HIW - Earnings call transcript Q3 2024 | Highwoods Properties, Inc.

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Operator

Good morning. Thank you for joining today's Highwoods Properties Q3 2024 Earnings Call. My name is Cole, and I'll be the moderator for today's call. [Operator Instructions]. I'd now like to pass the call over to Hannah True, Manager of Finance and Corporate Strategy. ahead. go Please

Hannah True

and operator, everyone. Thank good you, morning,

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

remarks prepared today's convenience, your have posted web. on been the For

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

Forward-looking filings. and subject uncertainties are statements well our to risks at discussed uncertainties. as length in These today's made are during press SEC risks our call releases and as

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

Theodore Klinck

financial excellent and good Hannah, Thanks, third and morning, again We reported in the quarter. operating performance everyone. once

first the the are we while delivered expectations, initial to of X the XXXX, that foundation our of term. sustainable building growth ahead long drive financial over results quarters For

line anticipated be continue this results than we better originally First, year bottom back our financial February. in to

outlook. included this since dispositions we share original During in not million of And the the strong this cash beginning and midpoint, higher $XX per the FFO flows. quarter. delivered than the per interest share rates of quarter, including that At up our is is our $X.XX of and noncore increase $X.XX $X.XX forecast, generated even FFO with year, were outlook

after signed strong of of strong organic XXXX. points occupied than the leases through is With our prominently and quarter, over but the Second, early of basis which rate rate square signed XXXX, of telegraphed we million should in growth XX%, our been trough our yet in very have -- throughout hasn't entire indicating feet that normal this occupancy year, X lease spread, roughly leasing sizable our occupancy XXX have most higher new that quarters leases pipeline have X.X first second-gen volumes where commenced. third new Xx in-service drive our organic long been a

continue on which now rate leased have XX% our progress prospects to our we Third, drive make pipeline, a and is we of pipeline development leased healthy to strong higher.

pipeline closed into assets sell and significant development deliver to driver growth over and cash months. we'll forward land continue stabilize. Fourth, quality the more next one a and will be additional reduce on higher asset properties. this noncore of the We and on flow sale noncore going these as small we recycle to use quarter several optimistic leverage. buildings Our are sales proceeds assets marketing close We're

acquisitions lenders the by list future laying high-quality throughout we're footprint. our wish of with for and owners foundation assets Finally, meeting

time have long bid-ask the to buyers We believed it between would spread for sellers take narrow. and

see first market rate investment the office we behind for the us, back now With up. a can sales to cut pathway open interest

quality portfolio in-service financial flows. leases commenced continue cash not making sheet, fortifying our already balance further significant but rate, our outperform pipeline of in a expectations. number have and development strong we that our yet our we improving long-term and Overall, We're our healthy to growth strengthen will our signed progress while and portfolio

hands-on commute to market portfolio, share both worthy driving and of balance to management is operations. customer service combination Turning locations, gains. approach and our strong The sheet, meaningful property our BBD

and XXX,XXX at included the square include renewals. New, square in of second strong quarter gen-leasing feet was feet XX,XXX are doesn't net expansions, that during which

stats market-wide Plus, year. mask most than view, rents, The highest are by in with with dynamics our than some highest for landlords. our which the in assets was seeking company's will getting Class middle elevated of higher improving starts rates of XX.X and remained ratio still lease competitive of the a our options X:X. are weighted large In under which, also previous in effective nonexistent. these deliver BBD less high-quality top-of-market new of average for the history fact, history. Stated our are the average. office construction in A vacancy space X-quarter essentially footprint. years, absorbed, There's rent there XX% users growing blocks our users space outpaced meaningful well-capitalized contractions but term more next by With Net spreads the

these the continue occupancy few over expect and us allow will drive rents. dynamics We should to next years, which

have bodes mandates are to several work. as culture past remote office easily with demand. building According a replicated of office space to of and the to collaboration full to quarters expect return the office large the KPMG value combination recent of In X high-quality limited is XX% of addition, next well future CEOs, development the steadily The U.S. for requirements blocks in-person to increased employers survey over a dwindling of starts over return and the return years. office increasing emphasizing that no

Turning to development.

feet including signed foot X.X we a million to pipeline $XXX XX,XXX retail build-to-suit leases, square quarter, square of million leased. XX% the first-gen our small During bringing

We year. additional several feet expect development don't new to other We have this announce strong projects to we for next sign an months. XXX,XXX over any square that prospects expect the

focused given and is seen the are we've to being close said, for pencil as any their the for That inquiries back current I the starts are in-person on decision, increasing being to evidence environment. large that a but very any teams. New characterize wouldn't developer experience interest these renewed anecdotal the coming of potential difficult users for are market build-to-suits. to

bright. may we XXXX. In range not land is an mentioned sold the so year. but to asset noncore the bringing earlier, to million Highwoods the the during $XX to noncore hit year-end, noncore of for believe outlook for dispositions in conclusion, $XXX we the our sales do end parcel included by outlook. a high our small third We've before We expect up of I million As early quarter, additional we

trough leasing portfolio this in drive year's Sunbelt our will BBD XXXX. by our following and in growth early evidenced to for demand strong. continues NOI be This As occupancy meaningful

pipeline development $XXX Our cash stabilizes and and our delivers interest earnings meaningful a will drive over it years. increase in next the flow is healthy as and million few seeing

shape allows portfolio. will remain is Our to on our supports enable excellent us continue our flows to balance investment Brian? which and sheet cash and strong, capitalize in in opportunities. And reinvesting attractive finally, dividend underlying our us

Brian Leary

quality leasing, is of occurring Thanks, emblematic we to Ted's our existing the be in development results Ted, hard-working happier and and third and overview across service deals morning flight across the pipeline team all. quality on good our quantity the our and couldn't quarter. of portfolio The markets. with posted Echoing

We're positive mentioned bias previously, we've landlords isn't physical quality our through a an we as to As rather for owner the operator. space, of square to the leasing commute quality worthy just momentum this access core an with is both flight on capital year-end. With representative quality this, the quarter. buildings, DNA is toward and quality which and about focused building to but experience, of signed XXX,XXX feet a

of workplace to highest in return a and and New retain XXX,XXX is feet decade order office. to our brightest performance that a over willingness best to their in a to a move quarterly leasing second-generation new testament secure and represents them the make customers' helps the recruit, square

in our remaining achieved square XXX,XXX Additionally, variety XXXX aggregate. Raleigh and largest expirations weighted for feet lease term. net effective average in and approximately Nashville XXXX and subsequent including Portfolio watermarks rent of across to X renewed and leasing quarter in a metrics, high of the end, we dollar stats meaningful

as spreads a also to GAAP relative XX.X% rent XX.X% asset, customers people. reinforce and most investment Our real cash relative their see belief real that in their estate valuable our their investment

portfolio's face and competitive XX.X% of line concessions Our payback our previous resilience the in in with the continued in average, highlighting is XX-quarter our market.

This tremendous continues their performance urban that food build-to-suit our of have to million impacted in curating best suburban which and quarter, adding district includes approximately are beverage customers in belief square XX% CBDs, relates fill XX% are worthiness, believe our out to This business pipeline both to X to square GlenLake. I XX,XXX to mixed-use and development location commute one's a we the leasing Raleigh. in office greatly of at leasing in in of support with the always workplace. one's complement representative This feet of XX% regional brewery customers BBDs activity is nature. Our feet draw where close aren't development This new be other and in the year-to-date which measure approach a at the our GlenLake will strategy and up, approach, commute. we is by third locations monolithic is in proving and the suburbs. the to interior to in options restaurant

the CBRE from activity down XX% X and Included in Turning reports that the greatest JLL the new our properties quarter's sublease reported construction its the & Alliance to highlighted inventory Wakefield leasing August. In peak, the of XX% A quarter. market's is is space of square no were garnering team almost our quarters. are Cushman and Class office expiration. quarter downsize XXXX leasing signed second for volume. reached end level Atlanta, Raleigh vacated We there feet, feet shrink, for deals. sublease new square lowest Overall, a foot Raleigh, feet signed availability and company's starts after square There, XX,XXX the renewed in of lease to In XXX,XXX during the modest square this representing markets. including number the who XXX,XXX backfill XXX,XXX in in a square quarter customer of substantial XXX,XXX feet largest

the Nashville net lowest looking noted unemployment of positive space over owns feet, market. X X million feet prospects market Moving square more to Highwoods active where square the square in with the are in nation's the and feet XX,XXX Wakefield to quarter million in and & reported for Cushman close absorption rate than

XXX,XXX Downtown of both signed and making repositioning quarter. the in quarter in Highwoodtizing And feet our XXXX Place, Springs BBD's. lease second feet. In the we after in which has third the renewed been the Our Brentwood XXX,XXX next seasoned move-outs largest square team asset been approach Nashville, successful expiration unique Symphony company's have Nashville finalized square workplace the for our to where square at of for end, XX,XXX plans represents Cool remaining Nashville, elsewhere opportunity in XXXX. no great proven have in This feet

up our of reposition iconic is towers creation and upon of work right take While Nashville's markets team tremendous one, I'd in of our to value light the Helene the the impact most like and stabilization. Wrapping of two upside Tampa our in to Milton. opportunity meaningful will Tampa, Hurricanes provide it highlight in one and time, wheelhouse will

personally back teammates for the many well came after sun when our of was still ready customers are While dealing fared portfolio the out. and effects storms, our the and with waiting

to approach their collaborative our of testament appreciative are a is solutions-oriented team's resilience portfolio's customers. our and greatly serving and we Our resilience to

and stable the and notes X.X feet represents JLL strong completed volume the market recent Tampa in the year-to-date report that activity Tampa Florida. in markets leasing million among their all market leasing square is of in greatest

Wakefield of highlighted U.S. that the one job Additionally, hottest in Cushman X the markets is and Tampa

For portfolio signed in includes hard heart Midtown including XXXX. In construction under applied Highwoods. of quarter quarter the quarter, restaurants, our is apartments. quarter Tampa strong only and in district, of to hotels for the a The XX% delivering was XX,XXX our of successful our of delivers stabilize market is third which which we've Midtown's XX,XXX first square the This first-generation market, closing, building work investment feet XXXX a feet the Midtown exceptional East pre-leased. leasing Whole joins the to and West foresight Foods and development, in in development results. East now the shops, Midtown and office our team one mixed-use is projected the asset square in second

portfolio an people metrics volume of Our and of flight a deliver exceptional and representative are who to leasing experience. quality

through delivering will core our in Highwoodtizing We and the Brendan? to most invest continue in SunBelt portfolio customer exceptional our approach BBD's. experience reenergizing our

Brendan Maiorana

to we improvements due net future write-off and modestly at Depreciation Thanks, doesn't the $XX.X cancellation was which does higher and through deferred FFO, Brian. during delivered the per Tivity $XX.X This and former million share relatively with foot of or of million expense, leasing lease clean In associated but per The an Nashville. income $X.XX the flow of of share. quarter. FFO square income costs the amortization quarter, third was the tenant XXX,XXX building was FFO a or perspective. in quarter impact $X.XX from net

years. this mentioned possibility a has The investment on us repay quarter's upfront call. the former customer we recall, over to may our X agreed next conference last You was

loans. capacity $XXX balance venture hand, At XX, Our from excellent of September nearly undrawn including sheet remains joint construction shape. our revolving million credit cash million total available had on in available and our liquidity, capacity $XXX facility, on we

These last over mentioned loans. early venture joint over million in of Granite & our we Park to and million ventures. source of are each the We point partner more QX, to some likely contributed quarter, these obtain joint future $XXX McKinney markets as future in repaid will favorable. in Olive financing As Granite, secured joint and Six our conditions ventures long-term be when capital $XXX a properties at the unconsolidated we plan secured

Brian and for higher company. especially driven vacant new which rents occupied leased lease highs average all-time leasing locked of the from and we lease quarter, quarter we leases were and volume, record on over than basis a lease rate space total Ted has revenue yet Net not strong also signed effective on leases points our million occupancy commenced space. plus second-gen As $XXX a our includes in signings, actual of terms This XX%. this currently mentioned, had signed but XXX leasing

volume, comes This landlords portfolios more cycle higher. a estate of with strong is term capital. high-quality to and leasing such able natural With the obviously when new drive part leasing occupancy real are rents capable

We the we and portfolio and are expect we average uptick push this well current weighted for healthy near fill flows given as lease drivers. cash future CapEx, term to We the handle embedded continue vacancy positioned terms. the of short-term to in growth leasing believe in pockets any in longer our trend

essentially range lower implies combination per and revenues, to higher implies our by from by the For midpoint a increase partially known outlook XXXX, at move-outs. of driven $X.XX FFO $X.XX share, unchanged average updated expenses XX%, NOI prior higher modestly telegraphed G&A. which compared to given has long increase been outlook. QX. is The occupancy The our $X.XX of is which our midpoint higher offset is a in our at reduced occupancy This expected all

likely. XX%. this now year, to the beginning year-end believe somewhere We half range most between the be to of of that projected upper At occupancy we XX% is

previously we've mentioned makes faster. A note occupancy achieved fourth items trough the As we that will early leasing and recovery higher us our expected, strong quarter, be quarter few be last our our expectations. we about this next will year confident to than year

spent compared X First, year QX to into is over to the to a incur attributable rather than level OpEx higher This prior of that we of largely expect the in expense the items the were certain quarters. timing late XXXX being ratably pushed quarters.

is in occupancy average projected mentioned, I lower as Second, to be QX.

were GlenLake no the and completed for Park Granite fourth quarter quarter. last the will III developments the in which Third, year, Six third interest have during OpEx capitalization

While portfolio our growth. in-service backdrop, results, development rent and locations and have these across gaining sheet potential combined growth This runway our items meaningful strengthen are for in future Sunbelt, and encouraged economics headwinds our share BBD our financial cash with in portfolio flow. To us we a stabilize, in-service we for create meaningful we're With short-term future over our as in strong time. wrap upside provides in balance embedded the occupancy up, high-quality the and we expect and recovers portfolio market the properties very to expect about strong to our pipeline Highwoods. earnings development

balance which sheet Finally, positions us Operator, capitalize for now excellent questions. investment in to are is on shape, opportunities. future ready we our

Operator

[Operator Blaine Our question Wells Heck Fargo. Instructions] first from with is

Blaine Heck

pay for space? then finding maybe sizes specific drove standout. that are you Can like can and you specific premium talk rate And the strength was to or Were comment more the in Atlanta on quarter? there more industries a that the leases in there that that any about looks you It active saw little rents right are whether market bit rental willing a tenants strength? you're

Theodore Klinck

quarter deal was economics, that services very that that -- a have couple services, had larger the a We We Atlanta. One without great out. a Yes, sorry, quarter then Blaine, Ted. one we a good one a of those and if front. GSA on firm the those you you was look, those, as morning, the one strong was financial it cash contribute in economics. back and had leasing But X, had I'm driving deals obviously, did we Hi and on did growth. professional were rent it's nailed drove in particular, even law

it It strength it's in right? a seeing we're quarter. all, So seeing the mix, on in. sort in markets of in -- our we're the some sort of all But just submarkets -- we're depends leasing past this it

can the then mean, we And terms respect get smaller longer pay TI and want. really If just to or with it for willing it depends customers -- on larger provide it. I think TIs are they're to I willing to depends. that

common newest and to quarters. still to quality I talked always that about some continues well. getting new -- say the been works willing is that we've pay flight you've and construction, a been the down interesting few sides but it, What's offering the it's that to talk buildings, that and we've chose We've we it's value of think of last higher the and because are It's to been for both what on where And not we're seeing customer, though theme customers about a to that's flight what also down out even pretty amenities play. capital. the always than ready And we've about shiniest, and brightest for more $XX I'm talk been times. we've is. won X X of me X X we've they where to our to several heard flight

it in cases, industry CEO ability type the who depends they're of they in, -- all many the the is. on just space to want? what who of is, it's on terms the -- customer So In

Blaine Heck

Great. Super helpful.

on schedule leasing a So guys it XX little looks up of you Springs. ahead like are

but do even in guess, first quarter. that with XX% stabilization got project be any I how that date potentially and on completion And revenue does at some early guys next feel you leased NOI in the contribute an your to as may as quarter already estimated XXXX, that about positivity your the on XXXX? recognizing of You've year? project of expected

Theodore Klinck

No, Yes. going XX well. is very Spring

it think and this quarter, XX%, moved we and moved XX% I last it very we to we was activity. it to quarter, see continue strong

strong more prospects. have We

I about movement And feet think get hopefully, prospects you'll next quarter our general, we a of we see, pipeline, in things of strong pipeline. if have think for square go. couple some XXX,XXX can our development I

probably finished quite ahead XX The building. a first still our first towards year. the And So be do we're And June. go. a then, you moves end of ways to next a rest yes, Springs, I Brendan, have ability in the of as But that? think in, will with quarter take respect of schedule. reminder, want We big to it's the to customer

Brendan Maiorana

it's Blaine, Brendan. Yes,

-- the And from more part weighted quarter of more towards later as but back would XX probably some terms good we contribution expect XXXX. half in just be Springs would year the it's that in question. quarter, will in So a 'XX. do year, of be even earnings move That and of mentioned, weighted then that towards Ted even in even middle because have fourth will it third kind customers in move then of we the some

should that, the contributor, additive we So kind good of think, along other quarters development 'XX. projects with, build that I we a I in throughout all as feel the think be be will

Blaine Heck

kind refreshing strategically, wherever about capital acceptable potential versus for needed an how but just waiting in any about mid-term? transaction to helpful. if those you've still in are any of is, lease-up market saving Are $XXX you and the thinking for any balance that guys price selling you That's dispositions I dispositions? the through just there? table then million Pittsburgh or returning now? portfolio Great. there identified between How exit off sooner you pricing properties of the think Pittsburgh guess the last very seeing the Do the can. to I or market And about maybe potential renovation near there. are are talk for maybe signs you Or the And some one question, think projects

Theodore Klinck

leasing look, Blaine, today, working -- team we've think deals. Sure. Pittsburgh got a on fact, I some in in up

a to right obviously, X.X the out since get last look, office we and hard the of really want deal locked the started it's capital time. interest up to done, know, But up of sort get rising You big any right? done. you it's Pittsburgh markets office get financing, as hard to got deal So to rates and at years the get

whole think over changed years. So I couple the a don't has last of lot

include look at time. from standpoint, the -- investment we are Pittsburgh As do to is a few be If into now get But been hit in a then we've and start interest overall seeing a think that's Pittsburgh. But couple right done, pretty I rate we think we're can this we're certainly, sell going sales to the up open market. in lot the we encouraging the whether of activity going I cuts. leasing year, think I that year an cuts the more sales to it the next Pittsburgh. investment meantime, at And what's would

activity at like to PPG, as we're more EQT there, we So see well. the seeing both starting activity

the both eventually to and just by out, overall going it's patient. encouraged I'm but our ability we're to get fundamentals be time, to and going So take then

Operator

Our next is Morgan Kamdem with from Ronald question Stanley.

Ronald Kamdem

quick me. two ones Just from

leasing the been front, on strong. starting has sort pretty which of Just

XX and at the number better my you share gain. then commentary number And of half just flight of any a sort is levels in -- of just of this year could XX next activity it's of talked are at terms is Or What just market? you -- more bottoming what really quality year? is two, the share overall think you of all of sort the more ending equal? else it where question occupancy thinking range the of guys so sort sort in sort the leasing I one, I guess plus about of it just, forth.

Brendan Maiorana

it's Ron, Hey morning. Brendan, good

of that for just outlook year-end. on so yes, first So kind

terms now. feel that upper occupancy. to we're we We comfortable we've in So for the originally said of XX said what think or of we half quarter past I is I range I XX, so in year-end part of feel the year, think think the

kind end of kind we'll and where XX.X of think between XX we year. somewhere the is So

expect be. that's So levels of kind where we to those

why better just that, overall I this is driven. that think we leasing been has that the that had market the share is I largely And feel higher year number is reason think or we've do activity why better.

we If in, to has as you going go And that relative that's spread all things our of markets forward that flight that look continued capital. widen. think to which to operate at quality have earlier, occupancy Ted and for is case we to to landlords we the the that, the kind likely that mentioned be buildings, flight-to-quality landlord access

year-end, talked So continue would would that known we've that past expect still about. part there. that vacates When have we in get of you the XXXX there's some we early

of We will that we mitigated in a leasing that later thus we've leasing commence the risk far 'XX. generally lot on think have done that through future

back in XXXX be really So year, as year second going progress a in the build through renewed. lower lot of 'XX. we last think And going we that once press the as XXXX the of of release, get But night part we're expiration, the to in first throughout disclosed trough vacates there the is remaining known is we first to our largest portfolio. for still the we aren't large because the half than it year-end you

So good feel we about that.

comparable to occupancy we standpoint, from think we'll year an probably XXXX. will we So somewhere where end next end

Ronald Kamdem

Great. really interesting. That's

So year. next sort of flattish

cap terms updated distressed provide some or what seeing especially there just get commentary cycle. distressed part couple back of a gears the back conversations getting thoughts not whether switching and we of it's little a Maybe you're of could start rate offense sort in opportunities. of know on capital offense? bit market. Any about Just on out this the had you to to I

Theodore Klinck

to continue assets of in maybe Ron. but There's not last market. in list traded that's of the a we there. the or quality Sure, wish a Look, out there's lot couple A quarter not so, just are lot. at everything look that

the to build. distress continues So I think

as still think the a bid-ask of as I there's there. spread lot -- well is

a don't environment. to they're lot want distressed, the -- So sellers sell if even this not that in of sellers

year, months So is X do the quarter optimism the the I up the by cuts couple by a a year. end can think next back be open into the my couple next to to of going we amount come get there's markets maybe of then next -- next the of the and of capital assets first going more quarters that fair are year, market Fed, early and to

lot as right not there's a But, there. now, out just of

continue wish to list hang work lot hoop the not We assets, out right our but now. and just around of there a

Operator

next Rob Stevenson with is question Our from Janney.

Robert Stevenson

start of selling are Or acquisition regardless opportunities you active opportunities? months? to of continue these $XXX to call it, I see be Ted, some acquisition how up until a it the teeing million thinking next, the down X is X the the some beyond sort to of guys of are dispositions you going you mean, about over assets over next to months. X much this of for while

Theodore Klinck

we Yes, -- at continuous we think our have asset you history, I Look, recyclers. if look Rob.

[indiscernible] we're pulling from repositioning So assets and always selling stuff. and the into higher quality bottom

a see include to Pittsburgh. million, does us you're continue do think just to I asked not question, I Blaine think reminder, So going that And it $XXX the that.

So a we're out last in them, what the we assets have years. the you're going marketing. And to several sold actively $XXX lot is us the see market that we've other of million like sell most what is

larger intensive. multi-tenant, I largely some assets capital think that are more of our

continue to markets that going us to higher and I quality capital the rotate assets up. back think opened see once into you're do So hopefully

Robert Stevenson

you land also desire been out or something looking office next your assets, else helpful. for pricing That's income-producing the at you characterize how Or beyond re-entitled development for to sites that for materially? there And actual pricing? apartments has How cycle? down Stayed this are the And would as then well relatively there as just flat? Okay. is guys have -- point? for gone

Theodore Klinck

I or we've you that if mixed-use as a multifamily think last several several a over older land developers bought several parcels use look Look, what done think better the maybe the land. that we job years years over as type better our not last selling off sold Yes. land We we bank, at BBD was office. well great had higher to is development and

probably look in bank it's shape I when at our So been it's today, best a land long in time. the

really land looking we're any right so now. not for actively And

we just past couple fact, sell parcels we year. In sold of parcel will a other a small then next quarter this have likely that and

hard given there's land of buy. we're parcels. right to not I out to making characterize out on the it, But offers buyers think it's there for there do So plenty

Brendan Maiorana

sub, held sorry, Yes. little to of million I'm plus the a Brendan. to that for going land it's noncore. In development we've and just between core Rob, bit. got add of $XXX kind

think to should down you time. I that number expect over go

probably than expect higher would carry. little to a that's what So we bit

So I think from capital get additional to that land land net than development? looking in will helpful of the for sales rather coming be acquire if door anything, in terms proceeds we'll

Robert Stevenson

Okay. Is that the in guidance? quarter contemplated any of fourth there

Brendan Maiorana

the quarter. $XXX million. that No. Nothing fourth Nothing in in in quarter fourth and nothing

Robert Stevenson

to you then quarter only And FFO hurricanes there fourth guys fortunately guys? reported number. earnings you X for impact Okay. any this Is point the from at

Brendan Maiorana

and at the there, most a kind incur not is significant but of of but I big looking probably little but bit of needle expect we felt -- costs, them. like good a expense of if modest impact a something there terms was would all that recover we're wouldn't something margin, not you're for those that there's say we to some there's operating that we it's it's would question. in in to a items. Yes, -- It's mover, expect nonrecoverable

Robert Stevenson

right. helpful. morning. Appreciate the That's All this time

Operator

Citi. is Griffin next with from Our question Michael

Michael Griffin

should this leases it you've average ask I that feet quarter-to-quarter leases signing there people rightsizing it leasing on dragging of by real some to on largely particularly their around and seem strong. kind in estate can it's lease more first to or we know committing has the large But done. their and impacted confidence terms an comes pipeline question footprint? of I my just they pretty expectation decision-makers been this to of that quarter, the are kind office maybe weighted fluctuate that kind still take as when wanted

Theodore Klinck

Yes, return do economy, and down Michael. of work. think quarters, the the it's also partially the couple think slowed Look, really decision-making to I has but last that's I

their or to and seen some sign lease more over requiring after come to We've teammates come their shrank need several to are back there's disposed the companies think they I back I mandates office. more space. us offices. do that think the

general down. in So the decision-making slowed has

their TIs build-out In lease the do of to has climbing, that. more they the [indiscernible] keep And got to to some face need, term, their terms are it for space dollars in as get able build-out today. to Again, seeing well rents do Face to on the our are more tenant they've get TIs. with to I term. customer and and but willingness we're high and of the commit think economics and cases, still rents we're to

So had impact the I think that's an that the of length make sense? term. Does on

Michael Griffin

maybe to just a looking sense said Ted. maybe the sense markets, in to know in the you seen a needs, are funding? transaction? spreads at return you're transaction might when helpful, that's your of potential in And and Great. you have And give back of markets? found then IRR trying bid-ask going the you can an you maybe still the of That's wheelhouse from it relative wide, cost But you very yet. kind or underwriting openness us get haven't I Would anything opportunities. transactions, of debt capital structure Just prospective then criteria a in you capital? you're of funding terms your your how use that equity to for hurdles

Theodore Klinck

a we pull levers look, way Maybe Yes. there's bought as hit lot GFC core mean, there. but we're office, and plus. also core of Look, -- depends we value-add cycle, at I of I'll underwriting. out to a was as -- of sort it opportunistic it the we you lot the the coming think buying all last we look I And bought of and the know,

So We deal. it's it's all term, will bit risk a great for core a if long adjusted a a value-add asset with double-digit IRR lease may credit, us. be on it little that. below And need

get can over on. looking of board. We returns that's high-quality over period we're risk-adjusted assets. time. attractive longer And a all the So We're for

Brendan Maiorana

it's Michael, Brendan.

has you've sales noncore we've so higher asset into then good from path. certainly quality as earlier, available. would I available Just better think been bond there, have that funds recycle long-term the been Ted seen the bond successful to seen And mentioned capital growth funding and that on the a assets market you've those monetizing response and is market have

of would be sources for us. capital those think I So

Michael Griffin

color, for the that time. Appreciate Thanks Great. it That's me. Brendan. for

Operator

question from We a have Baird. with Nick Thillman

Nicholas Thillman

on the markets markets particular? of customers if guys some But and market new North some Fulton have looking get some there's of in just other more had heard Just noticed in Perimeter. of at that's requirements. like wanted really kind suburban Central color to in We your larger users you trend a and wondering in to that Atlanta, kind particular,

Theodore Klinck

the continue seeing you're are to I not I of it, seeing for inbound or in think activity. remarks, They many development, development in but some there and markets, prepared outreach a of users. both large seeing come we're very sidelines. A We're went of out absolutely, users right? fairly potential as the to those them our them. lot the fall return quickly. then only we're interest that deals to are office, the pick office our back lot reevaluate there 'XX the to to mentioned started seeing in-migration, large the to back of And of customers market, from larger come in of rates some up And the

as again, square COVID, see where to more didn't So that to starting XXXs, -- define the XX,XXX to certainly, point even right? we got We those XXs, you're anecdotal, large. but we or large see during define all But starting customers. is back, are activity. more more. size We I mean, feet it's XXXs, the

Nicholas Thillman

And guys out kind we of not cost know sounds to on rough -- it for within assets have at the what like don't same-store, Brendan, that? as move Place I planning then, going repositioning of pool for a traditionally but XXXX? Symphony for be is are And like the do then you look Ted. you of are or helpful, estimate plans keeping That's that pool, you the

Brendan Maiorana

it's Nick, Brendan. Yes.

portfolio is of go kind I mean that fits I year. a there, the dollars Highwoodtizing basis -- Place would kind a we have back the within plans on that pool So into pretty normal what of that. of regular on Symphony renovation every call, robust, and

been So planning for we've this.

of would different our many terms And what assets Highwoodtizing here in in plans that at and past dramatically of the We've recently So at well. you Nashville Brentwood in done seen the years. kind done anything over do building it that headquarter we've Springs successfully with XXX in I Cool as Fayatteville spend capital see wouldn't there you've associated us expect versus Street.

over that out with of that what periods spend correctly not you are same-store done then time. And to of going -- take office pool. remain buildings we're are So kind that same-store, with consistent long buildings out, will we we've to of be office yes, as respect our point assets don't

in So there. will be that

We expense capital with will building normal expense and associated on leasing that through building channels. expenses of the associated all that operating with of the we'll the all

Operator

We have a question Abramowitz from with Peter Jefferies.

Peter Abramowitz

Yes.

in how you impacted in Just lease press comment the the Vanderbilt the the in called leasing out wondering sort well on could spreads on of any if as the release lease other that uplift rents you as the and quarter?

Brian Leary

and years. that, the on long we effectives X Brian in much good to as economic And relationship capital they but specifics to it's talk low happy there's We've here. and with about every a committed renew that kind Peter, not They had more have net with of kind the deal place on of were Vanderbilt. it.

Peter Abramowitz

Right.

kicks rents say flat? no uplift of it just when you there's renew next So place, renewal in year? in Is in kind when they the

Brendan Maiorana

of it's kind a Peter, escalators normal sort of rent of continuation had Brendan. there. that Yes, we've Yes, it's the just

So expect respect see big to that we renewal. there needle to any shouldn't movers with

Peter Abramowitz

as sort on in Got sign the mark-to-market increasing power? one-off? better higher of pricing there X% of of on effective the rents or kind case I been leasing overall and Okay. then past, plus think, the typically I back spreads in overall it. Brendan, of that's know you we talked about And recently that still guess should I quarter. overall stepping anything a the and Or cash it's portfolio. the take was more kind minus the it

going if just getting this we as a sign results of should quarter's So curious forward? take better that

Brendan Maiorana

talked mark-to-market, it's plus what things a let Brian Ted I'll guide kind quarter, we've of going Yes. maybe given start flattish, in cash post. a good kind any probably is still minus, think mean, Brendan. still Peter, think of I add And be are is and I it. to we or Obviously, about to on or basis. volatile.

XX% high positive. was at quarter over this So

of I were negative modestly first think the year. maybe in we the couple quarters of

a bounce to I kind probably spread of pretty think guide rent a bit. little cash to probably single-digit going a good positive flat gauge are around things still is low from it's to a be those perspective. good So

Theodore Klinck

okay rents in, The net you any rent, a do require we're deals. do a in of capital. Peter, And effective just several deals because would more focus don't add, an roll we of quarter out, on we as-is we down if net that those can really quarter sometimes spreads doing thing those but type versus attractive we every bit cases, little effective I only get have is the rents, again, do quarter, in

Peter Abramowitz

And more, one I if could.

if I specific markets just interest could is to on be I'm build-to-suits. which conversation theirs wondering out still the called but in know the early, you renewed in? You comment interested

Theodore Klinck

and might a than had we've -- more I early I What to we've static if to handful that. Yes. office. an to is importance or be see that on. see end and All just interest the market the conversations. and It's of are level, team great again, up work since is a the will getting in-migration years our users return to in early. been But inquiry time. do anywhere quite being But -- some on X One standpoint, of just work thing goes it just been of it's receiving Probably it's knows. to these would new has a it had the views was stuff the -- the large who a great well, X their inbounds but fee from being look, type it We're some development got the also share and type call that we've had great to practice.

deals development of time, our But in play to about nice X the some take I out. past, I being to talked years So, is again, X even long these going the or think take things table, a just we've at to see. are think as

Operator

Burzinski Our Green Dylan from with question Street. is

Dylan Burzinski

still the stages, hurdles sort of of guys hurdles in cost with curious yield in I here. with order theme but opportunities? sort early on just I or those it's to know progress the Ted, you of build-to-suit need continuing would sort mean, what return build-to-suit

Theodore Klinck

Yes. is very similar on Dylan, is development, right, acquisitions. the look, to it bar on high, what

necessary. rental look our the but come rate to at is really not down. the here of going big we're hurdle costs capital, We're cost So what's seeing

very higher financing. return So, to get There's loan. the a cost have be are costs even on going the go higher, there out had time obtaining build-to-suits that to difficult without a is even financing doubt,

gets and that the into So either. factored aren't then the hard costs mix and coming soft down

I getting think is from to the now. given So the pretty pretty is that customers high, high educated environment, But translates just are bar rent. high bar perspective, on it's and which the a right yield

Dylan Burzinski

vacancy sort effective highlighted the effective kind net in alluded next leases And some prospects. growth in but rent of as net then of rent highest touching but sort you quarter, you latter look a that the lot of high I you're in on maybe of just you the year, occupancy. portfolio you'll approaching half having the early occupancy of Obviously, know today, recovering XXXX. guys XXs signed to at have

occupancy. of just get sort growth a further prospects net to portfolio effective trying So that you sort of continuation approach level XX% for as a rent for sense of

Theodore Klinck

effective Maybe pressure Yes. free and jump start jump I'll net a rents then Brendan around. think in. certainly Brian from still to. and There's can TI net perspective I rent or rents effective Look, on

right? are doubt, I a challenging elevated vacancy still You markets market think without rates. our have still

for while. going continue So to I that's think a

a we'd I power in the if most BBD. think grow can a by maintain we don't be submarket net pricing them rents, think there's markets. But lot of maybe I submarket should bit, by I with think effective I BBD happy anybody of that. think our illusion little it's that do So have and

the So mix market certain competitive. quarter. leasing it's do challenging, a is you in and leases still it the But depends of on

them little grow is maintaining and so effective to goal rents And sort bit that a our of can. we if

Operator

no questions this queue in further at are time. Instructions]. the [Operator There

Theodore Klinck

appreciate We forward and Well, in look next Have interest thanks, a great maybe at to we seeing our day. everybody, Highwoods joining call for Nareit month. everybody your today.

Operator

That call. you Thank participation. concludes today's for your all

your You now disconnect lines. may

Highwoods Properties (HIW) 23 Oct 242024 Q3 Earnings call transcript