Good morning, and welcome to the Highwoods Properties fourth quarter earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Wednesday, February 10th, 2021. I would now like to turn the conference over to Brendan Maiorana. Please go ahead, Mr. Maiorana. Thank you, operator. Good morning, everyone. Joining me on the call this morning are Ted Klinck, our Chief Executive Officer, Brian Leary, our Chief Operating Officer, and Mark Mulhern, our Chief Financial Officer. As is our custom, today's prepared remarks have been posted on the web. If any of you have not received yesterday's earnings release or supplemental, they're both available on the investors section of our website at highwoods.com. On today's call, our review will include non-GAAP measures such as FFO, NOI, and EBITDARE. The release and supplemental include a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures. Forward-looking statements made during today's call are subject to risks and uncertainties, which are discussed at length in our press releases as well as our SEC filings. As you know, actual events and results can differ materially from these forward-looking statements, and the company does not undertake a duty to update any forward-looking statements. One of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the ongoing adverse effect of the COVID-19 pandemic on our financial condition, operating results and cash flows, our customers, the real estate market in which we operate, the global economy, and the financial markets. The extent to which the pandemic impacts us and our customers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of the pandemic and its ongoing impact on the U.S. economy and potential changes in customer behavior, among others. With that, I'll now turn the call over to Ted. Thanks, Brendan. Good morning, everyone. Let me start by saying I hope you are all well and your families continue to be safe and healthy. Our buildings have remained open throughout the pandemic, with protocols in place to keep our customers and their guests as safe as possible. Across our entire portfolio, we estimate utilization is now 25%-30% on average, up slightly from the end of last year as we've seen a modest increase during the past couple of weeks. In general, while difficult to draw trends across markets or submarkets, there is higher utilization by small and medium-sized companies than larger companies. We aren't assuming a meaningful increase in utilization in our portfolio until the second half of the year. As mentioned on our last call, the Highwoods teams across our markets have safely returned to the office, and we've heard from many of our customers who are eager for their full return. As I mentioned last quarter, it remains difficult to predict the duration and the severity of the current recession and when leasing activity will recover. Overall leasing volume dipped in the fourth quarter. However, new leasing volume was relatively steady at 160,000 square feet. While below our long-term quarterly average, new leasing volume was well above the low experience during the pandemic. We signed fewer renewals during the quarter, partly due to low lease expirations. At year end, we only had 8% of our revenues expiring in 2021 and 8.3% in 2022. This two-year cumulative expiration total is among the lowest in our history. Far this year, we are seeing some modest green shoots with regard to prospective leasing activity. Since January 1st, we've already signed 100,000 square feet of new leases. We continue to be optimistic about the long-term population and job trends in our markets. Small and large users from outside of our footprint continue to seek office space in our markets, with some of our new leasing activity already in 2021 attributable to out-of-town users. Turning to our results. We reported 2020 FFO of $3.58 per share. While our performance was impacted by the economic disruption caused by the pandemic, we were able to deliver per share FFO, excluding one-time charges, in line with our original expectations of $3.60-$3.72. Our ability to control expenses, maintain strong rent collections of over 99%, keep our buildings open safely, and continue to advance our development projects on time and on budget is a testament to the tenacity and the dedication of the entire Highwoods team. Our fourth quarter FFO was $0.87 per share, including a $0.02 severance charge that was not in our outlook. Cash rent spreads were flat, down from the mid-single digits over the past several quarters. The sequential drop was attributable to a few short-term deals where we provided aggressive economics to support occupancy. Which had an outsized impact on our quarterly stats, given the below average value. Occupancy held steady from the third quarter to the end of the year at 90.3%. Same-property cash NOI growth was a solid 3.7%, or 1.6% excluding the impact of temporary rent deferrals. As an aside, to date, we've already been repaid on more than 60% of the temporary rent deferrals granted earlier in the pandemic. The positive same-store result was achieved even though average occupancy was down 130 basis points year-over-year, as our average in-place rents were up 4.6%. Higher rents, combined with tight control on operating expenses, were more than enough to offset lower year-over-year occupancy. Turning to investments. We sold $129.7 million of non-core properties in the fourth quarter, all in Greensboro and Memphis. We now have only one office property in Memphis and four office buildings in one park in Greensboro. Subsequent to year-end, we sold 100,000 sq ft building in Atlanta for $30.7 million that is 100% leased to the FAA. This was our only building in the airport sub-market in Atlanta. We delivered this build to suit in 2009 for a total cost of $18.2 million, which further illustrates the value creation from our development activities. We're planning to market additional non-core properties as we continue to strategically prune our portfolio and improve the overall quality. We didn't close any acquisitions in 2020, but in January of this year, we acquired our joint venture partners 75% interest in the 636,000 sq ft The Forum office portfolio in Raleigh for $131.3 million. We have planned high-return tenant improvements that will increase our investment to $138.4 million. We're bullish on the long-term upside for these assets given the wide array of walkable amenities, proximity to executive housing, and easy access to Raleigh's major thoroughfares. We continue to evaluate additional acquisition opportunities. Even after The Forum purchase, we have plenty of balance sheet capacity with zero drawn on our revolving line of credit and $100 million of cash on hand. However, pricing remains competitive for the few high-quality buildings that have come to market since the pandemic started. Rest assured, we'll remain disciplined allocators of capital and seek properties that we believe will deliver appropriate risk-adjusted returns over the long term for our shareholders. Our 1.2 million sq ft, $503 million, 79% pre-leased development pipeline remains on budget and on schedule. To date, we funded 79% and expect to spend the most of the remaining $104 million by the end of 2021. Our pipeline will provide over $40 million of annual NOI upon stabilization. Only $8 million of which is scheduled to be recognized in 2021. Now to our 2021 FFO outlook of $3.50-$3.66 per share. In 2020, we were able to offset lower parking revenue and rents by reducing OPEX. We assume utilization across our portfolio will remain low in the first half of this year and gradually increase over the third and fourth quarters. We expect higher utilization will cause operating expenses to increase while we're assuming parking revenues will be slower to recover. At the midpoint of our per share outlook, we assume net operating expenses will be $0.06 higher than last year, while parking revenues will only improve by $0.01. Over time, we expect parking revenues will fully recover the $0.07 drop we experienced in 2020. Same-property cash NOI growth is projected to grow 3%-5% in 2021. Our outlook for dispositions in 2021 is $100 million-$150 million, in addition to the $30.7 million sale of the FAA building completed in January. Our acquisition outlook is zero to $200 million, which is in addition to The Forum acquisition. We have a placeholder for development announcements of zero to $250 million. We continue to have conversations with build to suit and pre-lease prospects but expect to be measured with regard to 2021 development commitments. Before I turn the call over to Brian, I'd like to reiterate the strong financial and operating performance we've delivered in the midst of an unprecedented economic environment. Since the start of the pandemic, we've collected 99.9% of rents, sold $291 million of non-core properties, kept our $503 million, 79% pre-leased development pipeline on time and on budget, and maintained a strong balance sheet with leverage of 36% and a debt to EBITDA ratio of five times. Even with the ongoing economic disruption caused by the pandemic, we still expect FFO per share to be higher in 2021 compared to a normalized 2019, the last full year before the pandemic. We have significant embedded growth potential as our development pipeline delivers and stabilizes, parking revenues recover, and occupancy improves. We're cognizant of the near-term challenges ahead, but we're confident we have the ingredients to drive sustainable growth over the long term. Brian? Thank you, Ted, and good morning all. Our 26 million sq ft portfolio is well-balanced across the BBDs of our markets and where we have exposure to many of the best submarkets in the Southeast. Our diversification is purposeful across markets, across urban and suburban submarkets, and across customer size and industry. This balance has served us well and provided noted resiliency as we posted healthy portfolio metrics in 2020, despite the most challenging of macro environments. We believe this will prove beneficial as the nation emerges from a pandemic and recession. The common belief shared by each and every member of the Highwoods team is that we are in the work placemaking business, and it's through our portfolio that our customers can achieve together what they cannot apart. Before jumping into the quarterly statistics, I'd like to first reflect on our overall 2020 performance. We collected 99.9% of rents contractually due since the beginning of the pandemic. Note that this is from all of our customers, including amenity retail, restaurants, and co-working. This does not include the effect of temporary rent deferrals, which have totaled approximately $8 million, and of which 60% has already been repaid. Even with the traditional leasing environment shut down for three quarters of the year, we leased 2.8 million sq ft with cash re-leasing spreads of a positive 4.6% and net effective rents in line with our high watermark in 2019. This positive outcome is a testament to our diversified portfolio's resiliency and our team's ability to leverage technology and meet our customers' needs in spite of a challenging environment. We achieved these leasing results while spending limited leasing CapEx. We ended the year with portfolio occupancy of 90.3%, just slightly lower than we expected at the beginning of 2020. As Ted mentioned, we have only 8% of rents expiring in 2021 and 8.3% in 2022, and we have no remaining expirations in either year greater than 100,000 sq ft. We're starting to see forward momentum in leasing activity across our markets based on the velocity of inbound inquiries, the number of RFPs received, and the amount of tours occurring in our buildings. Coupled with the portfolio's limited lease roll and a few pockets of high-quality vacancy, we're well positioned to capture leasing demand when the recovery takes hold. Focusing on the fourth quarter, we finished the year by executing 466,000 sq ft of second-generation leases, including 160,000 sq ft of new leases. As we've mentioned previously, overall volume can ebb and flow depending on expirations and renewals, while new leasing trends can often be more indicative of market activity. We've been pleased that new leasing volume has picked up measurably since the depths of the pandemic in the second quarter. As Ted noted, we've seen good new leasing volume already in the early part of 2021, and we're cautiously optimistic that leasing activity will translate to additional signed deals. We posted GAAP rent spreads of a positive 8.4% and flat cash rent spreads. We made the conscious decision to provide aggressive lease economics in a few instances where we felt it was important to maintain occupancy or bridge a customer through the pandemic. While these deals were small, given the limited lease volume in the quarter, they had an outsized impact on reported rent spreads. Temporary rent deferrals granted since the start of the pandemic remained static in the quarter at 1.2% of our annual revenues. For some added color, we convened a rent relief task force starting in March, then met daily for almost three months. Come summer, we were able to pare back our meetings to twice a week, and we now convene every other week to monitor customer progress and performance. I would like to commend our local teams, down to each and every Highwoods property manager, whose in-place relationships were key to supporting our customers and resulted in best-in-class rent collections throughout the pandemic. Now to our markets, which continue to garner national attention for their above-average population and job growth forecasts. Their fiscal health and low taxes, business-friendly climates, lack of dependence on mass transit, affordability, and overall high quality of life, has accelerated the great migration to our footprint. To this end, U.S. News & World Report lists three of our markets in the top eight of best places to live. Additionally, Green Street recently identified Raleigh, Charlotte, Tampa, Orlando, and Nashville in the top quadrant of national cities in terms of both population growth and lower susceptibility to work from home risk. Where else to start but Tampa, the new super city by the bay, where the Stanley Cup, American League pennant, and the Vince Lombardi trophy all call home. Where success on the field of play is begetting success in the halls of the city's economic developers, as evidenced by Pfizer's decision to create a new 100,000 sq ft enabling functions hub. Furthermore, Tampa ranked number four in the U.S. for net residential growth in 2020. In addition to Pfizer's news, Fisher Investments, a Highwoods customer, has made a large commitment to growth in Tampa, announcing the planned addition of 600 jobs in the year ahead. Moving to our Tampa portfolio at 5332 Avion, we're seeing solid interest in the remainder of the availability we have there. In the West Shore BBD, our 150,000 sq ft Midtown West development that sits above an REI and next to a Whole Foods Market, Shake Shack, and True Food Kitchen is finishing construction, hosting hard hat tours, and where we're seeing solid interest from prospects. To Raleigh, where we saw another quarter with positive net absorption and where California-based Gilead Sciences just announced the addition of 275 new jobs with an average annual salary of $142,000. National mortgage lender PennyMac Financial Services announced 322 new jobs last month. The Raleigh leasing team signed 130,000 square feet of deals in the quarter. Life science users continue to be the most active in the market. We're also seeing good activity from technology, financial services, and corporates. Atlanta also posted a healthy volume of 130,000 square feet with solid rent spreads. We are seeing increased prospect activity in Buckhead, which we believe can translate into signed leases later in the year. Finally, back down to central Florida to wrap up in Orlando, where we leased 91,000 square feet, including 20,000 square feet of new deals. Our CBD portfolio and spec suite program there are seeing good interest from prospects across a combination of small and medium-sized requirements. We expect occupancy will continue to improve as we move throughout the year. In closing, we're looking forward to 2021, when we'll deliver new trophy assets such as Asurion's headquarters in Nashville and where we are fortunate to be well-positioned with our dynamic and growing markets, our high quality and diversified portfolio, our roster of strong and performing customers with a limited forward lease roll across a wide array of industries. Mark? Thank you, Brian. Good morning. In the fourth quarter, we delivered net income of $82.1 million or $0.79 per share, and FFO of $92.5 million or $0.87 per share. The quarter included a one-time severance charge, which reduced FFO by $0.02 per share. For full year 2020, we delivered FFO of $3.58 per share. Adjusting for the severance charge, our FFO was in line with the midpoint of our updated 2020 outlook provided in October. I'd like to take a moment to review our 2020 results compared to our original expectations. As I mentioned, we reported FFO of $3.58 per share. Included in our full year numbers were $0.05 of one-time charges. The $0.02 severance charge I mentioned earlier that we took in the fourth quarter and $0.03 debt extinguishment charge we disclosed with our third quarter results. Adjusting for these items, our FFO would have been $3.63 per share. In addition, we had $153 million of non-core dispositions and no acquisitions that were not in our original 2020 outlook, which reduced FFO by $0.02 for the year. We incurred a $0.01 of additional interest expense from the excess cash we held on the balance sheet following our $400 million bond offering in the third quarter. This financing also wasn't included in our original FFO outlook. We believe all of these items, non-core dispositions, obtaining long-term financing, and reducing G&A, will benefit the company over the long term. Excluding these non-operational items, our FFO would have been higher by $0.08 or $3.66 per share, which was the midpoint of our original FFO outlook. Given the economic harm and disruption to our industry caused by the pandemic, we're extremely pleased our overall financial performance was generally in line with our pre-pandemic expectations. Our balance sheet is in excellent shape. Following the acquisition of our joint venture partner's 75% share of The Forum, we have $100 million of cash on hand and nothing outstanding on our $600 million revolving line of credit. We only have one remaining debt maturity before late 2022, which is the $150 million remaining on our 3.36% interest rate bonds that we plan to pay off at par in April. We have a little over $100 million left to fully fund our $503 million development pipeline, most of which will be spent by the end of this year. As Ted mentioned, our leverage remains low at 36%, while our net debt to adjusted EBITDA is five times. Clearly, we have plenty of liquidity and ample room to pursue additional investments if we see attractive opportunities. Turning to 2021. In last night's release, we provided our initial FFO outlook of $3.50-$3.66 per share. This includes $0.04 to $0.08 per share of lower FFO due to higher anticipated year-over-year operating expenses as we assume higher utilization in the second half of the year. We're optimistic on the long-term prospects for our parking facilities recovering to pre-pandemic levels, but we don't expect significant improvement in 2021. At the midpoint of our range, we are assuming increased net operating expenses combined with higher parking revenue will have a $0.05 per share headwind compared to 2020. The annualized diluted impact of the $153 million of dispositions late last year that were not included in our original 2020 outlook is expected to be offset by the accretive net impact of the Forum acquisition and the FAA sale in 2021. We expect the $0.05 headwind from net OpEx and parking revenues in 2021 to offset the other non-operational charges in 2020 I mentioned earlier that are not forecasted to recur in 2021. As a result, we expect overall FFO results in 2021 to be in line with 2020. Finally, last week we announced a quarterly dividend of $0.48 per share, which is unchanged from our prior dividend. The past few years, we've announced dividend increases in conjunction with our fourth quarter earnings releases. As a reminder, our dividend strategy is to generally target a level that approximates our taxable income over time. Given our income projections, combined with the uncertain economic environment around the pandemic, we believe it is prudent to use our excess cash flow to fund our development pipeline and for other investment opportunities. We continue to be constructive on the long-term cash flow outlook of the company and expect strong dividend coverage in 2021. Operator, we are now ready for your questions. Our first question comes from Blaine Heck with Wells Fargo. Please proceed. Great. Thanks. Good morning. Maybe for Mark or Brendan, I just wanted to touch a little bit more on what seems to be a little bit of a disconnect between a lot of positive assumptions baked into guidance, cash same-store NOI guidance being one of those major positives, and an FFO that's relatively flat year-over-year. Is there a material difference between GAAP same-store NOI growth and cash given the decrease expected in straight-line rent? Or are there other ins and outs that might help us bridge that gap? Hey, good morning, Blaine, it's Brendan. I'll take a stab at that, I'll try to run through some of these items. In general, overall, I would say yes, there's a meaningful difference between cash and GAAP NOI growth. We've got at the midpoint, as you pointed out, cash NOI growth at +4% at the midpoint of the outlook, whereas GAAP is, let's call it, I think it's flattish to maybe even slightly down a little bit. The biggest drivers on that are the things that are in GAAP that are not in cash is really attributable to a lot of the burn-off of some of the straight-line rent and free rent on leases that were done late 2019 and early part of 2020. Overall, at the midpoint, we have about a $22 million decline in terms of our expectation for straight-line rent. Now, a portion of that is attributable to the temporary rent deferrals that we provided in 2020. That is on a year-over-year basis. It's about a $5.5 million benefit to same store in 2021. Parking revenue, as Mark mentioned in his remarks, is about a $1 million positive. That's $6.5 million positive on cash. That's essentially offset by the higher net operating expenses, which at the midpoint, again, are also about $6.5 million negative. Those two things cancel each other out. We're left with the remaining straight-line reduction, which is, call it about $16 million or $17 million at the midpoint of the outlook. That all falls to the bottom line from a cash perspective. As I mentioned earlier, it's largely attributable to a lot of the leasing that we did late 2019 and 2020, where those leases were in a free rent period, and that has expired. Probably the best example of that is Fanatics at 5332 Avion. That lease commenced from a cash perspective earlier this month. I'd say those are probably the major drivers in terms of positive cash versus the GAAP number. I think as we've been stating, our cash flow continues to strengthen with the rotation of the portfolio and the good leasing that we've done. I think we feel good about the long-term cash flow outlook for the company. Okay, great. That's a really helpful detail. Along those same lines, again, we appreciate all the color you guys have given and guidance and the decrease in straight line rent seems like it should be a positive for FAD or AFFO growth. Can you also talk about how you guys are thinking about CapEx and how that might trend year-over-year and the implications for AFFO growth relative to that flat FFO growth that your guidance implies? Yeah. We just talked about the drop. From a cash perspective, as we think about kind of AFFO or CAD, we just talked about at the midpoint of the range, $22 million kind of drop in terms of straight line versus 2020 versus 2021. That's a positive for CAD that is not impacted in terms of an FFO or GAAP number. In addition to that, I would point out we spent $90 million of leasing CapEx that we expensed in 2020, and we only committed less than $50 million of leasing CapEx in 2020. Typically, what we commit foreshadows kind of what we spend going forward. Now, I think it's unlikely that we would have a $40 million reduction in leasing CapEx spend year-over-year. I think that's probably more aggressive than we would assume, and obviously that's pretty lumpy. We do think that it's likely that leasing CapEx in 2021, at least in the base case that we've laid out in the guidance outlook, is likely to be a little bit lower than what it was in 2020. The combination of more cash from rents that are commencing and likely lower leasing CapEx means we expect dividend coverage is likely to improve as we think about 2021 versus 2020. I, again, point out that we've been saying that for a while, that we feel like the cash flow outlook of the company is strengthening. We think 2021 will be a good example of that. Perfect. Last one from me, maybe for Ted or Brian. Can you talk about the acquisition prospects out there? Are you guys focused on any market in particular, like growing in Charlotte? Can you comment on whether you'll be looking at core deals, which I think, as Brian mentioned, make up the majority of deals that are being marketed right now, or do you have enough conviction in the markets to bid on anything that might come to the market with a value add component at this point? Sure, Blaine. This is Ted. Look, we look at everything that's out in the market, whether it's core value add, core plus, opportunistic. What we look at are, is it in a BBD? Is it an asset we want to own long term? Is it priced appropriately on a risk-adjusted return basis? As you mentioned, as we've said on our prepared remarks, core acquisitions today are very aggressively pursued and really haven't seen any price deterioration from the start of COVID. On the value add deals, we're looking at all those, but it's got to be priced right. We're looking at it from a lease-up perspective. What do we think market rents are going to be? Clearly, if it's in a market that we're in, we understand the current dynamics of the leasing market. If we can underwrite it based on our assumptions that we feel like we can get a good risk-adjusted, stabilized return, we would absolutely chase value add as well. All right, great. Thanks. Our next question comes from Manny Korchman with Citi. Please proceed. Hey, good morning, everyone. Brendan, at the beginning of your script, I think you went through a few risks that could come from the pandemic, and the potential pressure on tenants from that. In the 10-K, you had similar language. How are you thinking about sort of those bigger risks versus how you're planning for whether it be the year or the next couple of years? The risk factors, Manny, this is Ted. Obviously, the risk factors we put in the 10-K, it's sort of just required. We've got to really put the kitchen sink in there. Look, our outlook that we've got in our guidance reflects the current situation we're in. We're in a recession. We're still in the middle of COVID-19. I think, the way we put out guidance, the range we put out really factors in all of the risk factors that we've laid out in the 10-K. It just factors based on where we are in today's environment. Was that your question? Yeah, I think so. You talked about some out-of-towners looking at space in your portfolio. Are the characteristics or sort of the requirements of those any different from the in-market users that you're talking to or seeing? No, not really. Again, it's a combination of smaller companies that are looking to expand their office here, just access to talent and labor. It's the same thing we've really seen for many years now. The larger customers, it's the same thing. If you just think about just in the last couple of weeks, there's been three announcements in our markets of new inbound announcements, two in Raleigh. Gilead is creating 275 jobs, and PennyMac is, I think, 322 jobs. Both of those announcements were in the last week or so. They both cited it's all the things we talk about, the migration to the Southeast. It's the high-quality talent, low cost, low tax, high quality of life, all that. I think they're looking to just access that and get out of some of the higher cost cities. Hey, Manny, it's Brian. Maybe just to pile on a little bit, We've talked about this previously. I think what we're hearing and thus seeing is that while prior to the pandemic, a lot of these moves might have just been around affordability. A lot of these conversations that we're hearing now is really about the talent. If we remember 1% of an organization's annual investment in their business is around utilities, 9% is on their real estate, 90% is on their talent. They're seeing that these markets and then sub-markets or CBDs are the places for them to retain and recruit the talent going forward. From what I think what we hear, it's really a 90% kind of decision-making that supports their 9%, which obviously these markets are competitive from an affordability standpoint. Thanks, Brian. I have one more for you. You talked about the 8% rolling in 2021 and again in 2022. If you had to predict how much of that becomes sort of typical long-term leasing versus the shorter term that led to maybe some extra influence in the 14 numbers. Which way would you lean on that 8% expiring this year? Well, good question. Well, one thing I might also just put as a footnote to your question, Manny, is the amount of firms that we're still seeing kind of coming out of the space and maybe going to work from home, most of them on a temporary basis, are still very small in number and size, 1,500 sq ft, 1,700 sq ft. If they're still in business, all of them are saying that they plan on coming back, but they have the ability and flexibility to wait it out. We are seeing interest of those that are looking to kind of renew, looking at longer terms, because I think folks, let's be honest, it's a little bit more of a tenant's market, and they see the opportunity to kind of make a commitment long-term. We aren't seeing reconfigurations, particularly folks kind of downsizing. I think they're balancing the need for maybe more square feet per person and their plans for a flexible workplace. I think we'd see that fairly consistent. Brendan, do you have a perspective on that as well? Yeah, Manny, I think likely at least what's kind of our base case expectations is they'll probably be a comparable amount in the quarters, at least as we've kind of laid out the expectations for 2021. I don't think we expect some major snapback in terms of net effectives or lease terms extending out. We'll see how that plays out, and that's part of the reason why we have a range of possibilities in our 2021 outlook. Great. Thanks all. Our next question comes from Jamie Feldman with Bank of America. Please proceed. Thank you. Good morning. I guess sticking with the 2021 outlook, maybe if you could just talk us through how you got to your base case general assumptions and maybe where there's meaningful room for upside or potentially downside, the key drivers that would really move numbers. Yeah, Jamie, I'll start and maybe turn over to Mark or Brendan. Look, obviously the base case is we start at really it's no different than any other year. It's a sort of bottoms up from a leasing standpoint. We hit that. This year was, look, a little more difficult on the OPEX side, just given COVID. Last year was not a normal year on the OPEX side, on the parking side. It was virtually everything we do is bottoms up and drilling down and building by building, line item by line item on the budget. That's sort of just an overview. Brendan, do you want to run through sort of the nitty-gritty? Sure, Jamie. As we tried to lay out in the press release, I think we took a fairly conservative view with respect to OpEx. I think the increase in OpEx is not linear to the increase in utilization of the buildings. That's why we saw at the midpoint about a $0.06 headwind in 2021 versus 2020, even though we don't expect utilization to improve significantly until the back half of the year. I would say that that general outlook with respect to utilization mimics the leasing assumptions that we have in our outlook range. We don't expect a lot of lease up to happen, and what's likely to happen for us in occupancy is we will probably have occupancy dip in the first quarter. That is a normal seasonal pattern for us. Often what happens in a normal year is we make that back up in the remaining three quarters of the year. This year, we think that it will dip a little bit and then probably not make nearly as much of that back as we often do in a normal year. Okay. That's helpful. As we think about sublease has been rising in some of your markets as well as some of the markets we hear about where it's really spiked. Can you just talk about how much you think that space will impact market conditions and economics going forward, and how much you think is going to come right back off the market as soon as things reopen? Sure. I'll start, maybe Brian can jump in, add additional color. Obviously sublease space, I think it's rising in maybe all but a couple of our markets. We've seen some sublease space is competitive. In fact, over the last nine months, we've lost a couple deals to a sublease space. At the same time, not all sublease space is created equal. Some have short terms. The lessor may not provide TIs. There's no renewal options on most of this stuff. We've actually even heard from brokers that companies are just putting it out there because they're not at work right now anyway. They're just putting it on the sublease market to see if there's a taker. They think the company's actually going to need it when they come back to the office. Look, I think the other issue is creditworthiness of the sublandlord is also a question these days, and we've heard a little bit about the subtenants are worried about what if the primary tenant goes bankrupt, what's going to happen to their rent and all that. Again, while there is definitely some competitive sublease space, not all of it is. How that plays out, it's sort of building by building, sublease by sublease. I think some's competitive, some's not. Hey, Jamie. Brian here. Good morning. To Ted's point, it's kind of a broad spectrum. Just to give you some bullet points. Richmond and Pittsburgh, total sublease space was down. In fact, JLL is calling for 46% of Richmond sublease to be absorbed in the first half of 2021. Atlanta, where it might look like a large nominal number, Cumberland, Buckhead, Midtown sublease space is all down. The sublet space comes with some interesting handcuffs, too, in terms of who goes in there. Is the sublessor ready to write a check for TI or not? I think a lot of it is opportunistic. We haven't seen it drag any fundamentals down yet in terms of competitiveness across the board. Maybe anecdotally one or two. It's obviously something we are tracking daily, in fact. Okay, that's helpful. Are there certain markets you're more concerned than others? No, I don't think so. Maybe a quarter or so ago, we might have said, look, Atlanta looks like they have a lot of sublease space, and then you start seeing it disappear in the submarkets. You look at Highwoods' portfolio alone, our sublease space within our portfolio has gone down in Atlanta and in Pittsburgh and in Richmond. I think we're looking across the board. Our previous markets that were, and continue to be, a lot of the areas of inbound activity, Atlanta, Nashville, Raleigh, Tampa, that's also where we're watching the sublease space grow and compete. Okay. Finally, you had mentioned solid interest for 5332 Avion and Midtown West. Can you just talk about what that pipeline really looks like? I guess throw Virginia Springs into that mix as well. Sure, Jamie. A couple things as you look at those two Tampa assets. We just finished construction of repositioning of Avion, it wasn't really even available to be seen. Now that it's kind of shiny and new, there's been a lot of great interest, and there's three hotels right next to it. There's a World of Beer that's still pretty popular, we're getting some good traction there. Plus you've got Fanatics in the building showing it being used, and it's a very kind of young and exciting company, it definitely shows well. Going to Midtown, I have experience over my 25 years working in these kind of complicated mixed-use developments. What's so key is delivering enough critical mass at once to kind of create the there there. That's one thing that Midtown is actually doing. The two hotels opened up right before the Super Bowl. The restaurants are finishing up, Midtown hasn't even really been open for people to experience the live, work, play aspect of it. Now that we have the elevator working, we can take people up on a hard hat tour. There's a lot of folks coming now, we're moving the marketing center into the building from a trailer. That is real. Having experience like this in other markets and other projects, once it's actually open and people can walk the streets and go to Shake Shack and then catch a concert in the park, it'll really get its sea legs under it. Just as a reminder, Midtown is delivering in the 2nd quarter of this year. We haven't underwritten it to stabilize until the 4th quarter of 2022. To your point on Virginia Springs and Brentwood and Nashville, that just recently delivered, and we've kind of projected that to stabilize in the third quarter of 2022. Its sister building, Virginia Springs 1, as you know, is full next door. Those two buildings coming together now have a whole set of outdoor amenities. We're pursuing some additional certifications for that building that we'll be sharing with the market. It's the best-in-class building in the entire 6.2 million sq ft Brentwood submarket. Now that you can actually show people the space, get them out there, all teams in Tampa and Nashville have been very busy with tours and inbound interest in those two or three assets, actually. Okay. You're saying Virginia Springs is seeing a similar uptick in interest as the other two you mentioned? I think so. I think it's different, right? Brentwood is a different submarket, very suburban, drivable, surface parked, stable kind of submarket. Midtown is a very shiny and new dynamic Westshore market. It's a little different vibe in Brentwood. You also have some bigger users who could take a couple different floors. I think it's different, but we're happy with the activity that's occurring right off the bat in 2021. Yeah. Jamie, I'm looking at the prospect sheet. We've got about 280,000 square feet of prospects. Some of those are suspects as well right now. They're people that are touring, or their brokers have asked for brochures, information on pricing and all that. It's a pretty solid list, just given that we're still in the pandemic and a lot of companies, especially the bigger companies Brian alluded to, aren't making those type of decisions yet. Just to get the inquiries, I think is good. In Tampa, our prospect list is right at 200,000 feet. Actually, most of those have actually done the hard hat tours and coming back for either second tours or asking for more information as well. The activity's significantly picked up from what it's been over the last six months in both those assets. As they get completed, you can see what they're going to look like and what the surrounding area's like. I'm encouraged, but again, I wouldn't say anything's a strong prospect yet, but we like the general activity. Okay. All right. Thank you. Our next question comes from Robert Stevenson with Janney. Please proceed. Good morning, guys. Brian, can you talk a little bit more about your market expectations for 2021? Overall, the best markets in 2021 be the same from 2020? You expecting any meaningful improvement or deterioration in any markets? Hey, thanks for the question, Rob. Maybe taking that last part of the question first. No, I don't think we see any notable expected deterioration in these markets across the board. Those that were performing well pre-pandemic have seen accelerated inbound interest. While there was more of a natural flow, looking at the great migration, I think we're seeing an increase. Again, the economic developers are saying they've never been busy. The pipeline's never been more full. The prospects, to Ted's point, and suspects have been busy. Atlanta has obviously seen a number of wins there. Microsoft isn't just growing by 1,500 people in Midtown. They're buying land to the west side, the emerging area. They're doing a cloud computing center south of town. Nashville, we're seeing lots of inbounds from the West Coast. Chicago, folks coming in through our kind of different fields we have out there. Obviously Raleigh with the life science and technology inbounds. We're talking $ billions of new investment, some that probably aren't even getting above the fold. ApiJect Vaccine is building a giga factory. It's an $800 million investment. It's a 1 million sq ft facility here in Raleigh. It'll have 650 jobs. They'll be able to create 15 different drugs simultaneously, 8 million a day of prefilled injectors. Just stuff like that is happening in Raleigh through the pandemic. Look at Tampa. Tampa winning Pfizer's interest in investment of over 100,000 sq ft. That can't be understated in terms of Tampa's now joining kind of elite company in this country of winning kind of the economic development competition. Okay. I guess as part of that, which markets do you have that are expected to be at or above the sort of 5% high-end same store NOI growth range, and which markets are going to be below sort of 3% as we start thinking about the contributions to earnings in 2021? Hey, Rob, it's Brendan. Yeah, it's probably from a cash perspective, which is where we provide the outlook. I think it's going to be a little bit more asset specific associated with some of that conversion of straight line rent to cash rent. I mentioned 5332 Avion probably be the largest example of that. Also, another asset in Tampa where there was some straight line rent that will convert to cash in 2021 compared to 2020. Atlanta has a couple of assets that are in that category as well. Those would probably be the major ones as I'm sort of running down the list here. It'll be a little bit more asset specific than it would be necessarily driven by market dynamics. Okay. Last one from me. How are you guys thinking about the remaining JV assets? Are there more buying opportunities in there? Is there a source of dispositions in 2021 there? Continue to just hold them, and can you remind me if any of the JVs are coming up on a sunset? Sure. This is Ted. We've really only got five buildings left in JVs and three JVs. We still have, just to remind you what they are, we've got a three-building JV with our customer in Richmond. No end date on that one. We've got a JV on Midtown Development project as well in Tampa. That's the second JV. The third is we still have a 50/50 JV with a local partner in Kansas City. I'd say if there's any of the three, the Kansas City one, just given we sold the plaza, will be one that we would exit out of. Unlikely from a buy perspective. Down the road, obviously, we're going to want to own 100% of Midtown Tampa, and that's provided for with our development partner. Other than that, Richmond, we'd buy those assets. Again, that JV's no time soon probably going to unwind that. Okay. Thanks, guys, appreciate it. Our next question comes from Dave Rodgers with Baird. Please proceed. Hey, guys. Thanks for all the information so far. Brian, maybe you wanted to go to some of the expirations and the renewals that you're doing. One, you mentioned nothing over 100,000 square feet coming up here in the near term. If I remember it, you had three 50,000 square footers maybe rolling out. Is that number growing, changing, evolving? Then maybe a second more qualitative question on the expirations and renewals. Are you having discussions for swing space? Do people want to redo their space? Are those discussions happening or is it just a, "Hey, I'm contracting, I'm expanding, I'm exiting," without a really repurposing of the space? Hey, Dave, it's Ted. I'll maybe start out, and Brian can jump in. In terms of the expirations we have remaining for this year, there's a 75,000-footer that's at the very end of the year in December 1st, actually. They're still a prospect to renew. It'd be a downsize if they renew. That's not COVID-related downsize. It's something we've known has been out there for a while. Then we've got really two right at 50. One of the 50s is in September. That's likely a downsize. We think we've got a decent chance of renewing them for one floor. Then we have another 48,000 that just left February 1st, and we've already backfilled about 9,000 feet of that. Those are really the last remaining three we've got for this year that are in that size. After that, it dips down to about 35,000 feet or so. In terms of swing space to redo their space, we're really just not seeing much of that yet. The companies are still holding back, deciding what they're going to do. The small companies, most of those folks are already in hard-wall offices. The density's not very great anyway, so they're not going to redo it. The bigger companies that have more dense space, they're still figuring it out. A lot of them don't want to spend money yet. Again, it's the same thing we've been seeing for really the last nine months. They're waiting to get their employees back. They're certainly planning behind the scenes, but there hasn't been any mass inbound calls for us to help give them capital to redo their space or things like that. Hey, Dave, just to kind of, not to contradict what Ted said by any ways, there are a few that are not in the space now working from home that see this as an opportunity to naturally do work in their space and not necessarily put plexiglass and spread out. It's time, they've been in the space for a while, time to upgrade and redo. We have seen some folks being opportunistic and saying, "Hey, right now, we don't have to go through the nightmare of redoing our space while we're in it." I think some folks are realizing there's an opportunity to do that. That's helpful. Thanks for that. Maybe Mark or Brendan, it looked like there was maybe a million and a half or so of lost revenue, whether bad debt or straight-line rent write-off in the fourth quarter. Can you confirm kind of where that was? What's the expectation in your guidance for 2021 for any kind of bad debt or losses, or are those largely out of the mix at this point? I'll start with that. I think Mark's confirming the fourth quarter number. That sounds about right, I think we'll give you confirmation on that number. In terms of 2021 expectations, at least in the call it midpoint of the outlook, is more of a normalized year. Would be more comparable to 2019 as opposed to 2020. 2020 wasn't a year that was, I would say, dramatically different from a straight-line rent write-off perspective, it was a little bit higher than normal to the tune of call it maybe $3 million-$4 million higher than a normal year. I think for 2021, we expect it to be back in line with the 2019 levels and prior years. Dave, the only thing I'd say additive is, yeah, we did have that $1 million. You're correct on that. We did have, as you know, amenity co-working and some retail amenity customers that we had some write-offs on during the year. Our collections continue to be really strong. Obviously, the 99% plus numbers we've quoted you. Our watch list doesn't really have any material risks on it. We obviously have a watch list process that we go through every quarter. Overall, we couldn't be happier about the collection, and Brian and the divisional folks have done just a great job of staying after all this. We feel really good about where we are, including collection of the deferrals. From a credit and collections perspective, we couldn't be happier. Mark, maybe let's finish up with you. I think in your prepared comments, you said that the severance in the fourth quarter was unexpected or something along those lines. Anything there related, was it development? Was it just kind of leaning out with COVID? A broad color there would be helpful. Yeah. Listen, as everybody kind of prudently manages the business, we obviously earlier in the year had some of the impact of the market rotation plan of getting out of Memphis and Greensboro. We've just looked for efficiencies all across our business. We've obviously had less travel, less activity, less showings, all those things that have kind of impacted our business. We did make some adjustments in the workforce and took that severance charge. We obviously didn't have that in our outlook, so that's kind of how we've talked about it. Okay, great. Thank you. Sure. Our next question comes from Venkat Kommineni with Mizuho. Please proceed. Hi, good morning. Just a few quick ones. Over the last two quarters, you guys have mentioned that utilization has tended to be higher among smaller tenants versus larger. If you had to break that out, what do you think that utilization figure is for both segments? Great question. I'm not sure I'd break it out by market, but I don't know. Is it 50% and 15%? Something along those lines. Very few large companies are coming in, or if they are, it's a skeleton crew. One big example for us is Charlotte, where we've got Bank of America as a large customer there, as well as an accounting firm, KPMG. They have got skeleton crews and big, large customers, and we've got a couple smaller firms also in the building, and they're back in the office. I think it just depends on the large company and the mix we've got. I'd say somewhere in that range. I might add on that it feels like 100% of the law firms are back in. Yeah. Accounting firms. They've been busy and working through nonstop. Okay. Of the 100-150 potential dispositions in 2021, how much of that is part of the market rotation program? I think you mentioned in the prepared remarks there's a building in Memphis, a four-property park in Greensboro. Just wondering what that kind of dollar figure looks like. Sure. If we sold all of those last remaining five buildings, I'll call it $90 million-$100 million, so that if we sold all that'd get us close to the bottom end of the range. Our midpoint of our range does include a few assets that are outside of those. Again, it depends on pricing, and all of that is with respect to whether we sell all of the remaining Greensboro and Memphis assets. Okay. Apologize if I missed this in your prepared remarks, Brian, on rent deferrals, how much do you expect will be repaid in 2021? Should we expect around three and a half million based on five and a half deferred and $2 million repaid so far? Thanks, guys. It's Brendan. I'll take that one. It's probably, on a net basis, going to be $1.5 million-$2 million kind of net positive cash that will be repaid in 2021. There's a little bit of nuance kind of into some of those numbers because there are some customers where we provided temporary rent relief based upon percentage of sales. There could be some additional deferrals that happen in 2021. The net impact is about $1.5 million-$2 million positive on cash versus GAAP in 2021. Hey, Brendan, maybe to add, and not to be overly optimistic, but prior to the Thanksgiving spike, we saw a number of those, say, restaurants or folks on that% rent actually start to get a good amount of business and get close back to their contracted rent. Obviously, that kind of hit the wall a little bit into the end of the year, so that might be an area that we continue to look for as people return to some kind of normalcy. Great. Thank you. Our next question comes from Vikram Malhotra with Morgan Stanley. Please proceed. Thanks for taking the questions. I apologize if this was answered. I jumped on late. Sort of thinking of the potential rebound, like you alluded to, in the sublease space potentially coming down in the back half or these JLL highlighting that, and there's still a decent amount of interest in terms of the pipeline. I'm wondering, as you talk to your tenants or potential tenants, any insights into kind of their posture in terms of their ability, their desire to grow, and where specifically in your markets are new tenants that may be considering relocating from the coast growing in a post-pandemic world? Sort of in a work-from-home environment that may persist in a hybrid way, which seems to be what we're hearing from a lot of corporates. What are you seeing specifically in your current tenant base? New tenants, what type of buildings or sub-markets are they considering? Pardon me, sir, we cannot hear you at this time. I'm sorry. Is it better now? Yeah. I'm sorry. I think that was on our end. What we're hearing from our customers, first and foremost, we need to get them back in the office. What we're hearing is they're ready to come back in the office. They're ready to get their employees back in the office. They're not going to be work-from-home companies, is what we're hearing from a majority of our customers. What that looks like when they're not going to be a work-from-home company. Are they going to go to a hybrid model or the hub and spoke? I think it's still too early to tell. I think what we are hearing is there's going to be more flexibility, right? Customers are going to have some of their employees and some of their departments working at home for some of the time. Again, what that looks like, are they going to have assigned seating? Are they going to have hot desk where you just check in, check out over time? I think that depends on the company, the industry, the department that our customer is using the space for. I don't think there's any one size fits all or one solution that fits all for all of our customers at all, by any stretch. In terms of the locations, look, I think, CBDs, they want an amenitized submarkets is what we continue to hear. It doesn't necessarily have to be urban markets, right? I think the suburban, or cut down on their employees' commutes, so we can provide some of the flexibility that way. You're seeing a little bit of that, but not a lot yet. Again, I think it's early, and it's going to take a while to play out. In terms of the customers you say prospects that are inbound, it's sort of the same thing, right? They're looking at our markets for a reason. It's all the reasons we've talked about. It's low cost of living, high quality of life, adjacent to a highly educated workforce and so forth and so on. Once they find that market, they want to be in the amenitized markets, whether it's urban or suburban. I think it's very similar, whether it's an inbound or existing customer base. Got it. Okay. That's helpful. Then just on the debt stack sort of going forward, just sort of wondering your ability, looking out a couple of years, your ability to maybe get at some of that debt. Maybe you alluded to some of this in sort of 2020, just looking forward, any plans to potentially kind of get a little ahead of kind of some of the maturities? Vikram, it's Mark. We are fortunate to have a really clear maturity ladder here. We've got $150 million bond, half of a bond that we paid part of in 2020. We'll pay that off on April 15th. No maturities after that in 2021. 2022, we've got a late maturity of a bank term loan that's a floating rate, LIBOR, and just a portion of it's fixed, but most of it's floating, so it's very low cost. A bond in 2023. Nothing on the immediate short-term that we could go grab efficiently from an economic perspective. We've got open years, three or four open years after those years. Really good shape from a debt stack perspective. Okay, great. Thanks so much. Our next question comes from Chris Lucas with Capital One Securities. Please proceed. Hey, good morning, everybody. I guess, follow-up on some earlier questions. Just as it relates to tenant retention, what was that in 2020? Sort of what is embedded in your 2021 outlook? Hey, Chris. It's Brendan. It depends a little bit on how you look at that, because we did a lot of early renewals of natural 2020 expirations in years prior to 2020. When we think about the overall retention level, that was probably in that 60%-65% kind of range when we thought about the natural 2020 expirations. If you compared it to this point in time last year, what we had remaining that expired, it was significantly below that level. I would say the same thing is the case with the remaining 8% that is remaining to expire in 2021. The closer you get to the expiration dates, the likelihood on renewing those is low because typically we're going to do that ahead of time. What we have programmed in our 2021 outlook with respect to the remaining 8% of expirations is low. It's probably a little bit lower than a normal year, given the economic environment and the pandemic still going on. It's certainly well below that normalized 60%-65% when you look a few years out. Okay. I guess, any themes that you guys have picked up as it relates to tenants you don't renew? Is it consolidating locations? Is it shrinking the footprint, growing the footprint that you couldn't accommodate? Any themes that you might want to discuss? Sure, Chris. It's Ted, Maybe Brian can jump in. Really, I don't think there's a lot of themes other than we're not losing a lot of customers to other buildings. Obviously we're a pretty big landlord in all of our markets. We try and accommodate. If we can't accommodate a customer in the existing space, we've got plenty other space we can typically use. The only thing I would say, we're not losing a lot to other competitors. It's a regional office that's closing. It's a small company that's contracting, whatever, or pre-COVID, they're going to work from home indefinitely, or they're just consolidating to two or three offices. Several different instances. I don't think there's any one theme there. Ted, following up, some we've actually been the beneficiary of, where some companies have bought other companies and consolidated into our portfolio. Other than those anecdotal, smaller really from 1-3,000 square feet folks who have gotten to their natural end of life of their term, decide to work remotely and let the dust settle before they come back. Okay. Last question from me. Just as it relates to co-working space, you guys have been very light on that historically. Any updated views on that as it relates going forward post-pandemic? Sure. Look, I think just a reminder, we've got 10 different locations. Little over 1.2% of our revenues is co-working. That's split between Industrious and Regus. We don't have any WeWork exposure. Look, I think that model continues to be ripe for consolidation. I think obviously the pandemic exposed the risk of having long-term liabilities and short-term leases. A lot of the co-working operators have struggled, and we've seen that. I think long-term, there's a place for flexible space in our portfolio. I think it's just going to take a while to play out and see exactly what does that look like. We're firm believers in flexible space, whether it be co-working or some other version of that going forward. We're constructive on the concept overall, but it's going to go through a consolidation and sort of revamping of their business model somewhat. Okay, great. Thank you. Go ahead. There are no further questions at this time. Well, thank you everybody for being on the call this morning, and thank you for your continued interest in Highwoods, and we look forward to talking to you next time. Thank you. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone.