Highwoods Properties : At-A-Glance

HIW ED FRITSCH HONORARY

3Q19

Edition

AT-A-GLANCE

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ACROSS

3 1031 exchange result

5 Higher cash flow or FFO

1. Disposition proceeds = acquisition price
2. A swap of properties and markets that results in higher current CF, improved geographic mix, improved portfolio quality, increased growth rate, and maintains leverage neutrality

DOWN

1. No change to balance sheet metrics
2. Reduce operational complexity

4 Increase to forward years' FFO, CF and NOI outlook

1. A city where HIW will be a big dog on medium-sized porch, but where it doesn't currently operate
2. What HIW uses to pay its dividend
3. Pop group from the '90s or premier location in a market for office properties
4. Reduced corporate expenses

PITTSBURGH

ATLANTA

ATLANTA

PITTSBURGH

TAMPA

CHARLOTTE

RALEIGH

ATLANTA

ORLANDO

NASHVILLE

NASHVILLE

ATLANTA CHARLOTTE GREENSBORO MEMPHIS NASHVILLE ORLANDO PITTSBURGH RALEIGH RICHMOND TAMPA HIGHWOODS

CONTENTS

2 EDISMS

1. OPERATIONS
2. ASSET RECYCLING
3. DEVELOPMENT
4. FINANCIALS

1. IN THE NEWS
2. MARKET ROTATION PLAN

Certain matters discussed in this presentation are forward-looking statements within the meaning of the federal securities laws, such as: the planned acquisition of Bank of America Tower at Legacy Union on the terms described in this press release; planned sales of non-core assets and expected pricing and impact with respect to such sales, including the tax impact of such sales; the anticipated total investment, projected leasing activity, estimated replacement cost and expected net operating income of acquired properties and properties to be developed; and expected future leverage of the Company. These statements are distinguished by use of the words "will," "expect," "intend," "plan," "anticipate" and words of similar meaning. Although Highwoods believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from Highwoods' current expectations include, among others, the following: closing of the planned acquisition of Bank of America Tower at Legacy Union may not occur on the terms described in this presentation or at all; buyers may not be available and pricing may not be adequate with respect to the planned dispositions of non-core assets; comparable sales data on which we based our expectations with respect to the sales price of the non-core assets may not reflect current market trends; anticipated G&A expense savings may not be realized; the financial condition of our customers could deteriorate; development activity by our competitors in our existing markets could result in excessive supply of properties relative to customer demand; development, acquisition, reinvestment, disposition or joint venture projects may not be completed as quickly or on as favorable terms as anticipated; we may not be able to lease or re-lease second generation space quickly or on as favorable terms as old leases; our markets may suffer declines in economic growth; we may not be able to lease our newly constructed buildings as quickly or on as favorable terms as originally anticipated; unanticipated increases in interest rates could increase our debt service costs; unanticipated increases in operating expenses could negatively impact our NOI; 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 to repay or refinance outstanding debt upon maturity; the Company could lose key executive officers; and others detailed in the Company's 2018 Annual Report on Form 10-K and subsequent SEC reports.

P 1

EDISMS noun

ed is ms ed-ís-z ms
• •	e

1. a short (intended to be short) story or analogy used to explain, describe in more detail, reveal mostly relevant facts about a real estate concept or anything else that one may be talking about.
2. to throw light on what before was dark and obscure, by illustration and commentary and usually by elaborate explanation.

Not everyone can afford the ultimate driving machine, however, there are a lot of BMWs on the road.

You buy a shirt, pants, and a jacket but they don't all coordinate. Maybe it's the tie that brings it together?

We want to be a big dog on a medium size porch.

HIGHWOODS'CHOICEOFMARKETS

They brought 4 gallons of information, and we only used 2 tablespoons.

PEOPLE'SINPUT

THEVALUEOFSOME

POOLOFCUSTOMERSFORDEVELOPMENTPROJECTS

CONSIDERINGTHECOSTWHENDISCUSSINGTHE

What looks good on a billboard may not look

AGGREGATINGMULTIPLEDECISIONSINTOAN'ENSEMBLE'

That's like shining a flashlight in a corner that hasn't

It's like buying an avocado colored refrigerator.

WHICHWILLBECOMEDATEDMAKINGDECISIONS

We are pregnant on that!

WHENADECISIONCAN'TBEUNDONE

We're more of

1. "Masters" company than a "Superbowl" company.

ASASPORTINGEVENT
THECULTUREOF	HIGHWOODS

That's like giving someone the sleeves off your vest.

ANEGOTIATION

CONCESSIONINMAKING­ANEASY

Two stoplights from work to home.

MIDTIER.VSGATEWAY

good on TV!

ADVERTISINGFORHIGHWOODS

Has American Express ever called you up and told you to just forget the late fee, and hey thanks for all the money so far?

CHARGINGLATEFEESTOCUSTOMERS

I'm about to get into your bird's nest, so feel free to push me out if you want.

ELSE'SBUSINESS

GETTINGINVOLVEDINSOMEONE

been seen in years and is full of dust and cobwebs.

WE'REREADYFORTHESCRUTINY

BRINGINGUPATOPICBEFORE

That pig just needs some lipstick!

VS

FOUNTAIN.VSFLOWERBED

It doesn't matter how many runners are in the race-only if those three guys from Kenya are in the field.

WHENBIDDINGONABUILDING

											ADALEED
											ISTODAY'SNORM
FUNGIBILITY									YESTERDAY'SSUGGESTION

WHENTHESUBSTANCEISTHESAMESTUFF

MAKINGSOMETHINGAPPEARBETTER

Curb appeal

challenged.

NON-COREBUILDINGDEVELOPMENTHIGHWOODSTABLEATTHE

P 2

P 3

OPERATIONS

AVERAGE IN-PLACE RENT

SECOND GEN GAAP RENT GROWTH

$/SF							%
27
26							20
24							15
22
							10
20
18							5
16							0
2013	2014	2015	2016	2017	2018	2019	2013	2014	2015	2016	2017	2018	2019
SAME PROPERTY & AVERAGE OCCUPANCY	LEASE ECONOMICS

• Same Property Cash NOI Growth

7

Change in Average Occupancy

Net Effective Rent

Lease Payback Ratio

6								$/SF						%
							17						17
5								16						16
4								15						15
3								14						14
2								13						13
1								12						12
0								11						11
-1						Guidance Midpoint	10						10
							(Ex LSI impacts)
-2	2013	2014	2015	2016	2017	2018	2019	2013	2014	2015	2016	2017	2018	2019

EXPIRATIONS >100K SF

		Customer	Market	Expiration	SF	Comments
2019		FAA	Atlanta	4Q	100K	BTS; highly probable renewal
2020		T-Mobile	Tampa	3Q	116K	3 month extension, will vacate
	FBI	Tampa	4Q	138K	BTS; highly probable renewal
2021		None remaining(1)

1. Subsequent to 3Q'19, renewed and expanded Medsolutions (133K SF) and renewed Marsh USA (123K SF) with modest downsize.
   P 4

	COWORKING
				Market	Total Office	Existing		Flex Share
						Inventory	Flexible Stock		of Inventory
	HIGHWOODS EXPOSURE					SF	SF		%
		Markets	NY	415,472,222	14,957,000		3.6
6	29K
San Francisco	81,625,000	3,265,000		4.0
	Gateway
	DC	126,904,762	2,665,000		2.1
	Leases	Square Feet			Boston	220,352,941	3,746,000		1.7
	(Industrious, Spaces)
0.85%											HIW
										Exposure
										SF
		MarketsHighwoods	Atlanta	132,950,000	2,659,000		2.0		18,775
	Annualized Revenues
		Raleigh	57,736,842	1,097,000		1.9		68,803
5
						Pittsburgh	77,000,000	616,000		0.8		23,664
						Orlando	40,416,667	485,000		1.2		24,113
	Markets	Source: CBRE Q2'19			Tampa	47,000,000	564,000		1.2		39,728
	PROFORMA*										Charlotte	Other**
								Richmond 3%	5%
	Customer		% of Annualized		Average Remaining
		Cash Revenue		Lease Term in Years			6%			Nashville
						Orlando		22%
	U.S. Government		4.7			4.0
						6%
	Bank of America Corp.	3.8			14.5			Pittsburgh
									9%
	Asurion		3.1			15.0
	MetLife		3.1			11.4							Atlanta
									Tampa
	Bridgestone Americas, Inc.	2.6			17.9
						19%
									13%
	Total Top 5		17.1			11.6
	Total Top 10		23.2			10.6					Raleigh
											17%
	**As of 9/30/2019 assuming the planned completion of Phase One of market rotation plan and stabilization of current development pipeline
	**Greensboro and Memphis remaining upon completion of Phase One
ASSET RECYCLING						Gross Book	Value

$M	Dispositions	Acquisitions	Development	BofA Tower	Phase One Dispositions	$B
800															6
700															5
600															4
500
400															3
300															2
200
100															1
0															0
	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
															P 5

DEVELOPMENT

2019 DELIVERIES			$161M	443K	100%
			Investment	Square Feet	Pre-Leased

MetLife III

Mars Petcare U.S. HQ

COMPETITIVE SET CONSTRUCTION

Cumulative Submarkets	Under	Projects	% of Stock	Pre-leased
Construction (SF)	Competitve Set	(%)
Charlotte	3.1M	6	14.5	91
Nashville	2.9M	13	9.8	23
Atlanta	5.3M	18	5.3	52
Raleigh	1.4M	7	3.4	48
Pittsburgh	0.6M	5	1.6	0
Tampa	0.9M	3	3.6	44
Orlando	0.2M	1	2.8	94

Based on new office construction in BBD locations.

Excludes BTS and owner occupied projects where existing user buildings are not competitive to HIW product.

Source: CBRE + HIW

DEVELOPMENT

$500M

1.2M

73%

FINANCIALS

PIPELINE

Investment

Square Feet

Pre-Leased

PROFORMA DEVELOPMENT CASH RENT COMMENCEMENT

CASH FLOW & DIVIDENDS

2019

2020

2021

Current Pipeline	Market	Invst	SF	Pre-leased	Proforma	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q		$M	79.4	89.2	93.6	97.2		101.1	105.6	106.3	Average
		Shares (M)
($M)	(K)	(%)	Stabilization
MetLife III	Raleigh	65	219	100	2Q21														CAD	DIVIDENDS
GlenLake Seven	Raleigh	41	126	44	4Q21
											200
Midtown One	Tampa	71	150	0	4Q22											4Q22
Virginia Springs II	Nashville	38	111	0	3Q22											3Q22
Asurion HQ	Nashville	285	553	98	1Q22											1Q22
Placed In Service		Invst	SF	Leased	Proforma	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q		150
	($M)	(K)	(%)	Stabilized
5000 CentreGreen	Raleigh	41	170	100	3Q19
																	100	2012	2013	2014	2015		2016	2017	2018
				FUTURE DEVELOPMENT POTENTIAL | LAND BANK
				Market		Acres		Office SF	Potential			DIVIDENDS
						Investment
				Nashville		65		1,963,000									2016	2017			2018	2019
				Tampa*		37		1,413,000
				Raleigh		32		1,093,000		$2.1B					1.70	1.76	1.85	1.90
				Richmond		13		200,000
				Orlando		2		451,000											+3.5	+5.1	+2.7
				Atlanta		1		175,000
				Total		150		5,295,000
				*Includes 600K SF potential at Midtown Tampa not on HIW-owned land.
P 6																										P 7

FINANCIALS

MATURITY LADDER

$M		3.36	%	3.10	%	3.75	%		3.78			4.06%06		4.30	%	3.24	%
									%		%
500									Fixed				Floating
400														$96
																				Secured
300
200					$250																		$399
																	$347		$349		Bonds
			$298		Bank Loan									$297					$349
														Bonds		Bonds			Bonds
100			Bonds					$2489						Bonds
								Bonds
0					$50
				BankLoann
	'19	'20	'21		'22				'23						'27	'28	'29			'30

		CAPITAL STACK
Average				1.2%
				Unsecured
Interest Rate
				Floating Rate
					1.3%
30.4%		6.8 Years			Secured Debt
	27.9%
Net Debt*		Weighted Average Maturity		Unsecured
					Fixed Rate

69.6%

Equity**

**Cash on hand is included as a reduction to unsecured debt balance. **Based on public market capitalization using 11/7/19 share price.

IN THE NEWS

NASHVILLE

1100 BROADWAY	NASHVILLE
YARDS
ASURION	ASURION HQ
• $285M Investment
1100 BROADWAY	• 553K SF

• ~$500M Investment Potential
• Up to 1.2M SF

MIDTOWN TAMPA

PROJECT OVERVIEW

• $500M Investment

SIGNIFICANT BALANCE SHEET CAPACITY

STRONG BALANCE SHEET

6		5.37x				50	37.4	4.92x	96.4
	D/EBITDAre	Book Leverage			Book	%		%
D/E					Leverage
5	4.92x	40.9%	5.28x	40.5%			Debt + Preferred	Net Debt to	Unencumbered NOI
		40	as % of Gross Assets	Annualized EBITDAre
3	37.4%					1.6%	1.5%	Baa2 BBB
					30
4
						20	Secured Debt	Annualized Revenues
2						as % of Gross Assets	from JVs
1						10
0	9/30/19	BofA*	Dev + Mkt Rotation**	0	BOND OFFERING

* Assumes 100% debt funding of BofA Tower with no Phase One disposition proceeds received.

$400M

3.24%

1.625%

10 YR/5 MO

**Assumes completion of Phase One of market rotation plan and stabilization of current

Interest Rate

Spread

Maturity

development pipeline with no additional disposition proceeds or equity issuance.

2019 OUTLOOK

FFO PER SHARE

CASH SAME PROPERTY

YE OCCUPANCY

Low

High

Low

High

Low

High

Current Outlook (10/22)

$3.31

$3.33

0.5%

1.5%

91.7%

92.3%

Add back: LSI non-operational impact*

$0.12

$0.12

1.5%

1.5%

0.6%

0.6%

Add back: Market Rotation costs**

$0.05

$0.05

N/A

N/A

N/A

N/A

Outlook Ex items

$3.48

$3.50

2.0%

3.0%

92.3%

92.9%

*Adds back $0.12 of previously-disclosed credit losses of accounts and straight-line

INVESTMENT ACTIVITY

rents receivable and write-offs of notes receivable and lease incentives

Low

High

associated with the sudden closure of LSI in 1Q'19. Does not add back $0.05

of lost NOI and other income incurred from the sudden closure of LSI.

Acquisitions

$436M

$436M

** Adds back $0.05 net impact of previously-disclosed items relating to the

Market Rotation Plan.

Dispositions

$37M

$473M

Development $150M $250M

Announcements

1. 8

• 22 Acres

• 1.8M SF

-750K SF Office

-220K SF Retail/Entertainment

-390Multi-family Units

-225 Hotel Rooms

WHOLE FOODS		HIW INVESTMENT
		• $71M, 150K SF office
		under construction
		• 80% interest in JV
		• Rights to additional 600K SF
		of future office development

TAMPA | 5332 AVION

Built 2016 | 176K SF | 6 Stories | Floor-to-Ceiling Glass | 4.8/1000

(Parking Ratio)

Westshore

OFFICE	5332 Avion

MEDICAL

STATUS

• Unfettered building control

• Likely conversion to full office

• Interest from several large users

P 9

MARKET ROTATION PLAN

ROCKET PITCH

ACCRETION		LEVERAGE NEUTRAL		IMPROVES PORTFOLIO
		QUALITY
IMPROVES PORTFOLIO		SIMPLIFIES		ENHANCES FUTURE
EFFICIENCY		OPERATIONS		GROWTH

TIMELINE

SELL PHASE ONE ASSETS IN

SELL PHASE

GREENSBORO & MEMPHIS

Approximately

TWO ASSETS IN

neutral to

GREENSBORO

FUND REMAINING $386M

current FFO

AND MEMPHIS

DEPOSIT $50M

TO CLOSE ACQUISITION

run-rate

OF BofA TOWER

EARNEST MONEY

AUGUST

GO

NOVEMBER

BUY

SELL

MID

SELL

2019

2019

2020

BEGIN RECOGNITION OF

SEVERANCE AND OTHER COSTS

•	$3.8M of severance and
	other costs	CLOSE GREENSBORO	Cash flow /
•	$3.9M of land impairment	& MEMPHIS OFFICES	CAD accretive
	charges

FINANCIAL OUTLOOK

FFO Neutral

Cash Flow Accretive*

Leverage Neutral

Tax Efficient

G&A Savings

*Includes add back of 2020 free rent and other rent-related credits received as a reduction to the purchase price

P10

BANK OF AMERICA TOWER

AT LEGACY UNION

STATUS		Under Contract
PLANNED CLOSING	November 2019
TOTAL INVESTMENT	$436M
MARKET/SUBMARKET	Charlotte/Uptown CBD
DELIVERS		2019
SQUARE FEET/STORIES	841,164/33
FLOOR PLATES		23,000-29,000 SF
PARKING		3/1,000
		275 owned spaces
		Rights to 2,526 spaces in
		Central Parking Garage
CURRENT LEASED RATE	90%
EXPANSION POTENTIAL	~40,000 SF
SUSTAINABILITY		Registered LEED Gold
AMENITIES		Fitness center
		Ground level retail
		Conference facility
LOCATION		Vibrant location within
		Uptown CBD
		Adjacent to South End district
		Direct access to I-277
		Walkable to light rail
LEASE	Floor 9
9,000 SF
FOR	Floor 5
28,000 SF			EXPANSION POTENTIAL
AVAILABLE	11,000 SF
	Floor 4
	28,000 SF
	Floor 3

WITHIN 1 MILE:
12,000	200	40	88
RESIDENTS	RESTAURANTS	BARS	WALK SCORE

Suite 100

Floors 11-33

601,720 SF

Floors 9-10 46,052 SF

Floors 6-8 82,659 SF

Floor 3 6,302 SF

P11

CHARLOTTE OVERVIEW

COMPETITIVE SET	RSF	% LEASED	YEAR BUILT
Hearst Tower	970,002	99%	2002
Bank of America Tower	841,164	90%	2019
Ally Center	742,000	100%	2021
Fifth Third Center	697,817	96%	1997
650 South Tryon	362,000	25%	2021
300 South Tryon	638,459	100%	2017
615 South College	375,731	88%	2017
The RailYard	326,253	96%	2019
500 E. Morehead	187,000	98%	2017
TOTAL	5,138,426	91%

UPTOWN

$36.35	19.5M	10.5%	1.0M	1.3M
Average Asking	Inventory	Vacancy	YTD Net	SF Under
Rate/SF	(SF)		Absorption (SF)	Development
SOUTH END-MIDTOWN
$35.66	3.7M	9.4%	614K	787K
Average Asking	Inventory	Vacancy	YTD Net	SF Under
Rate/SF	(SF)		Absorption (SF)	Development

Source: JLL 3Q19

P12

FACTOIDS

#1

TOTAL TECH JOB

GROWTH IN THE U.S.

(2013-2018)

Source: CBRE

26

CONSECUTIVE

QUARTERS OF RENT

GROWTH

Source: CBRE

8

FORTUNE 500

HEADQUARTERS

Truist

#3

LOWEST OFFICE

VACANCY RATE

Source: CBRE

PROFESSIONAL SERVICES

EMPLOYMENT

80%

GROWTH SINCE 2001

Source: Bureau of Labor Statistics

#6

FORECASTED

REVENUE GROWTH

OUT OF TOP 50 U.S.

MARKETS RANKED

BY GREEN STREET

ADVISORS

DISPOSITION PROPERTIES

GREENSBORO

Office

• 1.2M SF
• 93.8% occupancy
• 18 properties

Industrial

• 2.7M SF
• 92.9% occupancy
• 6 parks

5.3% of annualized revenue

MEMPHIS

Office

• 1.7M SF
• 91.1% occupancy
• 11 properties

5.9% of annualized revenue

International Place IV 248,000 SF

Cresent Center 338,000 SF

HIGH QUALITY

• History of strong occupancy and healthy rents
• Well-maintainedby institutional owner
• BBD locations

ATTRACTIVE

PROPERTIES

• Greensboro industrial portfolio
• International Paper HQ (long-term lease, recent build-to-suit)
• Greensboro MOB portfolio
• Memphis assets concentrated along Poplar Corridor

Church Street Medical 149,000 SF

Airpark Industrial 359,000 SF

P13

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a							i
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LEADERSHIP
			1982-2019