Highwoods Properties, Inc.

Highwoods reported Q2 2026 net income of $93.5 million, or $0.85 per share, and FFO of $100.7 million, or $0.90 per share. The quarter included a $0.035 per share land sale gain and nearly $1 million of higher-than-expected G&A from write-offs of previously capitalized pre-development costs. Occupancy improved 70 basis points sequentially, and management said year-end occupancy should be 86.5% to 88.5%. Full-year 2026 FFO guidance was raised to $3.46 to $3.70 per share, up $0.04 at the midpoint; excluding land sale gains, the midpoint is up $0.01 despite $0.04 of dilution from higher dispositions without reinvestment and $0.01 from the pre-development write-offs. Management also said 23Springs needs only $28 million of remaining capital and is now expected to stabilize in Q2 2027, nine months earlier than previously planned.

Ted Klinck emphasized that the quarter showed continued execution across leasing, rent growth, occupancy, and capital recycling. He framed the portfolio as well positioned in Sun Belt best business districts, with limited new supply and growing pricing power at commute-worthy buildings. His tone was constructive and confident, especially around future development, saying Highwoods expects at least $100 million and potentially as much as $400 million of new development announcements later this year and into next year.

Brendan Maiorana focused on the financial bridge to better cash flow and a stronger balance sheet. He highlighted debt to EBITDA improving from 6.7x to 6.2x, $145 million of cash on hand, no revolver borrowings, and the extension of the $150 million term loan from 2027 to 2031 at a 15 basis point lower rate. He also said excess asset-sale proceeds could push pro forma cash above $250 million, that the March 2027 bond balance is $289 million after repurchasing $11 million, and that leverage should trend modestly lower at year-end and continue declining through 2027 if investment activity is leverage-neutral.

Analysts focused on dividend sustainability, dilution from asset sales, development vs. acquisition capital allocation, and occupancy trajectory into 2027. Management said the dividend is reviewed regularly, they are comfortable with it, and they expect to get back to covering about $2 a share next year; Brendan added that lower coverage reflects occupancy build, free rent, and higher leasing CapEx, which should normalize over time. On dispositions, management said year-to-date sales are around an 8% cap rate on the assets sold and soon-to-close deals, with additional sales likely in the high single digits, and that the cash-flow impact should be accretive or at worst roughly neutral after considering CapEx-heavy non-core assets. On occupancy, Brendan said year-end 2026 should land in the 86.5% to 88.5% range and that 2027 should also see occupancy gains.