Highwoods Properties (HIW) Nareit REIT Week: 2024 Investor Conference summary

Portfolio overview and strategy

• 27.5 million sq ft portfolio, 88.5% occupied, with 95% of NOI from Sun Belt markets and 94% from ULI's top 20 markets in 2024.

• Diversification across CBD, infill, and suburban submarkets, focusing on 'Best Business Districts' for resilience and outperformance.

• No customer or industry exceeds 4% and 20% of revenue, respectively; coworking exposure is minimal.

• Average in-place rents have grown at a 4.2% CAGR, with positive same-property NOI since 2013.

• Steady occupancy and positive lease spreads, with annual rent bumps in most leases.

Financial performance and outlook

• Cash flow has grown at a 5.5%-6% CAGR over 13 years, with transparent reporting of all capital expenditures.

• Backfilled vacancies in two major buildings will drive significant NOI and earnings growth in 2025.

• 2024 FFO per share expected in the mid-350s, with average occupancy around 88%.

• Occupancy has declined only 250 basis points since March 2020, or 100 basis points adjusted for backfilled vacancies.

Balance sheet and capital strategy

• Debt to EBITDA at 6x, Baa2/BBB ratings, no consolidated debt maturities until May 2026, and $750 million undrawn credit facility.

• Active asset recycling, with $80 million in non-core sales YTD and up to $150 million more planned in 2024.

• Asset sales are dilutive to near-term FFO but accretive to cash flow and portfolio quality.

• Over $500 million in development underway, with $40 million incremental NOI expected as projects stabilize.

• Land bank supports over $2 billion in future office and mixed-use development.