Highwoods Properties (HIW) 26 Apr 232023 Q1 Earnings call transcript

Good morning, and welcome to the Highwoods Properties earnings call.

During the presentation all participants are in a listen-only mode. Afterword’s we will conduct a question and answer session. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, April 26, 2023.

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

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

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

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

good everyone. Hannah, Thanks, morning, and

During activity bolstering we strong the near-term positive; share first quarter, a and liquidity. operational was cash growth the quarter; already flows healthy, strengthen; solid; balance sequential FFO fortress our cash was results. to continue was per fourth with our had by NOI and financial from same-property increase reinforced we sheet once, again, Leasing our

outperform Our to well-diversified, to throughout high-quality portfolio and versus compared markets areas our U.S. continues other major the metro

believe we attractive component we over resilient, generating be last long returns must which to goal stated long-stated our of core the that simple is sustainable diversified, we a quarter, and As and term. of be straightforward

which focus Sunbelt is on eight and suburban. sharpshooter markets, a customers, are X,XXX With urban our core portfolio in both nearly best business districts, with located

over is Raleigh, our with largest of NOI. XX% market Our just total

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

revenues. Our than largest of financial less services, our XX% is industry,

XX,XXX size median lease feet, under average square is feet. lease is size and X,XXX our square Our

locations and is landlords. office the financially high-quality, buildings, of choosing high-quality stable there space, preference increasing for we high-quality Further, but a just not also importance, believe clear quality when

points believe on XXX when positioned we by Our focus outperforming the We building customers submarkets owner. as the prospects is intently to its this and portfolio compared outperformance and of our property U.S. points on more occupancy, of this basis the financial to average. and the are well even and outperformance XXX increase to of increases an quality health average the basis

That immune to said, the headwinds is being downturn. during face economic portfolio not office all that an cyclical our landlords

in demand negatively on their While visit as tour about activity expect rewards remains term. often more more We with do that customers believe cautious do own we the businesses impacted will quality. to not, be portfolios prospects than near become encouraging, and flight will, high-quality the high-quality

to can the From continue encouraged retreating that a usage be perspective, increasingly emphasis. to are customers our we

markets to hasn't all creativity productivity realizing pre-pandemic office teams returned industries overall office. the customers the of in the utilization culture, difficulties the are While who from and our away levels, from went of their replicating

provide want to their to workplaces or is said that customers provide environment office to teams goal way, the commute come where with their Our another be an colleagues worthy. are into our

next lease Turning due occupancy per Nashville, year. of headwinds customer has move-out to the end, was a whose FFO NOI known to at quarter commence quarter. occupancy in share. been doesn't X.X%, despite until solid delivered At $X.XX already cash We XX.X%. was lower but of backfilled, the large plus Same-property which early

volume leases given the done subsequent is than December volume deals number square of XXX,XXX of new before lighter of declined first footage signed square leases, overall at typically rush square space, While Each leasing XX. around XXX feet year, of stable the quarters remained XXX,XXX including for the with second-gen quarter. feet modestly quarter getting

And a square expansions on cash and positive the feet, X ago. signed ratio basis XX.X% Of expansions basis outpaced we GAAP by of a year cash rates fourth X:X. X% contractions over XX,XXX a X% positive spreads quarter. number Rent on compared net follows were higher of to strong on of note, basis. which are a rental a Average

a actively on strengthen quarter non-core long-term the market buildings to a for While and busy it growth our investment quiet assembling of was disposition. building the and dispositions we're and We've possible been the in have land of variety front, portfolio. resiliency the potential non-core blocks further prepping

half the year, markets outlook capital disposition the the $XXX Our unlikely up to upper of seems range though remains for current environment. million the given

replenish future of help time, Over non-core opportunities. out our for we're to recycle which powder ability assets, investment confident will dry our in

development all X all years with across least preleased, Our and until pipeline XX% at time on budget. of well, $XXX million stabilization projects. projects spec with our continues on projected to We're progress

about million we $XXX have million to fund, stabilization. $XX NOI We project approximately left and upon of

and in XXXX for quarter, is in 'XX additional Our the Peachtree Atlanta, scheduled from with is strong interest preleased next XX% prospects. stabilization already development delivery, with XQ completion a projected in third

since line is Turning We to now minus to positive X.X% basis at to outlook year be up points projected of $X.XX midpoint. full to the our FFO initial $X.XX the in $X.XX items our XX midpoint share, Same-property February. project per are outlook. XXXX X.X%, All at unchanged. cash other up NOI

our would performance Brian, call the to I outlook. briefly over and turn I reiterate Before like to

suburban and to program will suite Sun that Our continue portfolio urban and Highwoodtizing in well. Belt very outperformance. our best investing portfolio perform across baby the spec drive additional portfolio our projects in the We're through days diversified prudently

Our pipeline $XXX will as meaningful cash million it stabilizes. and generate development delivers flow

are And higher respective fund the a debt-to-EBITDA balance strong FFO is with Our existing ample full to the liquidity our sheet all debt of spending until our originally ratio times, XXXX. year with development XXXX of X.X cash and forecasted. outlook for at than maturities remainder and midpoints share same-property NOI per

Brian?

the very capitalize to Belt is to tailor-made We flight their have and on Thanks, the markets. our return morning, thoughts, portfolio the portfolio to business Highwoods and our our open pleased support in appreciate the Ted, in and as worthy work Ted's of retain experiences recruit, Echoing growing best put commute the they believe and good this office. are to hard Sun with performance for we everyone. customers quarter the teammates

workplaces mentioned, are demand approach interest As approach medium-sized to the buildings. includes plays organizations is outperformance believe Ted of high-quality to year. around small which there our we clear sponsorship team as in from a take This in cautious rest as strong Yet, owners. growth and our to office healthy the reasons and we our for space towards quality, the buildings dynamic see a preference our continues locations, BBDs, directly resulting and to strengths

occupancy historically has outperformance where than XXX increased operate. even can onset quality. and our competition, prospects believe since higher of this than the more nearly levels markets we pandemic on basis has now focus While X% our portfolio the this increase higher and spread is continue by as to operated points We at customers the

off and customers larger portfolio. continue real the or some using this consistently have highest customers, operations, holding are to streamline medium-sized While office on to decisions businesses, to opportunity utilization core our generated grow estate small- our in

number quarter quarter. of X% were days up Further, the and all we continue up our illustrate fourth see compared the parking in point, To to the XX% office. revenues sizes of first increasing sequentially from their in last same-property this to customers year average

in average proxy In We feet. additional our XX,XXX medium-sized they a and XX,XXX we a the diversified the as added And see we Belt as fourth square small Sun serve this strength net quarter, general portfolio, an square to customer added quarter, our feet of within economy. expansions. for

positive X.X absorption million net there the are market quarter. quarter. reports that CBRE activity square market, for the tenant Tampa, of in to Turning it the requirements posted in and feet for

Our signed. team square quarter volume led of feet leasing there with the for XXX,XXX leases

neighboring East for the foot in new Shore This completion already In XXX,XXX becoming steady live, leased, slated and project only we're the recently we seeing announced benefited over underway development, in XX% construction addition, or Westshore the downtown project, Midtown from address work premier our is now With have interest play. BBDs. West, Midtown in to XXXX. West square its Midtown

terms up to Peachtree, of at It leases that noted, market the square does our second be and Atlanta signed. was development, most XXXX in pre-leased, completed quarter with proved quarter. joint should to on Consistent XX,XXX feet own less schedule this active leasing signed in third of be leases from activity include tenants experience, be year-end at Atlanta JLL portfolio noted square XX% XX,XXX venture activity now majority with is during not which in and our number of by that our however, the XX% than great the feet.

leased building XXX,XXX was, up named our seen acquired markets. Best which South Raleigh Triumph, from recent Business Facilities strong and last in again, Business square in up North August. we XX% to asset of which have we We've most XX% XXX when Charlotte, has Charlotte our and approximately the the Carolina, where feet State to at NOI XX%, activity Moving for

Charlotte Bank on also begun have We in South United our Park build-to-suit construction BBD. boutique for

team our leases X.X Raleigh, feet, of quarter we and million XX,XXX foot ended In signed with portfolio. square square our across occupancy XX.X% the for

of time Our Glenlake on budget X third delivered on by track and to year. within is be this the mixed-use development quarter

our to telling place-making the They work delivering as on in and sustained action to office. throughout return The pandemic the are they experience is into we customers retain us now based in are talent this and XXXX. our recruit, and word competitive results currency

personally the so quality well deliver exceptional our we by appreciate workplace for Highwoods our These who lease believe Highwoods work. hard delivered highest We much our long manage, ability the and very to and are themselves, term. buildings experience maintain their experiences has teammates positioned

Brendan?

We in gain, fee the FFO $XX.X had million per we $XXX.X both sale net published no significant and Thanks, first term per or early February. share. In which of an and of or quarter, land were of items income XXXX original in even unusual delivered in quarter. anticipated were $X.XX There the Brian. small that smaller share our we million $X.XX outlook a

revenue, forward FFO, primarily McKinney contributed of by Higher deconsolidation Markel NOI XX% operating of Olive Rolling JV the by contributed enrichment. improving $X.XX income Higher an of from share. quarter's our included driven $X.XX, also rental full increase income per margins. unconsolidated we the and higher JV higher in $X.XX, interest and the quarter driven and posted parking last contribution

annual are miscellaneous and mostly G&A, items offset income $X.XX to which total accounting our customarily equity Other was a of impact incentive upside, partially for grants, higher which of by of $X.XX $X.XX due the added of the from long-term $X.XX, in made and FFO of 'XX in XXXX. each to combination the year $X.XX the the these quarter of expense. of fourth to higher quarter items quarter interest net first first core increase The of

mortgage the to meaningful obtaining with proceeds. disposition a Turning with We our sheet, debt-to-EBITDAre interest-only year-end, where X.X by America times, development Bank by liquidity to Tower we rate even had strengthened Charlotte, continue flat fixed further in though net balance no of $XXX from secured X.XX% fund quarter we ended and our of million pipeline a X-year our

This able and execution low portfolio. metrics attractive where highlights strong market the high-quality market, unencumbered were sheet, maintain than to partners. the efficient for balance our largely pool to still asset pivot our largely benefit bondholders levered with mortgage of and yet unsecured is unsecured more and pricing the currently our a credit combined We maintained banking

At the quarter following million and our of $XXX liquidity, investment $XXX equity amount had existing million we this Olive the JV. preferred redemption McKinney end, & of in increased to

remaining no of We maturities pipeline XXXX. development until quarter fourth have $XXX to debt million fund consolidated our only on the and

credit the ample in additional of without the capital needs, and have or any all through We debt including expiration of maturities to raise proceeds. development our any capital receive spending disposition to our of March need XXXX liquidity line fund

or do additional be our raising about clear, but be liquidity move as proceeds ability position next, debt us plan capital And this expect throughout be to To the later we we year we this opportunistic to patient. disposition affords year.

ratings addition, were rating stable our outlooks. with by investment-grade of affirmed both In credit agencies our recently

the with to outlook As and cash NOI of same-property midpoint mentioned, our updated FFO. Ted we've an increase

$X.XX a Our major of midpoint. $X.XX $X.XX are to FFO is higher at the midpoint revised per the range a from increase changes outlook at by anticipated stronger of share, and NOI range the offset our million up net from redemption OpEx, The $X.XX revenues equity prior our to the better parking preferred reduction $XX lower impact from $X.XX the of investment. attributable leasing, partially MNO

quarter. first mind mentioned items strong keep to forward. couple in As earlier, with of we started a going A

our to largely QX than was OpEx. which First, lower higher was anticipated, margin operating originally attributable in

XXX expected be Some are for year, we basis in of will items lower to the be operating reduced the therefore, to compared incurred the XXX and expense full project to points year later QX. points margins basis

year. been QX, will which has but backfilled customer until we two incur Second, quarter impact won't commence the full of next move-outs large most of in

the distributions with SOFR the income other a the rate had M&O points, equity been XXX be plus will of lower. redemption paying at Finally, monthly JV preferred basis of that previously investment us in

included dispositions have potential up of million We our to in $XXX outlook.

of may and year the parcels the better some sales the half of smaller buildings challenging non-office be market, While range are investment seeing current the suited are upper we to of in that this to state land our reach good development. given interest

disposition any improve our metrics. and further would sheet our expect liquidity We proceeds bolster balance

mentioned continue several to our Finally, the times flows past many during as we've strengthen. years, cash

This long-term resiliency. development, simultaneously quarter while our a whether our to higher is rate full available our acquisitions grow excellent ability capital cash even a or a to million Highwoodtizing after growth projects, been into was and earnings example quality, able is our portfolio consistently interest after the The reason business, on distribution improving year an basis, why rates. year back increasing leverage-neutral after absorbing from upgrading recycle we've quarter's into as impact $XX major

Operator, for we questions. now ready are

[Operator Blaine question line Wells Instructions] comes Our from Heck, the first of Fargo.

to a just give more talk from of assets. this large or in targeting you some bit color the you've you elsewhere and on timing Pittsburgh focusing sales potential of more around Can kind us like about size smaller It those sales? little Can pivoted seems bite-sized the potential year? sales

office I looking profile in in for property? are these characteristics an investors general, days? transaction an what's office just return guess, the And that in the what prospective are And

there deals. is shifted of now. what That's for market, right, buyers So to think investor looking we plenty out There's the million to you're $XX of range. the right terms pool we in make in a of that sort dispose, smaller have asset

picked market. land got well. three of of of couple buildings on got actually in as -- we've buyers we've So the in Then, what's terms in market, the the we've all got we've that that transactions a out

one of single them two the two credit, building, X one good private. are buildings, waltz good customer, is tenant, got as multi-customer single And the buyers, we've But well. are pretty then institutional,

sort cross-section it's a of So there.

sort -- But couple out, to is the bidding have again, ago, it wasn't when but took of these as we see. it as plenty surprising. you deep to buyers a plenty was make great And of of we pool, tell years It market. I'll was of

So encouraging I our from standpoint. think that was

line optimistic running earnings pricing So they're that. we'll talk the all the through in call diligence in buildings. and due to process And about something the the maybe July. in get We're terms over of I'm goal at be prepared

our the are thing land And on a the got due same land. few working through going We've parcels conditions. out on Buyers diligence, closing there.

land So get I'm two, or next call. the maybe we'll by hopeful a transaction just one

So door. about good proceeds pretty in the getting feeling some we're overall, dispo

especially for the you've activity X that whether Second recently, X? question, Park leasing Granite talk change about the you projects those seen just on of much and term can pipeline like and in demand development in delivering Glen for a are those near

quick. move, prepared XX%. we're remarks We XX% from Peachtree, them one that if real did just so Yes, I hit don't in -- to maybe think, mentioned of XXXX take -- just mind, shy of I'll all you the

and I XXs. to prospects think XX.X% we maybe this got the get quarter, us good in

we in So deliver third and nicely. the that along again, quarter it's building, very come it,

So we one. building that great. feel about looks great The

includes the a The feet, about Raleigh. of also little just overall the or Glenlake adding Park. is X XXX,XXX a next X one retail behind which one, quarter, in we're XXXX That in here square is month bit to third Glenlake

has have team. Several wouldn't a any it's has at a couple. strong increased But a with the our days. So -- I've it's I in we're encouraged tours. one, there. last by this been increased on put prospects time, on of activity that say couple Raleigh but out, the proposals we lot the activity and we been Larry XX --

Tour Grantite Dallas, there, up delivers Park fourth picking X that quarter the in year. Plano in in this up too. of activities

So last XX far put we've proposals. out the XXX,XXX had square this in in of year, just days. XXXX, feet XX,XXX there We've

big the all for slow. decision-making is So just prospects

I'd got we've And activity that but been in decision-making has very, submitted, been has say, there. XXX,XXX the pretty slow. of the of be XXX,XXX those -- Springs, far in I'd tour and last say 'XX. there first activity, very it's moving proposals So the XX so quarter out good square days. the little are along in quicker strong It prospects. a XX feet this couple year, decision-making. to seem just And proposals delivers a

update no So that. progress yet, but on we're making

and quarter good then the seen starting Midtown but in we've the building. We already And first up one just We've of pretty last put fences East is the early some just in construction and started to interest. Tampa. we're that pilings,

on. that I we'll proposals already making be think two inquiries three or

deliver So years. doesn't -- that and full again, X don't another that for

in activity love to seems all the maybe in activity I'd up. be more all, development, little have picking on but So a to Raleigh

Granite a sounds So the activity like at better XX little Park Springs What's there? it is the X. and difference

the makers the just about decisions. been Park. the It's there. same up little it's make decisions those Granite just a So are leasing The a has position number of to in slower XX proposals Springs, at decision

think don't submarket, line make time great a a or I just specific the have Uptown got chasing. -- you. So it's great -- decisions is it's shorter obviously, Maybe to prospects you've but a what we're anything

the question with of Rob Next Stevenson Janney. from line

the seeing are renewals. you amount going you're I'm office in contract maintain to that the is their your seeking you're bit space Specifically, of like of breakdown market the currently your a to to less and under it as within can for first footprint XX% you out on what I on to the you have XX% pursuing quarter of seems little expand portfolio. curious But to 'XX? Brian, remainder It comments. give relative days. renewals still up expansions prepared about employers or more to think trying looking what are tenants those the spoke discussion in of their figure versus these same those narrative that and the

you said and kind and butter I our most small contracted, in leaning in customers. the past prepared question. the remarks, the of activity and of quarter. for this the Rob, bread expanded Thanks, quarter, for folks as for medium-sized Yes, mentioned as versus X:X for They

Just how lease quarter, come either for start. we're that's to to into good we're to everything have going enthusiastic a already terms. agreed off on what very color is this about based to little We're seeing this in or quarter feeling a gone, give to

my first on that -- be quarter. fairly with going the contraction quarter expansion guide volume from to to we're consistent second So and is more for

The as make rightsizing bigger And as with it's and mentioned, our And again, to use going telling work-from-home we're it's kind this of headwind it they're us in that a we've either workplace how or their differentiating talent. streamlining I talk users, maybe a less bit space. matters. they're really and do all is forward. in -- book delaying of space it to from they're a that -- leaning from that a their going The matters little is regard to factor think

is first in below your financial did price, stock context to the guidance? time how And the global comments totally of for of at which your are Ted, about end business upper your thinking that given now likely in the contradict this $XX dispositions Board recently crisis, seems value range and the given current thinking the environment? how since I'm you your 'XX unlocking of weren't the dip the which

-- office we sort being issue. are all talk tagged obviously, Look, the think I REITs same that a of with And about it's Yes. lot.

can't doing we're what operate. So to control keep this. our We're down. is head now to view in stock look, our going like is our We right price continue I to times think going

not seeing recession tough the increasing a spot be any office we're may the vacancy, space is, the you increases, economic quite business so is and Obviously, what in necessarily slowdown we're a or to on But perception sublease forth. quality tend -- the and ground. perception see in

so the forth. experiencing XXXX, in today we we're experienced thing So XXXX, and same

lot that's to out think, We out intently as I be And of of up execute. end where So we buying a opportunities going long coming great focused on great going office and GFC, time. term, just there's over buildings. we're think over the

the the out Some were buildings our in best coming just of portfolio of GFC.

can, while be I being be of side, to some So creating And around. there's while time best patient, these to execute going on the We type go got think similar disposition advantage this dry we as we leasing both on to we're powder opportunities. need take patient. the to side, opportunities

same the little really playbook. it's stuff, it's So but our

to then not FFO And all Brendan, Brendan low out. per to point? given quarter you share going lastly, leave be know is this the at quarter 'XX, in second

Well, say, bit depends part with put that we probably we last what are you know, for would of on a that, on the question, low It and that that's with I third probably all caveat I -- little the the are expecting. likely. think quarters probably second

occupancy probably we bounce kind couple quarter. rebound to likely currently are of the we of So it expect next then for is where quarters, fourth around to and the in

in the in we given So that users those lower in backfill second out they quarters we had moved contribute in third And remainder those March, not back space. expect the will that of the then will margins year. that the we be of be the operating because do in won't and beginning moved contributed quarter, kind CDC first mid-January, of out activity had the that

quarter with that, third second, probably likely So means yes, all would below. that be

America. Bonnel Next Camille of question from Bank with line the of

remarks this averages, I to renewals. looking quarter first perspective. the noted know the seems a the to further the to is historic majority But be typically quarter a lighter opening related compared your bit leasing activity slowdown of from that into

be much the on So their slowdown retention? your renew tenants can what saying how color are you appreciated. would to compared any reason lease? the as for comment to It expectations And not for on

start, we Ted retention of about quarter Camille, additional largely Brian long I and for to or along a pass talked maybe renewals had we time. the given low the expected whether color. But that then in it's that was move-out level for activity say Brendan. and I'll would the

XXX,XXX that's square So feet.

quarter. nonrenewal the that in So a was

which was XXX,XXX square CDC, the feet. had We

two lease. non-renewals. back we then are And kind that, over took also known proactively square square with backfilled the long took a And feet to those with user square XXX,XXX recall their remaining a we of that feet XX,XXX extend Raleigh have feet we substantially back. in of XX,XXX that combined, square footage So

But combined So was reduced the amount of of all all leasing that did. those known. renewal things we that

much So expectations. with very line it in was

So the -- thing space. I see in any only is would add again, their contract companies any you downturn,

You see have to if quality. operations companies office consolidate business. going they flight a got one submarket. than companies Obviously, of more out We've in

And flight to quality, we talk about deal upgrade it a a to lot for now, their space. but any and downturn, people are looking want may they

So closing the just we're economic the customers, our the losing being just consolidation and offices forth. on whether, environment retention offices, with going impacted so again, ratios by of overall and what's regional -- of some

So dissimilar that downturn. to the additional headwinds. is any not the work certainly with one hybrid guess, too caveat other I of

And on point. follow just to up that

XX%. think you're of around excluding rest those that mentioned the I you to first expecting year quarter for move-outs, remain the retention

back this any there of the is change for assumption to this So half year?

line of with No, in I that's think very expectations. our kind much

up you had in did we're NOI our and nudge the feeling that business about for I'd expect given occupancy provided. to XX%. So I think growth property outlook maybe the no outlook. you see better And we be little year. a same that year-end we the generally bit outlook between We XX% can say still overall, change the to

feel in probably things outlook sitting we to that all the when late beginning compared net-net, expectations. very here those say, a are bit line provided better much little So of April in in February. we with I'd

the different commented growing also had on execute on And having in record markets do. finally, the that I very the Historically, and a while around know when you track you've timing market FFO. exiting flexibility good could fact disposal the Pittsburgh you've look very to

just dilution to this stepping deliver the think FFO So this environment you and growth about tough sale? Highwood's from market ability how back, potential in do continue to

right? do Look, tougher consecutive no done of a question. I going it's growth, you think, had few it's We companies think do very recognize years -- to FFO said, and tougher There's that. be Yes. we which been has environment, to as I XX it, that. have

wait for obviously sell We're we to when capital certainly, going in do, we the market we're But huge got environment, to Pittsburgh. given no there. hurry headwinds So just Pittsburgh.

So will it's couple when dilution. And us over in NOI I is going some to $XX development And million stabilize be think over at think, our of we do that's same the of the years. past. that. there time, deliver the pipeline I FFO next helped

So growth that's standpoint. the on help going to

think I the that benefits solid of platform some growth that's Highwoods deliveries. development of one that can creation development is the having with deliver value NOI

Our the with line Michael Citi. Griffin from next question is of

century. less there looks about that and I space Georgia. think office much actually $XXX,XXX my week, But Atlanta was in XX% we'll point. and of was as a noticed, going State some stop X,XXX was Glenlake footnote in the love XXXX I I this about in the on day, like As you're down at so to on to taking question be have by that

would backfilling anything -- Just Other it's but past bucket, curious I of there about you'd think little a Maybe tenant how bit great. be thinking that? not needs? you're it's add

in we noncore as the XX-Q. for asset a specifically note Sure. department on know, the -- us. is That asset of the revenue On put you

RFP up And and the XX conservatism over renewal. transparency, building long a X been they've ago, chance got wanted we again, weeks is we less that when just given than So a good it that our It's ago, until, years. a we of because time, for to weeks a for thought it couple add in is. --

them well. building. other can in it at that our we There's a in interested looking chance be we're options now. same that So There in portfolio are right keep as that may they

and an that, will competing them. Again, keep there's it but days a early it. significant if it's for be on be we going So we're out to downside RFP there,

definitely So be but competitive. It's -- I'm It's big, see. a big a good requirement. hopeful, going we'll it's to

will folks that that's one. be of it. lot chasing a anyway, so -- sure I'm So But

the 'XX. street the then September one is as in of moved feet to other And other out it's that's, Plaza. Fips in ones, late the big know, square and you last across They [Indiscernible] XXX,XXX Michael, expires big year X in Atlanta.

paying So now space on vacant. it. still have They're a we rent

in -- another great in tours XX feet. We it. given but if we're two XX guys just size. can had the space, great the or keep we've showing we knows XX,XXX have those large it's just not. subleased competitive So past, square building, so And as they great the about -- mentioned opportunity or last location. But And It's days. who

it's time, I to So we're -- that we'll to forward. to customer great lease think -- be going up a over going able

and there. market. question presence the is second But it it curious just attractive Tampa, And what Obviously, then I'm my it's developments makes the on as is? back a circling on as growing

I mean was somewhere recently. I reading

Tampa has population decade think West, think, little Little over the around you to the not leased Rock, Tampa you've starting as I a per bad but I'm Electric, Midtown Arkansas. Gas like majority rock last se, the county. same saying I got growth

So market, maybe beneficial a could. such if talk about why you that's

we've been in performer since has a think Well, for good Tampa been think 'XXs. the And I I long-term us.

look there. you our business X largely assets they're districts CBD, Westshore the best If at in the are and there,

type we West. and Midtown Midtown that development. then on of really you And part in project is There's assets, East, Tampa specifically the a success mixed-use down had these Tampa at unique drill when for Midtown a XX-acre

XXXX, remember, the office in building, we think as pandemic, fall summer or you right XXX,XXX a foot If spec. before maybe started I XXX% square

from up our we better pandemic, leased a it completed time, rate forma during we on on pro and it rental time schedule. the on And than And standpoint.

demand conviction the in that for mixed-use, saw that looking mixed-use East. was integrated Tampa -- a to gave we project the is us go Midtown in just So

condominium buying square you're is about going to not interest foot building Midtown is that in a XX,XXX larger XXX,XXX be Electric, building. East, it's And as build, it Tampa that or TCO,

So office lease square up. only XXX,XXX to got feet about we've of

just very we going companies again that's think to help it's mixed-use and environment unique But It's recruit a their vibrant. it's employees. retain

CENTCOM Tampa location, ago, development it's their ages Michael, all just changed many of of might headquarter them years markets I on. there. fundamentally different of our perception. evolution. kind in defense with If this having its known of of Brian. kind back-office along Maybe and in some further sort we life, are And of add has their think connectivity different

really the the relocation we've South flow for the last It's of happened I the maybe one into of this companies destination What's years Florida, it's pandemic the is and Northeast outward out Tampa not few gateways, mentioned accelerated over Tampa. before, companies from think and Florida. the by

that's great a story. So

airport. the rate, of Midtown. spending looking of now customers In expanding we've of the that And that. The little is they're the Ted terms north diversified leasing space, of quality But in combination seen in XX% Midtown West leased. definitely economy to Tampa, mentioned, we're as the growth rock dollars of our billions the are

Midtown, next with of You're the Downtown its around Nashville seeing Water the that. the taking like we're doing and seat Raleigh kind is like from with there. folks our Street country likes development what feels It at the in and feels Tampa new of in partners It Austin through and investment table with Charlotte.

Our with next of Kamdem line question is Ronald Stanley. Morgan from the

activity what is? markets. A pipeline, Back and the science quick leasing, on in your qualitative the some on what ones. sort of maybe the sort some way were just that to couple hubs of some And life comments of tech then of a the of there quantify is

what you're curious seeing Just them. from

Ron, shot Ted Brian let here. paper. I'll the first my things. Brendan and Couple of grade take and

general. to tech in have exposure We low

think I just a that know on Not fact. probably down tech, you it's we're as that.

this Richmond Michael's the already, crystal to are quarter, Raleigh next look leader feet. be in, Even The what is have As second square on momentum we're something our weeks Tampa talk ball kind quarter, in about. there about good pretty XXX,XXX Nashville, about. question. you a following quarter continues of going of talk to we few going was into stuff to we the feel seeing

to So As something mention, kind on? of in the Is is ask. coming that like deals? around economics that's are in, more it are markets, the Ted that people economics those going general, expensive do leasing fundamental the we What

Yes, it's competitive.

have it a to optimistic so. down We chance down build-out as costs of slow leveled haven't spaces. we we're projects believe pick are some se that there. up come out, per the in we maybe things that seen Has And other

to optimistic is in For not. of bad have we're with team. who's those I'm That I give entire win will leasing the credit, those us deals. about maybe portfolio our to. building own kind more singularly someone customers and the deals to have with renewing ability portfolio financed able term that inclined than the a our and joke X be years do deals, the have renewals we with with And private way that X look side we that might ahead a work within compete years, not in

The how top. -- something is core, just sort buildings Were other the the usage of mentioned any different not if a was that about you there at there a as that of this sort at their they I could could it's tenants, other this this say, you question at "Okay, ask one same -- XX-Q. looked kind that If that Obviously, it made idiosyncratic? had clues is looking on sort maybe way, of there it But is Century versus Is the I ask XXXX sense?" different were of and was shown in using Boulevard there way. unique coming? I

certainly, to slower. Well, slower last the there on ability work in the were forever. couple been really they the of Ron. return users, over Yes, government have Like years. they're most But

tired. space does need is get It to redone. So

So think to I in reconfigure with probably space others. a hybrid needing like seeing combined work we're their just it's

in they're a building XXXX. that's there built Obviously, in --

older So a it's associated in on there's with there's sort but not invested plate. asset BI, an to that will CapEx of just lease, it, be the an So TI floor to need their they're only that capital right? retenant irregular the building building,

they reevaluating been they've it's space like their lot So -- time, are really there folks long a just a and are. of

the I one, if And last may.

quarter just went plans. you in good you in at from other down funded. I'm assets life terms Obviously, insurance sort license are there's companies interest, calls pretty through road? well more rate. Brendan getting curious, deal of the the And of opportunity the the insurance a funding Just you're there's did where

it's would borrower. We I with mean, execution at pleased we general, BofA the are in say, predominantly unsecured mortgage Thanks. on were I Tower. the Brendan. an Ron, Yes,

that looking to are So lot do a not we're something mortgages of.

However, the options high-quality benefit there we is portfolio some of those us choose having that a there, largely unsecured mortgages. are are asset a should pool to out assets of pursue with

evaluate it's out makes want whether we'll it the pool balance that's to But that or think open I with unsecured sense. not and option to there us. do we So we others. have an

we're And great in just from a as standpoint. a mean, shape liquidity reminder, I

we is all without raise line, can the development XXXX, fund of debt capital. So of all any I to our pipeline which expiration mean March of in and the additional maturities need the through the of

we do to something option to need actively capital, that so. it's So choose just it's raise not out and an should go we

is the Dylan question Burzinski Street. line Next from of Green with

probably leasing you if thoughts provide for XXXX? net know curious your have the Just effective throughout kind can of continued elevated. of I rents to remain costs or expectations remainder

And rents several something surprisingly years base last over us up held that the surprised have that well. is

So could rents? year we that XXXX see on the start guess to be I base pressure

it's got Look, I look, slowdown, increasing. -- increasing. sublease mean, any it's the Right got right? just economic now think Dylan, in Ted. vacancy like think space business. the slowdown other I so, I again, office an We rates we've

So you got those headwinds.

getting off, are to to that as increase. see maybe to more But TIs, keep -- still We going increasing. development continue little bit or Free costs And it's right? a thinking they've come may still in that to hoping that line there's cost you is the point, rent aggressive. this contractors fall some and up are got pressures, pressures cost start back

on different. there's free Again, that upward rent. upward blanket There TIs, statement. making But submarkets in general, all are they're pressure pressure on pockets in

COVID, not Now if the rents. able increase, since been is thing maintain, face we've nice to

you good when to slowdown a mix, downward it pressure on on net effectives, we've throw into all just job some see entering, net but rents. effective we're the that me entering wouldn't surprise done So the

Dylan, it's Brendan.

deals the one a We lot Just quarter. do did to -- suite add. would just thing I during of spec

average lease a carry feet. Those around was we quarter initially capital X,XXX we the low during upfront. tend did because sized the a of that spend kind square pretty deals saw of that to effective net suite spec You lot

relet we then very are As those, effectives the high. net

if adjust quarters. to looks in the a spec lot deals So quarter, the for effective the previous we suite more net comparable

So our net think drag it negative a effective. a by on overall around had foot square $X.XX I

headline more traction lot I of seen from the sign be be. we think this and successful would year leasing they net lower caused there, otherwise that a do those perspective very So but we initial will suites spec effectives as of during because to that than been we've will probably, a

Brian. Dylan.

this of kind face add counterintuitive on, to Just rates. on

is pool will the face in top longer the As the market drop because no "face new actually development is delivered rates." that and rates higher-end rate leases up, face to of market

-- -- we've stuff the done you back. when seeing seen space And part top rate factor. to seeing market So a up. of have rates we're face is point, pretty their a see smaller equation leased because drop some talking who we're is we're a the is differentiating Ted's they're folks good about job of as face of That talent their bringing actually

at of quick Just Charlotte? may. in of if to share LTV able Were one, I America the one underwritten Tower more you Bank guys sort

asset numbers, But if LTV. in good probably benchmark lender it for in market it's sale. think probably call outlook I ask that of a had with for to round terms mean, I on -- garner you V, of than value is Well, guess. I more let's XX% think who would we the it you were the it, the depends But a conservative pretty probably probably a

the Next with line Baird. of question Nick from Hillman

were and Daniel the deals, those? is with look you know in This the potential equity the had you Leben mortgage. transaction a I given Nick. any then mentioning market as on in way I But slowdown question. would a delevering of potential your to market

the consider the probably JV partner But it. not of we Daniel, maybe Brendan. would I for profile of I guess, if understand question, the sure mean, a -- question. kind if Got not I assets, it's I'm Okay. totally that's

type not that say that's we in the kind smaller in for assets out sale. market, Yes, probably have of out I the Ted really potential that buildings talked that that we the on have something those of would contemplating that say would kind assets the for about, market I we're of

line the with Instructions] Next [Operator of from Abramowitz Peter question Jefferies.

should how think looking it's we mentioned your just Ted quantify the little bit Could about I you of terms in there's acquisition guidance, side. further you're opportunities your what possibly of on some targeting kind on out. and in nothing know returns a those? maybe

the know market ton of side. in deal today not there's on I the financing a activity

hurdles of start you isn't if wondering totally kind can to do But of return if your active. So clear. get quantify capital you cost just

Yes.

I think now. dispose our being powder, trying goal to patient, get at you anything said we're really We're line. dry the replenish not looking right over some

we're think to I obviously be going So it acquisitions. whether and be definitely raised has or the bar development been patient

acquisition now. on the we've lot whole have right cost there the think of had assets there sorted down right are out are we capital are our because So that of pencils And side I discussion a don't don't now.

that be are wish now, good sort And that the We proxy opportunities they actually for tracking we're pricing our -- bit there may said of tracking is we're list that what are are we're little couple there today. and assets of right got if well-developed But and better think sitting a out back I a we've be we're down -- would waiting. there road trade. when versus

the question. have an don't really cost capital on of So you I for answer

And we further no phone have the questions line. on

And Well, look for you, line Thanks much. I interest your for everybody, Thanks in want seeing June. on of to at NAREIT many we being in forward your the so -- Highwoods. today. you on thank to

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