Exhibit 99
[LOGO] HIGHWOODS
PROPERTIES
Celebrating 25 Years of Excellence
FOR IMMEDIATE RELEASE Ref: 03-11
Contact: Tabitha Zane or Carman Liuzzo
Sr. Director, Investor Relations Chief Financial Officer
919-431-1529 919-875-6605
Highwoods Properties Reports First Quarter Results
Board Lowers Annual Dividend in Response to a Challenging Operating Outlook
Additional 2.5 Million Shares Added to Share Repurchase Program
_________________
Raleigh, NC - April 24, 2003 - Highwoods Properties, Inc. (NYSE: HIW), the
largest owner and operator of suburban office properties in the Southeast, today
reported funds from operations ("FFO") before minority interest of $40.8
million, or $0.68 per diluted share, for the quarter ended March 31, 2003. This
compares to FFO of $55.6 million, or $0.91 per diluted share, for the same
period a year ago. The Company has lowered its FFO guidance for the full year to
between $2.60 and $2.70 per share.
Net income available for common stockholders totaled $3.5 million, or $0.06 per
diluted share, for the quarter ended March 31, 2003 compared to $19.2 million,
or $0.36 per diluted share, for the same period last year.
Highwoods also announced that its Board of Directors has reduced its annual
dividend rate to $1.70 per share. At Highwoods' closing price on April 24, 2003,
this dividend provides an annual yield of approximately 8.0%.
The Board of Directors also increased the share repurchase authorization by an
additional 2.5 million shares. As a result, the Company may now repurchase up to
5.9 million shares of its outstanding common shares and operating partnership
units through open market or privately negotiated transactions.
Ronald P. Gibson, president and chief executive officer of Highwoods said, "The
entire office REIT industry continues to be impacted by deteriorating
macroeconomic trends including slow GDP growth, rising unemployment and
continuing uncertainty in the corporate sector, which has stymied most firms'
expansion plans. Highwoods has been particularly hard hit with the bankruptcies
of WorldCom and US Airways, which effectively eliminated $18.0 million of annual
revenue and reduced our occupancy by 2.2%. Some of the signs that appeared in
the fourth quarter, indicating that a number of our markets had begun to
stabilize, evaporated and were replaced with more indications of instability and
economic weakness.
Highwoods Properties Ref: 03-11
April 24, 2003
Page 2 of 7
Our Board of Directors, when faced with declining occupancy, deteriorating
macroeconomic trends and the likely prospects of having to fund a shortfall
through 2004 and perhaps part of 2005, believed that lowering the dividend was
the most prudent course of action to ensure the financial health and long-term
growth of the Company. This reduction in our dividend will enhance our financial
flexibility and better position us to take advantage of acquisition and
development opportunities when this market finally does turn around."
First Quarter Highlights
. Highwoods' 37.2 million-square foot in-service portfolio was 83.2%
occupied at March 31, 2003. This represents a 480 basis point decline
from a year ago and an 80 basis point decline from the fourth quarter of
2002.
. Rental revenues from continuing operations for the first quarter were
$109.0 million, a 6.2% decline from the first quarter of 2002 when rental
revenues from continuing operations were $116.2 million.
. Same property rental revenues for the first quarter declined 6.3% from a
year ago to $105.3 million and cash basis same property net operating
income declined 11.1% for the comparable period.
. Same property average occupancy for the quarter ended March 31, 2003
declined to 84.8% from 89.5% a year ago.
. Cash available for distribution ("CAD") was $29.1 million for the first
quarter of 2003 versus CAD of $46.8 million for the first quarter of
2002.
. Leasing activity in Highwoods' office, industrial and retail portfolio
during the first quarter totaled 2.0 million square feet. 55.0% of this
leasing activity was in the Company's office portfolio, which reported an
average first-year cash rental rate 7.5% lower than the average final
rental rate under the previous leases. On a straight-line basis, rents
for office leases increased 2.7% over the straight-line rents for
expiring leases.
. In the first quarter of 2003, the Company repurchased 126,261 common
partnership units at a weighted average price of $21.71 per unit. Since
commencement of its initial share repurchase program in December 1999,
Highwoods has repurchased 11.6 million shares of common stock and
Highwoods Realty Limited Partnership common partnership units at a
weighted-average price of $24.19 per share/unit for a total purchase
price of $280.7 million. Inclusive of the recent authorization of 2.5
million shares, the Company has 5.9 million shares/units remaining under
its authorized share/unit repurchase program.
Asset Repositioning
Sales
In the first quarter, the Company sold a total of 6.65 acres of land for a gain
of $863,000. In addition, the Company sold non-core assets in Kansas City for
total proceeds of $305,000.
For 2003, the Company anticipates disposition activity to be between $75.0 and
$175.0 million. The Company currently has assets under letter of intent or
contract for sale of $135.9 million.
Acquisitions
A 66,421 square foot building that was 94.8% occupied was purchased in Richmond
for $7.0 million. The Company also purchased 23.46 acres of land in Atlanta for
$2.25 million. This land is part of the Bluegrass Valley office development
project.
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Highwoods Properties Ref: 03-11
April 24, 2003
Page 3 of 7
Development
Highwoods' development pipeline consists of three projects totaling 200,000
square feet that were 36.0% pre-leased at the end of the quarter. The
anticipated total investment of these projects is $19.0 million, with $16.2
million funded as of March 31, 2003.
One development project was placed in service in the first quarter, Seven
Springs, a 131,000-square foot office building in Nashville that was 14%
occupied and 76% pre-leased.
Quarterly Dividend Declared
The Board of Directors declared a cash dividend of $0.425 per share of common
stock for the first quarter ended March 31, 2003, which equates to an annual
dividend of $1.70 per share, and is payable on May 20, 2003, to shareholders of
record as of May 7, 2003.
The Board also declared a cash dividend of $21.5625 per share of Highwoods
Properties Series A Cumulative Redeemable Preferred Stock. The dividend is
payable on June 2, 2003, to shareholders of record as of May 15, 2003.
The Board also declared a cash dividend of $0.50 per share of Highwoods
Properties Series B Cumulative Redeemable Preferred Stock. The dividend is
payable on June 16, 2003, to shareholders of record as of June 2, 2003.
Additionally, the Board declared a cash dividend of $0.50 per Depositary Share
each representing 1/10 of an 8 percent Series D Cumulative Redeemable Preferred
Share. The dividend is payable on July 31, 2003, to shareholders of record as of
July 1, 2003.
Outlook
For the year ending December 31, 2003, Highwoods is estimating FFO to be between
$2.60 to $2.70 per share. This estimate assumes an average occupancy of 82% to
84% on the portfolio.
These forward-looking statements are subject to risks and uncertainties that
exist in Highwoods' operations and business environment. See the Company's
cautionary language regarding forward-looking statements set forth at the bottom
of this release.
Non-GAAP Information
The Company believes that FFO and CAD are additional meaningful measures of
operating performance. FFO equals net income (computed in accordance with GAAP)
excluding gains (or losses) from debt restructuring and sales of depreciable
assets, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. CAD equals FFO reduced by
non-revenue enhancing capital expenditures for building improvements and tenant
improvements and lease commissions related to second-generation space. In
addition, CAD includes both recurring and nonrecurring operating results. As a
result, nonrecurring items that are not defined as "extraordinary" under GAAP
are reflected in the calculation of CAD. This information will necessarily be
different from comparable information provided by other companies and should not
be used as an alternative to the operating and other financial information as
determined under accounting principles generally accepted in the United States.
The computations of FFO and CAD can be found in a separate table following the
Consolidated Statements of Income.
[LOGO]
Highwoods Properties Ref: 03-11
April 24, 2003
Page 4 of 7
Supplemental Information
A copy of the Company's first quarter 2003 Supplemental Information that
includes detailed operating and financial information is available in the
"Investor Relations" section of the Company's Web site at www.highwoods.com. Or
you may obtain a copy by contacting Highwoods Investor Relations at 919-875-6717
/ 800-256-2963 or by e-mail to HIW-IR@highwoods.com. If you would like to
receive future Supplemental Information packages by e-mail or fax, please
contact the Investor Relations department as noted above or by written request
to: Investor Relations Department, Highwoods Properties, Inc., 3100 Smoketree
Court, Suite 600, Raleigh, NC 27604.
Conference Call
Highwoods will conduct a conference call to discuss the results of its first
quarter on Friday, April 25, 2003, at 10:00 a.m. Eastern Time. All interested
parties are invited to listen to the call. The dial-in number is (888) 202-5268
domestic, (706) 643-7509 international. The call will also be available live on
our web site at www.highwoods.com under the "Investor Relations" section.
Telephone and web cast replays will be available two hours after the completion
of the call. The telephone replay will be available for one week beginning at
1:00 p.m. Eastern Time. Dial-in numbers for the replay are (800) 642-1687
US/Canada, (706) 645-9291 international. The conference ID is 9587969.
About the Company
Highwoods Properties, Inc. is a fully integrated, self-administered real estate
investment trust ("REIT") that provides leasing, management, development,
construction and other customer-related services for its properties and for
third parties. As of March 31, 2003, the Company owned or had an interest in 572
in-service office, industrial and retail properties encompassing approximately
45.0 million square feet. Highwoods also owns approximately 1,341 acres of
development land. Highwoods is based in Raleigh, North Carolina, and its
properties and development land are located in Florida, Georgia, Iowa, Kansas,
Missouri, North Carolina, South Carolina, Tennessee and Virginia. For more
information about Highwoods Properties, please visit our Web site at
www.highwoods.com.
Certain matters discussed in this press release, such as the effect of tenant
bankruptcies on our operations, expected leasing activities, financial and
operating performance and share repurchases and the cost and timing of expected
development projects and asset dispositions, are forward-looking statements
within the meaning of the federal securities laws. These statements are
distinguished by use of the words "will", "expect", "intends" and words of
similar meaning. Although Highwoods believes that the expectations reflected in
such forward-looking statements are based upon reasonable assumptions, it can
give no assurance that its expectations will be achieved. Factors that could
cause actual results to differ materially from Highwoods' current expectations
include general economic conditions, local real estate conditions, deterioration
in the financial condition of our tenants, our ability to lease or re-lease
space quickly or on favorable terms, changes in the cost of materials and labor
used in construction projects, and the other risks detailed in the Company's
Annual Report on Form 10-K for the year ended December 31, 2002 and subsequent
SEC reports.
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Highwoods Properties, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended March 31,
-------------------------------------
2003 2002
=====================================
Rental revenue $ 109,020 $ 116,185
Operating expenses:
Rental property 37,319 36,091
Depreciation and amortization 33,294 29,356
Interest expense:
Contractual 27,674 25,604
Amortization of deferred financing costs 626 339
-------------------------------------
28,300 25,943
General and administrative 5,344 5,356
-------------------------------------
Total operating expenses 104,257 96,746
Other income
Interest and other income 2,890 3,345
Equity in earnings of unconsolidated affiliates 1,761 2,564
-------------------------------------
4,651 5,909
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Income before gain/(loss) on disposition of land
and depreciable assets, minority interest,
discontinued operations and extraordinary item 9,414 25,348
Gain/(loss) on disposition of land 863 (232)
Gain on disposition of depreciable assets 20 1,176
-------------------------------------
Income before minority interest, discontinued 10,297 26,292
operations and extraordinary item
Minority interest (1,221) (3,201)
-------------------------------------
Income from continuing operations 9,076 23,091
Discontinued operations
Income from discontinued operations, net of 2,266 3,781
minority interest
Loss on sale of discontinued operations, net of
minority interest (170) -
-------------------------------------
2,096 3,781
-------------------------------------
Net income 11,172 26,872
Dividends on preferred shares (7,713) (7,713)
-------------------------------------
Net income available for common stockholders $ 3,459 $ 19,159
=====================================
Net income per common share-diluted:
Income from continuing operations $ 0.02 $ 0.29
Income from discontinued operations $ 0.04 $ 0.07
Net income $ 0.06 $ 0.36
=====================================
Weighted average common shares outstanding-
diluted 53,475 53,393
=====================================
Highwoods Properties, Inc.
Funds from Operations and Cash Available for Distribution
(In thousands, except per share amounts and ratios)
Three Months Ended March 31,
-------------------------------------
2003 2002
=====================================
Funds from Operations:
Income before gain/(loss) on disposition of land and
depreciable assets, minority interest,
discontinued operations and extraordinary item $ 9,414 $ 25,348
Add/(Deduct):
Dividends on preferred shares (7,713) (7,713)
Gain/(loss) on disposition of land 863 (232)
Depreciation and amortization 33,294 29,356
Amortization of net intangible leases 43 -
Unconsolidated affiliates:
Depreciation and amortization 2,372 2,484
Discontinued operations:
Depreciation and amortization - 2,010
Income, net of minority interest 2,266 3,781
Minority Interest 292 526
-------------------------------------
Funds from operations 40,831 55,560
Cash Available for Distribution:
Add/(Deduct):
Rental income from straight-line rents (1,685) (2,367)
Nonrecurring compensation expense - 186
Amortization of deferred financing costs 626 339
Non-incremental revenue generating capital expenditures:
Building improvements paid (2,791) (751)
Second generation tenant improvements paid (4,488) (3,531)
Second generation lease commissions paid (3,368) (2,610)
-------------------------------------
(10,647) (6,892)
-------------------------------------
Cash available for distribution $ 29,125 $ 46,826
=====================================
Weighted average common shares/common units
outstanding-diluted 60,360 60,747
=====================================
Per common share/common unit-diluted:
Funds from operations $ 0.68 $ 0.91
=====================================
Cash available for distribution $ 0.48 $ 0.77
=====================================
Dividends paid $ 0.585 $ 0.585
=====================================
Dividend payout ratios:
Funds from operations 86.0% 64.0%
=====================================
Cash available for distribution 121.2% 75.9%
=====================================
Highwoods Properties, Inc.
Consolidated Balance Sheets
(in thousands)
3/31/03 12/31/02
-------------------------------
Assets:
Real estate assets, at cost:
Land and improvements $ 394,256 $ 395,935
Buildings and tenant improvements 2,876,869 2,864,048
Development in process 7,797 6,847
Land held for development 175,367 176,173
Furniture, fixtures and equipment 21,150 20,966
-------------------------------
3,475,439 3,463,969
Less-accumulated depreciation (488,899) (461,383)
-------------------------------
Net real estate assets 2,986,540 3,002,586
Property held for sale 135,857 130,368
Cash and cash equivalents 19,204 11,017
Restricted cash 2,943 8,582
Accounts receivable, net 12,723 13,578
Notes receivable 32,077 31,057
Accrued straight-line rents receivable 50,462 48,777
Investment in unconsolidated affiliates 78,229 79,504
Other assets:
Deferred leasing costs 99,640 100,143
Deferred financing costs 42,548 26,120
Prepaid expenses and other 16,388 15,295
-------------------------------
158,576 141,558
Less-accumulated amortization (73,579) (71,658)
-------------------------------
Other assets, net 84,997 69,900
-------------------------------
Total Assets $ 3,403,032 $ 3,395,369
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Liabilities and Stockholders' Equity:
Mortgages and notes payable $ 1,580,301 $ 1,528,720
Accounts payable, accrued expenses
and other liabilities 108,808 120,614
-------------------------------
Total liabilities 1,689,109 1,649,334
Minority interest 183,297 188,563
Preferred stock 377,445 377,445
Common stock 535 534
Additional paid-in capital 1,392,118 1,390,043
Distributions in excess of net earnings (225,430) (197,647)
Accumulated other comprehensive loss (8,767) (9,204)
Deferred compensation - restricted stock (5,275) (3,699)
-------------------------------
Total Stockholders' Equity 1,530,626 1,557,472
-------------------------------
Total Liabilities and Stockholders' Equity $ 3,403,032 $ 3,395,369
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