Highwoods Properties Posts Strong Q3 Earnings, Raises Full-Year Outlook
Highwoods Properties, a leading real estate investment trust (REIT), reported strong third-quarter earnings and raised its full-year outlook on Thursday. The company's quarterly results reflect the strengthening fundamentals in its portfolio and markets, driven by strong demand for high-quality office space and limited new construction.
In its Q3 2026 conference call transcript, Highwoods Properties' executives highlighted several key highlights from the quarter. Notably, the company posted GAAP rent growth of 29% and cash rent growth of 4% on over 1.2 million square feet of second-gen leases, delivering the second-highest second-gen net effective rents in its history.
Highwoods Properties' portfolio occupancy increased by 130 basis points since the end of June, with a lease rate now exceeding 90%. The company's strong lease economics and positive occupancy trajectory bolster its outlook for organic NOI growth over the foreseeable future. Additionally, Highwoods Properties made progress improving its portfolio quality during the quarter by selling $85 million of non-core properties in Richmond, Atlanta, and Raleigh.
Year-to-date, the company has sold $386 million of properties at an average cap rate below 8%, exceeding its original target by approximately $150 million. Highwoods Properties continues to market additional non-core assets for sale and expects to close at least $100 million more by year-end. These disposition proceeds provide the company with meaningful dry powder for future investments.
Highwoods Properties' financial results include FFO of $0.89 per share, and the company has increased its outlook for the full year to $3.51-$3.70 per share, at the midpoint representing a $0.025 increase over prior guidance and a $0.065 increase from the beginning of the year.
The company's executives attributed the strong performance to several factors, including the lack of high-quality office space with limited to no new construction in the strongest BBDs across the Sun Belt, driving significant rent growth and higher occupancy in its portfolio. Highwoods Properties' leasing performance was also excellent, with 300,000 square feet of new second-gen deals, helping drive the lease rate to 90.1%.
As a result of these strong trends, Highwoods Properties has increased confidence that the gains made during the past several quarters will sustain into future periods. The company's executives remain optimistic about its prospects for long-term FFO and cash flow growth rates, driven by its continued investment in high-quality office buildings in the strongest locations across the Southeast.
