Highwoods Properties, Inc. · NYSE:HIW
Highwoods Properties — Debt Investor Presentation (November 2023)
18 slides from Highwoods Properties's debt investor presentation, Nov 9, 2023
Slide 1: Highwoods Together - November 9, 2023
pie 2 ILIENCY: GROWTH. Highwoods: | # TOGETHER NOVEMBER 9, 2023
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Some of the information in this presentation may contain forward-looking statements. Such statements include, in particular, statements about our plans, strategies and prospects such as the following: the expected financial and operational results and the related assumptio
Slide 3: Highwoods at a glance
1994 $2.2B 354 28.5M 2003 88.7% QUARTER-END IPO MARKET CAP EMPLOYEES SQUARE FEET AVG YEAR BUILT OCCUPANCY (Includes HIW share of JVs) (Value Weighted Average) (Includes HIW share of JVs) 4.1% IN-PLACE 6.0x $580M 1.6M SF DEVELOPMENT ~$40M NET DEBT/EBITDAre ANNUALIZED NOI* FUTURE NOI FROM RENT CAGR PI
Slide 4: Attractive Markets
ATTRACTIVE MARKETS 95% 2.0x 2.5x 28.5M 1.6M SF EMPLOYMENT SUNBELT POPULATION SQUARE FEET DEVELOPMENT PIPELINE (% of NOI*) GROWTH GROWTH (As of 9/30/23) (As of 9/30/23) (vs US average 2010-2022) (vs US average 2010-2022) ULI’s 2024 TOP REAL ESTATE MARKETS PIT 5% WE BELIEVE THAT, IN CREATING ENVIRONME
Slide 5: Attractive Markets: Demographic & Market Trends
ATTRACTIVE MARKETS DEMOGRAPHIC & MARKET TRENDS 1.8% 4.5% 1.6% OFFICE EMPLOYMENT 4.0% 1.4% 3.5% POPULATION 1.2% 3.0% 1.0% 2.5% 0.8% 2.0% 0.6% 1.5% 0.4% 1.0% 0.2% 0.5% 0.0% 0.0% HIW Proforma Sunbelt HIW US Gateway HIW Proforma HIW Sunbelt US Gateway 3.5% 16.0% 3.0% 14.0% NET ABSORPTION (As a % of Inve
Slide 6: Attractive Markets: BBD Exposure by Market
Atlanta ATTRACTIVE MARKETS PITTSBURGH BBD EXPOSURE BY MARKET Central Perimeter CBD Cumberland/Galleria 5% Buckhead (% of NOI*) Midtown Charlotte NON- RICHMOND South Park BBD 10% CBD Uptown Suburban 4% South End = NASHVILLE Infill RALEIGH Dallas 2% CHARLOTTE Suburban CBD Frisco/Plano BB
Slide 7: Resilient Leasing & Operations: Diversification
RESILIENT LEASING & OPERATIONS WELCOME TO HIGHWOODS INDUSTRY DIVERSIFICATION (% of Annualized Revenue) Finance and Banking Legal & Accounting Services CUSTOMER DIVERSIFICATION 15% 19% Insurance % of Annualized Health Care and Social Assistance 4% Top 10 Customers Technology, Information, Media & Tel
Slide 8: Resilient Leasing & Operations
RESILIENT LEASING & OPERATIONS $/SF 30 WELCOME TO HIGHWOODS AVERAGE RENT FOR ALL IN-PLACE LEASES % 7 SAME PROPERTY CASH NOI GROWTH 6 28 5 26 4 3 24 2 Outlook 22 range 1 20 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 3Q23 2013 2014 2015 2016 2017 2018 2019* 2020 2021 2022 2023 *2019 FFO exclu
Slide 9: Resilient Leasing & Operations: Leasing
RESILIENT LEASING & OPERATIONS Count 1,600 WELCOME TO HIGHWOODS LEASE STRATIFICATION SF M 7 Count 600 LEASE COUNT BY LOCATION 1,400 6 500 1,200 5 400 1,000 4 300 800 3 600 200 2 400 100 200 1 0 0 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD 0 - 10K SF 10 - 25K SF 25 - 50K SF 50 - 100K SF
Slide 10: High-Quality Portfolio: Flight to Quality
HIW HIGH-QUALITY PORTFOLIO 80.0% 82.0% 84.0% 86.0% 88.0% 90.0% 92.0% 94.0% 96.0% 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 Source: CoStar, Company filings 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 HIW Occupancy 2017 Q1 2017 Q2 2017 Q3 2017 Q4 HIW BBDs 2018
Slide 11: Proven Track Record: Consistent FFO Growth
PROVEN TRACK RECORD $ CONSISTENT FFO GROWTH 4.00 OUTLOOK RANGE 3.75 3.50 3.25 3.00 1.7% ANNUAL GROWTH SINCE THE PANDEMIC 2.75 3.8% MID CYCLE ANNUAL GROWTH 2.50 4.3% EARLY CYCLE ANNUAL GROWTH HIW 2.25 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020 2021 2022 2023 FFO/sh Land sale gains/sh *20
Slide 12: Proven Track Record: Consistent Cash Flow Growth
PROVEN TRACK RECORD $ 000s CONSISTENT CASH FLOW GROWTH 250,000 200,000 150,000 100,000 50,000 0 HIW 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Cash Available for Distribution* Average shares *Cash Available for Distribution means FFO as adjusted for non-cash items less non-incr
Slide 13: Strong Balance Sheet & Financials: 2023 Outlook
STRONG BALANCE SHEET & FINANCIALS As of 10/24/2023 ACTUAL Low High 2022 2023 FFO per Share Outlook $3.73 $3.77 $3.90* Effects Assumed in FFO Outlook Growth in Same Property Cash NOI 0.0% 1.0% 1.0% Straight-Line Rental Income $23.5 $25.5 $28.2 G&A Expenses $39.0 $41.0 $42.3 Year-End Occupancy 88.5% 9
Slide 14: Proven Track Record: Consistent Financial Outperformance
PROVEN TRACK RECORD CONSISTENT FINANCIAL OUTPERFORMANCE 2.00% OCCUPANCY CHANGE "CORE" FFO PER SHARE GROWTH* (Since start of pandemic) 20% (2023 Consensus vs. 2019) 0.00% 10% -2.00% 0% -4.00% -10% -6.00% -20% -8.00% -30% -10.00% -40% -12.00% -50% -14.00% -60% NGW4 NGW2 HIW NGW5 GW1 GW2 NGW1 GW5 GW6 G
Slide 15: Strong Balance Sheet
STRONG BALANCE SHEET & FINANCIALS STRONG BALANCE SHEET (as of 9/30/23) 41.8% 6.0x 4.4% 9.5% 83.4% Baa2 Debt + Preferred as Net Debt to Weighted Average Secured Debt as Unencumbered BBB % of Gross Assets EBITDAre Interest Rate % of Gross Assets NOI* 7.0x Debt/EBITDAre 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x HI
Slide 16: Consolidated Maturity Ladder
STRONG BALANCE SHEET & FINANCIALS CONSOLIDATED MATURITY LADDER (as of 9/30/2023) $M AVERAGE INTEREST 6.34% 6.29% 4.64% 4.48% 4.12% 3.24% 2.65% 3.50% 3.73% 700 RATES 600 No maturities 500 until 4Q 2025 Without extension 400 options 300 200 100 0 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Slide 17: Covenants
COVENANTS Covenant Bond Bank Total debt / Total assets < 60% 44.9% < 60% 45.3% Total secured debt / Total assets < 40% 9.5% < 35% 9.6% EBITDA / Fixed charges > 1.50x 4.09x > 1.50x 3.52x Unencumbered assets / Unsecured debt > 150% 234.8% > 167% 238.7% Restricted payments < 95% of FFO N/A < 95% 52.2%
Slide 18: Thank You
THANK YOU HIW
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