HIGHWOODS PROPERTIES, INC. (HIW): what the price requires
The current priced-in claim for HIGHWOODS PROPERTIES, INC. (HIW) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/HIW
Headline
| Field | Value |
|---|---|
| Ticker | HIW |
| Company | HIGHWOODS PROPERTIES, INC. |
| Current price | $31.26/sh |
| Composition | Atlanta 19% / Charlotte 12% / Nashville 21% / Orlando 8% / Raleigh 24% / Richmond 5% / Tampa 12% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | reit |
| Price-to-FFO | 7.6x |
| FFO yield | 13.1% |
The price sits below what even a 5%/yr funds-from-operations decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 10.5% cost of equity with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.38σ |
| cohort percentile (of 88 peers) | 7 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.75x | 5 | expensive |
| Earnings | 2.05x | 5 | expensive |
| Relative | 0.44x | 4 | justifies |
| Growth | 0.93x | 5 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.1%); the inversion above states its own rate.
Per-Model Detail (n=19)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $38.65 | 0.81x | yes | FCF base $0.4B, growth 1% (input: historical growth), terminal g 0.7%, WACC 6.1%, 5yr projection |
| DCF Exit Multiple | Growth | $33.65 | 0.93x | yes | Exit EV/EBITDA: 4.9x / 6.9x / 8.9x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $92.88 | 0.34x | yes | P/E 24.1x (blended: static sector reference 35x + trailing (TTM) 8x), scenarios: 20.3x / 24.1x / 27.9x (bear / base = reference held flat / bull), EV/EBITDA 14.75x |
| Simple DDM | Growth | $39.28 | 0.80x | yes | DPS $1.96, g=4.1% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $26.52 | 1.18x | yes | Stage 1: -3% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $9.26 | 3.38x | yes | BV/sh $21.14, ROE (TTM) 4.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $5.93 | 5.27x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $19.42 | 1.61x | yes | Rev $0.8B, growth 1% (input: historical growth; tapered), Terminal P/S: 3.6x / 4.3x / 4.9x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $42.22 | 0.74x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.56B × (1−21%) / WACC 6.1% → EPV (no growth) |
| Residual Income | Asset | $4.77 | 6.55x | yes | BV $21.14 + 5yr PV of (ROE (TTM) 4.1% − Kₑ 9.3%) × BV; BV grows 2.6%/yr |
| Graham Number | Asset | $43.84 | 0.71x | yes | √(22.5 × FFO/share $4.04 × BVPS $21.14) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $131.27 | 0.24x | yes | EBITDA $0.85B × sector EV/EBITDA 20.0x |
| FCF Yield | Earnings | $15.21 | 2.05x | yes | FCF $375.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $14.28 | 2.19x | yes | SBC-adj FCF $0.37B (FCF $0.38B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $8.88 | 3.52x | yes | FFO/share $4.04 × (8.5 + 2×-2.9%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $8.34 | 3.75x | yes | BV $21.14 × (ROIC 2.4% / WACC 6.1%) |
| P/Sales Sector | Relative | $43.89 | 0.71x | yes | Revenue $0.82B × sector P/S 6.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $43.68 | 0.72x | yes | FFO/share $4.04 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | $57.21 | 0.55x | yes | FFO/share $4.04 × 14.2x P/FFO (route cohort median, n=85); FFO $0.45B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 112M |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Fixed-charge coverage (FFO basis) | 3.9x |
| Funds from operations (trailing) | $452.2m |
| Share count CAGR (dilution) | 1.1% |
| Burning cash | no |
REIT basis: leverage is read against funds from operations (FFO), not depreciation-gutted operating income. The header's implied growth runs on ADJUSTED FFO — FFO minus recurring maintenance capex — so the header's multiple and this leverage ratio use bases that differ by that capex; neither substitutes for the other. Net debt could not be resolved from the corporate debt tags in the filings (REIT notes and mortgage debt are often tagged outside the corporate ladder), so the leverage ratio is withheld rather than rendered from incomplete tags.
Bullet Takeaways
- Highwoods is a Sun Belt office landlord concentrated in fast-growing markets like Raleigh, Nashville, Atlanta, and Charlotte, and it trades at a deeply discounted roughly 7.6 times adjusted funds from operations, a near-13% cash yield that prices in the market's broad distrust of office regardless of geography.
- The central risk is occupancy: the office cycle has punished landlords as tenants shed space, and Highwoods is guiding year-end occupancy of 86.5% to 88.5%, with a leased rate of 89.7% running well ahead of occupied space, a 470-basis-point gap that only pays off if those signed leases actually move into the buildings.
- Watch the occupancy convergence and the next print on July 28: management initiated 2026 FFO guidance of $3.40 to $3.68 a share, up about 5.7%, and expects to lift occupancy by roughly 200 basis points by year-end on what it calls limited new supply and Sun Belt in-migration.
Bull Case
The market is pricing every office REIT as if remote work emptied the buildings, and Highwoods is where that blanket judgment looks most mistaken. At about $29.35 the stock trades near 7.6 times adjusted funds from operations, a cash yield of roughly 13%. That is a price set by the word "office," not by Highwoods' actual markets. The portfolio is concentrated in the Sun Belt: Raleigh, Nashville, Atlanta, Charlotte, Tampa, Orlando, Richmond. These are the places people and companies have been moving toward, not away from. The bull case starts from that gap between what the price assumes about office broadly and what the footprint actually is.
Geography is the whole thesis, and management's own read of it is concrete. The company describes "limited to no new supply" across its core Sun Belt business districts and "dwindling blocks of available, high-quality space," with Sun Belt in-migration and local company growth driving rent gains, including higher net effective rents and what it calls rent spikes in the strongest submarkets. That is the opposite of the gateway-city office story. When no one is building and demand is migrating in, the existing well-located buildings gain pricing power. A landlord that owns the good space in a market with no new supply is positioned to push rent as leases roll, which is exactly what a 13% starting cash yield is failing to credit.
The occupancy setup is the near-term catalyst the price ignores. The leased rate reached 89.7%, up from 89.2% a quarter earlier, and it runs about 470 basis points ahead of occupied space, roughly three times the normal gap. That spread is signed leases that have not yet moved into the buildings and started paying full rent. As those tenants take occupancy, cash flow rises without a single new lease being signed, because the income is already contracted. Management expects to lift occupancy by roughly 200 basis points by year-end, toward a guided 86.5% to 88.5%, and frames the convergence of occupancy gains, rent growth, and development stabilization as the driver of outsized NOI and earnings growth over the next few years.
The cash already supports the bet at today's price. Initial 2026 FFO guidance of $3.40 to $3.68 a share, up about 5.7%, against a stock near $29 means the funds-from-operations yield is in the mid-teens before the occupancy lift even lands. The board set the quarterly dividend at $0.50, an annualized $2.00, comfortably inside that cash generation. The bull does not need the office sector to be rehabilitated in the market's eyes. It needs the signed leases to move in and the Sun Belt supply-demand picture to hold, and the stock is priced as if neither will happen.
Bear Case
Office is in a structural demand reset, and a discounted price can stay discounted for a long time when the asset class itself is in question. That is the bear's starting point for Highwoods. The roughly 13% cash yield is not a free lunch the market overlooked; it is the price of a building type that hybrid and remote work have permanently changed. Companies across the country are renewing for less space than they once leased, and even healthy tenants in growing Sun Belt cities are part of that trend, taking efficient floorplans rather than sprawling ones. A 7.6-times multiple on adjusted funds from operations looks cheap against other property types, but office has earned a discount, and the question is whether Highwoods' geography is enough to escape a force that is national in scope.
The occupancy math is where the optimism is most exposed. The bull leans on a leased rate of 89.7% running about 470 basis points ahead of occupied space, treating that gap as future cash already contracted. But a signed lease is a promise, not a payment, and the gap only becomes cash if those tenants actually take occupancy on schedule and at the assumed rents. Move-in timing slips, tenants downsize between signing and occupying, and free-rent periods delay the cash. Management's own year-end occupancy guide of 86.5% to 88.5% sits below today's leased rate, which is an admission that not all of that spread converts cleanly. The entire near-term cash-flow lift the price would need to re-rate depends on a conversion that has not happened yet.
Leverage tightens the room for error. Fixed-charge coverage near 3.9 times is the thinnest among comparable office and diversified REITs, meaning a smaller cushion between the rent coming in and the interest and preferred obligations going out. For a REIT, leverage is read against funds from operations, and at under four-times coverage a meaningful occupancy stumble or a refinancing at higher rates would press directly on the cash available for the dividend. The board's $2.00 annualized payout is covered today, but the margin is narrower than at a lower-levered peer, and office landlords face a refinancing market where lenders have grown cautious on the entire category.
So the discount may be the market being right rather than wrong. The price embeds deep pessimism about office, and the bull's answer is geography plus a signed-but-not-occupied lease pipeline. Both could prove correct. But the bear does not need a collapse; it needs the occupancy convergence to disappoint, or new supply to eventually answer those "rent spikes," or financing costs to grind higher against a thin coverage ratio. Any one of those keeps a cheap stock cheap. A 13% cash yield is what the market charges to hold an asset it does not trust, and trust in office, even Sun Belt office, is not something a single strong leasing quarter restores.
Valuation
Begin with the cash yield, because for Highwoods it is the entire story. At about $29.35 the stock trades near 7.6 times adjusted funds from operations, the cash left after the upkeep these buildings require, which works out to roughly a 13% yield on that adjusted cash. A double-digit cash yield is not what a market pays for a healthy, growing income stream; it is what a market charges to hold an asset it distrusts. The price is not asking Highwoods to grow. It is barely asking it to hold steady, and it is demanding a steep return for the risk that even that does not happen. Funds from operations before the upkeep deduction is the gross figure, carrying a similar discount near 7.2 times and a 14% yield; it is the raw number the adjusted measure refines, and the adjusted yield is the one that bears on the dividend and the price.
The methods used to triangulate the stock almost all point the same way, which is unusual and itself the signal. The earnings-power lens, the peer-multiple lens, and the forward-growth lens every one land below the price, meaning each finds the stock cheap against the cash it generates and the cohort it trades within. Only the asset-value lens marks it expensive, and that is the familiar REIT artifact: heavy depreciation drags reported book returns below the buildings' real economics. When three independent income-based frames call a stock cheap and only the depreciation-distorted frame objects, the pattern is a value or turnaround read, not a growth bet that has gotten ahead of itself. The disagreement among methods is narrow here, and it leans toward the price being low.
What has to be true for the discount to close is occupancy, not heroics. The price requires almost no growth, so the bet is simply that the cash holds and the signed-lease pipeline converts. Management initiated 2026 FFO guidance of $3.40 to $3.68 a share, up about 5.7%, and expects to raise occupancy by roughly 200 basis points toward a year-end 86.5% to 88.5%, with a leased rate of 89.7% already running ahead of occupied space. That gap between leased and occupied is the concrete lever: it is contracted income waiting to move into the buildings. The analyst consensus, a hold rating with an average target around $27.57 and a recent Deutsche Bank move to $28 with a buy, sits close to today's price. The street, in other words, sees a name trading near a fair reading of a discounted asset, with the upside gated on the occupancy convergence the company is guiding toward.
Solvency is the reason the discount is not simply a gift. Leverage on a REIT is read against funds from operations, and fixed-charge coverage near 3.9 times is the thinnest of the comparable landlords, a narrower cushion between rent received and obligations paid. The share count has risen only about 1.1% a year, so dilution is mild and the cash growth largely accrues per share. But the thin coverage means the office cycle and the refinancing market bear directly on this name: the deep cash yield compensates for real risk, and whether it proves cheap or merely cheap-looking turns on the signed leases becoming occupied rent before financing costs or tenant downsizing intervene.
Catalysts
The occupancy convergence is the catalyst the whole thesis turns on, and the next print will show how it is progressing. In the first quarter Highwoods reported FFO of $0.84 a share and a leased rate of 89.7%, up from 89.2% a quarter earlier, running about 470 basis points ahead of occupied space, roughly three times the normal gap. That spread is contracted income waiting to move into the buildings, and management expects to lift occupancy by roughly 200 basis points by year-end toward a guided 86.5% to 88.5%, with full-year FFO guidance of $3.40 to $3.68 a share, up about 5.7%. Second-quarter results are due July 28 with the call July 29, and the readout that matters is whether the signed leases are converting to occupied, rent-paying space on schedule.
The Sun Belt supply backdrop is the longer-running tailwind management is leaning on. Leadership describes limited to no new construction across its core business districts and dwindling blocks of high-quality available space, with in-migration and local company growth supporting higher net effective rents and rent gains in the strongest submarkets. On the sell side, the posture is cautious-to-constructive: the consensus is a hold with an average target near $27.57, while Deutsche Bank recently raised its target to $28 from $27 and kept a buy rating. The variables to track are occupancy conversion, the pace of any new supply that might eventually answer current rent strength, and the development pipeline's stabilization, since each feeds the NOI growth the company is guiding toward.
Peer Cohorts (Per Segment, With Filing Citations)
Atlanta / Charlotte +5 more (reported)
- DEI (Douglas Emmett, Inc.)
- (no filing in the citation store)
- CDP (COPT DEFENSE PROPERTIES)
- (no filing in the citation store)
- ESRT (Empire State Realty Trust, Inc.)
- (no filing in the citation store)
- BXP (BXP, INC.)
- (no filing in the citation store)
- SLG (SL GREEN REALTY CORP)
- (no filing in the citation store)
- CUZ (COUSINS PROPERTIES INC)
- (no filing in the citation store)
- KRC (KILROY REALTY CORPORATION)
- (no filing in the citation store)
- VNO (VORNADO REALTY TRUST)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Highwoods Q1 2026 results · Highwoods 2026 guidance · Highwoods Q4 2025 earnings call · Highwoods 2026 guidance and Q4 2025 call · Highwoods dividend declaration, 2026 · Highwoods 2026 guidance and Q1 2026 results · analyst estimates and Deutsche Bank note, 2026 · Highwoods Q2 2026 earnings announcement