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DATE

April 29, 2026

CALL PARTICIPANTS

  • President, Chief Executive Officer, and Director — Theodore J. Klinck
  • Executive Vice President and Chief Operating Officer — Brian M. Leary
  • Executive Vice President and Chief Financial Officer — Brendan Maiorana

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TAKEAWAYS

  • Leased Rate (In-Service Portfolio) -- 89.7%, up from 89.2% sequentially, reflecting a 50-basis-point increase across operational assets.
  • Leased Rate (Development Properties) -- Increased by 800 basis points sequentially, driving future NOI, cash flow, and FFO potential.
  • Net Operating Income (NOI) Growth Prospects -- Management anticipates over $20 million of annual NOI growth from delivered and pipeline developments as signed leases commence.
  • Funds From Operations (FFO) -- $0.84 per share; management maintained full-year guidance at $3.40 to $3.68 per share.
  • Net Income -- $31.3 million, or $0.29 per share, including a $17 million property sale gain not included in FFO.
  • Leasing Volume -- 958,000 square feet of second-generation leases executed, including over 300,000 square feet of new transactions.
  • GAAP Rent Growth -- 19.4% on executed second-generation leases; Cash Rent Growth -- 4.8% in same segment.
  • Weighted Average Lease Term (Second-Generation Leasing) -- 7.5 years, more than one year longer than recent averages.
  • First-Generation Development Leasing -- 107,000 square feet signed, with net effective rents the second highest in company history (9% above the trailing five-quarter average).
  • Expansions vs. Contractions -- Ratio approached two to one, with expansions outpacing contractions within executed leasing activity.
  • Asset Transactions -- $108 million invested in Dallas and Raleigh joint ventures; $42 million of non-core Richmond properties sold at a low double-digit cap rate.
  • Disposition Outlook -- Management targets $200 million in additional non-core asset sales by midyear; proceeds may be used for up to $250 million of share repurchases on a leverage-neutral basis.
  • Liquidity -- Over $650 million of available liquidity at period-end; $100 million secured mortgage closed at Granite Park 6 post-quarter, generating more than $50 million in additional capital.
  • Development Highlights -- GlenLake III (94% leased, 203,000 square feet office, 15,000 square feet retail); GlenLake II Retail (100% leased); Granite Park 6, Dallas (80% leased, 422,000 square feet); 23 Springs, Uptown Dallas (leased rate increased to 83% from 75% quarter over quarter); Midtown East, Tampa (leased rate up to 95% from 76% quarter over quarter).
  • Pipeline Lease/Occupancy Spread -- Properties placed in service and in development are 86% leased but only 48% occupied, indicating embedded future occupancy gains.
  • Same-Store Operating Expense Growth -- Negative 60 basis points, primarily attributed to weather-driven utility cost increases.
  • Sublease Space -- Declined by 6%-7% sequentially; currently over 500,000 square feet within the portfolio being subleased.
  • Capital Deployment Priorities -- Management continues to emphasize driving occupancy, advancing the development pipeline, and recycling out of non-core, CapEx-intensive assets into higher-growth BBD properties while sustaining a flexible balance sheet.

SUMMARY

Highwoods Properties (HIW 5.58%) reported that expansions outpaced contractions nearly two to one in new leasing activity, supporting future occupancy and income growth. Management reiterated its occupancy outlook for the year, indicating that roughly 1.2 million square feet of leases are already signed to commence by year-end, and anticipates that a sustained pace of 100,000 square feet of new leasing per month will achieve targeted occupancy increases. Portfolio improvement continued as non-core dispositions advanced as planned, while the company explored both repurchasing shares and selectively investing in new developments supported by tenant demand for high-quality space in constrained markets. Sublease exposure continued to decrease, and no notable buyer profile shifts or capital market disruptions for office product were identified during this period. Management clarified that weather-related utility costs primarily drove higher first-quarter operating expenses, and expects G&A and capitalized interest to decline for the remainder of 2026 as signaled in guidance.

  • The spread between leased and occupied rates remains historically elevated at 470 basis points, and is highlighted as a strong forward indicator of future occupancy gains.
  • Retention rates on expirations are projected to improve from roughly 40% in 2026 to a 50%-60% range in 2027, according to Brendan Maiorana, reflecting positive momentum in renewing tenants and subleasing dynamics.
  • Management stated, "We have not seen changes in the profile of buyers," when asked about property capital markets, emphasizing ongoing stability in buyer interest and pricing.
  • Year over year total leasing volume in Charlotte grew approximately 74%, with about 70% attributed to Class A buildings, directly benefiting the company's BBD exposure.
  • Major development projects, notably 23 Springs and Midtown East, showed significant quarter-over-quarter improvements in leased rates, reinforcing management's outlook for steady occupancy and cash flow ramp as pipeline projects reach physical occupancy.

INDUSTRY GLOSSARY

  • BBD (Best Business District): Prime submarkets within major metropolitan areas that attract high concentrations of office tenants due to superior location, amenities, and business infrastructure.
  • Second-Generation Lease: A lease transaction involving previously occupied (as opposed to newly developed) office space.

Full Conference Call Transcript

Theodore J. Klinck: Thanks, Brendan, and good morning, everyone. We had an excellent quarter executing on our key initiatives. Leasing volume was strong across our in-service and development properties. This is clear from the 50-basis-point increase in our leased rate on our in-service portfolio and an 800-basis-point increase in our leased rate on our developments. Both of these will deliver meaningful upside in NOI, cash flow, and FFO over the next few years as occupancy ramps. During the quarter, we invested $108 million in best-in-class, commute-worthy properties in BBD locations in Dallas and Raleigh through joint ventures, and sold $42 million of non-core properties in Richmond.

All of this activity improves our portfolio and further cements the foundation for pushing our growth rate and cash flows meaningfully higher, and will result in long-term value creation for our shareholders. Even with our strong performance in the quarter, we recognize the broader narrative that advances in AI could reshape the workforce and therefore affect long-term office demand. The range of potential outcomes is wide and varied, and at this point, there are many unknowns. What we do know, however, is that customers and prospects have not diminished their appetite for space and are making long-term commitments to their in-office strategies, and activity across our portfolio, our markets, and our BBDs is strong. Leasing was solid in the quarter.

Our leasing pipeline remains robust. High-quality space across our BBDs is dwindling, and there is little to no new supply expected during the foreseeable future. This flight-to-quality dynamic creates a strong backdrop for gains and rent growth, both of which we experienced in the first quarter. Additionally, creditworthy customers are willing to make long-term commitments, as evidenced by our weighted average lease term on second-generation lease volume of 7.5 years, more than one year longer than our recent average lease term. Further, demographic trends across our footprint are favorable, with business relocations and expansions reaccelerating, driving healthy population and job growth.

We firmly believe high-quality, commute-worthy properties in BBD locations, owned by well-capitalized landlords, are best positioned to capture increasing demand and improving economics. Turning to the quarter, we delivered solid financial performance with FFO of $0.84 per share, and we maintained our outlook for the year. Our leasing performance was excellent. We signed 958,000 square feet of second-generation leases, including over 300,000 square feet of new leases. We delivered GAAP rent growth of 19.4% and cash rent growth of 4.8%. Net effective rents were the second highest in company history, and 9% higher than the prior five-quarter average. Expansions, which we include as renewals, outpaced contractions at a ratio of nearly two to one.

In addition, we signed 107,000 square feet in first-generation leases across our development properties. Customers and prospects recognize that blocks of high-quality, BBD-located office space with well-capitalized owners are diminishing across our footprint, which gives us strong pricing power in the best submarkets. We placed in service more than $200 million of 87% leased development properties during the quarter. GlenLake III, comprising 203,000 square feet of office and 15,000 square feet of retail, is now 94% leased. Across the street, we delivered GlenLake II Retail, which is 100% leased to Crooked Hammock Brewery. The addition of 24,000 square feet of food and beverage options elevates GlenLake’s offerings and complements the nearly 1 million square feet of office we have here.

This has supported our ability to push rents across this park in West Raleigh. We also placed in service Granite Park 6 in Dallas’ Legacy BBD. This 422,000-square-foot best-in-class office property is 80% leased. We also made strong progress leasing up our two remaining development properties. 23 Springs, our 642,000-square-foot development project in Uptown Dallas, continues to garner strong activity with the leased rate now 83%, up from 75% last quarter and 62% twelve months ago. We have strong prospects to bring our lease rate at 23 Springs into the 90s. In Tampa’s Westshore BBD, our 143,000-square-foot Midtown East development is now 95% leased, up from 76% last quarter and 39% twelve months ago.

The office component at Midtown East is 100% leased. On a combined basis, the properties placed in service during the first quarter and in our remaining development pipeline are 86% leased but only 48% occupied. As the leases commence, we will capture significant growth in NOI, cash flow, and FFO. We are starting to receive interest from build-to-suit and sizable anchor prospects for potential new development. It is still early, and it is hard to say whether any of these discussions will result in new projects, but the increased interest is encouraging and signifies limited inventory companies face when searching for large blocks of high-quality space. On the disposition front, we sold a non-core portfolio in Richmond for $42 million.

As reflected in our outlook, we expect to sell roughly $200 million of additional non-core assets by the middle of this year and are marketing other assets for sale. We believe we will be able to redeploy capital from non-core asset and land sales on a leverage-neutral basis that will further strengthen our cash flows and result in higher growth. As we announced last week, we may also use non-core disposition proceeds to repurchase up to $250 million of outstanding shares of common stock on a leverage-neutral basis. We continue to evaluate acquisition opportunities and highly pre-leased developments; the repurchasing of our shares is another capital deployment option we now have in our arsenal.

Before turning the call over to Brian, I want to reiterate the priorities we have highlighted over the past few years that will drive long-term value creation for our shareholders. First, we will continue to drive occupancy towards stabilized levels in our operating portfolio. Second, we will deliver and stabilize our development pipeline. Third, we will improve our portfolio quality and long-term growth rate by recycling out of non-core, CapEx-intensive assets in non-BBD locations and invest in properties with better cash flows and higher long-term growth rates. And fourth, we will do all this while maintaining a strong and flexible balance sheet. We made meaningful progress on each of these priorities during the first quarter.

We believe the focus on these four areas, combined with a strong fundamental backdrop in our core BBDs due to the healthy demand and limited new supply, will drive significant growth in cash flow and long-term value over the next several years. Brian?

Brian M. Leary: Thanks, Ted, and good morning, everyone. Our operating results continue to reflect the advantage of owning commute-worthy, amenitized assets in the best business districts of high-growth Sunbelt metros. Fundamentals across our markets continue to improve, as evidenced by vacancy rates and sublease space declining. Rents are up, which combined with steady concession packages has resulted in higher net effective rents. As far as supply goes, the best of the best and the best of the rest are in high demand. With office construction at historic lows, or non-existent in many markets, new office inventory is in scarce supply.

With demolitions outpacing deliveries nationwide, the flight to quality has become, in many cases, an all-out sprint to quality, with users proactively inquiring for early extensions to lock in location and terms. A common theme across our markets is that office rents pale in comparison to the investment customers have in their people, and that exceptional environments and experiences yield superior results when their people are in the office and being better together. Customers are choosing well-located, highly amenitized, Class A buildings with well-capitalized owners and customer-centric operations, and they are willing to pay for it. They are moving to metros that continue to win people and companies with the highest quality of life and most business-friendly outlooks.

This is the Highwoods Properties, Inc. portfolio, this is the Highwoods Properties, Inc. team, and these are our Sunbelt markets and BBDs. Starting with Dallas, the Metroplex remains one of the country’s premier destinations for corporate headquarters and expansions, which should not be a surprise at this point considering it is Site Selection Magazine’s number one city for headquarter relocations and is in the state Chief Executive Magazine has deemed as the best for business 21 consecutive years. From 2018 through 2024, Dallas landed roughly 100 headquarters, with 11 more in 2025.

The region continues to attract diverse firms across financial and professional services, advanced manufacturing, logistics, and life sciences, seeking a central location, business-friendly environment, and a deep labor pool. That macro story is consistent with the office fundamentals you see in the Q1 broker data. According to Cushman & Wakefield, DFW recorded 117,000 square feet of positive net absorption in 2026, its fifth consecutive positive quarter, with nearly 340,000 square feet of positive absorption in Class A as Class B continues to shed space. Our Dallas portfolio is in Uptown, Legacy, and Preston Center, which is the tightest submarket in the region with less than 6% vacancy and is home to one of our latest acquisitions, The Terraces.

These BBDs are squarely in the path of demand. The mark-to-market we are realizing via second-generation leasing, both at McKinney & Olive and The Terraces, is significant, generating GAAP rent spreads of 27%. Turning to Charlotte, the city is increasingly recognized as a strategic hub that is being validated by headline corporate decisions. Among the 104 metros that Cushman & Wakefield tracks, Charlotte was number one for job growth. To that end, and subsequent to our most recent earnings call in February, three global financial institutions have made major new job announcements.

Already with an established home in Charlotte’s SouthPark BBD, where we have almost 800,000 square feet, JPMorgan recently announced plans for an eventual 1,000-job regional hub, with 400 of those to be hired by 2028. Two new entries to the market include Capital Group’s planned new home in Uptown, with 600 new employees, and after a nationwide search, Sumitomo Mitsui Banking Group, one of Japan’s largest banks, selected Uptown as well for their second U.S. headquarters, creating 2,000 jobs by 2032, with an average salary for these 2,000 jobs projected to be over $165,000 a year.

This macro backdrop aligns perfectly with Q1 office fundamentals; CBRE noted approximately 410,000 square feet of positive net absorption in the first quarter and total leasing volume of roughly 1.4 million square feet, up nearly 74% year-over-year, with about 70% of that volume in Class A buildings. In Uptown, the denominator is shrinking as millions of square feet of office space are being taken out of inventory for conversions to residential, hotel, and retail uses. Strong demand for high-quality space and limited new supply are yielding a landlord-favorable environment for driving leasing fundamentals. Our Charlotte assets are directly benefiting from this demand, which is why we are seeing strong rent roll-ups and net effective rent growth in Charlotte.

In Raleigh, the long-term story of in-migration and organic growth remains intact. Recent census estimates show the Raleigh metro is one of the 10 fastest growing in the country between 2024 and 2025, and statewide, North Carolina ranked first in domestic net migration and third in overall population gain for the same period, adding an estimated 146,000 residents. CBRE’s tech report noted that the Raleigh area also produces nearly 5,000 tech graduates annually, reinforcing a sustainable pipeline of skilled workers. Office fundamentals reflect that strength in the best business districts, and our team was busy for the quarter, signing over 200,000 square feet of second-generation space.

Our two new developments at GlenLake offer a mix of uses and are 95% leased, and Block 83, our recent mixed-use JV acquisition, which is 97% leased in Raleigh’s CBD, is directly aligned with where both in-migration and corporate demand are strongest. Finishing in Nashville, where strong population growth and a diversified economy continue to attract brand-name employers, just last month Starbucks announced a $100 million plan to open a Southeast corporate office in Downtown Nashville for 2,000 employees, with some relocating from Seattle and the balance of new hires in Nashville.

Office data for the first quarter shows that demand is focused on newer or newly amenitized Class A nodes, and our 287,000 square feet of quarterly leasing with a weighted average lease term of 9.8 years, and cash and GAAP rent spreads of 9.4% and 26.5%, respectively, bears witness to this data. Across our footprint, we are aligning capital with the metros and submarkets that continue to win people, jobs, and corporate investment. We are making sure our portfolio and people are prepared to deliver commute-worthy experiences to our customers and their teams. Our success this quarter supports this strategy, and we are confident it will continue to serve us well. Brendan?

Brendan Maiorana: Thanks, Brian. In the first quarter, we delivered net income of $31.3 million, or $0.29 per share, and FFO of $94 million, or $0.84 per share. The quarter included a $17 million property sale gain from our disposition in Richmond that was included in net income but not included in FFO. During the quarter, we received a term fee at an unconsolidated JV for a net $2.2 million, or $0.02 per share, from a customer moving from McKinney & Olive to 23 Springs, and we sold our interest in a third-party brokerage services firm, resulting in a $1.4 million gain. These two items were included in FFO and were factored into our original FFO outlook.

Otherwise, there were no unusual items in the quarter. You may have noticed some minor changes to our supplemental package we released yesterday that we believe will make it easier to derive our share of joint venture NOI. We also broke out Dallas as its own market now that we have three in-service properties in Dallas, which will increase to four upon stabilization of 23 Springs. Our “Other” markets now primarily consist of our non-core Pittsburgh and Richmond portfolios. We are pleased with our first quarter financial results, which demonstrate the resiliency of our operations and cash flows.

Even more consequential was this quarter’s leasing activity on both the in-service portfolio and development pipeline, which positions us to increase occupancy and deliver NOI growth during the remainder of 2026 and beyond. Our leased rate is 89.7%, up from 89.2% one quarter ago. The spread between our leased and occupied rates of 470 basis points is three times our normal historical spread, a strong indicator for future occupancy gains. We reiterated our year-end occupancy outlook of 86.5% to 88.5%, which implies a 250-basis-point increase at the midpoint over the remaining three quarters of the year. Our balance sheet remains in good shape.

We had over $650 million of available liquidity at the end of the quarter, and subsequent to quarter-end, we closed a $100 million secured mortgage at Granite Park 6, resulting in over $50 million of capital to Highwoods Properties, Inc. We expect to close one or more additional financings at JVs during the remainder of the year, which will repatriate capital back to Highwoods Properties, Inc. and improve our liquidity and unencumbered debt-to-EBITDA ratio. Based on our current expectations of NOI growth, and assuming $200 million of non-core asset sales, we expect to end the year with debt to EBITDA in the low- to mid-6s, with additional reductions likely in future periods as NOI grows.

We have only $40 million of remaining capital needed to complete our share of the development properties. These properties, combined with the developments placed in service this quarter, will deliver over $20 million of annual NOI growth compared to the Q1 2026 run rate. As Ted mentioned, we have maintained our FFO outlook of $3.40 to $3.68 per share. It is still early in the year, and while we are off to a strong start with our leasing activity, most of these leases will have a financial benefit to 2027 and thereafter. Before we turn the call over for questions, there are a couple of items to note.

First, I mentioned the term fee and gain on sale were recorded in the first quarter. We do expect some additional term fees in the remainder of the year, as is typical, but these are expected to be lower in subsequent quarters. We also expect some additional other income items in the second half of the year. In total, these items are expected to be around $0.06 to $0.07 for full-year 2026, which is approximately $0.05 lower than 2025. Second, capitalized interest is expected to be lower for the foreseeable future, as we will no longer capitalize interest expense at 23 Springs or Midtown East.

There is significant embedded NOI growth at these properties due to leases that are signed but will not be fully online before 2027. Third, as is typical, G&A was higher in Q1 due to the expensing of annual equity grants. G&A is expected to be lower for the remaining quarters of the year. Given these factors and our expectation of steadily increasing occupancy during the final three quarters of 2026, we expect FFO to increase in the second half of the year. Operator, we are now ready for questions.

Operator: Thank you. To ask a question, please press star followed by the number one on your telephone keypad. Our first question comes from Seth Eugene Bergey from Citi. Please go ahead. Your line is open.

Seth Eugene Bergey: I just wanted to go back to some of your comments in prepared remarks about discussions around potential new developments and the share repurchase authorization. How are you thinking about capital allocation priorities, and how do those opportunities compare to each other today?

Theodore J. Klinck: Hey, Seth. It is Ted. Looking at the best ways to improve our long-term growth rate, strengthen and make our cash flows more resilient, and improve the quality of the portfolio, I think our stock buyback gives us another option and optionality. Over the years, we have proven to be disciplined allocators of capital. We have rotated between acquisitions and development throughout various cycles, always looking at the best risk-adjusted return. The stock buyback just gives us one more option to consider. Last year we were very active on the acquisition side; we acquired, on our share, about $580 million worth of assets at what we consider very attractive pricing.

Now, as you alluded to, we are becoming more constructive on development. There is a shortage of high-quality space, so we are fielding calls, whether it be build-to-suits or pre-leased office development. Development is hard these days—expensive, hard to finance, interest costs are higher—but we think there are opportunities for well-capitalized developers to earn attractive risk-adjusted returns. We look at everything, and development is certainly becoming more constructive.

Seth Eugene Bergey: Thanks. And then on the potential opportunity for dispositions, given the move in the 10-year and maybe some macro headlines around AI, are you seeing any changes in the type of capital interested in office product and any changes in pricing?

Theodore J. Klinck: The short answer is no, at least not yet. Since early 2025 through the disposition we had in January, we sold about $270 million roughly at an 8% cap rate, which matched up with our acquisitions. We have a lot of assets out in the market. We have said we are trying to get $190 to $210 million done by midyear—we are on track—and we have other assets in the market at various stages. We have not seen changes in the profile of buyers.

Seth Eugene Bergey: Great. Thank you.

Operator: Our next question comes from Blaine Heck from Wells Fargo. Please go ahead. Your line is open.

Blaine Heck: Great, thanks. Good morning. You have had a solid start to the year on the leasing side. Can you comment on the leasing economics you have seen thus far and how you would expect rent spreads and concessions to trend during the full year of 2026?

Theodore J. Klinck: Maybe I will start, Blaine, and then Brian or Brendan can jump in. As you alluded to, we had a great start to the year with almost 5% up on cash and 19% plus on GAAP. It can vary quarter to quarter with mix, but in general, the macro setup is pretty good for office owners over the long term. Demand remains strong in our markets. We are not seeing any impact from AI; in fact, it has been a net positive—we signed a couple of AI-related users. There is absolutely, as Brian said, a dwindling supply of high-quality space in the BBDs.

There is going to be a shortage of this space in the next couple of years given that new construction is at a historic low. That should accrue to the benefit of office owners. We do not know exactly what the metrics will look like quarter to quarter, but it is a good setup for owners of high-quality office space in our BBDs. In-migration is a tailwind across our markets, notably Charlotte and Dallas, among others. The supply-demand backdrop feels pretty good right now.

Brian M. Leary: Blaine, I might just add an anecdote. We have been proactive in connecting with customers well in advance of expirations to push out extensions, and now they are reaching out to us too. They want to secure where they are and secure terms, and not get caught at a mark-to-market a few years down the road. While the recovery is not universal, we feel the great majority of our portfolio is on the top side of that K-shape and we are benefiting.

Blaine Heck: That is helpful color. And then, Ted, on the potential for build-to-suit opportunities, are there specific markets where you are seeing demand increase? Any color on the profile of tenants you might be talking to? And would those potential build-to-suits occur on land you already own, or might you need to acquire some land?

Theodore J. Klinck: Market-wise, it is various markets—multiple—and in some of our top, larger markets. I do not want to get too specific as we are competing, and some are still multi-state competitions. Customer-wise, it varies—financial services, corporates—no single theme other than a shortage of space in the submarkets they want to be in. On land, it is both on land we already own and potentially on sites we would control specifically for a build-to-suit. We would not go out and buy land to land bank; any land purchase would be tied to a specific build-to-suit. Our land inventory is more likely to go down from here.

Operator: Our next question comes from Peter Dylan Abramowitz from Deutsche Bank. Please go ahead. Your line is open.

Peter Dylan Abramowitz: Thank you for taking the questions. I think last quarter you talked about needing around 700,000 square feet this year of vacancy leasing that would actually take occupancy to hit the midpoint of guidance, and mentioned a retention rate of around 35% to 40% under 2026 expirations. Of the 300,000 square feet of new leasing you did this quarter, how much will go toward that 700,000 for the full year that will actually take occupancy before year-end? And is the math still the same on the retention and renewal side?

Brendan Maiorana: Hey, Peter. Good question. The math pretty much rolls forward from everything we did in the first quarter. We had talked at the beginning of the year about 1.2 million square feet of leases signed that would commence by the end of 2026. We moved a number of those into occupancy during the first quarter, but we replaced that, so we still have about 1.2 million square feet of signed leases that will commence by year-end. On expirations, out of what remains, there is somewhere in the neighborhood of 850,000 to 900,000 square feet of likely move-outs.

That leaves us positive net absorption from 3/31 of 300,000-plus square feet, which means we have another 300,000 to 400,000 square feet to sign and start this year. That is down from the 700,000 we mentioned at the beginning of the year. If we keep roughly 100,000 square feet of new per month, that puts us on track to the midpoint of the year-end occupancy range of 87.5%.

Peter Dylan Abramowitz: That is helpful, thanks. On the Richmond sales, what was the cap rate specifically on that portfolio?

Theodore J. Klinck: It was at the upper end of the blended range we discussed—call it a very low double-digit cap rate—and that is incorporated in the overall blended number of around 8%.

Peter Dylan Abramowitz: Got it. One more: in the same-store pool, operating expense growth was a little elevated in the quarter. Anything unique to Q1 we should be mindful of going forward?

Brendan Maiorana: As you might expect from the winter, we had some pretty cold weather, particularly in February, so utility costs were up significantly year-over-year. That really drove the increase in expenses. We were negative 60 basis points on same-store in the quarter and expect roughly flat for the year. That likely means low again in Q2 and then positive in the back half to average out to flat on a cash basis and positive on a GAAP basis.

Operator: Our next question comes from Ronald Kamdem from Morgan Stanley. Please go ahead. Your line is open.

Ronald Kamdem: Following up on the same-store thread, can you give some breadcrumbs as we think about 2027? As occupancy ramps, presumably you will be at a better pace comping into next year. Any other puts and takes for potential acceleration?

Brendan Maiorana: Thanks, Ron. The second-half 2026 improvement in same-store should, in all likelihood, carry into 2027, so you should see good same-store results. From an earnings perspective, breadcrumbs from first half versus back half of this year: in Q1 we had the gain on the third-party brokerage sale and the term fee—combined $0.03. G&A is similarly about $0.03 higher in the first quarter, so those offset. Capitalized interest will go away on 23 Springs and Midtown East—probably a couple of pennies—partially offset by a little higher NOI.

We also expect about $200 million of dispositions in Q2; that will be a little dilutive as we pay down the line of credit and keep the remainder in cash in preparation for paying off the 2027 bond. All that likely means Q2 FFO is a little lower than Q1, and then a meaningful ramp in the back half to get to the midpoint of guidance excluding land sale gains. That is positive as you think about 2026 into 2027.

Ronald Kamdem: On capital recycling, on the buy side it sounds like Dallas is interesting. Are acquisition opportunities all in existing markets, or any new markets? And on the sell side, an update on the Pittsburgh portfolio situation and timing?

Theodore J. Klinck: On acquisitions, we are primarily focused on our existing footprint. We are very pleased with it and do want to grow in Dallas over time, but you go where the opportunity is; for now it has been entirely in existing markets. On dispositions, no real update on Pittsburgh. We will be bringing one of the smaller assets to market soon. For the big asset, PPG Place, no update—we are continuing to get some leasing done before bringing it to market. Capital markets are improving on both debt and equity, so we are getting closer to launching, but have not set a date yet.

Operator: Our next question comes from Dylan Robert Burzinski from Green Street. Please go ahead. Your line is open.

Dylan Robert Burzinski: Thanks for taking the question. On the build-to-suit opportunities, what sort of stabilized yield on cost do you require to kick one of those off in today’s environment?

Theodore J. Klinck: Dylan, it is hard to generalize. We do not disclose targets given competitiveness, and every deal is different based on market, submarket, credit, term, and annual bumps. On a risk-adjusted basis, we think there are attractive opportunities right now.

Dylan Robert Burzinski: Thinking about 2027—understanding no guidance—retention around 40% this year for 2026 expirations: is that the low point as we think about 2027 and beyond, or is there any one larger tenant in 2026 that makes 40% not a good assumption for 2027?

Brendan Maiorana: Your number is correct on 2026 in the ~40% range as we were migrating into 2026. Keep in mind the adverse selection bias: we early-renew folks, and those not renewed remain in the expiration schedule. For 2027, as of now, we are probably in the 50% to 60% retention range on what remains, and even that is probably lower than the ultimate outcome given a number of 2027 expirations where we have the underlying tenant but they have subleased to someone else. Our retention calc assumes the underlying tenant vacates and then we sign the subtenant as a new lease, so that would show as a move-out and new lease, not a renewal.

We think we will do well on 2027 retention, creating a good environment to continue driving occupancy higher from year-end 2026 through 2027.

Operator: As a reminder, to ask a question, please press star followed by the number one. Our next question comes from Vikram Malhotra from Mizuho. Please go ahead. Your line is open.

Vikram Malhotra: Good morning. Two quick ones. First, on the trajectory from here, what do you need to do new-leasing-wise for the rest of the year to hit the higher end or midpoint of the year-end occupancy? And is there anything new in terms of additional move-outs we should keep in mind going into next year? Second, on AI and leasing—are you hearing any AI-oriented firms looking for space or expanding away from the West Coast in your markets?

Brendan Maiorana: On leasing needed to hit the year-end occupancy range—at the midpoint—we probably need roughly 100,000 square feet of new leasing per month through June or July. Those leases are likely to move into occupancy by year-end. To continue pushing occupancy higher into 2027, we would like to see that pace continue in the back half, which should set us up well for 2027. We do not have significant 2027 expirations we are particularly worried about.

Theodore J. Klinck: On AI, as I alluded to earlier, we signed one AI-related tenant focused on data centers in Dallas. Otherwise, across our markets, we have not seen much AI demand yet.

Vikram Malhotra: Thank you.

Operator: Our last question comes from Nicholas Patrick Thillman from Baird. Please go ahead. Your line is open.

Nicholas Patrick Thillman: Good morning. One quick question on overall utilization and sublease availability within the portfolio. Do you have a number on occupied space currently listed for sublease?

Theodore J. Klinck: Our sublease space is going down—down 6% to 7% last quarter. Some does convert to direct vacancy, but some is being taken off the market and utilized by our customers. We have a little over 500,000 square feet in our portfolio currently being subleased. It is getting better in our portfolio and in the market as well.

Nicholas Patrick Thillman: That was it for me. Thanks, all.

Theodore J. Klinck: Great. Thanks, Nick.

Operator: We have no further questions. I would like to turn the call back over to Theodore J. Klinck for any closing remarks.

Theodore J. Klinck: Thanks, everyone, for joining the call, and thank you for your interest in Highwoods Properties, Inc. We look forward to seeing you all at NAREIT, if not before, or on the next call.

Operator: Thank you. This concludes today’s conference call. Thank you for your participation. You may now disconnect.