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Highwoods Gains from Operating Performance: Time to Buy?

We have issued an updated research report on Highwoods Properties Inc.HIW on Nov 16, 2015.

Last month, Highwoods reported third-quarter 2015 funds from operations ("FFO") of 77 cents per share, which came in line with the Zacks Consensus Estimate. However, the bottom line improved by 7 cents year over year. Results reflected strong same-property net operating income ("NOI") and occupancy growth. Total revenue for the quarter climbed 7.3% year over year to $163.7 million. Further, the top line surpassed the Zacks Consensus Estimate of $162.7 million.

This Raleigh, NC-based real estate investment trust ("REIT") has delivered strong operating performance in recent times. Same property cash NOI was up 6.3% year over year in the third quarter, led by a rise in same property revenues. Further, management raised guidance range for 2015 same property cash NOI to 6.5-6.8% from 6-6.5%.

In addition, Highwoods is making concerted efforts to augment its footprint in high-growth markets through acquisition and development of premium assets. A substantial part of the company's portfolio is presently concentrated in high-growth Sun Belt markets with favorable demographic trends, and is expected to benefit the company in the long term.

However, notable exposure to office assets and an anticipated rise in interest rate remain as concerns before Highwoods. Also, huge development pipeline adds to operational risks.

Currently, Highwoods carries a Zacks Rank #2 (Buy).

Key Picks from the Sector

Investors interested in the REIT sector may consider stocks like Mack-Cali Realty Corp. CLI , Alexandria Real Estate Equities, Inc. ARE and Cousins Properties Incorporated CUZ . While Mack-Cali sports a Zacks Rank #1 (Strong Buy), both Alexandria Real Estate Equities and Cousins Properties hold the same Zacks Rank as Highwoods.

Note: Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

HIGHWOODS PPTYS (HIW): Free Stock Analysis Report

COUSIN PROP INC (CUZ): Free Stock Analysis Report

MACK CALI CORP (CLI): Free Stock Analysis Report

ALEXANDRIA REAL (ARE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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