Highwoods Properties Reports $100 Million Net Income in Q1 2025, Driven by Property Dispositions

Highwoods Properties, Inc. reported a significant increase in net income for the first quarter of 2025, reaching $100 million, compared to $27.2 million in the same period of 2024. This surge in profitability was primarily driven by substantial gains on property dispositions, which amounted to $82.2 million, compared to just $7.2 million in the previous year. Rental and other revenues, however, decreased by 5.2% to $200.4 million, down from $211.3 million, largely due to lower consolidated same property revenues and lost revenue from property sales.

The company's operating expenses also saw a decline, dropping to $148.9 million from $156.6 million year-over-year. This reduction was attributed to lower rental property expenses and depreciation costs, which fell to $65 million and $71.4 million, respectively. General and administrative expenses remained relatively stable, totaling $12.5 million. The overall decrease in expenses contributed to a higher net income available for common stockholders, which increased to $97.4 million, or $0.91 per share, compared to $26.1 million, or $0.25 per share, in the prior year.

In terms of strategic developments, Highwoods Properties acquired the Advance Auto Parts Tower in Raleigh for $137.9 million during the quarter. This acquisition added a 346,000 square foot office building to its portfolio. Additionally, the company sold three buildings in Tampa and land in Pittsburgh for a total of $146.3 million, further enhancing its liquidity position. As of March 31, 2025, the company reported total assets of $6.1 billion, with net real estate assets valued at $4.9 billion.

Operationally, Highwoods Properties managed 27.4 million rentable square feet of in-service properties and had 1.4 million square feet under development. The average occupancy rate in its office portfolio decreased to 85.5% from 87.1% at the end of 2024, with expectations to remain between 85.0% and 86.0% for the remainder of the year. The company also reported a total employee headcount of 1,200 as of the end of the quarter.

Looking ahead, Highwoods Properties anticipates continued challenges in maintaining rental revenues due to lower average occupancy and property dispositions. The company expects to focus on enhancing its portfolio quality through strategic acquisitions and dispositions while managing operating expenses effectively. The outlook for 2025 suggests a cautious approach, with anticipated lower net operating income and rental revenues compared to 2024, as the company navigates the evolving market conditions.