Highwoods Properties posted first-quarter results that exceeded expectations and CEO Ed Fritsch expressed confidence in the outlook for commercial real estate in the company’s markets.
The Raleigh-based company reported this week that funds from operations – a key measure of profitability for real estate investment trusts like Highwoods – totaled $83.4 million, or 80 cents per share, versus $81.5 million a year ago. Analysts polled by Zacks Investment Research were anticipating funds from operations of 78 cents per share.
“Our view is customers and prospects are generally comfortable about growing their businesses, whether it’s an existing customer needing to expand or a build-to-suit prospect looking to relcate and/or consolidate multiple locations into one modern day facility,” Fritsch told analysts during a conference call.
Factors such as continued population growth in the southeast, where most of Highwoods’ buildings are located, “business-friendly environments,” rising rents and limited supply are contributing to the healthy market, Fritsch said.
During the quarter Highwoods announced $126 million in new building projects, that are 86 percent pre-leased. The most notable project is a $96 million, 224,000-square-foot building in Nashville that will serve as the U.S. headquarters for Mars Petcare.
Highwood shares closed Thursday at $51.16, down 27 cents. The company’s shares have been flat this year.