Highwoods Properties (HIW) 8-K Highwoods Properties Reports Second and Third Quarter

Exhibit 99.2

Supplemental Operating and Financial Information

September 30, 2004

Supplemental Information

Table of Contents

September 30, 2004

Schedule	Page
Summary and Corporate Information	i, ii and iii
Consolidated Statements of Income	1
Statement of Funds from Operations	2
Statement of Cash Available for Distribution	3
Consolidated Balance Sheets	4
Estimated Net Asset Value	5
Combined Financial Information	6
Components of Discontinued Operations	7
Capitalization	8
Long-Term Debt Summary	9
Long-Term Debt Detail	10
Portfolio Summary	11, 12 and 13
Occupancy Trends	14
Leasing Statistics	15, 16 and 17
Leasing Statistics by Market	18
Rental Rate Comparisons by Market	19
Lease Expirations	20 and 21
Office Lease Expirations by Market by Quarter	22
Industrial Lease Expirations by Market by Quarter	23
Office Lease Expirations by Market by Year	24
Industrial Lease Expirations by Market by Year	25
Customer Diversification	26
Same Property Performance	27
Acquisition Activity	28
Disposition Activity and Assets Contributed to Joint Ventures	29
Development Activity	30
Development Land	31
Unconsolidated Joint Ventures Assets, Debt and Liabilities	32
Unconsolidated Joint Ventures Income (Three Months)	33
Unconsolidated Joint Ventures Income (Nine Months)	34
Joint Ventures Long-Term Debt Detail	35
Joint Ventures Portfolio Summary	36
Joint Ventures Lease Expirations	37
Joint Ventures Development	38

The information within refers to all Highwoods Properties’ wholly-owned entities, except pages 32 to 38 unless noted otherwise.

Certain matters discussed in this supplemental, including estimates of net operating income, pre-leasing commitments and the cost, timing and stabilization of announced development projects, are forward- looking statements within the meaning of the federal securities laws. Although Highwoods believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from Highwoods’ current expectations include general economic conditions, local real estate conditions, the timely development and lease-up of properties, and the other risks detailed from time to time in the Company’s SEC reports.

Highwoods Properties, Inc. 9/30/04

Summary

Dollars in thousands, except per share amounts

	Three Months Ended
	09/30/04			09/30/03			Change F/(U)
Operations
Rental and other revenues from continuing operations	$	114,260		$	121,755		$	(7,495	)
Rental property expense from continuing operations		41,693			42,974			1,281
Net operating income from continuing operations	$	72,567		$	78,781		$	(6,214	)
Rental and other revenues from discontinued operations	$	1,467		$	3,184		$	(1,717	)
Rental property expense from discontinued operations		736			1,399			663
Net operating income from discontinued operations	$	731		$	1,785		$	(1,054	)
Equity in earnings of unconsolidated affiliates		2,631			1,081			1,550
General and administrative		10,089			6,750			(3,339	)
G&A as a % of rental and other revenues and equity in earnings of unconsolidated affiliates		8.5	%		5.4	%		-3.1	%
EBITDA calculation
Net income	$	21,559		$	32,084		$	(10,525	)
Addback depreciation and amortization		33,545			34,886			(1,341	)
Addback depreciation and amortization from unconsolidated affiliates		2,432			1,880			552
Addback interest expense		27,796			36,266			(8,470	)
Addback interest expense from unconsolidated affiliates		3,243			2,260			983
EBITDA	$	88,575		$	107,376		$	(18,801	)
Interest expense from continuing operations	$	27,796		$	36,123		$	8,327
Interest expense from discontinued operations		—			143			143
Interest expense from unconsolidated affiliates		3,243			2,260			(983	)
EBITDA/Interest expense		2.85			2.79			0.06
EBITDA/Interest expense + preferred dividends		2.49			2.44			(0.05	)
Net income	$	21,559		$	32,084		$	(10,525	)
Funds from operations allocable to common shares		43,196			44,804			(1,608	)
Per share - diluted:
Net (loss)/income	$	0.26		$	0.46		$	(0.20	)
Funds from operations		0.80			0.84			(0.04	)
Dividends paid		0.425			0.425			—
Dividends paid as % of funds from operations		53.1	%		50.6	%		-2.5	%
	09/30/04			09/30/03			Change
Capitalization
Market capitalization:
Long-term debt	$	1,600,627		$	1,771,490			(170,863	)
Financing obligations		62,992			125,687			(62,695	)
Market value of equity		1,850,132			1,799,692			50,440
Total market capitalization	$	3,513,751		$	3,696,869		$	(183,118	)
	09/30/04			09/30/03			Change F/(U)
Portfolio
Total In-Service Square Footage		34,453,000			37,071,000			(2,618,000	)
Occupancy		83.2	%		82.4	%		0.8	%
Same Property NOI (GAAP basis)	$	67,618		$	68,308		$	(690	)

Highwoods Properties, Inc. i 9/30/04

Corporate Information

Board of Directors

Thomas W. Adler

Gene H. Anderson

Kay N. Callison

Edward J. Fritsch

Ronald P. Gibson

William E. Graham Jr.

Lawrence S. Kaplan

L. Glenn Orr Jr.

O. Temple Sloan Jr., Chairman

Willard H. Smith Jr.

John L. Turner

F. William Vandiver, Jr.

Senior Management Team

Edward J. Fritsch

President, Chief Executive Officer and Director

Michael E. Harris

Executive Vice President and Chief Operating Officer

Gene H. Anderson

Senior Vice President and Director

Michael F. Beale

Senior Vice President

Robert G. Cutlip

Senior Vice President

W. Brian Reames

Senior Vice President

Carman J. Liuzzo

Vice President, Investments and Strategic Analysis

Mack D. Pridgen III

Vice President, General Counsel and Secretary

Terry L. Stevens

Vice President, Chief Financial Officer and Treasurer

Research Coverage

Banc of America Securities

Daniel Oppenheim - 212-847-5733

Davenport & Company, LLC

Rob Norfleet - 804-780-2170

Deutsche Banc Securities

Lou Taylor - 212-469-4912

Green Street Advisors

Jim Sullivan - 949-640-8780

KeyBanc Capital Markets

Frank Greywitt - 216-443-4795

Legg Mason

David Fick - 410-454-5018

Morgan Stanley Dean Witter

Gregory Whyte - 212-761-6331

Prudential Equity Group

Jim Sullivan - 212-778-2515

Smith Barney Citigroup

Jonathan Litt - 212-816-0231

UBS Warburg

Keith Mills - 212-713-3098

Wachovia Securities

Chris Haley - 443-263-6773

Highwoods Properties, Inc. ii 9/30/04

Corporate Information

Divisional Offices

Atlanta/Piedmont Triad

Gene H. Anderson - Regional Manager

Atlanta, GA

Gene H. Anderson, Senior Vice President

Piedmont Triad, NC

Mark W. Shumaker, Vice President

Orlando/Tampa

Michael F. Beale - Regional Manager

Orlando, FL

Michael F. Beale, Senior Vice President

Tampa, FL

Stephen A. Meyers, Vice President

Raleigh/Richmond

Robert G. Cutlip - Regional Manager

Raleigh, NC

Robert G. Cutlip, Senior Vice President

Richmond, VA

Paul W. Kreckman, Vice President

Charlotte/Memphis/Nashville

W. Brian Reames - Regional Manager

Nashville, TN

W. Brian Reames, Senior Vice President

Charlotte, NC

Thomas F. Cochran, Senior Vice President

Memphis, TN

Steven Guinn, Vice President

Kansas City

Kansas City, MO

Barrett Brady, Senior Vice President

Corporate Headquarters

Highwoods Properties, Inc.

3100 Smoketree Court, Suite 600

Raleigh, NC 27604

919-872-4924

Stock Exchange

NYSE Trading Symbol: HIW

Investor Relations Contact

Tabitha Zane

Sr. Director, Investor Relations

Phone: 919-431-1529

Fax: 919-876-6929

E-mail: tabitha.zane@highwoods.com

Information Request

To request a standard Investor Relations package, Annual Report or to be added to our e-mail or fax list, please contact the Investor Relations Coordinator at:

Phone: 919-875-6717 or 800-256-2963

Email: HIW-IR@highwoods.com

The Company

Highwoods Properties, Inc., a member of the S&P MidCap 400 Index, is a fully integrated, self-administered real estate investment trust (“REIT”) that provides leasing, management, development, construction and other customer-related services for its properties and for third parties. As of September 30, 2004, the Company owned or had an interest in 525 in-service office, industrial and retail properties encompassing approximately 41.4 million square feet. Highwoods also owns approximately 1,200 acres of development land. Highwoods is based in Raleigh, North Carolina, and its properties and development land are located in Florida, Georgia, Iowa, Kansas, Maryland, Missouri, North Carolina, South Carolina, Tennessee and Virginia. For more information about Highwoods Properties, please visit our Web site at www.highwoods.com.

Highwoods Properties, Inc. iii 9/30/04

Consolidated Statements of Income

Dollars in thousands, except per share amounts

	Nine Months Ended						Three Months Ended
	09/30/04			09/30/03			09/30/04			06/30/04			03/31/04			12/31/03			09/30/03
Rental and other revenues	$	351,088		$	372,968		$	114,260		$	117,546		$	119,282		$	125,429		$	121,755
Operating expenses:
Rental property		127,438			129,157			41,693			41,978			43,767			46,064			42,974
Depreciation and amortization		103,109			105,394			33,419			34,194			35,496			34,571			34,050
Impairment of assets held for use		500			—			500			—			—			—			—
General and administrative		28,625			18,382			10,089			7,869			10,667			6,887			6,750
Total operating expenses		259,672			252,933			85,701			84,041			89,930			87,522			83,774
Interest expense:
Contractual		80,222			90,407			25,636			27,371			27,215			29,119			29,955
Amortization of deferred financing costs		2,851			3,490			782			925			1,144			915			1,690
Financing obligations		7,497			13,516			1,378			1,426			4,693			4,175			4,478
		90,570			107,413			27,796			29,722			33,052			34,209			36,123
Other income/(expense):
Interest and other income		4,970			4,470			1,735			1,481			1,754			1,713			1,425
Settlement of bankruptcy claim		14,435			—			14,435			—			—			—			—
Loss on debt extinguishments		(12,457	)		(14,653	)		—			(12,457	)		—			—			—
Gain on extinguishment of co-venture obligation		—			16,301			—			—			—			—			16,301
		6,948			6,118			16,170			(10,976	)		1,754			1,713			17,726
Income/(loss) before disposition of property, co-venture expense, minority interest and equity in earnings of unconsolidated affiliates		7,794			18,740			16,933			(7,193	)		(1,946	)		5,411			19,584
Gains on disposition of property, net		17,783			7,970			2,308			14,405			1,070			4,346			5,556
Co-venture expense		—			(4,588	)		—			—			—			—			(333	)
Minority Interest in the Operating Partnership		(914	)		(261	)		(1,491	)		(137	)		714			(439	)		(1,965	)
Equity in earnings of unconsolidated affiliates		5,464			3,607			2,631			1,549			1,284			1,345			1,081
Income from continuing operations		30,127			25,468			20,381			8,624			1,122			10,663			23,923
Discontinued operations:
Income from discontinued operations, net of minority interest		1,167			2,878			548			231			388			448			730
Gain/(loss) on sale of discontinued operations, net of minority interest		609			8,331			630			(3,457	)		3,436			156			7,431
		1,776			11,209			1,178			(3,226	)		3,824			604			8,161
Net income		31,903			36,677			21,559			5,398			4,946			11,267			32,084
Dividends on preferred stock		(23,139	)		(23,139	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)
Net income available for/(loss attributable to) common stockholders	$	8,764		$	13,538		$	13,846		$	(2,315	)	$	(2,767	)	$	3,554		$	24,371
Net (loss)/income per common share - basic:
Income/(loss) from continuing operations	$	0.13		$	0.05		$	0.24		$	0.02		$	(0.12	)	$	0.06		$	0.31
Income/(loss) from discontinued operations	$	0.03		$	0.21		$	0.02		$	(0.06	)	$	0.07		$	0.01		$	0.15
Net income/(loss)	$	0.16		$	0.26		$	0.26		$	(0.04	)	$	(0.05	)	$	0.07		$	0.46
Weighted average common shares outstanding - basic		53,274			52,931			53,373			53,274			53,174			52,965			52,734
Net (loss)/income per common share - diluted:
Income/(loss) from continuing operations	$	0.13		$	0.04		$	0.24		$	0.02		$	(0.12	)	$	0.06		$	0.31
Income/(loss) from discontinued operations	$	0.03		$	0.21		$	0.02		$	(0.06	)	$	0.07		$	0.01		$	0.15
Net income/(loss)	$	0.16		$	0.25		$	0.26		$	(0.04	)	$	(0.05	)	$	0.07		$	0.46
Weighted average common shares outstanding - diluted		54,005			53,438			54,002			53,274			53,174			53,773			53,358

Highwoods Properties, Inc. Page 1 9/30/04

Statement of Funds from Operations

Dollars in thousands, except per share amounts

	Nine Months Ended						Three Months Ended
	09/30/04			09/30/03			09/30/04			06/30/04			03/31/04			12/31/03			09/30/03
Funds from operations:
Net income	$	31,903		$	36,677		$	21,559		$	5,398		$	4,946		$	11,267		$	32,084
Dividends to preferred shareholders		(23,139	)		(23,139	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)
Net income/(loss) applicable to common shares		8,764			13,538			13,846			(2,315	)		(2,767	)		3,554			24,371
Add/(Deduct):
Depreciation and amortization of real estate assets		100,979			103,241			32,649			33,512			34,818			33,897			33,230
Gain/(loss) on disposition of depreciable real estate assets		(17,883	)		(4,728	)		(1,729	)		(16,235	)		81			(3,949	)		(4,489	)
Minority interest in income from operations		914			261			1,491			137			(714	)		439			1,965
Unconsolidated affiliates:
Depreciation and amortization of real estate assets		6,352			5,571			2,372			2,001			1,979			1,707			1,820
Discontinued operations:
Depreciation and amortization of real estate assets		1,105			2,824			126			442			537			668			836
Gain/(loss) on sale, net of minority interest		(4,465	)		(8,444	)		(630	)		(399	)		(3,436	)		(156	)		(7,431	)
Minority interest in income from discontinued operations		135			367			63			27			45			53			90
Funds from operations before amounts allocable to minority interest		95,901			112,630			48,188			17,170			30,543			36,213			50,392
Minority interest in funds from operations		(10,000	)		(12,727	)		(4,992	)		(1,793	)		(3,215	)		(3,913	)		(5,588	)
Funds from operations applicable to common shares	$	85,901		$	99,903		$	43,196		$	15,377		$	27,328		$	32,300		$	44,804
Funds from operations per share - diluted
Net (loss)/income applicable to common shares	$	0.16		$	0.25		$	0.26		$	(0.04	)	$	(0.05	)	$	0.07		$	0.46
Add/(Deduct):
Depreciation and amortization of real estate assets		1.87			1.93			0.60			0.62			0.64			0.63			0.62
Gain/(loss) on disposition of depreciable real estate assets		(0.33	)		(0.08	)		(0.03	)		(0.30	)		—			(0.08	)		(0.09	)
Minority interest in income from operations		0.02			0.01			0.03			—			(0.01	)		0.01			0.04
Unconsolidated affiliates:
Depreciation and amortization of real estate assets		0.12			0.10			0.04			0.04			0.03			0.03			0.03
Discontinued operations:
Depreciation and amortization of real estate assets		0.02			0.05			—			0.01			0.01			0.01			0.02
Gain/(loss) on sale, net of minority interest		(0.08	)		(0.16	)		(0.01	)		(0.01	)		(0.06	)		—			(0.14	)
Minority interest in income from discontinued operations		—			0.01			—			—			—			—			—
Funds from operations before amounts allocable to minority interest		1.78			2.11			0.89			0.32			0.56			0.67			0.94
Minority interest in funds from operations		(0.19	)		(0.24	)		(0.09	)		(0.03	)		(0.06	)		(0.07	)		(0.10	)
Funds from operations applicable to common shares	$	1.59		$	1.87		$	0.80		$	0.29		$	0.50		$	0.60		$	0.84
Dividend payout data:
Dividends paid per common share/common unit - diluted:	$	1.275		$	1.435		$	0.425		$	0.425		$	0.425		$	0.425		$	0.425
Funds from operations		80.2	%		76.7	%		53.1	%		146.6	%		85.0	%		70.8	%		50.6	%
Weighted average shares outstanding - diluted		54,005			53,438			54,002			53,875			54,137			53,773			53,358
Impairment adjustments included in funds from operations applicable to common shares in dollars	$	(3,905	)	$	(288	)	$	(448	)	$	(3,457	)	$	—		$	—		$	—
Impairment adjustments included in funds from operations applicable to common shares per share	$	(0.07	)	$	(0.01	)	$	(0.01	)	$	(0.06	)	$	—		$	—		$	—

Highwoods Properties, Inc. Page 2 9/30/04

Statement of Cash Available for Distribution

Dollars in thousands, except per share amounts

	Nine Months Ended 09/30/04			Three Months Ended 09/30/04
Reconciliation of net cash provided by operating activities to cash available for distribution:
Net cash provided by operating activities	$	129,336		$	53,560
Add/(deduct):
Preferred dividends		(23,139	)		(7,713	)
Amortization of deferred compensation		(1,878	)		(814	)
Amortization of accumulated other comprehensive loss		(582	)		(175	)
Loss on debt extinguishments		(12,457	)		—
Equity in earnings of unconsolidated affiliates		5,464			2,631
Loss/gain on disposition of land		(100	)		579
Depreciation and amortization of unconsolidated affiliates		6,352			2,372
Changes in financing obligations		(1,429	)		353
Changes in operating assets and liabilities		5,841			(553	)
Changes in deferred rent receivable		(5,898	)		(1,752	)
Building improvements paid		(7,539	)		(2,835	)
Second generation tenant improvements paid		(31,205	)		(12,396	)
Second generation lease commissions paid		(13,282	)		(4,152	)
Cash available for distribution	$	(49,484	)	$	(29,105	)
Reconciliation of funds from operations to cash available for distribution:
Funds from operations before amounts allocable to minority interest	$	95,901		$	48,188
Add/(deduct):
Rental income from straight-line rents		(5,898	)		(1,752	)
Depreciation of non-real estate assets		2,130			770
Impairment charges		4,356			500
Amortization of deferred financing costs		2,851			782
Retirement compensation expense – non-cash portion		2,170			—
Non-incremental revenue generating capital expenditures:
Building improvements paid		(7,539	)		(2,835	)
Second generation tenant improvements paid		(31,205	)		(12,396	)
Second generation lease commissions paid		(13,282	)		(4,152	)
		(52,026	)		(19,383	)
Cash available for distribution	$	49,484		$	29,105
Dividend payout data:
Dividends paid per common share/common unit	$	1.275		$	0.425
Cash available for distribution		155.0	%		87.8	%
Weighted average shares/units outstanding - diluted		60,155			60,135

Highwoods Properties, Inc. Page 3 9/30/04

Consolidated Balance Sheets

Dollars in thousands

	09/30/04			06/30/04			03/31/04			12/31/03
Assets:
Real estate assets, at cost:
Land and improvements	$	402,475		$	401,300		$	402,691		$	424,701
Buildings and tenant improvements		2,938,899			2,916,449			2,919,711			3,085,061
Development in process		14,431			23,027			9,574			7,485
Land held for development		189,214			186,635			184,847			189,841
Furniture, fixtures and equipment		22,140			22,133			21,950			21,818
		3,567,159			3,549,544			3,538,773			3,728,906
Less-accumulated depreciation		(584,348	)		(558,382	)		(534,684	)		(539,700	)
Net real estate assets		2,982,811			2,991,162			3,004,089			3,189,206
Property held for sale		69,011			86,553			266,718			101,002
Cash and cash equivalents		20,468			11,672			17,637			21,551
Restricted cash		4,927			4,903			5,989			4,602
Accounts receivable, net		14,896			14,253			13,452			18,176
Notes receivable		9,802			10,705			10,779			10,066
Accrued straight-line rents receivable		60,873			58,276			61,475			58,912
Investment in unconsolidated affiliates		78,709			79,540			69,630			62,417
Other assets:
Deferred leasing costs		108,986			104,797			101,254			102,661
Deferred financing costs		16,972			16,081			19,484			19,286
Prepaid expenses and other		12,174			13,261			11,341			10,443
		138,132			134,139			132,079			132,390
Less- accumulated amortization		(63,484	)		(58,541	)		(57,158	)		(55,299	)
Other assets, net		74,648			75,598			74,921			77,091
Total Assets	$	3,316,145		$	3,332,662		$	3,524,690		$	3,543,023
Liabilities and Stockholders’ Equity:
Mortgages and notes payable	$	1,600,627		$	1,603,485		$	1,790,039		$	1,717,765
Accounts payable, accrued expenses and other liabilities		113,617			117,530			98,224			101,608
Financing obligations		62,992			63,345			62,994			124,063
Co-venture obligation		—			—			—			—
Total Liabilities		1,777,236			1,784,360			1,951,257			1,943,436
Minority interest		119,775			121,008			123,901			127,776
Stockholders’ Equity:
Preferred stock		377,445			377,445			377,445			377,445
Common stock		537			537			536			535
Additional paid-in capital		1,415,459			1,415,295			1,414,108			1,408,888
Distributions in excess of net earnings		(366,543	)		(357,561	)		(332,443	)		(306,938	)
Accumulated other comprehensive loss		(3,003	)		(3,141	)		(3,525	)		(3,650	)
Deferred compensation		(4,761	)		(5,281	)		(6,589	)		(4,469	)
Total Stockholders’ Equity		1,419,134			1,427,294			1,449,532			1,471,811
Total Liabilities and Stockholders’ Equity	$	3,316,145		$	3,332,662		$	3,524,690		$	3,543,023
Ratios
Total Debt/Total Assets		48.3	%		48.1	%		50.8	%		48.5	%

Highwoods Properties, Inc. Page 4 9/30/04

Estimated Net Asset Value

September 30, 2004

Dollars in thousands, except per share amounts

The information on this Page is provided to assist in the calculation of Net Asset Value using a range of Capitalization rates and In-Place Net Operating Income among other Factors. It is not intended to be an asset by asset valuation.

Office		8.75	%		9.00	%		9.25	%
Retail		7.75	%		8.00	%		8.25	%
Industrial/Other		8.75	%		9.00	%		9.25	%
Weighted average		8.65	%		8.90	%		9.15	%
Wholly Owned Properties Net Operating Income YTD1/ 2/
Office3/ 4/ 5/ 6/	$	176,488		$	176,488		$	176,488
Retail		18,987			18,987			18,987
Industrial/Other		19,257			19,257			19,257
Total Net Operating Income	$	214,732		$	214,732		$	214,732
Wholly Owned Properties Net Operating Income Annualized
Office	$	235,317		$	235,317		$	235,317
Retail		25,316			25,316			25,316
Industrial/Other		25,676			25,676			25,676
Total Net Operating Income	$	286,309		$	286,309		$	286,309
Wholly Owned Properties Capitalized Value
Office	$	2,689,341		$	2,614,637		$	2,543,971
Retail		326,658			316,450			306,861
Industrial/Other		293,440			285,289			277,578
	$	3,309,439		$	3,216,376		$	3,128,410
Highwoods’ Share of Joint Ventures
Net Operating Income YTD	$	18,939		$	18,939		$	18,939
Net Operating Income Annualized	$	25,252		$	25,252		$	25,252
Capitalization Rates		8.75	%		9.00	%		9.25	%
Capitalized Value	$	288,594		$	280,578		$	272,995
Value of Highwoods Preserve at $80 per square foot7/	$	51,200		$	51,200		$	51,200
Total In-Service Property Value	$	3,649,233		$	3,548,154		$	3,452,605
Value of Other income
Annualized Development, Leasing and Management Fees	$	3,600		$	3,600		$	3,600
Capitalization Rate		20	%		20	%		20	%
Value of Other income	$	18,000		$	18,000		$	18,000
Add Other assets:
Development Pipeline Investment	$	9,213		$	9,213		$	9,213
Property Held for Sale, at Net Sales Price		89,301			89,301			89,301
Land held for development at Book Value		189,214			189,214			189,214
Cash and cash equivalents		20,468			20,468			20,468
Restricted cash		4,927			4,927			4,927
Accounts receivable, net		14,896			14,896			14,896
Notes receivable		9,802			9,802			9,802
Other assets total	$	337,821		$	337,821		$	337,821
Gross Value of Assets	$	4,005,054		$	3,903,975		$	3,808,426
Deductions:
Total Liabilities8/	$	1,691,242		$	1,691,242		$	1,691,242
Preferred stock		377,445			377,445			377,445
Highwoods’ Share of Joint Ventures Liabilities		255,527			255,527			255,527
Estimated Net Asset Value	$	1,680,840		$	1,579,761		$	1,484,212
Total diluted common shares and operating units		60,129			60,129			60,129
Estimated Net Asset Value Per Share	$	27.95		$	26.27		$	24.68

^1/ Excludes straight-line rent of $6.5 million and the intra period impact of the net operating income related to acquisitions and dispositions

^2/ Excludes $1.5 million of expenses related to land

^3/ Added back the $1.4 million operating loss at Highwoods Preserve

^4/ Deducted $53,000 for the operating income on the completed but not stabilized development projects

^5/ Deducted $5.1 million of NOI related to previously consolidated Orlando CBD properties

^6/ Excludes $14.4 million WorldCom settlement proceeds

^7/ Highwoods Preserve is a 640,000 square foot office campus in Tampa that Worldcom vacated 12/31/02. The $80/SF is based on the original "as is" appraisal.

^8/ Excludes financing obligations and $22.8 million debt associated with the consolidated 20% owned joint venture property (Harborview)

Highwoods Properties, Inc. Page 5 9/30/04

Combined Financial Information

Highwoods Properties and Unconsolidated Joint Ventures

Dollars in thousands

	Highwoods Properties Inc.			Highwoods’ Share of Joint Ventures		Total
	(see pages 32 - 34)
Statement of Operations:
For the three months ended September 30, 2004
Revenue:
Rental and other revenues	$	114,260		$	13,213	$	127,473
Expenses:
Rental property expense		41,693			5,334		47,027
Depreciation and amortization		33,419			2,432		35,851
Impairment of assets held for use		500			—		500
General and administrative		10,089			—		10,089
Interest expense:
Contractual		25,636			3,243		28,879
Amortization of deferred financing costs		782			—		782
Financing obligations		1,378			—		1,378
		27,796			3,243		31,039
Other income/expense		16,170			—		16,170
Income before disposition of property, co-venture expense, minority interest and equity in earnings of unconsolidated affiliates	$	16,933		$	2,204	$	19,137
Net income	$	21,559			2,631	$	24,190
Deduct equity in earnings of unconsolidated affiliates		(2,631	)		—		(2,631	)
Addback depreciation and amortization		33,545			2,432		35,977
Addback interest expense		27,796			3,243		31,039
EBITDA	$	80,269		$	8,306	$	88,575
EBITDA /Interest Expense							2.85
For the nine months ended September 30, 2004
Revenue:
Rental and other revenues	$	351,088		$	32,727	$	383,815
Expenses:
Rental property expense		127,438			13,788		141,226
Depreciation and amortization		103,109			6,531		109,640
Impairment of assets held for use		500			—		500
General and administrative		28,625			—		28,625
Interest expense:
Contractual		80,222			8,049		88,271
Amortization of deferred financing costs		2,851			—		2,851
Financing obligations		7,497			—		7,497
		90,570			8,049		98,619
Other income/expense		6,948			—		6,948
Income before disposition of property, co-venture expense, minority interest and equity in earnings of unconsolidated affiliates	$	7,799		$	4,359	$	12,153
Net income	$	31,903		$	5,464	$	37,367
Deduct equity in earnings of unconsolidated affiliates		(5,464	)		—		(5,464	)
Addback depreciation and amortization		104,214			6,531		110,745
Addback interest expense		90,570			8,049		98,619
EBITDA	$	221,223		$	20,044	$	241,267
EBITDA /Interest Expense							2.39
As of September 30, 2004
Balance Sheet Information:
Total Assets1/	$	3,237,436		$	364,118	$	3,601,554
Debt		1,600,627			235,839		1,836,466
Total Liabilities		1,777,236			255,527		2,032,763
Total Debt/Total Assets							51.0	%

^1/ Excludes investment in unconsolidated affiliates

Highwoods Properties, Inc. Page 6 9/30/04

Components of Discontinued Operations

Dollars in thousands, except per share amounts

	Nine Months Ended						Three Months Ended
	09/30/04			09/30/03			09/30/04			06/30/04			03/31/04			12/31/03			09/30/03
Rental and other revenues	$	5,160		$	11,253		$	1,467		$	1,648		$	2,045		$	2,389		$	3,184
Operating expenses:
Rental property		2,768			4,229			736			951			1,081			1,245			1,399
Depreciation and amortization		1,105			2,824			126			442			537			668			836
Interest expense		—			1,000			—			—			—			—			143
Total operating expenses		3,873			8,053			862			1,393			1,618			1,913			2,378
Interest and other income		15			45			6			3			6			25			14
		15			45			6			3			6			25			14
Income before gain/(loss) on disposition of depreciable assets and minority interest		1,302			3,245			611			258			433			501			820
Minority interest		(135	)		(367	)		(63	)		(27	)		(45	)		(53	)		(90	)
Income from discontinued operations, net of minority interest		1,167			2,878			548			231			388			448			730
Gain/(loss) on disposition of discontinued operations		682			9,372			703			(3,856	)		3,835			175			8,359
Minority Interest		(73	)		(1,041	)		(73	)		399			(399	)		(19	)		(928	)
Gain on disposition of discontinued operations, net of minority interest		609			8,331			630			(3,457	)		3,436			156			7,431
Total discontinued operations	$	1,776		$	11,209		$	1,178		$	(3,226	)	$	3,824		$	604		$	8,161

Highwoods Properties, Inc. Page 7 9/30/04

Capitalization

Dollars, shares, and units in thousands

	09/30/04		06/30/04		03/31/04		12/31/03		09/30/03
Long-Term Debt (see page 9 & 10):	$	1,600,627	$	1,580,685	$	1,790,039	$	1,717,765	$	1,771,490
Finance Obligations:	$	62,992	$	63,345	$	62,994	$	124,063	$	125,687
Preferred Stock:
Series A 8 5/8% Perpetual Preferred Stock	$	104,945	$	104,945	$	104,945	$	104,945	$	104,945
Series B 8% Perpetual Preferred Stock		172,500		172,500		172,500		172,500		172,500
Series D 8% Perpetual Preferred Stock		100,000		100,000		100,000		100,000		100,000
Total preferred stock	$	377,445	$	377,445	$	377,445	$	377,445	$	377,445
Shares and Units Outstanding:
Common stock outstanding		53,713		53,716		53,631		53,474		53,103
Minority interest partnership units		6,128		6,146		6,146		6,203		6,505
Total shares and units outstanding		59,841		59,862		59,777		59,677		59,608
Stock price at period end	$	24.61	$	23.50	$	26.21	$	25.40	$	23.86
Market value of equity	$	1,850,132	$	1,784,202	$	1,944,200	$	1,893,241	$	1,799,692
Total market capitalization with debt and obligations	$	3,513,751	$	3,428,232	$	3,797,233	$	3,735,069	$	3,696,869

See pages 32 to 38 for information regarding Highwoods’ Joint Ventures

Highwoods Properties, Inc. Page 8 9/30/04

Long-Term Debt Summary

Dollars in thousands

	09/30/04			06/30/04			03/31/04			12/31/03			09/30/03
Balances Outstanding:
Secured:
Conventional fixed rate	$	745,524		$	748,740		$	751,894		$	755,049		$	631,203
Variable rate debt		50,803			54,945			204,845			68,709			68,780
Conventional fixed rate1/		22,800			22,800			22,800			22,800			22,800
Variable rate debt2/		—			—			—			136,207			136,207
Secured total	$	819,127		$	826,485		$	979,539		$	982,765		$	858,990
Unsecured:
Fixed rate bonds and notes	$	460,000		$	460,000		$	560,000		$	560,000		$	806,500
Variable rate debt		120,000			120,000			120,000			120,000			20,000
Credit facility		201,500			197,000			130,500			55,000			86,000
Unsecured total	$	781,500		$	777,000		$	810,500		$	735,000		$	912,500
Total	$	1,600,627		$	1,603,485		$	1,790,039		$	1,717,765		$	1,771,490
Average Interest Rates:
Secured:
Conventional fixed rate		7.2	%		7.2	%		7.2	%		7.2	%		7.5	%
Variable rate debt		3.7	%		3.1	%		3.1	%		3.1	%		3.2	%
Conventional fixed rate1/		6.1	%		6.1	%		6.1	%		6.1	%		6.1	%
Variable rate debt2/		—			—			—			3.2	%		3.1	%
Secured total		6.9	%		6.9	%		6.3	%		6.3	%		6.4	%
Unsecured:
Fixed rate bonds		7.4	%		7.4	%		7.3	%		7.3	%		7.4	%
Variable rate debt		3.0	%		2.9	%		2.4	%		2.5	%		2.1	%
Credit facility		2.2	%		2.3	%		2.1	%		2.2	%		2.3	%
Unsecured total		5.4	%		5.4	%		5.8	%		6.2	%		6.8	%
Average		6.2	%		6.2	%		6.1	%		6.3	%		6.6	%
Capitalized Interest:	$	334		$	257		$	115		$	204		$	276

Maturity Schedule:

	Future Maturities of Debt						Average Interest Rate
Year	Secured Debt 3/		Unsecured Debt		Total Debt3/
Remainder of 2004	$	—	$	—	$	—	—
2005		68,165		120,000		188,165	5.0	%
2006		53,217		311,500		364,717	3.9	%
2007		77,711		—		77,711	7.9	%
2008		—		100,000		100,000	7.1	%
2009		182,166		50,000		232,166	7.9	%
2010		138,635		—		138,635	7.8	%
2011		—		—		—	—
2012		22,800		—		22,800	6.1	%
2013		270,925		—		270,925	5.9	%
Thereafter		5,508		200,000		205,508	7.5	%
Total maturities	$	819,127	$	781,500	$	1,600,627	6.2	%

Weighted average maturity = 5.6 years

^1/ Loan relates to the consolidated 20% owned joint venture property (Harborview).

^2/ Loan relates to the consolidated 20% owned joint venture properties (MG-HIW, LLC).

^3/ Excludes annual principal amortization

^4/ Included in the $311.5 million of unsecured debt maturities is $201.5 million related to the credit facility which matures in 2006.

Highwoods Properties, Inc. Page 9 9/30/04

Long-Term Debt Detail

Dollars in thousands

Lender	Rate		Maturity Date	Loan Balance 09/30/04		Undepreciated Book Value of Assets Secured
Secured Loans
Monumental Life Ins. Co.	7.8	%	Nov-09	$	174,135	$	248,453
Northwestern	6.0	%	Feb-13		142,349		184,957
Northwestern	7.8	%	Nov-10		138,635		273,031
Mass Mutual	5.7	%	Dec-13		127,500		186,248
NW Mutual Life	8.2	%	Jan-07		65,660		138,120
GECC1/	3.7	%	Jan-06		46,986		81,901
Principal	8.6	%	Apr-05		41,510		103,417
Principal	8.2	%	Jul-05		26,655		69,361
Met Life2/	6.1	%	Oct-12		22,800		38,529
Aegon3/	8.1	%	Jun-07		5,798		22,167
Ohio National	8.0	%	Nov-17		5,508		10,877
Lutheran	6.8	%	Apr-09		4,048		7,573
Aegon3/4/	3.8	%	Jun-07		3,818		—
American General	7.9	%	Dec-06		2,741		6,949
Assoc Retirement Trust Fund	8.0	%	Jan-07		2,435		6,758
USG Annuity	7.7	%	Feb-06		2,229		3,777
Security Life of Denver	8.9	%	Aug-09		2,073		9,391
Southland Life Ins. Co.	8.8	%	Aug-09		1,910		6,898
American United Life	9.0	%	Jun-13		1,076		3,600
CUNA Mutual	8.0	%	Sep-06		649		3,145
Members Life Ins	8.0	%	Sep-06		612		3,246
	6.9	%		$	819,127	$	1,408,398
Unsecured Bonds
Bonds	7.0	%	Dec-06	$	110,000
Bonds	7.1	%	Feb-08		100,000
Bonds	8.1	%	Jan-09		50,000
Bonds	7.5	%	Apr-18		200,000
	7.3	%		$	460,000

^1/ Floating rate loans based on one month libor.

^2/ Loan relates to the consolidated 20% owned joint venture property (Harborview).

^3/ These two loans are secured by the same assets.

^4/ Floating rate loan based on ninety day libor.

Highwoods Properties, Inc. Page 10 9/30/04

Portfolio Summary - Wholly-Owned Properties Only^1/

(Rentable Square Feet)

	09/30/04		06/30/04		03/31/04		12/31/03		09/30/03
Office Industrial & Retail
In-Service:
Office2/	25,151,000		25,272,000		26,608,000		25,303,000		25,710,000
Industrial	7,992,000		7,992,000		8,092,000		8,092,000		9,934,000
Retail3/	1,410,000		1,411,000		1,411,000		1,527,000		1,527,000
Total	34,553,000		34,675,000		36,111,000		34,922,000		37,171,000
Development Completed - Not Stabilized:
Office2/	—		—		140,000		140,000		140,000
Industrial	350,000		—		—		—		60,000
Retail	—		—		—		—		—
Total	350,000		—		140,000		140,000		200,000
Development - In Process:
Office2/	333,000		222,000		112,000		112,000		—
Industrial	—		350,000		350,000		350,000		350,000
Retail	—		—		—		—		—
Total	333,000		572,000		462,000		462,000		350,000
Total:
Office2/	25,484,000		25,494,000		26,860,000		25,555,000		25,850,000
Industrial	8,342,000		8,342,000		8,442,000		8,442,000		10,344,000
Retail3/	1,410,000		1,411,000		1,411,000		1,527,000		1,527,000
Total	35,236,000		35,247,000		36,713,000		35,524,000		37,721,000
Same Property
Office2/	23,241,000		23,241,000		23,241,000		23,241,000		23,241,000
Industrial	7,932,000		7,932,000		7,932,000		7,932,000		7,932,000
Retail	1,410,000		1,410,000		1,410,000		1,410,000		1,410,000
Total	32,583,000		32,583,000		32,583,000		32,583,000		32,583,000
Percent Leased/Pre-Leased:
In-Service:
Office	80.9	%	79.2	%	79.2	%	79.2	%	79.4	%
Industrial	88.4	%	88.0	%	86.5	%	85.7	%	88.0	%
Retail	94.5	%	93.4	%	94.0	%	96.3	%	96.3	%
Total	83.2	%	81.8	%	81.4	%	81.5	%	82.4	%
Development Completed - Not Stabilized:
Office	100.0	%	—		36.0	%	36.0	%	30.0	%
Industrial	—		—		—		—		50.0	%
Retail	—		—		—		—		—
Total	—		—		36.0	%	36.0	%	36.0	%
Development - In Process:
Office	100.0	%	100.0	%	100.0	%	100.0	%	—
Industrial	—		100.0	%	100.0	%	100.0	%	100.0	%
Retail	—		—		—		—		—
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Same Property
Office	81.1	%	80.2	%	80.3	%	80.5	%	80.3	%
Industrial	88.5	%	88.3	%	87.0	%	86.2	%	85.7	%
Retail	94.5	%	93.5	%	94.1	%	96.8	%	96.7	%
Total	83.5	%	82.7	%	82.5	%	82.6	%	82.3	%

^1/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

^2/ Substantially all of our Office properties are located in suburban markets

^3/ Excludes basement space in the Country Club Plaza property of 418,000 square feet.

Highwoods Properties, Inc. Page 11 9/30/04

Portfolio Summary

(Continued)

As of September 30, 2004

Summary by Location, Wholly-Owned Properties Only^1/:

Market	Rentable				Percentage of Annualized Revenue 2/
	Square Feet		Occupancy		Office		Industrial		Retail		Total
Raleigh3/	4,739,000		81.1	%	15.8	%	0.2	%	—		16.0	%
Atlanta	6,826,000		81.3	%	11.7	%	3.2	%	—		14.9	%
Tampa	4,221,000		66.1	%	12.7	%	—		—		12.7	%
Kansas City	2,309,000	4/	92.4	%	4.1	%	0.0	%	8.1	%	12.2	%
Nashville	2,870,000		93.4	%	11.6	%	—		—		11.6	%
Piedmont Triad5/	6,651,000		91.9	%	6.1	%	4.2	%	—		10.3	%
Richmond	1,835,000		92.0	%	6.8	%	—		—		6.8	%
Memphis	1,216,000		82.1	%	4.4	%	—		—		4.4	%
Charlotte	1,655,000		74.6	%	4.1	%	0.3	%	—		4.4	%
Greenville	1,318,000		79.5	%	3.6	%	0.1	%	—		3.7	%
Columbia	426,000		57.6	%	1.0	%	—		—		1.0	%
Orlando	387,000		94.4	%	1.6	%	—		—		1.6	%
Other	100,000		64.1	%	0.4	%	—		—		0.4	%
Total	34,553,000		83.2	%	83.9	%	8.0	%	8.1	%	100.0	%

Summary by Location, Including Joint Venture Properties:

Market	Rentable Square Feet	Occupancy		Percentage of Annualized Revenue 2/6/
				Office		Industrial		Retail		Multi-Family		Total
Raleigh3/	5,194,000	82.6	%	14.7	%	0.2	%	—		—		14.9	%
Atlanta	7,661,000	81.8	%	11.9	%	2.9	%	—		—		14.8	%
Tampa	4,426,000	67.7	%	11.7	%	—		—		—		11.7	%
Kansas City	2,737,000	92.3	%	4.1	%	0.0	%	7.3	%	—		11.4	%
Nashville	2,870,000	93.4	%	10.4	%	—		—		—		10.4	%
Piedmont Triad5/	7,015,000	92.4	%	5.9	%	3.7	%	—		—		9.6	%
Richmond	2,248,000	93.4	%	6.7	%	—		—		—		6.7	%
Orlando	2,069,000	89.5	%	4.0	%	—		—		—		4.0	%
Charlotte	1,803,000	76.7	%	3.8	%	0.2	%	—		—		4.0	%
Memphis	1,216,000	82.1	%	4.0	%	—		—		—		4.0	%
Des Moines	2,245,000	92.3	%	3.0	%	0.4	%	0.1	%	0.4	%	3.9	%
Greenville	1,318,000	79.5	%	3.2	%	0.1	%	—		—		3.3	%
Columbia	426,000	57.5	%	0.9	%	—		—		—		0.9	%
Other	210,000	82.9	%	0.4	%	—		—		—		0.4	%
Total	41,438,000	84.7	%	84.7	%	7.5	%	7.4	%	0.4	%	100.0	%

^1/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

^2/ Annualized Revenue is September, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

^3/ Raleigh Market = Raleigh, Durham, Research Triangle metropolitan area

^4/ Excludes basement space in the Country Club Plaza property of 418,000 square feet

^5/ Piedmont Triad Market = Greensboro, Winston-Salem metropolitan area

^6/ Includes Highwoods’ share of Joint Venture Annualized Rental Revenue, see page 35

Highwoods Properties, Inc. Page 12 9/30/04

Portfolio Summary - Wholly-Owned Properties Only^1/

(Continued)

As of September 30, 2004

	Office Properties					Industrial
Market	Rentable Square Feet	Occupancy		Percentage of Office Annualized Revenue2/		Rentable Square Feet	Occupancy		Percentage of Industrial Annualized Revenue2/
Raleigh	4,638,000	81.1	%	19.0	%	101,000	79.9	%	2.2	%
Tampa	4,221,000	66.1	%	15.2	%	—	—		—
Atlanta	3,575,000	81.7	%	14.0	%	3,251,000	80.7	%	40.9	%
Nashville	2,870,000	93.4	%	13.8	%	—	—		—
Richmond	1,835,000	92.0	%	8.1	%	—	—		—
Piedmont Triad	2,281,000	83.6	%	7.3	%	4,370,000	96.3	%	52.6	%
Memphis	1,216,000	82.1	%	5.2	%	—	—		—
Charlotte	1,492,000	75.0	%	4.8	%	163,000	70.0	%	3.3	%
Kansas City	895,000	88.9	%	4.9	%	4,000	100.0	%	0.1	%
Greenville	1,215,000	83.4	%	4.3	%	103,000	33.6	%	0.9	%
Columbia	426,000	57.6	%	1.1	%	—	—		—
Orlando	387,000	94.4	%	1.9	%	—	—		—
Other	100,000	64.1	%	0.4	%	—	—		—
	25,151,000	80.9	%	100.0	%	7,992,000	88.4	%	100.0	%

	Retail
Market	Rentable Square Feet	Occupancy		Percentage of Retail Annualized Revenue2/
Kansas City3/	1,410,000	94.5	%	100.0	%
	1,410,000	94.5	%	100.0	%

^1/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

^2/ Annualized Revenue is September, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

^3/ Excludes basement space in the Country Club Plaza property of 418,000 square feet

Highwoods Properties, Inc. Page 13 9/30/04

Occupancy Trends - Office, Industrial and Retail Properties^1/

Market	Measurement	09/30/04		06/30/04		03/31/04		12/31/03		09/30/03
Atlanta	Rentable Square Feet	6,825,000		6,821,000		6,919,000		6,919,000		6,860,000
	Occupancy	81.3	%	80.7	%	78.8	%	78.4	%	80.7	%
	Current Properties2/	81.3	%	80.7	%	78.9	%	78.5	%	80.4	%
Charlotte	Rentable Square Feet	1,655,000		1,655,000		1,655,000		1,655,000		1,727,000
	Occupancy	74.6	%	73.9	%	80.5	%	79.6	%	79.5	%
	Current Properties2/	74.6	%	73.9	%	80.5	%	79.6	%	78.5	%
Columbia	Rentable Square Feet	426,000		426,000		426,000		426,000		426,000
	Occupancy	57.5	%	57.9	%	58.6	%	57.9	%	57.2	%
	Current Properties2/	57.5	%	57.9	%	58.6	%	57.8	%	57.2	%
Greenville	Rentable Square Feet	1,319,000		1,319,000		1,319,000		1,318,000		1,318,000
	Occupancy	79.4	%	78.8	%	78.8	%	80.2	%	81.5	%
	Current Properties2/	79.4	%	78.8	%	78.8	%	80.2	%	81.5	%
Kansas City3/	Rentable Square Feet	2,308,000		2,310,000		2,309,000		2,433,000		2,512,000
	Occupancy	92.4	%	91.4	%	91.2	%	92.7	%	92.1	%
	Current Properties2/	92.4	%	91.4	%	91.2	%	92.7	%	92.6	%
Memphis	Rentable Square Feet	1,216,000		1,216,000		1,216,000		1,216,000		1,216,000
	Occupancy	82.1	%	82.0	%	81.3	%	81.0	%	79.8	%
	Current Properties2/	82.1	%	82.0	%	81.3	%	81.0	%	79.8	%
Nashville	Rentable Square Feet	2,870,000		2,870,000		2,870,000		2,869,000		2,865,000
	Occupancy	93.4	%	91.7	%	89.8	%	91.5	%	88.7	%
	Current Properties2/	93.4	%	91.7	%	89.8	%	91.4	%	88.7	%
Orlando	Rentable Square Feet	387,000		387,000		1,656,000		299,000		299,000
	Occupancy	94.4	%	52.9	%	75.8	%	44.9	%	46.9	%
	Current Properties2/	94.4	%	52.9	%	54.6	%	54.1	%	44.3	%
Piedmont Triad	Rentable Square Feet	6,652,000		6,652,000		6,685,000		6,688,000		8,208,000
	Occupancy	91.9	%	91.1	%	90.5	%	90.0	%	90.6	%
	Current Properties2/	91.9	%	91.1	%	91.0	%	90.5	%	89.4	%
Raleigh	Rentable Square Feet	4,739,000		4,808,000		4,664,000		4,706,000		4,706,000
	Occupancy	81.1	%	79.4	%	80.9	%	80.8	%	79.7	%
	Current Properties2/	81.1	%	79.4	%	79.6	%	79.4	%	78.1	%
Richmond	Rentable Square Feet	1,835,000		1,835,000		1,851,000		1,852,000		2,526,000
	Occupancy	92.0	%	89.7	%	90.9	%	91.5	%	92.8	%
	Current Properties2/	92.0	%	89.7	%	91.0	%	91.6	%	90.5	%
Tampa	Rentable Square Feet	4,221,000		4,277,000		4,443,000		4,441,000		4,408,000
	Occupancy	66.1	%	65.9	%	63.7	%	63.4	%	64.2	%
	Current Properties2/	66.1	%	65.9	%	66.1	%	65.8	%	66.7	%
Total4/	Rentable Square Feet	34,453,000		34,576,000		36,013,000		34,822,000		37,071,000
	Occupancy	83.2	%	81.8	%	81.4	%	81.5	%	82.4	%
	Current Properties2/	83.2	%	81.8	%	81.7	%	81.7	%	81.4	%

^1/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

^2/ Only properties that were owned and in-service on September 30, 2004 are included for each quarter shown.

^3/ Excludes basement space in the Country Club Plaza property of 418,000 square feet.

^4/ Excludes 100,000 square foot building located in South Florida

Highwoods Properties, Inc. Page 14 9/30/04

Leasing Statistics

Office Portfolio^1/

	Three Months Ended
	9/30/042/			6/30/043/			3/31/044/			12/31/03			09/30/03			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		219			230			209			179			225			212
Rentable square footage leased		1,368,577			1,375,372			1,191,746			962,636			1,074,270			1,194,520
Square footage of Renewal Deals		703,003			1,011,662			673,551			614,969			629,353			726,508
Renewed square footage (% of total)		51.4	%		73.6	%		56.5	%		63.9	%		58.6	%		60.8	%
New Leases square footage (% of total)		48.6	%		26.4	%		43.5	%		36.1	%		41.4	%		39.2	%
Average per rentable square foot over the lease term:
Base rent	$	16.68		$	17.64		$	17.43		$	16.12		$	17.34		$	17.04
Tenant improvements		(1.27	)		(1.09	)		(1.57	)		(1.09	)		(1.54	)		(1.31	)
Leasing commissions5/		(0.64	)		(0.52	)		(0.58	)		(0.64	)		(0.55	)		(0.59	)
Rent concessions		(0.37	)		(0.27	)		(0.63	)		(0.35	)		(0.24	)		(0.37	)
Effective rent		14.40			15.76			14.65			14.04			15.01			14.77
Expense stop		(5.32	)		(5.25	)		(5.70	)		(5.35	)		(5.45	)		(5.41	)
Equivalent effective net rent	$	9.08		$	10.51		$	8.95		$	8.69		$	9.56		$	9.36
Average term in years		3.7			4.3			4.8			4.1			5.5			4.5
Capital Expenditures Related to Re-leased Space:
Tenant Improvements:
Total dollars committed under signed leases	$	9,455,102		$	8,908,277		$	10,063,665		$	5,355,637		$	9,120,612		$	8,580,658
Rentable square feet		1,368,577			1,375,372			1,191,746			962,636			1,074,270			1,194,520
Per rentable square foot	$	6.91		$	6.48		$	8.44		$	5.56		$	8.49		$	7.18
Leasing Commissions:
Total dollars committed under signed leases5/	$	2,969,620		$	2,878,161		$	2,747,400		$	2,102,659		$	2,175,162		$	2,574,600
Rentable square feet		1,368,577			1,375,372			1,191,746			962,636			1,074,270			1,194,520
Per rentable square foot	$	2.17		$	2.09		$	2.31		$	2.18		$	2.02		$	2.16
Total:
Total dollars committed under signed leases	$	12,424,721		$	11,786,438		$	12,811,064		$	7,458,296		$	11,295,774		$	11,155,259
Rentable square feet		1,368,577			1,375,372			1,191,746			962,636			1,074,270			1,194,520
Per rentable square foot	$	9.08		$	8.57		$	10.75		$	7.75		$	10.51		$	9.34

^1/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharingarrangements under FAS 66

^2/ Includes 128K square feet of leases that start in 2006 or later

^3/ Includes 100K square feet of leases that start in 2006 or later

^4/ Includes 72K square feet of leases that start in 2006 or later

^5/ Excludes a full allocation of internal marketing cost

Highwoods Properties, Inc. Page 15 9/30/04

Leasing Statistics

Industrial Portfolio

	Three Months Ended
	9/30/041/			06/30/04			03/31/04			12/31/03			09/30/03			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		34			7			32			36			22			26
Rentable square footage leased		285,706			820,933			630,829			1,131,281			638,376			701,425
Square footage of Renewal Deals		246,797			642,011			448,003			968,879			555,933			572,325
Renewed square footage (% of total)		86.4	%		78.2	%		71.0	%		85.6	%		87.1	%		81.6	%
New Leases square footage (% of total)		13.6	%		21.8	%		29.0	%		14.4	%		12.9	%		18.4	%
Average per rentable square foot over the lease term:
Base rent	$	4.73		$	4.11		$	3.67		$	3.79		$	3.52		$	3.96
Tenant improvements		(0.33	)		(0.31	)		(0.17	)		(0.08	)		(0.20	)		(0.22	)
Leasing commissions2/		(0.07	)		(0.08	)		(0.14	)		(0.08	)		(0.08	)		(0.09	)
Rent concessions		(0.05	)		(0.17	)		(0.05	)		(0.05	)		(0.06	)		(0.08	)
Effective rent		4.28			3.55			3.31			3.58			3.18			3.57
Expense stop		(0.54	)		(0.36	)		(0.18	)		(0.20	)		(0.09	)		(0.27	)
Equivalent effective net rent	$	3.74		$	3.19		$	3.13		$	3.38		$	3.09		$	3.30
Average term in years		2.6			3.2			2.6			3.2			4.5			3.2
Capital Expenditures Related to Re-leased Space:
Tenant Improvements:
Total dollars committed under signed leases	$	307,534		$	1,805,334		$	640,867		$	517,025		$	675,982		$	789,348
Rentable square feet		285,706			820,933			630,829			1,131,281			638,376			701,425
Per rentable square foot	$	1.08		$	2.20		$	1.02		$	0.46		$	1.06		$	1.13
Leasing Commissions:
Total dollars committed under signed leases2/	$	64,714		$	207,676		$	280,486		$	338,143		$	242,605		$	226,725
Rentable square feet		285,706			820,933			630,829			1,131,281			638,376			701,425
Per rentable square foot	$	0.23		$	0.25		$	0.44		$	0.30		$	0.38		$	0.32
Total:
Total dollars committed under signed leases	$	372,247		$	2,013,010		$	921,354		$	855,168		$	918,587		$	1,016,073
Rentable square feet		285,706			820,933			630,829			1,131,281			638,376			701,425
Per rentable square foot	$	1.30		$	2.45		$	1.46		$	0.76		$	1.44		$	1.45

^1/ Includes 74K square feet of leases that start in 2006 or later

^2/ Excludes a full allocation of internal marketing cost

Highwoods Properties, Inc. Page 16 9/30/04

Leasing Statistics

Retail Portfolio

	Three Months Ended
	9/30/04			6/30/041/			3/31/042/			12/31/03			09/30/03			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		18			13			10			9			6			11
Rentable square footage leased		34,300			38,548			37,303			75,947			12,920			39,804
Square footage of Renewal Deals		15,530			17,482			27,219			53,541			—			22,754
Renewed square footage (% of total)		45.3	%		45.4	%		73.0	%		70.5	%		0.0	%		57.2	%
New Leases square footage (% of total)		54.7	%		54.6	%		27.0	%		29.5	%		100.0	%		42.8	%
Average per rentable square foot over the lease term:
Base rent	$	26.45		$	22.98		$	30.87		$	12.30		$	17.25		$	21.97
Tenant improvements		(1.84	)		(2.04	)		(1.58	)		(0.31	)		(2.51	)		(1.66	)
Leasing commissions3/		(0.56	)		(0.32	)		(0.31	)		(0.14	)		(1.28	)		(0.52	)
Rent concessions		(0.04	)		0.00			(0.06	)		0.00			0.00			(0.02	)
Effective rent		24.01			20.62			28.92			11.85			13.46			19.77
Expense stop		0.00			0.00			0.00			0.00			0.00			0.00
Equivalent effective net rent	$	24.01		$	20.62		$	28.92		$	11.85		$	13.46		$	19.77
Average term in years		5.7			8.0			6.1			6.8			4.8			6.3
Capital Expenditures Related to Re-leased Space:
Tenant Improvements:
Total dollars committed under signed leases	$	403,309		$	800,125		$	866,975		$	239,110		$	158,000		$	493,504
Rentable square feet		34,300			38,548			37,303			75,947			12,920			39,804
Per rentable square foot	$	11.76		$	20.76		$	23.24		$	3.15		$	12.23		$	12.40
Leasing Commissions:
Total dollars committed under signed leases3/	$	86,458		$	34,423		$	28,206		$	17,212		$	36,392		$	40,538
Rentable square feet		34,300			38,548			37,303			75,947			12,920			39,804
Per rentable square foot	$	2.52		$	0.89		$	0.76		$	0.23		$	2.82		$	1.02
Total:
Total dollars committed under signed leases	$	489,767		$	834,548		$	895,181		$	256,322		$	194,392		$	534,042
Rentable square feet		34,300			38,548			37,303			75,947			12,920			39,804
Per rentable square foot	$	14.28		$	21.65		$	24.00		$	3.38		$	15.05		$	13.42

^1/ Includes 6K square feet of leases that start in 2006 or later

^2/ Includes 16K square feet of leases that start in 2006 or later

^3/ Excludes a full allocation of internal marketing cost

Highwoods Properties, Inc. Page 17 9/30/04

Leasing Statistics by Market

For the Three Months ended September 30, 2004

Office Portfolio^1/

Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF2/
Tampa	265,927	5.1	$	17.15	$	13.89	$	3.38
Raleigh	180,251	3.3		15.46		7.76		1.79
Richmond	153,863	4.1		14.95		3.80		1.82
Orlando	150,644	1.0		18.01		0.11		0.56
Greenville	124,498	3.7		18.98		5.05		1.51
Atlanta	121,099	4.8		11.54		9.51		2.13
Charlotte	90,365	3.5		12.92		7.12		1.50
Nashville	85,770	3.6		17.05		3.96		1.29
Memphis	78,969	4.5		17.04		3.78		1.99
Piedmont Triad	45,528	2.4		15.28		6.26		0.72
Kansas City	42,681	3.0		18.66		3.98		2.75
Columbia	28,982	3.7		18.12		8.40		3.45
	1,368,577	3.7	$	16.31	$	6.91
Industrial Portfolio
Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF2/
Piedmont Triad	129,408	2.1	$	4.54	$	0.73	$	0.01
Atlanta	120,174	3.2		3.81		0.87		0.22
Charlotte	16,414	2.1		7.37		2.81		0.07
Raleigh	11,240	0.7		6.95		0.00		0.00
Greenville	8,470	5.6		10.32		7.32		2.30
	285,706	2.6	$	4.68	$	1.08
Retail Portfolio
Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF
Kansas City	34,300	5.7	$	26.41	$	11.76	$	2.52
	34,300	5.7	$	26.41	$	11.76	$	2.52

^1/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

^2/ Total lease commisions per square foot excludes all internal charges from Leasing Departments, which are not allocated to individual leases.

Highwoods Properties, Inc. Page 18 9/30/04

Rental Rate Comparisons by Market

For the Three Months ended September 30, 2004

Office Portfolio1/
Market	Rentable Square Feet Leased	GAAP Rent		Previous GAAP Rent		Percentage Change GAAP Rent
Tampa	265,927	$	17.15	$	17.51	-2.1	%
Raleigh	180,251		15.46		18.78	-17.7	%
Richmond	153,863		14.95		14.06	6.3	%
Orlando	150,644		18.01		13.47	33.7	%
Greenville	124,498		18.98		19.22	-1.2	%
Atlanta	121,099		11.54		12.63	-8.6	%
Charlotte	90,365		12.92		14.21	-9.1	%
Nashville	85,770		17.05		17.75	-3.9	%
Memphis	78,969		17.04		18.91	-9.9	%
Piedmont Triad	45,528		15.28		15.55	-1.7	%
Kansas City	42,681		18.66		18.46	1.1	%
Columbia	28,982		18.12		17.10	5.9	%
	1,368,577	$	16.31	$	16.47	-1.0	%
Cash Rent Growth	1,368,577	$	16.06	$	17.78	-9.7	%
Industrial Portfolio
Market	Rentable Square Feet Leased	GAAP Rent		Previous GAAP Rent		Percentage Change GAAP Rent
Piedmont Triad	129,408	$	4.54	$	4.39	3.5	%
Atlanta	120,174		3.81		4.28	-11.0	%
Charlotte	16,414		7.37		8.03	-8.2	%
Raleigh	11,240		6.95		6.89	0.9	%
Greenville	8,470		10.32		10.00	3.2	%
	285,706	$	4.68	$	4.84	-3.4	%
Cash Rent Growth	285,706	$	4.55	$	5.18	-12.1	%
Retail Portfolio
Market	Rentable Square Feet Leased	GAAP Rent		Previous GAAP Rent		Percentage Change GAAP Rent
Kansas City	34,300	$	26.41	$	25.71	2.7	%
	34,300	$	26.41	$	25.71	2.7	%
Cash Rent Growth	34,300	$	25.44	$	24.88	2.2	%

^1/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

Highwoods Properties, Inc. Page 19 9/30/04

Lease Expirations

September 30, 2004

Dollars in thousands
Year	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue1/		Average Rental Rate		Percent of Annualized Revenue1/
Office:2/
Remainder of 20043/	630,576	3.1	%	$	11,157	$	17.69	3.1	%
2005	3,300,589	16.2	%		61,179		18.54	17.0	%
2006	3,294,361	16.2	%		61,417		18.64	17.1	%
2007	2,089,231	10.3	%		35,311		16.90	9.8	%
2008	3,182,194	15.6	%		51,953		16.33	14.5	%
2009	2,701,406	13.3	%		45,441		16.82	12.7	%
2010	1,532,968	7.5	%		30,856		20.13	8.6	%
2011	1,316,848	6.5	%		23,253		17.66	6.5	%
2012	690,449	3.4	%		13,402		19.41	3.7	%
2013	553,028	2.7	%		9,214		16.66	2.6	%
2014 and thereafter	1,058,144	5.2	%		15,805		14.94	4.4	%
	20,349,794	100.0	%	$	358,988	$	17.64	100.0	%
Industrial:
Remainder of 20044/	505,287	7.0	%	$	2,018	$	3.99	6.0	%
2005	1,839,198	25.6	%		8,134		4.42	24.1	%
2006	993,823	13.8	%		5,147		5.18	15.2	%
2007	1,891,322	26.4	%		8,706		4.60	25.7	%
2008	368,823	5.1	%		1,982		5.37	5.9	%
2009	620,951	8.6	%		3,489		5.62	10.3	%
2010	131,040	1.8	%		592		4.52	1.8	%
2011	152,742	2.1	%		724		4.74	2.1	%
2012	109,840	1.5	%		435		3.96	1.3	%
2013	102,384	1.4	%		613		5.99	1.8	%
2014 and thereafter	485,779	6.7	%		1,948		4.01	5.8	%
	7,201,189	100.0	%	$	33,788	$	4.69	100.0	%

^1/ Annualized Revenue is September, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

^2/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

^3/ Includes 149,000 square feet of leases that are on a month to month basis or 0.7% of total annualized revenue

^4/ Includes 165,000 square feet of leases that are on a month to month basis or 0.2% of total annualized revenue

Note: 2004 and beyond expirations that have been renewed are reflected above based on the renewal’s expiration date.

Highwoods Properties, Inc. Page 20 9/30/04

Lease Expirations

September 30, 2004

(Continued)

Dollars in thousands
Year	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue1/		Average Rental Rate		Percent of Annualized Revenue1/
Retail:
Remainder of 20042/	25,582	1.9	%	$	495	$	19.35	1.4	%
2005	110,594	8.3	%		2,719		24.59	7.8	%
2006	92,283	6.9	%		2,345		25.41	6.8	%
2007	76,682	5.8	%		2,141		27.92	6.2	%
2008	131,003	9.8	%		3,705		28.28	10.7	%
2009	188,105	14.1	%		4,541		24.14	13.1	%
2010	71,076	5.3	%		2,298		32.33	6.6	%
2011	53,833	4.0	%		1,800		33.44	5.2	%
2012	136,044	10.2	%		3,614		26.56	10.4	%
2013	108,866	8.2	%		2,681		24.63	7.7	%
2014 and thereafter	338,686	25.5	%		8,330		24.60	24.1	%
	1,332,754	100.0	%	$	34,669	$	26.01	100.0	%
Total:
Remainder of 20043/4/	1,161,445	4.0	%		13,670		11.77	3.2	%
2005	5,250,381	18.3	%		72,032		13.72	16.9	%
2006	4,380,467	15.2	%		68,909		15.73	16.1	%
2007	4,057,235	14.0	%		46,158		11.38	10.8	%
2008	3,682,020	12.7	%		57,640		15.65	13.5	%
2009	3,510,462	12.2	%		53,471		15.23	12.5	%
2010	1,735,084	6.0	%		33,746		19.45	7.9	%
2011	1,523,423	5.3	%		25,777		16.92	6.0	%
2012	936,333	3.2	%		17,451		18.64	4.1	%
2013	764,278	2.6	%		12,508		16.37	2.9	%
2014 and thereafter	1,882,609	6.5	%		26,083		13.85	6.1	%
	28,883,737	100.0	%	$	427,445	$	14.80	100.0	%

^1/ Annualized Revenue is September, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

^2/ Includes 19,000 square feet of leases that are on a month to month basis or 0.1% of total annualized revenue

^3/ Includes 333,000 square feet of leases that are on a month to month basis or 1.0% of total annualized revenue

^4/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

Note: 2004 and beyond expirations that have been renewed are reflected above based on the renewal’s expiration date.

Highwoods Properties, Inc. Page 21 9/30/04

Office Lease Expirations by Market by Quarter^1/

Dollars in thousands

			Three Months Ended
			12/31/042/			03/31/05			06/30/05			09/30/05			Total
Atlanta	RSF			56,920			157,218			77,483			346,395			638,016
	% of Total Office RSF			0.3	%		0.8	%		0.4	%		1.7	%		3.1	%
	Annualized Revenue	3/	$	864		$	2,216		$	1,315		$	5,926		$	10,321
	% of Total Office Annl Rev			0.2	%		0.6	%		0.4	%		1.7	%		2.9	%
Charlotte	RSF			63,245			47,542			132,069			71,651			314,507
	% of Total Office RSF			0.3	%		0.2	%		0.6	%		0.4	%		1.5	%
	Annualized Revenue	3/	$	1,095		$	674		$	2,378		$	1,032		$	5,179
	% of Total Office Annl Rev			0.3	%		0.2	%		0.7	%		0.3	%		1.4	%
Columbia	RSF			3,611			0			1,606			27,437			32,654
	% of Total Office RSF			0.0	%		0.0	%		0.0	%		0.1	%		0.2	%
	Annualized Revenue	3/	$	103		$	—		$	33		$	506		$	642
	% of Total Office Annl Rev			0.0	%		0.0	%		0.0	%		0.1	%		0.2	%
Greenville	RSF			3,856			12,281			93,974			17,815			127,926
	% of Total Office RSF			0.0	%		0.1	%		0.5	%		0.1	%		0.6	%
	Annualized Revenue	3/	$	133		$	275		$	901		$	324		$	1,633
	% of Total Office Annl Rev			0.0	%		0.1	%		0.3	%		0.1	%		0.5	%
Kansas City	RSF			27,915			48,061			39,983			19,997			135,956
	% of Total Office RSF			0.1	%		0.2	%		0.2	%		0.1	%		0.7	%
	Annualized Revenue	3/	$	572		$	1,118		$	824		$	385		$	2,899
	% of Total Office Annl Rev			0.2	%		0.3	%		0.2	%		0.1	%		0.8	%
Memphis	RSF			39,502			44,610			12,770			136,044			232,926
	% of Total Office RSF			0.2	%		0.2	%		0.1	%		0.7	%		1.1	%
	Annualized Revenue	3/	$	770		$	868		$	268		$	2,751		$	4,657
	% of Total Office Annl Rev			0.2	%		0.2	%		0.1	%		0.8	%		1.3	%
Nashville	RSF			51,013			72,628			98,268			61,848			283,757
	% of Total Office RSF			0.3	%		0.4	%		0.5	%		0.3	%		1.4	%
	Annualized Revenue	3/	$	1,110		$	1,483		$	2,136		$	1,264		$	5,993
	% of Total Office Annl Rev			0.3	%		0.4	%		0.6	%		0.4	%		1.7	%
Orlando	RSF			8,505			6,823			0			150,000			165,328
	% of Total Office RSF			0.0	%		0.0	%		0.0	%		0.7	%		0.8	%
	Annualized Revenue	3/	$	78		$	115		$	—		$	2,781		$	2,974
	% of Total Office Annl Rev			0.0	%		0.0	%		0.0	%		0.8	%		0.8	%
Piedmont Triad	RSF			20,808			25,658			52,541			109,135			208,142
	% of Total Office RSF			0.1	%		0.1	%		0.3	%		0.5	%		1.0	%
	Annualized Revenue	3/	$	516		$	498		$	952		$	1,644		$	3,610
	% of Total Office Annl Rev			0.1	%		0.1	%		0.3	%		0.5	%		1.0	%
Research Triangle	RSF			136,776			58,611			206,380			136,722			538,489
	% of Total Office RSF			0.6	%		0.3	%		1.0	%		0.7	%		2.6	%
	Annualized Revenue	3/	$	2,205		$	1,269		$	4,163		$	2,700		$	10,337
	% of Total Office Annl Rev			0.6	%		0.4	%		1.2	%		0.8	%		2.9	%
Richmond	RSF			82,530			20,281			56,357			163,736			322,904
	% of Total Office RSF			0.4	%		0.1	%		0.3	%		0.8	%		1.6	%
	Annualized Revenue	3/	$	1,230		$	353		$	1,082		$	3,226		$	5,891
	% of Total Office Annl Rev			0.3	%		0.1	%		0.3	%		0.9	%		1.6	%
Tampa	RSF			134,800			83,416			99,960			91,120			409,296
	% of Total Office RSF			0.7	%		0.4	%		0.5	%		0.4	%		2.0	%
	Annualized Revenue	3/	$	2,476		$	1,764		$	2,133		$	1,896		$	8,269
	% of Total Office Annl Rev			0.7	%		0.5	%		0.6	%		0.5	%		2.3	%
Other	RSF			1,095			0			0			982			2,077
	% of Total Office RSF			0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
	Annualized Revenue	3/	$	5		$	—		$	—		$	22		$	27
	% of Total Office Annl Rev			0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Total	RSF			630,576			577,129			871,391			1,332,882			3,411,978
	% of Total Office RSF			3.0	%		2.8	%		4.3	%		6.5	%		16.7	%
	Annualized Revenue	3/	$	11,157		$	10,633		$	16,185		$	24,457		$	62,432
	% of Total Office Annl Rev			3.1	%		3.0	%		4.5	%		6.8	%		17.4	%

^1/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

^2/ Includes 149,000 square feet of leases that are on a month to month basis or 0.7% of total annualized revenue

^3/ Annualized Revenue is September, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Highwoods Properties, Inc. Page 22 9/30/04

Industrial Lease Expirations by Market by Quarter

Dollars in thousands

			Three Months Ended
			12/31/041/			03/31/05			06/30/05			09/30/05			Total
Atlanta	RSF			85,772			184,331			104,219			177,172			551,494
	% of Total Industrial RSF			1.2	%		2.6	%		1.4	%		2.5	%		7.7	%
	Annualized Revenue	2/	$	411		$	644		$	415		$	873		$	2,343
	% of Total Industrial Annl Rev			1.3	%		1.9	%		1.2	%		2.6	%		7.0	%
Charlotte	RSF			4,712			10,649			10,795			0			26,156
	% of Total Industrial RSF			0.1	%		0.1	%		0.1	%		0.0	%		0.4	%
	Annualized Revenue	2/	$	56		$	106		$	120		$	—		$	282
	% of Total Industrial Annl Rev			0.2	%		0.3	%		0.4	%		0.0	%		0.8	%
Greenville	RSF			4,794			0			0			0			4,794
	% of Total Industrial RSF			0.1	%		0.0	%		0.0	%		0.0	%		0.1	%
	Annualized Revenue	2/	$	59		$	—		$	—		$	—		$	59
	% of Total Industrial Annl Rev			0.2	%		0.0	%		0.0	%		0.0	%		0.2	%
Kansas City	RSF			0			2,018			0			0			2,018
	% of Total Industrial RSF			0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
	Annualized Revenue	2/	$	—		$	17		$	—		$	—		$	17
	% of Total Industrial Annl Rev			0.0	%		0.1	%		0.0	%		0.0	%		0.1	%
Piedmont Triad	RSF			402,563			928,170			92,444			11,365			1,434,542
	% of Total Industrial RSF			5.6	%		12.9	%		1.3	%		0.2	%		19.9	%
	Annualized Revenue	2/	$	1,427		$	3,173		$	583		$	139		$	5,322
	% of Total Industrial Annl Rev			4.2	%		9.4	%		1.7	%		0.4	%		15.8	%
Research Triangle	RSF			7,446			3,728			3,550			31,911			46,635
	% of Total Industrial RSF			0.1	%		0.1	%		0.0	%		0.4	%		0.6	%
	Annualized Revenue	2/	$	65		$	34		$	34		$	278		$	411
	% of Total Industrial Annl Rev			0.2	%		0.1	%		0.1	%		0.8	%		1.2	%
Total	RSF			505,287			1,128,896			211,008			220,448			2,065,639
	% of Total Industrial RSF			7.0	%		15.7	%		2.9	%		3.1	%		28.7	%
	Annualized Revenue	2/	$	2,018		$	3,974		$	1,152		$	1,290		$	8,434
	% of Total Industrial Annl Rev			6.0	%		11.8	%		3.4	%		3.8	%		25.0	%

^1/ Includes 165,000 square feet of leases that are on a month to month basis or 0.2% of total annualized revenue

^2/ Annualized Revenue is September, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Highwoods Properties, Inc. Page 23 9/30/04

Office Lease Expirations by Market by Year^1/

Dollars in thousands

			20042/			2005			2006			2007			Thereafter
Atlanta	RSF			56,920			613,320			333,850			190,130			1,727,555
	% of Total Office RSF			0.3	%		3.0	%		1.6	%		0.9	%		8.5	%
	Annualized Revenue	3/	$	864		$	9,941		$	5,097		$	2,805		$	31,516
	% of Total Office Annl Rev			0.2	%		2.8	%		1.4	%		0.8	%		8.8	%
Charlotte	RSF			63,245			273,529			165,615			126,490			491,051
	% of Total Office RSF			0.3	%		1.3	%		0.8	%		0.6	%		2.4	%
	Annualized Revenue	3/	$	1,095		$	4,450		$	2,620		$	1,915		$	7,327
	% of Total Office Annl Rev			0.3	%		1.2	%		0.7	%		0.5	%		2.0	%
Columbia	RSF			3,611			32,395			58,607			58,951			91,433
	% of Total Office RSF			0.0	%		0.2	%		0.3	%		0.3	%		0.4	%
	Annualized Revenue	3/	$	103		$	596		$	1,068		$	921		$	1,405
	% of Total Office Annl Rev			0.0	%		0.2	%		0.3	%		0.3	%		0.4	%
Greenville	RSF			3,856			125,923			238,253			107,208			537,891
	% of Total Office RSF			0.0	%		0.6	%		1.2	%		0.5	%		2.6	%
	Annualized Revenue	3/	$	133		$	1,594		$	4,564		$	1,592		$	7,440
	% of Total Office Annl Rev			0.0	%		0.4	%		1.3	%		0.4	%		2.1	%
Kansas City	RSF			27,915			131,758			149,135			83,240			403,180
	% of Total Office RSF			0.1	%		0.6	%		0.7	%		0.4	%		2.0	%
	Annualized Revenue	3/	$	572		$	2,750		$	3,306		$	1,768		$	9,272
	% of Total Office Annl Rev			0.2	%		0.8	%		0.9	%		0.5	%		2.6	%
Memphis	RSF			39,502			203,291			127,762			99,861			527,560
	% of Total Office RSF			0.2	%		1.0	%		0.6	%		0.5	%		2.6	%
	Annualized Revenue	3/	$	770		$	4,078		$	2,516		$	1,943		$	9,510
	% of Total Office Annl Rev			0.2	%		1.1	%		0.7	%		0.5	%		2.6	%
Nashville	RSF			51,013			351,206			477,167			231,898			1,568,845
	% of Total Office RSF			0.3	%		1.7	%		2.3	%		1.1	%		7.7	%
	Annualized Revenue	3/	$	1,110		$	7,219		$	9,739		$	4,429		$	27,057
	% of Total Office Annl Rev			0.3	%		2.0	%		2.7	%		1.2	%		7.5	%
Orlando	RSF			8,505			156,823			7,489			23,796			168,693
	% of Total Office RSF			0.0	%		0.8	%		0.0	%		0.1	%		0.8	%
	Annualized Revenue	3/	$	78		$	2,896		$	181		$	440		$	3,105
	% of Total Office Annl Rev			0.0	%		0.8	%		0.1	%		0.1	%		0.9	%
Piedmont Triad	RSF			20,808			227,833			195,448			280,800			1,183,231
	% of Total Office RSF			0.1	%		1.1	%		1.0	%		1.4	%		5.8	%
	Annualized Revenue	3/	$	516		$	3,778		$	3,319		$	3,208		$	15,364
	% of Total Office Annl Rev			0.1	%		1.1	%		0.9	%		0.9	%		4.3	%
Research Triangle	RSF			136,776			511,910			901,713			356,743			1,856,137
	% of Total Office RSF			0.7	%		2.5	%		4.4	%		1.8	%		9.1	%
	Annualized Revenue	3/	$	2,204		$	10,545		$	15,904		$	6,664		$	32,619
	% of Total Office Annl Rev			0.6	%		2.9	%		4.4	%		1.9	%		9.1	%
Richmond	RSF			82,530			332,574			258,266			303,795			707,942
	% of Total Office RSF			0.4	%		1.6	%		1.3	%		1.5	%		3.5	%
	Annualized Revenue	3/	$	1,230		$	6,058		$	5,128		$	4,920		$	11,728
	% of Total Office Annl Rev			0.3	%		1.7	%		1.4	%		1.4	%		3.3	%
Tampa	RSF			134,800			339,045			372,107			213,612			1,731,282
	% of Total Office RSF			0.7	%		1.7	%		1.8	%		1.0	%		8.5	%
	Annualized Revenue	3/	$	2,476		$	7,252		$	7,752		$	4,341		$	32,608
	% of Total Office Annl Rev			0.7	%		2.0	%		2.2	%		1.2	%		9.1	%
Other	RSF			1,095			982			8,949			12,707			40,237
	% of Total Office RSF			0.0	%		0.0	%		0.0	%		0.1	%		0.2	%
	Annualized Revenue	3/	$	5		$	22		$	224		$	363		$	975
	% of Total Office Annl Rev			0.0	%		0.0	%		0.1	%		0.1	%		0.3	%
Total	RSF			630,576			3,300,589			3,294,361			2,089,231			11,035,037
	% of Total Office RSF			3.1	%		16.2	%		16.2	%		10.3	%		54.2	%
	Annualized Revenue	3/	$	11,156		$	61,179		$	61,418		$	35,309		$	189,926
	% of Total Office Annl Rev			3.1	%		17.0	%		17.1	%		9.8	%		52.9	%

^1/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

^2/ Includes 149,000 square feet of leases that are on a month to month basis or 0.7% of total annualized revenue

^3/ Annualized Revenue is September, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Highwoods Properties, Inc. Page 24 9/30/04

Industrial Lease Expirations by Market by Year

Dollars in thousands

			20041/			2005			2006			2007			Thereafter
Atlanta	RSF			85,772			708,624			333,292			654,213			978,750
	% of Total Industrial RSF			1.2	%		9.8	%		4.6	%		9.1	%		13.6	%
	Annualized Revenue	2/	$	410		$	3,378		$	2,017		$	3,296		$	4,705
	% of Total Industrial Annl Rev			1.2	%		10.0	%		6.0	%		9.8	%		13.9	%
Charlotte	RSF			4,712			30,422			42,190			30,524			6,081
	% of Total Industrial RSF			0.1	%		0.4	%		0.6	%		0.4	%		0.1	%
	Annualized Revenue	2/	$	56		$	317		$	379		$	299		$	57
	% of Total Industrial Annl Rev			0.2	%		0.9	%		1.1	%		0.9	%		0.2	%
Greenville	RSF			4,794			0			16,081			0			13,820
	% of Total Industrial RSF			0.1	%		0.0	%		0.2	%		0.0	%		0.2	%
	Annualized Revenue	2/	$	59		$	—		$	201		$	—		$	58
	% of Total Industrial Annl Rev			0.2	%		0.0	%		0.6	%		0.0	%		0.2	%
Kansas City	RSF			0			2,018			0			0			1,756
	% of Total Industrial RSF			0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
	Annualized Revenue	2/	$	—		$	17		$	—		$	—		$	20
	% of Total Industrial Annl Rev			0.0	%		0.1	%		0.0	%		0.0	%		0.1	%
Piedmont Triad	RSF			402,563			1,058,945			590,373			1,206,585			948,825
	% of Total Industrial RSF			5.6	%		14.7	%		8.2	%		16.8	%		13.2	%
	Annualized Revenue	2/	$	1,427		$	4,075		$	2,432		$	5,111		$	4,715
	% of Total Industrial Annl Rev			4.2	%		12.1	%		7.2	%		15.1	%		14.0	%
Research Triangle	RSF			7,446			39,189			11,887			0			22,327
	% of Total Industrial RSF			0.1	%		0.5	%		0.2	%		0.0	%		0.3	%
	Annualized Revenue	2/	$	65		$	346		$	118		$	—		$	227
	% of Total Industrial Annl Rev			0.2	%		1.0	%		0.3	%		0.0	%		0.7	%
Total	RSF			505,287			1,839,198			993,823			1,891,322			1,971,559
	% of Total Industrial RSF			7.0	%		25.5	%		13.8	%		26.3	%		27.4	%
	Annualized Revenue	2/	$	2,017		$	8,133		$	5,147		$	8,706		$	9,782
	% of Total Industrial Annl Rev			6.0	%		24.1	%		15.2	%		25.8	%		29.0	%

^1/ Includes 165,000 square feet of leases that are on a month to month basis or 0.2% of total annualized revenue

^2/ Annualized Revenue is September, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Highwoods Properties, Inc. Page 25 9/30/04

Customer Diversification^1/

September 30, 2004

Dollars in thousands

Top 20 Customers

Customer	RSF	Annualized Revenue2/		Percent of Annualized Revenue2/		Average Remaining Lease Term in Years
Federal Government	1,084,079		20,362	4.76	%	6.4
AT&T	541,313	$	10,211	2.39	%	4.3
Price Waterhouse Coopers	297,795		7,313	1.71	%	5.6
State Of Georgia	365,076		7,134	1.67	%	4.4
Sara Lee	1,195,383		4,682	1.10	%	2.9
IBM	194,934		4,105	0.96	%	1.4
Northern Telecom	246,000		3,651	0.85	%	3.4
Volvo	270,774		3,502	0.82	%	4.8
US Airways	295,046		3,375	0.79	%	3.2
Lockton Companies	132,718		3,303	0.77	%	10.4
BB&T	229,459		3,234	0.76	%	6.9
T-Mobile USA	120,561		3,058	0.72	%	1.8
Bank of America	151,633		3,042	0.71	%	4.7
ITC Deltacom3/	147,379		2,987	0.70	%	0.6
CHS Professional Services	162,374		2,896	0.68	%	2.3
Ford Motor Company	125,989		2,727	0.64	%	5.4
MCI	132,208		2,627	0.61	%	1.8
IKON	181,361		2,609	0.61	%	3.1
Hartford Insurance	116,010		2,508	0.59	%	2.1
Aspect Communications	116,692		2,328	0.54	%	2.2
	6,106,784	$	95,654	22.38	%	4.5

By Industry

Category	Percent of Annualized Revenue2/
Professional, Scientific, and Technical Services	22.7	%
Insurance	9.7	%
Manufacturing	8.6	%
Telecommunication	8.3	%
Finance/Banking	8.0	%
Retail Trade	7.0	%
Government/Public Administration	6.7	%
Health Care and Social Assistance	5.8	%
Wholesale Trade	4.4	%
Administrative and Support Services	3.7	%
Transportation and Warehousing	3.3	%
Real Estate Rental and Leasing	3.2	%
Other Services (except Public Administration)	2.8	%
Accommodation and Food Services	2.5	%
Information	2.2	%
Educational Services	1.1	%
	100.0	%

^1/ Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

^2/ Annualized Revenue is September, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

^3/ ITC Deltacom (formerly Business Telecom) is located in a property that, as of September 30, 2004, is under contract for sale. The sale is projected for either the fourth quarter of 2004 or the first quarter of 2005.

Highwoods Properties, Inc. Page 26 9/30/04

Same Property Performance

Dollars in thousands

	Three months ended September						Percentage Change
	2004			2003
Rental revenues	$	102,045		$	103,063		-1.0	%
Straight Line rent		1,710			843		102.8	%
Lease termination fees1/		1,547			1,191		29.9	%
Operating expenses		(37,684	)		(36,789	)	-2.4	%
Net operating income	$	67,618		$	68,308		-1.0	%
Average Occupancy		83.0	%		82.8	%	0.2	%
Rentable Square Feet		32,583,000			32,583,000
	Nine months ended September						Percentage Change
	2004			2003
Rental revenues	$	305,696		$	310,078		-1.4	%
Straight Line rent		5,100			4,657		9.5	%
Lease termination fees1/		2,291			2,422		-5.4	%
Operating expenses		(110,965	)		(108,749	)	-2.0	%
Net operating income	$	202,122		$	208,408		-3.0	%
Average Occupancy		82.6	%		83.0	%	-0.5	%
Rentable Square Feet		32,583,000			32,583,000

Market	2003 to 2004 3rd Quarter NOI Change		2003 to 2004 YTD NOI Change
Atlanta	-6.5	%	-8.7	%
Charlotte	-4.8	%	-8.2	%
Columbia	1.4	%	-16.1	%
Greenville	0.8	%	-3.3	%
Kansas City	4.8	%	-1.2	%
Memphis	-3.8	%	-1.9	%
Nashville	-1.3	%	0.3	%
Orlando	-15.5	%	-1.7	%
Piedmont Triad	-0.9	%	-4.8	%
Research Triangle	2.5	%	1.4	%
Richmond	18.7	%	7.0	%
Tampa	-15.0	%	-8.8	%
	-1.0	%	-3.0	%

^1/ Excludes WorldCom settlement proceeds of $14.4 million

Highwoods Properties, Inc. Page 27 9/30/04

Acquisition Activity

Dollars in thousands

Name	Market	Type 1/	Date Acquired	Square Footage	Total Cost
First quarter 2004:
Signature Plaza	Orlando	O	03/02/04	274,000
Capital Plaza I	Orlando	O	03/02/04	242,000
Capital Plaza II	Orlando	O	03/02/04	303,000
Landmark I	Orlando	O	03/02/04	226,000
Landmark II	Orlando	O	03/02/04	225,000
				1,270,000	$	171,526	2/
Windsor at Metro Center3/	Orlando	O	03/02/04	88,000	$	6,100	3/
Second quarter 2004:
None
Third quarter 2004:
None
				1,358,000	$	177,626
Joint Venture Acquisitions
	Market	Type1/	Date Acquired	Square Footage	Cost
First quarter 2004:
Glenridge 100	Atlanta	O	02/26/04	91,500
Glenridge 200	Atlanta	O	02/26/04	93,900
				185,400	$	23,850	4/
Second quarter 2004:
None
Third quarter 2004:
None

^1/ The letter “O” represents Office

^2/ As discussed in Notes 3 and 18 to the financial statements included in our amended 2003 Form 10K, these five properties held in the MG-HIW LLC joint venture and the related $136.2 million of mortgage debt were consolidated in our statements. In March we acquired our partners 80% interest in the joint venture entity that owns these properties. The $171.5 million amount reflects the $62.5 million to acquire the MG's 80% equity interest and MG"S 80% interest in the $136.2 million related debt.

^3/ We purchased our partner’s 50% interest in this Metrowest property.

^4/ We purchased a 40% interest in these two properties.

Highwoods Properties, Inc. Page 28 9/30/04

Disposition Activity

Dollars in thousands

Name	Market	Type 1/	Date Sold	Square Footage	Gross Sales Price
First quarter 2004:
Brookside Shopping Center	Kansas City	R	01/29/04	111,800
63rd & Brookside Building	Kansas City	O	01/29/04	7,800
				119,600	$	15,250
Northpark I	Raleigh	O	03/28/04	42,300		4,500
Second quarter 2004:
1309 E. Cary Street	Richmond	O	05/21/04	16,000		1,075
Highwoods Preserve III	Tampa	O	06/16/04	176,000		20,190
1035 Fred Drive	Atlanta	I	06/24/04	100,000		2,000
Third quarter 2004:
Sabal Tech Center	Tampa	O	08/10/04	58,600		3,350
Lake Plaza East	Raleigh	O	08/16/04	71,800		5,850
				584,300	$	52,215

Assets Contributed to Joint Ventures

	Market	Type 1/	Date Contributed	Square Footage	Gross Sales Price
First quarter 2004:
None
Second quarter 2004:
Signature Plaza	Orlando	O	06/28/04	274,000
Capital Plaza I	Orlando	O	06/28/04	242,000
Capital Plaza II	Orlando	O	06/28/04	303,000
Landmark I	Orlando	O	06/28/04	226,000
Landmark II	Orlando	O	06/28/04	225,000
				1,270,000	$	126,900	2/
Third quarter 2004:
None

^1/ The letters “O” and “R” represent Office and Retail, respectively.

^2/ As discussed in Note 4 to the financial statements in our amended 2003 Form 10K, the Company sold a 60% equity interest in the subsidiary that owned these five properties and retained a 40% interest. The $126.9 million amount reflects $41.1 million cash received, net of future payments required to be paid by the Company for leasing and tenant improvements, and $85.8 million representing 60% of the $143 million debt.

Highwoods Properties, Inc. Page 29 9/30/04

Development Activity

Dollars in thousands

Property	Market	Type 1/	Rentable Square Feet	Anticipated Total Investment		Investment @ 09/30/04		Pre- Leasing		Estimated Completion Date	Estimated Stabilization Date
In-Process
Center for Disease Control	Atlanta	O	109,000		21,375		—	100	%	4Q05	4Q05
Saxon	Richmond	O	112,000		14,829		2,492	100	%	3Q05	3Q05
FBI	Tampa	O	112,000		26,634		6,721	100	%	3Q05	3Q05
Total or Weighted Average			333,000	$	62,838	$	9,213	100	%
Completed Not Stabilized2/
National Archives Record Administration	Atlanta	I	350,000	$	20,387	$	13,991	100	%	3Q04	4Q05
Total or Weighted Average			350,000	$	20,387	$	13,991	100	%

Developed for Sale

	Market	Type 1/	Rentable Square Feet	Anticipated Total Investment		Investment @ 09/30/04		Pre- Sales		Estimated Completion Date
Grove Park Condominiums	Richmond	O	65,000	$	6,163	$	5,578	80	%	4Q04

^1/ The letters “O”, and “I” represent Office and Industrial, respectively.

^2/ This property contributed $53,000 in Net Operating Income (Property Revenue - Property Expense) in Q3 2004.

Highwoods Properties, Inc. Page 30 9/30/04

Development Land

September, 2004

Dollars in thousands

		Developable Square Footage			Total Estimated Market Value
Market	Acres	Office	Retail	Industrial
On Balance Sheet:
Research Triangle	365	2,774,000	60,000	162,000	$	62,200
Atlanta	249	270,000	1,100,000	1,390,000		35,200
Piedmont Triad	151	787,000	37,000	1,190,000		21,400
Kansas City1/	87	725,000	91,000	—		22,800
Charlotte	79	771,000	—	—		14,300
Richmond	50	688,000	—	—		9,500
Orlando	49	1,151,000	—	—		13,400
Nashville	48	830,000	—	—		12,900
Baltimore	45	862,000	—	—		15,600
Tampa	31	462,000	—	15,000		12,200
Memphis	22	288,000	—	—		4,200
Greenville	12	150,000	—	—		1,800
Jacksonville	10	80,000	—	—		1,200
Columbia	2	20,000	—	—		300
	1,200	9,858,000	1,288,000	2,757,000	$	227,000
Deferred or optioned:
Atlanta	25	—	500,000	—
Richmond	11	91,000	—	—
	36	91,000	500,000	—
Total	1,236	9,949,000	1,788,000	2,757,000

^1/ Includes 27 acres of residential land

Highwoods Properties, Inc. Page 31 9/30/04

Unconsolidated Joint Ventures Assets, Debt and Liabilities

September 30, 2004

Dollars in thousands

				Venture’s Books
Joint Venture	Type 1/	Own%		Total Assets		Debt		Total Liabilities
Board of Trade Investment Co.	O	49.0	%	$	8,237	$	612	$	1,074
Dallas County Partners I, LP	O/ I	50.0	%		44,039		40,976		42,952
Dallas County Partners II, LP	O	50.0	%		16,980		21,545		22,611
Dallas County Partners III, LP	O	50.0	%		53,630		—		19,245
Fountain Three	O/ I /R	50.0	%		33,759		29,101		30,689
RRHWoods, LLC	O/ M	50.0	%		81,387		69,828		72,616
Kessinger/Hunter, LLC	—	26.5	%		7,929		—		—
4600 Madison Associates, LP	O	12.5	%		21,710		16,192		17,254
Highwoods DLF 98/29, LP	O	22.8	%		137,646		66,472		68,693
Highwoods DLF 97/26 DLF 99/32, LP	O	42.9	%		112,951		58,497		62,277
Highwoods-Markel Associates, LLC	O	50.0	%		50,226		39,597		40,154
MG-HIW Metrowest I, LLC	O	50.0	%		—		—		—
MG-HIW Metrowest II, LLC	O	50.0	%		—		—		—
Concourse Center Associates, LLC	O	50.0	%		14,422		9,564		9,857
Plaza Colonnade, LLC	O/R	50.0	%		59,529		48,065		49,874
Highwoods KC Glenridge Office, LP	O	40.0	%		24,889		16,500		17,137
Highwoods KC Glenridge Land, LP	O	40.0	%		770		250		255
Highwoods KC Orlando, LLC	O	40.0	%		220,320		143,000		148,703
Total				$	888,424	$	560,199	$	603,391

				Highwoods’ Share of Joint Venture
Joint Venture	Type 1/	Own%		Total Assets		Debt		Total Liabilities
Board of Trade Investment Co.	O	49.0	%	$	4,036	$	300	$	526
Dallas County Partners I, LP	O/ I	50.0	%		22,020		20,488		21,476
Dallas County Partners II, LP	O	50.0	%		8,490		10,773		11,306
Dallas County Partners III, LP	O	50.0	%		26,815		—		9,623
Fountain Three	O/ I /R	50.0	%		16,880		14,551		15,345
RRHWoods, LLC	O/ M	50.0	%		40,694		34,914		36,308
Kessinger/Hunter, LLC	—	26.5	%		2,101		—		—
4600 Madison Associates, LP	O	12.5	%		2,714		2,024		2,157
Highwoods DLF 98/29, LP	O	22.8	%		31,397		15,162		15,669
Highwoods DLF 97/26 DLF 99/32, LP	O	42.9	%		48,490		25,113		26,736
Highwoods-Markel Associates, LLC	O	50.0	%		25,113		19,799		20,077
MG-HIW Metrowest I, LLC	O	50.0	%		—		—		—
MG-HIW Metrowest II, LLC	O	50.0	%		—		—		—
Concourse Center Associates, LLC	O	50.0	%		7,211		4,782		4,929
Plaza Colonnade, LLC	O/R	50.0	%		29,765		24,033		24,937
Highwoods KC Glenridge Office, LP	O	40.0	%		9,956		6,600		6,855
Highwoods KC Glenridge Land, LP	O	40.0	%		308		100		102
Highwoods KC Orlando, LLC	O	40.0	%		88,128		57,200		59,481
Total				$	364,118	$	235,839	$	255,527

^1/ The letters “O”, “I”, “R”, and “M” represent Office, Industrial, Retail, and Multi-Family, respectively.

Highwoods Properties, Inc. Page 32 9/30/04

Unconsolidated Joint Ventures Income

For the three months ended September 30, 2004

Dollars in thousands

			Venture’s Books
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Board of Trade Investment Co.	49.0	%	$	643	$	430	$	13	$	116	$	84
Dallas County Partners I, LP	50.0	%		3,868		1,410		717		478		1,263
Dallas County Partners II, LP	50.0	%		1,497		623		554		186		134
Dallas County Partners III, LP	50.0	%		53		31		—		1		21
Fountain Three	50.0	%		1,723		766		529		374		54
RRHWoods, LLC	50.0	%		3,687		1,988		713		806		180
Kessinger/Hunter, LLC	26.5	%		1,633		1,193		—		174		266
4600 Madison Associates, LP	12.5	%		1,380		548		281		465		86
Highwoods DLF 98/29, LP	22.8	%		4,966		1,497		1,128		894		1,447
Highwoods DLF 97/26 DLF 99/32, LP	42.9	%		3,536		1,153		1,133		1,016		234
Highwoods-Markel Associates, LLC	50.0	%		1,644		375		574		368		327
Concourse Center Associates, LLC	50.0	%		526		155		174		83		114
Plaza Colonnade, LLC	50.0	%		20		1		—		8		11
Highwoods KC Glenridge Office, LP	40.0	%		915		390		204		160		161
Highwoods KC Glenridge Land, LP	40.0	%		—		1		—		—		(1	)
Highwoods KC Orlando, LLC	40.0	%		6,906		2,673		1,862		1,036		1,335
Total			$	32,997	$	13,234	$	7,882	$	6,165	$	5,716

			Highwoods’ Share of Joint Venture
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Board of Trade Investment Co.	49.0	%	$	315	$	211	$	6	$	57	$	41
Dallas County Partners I, LP	50.0	%		1,934		705		359		239		631
Dallas County Partners II, LP	50.0	%		749		312		277		93		67
Dallas County Partners III, LP	50.0	%		27		16		—		1		10
Fountain Three	50.0	%		862		383		265		187		27
RRHWoods, LLC	50.0	%		1,845		994		357		403		91
Kessinger/Hunter, LLC	26.5	%		433		316		—		46		71
4600 Madison Associates, LP	12.5	%		173		69		35		58		11
Highwoods DLF 98/29, LP	22.8	%		1,133		341		257		204		331
Highwoods DLF 97/26 DLF 99/32, LP	42.9	%		1,519		495		486		436		102
Highwoods-Markel Associates, LLC	50.0	%		822		188		287		184		163
Concourse Center Associates, LLC	50.0	%		263		78		87		42		56
Plaza Colonnade, LLC	50.0	%		10		1		—		4		5
Highwoods KC Glenridge Office, LP	40.0	%		366		156		82		64		64
Highwoods KC Glenridge Land, LP	40.0	%		—		—		—		—		—
Highwoods KC Orlando, LLC	40.0	%		2,762		1,069		745		414		534
Total1/ 2/			$	13,213	$	5,334	$	3,243	$	2,432	$	2,204

^1/ Highwoods’ Share of JV income shown above does not include the amortization of a $137K deferred gain.

^2/ Highwoods’ Share of JV income shown above does not include $290K of reimbursed administrative costs.

Highwoods Properties, Inc. Page 33 9/30/04

Unconsolidated Joint Ventures Income

For the nine months ended September 30, 2004

Dollars in thousands

			Venture’s Books
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Board of Trade Investment Co.	49.0	%	$	1,904	$	1,286	$	40	$	340	$	238
Dallas County Partners I, LP	50.0	%		8,908		4,270		2,021		1,407		1,210
Dallas County Partners II, LP	50.0	%		4,626		2,019		1,686		556		365
Dallas County Partners III, LP	50.0	%		162		96		—		5		61
Fountain Three	50.0	%		5,467		2,402		1,598		1,147		320
RRHWoods, LLC	50.0	%		10,489		5,848		1,961		2,536		144
Kessinger/Hunter, LLC	26.5	%		4,825		3,591		—		522		712
4600 Madison Associates, LP	12.5	%		3,936		1,673		853		1,328		82
Highwoods DLF 98/29, LP	22.8	%		14,861		4,287		3,398		2,657		4,519
Highwoods DLF 97/26 DLF 99/32, LP	42.9	%		11,088		3,318		3,409		3,132		1,229
Highwoods-Markel Associates, LLC	50.0	%		4,988		1,117		1,729		1,103		1,039
MG-HIW Metrowest I, LLC	50.0	%		—		5		—		—		(5	)
MG-HIW Metrowest II, LLC	50.0	%		141		88		39		70		(56	)
Concourse Center Associates, LLC	50.0	%		1,579		439		523		249		368
Plaza Colonnade, LLC	50.0	%		27		3		—		17		7
Highwoods KC Glenridge Office, LP	40.0	%		1,999		876		332		374		417
Highwoods KC Glenridge Land, LP	40.0	%		—		3		—		—		(3	)
Highwoods KC Orlando, LLC	40.0	%		7,187		2,752		1,924		1,036		1,475
Total			$	82,187	$	34,073	$	19,513	$	16,479	$	12,122
			Highwoods’ Share of Joint Venture
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Board of Trade Investment Co.	49.0	%	$	933	$	630	$	20	$	167	$	116
Dallas County Partners I, LP	50.0	%		4,453		2,134		1,011		703		605
Dallas County Partners II, LP	50.0	%		2,313		1,010		843		278		182
Dallas County Partners III, LP	50.0	%		81		48		—		3		30
Fountain Three	50.0	%		2,734		1,201		799		574		160
RRHWoods, LLC	50.0	%		5,246		2,923		981		1,267		75
Kessinger/Hunter, LLC	26.5	%		1,279		952		—		138		189
4600 Madison Associates, LP	12.5	%		492		209		107		166		10
Highwoods DLF 98/29, LP	22.8	%		3,391		978		775		606		1,032
Highwoods DLF 97/26 DLF 99/32, LP	42.9	%		4,760		1,423		1,463		1,344		530
Highwoods-Markel Associates, LLC	50.0	%		2,494		559		865		552		518
MG-HIW Metrowest I, LLC	50.0	%		—		3		—		—		(3	)
MG-HIW Metrowest II, LLC	50.0	%		71		44		20		35		(28	)
Concourse Center Associates, LLC	50.0	%		790		220		262		125		183
Plaza Colonnade, LLC	50.0	%		14		2		—		9		3
Highwoods KC Glenridge Office, LP	40.0	%		800		350		133		150		167
Highwoods KC Glenridge Land, LP	40.0	%		—		1		—		—		(1	)
Highwoods KC Orlando, LLC	40.0	%		2,876		1,101		770		414		591
Total1/ 2/			$	32,727	$	13,788	$	8,049	$	6,531	$	4,359

^1/ Highwoods’ Share of JV income shown above does not include the amortization of a $364K deferred gain.

Highwoods Properties, Inc. Page 34 9/30/04

Joint Ventures Long-Term Debt Detail

Dollars in thousands

Joint Venture	Own %		Lender	Interest Rate		Maturity Date	Loan Balance 09/30/04
Dallas County Partners I, LP	50.0	%	American Express	7.0	%	Sep-09		3,555
Dallas County Partners I, LP	50.0	%	American Express	6.9	%	Jun-09		7,531
Dallas County Partners I, LP	50.0	%	John Hancock Life Insurance Co.	7.6	%	Mar-08		3,027
Dallas County Partners I, LP	50.0	%	State Farm	7.1	%	Oct-08		3,079
Dallas County Partners I, LP	50.0	%	State Farm	7.9	%	Sep-06		3,053
Dallas County Partners I, LP	50.0	%	State Farm	7.5	%	May-07		4,421
Dallas County Partners I, LP	50.0	%	Bank of America	5.7	%	Oct-07		4,031
Dallas County Partners I, LP	50.0	%	State Farm	7.5	%	Dec-07		5,147
Dallas County Partners I, LP	50.0	%	Thrivent	8.5	%	Aug-10		1,697
Dallas County Partners I, LP	50.0	%	Union Planters	6.3	%	Jun-14		3,695
Dallas County Partners I, LP	50.0	%	Union Planters	7.2	%	Jan-06		497
Dallas County Partners I, LP	50.0	%	Bankers Trust	8.0	%	Jul-11		1,243
				7.1	%			40,976
Dallas County Partners II, LP	50.0	%	Principal Life Insurance Company	10.2	%	Jun-13		21,545
Fountain Three	50.0	%	John Hancock Life Insurance Co.	7.8	%	Jan-08		6,096
Fountain Three	50.0	%	American Express	6.9	%	Jun-09		4,025
Fountain Three	50.0	%	Thrivent	8.0	%	Oct-10		3,787
Fountain Three	50.0	%	Thrivent	7.3	%	Apr-09		3,628
Fountain Three	50.0	%	Wells Fargo	8.2	%	May-08		2,311
Fountain Three	50.0	%	Lehman Brothers	8.0	%	Jul-09		3,638
Fountain Three	50.0	%	Thrivent	7.0	%	Sep-12		5,616
				7.5	%			29,101
RRHWoods, LLC	50.0	%	Industrial Revenue Bonds	1.0	%	Nov-15		23,000
RRHWoods, LLC	50.0	%	Bank of America	6.8	%	Sep-12		27,548
RRHWoods, LLC	50.0	%	Industrial Revenue Bonds	1.0	%	Sep-15		6,000
RRHWoods, LLC	50.0	%	Industrial Revenue Bonds	1.1	%	Nov-15		5,500
RRHWoods, LLC	50.0	%	Bank of America	5.7	%	Oct-07		4,085
RRHWoods, LLC	50.0	%	Union Planters	6.3	%	Jun-14		3,695
				3.9	%			69,828
Plaza Colonnade, LLC	50.0	%	Wells Fargo	3.5	%	Feb-06		29,378
Plaza Colonnade, LLC	50.0	%	Tax Incremental Financing	5.4	%	Mar-10		1,819
Plaza Colonnade, LLC	50.0	%	Tax Incremental Financing	6.0	%	Mar-16		4,395
Plaza Colonnade, LLC	50.0	%	Tax Incremental Financing	5.9	%	Mar-24		12,473
				4.4	%			48,065
4600 Madison Associates, LLC	12.5	%	State Farm	6.9	%	Apr-18		16,192
Board of Trade Investment Company	49.0	%	KC Board of Trade Clearing Corp.	7.8	%	Sep-07		612
Dreilander - Fonds 98/29	22.8	%	USG Annuity & Life Company	6.8	%	Apr-11		66,472
Dreilander - Fonds 97/26 and 99/32	42.9	%	Massachusetts Mutual Life Ins. Co.	7.7	%	May-12		58,497
Concourse Center Associates, LLC	50.0	%	Lincoln National Life Insurance Co.	7.0	%	Jul-10		9,564
KC Consult	40.0	%	Met Life	5.2	%	Jul-14		143,000
Highwoods - Markel Associates, LLC	50.0	%	Principal Life Insurance Company	5.8	%	Jan-14		39,597
Highwoods KC Glenridge Office	40.0	%	Wachovia	4.8	%	Jun-14		16,500
Highwoods KC Glenridge Land	40.0	%	Transwestern	0.0	%	Feb-05		250
				6.0	%		$	560,199
Highwoods’ Share of the above							$	235,839

Highwoods Properties, Inc. Page 35 9/30/04

Joint Ventures Portfolio Summary

As of September 30, 2004

Summary by Location:

	Rentable Square Feet 1/	Occupancy 2/		Percentage of Annualized Revenue -Highwoods' Share Only 3/
Market				Office		Industrial		Retail		Multi-Family		Total
Des Moines	2,245,000	92.3	%	30.1	%	3.8	%	1.1	%	3.7	%	38.7	%
Orlando	1,682,000	88.4	%	26.4	%	—		—		—		26.4	%
Atlanta	835,000	85.9	%	13.5	%	—		—		—		13.5	%
Raleigh	455,000	98.6	%	3.8	%	—		—		—		3.8	%
Kansas City	428,000	92.3	%	4.1	%	—		—		—		4.1	%
Piedmont Triad	364,000	100.0	%	4.2	%	—		—		—		4.2	%
Tampa	205,000	99.1	%	2.2	%	—		—		—		2.2	%
Charlotte	148,000	100.0	%	0.9	%	—		—		—		0.9	%
Richmond	413,000	99.8	%	5.6	%	—		—		—		5.6	%
Other	110,000	100.0	%	0.6	%	—		—		—		0.6	%
Total	6,885,000	92.3	%	91.4	%	3.8	%	1.1	%	3.7	%	100.0	%

^1/ Excludes Des Moines' apartment units

^2/ Excludes Des Moines' apartment occupancy percentage of 96.7%

^3/ Annualized Rental Revenue is September, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Highwoods Properties, Inc. Page 36 9/30/04

Joint Ventures Lease Expirations

September 30, 2004

Dollars in thousands

Year	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue1/		Average Rental Rate		Percent of Annualized Revenue1/
Total
Remainder of 2004	243,559	3.8	%	$	4,669	$	19.17	4.0	%
2005	675,547	10.5	%		11,812		17.49	10.1	%
2006	743,844	11.6	%		12,588		16.92	10.7	%
2007	383,686	6.0	%		7,858		20.48	6.7	%
2008	1,191,236	18.4	%		20,136		16.90	17.3	%
2009	897,093	13.9	%		16,549		18.45	14.1	%
2010	262,691	4.1	%		5,026		19.13	4.3	%
2011	371,923	5.8	%		8,218		22.10	7.0	%
2012	324,795	5.0	%		7,439		22.90	6.4	%
2013	708,066	11.0	%		13,740		19.40	11.7	%
2014 and thereafter	634,556	9.9	%		9,071		14.30	7.7	%
	6,436,996	100.0	%	$	117,106	$	18.19	100.0	%

^1/ Annualized Revenue is September, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12

Highwoods Properties, Inc. Page 37 9/30/04

Joint Ventures Development

Dollars in thousands

Property	% Ownership		Market	Rentable Square Feet	Anticipated Total Investment		Investment @ 09/30/04		Pre - Leasing		Estimated Completion Date	Estimated Stabilization Date
Plaza Colonade, LLC1/	50	%	Kansas City	285,000	$	71,500	$	59,529	76	%	4Q04	3Q05
Summit	50	%	Des Moines	35,000		3,559		3,190	75	%	3Q04	3Q05
Pinehurst	50	%	Des Moines	35,000		3,559		3,410	53	%	3Q04	3Q05
Sonoma	50	%	Des Moines	75,000		9,364		69	0	%	2Q05	2Q06
Total or Weighted Average				430,000	$	87,982	$	66,198	61	%
Highwoods’ Share of the above				355,000	$	39,309	$	33,065	61	%

^1/ Includes $16.2 million in investment cost that will be funded by tax increment financing

Highwoods Properties, Inc. Page 38 9/30/04