HIW Bearish Signal: Time to Consider Puts on Highwoods?

Highwoods Properties is a fully integrated office REIT focused on owning, developing, acquiring, leasing, and managing properties primarily in 'best business districts' (BBDs). The company's target markets are concentrated in Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond, and Tampa. Highwoods differentiates itself through its 'work-placemaking' strategy, which focuses on creating exceptional environments and experiences to attract and retain talent for its customers. It aims to own and operate high-quality workplaces in dynamic BBDs, offering talent-supportive options. The company is also fully-integrated, directly staffing the leasing, management, maintenance and customer service of its portfolio, allowing it to better respond to customer needs and provide cost-effective services.

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HIW's technical indicators paint a clearly bearish picture. The stock price has been in a downtrend over the past 90 days, falling from approximately $31.15 on June 30th to $28.48 as of November 4th. The price is currently below its 21-day EMA of $29.72 and its 50-day SMA of $30.87, signaling short-term and medium-term weakness. A 200-day SMA is present, but the price is still well above it. Momentum indicators confirm the bearish sentiment. The MACD is negative (-0.65), and the MACD histogram is also negative, indicating increasing downward momentum. The RSI of 29.85 is deeply oversold, which could lead to a short-term bounce, but overall suggests significant selling pressure. The ADX is elevated at 34.40, suggesting a strong trend is in place, and the negative directional indicator (DMN) is significantly higher than the positive directional indicator (DMP), confirming the downtrend. Stochastic oscillators are low, but not at extremes, and could indicate some short-term bottom forming. Given these signals, the likelihood of continued downward pressure over the next 1-3 months appears high.

Highwoods Realty faces headwinds, as indicated by several key metrics in the MD&A. `Rental and other revenues` decreased by 1.2% for the three months ended September 30, 2025, compared to 2024, primarily due to 'lost revenue from property dispositions, lower consolidated same property revenues and lost revenue from properties taken out of service'. Consolidated same property NOI was also down by 2.7% in the third quarter of 2025. The company's occupancy rate decreased from 87.1% to 85.3% as of September 30, 2025, and they 'expect average occupancy in our office portfolio to range from 85.0% to 86.0% for the remainder of 2025'. `Net cash provided by operating activities` for the nine months ended September 30, 2025, was $259.5 million, a decrease of $40.3 million compared to the same period in 2024. While they expect to sell between $50 million and $500 million of assets over the next six months and are evaluating potential acquisitions exceeding $500 million, these are 'subject to significant contingencies', creating uncertainty. Although new and renewal leases signed in the third quarter saw an 18.3% increase in annual combined GAAP rents compared to previous leases in the same spaces, the overall financial picture suggests a moderately bearish outlook.

Highwoods Properties' Q2 2025 earnings call projects a moderately bullish outlook, driven by strong leasing activity and an improved market environment. CEO Theodore Klinck highlighted a 'strong quarter with robust second-gen leasing and excellent financial results.' The company raised its 2025 FFO outlook by $0.02 at the midpoint, to a range of $3.37 to $3.45 per share, reflecting confidence in their performance. Leasing volumes were robust, with 923,000 square feet of second-gen leasing, including 371,000 square feet of new leasing. While year-end occupancy is expected to be at the low end of the 86% to 87% range, this is largely due to proactively taking back space for future long-term tenancy. COO Brian Leary emphasized the positive impact of 'improving in-office utilization, declining competitive supply and strong demographics' on their leasing activity. The company also sees opportunities for acquisitions, with capital markets opening up and more high-quality assets coming to market.

HIW's financial performance presents a mixed picture. Revenue has fluctuated, starting at $211.6M in Q1 2024 and ending at $0 in Q3 2025, which raises immediate concerns. Gross profit margins have also shown volatility, beginning at 0.31 in Q1 2024, peaking around 0.67 in Q3 2024 and Q2 2025, and then dropping to 0 in Q3 2025. Operating cash flow is positive in the most recent quarter (Q3 2025) at $96.7M, which is a positive sign. Total debt has remained relatively stable, starting at $3281.6M in Q1 2024 and ending at $0 in Q3 2025. Overall, the lack of revenue in the most recent quarter is a significant red flag, overshadowing some of the positive aspects like positive operating cash flow. The company's future trajectory is uncertain given these inconsistencies.

The company presents a moderately bullish investment profile based on its financial data. Revenue has shown positive growth, indicating increasing market demand or successful market penetration. The gross margin is healthy, suggesting efficient cost management in production or service delivery. A strong return on equity (ROE) signals effective utilization of shareholder investments to generate profit. The price-to-earnings (P/E) ratio suggests the stock is trading at a premium, but this could be justified by the company's growth prospects and profitability. A manageable debt-to-equity ratio indicates a reasonable level of financial leverage. The current ratio, being greater than 1, demonstrates the company's ability to cover short-term liabilities with its current assets, further solidifying its financial health. Overall, the combination of revenue growth, healthy profitability metrics, and a solid balance sheet makes the company an attractive investment for the next 12 months, although the elevated P/E ratio warrants careful monitoring.