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 26th, 2023. I would now like to turn the conference over to you, Hannah True. Please go ahead, Ms. True. Thank you, operator. Good morning, everyone. Joining me on the call this morning are Ted Klinck, our Chief Executive Officer, Brian Leary, our Chief Operating Officer, and 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 investor section of our website at highwoods.com. On today's call, our review will include non-GAAP measures such as FFO, NOI, and EBITDA. 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 risk 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 turn the call over to Ted. Thanks, Hannah. Good morning, everyone. During the first quarter, we once again had strong financial and operational results. Leasing activity was solid. Same-property cash NOI growth was positive. FFO per share was healthy with a sequential increase from the fourth quarter. Our cash flows continue to strengthen. We reinforced our already fortress balance sheet by bolstering our near-term liquidity. Our well-diversified, high-quality portfolio continues to outperform versus our markets and compared to other major metro areas throughout the U.S. As we stated last quarter, we believe that to be resilient, we must be diversified, which is a core component of our long-stated, simple, and straightforward goal of generating attractive and sustainable returns over the long term. With nearly 2,000 customers, our portfolio is located in eight core Sun B elt markets with a sharpshooter focus on Best Business Districts, which are both urban and suburban. Our largest market is Raleigh, with just over 20% of our total NOI. Our largest customer, Bank of America, is less than 4% of total revenues. Our largest industry, financial services, is less than 20% of our revenues. Our average lease size is under 15,000 sq ft, and our median lease size is 5,000 sq ft. Further, we believe there is a clear preference for quality when choosing office space. Not just the high-quality buildings, but also high-quality locations and of increasing importance, high quality, financially stable landlords. Our portfolio is outperforming our submarkets by an average of 590 basis points on occupancy, and this outperformance increases to 750 basis points when compared to the U.S. average. We believe we are well positioned to increase this outperformance as customers and prospects focus even more intently on the quality of the building and the financial health of the property and its owner. That being said, our portfolio is not immune to the cyclical headwinds that all office landlords face during an economic downturn. While tour activity remains encouraging, we do expect demand will be negatively impacted as customers and prospects become more cautious about their own businesses in the near term. We do believe that high-quality landlords with high-quality portfolios will, more often than not, benefit from the flight to quality. From a usage perspective, we continue to be encouraged that our customers are increasingly returning to the offices. While the overall office utilization hasn't returned to pre-pandemic levels, customers in our markets from all industries are realizing the difficulties of replicating the culture, creativity, and productivity of their teams when away from the office. Our goal is to provide our customers an environment where their teams want to come into the office to be with their colleagues, or said another way, provide workplaces that are commute worthy. Turning to the quarter. We delivered FFO of $0.98 per share. Same-property cash NOI was solid at +0.8%, despite the headwinds of lower occupancy due to a large known customer move out in Nashville, which has already been backfilled, but whose lease doesn't commence until early next year. At quarter end, occupancy was 89.6%. While overall leasing square footage volume declined modestly with 520,000 sq ft of second-gen space, including 220,000 sq ft of new leases. The number of leases signed remained stable at around 100 for the quarter. Each year, first quarter volume is typically lighter than subsequent quarters, given the rush of getting deals done before December 31st. Of note, we saw net expansions of over 50,000 sq ft, which follows a strong fourth quarter. The number of expansions outpaced contractions by a ratio of 5: 1. Rent spreads were positive 15.9% on a GAAP basis and positive 2% on a cash basis. Average rental rates are 3% higher on a cash basis compared to one year ago. While it was a quiet quarter on the investment front, we're actively assembling the building blocks to further strengthen the resiliency and long-term growth of our portfolio. We've been busy prepping potential dispositions and have a variety of non-core buildings and non-core land in the market for possible disposition. Our disposition outlook remains up to $400 million for the year, though the upper half of the range seems unlikely given the current capital markets environment. Over time, we're confident in our ability to recycle out of non-core assets, which will help replenish our dry powder for future investment opportunities. Our $518 million development pipeline continues to progress well, with all projects on time and on budget. We're 22% pre-leased with at least two years until projected stabilization across all of our spec projects. We have about $320 million left to fund, and we project NOI of approximately $40 million upon stabilization. Our next de-development delivery, 2827 Peachtree in Atlanta, is scheduled for completion in the third quarter with a projected stabilization in 1Q 2025, and is already 88% pre-leased with strong interest from additional prospects. Turning to our 2023 outlook. We now project full year FFO of $3.68-$3.82 per share, up $0.01 at the midpoint since our initial outlook in February. Same property cash NOI is projected to be -0.5% to +1.0%, up 25 basis points at the midpoint. All other line items are unchanged. Before I turn the call over to Brian, I would like to briefly reiterate our performance and outlook. Our diversified portfolio across the best urban and suburban BBDs in the Sun Belt continue to perform very well. We're prudently investing in our portfolio through our spec suite program and Highwoodtizing projects that will drive additional portfolio outperformance. Our $518 million development pipeline will generate meaningful cash flow as it delivers and stabilizes. Our full year 2023 outlook for same property cash NOI and FFO per share are higher at the respective midpoints than originally forecasted. Our balance sheet is strong with a debt to EBITDA ratio of 5.9x, with ample existing liquidity to fund the remainder of our development spending and all debt maturities until 2026. Brian. Thanks, Ted. Good morning, everyone. Echoing Ted's thoughts, we are pleased with the performance of the portfolio this quarter and appreciate the hard work our teammates have put in to support our customers as they recruit, retain, and return their very best to the office. We believe the Highwoods portfolio is tailor-made to capitalize on the flight to commute-worthy experiences in our open for business and growing Sun Belt markets. As Ted mentioned, we believe there are reasons to take a cautious approach around demand growth in the office space as we approach the rest of the year. Our team continues to see healthy interest from small to medium-sized organizations and a clear preference towards quality, which includes locations, buildings, and owners. This dynamic plays directly to our strengths as our high-quality BBDs, workplaces, and sponsorship is resulting in strong outperformance for our buildings. While our portfolio has historically operated at higher occupancy levels than our competition, this outperformance has increased by 490 basis points since the onset of the pandemic, and is now nearly 6% higher than the markets where we operate. We believe this spread can continue to increase as customers and prospects focus even more on quality. While some larger customers are holding off on real estate decisions or using this opportunity to streamline operations, our core customers, small to medium-sized businesses, continue to grow and have consistently generated the highest office utilization in our portfolio. We continue to see customers of all sizes increasing their average number of days in the office. To illustrate this point, our same property parking revenues were up 19% in the first quarter compared to last year, and up 9% sequentially from the fourth quarter. In the fourth quarter, we added 80,000 sq ft of net expansions, and in this quarter, we added an additional 50,000 sq ft. We see our small to medium-sized average customer as a strength within our portfolio, and they serve as a general proxy for the diversified Sun Belt economy. Turning to market activity for the quarter. CBRE reports that in Tampa, there are 2.3 million sq ft of tenant requirements in the market, and it posted positive net absorption for the quarter. Our team there led the quarter for leasing volume with 112,000 sq ft of leases signed. In addition, we're already seeing steady interest in our recently announced 143,000 sq ft Midtown East development, slated for completion in 2025. This project is the only new construction underway in the Westshore or downtown BBDs. With its neighboring project, Midtown West, now over 97% leased, we have benefited from Midtown becoming the premier Westshore address to live, work, and play. Atlanta proved to be our second most active market in terms of leasing activity during the quarter, with 81,000 sq ft of leases signed. It should be noted, however, that this number does not include leases signed at our joint venture development, 2827 Peachtree, which is now 88% pre-leased, up from 75% at year-end, and on schedule to be completed in the third quarter. Consistent with our own portfolio and experience, JLL noted that the great majority of activity in Atlanta was by tenants less than 10,000 sq ft. Moving to North Carolina, which was again named Business Facilities most recent Best State for Business, where we have approximately 35% of our NOI in the Raleigh and Charlotte markets. We've seen strong activity at 650 South Tryon, our 367,000 sq ft asset in Charlotte, which has leased up to 88%, up from 79% when we acquired the building last August. We have also begun construction on our boutique build to suit for United Bank in Charlotte South Park BBD. In Raleigh, our team signed leases for 75,000 sq ft, we ended the quarter with occupancy of 90.4% across our 6.3 million sq ft portfolio. Our GlenLake III mixed-use development is on track to be delivered on time and within budget by the third quarter of this year. The workplace making experience we are delivering to our customers is competitive currency as they recruit, retain, and return talent to the office. They are telling us this in word and in action based on our sustained results throughout the pandemic and now into 2023. We believe our ability to deliver the highest quality workplace experience has Highwoods well positioned for the long term. These experience are delivered personally by our exceptional Highwoods teammates who manage, lease, and maintain our buildings themselves. We so very much appreciate their hard work. Brendan? Thanks, Brian. In the first quarter, we delivered net income of $43.8 million or $0.42 per share and FFO of $105.7 million or $0.98 per share. There were no significant unusual items in the quarter. We had a small term fee and an even smaller land sale gain, both of which were anticipated in our original 2023 outlook that we published in early February. Rolling forward from last quarter's FFO, we posted an increase of $0.02 per share. Higher NOI contributed $0.05, driven by higher rental revenue, improving parking income, and higher operating margins. Higher unconsolidated JV income contributed $0.02, primarily driven by the full quarter contribution of McKinney & Olive and also included the deconsolidation of our 50% interest in the Markel JV in Richmond. Other income and miscellaneous items added $0.01 for a total of $0.08 of upside, which was partially offset by $0.03 of higher G&A, mostly due to the accounting impact of our annual long-term equity incentive grants, which are customarily made in the first quarter each year, and $0.03 of higher interest expense. The combination of these items nets to the $0.02 increase in core FFO from the fourth quarter of 2022 to the first quarter of 2023. Turning to our balance sheet, where we ended the quarter with net debt to EBITDA of 5.9x, flat from year-end, even though we continued to fund our development pipeline and had no meaningful disposition proceeds. We further strengthened our liquidity by obtaining a $200 million five-year interest-only mortgage with a 5.69% fixed rate secured by Bank of America Tower in Charlotte. This execution highlights the benefit of our low levered, largely unsecured balance sheet combined with our high-quality portfolio. We were able to pivot to the mortgage market where pricing is currently more efficient and attractive than the unsecured market, yet still maintain a largely unencumbered asset pool and maintain strong credit metrics for our bondholders and banking partners. At quarter end, we had $685 million of existing liquidity, and this amount increased to $725 million following the redemption of our preferred equity investment in the McKinney & Olive JV. We have only $329 million remaining to fund on our development pipeline. No consolidated debt maturities until the fourth quarter of 2025. We have ample liquidity to fund all of our capital needs, including development spending and debt maturities through the expiration of our line of credit in March 2026 without the need to raise any additional capital or receive any disposition proceeds. To be clear, we do expect disposition proceeds as we move throughout this year, and we plan to be opportunistic about raising additional debt capital later this year or next, but our liquidity position affords us the ability to be patient. In addition, our investment grade credit ratings were recently affirmed by both of our rating agencies with stable outlooks. As Ted mentioned, we've updated our outlook with an increase to the midpoints of same property cash and NOI and FFO. Our revised FFO range is $3.68- $3.82 per share, up $0.01 at the midpoint. The major changes from our prior outlook at the midpoint of the range are a $0.02 increase from higher anticipated NOI attributable to stronger leasing, better parking revenues, and lower OpEx, partially offset by a $0.01 reduction from the net impact of the $40 million redemption of our M&O preferred equity investment. As mentioned earlier, we started with a strong first quarter. A couple of items to keep in mind going forward. First, our operating margin in Q1 was higher than originally anticipated, which was largely attributable to lower OpEx. Some of the reduced expense items are expected to be incurred later in the year, therefore we project operating margins will be 100 to 150 basis points lower for the full year compared to Q1. Second, we will incur the full quarter impact of two large customer move-outs in Q1, most of which has been backfilled but won't commence until next year. Finally, with the redemption of the preferred equity investment in the M&O JV that had been previously paying us monthly distributions at a rate of SOFR plus 350 basis points, other income will be lower. We have included up to $400 million of potential dispositions in our outlook. While the upper half of the range may be challenging to reach this year, given the current state of the investment sales market, we are seeing good interest in smaller buildings and some of our land parcels that are better suited to non-office development. We expect any disposition proceeds would bolster our liquidity and further improve our balance sheet metrics. Finally, as we've mentioned many times during the past several years, our cash flows continue to strengthen. This quarter is an excellent example as our cash available after distribution was $20 million, even after absorbing a full quarter's impact from higher interest rates. The ability to recycle capital back into the business, whether into development, acquisitions, or Highwoodtizing projects, is a major reason why we've been able to consistently grow earnings year after year on a leverage neutral basis while simultaneously upgrading our portfolio quality, improving our long-term growth rate, and increasing our resiliency. Operator, we are now ready for questions. Thank you. If you would like to register any question, please press the 1 followed by the four on your telephone. You will hear a three-tone prompt acknowledging your request. If your question has been answered and you would like to withdraw your registration, please press one three. One moment please for the first question. Our first question comes from the line of Blaine Heck, Wells Fargo. Please go ahead. Great. Thanks. Good morning. Can you talk a little bit more about potential sales this year? It seems like you've pivoted from targeting the large sales in Pittsburgh or elsewhere to focusing more on smaller kind of bite-sized assets. Can you just give some color around the timing and size of those potential sales? Just in general, I guess, what are the characteristics in an office property and what's the return profile that perspective investors are looking for, in an office transaction these days? In terms of the dispos, you're right, we have shifted to smaller deals. That's sort of what the investor pool out there is looking for right now. There's plenty of buyers to make a market, we think, in that $20 million asset range. We've got, in terms of what's in the market, that we've actually picked buyers on all three of the buildings, that we've got at the market, then we've got a couple land transactions as well. The buildings, two of the three are single tenant, single customer, good credit, pretty good walls, as well, and then we've got one multi-customer building. Buyers, you know, 1's institutional, three of them are private, sort of a cross-section there. The bidding pool when we took these out, I'll tell you, it was sort of surprising and it was great to see. It wasn't as deep as it was couple of years ago, but we had plenty of, again, plenty of buyers to make a market. I think that was encouraging from our standpoint. They're all in the due diligence process in terms of the buildings. We're running through that and, you know, I'm optimistic, you know, we'll get something over the goal line and be prepared to talk about pricing maybe at the earnings call in July. Then same thing on the land. You know, we've got a few land parcels out there. Buyers are going through due diligence, working on our closing conditions. I'm hopeful we'll get, you know, a land transaction or two, maybe just one by the next call. You know, overall, we're feeling pretty good about getting some dispo proceeds in the door. Great. Thanks for all that color, Ted. Second question, can you just talk about leasing activity on the development pipeline and whether you've seen much of a change in demand for those projects recently, especially for those that are delivering in the near term, like Granite Park 6 and Glen Lake III? Yeah. If you don't mind, maybe I'll take, hit all of them, just real quick. We mentioned on the prepared remarks, 2827 Peachtree. That one did move, I think, from 75% to we're just shy of 88%, I think it's 87.5% maybe, this quarter, and we've got good prospects to get us in the 90s. That building, we deliver it again in the third quarter, and it's coming along, come along very nicely, so we feel great about that one. The building looks great. The next one, also in the third quarter, just a one or two months behind 28 27, is Glen Lake III here in Raleigh. That one's, you know, about 213,000 sq ft, which includes a little bit of retail we're adding to the overall Glen Lake Park. That one, you know, we put a lot of proposals out, and it's... The activity has increased in the last 90 days. Several tours. Leary been on a couple, I've been on a couple, with our Raleigh team. I wouldn't say we have any strong prospects at this time, but we're encouraged by the increased activity there. Granite Park 6, up in Plano, in Dallas, that delivers in the fourth quarter of this year. Tour activity is picking up there too. So far this year, in 2023, we've had 585,000 sq ft of proposals we've put out there, 60,000 just in the last 30 days. Decision-making for all the big prospects is just slow. You know, it's, we've got activity out there and proposals submitted, but the decision-making's been slow. 23 Springs, that delivers in the first quarter of 2025, and the tour activity, I'd say, has been very, very good there. You know, 560,000 sq ft of proposals so far this year, 160,000 just in the last 30 days. You know, I'd say a couple of those are pretty strong prospects that seem to be moving along a little quicker in decision-making. No update yet, we're making progress on that. The last one is just Midtown East in Tampa. You know, we just started construction in the first quarter of that building. Fence is up, and we're starting to put in the pilings, but we've already seen some pretty good early interest. I think two or three inquiries already that we'll be making proposals on. That, again, that doesn't deliver for another two full years. You know, all in all, I'd love to have a little more activity maybe in Raleigh on the development, but, you know, activity is, you know, seems to be picking up. It sounds like, the activity is a little better at 23 Springs than Granite Park 6. You know, what's the difference there? It's about the same number of proposals there. It's just the 23 Springs, the decision-makers are in a position to make those decisions, the leasing decisions. It's just been a little slower up at Granite Park. I don't think it's anything... Uptown's a great, obviously a great sub-market, it's just the specific prospects we're chasing. Maybe they've got a shorter timeline to make decisions or what have you. Got it. Thanks for all that color. Thanks, Blaine. Next question from the line of Rob Stevenson with Janney. Please go ahead. Good morning, guys. Brian, I think you spoke about it a little bit in your prepared comments, but can you expand on the renewals in the first quarter and what you have under discussion currently for the remainder of 2023? Specifically here trying to figure out the relative breakdown of the amount of tenants pursuing expansions versus those looking to contract and those that are more or less seeking to maintain their same footprint these days. Seems like the market narrative is still that employers are gonna give up 10%-20% of their office space on renewals. Curious as to what you're seeing within your portfolio. Thanks, Rob, for the question. As you mentioned, as I said in prepared remarks, for this past quarter, most of the activity for folks kind of leaning in are our small or medium-sized bread and butter customers. They expanded versus contracted 5: 1 for the quarter. Just to give you a little color into what we're seeing already for this quarter, we're off to a good start. We're feeling very enthusiastic about how this quarter's going to come in based of everything that's gone either to lease or have agreed to terms. My gut is we're going to be fairly consistent and from first to second quarter on that expansion contraction with more volume for the quarter. The bigger users, as we've kind of mentioned, they're either delaying or streamlining, right-sizing their space. I really do think it's maybe less from a work from home headwind, this is how we're gonna use space going forward. Again, you know, a little bit of talk in our book is that they're all telling us that it matters. The workplace matters, and that they're leaning in to make it a differentiating factor with regard to their talent. Okay, that's helpful. Ted, how are you and the Board thinking about unlocking value now, given your comments that dispositions at the upper end of the range weren't likely given the current environment? Thinking of this in the context of your stock price, which has, you know, recently dipped beow $20 for the first time since the Global Financial Crisis, which seems to totally contradict how your business did and your 2023 guidance. Yeah, look, obviously we talk about that a lot, and I think it's all office rates are sort of being tagged with the same, the same issues. Look, I think our view is we're gonna keep our head down. We're gonna continue to operate. We can't control, you know, what our stock price is doing right now in times like this. Obviously, you know, we're in a... the office business is in a tough spot, perception is, and perception may not necessarily be what we're seeing on the ground. Any recession or economic slowdown, you tend to see increasing vacancy, sublet space increases, flight to quality and so forth. You know, we're experiencing today the same thing we experienced in 2000, 2008, so forth. We are intently focused on just, you know, going out and execute. We think, you know, over the long term, there's gonna be great opportunities over time. As I think coming out of the GFC, that's where we end up buying a lot of great office buildings. Some of the best buildings in our portfolio were just coming out of the GFC. I think there's gonna be similar type opportunities this time around, but we got to be patient. While we're being patient, we need to execute as best we can, both on the leasing side, on the disposition side, while, you know, creating some dry powder to go take advantage of these opportunities. It's really the same old stuff, but just it's our playbook. Okay. Then lastly, not to leave Brendan out. Brendan, is second quarter going to be the low FFO per share quarter in 2023, given all you know at this point? Well, with the caveat that you put on the last part of that question, probably with all we know, I think that that's probably likely. Depends a little bit on, I would say second and third quarters are probably the low for what we are expecting. Occupancy is probably likely to kind of bounce around where we are currently for the next couple of quarters, and then we expect it to rebound in the fourth quarter. Given we had Tivity that moved out in the beginning of March, we had the CDC that moved out kind of mid-January, you know, those contributed in the first quarter. They will not contribute in the second and third quarters because those backfill users won't be back in that space. We do expect that operating margins will be lower, in the remainder of the year. With all that, yes, that probably means second and third quarters would likely be the low. Okay. Thanks, guys. Next question from the line of Camille Bonnel with Bank of America Corporation. Please go ahead. Hi. I know your opening re-remarks noted that the first quarter is typically lighter from a leasing perspective. Looking a bit further into the activity this quarter compared to historic averages, the majority of the slowdown seems to be related to renewals. Can you comment on how this slowdown compared to your expectations for retention and any color on what tenants are saying as the reason to not renew for their lease would be much appreciated. Hey, Camille, it's Brendan. I'll start and then maybe pass that along to Brian and Ted for additional color. I would say the low level of, you know, whether renewals or retention in the quarter was largely expected given we had the Tivity move-out that we talked about for a long time. That's 263,000 sq ft. That was a non-renewal in the quarter. We had the CDC, which was 116,000 sq ft. Combined, those two are 380,000 sq ft of kind of known non-renewals. Recall that we also proactively took back 77,000 sq ft with a user in Raleigh to extend their remaining square footage over a longer, a long lease. With that, we have substantially backfilled the 77,000 sq ft that we took back. All of those things combined reduced the amount of renewal leasing that we did. That was all known, so it was very much in line with expectations. The only thing I would add is, you know, in any, again, any downturn, you see companies contract their space. You see companies consolidate operations if they have more than one office in a sub-market. You got companies going out of business. You know, obviously flight to quality. Flight to quality, we talk about it a lot now, but any downturn, people are looking for a deal, and they may wanna upgrade their space. We're losing. Our retention ratio is being impacted just by the overall economic environment and some of the just what's going on with the customers, whether, again, consolidation of offices, closing regional offices, so and so forth. Not too dissimilar to any other downturn. Again, with the caveat that certainly hybrid work is one of the additional headwinds. Just to follow up on that point, because I think you mentioned excluding those first quarter move-outs, you're expecting retention for the rest of the year to remain around that 50%. Is there any change to this assumption for the back half of this year? No, I think that's very much in line with kind of our expectation. Yeah, no change to the outlook for the year. I think you can see that generally in the outlook that we provided. We still expect year-end occupancy to be between 89% and 91%. I'd say we're feeling maybe a little bit better about the business overall, given we did nudge up our same property NOI growth outlook. All those things are very much in line with expectations. I'd say net-net, we probably feel a little bit better sitting here, you know, in late April compared to when we provided that outlook in the beginning of February. That's helpful. Finally, I know you've commented on having the flexibility around timing to execute on the Pittsburgh disposal and the fact that the market could look very different when you do. Historically, you've also had a very good track record in exiting markets while growing FFO. Just stepping back, how do you think about Highwoods' ability to continue to deliver FFO growth in this tough market environment and the potential dilution from this sale? Yeah, look, I think, as you stated, we had 12 consecutive years of FFO growth, which has been, you know, very few companies have done that. I do think it's a tougher environment, right? There's no question we recognize it, and it's gonna be tougher to do that. You know, we're gonna obviously wait for Pittsburgh. We're in no huge hurry to sell Pittsburgh. Certainly when we do, just given capital market environment, you know, we got the headwinds there, so there will be some FFO dilution. I do think same time our development pipeline is gonna deliver over the next couple of years, and that's helped us in the past, and I think it's over $40 million of NOI when we stabilize that. That's gonna help on the growth standpoint. I think that's one of the benefits of Highwoods is having that development value creation platform, that can deliver some solid NOI growth with the development deliveries. Our next question from the line of Michael Griffin with Citi. Please go ahead. Great. Thanks. As much as I love the office, I'm actually down in Atlanta this week, so I'll have to stop by 2827 in Glen Lake at some point. On that vein, my question was about the state of Georgia. I noticed, I think there was a footnote in y'all's 10-Q. Looks like they're gonna be taking about 60% less space on that 290,000 in 1800 Century Boulevard. Just curious how you're thinking about backfilling that, other tenant needs. You know, maybe it's not. I think it's a little bit past Buckhead, anything you can add there would be great. Sure. On specifically the Department of Revenue, as you know, we put the note in the, in the 10-Q. It's that asset is a non-core asset for us. When we got the RFP less than two weeks ago, just given our, you know, conservatism and transparency, we wanted to add that because it is. It's a. They've been in that building for a long time, over 20 years. Up until, again, a couple of weeks ago, we thought is a good chance for renewal. You know, we're looking at it right now. There's a chance, though, you know, we could keep them in that same building. There are other options in our portfolio that they may be interested in as well. It's early days on that, but it will be a significant downsize if we keep them. Again, there's an RFP out there, and we're going to be competing for it. You know, I'm hopeful, but, you know, we'll see. It's a definitely going to be a competitive. It's a big requirement. I'm sure a lot of folks will be chasing it. That's that one. The other big ones, you know, the other big one in Atlanta, Michael, that's, as you know, it's 169,000 sq ft, expires in September of 2024. They moved out late last year across the street to Phipps Plaza. We now have that space vacant. They're still paying rent on it. But we're showing it. We had two large tours just in the last 30 or 45 days. As we've mentioned in the past, they have subleased about 43,000 sq ft. You know, who knows if we can keep those guys or not. It's another competitive opportunity just given the size. It's great space, great building, great location. You know, I think over time, we'll be able to lease that up to a great customer going forward. Great. Thanks. My second question just on Tampa, circling back on those developments and the presence there. You know, obviously, it's a growing market. I'm curious what makes it as attractive as it is. I mean, I was reading somewhere recently. I think Tampa has around the same population growth over the last decade as Little Rock, Arkansas. I'm not saying Little Rock is bad per se, but, like, you've got Midtown West, you know, two, three, you know, majority lease to Tampa Gas Electric, I think, starting Midtown East. Maybe talk about why that's such a beneficial market if you could? We've been in Tampa since, I think, the 90s, and I think it's been, you know, a good long-term performer for us. If you look at our assets there, they're largely in Westshore and the CBD are the two best business districts there. When you drill down specifically on these assets, Midtown East, you know, that is in part of a 22- acre Midtown Tampa mixed-use development. That's really a unique type project for Tampa. The success we had at Midtown West, if you remember, right before the pandemic, I think it was maybe summer or fall of 2019, we started a 150,000 sq ft office building, 100% spec. During the pandemic, we completed it on time, on schedule, and we leased it up on time and better than our pro forma from a rental rate standpoint. Just the demand that we saw that is looking for a mixed-use, integrated mixed-use project in Tampa was gave us the conviction to go in Midtown East. As you know, Midtown East, it is a larger building. It's about a 438,000 or 40,000 sq f t building that Tampa Electric, TECO, is gonna be buying a condominium interest in that building. We've only got about 140,000 sq f t of office to lease up. We just think it's a unique mixed-use environment. It's a very vibrant. It's gonna help companies recruit and retain their employees. Michael, it's Brian. I might just add on. If we think of all of our different markets having different ages in their life, you know, many of them are farther along in their development and evolution. Tampa has fundamentally kind of changed its perception. Maybe years ago, it was sort of known as this back office kind of location, some defense connectivity with CENTCOM headquartered there. What's happened really over the last few years and accelerated by the pandemic and the outward flow of companies from maybe the gateways. You know, I think we've mentioned this before. Tampa is the number 1 relocation destination for companies out of the Northeast into Florida. It's not South Florida, it's Tampa. That's, you know, a great story. In terms of the Little Rock growth rate, we'll definitely look into that. We've seen the quality of the customers that are leasing space, as Ted mentioned, in Midtown, and now our Midtown West is north of net 97% leased. The combination of the diversified economy in Tampa. They're spending billions of dollars of expanding the airport. You're seeing new investment with folks from around the country in downtown through the Water Street development in Midtown, what we're doing with our partners there. It feels like Tampa is kind of taking its next seat at the table with the likes of Raleigh, Nashville, Austin, and Charlotte. It feels like that. Awesome, guys. That's it for me. Thanks for the time. Our next question is from the line of Ronald Kamdem with Morgan Stanley. Please go ahead. Hey, a couple of quick ones. Back on the leasing, is there a way to sort of quantify what the pipeline, what the activity is? Then maybe just some qualitative comments on sort of tech, and some of the life science hubs that were in some of your markets. Just curious what you're seeing from them. Thanks. Hey, Ronald. Brian here. I'll take the first shot, let Ted and Brendan grade my paper. A couple of things. We have low exposure to tech in general. I think you probably know that. Not that we're down on tech, it's just as a fact. As we look into the crystal ball of what we're seeing in second quarter already, a few weeks in, you know, Nashville, Raleigh are gonna be stuff we talk about next quarter, we feel pretty good about. You know, even Richmond is gonna have something to talk about. Tampa was our leader this quarter, the 112,000 sq ft. The momentum continues there, following on kind of Michael's question. In general, those markets, we like the economics that are coming in. As Ted kind of mentioned, and it's something that, you know, people ask, is it more expensive to do deals? What are the fundamental economics around the leasing that's going on? Yes, it's competitive. We haven't seen costs come down per se in the build-out of spaces. Has it leveled out? We believe so, and we're optimistic that as other projects are slow down, that maybe we have a chance to pick up some things there. You know, for those deals that'll give us term and have the credit, we're inclined to win those deals. I have a kind of a bad joke with our entire leasing team, is that I'm more optimistic about renewing someone who's in the portfolio than is not. We have the ability, within our own portfolio to look ahead two years, three years with renewals and maybe do deals, work with customers in a way that the private side singularly, financed building that we compete with might not be able to. Great. Helpful. The other one is I have that same question on 1800 Century Boulevard that went in the 10-Q. If I could ask it a different way, obviously it's not core, as you mentioned at the top, but if I could ask it a different way, is this idiosyncratic? Was there something unique about how they were using the building that you sort of looked at this and said, "Okay, that sort of made sense?" Were there any sort of clues, just looking at their usage versus other tenants maybe that could have shown this was coming? Yeah, Ron. Certainly, they were, you know, they were slower, like most government users, they were slower on the return to work, over the last couple of years. Really the building. They've been in there forever, so the space is tired. It does need to get redone. I think it's probably a hybrid work combined with just needing to reconfigure their space like we're seeing in others. Obviously, they're in a building that's built in 1975, so it's an older building, right? There's CapEx not only to re-tenant it, there's the BI, the TI, associated with their lease, but they're just building capital, that'll need to be invested in that asset on a sort of an irregular floor plate. It's just, really they've been there a long time and, you know, they're reevaluating their space like a lot of folks are. Great. The last one, if I may, just the life insurance deal you did in the quarter at a pretty good rate. Obviously, Brendan went through sort of the funding plans and you're well-funded. I'm just curious, are you getting more calls from life insurance companies in terms of other assets where there's interest, there's opportunity down the road? Thanks. Yeah, Ron, it's Brendan, and thanks. We were pleased with the execution on the mortgage at BofA Tower. I would say, I mean, in general, we are predominantly a an unsecured borrower. You know, mortgages are not something that we're looking to do a lot of. However, the benefit of us having a largely unsecured asset pool with a high-quality portfolio of assets is there are those options that are out there, should we choose to pursue some mortgages. I think it's an option that's open to us, and we'll evaluate whether or not it makes sense. We do wanna balance the unsecured pool that we have out there with others. Just, you know, just as a reminder, I mean, we're in great shape from a liquidity standpoint. I mean, we can fund all of the development pipeline and all of our debt maturities through the expiration of the line, which is in March of 2026, without the need to raise any additional capital. It's not something that we kinda actively need to go out and raise capital. It's just an option should we, you know, choose to do so. Great. Thanks so much. Next question from the line of Dylan Burzinski with Green Street. Please go ahead. Hi, guys. Thanks for taking the question. Just curious if you can kind of provide your thoughts or expectations for net effective rents throughout the remainder of 2023. I know leasing costs have probably continued to remain elevated, something that surprised us over the last several years is that base rents have held up surprisingly well. I guess could 2023 be the year that we start to see pressure on base rents? Hey, Dylan. It's Ted. Look, I think so, right? I mean, again, it's an economic slowdown just like any other slowdown the office business. Right now, we've got vacancy rates increasing, we've got the sublease space increasing. You got those headwinds, and then you got cost pressures, right? We keep thinking or maybe hoping that, you know, costs are gonna come back in line. As development starts to fall off, you may see some contractors that are getting a little bit more aggressive. Up to this point, the TIs, it's still, you know, there's still cost pressures that continue to increase. Free rent is increasing. Again, making a blanket statement, there are pockets in sub-markets that they're all different. In general, you know, there's upward pressure on TIs, upward pressure on free rent. The nice thing is, since COVID, we've been able to maintain, if not increase, face rents. When you throw all that into the mix, you know, we've done a good job on net effectives, but just entering the slowdown we're entering, it wouldn't surprise me to see some downward pressure on net effective rents. Dylan, it's Brendan. Just one thing I would add. We did do a lot of spec suite deals during the quarter. You saw that the average kinda size lease that we did during the quarter was around 5,000 sq f t. Those spec suite deals initially tend to carry a pretty low net effective because we spend a lot of capital upfront. As we relet those, then the net effectives are very high. If we adjust for the spec suite deals in the quarter, the net effective looks a lot more comparable to previous quarters. I think it had a negative drag by around $0.65 a square foot on our overall net effective. I think we will do more of that during this year because we've been very successful and seen a lot of leasing traction there. That will probably, from a headline perspective, cause the initial net effectives as we sign those spec suites to be lower than they otherwise would be. Dylan, Brian. Just to add on on this kind of counterintuitive face rates. As the new development is delivered and leases up, market face rates will actually drop because that higher end top of the market face rate is no longer in the pool to quote face rates. We're actually seeing where you have seen the market face rates drop. It's because some of the top stuff is leased up, and we're seeing. To Ted's point, we've done a pretty good job of folks who see space as a differentiating factor. That face rate is a smaller part of their equation when they're talking about bringing their talent back. That's all very helpful detail. I appreciate that. Just one more quick one, if I may. Were you guys able to share sort of the underwritten LTV at Bank of America Tower in Charlotte? Well, it depends on who you ask for the V, I guess. You know, it's probably... I mean, I think, you know, the lender had a probably a more conservative outlook of value than we think it would, it would garner if you were to market that asset for sale. Let's call it, you know, probably in round numbers, 50% is probably a pretty good benchmark in terms of with the LTV. Great. Thank you. Next question from the line of Nick Thillman with Baird. Please go ahead. Hey, this is Daniel Leben on with Nick. I had a question. I know you were mentioning the mortgage, but given, you know, any potential slowdown in the market, in the transaction market and your deals, would you look to equity then as a potential way of delevering those? Hey, Daniel. It's Brendan. I'm not sure I totally understand the question. I mean, I guess if Would we consider a JV partner for assets? If that's maybe the question. Probably not the profile of kind of. Okay, got it. Yeah, I would say probably for the type of assets that Ted talked about, you know, kind of those smaller buildings that we have out in the market, I would say that that's not really kind of something that, we're contemplating on the assets that we have out in the market for potential sale. Okay, great. Thanks for the clarification. Once again, please press one-four if you have any phone questions. Next question from the line of Peter Abramowitz with Jefferies. Please go ahead. Thank you. Ted mentioned possibly some opportunities on the acquisition side. I know there's nothing in your guidance, and maybe it's kind of looking a little bit further out. Could you just quantify how we should think about, you know, what you're targeting in terms of your returns on those? You know, I know there's not a ton of deal activity in the market today, on the financing side, so cost of capital isn't totally clear. Just wondering if you could kinda quantify your return hurdles if you do start to get active. I think you said it. We're really not looking at anything right now. We're being patient, trying to replenish our dry powder, get some dispos over the goal line. You know, I think we're gonna be patient and the bar has definitely been raised, whether it be obviously development or acquisition. I don't think we've had, you know, the cost of capital discussion because we don't have Our pen-pencils are sorted down on the acquisition side right now, and there aren't a whole lot of assets that are out there right now. What we've got is our well-developed wish list that we're tracking. There are actually, I'd say there are a couple assets that are out there we're tracking that, you know, would be good proxy for pricing if and when they trade. Right now we're sort of sitting back and waiting. We think there may be better opportunities a little bit down the road versus today. Really don't have any answer for you in the cost of capital question. Okay, got it. That's it for me. Thank you. We have no further questions on the phone line. Well, I wanna thank you, everybody, for being on the line today. Thanks for your interest in Highwoods, and we look forward to seeing many of you at Nareit in June. Thanks so much. That concludes today's call. We thank you for your participation and ask you to please disconnect.