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Rental and other revenues rose 7.9% year over year to $216.38 million and surpassed the consensus mark of $210.96 million. Robust leasing, higher in-place rents and positive rent spreads supported the quarter. Same-property cash net operating income (NOI) increased 0.3%.
In response to the above results, HIW shares were trading close to 4% higher in the early hours of today’s market session.
HIW's Leasing Volume Remains Robust
Highwoods signed 1.07 million square feet of second-generation leases, up from 923,000 square feet in the prior-year quarter. The total included 326,000 square feet of new leases, while the dollar-weighted average lease term was 6.4 years.
Second-generation leases generated GAAP rent growth of 20.9% and cash rent growth of 3.2%. Net effective rents were 8% above the previous five-quarter average, indicating that the company maintained healthy leasing economics despite elevated tenant improvement and leasing commission requirements.
Highwoods Improves Occupancy and In-Place Rents
Quarter-end in-service occupancy was 85.7% compared with 85.6% a year earlier. On properties owned throughout the second quarter, occupancy increased 110 basis points sequentially. The in-service leased rate stood at 89.6%, leaving a meaningful backlog of signed leases that have not yet commenced.
Average cash rental rates for in-place leases increased 2.6% year over year to $34.45 per square foot. Management expects occupancy to continue trending higher during the second half of 2026 as tenants begin occupying previously leased space.
Highwoods Advances Its Development Pipeline
The company placed Midtown East in Tampa into service during the quarter. Highwoods owns a 50% interest in the 143,000-square-foot development, which was 94.9% leased and 39.5% occupied. Its share of total investment was $41.5 million.
The active development pipeline totaled $230 million at Highwoods’ share and was 93% leased, with only $28 million left to fund. The company also signed 63,000 square feet of first-generation leases, lifting the 642,000-square-foot 23Springs project to 93% leased well ahead of its projected stabilization.
HIW's Asset Sales Strengthen Liquidity
Highwoods sold the 513,000-square-foot, fully occupied Bridgestone Tower in Nashville for $255 million. It also sold its 50% joint venture interest in a 10-acre land parcel for $4 million at its share.
The company expects to complete another $73.5 million of non-core dispositions during the third quarter. Including these pending transactions, announced and completed 2026 sales would total about $375 million. The additional proceeds increase financial flexibility but also create near-term earnings dilution because management does not assume reinvestment during the second half.
Highwoods Reduces Leverage and Raises Outlook
Net debt to adjusted EBITDAre improved to 6.24X from 6.72X in the first quarter. Highwoods ended the quarter with $145.38 million of cash and no borrowings under its $750 million revolving credit facility.
Management raised its 2026 FFO guidance to $3.46-$3.70 per share from $3.40-$3.68. The outlook assumes same-property cash NOI growth between negative 1% and positive 1%, and year-end occupancy of 86.5%-88.5%.
BXP, Inc. (BXP - Free Report) reported second-quarter 2026 FFO of $1.78 per share, beating the Zacks Consensus Estimate of $1.71. FFO rose 4.1% from the year-ago period. Results reflected higher occupancy and same-property NOI growth, which supported the FFO beat. Total portfolio occupancy climbed 100 basis points sequentially to 88.4%.
SL Green Realty Corp. (SLG - Free Report) delivered second-quarter 2026 FFO of $1.43, which beat the Zacks Consensus Estimate of $1.19 by 20.17%. However, FFO declined 12.3% from $1.63 in the year-ago quarter. The results reflected stronger Manhattan leasing, higher occupancy and growth in same-store cash NOI.
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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HIW Q2 FFO Beats Estimates on Leasing and Rent Growth, 2026 View Up
Key Takeaways
Highwoods Properties, Inc. (HIW - Free Report) reported second-quarter 2026 funds from operations (FFO) of 90 cents per share, beating the Zacks Consensus Estimate by 4.7%. The figure increased 1.1% from the year-ago quarter.
Rental and other revenues rose 7.9% year over year to $216.38 million and surpassed the consensus mark of $210.96 million. Robust leasing, higher in-place rents and positive rent spreads supported the quarter. Same-property cash net operating income (NOI) increased 0.3%.
In response to the above results, HIW shares were trading close to 4% higher in the early hours of today’s market session.
HIW's Leasing Volume Remains Robust
Highwoods signed 1.07 million square feet of second-generation leases, up from 923,000 square feet in the prior-year quarter. The total included 326,000 square feet of new leases, while the dollar-weighted average lease term was 6.4 years.
Second-generation leases generated GAAP rent growth of 20.9% and cash rent growth of 3.2%. Net effective rents were 8% above the previous five-quarter average, indicating that the company maintained healthy leasing economics despite elevated tenant improvement and leasing commission requirements.
Highwoods Improves Occupancy and In-Place Rents
Quarter-end in-service occupancy was 85.7% compared with 85.6% a year earlier. On properties owned throughout the second quarter, occupancy increased 110 basis points sequentially. The in-service leased rate stood at 89.6%, leaving a meaningful backlog of signed leases that have not yet commenced.
Average cash rental rates for in-place leases increased 2.6% year over year to $34.45 per square foot. Management expects occupancy to continue trending higher during the second half of 2026 as tenants begin occupying previously leased space.
Highwoods Advances Its Development Pipeline
The company placed Midtown East in Tampa into service during the quarter. Highwoods owns a 50% interest in the 143,000-square-foot development, which was 94.9% leased and 39.5% occupied. Its share of total investment was $41.5 million.
The active development pipeline totaled $230 million at Highwoods’ share and was 93% leased, with only $28 million left to fund. The company also signed 63,000 square feet of first-generation leases, lifting the 642,000-square-foot 23Springs project to 93% leased well ahead of its projected stabilization.
HIW's Asset Sales Strengthen Liquidity
Highwoods sold the 513,000-square-foot, fully occupied Bridgestone Tower in Nashville for $255 million. It also sold its 50% joint venture interest in a 10-acre land parcel for $4 million at its share.
The company expects to complete another $73.5 million of non-core dispositions during the third quarter. Including these pending transactions, announced and completed 2026 sales would total about $375 million. The additional proceeds increase financial flexibility but also create near-term earnings dilution because management does not assume reinvestment during the second half.
Highwoods Reduces Leverage and Raises Outlook
Net debt to adjusted EBITDAre improved to 6.24X from 6.72X in the first quarter. Highwoods ended the quarter with $145.38 million of cash and no borrowings under its $750 million revolving credit facility.
Management raised its 2026 FFO guidance to $3.46-$3.70 per share from $3.40-$3.68. The outlook assumes same-property cash NOI growth between negative 1% and positive 1%, and year-end occupancy of 86.5%-88.5%.
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. (BXP - Free Report) reported second-quarter 2026 FFO of $1.78 per share, beating the Zacks Consensus Estimate of $1.71. FFO rose 4.1% from the year-ago period. Results reflected higher occupancy and same-property NOI growth, which supported the FFO beat. Total portfolio occupancy climbed 100 basis points sequentially to 88.4%.
SL Green Realty Corp. (SLG - Free Report) delivered second-quarter 2026 FFO of $1.43, which beat the Zacks Consensus Estimate of $1.19 by 20.17%. However, FFO declined 12.3% from $1.63 in the year-ago quarter. The results reflected stronger Manhattan leasing, higher occupancy and growth in same-store cash NOI.
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.