HIGHWOODS PROPERTIES, INC., 10-Q filed on 4/24/2018
Quarterly Report
v3.8.0.1
Document and Entity Information Document - shares
3 Months Ended
Mar. 31, 2018
Apr. 17, 2018
Entity Information [Line Items]    
Entity Registrant Name HIGHWOODS PROPERTIES INC.  
Entity Central Index Key 0000921082  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Document Type 10-Q  
Document Period End Date Mar. 31, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   103,421,754
Highwoods Realty Limited Partnership [Member]    
Entity Information [Line Items]    
Entity Registrant Name HIGHWOODS REALTY LIMITED PARTNERSHIP  
Entity Central Index Key 0000941713  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Document Type 10-Q  
Document Period End Date Mar. 31, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
Amendment Flag false  
v3.8.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Real estate assets, at cost:    
Land $ 485,956 $ 485,956
Buildings and tenant improvements 4,617,003 4,590,490
Development in-process 131,671 88,452
Land held for development 125,841 74,765
Total real estate assets 5,360,471 5,239,663
Less-accumulated depreciation (1,239,383) (1,202,424)
Net real estate assets 4,121,088 4,037,239
Real estate and other assets, net, held for sale 14,017 14,118
Cash and cash equivalents 31,034 3,272
Restricted cash 36,848 85,061
Accounts receivable, net of allowance of $784 and $753, respectively 22,943 24,397
Mortgages and notes receivable, net of allowance of $69 and $72, respectively 6,158 6,425
Accrued straight-line rents receivable, net of allowance of $909 and $819, respectively 206,698 200,131
Investments in and advances to unconsolidated affiliates 23,095 23,897
Deferred leasing costs, net of accumulated amortization of $146,909 and $143,512, respectively 196,302 200,679
Prepaid expenses and other assets, net of accumulated depreciation of $19,860 and $19,092, respectively 37,272 28,572
Total Assets 4,695,455 4,623,791
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,112,584 2,014,333
Accounts payable, accrued expenses and other liabilities 206,258 228,215
Total Liabilities 2,318,842 2,242,548
Commitments and contingencies
Noncontrolling interests in the Operating Partnership 123,113 144,009
Equity/Capital:    
Preferred Stock, $.01 par value, 50,000,000 authorized shares; 8.625% Series A Cumulative Redeemable Preferred Shares (liquidation preference $1,000 per share), 28,887 and 28,892 shares issued and outstanding, respectively 28,887 28,892
Common Stock, $.01 par value, 200,000,000 authorized shares; 103,421,754 and 103,266,875 shares issued and outstanding, respectively 1,034 1,033
Additional paid-in capital 2,953,148 2,929,399
Distributions in excess of net income available for common stockholders (762,642) (747,344)
Accumulated other comprehensive income 15,609 7,838
Total Stockholders’ Equity 2,236,036 2,219,818
Noncontrolling interests in consolidated affiliates 17,464 17,416
Total Equity/Capital 2,253,500 2,237,234
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital 4,695,455 4,623,791
Highwoods Realty Limited Partnership [Member]    
Real estate assets, at cost:    
Land 485,956 485,956
Buildings and tenant improvements 4,617,003 4,590,490
Development in-process 131,671 88,452
Land held for development 125,841 74,765
Total real estate assets 5,360,471 5,239,663
Less-accumulated depreciation (1,239,383) (1,202,424)
Net real estate assets 4,121,088 4,037,239
Real estate and other assets, net, held for sale 14,017 14,118
Cash and cash equivalents 31,034 3,272
Restricted cash 36,848 85,061
Accounts receivable, net of allowance of $784 and $753, respectively 22,943 24,397
Mortgages and notes receivable, net of allowance of $69 and $72, respectively 6,158 6,425
Accrued straight-line rents receivable, net of allowance of $909 and $819, respectively 206,698 200,131
Investments in and advances to unconsolidated affiliates 23,095 23,897
Deferred leasing costs, net of accumulated amortization of $146,909 and $143,512, respectively 196,302 200,679
Prepaid expenses and other assets, net of accumulated depreciation of $19,860 and $19,092, respectively 37,272 28,572
Total Assets 4,695,455 4,623,791
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,112,584 2,014,333
Accounts payable, accrued expenses and other liabilities 206,258 228,215
Total Liabilities 2,318,842 2,242,548
Commitments and contingencies
Redeemable Operating Partnership Units:    
Common Units, 2,809,508 and 2,828,704 outstanding, respectively 123,113 144,009
Series A Preferred Units (liquidation preference $1,000 per unit), 28,887 and 28,892 units issued and outstanding, respectively 28,887 28,892
Total Redeemable Operating Partnership Units 152,000 172,901
Equity/Capital:    
General partner Common Units, 1,058,225 and 1,056,868 outstanding, respectively 21,915 21,830
Limited partner Common Units, 101,954,720 and 101,801,198 outstanding, respectively 2,169,625 2,161,258
Accumulated other comprehensive income 15,609 7,838
Noncontrolling interests in consolidated affiliates 17,464 17,416
Total Equity/Capital 2,224,613 2,208,342
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital $ 4,695,455 $ 4,623,791
v3.8.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2018
Dec. 31, 2017
Assets:    
Accounts receivable allowance $ 784 $ 753
Mortgages and notes receivable allowance 69 72
Accrued straight-line rents receivable allowance 909 819
Deferred leasing costs, accumulated amortization 146,909 143,512
Prepaid expenses and other assets, accumulated depreciation $ 19,860 $ 19,092
Equity/Capital:    
Series A Preferred Stock, dividend rate percentage (in hundredths) 8.625% 8.625%
Series A Preferred Stock, par value (in dollars per share) $ 0.01 $ 0.01
Series A Preferred Stock, authorized shares (in shares) 50,000,000 50,000,000
Series A Preferred Stock, liquidation preference (in dollars per share) $ 1,000 $ 1,000
Series A Preferred Stock, shares issued (in shares) 28,887 28,892
Series A Preferred Stock, shares outstanding (in shares) 28,887 28,892
Common Stock, par value (in dollars per share) $ 0.01 $ 0.01
Common Stock, authorized shares (in shares) 200,000,000 200,000,000
Common Stock, shares issued (in shares) 103,421,754 103,266,875
Common Stock, shares outstanding (in shares) 103,421,754 103,266,875
Highwoods Realty Limited Partnership [Member]    
Assets:    
Accounts receivable allowance $ 784 $ 753
Mortgages and notes receivable allowance 69 72
Accrued straight-line rents receivable allowance 909 819
Deferred leasing costs, accumulated amortization 146,909 143,512
Prepaid expenses and other assets, accumulated depreciation $ 19,860 $ 19,092
Redeemable Operating Partnership Units: [Abstract]    
Redeemable Common Units outstanding (in shares) 2,809,508 2,828,704
Series A Preferred Units, liquidation preference (in dollars per share) $ 1,000 $ 1,000
Series A Preferred Units, issued (in shares) 28,887 28,892
Series A Preferred Units, outstanding (in shares) 28,887 28,892
Common Units: [Abstract]    
General partners' capital account, units outstanding (in shares) 1,058,225 1,056,868
Limited partners' capital account, units outstanding (in shares) 101,954,720 101,801,198
v3.8.0.1
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Rental and other revenues $ 180,438 $ 169,408
Operating expenses:    
Rental property and other expenses 59,432 57,396
Depreciation and amortization 57,568 56,145
General and administrative 11,778 11,490
Total operating expenses 128,778 125,031
Interest expense:    
Contractual 17,705 17,023
Amortization of debt issuance costs 686 840
Total interest expense 18,391 17,863
Other income:    
Interest and other income 455 684
Total other income 455 684
Income before disposition of investment properties and activity in unconsolidated affiliates 33,724 27,198
Gains on disposition of property 0 5,332
Equity in earnings of unconsolidated affiliates 522 955
Net income 34,246 33,485
Net (income) attributable to noncontrolling interests in the Operating Partnership (888) (888)
Net (income) attributable to noncontrolling interests in consolidated affiliates (286) (300)
Dividends on Preferred Stock (623) (623)
Net income available for common stockholders $ 32,449 $ 31,674
Earnings per Common Share – basic:    
Net income available for common stockholders (in dollars per share) $ 0.31 $ 0.31
Weighted average Common Shares outstanding - basic (in shares) 103,324 101,738
Earnings per Common Share - diluted:    
Net income available for common stockholders (in dollars per share) $ 0.31 $ 0.31
Weighted average Common Shares outstanding - diluted (in shares) 106,165 104,661
Dividends declared per Common Share (in dollars per share) $ 0.4625 $ 0.440
Highwoods Realty Limited Partnership [Member]    
Rental and other revenues $ 180,438 $ 169,408
Operating expenses:    
Rental property and other expenses 59,432 57,396
Depreciation and amortization 57,568 56,145
General and administrative 11,778 11,490
Total operating expenses 128,778 125,031
Interest expense:    
Contractual 17,705 17,023
Amortization of debt issuance costs 686 840
Total interest expense 18,391 17,863
Other income:    
Interest and other income 455 684
Total other income 455 684
Income before disposition of investment properties and activity in unconsolidated affiliates 33,724 27,198
Gains on disposition of property 0 5,332
Equity in earnings of unconsolidated affiliates 522 955
Net income 34,246 33,485
Net (income) attributable to noncontrolling interests in consolidated affiliates (286) (300)
Distributions on Preferred Units (623) (623)
Net income available for common unitholders $ 33,337 $ 32,562
Earnings per Common Unit - basic:    
Net income available for common unitholders (in dollars per share) $ 0.32 $ 0.31
Weighted average Common Units outstanding - basic (in shares) 105,730 104,167
Earnings per Common Unit - diluted:    
Net income available for common unitholders (in dollars per share) $ 0.32 $ 0.31
Weighted average Common Units outstanding - diluted (in shares) 105,756 104,252
Distributions declared per Common Unit (in dollars per unit) $ 0.4625 $ 0.44
v3.8.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Comprehensive income:    
Net income $ 34,246 $ 33,485
Other comprehensive income:    
Unrealized gains on cash flow hedges 7,877 452
Amortization of cash flow hedges (106) 484
Total other comprehensive income 7,771 936
Total comprehensive income 42,017 34,421
Less-comprehensive (income) attributable to noncontrolling interests (1,174) (1,188)
Comprehensive income attributable to common stockholders/Comprehensive income attributable to common unitholders 40,843 33,233
Highwoods Realty Limited Partnership [Member]    
Comprehensive income:    
Net income 34,246 33,485
Other comprehensive income:    
Unrealized gains on cash flow hedges 7,877 452
Amortization of cash flow hedges (106) 484
Total other comprehensive income 7,771 936
Total comprehensive income 42,017 34,421
Less-comprehensive (income) attributable to noncontrolling interests (286) (300)
Comprehensive income attributable to common stockholders/Comprehensive income attributable to common unitholders $ 41,731 $ 34,121
v3.8.0.1
Consolidated Statements of Equity/Capital - USD ($)
$ in Thousands
Total
Highwoods Realty Limited Partnership [Member]
Common Stock [Member]
Series A Cumulative Redeemable Preferred Shares [Member]
General Partners' Common Units [Member]
Highwoods Realty Limited Partnership [Member]
Limited Partners' Common Units [Member]
Highwoods Realty Limited Partnership [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Highwoods Realty Limited Partnership [Member]
Noncontrolling Interests in Consolidated Affiliates [Member]
Noncontrolling Interests in Consolidated Affiliates [Member]
Highwoods Realty Limited Partnership [Member]
Distributions in Excess of Net Income Available for Common Stockholders [Member]
Balance (in shares) at Dec. 31, 2016     101,665,554                  
Balance at Dec. 31, 2016 $ 2,154,316 $ 2,125,396 $ 1,017 $ 28,920 $ 21,023 $ 2,081,463 $ 2,850,881 $ 4,949 $ 4,949 $ 17,961 $ 17,961 $ (749,412)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   9,134     91 9,043            
Distributions on Common Units   (45,986)     (460) (45,526)            
Distributions on Preferred Units   (623)     (6) (617)            
Issuances of Common Stock, net of issuance costs and tax withholdings - Shares     239,817                  
Issuances of Common Stock, net of issuance costs and tax withholdings 9,134   $ 2       9,132          
Conversions of Common Units to Common Stock - Shares     2,000                  
Conversions of Common Units to Common Stock 102           102          
Dividends on Common Stock (44,917)                     (44,917)
Dividends on Preferred Stock (623)                     (623)
Adjustment of noncontrolling interests in the Operating Partnership to fair value 4,972           4,972          
Distributions to noncontrolling interests in consolidated affiliates (466) (466)               (466) (466)  
Issuances of restricted stock - shares     110,748                  
Issuances of restricted stock 0                      
Redemptions/repurchases of Preferred Stock (15)     (15)                
Share-based compensation expense, net of forfeitures 3,783 3,783 $ 1   38 3,745 3,782          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   5,255     52 5,203            
Net (income) attributable to noncontrolling interests in the Operating Partnership (888)                     (888)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (3) (297)       300 300 (300)
Comprehensive income:                        
Net income 33,485 33,485     335 33,150           33,485
Other comprehensive income 936 936           936 936      
Total comprehensive income 34,421 34,421                    
Balance (in shares) at Mar. 31, 2017     102,018,119                  
Balance at Mar. 31, 2017 $ 2,159,819 2,130,914 $ 1,020 28,905 21,070 2,086,164 2,868,869 5,885 5,885 17,795 17,795 (762,655)
Balance (in shares) at Dec. 31, 2017 103,266,875   103,266,875                  
Balance at Dec. 31, 2017 $ 2,237,234 2,208,342 $ 1,033 28,892 21,830 2,161,258 2,929,399 7,838 7,838 17,416 17,416 (747,344)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   (1,029)     (10) (1,019)            
Distributions on Common Units   (48,858)     (488) (48,370)            
Distributions on Preferred Units   (623)     (6) (617)            
Issuances of Common Stock, net of issuance costs and tax withholdings - Shares     (36,757)                  
Issuances of Common Stock, net of issuance costs and tax withholdings (1,029)   $ 0       (1,029)          
Conversions of Common Units to Common Stock - Shares     19,196                  
Conversions of Common Units to Common Stock 902           902          
Dividends on Common Stock (47,747)                     (47,747)
Dividends on Preferred Stock (623)                     (623)
Adjustment of noncontrolling interests in the Operating Partnership to fair value 19,582           19,582          
Distributions to noncontrolling interests in consolidated affiliates (238) (238)               (238) (238)  
Issuances of restricted stock - shares     172,440                  
Issuances of restricted stock 0                      
Redemptions/repurchases of Preferred Stock (5)     (5)                
Share-based compensation expense, net of forfeitures 4,295 4,295 $ 1   43 4,252 4,294          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   20,707     207 20,500            
Net (income) attributable to noncontrolling interests in the Operating Partnership (888)                     (888)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (3) (283)       286 286 (286)
Comprehensive income:                        
Net income 34,246 34,246     342 33,904           34,246
Other comprehensive income 7,771 7,771           7,771 7,771      
Total comprehensive income $ 42,017 42,017                    
Balance (in shares) at Mar. 31, 2018 103,421,754   103,421,754                  
Balance at Mar. 31, 2018 $ 2,253,500 $ 2,224,613 $ 1,034 $ 28,887 $ 21,915 $ 2,169,625 $ 2,953,148 $ 15,609 $ 15,609 $ 17,464 $ 17,464 $ (762,642)
v3.8.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Operating activities:    
Net income $ 34,246 $ 33,485
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 57,568 56,145
Amortization of lease incentives and acquisition-related intangible assets and liabilities (509) (10)
Share-based compensation expense 4,295 3,783
Allowance for losses on accounts and accrued straight-line rents receivable 227 61
Accrued interest on mortgages and notes receivable (112) (132)
Amortization of debt issuance costs 686 840
Amortization of cash flow hedges (106) 484
Amortization of mortgages and notes payable fair value adjustments 317 (30)
Net gains on disposition of property 0 (5,332)
Equity in earnings of unconsolidated affiliates (522) (955)
Distributions of earnings from unconsolidated affiliates 881 2,431
Settlement of cash flow hedges 7,216 7,322
Changes in operating assets and liabilities:    
Accounts receivable 3,288 3,922
Prepaid expenses and other assets (7,692) (5,959)
Accrued straight-line rents receivable (6,619) (6,185)
Accounts payable, accrued expenses and other liabilities (14,636) (20,951)
Net cash provided by operating activities 78,528 68,919
Investing activities:    
Investments in acquired real estate and related intangible assets, net of cash acquired (50,649) 0
Investments in development in-process (42,438) (59,408)
Investments in tenant improvements and deferred leasing costs (33,071) (24,649)
Investments in building improvements (19,293) (17,194)
Net proceeds from disposition of real estate assets 0 11,532
Distributions of capital from unconsolidated affiliates 105 6,512
Repayments of mortgages and notes receivable 379 1,178
Changes in other investing activities (586) (1,596)
Net cash used in investing activities (145,553) (83,625)
Financing activities:    
Dividends on Common Stock (47,747) (44,917)
Special dividend on Common Stock 0 (81,205)
Redemptions/repurchases of Preferred Stock (5) (15)
Dividends on Preferred Stock (623) (623)
Distributions to noncontrolling interests in the Operating Partnership (1,300) (1,249)
Special distribution to noncontrolling interests in the Operating Partnership 0 (2,271)
Distributions to noncontrolling interests in consolidated affiliates (238) (466)
Proceeds from the issuance of Common Stock 561 13,191
Costs paid for the issuance of Common Stock (46) (250)
Repurchase of shares related to tax withholdings (1,544) (3,807)
Borrowings on revolving credit facility 32,000 200,300
Repayments of revolving credit facility (277,000) (69,300)
Borrowings on mortgages and notes payable 345,863 346,001
Repayments of mortgages and notes payable (444) (380,261)
Changes in debt issuance costs and other financing activities (2,903) (4,894)
Net cash provided by/(used in) financing activities 46,574 (29,766)
Net decrease in cash and cash equivalents and restricted cash (20,451) (44,472)
Cash and cash equivalents and restricted cash at beginning of the period 88,333 78,631
Cash and cash equivalents and restricted cash at end of the period 67,882 34,159
Reconciliation of cash and cash equivalents and restricted cash:    
Cash and cash equivalents at end of the period 31,034 4,918
Restricted cash at end of the period 36,848 29,241
Supplemental disclosure of cash flow information:    
Cash paid for interest, net of amounts capitalized 15,986 18,909
Supplemental disclosure of non-cash investing and financing activities:    
Unrealized gains on cash flow hedges 7,877 452
Conversions of Common Units to Common Stock 902 102
Changes in accrued capital expenditures (7,333) (6,741)
Write-off of fully depreciated real estate assets 10,511 10,649
Write-off of fully amortized leasing costs 7,112 10,091
Write-off of fully amortized debt issuance costs 0 3,161
Adjustment of noncontrolling interests in the Operating Partnership to fair value (19,582) (4,972)
Highwoods Realty Limited Partnership [Member]    
Operating activities:    
Net income 34,246 33,485
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 57,568 56,145
Amortization of lease incentives and acquisition-related intangible assets and liabilities (509) (10)
Share-based compensation expense 4,295 3,783
Allowance for losses on accounts and accrued straight-line rents receivable 227 61
Accrued interest on mortgages and notes receivable (112) (132)
Amortization of debt issuance costs 686 840
Amortization of cash flow hedges (106) 484
Amortization of mortgages and notes payable fair value adjustments 317 (30)
Net gains on disposition of property 0 (5,332)
Equity in earnings of unconsolidated affiliates (522) (955)
Distributions of earnings from unconsolidated affiliates 881 2,431
Settlement of cash flow hedges 7,216 7,322
Changes in operating assets and liabilities:    
Accounts receivable 3,288 3,922
Prepaid expenses and other assets (7,692) (5,959)
Accrued straight-line rents receivable (6,619) (6,185)
Accounts payable, accrued expenses and other liabilities (14,636) (20,951)
Net cash provided by operating activities 78,528 68,919
Investing activities:    
Investments in acquired real estate and related intangible assets, net of cash acquired (50,649) 0
Investments in development in-process (42,438) (59,408)
Investments in tenant improvements and deferred leasing costs (33,071) (24,649)
Investments in building improvements (19,293) (17,194)
Net proceeds from disposition of real estate assets 0 11,532
Distributions of capital from unconsolidated affiliates 105 6,512
Repayments of mortgages and notes receivable 379 1,178
Changes in other investing activities (586) (1,596)
Net cash used in investing activities (145,553) (83,625)
Financing activities:    
Distributions on Common Units (48,858) (45,986)
Special distribution on Common Units 0 (83,149)
Redemptions/repurchases of Preferred Units (5) (15)
Distributions on Preferred Units (623) (623)
Distributions to noncontrolling interests in consolidated affiliates (238) (466)
Proceeds from the issuance of Common Units 561 13,191
Costs paid for the issuance of Common Units (46) (250)
Repurchase of units related to tax withholdings (1,544) (3,807)
Borrowings on revolving credit facility 32,000 200,300
Repayments of revolving credit facility (277,000) (69,300)
Borrowings on mortgages and notes payable 345,863 346,001
Repayments of mortgages and notes payable (444) (380,261)
Changes in debt issuance costs and other financing activities (3,092) (5,401)
Net cash provided by/(used in) financing activities 46,574 (29,766)
Net decrease in cash and cash equivalents and restricted cash (20,451) (44,472)
Cash and cash equivalents and restricted cash at beginning of the period 88,333 78,631
Cash and cash equivalents and restricted cash at end of the period 67,882 34,159
Reconciliation of cash and cash equivalents and restricted cash:    
Cash and cash equivalents at end of the period 31,034 4,918
Restricted cash at end of the period 36,848 29,241
Supplemental disclosure of cash flow information:    
Cash paid for interest, net of amounts capitalized 15,986 18,909
Supplemental disclosure of non-cash investing and financing activities:    
Unrealized gains on cash flow hedges 7,877 452
Changes in accrued capital expenditures (7,333) (6,741)
Write-off of fully depreciated real estate assets 10,511 10,649
Write-off of fully amortized leasing costs 7,112 10,091
Write-off of fully amortized debt issuance costs 0 3,161
Adjustment of Redeemable Common Units to fair value $ (20,896) $ (5,435)
v3.8.0.1
Description of Business and Significant Accounting Policies
3 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business and Significant Accounting Policies
Description of Business and Significant Accounting Policies

Description of Business

Highwoods Properties, Inc. (the “Company”) is a fully integrated real estate investment trust (“REIT”) that provides leasing, management, development, construction and other customer-related services for its properties and for third parties. The Company conducts its activities through Highwoods Realty Limited Partnership (the “Operating Partnership”). At March 31, 2018, we owned or had an interest in 30.7 million rentable square feet of in-service properties, 1.5 million rentable square feet of properties under development and approximately 400 acres of development land.
 
The Company is the sole general partner of the Operating Partnership. At March 31, 2018, the Company owned all of the Preferred Units and 103.0 million, or 97.4%, of the Common Units in the Operating Partnership. Limited partners owned the remaining 2.8 million Common Units. During the three months ended March 31, 2018, the Company redeemed 19,196 Common Units for a like number of shares of Common Stock.

Basis of Presentation
 
Our Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The Company's Consolidated Financial Statements include the Operating Partnership, wholly owned subsidiaries and those entities in which the Company has the controlling interest. The Operating Partnership's Consolidated Financial Statements include wholly owned subsidiaries and those entities in which the Operating Partnership has the controlling interest. All intercompany transactions and accounts have been eliminated.

The unaudited interim consolidated financial statements and accompanying unaudited consolidated financial information, in the opinion of management, contain all adjustments (including normal recurring accruals) necessary for a fair presentation of our financial position, results of operations and cash flows. We have condensed or omitted certain notes and other information from the interim Consolidated Financial Statements presented in this Quarterly Report as permitted by SEC rules and regulations. These Consolidated Financial Statements should be read in conjunction with our 2017 Annual Report on Form 10-K.

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in our Consolidated Financial Statements and accompanying notes. Actual results could differ from those estimates.

Insurance

Beginning in 2018, we are primarily self-insured for health care claims for eligible participating employees. We have stop-loss coverage to limit our exposure to significant claims on a per claim and annual aggregate basis. We determine our liabilities for claims, including incurred but not reported losses, based on all relevant information, including actuarial estimates of claim liabilities. At March 31, 2018, a reserve of $0.4 million was recorded to cover estimated reported and unreported claims.

1.    Description of Business and Significant Accounting Policies – Continued
Recently Issued Accounting Standards
 
The Financial Accounting Standards Board ("FASB") issued an accounting standards update ("ASU") which superseded the revenue recognition requirements under previous guidance. We adopted the ASU on January 1, 2018. Several updates have been issued subsequently which were intended to promote a more consistent interpretation and application of the principles outlined in the ASU. The ASU requires the use of a new five-step model to recognize revenue from contracts with customers. The five-step model requires that we identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when we satisfy the performance obligations. We are also required to disclose information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In analyzing our contracts with customers, we determined that the most material potential impact from the adoption of this ASU would be in how revenue is recognized for sales of real estate with continuing involvement. Prior to the adoption of this ASU, profit for such sales transactions was recognized and then reduced by the maximum exposure to loss related to the nature of the continuing involvement at the time of sale. Upon adoption of this ASU, any continuing involvement must be analyzed as a separate performance obligation in the contract and a portion of the sales price allocated to each performance obligation. When the continuing involvement performance obligation is satisfied, the sales price allocated to it will be recognized. We had no sales of real estate with continuing involvement during the first quarter of 2018 or prior periods; however, we will use such methodology for any future real estate sales with continuing involvement. Our internal controls with respect to accounting for such sales have been updated accordingly. The adoption of this ASU resulted in no other changes with respect to the timing of revenue recognition or internal controls related to our other contracts with customers which include primarily management, development and construction fees and transient parking income, all of which are not material to our Consolidated Financial Statements. As such, there is no cumulative-effect adjustment from the adoption of this ASU reflected in our Consolidated Financial Statements.
 
The FASB issued an ASU that requires entities to show changes in total cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances rather than presented as transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. We adopted the ASU as of January 1, 2018 with retrospective application to our Consolidated Statements of Cash Flows. Accordingly, our Consolidated Statements of Cash Flows present a reconciliation of the changes in cash and cash equivalents and restricted cash. The effect of the adoption resulted in a $0.1 million decrease in net cash used in investing activities for the three months ended March 31, 2017. Restricted cash represents cash deposits that are legally restricted or held by third parties on our behalf, such as construction-related escrows, property disposition proceeds set aside and designated or intended to fund future tax-deferred exchanges of qualifying real estate investments, escrows and reserves for debt service, real estate taxes and property insurance established pursuant to certain mortgage financing arrangements and any deposits made with lenders to unencumber secured properties.
 
The FASB issued an ASU that clarifies and narrows the definition of a business used in determining whether to account for a transaction as an asset acquisition or business combination. The guidance requires evaluation of the fair value of the assets acquired to determine if it is concentrated in a single identifiable asset or a group of similar identifiable assets. If so, the transferred assets would not be a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs. We adopted the ASU prospectively as of January 1, 2018. We expect that the majority of our future acquisitions would not meet the definition of a business; therefore, the related acquisition costs would be capitalized as part of the purchase price.
 
The FASB issued an ASU that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The guidance requires modification accounting if the value, vesting conditions or classification of the award changes. We adopted the ASU as of January 1, 2018 with no effect on our Consolidated Financial Statements.


1.    Description of Business and Significant Accounting Policies – Continued
 
The FASB issued an ASU which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. We are continuing to conduct our analysis of the impact of the guidance on our Consolidated Financial Statements and have an active project team working on the evaluation and implementation of the guidance. We continue to monitor FASB activity with respect to possible amendments to this ASU, particularly the FASB’s recent vote to provide an optional practical expedient to lessors that removes the requirement to separate lease and non-lease components when the pattern of recognition of those components are the same and, when combined as a single unit, those would be classified as operating leases. Should the proposed amendment be issued, we expect to elect the practical expedient as our initial analysis of our leases indicates that the pattern of recognition of our material non-lease components (primarily cost recovery income) are the same as the lease components and will not require the use of the five-step revenue recognition model discussed above. We currently believe that the adoption of the ASU will not significantly change the accounting for operating leases on our Consolidated Balance Sheets where we are the lessor, and that such leases will be accounted for in a similar method to existing standards with the underlying leased asset being reported and recognized as a real estate asset. In addition, the guidance requires lessors to capitalize and amortize only incremental direct leasing costs. As a result, upon the adoption of the ASU, we will no longer be able to capitalize and amortize certain leasing related costs and instead will expense these costs as incurred. We are in the process of evaluating the impact to our results of operations of expensing such costs. The ASU is required to be adopted in 2019 using a modified retrospective approach which requires a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Leases where we are the lessee include primarily our operating ground leases which are not material to our Consolidated Financial Statements. We will continue to refine our evaluation and finalize our implementation plan throughout 2018.

The FASB issued an ASU that eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item when the hedged item affects earnings. The ASU is required to be adopted in 2019 using a modified retrospective approach. We do not expect such adoption to have a material effect on our Consolidated Financial Statements.

The FASB issued an ASU that requires, among other things, the use of a new current expected credit loss ("CECL") model in determining our allowances for doubtful accounts with respect to accounts receivable, accrued straight-line rents receivable and mortgages and notes receivable. The CECL model requires that we estimate our lifetime expected credit loss with respect to these receivables and record allowances that, when deducted from the balance of the receivables, represent the net amounts expected to be collected. We will also be required to disclose information about how we developed the allowances, including changes in the factors (e.g., portfolio mix, credit trends, unemployment, gross domestic product, etc.) that influenced our estimate of expected credit losses and the reasons for those changes. We will apply the ASU’s provisions as a cumulative-effect adjustment to retained earnings upon adoption in 2020. We are in the process of evaluating this ASU.
v3.8.0.1
Real Estate Assets
3 Months Ended
Mar. 31, 2018
Real Estate [Abstract]  
Real Estate Assets
Real Estate Assets
During the first quarter of 2018, we acquired two development parcels totaling approximately nine acres in Nashville for an aggregate purchase price, including capitalized acquisition costs, of $50.6 million.
v3.8.0.1
Mortgages and Notes Receivable
3 Months Ended
Mar. 31, 2018
Receivables [Abstract]  
Mortgages and Notes Receivable
Mortgages and Notes Receivable
Mortgages and notes receivable were $6.2 million and $6.4 million at March 31, 2018 and December 31, 2017, respectively. We evaluate the ability to collect our mortgages and notes receivable by monitoring the leasing statistics and/or market fundamentals of these assets. As of March 31, 2018, our mortgages and notes receivable were not in default and there were no other indicators of impairment.
v3.8.0.1
Intangible Assets and Below Market Lease Liabilities
3 Months Ended
Mar. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets and Below Market Lease Liabilities
Intangible Assets and Below Market Lease Liabilities
 
The following table sets forth total intangible assets and acquisition-related below market lease liabilities, net of accumulated amortization:
 
 
March 31,
2018
 
December 31,
2017
Assets:
 
 
 
Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets)
$
343,211

 
$
344,191

Less accumulated amortization
(146,909
)
 
(143,512
)
 
$
196,302

 
$
200,679

Liabilities (in accounts payable, accrued expenses and other liabilities):
 
 
 
Acquisition-related below market lease liabilities
$
59,646

 
$
59,947

Less accumulated amortization
(29,436
)
 
(28,214
)
 
$
30,210

 
$
31,733

 
The following table sets forth amortization of intangible assets and below market lease liabilities:
 
 
Three Months Ended
March 31,
 
2018
 
2017
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)
$
9,495

 
$
10,619

Amortization of lease incentives (in rental and other revenues)
$
429

 
$
397

Amortization of acquisition-related intangible assets (in rental and other revenues)
$
448

 
$
1,036

Amortization of acquisition-related intangible assets (in rental property and other expenses)
$
137

 
$
137

Amortization of acquisition-related below market lease liabilities (in rental and other revenues)
$
(1,523
)
 
$
(1,580
)

The following table sets forth scheduled future amortization of intangible assets and below market lease liabilities:
 
 
 
Amortization of Deferred Leasing Costs and Acquisition-Related Intangible Assets (in Depreciation and Amortization)
 
Amortization of Lease Incentives (in Rental and Other Revenues)
 
Amortization of Acquisition-Related Intangible Assets (in Rental and Other Revenues)
 
Amortization of Acquisition-Related Intangible Assets (in Rental Property and Other Expenses)
 
Amortization of Acquisition-Related Below Market Lease Liabilities (in Rental and Other Revenues)
April 1 through December 31, 2018
 
$
27,309

 
$
1,218

 
$
1,213

 
$
416

 
$
(4,414
)
2019
 
31,646

 
1,503

 
1,273

 
553

 
(5,446
)
2020
 
27,150

 
1,227

 
959

 
518

 
(5,186
)
2021
 
22,748

 
1,002

 
632

 

 
(4,377
)
2022
 
18,565

 
788

 
462

 

 
(3,264
)
Thereafter
 
51,453

 
4,259

 
1,408

 

 
(7,523
)
 
 
$
178,871

 
$
9,997

 
$
5,947

 
$
1,487

 
$
(30,210
)
Weighted average remaining amortization periods as of March 31, 2018 (in years)
 
7.6

 
9.8

 
6.5

 
2.7

 
6.4

v3.8.0.1
Mortgages and Notes Payable
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Mortgages and Notes Payable
Mortgages and Notes Payable
 
The following table sets forth our mortgages and notes payable:
 
 
March 31,
2018
 
December 31,
2017
Secured indebtedness
$
98,537

 
$
98,981

Unsecured indebtedness
2,024,685

 
1,923,513

Less-unamortized debt issuance costs
(10,638
)
 
(8,161
)
Total mortgages and notes payable, net
$
2,112,584

 
$
2,014,333


 
At March 31, 2018, our secured mortgage loans were collateralized by real estate assets with an aggregate undepreciated book value of $147.6 million.
 
Our $600.0 million unsecured revolving credit facility is scheduled to mature in January 2022 and includes an accordion feature that allows for an additional $400.0 million of borrowing capacity subject to additional lender commitments. Assuming no defaults have occurred, we have an option to extend the maturity for two additional six-month periods. The interest rate at our current credit ratings is LIBOR plus 100 basis points and the annual facility fee is 20 basis points. There were no amounts outstanding under our revolving credit facility at March 31, 2018. There was $172.0 million outstanding under our revolving credit facility at April 17, 2018. At both March 31, 2018 and April 17, 2018, we had $0.5 million of outstanding letters of credit, which reduces the availability on our revolving credit facility. As a result, the unused capacity of our revolving credit facility at March 31, 2018 and April 17, 2018 was $599.5 million and $427.5 million, respectively.
 
During the first quarter of 2018, the Operating Partnership issued $350.0 million aggregate principal amount of 4.125% notes due 2028, less original issuance discount of $4.1 million. These notes were priced to yield 4.271%. Underwriting fees and other expenses were incurred that aggregated $2.9 million; these costs were deferred and will be amortized over the term of the notes.
 
We are currently in compliance with financial covenants with respect to our consolidated debt.
 
We have considered our short-term liquidity needs and the adequacy of our estimated cash flows from operating activities and other available financing sources to meet these needs. We intend to meet these short-term liquidity requirements through a combination of the following:
 
available cash and cash equivalents;
 
cash flows from operating activities;
 
issuance of debt securities by the Operating Partnership;
 
issuance of secured debt;
 
bank term loans;
 
borrowings under our revolving credit facility;
 
issuance of equity securities by the Company or the Operating Partnership; and
 
the disposition of non-core assets.
v3.8.0.1
Derivative Financial Instruments
3 Months Ended
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments

During 2017, we entered into $150.0 million notional amount of forward-starting swaps that effectively locked the underlying 10-year treasury rate at 2.44% with respect to a planned issuance of debt securities by the Operating Partnership. Upon issuance of the $350.0 million aggregate principal amount of 4.125% notes due 2028 during the first quarter of 2018, we terminated the forward-starting swaps resulting in an unrealized gain of $7.0 million in accumulated other comprehensive income and a gain of $0.2 million of hedge ineffectiveness in interest expense.

The counterparties under our swaps are major financial institutions. The swap agreements contain a provision whereby if we default on certain of our indebtedness and which default results in repayment of such indebtedness being, or becoming capable of being, accelerated by the lender, then we could also be declared in default on our swaps.

Our interest rate swaps have been designated as and are being accounted for as cash flow hedges with the effective portion of changes in fair value recorded in other comprehensive income each reporting period. No significant gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on our cash flow hedges during the three months ended March 31, 2018 and 2017. We have no collateral requirements related to our interest rate swaps.
 
Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our debt. During the period from April 1, 2018 through March 31, 2019, we estimate that $2.4 million will be reclassified as a decrease to interest expense.
 
The following table sets forth the fair value of our derivatives:
 
 
March 31,
2018
 
December 31,
2017
Derivatives:
 
 
 
Derivatives designated as cash flow hedges in prepaid expenses and other assets:
 
 
 
Interest rate swaps
$
2,179

 
$
1,286


 
The following table sets forth the effect of our cash flow hedges on accumulated other comprehensive income and interest expense:
 
 
Three Months Ended
March 31,
 
2018
 
2017
Derivatives Designated as Cash Flow Hedges:
 
 
 
Amount of unrealized gains recognized in accumulated other comprehensive income on derivatives (effective portion):
 
 
 
Interest rate swaps
$
7,877

 
$
452

Amount of (gains)/losses reclassified out of accumulated other comprehensive income into contractual interest expense (effective portion):
 
 
 
Interest rate swaps
$
(106
)
 
$
484

v3.8.0.1
Noncontrolling Interests
3 Months Ended
Mar. 31, 2018
Noncontrolling Interest [Abstract]  
Noncontrolling Interests
Noncontrolling Interests

Noncontrolling Interests in Consolidated Affiliates
 
At March 31, 2018, our noncontrolling interests in consolidated affiliates relate to our joint venture partner's 50.0% interest in office properties in Richmond. Our joint venture partner is an unrelated third party.

Noncontrolling Interests in the Operating Partnership

The following table sets forth the Company's noncontrolling interests in the Operating Partnership:
 
 
Three Months Ended
March 31,
 
2018
 
2017
Beginning noncontrolling interests in the Operating Partnership
$
144,009

 
$
144,802

Adjustment of noncontrolling interests in the Operating Partnership to fair value
(19,582
)
 
(4,972
)
Conversions of Common Units to Common Stock
(902
)
 
(102
)
Net income attributable to noncontrolling interests in the Operating Partnership
888

 
888

Distributions to noncontrolling interests in the Operating Partnership
(1,300
)
 
(1,249
)
Total noncontrolling interests in the Operating Partnership
$
123,113

 
$
139,367


The following table sets forth net income available for common stockholders and transfers from the Company's noncontrolling interests in the Operating Partnership:
 
 
Three Months Ended
March 31,
 
2018
 
2017
Net income available for common stockholders
$
32,449

 
$
31,674

Increase in additional paid in capital from conversions of Common Units
to Common Stock
902

 
102

Change from net income available for common stockholders and transfers from noncontrolling interests
$
33,351

 
$
31,776

v3.8.0.1
Disclosure About Fair Value of Financial Instruments
3 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
Disclosure About Fair Value of Financial Instruments
Disclosure About Fair Value of Financial Instruments

The following summarizes the levels of inputs that we use to measure fair value.

Level 1.  Quoted prices in active markets for identical assets or liabilities.

Our Level 1 asset is our investment in marketable securities that we use to pay benefits under our non-qualified deferred compensation plan. Our Level 1 liability is our non-qualified deferred compensation obligation. The Company's Level 1 noncontrolling interests in the Operating Partnership relate to the ownership of Common Units by various individuals and entities other than the Company.

Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Our Level 2 assets include the fair value of our mortgages and notes receivable and interest rate swaps. Our Level 2 liabilities include the fair value of our mortgages and notes payable.

8.
Disclosure About Fair Value of Financial Instruments - Continued

The fair value of mortgages and notes receivable and mortgages and notes payable is estimated by the income approach utilizing contractual cash flows and market-based interest rates to approximate the price that would be paid in an orderly transaction between market participants. The fair value of interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments of interest rate swaps are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves. In addition, credit valuation adjustments are considered in the fair values to account for potential nonperformance risk, but were concluded to not be significant inputs to the calculation for the periods presented.

The following table sets forth our assets and liabilities and the Company's noncontrolling interests in the Operating Partnership that are measured or disclosed at fair value within the fair value hierarchy.
 
 
 
 
Level 1
 
Level 2
 
 
Total
 
Quoted Prices
in Active
Markets for Identical Assets or Liabilities
 
Significant Observable Inputs
Fair Value at March 31, 2018:
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
Mortgages and notes receivable, at fair value (1)
 
$
6,158

 
$

 
$
6,158

Interest rate swaps (in prepaid expenses and other assets)
 
2,179

 

 
2,179

Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
2,376

 
2,376

 

Total Assets
 
$
10,713

 
$
2,376

 
$
8,337

Noncontrolling Interests in the Operating Partnership
 
$
123,113

 
$
123,113

 
$

Liabilities:
 
 
 
 
 
 
Mortgages and notes payable, net, at fair value (1)
 
$
2,090,232

 
$

 
$
2,090,232

Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
2,376

 
2,376

 

Total Liabilities
 
$
2,092,608

 
$
2,376

 
$
2,090,232

Fair Value at December 31, 2017:
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
Mortgages and notes receivable, at fair value (1)
 
$
6,425

 
$

 
$
6,425

Interest rate swaps (in prepaid expenses and other assets)
 
1,286

 

 
1,286

Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
2,388

 
2,388

 

Total Assets
 
$
10,099

 
$
2,388

 
$
7,711

Noncontrolling Interests in the Operating Partnership
 
$
144,009

 
$
144,009

 
$

Liabilities:
 
 
 
 
 
 
Mortgages and notes payable, net, at fair value (1)
 
$
2,015,689

 
$

 
$
2,015,689

Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
2,388

 
2,388

 

Total Liabilities
 
$
2,018,077

 
$
2,388

 
$
2,015,689


__________
(1)    Amounts recorded at historical cost on our Consolidated Balance Sheets at March 31, 2018 and December 31, 2017.
v3.8.0.1
Share-Based Payments
3 Months Ended
Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Payments
Share-Based Payments
 
During the three months ended March 31, 2018, the Company granted 94,984 shares of time-based restricted stock and 77,456 shares of total return-based restricted stock with weighted average grant date fair values per share of $43.01 and $40.81, respectively. We recorded share-based compensation expense of $4.3 million and $3.8 million during the three months ended March 31, 2018 and 2017, respectively. At March 31, 2018, there was $8.1 million of total unrecognized share-based compensation costs, which will be recognized over a weighted average remaining contractual term of 2.7 years.
v3.8.0.1
Accumulated Other Comprehensive Income (Loss)
3 Months Ended
Mar. 31, 2018
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Accumulated Other Comprehensive Income/(Loss)
Accumulated Other Comprehensive Income
 
The following table sets forth the components of accumulated other comprehensive income:
 
 
Three Months Ended
March 31,
 
2018
 
2017
Cash flow hedges:
 
 
 
Beginning balance
$
7,838

 
$
4,949

Unrealized gains on cash flow hedges
7,877

 
452

Amortization of cash flow hedges (1)
(106
)
 
484

Total accumulated other comprehensive income
$
15,609

 
$
5,885

__________
(1)    Amounts reclassified out of accumulated other comprehensive income into contractual interest expense.
v3.8.0.1
Real Estate and Other Assets Held For Sale
3 Months Ended
Mar. 31, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Real Estate and Other Assets Held For Sale
Real Estate and Other Assets Held For Sale

The following table sets forth the assets held for sale at March 31, 2018 and December 31, 2017, which are considered non-core:
 
 
March 31,
2018
 
December 31,
2017
Assets:
 
 
 
Land
$
870

 
$
870

Buildings and tenant improvements
21,318

 
21,318

Land held for development
355

 
355

Less-accumulated depreciation
(9,304
)
 
(9,304
)
Net real estate assets
13,239

 
13,239

Accrued straight-line rents receivable
475

 
591

Deferred leasing costs, net
255

 
253

Prepaid expenses and other assets
48

 
35

Real estate and other assets, net, held for sale
$
14,017

 
$
14,118

v3.8.0.1
Earnings Per Share and Per Unit
3 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
Earnings Per Share and Per Unit
Earnings Per Share and Per Unit

The following table sets forth the computation of basic and diluted earnings per share of the Company:

 
Three Months Ended
March 31,
 
2018
 
2017
Earnings per Common Share - basic:
 
 
 
Numerator:
 
 
 
Net income
$
34,246

 
$
33,485

Net (income) attributable to noncontrolling interests in the Operating Partnership
(888
)
 
(888
)
Net (income) attributable to noncontrolling interests in consolidated affiliates
(286
)
 
(300
)
Dividends on Preferred Stock
(623
)
 
(623
)
Net income available for common stockholders
$
32,449

 
$
31,674

Denominator:
 
 
 
Denominator for basic earnings per Common Share – weighted average shares
103,324

 
101,738

Net income available for common stockholders
$
0.31

 
$
0.31

Earnings per Common Share - diluted:
 
 
 
Numerator:
 
 
 
Net income
$
34,246

 
$
33,485

Net (income) attributable to noncontrolling interests in consolidated affiliates
(286
)
 
(300
)
Dividends on Preferred Stock
(623
)
 
(623
)
Net income available for common stockholders before net (income) attributable to noncontrolling interests in the Operating Partnership
$
33,337

 
$
32,562

Denominator:
 
 
 
Denominator for basic earnings per Common Share – weighted average shares
103,324

 
101,738

Add:
 
 
 
Stock options using the treasury method
26

 
85

Noncontrolling interests Common Units
2,815

 
2,838

Denominator for diluted earnings per Common Share – adjusted weighted average shares and assumed conversions (1)
106,165

 
104,661

Net income available for common stockholders
$
0.31

 
$
0.31

__________
(1)
Includes all unvested restricted stock where dividends on such restricted stock are non-forfeitable.

12.
Earnings Per Share and Per Unit - Continued

The following table sets forth the computation of basic and diluted earnings per unit of the Operating Partnership:
 
 
Three Months Ended
March 31,
 
2018
 
2017
Earnings per Common Unit - basic:
 
 
 
Numerator:
 
 
 
Net income
$
34,246

 
$
33,485

Net (income) attributable to noncontrolling interests in consolidated affiliates
(286
)
 
(300
)
Distributions on Preferred Units
(623
)
 
(623
)
Net income available for common unitholders
$
33,337

 
$
32,562

Denominator:
 
 
 
Denominator for basic earnings per Common Unit – weighted average units
105,730

 
104,167

Net income available for common unitholders
$
0.32

 
$
0.31

Earnings per Common Unit - diluted:
 
 
 
Numerator:
 
 
 
Net income
$
34,246

 
$
33,485

Net (income) attributable to noncontrolling interests in consolidated affiliates
(286
)
 
(300
)
Distributions on Preferred Units
(623
)
 
(623
)
Net income available for common unitholders
$
33,337

 
$
32,562

Denominator:
 
 
 
Denominator for basic earnings per Common Unit – weighted average units
105,730

 
104,167

Add:
 
 
 
Stock options using the treasury method
26

 
85

Denominator for diluted earnings per Common Unit – adjusted weighted average units and assumed conversions (1)
105,756

 
104,252

Net income available for common unitholders
$
0.32

 
$
0.31

__________
(1)
Includes all unvested restricted stock where distributions on such restricted stock are non-forfeitable.
v3.8.0.1
Segment Information
3 Months Ended
Mar. 31, 2018
Segment Reporting [Abstract]  
Segment Information
Segment Information

The following tables summarize the rental and other revenues and net operating income, the primary industry property-level performance metric used by our chief operating decision maker and which is defined as rental and other revenues less rental property and other expenses, for each of our reportable segments.

 
Three Months Ended
March 31,
 
2018
 
2017
Rental and Other Revenues:
 
 
 
Office:
 
 
 
Atlanta
$
35,483

 
$
34,209

Greensboro
6,026

 
5,302

Memphis
10,208

 
11,795

Nashville
30,723

 
23,690

Orlando
13,300

 
12,438

Pittsburgh
15,282

 
14,849

Raleigh
29,804

 
29,546

Richmond
11,049

 
10,942

Tampa
25,425

 
23,256

Total Office Segment
177,300

 
166,027

Other
3,138

 
3,381

Total Rental and Other Revenues
$
180,438

 
$
169,408


Net Operating Income:
 
 
 
Office:
 
 
 
Atlanta
$
22,670

 
$
22,006

Greensboro
4,011

 
3,358

Memphis
6,645

 
7,272

Nashville
21,983

 
16,624

Orlando
8,263

 
7,578

Pittsburgh
8,971

 
8,625

Raleigh
21,872

 
21,465

Richmond
7,581

 
7,621

Tampa
16,760

 
15,122

Total Office Segment
118,756

 
109,671

Other
2,250

 
2,341

Total Net Operating Income
121,006

 
112,012

Reconciliation to income before disposition of investment properties and activity in unconsolidated affiliates:
 
 
 
Depreciation and amortization
(57,568
)
 
(56,145
)
General and administrative expenses
(11,778
)
 
(11,490
)
Interest expense
(18,391
)
 
(17,863
)
Other income
455

 
684

Income before disposition of investment properties and activity in unconsolidated affiliates
$
33,724

 
$
27,198

v3.8.0.1