HIGHWOODS PROPERTIES, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES General The purpose of this section is to discuss our controls and procedures. The statements in this section represent the conclusions of Theodore J. Klinck, the Company’s President and Chief Executive Officer (“CEO”), and Brendan C. Maiorana, the Company’s Executive Vice President and Chief Financial Officer (“CFO”). The CEO and CFO evaluations of our controls and procedures include a review of the controls’ objectives and design, the controls’ implementation by us and the effect of the controls on the information generated for use in this Annual Report. We seek to identify data errors, control problems or acts of fraud and confirm that appropriate corrective action, including process improvements, is undertaken. Our controls and procedures are also evaluated on an ongoing basis by or through the following: • activities undertaken and reports issued by employees responsible for testing our internal control over financial reporting; • quarterly sub-certifications by representatives from appropriate business and accounting functions to support the CEO’s and CFO’s evaluations of our controls and procedures; • other personnel in our finance and accounting organization; • members of our internal disclosure committee; and • members of the audit committee of the Company’s Board of Directors. We do not expect that our controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of controls and procedures must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Management’s Annual Report on the Company’s Internal Control Over Financial Reporting The Company’s management is required to establish and maintain internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that: • pertain to the maintenance of records that in reasonable detail accurately and fairly reflect transactions and dispositions of assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements. Under the supervision of the Company’s CEO and CFO, we conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. 45 Table of Contents We have concluded that, as of December 31, 2022, the Company’s internal control over financial reporting was effective. Deloitte & Touche LLP, our independent registered public accounting firm, has issued their attestation report, which is included below, on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. Management’s Annual Report on the Operating Partnership’s Internal Control Over Financial Reporting The Operating Partnership is also required to establish and maintain internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Under the supervision of the Company’s CEO and CFO, we conducted an evaluation of the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2022 based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We have concluded that, as of December 31, 2022, the Operating Partnership’s internal control over financial reporting was effective. SEC rules do not require us to obtain an attestation report of Deloitte & Touche LLP on the effectiveness of the Operating Partnership’s internal control over financial reporting. 46 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Highwoods Properties, Inc.: Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Highwoods Properties, Inc. and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022 of the Company and our report dated February 7, 2023 expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on the Company’s internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”). A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Raleigh, North Carolina February 7, 2023 47 Table of Contents Changes in Internal Control Over Financial Reporting There were no changes in the Company’s internal control over financial reporting during the fourth quarter of 2022 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. There were also no changes in the Operating Partnership’s internal control over financial reporting during the fourth quarter of 2022 that materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting. Disclosure Controls and Procedures SEC rules require us to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our annual and periodic reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As defined in Rule 13a-15(e) under the Exchange Act, disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us is accumulated and communicated to our management, including the Company’s CEO and CFO, to allow for timely decisions regarding required disclosure. The Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective at the end of the period covered by this Annual Report. The Company’s CEO and CFO also concluded that the Operating Partnership’s disclosure controls and procedures were effective at the end of the period covered by this Annual Report. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 48 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information about the Company’s executive officers and directors, the code of ethics that applies to the Company’s chief executive officer and senior financial officers, which is posted on our website, and certain corporate governance matters is incorporated herein by reference to the Company’s Proxy Statement to be filed in connection with the Company's annual meeting of stockholders to be held on May 16, 2023. No changes have been made to the procedures by which stockholders may recommend nominees to the Company’s board of directors since the 2022 annual meeting, which was held on May 10, 2022. See Item X in Part I of this Annual Report for biographical information regarding the Company’s executive officers. The Company is the sole general partner of the Operating Partnership. ITEM 11. EXECUTIVE COMPENSATION Information about the compensation of the Company’s directors and executive officers is incorporated herein by reference to the Company’s Proxy Statement to be filed in connection with its annual meeting of stockholders to be held on May 16, 2023. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information about the beneficial ownership of Common Stock and the Company’s equity compensation plans is incorporated herein by reference to the Company’s Proxy Statement to be filed in connection with its annual meeting of stockholders to be held on May 16, 2023. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Information about certain relationships and related transactions, if any, and the independence of the Company’s directors is incorporated herein by reference to the Company’s Proxy Statement to be filed in connection with its annual meeting of stockholders to be held on May 16, 2023. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information about fees paid to and services provided by our independent registered public accounting firm is incorporated herein by reference to the Company’s Proxy Statement to be filed in connection with its annual meeting of stockholders to be held on May 16, 2023. 49 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Reference is made to the Index to Consolidated Financial Statements on page 52 for a list of the Consolidated Financial Statements of Highwoods Properties, Inc. and Highwoods Realty Limited Partnership included in this report. Exhibits Exhibit Number Description 3.1 Amended and Restated Charter of the Company (filed as part of the Company’s Current Report on Form 8-K dated May 15, 2008) 3.2 Amended and Restated Bylaws of the Company (filed as part of the Company’s Current Report on Form 8-K dated May 15, 2008) 4.1 Indenture among the Operating Partnership, the Company and U.S. Bank National Association (as successor in interest to Wachovia Bank, N.A.) dated as of December 1, 1996 (filed as part of the Operating Partnership’s Current Report on Form 8-K dated December 2, 1996) 4.2 Form of 3.875% Notes due March 1, 2027 (filed as part of the Company’s Current Report on Form 8-K dated February 23, 2017) 4.3 Officers’ Certificate Establishing the Terms of the 3.875% Notes, dated February 23, 2017 (filed as part of the Company’s Current Report on Form 8-K dated February 23, 2017) 4.4 Form of 4.125% Notes due March 15, 2028 (filed as part of the Company’s Current Report on Form 8-K dated March 5, 2018) 4.5 Officers’ Certificate Establishing the Terms of the 4.125% Notes, dated March 5, 2018 (filed as part of the Company’s Current Report on Form 8-K dated March 5, 2018) 4.6 Form of 4.20% Notes due April 15, 2029 (filed as part of the Company’s Current Report on Form 8-K dated March 7, 2019) 4.7 Officers’ Certificate Establishing the Terms of the 4.20% Notes, dated March 7, 2019 (filed as part of the Company’s Current Report on Form 8-K dated March 7, 2019) 4.8 Form of 3.050% Notes due February 15, 2030 (filed as part of the Company’s Current Report on Form 8-K dated September 13, 2019) 4.9 Officers’ Certificate Establishing the Terms of the 3.050% Notes, dated September 13, 2019 (filed as part of the Company’s Current Report on Form 8-K dated September 13, 2019) 4.10 Form of 2.600% Notes due February 1, 2031 (filed as part of the Company’s Current Report on Form 8-K dated August 13, 2020) 4.11 Officers’ Certificate Establishing the Terms of the 2.600% Notes, dated August 13, 2020 (filed as part of the Company’s Current Report on Form 8-K dated August 13, 2020) 4.12 Description of Registered Securities (filed as part of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019) 10.1 Second Restated Agreement of Limited Partnership, dated as of January 1, 2000, of the Operating Partnership (filed as part of the Company’s Annual Report on Form 10-K for the year ended December 31, 2004) 10.2 Amendment No. 1, dated as of July 22, 2004, to the Second Restated Agreement of Limited Partnership, dated as of January 1, 2000, of the Operating Partnership (filed as part of the Company’s Annual Report on Form 10-K for the year ended December 31, 2004) 10.3 Amendment No. 2, dated as of July 19, 2018, to the Second Restated Agreement of Limited Partnership, dated as of January 1, 2000, of the Operating Partnership (filed as part of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018) 10.4 * 2015 Long-Term Equity Incentive Plan (filed as part of the Company’s Current Report on Form 8-K dated May 13, 2015) 10.5 Form of warrants to purchase Common Stock of the Company (filed as part of the Company’s Annual Report on Form 10-K for the year ended December 31, 1997) 10.6 * Highwoods Properties, Inc. Retirement Plan, effective as of March 1, 2006 (filed as part of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007) 10.7 * Highwoods Properties, Inc. 2020 Employee Stock Purchase Plan (filed as part of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020) 10.8 * Amendment No. 1 , dated as of November 30, 2022, to the Highwoods Properties, Inc. 2020 Employee Stock Purchase Plan 50 Table of Contents Exhibit Number Description 10.9 * Executive Supplemental Employment Agreement, dated as of September 1, 2015 between the Company and Theodore J. Klinck (filed as part of the Company’s Current Report on Form 8-K dated September 1, 2015) 10.10 * Amended and Restated Executive Supplemental Employment Agreement, dated as of February 12, 2013, between the Company and Jeffrey D. Miller (filed as part of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012) 10.11 * Executive Supplemental Employment Agreement, dated as of July 19, 2019, between the Company and Brendan C. Maiorana (filed as part of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019) 10.12 * Executive Supplemental Employment Agreement, dated as of July 19, 2019, between the Company and Brian M. Leary (filed as part of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019) 10.13 Sixth Amended and Restated Credit Agreement, dated as of March 18, 2021, by and among the Company, the Operating Partnership, Bank of America, N.A., as Administrative Agent, Wells Fargo Bank, National Association and PNC Bank, National Association, as Co-Syndication Agents, and the Other Lenders named therein (filed as part of the Company’s Current Report on Form 8-K dated March 19, 2021) 10.14 * 2021 Long-Term Equity Incentive Plan (filed as part of the Company’s Current Report on Form 8-K dated May 11, 2021) 10.15 First Amendment to Sixth Amended and Restated Credit Agreement, dated as of May 24, 2022, by and among the Company, the Operating Partnership, Bank of America, N.A., as Administrative Agent, and the Other Lenders named therein (filed as part of the Company’s Current Report on Form 8-K) dated May 24, 2022 21 Schedule of Subsidiaries 23.1 Consent of Deloitte & Touche LLP for the Company 31.1 Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act for the Company 31.2 Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act for the Company 31.3 Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act for the Operating Partnership 31.4 Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act for the Operating Partnership 32.1 Certification of CEO Pursuant to Section 906 of the Sarbanes-Oxley Act for the Company 32.2 Certification of CFO Pursuant to Section 906 of the Sarbanes-Oxley Act for the Company 32.3 Certification of CEO Pursuant to Section 906 of the Sarbanes-Oxley Act for the Operating Partnership 32.4 Certification of CFO Pursuant to Section 906 of the Sarbanes-Oxley Act for the Operating Partnership 101.INS Inline XBRL Instance Document (the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document) 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) __________ * Represents management contract or compensatory plan. 51 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Highwoods Properties, Inc. Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 53 Consolidated Financial Statements: Consolidated Balance Sheets a s of December 31, 2022 and 2021 55 Consolidated Statements of Income for the Years Ended December 31, 2022, 2021 and 2020 56 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021 and 2020 57 Consolidated Statements of Equity for the Years Ended December 31, 2022, 2021 and 2020 58 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020 60 Highwoods Realty Limited Partnership: Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 62 Consolidated Financial Statements: Consolidated Balance Sheets a s of December 31, 2022 and 2021 64 Consolidated Statements of Income for the Years Ended December 31, 2022, 2021 and 2020 65 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021 and 2020 66 Consolidated Statements of Capital for the Years Ended December 31, 2022, 2021 and 2020 67 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020 68 Notes to Consolidated Financial Statements 70 Schedule III 101 __________ All other schedules are omitted because they are not applicable or because the required information is included in our Consolidated Financial Statements or notes thereto. 52 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Highwoods Properties, Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Highwoods Properties, Inc. and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 7, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Impairment of Real Estate Assets—Refer to Note 1 and Note 3 to the financial statements Critical Audit Matter Description The Company performs an impairment analysis of properties which begins with an evaluation of events or changes in circumstances that may indicate that the carrying value may not be recoverable, such as a significant decline in occupancy, identification of materially adverse legal or environmental factors, a change in the designation of an asset from core to non-core, which may impact the anticipated holding period, or a decline in market value to an amount less than cost. When events or changes in circumstances indicate that the carrying value may not be recoverable, the Company evaluates its real estate assets for impairment by comparing undiscounted future cash flows expected to be generated over the estimated hold period of each asset to the respective carrying amount. If the carrying amount of an asset exceeds the undiscounted future cash flows, an analysis is performed to determine the fair value of the asset. The Company makes judgments that determine whether specific real estate assets possess indicators of impairment. Changes in those judgments could have a material impact on the real estate assets that are identified for further analysis. 53 Table of Contents For those real estate assets where an indicator has been identified, the Company makes significant estimates and assumptions to determine the recoverability using undiscounted future cash flows expected to be generated over the estimated hold period of the asset, including estimates and assumptions related to the rental rates, growth rates, and capitalization rates. For those real estate assets where impairment has been identified, the Company applies a discount rate to those undiscounted cash flows to determine fair value. Total real estate assets as of December 31, 2022, were $5.1 billion, net of impairment losses recorded in 2022 of $35 million. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the evaluation of real estate assets for possible indications of impairment included the following, among others: • We tested the effectiveness of controls over management’s identification of possible circumstances that may indicate that the carrying amounts of real estate assets are no longer recoverable, including controls over management’s designation of an asset as core or non-core, occupancy and management’s estimates of fair values. • We evaluated management’s identification of impairment indicators by developing an independent determination if properties exhibit an indicator of impairment by: – Inquiring of management and reading investment committee and board minutes to identify properties that should be evaluated as non-core and therefore may impact the anticipated holding period. – Testing real estate assets for possible indications of impairment, including searching for adverse asset-specific circumstances and/or market conditions by reviewing questionnaires to regional property managers and using reputable market surveys. – With the assistance of our fair value specialists, developing an independent expectation of impairment indicators and comparing such expectation to management’s analysis. • We evaluated the Company’s undiscounted cash flows prepared when an indicator of impairment has been identified by performing the following: – We evaluated the reasonableness of the valuation methodology as well as significant assumptions used in the undiscounted recoverability models, including the rental rates, growth rates, and capitalization rates. • We evaluated the Company’s determination of fair value for those assets where impairment had been identified by performing the following: – We evaluated the reasonableness of the valuation methodology as well as significant assumptions used in fair value model, including the growth rates. With the assistance of our fair value specialists, we also evaluated the reasonableness of the discount rate, rental rates, and capitalization rate assumptions. /s/ Deloitte & Touche LLP Raleigh, North Carolina February 7, 2023 We have served as the Company’s auditor since 2006. 54 Table on Contents HIGHWOODS PROPERTIES, INC. Consolidated Balance Sheets (in thousands, except share and per share data) December 31, 2022 2021 Assets: Real estate assets, at cost: Land $ 548,720 $ 549,228 Buildings and tenant improvements 5,909,754 5,718,169 Development in-process 46,735 6,890 Land held for development 231,218 215,257 6,736,427 6,489,544 Less-accumulated depreciation ( 1,609,502 ) ( 1,457,511 ) Net real estate assets 5,126,925 5,032,033 Real estate and other assets, net, held for sale — 3,518 Cash and cash equivalents 21,357 23,152 Restricted cash 4,748 8,046 Accounts receivable 25,481 14,002 Mortgages and notes receivable 1,051 1,227 Accrued straight-line rents receivable 293,674 268,324 Investments in and advances to unconsolidated affiliates 269,221 7,383 Deferred leasing costs, net of accumulated amortization of $ 163,751 and $ 143,111 , respectively 252,828 258,902 Prepaid expenses and other assets, net of accumulated depreciation of $ 21,660 and $ 21,408 , respectively 68,091 78,551 Total Assets $ 6,063,376 $ 5,695,138 Liabilities, Noncontrolling Interests in the Operating Partnership and Equity: Mortgages and notes payable, net $ 3,197,215 $ 2,788,915 Accounts payable, accrued expenses and other liabilities 301,184 294,976 Total Liabilities 3,498,399 3,083,891 Commitments and contingencies Noncontrolling interests in the Operating Partnership 65,977 111,689 Equity: Preferred Stock, $ 0.01 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, $ 0.01 par value, 200,000,000 authorized shares; 105,210,858 and 104,892,780 shares issued and outstanding, respectively 1,052 1,049 Additional paid-in capital 3,081,330 3,027,861 Distributions in excess of net income available for common stockholders ( 633,227 ) ( 579,616 ) Accumulated other comprehensive loss ( 1,211 ) ( 973 ) Total Stockholders’ Equity 2,476,765 2,477,142 Noncontrolling interests in consolidated affiliates 22,235 22,416 Total Equity 2,499,000 2,499,558 Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity $ 6,063,376 $ 5,695,138 See accompanying notes to consolidated financial statements. 55 Table on Contents HIGHWOODS PROPERTIES, INC. Consolidated Statements of Income (in thousands, except per share amounts) Year Ended December 31, 2022 2021 2020 Rental and other revenues $ 828,929 $ 768,007 $ 736,900 Operating expenses: Rental property and other expenses 259,806 236,436 231,825 Depreciation and amortization 287,610 259,255 241,585 Impairments of real estate assets 36,515 — 1,778 General and administrative 42,266 40,553 41,031 Total operating expenses 626,197 536,244 516,219 Interest expense 105,385 85,853 80,962 Other income/(loss) 1,530 1,394 ( 1,707 ) Gains on disposition of property 63,546 174,059 215,897 Equity in earnings of unconsolidated affiliates 1,535 1,947 4,005 Net income 163,958 323,310 357,914 Net (income) attributable to noncontrolling interests in the Operating Partnership ( 3,670 ) ( 8,321 ) ( 9,338 ) Net (income) attributable to noncontrolling interests in consolidated affiliates ( 1,230 ) ( 1,712 ) ( 1,174 ) Dividends on Preferred Stock ( 2,486 ) ( 2,486 ) ( 2,488 ) Net income available for common stockholders $ 156,572 $ 310,791 $ 344,914 Earnings per Common Share – basic: Net income available for common stockholders $ 1.49 $ 2.98 $ 3.32 Weighted average Common Shares outstanding – basic 105,120 104,232 103,876 Earnings per Common Share – diluted: Net income available for common stockholders $ 1.49 $ 2.98 $ 3.32 Weighted average Common Shares outstanding – diluted 107,567 107,061 106,714 See accompanying notes to consolidated financial statements. 56 Table on Contents HIGHWOODS PROPERTIES, INC. Consolidated Statements of Comprehensive Income (in thousands) Year Ended December 31, 2022 2021 2020 Comprehensive income: Net income $ 163,958 $ 323,310 $ 357,914 Other comprehensive income/(loss): Unrealized losses on cash flow hedges — ( 19 ) ( 1,238 ) Amortization of cash flow hedges ( 238 ) 508 247 Total other comprehensive income/(loss) ( 238 ) 489 ( 991 ) Total comprehensive income 163,720 323,799 356,923 Less-comprehensive (income) attributable to noncontrolling interests ( 4,900 ) ( 10,033 ) ( 10,512 ) Comprehensive income attributable to common stockholders $ 158,820 $ 313,766 $ 346,411 See accompanying notes to consolidated financial statements. 57 Table of Contents HIGHWOODS PROPERTIES, INC. Consolidated Statements of Equity (in thousands, except share amounts) Number of Common Shares Common Stock Series A Cumulative Redeemable Preferred Shares Additional Paid-In Capital Accumulated Other Compre-hensive Income/(Loss) Non-controlling Interests in Consolidated Affiliates Distributions in Excess of Net Income Available for Common Stockholders Total Balance as of December 31, 2019 103,756,046 $ 1,038 $ 28,859 $ 2,954,779 $ ( 471 ) $ 22,010 $ ( 831,808 ) $ 2,174,407 Issuances of Common Stock, net of issuance costs and tax withholdings 19,377 — — 2,196 — — — 2,196 Conversions of Common Units to Common Stock 3,570 — — 145 — — — 145 Dividends on Common Stock ($ 1.92 per share) — — — — — ( 199,331 ) ( 199,331 ) Dividends on Preferred Stock ($ 86.25 per share) — — — — — ( 2,488 ) ( 2,488 ) Adjustment of noncontrolling interests in the Operating Partnership to fair value — — 30,617 — — — 30,617 Distributions to noncontrolling interests in consolidated affiliates — — — — ( 1,138 ) — ( 1,138 ) Issuances of restricted stock 149,304 — — — — — — — Redemptions/repurchases of Preferred Stock — ( 33 ) — — — — ( 33 ) Share-based compensation expense, net of forfeitures ( 6,751 ) 1 — 6,209 — — — 6,210 Net (income) attributable to noncontrolling interests in the Operating Partnership — — — — — ( 9,338 ) ( 9,338 ) Net (income) attributable to noncontrolling interests in consolidated affiliates — — — — 1,174 ( 1,174 ) — Comprehensive income: Net income — — — — — 357,914 357,914 Other comprehensive loss — — — ( 991 ) — — ( 991 ) Total comprehensive income 356,923 Balance as of 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 459,477 8 — 21,656 — — — 21,664 Conversions of Common Units to Common Stock 333,920 — — 15,076 — — — 15,076 Dividends on Common Stock ($ 1.96 per share) — — — — — ( 204,182 ) ( 204,182 ) Dividends on Preferred Stock ($ 86.25 per share) — — — — — ( 2,486 ) ( 2,486 ) Adjustment of noncontrolling interests in the Operating Partnership to fair value — — ( 11,461 ) — — — ( 11,461 ) 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 ) 2 — 8,644 — — — 8,646 Net (income) attributable to noncontrolling interests in the Operating Partnership — — — — — ( 8,321 ) ( 8,321 ) Net (income) attributable to noncontrolling interests in consolidated affiliates — — — — 1,712 ( 1,712 ) — Comprehensive income: Net income — — — — — 323,310 323,310 Other comprehensive income — — — 489 — — 489 Total comprehensive income 323,799 Balance as of December 31, 2021 104,892,780 $ 1,049 $ 28,821 $ 3,027,861 $ (973) $ 22,416 $ (579,616) $ 2,499,558 58 Table of Contents HIGHWOODS PROPERTIES, INC. Consolidated Statements of Equity - Continued (in thousands, except share amounts) Number of Common Shares Common Stock Series A Cumulative Redeemable Preferred Shares Additional Paid-In Capital Accumulated Other Compre-hensive Income/(Loss) Non-controlling Interests in Consolidated Affiliates Distributions in Excess of Net Income Available for Common Stockholders Total Balance as of 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 106,141 1 — 5,166 — — — 5,167 Conversions of Common Units to Common Stock 30,909 — — 1,251 — — — 1,251 Dividends on Common Stock ($ 2.00 per share) — — — — — ( 210,183 ) ( 210,183 ) Dividends on Preferred Stock ($ 86.25 per share) — — — — — ( 2,486 ) ( 2,486 ) Adjustment of noncontrolling interests in the Operating Partnership to fair value — — 39,502 — — — 39,502 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 ) 2 — 7,550 — — — 7,552 Net (income) attributable to noncontrolling interests in the Operating Partnership — — — — — ( 3,670 ) ( 3,670 ) Net (income) attributable to noncontrolling interests in consolidated affiliates — — — — 1,230 ( 1,230 ) — Comprehensive income: Net income — — — — — 163,958 163,958 Other comprehensive loss — — — ( 238 ) — — ( 238 ) Total comprehensive income 163,720 Balance as of December 31, 2022 105,210,858 $ 1,052 $ 28,821 $ 3,081,330 $ ( 1,211 ) $ 22,235 $ ( 633,227 ) $ 2,499,000 See accompanying notes to consolidated financial statements. 59 Table on Contents HIGHWOODS PROPERTIES, INC. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2022 2021 2020 Operating activities: Net income $ 163,958 $ 323,310 $ 357,914 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 287,610 259,255 241,585 Amortization of lease incentives and acquisition-related intangible assets and liabilities ( 42 ) ( 1,903 ) ( 2,537 ) Share-based compensation expense 7,552 8,646 6,210 Net credit losses on operating lease receivables 3,199 425 5,458 Accrued interest on mortgages and notes receivable ( 88 ) ( 103 ) ( 118 ) Amortization of debt issuance costs 4,324 4,451 3,092 Amortization of cash flow hedges ( 238 ) 508 247 Amortization of mortgages and notes payable fair value adjustments ( 70 ) 862 1,681 Impairments of real estate assets 36,515 — 1,778 Losses on debt extinguishment — 286 3,674 Net gains on disposition of property ( 63,546 ) ( 174,059 ) ( 215,897 ) Equity in earnings of unconsolidated affiliates ( 1,535 ) ( 1,947 ) ( 4,005 ) Distributions of earnings from unconsolidated affiliates 614 1,417 1,533 Changes in operating assets and liabilities: Accounts receivable ( 10,955 ) 5,744 437 Prepaid expenses and other assets 1,685 1,575 ( 365 ) Accrued straight-line rents receivable ( 29,421 ) ( 22,100 ) ( 36,576 ) Accounts payable, accrued expenses and other liabilities 22,217 8,191 ( 5,951 ) Net cash provided by operating activities 421,779 414,558 358,160 Investing activities: Investments in acquired real estate and related intangible assets, net of cash acquired ( 224,934 ) ( 305,291 ) ( 2,363 ) Investments in development in-process ( 44,352 ) ( 77,854 ) ( 160,612 ) Investments in tenant improvements and deferred leasing costs ( 120,739 ) ( 93,654 ) ( 137,997 ) Investments in building improvements ( 76,415 ) ( 48,405 ) ( 62,154 ) Investment in acquired controlling interest in unconsolidated affiliate — ( 127,339 ) — Net proceeds from disposition of real estate assets 130,038 374,016 484,311 Distributions of capital from unconsolidated affiliates — — 72 Investments in mortgages and notes receivable ( 24 ) ( 84 ) ( 32 ) Repayments of mortgages and notes receivable 288 301 310 Investments in and advances to unconsolidated affiliates ( 261,772 ) ( 6,079 ) — Payments of earnest money deposits ( 15,500 ) — — Changes in other investing activities ( 1,389 ) ( 3,289 ) ( 10,853 ) Net cash provided by/(used in) investing activities $ ( 614,799 ) $ ( 287,678 ) $ 110,682 60 Table on Contents HIGHWOODS PROPERTIES, INC. Consolidated Statements of Cash Flows – Continued (in thousands) Year Ended December 31, 2022 2021 2020 Financing activities: Dividends on Common Stock $ ( 210,183 ) $ ( 204,182 ) $ ( 199,331 ) Redemptions/repurchases of Preferred Stock — ( 5 ) ( 33 ) Redemptions of Common Units ( 3,763 ) — — Dividends on Preferred Stock ( 2,486 ) ( 2,486 ) ( 2,488 ) Distributions to noncontrolling interests in the Operating Partnership ( 4,866 ) ( 5,516 ) ( 5,456 ) Distributions to noncontrolling interests in consolidated affiliates ( 1,411 ) ( 1,342 ) ( 1,138 ) Proceeds from the issuance of Common Stock 7,570 23,917 3,571 Costs paid for the issuance of Common Stock ( 247 ) ( 535 ) ( 215 ) Repurchase of shares related to tax withholdings ( 2,156 ) ( 1,718 ) ( 1,160 ) Borrowings on revolving credit facility 675,000 380,000 129,000 Repayments of revolving credit facility ( 359,000 ) ( 310,000 ) ( 350,000 ) Borrowings on mortgages and notes payable 550,000 200,000 398,364 Repayments of mortgages and notes payable ( 456,444 ) ( 353,780 ) ( 251,952 ) Payments of debt extinguishment costs — — ( 3,193 ) Payments for debt issuance costs and other financing activities ( 4,087 ) ( 9,279 ) ( 10,309 ) Net cash provided by/(used in) financing activities 187,927 ( 284,926 ) ( 294,340 ) Net increase/(decrease) in cash and cash equivalents and restricted cash ( 5,093 ) ( 158,046 ) 174,502 Cash and cash equivalents and restricted cash at beginning of the period 31,198 189,244 14,742 Cash and cash equivalents and restricted cash at end of the period $ 26,105 $ 31,198 $ 189,244 Reconciliation of cash and cash equivalents and restricted cash: Year Ended December 31, 2022 2021 2020 Cash and cash equivalents at end of the period $ 21,357 $ 23,152 $ 109,322 Restricted cash at end of the period 4,748 8,046 79,922 Cash and cash equivalents and restricted cash at end of the period $ 26,105 $ 31,198 $ 189,244 Supplemental disclosure of cash flow information: Year Ended December 31, 2022 2021 2020 Cash paid for interest, net of amounts capitalized $ 102,501 $ 79,474 $ 72,350 Supplemental disclosure of non-cash investing and financing activities: Year Ended December 31, 2022 2021 2020 Unrealized losses on cash flow hedges $ — $ ( 19 ) $ ( 1,238 ) Conversions of Common Units to Common Stock 1,251 15,076 145 Changes in accrued capital expenditures (1) ( 1,426 ) ( 9,843 ) ( 1,913 ) Write-off of fully depreciated real estate assets 58,905 68,307 46,656 Write-off of fully amortized leasing costs 29,083 43,648 25,618 Write-off of fully amortized debt issuance costs 3,292 5,200 1,438 Adjustment of noncontrolling interests in the Operating Partnership to fair value ( 39,502 ) 11,461 ( 30,617 ) Assumption of mortgages and notes payable related to acquisition activities — 403,000 — Issuances of Common Units to acquire real estate assets — — 6,163 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 as of December 31, 2022, 2021 and 2020 were $ 53.2 million, $ 56.1 million and $ 66.0 million, respectively. See accompanying notes to consolidated financial statements. 61 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors of the General Partner of Highwoods Realty Limited Partnership: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Highwoods Realty Limited Partnership and subsidiaries (the “Operating Partnership”) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, capital, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Operating Partnership as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Impairment of Real Estate Assets—Refer to Note 1 and Note 3 to the financial statements Critical Audit Matter Description The Operating Partnership performs an impairment analysis of properties which begins with an evaluation of events or changes in circumstances that may indicate that the carrying value may not be recoverable, such as a significant decline in occupancy, identification of materially adverse legal or environmental factors, a change in the designation of an asset from core to non-core, which may impact the anticipated holding period, or a decline in market value to an amount less than cost. When events or changes in circumstances indicate that the carrying value may not be recoverable, the Operating Partnership evaluates its real estate assets for impairment by comparing undiscounted future cash flows expected to be generated over the estimated hold period of each asset to the respective carrying amount. If the carrying amount of an asset exceeds the undiscounted future cash flows, an analysis is performed to determine the fair value of the asset. The Operating Partnership makes judgments that determine whether specific real estate assets possess indicators of impairment. Changes in those judgments could have a material impact on the real estate assets that are identified for further analysis. 62 For those real estate assets where an indicator has been identified, the Operating Partnership makes significant estimates and assumptions to determine the recoverability using undiscounted future cash flows expected to be generated over the estimated hold period of the asset, including estimates and assumptions related to the rental rates, growth rates, and capitalization rates. For those real estate assets where impairment has been identified, the Operating Partnership applies a discount rate to those undiscounted cash flows to determine fair value. Total real estate assets as of December 31, 2022, were $5.1 billion, net of impairment losses recorded in 2022 of $35 million. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the evaluation of real estate assets for possible indications of impairment included the following, among others: • We tested the effectiveness of controls over management’s identification of possible circumstances that may indicate that the carrying amounts of real estate assets are no longer recoverable, including controls over management’s designation of an asset as core or non-core, occupancy, and management’s estimates of fair values. • We evaluated management’s identification of impairment indicators by developing an independent determination if properties exhibit an indicator of impairment by: – Inquiring of management and reading investment committee and board minutes to identify properties that should be evaluated as non-core and therefore may impact the anticipated holding period. – Testing real estate assets for possible indications of impairment, including searching for adverse asset-specific circumstances and/or market conditions by reviewing questionnaires to regional property managers and using reputable market surveys. – With the assistance of our fair value specialists, developing an independent expectation of impairment indicators and comparing such expectation to management’s analysis. • We evaluated the Operating Partnership’s undiscounted cash flows prepared when an indicator of impairment has been identified by performing the following: – We evaluated the reasonableness of the valuation methodology as well as significant assumptions used in the undiscounted recoverability models, including the rental rates, growth rates, and capitalization rates. • We evaluated the Operating Partnership’s determination of fair value for those assets where impairment had been identified by performing the following: – We evaluated the reasonableness of the valuation methodology as well as significant assumptions used in the fair value model, including the growth rates. With the assistance of our fair value specialists, we also evaluated the reasonableness of the discount rate, rental rates, and capitalization rate assumptions. /s/ Deloitte & Touche LLP Raleigh, North Carolina February 7, 2023 We have served as the Operating Partnership’s auditor since 2006. 63 Table of Contents HIGHWOODS REALTY LIMITED PARTNERSHIP Consolidated Balance Sheets (in thousands, except unit and per unit data) December 31, 2022 2021 Assets: Real estate assets, at cost: Land $ 548,720 $ 549,228 Buildings and tenant improvements 5,909,754 5,718,169 Development in-process 46,735 6,890 Land held for development 231,218 215,257 6,736,427 6,489,544 Less-accumulated depreciation ( 1,609,502 ) ( 1,457,511 ) Net real estate assets 5,126,925 5,032,033 Real estate and other assets, net, held for sale — 3,518 Cash and cash equivalents 21,357 23,152 Restricted cash 4,748 8,046 Accounts receivable 25,481 14,002 Mortgages and notes receivable 1,051 1,227 Accrued straight-line rents receivable 293,674 268,324 Investments in and advances to unconsolidated affiliates 269,221 7,383 Deferred leasing costs, net of accumulated amortization of $ 163,751 and $ 143,111 , respectively 252,828 258,902 Prepaid expenses and other assets, net of accumulated depreciation of $ 21,660 and $ 21,408 , respectively 68,091 78,551 Total Assets $ 6,063,376 $ 5,695,138 Liabilities, Redeemable Operating Partnership Units and Capital: Mortgages and notes payable, net $ 3,197,215 $ 2,788,915 Accounts payable, accrued expenses and other liabilities 301,184 294,976 Total Liabilities 3,498,399 3,083,891 Commitments and contingencies Redeemable Operating Partnership Units: Common Units, 2,358,009 and 2,504,805 outstanding, respectively 65,977 111,689 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 94,798 140,510 Capital: Common Units: General partner Common Units, 1,071,601 and 1,069,888 outstanding, respectively 24,492 24,492 Limited partner Common Units, 103,730,448 and 103,414,083 outstanding, respectively 2,424,663 2,424,802 Accumulated other comprehensive loss ( 1,211 ) ( 973 ) Noncontrolling interests in consolidated affiliates 22,235 22,416 Total Capital 2,470,179 2,470,737 Total Liabilities, Redeemable Operating Partnership Units and Capital $ 6,063,376 $ 5,695,138 See accompanying notes to consolidated financial statements. 64 Table of Contents HIGHWOODS REALTY LIMITED PARTNERSHIP Consolidated Statements of Income (in thousands, except per unit amounts) Year Ended December 31, 2022 2021 2020 Rental and other revenues $ 828,929 $ 768,007 $ 736,900 Operating expenses: Rental property and other expenses 259,806 236,436 231,825 Depreciation and amortization 287,610 259,255 241,585 Impairments of real estate assets 36,515 — 1,778 General and administrative 42,266 40,553 41,031 Total operating expenses 626,197 536,244 516,219 Interest expense 105,385 85,853 80,962 Other income/(loss) 1,530 1,394 ( 1,707 ) Gains on disposition of property 63,546 174,059 215,897 Equity in earnings of unconsolidated affiliates 1,535 1,947 4,005 Net income 163,958 323,310 357,914 Net (income) attributable to noncontrolling interests in consolidated affiliates ( 1,230 ) ( 1,712 ) ( 1,174 ) Distributions on Preferred Units ( 2,486 ) ( 2,486 ) ( 2,488 ) Net income available for common unitholders $ 160,242 $ 319,112 $ 354,252 Earnings per Common Unit – basic: Net income available for common unitholders $ 1.50 $ 2.99 $ 3.33 Weighted average Common Units outstanding – basic 107,153 106,634 106,297 Earnings per Common Unit – diluted: Net income available for common unitholders $ 1.50 $ 2.99 $ 3.33 Weighted average Common Units outstanding – diluted 107,158 106,652 106,305 See accompanying notes to consolidated financial statements. 65 Table of Contents HIGHWOODS REALTY LIMITED PARTNERSHIP Consolidated Statements of Comprehensive Income (in thousands) Year Ended December 31, 2022 2021 2020 Comprehensive income: Net income $ 163,958 $ 323,310 $ 357,914 Other comprehensive income/(loss): Unrealized losses on cash flow hedges — ( 19 ) ( 1,238 ) Amortization of cash flow hedges ( 238 ) 508 247 Total other comprehensive income/(loss) ( 238 ) 489 ( 991 ) Total comprehensive income 163,720 323,799 356,923 Less-comprehensive (income) attributable to noncontrolling interests ( 1,230 ) ( 1,712 ) ( 1,174 ) Comprehensive income attributable to common unitholders $ 162,490 $ 322,087 $ 355,749 See accompanying notes to consolidated financial statements. 66 Table of Contents HIGHWOODS REALTY LIMITED PARTNERSHIP Consolidated Statements of Capital (in thousands) Common Units Accumulated Other Comprehensive Income/(Loss) Noncontrolling Interests in Consolidated Affiliates Total General Partners’ Capital Limited Partners’ Capital Balance as of December 31, 2019 $ 21,240 $ 2,102,769 $ ( 471 ) $ 22,010 $ 2,145,548 Issuances of Common Units, net of issuance costs and tax withholdings 84 8,275 — — 8,359 Distributions on Common Units ($ 1.92 per unit) ( 2,040 ) ( 201,962 ) — — ( 204,002 ) Distributions on Preferred Units ($ 86.25 per unit) ( 25 ) ( 2,463 ) — — ( 2,488 ) Share-based compensation expense, net of forfeitures 62 6,148 — — 6,210 Distributions to noncontrolling interests in consolidated affiliates — — — ( 1,138 ) ( 1,138 ) Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner 199 19,733 — — 19,932 Net (income) attributable to noncontrolling interests in consolidated affiliates ( 12 ) ( 1,162 ) — 1,174 — Comprehensive income: Net income 3,579 354,335 — — 357,914 Other comprehensive loss — — ( 991 ) — ( 991 ) Total comprehensive income 356,923 Balance as of 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 217 21,447 — — 21,664 Distributions on Common Units ($ 1.96 per unit) ( 2,089 ) ( 206,807 ) — — ( 208,896 ) Distributions on Preferred Units ($ 86.25 per unit) ( 25 ) ( 2,461 ) — — ( 2,486 ) Share-based compensation expense, net of forfeitures 86 8,560 — — 8,646 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 — 8 — — 8 Net (income) attributable to noncontrolling interests in consolidated affiliates ( 17 ) ( 1,695 ) — 1,712 — Comprehensive income: Net income 3,233 320,077 — — 323,310 Other comprehensive income — — 489 — 489 Total comprehensive income 323,799 Balance as of 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 52 5,115 — — 5,167 Redemptions of Common Units ( 38 ) ( 3,725 ) — — ( 3,763 ) Distributions on Common Units ($ 2.00 per unit) ( 2,142 ) ( 212,089 ) — — ( 214,231 ) Distributions on Preferred Units ($ 86.25 per unit) ( 25 ) ( 2,461 ) — — ( 2,486 ) Share-based compensation expense, net of forfeitures 76 7,476 — — 7,552 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 449 44,445 — — 44,894 Net (income) attributable to noncontrolling interests in consolidated affiliates ( 12 ) ( 1,218 ) — 1,230 — Comprehensive income: Net income 1,640 162,318 — — 163,958 Other comprehensive loss — — ( 238 ) — ( 238 ) Total comprehensive income 163,720 Balance as of December 31, 2022 $ 24,492 $ 2,424,663 $ ( 1,211 ) $ 22,235 $ 2,470,179 See accompanying notes to consolidated financial statements. 67 Table of Contents HIGHWOODS REALTY LIMITED PARTNERSHIP Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2022 2021 2020 Operating activities: Net income $ 163,958 $ 323,310 $ 357,914 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 287,610 259,255 241,585 Amortization of lease incentives and acquisition-related intangible assets and liabilities ( 42 ) ( 1,903 ) ( 2,537 ) Share-based compensation expense 7,552 8,646 6,210 Net credit losses on operating lease receivables 3,199 425 5,458 Accrued interest on mortgages and notes receivable ( 88 ) ( 103 ) ( 118 ) Amortization of debt issuance costs 4,324 4,451 3,092 Amortization of cash flow hedges ( 238 ) 508 247 Amortization of mortgages and notes payable fair value adjustments ( 70 ) 862 1,681 Impairments of real estate assets 36,515 — 1,778 Losses on debt extinguishment — 286 3,674 Net gains on disposition of property ( 63,546 ) ( 174,059 ) ( 215,897 ) Equity in earnings of unconsolidated affiliates ( 1,535 ) ( 1,947 ) ( 4,005 ) Distributions of earnings from unconsolidated affiliates 614 1,417 1,533 Changes in operating assets and liabilities: Accounts receivable ( 10,955 ) 5,744 437 Prepaid expenses and other assets 1,685 1,575 ( 365 ) Accrued straight-line rents receivable ( 29,421 ) ( 22,100 ) ( 36,576 ) Accounts payable, accrued expenses and other liabilities 22,217 8,191 ( 5,951 ) Net cash provided by operating activities 421,779 414,558 358,160 Investing activities: Investments in acquired real estate and related intangible assets, net of cash acquired ( 224,934 ) ( 305,291 ) ( 2,363 ) Investments in development in-process ( 44,352 ) ( 77,854 ) ( 160,612 ) Investments in tenant improvements and deferred leasing costs ( 120,739 ) ( 93,654 ) ( 137,997 ) Investments in building improvements ( 76,415 ) ( 48,405 ) ( 62,154 ) Investment in acquired controlling interest in unconsolidated affiliate — ( 127,339 ) — Net proceeds from disposition of real estate assets 130,038 374,016 484,311 Distributions of capital from unconsolidated affiliates — — 72 Investments in mortgages and notes receivable ( 24 ) ( 84 ) ( 32 ) Repayments of mortgages and notes receivable 288 301 310 Investments in and advances to unconsolidated affiliates ( 261,772 ) ( 6,079 ) — Payments of earnest money deposits ( 15,500 ) — — Changes in other investing activities ( 1,389 ) ( 3,289 ) ( 10,853 ) Net cash provided by/(used in) investing activities $ ( 614,799 ) $ ( 287,678 ) $ 110,682 68 Table of Contents HIGHWOODS REALTY LIMITED PARTNERSHIP Consolidated Statements of Cash Flows - Continued (in thousands) Year Ended December 31, 2022 2021 2020 Financing activities: Distributions on Common Units $ ( 214,231 ) $ ( 208,896 ) $ ( 204,002 ) Redemptions/repurchases of Preferred Units — ( 5 ) ( 33 ) Redemptions of Common Units ( 3,763 ) — — Distributions on Preferred Units ( 2,486 ) ( 2,486 ) ( 2,488 ) Distributions to noncontrolling interests in consolidated affiliates ( 1,411 ) ( 1,342 ) ( 1,138 ) Proceeds from the issuance of Common Units 7,570 23,917 3,571 Costs paid for the issuance of Common Units ( 247 ) ( 535 ) ( 215 ) Repurchase of units related to tax withholdings ( 2,156 ) ( 1,718 ) ( 1,160 ) Borrowings on revolving credit facility 675,000 380,000 129,000 Repayments of revolving credit facility ( 359,000 ) ( 310,000 ) ( 350,000 ) Borrowings on mortgages and notes payable 550,000 200,000 398,364 Repayments of mortgages and notes payable ( 456,444 ) ( 353,780 ) ( 251,952 ) Payments of debt extinguishment costs — — ( 3,193 ) Payments for debt issuance costs and other financing activities ( 4,905 ) ( 10,081 ) ( 11,094 ) Net cash provided by/(used in) financing activities 187,927 ( 284,926 ) ( 294,340 ) Net increase/(decrease) in cash and cash equivalents and restricted cash ( 5,093 ) ( 158,046 ) 174,502 Cash and cash equivalents and restricted cash at beginning of the period 31,198 189,244 14,742 Cash and cash equivalents and restricted cash at end of the period $ 26,105 $ 31,198 $ 189,244 Reconciliation of cash and cash equivalents and restricted cash: Year Ended December 31, 2022 2021 2020 Cash and cash equivalents at end of the period $ 21,357 $ 23,152 $ 109,322 Restricted cash at end of the period 4,748 8,046 79,922 Cash and cash equivalents and restricted cash at end of the period $ 26,105 $ 31,198 $ 189,244 Supplemental disclosure of cash flow information: Year Ended December 31, 2022 2021 2020 Cash paid for interest, net of amounts capitalized $ 102,501 $ 79,474 $ 72,350 Supplemental disclosure of non-cash investing and financing activities: Year Ended December 31, 2022 2021 2020 Unrealized losses on cash flow hedges $ — $ ( 19 ) $ ( 1,238 ) Changes in accrued capital expenditures (1) ( 1,426 ) ( 9,843 ) ( 1,913 ) Write-off of fully depreciated real estate assets 58,905 68,307 46,656 Write-off of fully amortized leasing costs 29,083 43,648 25,618 Write-off of fully amortized debt issuance costs 3,292 5,200 1,438 Adjustment of Redeemable Common Units to fair value ( 45,712 ) ( 810 ) ( 26,880 ) Assumption of mortgages and notes payable related to acquisition activities — 403,000 — Issuances of Common Units to acquire real estate assets — — 6,163 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 as of December 31, 2022, 2021 and 2020 were $ 53.2 million, $ 56.1 million and $ 66.0 million, respectively. See accompanying notes to consolidated financial statements. 69 Table of Contents HIGHWOODS PROPERTIES, INC. HIGHWOODS REALTY LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 (tabular dollar amounts in thousands, except per share and per unit data) 1. Description of Business and Significant Accounting Policies Description of Business Highwoods Properties, Inc. (the “Company”) is a fully integrated real estate investment trust (“REIT”) that provides leasing, management, development, construction and other customer-related services for its properties and for third parties. The Company conducts its activities through Highwoods Realty Limited Partnership (the “Operating Partnership”). As of December 31, 2022, we owned or had an interest in 28.8 million rentable square feet of in-service properties, 1.6 million rentable square feet of office properties under development and development land with approximately 5.1 million rentable square feet of potential office build out. The Company is the sole general partner of the Operating Partnership. As of December 31, 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. In the event the Company issues shares of Common Stock, the net proceeds of the issuance are contributed to the Operating Partnership in exchange for additional Common Units. Generally, the Operating Partnership is obligated to redeem each Common Unit at the request of the holder thereof for cash equal to the value of one share of Common Stock based on the average of the market price for the 10 trading days immediately preceding the notice date of such redemption, provided that the Company, at its option, may elect to acquire any such Common Units presented for redemption for cash or one share of Common Stock. The Common Units owned by the Company are not redeemable. During 2022, the Company redeemed 30,909 Common Units for a like number of shares of Common Stock and 115,887 Common Units for cash. These redemptions, in conjunction with the proceeds from issuances of Common Stock (see Note 10), increased the percentage of Common Units owned by the Company from 97.7 % as of December 31, 2021 to 97.8 % as of December 31, 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 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; therefore, we consolidate this entity. As of December 31, 2022, we also have involvement with six additional entities we determined to be variable interest entities, one of which we are the primary beneficiary and is consolidated and five of which we are not the primary beneficiary and are not consolidated. We also owned three properties through a joint venture investment as of December 31, 2022 that were consolidated. (See Note 4). All intercompany transactions and accounts have been eliminated. 70 Table of Contents 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. As of December 31, 2022, a reserve of $ 0.5 million was recorded to cover estimated reported and unreported claims. Real Estate and Related Assets Real estate and related assets are recorded at cost and stated at cost less accumulated depreciation. Renovations, replacements and other expenditures that improve or extend the life of assets are capitalized and depreciated over their estimated useful lives. Expenditures for ordinary maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of 40 years for buildings and depreciable land infrastructure costs, 15 years for building improvements and five to seven years for furniture, fixtures and equipment. Tenant improvements are amortized using the straight-line method over the initial fixed terms of the respective leases, which generally are from three to 10 years. Depreciation expense for real estate assets was $ 240.3 million, $ 218.6 million and $ 204.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. Expenditures directly related to the development and construction of real estate assets are included in net real estate assets and are stated at depreciated cost. Development expenditures include pre-construction costs essential to the development of properties, development and construction costs, interest costs on qualifying assets, real estate taxes, development personnel salaries and related costs and other costs incurred during the period of development. Interest and other carrying costs are capitalized until the building is ready for its intended use, but not later than a year from cessation of major construction activity. We consider a construction project as substantially completed and ready for its intended use upon the completion of tenant improvements. We cease capitalization on the portion that is substantially completed and occupied or held available for occupancy and capitalize only those costs associated with the portion under construction. We record liabilities for the performance of asset retirement activities when the obligation to perform such activities is probable even when uncertainty exists about the timing and/or method of settlement. Upon the acquisition of real estate assets accounted for as asset acquisitions, we assess the fair value of acquired tangible assets such as land, buildings and tenant improvements, intangible assets and liabilities such as above and below market leases, acquired in-place leases and other identifiable intangible assets and assumed liabilities. We allocate fair value on a relative basis based on estimated cash flow projections that utilize discount and/or capitalization rates as well as available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The above and below market rate portions of leases acquired in connection with property acquisitions are recorded in deferred leasing costs and in accounts payable, accrued expenses and other liabilities, respectively, at fair value and amortized into rental revenue over the remaining term of the respective leases as described below. Fair value is calculated as the present value of the difference between (1) the contractual amounts to be paid pursuant to each in-place lease and (2) our estimate of fair market lease rates for each corresponding in-place lease, using a discount rate that reflects the risks associated with the leases acquired and measured over a period equal to the remaining initial term of the lease for above-market leases and the remaining initial term plus the term of any renewal option that the customer would be economically compelled to exercise for below-market leases. In-place leases acquired are recorded at fair value in deferred leasing costs and amortized to depreciation and amortization expense over the remaining term of the respective lease. The value of in-place leases is based on our evaluation of the specific characteristics of each customer’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, current market conditions, the customer’s credit quality and costs to execute similar leases. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, we consider tenant improvements, leasing commissions and legal and other related expenses. 71 Table of Contents Assumed debt, if any, is recorded at fair value based on the present value of the expected future payments. Real estate and other assets are classified as long-lived assets held for use or as long-lived assets held for sale. Real estate is classified as held for sale when the sale of the asset is probable, has been duly approved by the Company, a legally enforceable contract has been executed and the buyer’s due diligence period, if any, has expired. Impairments of Real Estate Assets and Investments in Unconsolidated Affiliates With respect to assets classified as held for use, we perform an impairment analysis if our evaluation of events or changes in circumstances indicate that the carrying value may not be recoverable, such as a significant decline in occupancy, identification of materially adverse legal or environmental factors, change in our designation of an asset from core to non-core, which may impact the anticipated holding period, or a decline in market value to an amount less than cost. This analysis is generally performed at the property level, except when an asset is part of an interdependent group such as an office park, and consists of determining whether the asset’s carrying amount will be recovered from its undiscounted estimated future operating and residual cash flows. These cash flows are estimated based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for customers, changes in market rental rates, costs to operate each property and expected ownership periods. For properties under development, the cash flows are based on expected service potential of the asset or asset group when development is substantially complete. If the carrying amount of a held for use asset exceeds the sum of its undiscounted future operating and residual cash flows, an impairment loss is recorded for the difference between estimated fair value of the asset and the carrying amount. We generally estimate the fair value of assets held for use by using discounted cash flow analyses. In some instances, appraisal information may be available and is used in addition to a discounted cash flow analysis. As the factors used in generating these cash flows are difficult to predict and are subject to future events that may alter our assumptions, the discounted and/or undiscounted future operating and residual cash flows estimated by us in our impairment analyses or those established by appraisal may not be achieved and we may be required to recognize future impairment losses on properties held for use. We record assets held for sale at the lower of the carrying amount or estimated fair value. Fair value of assets held for sale is equal to the estimated or contracted sales price with a potential buyer less costs to sell. The impairment loss is the amount by which the carrying amount exceeds the estimated fair value. We also analyze our investments in unconsolidated affiliates for impairment. This analysis consists of determining whether an expected loss in market value of an investment is other than temporary by evaluating the length of time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the investment, and our intent and ability to retain our investment for a period of time sufficient to allow for any anticipated recovery in market value. As the factors used in this analysis are difficult to predict and are subject to future events that may alter our assumptions, we may be required to recognize future impairment losses on our investments in unconsolidated affiliates. Sales of Real Estate For sales of real estate where we have collected the consideration to which we are entitled in exchange for transferring the real estate, the related assets and liabilities are removed from the balance sheet and the resultant gain or loss is recorded in the period the transaction closes. Any post-sale involvement is accounted for as separate performance obligations and when the separate performance obligations are satisfied, the sales price allocated to each is recognized. 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 (“CAM”). Office properties owned by us that are under lease are primarily located in Atlanta, Charlotte, Dallas, Nashville, Orlando, 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. Payments from customers for CAM are considered nonlease components that are separated from lease components and are generally accounted for in accordance with the revenue recognition standard. However, we qualified for and elected the practical expedient related to combining the components because the lease component is classified as an operating lease and the timing and pattern of transfer of CAM income, which is not the predominant component, is the same as the lease component. As such, consideration for CAM is accounted for as part of the overall consideration in the lease. Payments from customers for property taxes and insurance are considered noncomponents of the lease and therefore no consideration is allocated to them 72 Table of Contents because they do not transfer a good or service to the customer. Fixed contractual payments from our leases are recognized on a straight-line basis over the terms of the respective leases. This means that, with respect to a particular lease, actual amounts billed in accordance with the lease during any given period may be higher or lower than the amount of rental revenue recognized for the period. Straight-line rental revenue is commenced when the customer assumes control of the leased premises. Accrued straight-line rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements. Some of our leases are subject to annual changes in the Consumer Price Index (“CPI”). Although increases in the CPI are not estimated as part of our measurement of straight-line rental revenue, to the extent that actual CPI is greater or less than the CPI at lease commencement, the amount of rent recognized in a given year is affected accordingly. Some of our leases have termination options and/or extension options. Termination options allow the customer to terminate the lease prior to the end of the lease term under certain circumstances. Termination options generally become effective half way or further into the original lease term and require advance notification from the customer and payment of a termination fee that reimburses us for a portion of the remaining rent under the original lease term and the undepreciated lease inception costs such as commissions, tenant improvements and lease incentives. Termination fee income is recognized on a straight-line basis from the date of the executed termination agreement through lease expiration when the amount of the fee is determinable and collectability of the fee is reasonably assured. Our extension options generally require a re-negotiation with the customer at market rates. Initial direct costs, primarily commissions, related to the leasing of our office properties are included in deferred leasing costs and are stated at amortized cost. Such expenditures are part of the investment necessary to execute leases and, therefore, are classified as investment activities in the statement of cash flows. All leasing commissions paid to third parties and our in-house personnel for new leases or lease renewals are capitalized. Capitalized leasing costs are amortized on a straight-line basis over the initial fixed terms of the respective leases. All other costs to negotiate or arrange a lease are expensed as incurred. Lease incentive costs, which are payments made to or on behalf of a customer as an incentive to sign a lease, are capitalized in deferred leasing costs and amortized on a straight-line basis over the respective lease terms as a reduction of rental revenues. Lease related receivables, which include accounts receivable and accrued straight-line rents receivable, are reduced for credit losses. Such amounts are recognized as a reduction to rental and other revenues. We regularly evaluate the collectability of our lease related receivables. Our evaluation of collectability primarily consists of reviewing the credit quality of our customer, historical trends of the customer and changes in customer payment terms. We do not maintain a general reserve to estimate amounts that may not be collectible. If our assumptions regarding the collectability of lease related receivables prove incorrect, we could experience credit losses in excess of what was recognized in rental and other revenues. Discontinued Operations Properties that are sold or classified as held for sale are classified as discontinued operations provided that the disposal represents a strategic shift that has (or will have) a major effect on our operations and financial results. Interest expense is included in discontinued operations if a related loan securing the sold property is to be paid off or assumed by the buyer in connection with the sale. Investments in Unconsolidated Affiliates We account for our joint venture investments using the equity method of accounting when our interests represent a general partnership interest but substantive participating rights or substantive kick out rights have been granted to the limited partners or when our interests do not represent a general partnership interest and we do not control the major operating and financial policies of the investment. These investments are initially recorded at cost as investments in unconsolidated affiliates and are subsequently adjusted for our share of earnings and cash contributions and distributions. To the extent our cost basis at formation of the joint venture is different than the basis reflected at the joint venture level, the basis difference is amortized over the life of the related assets and included in our share of equity in earnings of unconsolidated affiliates. Cash Equivalents We consider highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. 73 Table of Contents Restricted Cash Restricted cash represents cash deposits that are legally restricted or held by third parties on our behalf, such as construction-related escrows, property disposition proceeds set aside and designated or intended to fund future tax-deferred exchanges of qualifying real estate investments and escrows and reserves for debt service, real estate taxes and property insurance established pursuant to certain mortgage financing arrangements. Redeemable Common Units and Preferred Units Limited partners holding Common Units other than the Company (“Redeemable Common Units”) have the right to put any and all of the Common Units to the Operating Partnership and the Company has the right to put any and all of the Preferred Units to the Operating Partnership in exchange for their liquidation preference plus accrued and unpaid distributions in the event of a corresponding redemption by the Company of the underlying Preferred Stock. Consequently, these Redeemable Common Units and Preferred Units are classified outside of permanent partners’ capital in the Operating Partnership’s accompanying balance sheets. The recorded value of the Redeemable Common Units is based on fair value at the balance sheet date as measured by the closing price of Common Stock on that date multiplied by the total number of Redeemable Common Units outstanding. The recorded value of the Preferred Units is based on their redemption value. Income Taxes The Company has elected and expects to continue to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). A corporate REIT is a legal entity that holds real estate assets and, through the payment of dividends to stockholders, is generally permitted to reduce or avoid the payment of federal and state income taxes at the corporate level. To maintain qualification as a REIT, the Company is required to pay dividends to its stockholders equal to at least 90.0 % of its annual REIT taxable income, excluding net capital gains. The partnership agreement requires the Operating Partnership to pay economically equivalent distributions on outstanding Common Units at the same time that the Company pays dividends on its outstanding Common Stock. Other than income taxes related to its taxable REIT subsidiary, the Operating Partnership does not reflect any federal income taxes in its financial statements, since as a partnership the taxable effects of its operations are attributed to its partners. The Operating Partnership does record state income tax for states that tax partnership income directly. We conduct certain business activities through a taxable REIT subsidiary, as permitted under the Code. The taxable REIT subsidiary is subject to federal, state and local income taxes on its taxable income. We record provisions for income taxes based on its income recognized for financial statement purposes, including the effects of differences between such income and the amount recognized for tax purposes. Concentration of Credit Risk As of December 31, 2022, our consolidated properties were leased to approximately 1,500 customers. The geographic locations that comprise greater than 10.0 % of our rental and other revenues are Atlanta, Nashville, Raleigh and Tampa. Our customers engage in a wide variety of businesses. No single customer generated more than 4 % of our consolidated revenues during 2022. We maintain our cash and cash equivalents and our restricted cash at financial or other intermediary institutions. The combined account balances at each institution may exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. Additionally, from time to time in connection with tax-deferred 1031 transactions, our restricted cash balances may be commingled with other funds being held by any such intermediary institution, which would subject our balance to the credit risk of the institution. Derivative Financial Instruments We borrow funds at a combination of fixed and variable rates. Borrowings under our revolving credit facility and bank term loans bear interest at variable rates. Our long-term debt, which consists of secured and unsecured long-term financings, typically bears interest at fixed rates. Our interest rate risk management objectives are to limit generally the impact of interest rate changes on earnings and cash flows and lower our overall borrowing costs. To achieve these objectives, from time to time, we enter into interest rate hedge contracts such as collars, swaps, caps and treasury lock agreements in order to mitigate our interest rate risk with respect to existing and prospective debt instruments. We generally do not hold or issue these derivative 74 Table of Contents contracts for trading or speculative purposes. The interest rate on all of our variable rate debt is generally adjusted at one or three month intervals, subject to settlements under these interest rate hedge contracts. Interest rate swaps involve the receipt of variable rate amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income/(loss) and are subsequently reclassified into interest expense as interest payments are made on our debt. We account for terminated derivative instruments by recognizing the related accumulated other comprehensive income/(loss) balance in current earnings, unless the hedged forecasted transaction continues as originally planned, in which case we continue to amortize the accumulated other comprehensive income/(loss) into interest expense over the originally designated hedge period. Earnings Per Share and Per Unit Basic earnings per share of the Company is computed by dividing net income available for common stockholders by the weighted Common Shares outstanding - basic. Diluted earnings per share is computed by dividing net income available for common stockholders (inclusive of noncontrolling interests in the Operating Partnership) by the weighted Common Shares outstanding - basic plus the dilutive effect of options, warrants and convertible securities outstanding, including Common Units, using the treasury stock method. Weighted Common Shares outstanding - basic includes all unvested restricted stock where dividends received on such restricted stock are non-forfeitable. Basic earnings per unit of the Operating Partnership is computed by dividing net income available for common unitholders by the weighted Common Units outstanding - basic. Diluted earnings per unit is computed by dividing net income available for common unitholders by the weighted Common Units outstanding - basic plus the dilutive effect of options and warrants, using the treasury stock method. Weighted Common Units outstanding - basic includes all of the Company’s unvested restricted stock where distributions received on such restricted stock are non-forfeitable. 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, 2024 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. 75 Table of Contents 2. Leases Information as Lessor We recognized rental and other revenues related to operating lease payments of $ 816.3 million, $ 754.9 million and $ 726.0 million, of which variable lease payments were $ 69.8 million, $ 57.3 million and $ 56.0 million, during the years ended December 31, 2022, 2021 and 2020, respectively. The following table sets forth the undiscounted cash flows for future minimum base rents to be received from customers for leases in effect as of December 31, 2022 for our consolidated properties: 2023 $ 706,882 2024 681,005 2025 596,224 2026 534,928 2027 474,241 Thereafter 1,864,949 $ 4,858,229 Information as Lessee We have office assets encompassing 2.8 million rentable square feet subject to operating ground leases in Atlanta, Nashville, Orlando, Raleigh and Tampa with a weighted average remaining term of 49 years. Rental payments on these leases are adjusted periodically based on either the CPI or on a pre-determined schedule. The monthly payments on a pre-determined schedule are recognized on a straight-line basis over the terms of the respective leases. Changes in the CPI are not estimated as part of our measurement of straight-line rental expense. Upon initial adoption of ASC 842, we recognized a lease liability of $ 35.3 million ( in accounts payable, accrued expenses and other liabilities ) and a related right of use asset of $ 29.7 million ( in prepaid expenses and other assets ) on our Consolidated Balance Sheets equal to the present value of the minimum lease payments required under each ground lease. The difference between the recorded lease liability and right of use asset represents the accrued straight-line rent liability previously recognized under ASC 840. We used a discount rate of approximately 4.5 %, which was derived from our assessment of the credit quality of the Company and adjusted to reflect secured borrowing, estimated yield curves and long-term spread adjustments over appropriate tenors. Some of our ground leases contain extension options; however, these did not impact our calculation of the right of use asset and liability as they extend beyond the useful life of the properties subject to the operating ground leases. We recognized $ 2.6 million of ground lease expense during each of the years ended December 31, 2022, 2021, and 2020, and we paid $ 2.4 million, $ 2.3 million and $ 2.2 million in cash during 2022, 2021 and 2020, respectively . The following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments on operating ground leases as of December 31, 2022 and a reconciliation of those cash flows to the operating lease liability as of December 31, 2022: 2023 $ 2,213 2024 2,258 2025 2,306 2026 2,355 2027 2,407 Thereafter 77,802 89,341 Discount ( 56,162 ) Lease liability $ 33,179 Acquired Finance Lease During 2021, we acquired a portfolio of real estate assets from Preferred Apartment Communities, Inc. (“PAC”) (see Note 3). In conjunction with the acquisition, we assumed the ground leasehold interest to land underneath a parking garage. Under the ground lease, we have an obligation to acquire fee simple title to the land at our discretion any time, but no later than October 31, 2029. We determined this lease to be a finance lease. As such, we recognized a lease liability (in accounts payable, accrued expenses and other liabilities) and a corresponding right of use asset (in prepaid expenses and other assets ) of $ 5.3 76 Table of Contents million on our Consolidated Balance Sheet on the date of acquisition equal to the present value of the minimum lease payments required under the ground lease. Through October 31, 2029, the expected date at which we estimate we will satisfy the obligation and acquire fee simple title to the land, we will recognize interest expense equal to the lease liability times our incremental borrowing rate, which reflects the fixed rate at which we could borrow a similar amount for the same term and with similar collateral. We determined this rate to be approximately 2.6 %. We also recorded an additional $ 3.1 million right of use asset ( in prepaid expenses and other assets ) to reflect favorable terms of the ground lease when compared with market terms. No amortization will be recorded for the right of use assets because they are comprised of land. 3. Real Estate Assets Acquisitions During 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 2022, we also acquired land in Charlotte for an aggregate purchase price, including capitalized acquisition costs, of $ 27.0 million. During 2021, we acquired a portfolio of real estate assets from PAC. The portfolio consists of the following assets: Asset Market Submarket/BBD Square Footage 150 Fayetteville Raleigh CBD 560,000 CAPTRUST Towers Raleigh North Hills 300,000 Capitol Towers Charlotte SouthPark 479,000 Morrocroft Centre Charlotte SouthPark 291,000 Galleria 75 Redevelopment Site Atlanta Cumberland/Galleria Our total purchase price, net of closing credits and cash acquired, was $ 653.6 million, including $ 4.5 million of capitalized acquisition costs. The acquisition included the assumption of four secured loans (see Note 6). 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. The following table sets forth a summary of the relative fair value of the material assets acquired and liabilities assumed relating to this acquisition: Amount Recorded at Acquisition Real estate assets (1) $ 593,039 Acquisition-related intangible assets (in deferred financing and leasing costs) (1) $ 61,126 Right of use asset (in prepaid expenses and other assets) (1) $ 8,440 Mortgages and notes payable $ ( 403,000 ) Debt issuance costs (in mortgages and notes payable) (1) $ 3,473 Acquisition-related intangible liabilities (in accounts payable, accrued expenses and other liabilities) (1) $ ( 7,174 ) Lease liability (in accounts payable, accrued expenses and other liabilities) (1) $ ( 5,310 ) __________ (1) Included in purchase price. During 2021, we also acquired various development land parcels in Nashville for an aggregate purchase price, including capitalized acquisition costs, of $ 74.1 million. The $ 16.0 million purchase price for one of the acquired parcels is expected to be paid in or prior to second quarter 2023, and $ 15.5 million of this amount had been paid as of December 31, 2022 . Duri ng 2021, we also acquired our joint venture partner’s 75.0 % interest in our Highwoods DLF Forum, LLC joint venture (the “Forum”), which owned five buildings in Raleigh encompassing 636,000 rentable square feet, for a purchase price of $ 131.3 million. We previously accounted for our 25.0 % interest in this joint venture using the equity method of accounting. The assets and liabilities of the joint venture are now wholly owned and we have determined the acquisition constitutes an asset 77 Table of Contents purchase. As such, because the Forum is not a variable interest entity, we allocated our previously held equity interest at historical cost along with the consideration paid and acquisition costs to the assets acquired and liabilities assumed. 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 2020, we acquired two development land parcels totaling less than one acre in Raleigh and Nashville for an aggregate purchase price of $ 8.5 million, including the issuance of 118,592 Common Units and capitalized acquisition costs. Dispositions During 2022, we sold a total of five office buildings and various land parcels in Atlanta, Greensboro, Richmond and Tampa for an aggregate sales price of $ 133.5 million (before closing credits to buyers of $ 1.1 million) and recorded aggregate gains on disposition of property of $ 63.5 million. During 2021, we sold a total of 13 office buildings and various land parcels in Atlanta, Memphis, Raleigh, Richmond and Tampa for an aggregate sales price of $ 384.6 million (before closing credits to buyers of $ 6.9 million) and recorded aggregate gains on disposition of property of $ 172.8 million. During 2020, we sold a total of 52 buildings in Greensboro and Memphis and various land parcels for an aggregate sales price of $ 494.2 million (before closing credits to buyers of $ 5.7 million) and recorded aggregate gains on disposition of property of $ 215.5 million. During 2020, we also recognized $ 0.4 million of gain related to the satisfaction of a performance obligation as part of a 2016 land sale. Impairments 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 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. During 2020, we recorded an impairment of real estate assets of $ 1.8 million, which resulted from a change in market-based inputs and our assumptions about the use of the assets. 78 Table of Contents 4. Investments in and Advances to Affiliates Unconsolidated Affiliates We have equity interests of up to 50.0 % in various joint ventures with unrelated third parties that are accounted for using the equity method of accounting because we have the ability to exercise significant influence over the operating and financial policies of the joint venture investment. The difference between the cost of these investments and the net book value of the underlying net assets was $ 2.7 million and $ 0.6 million as of December 31, 2022 and 2021, respectively. The following table sets forth our ownership in unconsolidated affiliates as of December 31, 2022: Joint Venture Location Ownership Interest Granite Park Six JV, LLC Dallas 50.0 % GPI 23 Springs JV, LLC Dallas 50.0 % M+O JV, LLC Dallas 50.0 % Midtown East Tampa, LLC Tampa 50.0 % Brand/HRLP 2827 Peachtree, LLC Atlanta 50.0 % Plaza Colonnade, Tenant-in-Common Kansas City 50.0 % Kessinger/Hunter & Company, LC Kansas City 26.5 % - Granite Park Six JV, LLC/ GPI 23 Springs JV, LLC (“Granite Park Six joint venture”/“23Springs joint venture”) During 2022, we entered the Dallas market through the formation of two joint ventures with Granite Properties (“Granite”) to develop Granite Park Six and 23Springs. In connection with the formation, we agreed to contribute our 50.0 % share of the equity required to fund each development project. The Granite Park Six joint venture has an anticipated total investment of $ 200.0 million and the 23Springs joint venture has an anticipated total investment of $ 460.0 million. As of December 31, 2022, we have fully funded our share of the equity for the Granite Park Six joint venture and we have funded $ 41.9 million of our share of the equity for the 23Springs joint venture. 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. As of December 31, 2022, $ 15.3 million was drawn on this loan. 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. As of December 31, 2022, no amounts were drawn on this loan. - M+O JV, LLC (“McKinney & Olive joint venture”) During 2022, we expanded our Dallas market presence by acquiring McKinney & Olive through the formation of another joint venture with Granite in which we own a 50 % interest. The McKinney & Olive joint venture has an anticipated total investment of $ 394.7 million, which includes $ 1.7 million of near-term building improvements and $ 2.0 million of transaction costs. As part of the transaction, the McKinney & Olive joint venture assumed a secured loan recorded at fair value of $ 137.0 million, with a stated interest rate of 4.5 % and an effective interest rate of 5.3 %, that is scheduled to mature in July 2024. The remainder of the purchase price was funded with $ 80.0 million of short-term preferred equity contributed by us and $ 86.4 million of common equity contributed by each of Granite and us. The preferred equity contributed by us will be entitled to receive monthly distributions initially at a minimum rate of SOFR plus 350 basis points. - Midtown East Tampa, LLC (“Midtown East joint venture”) During 2022, we formed a joint venture with The Bromley Companies (“Bromley”) in which we own a 50 % interest to construct Midtown East, a multi-customer office development project located in the mixed-use Midtown Tampa project in Tampa’s Westshore submarket. Upon completion, the Midtown East joint venture will own 143,000 square feet of an overall 79 Table of Contents 432,000 square foot tower. The rest of Midtown East will serve as the future headquarters of Tampa Electric and Peoples Gas. The total anticipated investment for the Midtown East joint venture’s share of the overall project is $ 83.0 million. In connection with the formation, we agreed to contribute our 50 % share of the equity required to fund the development project, $ 0.3 million of which was funded as of December 31, 2022. We also committed to provide a $ 52.3 million interest-only secured construction loan to the Midtown East joint venture that is scheduled to mature on the third anniversary of completion. The loan bears interest at SOFR plus 450 basis points. As of December 31, 2022, no amounts were drawn on this loan. - Brand/HRLP 2827 Peachtree LLC (“2827 Peachtree joint venture”) During 2021, we formed a joint venture with Brand Properties, LLC (“Brand”) to construct 2827 Peachtree, a 135,000 square foot, multi-customer office building located in Atlanta’s Buckhead submarket. The 2827 Peachtree joint venture 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. 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 SOFR plus 300 basis points. As of December 31, 2022, $ 4.0 million was drawn on this loan. - Other Activities We receive development, management and leasing fees for services provided to certain of our joint ventures. These fees are recognized in income to the extent of our respective joint venture partner’s interest. During the years ended December 31, 2022, 2021 and 2020, we recognized $ 0.6 million, $ 1.6 million and $ 1.0 million, respectively, of development/construction, management and leasing fees from our unconsolidated joint ventures. Consolidated Affiliates - HRLP MTW, LLC (“Midtown West joint venture”) In 2019, we and Bromley formed a joint venture to construct Midtown West, a 152,000 square foot, multi-customer office building located in the mixed-use Midtown Tampa project in Tampa’s Westshore submarket. The Midtown West joint venture 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 Bromley 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 December 31, 2022, $ 39.2 million was drawn on this loan. - Highwoods-Markel Associates, LLC (“Markel”) We have a 50.0 % ownership interest in Markel, a consolidated joint venture. We are the manager and leasing agent for Markel’s properties, which are located in Richmond in exchange for customary management and leasing fees. We consolidate Markel since we are the managing member and control the major operating and financial policies of the entity. As controlling member, we have an obligation to cause this property-owning entity to distribute proceeds of liquidation to the noncontrolling interest member in these partially owned properties only if the net proceeds received by the entity from the sale of any of Markel’s assets warrant a distribution as determined by the agreement governing the joint venture. We estimate the value of such noncontrolling interest distributions would have been $ 34.4 million had the entity been liquidated as of December 31, 2022. This estimated settlement value is based on the fair value of the underlying properties which is based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for customers, changes in market rental rates and costs to operate each property. If the entity’s underlying assets are worth less than the underlying liabilities on the date of such liquidation, we would have no obligation to remit any consideration to the noncontrolling interest holder. The assets of Markel can be used only to settle obligations of the joint venture and its creditors have no recourse to our wholly owned assets. During 2021, Markel sold land in Richmond for a sale price of $ 3.0 million and recorded gain on disposition of property of $ 1.3 million. 80 Table of Contents Joint Venture Rights and Obligations With respect to some of our joint ventures, we have a right to buy, and our joint venture partner has a right to sell to us, such joint venture partner’s interest under certain circumstances for fair market value (less estimated costs to sell) during various timeframes in the future. For our Granite Park Six joint venture, such rights are exercisable during the two -year period commencing on the 10th anniversary of the completion date. For each of our 23Springs and McKinney & Olive joint ventures, such rights are exercisable during the two -year period commencing on the 12th anniversary of the stabilization date of 23Springs. For our 2827 Peachtree joint venture, such rights are exercisable during the two -year period commencing on the earlier of: (1) the stabilization date; (2) the seventh anniversary of the completion date; and (3) maturity of the loan provided by us to the joint venture. For our Midtown West joint venture, our right to buy our partner’s interest is exercisable during the two -year period commencing on the seventh anniversary of the completion date, and our partner’s right to sell its interest to us is exercisable during the period commencing on the stabilization date and ending on the ninth anniversary of the completion date. In addition to the foregoing, with respect to our Granite Park Six, 23Springs and Midtown West joint ventures, our joint venture partner has a right to receive additional consideration from us or the joint venture under certain circumstances if and to the extent the internal rate of return on the applicable development project exceeds certain thresholds. Variable Interest Entities The acquisition of SIX50 at Legacy Union in Charlotte was completed in 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 December 31, 2022, this variable interest entity had total assets, liabilities and cash flows of $ 199.9 million, $ 3.6 million, and $ 1.6 million, respectively. We 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 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 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. As of December 31, 2022, our risk of loss with respect to these arrangements was limited to the carrying value of each investment balance. Our investment balances were $ 40.6 million and $ 44.9 million as of December 31, 2022 for the Granite Park Six and 23Springs joint ventures, 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. We determined that we have a variable interest in the McKinney & Olive joint venture primarily because the entity was designed to pass along interest rate risk, equity price risk and operation risk to us and Granite as equity holders. The McKinney & Olive 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 investments by us and Granite, including the additional preferred equity provided by us, are 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. As of December 31, 2022, our risk of loss with respect to this arrangement was $ 166.3 million, which represents the carrying value of our investment balance and includes the $ 80.0 million of preferred equity we funded. The assets of the McKinney & Olive 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 determined that we have a variable interest in the Midtown East 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 Bromley as an equity holder. The Midtown East 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 investments provided by us and Bromley are 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. As of December 31, 2022, our risk of loss with respect to this arrangement was limited to the carrying value of the investment balance of $ 0.3 million as no amounts were outstanding under the loan. The assets of the Midtown East joint venture can be used only to settle obligations of the joint venture, and its creditors have no recourse to our wholly owned assets. 81 Table of Contents 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 investments provided by us and Brand are 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. As of December 31, 2022, our risk of loss with respect to this arrangement was $ 21.8 million, which consists of the $ 17.8 million carrying value of our investment balance plus the $ 4.0 million outstanding balance of 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 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 Bromley 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 investments provided by us and Bromley are 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: December 31, 2022 2021 Net real estate assets $ 59,854 $ 53,191 Cash and cash equivalents $ 1,009 $ 389 Accounts receivable $ 1,490 $ — Accrued straight-line rents receivable $ 1,921 $ 121 Deferred leasing costs, net $ 2,677 $ 1,519 Prepaid expenses and other assets $ 153 $ 163 Accounts payable, accrued expenses and other liabilities $ 1,212 $ 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. 82 Table of Contents 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: December 31, 2022 2021 Assets: Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets) $ 416,579 $ 402,013 Less accumulated amortization ( 163,751 ) ( 143,111 ) $ 252,828 $ 258,902 Liabilities (in accounts payable, accrued expenses and other liabilities): Acquisition-related below market lease liabilities $ 55,304 $ 57,703 Less accumulated amortization ( 29,859 ) ( 28,978 ) $ 25,445 $ 28,725 The following table sets forth amortization of intangible assets and below market lease liabilities: Year Ended December 31, 2022 2021 2020 Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization) $ 44,900 $ 38,173 $ 34,401 Amortization of lease incentives (in rental and other revenues) $ 2,090 $ 1,885 $ 1,847 Amortization of acquisition-related intangible assets (in rental and other revenues) $ 3,320 $ 1,932 $ 1,137 Amortization of acquisition-related intangible assets (in rental property and other expenses) $ — $ — $ 510 Amortization of acquisition-related below market lease liabilities (in rental and other revenues) $ ( 5,452 ) $ ( 5,720 ) $ ( 6,031 ) The following table sets forth scheduled future amortization of intangible assets and below market lease liabilities: Years Ending December 31, 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) 2023 $ 42,303 $ 2,097 $ 3,302 $ ( 4,888 ) 2024 36,899 1,677 3,088 ( 4,219 ) 2025 29,903 1,598 2,220 ( 2,729 ) 2026 25,642 1,397 1,860 ( 2,514 ) 2027 21,893 1,210 1,518 ( 2,112 ) Thereafter 67,139 3,484 5,598 ( 8,983 ) $ 223,779 $ 11,463 $ 17,586 $ ( 25,445 ) Weighted average remaining amortization periods as of December 31, 2022 (in years) 7.8 7.7 7.6 8.4 83 Table of Contents The following table sets forth the intangible assets acquired and below market lease liabilities assumed as a result of the acquisition of SIX50 at Legacy Union in Charlotte: Acquisition-Related Intangible Assets (amortized in Rental and Other Revenues) Acquisition-Related Intangible Assets (amortized in Depreciation and Amortization) Acquisition-Related Below Market Lease Liabilities (amortized in Rental and Other Revenues) Amount recorded at acquisition $ 4,722 $ 12,606 $ ( 2,172 ) Weighted average remaining amortization periods as of December 31, 2022 (in years) 8.8 9.6 12.5 6. Mortgages and Notes Payable Our mortgages and notes payable consisted of the following: December 31, 2022 2021 Secured indebtedness (1) : 4.27% (3.61% effective rate) mortgage loan due 2028 (2) $ 113,105 $ 115,731 4.00% mortgage loan due 2029 89,204 91,318 3.61% (3.19% effective rate) mortgage loan due 2029 (3) 84,666 84,973 3.40% (3.50% effective rate) mortgage loan due 2033 (4) 69,473 69,422 4.60% (3.73% effective rate) mortgage loan due 2037 (5) 127,540 130,498 483,988 491,942 Unsecured indebtedness: 3.625% (3.752% effective rate) notes due 2023 (6) — 249,726 3.875% (4.038% effective rate) notes due 2027 (7) 298,334 297,934 4.125% (4.271% effective rate) notes due 2028 (8) 347,863 347,449 4.200% (4.234% effective rate) notes due 2029 (9) 349,386 349,288 3.050% (3.079% effective rate) notes due 2030 (10) 399,302 399,204 2.600% (2.645% effective rate) notes due 2031 (11) 398,735 398,579 Variable rate term loan due 2026 (12) 200,000 200,000 Variable rate term loan due 2027 (12) 150,000 — Variable rate term loan due 2024 (12) 200,000 — Revolving credit facility due 2025 (13) 386,000 70,000 2,729,620 2,312,180 Less-unamortized debt issuance costs ( 16,393 ) ( 15,207 ) Total mortgages and notes payable, net $ 3,197,215 $ 2,788,915 __________ (1) Our secured mortgage loans were collateralized by real estate assets with an undepreciated book value of $ 747.4 million as of December 31, 2022. We paid down $ 6.4 million of secured loan balances through principal amortization during 2022. (2) Net of unamortized fair market value premium of $ 3.3 million and $ 3.9 million as of December 31, 2022 and 2021, respectively. (3) Net of unamortized fair market value premium of $ 2.0 million and $ 2.3 million as of December 31, 2022 and 2021, respectively. (4) Net of unamortized fair market value discount of $ 0.5 million and $ 0.6 million as of December 31, 2022 and 2021, respectively. (5) Net of unamortized fair market value premium of $ 9.3 million and $ 10.0 million as of December 31, 2022 and 2021, respectively. (6) Net of unamortized original issuance discount of $ 0.3 million as of December 31, 2021. This debt was repaid in 2022. (7) Net of unamortized original issuance discount of $ 1.7 million and $ 2.1 million as of December 31, 2022 and 2021, respectively. (8) Net of unamortized original issuance discount of $ 2.1 million and $ 2.6 million as of December 31, 2022 and 2021, respectively. (9) Net of unamortized original issuance discount of $ 0.6 million and $ 0.7 million as of December 31, 2022 and 2021, respectively. (10) Net of unamortized original issuance discount of $ 0.7 million and $ 0.8 million as of December 31, 2022 and 2021, respectively. 84 Table of Contents (11) Net of unamortized original issuance discount of $ 1.3 million and $ 1.4 million as of December 31, 2022 and 2021, respectively. (12) The interest rate was 5.34 % as of December 31, 2022. (13) The interest rate was 5.24 % as of December 31, 2022. The following table sets forth scheduled future principal payments, including amortization, due on our mortgages and notes payable as of December 31, 2022: Years Ending December 31, Amount 2023 $ 7,069 2024 207,365 2025 393,176 2026 206,911 2027 458,929 Thereafter 1,940,158 Less-unamortized debt issuance costs ( 16,393 ) $ 3,197,215 Our $ 750.0 million unsecured revolving credit facility is scheduled to mature in March 2025 and includes an accordion feature that currently allows for an additional $ 200.0 million of borrowing capacity subject to additional lender commitments. Assuming no defaults have occurred, we have an option to extend the maturity for two additional six -month periods. During the second quarter of 2022, in connection with the modification of our $ 200.0 million term loan as discussed below, the interest rate on our revolving credit facility was converted from LIBOR plus 90 basis points to SOFR plus a related spread adjustment of 10 basis points and a borrowing spread of 85 basis points, based on current credit ratings. The annual facility fee is 20 basis points. The interest rate and facility fee are based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. We may be entitled to a temporary reduction in the interest rate of one basis point provided we meet certain sustainability goals with respect to the ongoing reduction of greenhouse gas emissions. There was $ 386.0 million and $ 392.0 million outstanding under our new revolving credit facility as of December 31, 2022 and January 27, 2023, respectively. As of both December 31, 2022 and January 27, 2023, we had $ 0.1 million of outstanding letters of credit, which reduces the availability on our revolving credit facility. As a result, the unused capacity of our revolving credit facility as of December 31, 2022 and January 27, 2023 was $ 363.9 million and $ 357.9 million, respectively. During 2022, we obtained a $ 200.0 million, two -year unsecured bank term loan that is scheduled to mature in October 2024. Assuming no defaults have occurred, we have an option to extend the maturity for one additional year. The interest rate, based on current credit ratings, is SOFR plus a related spread adjustment of 10 basis points and a borrowing spread of 95 basis points. The interest rate is based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. We may be entitled to a temporary reduction in the interest rate of one basis point provided we meet certain sustainability goals with respect to the ongoing reduction of greenhouse gas emissions. Additionally, we used the additional $ 200.0 million of borrowings, together with available cash and borrowings under our revolving credit facility, to prepay without penalty $ 250.0 million principal amount of 3.625 % unsecured notes that were scheduled to mature in January 2023. During 2022, we modified our $ 200.0 million unsecured bank term loan to extend the maturity date from November 2022 to May 2026. As part of this modification, we also obtained a $ 150.0 million delayed-draw term loan, which was drawn in its entirety in the third quarter of 2022, that is scheduled to mature in May 2027. The interest rate, based on current credit ratings, is SOFR plus a related spread adjustment of 10 basis points and a borrowing spread of 95 basis points. The interest rate is based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. We may be entitled to a temporary reduction in the interest rate of one basis point provided we meet certain sustainability goals with respect to the ongoing reduction of greenhouse gas emissions. We incurred $ 2.7 million of debt issuance costs, which are being amortized along with certain existing unamortized debt issuance costs over the remaining term of our modified term loan. During 2021, in conjunction with the acquisition of real estate assets from PAC, we assumed four secured mortgage loans recorded at fair value of $ 403 million in the aggregate, with a weighted average effective interest rate of 3.54 % and a weighted average maturity of 10.7 years. We incurred $ 3.5 million of debt issuance costs related to these assumptions, which will be amortized over the remaining terms of the loans. 85 Table of Contents During 2021, we also obtained a $ 200.0 million, six -month unsecured bridge facility. The bridge facility was originally scheduled to mature in January 2022. The bridge facility bore interest at LIBOR plus 85 basis points, had a commitment fee of 20 basis points. We incurred $ 1.0 million of debt issuance costs related to this bridge facility which were being amortized over the six -month term. This bridge facility was prepaid in full without penalty prior to December 31, 2021. We recorded $ 0.2 million of loss on debt extinguishment related to this prepayment. During 2021, we prepaid without penalty the remaining $ 150.0 million principal amount of 3.20 % unsecured notes that was scheduled to mature in June 2021. We recorded $ 0.1 million of loss on debt extinguishment related to this prepayment. During 2020, the Operating Partnership issued $ 400.0 million aggregate principal amount of 2.600 % notes due February 2031, less original issuance discount of $ 1.6 million. These notes were priced to yield 2.645 %. Underwriting fees and other expenses were incurred that aggregated $ 3.4 million; these costs were deferred and will be amortized over the term of the notes. The net proceeds from the issuance were used: (1) to finance the Operating Partnership’s cash tender offer to purchase $ 150.0 million principal amount of its 3.20 % notes due June 15, 2021 at a purchase price of 101.908 % of the face amount of the notes, plus accrued and unpaid interest; (2) to prepay without penalty our $ 100.0 million unsecured bank term loan that was scheduled to mature in January 2022 and which bore interest at LIBOR plus 110 basis points; and (3) for general corporate purposes. We recorded $ 3.7 million of aggregate losses on debt extinguishment related to the repurchase of the 3.20 % notes and the term loan prepayment. We previously entered into floating-to-fixed interest rate swaps through January 2022 with respect to an aggregate of $ 50.0 million LIBOR-based borrowings. These swaps effectively fixed the underlying one -month LIBOR rate at a weighted average rate of 1.693 %. During 2022, these interest rate swaps expired. We are currently in compliance with financial covenants with respect to our consolidated debt. Our revolving credit facility and bank term loans require us to comply with customary operating covenants and various financial requirements. Upon an event of default on the revolving credit facility, the lenders having at least 51.0 % of the total commitments under the revolving credit facility can accelerate all borrowings then outstanding, and we could be prohibited from borrowing any further amounts under our revolving credit facility, which would adversely affect our ability to fund our operations. In addition, certain of our unsecured debt agreements contain cross-default provisions giving the unsecured lenders the right to declare a default if we are in default under more than $ 35.0 million with respect to other loans in some circumstances. The Operating Partnership has $ 298.3 million carrying amount of 2027 notes outstanding, $ 347.9 million carrying amount of 2028 notes outstanding, $ 349.4 million carrying amount of 2029 notes outstanding, $ 399.3 million carrying amount of 2030 notes outstanding and $ 398.7 million carrying amount of 2031 notes outstanding. The indenture that governs these outstanding notes requires us to comply with customary operating covenants and various financial ratios. The trustee or the holders of at least 25.0 % in principal amount of any series of notes can accelerate the principal amount of such series upon written notice of a default that remains uncured after 60 days. We have considered our short-term liquidity needs within one year from February 7, 2023 (the date of issuance of the annual financial statements) and the adequacy of our estimated cash flows from operating activities and other available financing sources to meet these needs. In particular, we have considered our scheduled debt maturities during such one-year period. We have concluded it is probable we will meet these short-term liquidity requirements through a combination of the following: • available cash and cash equivalents; • cash flows from operating activities; • issuance of debt securities by the Operating Partnership; • issuance of secured debt; • bank term loans; • borrowings under our revolving credit facility; • issuance of equity securities by the Company or the Operating Partnership; and 86 Table of Contents • the disposition of non-core assets. Capitalized Interest Total interest capitalized to wholly-owned and joint venture development and significant building and tenant improvement projects was $ 4.0 million, $ 9.6 million and $ 8.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. 7. Commitments and Contingencies Lease and Contractual Commitments We have $ 300.6 million of lease and contractual commitments as of December 31, 2022. Lease and contractual commitments represent commitments under signed leases and contracts for operating properties (excluding tenant-funded tenant improvements), contracts for development/redevelopment projects and unfunded joint venture equity contributions agreed to at formation, of which $ 60.6 million was recorded on our Consolidated Balance Sheet as of December 31, 2022. Contingent Consideration We had $ 0.8 million of contingent consideration related to a parcel of acquired development land as of both December 31, 2022 and 2021. The contingent consideration is payable in cash to a third party if and to the extent future development milestones as outlined in the purchase agreements are met. Environmental Matters Substantially all of our in-service and development properties have been subjected to Phase I environmental assessments and, in certain instances, Phase II environmental assessments. Such assessments and/or updates have not revealed, nor are we aware of, any environmental liability that we believe would have a material adverse effect in our Consolidated Financial Statements. Litigation, Claims and Assessments We are from time to time a party to a variety of legal proceedings, claims and assessments arising in the ordinary course of our business. We regularly assess the liabilities and contingencies in connection with these matters based on the latest information available. For those matters where it is probable that we have incurred or will incur a loss and the loss or range of loss can be reasonably estimated, the estimated loss is accrued and charged to income in our Consolidated Financial Statements. In other instances, because of the uncertainties related to both the probable outcome and amount or range of loss, a reasonable estimate of liability, if any, cannot be made. Based on the current expected outcome of such matters, none of these proceedings, claims or assessments is expected to have a material effect on our business, financial condition, results of operations or cash flows. Joint Venture Buyout Rights and Obligations With respect to certain joint ventures, we have a right to buy, and our joint venture partner has a right to sell, such joint venture interest to us under certain circumstances for fair market value (less estimated costs to sell) at various dates in the future. See Note 4. In addition, with respect to certain of our joint ventures, our joint venture partner has a right to receive additional consideration from us or the joint venture under certain circumstances if and to the extent the internal rate of return on the applicable development project exceeds certain thresholds. 87 Table of Contents 8. Noncontrolling Interests Noncontrolling Interests in Consolidated Affiliates As of December 31, 2022, our noncontrolling interests in consolidated affiliates relate to our joint venture partners’ 50.0 % interest in Markel and 20.0 % interest in the Midtown West joint venture. See Note 4. Our joint venture partners are unrelated third parties. Noncontrolling Interests in the Operating Partnership Noncontrolling interests in the Operating Partnership relate to the ownership of Redeemable Common Units. Net income attributable to noncontrolling interests in the Operating Partnership is computed by applying the weighted average percentage of Redeemable Common Units during the period, as a percent of the total number of outstanding Common Units, to the Operating Partnership’s net income for the period after deducting distributions on Preferred Units. When a noncontrolling unitholder redeems a Common Unit for a share of Common Stock or cash, the noncontrolling interests in the Operating Partnership are reduced and the Company’s share in the Operating Partnership is increased by the fair value of each security at the time of redemption. The following table sets forth the Company’s noncontrolling interests in the Operating Partnership: Year Ended December 31, 2022 2021 Beginning noncontrolling interests in the Operating Partnership $ 111,689 $ 112,499 Adjustment of noncontrolling interests in the Operating Partnership to fair value ( 39,502 ) 11,461 Conversions of Common Units to Common Stock ( 1,251 ) ( 15,076 ) Redemptions of Common Units ( 3,763 ) — Net income attributable to noncontrolling interests in the Operating Partnership 3,670 8,321 Distributions to noncontrolling interests in the Operating Partnership ( 4,866 ) ( 5,516 ) Total noncontrolling interests in the Operating Partnership $ 65,977 $ 111,689 The following table sets forth net income available for common stockholders and transfers from the Company’s noncontrolling interests in the Operating Partnership: Year Ended December 31, 2022 2021 2020 Net income available for common stockholders $ 156,572 $ 310,791 $ 344,914 Increase in additional paid in capital from conversions of Common Units to Common Stock 1,251 15,076 145 Redemptions of Common Units 3,763 — — Issuances of Common Units — — ( 6,163 ) Change from net income available for common stockholders and transfers from noncontrolling interests $ 161,586 $ 325,867 $ 338,896 88 Table of Contents 9. Disclosure About Fair Value of Financial Instruments The following summarizes the levels of inputs that we use to measure fair value. Level 1. Quoted prices in active markets for identical assets or liabilities. Our Level 1 asset is our investment in marketable securities that we use to pay benefits under our non-qualified deferred compensation plan. Our Level 1 liability is our non-qualified deferred compensation obligation. The Company’s Level 1 noncontrolling interests in the Operating Partnership relate to the ownership of Common Units by various individuals and entities other than the Company. Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Our Level 2 assets include the fair value of our mortgages and notes receivable. Our Level 2 liabilities include the fair value of our mortgages and notes payable and interest rate swaps. The fair value of mortgages and notes receivable and mortgages and notes payable is estimated by the income approach utilizing contractual cash flows and market-based interest rates to approximate the price that would be paid in an orderly transaction between market participants. The fair value of interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments of interest rate swaps are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves. In addition, credit valuation adjustments are considered in the fair values to account for potential nonperformance risk, but were concluded to not be significant inputs to the calculation for the periods presented. Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Our Level 3 assets include any real estate assets recorded at fair value on a non-recurring basis as a result of our quarterly impairment analysis, which are valued using unobservable local and national industry market data such as comparable sales, appraisals, brokers’ opinions of value and/or the terms of definitive sales contracts. Significant increases or decreases in any valuation inputs in isolation would result in a significantly lower or higher fair value measurement. 89 Table of Contents The following table sets forth our assets and liabilities and the Company’s noncontrolling interests in the Operating Partnership that are measured or disclosed at fair value within the fair value hierarchy: Level 1 Level 2 Total Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Observable Inputs Fair Value as of December 31, 2022: Assets: Mortgages and notes receivable, at fair value (1) $ 1,051 $ — $ 1,051 Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets) 2,564 2,564 — Total Assets $ 3,615 $ 2,564 $ 1,051 Noncontrolling Interests in the Operating Partnership $ 65,977 $ 65,977 $ — Liabilities: Mortgages and notes payable, net, at fair value (1) $ 2,832,973 $ — $ 2,832,973 Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities) 2,564 2,564 — Total Liabilities $ 2,835,537 $ 2,564 $ 2,832,973 Fair Value as of December 31, 2021: Assets: Mortgages and notes receivable, at fair value (1) $ 1,227 $ — $ 1,227 Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets) 2,866 2,866 — Total Assets $ 4,093 $ 2,866 $ 1,227 Noncontrolling Interests in the Operating Partnership $ 111,689 $ 111,689 $ — Liabilities: Mortgages and notes payable, net, at fair value (1) $ 2,907,492 $ — $ 2,907,492 Interest rate swaps (in accounts payable, accrued expenses and other liabilities) 60 — 60 Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities) 2,866 2,866 — Total Liabilities $ 2,910,418 $ 2,866 $ 2,907,552 __________ (1) Amounts are not recorded at fair value on our Consolidated Balance Sheets as of December 31, 2022 and 2021. At various points throughout 2022, there were Level 3 impaired real estate assets resulting from the shortened hold period assumptions for certain assets in Pittsburgh, which included the following: • a land parcel measured at a fair value of $ 1.7 million in the third quarter of 2022. This impairment resulted from the changes in our assumptions about the use of the asset as a result of our plan to exit the Pittsburgh market and was calculated using broker opinions of value, as observable inputs were not available; and • EQT Plaza, an in-service office building measured at a fair value of $ 57.4 million in the second quarter of 2022. This impairment resulted from the shortened hold period assumptions for the asset as a result of our plan to exit the Pittsburgh market. The estimated fair value was calculated using broker opinions of value, which incorporate an income approach, as observable inputs were not available. Key assumptions used in the impairment calculation were estimated selling costs of 3.5 % (including seller’s share of anticipated transfer taxes), the high end of an estimated discount rate ranging from 13.2 % to 16.2 % and an estimated terminal capitalization rate of 8.0 %. 90 Table of Contents 10. Equity Common Stock Issuances 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 2022 and 2021, respectively, the Company issued 130,011 and 456,273 shares of Common Stock under its equity distribution agreements at an average gross sales price of $ 46.50 and $ 46.23 per share and received net proceeds, after sales commissions, of $ 6.0 million and $ 20.8 million. As of December 31, 2022, the Company had 94.8 million remaining shares of Common Stock authorized to be issued under its charter. Common Stock Dividends Dividends of the Company declared per share of Common Stock were $ 2.00 , $ 1.96 and $ 1.92 for the years ended December 31, 2022, 2021 and 2020, respectively. The following table sets forth the Company’s estimated taxability to the common stockholders of dividends per share for federal income tax purposes: Year Ended December 31, 2022 2021 2020 Ordinary dividend $ 1.82 $ 1.87 $ 1.65 Capital gains 0.18 0.09 0.25 Return of capital — — 0.02 Total $ 2.00 $ 1.96 $ 1.92 The Company’s tax returns have not been examined by the Internal Revenue Service (“IRS”) and, therefore, the taxability of dividends is subject to change. Preferred Stock The following table sets forth the Company’s outstanding Preferred Stock as of both December 31, 2022 and 2021 : Issue Date Number of Shares Outstanding Carrying Value Liquidation Preference Per Share Optional Redemption Date Annual Dividends Payable Per Share (in thousands) 8.625% Series A Cumulative Redeemable 2/12/1997 29 $ 28,821 $ 1,000 2/12/2027 $ 86.25 The following table sets forth the Company’s estimated taxability to the preferred stockholders of dividends per share for federal income tax purposes: Year Ended December 31, 2022 2021 2020 8.625% Series A Cumulative Redeemable: Ordinary dividend $ 78.48 $ 82.38 $ 74.96 Capital gains 7.77 3.87 11.29 Total $ 86.25 $ 86.25 $ 86.25 The Company’s tax returns have not been examined by the IRS and, therefore, the taxability of dividends is subject to change. 91 Table of Contents Warrants As of both December 31, 2022 and 2021, we had 15,000 warrants outstanding with an exercise price of $ 32.50 per share. Upon exercise of a warrant, the Company will contribute the exercise price to the Operating Partnership in exchange for Common Units. Therefore, the Operating Partnership accounts for such warrants as if issued by the Operating Partnership. These warrants have no expiration date. Common Unit Distributions Distributions of the Operating Partnership declared per Common Unit were $ 2.00 , $ 1.96 and $ 1.92 for the years ended December 31, 2022, 2021 and 2020, respectively. Redeemable Common Units Generally, the Operating Partnership is obligated to redeem each Redeemable Common Unit at the request of the holder thereof for cash equal to the value of one share of Common Stock based on the average of the market price for the 10 trading days immediately preceding the notice date of such redemption, provided that the Company, at its option, may elect to acquire any such Redeemable Common Unit presented for redemption for cash or one share of Common Stock. When a holder redeems a Redeemable Common Unit for a share of Common Stock or cash, the Company’s share in the Operating Partnership will be increased. The Common Units owned by the Company are not redeemable. Preferred Units The following table sets forth the Operating Partnership’s outstanding Preferred Units as of both December 31, 2022 and 2021: Issue Date Number of Units Outstanding Carrying Value Liquidation Preference Per Unit Optional Redemption Date Annual Distributions Payable Per Unit (in thousands) 8.625% Series A Cumulative Redeemable 2/12/1997 29 $ 28,821 $ 1,000 2/12/2027 $ 86.25 92 Table of Contents 11. Employee Benefit Plans Officer, Management and Director Compensation Programs Officers of the Company participate in an annual non-equity incentive program pursuant to which they are eligible to earn cash payments based on a percentage of their annual base salary in effect for December of the applicable year. Under this component of our executive compensation program, officers are eligible to earn additional cash compensation generally to the extent specific performance-based metrics are achieved during the most recently completed year. The position held by each officer has a target annual incentive percentage that ranges from 25 % to 140 % of base salary. The more senior the position, the greater the portion of compensation that varies with performance. The percentage amount an officer may earn under the annual non-equity incentive plan is the product of the target annual incentive percentage times an “actual performance factor,” which can range from zero to 200 %. Amounts under our annual non-equity incentive plan are accrued and expensed in the year earned, but are typically paid early in the following year. Certain other employees participate in a similar annual non-equity incentive program. Incentive eligibility ranges from 5 % to 30 % of annual base salary. These amounts are also accrued and expensed in the year earned, but are typically paid early in the following year. The Company’s officers are eligible to receive a mix of long-term equity incentive awards on or about March 1 of each year. Prior to 2018, the mix generally consisted of stock options, time-based restricted stock and total return-based restricted stock. Since 2018, the mix has consisted of time-based restricted stock and total return-based restricted stock. Time-based restricted stock grants are also made annually to directors and certain other employees. Dividends received on restricted stock are non-forfeitable and are paid at the same rate and on the same date as on shares of Common Stock, except that, with respect to shares of total return-based restricted stock issued to the Company’s chief executive officer, dividends accumulate and are payable only if and to the extent the shares vest. Dividends paid on subsequently forfeited shares are expensed. Additional shares of total return-based restricted stock may be issued at the end of the applicable measurement periods if and to the extent actual performance exceeds certain levels of performance. Such additional shares, if any, would be fully vested when issued. No expense is recorded for additional shares of total return-based restricted stock that may be issued at the end of the applicable measurement period since that possibility is reflected in the grant date fair value. The following table sets forth the number of shares of Common Stock reserved for future issuance under the Company’s long-term equity incentive plans: December 31, 2022 2021 Outstanding stock options and warrants 527,067 527,067 Possible future issuance under equity incentive plans 2,817,293 2,999,100 3,344,360 3,526,167 Of the possible future issuance under the Company’s long-term equity incentive plans as of December 31, 2022, no more than an additional 0.8 million shares can be in the form of restricted stock. During the years ended December 31, 2022, 2021 and 2020, we recognized share-based compensation expense of $ 7.6 million, $ 8.6 million and $ 6.2 million, respectively. Because REITs generally do not pay income taxes, we do not realize tax benefits on share-based payments. As of December 31, 2022, there was $ 3.6 million of total unrecognized share-based compensation costs, which will be recognized over a weighted average remaining contractual term of 1.9 years. - Stock Options Stock options issued from 2014 through 2017 vest ratably on an annual basis over four years and expire after 10 years. All stock options have an exercise price equal to the last reported stock price of our Common Stock on the New York Stock Exchange (“NYSE”) on the last trading day prior to grant. The value of all options as of the date of grant is calculated using the Black-Scholes option-pricing model and is amortized over the respective vesting period or the service period, if shorter, for employees who are or will become eligible under the Company’s retirement plan. 93 Table of Contents The following table sets forth stock option activity: Options Outstanding Number of Options Weighted Average Exercise Price Stock options outstanding as of December 31, 2019 584,902 $ 45.75 Exercised ( 42,163 ) 41.10 Forfeited ( 5,366 ) 50.82 Stock options outstanding as of December 31, 2020 537,373 46.07 Exercised ( 25,306 ) 43.76 Stock options outstanding as of December 31, 2021 (1) 512,067 46.18 __________ (1) There were no options granted, canceled, exercised or forfeited during the year ended December 31, 2022. The Company had 512,067 options exercisable as of both December 31, 2022 and 2021, with a weighted average exercise price of $ 46.18 at each date. As of December 31, 2022, these options had a weighted average remaining life of 3.0 years, and all had exercise prices higher than the market price of our common stock. As of December 31, 2021, these options had a weighted average remaining life of 4.0 years, an intrinsic value of $ 0.6 million, and there were 279,549 shares that had exercise prices higher than the market price of our common stock. No options were exercised during the year ended December 31, 2022 . Cash received or receivable from options exercised was $ 1.1 million and $ 1.9 million for the years ended December 31, 2021 and 2020, respectively. The total intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was $ 0.1 million and $ 0.4 million, respectively. The total intrinsic value of options outstanding as of December 31, 2021 and 2020 was $ 0.6 million and $ 0.1 million, respectively. The Company generally does not permit the net cash settlement of exercised stock options, but does permit net share settlement so long as the shares received are held for at least a year. The Company has a practice of issuing new shares to satisfy stock option exercises. - Time-Based Restricted Stock Shares of time-based restricted stock vest ratably on an annual basis generally over four years . Beginning in 2019, shares of time-based restricted stock granted to non-employee directors vest on the first anniversary of the grant date. The value of grants of time-based restricted stock is based on the market value of Common Stock as of the date of grant and is amortized to expense over the respective vesting period or the service period, if shorter, for employees who are or will become eligible under the Company’s retirement plan. The following table sets forth time-based restricted stock activity: Number of Shares Weighted Average Grant Date Fair Value Restricted shares outstanding as of December 31, 2019 218,151 $ 45.73 Awarded and issued (1) 83,116 44.88 Vested (2) ( 88,326 ) 45.86 Forfeited ( 3,751 ) 45.78 Restricted shares outstanding as of December 31, 2020 209,190 45.34 Awarded and issued (1) 103,120 39.99 Vested (2) ( 89,264 ) 45.90 Forfeited ( 3,327 ) 43.13 Restricted shares outstanding as of December 31, 2021 219,719 42.63 Awarded and issued (1) 99,975 43.58 Vested (2) ( 101,082 ) 42.80 Forfeited ( 779 ) 42.37 Restricted shares outstanding as of December 31, 2022 217,833 $ 42.63 __________ 94 Table of Contents (1) The weighted average fair value at grant date of time-based restricted stock issued during the years ended December 31, 2022, 2021 and 2020 was $ 4.4 million, $ 4.1 million and $ 3.7 million, respectively. (2) The vesting date fair value of time-based restricted stock that vested during the years ended December 31, 2022, 2021 and 2020 was $ 4.4 million, $ 3.6 million and $ 3.9 million, respectively. Vested shares include those shares surrendered by employees to satisfy tax withholding obligations in connection with such vesting. - Total Return-Based Restricted Stock Shares of total return-based restricted stock vest to the extent the Company’s absolute total returns for certain pre-determined three -year periods exceed predetermined goals. The amount subject to vesting ranges from zero to 150 %. For total return-based restricted stock issued prior to 2022, notwithstanding the Company’s absolute total return, if the Company’s total return exceeds 100 % of the average peer group total return index, 100 % of total return-based restricted stock issued will vest at the end of the applicable period. For total return-based restricted stock issued during 2022, notwithstanding the Company’s absolute total return, if the Company’s total return is in the 50th percentile or greater as compared to all of the companies included in the FTSE NAREIT Equity Office Index, 100 % of total return-based restricted stock issued will vest at the end of the applicable period. The weighted average grant date fair value of such shares of total return-based restricted stock issued in 2022, 2021 and 2020 was determined to be $ 41.94 , $ 36.41 and $ 38.31 , respectively, and is amortized over the respective three-year period or the service period, if shorter, for employees who are or will become eligible under the Company’s retirement plan. The fair values of the total return-based restricted stock granted were determined at the grant dates using a Monte Carlo simulation model and the following assumptions: 2022 2021 2020 Risk free interest rate (1) 1.6 % 0.3 % 0.9 % Common stock dividend yield (2) 4.5 % 4.8 % 3.9 % Expected volatility (3) 25.8 % 26.8 % 20.4 % __________ (1) Represents the interest rate as of the grant date on US treasury bonds having the same life as the estimated life of the total return-based restricted stock grants. (2) The dividend yield is calculated utilizing the then current regular dividend rate for a one -year period and the average per share price of Common Stock during the three -month period preceding the date of grant. (3) Based on the historical volatility of Common Stock over a period relevant to the related total return-based restricted stock grant. The following table sets forth total return-based restricted stock activity: Number of Shares Weighted Average Grant Date Fair Value Restricted shares outstanding as of December 31, 2019 208,848 $ 42.22 Awarded and issued (1) 66,188 38.31 Forfeited (3) ( 49,852 ) 51.93 Restricted shares outstanding as of December 31, 2020 225,184 39.53 Awarded and issued (1) 81,464 36.41 Vested (2) ( 55,452 ) 43.01 Forfeited (3) ( 21,904 ) 42.33 Restricted shares outstanding as of December 31, 2021 229,292 38.00 Awarded and issued (1) 81,832 41.94 Vested (2) ( 62,985 ) 45.90 Forfeited (3) ( 20,995 ) 45.90 Restricted shares outstanding as of December 31, 2022 227,144 $ 38.93 __________ (1) The fair value at grant date of total return-based restricted stock issued during the years ended December 31, 2022, 2021 and 2020 was $ 3.4 million, $ 2.9 million and $ 2.5 million, respectively, at target. (2) The vesting date fair value of total return-based restricted stock that vested during the years ended December 31, 2022 and 2021 was $ 2.7 million and $ 2.2 million, respectively, based on the performance of the specific plans. Vested shares include those shares 95 Table of Contents surrendered by employees to satisfy tax withholding obligations in connection with such vesting. There were no vested shares of total return-based restricted stock during the year ended December 31, 2020. (3) The 2022, 2021 and 2020 amounts include 20,995 , 18,484 and 46,852 shares, respectively, that were forfeited at the end of the applicable measurement period because the applicable total return did not meet targeted levels. 401(k) Retirement Savings Plan We have a 401(k) Retirement Savings Plan covering substantially all employees who meet certain age and employment criteria. We contribute amounts for each participant at a rate of 75 % of the employee’s contribution (up to 6 % of each employee’s bi-weekly salary and cash incentives, subject to statutory limits). During the years ended December 31, 2022, 2021 and 2020, we contributed $ 1.4 million, $ 1.3 million and $ 1.4 million, respectively, to the 401(k) savings plan. The assets of this qualified plan are not included in our Consolidated Financial Statements since the assets are not owned by us. Retirement Plan The Company has a retirement plan for employees with at least 30 years of continuous service or are at least 55 years old with at least 10 years of continuous service. Subject to advance written notice and a non-compete agreement, eligible retirees would be entitled to receive a pro rata amount of any annual non-equity incentive compensation earned during the year of retirement and stock options and time-based restricted stock would be non-forfeitable and vest according to the terms of their original grants. Eligible retirees would also be entitled to retain any total return-based restricted stock that subsequently vests after the retirement date according to the terms of their original grants. For employees who meet the age and service eligibility requirements, 100 % of their annual grants are expensed at the grant date as if fully vested. For employees who will meet the age and service eligibility requirements within the normal vesting periods, the grants are amortized over the shorter service period. Deferred Compensation Prior to 2010, officers could elect to defer all or a portion of their cash compensation, which was then invested in unrelated mutual funds under a non-qualified deferred compensation plan. These investments are recorded at fair value, which aggregated $ 2.6 million and $ 2.9 million as of December 31, 2022 and 2021, respectively, and are included in prepaid expenses and other assets, with an offsetting deferred compensation liability recorded in accounts payable, accrued expenses and other liabilities. Deferred amounts ultimately payable to the participants are based on the value of the related mutual fund investments. Accordingly, changes in the value of the unrelated mutual funds are recorded in interest and other income and the corresponding offsetting changes in the deferred compensation liability are recorded in general and administrative expense. As a result, there is no effect on our net income. The following table sets forth our deferred compensation liability: Year Ended December 31, 2022 2021 2020 Beginning deferred compensation liability $ 2,866 $ 2,573 $ 2,345 Mark-to-market adjustment to deferred compensation (in general and administrative expenses) ( 302 ) 293 228 Total deferred compensation liability $ 2,564 $ 2,866 $ 2,573 Employee Stock Purchase Plan The Company has an Employee Stock Purchase Plan (“ESPP”) pursuant to which employees may contribute up to 25 % of their cash compensation for the purchase of Common Stock. At the end of each quarter, each participant’s account balance, which includes accumulated dividends, is applied to acquire shares of Common Stock at a cost that is calculated at 85 % of the average closing price on the NYSE on the five consecutive days preceding the last day of the quarter. In the years ended December 31, 2022, 2021 and 2020, the Company issued 46,656 , 38,460 and 47,208 shares, respectively, of Common Stock under the ESPP. The 15 % discount on newly issued shares, which is taxable income to the participants and is recorded by us as additional compensation expense, aggregated $ 0.2 million, $ 0.2 million and $ 0.3 million in the years ended December 31, 2022, 2021 and 2020, respectively. Generally, shares purchased under the ESPP must be held at least one year. The Company satisfies its ESPP obligations by issuing additional shares of Common Stock. 96 Table of Contents 12. Real Estate and Other Assets Held For Sale The following table sets forth the assets held for sale as of December 31, 2022 and 2021, which are considered non-core: December 31, 2022 2021 Assets: Land held for development $ — $ 3,482 Net real estate assets — 3,482 Prepaid expenses and other assets — 36 Real estate and other assets, net, held for sale $ — $ 3,518 13. Earnings Per Share and Per Unit The following table sets forth the computation of basic and diluted earnings per share of the Company: Year Ended December 31, 2022 2021 2020 Earnings per Common Share - basic: Numerator: Net income $ 163,958 $ 323,310 $ 357,914 Net (income) attributable to noncontrolling interests in the Operating Partnership ( 3,670 ) ( 8,321 ) ( 9,338 ) Net (income) attributable to noncontrolling interests in consolidated affiliates ( 1,230 ) ( 1,712 ) ( 1,174 ) Dividends on Preferred Stock ( 2,486 ) ( 2,486 ) ( 2,488 ) Net income available for common stockholders $ 156,572 $ 310,791 $ 344,914 Denominator: Denominator for basic earnings per Common Share – weighted average shares (1) 105,120 104,232 103,876 Net income available for common stockholders $ 1.49 $ 2.98 $ 3.32 Earnings per Common Share - diluted: Numerator: Net income $ 163,958 $ 323,310 $ 357,914 Net (income) attributable to noncontrolling interests in consolidated affiliates ( 1,230 ) ( 1,712 ) ( 1,174 ) Dividends on Preferred Stock ( 2,486 ) ( 2,486 ) ( 2,488 ) Net income available for common stockholders before net (income) attributable to noncontrolling interests in the Operating Partnership $ 160,242 $ 319,112 $ 354,252 Denominator: Denominator for basic earnings per Common Share – weighted average shares (1) 105,120 104,232 103,876 Add: Stock options using the treasury method 5 18 8 Noncontrolling interests Common Units 2,442 2,811 2,830 Denominator for diluted earnings per Common Share – adjusted weighted average shares and assumed conversions 107,567 107,061 106,714 Net income available for common stockholders $ 1.49 $ 2.98 $ 3.32 __________ (1) Includes all unvested restricted stock where dividends on such restricted stock are non-forfeitable. 97 Table of Contents The following table sets forth the computation of basic and diluted earnings per unit of the Operating Partnership: Year Ended December 31, 2022 2021 2020 Earnings per Common Unit - basic: Numerator: Net income $ 163,958 $ 323,310 $ 357,914 Net (income) attributable to noncontrolling interests in consolidated affiliates ( 1,230 ) ( 1,712 ) ( 1,174 ) Distributions on Preferred Units ( 2,486 ) ( 2,486 ) ( 2,488 ) Net income available for common unitholders $ 160,242 $ 319,112 $ 354,252 Denominator: Denominator for basic earnings per Common Unit – weighted average units (1) 107,153 106,634 106,297 Net income available for common unitholders $ 1.50 $ 2.99 $ 3.33 Earnings per Common Unit - diluted: Numerator: Net income $ 163,958 $ 323,310 $ 357,914 Net (income) attributable to noncontrolling interests in consolidated affiliates ( 1,230 ) ( 1,712 ) ( 1,174 ) Distributions on Preferred Units ( 2,486 ) ( 2,486 ) ( 2,488 ) Net income available for common unitholders $ 160,242 $ 319,112 $ 354,252 Denominator: Denominator for basic earnings per Common Unit – weighted average units (1) 107,153 106,634 106,297 Add: Stock options using the treasury method 5 18 8 Denominator for diluted earnings per Common Unit – adjusted weighted average units and assumed conversions 107,158 106,652 106,305 Net income available for common unitholders $ 1.50 $ 2.99 $ 3.33 __________ (1) Includes all unvested restricted stock where distributions on such restricted stock are non-forfeitable. 14. Income Taxes Our Consolidated Financial Statements include the operations of the Company’s taxable REIT subsidiary, which is not entitled to the dividends paid deduction and is subject to federal, state and local income taxes on its taxable income. The minimum dividend per share of Common Stock required for the Company to maintain its REIT status was $ 1.60 , $ 1.61 and $ 1.41 per share in 2022, 2021 and 2020, respectively. Continued qualification as a REIT depends on the Company’s ability to satisfy the dividend distribution tests, stock ownership requirements and various other qualification tests. The tax basis of the Company’s assets (net of accumulated tax depreciation and amortization) and liabilities was approximately $ 5.6 billion and $ 3.5 billion, respectively, as of December 31, 2022 and $ 5.2 billion and $ 3.2 billion, respectively, as of December 31, 2021. The tax basis of the Operating Partnership’s assets (net of accumulated tax depreciation and amortization) and liabilities was approximately $ 5.4 billion and $ 3.5 billion, respectively, as of December 31, 2022 and $ 5.0 billion and $ 3.2 billion, respectively, as of December 31, 2021. During the years ended December 31, 2022, 2021 and 2020, the Company qualified as a REIT and incurred no federal income tax expense; accordingly, the only federal income taxes included in the accompanying Consolidated Financial Statements relate to activities of the Company’s taxable REIT subsidiary. The Company’s net deferred tax liability was $ 0.1 million as of December 31, 2021. There was no net deferred tax liability as of December 31, 2022. The net deferred tax liability is comprised primarily of tax versus book differences related to property (depreciation, amortization and basis differences). For the years ended December 31, 2022 and 2021, there were no unrecognized tax benefits. The Company is subject to federal, state and local income tax examinations by taxing authorities for 2019 through 2022. The Company does not expect that the total amount of unrecognized benefits will materially change within the next year. 98 Table of Contents 15. Segment Information Our principal business is the operation, acquisition and development of rental office properties. We evaluate our business by geographic location. The operating results by geographic grouping are regularly reviewed by our chief operating decision maker for assessing performance and other purposes. There are no material inter-segment transactions. Our accounting policies of the segments are the same as those used in our Consolidated Financial Statements. All operations are within the United States. The following tables summarize the rental and other revenues, net operating income (the primary industry property-level performance metric used by our chief operating decision maker and which is defined as rental and other revenues less rental property and other expenses) and total assets for our office properties. Our segment information as of and for the years ended December 31, 2021 and 2020, respectively, has been retrospectively revised from previously reported amounts to reflect a change in our reportable segments as a result of our plan to exit the Pittsburgh market. Year Ended December 31, 2022 2021 2020 Rental and Other Revenues: Atlanta $ 143,904 $ 143,612 $ 146,704 Charlotte 73,721 49,347 35,733 Nashville 174,341 149,674 138,089 Orlando 54,802 51,281 49,459 Raleigh 182,990 162,115 128,189 Richmond 43,084 45,941 48,079 Tampa 94,726 97,954 99,520 Total Office Segment 767,568 699,924 645,773 Other 61,361 68,083 91,127 Total Rental and Other Revenues $ 828,929 $ 768,007 $ 736,900 Net Operating Income: Atlanta $ 92,297 $ 94,122 $ 95,448 Charlotte 55,689 38,464 28,431 Nashville 129,217 110,039 99,901 Orlando 32,331 31,301 29,546 Raleigh 134,904 121,005 95,926 Richmond 28,879 31,726 33,667 Tampa 59,691 64,396 67,059 Total Office Segment 533,008 491,053 449,978 Other 36,115 40,518 55,097 Total Net Operating Income 569,123 531,571 505,075 Reconciliation to net income: Depreciation and amortization ( 287,610 ) ( 259,255 ) ( 241,585 ) Impairments of real estate assets ( 36,515 ) — ( 1,778 ) General and administrative expenses ( 42,266 ) ( 40,553 ) ( 41,031 ) Interest expense ( 105,385 ) ( 85,853 ) ( 80,962 ) Other income/(loss) 1,530 1,394 ( 1,707 ) Gains on disposition of property 63,546 174,059 215,897 Equity in earnings of unconsolidated affiliates 1,535 1,947 4,005 Net income $ 163,958 $ 323,310 $ 357,914 99 Table of Contents December 31, 2022 2021 Total Assets: Atlanta $ 928,406 $ 947,877 Charlotte 984,075 771,121 Nashville 1,290,819 1,294,178 Orlando 287,950 285,781 Raleigh 1,288,878 1,269,200 Richmond 196,435 202,488 Tampa 493,966 514,303 Total Office Segment 5,470,529 5,284,948 Other 592,847 410,190 Total Assets $ 6,063,376 $ 5,695,138 16. Subsequent Events We have a 50.0 % ownership interest in Markel, a joint venture that was consolidated as of December 31, 2022 (see Note 4). Effective January 1, 2023, the agreement governing the joint venture was modified to require the consent of both partners for major operating and financial policies of the entity. As a result, even though we remain the managing member, because we are no longer in sole control of the major operating and financial policies of the entity, we will no longer consolidate Markel and will account for the joint venture using the equity method of accounting effective January 1, 2023. On February 1, 2023, the Company declared a cash dividend of $ 0.50 per share of Common Stock, which is payable on March 14, 2023 to stockholders of record as of February 21, 2023. 100 Table of Contents HIGHWOODS PROPERTIES, INC. HIGHWOODS REALTY LIMITED PARTNERSHIP NOTE TO SCHEDULE III (in thousands) The following table sets forth the activity of real estate assets and accumulated depreciation: December 31, 2022 2021 2020 Real estate assets: Beginning balance $ 6,486,136 $ 5,594,833 $ 5,776,804 Acquisitions, development and improvements 378,587 1,248,256 259,470 Cost of real estate sold and retired ( 175,031 ) ( 356,953 ) ( 441,441 ) Ending balance (a) $ 6,689,692 $ 6,486,136 $ 5,594,833 Accumulated depreciation: Beginning balance $ 1,457,511 $ 1,421,956 $ 1,405,341 Depreciation expense 240,273 218,628 204,585 Real estate sold and retired ( 88,282 ) ( 183,073 ) ( 187,970 ) Ending balance (b) $ 1,609,502 $ 1,457,511 $ 1,421,956 (a) Reconciliation of total real estate assets to balance sheet caption: 2022 2021 2020 Total per Schedule III $ 6,689,692 $ 6,486,136 $ 5,594,833 Development in-process exclusive of land included in Schedule III 46,735 6,890 259,681 Real estate assets, net, held for sale — ( 3,482 ) ( 14,850 ) Total real estate assets $ 6,736,427 $ 6,489,544 $ 5,839,664 (b) Reconciliation of total accumulated depreciation to balance sheet caption: 2022 2021 2020 Total per Schedule III $ 1,609,502 $ 1,457,511 $ 1,421,956 Real estate assets, net, held for sale — — ( 3,577 ) Total accumulated depreciation $ 1,609,502 $ 1,457,511 $ 1,418,379 101 Table of Contents HIGHWOODS PROPERTIES, INC. HIGHWOODS REALTY LIMITED PARTNERSHIP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands) December 31, 2022 Initial Costs Costs Capitalized Subsequent to Acquisition Gross Value at Close of Period Life on Which Depreciation is Calculated Description Property Type 2022 Encumbrance Land Bldg & Improv Land Bldg & Improv Land Bldg & Improv Total Assets (1) Accumulated Depreciation Date of Construction Atlanta, GA 1700 Century Circle Office $ — $ 2,482 $ 2 $ 1,340 $ 2 $ 3,822 $ 3,824 $ 2,225 1983 5-40 yrs. 1800 Century Boulevard Office 1,444 29,081 — 6,381 1,444 35,462 36,906 21,368 1975 5-40 yrs. 1825 Century Boulevard Office 864 — 303 15,209 1,167 15,209 16,376 7,687 2002 5-40 yrs. 1875 Century Boulevard Office — 8,924 — 8,854 — 17,778 17,778 10,331 1976 5-40 yrs. 1900 Century Boulevard Office — 4,744 — 340 — 5,084 5,084 5,084 1971 5-40 yrs. 2200 Century Parkway Office — 14,432 — 9,374 — 23,806 23,806 13,405 1971 5-40 yrs. 2400 Century Parkway Office — — 406 14,802 406 14,802 15,208 8,843 1998 5-40 yrs. 2500 Century Parkway Office — — 328 12,892 328 12,892 13,220 6,204 2005 5-40 yrs. 2500/2635 Parking Garage Office — — — 6,447 — 6,447 6,447 2,764 2005 5-40 yrs. 2600 Century Parkway Office — 10,679 — 5,327 — 16,006 16,006 8,888 1973 5-40 yrs. 2635 Century Parkway Office — 21,643 — 21,120 — 42,763 42,763 22,453 1980 5-40 yrs. 2800 Century Parkway Office — 20,449 — 11,856 — 32,305 32,305 20,210 1983 5-40 yrs. Century Plaza I Office 1,290 8,567 — 4,772 1,290 13,339 14,629 7,493 1981 5-40 yrs. Century Plaza II Office 1,380 7,733 — 4,666 1,380 12,399 13,779 6,079 1984 5-40 yrs. Riverwood 100 Office 5,785 64,913 ( 29 ) 28,871 5,756 93,784 99,540 30,150 1989 5-40 yrs. Tradeport - Land Office 5,243 — ( 4,733 ) — 510 — 510 — N/A N/A Two Alliance Center Office 9,579 125,549 — 22 9,579 125,571 135,150 36,973 2009 5-40 yrs. One Alliance Center Office 14,775 123,071 — 23,163 14,775 146,234 161,009 40,075 2001 5-40 yrs. 10 Glenlake North Office 5,349 26,334 — 8,110 5,349 34,444 39,793 9,844 2000 5-40 yrs. 10 Glenlake South Office 5,103 22,811 — 9,336 5,103 32,147 37,250 9,177 1999 5-40 yrs. Riverwood 200 Office 4,777 89,708 450 2,691 5,227 92,399 97,626 17,208 2017 5-40 yrs. Riverwood 300 - Land Office 400 — — 710 400 710 1,110 105 N/A 5-40 yrs. Monarch Tower Office 22,717 143,068 — 22,143 22,717 165,211 187,928 36,534 1997 5-40 yrs. Monarch Plaza Office 27,678 88,962 — 14,823 27,678 103,785 131,463 22,507 1983 5-40 yrs. Galleria 75 - Land Office 19,740 — ( 906 ) 220 18,834 220 19,054 15 N/A N/A Charlotte, NC Bank of America Tower Office 29,273 354,749 — 22,746 29,273 377,495 406,768 35,392 2019 5-40 yrs. Morrocroft Office 69,473 19,286 177,199 — 5,569 19,286 182,768 202,054 9,120 1992 5-40 yrs. Capitol Towers Office 127,540 9,202 102,179 — 107 9,202 102,286 111,488 4,511 2015 5-40 yrs. 1426 S. Tryon - Land Office — — 26,702 — 26,702 — 26,702 — N/A 5-40 yrs. 102 Table of Contents HIGHWOODS PROPERTIES, INC. HIGHWOODS REALTY LIMITED PARTNERSHIP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) Initial Costs Costs Capitalized Subsequent to Acquisition Gross Value at Close of Period Life on Which Depreciation is Calculated Description Property Type 2022 Encumbrance Land Bldg & Improv Land Bldg & Improv Land Bldg & Improv Total Assets (1) Accumulated Depreciation Date of Construction SIX50 at Legacy Union Office — — 16,504 166,305 16,504 166,305 182,809 2,104 2020 5-40 yrs. Nashville, TN 3322 West End Office 3,025 27,490 — 12,663 3,025 40,153 43,178 21,598 1986 5-40 yrs. 3401 West End Office 5,862 22,917 — 7,484 5,862 30,401 36,263 17,944 1982 5-40 yrs. 5310 Maryland Way Office 1,863 7,201 — 3,818 1,863 11,019 12,882 7,444 1994 5-40 yrs. Cool Springs I & II Deck Office — — — 3,994 — 3,994 3,994 1,516 2007 5-40 yrs. Cool Springs III & IV Deck Office — — — 4,467 — 4,467 4,467 1,762 2007 5-40 yrs. Cool Springs I Office 1,583 — 15 18,764 1,598 18,764 20,362 9,375 1999 5-40 yrs. Cool Springs II Office 1,824 — 346 24,083 2,170 24,083 26,253 10,764 1999 5-40 yrs. Cool Springs III Office 1,631 — 804 22,191 2,435 22,191 24,626 7,172 2006 5-40 yrs. Cool Springs IV Office 1,715 — — 20,532 1,715 20,532 22,247 7,492 2008 5-40 yrs. Cool Springs V Office 3,688 — 295 53,285 3,983 53,285 57,268 26,690 2007 5-40 yrs. Harpeth Two Office 1,419 5,677 — 9,034 1,419 14,711 16,130 4,975 1984 5-40 yrs. Harpeth Three Office 1,660 6,649 — 7,876 1,660 14,525 16,185 5,788 1987 5-40 yrs. Harpeth Four Office 1,713 6,842 — 8,710 1,713 15,552 17,265 6,076 1989 5-40 yrs. Harpeth Five Office 662 — 197 8,579 859 8,579 9,438 3,459 1998 5-40 yrs. Hickory Trace Office 1,164 — 164 6,413 1,328 6,413 7,741 3,101 2001 5-40 yrs. Highwoods Plaza I Office 1,552 — 307 9,469 1,859 9,469 11,328 5,434 1996 5-40 yrs. Highwoods Plaza II Office 1,448 — 307 7,659 1,755 7,659 9,414 4,102 1997 5-40 yrs. Seven Springs I Office 2,076 — 592 14,008 2,668 14,008 16,676 6,847 2002 5-40 yrs. SouthPointe Office 1,655 — 310 9,403 1,965 9,403 11,368 5,047 1998 5-40 yrs. Ramparts Office 2,394 12,806 — 11,543 2,394 24,349 26,743 10,899 1986 5-40 yrs. Westwood South Office 2,106 — 382 11,222 2,488 11,222 13,710 6,487 1999 5-40 yrs. 100 Winners Circle Office 1,497 7,258 — 5,753 1,497 13,011 14,508 5,668 1987 5-40 yrs. The Pinnacle at Symphony Place Office 89,204 — 141,469 — 5,923 — 147,392 147,392 45,993 2010 5-40 yrs. Seven Springs East Office 2,525 37,587 — 507 2,525 38,094 40,619 10,926 2013 5-40 yrs. The Shops at Seven Springs Office 803 8,223 — 613 803 8,836 9,639 3,257 2013 5-40 yrs. Seven Springs West Office 2,439 51,306 — 1,187 2,439 52,493 54,932 10,007 2016 5-40 yrs. Seven Springs II Office 2,356 30,048 — 3,103 2,356 33,151 35,507 6,418 2017 5-40 yrs. Bridgestone Tower Office 19,223 169,582 — 380 19,223 169,962 189,185 26,196 2017 5-40 yrs. Virginia Springs II Office 4,821 26,448 — 3,973 4,821 30,421 35,242 1,914 2020 5-40 yrs. MARS Campus Office 7,010 87,474 — 136 7,010 87,610 94,620 12,072 2019 5-40 yrs. Virginia Springs I Office 4,534 25,632 — 308 4,534 25,940 30,474 3,745 2018 5-40 yrs. 1100 Broadway - Land Office 29,845 — ( 200 ) — 29,645 — 29,645 — N/A N/A Asurion Office 33,219 230,569 — 2,253 33,219 232,822 266,041 9,601 2021 5-40 yrs. 103 Table of Contents HIGHWOODS PROPERTIES, INC. HIGHWOODS REALTY LIMITED PARTNERSHIP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) Initial Costs Costs Capitalized Subsequent to Acquisition Gross Value at Close of Period Life on Which Depreciation is Calculated Description Property Type 2022 Encumbrance Land Bldg & Improv Land Bldg & Improv Land Bldg & Improv Total Assets (1) Accumulated Depreciation Date of Construction Ovation - Land Office 89,231 — 162 — 89,393 — 89,393 — N/A N/A Broadway Stem - Land Office 6,218 — — 526 6,218 526 6,744 18 N/A 5-40 yrs. YMCA Site - land Office 16,121 — 48 — 16,169 — 16,169 — N/A N/A Orlando, FL Capital Plaza Three - Land Office 2,994 — 18 — 3,012 — 3,012 — N/A N/A 1800 Eller Drive Office — 9,851 — 2,565 — 12,416 12,416 8,430 1983 5-40 yrs. Seaside Plaza Office 3,893 29,541 — 14,028 3,893 43,569 47,462 12,534 1982 5-40 yrs. Capital Plaza Two Office 4,346 43,394 — 11,555 4,346 54,949 59,295 13,688 1999 5-40 yrs. Capital Plaza One Office 3,482 27,321 — 9,724 3,482 37,045 40,527 10,249 1975 5-40 yrs. Landmark Center Two Office 4,743 22,031 — 10,368 4,743 32,399 37,142 10,100 1985 5-40 yrs. Landmark Center One Office 6,207 22,655 — 11,953 6,207 34,608 40,815 10,272 1983 5-40 yrs. Bank of America Plaza Office 3,490 56,079 — 9,601 3,490 65,680 69,170 14,390 2000 5-40 yrs. Eola Centre Office 5,785 11,160 — 15,510 5,785 26,670 32,455 5,463 1969 5-40 yrs. Pittsburgh, PA One PPG Place Office 9,819 107,643 — 51,618 9,819 159,261 169,080 55,295 1983-1985 5-40 yrs. Two PPG Place Office 2,302 10,978 — 12,456 2,302 23,434 25,736 7,358 1983-1985 5-40 yrs. Three PPG Place Office 501 2,923 — 4,536 501 7,459 7,960 3,254 1983-1985 5-40 yrs. Four PPG Place Office 620 3,239 — 3,383 620 6,622 7,242 2,438 1983-1985 5-40 yrs. Five PPG Place Office 803 4,924 — 2,678 803 7,602 8,405 2,490 1983-1985 5-40 yrs. Six PPG Place Office 3,353 25,602 — 15,552 3,353 41,154 44,507 13,894 1983-1985 5-40 yrs. EQT Plaza Office 16,457 83,812 ( 6,000 ) ( 7,121 ) 10,457 76,691 87,148 33,713 1987 5-40 yrs. East Liberty - Land Office 2,478 — ( 813 ) — 1,665 — 1,665 — N/A N/A Raleigh, NC 3600 Glenwood Avenue Office — 10,994 — 6,160 — 17,154 17,154 10,184 1986 5-40 yrs. 3737 Glenwood Avenue Office — — 318 17,738 318 17,738 18,056 9,607 1999 5-40 yrs. 4800 Falls of Neuse Office 2,678 17,630 — 7,685 2,678 25,315 27,993 16,048 1985 5-40 yrs. 5000 Falls of Neuse Office 1,010 4,612 ( 49 ) 3,792 961 8,404 9,365 4,717 1980 5-40 yrs. 801 Raleigh Corporate Center Office 828 — 272 11,975 1,100 11,975 13,075 5,710 2002 5-40 yrs. 2500 Blue Ridge Road Office 722 4,606 — 1,417 722 6,023 6,745 4,187 1982 5-40 yrs. 2418 Blue Ridge Road Office 462 1,410 — 2,895 462 4,305 4,767 2,113 1988 5-40 yrs. 2000 CentreGreen Office 1,529 — ( 391 ) 14,318 1,138 14,318 15,456 5,835 2000 5-40 yrs. 4000 CentreGreen Office 1,653 — ( 389 ) 12,171 1,264 12,171 13,435 5,310 2001 5-40 yrs. 5000 CentreGreen Office 1,291 34,572 — 2,481 1,291 37,053 38,344 8,208 2017 5-40 yrs. 3000 CentreGreen Office 1,779 — ( 397 ) 14,784 1,382 14,784 16,166 5,746 2002 5-40 yrs. 1000 CentreGreen Office 1,280 — 55 13,992 1,335 13,992 15,327 4,990 2008 5-40 yrs. 104 Table of Contents HIGHWOODS PROPERTIES, INC. HIGHWOODS REALTY LIMITED PARTNERSHIP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) Initial Costs Costs Capitalized Subsequent to Acquisition Gross Value at Close of Period Life on Which Depreciation is Calculated Description Property Type 2022 Encumbrance Land Bldg & Improv Land Bldg & Improv Land Bldg & Improv Total Assets (1) Accumulated Depreciation Date of Construction GlenLake - Land Office 13,003 — ( 12,382 ) 114 621 114 735 62 N/A 5-40 yrs. GlenLake One Office 924 — 1,324 24,166 2,248 24,166 26,414 11,700 2002 5-40 yrs. GlenLake Four Office 1,659 — 493 20,705 2,152 20,705 22,857 8,420 2006 5-40 yrs. GlenLake Six Office 941 — ( 365 ) 20,453 576 20,453 21,029 7,374 2008 5-40 yrs. 701 Corporate Center Office 1,304 — 540 18,946 1,844 18,946 20,790 9,389 1996 5-40 yrs. 7001 Weston Parkway Office 531 — ( 267 ) 8,062 264 8,062 8,326 4,788 1998 5-40 yrs. Inveresk Parcel 2 - Land Office 657 — 38 103 695 103 798 19 N/A 5-40 yrs. 4201 Lake Boone Trail Office 1,450 6,311 — 1,015 1,450 7,326 8,776 2,460 1998 5-40 yrs. 4620 Creekstone Drive Office 149 — 107 5,927 256 5,927 6,183 1,851 2001 5-40 yrs. 4825 Creekstone Drive Office 398 — 293 10,819 691 10,819 11,510 5,906 1999 5-40 yrs. 751 Corporate Center Office 2,665 16,939 — ( 50 ) 2,665 16,889 19,554 3,400 2018 5-40 yrs. PNC Plaza Office 1,206 — — 71,091 1,206 71,091 72,297 29,568 2008 5-40 yrs. 4301 Lake Boone Trail Office 878 3,730 — 2,432 878 6,162 7,040 4,355 1990 5-40 yrs. 4207 Lake Boone Trail Office 362 1,818 — 1,409 362 3,227 3,589 2,440 1993 5-40 yrs. 2301 Rexwoods Drive Office 919 2,816 — 1,486 919 4,302 5,221 2,997 1992 5-40 yrs. 4325 Lake Boone Trail Office 586 — — 4,696 586 4,696 5,282 3,220 1995 5-40 yrs. 2300 Rexwoods Drive Office 1,301 — 184 10,418 1,485 10,418 11,903 4,084 1998 5-40 yrs. 4709 Creekstone Drive Office 469 4,038 23 5,722 492 9,760 10,252 3,752 1987 5-40 yrs. 4700 Six Forks Road Office 666 2,665 — 1,741 666 4,406 5,072 2,558 1982 5-40 yrs. 4700 Homewood Court Office 1,086 4,533 — 1,655 1,086 6,188 7,274 3,915 1983 5-40 yrs. 4800 Six Forks Road Office 862 4,411 — 2,725 862 7,136 7,998 4,534 1987 5-40 yrs. 4601 Creekstone Drive Office 255 — 217 5,686 472 5,686 6,158 3,257 1997 5-40 yrs. Weston - Land Office 22,771 — ( 19,528 ) — 3,243 — 3,243 — N/A N/A 4625 Creekstone Drive Office 458 — 268 6,647 726 6,647 7,373 3,831 1995 5-40 yrs. 11000 Weston Parkway Office 2,651 18,850 — 16,628 2,651 35,478 38,129 9,954 1998 5-40 yrs. GlenLake Five Office 2,263 30,264 — 1,424 2,263 31,688 33,951 9,365 2014 5-40 yrs. 11800 Weston Parkway Office 826 13,188 — 45 826 13,233 14,059 3,855 2014 5-40 yrs. CentreGreen Café Office 41 3,509 — 15 41 3,524 3,565 709 2014 5-40 yrs. CentreGreen Fitness Center Office 27 2,322 — ( 1 ) 27 2,321 2,348 469 2014 5-40 yrs. One City Plaza Office 11,288 68,375 — 26,944 11,288 95,319 106,607 28,566 1986 5-40 yrs. Edison - Land Office 5,984 — 1,834 — 7,818 — 7,818 — N/A N/A Charter Square Office 7,267 65,881 — 4,140 7,267 70,021 77,288 14,023 2015 5-40 yrs. MetLife Global Technology Campus Office 21,580 149,889 — 264 21,580 150,153 171,733 28,859 2015 5-40 yrs. GlenLake Seven Office 1,662 37,332 — — 1,662 37,332 38,994 2,886 2020 5-40 yrs. 105 Table of Contents HIGHWOODS PROPERTIES, INC. HIGHWOODS REALTY LIMITED PARTNERSHIP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) Initial Costs Costs Capitalized Subsequent to Acquisition Gross Value at Close of Period Life on Which Depreciation is Calculated Description Property Type 2022 Encumbrance Land Bldg & Improv Land Bldg & Improv Land Bldg & Improv Total Assets (1) Accumulated Depreciation Date of Construction Hargett - Land Office 9,248 — ( 212 ) — 9,036 — 9,036 — N/A N/A Forum 1 Office 1,278 27,809 — 1,535 1,278 29,344 30,622 2,335 1985 5-40 yrs. Forum 2 Office 1,327 18,088 — 326 1,327 18,414 19,741 1,636 1988 5-40 yrs. Forum 3 Office 994 23,931 — 1,394 994 25,325 26,319 2,199 1995 5-40 yrs. Forum 4 Office 2,118 43,889 — 271 2,118 44,160 46,278 3,273 2000 5-40 yrs. Forum 5 Office 1,552 26,263 — 1,146 1,552 27,409 28,961 2,489 2007 5-40 yrs. Captrust Tower Office 84,666 9,670 124,530 — 2,432 9,670 126,962 136,632 5,466 2010 5-40 yrs. 150 Fayetteville Office 113,105 7,677 130,049 — 12,153 7,677 142,202 149,879 7,118 1991 5-40 yrs. Other Property Other 27,260 20,868 ( 21,846 ) 3,166 5,414 24,034 29,448 10,379 N/A 5-40 yrs. Richmond, VA 4900 Cox Road Office 1,324 5,311 15 3,537 1,339 8,848 10,187 5,764 1991 5-40 yrs. Colonnade Building Office 1,364 6,105 — 3,139 1,364 9,244 10,608 4,237 2003 5-40 yrs. Markel 4521 Office 1,581 13,299 168 ( 378 ) 1,749 12,921 14,670 7,029 1999 5-40 yrs. Highwoods Commons Office 521 — 458 4,930 979 4,930 5,909 2,323 1999 5-40 yrs. Highwoods One Office 1,688 — 22 14,053 1,710 14,053 15,763 7,981 1996 5-40 yrs. Highwoods Two Office 786 — 226 10,840 1,012 10,840 11,852 5,106 1997 5-40 yrs. Highwoods Five Office 783 — 11 8,210 794 8,210 9,004 4,520 1998 5-40 yrs. Highwoods Plaza Office 909 — 187 6,123 1,096 6,123 7,219 3,046 2000 5-40 yrs. Innslake Center Office 845 — 125 7,725 970 7,725 8,695 3,927 2001 5-40 yrs. 4101 Cox Road Office 1,205 4,825 — 2,711 1,205 7,536 8,741 4,045 1990 5-40 yrs. Markel 4501 Office 1,300 13,259 213 ( 3,435 ) 1,513 9,824 11,337 4,497 1998 5-40 yrs. 4600 Cox Road Office 1,700 17,081 169 ( 3,208 ) 1,869 13,873 15,742 6,444 1989 5-40 yrs. North Park Office 2,163 8,659 6 3,315 2,169 11,974 14,143 6,966 1989 5-40 yrs. North Shore Commons I Office 951 — 137 14,727 1,088 14,727 15,815 6,758 2002 5-40 yrs. North Shore Commons II Office 2,067 — ( 89 ) 11,742 1,978 11,742 13,720 4,526 2007 5-40 yrs. North End - Land Office 1,497 — 55 10 1,552 10 1,562 2 N/A 5-40 yrs. One Shockoe Plaza Office — — 356 22,319 356 22,319 22,675 12,122 1996 5-40 yrs. Pavilion - Land Office 181 46 ( 181 ) ( 46 ) — — — — N/A N/A Lake Brook Commons Office 1,600 8,864 ( 179 ) 334 1,421 9,198 10,619 3,848 1996 5-40 yrs. Sadler & Cox - Land Office 1,535 — 343 — 1,878 — 1,878 — N/A N/A Highwoods Three Office 1,918 — 358 12,542 2,276 12,542 14,818 5,254 2005 5-40 yrs. Stony Point I Office 1,384 11,630 ( 267 ) 4,808 1,117 16,438 17,555 9,230 1990 5-40 yrs. Stony Point II Office 1,240 — 103 13,952 1,343 13,952 15,295 7,215 1999 5-40 yrs. Stony Point III Office 995 — — 11,375 995 11,375 12,370 6,139 2002 5-40 yrs. Stony Point IV Office 955 — — 12,794 955 12,794 13,749 5,367 2006 5-40 yrs. 106 Table of Contents HIGHWOODS PROPERTIES, INC. HIGHWOODS REALTY LIMITED PARTNERSHIP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) Initial Costs Costs Capitalized Subsequent to Acquisition Gross Value at Close of Period Life on Which Depreciation is Calculated Description Property Type 2022 Encumbrance Land Bldg & Improv Land Bldg & Improv Land Bldg & Improv Total Assets (1) Accumulated Depreciation Date of Construction 4480 Cox Road Office 1,301 6,036 15 3,448 1,316 9,484 10,800 4,281 1996 5-40 yrs. Innsbrook Centre Office 914 8,249 — 999 914 9,248 10,162 4,470 1987 5-40 yrs. Tampa, FL Meridian Three Office 2,673 16,470 — 6,677 2,673 23,147 25,820 8,912 1989 5-40 yrs. Bayshore Place Office 2,276 11,817 — 3,915 2,276 15,732 18,008 8,265 1990 5-40 yrs. Highwoods Bay Center I Office 3,565 — ( 64 ) 38,113 3,501 38,113 41,614 15,460 2007 5-40 yrs. Horizon Office — 6,257 — 4,410 — 10,667 10,667 5,453 1980 5-40 yrs. LakePointe One Office 2,106 89 — 41,363 2,106 41,452 43,558 24,877 1986 5-40 yrs. LakePointe Two Office 2,000 15,848 672 13,141 2,672 28,989 31,661 16,304 1999 5-40 yrs. Lakeside Office — 7,369 — 7,160 — 14,529 14,529 8,478 1978 5-40 yrs. Lakeside/Parkside Garage Office — — — 5,731 — 5,731 5,731 2,950 2004 5-40 yrs. One Harbour Place Office 2,016 25,252 — 17,019 2,016 42,271 44,287 21,481 1985 5-40 yrs. Parkside Office — 9,407 — 3,513 — 12,920 12,920 7,041 1979 5-40 yrs. Pavilion Office — 16,394 — 6,535 — 22,929 22,929 14,016 1982 5-40 yrs. Pavilion Parking Garage Office — — — 5,911 — 5,911 5,911 3,353 1999 5-40 yrs. Spectrum Office 1,454 14,502 — 5,946 1,454 20,448 21,902 11,480 1984 5-40 yrs. Tower Place Office 3,218 19,898 — 9,888 3,218 29,786 33,004 15,879 1988 5-40 yrs. Westshore Square Office 1,126 5,186 — 1,765 1,126 6,951 8,077 4,103 1976 5-40 yrs. Independence Park - Land Office 4,943 — 2,669 1,693 7,612 1,693 9,305 247 N/A 5-40 yrs. Independence One Office 2,531 4,526 — 2,407 2,531 6,933 9,464 2,349 1983 5-40 yrs. Meridian One Office 1,849 22,363 — 4,120 1,849 26,483 28,332 7,641 1984 5-40 yrs. Meridian Two Office 1,302 19,588 — 5,843 1,302 25,431 26,733 7,947 1986 5-40 yrs. Avion Office — — 6,310 43,562 6,310 43,562 49,872 6,874 2016 5-40 yrs. Truist Place Office 1,980 102,138 — 28,429 1,980 130,567 132,547 29,249 1992 5-40 yrs. Truist Place - Land Office 2,225 — — — 2,225 — 2,225 — N/A N/A Midtown West Office 16,543 34,818 — 7,312 16,543 42,130 58,673 1,826 2021 5-40 yrs. $ 781,999 $ 4,175,016 $ ( 2,061 ) $ 1,734,738 $ 779,938 $ 5,909,754 $ 6,689,692 $ 1,609,502 __________ (1) The cost basis for income tax purposes of aggregate land and buildings and tenant improvements as of December 31, 2022 is $ 6.4 billion. 107 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Raleigh, State of North Carolina, on February 7, 2023. Highwoods Properties, Inc. By: /s/ Theodore J. Klinck Theodore J. Klinck President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated. Signature Title Date /s/ Carlos E. Evans Chairman of the Board of Directors February 7, 2023 Carlos E. Evans /s/ Theodore J. Klinck President, Chief Executive Officer and Director February 7, 2023 Theodore J. Klinck /s/ Charles A. Anderson Director February 7, 2023 Charles A. Anderson /s/ Gene H. Anderson Director February 7, 2023 Gene H. Anderson /s/ Thomas P. Anderson Director February 7, 2023 Thomas P. Anderson /s/ David L. Gadis Director February 7, 2023 David L. Gadis /s/ David J. Hartzell Director February 7, 2023 David J. Hartzell /s/ Anne H. Lloyd Director February 7, 2023 Anne H. Lloyd /s/ Brendan C. Maiorana Executive Vice President and Chief Financial Officer February 7, 2023 Brendan C. Maiorana /s/ Daniel L. Clemmens Vice President and Chief Accounting Officer February 7, 2023 Daniel L. Clemmens 108 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Raleigh, State of North Carolina, on February 7, 2023. Highwoods Realty Limited Partnership By: Highwoods Properties, Inc., its sole general partner By: /s/ Theodore J. Klinck Theodore J. Klinck President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated. Signature Title Date /s/ Carlos E. Evans Chairman of the Board of Directors of the General Partner February 7, 2023 Carlos E. Evans /s/ Theodore J. Klinck President, Chief Executive Officer and Director of the General Partner February 7, 2023 Theodore J. Klinck /s/ Charles A. Anderson Director of the General Partner February 7, 2023 Charles A. Anderson /s/ Gene H. Anderson Director of the General Partner February 7, 2023 Gene H. Anderson /s/ Thomas P. Anderson Director of the General Partner February 7, 2023 Thomas P. Anderson /s/ David L. Gadis Director of the General Partner February 7, 2023 David L. Gadis /s/ David J. Hartzell Director of the General Partner February 7, 2023 David J. Hartzell /s/ Anne H. Lloyd Director of the General Partner February 7, 2023 Anne H. Lloyd /s/ Brendan C. Maiorana Executive Vice President and Chief Financial Officer of the General Partner February 7, 2023 Brendan C. Maiorana /s/ Daniel L. Clemmens Vice President and Chief Accounting Officer of the General Partner February 7, 2023 Daniel L. Clemmens 109