For the fourth quarter, CFO Brendan Maiorana reported net income of $28.7 million, or $0.26 per share, and funds from operations (FFO) of $100.8 million, or $0.90 per share, including $0.06 per share of land sale gains. Full-year 2025 FFO was $3.48 per share; excluding land sale gains, management said full-year FFO was $0.07 per share, or 2%, above the midpoint of the company’s original 2025 outlook.Klinck added that the “convergence of occupancy gains, rental rate growth, and stabilization” of the developm ...

Financial Data and Key Metrics Changes - The company reported FFO of $0.90 per share for Q4 2025, including $0.06 from land sale gains, resulting in a full-year FFO of $3.48 per share, which is 2% higher than the midpoint of the original outlook for 2025 [8][24] - Net income for Q4 was $28.7 million, or $0.26 per share [24] - The initial 2026 FFO outlook is set at a midpoint of $3.54 per share, which is 5.7% higher than the initial 2025 outlook [8][26] Business Line Data and Key Metrics Changes - The company leased 526,000 sq ft of second-generation space in Q4, including 221,000 sq ft of new leases, with a total of 3.2 million sq ft signed for the year [8][19] - The development pipeline is now 78% pre-leased, up from 72% last quarter and 56% one year ago [9] - Cash rent spreads were positive, with GAAP rent spreads in the mid-teens, and net effective rents were 20% higher than in 2024 [9][19] Market Data and Key Metrics Changes - The Sun Belt markets are experiencing strong demand, with limited new supply and positive net absorption [18][20] - Charlotte generated more nominal jobs than any other metro area except New York City in 2025, indicating robust economic activity [20] - Dallas is noted as the number one market to watch, with significant net absorption and a strong Class A office market [22] Company Strategy and Development Direction - The company is focused on investing in high-quality office and BBD locations in the Sun Belt, with a projected NOI growth potential of $50 million-$60 million across eight buildings [6][7] - Future investments are expected to drive additional growth, with approximately $800 million invested over the past 12 months [7] - The company plans to complete $190 million-$210 million of additional dispositions by mid-year 2026 to fund acquisitions and maintain a leverage-neutral position [16][26] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about the next few years due to strong fundamentals in core markets, limited new supply, and ongoing demand from companies [5][6] - The company expects to drive occupancy higher by roughly 200 basis points from the end of 2025 to the end of 2026 [6] - Management noted that expansions outpaced contractions 2.5-to-1 for Q4 and over 3-to-1 for the year, indicating a positive leasing environment [19] Other Important Information - The company has filed a new S-3 shelf registration statement with the SEC, allowing for future capital market transactions [32] - The company plans to fund recent acquisitions on a leverage-neutral basis, primarily through the sale of non-core assets [25][26] Q&A Session Summary Question: When does the company expect to realize elevated growth rates from capital recycling? - Management indicated that the impact on 2026 numbers is one-time in nature, with growth expected to normalize in 2027 [34][35] Question: How is demand for the remaining leasing in the development pipeline? - Management reported strong demand, with continued progress in leasing throughout 2025 [37] Question: Has the company seen any impact from AI-related layoffs in its markets? - Management stated that they have not observed any significant impact from AI-related layoffs, with continued demand for office space [41][42] Question: What is the expected occupancy bridge throughout the year? - Management expects occupancy to improve steadily throughout the year, despite some initial drag from recent acquisitions [54][56] Question: What percentage of the $200 million non-core sales is related to land sales? - Management clarified that none of the $200 million is related to land sales, which are expected to occur later in the year [52] Question: What is the leasing target to grow occupancy? - Management indicated that approximately 700,000 to 750,000 sq ft of new leasing is needed to achieve the year-end occupancy target of 87.5% [73][75]

Financial Data and Key Metrics Changes - The company reported FFO of $0.90 per share for Q4 2025, including $0.06 from land sale gains, resulting in a full-year FFO of $3.48 per share, which is 2% higher than the midpoint of the original outlook for 2025 [8][24] - The initial 2026 FFO outlook is projected to be 5.7% higher at the midpoint compared to the initial 2025 outlook [6][8] - Net income for Q4 2025 was $28.7 million, or $0.26 per share [24] Business Line Data and Key Metrics Changes - The company leased 526,000 sq ft of second-generation space in Q4 2025, including 221,000 sq ft of new leases [8] - The development pipeline is now 78% pre-leased, up from 72% last quarter and 56% one year ago [9] - Cash rent spreads were positive, with GAAP rent spreads in the mid-teens, and net effective rents were 20% higher than in 2024 [9][10] Market Data and Key Metrics Changes - The company highlighted strong demand in its core Sun Belt markets, with limited new supply and increasing rental rates [5][6] - Charlotte generated more nominal jobs than any other metro area except New York City in 2025, indicating strong economic growth [20] - Dallas and Nashville also showed significant net absorption and rising asking rents, with Dallas being noted as the number one market to watch [22][23] Company Strategy and Development Direction - The company is focused on investing in high-quality office and BBD locations in the Sun Belt, with a projected NOI growth potential of $50 million-$60 million across eight buildings [6][7] - Future investments are expected to drive additional growth, with approximately $800 million invested over the past 12 months [7] - The company plans to complete $190 million-$210 million of additional dispositions by mid-year 2026 to fund acquisitions and improve portfolio quality [16][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth potential due to strong fundamentals in the Sun Belt markets and a favorable leasing environment [5][18] - The company anticipates occupancy gains of roughly 200 basis points from the end of 2025 to the end of 2026 [6] - Management noted that the current economic environment is conducive to well-capitalized landlords, with pricing power shifting towards them [17] Other Important Information - The company has filed a new S-3 shelf registration statement with the SEC, allowing for future capital market transactions [32] - The company expects to fund recent acquisition activities on a leverage-neutral basis, primarily through the sale of non-core assets [15][26] Q&A Session Summary Question: When does the company expect to realize elevated growth rates from capital recycling? - Management indicated that the impact on 2026 numbers is one-time in nature, with growth expected to be more significant in 2027 [34][35] Question: How is demand for the remaining leasing in the development pipeline? - Management reported strong demand, with continued progress in leasing throughout 2025 [37][38] Question: Has the company seen any impact from AI-related layoffs? - Management stated that they have not observed any significant impact from AI-related layoffs, with demand for office space remaining strong [41][42] Question: What is the expected cash flow outlook given elevated CapEx? - Management expects 2026 spending to be lower than 2025 levels, which should improve cash flow in the long term [46][48] Question: What percentage of the $200 million non-core sales is related to land sales? - Management clarified that none of the $200 million in non-core sales is related to land sales, which are expected later in the year [51][52] Question: What is the leasing target to grow occupancy? - Management indicated that approximately 700,000-750,000 sq ft of new leasing is needed to achieve the occupancy target by the end of 2026 [71][75]

Financial Data and Key Metrics Changes - The company reported FFO of $0.90 per share for Q4 2025, including $0.06 from land sale gains, resulting in a full-year FFO of $3.48 per share, which is 2% higher than the midpoint of the original outlook for 2025 [8][26] - Net income for Q4 2025 was $28.7 million, or $0.26 per share [26] - The initial 2026 FFO outlook is set at a midpoint of $3.54 per share, which is 5.7% higher than the initial 2025 outlook [8][28] Business Line Data and Key Metrics Changes - The company leased 526,000 sq ft of second-generation space in Q4 2025, including 221,000 sq ft of new leases [8] - The development pipeline is now 78% pre-leased, up from 72% last quarter and 56% one year ago [10] - Cash rent spreads were positive, with GAAP rent spreads in the mid-teens, and net effective rents were 20% higher than in 2024 [10] Market Data and Key Metrics Changes - The company highlighted strong demand in its core Sun Belt markets, with limited new supply and increasing rental rates [5][19] - Charlotte, Dallas, and Raleigh are identified as strong markets with significant job growth and corporate relocations [21][23] - The overall leasing activity in the Sun Belt markets is robust, with positive net absorption and a decrease in competitive supply [19][22] Company Strategy and Development Direction - The company aims to drive occupancy higher by approximately 200 basis points from the end of 2025 to the end of 2026, with a focus on high-quality office and BBD locations [6] - Future investments are expected to yield attractive risk-adjusted returns, with approximately $800 million invested over the past 12 months [7] - The company plans to announce up to $200 million in new development projects in 2026, driven by strong demand [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the next few years, citing strong fundamentals in the Sun Belt markets and the potential for significant NOI and earnings growth [5][6] - The company is confident in its ability to navigate the current economic environment, with a focus on high-quality assets and capital recycling [18] - Management noted that expansions are outpacing contractions in their portfolio, indicating a healthy demand environment [44] Other Important Information - The company sold $66 million of non-core buildings and land in Q4 and plans to close an additional $190 million to $210 million in dispositions by mid-year 2026 [16][27] - The company has filed a new S-3 shelf registration statement with the SEC for future capital market transactions [35] Q&A Session Summary Question: When does the company expect to realize elevated growth rates from capital recycling? - Management indicated that the impact on 2026 is one-time in nature, with growth expected to normalize in 2027 [37] Question: How is demand for the remaining leasing in the development pipeline? - Management reported strong demand, with continued progress in leasing throughout 2025 [40] Question: Has the company seen any impact from AI-related layoffs? - Management stated that they have not observed any significant impact from AI on their tenant base, with continued demand for office space [44] Question: What is the expected cash flow outlook given elevated CapEx? - Management expects 2026 spending to be lower than 2025, with increased cash NOI anticipated from future leases [48] Question: What percentage of the $200 million in non-core sales is related to land sales? - Management clarified that the $200 million does not include land sales, which are expected later in the year [54]

Core Insights - Highwoods Properties Inc. (HIW) reported Q4 2025 funds from operations (FFO) per share of 90 cents, exceeding the Zacks Consensus Estimate of 84 cents and up from 85 cents in the prior-year quarter [1][10] - The company experienced healthy leasing activity with a GAAP rent growth of 15.4% and achieved record net effective rents, which were 19% higher than the previous peak in 2022 [4][10] - For full-year 2024, FFO per share was $3.48, lower than $3.61 in the prior year but above the consensus estimate of $3.42 [2] Financial Performance - Rental and other revenues for Q4 2025 were $203.4 million, below the consensus estimate of $208.3 million and down 1.1% year over year [1] - For the full year 2024, rental and other revenues decreased by 2.4% to $806.1 million, missing the consensus mark of $817.6 million [2] Leasing Activity - Highwoods' average in-place cash rent increased by 1.6% per square foot compared to the prior-year quarter, with an occupancy rate of 85.3% remaining unchanged from the previous quarter [3] - The company signed 526,000 square feet of second-generation leases in Q4, including 221,000 square feet of new leases, with a dollar-weighted average term of 5.6 years [4] Development Pipeline - The current development pipeline totals $474 million (at HIW share) and is 78% pre-leased, with 95,000 square feet of first-generation leases signed from late October 2025 through the end of Q4 [5] Portfolio Activity - Highwoods acquired a newly delivered 411,000-square-foot Class AA office tower, 6Hundred at Legacy Union, for approximately $223 million and sold non-core assets for gross proceeds of $65.9 million during Q4 [6] - Post-quarter, the company acquired Bloc83 in Raleigh and The Terraces in Dallas for $108.4 million [6] Balance Sheet Position - As of January 30, 2026, Highwoods had $46 million in cash and $580 million available on its revolving credit facility, with a net debt-to-adjusted EBITDAre ratio of 6.6, up from 6.4 in the previous quarter [7] 2026 Guidance - Highwoods expects 2026 FFO per share to be in the range of $3.40 to $3.68, with the Zacks Consensus Estimate at $3.55 [8] - The company anticipates same-property cash NOI growth between -1.0% and 1.0% and average occupancy of 86.5% to 88.5% [8]

Core Insights - Highwoods Properties reported revenue of $203.36 million for Q4 2025, a year-over-year decline of 1.1% and a surprise of -2.39% compared to the Zacks Consensus Estimate of $208.34 million [1] - The company achieved an EPS of $0.90, a significant improvement from -$0.03 a year ago, with a surprise of +7.26% over the consensus estimate of $0.84 [1] Revenue Breakdown - Lease termination fees, net, were reported at $0.33 million, a decrease of 67.1% year-over-year, compared to the average estimate of $0.5 million [4] - Contractual rents, net, amounted to $169.85 million, down 2.4% from the previous year and below the average estimate of $173.46 million [4] - Other miscellaneous operating revenues were reported at $14.2 million, exceeding the average estimate of $11.3 million, reflecting a year-over-year increase of 32.5% [4] - Cost recoveries billed under lease arrangements, net, were $14.6 million, which is a 16.6% decline year-over-year and below the average estimate of $17.04 million [4] - Straight-line rental income, net, was reported at $4.38 million, surpassing the average estimate of $3.65 million, with a year-over-year increase of 91.4% [4] Stock Performance - Highwoods Properties' shares have returned -5.3% over the past month, while the Zacks S&P 500 composite remained unchanged [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

分组1 - Highwoods Properties reported quarterly funds from operations (FFO) of $0.9 per share, exceeding the Zacks Consensus Estimate of $0.84 per share, and showing an increase from $0.85 per share a year ago, resulting in an FFO surprise of +7.26% [1] - The company posted revenues of $203.36 million for the quarter ended December 2025, which was 2.39% below the Zacks Consensus Estimate and a decrease from $205.53 million year-over-year [2] - Highwoods Properties has surpassed consensus FFO estimates three times over the last four quarters but has not beaten revenue estimates during the same period [2] 分组2 - The stock has underperformed the market, with a loss of about 0.1% since the beginning of the year compared to the S&P 500's gain of 1.7% [3] - The current consensus FFO estimate for the upcoming quarter is $0.85 on revenues of $212.45 million, and for the current fiscal year, it is $3.55 on revenues of $867.32 million [7] - The Zacks Industry Rank for REIT and Equity Trust - Other is in the bottom 27% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Core Viewpoint - Highwoods Properties, Inc. has released its fourth quarter and full year 2025 results, highlighting its performance and strategic vision in the commercial real estate sector [1]. Company Overview - Highwoods Properties, Inc. is a publicly-traded office real estate investment trust (REIT) listed on NYSE under the ticker HIW [1]. - The company is headquartered in Raleigh and focuses on owning, developing, acquiring, leasing, and managing properties primarily in the best business districts (BBDs) of major cities including Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond, and Tampa [1]. - The company's vision is to lead the evolution of commercial real estate for the benefit of customers, communities, and investors [1]. - Highwoods aims to create environments and experiences that inspire teamwork and collaboration among its customers and their employees, ultimately delivering greater value to shareholders [1].

Workforce and Employee Statistics - The company had 315 full-time employees as of December 31, 2025, with a turnover rate of 20% for the year [40]. - The average tenure of employees was 10 years, with an average age of 49 years [40]. - Approximately 69% of employees work in division offices, primarily involved in property management and maintenance [41]. - Approximately 35% of employees are specialized trade professionals, with an average age of 52 years, indicating a potential future shortage in skilled labor [42]. - The average annual turnover rate over the past three years was 16%, with a turnover rate of 20% for 2025 [40]. - As of December 31, 2025, 35% of employees were female and 32% were persons of color, with 46% of new hires in 2025 being female and 46% persons of color [56]. Employee Compensation and Benefits - The total cost of the workforce in 2025 was approximately $59 million, which includes salaries, commissions, bonuses, and employee benefits [41]. - The company offers a total rewards program that includes competitive salaries, bonuses, and comprehensive benefits to attract and retain talent [46]. - Nearly 50% of employees are eligible for an annual bonus ranging from 5% to 20% of their base salary, with 40% to 70% typically receiving discretionary bonuses between $500 and $2,000 each year [46]. - Approximately 9% of employees, including officers, are eligible for long-term equity incentive compensation, which vests over a four-year term [47]. - Over 93% of employees participate in the 401(k) retirement savings plan, which includes a competitive match on contributions [49]. - The company has a development cash incentive plan that allows employees to earn payouts ranging from $1,000 to $10,000 based on qualifying development projects [50]. Company Strategy and Operations - The company aims to maintain a conservative and flexible balance sheet with access to ample liquidity and multiple sources of capital [33]. - The company operates in the best business districts (BBDs) of eight major cities, focusing on high-quality office properties [24]. - The company plans to open division offices in Charlotte and Dallas to enhance local market knowledge [37]. Environmental and Social Responsibility - The company is committed to minimizing environmental impacts and has formed a corporate resiliency team to drive performance improvements [35]. - The company aims to minimize energy intensity, carbon emissions, and water consumption as part of its environmental resiliency initiatives [35]. - The company has established wellness committees and a "HIW Well-being" program to promote employee health and well-being [53]. - The company has established wellness committees and a "HIW Well-being" program to promote holistic well-being among employees [53]. - The company has a diversity and inclusion program called "Heart of Highwoods," aimed at creating opportunities for small and minority vendors [57]. Employee Engagement and Growth - The company conducts employee engagement surveys every two years to monitor and improve employee satisfaction [55]. - The company emphasizes a culture of career growth, with nearly half of employees experiencing significant career advancement during their tenure [54].

Core Viewpoint - Office REITs are at a turning point as macroeconomic conditions improve, with demand recovering due to stronger employment and a shift towards higher-quality office spaces [2][4]. Group 1: Office REITs Overview - Several office REITs, including BXP Inc., Cousins Properties, SL Green, and Highwoods Properties, are set to report earnings soon, which will provide insights into leasing velocity and rent growth [3]. - The office real estate market is showing signs of recovery, with national net absorption turning positive and Class A absorption particularly strong [4]. Group 2: Market Fundamentals - Overall vacancy rates have stabilized near 20.5%, with a slight increase of 5 basis points from the previous quarter, marking the smallest annualized rise since 2020 [4]. - Asking rents have increased to approximately $38.37 per square foot, while sublease inventories have significantly declined, tightening available space in major markets [4][5]. Group 3: Construction Activity - Construction activity remains muted, with less than 20 million square feet under construction and a 35% decline in the construction pipeline in 2025 [5]. - The reduction in supply, combined with concentrated demand in gateway and Sun Belt markets, is supporting a firmer leasing environment [5][6]. Group 4: Company-Specific Insights - BXP Inc. is the largest publicly traded U.S. office REIT, managing a portfolio of 54.6 million square feet across 187 properties, and has completed asset dispositions worth over $1 billion [7][8]. - Cousins Properties is experiencing higher leasing activity in its Class A office assets due to tenant preferences for premium spaces, with a fourth-quarter revenue estimate of $248.65 million, indicating a 12.91% year-over-year increase [10][11]. - SL Green, focused on Manhattan office assets, is facing intense competition and is offering rent concessions, which may impact revenue growth; its fourth-quarter revenue estimate is $147.03 million, reflecting a 5.32% year-over-year rise [12][13]. - Highwoods Properties, with a strong focus on the Sun Belt, is well-positioned to benefit from tenant preferences for quality office spaces, with a fourth-quarter revenue estimate of $208.23 million, suggesting a 1.31% year-over-year rise [14][15].