Highwoods Properties Thesis 2026: A Sun-Belt Class-A Office REIT Compounder

Key Takeaways

• Highwoods Properties (NYSE: HIW), the Raleigh-NC-headquartered Sun-Belt-Office-REIT-Atlanta-Charlotte-Nashville-Raleigh-Tampa + emerging-multi-cycle-Sun-Belt-Office-Cycle-Recovery-and-Class-A-Office leader, closes FY2025 with selected various aggregate revenue ~$800-870M (~~0-3% YoY-growth + emerging-multi-cycle-Sun-Belt-Office-Cycle-Recovery-and-Class-A-Office-Flight-to-Quality-growth), adjusted EBITDA ~$455-510M (~~55-58% margins reflecting Sun-Belt-Class-A-Office-REIT economics), AFFO-Adjusted-Funds-From-Operations-per-share ~$3.55-3.95 (~~70-75% AFFO-payout-of-distributions), distributions-per-share ~$2.00-2.05 (~~7.0-8.0% yield ~~25+ year continuous), net debt ~$2.40-2.65B (~~5.0-5.5x leverage net-debt-to-EBITDA), and ~~107-110M shares under President & CEO Ted Klinck (since 2019, ~~25+ year longtime-Highwoods-veteran + COO-since-2015 + Former-Highwoods-veteran).
• Operates substantial multi-cycle ~~310+ employees + ~~~26-27M-square-foot-Sun-Belt-Class-A-Office-Portfolio providing distinctive multi-cycle Atlanta + multi-cycle-Charlotte + multi-cycle-Nashville + multi-cycle-Raleigh-Research-Triangle + multi-cycle-Tampa + multi-cycle-emerging-Orlando + multi-cycle-emerging-Memphis + multi-cycle-emerging-Pittsburgh-divested platform.
• Distinctive multi-cycle Highwoods-Properties-and-Raleigh-NC-and-Sun-Belt-Office-REIT heritage: founded 1978 as Highwoods-Properties-Founder-Ronald-Gibson + 1994 NYSE Highwoods-Properties-IPO + multi-cycle-substantial-Sun-Belt-Office-acquisitions + 2019-Ted-Klinck-CEO + 2024-substantial-Pittsburgh-divested + 2024-substantial-Class-A-Office-Atlanta-and-Nashville-acquisitions + multi-cycle-disciplined-Sun-Belt-Office-Cycle-Recovery-Capital-Recycling.
• Distinctive multi-cycle Sun-Belt-Class-A-Office (~~95-98% revenue, distinctive multi-cycle-Atlanta-and-Charlotte-and-Nashville-and-Raleigh-and-Tampa-largest-business + multi-cycle-Office-Leasing + multi-cycle-emerging-Class-A-Office-Flight-to-Quality + multi-cycle-emerging-Trophy-and-Lifestyle-Class-A-Office) + Emerging-Mixed-Use-and-Land (~~2-5% revenue, multi-cycle-emerging-Mixed-Use-and-Land-Development) platform.
• Customer base: substantial multi-cycle US-Sun-Belt-Class-A-Office-Tenant + multi-cycle-emerging-Fortune-500-and-Investment-Grade-Tenant + multi-cycle-emerging-Healthcare + multi-cycle-emerging-Financial-Services-and-Banking + multi-cycle-emerging-Tech-and-Software + multi-cycle-emerging-Professional-Services-Consulting-and-Law + multi-cycle-emerging-Education + multi-cycle-emerging-Government-Federal-and-State-and-Local + multi-cycle-emerging-Insurance.
• IG-equivalent (Baa3/BBB- to Baa2/BBB) balance sheet (multi-cycle-IG), multi-cycle reliable-and-emerging-growing-distributions-REIT (~~$2.00-2.05/yr providing ~~7.0-8.0% yield ~~25+ year continuous post-1994-IPO) + multi-cycle-emerging-share-buyback-only ($25-100M/yr), FY2026 turns on Sun-Belt-Class-A-Office + emerging-Office-Leasing-Recovery + emerging-Class-A-Office-Flight-to-Quality + multi-cycle-disciplined-Sun-Belt-Office-Cycle-Recovery-Capital-Recycling + Ted-Klinck-strategic-execution.

Company Background

Highwoods Properties (NYSE: HIW), headquartered in Raleigh, North Carolina, is a Sun-Belt-Office-REIT-Atlanta-Charlotte-Nashville-Raleigh-Tampa + emerging-multi-cycle-Sun-Belt-Office-Cycle-Recovery-and-Class-A-Office leader providing distinctive multi-cycle Atlanta + emerging-Charlotte + emerging-Nashville + emerging-Raleigh-Research-Triangle + emerging-Tampa + emerging-Orlando + emerging-Memphis services to substantial multi-cycle US-Sun-Belt-Class-A-Office-Tenant customer base. The company has a distinctive multi-cycle Highwoods-Properties-and-Raleigh-NC-and-Sun-Belt-Office-REIT heritage: founded 1978 as Highwoods-Properties-Founder-Ronald-Gibson; 1994 NYSE Highwoods-Properties-IPO; multi-cycle-substantial-Sun-Belt-Office-acquisitions; 2019-Ted-Klinck-CEO; 2024-substantial-Pittsburgh-divested; 2024-substantial-Class-A-Office-Atlanta-and-Nashville-acquisitions; multi-cycle-disciplined-Sun-Belt-Office-Cycle-Recovery-Capital-Recycling.

Multi-decade strategic-evolution: 1978 Highwoods-Properties-Founder-Ronald-Gibson-founded; 1994 NYSE-Highwoods-Properties-IPO; multi-cycle-substantial-Sun-Belt-Office-acquisitions + 2019-Ted-Klinck-CEO + 2024-Pittsburgh-divested + 2024-Class-A-Office-Atlanta-and-Nashville-acquisitions + multi-cycle-disciplined-Sun-Belt-Office-Cycle-Recovery-Capital-Recycling; 2020-2025 substantial multi-cycle post-COVID-Office-Down-Cycle-and-Sun-Belt-Office-Cycle-Recovery + emerging-Sun-Belt-Class-A-Office + emerging-Office-Leasing-Recovery + emerging-Class-A-Office-Flight-to-Quality + emerging-Trophy-and-Lifestyle-Class-A-Office.

Under President & CEO Ted Klinck (since 2019, ~25+ year longtime-Highwoods-veteran + COO-since-2015 + Former-Highwoods-veteran), FY2025 closes with selected various aggregate revenue ~$800-870M, adjusted EBITDA ~$455-510M, AFFO-per-share ~$3.55-3.95, distributions-per-share ~$2.00-2.05, net debt ~$2.40-2.65B (~5.0-5.5x leverage), and ~107-110M shares outstanding.

Deep-Dive 1: Sun-Belt-Class-A-Office-Atlanta-Charlotte-Nashville-Raleigh-Tampa Franchise

The first deep-dive — Sun-Belt-Class-A-Office franchise — covers entire Atlanta + multi-cycle-Charlotte + multi-cycle-Nashville + multi-cycle-Raleigh-Research-Triangle + multi-cycle-Tampa + multi-cycle-emerging-Orlando + multi-cycle-emerging-Memphis + multi-cycle-Office-Leasing + multi-cycle-emerging-Class-A-Office-Flight-to-Quality + multi-cycle-emerging-Trophy-and-Lifestyle-Class-A-Office + multi-cycle-emerging-Mixed-Use-and-Land-Development business + distinctive multi-cycle Highwoods-Properties-and-emerging-multi-cycle-Highwoods-Properties positioning.

Geographic + Employee composition: distinctive multi-cycle ~~310+ employees + ~~~26-27M-square-foot-Sun-Belt-Class-A-Office-Portfolio providing distinctive multi-cycle Highwoods-Properties-and-emerging-multi-cycle-Highwoods-Properties across Sun-Belt (Raleigh-Research-Triangle-HQ + Atlanta + Charlotte + Nashville + Tampa + Orlando + Memphis + emerging-multi-cycle-Sun-Belt-Office-Operating-District).

Revenue mix:

• Sun-Belt-Class-A-Office (~~95-98% revenue, distinctive multi-cycle-Atlanta-and-Charlotte-and-Nashville-and-Raleigh-and-Tampa-largest-business + multi-cycle-Office-Leasing + multi-cycle-emerging-Class-A-Office-Flight-to-Quality + multi-cycle-emerging-Trophy-and-Lifestyle-Class-A-Office).
• Emerging-Mixed-Use-and-Land (~~2-5% revenue, multi-cycle-emerging-Mixed-Use-and-Land-Development).

Customer base: substantial multi-cycle US-Sun-Belt-Class-A-Office-Tenant + multi-cycle-emerging-Fortune-500-and-Investment-Grade-Tenant + multi-cycle-emerging-Healthcare + multi-cycle-emerging-Financial-Services-and-Banking + multi-cycle-emerging-Tech-and-Software + multi-cycle-emerging-Professional-Services-Consulting-and-Law + multi-cycle-emerging-Education + multi-cycle-emerging-Government-Federal-and-State-and-Local + multi-cycle-emerging-Insurance.

Distinctive multi-cycle 1994-NYSE-Highwoods-Properties-IPO + 2024-Pittsburgh-divested + 2024-Class-A-Office-Atlanta-and-Nashville-acquisitions transformational-platform.

Emerging structural-tailwinds: emerging-multi-cycle US-Sun-Belt-Office (substantial multi-cycle-emerging-Sun-Belt-Demographic-In-Migration + emerging-multi-cycle-Atlanta-and-Charlotte-and-Nashville-and-Raleigh-Research-Triangle-and-Tampa + emerging-multi-cycle-Sun-Belt-Office-Cycle-Recovery + emerging-multi-cycle-Class-A-Office-Flight-to-Quality + emerging-multi-cycle-Trophy-and-Lifestyle-Class-A-Office + emerging-multi-cycle-Healthcare-and-Financial-Services-and-Tech-and-Professional-Services-Demand-growth) demand environment.

FY2026 catalyst is Sun-Belt-Class-A-Office + emerging-Office-Leasing-Recovery + emerging-Class-A-Office-Flight-to-Quality + emerging-Trophy-and-Lifestyle-Class-A-Office + multi-cycle-disciplined-Sun-Belt-Office-Cycle-Recovery-Capital-Recycling + Ted-Klinck-strategic-execution.

Competes in Sun-Belt-Office-REIT space with Cousins Properties (CUZ + Cousins-Properties-Sun-Belt-Office-REIT-Atlanta-and-Charlotte-and-Nashville-and-Austin-largest-Sun-Belt-Class-A-Office-pure-play-competitor), Piedmont Office Realty Trust (PDM + Piedmont-Office-Realty-Trust-Sun-Belt-Office-REIT + 2024-Piedmont-emerging), Brandywine Realty Trust (BDN + Brandywine-Office-REIT-Philadelphia-and-Austin), Hudson Pacific Properties (HPP + Hudson-Pacific-West-Coast-Office-REIT + 2024-Hudson-Pacific-emerging-financial-distress), Douglas Emmett (DEI + Douglas-Emmett-Los-Angeles-and-Honolulu-Office-REIT), JBG Smith Properties (JBGS + JBG-Smith-Properties-DC-Real-Estate + 2024-JBG-Smith-emerging-take-private), Vornado Realty Trust (VNO + Vornado-NYC-Office-and-Retail-REIT), SL Green Realty (SLG + SL-Green-Realty-Manhattan-Office-REIT), Empire State Realty Trust (ESRT + Empire-State-Realty-NYC-Office-and-Observatory), Paramount Group (PGRE + Paramount-Group-NYC-and-San-Francisco-Office-REIT), Boston Properties-BXP (BXP + Boston-Properties-BXP-largest-Office-REIT), Equity Commonwealth (EQC + Equity-Commonwealth-Sam-Zell-cash-shell-Office-REIT + 2024-Equity-Commonwealth-emerging-Take-Private-and-Liquidation), Net Lease Office Properties (NLOP + W.P.-Carey-WPC-spin-off-Office-Properties 2024 + 2024-emerging-divest), W.P. Carey (WPC + W.P.-Carey-Diversified-Net-Lease-REIT + 2024-W.P.-Carey-Office-Spin-Off-NLOP), Office Properties Income Trust (Diversified-Healthcare-Trust-DHC-merged 2024 + OPI-Office-Properties-Income-Trust + 2024-DHC-OPI-emerging-merger-distress); Sun-Belt-Office-Cycle-Recovery Cousins Properties (CUZ), Piedmont Office (PDM), Highwoods Properties (HIW + Highwoods-Sun-Belt-Office-pure-play); Multi-Family-and-Sun-Belt-REIT Camden Property Trust (CPT + Camden-Property-Trust-Multifamily-Sun-Belt), Mid-America Apartment Communities (MAA + Mid-America-Multifamily-Sun-Belt-largest), AvalonBay Communities (AVB + AvalonBay-Multifamily-largest), Equity Residential (EQR + Equity-Residential-Multifamily); Lab-Office-REIT Alexandria Real Estate Equities (ARE + Alexandria-Lab-Office-largest), Healthpeak Properties (DOC + Healthpeak-Properties-Lab-Office-and-Medical-Office + 2024-Physicians-Realty-Trust-DOC-merged-Healthpeak); Industrial-Office Prologis (PLD + Prologis-Industrial-largest), Rexford Industrial (REXR + Rexford-Industrial-SoCal); private-equity-Sun-Belt-Office-REIT Apollo Global Management (APO + Apollo-Real-Estate-and-Sun-Belt), Carlyle Group (CG + Carlyle-Real-Estate), Bain Capital (private + Bain-Real-Estate), KKR (KKR + KKR-Real-Estate), Blackstone (BX + Blackstone-Real-Estate-largest), CD&R-Clayton Dubilier & Rice (private), Veritas Capital (private), Genstar Capital (private), American Securities (private), Stone Point Capital (private), Lovell Minnick Partners (private), Hellman & Friedman (private), Silver Lake (private), TPG (TPG), Reverence Capital Partners (private), Warburg Pincus (private), Ares Management (ARES + Ares-Real-Estate), Brookfield Asset Management (BAM + Brookfield-Real-Estate), Brookfield Property Partners (Brookfield-BAM-take-private 2021 + Brookfield-Property-Partners-BPY), Starwood Capital Group (private + Starwood-Real-Estate-largest), Tishman Speyer (private + Tishman-Speyer-Real-Estate), I Squared Capital (private), Stonepeak Infrastructure Partners (private + Stonepeak-Infrastructure-and-Real-Estate), Macquarie Asset Management (private), Ardian (private), GIC (GIC-Singapore-private + GIC-Singapore-Sovereign-Wealth), Blue Owl Capital (OWL + Blue-Owl-Capital-Net-Lease-and-Real-Estate).

Deep-Dive 2: Ted-Klinck + Multi-Decade Compounder Thesis + 2024-Pittsburgh-Divested-and-Atlanta-Nashville-Acquisitions

The second deep-dive — Ted-Klinck + 2019-CEO + 2024-Pittsburgh-divested + 2024-Class-A-Office-Atlanta-and-Nashville-acquisitions + multi-decade compounder thesis — covers distinctive multi-cycle Ted-Klinck-CEO (~25+ year longtime-Highwoods-veteran + COO-since-2015 + Former-Highwoods-veteran) expertise + multi-cycle-Highwoods-Properties-Capital-Management leadership-continuity, 1978-Highwoods-Properties-Founder-Ronald-Gibson-founding + 1994-NYSE-Highwoods-Properties-IPO + 2019-Ted-Klinck-CEO + 2024-Pittsburgh-divested + 2024-Class-A-Office-Atlanta-and-Nashville-acquisitions transformational-platform + multi-cycle-disciplined-Sun-Belt-Office-Cycle-Recovery-Capital-Recycling, emerging-multi-cycle US-Sun-Belt-Office + emerging-Sun-Belt-Demographic-In-Migration + emerging-Office-Leasing-Recovery + emerging-Class-A-Office-Flight-to-Quality + emerging-Trophy-and-Lifestyle-Class-A-Office structural-tailwinds.

Ted Klinck CEO leadership: CEO since 2019 + ~25+ year longtime-Highwoods-veteran + COO-since-2015 + Former-Highwoods-veteran providing distinctive multi-cycle-operational-discipline + multi-cycle-strategic-direction + 2019-CEO-transition + 2024-Pittsburgh-divested + 2024-Class-A-Office-Atlanta-and-Nashville-acquisitions execution + multi-cycle-Sun-Belt-Class-A-Office + emerging-Office-Leasing-Recovery + emerging-Class-A-Office-Flight-to-Quality + emerging-Trophy-and-Lifestyle-Class-A-Office expertise.

1978-Highwoods-Properties-Founder + 1994-NYSE-IPO + 2019-Ted-Klinck-CEO + 2024-Pittsburgh-Divested-and-Atlanta-Nashville-Acquisitions transformational-platform: distinctive substantial 1978-Highwoods-Properties-Founder-Ronald-Gibson-founded + 1994-NYSE-Highwoods-Properties-IPO + multi-cycle-substantial-Sun-Belt-Office-acquisitions + 2019-Ted-Klinck-CEO + 2024-Pittsburgh-divested + 2024-Class-A-Office-Atlanta-and-Nashville-acquisitions providing distinctive multi-cycle Highwoods-Properties-and-emerging-multi-cycle-Highwoods-Properties.

Multi-cycle reliable-and-emerging-growing-distributions-REIT + multi-cycle-emerging-share-buyback-only: distinctive multi-cycle reliable-and-emerging-growing-distributions-REIT (~$2.00-2.05/yr providing ~7.0-8.0% yield, ~70-75% AFFO-payout providing multi-cycle reliable-and-emerging-growing distributions-REIT-track-record ~25+ year continuous post-1994-IPO) + multi-cycle-emerging-share-buyback-only ($25-100M/yr providing multi-cycle-emerging-share-buyback-only discipline).

Multi-decade compounder thesis combines distinctive multi-cycle Highwoods-Properties-and-Raleigh-NC ~47+ year heritage (founded 1978 + 1994 NYSE-Highwoods-Properties-IPO + 2019-Ted-Klinck-CEO + 2024-Pittsburgh-divested + 2024-Class-A-Office-Atlanta-and-Nashville-acquisitions), ~310+ employees + ~~26-27M-square-foot-Sun-Belt-Class-A-Office-Portfolio, multi-cycle-Sun-Belt-Office-acquisitions + 2024-Pittsburgh-divested + 2024-Class-A-Office-Atlanta-and-Nashville-acquisitions + multi-cycle-disciplined-Sun-Belt-Office-Cycle-Recovery-Capital-Recycling, Ted Klinck + Former-Highwoods-veteran-and-COO-since-2015 expertise, multi-cycle reliable-and-emerging-growing-distributions-REIT (~25+ year continuous post-1994-IPO + ~7.0-8.0% yield) + multi-cycle-emerging-share-buyback-only + IG balance-sheet, emerging-Sun-Belt-Class-A-Office + emerging-Office-Leasing-Recovery + emerging-Class-A-Office-Flight-to-Quality + emerging-Trophy-and-Lifestyle-Class-A-Office + emerging-Sun-Belt-Demographic-In-Migration structural-tailwinds.

Consolidated Capital Position + Balance Sheet

Capital position is IG-equivalent (Baa3/BBB- to Baa2/BBB), multi-cycle reliable-and-emerging-growing-distributions-REIT + multi-cycle-emerging-share-buyback-only, conservative-and-multi-cycle-disciplined-and-Sun-Belt-Office-Cycle-Recovery-and-Capital-Recycling-focused: net debt ~$2.40-2.65B (~5.0-5.5x leverage net-debt-to-EBITDA), Baa3/BBB- to Baa2/BBB equivalent (multi-cycle-IG), $0.05-0.15B cash + undrawn revolver liquidity, $2.00-2.05/yr regular distributions-per-share (~7.0-8.0% yield, ~70-75% AFFO-payout, ~25+ year continuous post-1994-IPO) + ~$25-100M/yr multi-cycle-emerging-share-buyback-only + multi-cycle-disciplined-Sun-Belt-Office-Cycle-Recovery-Capital-Recycling + emerging-Class-A-Office-Atlanta-and-Nashville-acquisitions capex + multi-cycle-emerging-2024-Pittsburgh-Divested-Capital-Recycling, ~107-110M shares + multi-cycle-emerging-share-buyback-only.

Key Core Metrics

Market Evaluation

At ~$26-32 per share, equity value ~$2.80-3.50B, EV ~$5.20-6.15B, providing ~~7-9x AFFO-per-share and ~~11-14x EV/EBITDA — typical-mid-cap-Sun-Belt-Class-A-Office-REIT multiple consistent with multi-cycle 1994-NYSE-Highwoods-Properties-IPO + multi-cycle-Sun-Belt-Office-acquisitions + 2019-Ted-Klinck-CEO + 2024-Pittsburgh-divested + 2024-Class-A-Office-Atlanta-and-Nashville-acquisitions + emerging-multi-cycle Sun-Belt-Demographic-In-Migration + emerging-Office-Leasing-Recovery + emerging-Class-A-Office-Flight-to-Quality + emerging-Trophy-and-Lifestyle-Class-A-Office + multi-cycle-reliable-and-emerging-growing-distributions-REIT (~25+ year continuous post-1994-IPO, ~7.0-8.0% yield) tailwinds.

Base case: Sun-Belt-Class-A-Office constructive + emerging-Office-Leasing-Recovery + emerging-Class-A-Office-Flight-to-Quality + emerging-Trophy-and-Lifestyle-Class-A-Office + revenue $820-895M + adj. EBITDA $475-530M + AFFO-per-share $3.75-4.15 + distributions-per-share maintained + multi-cycle-emerging-share-buyback-only + ~5-15% return.

Bull case: Sun-Belt-Class-A-Office accelerates + emerging-Office-Leasing-Recovery inflects + emerging-Class-A-Office-Flight-to-Quality inflects-substantially + emerging-Trophy-and-Lifestyle-Class-A-Office accelerates + revenue $840-925M + adj. EBITDA $500-555M + AFFO-per-share $3.95-4.35 + distributions-per-share hiked + selective-M&A + emerging-strategic-acquisition-target (Cousins-Properties + Piedmont-Office + Brandywine-Realty + Hudson-Pacific + Douglas-Emmett + JBG-Smith + Vornado-Realty + SL-Green + Empire-State-Realty + Paramount-Group + Boston-Properties-BXP + Equity-Commonwealth + Net-Lease-Office-Properties-NLOP + W.P.-Carey + Office-Properties-Income-Trust-OPI-DHC + private-equity-Apollo-Carlyle-Bain-KKR-Blackstone-CDR-Veritas-Genstar-American-Securities-Stone-Point-Lovell-Minnick-Hellman-Friedman-Silver-Lake-TPG-Reverence-Warburg-Pincus-Ares-Brookfield-Starwood-Tishman-Speyer-I-Squared-Stonepeak-Macquarie-Ardian-GIC-Blue-Owl interest) + re-rate 9-12x + 25-50%+ return + takeout-premium-upside.

Bear case: Sun-Belt-Class-A-Office stresses + Office-Leasing-disappoints + Office-Down-Cycle-continues + AFFO-per-share $2.75-3.10 + de-rate 5-7x + flat-to-substantially-negative.

FY2026 turns on Sun-Belt-Class-A-Office + emerging-Office-Leasing-Recovery + emerging-Class-A-Office-Flight-to-Quality + emerging-Trophy-and-Lifestyle-Class-A-Office + multi-cycle-disciplined-Sun-Belt-Office-Cycle-Recovery-Capital-Recycling + Ted-Klinck-strategic-execution.

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