,
are obtained after adding depreciation, amortization and other
non-cash expenses to net income.
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HIGHWOODS PPTYS (HIW): Free Stock Analysis
TERRENO REALTY (TRNO): Free Stock Analysis
CHATHAM LODGING (CLDT): Free Stock Analysis
GEO GRP INC/THE (GEO): Free Stock Analysis
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