Highlands REIT Reports Wider Loss

Despite rising revenues and stronger leasing momentum, higher costs and a lack of asset sales weighed on earnings.

November 13, 2025

Revenues up, but costs rise faster

Highlands REIT is leaning into its multi-family strategy—but the numbers from the third quarter show the transition isn’t without pressure. The company reported a net loss of $7.7 million through the first nine months of 2025, a drop from a $0.6 million profit in the same period last year.

The shift is part of a longer-term plan. Highlands was formed to manage a legacy portfolio of non-core assets—properties with location, tenant, or market challenges. Now, it’s actively repositioning by improving existing holdings and targeting more stable multi-family investments. As of September 30, the portfolio included 13 multi-family properties and five others across retail, office, correctional, and land.

On the revenue side, results moved in the right direction. Rental income increased 4.0% year over year, hitting $27.3 million. That growth came in part from new leasing activity, including the start of rent payments from a new Life Time Fitness at Sherman Plaza in Evanston, Illinois.

But that wasn’t enough to offset rising expenses. Property operating costs were up 14.7%, and general and administrative expenses climbed nearly 17%. The company also cited higher utilities, insurance, and legal costs, as well as consulting fees tied to the CEO transition earlier in the year.

Without any asset sales to help balance the books—as was the case in early 2024, when the company booked a $6.9 million gain—net income fell into the red.

Cash down, but debt remains steady

Highlands ended the quarter with $26.5 million in cash and restricted cash, down from $38.0 million a year ago. Spending was driven by $8.6 million in capital improvements and $1.9 million in share repurchases. One of the largest ongoing investments is the Sherman Plaza lease, which includes a buildout allowance and commissions totaling around $9.2 million.

On the debt side, the company reported $123.2 million in mortgage obligations, consistent with prior quarters. It also extended the maturity of a $20 million loan on its Trimble property through 2029, fixing the rate at 5.71% and removing a previous payment guarantee.

Looking ahead

Leasing activity shows momentum. So far in 2025, the company signed 15 leases across 160,000 square feet, including:

• 2 new long-term agreements


• 13 renewals

Nearly two-thirds of annualized commercial rent is locked in through 2030 or later.

Highlands hasn’t issued a firm timeline for a liquidity event, but said it's evaluating options and expects to share more within a year. Shareholders seeking near-term liquidity saw some activity through share buybacks earlier in the year, and the company may revisit that route depending on market conditions.

For now, Highlands is focused on execution: driving lease-up, managing costs, and continuing the shift to a multi-family-heavy portfolio. The path forward may be uneven, but the objective is clear—optimize the portfolio and position the business for long-term stability.