Previous Statements by HIW
» Highwoods Properties, Inc. Q1 2010 Earnings Call Transcript
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Such statements are subject to various risks and uncertainties. Actual results could materially differ from those currently anticipated due to a number of factors, including those identified at the bottom of yesterday's release and those identified in the company's Annual Report on Form 10-K for the year ended December 31, 2009, and subsequent reports filed with the SEC.The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. During this call, we will also discuss non-GAAP financial measures, such as FFO and NOI. Definitions of FFO and NOI and an explanation of management's view of the usefulness and risks of FFO and NOI can be found towards the bottom of yesterday's release and are also available on the Investor Relations section of the web at highwoods.com. I'll now like to turn the call over to Ed Fritsch. Ed Fritsch Good afternoon, thank you for joining us today. Before discussing our quarterly results, I'll make a few comments about the economic environment. Given the volume of highly-publicized, conflicting data on the U.S. and global economy, such as recovery versus double debt, it's hard for anyone to know what to expect over the next 6, 12, 18 months. Clearly most indicators suggest that it will take a while for economy to return to sustain growth. Here's what we do know. The important picture is not getting worse, the extent of home foreclosures is more quantifiable, expense inflation is being contained, interest rates are still very low and equity is plentiful. Given the remaining economic, political and regulatory uncertainties, it's hard to say when conditions are going to materially improve, but it appears conditions are not continuing in the trend of being worse today than they were six months ago. Despite this uncertain environment, given our progress to the first half of the year, and our projections for the remainder of the year, we have updated our 2010 FFO guidance. We raised the bottom end by $0.09 to $2.40 and lower the top end by a $0.01to $2.48 per share.
Turning to our results, leasing volumes were solid and better than a year ago. Office leasing in the first half of 2010 totaled 1.8 million square feet, compared to 1.3 million square feet lease in the first half of 2009. Some of the larger deals we achieved over the past six months have come with higher leasing CapEx, but these transactions were carefully vetted and stand nicely on their own merits. They are long-term, long non-credit and strong wins for Highwoods.OpEx and G&A are lower as we continued to be successful on our ongoing efforts to reduce expenses and improve efficiencies throughout our company. This has resulted in better same store NOI and G&A forecast in our updated FFO guidance. Our office occupancy remains significantly better than the market as a whole as we continue to differentiate our sales from our competitors to our healthy balance sheet. This strategy has proven to be effective as exhibited by recent wins of the larger deals in the number of our markets. Turning to investment activity, we're extremely pleased to have deployed $52.6 million to acquire Crescent Center. This purchase is a bulls eye on our acquisition scorecard. It improves the overall quality of our portfolio. It is a terrific asset in the core infield submarket. It strengthens our dominance in Memphis's best submarket. It has a stable diversified customer-based with no material near-term roles. We acquired a 30% plus below replacement cost and it is immediately accretive to FFO. While the breadth of our current acquisition opportunities remains narrow and well below historic norms, we are seeing the cadence of offering memorandums increase while they are not all higher quality assets, the few that are seeing to be garnering a "Scarcity" premium. Read the rest of this transcript for free on seekingalpha.com