Highwoods Properties Annual Report 2000

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FY2000 Annual Report · Highwoods Properties

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Highwoods Properties, Inc.

3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604
(919) 872-4924

www.highwoods.com

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HIGHWOODS PROPERTIES

11 CORE MARKETS

591 PROPERTIES

46.2 MILLION SQUARE FEET OF SPACE

5,000 CUSTOMERS

1,800 ACRES OF DEVELOPMENT LAND

$3.71

$3.45

$3.22

$2.71

$2.32

$2.19

$2.25

$2.10

$1.98

$1.78

80.2%

73.0%

65.2%

64.3%

60.6%

1996 1997 1998 1999

2000

1996 1997 1998 1999

2000

1996 1997 1998 1999

2000

PER DILUTED SHARE

Funds from Operations

PER SHARE

Dividends

PERCENTAGE OF FFO

Dividend Payout Ratio

Highwoods Properties, Inc.

3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604
(919) 872-4924

www.highwoods.com

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H i g h w o o d s P r o p e r t i e s

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HIGHWOODS PROPERTIES

11 CORE MARKETS

591 PROPERTIES

46.2 MILLION SQUARE FEET OF SPACE

5,000 CUSTOMERS

1,800 ACRES OF DEVELOPMENT LAND

$3.71

$3.45

$3.22

$2.71

$2.32

$2.19

$2.25

$2.10

$1.98

$1.78

80.2%

73.0%

65.2%

64.3%

60.6%

1996 1997 1998 1999

2000

1996 1997 1998 1999

2000

1996 1997 1998 1999

2000

PER DILUTED SHARE

Funds from Operations

PER SHARE

Dividends

PERCENTAGE OF FFO

Dividend Payout Ratio

2000

TO-DO-LIST

Increase Return on
Invested Capital

Divest and/or Joint Venture
$650 Million of assets

Start at least $200 million
of new development

Fund 10 million share
repurchase program

Maintain a conservative
balance sheet

Increase investor awareness

Continue to provide highest
possible level of service to
our customers

Aggressively reduce costs

2001

TO-DO-LIST

Continue to provide highest
possible level of service to
our customers

Self fund at least $170 million of
franchise enhancing development
in core markets

Divest and/or Joint Venture
at least $200 million of assets

Increase Return on
Invested Capital

Continue to repurchase
undervalued shares

Grow same property net
operating income by 2.0–2.5%

Maintain portfolio
occupancy at 94%

SHAREHOLDER INFORMATION

Shareholder Contact
For shareholder mailings and
Company information:

Highwoods Properties, Inc.
Attention: Investor Relations
3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604

(919) 872-4924
(800) 939-7311
(919) 876-6929

E websitemail@highwoods.com

Annual Meeting
May 15, 2001, at 11:00 a.m.
Marriott Crabtree Valley
4500 Marriott Drive
Raleigh, North Carolina
(919) 781-7000

Corporate Address
3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604

(919) 872-4924
(919) 873-0088
w www.highwoods.com

Transfer Agent
For information regarding change of
address or other matters concerning your
shareholder account, please contact the
transfer agent at:

First Union National Bank
Shareholder Services Group
1525 West W.T. Harris Boulevard, 3C2
Charlotte, North Carolina 28288-1153

(800) 829-8432
(704) 590-0394

Dividend Reinvestment Plan
As provided by the terms of the Dividend
Reinvestment and Stock Purchase Plan
(the “Plan”), eligible shareholders are
able to reinvest all or a portion of their
dividends in shares of the Company’s
stock. Shareholders are also able to make
optional cash payments for the purchase
of additional shares. No brokerage
commissions or fees will be charged under
either option.

For assistance or questions about the Plan,
please contact Highwoods’ Investor Relations
Coordinator at the Corporate Ofﬁce.

THIS IS THE HIGHWOODS PROPERTIES 2000 ANNUAL REPORT. THIS ANNUAL

REPORT IS COMPLETE ONLY IF FORM 10-K IS ATTACHED TO THIS DOCUMENT.

The Common Stock has been traded on the New York Stock Exchange (“NYSE”) under the
symbol HIW since the Company’s initial public offering. The following table sets forth the
quarterly high and low sales prices per share as reported on the NYSE for the periods
indicated and distributions paid per share during each such period.

QUARTER ENDED

March 31
June 30
September 30
December 31

HIGH

$ 23.50
25.94
27.19
24.94

Market Information

2000
LOW

DISTRIBUTION

HIGH

$ 20.25 $ 0.555 $ 25.69
27.69
26.88
25.63

21.31
23.50
21.25

0.555
0.57
0.57

1999
LOW

DISTRIBUTION

$ 22.25 $ 0.54
0.54
0.555
0.555

22.75
22.25
20.25

On February 23, 2001, the last reported sale price of the Common Stock on the NYSE was
$24.03 per share. On February 23, 2001, the Company had 1,381 stockholders of record.

2000

TO-DO-LIST

Increase Return on
Invested Capital

Divest and/or Joint Venture
$650 Million of assets

Start at least $200 million
of new development

Fund 10 million share
repurchase program

Maintain a conservative
balance sheet

Increase investor awareness

Continue to provide highest
possible level of service to
our customers

Aggressively reduce costs

2001

TO-DO-LIST

Continue to provide highest
possible level of service to
our customers

Self fund at least $170 million of
franchise enhancing development
in core markets

Divest and/or Joint Venture
at least $200 million of assets

Increase Return on
Invested Capital

Continue to repurchase
undervalued shares

Grow same property net
operating income by 2.0–2.5%

Maintain portfolio
occupancy at 94%

SHAREHOLDER INFORMATION

Shareholder Contact
For shareholder mailings and
Company information:

Highwoods Properties, Inc.
Attention: Investor Relations
3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604

(919) 872-4924
(800) 939-7311
(919) 876-6929

E websitemail@highwoods.com

Annual Meeting
May 15, 2001, at 11:00 a.m.
Marriott Crabtree Valley
4500 Marriott Drive
Raleigh, North Carolina
(919) 781-7000

Corporate Address
3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604

(919) 872-4924
(919) 873-0088
w www.highwoods.com

Transfer Agent
For information regarding change of
address or other matters concerning your
shareholder account, please contact the
transfer agent at:

First Union National Bank
Shareholder Services Group
1525 West W.T. Harris Boulevard, 3C2
Charlotte, North Carolina 28288-1153

(800) 829-8432
(704) 590-0394

For assistance or questions about the Plan,
please contact Highwoods’ Investor Relations
Coordinator at the Corporate Ofﬁce.

THIS IS THE HIGHWOODS PROPERTIES 2000 ANNUAL REPORT. THIS ANNUAL

REPORT IS COMPLETE ONLY IF FORM 10-K IS ATTACHED TO THIS DOCUMENT.

QUARTER ENDED

March 31
June 30
September 30
December 31

HIGH

$ 23.50
25.94
27.19
24.94

Market Information

2000
LOW

DISTRIBUTION

HIGH

$ 20.25 $ 0.555 $ 25.69
27.69
26.88
25.63

21.31
23.50
21.25

0.555
0.57
0.57

1999
LOW

DISTRIBUTION

$ 22.25 $ 0.54
0.54
0.555
0.555

22.75
22.25
20.25

On February 23, 2001, the last reported sale price of the Common Stock on the NYSE was
$24.03 per share. On February 23, 2001, the Company had 1,381 stockholders of record.

Highwoods Properties, Inc.

3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604
(919) 872-4924

www.highwoods.com

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HIGHWOODS PROPERTIES

11 CORE MARKETS

591 PROPERTIES

46.2 MILLION SQUARE FEET OF SPACE

5,000 CUSTOMERS

1,800 ACRES OF DEVELOPMENT LAND

$3.71

$3.45

$3.22

$2.71

$2.32

$2.19

$2.25

$2.10

$1.98

$1.78

80.2%

73.0%

65.2%

64.3%

60.6%

1996 1997 1998 1999

2000

1996 1997 1998 1999

2000

1996 1997 1998 1999

2000

PER DILUTED SHARE

Funds from Operations

PER SHARE

Dividends

PERCENTAGE OF FFO

Dividend Payout Ratio

2000

TO-DO-LIST

Increase Return on
Invested Capital

Divest and/or Joint Venture
$650 Million of assets

Start at least $200 million
of new development

Fund 10 million share
repurchase program

Maintain a conservative
balance sheet

Increase investor awareness

Continue to provide highest
possible level of service to
our customers

Aggressively reduce costs

2001

TO-DO-LIST

Continue to provide highest
possible level of service to
our customers

Self fund at least $170 million of
franchise enhancing development
in core markets

Divest and/or Joint Venture
at least $200 million of assets

Increase Return on
Invested Capital

Continue to repurchase
undervalued shares

Grow same property net
operating income by 2.0–2.5%

Maintain portfolio
occupancy at 94%

SHAREHOLDER INFORMATION

Shareholder Contact
For shareholder mailings and
Company information:

Highwoods Properties, Inc.
Attention: Investor Relations
3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604

(919) 872-4924
(800) 939-7311
(919) 876-6929

E websitemail@highwoods.com

Annual Meeting
May 15, 2001, at 11:00 a.m.
Marriott Crabtree Valley
4500 Marriott Drive
Raleigh, North Carolina
(919) 781-7000

Corporate Address
3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604

(919) 872-4924
(919) 873-0088
w www.highwoods.com

Transfer Agent
For information regarding change of
address or other matters concerning your
shareholder account, please contact the
transfer agent at:

First Union National Bank
Shareholder Services Group
1525 West W.T. Harris Boulevard, 3C2
Charlotte, North Carolina 28288-1153

(800) 829-8432
(704) 590-0394

For assistance or questions about the Plan,
please contact Highwoods’ Investor Relations
Coordinator at the Corporate Ofﬁce.

THIS IS THE HIGHWOODS PROPERTIES 2000 ANNUAL REPORT. THIS ANNUAL

REPORT IS COMPLETE ONLY IF FORM 10-K IS ATTACHED TO THIS DOCUMENT.

QUARTER ENDED

March 31
June 30
September 30
December 31

HIGH

$ 23.50
25.94
27.19
24.94

Market Information

2000
LOW

DISTRIBUTION

HIGH

$ 20.25 $ 0.555 $ 25.69
27.69
26.88
25.63

21.31
23.50
21.25

0.555
0.57
0.57

1999
LOW

DISTRIBUTION

$ 22.25 $ 0.54
0.54
0.555
0.555

22.75
22.25
20.25

On February 23, 2001, the last reported sale price of the Common Stock on the NYSE was
$24.03 per share. On February 23, 2001, the Company had 1,381 stockholders of record.

2000 HIGHLIGHTS
Our 2000 operating results showcase
our growth this year and the accom-
plishments of our outstanding team:

Sold or Joint Ventured
$801 million of assets

Return on invested capital
increased to 9.9% from 9.6%
in 1999

TO OUR FELLOW SHAREHOLDERS

Funds From Operations per
share grew 7.5%

Delivered $272 million of new
development 90% pre-leased

Cash available for distribution
per share grew 10.0%

Same properties net operating
income grew 3.1%

Started $232 million of new
franchise enhancing development

It is a pleasure to report to our shareholders
another year of success at Highwoods. We met
or exceded all our major operating and
management goals for the year, which leaves
our Company well positioned to prosper in
the years to come. Completing the asset repo-
sitioning program that we began in early 1999
on time and as promised was only one of our
major accomplishments in 2000. Importantly,
we continued to grow funds rom operations
per share (FFO), increase our return on
invested capital and increase our dividend.
From a portfolio perspective, we continued
to execute on our core market straten, exiting
rom thin, weaker markets while reinvesting and strengthening our ranchise
in our 11 core markets. Today, Highwoods has a newer, higher qualiy and
more strategically focused portfolio in growing markets. Our extraordinary
local market professionals, premier properties, diversi0ed customer base
and land inventory are all strategically positioned to fuel continued growth.
While anticipating and adapting to change and building for the future,

Repurchased 4.2 million shares
and units at an average price
of $23.69

Secured new $300 million credit
facility on favorable terms

Highwoods performance during 2000 continued our history of strong
operational results. FFO per share grew 7.5 percent to $3.71. `is continued
our unbroken streak of FFO per share growth since the Company went public
in 1994. `e appeal of our properties and talent of our leasing teams were
demonstrated as we leased 10.5 million square fet of space and maintained
overall portfolio occupancy at 94 percent. We delivered 2.4 million square
fet of newly developed space with initial leasing of 90 percent. `e sale
or joint venture of $801 million in properties during 2000 provided the
funding for the repurchase of 4.2 million of our shares and operating
partnership units, the reduction of our outstanding debt and costs associated
with our development activities. Given a less certain economic outlook,
the total budgeted cost of development in process was reduced rom $579
million at year end 1999 to $336 million at year end 2000. In addition,
successful renewal of our credit faciliy in advance of its maturiy provided

Highwoods Properties 2000 Annual Report

the Company with an improved faciliy for our anticipated neds on
more favorable terms.

Joint ventures are an important element of our core market straten.

While sharing risks with other partners, Highwoods has accomplished a
number of diferent goals — enhancing our dominant core market portfolios;
earning market rate leasing, management and development fes; moving
development land into service; reing capital for share repurchase and
debt reduction; and funding the development of new properties to add to
our portfolio. As anticipated, the maturation of our early joint ventures has
begun to provide substantial management, leasing and development income
streams while the more recent ventures are quickly building momentum.

Operational changes at the Company during the year were implemented

to both improve e2ciency as well as enhance our customers’ experience.
Our accounting, service and reporting functions were enhanced with the
installation of a new sofware platform that is both easier to use as well as
more adaptive to specialized management reporting and strategic planning
requirements. Our axention to detail throughout the year resulted in same
property operating expense growth of only a modest 1.4 percent over the
level experienced in 1999.

Our already strong board was pleased to add to its roster the considerable

talents of Lawrence S. Kaplan. Mr. Kaplan joined the board in October
ater a carer that propelled him to the position of senior real estate partner
for Ernst & Young LLP’s global real estate practice. His experience and
judgement are highly sought and we are thankful that he chose to join the
Highwoods team.

Ater disappointing shareholder return in 1999, 2000 proved to be

a good year for REIT investors. `e S&P REIT composite index ranked
among the best of all market sector indices as investors re-evaluated the
securiy and income characteristics of REIT shares. For the year 2000, the
S&P REIT Composite Index return of 19.5 percent was far superior to the
S&P 500 index loss of 9.1 percent. `e S&P Technolon Sector Index,
which had performed so well in recent years, demonstrated the di2culties
in the technolon sector recording a 40.0 percent loss for 2000. Like our
market sector, Highwoods shares performed well for the year producing a
total return of 16.0 percent.

Our plan for 2001 and beyond is to enhance the ranchise we have
built in our core markets by continuing to provide superior products,

locations and service to our customers. Along with our strong development
pipeline, we intend to more amressively sek opportunities to utilize our
proven development and real estate operating skills in additional creative
and profitable ways. Speci0cally, we intend to increase our build-to-suit
activiy, develop properties in collaboration with our joint venture partners,
and pursue opportunities to internalize tenant improvement construction
and third-pary management opportunities.

In 2000 we began a concerted efort to ofer value-added services to

our customers through strategic relationships with other companies.
We made an amressive push to ofer a variey of telecommunications and
Internet connectiviy options for our customers, including several portfolio-
wide relationships. Seking additional revenue sources through providing
amenities to our customers will remain a focus in the upcoming year.
Our participation with the O2ce Technolon Consortium provides us with
an unparalleled means by which to evaluate such opportunities while also
allowing us to collaborate on best-practice e2ciencies that would be more
di2cult to obtain on our own.

`e success of the past year and our prospects for the future are the
result of the creativiy and hard work of the hundreds of individuals that
make Highwoods Properties the premier o2ce and industrial Company
serving the southeastern United States. Our team’s dedication is exceptional
and most appreciated. `e expert guidance of our board of directors is a
resource that cannot be overstated. `eir willingness to unsel0shly share
their insights and experience has played a pivotal role in shaping our
Company. It is an honor to work with them. Finally, to our shareholders
and customers, our most valued supporters, thank you. It is on your behalf
that all of us at Highwoods strive every day to improve the Company’s abiliy
to provide superior investment returns and exceptional value in our
products and services.

We look forward to sharing our progress with you throughout the

coming year.

O. Temple Sloan, Jr.
Chairman of the Board

Ronald P. Gibson
President and Chief Executive Officer

Highwoods Properties 2000 Annual Report

T H E P O W E R O F P L A C E
P O R T F O L I O

S T R E N G T H T H R O U G H D I V E R S I T Y

TODAY, HIGHWOODS HAS A NEWER, HIGHER QUALITY AND MORE
STRATEGICALLY FOCUSED PORTFOLIO IN GROWING MARKETS.

The diversiﬁcation of the Highwoods portfolio across seven states and 11 core
markets insulates the Company from economic dislocations that could occur. These
cities are among the fastest growing in the country and are major economic hubs
in states that contained 18 percent of the nation’s population, yet accounted for
27 percent of the nation’s growth according to the 2000 US Census. The diverse
economic drivers within our core markets add to the stability of our overall
portfolio. From high tech research and development in the Research Triangle to
service centers in Tampa, distribution in the Piedmont Triad and ﬁnancial services
in Richmond, our local market economies base their strength on a variety of
economic engines. Faster, more resilient growth is a distinguishing characteristic
of Highwoods markets. Over the ﬁve years ended December 2000, the National
Bureau of Labor Statistics reported that employment grew 11.6 percent in the
United States. The appeal of our 11 core markets is demonstrated by their
average employment growth of 15.9 percent over the same period, outpacing
the national averages by 37.1 percent. Our markets have also demonstrated that
their growth is more resilient in tougher economic times. During the recession
in the early 1990s, employment in Highwoods’ markets recovered to their peak
levels in an average of 24 months. Nationally, it took 35 months for employment
to re-attain its prior peak level. The cities of New York, Boston, Chicago,
San Francisco and San Jose took an average of 80 months to recover to their
prior employment levels.

PERCENT OF TOTAL ANNUALIZED RENTAL REVENUE

%
8
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i
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G

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O

HIGHWOODS MARKETS

KANSAS CITY

RICHMOND

NASHVILLE

PIEDMONT TRIAD

RESEARCH TRIANGLE

MEMPHIS

CHARLOTTE

GREENVILLE

ATLANTA

ORLANDO

TAMPA

Includes Highwoods share of joint venture revenues

Highwoods Properties 2000 Annual Report

T H E P O W E R O F P L A C E
C O R E M A R K E T S

ATLANTA

CHARLOTTE

GREENVILLE SC

KANSAS CITY MO

MEMPHIS

NASHVILLE

400

277

ATLANTA

285

485

146

385

GREENVILLE

276

CHARLOTTE

435

KANSAS CITY

177

MEMPHIS

240

705

440

NASHVILLE

155

$523 MILLION OF PROPERTIES
OWNED AND OPERATED
5-YEAR EMPLOYMENT GROWTH
20%

Atlanta

Georgia

16%

D I V I S I O N
O F F I C E R

Gene
Anderson
26 years
experience

$199 MILLION OF PROPERTIES
OWNED AND OPERATED
5-YEAR EMPLOYMENT GROWTH
14%

Charlotte

North Carolina

12%

D I V I S I O N
O F F I C E R

Tom
Cochran
23 years
experience

$113 MILLION OF PROPERTIES
OWNED AND OPERATED
5-YEAR EMPLOYMENT GROWTH
11%

Greenville

South Carolina

13%

D I V I S I O N
O F F I C E R

Tom
Cochran
23 years
experience

$507 MILLION OF PROPERTIES
OWNED AND OPERATED
5-YEAR EMPLOYMENT GROWTH
13%

Kansas City

Missouri

D I V I S I O N
O F F I C E R

Barry
Brady
24 years
experience

$126 MILLION OF PROPERTIES
OWNED AND OPERATED
5-YEAR EMPLOYMENT GROWTH
11%

Memphis

Tennessee

D I V I S I O N
O F F I C E R

Mike
Harris
26 years
experience

$313 MILLION OF PROPERTIES
OWNED AND OPERATED
5-YEAR EMPLOYMENT GROWTH
13%

Nashville

Tennessee

D I V I S I O N
O F F I C E R

Brian
Reames
13 years
experience

9 ofﬁce and industrial parks

*
feet of ofﬁce space
industrial space
ofﬁce and industrial portfolio in Atlanta

3.1 million square
3.0 million square feet of
Highwoods owns the third largest

*
space

4 ofﬁce parks

*
8% market share

1.5 million square feet of ofﬁce

*
space

2 ofﬁce parks.

*
15% market share

1.1 million square feet of ofﬁce

1 ofﬁce park

*
*
space
Plaza sub-market

1.0 million square feet of ofﬁce
largest owner of for-lease space in the

*
space

1 ofﬁce park

*
12% market share

1.1 million square feet of ofﬁce

*
space

5 ofﬁce parks.

*
20% market share

2.8 million square feet of ofﬁce

S U B - M A R K E T
D O M I N A N C E

THE KEY TO OUR STRENGTH

441

As a market leader, Highwoods sets
the standard for space and product
opportunities in our select locations.
Our properties are clustered in ofﬁce
and industrial parks in the key sub-mar-
kets of each of our cities. The clustering
of our properties offers advantages to
both our customers and our shareholders.
By locating in a Highwoods park, where
we control both the available space and
development land, we can readily accom-
modate our customers’ changing and
growing needs. Clustering facilitates the
high level of service that our customers
have learned to expect from Highwoods.
From maintenance to cleaning, the
diminution of travel time between prop-
erties means faster response time for
service calls and more efﬁcient delivery
of management services.

ORLANDO

PIEDMONT TRIAD

RESEARCH TRIANGLE

RICHMOND

TAMPA

ORLANDO

421

WINSTON-SALEM

150

220

GREENSBORO

DURHAM

RESEARCH
TRIANGLE PARK

540

RALEIGH

295

197

RICHMOND

580

275

HIGH POINT

311

CARY

440

$305 MILLION OF PROPERTIES
OWNED AND OPERATED
5-YEAR EMPLOYMENT GROWTH
29%

Orlando

Florida

19%

D I V I S I O N
O F F I C E R

Mike
Beale
20 years
experience

$432 MILLION OF PROPERTIES
OWNED AND OPERATED
5-YEAR EMPLOYMENT GROWTH
10%

Piedmont Triad

North Carolina

12%

D I V I S I O N
O F F I C E R

Mark
Shumaker
15 years
experience

$503 MILLION OF PROPERTIES
OWNED AND OPERATED
5-YEAR EMPLOYMENT GROWTH
19%

Research Triangle

North Carolina

12%

D I V I S I O N
O F F I C E R

Marcus
Jackson
15 years
experience

$265 MILLION OF PROPERTIES
OWNED AND OPERATED
5-YEAR EMPLOYMENT GROWTH
13%

Richmond

Virginia

13%

D I V I S I O N
O F F I C E R

Paul
Kreckman
26 years
experience

*
space

5 ofﬁce parks

*
15% market share

1.6 million square feet of ofﬁce

16 ofﬁce and industrial parks

*
*
feet ofﬁce of space
million square feet of industrial space
industrial market share

*
30% ofﬁce market share
*

2.4 million square
*
6.0
31%

*
space

12 ofﬁce parks

*
18% market share

3.7 million square feet of ofﬁce

Highwoods Properties 2000 Annual Report

*
space

4 ofﬁce parks

*
15% market share

2.3 million square feet of ofﬁce

TAMPA

$502 MILLION OF PROPERTIES
OWNED AND OPERATED
5-YEAR EMPLOYMENT GROWTH
23%

Tampa

Florida

19%

D I V I S I O N
O F F I C E R

Steve
Meyers
25 years
experience

*
space

5 ofﬁce parks

*
17% market share

4.0 million square feet of ofﬁce

T H E P O W E R O F P L A C E
S U B - M A R K E T S

PIEDMONT TRIAD AIRPORT AND WINSTON-SALEM NORTH

WINSTON-SALEM NORTH

311

421

WINSTON-SALEM

150

P I E D M O N T T R I A D A I R P O R T A N D W I N S T O N - S A L E M N O R T H

OFFICE AND INDUSTRIAL CROSSROADS

A natural crossroads, the Piedmont Triad has 14 distinct sub-markets for both ofﬁce as well as industrial space. For ofﬁce
users, Highwoods is the market leader in the Piedmont Triad Airport and Winston-Salem North sub-markets with 46 percent
and 54 percent shares respectively. Long known as a manufacturing center, Winston-Salem has experienced signiﬁcant growth
in the ﬁnancial and service sectors and is now the 11th largest banking center in the country and is home to a large and
growing health care community. Greensboro is a natural distribution center with more than half the national population within
600 miles. The area offers strong road, rail and air infrastructure that provides competitive transportation options to business
and industry. Highwoods enjoys a market-leading 31 percent share of for-lease industrial space. Two sub-markets, Piedmont
Triad Airport and Winston-Salem North comprise 31 percent of the total industrial space in the Triad area. Highwoods domi-
nates both with market-leading 39 percent and 53 percent shares respectively.

PIEDMONT TRIAD AIRPORT

220

GREENSBORO

BRENTWOOD/COOLSPRINGS

HIGH POINT

311

BRENTWOOD/COOL SPRINGS

155

705

440

NASHVILLE

NORTHWEST RICHMOND

295

NORTHWEST RICHMOND

301

250

150

301

RICHMOND

195

Highwoods Properties 2000 Annual Report

B R E N T W O O D /
C O O L S P R I N G S

NASHVILLE’S BUSINESS LOCATION

Travel 10 miles south on I-65 from
downtown Nashville and you will ﬁnd
yourself in the Brentwood/Cool Springs
sub-market. With more class A ofﬁce
space than Nashville’s central business
district, this is the place for business in
the greater Nashville area. Over the last
ﬁve years, this sub-market accounted
for more than one-half of the total ofﬁce
space absorbed in Nashville. Surrounded
by a variety of residential, shopping and
entertainment options, the area consis-
tently has some of the lowest vacancy
rates in the Nashville market. Highwoods
is the dominant landlord in the market
with a 20 percent share of the suburban
markets and a 26 percent share of
the for-lease space available in the
Brentwood/Cool Springs sub-market.
This dominance allows us to meet
a wide range of customer needs.

N O R T H W E S T
R I C H M O N D

INNSBROOK CORPORATE CENTER

Ranked eleventh among America’s 50
hottest cities for business by Expansion
Management magazine in January 2001,
Richmond, conveniently located midway
between Boston and Atlanta, is a regional
financial and legal center. The northwest
sub-market is the dominant sub-market
in Richmond; Innsbrook is the dominant
park in that sub-market, and; Highwoods
is the dominant owner of for-lease space
and development land in Innsbrook.
With a 19 percent share of the northwest
sub-market that is 98 percent leased,
Highwoods is the market leader in
northwest Richmond ofﬁce space.

T H E P O W E R O F P L A C E
D E V E L O P M E N T

AMENITIES AT GLENLAKE

R E Z O N E , A C Q U I R E , D E V E L O P

GLENLAKE

HIGHWOODS CONTINUES TO

R E S I D E N T I A L

BUILD ON ITS REPUTATION AS A QUALITY DEVELOPER.

75' BUFFER

Highwoods continues to build on its reputation as a quality developer. For example,
in Raleigh we are starting an exciting project we have named GlenLake. From
the ﬁrst 158,000 square foot building currently under way, GlenLake will grow
into a nine-building, 875,000 square foot ofﬁce park. Located just outside I-440,
six miles from downtown and 14 miles from Research Triangle Park, the site
was Raleigh’s most sought after in-ﬁll location. It is adjacent to the 1.3 million-
square foot Crabtree Valley Mall, Eastern North Carolina’s premier shopping
destination. Surrounding the remainder of the site are dense residential neighbor-
hoods. Highwoods acquired this highly prized parcel despite strong competition
from rival suitors. The owners knew our history of responsible development and
were conﬁdent that our plans would be the best use of their land.

Like all of our development projects, GlenLake was subject to the rigorous scrutiny
of our capital allocation process. Highwoods’ local market experts generate project
ideas based on their unique knowledge of their markets conditions. Our investment
committee of ﬁve board members then analyzes each project. Capital is allocated
to the best proposals while others are declined. This combination of local market
expertise with a disciplined capital allocation process has been a key element in
the long-term success of our development activities.

1 0

M I L

D W A

R E S I D E N T I A L

PA R K I N G
D E C K

P U B L I C
S C H O O L

PA R K I N G
D E C K

C E N T R A L
P L A Z A

R
E
F
F
U
B

5
7

PA R K I N G
D E C K

R E S I D E N T I A L

LAKE

5 ' B

PA R K I N G
D E C K

LAKE

Surrounding a central plaza with gardens and a fountain, GlenLake offers a unique blend of ofﬁce park amenities in an
in-ﬁll location. Close to retail, residential and entertainment, customers will enjoy an ofﬁce environment unlike
anything else in Raleigh.

R O A D

I D G E

B L

R E S I D E N T I A L

Highwoods Properties 2000 Annual Report

FITNESS TRAIL

G L E N L A K E
S C H E M AT I C M A S T E R P L A N

VICINITY

RTP

R E S I D E N T I A L

540

RALEIGH

R E S I D E N T I A L

CARY

440

D Shopping

Center

Shopping
Mall

D A

GlenLake

440

GLEN EDEN RD

E R

Offices
E R
Shopping
Center

LAKE BOONE TR

R E S I D E N T I A L

Offices

D
E R
G
RID

WADE AVE

ED W ARDS MILL RD

Hospital
D
R
E
G
D
I
R
E
U
L
B

Offices

Arena

440

Nine-building campus to accom-
modate 875,000 square feet

Front and rear lobbies plus two
side entries

Flexible ﬂoor plans for large
and small users

Telecommunications conduit
systems to allow “hardwiring”
from building to building

Expansive central plaza area
to include extensive landscaping,
fountain and outdoor study garden

Covered parking

Fitness trail, showers and
locker facilities

Access to interstate system
via Edwards Mill Road

Centrally located to Raleigh,
Durham and Chapel Hill

Premier shopping – within
walking distance to mall with
more than 180 stores

Surrounded by exclusive
residential communities

1 1

Close proximity to area’s
ﬁnest hotels and major
ﬁnancial institutions

CATERPILLAR FINANCIAL CENTER

T H E P O W E R O F P L A C E
C U S T O M E R

B U I L D - T O - S U I T

FROM DIRT TO DONE

For customers desiring to own their facility, Highwoods offers a comprehensive
package of services to meet their needs. From fully entitled land in great locations
through needs assessment, design consultations, cost estimates, construction
management and ongoing property management and maintenance services,
Highwoods delivers for our customers. Partnering with Highwoods brings the
experience and abilities of one of the largest ofﬁce and industrial developers
to the project. Customers can be conﬁdent that their quality project will be
completed on time, within budget and as promised. The same diligence applies
regardless of whether their needs call for a 100,000 square foot industrial
building or a 800,000 square foot multi-building campus.

1 3

CATERPILLAR FINANCIAL CENTER

312,500 SQUARE FEET

“Our experience with Highwoods during the
construction of the Caterpillar Financial Center
in Nashville, Tennesse was extremely positive.
Highwoods dedicated tremendous efort in helping
us work through the many details required of a
project of this magnitude. `ey understood our
neds and worked diligently with the design and
construction team to deliver a building for us that
is both striking in appearance and functional for
our business. `e Highwoods personnel have ben
professionals in every phase of the project. `ey
worked many hours with our building team to
coordinate the design and construction process,
while always taking time to address any issues or
concerns. In fact, we fondly think of them as part
of the Caterpillar Financial family today!”

JAMES S. BEARD
Vice President, Caterpillar Financial

Highwoods Properties 2000 Annual Report

1 2

FROM DIRT TO DONE
Highwoods development history
is unmatched in the Southeast.

Since Initial Public Offering:

$1.2 billion starts

123 projects

12% stabilized yield

$350 million value created

Current Development Pipeline:

$336 million budgeted cost

26 projects under way

9 markets

60% pre-leased

45% funded

Internet

Internet-based purchasing and leasing
save time and money for both our
customers and Highwoods.

1 4

HVAC

Centralized monitoring and control of
heating and cooling systems allows us to
respond to special needs more quickly and
cost effectively.

Power

Planning for Uninterruptible Power
Supply systems is a normal part of our
new building design process.

T H E P O W E R O F P L A C E
O P E R A T I O N S

Lighting

30,000 light ﬁxtures keep our
buildings bright.

TECHNOLOGY

Highwoods continues to expand its
use of technology to enhance our
customer’s experience.

Centralized monitoring and
control of heating, ventilation,
and air conditioning systems.

Planning for uninterruptible
power supply systems and
expanded telephony is a normal
part of our new building design.

Internet-based purchasing and
leasing save time and money.

MAINTENANCE

During the course of a year,
Highwoods maintains and preserves:

2.5 million square yards
of carpet

500 acres of grounds

4,000 restrooms

1 5

Telephony

Planning for expanded telephony
systems is a normal part of our building
design process.

Carpeting

During the course of a year, Highwoods
sees to it that 2.5 million yards of
carpeting are vaccuumed.

O P E R A T I O N S

CHANGES TO IMPROVE EFFICIENCY AS WELL AS
ENHANCE OUR CUSTOMERS’ EXPERIENCE.

Highwoods operates our premier properties with the client in mind. Weekly divi-
sional meetings keep local personnel current with the latest developments in their
markets. Monthly, a group meeting of senior management reviews progress on
companywide initiatives. Twice a year, senior management conducts meetings with
all employees to discuss company goals and objectives. These formal meetings serve
as an idea swap and information sharing venue to ensure that the best ideas for
serving our clients are utilized across our platform.

Technology plays an ever-increasing role in all our lives. Highwoods continues to
expand our use of technology to enhance our customers’ experience. Centralized

monitoring and control of heating
and cooling systems allows us to
respond to special needs more quickly
and cost-effectively. Planning for
uninterruptible power supply systems
and expanded telephony is a normal
part of our new building design
process. Internet-based purchasing
and leasing continues to grow, saving
both time and money for Highwoods
and our customers.

Keeping it clean and fresh looking
is no small task when you own 40
million square feet of space. Nearly
200 maintenance and service employ-
ees pride themselves on providing our

customers with properties maintained
like no others. During the course of a
year, Highwoods sees to it that
approximately 2.5 million yards of
carpeting is vacuumed, 500 acres of
grass and grounds are maintained
and all the other details required to
keep our properties looking fresh are
attended to in a professional manner.

Our leasing professionals are on the
front line of meeting our customers’
space needs. Their experience, train-
ing and professionalism are second
to none. They assist customers in
understanding the market, evaluating
space options and attending to the

Highwoods Properties 2000 Annual Report

details of moving into new space.
With many customers in multiple
buildings and markets, consistent
quality and service delivery are
assured by our corporate host
program which partners one
Highwoods leasing professional
with all of a customers locations.

Highwoods supports the notion
that real estate is an inherently local
business. That is not to say that
centralization of some functions is
without merit. Where we touch the
customer most often – leasing, asset
management, build-to-suit projects
and a myriad of other tasks – people

and decision authority are local. Where
centralization makes sense – ﬁnancial
management, lease accounting, tax
accounting, beneﬁts management
and capital allocation – we have
centralized functions in our Raleigh
headquarters to maximize the effec-
tiveness and minimize the cost of
these functions.

BOARD OF DIRECTORS

SENIOR OFFICERS

Thomas W. Adler

Managing Partner for
NewGar, Ltd.

Gene H. Anderson

Kay N. Callison

Edward J. Fritsch

Senior Vice President

Former Director of
J.C. Nichols Company
and Community Volunteer

Executive Vice President,
Chief Operating Ofﬁcer
and Secretary

1 6

Ronald P. Gibson

William E. Graham, Jr.

Lawrence S. Kaplan

L. Glenn Orr, Jr.

President and
Chief Executive Ofﬁcer

Senior Counsel,
Hunton & Williams and
Past Vice Chairman of
Carolina Power and Light

Past Partner of
Ernst and Young LLP

Director and Past Chairman,
President and Chief Executive
Ofﬁcer of Southern National
Corporation

O. Temple Sloan, Jr.

Willard H. Smith Jr.

John L. Turner

Chairman of the
Board of Directors

Chairman of the
Board of Directors
of General Parts, Inc.

Past Managing Director
of Merrill Lynch

Chief Investment Ofﬁcer
and Vice Chairman of the
Board of Directors

Ronald P. Gibson*

President, Chief Executive Ofﬁcer and
Director

John L. Turner*

Chief Investment Ofﬁcer and
Vice Chairman of the Board of Directors

Edward J. Fritsch*

Executive Vice President,
Chief Operating Ofﬁcer, Director
and Secretary

Gene H. Anderson*

Senior Vice President and Director

Michael F. Beale*

Senior Vice President

Barrett Brady

Senior Vice President

Thomas F. Cochran

Senior Vice President

Michael E. Harris*

Senior Vice President

Marcus H. Jackson*

Senior Vice President

Paul W. Kreckman

Vice President

Carman J. Liuzzo*

Vice President,
Chief Financial Ofﬁcer and Treasurer

Stephen A. Meyers

Vice President

Scott I. Peek, Jr.

Vice President

Mack D. Pridgen III*

Vice President,
General Counsel and Assistant Secretary

W. Brian Reames

Vice President

W. Mark Shumaker

Vice President

*Ofﬁcers subject to the reporting require-
ments of Section 16 of the Securities
Exchange Act of 1934.

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Highwoods Properties, Inc.

3100 Smoketree Court, Suite 600
Raleigh, North Carolina 27604
(919) 872-4924

www.highwoods.com

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HIGHWOODS PROPERTIES

11 CORE MARKETS

591 PROPERTIES

46.2 MILLION SQUARE FEET OF SPACE

5,000 CUSTOMERS

1,800 ACRES OF DEVELOPMENT LAND

$3.71

$3.45

$3.22

$2.71

$2.32

$2.19

$2.25

$2.10

$1.98

$1.78

80.2%

73.0%

65.2%

64.3%

60.6%

1996 1997 1998 1999

2000

1996 1997 1998 1999

2000

1996 1997 1998 1999

2000

PER DILUTED SHARE

Funds from Operations

PER SHARE

Dividends

PERCENTAGE OF FFO

Dividend Payout Ratio