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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, 2022
or

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from [ ] to [ ]
hiw-20220930_g1.jpg
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 105,197,658 shares of Common Stock outstanding as of October 18, 2022.




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.

Certain information contained herein is presented as of October 18, 2022, 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, 2022 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 13 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, 2022

TABLE OF CONTENTS

Page
PART I - FINANCIAL INFORMATION
3
3
4
5
6
8
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS


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,
2022
December 31,
2021
Assets:
Real estate assets, at cost:
Land $ 548,720  $ 549,228 
Buildings and tenant improvements 5,867,137  5,718,169 
Development in-process 29,774  6,890 
Land held for development 231,911  215,257 
6,677,542  6,489,544 
Less-accumulated depreciation (1,562,374) (1,457,511)
Net real estate assets 5,115,168  5,032,033 
Real estate and other assets, net, held for sale —  3,518 
Cash and cash equivalents 23,055  23,152 
Restricted cash 6,038  8,046 
Accounts receivable 24,589  14,002 
Mortgages and notes receivable 1,103  1,227 
Accrued straight-line rents receivable 284,515  268,324 
Investments in and advances to unconsolidated affiliates 88,974  7,383 
Deferred leasing costs, net of accumulated amortization of $157,205 and $143,111, respectively
255,831  258,902 
Prepaid expenses and other assets, net of accumulated depreciation of $20,753 and $21,408, respectively
71,278  78,551 
Total Assets $ 5,870,551  $ 5,695,138 
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity:
Mortgages and notes payable, net $ 2,973,369  $ 2,788,915 
Accounts payable, accrued expenses and other liabilities 307,294  294,976 
Total Liabilities 3,280,663  3,083,891 
Commitments and contingencies
Noncontrolling interests in the Operating Partnership 64,219  111,689 
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), 28,821 shares issued and outstanding
28,821  28,821 
Common Stock, $.01 par value, 200,000,000 authorized shares;
105,197,658 and 104,892,780 shares issued and outstanding, respectively
1,052  1,049 
Additional paid-in capital 3,083,229  3,027,861 
Distributions in excess of net income available for common stockholders (608,181) (579,616)
Accumulated other comprehensive loss (1,137) (973)
Total Stockholders’ Equity 2,503,784  2,477,142 
Noncontrolling interests in consolidated affiliates 21,885  22,416 
Total Equity 2,525,669  2,499,558 
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity $ 5,870,551  $ 5,695,138 

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,
2022 2021 2022 2021
Rental and other revenues $ 206,997  $ 195,495  $ 617,216  $ 564,802 
Operating expenses:
Rental property and other expenses 66,334  60,567  190,125  172,982 
Depreciation and amortization 73,057  66,547  212,466  189,423 
Impairments of real estate assets 1,515  —  36,515  — 
General and administrative 9,586  10,350  32,733  30,409 
Total operating expenses 150,492  137,464  471,839  392,814 
Interest expense 26,392  21,986  75,812  60,755 
Other income 138  424  621  1,068 
Gains on disposition of property 9,402  38,572  63,546  80,371 
Equity in earnings of unconsolidated affiliates 457  546  1,083  1,614 
Net income 40,110  75,587  134,815  194,286 
Net (income) attributable to noncontrolling interests in the Operating Partnership (881) (1,967) (3,049) (5,084)
Net (income) attributable to noncontrolling interests in consolidated affiliates (357) (894) (880) (1,469)
Dividends on Preferred Stock (621) (621) (1,864) (1,864)
Net income available for common stockholders $ 38,251  $ 72,105  $ 129,022  $ 185,869 
Earnings per Common Share – basic:
Net income available for common stockholders $ 0.36  $ 0.69  $ 1.23  $ 1.79 
Weighted average Common Shares outstanding – basic 105,184  104,277  105,094  104,117 
Earnings per Common Share – diluted:
Net income available for common stockholders $ 0.36  $ 0.69  $ 1.23  $ 1.79 
Weighted average Common Shares outstanding – diluted 107,601  107,139  107,570  106,972 

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,
2022 2021 2022 2021
Comprehensive income:
Net income $ 40,110  $ 75,587  $ 134,815  $ 194,286 
Other comprehensive income/(loss):
Unrealized losses on cash flow hedges —  (6) —  (17)
Amortization of cash flow hedges (75) 129  (164) 377 
Total other comprehensive income/(loss) (75) 123  (164) 360 
Total comprehensive income 40,035  75,710  134,651  194,646 
Less-comprehensive (income) attributable to noncontrolling interests (1,238) (2,861) (3,929) (6,553)
Comprehensive income attributable to common stockholders $ 38,797  $ 72,849  $ 130,722  $ 188,093 

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, 2022
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 June 30, 2022 105,184,854  $ 1,052  $ 28,821  $ 3,065,208  $ (1,062) $ 21,528  $ (593,846) $ 2,521,701 
Issuances of Common Stock, net of issuance costs and tax withholdings
13,583  —  —  362  —  —  —  362 
Dividends on Common Stock ($0.50 per share)
—  —  —  —  —  (52,586) (52,586)
Dividends on Preferred Stock ($21.5625 per share)
—  —  —  —  —  (621) (621)
Adjustment of noncontrolling interests in the Operating Partnership to fair value
—  —  16,952  —  —  —  16,952 
Share-based compensation expense, net of forfeitures (779) —  —  707  —  —  —  707 
Net (income) attributable to noncontrolling interests in the Operating Partnership
—  —  —  —  —  (881) (881)
Net (income) attributable to noncontrolling interests in consolidated affiliates
—  —  —  —  357  (357) — 
Comprehensive income:
Net income —  —  —  —  —  40,110  40,110 
Other comprehensive loss —  —  —  (75) —  —  (75)
Total comprehensive income 40,035 
Balance at September 30, 2022 105,197,658  $ 1,052  $ 28,821  $ 3,083,229  $ (1,137) $ 21,885  $ (608,181) $ 2,525,669 

Nine Months Ended September 30, 2022
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, 2021 104,892,780  $ 1,049  $ 28,821  $ 3,027,861  $ (973) $ 22,416  $ (579,616) $ 2,499,558 
Issuances of Common Stock, net of issuance costs and tax withholdings 92,941  —  4,796  —  —  —  4,797 
Conversions of Common Units to Common Stock 30,909  1,251  1,251 
Dividends on Common Stock ($1.50 per share)
—  —  —  —  —  (157,587) (157,587)
Dividends on Preferred Stock ($64.6875 per share)
—  —  —  —  —  (1,864) (1,864)
Adjustment of noncontrolling interests in the Operating Partnership to fair value —  —  42,480  —  —  —  42,480 
Distributions to noncontrolling interests in consolidated affiliates —  —  —  —  (1,411) —  (1,411)
Issuances of restricted stock 181,807  —  —  —  —  —  —  — 
Share-based compensation expense, net of forfeitures (779) —  6,841  —  —  —  6,843 
Net (income) attributable to noncontrolling interests in the Operating Partnership —  —  —  —  —  (3,049) (3,049)
Net (income) attributable to noncontrolling interests in consolidated affiliates —  —  —  —  880  (880) — 
Comprehensive income:
Net income —  —  —  —  —  134,815  134,815 
Other comprehensive loss —  —  —  (164) —  —  (164)
Total comprehensive income 134,651 
Balance at September 30, 2022 105,197,658  $ 1,052  $ 28,821  $ 3,083,229  $ (1,137) $ 21,885  $ (608,181) $ 2,525,669 

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, 2021
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 June 30, 2021 104,209,513  $ 1,042  $ 28,821  $ 2,989,405  $ (1,225) $ 21,839  $ (672,239) $ 2,367,643 
Issuances of Common Stock, net of issuance costs and tax withholdings
168,311  —  7,506  —  —  —  7,508 
Conversions of Common Units to Common Stock 5,238  —  —  234  —  —  —  234 
Dividends on Common Stock ($0.50 per share)
—  —  —  —  —  (52,120) (52,120)
Dividends on Preferred Stock ($21.5625 per share)
—  —  —  —  —  (621) (621)
Adjustment of noncontrolling interests in the Operating Partnership to fair value
—  —  4,262  —  —  —  4,262 
Distributions to noncontrolling interests in consolidated affiliates
—  —  —  —  (560) —  (560)
Share-based compensation expense, net of forfeitures —  —  —  1,896  —  —  —  1,896 
Net (income) attributable to noncontrolling interests in the Operating Partnership
—  —  —  —  —  (1,967) (1,967)
Net (income) attributable to noncontrolling interests in consolidated affiliates
—  —  —  —  894  (894) — 
Comprehensive income:
Net income —  —  —  —  —  75,587  75,587 
Other comprehensive income —  —  —  123  —  —  123 
Total comprehensive income 75,710 
Balance at September 30, 2021 104,383,062  $ 1,044  $ 28,821  $ 3,003,303  $ (1,102) $ 22,173  $ (652,254) $ 2,401,985 

Nine Months Ended September 30, 2021
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, 2020 103,921,546  $ 1,039  $ 28,826  $ 2,993,946  $ (1,462) $ 22,046  $ (686,225) $ 2,358,170 
Issuances of Common Stock, net of issuance costs and tax withholdings 277,441  —  13,402  —  —  —  13,405 
Conversions of Common Units to Common Stock 6,238  —  —  278  —  —  —  278 
Dividends on Common Stock ($1.46 per share)
—  —  —  —  —  (151,898) (151,898)
Dividends on Preferred Stock ($64.6875 per share)
—  —  —  —  —  (1,864) (1,864)
Adjustment of noncontrolling interests in the Operating Partnership to fair value —  —  (11,072) —  —  —  (11,072)
Distributions to noncontrolling interests in consolidated affiliates —  —  —  —  (1,342) —  (1,342)
Issuances of restricted stock 184,584  —  —  —  —  —  —  — 
Redemptions/repurchases of Preferred Stock —  (5) —  —  —  —  (5)
Share-based compensation expense, net of forfeitures (6,747) —  6,749  —  —  —  6,751 
Net (income) attributable to noncontrolling interests in the Operating Partnership —  —  —  —  —  (5,084) (5,084)
Net (income) attributable to noncontrolling interests in consolidated affiliates —  —  —  —  1,469  (1,469) — 
Comprehensive income:
Net income —  —  —  —  —  194,286  194,286 
Other comprehensive income —  —  —  360  —  —  360 
Total comprehensive income 194,646 
Balance at September 30, 2021 104,383,062  $ 1,044  $ 28,821  $ 3,003,303  $ (1,102) $ 22,173  $ (652,254) $ 2,401,985 

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,
2022 2021
Operating activities:
Net income $ 134,815  $ 194,286 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 212,466  189,423 
Amortization of lease incentives and acquisition-related intangible assets and liabilities (342) (1,770)
Share-based compensation expense 6,843  6,751 
Net credit losses/(reversals) on operating lease receivables 3,167  (60)
Accrued interest on mortgages and notes receivable (67) (79)
Amortization of debt issuance costs 3,096  2,963 
Amortization of cash flow hedges (164) 377 
Amortization of mortgages and notes payable fair value adjustments (60) 882 
Impairments of real estate assets 36,515  — 
Losses on debt extinguishment —  134 
Net gains on disposition of property (63,546) (80,371)
Equity in earnings of unconsolidated affiliates (1,083) (1,614)
Distributions of earnings from unconsolidated affiliates 606  1,410 
Changes in operating assets and liabilities:
Accounts receivable (11,454) 5,753 
Prepaid expenses and other assets (2,150) (1,210)
Accrued straight-line rents receivable (20,558) (13,734)
Accounts payable, accrued expenses and other liabilities 21,795  6,077 
Net cash provided by operating activities 319,879  309,218 
Investing activities:
Investments in acquired real estate and related intangible assets, net of cash acquired (224,934) (270,160)
Investments in development in-process (26,220) (65,333)
Investments in tenant improvements and deferred leasing costs (90,910) (68,197)
Investments in building improvements (45,289) (34,452)
Investment in acquired controlling interest in unconsolidated affiliate —  (127,339)
Net proceeds from disposition of real estate assets 130,038  187,964 
Investments in mortgages and notes receivable (24) (56)
Repayments of mortgages and notes receivable 215  229 
Investments in and advances to unconsolidated affiliates (81,693) — 
Payments of earnest money deposits (3,000) — 
Changes in other investing activities 224  4,119 
Net cash used in investing activities (341,593) (373,225)
Financing activities:
Dividends on Common Stock (157,587) (151,898)
Redemptions/repurchases of Preferred Stock —  (5)
Redemptions of Common Units (3,101) — 
Dividends on Preferred Stock (1,864) (1,864)
Distributions to noncontrolling interests in the Operating Partnership (3,687) (4,144)
Distributions to noncontrolling interests in consolidated affiliates (1,411) (1,342)
Proceeds from the issuance of Common Stock 7,200  15,453 
Costs paid for the issuance of Common Stock (247) (355)
Repurchase of shares related to tax withholdings (2,156) (1,693)
Borrowings on revolving credit facility 275,000  310,000 
Repayments of revolving credit facility (235,000) (175,000)
Borrowings on mortgages and notes payable 350,000  200,000 
Repayments of mortgages and notes payable (204,807) (264,212)
Changes in debt issuance costs and other financing activities (2,731) (9,279)
Net cash provided by/(used in) financing activities 19,609  (84,339)
Net decrease in cash and cash equivalents and restricted cash $ (2,105) $ (148,346)

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,
2022 2021
Net decrease in cash and cash equivalents and restricted cash $ (2,105) $ (148,346)
Cash and cash equivalents and restricted cash at beginning of the period 31,198  189,244 
Cash and cash equivalents and restricted cash at end of the period $ 29,093  $ 40,898 

Reconciliation of cash and cash equivalents and restricted cash:

Nine Months Ended
September 30,
2022 2021
Cash and cash equivalents at end of the period $ 23,055  $ 27,871 
Restricted cash at end of the period 6,038  13,027 
Cash and cash equivalents and restricted cash at end of the period $ 29,093  $ 40,898 

Supplemental disclosure of cash flow information:
Nine Months Ended
September 30,
2022 2021
Cash paid for interest, net of amounts capitalized $ 82,908  $ 66,457 

Supplemental disclosure of non-cash investing and financing activities:
Nine Months Ended
September 30,
2022 2021
Unrealized losses on cash flow hedges $ —  $ (17)
Conversions of Common Units to Common Stock 1,251  278 
Changes in accrued capital expenditures (1)
(10,180) (20,150)
Write-off of fully depreciated real estate assets 42,817  52,158 
Write-off of fully amortized leasing costs 22,739  37,045 
Write-off of fully amortized debt issuance costs 1,216  4,158 
Adjustment of noncontrolling interests in the Operating Partnership to fair value (42,480) 11,072 
Assumption of mortgages and notes payable related to acquisition activities —  403,000 
Initial recognition of lease liabilities related to right of use assets —  5,310 
Future consideration in connection with the acquisition of land —  16,000 
__________

(1)Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities at September 30, 2022 and 2021 were $44.4 million and $45.8 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,
2022
December 31,
2021
Assets:
Real estate assets, at cost:
Land $ 548,720  $ 549,228 
Buildings and tenant improvements 5,867,137  5,718,169 
Development in-process 29,774  6,890 
Land held for development 231,911  215,257 
6,677,542  6,489,544 
Less-accumulated depreciation (1,562,374) (1,457,511)
Net real estate assets 5,115,168  5,032,033 
Real estate and other assets, net, held for sale —  3,518 
Cash and cash equivalents 23,055  23,152 
Restricted cash 6,038  8,046 
Accounts receivable 24,589  14,002 
Mortgages and notes receivable 1,103  1,227 
Accrued straight-line rents receivable 284,515  268,324 
Investments in and advances to unconsolidated affiliates 88,974  7,383 
Deferred leasing costs, net of accumulated amortization of $157,205 and $143,111, respectively
255,831  258,902 
Prepaid expenses and other assets, net of accumulated depreciation of $20,753 and $21,408, respectively
71,278  78,551 
Total Assets $ 5,870,551  $ 5,695,138 
Liabilities, Redeemable Operating Partnership Units and Capital:
Mortgages and notes payable, net $ 2,973,369  $ 2,788,915 
Accounts payable, accrued expenses and other liabilities 307,294  294,976 
Total Liabilities 3,280,663  3,083,891 
Commitments and contingencies
Redeemable Operating Partnership Units:
Common Units, 2,382,009 and 2,504,805 outstanding, respectively
64,219  111,689 
Series A Preferred Units (liquidation preference $1,000 per unit), 28,821 units issued and outstanding
28,821  28,821 
Total Redeemable Operating Partnership Units 93,040  140,510 
Capital:
Common Units:
General partner Common Units, 1,071,709 and 1,069,888 outstanding, respectively
24,759  24,492 
Limited partner Common Units, 103,717,140 and 103,414,083 outstanding, respectively
2,451,341  2,424,802 
Accumulated other comprehensive loss (1,137) (973)
Noncontrolling interests in consolidated affiliates 21,885  22,416 
Total Capital 2,496,848  2,470,737 
Total Liabilities, Redeemable Operating Partnership Units and Capital $ 5,870,551  $ 5,695,138 

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,
2022 2021 2022 2021
Rental and other revenues $ 206,997  $ 195,495  $ 617,216  $ 564,802 
Operating expenses:
Rental property and other expenses 66,334  60,567  190,125  172,982 
Depreciation and amortization 73,057  66,547  212,466  189,423 
Impairments of real estate assets 1,515  —  36,515  — 
General and administrative 9,586  10,350  32,733  30,409 
Total operating expenses 150,492  137,464  471,839  392,814 
Interest expense 26,392  21,986  75,812  60,755 
Other income 138  424  621  1,068 
Gains on disposition of property 9,402  38,572  63,546  80,371 
Equity in earnings of unconsolidated affiliates 457  546  1,083  1,614 
Net income 40,110  75,587  134,815  194,286 
Net (income) attributable to noncontrolling interests in consolidated affiliates (357) (894) (880) (1,469)
Distributions on Preferred Units (621) (621) (1,864) (1,864)
Net income available for common unitholders $ 39,132  $ 74,072  $ 132,071  $ 190,953 
Earnings per Common Unit – basic:
Net income available for common unitholders $ 0.37  $ 0.69  $ 1.23  $ 1.79 
Weighted average Common Units outstanding – basic 107,192  106,705  107,154  106,546 
Earnings per Common Unit – diluted:
Net income available for common unitholders $ 0.37  $ 0.69  $ 1.23  $ 1.79 
Weighted average Common Units outstanding – diluted 107,192  106,730  107,161  106,563 

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,
2022 2021 2022 2021
Comprehensive income:
Net income $ 40,110  $ 75,587  $ 134,815  $ 194,286 
Other comprehensive income/(loss):
Unrealized losses on cash flow hedges —  (6) —  (17)
Amortization of cash flow hedges (75) 129  (164) 377 
Total other comprehensive income/(loss) (75) 123  (164) 360 
Total comprehensive income 40,035  75,710  134,651  194,646 
Less-comprehensive (income) attributable to noncontrolling interests (357) (894) (880) (1,469)
Comprehensive income attributable to common unitholders $ 39,678  $ 74,816  $ 133,771  $ 193,177 

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, 2022
Common Units Accumulated
Other
Comprehensive Loss
Noncontrolling
Interests in
Consolidated
Affiliates
Total
General
Partners’
Capital
Limited
Partners’
Capital
Balance at June 30, 2022 $ 24,723  $ 2,447,691  $ (1,062) $ 21,528  $ 2,492,880 
Issuances of Common Units, net of issuance costs and tax withholdings 358  —  —  362 
Redemptions of Common Units (31) (3,070) —  —  (3,101)
Distributions on Common Units ($0.50 per unit)
(536) (53,037) —  —  (53,573)
Distributions on Preferred Units ($21.5625 per unit)
(7) (614) —  —  (621)
Share-based compensation expense, net of forfeitures 700  —  —  707 
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner 202  19,957  —  —  20,159 
Net (income) attributable to noncontrolling interests in consolidated affiliates (4) (353) —  357  — 
Comprehensive income:
Net income 401  39,709  —  —  40,110 
Other comprehensive loss —  —  (75) —  (75)
Total comprehensive income 40,035 
Balance at September 30, 2022 $ 24,759  $ 2,451,341  $ (1,137) $ 21,885  $ 2,496,848 

Nine Months Ended September 30, 2022
Common Units Accumulated
Other
Comprehensive Loss
Noncontrolling
Interests in
Consolidated
Affiliates
Total
General
Partners’
Capital
Limited
Partners’
Capital
Balance at December 31, 2021 $ 24,492  $ 2,424,802  $ (973) $ 22,416  $ 2,470,737 
Issuances of Common Units, net of issuance costs and tax withholdings 48  4,749  —  —  4,797 
Redemptions of Common Units (31) (3,070) —  —  (3,101)
Distributions on Common Units ($1.50 per unit)
(1,607) (159,053) —  —  (160,660)
Distributions on Preferred Units ($64.6875 per unit)
(19) (1,845) —  —  (1,864)
Share-based compensation expense, net of forfeitures 68  6,775  —  —  6,843 
Distributions to noncontrolling interests in consolidated affiliates —  —  —  (1,411) (1,411)
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner 469  46,387  —  —  46,856 
Net (income) attributable to noncontrolling interests in consolidated affiliates (9) (871) —  880  — 
Comprehensive income:
Net income 1,348  133,467  —  —  134,815 
Other comprehensive loss —  —  (164) —  (164)
Total comprehensive income 134,651 
Balance at September 30, 2022 $ 24,759  $ 2,451,341  $ (1,137) $ 21,885  $ 2,496,848 

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, 2021
Common Units Accumulated
Other
Comprehensive Loss
Noncontrolling
Interests in
Consolidated
Affiliates
Total
General
Partners’
Capital
Limited
Partners’
Capital
Balance at June 30, 2021 $ 23,182  $ 2,295,026  $ (1,225) $ 21,839  $ 2,338,822 
Issuances of Common Units, net of issuance costs and tax withholdings 75  7,433  —  —  7,508 
Distributions on Common Units ($0.50 per unit)
(533) (52,800) —  —  (53,333)
Distributions on Preferred Units ($21.5625 per unit)
(7) (614) —  —  (621)
Share-based compensation expense, net of forfeitures 19  1,877  —  —  1,896 
Distributions to noncontrolling interests in consolidated affiliates —  —  —  (560) (560)
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner 38  3,704  —  —  3,742 
Net (income) attributable to noncontrolling interests in consolidated affiliates (9) (885) —  894  — 
Comprehensive income:
Net income 756  74,831  —  —  75,587 
Other comprehensive income —  —  123  —  123 
Total comprehensive income 75,710 
Balance at September 30, 2021 $ 23,521  $ 2,328,572  $ (1,102) $ 22,173  $ 2,373,164 

Nine Months Ended September 30, 2021
Common Units Accumulated
Other
Comprehensive Loss
Noncontrolling
Interests in
Consolidated
Affiliates
Total
General
Partners’
Capital
Limited
Partners’
Capital
Balance at December 31, 2020 $ 23,087  $ 2,285,673  $ (1,462) $ 22,046  $ 2,329,344 
Issuances of Common Units, net of issuance costs and tax withholdings 134  13,271  —  —  13,405 
Distributions on Common Units ($1.46 per unit)
(1,554) (153,891) —  —  (155,445)
Distributions on Preferred Units ($64.6875 per unit)
(19) (1,845) —  —  (1,864)
Share-based compensation expense, net of forfeitures 68  6,683  —  —  6,751 
Distributions to noncontrolling interests in consolidated affiliates —  —  —  (1,342) (1,342)
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner (123) (12,208) —  —  (12,331)
Net (income) attributable to noncontrolling interests in consolidated affiliates (15) (1,454) 1,469  — 
Comprehensive income:
Net income 1,943  192,343  —  —  194,286 
Other comprehensive income —  —  360  —  360 
Total comprehensive income 194,646 
Balance at September 30, 2021 $ 23,521  $ 2,328,572  $ (1,102) $ 22,173  $ 2,373,164 

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,
2022 2021
Operating activities:
Net income $ 134,815  $ 194,286 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 212,466  189,423 
Amortization of lease incentives and acquisition-related intangible assets and liabilities (342) (1,770)
Share-based compensation expense 6,843  6,751 
Net credit losses/(reversals) on operating lease receivables 3,167  (60)
Accrued interest on mortgages and notes receivable (67) (79)
Amortization of debt issuance costs 3,096  2,963 
Amortization of cash flow hedges (164) 377 
Amortization of mortgages and notes payable fair value adjustments (60) 882 
Impairments of real estate assets 36,515  — 
Losses on debt extinguishment —  134 
Net gains on disposition of property (63,546) (80,371)
Equity in earnings of unconsolidated affiliates (1,083) (1,614)
Distributions of earnings from unconsolidated affiliates 606  1,410 
Changes in operating assets and liabilities:
Accounts receivable (11,454) 5,753 
Prepaid expenses and other assets (2,150) (1,210)
Accrued straight-line rents receivable (20,558) (13,734)
Accounts payable, accrued expenses and other liabilities 21,795  6,077 
Net cash provided by operating activities 319,879  309,218 
Investing activities:
Investments in acquired real estate and related intangible assets, net of cash acquired (224,934) (270,160)
Investments in development in-process (26,220) (65,333)
Investments in tenant improvements and deferred leasing costs (90,910) (68,197)
Investments in building improvements (45,289) (34,452)
Investment in acquired controlling interest in unconsolidated affiliate —  (127,339)
Net proceeds from disposition of real estate assets 130,038  187,964 
Investments in mortgages and notes receivable (24) (56)
Repayments of mortgages and notes receivable 215  229 
Investments in and advances to unconsolidated affiliates (81,693) — 
Payments of earnest money deposits (3,000) — 
Changes in other investing activities 224  4,119 
Net cash used in investing activities (341,593) (373,225)
Financing activities:
Distributions on Common Units (160,660) (155,445)
Redemptions/repurchases of Preferred Units —  (5)
Redemptions of Common Units (3,101) — 
Distributions on Preferred Units (1,864) (1,864)
Distributions to noncontrolling interests in consolidated affiliates (1,411) (1,342)
Proceeds from the issuance of Common Units 7,200  15,453 
Costs paid for the issuance of Common Units (247) (355)
Repurchase of units related to tax withholdings (2,156) (1,693)
Borrowings on revolving credit facility 275,000  310,000 
Repayments of revolving credit facility (235,000) (175,000)
Borrowings on mortgages and notes payable 350,000  200,000 
Repayments of mortgages and notes payable (204,807) (264,212)
Changes in debt issuance costs and other financing activities (3,345) (9,876)
Net cash provided by/(used in) financing activities 19,609  (84,339)
Net decrease in cash and cash equivalents and restricted cash $ (2,105) $ (148,346)

See accompanying notes to consolidated financial statements.
15


HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows - Continued
(Unaudited and in thousands)

Nine Months Ended
September 30,
2022 2021
Net decrease in cash and cash equivalents and restricted cash $ (2,105) $ (148,346)
Cash and cash equivalents and restricted cash at beginning of the period 31,198  189,244 
Cash and cash equivalents and restricted cash at end of the period $ 29,093  $ 40,898 

Reconciliation of cash and cash equivalents and restricted cash:

Nine Months Ended
September 30,
2022 2021
Cash and cash equivalents at end of the period $ 23,055  $ 27,871 
Restricted cash at end of the period 6,038  13,027 
Cash and cash equivalents and restricted cash at end of the period $ 29,093  $ 40,898 

Supplemental disclosure of cash flow information:

Nine Months Ended
September 30,
2022 2021
Cash paid for interest, net of amounts capitalized $ 82,908  $ 66,457 

Supplemental disclosure of non-cash investing and financing activities:

Nine Months Ended
September 30,
2022 2021
Unrealized losses on cash flow hedges $ —  $ (17)
Changes in accrued capital expenditures (1)
(10,180) (20,150)
Write-off of fully depreciated real estate assets 42,817  52,158 
Write-off of fully amortized leasing costs 22,739  37,045 
Write-off of fully amortized debt issuance costs 1,216  4,158 
Adjustment of Redeemable Common Units to fair value (47,470) 11,734 
Assumption of mortgages and notes payable related to acquisition activities —  403,000 
Initial recognition of lease liabilities related to right of use assets —  5,310 
Future consideration in connection with the acquisition of land —  16,000 
__________

(1)Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities at September 30, 2022 and 2021 were $44.4 million and $45.8 million, respectively.

See accompanying notes to consolidated financial statements.
16

HIGHWOODS PROPERTIES, INC.
HIGHWOODS REALTY LIMITED PARTNERSHIP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(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”). At September 30, 2022, we owned or had an interest in 28.1 million rentable square feet of in-service properties, 1.4 million rentable square feet of office properties under development and development land with approximately 5.0 million rentable square feet of potential office build out.

Capital Structure

The Company is the sole general partner of the Operating Partnership. At September 30, 2022, the Company owned all of the Preferred Units and 104.8 million, or 97.8%, of the Common Units in the Operating Partnership. Limited partners owned the remaining 2.4 million Common Units. During the nine months ended September 30, 2022, the Company redeemed 30,909 Common Units for a like number of shares of Common Stock and 91,887 Common Units for cash.

During 2020, we entered into separate equity distribution agreements in which the Company may offer and sell up to $300.0 million in aggregate gross sales price of shares of Common Stock. During the nine months ended September 30, 2022, the Company issued 130,011 shares of Common Stock under its equity distribution agreements at an average gross sales price of $46.50 per share and received net proceeds, after sales commissions, of $6.0 million. As a result of this activity and the redemptions discussed above, the percentage of Common Units owned by the Company increased from 97.7% at December 31, 2021 to 97.8% at September 30, 2022.

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.

During the third quarter of 2022, we acquired an office building using a special purpose entity owned by a qualified intermediary to facilitate one or more potential Section 1031 reverse exchanges under the Internal Revenue Code. To realize the tax deferrals available under the Section 1031 exchanges, we must complete the Section 1031 exchanges and take title to the to-be-exchanged buildings within 180 days of the acquisition date. We have determined that this entity is a variable interest entity of which we are the primary beneficiary; and therefore, we consolidate this entity. At September 30, 2022, we also have involvement with four additional entities we determined to be variable interest entities, one of which we are the primary beneficiary and is consolidated and three of which we are not the primary beneficiary and are not consolidated. (See Note 3).

All intercompany transactions and accounts have been eliminated.

The unaudited interim consolidated financial statements and accompanying unaudited consolidated financial information, in the opinion of management, 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
17

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 2021 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. We have stop-loss coverage to limit our exposure to significant claims on a per claim and annual aggregate basis. We determine our liabilities for claims, including incurred but not reported losses, based on all relevant information, including actuarial estimates of claim liabilities. At September 30, 2022, a reserve of $0.6 million was recorded to cover estimated reported and unreported claims.

Investment Activity

During the third quarter of 2022, we entered the Dallas market through the formation of two joint ventures with Granite Properties to develop the following Class AA assets:

Project BBD Own % Rentable Square Feet
Granite Park Six Frisco/Plano 50% 422,000
23Springs Uptown 50% 642,000

In connection with the formation, we agreed to contribute our 50.0% share of the equity required to fund the development projects, $55.7 million of which was funded on the formation date. We determined that we have a variable interest in each of these entities (see Note 3).

The Granite Park Six joint venture obtained a construction loan for $115.0 million, with an interest rate of SOFR plus 394 basis points and a maturity date of January 2026. In connection with this loan, the Granite Park Six joint venture obtained an interest rate hedge contract that effectively caps the underlying SOFR rate at 3.5% with respect to $95.2 million of any outstanding amounts. The cap expires in July 2024. No amounts were drawn on this loan as of September 30, 2022. The 23Springs joint venture obtained a construction loan for $265.0 million, with an interest rate of SOFR plus 355 basis points and a maturity date of March 2026. In connection with this loan, the 23Springs joint venture obtained an interest rate hedge contract that effectively caps the underlying SOFR rate at 3.5% with respect to $83.0 million of any outstanding amounts. The cap expires in April 2024. No amounts were drawn on this loan as of September 30, 2022.

We plan to fund our entry into the Dallas market, including our share of the equity required to construct Granite Park Six and 23Springs, by exiting the Pittsburgh market (see Note 4). Our Pittsburgh assets, which consist of 2,155,000 square feet of office that was 90.3% occupied as of September 30, 2022, represent approximately 6% of our overall net operating income.

Recently Issued Accounting Standards

The Financial Accounting Standards Board (“FASB”) issued an accounting standards update (“ASU”) that provides temporary optional expedients and exceptions to the guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities can also elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. The guidance in this ASU is optional and may be elected now through December 31, 2022 as reference rate reform activities occur. We will continue to evaluate the impact of this ASU; however, we currently expect to avail ourselves of such optional expedients and exceptions should our modified contracts meet the required criteria.
18


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. Office properties owned by us that are under lease are primarily located in Atlanta, Charlotte, Nashville, Orlando, Pittsburgh, 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 $203.9 million and $192.3 million during the three months ended September 30, 2022 and 2021, respectively, and $608.1 million and $554.6 million during the nine months ended September 30, 2022 and 2021, respectively. Included in these amounts are variable lease payments of $16.9 million and $13.7 million during the three months ended September 30, 2022 and 2021, respectively, and $51.9 million and $42.7 million during the nine months ended September 30, 2022 and 2021, respectively.

3.    Variable Interest Entities

The acquisition of SIX50 at Legacy Union in Charlotte was completed in the third quarter of 2022 using a special purpose entity owned by a qualified intermediary to facilitate one or more potential Section 1031 reverse exchanges under the Internal Revenue Code. As of September 30, 2022, this variable interest entity had total assets, liabilities and cash flows of $200.6 million, $3.3 million, and $0.5 million, respectively.

Consolidated Variable Interest Entity

In 2019, we and The Bromley Companies formed a joint venture to construct Midtown West, a 150,000 square foot, multi-customer office building located in the mixed-use Midtown Tampa project in Tampa’s Westshore submarket. Midtown West has an anticipated total investment of $71.3 million. Construction of Midtown West began in the third quarter of 2019 and the building was placed in service in the second quarter of 2021. At closing, we agreed to contribute cash of $20.0 million, which has been fully funded, in exchange for an 80.0% interest in the Midtown West joint venture and The Bromley Companies contributed land valued at $5.0 million in exchange for the remaining 20.0% interest. We also committed to provide a $46.3 million interest-only secured construction loan to the Midtown West joint venture that is scheduled to mature in June 2023. The loan bears interest at LIBOR plus 250 basis points. As of September 30, 2022, $37.7 million under the loan has been funded.

We determined that we have a variable interest in the Midtown West joint venture primarily because the entity was designed to pass along interest rate risk, equity price risk and operation risk to us as both a debt and an equity holder and The Bromley Companies as an equity holder. The Midtown West joint venture was further determined to be a variable interest entity as it requires additional subordinated financial support in the form of a loan because the initial equity investment provided by us and The Bromley Companies is not sufficient to finance its planned investments and operations. We, as majority owner and managing member and through our control rights as set forth in the joint venture’s governance documents, were determined to be the primary beneficiary as we have both the power to direct the activities that most significantly affect the entity (primarily lease rates, property operations and capital expenditures) and significant economic exposure through our equity investment and loan commitment. As such, the Midtown West joint venture is consolidated and all intercompany transactions and accounts are eliminated. The following table sets forth the assets and liabilities of the Midtown West joint venture included on our Consolidated Balance Sheets:

September 30,
2022
December 31,
2021
Net real estate assets $ 60,917  $ 53,191 
Cash and cash equivalents $ 1,246  $ 389 
Accounts receivable $ 166  $ — 
Accrued straight-line rents receivable $ 720  $ 121 
Deferred leasing costs, net $ 2,251  $ 1,519 
Prepaid expenses and other assets, net $ 160  $ 163 
Accounts payable, accrued expenses and other liabilities $ 1,476  $ 646 

The assets of the Midtown West joint venture can be used only to settle obligations of the joint venture, and its creditors have no recourse to our wholly owned assets.

19

Unconsolidated Variable Interest Entities

During the fourth quarter of 2021, we and Brand Properties, LLC (“Brand”) formed a joint venture to construct 2827 Peachtree, a 135,000 square foot, multi-customer office building located in Atlanta’s Buckhead submarket. 2827 Peachtree has an anticipated total investment of $79.0 million. Construction of 2827 Peachtree began in the first quarter of 2022 with a scheduled completion date in the third quarter of 2023. At closing, we agreed to contribute cash of $13.3 million, which has been fully funded, in exchange for a 50.0% interest in the 2827 Peachtree joint venture and Brand contributed land valued at $7.7 million and cash of $5.6 million in exchange for the remaining 50.0% interest. We also committed to provide a $49.6 million interest-only secured construction loan to the 2827 Peachtree joint venture that is scheduled to mature in December 2024 with an option to extend for one year. The loan bears interest at LIBOR plus 300 basis points. As of September 30, 2022, no amounts under the loan have been funded.

We determined that we have a variable interest in the 2827 Peachtree joint venture primarily because the entity was designed to pass along interest rate risk, equity price risk and operation risk to us as both a debt and equity holder and Brand as an equity holder. The 2827 Peachtree joint venture was further determined to be a variable interest entity as it requires additional subordinated financial support in the form of a loan because the initial equity investment provided by us and Brand is not sufficient to finance its planned investments and operations. We concluded we do not have the power to direct matters that most significantly impact the activities of the entity and therefore do not qualify as the primary beneficiary. Accordingly, the entity is not consolidated. At September 30, 2022, our risk of loss with respect to this arrangement was limited to the carrying value of the investment balance of $13.7 million as no amounts were outstanding under the loan. The assets of the 2827 Peachtree joint venture can be used only to settle obligations of the joint venture and its creditors have no recourse to our wholly owned assets.

We also determined that we have a variable interest in both the Granite Park Six and 23Springs joint ventures primarily because the entities were designed to pass along interest rate risk, equity price risk and operation risk to us and Granite Properties as equity holders. The joint ventures were further determined to be variable interest entities as they require additional subordinated financial support in the form of loans because the initial equity investments provided by us and Granite Properties are not sufficient to finance the planned investments and operations. We concluded we do not have the power to direct matters that most significantly impact the activities of either entity and therefore do not qualify as the primary beneficiary. Accordingly, the entities are not consolidated. At September 30, 2022, our risk of loss with respect to these arrangements was limited to the carrying value of each investment balance as no amounts were outstanding under the loans. Our investment balances were $36.1 million and $37.9 million at September 30, 2022 for Granite Park Six and 23Springs, respectively. The assets of the Granite Park Six and 23Springs joint ventures can be used only to settle obligations of the respective joint venture and their creditors have no recourse to our wholly owned assets.

20


4.    Real Estate Assets

Acquisitions

During the third quarter of 2022, we acquired SIX50 at Legacy Union, a 367,000 square foot trophy office building in Charlotte’s Uptown CBD submarket, for a net purchase price of $198.0 million. The assets acquired and liabilities assumed were recorded at relative fair value as determined by management, with the assistance of third party specialists, based on information available at the acquisition date and on current assumptions as to future operations.

During the second quarter of 2022, we acquired land in Charlotte for an aggregate purchase price, including capitalized acquisition costs, of $27.0 million.

Dispositions

During the third quarter of 2022, we sold land in Richmond for a sales price of $23.3 million and recorded a gain on disposition of property of $9.4 million.

During the second quarter of 2022, we sold office buildings and land in Atlanta, Greensboro and Tampa for an aggregate sales price of $100.7 million (before closing credits to buyers of $1.1 million) and recorded aggregate gains on disposition of property of $50.0 million.

During the first quarter of 2022, we sold land in Tampa for a sales price of $9.6 million and recorded a gain on disposition of property of $4.1 million.

Impairments

Because we classified all of our assets in Pittsburgh as non-core, we recorded the following impairment charges in 2022:

During the third quarter of 2022, we recorded an impairment charge of $1.5 million to lower the carrying amount of a land parcel in Pittsburgh to its estimated fair value less costs to sell; and

During the second quarter of 2022, we recorded an impairment charge of $35.0 million to lower the carrying amount of EQT Plaza (including accrued straight-line rents receivable and deferred leasing costs) to its estimated fair value less costs to sell. EQT Plaza is a 616,000 square foot office building located in the heart of Pittsburgh’s CBD. EQT Corporation’s lease of 317,000 square feet at EQT Plaza is scheduled to expire in September 2024.

21


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,
2022
December 31,
2021
Assets:
Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets) $ 413,036  $ 402,013 
Less accumulated amortization (157,205) (143,111)
$ 255,831  $ 258,902 
Liabilities (in accounts payable, accrued expenses and other liabilities):
Acquisition-related below market lease liabilities $ 55,371  $ 57,703 
Less accumulated amortization (28,633) (28,978)
$ 26,738  $ 28,725 

The following table sets forth amortization of intangible assets and below market lease liabilities:

Three Months Ended
September 30,
Nine Months Ended
September 30,
2022 2021 2022 2021
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization) $ 11,425  $ 10,070  $ 33,603  $ 27,267 
Amortization of lease incentives (in rental and other revenues) $ 500  $ 424  $ 1,369  $ 1,317 
Amortization of acquisition-related intangible assets (in rental and other revenues) $ 797  $ 636  $ 2,448  $ 1,154 
Amortization of acquisition-related below market lease liabilities (in rental and other revenues) $ (1,473) $ (1,391) $ (4,159) $ (4,241)

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 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, 2022 $ 11,068  $ 488  $ 865  $ (1,275)
2023 40,696  1,623  3,279  (4,918)
2024 35,514  1,554  3,065  (4,278)
2025 28,586  1,478  2,202  (2,764)
2026 24,614  1,279  1,868  (2,464)
Thereafter 86,384  4,089  7,179  (11,039)
$ 226,862  $ 10,511  $ 18,458  $ (26,738)
Weighted average remaining amortization periods as of September 30, 2022 (in years) 7.9 7.9