HIGHWOODS PROPERTIES, INC., 10-Q filed on 7/28/2020
Quarterly Report
v3.20.2
Cover Page Cover Page - shares
6 Months Ended
Jun. 30, 2020
Jul. 21, 2020
Entity Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2020  
Document Transition Report false  
Entity Registrant Name HIGHWOODS PROPERTIES, INC.  
Entity Incorporation, State or Country Code MD  
Entity File Number 001-13100  
Entity Tax Identification Number 56-1871668  
Entity Address, Address Line One 3100 Smoketree Court  
Entity Address, Address Line Two Suite 600  
Entity Address, City or Town Raleigh  
Entity Address, State or Province NC  
Entity Address, Postal Zip Code 27604  
City Area Code 919  
Local Phone Number 872-4924  
Title of 12(b) Security Common Stock, $.01 par value, of Highwoods Properties, Inc.  
Trading Symbol HIW  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   103,896,238
Entity Central Index Key 0000921082  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Highwoods Realty Limited Partnership [Member]    
Entity Information [Line Items]    
Entity Registrant Name HIGHWOODS REALTY LIMITED PARTNERSHIP  
Entity Incorporation, State or Country Code NC  
Entity File Number 000-21731  
Entity Tax Identification Number 56-1869557  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Central Index Key 0000941713  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Amendment Flag false  
v3.20.2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Real estate assets, at cost:    
Land $ 485,501 $ 515,095
Buildings and tenant improvements 5,010,086 5,128,150
Development in-process 195,166 172,706
Land held for development 131,522 99,163
Total real estate assets 5,822,275 5,915,114
Less-accumulated depreciation (1,376,817) (1,388,566)
Net real estate assets 4,445,458 4,526,548
Real estate and other assets, net, held for sale 0 20,790
Cash and cash equivalents 4,752 9,505
Restricted cash 8,955 5,237
Accounts receivable 29,876 23,370
Mortgages and notes receivable 1,440 1,501
Accrued straight-line rents receivable 249,722 234,652
Investments in and advances to unconsolidated affiliates 26,775 26,298
Deferred leasing costs, net of accumulated amortization of $151,170 and $146,125, respectively 221,905 231,347
Prepaid expenses and other assets, net of accumulated depreciation of $20,532 and $20,017, respectively 67,905 58,996
Total Assets 5,056,788 5,138,244
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,337,662 2,543,710
Accounts payable, accrued expenses and other liabilities 275,551 286,911
Total Liabilities 2,613,213 2,830,621
Commitments and contingencies
Noncontrolling interests in the Operating Partnership 106,103 133,216
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), 28,843 and 28,859 shares issued and outstanding, respectively 28,843 28,859
Common Stock, $.01 par value, 200,000,000 authorized shares; 103,896,936 and 103,756,046 shares issued and outstanding, respectively 1,039 1,038
Additional paid-in capital 2,996,442 2,954,779
Distributions in excess of net income available for common stockholders (708,903) (831,808)
Accumulated other comprehensive loss (1,704) (471)
Total Stockholders’ Equity 2,315,717 2,152,397
Noncontrolling interests in consolidated affiliates 21,755 22,010
Total Equity/Capital 2,337,472 2,174,407
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital 5,056,788 5,138,244
Highwoods Realty Limited Partnership [Member]    
Real estate assets, at cost:    
Land 485,501 515,095
Buildings and tenant improvements 5,010,086 5,128,150
Development in-process 195,166 172,706
Land held for development 131,522 99,163
Total real estate assets 5,822,275 5,915,114
Less-accumulated depreciation (1,376,817) (1,388,566)
Net real estate assets 4,445,458 4,526,548
Real estate and other assets, net, held for sale 0 20,790
Cash and cash equivalents 4,752 9,505
Restricted cash 8,955 5,237
Accounts receivable 29,876 23,370
Mortgages and notes receivable 1,440 1,501
Accrued straight-line rents receivable 249,722 234,652
Investments in and advances to unconsolidated affiliates 26,775 26,298
Deferred leasing costs, net of accumulated amortization of $151,170 and $146,125, respectively 221,905 231,347
Prepaid expenses and other assets, net of accumulated depreciation of $20,532 and $20,017, respectively 67,905 58,996
Total Assets 5,056,788 5,138,244
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,337,662 2,543,710
Accounts payable, accrued expenses and other liabilities 275,551 286,911
Total Liabilities 2,613,213 2,830,621
Commitments and contingencies
Redeemable Operating Partnership Units:    
Common Units, 2,842,295 and 2,723,703 outstanding, respectively 106,103 133,216
Series A Preferred Units (liquidation preference $1,000 per unit), 28,843 and 28,859 units issued and outstanding, respectively 28,843 28,859
Total Redeemable Operating Partnership Units 134,946 162,075
Equity/Capital:    
General partner Common Units, 1,063,304 and 1,060,709 outstanding, respectively 22,886 21,240
Limited partner Common Units, 102,424,823 and 102,286,528 outstanding, respectively 2,265,692 2,102,769
Accumulated other comprehensive loss (1,704) (471)
Noncontrolling interests in consolidated affiliates 21,755 22,010
Total Equity/Capital 2,308,629 2,145,548
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital $ 5,056,788 $ 5,138,244
v3.20.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Assets:    
Deferred leasing costs, accumulated amortization $ 151,170 $ 146,125
Prepaid expenses and other assets, accumulated depreciation $ 20,532 $ 20,017
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) 28,843 28,859
Series A Preferred Stock, shares outstanding (in shares) 28,843 28,859
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) 103,896,936 103,756,046
Common Stock, shares outstanding (in shares) 103,896,936 103,756,046
Highwoods Realty Limited Partnership [Member]    
Assets:    
Deferred leasing costs, accumulated amortization $ 151,170 $ 146,125
Prepaid expenses and other assets, accumulated depreciation $ 20,532 $ 20,017
Redeemable Operating Partnership Units: [Abstract]    
Redeemable Common Units outstanding (in shares) 2,842,295 2,723,703
Series A Preferred Units, liquidation preference (in dollars per share) $ 1,000 $ 1,000
Series A Preferred Units, issued (in shares) 28,843 28,859
Series A Preferred Units, outstanding (in shares) 28,843 28,859
Common Units: [Abstract]    
General partners' capital account, units outstanding (in shares) 1,063,304 1,060,709
Limited partners' capital account, units outstanding (in shares) 102,434,823 102,286,528
v3.20.2
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Rental and other revenues $ 183,153 $ 184,070 $ 375,953 $ 356,433
Operating expenses:        
Rental property and other expenses 55,119 60,558 117,321 121,109
Depreciation and amortization 59,461 59,460 120,611 128,664
Impairments of real estate assets 1,778 531 1,778 531
General and administrative 10,084 9,560 21,014 21,941
Total operating expenses 126,442 130,109 260,724 272,245
Interest expense 19,840 20,356 41,117 39,095
Other income/(loss) 588 321 657 (3,445)
Gains on disposition of property 318 6,703 153,385 6,703
Equity in earnings of unconsolidated affiliates 1,179 765 2,142 1,429
Net income 38,956 41,394 230,296 49,780
Net (income) attributable to noncontrolling interests in the Operating Partnership (1,017) (1,044) (5,977) (1,237)
Net (income) attributable to noncontrolling interests in consolidated affiliates (289) (306) (574) (622)
Dividends on Preferred Stock (622) (622) (1,244) (1,244)
Net income available for common stockholders $ 37,028 $ 39,422 $ 222,501 $ 46,677
Earnings per Common Share – basic:        
Net income available for common stockholders (in dollars per share) $ 0.36 $ 0.38 $ 2.14 $ 0.45
Weighted average Common Shares outstanding - basic (in shares) 103,886 103,693 103,849 103,647
Earnings per Common Share - diluted:        
Net income available for common stockholders (in dollars per share) $ 0.36 $ 0.38 $ 2.14 $ 0.45
Weighted average Common Shares outstanding - diluted (in shares) 106,730 106,445 106,681 106,402
Highwoods Realty Limited Partnership [Member]        
Rental and other revenues $ 183,153 $ 184,070 $ 375,953 $ 356,433
Operating expenses:        
Rental property and other expenses 55,119 60,558 117,321 121,109
Depreciation and amortization 59,461 59,460 120,611 128,664
Impairments of real estate assets 1,778 531 1,778 531
General and administrative 10,084 9,560 21,014 21,941
Total operating expenses 126,442 130,109 260,724 272,245
Interest expense 19,840 20,356 41,117 39,095
Other income/(loss) 588 321 657 (3,445)
Gains on disposition of property 318 6,703 153,385 6,703
Equity in earnings of unconsolidated affiliates 1,179 765 2,142 1,429
Net income 38,956 41,394 230,296 49,780
Net (income) attributable to noncontrolling interests in consolidated affiliates (289) (306) (574) (622)
Distributions on Preferred Units (622) (622) (1,244) (1,244)
Net income available for common unitholders $ 38,045 $ 40,466 $ 228,478 $ 47,914
Earnings per Common Unit - basic:        
Net income available for common unitholders (in dollars per share) $ 0.36 $ 0.38 $ 2.15 $ 0.45
Weighted average Common Units outstanding - basic (in shares) 106,319 106,017 106,259 105,973
Earnings per Common Unit - diluted:        
Net income available for common unitholders (in dollars per share) $ 0.36 $ 0.38 $ 2.15 $ 0.45
Weighted average Common Units outstanding - diluted (in shares) 106,321 106,036 106,272 105,993
v3.20.2
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Comprehensive income:        
Net income $ 38,956 $ 41,394 $ 230,296 $ 49,780
Other comprehensive loss:        
Unrealized losses on cash flow hedges (103) (646) (1,236) (2,550)
Amortization of cash flow hedges 75 (360) 3 (875)
Total other comprehensive loss (28) (1,006) (1,233) (3,425)
Total comprehensive income 38,928 40,388 229,063 46,355
Less-comprehensive (income) attributable to noncontrolling interests (1,306) (1,350) (6,551) (1,859)
Comprehensive income attributable to common stockholders/Comprehensive income attributable to common unitholders 37,622 39,038 222,512 44,496
Highwoods Realty Limited Partnership [Member]        
Comprehensive income:        
Net income 38,956 41,394 230,296 49,780
Other comprehensive loss:        
Unrealized losses on cash flow hedges (103) (646) (1,236) (2,550)
Amortization of cash flow hedges 75 (360) 3 (875)
Total other comprehensive loss (28) (1,006) (1,233) (3,425)
Total comprehensive income 38,928 40,388 229,063 46,355
Less-comprehensive (income) attributable to noncontrolling interests (289) (306) (574) (622)
Comprehensive income attributable to common stockholders/Comprehensive income attributable to common unitholders $ 38,639 $ 40,082 $ 228,489 $ 45,733
v3.20.2
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, 2018     103,557,065                  
Balance at Dec. 31, 2018 $ 2,264,296 $ 2,235,419 $ 1,036 $ 28,877 $ 22,078 $ 2,185,852 $ 2,976,197 $ 9,913 $ 9,913 $ 17,576 $ 17,576 $ (769,303)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   (731)     (7) (724)            
Distributions on Common Units   (100,634)     (1,006) (99,628)            
Distributions on Preferred Units   (1,244)     (12) (1,232)            
Issuances of Common Stock, net of issuance costs and tax withholdings - Shares     (23,705)                  
Issuances of Common Stock, net of issuance costs and tax withholdings (731)   $ 0       (731)          
Conversions of Common Units to Common Stock - Shares     8,000                  
Conversions of Common Units to Common Stock 353           353          
Dividends on Common Stock (98,425)                     (98,425)
Dividends on Preferred Stock (1,244)                     (1,244)
Adjustment of noncontrolling interests in the Operating Partnership to fair value (8,532)           (8,532)          
Distributions to noncontrolling interests in consolidated affiliates (784) (784)               (784) (784)  
Contributions from noncontrolling interests in consolidate affiliates 4,987 4,987               4,987 4,987  
Issuances of restricted stock - shares     164,190                  
Issuances of restricted stock 0                      
Redemptions/repurchases of Preferred Stock (18)     (18)                
Share-based compensation expense, net of forfeitures - shares     (947)                  
Share-based compensation expense, net of forfeitures 5,512 5,512 $ 1   55 5,457 5,511          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   (7,207)     (72) (7,135)            
Net (income) attributable to noncontrolling interests in the Operating Partnership (1,237)                     (1,237)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (6) (616)       622 622 (622)
Comprehensive income:                        
Net income 49,780 49,780     498 49,282           49,780
Other comprehensive loss (3,425) (3,425)           (3,425) (3,425)      
Total comprehensive income 46,355 46,355                    
Balance (in shares) at Jun. 30, 2019     103,704,603                  
Balance at Jun. 30, 2019 2,210,532 2,181,673 $ 1,037 28,859 21,528 2,131,256 2,972,798 6,488 6,488 22,401 22,401 (821,051)
Balance (in shares) at Mar. 31, 2019     103,690,619                  
Balance at Mar. 31, 2019 2,200,268 2,171,409 $ 1,037 28,859 21,463 2,124,868 2,956,517 7,494 7,494 17,584 17,584 (811,223)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   397     4 393            
Distributions on Common Units   (50,353)     (503) (49,850)            
Distributions on Preferred Units   (622)     (6) (616)            
Issuances of Common Stock, net of issuance costs and tax withholdings - Shares     9,672                  
Issuances of Common Stock, net of issuance costs and tax withholdings 397   $ 0       397          
Conversions of Common Units to Common Stock - Shares     5,000                  
Conversions of Common Units to Common Stock 222           222          
Dividends on Common Stock (49,250)                     (49,250)
Dividends on Preferred Stock (622)                     (622)
Adjustment of noncontrolling interests in the Operating Partnership to fair value 14,722           14,722          
Distributions to noncontrolling interests in consolidated affiliates (476) (476)               (476) (476)  
Contributions from noncontrolling interests in consolidate affiliates 4,987 4,987               4,987 4,987  
Share-based compensation expense, net of forfeitures - shares     (688)                  
Share-based compensation expense, net of forfeitures 940 940 $ 0   9 931 940          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   15,003     150 14,853            
Net (income) attributable to noncontrolling interests in the Operating Partnership (1,044)                     (1,044)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (3) (303)       306 306 (306)
Comprehensive income:                        
Net income 41,394 41,394     414 40,980           41,394
Other comprehensive loss (1,006) (1,006)           (1,006) (1,006)      
Total comprehensive income 40,388 40,388                    
Balance (in shares) at Jun. 30, 2019     103,704,603                  
Balance at Jun. 30, 2019 $ 2,210,532 2,181,673 $ 1,037 28,859 21,528 2,131,256 2,972,798 6,488 6,488 22,401 22,401 (821,051)
Balance (in shares) at Dec. 31, 2019 103,756,046   103,756,046                  
Balance at Dec. 31, 2019 $ 2,174,407 2,145,548 $ 1,038 28,859 21,240 2,102,769 2,954,779 (471) (471) 22,010 22,010 (831,808)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   7,564     76 7,488            
Distributions on Common Units   (101,931)     (1,019) (100,912)            
Distributions on Preferred Units   (1,244)     (12) (1,232)            
Issuances of Common Stock, net of issuance costs and tax withholdings - Shares     (2,248)                  
Issuances of Common Stock, net of issuance costs and tax withholdings 1,401   $ 0       1,401          
Conversions of Common Units to Common Stock 0                      
Dividends on Common Stock (99,596)                     (99,596)
Dividends on Preferred Stock (1,244)                     (1,244)
Adjustment of noncontrolling interests in the Operating Partnership to fair value 36,525           36,525          
Distributions to noncontrolling interests in consolidated affiliates (829) (829)               (829) (829)  
Issuances of restricted stock - shares     149,304                  
Issuances of restricted stock 0                      
Redemptions/repurchases of Preferred Stock (16)     (16)                
Share-based compensation expense, net of forfeitures - shares     (6,166)                  
Share-based compensation expense, net of forfeitures 3,738 3,738 $ 1   37 3,701 3,737          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   26,720     267 26,453            
Net (income) attributable to noncontrolling interests in the Operating Partnership (5,977)                     (5,977)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (6) (568)       574 574 (574)
Comprehensive income:                        
Net income 230,296 230,296     2,303 227,993           230,296
Other comprehensive loss (1,233) (1,233)           (1,233) (1,233)      
Total comprehensive income $ 229,063 229,063                    
Balance (in shares) at Jun. 30, 2020 103,896,936   103,896,936                  
Balance at Jun. 30, 2020 $ 2,337,472 2,308,629 $ 1,039 28,843 22,886 2,265,692 2,996,442 (1,704) (1,704) 21,755 21,755 (708,903)
Balance (in shares) at Mar. 31, 2020     103,885,918                  
Balance at Mar. 31, 2020 2,354,860 2,326,004 $ 1,039 28,856 23,055 2,282,528 3,000,614 (1,676) (1,676) 22,097 22,097 (696,070)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   362     4 358            
Distributions on Common Units   (51,028)     (510) (50,518)            
Distributions on Preferred Units   (622)     (6) (616)            
Issuances of Common Stock, net of issuance costs and tax withholdings - Shares     11,018                  
Issuances of Common Stock, net of issuance costs and tax withholdings 362   $ 0       362          
Dividends on Common Stock (49,861)                     (49,861)
Dividends on Preferred Stock (622)                     (622)
Adjustment of noncontrolling interests in the Operating Partnership to fair value (5,776)           (5,776)          
Distributions to noncontrolling interests in consolidated affiliates (631) (631)               (631) (631)  
Redemptions/repurchases of Preferred Stock (13)     (13)                
Share-based compensation expense, net of forfeitures - shares     0                  
Share-based compensation expense, net of forfeitures 1,242 1,242 $ 0   12 1,230 1,242          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   (5,626)     (56) (5,570)            
Net (income) attributable to noncontrolling interests in the Operating Partnership (1,017)                     (1,017)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (3) (286)       289 289 (289)
Comprehensive income:                        
Net income 38,956 38,956     390 38,566           38,956
Other comprehensive loss (28) (28)           (28) (28)      
Total comprehensive income $ 38,928 38,928                    
Balance (in shares) at Jun. 30, 2020 103,896,936   103,896,936                  
Balance at Jun. 30, 2020 $ 2,337,472 $ 2,308,629 $ 1,039 $ 28,843 $ 22,886 $ 2,265,692 $ 2,996,442 $ (1,704) $ (1,704) $ 21,755 $ 21,755 $ (708,903)
v3.20.2
Consolidated Statements of Equity/Capital (Parentheticals) - $ / shares
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Highwoods Properties, Inc. [Member]        
Dividends on Common Stock (per share) $ 0.48 $ 0.475 $ 0.96 $ 0.95
Highwoods Properties, Inc. [Member] | Series A Cumulative Redeemable Preferred Shares [Member]        
Dividends on Preferred Stock (per share)/Distributions on Preferred Units (per unit) 21.5625 21.5625 43.125 43.125
Highwoods Realty Limited Partnership [Member]        
Distributions on Common Units (per unit) 0.48 0.475 0.96 0.95
Highwoods Realty Limited Partnership [Member] | Series A Cumulative Redeemable Preferred Shares [Member]        
Dividends on Preferred Stock (per share)/Distributions on Preferred Units (per unit) $ 21.5625 $ 21.5625 $ 43.125 $ 43.125
v3.20.2
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Operating activities:    
Net income $ 230,296 $ 49,780
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 120,611 128,664
Amortization of lease incentives and acquisition-related intangible assets and liabilities (1,278) 868
Share-based compensation expense 3,738 5,512
Credit losses on operating lease receivables 2,333 8,144
Write-off of mortgages and notes receivable 0 4,087
Accrued interest on mortgages and notes receivable (61) (118)
Amortization of debt issuance costs 1,533 1,455
Amortization of cash flow hedges 3 (875)
Amortization of mortgages and notes payable fair value adjustments 852 787
Impairments of real estate assets 1,778 531
Losses on debt extinguishment 0 375
Net gains on disposition of property (153,385) (6,703)
Equity in earnings of unconsolidated affiliates (2,142) (1,429)
Distributions of earnings from unconsolidated affiliates 407 669
Settlement of cash flow hedges 0 (5,144)
Changes in operating assets and liabilities:    
Accounts receivable (1,031) (5,507)
Prepaid expenses and other assets (8,320) (3,305)
Accrued straight-line rents receivable (21,522) (14,273)
Accounts payable, accrued expenses and other liabilities 6,403 9,771
Net cash provided by operating activities 180,215 173,289
Investing activities:    
Investments in acquired real estate and related intangible assets, net of cash acquired (2,363) (12,795)
Investments in development in-process (83,071) (50,884)
Investments in tenant improvements and deferred leasing costs (85,544) (78,449)
Investments in building improvements (30,312) (24,113)
Net proceeds from disposition of real estate assets 334,366 31,510
Distributions of capital from unconsolidated affiliates 72 29
Investments in mortgages and notes receivable (32) 0
Repayments of mortgages and notes receivable 154 147
Changes in other investing activities (3,541) (4,272)
Net cash provided by/(used in) investing activities 129,729 (138,827)
Financing activities:    
Dividends on Common Stock (99,596) (98,425)
Redemptions/repurchases of Preferred Stock (16) (18)
Dividends on Preferred Stock (1,244) (1,244)
Distributions to noncontrolling interests in the Operating Partnership (2,728) (2,598)
Distributions to noncontrolling interests in consolidated affiliates (829) (784)
Proceeds from the issuance of Common Stock 2,753 1,049
Costs paid for the issuance of Common Stock (228) 0
Repurchase of shares related to tax withholdings (1,124) (1,780)
Borrowings on revolving credit facility 129,000 169,400
Repayments of revolving credit facility (336,000) (215,400)
Borrowings on mortgages and notes payable 0 349,010
Repayments of mortgages and notes payable (967) (225,929)
Changes in debt issuance costs and other financing activities 0 (4,379)
Net cash used in financing activities (310,979) (31,098)
Net increase/(decrease) in cash and cash equivalents and restricted cash (1,035) 3,364
Cash and cash equivalents and restricted cash at beginning of the period 14,742 10,143
Cash and cash equivalents and restricted cash at end of the period 13,707 13,507
Reconciliation of cash and cash equivalents and restricted cash:    
Cash and cash equivalents at end of the period 4,752 4,530
Restricted cash at end of the period 8,955 8,977
Supplemental disclosure of cash flow information:    
Cash paid for interest, net of amounts capitalized 38,424 33,378
Supplemental disclosure of non-cash investing and financing activities:    
Unrealized losses on cash flow hedges (1,236) (2,550)
Conversions of Common Units to Common Stock 0 353
Changes in accrued capital expenditures (1) [1] (18,819) 2,027
Write-off of fully depreciated real estate assets 22,630 36,188
Write-off of fully amortized leasing costs 10,564 19,900
Write-off of fully amortized debt issuance costs 0 828
Adjustment of noncontrolling interests in the Operating Partnership to fair value (36,525) 8,532
Contributions from noncontrolling interests in consolidated affiliates 0 4,987
Issuances of Common Units to acquire real estate assets 6,163 0
Contingent consideration in connection with the acquisition of land 1,500 0
Initial recognition of lease liabilities related to right of use assets 0 35,349
Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities 49,100 64,300
Highwoods Realty Limited Partnership [Member]    
Operating activities:    
Net income 230,296 49,780
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 120,611 128,664
Amortization of lease incentives and acquisition-related intangible assets and liabilities (1,278) 868
Share-based compensation expense 3,738 5,512
Credit losses on operating lease receivables 2,333 8,144
Write-off of mortgages and notes receivable 0 4,087
Accrued interest on mortgages and notes receivable (61) (118)
Amortization of debt issuance costs 1,533 1,455
Amortization of cash flow hedges 3 (875)
Amortization of mortgages and notes payable fair value adjustments 852 787
Impairments of real estate assets 1,778 531
Losses on debt extinguishment 0 375
Net gains on disposition of property (153,385) (6,703)
Equity in earnings of unconsolidated affiliates (2,142) (1,429)
Distributions of earnings from unconsolidated affiliates 407 669
Settlement of cash flow hedges 0 (5,144)
Changes in operating assets and liabilities:    
Accounts receivable (1,031) (5,507)
Prepaid expenses and other assets (8,320) (3,305)
Accrued straight-line rents receivable (21,522) (14,273)
Accounts payable, accrued expenses and other liabilities 6,403 9,771
Net cash provided by operating activities 180,215 173,289
Investing activities:    
Investments in acquired real estate and related intangible assets, net of cash acquired (2,363) (12,795)
Investments in development in-process (83,071) (50,884)
Investments in tenant improvements and deferred leasing costs (85,544) (78,449)
Investments in building improvements (30,312) (24,113)
Net proceeds from disposition of real estate assets 334,366 31,510
Distributions of capital from unconsolidated affiliates 72 29
Investments in mortgages and notes receivable (32) 0
Repayments of mortgages and notes receivable 154 147
Changes in other investing activities (3,541) (4,272)
Net cash provided by/(used in) investing activities 129,729 (138,827)
Financing activities:    
Distributions on Common Units (101,931) (100,634)
Redemptions/repurchases of Preferred Units (16) (18)
Distributions on Preferred Units (1,244) (1,244)
Distributions to noncontrolling interests in consolidated affiliates (829) (784)
Proceeds from the issuance of Common Units 2,753 1,049
Costs paid for the issuance of Common Units (228) 0
Repurchase of units related to tax withholdings (1,124) (1,780)
Borrowings on revolving credit facility 129,000 169,400
Repayments of revolving credit facility (336,000) (215,400)
Borrowings on mortgages and notes payable 0 349,010
Repayments of mortgages and notes payable (967) (225,929)
Changes in debt issuance costs and other financing activities (393) (4,768)
Net cash used in financing activities (310,979) (31,098)
Net increase/(decrease) in cash and cash equivalents and restricted cash (1,035) 3,364
Cash and cash equivalents and restricted cash at beginning of the period 14,742 10,143
Cash and cash equivalents and restricted cash at end of the period 13,707 13,507
Reconciliation of cash and cash equivalents and restricted cash:    
Cash and cash equivalents at end of the period 4,752 4,530
Restricted cash at end of the period 8,955 8,977
Supplemental disclosure of cash flow information:    
Cash paid for interest, net of amounts capitalized 38,424 33,378
Supplemental disclosure of non-cash investing and financing activities:    
Unrealized losses on cash flow hedges (1,236) (2,550)
Changes in accrued capital expenditures (1) [1] (18,819) 2,027
Write-off of fully depreciated real estate assets 22,630 36,188
Write-off of fully amortized leasing costs 10,564 19,900
Write-off of fully amortized debt issuance costs 0 828
Adjustment of Redeemable Common Units to fair value (33,276) 6,818
Contributions from noncontrolling interests in consolidated affiliates 0 4,987
Issuances of Common Units to acquire real estate assets 6,163 0
Contingent consideration in connection with the acquisition of land 1,500 0
Initial recognition of lease liabilities related to right of use assets 0 35,349
Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities $ 49,100 $ 64,300
[1]
(1)
Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities at June 30, 2020 and 2019 were $49.1 million and $64.3 million, respectively.
v3.20.2
Description of Business and Significant Accounting Policies
6 Months Ended
Jun. 30, 2020
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 June 30, 2020, we owned or had an interest in 28.1 million rentable square feet of in-service properties, 1.2 million rentable square feet of office properties under development and approximately 225 acres of development land.
 
The Company is the sole general partner of the Operating Partnership. At June 30, 2020, the Company owned all of the Preferred Units and 103.5 million, or 97.3%, of the Common Units in the Operating Partnership. Limited partners owned the remaining 2.8 million Common Units. During the six months ended June 30, 2020, the Company issued 118,592 Common Units to acquire real estate assets.
 
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. We consolidate joint venture investments, such as interests in partnerships and limited liability companies, when we control the major operating and financial policies of the investment through majority ownership, in our capacity as a general partner or managing member or through some other contractual right. We also consolidate those entities deemed to be variable interest entities in which we are determined to be the primary beneficiary. At June 30, 2020, we have involvement with, and are the primary beneficiary in, an entity that we concluded to be a variable interest entity (see Note 3). 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 2019 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
 
We are primarily self-insured for health care claims for 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 June 30, 2020, a reserve of $0.5 million was recorded to cover estimated reported and unreported claims.

Recently Issued Accounting Standards
 
The Financial Accounting Standards Board (“FASB”) issued an accounting standards update (“ASU”) that changes certain disclosure requirements for fair value measurements. We adopted the ASU as of January 1, 2020 with no material effect on our Notes to Consolidated Financial Statements.

The FASB issued an ASU that provides temporary optional expedients and exceptions to the guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). Entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities can also elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. The ASU can be applied from March 12, 2020 through December 31, 2022. We are in the process of evaluating this ASU; however, we currently expect to avail ourselves of such optional expedients and exceptions should our modified contracts meet the required criteria.

Due to the business disruptions and challenges severely affecting the global economy caused by the COVID-19 pandemic, lessors may provide rent deferrals and other lease concessions to lessees. In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing lease guidance, we would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows us, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. We have elected the practical expedient and will not apply lease modification accounting on a lease by lease basis where applicable. As a result, $5.0 million of deferred rent is included in accounts receivable on our Consolidated Balance Sheets at June 30, 2020.
v3.20.2
Leases
6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Leases
Leases

We generally lease our office properties to lessees in exchange for fixed monthly payments that cover rent, property taxes, insurance and certain cost recoveries, primarily common area maintenance. Office properties owned by us that are under lease are primarily located in Atlanta, Charlotte, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa and are leased to a wide variety of lessees across many industries. Our leases are operating leases and mostly range from three to 10 years. We recognized rental and other revenues related to operating lease payments of $181.1 million and $180.7 million during the three months ended June 30, 2020 and 2019, respectively, and $370.7 million and $350.1 million during the six months ended June 30, 2020 and 2019, respectively. Included in these amounts are variable lease payments of $13.4 million and $16.4 million during the three months ended June 30, 2020 and 2019, respectively, and $29.8 million and $31.9 million during the six months ended June 30, 2020 and 2019, respectively.
v3.20.2
Consolidated Variable Interest Entity
6 Months Ended
Jun. 30, 2020
Variable Interest Entities [Abstract]  
Consolidated Variable Interest Entity Consolidated Variable Interest Entity
 
We and The Bromley Companies formed a joint venture (the “Midtown One joint venture”) to construct Midtown One, a 150,000 square foot, multi-customer office building located in the mixed-use Midtown Tampa project in Tampa’s Westshore submarket. Midtown One has an anticipated total investment of $71.3 million. Construction of Midtown One began in the third quarter of 2019 with a scheduled completion date in the second quarter of 2021. At closing, we agreed to contribute cash of $20.0 million, which has been fully funded, in exchange for an 80.0% interest in the Midtown One joint venture and The Bromley Companies contributed land valued at $5.0 million in exchange for the remaining 20.0% interest. We also committed to provide a $46.3 million interest-only secured construction loan to the Midtown One joint venture that is scheduled to mature on the second anniversary of completion. The loan bears interest at LIBOR plus 250 basis points. As of June 30, 2020, $6.7 million under the loan has been funded.

We determined that we have a variable interest in the Midtown One joint venture primarily because the entity was designed to pass along interest rate risk, equity price risk and operation risk to us as both a debt and an equity holder and The Bromley Companies as an equity holder. The Midtown One joint venture was further determined to be a variable interest entity as it requires additional subordinated financial support in the form of a loan because the initial equity investment provided by us and The Bromley Companies is not sufficient to finance its planned investments and operations. We, as majority owner and managing member and through our control rights as set forth in the joint venture’s governance documents, were determined to be the primary beneficiary as we have both the power to direct the activities that most significantly affect the entity (primarily lease rates, property operations and capital expenditures) and significant economic exposure through our equity investment and loan commitment. As such, the Midtown One joint venture is consolidated and all intercompany transactions and accounts are eliminated. The following table sets forth the assets and liabilities of the Midtown One joint venture included on our Consolidated Balance Sheets:

 
June 30,
2020
Development in-process
$
34,462

Accounts payable, accrued expenses and other liabilities
$
2,377



The assets of the Midtown One joint venture can be used only to settle obligations of the joint venture and its creditors have no recourse to our wholly owned assets.
v3.20.2
Real Estate Assets
6 Months Ended
Jun. 30, 2020
Real Estate [Abstract]  
Real Estate Assets Real Estate Assets
 
Acquisitions
 
During the second quarter of 2020, we acquired development land in Raleigh for a purchase price, including capitalized acquisition costs, of $2.3 million.

During the first quarter of 2020, we acquired development land in Nashville for a purchase price of $6.2 million, which consisted of the issuance of 118,592 Common Units and capitalized acquisition costs.

Dispositions

During the second quarter of 2020, we sold land in Atlanta for a sale price of $2.8 million and recorded a loss on disposition of property of $0.1 million. During the second quarter of 2020, we also recognized $0.4 million of gain related to the satisfaction of a performance obligation as part of a 2016 land sale.

During the first quarter of 2020, we sold 41 buildings and land in Greensboro and Memphis for an aggregate sale price of $338.4 million (before closing credits to buyer of $3.8 million) and recorded aggregate gains on disposition of property of $153.1 million.

Impairments

During the second quarter of 2020, we recorded an impairment of real estate assets of $1.8 million, which resulted from a change in market-based inputs and our assumptions about the use of the assets.
v3.20.2
Intangible Assets and Below Market Lease Liabilities
6 Months Ended
Jun. 30, 2020
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:
 
 
June 30,
2020
 
December 31,
2019
Assets:
 
 
 
Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets)
$
373,075

 
$
377,472

Less accumulated amortization
(151,170
)
 
(146,125
)
 
$
221,905

 
$
231,347

Liabilities (in accounts payable, accrued expenses and other liabilities):
 
 
 
Acquisition-related below market lease liabilities
$
65,039

 
$
65,971

Less accumulated amortization
(36,164
)
 
(34,014
)
 
$
28,875

 
$
31,957

 
The following table sets forth amortization of intangible assets and below market lease liabilities:
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)
$
8,566

 
$
8,759

 
$
17,364

 
$
19,074

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

 
$
460

 
$
919

 
$
3,308

Amortization of acquisition-related intangible assets (in rental and other revenues)
$
321

 
$
343

 
$
609

 
$
700

Amortization of acquisition-related intangible assets (in rental property and other expenses)
$
138

 
$
139

 
$
277

 
$
276

Amortization of acquisition-related below market lease liabilities (in rental and other revenues)
$
(1,517
)
 
$
(1,763
)
 
$
(3,083
)
 
$
(3,416
)

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)
July 1 through December 31, 2020
 
$
18,951

 
$
831

 
$
529

 
$
233

 
$
(2,874
)
2021
 
33,989

 
1,415

 
767

 

 
(5,013
)
2022
 
29,787

 
1,204

 
601

 

 
(3,982
)
2023
 
26,329

 
1,121

 
447

 

 
(3,607
)
2024
 
23,306

 
975

 
373

 

 
(2,939
)
Thereafter
 
74,561

 
4,325

 
2,161

 

 
(10,460
)
 
 
$
206,923

 
$
9,871

 
$
4,878

 
$
233

 
$
(28,875
)
Weighted average remaining amortization periods as of June 30, 2020 (in years)
 
8.4

 
9.1

 
9.5

 
0.5

 
8.7


v3.20.2
Mortgages and Notes Payable
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Mortgages and Notes Payable Mortgages and Notes Payable
 
The following table sets forth our mortgages and notes payable:
 
 
June 30,
2020
 
December 31,
2019
Secured indebtedness
$
94,336

 
$
95,303

Unsecured indebtedness
2,255,277

 
2,461,425

Less-unamortized debt issuance costs
(11,951
)
 
(13,018
)
Total mortgages and notes payable, net
$
2,337,662

 
$
2,543,710


 
At June 30, 2020, our secured mortgage loan was collateralized by real estate assets with an undepreciated book value of $147.4 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 was $14.0 million outstanding under our revolving credit facility at June 30, 2020. There were no amounts outstanding under our revolving credit facility at July 21, 2020. At both June 30, 2020 and July 21, 2020, we had $0.1 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 June 30, 2020 and July 21, 2020 was $585.9 million and $599.9 million, respectively.
 
We are currently in compliance with financial covenants with respect to our consolidated debt.
 
We have considered our short-term liquidity needs within one year from July 28, 2020 (the date of issuance of the quarterly financial statements) and the adequacy of our estimated cash flows from operating activities and other available financing sources to meet these needs. In particular, we have considered our scheduled debt maturities during such one-year period, including the $300.0 million principal amount of unsecured notes due June 15, 2021. We have concluded it is probable we will 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.
v3.20.2
Derivative Financial Instruments
6 Months Ended
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments

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 changes in fair value recorded in other comprehensive income/(loss) each reporting period. We have no collateral requirements related to our interest rate swaps.
 
Amounts reported in accumulated other comprehensive income/(loss) related to derivatives will be reclassified to interest expense as interest payments are made on our debt. During the period from July 1, 2020 through June 30, 2021, we estimate that $0.5 million will be reclassified as a net increase to interest expense.

The following table sets forth the fair value of our derivatives:
 
 
June 30,
2020
 
December 31,
2019
Derivatives:
 
 
 
Derivatives designated as cash flow hedges in accounts payable, accrued expenses and other liabilities:
 
 
 
Interest rate swaps
$
1,237

 
$
154


 
The following table sets forth the effect of our cash flow hedges on accumulated other comprehensive income/(loss) and interest expense:
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Derivatives Designated as Cash Flow Hedges:
 
 
 
 
 
 
 
Amount of unrealized losses recognized in accumulated other comprehensive income/(loss) on derivatives:
 
 
 
 
 
 
 
Interest rate swaps
$
(103
)
 
$
(646
)
 
$
(1,236
)
 
$
(2,550
)
Amount of (gains)/losses reclassified out of accumulated other comprehensive income/(loss) into interest expense:
 
 
 
 
 
 
 
Interest rate swaps
$
75

 
$
(360
)
 
$
3

 
$
(875
)

v3.20.2
Noncontrolling Interests
6 Months Ended
Jun. 30, 2020
Noncontrolling Interest [Abstract]  
Noncontrolling Interests
Noncontrolling Interests

Noncontrolling Interests in Consolidated Affiliates
 
At June 30, 2020, our noncontrolling interests in consolidated affiliates relate to our joint venture partners’ 50.0% interest in office properties in Richmond and 20.0% interest in an office development property in Tampa. Our joint venture partners are unrelated third parties.

Noncontrolling Interests in the Operating Partnership

The following table sets forth the Company’s noncontrolling interests in the Operating Partnership:
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Beginning noncontrolling interests in the Operating Partnership
$
100,674

 
$
127,976

 
$
133,216

 
$
105,960

Adjustment of noncontrolling interests in the Operating Partnership to fair value
5,776

 
(14,722
)
 
(36,525
)
 
8,532

Issuances of Common Units

 

 
6,163

 

Conversions of Common Units to Common Stock

 
(222
)
 

 
(353
)
Net income attributable to noncontrolling interests in the Operating Partnership
1,017

 
1,044

 
5,977

 
1,237

Distributions to noncontrolling interests in the Operating Partnership
(1,364
)
 
(1,298
)
 
(2,728
)
 
(2,598
)
Total noncontrolling interests in the Operating Partnership
$
106,103

 
$
112,778

 
$
106,103

 
$
112,778


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
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Net income available for common stockholders
$
37,028

 
$
39,422

 
$
222,501

 
$
46,677

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

 
222

 

 
353

Issuances of Common Units

 

 
(6,163
)
 

Change from net income available for common stockholders and transfers from noncontrolling interests
$
37,028

 
$
39,644

 
$
216,338

 
$
47,030


v3.20.2
Disclosure About Fair Value of Financial Instruments
6 Months Ended
Jun. 30, 2020
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. Our Level 2 liabilities include the fair value of our mortgages and notes payable and interest rate swaps.

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.

Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
 
Our Level 3 assets include any real estate assets recorded at fair value on a non-recurring basis as a result of our quarterly impairment analysis, which are valued using unobservable local and national industry market data such as comparable sales, appraisals, brokers’ opinions of value and/or the terms of definitive sales contracts. Significant increases or decreases in any valuation inputs in isolation would result in a significantly lower or higher fair value measurement.

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
 
Level 3
 
 
Total
 
Quoted Prices
in Active
Markets for Identical Assets or Liabilities
 
Significant Observable Inputs
 
Significant Unobservable Inputs
Fair Value at June 30, 2020:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Mortgages and notes receivable, at fair value (1)
 
$
1,440

 
$

 
$
1,440

 
$

Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
2,111

 
2,111

 

 

Impaired real estate assets
 
2,053

 

 

 
2,053

Total Assets
 
$
5,604

 
$
2,111

 
$
1,440

 
$
2,053

Noncontrolling Interests in the Operating Partnership
 
$
106,103

 
$
106,103

 
$

 
$

Liabilities:
 
 
 
 
 
 
 
 
Mortgages and notes payable, net, at fair value (1)
 
$
2,421,024

 
$

 
$
2,421,024

 
$

Interest rate swaps (in accounts payable, accrued expenses and other liabilities)
 
1,237

 

 
1,237

 

Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
2,111

 
2,111

 

 

Total Liabilities
 
$
2,424,372

 
$
2,111

 
$
2,422,261

 
$

Fair Value at December 31, 2019:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Mortgages and notes receivable, at fair value (1)
 
$
1,501

 
$

 
$
1,501

 
$

Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
2,345

 
2,345

 

 

Total Assets
 
$
3,846

 
$
2,345

 
$
1,501

 
$

Noncontrolling Interests in the Operating Partnership