Abstract
Highwoods Properties will report its fourth-quarter results on February 10, 2026 Post Market; consensus implies modest revenue growth, stable margins, and a rebound in EPS, while recent research updates indicate a balanced stance with some caution on near-term fundamentals.Market Forecast
Market models and company guidance imply this quarter’s revenue of $207.84 million, up 1.87% year over year, with an estimated EBIT of $54.56 million and an EPS of $0.20; the forecast points to mild margin improvement and a recovery in adjusted EPS versus the prior quarter. The gross profit margin is expected to be broadly stable, and net margin should be comparable to last year’s level, though visibility remains tied to leasing velocity and occupancy. Highwoods Properties’ main business is rental and other property income, and the outlook emphasizes steady same-property performance and incremental rent spreads. The most promising segment is stabilized rental income, supported by new and renewal leases and modest rent escalations, with revenue of $207.84 million projected this quarter, implying 1.87% year-over-year growth.Last Quarter Review
Highwoods Properties’ last quarter delivered revenue of $201.77 million, a gross profit margin of 67.42%, GAAP net income attributable to common shareholders of $13.45 million with a net profit margin of 6.65%, and adjusted EPS of $0.12, with revenue down 1.25% year over year. One key highlight was cost discipline that helped preserve a high gross margin despite softer topline. The main business, rental and other income, contributed $201.77 million, although it experienced a year-over-year decline, reflecting timing of move-outs and leasing transitions.Current Quarter Outlook (with major analytical insights)
Main business: Core rental and other property income
Highwoods Properties’ core revenue base is derived from rental income and related property-level revenues across its office-focused portfolio. The current quarter’s forecast of $207.84 million assumes steady occupancy with incremental rent growth on renewals, and a larger revenue base than the prior quarter after absorbing known move-outs. The gross profit margin is modeled to remain close to prior-quarter levels, supported by operating expense control and stable property taxes and utilities trends. Given that last quarter’s revenue dipped modestly year over year, investors will watch for leasing announcements that indicate whether this quarter’s revenue improvement is sustainable. If the leasing pipeline translates to higher net absorption, the net profit margin could hold near last year’s level, enabling EPS to reach the forecasted $0.20.The key swing factor within the core business remains timing of lease commencements and the spread between expiring and new rents. A positive inflection in rent spreads or occupancy can drive better-than-expected revenue and EBIT. Conversely, any delays in project deliveries or extended downtime on vacated space may offset the expected revenue uptick. The company’s prior ability to maintain a 67.42% gross margin provides a buffer, but a widening gap between stabilized and non-stabilized properties could pressure net margins if leasing takes longer than anticipated.
Most promising business: Stabilized portfolio performance and rent escalations
The stabilized portfolio—properties with mature occupancy and recurring rent escalations—remains the most visible growth engine for the quarter. The $207.84 million revenue projection implies 1.87% year-over-year growth, suggesting a gradual pickup tied to contracted rent bumps and anticipated commencement of signed leases. EBIT forecasted at $54.56 million assumes that operating leverage from higher occupied space and controlled controllable expenses will translate into incremental profitability. This segment benefits when renewal spreads are positive and renewal probabilities remain elevated, helping mitigate vacancy risk.However, the magnitude of growth is modest, and incremental upside depends on the pace of backfilling space from planned or recent move-outs. Lease incentives and tenant improvement allowances can affect near-term cash yields, which may temper the speed of bottom-line recovery. Nonetheless, the forecast improvement in EPS to $0.20 from $0.12 last quarter implies a cleaner run-rate as leasing progresses, and a gradual stabilization in earnings power. Monitoring quarterly leasing volumes and the proportion of signed-but-not-yet-commenced leases converting into active rent will be pivotal for confirming the durability of growth.
Stock price drivers this quarter: Leasing velocity, expense trends, and capital allocation
Stock performance into and through the print will likely hinge on leasing velocity versus expectations, evidenced by new signings, retention rates, and net absorption in key markets. An upside surprise in net absorption or renewal spreads could bolster the revenue run-rate and support an EPS trajectory above $0.20. If leasing outcomes are mixed or skew modestly lower, the market may focus on the sustainability of the gross profit margin at roughly two-thirds of revenue and the implications for net interest rate and net margin.Expense trends, particularly property operating expenses and G&A, will also be scrutinized given their influence on margin preservation. A continued disciplined cost posture similar to last quarter would support EBIT around $54.56 million and keep net margin near the prior-year level. On capital allocation, investors will assess whether internal funding and the balance sheet leave adequate flexibility for targeted reinvestment and development while maintaining dividend commitments. Any commentary on asset recycling or debt maturities could influence sentiment by altering perceived risk to cash flows over the next several quarters.