Highwoods Properties, Inc. · NYSE:HIW
Highwoods Properties — Investor Presentation (June 2023)
33 slides from Highwoods Properties's investor presentation, June 2023
Slide 1: Investor Presentation June 2023
ATTRACTIVE QUALITY RESILIENT LEASING STRONG BALANCE PROVEN TRACK FUTURE GROWTH MARKETS PORTFOLIO & OPERATIONS SHEET & FINANCIALS RECORD OPPORTUNITIES APRIL 24, 2023 JUNE 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
95% 2.0x 2.5x 28.8M 1.6M SF ATTRACTIVE MARKETS EMPLOYMENT SUNBELT POPULATION SQUARE FEET DEVELOPMENT PIPELINE (% of NOI*) GROWTH GROWTH (As of 3/31/23) (As of 3/31/23) (vs US average 2010-2022) (vs US average 2010-2022) ULI’s 2023 TOP REAL ESTATE MARKETS 1 NASHVILLE 2 DALLAS/FORT WORTH WE BELIEVE TH
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 NON-BBD Charlotte RICHMOND 10% CBD South Park Uptown Suburban NASHVILLE 4% South End = RALEIGH Dallas Infill 3% CHARLOTTE Suburban CBD Frisco/Plano 6%
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 28.8M 89.6% 4.0% 2003 6.0 SQUARE FEET OCCUPANCY RENT CAGR AVG YEAR BUILT WALT (YEARS) (As of 3/31/23) (As of 3/31/23) (2013-2022) (Value Weighted Average) (As of 3/31/23) 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: HIW Occupancy vs US
HIW HIGH-QUALITY PORTFOLIO 80% 82% 84% 86% 88% 90% 92% 94% 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 Source: CoStar, Company filings 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 HIW Occupancy 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 HIW BBDs 2017 Q3 20
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/Banking CUSTOMER DIVERSIFICATION Legal & Accounting Services 17% 18% Insurance % of Annualized Health Care and Social Assistance 4% Top 10 Customers Technology, Info Media & Telecom 4% GAAP
Slide 14: Resilient Leasing & Operations: Cash Rent, NOI, Occupancy
RESILIENT LEASING & OPERATIONS $/SF 30 WELCOME TO HIGHWOODS AVERAGE IN-PLACE CASH RENT % 7 SAME PROPERTY CASH NOI GROWTH 6 28 5 26 4 3 24 Outlook 2 range 1 22 0 20 (1) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q23 2013 2014 2015 2016 2017 2018 2019* 2020 2021 2022 2023 *2019 FFO excludes ba
Slide 15: Lease Stratification and New Leasing
RESILIENT LEASING & OPERATIONS Count 1,400 WELCOME TO HIGHWOODS LEASE STRATIFICATION SF M 7 Count 600 LEASE COUNT BY LOCATION 1,200 6 500 1,000 5 400 800 4 300 600 3 200 400 2 100 200 1 0 0 0 0 - 10K SF 10 - 25K SF 25 - 50K SF 50 - 100K SF > 100K SF 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
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 per Share Outlook
STRONG BALANCE SHEET & FINANCIALS ACTUAL Low High 2022 2023 FFO per Share Outlook $3.68 $3.82 $3.90* Effects Assumed in FFO Outlook Growth in Same Property Cash NOI (0.5%) 1.0% 1.0% Straight-Line Rental Income $25.5 $28.0 $28.2 G&A Expenses $39.0 $41.0 $42.3 Year-End Occupancy 89.0% 91.0% 91.1% Weig
Slide 18: Strong Balance Sheet
STRONG BALANCE SHEET & FINANCIALS STRONG BALANCE SHEET (as of 3/31/23) 42.4% 5.9x 4.3% 9.6% 82.5% 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 6.0
Slide 19: Consolidated Maturity Ladder
STRONG BALANCE SHEET & FINANCIALS CONSOLIDATED MATURITY LADDER (as of 3/31/2023) $M AVERAGE INTEREST 5.84% 5.78% 4.47% 4.48% 4.12% 3.24% 2.65% 3.50% 3.73% 700 RATES 600 500 No maturities 400 until 4Q 2025 300 200 100 0 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2037 Secured Unsecured Fix
Slide 20: 2023 Disposition Outlook
STRONG BALANCE SHEET & FINANCIALS 2023 DISPOSITION OUTLOOK UP TO $400M 2023 YTD DISPOSITIONS $40M 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 and Development Announcements
PROVEN TRACK RECORD ACQUISITIONS & DISPOSITIONS ACQUISITIONS $3.6B TOTAL ACQUISITION DALLAS DISPOSITIONS $2.9B TOTAL $695 Outlook $491 range $821 $374 Up to $549 $400M $286 $447 $436 $400 $309 $296 $179 $158 $149 $125 $165 $37 $127 $133 $20 $84 $65 $85 $40 $0 $0 $0 $0 2010 2011 2012 2013 2014 2015 2
Slide 24: Acquisitions
ALLIANCE CENTER (2012/2013) MCKINNEY & OLIVE (2022) TRUIST PLACE (2015) PROVEN TRACK RECORD ATLANTA DALLAS TAMPA 150 FAYETTEVILLE (2021) CAPTRUST TOWER (2021) THE PINNACLE AT SYMPHONY PLACE (2013) CHARTER SQUARE (2016) RALEIGH RALEIGH NASHVILLE RALEIGH ACQUISITIONS CAPITOL TOWERS (2021) MORROCROFT C
Slide 25: 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 2.25 HIW 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020 2021 2022 2023 FFO/sh Land sale gains/sh *20
Slide 28: Strengthening Cash Flows
PROVEN TRACK RECORD $ 000s STRENGTHENING CASH FLOWS 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 28
Slide 29: 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 30: Future Growth
ATTRACTIVE HIGH-QUALITY RESILIENT LEASING STRONG BALANCE PROVEN TRACK FUTURE GROWTH MARKETS PORTFOLIO & OPERATIONS SHEET & FINANCIALS RECORD OPPORTUNITIES HIW 30
Slide 31: In-Process Development
FUTURE GROWTH 23Springs* $230M 642K 17% Granite Park Six* $100M 422K 12% Midtown East* $42M 143K 2% 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 $329M ~$4
Slide 32: 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 32
Slide 33: Thank You
THANK YOU HIW
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