Highwoods Properties提交截至2026年9月30日季度的10-Q：第三季度营收2.182亿美元，净利润3,408万美元
10-Q - HIGHWOODS PROPERTIES, INC. (0000921082) (Filer)
Highwoods Properties及其运营合伙企业联合提交截至2026年9月30日季度的10-Q。第三季度营收为2.182亿美元、净利润为3,408万美元，普通股股东可得净利润为3,175万美元，基本及稀释每股收益均为0.29美元；上年同期营收为2.018亿美元、净利润为1,371万美元。
这份10-Q节选提供了Highwoods第三季度及前九个月的营收、利润、现金流、物业运营和债务信息，可用于了解其报告期经营与融资情况。
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2026
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from [ ] to [ ]
HIGHWOODS PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
| Maryland | 001-13100 | 56-1871668 | ||||||
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||||||
HIGHWOODS REALTY LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
| North Carolina | 000-21731 | 56-1869557 | ||||||
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||||||
150 Fayetteville Street, Suite 1400
Raleigh, NC 27601
(Address of principal executive offices) (Zip Code)
919-872-4924
(Registrants’ telephone number, including area code)
___________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
| Common Stock, $.01 par value, of Highwoods Properties, Inc. | HIW | New York Stock Exchange | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Highwoods Properties, Inc. Yes ☒ No ☐ Highwoods Realty Limited Partnership Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Highwoods Properties, Inc. Yes ☒ No ☐ Highwoods Realty Limited Partnership Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Highwoods Properties, Inc.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
Highwoods Realty Limited Partnership
Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Highwoods Properties, Inc. ☐ Highwoods Realty Limited Partnership ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Highwoods Properties, Inc. Yes ☐ No ☒ Highwoods Realty Limited Partnership Yes ☐ No ☒
The Company had 110,315,322 shares of Common Stock outstanding as of October 20, 2026.
EXPLANATORY NOTE
We refer to Highwoods Properties, Inc. as the “Company,” Highwoods Realty Limited Partnership as the “Operating Partnership,” the Company’s common stock as “Common Stock” or “Common Shares,” the Company’s preferred stock as “Preferred Stock” or “Preferred Shares,” the Operating Partnership’s common partnership interests as “Common Units” and the Operating Partnership’s preferred partnership interests as “Preferred Units.” References to “we” and “our” mean the Company and the Operating Partnership, collectively, unless the context indicates otherwise.
The Company conducts its activities through the Operating Partnership and is its sole general partner. The partnership agreement provides that the Operating Partnership will assume and pay when due, or reimburse the Company for payment of, all costs and expenses relating to the ownership and operations of, or for the benefit of, the Operating Partnership. The partnership agreement further provides that all expenses of the Company are deemed to be incurred for the benefit of the Operating Partnership.
Except as otherwise noted, all property-level operational information presented herein includes in-service wholly owned properties and in-service properties owned by consolidated and unconsolidated joint ventures (at our share). Development projects are not considered in-service properties until such projects are completed and stabilized. Stabilization occurs at the earlier of: (1) the projected stabilization date; or (2) the date on which a project's occupancy generally exceeds 93%.
Certain information contained herein is presented as of October 20, 2026, the latest practicable date for financial information prior to the filing of this Quarterly Report.
This report combines the Quarterly Reports on Form 10-Q for the period ended September 30, 2026 of the Company and the Operating Partnership. We believe combining the quarterly reports into this single report results in the following benefits:
•combined reports better reflect how management and investors view the business as a single operating unit;
•combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;
•combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and
•combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.
To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:
•Consolidated Financial Statements;
•Note 11 to Consolidated Financial Statements - Earnings Per Share and Per Unit;
•Item 4 - Controls and Procedures; and
•Item 6 - Certifications of CEO and CFO Pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.
HIGHWOODS PROPERTIES, INC.
HIGHWOODS REALTY LIMITED PARTNERSHIP
QUARTERLY REPORT FOR THE PERIOD ENDED SEPTEMBER 30, 2026
TABLE OF CONTENTS
2
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
HIGHWOODS PROPERTIES, INC.
Consolidated Balance Sheets
(Unaudited and in thousands, except share and per share data)
| September 30, 2026 | December 31, 2025 | ||||||||||
| Assets: | |||||||||||
| Real estate assets, at cost: | |||||||||||
| Land | $ | 598,043 | $ | 609,177 | |||||||
| Buildings and tenant improvements | 6,205,052 | 6,144,697 | |||||||||
| Development in-process | — | 6,248 | |||||||||
| Land held for development | 201,723 | 214,149 | |||||||||
| 7,004,818 | 6,974,271 | ||||||||||
| Less-accumulated depreciation | (1,924,818) | (1,902,276) | |||||||||
| Net real estate assets | 5,080,000 | 5,071,995 | |||||||||
| Real estate and other assets, net, held for sale | 21,697 | 23,201 | |||||||||
| Cash and cash equivalents | 279,205 | 27,358 | |||||||||
| Restricted cash | 19,480 | 15,691 | |||||||||
| Accounts receivable | 22,497 | 28,263 | |||||||||
| Mortgages and notes receivable | 12,227 | 12,228 | |||||||||
| Accrued straight-line rents receivable | 312,772 | 318,024 | |||||||||
| Investments in and advances to unconsolidated affiliates | 354,368 | 471,580 | |||||||||
Deferred leasing costs, net of accumulated amortization of $179,599 and $169,972, respectively | 280,906 | 244,258 | |||||||||
Prepaid expenses and other assets, net of accumulated depreciation of $28,648 and $25,144, respectively | 64,063 | 61,240 | |||||||||
| Total Assets | $ | 6,447,215 | $ | 6,273,838 | |||||||
| Liabilities, Noncontrolling Interests in the Operating Partnership and Equity: | |||||||||||
| Mortgages and notes payable, net | $ | 3,511,810 | $ | 3,554,178 | |||||||
| Accounts payable, accrued expenses and other liabilities | 310,426 | 284,006 | |||||||||
| Total Liabilities | 3,822,236 | 3,838,184 | |||||||||
| Commitments and contingencies | |||||||||||
| Noncontrolling interests in the Operating Partnership | 58,541 | 52,777 | |||||||||
| Equity: | |||||||||||
Preferred Stock, $.01 par value, 50,000,000 authorized shares; | |||||||||||
8.625% Series A Cumulative Redeemable Preferred Shares (liquidation preference $1,000 per share), 26,631 and 26,691 shares issued and outstanding, respectively | 26,631 | 26,691 | |||||||||
Common Stock, $.01 par value, 200,000,000 authorized shares; | |||||||||||
110,315,322 and 109,905,241 shares issued and outstanding, respectively | 1,103 | 1,099 | |||||||||
| Additional paid-in capital | 3,224,586 | 3,223,767 | |||||||||
| Distributions in excess of net income available for common stockholders | (878,764) | (870,083) | |||||||||
| Accumulated other comprehensive loss | (1,641) | (2,494) | |||||||||
| Total Stockholders’ Equity | 2,371,915 | 2,378,980 | |||||||||
| Noncontrolling interests in consolidated affiliates | 194,523 | 3,897 | |||||||||
| Total Equity | 2,566,438 | 2,382,877 | |||||||||
| Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity | $ | 6,447,215 | $ | 6,273,838 | |||||||
See accompanying notes to consolidated financial statements.
3
HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Income
(Unaudited and in thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Rental and other revenues | $ | 218,183 | $ | 201,773 | $ | 648,596 | $ | 602,756 | |||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Rental property and other expenses | 71,612 | 65,923 | 212,885 | 194,612 | |||||||||||||||||||
| Depreciation and amortization | 79,477 | 73,898 | 236,068 | 219,982 | |||||||||||||||||||
| Impairments of real estate assets | — | 8,800 | — | 8,800 | |||||||||||||||||||
| General and administrative | 9,850 | 8,995 | 33,181 | 31,771 | |||||||||||||||||||
| Total operating expenses | 160,939 | 157,616 | 482,134 | 455,165 | |||||||||||||||||||
| Interest expense | 40,608 | 38,475 | 123,998 | 112,782 | |||||||||||||||||||
| Other income | 3,092 | 1,753 | 8,828 | 8,007 | |||||||||||||||||||
| Gains on disposition of property | 13,582 | 5,674 | 109,569 | 87,889 | |||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | 768 | 598 | 3,339 | 2,223 | |||||||||||||||||||
| Net income | 34,078 | 13,707 | 164,200 | 132,928 | |||||||||||||||||||
| Net (income) attributable to noncontrolling interests in the Operating Partnership | (583) | (256) | (2,878) | (2,577) | |||||||||||||||||||
| Net (income)/loss attributable to noncontrolling interests in consolidated affiliates | (1,171) | 2 | (3,013) | 28 | |||||||||||||||||||
| Dividends on Preferred Stock | (574) | (576) | (1,722) | (1,783) | |||||||||||||||||||
| Net income available for common stockholders | $ | 31,750 | $ | 12,877 | $ | 156,587 | $ | 128,596 | |||||||||||||||
| Earnings per Common Share – basic: | |||||||||||||||||||||||
| Net income available for common stockholders per Common Share | $ | 0.29 | $ | 0.12 | $ | 1.42 | $ | 1.19 | |||||||||||||||
| Weighted average Common Shares outstanding – basic | 110,306 | 108,403 | 110,211 | 107,973 | |||||||||||||||||||
| Earnings per Common Share – diluted: | |||||||||||||||||||||||
| Net income available for common stockholders per Common Share | $ | 0.29 | $ | 0.12 | $ | 1.42 | $ | 1.19 | |||||||||||||||
| Weighted average Common Shares outstanding – diluted | 112,323 | 110,522 | 112,230 | 110,113 | |||||||||||||||||||
See accompanying notes to consolidated financial statements.
4
HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Comprehensive Income
(Unaudited and in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||
| Net income | $ | 34,078 | $ | 13,707 | $ | 164,200 | $ | 132,928 | |||||||||||||||
| Other comprehensive income/(loss): | |||||||||||||||||||||||
| Our share of other comprehensive income in unconsolidated affiliates | 1,008 | — | 1,008 | — | |||||||||||||||||||
| Amortization of cash flow hedges | (24) | (62) | (155) | (186) | |||||||||||||||||||
| Total other comprehensive income/(loss) | 984 | (62) | 853 | (186) | |||||||||||||||||||
| Total comprehensive income | 35,062 | 13,645 | 165,053 | 132,742 | |||||||||||||||||||
| Less-comprehensive income attributable to noncontrolling interests | (1,754) | (254) | (5,891) | (2,549) | |||||||||||||||||||
| Comprehensive income attributable to common stockholders | $ | 33,308 | $ | 13,391 | $ | 159,162 | $ | 130,193 | |||||||||||||||
See accompanying notes to consolidated financial statements.
5
HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Equity
(Unaudited and in thousands, except share amounts)
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Number of Common Shares | Common Stock | Series A Cumulative Redeemable Preferred Shares | Additional Paid-In Capital | Accumulated Other Compre-hensive Loss | Non-controlling Interests in Consolidated Affiliates | Distributions in Excess of Net Income Available for Common Stockholders | Total | ||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | 110,306,211 | $ | 1,103 | $ | 26,631 | $ | 3,221,689 | $ | (2,625) | $ | 198,050 | $ | (855,358) | $ | 2,589,490 | ||||||||||||||||||||||||||||||||
| Issuances of Common Stock, net of issuance costs and tax withholdings | 9,652 | — | — | 75 | — | — | — | 75 | |||||||||||||||||||||||||||||||||||||||
Dividends on Common Stock ($0.50 per share) | — | — | — | — | — | (55,156) | (55,156) | ||||||||||||||||||||||||||||||||||||||||
Dividends on Preferred Stock ($21.5625 per share) | — | — | — | — | — | (574) | (574) | ||||||||||||||||||||||||||||||||||||||||
| Adjustment of noncontrolling interests in the Operating Partnership to fair value | — | — | 1,874 | — | — | — | 1,874 | ||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests in consolidated affiliates | — | — | — | — | (4,698) | — | (4,698) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense, net of forfeitures | (541) | — | — | 948 | — | — | — | 948 | |||||||||||||||||||||||||||||||||||||||
| Net (income) attributable to noncontrolling interests in the Operating Partnership | — | — | — | — | — | (583) | (583) | ||||||||||||||||||||||||||||||||||||||||
| Net (income) attributable to noncontrolling interests in consolidated affiliates | — | — | — | — | 1,171 | (1,171) | — | ||||||||||||||||||||||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 34,078 | 34,078 | ||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | 984 | — | — | 984 | ||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | 35,062 | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2026 | 110,315,322 | $ | 1,103 | $ | 26,631 | $ | 3,224,586 | $ | (1,641) | $ | 194,523 | $ | (878,764) | $ | 2,566,438 | ||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Number of Common Shares | Common Stock | Series A Cumulative Redeemable Preferred Shares | Additional Paid-In Capital | Accumulated Other Compre-hensive Loss | Non-controlling Interests in Consolidated Affiliates | Distributions in Excess of Net Income Available for Common Stockholders | Total | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | 109,905,241 | $ | 1,099 | $ | 26,691 | $ | 3,223,767 | $ | (2,494) | $ | 3,897 | $ | (870,083) | $ | 2,382,877 | ||||||||||||||||||||||||||||||||
Issuances of Common Stock, net of issuance costs and tax withholdings | (47,487) | — | — | (1,590) | — | — | — | (1,590) | |||||||||||||||||||||||||||||||||||||||
| Conversions of Common Units to Common Stock | 25,855 | 700 | 700 | ||||||||||||||||||||||||||||||||||||||||||||
Dividends on Common Stock ($1.50 per share) | — | — | — | — | — | (165,268) | (165,268) | ||||||||||||||||||||||||||||||||||||||||
Dividends on Preferred Stock ($64.6875 per share) | — | — | — | — | — | (1,722) | (1,722) | ||||||||||||||||||||||||||||||||||||||||
Adjustment of noncontrolling interests in the Operating Partnership to fair value | — | — | (6,635) | — | — | — | (6,635) | ||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests in consolidated affiliates | — | — | — | — | (9,589) | — | (9,589) | ||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interests in consolidated affiliates | — | — | — | — | 197,202 | — | 197,202 | ||||||||||||||||||||||||||||||||||||||||
| Issuances of restricted stock | 432,254 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Redemptions/repurchases of Preferred Stock | — | (60) | (60) | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense, net of forfeitures | (541) | 4 | — | 8,344 | — | — | — | 8,348 | |||||||||||||||||||||||||||||||||||||||
| Net (income) attributable to noncontrolling interests in the Operating Partnership | — | — | — | — | — | (2,878) | (2,878) | ||||||||||||||||||||||||||||||||||||||||
| Net (income) attributable to noncontrolling interests in consolidated affiliates | — | — | — | — | 3,013 | (3,013) | — | ||||||||||||||||||||||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 164,200 | 164,200 | ||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | 853 | — | — | 853 | ||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | 165,053 | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2026 | 110,315,322 | $ | 1,103 | $ | 26,631 | $ | 3,224,586 | $ | (1,641) | $ | 194,523 | $ | (878,764) | $ | 2,566,438 | ||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
6
HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Equity - Continued
(Unaudited and in thousands, except share amounts)
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Number of Common Shares | Common Stock | Series A Cumulative Redeemable Preferred Shares | Additional Paid-In Capital | Accumulated Other Compre-hensive Loss | Non-controlling Interests in Consolidated Affiliates | Distributions in Excess of Net Income Available for Common Stockholders | Total | ||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | 107,886,915 | $ | 1,079 | $ | 26,716 | $ | 3,149,335 | $ | (2,370) | $ | 4,105 | $ | (802,627) | $ | 2,376,238 | ||||||||||||||||||||||||||||||||
| Issuances of Common Stock, net of issuance costs and tax withholdings | 1,559,598 | 17 | — | 48,731 | — | — | — | 48,748 | |||||||||||||||||||||||||||||||||||||||
| Conversions of Common Units to Common Stock | 107,044 | 3,329 | 3,329 | ||||||||||||||||||||||||||||||||||||||||||||
Dividends on Common Stock ($0.50 per share) | — | — | — | — | — | (54,040) | (54,040) | ||||||||||||||||||||||||||||||||||||||||
Dividends on Preferred Stock ($21.5625 per share) | — | — | — | — | — | (576) | (576) | ||||||||||||||||||||||||||||||||||||||||
| Adjustment of noncontrolling interests in the Operating Partnership to fair value | — | — | (2,313) | — | — | — | (2,313) | ||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests in consolidated affiliates | — | — | — | — | (80) | — | (80) | ||||||||||||||||||||||||||||||||||||||||
| Redemptions/repurchases of Preferred Stock | (25) | (25) | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense, net of forfeitures | — | — | — | 1,169 | — | — | — | 1,169 | |||||||||||||||||||||||||||||||||||||||
| Net (income) attributable to noncontrolling interests in the Operating Partnership | — | — | — | — | — | (256) | (256) | ||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests in consolidated affiliates | — | — | — | — | (2) | 2 | — | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 13,707 | 13,707 | ||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | (62) | — | — | (62) | ||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | 13,645 | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | 109,553,557 | $ | 1,096 | $ | 26,691 | $ | 3,200,251 | $ | (2,432) | $ | 4,023 | $ | (843,790) | $ | 2,385,839 | ||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Number of Common Shares | Common Stock | Series A Cumulative Redeemable Preferred Shares | Additional Paid-In Capital | Accumulated Other Compre-hensive Loss | Non-controlling Interests in Consolidated Affiliates | Distributions in Excess of Net Income Available for Common Stockholders | Total | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | 107,623,777 | $ | 1,076 | $ | 28,811 | $ | 3,144,130 | $ | (2,246) | $ | 4,291 | $ | (810,608) | $ | 2,365,454 | ||||||||||||||||||||||||||||||||
| Issuances of Common Stock, net of issuance costs and tax withholdings | 1,561,056 | 17 | — | 48,589 | — | — | — | 48,606 | |||||||||||||||||||||||||||||||||||||||
| Conversions of Common Units to Common Stock | 107,044 | 3,329 | 3,329 | ||||||||||||||||||||||||||||||||||||||||||||
Dividends on Common Stock ($1.50 per share) | — | — | — | — | — | (161,778) | (161,778) | ||||||||||||||||||||||||||||||||||||||||
Dividends on Preferred Stock ($64.6875 per share) | — | — | — | — | — | (1,783) | (1,783) | ||||||||||||||||||||||||||||||||||||||||
| Adjustment of noncontrolling interests in the Operating Partnership to fair value | — | — | (3,240) | — | — | — | (3,240) | ||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests in consolidated affiliates | — | — | — | — | (240) | — | (240) | ||||||||||||||||||||||||||||||||||||||||
| Issuances of restricted stock | 261,680 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Redemptions/repurchases of Preferred Stock | — | (2,120) | (2,120) | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense, net of forfeitures | — | 3 | — | 7,443 | — | — | — | 7,446 | |||||||||||||||||||||||||||||||||||||||
| Net (income) attributable to noncontrolling interests in the Operating Partnership | — | — | — | — | — | (2,577) | (2,577) | ||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests in consolidated affiliates | — | — | — | — | (28) | 28 | — | ||||||||||||||||||||||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 132,928 | 132,928 | ||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | (186) | — | — | (186) | ||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | 132,742 | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | 109,553,557 | $ | 1,096 | $ | 26,691 | $ | 3,200,251 | $ | (2,432) | $ | 4,023 | $ | (843,790) | $ | 2,385,839 | ||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
7
HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Cash Flows
(Unaudited and in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Operating activities: | |||||||||||
| Net income | $ | 164,200 | $ | 132,928 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 236,068 | 219,982 | |||||||||
| Amortization of lease incentives and acquisition-related intangible assets and liabilities | 2,442 | 1,791 | |||||||||
| Share-based compensation expense | 8,348 | 7,446 | |||||||||
| Net credit losses/(reversals) on operating lease receivables | 2,019 | (776) | |||||||||
| Accrued interest on mortgages and notes receivable | 1,898 | (877) | |||||||||
| Amortization of debt issuance costs | 4,712 | 4,276 | |||||||||
| Amortization of cash flow hedges | (155) | (186) | |||||||||
| Amortization of mortgages and notes payable fair value adjustments | 259 | 84 | |||||||||
| Impairments of real estate assets | — | 8,800 | |||||||||
| Losses on debt extinguishment | 58 | 144 | |||||||||
| Net gains on disposition of property | (109,569) | (87,889) | |||||||||
| Equity in earnings of unconsolidated affiliates | (3,339) | (2,223) | |||||||||
| Distributions of earnings from unconsolidated affiliates | 5,038 | 5,277 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (586) | 621 | |||||||||
| Prepaid expenses and other assets | (816) | (1,102) | |||||||||
| Accrued straight-line rents receivable | (26,936) | (9,510) | |||||||||
| Accounts payable, accrued expenses and other liabilities | (3,785) | (19,263) | |||||||||
| Net cash provided by operating activities | 279,856 | 259,523 | |||||||||
| Investing activities: | |||||||||||
| Investments in acquired real estate and related intangible assets, net of cash acquired | (309,838) | (248,017) | |||||||||
| Investments in development in-process | (8,882) | (1,967) | |||||||||
| Investments in tenant improvements and deferred leasing costs | (132,494) | (110,065) | |||||||||
| Investments in building improvements | (39,160) | (30,760) | |||||||||
| Net proceeds from disposition of real estate assets | 380,269 | 153,586 | |||||||||
| Distributions of capital from unconsolidated affiliates | 152,845 | 6,288 | |||||||||
| Investments in mortgages and notes receivable | — | (1,577) | |||||||||
| Repayments of mortgages and notes receivable | — | 6,350 | |||||||||
| Investments in and advances to unconsolidated affiliates | (34,426) | (21,576) | |||||||||
| Changes in earnest money deposits | — | 10,000 | |||||||||
| Changes in other investing activities | (2,800) | (1,616) | |||||||||
| Net cash provided by/(used in) investing activities | 5,514 | (239,354) | |||||||||
| Financing activities: | |||||||||||
| Dividends on Common Stock | (165,268) | (161,778) | |||||||||
| Redemptions/repurchases of Preferred Stock | (60) | (2,120) | |||||||||
| Redemptions of Common Units | (24) | (10) | |||||||||
| Dividends on Preferred Stock | (1,722) | (1,783) | |||||||||
| Distributions to noncontrolling interests in the Operating Partnership | (3,025) | (3,227) | |||||||||
| Distributions to noncontrolling interests in consolidated affiliates | (9,589) | (240) | |||||||||
| Contributions from noncontrolling interests in consolidated affiliates | 197,202 | — | |||||||||
| Proceeds from the issuance of Common Stock | 934 | 51,819 | |||||||||
| Costs paid for the issuance of Common Stock | (659) | (1,204) | |||||||||
| Repurchase of shares related to tax withholdings | (1,865) | (2,009) | |||||||||
| Borrowings on revolving credit facility | 203,000 | 390,000 | |||||||||
| Repayments of revolving credit facility | (228,000) | (274,000) | |||||||||
| Borrowings on mortgages and notes payable | 20,000 | 31,600 | |||||||||
| Repayments of mortgages and notes payable | (39,279) | (37,157) | |||||||||
| Payments for debt issuance costs and other financing activities | (1,379) | (1,994) | |||||||||
| Net cash used in financing activities | (29,734) | (12,103) | |||||||||
| Net increase in cash and cash equivalents and restricted cash | $ | 255,636 | $ | 8,066 | |||||||
See accompanying notes to consolidated financial statements.
8
HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Cash Flows – Continued
(Unaudited and in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net increase in cash and cash equivalents and restricted cash | $ | 255,636 | $ | 8,066 | |||||||
| Cash and cash equivalents and restricted cash at beginning of the period | 43,049 | 33,677 | |||||||||
| Cash and cash equivalents and restricted cash at end of the period | $ | 298,685 | $ | 41,743 | |||||||
Reconciliation of cash and cash equivalents and restricted cash:
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash and cash equivalents at end of the period | $ | 279,205 | $ | 26,262 | |||||||
| Restricted cash at end of the period | 19,480 | 15,481 | |||||||||
| Cash and cash equivalents and restricted cash at end of the period | $ | 298,685 | $ | 41,743 | |||||||
Supplemental disclosure of cash flow information:
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash paid for interest, net of amounts capitalized | $ | 133,255 | $ | 123,314 | |||||||
Supplemental disclosure of non-cash investing and financing activities:
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Unrealized gains on cash flow hedges | $ | 1,008 | $ | — | |||||||
| Conversions of Common Units to Common Stock | $ | 700 | $ | 3,329 | |||||||
Changes in accrued capital expenditures (1) | $ | 29,289 | $ | (2,105) | |||||||
| Write-off of fully depreciated real estate assets | $ | 60,293 | $ | 71,956 | |||||||
| Write-off of fully amortized leasing costs | $ | 22,951 | $ | 35,962 | |||||||
| Write-off of fully amortized debt issuance costs | $ | 1,124 | $ | 1,388 | |||||||
| Adjustment of noncontrolling interests in the Operating Partnership to fair value | $ | 6,635 | $ | 3,240 | |||||||
__________
(1)Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities as of September 30, 2026 and 2025 were $74.3 million and $50.8 million, respectively.
See accompanying notes to consolidated financial statements.
9
HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Balance Sheets
(Unaudited and in thousands, except unit and per unit data)
| September 30, 2026 | December 31, 2025 | ||||||||||
| Assets: | |||||||||||
| Real estate assets, at cost: | |||||||||||
| Land | $ | 598,043 | $ | 609,177 | |||||||
| Buildings and tenant improvements | 6,205,052 | 6,144,697 | |||||||||
| Development in-process | — | 6,248 | |||||||||
| Land held for development | 201,723 | 214,149 | |||||||||
| 7,004,818 | 6,974,271 | ||||||||||
| Less-accumulated depreciation | (1,924,818) | (1,902,276) | |||||||||
| Net real estate assets | 5,080,000 | 5,071,995 | |||||||||
| Real estate and other assets, net, held for sale | 21,697 | 23,201 | |||||||||
| Cash and cash equivalents | 279,205 | 27,358 | |||||||||
| Restricted cash | 19,480 | 15,691 | |||||||||
| Accounts receivable | 22,497 | 28,263 | |||||||||
| Mortgages and notes receivable | 12,227 | 12,228 | |||||||||
| Accrued straight-line rents receivable | 312,772 | 318,024 | |||||||||
| Investments in and advances to unconsolidated affiliates | 354,368 | 471,580 | |||||||||
Deferred leasing costs, net of accumulated amortization of $179,599 and $169,972, respectively | 280,906 | 244,258 | |||||||||
Prepaid expenses and other assets, net of accumulated depreciation of $28,648 and $25,144, respectively | 64,063 | 61,240 | |||||||||
| Total Assets | $ | 6,447,215 | $ | 6,273,838 | |||||||
| Liabilities, Redeemable Operating Partnership Units and Capital: | |||||||||||
| Mortgages and notes payable, net | $ | 3,511,810 | $ | 3,554,178 | |||||||
| Accounts payable, accrued expenses and other liabilities | 310,426 | 284,006 | |||||||||
| Total Liabilities | 3,822,236 | 3,838,184 | |||||||||
| Commitments and contingencies | |||||||||||
| Redeemable Operating Partnership Units: | |||||||||||
Common Units, 2,017,248 and 2,044,053 outstanding, respectively | 58,541 | 52,777 | |||||||||
Series A Preferred Units (liquidation preference $1,000 per unit), 26,631 and 26,691 units issued and outstanding, respectively | 26,631 | 26,691 | |||||||||
| Total Redeemable Operating Partnership Units | 85,172 | 79,468 | |||||||||
| Capital: | |||||||||||
| Common Units: | |||||||||||
General partner Common Units, 1,119,238 and 1,115,405 outstanding, respectively | 23,468 | 23,547 | |||||||||
Limited partner Common Units, 108,787,275 and 108,381,027 outstanding, respectively | 2,323,457 | 2,331,236 | |||||||||
| Accumulated other comprehensive loss | (1,641) | (2,494) | |||||||||
| Noncontrolling interests in consolidated affiliates | 194,523 | 3,897 | |||||||||
| Total Capital | 2,539,807 | 2,356,186 | |||||||||
| Total Liabilities, Redeemable Operating Partnership Units and Capital | $ | 6,447,215 | $ | 6,273,838 | |||||||
See accompanying notes to consolidated financial statements.
10
HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Income
(Unaudited and in thousands, except per unit amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Rental and other revenues | $ | 218,183 | $ | 201,773 | $ | 648,596 | $ | 602,756 | |||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Rental property and other expenses | 71,612 | 65,923 | 212,885 | 194,612 | |||||||||||||||||||
| Depreciation and amortization | 79,477 | 73,898 | 236,068 | 219,982 | |||||||||||||||||||
| Impairments of real estate assets | — | 8,800 | — | 8,800 | |||||||||||||||||||
| General and administrative | 9,850 | 8,995 | 33,181 | 31,771 | |||||||||||||||||||
| Total operating expenses | 160,939 | 157,616 | 482,134 | 455,165 | |||||||||||||||||||
| Interest expense | 40,608 | 38,475 | 123,998 | 112,782 | |||||||||||||||||||
| Other income | 3,092 | 1,753 | 8,828 | 8,007 | |||||||||||||||||||
| Gains on disposition of property | 13,582 | 5,674 | 109,569 | 87,889 | |||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | 768 | 598 | 3,339 | 2,223 | |||||||||||||||||||
| Net income | 34,078 | 13,707 | 164,200 | 132,928 | |||||||||||||||||||
| Net (income)/loss attributable to noncontrolling interests in consolidated affiliates | (1,171) | 2 | (3,013) | 28 | |||||||||||||||||||
| Distributions on Preferred Units | (574) | (576) | (1,722) | (1,783) | |||||||||||||||||||
| Net income available for common unitholders | $ | 32,333 | $ | 13,133 | $ | 159,465 | $ | 131,173 | |||||||||||||||
| Earnings per Common Unit – basic: | |||||||||||||||||||||||
| Net income available for common unitholders per Common Unit | $ | 0.29 | $ | 0.12 | $ | 1.43 | $ | 1.20 | |||||||||||||||
| Weighted average Common Units outstanding – basic | 111,914 | 110,113 | 111,821 | 109,704 | |||||||||||||||||||
| Earnings per Common Unit – diluted: | |||||||||||||||||||||||
| Net income available for common unitholders per Common Unit | $ | 0.29 | $ | 0.12 | $ | 1.43 | $ | 1.20 | |||||||||||||||
| Weighted average Common Units outstanding – diluted | 111,914 | 110,113 | 111,821 | 109,704 | |||||||||||||||||||
See accompanying notes to consolidated financial statements.
11
HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Comprehensive Income
(Unaudited and in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||
| Net income | $ | 34,078 | $ | 13,707 | $ | 164,200 | $ | 132,928 | |||||||||||||||
| Other comprehensive income/(loss): | |||||||||||||||||||||||
| Our share of other comprehensive income in unconsolidated affiliates | 1,008 | — | 1,008 | — | |||||||||||||||||||
| Amortization of cash flow hedges | (24) | (62) | (155) | (186) | |||||||||||||||||||
| Total other comprehensive income/(loss) | 984 | (62) | 853 | (186) | |||||||||||||||||||
| Total comprehensive income | 35,062 | 13,645 | 165,053 | 132,742 | |||||||||||||||||||
| Net (income)/loss attributable to noncontrolling interests in consolidated affiliates | (1,171) | 2 | (3,013) | 28 | |||||||||||||||||||
| Comprehensive income attributable to common unitholders | $ | 33,891 | $ | 13,647 | $ | 162,040 | $ | 132,770 | |||||||||||||||
See accompanying notes to consolidated financial statements.
12
HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Capital
(Unaudited and in thousands)
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||
| Common Units | Accumulated Other Comprehensive Loss | Noncontrolling Interests in Consolidated Affiliates | Total | ||||||||||||||||||||||||||
| General Partners’ Capital | Limited Partners’ Capital | ||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | 23,674 | $ | 2,343,760 | $ | (2,625) | $ | 198,050 | 2,562,859 | ||||||||||||||||||||
| Issuances of Common Units, net of issuance costs and tax withholdings | 1 | 74 | — | — | 75 | ||||||||||||||||||||||||
Distributions on Common Units ($0.50 per unit) | (560) | (55,399) | — | — | (55,959) | ||||||||||||||||||||||||
Distributions on Preferred Units ($21.5625 per unit) | (6) | (568) | — | — | (574) | ||||||||||||||||||||||||
| Share-based compensation expense, net of forfeitures | 9 | 939 | — | — | 948 | ||||||||||||||||||||||||
| Distributions to noncontrolling interests in consolidated affiliates | — | — | — | (4,698) | (4,698) | ||||||||||||||||||||||||
| Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner | 21 | 2,073 | — | — | 2,094 | ||||||||||||||||||||||||
| Net (income) attributable to noncontrolling interests in consolidated affiliates | (12) | (1,159) | — | 1,171 | — | ||||||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||||||||
| Net income | 341 | 33,737 | — | — | 34,078 | ||||||||||||||||||||||||
| Other comprehensive income | — | — | 984 | — | 984 | ||||||||||||||||||||||||
| Total comprehensive income | 35,062 | ||||||||||||||||||||||||||||
| Balance as of September 30, 2026 | 23,468 | 2,323,457 | (1,641) | 194,523 | $ | 2,539,807 | |||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||
| Common Units | Accumulated Other Comprehensive Loss | Noncontrolling Interests in Consolidated Affiliates | Total | ||||||||||||||||||||||||||
| General Partners’ Capital | Limited Partners’ Capital | ||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | 23,547 | $ | 2,331,236 | $ | (2,494) | $ | 3,897 | $ | 2,356,186 | |||||||||||||||||||
| Issuances of Common Units, net of issuance costs and tax withholdings | (16) | (1,574) | — | — | (1,590) | ||||||||||||||||||||||||
| Redemptions of Common Units | — | (24) | — | — | (24) | ||||||||||||||||||||||||
Distributions on Common Units ($1.50 per unit) | (1,677) | (166,002) | — | — | (167,679) | ||||||||||||||||||||||||
Distributions on Preferred Units ($64.6875 per unit) | (17) | (1,705) | — | — | (1,722) | ||||||||||||||||||||||||
| Share-based compensation expense, net of forfeitures | 83 | 8,265 | — | — | 8,348 | ||||||||||||||||||||||||
| Distributions to noncontrolling interests in consolidated affiliates | — | — | — | (9,589) | (9,589) | ||||||||||||||||||||||||
| Contributions from noncontrolling interests in consolidated affiliates | — | — | — | 197,202 | 197,202 | ||||||||||||||||||||||||
| Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner | (64) | (6,314) | — | — | (6,378) | ||||||||||||||||||||||||
| Net (income) attributable to noncontrolling interests in consolidated affiliates | (30) | (2,983) | — | 3,013 | — | ||||||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||||||||
| Net income | 1,642 | 162,558 | — | — | 164,200 | ||||||||||||||||||||||||
| Other comprehensive income | — | — | 853 | — | 853 | ||||||||||||||||||||||||
| Total comprehensive income | 165,053 | ||||||||||||||||||||||||||||
| Balance as of September 30, 2026 | $ | 23,468 | $ | 2,323,457 | $ | (1,641) | $ | 194,523 | $ | 2,539,807 | |||||||||||||||||||
See accompanying notes to consolidated financial statements.
13
HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Capital - Continued
(Unaudited and in thousands)
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||
| Common Units | Accumulated Other Comprehensive Loss | Noncontrolling Interests in Consolidated Affiliates | Total | ||||||||||||||||||||||||||
| General Partners’ Capital | Limited Partners’ Capital | ||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | 23,477 | $ | 2,324,310 | $ | (2,370) | $ | 4,105 | $ | 2,349,522 | |||||||||||||||||||
| Issuances of Common Units, net of issuance costs and tax withholdings | 487 | 48,261 | — | — | 48,748 | ||||||||||||||||||||||||
Distributions on Common Units ($0.50 per unit) | (549) | (54,362) | — | — | (54,911) | ||||||||||||||||||||||||
Distributions on Preferred Units ($21.5625 per unit) | (6) | (570) | — | — | (576) | ||||||||||||||||||||||||
| Share-based compensation expense, net of forfeitures | 11 | 1,158 | — | — | 1,169 | ||||||||||||||||||||||||
| Distributions to noncontrolling interests in consolidated affiliates | — | — | — | (80) | (80) | ||||||||||||||||||||||||
| Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner | 16 | 1,615 | — | — | 1,631 | ||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests in consolidated affiliates | — | 2 | — | (2) | — | ||||||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||||||||
| Net income | 137 | 13,570 | — | — | 13,707 | ||||||||||||||||||||||||
| Other comprehensive loss | — | — | (62) | — | (62) | ||||||||||||||||||||||||
| Total comprehensive income | 13,645 | ||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | 23,573 | $ | 2,333,984 | $ | (2,432) | $ | 4,023 | $ | 2,359,148 | |||||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||
| Common Units | Accumulated Other Comprehensive Loss | Noncontrolling Interests in Consolidated Affiliates | Total | ||||||||||||||||||||||||||
| General Partners’ Capital | Limited Partners’ Capital | ||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | 23,345 | $ | 2,311,253 | $ | (2,246) | $ | 4,291 | $ | 2,336,643 | |||||||||||||||||||
| Issuances of Common Units, net of issuance costs and tax withholdings | 486 | 48,120 | — | — | 48,606 | ||||||||||||||||||||||||
| Redemptions of Common Units | — | (10) | — | — | (10) | ||||||||||||||||||||||||
Distributions on Common Units ($1.50 per unit) | (1,644) | (162,747) | — | — | (164,391) | ||||||||||||||||||||||||
Distributions on Preferred Units ($64.6875 per unit) | (18) | (1,765) | — | — | (1,783) | ||||||||||||||||||||||||
| Share-based compensation expense, net of forfeitures | 74 | 7,372 | — | — | 7,446 | ||||||||||||||||||||||||
| Distributions to noncontrolling interests in consolidated affiliates | — | — | — | (240) | (240) | ||||||||||||||||||||||||
| Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner | 1 | 134 | — | — | 135 | ||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests in consolidated affiliates | — | 28 | (28) | — | |||||||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||||||||
| Net income | 1,329 | 131,599 | — | — | 132,928 | ||||||||||||||||||||||||
| Other comprehensive loss | — | — | (186) | — | (186) | ||||||||||||||||||||||||
| Total comprehensive income | 132,742 | ||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | 23,573 | $ | 2,333,984 | $ | (2,432) | $ | 4,023 | $ | 2,359,148 | |||||||||||||||||||
See accompanying notes to consolidated financial statements.
14
HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows
(Unaudited and in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Operating activities: | |||||||||||
| Net income | $ | 164,200 | $ | 132,928 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 236,068 | 219,982 | |||||||||
| Amortization of lease incentives and acquisition-related intangible assets and liabilities | 2,442 | 1,791 | |||||||||
| Share-based compensation expense | 8,348 | 7,446 | |||||||||
| Net credit losses/(reversals) on operating lease receivables | 2,019 | (776) | |||||||||
| Accrued interest on mortgages and notes receivable | 1,898 | (877) | |||||||||
| Amortization of debt issuance costs | 4,712 | 4,276 | |||||||||
| Amortization of cash flow hedges | (155) | (186) | |||||||||
| Amortization of mortgages and notes payable fair value adjustments | 259 | 84 | |||||||||
| Impairments of real estate assets | — | 8,800 | |||||||||
| Losses on debt extinguishment | 58 | 144 | |||||||||
| Net gains on disposition of property | (109,569) | (87,889) | |||||||||
| Equity in earnings of unconsolidated affiliates | (3,339) | (2,223) | |||||||||
| Distributions of earnings from unconsolidated affiliates | 5,038 | 5,277 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (586) | 621 | |||||||||
| Prepaid expenses and other assets | (816) | (1,102) | |||||||||
| Accrued straight-line rents receivable | (26,936) | (9,510) | |||||||||
| Accounts payable, accrued expenses and other liabilities | (3,785) | (19,263) | |||||||||
| Net cash provided by operating activities | 279,856 | 259,523 | |||||||||
| Investing activities: | |||||||||||
| Investments in acquired real estate and related intangible assets, net of cash acquired | (309,838) | (248,017) | |||||||||
| Investments in development in-process | (8,882) | (1,967) | |||||||||
| Investments in tenant improvements and deferred leasing costs | (132,494) | (110,065) | |||||||||
| Investments in building improvements | (39,160) | (30,760) | |||||||||
| Net proceeds from disposition of real estate assets | 380,269 | 153,586 | |||||||||
| Distributions of capital from unconsolidated affiliates | 152,845 | 6,288 | |||||||||
| Investments in mortgages and notes receivable | — | (1,577) | |||||||||
| Repayments of mortgages and notes receivable | — | 6,350 | |||||||||
| Investments in and advances to unconsolidated affiliates | (34,426) | (21,576) | |||||||||
| Changes in earnest money deposits | — | 10,000 | |||||||||
| Changes in other investing activities | (2,800) | (1,616) | |||||||||
| Net cash provided by/(used in) investing activities | 5,514 | (239,354) | |||||||||
| Financing activities: | |||||||||||
| Distributions on Common Units | (167,679) | (164,391) | |||||||||
| Redemptions/repurchases of Preferred Units | (60) | (2,120) | |||||||||
| Redemptions of Common Units | (24) | (10) | |||||||||
| Distributions on Preferred Units | (1,722) | (1,783) | |||||||||
| Distributions to noncontrolling interests in consolidated affiliates | (9,589) | (240) | |||||||||
| Contributions from noncontrolling interests in consolidated affiliates | 197,202 | — | |||||||||
| Proceeds from the issuance of Common Units | 934 | 51,819 | |||||||||
| Costs paid for the issuance of Common Units | (659) | (1,204) | |||||||||
| Repurchase of units related to tax withholdings | (1,865) | (2,009) | |||||||||
| Borrowings on revolving credit facility | 203,000 | 390,000 | |||||||||
| Repayments of revolving credit facility | (228,000) | (274,000) | |||||||||
| Borrowings on mortgages and notes payable | 20,000 | 31,600 | |||||||||
| Repayments of mortgages and notes payable | (39,279) | (37,157) | |||||||||
| Payments for debt issuance costs and other financing activities | (1,993) | (2,608) | |||||||||
| Net cash used in financing activities | (29,734) | (12,103) | |||||||||
| Net increase in cash and cash equivalents and restricted cash | $ | 255,636 | $ | 8,066 | |||||||
See accompanying notes to consolidated financial statements.
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HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows - Continued
(Unaudited and in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net increase in cash and cash equivalents and restricted cash | $ | 255,636 | $ | 8,066 | |||||||
| Cash and cash equivalents and restricted cash at beginning of the period | 43,049 | 33,677 | |||||||||
| Cash and cash equivalents and restricted cash at end of the period | $ | 298,685 | $ | 41,743 | |||||||
Reconciliation of cash and cash equivalents and restricted cash:
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash and cash equivalents at end of the period | $ | 279,205 | $ | 26,262 | |||||||
| Restricted cash at end of the period | 19,480 | 15,481 | |||||||||
| Cash and cash equivalents and restricted cash at end of the period | $ | 298,685 | $ | 41,743 | |||||||
Supplemental disclosure of cash flow information:
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash paid for interest, net of amounts capitalized | $ | 133,255 | $ | 123,314 | |||||||
Supplemental disclosure of non-cash investing and financing activities:
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Unrealized gains on cash flow hedges | $ | 1,008 | $ | — | |||||||
Changes in accrued capital expenditures (1) | $ | 29,289 | $ | (2,105) | |||||||
| Write-off of fully depreciated real estate assets | $ | 60,293 | $ | 71,956 | |||||||
| Write-off of fully amortized leasing costs | $ | 22,951 | $ | 35,962 | |||||||
| Write-off of fully amortized debt issuance costs | $ | 1,124 | $ | 1,388 | |||||||
| Adjustment of Redeemable Common Units to fair value | $ | 5,764 | $ | (749) | |||||||
__________
(1)Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities as of September 30, 2026 and 2025 were $74.3 million and $50.8 million, respectively.
See accompanying notes to consolidated financial statements.
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HIGHWOODS PROPERTIES, INC.
HIGHWOODS REALTY LIMITED PARTNERSHIP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2026
(tabular dollar amounts in thousands, except per share and per unit data)
(Unaudited)
1. Description of Business and Significant Accounting Policies
Description of Business
Highwoods Properties, Inc. (the “Company”) is a fully integrated office real estate investment trust (“REIT”) that owns, develops, acquires, leases and manages properties primarily in the best business districts of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. The Company conducts its activities through Highwoods Realty Limited Partnership (the “Operating Partnership”). As of September 30, 2026, we owned or had an interest in 26.9 million rentable square feet of in-service properties, 0.6 million rentable square feet of office properties under development and development land with approximately 3.5 million rentable square feet of potential office build out.
Capital Structure
The Company is the sole general partner of the Operating Partnership. As of September 30, 2026, the Company owned all of the Preferred Units and 109.9 million, or 98.2%, of the Common Units in the Operating Partnership. Limited partners owned the remaining 2.0 million Common Units. During the nine months ended September 30, 2026, the Company redeemed 25,855 Common Units for a like number of shares of Common Stock and 950 Common Units for cash.
During the first quarter of 2026, we entered into separate equity distribution agreements pursuant to which the Company may offer and sell up to $300.0 million in aggregate gross sales price of shares of Common Stock, including on a forward basis. During each of the three and nine months ended September 30, 2026, the Company issued no shares of Common Stock under its equity distribution agreements, except for the shares sold and settled on a forward basis, if any, as discussed below.
The following table summarizes the activity for shares sold and settled on a forward basis under the equity distribution agreements:
| Forward Sale Agreements | Shares | Gross Sales | Weighted Average Gross Sales Price Per Share | Weighted Average Net Sales Price Per Share | Sales Commissions Per Share (1) | Net Proceeds Received Per Share | ||||||||||||||||||||||||||||||||
| Outstanding as of June 30, 2026 | — | $ | — | |||||||||||||||||||||||||||||||||||
| New forward sale agreements | 1,056,085 | 34,053 | $ | 32.24 | $ | 31.76 | $ | 0.48 | ||||||||||||||||||||||||||||||
| Forward sale agreements settled | — | — | — | — | — | $ | — | |||||||||||||||||||||||||||||||
| Outstanding as of September 30, 2026 | 1,056,085 | $ | 34,053 | |||||||||||||||||||||||||||||||||||
__________
(1)Upon a forward sale, the equity distribution agent typically earns a commission of 1.5% of the gross sales price.
The Company initially does not receive any proceeds from the sales of shares on a forward basis. We may settle the applicable forward sale agreements on one or more dates prior to the respective scheduled maturity dates, at which point the Company would receive the proceeds net of certain costs; provided, however, generally we may elect to cash settle or net share settle such forward sale agreements at any time through the respective scheduled maturity dates, which is typically one year from the respective trade dates. We determined that the forward sale agreements meet the criteria for equity classification and, therefore, are exempt from derivative accounting. We have evaluated the impact of forward sale agreements on diluted weighted average common shares outstanding using the treasury stock method. For the three and nine months ended September 30, 2026, there was no impact to diluted weighted average common shares outstanding related to the outstanding forward sale agreements.
During the second quarter of 2026, the Company’s Board of Directors authorized the repurchase of up to $250.0 million of outstanding shares of Common Stock under a new stock repurchase program. We anticipate funding any stock repurchases with
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proceeds from non-core asset sales, available cash and borrowings under our revolving credit facility. The Company may purchase shares of Common Stock from time to time in amounts and at prices determined by the Company in its discretion. Shares of Common Stock may be repurchased in the open market or in privately negotiated transactions, which may include block trades. If and when the Company repurchases Common Stock under this program, the Operating Partnership will repurchase an equal number of Common Units from the Company. The timing, manner, price and actual number of shares repurchased will be subject to a variety of factors, including price, market conditions, corporate and regulatory requirements, applicable SEC rules and other liquidity requirements and priorities. The Common Stock repurchase program does not have an expiration date, does not obligate the Company to repurchase any dollar amount or number of shares and may be suspended, modified or discontinued at any time without prior notice. During each of the three and nine months ended September 30, 2026, the Company repurchased no shares of Common Stock under its stock repurchase program.
Basis of Presentation
Our Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
The Company’s Consolidated Financial Statements include the Operating Partnership, wholly owned subsidiaries and those entities in which the Company has the controlling interest. The Operating Partnership’s Consolidated Financial Statements include wholly owned subsidiaries and those entities in which the Operating Partnership has the controlling interest. We consolidate joint venture investments, such as interests in partnerships and limited liability companies, when we control the major operating and financial policies of the investment through majority ownership, in our capacity as a general partner or managing member or through some other contractual right. In addition, we consolidate those entities deemed to be variable interest entities in which we are determined to be the primary beneficiary.
As of September 30, 2026, we are involved with four joint ventures that we determine to be variable interest entities, three of which we are the primary beneficiary and are consolidated and one of which we are not the primary beneficiary and is not consolidated. In addition, during 2025, we acquired a building using a special purpose entity owned by a qualified intermediary to facilitate a potential Section 1031 reverse exchange under the Internal Revenue Code. To realize the tax deferral available under the Section 1031 exchange, we were required to complete the Section 1031 exchange, and take title to the to-be-exchanged building within 180 days of the acquisition date. We completed the exchange by acquiring 100% of the special purpose entity during the second quarter of 2026.
All intercompany transactions and accounts have been eliminated.
In the opinion of management, the unaudited interim Consolidated Financial Statements and accompanying unaudited consolidated financial information contain all adjustments (including normal recurring accruals) necessary for a fair presentation of our financial position, results of operations and cash flows. We have condensed or omitted certain notes and other information from the interim Consolidated Financial Statements presented in this Quarterly Report as permitted by SEC rules and regulations. These Consolidated Financial Statements should be read in conjunction with our 2025 Annual Report on Form 10-K.
Use of Estimates
The preparation of consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in our Consolidated Financial Statements and accompanying notes. Actual results could differ from those estimates.
Insurance
We are primarily self-insured for health care claims for participating employees. To limit our exposure to significant claims, we have stop-loss coverage on a per claim and annual aggregate basis. We use all relevant information to determine our liabilities for claims, including actuarial estimates of claim liabilities. When determining our liabilities, we include claims for incurred losses, even if they are unreported. As of September 30, 2026, a reserve of $0.5 million was recorded to cover estimated reported and unreported claims.
Recently Issued Accounting Standards
The Financial Accounting Standards Board (“FASB”) issued an accounting standards update (“ASU”) that requires disaggregated disclosure of income statement expenses. Certain expense captions will be disaggregated into specified categories
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in disclosures within the Notes to Consolidated Financial Statements. The ASU is required to be adopted starting with our 2027 Annual Report on Form 10-K. We do not expect this adoption will have a material effect on our Consolidated Financial Statements.
2. Leases
Operating Leases
We generally lease our office properties to lessees in exchange for fixed monthly payments that cover rent, property taxes, insurance and certain cost recoveries, primarily common area maintenance. Our office properties that are under lease are primarily located in Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa and are leased to a wide variety of lessees across many industries. Our leases are operating leases and mostly range from three to 10 years. We recognized rental and other revenues related to operating lease payments of $213.3 million and $228.6 million during the three months ended September 30, 2026 and 2025, respectively, and $634.6 million and $590.5 million during the nine months ended September 30, 2026 and 2025, respectively. Included in these amounts were variable lease payments of $18.9 million and $16.6 million during the three months ended September 30, 2026 and 2025, respectively, and $55.9 million and $50.2 million during the nine months ended September 30, 2026 and 2025, respectively.
3. Investments in and Advances to Affiliates
We have interests in various real estate joint ventures that are evaluated for consolidation under the variable interest entity (“VIE”) model or the voting interest model, depending on the facts and circumstances of each joint venture. For our unconsolidated affiliates that are evaluated under the VIE model, we determined that we hold variable interests, but we are not the primary beneficiary because we do not have the power to direct the activities that most significantly impact the entities’ economic performance. Accordingly, these entities are not consolidated. For our unconsolidated affiliates that are evaluated under the voting interest model, we determined through evaluation of our voting rights that control does not rest with us. Accordingly, these entities are not consolidated. For our consolidated affiliates that are evaluated under the VIE model, we determined that we hold variable interests, and we are the primary beneficiary because we have the power to direct the activities that most significantly impact the entities’ economic performance. Accordingly, these entities are consolidated.
Unconsolidated Affiliates
Our unconsolidated joint ventures are accounted for under the equity method of accounting because we have the ability to exercise significant influence over the operating and financial policies of the entities. Our maximum exposure to loss from our unconsolidated VIEs is generally limited to the carrying value of our investments and any loans or other advances we have provided to the joint ventures. The assets of these unconsolidated VIEs may be used only to settle their own obligations, and their creditors have no recourse to our wholly owned assets.
The following table summarizes our unconsolidated affiliates as of September 30, 2026:
| Unconsolidated Affiliate | Location | Ownership Interest | VIE (Y/N) | Carrying Value as of | ||||||||||||||||||||||||||||
| September 30, 2026 | ||||||||||||||||||||||||||||||||
Granite Park Six JV, LLC (1) | Dallas | 50.0% | N | $ | 41,455 | |||||||||||||||||||||||||||
GPI 23Springs JV, LLC (2) | Dallas | 50.0% | N | 52,729 | ||||||||||||||||||||||||||||
| M+O JV, LLC | Dallas | 50.0% | N | 181,395 | ||||||||||||||||||||||||||||
Midtown East Tampa, LLC (3) | Tampa | 50.0% | N | 12,890 | ||||||||||||||||||||||||||||
Brand/HRLP 2827 Peachtree LLC (4) | Atlanta | 50.0% | Y | 61,604 | ||||||||||||||||||||||||||||
| Plaza Colonnade, Tenant-in-Common | Kansas City | 50.0% | N | 4,295 | ||||||||||||||||||||||||||||
| $ | 354,368 | |||||||||||||||||||||||||||||||
__________
(1)During the second quarter of 2026, Granite Park Six JV, LLC (“Granite Park Six joint venture”) obtained a secured loan for up to $100.0 million with a maturity date of April 2028 (but can be extended for one additional year at the joint venture’s option assuming no defaults have occurred). In connection with this loan, the Granite Park Six joint venture obtained an interest rate hedge contract that effectively fixed the overall interest rate at 5.9%. As of September 30, 2026, $87.2 million was drawn on this loan. The joint venture used the net proceeds from the secured loan to redeem the preferred equity that we contributed during the first quarter of 2026 and distributed the remainder equally to us and our partner, Granite Properties (“Granite”). As a result of these reconsideration events, the Granite Park Six
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joint venture is no longer a VIE since it now has sufficient equity at risk. This joint venture is now evaluated under the voting interest model, and the entity remains unconsolidated.
(2)To fund construction of our 23Springs development project, GPI 23Springs JV, LLC (“23Springs joint venture”) previously obtained a construction loan for up to $265.0 million with an interest rate of SOFR plus 355 basis points. This loan was scheduled to mature in March 2027. During the third quarter of 2026, the 23Springs joint venture modified this loan by converting it from a construction loan to a delayed draw secured loan, extending the maturity date to September 2029 (and can be extended for one additional year at the joint venture’s option assuming no defaults have occurred), lowering the borrowing spread to SOFR plus 230 basis points and increasing the borrowing capacity to $370.0 million. As of September 30, 2026, $325.6 million was outstanding on this loan. In connection with this modification, the 23Springs joint venture obtained interest rate hedge contracts that effectively cap the underlying SOFR rate at 5.0%. The incremental net proceeds were distributed equally to us and our partner, Granite. As a result of this reconsideration event, the 23Springs joint venture is no longer a VIE since it now has sufficient equity at risk. This joint venture is now evaluated under the voting interest model, and the entity remains unconsolidated.
(3)During the third quarter of 2026, Midtown East Tampa, LLC (“Midtown East joint venture”) obtained a two-tranche secured mortgage loan from a third party lender. The first tranche consists of a $44.8 million secured loan that was used to repay the $43.8 million balance on a secured construction loan that we previously provided the joint venture. The second tranche consists of a $10.9 million non-revolving line of credit. As of September 30, 2026, $2.5 million was drawn on the line of credit. Both tranches bear interest at SOFR plus 205 basis points and are scheduled to mature in July 2036. In connection with this loan, the Midtown East joint venture obtained interest rate hedge contracts that effectively fix the weighted average rate of both tranches at 6.3%. As a result of this reconsideration event, the Midtown East joint venture is no longer a VIE since it now has sufficient equity at risk. This joint venture is now evaluated under the voting interest model, and the entity remains unconsolidated.
(4)As of September 30, 2026, Brand/HRLP 2827 Peachtree LLC (“2827 Peachtree joint venture”) had $51.7 million outstanding under the loan we have provided to the joint venture.
Consolidated Affiliates
As of September 30, 2026, our consolidated VIEs consisted of the following: HRLP Bloc 83, L.P. (“Bloc 83 joint venture”) in Raleigh in which we own a 10.0% interest (but retain an option to increase our ownership interest to 50.0% in the future), Terraces JV, LLC (“Terraces joint venture”) in Dallas in which we own an 80.0% interest and HRLP MTW, LLC (“Midtown West joint venture”) in Tampa in which we own an 80.0% interest. The assets of these consolidated VIEs may be used only to settle their own obligations, and their creditors have no recourse to our wholly owned assets.
During the first quarter of 2026, we acquired Bloc83, a two-building, 492,000 square foot mixed-use asset in CBD Raleigh, through the formation of the Bloc 83 joint venture with the North Carolina Investment Authority (“NCIA”). The joint venture’s planned total investment of $210.5 million, which includes planned near-term building improvements and transaction costs, has been or will be funded with $21.0 million of common equity contributed by us and $189.5 million of common equity contributed by the NCIA. The assets acquired and liabilities assumed were recorded at relative fair value as determined by management based on information available at the acquisition date and on current assumptions as to future operations.
The following table sets forth the carrying value of the assets and liabilities of the Bloc 83 joint venture included on our Consolidated Balance Sheets:
| September 30, 2026 | |||||
| Net real estate assets | $ | 171,702 | |||
| Cash and cash equivalents | $ | 8,096 | |||
| Restricted cash | $ | 5,158 | |||
| Accounts receivable | $ | 293 | |||
| Accrued straight-line rents receivable | $ | 771 | |||
| Deferred leasing costs, net | $ | 26,791 | |||
| Accounts payable, accrued expenses and other liabilities | $ | 9,961 | |||
During the first quarter of 2026, we expanded our Dallas market presence by acquiring The Terraces, a 173,000 square foot office building in the Preston Center BBD of Dallas, through the formation of the Terraces joint venture with Granite. The joint venture’s planned total investment of $109.3 million, which includes planned near-term building improvements and transaction costs, has been or will be funded with $64.3 million of preferred equity contributed by us, $36.0 million of common equity contributed by us and $9.0 million of common equity contributed by Granite. The preferred equity contributed by us is entitled to receive monthly distributions from available cash at a rate of 5.75%. The assets acquired and liabilities assumed were recorded at relative fair value as determined by management based on information available at the acquisition date and on current assumptions as to future operations.
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The following table sets forth the carrying value of the assets and liabilities of the Terraces joint venture included on our Consolidated Balance Sheets:
| September 30, 2026 | |||||
| Net real estate assets | $ | 93,181 | |||
| Cash and cash equivalents | $ | 4,345 | |||
| Accounts receivable | $ | 298 | |||
| Accrued straight-line rents receivable | $ | 917 | |||
| Deferred leasing costs, net | $ | 12,531 | |||
| Accounts payable, accrued expenses and other liabilities | $ | 6,272 | |||
The following table sets forth the carrying value of the assets and liabilities of the Midtown West joint venture included on our Consolidated Balance Sheets:
| September 30, 2026 | December 31, 2025 | ||||||||||
| Net real estate assets | $ | 54,796 | $ | 56,299 | |||||||
| Cash and cash equivalents | $ | 2,046 | $ | 1,361 | |||||||
| Accounts receivable | $ | 46 | $ | 203 | |||||||
| Accrued straight-line rents receivable | $ | 5,103 | $ | 5,254 | |||||||
| Deferred leasing costs, net | $ | 1,949 | $ | 2,211 | |||||||
| Prepaid expenses and other assets, net | $ | 127 | $ | 124 | |||||||
| Mortgages and notes payable, net | $ | 43,837 | $ | 44,059 | |||||||
| Accounts payable, accrued expenses and other liabilities | $ | 1,612 | $ | 1,170 | |||||||
4. Real Estate Assets
Dispositions
During the third quarter of 2026, we sold nine buildings in Richmond, Atlanta and Raleigh for an aggregate sales price of $85.2 million and recorded aggregate gains on disposition of property of $13.6 million.
During the second quarter of 2026, we sold a building in Nashville and land in Richmond for an aggregate sales price of $259.0 million and recorded aggregate gains on disposition of property of $79.0 million.
During the first quarter of 2026, we sold three buildings in Richmond for an aggregate sales price of $42.3 million and recorded aggregate gains on disposition of property of $17.0 million.
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5. Intangible Assets and Below Market Lease Liabilities
The following table sets forth total intangible assets and acquisition-related below market lease liabilities, net of accumulated amortization:
| September 30, 2026 | December 31, 2025 | ||||||||||
| Assets: | |||||||||||
| Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets) | $ | 460,505 | $ | 414,230 | |||||||
| Less-accumulated amortization | (179,599) | (169,972) | |||||||||
| $ | 280,906 | $ | 244,258 | ||||||||
| Liabilities (in accounts payable, accrued expenses and other liabilities): | |||||||||||
| Acquisition-related below market lease liabilities | $ | 35,320 | $ | 32,628 | |||||||
| Less-accumulated amortization | (17,262) | (17,102) | |||||||||
| $ | 18,058 | $ | 15,526 | ||||||||
The following table sets forth amortization of intangible assets and below market lease liabilities:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization) | $ | 11,662 | $ | 9,683 | $ | 33,855 | $ | 27,757 | |||||||||||||||
| Amortization of lease incentives (in rental and other revenues) | $ | 756 | $ | 715 | $ | 2,490 | $ | 2,020 | |||||||||||||||
| Amortization of acquisition-related above market lease intangible assets (in rental and other revenues) | $ | 888 | $ | 615 | $ | 2,572 | $ | 1,849 | |||||||||||||||
| Amortization of acquisition-related below market lease liabilities (in rental and other revenues) | $ | (850) | $ | (661) | $ | (2,620) | $ | (2,078) | |||||||||||||||
The following table sets forth scheduled future amortization of intangible assets and below market lease liabilities:
| Amortization of Deferred Leasing Costs and Acquisition-Related Intangible Assets (in Depreciation and Amortization) | Amortization of Lease Incentives (in Rental and Other Revenues) | Amortization of Acquisition-Related Above Market Lease Intangible Assets (in Rental and Other Revenues) | Amortization of Acquisition-Related Below Market Lease Liabilities (in Rental and Other Revenues) | |||||||||||||||||||||||||||||||||||
| October 1 through December 31, 2026 | $ | 13,127 | $ | 703 | $ | 806 | $ | (812) | ||||||||||||||||||||||||||||||
| 2027 | 45,661 | 2,660 | 2,982 | (3,080) | ||||||||||||||||||||||||||||||||||
| 2028 | 38,278 | 2,506 | 2,811 | (2,666) | ||||||||||||||||||||||||||||||||||
| 2029 | 34,061 | 2,243 | 2,581 | (2,289) | ||||||||||||||||||||||||||||||||||
| 2030 | 30,033 | 1,932 | 2,255 | (2,154) | ||||||||||||||||||||||||||||||||||
| Thereafter | 84,373 | 6,784 | 7,110 | (7,057) | ||||||||||||||||||||||||||||||||||
| $ | 245,533 | $ | 16,828 | $ | 18,545 | $ | (18,058) | |||||||||||||||||||||||||||||||
| Weighted average remaining amortization periods as of September 30, 2026 (in years) | 7.2 | 8.4 | 7.4 | 7.3 | ||||||||||||||||||||||||||||||||||
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The following table sets forth the intangible assets and below market lease liabilities recorded as a result of the acquisitions of Bloc83 in Raleigh and The Terraces in Dallas in the first quarter of 2026:
| Acquisition-Related Above Market Lease Intangible Assets (amortized in Rental and Other Revenues) | Acquisition-Related Intangible Assets (amortized in Depreciation and Amortization) | Acquisition-Related Below Market Lease Liabilities (amortized in Rental and Other Revenues) | ||||||||||||||||||||||||
| Amount recorded at acquisition | $ | 7,751 | $ | 37,190 | $ | (5,152) | ||||||||||||||||||||
| Weighted average remaining amortization periods as of September 30, 2026 (in years) | 7.8 | 6.6 | 6.3 | |||||||||||||||||||||||
6. Mortgages and Notes Payable
The following table sets forth our mortgages and notes payable:
| September 30, 2026 | December 31, 2025 | ||||||||||
| Secured indebtedness | $ | 697,030 | $ | 703,409 | |||||||
| Unsecured indebtedness | 2,829,075 | 2,866,745 | |||||||||
| Less-unamortized debt issuance costs | (14,295) | (15,976) | |||||||||
| Total mortgages and notes payable, net | $ | 3,511,810 | $ | 3,554,178 | |||||||
As of September 30, 2026, our secured mortgage loans were collateralized by real estate assets with an undepreciated book value of $1,299.3 million.
Our $750.0 million unsecured revolving credit facility is scheduled to mature in January 2028 (but can be extended for two additional six-month periods at our option assuming no defaults have occurred). The interest rate on our revolving credit facility is SOFR plus 85 basis points, based on current credit ratings. The annual facility fee is 20 basis points. The interest rate and facility fee are based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. The interest rate may be adjusted upward or downward by 2.5 basis points depending upon whether or not we achieve certain pre-determined sustainability goals with respect to the ongoing reduction of greenhouse gas emissions. There were no amounts outstanding under our revolving credit facility as of September 30, 2026 or October 20, 2026. As of both September 30, 2026 and October 20, 2026, we had $0.1 million of outstanding letters of credit, which reduce the availability on our revolving credit facility. As a result, the unused capacity of our revolving credit facility was $749.9 million as of both September 30, 2026 and October 20, 2026.
During the third quarter of 2026, we repurchased $3.1 million principal amount of unsecured notes due March 2027.
During the second quarter of 2026, we modified our $150.0 million unsecured bank term loan to extend the maturity date from May 2027 to June 2029. The term can be extended for two additional years at our option, assuming no defaults have occurred. The interest rate is SOFR plus 90 basis points, based on current credit ratings. The interest rate is based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. The interest rate may be adjusted upward or downward by 2.5 basis points depending upon whether or not we achieve certain pre-determined sustainability goals with respect to the ongoing reduction of greenhouse gas emissions. We incurred $1.4 million of debt issuance costs, which are being amortized along with certain existing unamortized debt issuance costs over the remaining term of our modified term loan, and recorded $0.1 million of loss on debt extinguishment.
During the second quarter of 2026, we repurchased an aggregate of $11.0 million principal amount of unsecured notes due March 2027.
We are currently in compliance with financial covenants with respect to our consolidated debt.
We have considered our short-term liquidity needs within one year from October 27, 2026 (the date of issuance of the quarterly financial statements) and the adequacy of our estimated cash flows from operating activities and other available financing sources to meet these needs. In particular, we have given consideration to our scheduled debt maturities during such
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one-year period, which consists of $285.9 million principal amount of unsecured notes that are scheduled to mature in March 2027. We have concluded it is probable we will meet these short-term liquidity requirements through a combination of the following:
•available cash and cash equivalents;
•cash flows from operating activities;
•issuance of debt securities by the Operating Partnership;
•secured debt;
•bank term loans;
•borrowings under our revolving credit facility;
•issuance of equity securities by the Company or the Operating Partnership; and
•the disposition of non-core assets.
7. Noncontrolling Interests
Noncontrolling Interests in Consolidated Affiliates
As of September 30, 2026, our noncontrolling interest in consolidated affiliates relates to our joint venture partners’ 20.0% interest in the Midtown West joint venture, 90.0% interest in the Bloc 83 joint venture and 20.0% interest in the Terraces joint venture. Each of our joint venture partners is an unrelated third party.
Noncontrolling Interests in the Operating Partnership
The following table sets forth the Company’s noncontrolling interests in the Operating Partnership:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Beginning noncontrolling interests in the Operating Partnership | $ | 60,840 | $ | 66,878 | $ | 52,777 | $ | 65,791 | |||||||||||||||
| Adjustment of noncontrolling interests in the Operating Partnership to fair value | (1,874) | 2,313 | 6,635 | 3,240 | |||||||||||||||||||
| Conversions of Common Units to Common Stock | — | (3,329) | (700) | (3,329) | |||||||||||||||||||
| Redemptions of Common Units | — | — | (24) | (10) | |||||||||||||||||||
| Net income attributable to noncontrolling interests in the Operating Partnership | 583 | 256 | 2,878 | 2,577 | |||||||||||||||||||
| Distributions to noncontrolling interests in the Operating Partnership | (1,008) | (1,076) | (3,025) | (3,227) | |||||||||||||||||||
| Total noncontrolling interests in the Operating Partnership | $ | 58,541 | $ | 65,042 | $ | 58,541 | $ | 65,042 | |||||||||||||||
The following table sets forth net income available for common stockholders and transfers from the Company’s noncontrolling interests in the Operating Partnership:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income available for common stockholders | $ | 31,750 | $ | 12,877 | $ | 156,587 | $ | 128,596 | |||||||||||||||
| Increase in additional paid in capital from conversions of Common Units to Common Stock | — | 3,329 | 700 | 3,329 | |||||||||||||||||||
| Redemptions of Common Units | — | — | 24 | 10 | |||||||||||||||||||
| Change from net income available for common stockholders and transfers from noncontrolling interests | $ | 31,750 | $ | 16,206 | $ | 157,311 | $ | 131,935 | |||||||||||||||
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8. Fair Value of Financial Instruments
The following summarizes the levels of inputs that we use to measure fair value.
Level 1. Quoted prices in active markets for identical assets or liabilities.
Our Level 1 asset is our investment in marketable securities that we use to pay benefits under our non-qualified deferred compensation plan. Our Level 1 liability is our non-qualified deferred compensation obligation. The Company’s Level 1 noncontrolling interests in the Operating Partnership relate to the ownership of Common Units by various individuals and entities other than the Company.
Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
Our Level 2 assets include the fair value of our mortgages and notes receivable. Our Level 2 liabilities include the fair value of our mortgages and notes payable and any interest rate swaps.
The fair value of mortgages and notes receivable and mortgages and notes payable is estimated by the income approach, which uses contractual cash flows and market-based interest rates to approximate the price that would be paid in an orderly transaction between market participants. The fair value of any interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments of interest rate swaps are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves. In addition, credit valuation adjustments are considered in the fair values to account for potential nonperformance risk, but were concluded to not be significant inputs to the calculation for the periods presented.
Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Our Level 3 assets include any real estate assets recorded at fair value on a non-recurring basis as a result of our quarterly impairment analysis, which are valued using unobservable local and national industry market data such as comparable sales, appraisals, brokers’ opinions of value and/or the terms of definitive sales contracts. Significant increases or decreases in any valuation inputs in isolation would result in a significantly lower or higher fair value measurement.
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The following table sets forth our assets and liabilities and the Company’s noncontrolling interests in the Operating Partnership that are measured or disclosed at fair value within the fair value hierarchy:
| Level 1 | Level 2 | |||||||||||||||||||||||||
| Total | Quoted Prices in Active Markets for Identical Assets or Liabilities | Significant Observable Inputs | ||||||||||||||||||||||||
| Fair Value as of September 30, 2026: | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
Mortgages and notes receivable, at fair value (1) | $ | 12,227 | $ | — | $ | 12,227 | ||||||||||||||||||||
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets) | 829 | 829 | — | |||||||||||||||||||||||
| Total Assets | $ | 13,056 | $ | 829 | $ | 12,227 | ||||||||||||||||||||
| Noncontrolling Interests in the Operating Partnership | $ | 58,541 | $ | 58,541 | $ | — | ||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
Mortgages and notes payable, net, at fair value (1) | $ | 3,334,198 | $ | — | $ | 3,334,198 | ||||||||||||||||||||
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities) | 829 | 829 | — | |||||||||||||||||||||||
Total Liabilities | $ | 3,335,027 | $ | 829 | $ | 3,334,198 | ||||||||||||||||||||
| Fair Value as of December 31, 2025: | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
Mortgages and notes receivable, at fair value (1) | $ | 12,228 | $ | — | $ | 12,228 | ||||||||||||||||||||
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets) | 1,396 | 1,396 | — | |||||||||||||||||||||||
| Total Assets | $ | 13,624 | $ | 1,396 | $ | 12,228 | ||||||||||||||||||||
| Noncontrolling Interests in the Operating Partnership | $ | 52,777 | $ | 52,777 | $ | — | ||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
Mortgages and notes payable, net, at fair value (1) | $ | 3,471,003 | $ | — | $ | 3,471,003 | ||||||||||||||||||||
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities) | 1,396 | 1,396 | — | |||||||||||||||||||||||
Total Liabilities | $ | 3,472,399 | $ | 1,396 | $ | 3,471,003 | ||||||||||||||||||||
__________
(1) Amounts are not recorded at fair value on our Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025.
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9. Share-Based Payments
During the nine months ended September 30, 2026, the Company granted 271,458 shares of time-based restricted stock and 160,796 shares of total return-based restricted stock with weighted average grant date fair values per share of $22.80 and $24.02, respectively. We recorded share-based compensation expense of $0.9 million and $1.2 million during the three months ended September 30, 2026 and 2025, respectively, and $8.3 million and $7.4 million during the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, there was $5.4 million of total unrecognized share-based compensation costs, which will be recognized over a weighted average remaining contractual term of 2.2 years.
10. Real Estate and Other Assets Held For Sale
The following table sets forth our assets held for sale, which are considered non-core:
| September 30, 2026 | December 31, 2025 | ||||||||||
| Assets: | |||||||||||
| Land | $ | 5,151 | $ | 3,454 | |||||||
| Buildings and tenant improvements | 33,107 | 42,123 | |||||||||
| Less-accumulated depreciation | (18,931) | (25,468) | |||||||||
| Net real estate assets | 19,327 | 20,109 | |||||||||
| Accrued straight-line rents receivable | 1,396 | 2,083 | |||||||||
| Deferred leasing costs, net | 822 | 1,006 | |||||||||
| Prepaid expenses and other assets, net | 152 | 3 | |||||||||
| Real estate and other assets, net, held for sale | $ | 21,697 | $ | 23,201 | |||||||
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11. Earnings Per Share and Per Unit
The following table sets forth the computation of basic and diluted earnings per share of the Company:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Earnings per Common Share - basic: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | 34,078 | $ | 13,707 | $ | 164,200 | $ | 132,928 | |||||||||||||||
Net (income) attributable to noncontrolling interests in the Operating Partnership | (583) | (256) | (2,878) | (2,577) | |||||||||||||||||||
| Net (income)/loss attributable to noncontrolling interests in consolidated affiliates | (1,171) | 2 | (3,013) | 28 | |||||||||||||||||||
| Dividends on Preferred Stock | (574) | (576) | (1,722) | (1,783) | |||||||||||||||||||
| Net income available for common stockholders | $ | 31,750 | $ | 12,877 | $ | 156,587 | $ | 128,596 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
Denominator for basic earnings per Common Share – weighted average shares (1) | 110,306 | 108,403 | 110,211 | 107,973 | |||||||||||||||||||
| Net income available for common stockholders per Common Share | $ | 0.29 | $ | 0.12 | $ | 1.42 | $ | 1.19 | |||||||||||||||
| Earnings per Common Share - diluted: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | 34,078 | $ | 13,707 | $ | 164,200 | $ | 132,928 | |||||||||||||||
| Net (income)/loss attributable to noncontrolling interests in consolidated affiliates | (1,171) | 2 | (3,013) | 28 | |||||||||||||||||||
| Dividends on Preferred Stock | (574) | (576) | (1,722) | (1,783) | |||||||||||||||||||
Net income available for common stockholders before net (income) attributable to noncontrolling interests in the Operating Partnership | $ | 32,333 | $ | 13,133 | $ | 159,465 | $ | 131,173 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
Denominator for basic earnings per Common Share – weighted average shares (1) | 110,306 | 108,403 | 110,211 | 107,973 | |||||||||||||||||||
| Add: | |||||||||||||||||||||||
| Noncontrolling interests Common Units | 2,017 | 2,119 | 2,019 | 2,140 | |||||||||||||||||||
Denominator for diluted earnings per Common Share – adjusted weighted average shares and assumed conversions | 112,323 | 110,522 | 112,230 | 110,113 | |||||||||||||||||||
| Net income available for common stockholders per Common Share | $ | 0.29 | $ | 0.12 | $ | 1.42 | $ | 1.19 | |||||||||||||||
__________
(1)Includes all unvested restricted stock where dividends on such restricted stock are non-forfeitable.
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The following table sets forth the computation of basic and diluted earnings per unit of the Operating Partnership:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Earnings per Common Unit - basic: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | 34,078 | $ | 13,707 | $ | 164,200 | $ | 132,928 | |||||||||||||||
| Net (income)/loss attributable to noncontrolling interests in consolidated affiliates | (1,171) | 2 | (3,013) | 28 | |||||||||||||||||||
| Distributions on Preferred Units | (574) | (576) | (1,722) | (1,783) | |||||||||||||||||||
| Net income available for common unitholders | $ | 32,333 | $ | 13,133 | $ | 159,465 | $ | 131,173 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
Denominator for basic earnings per Common Unit – weighted average units (1) | 111,914 | 110,113 | 111,821 | 109,704 | |||||||||||||||||||
| Net income available for common unitholders per Common Unit | $ | 0.29 | $ | 0.12 | $ | 1.43 | $ | 1.20 | |||||||||||||||
| Earnings per Common Unit - diluted: | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | 34,078 | $ | 13,707 | $ | 164,200 | $ | 132,928 | |||||||||||||||
| Net (income)/loss attributable to noncontrolling interests in consolidated affiliates | (1,171) | 2 | (3,013) | 28 | |||||||||||||||||||
| Distributions on Preferred Units | (574) | (576) | (1,722) | (1,783) | |||||||||||||||||||
| Net income available for common unitholders | $ | 32,333 | $ | 13,133 | $ | 159,465 | $ | 131,173 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
Denominator for basic earnings per Common Unit – weighted average units (1) | 111,914 | 110,113 | 111,821 | 109,704 | |||||||||||||||||||
Denominator for diluted earnings per Common Unit – adjusted weighted average units and assumed conversions | 111,914 | 110,113 | 111,821 | 109,704 | |||||||||||||||||||
| Net income available for common unitholders per Common Unit | $ | 0.29 | $ | 0.12 | $ | 1.43 | $ | 1.20 | |||||||||||||||
__________
(1)Includes all unvested restricted stock where distributions on such restricted stock are non-forfeitable.
12. Segment Information
Our principal business is the operation, acquisition and development of rental office properties. We evaluate our business by geographic location, which is why our primary geographic locations are included as reportable segments below. The operating results by geographic grouping are regularly reviewed by our chief operating decision maker for assessing performance and other purposes. Our chief executive officer is our chief operating decision maker. There are no material inter-segment transactions.
Our accounting policies of the segments are the same as those used in our Consolidated Financial Statements. All operations are within the United States.
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The following tables summarize rental and other revenues, rental property and other expenses and net operating income for each of our reportable segments. Net operating income is the primary industry property-level performance metric used by our chief operating decision maker and is defined as rental and other revenues less rental property and other expenses. Our chief operating decision maker uses net operating income to help assess segment performance and decide how to allocate resources accordingly.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Rental and other revenues: | |||||||||||||||||||||||
| Atlanta | $ | 37,167 | $ | 36,935 | $ | 110,084 | $ | 108,828 | |||||||||||||||
| Charlotte | 30,239 | 23,342 | 87,131 | 67,308 | |||||||||||||||||||
| Dallas | 3,082 | — | 9,106 | — | |||||||||||||||||||
| Nashville | 37,154 | 38,728 | 112,351 | 117,925 | |||||||||||||||||||
| Orlando | 14,695 | 13,867 | 43,896 | 42,707 | |||||||||||||||||||
| Raleigh | 53,555 | 45,779 | 157,688 | 135,088 | |||||||||||||||||||
| Richmond | 5,613 | 8,935 | 20,252 | 27,431 | |||||||||||||||||||
| Tampa | 23,933 | 21,951 | 70,056 | 65,837 | |||||||||||||||||||
| Rental and other revenues for reportable segments | 205,438 | 189,537 | 610,564 | 565,124 | |||||||||||||||||||
| Other | 12,745 | 12,236 | 38,032 | 37,632 | |||||||||||||||||||
| Total rental and other revenues | 218,183 | 201,773 | 648,596 | 602,756 | |||||||||||||||||||
| Rental property and other expenses: | |||||||||||||||||||||||
| Atlanta | 14,836 | 15,041 | 43,856 | 42,876 | |||||||||||||||||||
| Charlotte | 8,188 | 6,410 | 24,225 | 18,254 | |||||||||||||||||||
| Dallas | 996 | — | 2,992 | — | |||||||||||||||||||
| Nashville | 11,241 | 11,009 | 32,626 | 33,383 | |||||||||||||||||||
| Orlando | 5,839 | 4,757 | 16,615 | 15,794 | |||||||||||||||||||
| Raleigh | 13,195 | 11,357 | 41,116 | 34,718 | |||||||||||||||||||
| Richmond | 1,830 | 3,048 | 7,011 | 8,656 | |||||||||||||||||||
| Tampa | 9,100 | 8,476 | 25,915 | 24,931 | |||||||||||||||||||
| Rental property and other expenses for reportable segments | 65,225 | 60,098 | 194,356 | 178,612 | |||||||||||||||||||
| Other | 6,387 | 5,825 | 18,529 | 16,000 | |||||||||||||||||||
| Total rental property and other expenses | 71,612 | 65,923 | 212,885 | 194,612 | |||||||||||||||||||
| Net operating income: | |||||||||||||||||||||||
| Atlanta | 22,331 | 21,894 | 66,228 | 65,952 | |||||||||||||||||||
| Charlotte | 22,051 | 16,932 | 62,906 | 49,054 | |||||||||||||||||||
| Dallas | 2,086 | — | 6,114 | — | |||||||||||||||||||
| Nashville | 25,913 | 27,719 | 79,725 | 84,542 | |||||||||||||||||||
| Orlando | 8,856 | 9,110 | 27,281 | 26,913 | |||||||||||||||||||
| Raleigh | 40,360 | 34,422 | 116,572 | 100,370 | |||||||||||||||||||
| Richmond | 3,783 | 5,887 | 13,241 | 18,775 | |||||||||||||||||||
| Tampa | 14,833 | 13,475 | 44,141 | 40,906 | |||||||||||||||||||
| Net operating income for reportable segments | 140,213 | 129,439 | 416,208 | 386,512 | |||||||||||||||||||
| Other | 6,358 | 6,411 | 19,503 | 21,632 | |||||||||||||||||||
| Total net operating income | $ | 146,571 | $ | 135,850 | $ | 435,711 | $ | 408,144 | |||||||||||||||
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| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Reconciliation to net income: | |||||||||||||||||||||||
| Depreciation and amortization | $ | (79,477) | $ | (73,898) | $ | (236,068) | $ | (219,982) | |||||||||||||||
| Impairments of real estate assets | — | (8,800) | — | (8,800) | |||||||||||||||||||
| General and administrative expenses | (9,850) | (8,995) | (33,181) | (31,771) | |||||||||||||||||||
| Interest expense | (40,608) | (38,475) | (123,998) | (112,782) | |||||||||||||||||||
| Other income | 3,092 | 1,753 | 8,828 | 8,007 | |||||||||||||||||||
| Gains on disposition of property | 13,582 | 5,674 | 109,569 | 87,889 | |||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | 768 | 598 | 3,339 | 2,223 | |||||||||||||||||||
| Net income | $ | 34,078 | $ | 13,707 | $ | 164,200 | $ | 132,928 | |||||||||||||||
13. Subsequent Events
On October 22, 2026, the Company declared a cash dividend of $0.50 per share of Common Stock, which is payable on December 8, 2026 to stockholders of record as of November 16, 2026.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is a fully integrated office real estate investment trust (“REIT”) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. The Company conducts its activities through the Operating Partnership. The Operating Partnership is managed by the Company, its sole general partner. Additional information about us can be found on our website at www.highwoods.com. Information on our website is not part of this Quarterly Report.
You should read the following discussion and analysis in conjunction with the accompanying Consolidated Financial Statements and related notes contained elsewhere in this Quarterly Report.
Disclosure Regarding Forward-Looking Statements
Some of the information in this Quarterly Report may contain forward-looking statements. Such statements include statements about our plans, strategies and prospects under this section. You can identify forward-looking statements by our use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue” or other similar words. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that our plans, intentions or expectations will be achieved. When considering such forward-looking statements, you should keep in mind important factors that could cause our actual results to differ materially from those contained in any forward-looking statement, including the following:
•the financial condition of our customers could deteriorate;
•our assumptions regarding potential losses related to customer financial difficulties could prove incorrect;
•counterparties under our debt instruments, particularly our revolving credit facility, may attempt to avoid their obligations thereunder, which, if successful, would reduce our available liquidity;
•we may not be able to lease or re-lease second generation space, defined as previously occupied space that becomes available for lease, quickly or on as favorable terms as old leases;
•we may not be able to lease newly constructed buildings as quickly or on as favorable terms as originally anticipated;
•we may not be able to complete development, acquisition, reinvestment, disposition or joint venture projects as quickly or on as favorable terms as anticipated;
•development activity in our existing markets could result in an excessive supply relative to customer demand;
•our markets may suffer declines in economic and/or office employment growth;
•increases in interest rates could increase our debt service costs;
•increases in operating expenses could negatively impact our operating results;
•natural disasters and climate change could have an adverse impact on our cash flow and operating results;
•we may not be able to meet our liquidity requirements or obtain capital on favorable terms to fund our working capital needs and growth initiatives or repay or refinance outstanding debt upon maturity; and
•the Company could lose key executive officers.
This list of risks and uncertainties, however, is not intended to be exhaustive. You should also review the other cautionary statements we make in “Item 1A. Risk Factors” set forth in our 2025 Annual Report on Form 10-K. Given these uncertainties, you should not place undue reliance on forward-looking statements. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements to reflect any future events or circumstances or to reflect the occurrence of unanticipated events.
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Executive Summary
Our vision is to be a leader in the evolution of commercial real estate for the benefit of our customers, our communities and those who invest with us. Our mission is to create environments and experiences that inspire our teammates and our customers to achieve more together. We are in the work-placemaking business and believe that by creating exceptional environments and experiences, we can deliver greater value to our customers, their teammates and, in turn, our shareholders. By creating and operating commute-worthy places, we support the growth and success of our customers and contribute to the vitality of our communities. Our simple strategy is to own and operate high-quality workplaces in the BBDs within our footprint, maintain a strong balance sheet to be opportunistic throughout economic cycles, employ a talented and dedicated team and communicate transparently with all stakeholders. We focus on owning and managing buildings in the most dynamic and vibrant BBDs. BBDs are highly-energized and amenitized workplace locations that enhance our customers’ ability to attract and retain talent. They are both urban and suburban. Providing the most talent-supportive workplace options in these environments is core to our work-placemaking strategy.
Our investment thesis is to generate attractive and sustainable returns over the long term for our stockholders by developing, acquiring and owning a portfolio of high-quality, differentiated office buildings in the BBDs of our core markets. A core component of this strategy is to continuously strengthen the financial and operational performance, resiliency and long-term growth prospects of our existing in-service portfolio and recycle those properties that no longer meet our criteria.
Revenues
Our operating results depend heavily on successfully leasing and operating the office space in our portfolio. Economic growth and office employment levels in our core markets are important factors, among others, in predicting our future operating results.
The key components affecting our rental and other revenues are average occupancy, rental rates, cost recovery income, new developments placed in service, acquisitions and dispositions. Average occupancy generally increases during times of improving economic growth, as our ability to lease space outpaces vacancies that occur upon the expirations of existing leases. Average occupancy generally declines during times of slower or negative economic growth, when new vacancies tend to outpace our ability to lease space. Asset acquisitions, dispositions and new developments placed in service directly impact our rental revenues and could impact our average occupancy, depending upon the occupancy rate of the properties that are acquired, sold or placed in service. Another indicator of the predictability of future revenues is the expected lease expirations of our portfolio. As a result, in addition to seeking to increase our average occupancy by leasing current vacant space, we also concentrate our leasing efforts on renewing existing leases prior to expiration. For more information regarding our lease expirations, see “Item 2. Properties – Lease Expirations” and “Item 1A. Risk Factors – Risks Related to our Operations. The continued social acceptance, desirability and perceived economic benefits of work-from-home arrangements could materially and negatively impact the future demand for office space over the long-term” in our 2025 Annual Report on Form 10-K. Occupancy in our office portfolio increased from 85.3% as of December 31, 2025 to 87.0% as of September 30, 2026. We expect average occupancy in our office portfolio to range from 87.0% to 88.0% for the remainder of 2026.
Whether or not our rental revenue tracks average occupancy proportionally depends upon whether GAAP rents under signed new and renewal leases are higher or lower than the GAAP rents under expiring leases. Annualized rental revenues from second generation leases expiring during any particular year are typically less than 15% of our total annual rental revenues. The following table sets forth information regarding second generation office leases signed during the third quarter of 2026 (we define second generation office leases as leases with new customers and renewals of existing customers in both consolidated and unconsolidated office space that has been previously occupied and leases with respect to vacant space in acquired buildings):
| New | Renewal | All Office | |||||||||||||||
| Leased space (in rentable square feet) | 289,131 | 922,720 | 1,211,851 | ||||||||||||||
| Average term (in years - rentable square foot weighted) | 7.7 | 7.1 | 7.2 | ||||||||||||||
Base rents (per rentable square foot) (1) | $ | 40.97 | $ | 41.14 | $ | 41.10 | |||||||||||
Rent concessions (per rentable square foot) (1) | (1.73) | (0.80) | (1.02) | ||||||||||||||
GAAP rents (per rentable square foot) (1) | $ | 39.24 | $ | 40.34 | $ | 40.08 | |||||||||||
Tenant improvements (per rentable square foot) (1) | $ | 5.88 | $ | 3.99 | $ | 4.44 | |||||||||||
Leasing commissions (per rentable square foot) (1) | $ | 1.56 | $ | 1.11 | $ | 1.22 | |||||||||||
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(1) Weighted average per rentable square foot on an annual basis over the lease term.
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Annual combined GAAP rents for new and renewal leases signed in the third quarter were $40.08 per rentable square foot, 28.8% higher compared to previous leases in the same office spaces.
We strive to maintain a diverse, stable and creditworthy customer base. We have an internal guideline whereby customers that account for more than 3% of our revenues are periodically reviewed with the Company’s Board of Directors. As of September 30, 2026, only Bank of America (4.2%) and Asurion (3.3%) accounted for more than 3% of our annualized GAAP revenues.
Expenses
Our expenses primarily consist of rental property expenses, depreciation and amortization, general and administrative expenses and interest expense. From time to time, expenses also include impairments of real estate assets. Rental property expenses are expenses associated with our ownership and operation of rental properties and include expenses that vary somewhat proportionately to occupancy and usage levels, such as janitorial services and utilities, and expenses that do not vary based on occupancy and usage levels, such as property taxes and insurance. Depreciation and amortization is a non-cash expense associated with the ownership of real property and generally remains relatively consistent each year, unless we buy, develop or sell assets, since our properties and related building and tenant improvement assets are depreciated on a straight-line basis over fixed lives. General and administrative expenses primarily consist of management and employee salaries and benefits, corporate overhead and short and long-term incentive compensation.
Net Operating Income
Whether or not we record increasing net operating income (“NOI”) in our same property portfolio typically depends upon our ability to garner higher rental revenues, whether from higher average occupancy, higher GAAP rents per rentable square foot or higher cost recovery income, that exceed any corresponding growth in operating expenses. Consolidated same property NOI was $6.0 million, or 4.9%, higher in the third quarter of 2026 as compared to 2025 due to an increase of $10.6 million in same property revenues, partially offset by an increase of $4.6 million in same property expenses
In addition to the effect of consolidated same property NOI, whether or not NOI increases typically depends upon whether the NOI from our acquired properties and recently completed development projects exceeds the lost NOI from property dispositions. NOI was $10.7 million, or 7.9%, higher in the third quarter of 2026 as compared to 2025 primarily due to property acquisitions in Raleigh, Charlotte, and Dallas, higher consolidated same property NOI and recently completed development projects in Raleigh, partially offset by lost NOI from property dispositions.
Cash Flows
In calculating net cash related to operating activities, depreciation and amortization, which are non-cash expenses, are added back to net income. We have historically generated a positive amount of cash from operating activities. From period to period, cash flow from operations primarily depends upon changes in our net income, as discussed more fully below under “Results of Operations,” changes in receivables and payables and net additions or decreases in our overall portfolio.
Net cash related to investing activities generally relates to capitalized costs incurred for leasing and major building improvements and our acquisition, development, disposition and joint venture activity. During periods of significant net acquisition and/or development activity, our cash used in such investing activities will generally exceed cash provided by investing activities, which typically consists of cash received upon the sale of properties and distributions from our joint ventures.
Net cash related to financing activities generally relates to distributions, incurrence and repayment of debt, and issuances, repurchases or redemptions of Common Stock, Common Units and Preferred Stock. We use a significant amount of our cash to fund distributions. Whether or not we have increases in the outstanding balances of debt during a period depends generally upon the net effect of our acquisition, disposition, development and joint venture activity. We generally use our revolving credit facility for daily working capital purposes, which means that during any given period, in order to minimize interest expense, we may record significant repayments and borrowings under our revolving credit facility.
For a discussion regarding dividends and distributions, see “Liquidity and Capital Resources - Dividends and Distributions.”
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Liquidity and Capital Resources
We continue to maintain a conservative and flexible balance sheet and believe we have ample liquidity to fund our operations and growth prospects. As of October 20, 2026, we had approximately $276 million of existing cash and no amounts drawn on our $750.0 million revolving credit facility, which is scheduled to mature in January 2028 (but which can be extended for two additional six-month periods at our option). As of September 30, 2026, our leverage ratio, as measured by the ratio of our mortgages and notes payable and outstanding preferred stock to the undepreciated book value of our assets, was 42.2%, and there were 112.3 million diluted shares of Common Stock outstanding.
Rental and other revenues are our principal source of funds to meet our short-term liquidity requirements. Other sources of funds for short-term liquidity needs include available working capital and borrowings under our revolving credit facility. Our short-term liquidity requirements primarily consist of operating expenses, interest and principal amortization on our debt, distributions and capital expenditures, including building improvement costs, tenant improvement costs and lease commissions. Building improvements are capital costs to maintain or enhance existing buildings not typically related to a specific customer. Tenant improvements are the costs required to customize space for our customers’ specific needs. We anticipate that our available cash and cash equivalents and cash provided by operating activities and planned financing activities, including borrowings under our revolving credit facility, will be adequate to meet our short-term liquidity requirements. We use our revolving credit facility for working capital purposes, the short-term funding of our development and acquisition activity and, in certain instances, the repayment of other debt. The continued ability to borrow under the revolving credit facility allows us to quickly capitalize on strategic opportunities at short-term interest rates.
We generally believe existing cash and rental and other revenues will continue to be sufficient to fund our short-term liquidity needs such as funding operating and general and administrative expenses, paying interest expense, maintaining our existing quarterly dividend and funding existing portfolio capital expenditures, including building improvement costs, tenant improvement costs and lease commissions.
Our long-term liquidity uses generally consist of the retirement or refinancing of debt upon maturity, funding of building improvements, new building developments (including our proportionate share of joint venture developments) and land infrastructure projects and funding acquisitions of buildings and development land (including our proportionate share of joint venture acquisitions). Additionally, we may, from time to time, retire outstanding equity and/or debt securities through redemptions, open market repurchases, privately negotiated acquisitions or otherwise. Such redemptions or repurchases, if any, will be on terms and at prices determined by the Company in its discretion, and will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved in connection with these transactions may be material.
We expect to meet our long-term liquidity needs through a combination of:
•cash flows from operating activities;
•issuance of debt securities by the Operating Partnership;
•secured debt;
•bank term loans;
•borrowings under our revolving credit facility;
•issuance of equity securities by the Company or the Operating Partnership; and
•the disposition of non-core assets.
We have no debt scheduled to mature within one year from October 27, 2026 (the date of issuance of the quarterly financial statements), except for $285.9 million principal amount of unsecured notes that are scheduled to mature in March 2027. We generally believe we will be able to satisfy future obligations with existing cash, borrowings under our revolving credit facility, new bank term loans, issuance of other unsecured debt, mortgage debt and/or proceeds from the sale of additional non-core assets.
Investment Activity
As noted above, a key tenet of our strategic plan is to continuously upgrade the quality of our office portfolio through acquisitions, dispositions and development. We generally seek to acquire and develop office buildings that improve the average
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quality of our overall portfolio and deliver consistent and sustainable value for our stockholders over the long-term. Whether or not an asset acquisition or new development results in higher per share net income or funds from operations (“FFO”) in any given period depends upon a number of factors, including whether the NOI for any such period exceeds the actual cost of capital used to finance the acquisition or development. Additionally, given the length of construction cycles, development projects are not placed in service until several years after commencement in some cases. Sales of non-core assets could result in lower per share net income or FFO in any given period in the event the return on the resulting use of proceeds does not exceed the capitalization rate on the sold properties.
We anticipate commencing up to $400 million of new office building development during the remainder of 2026. Any such development projects would not be delivered until 2028 or beyond. In addition, we have commenced construction of site and infrastructure work on our Ovation mixed-use real estate development land in Nashville. See “Liquidity and Capital Resources – Investment and Joint Venture Activity.” We also anticipate acquiring up to $85 million of properties during the remainder of 2026. We generally seek to acquire and develop assets that are consistent with our strategic plan, improve the average quality of our overall portfolio and deliver consistent and sustainable value for our stockholders over the long-term. We also generally intend to grow on a leverage-neutral basis. We can make no assurance, however, that we will develop or acquire any opportunities we may be reviewing, bidding on or negotiating or that we may have under contract or that any opportunities will be consummated or perform as expected.
Results of Operations
Three Months Ended September 30, 2026 and 2025
Rental and Other Revenues
Rental and other revenues were $16.4 million, or 8.1%, higher in the third quarter of 2026 as compared to 2025 primarily due to increases from property acquisitions in Raleigh, Charlotte and Dallas, higher consolidated same property revenues and recently completed development projects in Raleigh, which increased rental and other revenues by $15.3 million, $10.6 million and $1.0 million, respectively. Consolidated same property rental and other revenues were higher primarily due to higher average GAAP rents per rentable square foot, higher average occupancy, and higher cost recoveries. These increases were partially offset by a decrease of $10.3 million from property dispositions.
Operating Expenses
Rental property and other expenses were $5.7 million, or 8.6%, higher in the third quarter of 2026 as compared to 2025 primarily due to higher consolidated same property operating expenses and increases from property acquisitions in Raleigh, Charlotte and Dallas, which increased operating expenses by $4.6 million and $3.9 million, respectively. Consolidated same property operating expenses were higher primarily due to higher repairs and maintenance, utilities, contract services and property taxes. These increases were partially offset by a decrease of $2.5 million from property dispositions.
We recorded an impairment charge of $8.8 million in the third quarter of 2025 to lower the carrying amount of two non-core, out-of-service assets at Century Center in Atlanta to their estimated fair values. We recorded no such impairment in 2026.
Depreciation and amortization was $5.6 million, or 7.5%, higher in the third quarter of 2026 as compared to 2025 primarily due to property acquisitions in Raleigh, Charlotte and Dallas and higher consolidated same property lease related depreciation and amortization, partially offset by property dispositions.
General and administrative expenses were $0.9 million, or 9.5%, higher in the third quarter of 2026 as compared to 2025 primarily due to higher incentive compensation and employee benefits.
Interest Expense
Interest expense was $2.1 million, or 5.5%, higher in the third quarter of 2026 as compared to 2025 primarily due to higher average debt balances and lower capitalized interest.
Other Income
Other income was $1.3 million higher in the third quarter of 2026 as compared to 2025 primarily due to higher interest income from cash reserves.
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Gains on Disposition of Property
Gains on disposition of property were $7.9 million higher in the third quarter of 2026 as compared to 2025. The 2026 gains primarily related to building dispositions in Richmond and Raleigh. The 2025 gain related to a building disposition in Richmond.
Equity in Earnings of Unconsolidated Affiliates
Equity in earnings of unconsolidated affiliates was $0.2 million higher in the third quarter of 2026 as compared to 2025 primarily due to higher average occupancy within our 23Springs and Granite Park Six joint ventures, partially offset by lower capitalized expenses within our 23Springs joint venture and the sale of our 50.0% interest in the Highwoods-Markel Associates, LLC joint venture in 2025.
Earnings Per Common Share - Diluted
Diluted earnings per common share was $0.17 higher in the third quarter of 2026 as compared to 2025 due to an increase in net income for the reasons discussed above.
Nine Months Ended September 30, 2026 and 2025
Rental and Other Revenues
Rental and other revenues were $45.8 million, or 7.6%, higher in the nine months ended September 30, 2026 as compared to 2025 primarily due to increases from property acquisitions in Raleigh, Charlotte and Dallas, higher consolidated same property revenues and recently completed development projects in Raleigh, which increased rental and other revenues by $47.2 million, $17.5 million and $2.8 million, respectively. Consolidated same property rental and other revenues were higher primarily due to higher average GAAP rents per rentable square foot, higher average occupancy, and higher cost recoveries, partially offset by lower termination fee income. These increases were partially offset by a decrease of $20.7 million from property dispositions.
Operating Expenses
Rental property and other expenses were $18.3 million, or 9.4%, higher in the nine months ended September 30, 2026 as compared to 2025 primarily due to increases from property acquisitions in Raleigh, Charlotte and Dallas and higher consolidated same property operating expenses, which increased operating expenses by $13.0 million and $11.6 million, respectively. Consolidated same property operating expenses were higher primarily due to higher utilities, property taxes, repairs and maintenance and contract services. These increases were partially offset by a decrease of $5.5 million from property dispositions.
We recorded an impairment charge of $8.8 million in the nine months ended September 30, 2025 to lower the carrying amount of two non-core, out-of-service assets at Century Center in Atlanta to their estimated fair values. We recorded no such impairment in 2026.
Depreciation and amortization expense was $16.1 million, or 7.3%, higher in the nine months ended September 30, 2026 as compared to 2025 primarily due to property acquisitions in Raleigh, Charlotte and Dallas, partially offset by property dispositions.
General and administrative expenses were $1.4 million, or 4.4%, higher in the nine months ended September 30, 2026 as compared to 2025 primarily due to higher incentive compensation and employee benefits, partially offset by lower predevelopment cost write-offs.
Interest Expense
Interest expense was $11.2 million, or 9.9%, higher in the nine months ended September 30, 2026 as compared to 2025 primarily due to higher average debt balances and lower capitalized interest.
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Other Income
Other income was $0.8 million higher in the nine months ended September 30, 2026 as compared to 2025 primarily due to the sale of our 26.5% interest in Kessinger/Hunter and Company, LC, a brokerage services firm, in 2026 and higher interest income from cash reserves and loans provided to our 2827 Peachtree and Midtown East joint ventures. These increases were partially offset by $3.0 million of proceeds received in 2025 from the Florida Department of Transportation for the impact of roadway improvements adjacent to a non-core property in Tampa.
Gains on Disposition of Property
Gains on disposition of property were $21.7 million higher in the nine months ended September 30, 2026 as compared to 2025. The 2026 gains primarily related to building dispositions in Nashville, Richmond and Raleigh and a land parcel disposition in Richmond. The 2025 gains primarily related to building dispositions in Tampa and Richmond.
Equity in Earnings of Unconsolidated Affiliates
Equity in earnings of unconsolidated affiliates was $1.1 million higher in the nine months ended September 30, 2026 as compared to 2025 primarily due to termination fee income recorded by our M+O JV, LLC joint venture and higher average occupancy within our 23Springs and Granite Park Six joint ventures, partially offset by lower capitalized expenses within our 23Springs joint venture and the sale of our 50.0% interest in the Highwoods-Markel Associates, LLC joint venture in 2025.
Earnings Per Common Share - Diluted
Diluted earnings per common share was $0.23 higher in the nine months ended September 30, 2026 as compared to 2025 due to an increase in net income for the reasons discussed above.
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Liquidity and Capital Resources
Statements of Cash Flows
We report and analyze our cash flows based on operating activities, investing activities and financing activities. The following table sets forth the changes in the Company’s cash flows (in thousands):
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Net cash provided by operating activities | $ | 279,856 | $ | 259,523 | $ | 20,333 | |||||||||||
| Net cash provided by/(used in) investing activities | 5,514 | (239,354) | 244,868 | ||||||||||||||
| Net cash used in financing activities | (29,734) | (12,103) | (17,631) | ||||||||||||||
| Total cash flows | $ | 255,636 | $ | 8,066 | $ | 247,570 | |||||||||||
The change in net cash provided by operating activities in the nine months ended September 30, 2026 as compared to 2025 was primarily due to changes in operating assets and liabilities and net cash from property acquisitions in Raleigh, Charlotte, and Dallas, partially offset by property dispositions.
The change in net cash provided by/(used in) investing activities in the nine months ended September 30, 2026 as compared to 2025 was primarily due to higher net proceeds from property dispositions and distributions of capital from our Granite Park Six, Midtown East and 23Springs joint ventures upon receipt of loan proceeds. These inflows were partially offset by higher investments in acquired real estate in Raleigh and Dallas, higher investments in tenant improvements, deferred leasing costs and building improvements and higher investments in unconsolidated affiliates.
The change in net cash used in financing activities in the nine months ended September 30, 2026 as compared to 2025 was primarily due to higher net debt repayments in 2026 and proceeds from the issuance of common stock in 2025, partially offset by contributions from joint venture partners to acquire consolidated real estate assets in 2026.
Capitalization
The following table sets forth the Company’s capitalization (in thousands, except per share amounts):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Mortgages and notes payable, net, at recorded book value | $ | 3,511,810 | $ | 3,554,178 | |||||||
| Preferred Stock, at liquidation value | $ | 26,631 | $ | 26,691 | |||||||
| Common Stock outstanding | 110,315 | 109,905 | |||||||||
| Common Units outstanding (not owned by the Company) | 2,017 | 2,044 | |||||||||
| Per share stock price at period end | $ | 29.02 | $ | 25.82 | |||||||
| Market value of Common Stock and Common Units | $ | 3,259,875 | $ | 2,890,523 | |||||||
| Total capitalization | $ | 6,798,316 | $ | 6,471,392 | |||||||
As of September 30, 2026, our mortgages and notes payable and outstanding preferred stock represented 52.0% of our total capitalization and 42.2% of the undepreciated book value of our assets. See also “Executive Summary - Liquidity and Capital Resources.”
Our mortgages and notes payable as of September 30, 2026 consisted of $697.0 million of secured indebtedness with a weighted average interest rate of 4.45% and $2,829.1 million of unsecured indebtedness with a weighted average interest rate of 4.48%. The secured indebtedness was collateralized by real estate assets with an undepreciated book value of $1,299.3 million. As of September 30, 2026, $350.0 million of our debt bears interest at floating rates.
Investment and Joint Venture Activity
In the normal course of business, we regularly evaluate potential acquisitions. As a result, from time to time, we may have one or more potential acquisitions under consideration that are in varying stages of evaluation, negotiation or due diligence,
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including potential acquisitions that are subject to non-binding letters of intent or enforceable contracts. Consummation of any transaction is subject to a number of contingencies, including the satisfaction of customary closing conditions. No assurances can be provided that we will acquire any properties in the future. See “Item 1A. Risk Factors - Risks Related to our Investment Activities - Recent and future acquisitions and development properties may fail to perform in accordance with our expectations and may require renovation and development costs exceeding our estimates” in our 2025 Annual Report on Form 10-K.
During the third quarter of 2026, we sold nine buildings in Richmond, Atlanta and Raleigh for an aggregate sales price of $85.2 million and recorded aggregate gains on disposition of property of $13.6 million.
During the third quarter of 2026, we commenced construction of site and infrastructure work at our Ovation mixed-use real estate development land in Nashville. These development expenditures are intended to facilitate the potential sale of portions of such land to third parties for the future development of residential, retail and/or hotel uses by such third parties, and the future development of office buildings by us. Ovation is currently entitled and master planned for the overall development of up to 1,225,000 square feet of additional office, 1,594 residential units, 430,000 square feet of retail and 350 hotel keys.
To fund construction of our 23Springs development project, the 23Springs joint venture previously obtained a construction loan for up to $265.0 million, with an interest rate of SOFR plus 355 basis points. This loan was scheduled to mature in March 2027. During the third quarter of 2026, the 23Springs joint venture modified this loan by converting it from a construction loan to a delayed draw secured loan, extending the maturity date to September 2029 (and can be extended for one additional year at the joint venture’s option assuming no defaults have occurred), lowering the borrowing spread to SOFR plus 230 basis points and increasing the borrowing capacity to $370.0 million. As of September 30, 2026, $325.6 million was outstanding on this loan. In connection with this modification, the 23Springs joint venture obtained interest rate hedge contracts that effectively cap the underlying SOFR rate at 5.0%. The incremental net proceeds were distributed equally to us and our partner, Granite.
During the third quarter of 2026, the Midtown East joint venture obtained a two-tranche secured mortgage loan from a third party lender. The first tranche consists of a $44.8 million secured loan that was used to repay the $43.8 million balance on a secured construction loan that we previously provided the joint venture. The second tranche consists of a $10.9 million non-revolving line of credit. As of September 30, 2026, $2.5 million was drawn on the line of credit. Both tranches bear interest at SOFR plus 205 basis points and are scheduled to mature in July 2036. In connection with this loan, the Midtown East joint venture obtained interest rate hedge contracts that effectively fix the weighted average rate of both tranches at 6.3%.
Financing Activity
During the first quarter of 2026, we entered into separate equity distribution agreements with each of Wells Fargo Securities, LLC, BofA Securities, Inc., BTIG, LLC, Jefferies LLC, J.P. Morgan Securities LLC, TD Securities (USA) LLC and Truist Securities, Inc. pursuant to which the Company may offer and sell up to $300.0 million in aggregate gross sales price of shares of Common Stock from time to time, including on a forward basis, through such firms, acting as agents of the Company or as principals. Sales of the shares, if any, may be made by means of ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices or as otherwise agreed with any of such firms, which may include block trades. During the third quarter of 2026, the Company issued no shares of Common Stock under its equity agreements, except for the shares sold and settled on a forward basis, if any, as discussed below.
The following table summarizes the activity for shares sold and settled on a forward basis under the equity distribution agreements:
| Forward Sale Agreements | Shares | Gross Sales | Weighted Average Gross Sales Price Per Share | Weighted Average Net Sales Price Per Share | Sales Commissions Per Share (1) | Net Proceeds Received Per Share | ||||||||||||||||||||||||||||||||
| Outstanding as of June 30, 2026 | — | $ | — | |||||||||||||||||||||||||||||||||||
| New forward sale agreements | 1,056,085 | 34,053 | $ | 32.24 | $ | 31.76 | $ | 0.48 | ||||||||||||||||||||||||||||||
| Forward sale agreements settled | — | — | — | — | — | $ | — | |||||||||||||||||||||||||||||||
| Outstanding as of September 30, 2026 | 1,056,085 | $ | 34,053 | |||||||||||||||||||||||||||||||||||
__________
(1)Upon a forward sale, the equity distribution agent typically earns a commission of 1.5% of the gross sales price.
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The Company initially does not receive any proceeds from the sales of shares on a forward basis. We may settle the applicable forward sale agreements on one or more dates prior to the respective scheduled maturity dates, at which point the Company would receive the proceeds net of certain costs; provided, however, generally we may elect to cash settle or net share settle such forward sale agreements at any time through the respective scheduled maturity dates, which is typically one year from the respective trade dates.
During the second quarter of 2026, the Company’s Board of Directors authorized the repurchase of up to $250.0 million of outstanding shares of Common Stock under a new stock repurchase program. We anticipate funding any stock repurchases with proceeds from non-core asset sales, available cash and borrowings under our revolving credit facility. The Company may purchase shares of Common Stock from time to time in amounts and at prices determined by the Company in its discretion. Shares of Common Stock may be repurchased in the open market or in privately negotiated transactions (which may include block trades). If and when the Company repurchases Common Stock under this program, the Operating Partnership will repurchase an equal number of Common Units from the Company. The timing, manner, price and actual number of shares repurchased will be subject to a variety of factors, including price, market conditions, corporate and regulatory requirements, applicable SEC rules and other liquidity requirements and priorities. The Common Stock repurchase program does not have an expiration date, does not obligate the Company to repurchase any dollar amount or number of shares and may be suspended, modified or discontinued at any time without prior notice. During the third quarter of 2026, the Company repurchased no shares of Common Stock under its stock repurchase program.
Our $750.0 million unsecured revolving credit facility is scheduled to mature in January 2028 (but can be extended for two additional six-month periods at our option assuming no defaults have occurred). The interest rate on our revolving credit facility is SOFR plus 85 basis points, based on current credit ratings. The annual facility fee is 20 basis points. The interest rate and facility fee are based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. The interest rate may be adjusted upward or downward by 2.5 basis points depending upon whether or not we achieve certain pre-determined sustainability goals with respect to the ongoing reduction of greenhouse gas emissions. There were no amounts outstanding under our revolving credit facility as of September 30, 2026 or October 20, 2026. As of both September 30, 2026 and October 20, 2026, we had $0.1 million of outstanding letters of credit, which reduce the availability on our revolving credit facility. As a result, the unused capacity of our revolving credit facility was $749.9 million as of both September 30, 2026 and October 20, 2026.
During the third quarter of 2026, we repurchased $3.1 million principal amount of unsecured notes due March 2027.
We are currently in compliance with financial covenants and other requirements with respect to our consolidated debt. Although we expect to remain in compliance with these covenants and ratios for at least the next year, depending upon our future operating performance, property and financing transactions and general economic conditions, we cannot provide any assurances that we will continue to be in compliance.
Our revolving credit facility and bank term loans require us to comply with customary operating covenants and various financial requirements. Upon an event of default on our revolving credit facility, the lenders having at least 51.0% of the total commitments under our revolving credit facility can accelerate all borrowings then outstanding, and we could be prohibited from borrowing any further amounts under our revolving credit facility, which would adversely affect our ability to fund our operations. In addition, certain of our unsecured debt agreements contain cross-default provisions giving the unsecured lenders the right to declare a default if we are in default under more than $35.0 million with respect to other loans in some circumstances.
The indenture that governs the Operating Partnership’s outstanding notes requires us to comply with customary operating covenants and various financial ratios. The trustee or the holders of at least 25.0% in principal amount of any series of notes can accelerate the principal amount of such series upon written notice of a default that remains uncured after 60 days.
We may not be able to repay, refinance or extend any or all of our debt at maturity or upon any acceleration. If any refinancing is done at higher interest rates, the increased interest expense could adversely affect our cash flow and ability to pay distributions. Any such refinancing could also impose tighter financial ratios and other covenants that restrict our ability to take actions that could otherwise be in our best interest, such as funding new development activity, making opportunistic acquisitions, repurchasing our securities or paying distributions.
Dividends and Distributions
To maintain its qualification as a REIT, the Company must pay dividends to stockholders that are at least 90.0% of its annual REIT taxable income, excluding net capital gains. The partnership agreement requires the Operating Partnership to
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distribute at least enough cash for the Company to be able to pay such dividends. The Company’s REIT taxable income, as determined by the federal tax laws, does not equal its net income under accounting principles generally accepted in the United States of America (“GAAP”). In addition, although capital gains are not required to be distributed to maintain REIT status, capital gains, if any, are subject to federal and state income tax unless such gains are distributed to stockholders.
Cash dividends and distributions reduce the amount of cash that would otherwise be available for other business purposes, including funding debt maturities, reducing debt or future growth initiatives. The amount of future distributions that will be made is at the discretion of the Company’s Board of Directors. For a discussion of the factors that will affect such cash flows and, accordingly, influence the decisions of the Company’s Board of Directors regarding dividends and distributions, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Dividends and Distributions” in our 2025 Annual Report on Form 10-K.
On October 22, 2026, the Company declared a cash dividend of $0.50 per share of Common Stock, which is payable on December 8, 2026 to stockholders of record as of November 16, 2026.
During the third quarter of 2026, the Company declared and paid a cash dividend of $0.50 per share of Common Stock.
Current and Future Cash Needs
We anticipate that our available cash and cash equivalents, cash flows from operating activities and other available financing sources, including the issuance of debt securities by the Operating Partnership, secured debt, bank term loans, borrowings under our revolving credit facility, the issuance of equity securities by the Company or the Operating Partnership and the disposition of non-core assets, will be adequate to meet our short-term liquidity requirements. We generally believe existing cash and rental and other revenues will continue to be sufficient to fund operating and general and administrative expenses, interest expense, our existing quarterly dividend and existing portfolio capital expenditures, including building improvement costs, tenant improvement costs and lease commissions.
We had $279.2 million of cash and cash equivalents as of September 30, 2026. The unused capacity of our revolving credit facility was $749.9 million as of both September 30, 2026 and October 20, 2026.
We have a currently effective automatic shelf registration statement on Form S-3 with the SEC pursuant to which, at any time and from time to time, in one or more offerings on an as-needed basis, the Company may sell an indefinite amount of common stock, preferred stock and depositary shares and the Operating Partnership may sell an indefinite amount of debt securities, subject to our ability to effect offerings on satisfactory terms based on prevailing market conditions.
The Company from time to time enters into equity distribution agreements with a variety of firms pursuant to which the Company may offer and sell shares of common stock from time to time, including on a forward basis under forward sale agreements, through such firms, acting as agents of the Company or as principals. Sales of the shares, if any, may be made by means of ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices or as otherwise agreed with any of such firms (which may include block trades).
During the remainder of 2026, we expect to sell between $100 million to $250 million of additional properties no longer considered to be core assets due to location, age, quality and/or overall strategic fit. We can make no assurance, however, that we will sell any additional non-core assets or, if we do, what the timing or terms of any such sale will be.
See also “Executive Summary” and “Executive Summary - Liquidity and Capital Resources.”
Critical Accounting Estimates
There were no changes made by management to the critical accounting policies in the nine months ended September 30, 2026. For a description of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates” in our 2025 Annual Report on Form 10-K.
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Non-GAAP Information
The Company believes that FFO, FFO available for common stockholders and FFO available for common stockholders per share are metrics that are beneficial to management and investors and are important indicators of the performance of any equity REIT. Because these FFO calculations exclude such factors as depreciation, amortization and impairments of real estate assets and gains or losses from sales of operating real estate assets, which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful life estimates, they facilitate comparisons of operating performance between periods and between other REITs. Management believes that historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, management believes the use of FFO, FFO available for common stockholders and FFO available for common stockholders per share, together with the required GAAP presentations, provides a more complete understanding of the Company’s performance relative to its competitors and a more informed and appropriate basis on which to make decisions involving operating, financing and investing activities.
FFO, FFO available for common stockholders and FFO available for common stockholders per share are non-GAAP financial measures and therefore do not represent net income or net income per share as defined by GAAP. Net income and net income per share as defined by GAAP are the most relevant measures in determining the Company’s operating performance because these FFO measures include adjustments that investors may deem subjective, including adding back expenses such as depreciation, amortization and impairments. Furthermore, FFO available for common stockholders per share does not depict the amount that accrues directly to the stockholders’ benefit. Accordingly, FFO, FFO available for common stockholders and FFO available for common stockholders per share should never be considered as alternatives to net income, net income available for common stockholders, or net income available for common stockholders per share as indicators of the Company’s operating performance.
The Company’s presentation of FFO is consistent with FFO as defined by the National Association of Real Estate Investment Trusts, which is calculated as follows:
•Net income/(loss) computed in accordance with GAAP;
•Less net income, or plus net loss, attributable to noncontrolling interests in consolidated affiliates;
•Plus depreciation and amortization of depreciable operating properties;
•Less gains, or plus losses, from sales of depreciable operating properties, plus impairments on depreciable operating properties and excluding items that are classified as extraordinary items under GAAP;
•Plus or minus our share of adjustments, including depreciation and amortization of depreciable operating properties, for unconsolidated joint venture investments (to reflect funds from operations on the same basis); and
•Plus or minus adjustments for depreciation and amortization and gains/(losses) on sales of depreciable operating properties, plus impairments on depreciable operating properties, and noncontrolling interests in consolidated affiliates related to discontinued operations.
In calculating FFO, the Company includes net income attributable to noncontrolling interests in the Operating Partnership, which the Company believes is consistent with standard industry practice for REITs that operate through an UPREIT structure. The Company believes that it is important to present FFO on an as-converted basis since all of the Common Units not owned by the Company are redeemable on a one-for-one basis for shares of its Common Stock.
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The following table sets forth the Company’s FFO, FFO available for common stockholders and FFO available for common stockholders per share (in thousands, except per share amounts):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Funds from operations: | |||||||||||||||||||||||
| Net income | $ | 34,078 | $ | 13,707 | $ | 164,200 | $ | 132,928 | |||||||||||||||
| Net (income)/loss attributable to noncontrolling interests in consolidated affiliates | (1,171) | 2 | (3,013) | 28 | |||||||||||||||||||
| Depreciation and amortization of real estate assets | 75,636 | 73,222 | 224,985 | 217,946 | |||||||||||||||||||
| Impairments of depreciable properties | — | 8,800 | — | 8,800 | |||||||||||||||||||
| Gains on disposition of depreciable properties | (13,582) | (5,674) | (105,609) | (88,011) | |||||||||||||||||||
| Unconsolidated affiliates: | |||||||||||||||||||||||
| Depreciation and amortization of real estate assets | 5,695 | 5,318 | 15,939 | 14,262 | |||||||||||||||||||
| Funds from operations | 100,656 | 95,375 | 296,502 | 285,953 | |||||||||||||||||||
| Dividends on Preferred Stock | (574) | (576) | (1,722) | (1,783) | |||||||||||||||||||
| Funds from operations available for common stockholders | $ | 100,082 | $ | 94,799 | $ | 294,780 | $ | 284,170 | |||||||||||||||
| Funds from operations available for common stockholders per share | $ | 0.89 | $ | 0.86 | $ | 2.63 | $ | 2.58 | |||||||||||||||
Weighted average shares outstanding (1) | 112,323 | 110,522 | 112,230 | 110,113 | |||||||||||||||||||
__________
(1)Includes assumed conversion of all potentially dilutive Common Stock equivalents.
In addition, the Company believes NOI and same property NOI are useful supplemental measures of the Company’s property operating performance because such metrics provide a performance measure of the revenues and expenses directly involved in owning real estate assets and a perspective not immediately apparent from net income or FFO. The Company defines NOI as rental and other revenues less rental property and other expenses. The Company defines cash NOI as NOI less lease termination fees, straight-line rent, amortization of lease incentives and amortization of acquired above and below market leases. Other REITs may use different methodologies to calculate NOI, same property NOI and cash NOI.
As of September 30, 2026, our same property portfolio consisted of 127 wholly owned and joint venture in-service properties encompassing 24.1 million rentable square feet that were owned during the entirety of the periods presented (from January 1, 2025 to September 30, 2026). As of December 31, 2025, our same property portfolio consisted of 143 wholly owned and joint venture in-service properties encompassing 26.0 million rentable square feet that were owned during the entirety of the periods presented (from January 1, 2024 to December 31, 2025). The change in our same property portfolio was due to the addition of one newly developed property encompassing less than 0.1 million rentable square feet placed in service during 2024, offset by the removal of 13 wholly owned properties encompassing 1.6 million rentable square feet and three joint venture properties encompassing 0.2 million rentable square feet that were sold during 2026 and one property encompassing 0.1 million rentable square feet that was taken out of service during 2026 due to a change in our assumption about the use of the asset.
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The following table sets forth the Company’s NOI, same property NOI and same property cash NOI (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net income | $ | 34,078 | $ | 13,707 | $ | 164,200 | $ | 132,928 | |||||||||||||||
| Equity in earnings of unconsolidated affiliates | (768) | (598) | (3,339) | (2,223) | |||||||||||||||||||
| Gains on disposition of property | (13,582) | (5,674) | (109,569) | (87,889) | |||||||||||||||||||
| Other income | (3,092) | (1,753) | (8,828) | (8,007) | |||||||||||||||||||
| Interest expense | 40,608 | 38,475 | 123,998 | 112,782 | |||||||||||||||||||
| General and administrative expenses | 9,850 | 8,995 | 33,181 | 31,771 | |||||||||||||||||||
| Impairments of real estate assets | — | 8,800 | — | 8,800 | |||||||||||||||||||
| Depreciation and amortization | 79,477 | 73,898 | 236,068 | 219,982 | |||||||||||||||||||
| Net operating income | 146,571 | 135,850 | 435,711 | 408,144 | |||||||||||||||||||
| Our share of unconsolidated joint venture same property net operating income | 3,980 | 4,116 | 13,657 | 12,368 | |||||||||||||||||||
| Partner's share of consolidated joint venture same property net operating income | (268) | (287) | (831) | (833) | |||||||||||||||||||
| Non same property and other net operating income | (17,801) | (13,065) | (57,431) | (35,751) | |||||||||||||||||||
| Same property net operating income | $ | 132,482 | $ | 126,614 | $ | 391,106 | $ | 383,928 | |||||||||||||||
| Same property net operating income | $ | 132,482 | $ | 126,614 | $ | 391,106 | $ | 383,928 | |||||||||||||||
| Lease termination fees, straight-line rent and other non-cash adjustments | (9,067) | (3,436) | (20,658) | (12,285) | |||||||||||||||||||
| Same property cash net operating income | $ | 123,415 | $ | 123,178 | $ | 370,448 | $ | 371,643 | |||||||||||||||
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For information regarding our market risk as of December 31, 2025, see “Quantitative and Qualitative Disclosures About Market Risk” in our 2025 Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
SEC rules require us to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our annual and periodic reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management to allow for timely decisions regarding required disclosure. The Company’s CEO and CFO have concluded that the disclosure controls and procedures of the Company and the Operating Partnership were each effective as of September 30, 2026.
SEC rules also require us to establish and maintain internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. There were no changes in internal control over financial reporting during the three months ended September 30, 2026 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. There were also no changes in internal control over financial reporting during the three months ended September 30, 2026 that materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each of the registrants has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Highwoods Properties, Inc. | |||||
| By: | /s/ Brendan C. Maiorana | ||||
| Brendan C. Maiorana | |||||
| Executive Vice President and Chief Financial Officer | |||||
| Highwoods Realty Limited Partnership | |||||
| By: | Highwoods Properties, Inc., its sole general partner | ||||
| By: | /s/ Brendan C. Maiorana | ||||
| Brendan C. Maiorana | |||||
| Executive Vice President and Chief Financial Officer | |||||
Date: October 27, 2026
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