Core Insights - Highwoods Properties, Inc. has made two significant acquisitions: Bloc83 in Raleigh and The Terraces in Dallas, through joint ventures, indicating a strategic expansion into high-growth markets [2][3][4] Acquisition Details - Bloc83 is a 492,000 square foot mixed-use asset in CBD Raleigh, acquired for a total investment of $21 million, with a 10% ownership stake by Highwoods [1][8] - The Terraces is a 173,000 square foot office building in Dallas, acquired for a total investment of $87.4 million, with an 80% ownership stake by Highwoods [1][10] Financial Impact - The acquisitions are expected to be immediately accretive to cash flows and neutral to the current FFO run rate, with long-term growth potential [2][5] - The combined investment in both properties is projected to generate GAAP net operating income of $9 million and cash net operating income of $7.5 million in 2026 [11] Funding Strategy - The acquisitions will primarily be funded through the sale of non-core assets, with a leverage-neutral rotation of capital expected by mid-2026 [5][12] - In the fourth quarter of 2025, the company sold non-core assets for gross proceeds of $65.9 million and plans to sell additional properties for $42.2 million [13] Market Positioning - The acquisition of The Terraces positions Highwoods in Preston Center, a supply-constrained area in Dallas, with significant long-term rent growth potential due to in-place rents being approximately 30% below market [3][9] - Bloc83, being 97% leased, is strategically located near the company's headquarters, enhancing its portfolio flexibility [4][6]

Core Insights - BXP has secured a significant long-term lease with Starr at 343 Madison Avenue, enhancing its Midtown Manhattan portfolio and demonstrating ongoing tenant interest in modern office spaces [1][2][8] Company Developments - The lease agreement with Starr covers approximately 275,000 square feet, representing about 30% of the building, under a 20-year contract, which improves BXP's future cash flow visibility and reduces leasing risk [2][8] - 343 Madison Avenue is designed as a next-generation office building with a focus on sustainability, wellness, and amenities, aligning with BXP's strategy to upgrade its portfolio [3][6] Market Trends - The office real estate market is selective, with tenants favoring high-quality, well-located offices, particularly in Midtown Manhattan, which benefits landlords like BXP [5][6] - BXP reported strong leasing activity in Q3 2025, signing over 1.5 million square feet with a weighted-average lease term of 7.9 years, marking its best third quarter since 2019 [4] Financial Outlook - The lease with Starr reinforces BXP's positioning in a changing office market, improving income visibility and validating its focus on prime locations and modern design [6] - Analysts have slightly raised BXP's 2025 FFO per share estimates to $6.89, despite a 4.2% decline in shares over the past six months [7]

Core Viewpoint - Vision Capital Corp has fully liquidated its position in SL Green Realty, indicating ongoing skepticism in the office real estate market despite some positive leasing progress by the company [1][2][7]. Company Overview - SL Green Realty Corp is the largest office landlord in Manhattan, focusing on high-value commercial properties and operating as a real estate investment trust (REIT) [5]. - As of the latest report, SL Green's market capitalization stands at $3.48 billion, with a revenue of $910.38 million over the trailing twelve months (TTM) and a dividend yield of 6.7% [4]. Recent Performance - In the third quarter, SL Green reported funds from operations of $1.58 per share, an increase from $1.13 a year earlier, and same-store occupancy rose to 92.4%, with expectations of reaching 93.2% by year-end [6]. - The company signed over 650,000 square feet in leasing activity during the quarter, indicating a meaningful uptick in leasing [6]. Market Sentiment - Despite the positive operational metrics, SL Green's stock has declined approximately 32% over the past year, underperforming the S&P 500, which has increased by about 16% in the same period [3][7]. - The exit of Vision Capital suggests that concerns regarding office demand, refinancing risks, and the long-term impact of remote work continue to overshadow the company's incremental progress [7][9].

16 December 2025 Estimate Change Property/Real Estate Real Estate: 2026 Outlook Valerie Jacob +44 20 7762 4885 valerie.jacob@bernsteinsg.com Marios Pastou +44 20 7676 6881 marios.pastou@bernsteinsg.com Nikita Talwar +44 20 7676 8785 nikita.talwar@bernsteinsg.com Specialist Sales Sara Bellenda +44 20 7762 1867 sara.bellenda@bernsteinsg.com Whilst the recovery in asset values is well underway this has not yet been rewarded in the listed sector overall, although there have been some large divergences in stock ...

Core Viewpoint - The article discusses a selection of stocks with high dividend yields that are currently viewed unfavorably by Wall Street analysts, suggesting potential investment opportunities in these "hated" stocks. Group 1: Real Estate Investment Trusts (REITs) - National Storage Affiliates Trust (NSA) has a yield of 7.9% and operates 1,069 properties across 37 states and Puerto Rico, benefiting from a recession-resistant business model, although it is currently facing a 20% pullback in performance [3][4] - NSA's recent quarter showed declines in earnings, core FFO, same store net operating income, and occupancy, reflecting broader challenges in the self-storage sector rather than unique issues for NSA [3][4] - Alexander's (ALX) has an 8.5% yield and is highly concentrated, with 60% of its revenues coming from tenant Bloomberg. The company is in discussions for loan restructuring after failing to repay a $300 million loan [5][6] - Despite challenges, ALX has shown double-digit total returns in 2025, outperforming the broader real estate sector, but Wall Street remains skeptical due to dividend concerns [7] Group 2: Talent Solutions and Consulting - Robert Half (RHI) has a yield of 9.0% and operates in contract talent solutions, permanent placement, and consulting services. The company has seen its stock price drop 80% since its peak in 2022, leading to more Sell and Hold ratings than Buys [10][11] - The decline in RHI's stock is attributed to a post-COVID hiring moderation, with significant job losses reported, although the company believes the impact of AI on its business is overstated [12][13] - RHI's earnings are expected to drop by 45% this year, raising concerns about dividend coverage as the payout is projected to exceed earnings through at least the end of 2026 [14] Group 3: Crafting and Creativity Platform - Cricut (CRCT) boasts a high yield of 20.6% and operates as a creativity platform, offering machines and software for crafting. The company initiated a new semiannual dividend program despite declining profits [16][17] - The stock has seen a significant decline, leading to a yield increase above 20%, with analysts recommending selling the stock [19] - Despite a loyal user base and expected profit growth of over 20% in 2025, Cricut faces challenges with flat or declining revenues projected in the coming years, particularly if economic conditions affect holiday shopping [20][21]

Well, you've also got new insights into another belleaguered real estate sector office. An exclusive interview with the CEO of the nation's largest office rate for this week's property play. What were the insights. What were the takeaways.Well, it was a lot, Morgan. Look, we're seeing some encouraging new stats nationally on office. The office vacancy rate fell in Q3 year-over-year for the first time since the start of 2020.That according to CBRE, leasing activity was strong, driven by financial services an ...

Office Market Outlook - The predicted downfall of the office sector and its impact on the banking system has not materialized as initially feared [1] - The office market is showing signs of improvement, although not uniformly across all areas [1] - Opportunities exist to improve the performance of some office buildings through renovations and upgrades [2] Asset Performance - Some office buildings are performing well [1] Future Expectations - The office buildings are expected to find solutions and stabilize [1]

Core Insights - The office real estate market is believed to have hit its bottom in 2024, with positive trends emerging in leasing and earnings growth for many companies [2][4][43] - There is a significant bifurcation in the office market, with premier buildings performing well while lower-quality buildings struggle [6][22][39] - The demand for office space is being driven by the return of employees to the workplace, particularly in sectors like financial services and legal services [5][52] Market Trends - S&P 500 earnings are projected to grow by 11-12% this year, indicating a healthy economic environment that supports office leasing [3] - Leasing activity has increased significantly year-to-date compared to the last five years, particularly among leading companies [4][5] - The vacancy rate for premier office buildings is 11%, which is 5 percentage points lower than the overall market, with asking rents 55% higher [13][23] Development Strategies - The focus is on developing premier workplace assets, with significant investments in new projects like 343 Madison in New York, a $2 billion project, and 725 12th Street in Washington, D.C., costing approximately $450 million [40][41] - Amenities such as easy commuting access, meeting spaces, and food options are becoming increasingly important in attracting tenants [14][16][18] - There is a trend towards converting underperforming office buildings into residential spaces, particularly in markets like New York, where tax incentives exist for such conversions [28][29][27] Economic and Investment Outlook - The office market is experiencing a resurgence in capital investment, with transaction volumes up 10-15% from the previous quarter and 60-70% year-over-year [58] - Investors are recognizing opportunities in the office sector due to lower cap rates compared to other real estate sectors, leading to a shift in capital allocation [60][61] - The overall sentiment is cautiously optimistic, with expectations that the office market will stabilize and improve, despite challenges in certain segments [43][44][46]

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]

Financial Data and Key Metrics Changes - Funds from operations (FFO) per share for Q3 2025 was $1.74, which is $0.04 above the forecast and $0.02 above market consensus [5][38] - The midpoint of the earnings guidance for the full year 2025 was raised by $0.03, now projected at $6.89-$6.92 per share [5][40] - Occupancy in the same property pool increased by 20 basis points from the previous quarter, reaching 86.6% [21][38] Business Line Data and Key Metrics Changes - Over 1.5 million sq ft of leasing was completed in Q3 2025, a 39% increase compared to Q3 2024 and 130% of the last five-year average for the same quarter [6][5] - Year-to-date leasing activity reached 3.8 million sq ft, which is 14% greater than the first three quarters of 2024 [6] - The total portfolio percentage leased for the quarter was 88.8%, a decline of 30 basis points, but an increase of 10 basis points from June 30 [22] Market Data and Key Metrics Changes - S&P 500 earnings have been growing for nine consecutive quarters, with a projected growth of around 11%-12% for 2025 [6] - Office transaction volume in private markets improved, with significant office sales reaching $12.9 billion in Q3 2025, up 6% from Q2 and 55% from Q3 2024 [8] - Direct vacancy for premier workplaces in key markets is 11.7%, which is 22% lower than the broader market [10] Company Strategy and Development Direction - The company aims to lease space and grow occupancy, with a focus on premier workplace assets in core gateway markets [5][10] - A strategic goal includes selling 27 non-strategic assets for approximately $1.9 billion by the end of 2027, with $1.25 billion in transactions already closed or underway [7][8] - The company is reallocating capital to premier workplace assets and has launched new developments in New York and Washington, DC [12][14] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are growing and utilizing their space more intensively, leading to positive leasing market conditions [16] - The company expects to see a 200 basis point increase in occupancy by the end of 2026, driven by active leasing and market conditions [52][70] - The overall market for office space is improving, with more availability of capital at better pricing [16][37] Other Important Information - The company recorded $212 million in impairments related to assets part of its strategic sales program [39] - The debt markets have improved, allowing the company to access financing at favorable terms, including a $1 billion unsecured exchangeable notes offering [35][37] Q&A Session Summary Question: How is the company approaching smaller markets like Seattle and LA? - Management indicated that there are no current development opportunities in LA or Seattle due to weaker leasing conditions, but they would consider acquisition opportunities if they arise [46][47] Question: What is the confidence level regarding occupancy increases in 2026? - Management expressed confidence in achieving a 200+ basis point increase in occupancy by the end of 2026, supported by ongoing leasing activity [51][52] Question: How is the company addressing the recovery in San Francisco? - Management noted that AI demand is primarily in low-rise buildings south of Mission Street, and they are seeing growth in leasing activity from technology companies [54][56]