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, April twenty-seventh, two thousand and twenty-two. I would now like to turn the conference over to Hannah True, Manager of Finance and Corporate Strategy. Please go ahead, Ms. True. Thank you, operator, and good morning, everyone. Joining me on the call this morning are Ted Klinck, our Chief Executive Officer, Brian Leary, our Chief Operating Officer, and Brendan Maiorana, our Chief Financial Officer. For your convenience, today's prepared remarks have been posted on the web. If 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. 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 any forward-looking statements. With that, I'll now turn the call over to Ted. Thanks, Hannah, and good morning, everyone. We had excellent financial and operational results in the first quarter, consistent with our performance since the start of the pandemic. Leasing activity is robust. Same-property cash NOI growth was solid. We had our third consecutive quarter of record core FFO per share, which excludes land sale gains. Our cash flows continue to strengthen, and our balance sheet is in excellent shape. We believe our strong performance to start the year is largely attributable to continuing execution of our strategy. As we've stated before, our simple and straightforward investment strategy is to generate attractive and sustainable returns over the long term by developing, acquiring, and owning a portfolio of high-quality, differentiated office buildings in the BBDs of our markets, or said another way, workplaces that are commute worthy. We are actively putting together the building blocks to further strengthen the financial and operational performance, resiliency, and long-term growth prospects for our portfolio. Our development team is exploring numerous potential starts. We are optimistic about the potential to acquire additional high-quality assets, and we're continuing to make progress with our long-proven plan of cycling out of non-core assets. Turning to our results, we delivered FFO of $1.03 per share in the first quarter. Excluding 4 cents of land sale gains, our FFO was $0.99 per share, more than 8% higher than the first quarter last year. In addition to FFO, our operations were also healthy. Same-property cash NOI growth was consistent with last quarter at 3.1%. Occupancy held relatively steady at 91.1%, and leasing maintained its momentum with 658,000 sq ft of second gen space, including a robust 391,000 sq ft of new leases. Rent spreads were positive 14.9% on a GAAP basis and roughly flat on a cash basis, with average term increasing to 6.4 years. Average rental rates per square foot in our 27.4 million sq ft in-service portfolio were 4.2% higher on a cash basis compared to 1 year ago. The upbeat start to the year has given us confidence to increase our year-end occupancy outlook, as many of the new leases signed will commence later in the year. Utilization across our portfolios increased to around 50%, up about 10 percentage points during the past couple of months, and we expect it to continue to pick up based on the return-to-work plans we are hearing from our customers. As we've stated before, even though utilization is below pre-pandemic levels and customers are figuring out their office workspace schedules, many of which are hybrid, we are encouraged by the consistently strong leasing activity we've seen across our markets since the start of last year. Turning to investments. During the quarter, we sold a land parcel in Tampa's Westshore BBD for $9.6 million, which included a $4.1 million dollar gain. This sale is a good example of our strategy to maximize value from our existing assets, whether buildings or land. We sold the pad to a developer who will construct a luxury multi-family community adjacent to our 209,000 sq ft Bay Center office building. Our land bank has a value of approximately $340 million and has never been more attractive. It can support $2.2 billion of future office and another almost $2 billion of adjacent mixed-use development via new apartments, shops, restaurants, and hotels. These mixed-use sites create excellent optionality for us as we may choose to sell the parcels outright or participate in the ownership and development. Either way, the build-out of this mixed-use land will bring even more desirable amenities to our adjacent office properties, as will be the case at Bay Center. Our $283 million, 615,000 sq ft development pipeline is now 55% pre-leased, having leased another 23,000 sq ft since our February call. We have healthy interest across our projects and remain confident that both Virginia Springs 2 and Midtown West will stabilize by the end of the year. As you may remember, we started both projects fully spec in 2019. While we didn't announce any new developments in the quarter, our team is busy working on potential build to suit and spec developments that could be announced later this year. We're progressing with additional non-core dispositions. We have multiple properties under contract, and we have others in various stages of the marketing process. As has been our plan, we are on pace to return our balance sheet to pre-PAC acquisition metrics by the middle of the year. On the acquisition front, competition for high-quality properties in our markets' BBDs has continued to be strong as institutional investors recognize the excellent long-term value of assets located in the best submarkets across our footprint. We're seeing opportunities arise in BBDs, but rest assured, we will continue to be disciplined with our capital allocation as we seek to acquire office assets that would further strengthen our performance, resiliency, and long-term growth prospects. Now to our 2022 FFO outlook. We project full year FFO of $3.82-$3.98 per share, up 6 cents per share at the midpoint since our initial outlook in February. Same-property cash NOI is projected to grow at 0.5% to 2.0%, up 25 basis points at the midpoint. We now expect to end the year with occupancy of 91.0% to 92.5%, also up 25 basis points at the midpoint. Our investment activities, acquisitions, dispositions, and development announcements are unchanged from our prior outlook. Before I turn the call over to Brian, I'd like to briefly recap our performance and outlook. Our leasing activity has rebounded to pre-pandemic levels, especially new leasing, as evidenced by this quarter's 391,000 sq ft. Our full year 2022 outlook for all three of our primary financial and operational indicators, year-end occupancy, same property cash NOI, and FFO per share, are higher at the respective midpoints than originally forecasted. Our $283 million development pipeline is 55% pre-leased and will generate meaningful cash flow as it delivers. Our balance sheet is strong, with leverage of 39% and a debt-to-EBITDA ratio of 5.3x. We're confident that we continue to have the building blocks in place to drive sustainable growth over the long term. Brian. Thank you, Ted, and good morning, all. Our team continued to deliver solid results for the quarter with a well-located, high-quality, and thus resilient portfolio that's capturing latent and inbound customer growth and is welcoming back its occupants, albeit on different timelines. Our simple strategy of owning commute-worthy workplaces in the best business districts of our markets, which are both urban and suburban in nature, has positioned Highwoods at the nexus of a number of accelerating trends and proven a capable formula for maintaining occupancy, growing rents, and increasing term. As important, our workplace making approach is providing our customers a compelling and competitive advantage for retaining, recruiting, and returning talent to the office, where they've told us they can achieve together what they cannot apart, culture, collaboration, and collective creativity. The results for the first quarter bear evidence of this as our team signed 102 deals representing 658,000 sq ft, of which 391,000 sq ft were new. These 58 new deals represent our highest quarterly count since Q2 of 2014. As this leasing comes online, we expect occupancy, currently at 91.1%, to increase in the latter half of the year. In our markets, where the in-migration of residents and jobs continues, and where unemployment rates have returned to pre-pandemic levels or below. Let's start in Tampa, where unemployment is below 3%, office employment is up almost 4% year-over-year, and market rents have increased 8% from last year. Our leasing team has been busy signing 260,000 sq ft for the quarter. We leased our portfolio's largest vacancy at 53-32 Avion, which will bring this asset's occupancy to 95% by the end of the year. In addition, we backfilled our company's two largest remaining 2022 expirations. Both at One Independence, with no downtime via a long-term 112,000 sq ft lease to a tech company. Our success at One Independence is a clear marker for our placemaking strategy, having taken the 44-acre single-use Independence Park site through a mixed-use rezoning to add residential and retail uses to the master plan. For the quarter, GAAP rents were up 23.8% in Tampa, and the average term for the 260,000 sq ft of signed leases was over 7 years. These leases emphasize our strategy of owning, maintaining, and operating the strongest, most commute-worthy buildings in the BBDs of our markets as they demonstrate the desirability of our properties to diverse corporate users. Not to be outdone, the Richmond team posted a strong quarter, signing 93,000 sq ft of leases with market rents rising 4% year-over-year, and where CoStar's commitment to Richmond was reinforced by their announcement of a $460 million expansion of their research and technology innovation campus, where 2,000 new employees will occupy a new 26-story tower. The Raleigh and Nashville markets posted positive net absorption for the quarter. Their unemployment rates are at or below 3%, and our collective 11.4 million sq ft in these markets holds premier and premium positioning in each of these markets' BBDs. Raleigh's rents continue to grow, up 6% compared to last year, and where JLL notes the market has averaged over 4% year-over-year increases in rent over the last 5 years. Our team there signed 83,000 sq ft of leases and ended the quarter at 93.2% occupied. In Nashville, we ended the quarter 95% occupied, and our Virginia Springs Two development is 90% leased and on schedule to stabilize by the end of the year. Having acquired the balance of Ovation's 145 acres in Nashville's burgeoning Franklin Cool Springs BBD. As master developer, we are re-envisioning a more integrated mixed use plan and will be working with the city and best in class third party retail and residential developers to advance the mixed use town center over the next several quarters. As Ted mentioned earlier, our development pipeline and potential is as solid as ever with either construction or design underway across our footprint with anchor or build to suit RFPs in hand. The team's success in delivering on time, on budget, and leasing up throughout the pandemic gives us confidence looking ahead at the new development opportunities before us. While we continue to operate in a dynamic and ever-changing industry, a few things have become clear. The first is that a hybrid work model that provides for flexibility, most specifically throughout the work week, is currently a matter of fact for many of our customers. This being said, these same customers have led us to believe that their teams are better together in the office, where they can onboard new hires, mentor rising talent, cultivate culture, and collaborate to solve problems or develop new products. It is our opportunity to provide these places and spaces, and we couldn't be realizing the results we are without a total team effort. To our Highwoods teammates, thank you for giving our customers your very best every day. Your unwavering commitment to providing the best possible customer care has been the foundation from which the portfolio has proven resilient and from which we will continue to grow. Now let me hand it off to Brendan. Thanks, Brian, and good morning, everyone. In the first quarter, we delivered net income of $40.3 million or $0.38 per share and FFO of $110.4 million or $1.03 per share. As Ted mentioned, the quarter included a land sale gain of $0.04 and a termination fee of $0.01. While the $0.01 termination fee was factored into our original FFO outlook provided in February, the $0.04 land sale gain was not. Rolling forward from last quarter's FFO and excluding land sales from both the fourth quarter and first quarter, our FFO increased $0.02 per share. The increase in the first quarter compared to the fourth quarter was attributable to the following. Higher NOI contributed $0.04, including the aforementioned termination fee. The remaining $0.03 increase was driven by higher average occupancy and lower OpEx. Lower interest expense contributed $0.01, primarily attributable to lower average debt balances, which were primarily offset by $0.03 of higher G&A, mostly due to the accounting impact of our annual long-term incentive grants, which are customarily made in the first quarter each year. The combination of these items nets the $0.02 increase in core FFO from the fourth quarter of 2021 to the first quarter of 2022. Turning to our balance sheet, which remains in excellent shape. We ended the quarter with net debt to EBITDA of 5.3 times, down from 5.4 times at the end of 2021. We're on pace to return our balance sheet to pre-PAC acquisition metrics as we complete the last few non-core dispositions we've planned. Even if we don't sell any additional non-core assets or raise equity, our balance sheet still has plenty of dry powder to be opportunistic with future investments. To this end, we estimate we can complete our existing development pipeline and invest up to half a billion dollars in additional opportunities without the prerequisite of selling any assets or raising equity and still maintain a net debt to EBITDA ratio of under 6x. In addition, we have limited debt maturities, which creates optionality with our financing plans. Our only two debt maturities prior to 2026 are a $200 million term loan that matures in the fourth quarter of this year and a $250 million unsecured bond that matures in January 2023 that we can repay without penalty in October. We plan to satisfy these maturities with non-core disposition proceeds, retained cash flow and other financings. Similar to recent quarters, we issued a modest amount of shares on our ATM program at an average price of $46.50 per share for net proceeds of $6 million. ATM issuances remain one of the tools we believe are an efficient and measured way to fund incremental investments, particularly our development pipeline, on a leverage neutral basis. As Ted and Brian mentioned, our development team is busy exploring potential projects, and we believe creating some additional dry powder on our balance sheet ahead of future announcements is prudent and conservative financial planning. As Ted mentioned, we've updated our FFO outlook to $3.82-$3.98 per share, up 6 cents per share at the midpoint from the original range we introduced in February. The major changes from our prior outlook at the midpoint of the range are the following. $0.04 increase from land sale gains recorded in the first quarter, $0.05 increase from higher anticipated NOI attributable to stronger leasing, better parking revenues and lower OpEx, and a $0.01 pickup from lesser anticipated dilution in 2022 from planned dispositions primarily related to timing. These items add up to $0.10 of upside, which are partially offset by $0.03 of higher projected interest expense due to rising interest rates and $0.01 higher projected G&A expense. These items equate to a net increase of $0.06 per share at the midpoint. Finally, as mentioned many times during the past several years, our cash flows continue to strengthen. This quarter is an excellent example of this improvement as our cash available after distribution was $27 million. While CAD and cash flow can be lumpy from quarter to quarter or year to year, the trend is clear that our cash flows continue to strengthen. Cash flow improvement over the long run was one of the primary drivers behind the plan we executed in late 2019 and early 2020 to cycle out of the slower growth markets of Greensboro and Memphis and redeploy that capital into the higher growth market of Charlotte. It was again a primary driver behind the more recent plan of funding the acquisition of a portfolio of high-quality office assets from PAC with the sale of additional non-core assets in our existing markets. As we recycle capital going forward, we expect to continue to improve our portfolio quality, resiliency and long-term growth rate while also further strengthening our cash flows. Operator, we are now ready for questions. Thank you. If you would like to register for a question, please press the 1 followed by the 4 on your telephone. You will hear a 3-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw, please press the 1 and the 3. Our first question is from Vikram Malhotra with Mizuho. Please go ahead. Morning. Thanks for taking the question. I guess first just maybe, Brendan, you can walk us through your latest views on just expirations in the back half and into 2023. Maybe just update us on any known move-outs, any ones where maybe it's still in process, and just how much of the kind of next 12 months do you actually have covered at this point? Hey, Vikram. Good morning. Sure. I'll start, and I'll probably pass that off to Brian to talk about the specific expirations and the activity that we're seeing there. Overall, I think as you saw in the updated outlook, we did increase our year-end occupancy targets. The midpoint moved up 25 basis points to 91.75% at that midpoint, and we ended the quarter at 91.1%. I think for our expectations as we think about migrating throughout 2022, we do expect the occupancy ramp to be back-end loaded. We would expect occupancy to accelerate as we move into the back half of the year. We do have good overall activity throughout our markets. I'll hand it off to Brian to maybe talk about some of the specific expirations and activity we're seeing there. Thanks, Brendan. Thanks, Vikram, for the question. You may have heard earlier in the remarks that we have been working the garden, if you will, to take care of those 22 expirations and getting ahead into 2023. Specifically, the largest ones in the entire company were in one building in Tampa that we've since backfilled with no downtime to a tech company. That's Independence One. We're feeling really good about the team's work there. As these expirations come up, we get ahead of them. Even as we look into 2023, where we have the Tivity expiration too, we're feeling really good about prospects and good activity for full relet on that building as well. To Brendan's point We do feel optimistic about being able to address these early, and we're staying on the front foot. Sorry, if you could just clarify the tech company, what was the mark to market on that? Vikram, that one was about flat. That was a long-term deal. On a cash basis, it was positive on a GAAP basis. That was, if you'll recall, to backfill, as Brian mentioned, the two largest expirations that we had in 2022 remaining, and we backfilled that with no downtime. We felt good about that transaction in Tampa. Just on the OpEx side, you know, in the past, given where utilization is, given some of the variable income coming back, can you just update us on what's embedded in OpEx, you know, this year and should we expect any variability in that? Yeah. What we disclosed in the beginning of the year, and I know we chatted a lot about this with you and many others on the phone, we said we thought OpEx net of recovery would be a headwind to the tune of $0.08-$0.12 per share for 2022 compared to 2021. That number, we probably think that has lessened a little bit. It's probably more in the $0.08-$0.10 cents range in terms of headwind is kind of our updated outlook. More than offsetting that are improvement in terms of parking revenue, overall occupancy levels and other kind of growth within NOI. As I think I mentioned in the prepared remarks, our NOI, we're up about $0.05 a share compared to where we thought we would be in the beginning part of the year. We've more than offset some of the headwinds that we've seen elsewhere in the financial plan. Got it. Okay. Thanks so much. Our next question is from Blaine Heck with Wells Fargo. Please go ahead. Great. Thanks. Good morning. Brendan, thanks for the color on the ins and outs related to guidance. Just one more question on that. Can you talk about whether the $0.02-$0.04 of increased interest expense that you're now expecting is driven solely by the increased expense on your floating rate term loan and credit facility, or were there other, you know, balance sheet moves that were contemplated this year that might be a little bit more costly in this environment? Yeah, no, Blaine, thanks for the question, and good morning. Yeah, it's solely attributable to rate overall. Just to give you a little bit of perspective, I mean, we don't speculate on what rates are gonna do, we just look at the forward curve and layer that into our expense assumption. The forward curve has moved up fairly substantially over the past 2.5 months, and that's really driving that 2-4 cent increase. Just as a reminder, our overall variable rate debt is about 10% of our total debt, and it's less than 4% of our total assets. We're talking about a significant increase in terms of rates overall over the past several months, and it's impacting us by about $0.03 a share on an overall base that's $3.90 of FFO. Got it. That's helpful. Maybe for Ted or Brian. You know, the land bank is the largest it's been in quite a while, maybe in the company's history. Can you comment on whether some of the leasing you guys did during the quarter on projects under development makes you a little bit more comfortable starting something on land that you own in the near term and where that might be? You know, Nashville kind of jumps off the page as the largest opportunity for you guys from a development point of view. You know, that market has seen a lot of supply as well. If you could comment generally and then on the prospects there in Nashville specifically, that would be helpful. Sure, Blaine. I'll maybe start off and Brian can jump in on Nashville specifically. Yeah, you're right. Look, $340 million, our land bank is probably close to the higher end of what we've had historically. I think, you know, having a well-located land bank, it's our raw material for growth and development. You know, gets us in front of prospects, gets us a seat at the table. I can tell you, our development team, they're probably as busy as they've been in a long time. We've got, you know, numerous active discussions going on in really most of our markets, and either whether it be a build to suit or what would be a pre-lease, you know, pre-lease that would kick off a building. The development team's working hard, and most of these are on our own land that we've had, our own existing land banks. You know, we're hopeful we can have some starts. Things are taking longer. You know, I've talked about our guys are working hard for the last couple of quarters. All of the discussions we've alluded to in the last quarter or two, all of them are still ongoing, and we've added a few. They're just taking a long time for one reason or another. It's hard to predict, you know, when, if and when we can get more developments. But again, we're excited about the land bank. Brian, you want to touch on Nashville? Yeah, sure. I might just chime in on the 10,000-foot level on that land bank. It is one of the things that gives us a little advantage competing in these markets against more typical kind of merchant development. Having that land bank gives us the time to design. Right now with what I'm sure is out there, escalations and supply chain disruptions, as we can advance design and get better visibility into costing, in terms of what we're gonna build, it gives us an advantage to then start. Blaine, you hit on it with Nashville. We are very fortunate in having really three significant land bank positions in the three most significant BBDs in Nashville, kind of working the way inside out. Of those three, two of the three We are working through some nuances within the local jurisdictions on site plan approval, so we can really be in the starting gate to move very quickly. The one that has already cleared that is there in The Gulch, where it's our Gulch Central assemblage of basically a couple of city blocks surrounding Asurion between Broadway and Church. We received all of our approvals from the city for maximum density, and we envision that as a mixed-use development, which would include upwards of 1 million sq ft of office. We are kind of vetting the other uses as part of that, which would probably be high-end residential and hotel and retail uses. That is advancing. We look down to Brentwood, where we are leasing up Virginia Springs 2. We have activity on the balance of that building. That building hopefully will be not only stabilized by the end of the year, but moving towards 100% committed. We've got to have inventory, right? To Ted's point, he mentioned land as the raw materials for our pipeline, and so we're working with the city of Brentwood there for a multi-building opportunity. Then obviously Ovation. I mentioned that previously. Now that we have full control and ownership of it's 145 acres, and the full entitlement is there, which is currently at 1.4 million of office, 950 residential units, multiple hotels. We see that as a tremendous opportunity. The stars are aligning for Nashville and for Franklin and Williamson County. We are going through the process of vetting other third-party developers to be part of that, and we look forward to coming out of the gates at the end of this year for a re-imagination of those opportunities. Very helpful. Thanks, guys. Our next question is from Rob Stevenson with Janney Montgomery Scott. Please go ahead. Good morning, guys. Ted or Brian, can you talk about construction costs? I mean, I know that you have the land bank, but in terms of just the materials and labor construction costs, if you're starting something later this year, you know, how substantial has that been? Will that have been on a year-over-year basis if you start something in the back half of the year in terms of material and labor? What is that doing to the rental rate that you need and/or the expected yield on new developments? Hey, Rob. Great question. I sort of probably threw that out there a little bit in that last answer. First off, I don't think we are compromising development yields. We're not having to do that yet. They're holding steady based on a couple things. Let me tell you what we're seeing. We're seeing about a half to one percent of escalation kind of month-over-month, and we really see that continuing for the next year. This is primarily a delta between demand and supply, and that's kind of throughout the markets. Now, a couple things I just wanna hit on. Again, we have the ability to mitigate this in a way that others may not and a lot of the folks who are competing on the ground within the merchant build. Typically, the merchant developers will have to get to 100% GMP price with their general contractor to then secure construction financing to then go forward. Since we're developing on balance sheet without typically construction lending, we can go ahead and get ahead of that 0.5%-1% month-to-month escalation by buying out some major trades with the GC and the subs, glass, site work, steel, asphalt in some cases. Getting on that early, that represents about 60% of a project's cost. If we can lock in that early, in many cases, six months to a year maybe of some others, it's helping us kind of control that yield erosion and not having to accept that because rates are growing. Rental rates are growing, particularly for the flight to quality, and we're seeing that in the buildings that we're developing, and we're seeing the ones that are in the market. That's basically how we're addressing it. It's a real deal, and we'll monitor it daily. Okay. How big of an issue is the cost and general lack of availability of apartments in your markets in terms of office utilization and incremental demand in your markets? We've been hearing that there's a number of employers that are having issues getting their 2022 college graduating classes in the office this summer because they can't find housing. Are you guys seeing that? Are your tenants experiencing that issue, or is that not yet an issue for you in your markets? Yeah. I don't think that's an issue with us. There certainly has been a fair amount of multifamily construction going on in our markets, so that's the first I've heard of it. I know demand is extremely strong for multifamily product. Rents are definitely increasing. I think affordability versus availability might be more the issue here. Rents have risen in some of our markets 20%-25% in the last, you know, year and a half. I don't think it's a availability issue in our markets. Hey, Rob. To clip on to Ted's answer, you've hit on something that we've been trying to get ahead of for the last actual couple years, and it wasn't seeing the pandemic coming or seeing the housing shortage. I mean, as a country, we're about 2 million housing units short from our typical delivery over the last, say, 50 years. You may have noticed that, as Ted mentioned, we recently sold a pad site next to our Bay Center office building in Tampa for the construction of a high-rise residential multifamily tower. We're doing that so we can have some of that mitigation available in nearby residential housing as part of the office story. You can kind of live here and work there. We're looking at that across the entire portfolio, where we've gone through a major rezoning and an assemblage of land in Richmond around our major Innsbrook collection of office buildings to have multifamily. Obviously in Nashville, we're doing that. If we can create that live, work, play all within one step of the office. We're pretty bullish on that office's ability to stay full. Okay. Last one for me, Brendan. What's your expected use of the $140, $190 disposition proceeds? Is that gonna be to pay down the line and maybe part of the term loan? Is that something else? How are you anticipating using that proceeds when you get it in the next 60 days or so? Yeah. The basics are. There's going to be a little bit of a timing mismatch, so it may impact a quarter or two with respect to our FFO and earnings, but it's solely kind of timing mismatch related. If you think about what we have coming due from an overall debt perspective, I mentioned we have the $200 million term loan, and then we have the $250 million bond that matures in January 2023 that we can pay off in October. That's $450 million of debt maturities that we really classify as 2022. What we expect to do is probably refinance the term loan and upsize that maybe by $100 million, and then take, let's call it $150 million of the disposition proceeds. That would be $450 million of capital. We'll take those and pay off the remainder that we don't take from the upsized term loan, use those proceeds to pay off the January 2023 bond in October. Okay. All of that is included in the guidance at this point or not? It is, yes. Oh, okay. Perfect. Thanks, guys. Appreciate the time. Our next question is from Dave Rodgers with Baird. Please go ahead. Hey, guys. It's Nick on for Dave. I first wanted to touch on rent economics. It seemed as though economics slipped in the quarter. Was that more a function of more new leasing and/or geographical mix, or is that more an indictment of the current economics? Yeah, sure. Well, as you know, we did 391,000 sq ft of new leases. That was really 59% of our total leasing was new. That's the highest percent of new leasing in, I think it's over 20 years, our finance team told us this morning. It's a mix, just given the new leasing volume relative to total leasing. I mean, we're thrilled to be able to welcome 58 new customers to our portfolio this quarter alone. It's a function of the activity and just the new leasing we're bringing in the portfolio. Touching on utilization a little bit, you mentioned 50% utilization. In prior calls, you mentioned that smaller tenants were more active than larger tenants, and maybe some of the suburban assets were seeing a little bit more activity. Is that still the case, or has there been any changes there? No, that's exactly what it is. The only change is that now the bigger guys are starting to come back to the office. The big public companies have announced, as you've seen in the papers, they're bringing their workers back, many of them in shifts over time. That's been the. Again, the small companies have remained back. Suburban, again, I think more than urban. The large companies are helping that utilization. Hey, Nick, it's Brian. One thing I might add on to that. I know in general on these calls, everyone wants to kind of put together some major trends to project in the future, but I'd like to add some anecdotes. One is in Charlotte, our large Bank of America tower, the bank there has brought their people back officially. During the pandemic, we worked really hard and got the best in class coffee and cafe operator in all of Charlotte and built that out as part of an amenity. We wanna make sure when people came back, they were properly caffeinated. We've seen sales there double monthly, basically for the last three months. We're seeing that utility in real-time come back. Now, if you ask us for our utilization Tuesday through Thursday, it's gonna be the highest. We're still seeing kind of across the board Mondays and Fridays, companies granting more flexibility to their teammates. That's great. Maybe lastly, maybe some additional commentary on your vacancies in Buckhead and/or the activity you're seeing there in particular. Sure, Nick. Brian again. You know, Buckhead, it's busy. We are seeing renewals. We're seeing folks grow. We're seeing some inbounds as well. Very little inventory has been added, you know, or kind of was in the pipeline, which is a good thing for Buckhead. You know, we are doing a development there right now, 2827 Peachtree. You're seeing that flight to quality win. That's leasing out very well, and it's barely even in the ground, forget coming out of the ground. There's prospects of all sizes. You know, Buckhead, one of our assets, we were able to land a law firm coming out of downtown and came into Buckhead. You know, we're bullish. The blend of quality of life, regional access, shops and restaurants is pretty well unmatched. Maybe Midtown would be the closest. You know, we're still pretty busy there. Ted, you want to No, I think that's right. I think the demand we're seeing from professional services firms and financial services companies are largely from law firms as well. To Brian's point, I mean, we signed during the quarter, we just kicked off 2827 Peachtree and signed another 15,000 sq ft, and we continue to see good demand on that product as, again, the flight to quality. We're still a big fan of Buckhead, and that's doing well. Thanks, guys. Our next question is from Jamie Feldman with Bank of America. Please go ahead. Hey, guys. This is Sui filling in for Jamie. Could you talk about the investor appetite for assets in your markets, and how would you characterize it, and have cap rates or buyer demand changed with the rising interest rate environment? Sure. I think what you're seeing, obviously rates have just started picking up the last couple months, but, you know, pricing that we've seen for high quality core assets with great credit, long weighted average lease term, has generally held up. We've been a few in the market in the last couple months. You know, it wouldn't surprise me to see the single tenant market could be affected just given how low cap rates have gotten for some of the single tenant deals. But generally, core assets have held up. We are hearing of some, you know, some pressure on some value add deals that attract leverage buyers for the exact reason you just said, with interest rates going up. We're still early in the rising interest rate environment, so we'll see how it plays out. The nice thing is the investor pool that wants to be in our markets is incredibly deep. Both unlevered that are chasing the core deals, but also the levered buyers are trying to get in our markets. An abundance of capital is chasing, and the fundamentals are good. I do think buyers are able to underwrite some of the vacancy or the value add aspects more easily than they were, you know, a year ago. We'll see how that counterbalances. Net-net, a lot of investor appetite for assets still. Okay. Great. Thank you. Kind of along those lines, you know, have rising rates or recession concerns in general, slowed tenant leasing decision-making, or do any markets stand out on that front? No, not at all. I mean, the activity is robust. I think you saw our numbers both on the second gen. We made good progress on some of our development projects as well. We signed leases, we mentioned the 28, 27, but Virginia Springs too went from 81% to 90% this quarter. Midtown West in Tampa went from 64-65%, I think, to 71%. We've got prospects really to fill those buildings up. We're seeing robust demand really across our markets. Yeah, I might argue I think it's independent from your very specific question on rates and decision-making or activity. We are sensing from a number of customers that they've been sitting on the sidelines or their hands for two years, kicking the can on making decisions, and now realize that their workplace has to be part of that competitive advantage for recruiting, retaining, and returning their talent to the office, where they've told us that they're better, they're better together. To that end, they're also seeing escalations on fit-outs going up. They're seeing potential rates going up. I do believe we are seeing some urgency for some who want to be in office space to make decisions now because they see it rates going up and costs going up. Okay, great. Thank you, guys. That's all for me. Our next question is from Manny Khosbin with Citi. Please go ahead. Hey. I actually just wanted to follow up on the last topic. In terms of the tenant decision-making process, you know, how are they thinking about the timeline of getting into a space? Are they still thinking that we wanna, you know, we're gonna look at that building that Highwoods hasn't even built yet, and we'll wait a couple years for it to come out of the ground, another year to move in? Or are they looking at existing space because they can get to it quickly? Or just how are they thinking about sort of the today versus the tomorrow and how long it takes to get into some of these spaces? Sure. I think the answer is yes and yes. On, I know we've got some that are willing to wait and some that aren't willing to wait. We've also. You know, one thing we've done and we've talked about is really ramped up our spec suite program. We've got customers who just wanna do plug and play. They wanna look at it on Friday and show up for work a week later. There's good demand for that space as well. I think it just sort of depends on each individual company's decision-making process and their own timeline. We're seeing it, again, examples of both. Ted, are you seeing any differences in utilization between new leases and older leases? If somebody's had a space for a longer time, do they only have, you know, I'll throw out a number, 20% of people showing up and the new spaces are 80%, or is that kind of a wrong conclusion? Yeah. I think it's too early to figure out what that conclusion is. The bigger companies just in the last couple months are coming back. I don't think we've got enough data points. Again, as we've mentioned on other calls, the smaller companies, they've been back, and they're generally back and, you know, pretty close to what they were pre-pandemic, maybe a little bit less. We're still just trying to figure out and wait and see on what the larger companies as they return to work, what it's gonna look like. Great. Thanks much. Thank you. Our next question is from Ronald Kamdem with Morgan Stanley. Please go ahead. Hey, just a couple quick ones. Just starting with the occupancy, the guidance raise here. If you take a step back, just at what levels of occupancy do you think just historically in the portfolio have you started to get a lot of pricing power, where the sort of the balance shifts towards the landlord, and so forth? Sure. You know, I think it's a good question. I think historically, I would tell you when the market vacancy gets down to about 10%, the leverage shifts a little bit to landlords. You know, we're elevated. We're above that today. We're below it back in 2018 and 2019. It's still without a doubt, I do think it's a tenant market in most of our markets today. You know, certainly there's nuances by market and sub-market, and then also building as well. Historically, I've thought about 10% as the tipping point from a leverage standpoint. Maybe just to clip on. It might sound a little silly. It's less rate-driven as opposed to kind of quality-driven in many ways too. I think that we're also seeing that. Great. Just to dig in on some of the specific lease expirations, obviously no large ones in 2022. Just on the Tivity space, as I think you said in the past, I think there was some tenant subletting. Are the tenants still there, and there's still opportunities for maybe some of those tenants to take space, or will it have to be just a new user? This is on the Tivity space. Thanks. Sure. No. Good question, and good visibility into that specific asset. We do have some subtenancy in there with other users. We could have the option to deal with them directly, and we've stayed in touch, obviously. There is good activity. We have started the process for a reimagination of that collection of what is, in a sense, kind of three buildings around a real central park. We've started the process to bring in retail, to bring in a performing kind of music venue and to even have pickleball. We've started that kind of repositioning, and we're getting really good traction with the food that wants to come in there. With that, we have some good interest and activity to relet that entire building with, you know, a single user. more to hopefully talk about that in the future, but we're feeling pretty good. Got it. My last question was just on the lease structure. Anything, Chad, I think you talked about sort of you got more term, a great leasing quarter, obviously. Is it still sort of 2.5 rent bumps? Is there any change on lease structure on the newer vintages versus maybe historically? Thank you. Hey, Ronald, it's Brendan. I would say, I mean, I think our bumps in the quarter were a little bit higher than average, so they were a little bit above that 2.5% range. Two and a half is. I think going forward, I would say that's probably about where we think it will continue to be. I suppose if we remain in an elevated inflationary environment, there's probably some upward pressure on those annual escalators. We did get better than that this quarter. I think our expectation is we probably will continue to be average around 2.5% as we move forward over the next several quarters. Great. That's all my questions. Thank you. As a reminder to register, you may press the one followed by the four. Our next question is from Michael Lewis with Truist Securities. Please go ahead. Great. Thank you. So I'm gonna ask just one question, but it's potentially a long one. I'll try to be succinct. I've had more than one investor liken the current office situation to what malls faced in the recent past, where, you know, investors, I think, thought, you know, B plus malls will be okay. And then they thought, you know, A-minus are better and then A, and then pretty soon investors just wanted to own the trophy assets. You know, is there potential you think that office is gonna be like that? And do you feel any sense of urgency to, you know, sell those lower quality assets and focus on your best ones and your development opportunities and maybe some capital into some assets? Or do you think I'm overstating the situation? Cause I think, you know, if there's a pivot here that needs to be made in office, and I don't know that there does, but if there does, you know, it seems like your positions with what Brendan said about the balance sheet and the flexibility and your development capability, that you guys could do that, you know, if you think that's a necessary thing. Or maybe, like I said, maybe I'm overstating it. Yeah, Michael, a lot to unpack there. We may tag team this between the three of us. Look, I think, you know, what we measure is we're talking to our customers, we're talking to CEOs, and the CEOs and our customers wanna come back to the office. They wanna be together. It's a cultural thing. We think the office is gonna thrive. We do think there's a flight to quality, but it's not just the newest, the brightest, the shiniest buildings. It's quality buildings in quality locations with quality landlords that have got the ability and the willingness to invest in their assets over the long term. I mean, if you break down the 102 leases we signed this quarter or specifically even the 58 new leases we signed, or if you go back to 2021 when we signed roughly 400 leases and a 194 new leases, a lot of those are done in older buildings that are just incredibly well located near the decision-makers' home, in the best demographics, near the high transportation corridors, that are in our markets and submarkets. So we're big believers in having the best locations and high-quality assets. Then you think about the obviously office is gonna drive development as well from our portfolio. We're gonna develop buildings in those same submarkets. So we're you know big believers in the office. We think it's gonna continue. At the same time, we are selling. We've been active recyclers. We sold, I think, over $1 billion in the last three years or so. We are recognizing if, as a result of whatever trends COVID, we think those assets are gonna be less resilient or less commute worthy, we're gonna move them to the disposition side. A couple examples. We sold a couple suburban assets in Tampa this past year that historically they'd been good performers for us, Michael. We saw as a result of COVID that a call center is largely call center type customers in there. A lot of that technology can be shifted to home, and it can actually be done. Some of that back office call center work can be done more efficiently out of the home. We thought they were gonna be less resilient going forward, so we culled those from our portfolio. We've been doing those type of things. If we don't think the location's gonna stand up, withstand the test of time, we're gonna move those assets out. That's. I don't know if I hit on everything. Michael, Brian here to kind of chime in. I love the question. I love the potential analog with malls and, you know, retail in general. If you kind of slice and dice the level of experience, and I put experience in quotes, across malls, to your point, the A's in the fortress malls have kind of gotten potentially even stronger through all of this, right? But what's also from a retail experience standpoint that's gotten even stronger, that's gotten even busier is that strip retail. I'm gonna come back to the term that Ted used, which is what we call commute-worthy assets, that if the building, the workplace isn't providing a competitive and compelling advantage to our customers to win the war for talent and to return that talent together, then we gotta do something about that. When you think about something that's commute-worthy, the first place you start is that first word, commute. The easier the commute, the easier it is to make something commute-worthy, right? That's just a general statement about our entire footprint. In particular, as some of the previous folks have asked about is those suburban located assets that happen to be closer to where most of America lives and shops. As we look at making these commute-worthy, it's a number of uses. It's interesting, you look at like Brentwood, one of the BBDs in Nashville and a large collection of office buildings there is a place called Maryland Farms. Where we have a number of buildings that we are repositioning right now, and we've reimagined them, and we're gonna be repositioning them. We're already gaining rent lift just off the renderings. Now, we got to build what we've shown because we feel like that's gonna even surpass our original underwriting. You know, everyone doesn't need the Taj Mahal. People throw around words like trophy. Well, our trophy assets are our people. We're focusing the work experience around the occupants that are gonna be in the building. We're finding out that just these small touches in these super convenient, commute-worthy places are winning. Michael, 'cause we might as well all three answer your question. It was excellent question, something that we talk about regularly as a team. What I would say, just to point out from a financial perspective, is I think we have, you know, we have used the playbook in the past of selling assets that we feel like over the long term create some level of risk, whether it be NOI deterioration or value deterioration or some level of outsized risk. And so as Ted mentioned, we've sold $1 billion over the past three years, most of that done during COVID, since the onset of COVID. I think we have the playbook in place to be able to monetize assets and redeploy that capital in a way, and still grow our company and strengthen our cash flows over time. I think we still have those building blocks in place, and I think feel confident about that. I will mention just as a maybe as a quick plug for our investor day that I know you're signed up for. We're gonna show some of these assets in Nashville that have performed very well, as Brian mentioned, throughout the pandemic. I think we feel good about how we have segregated the assets and the ones that we think will be winners long term versus those where we see the outsized risks and have, you know, pushed to increase the monetization of those assets. Great. Thanks. Thanks for the thoughtful answer to what I think is, you know, not an easy question. Thanks. We have no further questions at this time. You may continue with your presentation or closing remarks. Well, thanks everybody for being on the call today, and thank you for your interest in Highwoods. If anybody has any follow-up questions, feel free to reach out. Thank you. That does conclude the conference call for today. We thank you all for your participation, and kindly ask that you please disconnect your lines. Have a great day, everyone.