HIW Shorts Hold Firm as Peers Rally Into Earnings

Highwoods Properties reports Q3 results today with short sellers entrenched at elevated levels even as the broader office REIT sector enjoys a strong week, a tension that makes this print particularly consequential for the stock's direction.

Short interest is the defining feature of the setup. At nearly 11% of the free float, the short position is substantial and has edged higher over the past week, up just over 3%. That rise comes despite the stock gaining 2.1% over seven days, meaning shorts have not capitulated into the rally. The ORTEX short score has also crept up to 67.6, its highest reading in recent weeks, reinforcing the bearish lean in the lending market. Borrowing costs remain low at 0.44%, and availability is ample at around 315%, so there is no technical squeeze pressure: the bears can hold their positions cheaply.

The contrast with peers sharpens the story. Closely correlated office REITs had a strong week. SLG gained 12%, VNO added 8.1%, KRC rose 7.9%, and CUZ climbed 7.3%. HIW's 2.1% gain looks restrained against that backdrop, suggesting the market is applying a selective discount ahead of the print. Yet options positioning tells a calmer story: the put/call ratio has edged up to 0.081, running near the top of its very narrow recent range, about 1.8 standard deviations above its 20-day average, though the absolute level remains low by any historical standard, well below the 52-week high of 0.618.

The fundamental debate centres on whether HIW's Sun Belt office exposure is enough to offset sector-wide FFO headwinds. Bulls point to the company's government-agency tenant base, expected single-digit positive GAAP rent spreads, and a dividend yield above 6%. Analysts have been directionally constructive: multiple firms raised price targets meaningfully through mid-2026, with Morgan Stanley lifting to $35 and Citigroup to $34 from post-tariff lows in the low $20s. The mean target now sits at $31.33, a thin premium to the current price of $29.82. Bears flag a projected 5.4% FFO decline in 2025, only modest recovery forecast for 2026, and the risk that higher cap rates further compress valuations in urban office markets. The stock's EPS surprise factor ranks at the 98th percentile, one of the strongest readings in the universe, but forward earnings momentum scores are near the bottom, a gap that the print will either close or widen.

Ownership concentration adds another layer. BlackRock raised its stake to 17.7% in a July 2026 13G/A amendment, up from 14.1%, making it by far the largest holder with roughly 21 million shares as of September. Cohen & Steers, a specialist real estate manager, held 15.3% as of its last disclosure. Together the two hold over a third of the company. Passive flows at this scale mean that any index-driven re-weighting or factor-rotation out of office REITs would be felt acutely. All 13D/G stakes are as last disclosed around the 5% threshold; holders dropping below may not file again.

Today's report is ultimately a test of whether HIW's occupancy trends and rent spreads in Atlanta, Raleigh and Nashville can support a valuation re-rating that its peers have already begun to price in.