Good morning, and welcome to the Highwoods Properties Earnings Call. [Operator Instructions]. And as a reminder, this conference is being recorded Wednesday, July 28, 2021. I would now like to turn the conference over to Mr. Brendan Maiorana. Please go ahead.

Thank you, operator, and good morning. Joining me on the call are Ted Klinck, our Chief Executive Officer; Brian Leary, our Chief Operating Officer; and Mark Mulhern, our Chief Financial Officer. As is our custom, today's prepared remarks have been posted on the web. If any of you have not received yesterday's earnings release or supplemental, they're both available on the Investors section of our website at highwoods.com. On today's call, our review will include non-GAAP measures such as FFO, NOI and EBITDAre. The release and supplemental include a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures. Forward-looking statements made during today's call are subject to risks and uncertainties including the ongoing adverse effect of the COVID-19 pandemic on our financial condition and operating results. These risks and uncertainties are discussed at length in our press releases as well as our SEC filings. As you know, actual events and results can differ materially from these forward-looking statements, and the company does not undertake a duty to update forward-looking statements. With that, I'll now turn the call over to Ted.

Thanks, Brendan, and good morning. Let me start by saying we continue to see an increase in more normalized activity across our portfolio and markets. It remains difficult to predict the progression of the pandemic and economic recovery, particularly given the concerns over variance. The leasing and parking are both recovering nicely. Utilization rates have risen throughout the second quarter and are currently around 40% across our portfolio, up from 30% last quarter. Based on discussions with our customers, we expect a meaningful increase in the utilization after Labor Day. As I mentioned on our last call, leasing activity in the first quarter was relatively solid, especially for new deals. This trend accelerated during the second quarter, we signed 899,000 square feet of second-gen leases, our highest total since the fourth quarter of 2019 and included 323,000 square feet of new deals. This is above our long-term average of 250,000 square feet for new leases. We signed 52 new deals. Also above our long-term average and our highest quarterly count of new leases since 2014. Obviously, the strong leasing activity in the quarter hasn't yet shown up in our occupancy stats where we ended the quarter at 89.5% across the entire portfolio. This leasing will benefit us in future quarters as our new customers move in. With the improving macro environment, especially in our markets, we're optimistic going forward. Rents on signed leases continue to be a little softer than they were pre-pandemic, but we believe are holding up reasonably well considering the challenges over the past 18 months. For the 899,000 square feet of second-gen leases signed during the quarter, rent spreads were down slightly at negative 0.6% on a cash basis, while up 8.9% on a GAAP basis. Overall, since the start of the pandemic, net effective rents…

Thank you, Ted, and good morning, everyone. With 2 quarters behind us, it's become apparent that the portfolio resiliency we highlighted last quarter is proving the able foundation from which our team is delivering solid results. Our markets are open for business. Our customers have returned or are returning to the office and most customers see the workplace as an important tool in delivering results. There are signs across the portfolio that give us optimism for the future. From in-office utilization rates in Orlando that have climbed over 60% and Nashville's Airport surpassing 2019 passenger levels to one of our downtown Pittsburgh restaurants achieving sales 20% higher than at the same time in 2019. A couple of these anecdotal signs of life with major job announcements made since the start of the pandemic that represent 50,000 new jobs and over $7 billion of direct investment, and there's an undeniable momentum and a return of optimistic sentiments permeating our markets. With regard to our customers who merited a rent deferral during the depth of the pandemic, over 80% has been repaid on schedule. For those restaurants repaying via percentage rent, the majority should be back in the black early next year. With these needs-based accommodations playing out as underwritten, this is hopefully the last time we need to discuss this subject on a call. As Ted highlighted, leasing accelerated in the second quarter with Raleigh, Atlanta, Nashville and Richmond, representing 75% of our total volume. Occupancy was relatively flat sequentially and in the quarter at 89.5%. And as stated last quarter, we expect occupancy to remain steady throughout the third. Given our strong leasing activity and positive overall market fundamentals, we are confident this will improve in future quarters as reflected in the midpoint of our updated year-end occupancy outlook. Now…

Thanks, Brian. In the second quarter, we delivered net income of $59.3 million or $0.57 per share and FFO of $99.5 million or $0.93 per share, an increase from $0.91 in the first quarter. The quarter included the $43 million sale of Preserve VII, which did not have much of an impact on our financial results since it didn't close until late in June. In other words, this was a relatively clean quarter without unusual items. Our results benefited from a full quarter contribution of the forum where we acquired our partner's 75% interest for $138 million incremental investment in January and included a full quarter of NOI from our GlenLake Seven development. As a reminder, GlenLake Seven is our $44 million, 125,000 square foot development in Raleigh that is 100% leased and was delivered in March. In addition, we had higher same property NOI growth. The combination of these items approximately $0.01 from net investment activity and $0.01 from higher same property income drove the $0.02 sequential increase in the quarter. Our balance sheet is in excellent shape. In April, we used cash on hand plus borrowings on revolver to repay at par the remaining $150 million of notes that had an effective interest rate of 3.36%, 2 months earlier than the stated June 2021 maturity. We funded $55 million of earnest money deposits for the planned acquisition of office assets back in the second quarter and deposited another $5 million subsequent to quarter end. This leaves approximately $200 million of cash required to initially fund the remaining cash portion of the purchase price. We have multiple sources of available liquidity to satisfy this obligation, including a 6-month unsecured $200 million bridge facility that we expect to obtain from JPMorgan. Nearly $600 million of remaining capacity on our $750…

[Operator Instructions]. Our first question comes from the line of Manny Korchman with Citi.

Brendan, maybe it would be helpful just so we can figure out what the trajectory is going forward here. If we could talk about sort of where your lease rate is versus your occupied rate? And whether you're seeing any difference there in the spread between those two versus history?

Yes, that's a good question. So I think we don't report lease rate, but what I would say is our lease rate is higher now than the spread between our leased rate and our occupied rate is wider now than what it historically has been. And a lot of the leasing that we did in the second quarter is showing up in that lease rate and gave us the confidence to increase the occupancy range for year-end. So I think you are -- we're seeing it in the lease rate I know we don't report that number, but that's driving a lot of the confidence that we had to move that year-end occupancy target up 50 basis points at the midpoint and 100 basis points at the low end. So it is -- all that leasing activity is materializing in that outlook. It just didn't show up in the second quarter numbers.

Great. And then the other question I had was just on the Atlanta market. It looks like it has been slow to recover occupancy there. Just what are you seeing in the broader market? And is that just a timing thing? Or are you a little bit more worried about Atlanta?

Manny, it's Ted. I'll start, and maybe Brian can jump in. Yes, look, I think we've had some expirations in our bucket assets over the last few quarters or whatever. But we're still bullish, we're incredibly bullish on Atlanta. Job growth there has been very strong. Obviously, pretty broad-based as well. The technology companies get a lot of the headlines. But there's been many more inbounds. So it's a competitive market right now. There is an elevated vacancy, but we feel very confident long term, we have the right assets, and we're in the right submarkets.

Manny, Brian here. Not much to add other than Atlanta is the biggest of all the markets. It's probably the most complex in terms of the kind of the BBDs within it. And many of those could stand on their own kind of nationally. And so we are seeing tremendous growth and some of the bigger movers that we've seen even into the [indiscernible] Central Perimeter on tech. They're just now kind of moving in and turning lights on. And so it is kind of a rule of thumb on economic development, one job at a minimum creates another job. I'm not saying they're necessarily office occupying, but we definitely do like the momentum. Atlanta does have some great things going forward, and we do see things improving there.

Next, we have a question from the line of Jamie Feldman with Bank of America.

First, congratulations, Mark and Brendan. We're going to miss you in REIT lands, but look forward to seeing what comes next to you, and Brendan will do a great job. So I guess --

Thank you, James.

Sorry, go ahead.

No, thanks. I appreciate it and look forward to catching up before I go. Really appreciate it.

Absolutely. So we've seen some of your peers in the office market talk more about being more willing to set into the value-add acquisition market here. Just what are your thoughts on -- you said you have a good amount of capital you could put to work. I mean, how willing are you now to go in and start buying some vacancy across your markets?

We are absolutely looking at everything that's in the market. Our pencils will be sharpened, we're underwriting some different actions that are out there. So again, what's been nice is to be able to see the activity we're seeing in the markets. just having the boots on the ground with our local leasing teams seeing the momentum and the activity in the market, it gives you more confidence if we want to go out and buy the vacancy. So we continue to work [indiscernible] we update on a quarterly basis. And it's -- we're open for business that we can find the right opportunity that's priced appropriately from our standpoint.

Okay. And I guess, along the same lines, I mean, now that you're starting to see the signs of coming out of the pandemic, if you think about your market exposure heading in versus where it is today or maybe where you think you want it to be given some of the changes you have seen in terms of tenant demand and where you've seen more growth than others. And do you have any interest in changing your portfolio exposure at this point?

Sure. Well, when we closed Vertex when we will have doubled, really gone from 0% to 6% or 7% in Charlotte over about 18-month period. So I think we're doubling it with the acquisition of Vertex . And we're thrilled to death with the activities we're seeing in Charlotte. So that's -- we like that exposure. We think there could be more exposure over time. Obviously, what we've done to date has been acquisitions. We do want to do development over time as well. But we -- so I think that -- other than that, I think we like the Raleigh exposure, we like Atlanta, we like Nashville as well. So where we're seeing the most activity is where we've got the most exposure. So I think our market mix right now is pretty good.

Jamie, Brian here. One of the other things we're doing is when we look at the existing portfolio and opportunities for those kind of value-add is an opportunity to bring in the mix of uses to leverage existing parking or structured parking with hotel and residential unions, and we have that. We've gone through some rezonings during this time too to enable us to do that. And so we see that to kind of to your question on the mix, we do see talent as really that currency that all of our customers are so focused on. And so they're communicating to us that the workplace is kind of core to their culture and core to creating this compelling position of growth and bringing the people back. So that's part of the look when we take a look at the existing portfolio and opportunities to add. Yes. And Jamie, just to round out maybe to make...

All of us answer your question. It's Brendan. What I would say is, I think, certainly expect a continued rotation of assets throughout the portfolio as we typically have. I mean the preferred transaction or the market rotation plan. Those are obviously large ones or similar to the Kansas City [indiscernible] with purchasing Monarch and SunTrust a few years ago. But the normal cadence of non-core dispositions, $100 million to $150 million a year with recycling that into additional growth opportunities. I think usually expect that to continue. And I would say the pace of that rotation is unlikely to change going forward.

Okay. And then as you look ahead to your expiration even through '22. Are there any large move-outs at this point that we need to be thinking about?

Sure. Not really. The largest one we have 322 is December 22, it's a 62,000 square foot expiration. And we do know they're vacating. But after that, it's less than 10 full floors. Even [indiscernible], we've got 50 that's mid next year, and then it's some 25 and 30. So not a lot of big expirations in the next 18 months.

Okay. And then you guys have a couple of unsecured, I think term loans expiring at the end of the year or at least the swap burns off. I'm just curious what your thoughts are on financing there.

Well, Jamie. Yes, the swap burns off in January, that's right. But the natural maturity on that loan is not until November of '22. But I think what's likely -- and I know we talked about this in April with the expected disposition proceeds to help fund the preferred acquisition. Some of those, because we can pay the term loan off without penalty early, the likelihood is as we get those disposition proceeds in the door, first use of those and probably the 2021 proceeds will be to pay down the line and the acquisition bridge loan. And then the additional proceeds, which likely are to come in the door in the first half of '22, probably assuming we don't have anything outstanding on the line, which is probably likely would be used to pay down those term loans.

Both of them?

Yes. I mean, it depends on obviously the amount of proceeds that come in the door, but those would both be available and could be there. I think ultimately, what we said when we announced the acquisition is, it probably will take into the third quarter of 2022, maybe even in the fourth quarter to kind of get the debt stack to be normalized because there is a little bit of challenge of when some of the debt rolls and to be optimized. So I think there'll be a little bit of noise in sort of that debt stack as we move throughout 2022. But I think ultimately, as we get in the second half of the year, it should be -- that should get to a pretty normalized rate. That's where we think we'll have all the disposition proceeds in the door. Obviously, as we mentioned, the acquisition should have closed sometime in the third quarter here. And then our balance sheet should be back to normalized levels by sometime in the third quarter of next year.

Our next question comes from the line of Rob Stevenson with Janney.

Can you talk a little bit about what you're seeing on the development side? Are you getting close to any development starts? Or could we see the pipeline essentially go to 0 when Asurion completes in the fourth quarter? How should we be thinking about that?

Sure. So obviously, our outlook for the year is 0 to 250. We've got multiple conversations going on right now in multiple markets, both build-to-suit and pre-leased, what would be a pre-leased development starts. So I think we're making good progress. These things just take time. And we've been in discussions with several for a long time. But I'm hopeful that we can be in a position of some announcements later this year.

And just maybe to pile on, we are seeing a number of customers again. This is kind of definitely talking my own book. But they see the workplace as a core component of their culture and creating a new place is an important component to compete against the [indiscernible] or the other competitor for the talent. And so we've seen that pick up of companies looking to maybe move into new buildings, new space. And so that's part of that inbound development interest.

And I guess the other question there on the development side is given your commentary about where effective rents are down from where they were. I mean, how would the yield on a development start that you do today given where market pricing is compared to pre-pandemic. Are you looking at slightly lower or given escalators and everything else that you think that the development -- same development would be roughly similar? How should we be thinking about that as well?

Yes. So Rob, Brian, again. Great question. From our perspective, there's really kind of 2 ways to mitigate the escalation and kind of preserve yield. First, just to highlight, we do see escalations on costs kind of across the board. We're actively completing some complicated big projects across multiple markets right now. So we have real-time pricing with our GCs and selves, which is super helpful. So we're getting good information. First and foremost, we believe a lot of the cost escalation is a function of supply chain inefficiency and delays, everything from kind of commodity raw materials going through the system to even just HVAC and is being delivered. So we're looking forward to that leveling out as goods and materials began moving through the system. That being said, we don't see it going down. I'd love to see a construction price really go down, but we haven't really seen that over the last decades. Tongue in cheek, the good thing is we're not building anything out of wood. And so we're really looking at more of the more sophisticated kind of material providers in GC. So coming back to cost containment on preserving the yield. A lot of folks are [indiscernible] right now because many [indiscernible] their soft cost spend and keep going back to the GC community to get updated pricing. Well, with less visibility into actually what we've built and when it will be built, GCs and subs have quite a lot of cushion and contingency in there. So what we've done is we've continued to advance design. We found that greater certainty equals greater pricing visibility and in some way savings. So we're actively finishing that as we move closer to get visibility there. Now on the revenue side, back to something I've already mentioned, the quality of the workplace is being recognized as a key consideration in competing and retaining talent. And so I think some of you before had to listen to me talk about this thing called the [indiscernible] while Jones Lang LaSalle used it a little differently. Jones Lang LaSalle says a typical organization is going to spend $3 a foot on utilities, $30 a foot on rent and $300 a foot on people. And so what we're seeing is that, that workplace that $30 a foot, if it's a key contributor to maintain [indiscernible] or attracting that $300 a foot, companies are happy [indiscernible]. And so for new product, for highly amenitized, talent supportive workplace making, we're seeing that the market will pay for it. And so we're kind of attacking it 2 ways. Sorry for the long answer.

No, no, that's helpful. And then, Mark, you talked in your prepared comments about parking still tracking below 2019 levels. Where are you actually parking today in the most recent month or quarter tracking on parking and other occupancy dependent revenue versus pre-pandemic?

Yes. Brendan can give you more specifics on the exact numbers. But what I would say is we've had -- we're talking 40% kind of occupancy in the buildings and spread across markets with maybe some of the smaller tenants coming in sooner than the larger companies. But we've had pretty good transient parking in some of the markets. Orlando in particular, has had really good performance there. So I would say we're kind of on track to where we originally forecasted. And again, I'll let Brendan give you some numbers.

Sure. Yes, Rob. So we've done -- on parking revenue, we've done $10 million year-to-date, and we probably think will be that will accelerate a little bit in the second half of the year because of the trends that Mark mentioned. So let's call it maybe in the second half of the year, kind of $11 million puts us $21 million for the year. That compares to our original 2020 budget was about $26 million. So we're still down, call it, $5 million and down about 20% on parking revenue. We do like the trends that we're seeing, and we're hopeful that those things will fully recover as we get kind of over the next quarters, but still a little bit of a -- still a little bit of a loss there versus where we were 1.5 years ago.

And Rob, Brian here. I might just add a little additional color just on the op side. Those markets where our parking supports special events, say, Orlando next to the Dr. Phillips Performing Art Center in Nashville, that had 350,000 people for July 4. And Pittsburgh that has things coming back to the plaza there, is driving transient parking in a way that might have even been higher than we might have had in 2019. So Florida is getting back right on track. Nashville, in some cases, outperformed in 2019. So we're feeling optimistic there.

And are there any notable expense savings that you're still realizing from not having tenants back at full occupancy that are going to dissipate as we go forward, that it will offset some of those parking revenue gains?

Yes, there is some of that. So I think you probably can see that in the trend of what we've got, both if you look at kind of what we've done year-to-date, from a same-store perspective and both from kind of an FFO perspective. Now often, the third quarter for us is a seasonal low just because operating expenses tend to be higher. And then later on some repopulation of the office buildings, which will also drive OpEx up a little bit. And there will be some of that. Now what we have said is we still think the latent growth in parking revenue returning back to normal versus kind of getting OpEx back to normal is still a net positive for us as both normalize. But we will -- we do expect to see a little bit of pressure on OpEx as we move throughout the year as folks make their way back into their offices.

Okay. And then last one for me. What's the current expected timing for closing the Preferred Apartment acquisition?

We're getting close. It's a big transaction, very evolved, lots of moving pieces. So we're pleased with the way closing is going. The due diligence obviously done. So we're on track to meet the timeline we've outlined and very confident it's going to close. There's a loan assumption we got to get done. So we feel good about it closing along the timeline we set.

And that 1 asset that they were trying to market that you may or may not acquire. Is that, at this point, likely to be acquired by you guys? Or is that likely to be sold elsewhere?

It's currently being marketed for sale. I think the way the process is going, it's going pretty well. So I don't know for sure, but I think there's a good chance it won't be included.

Congratulations, Mark and Brendan.

Thanks, Rob.

[Operator Instructions]. Up next, we have a question from the line of Dave Rodgers with Baird.

Mark, thanks for all the help over the years. Good luck, and congrats Brendan. Well-deserved recognition for all your hard work. I wanted to start with Brian, if I could, on some of the leasing topics. Maybe 2 specific questions on leasing. The first I would say is it seems like given the larger amount of leases you signed or a number of leases that there's maybe a bend towards smaller lease signings? And do you think that's a function of what we expect to see going forward? Is that a function of your availability or the markets you're leasing in, if that's a possible takeaway? A second question on leasing would be the terms in the leases, are you seeing more lease termination options from tenants or earlier lease termination options from tenants? Any changes in kind of how that is unfolding here in the near term?

Dave, good questions, and thanks for asking. A couple of things. The bigger users, kind of in general across the board, the bigger users are delaying a lot of their bigger decisions with regard to return to work, specialization and where they might be moving to or not. So that's -- we've kind of just seen that across the board. So other than some of them looking at 2 or 3 years out about getting into a new building, they're generally kind of moving slower to understand getting the folks back. That's the first thing. So I don't know if it's necessarily predictor of the future or if it's applicable to the entire portfolio because we have a pretty good mix of small, medium and large-sized customers. But that's generally it. With regard to term, it's funny. I thought you were going one way. So I'm going to answer one thing you didn't ask is that this last quarter, it's interesting, we saw a significant improvement in the actual length of term of the deal. So if we would qualify something a short term 2 years or less through the quarters of the pandemic, we probably had 28% to 30% of the deal churn being in that short-term range, only 9% this quarter. So we're averaging term now going into the third quarter, looking north of 5 years getting longer, which is great. We still have some folks kind of kicking the can because they need to make bigger decisions. But I think we're starting to see people being more confident and look longer. Now to your specific question on termination options. Something we really bite pretty hard because most of these customers want a pretty good investment in TI, right? And so from our perspective, there's a certain amount of period you need of rent payers in there to [indiscernible] kind of TI contribution. So to the extent you're seeing any kind of termination options, they are probably 7-plus years out, and there's going to be a full reconciliation with regard to unamortized TI and commissions. But we're not seeing it too short. There are some customers who say their occupancy is tied to some kind of state contract or some other kind of major deal. And so we definitely try to be partners best we can. But we definitely push back as best we can.

That's helpful. Maybe, Ted, one for you on the non-core asset sales. I mean, since you've kind of talked about the non-core asset sales, let's say, over the last 6 to 9 months, how is the roll if pricing improved on those assets?

Yes, Dave. So we've got -- as you know, we've got a mix of assets that we've got out in the market. We've closed $43 million so far. That was a single tenant asset. We got incredibly strong pricing on that. So what we're seeing on the single-tenant assets, incredibly deep by accrual and very good pricing. So we've been very pleased. And pricing, in some cases, has exceeded our expectations. And then we've got the more multi-tenant or value-add deals that may have some vacancy or whatever. I said -- so I said that pricing has met our expectations. Buyer pool is a little less deep but there's still plenty of buyers out there to make a market. So I think all in all, our programs right on track, on timing and from a pricing perspective as well.

All right. Brendan, maybe one last one for you. I saw the adjusted cash same-store NOI growth would have been just over 5%, excluding the deferrals. And maybe you can give some pieces to that because I was thinking that because I think I saw a 200 basis point drop year-over-year in actual physical occupancy that should have offset the escalators and then the rent bumps in the last year or the leasing spreads have been more flat. So the big jump in the adjusted number seemed high. So I don't know if there was something else [indiscernible] off or the parking is part of that. Any color you can kind of piece up to that 5-plus percent on a core basis?

Yes, Dave, that's a good question. Just in general, I think that it goes to show just kind of the movement and the lumpiness by quarter. But in effect, what happened last year, particularly in the first half of the year, if you recall, we had a lot of strong leasing activity that occurred in late 2019, those leases generally commenced in the first half of 2020 and carried with them some free [indiscernible] to it. So we're kind of anniversarying against some of that, which is driving that difference that you talked about and probably making the delta between kind of that cash and GAAP same-store NOI growth wider in the first half of the year. That will kind of normalize as we go into the second half of the year. And even in the second half of the year, we've actually got a little bit of a headwind from the deferral payments that we had in the third and fourth quarter last year compared to this year. So all those things are going to kind of balance out. But what I would probably point you to is last year, if we exclude the net deferral payments, we were up about 3% on our same-store pool. This year, our guidance overall, which includes the net deferrals is, let's call it, about 5% at the midpoint of the range. We've said that net deferral repayments are going to add about 125 basis points to that. So we're going to be in that 3.5% to 4% range, excluding the deferrals. And I think that's a pretty good trend line over those couple of years and I think kind of shows generally what we've endeavor to kind of deliver on a same-store basis in that sort of 2.5% to 4% range. I think it's where we've said we feel like things are working well for the portfolio. And that's where we'll be if you look at that over a couple of year period, which kind of negates some of the noise that happens from a quarter-to-quarter perspective.

And now we have a question from the line of Vikram Malhotra with Morgan Stanley.

Congratulations, Mark and Brendan for all the hard work, I really appreciate it. Maybe just, Brendan, to clarify, you talked about the 2.5% to 4% same-store kind of run rate, which we're all used to historically. Just -- not looking for any specific guidance for '22, but given all the leasing that occurred and the uptick in new leasing specifically, can you give us some sense of the sort of the trajectory or anything we should be aware in terms of moving -- big moving pieces as we think about updating models for '22?

Yes. So obviously, without -- we're certainly not prepared to provide kind of an outlook for '22, but just thinking about large moving pieces, I guess. What I would say is there is -- and as we have disclosed in the updated 2021 outlook, we do expect year-end occupancy to be higher than where we thought at the beginning part of the year. So that was part of that move. That generally should be a positive now. I would [indiscernible] that a little bit with what I just mentioned, Dave, on the prior question, often, some of those leases can include some level of free rent and things like that. So there's often a lot of moving parts that are in the specific leases. But in general, I think, trend line on occupancy, we feel like it's positive for the back half of 2021, and that should translate into positive things as we think about 2022. There really isn't a lot in '22 with respect to kind of the same-store pool that is going to change, at least as -- where it stands now. So I'd say, '22 should be a pretty clean from a same-store pool perspective, but certainly, the occupancy trends in the back half of the year should bode well as we go forward over the next several quarters.

Okay. And then just one more. So the -- clearly, the demand continues to pick up from tech. The job growth is pretty strong. I'm just wondering, if you look at Charlotte, specifically a market where you're clearly you're looking to expand further cyclically. There's a lot of supply that's not released and hitting the market. And I'm just wondering kind of what risks you're looking at across some of your key markets?

Vikram, Brian here. You may not know this one of the extra half I get is the Charlotte division lead. So Charlotte is interesting. They had a couple of million square feet under construction a few years ago. And it ended up all being fully spoken for by the time it came through. There's another couple of million kind of underway now. And we look to the inbounds from out of market coming to Charlotte. So there was a fully spec building under construction in the south end empty, maybe very minor leasing -- And then this past quarter, USAA announces they're taking basically 100,000 square feet and moving a bunch of people in there from out of state. So even right next door to us at Legacy Union and Uptown, Robinhood has come in and is leasing 50,000 square feet. And so that's the [indiscernible] Charlotte, I think you do get some good chunks of occupancy from inbounds and companies growing. So I think the other thing, too, is there's really a few -- there's really 3 submarkets for Class A offices. Obviously, Uptown is still the largest, kind of a champion of the heavyweight, if you will. South End is the emerging market right next to Uptown. I mean, they're literally adjacent to each other, and you can -- across the street nearing 1 or the other, and then South Park. So it's a fairly constrained market within those submarkets as well. So I think we feel pretty good there. Nashville has been on the radar for a lot of development, 50% of all the development in Nashville is in downtown, a great deal of that was pre-leased. Some things have started fully spec during the pandemic, which we haven't seen anywhere else. So that was interesting that their [indiscernible]. I think it is still bullish enough on Nashville to capitalize -- kind of traditionally capitalize speculative development. But we don't have any role in downtown Nashville till 2025. We feel really good about our development site surrounding. We have multiple development sites surrounding Asurion's headquarters as well. So I feel pretty good. I think we have eyes wide open on every deal that's under construction, that's in development. It's on the boards and on inbounds. And right now, demand is still strong.

I'll now turn the presentation back to our presenters for their concluding remarks. Thank you.

Well, thank you all for your interest in Highwoods and thank you for joining the call today. If you have any follow-up questions, please feel free to reach out to any one of us. Thanks again.

And that does conclude the conference call for today. We thank you all for your participation and ask that you please disconnect your lines. Thank you once again. Have a wonderful day.