8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 31, 2003

HIGHWOODS PROPERTIES, INC.

(Exact name of registrant specified in its charter)

Maryland	1-13100	56-1871668
(State of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

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

(Address of principal executive offices, zip code)

Registrant’s telephone number, including area code: (919) 872-4924

Item 12. Results of Operations and Financial Condition

On October 31, 2003, Highwoods Properties, Inc., the general partner of Highwoods Realty Limited Partnership, issued a press release announcing the results of operations and financial condition of Highwoods Properties, Inc. for the quarter ended September 30, 2003. This press release is attached hereto as Exhibit 99.1. In addition, we posted on our web site supplemental information regarding our operations for the quarter ended September 30, 2003, a copy of which is attached hereto as as Exhibit 99.2.

Exhibit	Description
99.1	Press Release, dated October 31, 2003, announcing the results of operations and financial condition of Highwoods Properties, Inc. for the nine months ended September 30, 2003.
99.2	Supplemental operating and Financial Information of Highwoods Properties, Inc. for the nine months ended September 30, 2003.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HIGHWOODS PROPERTIES, INC.
By:	/s/    CARMAN J. LIUZZO
	Carman J. Liuzzo Vice President, Chief Financial Officer and Treasurer

Dated: October 31, 2003

EX-99.1

Exhibit 99.1

[LOGO OF HIGHWOODS PROPERTIES]

FOR IMMEDIATE RELEASE

Contact: Tabitha Zane Sr. Director, Investor Relations 919-431-1529 or Carman Liuzzo Chief Financial Officer 909-875-6605

Highwoods Properties Reports Third Quarter Results

$0.64 Per Share Funds from Operations

Announces Debt Refinancing Plan, Anticipates Annual Interest Savings of

$8.9 Million or $0.15 Cents Per Share

Raleigh, NC – October 30, 2003 – Highwoods Properties, Inc. (NYSE: HIW), the largest owner and operator of suburban office properties in the Southeast, today reported net income available for common stockholders of $13.8 million, or $0.26 per diluted share, for the quarter ended September 30, 2003 compared to $7.1 million, or $0.14 per diluted share, for the same period last year.

Funds from operations (“FFO”) before minority interest was $38.1 million, or $0.64 per diluted share, for the quarter ended September 30, 2003. This compares to FFO of $44.7 million, or $0.74 per diluted share, for the same period a year ago. A reconciliation of FFO to GAAP net income is included in the financial tables. (See also “Non-GAAP Information” below)

Ronald P. Gibson, president and chief executive officer of Highwoods said, “The third quarter met our expectations with continued strong leasing activity totaling 1.8 million square feet. This is also the fourth consecutive quarter that we have leased in excess of one million square feet of office space. We are also pleased that office straight-line rents have held steady and are up 1.0% for the first nine months of the year. It is also important to note that the decline in occupancy in our portfolio was not the result of any deterioration in our markets but rather was primarily due to three factors; an expected move-out of a larger tenant in Tampa formerly occupying 153,000 square feet, the disposition of higher occupied assets and the acquisition of the 80.0% occupied MG-HIW assets.”

Highwoods Properties Ref: 03-23

October 30, 2003

Page 2 of 9

Third Quarter Highlights

· Second generation leasing activity in the Highwoods portfolio totaled 1.7 million square feet, 62.3% of which was in the Company’s office portfolio. In the first three quarters of 2003, the Company has leased 5.4 million square feet.

· Rental revenues from continuing operations were $107.0 million, a 2.3% decline from the third quarter of 2002 when rental revenues operations were $109.5 million.

· On a cash basis, same property rental revenues declined 6.4% from a year ago to $100.5 million and same property net operating income declined 9.8% for the comparable period. The decline in same property net operating income would have been 5.1% without the effect of the WorldCom lease rejection at Highwoods Preserve in Tampa.

· Cash available for distribution (“CAD”) was $22.3 million versus CAD of $38.6 million for the third quarter of 2002. A reconciliation of CAD to GAAP net income is included in the financial tables. See also “Non-GAAP Information” below.

· The Company was awarded a 350,000 square foot build-to-suit contract by the National Archives and Records Administration, an independent agency of the United States Government.

Debt Refinancing Plan

On December 1, 2003, $146.5 million of the Company’s 8.0% Notes and $100.0 million of the Company’s 6.75% Notes will mature. A portion of this debt totaling $127.5 million is expected to be refinanced with 10-year secured debt at an effective rate of 5.25%. The Company also plans to enter into a $100.0 million 2-year unsecured term loan with a floating rate that will initially be set at 1.3% over LIBOR. The remaining $19.0 million is expected to be repaid with proceeds from asset sales or with funds from the Company’s $250.0 million senior credit facility.

Although the 10-year secured loan and the 2-year unsecured loan have been approved by the lending institutions, they are each subject to definitive documentation. Assuming the Company is successful in obtaining financing on the terms described above, the Company anticipates annual interest savings of approximately $8.9 million, or $0.15 per share.

Asset Repositioning

In the third quarter, the Company sold $93.2 million of assets, including seven office and industrial properties encompassing 968,000 square feet, and 21.1 acres of land. Through October 24, 2003 the Company has repositioned $128.8 million of assets and currently has assets under contract or letter of intent with an aggregate sales price of $175.0 million and a net book value of $145.5 million. On July 29, 2003, the Company completed the acquisition of the assets in the Company’s MG-HIW joint venture in Atlanta, Research Triangle and Tampa, which includes 15 properties encompassing 1.3 million square feet.

Highwoods Properties Ref: 03-23

October 30, 2003

Page 3 of 9

Outlook

The Company anticipates that fourth quarter 2003 FFO will be between $0.62 and $0.64 per share, which would bring FFO for the full year to between $2.60 and $2.62 per share before the adjustments to FFO to exclude the impairment write-downs of depreciable real estate assets and losses on the extinguishment of debt (See the first paragraph under “Non-GAAP Information”). This range is consistent with the guidance provided by the Company in April of 2003. Excluding impairment write-downs of depreciable real estate assets and losses on the extinguishment of debt, which lowered FFO in the first six months of 2003 by $0.05, FFO for 2003 will be between $2.55 and $2.57. For 2004 the Company anticipates that FFO will be between $2.55 and $2.70 per share.

These forward-looking statements are subject to risks and uncertainties that exist in Highwoods’ operations and business environment. See the Company’s cautionary language regarding forward-looking statements set forth at the bottom of this release.

Non-GAAP Information

In early October, the National Association of Real Estate Investment Trusts (“NAREIT”) issued a Financial Reporting Alert stating that impairment write-downs of depreciable real estate assets must be excluded from FFO. Additionally, under the provisions of Financial Accounting Standards Board Statement No. 145, losses on the extinguishment of debt incurred in the third quarter of 2002 are no longer considered extraordinary items and must be excluded from FFO. As a result of these developments, FFO per share was reduced by approximately $0.05 for the nine-month period ending September 30, 2003 and $0.23 for the full year 2002. These developments had no impact on the current quarter’s FFO per share.

We consider FFO and CAD to be useful financial performance measures of the operating performance of an equity REIT. Together with net income and cash flows from operating, investing and financing activities, FFO and CAD provide an additional basis to evaluate the ability of a REIT to incur and service debt, fund acquisitions and other capital expenditures and pay stockholder’s distributions. FFO and CAD do not represent net income or cash flows from operating, investing or financing activities as defined by GAAP. They should not be considered as alternatives to net income as an indicator of our operating performance or to cash flows as a measure of liquidity. FFO and CAD do not measure whether cash flow is sufficient to fund all cash needs, including principal amortization, capital improvements and distributions to stockholders. Further, FFO as disclosed by other REITs may not be comparable to our calculation of FFO, as described below. Our calculation of FFO is consistent with FFO as defined by the NAREIT.

CAD is defined as FFO reduced by non-revenue enhancing capital expenditures for building improvements and tenant improvements and lease commissions related to second-generation space. In addition, CAD includes both recurring and nonrecurring operating results. As a result, nonrecurring items that are not defined as “extraordinary” under GAAP are reflected in the calculation of CAD. In addition, nonrecurring items included in the calculation of CAD for periods ended after March 28, 2003 meet the requirements of Item 10(e) of Regulation S-K, as amended January 22, 2003.

Highwoods Properties Ref: 03-23

October 30, 2003

Page 4 of 9

Supplemental Information

A copy of the Company’s third quarter 2003 Supplemental Information that includes detailed operating and financial information is available in the “Investor Relations/Quarterly Earnings” section of the Company’s Web site at www.highwoods.com. The Supplemental Information, together with this release, has been furnished to the Securities and Exchange Commission on Form 8-K. You may also obtain a copy of the Supplemental Information by contacting Highwoods Investor Relations at 919-875-6717 / 800-256-2963 or by e-mail to HIW-IR@highwoods.com. If you would like to receive future Supplemental Information packages by e-mail or fax, please contact the Investor Relations department as noted above or by written request to: Investor Relations Department, Highwoods Properties, Inc., 3100 Smoketree Court, Suite 600, Raleigh, NC 27604.

Conference Call

Highwoods will conduct a conference call to discuss the results of its third quarter on Friday, October 31, 2003, at 10:00 a.m. Eastern Time. All interested parties are invited to listen to the call. The dial-in number is (888) 202-5268 domestic, (706) 643-7509 international. The call will also be available live on our web site at www.highwoods.com under the “Investor Relations” section.

Telephone and web cast replays will be available two hours after the completion of the call. The telephone replay will be available for one week beginning at 1:00 p.m. Eastern Time. Dial-in numbers for the replay are (800) 642-1687 US/Canada, (706) 645-9291 international. The conference ID is 2462351.

About 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 September 30, 2003, the Company owned or had an interest in 545 in-service office, industrial and retail properties encompassing approximately 43.7 million square feet. Highwoods also owns approximately 1,377 acres of development land. Highwoods is based in Raleigh, North Carolina, and its properties and development land are located in Florida, Georgia, Iowa, Kansas, Missouri, North Carolina, South Carolina, Tennessee and Virginia. For more information about Highwoods Properties, please visit our Web site at www.highwoods.com.

Certain matters discussed in this press release, such as the effect of tenant bankruptcies on our operations, expected leasing and financing activities, financial and operating performance and share repurchases and the cost and timing of expected development projects and asset dispositions, are forward-looking statements within the meaning of the federal securities laws. These statements are distinguished by use of the words “will”, “expect”, “intends” and words of similar meaning. 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.

Highwoods Properties Ref: 03-23

October 30, 2003

Page 5 of 9

Factors that could cause actual results to differ materially from Highwoods’ current expectations are detailed in the Company’s 2002 Annual Report on Form 10-K and subsequent SEC reports and include, among others, the following: the financial condition of our customers could deteriorate; speculative development by others could result in excessive supply of office properties relative to customer demand; we may not be able to lease or re-lease space quickly or on as favorable terms as old leases; and unexpected difficulties in obtaining additional capital to satisfy our future cash needs or unexpected increases in interest rates would increase our debt service costs.

Financial tables follow.

####

Highwoods Properties, Inc.

Consolidated Statements of Income

(In thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Rental revenue	$	106,991		$	109,521		$	315,720		$	327,984
Operating expenses:
Rental property		37,184			34,976			109,579			103,618
Depreciation and amortization		31,543			29,872			95,774			86,996
Interest expense:
Contractual		28,122			27,470			83,618			79,761
Amortization of deferred financing costs		819			347			2,202			1,027
		28,941			27,817			85,820			80,788
General and administrative (includes $3,700 of nonrecurring compensation expense in the nine months ended September 30, 2002)		6,276			4,147			18,144			18,550
Litigation reserve		—			2,700			—			2,700
Total operating expenses		103,944			99,512			309,317			292,652
Other income:
Interest and other income		2,506			2,766			8,574			8,783
Equity in earnings of unconsolidated affiliates		1,626			1,259			2,902			6,298
		4,132			4,025			11,476			15,081
Income before gain/(loss) on disposition of land and depreciable assets, minority interest and discontinued operations		7,179			14,034			17,879			50,413
Gain on disposition of land		1,067			741			3,342			6,498
(Loss)/gain on disposition of depreciable assets		(203	)		(329	)		37			5,050
Income before minority interest and discontinued operations		8,043			14,446			21,258			61,961
Minority interest		(857	)		(1,841	)		(2,424	)		(7,564	)
Income from continuing operations		7,186			12,605			18,834			54,397
Discontinued operations:
Income from discontinued operations, net of minority interest		3,007			5,058			11,476			16,002
Gain/(loss) on sale of discontinued operations, net of minority interest		11,280			(2,841	)		12,455			(955	)
		14,287			2,217			23,931			15,047
Net income		21,473			14,822			42,765			69,444
Dividends on preferred shares		(7,713	)		(7,713	)		(23,139	)		(23,139	)
Net income available for common stockholders	$	13,760		$	7,109		$	19,626		$	46,305
Net income per common share-diluted:
(Loss)/income from continuing operations	$	(0.01	)	$	0.09		$	(0.08	)	$	0.58
Income from discontinued operations		0.27			0.05			0.45			0.29
Net income	$	0.26		$	0.14		$	0.37		$	0.87
Weighted average common shares outstanding—diluted		53,261			53,604			53,342			53,544

Highwoods Properties, Inc.

Funds from Operations and Cash Available for Distributions

(In thousands, except per share amounts and ratios)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Funds from operations:
Net income	$	21,473		$	14,822		$	42,765		$	69,444
Add/(Deduct):
Depreciation and amortization		31,543			29,872			95,774			86,996
Gain/(loss) on disposition of depreciable assets		203	(1)		(171	)(1)		(37	)(1)		(14,618	)(1)
Minority interest		857			1,841			2,424			7,564
Dividends to preferred shareholders		(7,713	)		(7,713	)		(23,139	)		(23,139	)
Unconsolidated affiliates:
Depreciation and amortization		2,235			2,432			7,139			7,065
Discontinued operations:
Depreciation and amortization		372			2,955			2,216			8,765
Gain on sale, net of minority interest		(11,280	)(1)		(12	)(1)		(12,743	)(1)		(2,629	)(1)
Minority interest in income		372			668			1,450			2,154
Funds from operations		38,062			44,694	(2)		115,849			141,602	(2)
Cash available for distribution:
Add/(Deduct):
Rental income from straight-line rents		(1,136	)		(1,222	)		(4,501	)		(2,540	)
Amortization of intangible lease assets		212			—			212			—
Impairment charges		—			3,353			2,701			13,152
Amortization of deferred financing costs		819			347			2,202			1,027
Non-recurring compensation expense		—			—			—			3,700
Litigation reserve		—			2,700			—			2,700
Non-incremental revenue generating capital expenditures:
Building improvements paid		(4,500	)		(1,740	)		(10,025	)		(4,861	)
Second generation tenant improvements paid		(6,588	)		(5,824	)		(18,008	)		(12,735	)
Second generation lease commissions paid		(4,551	)		(3,694	)		(11,465	)		(9,353	)
		(15,639	)		(11,258	)		(39,498	)		(26,949	)
Cash available for distribution	$	22,318		$	38,614		$	76,965		$	132,692
Per common share/common unit-diluted:
Funds from operations	$	0.64		$	0.74		$	1.93		$	2.33
Dividends paid	$	0.425		$	0.585		$	1.435		$	1.755
Dividend payout ratios:
Funds from operations		66.8	%		79.4	%		74.4	%		75.3	%
Cash available for distribution		113.9	%		91.9	%		112.0	%		80.3	%
Weighted average shares/units outstanding-diluted		59,830			60,653			60,063			60,730
Net cash provided by/(used in):
Operating activities	$	54,887		$	75,289		$	128,760		$	172,979
Investing activities		14,599			18,480			976			85,279
Financing activities		(69,428	)		(93,965	)		(127,670	)		(244,836	)
Net increase/(decrease) in cash and cash equivalents	$	58		$	(196	)	$	2,066		$	13,422

In October 2003, NAREIT issued a Financial Reporting Alert that changed its current implementation guidance for FFO regarding impairment charges. Accordingly, impairment charges have been excluded from gain/(loss) on disposition of depreciable assets in the calculation of FFO. In addition, as a result of the FASB’s “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”), losses on the extinguishment of debt will no longer be classified as an extraordinary item in the Company’s Consolidated Statements of Income. Therefore, the calculation of FFO no longer includes an add-back of this amount. See page 2 of this table for a reconciliation of gains/(losses) to the Company’s Consolidated Statements of Income and the impact these changes have had on FFO, in dollars and per share amounts, for all periods presented.

Highwoods Properties, Inc.

Funds from Operations and Cash Available for Distributions (continued)

(In thousands, except per share amounts and ratios)

(1) The following is a reconciliation of gain/(loss) on disposition of depreciable assets included in the FFO calculation and gain/(loss) ondisposition of depreciable assets included in the Company’s Consolidated Statements of Income for the three and nine months ended September 30, 2003 and 2002:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Continuing Operations:
Gain/(loss) on disposition of depreciable assets per FFO calculation	$	(203	)	$	171		$	37		$	14,618
Impairment charges		—			(500	)		—			(9,568	)
Gain/(loss) on disposition of depreciable assets per Consolidated Statements of Income	$	(203	)	$	(329	)	$	37		$	5,050
Discontinued Operations:
Gain/(loss) on disposition of depreciable assets per FFO calculation	$	11,280		$	12		$	12,743		$	2,629
Impairment charges		—			(2,853	)		(288	)		(3,584	)
Gain/(loss) on disposition of depreciable assets per Consolidated Statements of Income	$	11,280		$	(2,841	)	$	12,455		$	(955	)
In addition to the impairment charges detailed above, FFO for the nine months ended September 30, 2003 also excludes a $2.4 million impairment charge included in the Company’s equity in earnings of unconsolidated affiliates related to the acquisition of certain assets of the MG-HIW, LLC joint venture by the Company
(2)    FFO for the three and nine months ended September 30, 2002 was decreased by $687,000, which represents a loss on the extinguishment of debt incurred during those periods. There were no losses on the extinguishment of debt incurred in 2003.
As a result of the changes to the FFO calculation as outlined in footnotes (1) and (2), FFO has been reduced by the following in dollars and per share amounts:
	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
FFO in dollars	$	—		$	(4,040	)	$	(2,701	)	$	(13,839	)
FFO per share	$	—		$	(0.07	)	$	(0.05	)	$	(0.23	)

Highwoods Properties, Inc.
Consolidated Balance Sheets
(in thousands)
	09/30/2003			12/31/2002			09/30/2002
Assets:
Real estate assets, at cost:
Land and improvements	$	399,359		$	392,135		$	413,291
Buildings and tenant improvements		2,904,268			2,823,834			2,798,650
Development in process		11,159			6,419			39,633
Land held for development		177,982			163,789			153,395
Furniture, fixtures and equipment		21,605			20,966			20,479
		3,514,373			3,407,143			3,425,448
Less-accumulated depreciation		(517,779	)		(457,863	)		(437,454	)
Net real estate assets		2,996,594			2,949,280			2,987,994
Property held for sale		145,548			183,828			257,826
Cash and cash equivalents		13,083			11,017			13,998
Restricted cash		6,810			8,582			2,702
Accounts receivable, net		12,570			13,578			19,298
Notes receivable		18,920			31,057			31,914
Accrued straight-line rents receivable		51,592			48,777			50,191
Investment in unconsolidated affiliates		73,372			79,504			80,825
Other assets:
Deferred leasing costs		105,642			99,802			104,866
Deferred financing costs		44,506			26,120			25,964
Prepaid expenses and other		16,341			15,295			13,400
		166,489			141,217			144,230
Less-accumulated amortization		(81,456	)		(71,471	)		(70,023	)
Other assets, net		85,033			69,746			74,207
Total Assets	$	3,403,522		$	3,395,369		$	3,518,955
Liabilities and Stockholders’ Equity:
Mortgages and notes payable	$	1,612,483		$	1,528,720		$	1,626,362
Accounts payable, accrued expenses and other liabilities		118,192			120,614			131,087
Total Liabilities		1,730,675			1,649,334			1,757,449
Minority interest		174,058			188,563			191,114
Stockholders’ Equity:
Preferred stock		377,445			377,445			377,445
Common stock		531			534			534
Additional paid-in capital		1,384,129			1,390,043			1,389,595
Distributions in excess of net earnings		(254,546	)		(197,647	)		(182,719	)
Accumulated other comprehensive loss		(4,002	)		(9,204	)		(10,418	)
Deferred compensation		(4,768	)		(3,699	)		(4,045	)
Total Stockholders’ Equity		1,498,789			1,557,472			1,570,392
Total Liabilities and Stockholders’ Equity	$	3,403,522		$	3,395,369		$	3,518,955

EX-99.2

EXHIBIT 99.2

Supplemental Operating and Financial Information

September 30, 2003

Supplemental Information

Table of Contents

September 30, 2003

Schedule	Page
Summary and Corporate Information	i, ii and iii
Consolidated Statement of Income	1
Statement of Funds from Operations	2
Net Cash Flow and Capital Expenditures	3
Consolidated Balance Sheet	4
Estimated Net Asset Value	5
Combined Financial Information	6
Components of Discontinued Operations	7
Capitalization	8
Long-Term Debt Summary	9
Long-Term Debt Detail	10
Portfolio Summary	11, 12 and 13
Occupancy Trends	14
Leasing Statistics	15, 16 and 17
Leasing Statistics by Market	18
Rental Rate Comparisons by Market	19
Lease Expirations	20 and 21
Office Lease Expirations by Market by Quarter	22
Industrial Lease Expirations by Market by Quarter	23
Office Lease Expirations by Market by Year	24
Industrial Lease Expirations by Market by Year	25
Customer Diversification	26
Same Property Performance	27
Acquisition Activity	28
Disposition Activity and Assets Contributed to Joint Ventures	29
Development Activity	30
Development Land	31
Unconsolidated Joint Ventures Assets, Debt and Liabilities	32
Unconsolidated Joint Ventures Income (Three Months)	33
Unconsolidated Joint Ventures Income (Nine Months)	34
Unconsolidated Joint Ventures Long-Term Debt Detail	35
Portfolio Summary Unconsolidated Joint Ventures	36
Unconsolidated Joint Ventures Lease Expirations	37
Unconsolidated Joint Ventures Development	38

The information within refers to all Highwoods Properties’ consolidated entities, except pages 32 to 38 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
	09/30/03			09/30/02			Change F/(U)
Operations
Revenue from continuing operations	$	106,991		$	109,521		$	(2,530	)
Rental Property Expense from continuing operations		37,184			34,976			(2,208	)
Net Operating Income from continuing operations	$	69,807		$	74,545		$	(4,738	)
Revenue from discontinued operations	$	5,216		$	13,311		$	(8,095	)
Property Expense from discontinued operations		1,347			4,060			2,713
Net Operating Income from discontinued operations	$	3,869		$	9,251		$	(5,382	)
Interest and other income	$	2,506		$	2,766		$	(260	)
Equity in earnings of unconsolidated affiliates		1,626			1,259			367
General and Administrative		6,276			4,147			(2,129	)
G&A as a % of Revenue and Other Income		5.4	%		3.3	%		-2.1	%
EBITDA calculation
Net Income	$	21,473		$	14,822		$	6,651
Addback Depreciation and Amortization		31,915			32,827		$	(912	)
Addback Interest Expense		29,084			28,447		$	637
EBITDA	$	82,472		$	76,096		$	6,376
Interest Expense from continuing operations	$	28,941		$	27,817		$	(1,124	)
Interest Expense from discontinued operations		143			630			487
EBITDA/Interest Expense		2.84			2.68			0.16
EBITDA/Interest Expense + Preferred Dividends		2.24			2.10			0.14
Net Income	$	21,473		$	14,822		$	6,651
Funds from Operation		38,062			44,694			(6,632	)
Cash available for distribution		22,318			38,614			(16,296	)
Per Share—Diluted:
Net Income	$	0.26		$	0.14		$	0.12
Funds from operations		0.64			0.74			(0.10	)
Dividends paid		0.425			0.585			(0.16	)
Dividends paid as % of funds from operations		66.8	%		79.4	%		12.6	%
Dividends paid as % of cash available for distribution		113.9	%		91.9	%		-22.0	%
	09/30/03			09/30/02			Change
Capitalization
Total Assets	$	3,403,522		$	3,518,955		$	(115,433	)
Market Capitalization:
Total Debt		1,612,483			1,626,362			(13,879	)
Market Value of Common Equity		1,799,692			1,791,484			8,208
Total Market Capitalization	$	3,412,175		$	3,417,846		$	(5,671	)
Total Debt/Total Assets		47.4	%		46.2	%		-1.2	%
	09/30/03			09/30/02			Change F/(U)
Portfolio
Total In-Service Square Footage		37,171,000			37,979,000			(808,000	)
Occupancy		82.4	%		86.7	%		-4.3	%
Same Property NOI	$	65,634		$	72,750		$	(7,116	)

i

Corporate Information

Board of Directors	Research Coverage
Thomas W. Adler	Banc of America Securities
Gene H. Anderson	Lee Schalop - 212-847-5677
Kay N. Callison
Edward J. Fritsch	Davenport & Company, LLC
Ronald P. Gibson	Rob Norfleet - 804-780-2170
William E. Graham Jr.
Lawrence S. Kaplan	Deutsche Banc Alex. Brown
L. Glenn Orr Jr.	Lou Taylor - 212-469-4912
O. Temple Sloan Jr., Chairman
Willard H. Smith Jr.	Green Street Advisors
John L. Turner	John Lutzius - 949-640-8780
F. William Vandiver, Jr.
	Legg Mason
Senior Management Team	David Fick - 410-454-5018
Ronald P. Gibson	McDonald Investments, Inc.
President, Chief Executive Officer and Director	Anatole Pevnev - 216-263-4783
Edward J. Fritsch	Morgan Stanley Dean Witter
Executive Vice President, Chief Operating	Gregory Whyte - 212-761-6331
Officer, Director and Secretary
	Prudential Securities
Gene H. Anderson	Jim Sullivan - 212-778-2515
Senior Vice President and Director
	Smith Barney Citigroup
Michael F. Beale	Jonathan Litt - 212-816-0231
Senior Vice President
	UBS Warburg
Michael E. Harris	Keith Mills - 212-713-3098
Senior Vice President
	Wachovia Securities
Carman J. Liuzzo	Chris Haley - 443-263-6773
Vice President, Chief Financial Officer
and Treasurer
Mack D. Pridgen III
Vice President, General Counsel and
Assistant Secretary

ii

Corporate Information

Divisional Offices	Corporate Headquarters
Atlanta/Piedmont Triad	Highwoods Properties, Inc.
Gene H. Anderson - Regional Manager	3100 Smoketree Court, Suite 600 Raleigh, NC 27604
Atlanta, GA	919-872-4924
Gene H. Anderson, Senior Vice President
	Stock Exchange
Piedmont Triad, NC
Mark W. Shumaker, Vice President	NYSE         Trading Symbol: HIW
Orlando/Tampa	Investor Relations Contact
Michael F. Beale - Regional Manager
	Tabitha Zane
Orlando, FL	Sr. Director, Investor Relations
Michael F. Beale, Senior Vice President	Phone: 919-431-1529
	Fax: 919-876-6929
Tampa, FL	E-mail: tabitha.zane@highwoods.com
Stephen A. Meyers, Vice President
	Information Request
Research Triangle/Richmond
	To request a standard Investor Relations package,
Research Triangle, NC	Annual Report or to be added to our e-mail or fax list,
Robert G. Cutlip, Vice President	please contact the Investor Relations Coordinator at:
	Phone: 919-875-6717 or 800-256-2963
Richmond, VA	Email: HIW-IR@highwoods.com
Paul W. Kreckman, Vice President
	The Company
Kansas City/Charlotte/Memphis/	Highwoods Properties, Inc. a member of the S&P Mid Cap 400
Nashville	Index, is a fully integrated, self-administered real estate
Michael E. Harris - Regional Manager	investment trust (“REIT”) that provides leasing, management, development, construction and other customer-related services for
Kansas City, MO	its properties and for third parties. As of September 30, 2003, the Company
Barrett Brady, Senior Vice President	owns or has an interest in 545 in-service office, industrial and
	retail properties encompassing approximately 43.7 million square feet.
Charlotte, NC	Highwoods also owns approximately 1,377 acres of development land.
Thomas F. Cochran, Senior Vice President	Highwoods is based in Raleigh, North Carolina, and its properties and
	development land are located in Florida, Georgia, Iowa, Kansas,
Memphis, TN	Missouri, North Carolina, South Carolina, Tennessee and Virginia.
Michael E. Harris, Senior Vice President	For more information about Highwoods Properties, please visit our Web site at www.highwoods.com.
Nashville, TN
W. Brian Reames, Vice President

iii

Consolidated Statements of Income

Dollars in thousands, except per share amounts

	Nine Months Ended						Three Months Ended
	09/30/03			09/30/02			09/30/03			06/30/03			03/31/03			12/31/02			09/30/02
Rental revenue	$	315,720		$	327,984		$	106,991		$	104,218		$	104,511		$	107,679		$	109,521
Operating expenses:
Rental property		109,579			103,618			37,184			36,310			36,085			34,731			34,976
Depreciation and amortization		95,774			86,996			31,543			32,101			32,130			35,570			29,872
Interest expense:
Contractual		83,618			79,761			28,122			27,822			27,674			29,751			27,470
Amortization of deferred financing costs		2,202			1,027			819			757			626			366			347
		85,820			80,788			28,941			28,579			28,300			30,117			27,817
General and administrative (includes $3,700 of nonrecurring compensation expense in the nine months ended 9/30/02)		18,144			18,550			6,276			6,524			5,344			6,026			4,147
Litigation reserve		—			2,700			—			—			—			—			2,700
Total operating expenses		309,317			292,652			103,944			103,514			101,859			106,444			99,512
Other income:
Interest and other income		8,574			8,783			2,506			3,209			2,859			4,783			2,766
Equity in earnings/(loss) of unconsolidated affiliates		2,902			6,298			1,626			(485	)		1,761			1,765			1,259
		11,476			15,081			4,132			2,724			4,620			6,548			4,025
Income before gain/(loss) on disposition of land and depreciable assets, minority interest and discontinued operations		17,879			50,413			7,179			3,428			7,272			7,783			14,034
Gain on disposition of land		3,342			6,498			1,067			1,412			863			396			741
Gain/(loss) on disposition of depreciable assets		37			5,050			(203	)		220			20			(548	)		(329	)
Income before minority interest and discontinued operations		21,258			61,961			8,043			5,060			8,155			7,631			14,446
Minority interest		(2,424	)		(7,564	)		(857	)		(590	)		(977	)		(869	)		(1,841	)
Income from continuing operations		18,834			54,397			7,186			4,470			7,178			6,762			12,605
Discontinued operations:
Income from discontinued operations, net of minority int		11,476			16,002			3,007			4,305			4,164			4,693			5,058
Gain/(loss) on sale of discontinued operations, net of minority int		12,455			(955	)		11,280			1,345			(170	)		12,562			(2,841	)
		23,931			15,047			14,287			5,650			3,994			17,255			2,217
Net income		42,765			69,444			21,473			10,120			11,172			24,017			14,822
Dividends on preferred shares		(23,139	)		(23,139	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)
Net income available for common stockholders	$	19,626		$	46,305		$	13,760		$	2,407		$	3,459		$	16,304		$	7,109
Net income per common share-diluted:
(Loss)/income from continuing operations	$	(0.08	)	$	0.58		$	(0.01	)	$	(0.06	)	$	(0.01	)	$	(0.02	)	$	0.09
Income from discontinued operations	$	0.45		$	0.29		$	0.27		$	0.11		$	0.07		$	0.32		$	0.05
Net income	$	0.37		$	0.87		$	0.26		$	0.05		$	0.06		$	0.30		$	0.14
Weighted average common shares outstanding – diluted		53,342			53,544			53,261			53,315			53,475			53,407			53,604
Rental property expenses / rental revenue		34.7	%		31.6	%		34.8	%		34.8	%		34.5	%		32.3	%		31.9	%

Page 1

Statement of Funds from Operations

Dollars in thousands, except per share amounts

	Nine Months Ended						Three Months Ended
	09/30/03			09/30/02			09/30/03			06/30/03			03/31/03			12/31/02			09/30/02
Funds from operations:
Net income	$	42,765		$	69,444		$	21,473		$	10,120		$	11,172		$	24,017		$	14,822
Add/(Deduct):
Depreciation and amortization		95,774			86,996			31,543			32,101			32,130			35,570			29,872
Gain/(loss) on disposition of depreciable assets 1/		(37	)		(14,618	)		203			(220	)		(20	)		197			(171	)
Minority interest		2,424			7,564			857			590			977			869			1,841
Dividends to preferred shareholders		(23,139	)		(23,139	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)		(7,713	)
Unconsolidated affiliates:
Depreciation and amortization		7,139			7,065			2,235			2,489			2,415			2,554			2,432
Discontinued operations:
Depreciation and amortization		2,216			8,765			372			680			1,164			2,446			2,955
Gain on sale, net of minority interest 1/		(12,743	)		(2,629	)		(11,280	)		(1,345	)		(118	)		(12,562	)		(12	)
Minority interest in income		1,450			2,154			372			542			536			618			668
Funds from operations 2/		115,849			141,602			38,062			37,244			40,543			45,996			44,694
Cash available for distribution:
Add/(Deduct):
Rental income from straight-line rents		(4,501	)		(2,540	)		(1,136	)		(1,680	)		(1,685	)		(1,132	)		(1,222	)
Amortization of intangible lease assets		212			—			212			—			—			—			—
Impairment charges		2,701			13,152			—			2,413			288			351			3,353
Amortization of deferred financing costs		2,202			1,027			819			757			626			366			347
Non-recurring compensation expense		—			3,700			—			—			—			—			—
Litigation reserve		—			2,700			—			—			—			—			2,700
Non-incremental revenue generating capital expenditures paid:
Building improvements		(10,025	)		(4,861	)		(4,500	)		(2,734	)		(2,791	)		(3,086	)		(1,740	)
2nd generation tenant improvements		(18,008	)		(12,735	)		(6,588	)		(6,932	)		(4,488	)		(7,796	)		(5,824	)
2nd generation lease commissions		(11,465	)		(9,353	)		(4,551	)		(3,546	)		(3,368	)		(2,968	)		(3,694	)
		(39,498	)		(26,949	)		(15,639	)		(13,212	)		(10,647	)		(13,850	)		(11,258	)
Cash available for distribution	$	76,965		$	132,692		$	22,318		$	25,522		$	29,125		$	31,731		$	38,614
Weighted average share/units outstanding-diluted		60,063			60,730			59,830			60,028			60,360			60,437			60,653
Per common share/common unit-diluted:
Funds from operations	$	1.93		$	2.33		$	0.64		$	0.62		$	0.67		$	0.76		$	0.74
Dividends paid	$	1.435		$	1.755		$	0.425		$	0.425		$	0.585		$	0.585		$	0.585
Dividend payout ratios:
Funds from operations		74.4	%		75.3	%		66.8	%		68.5	%		87.1	%		76.9	%		79.4	%
Cash available for distribution		112.0	%		80.3	%		113.9	%		100.0	%		121.2	%		111.4	%		91.9	%
1/      In October 2003, NAREIT issued a Financial Reporting Alert that changed its current implementation guidance for FFO regarding impairment charges. Accordingly, impairment charges have been excluded from the gain/(loss) on disposition of depreciable assets. The following is a reconciliation of gain/(loss) on disposition of depreciable assets included in the FFO calculation and gain/(loss) on disposition of depreciable assets included in the Consolidated Statements of Income for all periods presented above:
Continuing Operations:
Gain/(loss) on disposition of depreciable assets per FFO above	$	37		$	14,618		$	(203	)	$	220		$	20		$	(197	)	$	171
Impairment charges		—			(9,568	)		—			—			—			(351	)		(500	)
Gain/(loss) on disposition of depreciable assets per Consolidated Statements of Income	$	37		$	5,050		$	(203	)	$	220		$	20		$	(548	)	$	(329	)
Discontinued Operations:
Gain/(loss) on disposition of depreciable assets per FFO above	$	12,743		$	2,629		$	11,280		$	1,345		$	118		$	12,562		$	12
Impairment charges		(288	)		(3,584	)		—			—			(288	)		—			(2,853	)
Gain/(loss) on disposition of depreciable assets per Consolidated Statements of Income	$	12,455		$	(955	)	$	11,280		$	1,345		$	(170	)	$	12,562		$	(2,841	)
In addition to the impairment charges detailed above, FFO for the nine months ended September 30, 2003 also excludes a $2.4 million impairment charge included in the Company’s equity in earnings of unconsolidated affiliates related to the acquisition of the MG-HIW LLC joint venture by the Company.
2/      As a result of the implementation of FASB’s Statement No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”), losses on the extinguishment of debt will no longer be classified as an extraordinary item in the Consolidated Statements of Income. Therefore, the calculation of FFO will no longer include an add-back of this amount. Accordingly, FFO for the three and nine months ended September 30, 2002 was decreased by $687,000, which represents losses on the extinguishment of debt incurred during those periods. There were no losses on the extinguishment of debt incurred in 2003.
As a result of the changes to the FFO calculation as outlined in footnotes 1/ and 2/, FFO has been reduced by the following in dollars and per share amounts:
FFO in dollars	$	(2,701	)	$	(13,839	)	$	—		$	—		$	(288	)	$	(351	)	$	(4,040	)
FFO per share	$	(0.05	)	$	(0.23	)	$	—		$	—		$	(0.005	)	$	(0.01	)	$	(0.07	)

Page 2

Net Cash Flow and Capital Expenditures

Dollars in thousands, except per share amounts

	Nine Months Ended						Three Months Ended
	09/30/03			09/30/02			09/30/03			06/30/03			03/31/03			12/31/02			09/30/02
Net cash provided by/(used in):
Operating activities	$	128,760		$	172,979		$	54,887		$	35,067		$	38,806		$	28,506		$	75,289
Investing activities		976			85,279			14,599			6,565			(20,188	)		110,308			18,480
Financing activities		(127,670	)		(244,836	)		(69,428	)		(47,811	)		(10,431	)		(141,795	)		(93,965	)
Net increase/(decrease) in cash and cash equivalents	$	2,066		$	13,422		$	58		$	(6,179	)	$	8,187		$	(2,981	)	$	(196	)
	Nine Months Ended
	09/30/03			09/30/02
Supplemental Capital Expenditure Disclosure
Development cost:
Shell construction and predevelopment costs	$	5,207		$	38,935
1st generation tenant improvements		12,540			16,194
1st generation lease commissions		2,352			4,190
Nonrecurring property renovation cost		12,379			2,773
Acquisitions		90,839			7,625
Furniture Fixtures and Equipment		639			2,190
	$	123,956		$	71,907
Non-incremental revenue generating capital expenditures paid:		39,498			26,949
Total per the Statement of Cash Flows	$	163,454		$	98,856

Page 3

Consolidated Balance Sheets

Dollars in thousands

	09/30/03			06/30/03			03/31/03			12/31/02			09/30/02
Assets:
Real estate assets, at cost:
Land and improvements	$	399,359		$	383,125		$	389,300		$	392,135		$	413,291
Buildings and tenant improvements		2,904,268			2,785,239			2,830,631			2,823,834			2,798,650
Development in process		11,159			9,167			7,374			6,419			39,633
Land held for development		177,982			171,973			166,862			163,789			153,395
Furniture, fixtures and equipment		21,605			21,223			21,150			20,966			20,479
		3,514,373			3,370,727			3,415,317			3,407,143			3,425,448
Less-accumulated depreciation		(517,779	)		(499,545	)		(484,085	)		(457,863	)		(437,454	)
Net real estate assets		2,996,594			2,871,182			2,931,232			2,949,280			2,987,994
Property held for sale		145,548			221,604			191,237			183,828			257,826
Cash and cash equivalents		13,083			13,025			19,204			11,017			13,998
Restricted cash		6,810			3,163			2,943			8,582			2,702
Accounts receivable, net		12,570			13,902			12,723			13,578			19,298
Notes receivable		18,920			27,617			32,077			31,057			31,914
Accrued straight-line rents receivable		51,592			51,703			50,462			48,777			50,191
Investment in unconsolidated affiliates		73,372			76,499			78,229			79,504			80,825
Other assets:
Deferred leasing costs		105,642			100,338			99,434			99,802			104,866
Deferred financing costs		44,506			42,544			42,548			26,120			25,964
Prepaid expenses and other		16,341			16,882			16,388			15,295			13,400
		166,489			159,764			158,370			141,217			144,230
Less-accumulated amortization		(81,456	)		(76,426	)		(73,445	)		(71,471	)		(70,023	)
Other assets, net		85,033			83,338			84,925			69,746			74,207
Total Assets	$	3,403,522		$	3,362,033		$	3,403,032		$	3,395,369		$	3,518,955
Liabilities and Stockholders’ Equity
Mortgages and notes payable	$	1,612,483		$	1,579,265		$	1,580,301		$	1,528,720		$	1,626,362
Accounts payable, accrued expenses and other liabilities		118,192			102,949			108,808			120,614			131,087
Total Liabilities		1,730,675			1,682,214			1,689,109			1,649,334			1,757,449
Minority interest		174,058			177,104			183,297			188,563			191,114
Stockholders’ Equity:
Preferred stock		377,445			377,445			377,445			377,445			377,445
Common stock		531			531			535			534			534
Additional paid-in capital		1,384,129			1,383,568			1,392,118			1,390,043			1,389,595
Distributions in excess of net earnings		(254,546	)		(245,751	)		(225,430	)		(197,647	)		(182,719	)
Accumulated other comprehensive loss		(4,002	)		(7,831	)		(8,767	)		(9,204	)		(10,418	)
Deferred compensation		(4,768	)		(5,247	)		(5,275	)		(3,699	)		(4,045	)
Total Stockholders’ Equity		1,498,789			1,502,715			1,530,626			1,557,472			1,570,392
Total Liabilities and Stockholders’ Equity	$	3,403,522		$	3,362,033		$	3,403,032		$	3,395,369		$	3,518,955
Ratios
Total Debt/Total Assets		47.4	%		47.0	%		46.4	%		45.0	%		46.2	%

Page 4

Estimated Net Asset Value

September 30, 2003

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		9.25	%		9.50	%		9.75	%
Retail		8.00	%		8.25	%		8.50	%
Industrial/Other		9.00	%		9.25	%		9.50	%
Weighted average		9.09	%		9.34	%		9.59	%
Wholly Owned Properties Net Operating Income YTD
Office 1/ 2/	$	165,705		$	165,705		$	165,705
Retail		20,498			20,498			20,498
Industrial/Other 3/		20,765			20,765			20,765
Total Net Operating Income	$	206,968		$	206,968		$	206,968
Wholly Owned Properties Net Operating Income Annualized
Office	$	230,073		$	230,073		$	230,073
Retail		27,331			27,331			27,331
Industrial/Other		27,687			27,687			27,687
Total Net Operating Income	$	285,090		$	285,090		$	285,090
Wholly Owned Properties Capitalized Value
Office	$	2,487,276		$	2,421,821		$	2,359,723
Retail		341,633			331,281			321,537
Industrial/Other		307,630			299,315			291,439
	$	3,136,539		$	3,052,417		$	2,972,699
Highwoods’ Share of Joint Ventures
Net Operating Income YTD	$	20,335		$	20,335		$	20,335
Net Operating Income Annualized	$	25,454		$	25,454		$	25,454
Capitalization Rates		9.25	%		9.50	%		9.75	%
Capitalized Value	$	275,182		$	267,940		$	261,070
Value of Highwoods Preserve at $80 per square foot 6/	$	65,280		$	65,280		$	65,280
Total In-Service Property Value	$	3,477,001		$	3,385,638		$	3,299,049
Value of Other income
Annualized Development, Leasing and Management Fees	$	6,560		$	6,560		$	6,560
Capitalization Rate		20	%		20	%		20	%
Value of Other income	$	32,800		$	32,800		$	32,800
Add Other assets:
Development Pipeline Investment	$	17,344		$	17,344		$	17,344
Property Held for Sale, at Net Sales Price		175,044			175,044			175,044
Land held for development at Book Value		177,982			177,982			177,982
Cash and cash equivalents		13,083			13,083			13,083
Restricted cash		6,810			6,810			6,810
Accounts receivable, net		12,570			12,570			12,570
Notes receivable		18,920			18,920			18,920
Other assets total	$	421,753		$	421,753		$	421,753
Gross Value of Assets	$	3,931,554		$	3,840,191		$	3,753,602
Deductions:
Total Liabilities	$	1,730,675		$	1,730,675		$	1,730,675
Preferred stock		377,445			377,445			377,445
Highwoods’ Share of Joint Ventures Liabilities		181,176			181,176			181,176
Estimated Net Asset Value	$	1,642,258		$	1,550,895		$	1,464,306
Total diluted common shares and operating units		59,655			59,655			59,655
Estimated Net Asset Value Per Share	$	27.53		$	26.00		$	24.55

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

2/ Deducted $497,000 for the operating income on the completed but not stabilized development projects

3/ Deducted $117,000 for the operating income on the completed but not stabilized development project

4/ Highwoods Preserve is an 816,000 square foot office campus in Tampa that Worldcom vacated 12/31/02.

Page 5

Combined Financial Information

Highwoods Properties and Unconsolidated Joint Ventures

Dollars in thousands

	Highwoods Properties Inc.			Highwoods’ Share of Joint Ventures		Total
	(see pages 32 - 34)
Statement of Operations:
For the three months ended September 30, 2003
Revenue:
Rental property revenue	$	106,991		$	11,188	$	118,179
Expenses:
Rental property expense		37,184			4,845		42,029
Depreciation and amortization		31,543			2,235		33,778
Interest expense:
Contractual		28,122			2,642		30,764
Amortization of deferred financing costs		819			—		819
		28,941			2,642		31,583
General and administrative		6,276			—		6,276
Other Income/(Expenses)		4,132			—		4,132
Income from continuing operations before gains	$	7,179		$	1,466	$	8,645
Net Income	$	21,473			1,626	$	23,099
Deduct equity in earnings of unconsolidated affiliates		(1,626	)				(1,626	)
Addback Depreciation and amortization		31,915			2,235		34,150
Addback Interest Expense		29,084			2,642		31,726
EBITDA	$	80,846		$	6,503	$	87,349
EBITDA /Interest Expense							2.75
For the nine months ended September 30, 2003
Revenue:
Rental property revenue	$	315,720		$	35,146	$	350,866
Expenses:
Rental property expense		109,579			14,811		124,390
Depreciation and amortization		95,774			7,139		102,913
Interest expense:
Contractual		83,618			8,372		91,990
Amortization of deferred financing costs		2,202			—		2,202
		85,820			8,372		94,192
General and administrative		18,144			—		18,144
Other Income/(Expenses)		11,476			—		11,476
Income from continuing operations before gains	$	17,879		$	4,824	$	22,703
Net Income	$	42,765		$	2,902	$	45,667
Deduct Equity in earnings of unconsolidated affiliates		(2,902	)				(2,902	)
Addback Depreciation and amortization		97,990			7,139		105,129
Addback Interest Expense		86,820			8,372		95,192
EBITDA	$	224,673		$	18,413	$	243,086
EBITDA /Interest Expense							2.55
As of September 30, 2003
Balance Sheet Information:
Total Assets 1/	$	3,330,150		$	257,182	$	3,587,332
Debt		1,612,483			172,708		1,785,191
Total Liabilities		1,730,675			181,176		1,911,851
Total Debt/Total Assets							49.8	%

1/ Excludes investment in unconsolidated affiliates

Page 6

Components of Discontinued Operations

Dollars in thousands, except per share amounts

	Nine Months Ended						Three Months Ended
	09/30/03			09/30/02			09/30/03			06/30/03			03/31/03			12/31/02			09/30/02
Rental revenue	$	21,561		$	39,628		$	5,216		$	7,924		$	8,421		$	11,210		$	13,311
Operating expenses:
Rental property		5,508			11,444			1,347			1,996			2,165			3,028			4,060
Depreciation and amortization		2,216			8,765			372			680			1,164			2,446			2,955
Interest expense		1,000			1,490			143			428			429			429			630
Total operating expenses		8,724			21,699			1,862			3,104			3,758			5,903			7,645
Interest and other income		89			227			25			27			37			4			60
		89			227			25			27			37			4			60
Income before gain/(loss) on disposition of depreciable assets and minority interest		12,926			18,156			3,379			4,847			4,700			5,311			5,726
Minority interest		(1,450	)		(2,154	)		(372	)		(542	)		(536	)		(618	)		(668	)
Income from discontinued operations, net of minority interest		11,476			16,002			3,007			4,305			4,164			4,693			5,058
Gain/(loss) on disposition of discontinued operations		13,999			(1,080	)		12,676			1,515			(192	)		14,202			(3,216	)
Minority Interest		(1,544	)		125			(1,396	)		(170	)		22			(1,640	)		375
Gain on disposition of discontinued operations, net of minority interest		12,455			(955	)		11,280			1,345			(170	)		12,562			(2,841	)
Total discontinued operations	$	23,931		$	15,047		$	14,287		$	5,650		$	3,994		$	17,255		$	2,217

Page 7

Capitalization

Dollars in thousands

	09/30/03		06/30/03		03/31/03		12/31/02		09/30/02
Long-Term Debt (see page 9 & 10)	$	1,612,483	$	1,579,265	$	1,580,301	$	1,528,720	$	1,626,362
Preferred Stock:
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		53,103		53,072		53,484		53,400		53,387
Minority interest partnership units		6,505		6,625		6,848		6,975		7,042
Total shares and units outstanding		59,608		59,697		60,332		60,375		60,429
Stock price at period end	$	23.86	$	22.30	$	20.44	$	22.10	$	23.40
Market value of equity	$	1,799,692	$	1,708,688	$	1,610,631	$	1,711,733	$	1,791,484
Total market capitalization with debt	$	3,412,175	$	3,287,953	$	3,190,932	$	3,240,453	$	3,417,846

See pages 32 to 38 for information regarding Highwoods’ Joint Ventures

Page 8

Long-Term Debt Summary

Dollars in thousands

	09/30/03			06/30/03			03/31/03			12/31/02			09/30/02
Balances Outstanding:
Secured:
Conventional fixed rate	$	631,203		$	653,092		$	656,060		$	515,411		$	517,859
Variable rate debt		68,780			4,173			4,241			4,309			5,503
Secured total	$	699,983		$	657,265		$	660,301		$	519,720		$	523,362
Unsecured:
Fixed rate bonds and notes	$	806,500		$	806,500		$	806,500		$	931,500		$	931,500
Variable rate debt		20,000			20,000			20,000			20,000			20,000
Credit facility		86,000			95,500			93,500			57,500			151,500
Unsecured total	$	912,500		$	922,000		$	920,000		$	1,009,000		$	1,103,000
Total	$	1,612,483		$	1,579,265		$	1,580,301		$	1,528,720		$	1,626,362
Average Interest Rates:
Secured:
Conventional fixed rate		7.5	%		7.6	%		7.6	%		8.0	%		8.0	%
Variable rate debt		3.2	%		3.6	%		3.7	%		3.9	%		3.4	%
Secured total		7.1	%		7.5	%		7.5	%		7.9	%		7.7	%
Unsecured:
Fixed rate bonds		7.4	%		7.4	%		7.4	%		7.3	%		7.3	%
Variable rate debt		2.1	%		2.5	%		2.6	%		2.8	%		—
Credit facility		2.3	%		2.1	%		2.3	%		2.8	%		2.7	%
Unsecured total		6.8	%		6.7	%		6.9	%		6.5	%		6.5	%
Average		6.9	%		7.1	%		7.1	%		7.0	%		6.9	%
Capitalized Interest:	$	276		$	349		$	366		$	(1,325	)	$	1,724

Maturity Schedule:

	Future Maturities of Debt					Total Debt 1/		Average Interest Rate
Year	Secured Debt 1/		Unsecured Debt
2003	$	—	$	246,500		$	246,500	7.5	%
2004		—		—			—	—
2005		70,121		20,000			90,121	7.0	%
2006		71,282		196,000	2/		267,282	4.6	%
2007		80,076		—			80,076	7.9	%
2008		—		100,000			100,000	7.1	%
2009		185,774		50,000			235,774	7.9	%
2010		141,678		—			141,678	7.8	%
2011		—		100,000			100,000	7.2	%
2012		—		—			—	—
Thereafter		151,052		200,000			351,052	6.9	%
Total maturities	$	699,983	$	912,500		$	1,612,483	6.9	%

Weighted average maturity = 5.9 years

1/ Excludes annual principal amortization

2/ Included in the $196.0 million of unsecured debt maturities is $86.0 million related to the credit facility which matures in 2006.

Page 9

Long-Term Debt Detail

Dollars in thousands

Secured Loans In Excess of $10 Million

Lender	Blended Rate		Maturity Date	Loan Balance 09/30/03		Undepreciated Book Value of Assets Secured
Monumental Life Insurance Company	7.8	%	Nov-09	$	177,557	$	248,118
Northwestern Mutual Life	6.0	%	Feb-13		144,164		185,101
Northwestern Mutual Life	7.8	%	Nov-10		141,108		267,022
Northwestern Mutual Life	8.2	%	Jan-07		67,298		133,331
GECC	3.1	%	Jan-06		64,676		83,110
Principal Life Insurance Company	8.6	%	Apr-05		42,672		102,809
Principal Life Insurance Company	8.2	%	Jul-05		27,449		68,310
	7.1	%		$	664,924	$	1,087,801
All Other Secured Loans (16)	7.4	%		$	35,059	$	82,205
Total Secured Loans	7.1	%		$	699,983	$	1,170,006
Unsecured Bonds
Bonds	6.8	%	Dec-03	$	100,000
Bonds	8.0	%	Dec-03		146,500
Bonds	7.0	%	Dec-06		110,000
Bonds	7.1	%	Feb-08		100,000
Bonds	8.1	%	Jan-09		50,000
Xpos 1/	7.2	%	Jun-11		100,000
Bonds	7.5	%	Apr-18		200,000
	7.4	%		$	806,500

1/ Remarket date is 6/15/2004

Page 10

Portfolio Summary

(Rentable Square Feet)

	09/30/03		06/30/03		03/31/03		12/31/02			09/30/02
Office Industrial & Retail
In-Service:
Office	25,710,000		25,052,000		25,387,000		25,342,000			25,861,000
Industrial	9,934,000		10,243,000		10,243,000		10,242,000			10,468,000
Retail 1/	1,527,000		1,527,000		1,527,000		1,528,000			1,650,000
Total	37,171,000		36,822,000		37,157,000		37,112,000			37,979,000
Development Completed – Not Stabilized:
Office	140,000		140,000		100,000		231,000			568,000
Industrial	60,000		60,000		60,000		60,000			136,000
Retail	—		—		—		—			20,000
Total	200,000		200,000		160,000		291,000			724,000
Development – In Process:
Office	—		—		40,000		40,000			100,000
Industrial	350,000		—		—		—			60,000
Retail	—		—		—		—			—
Total	350,000		—		40,000		40,000			160,000
Total:
Office	25,850,000		25,192,000		25,527,000		25,613,000			26,529,000
Industrial	10,344,000		10,303,000		10,303,000		10,302,000			10,664,000
Retail 1/	1,527,000		1,527,000		1,527,000		1,528,000			1,670,000
Total	37,721,000		37,022,000		37,357,000		37,443,000			38,863,000
Same Store
Office	22,488,000		23,149,000		23,484,000		22,450,000			23,408,000
Industrial	9,798,000		10,044,000		10,044,000		9,679,000			10,041,000
Retail	1,507,000		1,507,000		1,507,000		1,509,000			1,650,000
Total	33,793,000		34,700,000		35,035,000		33,638,000			35,099,000
Percent Leased/Pre-Leased:
In-Service:
Office	79.4	%	80.5	%	80.9	%	82.3	%	2/	86.3	%
Industrial	88.0	%	88.7	%	86.8	%	86.2	%		86.2	%
Retail	96.3	%	96.8	%	96.5	%	97.0	%		95.4	%
Total	82.4	%	83.4	%	83.2	%	84.0	%	2/	86.7	%
Development Completed – Not Stabilized:
Office	30.0	%	30.0	%	42.0	%	61.3	%		17.3	%
Industrial	50.0	%	50.0	%	50.0	%	50.0	%		29.0	%
Retail	—		—		—		—			90.0	%
Total	36.0	%	36.0	%	45.0	%	59.0	%		21.5	%
Development – In Process:
Office	100.0	%	—		0.0	%	0.0	%		42.0	%
Industrial	—		—		—		—			20.0	%
Retail	—		—		—		—			—
Total	100.0	%	—		0.0	%	0.0	%		33.8	%
Same Store
Office	80.4	%	81.9	%	82.1	%	84.3	%	3/	87.0	%
Industrial	88.1	%	88.9	%	87.0	%	87.1	%		86.3	%
Retail	96.3	%	96.7	%	96.6	%	97.1	%		95.4	%
Total	83.3	%	84.6	%	84.1	%	85.7	%	3/	87.2	%

1/ Excludes basement space in the Country Club Plaza property of 474,000 square feet.

2/ The occupancy percentages have been reduced as a result of the rejection of the 816,000 square foot Intermedia(Worldcom) lease on 12/31/02. The impact on Office occupancy and Total occupancy was 3.2% and 2.2%, respectively.

3/ The occupancy percentages have been reduced as a result of the rejection of the 816,000 square foot Intermedia(Worldcom) lease on 12/31/02. Only 631,000 square feet of this lease was related to Same Store Properties. The impact on Office occupancy and Total occupancy was 2.8% and 1.8%, respectively.

Page 11

Portfolio Summary

(Continued)

As of September 30, 2003

Summary by Location:

Market	Rentable Square Feet		Occupancy		Percentage of Annualized Revenue 1/
					Office		Industrial		Retail		Total
Research Triangle	4,706,000		79.7	%	15.2	%	0.2	%	—		15.4	%
Atlanta	6,860,000		80.7	%	11.2	%	3.1	%	—		14.3	%
Kansas City	2,512,000	2/	92.1	%	4.2	%	—		8.3	%	12.5	%
Tampa	4,408,000		64.2	%	12.4	%	—		—		12.4	%
Piedmont Triad	8,208,000		90.6	%	6.1	%	5.1	%	—		11.2	%
Nashville	2,865,000		88.7	%	11.2	%	—		—		11.2	%
Richmond	2,526,000		92.8	%	7.7	%	0.5	%	—		8.2	%
Charlotte	1,727,000		79.5	%	4.4	%	0.2	%	—		4.6	%
Memphis	1,216,000		79.8	%	4.3	%	—		—		4.3	%
Greenville	1,318,000		81.5	%	3.7	%	0.2	%	—		3.9	%
Columbia	426,000		57.2	%	1.0	%	—		—		1.0	%
Orlando	299,000		46.9	%	0.6	%	—		—		0.6	%
Other	100,000		64.1	%	0.4	%	—		—		0.4	%
Total	37,171,000		82.4	%	82.4	%	9.3	%	8.3	%	100.0	%

Summary by Location, Including Unconsolidated Joint Venture Properties:

Market	Rentable Square Feet	Occupancy		Percentage of Annualized Revenue 1/3/
				Office		Industrial		Retail		Multi-Family		Total
Research Triangle	5,161,000	81.4	%	14.3	%	0.2	%	—		—		14.5	%
Atlanta	7,510,000	81.2	%	11.4	%	2.8	%	—		—		14.2	%
Kansas City	2,939,000	91.4	%	4.2	%	—		7.6	%	—		11.8	%
Tampa	4,613,000	65.5	%	11.6	%	—		—		—		11.6	%
Piedmont Triad	8,572,000	91.0	%	6.0	%	4.7	%	—		—		10.7	%
Nashville	2,865,000	88.7	%	10.3	%	—		—		—		10.3	%
Richmond	2,647,000	93.1	%	7.3	%	0.4	%	—		—		7.7	%
Charlotte	1,875,000	81.1	%	4.2	%	0.2	%	—		—		4.4	%
Memphis	1,216,000	79.8	%	4.0	%	—		—		—		4.0	%
Des Moines	2,245,000	92.5	%	2.9	%	0.4	%	0.1	%	0.4	%	3.8	%
Greenville	1,318,000	81.5	%	3.4	%	0.2	%	—		—		3.6	%
Orlando	2,063,000	79.3	%	2.1	%	—		—		—		2.1	%
Columbia	426,000	57.2	%	0.9	%	—		—		—		0.9	%
Other	210,000	82.9	%	0.4	%	—		—		—		0.4	%
Total	43,660,000	83.6	%	83.0	%	8.9	%	7.7	%	0.4	%	100.0	%

1/ Annualized Revenue is September 2003 rental revenue (base rent plus operating expense pass throughs) multiplied by 12 and excludes the revenue associated with the rejected 816,000 square foot Intermedia(Worldcom) lease on 12/31/02.

2/ Excludes basement space in the Country Club Plaza property of 474,000 square feet

3/ Includes Highwoods’ share of Joint Venture Annualized Rental Revenue, see page 36

Page 12

Portfolio Summary

(Continued)

As of September 30, 2003

	Office Properties					Industrial
Market	Rentable Square Feet	Occupancy		Percentage of Office Annualized Revenue 1/		Rentable Square Feet	Occupancy		Percentage of Industrial Annualized Revenue 1/
Research Triangle	4,605,000	79.6	%	18.5	%	101,000	85.5	%	2.0	%
Tampa	4,408,000	64.2	%	15.1	%	—	—		—
Atlanta	3,569,000	82.4	%	13.6	%	3,291,000	78.9	%	33.1	%
Nashville	2,865,000	88.7	%	13.6	%	—	—		—
Richmond	2,144,000	91.5	%	9.3	%	382,000	100.0	%	4.9	%
Piedmont Triad	2,318,000	84.0	%	7.4	%	5,890,000	93.2	%	55.2	%
Charlotte	1,564,000	80.6	%	5.4	%	163,000	68.9	%	2.7	%
Memphis	1,216,000	79.8	%	5.3	%	—	—		—
Kansas City	981,000	85.4	%	5.1	%	4,000	100.0	%	0.1	%
Greenville	1,215,000	82.5	%	4.4	%	103,000	70.0	%	2.0	%
Columbia	426,000	57.2	%	1.2	%	—	—		—
Orlando	299,000	46.9	%	0.7	%	—	—		—
Other	100,000	64.1	%	0.4	%	—	—		—
	25,710,000	79.4	%	100.0	%	9,934,000	88.0	%	100.0	%
	Retail
Market	Rentable Square Feet	Occupancy		Percentage of Retail Annualized Revenue 1/
Kansas City 2/	1,527,000	96.3	%	100.0	%
	1,527,000	96.3	%	100.0	%

1/ Annualized Revenue is September 2003 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

2/ Excludes basement space in the Country Club Plaza property of 474,000 square feet.

Page 13

Occupancy Trends – Office, Industrial and Retail Properties

Market	Measurement	09/30/03		06/30/03		03/31/03		12/31/02		09/30/02
Atlanta	Rentable Square Feet	6,860,000		6,729,000		6,729,000		6,728,000		6,592,000
	Occupancy	80.7	%	82.5	%	82.0	%	83.0	%	83.7	%
Charlotte	Rentable Square Feet	1,727,000		1,729,000		1,729,000		1,729,000		2,075,000
	Occupancy	79.5	%	79.8	%	79.1	%	84.0	%	87.2	%
Columbia	Rentable Square Feet	426,000		426,000		426,000		426,000		426,000
	Occupancy	57.2	%	60.2	%	60.2	%	67.4	%	62.9	%
Greenville	Rentable Square Feet	1,318,000		1,511,000		1,511,000		1,511,000		1,527,000
	Occupancy	81.5	%	84.0	%	85.8	%	86.8	%	85.7	%
Kansas City 1/	Rentable Square Feet	2,512,000		2,511,000		2,511,000		2,512,000		2,690,000
	Occupancy	92.1	%	93.1	%	93.3	%	94.5	%	91.7	%
Memphis	Rentable Square Feet	1,216,000		1,216,000		1,216,000		1,215,000		1,135,000
	Occupancy	79.8	%	80.5	%	81.5	%	80.8	%	85.7	%
Nashville	Rentable Square Feet	2,865,000		2,865,000		2,864,000		2,733,000		3,045,000
	Occupancy	88.7	%	87.0	%	86.0	%	87.7	%	88.5	%
Orlando	Rentable Square Feet	299,000		340,000		340,000		340,000		664,000
	Occupancy	46.9	%	48.8	%	48.8	%	47.6	%	69.7	%
Piedmont Triad	Rentable Square Feet	8,208,000		8,368,000		8,371,000		8,371,000		8,273,000
	Occupancy	90.6	%	90.0	%	89.4	%	88.9	%	88.8	%
Research Triangle	Rentable Square Feet	4,706,000		4,032,000		4,188,000		4,340,000		4,120,000
	Occupancy	79.7	%	81.2	%	80.3	%	81.9	%	82.8	%
Richmond	Rentable Square Feet	2,526,000		2,825,000		2,829,000		2,764,000		2,989,000
	Occupancy	92.8	%	93.9	%	94.6	%	95.0	%	95.1	%
Tampa	Rentable Square Feet	4,408,000		4,170,000		4,262,000		4,262,000		4,262,000
	Occupancy	64.2	%	66.4	%	66.5	%	67.1	%    2/	86.4	%
Total 3/	Rentable Square Feet	37,071,000		36,722,000		36,976,000		36,931,000		37,798,000
	Occupancy	82.4	%	83.4	%	83.2	%	84.0	%    2/	86.7	%

1/ Excludes basement space in the Country Club Plaza property of 474,000 square feet.

2/ The occupancy percentages have been reduced as a result of the rejection of the 816,000 square foot Intermedia(Worldcom) lease on 12/31/02. The impact on Tampa’s occupancy and Total occupancy was 19.1% and 2.2%, respectively.

3/ Excludes 100,000 square feet of buildings held for sale

Page 14

Leasing Statistics

Office Portfolio

	Three Months Ended
	09/30/03			06/30/03			03/31/03			12/31/02			09/30/02			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		225			216			166			194			184			197
Rentable square footage leased		1,074,270			1,097,633			1,081,692			1,035,837			882,115			1,034,309
Square footage of Renewal Deals		629,353			891,772			822,005			748,258			666,398			751,557
Renewed square footage (% of total)		58.6	%		81.2	%		76.0	%		72.2	%		75.5	%		72.7	%
New Leases square footage (% of total)		41.4	%		18.8	%		24.0	%		27.8	%		24.5	%		27.3	%
Average per rentable square foot over the lease term:
Base rent	$	17.34		$	16.93		$	16.08		$	17.38		$	17.26		$	17.00
Tenant improvements		(1.54	)		(1.33	)		(0.85	)		(1.58	)		(1.06	)		(1.27	)
Leasing commissions 1/		(0.55	)		(0.59	)		(0.54	)		(0.65	)		(0.60	)		(0.59	)
Rent concessions		(0.24	)		(0.16	)		(0.14	)		(0.43	)		(0.22	)		(0.24	)
Effective rent		15.01			14.85			14.55			14.72			15.38			14.90
Expense stop		(5.45	)		(4.69	)		(4.76	)		(5.08	)		(5.54	)		(5.10	)
Equivalent effective net rent	$	9.56		$	10.16		$	9.79		$	9.64		$	9.84		$	9.80
Average term in years		5.5			3.8			3.5			4.2			3.6			4.1
Capital Expenditures Related to Re-leased Space:
Tenant Improvements:
Total dollars committed under signed leases	$	9,120,612		$	7,125,673		$	4,474,184		$	8,004,279		$	4,396,259		$	6,624,202
Rentable square feet		1,074,270			1,097,633			1,081,692			1,035,837			882,115			1,034,309
Per rentable square foot	$	8.49		$	6.49		$	4.14		$	7.73		$	4.98		$	6.40
Leasing Commissions:
Total dollars committed under signed leases	$	2,175,162		$	1,803,423		$	1,658,231		$	2,255,691		$	1,352,691		$	1,849,040
Rentable square feet		1,074,270			1,097,633			1,081,692			1,035,837			882,115			1,034,309
Per rentable square foot	$	2.02		$	1.64		$	1.53		$	2.18		$	1.53		$	1.79
Total:
Total dollars committed under signed leases	$	11,295,774		$	8,929,097		$	6,132,415		$	10,259,970		$	5,748,950		$	8,473,241
Rentable square feet		1,074,270			1,097,633			1,081,692			1,035,837			882,115			1,034,309
Per rentable square foot	$	10.51		$	8.13		$	5.67		$	9.91		$	6.52		$	8.19

1/ Excludes a full allocation of internal marketing cost

Page 15

Leasing Statistics

Industrial Portfolio

	Three Months Ended
	09/30/03			06/30/03			03/31/03			12/31/02			09/30/02			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		22			41			35			45			45			38
Rentable square footage leased		638,376			540,891			857,482			530,945			593,188			632,176
Square footage of Renewal Deals		555,933			403,716			639,683			301,435			432,040			466,561
Renewed square footage (% of total)		87.1	%		74.6	%		74.6	%		56.8	%		72.8	%		73.8	%
New Leases square footage (% of total)		12.9	%		25.4	%		25.4	%		43.2	%		27.2	%		26.2	%
Average per rentable square foot over the lease term:
Base rent	$	3.52		$	4.46		$	3.70		$	4.45		$	4.37		$	4.10
Tenant improvements		(0.20	)		(0.28	)		(0.32	)		(0.51	)		(0.23	)		(0.31	)
Leasing commissions 1/		(0.08	)		(0.12	)		(0.11	)		(0.12	)		(0.14	)		(0.11	)
Rent concessions		(0.06	)		(0.07	)		(0.01	)		(0.09	)		(0.02	)		(0.05	)
Effective rent		3.18			3.99			3.26			3.73			3.98			3.63
Expense stop		(0.09	)		(0.49	)		(0.25	)		(0.32	)		(0.39	)		(0.31	)
Equivalent effective net rent	$	3.09		$	3.50		$	3.01		$	3.41		$	3.59		$	3.32
Average term in years		4.5			3.5			2.6			3.8			1.6			3.2
Capital Expenditures Related to Re-leased Space:
Tenant Improvements:
Total dollars committed under signed leases	$	675,982		$	701,259		$	791,737		$	1,172,142		$	522,115		$	772,647
Rentable square feet		638,376			540,891			857,482			530,945			593,188			632,176
Per rentable square foot	$	1.06		$	1.30		$	0.92		$	2.21		$	0.88		$	1.22
Leasing Commissions:
Total dollars committed under signed leases	$	242,605		$	298,582		$	178,385		$	199,076		$	141,694		$	212,069
Rentable square feet		638,376			540,891			857,482			530,945			593,188			632,176
Per rentable square foot	$	0.38		$	0.55		$	0.21		$	0.37		$	0.24		$	0.34
Total:
Total dollars committed under signed leases	$	918,587		$	999,841		$	970,122		$	1,371,218		$	663,809		$	984,715
Rentable square feet		638,376			540,891			857,482			530,945			593,188			632,176
Per rentable square foot	$	1.44		$	1.85		$	1.13		$	2.58		$	1.12		$	1.56

1/ Excludes a full allocation of internal marketing cost

Page 16

Leasing Statistics

Retail Portfolio

	Three Months Ended
	09/30/03			06/30/03			03/31/03			12/31/02			09/30/02			Average
Net Effective Rents Related to Re-Leased Space:
Number of lease transactions (signed leases)		6			9			10			18			13			11
Rentable square footage leased		12,920			25,772			22,774			36,085			28,267			25,164
Square footage of Renewal Deals		—			8,631			7,814			19,295			8,527			8,853
Renewed square footage (% of total)		—			33.5	%		34.3	%		53.5	%		30.2	%		35.2	%
New Leases square footage (% of total)		100.0	%		66.5	%		65.7	%		46.5	%		69.8	%		64.8	%
Average per rentable square foot over the lease term:
Base rent	$	17.25		$	26.51		$	23.03		$	19.19		$	20.14		$	21.22
Tenant improvements		(2.51	)		(0.86	)		(1.54	)		(1.22	)		(0.60	)		(1.35	)
Leasing commissions 1/		(1.28	)		(0.70	)		(1.09	)		(0.82	)		(0.88	)		(0.95	)
Rent concessions		0.00			0.00			0.00			(0.01	)		0.00			0.00
Effective rent		13.46			24.95			20.40			17.14			18.66			18.92
Expense stop		0.00			0.00			0.00			0.00			0.00			0.00
Equivalent effective net rent	$	13.46		$	24.95		$	20.40		$	17.14		$	18.66		$	18.92
Average term in years		4.8			9.9			6.9			6.0			5.6			6.6
Capital Expenditures Related to Re-leased Space:
Tenant Improvements:
Total dollars committed under signed leases	$	158,000		$	195,055		$	513,000		$	351,023		$	121,500		$	267,716
Rentable square feet		12,920			25,772			22,774			36,085			28,267			25,164
Per rentable square foot	$	12.23		$	7.57		$	22.53		$	9.73		$	4.30		$	10.64
Leasing Commissions:
Total dollars committed under signed leases	$	36,392		$	100,464		$	109,066		$	127,964		$	91,405		$	93,058
Rentable square feet		12,920			25,772			22,774			36,085			28,267			25,164
Per rentable square foot	$	2.82		$	3.90		$	4.79		$	3.55		$	3.23		$	3.70
Total:
Total dollars committed under signed leases	$	194,392		$	295,519		$	622,066		$	478,987		$	212,905		$	360,774
Rentable square feet		12,920			25,772			22,774			36,085			28,267			25,164
Per rentable square foot	$	15.05		$	11.47		$	27.31		$	13.27		$	7.53		$	14.34

1/ Excludes a full allocation of internal marketing cost

Page 17

Leasing Statistics by Market

For the Three Months Ended September 30, 2003

Office Portfolio

Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF 1/
Atlanta	216,783	8.6	$	17.64	$	7.92	$	0.27
Research Triangle	185,860	3.6		17.88		5.87		1.18
Tampa	163,190	6.1		16.55		15.12		4.31
Nashville	123,774	6.6		16.78		10.35		2.86
Charlotte	114,349	4.3		14.58		7.92		1.75
Richmond	108,896	3.8		17.35		3.98		1.33
Piedmont Triad	59,965	3.4		16.87		4.46		0.18
Memphis	52,235	3.9		20.03		12.26		2.11
Kansas City	26,612	4.0		17.01		5.61		3.09
Columbia	14,516	4.2		16.37		7.71		2.22
Orlando	5,000	4.4		13.83		8.46		1.38
Greenville	3,090	2.9		17.12		4.10		1.52
	1,074,270	5.5	$	17.10	$	9.97	$	1.79
Industrial Portfolio
Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF 1/
Piedmont Triad	558,668	4.7	$	3.31	$	1.19		0.37
Atlanta	78,568	3.1		4.36		0.18	$	0.31
Charlotte	1,140	1.0		11.25		0.00		0.00
	638,376	4.5	$	3.46	$	1.06	$	0.36
Retail Portfolio
Market	Rentable Square Feet Leased	Average Term	GAAP Rental Rate		TI’s Per SF		Lease Commissions Per SF 1/
Kansas City	12,920	4.8	$	17.25	$	12.23	$	2.82
	12,920	4.8	$	17.25	$	12.23	$	2.82

1/ Total lease commisions per SF (square foot) excludes internal charges from Leasing Departments, which are not allocated to individual leases.

Page 18

Rental Rate Comparisons by Market

For the Three Months Ended September 30, 2003

Office Portfolio

	Rentable					Percentage Change
Market	Square Feet Leased	GAAP Rent		Previous GAAP Rent		GAAP Rent		Cash Rent
Atlanta	216,783	$	17.64	$	18.56	-5.0	%	-10.8	%
Research Triangle	185,860		17.88		18.83	-5.0	%	-16.1	%
Tampa	163,190		16.55		12.74	29.9	%	-6.5	%
Nashville	123,774		16.78		19.47	-13.8	%	-17.6	%
Charlotte	114,349		14.58		14.58	0.0	%	-13.4	%
Richmond	108,896		17.35		17.58	-1.3	%	-6.8	%
Piedmont Triad	59,965		16.87		16.36	3.1	%	-7.5	%
Memphis	52,235		20.03		19.31	3.7	%	1.3	%
Kansas City	26,612		17.01		18.02	-5.6	%	-9.6	%
Columbia	14,516		16.37		17.03	-3.9	%	-26.7	%
Orlando	5,000		13.83		13.35	3.6	%	-5.8	%
Greenville	3,090		17.12		16.55	3.4	%	1.0	%
	1,074,270	$	17.10	$	17.22	-0.7	%	-11.3	%
Industrial Portfolio
	Rentable					Percentage Change
Market	Square Feet Leased	GAAP Rent		Previous GAAP Rent		GAAP Rent		Cash Rent
Piedmont Triad	558,668	$	3.31	$	3.70	-10.6	%	-14.2	%
Atlanta	78,568		4.36		4.85	-10.1	%	-16.3	%
Charlotte	1,140		11.25		11.25	0.0	%	0.0	%
	638,376	$	3.46	$	3.86	-10.3	%	-14.4	%
Retail Portfolio
	Rentable					Percentage Change
Market	Square Feet Leased	GAAP Rent		Previous Year GAAP Rent		GAAP Rent		Cash Rent
Kansas City	12,920	$	17.25	$	14.60	18.2	%	11.6	%
	12,920	$	17.25	$	14.60	18.2	%	11.6	%

Page 19

Lease Expirations

September 30, 2003

Dollars in thousands

Year	Number of Leases	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue 1/		Average Rental Rate		Percent of Annualized Revenue 1/
Office:
Remainder of 2003 2/	243	1,239,154	6.1	%	$	19,969	$	16.12	5.6	%
2004	558	2,968,185	14.5	%		52,894		17.82	14.8	%
2005	577	3,516,754	17.2	%		64,119		18.23	18.0	%
2006	477	3,180,926	15.6	%		58,094		18.26	16.3	%
2007	247	1,772,002	8.7	%		30,078		16.97	8.4	%
2008	259	2,933,595	14.4	%		44,365		15.12	12.4	%
2009	66	1,336,949	6.5	%		23,298		17.43	6.5	%
2010	65	1,164,362	5.7	%		23,541		20.22	6.6	%
2011	45	962,737	4.7	%		19,624		20.38	5.5	%
2012	34	522,042	2.6	%		10,711		20.52	3.0	%
2013 and thereafter	129	823,730	4.0	%		10,319		12.53	2.9	%
	2,700	20,420,436	100.0	%	$	357,012	$	17.48	100.0	%
Industrial:
Remainder of 2003 3/	41	544,587	6.2	%	$	2,818	$	5.17	7.0	%
2004	112	2,754,339	31.4	%		11,120		4.04	27.6	%
2005	71	1,258,609	14.4	%		6,119		4.86	15.2	%
2006	62	977,099	11.2	%		4,815		4.93	12.0	%
2007	44	1,660,231	18.9	%		7,720		4.65	19.2	%
2008	22	471,011	5.4	%		2,659		5.65	6.6	%
2009	8	311,813	3.6	%		2,026		6.50	5.0	%
2010	5	96,156	1.1	%		512		5.32	1.3	%
2011	2	35,475	0.4	%		181		5.10	0.4	%
2012	2	44,447	0.5	%		261		5.87	0.6	%
2013 and thereafter	19	603,113	6.9	%		2,058		3.41	5.1	%
	388	8,756,880	100.0	%	$	40,289	$	4.60	100.0	%

1/ Annualized Revenue is September 2003 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

2/ Includes 185,000 square feet of leases that are on a month to month basis or 0.7% of total annualized revenue

3/ Includes 282,000 square feet of leases that are on a month to month basis or 0.3% of total annualized revenue

Page 20

Lease Expirations

September 30, 2003

(Continued)

Dollars in thousands

Year	Number of Leases	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue 1/		Average Rental Rate		Percent of Annualized Revenue 1/
Retail:
Remainder of 2003 2/	17	66,116	4.5	%	$	810	$	12.25	2.3	%
2004	35	153,397	10.4	%		2,482		16.18	6.9	%
2005	46	151,645	10.3	%		3,247		21.41	9.1	%
2006	31	91,139	6.2	%		2,313		25.38	6.5	%
2007	36	116,920	8.0	%		2,691		23.02	7.5	%
2008	41	141,235	9.6	%		4,839		34.26	13.5	%
2009	25	160,258	10.9	%		3,713		23.17	10.4	%
2010	17	85,386	5.8	%		2,344		27.45	6.6	%
2011	15	57,783	3.9	%		1,931		33.42	5.4	%
2012	13	77,862	5.3	%		1,943		24.95	5.4	%
2013 and thereafter	29	366,839	25.1	%		9,431		25.71	26.4	%
	305	1,468,580	100.0	%	$	35,744	$	24.34	100.0	%
Total:
Remainder of 2003 3/	301	1,849,857	6.0	%	$	23,597	$	12.76	5.4	%
2004	705	5,875,921	19.1	%		66,496		11.32	15.4	%
2005	694	4,927,008	16.1	%		73,485		14.91	17.0	%
2006	570	4,249,164	13.9	%		65,222		15.35	15.1	%
2007	327	3,549,153	11.6	%		40,489		11.41	9.3	%
2008	322	3,545,841	11.6	%		51,863		14.63	12.0	%
2009	99	1,809,020	5.9	%		29,037		16.05	6.7	%
2010	87	1,345,904	4.4	%		26,397		19.61	6.1	%
2011	62	1,055,995	3.4	%		21,736		20.58	5.0	%
2012	49	644,351	2.1	%		12,915		20.04	3.0	%
2013 and thereafter	177	1,793,682	5.9	%		21,808		12.16	5.0	%
	3,393	30,645,896	100.0	%	$	433,045	$	14.13	100.0	%

1/ Annualized Revenue is September 2003 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

2/ Includes 42,000 square feet of leases that are on a month to month basis or 0.0% of total annualized revenue

3/ Includes 509,000 square feet of leases that are on a month to month basis or 1.0% of total annualized revenue

Page 21

Office Lease Expirations by Market by Quarter

Dollars in thousands

			Three Months Ended
			12/31/2003 1/			03/31/04			06/30/04			09/30/04			Total
Atlanta	RSF			310,179			68,052			45,091			204,619			627,941
	% of Total Office RSF			1.5	%		0.3	%		0.2	%		1.0	%		3.1	%
	Annualized Revenue	2/	$	5,909		$	1,012		$	799		$	3,269		$	10,989
	% of Total Office Annl Rev			1.7	%		0.3	%		0.2	%		0.9	%		3.1	%
Charlotte	RSF			193,835			48,272			61,232			59,803			363,142
	% of Total Office RSF			0.9	%		0.2	%		0.3	%		0.3	%		1.8	%
	Annualized Revenue	2/	$	2,527		$	828		$	908		$	917		$	5,180
	% of Total Office Annl Rev			0.7	%		0.2	%		0.3	%		0.3	%		1.5	%
Columbia	RSF			57,060			8,615			3,611			21,973			91,259
	% of Total Office RSF			0.3	%		0.0	%		0.0	%		0.1	%		0.4	%
	Annualized Revenue	2/	$	1,227		$	152		$	69		$	400		$	1,848
	% of Total Office Annl Rev			0.3	%		0.0	%		0.0	%		0.1	%		0.5	%
Greenville	RSF			494			3,094			12,334			6,071			21,993
	% of Total Office RSF			0.0	%		0.0	%		0.1	%		0.0	%		0.1	%
	Annualized Revenue	2/	$	8		$	52		$	226		$	103		$	389
	% of Total Office Annl Rev			0.0	%		0.0	%		0.1	%		0.0	%		0.1	%
Kansas City	RSF			55,801			47,640			21,048			37,792			162,281
	% of Total Office RSF			0.3	%		0.2	%		0.1	%		0.2	%		0.8	%
	Annualized Revenue	2/	$	1,004		$	1,006		$	367		$	642		$	3,019
	% of Total Office Annl Rev			0.3	%		0.3	%		0.1	%		0.2	%		0.8	%
Memphis	RSF			28,765			73,962			22,452			57,449			182,628
	% of Total Office RSF			0.1	%		0.4	%		0.1	%		0.3	%		0.9	%
	Annualized Revenue	2/	$	585		$	1,273		$	440		$	1,013		$	3,311
	% of Total Office Annl Rev			0.2	%		0.4	%		0.1	%		0.3	%		0.9	%
Nashville	RSF			47,108			176,200			59,865			48,853			332,026
	% of Total Office RSF			0.2	%		0.9	%		0.3	%		0.2	%		1.6	%
	Annualized Revenue	2/	$	753		$	3,516		$	1,300		$	968		$	6,537
	% of Total Office Annl Rev			0.2	%		1.0	%		0.4	%		0.3	%		1.8	%
Orlando	RSF			12,820			8,335			12,502			0			33,657
	% of Total Office RSF			0.1	%		0.0	%		0.1	%		0.0	%		0.2	%
	Annualized Revenue	2/	$	259		$	78		$	230		$	—		$	567
	% of Total Office Annl Rev			0.1	%		0.0	%		0.1	%		0.0	%		0.2	%
Piedmont Triad	RSF			41,365			21,271			126,922			122,730			312,288
	% of Total Office RSF			0.2	%		0.1	%		0.6	%		0.6	%		1.5	%
	Annualized Revenue	2/	$	571		$	417		$	1,194		$	1,396		$	3,578
	% of Total Office Annl Rev			0.2	%		0.1	%		0.3	%		0.4	%		1.0	%
Research Triangle	RSF			218,048			153,740			138,895			170,650			681,333
	% of Total Office RSF			1.0	%		0.8	%		0.7	%		0.8	%		3.3	%
	Annualized Revenue	2/	$	3,510		$	2,891		$	2,747		$	3,240		$	12,388
	% of Total Office Annl Rev			1.0	%		0.8	%		0.8	%		0.9	%		3.5	%
Richmond	RSF			86,407			36,772			138,821			32,455			294,455
	% of Total Office RSF			0.4	%		0.2	%		0.7	%		0.2	%		1.4	%
	Annualized Revenue	2/	$	1,517		$	740		$	2,541		$	555		$	5,353
	% of Total Office Annl Rev			0.4	%		0.2	%		0.7	%		0.2	%		1.5	%
Tampa	RSF			184,888			56,698			162,133			133,090			536,809
	% of Total Office RSF			0.9	%		0.3	%		0.8	%		0.7	%		2.6	%
	Annualized Revenue	2/	$	2,061		$	1,133		$	2,769		$	3,101		$	9,064
	% of Total Office Annl Rev			0.6	%		0.3	%		0.8	%		0.9	%		2.5	%
Other	RSF			2,384			0			0			0			2,384
	% of Total Office RSF			0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
	Annualized Revenue	2/	$	38		$	—		$	—		$	—		$	38
	% of Total Office Annl Rev			0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Total	RSF			1,239,154			702,651			804,906			895,485			3,642,196
	% of Total Office RSF			6.0	%		3.4	%		3.9	%		4.4	%		17.8	%
	Annualized Revenue	2/	$	19,969		$	13,098		$	13,590		$	15,604		$	62,261
	% of Total Office Annl Rev			5.6	%		3.7	%		3.8	%		4.4	%		17.4	%

1/ Includes 185,000 square feet of leases that are on a month to month basis or 0.7% of total annualized revenue

2/ Annualized Revenue is September 2003 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 22

Industrial Lease Expirations by Market by Quarter

Dollars in thousands

			Three Months Ended
			12/31/2003 1/			03/31/04			06/30/04			09/30/04			Total
Atlanta	RSF			174,875			71,317			161,813			251,087			659,092
	% of Total Industrial RSF			2.0	%		0.8	%		1.8	%		2.9	%		7.5	%
	Annualized Revenue	2/	$	1,018		$	366		$	940		$	1,113		$	3,437
	% of Total Industrial Annl Rev			2.6	%		0.9	%		2.3	%		2.8	%		8.6	%
Charlotte	RSF			10,567			7,605			12,958			4,881			36,011
	% of Total Industrial RSF			0.1	%		0.1	%		0.1	%		0.1	%		0.4	%
	Annualized Revenue	2/	$	124		$	82		$	140		$	58		$	404
	% of Total Industrial Annl Rev			0.3	%		0.2	%		0.3	%		0.1	%		1.0	%
Greenville	RSF			24,096			0			0			26,859			50,955
	% of Total Industrial RSF			0.3	%		0.0	%		0.0	%		0.3	%		0.6	%
	Annualized Revenue	2/	$	278		$	—		$	—		$	291		$	569
	% of Total Industrial Annl Rev			0.7	%		0.0	%		0.0	%		0.7	%		1.4	%
Kansas City	RSF			0			3,774			0			0			3,774
	% of Total Industrial RSF			0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
	Annualized Revenue	2/	$	—		$	20		$	—		$	—		$	20
	% of Total Industrial Annl Rev			0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Piedmont Triad	RSF			267,122			328,022			716,743			657,701			1,969,588
	% of Total Industrial RSF			3.1	%		3.7	%		8.2	%		7.5	%		22.5	%
	Annualized Revenue	2/	$	993		$	1,121		$	2,399		$	2,365		$	6,878
	% of Total Industrial Annl Rev			2.5	%		2.8	%		6.0	%		5.9	%		17.1	%
Research Triangle	RSF			12,859			0			4,922			6,128			23,909
	% of Total Industrial RSF			0.1	%		0.0	%		0.1	%		0.1	%		0.3	%
	Annualized Revenue	2/	$	134		$	—		$	44		$	51		$	229
	% of Total Industrial Annl Rev			0.3	%		0.0	%		0.1	%		0.1	%		0.6	%
Richmond	RSF			55,068			0			15,000			25,082			95,150
	% of Total Industrial RSF			0.6	%		0.0	%		0.2	%		0.3	%		1.1	%
	Annualized Revenue	2/	$	273		$	—		$	89		$	144		$	506
	% of Total Industrial Annl Rev			0.7	%		0.0	%		0.2	%		0.4	%		1.3	%
Total	RSF			544,587			410,718			911,436			971,738			2,838,479
	% of Total Industrial RSF			6.2	%		4.7	%		10.4	%		11.1	%		32.4	%
	Annualized Revenue	2/	$	2,820		$	1,589		$	3,612		$	4,022		$	12,043
	% of Total Industrial Annl Rev			7.0	%		3.9	%		9.0	%		10.0	%		29.9	%

1/ Includes 282,000 square feet of leases that are on a month to month basis or 0.3% of total annualized revenue

2/ Annualized Revenue is September 2003 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 23

Office Lease Expirations by Market by Year

Dollars in thousands

			Remainder of 2003 1/			2004			2005			2006			Thereafter
Atlanta	RSF			310,179			361,472			412,286			253,693			1,598,647
	% of Total Office RSF			1.5	%		1.8	%		2.0	%		1.2	%		7.8	%
	Annualized Revenue	2/	$	5,909		$	5,728		$	7,179		$	3,780		$	26,075
	% of Total Office Annl Rev			1.7	%		1.6	%		2.0	%		1.1	%		7.3	%
Charlotte	RSF			193,835			197,993			306,222			168,082			393,434
	% of Total Office RSF			0.9	%		1.0	%		1.5	%		0.8	%		1.9	%
	Annualized Revenue	2/	$	2,527		$	3,179		$	5,367		$	2,514		$	5,620
	% of Total Office Annl Rev			0.7	%		0.9	%		1.5	%		0.7	%		1.6	%
Columbia	RSF			57,060			34,199			45,532			37,273			69,524
	% of Total Office RSF			0.3	%		0.2	%		0.2	%		0.2	%		0.3	%
	Annualized Revenue	2/	$	1,227		$	620		$	851		$	661		$	1,074
	% of Total Office Annl Rev			0.3	%		0.2	%		0.2	%		0.2	%		0.3	%
Greenville	RSF			494			22,564			333,705			238,253			407,649
	% of Total Office RSF			0.0	%		0.1	%		1.6	%		1.2	%		2.0	%
	Annualized Revenue	2/	$	8		$	462		$	4,150		$	4,545		$	6,685
	% of Total Office Annl Rev			0.0	%		0.1	%		1.2	%		1.3	%		1.9	%
Kansas City	RSF			55,801			126,000			167,938			151,655			336,452
	% of Total Office RSF			0.3	%		0.6	%		0.8	%		0.7	%		1.6	%
	Annualized Revenue	2/	$	1,004		$	2,376		$	3,751		$	3,254		$	7,666
	% of Total Office Annl Rev			0.3	%		0.7	%		1.1	%		0.9	%		2.1	%
Memphis	RSF			28,765			190,005			204,675			118,453			428,683
	% of Total Office RSF			0.1	%		0.9	%		1.0	%		0.6	%		2.1	%
	Annualized Revenue	2/	$	585		$	3,447		$	4,194		$	2,165		$	8,368
	% of Total Office Annl Rev			0.2	%		1.0	%		1.2	%		0.6	%		2.3	%
Nashville	RSF			47,108			347,269			510,980			485,016			1,146,189
	% of Total Office RSF			0.2	%		1.7	%		2.5	%		2.4	%		5.6	%
	Annualized Revenue	2/	$	753		$	7,017		$	10,225		$	9,450		$	20,973
	% of Total Office Annl Rev			0.2	%		2.0	%		2.9	%		2.6	%		5.9	%
Orlando	RSF			12,820			31,284			0			1,024			95,137
	% of Total Office RSF			0.1	%		0.2	%		0.0	%		0.0	%		0.5	%
	Annualized Revenue	2/	$	259		$	488		$	—		$	15		$	1,735
	% of Total Office Annl Rev			0.1	%		0.1	%		0.0	%		0.0	%		0.5	%
Piedmont Triad	RSF			41,365			280,223			293,910			160,110			1,158,251
	% of Total Office RSF			0.2	%		1.4	%		1.4	%		0.8	%		5.7	%
	Annualized Revenue	2/	$	571		$	3,090		$	4,818		$	2,758		$	15,170
	% of Total Office Annl Rev			0.2	%		0.9	%		1.3	%		0.8	%		4.2	%
Research Triangle	RSF			218,048			605,080			532,089			879,729			1,467,923
	% of Total Office RSF			1.1	%		3.0	%		2.6	%		4.3	%		7.2	%
	Annualized Revenue	2/	$	3,509		$	11,638		$	10,286		$	15,511		$	25,120
	% of Total Office Annl Rev			1.0	%		3.3	%		2.9	%		4.3	%		7.0	%
Richmond	RSF			86,407			243,555			428,469			243,333			961,056
	% of Total Office RSF			0.4	%		1.2	%		2.1	%		1.2	%		4.7	%
	Annualized Revenue	2/	$	1,517		$	4,478		$	7,293		$	4,593		$	15,374
	% of Total Office Annl Rev			0.4	%		1.3	%		2.0	%		1.3	%		4.3	%
Tampa	RSF			184,888			528,541			260,467			430,924			1,424,748
	% of Total Office RSF			0.9	%		2.6	%		1.3	%		2.1	%		7.0	%
	Annualized Revenue	2/	$	2,061		$	10,371		$	5,582		$	8,528		$	27,321
	% of Total Office Annl Rev			0.6	%		2.9	%		1.6	%		2.4	%		7.7	%
Other	RSF			2,384			0			20,481			13,381			27,724
	% of Total Office RSF			0.0	%		0.0	%		0.1	%		0.1	%		0.1	%
	Annualized Revenue	2/	$	38		$	—		$	423		$	320		$	758
	% of Total Office Annl Rev			0.0	%		0.0	%		0.1	%		0.1	%		0.2	%
Total	RSF			1,239,154			2,968,185			3,516,754			3,180,926			9,515,417
	% of Total Office RSF			6.1	%		14.5	%		17.2	%		15.6	%		46.6	%
	Annualized Revenue	2/	$	19,968		$	52,894		$	64,119		$	58,094		$	161,939
	% of Total Office Annl Rev			5.6	%		14.8	%		18.0	%		16.3	%		45.4	%

1/ Includes 185,000 square feet of leases that are on a month to month basis or 0.7% of total annualized revenue

2/ Annualized Revenue is September 2003 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 24

Industrial Lease Expirations by Market by Year

Dollars in thousands

			Remainder of 2003 1/			2004			2005			2006			Thereafter
Atlanta	RSF			174,875			572,254			526,691			322,468			1,013,539
	% of Total Industrial RSF			2.0	%		6.5	%		6.0	%		3.7	%		11.6	%
	Annualized Revenue	2/	$	1,017		$	2,858		$	2,688		$	1,920		$	4,873
	% of Total Industrial Annl Rev			2.5	%		7.1	%		6.7	%		4.8	%		12.1	%
Charlotte	RSF			10,567			28,900			18,201			33,166			20,081
	% of Total Industrial RSF			0.1	%		0.3	%		0.2	%		0.4	%		0.2	%
	Annualized Revenue	2/	$	124		$	311		$	197		$	239		$	199
	% of Total Industrial Annl Rev			0.3	%		0.8	%		0.5	%		0.6	%		0.5	%
Greenville	RSF			24,096			26,859			0			16,081			5,350
	% of Total Industrial RSF			0.3	%		0.3	%		0.0	%		0.2	%		0.1	%
	Annualized Revenue	2/	$	278		$	291		$	—		$	195		$	56
	% of Total Industrial Annl Rev			0.7	%		0.7	%		0.0	%		0.5	%		0.1	%
Kansas City	RSF			0			3,774			0			0			0
	% of Total Industrial RSF			0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
	Annualized Revenue	2/	$	—		$	20		$	—		$	—		$	—
	% of Total Industrial Annl Rev			0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Piedmont Triad	RSF			267,122			2,066,374			637,071			541,178			1,980,131
	% of Total Industrial RSF			3.1	%		23.6	%		7.3	%		6.2	%		22.6	%
	Annualized Revenue	2/	$	993		$	7,265		$	2,704		$	2,138		$	9,156
	% of Total Industrial Annl Rev			2.5	%		18.0	%		6.7	%		5.3	%		22.7	%
Research Triangle	RSF			12,859			16,096			35,461			2,339			19,745
	% of Total Industrial RSF			0.1	%		0.2	%		0.4	%		0.0	%		0.2	%
	Annualized Revenue	2/	$	134		$	143		$	304		$	23		$	200
	% of Total Industrial Annl Rev			0.3	%		0.4	%		0.8	%		0.1	%		0.5	%
Richmond	RSF			55,068			40,082			41,185			61,867			183,400
	% of Total Industrial RSF			0.6	%		0.5	%		0.5	%		0.7	%		2.1	%
	Annualized Revenue	2/	$	273		$	233		$	225		$	299		$	934
	% of Total Industrial Annl Rev			0.7	%		0.6	%		0.6	%		0.7	%		2.3	%
Total	RSF			544,587			2,754,339			1,258,609			977,099			3,222,246
	% of Total Industrial RSF			6.2	%		31.5	%		14.4	%		11.2	%		36.8	%
	Annualized Revenue	2/	$	2,819		$	11,121		$	6,118		$	4,814		$	15,418
	% of Total Industrial Annl Rev			7.0	%		27.6	%		15.2	%		11.9	%		38.3	%

1/ Includes 282,000 square feet of leases that are on a month to month basis or 0.3% of total annualized revenue

2/ Annualized Revenue is September 2003 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 25

Customer Diversification

September 30, 2003

Dollars in thousands

Top 20 Customers

Customer	Number Of Leases	RSF	Annualized Revenue 1/		Percent of Annualized Revenue 1/		Average Remaining Lease Term in Years
Federal Government	60	626,943	$	12,948	2.99	%	5.1
AT&T	8	612,092		11,493	2.65	%	4.2
Price Waterhouse Coopers	6	297,795		6,879	1.59	%	6.6
State Of Georgia	10	359,565		6,858	1.58	%	5.6
Sara Lee	10	1,230,534		4,789	1.11	%	1.8
IBM	7	215,737		4,566	1.05	%	2.0
Volvo	7	264,717		3,721	0.86	%	5.5
Bell South	7	175,106		3,654	0.84	%	1.1
Northern Telecom	1	246,000		3,651	0.84	%	4.4
Lockton Companies	10	132,718		3,294	0.76	%	11.4
US Airways	5	295,046		3,216	0.74	%	4.2
BB&T	8	241,075		3,167	0.73	%	7.4
Bank of America	23	146,842		2,979	0.69	%	3.5
Business Telecom	5	147,379		2,945	0.68	%	1.7
WorldCom and Affiliates	13	144,623		2,858	0.66	%	2.6
T-Mobile USA	3	120,561		2,806	0.65	%	2.7
Ikon	7	181,361		2,530	0.58	%	4.1
Carlton	2	95,771		2,435	0.56	%	0.8
Ford Motor Company	2	125,989		2,425	0.56	%	6.4
CHS Professional Services	17	138,888		2,314	0.53	%	3.4
	211	5,798,742	$	89,528	20.65	%	4.4

By Industry

Category	Percent of Annualized Revenue 1/
Professional, Scientific, and Technical Services	21.9%
Insurance	9.8%
Manufacturing	9.4%
Telecommunication	8.5%
Finance/Banking	7.8%
Retail Trade	7.4%
Administrative and Support Services	5.5%
Health Care and Social Assistance	5.0%
Wholesale Trade	5.0%
Government/Public Administration	4.8%
Transportation and Warehousing	3.2%
Real Estate Rental and Leasing	2.9%
Information	2.8%
Accommodation and Food Services	2.7%
Other Services (except Public Administration)	2.5%
Educational Services	0.8%
	100.0%

1/ Annualized Revenue is September 2003 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 26

Same Property Performance

Dollars in thousands

	Includes Highwoods Preserve 1/								Excludes Highwoods Preserve 1/
	Three months ended September 30,						Percentage Change		Three months ended September 30,						Percentage Change
	2003			2002					2003			2002
Rental revenues	$	100,461		$	107,334		-6.4	%	$	100,465		$	103,660		-3.1	%
Operating expenses		(34,827	)		(34,584	)	-0.7	%		(34,170	)		(33,808	)	-1.1	%
Net operating income	$	65,634		$	72,750		-9.8	%	$	66,295		$	69,852		-5.1	%
Average Occupancy		83.9	%		87.4	%	-4.0	%		86.0	%		87.0	%	-1.1	%
Rentable Square Feet		33,793,000			33,793,000					32,977,000			32,977,000

	Nine months ended September 30,						Percentage Change		Nine months ended September 30,						Percentage Change
	2003			2002					2003			2002
Rental revenues	$	303,020		$	323,120		-6.2	%	$	303,029		$	312,138		-2.9	%
Operating expenses		(103,532	)		(101,246	)	-2.3	%		(101,672	)		(99,753	)	-1.9	%
Net operating income	$	199,488		$	221,874		-10.1	%	$	201,357		$	212,385		-5.2	%
Average Occupancy		84.2	%		88.3	%	-4.6	%		86.4	%		88.0	%	-1.8	%
Rentable Square Feet		33,793,000			33,793,000					32,977,000			32,977,000

	Includes Highwoods Preserve 1/				Excludes Highwoods Preserve 1/
Market	2002 to 2003 3rd Quarter NOI Change		2002 to 2003 YTD NOI Change		2002 to 2003 3rd Quarter NOI Change		2002 to 2003 YTD NOI Change
Atlanta	-11.3	%	-12.2	%	-11.3	%	-12.2	%
Charlotte	-19.5	%	-13.1	%	-19.5	%	-13.1	%
Columbia	-21.2	%	-18.7	%	-21.2	%	-18.7	%
Greenville	3.7	%	2.5	%	3.7	%	2.5	%
Kansas City	-2.8	%	3.7	%	-2.8	%	3.7	%
Memphis	-9.9	%	-8.8	%	-9.9	%	-8.8	%
Nashville	4.3	%	2.2	%	4.3	%	2.2	%
Orlando	6.3	%	-0.3	%	6.3	%	-0.3	%
Piedmont Triad	-0.9	%	-5.6	%	-0.9	%	-5.6	%
Research Triangle	-7.6	%	-7.5	%	-7.6	%	-7.5	%
Richmond	-0.1	%	-0.4	%	-0.1	%	-0.4	%
Tampa	-37.5	%	-40.3	%	-6.3	%	-8.2	%
	-9.8	%	-10.1	%	-5.1	%	-5.2	%

1/ Highwoods Preserve is the 816,000 square foot office campus in Tampa that Worldcom vacated 12/31/02.

Page 27

Acquisition Activity

Dollars in thousands

Name	Market	Type 1/	Date Acquired	Square Footage	Cost
First quarter 2003:
Colonade	Richmond	O	01/21/03	66,000	$	7,000
Second quarter 2003:
None
Third quarter 2003:
Highwoods Ctr at Deerfield I	Atlanta	O	07/29/03	50,000
Highwoods Ctr at Deerfield II	Atlanta	O	07/29/03	67,000
HIW Ctr II at Peachtree Corners	Atlanta	O	07/29/03	109,000
4101 Research Commons	Research Triangle	O	07/29/03	74,000
4201 Research Commons	Research Triangle	O	07/29/03	90,000
4301 Research Commons	Research Triangle	O	07/29/03	91,000
4501 Research Commons	Research Triangle	O	07/29/03	57,000
Concourse	Research Triangle	O	07/29/03	132,000
Lake Plaza East	Research Triangle	O	07/29/03	72,000
Situs I	Research Triangle	O	07/29/03	59,000
Situs II	Research Triangle	O	07/29/03	60,000
Situs III	Research Triangle	O	07/29/03	39,000
Anchor Glass Building	Tampa	O	07/29/03	100,000
Bayshore Place	Tampa	O	07/29/03	83,000
Tower Place	Tampa	O	07/29/03	182,000
Subtotal				1,265,000	$	137,350	2	/
HIW Ctr III at Peachtree Corners	Atlanta	O	07/29/03	54,000	$	2,149	3	/
				1,385,000	$	146,499

1/ The letter “O” represents Office

2/ We purchased our partner’s 80% interest in these MG-HIW properties.

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

Page 28

Disposition Activity

Dollars in thousands

Name	Market	Type 1/	Date Sold	Square Footage	Sales Price
First quarter 2003:
none
Second quarter 2003:
Greenbriar Business Center	Hampton Roads	O	04/07/03	81,000	$	7,000
Madison Park – Building 5610	Piedmont Triad	O	04/14/03	3,000		775
Highwoods Plaza	Tampa	O	04/30/03	66,000		7,050
Summit Executive Centre	Tampa	O	05/01/03	36,000		2,900
Aspen, Cypress, Cedar East and Cedar West	Research Triangle	O	06/26/03	156,000		11,425
Third quarter 2003:
5125 Fulton Industrial Blvd	Atlanta	I	07/10/03	149,000		4,788
Capital One	Richmond	O	07/16/03	298,000		38,122
Bay View Office Centre	Tampa	O	07/23/03	73,000		7,400
Verizon Wireless	Greenville	O	07/31/03	193,000		21,502
Countryside Place	Tampa	O	08/29/03	54,000		5,650
Interlachen Village	Orlando	O	09/16/03	41,000		3,900
Holden Road	Piedmont Triad	I	09/30/03	160,000		5,800
				1,310,000	$	116,312

Assets Contributed to Joint Ventures

	Market	Type 1/	Date Contributed	Square Footage	Sales Price
First quarter 2003:
none
Second quarter 2003:
none
Third quarter 2003:
none

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

Page 29

Development Activity

Dollars in thousands

Property	Market	Type 1/	Rentable Square Feet	Anticipated Total Investment		Investment @ 09/30/03		Pre- Leasing	Estimated Completion Date	Estimated Stabilization Date
In-Process
NARA	Atlanta	I	350,000	$	20,345	$	1,209	100%	3Q04	4Q04
			350,000	$	20,345	$	1,209	100%
Completed Not Stabilized 2/
Catawba	Research Triangle	O	40,000	$	4,030	$	2,908	0%	2Q03	2Q04
801 Raleigh Corporate Center	Research Triangle	O	100,000		12,016		10,451	42%	4Q02	2Q04
Tradeport V	Atlanta	I	60,000		2,913		2,776	30%	4Q02	4Q03
Total or Weighted Average			200,000	$	18,959	$	16,135	30%

Developed for Sale

	Market	Type 1/	Rentable Square Feet	Anticipated Total Investment		Investment @ 09/30/03		Pre- Sales	Estimated Completion Date
Grove Park Condominiums	Richmond	O	65,000	$	6,163	$	1,500	66%	Q104

Placed in Service

Property	Market	Type 1/	In-Service Date	Rentable Square Feet	Investment @ 09/30/03		Quarter 3 2003 NOI 3/	Occ %		Leasing %
Seven Springs I	Nashville	O	3/31/2003	131,000	$	15,649	$313	67	%	76%

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

2/ These properties contributed $273,000 in Net Operating Income (Property Revenue – Property Expense) in Q3 2003.

3/ NOI = Net Operating Income (Property Revenue – Property Expense)

Page 30

Development Land

September 30, 2003

Dollars in thousands

		Developable Square Footage			Total Estimated Market Value
Market	Acres	Office	Retail	Industrial
On Balance Sheet:
Research Triangle	415	3,100,000	—	162,000	$	66,500
Atlanta	258	270,000	1,100,000	1,040,000		35,300
Piedmont Triad	166	787,000	37,000	1,252,000		18,300
Kansas City 1/	98	725,000	216,000	—		20,200
Baltimore	97	1,102,000	—	—		12,300
Richmond	93	688,000	—	700,000		15,900
Charlotte	79	1,231,000	—	—		13,400
Nashville	50	830,000	—	—		11,800
Orlando	43	862,000	—	—		13,700
Tampa	32	522,000	—	15,000		5,400
Memphis	22	288,000	—	—		4,200
Greenville	12	150,000	—	—		1,800
Jacksonville	10	80,000	—	—		1,100
Columbia	2	20,000	—	—		300
	1,377	10,655,000	1,353,000	3,169,000	$	220,200
Deferred or optioned:
Atlanta	25	—	500,000	—
Research Triangle	25	562,870	—	—
Richmond	11	91,000	—	—
	61	653,870	500,000	—
Total	1,438	11,308,870	1,853,000	3,169,000

1/ Includes 27 acres of residential land

Page 31

Unconsolidated Joint Ventures Assets, Debt and Liabilities

September 30, 2003

Dollars in thousands

				Venture’s Books
Joint Venture	Type 1/	Own %		Total Assets		Debt		Total Liabilities
Dallas County Partners I, LP	O/ I	50.0	%	$	41,799	$	38,234	$	40,573
Dallas County Partners II, LP	O	50.0	%		18,085		22,756		23,786
Dallas County Partners III, LP	O	50.0	%		74		—		33
Fountain Three	O/ I / R	50.0	%		34,368		30,191		32,058
RRHWoods , LLC	O/ M	50.0	%		80,975		66,499		69,478
Highwoods DLF 98/29	O	22.8	%		140,708		67,489		69,881
Highwoods DLF 97/26 DLF 99/32	O	42.9	%		116,637		59,197		61,702
MG-HIW, LLC	O	20.0	%		198,018		136,207		142,144
MG-HIW Metrowest I, LLC	O	50.0	%		1,601		—		22
MG-HIW Metrowest II, LLC	O	50.0	%		10,329		6,257		6,529
4600 Madison Assoc., LP	O	12.5	%		22,400		16,891		17,547
Board of Trade Investment Co.	O	49.0	%		8,083		792		1,141
Concourse Center Assoc., LLC	O	50.0	%		14,560		9,737		10,025
Plaza Colonnade, LLC	O/R	50.0	%		19,226		9,936		10,577
Highwoods-Markel Assoc., LLC	O	50.0	%		15,625		11,588		12,023
SF-HIW Harborview Plaza, LP	O	20.0	%		40,586		22,800		24,681
Kessinger/Hunter, LLC	—	26.5	%		8,337		—		284
Total				$	771,411	$	498,574	$	522,484

				Highwoods’ Share of Joint Venture
Joint Venture	Type 1/	Own %		Total Assets		Debt		Total Liabilities
Dallas County Partners I, LP	O/ I	50.0	%	$	20,900	$	19,117	$	20,287
Dallas County Partners II, LP	O	50.0	%		9,043		11,378		11,893
Dallas County Partners III, LP	O	50.0	%		37		—		17
Fountain Three	O/ I / R	50.0	%		17,184		15,096		16,029
RRHWoods , LLC	O/M	50.0	%		40,488		33,250		34,739
Highwoods DLF 98/29	O	22.8	%		32,095		15,394		15,940
Highwoods DLF 97/26 DLF 99/32	O	42.9	%		50,072		25,413		26,489
MG-HIW, LLC	O	20.0	%		39,604		27,241		28,429
MG-HIW Metrowest I, LLC	O	50.0	%		801		—		11
MG-HIW Metrowest II, LLC	O	50.0	%		5,165		3,129		3,265
4600 Madison Assoc., LP	O	12.5	%		2,800		2,111		2,193
Board of Trade Investment Co.	O	49.0	%		3,961		388		559
Concourse Center Assoc., LLC	O	50.0	%		7,280		4,869		5,013
Plaza Colonnade, LLC	O/R	50.0	%		9,613		4,968		5,289
Highwoods-Markel Assoc., LLC	O	50.0	%		7,813		5,794		6,012
SF-HIW Harborview Plaza, LP	O	20.0	%		8,117		4,560		4,936
Kessinger/Hunter, LLC	—	26.5	%		2,209		—		75
Total				$	257,182	$	172,708	$	181,176

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

Page 32

Unconsolidated Joint Ventures Income

For the Three Months Ended September 30, 2003

Dollars in thousands

			Venture’s Books
Joint Venture	Own %		Revenue		Oper Exp		Interest		Depr/Amort		Net Income
Dallas County Partners I, LP	50.0	%	$	2,512	$	1,340	$	690	$	432	$	50
Dallas County Partners II, LP	50.0	%		1,455		620		585		206		44
Dallas County Partners III, LP	50.0	%		61		38		—		1		22
Fountain Three	50.0	%		1,612		832		546		364		(130	)
RRHWoods , LLC	50.0	%		3,970		1,945		633		839		553
Highwoods DLF 98/29	22.8	%		4,818		1,395		1,145		864		1,414
Highwoods DLF 97/26 DLF 99/32	42.9	%		3,976		1,130		1,146		972		728
MG-HIW, LLC	20.0	%		8,288		3,279		1,559		1,566		1,884
MG-HIW Metrowest I, LLC	50.0	%		—		10		—		—		(10	)
MG-HIW Peachtree Corners III, LLC	50.0	%		44		14		10		33		(13	)
MG-HIW Metrowest II, LLC	50.0	%		175		102		42		90		(59	)
4600 Madison Assoc., LP	12.5	%		1,282		519		293		444		26
Board of Trade Investment Co.	49.0	%		553		400		16		104		33
Concourse Center Assoc., LLC	50.0	%		528		132		172		76		148
Highwoods-Markel Assoc., LLC	50.0	%		826		439		243		165		(21	)
Kessinger/Hunter, LLC	26.5	%		1,581		1,140		—		209		232
SF-HIW Harborview Plaza, LP	20.0	%		1,402		438		351		217		396
Plaza Colonnade, LLC	50.0	%		2		2		—		1		(1	)
Total			$	33,085	$	13,775	$	7,431	$	6,583	$	5,296

			Highwoods’ Share of Joint Venture
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Dallas County Partners I, LP	50.0	%	$	1,256	$	669	$	345	$	216	$	26
Dallas County Partners II, LP	50.0	%		728		310		293		103		22
Dallas County Partners III, LP	50.0	%		31		19		—		1		11
Fountain Three	50.0	%		806		416		273		182		(65	)
RRHWoods , LLC	50.0	%		1,985		972		317		419		277
Highwoods DLF 98/29	22.8	%		1,099		318		261		197		323
Highwoods DLF 97/26 DLF 99/32	42.9	%		1,707		485		492		416		314
MG-HIW, LLC	20.0	%		1,658		655		312		312		379
MG-HIW Metrowest I, LLC	50.0	%		—		5		—		—		(5	)
MG-HIW Peachtree Corners III, LLC	50.0	%		22		7		5		17		(7	)
MG-HIW Metrowest II, LLC	50.0	%		88		51		21		45		(29	)
4600 Madison Assoc., LP	12.5	%		160		65		37		56		2
Board of Trade Investment Co.	49.0	%		271		196		8		51		16
Concourse Center Assoc., LLC	50.0	%		264		66		86		38		74
Highwoods-Markel Assoc., LLC	50.0	%		413		220		122		83		(12	)
Kessinger/Hunter , LLC	26.5	%		419		302		—		55		62
SF-HIW Harborview Plaza, LP	20.0	%		280		88		70		43		79
Plaza Colonnade, LLC	50.0	%		1		1		—		1		(1	)
Total 1/			$	11,188	$	4,845	$	2,642	$	2,235	$	1,466

1/ Highwoods’ Share of JV income shown above does not include the amortization of a $160K deferred gain.

Page 33

Unconsolidated Joint Ventures Income

For the Nine Months Ended September 30, 2003

Dollars in thousands

			Venture’s Books
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Dallas County Partners I, LP	50.0	%	$	7,749	$	4,022	$	2,079	$	1,412	$	236
Dallas County Partners II, LP	50.0	%		4,579		1,914		1,775		617		273
Dallas County Partners III, LP	50.0	%		205		113		—		3		89
Fountain Three	50.0	%		5,174		2,346		1,687		1,160		(19	)
RRHWoods , LLC	50.0	%		10,918		5,551		1,979		2,545		843
Highwoods DLF 98/29	22.8	%		14,492		4,142		3,448		2,592		4,310
Highwoods DLF 97/26 DLF 99/32	42.9	%		12,082		3,345		3,448		2,979		2,310
MG-HIW, LLC 1/	20.0	%		32,862		12,254		6,202		6,295		8,111
MG-HIW Metrowest I, LLC	50.0	%		—		26		—		—		(26	)
MG-HIW Peachtree Corners III, LLC	50.0	%		219		75		73		76		(5	)
MG-HIW Metrowest II, LLC	50.0	%		441		325		124		252		(260	)
4600 Madison Assoc., LP	12.5	%		4,122		1,597		888		1,331		306
Board of Trade Investment Co.	49.0	%		1,768		1,191		50		304		223
Concourse Center Assoc., LLC	50.0	%		1,556		401		518		227		410
Highwoods-Markel Assoc., LLC	50.0	%		2,462		1,300		800		464		(102	)
Kessinger/Hunter, LLC	26.5	%		4,513		3,536		—		540		437
SF-HIW Harborview Plaza, LP	20.0	%		4,208		1,288		1,052		650		1,218
Plaza Colonnade, LLC	50.0	%		10		2		—		3		5
Total			$	107,360	$	43,428	$	24,123	$	21,450	$	18,359

			Highwoods’ Share of Joint Venture
Joint Venture	Own %		Revenue		Operating Exp		Interest		Depr/Amort		Net Income
Dallas County Partners I, LP	50.0	%	$	3,875	$	2,011	$	1,040	$	706	$	118
Dallas County Partners II, LP	50.0	%		2,290		957		888		309		136
Dallas County Partners III, LP	50.0	%		103		57		—		2		44
Fountain Three	50.0	%		2,587		1,173		844		580		(10	)
RRHWoods , LLC	50.0	%		5,460		2,734		990		1,315		421
Highwoods DLF 98/29	22.8	%		3,306		945		786		591		984
Highwoods DLF 97/26 DLF 99/32	42.9	%		5,188		1,437		1,480		1,278		993
MG-HIW, LLC 1/	20.0	%		6,573		2,452		1,240		1,258		1,623
MG-HIW Metrowest I, LLC	50.0	%		—		13		—		—		(13	)
MG-HIW Peachtree Corners III, LLC	50.0	%		110		38		37		38		(3	)
MG-HIW Metrowest II, LLC	50.0	%		221		163		62		126		(130	)
4600 Madison Assoc., LP	12.5	%		515		200		111		166		38
Board of Trade Investment Co. 2/	49.0	%		866		584		25		149		108
Concourse Center Assoc., LLC	50.0	%		778		201		259		114		204
Highwoods-Markel Assoc., LLC	50.0	%		1,231		650		400		232		(51	)
Kessinger/Hunter, LLC	26.5	%		1,196		937		—		143		116
SF-HIW Harborview Plaza, LP	20.0	%		842		258		210		130		244
Plaza Colonnade, LLC	50.0	%		5		1		—		2		2
Total 3/			$	35,146	$	14,811	$	8,372	$	7,139	$	4,824

1/ Net income EXCLUDES a $12.1MM impairment charge at the partnership level of which Highwoods’ share is $2.4MM.

2/ Excludes a $6K audit adjustment to reduce the provision for income taxes related to a prior year

3/ Highwoods’ Share of JV income shown above does not include the amortization of a $485K deferred gain.

Page 34

Unconsolidated Joint Ventures Long-Term Debt Detail

Dollars in thousands

Joint Venture	Own %		Lender	Interest Rate		Maturity Date	Loan Balance 09/30/03
Dallas County Partners I, LP	50.0	%	various 1/	7.2	%	various 1/	$	38,234
Dallas County Partners II, LP	50.0	%	Principal Life Insurance Company	10.2	%	Jun-13		22,756
Fountain Three	50.0	%	John Hancock Life Insurance Co.	7.8	%	Jan-08		6,240
	50.0	%	various 2/	7.5	%	various 2/		23,951
Total Fountain Three				7.5	%			30,191
RRHWoods, LLC	50.0	%	Industrial Revenue Bonds	1.0	% 3/	Nov-15		23,000
	50.0	%	Bank of America	6.8	%	Sep-12		8,410
	50.0	%	Bank of America	6.8	%	Sep-12		6,415
	50.0	%	Industrial Revenue Bonds	1.0	% 3/	Sep-15		6,000
	50.0	%	various 4/	5.22	% 3/	various 4/		22,674
Total RRHWoods, LLC				3.7	%			66,499
Highwoods DLF 98/29	22.8	%	USG Annuity & Life Company	6.8	%	May-11		67,489
Highwoods DLF 97/26 DLF 99/32	42.9	%	Massachusetts Mutual Life Ins. Co.	7.7	%	May-12		59,197
MG-HIW, LLC	20.0	%	GE Capital	3.1	% 3/	Jan-06		136,207
MG-HIW Metrowest II, LLC	50.0	%	Wachovia	2.7	% 3/	Feb-05		6,257
4600 Madison Assoc., LP	12.5	%	State Farm	6.9	%	Apr-18		16,891
Board of Trade Investment Co.	49.0	%	KC Board of Trade Clearing Corp.	7.8	%	Sep-07		792
Concourse Center Assoc., LLC	50.0	%	Lincoln National Life Insurance Co.	7.0	%	Jul-10		9,737
Highwoods-Markel Assoc., LLC	50.0	%	First Community Bank	7.9	%	Apr-11		9,968
	50.0	%	First Community Bank	8.6	%	Apr-10		1,620
Total Highwoods-Markel Assoc., LLC				8.0	%			11,588
SF-HIW Harborview Plaza, LP	20.0	%	Met Life	6.1	%	Oct-12		22,800
Plaza Colonnade, LLC	50.0	%	Wells Fargo	3.2	%	Feb-06		9,936
Total Secured Loans							$	498,574
Highwoods’ Share of the above							$	172,708

1/ Includes 15 fixed rate loans under $4 million with maturities ranging from January 2006 to July 2011

2/ Includes 6 fixed rate loans under $6 million with maturities ranging from May 2008 to September 2012

3/ The floating rate loans’ interest rates are based on September 30, 2003’s rates.

4/ Includes 5 fixed rate loans under $6 million maturing between October 2007 to September 2012 and a floating rate loan under $6 million that matures in November 2015

Page 35

Portfolio Summary Unconsolidated Joint Ventures

As of September 30, 2003

Summary by Location:
Market	Rentable Square Feet 1/	Occupancy 2/		Percentage of Annualized Revenue – Highwoods’ Share Only 3/
				Office		Industrial		Retail		Multi-Family		Total
Des Moines	2,245,000	92.5	%	35.4	%	4.4	%	1.3	%	5.2	%	46.3	%
Orlando	1,764,000	84.8	%	19.6	%	—		—		—		19.6	%
Atlanta	650,000	85.7	%	12.8	%	—		—		—		12.8	%
Research Triangle	455,000	98.7	%	4.5	%	—		—		—		4.5	%
Kansas City	427,000	87.4	%	4.7	%	—		—		—		4.7	%
Piedmont Triad	364,000	100.0	%	5.1	%	—		—		—		5.1	%
Tampa	205,000	92.1	%	2.6	%	—		—		—		2.6	%
Charlotte	148,000	100.0	%	1.0	%	—		—		—		1.0	%
Richmond	121,000	100.0	%	2.7	%	—		—		—		2.7	%
Other	110,000	100.0	%	0.7	%	—		—		—		0.7	%
Total	6,489,000	90.7	%	89.1	%	4.4	%	1.3	%	5.2	%	100.0	%

1/ Excludes Des Moines’ apartment units

2/ Excludes Des Moines’ apartment occupancy percentage of 90%

3/ Annualized Rental Revenue is September 2003 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 36

Unconsolidated Joint Ventures Lease Expirations

September 30, 2003

Dollars in thousands

Year	Number of Leases	Rentable Square Feet Expiring	Percent of Rentable Square Feet		Annualized Revenue 1/		Average Rental Rate		Percent of Annualized Revenue 1/
Total
Remainder of 2003	61	180,018	3.0	%	$	3,761	$	20.89	3.5	%
2004	80	443,284	7.5	%		8,878		20.03	8.2	%
2005	101	696,031	11.7	%		11,977		17.21	11.1	%
2006	93	885,242	14.9	%		13,786		15.57	12.7	%
2007	45	297,388	5.0	%		5,804		19.52	5.4	%
2008	59	1,024,449	17.2	%		15,944		15.56	14.7	%
2009	17	577,365	9.7	%		11,165		19.34	10.3	%
2010	20	285,639	4.8	%		5,172		18.11	4.8	%
2011	12	427,781	7.2	%		9,134		21.35	8.5	%
2012	16	295,741	5.0	%		6,833		23.11	6.3	%
2013 and thereafter	25	831,285	14.0	%		15,627		18.80	14.5	%
	529	5,944,223	100.0	%	$	108,081	$	18.18	100.0	%

1/ Annualized Revenue is September 2003 rental revenue (base rent plus operating expense pass throughs) multiplied by 12.

Page 37

Unconsolidated Joint Ventures Development

Dollars in thousands

Property	% Ownership		Market	Rentable Square Feet	Anticipated Total Investment		Investment @ 09/30/03		Pre- Leasing		Estimated Completion Date	Estimated Stabilization Date
Plaza Colonade, LLC 1/	50	%	Kansas City	285,000	$	69,700	$	18,968	59	%	Q304	Q305
Highwoods’ Share of the above				142,500	$	34,850	$	9,484	59	%

1/ Includes $14.1 million in investment cost that will be funded by tax increment financing

Page 38