Highwoods Properties (HIW) 28 Jul 222022 Q2 Earnings call transcript

Good morning, and welcome to the Highwoods Properties Earnings Call.

During the presentation, all participants will be in a listen-only mode. [Operator instructions] As a reminder, this conference is being recorded, Wednesday, July 27, 2022. I would now like to turn the conference over to Ms. Hannah True. Ms. ahead, go Please True.

and everyone. operator, good you, morning Thank

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

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

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

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

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

everyone. Thanks, Hannah, and good We had excellent quarter. another morning,

were Our financial strong. results

Our our our robust for set foundation the growth. long-term continued and were healthy investment activities operations

flows, quarter's driving and validates for This growth. execution to cash deliver portfolio strategy we've continuous steady performance financial and setting strengthening and the many for improvement growth deployed the stage years future while

in Top affordable state on Tennessee, acquiring, premier country. In we is BBDs we've NOI recently for other where the in been long-term all by Last week, from at with for growth are overall our ranked particularly the These focused market outpace Florida, the to the ingredient long and and As situated Dallas Frisco/Plano, and in developing, and business-friendly the business of to words, XX. of markets. in Preston which and Texas, over ideally entry economic North business-friendly. owning employment stated the long-run opportunities principally strategy accounts Coast region high-quality, generate the Dallas, three our over downtown its X essentially averages has a has portfolio the office markets Carolina, strategy In was demographic long-term most our and been that Frisco. based and strong are straightforward towards in tollway expansion Virginia, the Uptown metro highest buildings investment the for destination leads the select that simple relocations, and list our on we over our XX% our consistently from A core the attractive by in Dallas, business this into see CNBC out all No. the are greatest Georgia, of up Dallas, Center. the trends. area we building and before, BBDs is population West submarkets: growth Northeast. presence the which our are announced national of and area The returns growth for and sustainable of differentiated on top markets key population of our the three spine run nation

investment, We two in Granite best-in-class management those excited real commercial with with are of company a partner BBDs. roots develop assets Dallas, estate development, to privately-held to prestigious, in Properties, deep and

Granite Park foot a Park has years headquartered located is office that has the is projected the Granite and XX% and development, occupied. Park is interest, operates more leasing First within and square million of X.X office Granite Six, square mixed-use that until is BBD, pre-leased than Six stabilization. healthy developed XXX,XXX Granite XX% with development Frisco/Plano is where X.X feet in successful

Uptown retail property BBD foot located in XX% square XXX,XXX is a pre-leased. XXSprings, is that and the Second office

completion of Uptown. date XXSprings the in date Crescent a For XXXX scheduled estimated in XQ Dallas, street the development across those with heart is and XXXX. of you the in from has stabilization familiar XQ The

million, and Uptown, about the to pipeline the Springs II and ingress of Virginia These to egress not $XX and two iconic property, confident profile a at pre-leased. in which is completed, our projects location $XXX the Midtown leased. XX.X% Tampa of we’re its two properties, share, project’s investment total development West excellent our million our from XX.X% increase Given long-term in combined and and Nashville, are stabilized outlook. comprise

our strategy: to As employees. bring The of on and of with in will these workplace of highly projects all talent-supportive to success to customers projects spec stabilization options most are the we you continue and and recall, the completely we XXXX, time these on in both by their since energized lease-up started BBDs both budget, may be work-placemaking late sought properties our occurring pandemic. onset that and of after illustrates the amenitized forecast

can potential most including support projects, future about We’re current development of over in office X of help will drive our the billion meaningful feet spread for nearly well-situated excited land development development BBDs. land X X.X growth, our out our square pipeline, of additional which bank. future In total, our over billion and million given

of investment was meaningful little just in to announced the two a we volume in our it over the expansion activity months ago a forget Given easy quarter, Charlotte. when it’s

a connected Tryon, First, and we buy in our agreed square to Tower. located to XXX foot XXX,XXX Uptown, building BofA South office

to on XXX close this scheduled We’re quarter. later

End parcel XXX,XXX units. of residential development million heart Charlotte’s $XX and land. million in in sold We that million submarket of included acquired of the of and at feet of We square South XXX non-core properties dynamic mixed-use $XXX support This a office can quarter. office also least $XX the

from existed mid-year of our the by XXXX delivered $XXX on and same capital have interest metrics become assets that we investment risen returning prior The of more our scarce. has uncertain few With acquisition has months of rates PAC. million these market past office levels to over to XXXX balance sheet as the goal sales our sales, been

development capital to to fund help acquisition or South external balance in of have raise our Fortunately, sheet no is our shape XXX we and excellent our pipeline. current need Tryon

remain sales will the investment the market few next choppy over expect We quarters.

and the over low long rate. our staying allocators enables being run, quality of the to disciplined However, mantra operating of improve to us investments growth in the leverage portfolio of increase shareholders’ capital. All our seeking opportunistic our while true be long-term that with our additional

fund into plan also our exiting Dallas We our Pittsburgh. by to entry announced

Importantly, the is over once our portfolio and completed, while coupled to the roughly stabilization of and exit, leverage-neutral Pittsburgh our projects to new and providing of development our savings, higher Dallas be flows, our time. accretive anticipated cash improving quality market G&A growth in with expected

portfolio. consistently EQT Our two trophy and Place maintained the in best PPG in have assets occupancies Plaza, among our Pittsburgh, entire

our third have done terrific ground the work to for are will on jersey lease continue wearing provider. most care of in assets Pittsburgh, service of the We teammates party reputable our grateful a the whom for and

in press As we pre-set have no we last stated release, these timetable to week’s sell properties.

higher second the XXXX, often delivered financial share, restoring seen continue to FFO Plus, pre-PAC $X as acquisition and be X% sheet can quarter results, we of the of cash a benefits Turning our the while said simultaneously we’ve we metrics. to reap results, quarter, of per our than second flows. during strengthening clearly our balance to in

future a plan in future track our the office further Charlotte; growth the Dallas, feet buildings current can bolstered $X the development; is delivering development acquisition of square proud beginning We’re our Atlanta, entered and markets support balance office record XXXX, believe enhancing mixed-use we’ve results. of delivering between we right have: of billion time with future acquiring the of opportunities, by assets and an what announced delivery square high-growth announced us selection, land; of flow; Since a our growth and $XXX is in believe we’ve growth Most believe high-quality same best free we Nashville dividends XXX,XXX we’ve BBD outlook and ahead. in of delivered we geographic our what Pittsburgh; quality, of Raleigh compounded prospects X and and significant sets while at the Brian? Charlotte of high-growth upside million in our and land all additional earnings, that and feet million significant setting market fortress of NAV we’ve while cash with we for days growth to apart, are XXXX importantly, land growth record portfolio fortress FFO bank, future pipeline, sheet sheet, X% year-to-date firmly We the the share. footprint, consistent balance and the of track in development generated per cash this our in flow, non-core exit balance and sold X% maintained growth. foundation XXXX; core

morning good all. and Ted Thanks

For delivered the have second once portfolio and quarter, our excellent again people results.

future our increasingly that customers the there our workplaces effective work in second $XX.XX of off foot, that this square In XX.X% feet returning in consensus playing consensus quarter, feet the in per second XXXX. talent to new of general is to they like, counting and on of our need start since five-quarter compelling to end, does be average prior deals signed signed field better of new competitive and on. are among of good deals we quarter second than they together quarter provide we XX% the signed outnumbered looks growth feet XXX,XXX XXX,XXX XXX,XXX yet actually and historical to square are included one. achieved leases there square the XXX including indeed of brightest are the which generation for that and what a their retaining, and We to for of the expansions around deals. rent While a of new feet, XXX,XXX highest net our more best to two the deals the currency higher July, GAAP and rents and than are generation on and recruiting To square be total team a win average, whatever they with third contractions quarter be the XX exceeding second quarter, seem

assessing As we effective economics. pay attention net when rents to stated, leasing our closest we have long

our XX,XXX the XXX,XXX market absorption the signed for quarter. feet, multiple new third Raleigh or XX.X% at unemployment square net Turning Most generating expect in-migration the users leasing at occurred Utilization volume at ended to than the XX% levels. square national Tryon, greatest greatest physical BBDs. this rents including with summer. posted deals where we occupied, and lower XXX Tower pre-pandemic smaller our we increase Tuesday-through-Thursdays assets predominantly rates the have leasing with good XX,XXX occupied achieved average. at the are feet and Sunbelt and later and continues ended X% consecutive our activity to close positive suburban are Charlotte, Raleigh of America continues In signed. quarter’s BBDs to second the in seeing on we which where square momentum year-over-year South of Bank the of and occupancy, feet markets, the market and quarter with increased among approaching across quarter

and XX% Nashville, Virginia including XX Nashville our at in XXX% quarter deals, This XX,XXX growth are X.X%. now year-over-year our development held feet, square rents occupancy leased. average at employment the signed market up team exceeds Springs II X% new and steady national is

development is As Ted earlier, strong. our mentioned pipeline

Our of XX.X% remaining at two quarter feet was in our development not-yet-stabilized a Midtown with Springs combined square and leased, well. XX,XXX the feet XX,XXX properties signed signed in last completed, at are Tampa last II as Nashville since West availability Virginia square

just Our long-term highest the current of XXX,XXX XXX record our a both represents South provides in meet. to success acquisition to and Uptown Bank potential a rail and Union office tremendous district, BBDs second this “main-and-main” million restaurants. America Charlotte’s team’s the our variety parcel we’ve confidence Charlotte’s multi-customer the already With off-market close in before in and at the XXX,XXX joins served Also heart foot and that a End South a and unparalleled of inbound in the in BBDs represents, as plans with dose opportunities for the development. entered business dynamic on-budget pin in South the light bank. second healthy on-time the a on of by Uptown where interstate quarter, three in delivering district a portfolio to developers from by development development interest Queen south outlook Union’s gives along of and eye two future Since pending JW at Charlotte track of and square including our new tower call supported we mixed-use in opportunities efficient $X a an X and Highwoods looking we retail, where development, of amid targeted of quality near formidable amid land site, location land of received market and presence asset years our End our the the three billion hotel space three mixed-use office Tower JV all current of XXXX. the Tryon, the announced with Legacy of Marriott to square access we’ve residential office Growth last we’ve enter best-in-class closed development the high-growth Charlotte’s us and the address on. mixed-use effective on this XXX I’d of our of corner part a we’ve very market with feet we like hotel over in pipeline when the foot had Whole be with Foods, a square in a City opportunity us, and redefined the system established half-mile there. into looking way is Dallas via additional development a April, our ahead long the growth. to BBDs of growth Legacy

Granite is Six in robust build economy Highwoods which are Frisco/Plano owning provides believe long-term and second a of gives districts the Uptown and outperforming simple visibility to a is positions This and a XXSprings the best-in-class ground United fertile with from in best with consistent into long-term home headquarters and diversified nation the Properties workplaces Park of strategy Dallas’ to We coupled BBD business Dallas economy, three-year D] on that which job our and with and growth. best [ph]. bedrock nation of States markets Fortune variety foundation productive leads factors. in presence the XXX Granite in grow. in and from the the provides partnership Our The at to [Big most

pipeline the Brendan? we Our urban in from development focus, as which portfolio a deliver serve strong years suburban to BBD and robust for our quality continue foundation and and will ahead. shareholders customers

outlook of good In a Neither gain or everyone. straight-line related non-cash per the included million, and $X.XX lost FFO $X.XX we $X or of share. to Brian and provided the our operating which single the a quarter fluctuations $XXX.X were share, G&A Adjusting these Thanks credit February. for similar seasonal in reserves included quarter margins forecast the in core in term first and land receivable. quarter. essentially of and per reported difference were land when sale modestly FFO rental one revenues fees, The million, in prior of second offset to quarter, quarter-to-quarter in gains, of outlook $XX.X we our of and income $X.XX second losses The customer’s morning rents another. losses and XQ, sale lower main changes, was credit operations net we items original

upbeat the to Our again quarter. outlook strong for the year half our FFO increase and us this second start give the year to outlook of confidence

mid-point, quarter. outlook Our $X.XX introduced to mid-point the increase we outlook updated we $X.XX February. since the range which share, at increased is in we’ve per $X.XX total, at last our than the of provided X% top up $X.XX In is FFO our XXXX mid-point on of the more

Besides potential dispositions than line including to acquisitions what this last context in from our which we South we remainder to which or were could changes of of updated items, outlook. the announce have for we’ve other practice any later our the you in other expect outlook. night, Tryon, year, our the of excluding provide you to the minimal of the impact there quarter, of release acquiring XXXX the items FFO investment some XXX As expected returned close seen press may customary our impact

balance Now, sheet. to our

have Our leverage with financing maturities, remains which optionality relatively limited plans. creates low our and we debt

XX maturity XXXX by lowering recast and extending date basis rate quarter, the approximately May company’s to borrowing from the points. $XXX loan bank During the unsecured term November million we the XXXX,

be $XXX mature XXXX. August is drawn and a by million term loan, May obtained in unsecured bank which to XXXX, scheduled also must delayed-draw We

borrowings prior unsecured XXXX cash term and dispositions. October maturity Our only We non-core January maturity in delayed-draw satisfy the year. to flow, of $XXX can our that loan, on from a a this facility, XXXX debt combination repay we retained is this million credit revolving that to bond penalty with proceeds of matures in without plan

share complete current South the approximately pipeline. million finish XXX left Tryon of our $XXX development spend have We and of the to to acquisition

ample due of to and joint we existing long-term We net construction for any satisfy these repay can our $XXX Dallas growth million loan-to-cost without fund opportunities January under XXXX. in or these obligations selling including have developments, liquidity, assets the believe We and bond venture XX% a ratio the debt-to-EBITDAre equity, loans Xx. maintain raising pre-requisite still

by announcement the mentioned, $XXX year to million of with to $XXX we Ted growth the We timeline mid-XXXX, acquire As which a non-core to metrics sold set pre-PAC our returned high we’ve original PAC, from acquisition our June million levels portfolio slightly forecast office assets X.Xx below debt-to-EBITDAre our ratio million. assets ago, $XXX following our at of XX. of satisfies of

growing acquisition and ATM PAC, However, $XXX provide retained X% million, we more our our our over in our pre-PAC of To dividend amount able of planned dividend original excess million FFO increasing grew were retained acquisition than levels. quarter. none balance raising annual the payments, while completed and expectations, second we’ve our albeit our since achieve $XX increased sheet of operating our modest of announced program, target by context, from to balance sheet we still to cash net returning over investments all flow X%, through year-over-year in equity EBITDA flow cash a

organic strengthen on the us we’ve net without As gives years, leverage-neutral cash equity. our issuing the flows growth, which, basis a several combined platform stated for investor continue of solid be pre-requisite with EBITDA to to a new

fund can these fortress significantly over dry balance leverage $XXX replenished enabled that which our investments of jeopardizing the balance commit to powder, have commitments past months plus or million two we sheet’s increasing us sheet. we Importantly, knowing our future without

planned our exit our on and touch week entry into Pittsburgh. want last from announcement I Dallas about Finally,

completion following a Similarly, pre-plan market timeline, XX-month the Greensboro, completed of of similar with plan over that year years. our our Phase within balance year neutral, would enter was returned we As I announced accelerate the quarter completed plan neutral, to non-core Phase in accretive. prior the three stated from two you the to cash of Charlotte In sheet leverage and office our that planned when assets than our metrics. flow acquisition and first was last XXXX, of we announced exit to and and know, the plan many I, and higher dispositions. FFO corresponding past rotations We we plan Memphis FFO be have PAC we X%

We expected neutral, neutral and we also FFO completion. cash to recycling stated this planned be accretive leverage flow upon

As cash in stated returned to our we’ve earlier, the a X% and is sheet retained pre-announcement cash our million flow with than more flow year balance four quarters. I higher has strengthened our of $XX levels, last than FFO ago,

into neutrality has planned many with entry flow benefits capital from plans, same Dallas, of leverage exit and Our the prior our Pittsburgh, upon completion. combined accretion financial as cash recycling namely our

we the done dispositions as of Given the seamlessly the with of be the in investments as this the the timing from developments, primary we’ve NOI able not timetable time Dallas the to for construction commencement our difference may match-up is that past.

rate While in balance questions. are cash plan create and flows over for recycling that enhanced short-term growth will are sheet. this we ready long-term an higher result we our in latest could now Operator, fortress confident our choppiness compromising earnings, some long-term without the capital

Please of from [Operator with proceed. first America. instructions] Bank you. Jamie comes question Our Thank Feldman

the guess going we tenant the think can this context to on Thank as you. the that? watch through this the impairment Good we're quarter, more just And list, our impairment see to write-off, in kind work also provide credit the maybe continue you straight-line some way – I you on do downturn? then morning. of color

question. the or morning. for maybe, Good start add and color. Brian Ted Thanks I'll Jamie. some It's Brendan. will Sure,

Nashville had customer them. a and was some therefore, that had that So, in was we contracts canceled business that for down

wrote took the we off there that we wrote rent tact So, as where conservative AR reserve and the their straight-line well. is off

for space. us of they had is think some that I fortunate sublet thing the

subtenants. that believe with will those we go So, able to we direct be

collected additional don't exposure collected since going the impact rent would no that every really, us, I We without We in for – percent] pandemic, those is reason has collecting month, this charge as as I even that straight-line [XX-plus an issues quarter of fairly AR. within And was So, the but we've our onset say, mean portfolio. rents the impact representative [ph] and credit was but the we opposed or this this second the was see the different. this modest, and that. indicative to the of XX% been to didn't majority certainly that was attributable of forward rents AR? number. case And the for of still write-off the the

in so Thanks. And what the say in? Can you they or they’ve actually portfolio vacated? are sector still they're

occupancy. sector. taken have We them out in healthcare They're of the

that We occupancy the occupancy have have was of and of did of for they had. year-end reason taken them part the space the them high-end that the outlook. of our for out And lowering not range strip backfill of occupancy. We direct a out assumed

of So, as occupancy the for that's well. part reason that change

I thank year-end? know think about dispositions. likelihood guidance, down the as you. do you asset sales don't include you more acquisitions that mean or numbers here Okay, come what's do you by and said then you I And

there. lot hi it's Well, are capital price as out not pretty a know, today, you discovery Ted. markets of choppy Jamie, Look,

mostly think capital in we today, efficiently, just but I think out if markets land. are would certainly functioning look, were dispositions, We've there's a and the open some got there I market there. given some So but transactions uncertainty more where out be few

cause buildings income-producing necessarily dilution. not So, that would the

macro I for of remainder this markets given point, the I are, availability debt, where we're pretty on dispositions the at think So, cost lower of the debt think headwinds, of the given capital the year. just conservative increased just

outlook would add the timing that proceeds would get any would – minimal we would I likely therefore, in if our a late mean where that terms I impact. they right, be likely that and is thing just would be, in to of the given FFO have would only the year Jamie, of Yes. disposition

view on markets? point or your price I can rates foot then price or that change any you mean, in And Any discovery to? those finally, Okay. IRRs per along cap in lines,

There's We've a Sure. June We're that I'd May waiting they're and some forth. of from priced have in strong but don't trades deal before number, type been mid-X cap they that obviously traded so in I their more trades. Atlanta had high-profile guidance, they July, really say, rates. the think but pretty handful the and that still been, one a in back closed hit

So, those else of have of that everybody to days, out have but the waiting what end last of priced as we're closing. – a fallen sort which Several we're heard sort contract, on here as of up ones couple see is XX waiting well. deals in are under We've contract. so visibility maybe

What look does like? the buyer pool

More cash buyers.

just transactions for debt clear. think Again, really the hard they are to that I markets now. right want

if a But maybe out think all-cash sellers more sell, there's there. – can clearing buyer potential there out be, price, just opportunities be we market they and some buyer obviously, it's need to if you an all-cash I there's like, to for they pool. buyer shallower whether opportunities hit So, would that a pool want

Okay, you. great. Thank

Thanks Jamie.

Our next Montgomery Janney question proceed. with comes from Please Scott. Rob Stevenson

known morning, Good Tryon point? Brendan, per or items materially this any negatively at FFO third at quarter impacting XXX share point beyond or fourth guys. positively this acquisition, the

and I mean, we movement mean, say do give of going certainly quarterly I not give acquisition really what's how do a biggest would Yes, to but – it's have to don't right, would enough rates, lot. interest our And likely give sense again, we we likely to ingredients terms quarterly there's the we of be. FFO. the biggest you Tryon. do look when the forward Rob, the on the happen think is of quarters. what some interest We not guidance, I expense of – of – to say, project the I curve – at I XXX We in use progress progression fourth kind to third and in

curve forward it the where from now. currently is So, up is

to is expect higher the we've interest to what's think in a happen impact rates but from of see probably year, you I the will expense. So our see from likely beginning little stated as outlook, bit that can higher margins

that first quarter, the and that So, from second quarter somewhat was to in that just movement of mentioned part we see second did the remarks in prepared briefly the I quarter.

third our margin for The us, quarter a our typically seasonally quarter from lowest perspective. is

forecast And So, margin that case. then a the quarter that similar quarter. the the be perspective, looks typically, we second from do will to very fourth

to in can get those we're range progresses about the of the you and thinking our terms should, in of So, kind probably movements mid-point third quarter. figure what and of out kind you FFO fourth that of how

continue. Okay. or of of That's helpful the in because you the that guidance upper $X.XX assumes guys FFO second core the did more less end quarter

to So, or pushes known more Thank to I to that's but [ph] a in was just still then, this trying [Tivity] helpful. discussions what figure out that down is get that And midpoint, you you. at is a move-out point?

Sure, Rob. move-out. It's a known definitely

while. that we've that a telegraphed for hopefully, for a known and So, we've while,

a have we're are a and negotiations is, of for for a encouraged, done but we're a backfill do in is building. news good we majority but that space. the that strong signed, for until discussions ongoing, nothing it's Those of Now majority prospect obviously,

the End that South tied start the development buildings office? in multiple it what And could on have guys for of you right. where then in Is Charlotte? without sell timing the All and you apartment the somebody it is start being off the

folks is connectivity it's to question we're on in Rob, Brian. space more one we want and some visibility subleasing keep be Ted's point and have the we're the building able move the gets a as to another portfolio we whole building can them we to that out have good in pretty going backfilled feel single by to that user, by. also on that to subtenants that [Tivity] to close Hey [ph] those put of then that good I thing and

want one. just that to onto So, staple that

we fantastic. specific it's your frontage on really X.X think, acre South a more on to question has End little streets, is, three Now, which than the side,

a could it. as there's that residential go, hotel It strong So, going ways can the add be get It's elements these to starts but is and to to as interest podium think a of residential to more It's yet, to we go do a to from There's of we mixes ready first, build well of commit then to of complicated. a shared could component. single add do kind and have little lot the We later. and we facility. as on top someone a pre-leasing, a designed part some that. couple then like fully go generally office parking not

we some like there. So, good we've feel got flexibility

thing there's occupancy that in some term. site The – the the we've on is, some other got have current buildings

ability to years. in the going to have plan get we the So, and next that collect go ahead couple rent and of

And is one the Pittsburgh and me, and more impairment financials in hitting ops for second is like to severance the a or into there then an be last the such, of event? held-for-sale likely items XXXX half XXXX when impact does Okay. going Brendan, And that buckets? FFO and discontinued move

Good Yes. question.

won't disc an it's not because So, ops, to with respect it individual segment. just into go disc ops

So way that's we not the that. classify that

disc contract. So, that On largely the a it be it would in goes if would held ops. under case not for sale, be

So, we're on two assets preset there. no with – timetable as I those mean, Ted selling mentioned,

on when that So, we move under I think that would just depends contract.

shouldn't with our any material any severance TBD point. will impact that. that's expect So, with any associated with Those the impact from a And associated we closing you charges office then major in this will at there. costs – don't respect or line to see movements G&A see

Thanks Appreciate guys. the Okay. time.

with from comes Griffin proceed. Please Citi. Our next Michael question

maybe expansion touch why makes elevated into seeing given of give color supply some development the to want you're Dallas. structure, as in market? that kind you I Thanks. this particularly sense, Can that on to JV the

excited Look, about think entry Dallas. into we're Sure. I our extremely

you a to that the similar and time, amount find Charlotte looking been for think right Charlotte. to I that was of it's spent years about in. and very we since think in to We into several entry XXXX got point if able – fair Dallas, grow able

So, Dallas, we last been the participants of see certainly, in over been there. years, time and we've have Dallas the the same. few known a spending spending lot market We've time

of country, Dallas, So, think one think just accelerated has COVID. I you the fastest-growing only the growth if and about during the in markets

the Dallas, you Granite I It's a management long get like-minded. there be thrilled able So, for Six. is headquarters in in is or in we've time. tell they're an development Highwoods XX to known Their adjacent company. there, building ground established we're headquartered with to and based very a Granite to Park prestigious operating for very team, actually years. the would

opportunity Granite in Park, side this, far with in building They've is have experience Dallas. you success to got cycles on better even Six, and than were group type if returns buy obviously, as They've the to the development in So, this achieve get we developed the we throughout market great at buildings, the seven best go can Park that's it thought uptown. where buildings though well. proven Granite and developed called developed they've in in seven BBDs just this

into Dallas. cycle on So, their they're development tested

way this is to interest. [XX:X This XX/XX a This a XX:XX] alignment thought a tremendous is in So, is we of or a just in for shoulder-to-shoulder us get JV. JV. [ph]

a So, entered think better have probably market. way there's we could don't we Dallas the

Thanks. Pittsburgh And maybe on planned exit. then the

in the at the the recently how in I of I the color Investor talk positively Investor guess, Day would be sense of been this exit, that mean, makes I has think market. helpful. Dallas, kind expansion kind the can pretty talked it? wanted And but – it just to to long with around conjunction planned any of Day timing you've into You us about about thinking you

Pittsburgh us. for look, mean, has the performer Yes. a I been good I mean,

good the us. a last market markets, been for at the look occupancy you years, So, If our it's our has of of right? portfolio the top at or been Pittsburgh several near

the Dallas we've opportunity we our Charlotte how sales. given had came asset and to fund where just fund to prices similar to is through I when it stock had think up trade,

great match Dallas Pittsburgh right got seemed We've us. through our entry for up like just we it portfolio. for the into look a was our team So, there.

just those the So, Dallas an difficult best incredibly when rate to going long-term, how – we thing that months you but it's the decision. for think and that's what company is the cogitating it spent provide look is at decision. came deciding up, the over We growth this to long-term match we

Great. That’s me. for the Thanks it for time.

you. Thank

with proceed. Heck comes Wells next from question Fargo. Our Blaine Please

and seems Good asset I you the the Brendan, the characterize were FFO quarter? several drivers fundamentals on It by parts. more this by increase increase Thanks. guess just can as you morning. would guidance comment moving capital like or Great. driven in there major recycling? behind

Yes. Good morning, Blaine. Good question.

So, yes, the so at we're up $X.XX midpoint.

easier that our midpoint in outlook. the we to speak overall sale had to of to in related we earlier, the of prior credit the it's I gains And use probably land because also Neither reserve. than those loss just range. mentioned I'll FFO as then were the So, but $X.XX quarter, a had $X.XX

offset essentially have another. those So, two one

is net bit expense. the net share in I little remaining terms activity acquisition terms the the in of of a high impact $X.XX a call of corresponding $X.XX it about would as with a of XXX, with dispositions associated terms in at interest investment level, characterize So, increase less it,

about netted $X.XX for of All to positive that us.

$X.XX is higher NOI. other core The

that of OpEx. is to Some attributable lower

is of rents. that attributable Some to higher

attributable higher Some of that is to revenue. parking

things contributing. all of So, those are three

it's how one I higher Now, a didn't translate a given come that. same-property for there are may be, outlook couple reasons your of questions NOI NOI into think well, that probably growth of that growth. And

$X.XX of $X.XX are about the the better assets than probably on is which the we $X.XX is impacted is non-same-store one to $X.XX So, of from There mostly same-store expected. originally doing pool. pool, $X.XX that much had PAC, from to what increase

of write-off that same-store, of we or is AR take remaining enough credit the some but $X.XX do which range on Now, do just there. enough with to have associated range. the range We net the $X.XX wasn't reserve, the we felt a to higher pool, kind X.X% in the same-store it not and around X%, move increase of that's the to of to like of

the keep decided we range to in-line. So,

Brian probably seen, negative companies, have of many Great. in there. days leasing markets drivers then with tech your saw days. helpful of Ted, And right. there talk what Obviously, the major you've the the color some guys to were even pandemic. some Very during velocity for in respect been can headlines you or leasing of whom really to you about last XX XX and All

your whether market-wide seeing implications but may markets? any of portfolio, just you're So, demand not the in be in letup in only about some talk can you from target your them and what

in, a great said, in leasing Sure, as out mentioned start off will quarter. prepared Blaine. we the start and I'll the we're It's third I to in Look, Brian as Brian Ted. think. remarks, jump

days of in far so still leases, portfolio. square customers square a into feet just few of left. We So, including July, that new we signed feet XXX,XXX our XXX,XXX have will coming be

good despite the down. a diverse. got in pipeline the summer activity. markets, behind slow middle is demand, activity typically the things our see we've when is of pretty it's we So, good across as Tour that And being still good well. The been

services, financial deals, If then numbers, you most new expansions leases look was and contractions did second positive business we in the Brian we that seeing were, engineering And in quarter our of firm law expansions, law leasing most the are stat signed to firms, well. and activity, several is mentioned and other one. insurance, well, this two firms our exceeding as we're as our terms

more our half from So, space. contracting? our expanding half taken they I we've over or places, new and customers into contracting. other data when more new companies started guess or customers. us are them of expanding are of space got would be tracking they they we over taking coming come less but And then portfolio third And They've space. to point are They're a more –

to So, as coming expansion via they're our actually portfolio well. expanding

pretty So, good. has demand been

Thank guys. Great. you

Blaine. you, Thank

Our next proceed. from Dave question Please comes Rodgers with Baird.

exit about to Ted maybe to before get Brendan, in leasing guys? of kind hurdles of vacates have can of or making that around the that the Pittsburgh there, and going Yeah. or Good Maybe some the kind you've gains of think terms about got exit issues for happen that net tax the major you exiting or you'd might to through back everybody. that you morning, talk like and you

start. we assets. It's two have I'll Obviously, Ted. Dave. Sure,

operating little not is land two of – We for the to have capital itself go, PPG but as the choppiness of assets. ready piece well, be if it'd markets. a

going the we're wait for to So, right time.

no we're said, in to sell. we hurry As

Assets are operating well. They're well leased.

same we it's third-party leasing team when team. management transfer to company, the a Our the

great the So, same the we're have on working assets us. going for benefit people been to who

I So, PPG. think upcoming terms of expiration in; the markets all know, hurdle it's we've as EQT, telegraphed. there returning in September an of the They've got is biggest really capital XXXX. and we

don't we've So, They there seven do. know what on through. going sublease floors, the have to got or eight work I they're think, to is, The uncertainty we do market.

working we're through something that's as well. So,

chasing prospects. and through got it's we've look do So, at to different opportunities are there, we're see I and think that that to what out just going work – they're and

quite go do to – is ready asset, as to as not on PPG. some that work it's So, there but so

just taxes. answer Dave, And, your question to about

tax likely those be a be we year, would if the us the I could – that gain of think both likely other. a same for the probably we by transact one asset loss offset advantageous on would likely because tax versus within most

that most us of flexibility the So kind probably optionality. gives

we mitigate tax we'd would and year, I able a think if if work I that, out to gain, but some of where that have we occur think were had for not same significant could ideal deal the did to that us. the sizable tax impact believe with to it sell strategies be where both we within we be do them

And projects? there, to looking date Ted, on completion long-dated, and you construction Dallas. stabilization Are helpful. stabilization particularly on under back maybe Just those That's both it. then, at Got the going of those. fairly

leasing that come So, to ground of kind do to out two project are those more fully you vertical – see the of to projects now? need or you committed right

Granite and No, fully is good is loan great very and No, activity The we're question. construction Six there. leasing we're underway, committed. seeing well closed Park

Obviously So, for we're optimistic the there. of end We'll doesn't complete until XXXX. quarter see. fourth

be and still we're demoing is going and XX that of right parking. you like the sub-training on Springs, said, to fair And time. amount then a existing now buildings So,

is period as underway well, but there. building construction demos period, longer well the obviously, a bigger So,

the brought minimally under under some construction, GMP Brian Might it's think, Dave, seen and pile got construction ago that and choppiness insulated some and here. was when We're of out gets glad I markets actually Granite being time we've Park from benefit, in the as was on bit Six. the little it a well. to pricing inflation a but of contract

you activity I color more guess Dallas, Can you. on good. know Brian, a like a regionally which overall the little pipeline bit time talk sounds that. then on that of little more stands spend That's in little give versus look leasing been today, about have maybe let's is. about a both is regional the as helpful. weak finishing particularly Great. great, at lower maybe strong of where I I up the appreciate side? you but the you kind Can It in the whether has or is And as sometimes occupancy Carolinas. out kind particularly talk Florida, portfolio you trend you for regional movement anything maybe and Florida of been versus and the which with say, Atlanta, where

Yes. question. No, great

board, little and I'm bit to your the couple of going and a dice question different in ways. across slice a it's So,

as getting to yet, underwritten per I we're it come the First, performance of in interesting, Florida, know [indiscernible] Midtown activity right, But – suburbs suburbs, se and Tampa, general, prior tremendous kind will in development it's on filling to geographic not pandemic. it's specifically. the we up schedule towards but our and be that's

XX something had city of excited Tampa its jobs. in-bounds sort growth. X,XXX that relocate created is at occur that in into new seeing the about. table and so taking are of Orlando is companies And we terms the adult place

our even that subleases, seeing are that And Charlotte. in last positive way. is we're really one portfolio suburban Orlando two It's marketed announced, a of there a good moved rates that it's Nashville, quarter then of particularly kind being our but it tide they're quarter there portfolio, the negative was in growing so, very absorption negative not there. activity And major being punching though above well. one previous going absorption right bigger but not But still markets our and had Nashville in obviously there. its in has big the and rising weight after is

we're the the the future interest assets [ph] one that of is Tower [ph] in in know wear] our the really there Bank leased. atrium of second filling out market kind floor of to space. XXX the interest may that's [hats of even [DVP] and I You the seeing asset, and create is a Uptown kind Charlotte other America in lobby We're Charlotte having But GLA more strong. which already of South Park, at to kind manufacture is suburban we're

that kind In Raleigh, we're or back seeing downtown JLL So, it's sticking board, Raleigh the of and of very to so one's too. No hottest many from out probably folks negatively Dave. positively. I the really kind coming downtown and in the is Raleigh, suburban across of submarket Northeast claims the think it's looks

did what Anything Ted, So leave on I that out? kind color? of

you. think you I it Thank got covered. No,

Thanks everyone.

Tayo Please next with comes Suisse. Our question Credit from Okusanya proceed.

Yes. of the for math little could that be opportunities mismatch a development kind versus, are change accretive rotation. leverage kind may Dallas, in today in want of entry to Good and you Dallas, which acquisitions just kind away, morning. but Again, bit. of earnings curious right of the in accretion discussed about that kind I make market whether regarding you funding about some the there probably guys thinking selling just Dallas into to of talk between Pittsburgh assets

good a think question. that's Sure. I No,

we three provide to whether now that it's opportunities Dallas BBDs or to or sellers to do buyer market we'll we're obviously, these cash the for it's want us, development. want just are development, We Charlotte, there's looking transact, but we – went actively going growth Obviously, be don't whether a the looking going I buy We're time. opposite assets acquisitions. to the but opportunities, environment is successful then are that. in we are first are the know, and If think on be following we we with the but in are not, at This for future in with a there, being of up I over difficult sort a we in want. some of us, opening up in that

two, then well. at other the may in you. rotation? market next over markets eye another hear we that And regards year maybe you on just point Got Any market guys as that this have about or your to rotation could

Nothing right now.

up the platform, our our Sunbelt, since COVID growth speeded even. essentially XXX% to in we've We're be higher think going I with and the where that we're the pleased seen footprint. migration very

in our we happy normal time Charlotte, are in again, other did right And just So, footprint there we I now spending like in. of markets but time markets. our Dallas, part think spend now, other is we're just with business planning

the never say certainly there's now. burner nothing you front on So, right never, but

you. Thank you. Got

Thank you.

from with We have Bank follow-up Jamie a Feldman Please America. of proceed.

soon there Great. get the up on comment. What's wanted your can in tenant how to a you mark-to-market? Thanks. I the on Tivity and just thoughts follow

Yes.

I So, some I asked – skipped it have I that that. hit when Expect Jamie. downtime. should first the you should time, have

of the the end building that February majority So XXXX. again, at of it's of a expired

can I it So, time a the And if leg wrong. downtime, it's well. it's then over in six be, is a seven period may contemplating correct I'm sort what Brendan roughly or as flat. I'd of we're me expect, And months, think mark-to-market, maybe of some then whether

thank you. Alright, Okay.

Thanks, Jamie.

comes from question Street. with Please next Our proceed. Green Daniel Ismail

Great. Thank you.

Curious buybacks me. time. updated on or share at for Just this thoughts a your quick thoughts question

Just curious, on markets your thoughts the today? high-quality resiliency share given office public versus what and Sunbelt we're the the in in seeing price

And respect entry. long-term. we for going to just – Dallas, It's just considered the think rate to back regard fast-growing with be And Board. great we're opportunity is a for discuss it's start, want we capital, do with right Sure, we company. our Dallas enter obviously, stock, Danny. discussing at [indiscernible] make allocating buying sure but but we a we're be trading we afternoon as as etcetera, certainly the Look, this when consideration, We'll And early given at it's development, – you all of as our know, discount. stock it our look it's you growth market. we also to enhance doing whether what's do as alternatives, something long-term it our meeting we as our said, with when our to boards just a think

think don't either. are exclusive I So, mutually these things

be the these I protect our buy days. especially up table, sheet. to on fortress to be uncertain just but want We want would buyback given going lever our to continue We economy balance still don't to to think the it's situational. stock,

continue long-term, I about. some the over So, think it's think to we're to going

guys. Thanks Great.

Danny. you, Thank

There no questions are further at time. this

next everybody, for your care. for Take Highwoods We being the interest seeing quarter. to look forward today. you on in thanks, Well, and call

you thank your call for a today. great We your line. participation please disconnect ask day everyone. that and the you does That conference conclude Have for