HIGHWOODS PROPERTIES, INC.

Results of Operations

Three Months Ended March 31, 2025 and 2024

Rental and Other Revenues

Rental and other revenues were $10.9 million, or 5.2%, lower in the first quarter of 2025 as compared to 2024 primarily due to lower consolidated same property revenues and lost revenue from property dispositions, which decreased rental and other revenues by $6.1 million and $4.7 million, respectively. Same property rental and other revenues were lower primarily due to a decrease in average occupancy and lower cost recoveries, partially offset by higher average GAAP rents per rentable square foot and higher termination fee income. These decreases were partially offset by revenue from the acquisition of Advance Auto Parts Tower in Raleigh and recently completed development projects in Raleigh and Charlotte, which increased rental and other revenues by $0.6 million and $0.4 million, respectively. We expect rental and other revenues to be lower for the remainder of 2025 as compared to 2024 for similar reasons.

Operating Expenses

Rental property and other expenses were $5.4 million, or 7.7%, lower in the first quarter of 2025 as compared to 2024 primarily due to lower consolidated same property operating expenses and lost expenses from property dispositions, which decreased operating expenses by $3.0 million and $1.9 million, respectively. Same property operating expenses were lower primarily due to lower property taxes, partially offset by higher utilities, contract services and repairs and maintenance. We expect rental property and other expenses to be relatively consistent for the remainder of 2025 as compared to 2024 as higher anticipated same property operating expenses, expenses from the acquisition of Advance Auto Parts Tower in Raleigh and expenses from recently completed development projects in Raleigh and Charlotte are expected to be offset by lower expenses from property dispositions.

Depreciation and amortization expense was $2.3 million, or 3.1%, lower in the first quarter of 2025 as compared to 2024 primarily due to property dispositions. We expect depreciation and amortization to be lower for the remainder of 2025 as compared to 2024 primarily due to property dispositions and lower same property lease related depreciation and amortization, partially offset by the acquisition of Advance Auto Parts Tower in Raleigh.

General and administrative expenses were less than $0.1 million, or 0.3%, lower in the first quarter of 2025 as compared to 2024. We expect general and administrative expenses to be lower for the remainder of 2025 as compared to 2024 due to lower incentive compensation and lower predevelopment cost write-offs. First quarter general and administrative expenses are typically higher than in subsequent quarters due to higher long-term equity incentive compensation recognized for certain employees who meet the age and service eligibility requirements under our retirement plan. Long-term equity incentive compensation awards are typically issued during the first quarter of each year.

Interest Expense

Interest expense was $0.1 million, or 0.2%, higher in the first quarter of 2025 as compared to 2024. We expect interest expense to be higher for the remainder of 2025 as compared to 2024 primarily due to higher average debt balances and lower capitalized interest, partially offset by lower average interest rates.

Other Income

Other income was $0.4 million higher in the first quarter of 2025 as compared to 2024 primarily due to higher interest income from seller financing and loans provided to the 2827 Peachtree and Midtown East joint ventures.

Gains on Disposition of Property

Gains on disposition of property were $75.0 million higher in the first quarter of 2025 as compared to 2024. The first quarter 2025 gain primarily related to building dispositions in Tampa. The first quarter 2024 gain related to building dispositions in Raleigh.

Equity in Earnings of Unconsolidated Affiliates

Equity in earnings of unconsolidated affiliates was $0.7 million higher in the first quarter of 2025 as compared to 2024 primarily due to lower interest expense from our McKinney & Olive joint venture due to the payoff of a mortgage loan in the third quarter of 2024. This increase was partially offset by a higher net loss from our Granite Park Six joint venture, which owns a newly constructed building that was completed in the third quarter of 2023 but has not yet stabilized.

Earnings Per Common Share - Diluted

Diluted earnings per common share was $0.66 higher in the first quarter of 2025 as compared to 2024 due to an increase in net income for the reasons discussed above.