HIGHWOODS PROPERTIES, INC., 10-Q filed on 7/27/2021
Quarterly Report
v3.21.2
Cover Page - shares
6 Months Ended
Jun. 30, 2021
Jul. 20, 2021
Entity Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2021  
Document Transition Report false  
Entity Registrant Name HIGHWOODS PROPERTIES, INC.  
Entity Incorporation, State or Country Code MD  
Entity File Number 001-13100  
Entity Tax Identification Number 56-1871668  
Entity Address, Address Line One 3100 Smoketree Court  
Entity Address, Address Line Two Suite 600  
Entity Address, City or Town Raleigh  
Entity Address, State or Province NC  
Entity Address, Postal Zip Code 27604  
City Area Code 919  
Local Phone Number 872-4924  
Title of 12(b) Security Common Stock, $.01 par value, of Highwoods Properties, Inc.  
Trading Symbol HIW  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   104,209,513
Entity Central Index Key 0000921082  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Highwoods Realty Limited Partnership [Member]    
Entity Information [Line Items]    
Entity Registrant Name HIGHWOODS REALTY LIMITED PARTNERSHIP  
Entity Incorporation, State or Country Code NC  
Entity File Number 000-21731  
Entity Tax Identification Number 56-1869557  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Central Index Key 0000941713  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q2  
Amendment Flag false  
v3.21.2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2021
Dec. 31, 2020
Real estate assets, at cost:    
Land $ 489,894 $ 466,872
Buildings and tenant improvements 5,139,518 4,981,637
Development in-process 250,338 259,681
Land held for development 147,386 131,474
Total real estate assets 6,027,136 5,839,664
Less-accumulated depreciation (1,478,227) (1,418,379)
Net real estate assets 4,548,909 4,421,285
Real estate and other assets, net, held for sale 0 11,360
Cash and cash equivalents 6,535 109,322
Restricted cash 51,898 79,922
Accounts receivable 15,927 27,488
Mortgages and notes receivable 1,264 1,341
Accrued straight-line rents receivable 267,603 259,381
Investments in and advances to unconsolidated affiliates 714 27,104
Deferred leasing costs, net of accumulated amortization of $140,257 and $151,698, respectively 216,318 209,329
Prepaid expenses and other assets, net of accumulated depreciation of $19,717 and $21,154, respectively 127,853 62,885
Total Assets 5,237,021 5,209,417
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,475,902 2,470,021
Accounts payable, accrued expenses and other liabilities 265,296 268,727
Total Liabilities 2,741,198 2,738,748
Commitments and contingencies
Noncontrolling interests in the Operating Partnership 128,180 112,499
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), 28,821 and 28,826 shares issued and outstanding, respectively 28,821 28,826
Common Stock, $.01 par value, 200,000,000 authorized shares; 104,209,513 and 103,921,546 shares issued and outstanding, respectively 1,042 1,039
Additional paid-in capital 2,989,405 2,993,946
Distributions in excess of net income available for common stockholders (672,239) (686,225)
Accumulated other comprehensive loss (1,225) (1,462)
Total Stockholders’ Equity 2,345,804 2,336,124
Noncontrolling interests in consolidated affiliates 21,839 22,046
Total Equity/Capital 2,367,643 2,358,170
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital 5,237,021 5,209,417
Highwoods Realty Limited Partnership [Member]    
Real estate assets, at cost:    
Land 489,894 466,872
Buildings and tenant improvements 5,139,518 4,981,637
Development in-process 250,338 259,681
Land held for development 147,386 131,474
Total real estate assets 6,027,136 5,839,664
Less-accumulated depreciation (1,478,227) (1,418,379)
Net real estate assets 4,548,909 4,421,285
Real estate and other assets, net, held for sale 0 11,360
Cash and cash equivalents 6,535 109,322
Restricted cash 51,898 79,922
Accounts receivable 15,927 27,488
Mortgages and notes receivable 1,264 1,341
Accrued straight-line rents receivable 267,603 259,381
Investments in and advances to unconsolidated affiliates 714 27,104
Deferred leasing costs, net of accumulated amortization of $140,257 and $151,698, respectively 216,318 209,329
Prepaid expenses and other assets, net of accumulated depreciation of $19,717 and $21,154, respectively 127,853 62,885
Total Assets 5,237,021 5,209,417
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,475,902 2,470,021
Accounts payable, accrued expenses and other liabilities 265,296 268,727
Total Liabilities 2,741,198 2,738,748
Commitments and contingencies
Redeemable Operating Partnership Units:    
Common Units, 2,837,725 and 2,838,725 outstanding, respectively 128,180 112,499
Series A Preferred Units (liquidation preference $1,000 per unit), 28,821 and 28,826 units issued and outstanding, respectively 28,821 28,826
Total Redeemable Operating Partnership Units 157,001 141,325
Equity/Capital:    
General partner Common Units, 1,066,384 and 1,063,515 outstanding, respectively 23,182 23,087
Limited partner Common Units, 102,734,320 and 102,449,222 outstanding, respectively 2,295,026 2,285,673
Accumulated other comprehensive loss (1,225) (1,462)
Noncontrolling interests in consolidated affiliates 21,839 22,046
Total Equity/Capital 2,338,822 2,329,344
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital $ 5,237,021 $ 5,209,417
v3.21.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2021
Dec. 31, 2020
Assets:    
Deferred leasing costs, accumulated amortization $ 140,257 $ 151,698
Prepaid Expenses And Other Assets Accumulated Depreciation $ 19,717 $ 21,154
Equity/Capital:    
Series A Preferred Stock, par value (in dollars per share) $ 0.01 $ 0.01
Series A Preferred Stock, authorized shares (in shares) 50,000,000 50,000,000
Series A Preferred Stock, dividend rate percentage (in hundredths) 8.625%  
Series A Preferred Stock, liquidation preference (in dollars per share) $ 1,000 $ 1,000
Series A Preferred Stock, shares issued (in shares) 28,821 28,826
Series A Preferred Stock, shares outstanding (in shares) 28,821 28,826
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) 104,209,513 103,921,546
Common Stock, shares outstanding (in shares) 104,209,513 103,921,546
Highwoods Realty Limited Partnership [Member]    
Assets:    
Deferred leasing costs, accumulated amortization $ 140,257 $ 151,698
Prepaid Expenses And Other Assets Accumulated Depreciation $ 19,717 $ 21,154
Redeemable Operating Partnership Units: [Abstract]    
Redeemable Common Units outstanding (in shares) 2,837,725 2,838,725
Series A Preferred Units, liquidation preference (in dollars per share) $ 1,000 $ 1,000
Series A Preferred Units, issued (in shares) 28,821 28,826
Series A Preferred Units, outstanding (in shares) 28,821 28,826
Common Units: [Abstract]    
General partners' capital account, units outstanding (in shares) 1,066,384 1,063,515
Limited partners' capital account, units outstanding (in shares) 102,734,320 102,449,222
v3.21.2
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Rental and other revenues $ 185,502 $ 183,153 $ 369,307 $ 375,953
Operating expenses:        
Rental property and other expenses 56,226 55,119 112,415 117,321
Depreciation and amortization 61,949 59,461 122,876 120,611
Impairments of real estate assets 0 1,778 0 1,778
General and administrative 10,107 10,084 20,059 21,014
Total operating expenses 128,282 126,442 255,350 260,724
Interest expense 19,001 19,840 38,769 41,117
Other income 332 588 644 657
Gains on disposition of property 22,862 318 41,799 153,385
Equity in earnings of unconsolidated affiliates 431 1,179 1,068 2,142
Net income 61,844 38,956 118,699 230,296
Net (income) attributable to noncontrolling interests in the Operating Partnership (1,624) (1,017) (3,117) (5,977)
Net (income) attributable to noncontrolling interests in consolidated affiliates (294) (289) (575) (574)
Dividends on Preferred Stock (621) (622) (1,243) (1,244)
Net income available for common stockholders $ 59,305 $ 37,028 $ 113,764 $ 222,501
Earnings per Common Share – basic:        
Net income available for common stockholders (in dollars per share) $ 0.57 $ 0.36 $ 1.09 $ 2.14
Weighted average Common Shares outstanding - basic (in shares) 104,106 103,886 104,035 103,849
Earnings per Common Share - diluted:        
Net income available for common stockholders (in dollars per share) $ 0.57 $ 0.36 $ 1.09 $ 2.14
Weighted average Common Shares outstanding - diluted (in shares) 106,964 106,730 106,887 106,681
Highwoods Realty Limited Partnership [Member]        
Rental and other revenues $ 185,502 $ 183,153 $ 369,307 $ 375,953
Operating expenses:        
Rental property and other expenses 56,226 55,119 112,415 117,321
Depreciation and amortization 61,949 59,461 122,876 120,611
Impairments of real estate assets 0 1,778 0 1,778
General and administrative 10,107 10,084 20,059 21,014
Total operating expenses 128,282 126,442 255,350 260,724
Interest expense 19,001 19,840 38,769 41,117
Other income 332 588 644 657
Gains on disposition of property 22,862 318 41,799 153,385
Equity in earnings of unconsolidated affiliates 431 1,179 1,068 2,142
Net income 61,844 38,956 118,699 230,296
Net (income) attributable to noncontrolling interests in consolidated affiliates (294) (289) (575) (574)
Distributions on Preferred Units (621) (622) (1,243) (1,244)
Net income available for common unitholders $ 60,929 $ 38,045 $ 116,881 $ 228,478
Earnings per Common Unit - basic:        
Net income available for common unitholders (in dollars per share) $ 0.57 $ 0.36 $ 1.10 $ 2.15
Weighted average Common Units outstanding - basic (in shares) 106,535 106,319 106,464 106,259
Earnings per Common Unit - diluted:        
Net income available for common unitholders (in dollars per share) $ 0.57 $ 0.36 $ 1.10 $ 2.15
Weighted average Common Units outstanding - diluted (in shares) 106,555 106,321 106,478 106,272
v3.21.2
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Comprehensive income:        
Net income $ 61,844 $ 38,956 $ 118,699 $ 230,296
Other comprehensive income/(loss):        
Unrealized losses on cash flow hedges (11) (103) (11) (1,236)
Amortization of cash flow hedges 126 75 248 3
Total other comprehensive income/(loss) 115 (28) 237 (1,233)
Total comprehensive income 61,959 38,928 118,936 229,063
Less-comprehensive (income) attributable to noncontrolling interests (1,918) (1,306) (3,692) (6,551)
Comprehensive income attributable to common stockholders/Comprehensive income attributable to common unitholders 60,041 37,622 115,244 222,512
Highwoods Realty Limited Partnership [Member]        
Comprehensive income:        
Net income 61,844 38,956 118,699 230,296
Other comprehensive income/(loss):        
Unrealized losses on cash flow hedges (11) (103) (11) (1,236)
Amortization of cash flow hedges 126 75 248 3
Total other comprehensive income/(loss) 115 (28) 237 (1,233)
Total comprehensive income 61,959 38,928 118,936 229,063
Less-comprehensive (income) attributable to noncontrolling interests (294) (289) (575) (574)
Comprehensive income attributable to common stockholders/Comprehensive income attributable to common unitholders $ 61,665 $ 38,639 $ 118,361 $ 228,489
v3.21.2
Consolidated Statements of Equity/Capital - USD ($)
$ in Thousands
Total
Highwoods Realty Limited Partnership [Member]
Common Stock [Member]
Series A Cumulative Redeemable Preferred Shares [Member]
General Partners' Common Units [Member]
Highwoods Realty Limited Partnership [Member]
Limited Partners' Common Units [Member]
Highwoods Realty Limited Partnership [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Highwoods Realty Limited Partnership [Member]
Noncontrolling Interests in Consolidated Affiliates [Member]
Noncontrolling Interests in Consolidated Affiliates [Member]
Highwoods Realty Limited Partnership [Member]
Distributions in Excess of Net Income Available for Common Stockholders [Member]
Balance (in shares) at Dec. 31, 2019     103,756,046                  
Balance at Dec. 31, 2019 $ 2,174,407 $ 2,145,548 $ 1,038 $ 28,859 $ 21,240 $ 2,102,769 $ 2,954,779 $ (471) $ (471) $ 22,010 $ 22,010 $ (831,808)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   7,564     76 7,488            
Distributions on Common Units   (101,931)     (1,019) (100,912)            
Distributions on Preferred Units   (1,244)     (12) (1,232)            
Issuances of Common Stock, net of issuance costs and tax withholdings     (2,248)                  
Net proceeds of Common Stock sold during the period 1,401   $ 0       1,401          
Conversions of Common Units to Common Stock 0                      
Dividends on Common Stock (99,596)                     (99,596)
Dividends on Preferred Stock (1,244)                     (1,244)
Adjustment of noncontrolling interests in the Operating Partnership to fair value 36,525           36,525          
Distributions to noncontrolling interests in consolidated affiliates (829) (829)               (829) (829)  
Issuances of restricted stock - shares     149,304                  
Issuances of restricted stock 0                      
Redemptions/repurchases of Preferred Stock (16)     (16)                
Share-based compensation expense, net of forfeitures - shares     (6,166)                  
Share-based compensation expense, net of forfeitures 3,738 3,738 $ 1   37 3,701 3,737          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   26,720     267 26,453            
Net (income) attributable to noncontrolling interests in the Operating Partnership (5,977)                     (5,977)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (6) (568)       574 574 (574)
Comprehensive income:                        
Net income 230,296 230,296     2,303 227,993           230,296
Other comprehensive income/(loss) (1,233) (1,233)           (1,233) (1,233)      
Total comprehensive income 229,063 229,063                    
Balance (in shares) at Jun. 30, 2020     103,896,936                  
Balance at Jun. 30, 2020 2,337,472 2,308,629 $ 1,039 28,843 22,886 2,265,692 2,996,442 (1,704) (1,704) 21,755 21,755 (708,903)
Balance (in shares) at Dec. 31, 2019     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)
Balance (in shares) at Dec. 31, 2020 103,921,546   103,921,546                  
Balance at Dec. 31, 2020 $ 2,358,170 2,329,344 $ 1,039 28,826 23,087 2,285,673 2,993,946 (1,462) (1,462) 22,046 22,046 (686,225)
Balance (in shares) at Mar. 31, 2020     103,885,918                  
Balance at Mar. 31, 2020 2,354,860 2,326,004 $ 1,039 28,856 23,055 2,282,528 3,000,614 (1,676) (1,676) 22,097 22,097 (696,070)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   362     4 358            
Distributions on Common Units   (51,028)     (510) (50,518)            
Distributions on Preferred Units   (622)     (6) (616)            
Issuances of Common Stock, net of issuance costs and tax withholdings     11,018                  
Net proceeds of Common Stock sold during the period 362           362          
Dividends on Common Stock (49,861)                     (49,861)
Dividends on Preferred Stock (622)                     (622)
Adjustment of noncontrolling interests in the Operating Partnership to fair value (5,776)           (5,776)          
Distributions to noncontrolling interests in consolidated affiliates (631) (631)               (631) (631)  
Redemptions/repurchases of Preferred Stock (13)     (13)                
Share-based compensation expense, net of forfeitures - shares     0                  
Share-based compensation expense, net of forfeitures 1,242 1,242 $ 0   12 1,230 1,242          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   (5,626)     (56) (5,570)            
Net (income) attributable to noncontrolling interests in the Operating Partnership (1,017)                     (1,017)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (3) (286)       289 289 (289)
Comprehensive income:                        
Net income 38,956 38,956     390 38,566           38,956
Other comprehensive income/(loss) (28) (28)           (28) (28)      
Total comprehensive income 38,928 38,928                    
Balance (in shares) at Jun. 30, 2020     103,896,936                  
Balance at Jun. 30, 2020 $ 2,337,472 2,308,629 $ 1,039 28,843 22,886 2,265,692 2,996,442 (1,704) (1,704) 21,755 21,755 (708,903)
Balance (in shares) at Dec. 31, 2020 103,921,546   103,921,546                  
Balance at Dec. 31, 2020 $ 2,358,170 2,329,344 $ 1,039 28,826 23,087 2,285,673 2,993,946 (1,462) (1,462) 22,046 22,046 (686,225)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   5,897     59 5,838            
Distributions on Common Units   (102,112)     (1,021) (101,091)            
Distributions on Preferred Units   (1,243)     (12) (1,231)            
Issuances of Common Stock, net of issuance costs and tax withholdings     109,130                  
Net proceeds of Common Stock sold during the period 5,897   $ 1       5,896          
Conversions of Common Units to Common Stock - Shares     1,000                  
Conversions of Common Units to Common Stock 44           44          
Dividends on Common Stock (99,778)                     (99,778)
Dividends on Preferred Stock (1,243)                     (1,243)
Adjustment of noncontrolling interests in the Operating Partnership to fair value (15,334)           (15,334)          
Distributions to noncontrolling interests in consolidated affiliates (782) (782)               (782) (782)  
Issuances of restricted stock - shares     184,584                  
Issuances of restricted stock 0                      
Redemptions/repurchases of Preferred Stock (5)     (5)                
Share-based compensation expense, net of forfeitures - shares     (6,747)                  
Share-based compensation expense, net of forfeitures 4,855 4,855 $ 2   49 4,806 4,853          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   (16,073)     (161) (15,912)            
Net (income) attributable to noncontrolling interests in the Operating Partnership (3,117)                     (3,117)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (6) (569)       575 575 (575)
Comprehensive income:                        
Net income 118,699 118,699     1,187 117,512           118,699
Other comprehensive income/(loss) 237 237           237 237      
Total comprehensive income $ 118,936 118,936                    
Balance (in shares) at Jun. 30, 2021 104,209,513   104,209,513                  
Balance at Jun. 30, 2021 $ 2,367,643 2,338,822 $ 1,042 28,821 23,182 2,295,026 2,989,405 (1,225) (1,225) 21,839 21,839 (672,239)
Balance (in shares) at Mar. 31, 2021     104,055,152                  
Balance at Mar. 31, 2021 2,354,921 2,326,095 $ 1,041 28,826 23,059 2,282,831 2,986,462 (1,340) (1,340) 21,545 21,545 (681,613)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   7,095     71 7,024            
Distributions on Common Units   (51,098)     (511) (50,587)            
Distributions on Preferred Units   (621)     (6) (615)            
Issuances of Common Stock, net of issuance costs and tax withholdings     158,188                  
Net proceeds of Common Stock sold during the period 7,095   $ 1       7,094          
Conversions of Common Units to Common Stock - Shares     1,000                  
Conversions of Common Units to Common Stock 44           44          
Dividends on Common Stock (49,931)                     (49,931)
Dividends on Preferred Stock (621)                     (621)
Adjustment of noncontrolling interests in the Operating Partnership to fair value (6,068)           (6,068)          
Issuances of restricted stock - shares     1,484                  
Issuances of restricted stock 0                      
Redemptions/repurchases of Preferred Stock (5)     (5)                
Share-based compensation expense, net of forfeitures - shares     (6,311)                  
Share-based compensation expense, net of forfeitures 1,873 1,873 $ 0   19 1,854 1,873          
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   (6,481)     (65) (6,416)            
Net (income) attributable to noncontrolling interests in the Operating Partnership (1,624)                     (1,624)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0     (3) (291)       294 294 (294)
Comprehensive income:                        
Net income 61,844 61,844     618 61,226           61,844
Other comprehensive income/(loss) 115 115           115 115      
Total comprehensive income $ 61,959 61,959                    
Balance (in shares) at Jun. 30, 2021 104,209,513   104,209,513                  
Balance at Jun. 30, 2021 $ 2,367,643 $ 2,338,822 $ 1,042 $ 28,821 $ 23,182 $ 2,295,026 $ 2,989,405 $ (1,225) $ (1,225) $ 21,839 $ 21,839 $ (672,239)
v3.21.2
Consolidated Statements of Equity/Capital (Parentheticals) - $ / shares
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Highwoods Properties, Inc. [Member]        
Dividends on Common Stock (per share) $ 0.48 $ 0.48 $ 0.96 $ 0.96
Highwoods Properties, Inc. [Member] | Series A Cumulative Redeemable Preferred Shares [Member]        
Dividends on Preferred Stock (per share)/Distributions on Preferred Units (per unit) 21.5625 21.5625 43.125 43.125
Highwoods Realty Limited Partnership [Member]        
Distributions on Common Units (per unit) 0.48 0.48 0.96 0.96
Highwoods Realty Limited Partnership [Member] | Series A Cumulative Redeemable Preferred Shares [Member]        
Dividends on Preferred Stock (per share)/Distributions on Preferred Units (per unit) $ 21.5625 $ 21.5625 $ 43.125 $ 43.125
v3.21.2
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Operating activities:    
Net income $ 118,699 $ 230,296
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 122,876 120,611
Amortization of lease incentives and acquisition-related intangible assets and liabilities (1,439) (1,278)
Share-based compensation expense 4,855 3,738
Net credit losses/(reversals) on operating lease receivables (489) 2,333
Accrued interest on mortgages and notes receivable (54) (61)
Amortization of debt issuance costs 1,661 1,533
Amortization of cash flow hedges 248 3
Amortization of mortgages and notes payable fair value adjustments 776 852
Impairments of real estate assets 0 1,778
Losses on debt extinguishment 134 0
Net gains on disposition of property (41,799) (153,385)
Equity in earnings of unconsolidated affiliates (1,068) (2,142)
Distributions of earnings from unconsolidated affiliates 1,402 407
Changes in operating assets and liabilities:    
Accounts receivable 6,694 (1,031)
Prepaid expenses and other assets (5,642) (8,320)
Accrued straight-line rents receivable (7,638) (21,522)
Accounts payable, accrued expenses and other liabilities (1,801) 6,403
Net cash provided by operating activities 197,415 180,215
Investing activities:    
Investments in acquired real estate and related intangible assets, net of cash acquired (120) (2,363)
Investments in development in-process (54,365) (83,071)
Investments in tenant improvements and deferred leasing costs (44,827) (85,544)
Investments in building improvements (24,109) (30,312)
Investment in acquired controlling interest in unconsolidated affiliate (127,339) 0
Net proceeds from disposition of real estate assets 71,501 334,366
Distributions of capital from unconsolidated affiliates 0 72
Investments in mortgages and notes receivable (23) (32)
Repayments of mortgages and notes receivable 154 154
Payments of earnest money deposits (55,000) 0
Changes in other investing activities 5,711 (3,541)
Net cash provided by/(used in) investing activities (228,417) 129,729
Financing activities:    
Dividends on Common Stock (99,778) (99,596)
Redemptions/repurchases of Preferred Stock (5) (16)
Dividends on Preferred Stock (1,243) (1,244)
Distributions to noncontrolling interests in the Operating Partnership (2,726) (2,728)
Distributions to noncontrolling interests in consolidated affiliates (782) (829)
Proceeds from the issuance of Common Stock 7,763 2,753
Costs paid for the issuance of Common Stock (185) (228)
Repurchase of shares related to tax withholdings (1,681) (1,124)
Borrowings on revolving credit facility 230,000 129,000
Repayments of revolving credit facility (75,000) (336,000)
Repayments of mortgages and notes payable (151,006) (967)
Changes in debt issuance costs and other financing activities (5,166) 0
Net cash used in financing activities (99,809) (310,979)
Net decrease in cash and cash equivalents and restricted cash (130,811) (1,035)
Cash and cash equivalents and restricted cash at beginning of the period 189,244 14,742
Cash and cash equivalents and restricted cash at end of the period 58,433 13,707
Reconciliation of cash and cash equivalents and restricted cash:    
Cash and cash equivalents at end of the period 6,535 4,752
Restricted cash at end of the period 51,898 8,955
Supplemental disclosure of cash flow information:    
Cash paid for interest, net of amounts capitalized 36,071 38,424
Supplemental disclosure of non-cash investing and financing activities:    
Unrealized losses on cash flow hedges (11) (1,236)
Conversions of Common Units to Common Stock 44 0
Changes in accrued capital expenditures (1) [1] (23,599) (18,819)
Write-off of fully depreciated real estate assets 36,798 22,630
Write-off of fully amortized leasing costs 28,575 10,564
Write-off of fully amortized debt issuance costs 4,158 0
Adjustment of noncontrolling interests in the Operating Partnership to fair value 15,334 (36,525)
Issuances of Common Units to acquire real estate assets 0 6,163
Contingent consideration in connection with the acquisition of land 0 1,500
Future consideration in connection with the acquisition of land 16,000 0
Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities 42,300 49,100
Highwoods Realty Limited Partnership [Member]    
Operating activities:    
Net income 118,699 230,296
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 122,876 120,611
Amortization of lease incentives and acquisition-related intangible assets and liabilities (1,439) (1,278)
Share-based compensation expense 4,855 3,738
Net credit losses/(reversals) on operating lease receivables (489) 2,333
Accrued interest on mortgages and notes receivable (54) (61)
Amortization of debt issuance costs 1,661 1,533
Amortization of cash flow hedges 248 3
Amortization of mortgages and notes payable fair value adjustments 776 852
Impairments of real estate assets 0 1,778
Losses on debt extinguishment 134 0
Net gains on disposition of property (41,799) (153,385)
Equity in earnings of unconsolidated affiliates (1,068) (2,142)
Distributions of earnings from unconsolidated affiliates 1,402 407
Changes in operating assets and liabilities:    
Accounts receivable 6,694 (1,031)
Prepaid expenses and other assets (5,642) (8,320)
Accrued straight-line rents receivable (7,638) (21,522)
Accounts payable, accrued expenses and other liabilities (1,801) 6,403
Net cash provided by operating activities 197,415 180,215
Investing activities:    
Investments in acquired real estate and related intangible assets, net of cash acquired (120) (2,363)
Investments in development in-process (54,365) (83,071)
Investments in tenant improvements and deferred leasing costs (44,827) (85,544)
Investments in building improvements (24,109) (30,312)
Investment in acquired controlling interest in unconsolidated affiliate (127,339) 0
Net proceeds from disposition of real estate assets 71,501 334,366
Distributions of capital from unconsolidated affiliates 0 72
Investments in mortgages and notes receivable (23) (32)
Repayments of mortgages and notes receivable 154 154
Payments of earnest money deposits (55,000) 0
Changes in other investing activities 5,711 (3,541)
Net cash provided by/(used in) investing activities (228,417) 129,729
Financing activities:    
Distributions on Common Units (102,112) (101,931)
Redemptions/repurchases of Preferred Units (5) (16)
Distributions on Preferred Units (1,243) (1,244)
Distributions to noncontrolling interests in consolidated affiliates (782) (829)
Proceeds from the issuance of Common Units 7,763 2,753
Costs paid for the issuance of Common Units (185) (228)
Repurchase of units related to tax withholdings (1,681) (1,124)
Borrowings on revolving credit facility 230,000 129,000
Repayments of revolving credit facility (75,000) (336,000)
Repayments of mortgages and notes payable (151,006) (967)
Changes in debt issuance costs and other financing activities (5,558) (393)
Net cash used in financing activities (99,809) (310,979)
Net decrease in cash and cash equivalents and restricted cash (130,811) (1,035)
Cash and cash equivalents and restricted cash at beginning of the period 189,244 14,742
Cash and cash equivalents and restricted cash at end of the period 58,433 13,707
Reconciliation of cash and cash equivalents and restricted cash:    
Cash and cash equivalents at end of the period 6,535 4,752
Restricted cash at end of the period 51,898 8,955
Supplemental disclosure of cash flow information:    
Cash paid for interest, net of amounts capitalized 36,071 38,424
Supplemental disclosure of non-cash investing and financing activities:    
Unrealized losses on cash flow hedges (11) (1,236)
Changes in accrued capital expenditures (1) [1] (23,599) (18,819)
Write-off of fully depreciated real estate assets 36,798 22,630
Write-off of fully amortized leasing costs 28,575 10,564
Write-off of fully amortized debt issuance costs 4,158 0
Adjustment of Redeemable Common Units to fair value 15,681 (33,276)
Issuances of Common Units to acquire real estate assets 0 6,163
Contingent consideration in connection with the acquisition of land 0 1,500
Future consideration in connection with the acquisition of land 16,000 0
Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities $ 42,300 $ 49,100
[1] Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities at June 30, 2021 and 2020 were $42.3 million and $49.1 million, respectively.
v3.21.2
Description of Business and Significant Accounting Policies
6 Months Ended
Jun. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business and Significant Accounting Policies Description of Business and Significant Accounting Policies
Description of Business

Highwoods Properties, Inc. (the “Company”) is a fully integrated real estate investment trust (“REIT”) that provides leasing, management, development, construction and other customer-related services for its properties and for third parties. The Company conducts its activities through Highwoods Realty Limited Partnership (the “Operating Partnership”). At June 30, 2021, we owned or had an interest in 27.3 million rentable square feet of in-service properties, 0.8 million rentable square feet of office properties under development and approximately 250 acres of development land.

Capital Structure

The Company is the sole general partner of the Operating Partnership. At June 30, 2021, the Company owned all of the Preferred Units and 103.8 million, or 97.3%, of the Common Units in the Operating Partnership. Limited partners owned the remaining 2.8 million Common Units. During the six months ended June 30, 2021, the Company redeemed 1,000 Common Units for a like number of shares of Common Stock.

During 2020, we entered into separate equity distribution agreements in which the Company may offer and sell up to $300.0 million in aggregate gross sales price of shares of Common Stock. During the six months ended June 30, 2021, the Company issued 149,100 shares of Common Stock under its equity distribution agreements at an average gross sales price of $46.11 per share and received net proceeds, after sales commissions, of $6.8 million.

Basis of Presentation

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

The Company’s Consolidated Financial Statements include the Operating Partnership, wholly owned subsidiaries and those entities in which the Company has the controlling interest. The Operating Partnership’s Consolidated Financial Statements include wholly owned subsidiaries and those entities in which the Operating Partnership has the controlling interest. We consolidate joint venture investments, such as interests in partnerships and limited liability companies, when we control the major operating and financial policies of the investment through majority ownership, in our capacity as a general partner or managing member or through some other contractual right. We also consolidate those entities deemed to be variable interest entities in which we are determined to be the primary beneficiary. At June 30, 2021, we have involvement with, and are the primary beneficiary in, an entity that we concluded to be a variable interest entity (see Note 3). All intercompany transactions and accounts have been eliminated.

The unaudited interim consolidated financial statements and accompanying unaudited consolidated financial information, in the opinion of management, contain all adjustments (including normal recurring accruals) necessary for a fair presentation of our financial position, results of operations and cash flows. We have condensed or omitted certain notes and other information from the interim Consolidated Financial Statements presented in this Quarterly Report as permitted by SEC rules and regulations. These Consolidated Financial Statements should be read in conjunction with our 2020 Annual Report on Form 10-K.

Use of Estimates

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

We are primarily self-insured for health care claims for participating employees. We have stop-loss coverage to limit our exposure to significant claims on a per claim and annual aggregate basis. We determine our liabilities for claims, including incurred but not reported losses, based on all relevant information, including actuarial estimates of claim liabilities. At June 30, 2021, a reserve of $0.4 million was recorded to cover estimated reported and unreported claims.

Planned Investment Activities

During the second quarter of 2021, we agreed to acquire a portfolio of office assets from Preferred Apartment Communities, Inc. (NYSE:APTS) (“PAC”). The core portfolio to be acquired consists of the following four Class A office assets in Charlotte and Raleigh, which encompass 1,630,000 square feet in total, and one mixed-use redevelopment site in Atlanta: 150 Fayetteville, Raleigh (CBD); CAPTRUST Tower, Raleigh (North Hills); Capitol Towers, Charlotte (SouthPark); Morrocroft Centre, Charlotte (SouthPark); and Galleria 75, Atlanta (Cumberland/Galleria). We have also agreed to acquire two non-core assets: a mezzanine loan related to a recently constructed office building in Atlanta; and Armour Yards, a multi-building creative office project in Atlanta. Our total investment, including the estimated value of the non-core assets, is expected to be $769 million, which includes $28 million of near-term building improvements and $5 million of transaction costs. The transaction is expected to include, among other things, the assumption of four secured loans collateralized by the core office buildings estimated to be recorded at fair value of $403 million in the aggregate, with a weighted average effective interest rate of 3.7% and a weighted average maturity of 10.8 years. The value of the non-core assets represents less than 12% of the anticipated total investment. The acquisition, which is subject to customary closing conditions, is scheduled to close within 30 days of the filing of this Quarterly Report. As of July 20, 2021, we have posted $60.0 million of earnest money deposits (of which $55.0 million were recorded in prepaid expenses and other assets at June 30, 2021) that are non-refundable except in limited circumstances. As part of the transaction, PAC will separately market Armour Yards for sale to a third party. If PAC chooses not to sell Armour Yards to a third party, we will close on the acquisition of the creative office project no later than the first quarter of 2022.

Recently Issued Accounting Standards

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

Due to the business disruptions and challenges severely affecting the global economy caused by the COVID-19 pandemic, lessors may provide rent deferrals and other lease concessions to lessees. In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing lease guidance, we would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows us, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. We have elected the practical expedient and will not apply lease modification accounting on a lease by lease basis where applicable. As a result, $1.6 million of deferred rent is included in accounts receivable on our Consolidated Balance Sheets at June 30, 2021.
v3.21.2
Leases
6 Months Ended
Jun. 30, 2021
Leases [Abstract]  
Leases LeasesWe generally lease our office properties to lessees in exchange for fixed monthly payments that cover rent, property taxes, insurance and certain cost recoveries, primarily common area maintenance. Office properties owned by us that are under lease are primarily located in Atlanta, Charlotte, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa and are leased to a wide variety of lessees across many industries. Our leases are operating leases and mostly range from three to 10 years. We recognized rental and other revenues related to operating lease payments of $182.4 million and $181.1 million during the three months ended June 30, 2021 and 2020, respectively, and $362.4 million and $370.7 million during the six months ended June 30, 2021 and 2020, respectively. Included in these amounts are variable lease payments of $14.5 million and $13.4 million during the three months ended June 30, 2021 and 2020, respectively, and $29.0 million and $29.8 million during the six months ended June 30, 2021 and 2020, respectively.
v3.21.2
Consolidated Variable Interest Entity
6 Months Ended
Jun. 30, 2021
Variable Interest Entities [Abstract]  
Consolidated Variable Interest Entity Consolidated Variable Interest Entity
In 2019, we and The Bromley Companies formed a joint venture (the “Midtown One joint venture”) to construct Midtown West, a 150,000 square foot, multi-customer office building located in the mixed-use Midtown Tampa project in Tampa’s Westshore submarket. Midtown West has an anticipated total investment of $71.3 million. Construction of Midtown West began in the third quarter of 2019 with a completion date in the second quarter of 2021. At closing, we agreed to contribute cash of $20.0 million, which has been fully funded, in exchange for an 80.0% interest in the Midtown One joint venture and The Bromley Companies contributed land valued at $5.0 million in exchange for the remaining 20.0% interest. We also committed to provide a $46.3 million interest-only secured construction loan to the Midtown One joint venture that is scheduled to mature on the second anniversary of completion. The loan bears interest at LIBOR plus 250 basis points. As of June 30, 2021, $23.7 million under the loan has been funded.

We determined that we have a variable interest in the Midtown One joint venture primarily because the entity was designed to pass along interest rate risk, equity price risk and operation risk to us as both a debt and an equity holder and The Bromley Companies as an equity holder. The Midtown One joint venture was further determined to be a variable interest entity as it requires additional subordinated financial support in the form of a loan because the initial equity investment provided by us and The Bromley Companies is not sufficient to finance its planned investments and operations. We, as majority owner and managing member and through our control rights as set forth in the joint venture’s governance documents, were determined to be the primary beneficiary as we have both the power to direct the activities that most significantly affect the entity (primarily lease rates, property operations and capital expenditures) and significant economic exposure through our equity investment and loan commitment. As such, the Midtown One joint venture is consolidated and all intercompany transactions and accounts are eliminated. The following table sets forth the assets and liabilities of the Midtown One joint venture included on our Consolidated Balance Sheets:
June 30,
2021
Net real estate assets$51,533 
Cash and cash equivalents$101 
Deferred leasing costs$260 
Prepaid expenses and other assets, net of accumulated depreciation$126 
Accounts payable, accrued expenses and other liabilities$1,798 

The assets of the Midtown One joint venture can be used only to settle obligations of the joint venture and its creditors have no recourse to our wholly owned assets.
v3.21.2
Real Estate Assets
6 Months Ended
Jun. 30, 2021
Real Estate [Abstract]  
Real Estate Assets Real Estate Assets
Acquisitions

During the second quarter of 2021, we acquired development land in Nashville for a purchase price, including capitalized acquisition costs, of $16.1 million, which is expected to be paid within two years.

During the first quarter of 2021, we acquired our joint venture partner’s 75.0% interest in our Highwoods DLF Forum, LLC joint venture (the “Forum”), which owned five buildings in Raleigh encompassing 636,000 rentable square feet, for a purchase price of $131.3 million. We previously accounted for our 25.0% interest in this joint venture using the equity method of accounting. The assets and liabilities of the joint venture are now wholly owned and we have determined the acquisition constitutes an asset purchase. As such, because the Forum is not a variable interest entity, we allocated our previously held equity interest at historical cost along with the consideration paid and acquisition costs to the assets acquired and liabilities assumed. 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.

Dispositions

During the second quarter of 2021, we sold a building in Tampa for a sale price of $43.0 million (before closing credits to buyer of $0.9 million) and recorded a gain on disposition of property of $22.9 million.

During the first quarter of 2021, we sold a building in Atlanta for a sale price of $30.7 million and recorded a gain on disposition of property of $18.9 million.
v3.21.2
Intangible Assets and Below Market Lease Liabilities
6 Months Ended
Jun. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets and Below Market Lease Liabilities Intangible Assets and Below Market Lease Liabilities
The following table sets forth total intangible assets and acquisition-related below market lease liabilities, net of accumulated amortization:

June 30,
2021
December 31,
2020
Assets:
Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets)$356,575 $361,027 
Less accumulated amortization(140,257)(151,698)
$216,318 $209,329 
Liabilities (in accounts payable, accrued expenses and other liabilities):
Acquisition-related below market lease liabilities$55,581 $63,748 
Less accumulated amortization(31,159)(37,838)
$24,422 $25,910 

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

Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)$8,626 $8,566 $17,197 $17,364 
Amortization of lease incentives (in rental and other revenues)$445 $429 $893 $919 
Amortization of acquisition-related intangible assets (in rental and other revenues)$241 $321 $518 $609 
Amortization of acquisition-related intangible assets (in rental property and other expenses)$— $138 $— $277 
Amortization of acquisition-related below market lease liabilities (in rental and other revenues)$(1,421)$(1,517)$(2,850)$(3,083)
The following table sets forth scheduled future amortization of intangible assets and below market lease liabilities:

Amortization of Deferred Leasing Costs and Acquisition-Related Intangible Assets (in Depreciation and Amortization)Amortization of Lease Incentives (in Rental and Other Revenues)Amortization of Acquisition-Related Intangible Assets (in Rental and Other Revenues)Amortization of Acquisition-Related Below Market Lease Liabilities (in Rental and Other Revenues)
July 1 through December 31, 2021$18,331 $791 $484 $(2,336)
202233,657 1,493 910 (4,214)
202329,975 1,421 754 (3,838)
202426,604 1,273 664 (3,171)
202521,634 1,195 546 (1,813)
Thereafter69,158 4,975 2,453 (9,050)
$199,359 $11,148 $5,811 $(24,422)
Weighted average remaining amortization periods as of June 30, 2021 (in years)8.09.28.88.4

The following table sets forth the intangible assets acquired and below market lease liabilities assumed as a result of 2021 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$2,036 $13,168 $(1,361)
Weighted average remaining amortization periods as of June 30, 2021 (in years)7.25.85.7
v3.21.2
Mortgages and Notes Payable
6 Months Ended
Jun. 30, 2021
Debt Disclosure [Abstract]  
Mortgages and Notes Payable Mortgages and Notes Payable
The following table sets forth our mortgages and notes payable:

June 30,
2021
December 31,
2020
Secured indebtedness$92,345 $93,350 
Unsecured indebtedness2,396,466 2,390,652 
Less-unamortized debt issuance costs(12,909)(13,981)
Total mortgages and notes payable, net$2,475,902 $2,470,021 

At June 30, 2021, our secured mortgage loan was collateralized by real estate assets with an undepreciated book value of $147.9 million.

During the first quarter of 2021, we entered into a new $750.0 million unsecured revolving credit facility, which replaced our previously existing $600.0 million revolving credit facility and includes an accordion feature that allows for an additional $550.0 million of borrowing capacity subject to additional lender commitments. Our new revolving credit facility is scheduled to mature in March 2025. Assuming no defaults have occurred, we have an option to extend the maturity for two additional six-month periods. The current interest rate on the new facility at our existing credit ratings is LIBOR plus 90 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. The financial and other covenants under the new facility are substantially similar to our previous credit facility. We incurred $4.8 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 $155.0 million outstanding under our new revolving credit facility at both June 30, 2021 and July 20, 2021. At both June 30, 2021 and July 20, 2021, we had $0.1 million of outstanding letters of credit, which reduces the availability on our revolving credit facility. As a result, the unused capacity of our revolving credit facility at both June 30, 2021 and July 20, 2021 was $594.9 million.

During the second quarter of 2021, we prepaid without penalty the remaining $150.0 million principal amount of 3.20% unsecured notes that was scheduled to mature in June 2021. We recorded $0.1 million of loss on debt extinguishment related to this prepayment.

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

We have considered our short-term liquidity needs and the adequacy of our estimated cash flows from operating activities and other available financing sources to meet these needs. We intend to meet these short-term liquidity requirements through a combination of the following:

available cash and cash equivalents;

cash flows from operating activities;

issuance of debt securities by the Operating Partnership;

issuance of secured debt;

bank term loans;

borrowings under our revolving credit facility;

issuance of equity securities by the Company or the Operating Partnership; and

the disposition of non-core assets.
v3.21.2
Derivative Financial Instruments
6 Months Ended
Jun. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
The counterparties under our swaps are major financial institutions. The swap agreements contain a provision whereby if we default on certain of our indebtedness and which default results in repayment of such indebtedness being, or becoming capable of being, accelerated by the lender, then we could also be declared in default on our swaps.

Our interest rate swaps have been designated as and are being accounted for as cash flow hedges with changes in fair value recorded in other comprehensive income/(loss) each reporting period. We have no collateral requirements related to our interest rate swaps.

Amounts reported in accumulated other comprehensive income/(loss) related to derivatives will be reclassified to interest expense as interest payments are made on our debt. During the period from July 1, 2021 through June 30, 2022, we estimate that $0.2 million will be reclassified as a net increase to interest expense.

The following table sets forth the fair value of our derivatives:

June 30,
2021
December 31,
2020
Derivatives:
Derivatives designated as cash flow hedges in accounts payable, accrued expenses and other liabilities:
Interest rate swaps$461 $846 

The following table sets forth the effect of our cash flow hedges on accumulated other comprehensive loss and interest expense:

Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Derivatives Designated as Cash Flow Hedges:
Amount of unrealized losses recognized in accumulated other comprehensive loss on derivatives:
Interest rate swaps$(11)$(103)$(11)$(1,236)
Amount of losses reclassified out of accumulated other comprehensive loss into interest expense:
Interest rate swaps$126 $75 $248 $
v3.21.2
Noncontrolling Interests
6 Months Ended
Jun. 30, 2021
Noncontrolling Interest [Abstract]  
Noncontrolling Interests Noncontrolling Interests
Noncontrolling Interests in Consolidated Affiliates

At June 30, 2021, our noncontrolling interests in consolidated affiliates relate to our joint venture partners’ 50.0% interest in office properties in Richmond and 20.0% interest in the Midtown One joint venture. See Note 3. Our joint venture partners are unrelated third parties.

Noncontrolling Interests in the Operating Partnership

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

Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Beginning noncontrolling interests in the Operating Partnership$121,895 $100,674 $112,499 $133,216 
Adjustment of noncontrolling interests in the Operating Partnership to fair value6,068 5,776 15,334 (36,525)
Issuances of Common Units— — — 6,163 
Conversions of Common Units to Common Stock(44)— (44)— 
Net income attributable to noncontrolling interests in the Operating Partnership1,624 1,017 3,117 5,977 
Distributions to noncontrolling interests in the Operating Partnership(1,363)(1,364)(2,726)(2,728)
Total noncontrolling interests in the Operating Partnership$128,180 $106,103 $128,180 $106,103 

The following table sets forth net income available for common stockholders and transfers from the Company’s noncontrolling interests in the Operating Partnership:

Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Net income available for common stockholders$59,305 $37,028 $113,764 $222,501 
Increase in additional paid in capital from conversions of Common Units to Common Stock
44 — 44 — 
Issuances of Common Units— — — (6,163)
Change from net income available for common stockholders and transfers from noncontrolling interests
$59,349 $37,028 $113,808 $216,338 
v3.21.2
Disclosure About Fair Value of Financial Instruments
6 Months Ended
Jun. 30, 2021
Fair Value Disclosures [Abstract]  
Disclosure About Fair Value of Financial Instruments Disclosure About Fair Value of Financial Instruments
The following summarizes the levels of inputs that we use to measure fair value.

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

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

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

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

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

Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our Level 3 assets include any real estate assets recorded at fair value on a non-recurring basis as a result of our quarterly impairment analysis, which are valued using unobservable local and national industry market data such as comparable sales, appraisals, brokers’ opinions of value and/or the terms of definitive sales contracts. Significant increases or decreases in any valuation inputs in isolation would result in a significantly lower or higher fair value measurement.
The following table sets forth our assets and liabilities and the Company’s noncontrolling interests in the Operating Partnership that are measured or disclosed at fair value within the fair value hierarchy:

Level 1Level 2
TotalQuoted Prices
in Active
Markets for Identical Assets or Liabilities
Significant Observable Inputs
Fair Value at June 30, 2021:
Assets:
Mortgages and notes receivable, at fair value (1)
$1,264 $— $1,264 
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
2,829 2,829 — 
Total Assets$4,093 $2,829 $1,264 
Noncontrolling Interests in the Operating Partnership$128,180 $128,180 $— 
Liabilities:
Mortgages and notes payable, net, at fair value (1)
$2,619,464 $— $2,619,464 
Interest rate swaps (in accounts payable, accrued expenses and other liabilities)
461 — 461 
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
2,829 2,829 — 
Total Liabilities
$2,622,754 $2,829 $2,619,925 
Fair Value at December 31, 2020:
Assets:
Mortgages and notes receivable, at fair value (1)
$1,341 $— $1,341 
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
2,573 2,573 — 
Total Assets$3,914 $2,573 $1,341 
Noncontrolling Interests in the Operating Partnership$112,499 $112,499 $— 
Liabilities:
Mortgages and notes payable, net, at fair value (1)
$2,639,163 $— $2,639,163 
Interest rate swaps (in accounts payable, accrued expenses and other liabilities)
846 — 846 
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
2,573 2,573 — 
Total Liabilities
$2,642,582 $2,573 $2,640,009 
__________
(1)    Amounts are not recorded at fair value on our Consolidated Balance Sheets at June 30, 2021 and December 31, 2020.
v3.21.2
Share-Based Payments
6 Months Ended
Jun. 30, 2021
Share-based Payment Arrangement [Abstract]  
Share-Based Payments Share-Based PaymentsDuring the six months ended June 30, 2021, the Company granted 103,120 shares of time-based restricted stock and 81,464 shares of total return-based restricted stock with weighted average grant date fair values per share of $39.99 and $36.41, respectively. We recorded share-based compensation expense of $1.9 million and $1.2 million during the three months ended June 30, 2021 and 2020, respectively, and $4.9 million and $3.7 million during the six months ended June 30, 2021 and 2020, respectively. At June 30, 2021, there was $7.2 million of total unrecognized share-based compensation costs, which will be recognized over a weighted average remaining contractual term of 2.0 years.
v3.21.2
Accumulated Other Comprehensive Loss
6 Months Ended
Jun. 30, 2021
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Loss
The following table sets forth the components of accumulated other comprehensive loss:

Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Cash flow hedges:
Beginning balance$(1,340)$(1,676)$(1,462)$(471)
Unrealized losses on cash flow hedges(11)(103)(11)(1,236)
Amortization of cash flow hedges (1)
126 75 248 
Total accumulated other comprehensive loss$(1,225)$(1,704)$(1,225)$(1,704)
__________
(1)    Amounts reclassified out of accumulated other comprehensive loss into interest expense.