Highwoods Properties (HIW) Q2 2025 earnings summary

Executive summary

• Achieved strong Q2 results with robust second-gen leasing, resilient cash flows, and a raised FFO outlook, supporting confidence in future earnings and NAV growth.

• Focused on upgrading portfolio quality by recycling non-core, CapEx-intensive assets into higher growth, capital-efficient properties and maintaining a strong balance sheet.

• Leasing volumes remained elevated, with 923,000 sq ft of second-gen leasing, including 371,000 sq ft of new leases, and GAAP rent growth of 17.6%.

• Portfolio occupancy declined to 85.6% as of June 30, 2025, with expected average occupancy between 85.0% and 86.5% for the remainder of 2025.

• Significant progress made on stabilizing core assets and development pipeline, unlocking NOI growth potential.

Financial highlights

• Q2 2025 net income was $18.3M ($0.17/share), and FFO was $97.7M ($0.89/share); six-month FFO was $189.4M ($1.72/share).

• Rental and other revenues for Q2 2025 were $200.6M, down 2.0% year-over-year; six-month revenues were $401.0M, down 3.6%.

• Lease rate increased 80 bps to 88.9%, with occupancy flat at 85.6% compared to Q1.

• Over $33M of future NOI growth locked in with signed leases not yet contributing to 2025 results.

• Same property cash NOI declined -2.4% year-over-year; average in-place cash rents increased 1.4% per SF.

Outlook and guidance

• 2025 FFO outlook raised to $3.37–$3.45 per share, reflecting confidence in leasing and cash flow resilience.

• Expect lease rate and occupancy to increase by year-end, with occupancy likely at the low end of the 86%-87% range due to timing of lease commencements.

• Guidance assumes same property cash NOI growth of -4.0% to -2.0%, average occupancy of 85.0%–86.5%.

• Embedded growth drivers and signed leases provide strong visibility for earnings and cash flow growth into 2026 and 2027.

• Plan to sell up to $150M of non-core assets in 2025.