Highwoods Properties Acquires Bloc83 and The Terraces

Highwoods Properties has acquired Bloc83, a two-building, 492,000 square foot mixed-use asset in CBD Raleigh, in a joint venture with the North Carolina Investment Authority and The Terraces, a 173,000 square foot office building in the Preston Center BBD of Dallas, in a joint venture with Granite Properties. Bloc83 is a 492,000 square foot mixed-use asset that includes two 10-story best-in-class office buildings with 27,000 square feet of ground floor amenity retail located in CBD Raleigh. The building includes a rooftop terrace, customer lounge, fitness center, and interactive sports room with a golf simulator, among other on-site customer amenities. Bloc83, which delivered between 2019 and 2021, was 97% leased on a combined basis at December 31, 2025 with a weighted average lease term of 6.5 years. The Company initially owns a 10% interest in the joint venture that was formed to acquire Bloc83. The North Carolina Investment Authority, a new strategic investment partner for Highwoods, owns the remaining 90% interest. The Company retains the option to increase its ownership interest to 50%. The joint venture's total investment is expected to be $210.5 million, which includes $3.3 million of planned near-term building improvements and $0.5 million of transaction costs. The Terraces is a 12-story best-in-class office building encompassing 173,00 square feet located in the heart of Dallas' Preston Center, a new BBD for Highwoods. The Terraces, which delivered in 2017, was 98% leased at December 31, 2025 with a weighted average lease term of 7.0 years. Rents are approximately 30% below market, which provides significant long-term upside potential. The Company owns an 80% interest in the joint venture that was formed to acquire The Terraces. Granite, the Company's longtime partner in Dallas, owns the remaining 20% interest. The Company also contributed to the joint venture $12.9 million (net of the Company's 80% interest) of preferred equity. The joint venture's total investment is expected to be $109.3 million, which includes $2.5 million of planned near-term building improvements and $0.5 million of transaction costs. During 2026, the Company's combined investment in The Terraces and Bloc83 joint ventures is expected to generate GAAP net operating income of $9.0 million and cash net operating income of $7.5 million. In addition, the Company expects to generate approximately $0.8 million of income during 2026 from its net preferred equity investment in The Terraces joint venture.