10-Q · April 28, 2026
Highwoods reports quarter-over-quarter operating momentum driven by acquisitions and leasing: rental and other revenues rose by $13.7 million (6.8%) in Q1 2026 versus Q1 2025, and consolidated NOI increased by $7.6…
Earnings analysis · 10-Q
HIW earnings analysis
Filed July 28, 2026 · Our reading of the company's report
The latest report
Highwoods delivered improving underlying office operations in the second quarter: rental and other revenue increased 7.9%, same-property NOI increased 1.4%, and occupancy reached 85.7%. GAAP EPS rose to $0.85, although…
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Highwoods delivered improving underlying office operations in the second quarter: rental and other revenue increased 7.9%, same-property NOI increased 1.4%, and occupancy reached 85.7%. GAAP EPS rose to $0.85, although the $79.0 million gain on dispositions was the principal driver, while recurring FFO per share increased only $0.01 to $0.90. Liquidity is strong, but expense growth, higher interest costs, and execution on planned dispositions and capital deployment remain key watch items.
Reported figures
- Earnings per share
- $0.85
What stood out
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Revenue rose 7.9% on acquisitions and leasing
Second-quarter rental and other revenues rose $15.8 million, or 7.9% year over year, led by $15.6 million from acquisitions in Raleigh, Charlotte and Dallas, $5.4 million of same-property revenue growth, and $1.2 million from Raleigh developments; dispositions reduced revenue by $6.4 million.
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GAAP EPS jump was gain-driven
Diluted GAAP EPS increased $0.68 year over year to $0.85. The improvement was materially aided by $79.0 million of gains on dispositions during the quarter, while FFO per share improved more modestly to $0.90 from $0.89.
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Same-property NOI and occupancy improved
Consolidated same-property NOI increased $1.8 million, or 1.4%, as a $5.4 million increase in same-property revenue exceeded a $3.7 million rise in same-property expenses. Office occupancy improved to 85.7% at June 30, 2026 from 85.3% at December 31, 2025.
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Leasing spreads remained strongly positive
Second-generation leases signed in the quarter totaled 1,026,262 square feet at annual GAAP rents of $40.97 per square foot, 20.9% above prior leases in the same spaces.
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Operating cash flow strengthened
Six-month operating cash flow rose $25.2 million year over year to $188.1 million. Cash used for investing was $101.7 million, reflecting acquired real estate, tenant improvements/deferred leasing costs, and joint-venture investments; filing-defined free cash flow was not disclosed.
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Liquidity remains ample and debt edged down
Liquidity was substantial, with $145.4 million of cash at June 30 and $749.9 million of unused revolver capacity; no revolver borrowings were outstanding as of July 21, 2026. Net debt declined to $3.516 billion from $3.554 billion at December 31, 2025.
What to watch
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Operating-expense growth exceeded revenue growth
Property-level expense growth outpaced revenue growth: second-quarter rental property and other expenses rose $6.5 million, or 10.2%, versus a 7.9% increase in rental and other revenue. Management cited higher utilities, repairs and maintenance, and contract services.
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Higher interest burden and 2027 refinancing need
Interest expense increased $4.0 million, or 10.7%, year over year in the quarter because of higher average debt balances and lower capitalized interest. The company has $350.0 million of floating-rate debt and $289.1 million of unsecured notes maturing in March 2027.
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Non-core disposition execution risk
The filing adds a transaction-specific forward-looking risk: closing of $73.5 million of planned non-core building dispositions before August 15, 2026 may not occur on the stated terms or at all. Management also expects $100 million to $250 million of further asset sales during 2026, without assurance of timing or terms.
Management's outlook
No revenue or EPS guidance was included in the 10-Q. Management expects office-portfolio average occupancy of 86.0% to 87.0% for the remainder of 2026; it also expects $100 million to $250 million of additional non-core property sales, up to $400 million of development starts, and up to $250 million of acquisitions during the remainder of 2026.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.