Financial Data and Key Metrics Changes - The company reported FFO of $0.86 per share, raising the midpoint of its FFO outlook for 2025 by $0.08 compared to the initial outlook provided in February [10][11] - Net income for the quarter was $12.9 million or $0.12 per share, with net effective rents reaching new highs [22][23] - The debt to EBITDA ratio was 6.4 times at quarter end, with expectations for improvement as signed leases convert into occupancy [23][24] Business Line Data and Key Metrics Changes - The company signed over 1 million square feet of second-generation leasing volume, including 326,000 square feet of new leases, marking strong leasing activity for eight consecutive quarters [6][7] - The lease percentage in the development pipeline increased to 72%, up from 64% in the previous quarter, with 122,000 square feet of leases signed [7][16] - The company acquired the Legacy Union parking garage for $111.5 million and sold a non-core property in Richmond for $16 million [9][10] Market Data and Key Metrics Changes - Dallas, Nashville, Charlotte, and Tampa were highlighted as standout markets, with Dallas experiencing significant in-migration and corporate expansions [17][19][21] - In Nashville, asking rates increased by more than 11% year over year, reflecting strong demand and limited supply [19] - Charlotte saw a 77% year-over-year increase in leasing activity, with a portfolio occupancy rate of 96% [20] Company Strategy and Development Direction - The company is focused on securing embedded NOI growth by leasing up key vacancies and recycling non-core assets into higher quality properties [5][12] - The strategy includes maintaining a strong balance sheet while pursuing meaningful asset recycling opportunities, with potential acquisitions and dispositions of up to $500 million [11][12] - The company aims to deliver strong embedded NOI growth from signed leases and has a healthy pipeline of acquisition opportunities [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in rising occupancy rates and strong leasing prospects, anticipating a clear pathway to higher earnings and cash flow [12][13] - The company noted that the capital markets are improving, with more institutional capital becoming active in the office sector [60][61] - Management expects elevated capital expenditures to continue through 2026 as signed leases are converted into occupancy [40][41] Other Important Information - The company has $625 million of available liquidity, with only $96 million needed to complete its development pipeline [24] - The company plans to provide its 2026 outlook in February when releasing fourth-quarter results [26] Q&A Session Summary Question: Outlook on acquisitions and dispositions - Management indicated that potential acquisitions would focus on existing markets, with a strategy of trimming non-core assets [29][30] Question: Financing for acquisitions - The preference is to use disposition proceeds for funding acquisitions, although ATM issuances remain an option [32] Question: Market migration trends - Dallas is currently leading in tenant migration, followed by Charlotte and Nashville, with strong demand across the portfolio [35][36] Question: Impact of elevated capital expenditures on cash flow - Elevated CapEx is expected to impact cash flow through 2027, but strong NOI growth is anticipated to improve cash flow levels [39][41] Question: Disposition pricing expectations - Pricing for dispositions is generally meeting or exceeding initial expectations, with more familiar capital entering the market [60][61] Question: Update on Ovation project - The company has control over the Ovation site and plans to begin vertical construction in 2027, with a focus on mixed-use development [67][69]

Core Insights - Highwoods Properties Inc. (HIW) reported third-quarter 2025 funds from operations (FFO) per share of 86 cents, meeting the Zacks Consensus Estimate but down from 90 cents in the prior-year quarter [1][9] - The quarterly results indicate healthy leasing activity and rent growth, but a decline in occupancy and same-property net operating income (NOI) has negatively impacted the overall performance [1][9] - HIW has revised its 2025 guidance, raising the FFO per share estimate to a range of $3.41-$3.45 from the previous $3.37-$3.45 [7][9] Financial Performance - Rental and other revenues for the quarter were $201.8 million, missing the Zacks Consensus Estimate of $203.4 million and reflecting a 1.2% year-over-year decline [2] - The same-property cash NOI decreased by 3.6% year over year to $131.5 million [4][9] Leasing Activity - Highwoods' second-generation leasing activity included 1.0 million square feet of space, with 326,000 square feet in new leases and a dollar-weighted average lease term of 6.7 years [3] - GAAP rent growth was reported at 18.3%, while net effective rents were 21.8% higher than the previous five-quarter average [3] Portfolio Management - During the third quarter, Highwoods acquired the Legacy Union Parking Garage for $111.5 million and sold a non-core office building in Richmond, VA, for $16 million [5] - The current development pipeline totals $474 million and is 72% pre-leased [4] Balance Sheet and Liquidity - The company's total available liquidity exceeded $625 million, including cash, revolving credit facility availability, and undrawn joint venture construction loans [6] - The net debt-to-adjusted EBITDAre ratio remained stable at 6.4 [6] 2025 Guidance - HIW expects same-property cash NOI growth between -3% and -2%, with year-end occupancy projected at 85.7% to 86.3% [7][9]

Core Insights - Highwoods Properties reported a revenue of $201.77 million for the quarter ended September 2025, reflecting a decrease of 1.3% year-over-year [1] - The company's EPS was $0.86, significantly higher than $0.14 in the same quarter last year, indicating strong earnings growth [1] - The reported revenue fell short of the Zacks Consensus Estimate of $203.38 million, resulting in a surprise of -0.79% [1] Revenue Breakdown - Lease termination fees, net, were reported at $0.59 million, exceeding the average estimate of $0.53 million, marking a year-over-year increase of 217.9% [4] - Contractual rents, net, totaled $168.46 million, below the estimated $171.79 million, representing a decline of 4.2% compared to the previous year [4] - Other miscellaneous operating revenues were $13.87 million, surpassing the average estimate of $11.3 million, with a year-over-year increase of 36% [4] - Cost recoveries billed under lease arrangements, net, were $14.93 million, lower than the estimated $16.36 million, reflecting an 8% decrease year-over-year [4] - Straight-line rental income, net, was reported at $3.93 million, exceeding the estimate of $3.6 million, with a significant year-over-year increase of 108.4% [4] Stock Performance - Highwoods Properties' shares have returned -5.3% over the past month, contrasting with the Zacks S&P 500 composite's increase of 3.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Insights - Highwoods Properties reported quarterly funds from operations (FFO) of $0.86 per share, matching the Zacks Consensus Estimate, but down from $0.90 per share a year ago [1] - The company posted revenues of $201.77 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 0.79% and down from $204.32 million year-over-year [2] - Highwoods Properties shares have declined approximately 3.3% year-to-date, contrasting with the S&P 500's gain of 16.9% [3] Financial Performance - FFO for the previous quarter was expected to be $0.85 per share, but the actual result was $0.89, resulting in a surprise of +4.71% [1] - Over the last four quarters, the company has exceeded consensus FFO estimates twice [1] - The current consensus FFO estimate for the upcoming quarter is $0.85, with projected revenues of $207.23 million, and for the current fiscal year, the estimate is $3.42 on revenues of $811.6 million [7] Market Outlook - The sustainability of the stock's price movement will largely depend on management's commentary during the earnings call [3] - The estimate revisions trend for Highwoods Properties was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] - The REIT and Equity Trust - Other industry is currently ranked in the top 35% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Core Insights - Highwoods Properties, Inc. has released its third quarter 2025 results, indicating ongoing performance in the office real estate sector [1] Company Overview - Highwoods Properties, Inc. is a publicly-traded real estate investment trust (REIT) that operates in major business districts across several cities including Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond, and Tampa [2] - The company's vision focuses on leading the evolution of commercial real estate, aiming to create environments that inspire collaboration and achievement among customers and stakeholders [2] - Highwoods is committed to delivering exceptional environments and experiences to enhance value for customers and shareholders [2]

Asset Management - The company expects to sell between $50 million and $500 million of assets over the next six months to acquire high-quality office buildings in core markets [129]. - The company acquired the Legacy Union parking garage for $110.2 million during Q3 2025, supporting 1.2 million square feet of office space [177]. - Gains on property dispositions increased by $5.3 million in Q3 2025 compared to Q3 2024, related to a building sale in Richmond [157]. - Rental and other revenues decreased by $2.6 million, or 1.2%, in Q3 2025 compared to Q3 2024, primarily due to property dispositions and lower occupancy rates [150]. - An impairment charge of $8.8 million was recorded in Q3 2025 for two non-core, out-of-service assets [152]. - Impairments of real estate assets for Q3 2025 were $8,800,000, with no impairments reported in Q3 2024 [208]. - The same property portfolio consisted of 146 properties encompassing 26.1 million rentable square feet as of September 30, 2025, down from 152 properties and 27.2 million rentable square feet as of December 31, 2024 [206]. Financial Performance - Consolidated same property net operating income (NOI) was $3.6 million, or 2.7%, lower in Q3 2025 compared to 2024 due to a decrease in same property revenues [136]. - NOI was $2.8 million, or 2.0%, lower in Q3 2025 compared to 2024, primarily due to lower consolidated same property NOI and lost NOI from property dispositions [137]. - Same property net operating income (NOI) for Q3 2025 was $135,640,000, down 2.4% from $139,315,000 in Q3 2024 [208]. - Same property cash NOI for Q3 2025 was $131,513,000, a decrease of 3.2% compared to $136,467,000 in Q3 2024 [208]. - Net income for Q3 2025 was $13,707,000, a decrease of 11.4% from $15,469,000 in Q3 2024 [208]. - Total cash flows for the nine months ended September 30, 2025, were $8.1 million, an increase of $5.7 million compared to the same period in 2024 [171]. - Funds from operations (FFO) for Q3 2025 were $95.375 million, with FFO available for common stockholders at $94.799 million, translating to $0.86 per share [204]. - Net operating income for the nine months ended September 30, 2025, was $408,144,000, a decline of 2.8% from $419,636,000 in the same period of 2024 [208]. - Gains on disposition of property for the nine months ended September 30, 2025, were $(87,889,000), compared to $(42,581,000) in the same period of 2024 [208]. Liquidity and Capital Structure - The company had approximately $35 million in cash and $211.0 million drawn on its $750.0 million revolving credit facility as of October 21, 2025 [142]. - The leverage ratio as of September 30, 2025, was 42.8%, with 111.6 million diluted shares of common stock outstanding [142]. - The company anticipates that available cash and cash equivalents will be adequate to meet short-term liquidity requirements, including operating expenses and capital expenditures [144]. - The company has no debt scheduled to mature prior to 2027, indicating a strong liquidity position for future obligations [147]. - As of September 30, 2025, the company had $220.0 million outstanding under its $750.0 million unsecured revolving credit facility, with an unused capacity of $529.9 million [181]. - The company modified its $200.0 million unsecured bank term loan, extending the maturity date from May 2026 to January 2029, with an interest rate of SOFR plus 95 basis points [182]. - The company is currently in compliance with financial covenants and expects to remain compliant for at least the next year [183]. - The company anticipates that available cash and cash flows from operations will be adequate to meet short-term liquidity requirements [192]. Revenue and Expenses - Annualized rental revenues from new and renewal leases signed in Q3 2025 were $40.13 per rentable square foot, representing an 18.3% increase compared to previous leases [133]. - Operating expenses increased by $0.2 million, or 0.3%, in Q3 2025 compared to Q3 2024, driven by higher expenses from recent acquisitions [151]. - Interest expense increased by $1.0 million, or 2.7%, in Q3 2025 compared to Q3 2024, primarily due to higher average debt balances [155]. - Interest expense for Q3 2025 was $38,475,000, an increase of 2.7% from $37,472,000 in Q3 2024 [208]. - General and administrative expenses for Q3 2025 were $8,995,000, a decrease of 9.1% from $9,898,000 in Q3 2024 [208]. - Depreciation and amortization expense decreased by $5.2 million, or 6.6%, in Q3 2025 compared to Q3 2024, mainly due to property dispositions [153]. - Depreciation and amortization for the nine months ended September 30, 2025, was $219,982,000, a decrease of 2.9% from $226,532,000 in the same period of 2024 [208]. - The company incurred $2.0 million in debt issuance costs related to the modified term loan, which are being amortized over the remaining term [182]. Shareholder Returns - The company declared a cash dividend of $0.50 per share of common stock, payable on December 9, 2025, to stockholders of record as of November 17, 2025 [190]. - Diluted earnings per common share increased by $0.21 in the nine months ended September 30, 2025, compared to the same period in 2024 [169]. - The company issued 1,550,588 shares of common stock at an average gross sales price of $31.82 per share, resulting in net proceeds of $48.6 million during Q3 2025 [180].

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Core Points - Highwoods Properties, Inc. will release its third quarter 2025 results on October 28, after market close [2] - A conference call to discuss the results will take place on October 29 at 11:00 A.M. Eastern time [2] - The company is a publicly-traded, fully-integrated office real estate investment trust (REIT) [4] Company Overview - Highwoods Properties, Inc. is headquartered in Raleigh and operates primarily in major business districts across several cities including Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond, and Tampa [4] - The company's vision is to lead the evolution of commercial real estate, focusing on creating environments that inspire collaboration and achievement [4] - Highwoods aims to deliver greater value to customers and shareholders through exceptional environments and experiences [4]

Core Insights - Highwoods Properties, Inc. has completed the acquisition of Legacy Union Parking Garage for $111.5 million, which includes planned near-term building improvements [1][7] - The parking garage, located in Uptown Charlotte, has 3,057 spaces and supports 1.2 million square feet of office space owned by Highwoods [1][7] - The acquisition is part of Highwoods' strategy to expand in high-growth markets and enhance its portfolio quality through acquisitions and development [3] Financial Performance - Approximately 70% of the garage's yearly revenue is derived from long-term leased customers, with a weighted average remaining contractual term of 9 years [2] - The garage is expected to generate cash and GAAP net operating income of $8 million in the first four quarters following the acquisition [2][7] Strategic Positioning - Highwoods employs a disciplined capital-recycling strategy, focusing on disposing of non-core assets and reinvesting in premium acquisitions and development projects [3] - The company’s diversified tenant base and expansion efforts in high-growth markets are key growth drivers, although competition may limit pricing power and profitability [4]

Core Insights - Highwoods Properties, Inc. has made a total investment of $111.5 million to acquire the Legacy Union Parking Garage in Uptown Charlotte, which includes planned near-term building improvements [2][3] - The parking garage has 3,057 spaces and supports the parking needs for 1.2 million square feet of Highwoods-owned office space at Legacy Union, connected via a skybridge [2][3] - Approximately 70% of the annual revenue from the garage comes from long-term leases with office customers, with a weighted average remaining contractual term of 9 years [3] Financial Performance - The Legacy Union Parking Garage is expected to generate cash and GAAP net operating income of $8.0 million in the first four quarters following the acquisition [3] - The remaining revenue is derived from transient and special events, particularly those at the adjacent 75,000-seat Bank of America Stadium [3] Strategic Importance - The acquisition is seen as a strategic move to enhance connectivity with existing office customers and strengthen cash flows, thereby improving long-term growth prospects for Highwoods [4]