HIW's $223M Bet on 6Hundred at Legacy Union: Time to Buy the Stock?

Highwoods Properties HIW is setting the stage for growth with the planned acquisition of 6Hundred at Legacy Union, a newly delivered 411,000-square-foot Class AA office tower in Charlotte’s Uptown CBD that is about 84% leased with a weighted average lease term of more than 12 years.

The roughly $223 million investment positions Highwoods to scale its presence in the strong BBD of Charlotte, leveraging a property with embedded upside and long-term cash-flow potential. The acquisition is slated to close in the next 30 days.

Strategic Fit in the Portfolio

The property resides within the Legacy Union mixed-use campus in Charlotte, where Highwoods already owns adjoining assets, including the Bank of America Tower and SIX50 South Tryon. With the acquisition, the company’s footprint at Legacy Union will expand to roughly 1.6 million square feet of Class AA office with more than 4,200 structured parking spaces. For Highwoods, a concentrated campus in a high-demand urban location allows for operational efficiencies, shared amenities and stronger leasing leverage.

HIW's Financial Outlook & Growth Opportunity

Highwoods expects stabilized annual net operating income (NOI) of about $17.5-$18.5 million on both a GAAP and cash basis, with stabilization projected by 2027 (on a GAAP basis) and 2028 (on a cash basis). In the meantime, 6Hundred at Legacy Union is expected to yield approximately $10 million of GAAP NOI in 2026.
 
The company plans to fund the deal in a leverage-neutral way using proceeds from non-core asset sales, helping to preserve balance-sheet flexibility. The fact that in-place rents are more than 20% below market offers meaningful upside as leases roll and market rents reset.

Bottom Line of HIW

For investors focused on office-REIT credit and CRE transition plays, the Highwoods deal represents a strategic upgrade, acquiring a high-quality asset in a top Sunbelt city, with embedded rental growth potential and immediate scale benefits. Execution will be key, but the acquisition aligns well with the company’s strategy to deploy capital into best-in-class business-district office assets and exit less favorable non-core properties.

In the past three months, shares of this Zacks Rank #2 (Buy) company have declined 5.7% against the industry's uptick of 1.0%. However, from a valuation perspective, we note that Highwoods shares are currently undervalued, as suggested by the Value Score of B.

Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are Digital Realty Trust DLR and Public Storage PSA, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 
The Zacks Consensus Estimate for DLR’s 2025 FFO per share has moved 14 cents northward over the past month to $7.35.

The consensus estimate for PSA’s 2025 FFO per share has been revised 2 cents upward to $16.87 over the past month.

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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