Enhanced BBD Office Focus September 30, 2015
SAFE HARBOR Certain matters in this presentation are forward-looking statements within the meaning of the federal securities laws, such as the following: the planned sale of all or substantially all of the Company s wholly-owned Country Club Plaza ( Plaza ) assets and expected pricing and impact with respect to such sale, including the tax impact of such sale; anticipated total investment, projected leasing activity, estimated replacement cost and expected NOI of acquired properties and properties to be developed; and expected future leverage of the Company. These statements are distinguished by use of the words "will", "expect", "intend" and words of similar meaning. Although Highwoods believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from Highwoods' current expectations include, among others, the following: buyers may not be available and pricing may not be adequate with respect to the planned disposition of Plaza assets; comparable sales data on which we based our expectations with respect to the sale price of Plaza assets may not reflect current market trends; the financial condition of our customers could deteriorate; development activity by our competitors in our existing markets could result in excessive supply of properties relative to customer demand; development, acquisition, reinvestment, disposition or joint venture projects may not be completed as quickly or on as favorable terms as anticipated; we may not be able to lease or re-lease second generation space quickly or on as favorable terms as old leases; our markets may suffer declines in economic growth; we may not be able to lease our newly constructed buildings as quickly or on as favorable terms as originally anticipated; unanticipated increases in interest rates could increase our debt service costs; unanticipated increases in operating expenses could negatively impact our NOI; we may not be able to meet our liquidity requirements or obtain capital on favorable terms to fund our working capital needs and growth initiatives or to repay or refinance outstanding debt upon maturity; the Company could lose key executive officers; and others detailed in the Company s 2014 Annual Report on Form 10-K and subsequent SEC reports.
ROCKET PITCH BUY BUY SELL Monarch Plaza & Monarch Tower Buckhead Atlanta SunTrust Financial Centre CBD Tampa Country Club Plaza Kansas City ENHANCED BBD OFFICE FOCUS ENHANCED BBD OFFICE FOCUS // 3
KEY HIGHLIGHTS ACCRETIVE GROWTH Cap Rate Arbitrage Earnings Accretive CAD Accretive VALUE ADD Occupancy Upside Rent Growth Operating Synergies CLEAR FUNDING PLAN Short Term Bridge Facility No Additional Equity Leverage Neutral SIMPLIFIES Exits Retail G & A Savings STRENGHTHENS BBD OFFICE FRANCHISE Adds 3 BBD Trophy Towers Acquired Well-Below Replacement Cost TAX EFFICIENT Partial Reverse 1031 Exchange Tax Gain Deferral ENHANCED BBD OFFICE FOCUS // 4
MONARCH CENTRE BUCKHEAD (Atlanta)
MONARCH CENTRE NEXT DOOR NEIGHBORS to SYNERGIES One Alliance Center & Two Alliance Center Superior Buckhead Location 3 Points of Signaled Access Direct Connectivity to GA 400 and Peachtree Road LOCATION. LOCATION. LOCATION. Immediate Proximity to Ritz Carlton, Lenox Square & Phipps Plaza STRATEGIC INVESTMENT GENERATIONAL OPPORTUNITY NEVER TRADED 20% BELOW REPLACEMENT COST 12% RENTS UNDER MARKET 1.9M SF BUCKHEAD OWNERSHIP Monarch Centre // 6
MONARCH CENTRE $303M OVERVIEW Market Atlanta Monarch Tower Submarket Buckhead Delivered 1997 Square Feet 896,000 Occupancy at Closing Occupancy with Known Near-Term Move-Outs 88% 80% Square Feet 528,000 Stories 25 Floor Plates 18,000-23,000 SF Parking 2.7/1,000 Sustainability Shared On-Site Amenities High Quality Rent Roll LEED Silver Alterations and Dry Cleaning Athletic Club Boutique Flower Shop Concierge Service Enclosed Access to Ritz Carlton Full-Service Bank and ATM Multiple Conference Centers New York Prime Steakhouse Two Cafés Baker Donelson JPMorgan Chase Morgan Stanley Monarch Plaza Delivered 1983 Square Feet 368,000 Stories 15 Floor Plates 23,000-25,000 SF MONARCH CENTRE// 7
Monarch Centre // MONARCH CENTRE// 8
Common area visuals Monarch Centre // MONARCH CENTRE// 9
Monarch Centre // MONARCH CENTRE// 10
TOP 10 AFFLUENT U.S. COMMUNITIES ROBB REPORT WALKABLE 24/7 NO DEVELOPMENT SITES ENVIRONMENT REMAINING 82,000 RESIDENTS 5,275 HOTEL ROOMS $32M NEW MARTA PEDESTRIAN 3 MARTA RAIL STATIONS 140,000 DAYTIME POPULATION 300+ RESTAURANTS $2B ANNUAL RETAIL SALES THE FINANCIAL DISTRICT OF 250 BRIDGE ATLANTA STORES 100 STORES 11
1 Three Points of Signaled Access 2 3 N Monarch Centre // 12
Lenox square Monarch Plaza Two Alliance Center BRIDGE Monarch Tower One Alliance Center Three Alliance Center Late 2016 Phipps plaza Early 2016 The Domain at Phipps Plaza 319 Luxury Residences Early 2016 N Monarch Centre // 13
SUNTRUST FINANCIAL CENTRE TAMPA CBD SUNTRUST FINANCIAL CENTRE // 14
SUNTRUST FINANCIAL CENTRE STRATEGIC INVESTMENT PARTICIPATE IN CBD RESURGENCE 40% DEVELOPMENT SITE BELOW ADJACENT REPLACEMENT CITY BLOCK COST 1 ACRE UPSIDE 77% Occupancy with Known Near-Term Move-outs Highwoodtizing $9.1M of Planned Improvements MOST RECOGNIZABLE WELL LOCATED TROPHY CBD ASSET UNRIVALED 360 VIEWS SUNTRUST FINANCIAL CENTRE // 15
SUNTRUST FINANCIAL CENTRE $124M OVERVIEW Market Submarket Tampa CBD Delivered 1992 Square Feet 528,000 Stories 35 Typical Floor Plate Occupancy at Closing Occupancy with Known Near-Term Move-Outs Parking On-Site Amenities High Quality Rent Roll 20,000 SF 89% 77% 1.5/1,000 540 Embedded Parking 245 in Adjacent Deck/Lot Conference and Fitness Centers, Full-Service Bank, ATM, 124-Seat Restaurant and Sundry Shop Akerman Senterfitt GrayRobinson SunTrust SUNTRUST FINANCIAL CENTRE // 16
SUNTRUST FINANCIAL CENTRE // 17
SunTrust Financial Centre SUNTRUST FINANCIAL CENTRE // 18
SunTrust Financial Centre SUNTRUST FINANCIAL CENTRE // 19
TAMPA CBD $5B 4M+ EVENTS/PERFORMANCES ATTENDEES PUBLIC & PRIVATE INVESTMENTS PLANNED 20% DAYTIME WORKFORCE INCREASE SINCE 2012 1,500+ SINCE 2012 RESIDENTIAL UNITS 1,100+ UNDER CONSTRUCTION 5,100+ PLANNED 12 PARKS + 10 MUSEUMS & ART GALLERIES 2.6 MILE RIVERWALK $100M INVESTED 2 PERFORMING ARTS CENTERS 20
SUNTRUST FINANCIAL CENTRE AMALIE ARENA CONVENTION CENTER RIVERWALK ONE HARBOUR PLACE USF MEDICAL SCHOOL SUNTRUST FINANCIAL CENTRE // 21
SUNTRUST FINANCIAL CENTRE TRANSACTION OVERVIEW Investment $126.1M Building $124.1M ($235/SF) Development Land (1 city block) $2.0M Below Replacement Cost 35% Year One GAAP Cap Rate 6.9% SUNTRUST FINANCIAL CENTRE // 22
COUNTRY CLUB PLAZA KANSAS CITY Country Club Plaza //
ESTABLISHED IN 1922 LONGEST LIFE OF ANY PLANNED SHOPPING CENTER IN THE COUNTRY THE FIRST MASTER-PLANNED SUBURBAN SHOPPING CENTER IN THE U.S. a WORLD'S FIRST SHOPPING CENTER DESIGNED TO ACCOMMODATE CUSTOMERS ARRIVING BY CAR A LANDMARK DESTINATION 24
THE PLAZA IS HOME TO MANY LOCAL AND NATIONAL EVENTS 250K+ PLAZA ART FAIR VISITORS ANNUALY 200K+ PLAZA LIGHTS VISITORS ANNUALY 1920S SPANISH-INFLUENCED ARCHITECTURE 39 STATUES, MURALS & TILE MOSAICS 12M+ K N O W N B Y M A N Y A S RODEO DRIVE OF THE MIDWEST SHOPPERS ANNUALY 40% OF PLAZA VISITORS LIVE OUTSIDE THE CITY 15 BLOCKS OF WALKABLE RETAIL, DINING, ENTERTAINMENT & OFFICE COUNTRY CLUB PLAZA // 25
COUNTRY CLUB PLAZA* OVERVIEW Market Kansas City Submarket Midtown/Plaza Established 1922 Square Feet In-Service: Retail Office Redevelopment: Retail Occupancy In-Service: Retail Office Redevelopment: Retail 776,000 617,000 28,000 94% 99% 0% (Underway) Customers Retail Office 129 97 Parking Spaces 5,600 *Wholly-Owned Data as of 6/30/15 COUNTRY CLUB PLAZA // 26
Gateway for top brands. COUNTRY CLUB PLAZA // 27
COUNTRY CLUB PLAZA // 31
COUNTRY CLUB PLAZA // 32
THE MECHANICS ENHANCED BBD OFFICE FOCUS
CLEAR FUNDING PLAN NEW BRIDGE FACILITY DEMONSTRATED SUPPORT FROM BANK PARTNERS $350M $250M $100M COMPETITIVE PRICING LIBOR PLUS 110 TOTAL OUTSTANDING AVAILABLE SIX-MONTH TERM SIX-MONTH EXTENSION OPTION THE MECHANICAL // 34
CLEAR FUNDING PLAN EXISTING REVOLVER AMPLE LIQUIDITY TO FUND WORKING CAPITAL AND DEVELOPMENT $475M $265M $210M LIBOR PLUS 110 TOTAL OUTSTANDING AVAILABLE SYNDICATE BANKS THE MECHANICAL // 35
CLEAR FUNDING PLAN ATM ISSUANCE AUGUST 7 AUGUST 20 $49.7M NET PROCEEDS $41.89 PER SHARE AVERAGE PRICE 1.2M SHARES THE MECHANICAL // 36
ENHANCED BBD OFFICE FOCUS // 37
Enhanced BBD Office Focus // 38
DEVELOPMENT ACQUISITION LEASING ASSET MANAGEMENT NYSE: HIW