HIGHWOODS PROPERTIES, INC., 10-K filed on 2/4/2020
Annual Report
v3.19.3.a.u2
Cover Page - USD ($)
$ in Billions
12 Months Ended
Dec. 31, 2019
Jan. 24, 2020
Jun. 30, 2019
Entity Information [Line Items]      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 2019    
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    
Entity Shell Company false    
Entity Public Float     $ 4.2
Entity Common Stock, Shares Outstanding   103,783,857  
Entity Central Index Key 0000921082    
Current Fiscal Year End Date --12-31    
Document Fiscal Year Focus 2019    
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    
Entity Shell Company false    
Entity Central Index Key 0000941713    
Current Fiscal Year End Date --12-31    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Amendment Flag false    
v3.19.3.a.u2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Real estate assets, at cost:    
Land $ 515,095 $ 491,441
Buildings and tenant improvements 5,128,150 4,676,862
Development in-process 172,706 165,537
Land held for development 99,163 128,248
Total real estate assets 5,915,114 5,462,088
Less-accumulated depreciation (1,388,566) (1,296,562)
Net real estate assets 4,526,548 4,165,526
Real estate and other assets, net, held for sale 20,790 0
Cash and cash equivalents 9,505 3,769
Restricted cash 5,237 6,374
Accounts receivable 23,370 25,952
Mortgages and notes receivable, net of allowance of $0 and $44, respectively 1,501 5,599
Accrued straight-line rents receivable 234,652 220,088
Investments in and advances to unconsolidated affiliates 26,298 23,585
Deferred leasing costs, net of accumulated amortization of $146,125 and $149,275, respectively 231,347 195,273
Prepaid expenses and other assets, net of accumulated depreciation of $20,017 and $18,074, respectively 58,996 28,843
Total Assets 5,138,244 4,675,009
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,543,710 2,085,831
Accounts payable, accrued expenses and other liabilities 286,911 218,922
Total Liabilities 2,830,621 2,304,753
Commitments and contingencies
Noncontrolling interests in the Operating Partnership 133,216 105,960
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), 28,859 and 28,877 shares issued and outstanding, respectively 28,859 28,877
Common Stock, $.01 par value, 200,000,000 authorized shares; 103,756,046 and 103,557,065 shares issued and outstanding, respectively 1,038 1,036
Additional paid-in capital 2,954,779 2,976,197
Distributions in excess of net income available for common stockholders (831,808) (769,303)
Accumulated other comprehensive income/(loss) (471) 9,913
Total Stockholders’ Equity 2,152,397 2,246,720
Noncontrolling interests in consolidated affiliates 22,010 17,576
Total Equity/Capital: 2,174,407 2,264,296
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital 5,138,244 4,675,009
Highwoods Realty Limited Partnership [Member]    
Real estate assets, at cost:    
Land 515,095 491,441
Buildings and tenant improvements 5,128,150 4,676,862
Development in-process 172,706 165,537
Land held for development 99,163 128,248
Total real estate assets 5,915,114 5,462,088
Less-accumulated depreciation (1,388,566) (1,296,562)
Net real estate assets 4,526,548 4,165,526
Real estate and other assets, net, held for sale 20,790 0
Cash and cash equivalents 9,505 3,769
Restricted cash 5,237 6,374
Accounts receivable 23,370 25,952
Mortgages and notes receivable, net of allowance of $0 and $44, respectively 1,501 5,599
Accrued straight-line rents receivable 234,652 220,088
Investments in and advances to unconsolidated affiliates 26,298 23,585
Deferred leasing costs, net of accumulated amortization of $146,125 and $149,275, respectively 231,347 195,273
Prepaid expenses and other assets, net of accumulated depreciation of $20,017 and $18,074, respectively 58,996 28,843
Total Assets 5,138,244 4,675,009
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,543,710 2,085,831
Accounts payable, accrued expenses and other liabilities 286,911 218,922
Total Liabilities 2,830,621 2,304,753
Commitments and contingencies
Redeemable Operating Partnership Units:    
Common Units, 2,723,703 and 2,738,703 outstanding, respectively 133,216 105,960
Series A Preferred Units (liquidation preference $1,000 per unit), 28,859 and 28,877 units issued and outstanding, respectively 28,859 28,877
Total Redeemable Operating Partnership Units 162,075 134,837
Equity/Capital:    
General partner Common Units, 1,060,709 and 1,058,870 outstanding, respectively 21,240 22,078
Limited partner Common Units, 102,286,528 and 102,089,386 outstanding, respectively 2,102,769 2,185,852
Accumulated other comprehensive income/(loss) (471) 9,913
Noncontrolling interests in consolidated affiliates 22,010 17,576
Total Equity/Capital: 2,145,548 2,235,419
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital $ 5,138,244 $ 4,675,009
v3.19.3.a.u2
Consolidated Balance Sheets (Parentheticals) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Assets:    
Mortgages and notes receivable allowance $ 0 $ 44
Deferred leasing costs, accumulated amortization 146,125 149,275
Prepaid expenses and other assets, accumulated amortization $ 20,017 $ 18,074
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) 28,859 28,877
Preferred Stock, shares outstanding (in shares) 29,000 29,000
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) 103,756,046 103,557,065
Common Stock, shares outstanding (in shares) 103,756,046 103,557,065
Highwoods Realty Limited Partnership [Member]    
Assets:    
Mortgages and notes receivable allowance $ 0 $ 44
Deferred leasing costs, accumulated amortization 146,125 149,275
Prepaid expenses and other assets, accumulated amortization $ 20,017 $ 18,074
Redeemable Operating Partnership Units:    
Redeemable Common Units, outstanding (in shares) 2,723,703 2,738,703
Preferred Units liquidation preference (in dollars per share) $ 1,000 $ 1,000
Series A Preferred Units, issued (in shares) 28,859 28,877
Series A Preferred Units, outstanding (in shares) 29,000 29,000
Common Units:    
General partners' capital account, units outstanding (in shares) 1,060,709 1,058,870
Limited partners' capital account, units outstanding (in shares) 102,286,528 102,089,386
v3.19.3.a.u2
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Rental and other revenues $ 735,979 $ 720,035 $ 702,737
Operating expenses:      
Rental property and other expenses 248,511 242,415 236,888
Depreciation and amortization 254,504 229,955 227,832
Impairments of real estate assets 5,849 423 1,445
General and administrative 44,067 40,006 39,648
Total operating expenses 552,931 512,799 505,813
Interest expense 81,648 71,422 69,105
Other income/(loss) (2,510) 1,940 2,283
Gains on disposition of property 39,517 37,638 54,157
Equity in earnings of unconsolidated affiliates 3,276 2,238 7,404
Net income 141,683 177,630 191,663
Net (income) attributable to noncontrolling interests in the Operating Partnership (3,551) (4,588) (5,059)
Net (income) attributable to noncontrolling interests in consolidated affiliates (1,214) (1,207) (1,239)
Dividends on Preferred Stock (2,488) (2,492) (2,492)
Net income available for common stockholders $ 134,430 $ 169,343 $ 182,873
Earnings per Common Share - basic:      
Net income available for common stockholders (in dollars per share) $ 1.30 $ 1.64 $ 1.78
Weighted average Common Shares outstanding - basic (in shares) 103,692 103,439 102,682
Earnings per Common Share - diluted:      
Net income available for common stockholders (in dollars per share) $ 1.30 $ 1.64 $ 1.78
Weighted average Common Shares outstanding - diluted (in shares) 106,445 106,268 105,594
Highwoods Realty Limited Partnership [Member]      
Rental and other revenues $ 735,979 $ 720,035 $ 702,737
Operating expenses:      
Rental property and other expenses 248,511 242,415 236,888
Depreciation and amortization 254,504 229,955 227,832
Impairments of real estate assets 5,849 423 1,445
General and administrative 44,067 40,006 39,648
Total operating expenses 552,931 512,799 505,813
Interest expense 81,648 71,422 69,105
Other income/(loss) (2,510) 1,940 2,283
Gains on disposition of property 39,517 37,638 54,157
Equity in earnings of unconsolidated affiliates 3,276 2,238 7,404
Net income 141,683 177,630 191,663
Net (income) attributable to noncontrolling interests in consolidated affiliates (1,214) (1,207) (1,239)
Distributions on Preferred Units (2,488) (2,492) (2,492)
Net income available for common unitholders $ 137,981 $ 173,931 $ 187,932
Earnings per Common Unit - basic:      
Net income available for common unitholders (in dollars per share) $ 1.30 $ 1.64 $ 1.79
Weighted average Common Units outstanding - basic (in shares) 106,014 105,826 105,106
Earnings per Common Unit - diluted:      
Net income available for common unitholders (in dollars per share) $ 1.30 $ 1.64 $ 1.79
Weighted average Common Units outstanding - diluted (in shares) 106,036 105,859 105,185
v3.19.3.a.u2
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Comprehensive income:      
Net income $ 141,683 $ 177,630 $ 191,663
Other comprehensive income/(loss):      
Unrealized gains/(losses) on cash flow hedges (9,134) 4,161 1,732
Amortization of cash flow hedges (1,250) (2,086) 1,157
Total other comprehensive income/(loss) (10,384) 2,075 2,889
Total comprehensive income 131,299 179,705 194,552
Less-comprehensive (income) attributable to noncontrolling interests (4,765) (5,795) (6,298)
Comprehensive income attributable to common stockholders/unitholders 126,534 173,910 188,254
Highwoods Realty Limited Partnership [Member]      
Comprehensive income:      
Net income 141,683 177,630 191,663
Other comprehensive income/(loss):      
Unrealized gains/(losses) on cash flow hedges (9,134) 4,161 1,732
Amortization of cash flow hedges (1,250) (2,086) 1,157
Total other comprehensive income/(loss) (10,384) 2,075 2,889
Total comprehensive income 131,299 179,705 194,552
Less-comprehensive (income) attributable to noncontrolling interests (1,214) (1,207) (1,239)
Comprehensive income attributable to common stockholders/unitholders $ 130,085 $ 178,498 $ 193,313
v3.19.3.a.u2
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, 2016     101,665,554                  
Balance at Dec. 31, 2016 $ 2,154,316 $ 2,125,396 $ 1,017 $ 28,920 $ 21,023 $ 2,081,463 $ 2,850,881 $ 4,949 $ 4,949 $ 17,961 $ 17,961 $ (749,412)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   70,977     710 70,267     0   0  
Distributions on Common Units   (185,072)     (1,851) (183,221)     0   0  
Distributions on Preferred Units   (2,492)     (25) (2,467)     0   0  
Issuances of Common Stock - Shares     1,480,573                  
Issuances of Common Stock, net of issuance costs and tax withholdings 70,977   $ 15 0     70,962 0   0   0
Conversions of Common Units to Common Stock - Shares     10,000                  
Conversions of Common Units to Common Stock 511   $ 0 0     511 0   0   0
Dividends on Common Stock (180,805)   0 0     0 0   0   (180,805)
Dividends on Preferred Stock (2,492)   0 0     0 0   0   (2,492)
Adjustment of noncontrolling interests in the Operating Partnership to fair value 354   0 0     354 0   0   0
Distributions to noncontrolling interests in consolidated affiliates (1,784) (1,784) $ 0 0 0 0 0 0 0 (1,784) (1,784) 0
Issuances of restricted stock - Shares     110,748                  
Issuances of restricted stock 0   $ 0 0     0 0   0   0
Redemptions/repurchases of Preferred Stock (28)   $ 0 (28)     0 0   0   0
Share-based compensation expense, net of forfeitures - Shares     0                  
Share-based compensation expense, net of forfeitures 6,692 6,692 $ 1 0 67 6,625 6,691 0 0 0 0 0
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   73     1 72     0   0  
Net (income) attributable to noncontrolling interests in the Operating Partnership (5,059)   0 0     0 0   0   (5,059)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0 0 0 (12) (1,227) 0 0 0 1,239 1,239 (1,239)
Comprehensive income:                        
Net income 191,663 191,663 0 0 1,917 189,746 0 0 0 0 0 191,663
Other comprehensive income/(loss) 2,889 2,889 $ 0 0 0 0 0 2,889 2,889 0 0 0
Total comprehensive income 194,552 194,552                    
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   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)
v3.19.3.a.u2
Consolidated Statements of Equity (Parentheticals) - $ / shares
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
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) 1.90 1.85 1.76
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) 1.90 1.85 1.76
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
v3.19.3.a.u2
Consolidated Statements of Cash Flows
$ in Thousands
12 Months Ended
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Operating activities:      
Net income $ 141,683 $ 177,630 $ 191,663
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 254,504 229,955 227,832
Amortization of lease incentives and acquisition-related intangible assets and liabilities (505) (1,943) (1,172)
Share-based compensation expense 7,180 7,466 6,692
Credit losses on operating lease receivables 9,861 1,212 1,508
Write-off of mortgages and notes receivable 4,087 0 0
Accrued interest on mortgages and notes receivable (184) (451) (509)
Amortization of debt issuance costs 2,970 2,857 3,166
Amortization of cash flow hedges (1,250) (2,086) 1,157
Amortization of mortgages and notes payable fair value adjustments 1,619 1,449 705
Impairments of real estate assets 5,849 423 1,445
Losses on debt extinguishment 640 0 26
Net gains on disposition of property (39,517) (37,638) (54,157)
Equity in earnings of unconsolidated affiliates (3,276) (2,238) (7,404)
Distributions of earnings from unconsolidated affiliates 1,149 2,104 5,078
Settlement of cash flow hedges (11,749) 7,216 7,322
Changes in operating assets and liabilities:      
Accounts receivable (3,271) 1,759 (4,974)
Prepaid expenses and other assets 1,610 1,217 7,908
Accrued straight-line rents receivable (29,828) (23,203) (32,234)
Accounts payable, accrued expenses and other liabilities 24,225 (7,101) (1,520)
Net cash provided by operating activities 365,797 358,628 352,532
Investing activities:      
Investments in acquired real estate and related intangible assets, net of cash acquired (424,222) (50,649) (1,840)
Investments in development in-process (116,111) (150,310) (150,944)
Investments in tenant improvements and deferred leasing costs (138,754) (121,534) (109,742)
Investments in building improvements (53,826) (68,256) (63,780)
Net proceeds from disposition of real estate assets 133,326 88,813 129,503
Distributions of capital from unconsolidated affiliates 7,833 105 11,670
Repayments of mortgages and notes receivable 295 1,312 2,917
Investments in and advances to unconsolidated affiliates (9,977) 0 (10,063)
Changes in other investing activities (5,971) (6,230) (8,023)
Net cash used in investing activities (607,407) (306,749) (200,302)
Financing activities:      
Dividends on Common Stock (196,935) (191,302) (180,805)
Special dividend on Common Stock 0 0 (81,205)
Redemptions/repurchases of Preferred Stock (18) (15) (28)
Dividends on Preferred Stock (2,488) (2,492) (2,492)
Distributions to noncontrolling interests in the Operating Partnership (5,189) (5,167) (4,987)
Special distribution to noncontrolling interests in the Operating Partnership 0 0 (2,271)
Distributions to noncontrolling interests in consolidated affiliates (1,767) (1,047) (1,784)
Proceeds from the issuance of Common Stock 2,086 3,637 76,268
Costs paid for the issuance of Common Stock 0 (95) (1,283)
Repurchase of shares related to tax withholdings (1,788) (1,677) (4,008)
Borrowings on revolving credit facility 604,600 438,900 780,300
Repayments of revolving credit facility (565,600) (501,900) (535,300)
Borrowings on mortgages and notes payable 747,990 345,863 656,001
Repayments of mortgages and notes payable (326,876) (211,803) (832,553)
Payments of debt extinguishment costs 0 0 (57)
Changes in debt issuance costs and other financing activities (7,806) (2,971) (8,324)
Net cash provided by/(used in) financing activities 246,209 (130,069) (142,528)
Net increase/(decrease) in cash and cash equivalents and restricted cash 4,599 (78,190) 9,702
Cash and cash equivalents and restricted cash at beginning of the period 10,143 88,333 78,631
Cash and cash equivalents and restricted cash at end of the period 14,742 10,143 88,333
Reconciliation of cash and cash equivalents and restricted cash:      
Cash and cash equivalents at end of the period 9,505 3,769 3,272
Restricted cash at end of the period 5,237 6,374 85,061
Supplemental disclosure of cash flow information:      
Cash paid for interest, net of amounts capitalized 72,014 67,235 68,207
Supplemental disclosure of non-cash investing and financing activities:      
Unrealized gains on cash flow hedges (9,134) 4,161 1,732
Conversions of Common Units to Common Stock 663 4,043 511
Changes in accrued capital expenditures 5,625 (165) (1,912)
Write-off of fully depreciated real estate assets 85,727 76,558 59,108
Write-off of fully amortized leasing costs 45,042 34,191 40,517
Write-off of fully amortized debt issuance costs 1,791 2,733 11,724
Adjustment of noncontrolling interests in the Operating Partnership to fair value 29,557 (33,427) (354)
Contingent consideration in connection with the acquisition of land 1,200 0 750
Contributions from noncontrolling interests in consolidated affiliates 4,987 0 0
Initial recognition of lease liabilities related to right of use assets 35,349 0 0
Highwoods Realty Limited Partnership [Member]      
Operating activities:      
Net income 141,683 177,630 191,663
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 254,504 229,955 227,832
Amortization of lease incentives and acquisition-related intangible assets and liabilities (505) (1,943) (1,172)
Share-based compensation expense 7,180 7,466 6,692
Credit losses on operating lease receivables 9,861 1,212 1,508
Write-off of mortgages and notes receivable 4,087 0 0
Accrued interest on mortgages and notes receivable (184) (451) (509)
Amortization of debt issuance costs 2,970 2,857 3,166
Amortization of cash flow hedges (1,250) (2,086) 1,157
Amortization of mortgages and notes payable fair value adjustments 1,619 1,449 705
Impairments of real estate assets 5,849 423 1,445
Losses on debt extinguishment 640 0 26
Net gains on disposition of property (39,517) (37,638) (54,157)
Equity in earnings of unconsolidated affiliates (3,276) (2,238) (7,404)
Distributions of earnings from unconsolidated affiliates 1,149 2,104 5,078
Settlement of cash flow hedges (11,749) 7,216 7,322
Changes in operating assets and liabilities:      
Accounts receivable (3,271) 1,759 (4,974)
Prepaid expenses and other assets 1,610 1,217 7,908
Accrued straight-line rents receivable (29,828) (23,203) (32,234)
Accounts payable, accrued expenses and other liabilities 24,225 (7,101) (1,520)
Net cash provided by operating activities 365,797 358,628 352,532
Investing activities:      
Investments in acquired real estate and related intangible assets, net of cash acquired (424,222) (50,649) (1,840)
Investments in development in-process (116,111) (150,310) (150,944)
Investments in tenant improvements and deferred leasing costs (138,754) (121,534) (109,742)
Investments in building improvements (53,826) (68,256) (63,780)
Net proceeds from disposition of real estate assets 133,326 88,813 129,503
Distributions of capital from unconsolidated affiliates 7,833 105 11,670
Repayments of mortgages and notes receivable 295 1,312 2,917
Investments in and advances to unconsolidated affiliates (9,977) 0 (10,063)
Changes in other investing activities (5,971) (6,230) (8,023)
Net cash used in investing activities (607,407) (306,749) (200,302)
Financing activities:      
Distributions on Common Units (201,347) (195,712) (185,072)
Special distribution on Common Units 0 0 (83,149)
Redemptions/repurchases of Preferred Units (18) (15) (28)
Distributions on Preferred Units (2,488) (2,492) (2,492)
Distributions to noncontrolling interests in consolidated affiliates (1,767) (1,047) (1,784)
Proceeds from the issuance of Common Units 2,086 3,637 76,268
Costs paid for the issuance of Common Units 0 (95) (1,283)
Repurchase of units related to tax withholdings (1,788) (1,677) (4,008)
Borrowings on revolving credit facility 604,600 438,900 780,300
Repayments of revolving credit facility (565,600) (501,900) (535,300)
Borrowings on mortgages and notes payable 747,990 345,863 656,001
Repayments of mortgages and notes payable (326,876) (211,803) (832,553)
Payments of debt extinguishment costs 0 0 (57)
Changes in debt issuance costs and other financing activities (8,583) (3,728) (9,371)
Net cash provided by/(used in) financing activities 246,209 (130,069) (142,528)
Net increase/(decrease) in cash and cash equivalents and restricted cash 4,599 (78,190) 9,702
Cash and cash equivalents and restricted cash at beginning of the period 10,143 88,333 78,631
Cash and cash equivalents and restricted cash at end of the period 14,742 10,143 88,333
Reconciliation of cash and cash equivalents and restricted cash:      
Cash and cash equivalents at end of the period 9,505 3,769 3,272
Restricted cash at end of the period 5,237 6,374 85,061
Supplemental disclosure of cash flow information:      
Cash paid for interest, net of amounts capitalized 72,014 67,235 68,207
Supplemental disclosure of non-cash investing and financing activities:      
Unrealized gains on cash flow hedges (9,134) 4,161 1,732
Changes in accrued capital expenditures 5,625 (165) (1,912)
Write-off of fully depreciated real estate assets 85,727 76,558 59,108
Write-off of fully amortized leasing costs 45,042 34,191 40,517
Write-off of fully amortized debt issuance costs 1,791 2,733 11,724
Adjustment of Redeemable Common Units to fair value 27,256 (38,049) (793)
Contingent consideration in connection with the acquisition of land 1,200 0 750
Contributions from noncontrolling interests in consolidated affiliates 4,987 0 0
Initial recognition of lease liabilities related to right of use assets $ 35,349 $ 0 $ 0
v3.19.3.a.u2
Description of Business and Significant Accounting Policies
12 Months Ended
Dec. 31, 2019
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, 2019, we owned or had an interest in 31.7 million rentable square feet of in-service properties, 1.2 million rentable square feet of office properties under development and approximately 275 acres of development land.

The Company is the sole general partner of the Operating Partnership. At December 31, 2019, the Company owned all of the Preferred Units and 103.3 million, or 97.4%, of the Common Units in the Operating Partnership. Limited partners owned the remaining 2.7 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 2019, the Company redeemed 15,000 Common Units for a like number of shares of Common Stock.

Basis of Presentation

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

The Company's Consolidated Financial Statements include the Operating Partnership, wholly owned subsidiaries and those entities in which the Company has the controlling interest. The Operating Partnership's Consolidated Financial Statements include wholly owned subsidiaries and those entities in which the Operating Partnership has the controlling interest. 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, 2019, 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, 2019, 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. To realize the tax deferral available under the Section 1031 exchange, we must complete the Section 1031 exchange, and take title to the to-be-exchanged building within 180 days of the acquisition date. We have determined that this entity is a variable interest entity of which we are the primary beneficiary and therefore, we consolidate this entity. As of December 31, 2019, this variable interest entity had total assets, liabilities and cash flows of $425.0 million, $24.0 million and $2.5 million, respectively.

All intercompany transactions and accounts have been eliminated.

Certain amounts within the Consolidated Statements of Income for the years ended December 31, 2018 and 2017 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, 2019, a reserve of $0.6 million was recorded to cover estimated reported and unreported claims.

Other Events

During the third quarter of 2019, we announced a series of planned investment activities. First, during the fourth quarter of 2019, we acquired Bank of America Tower at Legacy Union in Charlotte’s uptown CBD submarket for a total investment of $436 million. Bank of America Tower at Legacy Union is a trophy, LEED gold-registered office building encompassing 841,000 square feet with structured parking that delivered in 2019. Second, we have a two-phased plan to exit the Greensboro and Memphis markets. The first phase consists of selling a select portfolio of assets in Greensboro and Memphis by mid-2020 with a total sales price that approximates the $436 million total investment for Bank of America Tower at Legacy Union (with the intent of executing a reverse 1031 exchange) and closing the division offices. In 2020, we sold 35 buildings and land in Greensboro for an aggregate sale price of $193.4 million. We can provide no assurances, however, that we will dispose of the remainder of these assets on favorable terms, or at all. The second phase is the planned sale of the remaining assets in both markets. There is no pre-determined timetable for the second phase. As a result of the announced plan to exit the Greensboro and Memphis markets and close our division offices, we recorded $1.8 million of severance costs in 2019.
 
During the first quarter of 2019, Laser Spine Institute, which leased a 176,000 square foot building with structured parking in Tampa’s Westshore submarket, suddenly ceased operations. As a result of this sudden closure, we incurred $5.6 million of credit losses on operating lease receivables and $2.3 million of write-offs of lease incentives (in rental and other revenues), $4.1 million of write-offs of notes receivable (in other income/(loss)) and $11.6 million of write-offs of tenant improvements and deferred leasing costs (in depreciation and amortization).

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 initial fixed terms of the respective leases, which generally are from three to 10 years. Depreciation expense for real estate assets was $214.7 million, $191.0 million and $184.4 million for the years ended December 31, 2019, 2018 and 2017, 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 are 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, 2019, properties that we wholly own were leased to 1,785 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 2019.
 
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 to 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 to 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 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. We adopted the ASU as of January 1, 2019 with no material effect on our Consolidated Financial Statements.
 
The FASB issued an ASU that changes certain disclosure requirements for fair value measurements. The ASU is required to be adopted in 2020 and applied prospectively. We do not expect such adoption to have a material effect on our Notes to Consolidated Financial Statements.
v3.19.3.a.u2
Leases
12 Months Ended
Dec. 31, 2019
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 year ended December 31, 2019 and under ASC 840 as of and 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
 
To generate positive cash flow, as a lessor, 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 were determined to be 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 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 reduce the related receivable balance for amounts deemed uncollectible. 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 $723.1 million during the year ended December 31, 2019, of which variable lease payments were $65.4 million. 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, 2019 for the properties that we wholly own:
 
2020
 
$
647,558

2021
 
621,080

2022
 
596,698

2023
 
537,225

2024
 
474,258

Thereafter
 
2,213,294

 
 
$
5,090,113


 
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, 2017
 
Additions
 
Deductions
 
Balance at December 31, 2018
Allowance for Doubtful Accounts - Straight-Line Rent
$
819

 
$
599

 
$
(777
)
 
$
641

Allowance for Doubtful Accounts - Accounts Receivable
753

 
969

 
(556
)
 
1,166

Allowance for Doubtful Accounts - Notes Receivable
72

 

 
(28
)
 
44

Totals
$
1,644

 
$
1,568

 
$
(1,361
)
 
$
1,851

 
 
Balance at December 31, 2016
 
Additions
 
Deductions
 
Balance at December 31, 2017
Allowance for Doubtful Accounts - Straight-Line Rent
$
692

 
$
1,503

 
$
(1,376
)
 
$
819

Allowance for Doubtful Accounts - Accounts Receivable
624

 
500

 
(371
)
 
753

Allowance for Doubtful Accounts - Notes Receivable
105

 

 
(33
)
 
72

Totals
$
1,421

 
$
2,003

 
$
(1,780
)
 
$
1,644


 
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.  

The following table sets forth our scheduled future minimum base rents to be received from customers for leases in effect at December 31, 2018 for the properties that we wholly own:
 
2019
 
$
618,014

2020
 
581,399

2021
 
524,381

2022
 
488,157

2023
 
428,461

Thereafter
 
2,068,891

 
 
$
4,709,303


 
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 52 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 $2.5 million of ground lease expense, of which $2.2 million was paid in cash, during the year ended December 31, 2019.
 
The following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments on operating ground leases at December 31, 2019 and a reconciliation of those cash flows to the operating lease liability at December 31, 2019:
 
2020
 
$
2,086

2021
 
2,127

2022
 
2,169

2023
 
2,167

2024
 
2,123

Thereafter
 
83,697

 
 
94,369

Discount
 
(59,470
)
Lease liability
 
$
34,899


 
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 each the years ended December 31, 2018 and 2017.
 
The following table sets forth our scheduled obligations for future minimum payments on operating ground leases at December 31, 2018:
 
2019
 
$
2,184

2020
 
2,223

2021
 
2,263

2022
 
2,305

2023
 
2,308

Thereafter
 
86,577

 
 
$
97,860


v3.19.3.a.u2
Real Estate Assets
12 Months Ended
Dec. 31, 2019
Real Estate [Abstract]  
Real Estate Assets Real Estate Assets
 
Acquisitions
 
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.
 
During 2017, we acquired fee simple title to land in Raleigh that was previously subject to a ground lease for a purchase price, including capitalized acquisition costs and contingent consideration, of $2.6 million.

Dispositions
 
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.
 
During 2017, we sold a total of 15 buildings and land for an aggregate sale price of $135.6 million (before closing credits to buyer of $3.7 million) and recorded aggregate gains on disposition of property of $54.2 million.

Impairments
 
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 and 2017, we recorded aggregate impairments of real estate assets of $0.4 million and $1.4 million, respectively. These impairments resulted from changes in market-based inputs and our assumptions about the use of the assets.
v3.19.3.a.u2
Investments In and Advances To Affiliates
12 Months Ended
Dec. 31, 2019
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 $0.7 million and $0.6 million at December 31, 2019 and 2018, respectively.
 
The following table sets forth our ownership in unconsolidated affiliates at December 31, 2019:
 
Joint Venture
 
Location
 
Ownership
Interest
Plaza Colonnade, Tenant-in-Common
 
Kansas City
 
50.0%
Kessinger/Hunter & Company, LC
 
Kansas City
 
26.5%
Highwoods DLF Forum, LLC
 
Raleigh
 
25.0%

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, 2019, 2018 and 2017, we recognized $0.5 million, $0.4 million and $1.4 million, respectively, of development/construction, management and leasing fees from our unconsolidated joint ventures. At both December 31, 2019 and 2018, we had receivables of $0.1 million related to these fees in accounts receivable.
 
Consolidated Variable Interest Entity
 
During the second quarter of 2019, we and The Bromley Companies formed a joint venture (the "Midtown One joint venture”) to construct Midtown One, a 150,000 square foot, multi-customer office building located in the mixed-use Midtown Tampa project in Tampa’s Westshore submarket. Midtown One has an anticipated total investment of $71.3 million. Construction of Midtown One began in the third quarter of 2019 with a scheduled completion date in the second quarter of 2021. At closing, we agreed to
contribute cash of $20.0 million ($15.9 million of which was funded and/or placed in escrow as of December 31, 2019) 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, 2019, no amounts under the loan have 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 was consolidated as of December 31, 2019 and for the period May 29, 2019 through December 31, 2019 and all intercompany transactions and accounts were eliminated. The following table sets forth the assets and liabilities of the Midtown One joint venture included on our Consolidated Balance Sheets:
 
 
December 31,
2019
Development in-process
$
22,380

Accounts payable, accrued expenses and other liabilities
$
1,162


 
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 $30.1 million had the entity been liquidated at December 31, 2019. 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.
v3.19.3.a.u2
Intangible Assets and Below Market Leaes Liabilities
12 Months Ended
Dec. 31, 2019
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,
 
2019
 
2018
Assets:
 
 
 
Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets)
$
377,472

 
$
344,548

Less accumulated amortization
(146,125
)
 
(149,275
)
 
$
231,347

 
$
195,273

Liabilities (in accounts payable, accrued expenses and other liabilities):
 
 
 
Acquisition-related below market lease liabilities
$
65,971

 
$
57,955

Less accumulated amortization
(34,014
)
 
(32,307
)
 
$
31,957

 
$
25,648

The following table sets forth amortization of intangible assets and below market lease liabilities:
 
 
Year Ended December 31,
 
2019
 
2018
 
2017
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)
$
37,386

 
$
36,486

 
$
41,187

Amortization of lease incentives (in rental and other revenues)
$
4,281

 
$
1,908

 
$
1,765

Amortization of acquisition-related intangible assets (in rental and other revenues)
$
1,290

 
$
1,677

 
$
2,921

Amortization of acquisition-related intangible assets (in rental property and other expenses)
$
557

 
$
557

 
$
557

Amortization of acquisition-related below market lease liabilities (in rental and other revenues)
$
(6,633
)
 
$
(6,085
)
 
$
(6,415
)

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 Intangible Assets (in Rental Property and Other Expenses)
 
Amortization
of Acquisition-Related Below Market Lease Liabilities (in Rental and Other Revenues)
2020
 
$
38,376

 
$
1,599

 
$
1,095

 
$
510

 
$
(5,933
)
2021
 
33,581

 
1,353

 
777

 

 
(5,033
)
2022
 
29,200

 
1,119

 
608

 

 
(3,985
)
2023
 
25,683

 
1,040

 
454

 

 
(3,607
)
2024
 
22,631

 
890

 
380

 

 
(2,939
)
Thereafter
 
65,964

 
3,914

 
2,173

 

 
(10,460
)
 
 
$
215,435

 
$
9,915

 
$
5,487

 
$
510

 
$
(31,957
)
Weighted average remaining amortization periods as of December 31, 2019 (in years)
 
8.4

 
9.2

 
9.4

 
1.0

 
8.8



The following table sets forth the intangible assets acquired and below market lease liabilities assumed as a result of 2019 acquisition activity:
 
 
 
Acquisition-Related Intangible Assets (amortized in Rental and Other Revenues)
 
Acquisition-Related Intangible Assets (amortized in Depreciation and Amortization)
 
Acquisition-Related Below Market Lease Liabilities (amortized in Rental and Other Revenues)
Amount recorded at acquisition
 
$
2,059

 
$
35,637

 
$
(12,943
)
Weighted average remaining amortization periods as of December 31, 2019 (in years)
 
14.4

 
14.7

 
14.3


v3.19.3.a.u2
Mortgages and Notes Payable
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Mortgages and Notes Payable Mortgages and Notes Payable
 
Our mortgages and notes payable consist of the following:
 
 
December 31,
 
2019
 
2018
Secured indebtedness:
 
 
 
4.00% mortgage loan due 2029 (1)
$
95,303

 
$
97,179

 
95,303

 
97,179

Unsecured indebtedness:
 
 
 
3.20% (3.363% effective rate) notes due 2021 (2)
299,369

 
298,936

3.625% (3.752% effective rate) notes due 2023 (3)
249,201

 
248,938

3.875% (4.038% effective rate) notes due 2027 (4)
297,134

 
296,734

4.125% (4.271% effective rate) notes due 2028 (5)
346,621

 
346,208

4.20% (4.234% effective rate) notes due 2029 (6)

349,091

 

3.050% (3.079% effective rate) notes due 2030 (7)

399,009

 

Variable rate term loan due 2020 (8)

 
225,000

Variable rate term loan due 2022 (9)
100,000

 
200,000

Variable rate term loan due 2022 (10)
200,000

 
200,000

Revolving credit facility due 2022 (11)
221,000

 
182,000

 
2,461,425

 
1,997,816

Less-unamortized debt issuance costs
(13,018
)
 
(9,164
)
Total mortgages and notes payable, net
$
2,543,710

 
$
2,085,831

__________
(1)
Our secured mortgage loan was collateralized by real estate assets with an undepreciated book value of $147.1 million at December 31, 2019. We paid down $1.9 million of secured loan balances through principal amortization during 2019.
(2)
Net of unamortized original issuance discount of $0.6 million and $1.1 million as of December 31, 2019 and 2018, respectively.
(3)
Net of unamortized original issuance discount of $0.8 million and $1.1 million as of December 31, 2019 and 2018, respectively.
(4)
Net of unamortized original issuance discount of $2.9 million and $3.3 million as of December 31, 2019 and 2018, respectively.
(5)
Net of unamortized original issuance discount of $3.4 million and $3.8 million as of December 31, 2019 and 2018, respectively.
(6)
Net of unamortized original issuance discount of $0.9 million as of December 31, 2019.
(7)
Net of unamortized original issuance discount of $1.0 million as of December 31, 2019.
(8)
This debt was repaid in 2019.
(9)
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 $50.0 million was 2.81% at December 31, 2019.
(10)
The interest rate was 2.90% at December 31, 2019.
(11)
The interest rate was 2.73% at December 31, 2019.
The following table sets forth scheduled future principal payments, including amortization, due on our mortgages and notes payable at December 31, 2019:
 
Years Ending December 31,
 
Principal Amount
2020
 
$
248

2021
 
300,560

2022
 
521,842

2023
 
251,180

2024
 
1,281

Thereafter
 
1,481,617

Less-unamortized debt issuance costs
 
(13,018
)
 
 
$
2,543,710

 
During 2017, we entered into a $600.0 million unsecured revolving credit facility, which replaced our previously existing $475.0 million revolving credit facility, and includes an accordion feature that allows for an additional $400.0 million of borrowing capacity subject to additional lender commitments. Our revolving credit facility is scheduled to mature in January 2022. 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. The interest rate and facility fee are based on the higher of the publicly announced ratings from Moody's Investors Service or Standard & Poor’s Ratings Services. We incurred $3.5 million of debt issuance costs, which will be amortized along with certain existing unamortized debt issuance costs over the remaining term of our new revolving credit facility. We recorded $0.1 million of loss on debt extinguishment. There was $221.0 million and $225.0 million outstanding under our revolving credit facility at December 31, 2019 and January 24, 2020, respectively. At both December 31, 2019 and January 24, 2020, we had $0.1 million of outstanding letters of credit, which reduces the availability on our revolving credit facility. As a result, the unused capacity of our revolving credit facility at December 31, 2019 and January 24, 2020 was $378.9 million and $374.9 million, respectively.
 
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 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.
 
During 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%. We recorded $0.4 million of gain on debt extinguishment related to this prepayment.
 
During 2017, we modified our $200.0 million, five-year unsecured bank term loan, which was originally scheduled to mature in January 2019. The modified term loan is scheduled to mature in November 2022 and the interest rate, based on current credit ratings, was reduced from LIBOR plus 120 basis points to LIBOR plus 110 basis points. We incurred $1.1 million of debt issuance costs, which will be amortized along with certain existing unamortized debt issuance costs over the remaining term of the modified loan. We recorded $0.4 million of loss on debt extinguishment.
 
During 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 2017, the Operating Partnership issued $300.0 million aggregate principal amount of 3.875% notes due March 2027, less original issuance 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 2017, we paid off at maturity $379.7 million principal amount of 5.85% unsecured notes.
 
We previously amended our $225.0 million, seven-year unsecured bank term loan, which was scheduled to mature in January 2019. We increased the borrowed amount to $350.0 million. The amended term loan was scheduled to mature in June 2020 and the interest rate, based on our current credit ratings, was reduced from LIBOR plus 175 basis points to LIBOR plus 110 basis points. We incurred $1.3 million of debt issuance costs in connection with this amendment, which was amortized along with existing unamortized debt issuance costs over the remaining term of the new loan. During 2017, we prepaid without penalty $125.0 million on this $350.0 million unsecured bank term loan and recorded $0.4 million of loss on debt extinguishment related to this prepayment. During 2019, we prepaid without penalty the remaining $225.0 million and recorded $0.4 million of loss on debt extinguishment related to this prepayment.
 
We previously 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 was satisfied upon payment of a "waterfall payment." During 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.
 
We previously borrowed an aggregate of $150.0 million under an unsecured bank term loan that is originally scheduled to mature in January 2022. The interest rate on the term loan at our current credit ratings is LIBOR plus 110 basis points. During 2017, we amended our $150.0 million unsecured bank term loan by increasing the borrowed amount to $200.0 million. 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. During 2019, we prepaid without penalty $100.0 million on this $200.0 million unsecured bank term loan. We recorded $0.3 million of loss on debt extinguishment related to this prepayment.
 
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 $299.4 million carrying amount of 2021 notes outstanding, $249.2 million carrying amount of 2023 notes outstanding, $297.1 million carrying amount of 2027 notes outstanding, $346.6 million carrying amount of 2028 notes outstanding, $349.1 million carrying amount of 2029 notes outstanding and $399.0 million carrying amount of 2030 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 and the adequacy of our estimated cash flows from operating activities and other available financing sources to meet these needs. We intend to meet these short-term liquidity requirements through a combination of the following:
 
available cash and cash equivalents;
 
cash flows from operating activities;
 
issuance of debt securities by the Operating Partnership;
 
issuance of secured debt;
 
bank term loans;
 
borrowings under our revolving credit facility;
 
issuance of equity securities by the Company or the Operating Partnership; and
 
the disposition of non-core assets.

Capitalized Interest
 
Total interest capitalized to development and significant building and tenant improvement projects was $5.6 million, $6.7 million and $8.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.
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Derivative Financial Instruments
12 Months Ended
Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments

During 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.

During 2017, we entered into $150.0 million notional amount of forward-starting swaps that effectively locked the underlying 10-year treasury rate at 2.44% with respect to a planned issuance of debt securities by the Operating Partnershi