HIGHWOODS PROPERTIES, INC., 10-Q filed on 10/24/2017
Quarterly Report
v3.8.0.1
Document and Entity Information Document - shares
9 Months Ended
Sep. 30, 2017
Oct. 18, 2017
Entity Information [Line Items]    
Entity Registrant Name HIGHWOODS PROPERTIES INC.  
Entity Central Index Key 0000921082  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Document Type 10-Q  
Document Period End Date Sep. 30, 2017  
Document Fiscal Year Focus 2017  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   103,248,940
Highwoods Realty Limited Partnership [Member]    
Entity Information [Line Items]    
Entity Registrant Name HIGHWOODS REALTY LIMITED PARTNERSHIP  
Entity Central Index Key 0000941713  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Document Type 10-Q  
Document Period End Date Sep. 30, 2017  
Document Fiscal Year Focus 2017  
Document Fiscal Period Focus Q3  
Amendment Flag false  
v3.8.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2017
Dec. 31, 2016
Real estate assets, at cost:    
Land $ 488,013 $ 474,375
Buildings and tenant improvements 4,605,061 4,313,373
Development in-process 58,578 279,602
Land held for development 76,969 77,355
Total real estate assets 5,228,621 5,144,705
Less-accumulated depreciation (1,196,642) (1,134,103)
Net real estate assets 4,031,979 4,010,602
Cash and cash equivalents 4,864 49,490
Restricted cash 47,761 29,141
Accounts receivable, net of allowance of $504 and $624, respectively 18,027 17,372
Mortgages and notes receivable, net of allowance of $80 and $105, respectively 6,789 8,833
Accrued straight-line rents receivable, net of allowance of $324 and $692, respectively 194,639 172,829
Investments in and advances to unconsolidated affiliates 23,523 18,846
Deferred leasing costs, net of accumulated amortization of $145,814 and $140,081, respectively 202,814 213,500
Prepaid expenses and other assets, net of accumulated amortization of $22,341 and $19,904, respectively 30,070 40,437
Total Assets 4,560,466 4,561,050
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 1,966,398 1,948,047
Accounts payable, accrued expenses and other liabilities 227,575 313,885
Total Liabilities 2,193,973 2,261,932
Commitments and contingencies
Noncontrolling interests in the Operating Partnership 147,451 144,802
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), 28,892 and 28,920 shares issued and outstanding, respectively 28,892 28,920
Common Stock, $.01 par value, 200,000,000 authorized shares; 103,248,940 and 101,665,554 shares issued and outstanding, respectively 1,032 1,017
Additional paid-in capital 2,924,048 2,850,881
Distributions in excess of net income available for common stockholders (758,484) (749,412)
Accumulated other comprehensive income 5,910 4,949
Total Stockholders’ Equity 2,201,398 2,136,355
Noncontrolling interests in consolidated affiliates 17,644 17,961
Total Equity/Capital 2,219,042 2,154,316
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital 4,560,466 4,561,050
Highwoods Realty Limited Partnership [Member]    
Real estate assets, at cost:    
Land 488,013 474,375
Buildings and tenant improvements 4,605,061 4,313,373
Development in-process 58,578 279,602
Land held for development 76,969 77,355
Total real estate assets 5,228,621 5,144,705
Less-accumulated depreciation (1,196,642) (1,134,103)
Net real estate assets 4,031,979 4,010,602
Cash and cash equivalents 4,864 49,490
Restricted cash 47,761 29,141
Accounts receivable, net of allowance of $504 and $624, respectively 18,027 17,372
Mortgages and notes receivable, net of allowance of $80 and $105, respectively 6,789 8,833
Accrued straight-line rents receivable, net of allowance of $324 and $692, respectively 194,639 172,829
Investments in and advances to unconsolidated affiliates 23,523 18,846
Deferred leasing costs, net of accumulated amortization of $145,814 and $140,081, respectively 202,814 213,500
Prepaid expenses and other assets, net of accumulated amortization of $22,341 and $19,904, respectively 30,070 40,437
Total Assets 4,560,466 4,561,050
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 1,966,398 1,948,047
Accounts payable, accrued expenses and other liabilities 227,575 313,885
Total Liabilities 2,193,973 2,261,932
Commitments and contingencies
Redeemable Operating Partnership Units:    
Common Units, 2,830,704 and 2,838,704 outstanding, respectively 147,451 144,802
Series A Preferred Units (liquidation preference $1,000 per unit), 28,892 and 28,920 units issued and outstanding, respectively 28,892 28,920
Total Redeemable Operating Partnership Units 176,343 173,722
Equity/Capital:    
General partner Common Units, 1,056,708 and 1,040,954 outstanding, respectively 21,665 21,023
Limited partner Common Units, 101,783,423 and 100,215,791 outstanding, respectively 2,144,931 2,081,463
Accumulated other comprehensive income 5,910 4,949
Noncontrolling interests in consolidated affiliates 17,644 17,961
Total Equity/Capital 2,190,150 2,125,396
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital $ 4,560,466 $ 4,561,050
v3.8.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
9 Months Ended 12 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Assets:    
Accounts receivable allowance $ 504 $ 624
Mortgages and notes receivable allowance 80 105
Accrued straight-line rents receivable allowance 324 692
Deferred leasing costs, accumulated amortization 145,814 140,081
Prepaid expenses and other assets, accumulated amortization $ 22,341 $ 19,904
Equity/Capital:    
Series A Preferred Stock, dividend rate percentage (in hundredths) 8.625% 8.625%
Series A Preferred Stock, par value (in dollars per share) $ 0.01 $ 0.01
Series A Preferred Stock, authorized shares (in shares) 50,000,000 50,000,000
Series A Preferred Stock, liquidation preference (in dollars per share) $ 1,000 $ 1,000
Series A Preferred Stock, shares issued (in shares) 28,892 28,920
Series A Preferred Stock, shares outstanding (in shares) 28,892 28,920
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) 103,248,940 101,665,554
Common Stock, shares outstanding (in shares) 103,248,940 101,665,554
Highwoods Realty Limited Partnership [Member]    
Assets:    
Accounts receivable allowance $ 504 $ 624
Mortgages and notes receivable allowance 80 105
Accrued straight-line rents receivable allowance 324 692
Deferred leasing costs, accumulated amortization 145,814 140,081
Prepaid expenses and other assets, accumulated amortization $ 22,341 $ 19,904
Redeemable Operating Partnership Units: [Abstract]    
Redeemable Common Units outstanding (in shares) 2,830,704 2,838,704
Series A Preferred Units, liquidation preference (in dollars per share) $ 1,000 $ 1,000
Series A Preferred Units, issued (in shares) 28,892 28,920
Series A Preferred Units, outstanding (in shares) 28,892 28,920
Common Units: [Abstract]    
General partners' capital account, units outstanding (in shares) 1,056,708 1,040,954
Limited partners' capital account, units outstanding (in shares) 101,783,423 100,215,791
v3.8.0.1
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Rental and other revenues $ 180,185 $ 166,269 $ 526,876 $ 497,988
Operating expenses:        
Rental property and other expenses 61,234 58,620 177,484 173,715
Depreciation and amortization 56,973 52,923 168,934 161,734
Impairments of real estate assets 1,445 0 1,445 0
General and administrative 9,247 9,863 29,787 29,327
Total operating expenses 128,899 121,406 377,650 364,776
Interest expense:        
Contractual 16,395 17,722 48,763 56,111
Amortization of debt issuance costs 796 844 2,445 2,645
Total interest expense 17,191 18,566 51,208 58,756
Other income:        
Interest and other income 558 833 1,806 1,884
Gains on debt extinguishment 0 0 826 0
Total other income 558 833 2,632 1,884
Income from continuing operations before disposition of investment properties and activity in unconsolidated affiliates 34,653 27,130 100,650 76,340
Gains on disposition of property 19,849 3,902 25,181 14,160
Equity in earnings of unconsolidated affiliates 5,047 2,808 6,757 5,010
Income from continuing operations 59,549 33,840 132,588 95,510
Discontinued operations:        
Income from discontinued operations 0 0 0 4,097
Net gains on disposition of discontinued operations 0 0 0 414,496
Total income from discontinued operations 0 0 0 418,593
Net income 59,549 33,840 132,588 514,103
Net (income) attributable to noncontrolling interests in the Operating Partnership (1,571) (926) (3,502) (14,876)
Net (income) attributable to noncontrolling interests in consolidated affiliates (315) (319) (914) (941)
Dividends on Preferred Stock (623) (624) (1,869) (1,877)
Net income available for common stockholders $ 57,040 $ 31,971 $ 126,303 $ 496,409
Earnings per Common Share – basic:        
Income from continuing operations available for common stockholders (in dollars per share) $ 0.55 $ 0.32 $ 1.23 $ 0.92
Income from discontinued operations available for common stockholders (in dollars per share) 0.00 0.00 0.00 4.16
Net income available for common stockholders (in dollars per share) $ 0.55 $ 0.32 $ 1.23 $ 5.08
Weighted average Common Shares outstanding - basic (in shares) 103,237 98,973 102,489 97,669
Earnings per Common Share - diluted:        
Income from continuing operations available for common stockholders (in dollars per share) $ 0.55 $ 0.32 $ 1.23 $ 0.92
Income from discontinued operations available for common stockholders (in dollars per share) 0.00 0.00 0.00 4.16
Net income available for common stockholders (in dollars per share) $ 0.55 $ 0.32 $ 1.23 $ 5.08
Weighted average Common Shares outstanding - diluted (in shares) 106,145 101,939 105,402 100,645
Dividends declared per Common Share (in dollars per share) $ 0.440 $ 0.425 $ 1.320 $ 1.275
Net income available for common stockholders:        
Income from continuing operations available for common stockholders $ 57,040 $ 31,971 $ 126,303 $ 90,081
Income from discontinued operations available for common stockholders 0 0 0 406,328
Net income available for common stockholders 57,040 31,971 126,303 496,409
Highwoods Realty Limited Partnership [Member]        
Rental and other revenues 180,185 166,269 526,876 497,988
Operating expenses:        
Rental property and other expenses 61,234 58,620 177,484 173,715
Depreciation and amortization 56,973 52,923 168,934 161,734
Impairments of real estate assets 1,445 0 1,445 0
General and administrative 9,247 9,863 29,787 29,327
Total operating expenses 128,899 121,406 377,650 364,776
Interest expense:        
Contractual 16,395 17,722 48,763 56,111
Amortization of debt issuance costs 796 844 2,445 2,645
Total interest expense 17,191 18,566 51,208 58,756
Other income:        
Interest and other income 558 833 1,806 1,884
Gains on debt extinguishment 0 0 826 0
Total other income 558 833 2,632 1,884
Income from continuing operations before disposition of investment properties and activity in unconsolidated affiliates 34,653 27,130 100,650 76,340
Gains on disposition of property 19,849 3,902 25,181 14,160
Equity in earnings of unconsolidated affiliates 5,047 2,808 6,757 5,010
Income from continuing operations 59,549 33,840 132,588 95,510
Discontinued operations:        
Income from discontinued operations 0 0 0 4,097
Net gains on disposition of discontinued operations 0 0 0 414,496
Total income from discontinued operations 0 0 0 418,593
Net income 59,549 33,840 132,588 514,103
Net (income) attributable to noncontrolling interests in consolidated affiliates (315) (319) (914) (941)
Distributions on Preferred Units (623) (624) (1,869) (1,877)
Net income available for common unitholders $ 58,611 $ 32,897 $ 129,805 $ 511,285
Earnings per Common Unit - basic:        
Income from continuing operations available for common unitholders (in dollars per share) $ 0.55 $ 0.32 $ 1.24 $ 0.93
Income from discontinued operations available for common unitholders (in dollars per share) 0.00 0.00 0.00 4.18
Net income available for common unitholders (in dollars per share) $ 0.55 $ 0.32 $ 1.24 $ 5.11
Weighted average Common Units outstanding - basic (in shares) 105,660 101,422 104,914 100,142
Earnings per Common Unit - diluted:        
Income from continuing operations available for common unitholders (in dollars per share) $ 0.55 $ 0.32 $ 1.24 $ 0.92
Income from discontinued operations available for common unitholders (in dollars per share) 0.00 0.00 0.00 4.18
Net income available for common unitholders (in dollars per share) $ 0.55 $ 0.32 $ 1.24 $ 5.10
Weighted average Common Units outstanding - diluted (in shares) 105,736 101,530 104,993 100,236
Distributions declared per Common Unit (in dollars per unit) $ 0.440 $ 0.425 $ 1.320 $ 1.275
Net income available for common unitholders:        
Income from continuing operations available for common unitholders $ 58,611 $ 32,897 $ 129,805 $ 92,692
Income from discontinued operations available for common unitholders 0 0 0 418,593
Net income available for common unitholders $ 58,611 $ 32,897 $ 129,805 $ 511,285
v3.8.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Comprehensive income:        
Net income $ 59,549 $ 33,840 $ 132,588 $ 514,103
Other comprehensive income/(loss):        
Unrealized gains/(losses) on cash flow hedges (347) 1,610 (31) (7,785)
Amortization of cash flow hedges 211 758 992 2,336
Total other comprehensive income/(loss) (136) 2,368 961 (5,449)
Total comprehensive income 59,413 36,208 133,549 508,654
Less-comprehensive (income) attributable to noncontrolling interests (1,886) (1,245) (4,416) (15,817)
Comprehensive income attributable to common stockholders/Comprehensive income attributable to common unitholders 57,527 34,963 129,133 492,837
Highwoods Realty Limited Partnership [Member]        
Comprehensive income:        
Net income 59,549 33,840 132,588 514,103
Other comprehensive income/(loss):        
Unrealized gains/(losses) on cash flow hedges (347) 1,610 (31) (7,785)
Amortization of cash flow hedges 211 758 992 2,336
Total other comprehensive income/(loss) (136) 2,368 961 (5,449)
Total comprehensive income 59,413 36,208 133,549 508,654
Less-comprehensive (income) attributable to noncontrolling interests (315) (319) (914) (941)
Comprehensive income attributable to common stockholders/Comprehensive income attributable to common unitholders $ 59,098 $ 35,889 $ 132,635 $ 507,713
v3.8.0.1
Consolidated Statements of Equity/Capital - USD ($)
$ in Thousands
Total
Highwoods Realty Limited Partnership [Member]
Common Stock [Member]
Series A Cumulative Redeemable Preferred Shares [Member]
General Partners' Common Units [Member]
Highwoods Realty Limited Partnership [Member]
Limited Partners' Common Units [Member]
Highwoods Realty Limited Partnership [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Highwoods Realty Limited Partnership [Member]
Noncontrolling Interests in Consolidated Affiliates [Member]
Noncontrolling Interests in Consolidated Affiliates [Member]
Highwoods Realty Limited Partnership [Member]
Distributions in Excess of Net Income Available for Common Stockholders [Member]
Balance (in shares) at Dec. 31, 2015     96,091,932                  
Balance at Dec. 31, 2015 $ 1,619,282 $ 1,590,232 $ 961 $ 29,050 $ 15,759 $ 1,560,309 $ 2,598,242 $ (3,811) $ (3,811) $ 17,975 $ 17,975 $ (1,023,135)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   187,214     1,872 185,342            
Distributions on Common Units   (127,391)     (1,274) (126,117)            
Distributions on Preferred Units   (1,877)     (19) (1,858)            
Issuances of Common Stock, net of issuance costs and tax withholdings - Shares     3,930,262                  
Issuances of Common Stock, net of issuance costs and tax withholdings 187,214   $ 39       187,175          
Conversions of Common Units to Common Stock - Shares     60,048                  
Conversions of Common Units to Common Stock 3,006           3,006          
Dividends on Common Stock (124,228)                     (124,228)
Dividends on Preferred Stock (1,877)                     (1,877)
Adjustment of noncontrolling interests in the Operating Partnership to fair value (13,390)           (13,390)          
Distributions to noncontrolling interests in consolidated affiliates (966) (966)               (966) (966)  
Issuances of restricted stock - shares     130,752                  
Issuances of restricted stock 0                      
Redemptions/repurchases of Preferred Stock (130)     (130)                
Share-based compensation expense, net of forfeitures - shares     (8,888)                  
Share-based compensation expense, net of forfeitures 5,412 5,412 $ 2   54 5,358 5,410          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   (22,097)     (221) (21,876)            
Net (income) attributable to noncontrolling interests in the Operating Partnership (14,876)                     (14,876)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (9) (932)       941 941 (941)
Comprehensive income:                        
Net income 514,103 514,103     5,141 508,962           514,103
Other comprehensive income/(loss) (5,449) (5,449)           (5,449) (5,449)      
Total comprehensive income 508,654 508,654                    
Balance (in shares) at Sep. 30, 2016     100,204,106                  
Balance at Sep. 30, 2016 $ 2,168,101 2,139,181 $ 1,002 28,920 21,303 2,109,188 2,780,443 (9,260) (9,260) 17,950 17,950 (650,954)
Balance (in shares) at Dec. 31, 2016 101,665,554   101,665,554                  
Balance at Dec. 31, 2016 $ 2,154,316 2,125,396 $ 1,017 28,920 21,023 2,081,463 2,850,881 4,949 4,949 17,961 17,961 (749,412)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   70,307     703 69,604            
Distributions on Common Units   (138,577)     (1,386) (137,191)            
Distributions on Preferred Units   (1,869)     (19) (1,850)            
Issuances of Common Stock, net of issuance costs and tax withholdings - Shares     1,464,638                  
Issuances of Common Stock, net of issuance costs and tax withholdings 70,307   $ 15       70,292          
Conversions of Common Units to Common Stock - Shares     8,000                  
Conversions of Common Units to Common Stock 408           408          
Dividends on Common Stock (135,375)                     (135,375)
Dividends on Preferred Stock (1,869)                     (1,869)
Adjustment of noncontrolling interests in the Operating Partnership to fair value (3,297)           (3,297)          
Distributions to noncontrolling interests in consolidated affiliates (1,231) (1,231)               (1,231) (1,231)  
Issuances of restricted stock - shares     110,748                  
Issuances of restricted stock 0                      
Redemptions/repurchases of Preferred Stock (28)     (28)                
Share-based compensation expense, net of forfeitures - shares     0                  
Share-based compensation expense, net of forfeitures 5,764 5,764     58 5,706 5,764          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   (3,189)     (31) (3,158)            
Net (income) attributable to noncontrolling interests in the Operating Partnership (3,502)                     (3,502)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (9) (905)       914 914 (914)
Comprehensive income:                        
Net income 132,588 132,588     1,326 131,262           132,588
Other comprehensive income/(loss) 961 961           961 961      
Total comprehensive income $ 133,549 133,549                    
Balance (in shares) at Sep. 30, 2017 103,248,940   103,248,940                  
Balance at Sep. 30, 2017 $ 2,219,042 $ 2,190,150 $ 1,032 $ 28,892 $ 21,665 $ 2,144,931 $ 2,924,048 $ 5,910 $ 5,910 $ 17,644 $ 17,644 $ (758,484)
v3.8.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Operating activities:    
Net income $ 132,588 $ 514,103
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 168,934 161,734
Amortization of lease incentives and acquisition-related intangible assets and liabilities (666) (1,599)
Share-based compensation expense 5,764 5,412
Allowance for losses on accounts and accrued straight-line rents receivable 435 1,846
Accrued interest on mortgages and notes receivable (391) (364)
Amortization of debt issuance costs 2,445 2,645
Amortization of cash flow hedges 992 2,336
Amortization of mortgages and notes payable fair value adjustments 422 (175)
Impairments of real estate assets 1,445 0
Gains on debt extinguishment (826) 0
Net gains on disposition of property (25,181) (428,656)
Equity in earnings of unconsolidated affiliates (6,757) (5,010)
Distributions of earnings from unconsolidated affiliates 4,815 3,936
Settlement of cash flow hedges 7,322 0
Changes in operating assets and liabilities:    
Accounts receivable 916 4,798
Prepaid expenses and other assets 2,735 (2,243)
Accrued straight-line rents receivable (24,473) (18,931)
Accounts payable, accrued expenses and other liabilities (308) (7,447)
Net cash provided by operating activities 270,211 232,385
Investing activities:    
Investments in acquired real estate and related intangible assets, net of cash acquired 0 (110,249)
Investments in development in-process (121,367) (122,839)
Investments in tenant improvements and deferred leasing costs (78,691) (63,715)
Investments in building improvements (41,862) (51,714)
Net proceeds from disposition of real estate assets 85,538 680,994
Distributions of capital from unconsolidated affiliates 11,670 2,639
Investments in mortgages and notes receivable 0 (7,934)
Repayments of mortgages and notes receivable 2,435 869
Investments in and advances to unconsolidated affiliates (10,063) (105)
Repayments from unconsolidated affiliates 0 448
Changes in restricted cash and other investing activities (24,225) (23,310)
Net cash provided by/(used in) investing activities (176,565) 305,084
Financing activities:    
Dividends on Common Stock (135,375) (124,228)
Special dividend on Common Stock (81,205) 0
Redemptions/repurchases of Preferred Stock (28) (130)
Dividends on Preferred Stock (1,869) (1,877)
Distributions to noncontrolling interests in the Operating Partnership (3,742) (3,684)
Special distribution to noncontrolling interests in the Operating Partnership (2,271) 0
Distributions to noncontrolling interests in consolidated affiliates (1,231) (966)
Proceeds from the issuance of Common Stock 75,517 194,518
Costs paid for the issuance of Common Stock (1,244) (2,888)
Repurchase of shares related to tax withholdings (3,966) (4,416)
Borrowings on revolving credit facility 492,300 257,800
Repayments of revolving credit facility (420,300) (528,800)
Borrowings on mortgages and notes payable 456,001 75,000
Repayments of mortgages and notes payable (507,114) (395,455)
Payments of debt extinguishment costs (57) 0
Changes in debt issuance costs and other financing activities (3,688) (992)
Net cash used in financing activities (138,272) (536,118)
Net increase/(decrease) in cash and cash equivalents (44,626) 1,351
Cash and cash equivalents at beginning of the period 49,490 5,036
Cash and cash equivalents at end of the period 4,864 6,387
Supplemental disclosure of cash flow information:    
Cash paid for interest, net of amounts capitalized 50,025 58,138
Supplemental disclosure of non-cash investing and financing activities:    
Unrealized losses on cash flow hedges (31) (7,785)
Conversions of Common Units to Common Stock 408 3,006
Changes in accrued capital expenditures (6,327) 25,037
Write-off of fully depreciated real estate assets 41,860 28,783
Write-off of fully amortized leasing costs 28,343 16,075
Write-off of fully amortized debt issuance costs 4,324 916
Adjustment of noncontrolling interests in the Operating Partnership to fair value 3,297 13,390
Highwoods Realty Limited Partnership [Member]    
Operating activities:    
Net income 132,588 514,103
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 168,934 161,734
Amortization of lease incentives and acquisition-related intangible assets and liabilities (666) (1,599)
Share-based compensation expense 5,764 5,412
Allowance for losses on accounts and accrued straight-line rents receivable 435 1,846
Accrued interest on mortgages and notes receivable (391) (364)
Amortization of debt issuance costs 2,445 2,645
Amortization of cash flow hedges 992 2,336
Amortization of mortgages and notes payable fair value adjustments 422 (175)
Impairments of real estate assets 1,445 0
Gains on debt extinguishment (826) 0
Net gains on disposition of property (25,181) (428,656)
Equity in earnings of unconsolidated affiliates (6,757) (5,010)
Distributions of earnings from unconsolidated affiliates 4,815 3,523
Settlement of cash flow hedges 7,322 0
Changes in operating assets and liabilities:    
Accounts receivable 916 4,798
Prepaid expenses and other assets 2,735 (2,243)
Accrued straight-line rents receivable (24,473) (18,931)
Accounts payable, accrued expenses and other liabilities (308) (7,447)
Net cash provided by operating activities 270,211 231,972
Investing activities:    
Investments in acquired real estate and related intangible assets, net of cash acquired 0 (110,249)
Investments in development in-process (121,367) (122,839)
Investments in tenant improvements and deferred leasing costs (78,691) (63,715)
Investments in building improvements (41,862) (51,714)
Net proceeds from disposition of real estate assets 85,538 680,994
Distributions of capital from unconsolidated affiliates 11,670 3,052
Investments in mortgages and notes receivable 0 (7,934)
Repayments of mortgages and notes receivable 2,435 869
Investments in and advances to unconsolidated affiliates (10,063) (105)
Repayments from unconsolidated affiliates 0 448
Changes in restricted cash and other investing activities (24,225) (23,310)
Net cash provided by/(used in) investing activities (176,565) 305,497
Financing activities:    
Distributions on Common Units (138,577) (127,391)
Special distribution on Common Units (83,149) 0
Redemptions/repurchases of Preferred Units (28) (130)
Distributions on Preferred Units (1,869) (1,877)
Distributions to noncontrolling interests in consolidated affiliates (1,231) (966)
Proceeds from the issuance of Common Units 75,517 194,518
Costs paid for the issuance of Common Units (1,244) (2,888)
Repurchase of units related to tax withholdings (3,966) (4,416)
Borrowings on revolving credit facility 492,300 257,800
Repayments of revolving credit facility (420,300) (528,800)
Borrowings on mortgages and notes payable 456,001 75,000
Repayments of mortgages and notes payable (507,114) (395,455)
Payments of debt extinguishment costs (57) 0
Changes in debt issuance costs and other financing activities (4,555) (1,513)
Net cash used in financing activities (138,272) (536,118)
Net increase/(decrease) in cash and cash equivalents (44,626) 1,351
Cash and cash equivalents at beginning of the period 49,490 5,036
Cash and cash equivalents at end of the period 4,864 6,387
Supplemental disclosure of cash flow information:    
Cash paid for interest, net of amounts capitalized 50,025 58,138
Supplemental disclosure of non-cash investing and financing activities:    
Unrealized losses on cash flow hedges (31) (7,785)
Changes in accrued capital expenditures (6,327) 25,037
Write-off of fully depreciated real estate assets 41,860 28,783
Write-off of fully amortized leasing costs 28,343 16,075
Write-off of fully amortized debt issuance costs 4,324 916
Adjustment of Redeemable Common Units to fair value $ 2,649 $ 21,576
v3.8.0.1
Description of Business and Significant Accounting Policies
9 Months Ended
Sep. 30, 2017
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 September 30, 2017, we owned or had an interest in 30.9 million rentable square feet of in-service properties, 0.6 million rentable square feet of properties under development and approximately 400 acres of development land.
 
The Company is the sole general partner of the Operating Partnership. At September 30, 2017, the Company owned all of the Preferred Units and 102.8 million, or 97.3%, of the Common Units in the Operating Partnership. Limited partners owned the remaining 2.8 million Common Units. During the nine months ended September 30, 2017, the Company redeemed 8,000 Common Units for a like number of shares of Common Stock.

Common Stock Offerings
 
During the first quarter of 2017, we entered into separate equity distribution agreements in which the Company may offer and sell up to $300.0 million in aggregate gross sales price of shares of Common Stock. During the nine months ended September 30, 2017, the Company issued 1,363,919 shares of Common Stock under its equity distribution agreements at an average gross sales price of $50.85 per share and received net proceeds, after sales commissions, of $68.3 million.

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

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

The unaudited interim consolidated financial statements and accompanying unaudited consolidated financial information, in the opinion of management, contain all adjustments (including normal recurring accruals) necessary for a fair presentation of our financial position, results of operations and cash flows. We have condensed or omitted certain notes and other information from the interim Consolidated Financial Statements presented in this Quarterly Report as permitted by SEC rules and regulations. These Consolidated Financial Statements should be read in conjunction with our 2016 Annual Report on Form 10-K.

Use of Estimates

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

1.    Description of Business and Significant Accounting Policies – Continued

Recently Issued Accounting Standards

The Financial Accounting Standards Board ("FASB") issued an accounting standards update ("ASU") that requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that we identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when we satisfy the performance obligations. We will also be required to disclose information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Upon adoption of the ASU in 2018, we expect to utilize the modified retrospective approach. We are currently conducting our analysis of the impact of the guidance on our Consolidated Financial Statements, including our internal control processes, and have an active project team working on the evaluation and implementation of the guidance. Our analysis of our non-lease related revenue contracts, which include primarily real estate sales, management, development and construction fee income and transient parking income, indicates that the adoption of this ASU will impact the financial statement disclosure of these contracts with no material impact on the timing of revenue recognition; however, we continue to evaluate the impacts of adoption of this ASU. We expect additional impact of this ASU upon adoption of the ASU related to accounting for leases discussed below for certain lease revenue streams that will be required to be evaluated as non-lease components using the five-step revenue recognition model.
 
The FASB issued an ASU that adds to and clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. The ASU is required to be adopted in 2018 with retrospective application required. We do not expect such adoption to have a material effect on our Consolidated Statements of Cash Flows.

The FASB issued an ASU that clarifies and narrows the definition of a business used in determining whether to account for a transaction as an asset acquisition or business combination. The guidance requires evaluation of the fair value of the assets acquired to determine if it is concentrated in a single identifiable asset or a group of similar identifiable assets. If so, the transferred assets would not be a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs. The ASU is required to be adopted in 2018 and applied prospectively. Upon adoption of this ASU, we expect that the majority of our future acquisitions would not meet the definition of a business; therefore, the related acquisition costs would be capitalized as part of the purchase price.

The FASB issued an ASU that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The guidance requires modification accounting if the value, vesting conditions or classification of the award changes. The ASU is required to be adopted in 2018 and applied prospectively. We do not expect such adoption to have a material effect on our Consolidated Financial Statements.

The FASB issued an ASU which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. We are currently conducting our initial analysis of the impact of the guidance on our Consolidated Financial Statements and have an active project team working on the evaluation and implementation of the guidance. We currently believe that the adoption of the ASU will not significantly change the accounting for operating leases on our Consolidated Balance Sheets where we are the lessor, and that such leases will be accounted for in a similar method to existing standards with the underlying leased asset being reported and recognized as a real estate asset. In addition, the guidance requires lessors to capitalize and amortize only incremental direct leasing costs. As a result, we expect that upon the adoption of the ASU, we will no longer be able to capitalize and amortize certain leasing related costs and instead will expense these costs as incurred. We are in the process of evaluating the impact to our results of operations of expensing such costs. The ASU is required to be adopted in 2019 using a modified retrospective approach. Our initial analysis of our leases also indicates that upon adoption of the ASU, certain lease revenue streams that are currently accounted for using the lease accounting standard will be accounted for as non-lease components using the five-step revenue recognition model discussed above. We continue to evaluate other impacts of adoption of this ASU.

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

1.    Description of Business and Significant Accounting Policies – Continued

The FASB issued an ASU that requires, among other things, the use of a new current expected credit loss ("CECL") model in determining our allowances for doubtful accounts with respect to accounts receivable, accrued straight-line rents receivable and mortgages and notes receivable. The CECL model requires that we estimate our lifetime expected credit loss with respect to these receivables and record allowances that, when deducted from the balance of the receivables, represent the net amounts expected to be collected. We will also be required to disclose information about how we developed the allowances, including changes in the factors (e.g., portfolio mix, credit trends, unemployment, gross domestic product, etc.) that influenced our estimate of expected credit losses and the reasons for those changes. We will apply the ASU’s provisions as a cumulative-effect adjustment to retained earnings upon adoption in 2020. We are in the process of evaluating this ASU.
v3.8.0.1
Real Estate Assets
9 Months Ended
Sep. 30, 2017
Real Estate [Abstract]  
Real Estate Assets
Real Estate Assets
Dispositions

During the third quarter of 2017, we sold a total of 12 buildings for an aggregate sale price of $78.0 million (before closing credits to buyer of $2.5 million) and recorded aggregate gains on disposition of property of $19.8 million.

During the first quarter of 2017, we sold a building for a sale price of $13.0 million (before closing credits to buyer of $1.2 million) and recorded a gain on disposition of property of $5.3 million.

Impairments

During the third quarter of 2017, we recorded aggregate impairments of real estate assets of $1.4 million, which resulted from a change in market-based inputs and our assumptions about the use of the assets.
v3.8.0.1
Mortgages and Notes Receivable
9 Months Ended
Sep. 30, 2017
Receivables [Abstract]  
Mortgages and Notes Receivable
Mortgages and Notes Receivable
Mortgages and notes receivable were $6.8 million and $8.8 million at September 30, 2017 and December 31, 2016, respectively. We evaluate the ability to collect our mortgages and notes receivable by monitoring the leasing statistics and/or market fundamentals of these assets. As of September 30, 2017, our mortgages and notes receivable were not in default and there were no other indicators of impairment.
v3.8.0.1
Intangible Assets and Below Market Lease Liabilities
9 Months Ended
Sep. 30, 2017
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:
 
 
September 30,
2017
 
December 31,
2016
Assets:
 
 
 
Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets)
$
348,628

 
$
353,581

Less accumulated amortization
(145,814
)
 
(140,081
)
 
$
202,814

 
$
213,500

Liabilities (in accounts payable, accrued expenses and other liabilities):
 
 
 
Acquisition-related below market lease liabilities
$
60,304

 
$
61,221

Less accumulated amortization
(26,905
)
 
(23,074
)
 
$
33,399

 
$
38,147

 
The following table sets forth amortization of intangible assets and below market lease liabilities:
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2017
 
2016
 
2017
 
2016
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)
$
10,130

 
$
10,111

 
$
30,882

 
$
33,177

Amortization of lease incentives (in rental and other revenues)
$
444

 
$
273

 
$
1,284

 
$
1,374

Amortization of acquisition-related intangible assets (in rental and other revenues)
$
671

 
$
901

 
$
2,382

 
$
2,904

Amortization of acquisition-related intangible assets (in rental property and other expenses)
$
140

 
$
140

 
$
416

 
$
417

Amortization of acquisition-related below market lease liabilities (in rental and other revenues)
$
(1,576
)
 
$
(1,734
)
 
$
(4,748
)
 
$
(6,294
)

The following table sets forth scheduled future amortization of intangible assets and below market lease liabilities:
 
 
 
Amortization of Deferred Leasing Costs and Acquisition-Related Intangible Assets (in Depreciation and Amortization)
 
Amortization of Lease Incentives (in Rental and Other Revenues)
 
Amortization of Acquisition-Related Intangible Assets (in Rental and Other Revenues)
 
Amortization of Acquisition-Related Intangible Assets (in Rental Property and Other Expenses)
 
Amortization of Acquisition-Related Below Market Lease Liabilities (in Rental and Other Revenues)
October 1 through December 31, 2017
 
$
10,019

 
$
427

 
$
469

 
$
134

 
$
(1,497
)
2018
 
35,970

 
1,599

 
1,680

 
553

 
(5,962
)
2019
 
30,311

 
1,377

 
1,286

 
553

 
(5,492
)
2020
 
25,589

 
1,101

 
967

 
525

 
(5,180
)
2021
 
21,254

 
886

 
647

 

 
(4,409
)
Thereafter
 
61,333

 
4,249

 
1,885

 

 
(10,859
)
 
 
$
184,476

 
$
9,639

 
$
6,934

 
$
1,765

 
$
(33,399
)
Weighted average remaining amortization periods as of September 30, 2017 (in years)
 
7.6

 
9.5

 
6.5

 
3.2

 
6.8

v3.8.0.1
Mortgages and Notes Payable
9 Months Ended
Sep. 30, 2017
Debt Disclosure [Abstract]  
Mortgages and Notes Payable
Mortgages and Notes Payable
 
The following table sets forth our mortgages and notes payable:
 
 
September 30,
2017
 
December 31,
2016
Secured indebtedness
$
99,421

 
$
128,204

Unsecured indebtedness
1,875,239

 
1,826,145

Less-unamortized debt issuance costs
(8,262
)
 
(6,302
)
Total mortgages and notes payable, net
$
1,966,398

 
$
1,948,047


 
At September 30, 2017, our secured mortgage loans were collateralized by real estate assets with an aggregate undepreciated book value of $147.7 million.
 
At September 30, 2017, we had a $475.0 million unsecured revolving credit facility that was scheduled to mature in January 2018. The interest rate was LIBOR plus 110 basis points and the annual facility fee was 20 basis points. There was $72.0 million outstanding under our revolving credit facility at September 30, 2017 and $0.6 million of outstanding letters of credit, which reduced the availability on the credit facility. As a result, the unused capacity of our revolving credit facility at September 30, 2017 was $402.4 million.
 
During the second quarter of 2017, we prepaid without penalty a secured mortgage loan with a fair market value of $108.2 million with an effective interest rate of 4.22% that was originally scheduled to mature in November 2017. We recorded $0.4 million of gain on debt extinguishment related to this prepayment.
 
During 2015, we acquired our joint venture partner’s 77.2% interest in a building in Orlando. Simultaneously with this acquisition, the joint venture's previously existing mortgage note was restructured into a new $18.0 million first mortgage note and a $10.2 million subordinated note, both of which were scheduled to mature in July 2017. The first mortgage and subordinated notes had effective interest rates of 5.36% and 8.6%, respectively. The subordinated note and accrued interest thereon can be satisfied, in certain circumstances, upon payment of a "waterfall payment" equal to a cash payment of 50.0% of the amount by which the net sale proceeds or appraised value at the time of refinancing exceeded (1) the outstanding principal of the first mortgage note, (2) funds deposited by us into escrow to fund tenant improvements, leasing commissions and building improvements and (3) a 10.0% return on such funds deposited by us into escrow. As of the date of such restructuring, the subordinated note was recorded at a projected waterfall payment of $1.0 million. During the second quarter of 2017, both notes were retired upon payment of the $18.0 million principal balance on the first mortgage note and a $0.5 million waterfall payment relating to the subordinated note, which resulted in $0.4 million of gain on debt extinguishment.
 
During the second quarter of 2017, we obtained a $100.0 million secured mortgage loan from a third party lender with an effective interest rate of 4.0%. This loan is scheduled to mature in May 2029. We incurred $0.8 million of debt issuance costs in connection with this loan, which will be amortized over the term of the loan.
 
During the first quarter of 2017, the Operating Partnership issued $300.0 million aggregate principal amount of 3.875% notes due 2027, less original issue discount of $4.0 million. These notes were priced to yield 4.038%. Underwriting fees and other expenses were incurred that aggregated $2.5 million; these costs were deferred and will be amortized over the term of the notes.
 
During the first quarter of 2017, we paid off at maturity $379.7 million principal amount of 5.85% unsecured notes.
 
During the first quarter of 2017, we amended our $150.0 million unsecured bank term loan that is scheduled to mature in January 2022 by increasing the borrowed amount to $200.0 million. The interest rate on this term loan at our current credit ratings is LIBOR plus 110 basis points. The underlying LIBOR rate with respect to $50.0 million of the unsecured bank term loan has been effectively fixed for the term through floating-to-fixed interest rate swaps as discussed in Note 6. We incurred $0.3 million of debt issuance costs in connection with this amendment, which will be amortized along with existing unamortized debt issuance costs over the remaining term.

5.    Mortgages and Notes Payable - Continued
 
We are currently in compliance with financial covenants and other requirements with respect to our consolidated debt.
 
We have considered our short-term liquidity needs within one year from October 24, 2017 (the date of issuance of the quarterly financial statements) and the adequacy of our estimated cash flows from operating activities and other expected financing sources to meet these needs. In particular, we have considered our scheduled debt maturities during such one-year period, including the $200.0 million principal amount of unsecured notes due April 15, 2018. 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 (some of which debt securities may be hedged to a fixed interest rate pursuant to the forward-starting swaps referred to in Note 6);
 
issuance of secured debt;
 
bank term loans;
 
borrowings under our revolving credit facility;
 
issuance of equity securities by the Company or the Operating Partnership; and
 
the disposition of non-core assets.
v3.8.0.1
Derivative Financial Instruments
9 Months Ended
Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments

During the second quarter of 2017, we entered into $150.0 million notional amount of forward-starting swaps that effectively lock the underlying 10-year treasury rate at 2.44% with respect to a planned issuance of debt securities by the Operating Partnership expected to occur prior to May 15, 2018.

During the second quarter of 2017, we 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%.

During 2016, we entered into $150.0 million notional amount of forward-starting swaps that effectively locked the underlying 10-year treasury rate at 1.90% with respect to a planned issuance of debt securities by the Operating Partnership. Upon issuance of the $300.0 million aggregate principal amount of 3.875% notes due 2027 during the first quarter of 2017, we terminated the forward-starting swaps resulting in an unrealized gain of $7.3 million in accumulated other comprehensive income.

The counterparties under these 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. No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on our cash flow hedges during the nine months ended September 30, 2017 and 2016. 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 variable-rate debt. During the period from October 1, 2017 through September 30, 2018, we estimate that less than $0.1 million will be reclassified as a net increase to interest expense.
 

6.
Derivative Financial Instruments - Continued

The following table sets forth the gross fair value of our derivatives:
 
 
September 30,
2017
 
December 31,
2016
Derivatives:
 
 
 
Derivatives designated as cash flow hedges in prepaid expenses and other assets:
 
 
 
Interest rate swaps
$
306

 
$
7,619

Derivatives designated as cash flow hedges in accounts payable, accrued expenses and other liabilities:
 
 
 
Interest rate swaps
$
1,059

 
$
1,870


 
The following table sets forth the effect of our cash flow hedges on accumulated other comprehensive income/(loss) and interest expense:
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2017
 
2016
 
2017
 
2016
Derivatives Designated as Cash Flow Hedges:
 
 
 
 
 
 
 
Amount of unrealized gains/(losses) recognized in accumulated other comprehensive income/(loss) on derivatives (effective portion):
 
 
 
 
 
 
 
Interest rate swaps
$
(347
)
 
$
1,610

 
$
(31
)
 
$
(7,785
)
Amount of net losses reclassified out of accumulated other comprehensive income/(loss) into contractual interest expense (effective portion):
 
 
 
 
 
 
 
Interest rate swaps
$
211

 
$
758

 
$
992

 
$
2,336

v3.8.0.1
Noncontrolling Interests
9 Months Ended
Sep. 30, 2017
Noncontrolling Interest [Abstract]  
Noncontrolling Interests
Noncontrolling Interests

Noncontrolling Interests in Consolidated Affiliates
 
At September 30, 2017, our noncontrolling interests in consolidated affiliates relate to our joint venture partner's 50.0% interest in office properties in Richmond. Our joint venture partner is an unrelated third party.

Noncontrolling Interests in the Operating Partnership

The following table sets forth the Company's noncontrolling interests in the Operating Partnership:
 
 
Nine Months Ended
September 30,
 
2017
 
2016
Beginning noncontrolling interests in the Operating Partnership
$
144,802

 
$
126,429

Adjustment of noncontrolling interests in the Operating Partnership to fair value
3,297

 
13,390

Conversions of Common Units to Common Stock
(408
)
 
(3,006
)
Net income attributable to noncontrolling interests in the Operating Partnership
3,502

 
14,876

Distributions to noncontrolling interests in the Operating Partnership
(3,742
)
 
(3,684
)
Total noncontrolling interests in the Operating Partnership
$
147,451

 
$
148,005


7.
Noncontrolling Interests - Continued

The following table sets forth net income available for common stockholders and transfers from the Company's noncontrolling interests in the Operating Partnership:
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2017
 
2016
 
2017
 
2016
Net income available for common stockholders
$
57,040

 
$
31,971

 
$
126,303

 
$
496,409

Increase in additional paid in capital from conversions of Common Units
to Common Stock
103

 
1,448

 
408

 
3,006

Change from net income available for common stockholders and transfers from noncontrolling interests
$
57,143

 
$
33,419

 
$
126,711

 
$
499,415

v3.8.0.1
Disclosure About Fair Value of Financial Instruments
9 Months Ended
Sep. 30, 2017
Fair Value Disclosures [Abstract]  
Disclosure About Fair Value of Financial Instruments
Disclosure About Fair Value of Financial Instruments

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

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

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

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

Our Level 2 assets include the fair value of our mortgages and notes receivable and certain interest rate swaps. Our Level 2 liabilities include the fair value of our mortgages and notes payable and remaining 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 included (1) any real estate assets recorded at fair value on a non-recurring basis as a result of our quarterly impairment analysis, which were valued using the terms of definitive sales contracts or the sales comparison approach, and (2) our tax increment financing bond, which was not routinely traded but whose fair value was determined by the income approach utilizing contractual cash flows and market-based interest rates to estimate the projected redemption value based on quoted bid/ask prices for similar unrated municipal bonds. Our tax increment financing bond was assigned in conjunction with a sale during the first quarter of 2016. The estimated fair value at the date of sale of $11.2 million was equal to the outstanding principal amount due on the bond.
 

8.
Disclosure About Fair Value of Financial Instruments - Continued

The following table sets forth our assets and liabilities and the Company's noncontrolling interests in the Operating Partnership that are measured or disclosed at fair value within the fair value hierarchy.
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
 
Total
 
Quoted Prices
in Active
Markets for Identical Assets or Liabilities
 
Significant Observable Inputs
 
Significant Unobservable Inputs
Fair Value at September 30, 2017:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Mortgages and notes receivable, at fair value (1)
 
$
6,789

 
$

 
$
6,789

 
$

Interest rate swaps (in prepaid expenses and other assets)
 
306

 

 
306

 

Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
2,269

 
2,269

 

 

Impaired real estate assets
 
5,888

 

 

 
5,888

Total Assets
 
$
15,252

 
$
2,269

 
$
7,095

 
$
5,888

Noncontrolling Interests in the Operating Partnership
 
$
147,451

 
$
147,451

 
$

 
$

Liabilities:
 
 
 
 
 
 
 
 
Mortgages and notes payable, net, at fair value (1)
 
$
1,983,723

 
$

 
$
1,983,723

 
$

Interest rate swaps (in accounts payable, accrued expenses and other liabilities)
 
1,059

 

 
1,059

 

Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
2,269

 
2,269

 

 

Total Liabilities
 
$
1,987,051

 
$
2,269

 
$
1,984,782

 
$

Fair Value at December 31, 2016:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Mortgages and notes receivable, at fair value (1)
 
$
8,833

 
$

 
$
8,833

 
$

Interest rate swaps (in prepaid expenses and other assets)
 
7,619

 

 
7,619

 

Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
2,451

 
2,451

 

 

Total Assets
 
$
18,903

 
$
2,451

 
$
16,452

 
$

Noncontrolling Interests in the Operating Partnership
 
$
144,802

 
$
144,802

 
$

 
$

Liabilities:
 
 
 
 
 
 
 
 
Mortgages and notes payable, net, at fair value (1)
 
$
1,965,611

 
$

 
$
1,965,611

 
$

Interest rate swaps (in accounts payable, accrued expenses and other liabilities)
 
1,870

 

 
1,870

 

Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
2,451

 
2,451

 

 

Total Liabilities
 
$
1,969,932

 
$
2,451

 
$
1,967,481

 
$


__________
(1)    Amounts recorded at historical cost on our Consolidated Balance Sheets at September 30, 2017 and December 31, 2016.


8.
Disclosure About Fair Value of Financial Instruments - Continued
The impaired real estate assets that were measured in the third quarter of 2017 at fair value and deemed to be Level 3 assets were valued based primarily on market-based inputs and our assumptions about the use of the assets, as observable inputs were not available. In the absence of observable inputs, we estimate the fair value of real estate using unobservable local and national industry market data such as comparable sales, sales contracts and appraisals to assist us in our estimation of fair value. Significant increases or decreases in any valuation inputs in isolation would result in a significantly lower or higher fair value measurement.
v3.8.0.1
Share-Based Payments
9 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Payments
Share-Based Payments
 
During the nine months ended September 30, 2017, the Company granted 168,748 stock options with an exercise price equal to the last reported stock price of our Common Stock on the New York Stock Exchange on the last trading day prior to the date of grant. The fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model, which resulted in a weighted average grant date fair value per share of $6.72. During the nine months ended September 30, 2017, the Company also granted 61,404 shares of time-based restricted stock and 49,344 shares of total return-based restricted stock with weighted average grant date fair values per share of $52.49 and $49.59, respectively. We recorded share-based compensation expense of $0.9 million during each of the three months ended September 30, 2017 and 2016 and $5.8 million and $5.4 million during the nine months ended September 30, 2017 and 2016, respectively. At September 30, 2017, there was $6.1 million of total unrecognized share-based compensation costs, which will be recognized over a weighted average remaining contractual term of 2.3 years.
v3.8.0.1
Accumulated Other Comprehensive Income (Loss)
9 Months Ended
Sep. 30, 2017
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Accumulated Other Comprehensive Income/(Loss)
Accumulated Other Comprehensive Income/(Loss)
 
The following table sets forth the components of accumulated other comprehensive income/(loss):
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2017
 
2016
 
2017
 
2016
Cash flow hedges:
 
 
 
 
 
 
 
Beginning balance
$
6,046

 
$
(11,628
)
 
$
4,949

 
$
(3,811
)
Unrealized gains/(losses) on cash flow hedges
(347
)
 
1,610

 
(31
)
 
(7,785
)
Amortization of cash flow hedges (1)
211

 
758

 
992