Highwoods Properties, Inc. reported fourth‑quarter and full‑year 2025 results that included an earnings per share (EPS) of $0.90, surpassing the consensus estimate of $0.84 by $0.06 or 7.1%. Total revenue for the quarter was $203.36 million, falling short of the $208.34 million consensus by $4.98 million or 2.4%. The company also guided 2026 funds‑from‑operations (FFO) per share to a range of $3.40 to $3.68, a slight upward revision from the prior guidance of $3.30 to $3.60.
The EPS beat was driven primarily by disciplined cost management and the absence of impairment charges that had weighed on the prior year. Property disposition gains in the Sun Belt portfolio added a one‑time boost, while operating expenses fell to $150.3 million from $178.7 million in the same quarter a year earlier. These factors allowed the company to maintain a healthy operating margin despite a modest decline in revenue.
Revenue missed expectations because leasing activity in some secondary markets slowed amid broader office‑space headwinds. However, occupancy in the core Sun Belt best‑business‑district (BBD) properties remained above 95%, and rent growth in those high‑quality assets offset the weaker performance in less‑desired locations. The company’s focus on Class A office space in resilient markets helped cushion the revenue dip.
Segment analysis shows that the Sun Belt BBD portfolio continued to generate the majority of the company’s income, with rent‑growth rates exceeding 4% year‑over‑year. Management highlighted that the portfolio’s limited supply and strong tenant demand are key drivers of the company’s competitive advantage. The company also noted that its recent acquisition of a well‑leased property in Charlotte added $12 million of annualized rent to the portfolio.
Management expressed confidence in the 2026 outlook, citing expected rent increases and continued occupancy gains. CEO Ted Klinck emphasized that “pricing power is shifting toward well‑capitalized landlords” and that the company’s strategic focus on high‑quality assets in Sun Belt BBDs positions it well for future growth. The guidance signals a modest improvement in cash‑generating capacity while acknowledging the ongoing office‑sector headwinds.
Investors reacted with a muted response, reflecting the mixed nature of the results: a solid EPS beat tempered by a revenue miss and broader market uncertainty. The company’s ability to maintain profitability and its forward‑looking guidance suggest resilience, but the revenue shortfall highlights the need for continued focus on high‑quality leasing and rent‑growth strategies.
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