HIW - Earnings call transcript Q3 2021 | Highwoods Properties, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Highwoods Properties Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, October 27, 2021. I would now like to turn the conference over to Mark Mulhern. Please go ahead, Mr. Mulhern.

Brendan Maiorana

you. Thank Maiorana. Brendan is This you, operator, morning, and good everyone. Thank

Financial this Ted Leary, Klinck, me our Chief on Chief are call the Chief Mulhern, Mark Brian Joining our morning Executive Officer; and Officer. Operating our Officer;

NOI As is have on release not web. our the Investors or have at prepared supplemental, any you available yesterday's and website been section highwoods.com. on non-GAAP measures of FFO, On directly the today's such posted include measures. supplemental If received will custom, our today's our remarks measures earnings financial most they're these The both of non-GAAP include EBITDAre. a call, review the comparable of and GAAP release as reconciliation to

adverse condition made on call Forward-looking during releases effect length operating risks and SEC are the today's as and press our COVID-XX at These as are our discussed to well uncertainties pandemic our risks the in and financial statements subject of results. ongoing uncertainties, including filings.

events differ With Ted. that, undertake turn you update statements. a forward-looking and not As call over any the results duty does these actual materially forward-looking I'll and company can know, to the statements, to from now

Ted Klinck

morning. Thanks, Brendan. Good

results We solid our pleased and the financial are quarter. third operational with in

expect Delta the to Given year. the not our third not portfolio meaningfully did as new utilization emergence of increase the much as anticipated, usage variant, We leveling do XX%. now across we increase until quarter the in off around

nicely. the the parking sign resulting our predict, utilization and leases on to recover of and continue difficult progression continue customers pandemic to revenues the fortunately While to impact remain prospects office and

including XXX,XXX XXX,XXX feet new new average. activity of deals, with we long-term has deals. square deals. In XX the of call, second consistent I As We healthy, been leasing quarter, including during last particularly leases our feet signed total, XX new our leases, mentioned for square signed on

signed XX,XXX signed on pipeline. our year, gen first high square this we leases we have to eclipse feet which the XXX annual on watermark. us deals, pace of Plus, far new development So puts

Leasing increased In XX.X% basis. addition to also the leases and basis GAAP and in The customers. signed higher We of on growing solid net don't cash terms. asked term at reflecting a was about X.X% on value We're our long-term this average rents. effect apples-to-apples offset pandemic the effective was weighted healthy volume, rents for X.X years, by increased rent face CapEx confidence on but effective on longer office the spreads. a of the rents net track often

from is experience our effective mentioned year-to-date, look However, signed if the markets deals patterns. to the net to is the midpoint decline typical consistent change X% also on across recessionary second-gen our XX% you XXXX the XXXX previously, which with average we've solely in rents at decline the roughly at of in

have continue we last quarter, net effective As we rents noted stabilized. believe to

market their and may media In lease you X plans from upon announced customers substantially best local out these developments. we XX least have new As rents exploration BBDs. term this below quarter reports, are are years to in-place the relocate seen to X and at remaining, top of in have among our in buildings both, move

owners, employers. best As locations talent districts, strengths. quality believers competitive with business will plays office become for best are higher well-located our space advantage highly recruiting and the in we a to buildings strong war that amenitized for a flight accelerates, and This capitalized to

generate resilience our further continue growth, portfolio demonstrating and to and and activity quality. markets Our the

in strong our to of third Turning We quarter. results. the FFO per $X.XX delivered share

at the was also growth first NOI of repayment months rent cash the of strong property same X.X%, to agreed temporary pandemic. deferrals Our including during the

the per midpoint with in been our a we FFO would last outlook $X.XX XXXX $X.XX growth X.X%, our from last provided healthy NOI outlook up cash In updated to XXXX from same-property February. initial $X.XX FFO prior outlook night's to repayments, these and quarter. up have our at $X.XXX consistent Excluding still release, share,

growth same-property outlook to outlook. our midpoint cash up X%, raised the also our to We basis more X% from prior NOI points than at XXX

to investments. Moving

previously the million, late schedule we well are from improvements. World Atlanta, disclosed, and interest office strong portfolio at in development leases investment of ahead Charlotte already around near-term a for total planned in PAC Truist seeing Series including we BBD and rents where As signed in Park. We've Galleria the the parcel Braves acquired in the $XXX portfolio healthy and corner across building of July of hosting as Raleigh the as Cumberland the from to the are

our million to bring third mid-XXXX. to levels million to the noncore first sale for plan million assets of pre-acquisition by to we the dispositions acquisition. We accelerating quarter, know, X the you in closed total $XXX $XXX our balance sheet bringing $XXX back we announced $XXX since As million of by

high confident the of million towards are We end year we'll to of end the our $XXX million. outlook $XXX

of build-to-suit Highwood's largest in to million in Nashville, Asurion project delivered Hastings testament our keys this to pandemic, in We our the the of new Brasfield schedule team the Completing for of Turning We true ahead strength our Architecture. workplace on incredible development. this history. customer a early. development to months and partners X as midst and to Gorrie in development our a of $XXX project budget delivered the

and quarter, square BBD II $XXX Virginia and XX,XXX Springs Following developments of of Brentwood these million signed and the during both build-to-suit, Tampa. West pipeline leasing feet XX% of to the Nashville of leases development BBD our We’ve on the consists Midtown bringing buildings. delivery of for the Asurion WestShore

of the of properties have in outlook from the development low to announcement pipeline growing the have we end confidence before or end remains announcements The $XXX second bring zero million, million. increased demonstrating year-end. a to $XXX We of our to strong We prospects at potential high half next year. these stabilization

fundamentals return We our strong build-to-suit believe investments of customers. across healthy is continue to sign prospective planning from to significant workplaces see in anchor another We companies and interest markets. physical yet a

is for Highwoods more well-located billion future bank, can and Our development true value differentiator drive will term. long support over which the land of creation a than $X

Franklin, in land purchase Cool Springs We million. the of remaining District XX to of price thrilled $XX.X total Ovation of are BBDs acquired of Tennessee, a have Nashville's acres one for the at development

office partner and city the live, retaining the with mixed-use addresses working of the in sites. with this the high-quality while control to innovation anticipate -- tremendous of country premier one to multifamily Franklin property, hotel the as reimagine realize full potential development will of of We developers work, development play retail, and

noncore call far and We ahead We Since of acquired we of $XXX We over attractive a in returns. delivered We with long-term schedule. this valuations. maintaining I'd on delivered strong the ratio to the financial Before performance quarterly Asurion we properties to million project increased properties and of X.Xx. have operating balance share of attractive while $XXX X%. budget office I the debt-to-EBITDA raised turn since of the midpoint acquisition, year, strong of the have so the XXXX. like sold per Brian? dividend a $X.XXX million our over Brian, did outlook beginning sheet we portfolio our reiterate announcing $XXX a and FFO with flexible million all and

Brian Leary

good and Thanks, morning, Ted, everyone.

unprecedented a believe the While most the manageable healthy and to recent volume them, and the to since for and across scope quarter, their best office generated. they foresee long now is more migrate being and consistent The provides in in emerging best-in-class Where being increased quarterly Customers was back proved the clear take new getting ULI a to more bore Nashville see our they is portfolio's occupancy highlighted our number strong are which This focused future plans and for returning than decision-making is life Tour team XXXX perhaps and join the Raleigh, we and our XX number occupancy continues a and of talent-centric spring many very balance by the with are respectively, business, and in workplace times, PwC's product last many portfolio RFP a is are resiliency of others, face signing remote. variance X in workplaces quarter that ranked office, together, long-term located third accurately that any first migration third the BBD and feet square the has many so steady open With X, in a metrics trends levels most while have XX.X%, Delta our affordable BBD SunBelt. to course of at where enthusiastic and addition year. accelerate customers scale commute foundation plans some are the may of of quarter, NOI delayed discuss but million health and in flexible our posted. hear the of the customers, this estate of with cities that sentiment us period Highwoods great housing basis of growth. with time for the And that us to workplace from organizations activity the the impact and the markets on developing, and more positive care as is new points led modes options significant the week we leasing individuals matters. science holding BBDs and are were has consistent engineering we XX.X real operating and where times in inherent year, strategy, about ahead, the companies to common work pre-pandemic far their This to market have economy place XX% XXX of as talented sooner or also and plans. we're told are results for states ready of for growth. brunt been the we when the

X%. of which Charlotte levels market being plates quick above JLL and the nearly such and XXX,XXX There square we fourth back a points business quarter mentality, more markets, to -- for for an the the In up vacancy feet of Atlanta, unseen. on absorption in above the our quarter. license start open and continue sometimes Raleigh, at activity Nashville, to a there investors, by for leasing to sales discovered quarter. decreased ending Now increasingly the to pushed data are and net of as XXXX XXX,XXX noting market leases housing posting year-over-year let's in square get out-of-state individuals, stream signed sight be Atlanta Market prevalence rents work grocery of slightly the listings, is feet and are organizations positive off store and

of or for XX.X%. from In near the Nashville, Raleigh occupancy of at including first to we the expect with job quarter, this and come list several relocations achieved strong adding leases X new second-generation of announcements be signed relocations, many XXXX. feet of lists XX,XXX new of We headquarter the to top to half additional years square quarter-end

completed team HQX. new development Asurion of Gulch that stretches blocks mixed-use is and Central anchoring square foot better Our our Nashville's development city the the adjacent XXX,XXX part headquarters Amazon X to

leasing XX,XXX XX% last addition, in and up In pipeline. quarter development from Midtown of from feet strong lease II square first-generation Virginia our We the a XX% Springs signed leases we bringing at rate West, quarter. had

see to are continue of in and We their in projected both towards XXXX. tracking well latter half strong stabilizations interest the projects

our Mars X.X XXXX can one in and amid PetCare's our opportunities be and build we complementary mentioned, billion fortunate we acres, mixed-use maintain premier Class nation Having the value U.S. creation. $X over to land of a significant confident weathering Listed in development extremely represent acreage of of XXXX, additional densities the since A develop, roof Ted is in lease, unmatched million Nashville all conclusion, have nation. headquarters As by sizable bank home With that storm our the Kiplinger we These team $X ovation and we're growth remaining excited development. in of and to most high-quality County. of under well. residential, Suburban uses. continue it. purchase and square XXth support can one Williamson retail will of completed XXX we're developed In operate drive about successful feet billion is an to where affluent the future To hotel this development the portfolio to already end, office nearly the future we're that

more We workplaces best competitive talent than what they are ability to they retain achieve very Because in the not. see supporting and cannot of space our this, They're and apart. their customers' investing available. recruit our currency are growing as to they're new together customers

busy team place very reloading commute our development the pipeline the buildings. of delivered next best examples of for and has worthy is work Our generation making the

Highwoods each Our family effort, of, plays of and exceptional people success. It of we're and and throughout portfolio team a the role and this results truly in is proud member produced a every the our pandemic. quarter Mark? meaningful

Mark Mulhern

the $X.XX quarter. million net million $XXX.X Thanks, delivered share $XX.X we $X.XX from or an or $X.XX FFO income share Brian. of increase per per and in second of In third the quarter,

acquisition end of late in closed September Asurion the the million As and development noncore of July, Ted million mentioned, at on the $XXX from sold in the delivered PAC quarter. assets $XXX

moving While of that the lot there were in parts lot quarter, operational there a items activity financial results. unusual our of from a investment weren't impacted

to sheet. the balance Turning

obviously up leverage ticked due quarter's Our acquisition. this temporarily to

However, we our X.Xx quarter. turn X.Xx X.X are quarter, very debt-to-EBITDAre pleased at the third than that in prior was in increase the less

disposition debt We million several million our are late expected on limited maturities noncore currently $XXX disposition plan, metrics sheet over million have the to revolving pre-acquisition by facility, mid-XXXX. planned our Further, track until $XXX million $XXX return balance liquidity of with making and credit solid available to $XXX proceeds progress sold are XXXX on to next quarters. the having and on our we ample

to amount issuances to issued on the per development continue remain many in million, way with of the quarter, on the are During believe an of we our fund leverage-neutral arrows proceeds share in ATM a consistent a ATM and an shares quarter. our we average and basis. the second particularly efficient quiver, pipeline ATM $X.X incremental $XX.XX activity net at of of investments, modest one the for price measured

issuance starts. far we in these announcement signifying start future As modest confidence ATM low gives Ted end development funding increased future of to growing development mentioned, $XXX head investments. us so The XXXX a million, our in outlook on our the

per lease-up higher from the the Regarding our provided to outlook to $X.XX acquisition and February. and robust impact since per the rationale year, due of remainder from moving up $X.XX the quarter $X.XX the updated in $X.XX per from disposition midpoint higher results original share $X.XX activity core on per we've $X.XX from July the XXXX the to parts. a expectations $X.XX Asurion the of operations. $X.XX the of $X.XX parking $X.XX for from operations the development to impact third the due delivery earlier-than-expected XXXX outlook and year. the pipeline, share original impact outlook transient with the net our of $X.XX forward combination share share February, outlook from provided to for and FFO our prior in basis, dispositions, particularly major $X.XX of the early $X.XXX and of outlook up remainder of per FFO from to in and July, core rest to higher delivery noncore to faster-than-expected Compared Rolling for are and $X.XX better-than-expected increase our acquisition to share, $X.XX approximately $X.XX was the our corresponding higher build-to-suit rising parking Asurion revenues, impact to here our from

outlook challenging The well a normal notable XXXX. revenue. revenues on continues an far both our to X% the to to from and In line so below at parking recently up expect NOI growth with revenues mid-point improved quarterly the regularly in to more that fourth addition increase outlook. the than still parking OpEx points same do be utilization we've compared of our also July onset range in and pandemic, But we a X%, FFO tracking cash quarter transient but on We're to expenses OpEx reduced in of to operating rates. property basis we commented parking in averages parking both items outlook, given seen XXX said, our we've our the the increased Since XXXX of trajectory revenues, increase and forecast.

solid XXXX, to strengthen. of FFO, continue Since markets addition SunBelt we've $XXX nearly cash $X.X our properties, noncore of sold our the we’ve acquired flows and BBDs development. of in million billion assets to billion delivered $X.X high-quality our In of

our and frame. our of XXXX the to same We improvements in-place time increase share payout a strengthening XX% increase rents, per to grown meaningful evidenced XX% proud our declining The cash dividend since a an while quality is our over ratio are in very have of making by flows consistently that in steadily average simultaneously FFO cash portfolio.

Our combined over our outlook. long-term support improvement, continuous that with flows proven strengthening our future as about makes us bank track $X and and record land development a confident developer, can billion cash portfolio of a

is this Finally, my appreciate and quarterly call XXth earnings I all great last in the years. at your really interest Highwoods. over and questions Highwoods

great for ready for do is Highwoods' to Brendan we well-qualified will you continue a now are role helping and strong success. your As record know, CFO track of questions. job Operator, the

Operator

from Instructions] Manny Citi. comes with Korchman [Operator our question first And

Unidentified Analyst

on is then? initially the If Crane there's Parker entitled question you since since first about there's any guys Manny. site. what is been ago, been changes for This to years several Ovation any if My changes just were

Brian Leary

question be Parker, full now here. your side to on it’s regarding Thanks Brian under Ovation. couldn’t for I the more question excited control, entitlements. have specifically the

Let just now XXX everyone place which actually -- roads about there. in are acres, on dealable the remind that of the out to right what are out curb there XXX got we’ve me already our and

there’s better grading put part of system. $XX the been and million and of the part So already ground sewer in

which headquarters, and square full too. So of XXX,XXX PetCare’s It’s about already Mars as a square part we’re office, pet feet which X.X been first truly U.S. just entitled fantastic building. is customer of built innovative building, million feet. It’s the of a our

to we think flexibility, existing moment, then And at that’s the the That’s bullish units the but So kind that an having We out XXX,XXX retail. support retail could grace over see or you feet and to hotel XXX argue we’re plenty you of would than site approximately about. say needs moment. there, of ever at come and entitlement should XXX residential that if it, square more probably rooms.

Franklin supportive to density, of inviting more of doing a and of plan the that. these mixed-use we’re few so repositioning kind closed of more But a city we part the benefit of it, right reimagination be partnering and operators the reimagine the be uses for now Franklin with work office we’ve integrated of in to the kind of of be probably select would of What to adjacent all we next uses of city the plan be the get can of we’re group identifying we’ve of on ideally go into more to next complementary necessarily spending don’t will master an other, development need being the been that density, to that’s We really through and much then see we’ll master in each running other expedited going the but those – that Is plan and and the the now. since early high-class developers year. come helpful? with weeks, city ground Franklin hit

Unidentified Analyst

just still volumes is concession. TIs leasing Yes, And Concessions pretty your and right around just second for high then absolutely. now. overall my are

guys level, volumes you see think are term. back-to-work of the that as by tick concessions I mentality you that are strong back But growing towards stuff you of offset some of of to the guys pre-COVID in think sort your to mentioned are you may normalized mentioning and a markets. in base down a more this remarks, say? When opening would your some arguably few that in I it’s rent leasing start starting

Ted Klinck

net starting sort leases, level of things signed to competitive. market. to But jump have Tis to can want been quarters. in quarter were and is Parker, to it’s our and still as think to thankful and concessions or feet with off past now. bit there, square still have little higher And hopefully – new Highwoods alluded Brian has of on we’re face of are we’ve in. of this out Companies going hold meet stabilizing our competitive we’ve try the par new most customers markets, effective Brendan XXX,XXX I I competitive. that rates. and But Look, which do rents able it’s still but But start are higher. been rents you first couple we been free think rent a to,

Operator

Janney. question And our Stevenson is next from with Rob

Rob Stevenson

that a talked you people data, about having day to to it Or XX% out utilization in rate, are XX%? people when look you the card you when basis? regular Ted, day your key on constitute earlier the same is rotate in starting at more and

Ted Klinck

of have is have Yes. really, data That’s they really. back our come office America our most bringing only is of Charlotte Those work that the question. preen One, Bank their ones customers, that smaller the with are to a as the return folks XX% most that of great the we in really right? to real back, point started,

larger have out XXXX. sort push customers pushed early Our return year the later continued this of either or

right America, exception one Day. of is people back their the really they started So, bringing Bank Labor after

wave. and people few We’ve think XXX they year. the end the now a got between coming I brought roughly of in back more the back first increments

So or real not, but really company are each don’t any on within generally the data have people different smaller back. companies the

Brian Leary

things Rob, add I One other that you’ve of that to you types those maybe to company. is sensed think say thing it XXX swipes, the and Brian seen kind because there’s card our from card here. of some maybe

something out. are of this still kind of summer when and waves We companies we team doing saw these in this are team last or kind seeing

over period a XXX different with time. card swipes So XXX might of people you get

that of people have ramp and at back year. that we seeing the time are both they are So kind early I think up planning of same to next those to

Rob Stevenson

-- needs. in at Okay. same in a there’s overall a just week, and cubicles people office that’s versus everybody space people difference of the X remote Because nature rooms, utilization XX% altering but you wonder people space, having what days is if other X the conference call they’re I things of in and week exterior for that, space only terms of, but it, that how between thinking future tenants about that’s both big only, sort how a the looking where and days and

say, million, any I to to disposition I to whatever the year of million or of it part Is dispositions, end, the here? for guess does how is like we close ratable any accelerate you’re I is, it buyers into question December November, to likely So from $XXX sort $XXX get through by what your look dispositions more should that pace today? year-end. push mid-XXXX? guess, pace be With that’s of Are on expected of other the done interesting. acquisitions remaining, marketing, me

Ted Klinck

Sure. Rob.

So remarks, stated as transactions. done are about which we and initial $XXX $XXX million the midyear our to to million, XXXX. was million And half would year-end by of in million it other $XXX of $XXX closed $XXX we’ve our get $XXX guidance of $XXX million that thus far million, thought to million we by

upper So the we’re that by And going very over halfway end of year $XXX of to $XXX million. so. there feel confident be the initial range to to about million million $XXX range we’re million this our to at $XXX we or end

already – a you some again, that actually give the with by several we’ve remaining market second of And We the as year-end. should then got that hard do that indication. close should So deals few half have are in contract money well. under the

So a next I of see you’ll cadence dispose the and first continual quarter year. second into think

Rob Stevenson

pricing stuff how a softer? today? you expected, How the you in characterize little under would on And it better, Is coming little contract bit bit where a is that’s that?

Ted Klinck

to the Xs, high mid-Xs. cash of rate sell, low closed, to million cap to $XXX cash, The it’s than rate of what a remaining we been we’ve GAAP the have Xs mid- X% Sure. call roughly gap it, low in cap

$XXX low it’s million, all So cap, a which going together, think to in Xs put we than initially. you to that $XXX when had million better is mid-Xs we indicated total, GAAP, it be

Rob Stevenson

Okay.

Brendan Maiorana

Rob, just I wanted your question. on just up to follow timing

the dispositions from all sales have dilution think And expected practice, a the for So the the of that’s in midpoint unlike close for at of normal the fair that ’XX. remainder to the balance the our layered really that, I fourth mid-quarter, sort to of for those. the assume into of it’s on guidance we on quarter – the we in close outlook expect remainder average

It’s of the call at year. average. the all November roughly, be not end it’s in going So for middle the an it, of to

Rob Stevenson

Brendan. me, missed. Mark, to Okay. And be say wanted That’s helpful, for very lastly then you’ll just

Mark Mulhern

Very Thanks, of Rob. you. I it. nice appreciate

Operator

from is question with next our And Dave Baird. Rodgers

Dave Rodgers

start Brian, with leasing. I to Two ask I’ll you. wanted maybe questions on

it’s is the market high-quality brand-new clear space. for obviously your obviously, demand across, There’s developments. First this really across

So in anything was trend types the et questions, you about cetera, that the space the then that, can second-generation certain the talk – to any them X that suburban, to of And consistent of as I leasing just Pinnacle of even did could second in in to question building, can through done you talk would guess, anything kind there for discipher quarter? CBD, be have better Berry, you you us. there are keep is, moving Bath was space. on And conversations their you and and or that they kind of

Just helpful. any color around that would be

Brian Leary

Dave, great question.

growing. in-town need we still their to hard it’s they’re So and of do same kind space, the cases, in let and me the have of to some update hit you’re staying basically growing and They’re They the BBD In Nashville. second it. one first. Berry. accommodate Pinnacle in when Bass kind couldn’t

so that’s And part really of it.

a press. about and kind the even space. leasing a partnership Pinnacle local is the X written that’s partnership It’s been It’s the new player a bigger it’s there. bigger events performing think even I in of on

we’re excited keeping the So in and some them super in a kind of staying being occupancy the BBD that civic citizen. and – for and neighborhood

square than feet. XXX,XXX So is like less Pinnacle

selling booming in So other market next big of building the it lease is out. the market of one. middle Sogo never this is to Seasons really of that to to thing BBD we’ve a not right micro that of and mark had ability the kind the And Four the the

it second-gen global markets. team say One of chomping excited you that. regard, little leasing and is suburban different a they’re a urban about leases. that So in the it’s bit, on to on I a so our have depending pretty the bit question

of and you work our beverage you lot the BBD they of and of that a amenitizing assets of kind access out walkability might sure walked that suburban have have amenities, of repositioning sort underway We if of make some right to food kind same to location. on have those

those And out being so the the lines, market. received plans, time by for start they’re we vision warmly very laying as renderings,

I on like So second-gen of had I but the or across if the specifically, Ted felt know don’t board renewals it Brendan was any leasing. kind more and

Ted Klinck

maybe No, Novelis that’s even got of standpoint. well of just minimum And shy They BBDs time, and on on markets. they’re a buildings great years X The to could rent X.X, below X I plenty the years. years, of is our Pinnacle there would best are X market reiterate, right? almost Pinnacle We’ve in add in we’ve got I in and a think thing and throw just right. only from best

pretty feel pretty we – shape. we’ll be in in we’re good like good So

Dave Rodgers

One leasing, if at were could. we discount Nashville, Midtown should The level note of developments. at new mean, prior take and any those of? the that more expectations, on meeting I activity I

Ted Klinck

No. rates, the to dissimilar TI. been get been more we – leasing. a I a And activity rent, more our We’ve maybe fantastic. too second-gen We’ve able face think more to bit bit not little has little hold TI, free little

of is little in on those. terms timing, the both of we’re sort But maybe bit. net So of lease-up down track effect a on they’re

our last quarter. We And So XX% quarter very, XX% we’re very pleased the is with took to from went and then pipeline good. with during strong Midtown Tampa Virginia XX% prospects from very Springs XX% it II. to

encouraged. we’re So

Dave Rodgers

Ted, maybe, for one, Last Great. you. just specifically

bottom the you what to I year, the others. portfolio back, is you guys what down through causing obviously move the today bottom comes continue double the with think the is to right markets opportunity still You are? of PAC that this saw as set. are transaction or leasing Or pretty got you’ve and anything that existing confident you about there But as markets additional to some exit guess, the some on

Ted Klinck

that’s want. at at what our with. look what’s evaluating We’re just looking part have that looking and noncore, what’s think sure can – do demand demand right? I our Look, constantly business, we normal at meet we’re demand of to markets, we and core, the that make customers meet can We portfolio we trying

process for a us. constant So it’s

the about all We’re portfolio. capital upgrading and recycling

think something So us to see do to it’s over I you’re time. continue going

Brian Leary

to just here flip Dave, Ted’s to Brian on statement.

retain for to in assets our couch. with that talent, against against One the and out that recruit is day on but becoming tools not and their own of these just the their things business, day competing are laser-focused even use we we’re customers are

So we’re for doing be we’ll the and laser coming years. focused that on this,

Brendan Maiorana

to just again. pile on Dave, And Yes. maybe

since the mentioned, GAAP the As the assets billion I so those X in to really the or mean in And just acquisition, coming remarks, sold over are X we’ve Mark years. as then cap sales Ted at rate mentioned the in a fund PAC $X.X in of the cash past cap rate help Xs. the mid-Xs prepared low XXXX, on

think, is the than we the have So XX lot higher I ago. noncore what X was a currently, quality or noncore years that

I to over I think about we’ll to good past So continue do the we several portfolio has gone but very years. think where the that, feel

Operator

next Ronald Our question is from Stanley. with Morgan Kamdem

Ronald Kamdem

for quick couple of a Just me. ones

there Is $X a supply we of clearly looking hearing thinking you so delivered more how we’re billion what What’s since Should looking Should chain supply sort about to pipeline. sort are going should think lot thinking you’re about versus we back be one, XXXX forward, about we you’ve billion Just about of when differently? the what about looking the successfully difference – $X forward forth. we’re And and hearing thinking – delays given expect – delays? the chains. and about expect then

Brian Leary

Leary. Brian Ron,

shot one. Let me take a first this at

plenty talking There’s to Yellen labor Janet issues. chain So X people from kind about hard chain chain. this, supply supply about of construction issues and commodity there’s supply things right, of And leaders. there’s

issues supply raw hundreds point, material at folks feel some be those and know we in, need the its LA commodity going I get of ports that mean at or bows of way all satellite photo think work to getting off the all the are look just beach long you to the I that will pretty to out. bullish chain unloaded stuff.

So of construction through it’s labor the on prefab through the work. delivery industry side, through into work preconstruction work precast more forcing efficient

to think of and good to disruption. plan of we’re going larger new the we’ve is time they got supply right on on out investment talking in when to and their So much investment innovation I the than and to in believe The construction make going the add focus year cover new that through now, is get to worth think this, that, to most longer it’s that tables in chain thing more rent it we’re actually for cost talent. that that. potential a I But they about that year customers development, dose

us is slowing new those for construction, particularly starting their value down necessarily not it workforce. of terms So in customers that

Ronald Kamdem

Or of clearly, those target. And disposition on that and you then a but after mostly the a some it sort in the Great. just track call say that? or sort recycling. of my not completed, you of other of and portfolio take there you at should of quality, the to that to million this be – there’s quality sort portfolio, more? pigging step lower want? about questions. and portfolio second seems the on want when are one growth lower $XXX still lower that Are on to we you of lower just question are we done expect we look sort where The fair you of be bottom million, $XXX thinking back portfolio is was have to would – Once back going Or is

Ted Klinck

Sure.

go We’re always always we XX. a a mentioned through I just It’s rank ago, where process to assets recycling, each X minute as we year. our

if a And last capital look so at the you selling million $XX years, always over average. $XXX to on XX our million recycling we’re year

would the continue portfolio. expect continue to time that’s we over to So I as upgrade going

Brendan Maiorana

Brendan. is this Ron, And

active to that. been we add on – mentioned, to we as Ted of capital. mean Just recyclers I have

recyclers cash the flow be that of earnings record but is decade plus. past of We will over active growth capital, our and not continue detracted to from track

and to we’re share think flow. cash earnings still we’ve capital recycle per able that growing I per dividend proven So share, while

the formula feel be to I So we that we think ingredients going continue forward. like to able have

Operator

next is question And our Instructions] of [Operator America. from with Feldman Jamie Bank

Jamie Feldman

Great.

you the is those ’XX. of the there some your move-outs on you not not coming. might know of So expiration walk top know some tenant be us largest much I Can there? through larger comment of end I made through just Or really the the about tenant list?

Ted Klinck

Jamie. Sure,

to that largest XXXX, foot and is a known So actually vacate. have – through December XX,XXX be XXXX. we to square they’re customer expires going And our

We’re XX. vacating. a then got to and We’ve a be going XX,XXX-footer

XXs. X. our XXs top those then below that, it And we’ve got of are falls and a So into the couple

a XXXX. not through large of So customer lot exposures

Jamie Feldman

XX the Okay. are the those renew do and think And will you – those XX or too early?

Ted Klinck

XX known XX, sure a about, we’re not vacate. the is and

Jamie Feldman

Okay. backfill? And the about of what the potential

Ted Klinck

I I yet. think space for in any that don’t September don’t that one’s have we prospects think ’XX.

Brendan Maiorana

in though, best with that going of and But one it’s arguably XX on improvements in market on our in the what’s buildings the amenities.

I think have about folks that. some we on do good

Jamie Feldman

that is Where one?

Brendan Maiorana

Hagberg.

Jamie Feldman

Okay, fair. the And the is then XX? XX, where

Ted Klinck

The lot the and prospect have for XX of XX Tampa, a a that we in are space. both and

Jamie Feldman

point? markets say, we’re And or I of you of structural just be change step out pandemic is I markets or of and wanting whether assuming your a from in kind mean, submarkets thinking a here. pandemic suburbs. at back the can tenant the have I change then downtown read this the would even in mean it’s the Okay. taking it’s guess about whether around anything versus coming terms kind from which that work sentiment of hybrid most to you there

Ted Klinck

study back their I get in companies Jamie. out too what we’ve of is I a I came the workplace post the to day I mean haven’t pandemic. X to early, X got other out everybody with like just going and office. decided it’s just think that look

seeing sort well. as what that’s of think we’re I

got to going to get the workplace back to be. before I they figure work in think and folks out is the have get what customers their

So that pretty figure early I still think out. to it’s

Jamie Feldman

then I of development increased see low that And Okay. the end you such at the $XXX million. guidance

of on at high $XXX start the the there? sorry, low get what Can $XXX the And just you million yes, You $XXX you color still to end. get what’s million, $XXX have would your you end million? – million the provide more

Ted Klinck

still several a got build-to-suit ongoing on both for we’ve pre-lease a spec and be sure, building. So discussions would

So where multiple a to to what’s before discussions or going gives those we’re have of us confidence given yet. X the hit year. don’t that conversations know just exactly are, going just But end the it start

Jamie Feldman

Okay.

to like percentage sorry, in XX,XXX you say is to NOI of or go the XX, what just back occupancy? like And the expiration that would

Ted Klinck

million. to from million Revenue-wise $X higher they’re $X.X all no

Brendan Maiorana

basis. annual Yes,

Ted Klinck

an on annual That’s basis.

Mark Mulhern

basis, it’s and revenue. annual $XXX that’s annual Yes, million of a on base of, an call it,

So it’s small pretty annual a of revenue. percentage

Operator

those time. are at Mr. remarks. And the call for over the we all back I'll to closing any Klinck turn this questions have

Ted Klinck

contributions And I just conclude to you. want to significant the for his call, Highwoods. thank before we Thank Mark again

since XXXX. transitions he we a the you you the Highwoods. First well of in of as town. of as Mark Board for wish behalf member and Highwoods then in and around seeing family, On a of We forward Thanks, look your at our entire Directors CFO joining them our for retirement, weeks. of well-deserved as thank we to and interest seeing couple everybody, a forward NAREIT to many call, into look

Operator

for for rest participation, and and ladies does call great today. of you all And your gentlemen, that your We conclude our day. a thank have

may disconnect your line. You

Highwoods Properties (HIW) 27 Oct 212021 Q3 Earnings call transcript