Highwoods Properties : 2023 Corporate Resiliency Report | Highwoods

ASURION GULCH HUB | NASHVILLE

2 0 2 3 C O R P O R AT E R E S I L I E N C Y R E P O RT

RESILIENCY with CONFIDENCE

#BETTERTOGETHER

TA B L E O F C O N T E N T S

2023 CORPORATE RESILIENCY REPORT

RESILIENCY with CONFIDENCE

3	Letter from the CEO	26	Healthy and Resilient Coworkers
4	HIW At-A-Glance	27	Employee Well-Being Program
5	Our Purpose	29	Employee Engagement
6	Resiliency with Confidence	30	Healthy and Resilient Buildings
7	Business Resiliency	31	Engaged Customers
8	Climate Resiliency	32	Customer Experience
9	Enterprise Risk Management | Asset Resilience Index	34	Diverse and Inclusive Culture
10	People Resiliency	36	Community Engagement
11	Business Continuity	37	Park Place | Nashville
12	ESG Strategy	38	Governance Structure
13	ESG Recognition and Leadership	39	Governance At-A-Glance
14	UN Sustainable Development Goals	40	Corporate Resiliency Team
16	ESG KPIs	41	Investor Engagement
17	ESG Policies	42	Industry Partnerships
18	Stakeholder Engagement	43	Ethics and Integrity
19	Materiality Analysis	44	Cybersecurity
20	Energy and Carbon	45	Energy Star Certifications
21	Water	47	2023 Environmental Performance
22	Materials and Waste	48	GRI Content Index
23	Biodiversity and Habitat	50	TCFD Disclosures | SASB Disclosures
24	New Developments	51	About This Report

25 The Heart of Highwoods

2023 PORTFOLIO

OVERVIEW

$5.7B

TOTAL ENTERPRISE

VALUE

29.2M

SQUARE FEET

165

BUILDINGS

1,570

CUSTOMERS

AS OF 12/31/2023

L E T T E R F R O M T H E C E O

On behalf of Highwoods, I am pleased to present our 2023 Corporate Resiliency Report. Over the last year, we have remained steadfast in our commitment to owning and operating a resilient, high-quality portfolio that thrives in all economic cycles. Our confidence for the future and the resiliency of our portfolio are supported by the following core principles of our Strategic Plan:

• We will own and operate high quality assets in the Best Business Districts (BBDs) in high-growth Sun Belt markets.
• We will create thoughtful, intentional and commute-worthy workplaces for our customers and their teammates.
• We will attract and retain a team of industry- leading professionals.
• We will maintain a strong balance sheet with ample liquidity.
• We will be disciplined yet opportunistic in growing our industry-leading platform.
• We will communicate transparently with all stakeholders.

By executing this straightforward strategy and adapting to the needs of our customers, we are navigating our way through the challenging and changing landscape for landlords, strengthening our balance sheet and are thrilled to see our customers thriving in our innovative, collaborative and best-in- class work environments.

To build an enduring business that prospers in all economic cycles, we must continuously assess and manage enterprise risks across our organization. In 2023, we formally assessed our enterprise risks, key business objectives and management capabilities to identify strategic business opportunities. And to drive resiliency across our assets, we created our own

comprehensive asset resilience index to quantify and embed enterprise risk, including climate change, into our financial and investment decision making.

We continued to elevate the customer experience in 2023 by establishing a customer experience department and expanding our #BetterTogether initiative, further embedding a hospitality mindset into our mission of exceeding customer expectations. We established a customer experience road map that aligns with our strategic objective of going beyond service to proactively anticipating our customers' wants and needs. In support of this initiative, we distributed a revamped customer engagement survey and implemented targeted initiatives to further improve the experiences that customers enjoy every day in their workplace.

In 2023, we advanced our ESG and resiliency strategy, achieving recognition from leading organizations:

• We earned the GRESB Green Star rating for the fourth consecutive year and continued to improve year- over-year performance.
• We earned recognition from industry leading ESG frameworks:
• • Sustainalytics: Ranked as "Low ESG Risk Profile"
  • MSCI: Awarded an A rating - one of the highest ratings for real estate companies.
  • ISS: Earned the highest ISS Governance Quality Score of 1 and earned an ESG Prime badge.
• We achieved our 20% energy and greenhouse
  gas (GHG) goals three years ahead of schedule and continued to raise the bar by establishing new, more aggressive goals.
• We invested over $7 million in portfolio-wide energy efficiency projects to further decarbonize our portfolio.

• We were recognized as a Green Lease Leader at the Gold level, acknowledging our commitment to collaborating with our customers to promote sustainability in the workplace.
• We established new enterprise-wide ESG goals aligned with the United Nations (UN) Sustainable Development Goal (SDG) framework.
• We achieved 100 ENERGY STAR certifications for the first time in Highwoods history.
• We achieved LEED and Fitwel certifications for all new, wholly owned developments.

We expanded our "Heart of Highwoods" program by launching an employee mentorship program and supporting more than 50 non-profit organizations in the communities where we live, work and play.

We received the 2023 Cigna Gold Level Healthy Workforce Designation for demonstrating a strong commitment to improving the health and well-being of our employees through our employee well-being program.

I am very proud of our team of talented professionals that have worked to advance the resiliency of our business. We continue to deliver on our commitment to create thoughtful, intentional and commute-worthy workplaces. Their creativity, passion and unwavering commitment to our mission has

made Highwoods a stronger, more resilient and purposeful organization.

Ted Klinck

President and

Chief Executive Officer

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H I G H W O O D S AT - A - G L A N C E

IN-PROCESS

DEVELOPMENT

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly traded (NYSE: HIW), fully-integrated office real estate investment trust (REIT) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the

work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders. For more information about Highwoods, please visit our website at highwoods.com.

$518M*

INVESTMENT

ULI'S 2024 TOP REAL

ESTATE MARKETS

DAL

(#3)

6%

PIT

5%

RIC

4%

NAS		RAL
(#1)	CLT
21%	(#9)
	(#13)	22%
	11%

ATL

(#4)

15%

6

BUILDINGS

1.6M

SQUARE FEET

>90%		ORL
NOI** IN TOP 20	TAM	(#19)
ULI MARKETS	5%

(#18)

11%

AS OF 12/31/2023

*AT HIW SHARE

**NOI ASSUMES STABILIZATION OF CURRENT DEVELOPMENT PIPELINE

~$40M*

STABILIZED

GAAP NOI

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O U R P U R P O S E

Highwoods is not a merchant builder or an arm's length asset manager, but rather an all-under- one-roofcollection of professionals committed to building, operating and maintaining the most talent-supportiveand resilient workplaces possible.

We aim to conduct our business in a manner that creates long-term value for stakeholders and contributes to positive economic, social and environmental outcomes for the communities we serve.

Developing lasting relationships with our customers is the foundation of who we are and what we do. This is our promise to our customers and our commitment to their success. Furthermore, we partner with local and diverse vendors, as well as local schools, colleges and universities, as part of our overall corporate resiliency strategy to ensure we are providing opportunities to small and minority-owned businesses and students seeking to start a career in commercial real estate. Supporting our communities through an inclusive culture will continue to strengthen our blend of expertise, passion and purpose.

We believe in building an enduring business that not only survives but prospers and thrives in all economic cycles. To achieve this long-termobjective, we must continuously assess and manage enterprise risks across our portfolio. This includes identifying financial and non-financialrisks so that management is informed and presented with a holistic view of enterprise risk. To this end, we have integrated both financial and non-financialrisks using a balanced scorecard approach to quantify and measure ESG- related and financial enterprise risks.

WORK STUDY STUDENTS & INTERNS

MARS PETCARE US HEADQUARTERS | NASHVILLE

VIRGINIA TECH REAL ESTATE CLUB PRESENTATION

BANK OF AMERICA TOWER | CHARLOTTE

HR TEAM		VIRGINIA SPRINGS | NASHVILLE

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R E S I L I E N C Y W I T H C O N F I D E N C E

Resiliency is a core component of the Highwoods Strategic Plan, and we are well-positioned to implement core environmental, social and governance (ESG) initiatives through the creation of resilient properties and communities. Our confidence for the future and the resiliency of our portfolio are supported by the following objectives:

• Focus on the Best Business Districts (BBDs) of eight core markets across the U.S. Sun Belt. Our markets have 2.0x growth in employment and 2.5x growth in population when compared to the national average.

• Maintain a strong balance sheet with ample liquidity that positions us to capitalize on potential growth opportunities in the coming years.
• Seek diversification of markets, customers, industries and lease size.
• Generate strong cash flows through attractive net effective rents and efficient capital expenditure spending.
• Capitalize on the accelerated "flight to quality" through the acquisition and development of high-quality assets and the disposition of low- quality assets.
• Maintain disciplined inventory of well-located land for future office and mixed-used development.

To advance our longterm resiliency and ESG initiatives, we have a management-level Corporate Resiliency Team that is overseen by the Company's Board of Directors. Composed of a diverse group of disciplines including executive leadership, the Corporate Resiliency Team is charged with refining our long-term resiliency strategy, driving performance improvements across our portfolio and tracking progress toward defined goals.

Our actions aim to drive business and economic resiliency and are anchored by our three ESG pillars: Business Resiliency, Climate Resiliency and People Resiliency.

BUSINESS RESILIENCY

• We are committed to managing our company in an ethical and transparent manner.
• We aim to maintain a resilient balance sheet which allows us to invest, grow and create value for all stakeholders.
• We are committed to an integrated Enterprise Risk Management framework that drives resiliency across the organization.
• We believe in Board independence and that the Board and Management exercise judgment and oversight over company operations, including ESG, that are aligned with business, stakeholder and societal interests.

CLIMATE RESILIENCY

• We are committed to reducing the environmental impact of our properties.
• We aim to push the envelope on sustainable building design and operations through innovative technologies, industry engagement and key partnerships.
• We are committed to using best-in-class ESG reporting standards that promote data quality and reliability in performance measurement.
• We are committed to achieving a low-carbon footprint through an asset life cycle perspective (site selection, development, acquisition and asset management).

PEOPLE RESILIENCY

• We aim to provide a safe and healthy work environment and improve the overall health and well-being of our employees.
• We are committed to improving the well-being of our customers by designing workspaces that promote health and wellness.
• We aim to engage with employees, customers and our communities to continuously promote the Highwoods culture of service.
• We are committed to advancing our diverse and inclusive culture within Highwoods and to engage with our partners and supply chain on diversity and inclusion initiatives.

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B U S I N E S S R E S I L I E N C Y

Our ESG Strategy is fundamental to our long-term success. As part of our mission to drive enterprise value and build a resilient and enduring business, we have created a business resiliency framework that includes a cross-functionalmanagement system that is aligned with the Highwoods Strategic Plan and business objectives. We call this our "resiliency management system."

The following principles are fundamental to our resiliency management system:

• Coherence
• Adaptiveness
• Reliability
• Agility

Our resiliency management system is organized into the following guiding principles:

• Strategy
• Organizational Resiliency
• Operational Resiliency
• Technology Resiliency
• Legal, Risk and Compliance Resiliency
• Financial Resiliency

STRATEGY

FINANCIAL	ORGANIZATIONAL
RESILIENCY	RESILIENCY

HIGHWOODS

BUSINESS

RESILIENCY

LEGAL, RISK	OPERATIONAL
AND COMPLIANCE
RESILIENCY
RESILIENCY
	TECHNOLOGY
	RESILIENCY

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C L I M AT E R E S I L I E N C Y

We collect environmental data for our properties through an integrated environmental management system that aims to analyze and mitigate environmental and climate risks and promote resiliency. Our goal is to increase energy, water and waste efficiencies across our portfolio, minimize our impact on the environment and make positive contributions to our customers, our communities and society as a whole.

We believe we have an important role to play in reducing greenhouse gas emissions and minimizing our environmental footprint associated with the development and operation of our properties. As such, we are actively decarbonizing our portfolio and have aligned our initiatives with global standards and best practices, including the Intergovernmental Panel on Climate Change (IPCC) and Task Force on Climate- related Financial Disclosure (TCFD).

The Investment Committee of our Board of Directors oversees all aspects of our climate risk and resiliency strategy, including the review of risk management policies, business plans, managing budgets, setting performance objectives and monitoring program implementation and performance. The Investment Committee meets with our Corporate Resiliency Team periodically to monitor progress towards climate-related goals, discuss climate-related issues and opportunities, and review impacts of recent acquisitions and divestitures. In 2023, this collaboration resulted in the development of a comprehensive

asset resilience index for quantifying and embedding enterprise risk, including climate change, into our financial and investment decision making.

Our climate resiliency initiatives strive to accomplish the following:

• Support global climate commitments
• Manage climate-related physical and transition risks throughout the life cycle of our assets
• Regularly assess the physical risks associated with climate change
• Utilize industry leading risk assessment tools to assess the potential financial impacts of climate risk factors
• Develop individual climate resiliency plans for assets with elevated climate-related risks
• Implement strategies to improve climate resiliency:
• • Due diligence climate risk assessments
  • Business continuity planning
  • Emergency response and evacuation planning
  • Floodable first floors
  • Elevated electrical infrastructure
  • Temporary flood barriers
  • Life safety analysis and back-up

energy generation

Further, we have adopted an asset life cycle perspective when assessing physical and transitional climate-related risks. This life cycle view of our portfolio is informed and guided by our environmentally focused acquisition, development and asset management procedures aimed at driving resiliency and sustainability. Key considerations of our approach include:

• Site Selection
• Material Sourcing and Procurement
• Renewable Energy
• Biodiversity and Habitat
• Indoor Environmental Quality
• Waste Management
• Water Management

HIGHWOODS LONG-TERM

CARBON STRATEGY

CARBON

OFFSETS

OFF-SITE

RENEWABLES

ON-SITE RENEWABLES

ELECTRIFICATION

UPGRADE SYSTEMS

REDUCE ENERGY USAGE

8

C A S E S T U D Y

E N T E R P R I S E R I S K

M A N A G E M E N T

Over the past four years, Highwoods has adapted to the impacts of the pandemic while balancing our long-term vision and growth plans. As we move into the future, our senior leadership team has established the following key objectives for Highwoods:

CUSTOMER EXPERIENCE:	MAINTAIN ACCESS	TRANSFORMATIVE
CREATING A COMMUTE-	TO CAPITAL	PORTFOLIO AND
WORTHY EXPERIENCE		INNOVATION

ADAPTING THE TALENT MODEL	ADVANCING TECHNOLOGY THAT
TO SUPPORT STRATEGY	ENABLES THE STRATEGY

C A S E S T U D Y

A S S E T R E S I L I E N C E

I N D E X

As part of our strategy to build an enduring business, we firmly believe that a resilient portfolio must consider both financial and non-financial risks.

In 2023, our Corporate Resiliency Team, with oversight from our Investment Committee, developed a comprehensive asset resilience index that included a blended score of financial and ESG metrics. We combine traditional financial key performance indicators (KPIs) for each asset with material climate related KPIs including historical GHG emissions, as well as susceptibility to climate physical risks, such as sea level rise, storm intensity, flooding and other physical characteristics. This balanced scorecard provides our leadership team additional insight into the resiliency of our assets today and into the future.

TIER	RESILIENCY	SCORE
(QUARTILE)
1st	Highly Resilient	79-95
2nd	Resilient	69-78

In 2023, our senior leadership team underwent a thoughtful and systematic process for analyzing strategic priorities, gathering risk information and prioritizing these risks based on the likelihood, impact and management capabilities with respect to each identified risk. This process led to the classification and stratification of over a dozen important risks and opportunities that were discussed

H

Risk Exposure

Potentially Requires

Additional

Resources

			6
	4	8
	3		7
	5	16
	12	1
14	15		9
	13	11	2
	10
		17

Significant

Resources

Already Applied

3rd	Moderately	59-68
Resilient
4th	Vulnerable	36-58

with the Board.

L

Management Capability

H

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P E O P L E R E S I L I E N C Y

Highwoods is re-imagining the workplace by creating innovative workplace experiences where people want to work and collaborate. By developing commute- worthy, compelling environments, we endeavor to make a positive impact in the lives of our customers, our coworkers and the communities in which we all live, work and play.

The "Heart of Highwoods" program was created as a foundational initiative focused on enhancing service to our communities and customers, expanding health and well-being resources for our customers and coworkers, advancing diversity and inclusion and enriching our company culture. These investments in our communities and workplaces are guided by a spirit of service that focuses on creating healthy and supportive environments where all can succeed, thrive and achieve their personal and professional goals.

Excelling in occupational health and safety shows that we care about our people and that we are willing to make the necessary investments to keep them safe, healthy and productive. In 2023, Highwoods was recognized by the National Council on Compensation Insurance (NCCI) as being "best-in-class" in having a low occupational incident rate. This rate is assessed by a company's experience modification rating (EMR), which measures the company's historical frequency and severity of occupational incidents. In 2023, we achieved an EMR of 0.58, which demonstrates that Highwoods is 42% more effective in reducing incidents than our industry peers, up from 38% more effective in 2022.

GENERATOR TRAINING		SPIRIT WEEK

MIDTOWN WEST 100% LEASED PARTY		HEART OF HIGHWOODS WALL

PARENT APPRECIATION DAY		HIGHWOODS HUDDLE

UNC PANEL DISCUSSION		EMPLOYEE CORNHOLE TOURNAMENT

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