HIGHWOODS PROPERTIES, INC. 10-K

ITEM 2. PROPERTIES Properties The following table sets forth information about in-service office properties that we wholly own by geographic location at December 31, 2020: Market Rentable Square Feet Occupancy Percentage of Annualized Cash Rental Revenue (1) Atlanta 5,416,000 88.8 % 21.3 % Nashville 4,567,000 92.8 19.8 Raleigh 4,834,000 91.2 18.4 Tampa 3,618,000 89.7 13.4 Pittsburgh 2,151,000 92.9 8.3 Orlando 1,791,000 87.8 6.8 Richmond 2,037,000 88.7 6.2 Charlotte 841,000 89.6 4.0 Other 654,000 87.5 1.8 Total 25,909,000 90.3 % 100.0 % __________ (1) Annualized Cash Rental Revenue is cash rental revenue (base rent plus cost recovery income, excluding straight-line rent) from our office properties for the month of December 2020 multiplied by 12. The following table sets forth the net changes in rentable square footage of in-service properties that we wholly own: Year Ended December 31, 2020 2019 2018 (in thousands) Acquisitions — 841 — Developments Placed In-Service — 898 351 Redevelopment/Other (40) (6) (2) Dispositions (4,489) (557) (491) Net Change in Rentable Square Footage (4,529) 1,176 (142) The following table sets forth operating information about in-service properties that we wholly own: Average Occupancy Annualized GAAP Rent Per Square Foot (1) Annualized Cash Rent Per Square Foot (2) 2016 92.8 % $ 23.24 $ 22.55 2017 92.5 % $ 24.05 $ 23.46 2018 91.7 % $ 24.68 $ 24.06 2019 91.4 % $ 26.46 $ 25.06 2020 90.7 % $ 29.23 $ 28.21 __________ (1) Annualized GAAP Rent Per Square Foot is rental revenue (base rent plus cost recovery income, including straight-line rent) for the month of December of the respective year multiplied by 12, divided by total occupied rentable square footage. (2) Annualized Cash Rent Per Square Foot is cash rental revenue (base rent plus cost recovery income, excluding straight-line rent) for the month of December of the respective year multiplied by 12, divided by total occupied rentable square footage. 21 Table of Contents Customers The following table sets forth information concerning the 20 largest customers of properties that we wholly own at December 31, 2020: Customer Rentable Square Feet Annualized Cash Rental Revenue (1) Percent of Total Annualized Cash Rental Revenue (1) Weighted Average Remaining Lease Term in Years (in thousands) Federal Government 1,178,487 $ 28,133 4.26 % 6.2 Bank of America 652,313 26,727 4.05 13.2 Bridgestone Americas 506,128 18,195 2.76 16.7 Metropolitan Life Insurance 624,540 16,926 2.56 10.2 Mars Petcare 223,700 9,850 1.49 10.4 PPG Industries 361,215 9,837 1.49 10.3 Vanderbilt University 294,389 8,817 1.34 5.4 EQT Corporation 317,052 8,265 1.25 3.8 Tivity 263,598 7,717 1.17 2.2 Bass, Berry & Sims 213,951 7,170 1.09 4.1 American General Life 173,834 6,335 0.96 6.1 Novelis 168,949 6,267 0.95 3.7 State of Georgia 288,443 5,764 0.87 3.6 Lifepoint Corporate Services 202,991 5,545 0.84 8.3 PNC Bank 159,142 5,121 0.78 7.1 Delta Community Credit Union 128,589 4,885 0.74 11.8 Avanos Medical 193,199 4,713 0.71 8.2 Marsh USA 136,246 4,667 0.71 6.6 Willis Towers Watson 162,849 4,564 0.69 3.3 Global Payments 168,051 4,537 0.69 12.2 Total 6,417,666 $ 194,035 29.40 % 8.7 __________ (1) Annualized Cash Rental Revenue is cash rental revenue (base rent plus cost recovery income, excluding straight-line rent) for the month of December 2020 multiplied by 12. 22 Table of Contents Lease Expirations The following tables set forth scheduled lease expirations for existing leases at office properties that we wholly owned at December 31, 2020: Lease Expiring (1) Number of Leases Expiring Rentable Square Feet Subject to Expiring Leases Percentage of Leased Square Footage Represented by Expiring Leases Annualized Cash Rental Revenue Under Expiring Leases (2) Average Annual Cash Rental Rate Per Square Foot for Expirations Percent of Annualized Cash Rental Revenue Represented by Expiring Leases (2) (in thousands) 2021 (3) 362 1,913,644 8.2 % $ 52,999 $ 27.70 8.0 % 2022 366 1,923,263 8.2 55,031 28.61 8.3 2023 291 2,341,142 10.0 64,912 27.73 9.8 2024 259 2,477,527 10.6 73,936 29.84 11.2 2025 228 2,880,807 12.3 82,530 28.65 12.5 2026 148 1,863,015 8.0 50,806 27.27 7.7 2027 85 1,726,509 7.4 50,443 29.22 7.6 2028 65 1,503,344 6.4 37,441 24.91 5.7 2029 68 1,202,446 5.1 33,001 27.44 5.0 2030 101 1,379,684 5.9 35,278 25.57 5.3 Thereafter 101 4,192,266 17.9 123,931 29.56 18.9 2,074 23,403,647 100.0 % $ 660,308 $ 28.21 100.0 % __________ (1) Expirations that have been renewed are reflected above based on the renewal expiration date. Expirations include leases related to completed not stabilized development properties but exclude leases related to developments in-process. (2) Annualized Cash Rental Revenue is cash rental revenue (base rent plus cost recovery income, excluding straight-line rent) for the month of December 2020 multiplied by 12. (3) Includes 52,000 rentable square feet of leases that are on a month-to-month basis, which represent 0.2% of total annualized cash rental revenue. In-Process Development As of December 31, 2020, we were developing 0.8 million rentable square feet of office properties. The following table summarizes these announced and in-process office developments: Property Market Rentable Square Feet Anticipated Total Investment (1) Investment As Of December 31, 2020 (1) Pre Leased % Estimated Completion Estimated Stabilization ($ in thousands) GlenLake Seven (2) Raleigh 125,700 $ 43,881 $ 36,966 100.0 % 1Q 21 1Q 21 Midtown West (3) Tampa 150,000 71,300 47,069 6.6 2Q 21 4Q 22 Asurion Nashville 552,800 285,000 225,727 98.3 4Q 21 1Q 22 828,500 $ 400,181 $ 309,762 81.9 % __________ (1) Includes deferred lease commissions which are classified in deferred leasing costs on our Consolidated Balance Sheets. (2) Recorded on our Consolidated Balance Sheets in land and buildings and tenant improvements, not development in-process. (3) We own an 80.0% interest in this consolidated joint venture. 23 Table of Contents Land Held for Development We wholly owned 220 acres of development land at December 31, 2020. We estimate that we can develop approximately 5.0 million rentable square feet of office space on the 161 acres that we consider core assets for our future development needs. Our core development land is zoned and available for development, and nearly all of the land has utility infrastructure in place. We believe that our commercially zoned and unencumbered land gives us a development advantage over other commercial real estate development companies in many of our markets. Joint Venture Investments The following table sets forth information about our joint venture investments by geographic location at December 31, 2020: Rentable Square Feet Weighted Average Ownership Interest (1) Occupancy Market Kansas City (2) 292,000 50.0 % 85.3 % Raleigh 636,000 25.0 91.0 Richmond (3) 345,000 50.0 99.2 Total 1,273,000 37.5 % 91.9 % __________ (1) Weighted Average Ownership Interest is calculated using Rentable Square Feet. (2) Excluding our 26.5% ownership interest in a real estate brokerage services company. (3) This joint venture is consolidated. In addition, we own an 80.0% interest in Midtown One, a consolidated joint venture. See “Item 2. Properties - In-Process Development.”