Highwoods Properties Inc. HIW reported first-quarter 2025 funds from operations (FFO) per share of 83 cents, beating the Zacks Consensus Estimate of 82 cents. However, the figure was lower than the prior-year quarter’s 89 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 came in at $200.4 million, missing the Zacks Consensus Estimate of $205.2 million. The figure fell by 5.4% year over year.

HIW’s First Quarter in Detail

Highwoods’ average in-place cash rent was up 2.5% per square foot from the prior-year quarter. At the end of the reported quarter, the in-service portfolio occupancy (at HIW share) declined 160 basis points from the prior quarter to 85.5%. The same-property cash NOI decreased 3.4% year over year to $132.3 million.

Highwoods’ second-generation leasing activity encompassed 700,000 square feet of space in the first quarter, including 252,000 square feet of new leases. The dollar-weighted average term is 5.3 years. GAAP rent growth was 12.8%, while net effective rents were 21% higher than the previous five-quarter average.

The present development pipeline aggregates $474 million (at HIW share) and is 62.8% pre-leased. During the first quarter, the company also signed 97,000 square feet of first-generation leases.

Portfolio Activity of HIW

During the first quarter, Highwoods purchased the Advance Auto Parts Tower, a Class AA office building in Raleigh spanning 346,000 square feet, for $138 million.

During the quarter, Highwoods sold off non-core office buildings in Tampa, FL, encompassing 616,000 square feet, for $145 million.

HIW’s Balance Sheet Position

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. The reported net debt-to-adjusted EBITDAre ratio was 6.4 compared with 6.29 at the end of Dec. 31, 2024.

HIW’s 2025 Guidance Revision

Highwoods has raised its 2025 FFO per share guidance to the range of $3.31-$3.47 from the earlier guided range of $3.26-$3.44. The Zacks Consensus Estimate is currently pegged at $3.35, which lies within this range.

HIW expects growth in same-property cash NOI between -4.0% and -2.0% and average occupancy of 85% to 86.5%.

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.

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Highwoods Properties, Inc. Price, Consensus and EPS SurpriseHighwoods 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 first-quarter 2025 FFO per share of $1.64 missed the Zacks Consensus Estimate of $1.65. BXP’s quarterly results reflected better-than-anticipated revenues on healthy leasing activity. However, lower occupancy during the quarter marred its year-over-year FFO per share growth. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

SL Green Realty Corp. SLG reported a first-quarter 2025 FFO per share of $1.40, which surpassed the Zacks Consensus Estimate of $1.27. Results reflected improved average rental rates on the signed Manhattan office leases in the period and higher same-store cash NOI. However, elevated interest expenses undermined the results to some extent.

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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