Highwoods Properties reports 3Q 2008 results
Financial Highlights:-Average in-place cash rental rates across the companyâ€™s total portfolio grew 3.0% compared to the third quarter of 2007. Average in-place cash rental rates across the companyâ€™s office portfolio increased 3.8% from the same period a year ago. Since the third quarter of 2004, average in-place cash rental rates across the companyâ€™s total portfolio and office portfolio have increased 15.3% and 13.7%, respectively.-Same property net operating income from continuing operations, excluding straight line rent and termination fee income, for the three and nine months ended September 30, 2008 increased 1.0% and 2.8%, respectively, from the corresponding periods of 2007.-On September 8, 2008, the company priced a public offering of 5.5 million shares of its common stock for net proceeds of $195 million. The offering closed on September 12, 2008.-On September 16, 2008 the company acquired 53,845 shares of its 8.625% series A preferred stock at 97.5% of liquidation value in a privately negotiated transaction. The yield to the company relating to this repurchase was 8.9%.Ed Fritsch, president and CEO, said, â€œWe reported solid financial results this quarter, with revenue, net income and Funds from Operations (FFO) all increasing from the third quarter of 2007. FFO from core operations was $0.68 per share, an 11% increase from the third quarter of 2007, and we now expect FFO from core operations to be 10% higher for full year 2008 compared to 2007.â€Fritsch continued, â€œOccupancy also increased this quarter up 120 basis points from the third quarter of 2007 and up 50 basis points from the second quarter of this year. Pre-leasing in our $336 million development pipeline is currently 71%, a 500 basis point increase over the past three months.â€Fritsch added, â€œWe are also pleased to have issued 5.5 million shares of common stock for net proceeds of $195 million in early September. We deployed $52.5 million to repurchase high-coupon preferred stock at a discount and the balance was used to pay down our $450 million revolving credit facility, which currently has $320 million of availability. We have no debt maturing this quarter and the $174 million of fixed rate debt we have maturing next year bears a weighted average interest rate of 7.9%. Our credit facility, which carries an initial maturity date of May 2009, has a one year extension, at our sole option, which we currently plan to exercise.â€The company also reported net income for common stockholders was $37.1 million or $0.64 per diluted share for the nine of 2008. Net income per diluted share in the first nine months of 2008 included $0.19 from gains on sales of depreciable assets, $0.03 of land sale gains and a nominal charge for the repurchase of preferred stock. For the nine months ended September 30, 2007, net income available for common stockholders was $62.4 million, or $1.09 per diluted share. Net income per diluted share in the first nine months of 2007 included $0.28 of land sale gains, $0.61 from gains on sales of depreciable assets, $0.07 related to finalization of an insurance claim and a preferred stock repurchase charge of $0.04.Excluding the gains and charges listed above, net income available for common stockholders in the first nine months of 2008 would have been $0.42 per diluted share and $0.17 per diluted share in the first nine months of 2007.FFO for the third quarter of 2008 was $44.6 million, or $0.71 per diluted share, compared to $36.1 million, or $0.59 per diluted share, for the third quarter of 2007. For the nine months ended September 30, 2008, FFO was $130.3 million, or $2.11 per diluted share, compared to FFO of $128.3 million, or $2.08 per diluted share, for the nine months ended September 30, 2007.