Highwoods Properties, Inc. · NYSE:HIW

Highwoods Properties — Investor Presentation (June 2019)

38 slides from Highwoods Properties's investor presentation, Jun 26, 2019

  1. Slide 1: Safe Harbor

    Safe Harbor Certain matters discussed in this presentation are forward-looking statements within the meaning of the federal securities laws, such as the expected cost, timing and impact of our development activity. These statements are distinguished by use of the words “will”, “expect”, “intend” and

  2. Slide 2: A Piece of the Highwoods Pie

    A PIECE OF THE HIGHWOODS PIE 2019 ANNUALIZED REVENUE BY MARKET 17% RALEIGH * Based on 1Q19 Annualized Revenue, and Includes Office, Industrial, Retail

  3. Slide 3: Raleigh Population Growth 2010-2017

    RALEIGH POPULATION GROWTH 2010 - 2017 % 22 20 18 16 14 AUSTIN 12 RALEIGH 10 CHARLOTTE NASHVILLE DALLAS DENVER 8 ATLANTA TAMPA SAN FRAN 6 DC 4 NYC 2 Source: Nashville Chamber of Commerce; U.S. Census Bureau, Population Division

  4. Slide 4: Cost of Living

    RALEIGH COST OF LIVING NYC 228 SAN FRANCISCO 193 WASHINGTON D.C. 152 DENVER 115 ATLANTA 99 AUSTIN 98 NASHVILLE 97 RALEIGH 98 CHARLOTTE 96 DALLAS 95 TAMPA 95 Source: Nashville Chamber of Commerce

  5. Slide 5: Education

    RALEIGH EDUCATION 3 TOP TIER 163,000+ Graduates Located Annually in the Triangle internationally students enrolled in recognized research 4 - ye a r i n s t i t u t i o n s Region u n i ve r s i t i e s across the region Lo c a t i o n o f 2 0 1 6 G r a d u a t e s i n 2 0 18 L inkedIn Alumni C a re

  6. Slide 6: Major Employers

    RALEIGH MAJOR EMPLOYERS 38K 10K 9K 7K 5K 5K 5K 2K 2K 1K Highwoods Customer Source: Wake County Economic Development

  7. Slide 7: Unemployment Rate

    RALEIGH UNEMPLOYMENT RATE % 12 10 8 6 4 2 0 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 RALEIGH U.S. Source: Green Street

  8. Slide 8: Office Employment Growth

    RALEIGH OFFICE EMPLOYMENT GROWTH % YEAR OVER YEAR 8 6 4 2 0 -2 -4 -6 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 RALEIGH U.S. Source: Green Street

  9. Slide 9: Submarkets

    RALEIGH SUBMARKETS TOTAL SUBMARKET HIGHWOODS SF OCCUPANCY SF OCCUPANCY SUBMARKET (MIL) (%) (MIL) (%) WEST 6.1 92.0 0.7 90.0 RALEIGH GLENWOOD/ 4.1 89.1 0.8 96.2 CREEDMOOR SIX FORKS 4.0 90.5 0.2 84.5 FALLS OF 3.0 89.8 0.2 91.9 NEUSE US 1/CAPITAL 2.3 92.3 0.2 97.9 BLVD CBD 5.6 94.6 0.9 94.0 CARY 7.0 87

  10. Slide 10: Occupancy Overview

    RALEIGH OCCUPANCY OVERVIEW % 100 95 90 85 80 75 '10 '11 '12 '13 '14 '15 '16 '17 '18 RALEIGH RALEIGH BBDs Source: Highwoods

  11. Slide 11: Class A Rent Trends

    OFFICE MARKET CLASS A RENT TRENDS $ /S F 26 25 24 23 22 21 20 '10 '11 '12 '13 '14 '15 '16 '17 '18 *Includes all of Raleigh, not just focused submarkets Source: REIS

  12. Slide 12: Rent per SF

    S E L E C T O F F I C E S U B M A R K E TS RENT PER SF $ /S F 27 26 25 24 23 22 21 20 19 18 '10 '11 '12 '13 '14 '15 '16 '17 '18 CBD G L E N WO O D/ CARY CREEDMOOR Source: REIS

  13. Slide 13: Inventory vs Vacancy

    OFFICE MARKET INVENTORY VS VACANCY M /S F % 43 18 42 16 41 14 40 12 39 10 38 8 37 6 36 4 35 2 34 0 '10 '11 '12 '13 '14 '15 '16 '17 '18 R A L E I G H O F F I C E I N V E N TO RY R A L E I G H VAC A N C Y Source: REIS

  14. Slide 14: Supply & Demand

    OFFICE MARKET SUPPLY & DEMAND % 8 7 6 5 4 3 2 1 0 -1 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 DELIVERIES NET ABSORPTION Source: Green Street

  15. Slide 15: Net Absorption

    OFFICE MARKET NET ABSORPTION M SF 1.4 1.2 1.0 0.8 0.6 560K Avg Net Absorption 0.4 0.2 0.0 -0.2 '10 '11 '12 '13 '14 '15 '16 '17 '18 *Includes all Raleigh-Durham submarkets Source: REIS

  16. Slide 16: Under Construction

    OFFICE MARKET UNDER CONSTRUCTION K /S F 600 500 400 300 200 100 0 2019 2020 *Excludes Durham & Orange County submarkets TOTA L S F UNLEASED Source: Highwoods

  17. Slide 17: Supply Pipeline

    S E L E C T O F F I C E S U B M A R K E TS SUPPLY PIPELINE K /S F % 800 9 700 8 7 600 6 500 5 400 4 300 3 200 2 100 1 0 0 G L E N WO O D/ CBD % O F S TO C K CREEDMOOR Source: Highwoods

  18. Slide 18: Replacement Costs

    OFFICE SUBMARKET REPLACEMENT COSTS $ /S F 600 500 400 300 200 100 0 '09 '15 '19 CBD SUBURBAN Source: Highwoods

  19. Slide 19: Overview

    S E L E C T O F F I C E S U B M A R K E TS OVERVIEW AVERAGE VACANCY BBD SIZE SF CLASS A % RENT $ CBD 5.6M 32 5.4 GLENWOOD/ CREEDMOOR GLENWOOD/ 4.1M 28 10.9 CREEDMOOR CARY CARY 7.0M 27 12.7 CBD Source: CBRE

  20. Slide 20: Construction

    S E L E C T O F F I C E S U B M A R K E TS CONSTRUCTION UNDER PRE-LEASED BBD CONSTRUCTION % CBD 150K 65.0 GLENWOOD/ CREEDMOOR GLENWOOD/ 591K 20.8 CREEDMOOR CARY CARY 0 N/A CBD Source: Highwoods

  21. Slide 21: CBD

    OFFICE SUBMARKET CBD 16% 897K 94% 450K SF SUBMARKET SUBMARKET OF SUBMARKET H I G H WO O D S S F H I G H WO O D S D E V E LO P M E N T OFFICE SF O C C U PA N C Y H I G H WO O D S (3 BUILDINGS) O C C U PA N C Y P OT E N T I A L OW N E D Includes land site under contract Source: Highwoods, CBRE

  22. Slide 22: Historical Occupancy

    CBD HISTORICAL OCCUPANCY % 100 95 90 85 80 75 '10 '11 '12 '13 '14 '15 '16 '17 '18 CBD HIW CBD Source: Highwoods, REIS

  23. Slide 23: Historical Rent/SF

    CBD HISTORICAL RENT/SF $ /S F 34 32 30 28 26 24 22 20 18 '10 '11 '12 '13 '14 '15 '16 '17 '18 CBD HIW CBD Source: Highwoods, REIS

  24. Slide 24: Cary

    O F F I C E S U B M A R K E TS CARY 22.9% 1.6M 12 81% 370K SF SUBMARKET SUBMARKET OF SUBMARKET H I G H WO O D S H I G H WO O D S H I G H WO O D S D E V E LO P M E N T OFFICE SF O C C U PA N C Y H I G H WO O D S SF BUILDINGS O C C U PA N C Y P OT E N T I A L OW N E D Source: Highwoods, CBRE

  25. Slide 25: Historical Occupancy

    C A RY HISTORICAL OCCUPANCY % 100 95 90 85 80 75 '10 '11 '12 '13 '14 '15 '16 '17 '18 CARY HIW CARY Source: Highwoods, REIS

  26. Slide 26: Historical Rent/SF

    C A RY HISTORICAL RENT/SF $ /S F 28 27 26 25 24 23 22 21 20 19 18 '10 '11 '12 '13 '14 '15 '16 '17 '18 CARY HIW CARY Source: Highwoods, REIS

  27. Slide 27: Glenwood/Creedmoor

    O F F I C E S U B M A R K E TS GLENWOOD/CREEDMOOR 19% 780K 6 96.2% 250K SF SUBMARKET SUBMARKET OF SUBMARKET H I G H WO O D S H I G H WO O D S H I G H WO O D S D E V E LO P M E N T OFFICE SF O C C U PA N C Y H I G H WO O D S SF BUILDINGS O C C U PA N C Y P OT E N T I A L OW N E D Source: Highwoods, C

  28. Slide 28: Historical Occupancy

    G L E N WO O D/C R E E D M O O R HISTORICAL OCCUPANCY % 100 95 90 85 80 75 '10 '11 '12 '13 '14 '15 '16 '17 '18 G L E N WO O D/ HIW CREEDMOOR G L E N WO O D/ Source: Highwoods, REIS CREEDMOOR

  29. Slide 29: Historical Rent/SF

    G L E N WO O D/C R E E D M O O R HISTORICAL RENT/SF $ /S F 30 28 26 24 22 20 18 '10 '11 '12 '13 '14 '15 '16 '17 '18 G L E N WO O D/ H I W G L E N WO O D/ CREEDMOOR CREEDMOOR Source: Highwoods, REIS

  30. Slide 30: Division Overview

    DIVISION OVERVIEW 5.1M 47 89.2% 330+ $169M 1.1M SF SQUARE BUILDINGS O C C U PA N C Y C U S TO M E R S UNDER D E V E LO P M E N T FEET D E V E LO P M E N T P OT E N T I A L Includes land site under contract Source: Highwoods

  31. Slide 31: Historical Occupancy

    D I V I S I O N OV E RV I E W HISTORICAL OCCUPANCY % 100 95 90 85 80 75 '10 '11 '12 '13 '14 '15 '16 '17 '18 HIW RALEIGH RALEIGH Source: Highwoods, REIS

  32. Slide 32: Historical Rent/SF

    D I V I S I O N OV E RV I E W HISTORICAL RENT/SF $ /S F 27 26 25 24 23 22 21 20 19 18 2010 ‘10 2011 ‘11 2012 ‘12 2013 ‘13 2014 ‘14 2015 ‘15 2016 ‘16 2017 ‘17 2018 ‘18 HIW RALEIGH RALEIGH Source: Highwoods, REIS

  33. Slide 33: Same Store NOI Growth

    D I V I S I O N OV E RV I E W SAME STORE NOI GROWTH % % 8 6 5 6 4 4 3 2 2 1 0 0 Economic (1) (2) adjustment (2) (4) (3) ‘10 ‘ 121 ‘ 13 2 ‘ 14 3 5 ‘14 ‘ 16 5 ‘ 176 ‘ 187 ‘ 198 C A S H N O I G R OW T H A N N U A L O C C U PA N C Y C H A N G E Source: Highwoods

  34. Slide 34: Mark to Market

    D I V I S I O N OV E RV I E W MARK TO MARKET % 18 16 14 12 10 8 6 4 2 0 CBD G L E N WO O D/ CARY CREEDMOOR Source: Highwoods

  35. Slide 35: Expirations by Year

    D I V I S I O N OV E RV I E W EXPIRATIONS BY YEAR K /S F % 500 12 450 10 400 350 8 300 250 6 200 4 150 100 2 50 0 0 '19 '20 '21 '22 E X P I R AT I O N S % O F TOTA L A N N U A L R E V E N U E Source: Highwoods, REIS

  36. Slide 36: Future Development

    D I V I S I O N OV E RV I E W FUTURE DEVELOPMENT GLENWOOD/ CREEDMOOR 250K SF CARY D E V E LO P M E N T P OT E N T I A L 370K SF D E V E LO P M E N T P OT E N T I A L CBD 450K SF D E V E LO P M E N T P OT E N T I A L

  37. Slide 37: Future Development

    GLENLAKE VII D I V I S I O N OV E RV I E W FUTURE DEVELOPMENT Conceptual rendering CENTREGREEN VI & VII Conceptual rendering Conceptual rendering THE EDGE

  38. Slide 38: You've Come to the Right Place.

    YOU’VE COME TO THE RIGHT PLACE.

Highwoods Properties — Investor Presentation (June 2019) on 6ix