UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    For the quarterly period ended March 31, 2024

or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    For the transition period from [ ] to [ ]

HIGHWOODS PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

Maryland	001-13100	56-1871668
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

HIGHWOODS REALTY LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)

North Carolina	000-21731	56-1869557
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

150 Fayetteville Street, Suite 1400

Raleigh, NC 27601

(Address of principal executive offices) (Zip Code)

919-872-4924

(Registrants’ telephone number, including area code)

___________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $.01 par value, of Highwoods Properties, Inc.	HIW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Highwoods Properties, Inc.  Yes  ☒    No ☐    Highwoods Realty Limited Partnership  Yes  ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Highwoods Properties, Inc.  Yes  ☒    No ☐    Highwoods Realty Limited Partnership  Yes  ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Highwoods Properties, Inc.

Large accelerated filer ☒   Accelerated filer ☐   Non-accelerated filer ☐   Smaller reporting company ☐   Emerging growth company ☐

Highwoods Realty Limited Partnership

Large accelerated filer ☐   Accelerated filer ☐   Non-accelerated filer ☒   Smaller reporting company ☐   Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Highwoods Properties, Inc.  ☐        Highwoods Realty Limited Partnership   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Highwoods Properties, Inc.  Yes  ☐    No ☒    Highwoods Realty Limited Partnership  Yes  ☐    No ☒

The Company had 105,995,812 shares of Common Stock outstanding as of April 16, 2024.

EXPLANATORY NOTE

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

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

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

Certain information contained herein is presented as of April 16, 2024, the latest practicable date for financial information prior to the filing of this Quarterly Report.

This report combines the Quarterly Reports on Form 10-Q for the period ended March 31, 2024 of the Company and the Operating Partnership. We believe combining the quarterly reports into this single report results in the following benefits:

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

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

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

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

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

•Consolidated Financial Statements;

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

•Item 4 - Controls and Procedures; and

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

HIGHWOODS PROPERTIES, INC.

HIGHWOODS REALTY LIMITED PARTNERSHIP

QUARTERLY REPORT FOR THE PERIOD ENDED MARCH 31, 2024

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)	3
HIGHWOODS PROPERTIES, INC.:
Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	3
Consolidated Statements of Income for the Three Months Ended March 31, 2024 and 2023	4
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023	5
Consolidated Statements of Equity for the Three Months Ended March 31, 2024 and 2023	6
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023	7
HIGHWOODS REALTY LIMITED PARTNERSHIP:
Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	9
Consolidated Statements of Income for the Three Months Ended March 31, 2024 and 2023	10
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023	11
Consolidated Statements of Capital for the Three Months Ended March 31, 2024 and 2023	12
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023	13
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	15
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
Disclosure Regarding Forward-Looking Statements	27
Executive Summary	28
Results of Operations	31
Liquidity and Capital Resources	33
Critical Accounting Estimates	36
Non-GAAP Information	36
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39
ITEM 4. CONTROLS AND PROCEDURES	39
PART II - OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	40
ITEM 6. EXHIBITS	40

2

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

HIGHWOODS PROPERTIES, INC.

Consolidated Balance Sheets

(Unaudited and in thousands, except share and per share data)

	March 31, 2024		December 31, 2023
Assets:
Real estate assets, at cost:
Land	$	533,361	$	540,050
Buildings and tenant improvements	5,927,772		5,960,895
Development in-process	—		8,918
Land held for development	226,575		227,058
	6,687,708		6,736,921
Less-accumulated depreciation	(1,754,503)		(1,743,390)
Net real estate assets	4,933,205		4,993,531
Real estate and other assets, net, held for sale	26,078		—
Cash and cash equivalents	16,422		25,123
Restricted cash	10,865		6,446
Accounts receivable	34,449		28,094
Mortgages and notes receivable	11,008		4,795
Accrued straight-line rents receivable	311,099		310,649
Investments in and advances to unconsolidated affiliates	372,722		343,241
Deferred leasing costs, net of accumulated amortization of $180,904 and $175,697, respectively	222,997		225,924
Prepaid expenses and other assets, net of accumulated depreciation of $17,424 and $22,142, respectively	74,552		65,125
Total Assets	$	6,013,397	$	6,002,928
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity:
Mortgages and notes payable, net	$	3,262,327	$	3,213,206
Accounts payable, accrued expenses and other liabilities	287,176		302,180
Total Liabilities	3,549,503		3,515,386
Commitments and contingencies
Noncontrolling interests in the Operating Partnership	56,324		49,520
Equity:
Preferred Stock, $.01 par value, 50,000,000 authorized shares;
8.625% Series A Cumulative Redeemable Preferred Shares (liquidation preference $1,000 per share), 28,811 shares issued and outstanding	28,811		28,811
Common Stock, $.01 par value, 200,000,000 authorized shares;
105,995,624 and 105,710,315 shares issued and outstanding, respectively	1,060		1,057
Additional paid-in capital	3,099,865		3,103,446
Distributions in excess of net income available for common stockholders	(724,827)		(698,020)
Accumulated other comprehensive loss	(2,059)		(1,997)
Total Stockholders’ Equity	2,402,850		2,433,297
Noncontrolling interests in consolidated affiliates	4,720		4,725
Total Equity	2,407,570		2,438,022
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity	$	6,013,397	$	6,002,928

See accompanying notes to consolidated financial statements.

3

HIGHWOODS PROPERTIES, INC.

Consolidated Statements of Income

(Unaudited and in thousands, except per share amounts)

	Three Months Ended March 31,
	2024		2023
Rental and other revenues	$	211,275	$	212,752
Operating expenses:
Rental property and other expenses	70,435		65,731
Depreciation and amortization	73,671		70,633
General and administrative	12,499		12,415
Total operating expenses	156,605		148,779
Interest expense	36,552		33,098
Other income	1,232		1,147
Gains on disposition of property	7,209		450
Gain on deconsolidation of affiliate	—		11,778
Equity in earnings of unconsolidated affiliates	654		704
Net income	27,213		44,954
Net (income) attributable to noncontrolling interests in the Operating Partnership	(533)		(986)
Net loss attributable to noncontrolling interests in consolidated affiliates	5		487
Dividends on Preferred Stock	(621)		(621)
Net income available for common stockholders	$	26,064	$	43,834
Earnings per Common Share – basic:
Net income available for common stockholders	$	0.25	$	0.42
Weighted average Common Shares outstanding – basic	105,804		105,288
Earnings per Common Share – diluted:
Net income available for common stockholders	$	0.25	$	0.42
Weighted average Common Shares outstanding – diluted	107,958		107,646

See accompanying notes to consolidated financial statements.

4

HIGHWOODS PROPERTIES, INC.

Consolidated Statements of Comprehensive Income

(Unaudited and in thousands)

	Three Months Ended March 31,
	2024		2023
Comprehensive income:
Net income	$	27,213	$	44,954
Other comprehensive loss:
Amortization of cash flow hedges	(62)		(75)
Total other comprehensive loss	(62)		(75)
Total comprehensive income	27,151		44,879
Less-comprehensive (income) attributable to noncontrolling interests	(528)		(499)
Comprehensive income attributable to common stockholders	$	26,623	$	44,380

See accompanying notes to consolidated financial statements.

5

HIGHWOODS PROPERTIES, INC.

Consolidated Statements of Equity

(Unaudited and in thousands, except share amounts)

	Three Months Ended March 31, 2024
	Number of Common Shares	Common Stock		Series A Cumulative Redeemable Preferred Shares		Additional Paid-In Capital		Accumulated Other Compre-hensive Loss		Non-controlling Interests in Consolidated Affiliates		Distributions in Excess of Net Income Available for Common Stockholders		Total
Balance at December 31, 2023	105,710,315	$	1,057	$	28,811	$	3,103,446	$	(1,997)	$	4,725	$	(698,020)	$	2,438,022
Issuances of Common Stock, net of issuance costs and tax withholdings	(44,396)	—		—		(1,064)		—		—		—		(1,064)
Conversions of Common Units to Common Stock	5,385					132								132
Dividends on Common Stock ($0.50 per share)		—		—		—		—		—		(52,871)		(52,871)
Dividends on Preferred Stock ($21.5625 per share)		—		—		—		—		—		(621)		(621)
Adjustment of noncontrolling interests in the Operating Partnership to fair value		—		—		(7,479)		—		—		—		(7,479)
Issuances of restricted stock	324,320	—		—		—		—		—		—		—
Share-based compensation expense, net of forfeitures		3		—		4,830		—		—		—		4,833
Net (income) attributable to noncontrolling interests in the Operating Partnership		—		—		—		—		—		(533)		(533)
Net loss attributable to noncontrolling interests in consolidated affiliates		—		—		—		—		(5)		5		—
Comprehensive income:
Net income		—		—		—		—		—		27,213		27,213
Other comprehensive loss		—		—		—		(62)		—		—		(62)
Total comprehensive income														27,151
Balance as of March 31, 2024	105,995,624	$	1,060	$	28,811	$	3,099,865	$	(2,059)	$	4,720	$	(724,827)	$	2,407,570

	Three Months Ended March 31, 2023
	Number of Common Shares	Common Stock		Series A Cumulative Redeemable Preferred Shares		Additional Paid-In Capital		Accumulated Other Compre-hensive Loss		Non-controlling Interests in Consolidated Affiliates		Distributions in Excess of Net Income Available for Common Stockholders		Total
Balance at 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	(26,083)	—		—		(828)		—		—		—		(828)
Dividends on Common Stock ($0.50 per share)		—		—		—		—		—		(52,621)		(52,621)
Dividends on Preferred Stock ($21.5625 per share)		—		—		—		—		—		(621)		(621)
Adjustment of noncontrolling interests in the Operating Partnership to fair value		—		—		11,102		—		—		—		11,102
Issuances of restricted stock	272,733	—		—		—		—		—		—		—
Redemptions/repurchases of Preferred Stock		—		(10)		—		—		—		—		(10)
Share-based compensation expense, net of forfeitures	—	3		—		4,522		—		—		—		4,525
Net (income) attributable to noncontrolling interests in the Operating Partnership		—		—		—		—		—		(986)		(986)
Net loss attributable to noncontrolling interests in consolidated affiliates		—		—		—		—		(487)		487		—
Deconsolidation of affiliate		—		—		—		—		(17,281)		—		(17,281)
Comprehensive income:
Net income		—		—		—		—		—		44,954		44,954
Other comprehensive loss		—		—		—		(75)		—		—		(75)
Total comprehensive income														44,879
Balance as of March 31, 2023	105,457,508	$	1,055	$	28,811	$	3,096,126	$	(1,286)	$	4,467	$	(642,014)	$	2,487,159

See accompanying notes to consolidated financial statements.

6

HIGHWOODS PROPERTIES, INC.

Consolidated Statements of Cash Flows

(Unaudited and in thousands)

	Three Months Ended March 31,
	2024		2023
Operating activities:
Net income	$	27,213	$	44,954
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	73,671		70,633
Amortization of lease incentives and acquisition-related intangible assets and liabilities	351		291
Share-based compensation expense	4,833		4,525
Net credit reversals on operating lease receivables	(140)		(122)
Accrued interest on mortgages and notes receivable	(125)		(19)
Amortization of debt issuance costs	1,381		1,161
Amortization of cash flow hedges	(62)		(75)
Amortization of mortgages and notes payable fair value adjustments	28		(86)
Losses on debt extinguishment	173		—
Net gains on disposition of property	(7,209)		(450)
Gain on deconsolidation of affiliate	—		(11,778)
Equity in earnings of unconsolidated affiliates	(654)		(704)
Distributions of earnings from unconsolidated affiliates	977		613
Changes in operating assets and liabilities:
Accounts receivable	(3,651)		1,598
Prepaid expenses and other assets	(2,116)		(2,840)
Accrued straight-line rents receivable	(3,218)		(8,678)
Accounts payable, accrued expenses and other liabilities	(19,042)		(33,354)
Net cash provided by operating activities	72,410		65,669
Investing activities:
Investments in development in-process	(2,558)		(9,934)
Investments in tenant improvements and deferred leasing costs	(29,088)		(21,296)
Investments in building improvements	(8,989)		(25,815)
Net proceeds from disposition of real estate assets	16,249		1,862
Distributions of capital from unconsolidated affiliates	963		—
Investments in mortgages and notes receivable	(6,229)		—
Repayments of mortgages and notes receivable	16		72
Investments in and advances to unconsolidated affiliates	(30,869)		(16,762)
Changes in earnest money deposits	—		(500)
Changes in other investing activities	(1,180)		(2,163)
Net cash used in investing activities	(61,685)		(74,536)
Financing activities:
Dividends on Common Stock	(52,871)		(52,621)
Redemptions/repurchases of Preferred Stock	—		(10)
Dividends on Preferred Stock	(621)		(621)
Distributions to noncontrolling interests in the Operating Partnership	(1,076)		(1,179)
Proceeds from the issuance of Common Stock	363		553
Costs paid for the issuance of Common Stock	—		(56)
Repurchase of shares related to tax withholdings	(1,427)		(1,325)
Borrowings on revolving credit facility	75,000		92,000
Repayments of revolving credit facility	(25,000)		(223,000)
Borrowings on mortgages and notes payable	—		200,000
Repayments of mortgages and notes payable	(1,727)		(1,654)
Payments for debt issuance costs and other financing activities	(7,648)		(1,305)
Net cash provided by/(used in) financing activities	(15,007)		10,782
Net increase/(decrease) in cash and cash equivalents and restricted cash	$	(4,282)	$	1,915

See accompanying notes to consolidated financial statements.

7

HIGHWOODS PROPERTIES, INC.

Consolidated Statements of Cash Flows – Continued

(Unaudited and in thousands)

	Three Months Ended March 31,
	2024		2023
Net increase/(decrease) in cash and cash equivalents and restricted cash	$	(4,282)	$	1,915
Cash from deconsolidation of affiliate	—		(6,386)
Cash and cash equivalents and restricted cash at beginning of the period	31,569		26,105
Cash and cash equivalents and restricted cash at end of the period	$	27,287	$	21,634

Reconciliation of cash and cash equivalents and restricted cash:

	Three Months Ended March 31,
	2024		2023
Cash and cash equivalents at end of the period	$	16,422	$	15,733
Restricted cash at end of the period	10,865		5,901
Cash and cash equivalents and restricted cash at end of the period	$	27,287	$	21,634

Supplemental disclosure of cash flow information:

	Three Months Ended March 31,
	2024		2023
Cash paid for interest, net of amounts capitalized	$	36,772	$	39,633

Supplemental disclosure of non-cash investing and financing activities:

	Three Months Ended March 31,
	2024	2023
Conversions of Common Units to Common Stock	132	—
Changes in accrued capital expenditures (1)	5,734	(4,153)
Write-off of fully depreciated real estate assets	19,549	24,625
Write-off of fully amortized leasing costs	4,691	11,247
Write-off of fully amortized debt issuance costs	4,083	—
Adjustment of noncontrolling interests in the Operating Partnership to fair value	7,479	(11,102)

__________

(1)Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities as of March 31, 2024 and 2023 were $61.3 million and $49.2 million, respectively.

See accompanying notes to consolidated financial statements.

8

HIGHWOODS REALTY LIMITED PARTNERSHIP

Consolidated Balance Sheets

(Unaudited and in thousands, except unit and per unit data)

	March 31, 2024		December 31, 2023
Assets:
Real estate assets, at cost:
Land	$	533,361	$	540,050
Buildings and tenant improvements	5,927,772		5,960,895
Development in-process	—		8,918
Land held for development	226,575		227,058
	6,687,708		6,736,921
Less-accumulated depreciation	(1,754,503)		(1,743,390)
Net real estate assets	4,933,205		4,993,531
Real estate and other assets, net, held for sale	26,078		—
Cash and cash equivalents	16,422		25,123
Restricted cash	10,865		6,446
Accounts receivable	34,449		28,094
Mortgages and notes receivable	11,008		4,795
Accrued straight-line rents receivable	311,099		310,649
Investments in and advances to unconsolidated affiliates	372,722		343,241
Deferred leasing costs, net of accumulated amortization of $180,904 and $175,697, respectively	222,997		225,924
Prepaid expenses and other assets, net of accumulated depreciation of $17,424 and $22,142, respectively	74,552		65,125
Total Assets	$	6,013,397	$	6,002,928
Liabilities, Redeemable Operating Partnership Units and Capital:
Mortgages and notes payable, net	$	3,262,327	$	3,213,206
Accounts payable, accrued expenses and other liabilities	287,176		302,180
Total Liabilities	3,549,503		3,515,386
Commitments and contingencies
Redeemable Operating Partnership Units:
Common Units, 2,151,423 and 2,156,808 outstanding, respectively	56,324		49,520
Series A Preferred Units (liquidation preference $1,000 per unit), 28,811 units issued and outstanding	28,811		28,811
Total Redeemable Operating Partnership Units	85,135		78,331
Capital:
Common Units:
General partner Common Units, 1,077,382 and 1,074,583 outstanding, respectively	23,760		24,064
Limited partner Common Units, 104,509,433 and 104,226,923 outstanding, respectively	2,352,338		2,382,419
Accumulated other comprehensive loss	(2,059)		(1,997)
Noncontrolling interests in consolidated affiliates	4,720		4,725
Total Capital	2,378,759		2,409,211
Total Liabilities, Redeemable Operating Partnership Units and Capital	$	6,013,397	$	6,002,928

See accompanying notes to consolidated financial statements.

9

HIGHWOODS REALTY LIMITED PARTNERSHIP

Consolidated Statements of Income

(Unaudited and in thousands, except per unit amounts)

	Three Months Ended March 31,
	2024		2023
Rental and other revenues	$	211,275	$	212,752
Operating expenses:
Rental property and other expenses	70,435		65,731
Depreciation and amortization	73,671		70,633
General and administrative	12,499		12,415
Total operating expenses	156,605		148,779
Interest expense	36,552		33,098
Other income	1,232		1,147
Gains on disposition of property	7,209		450
Gain on deconsolidation of affiliate	—		11,778
Equity in earnings of unconsolidated affiliates	654		704
Net income	27,213		44,954
Net loss attributable to noncontrolling interests in consolidated affiliates	5		487
Distributions on Preferred Units	(621)		(621)
Net income available for common unitholders	$	26,597	$	44,820
Earnings per Common Unit – basic:
Net income available for common unitholders	$	0.25	$	0.42
Weighted average Common Units outstanding – basic	107,549		107,237
Earnings per Common Unit – diluted:
Net income available for common unitholders	$	0.25	$	0.42
Weighted average Common Units outstanding – diluted	107,549		107,237

See accompanying notes to consolidated financial statements.

10

HIGHWOODS REALTY LIMITED PARTNERSHIP

Consolidated Statements of Comprehensive Income

(Unaudited and in thousands)

	Three Months Ended March 31,
	2024		2023
Comprehensive income:
Net income	$	27,213	$	44,954
Other comprehensive loss:
Amortization of cash flow hedges	(62)		(75)
Total other comprehensive loss	(62)		(75)
Total comprehensive income	27,151		44,879
Net loss attributable to noncontrolling interests in consolidated affiliates	5		487
Comprehensive income attributable to common unitholders	$	27,156	$	45,366

See accompanying notes to consolidated financial statements.

11

HIGHWOODS REALTY LIMITED PARTNERSHIP

Consolidated Statements of Capital

(Unaudited and in thousands)

	Three Months Ended March 31, 2024
	Common Units				Accumulated Other Comprehensive Loss		Noncontrolling Interests in Consolidated Affiliates		Total
	General Partners’ Capital		Limited Partners’ Capital
Balance at December 31, 2023	$	24,064	$	2,382,419	$	(1,997)	$	4,725	$	2,409,211
Issuances of Common Units, net of issuance costs and tax withholdings	(11)		(1,053)		—		—		(1,064)
Distributions on Common Units ($0.50 per unit)	(537)		(53,205)		—		—		(53,742)
Distributions on Preferred Units ($21.5625 per unit)	(6)		(615)		—		—		(621)
Share-based compensation expense, net of forfeitures	48		4,785		—		—		4,833
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner	(70)		(6,939)		—		—		(7,009)
Net loss attributable to noncontrolling interests in consolidated affiliates	—		5		—		(5)		—
Comprehensive income:
Net income	272		26,941		—		—		27,213
Other comprehensive loss	—		—		(62)		—		(62)
Total comprehensive income									27,151
Balance as of March 31, 2024	$	23,760	$	2,352,338	$	(2,059)	$	4,720	$	2,378,759

	Three Months Ended March 31, 2023
	Common Units				Accumulated Other Comprehensive Loss		Noncontrolling Interests in Consolidated Affiliates		Total
	General Partners’ Capital		Limited Partners’ Capital
Balance at December 31, 2022	$	24,492	$	2,424,663	$	(1,211)	$	22,235	$	2,470,179
Issuances of Common Units, net of issuance costs and tax withholdings	(8)		(820)		—		—		(828)
Distributions on Common Units ($0.50 per unit)	(536)		(53,059)		—		—		(53,595)
Distributions on Preferred Units ($21.5625 per unit)	(6)		(615)		—		—		(621)
Share-based compensation expense, net of forfeitures	45		4,480		—		—		4,525
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner	111		10,979		—		—		11,090
Net loss attributable to noncontrolling interests in consolidated affiliates	5		482				(487)		—
Deconsolidation of affiliate	—		—		—		(17,281)		(17,281)
Comprehensive income:
Net income	450		44,504						44,954
Other comprehensive loss	—		—		(75)		—		(75)
Total comprehensive income									44,879
Balance as of March 31, 2023	$	24,553	$	2,430,614	$	(1,286)	$	4,467	$	2,458,348

See accompanying notes to consolidated financial statements.

12

HIGHWOODS REALTY LIMITED PARTNERSHIP

Consolidated Statements of Cash Flows

(Unaudited and in thousands)

	Three Months Ended March 31,
	2024		2023
Operating activities:
Net income	$	27,213	$	44,954
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	73,671		70,633
Amortization of lease incentives and acquisition-related intangible assets and liabilities	351		291
Share-based compensation expense	4,833		4,525
Net credit reversals on operating lease receivables	(140)		(122)
Accrued interest on mortgages and notes receivable	(125)		(19)
Amortization of debt issuance costs	1,381		1,161
Amortization of cash flow hedges	(62)		(75)
Amortization of mortgages and notes payable fair value adjustments	28		(86)
Losses on debt extinguishment	173		—
Net gains on disposition of property	(7,209)		(450)
Gain on deconsolidation of affiliate	—		(11,778)
Equity in earnings of unconsolidated affiliates	(654)		(704)
Distributions of earnings from unconsolidated affiliates	977		613
Changes in operating assets and liabilities:
Accounts receivable	(3,651)		1,598
Prepaid expenses and other assets	(2,116)		(2,840)
Accrued straight-line rents receivable	(3,218)		(8,678)
Accounts payable, accrued expenses and other liabilities	(19,042)		(33,354)
Net cash provided by operating activities	72,410		65,669
Investing activities:
Investments in development in-process	(2,558)		(9,934)
Investments in tenant improvements and deferred leasing costs	(29,088)		(21,296)
Investments in building improvements	(8,989)		(25,815)
Net proceeds from disposition of real estate assets	16,249		1,862
Distributions of capital from unconsolidated affiliates	963		—
Investments in mortgages and notes receivable	(6,229)		—
Repayments of mortgages and notes receivable	16		72
Investments in and advances to unconsolidated affiliates	(30,869)		(16,762)
Changes in earnest money deposits	—		(500)
Changes in other investing activities	(1,180)		(2,163)
Net cash used in investing activities	(61,685)		(74,536)
Financing activities:
Distributions on Common Units	(53,742)		(53,595)
Redemptions/repurchases of Preferred Units	—		(10)
Dividends on Preferred Units	(621)		(621)
Proceeds from the issuance of Common Units	363		553
Costs paid for the issuance of Common Units	—		(56)
Repurchase of units related to tax withholdings	(1,427)		(1,325)
Borrowings on revolving credit facility	75,000		92,000
Repayments of revolving credit facility	(25,000)		(223,000)
Borrowings on mortgages and notes payable	—		200,000
Repayments of mortgages and notes payable	(1,727)		(1,654)
Payments for debt issuance costs and other financing activities	(7,853)		(1,510)
Net cash provided by/(used in) financing activities	(15,007)		10,782
Net increase/(decrease) in cash and cash equivalents and restricted cash	$	(4,282)	$	1,915

See accompanying notes to consolidated financial statements.

13

HIGHWOODS REALTY LIMITED PARTNERSHIP

Consolidated Statements of Cash Flows - Continued

(Unaudited and in thousands)

	Three Months Ended March 31,
	2024		2023
Net increase/(decrease) in cash and cash equivalents and restricted cash	$	(4,282)	$	1,915
Cash from deconsolidation of affiliate	—		(6,386)
Cash and cash equivalents and restricted cash at beginning of the period	31,569		26,105
Cash and cash equivalents and restricted cash at end of the period	$	27,287	$	21,634

Reconciliation of cash and cash equivalents and restricted cash:

	Three Months Ended March 31,
	2024		2023
Cash and cash equivalents at end of the period	$	16,422	$	15,733
Restricted cash at end of the period	10,865		5,901
Cash and cash equivalents and restricted cash at end of the period	$	27,287	$	21,634

Supplemental disclosure of cash flow information:

	Three Months Ended March 31,
	2024		2023
Cash paid for interest, net of amounts capitalized	$	36,772	$	39,633

Supplemental disclosure of non-cash investing and financing activities:

	Three Months Ended March 31,
	2024	2023
Changes in accrued capital expenditures (1)	5,734	(4,153)
Write-off of fully depreciated real estate assets	19,549	24,625
Write-off of fully amortized leasing costs	4,691	11,247
Write-off of fully amortized debt issuance costs	4,083	—
Adjustment of Redeemable Common Units to fair value	6,804	(11,295)

__________

(1)Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities as of March 31, 2024 and 2023 were $61.3 million and $49.2 million, respectively.

See accompanying notes to consolidated financial statements.

14

HIGHWOODS PROPERTIES, INC.

HIGHWOODS REALTY LIMITED PARTNERSHIP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(tabular dollar amounts in thousands, except per share and per unit data)

(Unaudited)

1.    Description of Business and Significant Accounting Policies

Description of Business

Highwoods Properties, Inc. (the “Company”) is a fully integrated office real estate investment trust (“REIT”) that owns, develops, acquires, leases and manages properties primarily in the best business districts of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. The Company conducts its activities through Highwoods Realty Limited Partnership (the “Operating Partnership”). As of March 31, 2024, we owned or had an interest in 28.3 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.

Capital Structure

The Company is the sole general partner of the Operating Partnership. As of March 31, 2024, the Company owned all of the Preferred Units and 105.6 million, or 98.0%, of the Common Units in the Operating Partnership. Limited partners owned the remaining 2.2 million Common Units. During the three months ended March 31, 2024, the Company redeemed 5,385 Common Units for a like number of shares of Common Stock.

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. During the three months ended March 31, 2024, the Company issued no shares of Common Stock under its equity distribution agreements.

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 March 31, 2024, 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.

All intercompany transactions and accounts have been eliminated.

In the opinion of management, the unaudited interim Consolidated Financial Statements and accompanying unaudited consolidated financial information contain all adjustments (including normal recurring accruals) necessary for a fair presentation of our financial position, results of operations and cash flows. We have condensed or omitted certain notes and other information from the interim Consolidated Financial Statements presented in this Quarterly Report as permitted by SEC rules and regulations. These Consolidated Financial Statements should be read in conjunction with our 2023 Annual Report on Form 10-K.

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Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in our Consolidated Financial Statements and accompanying notes. Actual results could differ from those estimates.

Insurance

We are primarily self-insured for health care claims for participating employees. To limit our exposure to significant claims, we have stop-loss coverage on a per claim and annual aggregate basis. We use all relevant information to determine our liabilities for claims, including actuarial estimates of claim liabilities. When determining our liabilities, we include claims for incurred losses, even if they are unreported. As of March 31, 2024, a reserve of $0.5 million was recorded to cover estimated reported and unreported claims.

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 expected 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 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.

2.    Leases

Operating 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. Office properties that are under lease are primarily located in Atlanta, Charlotte, Nashville, Orlando, Pittsburgh, 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. We recognized rental and other revenues related to operating lease payments of $207.8 million and $209.4 million during the three months ended March 31, 2024 and 2023, respectively. Included in these amounts were variable lease payments of $22.5 million and $19.4 million during the three months ended March 31, 2024 and 2023, respectively.

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3.    Investments in and Advances to Affiliates

Unconsolidated Affiliates

- 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. We own a 50.0% interest in each of these two joint ventures.

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 were not sufficient to finance the planned investments and operations. We concluded that 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 March 31, 2024, our risk of loss with respect to these arrangements was limited to the carrying value of each investment balance. Our investment balances were $42.2 million and $96.7 million as of March 31, 2024 for the Granite Park Six and 23Springs joint ventures, respectively. The assets of the Granite Park Six and 23Springs joint ventures can be used only to settle obligations of the respective joint venture, and their creditors have no recourse to our wholly owned assets.

- 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.

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 that was subsequently redeemed in full during 2023, were not sufficient to finance its planned investments and operations. We concluded that 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 March 31, 2024, our risk of loss with respect to this arrangement was limited to the carrying value of our investment balance of $125.3 million. The assets of the McKinney & Olive joint venture can be used only to settle obligations of the joint venture, and its creditors have no recourse to our wholly owned assets.

- Midtown East Tampa, LLC (“Midtown East joint venture”)

During 2022, we formed the Midtown East joint venture in Tampa with The Bromley Companies (“Bromley”). We own a 50.0% interest in this joint venture.

We determined that we have a variable interest in the Midtown East joint venture primarily because the entity was designed to pass along interest rate risk, equity price risk and operation risk to us as both a debt and equity holder and 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 were not sufficient to finance its planned investments and operations. We concluded that 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 March 31, 2024, our risk of loss with respect to this arrangement was $17.8 million, which consists of the $14.1 million carrying value of our investment balance plus the $3.7 million outstanding balance of the loan we have provided to the joint venture. 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 Midtown East joint venture can be used only to settle obligations of the joint venture, and its creditors have no recourse to our wholly owned assets.

17

- Brand/HRLP 2827 Peachtree LLC (“2827 Peachtree joint venture”)

During 2021, we formed the 2827 Peachtree joint venture in Atlanta with Brand Properties, LLC (“Brand”). We own a 50.0% interest in this joint venture.

We determined that we have a variable interest in the 2827 Peachtree joint venture primarily because the entity was designed to pass along interest rate risk, equity price risk and operation risk to us as both a debt and equity holder and 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 were not sufficient to finance its planned investments and operations. We concluded that 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 March 31, 2024, our risk of loss with respect to this arrangement was $61.0 million, which consists of the $13.2 million carrying value of our investment balance plus the $47.8 million outstanding balance of the loan we have provided to the joint venture. 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 be used only to settle obligations of the joint venture, and its creditors have no recourse to our wholly owned assets.

Consolidated Affiliate

- HRLP MTW, LLC (“Midtown West joint venture”)

In 2019, we formed the Midtown West joint venture in Tampa with Bromley. We own an 80.0% interest in this joint venture.

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 and Bromley as equity holders. 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 were not sufficient to finance its planned investments and operations. We, as the majority owner and managing member and through our control rights as set forth in the joint venture’s governance documents, were determined to be the primary beneficiary as we have both the power to direct the activities that most significantly affect the entity (primarily lease rates, property operations and capital expenditures) and significant economic exposure through our equity investment. As such, the Midtown West joint venture is consolidated and all intercompany transactions and accounts are eliminated.

The following table sets forth the assets and liabilities of the Midtown West joint venture included on our Consolidated Balance Sheets:

	March 31, 2024		December 31, 2023
Net real estate assets	$	59,970	$	60,410
Cash and cash equivalents	$	1,628	$	1,096
Restricted cash	$	2,260	$	2,260
Accrued straight-line rents receivable	$	5,124	$	5,041
Deferred leasing costs, net	$	2,699	$	2,783
Prepaid expenses and other assets, net	$	125	$	124
Mortgages and notes payable, net	$	44,234	$	44,192
Accounts payable, accrued expenses and other liabilities	$	3,038	$	2,872

The assets of the Midtown West joint venture can be used only to settle obligations of the joint venture, and its creditors have no recourse to our wholly owned assets.

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4.    Real Estate Assets

Dispositions

During the first quarter of 2024, we sold two buildings in Raleigh for an aggregate sales price of $16.9 million and recorded aggregate gains on disposition of property of $7.2 million.

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:

	March 31, 2024		December 31, 2023
Assets:
Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets)	$	403,901	$	401,621
Less accumulated amortization	(180,904)		(175,697)
	$	222,997	$	225,924
Liabilities (in accounts payable, accrued expenses and other liabilities):
Acquisition-related below market lease liabilities	$	50,723	$	50,842
Less accumulated amortization	(31,440)		(30,416)
	$	19,283	$	20,426

The following table sets forth amortization of intangible assets and below market lease liabilities:

	Three Months Ended March 31,
	2024		2023
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)	$	9,645	$	10,232
Amortization of lease incentives (in rental and other revenues)	$	693	$	714
Amortization of acquisition-related intangible assets (in rental and other revenues)	$	802	$	831
Amortization of acquisition-related below market lease liabilities (in rental and other revenues)	$	(1,144)	$	(1,254)

The following table sets forth scheduled future amortization of intangible assets and below market lease liabilities:

	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)
April 1 through December 31, 2024	$	29,774	$	1,818	$	2,264	$	(3,097)
2025	32,319		2,095		2,210		(2,727)
2026	28,052		1,893		1,861		(2,431)
2027	24,340		1,690		1,520		(2,062)
2028	20,468		1,440		1,404		(1,648)
Thereafter	61,162		4,500		4,187		(7,318)
	$	196,115	$	13,436	$	13,446	$	(19,283)
Weighted average remaining amortization periods as of March 31, 2024 (in years)	7.5		7.9		7.0		8.1

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6.    Mortgages and Notes Payable

The following table sets forth our mortgages and notes payable:

	March 31, 2024		December 31, 2023
Secured indebtedness	$	718,648	$	720,752
Unsecured indebtedness	2,560,599		2,510,193
Less-unamortized debt issuance costs	(16,920)		(17,739)
Total mortgages and notes payable, net	$	3,262,327	$	3,213,206

As of March 31, 2024, our secured mortgage loans were collateralized by real estate assets with an undepreciated book value of $1,239.0 million.

Our $750.0 million unsecured revolving credit facility was modified during the first quarter of 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 revolving credit facility is SOFR plus a related spread adjustment of 10 basis points and a borrowing spread of 85 basis points, based on current credit ratings. The annual facility fee is 20 basis points. The interest rate and facility fee are based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s Ratings Services. 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 incurred $7.7 million of debt issuance costs during the first quarter of 2024, which will be amortized along with certain existing unamortized debt issuance costs over the remaining term of our new revolving credit facility, and recorded $0.2 million of loss on debt extinguishment. There was $70.0 million and $10.0 million outstanding under our revolving credit facility as of March 31, 2024 and April 16, 2024, respectively. As of both March 31, 2024 and April 16, 2024, we had $0.1 million of outstanding letters of credit, which reduces the availability on our revolving credit facility. As a result, the unused capacity of our revolving credit facility as of March 31, 2024 and April 16, 2024 was $679.9 million and $739.9 million, respectively.

We are currently in compliance with financial covenants with respect to our consolidated debt.

We have considered our short-term liquidity needs within one year from April 23, 2024 (the date of issuance of the quarterly 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.

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7.    Noncontrolling Interests

Noncontrolling Interests in Consolidated Affiliates

As of March 31, 2024, our noncontrolling interest in consolidated affiliates relates to our joint venture partner's 20.0% interest in the Midtown West joint venture. Our joint venture partner is an unrelated third party.

Noncontrolling Interests in the Operating Partnership

The following table sets forth the Company’s noncontrolling interests in the Operating Partnership:

	Three Months Ended March 31,
	2024		2023
Beginning noncontrolling interests in the Operating Partnership	$	49,520	$	65,977
Adjustment of noncontrolling interests in the Operating Partnership to fair value	7,479		(11,102)
Conversions of Common Units to Common Stock	(132)		—
Net income attributable to noncontrolling interests in the Operating Partnership	533		986
Distributions to noncontrolling interests in the Operating Partnership	(1,076)		(1,179)
Total noncontrolling interests in the Operating Partnership	$	56,324	$	54,682

The following table sets forth net income available for common stockholders and transfers from the Company’s noncontrolling interests in the Operating Partnership:

	Three Months Ended March 31,
	2024		2023
Net income available for common stockholders	$	26,064	$	43,834
Increase in additional paid in capital from conversions of Common Units to Common Stock	132		—
Change from net income available for common stockholders and transfers from noncontrolling interests	$	26,196	$	43,834

8.    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 any interest rate swaps.

The fair value of mortgages and notes receivable and mortgages and notes payable is estimated by the income approach, which uses 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 any 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.

21

Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our Level 3 assets include any real estate assets recorded at fair value on a non-recurring basis as a result of our quarterly impairment analysis, which are valued using unobservable local and national industry market data such as comparable sales, appraisals, brokers’ opinions of value and/or the terms of definitive sales contracts. Significant increases or decreases in any valuation inputs in isolation would result in a significantly lower or higher fair value measurement.

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 March 31, 2024:
Assets:
Mortgages and notes receivable, at fair value (1)	$	11,008	$	—	$	11,008
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)	1,943		1,943		—
Total Assets	$	12,951	$	1,943	$	11,008
Noncontrolling Interests in the Operating Partnership	$	56,324	$	56,324	$	—
Liabilities:
Mortgages and notes payable, net, at fair value (1)	$	2,994,752	$	—	$	2,994,752
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)	1,943		1,943		—
Total Liabilities	$	2,996,695	$	1,943	$	2,994,752

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

__________

(1)    Amounts are not recorded at fair value on our Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023.

22

9.    Share-Based Payments

During the three months ended March 31, 2024, the Company granted 181,328 shares of time-based restricted stock and 142,992 shares of total return-based restricted stock with weighted average grant date fair values per share of $24.45 and $25.22, respectively. We recorded share-based compensation expense of $4.8 million and $4.5 million during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, there was $7.3 million of total unrecognized share-based compensation costs, which will be recognized over a weighted average remaining contractual term of 2.4 years.

10.    Real Estate and Other Assets Held For Sale

The following table sets forth the assets held for sale as of March 31, 2024 and December 31, 2023, which are considered non-core:

	March 31, 2024		December 31, 2023
Assets:
Land	$	6,143	$	—
Buildings and tenant improvements	39,629		—
Less-accumulated depreciation	(22,289)		—
Net real estate assets	23,483		—
Accrued straight-line rents receivable	1,626		—
Deferred leasing costs, net	904		—
Prepaid expenses and other assets, net	65		—
Real estate and other assets, net, held for sale	$	26,078	$	—

23

11.    Earnings Per Share and Per Unit

The following table sets forth the computation of basic and diluted earnings per share of the Company:

	Three Months Ended March 31,
	2024		2023
Earnings per Common Share - basic:
Numerator:
Net income	$	27,213	$	44,954
Net (income) attributable to noncontrolling interests in the Operating Partnership	(533)		(986)
Net loss attributable to noncontrolling interests in consolidated affiliates	5		487
Dividends on Preferred Stock	(621)		(621)
Net income available for common stockholders	$	26,064	$	43,834
Denominator:
Denominator for basic earnings per Common Share – weig