Highwoods Properties, Inc. · NYSE:HIW
Highwoods Properties — Investor Presentation (November 2023)
34 slides from Highwoods Properties's investor presentation, November 2023
Slide 1: Highwoods November 2023
pie 2 ILIENCY: GROWTH. Highwoods: | # TOGETHER NOVEMBER 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: Why Highwoods?
WHY HIGHWOODS? ATTRACTIVE HIGH-QUALITY RESILIENT LEASING STRONG BALANCE PROVEN TRACK FUTURE GROWTH MARKETS PORTFOLIO & OPERATIONS SHEET & FINANCIALS RECORD OPPORTUNITIES HIW 3
Slide 4: Attractive Markets
ATTRACTIVE HIGH-QUALITY RESILIENT LEASING STRONG BALANCE PROVEN TRACK FUTURE GROWTH MARKETS PORTFOLIO & OPERATIONS SHEET & FINANCIALS RECORD OPPORTUNITIES HIW 4
Slide 5: 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 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: 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 8: High-Quality Portfolio
ATTRACTIVE HIGH-QUALITY RESILIENT LEASING STRONG BALANCE PROVEN TRACK FUTURE GROWTH MARKETS PORTFOLIO & OPERATIONS SHEET & FINANCIALS RECORD OPPORTUNITIES HIW 8
Slide 9: High-Quality Portfolio
HIGH-QUALITY PORTFOLIO 28.5M 88.7% 4.1% 2003 6.0 SQUARE FEET OCCUPANCY RENT CAGR AVG YEAR BUILT WALT (YEARS) (As of 9/30/23) (As of 9/30/23) (2013-3Q23) (Value Weighted Average) (As of 9/30/23) HIW 9
Slide 10: Continuous Reinvestment in Existing Portfolio
NASHVILLE HIGH-QUALITY PORTFOLIO BEFORE BEFORE CONTINUOUS REINVESTMENT IN EXISTING PORTFOLIO HIW BEFORE BEFORE 10
Slide 11: Flight to Quality: Occupancy
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 12: Resilient Leasing & Operations
ATTRACTIVE HIGH-QUALITY RESILIENT LEASING STRONG BALANCE PROVEN TRACK FUTURE GROWTH MARKETS PORTFOLIO & OPERATIONS SHEET & FINANCIALS RECORD OPPORTUNITIES HIW 12
Slide 13: 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 14: 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 Excluding 2 PIT Outlook range 22 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 *
Slide 15: Lease Stratification and New 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 16: Strong Balance Sheet & Financials
ATTRACTIVE HIGH-QUALITY RESILIENT LEASING STRONG BALANCE PROVEN TRACK FUTURE GROWTH MARKETS PORTFOLIO & OPERATIONS SHEET & FINANCIALS RECORD OPPORTUNITIES HIW 16
Slide 17: 2023 FFO 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 18: 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 Affirmed % of Gross Assets EBITDAre Interest Rate % of Gross Assets NOI* Stable Outlook 1Q’23 7.0x Debt/EBITDAre 6.
Slide 19: 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 20: 2023 Disposition Outlook
STRONG BALANCE SHEET & FINANCIALS 2023 DISPOSITION OUTLOOK UP TO ADDITIONAL $150M 2023 YTD DISPOSITIONS $51M INCLUDES NON-CORE ASSETS AND NON-OFFICE USE LAND PARCELS HIW 20
Slide 21: Non-Office Land as a Source of Capital
ORLANDO | CAPITAL PLAZA |1 ACRE OWNED TAMPA | INDEPENDENCE PARK | TOTAL ACRES 22 TAMPA | BAY CENTER STRONG BALANCE SHEET & FINANCIALS 7 ACRES | SOLD $6.9M 3 ACRES | SOLD $9.6M 15 ACRES OWNED NON-OFFICE LAND AS A SOURCE OF CAPITAL HIW RICHMOND | NORTH END | 22 ACRES | SOLD $14.4M NASHVILLE | OVATION
Slide 22: Proven Track Record
ATTRACTIVE HIGH-QUALITY RESILIENT LEASING STRONG BALANCE PROVEN TRACK FUTURE GROWTH MARKETS PORTFOLIO & OPERATIONS SHEET & FINANCIALS RECORD OPPORTUNITIES HIW 22
Slide 23: Acquisitions, Dispositions & Development
PROVEN TRACK RECORD ACQUISITIONS & DISPOSITIONS ACQUISITIONS $3.6B TOTAL ACQUISITION DALLAS DISPOSITIONS $2.9B TOTAL $821 $695 Outlook $549 range $447 $491 $436 $400 $374 $309 $296$286 Up to $158 $179$165 $149 $150M $125 $127 $133 $65 $20 $84 $85 $51 $37 $0 $0 $0 $0 2010 2011 2012 2013 2014 2015 201
Slide 24: Proven Track Record: Acquisitions
ALLIANCE CENTER (2012/2013) MCKINNEY & OLIVE (2022) TRUIST PLACE (2015) PROVEN TRACK RECORD ATLANTA DALLAS TAMPA ACQUISITIONS 150 FAYETTEVILLE (2021) CAPTRUST TOWER (2021) RALEIGH RALEIGH HIW THE PINNACLE AT SYMPHONY PLACE (2013) CHARTER SQUARE (2016) MORROCROFT CENTRE (2021) NASHVILLE RALEIGH CAPIT
Slide 25: Proven Track Record: Development
MIDTOWN WEST (2019) BRIDGESTONE TOWER (2014) MARS PETCARE (2017) PROVEN TRACK RECORD TAMPA NASHVILLE NASHVILLE DEVELOPMENT ASURION GULCH HUB (2018) METLIFE (2013 & 2017) VIRGINIA SPRINGS II (2019) NASHVILLE RALEIGH NASHVILLE HIW 25
Slide 26: Market Exits at Attractive Valuations
KANSAS CITY (2016) GREENSBORO (2019 – 2020) GREENSBORO (2019 – 2020) PROVEN TRACK RECORD MARKET EXITS AT ATTRACTIVE VALUATIONS MEMPHIS (2019 – 2021) MEMPHIS (2019 – 2021) MEMPHIS (2019 – 2021) HIW 26
Slide 27: 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 28: 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-incre
Slide 29: Consistent Financial Outperformance
PROVEN TRACK RECORD CONSISTENT FINANCIAL OUTPERFORMANCE 2.00% OCCUPANCY CHANGE "CORE" FFO PER SHARE GROWTH* 20% (Since start of pandemic) (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 30: Environmental Social Governance
PROVEN TRACK RECORD ENVIRONMENTAL SOCIAL GOVERNANCE DIRECTORS SERVE ONE-YEAR TERMS MAJORITY VOTE DIRECTOR RESIGNATION POLICY VIGOROUS CASH AND EQUITY CLAWBACK POLICY OUR PEOPLE ARE OUR DOUBLE TRIGGER CHANGE-IN-CONTROLS CONTRACTS TROPHY ASSETS NO POISON PILL 88% INDEPENDENT DIRECTORS COLLEGIALITY | W
Slide 31: Future Growth Opportunities
ATTRACTIVE HIGH-QUALITY RESILIENT LEASING STRONG BALANCE PROVEN TRACK FUTURE GROWTH MARKETS PORTFOLIO & OPERATIONS SHEET & FINANCIALS RECORD OPPORTUNITIES HIW 31
Slide 32: In-Process Development
FUTURE GROWTH 23Springs* $230M 642K 17% Granite Park Six* $100M 422K 13% Midtown East* $42M 143K 16% 2028 Stabilization Investment Square Feet Leased 2026 Stabilization Investment Square Feet Leased 2026 Stabilization Investment Square Feet Leased IN-PROCESS DEVELOPMENT (at HIW share) $518M $270M ~$
Slide 33: Development Potential
FUTURE GROWTH DEVELOPMENT POTENTIAL (existing core land bank) RICHMOND $115M RALEIGH NASHVILLE CHARLOTTE $500M $1.0B $210M ATLANTA $330M *Includes residential, retail and hotel. Residential SF based upon an average of 1,000 SF per unit. ORLANDO $40M TAMPA $165M HIW 33
Slide 34: Thank You
THANK YOU HIW
Highwoods Properties — Investor Presentation (November 2023) on 6ix