Highwoods Properties Stock Up 8.3% in Three Months: Will It Continue?

Highwoods Properties HIW shares have rallied 8.3% in the past three months, against the industry’s fall of 0.2%.In early June, HIW announced that it has signed more than 750,000 square feet of second-generation leases from the beginning of the second quarter through June 2, 2025. These included more than 300,000 square feet of new leases. This development highlights the growing demand for high-quality office spaces, propelling leasing activity.Analysts seem positive on this Zacks Rank #3 (Hold) company, with the Zacks Consensus Estimate for its 2025 funds from operations (FFO) per share revised marginally northward to $3.41 over the past month.Image Source: Zacks Investment ResearchFactors Behind HIW Stock Price Surge: Will the Trend Last?Highwoods is seeing a recovery in demand for its high-quality and well-placed office properties, as highlighted by a rebound in new leasing volume. During the first quarter of 2025, Highwoods’ second-generation leasing activity encompassed 700,000 square feet of space, including 252,000 square feet of new leases.Going forward, the next cycle of office space demand is likely to be driven by inbound migration and significant investments announced by office occupiers to expand their footprint in Sun Belt regions, as well as additional hiring plans in the company’s markets. Moreover, HIW is seeing an increasing number of tenants returning to offices. This is likely to support office real estate market fundamentals.Highwoods’ portfolio is concentrated in high-growth Sun Belt markets, which have long-term favorable demographic trends and are expected to continue experiencing above-average job growth. This is likely to support Highwoods’ rent growth over the long term. Net effective rents seen by the company were 20% higher than the previous five-quarter average.HIW has been following a disciplined capital-recycling strategy that entails disposing of non-core assets and redeploying the proceeds in premium asset acquisitions and accretive development projects. In the first quarter of 2025, Highwoods sold three non-core office buildings encompassing 616,000 square feet in Tampa, FL, for $145 million and land for $1.3 million. Meanwhile, in March 2025, Highwoods acquired Advance Auto Parts Tower, a 20-story, Class AA office tower spanning around 346,000 square feet in Raleigh’s mixed-use North Hills BBD. HIW maintains a healthy balance sheet, with no consolidated debt maturities until the second quarter of 2026. As of March 31, 2025, 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. In the first quarter of 2025, Highwoods generated 84.3% unencumbered net operating income (at the company’s share), providing scope to tap additional secured debt capital if required.Key Risks for HIWCompetition from developers, owners and operators of office properties and a significant development outlay are likely to weigh on Highwoods. A high debt burden adds to the company’s concerns.Stocks to ConsiderSome better-ranked stocks from the broader REIT sector are VICI Properties VICI and W.P. Carey WPC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share has been raised marginally over the past two months to $2.34.The consensus estimate for W.P. Carey’s current-year FFO per share has moved northward 1.2% in the past two months to $4.88.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.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Highwoods Properties, Inc. (HIW): Free Stock Analysis Report W.P. Carey Inc. (WPC): Free Stock Analysis Report VICI Properties Inc. (VICI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks