HIGHWOODS PROPERTIES, INC. — Call Transcript 2026

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. 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. 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. 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. Thanks, Brendan. Good morning, everyone. We had an excellent quarter executing on our key initiatives. Leasing volume was strong across our in-service and development properties. This is clear from the 50-basis point increase in our lease rate on our in-service portfolio, an 800-basis point increase in our lease rate on our developments. Both of these will deliver meaningful upside in NOI, cash flow, and FFO over the next few years as occupancy ramps. During the quarter, we invested $108 million in best-in-class commute-worthy properties in BBD locations in Dallas and Raleigh through joint ventures and sold $42 million of non-core properties in Richmond. All of this activity improves our portfolio and further cements the foundation for pushing our growth rate and cash flows meaningfully higher and will result in long-term value creation for our shareholders. Even with our strong performance on the quarter, we recognize the broader narrative that advances in AI could reshape the workforce and therefore affect long-term office demand. The range of potential outcomes is wide and varied, and at this point there are many unknowns. What we do know, however, is that customers and prospects haven't diminished their appetite for space and are making long-term commitments to their in-office strategies. Activity across our portfolio, our markets, and our BBDs is strong. Leasing was solid in the quarter. Our leasing pipeline remains robust. High quality space across our BBDs is dwindling, and there's little to no new supply expected during the foreseeable future. This flight to quality dynamic creates a strong backdrop for occupancy gains and rent growth, both of which we experienced in the first quarter. Demographic trends across our footprint are favorable, with business relocations and expansions re-accelerating, driving healthy population and job growth. We firmly believe high quality, commute-worthy properties in BBD locations owned by well-capitalized landlords are best positioned to capture increasing demand and improving economics. Turning to the quarter, we delivered solid financial performance with FFO of $0.84 per share. We maintained our outlook for the year. Our leasing performance was excellent. We signed 958,000 square feet of second gen leases, including over 300,000 square feet of new leases. We delivered GAAP rent growth of 19.4% and cash rent growth of 4.8%. Net effective rents were the second highest in company history and 9% higher than the prior five quarter average. Expansions, which we include as renewals, outpaced contractions at a ratio of nearly two to one. In addition, we signed 107,000 sq ft of first-generation leases across our development properties. Customers and prospects recognize the blocks of high-quality BBD located office space with well capitalized owners are diminishing across our footprint, which gives us strong pricing power in the best submarkets. We placed in service more than $200 million of 87% leased development properties during the quarter. GlenLake III, which comprises 203,000 sq ft of office and 15,000 sq ft of retail, is now 94% leased. Across the street, we delivered GlenLake II retail, which is 100% leased to Crooked Hammock Brewery. The addition of 24,000 square feet of food and beverage options elevates GlenLake's offerings and complements the nearly 1 million square feet of office we have here. This has supported our ability to push rents across this park in West Raleigh. We also placed in service Granite Park Six in Dallas' Legacy BBD. This 422,000 square foot best-in-class office property is 80% leased. We also made strong progress leasing up our two remaining development properties. 23Springs, our 642,000 square foot development project in Uptown Dallas, continues to garner strong activity with the lease rate now 83%, up from 75% last quarter and 62% 12 months ago. We have strong prospects to bring our lease rate at 23Springs into the 90s. In Tampa's Westshore BBD, our 143,000 sq ft Midtown East development is now 95% leased, up from 76% last quarter and 39% 12 months ago. The office component at Midtown East is 100% leased. On a combined basis, the properties placed in service during the first quarter and in our remaining development pipeline are 86% leased, but only 48% occupied. As the leases commence, we will capture significant growth in NOI, cash flow, and FFO. We are starting to receive interest from build-to-suit and sizable anchor prospects for potential new development. It's still early, and it's hard to say whether any of these discussions will result in new projects, but the increased interest is encouraging and signifies the limited inventory companies face when searching for large blocks of high-quality space. On the disposition front, we sold a non-core portfolio in Richmond for $42 million. As reflected in our outlook, we expect to sell roughly $200 million of additional non-core assets by the middle of this year and are marketing other assets for sale. We believe we will be able to redeploy capital from non-core asset and land sales on a leverage-neutral basis that will further strengthen our cash flows and result in higher growth. As we announced last week, we may also use non-core disposition proceeds to repurchase up to $250 million of outstanding shares of our common stock on a leverage-neutral basis. We continue to evaluate acquisition opportunities and highly pre-leased developments, but repurchasing our shares is another capital deployment option we now have in our arsenal. Before turning the call over to Brian, I want to reiterate the priorities we have highlighted over the past few years that will drive long-term value creation for our shareholders. First, we will continue to drive occupancy towards stabilized levels in our operating portfolio. Second, we will deliver and stabilize our development pipeline. Third, we will improve our portfolio quality and long-term growth rate by recycling out of non-core CapEx intensive assets in non-BBD locations and invest in properties with better cash flows and higher long-term growth rates. Fourth, we will do all this while maintaining a strong and flexible balance sheet. We made meaningful progress on each of these priorities during the first quarter. We believe the focus on these four areas, combined with a strong fundamental backdrop in our core BBDs due to the healthy demand and limited new supply, will drive significant growth in cash flow and long-term value over the next several years. Brian? Thanks, Ted. Good morning, everyone. Our operating results continue to reflect the advantage of owning commute-worthy, amenitized assets in the best business districts of high-growth Sunbelt metros. Fundamentals across our markets continue to improve as evidenced by vacancy rates and sublease space declining. Rents are up, which combined with steady concession packages, has resulted in higher net effective rents. As far as supply goes, the best of the best and the best of the rest are in high demand. With office construction at historic lows or non-existent in many markets, new office inventory is in scarce supply. With demolitions outpacing deliveries nationwide, the flight to quality has become, in many cases, an all-out sprint to quality, with users proactively inquiring for early extensions to lock in location and terms. A common theme across our markets is that office rents pale in comparison to the investment customers have in their people, and that exceptional environments and experiences yield superior results when their people are in the office and being better together. Customers are choosing well-located, highly amenitized Class A buildings with well-capitalized owners and customer-centric operations, and they are willing to pay for it. They are moving to metros that continue to win people and companies with the highest quality of life and most business-friendly outlooks. This is the Highwoods portfolio. This is the Highwoods team, and these are our Sunbelt markets and BBDs. Starting with Dallas, the metroplex remains one of the country's premier destinations for corporate headquarters and expansions, which shouldn't be a surprise at this point, considering it is Site Selection Magazine's number one city for headquarter relocations and is in the state Chief Executive Magazine has deemed as the best for business 21 consecutive years. From 2018 through 2024, Dallas landed roughly 100 headquarter relocations, with 11 more in 2025. The region continues to attract diverse firms across financial and professional services, advanced manufacturing, logistics, and life sciences, seeking a central location, business-friendly environment, and a deep labor pool. That macro story is consistent with the office fundamentals you see in the Q1 broker data. According to Cushman & Wakefield, DFW recorded 117,000 sq ft of positive net absorption in the first quarter of 2026. Its fifth consecutive positive quarter, with nearly 340,000 sq ft of positive absorption in Class A as Class B continues to shed space. Our Dallas portfolio is in Uptown, Legacy, and Preston Center, which is the tightest submarket in the region with less than 6% vacancy and is home to one of our latest acquisitions, The Terraces. These BBDs are squarely in the path of demand. The mark to market we're realizing via second-generation leasing, both at McKinney & Olive and at Terraces, is significant, generating gap rent spreads of 27%. Turning to Charlotte, the city is increasingly recognized as a strategic hub that's being validated by headline corporate decisions. Among the 104 metros that Cushman & Wakefield tracks, Charlotte was number one for job growth. To that end, subsequent to our most recent earnings call in February, three global financial institutions have made major new job announcements. Already with an established home in Charlotte South Park BBD, where we have almost 800,000 sq ft, J.P. Morgan recently announced plans for an eventual 1,000 job regional hub, with 400 of those to be hired by 2028. Two new entries to the market include Capital Group's planned new home in Uptown with 600 new employees. After a nationwide search, Sumitomo Mitsui Banking Corporation, one of Japan's largest banks, selected Uptown as well for a second U.S. headquarters, creating 2,000 jobs by the end of 2032, with an average salary for these 2,000 jobs projected to be over $165,000 a year. This macro backdrop aligns perfectly with Q1 office fundamentals. CBRE noted approximately 410,000 sq ft of positive net absorption in the first quarter and total leasing volume of roughly 1.4 million sq ft, up nearly 74% year-over-year, with about 70% of that volume in Class A buildings. In Uptown, the denominator is shrinking as millions of sq ft of office space are being taken out of inventory for conversions to residential, hotel, and retail uses. Strong demand for high-quality space and limited new supply are yielding a landlord favorable environment for driving leasing fundamentals. Our Charlotte assets are directly benefiting from this demand, which is why we're seeing strong rent roll-ups and net effective rent growth in Charlotte. In Raleigh, the long-term story of in-migration and organic growth remains intact. Recent census estimates show the Raleigh metro is one of the 10 fastest growing in the country between 2024 and 2025. Statewide, North Carolina ranked first in domestic net migration and third in overall population gain for the same period, adding an estimated 146,000 residents. CBRE's tech report noted that the Raleigh area also produces nearly 5,000 tech graduates annually, reinforcing a sustainable pipeline of skilled workers. Office fundamentals reflect that strength in the best business districts, and our team was busy for the quarter, signing over 200,000 square feet of second-generation space. Our two new developments at GlenLake, which offer a mix of uses and are 95% leased, and Block 83, our recent mixed-use JV acquisition, which is 97% leased in Raleigh CBD, are directly aligned with where both immigration and corporate demand is strongest. Finishing in Nashville, where strong population growth and a diversified economy continue to attract brand name employers. Just last month, Starbucks announced a $100 million plan to open a Southeast corporate office in downtown Nashville for 2,000 employees, with some relocating from Seattle and to balance new hires in Nashville. Office data for the first quarter shows that demand is focused on newer or newly amenitized Class A nodes and our 287,000 sq ft of quarterly leasing with a weighted average lease term of 9.8 years and cash and GAAP rent spreads of 9.4% and 26.5% respectively, bears witness to this data. Across our footprint, we're aligning capital with the metros and submarkets that continue to win people, jobs, and corporate investment. We're making sure our portfolio and people are prepared to deliver commute-worthy experiences to our customers and their teams. Our success this quarter supports this strategy, and we're confident will continue to serve us well. Brendan? Thanks, Brian. In the first quarter, we delivered net income of $31.3 million or $0.29 per share and FFO of $94 million or $0.84 per share. The quarter included a $17 million property sale gain from our disposition in Richmond that was included in net income but not included in FFO. During the quarter, we received a term fee at an unconsolidated JV for a net $2.2 million or $0.02 per share from a customer moving from McKinney & Olive to 23Springs, and we sold our interest in a third-party brokerage services firm, resulting in a $1.4 million gain. These two items were included in FFO and were factored into our original FFO outlook. Otherwise, there were no unusual items in the quarter. You may have noticed some minor changes to our supplemental package we released yesterday that we believe will make it easier to derive our share of joint venture NOI. We also broke out Dallas as its own market now that we have three in-service properties in Dallas, which will increase to four upon stabilization of 23Springs. Our other markets now primarily consist of our non-core Pittsburgh and Richmond portfolios. We are pleased with our first quarter financial results, which demonstrate the resiliency of our operations and cash flows. Even more consequential was this quarter's leasing activity on both the in-service portfolio and development pipeline, which positions us to increase occupancy and deliver NOI growth during the remainder of 2026 and beyond. Our lease rate is 89.7%, up from 89.2% one quarter ago. The spread between our leased and occupied rates of 470 basis points is three times our normal historical spread, a strong indicator for future occupancy gains. We reiterated our year-end occupancy outlook of 86.5%-88.5%, which implies a 250-basis point increase at the midpoint over the remaining three quarters of the year. Our balance sheet remains in good shape. We had over 650 million of available liquidity at the end of the quarter, and subsequent to quarter end, we closed a $100 million secured mortgage at Granite Park Six, resulting in over $50 million of capital to Highwoods. We expect to close one or more additional financings at JVs during the remainder of the year, which will repatriate capital back to Highwoods and improve our liquidity and unencumbered debt-to-EBITDA ratio. Based on our current expectations of NOI growth and assuming $200 million of non-core asset sales, we expect to end the year with debt-to-EBITDA in the low to mid sixes, with additional reductions likely in future periods as NOI grows. We have only $40 million of remaining capital needed to complete our share of the development properties. These properties, combined with the developments placed in service this quarter, will deliver over $20 million of annual NOI growth compared to the Q1 26 run rate. As Ted mentioned, we have maintained our FFO outlook of $3.40 to $3.68 per share. It's still early in the year, and while we're off to a strong start with our leasing activity, most of these leases will have a financial benefit to 2027 and thereafter. Before we turn the call over for questions, there are a couple of items to note. First, I mentioned the term fee and gain on sale we recorded in the first quarter. We do expect some additional term fees in the remainder of the year, as is typical, but these are expected to be lower in subsequent quarters. We also expect some additional other income items in the second half of the year. In total, these items are expected to be around $0.06-$0.07 for full year 2026, which is approximately $0.05 lower than 2025. Second, capitalized interest is expected to be lower for the foreseeable future, as we will no longer capitalize interest expense at 23Springs or Midtown East. There is significant embedded NOI growth at these properties due to leases that are signed but won't be fully online before the middle of 2027. Third, as is typical, G&A was higher in Q1 due to the expensing of annual equity grants. G&A is expected to be lower for the remaining quarters of the year. Given these factors and our expectation of steadily increasing occupancy during the final three quarters of 2026, we expect FFO to increase in the second half of the year. Operator, we are now ready for questions. Thank you. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. Our first question comes from Seth Berge from Citi. Please go ahead. Your line is open. Hi, good morning. Thanks for taking my question. I guess I just wanted to go back to some of your comments and prepared remarks about, you know, discussions around potential new developments, and then you obviously announced kind of the share reauthorization. I'm just curious kind of, you know, how do you think about capitalization priorities and, you know, how do those two opportunities kind of compare to each other today? Hey, Seth, it's Ted. Look, I think we're always looking at the best ways to improve, you know, our long-term growth rate, strengthen our cash flows, make us more resilient cash flows, improve the quality of the portfolio. I just think our stock buyback gives us another option to think about and gives us optionality. I think, you know, over the years, we've proven to be pretty disciplined allocators of capital. We've rotated between acquisitions and development throughout, you know, various cycles, always looking at what's the best risk-adjusted return. Again, the stock buyback just gives us one more option to consider. You know, last year, we were very active on the acquisition side. We, you know, acquired on our shared interest about $580 million worth of assets that were, we consider, very attractive pricing. Now, as you alluded to, we're becoming more constructive on development. You know, there's a shortage of high-quality space, so we're fielding calls, whether it be build-to-suits or pre-leased office development. Development's hard these days, right? It's expensive. It's hard to finance. Interest costs are higher. Everything about development's really hard right now. We think there's opportunities for well-capitalized developers to earn, you know, pretty attractive risk-adjusted returns. Again, we look at everything, but development is certainly becoming more constructive Thanks. Just on the potential opportunity for dispositions. You know, just given kind of rates, and some of the changes in the 10-year, and maybe some of the macro headlines around AI. Are you seeing any changes towards the type of capital they're interested in investing in an office product and any changes in pricing? I'd say the short answer is no, at least not yet. You know, if you think about since last year, call it since early 2025, through the disposition we had in January. We sold about $270 million at, you know, roughly right at an 8% cap rate, which sort of matched up with our acquisitions. You know, we've got a lot of assets out in the market. I think, you know, we've said we're gonna try and get $190 million-$210 million done by midyear. We're on track to doing that, and we have other assets that are in the market as well and at various stages of the process. We have not seen really any changes whatsoever in the profile of the buyers. Great. Thank you. Our next question comes from Blaine Heck from Wells Fargo. Please go ahead, your line is open. Great. Thanks. Good morning. You've had a solid start to the year on the leasing side. I was hoping you could comment on the leasing economics you've seen thus far and maybe how you would expect rent spreads and concessions to trend during the full year of 2026? Maybe I'll start, Blaine, and then Brian or Brendan can jump in. Look, as you alluded, we had a great start to the year with, you know, up almost 5% on cash, 19+% on GAAP. It, you know, it can vary quarter to quarter. It can just be a mix, as you know. I think in general, the macro, our macro view is: Look, there's a pretty good setup for office owners over the long term. Again, quarter to quarter can bounce around a little bit. Look, what we know is demand remains strong in our markets. We're not seeing any impact whatsoever thus far on AI. It's been a net positive to us. We've signed a couple AI related users, we're not seeing anything there. There's absolutely, to Brian's point in his prepared remarks, there's a dwindling supply of high-quality space in the BBDs. There's going to be a shortage of this space, I think, in the next couple years, given that no new construction. Ongoing constructions at a, I think, a historic low, according to JLL. We're starting to see that, and that's going to accrue to the benefit, I think, to office owners. Look, again, we don't know exactly what the metrics are going to look like, but we do think there's a pretty good setup for owners of high-quality office space in our BBDs. Also, one other thing we've got at wind at our back is the in-migration. It's just continuing. Brian alluded to a few big announcements in Charlotte, but we're seeing that in Dallas. We're seeing that in other markets as well, obviously to varying degrees. Just in general, everything about the supply demand backdrop feels pretty good right now. Blaine, this is Brian. I might just add a little anecdote or to add on to that. We've mentioned on previous calls that we have been proactive in many cases in connecting with customers well in advance of expirations since we had term and arguably, kind of a catch market to push out those extensions. Because we don't have pending secured debt expirations and things like that, we could look beyond. They're now reaching out to us too. They. So, that's a kind of unique change. They wanna secure where they're at. They wanna secure terms and not get kind of caught at a mark to market a few years down. I think that's also helpful. If you think about that K-shaped re-recovery, well, maybe it's not universal in terms of the entire portfolio, but we feel really good that the great majority is on the top side of that K, and we're benefiting from that. Great. That's helpful color. Ted, I wanted to follow up on your commentary on the potential for build-to-suit opportunities. Are there specific markets that you're seeing that demand increase in? Is there any color on the profile of tenants that you might be talking to? Lastly, would those potential build-to-suits occur on land you already own, or might you need to acquire some land if those come to fruition? Yeah. Let me make sure I hit all these. Marketwise, there's various markets, so multiple markets. You know, it's some of our top markets. I don't wanna get real specific. We're competing on some of these, and some of them are still multi-state competitions as well that, you know, we haven't even won it from a market perspective. It's in our larger markets, as you'd expect. Customer-wise, it varies from. It can be financial services, regular corporates as well. It varies across the board there. I'd say there's no real theme to it. The only theme being there's a shortage of space in the market, in the sub-market they wanted to be in. Across the board, but it is in our larger markets, but multiple markets. Great. That's helpful. Is it on land that you already own or might you have to go out and purchase? Yeah. Sorry about that. I missed that one. It's both. No problem. Okay. Thank you. Blaine, I just wanna be clear. We wouldn't go out and buy land to land bank. I think it would only be subject to a build-to-suit that's there. I don't want anybody to get the impression that the land inventory is gonna go up. It's more likely to go down from here. Right. Okay. Thanks a lot for the color Our next question comes from Peter Abramowitz from Deutsche Bank. Please go ahead, your line is open. Yes, thank you for taking the questions. I think last quarter you talked about, you needed around 700,000 sq ft this year of vacancy leasing that would actually take occupancy to kind of hit the midpoint of your guidance, and also mentioned, I think a retention rate of around 35% or 40% on your 2026 expirations. Just curious, I guess on the leasing you did this quarter, you know, the 300,000 sq ft of new leasing, how much of that will kind of go toward that 700,000 for the full year that'll actually take occupancy before year-end? Is kind of the math still the same on the retention and renewal side as well? Hey Peter, it's Brendan. Good question. The math pretty much rolls forward from everything that we did in the first quarter. The good thing is we moved that leased rate up. I think we had talked about at the beginning of the year that we had about 1.2 million square feet of leases that were signed that would commence by the end of 2026. We have moved a number of those leases into occupancy during the first quarter, but fortunately we've replaced that and so we still have about 1.2 million square feet of signed leases that will commence by the end of the year. We had expirations. What we have out of the remaining expirations, there's probably somewhere in the neighborhood of 850,000-900,000 square feet of likely kind of move outs based on what's left over. That leaves us positive net absorption from 3/31 of 300,000+ square feet, which means we have another 300,000-400,000 square feet to sign and start to get into this year. We feel good about that. That's down from that 700 that you mentioned kind of at the beginning of the year. If we keep that pace of roughly 100,000 square feet of new per month, that kind of puts us right on track to get to the midpoint of that year-end occupancy range of 87.5%. Okay. I appreciate that. That's helpful. Thanks, Brendan. On the Richmond sales, I think you talked about, sort of an overall blended cap rate for sales last year through January, but I wanted to ask, what was the cap rate specifically, on that portfolio that you sold in Richmond? Yeah, Peter, it was again, the blended. You know, that's up on the upper end of that. I think it was a, you know, maybe a low double digit type cap rate, but very low double digit. Okay. That's kind of incorporated in that blended number, I think you said around 8%? That's correct. Okay. Okay. Gotcha. Then one more if I could. It looks like the in the same store pool, operating expense growth was a little bit elevated in the quarter. Was there anything kind of unique to first quarter results that you wanted to call out or anything that we should kind of be mindful of going forward? Yeah, Peter. Just as you can probably expect from the winter, right, we had some pretty cold weather, particularly kind of in February. Utility costs were up pretty significantly kind of year-over-year. That really drove the sizable increase in expenses. That was probably the biggest one that's there. Given we were, I think, negative 60 basis points on same store, in the quarter, and we're expecting roughly flat kind of for the year. We think that that number is probably gonna be low again in Q2 and then positive in the back half of the year to average out to be flat for the full year on a cash basis and positive on a GAAP basis. All right. That's all for me. Thank you. Our next question comes from Ronald Kamdem from Morgan Stanley. Please go ahead, your line is open. Great. Just following up on that sort of same store thread, I just wonder if you can give some of the breadcrumbs as we're thinking about into 2027. As the occupancy starts to ramp, presumably you'd be at a better pace as you're copping into next year. Any other sort of puts and takes that we should be thinking about, potential acceleration? Thanks. Ron. Thanks for the question. I think you'll see, you know, that kind of second half 2026 improvement in same store, I think in all likelihood carries into 2027, so you should see good same store results there. I think if from an earnings perspective, you know, what I can kind of give some breadcrumbs there in terms of thinking about first half of this year and then as you go into the back half of this year, which should be helpful as you think about next year numbers. I mentioned in prepared remarks, right? We had the gain on the third-party brokerage sale. We had the term fee. Those combined were $0.03 in the quarter. G&A is similarly sort of $0.03 higher in the first quarter. Those things kind of offset each other. I think we've got cap interest that will go away on 23Springs and Midtown East. That's probably $0.02. That is probably partially offset by a little higher NOI in Q2. We mentioned that we've got the $200 million of dispositions that we expect to kind of have, and that will be a little bit dilutive in terms of we're just gonna kind of pay down the line of credit and probably keep the remainder in cash for the balance of the year in preparation for paying off the 2027 bond. All that means probably your second quarter is gonna be a little lower than where Q1 was from an FFO perspective. If you think about getting to the midpoint of guidance ex land sale gains, it obviously implies a pretty meaningful ramp in the back half of the year or so. I think that's positive kinda as you think about the second half of 2026 and then ultimately into 2027. Got it. That's helpful. My second question is just on the capital recycling front. On the buy side, is it, is it all in. It sounds like Dallas obviously is really interesting. Is the acquisition opportunities all in existing markets or is there some new markets in there? On the sell side, maybe an update on just the Pittsburgh, you know, portfolio situation and what you think timing, you know, maybe too soon for pricing, but that'd be helpful as well, could be on that. Thanks. Sure, Ron. On the acquisition side, yeah, we're primarily focused on our existing footprint. We're, you know, we're very pleased with our footprint. We do wanna grow in Dallas over time, we'll see where the acquisitions are. You sorta gotta go where the opportunity is. Largely in our, or entirely in our existing markets for now. On the dispo, really no update on Pittsburgh. We are gonna be bringing to market one of the smaller assets here soon. For the big asset, PPG Place, really no update. We're continuing to get some leasing done before we bring it to market. I think we're pleased with the capital markets are improving, both the debt and the equity capital markets. I think we're getting closer to launching but haven't set a date yet. We're trying to nail down a few leases before we do that. Great. That's it for me. Thank you. Our next question comes from Dylan Burzinski from Green Street. Please go ahead, your line is open. Hey, guys. Thanks for taking the question. I guess just on the build-to-suit opportunities, what sort of stabilized yield on cost would you guys require to kick one of those off in today's environment? Yeah, Dylan, again, it's hard to do a comparison, or hard to say. I mean, we don't really talk about just from a competitive standpoint. Virtually every deal can be different. It's obviously based on the market, the sub-market, the credit, the term, what annual bumps you're getting. It's hard to say. What I would tell you though is on a risk-adjusted basis, we think there are pretty attractive opportunities out there right now. I guess just thinking about sort of 2027, and obviously not going to get any guidance, but retention around 40% this year, I think, for 2026 expirations. Do you guys' sort of view that as a low point in retention as we think about 2027 and beyond? Or is there any one larger tenant in 2026 that might not make sense to use that as like a 2027 assumption? Just sort of trying to get a sense for, you know, the trajectory on retention as we think about, you know, the outer years. Yeah, Dylan, it's Brendan. I think your number is correct on 2026 in that, you know, 40% range, as we were kind of migrating into 2026. Just keep in mind that the 2026 renewals, most of the 2026 renewals that we did, we do early. As you kind of migrate into any given year, you've got adverse selection bias because you early renew folks and then the ones who you don't renew, you know, they remain in that expiration schedule. I think as we think about 2027 as of now, we're probably somewhere in that 50%-60% retention range on what's remaining in 2027. Even that number is probably lower than what the ultimate kind of likelihood is, given that we've got a number of expirations in 2027 where we've got the underlying tenant, but they have subleased to somebody else. That assumes that that underlying tenant vacates, and then we renew with the subtenant. That's not part of our retention calculation, so that would be part of a move-out and then signing on a new. I think we'll do pretty well on 2027 in terms of retention, which creates a good environment for us to continue to drive occupancy higher from year-end 2026 as we migrate throughout 2027. Okay, great. That's incredibly helpful, Brendan. Thanks so much. Our next question comes from Vikram Malhotra from Mizuho. Please go ahead, your line is open. Morning. Thanks for taking the question. Just two quick ones. I guess first, you know, on the trajectory from here, what do you kind of need to do, maybe I missed this, what do you need to do new leasing-wise for the rest of the year, kind of to hit that, you know, higher end or maybe even a midpoint of the year-end occupancy? Is there anything new in terms of additional move-outs or anything big we should just remind us going into next year in terms of, you know, potential move-outs? That's just the first. The second, you know, AI and leasing's been a big topic in San Fran in particular. We've heard some in New York. I'm just wondering, in your markets, are you hearing any AI-oriented firms look for space or expand away from sort of the West Coast? Thanks. Hey Vikram, it's Brendan. Maybe I'll start on just kinda leasing, needed to kinda hit those year-end numbers and then turn it over to Ted and Brian to talk about some of the specifics on the role in AI. Just in terms of leasing, I would say to get to the year-end 2026 occupancy range that we have, and let's talk about the midpoint, we think that's where we probably need to do roughly 100,000 square feet of new leasing per month, kind of through probably June or July. That kind of gets us pretty well-positioned. We think that those leases, in all likelihood, are gonna move into occupancy by end of year. I think to continue to have occupancy move higher as we go forward into 2027, we'd like to see that pace continue in the back half of the year, and that, in all likelihood, will create a good environment for us to continue to drive occupancy higher as we go throughout 2027. I think we feel like we're in good shape kind of as, you know, we're through the first quarter of the year here. We think we feel positive about the backdrop to allow us to continue to drive occupancy higher in 2027. I don't think there's any significant expirations in 2027 that we're particularly worried about. On the second question, AI, I alluded to it maybe I think earlier in the call. We've signed one AI related tenant. They're focused on data centers, and that was in Dallas, Vikram. Other than that, throughout our markets, we really haven't seen much AI demand at all. Thank you. Our last question comes from Nick Thillman from Baird. Please go ahead, your line is open. Hey, good morning, guys. Can you hear me? Yes. Yes. Okay. It, like, cut out for a second. Sorry. Just one quick question on just overall utilization within the portfolio and just maybe getting a understanding of just sublease availability within the portfolio. Do you guys have, like, a number on just occupied space that's currently listed for sublease? Actually, our sublease space is actually going down. I think it was down 6% or 7% last quarter. It is something we monitor. Some of it just to be, you know, just to be transparent, it goes to direct vacancy. Some is being taken off the market and utilized by our customers. You know, we have roughly 500,000, a little over 500,000 sq ft in our portfolio that is currently being subleased today. It is getting better, and we're seeing it both getting better in our portfolio, but the market as well. That was it for me. Thanks, all. Great. Thanks, Nick. We have no further questions. I would like to turn the call back over to Ted Klinck for any closing remarks. Well, thanks everybody for joining the call, and thanks for your interest in Highwoods. We look forward to seeing you, all at Nareit, if not before, or the next call. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker 6: 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. As a reminder, this conference call is being recorded. 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. i would now like to turn the call over to brendan maiorana executive vice president and chief financial officer Thank you. thank you Please go ahead. 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. 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. Thank you, operator, and good morning, everyone. 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. 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. 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. 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. 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. 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. 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. these risks and uncertainties are discussed at length in our press releases as well as our sec filings As you know, actual events and results can differ materially from these forward-looking statements, and the company does not undertake a duty to update any forward-looking statements. With that, I'll turn the call over to Ted. 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. 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. with that i'll turn the call over to ted

Speaker 10: Thanks, Brendan. Good morning, everyone. We had an excellent quarter executing on our key initiatives. Leasing volume was strong across our in-service and development properties. This is clear from the 50-basis point increase in our lease rate on our in-service portfolio, an 800-basis point increase in our lease rate on our developments. Both of these will deliver meaningful upside in NOI, cash flow, and FFO over the next few years as occupancy ramps. During the quarter, we invested $108 million in best-in-class commute-worthy properties in BBD locations in Dallas and Raleigh through joint ventures and sold $42 million of non-core properties in Richmond. All of this activity improves our portfolio and further cements the foundation for pushing our growth rate and cash flows meaningfully higher and will result in long-term value creation for our shareholders. Thanks, Brendan. thanks brendan Good morning, everyone. good morning everyone We had an excellent quarter executing on our key initiatives. we had an excellent quarter executing on our key initiatives Leasing volume was strong across our in-service and development properties. leasing volume was strong across our in-service and development properties This is clear from the 50-basis point increase in our lease rate on our in-service portfolio, an 800- basis point increase in our lease rate on our developments. this is clear from the 50-basis point increase in our lease rate on our in-service portfolio an 800- basis point increase in our lease rate on our developments Both of these will deliver meaningful upside in NOI, cash flow, and FFO over the next few years as occupancy ramps. both of these will deliver meaningful upside in noi cash flow and ffo over the next few years as occupancy ramps During the quarter, we invested $108 million in best-in-class commute-worthy properties in BBD locations in Dallas and Raleigh through joint ventures and sold $42 million of non-core properties in Richmond. during the quarter we invested $108 million in best-in-class commute-worthy properties in bbd locations in dallas and raleigh through joint ventures and sold $42 million of non-core properties in richmond All of this activity improves our portfolio and further cements the foundation for pushing our growth rate and cash flows meaningfully higher and will result in long-term value creation for our shareholders. all of this activity improves our portfolio and further cements the foundation for pushing our growth rate and cash flows meaningfully higher and will result in long-term value creation for our shareholders Even with our strong performance on the quarter, we recognize the broader narrative that advances in AI could reshape the workforce and therefore affect long-term office demand. The range of potential outcomes is wide and varied, and at this point there are many unknowns. What we do know, however, is that customers and prospects haven't diminished their appetite for space and are making long-term commitments to their in-office strategies. Activity across our portfolio, our markets, and our BBDs is strong. Leasing was solid in the quarter. Our leasing pipeline remains robust. High quality space across our BBDs is dwindling, and there's little to no new supply expected during the foreseeable future. This flight to quality dynamic creates a strong backdrop for occupancy gains and rent growth, both of which we experienced in the first quarter. Even with our strong performance on the quarter, we recognize the broader narrative that advances in AI could reshape the workforce and therefore affect long-term office demand. even with our strong performance on the quarter we recognize the broader narrative that advances in ai could reshape the workforce and therefore affect long-term office demand The range of potential outcomes is wide and varied, and at this point there are many unknowns. the range of potential outcomes is wide and varied and at this point there are many unknowns What we do know, however, is that customers and prospects haven't diminished their appetite for space and are making long-term commitments to their in-office strategies. what we do know however is that customers and prospects haven't diminished their appetite for space and are making long-term commitments to their in-office strategies Activity across our portfolio, our markets, and our BBDs is strong. activity across our portfolio our markets and our bbds is strong Leasing was solid in the quarter. leasing was solid in the quarter Our leasing pipeline remains robust. our leasing pipeline remains robust High quality space across our BBDs is dwindling, and there's little to no new supply expected during the foreseeable future. high quality space across our bbds is dwindling and there's little to no new supply expected during the foreseeable future This flight to quality dynamic creates a strong backdrop for occupancy gains and rent growth, both of which we experienced in the first quarter. this flight to quality dynamic creates a strong backdrop for occupancy gains and rent growth both of which we experienced in the first quarter Demographic trends across our footprint are favorable, with business relocations and expansions re-accelerating, driving healthy population and job growth. We firmly believe high quality, commute-worthy properties in BBD locations owned by well-capitalized landlords are best positioned to capture increasing demand and improving economics. Turning to the quarter, we delivered solid financial performance with FFO of $0.84 per share. We maintained our outlook for the year. Our leasing performance was excellent. We signed 958,000 square feet of second gen leases, including over 300,000 square feet of new leases. Demographic trends across our footprint are favorable, with business relocations and expansions re-accelerating, driving healthy population and job growth. demographic trends across our footprint are favorable with business relocations and expansions re-accelerating driving healthy population and job growth We firmly believe high quality, commute-worthy properties in BBD locations owned by well-capitalized landlords are best positioned to capture increasing demand and improving economics. we firmly believe high quality commute-worthy properties in bbd locations owned by well-capitalized landlords are best positioned to capture increasing demand and improving economics Turning to the quarter, we delivered solid financial performance with FFO of $0.84 per share. turning to the quarter we delivered solid financial performance with ffo of $0.84 per share We maintained our outlook for the year. we maintained our outlook for the year Our leasing performance was excellent. our leasing performance was excellent We signed 958,000 square feet of second gen leases, including over 300,000 square feet of new leases. we signed 958,000 square feet of second gen leases including over 300,000 square feet of new leases We delivered GAAP rent growth of 19.4% and cash rent growth of 4.8%. Net effective rents were the second highest in company history and 9% higher than the prior five quarter average. Expansions, which we include as renewals, outpaced contractions at a ratio of nearly two to one. In addition, we signed 107,000 sq ft of first-generation leases across our development properties. Customers and prospects recognize the blocks of high-quality BBD located office space with well capitalized owners are diminishing across our footprint, which gives us strong pricing power in the best submarkets. We placed in service more than $200 million of 87% leased development properties during the quarter. GlenLake III, which comprises 203,000 sq ft of office and 15,000 sq ft of retail, is now 94% leased. We delivered GAAP rent growth of 19.4% and cash rent growth of 4.8%. we delivered gaap rent growth of 19.4% and cash rent growth of 4.8% Net effective rents were the second highest in company history and 9% higher than the prior five quarter average. net effective rents were the second highest in company history and 9% higher than the prior five quarter average Expansions, which we include as renewals, outpaced contractions at a ratio of nearly two to one. expansions which we include as renewals outpaced contractions at a ratio of nearly two to one In addition, we signed 107,000 sq ft of first-generation leases across our development properties. in addition we signed 107,000 sq ft of first-generation leases across our development properties Customers and prospects recognize the blocks of high-quality BBD located office space with well capitalized owners are diminishing across our footprint, which gives us strong pricing power in the best submarkets. customers and prospects recognize the blocks of high-quality bbd located office space with well capitalized owners are diminishing across our footprint which gives us strong pricing power in the best submarkets We placed in service more than $200 million of 87% leased development properties during the quarter. we placed in service more than $200 million of 87% leased development properties during the quarter GlenLake III, which comprises 203,000 sq ft of office and 15,000 sq ft of retail, is now 94% leased. glenlake iii which comprises 203,000 sq ft of office and 15,000 sq ft of retail is now 94% leased Across the street, we delivered GlenLake II retail, which is 100% leased to Crooked Hammock Brewery. The addition of 24,000 square feet of food and beverage options elevates GlenLake's offerings and complements the nearly 1 million square feet of office we have here. This has supported our ability to push rents across this park in West Raleigh. We also placed in service Granite Park Six in Dallas' Legacy BBD. This 422,000 square foot best-in-class office property is 80% leased. We also made strong progress leasing up our two remaining development properties. 23Springs, our 642,000 square foot development project in Uptown Dallas, continues to garner strong activity with the lease rate now 83%, up from 75% last quarter and 62% 12 months ago. Across the street, we delivered GlenLake II retail, which is 100% leased to Crooked Hammock Brewery. across the street we delivered glenlake ii retail which is 100% leased to crooked hammock brewery The addition of 24,000 square feet of food and beverage options elevates GlenLake's offerings and complements the nearly 1 million square feet of office we have here. the addition of 24,000 square feet of food and beverage options elevates glenlake's offerings and complements the nearly 1 million square feet of office we have here This has supported our ability to push rents across this park in West Raleigh. this has supported our ability to push rents across this park in west raleigh We also placed in service Granite Park Six in Dallas' Legacy BBD. we also placed in service granite park six in dallas' legacy bbd This 422,000 square foot best-in-class office property is 80% leased. this 422,000 square foot best-in-class office property is 80% leased We also made strong progress leasing up our two remaining development properties. 23Springs, our 642,000 square foot development project in Uptown Dallas, continues to garner strong activity with the lease rate now 83%, up from 75% last quarter and 62% 12 months ago. we also made strong progress leasing up our two remaining development properties 23springs our 642,000 square foot development project in uptown dallas continues to garner strong activity with the lease rate now 83% up from 75% last quarter and 62% 12 months ago We have strong prospects to bring our lease rate at 23Springs into the 90s. In Tampa's Westshore BBD, our 143,000 sq ft Midtown East development is now 95% leased, up from 76% last quarter and 39% 12 months ago. The office component at Midtown East is 100% leased. On a combined basis, the properties placed in service during the first quarter and in our remaining development pipeline are 86% leased, but only 48% occupied. As the leases commence, we will capture significant growth in NOI, cash flow, and FFO. We are starting to receive interest from build-to-suit and sizable anchor prospects for potential new development. We have strong prospects to bring our lease rate at 23Springs into the 90s. we have strong prospects to bring our lease rate at 23springs into the 90s In Tampa's Westshore BBD, our 143,000 sq ft Midtown East development is now 95% leased, up from 76% last quarter and 39% 12 months ago. in tampa's westshore bbd our 143,000 sq ft midtown east development is now 95% leased up from 76% last quarter and 39% 12 months ago The office component at Midtown East is 100% leased. the office component at midtown east is 100% leased On a combined basis, the properties placed in service during the first quarter and in our remaining development pipeline are 86% leased, but only 48% occupied. on a combined basis the properties placed in service during the first quarter and in our remaining development pipeline are 86% leased but only 48% occupied As the leases commence, we will capture significant growth in NOI, cash flow, and FFO. as the leases commence we will capture significant growth in noi cash flow and ffo We are starting to receive interest from build-to-suit and sizable anchor prospects for potential new development. we are starting to receive interest from build-to-suit and sizable anchor prospects for potential new development It's still early, and it's hard to say whether any of these discussions will result in new projects, but the increased interest is encouraging and signifies the limited inventory companies face when searching for large blocks of high-quality space. On the disposition front, we sold a non-core portfolio in Richmond for $42 million. As reflected in our outlook, we expect to sell roughly $200 million of additional non-core assets by the middle of this year and are marketing other assets for sale. We believe we will be able to redeploy capital from non-core asset and land sales on a leverage-neutral basis that will further strengthen our cash flows and result in higher growth. As we announced last week, we may also use non-core disposition proceeds to repurchase up to $250 million of outstanding shares of our common stock on a leverage-neutral basis. It's still early, and it's hard to say whether any of these discussions will result in new projects, but the increased interest is encouraging and signifies the limited inventory companies face when searching for large blocks of high-quality space. it's still early and it's hard to say whether any of these discussions will result in new projects but the increased interest is encouraging and signifies the limited inventory companies face when searching for large blocks of high-quality space On the disposition front, we sold a non-core portfolio in Richmond for $42 million. on the disposition front we sold a non-core portfolio in richmond for $42 million As reflected in our outlook, we expect to sell roughly $200 million of additional non-core assets by the middle of this year and are marketing other assets for sale. as reflected in our outlook we expect to sell roughly $200 million of additional non-core assets by the middle of this year and are marketing other assets for sale We believe we will be able to redeploy capital from non-core asset and land sales on a leverage-neutral basis that will further strengthen our cash flows and result in higher growth. we believe we will be able to redeploy capital from non-core asset and land sales on a leverage-neutral basis that will further strengthen our cash flows and result in higher growth As we announced last week, we may also use non-core disposition proceeds to repurchase up to $250 million of outstanding shares of our common stock on a leverage-neutral basis. as we announced last week we may also use non-core disposition proceeds to repurchase up to $250 million of outstanding shares of our common stock on a leverage-neutral basis We continue to evaluate acquisition opportunities and highly pre-leased developments, but repurchasing our shares is another capital deployment option we now have in our arsenal. Before turning the call over to Brian, I want to reiterate the priorities we have highlighted over the past few years that will drive long-term value creation for our shareholders. First, we will continue to drive occupancy towards stabilized levels in our operating portfolio. Second, we will deliver and stabilize our development pipeline. Third, we will improve our portfolio quality and long-term growth rate by recycling out of non-core CapEx intensive assets in non-BBD locations and invest in properties with better cash flows and higher long-term growth rates. Fourth, we will do all this while maintaining a strong and flexible balance sheet. We made meaningful progress on each of these priorities during the first quarter. We continue to evaluate acquisition opportunities and highly pre-leased developments, but repurchasing our shares is another capital deployment option we now have in our arsenal. we continue to evaluate acquisition opportunities and highly pre-leased developments but repurchasing our shares is another capital deployment option we now have in our arsenal Before turning the call over to Brian, I want to reiterate the priorities we have highlighted over the past few years that will drive long-term value creation for our shareholders. before turning the call over to brian i want to reiterate the priorities we have highlighted over the past few years that will drive long-term value creation for our shareholders First, we will continue to drive occupancy towards stabilized levels in our operating portfolio. first we will continue to drive occupancy towards stabilized levels in our operating portfolio Second, we will deliver and stabilize our development pipeline. second we will deliver and stabilize our development pipeline Third, we will improve our portfolio quality and long-term growth rate by recycling out of non-core CapEx intensive assets in non-BBD locations and invest in properties with better cash flows and higher long-term growth rates. third we will improve our portfolio quality and long-term growth rate by recycling out of non-core capex intensive assets in non-bbd locations and invest in properties with better cash flows and higher long-term growth rates Fourth, we will do all this while maintaining a strong and flexible balance sheet. fourth we will do all this while maintaining a strong and flexible balance sheet We made meaningful progress on each of these priorities during the first quarter. we made meaningful progress on each of these priorities during the first quarter We believe the focus on these four areas, combined with a strong fundamental backdrop in our core BBDs due to the healthy demand and limited new supply, will drive significant growth in cash flow and long-term value over the next several years. Brian? We believe the focus on these four areas, combined with a strong fundamental backdrop in our core BBDs due to the healthy demand and limited new supply, will drive significant growth in cash flow and long-term value over the next several years. we believe the focus on these four areas combined with a strong fundamental backdrop in our core bbds due to the healthy demand and limited new supply will drive significant growth in cash flow and long-term value over the next several years Brian? brian

Speaker 3: Thanks, Ted. Good morning, everyone. Our operating results continue to reflect the advantage of owning commute-worthy, amenitized assets in the best business districts of high-growth Sunbelt metros. Fundamentals across our markets continue to improve as evidenced by vacancy rates and sublease space declining. Rents are up, which combined with steady concession packages, has resulted in higher net effective rents. As far as supply goes, the best of the best and the best of the rest are in high demand. With office construction at historic lows or non-existent in many markets, new office inventory is in scarce supply. With demolitions outpacing deliveries nationwide, the flight to quality has become, in many cases, an all-out sprint to quality, with users proactively inquiring for early extensions to lock in location and terms. Thanks, Ted. thanks ted Good morning, everyone. good morning everyone Our operating results continue to reflect the advantage of owning commute-worthy, amenitized assets in the best business districts of high-growth Sunbelt metros. our operating results continue to reflect the advantage of owning commute-worthy amenitized assets in the best business districts of high-growth sunbelt metros Fundamentals across our markets continue to improve as evidenced by vacancy rates and sublease space declining. fundamentals across our markets continue to improve as evidenced by vacancy rates and sublease space declining Rents are up, which combined with steady concession packages, has resulted in higher net effective rents. rents are up which combined with steady concession packages has resulted in higher net effective rents As far as supply goes, the best of the best and the best of the rest are in high demand. as far as supply goes the best of the best and the best of the rest are in high demand With office construction at historic lows or non-existent in many markets, new office inventory is in scarce supply. with office construction at historic lows or non-existent in many markets new office inventory is in scarce supply With demolitions outpacing deliveries nationwide, the flight to quality has become, in many cases, an all-out sprint to quality, with users proactively inquiring for early extensions to lock in location and terms. with demolitions outpacing deliveries nationwide the flight to quality has become in many cases an all-out sprint to quality with users proactively inquiring for early extensions to lock in location and terms A common theme across our markets is that office rents pale in comparison to the investment customers have in their people, and that exceptional environments and experiences yield superior results when their people are in the office and being better together. Customers are choosing well-located, highly amenitized Class A buildings with well-capitalized owners and customer-centric operations, and they are willing to pay for it. They are moving to metros that continue to win people and companies with the highest quality of life and most business-friendly outlooks. This is the Highwoods portfolio. This is the Highwoods team, and these are our Sunbelt markets and BBDs. A common theme across our markets is that office rents pale in comparison to the investment customers have in their people, and that exceptional environments and experiences yield superior results when their people are in the office and being better together. a common theme across our markets is that office rents pale in comparison to the investment customers have in their people and that exceptional environments and experiences yield superior results when their people are in the office and being better together Customers are choosing well-located, highly amenitized Class A buildings with well-capitalized owners and customer-centric operations, and they are willing to pay for it. customers are choosing well-located highly amenitized class a buildings with well-capitalized owners and customer-centric operations and they are willing to pay for it They are moving to metros that continue to win people and companies with the highest quality of life and most business-friendly outlooks. they are moving to metros that continue to win people and companies with the highest quality of life and most business-friendly outlooks This is the Highwoods portfolio. this is the highwoods portfolio This is the Highwoods team, and these are our Sunbelt markets and BBDs. this is the highwoods team and these are our sunbelt markets and bbds Starting with Dallas, the metroplex remains one of the country's premier destinations for corporate headquarters and expansions, which shouldn't be a surprise at this point, considering it is Site Selection Magazine's number one city for headquarter relocations and is in the state Chief Executive Magazine has deemed as the best for business 21 consecutive years. From 2018 through 2024, Dallas landed roughly 100 headquarter relocations, with 11 more in 2025. The region continues to attract diverse firms across financial and professional services, advanced manufacturing, logistics, and life sciences, seeking a central location, business-friendly environment, and a deep labor pool. That macro story is consistent with the office fundamentals you see in the Q1 broker data. According to Cushman & Wakefield, DFW recorded 117,000 sq ft of positive net absorption in the first quarter of 2026. Starting with Dallas, the metroplex remains one of the country's premier destinations for corporate headquarters and expansions, which shouldn't be a surprise at this point, considering it is Site Selection Magazine's number one city for headquarter relocations and is in the state Chief Executive Magazine has deemed as the best for business 21 consecutive years. starting with dallas the metroplex remains one of the country's premier destinations for corporate headquarters and expansions which shouldn't be a surprise at this point considering it is site selection magazine's number one city for headquarter relocations and is in the state chief executive magazine has deemed as the best for business 21 consecutive years From 2018 through 2024, Dallas landed roughly 100 headquarter relocations, with 11 more in 2025. from 2018 through 2024 dallas landed roughly 100 headquarter relocations with 11 more in 2025 The region continues to attract diverse firms across financial and professional services, advanced manufacturing, logistics, and life sciences, seeking a central location, business-friendly environment, and a deep labor pool. the region continues to attract diverse firms across financial and professional services advanced manufacturing logistics and life sciences seeking a central location business-friendly environment and a deep labor pool That macro story is consistent with the office fundamentals you see in the Q1 broker data. that macro story is consistent with the office fundamentals you see in the q1 broker data According to Cushman & Wakefield, DFW recorded 117,000 sq ft of positive net absorption in the first quarter of 2026. according to cushman & wakefield dfw recorded 117,000 sq ft of positive net absorption in the first quarter of 2026 Its fifth consecutive positive quarter, with nearly 340,000 sq ft of positive absorption in Class A as Class B continues to shed space. Our Dallas portfolio is in Uptown, Legacy, and Preston Center, which is the tightest submarket in the region with less than 6% vacancy and is home to one of our latest acquisitions, The Terraces. These BBDs are squarely in the path of demand. The mark to market we're realizing via second-generation leasing, both at McKinney & Olive and at Terraces, is significant, generating gap rent spreads of 27%. Turning to Charlotte, the city is increasingly recognized as a strategic hub that's being validated by headline corporate decisions. Among the 104 metros that Cushman & Wakefield tracks, Charlotte was number one for job growth. Its fifth consecutive positive quarter, with nearly 340,000 sq ft of positive absorption in Class A as Class B continues to shed space. its fifth consecutive positive quarter with nearly 340,000 sq ft of positive absorption in class a as class b continues to shed space Our Dallas portfolio is in Uptown, Legacy, and Preston Center, which is the tightest submarket in the region with less than 6% vacancy and is home to one of our latest acquisitions, The Terraces. our dallas portfolio is in uptown legacy and preston center which is the tightest submarket in the region with less than 6% vacancy and is home to one of our latest acquisitions the terraces These BBDs are squarely in the path of demand. these bbds are squarely in the path of demand The mark to market we're realizing via second-generation leasing, both at McKinney & Olive and at Terraces, is significant, generating gap rent spreads of 27%. the mark to market we're realizing via second-generation leasing both at mckinney & olive and at terraces is significant generating gap rent spreads of 27% Turning to Charlotte, the city is increasingly recognized as a strategic hub that's being validated by headline corporate decisions. turning to charlotte the city is increasingly recognized as a strategic hub that's being validated by headline corporate decisions Among the 104 metros that Cushman & Wakefield tracks, Charlotte was number one for job growth. among the 104 metros that cushman & wakefield tracks charlotte was number one for job growth To that end, subsequent to our most recent earnings call in February, three global financial institutions have made major new job announcements. Already with an established home in Charlotte South Park BBD, where we have almost 800,000 sq ft, J.P. Morgan recently announced plans for an eventual 1,000 job regional hub, with 400 of those to be hired by 2028. Two new entries to the market include Capital Group's planned new home in Uptown with 600 new employees. After a nationwide search, Sumitomo Mitsui Banking Corporation, one of Japan's largest banks, selected Uptown as well for a second U.S. headquarters, creating 2,000 jobs by the end of 2032, with an average salary for these 2,000 jobs projected to be over $165,000 a year. This macro backdrop aligns perfectly with Q1 office fundamentals. To that end, subsequent to our most recent earnings call in February, three global financial institutions have made major new job announcements. to that end subsequent to our most recent earnings call in february three global financial institutions have made major new job announcements Already with an established home in Charlotte South Park BBD, where we have almost 800,000 sq ft, J.P. already with an established home in charlotte south park bbd where we have almost 800,000 sq ft j.p Morgan recently announced plans for an eventual 1,000 job regional hub, with 400 of those to be hired by 2028. morgan recently announced plans for an eventual 1,000 job regional hub with 400 of those to be hired by 2028 Two new entries to the market include Capital Group's planned new home in Uptown with 600 new employees. two new entries to the market include capital group's planned new home in uptown with 600 new employees After a nationwide search, Sumitomo Mitsui Banking Corporation, one of Japan's largest banks, selected Uptown as well for a second U.S. headquarters, creating 2,000 jobs by the end of 2032, with an average salary for these 2,000 jobs projected to be over $165,000 a year. after a nationwide search sumitomo mitsui banking corporation one of japan's largest banks selected uptown as well for a second u.s headquarters creating 2,000 jobs by the end of 2032 with an average salary for these 2,000 jobs projected to be over $165,000 a year This macro backdrop aligns perfectly with Q1 office fundamentals. this macro backdrop aligns perfectly with q1 office fundamentals CBRE noted approximately 410,000 sq ft of positive net absorption in the first quarter and total leasing volume of roughly 1.4 million sq ft, up nearly 74% year-over-year, with about 70% of that volume in Class A buildings. In Uptown, the denominator is shrinking as millions of sq ft of office space are being taken out of inventory for conversions to residential, hotel, and retail uses. Strong demand for high-quality space and limited new supply are yielding a landlord favorable environment for driving leasing fundamentals. Our Charlotte assets are directly benefiting from this demand, which is why we're seeing strong rent roll-ups and net effective rent growth in Charlotte. In Raleigh, the long-term story of in-migration and organic growth remains intact. CBRE noted approximately 410,000 sq ft of positive net absorption in the first quarter and total leasing volume of roughly 1.4 million sq ft, up nearly 74% year-over-year, with about 70% of that volume in Class A buildings. cbre noted approximately 410,000 sq ft of positive net absorption in the first quarter and total leasing volume of roughly 1.4 million sq ft up nearly 74% year-over-year with about 70% of that volume in class a buildings In Uptown, the denominator is shrinking as millions of sq ft of office space are being taken out of inventory for conversions to residential, hotel, and retail uses. in uptown the denominator is shrinking as millions of sq ft of office space are being taken out of inventory for conversions to residential hotel and retail uses Strong demand for high-quality space and limited new supply are yielding a landlord favorable environment for driving leasing fundamentals. strong demand for high-quality space and limited new supply are yielding a landlord favorable environment for driving leasing fundamentals Our Charlotte assets are directly benefiting from this demand, which is why we're seeing strong rent roll-ups and net effective rent growth in Charlotte. our charlotte assets are directly benefiting from this demand which is why we're seeing strong rent roll-ups and net effective rent growth in charlotte In Raleigh, the long-term story of in-migration and organic growth remains intact. in raleigh the long-term story of in-migration and organic growth remains intact Recent census estimates show the Raleigh metro is one of the 10 fastest growing in the country between 2024 and 2025. Statewide, North Carolina ranked first in domestic net migration and third in overall population gain for the same period, adding an estimated 146,000 residents. CBRE's tech report noted that the Raleigh area also produces nearly 5,000 tech graduates annually, reinforcing a sustainable pipeline of skilled workers. Office fundamentals reflect that strength in the best business districts, and our team was busy for the quarter, signing over 200,000 square feet of second-generation space. Our two new developments at GlenLake, which offer a mix of uses and are 95% leased, and Block 83, our recent mixed-use JV acquisition, which is 97% leased in Raleigh CBD, are directly aligned with where both immigration and corporate demand is strongest. Recent census estimates show the Raleigh metro is one of the 10 fastest growing in the country between 2024 and 2025. recent census estimates show the raleigh metro is one of the 10 fastest growing in the country between 2024 and 2025 Statewide, North Carolina ranked first in domestic net migration and third in overall population gain for the same period, adding an estimated 146,000 residents. statewide north carolina ranked first in domestic net migration and third in overall population gain for the same period adding an estimated 146,000 residents CBRE's tech report noted that the Raleigh area also produces nearly 5,000 tech graduates annually, reinforcing a sustainable pipeline of skilled workers. cbre's tech report noted that the raleigh area also produces nearly 5,000 tech graduates annually reinforcing a sustainable pipeline of skilled workers Office fundamentals reflect that strength in the best business districts, and our team was busy for the quarter, signing over 200,000 square feet of second-generation space. office fundamentals reflect that strength in the best business districts and our team was busy for the quarter signing over 200,000 square feet of second-generation space Our two new developments at GlenLake, which offer a mix of uses and are 95% leased, and Block 83, our recent mixed-use JV acquisition, which is 97% leased in Raleigh CBD, are directly aligned with where both immigration and corporate demand is strongest. our two new developments at glenlake which offer a mix of uses and are 95% leased and block 83 our recent mixed-use jv acquisition which is 97% leased in raleigh cbd are directly aligned with where both immigration and corporate demand is strongest Finishing in Nashville, where strong population growth and a diversified economy continue to attract brand name employers. Just last month, Starbucks announced a $100 million plan to open a Southeast corporate office in downtown Nashville for 2,000 employees, with some relocating from Seattle and to balance new hires in Nashville. Office data for the first quarter shows that demand is focused on newer or newly amenitized Class A nodes and our 287,000 sq ft of quarterly leasing with a weighted average lease term of 9.8 years and cash and GAAP rent spreads of 9.4% and 26.5% respectively, bears witness to this data. Across our footprint, we're aligning capital with the metros and submarkets that continue to win people, jobs, and corporate investment. Finishing in Nashville, where strong population growth and a diversified economy continue to attract brand name employers. finishing in nashville where strong population growth and a diversified economy continue to attract brand name employers Just last month, Starbucks announced a $100 million plan to open a Southeast corporate office in downtown Nashville for 2,000 employees, with some relocating from Seattle and to balance new hires in Nashville. just last month starbucks announced a $100 million plan to open a southeast corporate office in downtown nashville for 2,000 employees with some relocating from seattle and to balance new hires in nashville Office data for the first quarter shows that demand is focused on newer or newly amenitized Class A nodes and our 287,000 sq ft of quarterly leasing with a weighted average lease term of 9.8 years and cash and GAAP rent spreads of 9.4% and 26.5% respectively, bears witness to this data. office data for the first quarter shows that demand is focused on newer or newly amenitized class a nodes and our 287,000 sq ft of quarterly leasing with a weighted average lease term of 9.8 years and cash and gaap rent spreads of 9.4% and 26.5% respectively bears witness to this data Across our footprint, we're aligning capital with the metros and submarkets that continue to win people, jobs, and corporate investment. across our footprint we're aligning capital with the metros and submarkets that continue to win people jobs and corporate investment We're making sure our portfolio and people are prepared to deliver commute-worthy experiences to our customers and their teams. Our success this quarter supports this strategy, and we're confident will continue to serve us well. Brendan? We're making sure our portfolio and people are prepared to deliver commute-worthy experiences to our customers and their teams. we're making sure our portfolio and people are prepared to deliver commute-worthy experiences to our customers and their teams Our success this quarter supports this strategy, and we're confident will continue to serve us well. our success this quarter supports this strategy and we're confident will continue to serve us well Brendan? brendan

Speaker 2: Thanks, Brian. In the first quarter, we delivered net income of $31.3 million or $0.29 per share and FFO of $94 million or $0.84 per share. The quarter included a $17 million property sale gain from our disposition in Richmond that was included in net income but not included in FFO. During the quarter, we received a term fee at an unconsolidated JV for a net $2.2 million or $0.02 per share from a customer moving from McKinney & Olive to 23Springs, and we sold our interest in a third-party brokerage services firm, resulting in a $1.4 million gain. These two items were included in FFO and were factored into our original FFO outlook. Otherwise, there were no unusual items in the quarter. Thanks, Brian. thanks brian In the first quarter, we delivered net income of $31.3 million or $0.29 per share and FFO of $94 million or $0.84 per share. in the first quarter we delivered net income of $31.3 million or $0.29 per share and ffo of $94 million or $0.84 per share The quarter included a $17 million property sale gain from our disposition in Richmond that was included in net income but not included in FFO. the quarter included a $17 million property sale gain from our disposition in richmond that was included in net income but not included in ffo During the quarter, we received a term fee at an unconsolidated JV for a net $2.2 million or $0.02 per share from a customer moving from McKinney & Olive to 23Springs, and we sold our interest in a third-party brokerage services firm, resulting in a $1.4 million gain. during the quarter we received a term fee at an unconsolidated jv for a net $2.2 million or $0.02 per share from a customer moving from mckinney & olive to 23springs and we sold our interest in a third-party brokerage services firm resulting in a $1.4 million gain These two items were included in FFO and were factored into our original FFO outlook. Otherwise, there were no unusual items in the quarter. these two items were included in ffo and were factored into our original ffo outlook. otherwise there were no unusual items in the quarter You may have noticed some minor changes to our supplemental package we released yesterday that we believe will make it easier to derive our share of joint venture NOI. We also broke out Dallas as its own market now that we have three in-service properties in Dallas, which will increase to four upon stabilization of 23Springs. Our other markets now primarily consist of our non-core Pittsburgh and Richmond portfolios. We are pleased with our first quarter financial results, which demonstrate the resiliency of our operations and cash flows. Even more consequential was this quarter's leasing activity on both the in-service portfolio and development pipeline, which positions us to increase occupancy and deliver NOI growth during the remainder of 2026 and beyond. Our lease rate is 89.7%, up from 89.2% one quarter ago. You may have noticed some minor changes to our supplemental package we released yesterday that we believe will make it easier to derive our share of joint venture NOI. you may have noticed some minor changes to our supplemental package we released yesterday that we believe will make it easier to derive our share of joint venture noi We also broke out Dallas as its own market now that we have three in-service properties in Dallas, which will increase to four upon stabilization of 23Springs. we also broke out dallas as its own market now that we have three in-service properties in dallas which will increase to four upon stabilization of 23springs Our other markets now primarily consist of our non-core Pittsburgh and Richmond portfolios. our other markets now primarily consist of our non-core pittsburgh and richmond portfolios We are pleased with our first quarter financial results, which demonstrate the resiliency of our operations and cash flows. we are pleased with our first quarter financial results which demonstrate the resiliency of our operations and cash flows Even more consequential was this quarter's leasing activity on both the in-service portfolio and development pipeline, which positions us to increase occupancy and deliver NOI growth during the remainder of 2026 and beyond. even more consequential was this quarter's leasing activity on both the in-service portfolio and development pipeline which positions us to increase occupancy and deliver noi growth during the remainder of 2026 and beyond Our lease rate is 89.7%, up from 89.2% one quarter ago. our lease rate is 89.7% up from 89.2% one quarter ago The spread between our leased and occupied rates of 470 basis points is three times our normal historical spread, a strong indicator for future occupancy gains. We reiterated our year-end occupancy outlook of 86.5%-88.5%, which implies a 250-basis point increase at the midpoint over the remaining three quarters of the year. Our balance sheet remains in good shape. We had over 650 million of available liquidity at the end of the quarter, and subsequent to quarter end, we closed a $100 million secured mortgage at Granite Park Six, resulting in over $50 million of capital to Highwoods. We expect to close one or more additional financings at JVs during the remainder of the year, which will repatriate capital back to Highwoods and improve our liquidity and unencumbered debt-to-EBITDA ratio. The spread between our leased and occupied rates of 470 basis points is three times our normal historical spread, a strong indicator for future occupancy gains. the spread between our leased and occupied rates of 470 basis points is three times our normal historical spread a strong indicator for future occupancy gains We reiterated our year-end occupancy outlook of 86.5%-88.5%, which implies a 250-basis point increase at the midpoint over the remaining three quarters of the year. we reiterated our year-end occupancy outlook of 86.5%-88.5% which implies a 250-basis point increase at the midpoint over the remaining three quarters of the year Our balance sheet remains in good shape. our balance sheet remains in good shape We had over 650 million of available liquidity at the end of the quarter, and subsequent to quarter end, we closed a $100 million secured mortgage at Granite Park Six, resulting in over $50 million of capital to Highwoods. we had over 650 million of available liquidity at the end of the quarter and subsequent to quarter end we closed a $100 million secured mortgage at granite park six resulting in over $50 million of capital to highwoods We expect to close one or more additional financings at JVs during the remainder of the year, which will repatriate capital back to Highwoods and improve our liquidity and unencumbered debt-to-EBITDA ratio. we expect to close one or more additional financings at jvs during the remainder of the year which will repatriate capital back to highwoods and improve our liquidity and unencumbered debt-to-ebitda ratio Based on our current expectations of NOI growth and assuming $200 million of non-core asset sales, we expect to end the year with debt-to-EBITDA in the low to mid sixes, with additional reductions likely in future periods as NOI grows. We have only $40 million of remaining capital needed to complete our share of the development properties. These properties, combined with the developments placed in service this quarter, will deliver over $20 million of annual NOI growth compared to the Q1 26 run rate. As Ted mentioned, we have maintained our FFO outlook of $3.40 to $3.68 per share. It's still early in the year, and while we're off to a strong start with our leasing activity, most of these leases will have a financial benefit to 2027 and thereafter. Based on our current expectations of NOI growth and assuming $200 million of non-core asset sales, we expect to end the year with debt-to-EBITDA in the low to mid sixes, with additional reductions likely in future periods as NOI grows. based on our current expectations of noi growth and assuming $200 million of non-core asset sales we expect to end the year with debt-to-ebitda in the low to mid sixes with additional reductions likely in future periods as noi grows We have only $40 million of remaining capital needed to complete our share of the development properties. we have only $40 million of remaining capital needed to complete our share of the development properties These properties, combined with the developments placed in service this quarter, will deliver over $20 million of annual NOI growth compared to the Q1 26 run rate. these properties combined with the developments placed in service this quarter will deliver over $20 million of annual noi growth compared to the q1 26 run rate As Ted mentioned, we have maintained our FFO outlook of $3.40 to $3.68 per share. as ted mentioned we have maintained our ffo outlook of $3.40 to $3.68 per share It's still early in the year, and while we're off to a strong start with our leasing activity, most of these leases will have a financial benefit to 2027 and thereafter. it's still early in the year and while we're off to a strong start with our leasing activity most of these leases will have a financial benefit to 2027 and thereafter Before we turn the call over for questions, there are a couple of items to note. First, I mentioned the term fee and gain on sale we recorded in the first quarter. We do expect some additional term fees in the remainder of the year, as is typical, but these are expected to be lower in subsequent quarters. We also expect some additional other income items in the second half of the year. In total, these items are expected to be around $0.06-$0.07 for full year 2026, which is approximately $0.05 lower than 2025. Second, capitalized interest is expected to be lower for the foreseeable future, as we will no longer capitalize interest expense at 23Springs or Midtown East. Before we turn the call over for questions, there are a couple of items to note. before we turn the call over for questions there are a couple of items to note First, I mentioned the term fee and gain on sale we recorded in the first quarter. first i mentioned the term fee and gain on sale we recorded in the first quarter We do expect some additional term fees in the remainder of the year, as is typical, but these are expected to be lower in subsequent quarters. we do expect some additional term fees in the remainder of the year as is typical but these are expected to be lower in subsequent quarters We also expect some additional other income items in the second half of the year. we also expect some additional other income items in the second half of the year In total, these items are expected to be around $0.06-$0.07 for full year 2026, which is approximately $0.05 lower than 2025. in total these items are expected to be around $0.06-$0.07 for full year 2026 which is approximately $0.05 lower than 2025 Second, capitalized interest is expected to be lower for the foreseeable future, as we will no longer capitalize interest expense at 23Springs or Midtown East. second capitalized interest is expected to be lower for the foreseeable future as we will no longer capitalize interest expense at 23springs or midtown east There is significant embedded NOI growth at these properties due to leases that are signed but won't be fully online before the middle of 2027. Third, as is typical, G&A was higher in Q1 due to the expensing of annual equity grants. G&A is expected to be lower for the remaining quarters of the year. Given these factors and our expectation of steadily increasing occupancy during the final three quarters of 2026, we expect FFO to increase in the second half of the year. Operator, we are now ready for questions. There is significant embedded NOI growth at these properties due to leases that are signed but won't be fully online before the middle of 2027. there is significant embedded noi growth at these properties due to leases that are signed but won't be fully online before the middle of 2027 Third, as is typical, G&A was higher in Q1 due to the expensing of annual equity grants. third as is typical g&a was higher in q1 due to the expensing of annual equity grants G&A is expected to be lower for the remaining quarters of the year. g&a is expected to be lower for the remaining quarters of the year Given these factors and our expectation of steadily increasing occupancy during the final three quarters of 2026, we expect FFO to increase in the second half of the year. given these factors and our expectation of steadily increasing occupancy during the final three quarters of 2026 we expect ffo to increase in the second half of the year Operator, we are now ready for questions. operator we are now ready for questions

Speaker 6: Thank you. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. Our first question comes from Seth Berge from Citi. Please go ahead. Your line is open. Thank you. thank you As a reminder to ask a question, please press star followed by the number one on your telephone keypad. as a reminder to ask a question please press star followed by the number one on your telephone keypad Our first question comes from Seth Berge from Citi. our first question comes from seth berge from citi Please go ahead. please go ahead Your line is open. your line is open

Speaker 9: Hi, good morning. Thanks for taking my question. I guess I just wanted to go back to some of your comments and prepared remarks about, you know, discussions around potential new developments, and then you obviously announced kind of the share reauthorization. I'm just curious kind of, you know, how do you think about capitalization priorities and, you know, how do those two opportunities kind of compare to each other today? Hi, good morning. hi good morning Thanks for taking my question. thanks for taking my question I guess I just wanted to go back to some of your comments and prepared remarks about, you know, discussions around potential new developments, and then you obviously announced kind of the share reauthorization. i guess i just wanted to go back to some of your comments and prepared remarks about you know discussions around potential new developments and then you obviously announced kind of the share reauthorization I'm just curious kind of, you know, how do you think about capitalization priorities and, you know, how do those two opportunities kind of compare to each other today? i'm just curious kind of you know how do you think about capitalization priorities and you know how do those two opportunities kind of compare to each other today

Speaker 10: Hey, Seth, it's Ted. Look, I think we're always looking at the best ways to improve, you know, our long-term growth rate, strengthen our cash flows, make us more resilient cash flows, improve the quality of the portfolio. I just think our stock buyback gives us another option to think about and gives us optionality. I think, you know, over the years, we've proven to be pretty disciplined allocators of capital. We've rotated between acquisitions and development throughout, you know, various cycles, always looking at what's the best risk-adjusted return. Again, the stock buyback just gives us one more option to consider. You know, last year, we were very active on the acquisition side. We, you know, acquired on our shared interest about $580 million worth of assets that were, we consider, very attractive pricing. Hey, Seth, it's Ted. hey seth it's ted Look, I think we're always looking at the best ways to improve, you know, our long-term growth rate, strengthen our cash flows, make us more resilient cash flows, improve the quality of the portfolio. look i think we're always looking at the best ways to improve you know our long-term growth rate strengthen our cash flows make us more resilient cash flows improve the quality of the portfolio I just think our stock buyback gives us another option to think about and gives us optionality. i just think our stock buyback gives us another option to think about and gives us optionality I think, you know, over the years, we've proven to be pretty disciplined allocators of capital. i think you know over the years we've proven to be pretty disciplined allocators of capital We've rotated between acquisitions and development throughout, you know, various cycles, always looking at what's the best risk-adjusted return. we've rotated between acquisitions and development throughout you know various cycles always looking at what's the best risk-adjusted return Again, the stock buyback just gives us one more option to consider. again the stock buyback just gives us one more option to consider You know, last year, we were very active on the acquisition side. you know last year we were very active on the acquisition side We, you know, acquired on our shared interest about $580 million worth of assets that were, we consider, very attractive pricing. we you know acquired on our shared interest about $580 million worth of assets that were we consider very attractive pricing Now, as you alluded to, we're becoming more constructive on development. You know, there's a shortage of high-quality space, so we're fielding calls, whether it be build-to-suits or pre-leased office development. Development's hard these days, right? It's expensive. It's hard to finance. Interest costs are higher. Everything about development's really hard right now. We think there's opportunities for well-capitalized developers to earn, you know, pretty attractive risk-adjusted returns. Again, we look at everything, but development is certainly becoming more constructive Now, as you alluded to, we're becoming more constructive on development. now as you alluded to we're becoming more constructive on development You know, there's a shortage of high-quality space, so we're fielding calls, whether it be build-to-suits or pre-leased office development. you know there's a shortage of high-quality space so we're fielding calls whether it be build-to-suits or pre-leased office development Development's hard these days, right? development's hard these days right It's expensive. it's expensive It's hard to finance. it's hard to finance Interest costs are higher. interest costs are higher Everything about development's really hard right now. everything about development's really hard right now We think there's opportunities for well-capitalized developers to earn, you know, pretty attractive risk-adjusted returns. we think there's opportunities for well-capitalized developers to earn you know pretty attractive risk-adjusted returns Again, we look at everything, but development is certainly becoming more constructive again we look at everything but development is certainly becoming more constructive

Speaker 9: Thanks. Just on the potential opportunity for dispositions. You know, just given kind of rates, and some of the changes in the 10-year, and maybe some of the macro headlines around AI. Are you seeing any changes towards the type of capital they're interested in investing in an office product and any changes in pricing? Thanks. thanks Just on the potential opportunity for dispositions. just on the potential opportunity for dispositions You know, just given kind of rates, and some of the changes in the 10-year, and maybe some of the macro headlines around AI. you know just given kind of rates and some of the changes in the 10-year and maybe some of the macro headlines around ai Are you seeing any changes towards the type of capital they're interested in investing in an office product and any changes in pricing? are you seeing any changes towards the type of capital they're interested in investing in an office product and any changes in pricing

Speaker 10: I'd say the short answer is no, at least not yet. You know, if you think about since last year, call it since early 2025, through the disposition we had in January. We sold about $270 million at, you know, roughly right at an 8% cap rate, which sort of matched up with our acquisitions. You know, we've got a lot of assets out in the market. I think, you know, we've said we're gonna try and get $190 million-$210 million done by midyear. We're on track to doing that, and we have other assets that are in the market as well and at various stages of the process. We have not seen really any changes whatsoever in the profile of the buyers. I'd say the short answer is no, at least not yet. i'd say the short answer is no at least not yet You know, if you think about since last year, call it since early 2025, through the disposition we had in January. you know if you think about since last year call it since early 2025 through the disposition we had in january We sold about $270 million at, you know, roughly right at an 8% cap rate, which sort of matched up with our acquisitions. we sold about $270 million at you know roughly right at an 8% cap rate which sort of matched up with our acquisitions You know, we've got a lot of assets out in the market. you know we've got a lot of assets out in the market I think, you know, we've said we're gonna try and get $190 million-$210 million done by midyear. i think you know we've said we're gonna try and get $190 million-$210 million done by midyear We're on track to doing that, and we have other assets that are in the market as well and at various stages of the process. we're on track to doing that and we have other assets that are in the market as well and at various stages of the process We have not seen really any changes whatsoever in the profile of the buyers. we have not seen really any changes whatsoever in the profile of the buyers

Speaker 9: Great. Thank you. Great. great Thank you. thank you

Speaker 6: Our next question comes from Blaine Heck from Wells Fargo. Please go ahead, your line is open. Our next question comes from Blaine Heck from Wells Fargo. our next question comes from blaine heck from wells fargo Please go ahead, your line is open. please go ahead your line is open

Speaker 1: Great. Thanks. Good morning. You've had a solid start to the year on the leasing side. I was hoping you could comment on the leasing economics you've seen thus far and maybe how you would expect rent spreads and concessions to trend during the full year of 2026? Great. great Thanks. thanks Good morning. good morning You've had a solid start to the year on the leasing side. you've had a solid start to the year on the leasing side I was hoping you could comment on the leasing economics you've seen thus far and maybe how you would expect rent spreads and concessions to trend during the full year of 2026? i was hoping you could comment on the leasing economics you've seen thus far and maybe how you would expect rent spreads and concessions to trend during the full year of 2026

Speaker 10: Maybe I'll start, Blaine, and then Brian or Brendan can jump in. Look, as you alluded, we had a great start to the year with, you know, up almost 5% on cash, 19+% on GAAP. It, you know, it can vary quarter to quarter. It can just be a mix, as you know. I think in general, the macro, our macro view is: Look, there's a pretty good setup for office owners over the long term. Again, quarter to quarter can bounce around a little bit. Look, what we know is demand remains strong in our markets. We're not seeing any impact whatsoever thus far on AI. It's been a net positive to us. We've signed a couple AI related users, we're not seeing anything there. Maybe I'll start, Blaine, and then Brian or Brendan can jump in. maybe i'll start blaine and then brian or brendan can jump in Look, as you alluded, we had a great start to the year with, you know, up almost 5% on cash, 19+% on GAAP. look as you alluded we had a great start to the year with you know up almost 5% on cash 19+% on gaap It, you know, it can vary quarter to quarter. it you know it can vary quarter to quarter It can just be a mix, as you know. it can just be a mix as you know I think in general, the macro, our macro view is: Look, there's a pretty good setup for office owners over the long term. i think in general the macro our macro view is look there's a pretty good setup for office owners over the long term Again, quarter to quarter can bounce around a little bit. again quarter to quarter can bounce around a little bit Look, what we know is demand remains strong in our markets. look what we know is demand remains strong in our markets We're not seeing any impact whatsoever thus far on AI. we're not seeing any impact whatsoever thus far on ai It's been a net positive to us. it's been a net positive to us We've signed a couple AI related users, we're not seeing anything there. we've signed a couple ai related users we're not seeing anything there There's absolutely, to Brian's point in his prepared remarks, there's a dwindling supply of high-quality space in the BBDs. There's going to be a shortage of this space, I think, in the next couple years, given that no new construction. Ongoing constructions at a, I think, a historic low, according to JLL. We're starting to see that, and that's going to accrue to the benefit, I think, to office owners. Look, again, we don't know exactly what the metrics are going to look like, but we do think there's a pretty good setup for owners of high-quality office space in our BBDs. Also, one other thing we've got at wind at our back is the in-migration. It's just continuing. Brian alluded to a few big announcements in Charlotte, but we're seeing that in Dallas. There's absolutely, to Brian's point in his prepared remarks, there's a dwindling supply of high-quality space in the BBDs. there's absolutely to brian's point in his prepared remarks there's a dwindling supply of high-quality space in the bbds There's going to be a shortage of this space, I think, in the next couple years, given that no new construction. there's going to be a shortage of this space i think in the next couple years given that no new construction Ongoing constructions at a, I think, a historic low, according to JLL. ongoing constructions at a i think a historic low according to jll We're starting to see that, and that's going to accrue to the benefit, I think, to office owners. we're starting to see that and that's going to accrue to the benefit i think to office owners Look, again, we don't know exactly what the metrics are going to look like, but we do think there's a pretty good setup for owners of high-quality office space in our BBDs. look again we don't know exactly what the metrics are going to look like but we do think there's a pretty good setup for owners of high-quality office space in our bbds Also, one other thing we've got at wind at our back is the in-migration. also one other thing we've got at wind at our back is the in-migration It's just continuing. it's just continuing Brian alluded to a few big announcements in Charlotte, but we're seeing that in Dallas. brian alluded to a few big announcements in charlotte but we're seeing that in dallas We're seeing that in other markets as well, obviously to varying degrees. Just in general, everything about the supply demand backdrop feels pretty good right now. We're seeing that in other markets as well, obviously to varying degrees. we're seeing that in other markets as well obviously to varying degrees Just in general, everything about the supply demand backdrop feels pretty good right now. just in general everything about the supply demand backdrop feels pretty good right now

Speaker 3: Blaine, this is Brian. I might just add a little anecdote or to add on to that. We've mentioned on previous calls that we have been proactive in many cases in connecting with customers well in advance of expirations since we had term and arguably, kind of a catch market to push out those extensions. Because we don't have pending secured debt expirations and things like that, we could look beyond. They're now reaching out to us too. They. So, that's a kind of unique change. They wanna secure where they're at. They wanna secure terms and not get kind of caught at a mark to market a few years down. I think that's also helpful. Blaine, this is Brian. blaine this is brian I might just add a little anecdote or to add on to that. i might just add a little anecdote or to add on to that We've mentioned on previous calls that we have been proactive in many cases in connecting with customers well in advance of expirations since we had term and arguably, kind of a catch market to push out those extensions. we've mentioned on previous calls that we have been proactive in many cases in connecting with customers well in advance of expirations since we had term and arguably kind of a catch market to push out those extensions Because we don't have pending secured debt expirations and things like that, we could look beyond. because we don't have pending secured debt expirations and things like that we could look beyond They're now reaching out to us too. they're now reaching out to us too They. they So, that's a kind of unique change. so that's a kind of unique change They wanna secure where they're at. they wanna secure where they're at They wanna secure terms and not get kind of caught at a mark to market a few years down. they wanna secure terms and not get kind of caught at a mark to market a few years down I think that's also helpful. i think that's also helpful If you think about that K-shaped re-recovery, well, maybe it's not universal in terms of the entire portfolio, but we feel really good that the great majority is on the top side of that K, and we're benefiting from that. If you think about that K-shaped re-recovery, well, maybe it's not universal in terms of the entire portfolio, but we feel really good that the great majority is on the top side of that K, and we're benefiting from that. if you think about that k-shaped re-recovery well maybe it's not universal in terms of the entire portfolio but we feel really good that the great majority is on the top side of that k and we're benefiting from that

Speaker 1: Great. That's helpful color. Ted, I wanted to follow up on your commentary on the potential for build-to-suit opportunities. Are there specific markets that you're seeing that demand increase in? Is there any color on the profile of tenants that you might be talking to? Lastly, would those potential build-to-suits occur on land you already own, or might you need to acquire some land if those come to fruition? Great. great That's helpful color. that's helpful color Ted, I wanted to follow up on your commentary on the potential for build-to-suit opportunities. ted i wanted to follow up on your commentary on the potential for build-to-suit opportunities Are there specific markets that you're seeing that demand increase in? are there specific markets that you're seeing that demand increase in Is there any color on the profile of tenants that you might be talking to? is there any color on the profile of tenants that you might be talking to Lastly, would those potential build-to-suits occur on land you already own, or might you need to acquire some land if those come to fruition? lastly would those potential build-to-suits occur on land you already own or might you need to acquire some land if those come to fruition

Speaker 10: Yeah. Let me make sure I hit all these. Marketwise, there's various markets, so multiple markets. You know, it's some of our top markets. I don't wanna get real specific. We're competing on some of these, and some of them are still multi-state competitions as well that, you know, we haven't even won it from a market perspective. It's in our larger markets, as you'd expect. Customer-wise, it varies from. It can be financial services, regular corporates as well. It varies across the board there. I'd say there's no real theme to it. The only theme being there's a shortage of space in the market, in the sub-market they wanted to be in. Across the board, but it is in our larger markets, but multiple markets. Yeah. yeah Let me make sure I hit all these. let me make sure i hit all these Marketwise, there's various markets, so multiple markets. marketwise there's various markets so multiple markets You know, it's some of our top markets. you know it's some of our top markets I don't wanna get real specific. i don't wanna get real specific We're competing on some of these, and some of them are still multi-state competitions as well that, you know, we haven't even won it from a market perspective. we're competing on some of these and some of them are still multi-state competitions as well that you know we haven't even won it from a market perspective It's in our larger markets, as you'd expect. it's in our larger markets as you'd expect Customer-wise, it varies from. customer-wise it varies from It can be financial services, regular corporates as well. it can be financial services regular corporates as well It varies across the board there. it varies across the board there I'd say there's no real theme to it. i'd say there's no real theme to it The only theme being there's a shortage of space in the market, in the sub-market they wanted to be in. the only theme being there's a shortage of space in the market in the sub-market they wanted to be in Across the board, but it is in our larger markets, but multiple markets. across the board but it is in our larger markets but multiple markets

Speaker 1: Great. That's helpful. Is it on land that you already own or might you have to go out and purchase? Great. great That's helpful. that's helpful Is it on land that you already own or might you have to go out and purchase? is it on land that you already own or might you have to go out and purchase

Speaker 10: Yeah. Sorry about that. I missed that one. It's both. Yeah. yeah Sorry about that. sorry about that I missed that one. i missed that one It's both. it's both

Speaker 1: No problem. Okay. Thank you. No problem. no problem Okay. okay Thank you. thank you

Speaker 3: Blaine, I just wanna be clear. We wouldn't go out and buy land to land bank. I think it would only be subject to a build-to-suit that's there. I don't want anybody to get the impression that the land inventory is gonna go up. It's more likely to go down from here. Blaine, I just wanna be clear. blaine i just wanna be clear We wouldn't go out and buy land to land bank. we wouldn't go out and buy land to land bank I think it would only be subject to a build-to-suit that's there. i think it would only be subject to a build-to-suit that's there I don't want anybody to get the impression that the land inventory is gonna go up. i don't want anybody to get the impression that the land inventory is gonna go up It's more likely to go down from here. it's more likely to go down from here

Speaker 1: Right. Okay. Thanks a lot for the color Right. right Okay. okay Thanks a lot for the color thanks a lot for the color

Speaker 6: Our next question comes from Peter Abramowitz from Deutsche Bank. Please go ahead, your line is open. Our next question comes from Peter Abramowitz from Deutsche Bank. our next question comes from peter abramowitz from deutsche bank Please go ahead, your line is open. please go ahead your line is open

Speaker 7: Yes, thank you for taking the questions. I think last quarter you talked about, you needed around 700,000 sq ft this year of vacancy leasing that would actually take occupancy to kind of hit the midpoint of your guidance, and also mentioned, I think a retention rate of around 35% or 40% on your 2026 expirations. Just curious, I guess on the leasing you did this quarter, you know, the 300,000 sq ft of new leasing, how much of that will kind of go toward that 700,000 for the full year that'll actually take occupancy before year-end? Is kind of the math still the same on the retention and renewal side as well? Yes, thank you for taking the questions. yes thank you for taking the questions I think last quarter you talked about, you needed around 700,000 sq ft this year of vacancy leasing that would actually take occupancy to kind of hit the midpoint of your guidance, and also mentioned, I think a retention rate of around 35% or 40% on your 2026 expirations. i think last quarter you talked about you needed around 700,000 sq ft this year of vacancy leasing that would actually take occupancy to kind of hit the midpoint of your guidance and also mentioned i think a retention rate of around 35% or 40% on your 2026 expirations Just curious, I guess on the leasing you did this quarter, you know, the 300,000 sq ft of new leasing, how much of that will kind of go toward that 700,000 for the full year that'll actually take occupancy before year-end? just curious i guess on the leasing you did this quarter you know the 300,000 sq ft of new leasing how much of that will kind of go toward that 700,000 for the full year that'll actually take occupancy before year-end Is kind of the math still the same on the retention and renewal side as well? is kind of the math still the same on the retention and renewal side as well

Speaker 2: Hey Peter, it's Brendan. Good question. The math pretty much rolls forward from everything that we did in the first quarter. The good thing is we moved that leased rate up. I think we had talked about at the beginning of the year that we had about 1.2 million square feet of leases that were signed that would commence by the end of 2026. We have moved a number of those leases into occupancy during the first quarter, but fortunately we've replaced that and so we still have about 1.2 million square feet of signed leases that will commence by the end of the year. We had expirations. Hey Peter, it's Brendan. hey peter it's brendan Good question. good question The math pretty much rolls forward from everything that we did in the first quarter. the math pretty much rolls forward from everything that we did in the first quarter The good thing is we moved that leased rate up. the good thing is we moved that leased rate up I think we had talked about at the beginning of the year that we had about 1.2 million square feet of leases that were signed that would commence by the end of 2026. i think we had talked about at the beginning of the year that we had about 1.2 million square feet of leases that were signed that would commence by the end of 2026 We have moved a number of those leases into occupancy during the first quarter, but fortunately we've replaced that and so we still have about 1.2 million square feet of signed leases that will commence by the end of the year. we have moved a number of those leases into occupancy during the first quarter but fortunately we've replaced that and so we still have about 1.2 million square feet of signed leases that will commence by the end of the year We had expirations. we had expirations What we have out of the remaining expirations, there's probably somewhere in the neighborhood of 850,000-900,000 square feet of likely kind of move outs based on what's left over. That leaves us positive net absorption from 3/31 of 300,000+ square feet, which means we have another 300,000-400,000 square feet to sign and start to get into this year. We feel good about that. That's down from that 700 that you mentioned kind of at the beginning of the year. If we keep that pace of roughly 100,000 square feet of new per month, that kind of puts us right on track to get to the midpoint of that year-end occupancy range of 87.5%. What we have out of the remaining expirations, there's probably somewhere in the neighborhood of 850,000-900,000 square feet of likely kind of move outs based on what's left over. what we have out of the remaining expirations there's probably somewhere in the neighborhood of 850,000-900,000 square feet of likely kind of move outs based on what's left over That leaves us positive net absorption from 3/31 of 300,000+ square feet, which means we have another 300,000-400,000 square feet to sign and start to get into this year. that leaves us positive net absorption from 3/31 of 300,000+ square feet which means we have another 300,000-400,000 square feet to sign and start to get into this year We feel good about that. we feel good about that That's down from that 700 that you mentioned kind of at the beginning of the year. that's down from that 700 that you mentioned kind of at the beginning of the year If we keep that pace of roughly 100,000 square feet of new per month, that kind of puts us right on track to get to the midpoint of that year-end occupancy range of 87.5%. if we keep that pace of roughly 100,000 square feet of new per month that kind of puts us right on track to get to the midpoint of that year-end occupancy range of 87.5%

Speaker 7: Okay. I appreciate that. That's helpful. Thanks, Brendan. On the Richmond sales, I think you talked about, sort of an overall blended cap rate for sales last year through January, but I wanted to ask, what was the cap rate specifically, on that portfolio that you sold in Richmond? Okay. okay I appreciate that. i appreciate that That's helpful. that's helpful Thanks, Brendan. thanks brendan On the Richmond sales, I think you talked about, sort of an overall blended cap rate for sales last year through January, but I wanted to ask, what was the cap rate specifically, on that portfolio that you sold in Richmond? on the richmond sales i think you talked about sort of an overall blended cap rate for sales last year through january but i wanted to ask what was the cap rate specifically on that portfolio that you sold in richmond

Speaker 10: Yeah, Peter, it was again, the blended. You know, that's up on the upper end of that. I think it was a, you know, maybe a low double digit type cap rate, but very low double digit. Yeah, Peter, it was again, the blended. yeah peter it was again the blended You know, that's up on the upper end of that. you know that's up on the upper end of that I think it was a, you know, maybe a low double digit type cap rate, but very low double digit. i think it was a you know maybe a low double digit type cap rate but very low double digit

Speaker 7: Okay. That's kind of incorporated in that blended number, I think you said around 8%? Okay. okay That's kind of incorporated in that blended number, I think you said around 8%? that's kind of incorporated in that blended number i think you said around 8%

Speaker 10: That's correct. That's correct. that's correct

Speaker 7: Okay. Okay. Gotcha. Then one more if I could. It looks like the in the same store pool, operating expense growth was a little bit elevated in the quarter. Was there anything kind of unique to first quarter results that you wanted to call out or anything that we should kind of be mindful of going forward? Okay. okay Okay. okay Gotcha. gotcha Then one more if I could. then one more if i could It looks like the in the same store pool, operating expense growth was a little bit elevated in the quarter. it looks like the in the same store pool operating expense growth was a little bit elevated in the quarter Was there anything kind of unique to first quarter results that you wanted to call out or anything that we should kind of be mindful of going forward? was there anything kind of unique to first quarter results that you wanted to call out or anything that we should kind of be mindful of going forward

Speaker 2: Yeah, Peter. Just as you can probably expect from the winter, right, we had some pretty cold weather, particularly kind of in February. Utility costs were up pretty significantly kind of year-over-year. That really drove the sizable increase in expenses. That was probably the biggest one that's there. Given we were, I think, negative 60 basis points on same store, in the quarter, and we're expecting roughly flat kind of for the year. We think that that number is probably gonna be low again in Q2 and then positive in the back half of the year to average out to be flat for the full year on a cash basis and positive on a GAAP basis. Yeah, Peter. yeah peter Just as you can probably expect from the winter, right, we had some pretty cold weather, particularly kind of in February. just as you can probably expect from the winter right we had some pretty cold weather particularly kind of in february Utility costs were up pretty significantly kind of year-over-year. utility costs were up pretty significantly kind of year-over-year That really drove the sizable increase in expenses. that really drove the sizable increase in expenses That was probably the biggest one that's there. that was probably the biggest one that's there Given we were, I think, negative 60 basis points on same store, in the quarter, and we're expecting roughly flat kind of for the year. given we were i think negative 60 basis points on same store in the quarter and we're expecting roughly flat kind of for the year We think that that number is probably gonna be low again in Q2 and then positive in the back half of the year to average out to be flat for the full year on a cash basis and positive on a GAAP basis. we think that that number is probably gonna be low again in q2 and then positive in the back half of the year to average out to be flat for the full year on a cash basis and positive on a gaap basis

Speaker 7: All right. That's all for me. Thank you. All right. all right That's all for me. that's all for me Thank you. thank you

Speaker 6: Our next question comes from Ronald Kamdem from Morgan Stanley. Please go ahead, your line is open. Our next question comes from Ronald Kamdem from Morgan Stanley. our next question comes from ronald kamdem from morgan stanley Please go ahead, your line is open. please go ahead your line is open

Speaker 8: Great. Just following up on that sort of same store thread, I just wonder if you can give some of the breadcrumbs as we're thinking about into 2027. As the occupancy starts to ramp, presumably you'd be at a better pace as you're copping into next year. Any other sort of puts and takes that we should be thinking about, potential acceleration? Thanks. Great. great Just following up on that sort of same store thread, I just wonder if you can give some of the breadcrumbs as we're thinking about into 2027. just following up on that sort of same store thread i just wonder if you can give some of the breadcrumbs as we're thinking about into 2027 As the occupancy starts to ramp, presumably you'd be at a better pace as you're copping into next year. as the occupancy starts to ramp presumably you'd be at a better pace as you're copping into next year Any other sort of puts and takes that we should be thinking about, potential acceleration? any other sort of puts and takes that we should be thinking about potential acceleration Thanks. thanks

Speaker 2: Ron. Thanks for the question. I think you'll see, you know, that kind of second half 2026 improvement in same store, I think in all likelihood carries into 2027, so you should see good same store results there. I think if from an earnings perspective, you know, what I can kind of give some breadcrumbs there in terms of thinking about first half of this year and then as you go into the back half of this year, which should be helpful as you think about next year numbers. I mentioned in prepared remarks, right? We had the gain on the third-party brokerage sale. We had the term fee. Those combined were $0.03 in the quarter. G&A is similarly sort of $0.03 higher in the first quarter. Ron. ron Thanks for the question. thanks for the question I think you'll see, you know, that kind of second half 2026 improvement in same store, I think in all likelihood carries into 2027, so you should see good same store results there. i think you'll see you know that kind of second half 2026 improvement in same store i think in all likelihood carries into 2027 so you should see good same store results there I think if from an earnings perspective, you know, what I can kind of give some breadcrumbs there in terms of thinking about first half of this year and then as you go into the back half of this year, which should be helpful as you think about next year numbers. i think if from an earnings perspective you know what i can kind of give some breadcrumbs there in terms of thinking about first half of this year and then as you go into the back half of this year which should be helpful as you think about next year numbers I mentioned in prepared remarks, right? i mentioned in prepared remarks right We had the gain on the third-party brokerage sale. we had the gain on the third-party brokerage sale We had the term fee. we had the term fee Those combined were $0.03 in the quarter. those combined were $0.03 in the quarter G&A is similarly sort of $0.03 higher in the first quarter. g&a is similarly sort of $0.03 higher in the first quarter Those things kind of offset each other. I think we've got cap interest that will go away on 23Springs and Midtown East. That's probably $0.02. That is probably partially offset by a little higher NOI in Q2. We mentioned that we've got the $200 million of dispositions that we expect to kind of have, and that will be a little bit dilutive in terms of we're just gonna kind of pay down the line of credit and probably keep the remainder in cash for the balance of the year in preparation for paying off the 2027 bond. All that means probably your second quarter is gonna be a little lower than where Q1 was from an FFO perspective. Those things kind of offset each other. those things kind of offset each other I think we've got cap interest that will go away on 23Springs and Midtown East. i think we've got cap interest that will go away on 23springs and midtown east That's probably $0.02. that's probably $0.02 That is probably partially offset by a little higher NOI in Q2. that is probably partially offset by a little higher noi in q2 We mentioned that we've got the $200 million of dispositions that we expect to kind of have, and that will be a little bit dilutive in terms of we're just gonna kind of pay down the line of credit and probably keep the remainder in cash for the balance of the year in preparation for paying off the 2027 bond. we mentioned that we've got the $200 million of dispositions that we expect to kind of have and that will be a little bit dilutive in terms of we're just gonna kind of pay down the line of credit and probably keep the remainder in cash for the balance of the year in preparation for paying off the 2027 bond All that means probably your second quarter is gonna be a little lower than where Q1 was from an FFO perspective. all that means probably your second quarter is gonna be a little lower than where q1 was from an ffo perspective If you think about getting to the midpoint of guidance ex land sale gains, it obviously implies a pretty meaningful ramp in the back half of the year or so. I think that's positive kinda as you think about the second half of 2026 and then ultimately into 2027. If you think about getting to the midpoint of guidance ex land sale gains, it obviously implies a pretty meaningful ramp in the back half of the year or so. if you think about getting to the midpoint of guidance ex land sale gains it obviously implies a pretty meaningful ramp in the back half of the year or so I think that's positive kinda as you think about the second half of 2026 and then ultimately into 2027. i think that's positive kinda as you think about the second half of 2026 and then ultimately into 2027

Speaker 8: Got it. That's helpful. My second question is just on the capital recycling front. On the buy side, is it, is it all in. It sounds like Dallas obviously is really interesting. Is the acquisition opportunities all in existing markets or is there some new markets in there? On the sell side, maybe an update on just the Pittsburgh, you know, portfolio situation and what you think timing, you know, maybe too soon for pricing, but that'd be helpful as well, could be on that. Thanks. Got it. got it That's helpful. that's helpful My second question is just on the capital recycling front. my second question is just on the capital recycling front On the buy side, is it, is it all in. on the buy side is it is it all in It sounds like Dallas obviously is really interesting. it sounds like dallas obviously is really interesting Is the acquisition opportunities all in existing markets or is there some new markets in there? is the acquisition opportunities all in existing markets or is there some new markets in there On the sell side, maybe an update on just the Pittsburgh, you know, portfolio situation and what you think timing, you know, maybe too soon for pricing, but that'd be helpful as well, could be on that. on the sell side maybe an update on just the pittsburgh you know portfolio situation and what you think timing you know maybe too soon for pricing but that'd be helpful as well could be on that Thanks. thanks

Speaker 10: Sure, Ron. On the acquisition side, yeah, we're primarily focused on our existing footprint. We're, you know, we're very pleased with our footprint. We do wanna grow in Dallas over time, we'll see where the acquisitions are. You sorta gotta go where the opportunity is. Largely in our, or entirely in our existing markets for now. On the dispo, really no update on Pittsburgh. We are gonna be bringing to market one of the smaller assets here soon. For the big asset, PPG Place, really no update. We're continuing to get some leasing done before we bring it to market. I think we're pleased with the capital markets are improving, both the debt and the equity capital markets. Sure, Ron. sure ron On the acquisition side, yeah, we're primarily focused on our existing footprint. on the acquisition side yeah we're primarily focused on our existing footprint We're, you know, we're very pleased with our footprint. we're you know we're very pleased with our footprint We do wanna grow in Dallas over time, we'll see where the acquisitions are. we do wanna grow in dallas over time we'll see where the acquisitions are You sorta gotta go where the opportunity is. you sorta gotta go where the opportunity is Largely in our, or entirely in our existing markets for now. largely in our or entirely in our existing markets for now On the dispo, really no update on Pittsburgh. on the dispo really no update on pittsburgh We are gonna be bringing to market one of the smaller assets here soon. we are gonna be bringing to market one of the smaller assets here soon For the big asset, PPG Place, really no update. for the big asset ppg place really no update We're continuing to get some leasing done before we bring it to market. we're continuing to get some leasing done before we bring it to market I think we're pleased with the capital markets are improving, both the debt and the equity capital markets. i think we're pleased with the capital markets are improving both the debt and the equity capital markets I think we're getting closer to launching but haven't set a date yet. We're trying to nail down a few leases before we do that. I think we're getting closer to launching but haven't set a date yet. i think we're getting closer to launching but haven't set a date yet We're trying to nail down a few leases before we do that. we're trying to nail down a few leases before we do that

Speaker 8: Great. That's it for me. Thank you. Great. great That's it for me. that's it for me Thank you. thank you

Speaker 6: Our next question comes from Dylan Burzinski from Green Street. Please go ahead, your line is open. Our next question comes from Dylan Burzinski from Green Street. our next question comes from dylan burzinski from green street Please go ahead, your line is open. please go ahead your line is open

Speaker 4: Hey, guys. Thanks for taking the question. I guess just on the build-to-suit opportunities, what sort of stabilized yield on cost would you guys require to kick one of those off in today's environment? Hey, guys. hey guys Thanks for taking the question. thanks for taking the question I guess just on the build-to-suit opportunities, what sort of stabilized yield on cost would you guys require to kick one of those off in today's environment? i guess just on the build-to-suit opportunities what sort of stabilized yield on cost would you guys require to kick one of those off in today's environment

Speaker 10: Yeah, Dylan, again, it's hard to do a comparison, or hard to say. I mean, we don't really talk about just from a competitive standpoint. Virtually every deal can be different. It's obviously based on the market, the sub-market, the credit, the term, what annual bumps you're getting. It's hard to say. What I would tell you though is on a risk-adjusted basis, we think there are pretty attractive opportunities out there right now. Yeah, Dylan, again, it's hard to do a comparison, or hard to say. yeah dylan again it's hard to do a comparison or hard to say I mean, we don't really talk about just from a competitive standpoint. i mean we don't really talk about just from a competitive standpoint Virtually every deal can be different. virtually every deal can be different It's obviously based on the market, the sub-market, the credit, the term, what annual bumps you're getting. it's obviously based on the market the sub-market the credit the term what annual bumps you're getting It's hard to say. it's hard to say What I would tell you though is on a risk-adjusted basis, we think there are pretty attractive opportunities out there right now. what i would tell you though is on a risk-adjusted basis we think there are pretty attractive opportunities out there right now

Speaker 4: I guess just thinking about sort of 2027, and obviously not going to get any guidance, but retention around 40% this year, I think, for 2026 expirations. Do you guys' sort of view that as a low point in retention as we think about 2027 and beyond? Or is there any one larger tenant in 2026 that might not make sense to use that as like a 2027 assumption? Just sort of trying to get a sense for, you know, the trajectory on retention as we think about, you know, the outer years. I guess just thinking about sort of 2027, and obviously not going to get any guidance, but retention around 40% this year, I think, for 2026 expirations. i guess just thinking about sort of 2027 and obviously not going to get any guidance but retention around 40% this year i think for 2026 expirations Do you guys' sort of view that as a low point in retention as we think about 2027 and beyond? do you guys' sort of view that as a low point in retention as we think about 2027 and beyond Or is there any one larger tenant in 2026 that might not make sense to use that as like a 2027 assumption? or is there any one larger tenant in 2026 that might not make sense to use that as like a 2027 assumption Just sort of trying to get a sense for, you know, the trajectory on retention as we think about, you know, the outer years. just sort of trying to get a sense for you know the trajectory on retention as we think about you know the outer years

Speaker 2: Yeah, Dylan, it's Brendan. I think your number is correct on 2026 in that, you know, 40% range, as we were kind of migrating into 2026. Just keep in mind that the 2026 renewals, most of the 2026 renewals that we did, we do early. As you kind of migrate into any given year, you've got adverse selection bias because you early renew folks and then the ones who you don't renew, you know, they remain in that expiration schedule. I think as we think about 2027 as of now, we're probably somewhere in that 50%-60% retention range on what's remaining in 2027. Yeah, Dylan, it's Brendan. yeah dylan it's brendan I think your number is correct on 2026 in that, you know, 40% range, as we were kind of migrating into 2026. i think your number is correct on 2026 in that you know 40% range as we were kind of migrating into 2026 Just keep in mind that the 2026 renewals, most of the 2026 renewals that we did, we do early. just keep in mind that the 2026 renewals most of the 2026 renewals that we did we do early As you kind of migrate into any given year, you've got adverse selection bias because you early renew folks and then the ones who you don't renew, you know, they remain in that expiration schedule. as you kind of migrate into any given year you've got adverse selection bias because you early renew folks and then the ones who you don't renew you know they remain in that expiration schedule I think as we think about 2027 as of now, we're probably somewhere in that 50%-60% retention range on what's remaining in 2027. i think as we think about 2027 as of now we're probably somewhere in that 50%-60% retention range on what's remaining in 2027 Even that number is probably lower than what the ultimate kind of likelihood is, given that we've got a number of expirations in 2027 where we've got the underlying tenant, but they have subleased to somebody else. That assumes that that underlying tenant vacates, and then we renew with the subtenant. That's not part of our retention calculation, so that would be part of a move-out and then signing on a new. I think we'll do pretty well on 2027 in terms of retention, which creates a good environment for us to continue to drive occupancy higher from year-end 2026 as we migrate throughout 2027. Even that number is probably lower than what the ultimate kind of likelihood is, given that we've got a number of expirations in 2027 where we've got the underlying tenant, but they have subleased to somebody else. even that number is probably lower than what the ultimate kind of likelihood is given that we've got a number of expirations in 2027 where we've got the underlying tenant but they have subleased to somebody else That assumes that that underlying tenant vacates, and then we renew with the subtenant. that assumes that that underlying tenant vacates and then we renew with the subtenant That's not part of our retention calculation, so that would be part of a move-out and then signing on a new. that's not part of our retention calculation so that would be part of a move-out and then signing on a new I think we'll do pretty well on 2027 in terms of retention, which creates a good environment for us to continue to drive occupancy higher from year-end 2026 as we migrate throughout 2027. i think we'll do pretty well on 2027 in terms of retention which creates a good environment for us to continue to drive occupancy higher from year-end 2026 as we migrate throughout 2027

Speaker 4: Okay, great. That's incredibly helpful, Brendan. Thanks so much. Okay, great. okay great That's incredibly helpful, Brendan. that's incredibly helpful brendan Thanks so much. thanks so much

Speaker 6: Our next question comes from Vikram Malhotra from Mizuho. Please go ahead, your line is open. Our next question comes from Vikram Malhotra from Mizuho. our next question comes from vikram malhotra from mizuho Please go ahead, your line is open. please go ahead your line is open

Speaker 11: Morning. Thanks for taking the question. Just two quick ones. I guess first, you know, on the trajectory from here, what do you kind of need to do, maybe I missed this, what do you need to do new leasing-wise for the rest of the year, kind of to hit that, you know, higher end or maybe even a midpoint of the year-end occupancy? Is there anything new in terms of additional move-outs or anything big we should just remind us going into next year in terms of, you know, potential move-outs? That's just the first. The second, you know, AI and leasing's been a big topic in San Fran in particular. Morning. morning Thanks for taking the question. thanks for taking the question Just two quick ones. just two quick ones I guess first, you know, on the trajectory from here, what do you kind of need to do, maybe I missed this, what do you need to do new leasing-wise for the rest of the year, kind of to hit that, you know, higher end or maybe even a midpoint of the year-end occupancy? i guess first you know on the trajectory from here what do you kind of need to do maybe i missed this what do you need to do new leasing-wise for the rest of the year kind of to hit that you know higher end or maybe even a midpoint of the year-end occupancy Is there anything new in terms of additional move-outs or anything big we should just remind us going into next year in terms of, you know, potential move-outs? is there anything new in terms of additional move-outs or anything big we should just remind us going into next year in terms of you know potential move-outs That's just the first. that's just the first The second, you know, AI and leasing's been a big topic in San Fran in particular. the second you know ai and leasing's been a big topic in san fran in particular We've heard some in New York. I'm just wondering, in your markets, are you hearing any AI-oriented firms look for space or expand away from sort of the West Coast? Thanks. We've heard some in New York. I'm just wondering, in your markets, are you hearing any AI-oriented firms look for space or expand away from sort of the West Coast? we've heard some in new york. i'm just wondering in your markets are you hearing any ai-oriented firms look for space or expand away from sort of the west coast Thanks. thanks

Speaker 2: Hey Vikram, it's Brendan. Maybe I'll start on just kinda leasing, needed to kinda hit those year-end numbers and then turn it over to Ted and Brian to talk about some of the specifics on the role in AI. Just in terms of leasing, I would say to get to the year-end 2026 occupancy range that we have, and let's talk about the midpoint, we think that's where we probably need to do roughly 100,000 square feet of new leasing per month, kind of through probably June or July. That kind of gets us pretty well-positioned. We think that those leases, in all likelihood, are gonna move into occupancy by end of year. Hey Vikram, it's Brendan. hey vikram it's brendan Maybe I'll start on just kinda leasing, needed to kinda hit those year-end numbers and then turn it over to Ted and Brian to talk about some of the specifics on the role in AI. maybe i'll start on just kinda leasing needed to kinda hit those year-end numbers and then turn it over to ted and brian to talk about some of the specifics on the role in ai Just in terms of leasing, I would say to get to the year-end 2026 occupancy range that we have, and let's talk about the midpoint, we think that's where we probably need to do roughly 100,000 square feet of new leasing per month, kind of through probably June or July. just in terms of leasing i would say to get to the year-end 2026 occupancy range that we have and let's talk about the midpoint we think that's where we probably need to do roughly 100,000 square feet of new leasing per month kind of through probably june or july That kind of gets us pretty well-positioned. that kind of gets us pretty well-positioned We think that those leases, in all likelihood, are gonna move into occupancy by end of year. we think that those leases in all likelihood are gonna move into occupancy by end of year I think to continue to have occupancy move higher as we go forward into 2027, we'd like to see that pace continue in the back half of the year, and that, in all likelihood, will create a good environment for us to continue to drive occupancy higher as we go throughout 2027. I think we feel like we're in good shape kind of as, you know, we're through the first quarter of the year here. We think we feel positive about the backdrop to allow us to continue to drive occupancy higher in 2027. I don't think there's any significant expirations in 2027 that we're particularly worried about. I think to continue to have occupancy move higher as we go forward into 2027, we'd like to see that pace continue in the back half of the year, and that, in all likelihood, will create a good environment for us to continue to drive occupancy higher as we go throughout 2027. i think to continue to have occupancy move higher as we go forward into 2027 we'd like to see that pace continue in the back half of the year and that in all likelihood will create a good environment for us to continue to drive occupancy higher as we go throughout 2027 I think we feel like we're in good shape kind of as, you know, we're through the first quarter of the year here. i think we feel like we're in good shape kind of as you know we're through the first quarter of the year here We think we feel positive about the backdrop to allow us to continue to drive occupancy higher in 2027. we think we feel positive about the backdrop to allow us to continue to drive occupancy higher in 2027 I don't think there's any significant expirations in 2027 that we're particularly worried about. i don't think there's any significant expirations in 2027 that we're particularly worried about

Speaker 10: On the second question, AI, I alluded to it maybe I think earlier in the call. We've signed one AI related tenant. They're focused on data centers, and that was in Dallas, Vikram. Other than that, throughout our markets, we really haven't seen much AI demand at all. On the second question, AI, I alluded to it maybe I think earlier in the call. on the second question ai i alluded to it maybe i think earlier in the call We've signed one AI related tenant. we've signed one ai related tenant They're focused on data centers, and that was in Dallas, Vikram. they're focused on data centers and that was in dallas vikram Other than that, throughout our markets, we really haven't seen much AI demand at all. other than that throughout our markets we really haven't seen much ai demand at all

Speaker 11: Thank you. Thank you. thank you

Speaker 6: Our last question comes from Nick Thillman from Baird. Please go ahead, your line is open. Our last question comes from Nick Thillman from Baird. our last question comes from nick thillman from baird Please go ahead, your line is open. please go ahead your line is open

Speaker 5: Hey, good morning, guys. Can you hear me? Hey, good morning, guys. hey good morning guys Can you hear me? can you hear me

Speaker 10: Yes. Yes. yes

Speaker 2: Yes. Yes. yes

Speaker 5: Okay. It, like, cut out for a second. Sorry. Just one quick question on just overall utilization within the portfolio and just maybe getting a understanding of just sublease availability within the portfolio. Do you guys have, like, a number on just occupied space that's currently listed for sublease? Okay. okay It, like, cut out for a second. it like cut out for a second Sorry. sorry Just one quick question on just overall utilization within the portfolio and just maybe getting a understanding of just sublease availability within the portfolio. just one quick question on just overall utilization within the portfolio and just maybe getting a understanding of just sublease availability within the portfolio Do you guys have, like, a number on just occupied space that's currently listed for sublease? do you guys have like a number on just occupied space that's currently listed for sublease

Speaker 10: Actually, our sublease space is actually going down. I think it was down 6% or 7% last quarter. It is something we monitor. Some of it just to be, you know, just to be transparent, it goes to direct vacancy. Some is being taken off the market and utilized by our customers. You know, we have roughly 500,000, a little over 500,000 sq ft in our portfolio that is currently being subleased today. It is getting better, and we're seeing it both getting better in our portfolio, but the market as well. Actually, our sublease space is actually going down. actually our sublease space is actually going down I think it was down 6% or 7% last quarter. i think it was down 6% or 7% last quarter It is something we monitor. it is something we monitor Some of it just to be, you know, just to be transparent, it goes to direct vacancy. some of it just to be you know just to be transparent it goes to direct vacancy Some is being taken off the market and utilized by our customers. some is being taken off the market and utilized by our customers You know, we have roughly 500,000, a little over 500,000 sq ft in our portfolio that is currently being subleased today. you know we have roughly 500,000 a little over 500,000 sq ft in our portfolio that is currently being subleased today It is getting better, and we're seeing it both getting better in our portfolio, but the market as well. it is getting better and we're seeing it both getting better in our portfolio but the market as well

Speaker 5: That was it for me. Thanks, all. That was it for me. that was it for me Thanks, all. thanks all

Speaker 10: Great. Thanks, Nick. Great. great Thanks, Nick. thanks nick

Speaker 6: 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. we have no further questions I would like to turn the call back over to Ted Klinck for any closing remarks. i would like to turn the call back over to ted klinck for any closing remarks

Speaker 10: Well, thanks everybody for joining the call, and thanks for your interest in Highwoods. We look forward to seeing you, all at Nareit, if not before, or the next call. Thank you. Well, thanks everybody for joining the call, and thanks for your interest in Highwoods. well thanks everybody for joining the call and thanks for your interest in highwoods We look forward to seeing you, all at Nareit, if not before, or the next call. we look forward to seeing you all at nareit if not before or the next call Thank you. thank you

Speaker 6: This concludes today's conference call. Thank you for your participation. You may now disconnect. This concludes today's conference call. this concludes today's conference call Thank you for your participation. thank you for your participation You may now disconnect. you may now disconnect