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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, 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 105,693,261 shares of Common Stock outstanding as of October 17, 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 October 17, 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 September 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 SEPTEMBER 30, 2023

TABLE OF CONTENTS

Page
PART I - FINANCIAL INFORMATION
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,
2023
December 31,
2022
Assets:
Real estate assets, at cost:
Land$542,418 $548,720 
Buildings and tenant improvements5,970,163 5,909,754 
Development in-process6,203 46,735 
Land held for development227,817 231,218 
6,746,601 6,736,427 
Less-accumulated depreciation(1,711,023)(1,609,502)
Net real estate assets5,035,578 5,126,925 
Real estate and other assets, net, held for sale4,706  
Cash and cash equivalents16,901 21,357 
Restricted cash3,809 4,748 
Accounts receivable25,583 25,481 
Mortgages and notes receivable9,783 1,051 
Accrued straight-line rents receivable308,277 293,674 
Investments in and advances to unconsolidated affiliates314,475 269,221 
Deferred leasing costs, net of accumulated amortization of $173,926 and $163,751, respectively
233,079 252,828 
Prepaid expenses and other assets, net of accumulated depreciation of $23,008 and $21,660, respectively
72,177 68,091 
Total Assets$6,024,368 $6,063,376 
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity:
Mortgages and notes payable, net$3,212,185 $3,197,215 
Accounts payable, accrued expenses and other liabilities310,409 301,184 
Total Liabilities3,522,594 3,498,399 
Commitments and contingencies
Noncontrolling interests in the Operating Partnership44,452 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;
105,693,261 and 105,210,858 shares issued and outstanding, respectively
1,057 1,052 
Additional paid-in capital3,107,593 3,081,330 
Distributions in excess of net income available for common stockholders(683,171)(633,227)
Accumulated other comprehensive loss(1,434)(1,211)
Total Stockholders’ Equity2,452,856 2,476,765 
Noncontrolling interests in consolidated affiliates4,466 22,235 
Total Equity2,457,322 2,499,000 
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity$6,024,368 $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
September 30,
Nine Months Ended
September 30,
2023202220232022
Rental and other revenues$207,095 $206,997 $627,138 $617,216 
Operating expenses:
Rental property and other expenses67,193 66,334 199,231 190,125 
Depreciation and amortization74,765 73,057 220,416 212,466 
Impairments of real estate assets 1,515  36,515 
General and administrative8,873 9,586 30,668 32,733 
Total operating expenses150,831 150,492 450,315 471,839 
Interest expense34,247 26,392 101,408 75,812 
Other income754 138 3,082 621 
Gains on disposition of property 9,402 19,818 63,546 
Gain on deconsolidation of affiliate  11,778  
Equity in earnings of unconsolidated affiliates400 457 1,902 1,083 
Net income23,171 40,110 111,995 134,815 
Net (income) attributable to noncontrolling interests in the Operating Partnership(453)(881)(2,386)(3,049)
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates5 (357)488 (880)
Dividends on Preferred Stock(622)(621)(1,864)(1,864)
Net income available for common stockholders$22,101 $38,251 $108,233 $129,022 
Earnings per Common Share – basic:
Net income available for common stockholders$0.21 $0.36 $1.03 $1.23 
Weighted average Common Shares outstanding – basic105,671 105,184 105,473 105,094 
Earnings per Common Share – diluted:
Net income available for common stockholders$0.21 $0.36 $1.03 $1.23 
Weighted average Common Shares outstanding – diluted107,832 107,601 107,762 107,570 

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,
2023202220232022
Comprehensive income:
Net income$23,171 $40,110 $111,995 $134,815 
Other comprehensive loss:
Amortization of cash flow hedges(74)(75)(223)(164)
Total other comprehensive loss(74)(75)(223)(164)
Total comprehensive income23,097 40,035 111,772 134,651 
Less-comprehensive (income) attributable to noncontrolling interests(448)(1,238)(1,898)(3,929)
Comprehensive income attributable to common stockholders$22,649 $38,797 $109,874 $130,722 

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, 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 June 30, 2023105,472,213 $1,055 $28,811 $3,095,272 $(1,360)$4,471 $(652,436)$2,475,813 
Issuances of Common Stock, net of issuance costs and tax withholdings
17,521 2 — 359 — — — 361 
Conversions of Common Units to Common Stock193,907 4,795 4,795 
Dividends on Common Stock ($0.50 per share)
— — — — — (52,836)(52,836)
Dividends on Preferred Stock ($21.5625 per share)
— — — — — (622)(622)
Adjustment of noncontrolling interests in the Operating Partnership to fair value
— — 6,334 — — — 6,334 
Issuances of restricted stock9,620 — — — — — —  
Share-based compensation expense, net of forfeitures  — 833 — — — 833 
Net (income) attributable to noncontrolling interests in the Operating Partnership
— — — — — (453)(453)
Net loss attributable to noncontrolling interests in consolidated affiliates— — — — (5)5  
Comprehensive income:
Net income— — — — — 23,171 23,171 
Other comprehensive loss— — — (74)— — (74)
Total comprehensive income23,097 
Balance as of September 30, 2023105,693,261 $1,057 $28,811 $3,107,593 $(1,434)$4,466 $(683,171)$2,457,322 

Nine Months Ended September 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
10,010 2 — (204)— — — (202)
Conversions of Common Units to Common Stock193,907 4,795 4,795 
Dividends on Common Stock ($1.50 per share)
— — — — — (158,177)(158,177)
Dividends on Preferred Stock ($64.6875 per share)
— — — — — (1,864)(1,864)
Adjustment of noncontrolling interests in the Operating Partnership to fair value
— — 15,521 — — — 15,521 
Issuances of restricted stock282,453 — — — — — —  
Redemptions/repurchases of Preferred Stock— (10)— — — — (10)
Share-based compensation expense, net of forfeitures(3,967)3 — 6,151 — — — 6,154 
Net (income) attributable to noncontrolling interests in the Operating Partnership
— — — — — (2,386)(2,386)
Net loss attributable to noncontrolling interests in consolidated affiliates— — — — (488)488  
Deconsolidation of affiliate— — — — (17,281)— (17,281)
Comprehensive income:
Net income— — — — — 111,995 111,995 
Other comprehensive loss— — — (223)— — (223)
Total comprehensive income111,772 
Balance as of September 30, 2023105,693,261 $1,057 $28,811 $3,107,593 $(1,434)$4,466 $(683,171)$2,457,322 

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, 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 June 30, 2022105,184,854 $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 income40,035 
Balance as of September 30, 2022105,197,658 $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 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
92,941 1 — 4,796 — — — 4,797 
Conversions of Common Units to Common Stock30,909 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 stock181,807 — — — — — —  
Share-based compensation expense, net of forfeitures(779)2 — 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 income134,651 
Balance as of September 30, 2022105,197,658 $1,052 $28,821 $3,083,229 $(1,137)$21,885 $(608,181)$2,525,669 

See accompanying notes to consolidated financial statements.
7

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Cash Flows
(Unaudited and in thousands)
Nine Months Ended
September 30,
20232022
Operating activities:
Net income$111,995 $134,815 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization220,416 212,466 
Amortization of lease incentives and acquisition-related intangible assets and liabilities712 (342)
Share-based compensation expense6,154 6,843 
Net credit losses on operating lease receivables1,850 3,167 
Accrued interest on mortgages and notes receivable(750)(67)
Amortization of debt issuance costs3,645 3,096 
Amortization of cash flow hedges(223)(164)
Amortization of mortgages and notes payable fair value adjustments(257)(60)
Impairments of real estate assets 36,515 
Net gains on disposition of property(19,818)(63,546)
Gain on deconsolidation of controlling interest in affiliate(11,778) 
Equity in earnings of unconsolidated affiliates(1,902)(1,083)
Distributions of earnings from unconsolidated affiliates1,153 606 
Changes in operating assets and liabilities:
Accounts receivable1,182 (11,454)
Prepaid expenses and other assets(4,376)(2,150)
Accrued straight-line rents receivable(20,196)(20,558)
Accounts payable, accrued expenses and other liabilities(3,636)21,795 
Net cash provided by operating activities284,171 319,879 
Investing activities:
Investments in acquired real estate and related intangible assets, net of cash acquired(18,544)(224,934)
Investments in development in-process(26,179)(26,220)
Investments in tenant improvements and deferred leasing costs(68,625)(90,910)
Investments in building improvements(55,155)(45,289)
Net proceeds from disposition of real estate assets51,538 130,038 
Distributions of capital from unconsolidated affiliates3,864  
Investments in mortgages and notes receivable(9,763)(24)
Repayments of mortgages and notes receivable200 215 
Investments in and advances to unconsolidated affiliates(100,052)(81,693)
Repayments of preferred equity from unconsolidated affiliates80,000  
Changes in earnest money deposits15,500 (3,000)
Changes in other investing activities(3,751)224 
Net cash used in investing activities(130,967)(341,593)
Financing activities:
Dividends on Common Stock(158,177)(157,587)
Redemptions/repurchases of Preferred Stock(10) 
Redemptions of Common Units(163)(3,101)
Dividends on Preferred Stock(1,864)(1,864)
Distributions to noncontrolling interests in the Operating Partnership(3,432)(3,687)
Distributions to noncontrolling interests in consolidated affiliates (1,411)
Proceeds from the issuance of Common Stock1,349 7,200 
Costs paid for the issuance of Common Stock(226)(247)
Repurchase of shares related to tax withholdings(1,325)(2,156)
Borrowings on revolving credit facility219,000 275,000 
Repayments of revolving credit facility(400,000)(235,000)
Borrowings on mortgages and notes payable200,000 350,000 
Repayments of mortgages and notes payable(5,018)(204,807)
Payments for debt issuance costs and other financing activities(2,347)(2,731)
Net cash provided by/(used in) financing activities(152,213)19,609 
Net increase/(decrease) in cash and cash equivalents and restricted cash$991 $(2,105)
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,
20232022
Net increase/(decrease) in cash and cash equivalents and restricted cash$991 $(2,105)
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$20,710 $29,093 

Reconciliation of cash and cash equivalents and restricted cash:

Nine Months Ended
September 30,
20232022
Cash and cash equivalents at end of the period$16,901 $23,055 
Restricted cash at end of the period3,809 6,038 
Cash and cash equivalents and restricted cash at end of the period$20,710 $29,093 

Supplemental disclosure of cash flow information:
Nine Months Ended
September 30,
20232022
Cash paid for interest, net of amounts capitalized$105,342 $82,908 

Supplemental disclosure of non-cash investing and financing activities:
Nine Months Ended
September 30,
20232022
Conversions of Common Units to Common Stock4,795 1,251 
Changes in accrued capital expenditures (1)
17,275 (10,180)
Write-off of fully depreciated real estate assets54,489 42,817 
Write-off of fully amortized leasing costs25,605 22,739 
Write-off of fully amortized debt issuance costs 1,216 
Adjustment of noncontrolling interests in the Operating Partnership to fair value(15,521)(42,480)
__________

(1)Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities as of September 30, 2023 and 2022 were $70.7 million and $44.4 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,
2023
December 31,
2022
Assets:
Real estate assets, at cost:
Land$542,418 $548,720 
Buildings and tenant improvements5,970,163 5,909,754 
Development in-process6,203 46,735 
Land held for development227,817 231,218 
6,746,601 6,736,427 
Less-accumulated depreciation(1,711,023)(1,609,502)
Net real estate assets5,035,578 5,126,925 
Real estate and other assets, net, held for sale4,706  
Cash and cash equivalents16,901 21,357 
Restricted cash3,809 4,748 
Accounts receivable25,583 25,481 
Mortgages and notes receivable9,783 1,051 
Accrued straight-line rents receivable308,277 293,674 
Investments in and advances to unconsolidated affiliates314,475 269,221 
Deferred leasing costs, net of accumulated amortization of $173,926 and $163,751, respectively
233,079 252,828 
Prepaid expenses and other assets, net of accumulated depreciation of $23,008 and $21,660, respectively
72,177 68,091 
Total Assets$6,024,368 $6,063,376 
Liabilities, Redeemable Operating Partnership Units and Capital:
Mortgages and notes payable, net$3,212,185 $3,197,215 
Accounts payable, accrued expenses and other liabilities310,409 301,184 
Total Liabilities3,522,594 3,498,399 
Commitments and contingencies
Redeemable Operating Partnership Units:
Common Units, 2,156,808 and 2,358,009 outstanding, respectively
44,452 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 Units73,263 94,798 
Capital:
Common Units:
General partner Common Units, 1,074,413 and 1,071,601 outstanding, respectively
24,255 24,492 
Limited partner Common Units, 104,210,039 and 103,730,448 outstanding, respectively
2,401,224 2,424,663 
Accumulated other comprehensive loss(1,434)(1,211)
Noncontrolling interests in consolidated affiliates4,466 22,235 
Total Capital2,428,511 2,470,179 
Total Liabilities, Redeemable Operating Partnership Units and Capital$6,024,368 $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
September 30,
Nine Months Ended
September 30,
2023202220232022
Rental and other revenues$207,095 $206,997 $627,138 $617,216 
Operating expenses:
Rental property and other expenses67,193 66,334 199,231 190,125 
Depreciation and amortization74,765 73,057 220,416 212,466 
Impairments of real estate assets 1,515  36,515 
General and administrative8,873 9,586 30,668 32,733 
Total operating expenses150,831 150,492 450,315 471,839 
Interest expense34,247 26,392 101,408 75,812 
Other income754 138 3,082 621 
Gains on disposition of property 9,402 19,818 63,546 
Gain on deconsolidation of affiliate  11,778  
Equity in earnings of unconsolidated affiliates400 457 1,902 1,083 
Net income23,171 40,110 111,995 134,815 
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates5 (357)488 (880)
Distributions on Preferred Units(622)(621)(1,864)(1,864)
Net income available for common unitholders$22,554 $39,132 $110,619 $132,071 
Earnings per Common Unit – basic:
Net income available for common unitholders$0.21 $0.37 $1.03 $1.23 
Weighted average Common Units outstanding – basic107,423 107,192 107,353 107,154 
Earnings per Common Unit – diluted:
Net income available for common unitholders$0.21 $0.37 $1.03 $1.23 
Weighted average Common Units outstanding – diluted107,423 107,192 107,353 107,161 

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,
2023202220232022
Comprehensive income:
Net income$23,171 $40,110 $111,995 $134,815 
Other comprehensive loss:
Amortization of cash flow hedges(74)(75)(223)(164)
Total other comprehensive loss(74)(75)(223)(164)
Total comprehensive income23,097 40,035 111,772 134,651 
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates5 (357)488 (880)
Comprehensive income attributable to common unitholders$23,102 $39,678 $112,260 $133,771 

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, 2023
Common UnitsAccumulated
Other
Comprehensive Loss
Noncontrolling
Interests in
Consolidated
Affiliates
Total
General
Partners’
Capital
Limited
Partners’
Capital
Balance as of June 30, 2023$24,439 $2,419,452 $(1,360)$4,471 $2,447,002 
Issuances of Common Units, net of issuance costs and tax withholdings4 357 — — 361 
Distributions on Common Units ($0.50 per unit)
(537)(53,172)— — (53,709)
Distributions on Preferred Units ($21.5625 per unit)
(7)(615)— — (622)
Share-based compensation expense, net of forfeitures9 824 — — 833 
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner115 11,434 — — 11,549 
Net loss attributable to noncontrolling interests in consolidated affiliates 5 — (5) 
Comprehensive income:
Net income232 22,939 — — 23,171 
Other comprehensive loss— — (74)— (74)
Total comprehensive income23,097 
Balance as of September 30, 2023$24,255 $2,401,224 $(1,434)$4,466 $2,428,511 

Nine Months Ended September 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(2)(200)— — (202)
Redemptions of Common Units(2)(161)— — (163)
Distributions on Common Units ($1.50 per unit)
(1,610)(159,385)— — (160,995)
Distributions on Preferred Units ($64.6875 per unit)
(19)(1,845)— — (1,864)
Share-based compensation expense, net of forfeitures62 6,092 — — 6,154 
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner209 20,702 — — 20,911 
Net loss attributable to noncontrolling interests in consolidated affiliates5 483 — (488) 
Deconsolidation of affiliate— — — (17,281)(17,281)
Comprehensive income:
Net income1,120 110,875 — — 111,995 
Other comprehensive loss— — (223)— (223)
Total comprehensive income111,772 
Balance as of September 30, 2023$24,255 $2,401,224 $(1,434)$4,466 $2,428,511 

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, 2022
Common UnitsAccumulated
Other
Comprehensive Loss
Noncontrolling
Interests in
Consolidated
Affiliates
Total
General
Partners’
Capital
Limited
Partners’
Capital
Balance as of 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 withholdings4 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 forfeitures7 700 — — 707 
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner202 19,957 — — 20,159 
Net (income) attributable to noncontrolling interests in consolidated affiliates(4)(353)— 357  
Comprehensive income:
Net income401 39,709 — — 40,110 
Other comprehensive loss— — (75)— (75)
Total comprehensive income40,035 
Balance as of September 30, 2022$24,759 $2,451,341 $(1,137)$21,885 $2,496,848 

Nine Months Ended September 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