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VOL. 126 | NO. 147 | Friday, July 29, 2011

Highwoods Properties’ Q2 Funds Down to $45.8 Million

By Sarah Baker

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Highwoods Properties Inc.’s second-quarter funds from operations was $45.8 million – down from $48.7 million during the same period last year – the company announced Thursday, July 28, in its second-quarter earnings conference call.

That translates to a $0.60 FFO per diluted share in Q2, as compared to $0.64 in Q2 2010. Excluding the preferred stock redemption charge, debt extinguishment and expensed property acquisition costs, FFO per share would have been $0.63 from April 1 to June 30.

The Raleigh, N.C.-based real estate investment trust is one of the largest owners and operators of office properties in the Southeast.

In Memphis, Highwoods’ portfolio is composed of 19 office buildings in the Poplar and 385 corridors.

Amid economic uncertainty, and the “worst reality TV show broadcasting live from the Capitol, business is getting done,” said Ed Fritsch, Highwoods’ president and CEO.

Among accomplishments during the quarter were achieving a 60 basis point increase in occupancy and a 1.5 percent increase in same property cash net operating income compared to the second quarter of 2010.

Highwoods also signed 153 leases during Q2, representing 1.1 million square feet of second-generation space. Seventy-six percent of those leases were in the office sector – the firm’s primary source of product revenue – with an average term of 4.6 years.

While overall occupancy increased 60 basis points from the second quarter of 2010, it declined 20 basis points from last quarter, directly as a result of Triad III, 6070 Poplar Ave., being placed in service, which negatively impacted occupancy by 34 basis points.

Revenues from non-same properties were up $2.9 million, mostly due to the acquisition of the Crescent Center, 6075 Poplar Ave., which was completed in the third quarter last year, and also the medical office building acquisition in Raleigh completed in early second quarter of this year, and higher construction management fees. Fristch called the Crescent Center “one of the best, well-stabilized, well-positioned assets in all of Memphis.”

Highwoods updated its FFO guidance per share for 2011 to a range of $2.48 to $2.56 from the prior outlook from $2.41 to $2.57, which reflects a three-center increase in the midpoint.

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 51 223 1,152
MORTGAGES 55 189 861
FORECLOSURE NOTICES 25 45 144
BUILDING PERMITS 149 541 2,593
BANKRUPTCIES 24 120 581
BUSINESS LICENSES 14 65 264
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0