Q1 2025 Highwoods Properties Inc Earnings Call

Good morning, and thank you for attending today's Highwood properties Q1, 2025 earnings call. My name is Jane might not be a moderator for today I'll ask will be immediately in the presentation portion of the call with an opportunity for questions and answers at the end I'll now like to turn the conference over to our host Brendan Maiorana.

Operator: Good morning and thank you for attending today's Highwoods Properties Q1 2025 earnings call.

Jayla: My name is Jayla and I'll be a moderator for today. All lines will be muted in the presentation portion of the call with an opportunity for questions and answers at the end.

Operator: I'd now like to turn the conference over to our host, Brendan Maiorana. Brendan and Michael.

Speaker Change: Wendy you May proceed.

Brendan Maiorana: Thank you operator, and good morning, everyone. Joining me on the call. This morning are Ted Klink, our Chief Executive Officer, and Brian Leary, Our Chief operating officer for your convenience today's prepared remarks have been posted on the web. If you have not received yesterday's earnings release or supplemental they're both available on the <unk>.

Brendan Maiorana: Thank you, Operator, and good morning, everyone. Joining me on the call this morning are Ted Klinck, our Chief Executive Officer, and Brian Leary, our Chief Operating Officer.

Brendan Maiorana: For your convenience, today's prepared remarks have been posted on the web. If you have not received yesterday's earnings release or supplemental, they're both available on the Investors section of our website at Highwoods.com. On today's call, our review will include non-GAAP measures such as FFO, NOI, and EBITDAIR. The release and supplemental include a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measure.

Speaker Change: <unk> section of our website at <unk> Dot com.

Speaker Change: On today's call. Our review will include non-GAAP measures, such as <unk> NOI and EBIT there the release and supplemental include a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures.

Brendan Maiorana: Forward-looking statements made during today's call are subject to risks and uncertainty. These risks and uncertainties are discussed at length in our press release . as well as our SEC file. As you know, actual events and results can differ materially from these forward-looking statements, and the company does not undertake a duty to update any forward-looking statements.

Speaker Change: Forward looking statements made during today's call are subject to risks and uncertainties. These risks and uncertainties are discussed at length in our press releases as well as our SEC filings as you know actual events and results can differ materially from these forward looking statements and the company does not undertake a duty.

Ted Klink: To update any forward looking statements with that I'll turn the call over to Ted.

Theodore Klinck: With that, I'll turn the call over. Thanks, Brendan. And good morning, everyone. We had a strong quarter executing on our key priorities and delivering solid financial results. Despite rising concern over the macroeconomic outlook and choppiness in the capital markets, we continue to set ourselves up for meaningful long-term growth, while at the same time improving our portfolio quality and delivering financial results that were stronger than our original expectations. First, our investment activity was robust, with the recycling of $145 million of non-core disposition proceeds. and to the $138 million acquisition of Advance Auto Parts Tower, a commute-worthy Class AA building in the vibrant North Hills BBD in Raleigh.

Ted Klink: Thanks, Brendan and good morning, everyone.

Ted Klink: We had a strong quarter executing on our key priorities in delivering solid financial results.

Ted Klink: Despite rising concern over the macro economic outlook and Choppiness in the capital markets. We continue to set ourselves up for meaningful long term growth while at the same time, improving our portfolio quality and delivering financial results that were stronger than our original expectations.

Ted Klink: First our investment activity was robust with the recycling of $145 million of noncore disposition proceeds into the $138 million acquisition of advance auto parts tower, a commute worthy class double a building and the vibrant North Hills Bvd.

Ted Klink: And Raleigh.

Ted Klink: This rotation of capital is a bullseye illustration of our investment objective of selling older capital intensive properties and non bvd locations and rotating into high quality buildings in locations, where people want to live work and play.

Theodore Klinck: This rotation of capital is a bullseye illustration of our investment objective of selling older capital-intensive properties in non-BBD locations and rotating into high-quality buildings in locations where people want to live, work, and play. This acquisition has meaningful long-term growth potential as existing rents are below market for North America. BBD, where we believe market rents will accelerate over the next several years. We now own nearly 650,000 square feet of class AA office in North. with a diverse group of strong customers. Also, this leveraged neutral rotation of capital is immediately accretive to cash. Second, we placed in service 2827 peach.

Ted Klink: This acquisition has meaningful long term growth potential as existing rents are below market for north Hills.

Ted Klink: <unk>, where we believe market rents will accelerate over the next several years.

Ted Klink: We now own nearly 650000 square feet of class a double a office in North Hills with a diverse group of strong customers.

Ted Klink: Also this leverage neutral rotation of capital is immediately accretive to cash flow.

Ted Klink: Second we placed in service 28 27 Peachtree.

Theodore Klinck: 79,135,000 square foot development in the Buckhead BBD of Atlanta, where we hold a 50% interest in a joint venture that developed and owns the property. 2827 Peachtree is 94% leased and 88% occupied. We signed 97,000 square feet of first-gen leases in our development pipeline. 474 million pipe is now 63% lead. up 5% from last. Even after place and in-service, the 94% leased 2827 Peachtree developed. We continue to garner solid interest in these best-in-class projects. which, upon stabilization, are projected to drive 30 million of incremental NOI above our 2025 outlook. And fourth, we lease 700,000 square feet of second gen office.

Ted Klink: $79 million 135000 square foot development in the Buckhead Bvd of Atlanta, where we hold a 50% interest in the joint venture that developed and owns the property.

Ted Klink: 28, 27, Peachtree is 94% leased and 88% occupied.

Ted Klink: Third we signed 97000 square feet in the first Gen leases in our development pipeline.

Ted Klink: Our $474 million pipeline is now 63% leased.

Ted Klink: Up 5% from last quarter, even after placing in service the 94% leased 28 27 Peachtree development.

Ted Klink: We continue to garner solid interest in these best in class projects, which upon stabilization are projected to drive 30 million of incremental NOI above our 2025 outlook.

Ted Klink: Fourth we leased 700000 square feet of second Gen office space, including over 250000 square feet of new leases, plus 43000 square feet of net expansion leases.

Theodore Klinck: including over 250,000 square feet of newly plus 43,000 square feet of net expansion. Leasing economics were strong, with net effective rents more than 20% higher than our prior five-quarter average. Plus, April leasing volumes have accelerated with over 200,000 square feet of new second-gen lease volume in just the first four weeks of the second quarter. Highlighted by a 145,000 square foot lease with a new Highwoods customer at Symphony Place in Nashville. This lease is scheduled to commence Q2 26. and back fills nearly two-thirds of the space from a customer who vacated the building earlier this year.

Ted Klink: Leasing economics were strong with net effective rents more than 20% higher than our prior five quarter average.

Ted Klink: Plus April leasing volumes have accelerated with over 200000 square feet of new second Gen lease volume in just the first four weeks of the second quarter.

Ted Klink: Highlighted by a 145000 square foot lease with a new hi, woods customer at Symphony place in Nashville.

Ted Klink: This lease is scheduled to commence Q2 26 and.

Ted Klink: And backfill nearly two thirds of the space from a customer who vacated the building earlier this year.

Ted Klink: Securing this long term lease coupled with strong interest from others in the market.

Theodore Klinck: Carrying this long-term lease, coupled with strong interest from others in the market, further validates the high-wattizing efforts underway at Symphony Place.

Ted Klink: Further validates the high wood ties and efforts underway at Symphony place.

Ted Klink: During our February call I highlighted several growth drivers for the next few years.

Theodore Klinck: During our February call, I highlighted several growth drivers for the next few years. The first of these is lease-up efforts at four core buildings with current and elevated vacancies. Upon stabilization, these four buildings alone will drive 25 million of NOI growth above our 2025 outlook. With the just announced 145,000 square foot lease at Symphony Place, we have already locked in over 40% of this future upside with leases that have been signed but haven't yet commenced and with strong prospects for additional upsells.

Ted Klink: The first of these is lease up efforts at four core buildings with current elevated vacancy.

Ted Klink: Upon stabilization. These four buildings alone will drive $25 million of NOI growth above our 2025 outlook.

Ted Klink: With the just announced 145000 square foot lease at Symphony place, we have already locked in over 40% of this future upside with leases that have been signed but haven't yet commenced and with strong prospects for additional upside.

Ted Klink: The second growth driver previously highlighted is $10 million of future NOI upside from to 2023 development deliveries that have not yet stabilized Glen Lake three in Raleigh, and granted parks six in Dallas.

Theodore Klinck: The second growth driver previously highlighted is $10 million of future NOI upside from two 2023 development deliveries that have not yet stabilized. Glen Lake 3 in Raleigh and Granite Park 6 in Dallas. With the lease assigned this quarter, we have now locked in over 60% of this future. While we're mindful of the current uncertainties around the macroeconomic environment. We're optimistic as we approach the midpoint of this year, given the level of activity we continue to see across our portfolio and our already executed lease Turning to our quarterly results, we delivered FFO of 83 cents per share and generated healthy cash As expected, our occupancy dipped due to known customer move-outs that we have long communicated.

Ted Klink: With the leases signed this quarter, we have now locked in over 60% of this future upside.

Ted Klink: While we are mindful of the current uncertainties around the macroeconomic environment.

Ted Klink: We're optimistic because we approach the midpoint of this year given the level of activity, we continue to see across our portfolio and are already executed lease deals.

Ted Klink: Turning to our quarterly results, we delivered <unk> of <unk> 83 per share and generated healthy cash flow.

Ted Klink: As expected our occupancy dipped due to known customer move outs that we have long communicated.

Theodore Klinck: We expect to drive occupancy growth over the next few years, given our healthy backlog of signed, but not yet commenced, leases and much more manageable lease roles. With our strong financial performance in Q1, positive outlook for the balance of the year, and a creative acquisition of advanced auto tower, we have raised the midpoint of our 2025 FFO outlook by 4.6%. to a range of $3.31 to $3.47 per share. We continue to actively underwrite new investment. There are still many office owners that face near-term refinancing challenges or simply plan to reduce their allocations to office. which we expect will provide opportunities to deploy capital into additional community worthy properties.

Ted Klink: We expect to drive occupancy growth over the next few years, given our healthy backlog of signed but not yet commenced leases and much more manageable lease roll.

Ted Klink: With our strong financial performance in Q1 positive outlook for the balance of the year and accretive acquisition of advanced Auto tower, we have raised the midpoint of our 2025 <unk> outlook by four.

Ted Klink: To a range of $3 31.

Ted Klink: To $3 47 per share.

Ted Klink: We continue to actively underwrite new investments.

There are still many office owners that face near term refinancing challenges or simply plan to reduce their allocations to office.

Ted Klink: Which we expect will provide opportunities to deploy capital into additional commute worthy properties.

Ted Klink: We are also actively prepping additional noncore assets for sale.

Theodore Klinck: We are also actively prepping additional non-core assets. Since 2019, we have sold over 1.5 billion of non-core properties and recycled the proceeds into higher quality, higher growth, and less capital-intensive commute-worthy office Subs by www.zeoranger.co.uk We expect to continue this.

Ted Klink: Since 2019, we have sold over $1 5 billion of noncore properties and recycle the proceeds into higher quality higher growth and less capital intensive to meet worthy office buildings.

Ted Klink: We expect to continue this strategy.

Given the combination of high construction costs elevated vacancy levels and risk adjusted yield requirements that we believe would make sense for our shareholders.

Theodore Klinck: Given the combination of high construction costs, elevated vacancy levels, and risk-adjusted yield requirements that we believe would make sense for our shareholders, We don't expect to announce any new development projects this year. While spec development deals continue to be difficult to pencil in this environment, for us or anyone else, Your absence creates the opportunity for significant rent growth and high-quality second-gen product as availability dwindles. We are having conversations with a few build-to-suit prospects. with both existing companies in our BBDs and new to market. While these conversations are all in the very early The increase in activity is a good indicator of the health of the office sector.

Ted Klink: We don't expect to announce any new development projects this year.

Ted Klink: While spec development deals continue to be difficult to pencil in this environment for us or anyone else their absence creates the opportunity for significant rent growth and high quality second Gen product is availability dwindles.

Ted Klink: We are having conversations with a few build to suit prospects with both existing companies in our <unk> and new to market users.

Ted Klink: While these conversations are all in the very early stage. The increase in activity is a good indicator of the health of the office sector and.

Theodore Klinck: and illustrates the importance of the workplace.

Ted Klink: And illustrates the importance of the workplace experience.

Ted Klink: In conclusion, we're bullish about the future of high Woods, who are operating in the strongest <unk> in the sunbelt that if continually proven to be the places where talent and companies want to be.

Theodore Klinck: In conclusion, we're bullish about the future of Highwoods. We're operating in the strongest BBDs in the Sunbelt that have continually proven to be the places where talent and companies want We're making significant progress locking in our future organic growth drivers by signing long term leases with strong customers. both in our operating portfolio and in our development pipeline.

Ted Klink: We're making significant progress locking in our future organic growth drivers by signing long term leases with strong customers.

Ted Klink: Both in our operating portfolio and in our development pipeline.

Ted Klink: Finally backed by a strong balance sheet with limited near term maturities and ample liquidity, we are well positioned to execute on our proven strategy of asset recycling and drive our long term growth rate, even higher further strengthen our cash flows and improve our portfolio quality.

Theodore Klinck: Finally, backed by a strong balance sheet with limited near-term maturities and ample liquidity, we are well-positioned to execute on our proven strategy of asset recycling and drive our long-term growth rate even higher. further strengthen our cash flows and improve our portfolio quality.

Ted Klink: Brian.

Brian Leary: Thanks, Tad and good morning, everyone.

Theodore Klinck: Thanks, Ted.

Brian Leary: And good morning, everyone. Our Sunbelt BBD strategy has proven resilient over the past several years, and we believe we're well positioned to continue this outperformance amid the economic uncertainty of government cutbacks, global tariffs, and the potential of a looming recession, just to name a few. We recognize that our markets and business are not sheltered from these headwinds on the whole, but on the margin, we can report that, to date, they have not deterred our customers and prospects from executing leases and committing to office sales. Because of this, our leasing pipeline is full and we've made substantial progress backfilling our long communicated no move outs and pre-leasing our development pipeline.

Brian Leary: Our sunbelt Bvd strategy has proven resilient over the past several years and we believe we're well positioned to continue this outperformance amid the economic uncertainty of government cutbacks global tariffs and the potential of Illumina recession, just to name a few we recognize that our markets and business or not.

Brian Leary: <unk> from these headwinds on the whole.

Brian Leary: On the margin we can report that to date, they have not deterred, our customers and prospects from executing leases and committing to office space.

Brian Leary: Because of this our leasing pipeline is full and we have made substantial progress back filling our long communicated known move outs and pre leasing our development pipeline.

Brian Leary: We completed this volume of work at Strong Leasing Economics for the first quarter. Our team signed 88 deals for a total of 700,000 square feet with expansions, outpacing contractions, 4 to 1. Net effective rents grew to $20.56 with average annual rent escalations of 2.7%. and Gap Rent Growth of $12.8 while our average term of 5.3 years was lower than recent quarters. It includes a number of early as-is renewals that kept lease concessions low and drove strong net effective rent. In addition, activity remains strong across our $474 million development pipeline. As Ted mentioned, we signed 97,000 square feet of first generation leasing.

Brian Leary: We completed this volume of work at strong leasing economics for the first quarter.

Brian Leary: Our team signed 88 deals for a total of 700000 square feet with expansions outpacing contractions 401.

Brian Leary: Net effective rents grew to $20 56 with average annual rent escalations of two 7% and.

Brian Leary: And GAAP rent growth of 12, 8%.

Brian Leary: While our average term of five three years was lower than recent quarters.

Brian Leary: It includes a number of early as is renewals that capital lease concessions low and drove strong net effective rents.

Brian Leary: In addition activity remained strong across our $474 million development pipeline as.

Brian Leary: As Ted mentioned, we signed 97000 square feet.

Brian Leary: First generation leases, including 48000 square feet at Glen Lake III, our mixed use development in Raleigh, which is now 78% leased and 43000 square feet at granite Park sticks or joint venture development with granite properties in Dallas, Plano, Bvd, which is now.

Brian Leary: including 48,000 square feet at Glenlake 3, our mixed-use development in Raleigh, which is now 78% leased. and 43,000 square feet at Granite Park 6, our joint venture development with Granite Properties and Dallas's Plano BBD, which is now 58%. Both of these developments are forecast to stabilize in the first quarter of 2026. and we are pleased with the continued prospect pipeline. During the quarter, we delivered $272 million of development with the completion of 23 springs in Dallas and Midtown East in Tampa. These projects were delivered on time and on budget at a combined 58% pre-lease. As a reminder, we forecast 23 springs to stabilize in early 2028 and Midtown East in mid-2026.

Brian Leary: 58% leased.

Brian Leary: Both of these developments are forecast to stabilize in the first quarter of 2026.

Brian Leary: And we are pleased with the continued prospect pipeline.

Brian Leary: During the quarter, we delivered $272 million of development with the completion of 23 Springs in Dallas, and Midtown East and Tampa.

Brian Leary: These projects were delivered on time and on budget at a combined 58% pre leased.

Brian Leary: As a reminder, we forecast 23 springs to stabilized in early 2028.

Brian Leary: In Midtown East in mid 2026.

Brian Leary: We remain confident in our ability to lease up both of these projects at or before scheduled stabilization. The Sunbelt continues its positive momentum with its talent attractive and open for business environment. The region dominates a list of distinction, such as ULI's Emerging Trends, Markets to Watch and Site Selection Magazine's Best States for Business. With these tailwinds, our markets and BBDs are outperforming national trends, and our portfolio is outperforming locally. In Raleigh, the Milken Institute named the City of Oaks the number one best performing large city in the United highlighting its robust job growth, wage increases, and thriving tech sector.

Brian Leary: We remain confident in our ability to lease up both of these projects at or before scheduled stabilization.

Brian Leary: The Sunbelt continues its positive momentum with its talent attractive and open for business environment.

Brian Leary: The region dominates the list of distinction such as utilize emerging trends markets to watch and site selection magazine's best state for business.

Brian Leary: With these tailwind our markets and bvd are outperforming national trends and our portfolio is outperforming locally.

Brian Leary: In Raleigh, the Milken Institute named <unk>, The number one best performing large city in the United States, highlighting its robust job growth wage increases and thriving tech sector here.

Brian Leary: Here, we own almost six million square feet and sign the most volume in the quarter with 316,000 square feet of second generation. CBRE noted that for the first time since 2011, 14 years ago, the construction pipeline is This dearth of new supply benefits our recently delivered Glenlake III development and the balance of our best-in-class portfolio.

Brian Leary: Here, we own almost 6 million square feet and signed the most volume in the quarter with 316000 square feet of second generation space.

Speaker Change: CBRE noted that for the first time since 2011 14 years ago. The construction pipeline is empty.

Speaker Change: This dearth of new supply benefits, our recently delivered <unk> three development and the balance of our best in class portfolio.

Brian Leary: Moving South, Tampa, where J.L.A. highlighted the downtown submarket's vacancy rate at 9.8%. making it the lowest office vacancy among major U.S. CBDs. During the quarter, the region heralded Foot Locker's Fortune 500 relocation out of New York and major lease signings by Fisher Investments and by GEICO, who with their lease announcement committed to adding 1,000 jobs at its new company. Our recently delivered 143,000 square foot Midtown East mixed use JV development is 39% lease. welcome its first customer move-in and has prospects for the balance of the building. With this completion, there are no buildings under construction in the Tampa Market.

Speaker Change: Moving south Tampa, where <unk> highlighted the downtown Submarkets vacancy rate at nine 8%.

Speaker Change: Making it the lowest office vacancy among major U S GBDS.

Speaker Change: During the quarter the region heralded foot lockers fortune 500 relocation out of New York.

Speaker Change: And major lease signings by Fisher investments and by Geico, who with their lease announcements committed to adding 1000 jobs at its new campus.

Speaker Change: Our recently delivered 143000 square foot Midtown East mixed use JV development is 39% leased.

Speaker Change: Welcome its first customer move in and has prospects for the balance of the building.

Speaker Change: With this completion there are no buildings under construction in the Tampa market.

Speaker Change: Across our operating portfolio the Tampa team signed 18 second generation leases in the quarter for a total of 95000 square feet.

Brian Leary: Across our operating portfolio, the Tampa team signed 18 second-generation leases in the quarter for a total of 95,000 square feet. of which almost half represented newly. rounding out our markets in In just a few months after a long communicated move out, we have backfilled over two-thirds of this vacancy with 145,000 square foot customer new to Highwoods portfolio at our Symphony Place Tower downtown. The market response to our hybridizing plans, which are now underway, has been exceptional and has generated healthy additional This progress, coupled with the prospect pipeline at Westwood South and Park West in the Brentwood and Cool Springs BBDs respectively, provides confidence in the long-term embedded NOI growth potential of the existing portfolio.

Speaker Change: Of which almost half represented new leases.

Speaker Change: Rounding out our markets in Nashville, and just a few months after a long communicated move out we have backfield over two thirds of this vacancy with 145000 square foot customer new to high which portfolio at our Symphony place tower downtown.

Speaker Change: The market response to our <unk> plans, which are now underway has been exceptional and has generated healthy additional interest.

Speaker Change: This progress coupled with the prospect pipeline at Westwood, South and park West and the Brentwood and Cool Springs Bvd's, respectively provides confidence in the long term embedded NOI growth potential of the existing portfolio.

Brian Leary: We are not naive to the reality that economic uncertainty is a headwind to decision-making. But in the present, our current leasing activity and pipeline bears little evidence to the expected cause and effect. I would provide the caveat that all meaningful construction scopes and bids are now qualified but not yet escalating with regard to tariffs. If and when that chicken comes home to roost, the question is, will construction costs for office fit ups be able to bear the brunt of any increases, or will potential escalations be mitigated with construction pipelines at all time lows? Time will tell.

Speaker Change: We are not naive to the reality that economic uncertainty is a headwind to decision, making but in the present, our current leasing activity and pipeline bears a little evidence to the expected cause and effect.

Speaker Change: I would provide the caveat that all meaningful construction scopes and bids are now qualified by not yet escalating with regard to tariffs.

Speaker Change: If and when that chicken comes home to roost. The question is well construction cost for office fit ups be able to bear the brunt of any increases.

Speaker Change: Our will potential escalations be mitigated with construction pipelines at all time lows.

Speaker Change: Time will tell.

Speaker Change: In the meantime, our leasing pipeline is healthy and we are pleased by the progress of our development portfolio. We are confident that we will continue to drive organic growth by leaning in with our exceptional people.

Brian Leary: In the meantime, our leasing pipeline is healthy, and we are pleased by the progress of our development portfolio.

Brian Leary: We are confident that we will continue to drive organic growth by leaning in with our exceptional people, portfolio, and positioning.

Brendan Maiorana: Folio and positioning Brendan.

Brendan Maiorana: Brendan? Thanks, Brian.

Brendan Maiorana: Thanks, Brian in the first quarter, we delivered net income of $97 4 million or <unk> 91 per share and <unk> of $91 7 million or <unk> 83 per share the quarter included a large property sale gain from our disposition in Tampa that was included in net income.

Brendan Maiorana: In the first quarter, we delivered net income of $97.4 million, or $0.91 per share, and FFO of $91.7 million, or $0.83 per share.

Brendan Maiorana: The quarter included a large property sale gain from our disposition in Tampa that was included in net income, but not included in FFO. During the quarter, we received a term fee for a net $1.8 million as part of an early giveback, which was factored into our original FFO outlook. This fee will be partially offset by downtime in 2025 before rent commences with a new Highwoods customer who fully backfilled this early giveback plus took additional space. Otherwise, there were no unusual items in the quarter.

Brendan Maiorana: Not included in <unk> during.

Brendan Maiorana: During the quarter, we received a term fee for a net $1 $8 million as part of an early give back which was factored into our original <unk> outlook. This fee will be partially offset by downtime in 2025 before rent commences with a new <unk> customer who fully backfill thats URL.

Brendan Maiorana: Get back plus took additional space.

Brendan Maiorana: Otherwise there were no unusual items in the quarter.

Brendan Maiorana: We are pleased with our first quarter financial results, which demonstrate the resiliency of our operations and cash flow. Even more consequential were the quarter's investment activity and leasing. which positions us for future growth.

Brendan Maiorana: We are pleased with our first quarter financial results, which demonstrate the resiliency of our operations and cash flows even more consequential, where the quarters investment activity and leasing results, which positions us for future growth.

Our balance sheet remains in excellent shape, we didn't issue any shares on the ATM and had $710 million of available liquidity at the end of the quarter.

Brendan Maiorana: Our balance sheet remains in exce- We didn't issue any shares on the ATM and had $710 million of available liquidity at the end of the. We only have approximately $125 million left to fund on our development pipeline and no debt maturities until May of 2020. As Ted mentioned, we have updated our 2025 FFO outlook to $3.31 to $3.47 per share, which equates to a 4 cent increase at the mid There are always a few moving parts when we update our Outlook, but at a high level, three cents is attributable to partial year impact from the Advanced Auto Parts Tower Acquisition, and one cent is from Operation.

Brendan Maiorana: We only have approximately $125 million left to fund on our development pipeline and no debt maturities until may of 2026.

As Ted mentioned, we have updated our 2025 <unk> outlook to $3 31 to $3 47 per share, which equates to a <unk> <unk> increase at the midpoint. There are always a few moving parts when we update our outlook, but at a high level <unk> is attributable to par.

Shall year impact from the advanced auto parts of tower acquisition and one is from operations.

Brendan Maiorana: In our initial 2025 outlook in February we provided detail around what our same property and occupancy outlook would be excluding four operating properties, where vacancy is elevated this year.

Brendan Maiorana: In our initial 2025 outlook in February, we provided detail around what our same property and occupancy outlook would be excluding four operating properties where vacancy is elevated this year. Similar to our overall same-property and occupancy outlooks, our view of this adjusted same-property growth outlook hasn't changed since February, nor have our expectations for occupancy. We offer this additional color in February, given the outsized impact of a few select assets to our overall NOI growth and occupancy.

Brendan Maiorana: Similar to our overall same property in occupancy outlook. Our view of this adjusted same property growth outlook Hasnt changed since February nor have our expectations for occupancy. We offered this additional color in February given the outsized impact of a few select assets to our overall NOI.

Brendan Maiorana: High growth and occupancy metrics. However, our preference is to present results on the full portfolio rather than on an adjusted basis that excludes certain properties. Therefore, we removed these adjusted metrics and our updated outlook and don't plan to include them in future updates.

Brendan Maiorana: However, our preference is to present results on the full portfolio rather than on an adjusted basis that excludes certain properties. Therefore, we remove these adjusted metrics in our updated outlook and don't plan to include them in future updates.

Brendan Maiorana: We're off to a strong start so far in 2025, locking in some of our forecasted organic growth. Of the $25 million of NOI growth upside we have on the four core operating assets Ted discussed, we have signed but not yet commenced the leases for over 40% of this total. The biggest component of this future growth is a combined 250,000 square feet across two at Two Alliance Center and Symphony Place with both leases projected to start mid to late Q2 2026. Our Glen Lake 3 and Granite Park 6 developments are projected to generate over $10 million of additional upside compared to our 2025 outlook, with over 60% already secured via leases that are signed but haven't yet commenced.

Speaker Change: We're off to a strong start so far in 2025 locking in some of our forecasted organic growth potential of the $25 million of NOI growth upside we have on the four core operating asset Ted discussed, we have signed but not yet commenced leases for over 40% of this tone.

Speaker Change: It'll the biggest component of this future growth as a combined 250000 square feet across two leases at two Alliance Center and Symphony place with both leases projected to start mid to late Q2 2026.

Speaker Change: Our Glen Lake three in granite Park, six developments are projected to generate over $10 million of additional upside compared to our 2025 outlook with over 60% already secured via leases that are signed but haven't yet commenced.

Brendan Maiorana: Most of this $6 million of annual upside will be in place by the middle of 2026. while we've provided a roadmap of the upside potential from these six specific properties. It's important to note we still expect additional growth in occupancy and NOI from the remainder of our operating portfolio over the next few years, plus meaningful NOI from the two development properties we delivered this quarter.

Speaker Change: Most of the $6 million of annual upside will be in place by the middle of 2026.

While we have provided a roadmap of the upside potential from these six specific properties. It is important to note we still expect additional growth in <unk>.

Speaker Change: Occupancy and NOI from the remainder of our operating portfolio over the next few years plus meaningful NOI from the two development properties, we delivered this quarter.

Brendan Maiorana: Lastly, I'd like to touch on our asset recycling performance and future outlook. Ted mentioned since 2019. sold over $1.5 billion of mostly non-core buildings and land and acquired $1.8 billion of commute-worthy property. On average, the dispositions carried a nominal exit cap rate roughly 50 basis points higher than the year one acquisition cap. While this rotation of capital caused a modest headwind to short-term FFO, it has significantly strengthened our cash flows, both in the near and long term, and is a large component that drove over $150 million of cumulative free cash flow above our healthy dividend payout since the onset of the pandemic.

Speaker Change: Lastly, I'd like to touch on our asset recycling performance and future outlook.

Ted Klink: As Ted mentioned since 2019, we've sold over $1 $5 billion.

Ted Klink: Of mostly non core buildings and land and acquired $1 8 billion.

Ted Klink: Of commute worthy properties on average the dispositions carried a nominal exit cap rate roughly 50 basis points higher than the year, one acquisition cap rates. While this rotation of capital caused a modest headwind to short term <unk>. It has significantly strengthened our cash flows both in the near and long.

Ted Klink: Long term and has a large component that drove over $150 million of cumulative free cash flow above our healthy dividend payout since the onset of the pandemic.

Brendan Maiorana: As you know, the office business is CapEx intensive, which is why we're focused on driving our risk-adjusted cash flows higher over the long We expect our asset recycling efforts will continue to strengthen our cash. and improve our portfolio quality, thereby making our NOI more resilient over the long term, all while maintaining a low levered balance.

Ted Klink: As you know the office business is Capex intensive which is why we're focused on driving our risk adjusted cash flows higher over the long term.

Ted Klink: We expect our asset recycling efforts will continue to strengthen our cash flows and improve our portfolio quality, thereby making our NOI more resilient over the long term all while maintaining a low levered balance sheet.

Brendan Maiorana: To wrap up, we're ahead of plan executing on our embedded growth drivers with potential to secure more of this upside over the next few quarters. Further, our asset recycling playbook has a demonstrated track record of success and we're encouraged about future investment opportunities. We believe we have the markets, portfolio, balance sheet, and team to realize the meaningful growth potential available to us over the next few years.

Ted Klink: To wrap up we're ahead of plan executing on our embedded growth drivers with potential to secure more of this upside over the next few quarters further our asset recycling playbook has a demonstrated track record of success and we're encouraged about future investment opportunities. We believe we have the market.

Ted Klink: Leo balance sheet and team to realize the meaningful growth potential available to us over the next few years.

Operator: Operator, we are now ready for At this time, if you would like to ask a question, it is star followed by 1 on your telephone keypad. If for any reason you would like to remove that question, it is star followed by 2. Again, to ask a question, it is star 1.

Ted Klink: Operator, we are now ready for questions.

Speaker Change: At this time, if you would like to ask a question in the star followed by one on your telephone keypad. If for any reason you would like to remove that question. It is star followed by Tim again to ask a question. It is star one as a reminder, if you are using a speakerphone. Please remember to pickup your handset before asking a question I'll pause briefly ask questions registered.

Operator: As a reminder, if you are using a speakerphone, please remember to pick up your headset before asking a question. I'll pause briefly here if questions are registered.

Speaker Change: Our first question comes from Rob Stevenson with accompanying Jami, Rob Your line is now open.

Rob Stevenson: Our first question comes from Rob Stevenson with the company Jamie. Rob, your line is now open. Thank you. Good morning, guys.

Rob Stevenson: Thank you good morning, guys.

Speaker Change: Ted would you do any significant level of incremental dispositions from here without a corresponding acquisition lined up or are those separate discussions in terms of your thoughts.

Brendan Maiorana: Any significant level of incremental dispositions from here without a corresponding acquisition lined up or are those separate discussions? Hey, Rob. Good morning. Sure. No, I think as you saw in our guidance, we've left, we've closed the obviously $145 million sale. We've got another up to 150 of additional dispos. We've got a couple assets that are out in the market right now, dispos, nothing of size, but we are prepping a few others to bring to market. I think all of these are going to be second half 25 closings. So yeah, we're going to, whether we find something or not, we're going to continue to recycle out of non-core assets.

Rob Stevenson: Hey, Rob good morning.

Rob Stevenson: Sure No I think.

Speaker Change: As you saw in our guidance. We've left we've closed obviously $145 million sale, we've got another.

Speaker Change: <unk> 150 of additional dispose we've got a couple of assets that are out in the market right now dispose nothing of size, but we are prepping, a few others to bring to market.

Speaker Change: I think all of these are going to be second half 'twenty five closings.

Speaker Change: So, yes, we're going to whether we find something or not we're going to continue to recycle out of non core assets.

Brendan Maiorana: We want to create some dry power.

Speaker Change: We want to create some dry powder.

Speaker Change: Okay and then.

Brendan Maiorana: Okay, and then Given the macro uncertainty, are you guys sensing any reluctance? to engage on the 2026 expirations early here, where they want to wait and see whether or not we're in a recession, etc., before they make commitments to maintain or how much space they would downsize or upsize. Yeah, Rob, I think that's a great question. We ask that internally all the time of our leasing agents. And we have to a person, we've not seen any of that we haven't seen any impact. Obviously, we're seeing the terrorist and economic uncertainty, maybe have an investor confidence, maybe impact investor confidence, but in our business and our leasing, we haven't lost any deals, or deal flow hasn't slowed down or tour activity hasn't slowed down.

Speaker Change: EBIT given the macro uncertainty, but are you guys sensing any reluctance from tenants to engage on the 2026 explorations early here, where they want to wait and see whether or not we're in a recession et cetera, before they make commitments to maintain or how much space. They would downsize our upsize.

Speaker Change: Yeah, Rob I think that's a great question, we asked that internally all the time of our leasing agents and.

Speaker Change: To a person we have not seen any of that we havent see any impact obviously, we are seeing the tariffs and economic uncertainty maybe haven't investor confidence.

Speaker Change: The impact of investor confidence, but in our business and our leasing we haven't lost any deals or deal flow hasn't slowed down our tour activity hasnt slowed down.

Brendan Maiorana: So we have not seen that. But we are you know, we asked ourselves that as well.

Speaker Change: So we have not seen that.

Speaker Change: Well, we are we ask ourselves that as well.

Speaker Change: Okay.

Brendan Maiorana: Okay, and then last one for me is the second quarter 26 occupancy on the two alliance center and symphony place leases due to expiration of their existing leases? Or is there a more extensive timeframe that's going to take you guys to do the Now we're in process of doing the improvements now. So the customer, as you know, I think you said Alliance Center. So the the former customer moved out last fall. And then the new customer backfilled of a big law firm. They'll take occupancy in the second quarter of next year. So they're in process of starting to build that now.

Speaker Change: And then lastly.

Speaker Change: Last one for me is the second quarter 'twenty six occupancy on the two Alliance center and Symphony place leases due to exploration of their existing leases or is there a more extensive timeframe that's going to take you guys to do the improvements there.

Speaker Change: Now we're in the process of doing the improvements now so the customer thank.

Speaker Change: Thank you said Alliance center.

Speaker Change: So the.

Speaker Change: Former customer moved out last fall and then the new customer a backfill of a big law firm.

Speaker Change: It will take occupancy in the second quarter of next year. So they are in process.

Speaker Change: Their build out now.

Brendan Maiorana: Okay. It Brendan how significant is the capex.

Brendan Maiorana: Okay, and Brendan, how significant is the CapEx? and T.I.'s for the for these leasing that you've done thus far. Is it meaningful in terms of the spend for 2025 here or is it just as per year? How heavy is that? Yeah. Rob, it's not unusual given the sense that it's a long-term lease and we've done the one sizable lease in Nashville is a long-term lease for 145,000 square feet, so that TDI is very much kind of in line with what you would probably expect in terms of market. And then the other new leasing that we disclosed, another over 50,000 square feet, is also kind of in line with what you would expect.

Brendan Maiorana: <unk> for the for these leasing that you've done thus far in April.

Brendan Maiorana: Is it meaningful in terms of the spend for 2025 here or is it just as per usual.

Brendan Maiorana: How heavy.

Rob Stevenson: Yes rod.

Brendan Maiorana: No.

Brendan Maiorana: Usual given that it's a long term lease and we've done that one the one sizable leads in Nashville as a long term lease for 145000 square feet is that Ti is very much kind of in line with what you would probably expect in terms of market and then the other new leasing that we disclosed at another over 50000.

Brendan Maiorana: It is also kind of in line with with what.

Brendan Maiorana: What you would expect.

Brendan Maiorana: But I would say I think our expectation is you will see leasing capital higher over the balance of this year and likely into 2026 as well, just given the occupancy bill that we expect and all of the leasing that we've done. So I think we expect leasing capital to be higher in terms of spend for the next several quarters.

Brendan Maiorana: But I would say I think our expectation is you will see leasing capital higher over the next the balance of this year and likely into 2026 as well just given the occupancy build that we expect in all of the leasing that we've done. So I think we expect leasing capital to be higher in terms of spend.

Brendan Maiorana: <unk>.

Brendan Maiorana: For the next several quarters.

Speaker Change: Okay. That's helpful. Thanks, guys I appreciate the time this morning.

Brendan Maiorana: Okay, that's helpful. Thanks, guys. Appreciate the time.

Vikram Malhotra: Our next question comes from Vikram Malhotra with the company Mizuho. Vikram, your line is now open. Thanks so much for doing the question.

Speaker Change: Our next question comes from Vikram Malhotra with accompanying Mizuho Crum. Your line is now open.

Vikram Malhotra: Thanks, so much for taking the question Brendan maybe I can just start.

Brendan Maiorana: Brendan, maybe I can just start. You earlier referenced sort of crossing occupancy and more so SFO growth kind of in the, I think it was either first quarter or first half. Can you just give us a sense of how you think, how the cadence will go based on the puts and takes as you outlined in the new guide? Yeah, Vikram, morning and good question. It's what we've talked about, and I would say, you know, things aren't too much different in terms of the updated outlook relative to what we provided initially in February, is we thought first half would be low, both in terms of occupancy, and then generally, FFO sort of tracks occupancy without some unusual items on either the financing side or investment side.

Vikram Malhotra: You earlier referenced sort of crossing occupancy and more successful growth kind of in the I think it was either first quarter or first half can you just give me give us a sense of how you think how the cadence will go based on.

Vikram Malhotra: The puts and takes that you all kind of in the New guide.

Speaker Change: Yes vikram.

Vikram Malhotra: And question, Yes, what we've talked about and I would say things aren't too much different in terms of the updated outlook relative to what we provided initially in February as we thought.

Speaker Change: First half would be low both in terms of.

Speaker Change: Occupancy and then generally <unk> sort of tracks occupancy without some unusual items.

Speaker Change: Nancy side, our investment side, and then will grow kind of late in the year and I think that that still holds there is probably a little bit more movement.

Brendan Maiorana: And then we'll grow kind of late in the year. And I think that that still holds, there's probably a little bit more movement in the occupancy trends over maybe the second and third quarter than what we expected in February. But I still think that that year end outlook of what we talked about last quarter between 86 and 87%, I think it's still a good guide for year end.

Speaker Change: The occupancy trends for maybe the second and third quarter than what we expected in February but I still think that that year end outlook.

Speaker Change: What we talked about last quarter between 86%, 87% I think it's still a good guide for year end.

Brendan Maiorana: Okay, and just to clarify, what level of new leasing have you baked in to kind of hit your occupancy guide? Um, there's, so there's So new leasing that is required. There's some spec leasing that is required to get to that year-end occupancy guide. But I would say what's in 2025 is fairly limited. I think as you're thinking about the occupancy ramp and the level of new leasing activity that gets done over the balance of 25, most of that, if we're able to be successful and lease up, is gonna drive occupancy higher in 2026. And so what we've kind of talked about as a good marker for driving occupancy higher over time is usually somewhere in the neighborhood of 300,000 square feet of new per quarter on average, puts us well-positioned, we think, to drive occupancy higher.

Speaker Change: Okay, and just to clarify.

Speaker Change: What level of new leasing.

Speaker Change: Have you baked into kind of hit your occupancy guide.

Speaker Change: They're ours so.

Speaker Change: There is.

Speaker Change: So new leasing that is required there is some spec leasing that is required to get to that year end occupancy guide, but I would say what's in 2025 is fairly limited I think as you're thinking about the occupancy ramp and the level of new leasing activity that gets done over.

Speaker Change: The balance of 25, most of that if we're able to be successful in lease up is going to drive occupancy higher in 2026, and so what we've kind of talked about as good marker for driving occupancy higher over time, it's usually somewhere in the neighborhood.

Speaker Change: 300000 square feet of new per quarter on average puts us well positioned we think to drive occupancy higher and I think if we're able to do that during 2025, it should position us well to grow occupancy as we migrate throughout 2026.

Brendan Maiorana: And I think if we're able to do that during 2025, it should position us well to grow occupancy as we migrate throughout 2026.

Brendan Maiorana: Okay, great.

Speaker Change: Okay, Great and then just last one I guess big picture I mean, with all the tariff and economic concerns now any update you can share from your conversations with kind of the local economic downturn, that's sort of the gatekeepers for.

Theodore Klinck: And just last one, I guess, Ted, big picture, I mean, with all the tariffs and economic concerns now, any update you can share from your conversations with kind of the local economic councils that are sort of the gatekeepers for migration or expansion into into your market? Sure, Vikram. It's very positive. I think the last couple of years, while they've been very busy, it's largely been more manufacturing and industrial-related inquiries in migration from out of state, but we're starting to see more office inquiries, which I think is fantastic. None of the ones... Well, there's a few big ones out there that are poking around, that project names are multi-market searches that just take a long time, but there's a lot of singles and doubles out there that might be a floor or two floors.

Speaker Change: Migration or expansion into into your markets.

Speaker Change: Yeah.

Speaker Change: Sure Vikram, it's very positive.

Speaker Change: I think the last couple of years.

Speaker Change: While we've been very busy it's largely been more manufacturing and industrial related.

Speaker Change: Inquiries from migration from out of state, but we're starting to see more office inquiries.

Speaker Change: I think it was fantastic none of the ones, where there's a few big ones out there.

Speaker Change: Poking around that project names or multi market.

Speaker Change: Multi market searches it just take a long time, but theres a lot of singles and doubles out there that might be a floor two floors.

Blaine Heck: So I'm encouraged, just in general, by the activity and what we're hearing from the Economic Development Next question comes from Blaine Heck with the company Wells Fargo.

Speaker Change: So I'm encouraged it just in general by the activity and what we're hearing from the economic development folks.

Speaker Change: Next question comes from Blaine Heck with the company Wells Fargo blame your line is now open.

Blaine Heck: Blaine, your line is open. Great, thanks. Good morning. I guess just digging in a little bit more on your tenant conversations. Have you seen any tenants shift kind of relocation plans or expansion plans with an increased press preference to sign short term renewals in place to kind of wait out some of the uncertainty in the market?

Blaine Heck: Great. Thanks, Good morning, I guess, just digging in a little bit more on your tenant conversations have you seen any tenants shifts kind of relocation plans or expansion plans with an increased press preference to sign short term renewals in place to kind of wait out some of the uncertainty in the market or.

Brian Leary: Or are you not even Hey Blaine, it's Brian, I can take the first shot at that. generally no. We still always have a few folks who might be consolidating their company, moving in and looking to short term, three years to kind of figure that out. But that's not at a specific response to necessarily, at least what they're telling us, the economy. But, you know, our wall that came through on this latest amount of leasing and the commitment in Nashville Symphony Place is a long term one. So we're getting some pretty good conviction from our customers and prospects around term, with the fundamental belief that they want their people together under one roof and creating value.

Speaker Change: Or are you not even seeing that yet.

Brian Leary: Hey, Glenn it's Brian I can take the first shot at that.

Speaker Change: Generally no Houston, we still always have a few folks who might be consolidating their company moving in and looking at short term.

Speaker Change: Three years to kind of figure that out, but that's not a specific response to necessarily at least what they are telling us the economy.

Speaker Change: Well if it came through on this latest.

Speaker Change: Amount of leasing in the commitment.

Speaker Change: Nashville Symphony Places a long term one so we're getting.

Speaker Change: Some pretty good conviction from our customers and prospects around term.

Speaker Change: The fundamental belief that they want their people together under one roof and created value.

Brian Leary: And then, look, the only thing I would add is, you know, our expansions are outnumbering our contractions, you know, four to one this quarter, and we had 20 expansions, only five contractions, and that 20, just the count, it's the second highest count we've had in over five years since 2019. So, our customers are expanding, they're growing, and they are willing to make space commitments. One other little nuance I'll add, Blaine, is that the pipeline for new construction, new deliveries is basically stopped, but for maybe two markets, Dallas and maybe Charlotte and then a small building elsewhere.

Speaker Change: And then look the only thing I would add is.

Speaker Change: Our expansions are outnumbering are contractions 401.

Speaker Change: This quarter, we had 20.

Speaker Change: <unk> expansion is only five contractions in that 'twenty just accounts the second highest count we've had in over five years. Since 2019, so our customers are expanding their growing and they are willing to take make space commitments. One other little nuance I'll add blayne is that.

Speaker Change: The pipeline for new construction, new deliveries has basically stopped but for maybe.

Speaker Change: Two markets, Dallas and maybe Charlotte.

Small building elsewhere, and so I think what we're seeing from many customers is realizing there are options will be dwindling, particularly on best in class.

Brian Leary: And so, I think what we're seeing from many customers is realizing their options will be dwindling, particularly on best-in-class, commute-worthy space, and so they feel like the idea of making the decision sooner, locking something in, maybe locking even build-out pricing and lease pricing before, if and when things change, that's basically what we're seeing.

Speaker Change: Or the space and so.

Speaker Change: Feel like the idea of making the decision sooner locking something and maybe like even build out pricing and lease pricing before if and when things change.

Speaker Change: Basically what we're seeing.

Vikram Malhotra: Okay, great. Thanks for that color, Brian and Ted.

Blaine Heck: Okay, great. Thanks for that color, Brian and Ted.

Brendan Maiorana: And just to follow up on one of Rob's questions, Brendan, you talked about elevated leasing capital over the next several quarters. How do you see that impacting AFFO or cash flow and kind of related to that? Can you just touch on your comfort with the dividend level? Yeah, maybe I'll start and let Ted follow up. So, yeah, as you mentioned, I think, firstly, what I would say is, as we talked about in the paired remarks, we're really focused on driving risk-adjusted free cash flow higher over time. So I think that's been the focus of the company for a long time, and we continue to think about growing the business by growing risk-adjusted free cash flow.

Speaker Change: And just a follow up I wanted to ask questions. Brandon you talked about elevated leasing capital over the next several quarters, how do you see that impacting <unk> or cash flow and kind of related to that can you just touch on your comfort with the dividend level here.

Speaker Change: Yes, maybe I'll start and let Ted follow up so as you mentioned I think firstly, what I would say is as we talked about in our prepared remarks were really focused on driving risk adjusted free cash flow higher over time. So I think that's been the focus of the company for a long time.

Ted Klink: And we continue to think about growing the business by growing risk adjusted free cash flow, but with that we recognize that we're in a cyclical and capex intensive business and capital spend is going to it's going to be lumpy from quarter to quarter and year to year. So we really program that end to just thinking about the business over.

Brendan Maiorana: But with that, we recognize that we're in a cyclical and capex-intensive business, and capital spend is going to be lumpy from quarter to quarter and year to year. So we really program that in to just thinking about the business over the cycle, and that goes into both balance sheet strategy, but then also planning capital projects or highwitizing projects as we think about reinvesting within the portfolio. But with all of that, we understand that capital is going to be lumpy, and it's going to cause cash flow to be lumpy, and so we just program that in.

Speaker Change: The cycle.

Speaker Change: That goes into both balance sheet strategy, but then also planning capital projects.

Speaker Change: <unk> projects as we think about reinvesting within the portfolio, but with all of that we understand that capital is going to be lumpy and it's going to cause cash flow to be lumpy and so we just program that Ed.

Brendan Maiorana: And so we think that cash flow will be lower over the next couple of years than it has been over the past few years, but that's just a normal part of the business, and that's going to happen as you're driving occupancy higher, because obviously you're spending that leasing capital up front before you get the corresponding revenue as leases commence. The only thing I would add, Blaine, is, you know, Brendan mentioned it in his prepared remarks that since the onset of the pandemic, we've generated over $150 million of free cash flow above our dividend. So it is going to be lumpy with a big move out to release the space, but we feel comfortable with where we are.

Speaker Change: So we think that cash.

Speaker Change: Cash flow will be lower over the next couple of years than it has been over the past few years.

Speaker Change: That's just a normal part of the business and Thats going to happen as youre driving occupancy higher because obviously youre spending that leasing capital upfront before you get the corresponding revenue as leases commence.

Blaine Heck: The only thing I would add Blaine.

Speaker Change: <unk> mentioned it in his prepared remarks.

Speaker Change: Since the onset of the pandemic, we generate over $150 million of free cash flow above our dividend. So it is going to be lumpy with a big move outs to release the space, but we feel comfortable with where we are.

Brendan Maiorana: Yeah, and Blaine, sorry, I forgot to mention, just the $150 million in cash flow, that's a true free cash flow metric. I think you mentioned AFFO. When we really think about generating cash flow for the business, we think about what you would consider growth capital in that number because that's a normal part of the business and we typically reinvest within our portfolio. So that's included in that number. So even with that capital factored in, we still generated over $150 million of retained cash flow above the dividend over the past few years.

Speaker Change: Sorry, I forgot to mention.

$150 million in cash flow, that's a true free cash flow metric. So I think you mentioned <unk> when we really think about generating cash flow for the business. We think about what you would consider growth capital.

Speaker Change: In that number because that's a normal part of the business and we would typically reinvest within our portfolio. So that's included in that number so even with that capital factored in we still generated over $150 million of retained cash flow above the dividend over the past few years.

Speaker Change: Okay very helpful. Thanks, guys.

Brendan Maiorana: Okay, very helpful. Thanks, guys.

Operator: Our next question comes from Peter Ingram.

Peter Abramowitz: Our next question comes from Peter Abramowitz with the company Jeffries. Peter, your line is now open. Yes, thank you for taking the question. I just wonder if you could comment on the rents on the new lease at Symphony Place and mark the market, how it compares to where Bassberry's rents are. Yeah, it's essentially flat, Peter. Okay, got it. That's helpful.

Abraham: Abraham with where the company Jefferies. Peter Your line is now open.

Peter Ingram: Yes. Thank you for taking the question just wondering if you could comment on the rents on the new lease at Symphony place and Mark to market, how it compares to where bass Berry rents were.

Peter Ingram: Yes, it's essentially flat Peter.

Peter Ingram: Okay got it that's helpful and then elsewhere on the core four so you've made the progress here at Symphony.

Theodore Klinck: And then elsewhere on the core four. So you've made the progress here at Symphony and some progress down to Alliance Center. Just wondering if you can comment on sort of the other assets, where sort of tenant requirements you're seeing on the space, how much leasing coverage you have? Sure. Yeah, you alluded to, obviously, Backfield down in the Two Alliance Center, a vast majority of the Novello space. We touched on Pinnacle Symphony Place, Backfield, Bassbury, 68% of that. The other ones are Westwood South, it's a building in Nashville. So that's a, we had a, earlier this year, we had 128,000 square foot customer vacate.

Peter Ingram: And some progress down at two Alliance Center I'm, just wondering if you could comment on sort of the.

Peter Ingram: The other assets.

Peter Ingram: Sort of tenant.

Speaker Change: Tenant requirements Youre seeing in that space, how much leasing coverage you have would be helpful.

Peter Ingram: Sure.

Peter Ingram: You alluded to obviously backfill down two alliance center, a vast majority of novellus space.

Peter Ingram: <unk>.

Peter Ingram: Critical Symphony place.

Peter Ingram: Backfill bass Berry, 68% of that the other ones are Westwood south its ability to Nashville.

Peter Ingram: We had a earlier this year, we had 128000 square foot customer vacate.

Theodore Klinck: And we've got a lot of prospects for that space. We've got a full building user, we've got a user that would take 70 to 80% of the building. And then we've also got some smaller guys, we're sort of just putting, sort of waiting to see how these other two play out. So we're very confident and excited about the activity we have at Westwood South. And then down at Cool Springs Five, the former activity building, you know, we've leased 40% of that. And we've got prospects for, I'll tell you, probably more than the remaining vacancy there.

Peter Ingram: And we've got a lot of prospects for that space. We've got a full building user we've got to use or they would take 70% to 80% of the building and then we've also got some smaller guys were sort of just putting sort of waiting to see how these other two two to play out. So we're very confident and excited about the activity.

Peter Ingram: We have at Westwood, South and then down at.

Peter Ingram: Cool Springs, five to form activity building, we've leased 40% of that and we've got prospects for I would tell you probably more than the remaining vacancy there again nothing signed yet but the tour activity just the <unk>. The response, we're getting to the highway Deicing efforts down there is really spurred demand. So we're.

Theodore Klinck: Again, nothing signed yet, but the tour activity, just the highwoodizing, the response we're getting to the highwoodizing efforts down there has really spurred demand. So we're incredibly excited and optimistic about the activity we're seeing across the board in the core four. That's helpful, Ted.

Peter Ingram: Incredibly excited and optimistic about.

Peter Ingram: The activity, we're seeing across the board in the core four.

Peter Ingram: That's helpful.

Theodore Klinck: And one more, if I can. So you touched on sort of, you know, it would be naive to think you won't see an impact to your conversations eventually from sort of the uncertainty that's been introduced to the macro outlook, but you're not necessarily seeing it yet. So that's helpful on, I guess, the leasing side. Curious, kind of what you're seeing just more broadly across your markets on the capital market and transaction side, and sort of how has, does it seem like deal velocity has changed much since Liberation Day? And kind of just general thoughts on the transaction market?

Peter Ingram: One more if I can so you touched on.

Peter Ingram: Sort of.

Peter Ingram: It would be naive to think you won't see an impact.

Peter Ingram: To your conversations eventually from for the uncertainty that's been introduced to the macro outlook, but youre not necessarily seeing it yet.

Peter Ingram: So thats helpful. On the leasing side curious kind of what Youre seeing just more broadly across your markets on the capital market and transaction side.

Peter Ingram: And sort of.

Peter Ingram: Does it seem like deal velocity has changed much.

Peter Ingram: Since Liberation day.

Peter Ingram: And kind of just general thoughts on the transaction market.

Peter Ingram: In the Sun belt.

Peter Ingram: Sure.

Theodore Klinck: Sure. Look, the office capital markets, I think we're starting to see them open up a little bit. Certainly, when the calendar turned this year, we have seen it. The debt capital markets are starting to open up, and that helps deal flow, right? CMBS is open to office now. Certainly, the SASB market within CMBS is very, very active. But you're also starting to see some life companies and some banks come back and start looking at office loans, which is great. Then on the equity capital side, look, there's been a ton of dry powder the last several years, looking to invest.

Peter Ingram: The office capital markets I think we're starting to see him open up a little bit.

Peter Ingram: Certainly when the calendar turned.

Peter Ingram: This year, we have seen at the debt capital markets are starting to open up and that helps deal flow right.

Peter Ingram: <unk> has opened a office now certainly the SaaS market within <unk> is very very active but youre also starting to see some life companies and some banks come back and start looking at office loans.

Peter Ingram: Great and then on the equity capital side look there's been a ton of dry powder. The last several years are looking to invest I think office there'll be more constructive on now starting to underwrite office now so I think that's all good for the office capital markets I.

Theodore Klinck: I think office, they're being more constructive on now. We're starting to underwrite office now. So, I think that's all good for the office capital markets. I think you've seen a few deals close. I think you're going to see a few more. So, I think the office capital markets are thawing, and I'm optimistic you're going to see a higher transaction volume this year than we have the last few years. Alright, that's helpful. Thanks for the time.

Peter Ingram: I think you've seen a few deals close I think youre going to see a few more so I think there's also capital markets a thorn in I'm optimistic youre going to see a higher transaction volume. This year, because we had the last few years.

Peter Ingram: Okay.

Peter Ingram: Alright Thats helpful. Thanks for the time.

Peter Ingram: Question comes from Nick Tillman with accompanied there Nick Your line is now open.

Nick Thillman: Question comes from Nick Thillman with the company Baird. Nick, your line is now open. Hey, good morning, guys. So congrats on the partial backfill at Symphony Place. I guess that's the second large law firm you guys kind of landed within the portfolio in recent months. So what's the behavior kind of seen there? Are they are they downsizing from their initial footprint? And I guess what's really appealing about your sort of assets in these markets? Is it lack of availability? Or just location?

Nick Tillman: Hey, good morning, guys. So congrats on the partial backfill at Symphony place I guess, that's the second large law firm you guys kind of landed within the portfolio in recent months so.

What's the behavior, you're kind of seeing there are they are they downsizing from their initial footprints and I guess, what's really appealing about your sort of assets in these markets is it lack of availability.

Nick Tillman: Or just location a little bit more commentary there would be helpful.

Brian Leary: A little bit more commentary there would be helpful. Thank you.

Nick Tillman: Hey, Nick it's Brian I'll take the first shot on your very specific question about kind of space needs an appetite.

Brian Leary: Hey, Nick, it's Brian. I'll take the first shot on your very specific question about kind of space needs and appetite. And I don't want to speak for our new customer, but they spoke to the local paper overnight. And what they said is that while they are taking less square feet, they are growing as a firm, because this is a much more efficient location for them and how they're now working. So they are growing. With attorneys and team mates, but actually taking less square feet, technically, from where they were and to where they're coming with us from Symphony Place.

Nick Tillman: <unk>.

Speaker Change: I don't want to speak for our new customer, but they spoke to the local paper overnight.

Nick Tillman: They said is that.

Nick Tillman: While they are taking less square feet. They are growing as a firm because this is a much more efficient location for them and how they are now working so they are growing with attorneys and teammates, but actually taking less square feet technically from where they were in to where they are coming.

Nick Tillman: With us from 70 place.

Brian Leary: So that's, you know, there's also kind of M&A activity across a number of these law firms, folks moving around, folks getting bigger. In fact, the customer that we recruited to Symphony Place is sort of a mainstay, long known pillar of the community in Nashville, but is now part of an international top 20 law firm on the planet. So that's a kind of a good thing.

Nick Tillman: So thats Theres also kind of M&A activity across a number of these.

Nick Tillman: Firms folks moving around folks getting bigger.

Nick Tillman: Back to the customer that we recruited just Stephanie places sort of.

Nick Tillman: A mainstay long known.

Nick Tillman: Pillar of the community in Nashville, but is now part of an international comp.

Nick Tillman: 20 law firm on the planet.

Nick Tillman: And have a good thing.

Brendan Maiorana: Yeah, the only thing I would just add to that is we've seen, as Ted and Brian mentioned earlier, we've seen good expansion activity across the portfolio. So the largest lease that we did in the quarter was a large financial services user who expanded during the quarter. And then we had another Fortune 500 company who was new, came in, new to market growth. So while there's been two prominent deals that are law firm deals within our portfolio in the core four, if you I think we've seen a pretty broad-based growth across our customer base. No, that's very helpful.

Speaker Change: Yes, the only thing I would just add to that is we've seen Ted and Bryan mentioned earlier, we've seen good expansion activity across the portfolio. So the largest lease that we did in the quarter was a large financial services user who expanded during the quarter and then we had another fortune 500 company, who was new came in new to market.

Speaker Change: Growth so while there's been two prominent deals that our law firm deals within our portfolio and the core four if you will I think we've seen a pretty broad based.

Speaker Change: Growth across our customer base.

Speaker Change: No. That's very helpful. And then I just wanted to touch a little bit on 2026, you said 2025 retention a little bit lower but 26, you felt like that the renewal activity was going to be there and pretty high retention. So is that still the case.

Brendan Maiorana: And then I just wanted to touch a little bit on 2026. You said 2025 retention a little bit lower, but 26, you felt like that the renewal activity was going to be there and pretty high retention. So is that still the case? And is our kind of spec leasing overall kind of tracking with your initial outlook for 25 as well? Yes, I would say so with respect to 25, I think we're kind of right on track with what we thought, probably early part of the early part of the year, I'd say maybe even a little bit ahead.

Speaker Change: Our kind of spec leasing overall kind of tracking with your initial outlook for 'twenty five as well.

Speaker Change: Yes, I would say so with respect to <unk> 25, I think we're kind of right on track with what we thought probably early part of early part of the year and maybe even a little bit ahead.

Speaker Change: And then.

Speaker Change: I think what that means in terms of the renewal activity for the conversations that we're having on 2026 I think that that was all feel constructive as well and I think we will be back to more normalized levels of retention in 2026 relative to kind of where we've been late in 'twenty four and then in 'twenty five.

Brendan Maiorana: And then I think what that means in terms of the renewal activity for the conversations that we're having on 2026, I think that those all feel constructive as well. And I think we'll be back to more normalized levels of retention in 2026, relative to kind of where we've been late in 24, and then in 25. So I think that positions us, given the limited role that we have, and then more normalized levels of retention, and then the new leasing volume, I think that creates a good environment where we ought to be able to grow occupancy as we migrate.

Speaker Change: That positions us given the limited roll that we have and then more normalized levels of retention and then the new leasing volume I think that creates a good environment, where we ought to be able to grow occupancy as we migrate through 26.

Speaker Change: Very helpful. Thank you.

Brendan Maiorana: Very helpful, thank you.

Speaker Change: Okay.

Dov Brzezinski: Our next question comes from doing Brzezinski with accompany Green Street. Your line is now open.

Dylan Burzinski: Our next question comes from Dylan Burzinski with the company Green Streak. Dylan, your line is now open. Hey, guys. Thanks for taking the question. I guess just sort of going back to Peter's line of questioning around capital markets changes. Ben, I think you mentioned having, you know, smaller assets in the market today. Have you seen any change as it relates to the pricing expectations or buyer appetite since sort of April 2, Liberation Day? Not at all, Dylan. Again, we don't have a lot of data points. We don't have anything of size out in the market.

Speaker Change: Hey, guys. Thanks for taking the question I guess, just going back to Peter's line of questioning around capital market changes.

Dov Brzezinski: I think you mentioned having.

Dov Brzezinski: Smaller assets in the market today have you seen any change as it relates to the pricing expectations or buyer appetite.

Dov Brzezinski: April 2nd collaboration day.

Dov Brzezinski: Not at all.

Dov Brzezinski: Again, we don't have a lot of data points on our because we don't have anything of size Outland market. We've got a couple of small buildings, but there's plenty of investor interest in a couple of buildings, we have out there, but it wouldn't surprise me just to your point again.

Theodore Klinck: We've got a couple of small buildings, but there's plenty of investor interest in the couple of buildings we have out there. But it wouldn't surprise me, just to your point, again, we'll have to wait and see the next 30, 60 days or whatever. But to date, we haven't really seen an appetite. We're having people continue to call us, whether it be users or local buyers that are interested in assets. Some of our assets we don't even have on the market, which is similar to what happened last year with Baycare. We sold those buildings. That was an inbound call.

Dov Brzezinski: We'll have to wait and see the next 30 60 days or whatever but to date, we haven't really seen an appetite we're having people continue to call us whether it be users or local buyers that are interested in assets. Some of our assets. We don't even have on the market, which is so similar to what happened last year with Baker and we sold those buildings that was in <unk>.

Dov Brzezinski: Bound call. So we're continuing to feel calls from users as well as potential buyers that are looking to transact. So theres a lot of money on the sidelines looking to invest in office buildings. These days.

Theodore Klinck: So we're continuing to field calls from users as well as potential buyers that are looking to transact. So I think there's a lot of money on the sidelines that's looking to invest in office buildings these days.

Speaker Change: Great I appreciate those comments, Curt and I guess just going back.

Theodore Klinck: Great, appreciate those comments, Ted. And I guess just going back to, you know, the demand side not changing as well. But are you starting to see any cracks on, you know, free rent periods moving higher, TI packages being higher? I know you guys commented on just net effective in the quarter being higher than they were five quarters ago. But any any change in the last several weeks, as it relates to just leasing economics? You know, not really. In fact, I would tell you the concessions in many of our submarkets are starting to level off. I think we've probably hit peak TIs and peak free rent.

Speaker Change: The demand side, not changing as well, but are you starting to see any cracks.

Speaker Change: On free rent periods, maybe higher Ti packages being higher I know you guys commented on just net effective in the quarter being higher than they were five quarters ago, but any any change in the last several weeks as it relates to just leasing economics.

Speaker Change: No not really and in fact I would tell you the concessions in many of our Submarkets are starting to level off I think we've probably hit peak.

Speaker Change: <unk> peak free rent so depending on the Submarket.

Theodore Klinck: So, depending on the submarket, and in some cases, the specific deal and location, you know, you're starting to see concessions subside a little bit even. So, which is, again, that's encouraging for the overall office market, especially given there's no new deliveries in the next couple of years or very few. We think that things are going to tighten up. Vacancy rates have probably peaked in our markets, and concessions, we think, they have as well. So, we're encouraged about the overall fundamental picture improving over the next couple of years as well.

Speaker Change: In some cases, the specific deal and location.

Speaker Change: Youre starting to see a concession subside a little bit even.

Speaker Change: So which is again, that's encouraging for the overall office market, especially given there is no new deliveries in the next couple of years of very few.

Speaker Change: Thank the things are going to tighten up vacancy rates are probably peaked in our markets and concessions, we think they have as well so.

Speaker Change: We are encouraged about the overall fundamental picture improving over the next couple of years as well.

Speaker Change: Perfect. Thanks.

Theodore Klinck: Perfect. Thanks.

Speaker Change: Our next question comes from Matteo.

Omotayo Okunia: And the next question comes from Omotayo Okunia with the company Deutsche Bank.

Speaker Change: Neil with the company Deutsche Bank your.

Omotayo Okunia: Omotayo, your line is now open. Yes, good morning, everyone. Again, congrats on a solid quarter and a great momentum there. Wanted to understand guidance a little bit better. You talked about a one-cent increase from operations, but there really are no big changes to your guidance assumption. So trying to understand maybe something's happening on the non-same-store pool. And then the three cents associated with acquisition. Again, I think your initial guidance had up to 300 million of acquisitions. You've done 138 so far, calling for a potential additional 150. So acquisition guidance doesn't seem like it's changed much as well, but you're expecting a three-cent pickup on that end as well.

Speaker Change: Your line is now open.

Yes, good morning, everyone again, congrats on the.

Speaker Change: Solid quarter.

Speaker Change: Great momentum there.

Speaker Change: Wanted to understand guidance, a little bit better you talked about a 1% increase from operation.

Speaker Change: But really no.

Speaker Change: No big changes to your guidance assumption, so trying to understand maybe the non same store pool and then the.

Speaker Change: Associated with the acquisition.

Speaker Change: Again, I think Youll Guy and he said guidance at up to $300 million of acquisition.

Speaker Change: 138, so far calling for potential additional 150.

Speaker Change: Acquisition guidance doesn't seem like it's too much as well, but you're expecting that to pick.

Speaker Change: Up.

Speaker Change: On that end as well. So if you can just help us kind of understand the force sensing that would be helpful.

Brendan Maiorana: So if you could just help us kind of understand the four-cent increase, that would be.

Speaker Change: Hey, Tayo, it's Brandon I'll take that thanks for the question. So just firstly on the acquisition. So we provide the guidance in terms of color on acquisition activity, but we don't include that in the <unk> number.

Brendan Maiorana: Yeah, hey Tayo, it's Brendan. I'll take that. Thanks for the question. So just firstly, on the acquisition, so we provide the guidance in terms of color on acquisition activity, but we don't include that in the FFO number. And so what happened with the February outlook is we had sold the assets in Tampa, that $145 million. So that was that dilution, if you will, was kind of in that number, but we hadn't closed on Advanced Auto Parts Tower. We closed on that a month or so after we had provided that initial outlook. So the closing of that, then that obviously goes into the number, and that's $0.03 there if you just take, you know, roughly nine months of ownership in that asset relative to the cost of capital to pay for that.

Speaker Change: And so what happened with the February outlook as we had sold the assets in Tampa that $145 million. So that was that dilution. If you will was kind of in that number but we hadn't closed on advance auto parts tower, we closed on that at a month or so after we had provided that initial outlook. So the closing of that.

Speaker Change: Obviously it goes into the number in that three sets there if you just.

Speaker Change: Take roughly nine months of ownership in that asset relative to the cost of capital too.

Speaker Change: Pay for that.

Brendan Maiorana: And then the penny of better operations. I mean, could you move the numbers around a little bit in terms of the metrics? But, you know, we've got a 200 basis point range on same store, you know, that's $10, $12 million of kind of play in there. I didn't think it was kind of updating those numbers, same with occupancy. What we did move up, and really this kind of goes maybe to your question a little bit is, you saw the straight line number move up a couple million bucks. So really, you kind of have some of that is just in play there as well.

Speaker Change: And then the penny of better operations.

Speaker Change: I mean could you move the numbers around a little bit in terms of the metrics sure, but we've got at 200 basis point range on same store.

Speaker Change: $10 million to $12 million of kind of play in there I didn't think it was kind of updating those numbers same with occupancy what we did move up and really this kind of goes maybe to your question a little bit as you saw the straight line number move up a couple million Bucks. So really you kind of have some of that is just in play there as well so.

Brendan Maiorana: So it doesn't impact cash, same property, and why, which is where we are, but we did take the same property number up a little bit. And there's a variety of reasons for that, but a bunch of stuff moves around. But I think the general parameters of same store guide, occupancy guide, not much really has changed there. Gotcha.

Speaker Change: It doesn't impact cash same property NOI, which is where we are but but we did take that same property number up a little bit and there is a variety of reasons for that but but stuff moves around but I think the general parameters of same store guide occupancy guy not much really has changed there.

Speaker Change: Gotcha that's helpful. Thank you.

Omotayo Okunia: That's helpful. Thank you.

Speaker Change: Our next question comes from Ronald Camden with accompanying Morgan Stanley. Your line is now open.

Ronald Kamdem: Our next question comes from Ronald Kamdem with the company Morgan Stanley. Ronald, your line is now open. Hey, just two quick ones for me. I think one on the, you know, just the potential additional dispositions and acquisitions not included in guidance. I know you talked about. but any any updated thoughts on the Pittsburgh assets? https://www.youtube.com.access.com Sure.

Ronald Camden: Hey, just two quick ones for me I think one on the.

Just the potential additional dispositions and acquisitions not included in guidance I know you talked about.

Some dispositions being prep, but any any updated thoughts on the Pittsburgh assets and what your thinking is there.

Ronald Camden: There would be helpful and similarly on the acquisition side is it is it all speculative at this point or are there sort of deals that.

Ronald Camden: Guys are sort of looking evaluating clothing or not thanks.

Ronald Camden: Yeah.

Ronald Camden: Sure Hey, Ron.

Theodore Klinck: Hey, Ron. First on Pittsburgh, really no update on Pittsburgh. You know, we continue to monitor the situation just like we have the last couple of years. And I think that when the capital markets open up more for large assets like the ones we own, And, you know, we're going to find the right time to sell his assets so really no update there. And then on the acquisition front, you know, we're underwriting stuff where pencils... You know, we're underwriting various opportunities, but really nothing to talk about. And, you know, we'll just see how things play out.

Ronald Camden: First on Pittsburgh really no update on Pittsburgh.

Ronald Camden: We continue to monitor the situation just like we have the last couple of years.

Ronald Camden: When the capital markets open up more for large.

Ronald Camden: Assets like the ones we own.

Ronald Camden: We'll be we'll go and find the right time to sell those assets. So really no new update there and then on the acquisition front.

Ronald Camden: We're underwriting stuff, where our pencils or.

Ronald Camden: We're underwriting various opportunities, but really nothing to talk about.

Ronald Camden: And we'll just see how things play out but.

Brendan Maiorana: But it's just nice to have acquisition opportunities that are out there right now, but really nothing to talk about. And then my second one was just on the cadence for the same store, you know, the midpoint is 3%, which is where you sort of were in one queue, should we be expecting sort of a dip in two queue and then a recovery in the back half of the year? Just how should we think about how that's going to trend? Yeah, Ron, it's Brendan. Good question. Yeah, I think it's likely to be, if you go back and look at last year, right, we were higher in Q2, and then higher again in Q3.

Ronald Camden: It's just nice to have.

Ronald Camden: Acquisition opportunities that are out there right now, but really nothing to talk about.

Ronald Camden: Great and then my second.

Ronald Camden: One was just on the cadence for the same store.

Ronald Camden: The midpoint is 3%, which is where you sort of where in <unk> should we be expecting sort of a dip in <unk> and then a recovery in the back half of the year just.

Ronald Camden: How should we think about how thats going to trend.

Brendan Maiorana: Yes, Brian It's Brendan good question, Yes, I think it's likely to be.

Speaker Change: If you go back and look at last year right. We were higher in Q2, and then higher again in Q3, so obviously anniversarying against those prior quarters is it challenging top so I would expect it to be weak in Q2 and weak in Q3, and then as we had occupancy down in Q4.

Brendan Maiorana: So obviously, anniversary against those prior quarters is a challenging top. So I would expect it to be weak in Q2 and weak in Q3. And then, as we had occupancy down in Q4 last year, I think we'll, we'll do better on a relative basis in Q4 of this year.

Brendan Maiorana: Last year, I think we'll do better on.

Speaker Change: Relative basis in Q4 of this year, so I think thats it.

Brendan Maiorana: So I think that's, you know, in terms of expectations on same property guidance, I think that's a good, good way to think about it.

Speaker Change: Terms of expectations on same property guidance I think that's a good way to think about it.

Speaker Change: Great. Thanks, so much.

Speaker Change: Our next question comes from Seth <unk> with company City Seth Your line is now open.

Seth Burgey: Our next question comes from Seth Burgey with the company City. Seth, your line is now open. Hi, thanks for taking my question. I just kind of want to go back to some of the discussion around acquisitions. You know, how is kind of the uncertainty out there? Has that changed kind of the yields or IRRs you guys are underwriting to? And then, you know, are there any markets you're kind of looking, you would look to kind of grow in or any color that would be helpful? Sure. Hey, Seth. Look, I don't think necessarily uncertainty is impacting us a whole lot.

Speaker Change: Hi, Thanks for taking my question I, just kind of wanted to go back to some of the discussion around acquisitions.

Speaker Change: How is kind of the uncertainty out there does that change kind of the yields or IRR. As you guys are underwriting to and then.

Speaker Change: Are there any markets you're kind of looking you would look to kind of grow in or.

Speaker Change: Any color there would be helpful as well.

Seth: Sure Hey, Seth.

Speaker Change: Look I don't think necessarily uncertainty is impacting us a whole lot.

Theodore Klinck: We look at the fundamentals when we underwrite deals, whether it's a core, core plus, value add opportunity. We look at the sub-market and what kind of rent growth can we get? What kind of lease up can we have if there's vacant space? So there's a lot of levers that go into coming up with our overall underwriting assumptions. But I don't think we've changed a whole lot in the last, last 30 days or so. It just, but it's very micro as we look at the asset in the sub-market. Or the second part. Oh, and I'm sorry, Seth, I'm marking the second part.

Speaker Change: Look at the fundamentals when we underwrite deals whether it's a core core plus value add opportunity. We look at the sub market and what kind of rent growth can we get what kind of lease up can we have those vacant space. So there's a lot of levers that go into coming up with our overall underwriting assumptions, so but I don't think we've.

Speaker Change: Changed a whole lot in the last 30 days or so just but it's very micro as we look at the asset in the Submarket.

Speaker Change: The second part.

Seth: Good morning, I am sorry, Seth on Marcus on the second part.

Theodore Klinck: Yeah, second part of the markets. Look, we've entered Charlotte five years ago, Dallas three years ago. So I think we like our footprint right now.

Seth: Yes, the second part of the markets look we've entered Charlotte five years ago, Dallas three years ago. So I think we like our footprint right now we poke around other markets, but we're sort of pretty pleased with the markets. We're in right now.

Theodore Klinck: You know, we poke around other markets, but we're sort of pretty pleased with the markets we're in right Great, thanks.

Seth: Great. Thanks.

Speaker Change: No no more questions in queue again, if you'd like to ask a question. It is still followed by one on your telephone keypad.

Operator: There are no more questions. Register in queue. Again, if you would like to ask a question, it is star followed by 1 on your telephone keypad. All right, doesn't look like we have any additional questions.

Speaker Change: Yes.

Speaker Change: Alright, it doesn't look like we have any additional questions. So thank you all for joining the call today. Thanks for your interest in <unk>.

Operator: So thank you all for joining the call today. Thanks for your interest in Highwoods. We look forward to seeing everybody in Nairi in early June. Thank you.

Speaker Change: We look forward to seeing everybody at NAREIT.

Speaker Change: In early June thank you.

Speaker Change: That will conclude today's conference call. Thank you for your participation and enjoy the rest of your day.

Operator: That will conclude today's conference call. Thank you for your participation and enjoy the rest of your day.