HIW - Earnings call transcript Q4 2024 | Highwoods Properties, Inc.

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Operator

Good morning. Thank you for attending today's Highwoods Properties Q4 2024 Earnings Call. My name is Tamia, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to your host, Brendan Maiorana, Chief Financial Officer.

You may proceed.

Brendan Maiorana

good and operator, you, morning, everyone. Thank

on Executive Officer; me the Chief call Chief our Klinck, Ted and Officer. is Operating Joining Brian our Leary,

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

received yesterday's the on of If you section have earnings or both Investors highwoods.com. supplemental, at website release our able they're not

the GAAP call, today's and include of The measures. and release will non-GAAP EBITDAre. a these such reconciliation comparable measures On non-GAAP review most measures to supplemental financial our supply as directly include FFO,

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

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

Theodore Klinck

morning, and everyone. Brendan, Thanks, good

fourth about few significant I'd by to talk start our I have Before the and we exceptional leasing, of full like potential over the year outlining quarter growth years. next

First, significant portfolio. our in we core upside have operating potential

years, we've been be flow. has, move-outs FFO would anticipated, which knew XXXX upon well several in occupancy cash stabilized levels now in large below resulted temporarily about driven low late are we early occurring that and as customer us, and and XXXX. transparent These For NOI,

more have million annual have even upside we been have over but where where buildings backfilled, Importantly, annual the yet of meaningful XXXX prospect bulk cash some and growth outlook, flow. of stabilized NOI this to vacancy our others is already X buildings, of occupancy concentrated in activity. $XX in X and which these core commenced Compared hasn't good

and continues potential development pipeline stabilize. significant as have to upside we Second, our deliver

X NOI square strong of upside development the in annual nearly Park in XXX,XXX to haven't properties our have is We for The space. these last high-quality Granite but X upon Lake compared stabilized. signed yet prospects development in have XXXX is robust additional stabilization Dallas, where with Six quarter projects Raleigh feet million. outlook activity and but leasing Glen delivered X that alone, and $XX

on and X Importantly, longer will FFO year Uptown projected Plus because we're projects, we cash line drop will any East all developments, growth that over million $XX flow. annual the Dallas this stabilization. to these XX Springs are bottom deliver and have capitalizing NOI Westshore NOI Midtown additional and Tampa's upon and to generate in BBD of no costs

compelling significant from investments. during opportunities upside XXXX. we acquisition will Third, potential future be have believe We there

Monday's and last XXXX press equity raised in release, early issued million dry our from know our powder. noncore and bolster you program XXXX and $XXX late ATM As with through to we dispositions proactively

this and upside. to with of growth FFO during potential long-term outlook. capital future included is high-quality deploy this We cash meaningful the by expect acquiring assets flows our strong year in None XXXX initial

embedded our operating development the few next be within more couldn't about with years. the upside meaningful pipeline dry Given we combined powder, excited portfolio and

the first to year and XXXX. quarters a fourth of X The was full turning performance. Now quarter quarter repeat of fourth XXXX our

Solid FFO were delivered not financial of quarter, the in of our line in activity, $X.XX strong share, and $X.XX with foundation including with XXXX leasing that write-offs sets growth fourth noncash In results, late very outlook. the in we beyond. which per coupled outlook, for our

than remained rates than FFO outlook $XXX properties of that million original almost original X% higher was provided in of neither midpoint selling per interest year, the full the of and which higher last over February despite our $X.XX our expected, noncore were For share, included outlook.

and standout and full of fourth the volume the leasing robust year. Our quarter economics were

expansions. plus nearly we gen including of of net space, second million XXX,XXX new square quarter, square During feet leased feet of leases, the feet X.X square XXX,XXX

our year, gen our volume the highest years. X.X XX leasing second square million volume was new in feet, For

second-gen for square commit term combined was our average year and in with locations businesses feet they willing X.X demonstrates financially lease volume years, secure their strong weighted that are lengthy strategy Our X landlords. leasing our worthy terms to in-office million buildings to in was commute volume history. workplace the with This can total the highest if BBD strong

that an million is gen signed deals. this total second the end, another rents of billion, and of through which record during to signed total To for year, equate $X additional we $XXX gen rent cash Highwoods first leases we

in fourth roll feet with quarter, in the over X square Raleigh these our renewals Securing During renewed XXX,XXX we leaves remaining XXXX. both combined. for expirations us large XXXX largest X limited

our Starting late very confidence of signed in the meaningful haven't we into commenced years, second see over that we'll the optimistic several known that with leases yet outlook very with XXXX is gives beyond. volume as rollover the next and extending occupancy, manageable half XXXX significant with of NOI get few and coupled move-outs. exposure us and cash This flow in growth XXXX

properties foot occupied $XXX of Last cash XX% buildings in a Raleigh. investments. office which to average, in $XXX noncore on sale properties, the announced in February. Turning XX These in X.X% noncore were XXXX building week, combined on North for old quarter square early Raleigh of include million XXX,XXX X the and for rate comprising and feet noncore projected million for years NOI. Tampa a of cap in and sold $XX.X Tampa we million These fourth XXX,XXX square

acquired fee of noncore provides title FFO office Fee Center which and square are simple XX million Century million outlook. year. feet not Any are land the in after included December, close to land. us proceeds look X.X acres and we our and midyear to of as aren't our of targeting until an In consists in underneath source we additional simple to flexibility developable Atlanta, assets of capital recycle long-term of over certainty. ownership sales likely investments to future disposition These this new up into We're dispositions attractive $XXX time.

acquisition be there next the well-capitalized attractive years will opportunities such over owners Highwoods. for as few believe We

always, we'll As disciplined shareholder of be allocators capital.

quality, overall our rate flows. investments portfolio expect strengthen improve can growth will cash enhance You our any our long-term new and

not Our properties, X a activity properties, development healthy XX% yet stabilized with from quarter signed XXX,XXX and from GlenLake up Dallas. are combined leases. first year the of completed X These Raleigh most our which gen away XX% at leased, or III X now but Park seeing activity. leased square feet XX% last in prospect pipeline in still projected as stabilization Granite is We're we

Our initial is share. to per $X.XX XXXX FFO outlook $X.XX

per equity XXXX raised effect million at recent Center. Century purchase and of the of in $XX approximate dilutive the sales, The $X.XX from the million of the late outlook share short-term includes the asset ground $XXX

will believe We our cash Our same-property NOI negative outlook before resuming X% be to trough negative of temporary a is trajectory consistent same-store growth X%. XXXX growth.

further so I Before Highwoods. optimistic few next about why to over we're turn want the years the I highlight to Brian, call at

outlook long-term the for in First, BBDs markets our is strong.

As expected to you the being and supply years space there added few is know, are of high-quality be limited absorbed. new blocks next over

Our well-located, share. and high-quality operator us portfolio gain Reputation positions is a to sponsorship strong best-in-class market financial

we late last grow thereafter. flow into XXXX with through positioned leasing of Second, the limited occupancy, over has to volume the XXXX as rollover XXXX, us and move late several combined and in quarters, NOI completed cash

prospect strong. contribute we several signed have Third, is meaningfully -- that we or won't where XXXX have potential leases assets, that growth activity to core where significant don't NOI

development million our will years, will the pipeline $XX-plus XXXX stabilize Fourth, deliver project few which NOI above result next our and we in of outlook.

we believe acquisition opportunities, our positioned take advantage to balance will sheet is year. attractive this of finally, And materialize

balance and and To success. only markets, but of talented wrap because engaged, optimistic drive up, we're of portfolio our not who our sheet, consistent our also teammates because hard-working

dedication. commitment is positioned for their the entire us effort that Highwoods well future. would tireless Brian? I thank It to and like so our for team their has

Brian Leary

employment Thank years. market strengthen marking you, quarter, fundamentals in morning, the office CBRE U.S. return an in high in overall reported vacancy good in the to swing. in the movement first and the and office to market rate Office improvement office reaching all-time continue fourth full the X decline Nationally, everyone. Ted, with

net second high-quality in consecutive construction absorption demand outpaced the with locations prime completions quarter, For remaining strong. space for

absorbed as CBRE either in market. sublessors increase XX% the leasing XX% Notably, quarterly net and quarter-over-quarter and space X sublease year-over-year broader or national the in activity a also decreased highlighted highest availability was years. absorption in directly also by reoccupied total

Highwoods' strong across remained momentum markets. Leasing

million The For time The the pre-leased feet. pandemic absorption first X inventory our the for under square redevelopments. construction pipeline on own XXX,XXX including net continues feet average, of XXXX. significantly square existing and of shrink signed and million approximately construction diminished of the the XX% represents conversions of has current million since X while full anticipated portfolio due expansions. year, positive deals to second-generation leases, new is to in year starts X.X feet Within square and pipeline with and few for square feet X% the development inventory surpassed we

weighted including and ended vacant The on XX.X% We signed not a term space, year the basis years. markets over XX.X% year X.X lease at but record commenced ended our occupancy, average the higher yet high points leases than reached lease. XXX we

occupancy known year-end quarter dipped expirations. expected, fourth due As to

leasing growth half first activity XXXX. throughout strong long of following telegraph positions us occupancy for XXXX the trough However, in the our

and first-generation lease the previously, a is $X.X which provides total leases of revenue. This robust activity noted our strong Ted was current signed in annualized leases signed with revenue over highest second-generation from history, As future. billion for our rental XXX% combined the represents foundation leasing

forward our successful XXXX with of XXX leases X.X approximately major XX% million fourth feet of remaining proactive either regard expirations of quarter body in This including Being Focusing $XXX proved contracted expansions. XXX,XXX volume and new Raleigh. we in totaling work quarter's new renewals XXXX XXX,XXX lease Nashville in deal leases revenue, role, second-generation signed square on the with million feet leases. represented nearly quarter, or of square totaling fourth our feet, the and square to largest or the

only our in expiration feet X long through communicated than low occupancy ahead XXXX. square XXXX XXX,XXX larger have year-end we Following

net than economics were leasing and lease concessions On costs that the X-quarter previous higher the achieved which effective include average. rents all we front, X.X%

square leasing X-year fourth an volume and quarter with term rent XXX,XXX our growth. signed of feet second-generation led XX.X% average in in Raleigh leases the GAAP

first-generation to Additionally, XX%. lease XX% development drove rate our at asset's from III leasing the GlenLake

to The end, focused former attractive playbook this needed. our our in the is being commitment our of highlighted highly success square X.X and at Nashville are and the Highwood-tizing Two feet of relet completed core where on when pipeline's building, driven and Tivity to we this respectively, Ted yielding has or To buildings. a While as the Highwood-tizing substantial Alliance leasing portfolio positive is our significant we redeveloper million those deploying well. and commute-worthy momentum, Atlanta returns, redevelopment core portfolio's development

the regional by unparalleled It received Highwood-tizing Symphony an and and is to Symphony of a in of the market. a Downtown Nashville the planned all Place is amenities makes individuals. a Nashville destination such will well compelling the completed the year, Nashville Our to curated and in is collection is for on standards with of market. architectural connectivity location skyline. redevelopment talented tower next in feature Place the Place our that organizations When Symphony built remains access being unmatched and beneficiary iconic highest talent-supportive

interest encouraged are early the to prospect in the tours We building date. and by

BBD and growing by economics From and the in our be a market advantage ability focus NOI capital both competitive Increased organically lease growth for our of share gain portfolio reinvest via an in FFO and growth. driving operations pathway to unyielding within to clearest redevelop the leaning XXXX occupancy will standpoint, meaningful is on and year – portfolio. the organic occupancy

momentum, We for closed the foundation solid a leasing year revenue lease record-setting growth. with strong and

leading at strategic a on to owner-operator and opportunities and ongoing through we're well in differentiate Our our our portfolio, leasing our Highwoods With redevelopment historic to as lows market continue operator resilient initiatives vacancy capitalize office strong development positioned investments pipelines advantage. redevelopment markets. efforts, and in and sheet competitive proactive balance peaking, market owner

all these stakeholders. the we now to reasons, I For over our Highwoods long-term turn we of drive as will Brendan. value for for is call bright believe outlook the

Brendan Maiorana

include $XX.X posted we of impairment $X predevelopment impairment million for $XX.X $X.XX million quarter, million per known included net share EQT or does Thanks, a or of Pittsburgh. costs. in Brian. $X.X share, as Plaza not which In but per write-off the include Liberty Avenue fourth which loss a was million noncash the $X.XX FFO does a formerly XXX charge

would which in write-off, have end this FFO into $X.XX share our high outlook at our not provided per our was of FFO Excluding factored the October, range. been

Our balance in sheet shape. is excellent

until XXXX, in no quarter of XXXX. we and term other have floating debt We a $XXX have no maturities until million maturities loan rate the second matures

quarter, gross we share. raised of million $XX.XX our the average During ATM proactively at price just equity of per through program $XX over an

early noncore year-end. addition, XXXX sold $XXX properties $XXX XXXX, and in In million after including late million we closed that of

$XX simple these million Atlanta. the creates properties consolidate future. also ground We Center little for invested Century the fee to our over a items ownership Each underneath dry in of of powder

$XXX sales asset ample at million revolving and today, outstanding future of the in proceeds us pro liquidity With from Tampa for $XXX to we have balance million credit, giving investments week, our X.Xx of on noncore last forma from debt-to-EBITDA ratio received our reducing our no X.Xx year-end. line

of X.X% was pending balance of GAAP credit, our FFO $XXX rate temporarily cap a as is these cash capital-intensive of rate The in sale of above vintage, sold dispositions. new million line use NOI reduce redeployment we items proceeds which about a cap source FFO projected assets price into noncore The and the view were revolving our A an locations. drag, equates proceeds older the capital recent dilutive as investments. properties note the few to of slightly near-term combined Despite immediate to on to efficient short-term X%. on XXXX non-BBD

expect rates growth flows our Following and be higher to long-term these resiliency and dispositions, long-term while improving our we portfolio. cash quality the of

Now on outlook. XXXX to our

in outlook to X NOI X%. be our NOI X% sharp minus Included during are cash decline a underoccupied property in with same-property are is pool Our buildings significantly to XXXX. minus that projected same

in reduced use in the the redevelopment is of by growth these unless we X XXXX sale development effect property in our that our properties basis move projection so the is to supp. keeping The or same-store pool has same-property there and XXX approximately Tampa pool of of is Our historical the page our change assets that practice the points. a building to extensive buildings keep same

temporary we XX our have grown resuming consistent without be same-property same XXXX years of trajectory a buildings office consecutive trough for believe out will NOI service, As a we reminder, of cash taking and growth. before

outlook basis expect Ted we to average Our is decrease points dip in NOI, the projected the occupancy to to year XX% half well-telegraphed year. the around is given Similar 'XX grow first 'XX from move-out XQ the later mentioned. XXX to will occupancy of Occupancy and XX.X%. then during XQ

XX% our for our by is outlook, we somewhere range XX% While landing occupancy don't a provide between a likely year-end in year-end spot to portfolio.

Tampa mentioned, in XXX our the properties just under-occupied for XXXX sold be occupancy I X recently the significantly Excluding basis average would and buildings approximately points higher.

would to QX is As the due reported $X.XX Ted start for modeling to per quarter noncash $X.XX excluding Annualizing or predevelopment FFO rate as G&A per $X.XXs. higher 'XX low We share, annual QX mentioned, traditionally for and run $X.XX with per QX our to of adjusting expensing the in the the I'll write-offs. first equity the grants, in imply of XXXX FFO share be base XXXX. FFO per share range a for share. $X.XX

the on have ground $X.XX acquisition noted to an Center FFO. approximate our the release, As lease dilutive issuances equity are and Century impact expected in recent XXXX dispositions,

expected throughout the occupancy to amount XXXX per Since of other lower, projected of first this the rate points Putting was items would be half of to the us announced dispositions those the say approximately at to XXXX. to way, $X.XX get by year fourth midpoint it I reduce year. particularly projected occurred share. but our occur is offset annualized of be items of should $X.XX subsequent the due the year-end, all the in the fourth of modest to income another NOI outlook. earlier, vast quarter the run dilution quarter to mentioned various together some these only baked by the will items into majority a To

at place To low his significant Ted strong be on clear, of exit the from growth primary have mentioned year improve as and we the on and start we expect later occupancy, in summary, potential and should NOI to XXXX. beginning to FFO which trajectory X In a remarks, XXXX, as we areas. us move

locations; in and organic NOI strong Highwoods' operating is with limited our of First, drive growth we the projected to core development and high-quality BBD lease-up we left this our have deploy growth properties and FFO fundamental second, across capital. is significant balance before core our sheet account funding strong meaningful through well potential pipeline completion; finally, doesn't excellent see to for the and And third positioned shape backdrop BBDs.

all For we're optimistic reasons, next of these Highwoods. years for the about several

questions. ready for Operator, we now are

Operator

[Operator with Instructions] Citi. Griffin The first Michael comes from

Michael Griffin

leasing the like seems color the heading on It it's pretty XXXX. Appreciate outlook. into optimistic

context expectations larger it's really Nashville, you the any Just then the those positive would your in leasing EQT, those absorption executed does Alliance, leases continue more wanted of some whether 'XX that of push kind maybe to to properties vacancies, there? see and assume color have at properties within get on net need for to And portfolio? your

Brendan Maiorana

start I'll and to in color. of in, to over it terms Ted Brendan. it's Michael, and then fill turn Brian I'll

really what leasing is outlook the vacancy. included core in significant kind we there's So have that X in really the call occupancy that the not -- any of assets

So that's Alliance Place, South Westwood Springs and X. Symphony Cool Center,

scheduled there's in nothing that the already are firm largest that there. those, come is year. to completed XXXX. -- late leases Center, in law down deal we that at have large really the So some of Alliance There commence But did some the will in until that there isn't

Theodore Klinck

Thanks, Yes. Brendan.

it's Let color, just me little Ted. add a

Xs, it that, we as but of we it's on of vast recalling the down core know, Novelis majority doesn't all So it, it you XXXX. former Brendan space. to Buckhead, And in each until are these commence alluded a backfilled

to going through financials of sort XXXX. it see but until -- sort our it's up, not of we're again, largely -- doesn't buttoned that's So it come

building Springs one be Tivity would Five. in former Cool The next the

We then And the so. for out are kickers got we remaining another prospects or space. building, tire signed XX% we've for that that on XX% strong So got enough building. the there of

a one that lot well. we're think year won't as next that's will come we good as And that of on of be making really lot through -- year, well. So it this of a but progress some

square well. Westwood shows The customer one as ones. in few guess. the got a out South, I January, multiple building. foot great Space well is sizable as early XXX,XXX prospect incredibly it's just building small condition, moved ago, a other We've weeks

them you all add entire building. if than it's So more well the up,

good downtown prospect we've out Place. the our So February. really moved is Bass, Berry Nashville. while it's building in then And early still early, activity there. final It's Symphony got one

So ago, as you just square a feet. the moving be out third Pinnacle couple of XXX,XXX And in will weeks then Bank it's this quarter year. of know,

Our are done. plans Highwood-tizing

we're Now the to remarks, or done in so. alluded Berry some and that of were Bass, going next it his prepared start it's moved we swinging in Brian out, has hammers be assets, month When a to got the going all Nashville. for a of we amenitized value the great Tour activities customers. can so basis most one proposition and buildings up. picking on We've in be great to

we're as encouraged So well. there

Michael Griffin

a for the opposed my just guess And proceeds it's maybe noncore trading issuing Then guys all highlighted. there, you you they that acquisition got to Could you've more sauce? probably pivot to equity, the Highwood-tizing opportunity Thanks, execute Ted. relates not think as relative use where encouraging on and potential then and you you that be your are offense these NAV. but Obviously, it's there. to these to Brendan, why if Can proceeds for equity. kind sets you're it as Appreciate sense buildings type of dispo are Are acquisitions? question the fund given of secret the I you I all component acquisitions? us better to sales stabilized? color targeting looking more to of value-add there a give and

Theodore Klinck

funding. I'll to it the Michael, and off turn then Brendan over start on

whatever on we we from side, spectrum and there the I risk-adjusted are think everything always opportunistic. be. on So core comfortable you're acquisition the the to look aware, -- how We wherever look probably on at at the acquisition may out that's where just returns

there's trade achieved meet the some because But the there, whether in also core So sellers to We've be we've expectations. have haven't expectations their out pulled going buildings high-quality pricing be that. some few opportunities last it gotten on seen or seen think we that opportunistic months. our

going a assets. the pretty we as quality the looking We're we're growth be some as excited similar bought our GFC, assets cash playbook of we to coming lot of a to about It's improve rate the So of flows. portfolio, out stabilized where improve well opportunistic it. and our use improve as

Brendan Maiorana

we'd be why in versus just terms and not comfortable disposition Michael, that Then equity. of proceeds the investing capital

think at it a balanced we from I approach. looked

that good announced in that of week. last the I terms think had sale we we closed visibility

then was So bit that that's think also like us, to more sense year. in we a good in the create powder of the I proceeds. made set it given But felt dry front opportunity late little

of went and we there'll did be later hopefully those think opportunities, as in the -- so we said, that to attractive the think I will be use and we think of that. likely capital And proceeds, year. ahead we source And relative

Operator

The following Ronald Stanley. comes with from Morgan Kamdem

Ronald Kamdem

Just ones. a couple quick of

charge taken -- on impairment the So just on XXX. the

Just that of sort the or sale going be next years? any is updated of business to for a the of what for curious, couple plan asset thinking

Theodore Klinck

no Ron, update. really

still As EQT desire and same then know, and is sort for out a to you of difficult. announced of up markets assets markets locked financing secondary is Pittsburgh But -- Pittsburgh. for right long-term get very -- years us, about in ago as and few so our time noncore are you the know, out capital of getting are capital asset we big

So on it the be at list we're dispo going is to still but time, our right patient.

Ronald Kamdem

just both I assets. my on know the the on the X year, core focus second one, is as as well development this some then leasing of And Great.

this leasing TIs versus strategy year, Like year sort year? smaller going of big after users? it's any strategy this or changes the picture any changes Just whether of wondering if sort in last more to

Theodore Klinck

to spec us Not chases want that years out very going can down successful that the the what it take the time to suite mean cut very small program really. has time get think customers we're we I been their for robust is, I for a there. get space. Obviously, many in to got we've

foot us. make a seen X,XXX in their So that's return companies the decisions continues But to they can last really XX,XXX for sweet to to spot larger been square prospects, of quarters, of user get couple last -- our program of years if have great are we into the that good be that couple ready buildings.

had any we've going it quarters. won't. robust of last lot certainly We've So a reason had and there's leasing, the just continue that's success why in don't we're hoping think to X and

I the maybe think at we our And this the remains the is brought be last to end to year, of big the tour towards pipeline bit. day, robust, our we had end done couple which up right of good. the last year activity a a years. the did because little we similar got end have few stats ones of it expect -- But before year, of

Operator

next Montgomery. from Rob comes Our question Stevenson with Janney

Robert Stevenson

that of are about I the the if is on stuff biggest think Trump leases point? you kit at there can the your talk list departments any the this revenue, and X.X% just federal government's what are that in of must

Theodore Klinck

Rob, it's Ted.

leases. see X.X% X.X%, think largest it's I agencies, lot it's diverse -- not. encouraged on the actually firm if of list agencies But think a And So and we in there's exposure CDC. the that's term know Supp. XX as well. diverse essential by have. don't we're primarily different The over I in we that pretty It's pretty you'll is it's -- It's in XX or

perspective. across are So from X ton out XX-plus we of spread exposure different our leases a Those don't have markets.

overall. just it's lot So exposure a not of

Robert Stevenson

in Okay. view? best challenged you your be then That's on the markets relative in are likely expecting where relatively core bit helpful. to can at a you're talk 'XX operating little And the in markets more and performance least 'XX which

Theodore Klinck

leasing, is you're that regarding specifically what about? And talking

Robert Stevenson

Operating fundamentals, to in the operating and stuck your neutral demand, sort traction best fundamentals, what's and -- view? which want likely just have 'XX are cetera, having to however of more the 'XX et you in -- pricing, in count the

Theodore Klinck

Sure.

on phase. I our of I are them look think think as at markets, recovery all a we

good will demand, caught there finally supply be suburban think different if if think us. or recovery. supply of you the a I been will. I particular, with market trajectories look Nashville, you up finally Downtown, Nashville But really for there's in caught at

So we're for more although been downtown Place, in not has been just see activity. really to Charlotte talked construction us. on. as going stays has starting It a a about Symphony a good lot little we of softer, full, market

I very, you and down look Frisco, submarket if to drill Plano specific seeing down well is submarkets, if activity got in up important. go But robust. uptown or as at think, pretty the the you the is and you to Then drill soft. even Dallas, headlines very to we're Dallas, Dallas it's

that I think had quarter. the on last on saw We've Park needle the project. development the you moved movement the in -- Granite occupancy Six we activity materially we really that

to sell a BayCare lot in Tampa, which in So us there. of the seeing Dallas is made a portfolio. at Orlando hanging actually hanging there as We're enabled is great well. good in activity time. Tampa, in leasing

been last that's little little softer couple Raleigh of bit side, I but think has a the around turning on a the bit months.

trajectories. again, to are think, just seeing different all So in general, our I the be going recovery is of markets

Robert Stevenson

drove needed extremely And wouldn't that have purchase wise last what me. forward you Was that for you been That's purchase you do helpful. right. one at allow able do does Century Can to to talk option this the an Center. development land what going All then otherwise? exercise? decision that about And you to

Theodore Klinck

Sure.

also effectuate. option had able really to us -- and exercise. Century for we in create to the It gives an ownership a wasn't have a buildings. the went land This just flexibility we Center it to lot us to didn't the proactively So assets. consolidate long-term Rob, we something of the was is those liquidity of our some enables landowner and

a the done leasing last or of lot there year We've so. great in

unlock created to of buying we It and also value, land XX the we've there's lot -- us created. a got be we've value monetized. So of acres land some of enables can think undeveloped that that

time So that. we just value a is the we've good the done, this do we've to with created, leasing thought

Operator

from The next Lewis comes Truth question Securities. Michael with

Michael Lewis

answered my XXX points XXX I to already did. bps. move-outs? from in down of a the have it of are That to the Berry end apologize confluence at bps, there might XX% XX. Sims XX year that? So Or By this, Bass, remaining smaller occupancy of about if Ted is is basis kind But spaces tenant & large you get any math,

Brendan Maiorana

are it's There some. are Michael, so -- Brendan. There yes,

at building South So about feet. that's there's user the -- full square building in XXX,XXX so Nashville the building, Westwood

So sizable. that's

You've we that mentioned. got Pinnacle Bank

are then but in is as And there. that a that are a bit modest So well. there's size a handful one sizable expiration little more

that currently I think X.X of that leases will X.X the of million million square are on feet in. space X is that what vacant signed which expirations. that, on some space roughly have are overall, move we've will of of Cumulatively, So that we vacate some will out square there's of about million remaining feet that will but the occupied move of out, which commence, got

a square after of then year-end. of we've then some feet drag XXX,XXX spec assets the the And kind is also we that have remainder of combination that you the in Tampa got forecast. of from leasing net the And have sale hit about

but if will call do where well. the that you for think XX% the by go of between probably and year-end somewhere of average higher that of end by occupancy kind year, be year, than be between all point things a XX% the the year-end So we probably to gets somewhere it, we'll

Michael Lewis

lot I when a guess, FASB at and quarters have by you leasing, realize I And you core, CapEx see of dividend a then question wasn't I but question covered Okay. this see to that should trend? going be this quarter. Got going quarter elevated its Should CapEx dividend. elevated. is, CapEx like is the the you. a is do choppy? bumpy this and CapEx how Between we the growth was then, spend Or path -- the little cover to to now

Brendan Maiorana

a as been the And north I I of say, our really is year, X still for had it's over Yes, And good positive it $XXX of of all we cumulative dividend years the likely the in clear, since past question. And The good onset be to elevated was would dividend coverage be coverage. well that from pandemic, the leasing think million. has the to just did. CapEx elevated. XXXX

to So around. that going bounce is

building get get kind capital to before increase where corresponding you time But that the I signing you're get occupancy as play spend just in and a and you of leases through. takes point rents and you think you're to NOI, the

think from I as to your be for point, stabilized even bring drive significantly to But lumpy as a flow year or have higher good of those going problem and and the So kind two. stabilization is levels. NOI coverage to cash going us that's to to reach that's and we quarter-to-quarter a

Michael Lewis

The me. for give start unlikely more far one just about have release said just talk kind can. math might be rent if of press year. development work Could that to fair it's a is how assume then almost development market to you make can't us a start I this you maybe would And the sense? above nobody the probably

are the a So working we development. math away how on far from

Theodore Klinck

Look, I do the it think on varies depending product.

to and going it's to going now suburban a depending, different exercises high-rise proposals. XX% a surface versus are parked, want with few a you product with through is right vary. those it But we Probably XX%-ish? If maybe

presenting. scare -- we have we chase. a did like several Michael, the the that actually numbers that it months off couple We in are They didn't last

the at few on but X be So may even to not you're been new -- it rents inquiries, to just rent. deliver still of the little we're probably last than encouraging top-of-the-market bit time, clearly several top X different, have last we any And a had years, and years type but wider several do same the or that's a market the spread see ago, years. it's going that building in build-to-suits, way really a working it's today

Operator

Thillman question comes Baird. Nick from The with next

Nicholas Thillman

half a square tailor either off in tenant have of new sort I demand. you guys could confidence guess last kind feet was off you your it on of Ted, the first do outperformed kind or towards of bit you Brian to vacancies of with where have new per leasing sort or on logical of XXX,XXX quarter, that the continue is trend it the to that of is leasing today today, front, kind you thought today. positive were but or guys the of amount you the like pipeline year, to the at were you year-end, little like right of going starting leasing taper Maybe more looking doing, at the obviously that

Theodore Klinck

are construction. I'm return mean migration still continuing, we've if market have-nots up, haves We in is think not Very that got Just have XXXX. against a about markets. some market mud in between down, in continuing sort and confluence starting I backdrop to vacancy which come a new there's a there. you space continues help the to look, are our to I optimistic in and of the the able to been stuck job economic There's about bifurcation general, share leasing. in is the of going rates population the mean, work is buildings favorable still growth little and of sublease and being gain

put we're some I fill. all big We've very we to going leasing. that think positive still you holes together, got to got optimistic see that I'm

to to tour So we our talking do. is still got a good. work lot activity the of But leasing agents,

Our spaces show well.

think I'm for XXXX. very optimistic I so And

Brendan Maiorana

Yes.

to wanted just I that. to add Sorry, on

Just or clear, don't to feet feet new be in of plan. have XXX,XXX mean our million new square of we X.X square business I

year-end than trajectory So what -- into of kind kind going faster occupancy replicate translate if to about drive higher XXXX than XXXX talking were we able that's significantly into got likely were an of to achieve XXXX, for we've and we would even what levels contemplated. in

leasing. that think But optimistic XXXX, to plan year. I business I similar could we're the think of cautiously last in well our point, moderation in a things assumed is Ted's we they what to did So go

Nicholas Thillman

like outlined have you are have tenant million X.X of when historic feet 'XX following just of I up, of with helpful. No, now. guys a kind retention you to on that's X of What's kind demand a expiring X kind square XXX,XXX only over here very parter maybe that or And feet rough rate to also expected commence, leases retention is square to of historic those commence? the tenants? the like average And yet signed that then kind on those you of kind of weighted have smaller

Brendan Maiorana

Yes, Nick.

if So renewal around change XX%. between the it's of We're you between medium much time, large, percentage kind look at small -- to XX% doesn't somewhere our and users. rough over too

that to haven't goes exploration then you renewed early, closer the of renewal down. and get likelihood the obviously, you Now them

out as this mentioned, expirations have been signed but remaining So Those we renewed. largest we of the X XXXX now those are XX our numbers, quarter.

color. XXXX X year for So us, of of those I gives years. rent in think roll the retention some that high particular think happen just XXXX given kind do particularly you uniqueness will and retention happens to particularly us, be to for the year a a be low we

of the square think we'll occupancy into year this in I is of optimistic that when we're build it is in, that continue. feet in occupancy build part which it in half think why weighted late the front be then the of of the So of will then see more that then moves XXXX terms than we that kind half is year late X.X in million year, that year. kind beginning and and back back the the the low And will

Operator

The next Catherwood BTIG. question comes with Tom from

William Catherwood

do to on potential? where you timing, can any target touch we either impossible note to you following question or see earlier to on And the on you access an discounted the chance Maybe handicap purchase properties? get but most it's And markets a obviously, submarkets up see could acquisitions.

Theodore Klinck

at we're of in stuff. And Ted. we're Yes, think seeing Nashville opportunities maybe starting looking in few really, markets. all obviously, opportunities Tom, I it's several in stuff we're markets. more particular, a our Charlotte, or look, of see In to our Dallas,

deal of optimistic. a but sort that we're selling. several seen, bit. a have trade trade, We've have a is Not why rate. little to that think had same asset there's time their comes few immediately pulled low months sold sees have last that going expectations. That's the deals because several in that everything at has all I a out low also cap seller they hesitating seller the So been you met been that hasn't been Every cap rate

So there's assets. spread to a -- still a lot bid-ask but there's on degree a still -- of so certain

we'll So see.

to going I the over to think next continue just that's get couple of quarters. better

for to pathway to acquiring assets acquire short note debt. it's we the we would if assets, a the look, what strongly So to can do. to just But do not we versus really want clear prefer see we absolutely something term, But acquire that. then

William Catherwood

Understood.

front? question rents are able having in or specific maybe, the negotiation face me, improved lease the also on effective Where XQ. markets? in Second pulling it up economics Is this had you TIs for you are you prepared higher mentioned most in remarks success free in to rents Brian, back and showed and net your targeting on push rent

Brian Leary

the Tom, for thanks question.

to push I to rents. point, your the seeing are ability think last we face

committed that having productivity is to rent office are back using calculus Our back customers the of they're are the in and that people to being kind compared the what getting. of their

they has markets. kind So are is concession I underwrite curve the able I believe across think those vacancy to rents, but the peaked flattening of kind do of as

and Ted Now football focused Charlotte, more hadn't push rents. we're they're Atlanta levels Tampa, getting mentioned, is before. it's Even that able do deal -- ability to to think, is, every longer, But on. the takes thought core have urban, is negotiated, or the Dallas, the Nashville, yet suburban those. deal details I we've seen grow like knobs different Buckhead markets, that not every as here or because that spike But anything and we there's to of customers being of kind different

fit Some more Others cash that. need necessarily and through and up so to want lease, have to the finance their TI don't do

Operator

comes Green from with question following The Burzinski Dylan Street.

Dylan Burzinski

to scenario to renewals we how this you can sort just be thinking pairing that activity. some given sometime should high mean the quickly Or you back or comment, guys new this year continuation about providing in XXs sort the recovery low in guys where is the some that of about of trajectory not much year get next are of of end Appreciate having hearing strong amount lost likely of Brendan, think the XXs, terms a too leasing retention you occupancy trying with occupancy you with you'll But into you move-outs. I occupancy and in this of how about XXXX. think able of now obviously of known the of the where to given having get your year recoup XXXX? sort as strong

Brendan Maiorana

pinned back half good and And to 'XX 'XX want down setup But don't -- look Dylan, guidance. 'XX I of us. do like and really you think provide for to that I 'XX -- favorable said, XXXX I Yes, want think a don't even it's get question. the I and the get

case, but well on I over that's ought and backdrop positioned a time certainly, or years we kind if across occupancy that's the But I all holds go X.X dependent a years. don't steadily indication think the well next of up long activity any we to as pretty drive leasing forward to I higher Now assuming we're it economic think markets, we which wouldn't, couple have period. X, -- of the that think think to is see our

Dylan Burzinski

Great. the Appreciate dispositions, that one, I obviously, to detail. And Tampa switching the execution then specifically guess great there. over

this tighter sort a older Given around good mean the things assets of these paying might see it. given call buyers deferred you assets? can of one of characteristics expect money rate are or was these sort this let's than maybe is tightening okay, into comments guys that indication optically more about as cap of being I of net sort one-off the talk and sort with CapEx, a kind assets. yield Is what your you worth those of of going like that high

Theodore Klinck

Sure.

a some was that main Dylan, the So assets, own that -- to they -- specifically to immediately their with user campus actually adjacent this. is user, Tampa -- respect it's a sold to owns

bit, lot private for really noninstitutional. a for and lot we're of in little some syndicator out I to It's in But selling expansion multiple other they're an quality banking institutional for and starting for cash. buyers last chase or general, worth is we've talking great is market have buildings. today, tell everything sidelines brokers the higher sitting what the here net the talked was you it all starting got high we're buyers, of them years, pool here But office that and about, So close largely can relationships of that's a there will what next that we're the buyer the a is the to for see capital or type on growth of in couple probably to years. as seeing

be through institutional move opportunities. capital XXXX, would I expect there'll So as we more chasing

Operator

comes question from with Fargo. following Ku Wells The Young

Young Ku

couple me. a are there land or for sale any of 'XX Just baked fees Brendan, guidance? termination into gains ones quick

Brendan Maiorana

question. the always that bit for fee there. we thanks term of a yes, There's in little Young, stuff have

kind are say I tend unusual. There would we stuff guidance, have land of to Again, but call particularly there every sale that what are I miscellaneous nothing So gains would the some aren't that's there. any year. in that included in items

of So they'll are those that be But lumpy. a little year say little all maybe those -- it's I full a quarter basis. but bit kind would by on nothing uncommon are and episodic for all a us is in there,

Young Ku

Got you.

baked growth And Okay. outlook? the kind just provided of you is same-store in the terms OpEx same-store on I occupancy. kind What progression in of that guidance, of appreciate the into

Brendan Maiorana

OpEx on pretty inflationary. is same-store

nothing, OpEx I to that say, wouldn't outlook unusual that track. particularly to I there's think respect in tends with same-store would So the

we cash about terms obviously, And this in talked the low downdraft NOI. to is guide occupancy. largely is the outlook for reasons we thing the And that of that for that other same-store the driven year. number is think I'll I same-store by mention

with The very you NOI positive cash that's is X.X% basis rare on GAAP cash first-generation but leases have to year-over-year. indicator growth a year-over-year about on basis that than our on any for call acquisition And disadvantage average grow or development portfolio. X/X is it because those NOI, leases structural provide same-property about of same-property don't a through higher just to have there be are a it, us, GAAP

gap we expect be. future same-property good which than this that a forward will indicator is same-property NOI growth cash higher same-property NOI be actually of NOI, should year, what For

Young Ku

it. Okay. Got

Okay. portfolio-wide? And what's the built-in escalator

Brendan Maiorana

around It's X.X%.

Operator

The Malhotra Vikram with following question Mizuho. from comes

Vikram Malhotra

I because any know I requirements have to big gone or are markets recovery public the any you been of in in for activity sector wanted of up. touch associations know sort back you share just that's go picking a ask the just tenants I I Highwoods, are referenced Can to half, And with. perhaps to may? there confidence you couple that by you requirements also in perhaps the but both there large second the these economic

So how pipeline, deep just sense market? a large and is not like I the get but just the is want this of in Highwoods, to broadly for

Brian Leary

shot named. year, inbounds, the quiet. Brian. I'll it's this big code of got at take kind of the end kind a of They one. Vikram,

a headquarter and corporate But I relo suburban. we're people are quarter, waiting looking think have with particularly first Charlotte, think to number happened locations the now that see what I Nashville, both urban are of election. seeing

kind inquiries information. potential receiving RFP of So the we're selling out

of take our coastal that in outside of a those maybe we from as one. relocations positive gateway markets, A markets. from the into number are So

see do that a we move. So as positive

Vikram Malhotra

be trajectory, to I the think just, and guess, then FFO I just And to guess, I Brendan, but clear. want I underlying, NOI you referenced, specifically

second flow lose I'm margin then growth and So there's NOI you're half Is will pressure, saying you the ultimately, through then the the the you correct? as pick will in the 'XX. on assuming half pressure first occupancy, up in and that the trough given leasing, cash

Brendan Maiorana

probably I kind FFO your into then spend would just get say, back correct. to Yes, mean, of commencement think well Vikram. the and tend flows in and then That's, is build later trajectory year. of half from flow cash year an some an that standpoint, you first of would the of is underlying And the I rent. I I from kind lag. say, then mean, as kind trough perspective, that into and I think given cash does I as of FFO roughly occupancy what

So I view is 'XX your correct. think on

Vikram Malhotra

just Anything be last view? year. last this fence that the into XX,XXX mover like move-outs recovery sizable, clarification. year -- in maybe known that's like even to telegraphed all may needle 'XX 'XX obviously, this plus you've The then the And that's a on

Theodore Klinck

really So one. in got Vikram, XX,XXX. only it's XX,XXX above Ted. take to We've got that over X XXXX. try I'll We've

And XXX,XXX lot little only it's really, is got not So in greater That's XXX,XXX. a we've the one a one XXXX. there. our largest over than

be ones X couple on of the you know is look versus little really, larger bit a based years, today. the when think size, our renewal next least next retention we at everything those years, but at on So on also we higher both the projection going to vacate,

Operator

Okusanya Omotayo question comes Deutsche from final The with Bank.

Omotayo Okusanya

look you anything could all BBD economics? potentially As markets, your leasing demand-supply or a fundamentals impact regulatory through curious from perspective that

Brian Leary

Omotayo, Brian here.

the me think right a shot. that compelling markets one work you for kind the actually make our is friendly, that of markets. so open cost, government Let of asking in business, take things Thank our That's we low BBD to for question.

So no, results, partnerships to business development more than for anything, they're maybe if focused drive economic even open on we've public-private the in or seen past.

that's whole through funded from ] the a first time the transportation Everything Nashville, That's the time happens. the [ ballot major that for they first initiative passed taxpayers. initiative

have you're their people improvements Nashville happen. the spending leaning with in to on new Atlanta other dollars and districts improvement and support spending together big private self-testing districts areas civic cities are where in of So and of infrastructure come like business is to seeing billions make which partnerships Charlotte, the

for marker for actually differentiating a the work So another in the we're with factor we and markets it's that they're pleased BBDs. very these very, doing, think

Operator

There are closing currently no I this more the for at over will it to time. team questions remarks. back pass

Theodore Klinck

to beforehand. Thank call to not your Well, everybody interest I look next for seeing thank want the forward you thank joining you on and for and quarter, in if all you. Highwoods today,

Operator

your Thank concludes This participation. today's conference call. for you

You may now lines. disconnect your

Highwoods Properties (HIW) 12 Feb 252024 Q4 Earnings call transcript