Supplemental Operating Information of Highwoods Properties

EX-99.2 3 dex992.htm SUPPLEMENTAL OPERATING INFORMATION OF HIGHWOODS PROPERTIES Supplemental Operating Information of Highwoods Properties

Exhibit 99.2

LOGO

Supplemental Information

December 31, 2004

Supplemental Information

Table of Contents

December 31, 2004


Schedule		Page
Summary and Corporate Information		i, ii and iii

Consolidated Statements of Income		1
Statement of Funds from Operations		2
Statement of Cash Available for Distribution to be issued at a later date		3
Consolidated Balance Sheets		4
Estimated Net Asset Value		5
Components of Discontinued Operations		6
Capitalization		7
Long-Term Debt Summary		8
Long-Term Debt Detail		9
Portfolio Summary		10, 11 and 12
Occupancy Trends		13
Leasing Statistics		14, 15 and 16
Leasing Statistics by Market		17
Rental Rate Comparisons by Market		18
Lease Expirations		19 and 20
Office Lease Expirations by Market by Quarter		21
Industrial Lease Expirations by Market by Quarter		22
Office Lease Expirations by Market by Year		23
Industrial Lease Expirations by Market by Year		24
Customer Diversification		25
Same Property Performance		26
Acquisition Activity		27
Disposition Activity and Depreciable Assets Contributed to Joint Ventures		28
Development Activity		29
Development Land		30
Unconsolidated Joint Ventures Assets, Debt and Liabilities		31
Unconsolidated Joint Ventures Income (Three Months)		32
Unconsolidated Joint Ventures Income (Twelve Months)		33
Joint Ventures Long-Term Debt Detail		34
Joint Ventures Portfolio Summary		35
Joint Ventures Lease Expirations		36
Joint Ventures Development		37

The information within refers to all Highwoods Properties’ wholly-owned entities, except pages 32 to 37 unless

noted otherwise.

differ materially from Highwoods’ current expectations include general economic conditions, local real estate conditions, the timely development and lease-up of properties, and the other risks detailed from time to time in the Company’s SEC reports.

Summary

Dollars in thousands, except per share amounts


	*Three Months Ended*						Change f/(u)
	12/31/04			12/31/03			Change f/(u)
Operations
Rental and other revenues from continuing operations	$	115,593		$	124,734		$	(9,141	)
Rental property expense from continuing operations		41,195			45,900			4,705

Net operating income from continuing operations	$	74,398		$	78,834		$	(4,436	)

Rental and other revenues from discontinued operations	$	1,785		$	2,784		$	(999	)
Rental property expense from discontinued operations		907			1,451			544

Net operating income from discontinued operations	$	878		$	1,333		$	(455	)

Equity in earnings of unconsolidated affiliates		2,033			1,272			761
General and administrative		10,841			6,957			(3,884	)
G&A as a % of rental and other revenues and equity in earnings of unconsolidated affiliates		9.1	%		5.4	%		-3.7	%

EBITDA calculation
Net income	$	8,540		$	10,940		$	(2,400	)
Addback depreciation and amortization		34,628			35,179			(551	)
Addback depreciation and amortization from unconsolidated affiliates		2,620			1,776			844
Addback interest expense		28,911			34,164			(5,253	)
Addback interest expense from unconsolidated affiliates		3,420			2,246			849

EBITDA	$	78,119		$	84,630		$	(6,511	)

Interest expense from continuing operations	$	28,911		$	34,164		$	5,253
Interest expense from discontinued operations		—			—			—
Interest expense from unconsolidated affiliates		3,420			2,571			(849	)
EBITDA/Interest expense		2.42			2.30			0.12
EBITDA/Interest expense + preferred dividends		2.13			2.02			0.11
Net income	$	8,540		$	10,940		$	(2,400	)
Funds from operations		32,124			35,849			(3,725	)
Per share - diluted:
Net income	$	0.02		$	0.06		$	(0.04	)
Funds from operations		0.53			0.60			(0.07	)
Dividends paid		0.425			0.425			—
Dividends paid as % of funds from operations		80.2	%		70.8	%		-9.4	%

	12/31/04			12/31/03			Change f/(u)
Capitalization
Market capitalization:
Long-term debt	$	1,572,169		$	1,717,765			(145,596	)
Financing obligations		65,309			125,777			(60,468	)
Preferred equity at redemption value		377,445			377,445			—
Market value of common equity		1,659,646			1,515,795			143,851

Total market capitalization	$	3,674,569		$	3,736,782		$	(62,213	)

	12/31/04			12/31/03			Change f/(u)
Portfolio - wholly-owned
Total In-Service Square Footage		33,866,000			34,922,000			(1,056,000	)
Occupancy		85.0	%		81.5	%		3.5	%
Same Property NOI (GAAP basis)	$	67,787		$	67,878		$	(91	)

Corporate Information


Board of Directors		Research Coverage

Thomas W. Adler		Deutsche Banc Securities
Gene H. Anderson		Lou Taylor - 212-469-4912
Kay N. Callison
Edward J. Fritsch		Green Street Advisors
Ronald P. Gibson		Jim Sullivan - 949-640-8780
William E. Graham Jr.
Lawrence S. Kaplan		KeyBanc Capital Markets
L. Glenn Orr Jr.		Richard Moore - 216-443-2815
O. Temple Sloan Jr., Chairman
Willard H. Smith Jr.		Legg Mason
John L. Turner		David Fick - 410-454-5018
F. William Vandiver, Jr.
		Morgan Stanley Dean Witter
		Gregory Whyte - 212-761-6331
Senior Management Team
		Prudential Equity Group
Edward J. Fritsch		Jim Sullivan - 212-778-2515
President, Chief Executive Officer and Director
		Smith Barney Citigroup
Michael E. Harris		Jonathan Litt - 212-816-0231
Executive Vice President and Chief Operating Officer
		UBS Warburg
Terry L. Stevens		Keith Mills - 212-713-3098
Vice President, Chief Financial Officer
and Treasurer		Wachovia Securities
		Chris Haley - 443-263-6773
Gene H. Anderson
Senior Vice President and Director

Michael F. Beale
Senior Vice President

Robert G. Cutlip
Senior Vice President

W. Brian Reames
Senior Vice President

Thomas S. Hill
Corporate Vice President, Leasing

Carman J. Liuzzo
Vice President, Investments and
Strategic Analysis

Kevin E. Penn
Chief Information Officer and
Business Solutions Officer

Mack D. Pridgen III
Vice President, General Counsel and
Secretary

Corporate Information


Divisional Offices		Corporate Headquarters
		Highwoods Properties, Inc.
Atlanta/Piedmont Triad		3100 Smoketree Court, Suite 600
Gene H. Anderson - Regional Manager		Raleigh, NC 27604
		919-872-4924
Atlanta, GA
Gene H. Anderson, Senior Vice President		Stock Exchange
		NYSE Trading Symbol: HIW
Piedmont Triad, NC
Mark W. Shumaker, Vice President		Investor Relations Contact
		Tabitha Zane
Orlando/Tampa		Sr. Director, Investor Relations
Michael F. Beale - Regional Manager		Phone: 919-431-1529
		Fax: 919-876-6929
Orlando, FL		E-mail: tabitha.zane@highwoods.com
Michael F. Beale, Senior Vice President
		Information Request
Tampa, FL		To request a standard Investor Relations package, Annual Report or to be added to our e-mail or fax list, please contact the Investor Relations Coordinator at:
Stephen A. Meyers, Vice President

Raleigh/Richmond		Phone: 800-256-2963
Robert G. Cutlip - Regional Manager		Email: HIW-IR@highwoods.com

Raleigh, NC		The Company
Robert G. Cutlip, Senior Vice President		Highwoods Properties, Inc., a member of the S&P MidCap 400 Index, is a fully integrated, self-administered real estate investment trust (“REIT”) that provides leasing, management, development, construction and other customer-related services for its properties and for third parties. As of December 31, 2004, the Company owned or had an interest in 510 in-service office, industrial and retail properties encompassing approximately 40.8 million square feet. Highwoods also owns 1,115 acres of development land. Highwoods is based in Raleigh, North Carolina, and its properties and development land are located in Florida, Georgia, Iowa, Kansas, Maryland, Missouri, North Carolina, South Carolina, Tennessee and Virginia. For more information about Highwoods Properties, please visit our Web site at www.highwoods.com.

Richmond, VA
Paul W. Kreckman, Vice President

Charlotte/Memphis/Nashville
W. Brian Reames - Regional Manager

Nashville, TN
W. Brian Reames, Senior Vice President

Charlotte, NC
Thomas F. Cochran, Senior Vice President

Memphis, TN
Steven Guinn, Vice President

Kansas City
Kansas City, MO
Barrett Brady, Senior Vice President

LOGO

iii

Consolidated Statements of Income

Dollars in thousands, except per share amounts


	*Year Ended*						*Three Months Ended*
	12/31/04			12/31/03			12/31/04			09/30/04			06/30/04			03/31/04			12/31/03
Rental and other revenues	$	464,078		$	495,861		$	115,593		$	113,161		$	116,747		$	118,577		$	124,734

Operating expenses:
Rental property		168,023			174,855			41,195			41,437			41,789			43,602			45,900
Depreciation and amortization		136,451			138,633			34,543			33,160			33,904			34,844			34,322
Impairments of assets held for use		1,270			—			1,270			—			—			—			—
General and administrative		39,695			25,543			10,841			10,166			7,945			10,743			6,957

Total operating expenses		345,439			339,031			87,849			84,763			83,638			89,189			87,179
Interest expense:
Contractual		105,569			119,291			25,552			25,564			27,304			27,149			29,051
Amortization of deferred financing costs		3,677			4,398			826			782			925			1,144			908
Financing obligations		10,123			17,811			2,533			1,409			1,457			4,724			4,205

		119,369			141,500			28,911			27,755			29,686			33,017			34,164
Other income/(expense):
Interest and other income		6,708			6,203			1,702			1,752			1,497			1,757			1,718
Settlement of bankruptcy claim		14,435			—			—			14,435			—			—			—
Loss on debt extinguishments		(12,457	)		(14,653	)		—			—			(12,457	)		—			—
Gain on extinguishment of co-venture obligation		—			16,301			—			—			—			—			—

		8,686			7,851			1,702			16,187			(10,960	)		1,757			1,718

Income/(loss) before disposition of property, co-venture expense, minority interest and equity in earnings of unconsolidated affiliates		7,956			23,181			535			16,830			(7,537	)		(1,872	)		5,109
Gains on disposition of property, net		21,515			12,387			3,445			2,215			14,770			1,085			4,353
Co-venture expense		—			(4,588	)		—			—			—			—			—
Minority Interest in the Operating Partnership		(704	)		(569	)		180			(1,464	)		(132	)		712			(400	)
Equity in earnings of unconsolidated affiliates		7,277			4,673			2,033			2,555			1,477			1,212			1,272

Income from continuing operations		36,044			35,084			6,193			20,136			8,578			1,137			10,334
Discontinued operations:
Income from discontinued operations, net of minority interest		1,694			3,101			713			345			273			363			450
Gain/(loss) on sale of discontinued operations, net of minority interest		2,243			8,487			1,634			630			(3,457	)		3,436			156

		3,937			11,588			2,347			975			(3,184	)		3,799			606

Net income		39,981			46,672			8,540			21,111			5,394			4,936			10,940
Dividends on preferred stock		(30,852	)		(30,852	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)

Net income available for/(loss attributable to) common stockholders	$	9,129		$	15,820		$	827		$	13,398		$	(2,319	)	$	(2,777	)	$	3,227

Net income/(loss) per common share - basic:
Income/(loss) from continuing operations	$	0.10		$	0.08		$	(0.03	)	$	0.23		$	0.02		$	(0.12	)	$	0.05
Income/(loss) from discontinued operations	$	0.07		$	0.22		$	0.05		$	0.02		$	(0.06	)	$	0.07		$	0.01

Net income/(loss)	$	0.17		$	0.30		$	0.02		$	0.25		$	(0.04	)	$	(0.05	)	$	0.06

Weighted average common shares outstanding - basic		53,323			52,950		$	53,424			53,400			53,275			53,186			52,976

Net income/(loss) per common share - diluted:
Income/(loss) from continuing operations	$	0.10		$	0.08		$	(0.03	)	$	0.23		$	0.02		$	(0.12	)	$	0.05
Income/(loss) from discontinued operations	$	0.07		$	0.22		$	0.05		$	0.02		$	(0.06	)	$	0.07		$	0.01

Net income/(loss)	$	0.17		$	0.30		$	0.02		$	0.25		$	(0.04	)	$	(0.05	)	$	0.06

Weighted average common shares outstanding - diluted		60,024			59,911			60,214			59,991			53,275			53,186			59,889

Page 1

Statement of Funds from Operations

Dollars in thousands, except per share amounts


	*Year Ended*						*Three Months Ended*
	12/31/04			12/31/03			12/31/04			09/30/04			06/30/04			03/31/04			12/31/03
Funds from operations:
Net income	$	39,981		$	46,672		$	8,540		$	21,111		$	5,394		$	4,936		$	10,940
Dividends to preferred shareholders		(30,852	)		(30,852	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)

Net income/(loss) applicable to common shares		9,129			15,820			827			13,398			(2,319	)		(2,777	)		3,227
Add/(Deduct):
Depreciation and amortization of real estate assets		133,652			135,806			33,874			32,390			33,222			34,166			33,648
(Gain)/loss on disposition of depreciable real estate assets		(18,564	)		(8,748	)		(394	)		(1,636	)		(16,600	)		66			(3,956	)
Minority interest in income from operations		704			569			(180	)		1,464			132			(712	)		400
Unconsolidated affiliates:
Depreciation and amortization of real estate assets		9,179			7,554			2,620			2,441			2,070			2,048			1,776
Discontinued operations:
Depreciation and amortization of real estate assets		1,785			4,355			85			325			639			736			857
(Gain)/loss on sale, net of minority interest		(9,255	)		(8,600	)		(4,790	)		(630	)		(399	)		(3,436	)		(156	)
Minority interest in income from discontinued operations		194			391			82			39			31			42			53

Funds from operations	$	126,824		$	147,147		$	32,124		$	47,791		$	16,776		$	30,133		$	35,849

Funds from operations per share - diluted
Net income/(loss) applicable to common shares	$	0.17		$	0.30		$	0.02		$	0.25		$	(0.04	)	$	(0.05	)	$	0.06
Add/(Deduct):
Depreciation and amortization of real estate assets		2.22			2.26			0.56			0.54			0.56			0.57			0.56
(Gain)/loss on disposition of depreciable real estate assets		(0.31	)		(0.15	)		(0.01	)		(0.02	)		(0.27	)		—			(0.06	)
Unconsolidated affiliates:
Depreciation and amortization of real estate assets		0.15			0.12			0.04			0.04			0.03			0.03			0.03
Discontinued operations:
Depreciation and amortization of real estate assets		0.03			0.07			—			—			0.01			0.01			0.01
(Gain)/loss on sale, net of minority interest		(0.15	)		(0.14	)		(0.08	)		(0.01	)		(0.01	)		(0.06	)		—

Funds from operations	$	2.11		$	2.46		$	0.53		$	0.80		$	0.28		$	0.50		$	0.60

Dividend payout data:
Dividends paid per common share/common unit - diluted:	$	1.700		$	1.860		$	0.425		$	0.425		$	0.425		$	0.425		$	0.425

Funds from operations		80.6	%		75.6	%		80.2	%		53.1	%		151.8	%		85.0	%		70.8	%

Weighted average shares outstanding - diluted		60,024			59,911			60,214			59,991			59,794			60,092			59,889

Impairment adjustments included in funds from operations	$	(8,782	)	$	(325	)	$	(4,426	)	$	(500	)	$	(3,856	)	$	—		$	—

Impairment adjustments included in funds from operations per share	$	(0.15	)	$	(0.01	)	$	(0.07	)	$	(0.01	)	$	(0.06	)	$	—		$	—

Page 2

Consolidated Balance Sheets

Dollars in thousands


	12/31/04			09/30/04			06/30/04			03/31/04			12/31/03
Assets:
Real estate assets, at cost:
Land and improvements	$	397,840		$	403,896		$	404,317		$	432,142		$	430,199
Buildings and tenant improvements		2,932,756			2,935,526			2,933,636			3,135,432			3,111,537
Development in process		25,171			14,431			23,027			9,588			7,485
Land held for development		188,945			189,214			191,409			203,667			197,064
Furniture, fixtures and equipment		22,187			22,140			22,133			21,950			21,818

		3,566,899			3,565,207			3,574,522			3,802,779			3,768,103
Less-accumulated depreciation		(606,111	)		(589,383	)		(568,453	)		(580,138	)		(550,136	)

Net real estate assets		2,960,788			2,975,824			3,006,069			3,222,641			3,217,967
Property held for sale		32,796			69,011			64,958			38,467			65,724
Cash and cash equivalents		24,482			20,613			11,817			17,782			21,696
Restricted cash		3,875			4,782			4,758			5,844			4,457
Accounts receivable, net		16,748			14,896			14,253			13,452			18,176
Notes receivable		9,672			9,790			10,676			10,733			10,016
Accrued straight-line rents receivable		61,518			62,216			59,312			62,457			59,728
Investment in unconsolidated affiliates		74,432			78,493			79,328			69,276			62,069
Other assets:
Deferred leasing costs		111,121			107,325			103,956			106,612			102,058
Deferred financing costs		16,686			16,972			16,081			19,484			19,286
Prepaid expenses and other		10,618			11,902			12,989			11,111			10,217

		138,425			136,199			133,026			137,207			131,561
Less-accumulated amortization		(62,567	)		(60,511	)		(56,044	)		(57,746	)		(53,010	)

Other assets, net		75,858			75,688			76,982			79,461			78,551

Total Assets	$	3,260,169		$	3,311,313		$	3,328,153		$	3,520,113		$	3,538,384

Liabilities and Stockholders’ Equity:
Mortgages and notes payable	$	1,572,169		$	1,600,627		$	1,603,485		$	1,790,039		$	1,717,765
Accounts payable, accrued expenses and other liabilities		115,003			115,639			119,392			100,029			103,356
Financing obligations		65,309			64,754			65,091			64,724			125,777
Total Liabilities		1,752,481			1,781,020			1,787,968			1,954,792			1,946,898
Minority interest in operating partnership		115,926			118,847			120,142			123,043			126,928
Stockholders’ Equity:
Preferred stock		377,445			377,445			377,445			377,445			377,445
Common stock		538			537			537			536			535
Additional paid-in capital		1,416,855			1,415,377			1,415,202			1,414,008			1,408,779
Distributions in excess of net earnings		(396,151	)		(374,149	)		(364,719	)		(339,597	)		(314,082	)
Accumulated other comprehensive loss		(2,814	)		(3,003	)		(3,141	)		(3,525	)		(3,650	)
Deferred compensation		(4,111	)		(4,761	)		(5,281	)		(6,589	)		(4,469	)

Total Stockholders’ Equity		1,391,762			1,411,446			1,420,043			1,442,278			1,464,558

Total Liabilities and Stockholders’ Equity	$	3,260,169		$	3,311,313		$	3,328,153		$	3,520,113		$	3,538,384

Ratios
Total Debt/Total Assets		48.2	%		48.3	%		48.2	%		50.9	%		48.5	%

Page 4

Estimated Net Asset Value

December 31, 2004

Dollars in thousands, except per share amounts

The information on this Page is provided to assist in the calculation of Net Asset Value using a range of Capitalization rates and In-Place Net Operating Income among other Factors. It is not intended to be an asset by asset valuation.


Office (80.3% ave. occupancy)		8.25	%		8.50	%		8.75	%
Retail (94.8% ave. occupancy)		6.50	%		6.75	%		7.00	%
Industrial/Other (88.0% ave. occupancy)		7.75	%		8.00	%		8.25	%

Weighted average		8.01	%		8.26	%		8.51	%

Wholly Owned Properties Net Operating Income YTD 1/ 2/
Office 3/ 4/ 5/	$	234,724		$	234,724		$	234,724
Retail		25,903			25,903			25,903
Industrial/Other		25,614			25,614			25,614

Total Net Operating Income	$	286,241		$	286,241		$	286,241

Wholly Owned Properties Net Operating Income Annualized
Office	$	234,724		$	234,724		$	234,724
Retail		25,903			25,903			25,903
Industrial/Other		25,614			25,614			25,614

Total Net Operating Income	$	286,241		$	286,241		$	286,241

Wholly Owned Properties Capitalized Value
Office	$	2,845,139		$	2,761,459		$	2,682,560
Retail		398,508			383,748			370,043
Industrial/Other		330,503			320,175			310,473

	$	3,574,150		$	3,465,382		$	3,363,076


Highwoods’ Share of Joint Ventures
Net Operating Income YTD 4/	$	29,586		$	29,586		$	29,586

Net Operating Income Annualized	$	29,586		$	29,586		$	29,586
Capitalization Rates		8.25	%		8.50	%		8.75	%

Capitalized Value	$	358,618		$	348,071		$	338,126

Value of Highwoods Preserve ($121 per square foot) 6/	$	74,221		$	74,221		$	74,221

Total In-Service Property Value	$	4,006,989		$	3,887,674		$	3,775,422


Value of Other income
Annualized Development, Leasing and Management Fees	$	5,200		$	5,200		$	5,200
Capitalization Rate		20	%		20	%		20	%

Value of Other income	$	26,000		$	26,000		$	26,000


Add Other assets:
Development Pipeline Investment	$	21,986		$	21,986		$	21,986
Property Held for Sale, at Net Sales Price		48,629			48,629			48,629
Land held for development at Book Value		188,945			188,945			188,945
Cash and cash equivalents		24,482			24,482			24,482
Restricted cash		3,875			3,875			3,875
Accounts receivable, net		16,748			16,748			16,748
Notes receivable		9,672			9,672			9,672

Other assets total	$	314,337		$	314,337		$	314,337

Gross Value of Assets	$	4,347,326		$	4,228,011		$	4,115,759


Deductions:
Total Liabilities 7/	$	181,061		$	181,061		$	181,061
Fair Market Value of Debt 8/ 9/	$	1,652,769		$	1,652,769		$	1,652,769
Preferred stock		377,445			377,445			377,445
Highwoods’ Share of Joint Ventures Liabilities		256,478			256,478			256,478

Estimated Net Asset Value	$	1,879,573		$	1,760,258		$	1,648,006

Total diluted common shares and operating units		60,203			60,203			60,203

Estimated Net Asset Value Per Share	$	31.22		$	29.24		$	27.37

1/	Excludes straight-line rent of $7.5 million and $1.2 million net operating income related to intra-period dispositions

2/	Excludes $2.2 million of expenses related to land held for development

3/	Added back the $1.9 million operating loss at Highwoods Preserve

4/	Deducted $5.1 million of NOI related to previously consolidated Orlando CBD properties and adjusted Joint Venture income to reflect correct NOI based on forty percent ownership.

5/	Excludes $14.4 million WorldCom settlement proceeds

6/	Highwoods Preserve is a 615,000 square foot office campus in Tampa that Worldcom vacated 12/31/02.

7/	Excludes financing obligations

8/	Including debt at fair value instead of book reduces NAV by $99.8 million

9/	Excludes 80% of $23.6 million debt associated with a consolidated 20% owned joint venture property (Harborview)

Page 5

Components of Discontinued Operations

Dollars in thousands, except per share amounts


	*Year Ended*						*Three Months Ended*
	12/31/04			12/31/03			12/31/04			09/30/04			06/30/04			03/31/04			12/31/03
Rental and other revenues	$	8,561		$	15,144		$	1,785		$	2,235		$	2,120		$	2,421		$	2,784

Operating expenses:
Rental property		4,410			6,375			907			1,033			1,182			1,288			1,451
Depreciation and amortization		1,785			4,355			85			325			639			736			857
Interest expense		—			1,000			—			—			—			—			—
Impairment of assets held for use		500									500

Total operating expenses		6,695			11,730			992			1,858			1,821			2,024			2,308

Interest and other income		22			78			2			7			5			8			27

		22			78			2			7			5			8			27

Income before gain/(loss) on disposition of depreciable assets and minority interest		1,888			3,492			795			384			304			405			503
Minority interest		(194	)		(391	)		(82	)		(39	)		(31	)		(42	)		(53	)

Income from discontinued operations, net of minority interest		1,694			3,101			713			345			273			363			450

Gain/(loss) on disposition of discontinued operations		2,503			9,547			1,821			703			(3,856	)		3,835			175
Minority Interest		(260	)		(1,060	)		(187	)		(73	)		399			(399	)		(19	)

Gain on disposition of discontinued operations, net of minority interest		2,243			8,487			1,634			630			(3,457	)		3,436			156

Total discontinued operations	$	3,937		$	11,588		$	2,347		$	975		$	(3,184	)	$	3,799		$	606

Page 6

Capitalization

Dollars, shares, and units in thousands


	12/31/04		09/30/04		06/30/04		03/31/04		12/31/03
Long-Term Debt (see page 9 & 10):	$	1,572,169	$	1,600,627	$	1,603,485	$	1,790,039	$	1,717,765

Finance Obligations:	$	65,309	$	64,754	$	65,091	$	64,724	$	125,777

Preferred Stock (at redemption value):
Series A 8 5/8% Perpetual Preferred Stock	$	104,945	$	104,945	$	104,945	$	104,945	$	104,945
Series B 8% Perpetual Preferred Stock		172,500		172,500		172,500		172,500		172,500
Series D 8% Perpetual Preferred Stock		100,000		100,000		100,000		100,000		100,000

Total preferred stock	$	377,445	$	377,445	$	377,445	$	377,445	$	377,445

Shares and Units Outstanding:
Common stock outstanding		53,813		53,713		53,716		53,631		53,474
Minority interest partnership units		6,102		6,128		6,146		6,146		6,203

Total shares and units outstanding		59,915		59,841		59,862		59,777		59,677

Stock price at period end	$	27.70	$	24.61	$	23.50	$	26.21	$	25.40
Market value of common equity	$	1,659,646	$	1,472,687	$	1,406,757	$	1,566,755	$	1,515,795

Total market capitalization with debt and obligations	$	3,672,791	$	3,513,751	$	3,451,032	$	3,797,233	$	3,735,068

See pages 32 to 37 for information regarding Highwoods’ Joint Ventures

Page 7

Long-Term Debt Summary

Dollars in thousands


	12/31/04			09/30/04			06/30/04			03/31/04			12/31/03
Balances Outstanding:

Secured:
Conventional fixed rate	$	732,796		$	745,524		$	748,740		$	751,894		$	755,049
Variable rate debt		66,181			50,803			54,945			204,845			68,709
Conventional fixed rate 1/		22,800			22,800			22,800			22,800			22,800
Variable rate debt 2/		392			—			—			—			136,207

Secured total	$	822,169		$	819,127		$	826,485		$	979,539		$	982,765

Unsecured:
Fixed rate bonds and notes	$	460,000		$	460,000		$	460,000		$	560,000		$	560,000
Variable rate debt		120,000			120,000			120,000			120,000			120,000
Credit facility		170,000			201,500			197,000			130,500			55,000

Unsecured total	$	750,000		$	781,500		$	777,000		$	810,500		$	735,000

Total	$	1,572,169		$	1,600,627		$	1,603,485		$	1,790,039		$	1,717,765

Average Interest Rates:

Secured:
Conventional fixed rate		7.2	%		7.2	%		7.2	%		7.2	%		7.2	%
Variable rate debt		4.2	%		3.7	%		3.1	%		3.1	%		3.1	%
Conventional fixed rate 1/		6.1	%		6.1	%		6.1	%		6.1	%		6.1	%
Variable rate debt 2/		2.8	%		—			—			—			3.2	%

Secured total		6.9	%		6.9	%		6.9	%		6.3	%		6.3	%

Unsecured:
Fixed rate bonds		7.4	%		7.4	%		7.4	%		7.3	%		7.3	%
Variable rate debt		3.5	%		3.0	%		2.9	%		2.4	%		2.5	%
Credit facility		3.4	%		2.2	%		2.3	%		2.1	%		2.2	%

Unsecured total		5.9	%		5.4	%		5.4	%		5.8	%		6.2	%

Average		6.4	%		6.2	%		6.2	%		6.1	%		6.3	%

Capitalized Interest:	$	447		$	334		$	257		$	115		$	204

Maturity Schedule:


	*Future Maturities of Debt*						Average
Year	Secured Debt 3/		Unsecured Debt		Total Debt 3/		Interest Rate
2005	$	67,650	$	120,000	$	187,650	5.3	%
2006		53,118		280,000		333,118	4.8	%
2007		92,926		—		92,926	7.3	%
2008		—		100,000		100,000	7.1	%
2009		171,797		50,000		221,797	7.9	%
2010		137,969		—		137,969	7.8	%
2011		—		—		—	—
2012		22,800		—		22,800	6.1	%
2013		270,460		—		270,460	5.9	%
2014		—		—		—	—
Thereafter		5,449		200,000		205,449	7.5	%

Total maturities	$	822,169	$	750,000	$	1,572,169	6.4	%

Weighted average maturity = 4.7 years

1/	Loan relates to the consolidated 20% owned joint venture property (Harborview).

2/	Loan relates to the consolidated 50% owned joint venture property (Vinings) at 12/31/04, relates to the consolidated 20% owned joint venture properties (MG-HIW, LLC) at 12/31/03.

3/	Excludes annual principal amortization

4/	Included in the $280.0 million of unsecured debt maturities is $170.0 million related to the credit facility which matures in 2006.

Page 8

Long-Term Debt Detail

Dollars in thousands

Secured Loans


Lender	Rate		Maturity Date	Loan Balance 12/31/04		Undepreciated Book Value of Assets Secured
Monumental Life Ins. Co.	7.8	%	Nov-09	$	163,813	$	236,302
Northwestern Mutual	6.0	%	Mar-13		141,865		186,090
Northwestern Mutual	7.8	%	Nov-10		137,969		276,756
Massachusetts Mutual Life Ins. Co.	5.7	%	Dec-13		127,541		185,836
Northwestern Mutual	8.2	%	Feb-07		65,221		138,820
GECC 1/	3.7	%	Jan-06		46,985		82,171
Principal Life Ins. Co. 2/	8.6	%	Apr-05		41,204		103,251
Principal Life Ins. Co.	8.2	%	Aug-05		26,446		70,387
Metropolitan Life Ins. Co. 3/	6.1	%	Oct-12		22,800		38,774
PNC/Am South/Southtrust 4/	3.7	%	Oct-07		15,449		17,014
PFL Life Ins. Co. 5/	8.1	%	Jun-07		5,711		22,457
Ohio National	8.0	%	Nov-17		5,449		10,915
Lutheran Brotherhood	6.8	%	Apr-09		4,023		7,628
PFL Life Ins. Co. 4/5/	3.8	%	Jun-07		3,747		—
American General	7.9	%	Dec-06		2,708		7,088
Assoc Retirement Trust Fund	8.0	%	Jan-07		2,405		6,812
USG Annuity	7.7	%	Feb-06		2,198		3,777
Security Life of Denver	8.9	%	Aug-09		2,061		9,451
Southland Life Ins. Co.	8.8	%	Aug-09		1,899		6,968
American United Life	9.0	%	Jun-13		1,056		3,637
CUNA Mutual	8.0	%	Sep-06		631		3,184
Members Life Ins. Co	8.0	%	Sep-06		596		3,259
Central Carolina Bank 1/	2.8	%	Dec-07		392		1,847

	6.9	%		$	822,169	$	1,422,424

Unsecured Bonds
Bonds	7.0	%	Dec-06	$	110,000
Bonds	7.1	%	Feb-08		100,000
Bonds	8.1	%	Jan-09		50,000
Bonds	7.5	%	Apr-18		200,000

	7.3	%		$	460,000

Unsecured Loans
Term Loan 1/	3.4	%	Sep-05	$	20,000
Term Loan 6/	3.7	%	Nov-05		100,000
Line of Credit 1/	3.4	%	Jul-06		170,000

	3.5	%		$	290,000

Total Debt	6.4	%		$	1,572,169

1/	Floating rate loans based on one month libor.

2/	Paid off on 4/1/05

3/	Loan relates to the consolidated 20% owned joint venture property (Harborview).

4/	Floating rate loan based on ninety day libor.

5/	These two loans are secured by the same assets.

6/	Floating rate loan based on two month libor.

Page 9

Portfolio Summary - Wholly-Owned Properties Only 1/

(Rentable Square Feet)


Office Industrial & Retail	12/31/04		09/30/04		06/30/04		03/31/04		12/31/03
In-Service:
Office 2/	24,628,000		25,151,000		25,272,000		26,608,000		25,303,000
Industrial	7,829,000		7,992,000		7,992,000		8,092,000		8,092,000
Retail 3/	1,409,000		1,410,000		1,411,000		1,411,000		1,527,000

Total	33,866,000		34,553,000		34,675,000		36,111,000		34,922,000

Development Completed - Not Stabilized:
Office 2/	—		—		—		140,000		140,000
Industrial	353,000		350,000		—		—		—
Retail	—		—		—		—		—

Total	353,000		350,000		—		140,000		140,000

Development - In Process:
Office 2/	358,000		333,000		222,000		112,000		112,000
Industrial	—		—		350,000		350,000		350,000
Retail	9,600		—		—		—		—

Total	367,600		333,000		572,000		462,000		462,000

Total:
Office 2/	24,986,000		25,484,000		25,494,000		26,860,000		25,555,000
Industrial	8,182,000		8,342,000		8,342,000		8,442,000		8,442,000
Retail 3/	1,418,600		1,410,000		1,411,000		1,411,000		1,527,000

Total	34,586,600		35,236,000		35,247,000		36,713,000		35,524,000

Same Property
Office 2/	22,907,000		22,907,000		22,907,000		22,907,000		22,907,000
Industrial	7,769,000		7,769,000		7,769,000		7,769,000		7,769,000
Retail	1,409,000		1,409,000		1,409,000		1,409,000		1,409,000

Total	32,085,000		32,085,000		32,085,000		32,085,000		32,085,000

Percent Leased/Pre-Leased:
In-Service:
Office	82.7	%	80.9	%	79.2	%	79.2	%	79.2	%
Industrial	90.2	%	88.4	%	88.0	%	86.5	%	85.7	%
Retail	97.3	%	94.5	%	93.4	%	94.0	%	96.3	%

Total	85.0	%	83.2	%	81.8	%	81.4	%	81.5	%

Development Completed - Not Stabilized:
Office	—		—		—		36.0	%	36.0	%
Industrial	100.0	%	100.0	%	—		—		—
Retail	—		—		—		—		—

Total	100.0	%	100.0	%	—		36.0	%	36.0	%

Development - In Process:
Office	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Industrial	—		—		100.0	%	100.0	%	100.0	%
Retail	44.0	%	—		—		—		—

Total	98.5	%	100.0	%	100.0	%	100.0	%	100.0	%

Same Property
Office	83.1	%	81.0	%	80.1	%	80.2	%	80.5	%
Industrial	90.3	%	88.9	%	88.6	%	87.3	%	86.5	%
Retail	97.3	%	94.6	%	93.6	%	94.2	%	96.8	%

Total	85.5	%	83.5	%	82.8	%	82.5	%	82.6	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Substantially all of our Office properties are located in suburban markets

3/	Excludes 430,000 square feet of basement space in the Country Club Plaza and other Kansas City retail properties.

Page 10

Portfolio Summary

(Continued)

As of December 31, 2004


Summary by Location, Wholly-Owned Properties Only 1/:

Market	Rentable Square Feet		Occupancy		Percentage of Annualized Revenue 2/
Market	Rentable Square Feet		Occupancy		Office		Industrial		Retail		Total
Raleigh 3/	4,597,000		83.8	%	15.7	%	0.2	%	—		15.9	%
Atlanta	6,826,000		83.7	%	11.7	%	3.1	%	—		14.8	%
Tampa	4,196,000		71.0	%	13.4	%	—		—		13.4	%
Kansas City	2,308,000	4/	94.1	%	4.2	%	—		8.5	%	12.7	%
Nashville	2,870,000		93.3	%	11.9	%	—		—		11.9	%
Piedmont Triad 5/	6,651,000		92.5	%	6.3	%	4.2	%	—		10.5	%
Richmond	1,835,000		94.1	%	7.0	%	—		—		7.0	%
Memphis	1,216,000		83.2	%	4.5	%	—		—		4.5	%
Charlotte	1,492,000		72.9	%	3.9	%	—		—		3.9	%
Greenville	1,127,000		80.5	%	3.1	%	0.1	%	—		3.2	%
Columbia	426,000		60.4	%	1.0	%	—		—		1.0	%
Orlando	222,000		93.3	%	0.9	%	—		—		0.9	%
Other	100,000		61.3	%	0.3	%	—		—		0.3	%

Total	33,866,000		85.0	%	83.9	%	7.6	%	8.5	%	100.0	%


Summary by Location, Including Joint Venture Properties:

Market	Rentable Square Feet		Occupancy		Percentage of Annualized Revenue 2/6/
Market	Rentable Square Feet		Occupancy		Office		Industrial		Retail		Multi-Family		Total
Atlanta	7,661,000		84.6	%	11.9	%	2.8	%	—		—		14.7	%
Raleigh 3/	5,052,000		85.2	%	14.3	%	0.1	%	—		—		14.4	%
Tampa	4,401,000		72.3	%	12.2	%	—		—		—		12.2	%
Kansas City	2,736,000	4/	92.9	%	4.6	%	—		7.6	%	—		12.2	%
Nashville	2,870,000		93.3	%	10.6	%	—		—		—		10.6	%
Piedmont Triad 5/	7,015,000		92.9	%	6.0	%	3.8	%	—		—		9.8	%
Richmond	2,248,000		95.1	%	6.8	%	—		—		—		6.8	%
Memphis	1,216,000		83.2	%	4.0	%	—		—		—		4.0	%
Des Moines	2,253,000		91.5	%	3.0	%	0.4	%	0.1	%	0.4	%	3.9	%
Orlando	1,905,000		90.1	%	3.6	%	—		—		—		3.6	%
Charlotte	1,640,000		75.4	%	3.6	%	—		—		—		3.6	%
Greenville	1,127,000		80.5	%	2.8	%	0.1	%	—		—		2.9	%
Columbia	426,000		60.4	%	0.9	%	—		—		—		0.9	%
Other	210,000		81.6	%	0.4	%	—		—		—		0.4	%

Total	40,760,000		84.7	%	84.7	%	7.2	%	7.7	%	0.4	%	100.0	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Annualized Revenue is December, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

3/	Raleigh Market encompasses Raleigh, Durham, Cary, and Research Triangle metropolitan area.

4/	Excludes basement space in the Country Club Plaza property of 430,000 square feet

5/	Piedmont Triad Market encompasses Greensboro, Winston-Salem metropolitan area.

6/	Includes Highwoods’ share of Joint Venture Annualized Rental Revenue, see page 35

Page 11

Portfolio Summary - Wholly-Owned Properties Only 1/

(Continued)

As of December 31, 2004


	Office Properties					Industrial
Market	Rentable Square Feet	Occupancy		Percentage of Office Annualized Revenue 2/		Rentable Square Feet	Occupancy		Percentage of Industrial Annualized Revenue 2/
Raleigh	4,496,000	84.0	%	18.7	%	101,000	74.9	%	2.2	%
Tampa	4,196,000	71.0	%	16.0	%	—	—		—
Nashville	2,870,000	93.3	%	14.1	%	—	—		—
Atlanta	3,575,000	83.0	%	14.0	%	3,251,000	84.3	%	41.4	%
Richmond	1,835,000	94.1	%	8.3	%	—	—		—
Piedmont Triad	2,281,000	85.2	%	7.5	%	4,370,000	96.3	%	55.4	%
Memphis	1,216,000	83.2	%	5.3	%	—	—		—
Kansas City	895,000	89.1	%	5.0	%	4,000	100.0	%	0.1	%
Charlotte	1,492,000	72.9	%	4.7	%	—	—		—
Greenville	1,024,000	85.7	%	3.7	%	103,000	28.9	%	0.9	%
Columbia	426,000	60.4	%	1.2	%	—	—		—
Orlando	222,000	93.3	%	1.1	%	—	—		—
Other	100,000	61.3	%	0.4	%	—	—		—

	24,628,000	82.7	%	100.0	%	7,829,000	90.2	%	100.0	%


	Retail
Market	Rentable Square Feet	Occupancy		Percentage of Retail Annualized Revenue 2/
Kansas City 3/	1,409,000	97.3	%	100.0	%

	1,409,000	97.3	%	100.0	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Annualized Revenue is December, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

3/	Excludes basement space in the Country Club Plaza property of 430,000 square feet

Page 12

Occupancy Trends - Office, Industrial and Retail Properties 1/


Market	Measurement	12/31/04		09/30/04		06/30/04		03/31/04		12/31/03
Atlanta	Rentable Square Feet Occupancy Current Properties 2/	6,825,000 83.7 83.7	% %	6,825,000 81.3 81.3	% %	6,821,000 80.7 80.7	% %	6,919,000 78.8 78.9	% %	6,919,000 78.4 78.4	% %

Charlotte	Rentable Square Feet Occupancy Current Properties 2/	1,492,000 72.9 72.9	% %	1,655,000 74.6 75.1	% %	1,655,000 73.9 74.1	% %	1,655,000 80.5 81.6	% %	1,655,000 79.6 80.5	% %

Columbia	Rentable Square Feet Occupancy Current Properties 2/	426,000 60.4 60.4	% %	426,000 57.5 57.5	% %	426,000 57.9 57.9	% %	426,000 58.6 58.6	% %	426,000 57.9 57.8	% %

Greenville	Rentable Square Feet Occupancy Current Properties 2/	1,127,000 80.5 80.5	% %	1,319,000 79.4 78.4	% %	1,319,000 78.8 77.4	% %	1,319,000 78.8 77.4	% %	1,318,000 80.2 79.0	% %

Kansas City 3/	Rentable Square Feet Occupancy Current Properties 2/	2,308,000 94.1 94.1	% %	2,308,000 92.4 92.4	% %	2,310,000 91.4 91.4	% %	2,309,000 91.2 91.2	% %	2,433,000 92.7 92.8	% %

Memphis	Rentable Square Feet Occupancy Current Properties 2/	1,216,000 83.2 83.2	% %	1,216,000 82.1 82.1	% %	1,216,000 82.0 82.0	% %	1,216,000 81.3 81.3	% %	1,216,000 81.0 81.0	% %

Nashville	Rentable Square Feet Occupancy Current Properties 2/	2,870,000 93.3 93.3	% %	2,870,000 93.4 93.4	% %	2,870,000 91.7 91.7	% %	2,870,000 89.8 89.8	% %	2,869,000 91.5 91.4	% %

Orlando	Rentable Square Feet Occupancy Current Properties 2/	222,000 93.2 93.2	% %	387,000 94.4 93.2	% %	387,000 52.9 88.5	% %	1,656,000 75.8 91.5	% %	299,000 44.9 90.6	% %

Piedmont Triad	Rentable Square Feet Occupancy Current Properties 2/	6,652,000 92.5 92.5	% %	6,652,000 91.9 91.9	% %	6,652,000 91.1 91.1	% %	6,685,000 90.5 91.0	% %	6,688,000 90.0 90.5	% %

Raleigh	Rentable Square Feet Occupancy Current Properties 2/	4,597,000 83.8 83.8	% %	4,739,000 81.1 80.8	% %	4,808,000 79.4 79.4	% %	4,664,000 80.9 79.6	% %	4,706,000 80.8 79.4	% %

Richmond	Rentable Square Feet Occupancy Current Properties 2/	1,835,000 94.1 94.1	% %	1,835,000 92.0 92.0	% %	1,835,000 89.7 89.7	% %	1,851,000 90.9 91.0	% %	1,852,000 91.5 91.6	% %

Tampa	Rentable Square Feet Occupancy Current Properties 2/	4,196,000 71.0 71.0	% %	4,221,000 66.1 66.1	% %	4,277,000 65.9 66.8	% %	4,443,000 63.7 65.9	% %	4,441,000 63.4 65.5	% %

Total 4/	Rentable Square Feet Occupancy	33,766,000 85.0	%	34,453,000 83.2	%	34,576,000 81.8	%	36,013,000 81.4	%	34,822,000 81.5	%

	Current Properties 2/	85.0	%	83.2	%	82.3	%	82.1	%	82.1	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Only properties that were owned and in-service on December 31, 2004 are included for each quarter shown.

3/	Excludes basement space in the Country Club Plaza property of 430,000 square feet.

4/	Excludes 100,000 square foot building located in South Florida

Page 13

Leasing Statistics

Office Portfolio 1/


	Three Months Ended
	12/31/04 2/			9/30/04 3/			6/30/04 4/			3/31/04 5/			12/31/03			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		206			219			230			209			179			209
Rentable square footage leased		1,101,291			1,368,577			1,375,372			1,191,746			962,636			1,199,924
Square footage of Renewal Deals		726,959			703,003			1,011,662			673,551			614,969			746,029
Renewed square footage (% of total)		66.0	%		51.4	%		73.6	%		56.5	%		63.9	%		62.2	%
New Leases square footage (% of total)		34.0	%		48.6	%		26.4	%		43.5	%		36.1	%		37.8	%

Average per rentable square foot over the lease term:
Base rent	$	17.40		$	16.68		$	17.64		$	17.43		$	16.12		$	17.05
Tenant improvements		(1.51	)		(1.27	)		(1.09	)		(1.57	)		(1.09	)		(1.31	)
Leasing commissions 6/		(0.62	)		(0.64	)		(0.52	)		(0.58	)		(0.64	)		(0.60	)
Rent concessions		(0.31	)		(0.37	)		(0.27	)		(0.63	)		(0.35	)		(0.39	)

Effective rent		14.96			14.40			15.76			14.65			14.04			14.75
Expense stop		(5.61	)		(5.32	)		(5.25	)		(5.70	)		(5.35	)		(5.45	)

Equivalent effective net rent	$	9.35		$	9.08		$	10.51		$	8.95		$	8.69		$	9.30

Average term in years		5.0			3.7			4.3			4.8			4.1			4.4

Capital Expenditures Related to Re-leased Space:
Tenant Improvements:
Total dollars committed under signed leases	$	9,208,835		$	9,455,102		$	8,908,277		$	10,063,665		$	5,355,637		$	8,598,303
Rentable square feet		1,101,291			1,368,577			1,375,372			1,191,746			962,636			1,199,924

Per rentable square foot	$	8.36		$	6.91		$	6.48		$	8.44		$	5.56		$	7.17

Leasing Commissions:

Total dollars committed under signed leases 6/	$	2,806,566		$	2,969,620		$	2,878,161		$	2,747,400		$	2,102,659		$	2,700,881
Rentable square feet		1,101,291			1,368,577			1,375,372			1,191,746			962,636			1,199,924

Per rentable square foot	$	2.55		$	2.17		$	2.09		$	2.31		$	2.18		$	2.25

Total:

Total dollars committed under signed leases	$	12,015,400		$	12,424,721		$	11,786,438		$	12,811,064		$	7,458,296		$	11,299,184
Rentable square feet		1,101,291			1,368,577			1,375,372			1,191,746			962,636			1,199,924

Per rentable square foot	$	10.91		$	9.08		$	8.57		$	10.75		$	7.75		$	9.42

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Includes 111K square feet of leases that start in 2007 or later

3/	Includes 128K square feet of leases that start in 2006 or later

4/	Includes 100K square feet of leases that start in 2006 or later

5/	Includes 72K square feet of leases that start in 2006 or later

6/	Excludes a full allocation of internal marketing cost

Page 14

Leasing Statistics

Industrial Portfolio


	Three Months Ended
	12/31/04			9/30/04 1/			06/30/04			03/31/04			12/31/03			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		36			34			7			32			36			29
Rentable square footage leased		1,216,644			285,706			820,933			630,829			1,131,281			817,079
Square footage of Renewal Deals		875,445			246,797			642,011			448,003			968,879			636,227
Renewed square footage (% of total)		72.0	%		86.4	%		78.2	%		71.0	%		85.6	%		77.9	%
New Leases square footage (% of total)		28.0	%		13.6	%		21.8	%		29.0	%		14.4	%		22.1	%

Average per rentable square foot over the lease term:
Base rent	$	3.49		$	4.73		$	4.11		$	3.67		$	3.79		$	3.96
Tenant improvements		(0.13	)		(0.33	)		(0.31	)		(0.17	)		(0.08	)		(0.20	)
Leasing commissions 2/		(0.06	)		(0.07	)		(0.08	)		(0.14	)		(0.08	)		(0.09	)
Rent concessions		(0.03	)		(0.05	)		(0.17	)		(0.05	)		(0.05	)		(0.07	)

Effective rent		3.27			4.28			3.55			3.31			3.58			3.60
Expense stop		(0.09	)		(0.54	)		(0.36	)		(0.18	)		(0.20	)		(0.27	)

Equivalent effective net rent	$	3.18		$	3.74		$	3.19		$	3.13		$	3.38		$	3.33

Average term in years		2.0			2.6			3.2			2.6			3.2			2.7

Capital Expenditures Related to Re-leased Space:
Tenant Improvements:
Total dollars committed under signed leases	$	756,077		$	307,534		$	1,805,334		$	640,867		$	517,025		$	805,367
Rentable square feet		1,216,644			285,706			820,933			630,829			1,131,281			817,079

Per rentable square foot	$	0.62		$	1.08		$	2.20		$	1.02		$	0.46		$	0.99

Leasing Commissions:
Total dollars committed under signed leases 2/	$	226,000		$	64,714		$	207,676		$	280,486		$	338,143		$	223,404
Rentable square feet		1,216,644			285,706			820,933			630,829			1,131,281			817,079

Per rentable square foot	$	0.19		$	0.23		$	0.25		$	0.44		$	0.30		$	0.27

Total:
Total dollars committed under signed leases	$	982,077		$	372,247		$	2,013,010		$	921,354		$	855,168		$	1,028,771
Rentable square feet		1,216,644			285,706			820,933			630,829			1,131,281			817,079

Per rentable square foot	$	0.81		$	1.30		$	2.45		$	1.46		$	0.76		$	1.26

1/	Includes 74K square feet of leases that start in 2006 or later

2/	Excludes a full allocation of internal marketing cost

Page 15

Leasing Statistics

Retail Portfolio


	Three Months Ended
	12/31/04			9/30/04			6/30/04 1/			3/31/04 2/			12/31/03			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		23			18			13			10			9			15
Rentable square footage leased		106,629			34,300			38,548			37,303			75,947			58,545
Square footage of Renewal Deals		78,579			15,530			17,482			27,219			53,541			38,470
Renewed square footage (% of total)		73.7	%		45.3	%		45.4	%		73.0	%		70.5	%		65.7	%
New Leases square footage (% of total)		26.3	%		54.7	%		54.6	%		27.0	%		29.5	%		34.3	%

Average per rentable square foot over the lease term:
Base rent	$	17.03		$	26.45		$	22.98		$	30.87		$	12.30		$	21.93
Tenant improvements		(1.73	)		(1.84	)		(2.04	)		(1.58	)		(0.31	)		(1.50	)
Leasing commissions 3/		(0.26	)		(0.56	)		(0.32	)		(0.31	)		(0.14	)		(0.32	)
Rent concessions		0.00			(0.04	)		0.00			(0.06	)		0.00			(0.02	)

Effective rent		15.04			24.01			20.62			28.92			11.85			20.09
Expense stop		0.00			0.00			0.00			0.00			0.00			0.00

Equivalent effective net rent	$	15.04		$	24.01		$	20.62		$	28.92		$	11.85		$	20.09

Average term in years		8.3			5.7			8.0			6.1			6.8			7.0

Capital Expenditures Related to Re-leased Space:

Tenant Improvements:

Total dollars committed under signed leases	$	2,137,327		$	403,309		$	800,125		$	866,975		$	239,110		$	889,369
Rentable square feet		106,629			34,300			38,548			37,303			75,947			58,545

Per rentable square foot	$	20.04		$	11.76		$	20.76		$	23.24		$	3.15		$	15.19

Leasing Commissions:

Total dollars committed under signed leases 3/	$	220,528		$	86,458		$	34,423		$	28,206		$	17,212		$	77,365
Rentable square feet		106,629			34,300			38,548			37,303			75,947			58,545

Per rentable square foot	$	2.07		$	2.52		$	0.89		$	0.76		$	0.23		$	1.32

Total:

Total dollars committed under signed leases	$	2,357,855		$	489,767		$	834,548		$	895,181		$	256,322		$	966,735
Rentable square feet		106,629			34,300			38,548			37,303			75,947			58,545

Per rentable square foot	$	22.11		$	14.28		$	21.65		$	24.00		$	3.38		$	16.51

1/	Includes 6K square feet of leases that start in 2006 or later

2/	Includes 16K square feet of leases that start in 2006 or later

3/	Excludes a full allocation of internal marketing cost

Page 16

Leasing Statistics by Market

For the Three Months ended December 31, 2004

Office Portfolio 1/


Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF 2/
Raleigh	273,485	5.0	$	15.51	$	8.09	$	3.25
Tampa	150,572	4.6		19.15		11.73		2.48
Memphis	147,013	6.9		19.46		14.00		2.12
Nashville	141,497	6.5		20.31		9.13		3.56
Richmond	114,827	4.2		19.16		7.44		1.66
Piedmont Triad	87,039	4.4		11.11		2.26		0.26
Atlanta	77,653	3.0		12.14		3.75		1.56
Charlotte	70,122	3.5		14.57		5.88		1.64
Kansas City	23,543	3.4		21.95		2.08		3.31
Orlando	6,788	2.7		24.03		7.56		0.00
Greenville	6,167	2.7		18.31		3.61		1.42
Columbia	2,585	2.7		14.41		0.93		1.55

	1,101,291	5.0	$	17.09	$	8.36	$	2.55

Industrial Portfolio
Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF 2/
Piedmont Triad	954,519	1.5	$	3.08	$	0.17	$	0.08
Atlanta	262,125	3.7		4.84		2.27		0.50

	1,216,644	2.0	$	3.46	$	0.62	$	0.19

Retail Portfolio
Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF
Kansas City	106,629	8.3	$	17.03	$	20.04	$	2.07

	106,629	8.3	$	17.03	$	20.04	$	2.07

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Total lease commissions per square foot excludes all internal charges from Leasing Departments, which are not allocated to individual leases.

Page 17

Rental Rate Comparisons by Market

For the Three Months ended December 31, 2004

Office Portfolio 1/


Market	Rentable Square Feet Leased	Current GAAP Rent		Previous GAAP Rent		Percentage Change GAAP Rent
Raleigh	273,485	$	15.51	$	16.88	-8.1	%
Tampa	150,572		19.15		19.46	-1.6	%
Memphis	147,013		19.46		19.27	1.0	%
Nashville	141,497		20.31		19.44	4.5	%
Richmond	114,827		19.16		18.53	3.4	%
Piedmont Triad	87,039		11.11		15.15	-26.7	%
Atlanta	77,653		12.14		17.64	-31.2	%
Charlotte	70,122		14.57		15.85	-8.1	%
Kansas City	23,543		21.95		20.67	6.2	%
Orlando	6,788		24.03		20.34	18.1	%
Greenville	6,167		18.31		17.24	6.2	%
Columbia	2,585		14.41		17.99	-19.9	%

	1,101,291	$	17.09	$	17.99	-5.0	%

Cash Rent Growth	1,101,291	$	16.43	$	19.02	-13.7	%

Industrial Portfolio
Market	Rentable Square Feet Leased	Current GAAP Rent		Previous GAAP Rent		Percentage Change GAAP Rent
Piedmont Triad	954,519	$	3.08	$	3.03	1.6	%
Atlanta	262,125		4.84		5.54	-12.6	%

	1,216,644	$	3.46	$	3.60	-3.8	%

Cash Rent Growth	1,216,644	$	3.45	$	3.67	-6.0	%

Retail Portfolio
Market	Rentable Square Feet Leased	Current GAAP Rent		Previous GAAP Rent		Percentage Change GAAP Rent
Kansas City	106,629	$	17.03	$	17.20	-1.0	%

	106,629	$	17.03	$	17.20	-1.0	%

Cash Rent Growth	106,629	$	15.99	$	17.60	-9.1	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

Page 18

Lease Expirations

December 31, 2004

Dollars in thousands


Year	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue 1/		Average Rental Rate		Percent of Annualized Revenue 1/
Office: 2/
2005 3/	3,114,226	15.2	%	$	56,694	$	18.21	15.9	%
2006	3,179,399	15.5	%		59,037		18.57	16.6	%
2007	2,069,793	10.2	%		35,202		17.01	9.9	%
2008	3,111,840	15.3	%		50,196		16.13	14.1	%
2009	2,838,459	13.9	%		49,006		17.27	13.7	%
2010	1,913,500	9.4	%		34,812		18.19	9.8	%
2011	1,389,886	6.8	%		25,769		18.54	7.2	%
2012	766,121	3.8	%		14,066		18.36	3.9	%
2013	480,340	2.4	%		8,087		16.84	2.3	%
2014	419,418	2.1	%		7,868		18.76	2.2	%
2015 and thereafter	1,099,229	5.4	%		15,834		14.40	4.4	%

	20,382,211	100.0	%	$	356,571	$	17.49	100.0	%

Industrial:
2005 4/	1,981,682	28.2	%	$	8,377	$	4.23	25.9	%
2006	964,023	13.7	%		4,821		5.00	14.9	%
2007	1,897,292	26.9	%		8,746		4.61	27.1	%
2008	627,041	8.9	%		2,851		4.55	8.8	%
2009	644,325	9.1	%		3,598		5.58	11.1	%
2010	159,418	2.3	%		795		4.99	2.5	%
2011	150,822	2.1	%		713		4.73	2.2	%
2012	171,340	2.4	%		435		2.54	1.3	%
2013	102,384	1.5	%		621		6.07	1.9	%
2014	206,731	2.9	%		799		3.86	2.5	%
2015 and thereafter	142,170	2.0	%		596		4.19	1.8	%

	7,047,228	100.0	%	$	32,352	$	4.59	100.0	%

1/	Annualized Revenue is December, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

2/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

3/	Includes 104,000 square feet of leases that are on a month to month basis or 0.4% of total annualized revenue

4/	Includes 212,000 square feet of leases that are on a month to month basis or 0.2% of total annualized revenue

Note: 2005 and beyond expirations that have been renewed are reflected above based on the renewal’s expiration date.

Page 19

Lease Expirations

December 31, 2004

(Continued)

Dollars in thousands


Year	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue 1/		Average Rental Rate		Percent of Annualized Revenue 1/
Retail:
2005 2/	64,184	4.7	%	$	1,747	$	27.22	4.8	%
2006	101,607	7.4	%		2,498		24.58	6.9	%
2007	79,810	5.8	%		2,197		27.53	6.1	%
2008	131,003	9.6	%		3,711		28.33	10.3	%
2009	190,401	13.9	%		4,735		24.87	13.1	%
2010	88,790	6.5	%		2,989		33.66	8.3	%
2011	58,071	4.2	%		1,867		32.15	5.2	%
2012	140,336	10.2	%		3,923		27.95	10.9	%
2013	108,866	7.9	%		2,681		24.63	7.4	%
2014	83,349	6.1	%		1,570		18.84	4.3	%
2015 and thereafter	324,988	23.7	%		8,212		25.27	22.7	%

	1,371,405	100.0	%	$	36,130	$	26.35	100.0	%

Total:
2005 3/4/	5,160,092	17.9	%		66,818		12.95	15.6	%
2006	4,245,029	14.7	%		66,356		15.63	15.6	%
2007	4,046,895	14.1	%		46,145		11.40	10.9	%
2008	3,869,884	13.4	%		56,758		14.67	13.4	%
2009	3,673,185	12.8	%		57,339		15.61	13.5	%
2010	2,161,708	7.5	%		38,596		17.85	9.1	%
2011	1,598,779	5.6	%		28,349		17.73	6.7	%
2012	1,077,797	3.7	%		18,424		17.09	4.3	%
2013	691,590	2.4	%		11,389		16.47	2.7	%
2014	709,498	2.5	%		10,237		14.43	2.4	%
2015 and thereafter	1,566,387	5.4	%		24,642		15.73	5.8	%

	28,800,844	100.0	%	$	425,053	$	14.76	100.0	%

1/	Annualized Revenue is December, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

2/	Includes 10,000 square feet of leases that are on a month to month basis or 0.1% of total annualized revenue

3/	Includes 326,000 square feet of leases that are on a month to month basis or 0.7% of total annualized revenue

4/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

Note: 2005 and beyond expirations that have been renewed are reflected above based on the renewal’s expiration date.

Page 20

Office Lease Expirations by Market by Quarter 1/

Dollars in thousands


		*Three Months Ended*
		3/31/05 2/			06/30/05			09/30/05			12/31/05			Total
Atlanta	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	151,868 0.7 1,888 0.5	% %	$	72,363 0.4 1,191 0.3	% %	$	343,766 1.7 5,862 1.6	% %	$	30,501 0.1 468 0.1	% %	$	598,498 2.9 9,409 2.6	% %

Charlotte	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	139,577 0.7 2,286 0.6	% %	$	47,871 0.2 900 0.3	% %	$	58,557 0.3 767 0.2	% %	$	22,267 0.1 377 0.1	% %	$	268,272 1.3 4,330 1.2	% %

Columbia	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	27,437 0.1 506 0.1	% %	$	3,352 0.0 60 0.0	% %	$	30,789 0.2 566 0.2	% %

Greenville	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	11,608 0.1 257 0.1	% %	$	0 0.0 — 0.0	% %	$	101,444 0.5 1,585 0.4	% %		0 0.0 — 0.0	% $ %	$	113,052 0.6 1,842 0.5	% %

Kansas City	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	62,994 0.3 1,384 0.4	% %	$	33,324 0.2 627 0.2	% %	$	20,970 0.1 406 0.1	% %	$	26,654 0.1 489 0.1	% %	$	143,942 0.7 2,906 0.8	% %

Memphis	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	88,827 0.4 1,594 0.4	% %	$	12,770 0.1 258 0.1	% %	$	71,392 0.4 1,376 0.4	% %	$	9,867 0.0 177 0.0	% %	$	182,856 0.9 3,405 1.0	% %

Nashville	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	62,131 0.3 1,289 0.4	% %	$	97,717 0.5 2,014 0.6	% %	$	60,152 0.3 1,231 0.3	% %	$	115,545 0.6 2,362 0.7	% %	$	335,545 1.6 6,896 1.9	% %

Orlando	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	7,847 0.0 130 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	7,847 0.0 130 0.0	% %

Piedmont Triad	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	35,735 0.2 623 0.2	% %	$	75,089 0.4 1,349 0.4	% %	$	96,135 0.5 1,515 0.4	% %	$	41,764 0.2 709 0.2	% %	$	248,723 1.2 4,196 1.2	% %

Raleigh	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	79,653 0.3 1,428 0.4	% %	$	176,674 0.9 3,443 1.0	% %	$	118,453 0.6 2,325 0.7	% %	$	109,598 0.5 2,272 0.6	% %	$	484,378 2.3 9,468 2.7	% %

Richmond	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	20,687 0.1 391 0.1	% %	$	64,056 0.3 1,151 0.3	% %	$	163,736 0.8 3,216 0.9	% %	$	92,200 0.5 1,409 0.4	% %	$	340,679 1.7 6,167 1.7	% %

Tampa	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	118,001 0.6 2,174 0.6	% %	$	65,225 0.3 1,463 0.4	% %	$	87,754 0.4 1,818 0.5	% %	$	67,089 0.3 1,472 0.4	% %	$	338,069 1.7 6,927 1.9	% %

Other	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	1,095 0.0 5 0.0	% %	$	0 0.0 — 0.0	% %	$	20,481 0.1 451 0.1	% %	$	0 0.0 — 0.0	% %	$	21,576 0.1 456 0.1	% %

Total	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	780,023 3.8 13,449 3.8	% %	$	645,089 3.2 12,396 3.5	% %	$	1,170,277 5.7 21,058 5.9	% %	$	518,837 2.5 9,795 2.7	% %	$	3,114,226 15.2 56,698 15.9	% %

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Includes 104,000 square feet of leases that are on a month to month basis or 0.4% of total annualized revenue

3/	Annualized Revenue is December, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 21

Industrial Lease Expirations by Market by Quarter

Dollars in thousands


		*Three Months Ended*
		3/31/05 1/			06/30/05			09/30/05			12/31/05			Total
Atlanta	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	198,966 2.8 548 1.7	% %	$	104,219 1.5 415 1.3	% %	$	170,528 2.4 837 2.6	% %	$	271,953 3.9 1,595 4.9	% %	$	745,666 10.6 3,395 10.5	% %

Charlotte	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %

Greenville	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %

Kansas City	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	2,018 0.0 17 0.1	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	2,018 0.0 17 0.1	% %

Piedmont Triad	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	840,404 11.9 3,143 9.7	% %	$	92,444 1.3 524 1.6	% %	$	232,595 3.3 753 2.3	% %	$	26,966 0.4 184 0.6	% %	$	1,192,409 16.9 4,604 14.2	% %

Raleigh	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	3,728 0.1 34 0.1	% %	$	5,950 0.1 49 0.2	% %	$	31,911 0.5 278 0.9	% %	$	0 0.0 — 0.0	% %	$	41,589 0.6 361 1.1	% %

Total	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	1,045,116 14.8 3,742 11.6	% %	$	202,613 2.9 988 3.1	% %	$	435,034 6.2 1,868 5.8	% %	$	298,919 4.2 1,779 5.5	% %	$	1,981,682 28.1 8,377 25.9	% %

1/	Includes 212,000 square feet of leases that are on a month to month basis or 0.2% of total annualized revenue

2/	Annualized Revenue is December, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 22

Office Lease Expirations by Market by Year 1/

Dollars in thousands


		2005 2/			2006			2007			2008			Thereafter
Atlanta	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	598,498 2.9 9,410 2.6	% %	$	373,647 1.8 5,906 1.7	% %	$	199,083 1.0 2,899 0.8	% %	$	539,637 2.6 8,487 2.4	% %	$	1,275,489 6.3 23,164 6.5	% %

Charlotte	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	268,272 1.3 4,330 1.2	% %	$	171,575 0.8 2,751 0.8	% %	$	125,838 0.6 1,912 0.5	% %	$	102,969 0.5 1,653 0.5	% %	$	419,262 2.1 5,948 1.7	% %

Columbia	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	30,789 0.2 565 0.2	% %	$	59,586 0.3 1,110 0.3	% %	$	58,951 0.3 1,046 0.3	% %	$	63,170 0.3 1,085 0.3	% %	$	44,698 0.2 460 0.1	% %

Greenville	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	113,052 0.6 1,842 0.5	% %	$	218,167 1.1 4,097 1.1	% %	$	16,115 0.1 295 0.1	% %	$	98,992 0.5 1,794 0.5	% %	$	431,299 2.1 5,147 1.4	% %

Kansas City	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	143,942 0.7 2,906 0.8	% %	$	148,045 0.7 3,284 0.9	% %	$	89,495 0.4 1,875 0.5	% %	$	56,558 0.3 1,113 0.3	% %	$	359,313 1.8 8,621 2.4	% %

Memphis	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	182,856 0.9 3,405 1.0	% %	$	96,277 0.5 1,796 0.5	% %	$	103,781 0.5 1,974 0.6	% %	$	185,782 0.9 3,582 1.0	% %	$	442,961 2.2 8,207 2.3	% %

Nashville	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	335,545 1.6 6,896 1.9	% %	$	471,315 2.3 9,540 2.7	% %	$	235,334 1.2 4,560 1.3	% %	$	178,944 0.9 3,378 0.9	% %	$	1,451,973 7.1 25,943 7.3	% %

Orlando	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	7,847 0.0 130 0.0	% %	$	6,465 0.0 170 0.0	% %	$	19,339 0.1 338 0.1	% %	$	8,216 0.0 184 0.1	% %	$	164,934 0.8 3,177 0.9	% %

Piedmont Triad	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	248,723 1.2 4,196 1.2	% %	$	182,774 0.9 3,124 0.9	% %	$	283,320 1.4 3,251 0.9	% %	$	617,992 3.0 7,054 2.0	% %	$	611,382 3.0 9,131 2.6	% %

Raleigh	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	484,378 2.4 9,467 2.7	% %	$	827,520 4.1 14,394 4.0	% %	$	372,092 1.8 6,908 1.9	% %	$	560,340 2.7 9,580 2.7	% %	$	1,531,136 7.5 26,308 7.4	% %

Richmond	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	340,679 1.7 6,166 1.7	% %	$	250,054 1.2 5,007 1.4	% %	$	312,340 1.5 5,069 1.4	% %	$	202,596 1.0 3,742 1.0	% %	$	620,244 3.0 9,587 2.7	% %

Tampa	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	338,069 1.7 6,925 1.9	% %	$	367,808 1.8 7,700 2.2	% %	$	241,398 1.2 4,752 1.3	% %	$	477,195 2.3 8,026 2.3	% %	$	1,552,973 7.6 29,723 8.3	% %

Other	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	21,576 0.1 456 0.1	% %	$	6,166 0.0 157 0.0	% %	$	12,707 0.1 322 0.1	% %	$	19,449 0.1 518 0.1	% %	$	1,289 0.0 28 0.0	% %

Total	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	3,114,226 15.3 56,694 15.9	% %	$	3,179,399 15.6 59,036 16.6	% %	$	2,069,793 10.2 35,201 9.9	% %	$	3,111,840 15.3 50,196 14.1	% %	$	8,906,953 43.7 155,444 43.6	% %

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Includes 104,000 square feet of leases that are on a month to month basis or 0.4% of total annualized revenue

3/	Annualized Revenue is December, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 23

Industrial Lease Expirations by Market by Year

Dollars in thousands


		2005 1/			2006			2007			2008			Thereafter
Atlanta	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	745,666 10.6 3,395 10.5	% %	$	345,292 4.9 2,069 6.4	% %	$	665,087 9.4 3,462 10.7	% %	$	213,372 3.0 1,013 3.1	% %	$	759,492 10.7 3,503 10.5	% %

Charlotte	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %

Greenville	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	0 0.0 — 0.0	% %	$	16,081 0.2 201 0.6	% %	$	0 0.0 — 0.0	% %	$	5,350 0.1 58 0.2	% %	$	8,470 0.1 46 0.1	% %

Kansas City	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	2,018 0.0 17 0.1	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	1,756 0.0 20 0.1	% %

Piedmont Triad	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	1,192,409 16.9 4,603 14.2	% %	$	590,763 8.4 2,433 7.5	% %	$	1,232,205 17.5 5,284 16.3	% %	$	393,131 5.6 1,618 5.0	% %	$	800,333 11.4 3,920 12.1	% %

Raleigh	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	41,589 0.6 362 1.1	% %	$	11,887 0.2 118 0.4	% %	$	0 0.0 — 0.0	% %	$	15,188 0.2 163 0.5	% %	$	7,139 0.1 67 0.2	% %

Total	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	1,981,682 28.1 8,377 25.9	% %	$	964,023 13.7 4,821 14.9	% %	$	1,897,292 26.9 8,746 27.0	% %	$	627,041 8.9 2,852 8.8	% %	$	1,577,190 22.3 7,556 23.1	% %

1/	Includes 212,000 square feet of leases that are on a month to month basis or 0.2% of total annualized revenue

2/	Annualized Revenue is December, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 24

Customer Diversification 1/

December 31, 2004

Dollars in thousands

Top 20 Customers


Customer	RSF	Annualized Revenue 2/		Percent of Annualized Revenue 2/		Average Remaining Lease Term in Years
Federal Government	789,696	$	16,466	3.94	%	6.7
AT&T 3/	537,529		10,008	2.40	%	4.1
Price Waterhouse Coopers	297,795		7,385	1.77	%	5.3
State Of Georgia	361,687		7,070	1.69	%	4.2
T-Mobile USA	205,394		4,757	1.14	%	4.5
Sara Lee	1,195,383		4,682	1.12	%	2.7
IBM	194,649		4,100	0.98	%	1.2
Northern Telecom	246,000		3,651	0.87	%	3.2
Volvo	270,774		3,483	0.83	%	4.6
US Airways	295,046		3,376	0.81	%	3.0
Lockton Companies	132,718		3,303	0.79	%	10.2
BB&T	229,459		3,252	0.78	%	6.7
CHS Professional Services	168,436		2,994	0.72	%	2.1
ITC Deltacom 4/	147,379		2,989	0.72	%	0.4
Ford Motor Company	125,989		2,729	0.65	%	5.1
IKON	181,361		2,610	0.63	%	1.7
MCI	127,268		2,533	0.61	%	1.5
Hartford Insurance	116,010		2,508	0.60	%	1.8
Aspect Communications	116,692		2,343	0.56	%	1.9
Jacob’s Engineering	229,626		2,258	0.54	%	11.3

	5,968,891	$	92,497	22.15	%	4.5

By Industry


Category	Percent of Annualized Revenue 2/
Professional, Scientific, and Technical Services	21.6	%
Insurance	10.1	%
Manufacturing	9.4	%
Telecommunication	8.2	%
Finance/Banking	8.0	%
Retail Trade	7.2	%
Government/Public Administration	6.2	%
Health Care and Social Assistance	6.0	%
Wholesale Trade	5.5	%
Transportation and Warehousing	3.3	%
Administrative and Support Services	3.1	%
Real Estate Rental and Leasing	2.8	%
Accommodation and Food Services	2.7	%
Other Services (except Public Administration)	2.7	%
Information	2.1	%
Educational Services	1.1	%

	100.0	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Annualized Revenue is December, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

3/	AT&T and SBC have received final approval on their plans to merge. SBC currently leases 5K square feet with $110K in associated annualized revenue.

4/	ITC Deltacom (formerly Business Telecom) is located in a property that was sold on 3/31/05.

Page 25

Same Property Performance

Dollars in thousands


	Three months ended December 31,						Percentage
	2004			2003			Change
Rental revenues	$	103,733		$	100,910		2.8	%
Straight Line rent/lease incentives		606			1,061		-42.9	%
Lease termination fees 1/		278			2,525		-89.0	%
Operating expenses		(36,830	)		(36,618	)	-0.6	%

Net operating income	$	67,787		$	67,878		-0.1	%

Average Occupancy		84.3	%		82.4	%	2.3	%

Rentable Square Feet		32,085,000			32,085,000


	Twelve months ended December 31,						Percentage
	2004			2003			Change
Rental revenues	$	405,102		$	406,763		-0.4	%
Straight Line rent/lease incentives		5,099			5,168		-1.3	%
Lease termination fees 1/		2,569			4,946		-48.1	%
Operating expenses		(145,942	)		(143,514	)	-1.7	%

Net operating income	$	266,828		$	273,363		-2.4	%

Average Occupancy		83.0	%		82.8	%	0.2	%

Rentable Square Feet		32,085,000			32,085,000


Market	2003 to 2004 4th Quarter NOI Change		2003 to 2004 YTD NOI Change
Atlanta	4.1	%	-5.7	%
Charlotte	-11.7	%	-8.7	%
Columbia	19.6	%	-9.9	%
Greenville	-18.4	%	-7.8	%
Kansas City	8.0	%	1.1	%
Memphis	-1.4	%	-1.8	%
Nashville	2.6	%	0.9	%
Orlando	-14.2	%	-4.7	%
Piedmont Triad	2.9	%	-2.9	%
Raleigh	-5.4	%	-0.7	%
Richmond	3.7	%	6.1	%
Tampa 1/	-6.0	%	-8.1	%

	-0.1	%	-2.4	%

1/	Excludes WorldCom settlement proceeds of $14.4 million

Page 26

Acquisition Activity

Dollars in thousands

Name

Market

Type 1/

Date

Acquired

Square
Footage

Total Cost

First quarter 2004:

Signature Plaza

Orlando

03/02/04

274,000

Capital Plaza I

Orlando

03/02/04

242,000

Capital Plaza II

Orlando

03/02/04

303,000

Landmark I

Orlando

03/02/04

226,000

Landmark II

Orlando

03/02/04

225,000

1,270,000

171,526

Windsor at Metro Center 3/

Orlando

03/02/04

88,000

6,100

Second quarter 2004:

None

Third quarter 2004:

None

Fourth quarter 2004:

None

1,358,000

177,626

Joint Venture Acquisitions

Market

Type 1/

Date
Acquired

Square
Footage

Cost

First quarter 2004:

Glenridge 100

Atlanta

02/26/04

91,500

Glenridge 200

Atlanta

02/26/04

93,900

185,400

23,850

Second quarter 2004:

None

Third quarter 2004:

None

Fourth quarter 2004:

None

185,400

23,850

1/	The letter “O” represents Office

As discussed in Notes 3 and 18 to the financial statements included in our amended 2003 Form 10K, these five properties held in the MG-HIW LLC joint venture and the related $136.2 million of mortgage debt were consolidated in our statements. In March we acquired our partner’s 80% interest in the joint venture entity that owns these properties. The $171.5 million amount reflects the $62.5 million to acquire the MG’s 80% equity interest and MG”S 80% interest in the $136.2 million related debt.

3/	We purchased our partner’s 50% interest in this Metrowest property.

4/	We purchased a 40% interest in these two properties.

Page 27

Disposition Activity

Dollars in thousands

Name

Market

Type 1/

Date

Sold

Square
Footage

Gross Sales

Price

First quarter 2004:

Brookside Shopping Center

Kansas City

01/29/04

111,800

63rd & Brookside Building

Kansas City

01/29/04

7,800

119,600

15,250

Northpark I

Raleigh

03/28/04

42,300

4,500

Second quarter 2004:

1309 E. Cary Street

Richmond

05/21/04

16,000

1,075

Highwoods Preserve III

Tampa

06/16/04

176,000

20,190

1035 Fred Drive

Atlanta

06/24/04

100,000

2,000

Third quarter 2004:

Sabal Tech Center

Tampa

08/10/04

58,600

3,350

Lake Plaza East

Raleigh

08/16/04

71,800

5,850

Fourth quarter 2004:

Highwoods Business Park

Charlotte

11/05/04

162,700

9,500

SunPort Center

Orlando

11/23/04

165,000

6,800

South Square I

Raleigh

11/23/04

57,900

4,700

South Square II

Raleigh

11/23/04

59,300

4,050

Bay Vista

Tampa

12/08/04

17,800

1,955

Pulse Athletic Club at Highwoods

Raleigh

12/17/04

24,800

1,850

Bank of America

Greenville

12/22/04

191,600

12,350

1,263,400

93,420

Depreciable Assets Contributed to Joint Ventures

Market

Type 1/

Date
Contributed

Square
Footage

Gross Sales
Price

First quarter 2004:

None

Second quarter 2004:

Signature Plaza

Orlando

06/28/04

274,000

Capital Plaza I

Orlando

06/28/04

242,000

Capital Plaza II

Orlando

06/28/04

303,000

Landmark I

Orlando

06/28/04

226,000

Landmark II

Orlando

06/28/04

225,000

1,270,000

126,900

Third quarter 2004:

None

Fourth quarter 2004:

None

1,270,000

126,900

1/	The letters “O” and “R” represent Office and Retail, respectively.

As discussed in Note 4 to the financial statements in our amended 2003 Form 10K, the Company sold a 60% equity interest in the subsidiary that owned these five properties and retained a 40% interest. The $126.9 million amount reflects $41.1 million cash received, net of future payments required to be paid by the Company for leasing and tenant improvements, and $85.8 million representing 60% of the $143 million debt.

Page 28

Development Activity

Dollars in thousands


Property In - Process	Market	Type 1/	Rentable Square Feet	Anticipated Total Investment		Investment @ 12/31/04		Pre-Leasing		Estimated Completion Date	Estimated Stabilization Date
Office:
Center for Disease Control	Atlanta	O	109,000	$	21,375	$	1,078	100	%	4Q05	4Q05
Saxon	Richmond	O	112,000		14,829		5,084	100	%	3Q05	3Q05
FBI 2/	Tampa	O	137,000		31,091		12,330	100	%	4Q05	4Q05

Total or Weighted Average			358,000	$	67,295	$	18,492	100	%

Retail:
Griffith Road/Boutique Shops	Piedmont Triad	R	9,600	$	2,634	$	1,647	44	%	2Q05	2Q06

Total or Weighted Average			9,600	$	2,634	$	1,647	44	%

Multi-Family 3/:
The Vinings at University Center	Charlotte	M	156 units		10,800		1,847	0	%	4Q05	3Q06

Total or Weighted Average			156 units	$	10,800	$	1,847	0	%

Total or Weighted Average 4/			367,600	$	80,729	$	21,986	99	%

Completed Not Stabilized 5/
National Archives Record Administration	Atlanta	I	353,000	$	20,387	$	17,482	100	%	3Q04	4Q05

Total or Weighted Average			353,000	$	20,387	$	17,482	100	%

Grand Total or Weighed Average			720,600	$	101,116	$	39,468	99	%

1/	The letters “O”, and “I” represent Office and Industrial, respectively.

2/	An approved 25,000 square feet expansion at an additional anticipated cost of $4.5 million is included.

3/	The Vinings at University Center is currently a fifty percent owned joint venture consolidated under the provisions of FIN 46.

4/	These “In-process” developments, together with $843,000 of other development costs and $2.3 million related to office condominiums being developed for sale, are included on the Consolidated Balance Sheet as “Developments-in-process.” This preleasing percentage does not include multi-family.

5/	Completed Not Stabilized properties are recorded in the Consolidated Balance Sheet in the Land and Building accounts, not Development-in-process.

Page 29

Development Land

December 31, 2004

Dollars in thousands


		Developable Square Footage 1/			Total Estimated Market Value
Market	Acres	Office	Retail	Industrial	Total Estimated Market Value
On Balance Sheet:
Raleigh	361	3,119,000	60,000	162,000	$	68,900
Atlanta	249	270,000	1,100,000	1,390,000		37,400
Piedmont Triad	117	787,000	37,000	1,190,000		16,400
Kansas City 2/	46	550,000	91,000	—		12,300
Baltimore	45	771,000	—	—		14,300
Richmond	61	688,000	—	—		10,500
Charlotte	65	1,151,000	—	—		11,300
Nashville	48	830,000	—	—		12,900
Orlando	49	862,000	—	—		15,600
Tampa	29	462,000	—	15,000		12,200
Memphis	22	288,000	—	—		4,200
Greenville	12	150,000	—	—		1,800
Jacksonville	9	80,000	—	—		1,900
Columbia	2	20,000	—	—		300

	1,115	10,028,000	1,288,000	2,757,000	$	220,000

Deferred or optioned:
Atlanta	25	—	500,000	—

	25	—	500,000	—

Total	1,140	10,028,000	1,788,000	2,757,000

1/	A portion of land has been or will be rezoned for other use increasing its market value

2/	Includes 27 acres of residential land

Page 30

Unconsolidated Joint Ventures Assets, Debt and Liabilities

December 31, 2004

Dollars in thousands


Joint Venture	Type 1/	Own %		Venture’s Books
Joint Venture	Type 1/	Own %		Total Assets		Debt		Total Liabilities
Board of Trade Investment Co.	O	49.0	%	$	8,044	$	565	$	790
Dallas County Partners I, LP	O/ I	50.0	%		44,985		40,712		43,604
Dallas County Partners II, LP	O	50.0	%		16,857		21,223		22,662
Dallas County Partners III, LP	O	50.0	%		45		—		26
Fountain Three	O/I/R	50.0	%		33,569		28,818		30,774
RRHWoods, LLC 2/	O/M	50.0	%		82,267		69,714		73,467
Kessinger/Hunter, LLC	—	26.5	%		9,058		—		816
4600 Madison Associates, LP	O	12.5	%		21,171		16,010		16,756
Highwoods DLF 98/29, LP 2/	O	22.81	%		138,195		66,206		68,761
Highwoods DLF 97/26 DLF 99/32, LP 2/	O	42.93	%		112,103		58,313		61,827
Highwoods-Markel Associates, LLC 2/	O	50.0	%		49,973		39,442		39,840
MG-HIW Metrowest I, LLC	O	50.0	%		—		—		—
MG-HIW Metrowest II, LLC	O	50.0	%		—		—		—
Concourse Center Associates, LLC 2/	O	50.0	%		14,473		9,519		9,898
Plaza Colonnade, LLC	O/R	50.0	%		80,498		68,685		71,885
Highwoods KC Glenridge Office, LP	O	40.0	%		24,624		16,500		16,919
Highwoods KC Glenridge Land, LP	O	40.0	%		749		238		248
Highwoods KC Orlando, LLC 2/	O	40.0	%		213,255		143,000		146,521

Total				$	849,866	$	578,945	$	604,794


Joint Venture	Type 1/	Own %		Highwoods’ Share of Joint Venture
Joint Venture	Type 1/	Own %		Total Assets		Debt		Total Liabilities
Board of Trade Investment Co.	O	49.0	%	$	3,942	$	277	$	387
Dallas County Partners I, LP	O/I	50.0	%		22,493		20,356		21,802
Dallas County Partners II, LP	O	50.0	%		8,429		10,612		11,331
Dallas County Partners III, LP	O	50.0	%		23		—		13
Fountain Three	O/I/R	50.0	%		16,785		14,409		15,387
RRHWoods, LLC 2/	O/M	50.0	%		41,134		34,857		36,734
Kessinger/Hunter, LLC	—	26.5	%		2,400		—		216
4600 Madison Associates, LP	O	12.5	%		2,646		2,001		2,095
Highwoods DLF 98/29, LP 2/	O	22.81	%		31,522		15,102		15,684
Highwoods DLF 97/26 DLF 99/32, LP 2/	O	42.93	%		48,126		25,034		26,542
Highwoods-Markel Associates, LLC 2/	O	50.0	%		24,987		19,721		19,920
MG-HIW Metrowest I, LLC	O	50.0	%		—		—		—
MG-HIW Metrowest II, LLC	O	50.0	%		—		—		—
Concourse Center Associates, LLC 2/	O	50.0	%		7,237		4,760		4,949
Plaza Colonnade, LLC	O/R	50.0	%		40,249		34,343		35,943
Highwoods KC Glenridge Office, LP	O	40.0	%		9,850		6,600		6,768
Highwoods KC Glenridge Land, LP	O	40.0	%		300		95		99
Highwoods KC Orlando, LLC 2/	O	40.0	%		85,302		57,200		58,608

Total				$	345,425	$	245,367	$	256,478

1/	The letters “O”, “I”, “R”, and “M” represent Office, Industrial, Retail, and Multi-Family, respectively.

2/	Highwoods Realty's share of equity from these tables will not equal Investments in Unconsolidated Affiliates on the Consolidated Balance Sheet due to various purchase accounting and related adjustments, which are not reflected in the Joint Ventures’ stand-alone financial statements.

Page 31

Unconsolidated Joint Ventures Income

For the three months ended December 31, 2004

Dollars in thousands


Joint Venture	Own %		Venture’s Books
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Board of Trade Investment Co.	49.0	%	$	634	$	500	$	12	$	121	$	1
Dallas County Partners I, LP	50.0	%		2,986		1,536		740		678		32
Dallas County Partners II, LP	50.0	%		1,649		792		536		186		135
Dallas County Partners III, LP	50.0	%		54		30		—		1		23
Fountain Three	50.0	%		1,709		821		519		408		(39	)
RRHWoods, LLC 1/ 2/	50.0	%		3,557		1,889		773		1,024		(129	)
Kessinger/Hunter, LLC	26.5	%		2,079		1,172		—		120		787
4600 Madison Associates, LP	12.5	%		1,312		534		278		441		59
Highwoods DLF 98/29, LP 1/ 2/	22.81	%		5,202		1,483		1,124		890		1,705
Highwoods DLF 97/26 DLF 99/32, LP 1/ 2/	42.93	%		3,790		1,123		1,129		1,008		530
Highwoods-Markel Associates, LLC 1/ 2/	50.0	%		1,451		337		572		115		427
Concourse Center Associates, LLC 1/ 2/	50.0	%		526		129		173		83		141
Plaza Colonnade, LLC	50.0	%		769		193		264		354		(42	)
Highwoods KC Glenridge Office, LP	40.0	%		904		381		219		175		129
Highwoods KC Glenridge Land, LP	40.0	%		—		5		9		—		(14	)
Highwoods KC Orlando, LLC 1/ 2/	40.0	%		6,748		3,023		1,895		3,708		(1,878	)

Total			$	33,370	$	13,948	$	8,243	$	9,312	$	1,867


Joint Venture	Own %		Highwoods’ Share of Joint Venture
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Board of Trade Investment Co.	49.0	%	$	311	$	245	$	6	$	59	$	1
Dallas County Partners I, LP	50.0	%		1,493		768		370		339		16
Dallas County Partners II, LP	50.0	%		825		396		268		93		68
Dallas County Partners III, LP	50.0	%		27		15		—		1		11
Fountain Three	50.0	%		855		411		260		204		(20	)
RRHWoods, LLC 1/ 2/	50.0	%		1,778		944		386		512		(64	)
Kessinger/Hunter, LLC	26.5	%		551		311		—		32		208
4600 Madison Associates, LP	12.5	%		164		67		35		55		7
Highwoods DLF 98/29, LP 1/ 2/	22.81	%		1,186		338		256		203		389
Highwoods DLF 97/26 DLF 99/32, LP 1/ 2/	42.93	%		1,627		482		485		433		227
Highwoods-Markel Associates, LLC 1/ 2/	50.0	%		726		169		286		57		214
Concourse Center Associates, LLC 1/ 2/	50.0	%		263		65		86		41		71
Plaza Colonnade, LLC	50.0	%		385		97		132		177		(21	)
Highwoods KC Glenridge Office, LP	40.0	%		362		152		88		70		52
Highwoods KC Glenridge Land, LP	40.0	%		—		2		4		—		(6	)
Highwoods KC Orlando, LLC 1/ 2/	40.0	%		2,699		1,209		758		1,483		(751	)

Total 1/ 2/			$	13,252	$	5,671	$	3,420	$	3,759	$	402

Highwoods Realty’s share of Depreciation/Amortization from these tables will not equal Depreciation and Amortization of Real Estate Assets for Unconsolidated Affiliates on the Statement of Funds from Operations due to various purchase accounting and related adjustments, which are not reflected in the Joint Ventures’ stand-alone financial statements.

2/	Highwoods Realty’s share of Net Income from these tables will not equal Equity in Earnings of Unconsolidated Affiliates on the Consolidated Income Statement due to various purchase accounting and related adjustments, which are not reflected in the Joint Ventures’ stand-alone financial statements.

Page 32

Unconsolidated Joint Ventures Income

For the year ended December 31, 2004

Dollars in thousands


	Own %		Venture’s Books
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Board of Trade Investment Co.	49.0	%	$	2,534	$	1,786	$	52	$	461	$	235
Dallas County Partners I, LP	50.0	%		11,895		5,806		2,762		2,085		1,242
Dallas County Partners II, LP	50.0	%		6,276		2,811		2,222		742		501
Dallas County Partners III, LP	50.0	%		215		125		—		6		84
Fountain Three	50.0	%		7,176		3,223		2,116		1,555		282
RRHWoods, LLC 1/ 2/	50.0	%		14,049		7,736		2,734		3,561		18
Kessinger/Hunter, LLC	26.5	%		6,895		4,764		—		642		1,489
4600 Madison Associates, LP	12.5	%		5,248		2,207		1,132		1,768		141
Highwoods DLF 98/29, LP 1/ 2/	22.81	%		20,063		5,770		4,521		3,538		6,234
Highwoods DLF 97/26 DLF 99/32, LP 1/ 2/	42.93	%		14,877		4,441		4,538		4,117		1,781
Highwoods-Markel Associates, LLC 1/ 2/	50.0	%		6,740		1,453		2,301		1,777		1,209
MG-HIW Metrowest I, LLC	50.0	%		—		5		—		—		(5	)
MG-HIW Metrowest II, LLC	50.0	%		141		88		39		70		(56	)
Concourse Center Associates, LLC 1/ 2/	50.0	%		2,105		568		695		332		510
Plaza Colonnade, LLC	50.0	%		796		196		264		370		(34	)
Highwoods KC Glenridge Office, LP	40.0	%		2,903		1,256		552		549		546
Highwoods KC Glenridge Land, LP	40.0	%		—		9		9		—		(18	)
Highwoods KC Orlando, LLC 1/ 2/	40.0	%		13,936		5,775		3,818		4,743		(400	)

Total			$	115,848	$	48,019	$	27,756	$	26,316	$	13,759


	Own %		Highwoods’ Share of Joint Venture
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Board of Trade Investment Co.	49.0	%	$	1,242	$	875	$	25	$	226	$	116
Dallas County Partners I, LP	50.0	%		5,948		2,903		1,381		1,043		621
Dallas County Partners II, LP	50.0	%		3,138		1,406		1,111		371		250
Dallas County Partners III, LP	50.0	%		108		63		—		3		42
Fountain Three	50.0	%		3,588		1,612		1,058		778		140
RRHWoods, LLC 1/ 2/	50.0	%		7,024		3,868		1,367		1,781		8
Kessinger/Hunter, LLC	26.5	%		1,827		1,262		—		170		395
4600 Madison Associates, LP	12.5	%		656		276		142		221		17
Highwoods DLF 98/29, LP 1/ 2/	22.81	%		4,576		1,316		1,031		807		1,422
Highwoods DLF 97/26 DLF 99/32, LP 1/ 2/	42.93	%		6,387		1,907		1,948		1,768		764
Highwoods-Markel Associates, LLC 1/ 2/	50.0	%		3,370		727		1,150		888		605
MG-HIW Metrowest I, LLC	50.0	%		—		3		—		—		(3	)
MG-HIW Metrowest II, LLC	50.0	%		71		44		20		35		(28	)
Concourse Center Associates, LLC 1/ 2/	50.0	%		1,053		284		348		166		255
Plaza Colonnade, LLC	50.0	%		398		98		132		185		(17	)
Highwoods KC Glenridge Office, LP	40.0	%		1,161		502		221		220		218
Highwoods KC Glenridge Land, LP	40.0	%		—		4		4		—		(8	)
Highwoods KC Orlando, LLC 1/ 2/	40.0	%		5,574		2,310		1,527		1,897		(160	)

Total			$	46,121	$	19,460	$	11,465	$	10,559	$	4,637

2/	Highwoods Realty’s share of Net Income from these tables will not equal Equity in Earnings of Unconsolidated Affiliates on the Consolidated Income Statement due to various purchase accounting and related adjustments, which are not reflected in the Joint Ventures’ stand-alone financial statements.

Page 33

Joint Ventures Long-Term Debt Detail

Dollars in thousands


Joint Venture	Own %		Lender	Interest Rate		Maturity Date	Loan Balance 12/31/04
Dallas County Partners I, LP	50.0	%	American Express	7.0	%	Sep-09		3,535
Dallas County Partners I, LP	50.0	%	American Express	6.9	%	Jun-09		7,484
Dallas County Partners I, LP	50.0	%	John Hancock Life Insurance Co.	7.6	%	Mar-08		2,995
Dallas County Partners I, LP	50.0	%	State Farm	7.1	%	Oct-08		3,060
Dallas County Partners I, LP	50.0	%	State Farm	7.9	%	Sep-06		3,031
Dallas County Partners I, LP	50.0	%	State Farm	7.5	%	May-07		4,390
Dallas County Partners I, LP	50.0	%	Bank of America	5.7	%	Oct-07		4,010
Dallas County Partners I, LP	50.0	%	State Farm	7.5	%	Dec-07		5,107
Dallas County Partners I, LP	50.0	%	Thrivent	8.5	%	Aug-10		1,690
Dallas County Partners I, LP	50.0	%	Union Planters	6.3	%	Jun-14		3,680
Dallas County Partners I, LP	50.0	%	Union Planters	7.2	%	Jan-06		493
Dallas County Partners I, LP	50.0	%	Bankers Trust	8.0	%	Jul-11		1,237

				7.1	%			40,712

Dallas County Partners II, LP	50.0	%	Principal Life Insurance Company	10.2	%	Jun-13		21,223

Fountain Three	50.0	%	John Hancock Life Insurance Co.	7.8	%	Jan-08		6,058
Fountain Three	50.0	%	American Express	6.9	%	Jun-09		4,001
Fountain Three	50.0	%	Thrivent	8.0	%	Oct-10		3,768
Fountain Three	50.0	%	Thrivent	7.3	%	Apr-09		3,605
Fountain Three	50.0	%	Wells Fargo	8.2	%	May-08		2,167
Fountain Three	50.0	%	Lehman Brothers	8.0	%	Jul-09		3,628
Fountain Three	50.0	%	Thrivent	7.0	%	Sep-12		5,591

				7.5	%			28,818

RRHWoods, LLC	50.0	%	Industrial Revenue Bonds	1.0	%	Nov-15		23,000
RRHWoods, LLC	50.0	%	Bank of America	6.8	%	Sep-12		27,471
RRHWoods, LLC	50.0	%	Industrial Revenue Bonds	1.0	%	Sep-15		6,000
RRHWoods, LLC	50.0	%	Industrial Revenue Bonds	1.1	%	Nov-15		5,500
RRHWoods, LLC	50.0	%	Bank of America	5.7	%	Oct-07		4,063
RRHWoods, LLC	50.0	%	Union Planters	6.3	%	Jun-14		3,680

				3.8	%			69,714

Plaza Colonnade, LLC	50.0	%	Met Life	5.7	%	Jan-17		50,000
Plaza Colonnade, LLC	50.0	%	Tax Incremental Financing	5.4	%	Mar-10		1,818
Plaza Colonnade, LLC	50.0	%	Tax Incremental Financing	6.0	%	Mar-16		4,394
Plaza Colonnade, LLC	50.0	%	Tax Incremental Financing	5.9	%	Mar-24		12,473

				5.8	%			68,685

4600 Madison Associates, LLC	12.5	%	State Farm	6.9	%	Apr-18		16,010
Board of Trade Investment Company	49.0	%	KC Board of Trade Clearing Corp.	7.8	%	Sep-07		565
Highwoods DLF 98/29, LP	22.8	%	USG Annuity & Life Company	6.8	%	Apr-11		66,206
Highwoods DLF 97/26 DLF 99/32, LP	42.9	%	Massachusetts Mutual Life Ins. Co.	7.7	%	May-12		58,313
Concourse Center Associates, LLC	50.0	%	Lincoln National Life Insurance Co.	7.0	%	Jul-10		9,519
Highwoods KC Orlando, LLC	40.0	%	Met Life	5.2	%	Jul-14		143,000
Highwoods - Markel Associates, LLC	50.0	%	Principal Life Insurance Company	5.8	%	Jan-14		39,442
Highwoods KC Glenridge Office	40.0	%	Wachovia	4.8	%	Jun-14		16,500
Highwoods KC Glenridge Land	40.0	%	Transwestern	0.0	%	Feb-05		238

				6.1	%			349,793

				6.1	%		$	578,945

Highwoods’ Share of the above							$	245,367

Page 34

Joint Ventures Portfolio Summary

As of December 31, 2004


Summary by Location:

	Rentable Square Feet 1/	Occupancy 2/		Percentage of Annualized Revenue - Highwoods’ Share Only 3/
Market	Rentable Square Feet 1/	Occupancy 2/		Office		Industrial		Retail		Multi-Family		Total
Des Moines	2,253,000	91.4	%	28.6	%	3.6	%	1.0	%	3.5	%	36.7	%
Orlando	1,683,000	89.7	%	25.7	%	—		—		—		25.7	%
Atlanta	835,000	92.5	%	12.9	%	—		—		—		12.9	%
Raleigh	455,000	99.5	%	3.7	%	—		—		—		3.7	%
Kansas City	428,000	86.4	%	8.4	%	—		—		—		8.4	%
Piedmont Triad	364,000	100.0	%	4.0	%	—		—		—		4.0	%
Tampa	205,000	99.1	%	2.1	%	—		—		—		2.1	%
Charlotte	148,000	100.0	%	0.8	%	—		—		—		0.8	%
Richmond	413,000	99.7	%	5.2	%	—		—		—		5.2	%
Other	110,000	100.0	%	0.5	%	—		—		—		0.5	%

Total	6,894,000	92.9	%	91.9	%	3.6	%	1.0	%	3.5	%	100.0	%

1/	Excludes Des Moines’ apartment units

2/	Excludes Des Moines’ apartment occupancy percentage of 95.7%

3/	Annualized Rental Revenue is December, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 35

Joint Ventures Lease Expirations

December 31, 2004

Dollars in thousands


Year	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue 1/		Average Rental Rate		Percent of Annualized Revenue 1/
Total
2005	673,634	10.1	%	$	11,176	$	16.59	9.0	%
2006	657,868	9.9	%		12,485		18.98	10.0	%
2007	375,057	5.6	%		7,670		20.45	6.2	%
2008	1,259,399	18.9	%		21,513		17.08	17.2	%
2009	844,347	12.6	%		15,763		18.67	12.7	%
2010	353,475	5.3	%		6,446		18.24	5.2	%
2011	526,104	7.9	%		9,781		18.59	7.9	%
2012	377,923	5.7	%		8,561		22.65	6.9	%
2013	689,447	10.3	%		13,622		19.76	11.0	%
2014	358,248	5.4	%		7,860		21.94	6.3	%
2015 and thereafter	552,994	8.3	%		9,396		16.99	7.6	%

	6,668,496	100.0	%	$	124,273	$	18.64	100.0	%

1/	Annualized Revenue is December, 2004 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 36

Joint Ventures Development

Dollars in thousands


Property	% Ownership		Market	Rentable Square Feet	Anticipated Total Investment		Investment @ 12/31/04		Pre-Leasing		Estimated Completion Date	Estimated Stabilization Date
Plaza Colonade, LLC 1/	50	%	Kansas City	285,000	$	71,500	$	65,099	76	%	4Q04	3Q05
Summit	50	%	Des Moines	35,000		3,559		3,435	75	%	3Q04	3Q05
Pinehurst	50	%	Des Moines	35,000		3,559		3,497	79	%	3Q04	3Q05
Sonoma	50	%	Des Moines	75,000		9,364		202	0	%	2Q05	2Q06

Total or Weighted Average				430,000	$	87,982	$	72,233	63	%

Highwoods’ Share of the above					$	43,991	$	36,117

1/	Includes $16.2 million in investment cost that has been funded by tax increment financing

Page 37

LOGO

Supplemental Information

March 31, 2005

Supplemental Information

Table of Contents

March 31, 2005


Schedule		Page
Summary and Corporate Information		i, ii and iii

Consolidated Statements of Income		1
Statement of Funds from Operations		2
Statement of Cash Available for distribution will be issued at a later date		3
Consolidated Balance Sheets		4
Estimated Net Asset Value		5
Components of Discontinued Operations		6
Capitalization		7
Long-Term Debt Summary		8
Long-Term Debt Detail		9
Portfolio Summary		10, 11 and 12
Occupancy Trends		13
Leasing Statistics		14, 15 and 16
Leasing Statistics by Market		17
Rental Rate Comparisons by Market		18
Lease Expirations		19 and 20
Office Lease Expirations by Market by Quarter		21
Industrial Lease Expirations by Market by Quarter		22
Office Lease Expirations by Market by Year		23
Industrial Lease Expirations by Market by Year		24
Customer Diversification		25
Same Property Performance		26
Acquisition Activity		27
Disposition Activity and Depreciable Assets Contributed to Joint Ventures		28
Development Activity		29
Development Land		30
Unconsolidated Joint Ventures Assets, Debt and Liabilities		31
Unconsolidated Joint Ventures Income (Three Months)		32
Joint Ventures Long-Term Debt Detail		33
Joint Ventures Portfolio Summary		34
Joint Ventures Lease Expirations		35
Joint Ventures Development		36

The information within refers to all Highwoods Properties’ wholly-owned entities, except pages 32 to 36 unless

noted otherwise.

Certain matters discussed in this supplemental, including estimates of net operating income, pre-leasing commitments and the cost, timing and stabilization of announced development projects, are forward- looking statements within the meaning of the federal securities laws. Although Highwoods believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from Highwoods’ current expectations include general economic conditions, local real estate conditions, the timely development and lease-up of properties, and the other risks detailed from time to time in the Company’s SEC reports.

Summary

Dollars in thousands, except per share amounts


	*Three Months Ended*
	03/31/05			03/31/04			Change F/(U)
Operations
Rental and other revenues from continuing operations	$	116,022		$	117,292		$	(1,270	)
Rental property expense from continuing operations		41,126			43,404			2,278

Net operating income from continuing operations	$	74,896		$	73,888		$	1,008

Rental and other revenues from discontinued operations	$	1,312		$	3,706		$	(2,394	)
Rental property expense from discontinued operations		239			1,486			1,247

Net operating income from discontinued operations	$	1,073		$	2,220		$	(1,147	)

Equity in earnings of unconsolidated affiliates		2,216			1,212			1,004
General and administrative		7,423			10,743			3,320
G&A as a % of rental and other revenues and equity in earnings of unconsolidated affiliates		6.2	%		8.8	%		2.6	%
EBITDA calculation
Net income	$	20,346		$	4,936		$	15,410
Addback depreciation and amortization		36,015			35,580			435
Addback depreciation and amortization from unconsolidated affiliates		2,645			2,048			597
Addback interest expense		27,999			33,017			(5,018	)
Addback interest expense from unconsolidated affiliates		3,593			2,423			933

EBITDA	$	90,598		$	78,241		$	12,357

Interest expense from continuing operations	$	27,999		$	33,017		$	5,018
Interest expense from discontinued operations		—			—			—
Interest expense from unconsolidated affiliates		3,593			2,660			(933	)
EBITDA/Interest expense		2.87			2.19			0.67
EBITDA/Interest expense + preferred dividends		2.54			1.92			0.62
Net income	$	20,346		$	4,936		$	15,410
Funds from operations	$	36,246		$	30,133		$	6,113.00
Per share - diluted:
Net (loss)/income	$	0.24		$	(0.05	)	$	0.29
Funds from operations		0.60			0.50			0.11
Dividends paid		0.425			0.425			—
Dividends paid as % of funds from operations		69.7	%		85.0	%		15.3	%

	03/31/05			03/31/04			Change
Capitalization
Market capitalization:
Long-term debt	$	1,582,010		$	1,790,039			(208,029	)
Financing obligations		63,096			64,724			(1,628	)
Preferred equity at redemption value		377,445			377,445			—
Market value of common equity		1,606,008			1,564,133			41,875

Total market capitalization	$	3,628,559		$	3,796,341		$	(167,782	)

	03/31/05			03/31/04			Change F/(U)
Portfolio - wholly-owned
Total In-Service Square Footage		32,654,000			36,111,000			(3,457,000	)
Occupancy		83.8	%		81.4	%		2.4	%
Same Property NOI (GAAP basis)	$	72,214		$	68,512		$	3,702

Corporate Information


Board of Directors		Research Coverage

Thomas W. Adler		Deutsche Banc Securities
Gene H. Anderson		Lou Taylor - 212-469-4912
Kay N. Callison
Edward J. Fritsch		Green Street Advisors
Ronald P. Gibson		Jim Sullivan - 949-640-8780
William E. Graham Jr.
Lawrence S. Kaplan		KeyBanc Capital Markets
L. Glenn Orr Jr.		Richard Moore - 216-443-2815
O. Temple Sloan Jr., Chairman
Willard H. Smith Jr.		Legg Mason
John L. Turner		David Fick - 410-454-5018
F. William Vandiver, Jr.
		Morgan Stanley Dean Witter
		Gregory Whyte - 212-761-6331
Senior Management Team
		Prudential Equity Group
Edward J. Fritsch		Jim Sullivan - 212-778-2515
President, Chief Executive Officer and Director
		Smith Barney Citigroup
Michael E. Harris		Jonathan Litt - 212-816-0231
Executive Vice President and Chief Operating Officer
		UBS Warburg
Terry L. Stevens		Keith Mills - 212-713-3098
Vice President, Chief Financial Officer
and Treasurer		Wachovia Securities
		Chris Haley - 443-263-6773
Gene H. Anderson
Senior Vice President and Director

Michael F. Beale
Senior Vice President

Robert G. Cutlip
Senior Vice President

W. Brian Reames
Senior Vice President

Thomas S. Hill
Corporate Vice President, Leasing

Carman J. Liuzzo
Vice President, Investments and
Strategic Analysis

Kevin E. Penn
Chief Information Officer and
Business Solutions Officer

Mack D. Pridgen III
Vice President, General Counsel and Secretary


Corporate Information
Divisional Offices		Corporate Headquarters
Atlanta/Piedmont Triad Gene H. Anderson - Regional Manager Atlanta, GA Gene H. Anderson, Senior Vice President Piedmont Triad, NC Mark W. Shumaker, Vice President Orlando/Tampa Michael F. Beale - Regional Manager Orlando, FL Michael F. Beale, Senior Vice President Tampa, FL Stephen A. Meyers, Vice President Raleigh/Richmond Robert G. Cutlip - Regional Manager Raleigh, NC Robert G. Cutlip, Senior Vice President Richmond, VA Paul W. Kreckman, Vice President Charlotte/Memphis/Nashville W. Brian Reames - Regional Manager Nashville, TN W. Brian Reames, Senior Vice President Charlotte, NC Thomas F. Cochran, Senior Vice President Memphis, TN Steven Guinn, Vice President Kansas City Kansas City, MO Barrett Brady, Senior Vice President		Highwoods Properties, Inc. 3100 Smoketree Court, Suite 600 Raleigh, NC 27604 919-872-4924 Stock Exchange NYSE Trading Symbol: HIW Investor Relations Contact Tabitha Zane Sr. Director, Investor Relations Phone: 919-431-1529 Fax: 919-876-6929 E-mail: tabitha.zane@highwoods.com Information Request To request a standard Investor Relations package, Annual Report or to be added to our e-mail or fax list, please contact the Investor Relations Coordinator at: Phone: 800-256-2963 Email: HIW-IR@highwoods.com The Company Highwoods Properties, Inc., a member of the S&P MidCap 400 Index, is a fully integrated, self-administered real estate investment trust (“REIT”) that provides leasing, management, development, construction and other customer-related services for its properties and for third parties. As of March 31, 2005, the Company owned or had an interest in 504 in-service office, industrial and retail properties encompassing approximately 39.5 million square feet. Highwoods also owns 1,115 acres of development land. Highwoods is based in Raleigh, North Carolina, and its properties and development land are located in Florida, Georgia, Iowa, Kansas, Maryland, Missouri, North Carolina, South Carolina, Tennessee and Virginia. For more information about Highwoods Properties, please visit our Web site at www.highwoods.com.

iii

Consolidated Statements of Income

Dollars in thousands, except per share amounts


	*Three Months Ended*
	03/31/05			12/31/04			09/30/04			06/30/04			03/31/04
Rental and other revenues	$	116,022		$	114,240		$	111,808		$	115,439		$	117,292
Operating expenses:
Rental property		41,126			40,999			41,226			41,596			43,404
Depreciation and amortization		35,877			34,276			32,899			33,608			34,563
Impairments of assets held for use		2,614			1,270			—			—			—
General and administrative		7,423			10,841			10,166			7,945			10,743

Total operating expenses		87,040			87,386			84,291			83,149			88,710
Interest expense:
Contractual		25,585			25,552			25,564			27,304			27,149
Amortization of deferred financing costs		847			826			782			925			1,144
Financing obligations		1,567			2,533			1,409			1,457			4,724

		27,999			28,911			27,755			29,686			33,017
Other income/(expense):
Interest and other income		1,684			1,702			1,751			1,491			1,754
Settlement of bankruptcy claim		—						14,435			—			—
Loss on debt extinguishments		—			—			—			(12,457	)		—

		1,684			1,702			16,186			(10,966	)		1,754

Income/(loss) before disposition of property, minority interest and equity in earnings of unconsolidated affiliates		2,667			(355	)		15,948			(8,362	)		(2,681	)
Gains on disposition of property, net		10,625			3,445			2,215			14,770			1,085
Minority Interest in the Operating Partnership		(829	)		272			(1,373	)		(47	)		796
Equity in earnings of uncosolidated affiliates		2,216			2,033			2,555			1,477			1,212

Income from continuing operations		14,679			5,395			19,345			7,838			412
Discontinued operations:
Income from discontinued operations, net of minority interest		843			1,511			1,136			1,013			1,088
Gain/(loss) on sale of discontinued operations, net of minority interest		4,824			1,634			630			(3,457	)		3,436

		5,667			3,145			1,766			(2,444	)		4,524

Net income		20,346			8,540			21,111			5,394			4,936
Dividends on preferred stock		(7,713	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)

Net income available for/(loss attributable to) common stockholders	$	12,633		$	827		$	13,398		$	(2,319	)	$	(2,777	)

Net income/(loss) per common share - basic:
Income/(loss) from continuing operations	$	0.13		$	(0.04	)	$	0.22		$	—		$	(0.14	)
Income/(loss) from discontinued operations	$	0.11		$	0.06		$	0.03		$	(0.04	)	$	0.09

Net income/(loss)	$	0.24		$	0.02		$	0.25		$	(0.04	)	$	(0.05	)

Weighted average common shares outstanding - basic		53,640			53,424			53,400			53,275			53,186

Net income/(loss) per common share - diluted:
Income/(loss) from continuing operations	$	0.13		$	(0.04	)	$	0.22		$	—		$	(0.14	)
Income/(loss) from discontinued operations	$	0.11		$	0.06		$	0.03		$	(0.04	)	$	0.09

Net income/(loss)	$	0.24		$	0.02		$	0.25		$	(0.04	)	$	(0.05	)

Weighted average common shares outstanding - diluted		60,182			60,214			59,991			53,275			53,186

Page 1

Statement of Funds from Operations

Dollars in thousands, except per share amounts


	*Three Months Ended*
	03/31/05			12/31/04			09/30/04			06/30/04			03/31/04
Funds from operations:
Net income	$	20,346		$	8,540		$	21,111		$	5,394		$	4,936
Dividends to preferred shareholders		(7,713	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)

Net income/(loss) applicable to common shares		12,633			827			13,398			(2,319	)		(2,777	)
Add/(Deduct):
Depreciation and amortization of real estate assets		35,209			33,607			32,129			32,926			33,885
(Gain)/loss on disposition of depreciable real estate assets		(10,478	)		(394	)		(1,636	)		(16,600	)		66
Minority interest in income from operations		829			(272	)		1,373			47			(796	)
Unconsolidated affiliates:
Depreciation and amortization of real estate assets		2,645			2,620			2,441			2,070			2,048
Discontinued operations:
Depreciation and amortization of real estate assets		138			352			586			935			1,017
(Gain)/loss on sale, net of minority interest		(4,824	)		(4,790	)		(630	)		(399	)		(3,436	)
Minority interest in income from discontinued operations		94			174			130			116			126

Funds from operations	$	36,246		$	32,124		$	47,791		$	16,776		$	30,133

Funds from operations per share - diluted
Net income/(loss) applicable to common shares	$	0.24		$	0.02		$	0.25		$	(0.04	)	$	(0.05	)
Add/(Deduct):
Depreciation and amortization of real estate assets		0.58			0.56			0.54			0.56			0.57
(Gain)/loss on disposition of depreciable real estate assets		(0.18	)		(0.01	)		(0.02	)		(0.27	)		—
Unconsolidated affiliates:
Depreciation and amortization of real estate assets		0.04			0.04			0.04			0.03			0.03
Discontinued operations:
Depreciation and amortization of real estate assets		—			—						0.01			0.01
(Gain)/loss on sale, net of minority interest		(0.08	)		(0.08	)		(0.01	)		(0.01	)		(0.06	)

Funds from operations	$	0.60		$	0.53		$	0.80		$	0.28		$	0.50

Dividend payout data:
Dividends paid per common share	$	0.425		$	0.425		$	0.425		$	0.425		$	0.425

Funds from operations		69.7	%		80.2	%		53.1	%		151.8	%		85.0	%

Weighted average shares outstanding - diluted		60,182			60,214			59,991			59,794			60,092

Impairment adjustments included in funds from operations in dollars	$	(2,614	)	$	(4,426	)	$	(500	)	$	(3,856	)	$	—

Impairment adjustments included in funds from operations per share	$	(0.04	)	$	(0.07	)	$	(0.01	)	$	(0.06	)	$	—

Page 2

Consolidated Balance Sheets

Dollars in thousands


	03/31/05			12/31/04			09/30/04			06/30/04			03/31/04
Assets:
Real estate assets, at cost:
Land and improvements	$	391,768		$	397,840		$	403,896		$	404,317		$	432,142
Buildings and tenant improvements		2,914,253			2,932,756			2,935,526			2,933,636			3,135,432
Development in process		40,581			25,171			14,431			23,027			9,588
Land held for development		179,755			188,945			189,214			191,409			203,667
Furniture, fixtures and equipment		22,509			22,187			22,140			22,133			21,950

		3,548,866			3,566,899			3,565,207			3,574,522			3,802,779
Less-accumulated depreciation		(622,956	)		(606,111	)		(589,383	)		(568,453	)		(580,138	)

Net real estate assets		2,925,910			2,960,788			2,975,824			3,006,069			3,222,641
Property held for sale		27,283			32,796			69,011			64,958			38,467
Cash and cash equivalents		55,166			24,482			20,613			11,817			17,782
Restricted cash		3,711			3,875			4,782			4,758			5,844
Accounts receivable, net		17,035			16,748			14,896			14,253			13,452
Notes receivable		8,304			9,672			9,790			10,676			10,733
Accrued straight-line rents receivable		62,786			61,518			62,216			59,312			62,457
Investment in unconsolidated affiliates		73,723			74,432			78,493			79,328			69,276
Other assets:
Deferred leasing costs		112,873			111,121			107,325			103,956			106,612
Deferred financing costs		16,257			16,686			16,972			16,081			19,484
Prepaid expenses and other		11,847			10,618			11,902			12,989			11,111

		140,977			138,425			136,199			133,026			137,207
Less-accumulated amortization		(64,454	)		(62,567	)		(60,511	)		(56,044	)		(57,746	)

Other assets, net		76,523			75,858			75,688			76,982			79,461

Total Assets	$	3,250,441		$	3,260,169		$	3,311,313		$	3,328,153		$	3,520,113

Liabilities and Stockholders’ Equity:
Mortgages and notes payable	$	1,582,010		$	1,572,169		$	1,600,627		$	1,603,485		$	1,790,039
Accounts payable, accrued expenses and other liabilities		113,282			115,003			115,639			119,392			100,029
Financing obligations		63,096			65,309			64,754			65,091			64,724

Total Liabilities		1,758,388			1,752,481			1,781,020			1,787,968			1,954,792

Minority interest		109,275			115,926			118,847			120,142			123,043
Stockholders’ Equity:
Preferred stock		377,445			377,445			377,445			377,445			377,445
Common stock		540			538			537			537			536
Additional paid-in capital		1,420,055			1,416,855			1,415,377			1,415,202			1,414,008
Distributions in excess of net earnings		(406,437	)		(396,151	)		(374,149	)		(364,719	)		(339,597	)
Accumulated other comprehensive loss		(2,675	)		(2,814	)		(3,003	)		(3,141	)		(3,525	)
Deferred compensation		(6,150	)		(4,111	)		(4,761	)		(5,281	)		(6,589	)

Total Stockholders’ Equity		1,382,778			1,391,762			1,411,446			1,420,043			1,442,278

Total Liabilities and Stockholders’ Equity	$	3,250,441		$	3,260,169		$	3,311,313		$	3,328,153		$	3,520,113

Ratios
Total Debt/Total Assets		48.7	%		48.2	%		48.3	%		48.2	%		50.9	%

Page 4

Estimated Net Asset Value

March 31, 2005

Dollars in thousands, except per share amounts


Office (82.2% ave. occupancy)		8.00	%		8.25	%		8.50	%
Retail (95.5% ave. occupancy)		6.00	%		6.25	%		6.50	%
Industrial/Other (86.3% ave. occupancy)		7.50	%		7.75	%		8.00	%

Weighted average		7.72	%		7.97	%		8.22	%

Wholly Owned Properties Net Operating Income YTD 1/ 2/
Office 3/	$	60,585		$	60,585		$	60,585
Retail		6,865			6,865			6,865
Industrial/Other		5,451			5,451			5,451

Total Net Operating Income	$	72,901		$	72,901		$	72,901

Wholly Owned Properties Net Operating Income Annualized
Office	$	242,340		$	242,340		$	242,340
Retail		27,460			27,460			27,460
Industrial/Other		21,804			21,804			21,804

Total Net Operating Income	$	291,604		$	291,604		$	291,604

Wholly Owned Properties Capitalized Value
Office	$	3,029,250		$	2,937,455		$	2,851,059
Retail		457,667			439,360			422,462
Industrial/Other		290,720			281,342			272,550

	$	3,777,637		$	3,658,156		$	3,546,070

Highwoods’ Share of Joint Ventures
Net Operating Income YTD	$	8,228		$	8,228		$	8,228

Net Operating Income Annualized	$	32,912		$	32,912		$	32,912
Capitalization Rates		8.00	%		8.25	%		8.50	%

Capitalized Value	$	411,400		$	398,933		$	387,200

Value of Highwoods Preserve ($121 per square foot) 4/	$	74,221		$	74,221		$	74,221

Total In-Service Property Value	$	4,263,258		$	4,131,311		$	4,007,491

Value of Other income
Annualized Development, Leasing and Management Fees	$	5,200		$	5,200		$	5,200
Capitalization Rate		20	%		20	%		20	%

Value of Other income	$	26,000		$	26,000		$	26,000

Add Other assets:
Development Pipeline Investment	$	40,121		$	40,121		$	40,121
Property Held for Sale, at Net Sales Price		29,450			29,450			29,450
Land held for development at Book Value		179,755			179,755			179,755
Cash and cash equivalents		55,166			55,166			55,166
Restricted cash		3,711			3,711			3,711
Accounts receivable, net		17,035			17,035			17,035
Notes receivable		8,304			8,304			8,304

Other assets total	$	333,542		$	333,542		$	333,542

Gross Value of Assets	$	4,622,800		$	4,490,853		$	4,367,033

Deductions:
Total Liabilities 5/	$	178,157		$	178,157		$	178,157
Fair Market Value of Debt 6/ 7/	$	1,643,667		$	1,643,667		$	1,643,667
Preferred stock		377,445			377,445			377,445
Highwoods’ Share of Joint Ventures Liabilities		254,008			254,008			254,008

Estimated Net Asset Value	$	2,169,522		$	2,037,575		$	1,913,756

Total diluted common shares and operating units		60,169			60,169			60,169

Estimated Net Asset Value Per Share	$	36.06		$	33.86		$	31.81

1/	Excludes straight-line rent of $1.1 million and $1.2 million net operating income related to intra-period dispositions

2/	Excludes $498,000 of expenses related to land held for development

3/	Added back the $165,000 operating loss at Highwoods Preserve

4/	Highwoods Preserve is a 615,000 square foot office campus in Tampa that Worldcom vacated 12/31/02.

5/	Excludes financing obligations

6/	Including debt at fair value instead of book reduces NAV by $80.2 million

7/	Excludes 80% of $23.2 million debt associated with a consolidated 20% owned joint venture property (Harborview)

Page 5

Components of Discontinued Operations

Dollars in thousands, except per share amounts


	*Three Months Ended*
	03/31/05			12/31/04			09/30/04			06/30/04			03/31/04
Rental and other revenues	$	1,312		$	3,138		$	3,588		$	3,428		$	3,706

Operating expenses:
Rental property		239			1,103			1,244			1,375			1,486
Depreciation and amortization		138			352			586			935			1,017
Interest expense		—			—			—			—			—
Impairment of assets held for use								500

Total operating expenses		377			1,455			2,330			2,310			2,503

Interest and other income		2			2			8			11			11

		2			2			8			11			11

Income before gain/(loss) on disposition of depreciable assets and minority interest		937			1,685			1,266			1,129			1,214
Minority interest		(94	)		(174	)		(130	)		(116	)		(126	)

Income from discontinued operations, net of minority interest		843			1,511			1,136			1,013			1,088

Gain/(loss) on disposition of discontinued operations		5,364			1,821			703			(3,856	)		3,835
Minority Interest		(540	)		(187	)		(73	)		399			(399	)

Gain/(loss) on disposition of discontinued operations, net of minority interest		4,824			1,634			630			(3,457	)		3,436

Total discontinued operations	$	5,667		$	3,145		$	1,766		$	(2,444	)	$	4,524

Page 6

Capitalization

Dollars, shares, and units in thousands


	03/31/05		12/31/04		09/30/04		06/30/04		03/31/04
Long-Term Debt (see page 9 & 10):	$	1,582,009	$	1,571,777	$	1,600,627	$	1,603,485	$	1,790,039

Finance Obligations:	$	63,096	$	65,309	$	64,754	$	65,091	$	64,724

Preferred Stock (at redemtion value):
Series A 8⁵/8 % Perpetual Preferred Stock	$	104,945	$	104,945	$	104,945	$	104,945	$	104,945
Series B 8% Perpetual Preferred Stock		172,500		172,500		172,500		172,500		172,500
Series D 8% Perpetual Preferred Stock		100,000		100,000		100,000		100,000		100,000

Total preferred stock	$	377,445	$	377,445	$	377,445	$	377,445	$	377,445

Shares and Units Outstanding:
Common stock outstanding		54,053		53,813		53,713		53,716		53,631
Minority interest partnership units		5,828		6,102		6,128		6,146		6,146

Total shares and units outstanding		59,881		59,841		59,862		59,777		59,677

Stock price at period end	$	26.82	$	27.70	$	24.61	$	23.50	$	26.21
Market value of common equity	$	1,606,008	$	1,657,596	$	1,473,204	$	1,404,760	$	1,564,133

Total market capitalization with debt and obligations	$	3,628,066	$	3,670,349	$	3,514,268	$	3,449,035	$	3,794,611

See pages 32 to 36 for information regarding Highwoods’ Joint Ventures

Page 7

Long-Term Debt Summary

Dollars in thousands


	03/31/05			12/31/04			09/30/04			06/30/04			03/31/04
Balances Outstanding:

Secured:
Conventional fixed rate	$	731,426		$	732,796		$	745,524		$	748,740		$	751,894
Variable rate debt		67,348			66,181			50,803			54,945			204,845
Conventional fixed rate 1/		22,800			22,800			22,800			22,800			22,800
Variable rate debt 2/		436			392			—			—			—

Secured total	$	822,009		$	822,169		$	819,127		$	826,485		$	979,539

Unsecured:
Fixed rate bonds and notes	$	460,000		$	460,000		$	460,000		$	460,000		$	560,000
Variable rate debt		120,000			120,000			120,000			120,000			120,000
Credit facility		180,000			170,000			201,500			197,000			130,500

Unsecured total	$	760,000		$	750,000		$	781,500		$	777,000		$	810,500

Total	$	1,582,010		$	1,572,169		$	1,600,627		$	1,603,485		$	1,790,039

Average Interest Rates:

Secured:
Conventional fixed rate		7.2	%		7.2	%		7.2	%		7.2	%		7.2	%
Variable rate debt		4.2	%		4.2	%		3.7	%		3.1	%		3.1	%
Conventional fixed rate 1/		6.1	%		6.1	%		6.1	%		6.1	%		6.1	%
Variable rate debt 2/		2.8	%		—			—			—			0.0	%

Secured total		6.9	%		6.9	%		6.9	%		6.9	%		6.3	%

Unsecured:
Fixed rate bonds		7.4	%		7.4	%		7.4	%		7.4	%		7.3	%
Variable rate debt		3.5	%		3.5	%		3.0	%		2.9	%		2.4	%
Credit facility		3.4	%		3.4	%		2.2	%		2.3	%		2.1	%

Unsecured total		6.0	%		5.9	%		5.4	%		5.4	%		5.8	%

Average		6.5	%		6.4	%		6.2	%		6.2	%		6.1	%

Capitalized Interest:	$	423		$	478		$	406		$	324		$	181

Maturity Schedule:


	*Future Maturities of Debt*				Total Debt 3/		Average Interest Rate
Year	Secured Debt 3/		Unsecured Debt		Total Debt 3/		Average Interest Rate
2005	$	67,124	$	120,000	$	187,124	5.7	%
2006		50,344		290,000		340,344	5.0	%
2007		93,557		—		93,557	7.3	%
2008		—		100,000		100,000	7.1	%
2009		170,645		50,000		220,645	7.9	%
2010		137,266		—		137,266	7.8	%
2011		—		—		—	—
2012		22,800		—		22,800	6.1	%
2013		274,885		—		274,885	5.9	%
2014		—		—		—	—
Thereafter		5,388		200,000		205,388	7.5	%

Total maturities	$	822,009	$	760,000	$	1,582,009	6.5	%

Weighted average maturity = 4.7 years

1/	Loan relates to the consolidated 20% owned joint venture property (Harborview).

2/	Loan relates to the consolidated 50% owned joint venture property (Vinings).

3/	Excludes annual principal amortization

4/	Included in the $290.0 million of unsecured debt maturities is $180.0 million related to the credit facility which matures in 2006.

Page 8

Long-Term Debt Detail

Dollars in thousands

Secured Loans


Lender	Rate		Maturity Date	Loan Balance 03/31/05		Undepreciated Book Value of Assets Secured
Monumental Life Ins. Co.	7.8	%	Nov-09	$	162,712	$	236,939
Northwestern Mutual	6.0	%	Mar-13		141,353		186,524
Northwestern Mutual	7.8	%	Nov-10		137,266		277,521
Massachusetts Mutual Life Ins. Co. 1/	5.7	%	Dec-13		126,997		185,922
Northwestern Mutual	8.2	%	Feb-07		64,761		139,833
GECC 2/	3.7	%	Jan-06		46,985		82,355
Principal Life Ins. Co. 3/	8.6	%	Apr-05		40,891		103,399
Principal Life Ins. Co.	8.2	%	Aug-05		26,233		70,655
Metropolitan Life Ins. Co. 4/	6.1	%	Oct-12		22,800		38,834
PNC/Am South/Southtrust 5/	3.7	%	Oct-07		16,686		17,712
PFL Life Ins. Co. 6/	8.1	%	Jun-07		5,623		22,543
Massachusetts Mutual Life Ins. Co. 1/	6.5	%	Dec-13		5,500		—
Ohio National	8.0	%	Nov-17		5,388		10,956
Lutheran Brotherhood	6.8	%	Apr-09		3,997		7,640
PFL Life Ins. Co. 5/6/	5.4	%	Jun-07		3,678		—
Assoc Retirement Trust Fund	8.0	%	Jan-07		2,375		6,790
USG Annuity	7.7	%	Feb-06		2,166		3,797
Security Life of Denver	8.9	%	Aug-09		2,048		9,496
Southland Life Ins. Co.	8.8	%	Aug-09		1,887		6,993
American United Life	9.0	%	Jun-13		1,035		3,640
CUNA Mutual	8.0	%	Sep-06		614		3,184
Members Life Ins. Co	8.0	%	Sep-06		579		3,266
Central Carolina Bank 2/	2.8	%	Jan-08		436		1,876

	6.9	%		$	822,010	$	1,419,875

Unsecured Bonds
Bonds	7.0	%	Dec-06	$	110,000
Bonds	7.1	%	Feb-08		100,000
Bonds	8.1	%	Jan-09		50,000
Bonds	7.5	%	Apr-18		200,000

	7.3	%		$	460,000

Unsecured Loans
Term Loan 2/	3.9	%	Sep-05	$	20,000
Term Loan 7/	4.3	%	Nov-05		100,000
Line of Credit 2/	3.9	%	Jul-06		180,000

	4.0	%		$	300,000

Total Debt	6.5	%		$	1,582,010

1/	These two loans are secured by the same assets.

2/	Floating rate loans based on one month libor.

3/	Paid off on 4/1/05

4/	Loan relates to the consolidated 20% owned joint venture property (Harborview).

5/	Floating rate loan based on ninety day libor.

6/	These two loans are secured by the same assets.

7/	Floating rate loan based on two month libor.

Page 9

Portfolio Summary - Wholly-Owned Properties Only 1/

(Rentable Square Feet)


	03/31/05		12/31/04		09/30/04		06/30/04		03/31/04
Office Industrial & Retail
In-Service:
Office 2/	24,254,000		24,628,000		25,151,000		25,272,000		26,608,000
Industrial	6,991,000		7,829,000		7,992,000		7,992,000		8,092,000
Retail 3/	1,409,000		1,409,000		1,410,000		1,411,000		1,411,000

Total	32,654,000		33,866,000		34,553,000		34,675,000		36,111,000

Development Completed - Not Stabilized:
Office 2/	—		—		—		—		140,000
Industrial	353,000		350,000		350,000		—		—
Retail	—		—		—		—		—

Total	353,000		350,000		350,000		—		140,000

Development - In Process:
Office 2/	358,000		358,000		333,000		222,000		112,000
Industrial	—		—		—		350,000		350,000
Retail	9,600		9,600		—		—		—

Total	367,600		367,600		333,000		572,000		462,000

Total:
Office 2/	24,612,000		24,986,000		25,484,000		25,494,000		26,860,000
Industrial	7,344,000		8,179,000		8,342,000		8,342,000		8,442,000
Retail 3/	1,418,600		1,418,600		1,410,000		1,411,000		1,411,000

Total	33,374,600		34,583,600		35,236,000		35,247,000		36,713,000

Same Property
Office 2/	24,022,000		24,022,000		24,022,000		24,022,000		24,022,000
Industrial	6,991,000		6,991,000		6,991,000		6,991,000		6,991,000
Retail	1,409,000		1,409,000		1,409,000		1,409,000		1,409,000

Total	32,422,000		32,422,000		32,422,000		32,422,000		32,422,000


Percent Leased/Pre-Leased:

In-Service:
Office	82.3	%	82.7	%	80.9	%	79.2	%	79.2	%
Industrial	86.8	%	90.2	%	88.4	%	88.0	%	86.5	%
Retail	95.5	%	97.3	%	94.5	%	93.4	%	94.0	%

Total	83.8	%	85.0	%	83.2	%	81.8	%	81.4	%

Development Completed - Not Stabilized:
Office	—		—		—		—		36.0	%
Industrial	100.0	%	100.0	%	100.0	%	—		—
Retail	—		—		—		—		—

Total	100.0	%	100.0	%	100.0	%	—		36.0	%

Development - In Process:
Office	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Industrial	—		—		—		100.0	%	100.0	%
Retail	66.0	%	44.0	%	—		—		—

Total	99.1	%	98.5	%	100.0	%	100.0	%	100.0	%

Same Property
Office	82.5	%	82.8	%	80.8	%	79.9	%	80.0	%
Industrial	86.8	%	89.0	%	87.4	%	86.9	%	85.4	%
Retail	95.5	%	97.3	%	94.6	%	93.5	%	94.2	%

Total	84.0	%	84.8	%	82.9	%	82.0	%	81.8	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Substantially all of our Office properties are located in suburban markets

3/	Excludes 430,000 square feet of basement space in the Country Club Plaza and other Kansas City retail properties.

Page 10

Portfolio Summary

(Continued)

As of March 31, 2005



Summary by Location, Wholly-Owned Properties Only 1/:

Market	Rentable Square Feet		Occupancy		Percentage of Annualized Revenue 2/
Market	Rentable Square Feet		Occupancy		Office		Industrial		Retail		Total
Raleigh 3/	4,432,000		83.3	%	15.3	%	0.2	%	—		15.5	%
Atlanta	6,826,000		83.0	%	11.6	%	3.4	%	—		15.0	%
Tampa	4,077,000		70.5	%	13.7	%	—		—		13.7	%
Kansas City	2,308,000	4/	91.6	%	4.1	%	—		8.7	%	12.8	%
Nashville	2,870,000		92.8	%	12.1	%	—		—		12.1	%
Piedmont Triad 5/	5,722,000		90.4	%	6.3	%	3.5	%	—		9.8	%
Richmond	1,836,000		95.1	%	7.3	%	—		—		7.3	%
Memphis	1,216,000		80.6	%	4.3	%	—		—		4.3	%
Charlotte	1,492,000		67.7	%	3.7	%	—		—		3.7	%
Greenville	1,127,000		81.1	%	3.3	%	0.1	%	—		3.4	%
Columbia	426,000		59.9	%	1.0	%	—		—		1.0	%
Orlando	222,000		97.8	%	1.0	%	—		—		1.0	%
Other	100,000		61.3	%	0.4	%	—		—		0.4	%

Total	32,654,000		83.8	%	84.1	%	7.2	%	8.7	%	100.0	%


Summary by Location, Including Joint Venture Properties:

Market	Rentable Square Feet	Occupancy		Percentage of Annualized Revenue 2/6/
Market	Rentable Square Feet	Occupancy		Office		Industrial		Retail		Multi-Family		Total
Atlanta	7,661,000	84.1	%	12.0	%	3.0	%	—		—		15.0	%
Raleigh	4,887,000	84.8	%	14.2	%	0.1	%	—		—		14.3	%
Kansas City	2,736,000	90.8	%	4.6	%	—		7.8	%	—		12.4	%
Tampa	4,282,000	71.9	%	12.3	%	—		—		—		12.3	%
Nashville	2,870,000	92.8	%	10.8	%	—		—		—		10.8	%
Piedmont Triad	6,086,000	91.0	%	6.0	%	3.1	%	—		—		9.1	%
Richmond	2,249,000	96.0	%	7.0	%	—		—		—		7.0	%
Des Moines	2,245,000	95.3	%	3.1	%	0.4	%	0.1	%	0.4	%	4.0	%
Memphis	1,216,000	80.6	%	3.8	%	—		—		—		3.8	%
Orlando	1,906,000	90.8	%	3.7	%	—		—		—		3.7	%
Charlotte	1,640,000	70.7	%	3.3	%	—		—		—		3.3	%
Greenville	1,127,000	81.1	%	2.9	%	0.1	%	—		—		3.0	%
Columbia	426,000	59.9	%	0.9	%	—		—		—		0.9	%
Other	210,000	81.6	%	0.4	%	—		—		—		0.4	%

Total	39,541,000	85.6	%	85.0	%	6.7	%	7.9	%	0.4	%	100.0	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Annualized Revenue is March, 2005 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

3/	Raleigh Market encompasses Raleigh, Durham, Cary, and Research Triangle metropolitan area.

4/	Excludes basement space in the Country Club Plaza property of 430,000 square feet

5/	Piedmont Triad Market encompasses Greensboro, Winston-Salem metropolitan area.


		Page 11

Portfolio Summary - Wholly-Owned Properties Only 1/

(Continued)

As of March 31, 2005



	Office Properties					Industrial
Market	Rentable Square Feet	Occupancy		Percentage of Office Annualized Revenue 2/		Rentable Square Feet	Occupancy		Percentage of Industrial Annualized Revenue 2/
Raleigh	4,331,000	83.6	%	18.4	%	101,000	71.2	%	2.3	%
Tampa	4,077,000	70.5	%	16.3	%	—	—		—
Nashville	2,870,000	92.8	%	14.4	%	—	—		—
Atlanta	3,575,000	81.8	%	13.8	%	3,251,000	84.3	%	47.2	%
Richmond	1,836,000	95.1	%	8.6	%	—	—		—
Piedmont Triad	2,190,000	89.1	%	7.5	%	3,532,000	91.2	%	49.2	%
Memphis	1,216,000	80.6	%	5.1	%	—	—		—
Kansas City	895,000	85.4	%	4.8	%	4,000	100.0	%	0.1	%
Charlotte	1,492,000	67.7	%	4.4	%	—	—		—
Greenville	1,024,000	86.3	%	3.9	%	103,000	28.9	%	1.2	%
Columbia	426,000	59.9	%	1.2	%	—	—		—
Orlando	222,000	97.8	%	1.2	%	—	—		—
Other	100,000	61.3	%	0.4	%	—	—		—

	24,254,000	82.3	%	100.0	%	6,991,000	86.8	%	100.0	%


	Retail
Market	Rentable Square Feet	Occupancy		Percentage of Retail Annualized Revenue 2/
Kansas City 3/	1,409,000	95.5	%	100.0	%

	1,409,000	95.5	%	100.0	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Annualized Revenue is March, 2005 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

3/	Excludes basement space in the Country Club Plaza property of 430,000 square feet


		Page 12

Occupancy Trends - Office, Industrial and Retail Properties 1/


Market	Measurement	03/31/05		12/31/04		09/30/04		06/30/04		03/31/04
Atlanta	Rentable Square Feet Occupancy Current Properties 2/	6,826,000 83.0 83.0	% %	6,825,000 83.7 83.7	% %	6,825,000 81.3 81.3	% %	6,821,000 80.7 80.7	% %	6,919,000 78.8 78.9	% %

Charlotte	Rentable Square Feet Occupancy Current Properties 2/	1,492,000 67.7 67.7	% %	1,492,000 72.9 72.9	% %	1,655,000 74.6 75.1	% %	1,655,000 73.9 74.1	% %	1,655,000 80.5 81.6	% %

Columbia	Rentable Square Feet Occupancy Current Properties 2/	426,000 59.9 59.9	% %	426,000 60.4 60.4	% %	426,000 57.5 57.5	% %	426,000 57.9 57.9	% %	426,000 58.6 58.6	% %

Greenville	Rentable Square Feet Occupancy Current Properties 2/	1,127,000 81.1 81.1	% %	1,127,000 80.5 80.5	% %	1,319,000 79.4 78.4	% %	1,319,000 78.8 77.4	% %	1,319,000 78.8 77.4	% %

Kansas City 3/	Rentable Square Feet Occupancy Current Properties 2/	2,308,000 91.6 91.6	% %	2,308,000 94.1 94.1	% %	2,308,000 92.4 92.4	% %	2,310,000 91.4 91.4	% %	2,309,000 91.2 91.2	% %

Memphis	Rentable Square Feet Occupancy Current Properties 2/	1,216,000 80.6 80.6	% %	1,216,000 83.2 83.2	% %	1,216,000 82.1 82.1	% %	1,216,000 82.0 82.0	% %	1,216,000 81.3 81.3	% %

Nashville	Rentable Square Feet Occupancy Current Properties 2/	2,870,000 92.8 92.8	% %	2,870,000 93.3 93.3	% %	2,870,000 93.4 93.4	% %	2,870,000 91.7 91.7	% %	2,870,000 89.8 89.8	% %

Orlando	Rentable Square Feet Occupancy Current Properties 2/	222,000 97.7 97.7	% %	222,000 93.2 93.2	% %	387,000 94.4 93.2	% %	387,000 52.9 88.5	% %	1,656,000 75.8 91.5	% %

Piedmont Triad	Rentable Square Feet Occupancy Current Properties 2/	5,722,000 90.4 90.4	% %	6,652,000 92.5 91.3	% %	6,652,000 91.9 90.6	% %	6,652,000 91.1 89.7	% %	6,685,000 90.5 89.5	% %

Raleigh	Rentable Square Feet Occupancy Current Properties 2/	4,432,000 83.3 83.3	% %	4,597,000 83.8 83.3	% %	4,739,000 81.1 80.2	% %	4,808,000 79.4 78.7	% %	4,664,000 80.9 78.9	% %

Richmond	Rentable Square Feet Occupancy Current Properties 2/	1,836,000 95.1 95.1	% %	1,835,000 94.1 94.0	% %	1,835,000 92.0 92.0	% %	1,835,000 89.7 89.6	% %	1,851,000 90.9 90.9	% %

Tampa	Rentable Square Feet Occupancy Current Properties 2/	4,077,000 70.5 70.5	% %	4,196,000 71.0 71.1	% %	4,221,000 66.1 66.1	% %	4,277,000 65.9 66.8	% %	4,443,000 63.7 66.1	% %

Total 4/	Rentable Square Feet Occupancy	32,554,000 83.8	%	33,766,000 85.0	%	34,453,000 83.2	%	34,576,000 81.8	%	36,013,000 81.4	%

	Current Properties 2/	83.8	%	84.6	%	82.7	%	81.8	%	81.6	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Only properties that were owned and in-service on March 31, 2005 are included for each quarter shown.

3/	Excludes basement space in the Country Club Plaza property of 430,000 square feet.

4/	Excludes 100,000 square foot building located in South Florida


		Page 13

Leasing Statistics

Office Portfolio 1/


	Three Months Ended
	3/31/05 2/			12/31/04 3/			9/30/04 4/			6/30/04 5/			3/31/04 6/			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		188			206			219			230			209			210
Rentable square footage leased		1,235,718			1,101,291			1,368,577			1,375,372			1,191,746			1,254,541
Square footage of Renewal Deals		677,799			726,959			703,003			1,011,662			673,551			758,595
Renewed square footage (% of total)		54.9	%		66.0	%		51.4	%		73.6	%		56.5	%		60.5	%
New Leases square footage (% of total)		45.1	%		34.0	%		48.6	%		26.4	%		43.5	%		39.5	%

Average per rentable square foot over the lease term:
Base rent	$	16.20		$	17.40		$	16.68		$	17.64		$	17.43		$	17.07
Tenant improvements		(0.94	)		(1.51	)		(1.27	)		(1.09	)		(1.57	)		(1.28	)
Leasing commissions 7/		(0.66	)		(0.62	)		(0.64	)		(0.52	)		(0.58	)		(0.60	)
Rent concessions		(0.41	)		(0.31	)		(0.37	)		(0.27	)		(0.63	)		(0.40	)

Effective rent		14.19			14.96			14.40			15.76			14.65			14.79
Expense stop		(4.46	)		(5.61	)		(5.32	)		(5.25	)		(5.70	)		(5.27	)

Equivalent effective net rent	$	9.73		$	9.35		$	9.08		$	10.51		$	8.95		$	9.52

Average term in years		5.7			5.0			3.7			4.3			4.8			4.7
Capital Expenditures Related to Re-leased Space:
Tenant Improvements:
Total dollars committed under signed leases	$	5,644,830		$	9,208,835		$	9,455,102		$	8,908,277		$	10,063,665		$	8,656,142
Rentable square feet		1,235,718			1,101,291			1,368,577			1,375,372			1,191,746			1,254,541

Per rentable square foot	$	4.57		$	8.36		$	6.91		$	6.48		$	8.44		$	6.90

Leasing Commissions:
Total dollars committed under signed leases 7/	$	4,109,601		$	2,806,566		$	2,969,620		$	2,878,161		$	2,747,400		$	3,102,269
Rentable square feet		1,235,718			1,101,291			1,368,577			1,375,372			1,191,746			1,254,541

Per rentable square foot	$	3.33		$	2.55		$	2.17		$	2.09		$	2.31		$	2.47

Total:
Total dollars committed under signed leases	$	9,754,430		$	12,015,400		$	12,424,721		$	11,786,438		$	12,811,064		$	11,758,411
Rentable square feet		1,235,718			1,101,291			1,368,577			1,375,372			1,191,746			1,254,541

Per rentable square foot	$	7.89		$	10.91		$	9.08		$	8.57		$	10.75		$	9.37

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Includes 89K square feet of leases that start in 2007 or later

3/	Includes 111K square feet of leases that start in 2007 or later

4/	Includes 128K square feet of leases that start in 2006 or later

5/	Includes 100K square feet of leases that start in 2006 or later

6/	Includes 72K square feet of leases that start in 2006 or later

7/	Excludes a full allocation of internal marketing cost


		Page 14

Leasing Statistics

Industrial Portfolio


	Three Months Ended
	3/31/05 1/			12/31/04			9/30/04 2/			06/30/04			03/31/04			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		15			36			34			7			32			25
Rentable square footage leased		599,048			1,216,644			285,706			820,933			630,829			710,632
Square footage of Renewal Deals		579,069			875,445			246,797			642,011			448,003			558,265
Renewed square footage (% of total)		96.7	%		72.0	%		86.4	%		78.2	%		71.0	%		78.6	%
New Leases square footage (% of total)		3.3	%		28.0	%		13.6	%		21.8	%		29.0	%		21.4	%

Average per rentable square foot over the lease term:
Base rent	$	3.39		$	3.49		$	4.73		$	4.11		$	3.67		$	3.88
Tenant improvements		(0.16	)		(0.13	)		(0.33	)		(0.31	)		(0.17	)		(0.22	)
Leasing commissions 3/		(0.06	)		(0.06	)		(0.07	)		(0.08	)		(0.14	)		(0.08	)
Rent concessions		(0.01	)		(0.03	)		(0.05	)		(0.17	)		(0.05	)		(0.06	)


Effective rent		3.16			3.27			4.28			3.55			3.31			3.52
Expense stop		(0.08	)		(0.09	)		(0.54	)		(0.36	)		(0.18	)		(0.25	)

Equivalent effective net rent	$	3.08		$	3.18		$	3.74		$	3.19		$	3.13		$	3.27

Average term in years		1.3			2.0			2.6			3.2			2.6			2.3
Capital Expenditures Related to Re-leased Space:
Tenant Improvements:
Total dollars committed under signed leases	$	361,044		$	756,077		$	307,534		$	1,805,334		$	640,867		$	774,171
Rentable square feet		599,048			1,216,644			285,706			820,933			630,829			710,632

Per rentable square foot	$	0.60		$	0.62		$	1.08		$	2.20		$	1.02		$	1.09

Leasing Commissions:
Total dollars committed under signed leases 3/	$	63,473		$	226,000		$	64,714		$	207,676		$	280,486		$	168,470
Rentable square feet		599,048			1,216,644			285,706			820,933			630,829			710,632

Per rentable square foot	$	0.11		$	0.19		$	0.23		$	0.25		$	0.44		$	0.24

Total:
Total dollars committed under signed leases	$	424,517		$	982,077		$	372,247		$	2,013,010		$	921,354		$	942,641
Rentable square feet		599,048			1,216,644			285,706			820,933			630,829			710,632

Per rentable square foot	$	0.71		$	0.81		$	1.30		$	2.45		$	1.46		$	1.33

1/	Includes 2K square feet of leases that start in 2006 or later

2/	Includes 74K square feet of leases that start in 2006 or later

3/	Excludes a full allocation of internal marketing cost


		Page 15

Leasing Statistics

Retail Portfolio


	Three Months Ended
	03/31/05			12/31/04			9/30/04			6/30/04 1/			3/31/04 2/			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		4			23			18			13			10			14
Rentable square footage leased		10,993			106,629			34,300			38,548			37,303			45,555
Square footage of Renewal Deals		1,750			78,579			15,530			17,482			27,219			28,112
Renewed square footage (% of total)		15.9	%		73.7	%		45.3	%		45.4	%		73.0	%		61.7	%
New Leases square footage (% of total)		84.1	%		26.3	%		54.7	%		54.6	%		27.0	%		38.3	%

Average per rentable square foot over the lease term:
Base rent	$	26.09		$	17.03		$	26.45		$	22.98		$	30.87		$	24.68
Tenant improvements		(2.65	)		(1.73	)		(1.84	)		(2.04	)		(1.58	)		(1.97	)
Leasing commissions 3/		(0.88	)		(0.26	)		(0.56	)		(0.32	)		(0.31	)		(0.47	)
Rent concessions		0.00			0.00			(0.04	)		0.00			(0.06	)		(0.02	)

Effective rent		22.56			15.04			24.01			20.62			28.92			22.22
Expense stop		0.00			0.00			0.00			0.00			0.00			0.00

Equivalent effective net rent	$	22.56		$	15.04		$	24.01		$	20.62		$	28.92		$	22.22

Average term in years		9.3			8.3			5.7			8.0			6.1			7.5
Capital Expenditures Related to Re-leased Space:
Tenant Improvements:
Total dollars committed under signed leases	$	308,098		$	2,137,327		$	403,309		$	800,125		$	866,975		$	903,167
Rentable square feet		10,993			106,629			34,300			38,548			37,303			45,555

Per rentable square foot	$	28.03		$	20.04		$	11.76		$	20.76		$	23.24		$	19.83

Leasing Commissions:
Total dollars committed under signed leases 3/	$	3,778		$	220,528		$	86,458		$	34,423		$	28,206		$	74,679
Rentable square feet		10,993			106,629			34,300			38,548			37,303			45,555

Per rentable square foot	$	0.34		$	2.07		$	2.52		$	0.89		$	0.76		$	1.64

Total:
Total dollars committed under signed leases	$	311,876		$	2,357,855		$	489,767		$	834,548		$	895,181		$	977,845
Rentable square feet		10,993			106,629			34,300			38,548			37,303			45,555

Per rentable square foot	$	28.37		$	22.11		$	14.28		$	21.65		$	24.00		$	21.47

1/	Includes 6K square feet of leases that start in 2006 or later

2/	Includes 16K square feet of leases that start in 2006 or later

3/	Excludes a full allocation of internal marketing cost


		Page 16

Leasing Statistics by Market

For the Three Months ended March 31, 2005


Office Portfolio 1/
Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF 2/
Tampa	297,894	8.7	$	14.43	$	5.23	$	6.61
Richmond	161,114	3.2		18.71		5.68		1.72
Raleigh	158,676	3.0		17.41		2.29		0.83
Nashville	148,947	3.0		19.31		4.73		1.34
Piedmont Triad	132,410	11.1		8.55		1.82		2.54
Atlanta	110,227	4.7		14.88		3.31		2.19
Greenville	98,722	5.3		16.23		5.18		4.56
Memphis	56,632	5.2		20.98		12.53		3.04
Charlotte	44,455	2.2		10.80		2.38		0.40
Kansas City	20,046	2.6		20.71		2.88		2.79
Columbia	6,595	5.8		15.99		17.20		5.93

	1,235,718	5.7	$	15.79	$	4.57	$	3.33


Industrial Portfolio
Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF 2/
Piedmont Triad	515,278	0.9	$	3.16	$	0.15	$	0.03
Atlanta	83,770	3.8		4.70		3.40		0.45

	599,048	1.3	$	3.38	$	0.60	$	0.11


Retail Portfolio
Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF
Kansas City	10,993	9.3	$	26.09	$	28.03	$	0.34

	10,993	9.3	$	26.09	$	28.03	$	0.34

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Total lease commisions per square foot excludes all internal charges from Leasing Departments, which are not allocated to individual leases.


		Page 17

Rental Rate Comparisons by Market

For the Three Months ended March 31, 2005


Office Portfolio 1/
Market	Rentable Square Feet Leased	Current GAAP Rent		Previous GAAP Rent		Percentage Change GAAP Rent
Tampa	297,894	$	14.43	$	16.93	-14.8	%
Richmond	161,114		18.71		18.08	3.5	%
Raleigh	158,676		17.41		19.05	-8.6	%
Nashville	148,947		19.31		19.63	-1.6	%
Piedmont Triad	132,410		8.55		8.49	0.7	%
Atlanta	110,227		14.88		16.46	-9.6	%
Greenville	98,722		16.23		14.02	15.8	%
Memphis	56,632		20.98		20.08	4.5	%
Charlotte	44,455		10.80		13.00	-16.9	%
Kansas City	20,046		20.71		20.51	1.0	%
Columbia	6,595		15.99		18.05	-11.4	%

	1,235,718	$	15.79	$	16.55	-4.6	%

Cash Rent Growth	1,235,718	$	16.54	$	18.13	-8.8	%


Industrial Portfolio
Market	Rentable Square Feet Leased	Current GAAP Rent		Previous GAAP Rent		Percentage Change GAAP Rent
Piedmont Triad	515,278	$	3.16	$	3.23	-2.1	%
Atlanta	83,770		4.70		5.42	-13.4	%

	599,048	$	3.38	$	3.53	-4.2	%

Cash Rent Growth	599,048	$	3.27	$	3.45	-5.2	%


Retail Portfolio
Market	Rentable Square Feet Leased	Current GAAP Rent		Previous GAAP Rent		Percentage Change GAAP Rent
Kansas City	10,993	$	26.09	$	16.83	55.0	%

	10,993	$	26.09	$	16.83	55.0	%

Cash Rent Growth	10,993	$	24.05	$	16.98	41.6	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66


		Page 18

Lease Expirations

March 31, 2005

Dollars in thousands


Year	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue 1/		Average Rental Rate		Percent of Annualized Revenue 1/


Office: 2/
2005 3/	2,596,243	13.0	%	$	45,916	$	17.69	13.1	%
2006	3,111,763	15.6	%		57,788		18.57	16.4	%
2007	1,998,876	10.0	%		34,981		17.50	10.0	%
2008	3,144,803	15.7	%		51,052		16.23	14.6	%
2009	2,770,415	13.9	%		49,857		18.00	14.3	%
2010	2,118,090	10.6	%		37,441		17.68	10.7	%
2011	1,443,419	7.2	%		27,567		19.10	7.9	%
2012	829,918	4.2	%		15,304		18.44	4.4	%
2013	469,632	2.4	%		7,967		16.96	2.3	%
2014	419,428	2.1	%		8,291		19.77	2.4	%
2015 and thereafter	1,049,119	5.3	%		13,661		13.02	3.9	%

	19,951,706	100.0	%	$	349,825	$	17.53	100.0	%

Industrial:
2005 4/	1,536,242	24.5	%	$	6,610	$	4.30	22.2	%
2006	1,047,623	16.6	%		5,248		5.01	17.6	%
2007	1,090,412	17.3	%		6,185		5.67	20.8	%
2008	688,790	10.9	%		3,132		4.55	10.5	%
2009	644,325	10.2	%		3,756		5.83	12.6	%
2010	198,232	3.2	%		826		4.17	2.8	%
2011	150,822	2.4	%		713		4.73	2.4	%
2012	194,828	3.1	%		455		2.34	1.5	%
2013	102,384	1.6	%		621		6.07	2.1	%
2014	206,731	3.3	%		799		3.86	2.7	%
2015 and thereafter	432,567	6.9	%		1,420		3.28	4.8	%

	6,292,956	100.0	%	$	29,765	$	4.73	100.0	%

1/	Annualized Revenue is March, 2005 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

2/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

3/	Includes 104,000 square feet of leases that are on a month to month basis or 0.4% of total annualized revenue

4/	Includes 212,000 square feet of leases that are on a month to month basis or 0.2% of total annualized revenue

Note: 2005 and beyond expirations that have been renewed are reflected above based on the renewal’s expiration date.


		Page 19

Lease Expirations

March 31, 2005

(Continued)

Dollars in thousands


Year	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue 1/		Average Rental Rate		Percent of Annualized Revenue 1/
Retail:
2005 2/	32,264	2.4	%	$	992	$	30.75	2.7	%
2006	99,549	7.4	%		2,438		24.49	6.7	%
2007	79,810	5.9	%		2,180		27.31	6.0	%
2008	129,441	9.6	%		3,612		27.90	9.9	%
2009	191,405	14.2	%		4,797		25.06	13.2	%
2010	91,550	6.8	%		3,116		34.04	8.6	%
2011	58,071	4.3	%		1,902		32.75	5.2	%
2012	140,426	10.4	%		4,033		28.72	11.1	%
2013	108,866	8.1	%		2,775		25.49	7.6	%
2014	83,349	6.2	%		1,626		19.51	4.5	%
2015 and thereafter	331,450	24.7	%		8,890		26.82	24.5	%

	1,346,181	100.0	%	$	36,361	$	27.01	100.0	%

Total:
2005 3/4/	4,164,749	15.0	%		53,518		12.85	12.9	%
2006	4,258,935	15.4	%		65,474		15.37	15.7	%
2007	3,169,098	11.5	%		43,346		13.68	10.4	%
2008	3,963,034	14.4	%		57,796		14.58	13.9	%
2009	3,606,145	13.1	%		58,410		16.20	14.0	%
2010	2,407,872	8.7	%		41,383		17.19	9.9	%
2011	1,652,312	6.0	%		30,182		18.27	7.3	%
2012	1,165,172	4.2	%		19,792		16.99	4.8	%
2013	680,882	2.5	%		11,363		16.69	2.7	%
2014	709,508	2.6	%		10,716		15.10	2.6	%
2015 and thereafter	1,813,136	6.6	%		23,971		13.22	5.8	%

	27,590,843	100.0	%	$	415,951	$	15.08	100.0	%

1/	Annualized Revenue is March, 2005 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

2/	Includes 10,000 square feet of leases that are on a month to month basis or 0.1% of total annualized revenue

3/	Includes 326,000 square feet of leases that are on a month to month basis or 0.7% of total annualized revenue

4/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

Note: 2005 and beyond expirations that have been renewed are reflected above based on the renewal’s expiration date.


		Page 20

Office Lease Expirations by Market by Quarter 1/

Dollars in thousands


		*Three Months Ended*
		6/30/05 2/			09/30/05			12/31/05			03/31/06			Total
Atlanta	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	118,460 0.6 1,309 0.4	% %	$	349,949 1.8 5,947 1.7	% %	$	30,914 0.2 469 0.1	% %	$	134,599 0.7 1,738 0.5	% %	$	633,922 3.2 9,463 2.7	% %

Charlotte	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	55,910 0.3 993 0.3	% %	$	73,469 0.4 946 0.3	% %	$	22,267 0.1 377 0.1	% %	$	36,827 0.2 555 0.2	% %	$	188,473 0.9 2,871 0.8	% %

Columbia	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	0 0.0 — 0.0	% %	$	27,437 0.1 506 0.1	% %	$	3,352 0.0 60 0.0	% %	$	0 0.0 — 0.0	% %	$	30,789 0.2 566 0.2	% %

Greenville	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	227,080 1.1 3,057 0.9	% %	$	30,364 0.2 480 0.1	% %	$	0 0.0 — 0.0	% %	$	30,791 0.2 609 0.2	% %	$	288,235 1.4 4,146 1.2	% %

Kansas City	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	39,854 0.2 783 0.2	% %	$	20,727 0.1 395 0.1	% %	$	29,133 0.1 532 0.2	% %	$	60,422 0.3 1,307 0.4	% %	$	150,136 0.8 3,017 0.9	% %

Memphis	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	53,891 0.3 980 0.3	% %	$	46,875 0.2 853 0.2	% %	$	9,867 0.0 177 0.1	% %	$	49,630 0.2 943 0.3	% %	$	160,263 0.8 2,953 0.8	% %

Nashville	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	116,667 0.6 2,410 0.7	% %	$	55,687 0.3 1,143 0.3	% %	$	115,545 0.6 2,367 0.7	% %	$	143,359 0.7 2,870 0.8	% %	$	431,258 2.2 8,790 2.5	% %

Orlando	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	9,154 0.0 161 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	9,154 0.0 161 0.0	% %

Piedmont Triad	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	87,464 0.4 1,562 0.4	% %	$	109,135 0.5 1,649 0.5	% %	$	41,764 0.2 709 0.2	% %	$	93,611 0.5 1,632 0.5	% %	$	331,974 1.7 5,552 1.6	% %

Raleigh	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	96,912 0.4 1,687 0.5	% %	$	119,557 0.6 2,461 0.7	% %	$	101,829 0.5 2,229 0.6	% %	$	299,390 1.5 6,020 1.7	% %	$	617,688 3.0 12,397 3.5	% %

Richmond	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	65,836 0.3 1,235 0.4	% %	$	179,310 0.9 3,510 1.0	% %	$	85,631 0.4 1,281 0.4	% %	$	44,771 0.2 853 0.2	% %	$	375,548 1.9 6,879 2.0	% %

Tampa	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	126,549 0.6 2,510 0.7	% %	$	87,809 0.4 1,826 0.5	% %	$	56,750 0.3 1,309 0.4	% %	$	63,342 0.3 1,094 0.3	% %	$	334,450 1.7 6,739 1.9	% %

Other	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	1,095 0.0 5 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	1,095 0.0 5 0.0	% %

Total	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	998,872 5.0 16,692 4.8	% %	$	1,100,319 5.5 19,716 5.6	% %	$	497,052 2.5 9,510 2.7	% %	$	956,742 4.8 17,621 5.0	% %	$	3,552,985 17.8 63,539 18.2	% %

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Includes 104,000 square feet of leases that are on a month to month basis or 0.4% of total annualized revenue

3/	Annualized Revenue is March, 2005 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.


		Page 21

Industrial Lease Expirations by Market by Quarter

Dollars in thousands


		*Three Months Ended*
		6/30/05 1/			09/30/05			12/31/05			03/31/06			Total
Atlanta	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	136,694 2.2 472 1.6	% %	$	170,528 2.7 837 2.8	% %	$	271,953 4.3 1,595 5.4	% %	$	111,622 1.8 646 2.2	% %	$	690,797 11.0 3,550 12.0	% %

Charlotte	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %

Greenville	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	16,081 0.3 206 0.7	% %	$	16,081 0.3 206 0.7	% %

Kansas City	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	2,018 0.0 17 0.1	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	2,018 0.0 17 0.1	% %

Piedmont Triad	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	413,227 6.6 1,546 5.2	% %	$	476,995 7.6 1,636 5.5	% %	$	26,966 0.4 184 0.6	% %	$	134,017 2.1 660 2.2	% %	$	1,051,205 16.7 4,026 13.5	% %

Raleigh	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	5,950 0.1 49 0.2	% %	$	31,911 0.5 277 0.9	% %	$	0 0.0 — 0.0	% %	$	11,887 0.2 118 0.4	% %	$	49,748 0.8 444 1.5	% %

Total	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	557,889 8.9 2,084 7.1	% %	$	679,434 10.8 2,750 9.2	% %	$	298,919 4.8 1,779 6.0	% %	$	273,607 4.3 1,630 5.5	% %	$	1,809,849 28.8 8,243 27.7	% %

1/	Includes 212,000 square feet of leases that are on a month to month basis or 0.2% of total annualized revenue

2/	Annualized Revenue is March, 2005 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.


		Page 22

Office Lease Expirations by Market by Year 1/

Dollars in thousands


		2005 2/			2006			2007			2008			Thereafter
Atlanta	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	499,323 2.5 7,725 2.2	% %	$	321,046 1.6 4,730 1.4	% %	$	229,735 1.2 3,260 0.9	% %	$	549,608 2.8 8,527 2.4	% %	$	1,325,968 6.6 23,964 6.9	% %

Charlotte	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	151,646 0.8 2,316 0.7	% %	$	169,027 0.8 2,646 0.8	% %	$	121,495 0.6 1,855 0.5	% %	$	118,735 0.6 1,835 0.5	% %	$	449,619 2.3 6,568 1.9	% %

Columbia	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	30,789 0.2 565 0.2	% %	$	59,586 0.3 1,110 0.3	% %	$	58,951 0.3 1,046 0.3	% %	$	63,170 0.3 1,089 0.3	% %	$	42,482 0.2 522 0.1	% %

Greenville	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	257,444 1.3 3,538 1.0	% %	$	148,824 0.7 2,839 0.8	% %	$	16,115 0.1 298 0.1	% %	$	96,497 0.5 1,760 0.5	% %	$	364,907 1.8 5,180 1.5	% %

Kansas City	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	89,714 0.4 1,711 0.5	% %	$	154,371 0.8 3,355 1.0	% %	$	91,920 0.5 1,776 0.5	% %	$	65,281 0.3 1,334 0.4	% %	$	362,798 1.8 8,749 2.5	% %

Memphis	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	110,633 0.6 2,010 0.6	% %	$	97,750 0.5 1,839 0.5	% %	$	105,564 0.5 2,026 0.6	% %	$	179,866 0.9 3,663 1.0	% %	$	486,004 2.4 8,458 2.4	% %

Nashville	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	287,899 1.4 5,920 1.7	% %	$	471,315 2.4 9,557 2.7	% %	$	235,334 1.2 4,595 1.3	% %	$	188,552 0.9 3,748 1.1	% %	$	1,480,494 7.4 26,662 7.6	% %

Orlando	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	9,154 0.0 161 0.0	% %	$	6,465 0.0 170 0.0	% %	$	20,571 0.1 370 0.1	% %	$	9,240 0.0 186 0.1	% %	$	171,379 0.9 3,312 0.9	% %

Piedmont Triad	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	238,363 1.2 3,920 1.1	% %	$	195,662 1.0 3,392 1.0	% %	$	199,480 1.0 3,048 0.9	% %	$	622,522 3.1 7,182 2.1	% %	$	694,432 3.5 8,530 2.4	% %

Raleigh	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	318,298 1.6 6,375 1.8	% %	$	880,578 4.4 15,507 4.4	% %	$	378,100 1.9 6,927 2.0	% %	$	558,417 2.8 9,370 2.7	% %	$	1,485,776 7.4 25,888 7.4	% %

Richmond	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	330,777 1.7 6,026 1.7	% %	$	250,744 1.3 5,037 1.4	% %	$	302,754 1.5 4,944 1.4	% %	$	212,855 1.1 4,007 1.1	% %	$	648,423 3.2 10,220 2.9	% %

Tampa	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	271,108 1.4 5,643 1.6	% %	$	350,229 1.8 7,448 2.1	% %	$	226,150 1.1 4,515 1.3	% %	$	460,611 2.3 7,832 2.2	% %	$	1,565,969 7.8 31,554 9.0	% %

Other	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	1,095 0.0 5 0.0	% %	$	6,166 0.0 157 0.0	% %	$	12,707 0.1 322 0.1	% %	$	19,449 0.1 519 0.1	% %	$	21,770 0.1 479 0.1	% %

Total	RSF % of Total Office RSF Annualized Revenue 3/ % of Total Office Annl Rev	$	2,596,243 13.0 45,915 13.1	% %	$	3,111,763 15.6 57,787 16.5	% %	$	1,998,876 10.0 34,982 10.0	% %	$	3,144,803 15.8 51,052 14.6	% %	$	9,100,021 45.6 160,086 45.8	% %

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Includes 104,000 square feet of leases that are on a month to month basis or 0.4% of total annualized revenue

3/	Annualized Revenue is March, 2005 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.


		Page 23

Industrial Lease Expirations by Market by Year

Dollars in thousands


		2005 1/			2006			2007			2008			Thereafter
Atlanta	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	579,175 9.2 2,903 9.8	% %	$	345,292 5.5 2,077 7.0	% %	$	665,857 10.6 3,488 11.7	% %	$	272,037 4.3 1,259 4.2	% %	$	1,102,191 17.5 4,331 14.6	% %

Charlotte	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %

Greenville	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	0 0.0 — 0.0	% %	$	16,081 0.3 206 0.7	% %	$	0 0.0 — 0.0	% %	$	5,350 0.1 58 0.2	% %	$	8,470 0.1 91 0.3	% %

Kansas City	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	2,018 0.0 17 0.1	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	0 0.0 — 0.0	% %	$	1,756 0.0 19 0.1	% %

Piedmont Triad	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	917,188 14.6 3,365 11.3	% %	$	674,363 10.7 2,846 9.6	% %	$	424,555 6.7 2,697 9.1	% %	$	396,215 6.3 1,654 5.6	% %	$	810,333 12.9 4,085 13.7	% %

Raleigh	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	37,861 0.6 325 1.1	% %	$	11,887 0.2 118 0.4	% %	$	0 0.0 — 0.0	% %	$	15,188 0.2 162 0.5	% %	$	7,139 0.1 66 0.2	% %

Total	RSF % of Total Industrial RSF Annualized Revenue 2/ % of Total Industrial Annl Rev	$	1,536,242 24.4 6,610 22.2	% %	$	1,047,623 16.6 5,247 17.6	% %	$	1,090,412 17.3 6,185 20.8	% %	$	688,790 10.9 3,133 10.5	% %	$	1,929,889 30.7 8,592 28.9	% %

1/	Includes 212,000 square feet of leases that are on a month to month basis or 0.2% of total annualized revenue

2/	Annualized Revenue is March, 2005 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.


		Page 24

Customer Diversification 1/

March 31, 2005

Dollars in thousands


Top 20 Customers
Customer	RSF	Annualized Revenue 2/		Percent of Annualized Revenue 2/		Average Remaining Lease Term in Years
Federal Government	863,609	$	17,042	4.10	%	6.5
AT&T 3/	537,529		10,065	2.42	%	3.9
Price Waterhouse Coopers	297,795		7,528	1.81	%	5.1
State Of Georgia	361,687		7,070	1.70	%	4.0
T-Mobile USA	205,394		4,853	1.17	%	4.2
IBM	188,763		3,978	0.96	%	1.1
Northern Telecom	246,000		3,651	0.88	%	2.9
Volvo	270,525		3,572	0.86	%	4.4
US Airways	295,046		3,403	0.82	%	2.7
Lockton Companies	132,718		3,339	0.80	%	9.9
BB&T	229,459		3,260	0.78	%	6.9
CHS Professional Services	170,524		3,042	0.73	%	1.9
Ford Motor Company	125,989		2,734	0.66	%	4.9
IKON	181,361		2,613	0.63	%	1.3
MCI	127,268		2,531	0.61	%	1.2
Hartford Insurance	116,010		2,508	0.60	%	1.6
Aspect Communications	116,692		2,354	0.57	%	1.7
Metropolitan Life	118,017		2,250	0.54	%	6.2
Jacob’s Engineering	228,345		2,236	0.54	%	11.2
Icon Clinical Research	99,163		2,114	0.51	%	7.2

	4,911,894	$	90,143	21.69	%	4.7

By Industry


Category	Percent of Annualized Revenue 2/
Professional, Scientific, and Technical Services	21.3	%
Insurance	10.3	%
Manufacturing	8.8	%
Finance/Banking	8.0	%
Telecommunication	7.8	%
Retail Trade	7.5	%
Government/Public Administration	6.5	%
Health Care and Social Assistance	6.2	%
Wholesale Trade	5.5	%
Transportation and Warehousing	3.4	%
Administrative and Support Services	3.2	%
Real Estate Rental and Leasing	3.1	%
Accommodation and Food Services	2.6	%
Other Services (except Public Administration)	2.4	%
Information	2.1	%
Educational Services	1.3	%

	100.0	%

1/	Excludes properties recorded on our Balance Sheet that were sold but accounted for as Financings or Profit Sharing arrangements under FAS 66

2/	Annualized Revenue is March, 2005 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

3/	AT&T and SBC have received final approval on their plans to merge. SBC currently leases 5K square feet with $110K in associated annualized revenue.


		Page 25

Same Property Performance

Dollars in thousands


	Three months ended March 31,						Percentage Change
	2005			2004			Percentage Change
Rental revenues	$	107,411		$	103,735		3.5	%
Straight Line rent/lease incentives		912			2,279		-60.0	%
Lease termination fees		2,574			262		882.4	%
Operating expenses		(38,683	)		(37,764	)	-2.4	%

Net operating income	$	72,214		$	68,512		5.4	%

Average Occupancy		83.8	%		81.4	%	2.9	%

Rentable Square Feet		32,422,000			32,422,000


Market	2004 to 2005 1st Quarter NOI Change
Atlanta	4.9	%
Charlotte	-21.4	%
Columbia	-16.4	%
Greenville	9.8	%
Kansas City	4.7	%
Memphis	-5.4	%
Nashville	9.4	%
Orlando	2.0	%
Piedmont Triad	17.0	%
Raleigh	5.2	%
Richmond	4.0	%
Tampa 1/	8.6	%

	5.4	%


		Page 26

Acquisition Activity

Dollars in thousands


Name	Market	Type 1/	Date Acquired	Square Footage	Total Cost
First quarter 2005:
None


		Page 27

Disposition Activity

Dollars in thousands


Name	Market	Type 1/	Date Sold	Square Footage	Gross Sales Price
First quarter 2005:
Northside	Tampa	O	02/24/05	85,700	$	9,000

531 Northridge Warehouse	Piedmont Triad	I	02/28/05	598,100
531 Northridge Office	Piedmont Triad	O	02/28/05	91,800

				689,900		18,656

3928 Westpoint Boulevard	Piedmont Triad	I	02/28/05	240,000		6,225
4300 Six Forks Road	Raleigh	O	03/31/05	163,300		27,318

				1,178,900	$	61,199


Depreciable Assets Contributed to Joint Ventures
	Market	Type 1/	Date Contributed	Square Footage	Gross Sales Price
First quarter 2005:
None


		Page 28

Development Activity

Dollars in thousands


Property In - Process	Market	Type 1/	Rentable Square Feet	Anticipated Total Investment		Investment @ 03/31/05		Pre- Leasing		Estimated Completion Date	Estimated Stabilization Date
Office:
Center for Disease Control	Atlanta	O	109,000	$	21,375	$	7,426	100	%	4Q05	4Q05
Saxon	Richmond	O	112,000		14,829		10,816	100	%	3Q05	3Q05
FBI 2/	Tampa	O	137,000		31,090		17,886	100	%	4Q05	4Q05

Total or Weighted Average			358,000	$	67,294	$	36,128	100	%

Retail 3/:
Griffith Road/Boutique Shops	Piedmont Triad	R	9,600	$	2,634	$	2,117	66	%	2Q05	2Q06

Total or Weighted Average			9,600	$	2,634	$	2,117	66	%

Multi-Family 4/:
The Vinings at University Center	Charlotte	M	156 units		10,800		1,876	0	%	4Q05	3Q06

Total or Weighted Average			156 units	$	10,800	$	1,876	0	%

Total or Weighted Average 5/			367,600	$	80,728	$	40,121	99	%

Completed Not Stabilized 6/
National Archives Record Administration	Atlanta	I	353,000	$	20,387	$	17,894	100	%	3Q04	4Q05

Total or Weighted Average			353,000	$	20,387	$	17,894	100	%

Grand Total or Weighed Average			720,600	$	101,115	$	58,015	100	%

1/	The letters “O”, and “I” represent Office and Industrial, respectively.

2/	An approved 25,000 square feet expansion at an additional anticipated cost of $4.5 million is included.

3/	Excludes a vacant building in Kansas City acquired in the first quarter for $4.1 million for potential future retail development or sale to a retail user.

4/	The Vinings at University Center is currently a fifty percent owned joint venture consolidated under the provisions of FIN 46.

5/	These “In-process” developments, together with $460,000 of other development costs, are included on the Consolidated Balance Sheet as “Developments-in-process.” This preleasing percentage does not include multi-family.

6/	Completed Not Stabilized properties are recorded in the Consolidated Balance Sheet in the Land and Building accounts, not Development-in-process.

Page 29

Development Land

March 31, 2005

Dollars in thousands


Market	Acres	Developable Square Footage 1/			Total Estimated Market Value
Market	Acres	Office	Retail	Industrial	Total Estimated Market Value
On Balance Sheet:
Raleigh	361	3,119,000	60,000	162,000	$	68,900
Atlanta	249	270,000	1,100,000	1,390,000		37,400
Piedmont Triad	117	787,000	37,000	1,190,000		16,400
Kansas City 2/	46	550,000	91,000	—		12,300
Baltimore	45	771,000	—	—		14,300
Richmond	61	688,000	—	—		10,500
Charlotte	65	1,151,000	—	—		11,300
Nashville	48	830,000	—	—		12,900
Orlando	49	862,000	—	—		15,600
Tampa	29	462,000	—	15,000		12,200
Memphis	22	288,000	—	—		4,200
Greenville	12	150,000	—	—		1,800
Jacksonville	9	80,000	—	—		1,900
Columbia	2	20,000	—	—		300

	1,115	10,028,000	1,288,000	2,757,000	$	220,000

Deferred or optioned:
Atlanta	25	—	500,000	—

	25	—	500,000	—

Total	1,140	10,028,000	1,788,000	2,757,000

1/	A portion of land has been or will be rezoned for other use increasing its market value

2/	Includes 27 acres of residential land


		Page 30

Unconsolidated Joint Ventures Assets, Debt and Liabilities

March 31, 2005

Dollars in thousands


				Venture’s Books
Joint Venture	Type 1/	Own %		Total Assets		Debt		Total Liabilities
Board of Trade Investment Co.	O	49.0	%	$	8,160	$	517	$	834
Dallas County Partners I, LP	O/ I	50.0	%		43,169		40,442		42,653
Dallas County Partners II, LP	O	50.0	%		16,640		20,892		22,006
Dallas County Partners III, LP	O	50.0	%		53		—		20
Fountain Three	O/I/R	50.0	%		31,621		28,530		30,133
RRHWoods, LLC	O/M	50.0	%		81,370		69,593		72,449
Kessinger/Hunter, LLC	—	26.5	%		8,411		—		221
4600 Madison Associates, LP	O	12.5	%		21,127		15,824		16,792
Highwoods DLF 98/29, LP	O	22.81	%		136,679		65,936		68,301
Highwoods DLF 97/26 DLF 99/32, LP	O	42.93	%		111,069		58,126		60,847
Highwoods-Markel Associates, LLC	O	50.0	%		49,763		39,285		39,803
Concourse Center Associates, LLC	O	50.0	%		14,253		9,473		9,734
Plaza Colonnade, LLC	O/R	50.0	%		79,763		68,684		70,864
Highwoods KC Glenridge Office, LP	O	40.0	%		24,543		16,500		17,001
Highwoods KC Glenridge Land, LP	O	40.0	%		750		238		251
Highwoods KC Orlando, LLC	O	40.0	%		214,483		143,000		147,518

Total				$	841,854	$	577,040	$	599,427


				Highwoods’ Share of Joint Venture
Joint Venture	Type 1/	Own %		Total Assets		Debt		Total Liabilities
Board of Trade Investment Co.	O	49.0	%	$	3,998	$	253	$	409
Dallas County Partners I, LP	O/ I	50.0	%		21,585		20,221		21,327
Dallas County Partners II, LP	O	50.0	%		8,320		10,446		11,003
Dallas County Partners III, LP	O	50.0	%		27		—		10
Fountain Three	O/I /R	50.0	%		15,811		14,265		15,067
RRHWoods, LLC	O/ M	50.0	%		40,685		34,797		36,225
Kessinger/Hunter, LLC	—	26.5	%		2,229		—		59
4600 Madison Associates, LP	O	12.5	%		2,641		1,978		2,099
Highwoods DLF 98/29, LP	O	22.81	%		31,177		15,040		15,579
Highwoods DLF 97/26 DLF 99/32, LP	O	42.93	%		47,682		24,953		26,122
Highwoods-Markel Associates, LLC	O	50.0	%		24,882		19,643		19,902
Concourse Center Associates, LLC	O	50.0	%		7,126		4,737		4,867
Plaza Colonnade, LLC	O/R	50.0	%		39,882		34,342		35,432
Highwoods KC Glenridge Office, LP	O	40.0	%		9,817		6,600		6,800
Highwoods KC Glenridge Land, LP	O	40.0	%		300		95		100
Highwoods KC Orlando, LLC	O	40.0	%		85,793		57,200		59,007

Total 2/				$	341,955	$	244,570	$	254,008

1/	The letters “O”, “I”, “R”, and “M” represent Office, Industrial, Retail, and Multi-Family, respectively.

2/	Highwoods Realty’s share of equity from these tables will not agree to Investments in Unconsolidated Affiliates on the Consolidated Balance Sheet due to various purchase accounting and related adjustments, which are not reflected in the Joint Ventures’ stand-alone financial statements.

Page 31

Unconsolidated Joint Ventures Income

March 31, 2005

Dollars in thousands


			Venture’s Books
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Board of Trade Investment Co.	49.0	%	$	645	$	424	$	10	$	135	$	76
Dallas County Partners I, LP	50.0	%		2,932		1,412		720		556		244
Dallas County Partners II, LP	50.0	%		1,496		645		538		186		127
Dallas County Partners III, LP	50.0	%		54		31		—		1		22
Fountain Three	50.0	%		1,695		820		519		390		(34	)
RRHWoods, LLC	50.0	%		3,594		1,928		736		863		67
Kessinger/Hunter, LLC	26.5	%		1,223		1,212		—		157		(146	)
4600 Madison Associates, LP	12.5	%		1,215		581		275		439		(80	)
Highwoods DLF 98/29, LP	22.81	%		5,073		1,437		1,119		896		1,621
Highwoods DLF 97/26 DLF 99/32, LP	42.93	%		3,946		1,173		1,126		1,035		612
Highwoods-Markel Associates, LLC	50.0	%		1,761		446		570		583		162
Concourse Center Associates, LLC	50.0	%		539		141		171		83		144
Plaza Colonnade, LLC	50.0	%		2,033		616		715		416		286
Highwoods KC Glenridge Office, LP	40.0	%		895		402		198		147		148
Highwoods KC Glenridge Land, LP	40.0	%		—		2		—		—		(2	)
Highwoods KC Orlando, LLC	40.0	%		7,040		2,565		1,881		2,150		444

Total			$	34,142	$	13,835	$	8,577	$	8,037	$	3,691


			Highwoods’ Share of Joint Venture
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Board of Trade Investment Co.	49.0	%	$	316	$	208	$	5	$	66	$	37
Dallas County Partners I, LP	50.0	%		1,466		706		360		278		122
Dallas County Partners II, LP	50.0	%		748		323		269		93		63
Dallas County Partners III, LP	50.0	%		27		16		—		1		10
Fountain Three	50.0	%		848		410		260		195		(17	)
RRHWoods, LLC	50.0	%		1,797		964		368		431		34
Kessinger/Hunter, LLC	26.5	%		324		321		—		42		(39	)
4600 Madison Associates, LP	12.5	%		152		73		34		55		(10	)
Highwoods DLF 98/29, LP	22.81	%		1,157		328		255		204		370
Highwoods DLF 97/26 DLF 99/32, LP	42.93	%		1,694		504		483		444		263
Highwoods-Markel Associates, LLC	50.0	%		881		223		285		292		81
Concourse Center Associates, LLC	50.0	%		270		71		86		41		72
Plaza Colonnade, LLC	50.0	%		1,017		308		358		208		143
Highwoods KC Glenridge Office, LP	40.0	%		358		161		79		59		59
Highwoods KC Glenridge Land, LP	40.0	%		—		1		—		—		(1	)
Highwoods KC Orlando, LLC	40.0	%		2,816		1,026		752		860		178

Total 1/ 2/			$	13,871	$	5,643	$	3,594	$	3,269	$	1,365

Highwoods Realty’s share of Depreciation/Amortization from these tables will not agree to Depreciation and Amortization of Real Estate Assets for Unconsolidated Affiliates on the Statement of Funds from Operations due to various purchase accounting and related adjustments, which are not reflected in the Joint Ventures’ stand-alone financial statements.

Highwoods Realty’s share of Net Income from these tables will not agree to Equity in Earnings of Unconsolidated Affiliates on the Consolidated Income Statement due to various purchase accounting and related adjustments, which are not reflected in the Joint Ventures’ stand-alone financial statements.

Page 32

Joint Ventures Long-Term Debt Detail

Dollars in thousands


Joint Venture	Own %		Lender	Interest Rate		Maturity Date	Loan Balance 03/31/05
Dallas County Partners I, LP	50.0	%	American Express	7.0	%	Sep-09		3,514
Dallas County Partners I, LP	50.0	%	American Express	6.9	%	Jun-09		7,438
Dallas County Partners I, LP	50.0	%	John Hancock Life Insurance Co.	7.6	%	Mar-08		2,962
Dallas County Partners I, LP	50.0	%	State Farm	7.1	%	Oct-08		3,040
Dallas County Partners I, LP	50.0	%	State Farm	7.9	%	Sep-06		3,009
Dallas County Partners I, LP	50.0	%	State Farm	7.5	%	May-07		4,359
Dallas County Partners I, LP	50.0	%	Bank of America	5.7	%	Oct-07		3,987
Dallas County Partners I, LP	50.0	%	State Farm	7.5	%	Dec-07		5,065
Dallas County Partners I, LP	50.0	%	Thrivent	8.5	%	Aug-10		1,682
Dallas County Partners I, LP	50.0	%	Union Planters	6.3	%	Jun-14		3,664
Dallas County Partners I, LP	50.0	%	Union Planters	7.2	%	Jan-06		489
Dallas County Partners I, LP	50.0	%	Bankers Trust	8.0	%	Jul-11		1,232

				7.1	%			40,441

Dallas County Partners II, LP	50.0	%	Principal Life Insurance Company	10.2	%	Jun-13		20,892

Fountain Three	50.0	%	John Hancock Life Insurance Co.	7.8	%	Jan-08		6,019
Fountain Three	50.0	%	American Express	6.9	%	Jun-09		3,976
Fountain Three	50.0	%	Thrivent	8.0	%	Oct-10		3,748
Fountain Three	50.0	%	Thrivent	7.3	%	Apr-09		3,581
Fountain Three	50.0	%	Wells Fargo	8.2	%	May-08		2,023
Fountain Three	50.0	%	Lehman Brothers	8.0	%	Jul-09		3,617
Fountain Three	50.0	%	Thrivent	7.0	%	Sep-12		5,566

				7.5	%			28,530

RRHWoods, LLC	50.0	%	Industrial Revenue Bonds	1.0	%	Nov-15		23,000
RRHWoods, LLC	50.0	%	Bank of America	6.8	%	Sep-12		27,388
RRHWoods, LLC	50.0	%	Industrial Revenue Bonds	1.0	%	Sep-15		6,000
RRHWoods, LLC	50.0	%	Industrial Revenue Bonds	1.1	%	Nov-15		5,500
RRHWoods, LLC	50.0	%	Bank of America	5.7	%	Oct-07		4,041
RRHWoods, LLC	50.0	%	Union Planters	6.3	%	Jun-14		3,664

				3.8	%			69,593

Plaza Colonnade, LLC	50.0	%	Met Life	5.7	%	Jan-17		50,000
Plaza Colonnade, LLC	50.0	%	Tax Incremental Financing	5.4	%	Mar-10		1,818
Plaza Colonnade, LLC	50.0	%	Tax Incremental Financing	6.0	%	Mar-16		4,394
Plaza Colonnade, LLC	50.0	%	Tax Incremental Financing	5.9	%	Mar-24		12,473

				5.8	%			68,685

4600 Madison Associates, LLC	12.5	%	State Farm	6.9	%	Apr-18		15,824
Board of Trade Investment Company	49.0	%	KC Board of Trade Clearing Corp.	7.8	%	Sep-07		517
Highwoods DLF 98/29, LP	22.8	%	USG Annuity & Life Company	6.8	%	Apr-11		65,936
Highwoods DLF 97/26 DLF 99/32, LP	42.9	%	Massachusetts Mutual Life Ins. Co.	7.7	%	May-12		58,126
Concourse Center Associates, LLC	50.0	%	Lincoln National Life Insurance Co.	7.0	%	Jul-10		9,473
Highwoods KC Orlando, LLC	40.0	%	Met Life	5.2	%	Jul-14		143,000
Highwoods - Markel Associates, LLC	50.0	%	Principal Life Insurance Company	5.8	%	Jan-14		39,285
Highwoods KC Glenridge Office	40.0	%	Wachovia	4.8	%	Jun-14		16,500
Highwoods KC Glenridge Land	40.0	%	Transwestern	4.8	%	Feb-05		238

				6.1	%			348,899

				6.1	%		$	577,040

Highwoods’ Share of the above							$	244,570


		Page 33

Joint Ventures Portfolio Summary

As of March 31, 2005

Summary by Location:


Market	Rentable Square Feet 1/	Occupancy 2/		Percentage of Annualized Revenue - Highwoods’ Share Only 3/
Market	Rentable Square Feet 1/	Occupancy 2/		Office		Industrial		Retail		Multi- Family		Total
Des Moines	2,245,000	95.3	%	27.7	%	3.7	%	1.0	%	3.4	%	35.8	%
Orlando	1,684,000	89.9	%	24.8	%	—		—		—		24.8	%
Atlanta	835,000	93.3	%	15.7	%	—		—		—		15.7	%
Kansas City	428,000	86.3	%	8.4	%	—		—		—		8.4	%
Richmond	413,000	100.0	%	5.0	%	—		—		—		5.0	%
Piedmont Triad	364,000	100.0	%	3.8	%	—		—		—		3.8	%
Raleigh	455,000	99.3	%	3.5	%	—		—		—		3.5	%
Tampa	205,000	99.1	%	1.7	%	—		—		—		1.7	%
Charlotte	148,000	100.0	%	0.8	%	—		—		—		0.8	%
Other	110,000	100.0	%	0.5	%	—		—		—		0.5	%

Total	6,887,000	94.3	%	91.9	%	3.7	%	1.0	%	3.4	%	100.0	%

1/	Excludes Des Moines’ apartment units

2/	Excludes Des Moines’ apartment occupancy percentage of 93.5%

3/	Annualized Rental Revenue is March, 2005 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.


		Page 34

Joint Ventures Lease Expirations

March 31, 2005

Dollars in thousands


Year	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue 1/		Average Rental Rate		Percent of Annualized Revenue 1/
Total

2005	648,896	9.6	%	$	9,324	$	14.37	7.2	%
2006	655,354	9.7	%		12,363		18.86	9.6	%
2007	378,549	5.6	%		7,828		20.68	6.1	%
2008	1,299,233	19.1	%		21,989		16.92	17.2	%
2009	839,009	12.4	%		20,086		23.94	15.6	%
2010	368,712	5.4	%		7,254		19.67	5.6	%
2011	553,652	8.2	%		10,278		18.56	8.0	%
2012	354,359	5.2	%		7,353		20.75	5.7	%
2013	714,819	10.6	%		13,762		19.25	10.7	%
2014	368,000	5.4	%		7,961		21.63	6.2	%
2015 and thereafter	594,502	8.8	%		10,484		17.63	8.1	%

	6,775,085	100.0	%	$	128,682	$	18.99	100.0	%

1/	Annualized Revenue is March, 2005 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.


		Page 35

Joint Ventures Development

Dollars in thousands


Property	% Ownership		Market	Rentable Square Feet	Anticipated Total Investment		Investment @ 03/31/05		Pre-Leasing		Estimated Completion Date	Estimated Stabilization Date
Plaza Colonade, LLC 1/	50	%	Kansas City	285,000	$	71,500	$	68,536	77	%	4Q04	3Q05
Summit	50	%	Des Moines	35,000		3,559		3,437	75	%	3Q04	3Q05
Pinehurst	50	%	Des Moines	35,000		3,559		3,526	81	%	3Q04	3Q05
Sonoma	50	%	Des Moines	75,000		9,364		1,518	0	%	2Q05	2Q06

Total or Weighted Average				430,000	$	87,982	$	77,017	64	%

Highwoods’ Share of the above					$	43,991	$	38,509

1/	Includes $16.2 million in investment cost that has been funded by tax increment financing


		Page 36