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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 June 30, 2023
or

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from [ ] to [ ]
logotree14.jpg
HIGHWOODS PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland001-1310056-1871668
(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 Carolina000-2173156-1869557
(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 ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $.01 par value, of Highwoods Properties, Inc.HIWNew 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 105,675,624 shares of Common Stock outstanding as of July 18, 2023.




EXPLANATORY NOTE

We refer to Highwoods Properties, Inc. as the “Company,” Highwoods Realty Limited Partnership as the “Operating Partnership,” the Company’s common stock as “Common Stock” or “Common Shares,” the Company’s preferred stock as “Preferred Stock” or “Preferred Shares,” the Operating Partnership’s common partnership interests as “Common Units” and the Operating Partnership’s preferred partnership interests as “Preferred Units.” References to “we” and “our” mean the Company and the Operating Partnership, collectively, unless the context indicates otherwise.

The Company conducts its activities through the Operating Partnership and is its sole general partner. The partnership agreement provides that the Operating Partnership will assume and pay when due, or reimburse the Company for payment of, all costs and expenses relating to the ownership and operations of, or for the benefit of, the Operating Partnership. The partnership agreement further provides that all expenses of the Company are deemed to be incurred for the benefit of the Operating Partnership.

Except as otherwise noted, all property-level operational information presented herein includes in-service wholly owned properties and in-service properties owned by consolidated joint ventures (at 100%). Development projects are not considered in-service properties until such projects are completed and stabilized. Stabilization occurs at the beginning of the first quarter after the earlier of: (1) the projected stabilization date, or (2) the date on which a project's occupancy generally exceeds 93%.

Certain information contained herein is presented as of July 18, 2023, 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 June 30, 2023 of the Company and the Operating Partnership. We believe combining the quarterly reports into this single report results in the following benefits:

combined reports better reflect how management and investors view the business as a single operating unit;

combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;

combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and

combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

Consolidated Financial Statements;

Note 11 to Consolidated Financial Statements - Earnings Per Share and Per Unit;

Item 4 - Controls and Procedures; and

Item 6 - Certifications of CEO and CFO Pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.





HIGHWOODS PROPERTIES, INC.
HIGHWOODS REALTY LIMITED PARTNERSHIP

QUARTERLY REPORT FOR THE PERIOD ENDED JUNE 30, 2023

TABLE OF CONTENTS

Page
PART I - FINANCIAL INFORMATION
PART II - OTHER INFORMATION
ITEM 1A. RISK FACTORS
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)
June 30,
2023
December 31,
2022
Assets:
Real estate assets, at cost:
Land$538,437 $548,720 
Buildings and tenant improvements5,884,834 5,909,754 
Development in-process64,966 46,735 
Land held for development228,390 231,218 
6,716,627 6,736,427 
Less-accumulated depreciation(1,661,609)(1,609,502)
Net real estate assets5,055,018 5,126,925 
Real estate and other assets, net, held for sale4,692  
Cash and cash equivalents17,011 21,357 
Restricted cash5,350 4,748 
Accounts receivable20,552 25,481 
Mortgages and notes receivable9,891 1,051 
Accrued straight-line rents receivable303,781 293,674 
Investments in and advances to unconsolidated affiliates294,160 269,221 
Deferred leasing costs, net of accumulated amortization of $168,187 and $163,751, respectively
239,193 252,828 
Prepaid expenses and other assets, net of accumulated depreciation of $23,417 and $21,660, respectively
78,053 68,091 
Total Assets$6,027,701 $6,063,376 
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity:
Mortgages and notes payable, net$3,198,081 $3,197,215 
Accounts payable, accrued expenses and other liabilities297,601 301,184 
Total Liabilities3,495,682 3,498,399 
Commitments and contingencies
Noncontrolling interests in the Operating Partnership56,206 65,977 
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), 28,811 and 28,821 shares issued and outstanding, respectively
28,811 28,821 
Common Stock, $.01 par value, 200,000,000 authorized shares;
105,473,213 and 105,210,858 shares issued and outstanding, respectively
1,055 1,052 
Additional paid-in capital3,095,272 3,081,330 
Distributions in excess of net income available for common stockholders(652,436)(633,227)
Accumulated other comprehensive loss(1,360)(1,211)
Total Stockholders’ Equity2,471,342 2,476,765 
Noncontrolling interests in consolidated affiliates4,471 22,235 
Total Equity2,475,813 2,499,000 
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity$6,027,701 $6,063,376 

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 June 30,Six Months Ended June 30,
2023202220232022
Rental and other revenues$207,291 $203,841 $420,043 $410,219 
Operating expenses:
Rental property and other expenses66,307 62,369 132,038 123,791 
Depreciation and amortization75,018 69,742 145,651 139,409 
Impairments of real estate assets 35,000  35,000 
General and administrative9,380 9,591 21,795 23,147 
Total operating expenses150,705 176,702 299,484 321,347 
Interest expense34,063 25,027 67,161 49,420 
Other income1,181 120 2,328 483 
Gains on disposition of property19,368 50,044 19,818 54,144 
Gain on deconsolidation of affiliate  11,778  
Equity in earnings of unconsolidated affiliates798 326 1,502 626 
Net income43,870 52,602 88,824 94,705 
Net (income) attributable to noncontrolling interests in the Operating Partnership(947)(1,203)(1,933)(2,168)
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates(4)(266)483 (523)
Dividends on Preferred Stock(621)(622)(1,242)(1,243)
Net income available for common stockholders$42,298 $50,511 $86,132 $90,771 
Earnings per Common Share – basic:
Net income available for common stockholders$0.40 $0.48 $0.82 $0.86 
Weighted average Common Shares outstanding – basic105,457 105,163 105,373 105,049 
Earnings per Common Share – diluted:
Net income available for common stockholders$0.40 $0.48 $0.82 $0.86 
Weighted average Common Shares outstanding – diluted107,808 107,654 107,728 107,554 

See accompanying notes to consolidated financial statements.
4

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Comprehensive Income
(Unaudited and in thousands)
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Comprehensive income:
Net income$43,870 $52,602 $88,824 $94,705 
Other comprehensive loss:
Amortization of cash flow hedges(74)(74)(149)(89)
Total other comprehensive loss(74)(74)(149)(89)
Total comprehensive income43,796 52,528 88,675 94,616 
Less-comprehensive (income) attributable to noncontrolling interests(951)(1,469)(1,450)(2,691)
Comprehensive income attributable to common stockholders$42,845 $51,059 $87,225 $91,925 

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 June 30, 2023
Number of Common SharesCommon StockSeries A Cumulative Redeemable Preferred SharesAdditional Paid-In CapitalAccumulated Other Compre-hensive LossNon-controlling Interests in Consolidated AffiliatesDistributions in Excess of Net Income Available for Common StockholdersTotal
Balance as of March 31, 2023105,457,508 $1,055 $28,811 $3,096,126 $(1,286)$4,467 $(642,014)$2,487,159 
Issuances of Common Stock, net of issuance costs and tax withholdings
18,572  — 265 — — — 265 
Dividends on Common Stock ($0.50 per share)
— — — — — (52,720)(52,720)
Dividends on Preferred Stock ($21.5625 per share)
— — — — — (621)(621)
Adjustment of noncontrolling interests in the Operating Partnership to fair value
— — (1,915)— — — (1,915)
Issuances of restricted stock1,100 — — — — — —  
Share-based compensation expense, net of forfeitures(3,967) — 796 — — — 796 
Net (income) attributable to noncontrolling interests in the Operating Partnership
— — — — — (947)(947)
Net (income) attributable to noncontrolling interests in consolidated affiliates— — — — 4 (4) 
Comprehensive income:
Net income— — — — — 43,870 43,870 
Other comprehensive loss— — — (74)— — (74)
Total comprehensive income43,796 
Balance as of June 30, 2023105,473,213 $1,055 $28,811 $3,095,272 $(1,360)$4,471 $(652,436)$2,475,813 

Six Months Ended June 30, 2023
Number of Common SharesCommon StockSeries A Cumulative Redeemable Preferred SharesAdditional Paid-In CapitalAccumulated Other Compre-hensive LossNon-controlling Interests in Consolidated AffiliatesDistributions in Excess of Net Income Available for Common StockholdersTotal
Balance at December 31, 2022105,210,858 $1,052 $28,821 $3,081,330 $(1,211)$22,235 $(633,227)$2,499,000 
Issuances of Common Stock, net of issuance costs and tax withholdings
(7,511) — (563)— — — (563)
Dividends on Common Stock ($1.00 per share)
— — — — — (105,341)(105,341)
Dividends on Preferred Stock ($43.1250 per share)
— — — — — (1,242)(1,242)
Adjustment of noncontrolling interests in the Operating Partnership to fair value
— — 9,187 — — — 9,187 
Issuances of restricted stock273,833 — — — — — —  
Redemptions/repurchases of Preferred Stock— (10)— — — — (10)
Share-based compensation expense, net of forfeitures(3,967)3 — 5,318 — — — 5,321 
Net (income) attributable to noncontrolling interests in the Operating Partnership
— — — — — (1,933)(1,933)
Net loss attributable to noncontrolling interests in consolidated affiliates— — — — (483)483  
Deconsolidation of affiliate— — — — (17,281)— (17,281)
Comprehensive income:
Net income— — — — — 88,824 88,824 
Other comprehensive loss— — — (149)— — (149)
Total comprehensive income88,675 
Balance as of June 30, 2023105,473,213 $1,055 $28,811 $3,095,272 $(1,360)$4,471 $(652,436)$2,475,813 

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 June 30, 2022
Number of Common SharesCommon StockSeries A Cumulative Redeemable Preferred SharesAdditional Paid-In CapitalAccumulated Other Compre-hensive LossNon-controlling Interests in Consolidated AffiliatesDistributions in Excess of Net Income Available for Common StockholdersTotal
Balance as of March 31, 2022105,143,984 $1,051 $28,821 $3,034,155 $(988)$21,262 $(591,780)$2,492,521 
Issuances of Common Stock, net of issuance costs and tax withholdings
9,537 1 — 261 — — — 262 
Conversions of Common Units to Common Stock30,909 1,251 1,251 
Dividends on Common Stock ($0.50 per share)
— — — — — (52,577)(52,577)
Dividends on Preferred Stock ($21.5625 per share)
— — — — — (622)(622)
Adjustment of noncontrolling interests in the Operating Partnership to fair value
— — 28,696 — — — 28,696 
Issuances of restricted stock424 — — — — — —  
Share-based compensation expense, net of forfeitures—  — 845 — — — 845 
Net (income) attributable to noncontrolling interests in the Operating Partnership— — — — — (1,203)(1,203)
Net (income) attributable to noncontrolling interests in consolidated affiliates— — — — 266 (266) 
Comprehensive income:
Net income— — — — — 52,602 52,602 
Other comprehensive loss— — — (74)— — (74)
Total comprehensive income52,528 
Balance as of June 30, 2022105,184,854 $1,052 $28,821 $3,065,208 $(1,062)$21,528 $(593,846)$2,521,701 

Six Months Ended June 30, 2022
Number of Common SharesCommon StockSeries A Cumulative Redeemable Preferred SharesAdditional Paid-In CapitalAccumulated Other Compre-hensive LossNon-controlling Interests in Consolidated AffiliatesDistributions in Excess of Net Income Available for Common StockholdersTotal
Balance at December 31, 2021104,892,780 $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
79,358 1 — 4,434 — — — 4,435 
Conversions of Common Units to Common Stock30,909 1,251 1,251 
Dividends on Common Stock ($1.00 per share)
— — — — — (105,001)(105,001)
Dividends on Preferred Stock ($43.125 per share)
— — — — — (1,243)(1,243)
Adjustment of noncontrolling interests in the Operating Partnership to fair value
— — 25,528 — — — 25,528 
Distributions to noncontrolling interests in consolidated affiliates
— — — — (1,411)— (1,411)
Issuances of restricted stock181,807 — — — — — —  
Share-based compensation expense, net of forfeitures— 2 — 6,134 — — — 6,136 
Net (income) attributable to noncontrolling interests in the Operating Partnership
— — — — — (2,168)(2,168)
Net (income) attributable to noncontrolling interests in consolidated affiliates— — — — 523 (523) 
Comprehensive income:
Net income— — — — — 94,705 94,705 
Other comprehensive loss— — — (89)— — (89)
Total comprehensive income94,616 
Balance as of June 30, 2022105,184,854 $1,052 $28,821 $3,065,208 $(1,062)$21,528 $(593,846)$2,521,701 

See accompanying notes to consolidated financial statements.
7

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Cash Flows
(Unaudited and in thousands)
Six Months Ended June 30,
20232022
Operating activities:
Net income$88,824 $94,705 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization145,651 139,409 
Amortization of lease incentives and acquisition-related intangible assets and liabilities494 (166)
Share-based compensation expense5,321 6,136 
Net credit losses on operating lease receivables1,351 2,625 
Accrued interest on mortgages and notes receivable(390)(46)
Amortization of debt issuance costs2,398 2,040 
Amortization of cash flow hedges(149)(89)
Amortization of mortgages and notes payable fair value adjustments(172)(41)
Impairments of real estate assets 35,000 
Net gains on disposition of property(19,818)(54,144)
Gain on deconsolidation of controlling interest in affiliate(11,778) 
Equity in earnings of unconsolidated affiliates(1,502)(626)
Distributions of earnings from unconsolidated affiliates988 598 
Changes in operating assets and liabilities:
Accounts receivable2,103 (3,758)
Prepaid expenses and other assets(8,503)(6,534)
Accrued straight-line rents receivable(15,394)(13,053)
Accounts payable, accrued expenses and other liabilities(8,304)(158)
Net cash provided by operating activities181,120 201,898 
Investing activities:
Investments in acquired real estate and related intangible assets, net of cash acquired(18,544)(26,977)
Investments in development in-process(18,658)(20,869)
Investments in tenant improvements and deferred leasing costs(43,720)(60,661)
Investments in building improvements(43,848)(26,528)
Net proceeds from disposition of real estate assets51,538 107,362 
Distributions of capital from unconsolidated affiliates1,839  
Investments in mortgages and notes receivable(9,763)(24)
Repayments of mortgages and notes receivable116 144 
Investments in and advances to unconsolidated affiliates(77,736)(7,500)
Repayments of preferred equity from unconsolidated affiliates80,000  
Changes in earnest money deposits15,500 (37,500)
Changes in other investing activities(4,898)2,684 
Net cash used in investing activities(68,174)(69,869)
Financing activities:
Dividends on Common Stock(105,341)(105,001)
Redemptions/repurchases of Preferred Stock(10) 
Redemptions of Common Units(163) 
Dividends on Preferred Stock(1,242)(1,243)
Distributions to noncontrolling interests in the Operating Partnership(2,354)(2,495)
Distributions to noncontrolling interests in consolidated affiliates (1,411)
Proceeds from the issuance of Common Stock988 6,839 
Costs paid for the issuance of Common Stock(226)(248)
Repurchase of shares related to tax withholdings(1,325)(2,156)
Borrowings on revolving credit facility159,000 145,000 
Repayments of revolving credit facility(355,000)(125,000)
Borrowings on mortgages and notes payable200,000 200,000 
Repayments of mortgages and notes payable(3,326)(203,187)
Payments for debt issuance costs and other financing activities(1,305)(2,657)
Net cash used in financing activities(110,304)(91,559)
Net increase in cash and cash equivalents and restricted cash$2,642 $40,470 
See accompanying notes to consolidated financial statements.
8

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Cash Flows – Continued
(Unaudited and in thousands)
Six Months Ended June 30,
20232022
Net increase in cash and cash equivalents and restricted cash$2,642 $40,470 
Cash from deconsolidation of controlling interest in affiliate(6,386) 
Cash and cash equivalents and restricted cash at beginning of the period26,105 31,198 
Cash and cash equivalents and restricted cash at end of the period$22,361 $71,668 

Reconciliation of cash and cash equivalents and restricted cash:

Six Months Ended June 30,
20232022
Cash and cash equivalents at end of the period$17,011 $25,045 
Restricted cash at end of the period5,350 46,623 
Cash and cash equivalents and restricted cash at end of the period$22,361 $71,668 

Supplemental disclosure of cash flow information:
Six Months Ended June 30,
20232022
Cash paid for interest, net of amounts capitalized$63,858 $47,762 

Supplemental disclosure of non-cash investing and financing activities:
Six Months Ended June 30,
20232022
Conversions of Common Units to Common Stock 1,251 
Changes in accrued capital expenditures (1)
7,067 (20,066)
Write-off of fully depreciated real estate assets40,556 21,827 
Write-off of fully amortized leasing costs19,169 11,628 
Write-off of fully amortized debt issuance costs 1,216 
Adjustment of noncontrolling interests in the Operating Partnership to fair value(9,187)(25,528)
__________

(1)Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities as of June 30, 2023 and 2022 were $60.5 million and $34.5 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)
June 30,
2023
December 31,
2022
Assets:
Real estate assets, at cost:
Land$538,437 $548,720 
Buildings and tenant improvements5,884,834 5,909,754 
Development in-process64,966 46,735 
Land held for development228,390 231,218 
6,716,627 6,736,427 
Less-accumulated depreciation(1,661,609)(1,609,502)
Net real estate assets5,055,018 5,126,925 
Real estate and other assets, net, held for sale4,692  
Cash and cash equivalents17,011 21,357 
Restricted cash5,350 4,748 
Accounts receivable20,552 25,481 
Mortgages and notes receivable9,891 1,051 
Accrued straight-line rents receivable303,781 293,674 
Investments in and advances to unconsolidated affiliates294,160 269,221 
Deferred leasing costs, net of accumulated amortization of $168,187 and $163,751, respectively
239,193 252,828 
Prepaid expenses and other assets, net of accumulated depreciation of $23,417 and $21,660, respectively
78,053 68,091 
Total Assets$6,027,701 $6,063,376 
Liabilities, Redeemable Operating Partnership Units and Capital:
Mortgages and notes payable, net$3,198,081 $3,197,215 
Accounts payable, accrued expenses and other liabilities297,601 301,184 
Total Liabilities3,495,682 3,498,399 
Commitments and contingencies
Redeemable Operating Partnership Units:
Common Units, 2,350,715 and 2,358,009 outstanding, respectively
56,206 65,977 
Series A Preferred Units (liquidation preference $1,000 per unit), 28,811 and 28,821 units issued and outstanding, respectively
28,811 28,821 
Total Redeemable Operating Partnership Units85,017 94,798 
Capital:
Common Units:
General partner Common Units, 1,074,151 and 1,071,601 outstanding, respectively
24,439 24,492 
Limited partner Common Units, 103,990,253 and 103,730,448 outstanding, respectively
2,419,452 2,424,663 
Accumulated other comprehensive loss(1,360)(1,211)
Noncontrolling interests in consolidated affiliates4,471 22,235 
Total Capital2,447,002 2,470,179 
Total Liabilities, Redeemable Operating Partnership Units and Capital$6,027,701 $6,063,376 

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 June 30,Six Months Ended June 30,
2023202220232022
Rental and other revenues$207,291 $203,841 $420,043 $410,219 
Operating expenses:
Rental property and other expenses66,307 62,369 132,038 123,791 
Depreciation and amortization75,018 69,742 145,651 139,409 
Impairments of real estate assets 35,000  35,000 
General and administrative9,380 9,591 21,795 23,147 
Total operating expenses150,705 176,702 299,484 321,347 
Interest expense34,063 25,027 67,161 49,420 
Other income1,181 120 2,328 483 
Gains on disposition of property19,368 50,044 19,818 54,144 
Gain on deconsolidation of controlling interest in affiliate  11,778  
Equity in earnings of unconsolidated affiliates798 326 1,502 626 
Net income43,870 52,602 88,824 94,705 
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates(4)(266)483 (523)
Distributions on Preferred Units(621)(622)(1,242)(1,243)
Net income available for common unitholders$43,245 $51,714 $88,065 $92,939 
Earnings per Common Unit – basic:
Net income available for common unitholders$0.40 $0.48 $0.82 $0.87 
Weighted average Common Units outstanding – basic107,399 107,240 107,319 107,135 
Earnings per Common Unit – diluted:
Net income available for common unitholders$0.40 $0.48 $0.82 $0.87 
Weighted average Common Units outstanding – diluted107,399 107,245 107,319 107,145 

See accompanying notes to consolidated financial statements.
11

HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Comprehensive Income
(Unaudited and in thousands)
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Comprehensive income:
Net income$43,870 $52,602 $88,824 $94,705 
Other comprehensive loss:
Amortization of cash flow hedges(74)(74)(149)(89)
Total other comprehensive loss(74)(74)(149)(89)
Total comprehensive income43,796 52,528 88,675 94,616 
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates(4)(266)483 (523)
Comprehensive income attributable to common unitholders$43,792 $52,262 $89,158 $94,093 

See accompanying notes to consolidated financial statements.

12

HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Capital
(Unaudited and in thousands)

Three Months Ended June 30, 2023
Common UnitsAccumulated
Other
Comprehensive Loss
Noncontrolling
Interests in
Consolidated
Affiliates
Total
General
Partners’
Capital
Limited
Partners’
Capital
Balance as of March 31, 2023$24,553 $2,430,614 $(1,286)$4,467 $2,458,348 
Issuances of Common Units, net of issuance costs and tax withholdings2 263 — — 265 
Redemptions of Common Units(2)(161)— — (163)
Distributions on Common Units ($0.50 per unit)
(539)(53,356)— — (53,895)
Distributions on Preferred Units ($21.5625 per unit)
(6)(615)— — (621)
Share-based compensation expense, net of forfeitures8 788 — — 796 
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner(15)(1,509)— — (1,524)
Net (income) attributable to noncontrolling interests in consolidated affiliates (4)— 4  
Comprehensive income:
Net income438 43,432 — — 43,870 
Other comprehensive loss— — (74)— (74)
Total comprehensive income43,796 
Balance as of June 30, 2023$24,439 $2,419,452 $(1,360)$4,471 $2,447,002 

Six Months Ended June 30, 2023
Common UnitsAccumulated
Other
Comprehensive Loss
Noncontrolling
Interests in
Consolidated
Affiliates
Total
General
Partners’
Capital
Limited
Partners’
Capital
Balance at December 31, 2022$24,492 $2,424,663 $(1,211)$22,235 $2,470,179 
Issuances of Common Units, net of issuance costs and tax withholdings(6)(557)— — (563)
Redemptions of Common Units(2)(161)— — (163)
Distributions on Common Units ($1.00 per unit)
(1,073)(106,213)— — (107,286)
Distributions on Preferred Units ($43.1250 per unit)
(12)(1,230)— — (1,242)
Share-based compensation expense, net of forfeitures53 5,268 — — 5,321 
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner94 9,268 — — 9,362 
Net loss attributable to noncontrolling interests in consolidated affiliates5 478 — (483) 
Deconsolidation of affiliate— — — (17,281)(17,281)
Comprehensive income:
Net income888 87,936 — — 88,824 
Other comprehensive loss— — (149)— (149)
Total comprehensive income88,675 
Balance as of June 30, 2023$24,439 $2,419,452 $(1,360)$4,471 $2,447,002 

See accompanying notes to consolidated financial statements.
13


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

Three Months Ended June 30, 2022
Common UnitsAccumulated
Other
Comprehensive Loss
Noncontrolling
Interests in
Consolidated
Affiliates
Total
General
Partners’
Capital
Limited
Partners’
Capital
Balance as of March 31, 2022$24,433 $2,418,993 $(988)$21,262 $2,463,700 
Issuances of Common Units, net of issuance costs and tax withholdings2 260 — — 262 
Distributions on Common Units ($0.50 per unit)
(536)(53,080)— — (53,616)
Distributions on Preferred Units ($21.5625 per unit)
(6)(616)— — (622)
Share-based compensation expense, net of forfeitures8 837 — — 845 
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner298 29,485 — — 29,783 
Net (income) attributable to noncontrolling interests in consolidated affiliates(2)(264)— 266  
Comprehensive income:
Net income526 52,076 — — 52,602 
Other comprehensive loss— — (74)— (74)
Total comprehensive income52,528 
Balance as of June 30, 2022$24,723 $2,447,691 $(1,062)$21,528 $2,492,880 

Six Months Ended June 30, 2022
Common UnitsAccumulated
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 $