Highwoods Properties HIW Sees 14.5% Surge in 3 Months: Is the Trend Sustainable?

Highwoods Properties (HIW) shares have surged 14.5% in the past three months, driven by a recovery in demand for high-quality office spaces in Sun Belt markets. Analysts are positive, with the Zacks Consensus Estimate for 2025 funds from operations (FFO) per share revised marginally northward to $3.39. The company's portfolio is well-poised to capitalize on tenants' preference for office spaces with class-apart amenities, and its aggressive capital-recycling program and healthy balance sheet bode well.

Highwoods Properties (HIW) shares have surged 14.5% in the past three months, outpacing the industry's 5.5% rise [1]. This surge is driven by a recovery in demand for high-quality office spaces in Sun Belt markets. The company's portfolio of premier office properties in these high-growth regions is well-positioned to capitalize on tenants' growing preference for office spaces with top-tier amenities. With an increasing number of organizations emphasizing return-to-office mandates, demand for high-quality office spaces is picking up, leading to a rebound in leasing activity [1].

The company's strong fundamentals also contribute to its stock performance. Highwoods maintains a healthy balance sheet, with no consolidated debt maturities until the second quarter of 2026. As of March 31, 2025, the company's total available liquidity amounted to more than $700 million [1]. Moreover, the company's disciplined capital-recycling strategy, which involves disposing of non-core assets and redeploying the proceeds in premium asset acquisitions and accretive development projects, has been instrumental in driving growth [1].

Analysts are generally positive about Highwoods. The Zacks Consensus Estimate for its 2025 funds from operations (FFO) per share has been revised marginally northward to $3.39 over the past two months [1]. Despite the positive outlook, there are risks to consider. Competition from other developers and operators, as well as significant development outlays, could weigh on the company's performance. Additionally, a high debt burden adds to the company's concerns [1].

Investors should also consider other high-yielding REITs in the sector. For instance, Healthpeak Properties (DOC) offers a dividend yield of 6.68% with a strong analyst consensus [2]. Similarly, Sabra Health Care REIT (SBRA) provides a dividend yield of 6.49% and has a solid analyst consensus [2]. However, these stocks may be more suitable for investors seeking high dividend yields rather than capital appreciation.

In conclusion, Highwoods Properties' strong fundamentals and positive analyst sentiment make it an attractive investment for those interested in the real estate sector. However, investors should be aware of the potential risks and consider other high-yielding REITs in the sector.

References:
[1] https://www.tradingview.com/news/zacks:5ffbb9095094b:0-highwoods-stock-up-14-5-in-three-months-will-the-trend-last/
[2] https://www.benzinga.com/trading-ideas/dividends/25/07/46339672/wall-streets-most-accurate-analysts-give-their-take-on-3-real-estate-stocks-delivering-high-dividend-yields-6