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, Nashville, Orlando,
Pittsburgh, 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, in particular, 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. Currently, one of the most significant factors that
could cause actual outcomes to differ materially from our forward-looking
statements is the potential adverse effect of the COVID-19 pandemic, and
federal, state, and/or local regulatory guidelines and private business actions
to control it, on our financial condition, operating results and cash flows, our
customers, the real estate market in which we operate, the global economy and
the financial markets. The extent to which the COVID-19 pandemic impacts us and
our customers will depend on future developments, which are highly uncertain and
cannot be predicted with confidence, including the scope, severity and duration
of the pandemic and the resulting economic recession and potential changes in
customer behavior, among others. Additional factors, many of which may be
influenced by the COVID-19 pandemic, that could cause actual outcomes or results
to differ materially from those indicated in these statements include:

•the financial condition of our customers could deteriorate or further worsen;

•our assumptions regarding potential losses related to customer financial difficulties due to the COVID-19 pandemic 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;

•unanticipated increases in interest rates could increase our debt service costs;

•unanticipated increases in operating expenses could negatively impact our 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.


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This list of risks and uncertainties, however, is not intended to be exhaustive.
You should also review the other cautionary statements we make in "Business -
Risk Factors" set forth in our 2019 Annual Report on Form 10-K and "Item 1A.
Risk Factors" set forth in our Quarterly Report on Form 10-Q for the second
quarter of 2020. 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.

                               Executive Summary

Our Strategic Plan focuses on:

•owning high-quality, differentiated office buildings in the BBDs of our core markets;

•improving the operating results of our properties through concentrated leasing, asset management, cost control and customer service efforts;



•developing and acquiring office buildings in BBDs that improve the overall
quality of our portfolio and generate attractive returns over the long term for
our stockholders;

•disposing of properties no longer considered to be core assets primarily due to location, age, quality and/or overall strategic fit; and

•maintaining a balance sheet with ample liquidity to meet our funding needs and growth prospects.



COVID-19

The unprecedented nationwide efforts to slow the spread of the COVID-19 virus have obviously had a significant impact on the U.S. economy.



It is very difficult to predict when, if and to what extent economic activity
will return to pre-COVID-19 levels. While the COVID-19 pandemic did not have a
meaningful impact on our third quarter of 2020 financial results, we believe it
is likely our financial results for the remainder of 2020 will be adversely
impacted by the COVID-19 pandemic. Given the fluidity of the pandemic and its
uncertain impact on economic activity, losses related to customer financial
difficulties are difficult to predict.

This outlook reflects management's view of current and future market conditions,
including assumptions such as potential losses related to customer financial
difficulties and asset usage due to the COVID-19 pandemic, rental rates,
occupancy levels, operating and general and administrative expenses, weighted
average diluted shares outstanding and interest rates. Factors that could cause
actual results to differ materially from our current expectations are set forth
under "Disclosure Regarding Forward-Looking Statements."

While all buildings and parking facilities have remained open for business, the
usage of our assets in the third quarter of 2020 continued to be significantly
lower due to the COVID-19 pandemic. As a result, parking and parking-related
revenues continued to be lower during this period. In addition, our operating
expenses, net of expense recoveries, continued to be lower during this period
due to reduced electricity, janitorial and other variable expenses. Until usage
increases, which will depend on the duration of the COVID-19 pandemic, which is
difficult to estimate, we expect that reduced usage will continue to result in
reduced parking revenues, which will be only partially offset by reduced
operating expenses. We do not expect usage to increase over the current level
until at least the beginning of 2021.

Given the COVID-19 pandemic, we have been experiencing and expect to continue to
experience slower than originally anticipated speculative new leasing, which
could be partially offset by higher renewal activity. This would reduce our
anticipated rental revenues. Because construction activities have generally been
classified as essential activities throughout our markets during the COVID-19
pandemic, we do not currently expect meaningful delays in customers taking
occupancy under recently-signed leases.

We assume we will incur losses due to customers that default on their leases,
file bankruptcy and/or otherwise experience significant financial difficulty as
a result of the COVID-19 pandemic (including $3.0 million during the nine months
ended September 30, 2020), consisting of credit losses of straight-line rent
receivables and lower rent payments. Most of the credit losses of straight-line
rent receivables during the third quarter were due to the conversion of fixed
rent leases to percentage rent leases for certain customers that remain in
occupancy but have been impacted by social distancing measures.

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Given the fluidity of the pandemic and its uncertain impact on economic
activity, we cannot estimate such losses during the remainder of 2020.
Generally, in cases where an otherwise viable, creditworthy customer has been
able to demonstrate disruption due to the complete or partial shutdown of its
business operations, we have agreed and/or may agree to defer, but not abate,
the payment of rent for a limited period of time or, as noted above, convert
traditional leases to percentage rent leases. In other cases, we have agreed
and/or may agree to abate rent for a limited period of time as consideration for
a lease term extension. The extent of any losses will depend on whether or not
the collectability of future rents from customers experiencing financial
difficulty is deemed to be probable under GAAP. Through October 20, 2020, we
have collected 99% of our contractually required rents for the month of October
and are not currently aware of any customer-specific facts or circumstances that
indicate a likelihood of any material losses at this point during the fourth
quarter of 2020. To date, we have agreed to grant temporary rent deferrals that
represent 1.2% of our annualized rental revenues. On average, these deferrals
represent approximately two months of a customer's rent and are expected to be
repaid to us prior to the end of 2021.

For a discussion of the impact of the COVID-19 pandemic on our liquidity and balance sheet, see "Liquidity and Capital Resources" below.

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. A further 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 "Properties - Lease
Expirations" in our 2019 Annual Report on Form 10-K. Occupancy in our office
portfolio decreased from 92.0% at December 31, 2019 to 90.2% at September 30,
2020. We expect average occupancy for our office portfolio to be approximately
90% for the remainder of 2020. However, average occupancy will be lower, perhaps
significantly lower, if the COVID-19 pandemic causes vacancies and move-outs due
to (a) customers that default on their leases, file bankruptcy or otherwise
experience significant financial difficulty and/or (b) potential changes in
customer behavior, such as the continued social acceptance, desirability and
perceived economic benefits of work-from-home arrangements, which could
materially and negatively impact the future demand for office space over the
long-term.

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 2020 (we define second generation office leases as leases with
new customers and renewals of existing customers in office space that has been
previously occupied under our ownership and leases with respect to vacant space
in acquired buildings):
                                                                  New             Renewal           All Office
Leased space (in rentable square feet)                         189,826           469,877              659,703
Average term (in years - rentable square foot weighted)            7.2               4.3                  5.1
Base rents (per rentable square foot) (1)                     $  31.23          $  30.37          $     30.62
Rent concessions (per rentable square foot) (1)                  (1.43)            (1.08)               (1.18)
GAAP rents (per rentable square foot) (1)                     $  29.80          $  29.29          $     29.44
Tenant improvements (per rentable square foot) (1)            $   4.63          $   0.99          $      2.04
Leasing commissions (per rentable square foot) (1)            $   0.91

$ 0.50 $ 0.62

__________

(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 $29.44 per rentable square foot, 12.5% 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, 2020, no customer accounted for more than 3% of our cash revenues
other than the Federal Government and Bank of America, which accounted for 4.8%
and 3.9%, respectively, of our cash revenues on an annualized basis. Upon
stabilization of the MetLife III development project in Raleigh, it is expected
that MetLife will account for approximately 3.3% of our revenues based on
annualized cash revenues for September 2020.

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 levels, such as janitorial services and utilities, and expenses that
do not vary based on occupancy, 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, place in service 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
consist primarily 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. Same property NOI was $0.9 million, or 0.9%, higher in
the third quarter of 2020 as compared to 2019 due to a decrease of $5.1 million
in same property expenses offset by a decrease of $4.2 million in same property
revenues. As a result of reduced usage of our assets because of the COVID-19
pandemic, we expect same property NOI to be lower for the remainder of 2020 as
compared to 2019 as lower anticipated rental revenues would be expected to more
than offset an anticipated decrease in same property operating expenses. With
the fluidity of the COVID-19 pandemic and its uncertain impact on economic
activity, same property NOI could be further negatively impacted if the COVID-19
pandemic causes losses related to customer difficulties or slower than
originally anticipated leasing.

In addition to the effect of same property NOI, whether or not NOI increases
typically depends upon whether the NOI from our acquired properties and
development properties placed in service exceeds the NOI from property
dispositions. NOI was $0.8 million, or 0.7%, higher in the third quarter of 2020
as compared to 2019 due to acquisitions, higher same property NOI and
development properties placed in service, partly offset by NOI lost from
property dispositions. We expect NOI to be lower for the remainder of 2020 as
compared to 2019 due to NOI lost from property dispositions and lower same
property NOI, partly offset by acquisitions and development properties placed in
service. Like with same property NOI, NOI will be further negatively impacted if
the COVID-19 pandemic causes losses related to customer difficulties or slower
than originally anticipated leasing.

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 depends primarily 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
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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."

Liquidity and Capital Resources



We continue to maintain a conservative and flexible balance sheet. We believe we
have ample liquidity. As of October 20, 2020, we had approximately $120 million
of existing cash and zero drawn on our $600 million revolving credit facility,
which is scheduled to mature in January 2022. Assuming we are in compliance with
our covenants, we have an option to extend the maturity for two additional
six-month periods. At September 30, 2020, 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 37.8% and there were 106.8 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, which had $599.9 million of availability at
October 20, 2020. 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 the specific needs of customers. 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 and for the short-term
funding of our development and acquisition activity and, in certain instances,
the repayment of other debt. Continued ability to borrow under the revolving
credit facility allows us to quickly capitalize on strategic opportunities at
short-term interest rates.

Subject to potential losses in the remainder of 2020 related to customer financial difficulties due to the COVID-19 pandemic, we generally believe existing cash and rental and other revenues will continue to be sufficient to fund 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 and land infrastructure projects and funding acquisitions of
buildings and development land. Our expected future capital expenditures for
started and/or committed new development projects were approximately $137
million at September 30, 2020. Additionally, we may, from time to time, retire
outstanding equity and/or debt securities through redemptions, open market
repurchases, privately negotiated acquisitions or otherwise.

We expect to meet our long-term liquidity needs through a combination of:

•cash flow from operating activities;

•bank term loans and borrowings under our revolving credit facility;

•the issuance of unsecured debt;

•the issuance of secured debt;

•the 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 during the remainder of 2020 or 2021 except
for $150.0 million principal amount of 3.20% (3.363% effective rate) notes due
June 2021. During the remainder of 2020, we forecast funding approximately $64
million of our $503 million development pipeline, which was approximately 70%
funded as of September 30, 2020. We
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generally believe we will be able to satisfy these 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 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, in some cases, several years after commencement. Sales of
non-core assets could result in lower per share net income or FFO in any given
period in the event the resulting use of proceeds does not exceed the
capitalization rate on the sold properties.

                             Results of Operations

Three Months Ended September 30, 2020 and 2019

Rental and Other Revenues



Rental and other revenues were $6.4 million, or 3.4%, lower in the third quarter
of 2020 as compared to 2019 primarily due to property dispositions and lower
same property revenues, which decreased rental and other revenues by $11.5
million and $4.2 million, respectively. Same property rental and other revenues
were lower primarily due to lower cost recovery income and lower parking income
as a result of reduced usage of our assets because of the COVID-19 pandemic and
higher credit losses, partly offset by higher average GAAP rents per rentable
square foot. These decreases were partly offset by acquisitions and development
properties placed in service, which increased rental and other revenues by $8.9
million and $0.7 million, respectively. We expect rental and other revenues to
be lower for the remainder of 2020 as compared to 2019 due to lost revenue from
property dispositions and lower same property revenues as a result of reduced
usage of our assets because of the COVID-19 pandemic, partly offset by
acquisitions and development properties placed in service. Rental and other
revenues, particularly same property revenues, could be further adversely
affected, perhaps significantly, in the event customers default on their leases,
file bankruptcy and/or otherwise experience significant financial difficulty or
slower than originally anticipated leasing as a result of the COVID-19 pandemic.

Operating Expenses



Rental property and other expenses were $7.2 million, or 11.3%, lower in the
third quarter of 2020 as compared to 2019 primarily due to lower same property
operating expenses and property dispositions, which decreased operating expenses
by $5.1 million and $4.0 million, respectively. Same property operating expenses
were lower primarily due to lower utilities, contract services and repairs and
maintenance as a result of reduced usage of our assets because of the COVID-19
pandemic. These decreases were partly offset by acquisitions and development
properties placed in service, which increased operating expenses by $1.9 million
and $0.2 million, respectively. We expect rental property and other expenses to
be lower for the remainder of 2020 as compared to 2019 due to lower operating
expenses from property dispositions and lower same property operating expenses
as a result of reduced usage of our assets because of the COVID-19 pandemic,
partly offset by acquisitions and development properties placed in service.

Depreciation and amortization was $0.5 million, or 0.9%, lower in the third
quarter of 2020 as compared to 2019 primarily due to property dispositions,
partly offset by acquisitions and development properties placed in service. We
expect depreciation and amortization to be lower for the remainder of 2020 as
compared to 2019 for similar reasons.

We recorded aggregate impairments of real estate assets of $5.3 million in the
third quarter of 2019 as a result of shortened hold periods from classifying all
of our assets in Greensboro and Memphis as non-core. We recorded no such
impairments in 2020.

General and administrative expenses were $2.6 million, or 21.9%, lower in the
third quarter of 2020 as compared to 2019 primarily due to lower severance
costs, salaries and benefits associated with the closure of our Greensboro and
Memphis offices, lower expensed pre-development costs and lower executive
retirement and consulting costs. We expect general and
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administrative expenses to be lower for the remainder of 2020 as compared to
2019 due to lower severance costs and salaries associated with the closure of
our Greensboro and Memphis offices.

Interest Expense



Interest expense was $0.6 million, or 3.1%, lower in the third quarter of 2020
as compared to 2019 primarily due to higher capitalized interest and lower
average interest rates, partly offset by higher average debt balances. We expect
interest expense to be lower for the remainder of 2020 as compared to 2019 for
similar reasons.

Other Income/(Loss)

Other income/(loss) was a loss of $3.3 million in the third quarter of 2020 as compared to income of $0.2 million in 2019 primarily due to losses on debt extinguishment in 2020.

Gains on Disposition of Property



Gains on disposition of property were $6.5 million higher in the third quarter
of 2020 as compared to 2019 due to the net effect of the disposition activity in
such periods.

Equity in Earnings of Unconsolidated Affiliates



Equity in earnings of unconsolidated affiliates was $0.1 million, or 12.4%,
lower in the third quarter of 2020 as compared to 2019 primarily due to lower
leasing activity. We generally expect equity in earnings of unconsolidated
affiliates to be higher for the remainder of 2020 as compared to 2019 due to
higher average occupancy. However, equity in earnings of unconsolidated
affiliates could be adversely affected, perhaps significantly, in the event
customers of our unconsolidated affiliates default on their leases, file
bankruptcy and/or otherwise experience significant financial difficulty as a
result of the COVID-19 pandemic.

Earnings Per Common Share - Diluted



Diluted earnings per common share was $0.12 higher in the third quarter of 2020
as compared to 2019 due to an increase in net income for the reasons discussed
above.

Nine Months Ended September 30, 2020 and 2019

Laser Spine Institute



In the first quarter of 2019, we provided information on Laser Spine Institute,
which occupied a 176,000 square-foot, six-story building with structured parking
in Tampa's Westshore submarket, a BBD. The building, developed by us, had been
used by Laser Spine Institute for both its company headquarters and an
ambulatory surgery center. After the market closed on March 1, 2019, Laser Spine
Institute announced it would immediately discontinue its operations. This
unexpected announcement affected all of its locations nationwide. As a result of
this sudden closure, in the first quarter of 2019, we incurred $5.6 million of
credit losses on operating lease receivables and write-offs of $2.3 million of
lease incentives, $4.1 million of notes receivable and $11.6 million of tenant
improvements and deferred leasing costs.

Rental and Other Revenues



Rental and other revenues were $13.1 million, or 2.4%, higher in the nine months
ended September 30, 2020 as compared to 2019 primarily due to acquisitions,
higher same property revenues and development properties placed in service,
which increased rental and other revenues by $27.1 million, $8.8 million and
$6.5 million, respectively. Same property rental and other revenues were higher
primarily due to higher average GAAP rents per rentable square foot and no
credit losses and write-offs associated with Laser Spine Institute, partly
offset by lower cost recovery income and lower parking income as a result of
reduced usage of our assets because of the COVID-19 pandemic. These increases
were partly offset by lost revenue of $28.3 million from property dispositions.

Operating Expenses

Rental property and other expenses were $11.0 million, or 6.0%, lower in the nine months ended September 30, 2020 as compared to 2019 primarily due to property dispositions and lower same property operating expenses, which decreased


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operating expenses by $9.2 million and $7.8 million, respectively. Same property
operating expenses were lower primarily due to lower utilities, contract
services and repairs and maintenance as a result of reduced usage of our assets
because of the COVID-19 pandemic, partly offset by higher property taxes. These
decreases were partly offset by acquisitions and development properties placed
in service, which increased operating expenses by $5.7 million and $1.5 million,
respectively.

Depreciation and amortization was $8.6 million, or 4.5%, lower in the nine
months ended September 30, 2020 as compared to 2019 primarily due to accelerated
depreciation and amortization of tenant improvements and deferred leasing costs
associated with Laser Spine Institute in 2019 and property dispositions, partly
offset by acquisitions and development properties placed in service.

During the nine months ended September 30, 2020, we recorded an impairment of
real estate assets of $1.8 million, which resulted from a change in market-based
inputs and our assumptions about the use of the assets. During the nine months
ended September 30, 2019, we recorded aggregate impairments of real estate
assets of $5.8 million primarily as a result of shortened hold periods from
classifying all of our assets in Greensboro and Memphis as non-core.

General and administrative expenses were $3.5 million, or 10.4%, lower in the
nine months ended September 30, 2020 as compared to 2019 primarily due to lower
long-term equity incentive compensation, lower salaries and benefits (partly
offset by higher severance costs) associated with the closure of our Greensboro
and Memphis offices, lower expensed pre-development costs and lower executive
retirement and consulting costs.

Interest Expense

Interest expense was $1.4 million, or 2.3%, higher in the nine months ended September 30, 2020 as compared to 2019 primarily due to higher average debt balances, partly offset by lower average interest rates and higher capitalized interest.



Other Income/(Loss)

Other income/(loss) was a loss of $2.7 million in the nine months ended
September 30, 2020 primarily due to losses on debt extinguishment. Other
income/(loss) was a loss of $3.3 million in the nine months ended September 30,
2019 primarily due to the write-off of notes receivable associated with Laser
Spine Institute.

Gains on Disposition of Property



Gains on disposition of property were $153.2 million higher in the nine months
ended September 30, 2020 as compared to 2019 primarily due to the completion of
the first phase of our market rotation plan of exiting the Greensboro and
Memphis markets in 2020.

Equity in Earnings of Unconsolidated Affiliates

Equity in earnings of unconsolidated affiliates was $0.6 million, or 25.2%, higher in the nine months ended September 30, 2020 as compared to 2019 primarily due to higher average occupancy.

Earnings Per Common Share - Diluted

Diluted earnings per common share was $1.81 higher in the nine months ended September 30, 2020 as compared to 2019 due to an increase in net income for the reasons discussed above.


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