Q2 2026 Highwoods Properties Inc

July 29, 2026

Speaker #1: Good morning and welcome to the HIGHWOODS Properties second quarter 2026 earnings call. All participants are on a listen-only mode. After the speaker's remarks, we'll conduct a question-and-answer session.

Operator: Good morning, and welcome to the Highwoods Properties Q2 2026 Earnings Call. All participants are in a listen-only mode. After the speaker's marks, we'll conduct a question and answer session. After time, you'll need to press star followed by the number on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Brendan Maiorana, Executive Vice President and Chief Financial Officer. Thank you. Please go ahead.

Speaker #1: You'll need to press star followed by the number 1 on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Brendan Maiorana.

Speaker #1: Executive Vice President and Chief Financial Officer. Thank you. Please go ahead.

Speaker #2: 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: Thank you operator. Good morning, everyone. Joining me on the call this morning are Ted Klinck, 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 investors section of our website at highwoods.com. On today's call, our review will include non-GAAP measures such as FFO, NOI, and EBITDARE. The release and supplemental include a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures. 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.

Speaker #2: 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.

Speaker #2: On today's call, our review will include non-GAAP measures such as FFO, NOI, and EBITDA. The release and supplemental include a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures.

Speaker #2: 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.

Speaker #2: 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.

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

Speaker #2: With that, I'll turn the call over to Ted.

Speaker #3: Thanks, Brendan, and good morning, everyone. We had another excellent quarter delivering strong financial and operating results. An executing on our key long-term initiatives. Let me start with six key highlights.

Ted Klinck: Thanks, Brendan, and good morning, everyone. We had another excellent quarter, delivering strong financial and operating results and executing on our key long-term initiatives. Let me start with six key highlights. First, leasing volume was healthy, with over 1 million square feet of second gen signings, including 326,000 square feet of new leases. We signed 63,000 square feet of first gen leases in our development pipeline. Second, rent growth continued upward with cash rent spreads over 3% and GAAP rent spreads over 20%. Plus, our net effective rents were 8% higher than our prior 5-quarter average and the second highest in our company's history. Third, our occupancy increased by 70 basis points sequentially, or 110 basis points when adjusting for properties owned and in service for the entirety of the Q2.

Speaker #3: First, leasing volume was healthy, with over 1 million square feet a second-gen signings. Including 326,000 square feet of new leases. We signed 63,000 square feet of first-gen leases in our development pipeline.

Speaker #3: Second, rent growth continued upward with cash rent spreads over 3% and GAAP rent spreads over 20%. Plus, our net effective rents were 8% higher than our prior five-quarter average in the second highest in our company's history.

Speaker #3: Third, our occupancy increased by 70 basis points sequentially, or 110 basis points when adjusting for properties owned and in service for the entirety of the second quarter.

Speaker #3: We expect occupancy will continue to improve as we move into the second half of the year. Fourth, our development pipeline now consists only of 23 springs and uptown Dallas, where we increased the lease rate to 93%, up 10 percentage points during the quarter, and where we only have 28 million of projected spend to bring this property to stabilization.

Ted Klinck: We expect occupancy will continue to improve as we move into the H2 of the year. Fourth, our development pipeline now consists only of 23Springs in Uptown Dallas, where we increased the lease rate to 93%, up 10 percentage points during the quarter, and where we only have $28 million of projected spend to bring this property to stabilization. Given strong leasing, we've accelerated the projected stabilization date of 23Springs by 9 months, from the Q1 2028 to the Q2 2027. Plus, rents are meaningfully higher than original underwriting. Fifth, we made significant progress pruning our portfolio and replenishing our dry powder for future investments. We sold nearly $260 million of properties in the Q2 and expect to close on an additional $74 million of non-core dispositions over the next few weeks.

Speaker #3: Given strong leasing, we have accelerated the projected stabilization date of 23 Springs by nine months, from the first quarter of 2028 to the second quarter of 2027.

Speaker #3: Plus, rents are meaningfully higher than original underwriting. Fifth, we made significant progress pruning our portfolio and replenishing our dry powder for future investments. We sold nearly $260 million of properties in the second quarter, and expect to close on an additional $74 million of non-core dispositions over the next few weeks.

Speaker #3: This will bring our disposition total to 375 million thus far in 2026. And sixth, we continue to advance discussions on potential new investment opportunities, mostly around build-a-suit or substantially pre-lease development projects.

Ted Klinck: This will bring our disposition total to $375 million thus far in 2026. Sixth, we continue to advance discussions on potential new investment opportunities, mostly around build a suit or substantially pre-leased development projects. We have growing confidence that we'll have new development announcements later this year and into next year that will generate attractive risk-adjusted returns and replenish our future growth engine. This body of work over the past several quarters sets the stage for a significantly improved portfolio with an even stronger balance sheet than we currently have, all while delivering steady growth in earnings and cash flow over the foreseeable future. Turning to Sunbelt office dynamics, we believe our portfolio is well-positioned to deliver outsized rent growth given the lack of new supply currently under construction and dwindling blocks of high-quality space in BBD locations.

Speaker #3: We have growing confidence that we'll have new development announcements later this year and into next year, that will generate attractive, risk-adjusted returns, and replenish our future growth engine.

Speaker #3: This body of work over the past several quarters sets the stage for a significantly improved portfolio, with an even stronger balance sheet than we currently have—all while delivering steady growth in earnings and cash flow over the foreseeable future.

Speaker #3: Turning to Sunbelt Office Dynamics, we believe our portfolio is well-positioned to deliver outsized rent growth, given the lack of new supply currently under construction, and dwindling blocks of high-quality space in BBD locations.

Speaker #3: Simply put, existing customers and new prospects don't have a lot of options when seeking commute-worthy office space. We're pushing rents across most of our BBDs and buildings, and believe this dynamic, combined with occupancy growth, will drive meaningful upside in NOI over the next few years.

Ted Klinck: Simply put, existing customers and new prospects don't have a lot of options when seeking commute-worthy office space. We're pushing rents across most of our BBDs and buildings and believe this dynamic, combined with occupancy growth, will drive meaningful upside in NOI over the next few years. To this end, we estimate vacancy rates across high-quality buildings in our core BBDs are at least 5% lower than the stated overall vacancy rates for these sub-markets. CBRE recently published a study highlighting prime office vacancy is 640 basis points lower than non-prime office, which is the widest spread since CBRE began tracking this metric. While a rising tide is likely to eventually buoy rent economics across a broad range of office product, current market dynamics are driving pricing power at commute-worthy buildings in the strongest BBDs across the Sun Belt. Turning to investment activity.

Speaker #3: To this end, we estimate vacancy rates across high-quality buildings in our core BBDs are at least 5% lower than the stated overall vacancy rates for these submarkets.

Speaker #3: CBRE recently published a study highlighting prime office vacancy at a 640 basis points lower than non-prime office, which is the widest spread since CBRE began tracking this metric.

Speaker #3: While a rising tide is likely to eventually buoy rent economics across a broad range of office products, current market dynamics are driving pricing power at commute-worthy buildings in the strongest BBDs across the Sunbelt.

Speaker #3: Turning to investment activity, we generated disposition proceeds of $260 million during the quarter, consisting of the sale of Bridgestone Tower in Nashville, and a non-core land parcel that we owned with a JV partner in Richmond.

Ted Klinck: We generated disposition proceeds of $260 million during the quarter, consisting of the sale of Bridgestone Tower in Nashville and a non-core land parcel that we owned with a JV partner in Richmond. Bridgestone Tower is an excellent building in a BBD location that we developed and delivered in 2017. The tower is 100% occupied with over 11 years of lease term and annual rent bumps well below average for our portfolio. Essentially, we swapped Bridgestone Tower for 600 South Tryon in Charlotte, a building we acquired late last year that is 8 years younger for a total investment of $30 million less, with $1 million more in NOI upside upon stabilization, higher annual rent bumps, longer weighted average lease term, and a diversified rent roll.

Speaker #3: Bridgestone Tower is an excellent building in a BBD location that we developed and delivered in 2017. The tower is 100% occupied with over 11 years of lease term, and annual rent bumps well below average for our portfolio.

Speaker #3: Essentially, we swapped Bridgestone Tower for 600 South Tryon in Charlotte, a building we acquired late last year, that is 8 years younger, for a total investment of $30 million less, with $1 million more in NOI upside upon stabilization, higher annual rent bumps, longer weighted average lease term, and a diversified rent role.

Speaker #3: We expect to close an additional $74 million of non-core dispositions in the next few, including building in the Century Center in Atlanta, a $6 billion portfolio in Richmond.

Ted Klinck: We expect to close an additional $74 million of non-core dispositions in the next few weeks, including a fully leased building in the Century Center in Atlanta, a 6-building portfolio in Richmond. These sales will bring our year-to-date disposition total to $375 million. We have several more assets currently in the market for sale at various stages and now expect to close at least an additional $100 million, and maybe as much as $300 million by the end of the year. These potential sales include a combination of non-core buildings and land. With regard to acquisitions, as a reminder, we have the option to acquire an additional 40% interest in Block 83 in Raleigh for $85 million, and have included this at the low end of our acquisition outlook for the balance of the year.

Speaker #3: These sales will bring our year-to-date disposition total to 375 million. We have several more assets currently in the market for sale, at various stages, and now expect to close at least an additional 100 million and maybe as much as 300 million, by the end of the year.

Speaker #3: These potential sales include a combination of non-core buildings and land. With regard to acquisitions, as a reminder, we have the option to acquire an additional 40% interest in Block 83 in Raleigh for $85 million, and have included this at the low end of our acquisition outlook for the balance of the year.

Speaker #3: Last quarter, I mentioned we are starting to see inquiries for build-a-suit and highly pre-lease development opportunities. These conversations have continued to future development announcements.

Ted Klinck: Last quarter, I mentioned we are starting to see inquiries for build to suit and highly pre-leased development opportunities. These conversations have continued to advance, giving us confidence around future development announcements. These opportunities are all in existing core markets, some with potential development partners, and some on company-owned land. As a result of these conversations, we now expect to announce at least $100 million of new development during the remainder of the year and potentially as much as $400 million. Turning to the quarter. We delivered FFO of $0.90 per share, which included $0.04 of land gains. Our occupancy improved, and given the strong leasing that we have completed in the H1 of the year, we expect occupancy will continue to march higher in the H2 of the year.

Speaker #3: These opportunities are all in existing core markets, some with potential development partners and some on company-owned land. As a result of these conversations, we now expect to announce at least $100 million of new development during the remainder of the year, and potentially as much as $400 million.

Speaker #3: Turning to the quarter, we delivered FFO of 90 cents per share, which included 4 cents of land gains. Our occupancy improved, and given the strong leasing that we have completed in the first half of the year, we expect occupancy will continue to march higher in the second half of the year.

Speaker #3: Based on our strong results year to date, and our confidence for the remaining two quarters, we have increased our 2026 FFO outlook to a range of $3.46 to $3.70 per share, which equates to $3.58 at the midpoint—an increase of $0.04 per share.

Ted Klinck: Based on our strong results year to date and confidence for the remaining two quarters, we have increased our 2026 FFO outlook to a range of $3.46 to $3.70 per share, which equates to $3.58 at the midpoint, an increase of $0.04 per share. Excluding land sale gains, our range is up $0.01 per share, despite $0.04 per share of dilution from higher than expected dispositions without reinvestment of excess cash proceeds. Given the meaningful dry powder we now have on the balance sheet, combined with a positive outlook for NOI growth across our portfolio, we expect to deliver healthy growth in NAV, FFO, and cash flow over the foreseeable future. Before turning the call over to Brian, I want to reiterate the strategic priorities we have highlighted over the past few years that will drive long-term value creation for our shareholders.

Speaker #3: Excluding land sale gains, our range is up $0.01 per share, despite $0.04 per share of dilution from higher-than-expected dispositions without reinvestment of excess cash proceeds.

Speaker #3: Given the meaningful dry powder we now have on the balance sheet, combined with a positive outlook for NOI growth across our portfolio, we expect to deliver healthy growth in NAV, FFO, and cash flow over the foreseeable future.

Ted Klinck: First, we have mentioned for a couple years our focus on driving occupancy towards stabilized levels in order to deliver meaningful NOI growth. We continue to prioritize occupancy, but we're also pushing rents more aggressively, which adds to our long-term NOI growth outlook. Second, we have been focused on delivering and stabilizing our development pipeline. With our pipeline now delivered and nearing stabilization, we are focused on replenishing this pipeline with new projects that will generate attractive risk-adjusted returns. Third, we have been focused on improving our portfolio quality and long-term growth rate by recycling out of non-core CapEx intensive assets and assets with lower growth profiles, and investing in properties with better cash flows and higher long-term growth rates. We have made meaningful progress in H1, expect additional improvements in H2 2026 and beyond.

First, we have mentioned for a couple years our focus on driving occupancy towards stabilized levels in order to deliver meaningful. Noi growth.

We continue to prioritize occupancy. We are Al pushing rents more aggressively which adds to our long-term noi growth Outlook.

Second, we have been focused on delivering and stabilizing our development pipeline.

With our pipeline now delivered and nearing stabilization, we are focused on replenishing this pipeline with new projects that will generate attractive risk-adjusted returns.

Third, we have been focused on improving our portfolio quality and long-term growth rate by recycling out of non-core, CapEx-intensive assets and assets with lower growth profiles, and investing in properties with better cash flows and higher long-term growth rates.

Ted Klinck: Fourth, we continue to maintain a strong and flexible balance sheet and have significant dry powder available for new investments. With the progress we've made over the past several quarters, combined with a strong fundamental backdrop across our Sunbelt BBDs, we are well-positioned to deliver significant organic growth from our current portfolio and deploy our dry powder into new investments that will generate attractive risk-adjusted returns. Brian?

We've made meaningful progress in the first half of the Year, expect additional improvements in the second half of 2026 and Beyond.

And forth, we continue to maintain a strong and flexible balance sheet and have significant dry powder available for new investments.

With the progress we've made over the past several quarters. Combined, with a strong fundamental backdrop across our Sunbelt bbds. We are well, positioned to deliver significant organic growth from our current portfolio and deploy our dry powder into new Investments that will generate attractive risk, adjusted returns Mariah.

Brian Leary: Thanks, Ted, and good morning, everyone. Kudos to our team for a standout Q2. The macro story here is simple. Our Sunbelt markets are outperforming the nation, and a structural supply low is moving the market in our favor. Per CBRE, the national office construction pipeline has plunged to just 6.4 million square feet, the lowest level since 1996, back when there were 11 million fewer jobs using office space in America. Between obsolete space getting demolished and new starts at all-time lows, there is a growing shortage of prime commute-worthy space across our Best Business Districts. We've capitalized on that setup this quarter, signing over 120 leases, including 41 new deals totaling 326,000 square feet that will directly drive future occupancy. Most importantly, we're seeing attractive economics.

Thanks, Ted and good morning, everyone.

Two cheers to our team for our standout second quarter.

The macros story. Here is simple.

Our Sunbelt markets are outperforming the nation.

And a structural supply low is moving the market in our favor.

Per C, the national office construction pipeline has plunged to just 6.4 million square feet.

the lowest level, since 1996 back, when there were 11 million fewer jobs using office, space in America,

Between obsolete space getting demolished and new starts at all-time lows, there is a growing shortage of prime, commute-worthy space across our best business districts.

We capitalize on that setup, this quarter.

Signing over 120 leases including 41 New Deals, totaling 326,000 square feet.

That will directly Drive future occupancy.

Brian Leary: GAAP rent growth jumped 20.9%, cash rents were up 3.2%, and net effective rents came in 8% higher than our prior five quarter average. Our operational performance this quarter highlights the ongoing strength of our Sunbelt BBD strategy. CNBC recently ranked the top states for business, and our footprint dominated the list, with North Carolina holding its top two streak since 2021, Texas, Virginia, Georgia, Florida, and Tennessee all firmly in the top 10 with major announcements of new front office executive and revenue-generating operations at scale. This business-friendly macro environment continues to drive employment growth, corporate relocations, and talent retention directly into our best business districts. Turning to our markets. Leasing volumes and improving metrics were consistent across the portfolio, and I'll highlight three markets where activity was especially strong: Charlotte, Nashville, and Dallas.

Most importantly, we're seeing attractive economics.

Gap. Rent growth, jumped 20.9%.

Cash rents were up 3.2%, and net effective rents came in 8% higher than our prior Q4 average.

Our operational performance, this quarter highlights the ongoing strength of our Sunbelt, BBD strategy.

CNBC recently ranked the top states for business.

In our footprint, dominated the list.

With North Carolina, holding its top 2 Street since 2021 and Texas Virginia, Georgia, Florida and Tennessee, all firmly in the top 10 with major announcements of new front office, executive and revenue generating operations at scale.

This business-friendly macro environment continues to drive employment growth, corporate relocations, and talent retention directly into our best business districts.

Turning to our markets.

Brian Leary: In Charlotte, we continue to see the market act as a magnet for corporate talent. Uptown saw major job and capital commitments from Capital Group and Sumitomo Mitsui, each taking approximately 200,000 square feet. In the suburbs, Swiss pharmaceutical giant, Actelion, recently announced a $1.5 billion headquarters and lab that will bring 1,500 overall jobs to the area. CBRE reported that announcements like these helped drive over 550,000 square feet of positive net absorption in the quarter and pulled overall vacancy down to a 3-year low of 23%. Prime trophy availability has tightened below 4%, and direct asking rents for that space broke $59 a square foot for the first time, a 60% premium over the market average.

And I'll highlight three markets where activity was especially strong: Charlotte, Nashville, and Dallas.

In Charlotte, we continue to see the market act as a magnet for corporate talent.

Uptown saw major job in capital commitments from Capital group and Sumitomo mitsui.

Each taking approximately 200,000 square feet, and in the suburbs, Swiss pharmaceutical giant Octapharma recently announced a $1.5 billion headquarters and lab that will bring 1,500 overall jobs to the area.

CBR reported that announcements, like these help drive over 550,000 square feet of positive. Net absorption in the quarter and pulled overall vacancy down to a 3 year low 23%,

Prime trophy availability has tightened below 4% and direct asking rents for that space broke 59 dollars. A square foot for the first time.

Brian Leary: Our 2.4 million square feet in SouthPark and Uptown Charlotte sit right in the middle of that scarcity with cash rent roll-ups of 10%, GAAP roll-ups of 29%, and net effective rents averaging over $31 a square foot. Nashville was our leasing volume leader for the quarter. Roughly half of our 241,000 square feet of leasing there was new business, adding to our Q1 momentum when we signed over 130,000 square feet of new leasing there as well. This volume of new leasing represents meaningful momentum for notable occupancy gains into next year. The broader market reinforced that story, with Starbucks signing a long-term lease for their 250,000 square foot southeast corporate office downtown, and JLL recording 1.3 million square feet of leasing activity and 400,000 square feet of positive net absorption in the quarter, more than double the Q1's pace.

A 60% premium over the market average.

Our 2.4 million square feet in SouthPark in Uptown Charlotte sit right in the middle of that scarcity, with cash rent roll-ups of 10%, gap roll-ups of 29%, and net effective rents averaging over $31 per square foot.

Nashville was our leasing volume leader for the quarter.

Roughly half of our 241,000 Square ft of leasing. There was new business.

Adding to our first quarter momentum, when we signed over 130,000 Square ft of new leasing there as well.

This volume of new leasing represents meaningful momentum for notable occupancy gains into next year.

The broader Market. Reinforced that story.

With Starbucks signing a long-term lease for the 250,000 square foot Southeast corporate office downtown and JL recording 1.3. Million square ft of leasing activity and 400,000 square ft of positive net absorption in the quarter.

Brian Leary: Active construction in Nashville is limited to just 450,000 square feet, 77% of which is already pre-leased, meaning commute-worthy space across our core BBDs of Downtown, West End, Brentwood, and Cool Springs is becoming scarce. This reinforces the organic growth embedded in our assets in Music City. Finally, to Dallas. Headquartered there, CBRE noted that fundamentals continued to accelerate with nearly 940,000 square feet of positive net absorption in the Q2. Vacancy was down 70 basis points sequentially to 25%, and Class A asking rents rose north of $39 per square foot. Our footprint in Uptown and Preston Center, where vacancy sits below 5%, is capturing that demand directly, generating double-digit cash and GAAP rent spreads and net effective rents above $50 a square foot.

That's more than double the pace of the first quarter.

Active construction in Nashville is limited to just 450,000 square feet, 77% of which is already pre-leased, meaning that to-be-worthy space across our core of BBDs—Downtown, West End, Brentwood, and Cool Springs—is becoming scarce.

This reinforces the organic growth embedded in our assets and Music City.

Finally, to Dallas.

Headquartered there, CBR noted that fundamentals continue to accelerate with nearly 940,000 square feet of positive net absorption in the second quarter.

Vacancy was down 70 basis points sequentially to 25%.

And Class A asking rents Rose north of 39 per square foot.

Our footprint in Uptown and Preston Center, where vacancy sits below 5%, is capturing that demand directly.

Brian Leary: In summary, with a commute-worthy portfolio, a limited supply picture, and a trophy asset team operating in the nation's most business-friendly states, Highwoods is well-positioned to keep delivering on our simple strategy: occupancy gains, rental growth, and long-term value creation. I'll now turn the call over to Brendan.

Generating double-digit cash and GAAP rent spreads, and net effective rents above $50 a square foot.

In summary with a commute worthy portfolio, a limited Supply picture.

And a trophy asset team operating in the nation's most business-friendly States Highwoods is well positioned to keep delivering on our simple strategy.

Occupancy. Gains rental growth and long-term value creation.

I'll now turn the call over to Brendan.

Brendan Maiorana: Thanks, Brian. In Q2, we delivered net income of $93.5 million, or $0.85 per share, and FFO of $100.7 million, or $0.90 per share. The quarter included a $0.035 per share land sale gain from the disposition of a non-core parcel in Richmond that was sold by a JV in which we had a 50% interest. G&A was nearly $1 million higher than expected due to write-offs of previously capitalized pre-development costs related to projects where our view of the highest and best use has changed. These write-offs are the primary reason our G&A outlook for 2026 increased compared to our prior outlook. There were no other unusual items in the quarter. Our balance sheet remains in excellent shape.

Thanks. Brian. In the second quarter, we delivered, net income of 93.5 million or 85 cents per share and ffo of 100.7 million or 900 cents per share. The quarter included, a 3 and a half cent per share land sale gain from the disposition of a non-core. Parcel in Richmond. That was sold by a JB in which we had a 50% interest.

GNA was nearly a million dollars higher than expected due to write-offs of previously capitalized. Pre-development costs related to projects where our view of the highest and best use has changed. These write-offs are the primary reason our GNA outlook for 20126 increased compared to our prior Outlook. There were no other unusual items in the quarter.

Brendan Maiorana: We have ample liquidity, no near-term debt maturities, and we made significant progress lowering our debt-to-EBITDA ratio from 6.7x to 6.2x in Q2. We ended the quarter with $145 million of cash on hand and nothing drawn on our $750 million revolving line of credit. We extended the maturity date on our $150 million term loan from 2027 to 2031 and reduced the borrowing rate by 15 basis points. Subsequent to quarter end, we closed a $56 million secured mortgage at our 50/50 Midtown East JV, repatriating over $44 million from this recently stabilized development back to Highwoods.

Our balance sheet remains in excellent shape. We have ample liquidity and no near-term debt maturities. We made significant progress lowering our debt-to-EBITDA ratio from 6.7 times to 6.2 times in the second quarter.

We ended the quarter with $145 million of cash on hand and nothing drawn on our $750 million revolving line of credit. We extended the maturity date on our $150 million term loan from 2027 to 2031 and reduced the borrowing rate by 15 basis points.

Brendan Maiorana: As Ted mentioned, we expect to close over $70 million of asset sales in the next couple of weeks, which will result in a pro forma cash balance of more than $250 million and no borrowings outstanding on our revolver. The only maturity we have between now and Q1 2028 is our March 2027 bond, which has a balance of $289 million after we repurchased $11 million of the notes during Q2. This debt can be repaid at par starting in December, given our strong cash position, we don't anticipate a need to raise capital to address this maturity.

Woods.

Plus, as Ted mentioned, we expect to close over 70 million dollars of asset sales in the next couple of weeks, which will result in a ProForm, a cash balance of more than 250 million and no borrowings outstanding on our revolver. The only maturity we have between now and the first quarter of 2028 is our March 2027 bond, which has a balance of 289 million. After we repurchased, 11 million of the notes during the second quarter.

Brendan Maiorana: We expect to close one or more additional JV financings during the remainder of the year, which will repatriate even more capital back to Highwoods and further strengthen our liquidity and unencumbered debt to EBITDA ratio. Based on our current expectations of NOI growth, we expect debt to EBITDA to be modestly lower at year-end and continue to decline throughout 2027, assuming otherwise leverage neutral investment activities. We have only $28 million of remaining capital needed at our share to complete 23Springs, which is the only property remaining in our development pipeline after placing Midtown East in service during Q2 2026. Given even stronger than expected leasing, we now project 23Springs will stabilize in Q2 2027, which is 9 months earlier than our pro forma and with NOI meaningfully higher due to better than anticipated rents.

This debt can be repaid at par starting in December and given our strong cash position. We don't anticipate a need to raise Capital to address this maturity.

We expect to close 1 or more additional JV financings during the remainder of the year, which will repatriate even more Capital back to Highwoods and further strengthen our liquidity and unencumbered debt to ibida ratio.

Based on our current expectations of noi growth, we expect debt to Eva to be modestly lower at year end and continue to decline throughout 2027. Assuming otherwise, leverage neutral, investment activities,

We have only $28 million of remaining capital needed at our share to complete 23 Springs, which is the only property remaining in our development pipeline after placing Midtown East in service during Q2 '26.

Brendan Maiorana: We are no longer capitalizing costs on this project, which will result in upside to FFO and cash flow as signed leases commence over the next 4 quarters. As Ted mentioned, our occupancy improved 70 basis points from the end of Q1, which includes a 30 basis point headwind from the sale of the 100% occupied Bridgestone Tower. Even with the occupancy impact from the sale of Bridgestone Tower, we continue to expect to end the year with occupancy in a range of 86.5% to 88.5%, implying nearly 200 basis points of upside over the next 2 quarters at the midpoint of our year-end outlook. Before I turn the call back to the operator for questions, I'd like to give some color on our financial outlook for the remainder of the year.

Given even stronger than expected leasing. We now project 23 Springs will stabilize in the second quarter of 2027, which is 9 months earlier than our pro-forma. And with noi, meaningfully higher due to better than anticipated rents.

We are no longer capitalizing costs on this project which will result in upside to ffo and cash flow as signed leases commence, over the next 4 quarters.

As Ted mentioned, our occupancy improved 70 basis points from the end of Q1, which includes a 30 basis point headwind from the sale of the 100% occupied Bridgestone Tower.

Even with the occupancy impact from the sale of Bridgestone Tower, we continue to expect to end the year with occupancy in a range of 86.5% to 88.5%, implying nearly 200 basis points of upside over the next two quarters at the midpoint of our year-end outlook.

Brendan Maiorana: We updated our 2026 FFO outlook to $3.46 to $3.70 per share, which is up $0.04 per share at the midpoint. Excluding land sale gains, our FFO outlook is up $0.01 per share at the midpoint, which includes $0.04 per share of dilution from higher than anticipated disposition activity and $0.01 from the aforementioned pre-development cost write-offs. Neither of these headwinds were in our prior outlook. To be clear about the dilutive impact from the additional 2026 disposition proceeds, our updated 2026 outlook assumes we will keep the excess disposition proceeds in cash for the remainder of the year. We ultimately expect to deploy these proceeds into new investments, which should drive accretion in both FFO and cash flow as we fully reinvest the proceeds into income producing assets.

Before I turn the call back to the operator for questions, I'd like to give some color on our financial outlook for the remainder of the year.

We updated our 2026 ffo Outlook to 346 to 370 per share, which is up 4 cents per share at the midpoint excluding land sale. Gains are ffo outlook, is up a penny per share at the midpoint which includes 4 cents per share of dilution from higher than anticipated, disposition activity, and a penny from the aforementioned pre-development cost. Right offs, neither of these headwinds were in our prior Outlook.

To be clear about the dilutive impact from the additional 2026 disposition precedes. Our updated 2026 Outlook assumes. We will keep the excess disposition proceeds in cash for the remainder of the year.

Brendan Maiorana: As far as our FFO expectations for H2 2026 are concerned, excluding any impact from land sale gains, we expect to end the year with an acceleration of FFO based on three main factors. First, our projected occupancy ramp is expected to be weighted more heavily in Q4 than Q3. Second, we expect steady NOI gains at Three Springs over the next few quarters. Third and finally, OpEx seasonality typically results in lower operating margins in Q3 compared to the other quarters during the year. Overall, given our implied FFO outlook for H2 2026, combined with ample cash on hand available for future deployment, we're upbeat about the trajectory of FFO and cash flow for the foreseeable future. Operator, we are now ready for questions.

We ultimately expect to deploy these proceeds into new investments, which should drive accretion in both FFO and cash flow as we fully reinvest the proceeds into income-producing assets.

As far as our FFO expectations for the second half of 2026 are concerned, and excluding any impact from land sale gains, we expect to end the year with an acceleration of FFO based on three main factors. First, our projected occupancy ramp is expected to be weighted more heavily in Q4 than Q3.

Second, we expect steady noi gains at 23 Springs over the next few quarters and third and finally, Opex seasonality typically results in lower operating margins in Q3 compared to the other quarters during the year.

Overall, given our implied FFO outlook for the second half of 2026, combined with ample cash on hand available for future deployment, we're upbeat about the trajectory of FFO and cash flow for the 4C future.

Operator: We are now ready for questions.

Operator: Thank you. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. To withdraw any questions, press star one again. Our first question comes from Seth Bergey from Citigroup. Please go ahead. Your line is open.

Thank you.

As a reminder, to ask a question, please press star followed by the number 1 on your telephone keypad. To withdraw any questions, press star 1 again.

Our first question comes from Seth burgie from Citigroup. Please go ahead. Your line is open.

Seth Bergey: Hey, thanks for taking my question. Just kind of want to ask on the sustainability of the dividend and funding some of the leasing CapEx. Just calculating kind of a pay off the FFO payout ratio of over 100%. Just any kind of thoughts there and how you look to fund some of the additional development projects that you mentioned might be coming in the prepared remarks.

Okay, thanks for taking my question. I just wanted to ask about the sustainability of the dividend and funding, specifically regarding some of the leasing CapEx.

Over 100%. So just any any kind of thoughts there and and whether um, and how you kind of look to fund, um, some of the additional development projects that you mentioned might be coming um in the prepared remarks.

Ted Klinck: Good morning, Seth. Thanks for the question. This is Ted. I'll start out, and maybe Brendan can jump in. Look, regarding the dividend, we discuss it with our board virtually every quarter. We view the dividend as a very important part of our total return, we're not going to overreact on a year or two of shortfalls. As you think about it, if you go back to 2020, we've generated roughly $150 million of free cash flow above our dividend. Look, I think we feel very comfortable that we're going to get back to covering $2 a share next year, hopefully. It's going to be significantly better than it is today. I think in general, we feel comfortable with it.

Good morning, Seth, thanks for the question. Um, you know, maybe this is Ted I'll start out and maybe Brendan can jump in. Look regarding the dividend. We discussed it with our board virtually every quarter. Um, you know, if you look at, you know, we we've used the dividend is very important part of our total return so we're not going to react overreact on a year or 2, shortfalls.

Brendan Maiorana: Yeah, Seth, it's Brendan. Maybe just to add a little additional color. I think a couple of options as we think about the dividend. One, I think there's probably three main reasons why a company would look to make an adjustment. One is if there's an acute leverage problem, which given kind of the leverage profile that we have, we feel very good about where our leverage is and where that's heading. Number 2, as a source of funds, given we've sold $375 million year to date, we have additional sales teed up. We have lots of proceeds coming in the door, we don't feel like we have difficulty in terms of raising capital. Then third, which I think is primarily what you're driving at, is do we have operating cash flow that is sustainable to support a payout ratio over time? We believe that we do.

If you think about it, if you go back to 2020 we've generated, uh, roughly 150 million dollars of free cash flow above our dividend. So, you know, look, I think we feel very comfortable that we're going to get back to covering 2 dollars a share, you know, next year hopefully. Um, but it's going to be significantly better than it is today. So we, you know, I, I think, in general, we feel comfortable with it. Yes. Seth, it's Brandon. Maybe just a, um, add a little additional color. I think, you know, a couple of options as we think about, um, the dividend. Um, so 1, I think there's probably 3 main reasons why, uh, a company would look to make an adjustment 1 is if there's an acute leverage problem, which given kind of the leverage profile that we have. We feel very good about kind of where our Leverage is and where that's heading, uh, number 2 as a source of funds. Um, given we've sold 375 million a year to date. We have additional sales

Brendan Maiorana: I think the reason why coverage is so low this year is, number one, there's an occupancy build, and with that comes generally free rent and then spend on leasing capital. We've talked about that straight line adjustment, which is probably $20 to $25 million higher in 2026 than a normalized level. We expect that that cash flow will come on as we have a bunch of free rent that converts over into cash rent. Second, we've talked about how much NOI upside we have, just as we have the development deliveries come online, and then we have normalized occupancy. That's in the range of around $40 million. Then third, and finally, we've been spending a lot in terms of leasing CapEx. I think we spent $84 million in the H1 of the year. That's an annualized run rate of close to $170 million.

Teed up, we have lots of proceeds, coming in the door. So we don't feel like, um, we have, um, difficulty in terms of raising capital and then third, which I think is primarily what you're driving at is, do we have operating cash flow? Um, that is sustainable to support a payout ratio over time. Um, we believe that we do. I think, the reason why coverage is so low this year, is number 1, there's an occupancy build and with that comes generally free rent, um, and then spend on leasing Capital. Um, so, um, we've talked about kind of that straight line adjustment, which is probably 20 to 25 million dollars higher in 2026 than a normalized level. Um, so we expect that, that cash flow will come on as we have a bunch of free rent that converts over into Cash rent. Um, second, we've talked about how much noi upside we have just as, um, we have the development delivery has come online and then we have normalized occupancy. Um, and that's in the range of around $40 million. Um, and then third, and finally, we've been

Brendan Maiorana: We really expect that that number is going to come down to probably $120 million over time. That's an additional $40 to $50 million of cash flow. When you add all of that up and you get to normalized levels, we expect that cash flow levels will be in that neighborhood of $100 plus million higher than at least where the annual run rate is for the H1 of the year. We feel very good about that outlook, and I think we'll get back to those levels of cash flow retention that Ted mentioned we were a few years ago.

Spending a lot in terms of leasing capex. Um, I think uh we spent 84 million in the first half of the year that's an annualized run rate of close to 170 million. We really expect that that number is going to come down to probably 120 million over time. So that's an additional um, 40 to 50 million of cash flow. So when you add all of that up and you get to normalize levels, we expect that cash flow levels will be, you know, in that neighborhood of a 100 plus million dollars higher than at least where the

Annual run rate is for the first half of the year, so we feel very good about that outlook, and I think we'll get back to those levels of cash flow retention that Ted mentioned we were at a few years ago.

Seth Bergey: Thanks. That's helpful. Then maybe just a follow-up. Can you kind of give a cap rate on some of the dispositions that you have teed up? I know you called out kind of the $0.04 of dilution to 2026, but just any color on how we should think about that impacting the FFO run rate heading into 2027?

Thanks, that's helpful. And then maybe you saw a follow-up, can you kind of give a cap rate on? Um, some of the dispositions that you have teed up and and I know you called out kind of the 4 cents of solution, um, to to 2026. But just any any color on how we should think about that, and impacting the ffo Run rate heading into 27.

Ted Klinck: Again, Seth, it's Ted, and maybe I can start again. I think we put in the press release last night. With what we've sold so far this year, the $300 million and then the $74 or so that'll close in the next couple of weeks. Combined, that's roughly an 8 cap. Then after that, as we mentioned, we do have some additional dispositions in the market that will close, whether it be late this year or I'm sure some will roll into next year. Just who knows? Look, I think those are going to be higher. My gut is those are going to be in the high single-digit cap rates.

So again, Seth is Ted, maybe I can start again. So, I think we put in the press release last night, uh, with what we've sold so far this year, uh, the 300 million, and then the 74 or so, that'll close in the next couple of weeks. Combined, that's roughly an 8 cap. Um, and then after that, as we mentioned, we do have some additional dispositions in the market. Uh, that will close whether it be late this year or or I'm sure some will roll in the next year, just who knows. Um, look, I think those are going to be higher. Um, I my gut is, those are going to be in the high.

Hi. Single digit. Cap rates.

Brendan Maiorana: Seth, just to kind of put a point on kind of the dilution outlook there. Obviously, we made up for the dilution in terms of keeping that cash on balance sheet from the excess proceeds. I think we've sold $135 million more than what we told you at the beginning of the year and included in the guide. We've made up for that with higher NOI on a go-forward basis. I think as you think about additional sales that we put in the outlook but not in our FFO numbers, those could come in.

Brendan Maiorana: Let's say even if we use those proceeds only for debt reduction or maybe to fund development, but you think about all of the cash that we have on hand, and as we deploy that, I think you would mitigate even in the most conservative sense of use of additional proceeds coming on the door. Given the excess cash that we have on hand, I think we would likely mitigate the vast majority of that dilution with then building that pipeline of kind of future earnings growth as that capital was deployed into income-producing assets.

Fund development. Um, but you think about all of the cash that we have on hand and as we deploy that, I think you would mitigate even even in the most conservative sense of use of additional proceeds, coming on the door, given the excess cash that we have on hand. I think we're, we would likely mitigate the, the vast majority of that dilution with, then building, that pipeline of kind of future earnings growth as the those, um, uh, that Capital was deployed into income producing assets.

Seth Bergey: Great. Thank you.

Great. Thank you.

Operator: Our next question comes from Ronald Kamdem from Morgan Stanley. Please go ahead. Your line is open.

Ronald Kamdem: Great. I guess just the first one for me is just starting with development a little bit. Clearly some success with 23Springs. Was wondering if you can comment broadly on sort of the flavor of additional development projects such as Ovation or anything else, because I noticed the release sort of increased the potential for development, the dollar amount. Thanks.

Our next question comes from. Ronald Camden from Morgan Stanley, please go ahead. Your line is open.

Great. Um, I guess uh just the the first 1 for me is just uh starting with development a little bit. Um, clearly some success with 23 Springs but was was wondering if you could comment, broadly on on sort of the flavor of additional development projects, such as Ovation or anything else. Cuz I I I I noticed the, the release sort of increase the potential for development.

Ted Klinck: Sure, Ron. Look, with regard to development, I think in the last several months, maybe even talked about on a prior quarter, we're starting to see some interesting development opportunities, and it's numerous opportunities, and really, we're seeing opportunities in most of our markets today. We're certainly sharpening our pencil and trying to replenish our development pipeline. We feel confident we're going to have at least an announcement or so in the next few months. Nothing's done yet. We've got CAs signed on all the opportunities we're looking at. Hopefully we'll have more to discuss, but I will say, just to reiterate, we do have a fair amount of development opportunities that we're looking at right now. I think when I look at it, with a historic low amount of new construction in play, these capitalized developers are going to have a first-mover advantage.

Uh, the dollar amount thanks.

Sure Ron um look with regard to development. I mean I think in the last several months maybe even talked about on a prior quarter.

Ted Klinck: If we can get some pre-leasing done, I think there's going to be a real opportunity to take advantage of this environment.

Brian Leary: Hey, Ron. Brian, just to give you a little color on Ovation, just to remind everyone. We fully own the full close to 150 acres. We've got it fully re-entitled. The density that's approved there from the City of Franklin, which is the white hot center of suburban growth and affluence in Nashville, is 1.4 million square feet of office, within which our Mars Petcare headquarters is in that number. We have 1,600 residential units entitled, both for sale and for rent, 430,000 square feet of retail, 350 hotel rooms. Great partnership with the City of Franklin. We've identified build to core partners who have aligned interest in capital and are looking forward to advancing and sharing, as we finish the year, when we're going vertical.

We're starting to see some interesting development opportunities and it's, uh, it's numerous opportunities and really, we're seeing, um, an opportunities in most of our markets today. So, uh, we're, uh, we're certainly sharpening our pencil and trying to replenish our development pipeline, um, you know, so we're, you know, we feel confident we're going to have, uh, you know, at least an announcement or so in the next few months. Um, but nothing's done yet, we've got Cass. Signed on all the opportunities we're looking at. So hopefully we'll have more to discuss but I will say just to reiterate we do have a fair amount of uh development opportunities that uh that we're looking at right now. And I think you know 1 1 1 1 when I look at it with a historic low amount of new construction in our way we capitalize developers are going to have a first mover advantage and so if we can get some pre-leasing done I think there's going to be a real opportunity to take advantage of this this environment.

Hey, Ron Brian, just to give you a little color on Ovation just to remind everyone. Um, we fully own the full, uh, close to 150 acres. We've got it. Fully re-entered the density that's approved there from the city of Franklin, uh, which is the white hot Center of suburban growth in affluence in Nashville is 1.4 million square feet of office within which our Mars Pet Care headquarters is in that number. Uh, we have 1600 residential units entitled both for sale, and for rent, 430,000 square feet of retail.

350 hotel rooms. Um, so great partnership with the city of Franklin. We've identified, um, build a core Partners who have aligned interests in capital and are looking forward to advancing and sharing. Uh, as we finish the year, uh, when we're going vertical,

Ronald Kamdem: Great. Just my second question, if you take just a big step back, thinking about the guidance for this year. Just what's the number for the dilution from capital recycling, right? I know it said $0.04 of incremental dilution, but what's sort of the total number from dilution from this year? The land sale gains, presumably that creates a headwind for next year if it does not recur. Last but not least, on the same store, the cash number, I think, was reiterated just as you're gaining occupancy, just any sort of breadcrumbs about what tailwinds that could become in 2027 as lease commits. Thanks.

Great. And then, just my second question—if you take a big step back,

um, thinking about the guidance for this year.

Just what's the, what's the number for the delusion from Capital recycling, right? I know it's at 4 cents of incremental dilution but what's what's sort of the total number from delusion from the Sierra? And then the land sale gains presumably that creates a headwind for next year, if it does not recur.

And then, last but not least, on the same store—the cash number, I think, was reiterated. Just as you're getting occupancy, any sort of breadcrumbs about...

What tailwind could there be in '27, as at least commencement? Thanks.

Brendan Maiorana: Hey, Ronald, it's Brendan. I'll try to tick through those questions. If you go back to the beginning of the year, what we talked about was the recycling of capital with the acquisition primarily of 600 South Tryon that was not stabilized, right? It was stabilized from a lease perspective, but not stabilized from an occupancy perspective. We mentioned that that had $0.07 of headwind in that number for our 2026 outlook. That number still holds. That goes away in 2027 as that will be in the low 90s in terms of occupancy by the end of 2026, and then generate roughly a stabilized level of GAAP NOI in 2027.

Hey Ron, it's Brandon. And I'll try to um I'll try to uh tick through those those questions. Um, so if you go back to the beginning of the year, um, what we talked about was, um, the recycling of of capital with the acquisition primarily of 600 South Tryon. That was not stabilized, right? It was stabilized from a lease perspective but not stabilized from an occupancy perspective. And we mentioned that that had 7

Brendan Maiorana: In addition to that, we just disclosed kind of the $0.04 of additional dilution associated with the excess sale proceeds from Bridgestone Tower and the two dispositions that we announced last night. You kind of have a full $0.11 that was in there. What we talked about initially was the dilution from 600 South Tryon was largely offset by the land sale gains in that initial guide. We were initially at $3.54. You kind of had $0.08 of land sale gains, $0.07 of dilution from 600 South Tryon. They roughly offset one another. I think a normalized level of kind of earnings power was in that mid $3.50s context for 2026. You'll kind of get that growth from 600 South Tryon next year that will come online.

Brendan Maiorana: You've got organic growth from just the occupancy build and 23Springs. I think I tried to give some color in the prepared remarks about the trajectory of FFO in the back half of this year. I would expect that Q3 will be kind of ex land sale gains in line-ish with where we were in Q2, which suggests that you've got an accelerating FFO trajectory on Q4. On top of that, you've got additional gains that we would get in terms of 23Springs as those leases commence in H1 2027. I think we've talked previously about how we have a positive view of occupancy, not just in the back half of this year, but we think we're set up well to deliver occupancy gains in 2027 as well.

A full 11 cents that was in there. What we talked about initially was the dilution from 600. South Tryon was largely offset by the land sale gains in that initial guide. So we were initially at 3.54 you kind of had 8 cents a land sale, gains 7 cents a solution from 600 South Tryon, they roughly offset 1 another. So I think a normalized level of of kind of earnings power was was in that mid 350s context for 2026, um, and then you'll kind of get that growth from 600 South Tryon. Next year, that will come online and then you've got organic growth from just the occupancy. Build, and 23 Springs. So I think I tried to give some color in the prepared marks about the trajectory of ffo, in the back half of this year, I would, I would expect. That Q3 will be kind of excellent sale. Gains in line is with where we were, um, in Q2 which suggests that you've got an accelerating ffo, um, trajectory on Q4.

Brendan Maiorana: We're going to sharpen our pencil and kind of give you more specifics at the beginning of the year on the 2027 outlook, but I think we feel good about the trajectory of where that's all going.

Um, and then on top of that, you've got additional gains that we would get in terms of 23 Springs as those leases commence in the first half of 2027. Um, and then, I think we've talked previously about how we have a positive view of occupancy, not just in the back half of this year, but we think we're set up well to deliver occupancy gains in 2027 as well. We're going to sharpen our pencil and kind of give you more specifics at the beginning of the year on the 2027 outlook. But I think we feel good about the—

Ronald Kamdem: Helpful. Thank you.

Trajectory of where that's all going.

Helpful. Thank you.

Operator: Our next question comes from Blaine Heck from Wells Fargo. Please go ahead, your line is open.

Our next question comes from blade.

Hack from

please go ahead, your line.

Blaine Heck: Great. Thanks. Ted, wanted to follow up on your commentary on the potential for build to suit opportunities. I know you said there are opportunities in each market, but are there any specific markets that you're seeing that offer the best risk reward at this point? Any color on the profile of tenants that you guys are talking to or industry? What's kind of your required return hurdle on a yield basis?

Ted Klinck: Sure. With regard to the opportunities, really the sectors, it's financial services and corporates for the most part. Markets, Blaine, it is exactly what I said. We're really seeing opportunities in just about every one of our markets. I guess we're really not looking at anything in Richmond and Orlando, but really have opportunities to look at across the spectrum. Again, not all of it's on our own land. Some of it is. Others, it would be on other people's land. We're just super excited about the inbound activity that's occurred over the past, again, several months, but things seem to be picking up a little bit and giving us some more confidence. We'll see on that, but hopefully we'll have more to talk about the next quarter or so.

Great, thanks. Uh, Ted wanted to follow up on your commentary on the potential for build-to-suit opportunities. Um, I know you said there are opportunities in each market, but are there any specific markets that you're seeing that offer the best risk-reward at this point? Uh, any color on the profile of tenants that you guys are talking to, or industry? Um, and what, you know, kind of your required return hurdle is on a yield basis?

Sure. Um,

Ted Klinck: In terms of our required returns, as you know, we don't normally talk about it, largely from a competitive standpoint. There's just a lot of factors that go into it and what market is it? Is it urban, suburban? What's the credit? What's the term? What annual bumps you're getting, anticipated exit cap rate. There's just a lot of factors that make a comparison really hard to make on these transactions. Every deal is sort of a snowflake, if you will, to a certain degree. Again, just the activity we're seeing, we're pretty excited about.

So with regard to the opportunities, really? It's uh, the sectors, it's it's financial services and corporates for the most part, um, and and markets. Blaine, you know, it is exactly what I said. We're, we're really seeing opportunities, um, in in, just about every 1 of our markets. I guess, we really don't not looking at anything in Richmond in Orlando, but really have opportunities to look at across. Um, the Spectrum, again, not all of its on our own land. Some of it is, um, and others is, it would be on other people's land, but um, we're we're just super excited about the inbound activity. That's, uh, that's occurred over the past again, several months, but things seem to be picking up a little bit and giving us some more confidence. So, you know, we'll see on that. But but hopefully we'll have more to talk about the next.

Blaine Heck: Okay, great. Just following up on that, it does seem like you're leaning into development, but I guess, how are you thinking about the balance between investing in acquisitions where you get immediate yield and NOI contribution versus developments where you have some incremental capitalized interest, but the full NOI contribution is delayed, kind of pushing out earnings growth relative to the kind of immediate gratification you could get from acquisitions. How do you think about the balance?

Uh, the next quarter. So, in terms of our, you know, required returns as, you know, we don't normally talk about it, largely from a competitive standpoint and then, you know, there's just a lot of factors that go into it. And and what Market is it? Is it Urban Suburban, what's the credit? What's the term, What annual bumps you getting anticipated, exit cap rate, there's just a lot of factors that make a comparison really hard to make, uh, on these transactions. So, uh, every deal sort of a snowflake if you will to a certain degree. So, but again, just the activity, we're seeing we're pretty excited about

Ted Klinck: Yeah, look, we think about it all the time. Again, we're always evaluating the best use of our capital over the long term. I think over multiple cycles, we've rotated pretty well between acquisitions and development, and always looking for really what we think the best risk-adjusted returns. If you think about the last 2025 and early 2026, we closed on about $600 million of acquisitions, that we thought we were going to get very attractive risk adjusted returns, and we've been incredibly pleased about it. As the development is picking up, we're seeing those development opportunities with higher yields than even the acquisitions. Again, we're looking at it over the long term. It's something we toggle between all the time, and we're always discussing.

Okay, great. Um, just following up on that, it does seem like you're leaning into development, but I guess—how are you thinking about the balance between investing and acquisitions, where you get immediate yield and NOI contribution, versus development, where you have some, you know, incremental capitalized interests, but the full NOI contribution is delayed, kind of pushing out earnings growth relative to the kind of immediate gratification you could get from acquisitions? How do you think about the balance?

What time again, again, we're always evaluating the best use of our capital over the long term. I think over multiple cycles, you know, we've rotated pretty well between acquisitions and development, and always looking for really what we think are the best risk-adjusted returns. So, and if you think about the last '25 and early '26, um, you know, we...

We closed on about $600 million of acquisitions, um, that we thought were going to get very attractive risk-adjusted returns, and we've been incredibly pleased about it. But as development is picking up, we're seeing, uh, those, um, development opportunities with higher yields than even the acquisitions. So again, we're looking at it over the long term, uh, but it's, um...

All the time. And we're always discussing.

Blaine Heck: Very helpful. Thanks, Ted.

Very helpful. Thanks Ed.

Operator: Our next question comes from Vikram Malhotra from Mizuho. Please go ahead. Your line is open.

Ultra from

Vikram Malhotra: Thanks for taking the question. I guess, Brendan, maybe I missed it, so sorry if I'm asking to repeat, but based on all the new leasing you've done this quarter and kind of what you can see into Q3 and maybe Q4 on renewals and the pipeline of new leasing, is there a possibility of sort of hitting towards the near end of the occupancy guide? As we look into 2027, do you mind just reminding us of any new move-outs that could impact the occupancy trajectory from lease to occupied?

Please go ahead. Your line is open.

Thanks for taking the question. Um, I guess, Brandon. Maybe I missed this so sorry, if if I'm asking to repeat, but based on, uh, all the the new leasing you've done this quarter and kind of what you can see into 3 q and maybe 4 Q on renewals and the pipeline of new leasing. Um, you might sort of, is there a possibility of sort of hitting towards the near end of the, uh, the occupancy guide? And as we look into 27, do you mind just, uh, giving the S reminding us of any new move outs that could impact the occupancy trajectory from Leeds to occupied?

Brendan Maiorana: Yeah, Vikram. Good morning. Thanks for the question. I think from the occupancy outlook, just to give a very high level roll forward of where we stand today, which I think I did last quarter as well. We've got a little less than 800,000 square feet of expirations remaining in 2026. We currently project that 200,000 to 300,000 of that will renew, which means that we're At the midpoint of that range, there's about 550 vacates kind of between now and year end. We have 1 million square feet that is signed, that is not yet commenced, that will commence by year end 2026. That dynamic there is plus 450,000 square feet of net absorption.

Um, yeah, vicram uh, good morning. Thanks for the question. So, um, I think from the occupancy Outlook, just to give a very kind of like high-level role for it of where we stand today, which I think I did last quarter as well. Um, we've got a little less than 800,000 square feet of expirations remaining in 2026. Um, we currently project that 2 to 300 of that will renew, which means that we're in the at the midpoint of that range, there's about 550 vacates, kind of between now and year-end. Um, we have a million square feet that is signed, that is not yet commenced that will.

Commenced by year-end 2026. So, that dynamic there is plus 450,000 square feet of net absorption.

Brendan Maiorana: Need to have a little more spec new kind of come in and start, and probably do a little bit better than at least what the midpoint is in terms of some of the retention that we have for H2 of the year. That'd probably put us, I think it'd be unlikely to get to 88.5, but maybe gets to that 88 level. I think to get down to the lower end of the range, probably, again, it's probably just the reverse of those things. Maybe retention is a little bit lower, and then, there can always be sometimes an early move out here or there, or we may proactively take space back to do a long-term extension or something like that. Those are probably the things that kind of move us around.

8 and a half.

Percent us to do that.

We'll come need to have a little more spec, new kind of come in and start. Um and probably do a little bit better than at least what the midpoint is in terms of some of the

Brendan Maiorana: What I would say is, I think we feel very good about the leasing that we've done thus far year-to-date. To be able to maintain the midpoint of the year-end outlook with selling Bridgestone Tower that was 100% occupied, that in and of itself had 30 basis points of headwind to that year-end number. I think we feel very good about the progress that we've made halfway through the year. Sorry, I think you mentioned about 2027.

Um, retention that we have for the back half of the year that probably put us. I think it'd be unlikely to get to 885, but maybe gets to that 88 level. I think to get down to the lower end of the range. Um, probably again, it's probably just the reverse of those things. Um, maybe retention is a little bit lower and then, you know, there can always be sometimes an early move out here or there, or we may proactively take space back, um, to do a long-term extension, or something like that. So those are probably the things that kind of move us around. But what I would say is, I think we feel very good about the leasing that we've done thus far year to date. Um, and to be able to maintain the midpoint of the year-end Outlook with selling Bridgestone tower, that was 100% occupied that in and of itself had 30 basis points of headwind to that year end number. I think we feel very good about the progress that we've made halfway through the year.

Vikram Malhotra: Yeah. 2027.

Brendan Maiorana: Yeah, 2027, as I think we were talking about earlier, we feel like we're well positioned. We've got, I think, roughly two and a half million square feet of expirations there. None that are large. I think we have one that's over 100,000 square feet. I think we feel good about that renewal. Not a whole lot there. There are some early-term options that we've been notified on. We had expected those for a long period of time. Nothing surprising that's popping up. I think given the backdrop for 2027, I think we feel good about the ability to drive occupancy higher as we migrate throughout next year as well.

Vikram Malhotra: You mind just giving us a sense of how margins will progress given all the leasing you've already done that's due to commence into the H2 in 2026? Just remind us any one-time impacts in terms of property tax true-ups or anything you're anticipating that would, I guess, change the trajectory of the NOI margin upside.

And then sorry, I think you mentioned about yeah, 277. Um, yeah, 27. As I think we were talking about earlier, um, you know, we we feel like we're well positioned. Um, we've got I think roughly 2 and a half million square feet of expirations there, none that are large. I think we have 1, that's over 100,000 square feet. I think we feel good about that, that renewal. Um, uh, so not not a whole lot there. There are, um, some early term options that we've been notified on. We had expected those for a long long period of time. So nothing, surprising that's popping up. So I think given the backdrop, um, for 27, I think we feel good about the ability to drive occupancy, um, higher as we migrate throughout next year as well.

And then, do you mind just giving us a sense of, uh, how margins will progress given all the leasing you've already done that do commence, um, into, you know, the second half and 2026? And just remind us of any, um, one-time impacts in terms of property tax true-ups or anything you're anticipating that would, uh, I guess, change the trajectory of the NOI margin upside.

Brendan Maiorana: From a margin perspective, I would say just overall, without getting into the quarterly numbers that are there. It's going to bounce around a little bit. It probably depends a little bit on where mix issue on occupancy gets better versus comparatively worse. What I would say generally, as you're thinking about incremental margins and leasing that falls to the bottom line. We were in that mid-85s kind of context in the Q2. We were suggesting we're up 200 basis points by end of this year. I think we have opportunity to grow occupancy a decent amount, in 2027 as well. Typically, 100 basis points of occupancy for us is 8-plus million dollars of annual rent. That incremental margin on the occupancy gains is very high. Probably somewhere in that 90% range.

Brendan Maiorana: Rather than get pinpoint down on what overall operating margins are, I think you can think about that context of the revenue gains and how much of that is going to fall to the bottom line, I think is probably a better way to think through that as what the impact is likely to be in terms of FFO and cash flow.

Vikram Malhotra: Great. Thank you.

Mental margin on the occupancy, gains is very high. So, you know, probably somewhere in that 90% range. So, rather than kind of get pinpoint down on what overall operating margins are. I think you can think about that context of the revenue gains and how much of that is going to fall to the bottom line? I think it's probably a better way to think through that as what the impact is likely to be in terms of ffo and cash flow.

Great. Thank you.

Operator: Our next question comes from Nick Thillman from Baird. Please go ahead. Your line is open.

Selman from Baird, please go ahead. Your line is open.

Nick Thillman: Hey, good morning, guys. Maybe wanted to touch a little bit on just areas where you're seeing some strength in being able to push rate. Historically, you guys, over the last couple quarters have been mentioning Dallas and Charlotte as areas where you're seeing some rent growth. As we look at throughout the portfolio now, it sounds like even in Buckhead, you're starting to be able to push rents there as well. As you just look at the portfolio comprehensively, what % of just the overall portfolio are you being able to push right now, given that you're starting to see some inflection on the vacancy side that's making it a little bit more favorable for landlords here?

Ted Klinck: Good morning, Nick. Maybe I'll start and Brian can jump in if he has anything to add. Look, I just think the overall comment, like tour activity in really all of our markets remains very active. Probably the best way to characterize it, is that we haven't seen a summer slowdown this year. I think the brokers are all working hard, both our internal leasing folks, but the tenant reps. Our leasing funnel's full. Largely consisting of our bread-and-butter type deals, working on a few larger renewals. All of our markets are active. I'd tell you our markets from a desirability where we think we have landlord pricing power, it's really Dallas, Charlotte, and Nashville would be our top three markets. Yeah, like you said, Buckhead's getting better.

Hey, good morning guys. Maybe wanted to touch a little bit on just areas where you're seeing some strength and being able to push rate. Historically, you guys over the last couple quarters, have been mentioning Dallas and Charlotte as areas where you're seeing some rent growth. But as we look at throughout the portfolio, now it sounds like even in Buckhead, you're starting to be able to push rents there as well. Um, as you just look, the portfolio, comprehensively what percentage of of just the overall portfolio? Are you being able to push right now given that you're starting to see some inflection and, uh, on the vacancy side? Um, that's that's making a little bit more, uh, Fable for your landlords here.

Ted Klinck: We do have some pockets in some other markets, Westshore and Tampa, we're seeing some pretty good economics as well. You do have to go sort of market by market, and sub-market by sub-market, and really look at the competitive set. We're starting to get pricing power. You said what %? Look, I don't know. Is it 60% to 65% maybe? We still got a few soft sub-markets that are maybe lagging, but in general, all of our markets are improving. Just the cadence is different by market.

Good morning, Nick. Um, maybe I'll start in, Brian, can jump in if he has anything to add look. I just think the overall comment, I think 2 activity and really all of our markets remains very active, you know, probably the best way to characterize it. Um, is that we haven't seen a summer slowdown this year. Uh, I think the Brokers are all working hard. Both our internal leasing folks for the, the tenant reps. Um, so our leasing funnels full, um, largely consistent of our bread and butter type deals. Working a few larger renewals. But, um, but all of our markets are active. I'd tell you our markets from a desirability where we think we have landlord pricing power, it's really Dallas uh Charlotte and Nashville would be our top 3 markets. But yeah, like you said buckhead's getting better uh, and we do have some Pockets, you know, and some other markets, you know, Westshore, in Tampa, we're seeing some pretty good economics as well. So you do have to go sort of Market by market uh and submarket by submarket and really look at

Brian Leary: Hey, Nick. Brian, just to tag on a little bit. Nashville and Charlotte probably represent the greatest positive rate of change when you combine the quarter-over-quarter this year absorption and rate escalation. That's a really nice look. Dallas is a huge metroplex market, but where we're at kind of sharpshooters within Preston Center and Uptown, we've greatly benefited from increased rents and low to no concessions. The rest of the teammates across our markets are really blown away by some of the metrics in Dallas. Even as you mentioned, I guess Charlotte, 20% up probably year-to-date, from an asking rent perspective. You mentioned Buckhead, asking rents there are probably up 5%, year-over-year. To Ted's point, we're kind of staking our ground where we can, and we're going to lean in.

The competitive set but we're starting to get pricing power. You said what percentage? Look, I don't know. I is it 60 to 65%, maybe we still got a few soft sub-markets that are maybe lagging but in general, all of our markets are improving, just the Cadence is different by by market.

Nick Thillman: That's helpful. Then maybe following up a little bit on the disposition front. Ted, you mentioned high nines probably for the non-core sales. When we talked in June, it seemed as though you guys thought if conditions held, that you could do up to $200 million of additional sales on the non-core front before year-end. It seems as though with what you're closing in Q3 and what you have kind of laid out that's not embedded within guidance, that you're feeling a little bit more opportunistic here on just the sale front. We back into what the sales were on like a cap rate basis for Q3, and it's around like a 12. I assume there's some land sales numbers that could see you closer to that nine number.

Hey Nick Brian, just a tag on a little bit. Um Nashville and Charlotte are probably represent the greatest positive rate of change. When you combine the quarter of a quarter this year absorption and rate escalation. So, that's a really nice look, you know, Dallas is a huge Metroplex Market, but where we're at kind of Sharpshooters with, in Preston Center in uptown. We've greatly benefited from, uh, increased rents and low. I mean low to no concessions. Um, the rest of the, uh, teammates are markets or really Blown Away by some of the the metrics in, in Dallas. Even as you mentioned, like Charlotte, 20% up, probably a year to date. Um, from asking, rent perspective. You mentioned Buckhead asking rents, they are probably up 5%, uh, year-over-year. Uh, so to Ted's point we're we're kind of staking our ground where we can and we're going to lean in

that's helpful and then maybe following up a little bit. Um, the disposition front. Ted you mentioned, High nines, probably for the non-core sales. Um, when we talked in June, it seemed as though you guys thought its conditions held that you could do up to 200 million of additional sales uh on the non-core front before year end, but it seems as though with what you're closing in 32 and and what you have kind of laid out, it's not embedded within guidance, that you're feeling a little bit more opportunistic here. Um, just the sale front. So we back, we back in

Operator 2: Then if, I know we're looking at it from a headline cap rate number, but also maybe look at from a cash flow perspective. If we look at just your overall CapEx as maybe as a percentage of NOI of the assets you're exiting on the non-core versus maybe what you're buying at here for like a $600, just to give us a flavor of how this longer term shakes out for just cash flow growth within the portfolio. I know that was a lot to digest, but I wanted to kind of piece all those together.

Nick Thillman: Then if, I know we're looking at it from a headline cap rate number, but also maybe look at from a cash flow perspective. If we look at just your overall CapEx as maybe as a percentage of NOI of the assets you're exiting on the non-core versus maybe what you're buying at here for like a $600, just to give us a flavor of how this longer term shakes out for just cash flow growth within the portfolio. I know that was a lot to digest, but I wanted to kind of piece all those together.

To what the sales were on, like a cap rate basis for the 3Q and it's around like a 12. So I assume there's some land sales numbers, to get to you closer to that 9 number and then if I know we're looking at from a headline cap rate number. But also maybe look at from a cash flow perspective. If we look at just your overall uh, cap access of maybe, as a percentage of noi, if the assets are exiting on the non-core versus, maybe what you're buying at here for like a 600. Um,

Just to give us a flavor of how this longer term shakes out for, um, just cash flow growth within the portfolio. I know that was a lot to digest, but I wanted to kind of piece all those together.

Ted Klinck: Let me take the first half and maybe Brendan can take the second half. Look, I think you're generally right in terms of our confidence level in getting more dispositions out the door. I think we're seeing more buyers in the market. I think we're seeing more financing sources in the market. It gives us confidence on sort of the non-core assets that we can push them out the door. Again, cap rate range. Look, without a doubt, there's going to be some double-digit cap rates, but we have some other, again, one of them we're selling in the next couple of weeks is a single-tenant deal at a pretty low cap rate. It's a mix of assets, both single tenant, multi-tenant. You're going to see a mix of cap rates as well.

Ted Klinck: There is some land that's mixed in as well, without a doubt, Nick. I think in that high single digit, if that comprises both the lower and then the double-digit cap rates, I think you're going to be in that average of the high single digits.

Brendan Maiorana: Yeah. Nick, just in terms of the cash flow, your point is spot on. I think the nominal cap rates, the nominal NOI tends to be high, these assets carry a much wider CapEx load or much heavier CapEx load than what we see in the typical portfolio. When it distilled down to underlying cash flow levels, I think regardless of sort of use of those proceeds, it's probably likely to be accretive to cash flow. At worst, if it's kind of a debt pay down, it's probably roughly neutral.

Getting more dispositions out the door. Um, I think there's we're seeing, you know, more buyers in the market. I think we're seeing more uh, uh, financing sources in the market. So it gives us confidence on sort of the non-core assets that we can push them out the door again, cap rate range, look without a doubt, there's going to be some double digit cap rates, but we have some other again, 1 of them, we're selling in the next couple weeks is a single tenant deal at a pretty low cap rate. So it's, it's a mix of assets, both single tenant multi-tenant, so you're going to see a mix of cap rates as well. Um, and and, and there is some land that's mixed in as well, um, without a doubt, Nick. But I think in that, you know, High single digit, if that comprises both the lower and then the double digit cap rates and I think you're going to be in that average of the high single digits.

Yeah, and then Nick just in terms of the cash flow, your point is spot-on. So I think, you know, the nominal cap rates the nominal, noi is tends to be high, but these assets carry, um, a much, um, wider capex load or much heavier capex load than what we see in the in the, uh, typical portfolio. So when it is still down to underlying cash flow levels, I think, regardless of sort of use of those proceeds, it's probably likely to be, um, a creative to cash flow, you know, at worst, if it's kind of a Debt Pay down, it's it's probably roughly neutral.

Nick Thillman: Very helpful. That's it for me. Thank you all.

Very helpful. That's it for me. Thank you. All

Operator: Our next question comes from Peter Abramowitz from Deutsche Bank. Please go ahead. Your line is open.

our next question.

Peter Abramowitz: Yes, thank you for taking the question. Ted, you certainly sound pretty optimistic on build to suit and other development opportunities. I guess I just wanted to ask could you contextualize maybe the change in tone from maybe what's changed to make development more feasible in your markets? I know the conversation for a while has been that you were having conversations behind the scenes, but a lot of it might slow down when you get to the point where new tenants realize that the rents that they have to pay to justify your construction cost. Could you contextualize maybe the pickup you're seeing in potential development opportunities around that conversation? What changed? Or is it just market and deal specific?

Ted Klinck: No. Look, Peter, I think that's a great question. I think a couple of years ago, we were going down the road on some development opportunities, and when they saw the rents that were required, we had a couple that backed off. Just probably to your question. What are we seeing and what's different today? First, there is very little new construction that people can go to. Companies are looking out, they're seeing the low amount of development that's underway, and a lot of that's pre-leased even, Peter. There's really no large or very few large blocks of space that anybody can even take if they need space in two to three years. Right? If you start a building today, it's two to three years to get delivered. Customers are looking out and prospects looking out two or three years.

Yes, thank you for taking the question. Uh, Ted you certainly sound, uh, pretty optimistic on build the suit and other development opportunities. Um, so I guess I just wanted to ask kind of, could you contextualize the maybe the changing tone? Um, from maybe what's changed to make development more feasible, in your markets, under the conversation for a while has been um that you were having conversations behind the scenes, um, but a lot of it, you know, might might slow down when you get to the point where, um, you know, new tenants realize that the rents that they have to pay to justify your construction cost. So could you kind of contextualize um maybe the pick up you're seeing in in potential development opportunities? Um around that conversation what changed uh or is it just kind of market and deal specific?

Uh, look Peter, I think that's a great question. I think, you know, a couple years ago, um, we had, you know, we were going down the road on some development opportunities and when they saw their rents that were required, uh, we had a couple of the backed off, so, which is probably to your question. So, what are we seeing? And what's different today? First, there is very little new construction that people can go to. So companies are looking out, they're seeing the low amount of development that's underway.

Ted Klinck: They're not seeing the high-quality space available. They know they have to pay the higher rents to do that. Look, we've had a couple that just these companies, they want to be in their own building. It's from a culture standpoint. They're coming and saying, Look, I understand you might be able to get a pretty good space in a building in a couple of years, but I want to be by myself, just as part of our culture. It's a combination there, I think. In a couple of our markets, a couple of trends were interesting. This is maybe off development. We do see some of our customers coming to us three to five years before their expiration because they're looking out and seeing the premium space.

And a lot of that's pre-leased, even Peter. So there's really no large or very few large blocks of space um that anybody can even take if they need space in 2 to 3 years, right? So if you started building today, it's 2 to 3 years. Get delivered. So, customers are looking out and Prospects looking out 2 or 3 years, they're not seeing the high quality space available, so they're having to, they know, they have to pay the higher rents uh, to do that. Uh, and then look, we've had a couple that just these companies they want to be in their own building. It's from a culture standpoint. So they're coming and saying, look, I understand you might be able to get uh pretty good space in a building in a couple of years but I want to be by myself uh just as part of our culture. So it's sort of a combination there, I think and a couple of our markets a couple Trends we're interested in. This is maybe off development. We do see some of our customers coming to us.

Ted Klinck: There's a lack of premium space, they know they're going to have to pay up if they want to move, and that's going to prompt development. That's also going through our own portfolio on renewals. We've had some large customers that have expirations in three, four or five years that are asking us to renew now, which I think goes to the office demand long term as well, and the sustainability there. Specifically on development, it's look, I just think they're willing to pay the rents now. They know they have to get into high-quality space.

Brian Leary: Peter, I'm not sure it adds much other than some additional color. I think as Ted mentioned, when previous developments or build-to-suits were kind of underwritten with prospective anchors, they saw the rent running away as they saw costs running away. We keep thinking, oh, there's no office being built in this country. Construction costs should go down. Well, unfortunately, it doesn't seem to ever go down, but it has moderated. Now we're seeing in those kind of BBDs with no space available, the rents outpacing the construction costs in terms of growth. It does create an inflection point to start making these things underwritable.

3 to 5 years before their expiration because they're looking out and seeing the premium space. There's not there's a lack of Premium space so they know they're going to have to pay up if they want to move and that's going to prompt development. But that's also um sort of going through our own portfolio on renewals we've we've had some large customers that have expirations in 3 4 or 5 years that are asking us to renew now which I think goes to the the office demand long term as well in the sustainability there. But specifically on development it's look I just think they're willing to pay the rents now they know they have to to get in the high quality space.

Peter, I'm not sure it adds much, other than some additional color, I think, as Ted mentioned.

When previous developments were built, the suites were kind of underwritten with prospective anchors.

Brian Leary: The other thing, I'm a bit of a broken record for the last number of years I've been able to be on these calls, is that when we talk to CEOs, we talk to the heads of the HR and people department, we talk to the CFOs, they tell us that 1% of what they spend every year in sort of their G&A is on utilities, 9% is on real estate, 90% is on people. They're going to lean in on their 90%, so they can grind down their 9%. It's been shown that a bad workplace experience from a built environment can kind of reduce your productivity and your recruitment and all of that. So they're leaning in to investing in their 9% to positively impact their 90.

The construction costs, in terms of growth—so, it does create an inflection point to start making these things underwritable. The other thing, and I know I'm a bit of a broken record over the last number of years that I've been able to be on these calls, is that when we talk to CEOs, we talk to the heads of the HR and People Departments, we talk to the CFOs. You know, they tell us that 1% of what they spend every year in their G&A is on utilities, 9% is on real estate, and 90% is on people.

And they're going to lean in on their 90%, so they can grind down their 9%. And it's been shown that, you know, a bad workplace experience from a built environment can kind of reduce your productivity, and your recity, in your recruitment, and all that. So they're leaning in to investing in their 9% to positively impact their 90%.

Peter Abramowitz: All right. Thank you both. I appreciate that. Then, another question on capital recycling. Just in the context of kind of the pickup in some of these incremental asset sales Could you talk about just interest in the Pittsburgh assets and where that falls in the plan today in terms of timing expectations? I would imagine just in light of improving fundamentals around the country, that broadly you would expect to see a pickup in capital markets activity. Specific to those assets, could you speak to interest today and where in the process you are with those?

Ted Klinck: Sure. We really have two assets. One's a multi-building project, PPG Place. Where we are on that one is we're really locking down. We're in negotiations right now on several renewals, really just to solidify the rent roll and long-term cash flow that we can present to a potential buyer. Look, I think we're in process of doing that. That's going to take another few months at least. We're just being patient as we get those deals done to lock down that rent roll. That's probably, maybe we can get to that. That's 2027 sale we're hopeful for. Then the other one is our Liberty building, 625 Liberty. That's out in the market right now. We're going through the process, and we'll see how it plays out, but it is in the market for sale right now.

All right, thank you both. I appreciate that. Uh, and then another question on Capital recycling, uh, just in the context of, uh, kind of the pickup and some of these incremental assets sales. Um, could you talk about uh, just interest in the Pittsburgh assets and, and kind of uh where that falls in the plan today in terms of uh, timing expectations. Um, I would imagine just in light of kind of improving fundamentals around the country that, uh, broadly, you would expect to see a pickup in capital markets activity. But, um, specific to those assets, could you speak to, to interest today and where in the process you are with those.

Sure, um, so you know, we really have 2 assets 1's, a multi-building uh project PPG play. So where we are on that 1 is we're really locking down. We're in the negotiations right now. On several renewals really just to solidify the rent, roll and long-term cash flow uh, that we can present to a potential buyer. So I look, I think that's we're in process of doing that. That's going to take, you know, another, you know, few months at least. Uh, so we're just being patient, uh, as we get those deals done to lock down that rent roll. Uh, so that's probably, you know, maybe we can get to that, that's 2027 sale, we're hopeful for, and then, the other 1 is, uh, uh, our, our Liberty Liberty building, 625 Liberty, that's out in the market right now. Uh, so we're going through the process and, and uh, we'll see how it plays out, but it is in the market uh, for sale right now.

Peter Abramowitz: All right. Appreciate the time.

All right, appreciate your time.

Operator: Our next question comes from Dylan Burzinski from Green Street. Please go ahead. Your line is open.

Dylan Burzinski: Hi, guys. Thanks for the question. Maybe just a quick one. Can you kind of touch on sort of the acquisition pipeline, given you guys' dry powder that you guys have today, but also with the forthcoming dispositions? Then maybe as sort of a parallel to that, can you kind of talk about, if the acquisition pipeline is robust enough, and given where the stock trades today, if at a certain point, equity issuance and sort of taking advantage of that external growth afforded to you by the public market is an option that you guys would be open to?

Our next question comes from Dillon Berzinski from Green Street. Please go ahead, your line is open.

Hi guys, thanks for the questions. Maybe just a quick 1. Can you kind of touch on sort of the acquisition pipeline given? Uh, you know, you guys just dry powder that you guys have today all, but also with the forthcoming, this is dispositions and then maybe just sort of a parallel to that. Can you kind of talk about, you know, if the acquisition pipeline is, is robust robust enough and giving where the stock trades today, if at a certain point, you know, Equity issuance and and sort of taking advantage of that, that external growth to forward it to you. By the public market is an option that you guys will be open to

Ted Klinck: Sure, Dylan. I'll start, maybe Brendan can jump in. With regard to the acquisition pipeline, look, without a doubt, deal flow has picked up from last year. Not all of the assets that we're seeing are assets that we're interested in. Our acquisition investment team is certainly active on underwriting deals. Look, we're weighing that against development as well. Again, it's all about risk-adjusted yields. We're looking at virtually everything, whether it be core or value add. We'd love a value add deal where we can mark-to-market the rents and get a very attractive yield. We do measure it against development as well. While there's more opportunities out there, more sellers are bringing their assets to the market, more buyers looking at assets, so the capital markets, without a doubt, have more liquidity today than they have.

Ted Klinck: I wouldn't say there's anything. We're looking at a lot of stuff, but there's nothing imminent from our standpoint on the acquisition side.

Sure, Dylan. I'll I'll start maybe Brennan can jump in um, with regard to the acquisition pipeline look, without a doubt. Deal flow has picked up from last year, uh, not all of the assets that that we're seeing, um, are assets that were interested in, uh, but we are, you know, our our acquisition investment team is, is certainly active on on underwriting deals. Uh, but look, we're, you know, we're weighing that against development as well. Again. It's all about risk, adjusted yields. We're looking at virtually everything, whether it be core or value, add, um, and we'd love a value. Add deal where we can mark the market for rents and, and get a very attractive yield, but we do measure it against development as well. So, uh, while there's more opportunities out there and more sellers are, are bringing their assets to the market, more buyers looking at assets. So the capital markets, without a data have more liquidity today than they have. Um, I

Brendan Maiorana: Hey, Dylan, it's Brendan. Just what I would say in terms of sources of capital for new opportunities that are there, obviously, we've been very successful kind of selling assets, $375 million done year to date, additional ones that we expect to get done in the back half of the year. I think we are very focused on exiting the non-core pieces of the portfolio, and that's going to kind of happen regardless of recycling of those proceeds. We will do that. I think if there are other sources of capital to raise, we've been very judicious in terms of the equity over time. We contemplate that, and it's sort of just what the opportunity set is that's there.

Brendan Maiorana: I think we're very confident that we're going to have sources of capital coming in from the non-core asset sales that we get done in the back half of the year here, and then in all likelihood, next year as well.

Sort of just what the opportunity set is that's there. But I think we're very confident that we're going to have sources of capital coming in from the non-core asset sales that we get done in the back half of the year here, and then, in all likelihood, next year as well.

Dylan Burzinski: Great. Thanks, guys.

Great. Thanks guys.

Operator: Our last question comes from Mike from Truist Securities. Please go ahead. Your line is open.

Our last.

[Analyst] (Truist Securities): Thank you. I'm going to come back to the land and development theme. As prime space becomes more scarce and rents are going up, on the other hand, you're selling land. I understand it's on a case-by-case basis, but I guess a bigger picture question about how land fits into your strategy, how much should you hold in an environment like this? How patient are you in holding it? You had a question earlier sort of about opportunity cost of that. The rent's going up and the build-to-suit's becoming more likely, and yet selling down the land a little bit. Just maybe talk about that a little bit.

Mike Lewis: Thank you. I'm going to come back to the land and development theme. As prime space becomes more scarce and rents are going up, on the other hand, you're selling land. I understand it's on a case-by-case basis, but I guess a bigger picture question about how land fits into your strategy, how much should you hold in an environment like this? How patient are you in holding it? You had a question earlier sort of about opportunity cost of that. The rent's going up and the build-to-suit's becoming more likely, and yet selling down the land a little bit. Just maybe talk about that a little bit.

Coming from Truist Securities, please go ahead. The line is open.

Ted Klinck: Sure, Michael. Look, the land that we're selling, just so I'm clear, it's really non-core land. It's land that we look at, I think two to three times a year, we look at our land bank and say, Is that a good office land parcel? Or is that better use for a different use? We do have sort of land that we think is better for multi-family or better for retail. The land parcels we are selling really are all parcels that we believe are better suited for a different use. We're really not selling office land, because we do think having a judicious land bank is very advantageous for us as we're chasing build-to-suits. We can go through build-to-suit after build-to-suit that we would not have won if we didn't have land.

Uh thank you. So I'm going to come back to the the land and development theme. You know as Prime space becomes more scarce and rents are going up and yet on the other hand, you're selling land. So I understand it's on a Case by case basis, but I guess a bigger picture question about. You know, how land fits into your strategy? How much should you hold in an environment like this? You know how patient are you and holding it? You had a question earlier, sort of about opportunity cost of that. Um, so you know, the the rents going up and the bill to Suits become a more likely and yet selling down the land a little bit. Just maybe talk about that a little bit.

Sure Michael um look the land that we're selling just so I'm clear is it's really non-core land, its land that we you know look at you know I think 2 to 3 times a year we look at our land bank and say is that a good office land parcel uh or is that better use for a different use. So we do have sort of land that we think is better for multi family or better for retail. So the land Parcels we are selling really are all

Ted Klinck: Having the right amount of land is incredibly important for us as developers. It's just making sure we're selling. Some of the parcels we're selling, they used to be office land parcels. We just think the market has moved. Not every piece of land we've owned 10 years ago is an office piece of land today. We just take a hard look at it a few times a year, and we don't have that land, let's get rid of it, and let us go deploy into some other land.

[Analyst] (Truist Securities): Okay. The last question, I guess the last question of the call. This is a small one, but why repurchase $11 million of the 2027 notes? It looked to us like those are swapped at a really attractive rate, 3.78%. I don't know if there's a swap burning off or if there was another reason why you would tackle those early.

Mike Lewis: Okay. The last question, I guess the last question of the call. This is a small one, but why repurchase $11 million of the 2027 notes? It looked to us like those are swapped at a really attractive rate, 3.78%. I don't know if there's a swap burning off or if there was another reason why you would tackle those early.

Parcels that we believe are better suited for a different use, but really not selling office land because we do think having a judicious land bank is very, um, advantageous for us as we're chasing Bill to Suits, we can go through build the suit after build the suit that we would not have won if we didn't have land. So having the right amount of land, um, is incredibly important for us as developers. It's just making sure we're selling, what's not, you know. Well, there's some of the partials were selling. They used to be office land Parcels. Uh, but we just think the market has moved. So, not every piece of land. We've owned 10 years ago as an office piece of land today. So we we, we just take a, you know, take a hard look at it few times a year and and uh, we don't have that land. Let's get rid of it and let us go deploy into some other land.

Brendan Maiorana: Yeah. Hey, Michael, it's Brendan. Yeah, good question. That is the maturity that comes up in March of 2027. They're payable at par, starting in December. Given the excess proceeds that we had on the balance sheet, a lot of those proceeds were slated for that repayment. We just got those at a modest discount to par, and took those on early rather than wait to pay those off in par sometime between December and March. That was just the rationale for that. I think we'd do more if there was more available, but they don't trade that often, and so it's a little bit difficult to get at those.

Okay. And then the last question, I guess the last question of the call, um, this is a small 1. But um, why are we purchase 11 million dollars of the 2027 notes that with us like those are swapped, um, at a really attractive rate 3.78%. So I don't know if there's a swap burning off, or if there was another reason, um, why you would tackle those early,

[Analyst] (Truist Securities): Okay, I understand. Thank you.

Mike Lewis: Okay, I understand. Thank you.

Yeah. Hey Michael. It's Brendan um, yeah, good question. Um, it is um, that is the maturity that comes up in March of 27, their payable at par, um, starting in December and given the excess proceeds that we had, um, on the balance sheet, a lot of those proceeds were slated for that repayment. So we just got those at a modest discount to par, um, and took those on early rather than wait to pay those off and Par sometime between December and March. Um, so that that was just the rationale for, for that. Um, I think we, we do more if there was more available, but, you know, they they don't trade that often and so it's a little bit difficult to get at those.

Okay, I understand. Thank you.

Operator: We have no further questions. I would like to turn the call back over to Ted Klinck for any closing remarks.

We have no further questions, I would like to turn the call back.

Ted Klinck: Well, thank you everybody for joining the call this morning, and thank you for your continued interest in Highwoods Properties. Have a great rest of the summer. We look forward to seeing you all soon.

For any closing remarks.

Well, thank you, everybody, for joining the call this morning, and thank you for your continued interest in Highwoods Properties. Have a great rest of the summer, and we look forward to seeing you all soon.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

This concludes today's conference call. Thank you for your participation. You may now disconnect

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