Fitch affirms Highwoods Properties

Fitch Ratings said it affirmed Highwoods Properties, Inc.'s issuer default rating at BBB- and its preferred stock at BB+. Highwoods Realty LP's issuer default rating, senior unsecured notes and unsecured revolving credit facility were affirmed at BBB-.

The outlook is stable.

The agency said the affirmation reflects the solid improvement in Highwoods' operating performance of its wholly owned 312 in-service office, industrial and retail properties geographically diversified in the southeastern United States as well as the strength of Highwoods' funding profile and management team.

Fitch's credit concerns revolve around the slight increase in leverage, weak risk-adjusted capitalization, the company's presence primarily in less supply-constrained secondary markets and declining operating fundamentals in Highwoods' more challenged markets (Nashville, Tampa and Atlanta).

Highwoods' debt-to-recurring EBITDA ratio increased to 6.5 times as of June 30 from 6.3 times as of Dec. 31, 2007.

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