Highwoods Properties Reports Decrease in Revenue and Net Income for Fiscal Year 2024

Highwoods Properties, Inc. reported a decrease in rental and other revenues for the fiscal year ending December 31, 2024, totaling $825.9 million, down from $834.0 million in 2023. The decline of $8.1 million, or 1.0%, was primarily attributed to lost revenue from property dispositions, particularly in Raleigh, which accounted for a $14.4 million decrease. This was partially offset by increased revenues from recently completed development projects in Raleigh and Charlotte, which contributed an additional $4.0 million and $3.1 million, respectively. The company's net income for 2024 was $104.3 million, a significant drop from $151.3 million in 2023, leading to diluted earnings per share of $0.94, down from $1.39.

In terms of operational performance, Highwoods experienced a decline in average occupancy rates, which fell from 88.9% in 2023 to 87.1% in 2024. The company anticipates average occupancy to range between 85.0% and 86.5% for 2025. The annualized rental revenues from second-generation leases signed in the fourth quarter of 2024 were reported at $33.32 per rentable square foot, reflecting a 12.2% increase compared to previous leases in the same office spaces. The company maintained a diverse customer base, with only two customers, Bank of America and Asurion, accounting for more than 3% of annualized GAAP revenues.

Strategically, Highwoods Properties made significant moves in its investment activities, including the acquisition of the land underneath its Century Center assets in Atlanta for $50.8 million. The company also executed several property dispositions, including the sale of ten buildings in Raleigh and a land parcel in Greensboro for a total of $105.3 million, resulting in gains of $46.8 million. Additionally, an impairment charge of $24.6 million was recorded for EQT Plaza in Pittsburgh, reflecting a strategic shift in asset management.

Looking ahead, Highwoods Properties expects rental and other revenues to decline further in 2025 due to anticipated lower occupancy rates and continued property dispositions. The company has a conservative balance sheet with approximately $34 million in cash and $119 million drawn on its $750 million revolving credit facility, which is set to mature in January 2028. The company plans to meet its long-term liquidity needs through a combination of cash flows from operations, debt securities issuance, and potential asset dispositions. The outlook remains cautious, with management emphasizing the importance of maintaining a strong balance sheet to navigate economic cycles effectively.