HIGHWOODS PROPERTIES, INC., 10-K filed on 2/9/2021
Annual Report
v3.20.4
Cover Page - USD ($)
$ in Billions
12 Months Ended
Dec. 31, 2020
Jan. 29, 2021
Jun. 30, 2020
Entity Information [Line Items]      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 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 Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
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    
ICFR Auditor Attestation Flag true    
Entity Shell Company false    
Entity Public Float     $ 3.8
Entity Common Stock, Shares Outstanding   103,921,110  
Entity Central Index Key 0000921082    
Current Fiscal Year End Date --12-31    
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
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 Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
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    
ICFR Auditor Attestation Flag 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 FY    
Amendment Flag false    
v3.20.4
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Real estate assets, at cost:    
Land $ 466,872 $ 515,095
Buildings and tenant improvements 4,981,637 5,128,150
Development in-process 259,681 172,706
Land held for development 131,474 99,163
Total real estate assets 5,839,664 5,915,114
Less-accumulated depreciation (1,418,379) (1,388,566)
Net real estate assets 4,421,285 4,526,548
Real estate and other assets, net, held for sale 11,360 20,790
Cash and cash equivalents 109,322 9,505
Restricted cash 79,922 5,237
Accounts receivable 27,488 23,370
Mortgages and notes receivable 1,341 1,501
Accrued straight-line rents receivable 259,381 234,652
Investments in and advances to unconsolidated affiliates 27,104 26,298
Deferred leasing costs, net of accumulated amortization of $151,698 and $146,125, respectively 209,329 231,347
Prepaid expenses and other assets, net of accumulated depreciation of $21,154 and $20,017, respectively 62,885 58,996
Total Assets 5,209,417 5,138,244
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,470,021 2,543,710
Accounts payable, accrued expenses and other liabilities 268,727 286,911
Total Liabilities 2,738,748 2,830,621
Commitments and contingencies
Noncontrolling interests in the Operating Partnership 112,499 133,216
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), 28,826 and 28,859 shares issued and outstanding, respectively 28,826 28,859
Common Stock, $.01 par value, 200,000,000 authorized shares; 103,921,546 and 103,756,046 shares issued and outstanding, respectively 1,039 1,038
Additional paid-in capital 2,993,946 2,954,779
Distributions in excess of net income available for common stockholders (686,225) (831,808)
Accumulated other comprehensive loss (1,462) (471)
Total Stockholders’ Equity 2,336,124 2,152,397
Noncontrolling interests in consolidated affiliates 22,046 22,010
Total Equity/Capital: 2,358,170 2,174,407
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital 5,209,417 5,138,244
Highwoods Realty Limited Partnership [Member]    
Real estate assets, at cost:    
Land 466,872 515,095
Buildings and tenant improvements 4,981,637 5,128,150
Development in-process 259,681 172,706
Land held for development 131,474 99,163
Total real estate assets 5,839,664 5,915,114
Less-accumulated depreciation (1,418,379) (1,388,566)
Net real estate assets 4,421,285 4,526,548
Real estate and other assets, net, held for sale 11,360 20,790
Cash and cash equivalents 109,322 9,505
Restricted cash 79,922 5,237
Accounts receivable 27,488 23,370
Mortgages and notes receivable 1,341 1,501
Accrued straight-line rents receivable 259,381 234,652
Investments in and advances to unconsolidated affiliates 27,104 26,298
Deferred leasing costs, net of accumulated amortization of $151,698 and $146,125, respectively 209,329 231,347
Prepaid expenses and other assets, net of accumulated depreciation of $21,154 and $20,017, respectively 62,885 58,996
Total Assets 5,209,417 5,138,244
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,470,021 2,543,710
Accounts payable, accrued expenses and other liabilities 268,727 286,911
Total Liabilities 2,738,748 2,830,621
Commitments and contingencies
Redeemable Operating Partnership Units:    
Redeemable Operating Partnership Units, Common Units, 2,838,725 and 2,723,703 outstanding, respectively 112,499 133,216
Series A Preferred Units (liquidation preference $1,000 per unit), 28,826 and 28,859 units issued and outstanding, respectively 28,826 28,859
Total Redeemable Operating Partnership Units 141,325 162,075
Equity/Capital:    
General partner Common Units, 1,063,515 and 1,060,709 outstanding, respectively 23,087 21,240
Limited partner Common Units, 102,449,222 and 102,286,528 outstanding, respectively 2,285,673 2,102,769
Accumulated other comprehensive loss (1,462) (471)
Noncontrolling interests in consolidated affiliates 22,046 22,010
Total Equity/Capital: 2,329,344 2,145,548
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital $ 5,209,417 $ 5,138,244
v3.20.4
Consolidated Balance Sheets (Parentheticals) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Assets:    
Deferred leasing costs, accumulated amortization $ 151,698 $ 146,125
Prepaid expenses and other assets, accumulated amortization $ 21,154 $ 20,017
Equity/Capital:    
Preferred Stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred Stock, authorized shares (in shares) 50,000,000 50,000,000
Preferred Stock, liquidation preference (in dollars per share) $ 1,000 $ 1,000
Preferred Stock, shares issued (in shares) 28,826 28,859
Preferred Stock, shares outstanding (in shares) 28,826 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) 103,921,546 103,756,046
Common Stock, shares outstanding (in shares) 103,921,546 103,756,046
Highwoods Realty Limited Partnership [Member]    
Assets:    
Deferred leasing costs, accumulated amortization $ 151,698 $ 146,125
Prepaid expenses and other assets, accumulated amortization $ 21,154 $ 20,017
Redeemable Operating Partnership Units:    
Redeemable Common Units, outstanding (in shares) 2,838,725 2,723,703
Preferred Units liquidation preference (in dollars per share) $ 1,000 $ 1,000
Series A Preferred Units, issued (in shares) 28,826 28,859
Series A Preferred Units, outstanding (in shares) 28,826 28,859
Common Units:    
General partners' capital account, units outstanding (in shares) 1,063,515 1,060,709
Limited partners' capital account, units outstanding (in shares) 102,449,222 102,286,528
v3.20.4
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Rental and other revenues $ 736,900 $ 735,979 $ 720,035
Operating expenses:      
Rental property and other expenses 231,825 248,511 242,415
Depreciation and amortization 241,585 254,504 229,955
Impairments of real estate assets 1,778 5,849 423
General and administrative 41,031 44,067 40,006
Total operating expenses 516,219 552,931 512,799
Interest expense 80,962 81,648 71,422
Other income/(loss) (1,707) (2,510) 1,940
Gains on disposition of property 215,897 39,517 37,638
Equity in earnings of unconsolidated affiliates 4,005 3,276 2,238
Net income 357,914 141,683 177,630
Net (income) attributable to noncontrolling interests in the Operating Partnership (9,338) (3,551) (4,588)
Net (income) attributable to noncontrolling interests in consolidated affiliates (1,174) (1,214) (1,207)
Dividends on Preferred Stock (2,488) (2,488) (2,492)
Net income available for common stockholders $ 344,914 $ 134,430 $ 169,343
Earnings per Common Share - basic:      
Net income available for common stockholders (in dollars per share) $ 3.32 $ 1.30 $ 1.64
Weighted average Common Shares outstanding - basic (in shares) 103,876 103,692 103,439
Earnings per Common Share - diluted:      
Net income available for common stockholders (in dollars per share) $ 3.32 $ 1.30 $ 1.64
Weighted average Common Shares outstanding - diluted (in shares) 106,714 106,445 106,268
Highwoods Realty Limited Partnership [Member]      
Rental and other revenues $ 736,900 $ 735,979 $ 720,035
Operating expenses:      
Rental property and other expenses 231,825 248,511 242,415
Depreciation and amortization 241,585 254,504 229,955
Impairments of real estate assets 1,778 5,849 423
General and administrative 41,031 44,067 40,006
Total operating expenses 516,219 552,931 512,799
Interest expense 80,962 81,648 71,422
Other income/(loss) (1,707) (2,510) 1,940
Gains on disposition of property 215,897 39,517 37,638
Equity in earnings of unconsolidated affiliates 4,005 3,276 2,238
Net income 357,914 141,683 177,630
Net (income) attributable to noncontrolling interests in consolidated affiliates (1,174) (1,214) (1,207)
Distributions on Preferred Units (2,488) (2,488) (2,492)
Net income available for common unitholders $ 354,252 $ 137,981 $ 173,931
Earnings per Common Unit - basic:      
Net income available for common unitholders (in dollars per share) $ 3.33 $ 1.30 $ 1.64
Weighted average Common Units outstanding - basic (in shares) 106,297 106,014 105,826
Earnings per Common Unit - diluted:      
Net income available for common unitholders (in dollars per share) $ 3.33 $ 1.30 $ 1.64
Weighted average Common Units outstanding - diluted (in shares) 106,305 106,036 105,859
v3.20.4
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Comprehensive income:      
Net income $ 357,914 $ 141,683 $ 177,630
Other comprehensive income/(loss):      
Unrealized gains/(losses) on cash flow hedges (1,238) (9,134) 4,161
Amortization of cash flow hedges 247 (1,250) (2,086)
Total other comprehensive income/(loss) (991) (10,384) 2,075
Total comprehensive income 356,923 131,299 179,705
Less-comprehensive (income) attributable to noncontrolling interests (10,512) (4,765) (5,795)
Comprehensive income attributable to common stockholders/unitholders 346,411 126,534 173,910
Highwoods Realty Limited Partnership [Member]      
Comprehensive income:      
Net income 357,914 141,683 177,630
Other comprehensive income/(loss):      
Unrealized gains/(losses) on cash flow hedges (1,238) (9,134) 4,161
Amortization of cash flow hedges 247 (1,250) (2,086)
Total other comprehensive income/(loss) (991) (10,384) 2,075
Total comprehensive income 356,923 131,299 179,705
Less-comprehensive (income) attributable to noncontrolling interests (1,174) (1,214) (1,207)
Comprehensive income attributable to common stockholders/unitholders $ 355,749 $ 130,085 $ 178,498
v3.20.4
Consolidated Statements of Equity - USD ($)
$ in Thousands
Total
Highwoods Realty Limited Partnership [Member]
Common Stock [Member]
Series A Cumulative Redeemable Preferred Shares [Member]
General Partner Common Units [Member]
Highwoods Realty Limited Partnership [Member]
Limited Partner 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, 2017     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   1,865     19 1,846     0   0  
Distributions on Common Units   (195,712)     (1,957) (193,755)     0   0  
Distributions on Preferred Units   (2,492)     (25) (2,467)     0   0  
Issuances of Common Stock - Shares     33,652                  
Issuances of Common Stock, net of issuance costs and tax withholdings 1,865   $ 0 0     1,865 0   0   0
Conversions of Common Units to Common Stock - Shares     90,001                  
Conversions of Common Units to Common Stock 4,043   $ 0 0     4,043 0   0   0
Dividends on Common Stock (191,302)   0 0     0 0   0   (191,302)
Dividends on Preferred Stock (2,492)   0 0     0 0   0   (2,492)
Adjustment of noncontrolling interests in the Operating Partnership to fair value 33,427   0 0     33,427 0   0   0
Distributions to noncontrolling interests in consolidated affiliates (1,047) (1,047) $ 0 0 0 0 0 0 0 (1,047) (1,047) 0
Issuances of restricted stock - Shares     172,440                  
Issuances of restricted stock 0   $ 0 0     0 0   0   0
Redemptions/repurchases of Preferred Stock (15)   $ 0 (15)     0 0   0   0
Share-based compensation expense, net of forfeitures - Shares     (5,903)                  
Share-based compensation expense, net of forfeitures 7,466 7,466 $ 3 0 75 7,391 7,463 0 0 0 0 0
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   37,292     372 36,920     0   0  
Net (income) attributable to noncontrolling interests in the Operating Partnership (4,588)   0 0     0 0   0   (4,588)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0 0 0 (12) (1,195) 0 0 0 1,207 1,207 (1,207)
Comprehensive income:                        
Net income 177,630 177,630 0 0 1,776 175,854 0 0 0 0 0 177,630
Other comprehensive income/(loss) 2,075 2,075 $ 0 0 0 0 0 2,075 2,075 0 0 0
Total comprehensive income 179,705 179,705                    
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   298     3 295     0   0  
Distributions on Common Units   (201,347)     (2,013) (199,334)     0   0  
Distributions on Preferred Units   (2,488)     (25) (2,463)     0   0  
Issuances of Common Stock - Shares     (143)                  
Issuances of Common Stock, net of issuance costs and tax withholdings 298   $ 0 0     298 0   0   0
Conversions of Common Units to Common Stock - Shares     15,000                  
Conversions of Common Units to Common Stock 663   $ 0 0     663 0   0   0
Dividends on Common Stock (196,935)   0 0     0 0   0   (196,935)
Dividends on Preferred Stock (2,488)   0 0     0 0   0   (2,488)
Adjustment of noncontrolling interests in the Operating Partnership to fair value (29,557)   0 0     (29,557) 0   0   0
Distributions to noncontrolling interests in consolidated affiliates (1,767) (1,767) 0 0 0 0 0 0 0 (1,767) (1,767) 0
Contributions from noncontrolling interests in consolidated affiliates 4,987 4,987 $ 0 0 0 0 0 0 0 4,987 4,987 0
Issuances of restricted stock - Shares     190,934                  
Issuances of restricted stock 0   $ 0 0     0 0   0   0
Redemptions/repurchases of Preferred Stock (18)   $ 0 (18)     0 0   0   0
Share-based compensation expense, net of forfeitures - Shares     (6,810)                  
Share-based compensation expense, net of forfeitures 7,180 7,180 $ 2 0 72 7,108 7,178 0 0 0 0 0
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   (28,033)     (280) (27,753)     0   0  
Net (income) attributable to noncontrolling interests in the Operating Partnership (3,551)   0 0     0 0   0   (3,551)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0 0 0 (12) (1,202) 0 0 0 1,214 1,214 (1,214)
Comprehensive income:                        
Net income 141,683 141,683 0 0 1,417 140,266 0 0 0 0 0 141,683
Other comprehensive income/(loss) (10,384) (10,384) $ 0 0 0 0 0 (10,384) (10,384) 0 0 0
Total comprehensive income $ 131,299 131,299                    
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   8,359     84 8,275     0   0  
Distributions on Common Units   (204,002)     (2,040) (201,962)     0   0  
Distributions on Preferred Units   (2,488)     (25) (2,463)     0   0  
Issuances of Common Stock - Shares     19,377                  
Issuances of Common Stock, net of issuance costs and tax withholdings 2,196   $ 0 0     2,196 0   0   0
Conversions of Common Units to Common Stock - Shares     3,570                  
Conversions of Common Units to Common Stock 145   $ 0 0     145 0   0   0
Dividends on Common Stock (199,331)   0 0     0 0   0   (199,331)
Dividends on Preferred Stock (2,488)   0 0     0 0   0   (2,488)
Adjustment of noncontrolling interests in the Operating Partnership to fair value 30,617   0 0     30,617 0   0   0
Distributions to noncontrolling interests in consolidated affiliates (1,138) (1,138) $ 0 0 0 0 0 0 0 (1,138) (1,138) 0
Issuances of restricted stock - Shares     149,304                  
Issuances of restricted stock 0   $ 0 0     0 0   0   0
Redemptions/repurchases of Preferred Stock (33)   $ 0 (33)     0 0   0   0
Share-based compensation expense, net of forfeitures - Shares     (6,751)                  
Share-based compensation expense, net of forfeitures 6,210 6,210 $ 1 0 62 6,148 6,209 0 0 0 0 0
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   19,932     199 19,733     0   0  
Net (income) attributable to noncontrolling interests in the Operating Partnership (9,338)   0 0     0 0   0   (9,338)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0 0 0 (12) (1,162) 0 0 0 1,174 1,174 (1,174)
Comprehensive income:                        
Net income 357,914 357,914 0 0 3,579 354,335 0 0 0 0 0 357,914
Other comprehensive income/(loss) (991) (991) $ 0 0 0 0 0 (991) (991) 0 0 0
Total comprehensive income $ 356,923 356,923                    
Balance (in shares) at Dec. 31, 2020 103,921,546   103,921,546                  
Balance at Dec. 31, 2020 $ 2,358,170 $ 2,329,344 $ 1,039 $ 28,826 $ 23,087 $ 2,285,673 $ 2,993,946 $ (1,462) $ (1,462) $ 22,046 $ 22,046 $ (686,225)
v3.20.4
Consolidated Statements of Equity (Parentheticals) - $ / shares
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Series A Cumulative Redeemable Preferred Shares [Member]      
Dividends on Preferred Stock (per share)/Distributions on Preferred Units (per unit) $ 86.25 $ 86.25 $ 86.25
Highwoods Properties, Inc. [Member]      
Dividends on Common Stock (per share) 1.92 1.90 1.85
Highwoods Properties, Inc. [Member] | Series A Cumulative Redeemable Preferred Shares [Member]      
Dividends on Preferred Stock (per share)/Distributions on Preferred Units (per unit) 86.25 86.25 86.25
Highwoods Realty Limited Partnership [Member]      
Distributions on Common Units (per unit) 1.92 1.90 1.85
Highwoods Realty Limited Partnership [Member] | Series A Cumulative Redeemable Preferred Shares [Member]      
Dividends on Preferred Stock (per share)/Distributions on Preferred Units (per unit) $ 86.25 $ 86.25 $ 86.25
v3.20.4
Consolidated Statements of Cash Flows
$ in Thousands
12 Months Ended
Dec. 31, 2020
USD ($)
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Operating activities:      
Net income $ 357,914 $ 141,683 $ 177,630
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 241,585 254,504 229,955
Amortization of lease incentives and acquisition-related intangible assets and liabilities (2,537) (505) (1,943)
Share-based compensation expense 6,210 7,180 7,466
Credit losses on operating lease receivables 5,458 9,861 1,212
Write-off of mortgages and notes receivable 0 4,087 0
Accrued interest on mortgages and notes receivable (118) (184) (451)
Amortization of debt issuance costs 3,092 2,970 2,857
Amortization of cash flow hedges 247 (1,250) (2,086)
Amortization of mortgages and notes payable fair value adjustments 1,681 1,619 1,449
Impairments of real estate assets 1,778 5,849 423
Losses on debt extinguishment 3,674 640 0
Net gains on disposition of property (215,897) (39,517) (37,638)
Equity in earnings of unconsolidated affiliates (4,005) (3,276) (2,238)
Distributions of earnings from unconsolidated affiliates 1,533 1,149 2,104
Settlement of cash flow hedges 0 (11,749) 7,216
Changes in operating assets and liabilities:      
Accounts receivable 437 (3,271) 1,759
Prepaid expenses and other assets (365) 1,610 1,217
Accrued straight-line rents receivable (36,576) (29,828) (23,203)
Accounts payable, accrued expenses and other liabilities (5,951) 24,225 (7,101)
Net cash provided by operating activities 358,160 365,797 358,628
Investing activities:      
Investments in acquired real estate and related intangible assets, net of cash acquired (2,363) (424,222) (50,649)
Investments in development in-process (160,612) (116,111) (150,310)
Investments in tenant improvements and deferred leasing costs (137,997) (138,754) (121,534)
Investments in building improvements (62,154) (53,826) (68,256)
Net proceeds from disposition of real estate assets 484,311 133,326 88,813
Distributions of capital from unconsolidated affiliates 72 7,833 105
Investments in mortgages and notes receivable (32) 0 0
Repayments of mortgages and notes receivable 310 295 1,312
Investments in and advances to unconsolidated affiliates 0 (9,977) 0
Changes in other investing activities (10,853) (5,971) (6,230)
Net cash provided by/(used in) investing activities 110,682 (607,407) (306,749)
Financing activities:      
Dividends on Common Stock (199,331) (196,935) (191,302)
Redemptions/repurchases of Preferred Stock (33) (18) (15)
Dividends on Preferred Stock (2,488) (2,488) (2,492)
Distributions to noncontrolling interests in the Operating Partnership (5,456) (5,189) (5,167)
Distributions to noncontrolling interests in consolidated affiliates (1,138) (1,767) (1,047)
Proceeds from the issuance of Common Stock 3,571 2,086 3,637
Costs paid for the issuance of Common Stock (215) 0 (95)
Repurchase of shares related to tax withholdings (1,160) (1,788) (1,677)
Borrowings on revolving credit facility 129,000 604,600 438,900
Repayments of revolving credit facility (350,000) (565,600) (501,900)
Borrowings on mortgages and notes payable 398,364 747,990 345,863
Repayments of mortgages and notes payable (251,952) (326,876) (211,803)
Payments of debt extinguishment costs (3,193) 0 0
Changes in debt issuance costs and other financing activities (10,309) (7,806) (2,971)
Net cash provided by/(used in) financing activities (294,340) 246,209 (130,069)
Net increase/(decrease) in cash and cash equivalents and restricted cash 174,502 4,599 (78,190)
Cash and cash equivalents and restricted cash at beginning of the period 14,742 10,143 88,333
Cash and cash equivalents and restricted cash at end of the period 189,244 14,742 10,143
Reconciliation of cash and cash equivalents and restricted cash:      
Cash and cash equivalents at end of the period 109,322 9,505 3,769
Restricted cash at end of the period 79,922 5,237 6,374
Supplemental disclosure of cash flow information:      
Cash paid for interest, net of amounts capitalized 72,350 72,014 67,235
Supplemental disclosure of non-cash investing and financing activities:      
Unrealized gains on cash flow hedges (1,238) (9,134) 4,161
Conversions of Common Units to Common Stock 145 663 4,043
Changes in accrued capital expenditures (1) (1,913) 5,625 (165)
Write-off of fully depreciated real estate assets 46,656 85,727 76,558
Write-off of fully amortized leasing costs 25,618 45,042 34,191
Write-off of fully amortized debt issuance costs 1,438 1,791 2,733
Adjustment of noncontrolling interests in the Operating Partnership to fair value (30,617) 29,557 (33,427)
Issuances of Common Units to acquire real estate assets 6,163 0 0
Contingent consideration in connection with the acquisition of land 0 1,200 0
Contributions from noncontrolling interests in consolidated affiliates 0 4,987 0
Initial recognition of lease liabilities related to right of use assets 0 35,349 0
Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities 66,000 67,900 62,200
Highwoods Realty Limited Partnership [Member]      
Operating activities:      
Net income 357,914 141,683 177,630
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 241,585 254,504 229,955
Amortization of lease incentives and acquisition-related intangible assets and liabilities (2,537) (505) (1,943)
Share-based compensation expense 6,210 7,180 7,466
Credit losses on operating lease receivables 5,458 9,861 1,212
Write-off of mortgages and notes receivable 0 4,087 0
Accrued interest on mortgages and notes receivable (118) (184) (451)
Amortization of debt issuance costs 3,092 2,970 2,857
Amortization of cash flow hedges 247 (1,250) (2,086)
Amortization of mortgages and notes payable fair value adjustments 1,681 1,619 1,449
Impairments of real estate assets 1,778 5,849 423
Losses on debt extinguishment 3,674 640 0
Net gains on disposition of property (215,897) (39,517) (37,638)
Equity in earnings of unconsolidated affiliates (4,005) (3,276) (2,238)
Distributions of earnings from unconsolidated affiliates 1,533 1,149 2,104
Settlement of cash flow hedges 0 (11,749) 7,216
Changes in operating assets and liabilities:      
Accounts receivable 437 (3,271) 1,759
Prepaid expenses and other assets (365) 1,610 1,217
Accrued straight-line rents receivable (36,576) (29,828) (23,203)
Accounts payable, accrued expenses and other liabilities (5,951) 24,225 (7,101)
Net cash provided by operating activities 358,160 365,797 358,628
Investing activities:      
Investments in acquired real estate and related intangible assets, net of cash acquired (2,363) (424,222) (50,649)
Investments in development in-process (160,612) (116,111) (150,310)
Investments in tenant improvements and deferred leasing costs (137,997) (138,754) (121,534)
Investments in building improvements (62,154) (53,826) (68,256)
Net proceeds from disposition of real estate assets 484,311 133,326 88,813
Distributions of capital from unconsolidated affiliates 72 7,833 105
Investments in mortgages and notes receivable (32) 0 0
Repayments of mortgages and notes receivable 310 295 1,312
Investments in and advances to unconsolidated affiliates 0 (9,977) 0
Changes in other investing activities (10,853) (5,971) (6,230)
Net cash provided by/(used in) investing activities 110,682 (607,407) (306,749)
Financing activities:      
Distributions on Common Units (204,002) (201,347) (195,712)
Redemptions/repurchases of Preferred Units (33) (18) (15)
Distributions on Preferred Units (2,488) (2,488) (2,492)
Distributions to noncontrolling interests in consolidated affiliates (1,138) (1,767) (1,047)
Proceeds from the issuance of Common Units 3,571 2,086 3,637
Costs paid for the issuance of Common Units (215) 0 (95)
Repurchase of units related to tax withholdings (1,160) (1,788) (1,677)
Borrowings on revolving credit facility 129,000 604,600 438,900
Repayments of revolving credit facility (350,000) (565,600) (501,900)
Borrowings on mortgages and notes payable 398,364 747,990 345,863
Repayments of mortgages and notes payable (251,952) (326,876) (211,803)
Payments of debt extinguishment costs (3,193) 0 0
Changes in debt issuance costs and other financing activities (11,094) (8,583) (3,728)
Net cash provided by/(used in) financing activities (294,340) 246,209 (130,069)
Net increase/(decrease) in cash and cash equivalents and restricted cash 174,502 4,599 (78,190)
Cash and cash equivalents and restricted cash at beginning of the period 14,742 10,143 88,333
Cash and cash equivalents and restricted cash at end of the period 189,244 14,742 10,143
Reconciliation of cash and cash equivalents and restricted cash:      
Cash and cash equivalents at end of the period 109,322 9,505 3,769
Restricted cash at end of the period 79,922 5,237 6,374
Supplemental disclosure of cash flow information:      
Cash paid for interest, net of amounts capitalized 72,350 72,014 67,235
Supplemental disclosure of non-cash investing and financing activities:      
Unrealized gains on cash flow hedges (1,238) (9,134) 4,161
Changes in accrued capital expenditures (1) (1,913) 5,625 (165)
Write-off of fully depreciated real estate assets 46,656 85,727 76,558
Write-off of fully amortized leasing costs 25,618 45,042 34,191
Write-off of fully amortized debt issuance costs 1,438 1,791 2,733
Adjustment of Redeemable Common Units to fair value (26,880) 27,256 (38,049)
Issuances of Common Units to acquire real estate assets 6,163 0 0
Contingent consideration in connection with the acquisition of land 0 1,200 0
Contributions from noncontrolling interests in consolidated affiliates 0 4,987 0
Initial recognition of lease liabilities related to right of use assets 0 35,349 0
Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities $ 66,000 $ 67,900 $ 62,200
v3.20.4
Description of Business and Significant Accounting Policies
12 Months Ended
Dec. 31, 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 December 31, 2020, we owned or had an interest in 27.2 million rentable square feet of in-service properties, 1.2 million rentable square feet of office properties under development and approximately 230 acres of development land.

The Company is the sole general partner of the Operating Partnership. At December 31, 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. In the event the Company issues shares of Common Stock, the net proceeds of the issuance are contributed to the Operating Partnership in exchange for additional Common Units. Generally, the Operating Partnership is obligated to redeem each Common Unit at the request of the holder thereof for cash equal to the value of one share of Common Stock based on the average of the market price for the 10 trading days immediately preceding the notice date of such redemption, provided that the Company, at its option, may elect to acquire any such Common Units presented for redemption for cash or one share of Common Stock. The Common Units owned by the Company are not redeemable. During 2020, the Company redeemed 3,570 Common Units for a like number of shares of Common Stock and the Operating Partnership 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. At December 31, 2020, three properties owned through a joint venture investment were consolidated. We also consolidate those entities deemed to be variable interest entities in which we are determined to be the primary beneficiary. At December 31, 2020, we have involvement with, and are the primary beneficiary in, an entity that we concluded to be a variable interest entity (see Note 4).

In addition, during 2019, we acquired a building using a special purpose entity owned by a qualified intermediary to facilitate a potential Section 1031 reverse exchange under the Internal Revenue Code. We determined that this entity was a variable interest entity of which we were the primary beneficiary and therefore, we consolidated this entity as of December 31, 2019. During 2020, we completed the exchange by acquiring 100% of the special purpose entity.

All intercompany transactions and accounts have been eliminated.

Certain amounts within the Consolidated Statements of Income for the year ended December 31, 2018 were removed and/or combined to conform to the current year presentation.

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 December 31, 2020, a reserve of $0.5 million was recorded to cover estimated reported and unreported claims.

Real Estate and Related Assets

Real estate and related assets are recorded at cost and stated at cost less accumulated depreciation. Renovations, replacements and other expenditures that improve or extend the life of assets are capitalized and depreciated over their estimated useful lives. Expenditures for ordinary maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of 40 years for buildings and depreciable land infrastructure costs, 15 years for building improvements and five to seven years for furniture, fixtures and equipment. Tenant improvements are amortized using the straight-line method over the initial fixed terms of the respective leases, which generally are from three to 10 years. Depreciation expense for real estate assets was $204.6 million, $214.7 million and $191.0 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Expenditures directly related to the development and construction of real estate assets are included in net real estate assets and are stated at depreciated cost. Development expenditures include pre-construction costs essential to the development of properties, development and construction costs, interest costs on qualifying assets, real estate taxes, development personnel salaries and related costs and other costs incurred during the period of development. Interest and other carrying costs are capitalized until the building is ready for its intended use, but not later than a year from cessation of major construction activity. We consider a construction project as substantially completed and ready for its intended use upon the completion of tenant improvements. We cease capitalization on the portion that is substantially completed and occupied or held available for occupancy and capitalize only those costs associated with the portion under construction.

We record liabilities for the performance of asset retirement activities when the obligation to perform such activities is probable even when uncertainty exists about the timing and/or method of settlement.

Upon the acquisition of real estate assets accounted for as asset acquisitions, we assess the fair value of acquired tangible assets such as land, buildings and tenant improvements, intangible assets and liabilities such as above and below market leases, acquired in-place leases and other identifiable intangible assets and assumed liabilities. We allocate fair value on a relative basis based on estimated cash flow projections that utilize discount and/or capitalization rates as well as available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

The above and below market rate portions of leases acquired in connection with property acquisitions are recorded in deferred leasing costs and in accounts payable, accrued expenses and other liabilities, respectively, at fair value and amortized into rental revenue over the remaining term of the respective leases as described below. Fair value is calculated as the present value of the difference between (1) the contractual amounts to be paid pursuant to each in-place lease and (2) our estimate of fair market lease rates for each corresponding in-place lease, using a discount rate that reflects the risks associated with the leases acquired and measured over a period equal to the remaining initial term of the lease for above-market leases and the remaining initial term plus the term of any renewal option that the customer would be economically compelled to exercise for below-market leases.

In-place leases acquired are recorded at fair value in deferred leasing costs and amortized to depreciation and amortization expense over the remaining term of the respective lease. The value of in-place leases is based on our evaluation of the specific characteristics of each customer’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, current market conditions, the customer’s credit quality and costs to execute similar leases. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, we consider tenant improvements, leasing commissions and legal and other related expenses.

Real estate and other assets are classified as long-lived assets held for use or as long-lived assets held for sale. Real estate is classified as held for sale when the sale of the asset is probable, has been duly approved by the Company, a legally enforceable contract has been executed and the buyer’s due diligence period, if any, has expired.
Impairments of Real Estate Assets and Investments in Unconsolidated Affiliates

With respect to assets classified as held for use, we perform an impairment analysis if our evaluation of events or changes in circumstances indicate that the carrying value may not be recoverable, such as a significant decline in occupancy, identification of materially adverse legal or environmental factors, change in our designation of an asset from core to non-core, which may impact the anticipated holding period, or a decline in market value to an amount less than cost. This analysis is generally performed at the property level, except when an asset is part of an interdependent group such as an office park, and consists of determining whether the asset’s carrying amount will be recovered from its undiscounted estimated future operating and residual cash flows. These cash flows are estimated based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for customers, changes in market rental rates, costs to operate each property and expected ownership periods. For properties under development, the cash flows are based on expected service potential of the asset or asset group when development is substantially complete.

If the carrying amount of a held for use asset exceeds the sum of its undiscounted future operating and residual cash flows, an impairment loss is recorded for the difference between estimated fair value of the asset and the carrying amount. We generally estimate the fair value of assets held for use by using discounted cash flow analyses. In some instances, appraisal information may be available and is used in addition to a discounted cash flow analysis. As the factors used in generating these cash flows are difficult to predict and are subject to future events that may alter our assumptions, the discounted and/or undiscounted future operating and residual cash flows estimated by us in our impairment analyses or those established by appraisal may not be achieved and we may be required to recognize future impairment losses on properties held for use.

We record assets held for sale at the lower of the carrying amount or estimated fair value. Fair value of assets held for sale is equal to the estimated or contracted sales price with a potential buyer, less costs to sell. The impairment loss is the amount by which the carrying amount exceeds the estimated fair value.

We also analyze our investments in unconsolidated affiliates for impairment. This analysis consists of determining whether an expected loss in market value of an investment is other than temporary by evaluating the length of time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the investment, and our intent and ability to retain our investment for a period of time sufficient to allow for any anticipated recovery in market value. As the factors used in this analysis are difficult to predict and are subject to future events that may alter our assumptions, we may be required to recognize future impairment losses on our investments in unconsolidated affiliates.

Sales of Real Estate

For sales of real estate where we have collected the consideration to which we are entitled in exchange for transferring the real estate, the related assets and liabilities are removed from the balance sheet and the resultant gain or loss is recorded in the period the transaction closes. Any post-sale involvement is accounted for as separate performance obligations and when the separate performance obligations are satisfied, the sales price allocated to each is recognized.

Leases

See Note 2 for significant accounting policies and related disclosures with respect to revenue recognition for our leases, accounting for initial direct costs and lease incentive costs and credit losses on operating lease receivables as a result of the lease standard adoption effective January 1, 2019.

Discontinued Operations

Properties that are sold or classified as held for sale are classified as discontinued operations provided that the disposal represents a strategic shift that has (or will have) a major effect on our operations and financial results. Interest expense is included in discontinued operations if a related loan securing the sold property is to be paid off or assumed by the buyer in connection with the sale.

Investments in Unconsolidated Affiliates

We account for our joint venture investments using the equity method of accounting when our interests represent a general partnership interest but substantive participating rights or substantive kick out rights have been granted to the limited partners or when our interests do not represent a general partnership interest and we do not control the major operating and financial policies of the investment. These investments are initially recorded at cost as investments in unconsolidated affiliates and are
subsequently adjusted for our share of earnings and cash contributions and distributions. To the extent our cost basis at formation of the joint venture is different than the basis reflected at the joint venture level, the basis difference is amortized over the life of the related assets and included in our share of equity in earnings of unconsolidated affiliates.

Cash Equivalents

We consider highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Restricted Cash

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 and escrows and reserves for debt service, real estate taxes and property insurance established pursuant to certain mortgage financing arrangements.

Redeemable Common Units and Preferred Units

Limited partners holding Common Units other than the Company (“Redeemable Common Units”) have the right to put any and all of the Common Units to the Operating Partnership and the Company has the right to put any and all of the Preferred Units to the Operating Partnership in exchange for their liquidation preference plus accrued and unpaid distributions in the event of a corresponding redemption by the Company of the underlying Preferred Stock. Consequently, these Redeemable Common Units and Preferred Units are classified outside of permanent partners’ capital in the Operating Partnership’s accompanying balance sheets. The recorded value of the Redeemable Common Units is based on fair value at the balance sheet date as measured by the closing price of Common Stock on that date multiplied by the total number of Redeemable Common Units outstanding. The recorded value of the Preferred Units is based on their redemption value.

Income Taxes

The Company has elected and expects to continue to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). A corporate REIT is a legal entity that holds real estate assets and, through the payment of dividends to stockholders, is generally permitted to reduce or avoid the payment of federal and state income taxes at the corporate level. To maintain qualification as a REIT, the Company is required to pay dividends to its stockholders equal to at least 90.0% of its annual REIT taxable income, excluding net capital gains. The partnership agreement requires the Operating Partnership to pay economically equivalent distributions on outstanding Common Units at the same time that the Company pays dividends on its outstanding Common Stock.

Other than income taxes related to its taxable REIT subsidiary, the Operating Partnership does not reflect any federal income taxes in its financial statements, since as a partnership the taxable effects of its operations are attributed to its partners. The Operating Partnership does record state income tax for states that tax partnership income directly.

We conduct certain business activities through a taxable REIT subsidiary, as permitted under the Code. The taxable REIT subsidiary is subject to federal, state and local income taxes on its taxable income. We record provisions for income taxes based on its income recognized for financial statement purposes, including the effects of differences between such income and the amount recognized for tax purposes.

Concentration of Credit Risk

At December 31, 2020, properties that we wholly own were leased to 1,378 customers. The geographic locations that comprise greater than 10.0% of our rental and other revenues are Atlanta, Nashville, Raleigh and Tampa. Our customers engage in a wide variety of businesses. No single customer generated more than 5% of our consolidated revenues during 2020.

We maintain our cash and cash equivalents and our restricted cash at financial or other intermediary institutions. The combined account balances at each institution may exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. Additionally, from time to time in connection with tax-deferred 1031 transactions, our restricted cash balances may be commingled with other funds being held by any such intermediary institution, which would subject our balance to the credit risk of the institution.
Derivative Financial Instruments

We borrow funds at a combination of fixed and variable rates. Borrowings under our revolving credit facility and bank term loans bear interest at variable rates. Our long-term debt, which consists of secured and unsecured long-term financings, typically bears interest at fixed rates. Our interest rate risk management objectives are to limit generally the impact of interest rate changes on earnings and cash flows and lower our overall borrowing costs. To achieve these objectives, from time to time, we enter into interest rate hedge contracts such as collars, swaps, caps and treasury lock agreements in order to mitigate our interest rate risk with respect to existing and prospective debt instruments. We generally do not hold or issue these derivative contracts for trading or speculative purposes. The interest rate on all of our variable rate debt is generally adjusted at one or three month intervals, subject to settlements under these interest rate hedge contracts.

Interest rate swaps involve the receipt of variable rate amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income/(loss) and are subsequently reclassified into interest expense as interest payments are made on our debt.

We account for terminated derivative instruments by recognizing the related accumulated other comprehensive income/(loss) balance in current earnings, unless the hedged forecasted transaction continues as originally planned, in which case we continue to amortize the accumulated other comprehensive income/(loss) into earnings over the originally designated hedge period.

Earnings Per Share and Per Unit

Basic earnings per share of the Company is computed by dividing net income available for common stockholders by the weighted Common Shares outstanding - basic. Diluted earnings per share is computed by dividing net income available for common stockholders (inclusive of noncontrolling interests in the Operating Partnership) by the weighted Common Shares outstanding - basic plus the dilutive effect of options, warrants and convertible securities outstanding, including Common Units, using the treasury stock method. Weighted Common Shares outstanding - basic includes all unvested restricted stock where dividends received on such restricted stock are non-forfeitable.

Basic earnings per unit of the Operating Partnership is computed by dividing net income available for common unitholders by the weighted Common Units outstanding - basic. Diluted earnings per unit is computed by dividing net income available for common unitholders by the weighted Common Units outstanding - basic plus the dilutive effect of options and warrants, using the treasury stock method. Weighted Common Units outstanding - basic includes all of the Company’s unvested restricted stock where distributions received on such restricted stock are non-forfeitable.

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 guidance in this ASU is optional and may be elected over the period March 12, 2020 through December 31, 2022 as reference rate reform activities occur. We will continue to evaluate the impact of 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, $3.7 million of deferred rent is included in accounts receivable on our Consolidated Balance Sheets at December 31, 2020.
v3.20.4
Leases
12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Leases Leases
On January 1, 2019, we adopted Accounting Standards Codification Topic 842 “Leases” (“ASC 842”), which supersedes Accounting Standards Codification Topic 840 “Leases” (“ASC 840”). Information in this Note 2 with respect to our leases and lease related costs as both lessee and lessor and lease related receivables as lessor is presented under ASC 842 as of and for the years ended December 31, 2020 and 2019 and under ASC 840 for the year ended December 31, 2018.

We adopted ASC 842 using the modified retrospective approach whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated. There was no net cumulative effect adjustment to retained earnings as of January 1, 2019 as a result of this adoption. ASC 842 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. We operate as both a lessor and a lessee. As a lessor, we are required under ASC 842 to account for leases using an approach that is substantially equivalent to ASC 840’s guidance for operating leases and other leases such as sales-type leases and direct financing leases. In addition, ASC 842 requires lessors to capitalize and amortize only incremental direct leasing costs. As a lessee, we are required under the new standard to apply a dual approach, classifying leases, such as ground leases, as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. ASC 842 also requires lessees to record a right of use asset and a lease liability for all leases with a term of greater than a year regardless of their classification. We have also elected the practical expedient not to recognize right of use assets and lease liabilities for leases with a term of a year or less.

On adoption of the standard, we elected the package of practical expedients provided for in ASC 842, including:

No reassessment of whether any expired or existing contracts were or contained leases;

No reassessment of the lease classification for any expired or existing leases; and

No reassessment of initial direct costs for any existing leases.

The package of practical expedients was made as a single election and was consistently applied to all existing leases as of January 1, 2019. We also elected the practical expedient provided to lessors in a subsequent amendment to ASC 842 that removed the requirement to separate lease and nonlease components, provided certain conditions were met.

Information as Lessor Under ASC 842

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 (“CAM”). 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. Payments from customers for CAM are considered nonlease components that are separated from lease components and are generally accounted for in accordance with the revenue recognition standard. However, we qualified for and elected the practical expedient related to combining the components because the lease component is classified as an operating lease and the timing and pattern of transfer of CAM income, which is not the predominant component, is the same as the lease component. As such, consideration for CAM is accounted for as part of the overall consideration in the lease. Payments from customers for property taxes and insurance are considered noncomponents of the lease and therefore no consideration is allocated to them because they do not transfer a good or service to the customer. Fixed contractual payments from our leases are recognized on a straight-line basis over the terms of the respective leases. This means that, with respect to a particular lease, actual amounts billed in accordance with the lease during any given period may be higher or lower than the amount of rental revenue recognized for the period. Straight-line rental revenue is commenced when the customer assumes control of the leased premises. Accrued straight-line rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements.
Some of our leases are subject to annual changes in the Consumer Price Index (“CPI”). Although increases in the CPI are not estimated as part of our measurement of straight-line rental revenue, to the extent that actual CPI is greater or less than the CPI at lease commencement, the amount of straight-line rent recognized in a given year is affected accordingly.

Some of our leases have termination options and/or extension options. Termination options allow the customer to terminate the lease prior to the end of the lease term under certain circumstances. Termination options generally become effective half way or further into the original lease term and require advance notification from the customer and payment of a termination fee that reimburses us for a portion of the remaining rent under the original lease term and the undepreciated lease inception costs such as commissions, tenant improvements and lease incentives. Termination fee income is recognized on a straight-line basis from the date of the executed termination agreement through lease expiration when the amount of the fee is determinable and collectability of the fee is reasonably assured. Our extension options generally require a re-negotiation with the customer at market rates.

Initial direct costs, primarily commissions, related to the leasing of our office properties are included in deferred leasing costs and are stated at amortized cost. Such expenditures are part of the investment necessary to execute leases and, therefore, are classified as investment activities in the statement of cash flows. All leasing commissions paid to third parties and our in-house personnel for new leases or lease renewals are capitalized. Capitalized leasing costs are amortized on a straight-line basis over the initial fixed terms of the respective leases. All other costs to negotiate or arrange a lease are expensed as incurred.

Lease incentive costs, which are payments made to or on behalf of a customer as an incentive to sign a lease, are capitalized in deferred leasing costs and amortized on a straight-line basis over the respective lease terms as a reduction of rental revenues.

Lease related receivables, which include accounts receivable and accrued straight-line rents receivable, are reduced for credit losses. Such amounts are recognized as a reduction to rental and other revenues. We regularly evaluate the collectability of our lease related receivables. Our evaluation of collectability primarily consists of reviewing the credit quality of our customer, historical trends of the customer and changes in customer payment terms. We do not maintain a general reserve to estimate amounts that may not be collectible. If our assumptions regarding the collectability of lease related receivables prove incorrect, we could experience credit losses in excess of what was recognized in rental and other revenues.

We recognized rental and other revenues related to operating lease payments of $726.0 million and $723.1 million, of which variable lease payments were $56.0 million and $65.4 million, during the years ended December 31, 2020 and 2019, respectively. The following table sets forth the undiscounted cash flows for future minimum base rents to be received from customers for leases in effect at December 31, 2020 for the properties that we wholly own:
2021$623,888 
2022619,530 
2023570,417 
2024513,483 
2025432,272 
Thereafter2,049,545 
$4,809,135 

Information as Lessor Under ASC 840

Minimum contractual rents from leases are recognized on a straight-line basis over the terms of the respective leases. This means that, with respect to a particular lease, actual amounts billed in accordance with the lease during any given period may be higher or lower than the amount of rental revenue recognized for the period. Straight-line rental revenue is commenced when the customer assumes control of the leased premises. Accrued straight-line rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements. Contingent rental revenue, such as percentage rent, is accrued when the contingency is removed. Termination fee income is recognized at the later of when the customer has vacated the space or the lease has expired and a fully executed lease termination agreement has been delivered, the amount of the fee is determinable and collectability of the fee is reasonably assured.

Cost recovery income is determined on a calendar year and a lease-by-lease basis. The most common types of cost recovery income in our leases are CAM and real estate taxes, for which a customer typically pays its pro-rata share of operating and administrative expenses and real estate taxes in excess of the costs incurred during a contractually specified base year. The
computation of cost recovery income is complex and involves numerous judgments, including the interpretation of lease provisions. Leases are not uniform in dealing with such cost recovery income and there are many variations in the computation. Many customers make monthly fixed payments of CAM, real estate taxes and other cost reimbursement items. We accrue income related to these payments each month. We make quarterly accrual adjustments, positive or negative, to cost recovery income to adjust the recorded amounts to our best estimate of the final annual amounts to be billed and collected. After the end of the calendar year, we compute each customer’s final cost recovery income and, after considering amounts paid by the customer during the year, issue a bill or credit for the appropriate amount to the customer. The differences between the amounts billed less previously received payments and the accrual adjustment are recorded as increases or decreases to cost recovery income when the final bills are prepared, which occurs during the first half of the subsequent year.

Accounts receivable, accrued straight-line rents receivable and mortgages and notes receivable are reduced by an allowance for amounts that may become uncollectible in the future. We regularly evaluate the adequacy of our allowance for doubtful accounts. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of our customer, historical trends of the customer and changes in customer payment terms. Additionally, with respect to customers in bankruptcy, we estimate the probable recovery through bankruptcy claims and adjust the allowance for amounts deemed uncollectible. If our assumptions regarding the collectability of receivables prove incorrect, we could experience losses in excess of our allowance for doubtful accounts. The allowance and its related receivable are written-off when we have concluded there is a low probability of collection and we have discontinued collection efforts.

The following table sets forth the activity of allowance for doubtful accounts:
Balance at December 31, 2017AdditionsDeductionsBalance at December 31, 2018
Allowance for Doubtful Accounts - Straight-Line Rent$819 $599 $(777)$641 
Allowance for Doubtful Accounts - Accounts Receivable753 969 (556)1,166 
Allowance for Doubtful Accounts - Notes Receivable72 — (28)44 
Totals$1,644 $1,568 $(1,361)$1,851 

Lease incentive costs, which are payments made to or on behalf of a customer as an incentive to sign a lease, are capitalized in deferred leasing costs and amortized on a straight-line basis over the respective lease terms as a reduction of rental revenues.

Our real estate assets are leased to customers under operating leases. The minimum rental amounts under the leases are generally subject to scheduled fixed increases. Generally, the leases also provide that we receive cost recovery income from customers for increases in certain costs above the costs incurred during a contractually specified base year.  

Information as Lessee Under ASC 842

We have 20 properties subject to operating ground leases in Atlanta, Nashville, Orlando, Raleigh and Tampa with a weighted average remaining term of 51 years. Rental payments on these leases are adjusted periodically based on either the CPI or on a pre-determined schedule. The monthly payments on a pre-determined schedule are recognized on a straight-line basis over the terms of the respective leases. Changes in the CPI are not estimated as part of our measurement of straight-line rental expense. Upon initial adoption of ASC 842, we recognized a lease liability of $35.3 million (in accounts payable, accrued expenses and other liabilities) and a related right of use asset of $29.7 million (in prepaid expenses and other assets) on our Consolidated Balance Sheets equal to the present value of the minimum lease payments required under each ground lease. The difference between the recorded lease liability and right of use asset represents the accrued straight-line rent liability previously recognized under ASC 840. We used a discount rate of approximately 4.5%, which was derived from our assessment of the credit quality of the Company and adjusted to reflect secured borrowing, estimated yield curves and long-term spread adjustments over appropriate tenors. Some of our ground leases contain extension options; however, these did not impact our calculation of the right of use asset and liability as they extend beyond the useful life of the properties subject to the operating ground leases. We recognized $2.6 million and $2.5 million of ground lease expense during the years ended December 31, 2020 and 2019, respectively, and paid $2.2 million in cash during both years.
The following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments on operating ground leases at December 31, 2020 and a reconciliation of those cash flows to the operating lease liability at December 31, 2020:

2021$2,127 
20222,169 
20232,167 
20242,123 
20252,170 
Thereafter81,527 
92,283 
Discount(57,892)
Lease liability$34,391 

Information as Lessee Under ASC 840

Certain of our properties are subject to operating ground leases. Rental payments on these leases are adjusted periodically based on either the CPI or on a pre-determined schedule. Total rental property expense recorded for operating ground leases was $2.5 million for the year ended December 31, 2018.
v3.20.4
Real Estate Assets
12 Months Ended
Dec. 31, 2020
Real Estate [Abstract]  
Real Estate Assets Real Estate Assets
Acquisitions

During 2020, we acquired two development parcels totaling less than one acre in Raleigh and Nashville for an aggregate purchase price of $8.5 million, including the issuance of 118,592 Common Units and capitalized acquisition costs.

During 2019, we acquired a building in the central business district of Charlotte, which delivered in 2019 and encompasses 841,000 rentable square feet, for a net purchase price of $399.1 million. The assets acquired and liabilities assumed were recorded at relative fair value as determined by management, with the assistance of third party specialists, based on information available at the acquisition date and on current assumptions as to future operations.

During 2019, we also acquired four development parcels totaling approximately 10 acres in Raleigh, Richmond and Pittsburgh for an aggregate purchase price, including capitalized acquisition costs, of $12.4 million.

During 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.

Dispositions

During 2020, we sold a total of 52 buildings, encompassing 4,489,000 rentable square feet, in Greensboro and Memphis and various land parcels for an aggregate sale price of $494.2 million (before closing credits to buyer of $5.7 million) and recorded aggregate gains on disposition of property of $215.5 million. During 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 2019, we sold a total of six buildings and various land parcels for an aggregate sale price of $136.4 million and recorded aggregate gains on disposition of property of $39.5 million.

During 2018, we sold a total of three buildings and various land parcels for an aggregate sale price of $90.6 million and recorded aggregate gains on disposition of property of $37.6 million.

Impairments

During 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.
During 2019, we recorded aggregate impairments of real estate assets of $5.8 million as a result of shortened hold periods from classifying all of our assets in Greensboro and Memphis as non-core and changes in market-based inputs and our assumptions about the use of the assets.

During 2018, we recorded an impairment of real estate assets of $0.4 million, which resulted from a change in market-based inputs and our assumptions about the use of the assets.
v3.20.4
Investments In and Advances To Affiliates
12 Months Ended
Dec. 31, 2020
Equity Method Investments and Joint Ventures [Abstract]  
Investments In and Advances To Affiliates Investments in and Advances to Affiliates
Unconsolidated Affiliates

We have equity interests of up to 50.0% in various joint ventures with unrelated third parties that are accounted for using the equity method of accounting because we have the ability to exercise significant influence over the operating and financial policies of the joint venture investment. The difference between the cost of these investments and the net book value of the underlying net assets was $0.6 million and $0.7 million at December 31, 2020 and 2019, respectively.

The following table sets forth our ownership in unconsolidated affiliates at December 31, 2020:
Joint VentureLocationOwnership
Interest
Plaza Colonnade, Tenant-in-CommonKansas City50.0%
Kessinger/Hunter & Company, LCKansas City26.5%
Highwoods DLF Forum, LLC (1)
Raleigh25.0%
__________
(1)We acquired our joint venture partner’s 75.0% interest in our Highwoods DLF Forum, LLC joint venture (the “Forum”) in the first quarter of 2021. See Note 19.

We receive development, management and leasing fees for services provided to certain of our joint ventures. These fees are recognized in income to the extent of our respective joint venture partner’s interest. During the years ended December 31, 2020, 2019 and 2018, we recognized $1.0 million, $0.5 million and $0.4 million, respectively, of development/construction, management and leasing fees from our unconsolidated joint ventures. At December 31, 2020 and 2019, we had receivables of $0.2 million and $0.1 million, respectively, related to these fees in accounts receivable.

Consolidated Variable Interest Entity

In 2019, we and The Bromley Companies formed a joint venture (the “Midtown One joint venture”) to construct Midtown West, a 150,000 square foot, multi-customer office building located in the mixed-use Midtown Tampa project in Tampa’s Westshore submarket. Midtown West has an anticipated total investment of $71.3 million. Construction of Midtown West 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 December 31, 2020, $18.5 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:

December 31,
2020
Development in-process$46,873 
Deferred leasing costs$196 
Prepaid expenses and other assets$75 
Accounts payable, accrued expenses and other liabilities$2,693 

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.

Other Consolidated Affiliate

We have a 50.0% ownership interest in Highwoods-Markel Associates, LLC (“Markel”), a consolidated joint venture. We are the manager and leasing agent for Markel’s properties, which are located in Richmond in exchange for customary management and leasing fees. We consolidate Markel since we are the managing member and control the major operating and financial policies of the entity. As controlling member, we have an obligation to cause this property-owning entity to distribute proceeds of liquidation to the noncontrolling interest member in these partially owned properties only if the net proceeds received by the entity from the sale of any of Markel’s assets warrant a distribution as determined by the agreement governing the joint venture. We estimate the value of such noncontrolling interest distributions would have been $30.7 million had the entity been liquidated at December 31, 2020. This estimated settlement value is based on the fair value of the underlying properties which is based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for customers, changes in market rental rates and costs to operate each property. If the entity’s underlying assets are worth less than the underlying liabilities on the date of such liquidation, we would have no obligation to remit any consideration to the noncontrolling interest holder.
v3.20.4
Intangible Assets and Below Market Leaes Liabilities
12 Months Ended
Dec. 31, 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:
December 31,
20202019
Assets:
Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets)
$361,027 $377,472 
Less accumulated amortization(151,698)(146,125)
$209,329 $231,347 
Liabilities (in accounts payable, accrued expenses and other liabilities):
Acquisition-related below market lease liabilities$63,748 $65,971 
Less accumulated amortization(37,838)(34,014)
$25,910 $31,957 
The following table sets forth amortization of intangible assets and below market lease liabilities:

Year Ended December 31,
202020192018
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)
$34,401 $37,386 $36,486 
Amortization of lease incentives (in rental and other revenues)$1,847 $4,281 $1,908 
Amortization of acquisition-related intangible assets (in rental and other revenues)
$1,137 $1,290 $1,677 
Amortization of acquisition-related intangible assets (in rental property and other expenses)
$510 $557 $557 
Amortization of acquisition-related below market lease liabilities (in rental and other revenues)
$(6,031)$(6,633)$(6,085)

The following table sets forth scheduled future amortization of intangible assets and below market lease liabilities:

Years Ending December 31,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 Below Market Lease Liabilities (in Rental and Other Revenues)
2021$34,063 $1,563 $711 $(4,958)
202230,011 1,353 601 (3,977)
202326,496 1,279 447 (3,600)
202423,348 1,133 373 (2,932)
202519,224 1,064 342 (1,673)
Thereafter60,979 4,523 1,819 (8,770)
$194,121 $10,915 $4,293 $(25,910)
Weighted average remaining amortization periods as of December 31, 2020 (in years)8.39.59.78.6
v3.20.4
Mortgages and Notes Payable
12 Months Ended
Dec. 31, 2020
Debt Disclosure [Abstract]  
Mortgages and Notes Payable Mortgages and Notes Payable
Our mortgages and notes payable consisted of the following:
December 31,
20202019
Secured indebtedness:
4.00% mortgage loan due 2029 (1)
$93,350 $95,303 
93,350 95,303 
Unsecured indebtedness:
3.20% (3.363% effective rate) notes due 2021 (2)
149,901 299,369 
3.625% (3.752% effective rate) notes due 2023 (3)
249,464 249,201 
3.875% (4.038% effective rate) notes due 2027 (4)
297,534 297,134 
4.125% (4.271% effective rate) notes due 2028 (5)
347,035 346,621 
4.20% (4.234% effective rate) notes due 2029 (6)
349,189 349,091 
3.050% (3.079% effective rate) notes due 2030 (7)
399,106 399,009 
2.600% (2.645% effective rate) notes due 2031 (8)
398,423 — 
Variable rate term loan due 2022 (9)
— 100,000 
Variable rate term loan due 2022 (10)
200,000 200,000 
Revolving credit facility due 2022— 221,000 
2,390,652 2,461,425 
Less-unamortized debt issuance costs(13,981)(13,018)
Total mortgages and notes payable, net$2,470,021 $2,543,710 
__________
(1)Our secured mortgage loan was collateralized by real estate assets with an undepreciated book value of $147.9 million at December 31, 2020. We paid down $2.0 million of secured loan balances through principal amortization during 2020.
(2)Net of unamortized original issuance discount of $0.1 million and $0.6 million as of December 31, 2020 and 2019, respectively.
(3)Net of unamortized original issuance discount of $0.5 million and $0.8 million as of December 31, 2020 and 2019, respectively.
(4)Net of unamortized original issuance discount of $2.5 million and $2.9 million as of December 31, 2020 and 2019, respectively.
(5)Net of unamortized original issuance discount of $3.0 million and $3.4 million as of December 31, 2020 and 2019, respectively.
(6)Net of unamortized original issuance discount of $0.8 million and $0.9 million as of December 31, 2020 and 2019, respectively.
(7)Net of unamortized original issuance discount of $0.9 million and $1.0 million as of December 31, 2020 and 2019, respectively.
(8)Net of unamortized original issuance discount of $1.6 million as of December 31, 2020.
(9)This debt was repaid in 2020.
(10)As more fully described in Note 7, we entered into floating-to-fixed interest rate swaps that effectively fix LIBOR for $50.0 million of this loan through January 2022. Accordingly, the equivalent fixed rate of this amount is 2.79%. The interest rate on the remaining $150.0 million was 1.25% at December 31, 2020.
The following table sets forth scheduled future principal payments, including amortization, due on our mortgages and notes payable at December 31, 2020:
Years Ending December 31,Principal Amount
2021$150,504 
2022200,686 
2023251,024 
20241,124 
2025 (1)
(185)
Thereafter1,880,849 
Less-unamortized debt issuance costs(13,981)
$2,470,021 
__________
(1)Represents amortization of discounts in excess of principal payments due.

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 both December 31, 2020 and January 29, 2021. At both December 31, 2020 and January 29, 2021, 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 both December 31, 2020 and January 29, 2021 was $599.9 million.

During 2020, the Operating Partnership issued $400.0 million aggregate principal amount of 2.600% notes due February 2031, less original issuance discount of $1.6 million. These notes were priced to yield 2.645%. Underwriting fees and other expenses were incurred that aggregated $3.4 million; these costs were deferred and will be amortized over the term of the notes. The net proceeds from the issuance were used: (1) to finance the Operating Partnership’s cash tender offer to purchase $150.0 million principal amount of its 3.20% notes due June 15, 2021 at a purchase price of 101.908% of the face amount of the notes, plus accrued and unpaid interest; (2) to prepay without penalty our $100.0 million unsecured bank term loan that was scheduled to mature in January 2022 and which bore interest at LIBOR plus 110 basis points; and (3) for general corporate purposes. We recorded $3.7 million of aggregate losses on debt extinguishment related to the repurchase of the 3.20% notes and the term loan prepayment.

During 2019, the Operating Partnership issued $400.0 million aggregate principal amount of 3.050% notes due February 2030, less original issuance discount of $1.0 million. These notes were priced to yield 3.079%. Underwriting fees and other expenses were incurred that aggregated $3.4 million; these costs were deferred and will be amortized over the term of the notes.

During 2019, the Operating Partnership issued $350.0 million aggregate principal amount of 4.20% notes due April 2029, less original issuance discount of $1.0 million. These notes were priced to yield 4.234%. Underwriting fees and other expenses were incurred that aggregated $3.1 million; these costs were deferred and will be amortized over the term of the notes.

During 2019, we prepaid without penalty the remaining $225.0 million on our seven-year unsecured bank term loan, which was scheduled to mature in June 2020. The term loan bore interest at LIBOR plus 110 basis points. We recorded $0.4 million of loss on debt extinguishment related to this prepayment.

During 2019, we prepaid without penalty $100.0 million on our $200.0 million unsecured bank term loan and recorded $0.3 million of loss on debt extinguishment related to this prepayment. During 2020, we prepaid without penalty the remaining $100.0 million upon issuance of the $400.0 million aggregate principal amount of 2.600% notes due February 2031. The term loan was scheduled to mature in January 2022 and bore interest at LIBOR plus 110 basis points.

During 2018, we paid off at maturity $200.0 million principal amount of 7.5% unsecured notes.
During 2018, the Operating Partnership issued $350.0 million aggregate principal amount of 4.125% notes due March 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.

Our revolving credit facility and bank term loans require us to comply with customary operating covenants and various financial requirements. Upon an event of default on the revolving credit facility, the lenders having at least 51.0% of the total commitments under the revolving credit facility can accelerate all borrowings then outstanding, and we could be prohibited from borrowing any further amounts under our revolving credit facility, which would adversely affect our ability to fund our operations. In addition, certain of our unsecured debt agreements contain cross-default provisions giving the unsecured lenders the right to declare a default if we are in default under more than $30.0 million with respect to other loans in some circumstances.

We are currently in compliance with financial covenants with respect to our consolidated debt.

The Operating Partnership has $149.9 million carrying amount of 2021 notes outstanding, $249.5 million carrying amount of 2023 notes outstanding, $297.5 million carrying amount of 2027 notes outstanding, $347.0 million carrying amount of 2028 notes outstanding, $349.2 million carrying amount of 2029 notes outstanding, $399.1 million carrying amount of 2030 notes outstanding and $398.4 million carrying amount of 2031 notes outstanding. The indenture that governs these outstanding notes requires us to comply with customary operating covenants and various financial ratios. The trustee or the holders of at least 25.0% in principal amount of any series of notes can accelerate the principal amount of such series upon written notice of a default that remains uncured after 60 days.

We have considered our short-term liquidity needs within one year from February 9, 2021 (the date of issuance of the annual 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 remaining $150.0 million principal amount of unsecured notes that are scheduled to mature on June 15, 2021. We intend to exercise our right to redeem the remaining 3.20% notes at par on April 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.

Capitalized Interest

Total interest capitalized to development and significant building and tenant improvement projects was $8.3 million, $5.6 million and $6.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.
v3.20.4
Derivative Financial Instruments
12 Months Ended
Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial InstrumentsDuring 2019, we entered into $150.0 million notional amount of forward-starting swaps that effectively locked the underlying 10-year treasury rate at 1.87% with respect to a planned issuance of debt securities by the Operating Partnership. Upon the subsequent issuance of the $400.0 million aggregate principal amount of 3.050% notes due February 2030 during 2019, we terminated the forward-starting swaps and paid cash upon settlement. The unrealized loss of $6.6 million in accumulated other comprehensive income/(loss) will be reclassified to interest expense as interest payments are made on the debt.
During 2018, we entered into an aggregate of $225.0 million notional amount of forward-starting swaps that effectively locked the underlying 10-year treasury rate at a weighted average of 2.86% with respect to a planned issuance of debt securities by the Operating Partnership. Upon issuance of the $350.0 million aggregate principal amount of 4.20% notes due April 2029 during 2019, we terminated the forward-starting swaps and paid cash upon settlement. The unrealized loss of $5.1 million in accumulated other comprehensive income/(loss) will be reclassified to interest expense as interest payments are made on the debt.

We previously 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 March 2028 during 2018, we terminated the forward-starting swaps and received cash upon settlement. The unrealized gain of $7.0 million in accumulated other comprehensive income/(loss) will be reclassified to interest expense as interest payments are made on the debt and a gain of $0.2 million of hedge ineffectiveness was recognized in interest expense.

We previously entered into floating-to-fixed interest rate swaps through January 2022 with respect to an aggregate of $50.0 million LIBOR-based borrowings. These swaps effectively fix the underlying one-month LIBOR rate at a weighted average rate of 1.693%.

We also had floating-to-fixed interest rate swaps with respect to an aggregate of $225.0 million LIBOR-based borrowings. These swaps effectively fixed the underlying one-month LIBOR rate at a weighted average rate of 1.678%. During 2019, these interest rate swaps expired.

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 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:
December 31,
20202019
Derivatives:
Derivatives designated as cash flow hedges in accounts payable, accrued expenses and other liabilities:
Interest rate swaps$846 $154 

The following table sets forth the effect of our cash flow hedges on accumulated other comprehensive income/(loss) and interest expense:
Year Ended December 31,
202020192018
Derivatives Designated as Cash Flow Hedges:
Amount of unrealized gains/(losses) recognized in accumulated other comprehensive income/(loss) on derivatives:
Interest rate swaps$(1,238)$(9,134)$4,161 
Amount of (gains)/losses reclassified out of accumulated other comprehensive income/(loss) into interest expense:
Interest rate swaps$247 $(1,250)$(2,086)
v3.20.4
Commitments and Contingencies
12 Months Ended
Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Lease and Contractual Commitments

We have $212.9 million of lease and contractual commitments at December 31, 2020. Lease and contractual commitments represent commitments under signed leases and contracts for operating properties (excluding tenant-funded tenant improvements) and contracts for development/redevelopment projects, of which $58.0 million was recorded on our Consolidated Balance Sheets at December 31, 2020.

Contingent Consideration

We had $0.8 million and $5.3 million of contingent consideration related to certain parcels of acquired development land at December 31, 2020 and 2019, respectively. The contingent consideration for each is payable in cash to a third party if and to the extent future development milestones as outlined in the purchase agreements are met.

Environmental Matters

Substantially all of our in-service and development properties have been subjected to Phase I environmental assessments and, in certain instances, Phase II environmental assessments. Such assessments and/or updates have not revealed, nor are we aware of, any environmental liability that we believe would have a material adverse effect on our Consolidated Financial Statements.

Litigation, Claims and Assessments

We are from time to time a party to a variety of legal proceedings, claims and assessments arising in the ordinary course of our business. We regularly assess the liabilities and contingencies in connection with these matters based on the latest information available. For those matters where it is probable that we have incurred or will incur a loss and the loss or range of loss can be reasonably estimated, the estimated loss is accrued and charged to income in our Consolidated Financial Statements. In other instances, because of the uncertainties related to both the probable outcome and amount or range of loss, a reasonable estimate of liability, if any, cannot be made. Based on the current expected outcome of such matters, none of these proceedings, claims or assessments is expected to have a material effect on our business, financial condition, results of operations or cash flows.

COVID-19

Since early March 2020, efforts to slow the spread of the COVID-19 virus have had a significant impact on the U.S. economy. We continue to follow the policies described in Notes 1 and 2, including those related to impairments of real estate assets and investments in unconsolidated affiliates, leases and estimates of credit losses on operating lease receivables. While the results of our current analyses did not result in any material adjustments to amounts as of and for the year ended December 31, 2020, circumstances related to the COVID-19 pandemic may result in recording impairments, lease modifications and credit losses in future periods.
v3.20.4
Noncontrolling Interests
12 Months Ended
Dec. 31, 2020
Noncontrolling Interest [Abstract]  
Noncontrolling Interests Noncontrolling Interests
Noncontrolling Interests in Consolidated Affiliates

At December 31, 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

Noncontrolling interests in the Operating Partnership relate to the ownership of Redeemable Common Units. Net income attributable to noncontrolling interests in the Operating Partnership is computed by applying the weighted average percentage of Redeemable Common Units during the period, as a percent of the total number of outstanding Common Units, to the Operating Partnership’s net income for the period after deducting distributions on Preferred Units. When a noncontrolling unitholder redeems a Common Unit for a share of Common Stock or cash, the noncontrolling interests in the Operating Partnership are reduced and the Company’s share in the Operating Partnership is increased by the fair value of each security at the time of redemption.

The following table sets forth the Company’s noncontrolling interests in the Operating Partnership:

Year Ended December 31,
20202019
Beginning noncontrolling interests in the Operating Partnership$133,216 $105,960 
Adjustment of noncontrolling interests in the Operating Partnership to fair value(30,617)29,557 
Issuances of Common Units6,163 — 
Conversions of Common Units to Common Stock(145)(663)
Net income attributable to noncontrolling interests in the Operating Partnership9,338 3,551 
Distributions to noncontrolling interests in the Operating Partnership(5,456)(5,189)
Total noncontrolling interests in the Operating Partnership$112,499 $133,216 

The following table sets forth net income available for common stockholders and transfers from the Company’s noncontrolling interests in the Operating Partnership:
Year Ended December 31,
202020192018
Net income available for common stockholders$344,914 $134,430 $169,343 
Increase in additional paid in capital from conversions of Common Units to Common Stock
145 663 4,043 
Issuances of Common Units
(6,163)— — 
Change from net income available for common stockholders and transfers from noncontrolling interests$338,896 $135,093 $173,386 
v3.20.4
Disclosure About Fair Value of Financial Instruments
12 Months Ended
Dec. 31, 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 1Level 2
TotalQuoted Prices
in Active
Markets for Identical Assets or Liabilities
Significant Observable Inputs
Fair Value at December 31, 2020:
Assets:
Mortgages and notes receivable, at fair value (1)
$1,341 $— $1,341 
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
2,573 2,573 — 
Total Assets$3,914 $2,573 $1,341 
Noncontrolling Interests in the Operating Partnership$112,499 $