Highwoods Properties Inc (NYSE:HIW) Q2 2020 Earnings Conference Call - Final Transcript

Jul 29, 2020 • 11:00 am ET

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Highwoods Properties Inc (NYSE:HIW) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Mark Mulhern

be $0.06 to $0.08 per share lower than our original February 4 outlook, which mostly offsets the reduction in parking income.

And finally, the dilutive impact from the $23 million non-core disposition and straight-line rent credit loss has lowered our outlook by $0.01 per share.

In addition to these specified COVID-19 induced changes to our outlook, we increased the low-end of the prior range $0.03 per share. The result is an updated range of $3.59 to $3.68 per share. In total, the mid-point of our range is down $0.025, or less than 1%, from our original February outlook.

As we stated in the press release, our updated outlook excludes the potential impact of customers that file bankruptcy or otherwise irrevocably default on their leases and non-cash credit losses of straight-line rent receivables. Given the fluidity of the pandemic and its effect on the collectability of rents over the remainder of existing lease terms, such losses are still too speculative to project at this time.

Our year-end occupancy assumption is 89% to 91%, which we lowered 100 basis points at the high-end due to slower new leasing activity.

Our same-property cash NOI growth outlook is 1% to 2%, excluding potential lost rental revenues attributable to COVID-19, but inclusive of the negative impact of temporary rent deferrals. Our prior range was 1.5% to 3%. The change from our prior outlook is driven primarily by the negative impact of temporary rent deferrals and free rent associated with early lease extensions. These items reduce 2020 cash NOI but will benefit cash flow in future years, while they have no impact on current year GAAP NOI or FFO.

As is our custom, we don't include the effect of future acquisitions, dispositions or development announcements in our FFO outlook. Ted mentioned that we have $72 million of dispositions under contract that are scheduled to close later this year, and these have not been included in our updated FFO range. The low-end of our disposition range is $95 million and the upper end is $150 million. We have maintained the original upper-end of our acquisitions and development announcement categories as a placeholder in our current outlook, with a low-end of zero given the current uncertain economic environment.

So to wrap up, we believe we are well-positioned to weather the uncertain economic environment given our balance sheet, our portfolio, our development pipeline and geographic diversification.

Operator, we are now ready for your questions.