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Highwoods Properties Stock Up 8.3% in Three Months: Will It Continue?
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Key Takeaways
HIW secured 750,000 square feet of Q2 leasing through June 2, including 300,000 square feet of new deals.
HIW's portfolio focus on high-growth Sun Belt markets is aiding rent growth and leasing strength.
HIW sold $146.3M in non-core assets and bought a Class AA tower in Raleigh in early 2025.
Highwoods Properties (HIW - Free Report) shares have rallied 8.3% in the past three months, against the industry’s fall of 0.2%.
In early June, HIW announced that it has signed more than 750,000 square feet of second-generation leases from the beginning of the second quarter through June 2, 2025. These included more than 300,000 square feet of new leases. This development highlights the growing demand for high-quality office spaces, propelling leasing activity.
Analysts seem positive on this Zacks Rank #3 (Hold) company, with the Zacks Consensus Estimate for its 2025 funds from operations (FFO) per share revised marginally northward to $3.41 over the past month.
Image Source: Zacks Investment Research
Factors Behind HIW Stock Price Surge: Will the Trend Last?
Highwoods is seeing a recovery in demand for its high-quality and well-placed office properties, as highlighted by a rebound in new leasing volume. During the first quarter of 2025, Highwoods’ second-generation leasing activity encompassed 700,000 square feet of space, including 252,000 square feet of new leases.
Going forward, the next cycle of office space demand is likely to be driven by inbound migration and significant investments announced by office occupiers to expand their footprint in Sun Belt regions, as well as additional hiring plans in the company’s markets. Moreover, HIW is seeing an increasing number of tenants returning to offices. This is likely to support office real estate market fundamentals.
Highwoods’ portfolio is concentrated in high-growth Sun Belt markets, which have long-term favorable demographic trends and are expected to continue experiencing above-average job growth. This is likely to support Highwoods’ rent growth over the long term. Net effective rents seen by the company were 20% higher than the previous five-quarter average.
HIW has been following a disciplined capital-recycling strategy that entails disposing of non-core assets and redeploying the proceeds in premium asset acquisitions and accretive development projects. In the first quarter of 2025, Highwoods sold three non-core office buildings encompassing 616,000 square feet in Tampa, FL, for $145 million and land for $1.3 million. Meanwhile, in March 2025, Highwoods acquired Advance Auto Parts Tower, a 20-story, Class AA office tower spanning around 346,000 square feet in Raleigh’s mixed-use North Hills BBD.
HIW maintains a healthy balance sheet, with no consolidated debt maturities until the second quarter of 2026. As of March 31, 2025, the company’s total available liquidity amounted to more than $700 million, including cash on hand, availability on the revolving credit facility and pro rata share of undrawn joint venture construction loans. In the first quarter of 2025, Highwoods generated 84.3% unencumbered net operating income (at the company’s share), providing scope to tap additional secured debt capital if required.
Key Risks for HIW
Competition from developers, owners and operators of office properties and a significant development outlay are likely to weigh on Highwoods. A high debt burden adds to the company’s concerns.
The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share has been raised marginally over the past two months to $2.34.
The consensus estimate for W.P. Carey’s current-year FFO per share has moved northward 1.2% in the past two months to $4.88.
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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Highwoods Properties Stock Up 8.3% in Three Months: Will It Continue?
Key Takeaways
Highwoods Properties (HIW - Free Report) shares have rallied 8.3% in the past three months, against the industry’s fall of 0.2%.
In early June, HIW announced that it has signed more than 750,000 square feet of second-generation leases from the beginning of the second quarter through June 2, 2025. These included more than 300,000 square feet of new leases. This development highlights the growing demand for high-quality office spaces, propelling leasing activity.
Analysts seem positive on this Zacks Rank #3 (Hold) company, with the Zacks Consensus Estimate for its 2025 funds from operations (FFO) per share revised marginally northward to $3.41 over the past month.
Image Source: Zacks Investment Research
Factors Behind HIW Stock Price Surge: Will the Trend Last?
Highwoods is seeing a recovery in demand for its high-quality and well-placed office properties, as highlighted by a rebound in new leasing volume. During the first quarter of 2025, Highwoods’ second-generation leasing activity encompassed 700,000 square feet of space, including 252,000 square feet of new leases.
Going forward, the next cycle of office space demand is likely to be driven by inbound migration and significant investments announced by office occupiers to expand their footprint in Sun Belt regions, as well as additional hiring plans in the company’s markets. Moreover, HIW is seeing an increasing number of tenants returning to offices. This is likely to support office real estate market fundamentals.
Highwoods’ portfolio is concentrated in high-growth Sun Belt markets, which have long-term favorable demographic trends and are expected to continue experiencing above-average job growth. This is likely to support Highwoods’ rent growth over the long term. Net effective rents seen by the company were 20% higher than the previous five-quarter average.
HIW has been following a disciplined capital-recycling strategy that entails disposing of non-core assets and redeploying the proceeds in premium asset acquisitions and accretive development projects. In the first quarter of 2025, Highwoods sold three non-core office buildings encompassing 616,000 square feet in Tampa, FL, for $145 million and land for $1.3 million. Meanwhile, in March 2025, Highwoods acquired Advance Auto Parts Tower, a 20-story, Class AA office tower spanning around 346,000 square feet in Raleigh’s mixed-use North Hills BBD.
HIW maintains a healthy balance sheet, with no consolidated debt maturities until the second quarter of 2026. As of March 31, 2025, the company’s total available liquidity amounted to more than $700 million, including cash on hand, availability on the revolving credit facility and pro rata share of undrawn joint venture construction loans. In the first quarter of 2025, Highwoods generated 84.3% unencumbered net operating income (at the company’s share), providing scope to tap additional secured debt capital if required.
Key Risks for HIW
Competition from developers, owners and operators of office properties and a significant development outlay are likely to weigh on Highwoods. A high debt burden adds to the company’s concerns.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are VICI Properties (VICI - Free Report) and W.P. Carey (WPC - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share has been raised marginally over the past two months to $2.34.
The consensus estimate for W.P. Carey’s current-year FFO per share has moved northward 1.2% in the past two months to $4.88.
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.