Highwoods Properties Q3 FFO Meets Estimates, Revenues Miss

Highwoods Properties Inc. HIW reported third-quarter 2025 funds from operations (FFO) per share of 86 cents, meeting the Zacks Consensus Estimate. However, the figure was lower than the prior-year quarter’s 90 cents.

Quarterly results reflect healthy leasing activity with rent growth. However, the decline in occupancy and same-property net operating income (NOI) undermines the results to an extent. HIW revised its outlook for 2025.

Rental and other revenues were $201.8 million, missing the Zacks Consensus Estimate of $203.4 million. The figure fell by 1.2% year over year.

HIW’s Third Quarter in Detail

Highwoods’ second-generation leasing activity encompassed 1.0 million square feet of space in the third quarter, including 326,000 square feet of new leases. The dollar-weighted average term is 6.7 years. GAAP rent growth was 18.3%, while net effective rents were 21.8% higher than the previous five-quarter average.

Highwoods’ average in-place cash rent was up 1.6% per square foot from the prior-year quarter. At the end of the reported quarter, the in-service portfolio occupancy (at HIW share) declined 20 basis points from the prior quarter to 85.3%. The same-property cash NOI decreased 3.6% year over year to $131.5 million.

The present development pipeline aggregates $474 million (at HIW share) and is 72% pre-leased. During the third quarter, the company also signed 138,000 square feet of first-generation leases.

Portfolio Activity of HIW

During the third quarter, Highwoods purchased Legacy Union Parking Garage for $111.5 million, including planned near-term building improvements. Located at 720 South Church Street in Uptown Charlotte, the 3,057-space garage provides parking for 1.2 million square feet of office space owned by Highwoods at Legacy Union.

During the quarter, Highwoods sold off a non-core office building in Richmond, VA, encompassing 107,000 square feet, for $16 million.

HIW’s Balance Sheet Position

The company’s total available liquidity amounted to more than $625 million, including cash on hand, availability on the revolving credit facility and pro rata share of undrawn joint venture construction loans. The reported net debt-to-adjusted EBITDAre ratio was 6.4, unchanged from the previous quarter.

HIW’s 2025 Guidance Revision

Highwoods has raised its 2025 FFO per share guidance to the range of $3.41-$3.45 from the earlier guided range of $3.37-$3.45. The Zacks Consensus Estimate is currently pegged at $3.42, which lies within this range.

HIW expects growth in same-property cash NOI between -3% and -2%, and year-end occupancy of 85.7% to 86.3%.

HIW's Zacks Rank

Highwoods currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Highwoods Properties, Inc. Price, Consensus and EPS Surprise

Highwoods Properties, Inc. price-consensus-eps-surprise-chart | Highwoods Properties, Inc. Quote

Performance of Other Office REITs

BXP Inc.’s BXP third-quarter 2025 FFO per share of $1.74 surpassed the Zacks Consensus Estimate of $1.72. BXP’s quarterly results reflected better-than-anticipated revenues on healthy leasing activity. However, lower occupancy during the quarter marred the performance to some extent.

SL Green Realty Corp. SLG reported a third-quarter 2025 FFO per share of $1.58, which beat the Zacks Consensus Estimate of $1.34. Results reflected a strong leasing activity with improved average rental rates on the Manhattan office leases signed in this period.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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