Highwoods Properties HIW owns premium office buildings in fast-growing Sun Belt business districts, where demand for high-quality workplaces and limited new construction continue to support leasing. Strategic portfolio restructuring and a strong balance sheet favor long-term growth.
However, office competition and sublease availability can cap pricing power. A high debt burden adds to its concerns.
In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 39.4% compared with the industry's growth of 3%.
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What Aids HIW?
Highwoods benefits from a diversified office portfolio across fast-growing Sun Belt markets, helping reduce tenant concentration risk. As of March 2026, its top 10 largest tenants accounted for only 19.6% of annualized GAAP rental revenues. The portfolio carried a weighted average lease term of 5.8 years, providing steady cash flow visibility.
Leasing trends remain encouraging. During the first quarter of 2026, Highwoods completed 958,000 square feet of second-generation leasing, including 307,000 square feet of new leases, with a 7.5-year dollar-weighted average lease term. GAAP rents increased 19.4%, while cash rents rose 4.8%. Management maintained its year-end 2026 occupancy outlook of 86.5-88.5% and cited limited new supply in its BBDs as support for continued leasing activity.
Highwoods continues to improve portfolio quality through acquisitions and capital recycling. In the first quarter of 2026, it acquired Bloc83 in Raleigh through a joint venture with a 10% initial stake (expandable to 50%) and invested in The Terraces in Dallas via a joint venture with Granite, securing an 80% ownership interest. Highwoods sold a Richmond portfolio for $42.3 million in the first quarter and expects $200 million of additional non-core asset sales by mid-2026.
The balance sheet also remains well supported, with more than $650 million of liquidity, $574.9 million of unused revolving credit capacity and a $150 million unsecured term loan extended to 2031.
What’s Hurting HIW?
Highwoods faces intense competition from office landlords, developers and tenants marketing sublease space. This can slow leasing activity and limit rent increases.
Execution remains a challenge. While Highwoods' $272 million development pipeline is 85% leased, only 48% of the completed and under-development space is occupied, leaving earnings exposed to construction delays, lease commencements and higher project costs.
Capital recycling may also pressure near-term results. The May 2026 sale of the fully leased Bridgestone Tower for $255 million removes a property that was expected to contribute roughly $17 million of annual cash and GAAP NOI in 2026.
Stock to Consider
Some better-ranked stocks from the other REIT sector are American Healthcare REIT AHR and CareTrust REIT CTRE, carrying a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for AHR’s 2026 FFO per share has moved up marginally to $2.07 over the past month.
The consensus estimate for CTRE’s 2026 FFO per share has moved up marginally to $2.03 per share 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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Highwoods Properties, Inc. (HIW): Free Stock Analysis Report
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American Healthcare REIT, Inc. (AHR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).