Highwoods Properties (HIW) 8 Feb 232022 Q4 Earnings call transcript

Good morning and welcome to the Highwoods Properties Earning Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded today, Wednesday, February 8, 2023.

I would now like to turn the conference over to Hannah True. ahead. go Please,

and operator, everyone. Thank good you, morning,

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

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

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

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

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

results As duty undertake from differ a materially statements update does you events these forward-looking any not know, to and statements. can and actual forward-looking the company

the turn over call to I'll that, With Ted.

best-in-class in property Hannah, announced morning, Thanks, a fourth second $X.XX placed in our share. to successful highly and economics, volume East, Midtown in a a In strong we and our development West year per had in-service terms development in enjoyed strong end We the Midtown FFO Tampa, Tampa for solid leasing Highwoods. both delivered of quarter, good in strong everyone. Midtown uptown of and Dallas, acquired

concerns Our a the quarter interest widespread healthy capital pending leasing with is during recession. the to macro of broader limited and fourth availability environment, somewhat contradictory rates sharply, up

over must term. customer, simple not to core be a long size. We continue straightforward market, our diversification lease and portfolio or any sustainable attractive to to and long-stated to industry This diversified our component that overly resilient, returns generate goal submarket, the reliant believe be be on and single is

than Our XX% less of is largest market, revenues. Raleigh,

less of than Bank America, customer, largest Our X%. is

for Our less customers top account than XX XX%.

XX,XXX category largest XX%. less feet. than our the size diversified services technical is highly professional, And industry, average is square and lease under scientific Our

our has across job We continued and strong throughout onset of strong believe and markets our diversification, purposeful the our population leasing the including driven this growth since year. pandemic, high-quality portfolio last

million any We feet note new leasing. on leasing X.X XXXX, feet in a square of feet since total the XXXX. signed square square XXX,XXX second-gen XXX,XXX of most new leases, In of with we and ended the positive year year

In signed half expansions of feet expansions. count, ratio outpacing XX we the square fourth our XX,XXX of quarter, renewal nearly by equating of expansions, contractions to with X.X:X a net

rents signed prior the renewal foot at This of In we a JV XXX% a was a addition, XX-XX space XXX,XXX customer's square property TIs. in and for limited in cash with renewal roll-up Richmond.

is leasing overall not in included statistics. JV reminder, leasing a our As

into activity impacted XXXX we the XXXX. end cash the As backfilled. have to customers’ substantially we will square negatively scheduled NOI of move a commence until our in foot XXX,XXX the space move-out of BBD Nashville same-property Springs backfill already lease occupancy The month, Cool isn't and that at this by be early

practice, pool. our do is same buildings remove not in-service our we As from property

both with In the Dallas growth our addition our million assets we meaningful also solid during with leasing long-term acquired investment activity of are in Charlotte best-in-class $XXX in XXXX year. efforts pleased We to and potential.

strongest high-quality lease generate we and million buildings. BBDs and Tampa non-core long-term volume land sold blocks in Sunbelt us $XXX our placed Dallas, building of in development. the portfolio of gives and service work to office roughly development and over Atlanta, throughout XX% of growth. we $XXX of need the million Charlotte with additional announced combined We million $XXX We This the

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

year Our share FFO per $X.XX land full including $X.XX of gains. was net sale

XXXX midpoint interest outlook share rise the per rates. of initial gains FFO sale year land $X.XX in our unanticipated our full the Excluding with $X.XX even was above sharp

partnering the a Granite Dallas $XXX with in JV Turning in at acquire we for once again properties, a Olive expanded investment and million time quarter this dynamic market Uptown fourth local investments. share. In presence sharpshooter total our of XX-XX the McKinney by to to Dallas & our

McKinney XXX,XXX well-leased of feet & feet and The with trophy square retail. market. XX% building XX,XXX below and is building rents Olive square to of mixed-use office with growing a average approximately is customers be estimated

This development-like a rents priced below investment to yield going-in to we provides opportunities combination replacement of roll attractive the cost an up unique as flow market. with earn cash returns

leasing and building be the blocks what development from we our with ample believe of and this opportunity is four two the buildings synergies in only Springs for Uptown. Further, providing XXXX will operating best

in successful XX-XX Midtown announced the encompass in East development. Tampa will project XXX,XXX also This Midtown square a feet mixed-use we quarter, JV. the highly development During a

of The office is half total project cost being We XX% quarter forma. Midtown first in on follows in West Midtown the the million we service announcement fourth our placed that. as share with specked our leased. $XX during started West in above late our development which leased at or at Midtown originally This the successfully original despite up scheduled estimated at Tampa, rents pandemic, a XXXX. And at pro fully basis

development now million through scheduled across projected of markets it at representing those total and XQ square to different share XQ nearly total but XX% Our five not developments Three stabilize is of XXXX, pre-leased. a square a foot our are XXXX. XXX,XXX XXXX X.X represents deliver until in at our pipeline million combined are $XXX feet investment to investment million $XXX share of

meaningfully availability, the investment market With over has reduced debt the rising rates few sales interest quarters. past and slowed

in is be us sheet shape, patient to allows balance with which efforts. our our disposition Fortunately, excellent

average higher-growth believe intensive, of the proceeds or we'll our use Over properties. and ultimately monetizing CapEx recycle long we have continue dry to upside powder replenish our our the into and run, we limited strategy below growth prospects, will properties

a dispositions although, will market. As illustrated outlook, investment in our the expect office of year, this stabilization sales to upon be XXXX we the volume depend the net of seller

are Our is acquisitions non-core million of up sell we unlikely. plan to while year, this believe $XXX to assets

to higher rates and higher to is share. project historical interest is will also move CapEx $X.XX occupancy cash NOI and outlook higher FFO flat lower as due out. XXXX projected be midpoint activity due rising below $X.XX the at result same-property operating the At initial growth to to per we expenses. the average Same-property Our a midpoint be of significantly average largely our expense

continuing of we investment XXXX and compound for delivered $X.X COVID office as X.X million million normalized year sold is XXXX While $X feet feet we FFO million consecutive a acquired investment outlook a the strengthen square our beginning Since years each rate. billion actual have at XX cash long-term feet a reminder of below share for X% growth. million share and of XX% poised for results, growing FFO of resilient With even onset assets total portfolio a while of X.X grown of the at X.X nearly square $XXX normalized office a better per highly per for leased the ever-improving best-in-class XXXX, flows. have of properties our square for non-core development quality, more All to and we're FFO total billion. now average

tireless has Brian? and to past their entire continued for are while shareholders year. our us our high-growth BBDs commitment that who company many for and their It's portfolio positioned are to teammates for thank success. conclusion, drive from the our come. to like success and In during high-quality talented I dedication would our effort Highwoods team hard-working our of continued ones received humble, the the years most attention

morning and everyone. Ted good Thanks

strong and compelling off three-year that every As the the fourth strong Ted portfolio challenge meet team produce a run a mentioned, capped pandemic results. quarter strong saw through and XXXX and

which by most and Real our a leaned the five high-growth assets markets, Urban to markets Institute, taking strategy BBD Trends top across markets report. of to the approach the into US Land upgrade PwC, We've XX Emerging six top reach include six recent for of watch diversify geographic the in Estate Sunbelt to and deliberate

they in life occupancy our Within Sunbelt. and options customers a are of individuals quality proven these Suburban flight prefer calculus by and have Wayne our have physical competitive successful activity and workplaces as our proved and portfolio evidenced to the leasing urban to across organizations be markets be. and highest suburban when and to meeting BBDs where both

greatest that being worthy the of belief burden, our a factor is the is determining the It commute worthiness the overcome. to magnitude of commute workplace has

and BBD base industries worthiness and across and a sizes. customer attracted options of spectrum suburban regard broad and a with a to portfolio has provides commute urban variety of Our amenities

and than XX,XXX cycles, Small less the office are mix future medium-sized feet, and has square to of pandemic the a so-called customers bread of with an disproportionately work. previous and size customer average allowed portfolio are and evolutions weather in This flows expanding. back customer of the ebbs in our butter and

to-date. variety on Commons offer be formalizing glass and steel of the under flexible are concrete, we While Highwoods may of the materials, based most banner the we've work success options had we flexible our not

Suite we full our space in hall of town a with occupancy be the specific one or collections conferencing taking of our booking duration CoLab, to tailored call dedicated the needs. convening Spark and provides their it's Spec our regard rooms, Zoom and one to flexibility hubs, customers platform scalable Whether Commons our can on floor ultimate

with across spaces, enters portfolio such XXXX it. net diversification over with both creating associated more deliberate a experiences. collaboration platform includes XXX new informal having formal workplace our approach This coupled and our income and the compelling It around to makes of conceived making all delivered competitive factors variety rental spaces and healthy resilient, with

brightest a individuals the operating location XX of we since to of have Highwoods organizations. expansions, and fourth To with the our and that finished that XXX,XXX feet, signing expansions confident and results the signed choice square serve for team are We for net the continue best XXXX. financial solid portfolio year the most quarter, beginning end, the including as will

include this JV Ted in of foot Richmond renewal property As XXX,XXX XXXX. our through XXX% mentioned, the not owned square does

our the five-quarter year for higher and quarter rents high. represent net were effective rents a Net the record effective than our for average

stated on rent long is overall our have best or often economics. focus leasing there is spreads, the While that securing much cash we GAAP focus

face the may or we attractive. lower TIs lower For if overall rents rent for effective example, net are rents free trade

a Sunbelt, of BBD during portfolio all-time the high net our effective strategy. Our and diversified for strong endorsement year is rents

XXX,XXX Trimming where and Raleigh, rents market occupied end grew down on XX% and the we for of our in market CBRE. signed X.X% feet activity, quarter year-over-year square

has job financial so team continue service activity far and led growth professional healthy expect and seen this in companies. local by year Our this to we

line national feet on the terms for million two of XXXX. in almost the feet quarter, entire the Second, BBDs assets activity hybridizing the X the square Cool majority and square for Springs, nearing finish Nashville in in that of and volume leasing market Brentwood XXX,XXX is signed garner of

rent. market to reimagining Our the positive backfill and five signature have months to increase market roll net Tivity, our and quarter these assets in Wakefield, been According posted XXXX substantial prior a lease national the of the portfolio's year-over-year absorption well-received Cushman in leading X.X% to expiration. repositioning of largest & for

previously, our Ted in will doesn't XXXX and our the Tivity of beginning as As occupancy be customers portfolio mentioned vacates until lower replacement XXXX. in lease natural commence

which Moving placed Midtown development of and City further York Midtown West New views south offer mixed-use an will relocations, address choice East net recruiting, service joint the our the announced itself state established have XXX,XXX Florida development, XX% a to in foot leads blue-chip Tampa, retaining, which highest talent. as resident venture who Westshore has leased the for organizations we Midtown on square and quarter a for returning the BBD. in in placed priority of

great we've and and via deep markets time. and are into newest successfully of Our our examples simple and built Charlotte executing leaning relationships over decisively wide Dallas the strategy straightforward in

City South Trian NOI. now contributor XXX acquisition Charlotte, and With Queen stands is of largest to Highwood's the the fourth off-market

a The the two on track of for McKinney to market for for of of projects. which square growth the and our leased forma stabilization foot XXX,XXX and BBD, rental X% Olive, December annual XXXX, Dallas following contribute tops heart was to NOI in absorption XX% uptown completion the we're acquisition in our tower bottom-line, of Dallas' development pro and

do can this, to our conclusion, and our the together making approach customers and their our achieve turn they Highwoods in customers apart will focused what our every and teammate for create diverse We will remains we and and value most teams commute when on each worthy shareholders. enable talent supportive be. portfolio In cannot it we this believe

now I'll over Brendan. the turn call to

and quarter. Thanks quarter, share. fourth significant FFO million unusual share a $X.XX or Brian. items we a in $XX.X of In were net of the delivered no income million There $XXX.X the or $X.XX

our midpoint For This the FFO per upwardly outlook FFO came $X.XX outlook. was provided the of above the in revised our we at year, $X.XX October. in XXXX share was original

the core Excluding initial OpEx gains, our $X.XX was compared of in originally above than $X.XX FFO outlook. per from core FFO higher a due parking largely of activity impairments midpoint of XXXX driven less to in and from share planned to $X.XX was upside of share in net XXXX of outlook lower and $X.XX forecast higher midpoint land The or $X.XX disposition our revenues sale NOI, by original the the than acquisitions. $X.XX following:

and These rate higher of debt. $X.XX for forecasted than $X.XX higher of on were items combined partially by to rates, upside, interest our attributable offset variable expense

In strengthen. strong us of year, we during addition, dividend to flows current XXXX the flow over to X.X%, coverage reinvest. in strong attractive believe cash we is to XX%, a payout CAD our yield FFO what under cash with had Even continue with providing ratio meaningful retained an

and by million more since and NOI with from purposeful down cash XXXX, spend or a been cash strengthening in and have higher leasing capital with our CapEx, without assets in NOI CapEx XX% and cash and $XX X% XX%, $XX is capital our million yields. by generated improved were ratio on or to equity any our base. higher into development flows. that long-term is flow resulting has We maintenance increase sold this, that our our meaningful of To portfolio, projects, inefficient focus million We've cash quantify $XX recycled acquisitions

quarter-to-quarter spend clear. year-to-year. regardless is often or But fluctuations, is trend short-term the of lumpy CapEx the

Our our portfolio has strengthen. cash become have flows to more efficient and continued

with still to sheet investment pipeline, from is the the quarter debt-to-EBITDA continued Olive shape. ended our year & and of due in McKinney X.X up on balance overall. times, Our acquisition the but We development low excellent of third

provide line undrawn on and amounts of over fund liquidity to which plenty Dallas at loans, the million have development credit our complete to ample our the pipeline. JVs, construction million of between $XXX us $XXX remaining room development We our

balance expect the net to over XXXX. until with as our up of set is investment maturities penalty, debt the no with year, million and for without of well debt be we sheet have flexibility, end a purposely This we have pre-payable ample the We plan fits consolidated that $XXX where seller.

our to throughout rate proceeds. reduce expect We we move as with disposition year, planned exposure floating the

unencumbered and We debt. assets of longer-term flexibility rate the fixed also have a financial pool solid the obtain to

As is Ted mentioned, XXXX, outlook to for per $X.XX $X.XX our FFO share.

largest rates. the higher is know, XXXX headwind you interest for As

$X.XX months SOFR current just the curve, we to share ago. Based higher what XXXX on to of to interest of expect forward the incur in XX $X.XX expense compared per implied curve

without be us structured sheet to our able to I earlier, mentioned purposely As we balance provide optionality to debt repay penalty.

the to means and maturities expect short-term, year. no this projected curve the higher are until peak XXXX, rate in this after from during in we expense the given in While SOFR interest forecasted positioned a downward with XXXX, benefit trend debt fixed great interest we

the with has release anticipated NOI share to our we projected net OpEx of night, cash of same-property expect growth XXXX. midpoint per OpEx, of the comparison from same-property last XXXX. principally from a anticipated occupancy of in average our an The combined outlook second normalized impacted recoveries. somewhat OpEx headwind low unusually half our In more stated same-property at Year-over-year lower $X.XX move-out in XXXX Tivity helpful, first higher we higher our the related are point, as by NOI Using the but XXXX. positive is cash XXXX comparisons often pool in distorted half negatively

years since statements Finally morning. may shelf noticed, registration our has Under have routine made SEC yesterday shelf as been years. filing. S-X filings you three rules It every we three this sunset and SEC last some

securities, future new was of As a shelf a S-X market transactions. the number that we common by filed the REIT an This indeterminate and with evening, stock filing joint registers capital partnership result, operating a preferred last the stock for and debt SEC.

Form filed in to ATM longstanding we program place, With our we refresh this morning. via also which this shelf XXX(b) needed new

keeping of in outlook we provided like clear, during you is ATM share assumes program to ATM the keep release be arrows many To place an As know our the quiver. that one in last issuances night's in capital-raising we no XXXX. per FFO

Operator, we questions. now for ready are

from first go the Instructions] of Our with ahead. of [Operator Bonnel is Please Camille America. Thank you question Bank line

morning. Good

large of QX, about in same-store few provided. you move-out guidance a is the When in outlook sort on questions your what of the your embedded impact we the Just outlook? excluding ratio NOI retention occupancy think

Brendan. Thanks for Camilo, the Hey, question. it's

look year-end of at what's retention we our remaining average. XXXX So at when is in terms below XXXX,

overall around So we're XXXX that that Tivity out of with expiration. probably move the including the XX%

out, up So if back we to little back XX% that goes we're under bit that number probably a overall.

that average I grab which have we're be, need year that where that's Over roughly be of we you just where with a so average forward number of to that in just year tends probably of to this quarters right line for front about in renewals point roll the would the four kind as in at me four us. but time, do when new higher. is XX%, a the number into about for quarters. lot early forward But we is

Thank leasing you. really solid And last year.

and I understand talk expectations leasing new your but time, volume challenging for can Looking forward this though, you it's year? to very also a

year. Ted. of Camilo. really which new Highwoods Coming million of leases, a last leasing to came feet number. -- We signed new that Sure, new feet our into square obviously, was had Look, year, good customers million we customers. roughly X.X is It's square portfolio, great a XXX X.X

was that over three we since of quarters, And feet we most XXXX. the fourth XXX,XXX new had I of I think think square leasing new had leasing.

And start in leasing. quarter-to-quarter. a with first obviously, we're off to pleased very been quarter. we've So, it's But good

at active smaller it's is our look deals. the Our say, leasing a markets. all pipeline lot will I pipeline, of of in as we

demand. now we just medium-sized and our see was seeing But customers and the Leasing core what portfolio year. and continue -- case large plays you've the right hit well. in the demand users really for I pause sort think heard all smaller to seen XXXX we've us where the activity, button as others, late that of a from is it that to in we're

first is in still So slower second continuing, the but but than small half it's but a decent. maybe good, little a quarter, tour lot activity of pretty it bit volume year, pretty is last customers, of

we're Camilo, about firms? momentum around. of our there's from firms the small a on little market, that that markets Brian Leary a into move then firms or law know coming in are a who seeing what of and out add just additional what's here. law for I are planting that a are talked number But theory growing. complexion I that interesting, So Ted law midsized, just might flag in they

say, inbound law I we an that, in further. firm where York, one next landed seen New spec is of our from in the Charlotte, and grew an down we've at services firms, space door engineering, local bill, into open growing color. now looking we're office extra as way So start into to just Financial suites markets a so -- with little to engineering find momentum the well, get its the the infrastructure think, seeing starting the

you for Thank Appreciate taking the my question. detail there.

Thank you.

line is question Next Griffin from of go Please the with ahead. Citi. Michael

is My morning. [ph] Ari others a for you question markets? markets turn are there from Good tenant This to back seeing coming is office on Are How Sunbelt return utilization office. or on your across faring first Tyres the any to that than Griffin. perspective? are Michael stronger types

know, back markets it's of Hi the Ted. markets. a quicker Look, lot have larger probably as the Ari, gateway than come you Sunbelt

not types of necessarily I really of tenants. tenants, think size

larger back. for large back Our public have time. really well in companies, the the returns. their slower It's a company terms a well, smaller customers, ones office suburban as been first They've return of as really have the a little to been customers, been has the been long

a it's type it think than industry. So, of customer, customer been I has of type more size

we're week, Leary the on absolutely Brian Ari, seeing Wednesday, Tuesday, three clip Thursday is The our occupancy. Hi there. days when of to

garage full, getting in are the top services parking the level financial So parked buildings on. Charlotte, is of

larger hear work even seeing And have so, of. ones a implemented hybrid we lot Three-two is week. we're their the what

that. So folks sales, Tuesday, sales, Thursday driving is Wednesday, when restaurant of things majority buildings, seeing we're sundry our like the in

backfill the if Wondering My activity was backfill. to rent Thank in relative comment the is is question follow-up you. activity on on what you Helpful. paying? XXXX can

was. roll up range. GAAP the And we Ari, of a versus cash then more Hey, double-digit from Yes kind Brendan. basis had a normalized modest a where in roll-up it's Tivity

XX So, we XXXX, was execution – we very given found was compounded XXXX bumps build-to-suit Tivity with in that a that that over that and years. healthy that had done were pleased

So, GAAP we that to from roll to for I cash up execution leasing think the and able on the new pleased with a were a basis standpoint customer. be

the for Thanks time. Great.

Our is the next Heck, Fargo. Please go Wells question from ahead. Blaine of line

Great. Thanks. Good morning.

work eventually use? Can flexible of providing of those spaces within your there options or space how markets Are You think could to do a that portfolio. work you or that? are guys converted talked little specific about suites just buildings best guys office bit the And you the much in? on a more expand flexible flexible you be

Brian morning, Leary, time thanks much have, because is Hey, passionate obviously this. This question. does pretty I'm about for everyone Blaine, good how the

are or custom you, as started all or are that same, same. are BBDs So suites are flush that the I'll can a across Brentwood. to to And Taylor in same, spec or and momentum it We with markets out the the be the the for applied that matrix to not customers be instance out started years ago buildings with realize BBDs suite program. honest few we spec rolling we same with a garnered started

rolling Buckhead different base, of collection, that a common a the user suites, type the the we'll spec successful Nashville that and to in carries floor of be certain out you pay customers something look in at We've of of and there, different. a been very there, amenity demand able amount where by that's our for are rents goes where floor what complexion certain there's

of so spaces. get office. will. even also giving folks to collaborate of of of potential just diversity growing It's doing what occupancy, And It's a out you a just XXX% kind not we're we're if own them realizing their that want is, and

idea So you could an transformed of I I over don't give what percent think, time. could be

be to the going that we embedded now just provide. is this think in I offerings

get the and it's and to really long-term been kind kind we when necessarily having as opportunistic, our this, at this more do a Yes, by typical of rolling with presented see that option engage successful, itself environments. not relationship to kind flexible we've fairly co-working you of Highwoods, of but up been vacancies have

Great. That's helpful. Thanks, Brian.

my about should needs I was XXXX? issuance more For additional talk just mentioned throughout know, year? debt you you this we trend in how your included expect second should can bit but we you to expect a ATM guidance, year? issue question, capital leverage Brendan we little And no any progress to as this

question. Blaine, a Yeah, it's good

flexibility we do the lot have So a within of capital stack.

So, as I mentioned of in the prepared until remarks no the really scheduled debt end maturities XXXX.

need So, be capital we in have markets. no the to

However, is freely debt we a do pre-payable have lot of that outstanding.

two the some the disposition there we non-core one, door. in are, the proceeds options like mean, So come have I would to of

that on door that's mentioned, would in much there to help the sales in proceeds that As get And we investment have financing Ted rate then, longer-term would I exposure And but to used of highly we pay of that debt. the terms how down market be think options some dependent we that the be have. reduce we on respect also floating opportunistic. to with

as -- that likely be do to term opportunistic the takes. would it's form year. during form I just reasonable of floating do some It probably rate think, I to point have say, what out that But that exposure when financing we'll and some to that at we of more assume we'll some than it's It's this not

you. Thank Great.

ahead. Next question is Mizuho. line Georgi from go the Please with of Dinkov

my taking questions. for you Thank Hi.

gets please of low And high-end So walk to the through occupancy us the the versus through what the the could you year? guidance? you trajectory

that Hey George, will I'll and this Ted add in with is and Brendan. maybe start some color. Brian

talked about square have So yes, headwind obviously the we as feet. I XXX,XXX from mean, we the Tivity

so first basis That's the points. quarter XXX in that's

number XX%. in until is Tivity commence at to ended then to of the the So QX we with down expect scheduled that doesn't And year and the -- beginning customer XXXX. go backfill you not commence

other had square that move then, of some -- government a occur will We amount as sizable a that that was gave outs soft expirations us are that term user some well. in footage. back we And have

us. impacting is also that So

some that to year. have occupancy then, we And are later queued into in up leases commence the

all when XXXX. So end where that ended with that's points basis all of we'll we than lower we XXXX we together, think think that, XXX mix about we where stuff

have majority in over will customer mind sizable of beginning the have backfill the we'll But do They also their that space XXXX. be time into of that Tivity in keep of XXXX a we leg at but for start the they'll as space amount that then space. will take we

what size of space Okay. given back you? Great. the that And was the to was

This couple is Brendan to. Ted. alluded had Really we a as

reasonably notice. of they were in lease -- so government soft the on terminate One to to reiterate just ability their the they the they're customer, term had again, a short

I think it then was they notice that a mid-January. a think gave back and XX-day feet in they but Atlanta it's XXX,XXX gave square I

above XXX,XXX two XXX,XXX We of just another XX,XXX and government the feet. above through majority the feet. the And that's then, only So year. other downsized customer we merger a Raleigh. they about had here one tenant big And for the that I'll square mention went one one. foot Tivity to are in Those

renewal effective they part XXXX. early square feet XX,XXX back as about us one gave long-term gave of us they back So of January the renewal

the hit on well. a occupancy So that's as

of will that square Now, be that XX,XXX already throughout is of starting with customers the XX,XXX we've part and story the released good this feet year.

the are those three really So ones. big

Great. talk That your that in market. sublet was How portfolio? trending and very helpful. you specifically my markets your And the last in about just Can is question,

Leary And question. George, here Brian to that take

different certain of we complexion we've and looks it not it. about this the of focused is growth it, activity the sublet It same. before in on of So cases all are very the talked the much

as of proportion see And we that's growing, headline. sublet greatest so space market where of kind the the a it of Raleigh with available a is amount probably space

of you our in exposure a any market one market. that none the don't Park, like into area is the single dig and we sublease to all which have almost Triangle you in As realize have called that Raleigh space Research in XX%

how then standpoint, so there the big motivations in or term user got six over sublet a is the move years, -- And one is do our it's from a take their sub-lessor -- they years. thing if who's portfolio our write to of are within to look have And average much the check you even you of what XX-plus out someone what if sub-lessor who's left? leasing, who's and so years north wealth four

we good the exposure So portfolio. the high feel pretty within and that's risk visibility about

that, the we that you folks going the that if stable quarter-to-quarter over it the Raleigh’s sublet our starts and we space to move. are within markets, I available rents. it's most down and definitely ratio that -- quarter-to-quarter. place But of Nashville When lot year-over-year seen gets a sublet But other general It's of But backfilling. at nationally out XX% the And amount then mean that impact seen where with shows actually have has gets haven't is we markets. And part than up. of stayed there. up look

color. Appreciate the you the time. so much for Great. Thank

question Janney. from the with Rob go line Next is Please Stevenson of ahead.

morning Good $XXX guys. shy expecting of in and combined improvements of and second-gen just XXXX retenanting building you guys and at million expenses known what Tivity spending? in given north had other are Brian point of million XXXX in this you $XXX XXXX,

stable. out. And and like is that be we and leasing probably that's we of reasonably I say Rob, yeah one that. leasing nature likely I would the depends say the to a is, on leasing figure around things it's is the the that Hey, -- -- little to I of mean, a bounces leasing think probably is that I did would I that bit mean, number lot. It think hardest What volume

committed than terms dollars to of spent. We more in we what leases bit in XXXX little a

things then I CapEx And won't well. probably steady think numbers maintenance on be fairly So expectation usually as CapEx. steady those the And normalize. leasing pretty we the are our is probably

we but is what hard a and gauge. XXXX, would it pretty -- we guess number project will this be consistent that I versus XXXX is we -- to that So

positioning Okay. the in about could loaded? XXXX are you that given the first And continued to in close in Ted's you How then the dislocation the teed Do stuff commentary point? are of have year? dispositions at half acquisition guys market that be up this likely back-end

some back and to property And wide you're least other a dependent million highly I some pretty we shoots stabilized starting at a range our encouraging of sales market. $XXX getting think functioning No fully we're signs, zero dead to on. investment dispo think range put see types. for green that on I it's to Obviously, for

things that is I but the starting bit. to think bit some so trail headwind, positive a a to I going maybe see got side following little we're office -- debt which on more is little good.

So likely so well. dispose a do transactions we in going buildings I'd yeah, now that that the got of to land any of loaded. and a are We've couple say far be going back-end market they're couple

this late heavily late back So a year. towards of then have we else that first likely of or -- may quarter be we half year. do And half couple anything weighted the the things this of the

the sale Okay. and Pittsburgh updated to likely now? And I XXXX that might to any tabled portfolio thoughts more going Is that mean wind for or still Is be potential you a market on the then up are this Ted, now? thinking that transaction, year? that

fully And rush. preparing There's to with functioning in Pittsburgh. to while can put Yeah. we're again a some to think market, want really broker. do probably activity think sales the afford We We're fully Look we're functioning it's no be again, leasing hired market I debt real on the market. meantime and investment I it patient good seeing we sell. until get Pittsburgh. But patient, being hold. We've we in

of we'll for button not that and and So the we're and there wait But going we take advantage holes up. to going while. have likely but to be a see, try

Have change utilization with and seen really markets? before. not your noticeable Brian, the January about or an last the has been since then back, more date definitive having a And me. of it companies for with plan the X coming beginning any one Okay. were of talking year you you uptick

Rob. No, great That's I question. it point and a think has

firms big about I necessarily think the moving not they're making decisions expanding. or

CEOs are be the definitive have that. by I a on squares a plan pretty Some on this. have like sublet in their seen the It's their rhythm And leaders, for stuff Hollywood office. They We're have market, manage to work-from-work number think putting if to hard get all They people of a they're back company. the contracting. things hybrid. you

you in And back. it. customer bread I butter, look again and you the capture and medium majority, and they go at as up plan the are great their which services of you if mentioned base, if makes of the our And makeup customers, they small a financial at ahead kind our bigger traded, corporates, or absolutely folks seen and you, what and been publicly the have have then the the the back look the they have users have we

we're return our we've that policy kind how productivity and deliberately the how Maguire me work want faster with garages are help that help what together so we Their engaged in do help see as their better mean done to their how with building. they're now we've do when of increases been scene are committed Jerry you, much is they we they customers, because to help the increase. them to so exit on because I productivity working them they

So that's kind doing. of what we're

of and with teammates where office. bringing partnering specifically a we're campaign recruiting have the their to We literally them back kind on

these you across And days? where the is utilization portfolio for midweek

commute been have Peers have we places heard weak. the the that you've term those think I -- worthiness talk I that about. mean,

trailing And have might to likes interesting distances higher Nashville. So places considered because Sunbelt the is greater while times probably overcome, of that of enough, commute Atlanta and itself so of the even it's the heart right? burden commute the its those

We the terms levels busier it. that cafes; the Monday Pittsburgh, much pre-pandemic of for XX%. Tuesday, to sure, say, look and between would model. Atlanta a just the kind has But noticed sales, more some kind at hub-and-spoke is extent commute I absolutely to Wednesday, in we've of -- back Again, of XX% deli sales, plateaued kind Thursday, they're restaurant of traditional activity.

Appreciate the time. Thanks, Okay. guys.

of go from Baird. the Next line is Rodgers Dave question ahead. Please, with

about to rent but size about or average haven't been your and Good earlier. terrible, Yes. love not be, talk deal everybody. they're rents you'd XX,XXX a you where Brian, they has square little about effective morning, Maybe talked feet. bit wanted but economic I them to been

any of or were done, bigger substantially north know deals, what you're come seeing roll and seeing on, getting rents. to or these there starting have are love you're you or evidence that good you rents feels amount like now that to forward, a you're pressure could negotiations XXX,XXX I'd as that have that So square is on front. out feet to us, on It maybe XXX,XXX surprise start just comp say of XX,XXX effective where to but greater

yet. our see person, get my that. And people haven't want experience us just workplace And that mean, Dave, to seen know, through the really their I even it that sounds talking they customers, But, back. a like the book. are, they bigger as of probably telling -- I'm ones it just I part

So up. right rent is now, are rents absolutely the holding The there. free

I like like they'd to Again, go to think, me first two listening for been while. they've to through not back years rents. TI a finance and their higher

bit is think a I pretty while lot what year these focused and record, for like XX% a little of sound real sure, of broken X% but they on is spend I a people XX%. X% cost-focused that utilities, organizations, they on like estate, on on every is they're are

so, have connection the to obviously does it a And X%.

So nothing those yet days. to connect

a or long short answer thought. maybe yes the for fairly no. Ted, Sorry for

that quarter portfolio to our rent it question. we The Yes. well. pretty over XXX,XXX high what the at and been did space of interesting year, of square just only and is, to feet I'd as was that It's add the goes third last looking on Landmark, thing sort --

greater Last and just It's of again, an a small lot stat. square nine our than year, we only plays did medium-sized XX,XXX right to feet, which about interesting which, was portfolio. leases users, I thought the

an And you So that's out gives that deals, right? of idea. XXX

larger seemingly then, on about backfill Tivity, focused did deals or that talked Buckhead, similar you data are in of gravitating tenants definitely not suburban towards you larger markets. happening maybe have to transactions Riverwood, larger Is or Richmond. seeing some the you that of to gravitating something enough markets? the but And have are deal across conclusion the aren't your that The or or make that leap, where the

don't to and enough renewals, of been have can it's know well and on I the really your as you any ones some holes think it renew -- in only you the You portfolio. there's right? where data points have is

backfill ones. so to aggressively we're So, obviously, then, go some a had it. able other Tivity, of the we hole, and And try

just of depends. sort it So

a say, blanket will I statement. But

before I in out think the said data have if suburbs other. we to one this say don't way a versus that, I there's any the enough or there's we've disproportionate think trend, leasing during but points pandemic, urban, seen

live clip is and think people is like where this on I work. to where decades they just making in to the

the buying home continue the to And so there's suburbs. by a great millennials migration homeownership of and

is that suburbs something And any concept competitive not is so I think -- just stretch. we the think some because of commodity suburbs of by the not it's

we've to our repositioning Springs walkable about fitness Springs a Cools amenitizing to Cools mixed talked use a collaborative place cup about assets coffee of workout walk grab center landed And been and which It's what outside. to a get have repositioning we've of workspace. a so of lunch And if you place about think place a the and that -- said backfill and Brentwood in building.

expect that -- it's in to down or we've what drop seen. the it So town can't suburbs but -- just and in even it's solve you someplace your that's problems,

mentioned not last for this full kind exit and on me land maybe your in of then maybe here. dispositions. Ted as comment Pittsburgh you last And the some a

the this as debt is the to of And maybe anticipate what being really I XXXX million you is XXXX? selling you're how point sell year? cost late think if that So do $XXX dilutive able the guess you relative about question into to

maybe Sure. can Brendan in. the I'll part take and first jump

buy did it's assets in down in time. done mix an balance we've go going and market, sell up a bit or we three of large deals. mix where last back and -- a out typically And the and couple two in the flex over So asset it got we've it's single out a couple what but land tenant the then we then sheet be Olive bring the of transactions McKinney a pay & like go off of of is little to transactions

growth some mix have be land Again single forward. profile So a maybe a that some to going tenant it's multi-tenant assets going of lower assets.

of dilution. So large terms larger it's done get and Pittsburgh, but not we've be Brendan there. take that? to unlike transaction seen. in these days you see it do We'll in want is deals may harder are to other stuff a it

Dave. Sure,

what I kind to the you're look upper what think of probably on is, would the of at off our for So would XXXX mean, you I if in Xs. cost mid marginal we forecast say I pay borrowing

kind from say What I apply where perspective, would can, we versus is those is have cash of, rates focused. flow you you that which a So the cap numbers. think

There's down Clearly there's we with the CapEx savings falls that CapEx the debt associated associated bottom-line. obviously. associated that with pay plan to going assets CapEx we -- that all no the of When to sell. on interest with

much development planned flows better come So online we staple where when that's it's continue cash dilutive. get less that we on with then from a to even over dispositions will think our do time cash the deliveries we to that flow And perspective the that have.

Thank Right. you.

Dylan Our with Green line next Please Street. Burzinski of go the comes question from ahead.

for Hi, guys. taking the question. Thanks

if kind pipeline you touch Just development and where can of, sort the leasing today? curious, on it of stands

order of of let them. just Good they And Sure, Yes, walk I'll maybe each maybe morning. me through start deliver. -- Dylan. in walk when

just of XXXX topped a that's now this delivers the reminder So Peachtree It third quarter year. out.

date do quarter a first So it's And and stabilization XXXX of we together that. have nicely. come

we we've XX% to I'd were in a strong prospects us to leased delivery year the somewhere got of the very get so prior that couple say and about mid-XXs end feel we the At good one.

you will I that year late quarter third it pre-leased as in else did throughout into But last the as topped also first in we with We III Raleigh of not XX% delivers remember call far. even we quarter signed activity have off days year if year anyone GlenLake so this building. XXXX. say rolling -- the last this here we've XX prospect stabilization started

pretty an see now our picked that that activity good. amenity has of can You up come the adding retail as we're the together shell

So encouraged we're that. by

mid Properties a are the local that the And be that, we're joint I'd sharpshooter users a and progress quarter year thrilled larger that been so or has we The in pre-leased. submarket third was interesting that last the one lot year is That's Frisco A activity making off to just Granite reminder fourth this delivers chasing, towards the progress. of in partners with in Granite end of as sort say, the Park VI. the one that venture delivers charts. year XX-XX with with Plano, sort down some the XX% of moving of we're

And we've sudden sort big of last like just heard all late a year of they third the quarter pause the users the press all button. or

is activity. So building well-located incredibly looks encouraged by how building together. smaller again, there's the still again coming and But the we're by

been other very, the out. years first XXXX. in has XXXX with very XXSprings then two there doesn't quarter until stabilizes are the also of And a Granite that get delivery And couple completed activity even strong is though

about great we that. So feel

it up And -- two had the I that, didn't just actually -- fifth with since which had around we go fence the silt the then put next and the East, we've in one some be week expect. ground Midtown obviously, deliver inquiries And fence really we've one on or we'll had we're XXXX. breaking we've just that until doesn't

Tampa is not market. a really pre-lease

very responded RFPs, the some there. So early some those see activity and of even we're but to haven't getting are we'll

good. your Did So, of one feel couple until that answer we that We again, done. a years we got question? get

that? Park mentioned That be in or follow-up we you activity, just Granite you about Yes. that. on then on appreciate And guys given Granite Park or perfect. of changed should Have the I was just I leasing guess just kind VI. a color drop-off the how expectations sort thinking underwritten underwriting of

all. at Not Not at all.

first the about good very underwriting. Again, feel think we we stabilize I XXXX. think quarter that don't until I

rush We in we've before again, was didn't no the done. of time. here. got of a plenty have There's pre-leasing lot building So coming

pretty are with our conservative. out in underwriting. well are we're we The think line we putting proposals So

about feel very So no we it. still good

Thanks.

you. Thank

Next Jefferies. of with question line Peter Please Abramowitz ahead. the from go

Yes. your that want you're of of for Thank you. built in into ask what's to the terms kind guidance just the expecting year? I mark-to-market

the it's of pack almost mean, I since it's of the on roughly basis onset around we've kind Hey, Brendan. for been Peter, would say, really I COVID. a cash flat

GAAP low marker on digits probably a that's a good and in So the basis. double

So good those markers. are probably

of be in expirations lease those line gets where got what forecast to probably ought mix I the our guideposts But you difficult to that like bit things that with probably given you that. just kind little to signings new in outlook. a included and Again, and use of think if we've –

about leaders past is a Got same in and your signs coastal willing it activity of your been in lot so? way or have And slightly of business earlier, signs – make they've of it. then Are an the being year decisions, pickup kind that still talked meaningfully more of Okay. that to and New a that the guess I you different of something in the of business but was Year. pretty or since any or terms markets for kind a of asked any competitors inflection asking confidence generally seeing

Brian Peter. Hey, here.

couple of comparison. that a kind things to So of

curve. Our markets, buildings our we're of submarkets that or already are BBDs ahead

kind our came of the – again, and suburban back smaller so kind of first medium-sized particularly thing. then back across that's board. they and So were But first the

CEOs this the year, of about start I that that the they think folks back. bigger Now do want get their to saying corporates, read the ones you've their

seen absolutely have We that.

which why folks and the thing Now hope is year kind are we still a the of coming reason what back, of ago not the really terms around case, potential back. as are think that this I just the pandemic, the abated were in a those hovering great issues

the So thing. in I a think mirror. that's good Hopefully, rearview that's

a But you the is a a days did plan there of last office at more do Fridays for to week. of is the back consistent, than curves quiet, fairly Mondays to that continue a go on seeing been sure, curve, up, company folks are three I that believe occupancy in end have peak Wednesday, now year. We are ahead Thursday that Tuesday, you're the

That’s it me. you. right. Thank for All

We Bank have ahead. go a Please America. follow-up of from Camille Bonnel,

Hi. I just one follow-up. have

weakness your activity, office performance two, CBD leasing us breakdown And distinction are you big the of within any whether portfolio? urban of versus temporary occupancy operating debate would suburban rents? or the urban between whether the the in of be that the not, remind between the clear on can you Given seeing is it or

Hey Camille, Brendan. it's

I mean three -- say kind of I yes, mean So, in from ways. I CBD we classify different would it a

and infill, CBD, suburban. So,

not distributed. evenly they're suburban, So, quite

about a is suburban evenly and CBD. then -- between and is infill maybe split bit little a have quarter might infill You

in in So, terms of the I'll portfolio that or that. over maybe breakdown to of performance. kind terms let that's of answer to Brian Ted

CBDs add different And from fundamentally gateways. CBD Camille on. the our a of just to are

the CBDs spending not commuting train to our are way. So, an each customers their the our teammates hour whole are who on and on

So, a our that I different kind have using CBDs term. of keep complex.

Brendan's those from mentioned that are coastal longer like in burbs terms to how our you gateways Now, terms in and out But in with kind hub-and-spoke Atlanta of It educational the return. incredible a earlier gateway if and we kind I know solid of a do more attainment. and suburban then point infill, the base markets; again, that's incomes infill, nature that. a regions CBD, that like break has of basically looking out of as look and residential of kind commutes back more the the Buckhead they of

there because then already live they added they And they and that to for restaurants worth is happened they high played what population shops Then service. work to the there. and net wanted there,

And so here Charlotte, that's Buckhead, Raleigh. Park in South that's North Hills that's

So, CBD, of and of the that a bit portfolio to a little gateways nuance Highwoods the Sunbelt between coastals. is a CBD analog the within

Thank you.

you. Thank

on We line. have phone the no further questions

we call the We everybody soon. your for to Thank again Highwoods you today. thanks Well, joining all to in forward and appreciate interest you. look talking

to and today's thank lines. participation disconnect your please call. concludes We you for That ask you your