Company Overview - Highwoods Properties, Inc. is a publicly-traded real estate investment trust (REIT) focused on owning, developing, acquiring, leasing, and managing properties in major business districts across several cities including Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond, and Tampa [4] Financial Update - Highwoods Properties has recast a $200 million unsecured bank term loan, extending its maturity from May 2026 to January 2029, with an option to extend for an additional two years if no defaults occur [1] - The interest rate on the new term loan is set at SOFR plus 95 basis points, with potential adjustments of up to 2.5 basis points based on the achievement of specific sustainability goals related to greenhouse gas emissions reduction [2] Loan Arrangement Details - The new term loan was arranged by several financial institutions, including BofA Securities, Wells Fargo Securities, and PNC Capital Markets, with Bank of America acting as the Administrative Agent [3]

Group 1 - Highwoods Properties (NYSE: HIW) provides exposure to a portfolio of high-quality Class A office properties, but rising occupancy rates in its core geographical markets reduce the attractiveness of its dividend yield [1] - The equity market serves as a mechanism for wealth creation or destruction over the long term, with Pacifica Yield focusing on undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms for long-term wealth creation [1]

Financial Data and Key Metrics Changes - The company reported a net income of $18.3 million or $0.17 per share and FFO of $97.7 million or $0.89 per share for Q2 2025 [25][11] - The midpoint of the 2025 FFO outlook was raised by $0.02 to a range of $3.37 to $3.45 per share, reflecting a nearly 2% increase since the beginning of the year [12][28] - The debt to EBITDA ratio was 6.3 times at quarter end, with $106 million left to fund on the development pipeline and over $700 million of available liquidity [27] Business Line Data and Key Metrics Changes - The company achieved 920,000 square feet of second-generation leasing in Q2, including 370,000 square feet of new leasing [6][14] - The leased rate increased by 80 basis points to 88.9%, while occupancy remained flat at 85.6% [11][12] - The company has locked in over $12 million of annual NOI growth potential from its core four properties, with strong prospects for an additional $5 million to $6 million [31] Market Data and Key Metrics Changes - The company noted strong demand in its key markets, particularly in Charlotte, Dallas, and Nashville, which are outperforming the national average [73][72] - Nashville reported the nation's third-highest positive net absorption, with nearly 1 million square feet leased in Q2, the highest since 2021 [20][21] - The Charlotte market is experiencing significant job growth, with a daily net migration count increasing from 117 to 157 [22][76] Company Strategy and Development Direction - The company aims to upgrade its portfolio by rotating out of slower growth properties into higher growth, more capital-efficient assets [5][6] - The development pipeline includes properties like Glenlake III and Granite Park VI, which have over $10 million of NOI growth potential [8][31] - The company is optimistic about the future, citing a strong balance sheet and the potential for capital deployment in new investments [13][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the leasing activity and the potential for occupancy to improve by late 2025 [7][12] - The company highlighted the positive impact of limited supply in the market, which is driving rent growth in high-quality locations [9][10] - Management noted that the current economic environment is favorable for office space demand, with a shift back to in-office work [16][18] Other Important Information - The company received $3 million from the Florida Department of Transportation for roadway improvements, which was included in the FFO outlook [25][26] - The company is actively underwriting potential new investments and has numerous assets in the market for sale [6][5] - The company is focused on maintaining a diverse debt structure to manage interest rate exposure effectively [59][60] Q&A Session Summary Question: Can you discuss the guidance and the factors influencing it? - Management indicated that there were $0.03 of headwinds in the updated outlook due to higher G&A and pushed interest income into future years, offset by $0.05 of NOI upside [34][36] Question: What is the opportunity set for acquisitions in your markets? - Management noted that capital markets are opening up, with more high-quality assets coming to market and narrowing bid-ask spreads [39][40] Question: What are your expectations for concessions and tenant improvements? - Management stated that concessions have generally peaked, and market rents are increasing, which should positively impact net effective rents [44][46] Question: Will there be a spike in building improvements and leasing commissions? - Management expects elevated levels of tenant improvements and commissions to continue, likely higher than previous years [52][53] Question: What are the biggest swing factors in your guidance? - Management highlighted expense timing and potential lease renewals as key factors influencing guidance variability [55][56] Question: How competitive is the process for large RFPs? - Management noted that there is significant competition for headquarter space, with various industries showing interest, particularly in financial services [90][92]

Financial Data and Key Metrics Changes - The company reported net income of $18.3 million or $0.17 per share and FFO of $97.7 million or $0.89 per share for the quarter [24] - The midpoint of the 2025 FFO outlook has been raised by $0.02 to a range of $3.37 to $3.45 per share, reflecting a nearly 2% increase since the beginning of the year [11][27] - The debt to EBITDA ratio was 6.3 times at quarter end, with $106 million left to fund on the development pipeline and over $700 million of available liquidity [26] Business Line Data and Key Metrics Changes - The company achieved 920,000 square feet of second-generation leasing in the quarter, including 370,000 square feet of new leasing [5][10] - The occupancy rate remained flat at 85.6%, while the leased rate increased by 80 basis points to 88.9% [10] - The company has forecasted $25 million of annual NOI upside from stabilizing its core four assets, with 50% of this upside already secured through signed leases [6][30] Market Data and Key Metrics Changes - The company noted strong demand in its key markets, particularly in Charlotte, Dallas, and Nashville, which are outperforming the national average [72] - Nashville reported the highest dollar-weighted average lease term at nine years, with GAAP rent growth of 23.8% and cash rent spreads of 12.4% [19] - The Tampa market has seen its fifth consecutive quarter of positive net absorption, with a healthy pipeline of future tenant move-ins [22] Company Strategy and Development Direction - The company aims to upgrade its portfolio quality by rotating out of slower growth properties into higher growth, more capital-efficient assets [4] - The development pipeline includes significant NOI growth potential, with over $10 million at Glenlake III and Granite Park VI, and over $20 million at 23 Springs and Midtown East [7][30] - The company is confident in the Ovation mixed-use development project, which is expected to create significant value for shareholders [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the leasing environment, noting a return to office trends and a reduction in competitive supply [14] - The company anticipates steady occupancy growth through 2026, supported by signed leases and a strong development pipeline [85] - Management highlighted the importance of maintaining a strong balance sheet and liquidity to capitalize on future opportunities [12] Other Important Information - The company received $3 million from the Florida Department of Transportation for roadway improvements, which was included in the FFO outlook [24] - The company wrote off nearly $1 million of predevelopment costs at sites where office use is no longer deemed optimal [25] Q&A Session Summary Question: Insights on guidance and other income items - Management indicated that there were $0.03 of headwinds in the updated outlook due to higher G&A and pushed interest income into future years, offset by $0.05 of NOI upside [34][35] Question: Acquisition opportunities in current markets - Management noted that capital markets are opening up, with more high-quality assets coming to market and narrowing bid-ask spreads [40][41] Question: Expectations for concessions and tenant improvements - Management stated that concessions have generally peaked, with net effective rents increasing, although variability exists by submarket [44][46] Question: Future leasing commissions and tenant improvements - Management expects elevated levels of leasing commissions and tenant improvements to continue, likely higher than previous years [50][52] Question: Factors affecting guidance range - Management highlighted expense timing and potential lease renewals as swing factors affecting the guidance range [56] Question: Competitive landscape for large RFPs - Management noted strong competition for headquarter space, with demand coming from various industries, including financial services and manufacturing [90][92]

Highwoods Properties (HIW) came out with quarterly funds from operations (FFO) of $0.89 per share, beating the Zacks Consensus Estimate of $0.85 per share. This compares to FFO of $0.98 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an FFO surprise of +4.71%. A quarter ago, it was expected that this real estate investment trust would post FFO of $0.82 per share when it actually produced FFO of $0.83, delivering a surprise of +1.22%. There are no ea ...

Core Insights - Highwoods Properties, Inc. has released its second quarter 2025 financial results, indicating ongoing performance in the office real estate sector [1]. Company Overview - Highwoods Properties, Inc. is a publicly-traded real estate investment trust (REIT) that operates in major business districts across several cities including Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond, and Tampa [2]. - The company's vision focuses on leading the evolution of commercial real estate, aiming to create environments that inspire collaboration and achievement among customers and their teams [2]. - Highwoods is committed to delivering greater value to its customers and shareholders through exceptional workplace environments and experiences [2].

Filing Information Provides essential filing details for Highwoods Properties, Inc. and its Operating Partnership [Registrant Information](index=1&type=section&id=Registrant%20Information) Highwoods Properties, Inc. and Highwoods Realty Limited Partnership filed this Form 10-Q; the Company is a large accelerated filer, the Operating Partnership is non-accelerated - **Highwoods Properties, Inc. (HIW)** is a large accelerated filer, and **Highwoods Realty Limited Partnership** is a non-accelerated filer[5](index=5&type=chunk)[6](index=6&type=chunk) - **108,073,015 shares** of Common Stock outstanding as of July 22, 2025[6](index=6&type=chunk) [Explanatory Note](index=3&type=section&id=Explanatory%20Note) Clarifies report terminology, defines the relationship between Highwoods Properties, Inc. and Highwoods Realty Limited Partnership, and outlines property-level operational information scope - The Company conducts its activities through the Operating Partnership and is its sole general partner[10](index=10&type=chunk) - Property-level operational information includes in-service wholly owned properties and in-service properties owned by consolidated and unconsolidated joint ventures (at our share); development projects are not considered in-service until completed and stabilized (occupancy generally exceeds **93%**)[11](index=11&type=chunk) PART I - FINANCIAL INFORMATION [Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=ITEM%201.%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20%28unaudited%29) Presents unaudited condensed consolidated financial statements for Highwoods Properties, Inc. and Highwoods Realty Limited Partnership, including balance sheets, income, comprehensive income, equity/capital, and cash flows [Highwoods Properties, Inc. Financial Statements](index=5&type=section&id=HIGHWOODS%20PROPERTIES%2C%20INC.%20Financial%20Statements) Provides unaudited consolidated financial statements for Highwoods Properties, Inc., detailing financial position, performance, and cash flows Consolidated Balance Sheets (Highwoods Properties, Inc.) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----- | :--------------------------- | :------------------------------- | | Total Assets | $6,058,711 | $6,029,355 | | Total Liabilities | $3,615,595 | $3,598,110 | | Total Equity | $2,376,238 | $2,365,454 | Consolidated Statements of Income (Highwoods Properties, Inc.) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Rental and other revenues | $200,600 | $204,738 | $400,983 | $416,013 | | Total operating expenses | $148,653 | $147,661 | $297,549 | $304,266 | | Net income | $19,221 | $64,770 | $119,221 | $91,983 | | Net income available for common stockholders | $18,270 | $62,870 | $115,719 | $88,934 | | Basic EPS | $0.17 | $0.59 | $1.07 | $0.84 | | Diluted EPS | $0.17 | $0.59 | $1.07 | $0.84 | Consolidated Statements of Cash Flows (Highwoods Properties, Inc.) | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | | Net cash provided by operating activities | $162,855 | $202,365 | | Net cash used in investing activities | $(82,156) | $(55,960) | | Net cash used in financing activities | $(74,368) | $(141,169) | | Net increase in cash and cash equivalents and restricted cash | $6,331 | $5,236 | [Highwoods Realty Limited Partnership Financial Statements](index=12&type=section&id=HIGHWOODS%20REALTY%20LIMITED%20PARTNERSHIP%20Financial%20Statements) Provides unaudited consolidated financial statements for Highwoods Realty Limited Partnership, detailing financial position, performance, and cash flows Consolidated Balance Sheets (Highwoods Realty Limited Partnership) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----- | :--------------------------- | :------------------------------- | | Total Assets | $6,058,711 | $6,029,355 | | Total Liabilities | $3,615,595 | $3,598,110 | | Total Capital | $2,349,522 | $2,336,643 | Consolidated Statements of Income (Highwoods Realty Limited Partnership) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Rental and other revenues | $200,600 | $204,738 | $400,983 | $416,013 | | Total operating expenses | $148,653 | $147,661 | $297,549 | $304,266 | | Net income | $19,221 | $64,770 | $119,221 | $91,983 | | Net income available for common unitholders | $18,635 | $64,151 | $118,040 | $90,748 | | Basic EPS | $0.17 | $0.60 | $1.08 | $0.84 | | Diluted EPS | $0.17 | $0.60 | $1.08 | $0.84 | Consolidated Statements of Cash Flows (Highwoods Realty Limited Partnership) | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | | Net cash provided by operating activities | $162,855 | $202,365 | | Net cash used in investing activities | $(82,156) | $(55,960) | | Net cash used in financing activities | $(74,368) | $(141,169) | | Net increase in cash and cash equivalents and restricted cash | $6,331 | $5,236 | [Notes to Condensed Consolidated Financial Statements](index=19&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Detailed notes to unaudited condensed consolidated financial statements cover business, accounting policies, capital, leases, investments, real estate, intangibles, debt, noncontrolling interests, fair value, share-based payments, assets held for sale, EPS/unit, and segment information [Note 1. Description of Business and Significant Accounting Policies](index=19&type=section&id=Note%201.%20Description%20of%20Business%20and%20Significant%20Accounting%20Policies) - Highwoods Properties, Inc. is a fully integrated office REIT operating in Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond, and Tampa; as of June 30, 2025, the company owned or had an interest in **27.3 million rentable square feet** of in-service properties and **1.4 million rentable square feet** under development[58](index=58&type=chunk) - The Company owns **98.0%** of the Common Units in the Operating Partnership as of June 30, 2025[59](index=59&type=chunk) - The Company issued **44,819 shares** of Common Stock under equity distribution agreements for net proceeds of **$1.4 million** during the three and six months ended June 30, 2025[60](index=60&type=chunk) [Note 2. Leases](index=20&type=section&id=Note%202.%20Leases) Rental and Other Revenues from Operating Leases | Period | 2025 (in thousands) | 2024 (in thousands) | | :----- | :------------------ | :------------------ | | Three Months Ended June 30 | $222,100 | $201,000 | | Six Months Ended June 30 | $392,900 | $408,800 | Variable Lease Payments | Period | 2025 (in thousands) | 2024 (in thousands) | | :----- | :------------------ | :------------------ | | Three Months Ended June 30 | $16,700 | $16,600 | | Six Months Ended June 30 | $33,600 | $39,100 | [Note 3. Investments in and Advances to Affiliates](index=21&type=section&id=Note%203.%20Investments%20in%20and%20Advances%20to%20Affiliates) - The Company has variable interests in several unconsolidated joint ventures (Granite Park Six, 23Springs, McKinney & Olive, Midtown East, 2827 Peachtree) where it is not the primary beneficiary, limiting its risk of loss to the carrying value of its investment balances and/or outstanding loans to the JVs[71](index=71&type=chunk)[73](index=73&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) - The Midtown West joint venture is consolidated as the Company is the primary beneficiary, holding an **80.0% interest** and controlling significant activities[79](index=79&type=chunk) [Note 4. Real Estate Assets](index=23&type=section&id=Note%204.%20Real%20Estate%20Assets) - Acquired Advance Auto Parts Tower (**346,000 sq ft** office building in Raleigh) for **$137.9 million** in Q1 2025[81](index=81&type=chunk) - Sold three buildings in Tampa and land in Pittsburgh for **$146.3 million**, recording **$82.2 million** in net gains on disposition in Q1 2025[82](index=82&type=chunk) [Note 5. Intangible Assets and Below Market Lease Liabilities](index=23&type=section&id=Note%205.%20Intangible%20Assets%20and%20Below%20Market%20Lease%20Liabilities) Total Intangible Assets and Below Market Lease Liabilities (Net of Amortization) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------- | :--------------------------- | :------------------------------- | | Deferred leasing costs | $221,609 | $209,967 | | Acquisition-related below market lease liabilities | $14,770 | $16,186 | Amortization of Intangible Assets and Below Market Lease Liabilities | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Amortization of deferred leasing costs | $9,070 | $9,984 | $18,074 | $19,629 | | Amortization of lease incentives | $660 | $550 | $1,305 | $1,243 | | Amortization of above market lease assets | $636 | $794 | $1,234 | $1,596 | | Amortization of below market lease liabilities | $(665) | $(1,130) | $(1,417) | $(2,274) | [Note 6. Mortgages and Notes Payable](index=25&type=section&id=Note%206.%20Mortgages%20and%20Notes%20Payable) Mortgages and Notes Payable (Net) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------- | :--------------------------- | :------------------------------- | | Secured indebtedness | $707,567 | $712,186 | | Unsecured indebtedness | $2,639,626 | $2,595,815 | | Less-unamortized debt issuance costs | $(12,808) | $(14,442) | | Total mortgages and notes payable, net | $3,334,385 | $3,293,559 | - Unused capacity of the **$750.0 million** unsecured revolving credit facility was **$602.9 million** as of June 30, 2025, and **$612.9 million** as of July 22, 2025[86](index=86&type=chunk) - The Company is in compliance with financial covenants for its consolidated debt[87](index=87&type=chunk) [Note 7. Noncontrolling Interests](index=26&type=section&id=Note%207.%20Noncontrolling%20Interests) - Noncontrolling interest in consolidated affiliates relates to a **20.0% interest** in the Midtown West joint venture[89](index=89&type=chunk) Noncontrolling Interests in the Operating Partnership | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Beginning balance | $63,759 | $56,324 | $65,791 | $49,520 | | Adjustment to fair value | $3,829 | $(12) | $927 | $7,467 | | Net income attributable | $365 | $1,281 | $2,321 | $1,814 | | Distributions | $(1,075) | $(1,075) | $(2,151) | $(2,151) | | Total noncontrolling interests | $66,878 | $56,518 | $66,878 | $56,518 | [Note 8. Disclosure About Fair Value of Financial Instruments](index=26&type=section&id=Note%208.%20Disclosure%20About%20Fair%20Value%20of%20Financial%20Instruments) - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1 prices), and Level 3 (unobservable inputs)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[96](index=96&type=chunk) Fair Value Hierarchy as of June 30, 2025 | Category | Total (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :------- | :------------------- | :--------------------- | :--------------------- | :--------------------- | | Assets | $7,844 | $1,617 | $6,227 | $0 | | Noncontrolling Interests in OP | $66,878 | $66,878 | $0 | $0 | | Liabilities | $3,209,620 | $1,617 | $3,208,003 | $0 | [Note 9. Share-Based Payments](index=28&type=section&id=Note%209.%20Share-Based%20Payments) Share-Based Compensation Expense | Period | 2025 (in thousands) | 2024 (in thousands) | | :----- | :------------------ | :------------------ | | Three Months Ended June 30 | $1,300 | $1,100 | | Six Months Ended June 30 | $6,300 | $6,000 | - As of June 30, 2025, **$5.6 million** of total unrecognized share-based compensation costs remain, to be recognized over a weighted average remaining contractual term of **2.2 years**[100](index=100&type=chunk) [Note 10. Real Estate and Other Assets Held For Sale](index=28&type=section&id=Note%2010.%20Real%20Estate%20and%20Other%20Assets%20Held%20For%20Sale) Real Estate and Other Assets Held For Sale | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------- | :--------------------------- | :------------------------------- | | Net real estate assets | $0 | $45,802 | | Accrued straight-line rents receivable | $0 | $6,581 | | Deferred leasing costs, net | $0 | $2,784 | | Prepaid expenses and other assets, net | $0 | $242 | | Total assets held for sale | $0 | $55,409 | - As of June 30, 2025, there were no assets held for sale, indicating all previously held-for-sale assets were disposed of[101](index=101&type=chunk) [Note 11. Earnings Per Share and Per Unit](index=29&type=section&id=Note%2011.%20Earnings%20Per%20Share%20and%20Per%20Unit) Company Earnings Per Common Share (Basic & Diluted) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income available for common stockholders | $18,270 | $62,870 | $115,719 | $88,934 | | Basic EPS | $0.17 | $0.59 | $1.07 | $0.84 | | Diluted EPS | $0.17 | $0.59 | $1.07 | $0.84 | Operating Partnership Earnings Per Common Unit (Basic & Diluted) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income available for common unitholders | $18,635 | $64,151 | $118,040 | $90,748 | | Basic EPS | $0.17 | $0.60 | $1.08 | $0.84 | | Diluted EPS | $0.17 | $0.60 | $1.08 | $0.84 | [Note 12. Segment Information](index=30&type=section&id=Note%2012.%20Segment%20Information) - The Company evaluates its business by geographic location, with primary reportable segments including Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond, and Tampa[106](index=106&type=chunk) Total Net Operating Income by Segment | Period | 2025 (in thousands) | 2024 (in thousands) | | :----- | :------------------ | :------------------ | | Three Months Ended June 30 | $136,945 | $140,179 | | Six Months Ended June 30 | $272,294 | $281,019 | [Note 13. Subsequent Events](index=32&type=section&id=Note%2013.%20Subsequent%20Events) - On July 24, 2025, the Company declared a cash dividend of **$0.50 per share** of Common Stock, payable on September 9, 2025[112](index=112&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial condition, operations, and cash flows, including strategy, revenue/expense analysis, liquidity, critical accounting, and non-GAAP measures [Disclosure Regarding Forward-Looking Statements](index=33&type=section&id=Disclosure%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements, highlighting factors and risks that could cause actual results to differ materially from projections, including customer financial condition, leasing terms, and market conditions - Forward-looking statements are identified by terms like 'may,' 'will,' 'expect,' 'anticipate,' 'estimate,' 'continue'[117](index=117&type=chunk) - Key risks include deteriorating customer financial condition, inability to lease/re-lease space favorably, delays in development/acquisition, excessive supply, market declines, increased interest rates/operating expenses, natural disasters, and liquidity issues[119](index=119&type=chunk) [Executive Summary](index=34&type=section&id=Executive%20Summary) The Company aims to lead commercial real estate evolution by creating inspiring BBD environments, focusing on high-quality workplaces, a strong balance sheet, and portfolio strengthening through development, acquisition, and disposition - Company's vision: to be a leader in the evolution of commercial real estate for the benefit of customers, communities, and investors[121](index=121&type=chunk) - Strategy: own and operate high-quality workplaces in Best Business Districts (BBDs), maintain a strong balance sheet, employ a talented team, and communicate transparently[121](index=121&type=chunk) - Occupancy in the office portfolio decreased from **87.1%** as of December 31, 2024, to **85.6%** as of June 30, 2025, with expected average occupancy for the remainder of 2025 between **85.0%** and **86.0%**[124](index=124&type=chunk) - Annual combined GAAP rents for new and renewal leases signed in Q2 2025 were **$33.63 per rentable square foot**, representing a **17.6% increase** over previous leases[127](index=127&type=chunk) - Top customers (over **3%** of annualized GAAP revenues) as of June 30, 2025, include **Bank of America (3.9%)** and **Asurion (3.5%)**[128](index=128&type=chunk) - Consolidated same property NOI was **$2.9 million (2.1%) lower** in Q2 2025 versus 2024 due to decreased revenues and increased expenses, with expectations for it to be lower for the remainder of 2025[130](index=130&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Details financial performance for Q2 and H1 2025 versus 2024, highlighting changes in rental revenues, operating expenses, interest, other income, property disposition gains, affiliate earnings, and diluted EPS - Rental and other revenues decreased by **$4.1 million (2.0%)** in Q2 2025 compared to Q2 2024, primarily due to property dispositions, lower consolidated same property revenues, and properties taken out of service, partially offset by the Advance Auto Parts Tower acquisition[146](index=146&type=chunk) - Net income decreased from **$64.77 million** in Q2 2024 to **$19.22 million** in Q2 2025[19](index=19&type=chunk) - Diluted EPS decreased by **$0.42** in Q2 2025 compared to Q2 2024[153](index=153&type=chunk) - Gains on disposition of property were **$35.0 million lower** in Q2 2025 compared to Q2 2024[151](index=151&type=chunk) - Rental and other revenues decreased by **$15.0 million (3.6%)** in the first six months of 2025 compared to 2024, primarily due to dispositions, lower same property revenues, and properties taken out of service, partially offset by the Advance Auto Parts Tower acquisition[154](index=154&type=chunk) - Net income increased from **$91.98 million** in H1 2024 to **$119.22 million** in H1 2025[19](index=19&type=chunk) - Diluted EPS increased by **$0.23** in H1 2025 compared to H1 2024[161](index=161&type=chunk) - Gains on disposition of property were **$40.0 million higher** in H1 2025 compared to H1 2024, primarily from Tampa building dispositions[159](index=159&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The Company maintains a conservative balance sheet with ample liquidity, meeting short-term needs via operating cash and credit, and long-term needs via debt/equity and asset dispositions - As of July 22, 2025, the Company had approximately **$32 million** in cash and **$137.0 million** drawn on its **$750.0 million** revolving credit facility[136](index=136&type=chunk) - Leverage ratio (mortgages and notes payable + outstanding preferred stock to undepreciated book value of assets) was **42.5%** as of June 30, 2025[136](index=136&type=chunk) - No debt scheduled to mature prior to 2027, except for a **$200.0 million** unsecured bank term loan maturing in May 2026[140](index=140&type=chunk) - Expected to sell up to **$150 million** of non-core properties during the remainder of 2025[182](index=182&type=chunk) [Critical Accounting Estimates](index=43&type=section&id=Critical%20Accounting%20Estimates) No changes were made to the Company's critical accounting policies during the six months ended June 30, 2025 - No changes were made to critical accounting policies in the six months ended June 30, 2025[184](index=184&type=chunk) [Non-GAAP Information](index=44&type=section&id=Non-GAAP%20Information) Presents non-GAAP financial measures like FFO and NOI, offering a clearer understanding of performance by excluding non-cash items and property sale gains/losses - FFO, FFO available for common stockholders, and FFO per share are non-GAAP metrics considered beneficial for evaluating REIT performance, as they exclude depreciation, amortization, impairments, and gains/losses from property sales[186](index=186&type=chunk) Funds From Operations (FFO) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net income | $19,221 | $64,770 | $119,221 | $91,983 | | FFO | $98,271 | $106,567 | $190,578 | $203,140 | | FFO available for common stockholders | $97,685 | $105,946 | $189,371 | $201,898 | | FFO per share | $0.89 | $0.98 | $1.72 | $1.87 | - NOI is defined as rental and other revenues less rental property and other expenses; Same property NOI and cash NOI are also used as supplemental measures[191](index=191&type=chunk) Same Property Net Operating Income (NOI) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net operating income | $136,945 | $140,179 | $272,294 | $281,019 | | Same property net operating income | $137,938 | $140,940 | $275,996 | $281,775 | | Same property cash net operating income | $133,665 | $136,990 | $265,633 | $273,431 | [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Market risk information as of December 31, 2024, is referenced from the company's 2024 Annual Report on Form 10-K - For market risk information as of December 31, 2024, refer to the 2024 Annual Report on Form 10-K[195](index=195&type=chunk) [Controls and Procedures](index=47&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) The Company and Operating Partnership's disclosure controls were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures for both the Company and the Operating Partnership were effective as of June 30, 2025[197](index=197&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[198](index=198&type=chunk) PART II - OTHER INFORMATION [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Details shares of Common Stock surrendered by employees for tax withholding related to restricted stock vesting in Q2 2025 Shares of Common Stock Surrendered for Tax Withholding (Q2 2025) | Period | Total Number of Shares Purchased | Weighted Average Price Paid per Share | | :----- | :------------------------------- | :------------------------------------ | | April 1 to April 30 | 19 | $29.64 | | May 1 to May 31 | — | — | | June 1 to June 30 | — | — | | Total | 19 | $29.64 | [Exhibits](index=48&type=section&id=ITEM%206.%20EXHIBITS) Lists all exhibits filed with the Form 10-Q, including equity incentive plans, certifications, and XBRL documents - Exhibits include the 2025 Long-Term Equity Incentive Plan, CEO/CFO certifications under Sections 302 and 906 of Sarbanes-Oxley Act for both the Company and Operating Partnership, and Inline XBRL documents[203](index=203&type=chunk) Signatures [Signatures](index=49&type=section&id=Signatures) Contains signatures of authorized officers for Highwoods Properties, Inc. and Highwoods Realty Limited Partnership, certifying the report filing - Report signed by Brendan C. Maiorana, Executive Vice President and Chief Financial Officer, on behalf of Highwoods Properties, Inc. and Highwoods Realty Limited Partnership on July 29, 2025[207](index=207&type=chunk)

Core Insights - Highwoods Properties (HIW) shares have increased by 14.5% over the past three months, outperforming the industry average rise of 5.5% [1] - The company's portfolio is strategically located in high-growth Sun Belt markets, which are expected to benefit from a rising demand for high-quality office spaces as organizations push for return-to-office mandates [1][4] - The net effective rents for HIW in Q1 2025 were reported to be 20% higher than the average of the previous five quarters, indicating strong demand for its properties [5][7] Financial Performance - Analysts have revised the Zacks Consensus Estimate for HIW's 2025 funds from operations (FFO) per share to $3.39, reflecting a positive outlook [2] - The company has a healthy balance sheet with over $700 million in total available liquidity as of March 31, 2025, and no consolidated debt maturities until Q2 2026 [9] Strategic Initiatives - Highwoods is implementing a disciplined capital-recycling strategy, having completed buyouts worth $3.6 billion and dispositions totaling $3.0 billion from 2010 to 2024 [6] - The company has a development pipeline valued at $474 million, which is 62.8% pre-leased and expected to generate over $40 million in incremental annual net operating income (NOI) upon stabilization [8] Market Trends - The demand for office spaces is anticipated to be driven by inbound migration and significant investments from office occupiers in the Sun Belt regions, alongside hiring plans in the company's markets [4] - The recovery in leasing activity and the return of tenants to offices are expected to support the fundamentals of the office real estate market [4][7]

Core Insights - The article discusses the resurgence of office REITs as major cities begin to recover from the pandemic and return to office mandates, highlighting potential investment opportunities in this sector [3][4][5]. Group 1: Market Trends - Major cities like Boston, New York, and San Francisco are experiencing a return to pre-pandemic commuting patterns, which is positively impacting office REITs [3][4]. - Office REITs, previously struggling due to COVID-19, are now seeing renewed interest as companies mandate employees to return to the office [5]. Group 2: Specific REIT Analysis - Alexander's (ALX) has a yield of 8.2% but faces high single-tenant risk, with Bloomberg accounting for nearly 60% of its rental revenue [7][8][9]. - Easterly Government Properties (DEA) has a yield of 8.1% but recently cut its dividend by about one-third, raising concerns about its financial stability [12][14]. - Highwoods Properties (HIW) offers a safer investment with a 6.4% yield and a low FFO payout ratio of 60%, indicating strong dividend coverage [15][16]. - American Assets Trust (AAT) has a yield of 6.7% and has resumed dividend growth after a cut during COVID, with dividends representing 70% of projected 2025 FFO [17][18]. - Brandywine Realty Trust (BDN) has a high yield of 14.4% but is facing challenges due to development projects and declining FFO, raising concerns about its dividend sustainability [19][21].

Core Viewpoint - Highwoods Properties, Inc. is set to release its second quarter 2025 results on July 29, followed by a conference call on July 30 at 11:00 A.M. Eastern time [1]. Company Overview - Highwoods Properties, Inc. is a publicly-traded, fully-integrated office real estate investment trust (REIT) headquartered in Raleigh, focusing on owning, developing, acquiring, leasing, and managing properties in prime business districts across several major cities including Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond, and Tampa [3]. - The company's vision is to lead the evolution of commercial real estate, aiming to create environments that inspire collaboration and achievement among customers and their teams, ultimately delivering greater value to shareholders [3]. Conference Call Details - For US/Canada callers, the conference call can be accessed by dialing (833) 470-1428 with access code 172004, while international callers should dial (404) 975-4839 using the same passcode [2]. - A live webcast of the call will be available on the company's website, and a replay will also be accessible afterward [2]. Contact Information - The Executive Vice President and Chief Financial Officer of Highwoods Properties, Brendan Maiorana, can be contacted via email at brendan.maiorana@highwoods.com or by phone at 919-872-4924 [4].