Good morning, and welcome to the Highwoods Properties 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, July 28, 2021. I would now like to turn the conference over to Mr. Brendan Maiorana. Please go ahead. Thank you, operator, and good morning. 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, including the ongoing adverse effect of the COVID-19 pandemic on our financial condition and operating results. These risks and uncertainties 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 forward-looking statements. With that, I'll now turn the call over to Ted. Thanks, Brendan, good morning. Let me start by saying we continue to see an increase in more normalized activity across our portfolio and markets. It remains difficult to predict the progression of the pandemic and economic recovery, particularly given the concerns over variants. The leasing and parking are both recovering nicely. Utilization rates have risen throughout the second quarter and are currently around 40% across our portfolio, up from 30% last quarter. Based on discussions with our customers, we expect a meaningful increase in utilization after Labor Day. As I mentioned on our last call, leasing activity in the first quarter was relatively solid, especially for new deals. This trend accelerated during the second quarter as we signed 899,000 sq ft of second gen leases, our highest total since the fourth quarter of 2019 and included 323,000 sq ft of new deals. This is above our long-term average of 250,000 sq ft for new leases. We signed 52 new deals, also above our long-term average and our highest quarterly count of new leases since 2014. Obviously, the strong leasing activity in the quarter hasn't yet shown up in our occupancy stats where we ended the quarter at 89.5% across the entire portfolio. This leasing will benefit us in future quarters as our new customers move in. With the improving macro environment, especially in our markets, we're optimistic going forward. Rents on signed leases continue to be a little softer than they were pre-pandemic, but we believe are holding up reasonably well considering the challenges over the past 18 months. For the 899,000 sq ft of second gen leases signed during the quarter, rent spreads were down slightly at - 0.6% on a cash basis, while up 8.9% on a GAAP basis. Overall, since the start of the pandemic, net effective rents across our markets are down on average 5%-10%, primarily as a result of higher concessions. Fortunately, net effective rents have stabilized in the first half of the year. Further, we continue to see a migration to higher quality buildings with well-capitalized owners, which plays to our strengths. Our results. We delivered FFO of $0.93 per share in the second quarter. Our same property cash NOI growth was very strong at 11.1%, which benefited from the payment of temporary rent deferrals agreed to during the first months of the pandemic. Excluding these repayments, same property cash NOI growth would still have been a robust 5.3%. As illustrated in last night's release, we have updated our 2021 FFO outlook to $3.62-$3.73 per share, up $0.075 at the midpoint from our prior outlook. At the midpoint, $0.03-$0.04 of the increase is due to our improved operational outlook, and $0.04 is from the anticipated net impact of our planned investment activity, which consists of the PAC acquisition and the sale of an additional $207 million-$257 million of existing non-core assets by year-end. In addition to the increase in our FFO outlook, we also raised our same property cash NOI growth outlook to 4.25%-5.5%, up 50 basis points at the midpoint. We have increased the low end of our occupancy outlook. Our new range is 89.5%-91.5%. Moving to investments. As you all know, we have agreed to acquire a portfolio of office assets from PAC and accelerate the sale of $500 million-$600 million of non-core assets by mid-2022. We're excited about doubling our presence in Charlotte and entering the BBD, adding to our leading position in downtown Raleigh, and entering the North Hills BBD in Raleigh. We closed one disposition in the quarter, 100% leased Preserve VII property in North Tampa for gross proceeds of $43 million. We have numerous other non-core properties in various stages of the marketing process. Our disposition plan is tracking our expectations, both in terms of pricing and timing. We believe we are well positioned to meet our target of $250 million-$300 million of non-core sales by the end of 2021, including the $43 million already closed. As I mentioned, while we are highly focused on closing the portfolio acquisition from PAC and executing on our non-core disposition plan, we continue to assess additional investment opportunities. Outsized job growth and population growth continue to fuel interest in Sunbelt markets. Which has caused pricing for high-quality assets in the BBDs of our markets to remain competitive. Rest assured, we will continue to be disciplined allocators of capital and seek only those opportunities that we believe provide healthy risk-adjusted returns. Turning to development. Our pipeline is $394 million and 78% pre-leased. Our $285 million Asurion project in Nashville is on time and budget and will deliver in the fourth quarter. At Virginia Springs II, our recently delivered project in the Brentwood BBD of Nashville, we signed two leases totaling 20,000 sq ft during the quarter, which brings the lease rate to 50%, five quarters ahead of pro forma stabilization, and we have strong interest in additional space. Finally, at our office project in Midtown Tampa, while we didn't find any leases during the quarter, we have strong interest from a number of prospects and remain confident in the long-term outlook for the development. The overall Midtown mixed-use project is just now finishing up, with additional retailers opening by the day. There's growing energy around the project, whether from prospective office users, new residents, hotels, or customers shopping and dining. We are starting to see increased interest from prospective build-to-suit and anchor customers. We believe this is another sign of a return to healthy office fundamentals across our markets. We have up to $250 million of potential development announcements in our 2021 outlook for the land bank that can support more than $2 billion of future development. We hope to announce new projects later in the year. Two other items before I turn the call over to Brian. First, we announced a $0.50 quarterly dividend last evening, which equates to an annualized amount of $2 per share. This represents an increase of 4.2% over the prior amount, is our fifth dividend increase since the start of 2017. We've long stated that our cash flow continues to strengthen, which provides strong dividend coverage even with our higher payout. Second, as we also announced last evening, Mark plans to retire at the end of this year. Mark has been an exceptional contributor to Highwoods over the past decade, first as a board member, and second as our CFO. I know I speak on behalf of the entire Highwoods family when I say it has been our privilege to work alongside Mark. Under Mark's stewardship, we have maintained a fortress balance sheet, continued our longstanding practice of candor and transparency, and further strengthened and streamlined our already strong financial reporting and accounting processes. We wish Mark, his wife Kelly, and the rest of the Mulhern family the best as he promotes himself into retirement. I'm thrilled that Brendan will assume the CFO role upon Mark's departure. As you all know, Brendan has been a key contributor to our leadership team since his first day at Highwoods in May of 2016, and he has been deeply involved in all of our strategic investment and financing activities. We expect a seamless transition. Brian? Thank you, Ted, and good morning, everyone. With two quarters behind us, it's become apparent that the portfolio resiliency we highlighted last quarter is proving the able foundation from which our team is delivering solid results. Our markets are open for business. Our customers have returned or are returning to the office, and most customers see the workplace as an important tool in delivering results. There are signs across the portfolio that give us optimism for the future, from in-office utilization rates in Orlando that have climbed over 60%, to Nashville's airport surpassing 2019 passenger levels, to one of our downtown Pittsburgh restaurants achieving sales 20% higher than at the same time in 2019. Couple these anecdotal signs of life with major job announcements made since the start of the pandemic that represent 50,000 new jobs and over $7 billion of direct investment, there's an undeniable momentum and a return of optimistic sentiments permeating our markets. With regard to our customers who merited a rent deferral during the depths of the pandemic, over 80% has been repaid on schedule. For those restaurants repaying via percentage rent, the majority should be back in the black early next year. With these needs-based accommodations playing out as underwritten, this is hopefully the last time we'll need to discuss this subject on a call. As Ted highlighted, leasing accelerated in the second quarter with Raleigh, Atlanta, Nashville, and Richmond representing 75% of our total volume. Occupancy was relatively flat sequentially, ending the quarter at 89.5%. As stated last quarter, we expect occupancy to remain steady throughout the third. Given our strong leasing activity and positive overall market fundamentals, we are confident this will improve in future quarters, as reflected in the midpoint of our updated year-end occupancy outlook. Now, to our markets. After weathering the pandemic, Atlanta, Charlotte, and Raleigh posted positive net absorption for the quarter, and Raleigh led the pack this quarter with 321,000 sq ft signed. Occupancy in Raleigh decreased slightly from last quarter, ending at 90.6%, with market rents up 4% and office employment growth up 4.5%, both on a year-over-year basis. All of this is before the impact of recent announcements by Google and Apple that will add thousands of new jobs to the market. In Nashville, we signed 106,000 sq ft and end of the quarter at 94.1% occupied. Our 111,000 sq ft Virginia Springs II development project is now 50% pre-leased, and we have solid interest in the balance. This project is scheduled to stabilize in the third quarter of 2022. We remain on schedule and on budget with Asurion's global headquarters and look forward to placing this $285 million asset into service in the fourth quarter. As noted earlier, Music City is back in business, with travelers outpacing 2019 levels, including 350,000 downtown for July 4th. On the jobs front, positive momentum continues in the city where Oracle has now closed on approximately 60 acres for their billion-dollar campus, where they plan to hire over 8,500 new office using employees. Amazon has commenced construction on the second tower for their Operations Center of Excellence, a sign they expect to continue hiring workers in the city to fulfill their 5,000 job goal there. Moving on to Atlanta, where our team signed over 150,000 sq ft of leases in the quarter. Year-over-year, office employment growth was 6.1%, higher than the national average of 5.5%. The Atlanta market experienced positive net absorption in the quarter, while market rents dipped slightly, down less than 1% year-over-year. Not to be outdone by its bigger rivals, Richmond leased over 98,000 sq ft for the quarter and is off to a great start in the third quarter, with interest from tech, insurance, and construction prospects. Overall, we're encouraged by the strong new leasing activity our team delivered in the first half of the year, and we're off to a solid start early in the third quarter with several new leases already signed and good prospect activity across our markets. To close, our markets and portfolio continue to not only show their resilience, but are centers for activity and growth. While we readily acknowledge that how and where people can and will work has been influenced by the forced experiment we've all been subject to these past 18 months, we are more enthusiastic than ever about the power of place in cultivating talent and culture, solving problems, and achieving great things. It is through our workplace making efforts that we enable our customers and their teams to achieve together what they cannot apart. Because of this, we remain bullish on the days ahead. Mark? Thanks, Brian. In the second quarter, we delivered net income of $59.3 million, or $0.57 per share, and FFO of $99.5 million, or $0.93 per share, an increase from $0.91 in the first quarter. The quarter included the $43 million sale of Preserve VII, which did not have much of an impact on our financial results since it didn't close until late in June. In other words, this was a relatively clean quarter without unusual items. Our results benefited from a full quarter contribution of The Forum, where we acquired our partner's 75% interest for $138 million incremental investment in January, and included a full quarter of NOI from our GlenLake Seven development. As a reminder, GlenLake Seven is our $44 million, 125,000 sq ft development in Raleigh that is 100% leased and was delivered in March. In addition, we had higher same property NOI growth. The combination of these items, approximately $0.01 from net investment activity and $0.01 from higher same property income, drove the $0.02 sequential increase in the quarter. Our balance sheet is in excellent shape. In April, we used cash on hand plus borrowings on our revolver to repay at par the remaining $150 million of notes that had an effective rate of 3.36%, two months earlier than the stated June 2021 maturity. We funded $55 million of earnest money deposits for the planned acquisition of office assets back in the second quarter and deposited another $5 million subsequent quarter end. This leaves approximately $200 million of cash required to initially fund the remaining cash portion of the purchase price. We have multiple sources of available liquidity to satisfy this obligation, including a six-month unsecured $200 million bridge facility that we expect to obtain from JP Morgan. Nearly $600 million of remaining capacity on our $750 million revolver and $43 million of 1031 exchange funds held in escrow from Preserve VII. Said differently, once we close the PAC acquisition, we will still have plenty of liquidity available for potential future opportunities. Further, we are 87% funded on our $394 million development pipeline, which leaves roughly $50 million remaining to fully fund the three remaining projects, and we have no debt maturities until November 2022. During the quarter, we issued a modest amount of shares on the ATM at an average price of $46.11 per share for net proceeds of $6.8 million. This is our first issuance since the second quarter of 2017. ATM issuances remain one of the many arrows in our quiver, and we continue to believe are an efficient and measured way to fund incremental investments, particularly our development pipeline, on a leverage neutral basis. Turning to our expectations for the rest of the year, we've updated our 2021 FFO outlook to $3.62 - $3.73 per share, with the midpoint up $0.075 since April and up $0.095 at the midpoint from our original 2021 outlook provided in February. Rolling forward from our prior outlook in April, we have increased the midpoint $0.035 on an apples-to-apples basis, or up $0.06 at the low end and $0.01 at the high end. This improved operational outlook is driven by higher same property NOI and increased contribution from development properties. In addition, the updated FFO outlook includes the anticipated impact from the planned acquisition from PAC and our plan to accelerate non-core dispositions of $250 million-$300 million by the end of the year, including the sale of Preserve VII that closed in the second quarter. This net investment activity is expected to have a $0.02-$0.06 positive impact on 2021 FFO. The high and low ends of the range are largely dependent on the timing of the PAC acquisition and planned dispositions. In addition to our improved 2021 FFO outlook, we also increased our same property cash NOI growth outlook to a range of 4.25%-5.5%. That's up 50 basis points at the midpoint. Since the pandemic, we've regularly commented on parking revenues, and while we're still tracking well below 2019 levels, we have seen an uptick in parking over the past couple of months contributing to our improving outlook. In addition to solid FFO, our cash flows continue to strengthen, something that we have often highlighted, but where it's clearly materializing in our reported results. Our expectation for continued cash flow growth is being driven primarily by delivery of our development projects and continuous recycling out of older, more CapEx intensive properties into newer, more capital efficient properties. As Ted mentioned, this improved cash flow outlook helped drive our decision to increase the quarterly dividend 4.2% to an annualized rate of $2 per share. Finally, thanks to all of you on the phone for your patience and support in my time here at Highwoods. I hope to see many of you before I go at the end of the year. As you all know, Brendan is exceptionally well prepared for this role and will serve all Highwoods constituents well. The future here with Ted, Brian, and Brendan at the helm is very bright and I wish them all the best. Operator, we are now ready for your questions. Thank you. We'll now begin the question- and- answer session. If you would like to register for a question, press the one followed by the four on your telephone. You will hear a tone promt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, press the one followed by three. One moment please for our first question. Our first question comes from the line of Manny Korchman with Citi. Please proceed with your question. Hey, good morning, everyone. Brendan, maybe it would be helpful just so we can figure out what the trajectory is going forward here, if we could talk about sort of where your lease rate is versus your occupied rate, and whether you are seeing any difference there in the spread between those two versus history? Yeah. Hey, good morning, Manny. Yeah, that's a good question. I think we don't report lease rate, but what I would say is our lease rate is higher now than The spread between our leased rate and our occupied rate is wider now than what it historically has been. A lot of the leasing that we did in the second quarter is showing up in that lease rate and gave us the confidence to increase the occupancy range for year-end. I think we're seeing it in the lease rate. I know we don't report that number, but that's driving a lot of the confidence that we had to move that year-end occupancy target up 50 basis points at the midpoint and 100 basis points at the low end. All that leasing activity is materializing in that outlook. It just didn't show up in the second quarter numbers. Great. The other question I had was just on the Atlanta market. It looks like it's been slow to recover occupancy there. Just what are you seeing in the broader market, and is that just a timing thing, or are you a little bit more worried about Atlanta? Hey, Manny, it's Ted. I'll start, maybe Brian can jump in. Look, I think, we've had some expirations in our Buckhead assets over the last few quarters or whatever, but we're still bullish. We're incredibly bullish on Atlanta. Job growth there has been very strong. Obviously, pretty broad-based as well. The technology companies get a lot of the headlines, but there's been many more inbounds. It's a competitive market right now. There is an elevated vacancy. We feel very confident long-term. We have the right assets, and we're in the right sub-markets. Manny, Brian here. Not much to add other than Atlanta is the biggest of all the markets. It's probably the most complex in terms of the BBDs within it, and many of those could stand on their own nationally. We are seeing tremendous growth. Some of the bigger movers that we've seen, even into midtown and the central perimeter on tech, they're just now kind of moving in and turning lights on. As kind of a rule of thumb on economic development, one job at a minimum creates another job. Now, I'm not saying they're all necessarily office occupying, but we definitely do like the momentum. Atlanta does have some great things going forward, and we do see things improving there. Thank you all. Thank you for your question. We have a question from the line of Jamie Feldman with Bank of America. Please go ahead, sir. Thank you. Congratulations, Mark and Brendan. We're going to miss you in REIT land, but look forward to seeing what comes next for you, and I know Brendan will do a great job. Thank you, Jamie. So I guess- Appreciate it. Oh, sorry. Go ahead. No, thanks. I appreciate it. Look forward to catching up before I go. Really appreciate it. Absolutely. We've seen some of your peers in the office market talk more about being more willing to step into the value add acquisition market here. Just what are your thoughts on? You said you have a good amount of capital you could put to work. How willing are you now to go in and start buying some vacancy across your markets? We're absolutely looking at everything that's in the market. Our pencil is sharpened. We're underwriting some different actions that are out there. Again, what's been nice is to be able to see the activity we're seeing in the markets, just having the boots on the ground with our local leasing teams, seeing the momentum and the activity in the market. It gives you more confidence if we wanted to go out and buy the vacancy. We continue to work our that we update on a quarterly basis. We're open for business if we can find the right opportunity that's priced appropriately from our standpoint. Okay. I guess along the same lines, now that you're starting to see the signs of coming out of the pandemic, if you think about your market exposure heading in versus where it is today or maybe where you think you want it to be, given some of the changes you have seen in terms of tenant demand and where you're seeing more growth than others, do you have any interest in changing your portfolio exposure at this point? Sure. Well, when we close Vortex, where we will have doubled, really gone from 0%- 6% or 7% in Charlotte over about an 18-month period. I think we're doubling it with the acquisition of Vortex, and we're thrilled to death with the activities we're seeing in Charlotte. We like that exposure. We think there can be more exposure over time. Obviously, what we've done to date has been acquisitions. We do want to do development over time as well. I think other than that, I think we like the Raleigh exposure. We like Atlanta. We like Nashville as well. Where we're seeing the most activity is where we've got the most exposure. I think our market mix right now is pretty good. Manny, Brian here. One of the other things we're doing is when we look at the existing portfolio and opportunities for those kind of value add is an opportunity to bring in the mix of uses to leverage existing parking or structured parking, with hotel and residential units, and we have that. We've gone through some rezonings during this time too to enable us to do that. We see that to kind of your question on the mix, we do see talent as really that currency that all of our customers are so focused on. They're communicating to us that the workplace is kind of core to their culture and core to creating this compelling position of growth and bringing their people back. That's part of the look when we take a look at the existing portfolio and opportunities to add. Yeah. Jamie, just to round out, maybe to make all of us answer your question, it's Brendan. What I would say is, I think certainly expect a continued rotation of assets throughout the portfolio as we typically have. The preferred transaction or the market rotation plan, those are obviously large ones or similar to the Kansas City exit with purchasing Monarch and SunTrust a few years ago. The normal cadence of non-core dispositions, $100 million-$150 million a year with recycling that into additional growth opportunities, I think you should expect that to continue. I would say the pace of that rotation is unlikely to change going forward. Okay. As you look ahead to your expirations even through 2022, are there any large move-outs at this point that we need to be thinking about? Sure. Not really. The largest one we have through 2022 is December 2022. It's a 62,000 sq ft expiration. We do know they're vacating. After that, it's less than 10 full floors even. I think actually we've got a 50 that's mid-next year, and then it's some 25s and 30s. Not a lot of big expirations in the next 18 months. Okay. You have a couple of unsecured, I think, term loans expiring at the end of the year, or at least the swap burns off. I'm just curious what your thoughts are on financing there. Jamie, yes. The swap burns off in January, that's right, but the natural maturity on that loan is not until November of 2022. I think what's likely, and I know we talked about this in April with the expected disposition proceeds to help fund the preferred acquisition. Some of those, because we can pay the term loans off without penalty early, the likelihood is as we get those disposition proceeds in the door, first use of those and probably the 2021 proceeds will be to pay down the line and the acquisition bridge loan. Then the additional proceeds, which likely are to come in the door in the first half of 2022, probably, assuming we don't have anything outstanding on the line, which is probably likely, would be used to pay down those term loans. Both of them? Yeah. It depends on obviously the amount of proceeds that come in the door, but those would both be available and could be there. I think ultimately what we said when we announced the acquisition is it probably will take into the third quarter of 2022, maybe even in the fourth quarter to kind of get the debt stack to be normalized because there is a little bit of a challenge of when some of the debt rolls and to be optimized. I think there'll be a little bit of noise in sort of that debt stack as we move throughout 2022. I think ultimately, as we get in the second half of the year, that should get to a pretty normalized rate. That's where we think we'll have all the disposition proceeds in the door. Obviously, as we've mentioned, the acquisition should have closed sometime in the third quarter here. Our balance sheet should be back to normalized levels by sometime in the third quarter of next year. Okay. All right, great. Thank you. Thank you for your question, sir. Continuing on, our next question comes from the line of Rob Stevenson with Janney. Please go ahead, sir. Good morning, guys. Can you talk a little bit about what you're seeing on the development side? Are you getting close to any development starts, or could we see the pipeline essentially go to zero when Asurion completes in the fourth quarter? How should we be thinking about that? Sure. Obviously, our outlook for the year is 0 - 250. We've got multiple conversations going on right now in multiple markets, both build to suit and what would be a pre-lease development starts. I think we're making good progress. These things just take time, and we've been in discussions with several for a long time. I'm hopeful that we can be in a position with some announcements later this year. Hey, Rob. Yep. Just maybe to pile on, we are seeing a number of customers. Again, this is kind of definitely talking my own book, but they see the workplace as a core component of their culture, creating a new place is an important component to compete against the couch or the other competitor for the talent. We've seen that pickup of companies looking to maybe move into new buildings, new space, and so that's part of that inbound development interest. I guess the other question there on the development side is, given your commentary about where effective rents are down from where they were. How would the yield on a development start that you do today, given where market pricing is compared to pre-pandemic? Are you looking at slightly lower or given escalators and everything else that you think that the same development would be roughly similar? How should we be thinking about that as well? Yeah. Rob, Brian again. Great question. From our perspective, there's really kind of two ways to mitigate the escalation and kind of preserve yield. First, just to highlight, we do see escalations on costs kind of across the board. We're actively c ompleting some complicated, big projects across multiple markets right now. We have real-time pricing with our GCs and subs, which is super helpful. We're getting good information. First and foremost, we believe a lot of the cost escalation is a function of supply chain inefficiency and delays. Everything from commodity raw materials going through the system to even just HVAC units being delivered. We're looking forward to that leveling out as goods and materials begin moving through the system. That being said, we don't see it going down. I'd love to see a construction price really go down, but we haven't really seen that over the last decades. Tongue in cheek, the good thing is we're not building anything out of wood. We're really looking at more of the more sophisticated kind of material providers and GCs. To come back to cost containment on preserving yield. A lot of folks are pricing off napkins right now because many paused their soft cost spend and keep going back to the GC community to get updated pricing. Well, with less visibility into actually what we rebuilt and when it will be built, GCs and subs have quite a lot of cushion and contingency in there. What we've done is we've continued advanced design. We found that greater certainty equals greater pricing visibility, and in some ways, savings. We're actively finishing that as we move closer to get visibility there. On the revenue side, back to something I've already mentioned. The quality of the workplace is being recognized as a key consideration in competing and retaining talent. I think some of you before have had to listen to me talk about this thing called the 1-9-90 rule. Well, Jones Lang LaSalle uses it a little differently. Jones Lang LaSalle says a typical organization's going to spend $3 a foot on utilities, $30 a foot on rent, and $300 a foot on people. What we're seeing is that that workplace, that $30 a foot, if it's a key contributor to maintaining a foot or attracting that $300 a foot, companies are happy. For new product, for highly amenitized, talent-supportive workplace making, we're seeing that the market will pay for it. We're kind of attacking it two ways. Sorry for the long answer. No, that's helpful. Mark, you talked in your prepared comments about parking still tracking below 2019 levels. Where are you actually parking today in the most recent month or quarter, tracking on parking and other occupancy-dependent revenue versus pre-pandemic? Yeah, Brendan can probably give you more specifics on the exact numbers. What I would say is, we're talking 40% kind of occupancy in the buildings. It's spread across markets with maybe some of the smaller tenants coming in sooner than the larger companies. We've had pretty good transient parking in some of the markets. Orlando, in particular, has had really good performance there. I would say we're kind of on track to where we originally forecasted. Again, I'll let Brendan give you some numbers. Sure. Yeah, Rob. On parking revenue, we've done $10 million year to date, and we probably think that'll accelerate a little bit in the second half of the year because of the trends that Mark mentioned. Let's call it maybe in the second half of the year, kind of $11 million, puts us at $21 million for the year. That compares to our original 2020 budget was about $26 million. We're still down, call it $5 million and down about 20% on parking revenue. We do like the trends that we're seeing, and we're hopeful that those things will fully recover as we get kind of over the next several quarters. It's still a little bit of a loss there versus where we were a year and a half ago. Rob, Brian here. Might just add a little additional color just on the op side. Those markets where our parking supports special events, say Orlando, next to the Dr. Phillips Performing Arts Center in Nashville. They had 350,000 people for July 4th. In Pittsburgh, that has things coming back to the plaza there, is driving transient parking in a way that might even been higher than we might have had in 2019. Florida's getting back right on track. Nashville's, in some cases, outperforming 2019. We're feeling optimistic there. Are there any notable expense savings that you're still realizing from not having tenants back at full occupancy that are going to dissipate as we go forward, that it'll offset some of those parking revenue gains? Yes, there is some of that. I think you probably can see that in the trends of what we've got, both if you look at kind of what we've done year to date from a same store perspective and both from kind of an FFO perspective. Often the third quarter for us is a seasonal low just because operating expenses tend to be higher. Then layer on some repopulation of the office buildings, which will also drive OpEx up a little bit. There will be some of that. What we have said is we still think the latent growth in parking revenue returning back to normal versus kind of getting OpEx back to normal is still a net positive for us as both normalize. We do expect to see a little bit of pressure on OpEx as we move throughout the year as folks make their way back into their offices. Okay. Last one from me. What's the current expected timing for closing the Preferred Apartment Communities acquisition? We're getting close. It's a big transaction, very involved, lots of moving pieces. We're pleased with the way closing's going. The due diligence obviously done. We're on track to meet the timeline we've outlined and very confident it's going to close. There's some loan assumptions we got to get done. We feel good about it closing along the timeline we said. That one asset that they were trying to market that you may or may not acquire, is that, at this point, likely to be acquired by you guys, or is that likely to be sold elsewhere? It's currently being marketed for sale. I think the way the process is going, it's going pretty well. Don't know for sure, but I think there's a good chance it won't be included. Okay. Thanks, guys, and congratulations, Mark and Brendan. Thanks, Rob. Thank you for your question. Before we move on to the next question, we'd just like to remind everyone. Feel free to press the one followed by the four to register for a question. Up next, we have a question from the line of Dave Rogers with Baird. Please proceed with your question. Yeah. Good morning, everybody. Mark, thanks for all the help over the years. Good luck and congrats, Brendan. Well-deserved recognition for all your hard work. I wanted to start with Brian, if I could, on just some of the leasing topics. Maybe two specific questions on leasing. The first I would say is it seems like given the larger amount of leases you signed or number of leases, that there's maybe a bent towards smaller lease signings. Do you think that's a function of what we expect to see going forward? Is that a function of your availability or the markets you're leasing in? If that's a possible takeaway. A second question on leasing would be the terms in the leases, are you seeing more lease termination options from tenants or earlier lease termination options from tenants? Any changes in kind of how that is unfolding here in the near term? Dave, good questions and thanks for asking. A couple of things. The bigger users, kind of in general across the board, the bigger users are delaying a lot of their bigger decisions with regard to return to work, space utilization, and where they might be moving to or not. We've kind of just seen that across the board. Other than some of them looking at two or three years out about getting into a new building, they're generally kind of moving slower to understand, getting their footing back. That's the first thing. I don't know if it's necessarily a predictor of the future or if it's applicable to the entire portfolio because we have a pretty good mix of small, medium, and large size customers. That's generally it. With regard to term, it's funny, I thought you were going one way, so I'm going to answer one thing you didn't ask, is that this last quarter, it's interesting, we saw a significant improvement in the actual length of term of the deal. If we would qualify something as short-term, two years or less, through the quarters of the pandemic, we probably had 28%-30% of the deal churn being in that short-term range. Only 9% this quarter. We're averaging term now going into the third quarter, looking north of five years, getting longer, which is great. We still have some folks kind of kicking the can because they need to make bigger decisions, but I think we're starting to see people being more confident and look longer. Now, to your specific question on termination options, something we really bite pretty hard because most of these customers want a pretty good investment in TI, right? From our perspective, there's a certain amount of period you need of rent payers in there to merit that kind of TI contribution. To the extent you're seeing any kind of termination options, they're probably 7+ years out, and there's going to be a full reconciliation with regard to unamortized TI and commissions. We're not seeing it too short. There are some customers who say their occupancy is tied to some kind of state contract or some other kind of major deal. We definitely try to be partners as best we can, but we definitely push back as best we can. That's helpful. Thanks for that, Brian. Maybe, Ted, one for you on the non-core asset sales. Since you've kind of talked about the non-core asset sales, let's say, over the last six to nine months, how, if at all, has pricing improved on those assets? Yeah, Dave. As you know, we've got a mix of assets that we've got out in the market. We've closed $43 million so far. That was a single-tenant asset. We got incredibly strong pricing on that. What we're seeing on the single-tenant assets, incredibly deep buyer pool and then very good pricing. We've been very pleased. Pricing, in some cases, has exceeded our expectations. Then we've got the more multi-tenant or value-add deals that may have some vacancy or whatever. I'd say, that pricing's met our expectations. Buyer pool is a little less deep. There's still plenty of buyers out there to make a market. I think all in all, our program's right on track, on timing, and from a pricing perspective as well. All right. Thanks, Ted. Brendan, maybe one last one for you. I saw the adjusted cash same-store NOI growth would've been just over 5%, excluding the deferrals. Maybe you can give some pieces to that because I was thinking that I think I saw a 200 basis point drop year-over-year in actual physical occupancy. That should have offset the escalators. The rent bumps in the last year or the leasing spreads have been more flat. The big jump in the adjusted numbers seemed high. I don't know if there was something else burning off or the parking is part of that. Any color you can kind of piece up to that 5%+ on a core basis? Yeah, Dave, that's a good question. It's just in general, I think that it goes to show just kind of the movement and the lumpiness by quarter. In effect, what happened last year, particularly in the first half of the year, if you recall, we had a lot of strong leasing activity that occurred in late 2019. Those leases generally commenced in the first half of 2020 and carried with them some free. So we're kind of anniversarying against some of that, which is driving that difference that you talked about, and probably making the delta between kind of that cash and GAAP same-store NOI growth wider in the first half of the year. That will kind of normalize as we go into the second half of the year. Even in the second half of the year, we've actually got a little bit of a headwind from the deferral payments that we had in the third and fourth quarter last year compared to this year. All those things are going to kind of balance out. What I would probably point you to is last year, if we exclude the net deferral payments, we were up about 3% on our same-store pool. This year, our guidance overall, which includes those net deferrals, is, let's call it about 5% at the midpoint of the range. We've said that net deferral repayments are going to add about 125 basis points to that. We're going to be in that 3.5%-4% range, excluding the deferrals. I think that's a pretty good trend line over those couple of years, and I think kind of shows generally what we've endeavored to kind of deliver on a same-store basis. In that sort of 2.5%-4% range, I think, is where we've said we feel like things are working well for the portfolio, and that's where we'll be if you look at that over a couple year period, which kind of negates some of the noise that happens from a quarter-to-quarter perspective. Yeah. Appreciate that. Thanks, Brendan. Thank you for your question. Now we have a question from the line of Vikram Malhotra with Morgan Stanley. Please go ahead, sir. Thanks so much. Congratulations, Mark and Brendan, for all the hard work. I really appreciate it. Maybe just Brendan to clarify, you talked about the 2.5%-4% same-store kind of run rate, which we're all used to historically. Just not looking for any specific guidance for 2022, given all the leasing that's occurred and the uptick in new leasing specifically, can you give us some sense of the trajectory or anything we should be aware in terms of big moving pieces as we think about updating models for 2022? Obviously, we're certainly not prepared to provide kind of an outlook for 2022. Just thinking about large moving pieces, I guess. What I would say is as we have disclosed in the updated 2021 outlook, we do expect year-end occupancy to be higher than where we thought at the beginning part of the year. That was part of that move. That generally should be a positive. Now, I would caveat that a little bit with what I just mentioned to Dave on the prior question. Often some of those leases can include some level of free rent and things like that. There's often a lot of moving parts that are in the specific leases. In general, I think trend line on occupancy, we feel like, is positive for the back half of 2021, and that should translate into positive things as we think about 2022. There really isn't a lot in 2022 with respect to kind of the same-store pool that is going to change, at least where it stands now. I'd say 2022 should be pretty clean from a same-store pool perspective. Certainly the occupancy trends in the back half of the year should bode well as we go forward over the next several quarters. Okay, just one more. Clearly the demand continues to pick up from tech. The job growth pretty strong. I'm just wondering, if you look at Charlotte specifically, a market where you clearly are looking to expand further. Cyclically, there's a lot of supply that's not pre-leased and hitting the market. I'm just wondering kind of what risks you're looking at across some of your key markets. Hey, Vikram. Brian here. You may not know this, one of the extra hats I get is the Charlotte division lead. Charlotte's interesting. They had 2,000,000 sq ft under construction a few years ago, and it ended up all being fully spoken for by the time it came through. There's another 2,000,000 kind of underway now. We look to the inbounds from out of market coming to Charlotte. There was a fully spec building under construction in the South End, empty, maybe very minor leasing. This past quarter, USAA announces they're taking basically 100,000 sq ft and moving a bunch of people in there from out of state. Even right next door to us at Legacy Union in Uptown, Robinhood has come in and is leasing 50,000 sq ft. That's the Charlotte, I think you do get some good chunks of occupancy from inbounds and companies growing. I think the other thing too is there's really three sub-markets for Class A offices. Obviously, Uptown is still the largest, kind of the champion, the heavyweight, if you will. South End is the emerging market right next to Uptown. I mean, they're literally adjacent to each other, and you can cross the street and you're in one or the other. South Park. It's a fairly constrained market within those sub-markets as well. I think we feel pretty good there. Nashville has been on the radar for a lot of development. 50% of all the development in Nashville is in downtown. A great deal of that was pre-leased. Some things have started fully spec during the pandemic, which we haven't seen anywhere else. That was interesting that there are folks I think are still bullish enough on Nashville to capitalize, kind of traditionally capitalize speculative development. We don't have any role in downtown Nashville till 2025. We have multiple development sites surrounding Asurion's headquarters as well. I feel pretty good. I think we have eyes wide open on every deal that's under construction, that's in development, that's on the boards and on inbounds. Right now, demand is still strong. Great. Thank you so much. Thank you, sir, for your question. I'll now turn the presentation back to our presenters for their concluding remarks. Thank you. Well, thank you all for your interest in Highwoods, and thank you for joining the call today. If you have any follow-up questions, please feel free to reach out to any one of us. Thanks again. Thank you. That does conclude the conference call for today. We thank you all for your participation and ask that you please disconnect your line. Thank you once again. Have a wonderful day.