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Key Reasons to Add Highwoods Stock to Your Portfolio Right Now

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Key Takeaways

  • Highwoods bought the 6Hundred at Legacy Union tower in Charlotte for $223M, now 84% leased.
  • HIW sees rising demand, with Q3 2025 second-generation leasing hitting 1.0M square feet.
  • Highwoods advanced capital recycling and kept a strong balance sheet with ample liquidity.

Highwoods Properties’ (HIW - Free Report) well-diversified tenant base, efforts to expand in the high-growth markets, an aggressive capital-recycling program and solid balance-sheet strength are key growth drivers.

Recently, HIW announced the acquisition of 6Hundred at Legacy Union for $223 million. Spanning 411,000 square feet, the 24-story, Class AA office tower is located in Charlotte’s Uptown CBD. The asset is 84% leased with a weighted average lease term of more than 12 years.

Analysts seem optimistic about this Zacks Rank #2 (Buy) office-based real estate investment trust (REIT). The Zacks Consensus Estimate for HIW’s 2025 funds from operations (FFO) per share has moved marginally northward over the past month to $3.43.

Factors That Make Highwoods Stock a Solid Pick

Healthy Operating 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 the company’s rent growth over the long term. During the third quarter of 2025, its average in-place cash rent witnessed growth of 1.6% per square foot year over year.

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. This is likely to support office real estate market fundamentals.

Healthy Leasing Activities: Highwoods is seeing a recovery in demand for its high-quality, well-placed office properties, as highlighted by a rebound in new leasing volume. In the third quarter of 2025, Highwoods’ second-generation leasing activity encompassed 1.0 million square feet of space, including 326,000 square feet of new leases.

Capital-Recycling Efforts: Highwoods follows 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 nine months of 2025, Highwoods completed building and land dispositions worth $161 million and $1.3 million, respectively.

The company has made efforts to expand its footprint in high-growth best business district markets through acquisitions. In the first nine months of 2025, Highwoods completed buyouts worth $249.5 million. It is also focused on development projects in key markets, which are likely to generate considerable annual net operating income (NOI) upon completion and stabilization. As of Sept. 30, 2025, Highwoods’ development pipeline aggregated $474.2 million (at the company’s share) and was 71.9% pre-leased.

Balance Sheet & ROE Strength: Highwoods maintains a healthy balance sheet, with no consolidated debt maturities until the first quarter of 2027. As of Sept. 30, 2025, the company had around $26.3 million of available cash and $529.9 million of unused capacity under its revolving credit facility. In the third quarter of 2025, Highwoods generated 85.2% unencumbered NOI (at the company’s share), providing scope to tap additional secured debt capital if required. Investment-grade ratings of BBB-/Baa2 from S&P and Moody’s render the company access to the debt market at favorable rates.

However, shares of the company have declined 5.7% in the past three months against the industry’s 1.1% growth.

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Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are Digital Realty Trust (DLR - Free Report) and W.P. Carey (WPC - Free Report) , 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 is pegged at $7.35, which indicates year-over-year growth of 9.5%.

The Zacks Consensus Estimate for WPC’s full-year FFO per share is pinned at $4.92, which calls for an increase of 4.7% from the year-ago 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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