Fitch may cut Highwoods

Fitch Ratings said it placed Highwoods Properties Inc.'s BBB- senior unsecured debt and BB+ preferred stock ratings on Rating Watch negative. The ratings had been on Rating Outlook negative since May 7, 2003.

Fitch said the Rating Watch negative is driven by Highwood's announcement on May 26 that the company will be restating financials for a second time in a 12-month period and that the Securities and Exchange Commission has changed the status of its confidential informal inquiry to a confidential formal inquiry.

Highwoods has not yet filed its 2004 10-K and is now also late in filing its 10-Q for the first quarter of 2005. The company's delinquent SEC filing status substantially limits its access to diverse funding sources, which is inconsistent with Fitch's expectations for an investment-grade issuer.

Nevertheless, Fitch said it believes that Highwoods has adequate liquidity resources relative to its cash requirements over the next 12 months.

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