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, 2023 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, 2023, 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, 2023. 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, 2023 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, 2023, 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, 2023, 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, 2023, 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, 2023, of the Company and our report dated February 6, 2024, 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 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 6, 2024 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 2023 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 2023 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 14, 2024. No changes have been made to the procedures by which stockholders may recommend nominees to the Company’s board of directors since the 2023 annual meeting, which was held on May 16, 2023. The Company has adopted insider trading policies and procedures governing the purchase, sale and/or other dispositions of our securities by directors, officers and employees that are reasonably designed to promote compliance with insider trading laws, rules and regulations and NYSE listing standards. No director or officer of the Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements. 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 14, 2024. 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 14, 2024. 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 14, 2024. 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 14, 2024. 49 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES - KJA/JDM Review 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) 4.13 Form of 7.65% Notes due February 1, 2034 (filed as part of the Company’s Current Report on Form 8-K dated November 16, 2023) 4.14 Officers’ Certificate Establishing the Terms of the 7.65% Notes, dated November 21, 2023 (filed as part of the Company’s Current Report on Form 8-K dated November 16, 2023) 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) 50 Table of Contents Exhibit Number Description 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 (filed as part of the Company's Annual Report on Form 10-K for the year ended December 31, 2022) 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 * 2021 Long-Term Equity Incentive Plan (filed as part of the Company’s Current Report on Form 8-K dated May 11, 2021) 10.14 Third Amendment to Sixth Amended and Restated Credit Agreement, dated as of January 25, 2024, 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 January 25, 2024) 19 Insider Trading Policy and Procedures 21 Schedule of Subsidiaries 23.1 Consent of Deloitte & Touche LLP for the Company 23.2 Consent of Deloitte & Touche LLP for the Operating Partnership 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 97 Policy Relating to Recovery of Erroneously Awarded Compensation 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 as of December 31, 202 3 and 202 2 55 Consolidated Statements of Income for the Years Ended December 31, 202 3 , 202 2 and 202 1 56 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2022 and 2021 57 Consolidated Statements of Equity for the Years Ended December 31, 2023, 2022 and 2021 58 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021 60 Highwoods Realty Limited Partnership: Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 62 Consolidated Financial Statements: Consolidated Balance Sheets as of December 31, 2023 and 2022 64 Consolidated Statements of Income for the Years Ended December 31, 2023, 2022 and 2021 65 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2022 and 2021 66 Consolidated Statements of Capital for the Years Ended December 31, 2023, 2022 and 2021 67 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021 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, 2023 and 2022, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, 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, 2023, 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 6, 2024, 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. Real Estate Assets - Determination of Impairment Indicators and Impairment—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 carrying value. 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. 53 Table of Contents 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. Given (1) the Company’s evaluation of possible indications of impairment of real estate assets requires management to make judgments, and (2), the undiscounted estimated future operating and residual cash flows to determine recoverability require management to make significant estimates and assumptions related to current and projected trends in rental, occupancy, capitalization rates and estimated hold periods, performing audit procedures to evaluate (a) whether management appropriately identified events or changes in circumstances indicating that the carrying amounts of real estate assets may not be recoverable and (b) the reasonableness of managements undiscounted future cash flow analysis, required a high degree of auditor judgment and an increased extent of effort. 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 and our procedures related to the undiscounted estimated future operating and residual cash flows to determine recoverability, 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 controls over undiscounted estimated future operating and residual cash flows to determine recoverability. • 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. – Developing an independent expectation of impairment indicators and comparing such expectation to management’s analysis. • We evaluated the Company’s determination of the undiscounted estimated future operating and residual cash flows to determine recoverability for those assets where an indicator had been identified by performing the following: – Comparing the projections included in management’s cash flow estimates to determine recoverability to the Company’s historical results and external market sources. – We evaluated the reasonableness of the significant assumptions used in the undiscounted estimated future operating and residual cash flows, including the estimated hold period, rental rates, growth rates, and capitalization rate assumptions. /s/ Deloitte & Touche LLP Raleigh, North Carolina February 6, 2024 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, 2023 2022 Assets: Real estate assets, at cost: Land $ 540,050 $ 548,720 Buildings and tenant improvements 5,960,895 5,909,754 Development in-process 8,918 46,735 Land held for development 227,058 231,218 6,736,921 6,736,427 Less-accumulated depreciation ( 1,743,390 ) ( 1,609,502 ) Net real estate assets 4,993,531 5,126,925 Cash and cash equivalents 25,123 21,357 Restricted cash 6,446 4,748 Accounts receivable 28,094 25,481 Mortgages and notes receivable 4,795 1,051 Accrued straight-line rents receivable 310,649 293,674 Investments in and advances to unconsolidated affiliates 343,241 269,221 Deferred leasing costs, net of accumulated amortization of $ 175,697 and $ 163,751 , respectively 225,924 252,828 Prepaid expenses and other assets, net of accumulated depreciation of $ 22,142 and $ 21,660 , respectively 65,125 68,091 Total Assets $ 6,002,928 $ 6,063,376 Liabilities, Noncontrolling Interests in the Operating Partnership and Equity: Mortgages and notes payable, net $ 3,213,206 $ 3,197,215 Accounts payable, accrued expenses and other liabilities 302,180 301,184 Total Liabilities 3,515,386 3,498,399 Commitments and contingencies Noncontrolling interests in the Operating Partnership 49,520 65,977 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), 28,811 and 28,821 shares issued and outstanding 28,811 28,821 Common Stock, $ 0.01 par value, 200,000,000 authorized shares; 105,710,315 and 105,210,858 shares issued and outstanding, respectively 1,057 1,052 Additional paid-in capital 3,103,446 3,081,330 Distributions in excess of net income available for common stockholders ( 698,020 ) ( 633,227 ) Accumulated other comprehensive loss ( 1,997 ) ( 1,211 ) Total Stockholders’ Equity 2,433,297 2,476,765 Noncontrolling interests in consolidated affiliates 4,725 22,235 Total Equity 2,438,022 2,499,000 Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity $ 6,002,928 $ 6,063,376 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, 2023 2022 2021 Rental and other revenues $ 833,997 $ 828,929 $ 768,007 Operating expenses: Rental property and other expenses 268,782 259,806 236,436 Depreciation and amortization 299,411 287,610 259,255 Impairments of real estate assets — 36,515 — General and administrative 42,857 42,266 40,553 Total operating expenses 611,050 626,197 536,244 Interest expense 136,710 105,385 85,853 Other income 4,435 1,530 1,394 Gains on disposition of property 47,773 63,546 174,059 Gain on deconsolidation of affiliate 11,778 — — Equity in earnings of unconsolidated affiliates 1,107 1,535 1,947 Net income 151,330 163,958 323,310 Net (income) attributable to noncontrolling interests in the Operating Partnership ( 3,164 ) ( 3,670 ) ( 8,321 ) Net (income)/loss attributable to noncontrolling interests in consolidated affiliates 549 ( 1,230 ) ( 1,712 ) Dividends on Preferred Stock ( 2,485 ) ( 2,486 ) ( 2,486 ) Net income available for common stockholders $ 146,230 $ 156,572 $ 310,791 Earnings per Common Share – basic: Net income available for common stockholders $ 1.39 $ 1.49 $ 2.98 Weighted average Common Shares outstanding – basic 105,529 105,120 104,232 Earnings per Common Share – diluted: Net income available for common stockholders $ 1.39 $ 1.49 $ 2.98 Weighted average Common Shares outstanding – diluted 107,785 107,567 107,061 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, 2023 2022 2021 Comprehensive income: Net income $ 151,330 $ 163,958 $ 323,310 Other comprehensive income/(loss): Settlement of cash flow hedges ( 493 ) — — Unrealized losses on cash flow hedges — — ( 19 ) Amortization of cash flow hedges ( 293 ) ( 238 ) 508 Total other comprehensive income/(loss) ( 786 ) ( 238 ) 489 Total comprehensive income 150,544 163,720 323,799 Less-comprehensive (income) attributable to noncontrolling interests ( 2,615 ) ( 4,900 ) ( 10,033 ) Comprehensive income attributable to common stockholders $ 147,929 $ 158,820 $ 313,766 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, 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 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 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, 2022 105,210,858 $ 1,052 $ 28,821 $ 3,081,330 $ ( 1,211 ) $ 22,235 $ ( 633,227 ) $ 2,499,000 Issuances of Common Stock, net of issuance costs and tax withholdings 27,064 2 — 188 — — — 190 Conversions of Common Units to Common Stock 193,907 — — 4,795 — — — 4,795 Dividends on Common Stock ($ 2.00 per share) — — — — — ( 211,023 ) ( 211,023 ) Dividends on Preferred Stock ($ 86.25 per share) — — — — — ( 2,485 ) ( 2,485 ) Adjustment of noncontrolling interests in the Operating Partnership to fair value — — 10,152 — — — 10,152 Contributions from noncontrolling interests in consolidated affiliates — — — — 320 — 320 Issuances of restricted stock 282,453 — — — — — — — Redemptions/repurchases of Preferred Stock — ( 10 ) — — — — ( 10 ) Share-based compensation expense, net of forfeitures ( 3,967 ) 3 — 6,981 — — — 6,984 Net (income) attributable to noncontrolling interests in the Operating Partnership — — — — — ( 3,164 ) ( 3,164 ) Net loss attributable to noncontrolling interests in consolidated affiliates — — — — ( 549 ) 549 — Deconsolidation of affiliate — — — — ( 17,281 ) — ( 17,281 ) Comprehensive income: Net income — — — — — 151,330 151,330 Other comprehensive loss — — — ( 786 ) — — ( 786 ) Total comprehensive income 150,544 Balance as of December 31, 2023 105,710,315 $ 1,057 $ 28,811 $ 3,103,446 $ ( 1,997 ) $ 4,725 $ ( 698,020 ) $ 2,438,022 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, 2023 2022 2021 Operating activities: Net income $ 151,330 $ 163,958 $ 323,310 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 299,411 287,610 259,255 Amortization of lease incentives and acquisition-related intangible assets and liabilities 1,135 ( 42 ) ( 1,903 ) Share-based compensation expense 6,984 7,552 8,646 Net credit losses on operating lease receivables 3,834 3,199 425 Accrued interest on mortgages and notes receivable ( 805 ) ( 88 ) ( 103 ) Amortization of debt issuance costs 4,884 4,324 4,451 Amortization of cash flow hedges ( 293 ) ( 238 ) 508 Amortization of mortgages and notes payable fair value adjustments ( 288 ) ( 70 ) 862 Impairments of real estate assets — 36,515 — Losses on debt extinguishment 602 — 286 Net gains on disposition of property ( 47,773 ) ( 63,546 ) ( 174,059 ) Gain on deconsolidation of affiliate ( 11,778 ) — — Equity in earnings of unconsolidated affiliates ( 1,107 ) ( 1,535 ) ( 1,947 ) Distributions of earnings from unconsolidated affiliates 1,246 614 1,417 Settlement of cash flow hedges ( 493 ) — — Changes in operating assets and liabilities: Accounts receivable ( 547 ) ( 10,955 ) 5,744 Prepaid expenses and other assets 1,259 1,685 1,575 Accrued straight-line rents receivable ( 24,510 ) ( 29,421 ) ( 22,100 ) Accounts payable, accrued expenses and other liabilities 3,871 22,217 8,191 Net cash provided by operating activities 386,962 421,779 414,558 Investing activities: Investments in acquired real estate and related intangible assets, net of cash acquired ( 18,544 ) ( 224,934 ) ( 305,291 ) Investments in development in-process ( 33,848 ) ( 44,352 ) ( 77,854 ) Investments in tenant improvements and deferred leasing costs ( 112,290 ) ( 120,739 ) ( 93,654 ) Investments in building improvements ( 64,312 ) ( 76,415 ) ( 48,405 ) Investment in acquired controlling interest in unconsolidated affiliate — — ( 127,339 ) Net proceeds from disposition of real estate assets 101,829 130,038 374,016 Distributions of capital from unconsolidated affiliates 6,594 — — Investments in mortgages and notes receivable ( 14,463 ) ( 24 ) ( 84 ) Repayments of mortgages and notes receivable 9,888 288 301 Investments in and advances to unconsolidated affiliates ( 132,609 ) ( 261,772 ) ( 6,079 ) Repayments of preferred equity from unconsolidated affiliates 80,000 — — Changes in earnest money deposits 15,500 ( 15,500 ) — Changes in other investing activities ( 7,431 ) ( 1,389 ) ( 3,289 ) Net cash used in investing activities $ ( 169,686 ) $ ( 614,799 ) $ ( 287,678 ) 60 Table on Contents HIGHWOODS PROPERTIES, INC. Consolidated Statements of Cash Flows – Continued (in thousands) Year Ended December 31, 2023 2022 2021 Financing activities: Dividends on Common Stock $ ( 211,023 ) $ ( 210,183 ) $ ( 204,182 ) Redemptions/repurchases of Preferred Stock ( 10 ) — ( 5 ) Redemptions of Common Units ( 163 ) ( 3,763 ) — Dividends on Preferred Stock ( 2,485 ) ( 2,486 ) ( 2,486 ) Distributions to noncontrolling interests in the Operating Partnership ( 4,511 ) ( 4,866 ) ( 5,516 ) Distributions to noncontrolling interests in consolidated affiliates — ( 1,411 ) ( 1,342 ) Proceeds from the issuance of Common Stock 1,741 7,570 23,917 Costs paid for the issuance of Common Stock ( 226 ) ( 247 ) ( 535 ) Repurchase of shares related to tax withholdings ( 1,325 ) ( 2,156 ) ( 1,718 ) Borrowings on revolving credit facility 249,000 675,000 380,000 Repayments of revolving credit facility ( 615,000 ) ( 359,000 ) ( 310,000 ) Borrowings on mortgages and notes payable 590,352 550,000 200,000 Repayments of mortgages and notes payable ( 206,726 ) ( 456,444 ) ( 353,780 ) Contributions from noncontrolling interests in consolidated affiliates 320 — — Payments for debt issuance costs and other financing activities ( 5,370 ) ( 4,087 ) ( 9,279 ) Net cash provided by/(used in) financing activities ( 205,426 ) 187,927 ( 284,926 ) Net increase/(decrease) in cash and cash equivalents and restricted cash 11,850 ( 5,093 ) ( 158,046 ) Cash from deconsolidation of affiliate ( 6,386 ) — — Cash and cash equivalents and restricted cash at beginning of the period 26,105 31,198 189,244 Cash and cash equivalents and restricted cash at end of the period $ 31,569 $ 26,105 $ 31,198 Reconciliation of cash and cash equivalents and restricted cash: Year Ended December 31, 2023 2022 2021 Cash and cash equivalents at end of the period $ 25,123 $ 21,357 $ 23,152 Restricted cash at end of the period 6,446 4,748 8,046 Cash and cash equivalents and restricted cash at end of the period $ 31,569 $ 26,105 $ 31,198 Supplemental disclosure of cash flow information: Year Ended December 31, 2023 2022 2021 Cash paid for interest, net of amounts capitalized $ 129,764 $ 102,501 $ 79,474 Supplemental disclosure of non-cash investing and financing activities: Year Ended December 31, 2023 2022 2021 Conversions of Common Units to Common Stock 4,795 1,251 15,076 Changes in accrued capital expenditures (1) 2,342 ( 1,426 ) ( 9,843 ) Write-off of fully depreciated real estate assets 76,722 58,905 68,307 Write-off of fully amortized leasing costs 36,051 29,083 43,648 Write-off of fully amortized debt issuance costs 1,356 3,292 5,200 Adjustment of noncontrolling interests in the Operating Partnership to fair value ( 10,152 ) ( 39,502 ) 11,461 Assumption of mortgages and notes payable related to acquisition activities — — 403,000 Initial recognition of lease liabilities related to right of use assets — — 5,310 Future consideration in connection with the acquisition of land — — 16,000 __________ (1) Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities as of December 31, 2023, 2022 and 2021 were $ 55.7 million, $ 53.2 million and $ 56.1 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, 2023 and 2022, the related consolidated statements of income, comprehensive income, capital, and cash flows for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, 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. Real Estate Assets - Determination of Impairment Indicators and Impairment—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 carrying value. 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. 62 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. Given (1) the Operating Partnership’s evaluation of possible indications of impairment of real estate assets requires management to make judgments, and (2), the undiscounted estimated future operating and residual cash flows to determine recoverability require management to make significant estimates and assumptions related to current and projected trends in rental, occupancy, capitalization rates and estimated hold periods, performing audit procedures to evaluate (a) whether management appropriately identified events or changes in circumstances indicating that the carrying amounts of real estate assets may not be recoverable and (b) the reasonableness of managements undiscounted future cash flow analysis, required a high degree of auditor judgment and an increased extent of effort. 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 and our procedures related to the undiscounted estimated future operating and residual cash flows to determine recoverability, 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 controls over undiscounted estimated future operating and residual cash flows to determine recoverability. • 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. – Developing an independent expectation of impairment indicators and comparing such expectation to management’s analysis. • We evaluated the Operating Partnership’s determination of the undiscounted estimated future operating and residual cash flows to determine recoverability for those assets where an indicator had been identified by performing the following: – Comparing the projections included in management’s cash flow estimates to determine recoverability to the Operating Partnership’s historical results and external market sources. – We evaluated the reasonableness of the significant assumptions used in the undiscounted estimated future operating and residual cash flows, including the estimated hold period, rental rates, growth rates, and capitalization rate assumptions. /s/ Deloitte & Touche LLP Raleigh, North Carolina February 6, 2024 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, 2023 2022 Assets: Real estate assets, at cost: Land $ 540,050 $ 548,720 Buildings and tenant improvements 5,960,895 5,909,754 Development in-process 8,918 46,735 Land held for development 227,058 231,218 6,736,921 6,736,427 Less-accumulated depreciation ( 1,743,390 ) ( 1,609,502 ) Net real estate assets 4,993,531 5,126,925 Cash and cash equivalents 25,123 21,357 Restricted cash 6,446 4,748 Accounts receivable 28,094 25,481 Mortgages and notes receivable 4,795 1,051 Accrued straight-line rents receivable 310,649 293,674 Investments in and advances to unconsolidated affiliates 343,241 269,221 Deferred leasing costs, net of accumulated amortization of $ 175,697 and $ 163,751 , respectively 225,924 252,828 Prepaid expenses and other assets, net of accumulated depreciation of $ 22,142 and $ 21,660 , respectively 65,125 68,091 Total Assets $ 6,002,928 $ 6,063,376 Liabilities, Redeemable Operating Partnership Units and Capital: Mortgages and notes payable, net $ 3,213,206 $ 3,197,215 Accounts payable, accrued expenses and other liabilities 302,180 301,184 Total Liabilities 3,515,386 3,498,399 Commitments and contingencies Redeemable Operating Partnership Units: Common Units, 2,156,808 and 2,358,009 outstanding, respectively 49,520 65,977 Series A Preferred Units (liquidation preference $ 1,000 per unit), 28,811 and 28,821 units issued and outstanding 28,811 28,821 Total Redeemable Operating Partnership Units 78,331 94,798 Capital: Common Units: General partner Common Units, 1,074,583 and 1,071,601 outstanding, respectively 24,064 24,492 Limited partner Common Units, 104,226,923 and 103,730,448 outstanding, respectively 2,382,419 2,424,663 Accumulated other comprehensive loss ( 1,997 ) ( 1,211 ) Noncontrolling interests in consolidated affiliates 4,725 22,235 Total Capital 2,409,211 2,470,179 Total Liabilities, Redeemable Operating Partnership Units and Capital $ 6,002,928 $ 6,063,376 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, 2023 2022 2021 Rental and other revenues $ 833,997 $ 828,929 $ 768,007 Operating expenses: Rental property and other expenses 268,782 259,806 236,436 Depreciation and amortization 299,411 287,610 259,255 Impairments of real estate assets — 36,515 — General and administrative 42,857 42,266 40,553 Total operating expenses 611,050 626,197 536,244 Interest expense 136,710 105,385 85,853 Other income 4,435 1,530 1,394 Gains on disposition of property 47,773 63,546 174,059 Gain on deconsolidation of affiliate 11,778 — — Equity in earnings of unconsolidated affiliates 1,107 1,535 1,947 Net income 151,330 163,958 323,310 Net (income)/loss attributable to noncontrolling interests in consolidated affiliates 549 ( 1,230 ) ( 1,712 ) Distributions on Preferred Units ( 2,485 ) ( 2,486 ) ( 2,486 ) Net income available for common unitholders $ 149,394 $ 160,242 $ 319,112 Earnings per Common Unit – basic: Net income available for common unitholders $ 1.39 $ 1.50 $ 2.99 Weighted average Common Units outstanding – basic 107,376 107,153 106,634 Earnings per Common Unit – diluted: Net income available for common unitholders $ 1.39 $ 1.50 $ 2.99 Weighted average Common Units outstanding – diluted 107,376 107,158 106,652 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, 2023 2022 2021 Comprehensive income: Net income $ 151,330 $ 163,958 $ 323,310 Other comprehensive income/(loss): Settlement of cash flow hedges ( 493 ) — — Unrealized losses on cash flow hedges — — ( 19 ) Amortization of cash flow hedges ( 293 ) ( 238 ) 508 Total other comprehensive income/(loss) ( 786 ) ( 238 ) 489 Total comprehensive income 150,544 163,720 323,799 Less-comprehensive (income)/loss attributable to noncontrolling interests 549 ( 1,230 ) ( 1,712 ) Comprehensive income attributable to common unitholders $ 151,093 $ 162,490 $ 322,087 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, 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 Issuances of Common Units, net of issuance costs and tax withholdings 2 188 — — 190 Redemptions of Common Units ( 2 ) ( 161 ) — — ( 163 ) Distributions on Common Units ($ 2.00 per unit) ( 2,147 ) ( 212,569 ) — — ( 214,716 ) Distributions on Preferred Units ($ 86.25 per unit) ( 25 ) ( 2,460 ) — — ( 2,485 ) Share-based compensation expense, net of forfeitures 70 6,914 — — 6,984 Contributions from noncontrolling interests in consolidated affiliates — — — 320 320 Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner 156 15,483 — — 15,639 Net loss attributable to noncontrolling interests in consolidated affiliates 5 544 — ( 549 ) — Deconsolidation of affiliate — — — ( 17,281 ) ( 17,281 ) Comprehensive income: Net income 1,513 149,817 — — 151,330 Other comprehensive loss — — ( 786 ) — ( 786 ) Total comprehensive income 150,544 Balance as of December 31, 2023 $ 24,064 $ 2,382,419 $ ( 1,997 ) $ 4,725 $ 2,409,211 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, 2023 2022 2021 Operating activities: Net income $ 151,330 $ 163,958 $ 323,310 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 299,411 287,610 259,255 Amortization of lease incentives and acquisition-related intangible assets and liabilities 1,135 ( 42 ) ( 1,903 ) Share-based compensation expense 6,984 7,552 8,646 Net credit losses on operating lease receivables 3,834 3,199 425 Accrued interest on mortgages and notes receivable ( 805 ) ( 88 ) ( 103 ) Amortization of debt issuance costs 4,884 4,324 4,451 Amortization of cash flow hedges ( 293 ) ( 238 ) 508 Amortization of mortgages and notes payable fair value adjustments ( 288 ) ( 70 ) 862 Impairments of real estate assets — 36,515 — Losses on debt extinguishment 602 — 286 Net gains on disposition of property ( 47,773 ) ( 63,546 ) ( 174,059 ) Gain on deconsolidation of affiliate ( 11,778 ) — — Equity in earnings of unconsolidated affiliates ( 1,107 ) ( 1,535 ) ( 1,947 ) Distributions of earnings from unconsolidated affiliates 1,246 614 1,417 Settlement of cash flow hedges ( 493 ) — — Changes in operating assets and liabilities: Accounts receivable ( 547 ) ( 10,955 ) 5,744 Prepaid expenses and other assets 1,259 1,685 1,575 Accrued straight-line rents receivable ( 24,510 ) ( 29,421 ) ( 22,100 ) Accounts payable, accrued expenses and other liabilities 3,871 22,217 8,191 Net cash provided by operating activities 386,962 421,779 414,558 Investing activities: Investments in acquired real estate and related intangible assets, net of cash acquired ( 18,544 ) ( 224,934 ) ( 305,291 ) Investments in development in-process ( 33,848 ) ( 44,352 ) ( 77,854 ) Investments in tenant improvements and deferred leasing costs ( 112,290 ) ( 120,739 ) ( 93,654 ) Investments in building improvements ( 64,312 ) ( 76,415 ) ( 48,405 ) Investment in acquired controlling interest in unconsolidated affiliate — — ( 127,339 ) Net proceeds from disposition of real estate assets 101,829 130,038 374,016 Distributions of capital from unconsolidated affiliates 6,594 — — Investments in mortgages and notes receivable ( 14,463 ) ( 24 ) ( 84 ) Repayments of mortgages and notes receivable 9,888 288 301 Investments in and advances to unconsolidated affiliates ( 132,609 ) ( 261,772 ) ( 6,079 ) Repayments of preferred equity from unconsolidated affiliates 80,000 — — Changes in earnest money deposits 15,500 ( 15,500 ) — Changes in other investing activities ( 7,431 ) ( 1,389 ) ( 3,289 ) Net cash used in investing activities $ ( 169,686 ) $ ( 614,799 ) $ ( 287,678 ) 68 Table of Contents HIGHWOODS REALTY LIMITED PARTNERSHIP Consolidated Statements of Cash Flows - Continued (in thousands) Year Ended December 31, 2023 2022 2021 Financing activities: Distributions on Common Units $ ( 214,716 ) $ ( 214,231 ) $ ( 208,896 ) Redemptions/repurchases of Preferred Units ( 10 ) — ( 5 ) Redemptions of Common Units ( 163 ) ( 3,763 ) — Distributions on Preferred Units ( 2,485 ) ( 2,486 ) ( 2,486 ) Distributions to noncontrolling interests in consolidated affiliates — ( 1,411 ) ( 1,342 ) Proceeds from the issuance of Common Units 1,741 7,570 23,917 Costs paid for the issuance of Common Units ( 226 ) ( 247 ) ( 535 ) Repurchase of units related to tax withholdings ( 1,325 ) ( 2,156 ) ( 1,718 ) Borrowings on revolving credit facility 249,000 675,000 380,000 Repayments of revolving credit facility ( 615,000 ) ( 359,000 ) ( 310,000 ) Borrowings on mortgages and notes payable 590,352 550,000 200,000 Repayments of mortgages and notes payable ( 206,726 ) ( 456,444 ) ( 353,780 ) Contributions from noncontrolling interests in consolidated affiliates 320 — — Payments for debt issuance costs and other financing activities ( 6,188 ) ( 4,905 ) ( 10,081 ) Net cash provided by/(used in) financing activities ( 205,426 ) 187,927 ( 284,926 ) Net increase/(decrease) in cash and cash equivalents and restricted cash 11,850 ( 5,093 ) ( 158,046 ) Cash from deconsolidation of affiliate ( 6,386 ) — — Cash and cash equivalents and restricted cash at beginning of the period 26,105 31,198 189,244 Cash and cash equivalents and restricted cash at end of the period $ 31,569 $ 26,105 $ 31,198 Reconciliation of cash and cash equivalents and restricted cash: Year Ended December 31, 2023 2022 2021 Cash and cash equivalents at end of the period $ 25,123 $ 21,357 $ 23,152 Restricted cash at end of the period 6,446 4,748 8,046 Cash and cash equivalents and restricted cash at end of the period $ 31,569 $ 26,105 $ 31,198 Supplemental disclosure of cash flow information: Year Ended December 31, 2023 2022 2021 Cash paid for interest, net of amounts capitalized $ 129,764 $ 102,501 $ 79,474 Supplemental disclosure of non-cash investing and financing activities: Year Ended December 31, 2023 2022 2021 Changes in accrued capital expenditures (1) 2,342 ( 1,426 ) ( 9,843 ) Write-off of fully depreciated real estate assets 76,722 58,905 68,307 Write-off of fully amortized leasing costs 36,051 29,083 43,648 Write-off of fully amortized debt issuance costs 1,356 3,292 5,200 Adjustment of Redeemable Common Units to fair value ( 16,457 ) ( 45,712 ) ( 810 ) Assumption of mortgages and notes payable related to acquisition activities — — 403,000 Initial recognition of lease liabilities related to right of use assets — — 5,310 Future consideration in connection with the acquisition of land — — 16,000 __________ (1) Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities as of December 31, 2023, 2022 and 2021 were $ 55.7 million, $ 53.2 million and $ 56.1 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, 2023 (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, 2023, we owned or had an interest in 28.4 million rentable square feet of in-service properties, 1.6 million rentable square feet of office properties under development and development land with approximately 5.2 million rentable square feet of potential office build out. The Company is the sole general partner of the Operating Partnership. As of December 31, 2023, the Company owned all of the Preferred Units and 105.3 million, or 98.0 %, of the Common Units in the Operating Partnership. Limited partners owned the remaining 2.2 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 unitholder 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 2023, the Company redeemed 193,907 Common Units for a like number of shares of Common Stock and 7,294 Common Units for cash. These redemptions increased the percentage of Common Units owned by the Company from 97.8 % as of December 31, 2022 to 98.0 % as of December 31, 2023. 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. As of December 31, 2023, we are involved with six 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 own three properties through a joint venture investment that were deconsolidated effective January 1, 2023 (see Note 4). All intercompany transactions and accounts have been eliminated. 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. 70 Table of Contents 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, 2023, 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 range from three to 10 years. Depreciation expense for real estate assets was $ 253.2 million, $ 240.3 million and $ 218.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. Expenditures directly related to the development and construction of real estate assets are included in net real estate assets and 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. 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. 71 Table of Contents 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 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 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 determined an enforceable contract exists and collection of the consideration to which we are entitled in exchange for transferring the real estate is probable, 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 a separate performance obligation and the allocable sales price is recognized when the separate performance obligation is satisfied. 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”). Our office properties 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 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- 72 Table of Contents 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 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 halfway 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 are, therefore, 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, 2023, 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, Charlotte, 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 2023. 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 generally limit 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 ease the financial reporting burdens related to the market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). These optional expedients and exceptions provide guidance on contract modifications and hedge accounting. We have completed the transition to SOFR rates for our applicable outstanding debt instruments with no material impact to our Consolidated Financial Statements. The FASB issued an ASU that will require enhanced segment disclosures, primarily regarding significant segment expenses. The ASU is required to be adopted in our 2024 Annual Report and applied retrospectively to all prior periods presented in the financial statements. We do not expect such adoption to have a material effect on our Notes to Consolidated Financial Statements. 75 Table of Contents 2. Leases Information as Lessor We recognized rental and other revenues related to operating lease payments of $ 819.9 million, $ 816.3 million and $ 754.9 million, of which variable lease payments were $ 72.9 million, $ 69.8 million and $ 57.3 million, during the years ended December 31, 2023, 2022 and 2021, 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, 2023 for our consolidated properties: 2024 $ 707,439 2025 643,857 2026 588,955 2027 527,229 2028 448,428 Thereafter 1,677,371 $ 4,593,279 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 Accounting Standards Codification (“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 at the time of adoption. 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, 2023, 2022, and 2021, and we paid $ 2.4 million, $ 2.4 million and $ 2.3 million in cash during 2023, 2022 and 2021, 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, 2023 and a reconciliation of those cash flows to the operating lease liability as of December 31, 2023: 2024 $ 2,258 2025 2,306 2026 2,355 2027 2,407 2028 2,461 Thereafter 75,341 87,128 Discount ( 54,617 ) Lease liability $ 32,511 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 % at the time of acquisition. 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 2023, we acquired land in Raleigh for a purchase price, including capitalized acquisition costs, of $ 2.7 million. 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 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 was fully paid in or prior to the second quarter of 2023. 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 77 Table of Contents $ 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 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. Dispositions During 2023, we sold a total of four buildings and various land parcels in Nashville, Raleigh and Tampa for an aggregate sales price of $ 103.8 million and recorded aggregate gains on disposition of property of $ 47.8 million. 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. Seller Financed Transaction During 2023, we sold a land parcel in Tampa for an aggregate sales price of $ 21.0 million. In connection with this disposition, we received cash of $ 2.0 million and provided $ 19.0 million of non-recourse seller financing in the form of a two-year , interest-only first mortgage that bears interest at SOFR plus 100 basis points. We have deemed repayment of the mortgage to be not probable primarily because the seller financing represents a significant portion of the aggregate sales price and, since the seller financing is non-recourse, our only remedy in the event of a default would be to foreclose on the asset. As a result, the disposition does not meet the contract criteria to be recognized as a sale. Until such time as the contract criteria are met, we will continue to account for the land parcel as land held for development on our Consolidated Balance Sheets, and the mortgage associated with the seller financing will not be recorded on our Consolidated Balance Sheets. The cash received at closing is recorded as a nonrefundable deposit in accounts payable, accrued expenses and other liabilities on our Consolidated Balance Sheets as of December 31, 2023. 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. 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 $ 18.9 million and $ 2.7 million as of December 31, 2023 and 2022, respectively. The following table sets forth our ownership in unconsolidated affiliates as of December 31, 2023: Joint Venture Location Ownership Interest Highwoods-Markel Associates, LLC Richmond 50.0 % 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 % - Highwoods-Markel Associates, LLC (“Markel joint venture”) In 1999, we formed a joint venture with Markel Corporation in which we own a 50.0 % interest. The Markel joint venture was consolidated as of December 31, 2022 because we controlled the major operating and financial policies of the entity. 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, the Markel joint venture was deconsolidated effective January 1, 2023, and this joint venture is now accounted for using the equity method of accounting. We recognized a gain on deconsolidation of $ 11.8 million related to adjusting our retained interest in the joint venture to fair value. The assets of the Markel joint venture can only be used to settle obligations of the joint venture, and its creditors have no recourse to our wholly owned assets. During 2021, prior to the deconsolidation, the Markel joint venture sold land in Richmond for a sale price of $ 3.0 million and recorded gain on disposition of property of $ 1.3 million. - 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, 2023, we have fully funded our share of the equity for the Granite Park Six joint venture and have funded $ 75.6 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, 2023, $ 54.9 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, 2023, no amounts were drawn on this loan. 79 Table of Contents 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, 2023, our risk of loss with respect to these arrangements was limited to the carrying value of each investment balance. Our investment balances were $ 41.9 million and $ 78.7 million as of December 31, 2023 for the Granite Park Six and 23Springs joint ventures, respectively. The assets of the Granite Park Six and 23Springs joint ventures can only be used to settle obligations of the respective joint venture, and their creditors have no recourse to our wholly owned assets. - 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 50.0 % interest. The McKinney & Olive joint venture has an anticipated total investment of $ 394.7 million. 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 paid by the McKinney & Olive joint venture 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. During 2023, we and Granite each contributed an additional $ 40.0 million of common equity to the McKinney & Olive joint venture. Such proceeds were then used by the joint venture to redeem our $ 80.0 million short-term preferred equity investment in full. Prior to the redemption, we received monthly distributions on the preferred equity at a rate of SOFR plus 350 basis points. 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, 2023, our risk of loss with respect to this arrangement was $ 118.6 million, which represents the carrying value of our investment balance. The redemption of the preferred equity during 2023 was a reconsideration event that did not change our initial conclusion that the McKinney & Olive joint venture is a variable interest entity of which were are not the primary beneficiary. As such, the entity remains unconsolidated. The assets of the McKinney & Olive joint venture can only be used to settle obligations of the joint venture, and its creditors have no recourse to our wholly owned assets. - 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 50.0 % 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 432,000 square foot tower. The rest of Midtown East will be owned by and 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 50.0 % share of the equity required to fund the development project, $ 13.7 million of which was funded as of December 31, 2023. 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, 2023, no amounts were drawn on this loan. 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, both as a debt and an equity holder, and to 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 80 Table of Contents 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, 2023, our risk of loss with respect to this arrangement was limited to the carrying value of the investment balance of $ 13.6 million as no amounts were outstanding under the loan. The assets of the Midtown East joint venture can only be used to settle obligations of the joint venture, and its creditors have no recourse to our wholly owned assets. - 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. 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 have provided a $ 52.8 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 310 basis points. As of December 31, 2023, $ 46.9 million was drawn on this loan. 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, both as a debt and an equity holder, and to 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, 2023, our risk of loss with respect to this arrangement was $ 60.3 million, which consists of the $ 13.4 million carrying value of our investment balance plus the $ 46.9 million outstanding balance of the loan. The outstanding balance on the loan is recorded in investments in and advances to unconsolidated affiliates on our Consolidated Balance Sheets. The assets of the 2827 Peachtree joint venture can only be used to settle obligations of the joint venture, and its creditors have no recourse to our wholly owned assets. - 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, 2023, 2022 and 2021, we recognized $ 1.0 million, $ 0.6 million and $ 1.6 million, respectively, of development/construction, management and leasing fees from our unconsolidated joint ventures. Consolidated Affiliate - 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. 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 provided a $ 46.3 million interest-only secured construction loan to the Midtown West joint venture. All of the amounts outstanding under this loan were repaid in the fourth quarter of 2023. During 2023, the Midtown West joint venture obtained a $ 45.0 million, five-year secured mortgage loan from a third party lender, with an effective fixed rate of 7.29 %. This loan is scheduled to mature in November 2028. The joint venture incurred $ 0.8 million of debt issuance costs, which will be amortized over the term of the loan. The net proceeds were used by the joint venture to repay in full the secured construction loan we provided, as discussed above. 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, both as a debt and an equity holder, and to 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, 81 Table of Contents property operations and capital expenditures) and significant economic exposure through our equity investment. The joint venture obtaining a loan from a third party during 2023, as discussed above, was a reconsideration event that did not change our initial conclusion that the Midtown West joint venture is a variable interest entity of which we are the primary beneficiary. As such, the entity remains 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, 2023 2022 Net real estate assets $ 60,410 $ 59,854 Cash and cash equivalents $ 1,096 $ 1,009 Restricted cash $ 2,260 $ — Accounts receivable $ 31 $ 1,490 Accrued straight-line rents receivable $ 5,041 $ 1,921 Deferred leasing costs, net $ 2,783 $ 2,677 Prepaid expenses and other assets $ 124 $ 153 Mortgages and notes payable, net $ 44,192 $ — Accounts payable, accrued expenses and other liabilities $ 2,872 $ 1,212 The assets of the Midtown West joint venture can only be used to settle obligations of the joint venture, and its creditors have no recourse to our wholly owned assets. 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) the 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 the 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. 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, 2023 2022 Assets: Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets) $ 401,621 $ 416,579 Less accumulated amortization ( 175,697 ) ( 163,751 ) $ 225,924 $ 252,828 Liabilities (in accounts payable, accrued expenses and other liabilities): Acquisition-related below market lease liabilities $ 50,842 $ 55,304 Less accumulated amortization ( 30,416 ) ( 29,859 ) $ 20,426 $ 25,445 The following table sets forth amortization of intangible assets and below market lease liabilities: Year Ended December 31, 2023 2022 2021 Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization) $ 43,511 $ 44,900 $ 38,173 Amortization of lease incentives (in rental and other revenues) $ 2,816 $ 2,090 $ 1,885 Amortization of acquisition-related intangible assets (in rental and other revenues) $ 3,338 $ 3,320 $ 1,932 Amortization of acquisition-related below market lease liabilities (in rental and other revenues) $ ( 5,019 ) $ ( 5,452 ) $ ( 5,720 ) 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) 2024 $ 39,896 $ 2,279 $ 3,066 $ ( 4,240 ) 2025 31,612 1,977 2,210 ( 2,727 ) 2026 27,323 1,744 1,861 ( 2,431 ) 2027 23,539 1,543 1,520 ( 2,062 ) 2028 19,684 1,298 1,404 ( 1,648 ) Thereafter 57,353 3,428 4,187 ( 7,318 ) $ 199,407 $ 12,269 $ 14,248 $ ( 20,426 ) Weighted average remaining amortization periods as of December 31, 2023 (in years) 7.4 7.2 7.1 8.1 83 Table of Contents 6. Mortgages and Notes Payable Our mortgages and notes payable consisted of the following: December 31, 2023 2022 Secured indebtedness (1) : 5.69% mortgage loan due 2028 $ 200,000 $ — 7.29% mortgage loan due 2028 (2) 45,000 — 4.27% (3.61% effective rate) mortgage loan due 2028 (3) 110,391 113,105 4.00% mortgage loan due 2029 87,003 89,204 3.61% (3.19% effective rate) mortgage loan due 2029 (4) 84,360 84,666 3.40% (3.50% effective rate) mortgage loan due 2033 (5) 69,524 69,473 4.60% (3.73% effective rate) mortgage loan due 2037 (6) 124,474 127,540 720,752 483,988 Unsecured indebtedness: 3.875% (4.038% effective rate) notes due 2027 (7) 298,734 298,334 4.125% (4.271% effective rate) notes due 2028 (8) 348,276 347,863 4.200% (4.234% effective rate) notes due 2029 (9) 349,484 349,386 3.050% (3.079% effective rate) notes due 2030 (10) 399,400 399,302 2.600% (2.645% effective rate) notes due 2031 (11) 398,892 398,735 7.650% (7.836% effective rate) notes due 2034 (12) 345,407 — Variable rate term loan due 2026 (13) 200,000 200,000 Variable rate term loan due 2027 (13) 150,000 150,000 Variable rate term loan due 2024 (14) — 200,000 Revolving credit facility due 2025 (15) 20,000 386,000 2,510,193 2,729,620 Less-unamortized debt issuance costs ( 17,739 ) ( 16,393 ) Total mortgages and notes payable, net $ 3,213,206 $ 3,197,215 __________ (1) Our secured mortgage loans were collateralized by real estate assets with an undepreciated book value of $ 1,237.6 million as of December 31, 2023. We paid down $ 6.7 million of secured loan balances through principal amortization during 2023. (2) The borrower under this loan is our Midtown West joint venture, a consolidated 80.0 % owned joint venture. See Note 4. (3) Net of unamortized fair market value premium of $ 2.7 million and $ 3.3 million as of December 31, 2023 and 2022, respectively. (4) Net of unamortized fair market value premium of $ 1.7 million and $ 2.0 million as of December 31, 2023 and 2022, respectively. (5) Net of unamortized fair market value discount of $ 0.5 million as of both December 31, 2023 and 2022. (6) Net of unamortized fair market value premium of $ 8.6 million and $ 9.3 million as of December 31, 2023 and 2022, respectively. (7) Net of unamortized original issuance discount of $ 1.3 million and $ 1.7 million as of December 31, 2023 and 2022, respectively. (8) Net of unamortized original issuance discount of $ 1.7 million and $ 2.1 million as of December 31, 2023 and 2022, respectively. (9) Net of unamortized original issuance discount of $ 0.5 million and $ 0.6 million as of December 31, 2023 and 2022, respectively. (10) Net of unamortized original issuance discount of $ 0.6 million and $ 0.7 million as of December 31, 2023 and 2022, respectively. (11) Net of unamortized original issuance discount of $ 1.1 million and $ 1.3 million as of December 31, 2023 and 2022, respectively. (12) Net of unamortized original issuance discount of $ 4.6 million as of December 31, 2023. (13) The interest rate was 6.35 % as of December 31, 2023. (14) This loan was repaid in full as of December 31, 2023. (15) The interest rate was 6.25 % as of December 31, 2023. 84 Table of Contents The following table sets forth scheduled future principal payments, including amortization, due on our mortgages and notes payable as of December 31, 2023: Years Ending December 31, Amount 2024 $ 6,944 2025 27,156 2026 206,922 2027 458,976 2028 699,168 Thereafter 1,831,779 Less-unamortized debt issuance costs ( 17,739 ) $ 3,213,206 As of December 31, 2023,our $ 750.0 million unsecured revolving credit facility was scheduled to mature in March 2025. The interest rate on our revolving credit facility was 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 was 20 basis points. The interest rate and facility fee were based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. We were 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. As of December 31, 2023, there was $ 20.0 million outstanding under our revolving credit facility and $ 0.9 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, 2023 was $ 729.1 million. During 2023, the Operating Partnership issued $ 350.0 million aggregate principal amount of 7.650 % notes due February 2034, less original issuance discount of $ 4.6 million. These notes were priced to yield 7.836 %. Previously during 2023, we obtained an aggregate of $ 200.0 million notional amount of forward-starting swaps that effectively locked the underlying 10-year treasury rate at 4.498 %. Upon the subsequent issuance of the notes, we terminated the forward-starting swaps and paid cash upon settlement. The unrealized loss of $ 0.5 million will be classified to interest expense as interest payments are made on the debt. Underwriting fees and other expenses totaled $ 3.2 million and will be amortized over the term of the notes. The net proceeds from the issuance were used: (1) to prepay, without penalty, a $ 200.0 million unsecured bank term loan that was scheduled to mature in October 2024; (2) to repay amounts outstanding under our revolving credit facility; and (3) for general corporate purposes. We recorded $ 0.6 million of loss on debt extinguishment related to the term loan prepayment. During 2023, we obtained a $ 200.0 million, five-year secured mortgage loan from a third party lender, with an effective fixed interest rate of 5.69 %. This loan is scheduled to mature in April 2028. We incurred $ 1.3 million of debt issuance costs, which will be amortized over the term of the loan. During 2022, we obtained a $ 200.0 million, two-year unsecured bank term loan that was originally scheduled to mature in October 2024. This loan was prepaid in full without penalty during the fourth quarter of 2023. The interest rate, based on current credit ratings, was SOFR plus a related spread adjustment of 10 basis points and a borrowing spread of 95 basis points. The interest rate was based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. We were entitled to a temporary reduction in the interest rate of one basis point provided we met certain sustainability goals with respect to the ongoing reduction of greenhouse gas emissions. 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 other $ 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. Subject to written consent of the lenders, we may elect to amend this term loan no later than May 15, 2024 to provide that the interest rate may be adjusted upward or downward by up to 2.5 basis points subject to satisfaction of certain to-be-determined 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. 85 Table of Contents 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. 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. 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 $ 2,140.2 million carrying amount of various notes outstanding as detailed in the table above. 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 6, 2024 (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. Importantly, we have no 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 • 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 $ 9.0 million, $ 4.0 million and $ 9.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. 86 Table of Contents 7. Commitments and Contingencies Lease and Contractual Commitments We have $ 204.3 million of lease and contractual commitments as of December 31, 2023. 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 $ 50.7 million was recorded on our Consolidated Balance Sheet as of December 31, 2023. Contingent Consideration We had $ 0.8 million of contingent consideration related to a parcel of acquired development land as of both December 31, 2023 and 2022. 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 From time to time, we are 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 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 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) at various timeframes 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. See Note 4. 87 Table of Contents 8. Noncontrolling Interests Noncontrolling Interests in Consolidated Affiliates As of December 31, 2023, our noncontrolling interests in consolidated affiliates relate to our joint venture partner’s 20.0 % interest in the Midtown West joint venture. See Note 4. Our joint venture partner is an unrelated third party. 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, 2023 2022 Beginning noncontrolling interests in the Operating Partnership $ 65,977 $ 111,689 Adjustment of noncontrolling interests in the Operating Partnership to fair value ( 10,152 ) ( 39,502 ) Conversions of Common Units to Common Stock ( 4,795 ) ( 1,251 ) Redemptions of Common Units ( 163 ) ( 3,763 ) Net income attributable to noncontrolling interests in the Operating Partnership 3,164 3,670 Distributions to noncontrolling interests in the Operating Partnership ( 4,511 ) ( 4,866 ) Total noncontrolling interests in the Operating Partnership $ 49,520 $ 65,977 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, 2023 2022 2021 Net income available for common stockholders $ 146,230 $ 156,572 $ 310,791 Increase in additional paid in capital from conversions of Common Units to Common Stock 4,795 1,251 15,076 Redemptions of Common Units 163 3,763 — Change from net income available for common stockholders and transfers from noncontrolling interests $ 151,188 $ 161,586 $ 325,867 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 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, 2023: Assets: Mortgages and notes receivable, at fair value (1) $ 4,795 $ — $ 4,795 Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets) 2,294 2,294 — Total Assets $ 7,089 $ 2,294 $ 4,795 Noncontrolling Interests in the Operating Partnership $ 49,520 $ 49,520 $ — Liabilities: Mortgages and notes payable, net, at fair value (1) $ 2,927,330 $ — $ 2,927,330 Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities) 2,294 2,294 — Total Liabilities $ 2,929,624 $ 2,294 $ 2,927,330 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 __________ (1) Amounts are not recorded at fair value on our Consolidated Balance Sheets as of December 31, 2023 and 2022. 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 2023, 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. There were no shares issued under these agreements in 2023. During 2022, the Company issued 130,011 shares of Common Stock under its equity distribution agreements at an average gross sales price of $ 46.50 per share and received net proceeds, after sales commissions, of $ 6.0 million. As of December 31, 2023, the Company had 94.3 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 , $ 2.00 and $ 1.96 for the years ended December 31, 2023, 2022 and 2021, 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, 2023 2022 2021 Ordinary dividend $ 1.58 $ 1.82 $ 1.87 Capital gains 0.42 0.18 0.09 Total $ 2.00 $ 2.00 $ 1.96 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, 2023 and 2022 : 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 $ 28,811 $ 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, 2023 2022 2021 8.625% Series A Cumulative Redeemable: Ordinary dividend $ 68.02 $ 78.48 $ 82.38 Capital gains 18.23 7.77 3.87 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. Warrants As of both December 31, 2023 and 2022, 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 91 Table of Contents 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 , $ 2.00 and $ 1.96 for the years ended December 31, 2023, 2022 and 2021, 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, 2023 and 2022: 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 $ 28,811 $ 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 35 % 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, 2023 2022 Outstanding stock options and warrants 527,067 527,067 Possible future issuance under equity incentive plans 2,537,816 2,817,293 3,064,883 3,344,360 Of the possible future issuance under the Company’s long-term equity incentive plans as of December 31, 2023, no more than an additional 0.5 million shares can be in the form of restricted stock. During the years ended December 31, 2023, 2022 and 2021, we recognized share-based compensation expense of $ 7.0 million, $ 7.6 million and $ 8.6 million, respectively. Because REITs generally do not pay income taxes, we do not realize tax benefits on share-based payments. As of December 31, 2023, there was $ 4.0 million of total unrecognized share-based compensation costs, which will be recognized over a weighted average remaining contractual term of 2.0 years. - Stock Options Outstanding stock options 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, 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 years ended December 31, 2023 and 2022. The Company had 512,067 options exercisable as of December 31, 2023, 2022 and 2021, respectively, with a weighted average exercise price of $ 46.18 at each date. As of December 31, 2023 and 2022, these options had a weighted average remaining life of 2.0 years and 3.0 years, respectively, and all had exercise prices higher than the market price of our common stock. No options were exercised during the years ended December 31, 2023 and 2022 , respectively . Cash received or receivable from options exercised was $ 1.1 million for the year ended December 31, 2021. The total intrinsic value of options exercised during the year ended December 31, 2021 was $ 0.1 million. The total intrinsic value of options outstanding as of December 31, 2021 was $ 0.6 million. 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, 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 43.00 Awarded and issued (1) 155,717 26.42 Vested (2) ( 95,423 ) 43.57 Forfeited ( 1,819 ) 34.11 Restricted shares outstanding as of December 31, 2023 276,308 $ 33.51 __________ (1) The weighted average fair value at grant date of time-based restricted stock issued during the years ended December 31, 2023, 2022 and 2021 was $ 4.1 million, $ 4.4 million and $ 4.1 million, respectively. (2) The vesting date fair value of time-based restricted stock that vested during the years ended December 31, 2023, 2022 and 2021 was $ 2.5 million, $ 4.4 million and $ 3.6 million, respectively. Vested shares include those shares surrendered by employees to satisfy tax withholding obligations in connection with such vesting. 94 Table of Contents - 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 since 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 2023, 2022 and 2021 was determined to be $ 27.06 , $ 41.94 and $ 36.41 , 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: 2023 2022 2021 Risk free interest rate (1) 4.4 % 1.6 % 0.3 % Common stock dividend yield (2) 6.9 % 4.5 % 4.8 % Expected volatility (3) 27.2 % 25.8 % 26.8 % __________ (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, 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 Awarded and issued (1) 126,736 27.06 Vested (2) ( 65,140 ) 44.88 Forfeited (3) ( 2,148 ) 35.83 Restricted shares outstanding as of December 31, 2023 286,592 $ 34.03 __________ (1) The fair value at grant date of total return-based restricted stock issued during the years ended December 31, 2023, 2022 and 2021 was $ 3.4 million, $ 3.4 million and $ 2.9 million, respectively, at target. (2) The vesting date fair value of total return-based restricted stock that vested during the years ended December 31, 2023, 2022 and 2021 was $ 1.7 million, $ 2.7 million and $ 2.2 million, respectively, based on the performance of the specific plans. Vested shares include those shares surrendered by employees to satisfy tax withholding obligations in connection with such vesting. (3) The 2022 and 2021 amounts include 20,995 and 18,484 shares, respectively, that were forfeited at the end of the applicable measurement period because the applicable total return did not meet targeted levels. No shares were forfeited in 2023. 95 Table of Contents 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, 2023, 2022 and 2021, we contributed $ 1.4 million, $ 1.4 million and $ 1.3 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 $ 2.3 million and $ 2.6 million as of December 31, 2023 and 2022, 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, 2023 2022 2021 Beginning deferred compensation liability $ 2,564 $ 2,866 $ 2,573 Mark-to-market adjustment to deferred compensation (in general and administrative expenses) 243 ( 302 ) 293 Distributions from deferred compensation plans ( 513 ) — — Total deferred compensation liability $ 2,294 $ 2,564 $ 2,866 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, 2023, 2022 and 2021, the Company issued 77,086 , 46,656 and 38,460 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 $ 0.3 million, $ 0.2 million and $ 0.2 million in the years ended December 31, 2023, 2022 and 2021, respectively. Generally, shares purchased under the ESPP must be held for at least one year. The Company satisfies its ESPP obligations by issuing additional shares of Common Stock. 96 Table of Contents 12. 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, 2023 2022 2021 Earnings per Common Share - basic: Numerator: Net income $ 151,330 $ 163,958 $ 323,310 Net (income) attributable to noncontrolling interests in the Operating Partnership ( 3,164 ) ( 3,670 ) ( 8,321 ) Net (income)/loss attributable to noncontrolling interests in consolidated affiliates 549 ( 1,230 ) ( 1,712 ) Dividends on Preferred Stock ( 2,485 ) ( 2,486 ) ( 2,486 ) Net income available for common stockholders $ 146,230 $ 156,572 $ 310,791 Denominator: Denominator for basic earnings per Common Share – weighted average shares (1) 105,529 105,120 104,232 Net income available for common stockholders $ 1.39 $ 1.49 $ 2.98 Earnings per Common Share - diluted: Numerator: Net income $ 151,330 $ 163,958 $ 323,310 Net (income)/loss attributable to noncontrolling interests in consolidated affiliates 549 ( 1,230 ) ( 1,712 ) Dividends on Preferred Stock ( 2,485 ) ( 2,486 ) ( 2,486 ) Net income available for common stockholders before net (income) attributable to noncontrolling interests in the Operating Partnership $ 149,394 $ 160,242 $ 319,112 Denominator: Denominator for basic earnings per Common Share – weighted average shares (1) 105,529 105,120 104,232 Add: Stock options using the treasury method — 5 18 Noncontrolling interests Common Units 2,256 2,442 2,811 Denominator for diluted earnings per Common Share – adjusted weighted average shares and assumed conversions 107,785 107,567 107,061 Net income available for common stockholders $ 1.39 $ 1.49 $ 2.98 __________ (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, 2023 2022 2021 Earnings per Common Unit - basic: Numerator: Net income $ 151,330 $ 163,958 $ 323,310 Net (income)/loss attributable to noncontrolling interests in consolidated affiliates 549 ( 1,230 ) ( 1,712 ) Distributions on Preferred Units ( 2,485 ) ( 2,486 ) ( 2,486 ) Net income available for common unitholders $ 149,394 $ 160,242 $ 319,112 Denominator: Denominator for basic earnings per Common Unit – weighted average units (1) 107,376 107,153 106,634 Net income available for common unitholders $ 1.39 $ 1.50 $ 2.99 Earnings per Common Unit - diluted: Numerator: Net income $ 151,330 $ 163,958 $ 323,310 Net (income)/loss attributable to noncontrolling interests in consolidated affiliates 549 ( 1,230 ) ( 1,712 ) Distributions on Preferred Units ( 2,485 ) ( 2,486 ) ( 2,486 ) Net income available for common unitholders $ 149,394 $ 160,242 $ 319,112 Denominator: Denominator for basic earnings per Common Unit – weighted average units (1) 107,376 107,153 106,634 Add: Stock options using the treasury method — 5 18 Denominator for diluted earnings per Common Unit – adjusted weighted average units and assumed conversions 107,376 107,158 106,652 Net income available for common unitholders $ 1.39 $ 1.50 $ 2.99 __________ (1) Includes all unvested restricted stock where distributions on such restricted stock are non-forfeitable. 13. 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 $ 1.42 , $ 1.60 and $ 1.61 per share in 2023, 2022 and 2021, 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, 2023 and $ 5.6 billion and $ 3.5 billion, respectively, as of December 31, 2022. 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, 2023 and $ 5.4 billion and $ 3.5 billion, respectively, as of December 31, 2022. During the years ended December 31, 2023, 2022 and 2021, 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 had no net deferred tax asset or liability as of December 31, 2023 or December 31, 2022. For the years ended December 31, 2023 and 2022, there were no unrecognized tax benefits. The Company is subject to federal, state and local income tax examinations by taxing authorities for 2020 through 2023. The Company does not expect that the total amount of unrecognized benefits will materially change within the next year. 98 Table of Contents 14. 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 rental and other revenues, net operating income and total assets for our office properties. Net operating income is the primary industry property-level performance metric used by our chief operating decision maker and is defined as rental and other revenues less rental property and other expenses. Year Ended December 31, 2023 2022 2021 Rental and Other Revenues: Atlanta $ 143,741 $ 143,904 $ 143,612 Charlotte 85,984 73,721 49,347 Nashville 171,797 174,341 149,674 Orlando 58,002 54,802 51,281 Raleigh 181,964 182,990 162,115 Richmond 35,918 43,084 45,941 Tampa 99,421 94,726 97,954 Total Office Segment 776,827 767,568 699,924 Other 57,170 61,361 68,083 Total Rental and Other Revenues $ 833,997 $ 828,929 $ 768,007 Net Operating Income: Atlanta $ 89,700 $ 92,297 $ 94,122 Charlotte 63,921 55,689 38,464 Nashville 125,417 129,217 110,039 Orlando 35,162 32,331 31,301 Raleigh 132,262 134,904 121,005 Richmond 24,756 28,879 31,726 Tampa 62,382 59,691 64,396 Total Office Segment 533,600 533,008 491,053 Other 31,615 36,115 40,518 Total Net Operating Income 565,215 569,123 531,571 Reconciliation to net income: Depreciation and amortization ( 299,411 ) ( 287,610 ) ( 259,255 ) Impairments of real estate assets — ( 36,515 ) — General and administrative expenses ( 42,857 ) ( 42,266 ) ( 40,553 ) Interest expense ( 136,710 ) ( 105,385 ) ( 85,853 ) Other income 4,435 1,530 1,394 Gains on disposition of property 47,773 63,546 174,059 Gain on deconsolidation of affiliate 11,778 — — Equity in earnings of unconsolidated affiliates 1,107 1,535 1,947 Net income $ 151,330 $ 163,958 $ 323,310 99 Table of Contents December 31, 2023 2022 Total Assets: Atlanta $ 907,421 $ 928,406 Charlotte 974,846 984,075 Nashville 1,259,272 1,290,819 Orlando 286,781 287,950 Raleigh 1,255,978 1,288,878 Richmond 157,299 196,435 Tampa 473,800 493,966 Total Office Segment 5,315,397 5,470,529 Other 687,531 592,847 Total Assets $ 6,002,928 $ 6,063,376 15. Subsequent Events Our $ 750.0 million unsecured revolving credit facility was modified on January 25, 2024 and is now scheduled to mature in January 2028 (but can be extended for two additional six-month periods at our option assuming no defaults have occurred). The interest rate on our newly modified revolving credit facility remains SOFR plus a related spread adjustment of 10 basis points and a borrowing spread of 85 basis points, based on current credit ratings and the annual facility fee remains 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. Subject to written consent of the lenders, we may elect to amend the newly modified revolving credit facility no later than May 15, 2024 to provide that the interest rate may be adjusted upward or downward by up to 2.5 basis points subject to satisfaction of certain to-be-determined sustainability goals with respect to the ongoing reduction of greenhouse gas emissions. The financial and other covenants under our newly modified facility are substantially similar to our previous credit facility. We expect to incur $ 7.9 million of debt issuance costs, which will be amortized along with certain existing unamortized debt issuance costs over the remaining term of our new revolving credit facility. We expect to record $ 0.2 million of loss on debt extinguishment. As of January 26, 2024, there was $ 36.0 million outstanding under our revolving credit facility and $ 0.9 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 January 26, 2024 was $ 713.1 million. On January 31, 2024, the Company declared a cash dividend of $ 0.50 per share of Common Stock, which is payable on March 12, 2024 to stockholders of record as of February 20, 2024. 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, 2023 2022 2021 Real estate assets: Beginning balance $ 6,689,692 $ 6,486,136 $ 5,594,833 Acquisitions, development and improvements 226,066 378,587 1,248,256 Cost of real estate sold, retired and deconsolidated ( 187,755 ) ( 175,031 ) ( 356,953 ) Ending balance (a) $ 6,728,003 $ 6,689,692 $ 6,486,136 Accumulated depreciation: Beginning balance $ 1,609,502 $ 1,457,511 $ 1,421,956 Depreciation expense 253,151 240,273 218,628 Real estate sold, retired and deconsolidated ( 119,263 ) ( 88,282 ) ( 183,073 ) Ending balance (b) $ 1,743,390 $ 1,609,502 $ 1,457,511 (a) Reconciliation of total real estate assets to balance sheet caption: 2023 2022 2021 Total per Schedule III $ 6,728,003 $ 6,689,692 $ 6,486,136 Development in-process exclusive of land included in Schedule III 8,918 46,735 6,890 Real estate assets, net, held for sale — — ( 3,482 ) Total real estate assets $ 6,736,921 $ 6,736,427 $ 6,489,544 (b) Reconciliation of total accumulated depreciation to balance sheet caption: 2023 2022 2021 Total per Schedule III $ 1,743,390 $ 1,609,502 $ 1,457,511 Real estate assets, net, held for sale — — — Total accumulated depreciation $ 1,743,390 $ 1,609,502 $ 1,457,511 101 Table of Contents HIGHWOODS PROPERTIES, INC. HIGHWOODS REALTY LIMITED PARTNERSHIP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands) December 31, 2023 Initial Costs Costs Capitalized Subsequent to Acquisition Gross Value at Close of Period Life on Which Depreciation is Calculated Description Property Type 2023 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 $ 639 $ 2 $ 3,121 $ 3,123 $ 1,662 1983 5-40 yrs. 1800 Century Boulevard Office 1,444 29,081 — 6,311 1,444 35,392 36,836 22,480 1975 5-40 yrs. 1825 Century Boulevard Office 864 — 303 15,204 1,167 15,204 16,371 8,169 2002 5-40 yrs. 1875 Century Boulevard Office — 8,924 — 9,038 — 17,962 17,962 11,278 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 — 9,395 — 23,827 23,827 14,339 1971 5-40 yrs. 2400 Century Parkway Office — — 406 15,514 406 15,514 15,920 9,384 1998 5-40 yrs. 2500 Century Parkway Office — — 328 11,507 328 11,507 11,835 5,114 2005 5-40 yrs. 2500/2635 Parking Garage Office — — — 6,447 — 6,447 6,447 2,933 2005 5-40 yrs. 2600 Century Parkway Office — 10,679 — 5,541 — 16,220 16,220 9,543 1973 5-40 yrs. 2635 Century Parkway Office — 21,643 — 21,669 — 43,312 43,312 24,379 1980 5-40 yrs. 2800 Century Parkway Office — 20,449 — 11,587 — 32,036 32,036 20,147 1983 5-40 yrs. Century Plaza I Office 1,290 8,567 — 5,020 1,290 13,587 14,877 7,863 1981 5-40 yrs. Century Plaza II Office 1,380 7,733 — 4,764 1,380 12,497 13,877 6,554 1984 5-40 yrs. Riverwood 100 Office 5,785 64,913 ( 29 ) 31,582 5,756 96,495 102,251 34,264 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 — 756 9,579 126,305 135,884 41,606 2009 5-40 yrs. One Alliance Center Office 14,775 123,071 — 24,548 14,775 147,619 162,394 45,240 2001 5-40 yrs. 10 Glenlake North Office 5,349 26,334 — 8,153 5,349 34,487 39,836 11,367 2000 5-40 yrs. 10 Glenlake South Office 5,103 22,811 — 8,223 5,103 31,034 36,137 8,905 1999 5-40 yrs. Riverwood 200 Office 4,777 89,708 450 2,033 5,227 91,741 96,968 19,819 2017 5-40 yrs. Riverwood 300 - Land Office 400 — — 710 400 710 1,110 123 2017 5-40 yrs. Monarch Tower Office 22,717 143,068 — 25,268 22,717 168,336 191,053 41,899 1997 5-40 yrs. Monarch Plaza Office 27,678 88,962 — 19,637 27,678 108,599 136,277 24,488 1983 5-40 yrs. Galleria 75 - Land Office 19,740 — ( 1,938 ) 697 17,802 697 18,499 99 2022 5-40 yrs. Charlotte, NC Bank of America Tower Office 200,000 29,273 354,749 — 28,069 29,273 382,818 412,091 47,795 2019 5-40 yrs. One Morrocroft Office (2) 3,655 28,357 ( 198 ) 4,697 3,457 33,054 36,511 3,114 1992 5-40 yrs. Two Morrocroft Office (2) 3,530 28,804 ( 190 ) 1,675 3,340 30,479 33,819 2,716 1998 5-40 yrs. Three Morrocroft Office (2) 3,566 30,505 ( 192 ) 11 3,374 30,516 33,890 2,737 2000 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 2023 Encumbrance Land Bldg & Improv Land Bldg & Improv Land Bldg & Improv Total Assets (1) Accumulated Depreciation Date of Construction Capitol Towers North Office (3) 8,642 96,254 — 768 8,642 97,022 105,664 7,304 2017 5-40 yrs. Capitol Towers South Office (3) 9,095 95,458 — 132 9,095 95,590 104,685 7,568 2015 5-40 yrs. 1426 S. Tryon - Land Office 26,702 — ( 421 ) — 26,281 — 26,281 — N/A 5-40 yrs. SIX50 at Legacy Union Office 16,504 166,305 — 1,400 16,504 167,705 184,209 7,741 2020 5-40 yrs. Nashville, TN 3322 West End Office 3,025 27,490 — 12,678 3,025 40,168 43,193 22,235 1986 5-40 yrs. 3401 West End Office 5,862 22,917 — 7,269 5,862 30,186 36,048 19,087 1982 5-40 yrs. 5310 Maryland Way Office 1,863 7,201 — 5,623 1,863 12,824 14,687 7,977 1994 5-40 yrs. Cool Springs I & II Deck Office — — — 3,998 — 3,998 3,998 1,617 2007 5-40 yrs. Cool Springs III & IV Deck Office — — — 4,468 — 4,468 4,468 1,875 2007 5-40 yrs. Cool Springs I Office 1,583 — 15 16,867 1,598 16,867 18,465 9,850 1999 5-40 yrs. Cool Springs II Office 1,824 — 346 25,482 2,170 25,482 27,652 12,177 1999 5-40 yrs. Cool Springs III Office 1,631 — 804 23,704 2,435 23,704 26,139 7,823 2006 5-40 yrs. Cool Springs IV Office 1,715 — — 25,288 1,715 25,288 27,003 8,013 2008 5-40 yrs. Cool Springs V Office 3,688 — 295 50,813 3,983 50,813 54,796 17,033 2007 5-40 yrs. Harpeth Two Office 1,419 5,677 — 8,608 1,419 14,285 15,704 5,543 1984 5-40 yrs. Harpeth Three Office 1,660 6,649 — 10,438 1,660 17,087 18,747 6,841 1987 5-40 yrs. Harpeth Four Office 1,713 6,842 — 10,936 1,713 17,778 19,491 7,007 1989 5-40 yrs. Harpeth Five Office 662 — 197 10,965 859 10,965 11,824 4,087 1998 5-40 yrs. Hickory Trace Office 1,164 — 164 5,989 1,328 5,989 7,317 3,024 2001 5-40 yrs. Highwoods Plaza I Office 1,552 — 307 9,199 1,859 9,199 11,058 5,588 1996 5-40 yrs. Highwoods Plaza II Office 1,448 — 307 7,642 1,755 7,642 9,397 4,372 1997 5-40 yrs. Seven Springs I Office 2,076 — 592 14,814 2,668 14,814 17,482 7,144 2002 5-40 yrs. SouthPointe Office 1,655 — 310 9,493 1,965 9,493 11,458 5,476 1998 5-40 yrs. Westwood South Office 2,106 — 382 11,190 2,488 11,190 13,678 7,041 1999 5-40 yrs. 100 Winners Circle Office 1,497 7,258 — 7,687 1,497 14,945 16,442 6,328 1987 5-40 yrs. The Pinnacle at Symphony Place Office 87,003 — 141,469 — 6,181 — 147,650 147,650 51,151 2010 5-40 yrs. Seven Springs East Office 2,525 37,587 — 520 2,525 38,107 40,632 12,149 2013 5-40 yrs. The Shops at Seven Springs Office 803 8,223 — 691 803 8,914 9,717 3,663 2013 5-40 yrs. Seven Springs West Office 2,439 51,306 — 4,120 2,439 55,426 57,865 11,916 2016 5-40 yrs. Seven Springs II Office 2,356 30,048 — 3,432 2,356 33,480 35,836 7,563 2017 5-40 yrs. Bridgestone Tower Office 19,223 169,582 — 457 19,223 170,039 189,262 31,117 2017 5-40 yrs. Virginia Springs II Office 4,821 26,448 — 3,988 4,821 30,436 35,257 3,315 2020 5-40 yrs. MARS Campus Office 7,010 87,474 — 161 7,010 87,635 94,645 15,360 2019 5-40 yrs. Virginia Springs I Office 4,534 25,632 — 308 4,534 25,940 30,474 4,732 2018 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 2023 Encumbrance Land Bldg & Improv Land Bldg & Improv Land Bldg & Improv Total Assets (1) Accumulated Depreciation Date of Construction 1100 Broadway - Land Office 29,845 — ( 259 ) — 29,586 — 29,586 — N/A N/A Asurion Office 33,219 230,569 — 2,780 33,219 233,349 266,568 17,157 2021 5-40 yrs. Ovation - Land Office 89,231 — 192 — 89,423 — 89,423 — N/A N/A Broadway Stem - Land Office 6,218 — ( 1,205 ) 526 5,013 526 5,539 31 2021 5-40 yrs. YMCA Site - land Office 16,121 — ( 28 ) — 16,093 — 16,093 — 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 — 1,692 — 11,543 11,543 7,963 1983 5-40 yrs. 201 South Orange Office 3,893 29,541 — 14,687 3,893 44,228 48,121 13,704 1982 5-40 yrs. Capital Plaza Two Office 4,346 43,394 — 14,697 4,346 58,091 62,437 15,476 1999 5-40 yrs. Capital Plaza One Office 3,482 27,321 — 10,693 3,482 38,014 41,496 11,798 1975 5-40 yrs. Landmark Center Two Office 4,743 22,031 — 11,894 4,743 33,925 38,668 10,873 1985 5-40 yrs. Landmark Center One Office 6,207 22,655 — 12,160 6,207 34,815 41,022 12,180 1983 5-40 yrs. Bank of America Plaza Office 3,490 56,079 — 11,401 3,490 67,480 70,970 16,215 2000 5-40 yrs. Eola Centre Office 5,785 11,160 — 15,584 5,785 26,744 32,529 6,732 1969 5-40 yrs. Pittsburgh, PA One PPG Place Office 9,819 107,643 — 57,996 9,819 165,639 175,458 58,449 1983-1985 5-40 yrs. Two PPG Place Office 2,302 10,978 — 15,373 2,302 26,351 28,653 8,649 1983-1985 5-40 yrs. Three PPG Place Office 501 2,923 — 5,277 501 8,200 8,701 3,690 1983-1985 5-40 yrs. Four PPG Place Office 620 3,239 — 3,378 620 6,617 7,237 2,786 1983-1985 5-40 yrs. Five PPG Place Office 803 4,924 — 3,007 803 7,931 8,734 2,842 1983-1985 5-40 yrs. Six PPG Place Office 3,353 25,602 — 16,079 3,353 41,681 45,034 15,906 1983-1985 5-40 yrs. EQT Plaza Office 16,457 83,812 ( 6,000 ) ( 5,867 ) 10,457 77,945 88,402 37,168 1987 5-40 yrs. East Liberty - Land Office 2,478 — ( 1,204 ) — 1,274 — 1,274 — N/A N/A Raleigh, NC 3600 Glenwood Avenue Office — 10,994 — 6,237 — 17,231 17,231 11,057 1986 5-40 yrs. 3737 Glenwood Avenue Office — — 318 17,946 318 17,946 18,264 9,889 1999 5-40 yrs. 4800 Falls of Neuse Office 2,678 17,630 — 7,472 2,678 25,102 27,780 17,202 1985 5-40 yrs. 801 Raleigh Corporate Center Office 828 — 272 13,031 1,100 13,031 14,131 6,345 2002 5-40 yrs. 2500 Blue Ridge Road Office 722 4,606 — 1,022 722 5,628 6,350 3,969 1982 5-40 yrs. 2418 Blue Ridge Road Office 462 1,410 — 2,731 462 4,141 4,603 2,333 1988 5-40 yrs. 2000 CentreGreen Office 1,529 — ( 391 ) 14,485 1,138 14,485 15,623 6,749 2000 5-40 yrs. 4000 CentreGreen Office 1,653 — ( 389 ) 12,336 1,264 12,336 13,600 5,808 2001 5-40 yrs. 5000 CentreGreen Office 1,291 34,572 — 2,197 1,291 36,769 38,060 9,583 2017 5-40 yrs. 3000 CentreGreen Office 1,779 — ( 397 ) 14,784 1,382 14,784 16,166 6,196 2002 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 2023 Encumbrance Land Bldg & Improv Land Bldg & Improv Land Bldg & Improv Total Assets (1) Accumulated Depreciation Date of Construction 1000 CentreGreen Office 1,280 — 55 13,765 1,335 13,765 15,100 5,491 2008 5-40 yrs. GlenLake - Land Office 13,003 — ( 12,382 ) 114 621 114 735 65 2001 5-40 yrs. GlenLake One Office 924 — 1,324 23,241 2,248 23,241 25,489 11,934 2002 5-40 yrs. GlenLake Four Office 1,659 — 493 20,795 2,152 20,795 22,947 8,920 2006 5-40 yrs. GlenLake Six Office 941 — ( 365 ) 22,210 576 22,210 22,786 7,899 2008 5-40 yrs. 701 Corporate Center Office 1,304 — 540 19,465 1,844 19,465 21,309 10,277 1996 5-40 yrs. 7001 Weston Parkway Office 531 — ( 267 ) 8,064 264 8,064 8,328 5,069 1998 5-40 yrs. Inveresk Parcel 2 - Land Office 657 — 38 103 695 103 798 22 2015 5-40 yrs. 4201 Lake Boone Trail Office 1,450 6,311 — 1,077 1,450 7,388 8,838 2,519 1998 5-40 yrs. 4620 Creekstone Drive Office 149 — 107 5,904 256 5,904 6,160 2,183 2001 5-40 yrs. 4825 Creekstone Drive Office 398 — 293 10,796 691 10,796 11,487 6,327 1999 5-40 yrs. 751 Corporate Center Office 2,665 16,939 — ( 144 ) 2,665 16,795 19,460 4,076 2018 5-40 yrs. PNC Plaza Office 1,206 — — 71,200 1,206 71,200 72,406 32,059 2008 5-40 yrs. 4301 Lake Boone Trail Office 878 3,730 — 3,066 878 6,796 7,674 4,547 1990 5-40 yrs. 4207 Lake Boone Trail Office 362 1,818 — 1,113 362 2,931 3,293 2,320 1993 5-40 yrs. 2301 Rexwoods Drive Office 919 2,816 — 1,709 919 4,525 5,444 3,155 1992 5-40 yrs. 4325 Lake Boone Trail Office 586 — — 3,894 586 3,894 4,480 2,609 1995 5-40 yrs. 2300 Rexwoods Drive Office 1,301 — 184 9,988 1,485 9,988 11,473 4,620 1998 5-40 yrs. 4700 Six Forks Road Office 666 2,665 — 1,796 666 4,461 5,127 2,666 1982 5-40 yrs. 4700 Homewood Court Office 1,086 4,533 — 1,677 1,086 6,210 7,296 4,035 1983 5-40 yrs. 4800 Six Forks Road Office 862 4,411 — 2,546 862 6,957 7,819 4,670 1987 5-40 yrs. 4601 Creekstone Drive Office 255 — 217 6,507 472 6,507 6,979 3,470 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 6,552 726 6,552 7,278 3,969 1995 5-40 yrs. 11000 Weston Parkway Office 2,651 18,850 — 16,644 2,651 35,494 38,145 12,110 1998 5-40 yrs. GlenLake Five Office 2,263 30,264 — 1,229 2,263 31,493 33,756 10,346 2014 5-40 yrs. 11800 Weston Parkway Office 826 13,188 — 60 826 13,248 14,074 4,366 2014 5-40 yrs. CentreGreen Café Office 41 3,509 — 15 41 3,524 3,565 798 2014 5-40 yrs. CentreGreen Fitness Center Office 27 2,322 — 14 27 2,336 2,363 528 2014 5-40 yrs. One City Plaza Office 11,288 68,375 — 25,572 11,288 93,947 105,235 30,250 1986 5-40 yrs. Edison - Land Office 5,984 — 1,575 — 7,559 — 7,559 — N/A N/A Charter Square Office 7,267 65,881 — 4,016 7,267 69,897 77,164 16,034 2015 5-40 yrs. MetLife Global Technology Campus Office 21,580 149,889 — 356 21,580 150,245 171,825 33,564 2015 5-40 yrs. GlenLake Seven Office 1,662 37,332 — ( 44 ) 1,662 37,288 38,950 4,145 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 2023 Encumbrance Land Bldg & Improv Land Bldg & Improv Land Bldg & Improv Total Assets (1) Accumulated Depreciation Date of Construction Hargett - Land Office 9,248 — ( 507 ) — 8,741 — 8,741 — N/A N/A Forum 1 Office 1,278 27,809 — 1,686 1,278 29,495 30,773 3,510 1985 5-40 yrs. Forum 2 Office 1,327 18,088 — 151 1,327 18,239 19,566 2,328 1988 5-40 yrs. Forum 3 Office 994 23,931 — 1,480 994 25,411 26,405 3,421 1995 5-40 yrs. Forum 4 Office 2,118 43,889 — 279 2,118 44,168 46,286 4,970 2000 5-40 yrs. Forum 5 Office 1,552 26,263 — 1,505 1,552 27,768 29,320 3,889 2007 5-40 yrs. Captrust Tower Office 84,360 9,670 124,530 — 3,991 9,670 128,521 138,191 9,428 2010 5-40 yrs. 150 Fayetteville Office 110,391 7,677 130,049 — 17,401 7,677 147,450 155,127 12,307 1991 5-40 yrs. GlenLake III Office — — 3,981 65,660 3,981 65,660 69,641 550 2023 5-40 yrs. 2205 Evans Road - Land Office — — 2,676 — 2,676 — 2,676 — N/A N/A Other Property Other 27,260 20,868 ( 15,828 ) 6,837 11,432 27,705 39,137 10,640 N/A 5-40 yrs. Richmond, VA 4900 Cox Road Office 1,324 5,311 15 2,742 1,339 8,053 9,392 4,694 1991 5-40 yrs. Colonnade Building Office 1,364 6,105 — 3,021 1,364 9,126 10,490 4,306 2003 5-40 yrs. Highwoods Commons Office 521 — 458 5,038 979 5,038 6,017 2,539 1999 5-40 yrs. Highwoods One Office 1,688 — 22 14,072 1,710 14,072 15,782 8,421 1996 5-40 yrs. Highwoods Two Office 786 — 226 10,951 1,012 10,951 11,963 5,521 1997 5-40 yrs. Highwoods Five Office 783 — 11 8,210 794 8,210 9,004 4,876 1998 5-40 yrs. Highwoods Plaza Office 909 — 187 6,334 1,096 6,334 7,430 3,311 2000 5-40 yrs. Innslake Center Office 845 — 125 7,706 970 7,706 8,676 4,262 2001 5-40 yrs. 4101 Cox Road Office 1,205 4,825 — 2,887 1,205 7,712 8,917 4,361 1990 5-40 yrs. North Park Office 2,163 8,659 6 3,129 2,169 11,788 13,957 7,081 1989 5-40 yrs. North Shore Commons I Office 951 — 137 13,947 1,088 13,947 15,035 6,494 2002 5-40 yrs. North Shore Commons II Office 2,067 — ( 89 ) 11,410 1,978 11,410 13,388 4,544 2007 5-40 yrs. North End - Land Office 1,497 — 55 10 1,552 10 1,562 3 2020 5-40 yrs. One Shockoe Plaza Office — — 356 22,374 356 22,374 22,730 13,031 1996 5-40 yrs. Lake Brook Commons Office 1,600 8,864 ( 179 ) 367 1,421 9,231 10,652 4,173 1996 5-40 yrs. Highwoods Three Office 1,918 — 358 12,445 2,276 12,445 14,721 5,522 2005 5-40 yrs. Stony Point I Office 1,384 11,630 ( 267 ) 4,988 1,117 16,618 17,735 9,773 1990 5-40 yrs. Stony Point II Office 1,240 — 103 13,839 1,343 13,839 15,182 7,662 1999 5-40 yrs. Stony Point III Office 995 — — 10,501 995 10,501 11,496 5,516 2002 5-40 yrs. Stony Point IV Office 955 — — 13,659 955 13,659 14,614 5,024 2006 5-40 yrs. 4480 Cox Road Office 1,301 6,036 15 3,491 1,316 9,527 10,843 4,717 1996 5-40 yrs. Innsbrook Centre Office 914 8,249 — 677 914 8,926 9,840 4,406 1987 5-40 yrs. Tampa, FL 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 2023 Encumbrance Land Bldg & Improv Land Bldg & Improv Land Bldg & Improv Total Assets (1) Accumulated Depreciation Date of Construction Meridian Three Office 2,673 16,470 — 6,379 2,673 22,849 25,522 9,488 1989 5-40 yrs. Bayshore Place Office 2,276 11,817 — 3,891 2,276 15,708 17,984 8,721 1990 5-40 yrs. Highwoods Bay Center I Office 3,565 — ( 64 ) 38,207 3,501 38,207 41,708 16,401 2007 5-40 yrs. Horizon Office — 6,257 — 4,294 — 10,551 10,551 5,736 1980 5-40 yrs. LakePointe One Office 2,106 89 — 41,220 2,106 41,309 43,415 25,899 1986 5-40 yrs. LakePointe Two Office 2,000 15,848 672 13,455 2,672 29,303 31,975 17,383 1999 5-40 yrs. Lakeside Office — 7,369 — 7,126 — 14,495 14,495 9,199 1978 5-40 yrs. Lakeside/Parkside Garage Office — — — 5,731 — 5,731 5,731 3,197 2004 5-40 yrs. One Harbour Place Office 2,016 25,252 — 15,916 2,016 41,168 43,184 22,066 1985 5-40 yrs. Parkside Office — 9,407 — 3,758 — 13,165 13,165 7,538 1979 5-40 yrs. Pavilion Office — 16,394 — 7,052 — 23,446 23,446 14,425 1982 5-40 yrs. Pavilion Parking Garage Office — — — 5,911 — 5,911 5,911 3,514 1999 5-40 yrs. Spectrum Office 1,454 14,502 — 6,513 1,454 21,015 22,469 12,054 1984 5-40 yrs. Tower Place Office 3,218 19,898 — 10,011 3,218 29,909 33,127 17,242 1988 5-40 yrs. Westshore Square Office 1,126 5,186 — 1,754 1,126 6,940 8,066 4,380 1976 5-40 yrs. Meridian One Office 1,849 22,363 — 5,464 1,849 27,827 29,676 8,416 1984 5-40 yrs. Meridian Two Office 1,302 19,588 — 6,848 1,302 26,436 27,738 8,604 1986 5-40 yrs. Avion Office — — 6,310 43,901 6,310 43,901 50,211 8,833 2016 5-40 yrs. Truist Place Office 1,980 102,138 — 29,849 1,980 131,987 133,967 32,733 1992 5-40 yrs. Truist Place - Land Office 2,225 — — — 2,225 — 2,225 — N/A N/A Midtown West Office 45,000 16,543 34,818 ( 218 ) 9,931 16,325 44,749 61,074 3,670 2021 5-40 yrs. $ 807,561 $ 4,271,654 $ ( 40,453 ) $ 1,689,241 $ 767,108 $ 5,960,895 $ 6,728,003 $ 1,743,390 __________ (1) The cost basis for income tax purposes of aggregate land and buildings and tenant improvements as of December 31, 2023 is $ 6.6 billion. (2) These assets are pledged as collateral for a $ 69.5 million first mortgage loan. (3) These assets are pledged as collateral for a $ 124.5 million first mortgage loan. 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 6, 2024. 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 6, 2024 Carlos E. Evans /s/ Theodore J. Klinck President, Chief Executive Officer and Director February 6, 2024 Theodore J. Klinck /s/ Charles A. Anderson Director February 6, 2024 Charles A. Anderson /s/ Gene H. Anderson Director February 6, 2024 Gene H. Anderson /s/ Thomas P. Anderson Director February 6, 2024 Thomas P. Anderson /s/ David L. Gadis Director February 6, 2024 David L. Gadis /s/ David J. Hartzell Director February 6, 2024 David J. Hartzell /s/ Anne H. Lloyd Director February 6, 2024 Anne H. Lloyd /s/ Candice W. Todd Director February 6, 2024 Candice W. Todd /s/ Brendan C. Maiorana Executive Vice President and Chief Financial Officer February 6, 2024 Brendan C. Maiorana /s/ Daniel L. Clemmens Vice President and Chief Accounting Officer February 6, 2024 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 6, 2024. 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 6, 2024 Carlos E. Evans /s/ Theodore J. Klinck President, Chief Executive Officer and Director of the General Partner February 6, 2024 Theodore J. Klinck /s/ Charles A. Anderson Director of the General Partner February 6, 2024 Charles A. Anderson /s/ Gene H. Anderson Director of the General Partner February 6, 2024 Gene H. Anderson /s/ Thomas P. Anderson Director of the General Partner February 6, 2024 Thomas P. Anderson /s/ David L. Gadis Director of the General Partner February 6, 2024 David L. Gadis /s/ David J. Hartzell Director of the General Partner February 6, 2024 David J. Hartzell /s/ Anne H. Lloyd Director of the General Partner February 6, 2024 Anne H. Lloyd /s/ Candice W. Todd Director of the General Partner February 6, 2024 Candice W. Todd /s/ Brendan C. Maiorana Executive Vice President and Chief Financial Officer of the General Partner February 6, 2024 Brendan C. Maiorana /s/ Daniel L. Clemmens Vice President and Chief Accounting Officer of the General Partner February 6, 2024 Daniel L. Clemmens 109