HIGHWOODS PROPERTIES, INC., 10-Q filed on 4/26/2016
Quarterly Report
v3.4.0.3
Document and Entity Information Document - shares
 3 Months Ended
Mar. 31, 2016
Apr. 19, 2016
Entity Information [Line Items]    
Entity Registrant Name HIGHWOODS PROPERTIES INC.  
Entity Central Index Key 0000921082  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Document Type 10-Q  
Document Period End Date Mar. 31, 2016  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   97,409,163
Entity Well-known Seasoned Issuer Yes  
Entity Voluntary Filers No  
Entity Current Reporting Status Yes  
Highwoods Realty Limited Partnership [Member]    
Entity Information [Line Items]    
Entity Registrant Name HIGHWOODS REALTY LIMITED PARTNERSHIP  
Entity Central Index Key 0000941713  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Document Type 10-Q  
Document Period End Date Mar. 31, 2016  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Entity Well-known Seasoned Issuer Yes  
Entity Voluntary Filers No  
Entity Current Reporting Status Yes  
v3.4.0.3
Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Real estate assets, at cost:    
Land $ 448,706 $ 443,705
Buildings and tenant improvements 4,113,001 4,063,328
Development in-process 180,150 194,050
Land held for development 68,244 68,244
Total real estate assets 4,810,101 4,769,327
Less-accumulated depreciation (1,033,127) (1,007,104)
Net real estate assets 3,776,974 3,762,223
Real estate and other assets, net, held for sale 0 240,948
Cash and cash equivalents 3,345 5,036
Restricted cash 258,444 16,769
Accounts receivable, net of allowance of $1,003 and $928, respectively 25,912 29,077
Mortgages and notes receivable, net of allowance of $282 and $287, respectively 9,661 2,096
Accrued straight-line rents receivable, net of allowance of $468 and $257, respectively 156,323 150,392
Investments in and advances to unconsolidated affiliates 19,225 20,676
Deferred leasing costs, net of accumulated amortization of $122,630 and $115,172, respectively 224,459 231,765
Prepaid expenses and other assets, net of accumulated amortization of $18,590 and $17,830, respectively 39,681 26,649
Total Assets 4,514,024 4,485,631
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,100,937 2,491,813
Accounts payable, accrued expenses and other liabilities 212,106 233,988
Liabilities held for sale 0 14,119
Total Liabilities $ 2,313,043 $ 2,739,920
Commitments and contingencies
Noncontrolling interests in the Operating Partnership $ 138,637 $ 126,429
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), 29,030 and 29,050 shares issued and outstanding, respectively 29,030 29,050
Common Stock, $.01 par value, 200,000,000 authorized shares; 97,392,301 and 96,091,932 shares issued and outstanding, respectively 974 961
Additional paid-in capital 2,652,254 2,598,242
Distributions in excess of net income available for common stockholders (631,226) (1,023,135)
Accumulated other comprehensive loss (6,651) (3,811)
Total Stockholders’ Equity 2,044,381 1,601,307
Noncontrolling interests in consolidated affiliates 17,963 17,975
Total Equity/Capital 2,062,344 1,619,282
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital 4,514,024 4,485,631
Highwoods Realty Limited Partnership [Member]    
Real estate assets, at cost:    
Land 448,706 443,705
Buildings and tenant improvements 4,113,001 4,063,328
Development in-process 180,150 194,050
Land held for development 68,244 68,244
Total real estate assets 4,810,101 4,769,327
Less-accumulated depreciation (1,033,127) (1,007,104)
Net real estate assets 3,776,974 3,762,223
Real estate and other assets, net, held for sale 0 240,948
Cash and cash equivalents 3,345 5,036
Restricted cash 258,444 16,769
Accounts receivable, net of allowance of $1,003 and $928, respectively 25,912 29,077
Mortgages and notes receivable, net of allowance of $282 and $287, respectively 9,661 2,096
Accrued straight-line rents receivable, net of allowance of $468 and $257, respectively 156,323 150,392
Investments in and advances to unconsolidated affiliates 19,225 20,676
Deferred leasing costs, net of accumulated amortization of $122,630 and $115,172, respectively 224,459 231,765
Prepaid expenses and other assets, net of accumulated amortization of $18,590 and $17,830, respectively 39,681 26,649
Total Assets 4,514,024 4,485,631
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Capital:    
Mortgages and notes payable, net 2,100,937 2,491,813
Accounts payable, accrued expenses and other liabilities 212,106 233,988
Liabilities held for sale 0 14,119
Total Liabilities $ 2,313,043 $ 2,739,920
Commitments and contingencies
Redeemable Operating Partnership Units:    
Common Units, 2,899,752 outstanding $ 138,637 $ 126,429
Series A Preferred Units (liquidation preference $1,000 per unit), 29,030 and 29,050 units issued and outstanding, respectively 29,030 29,050
Total Redeemable Operating Partnership Units 167,667 155,479
Equity/Capital:    
General partner Common Units, 998,832 and 985,829 outstanding, respectively 20,219 15,759
Limited partner Common Units, 95,984,660 and 94,697,294 outstanding, respectively 2,001,783 1,560,309
Accumulated other comprehensive loss (6,651) (3,811)
Noncontrolling interests in consolidated affiliates 17,963 17,975
Total Equity/Capital 2,033,314 1,590,232
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Capital $ 4,514,024 $ 4,485,631
v3.4.0.3
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Assets:    
Accounts receivable allowance $ 1,003 $ 928
Mortgages and notes receivable allowance 282 287
Accrued straight-line rents receivable allowance 468 257
Deferred leasing costs, accumulated amortization 122,630 115,172
Prepaid expenses and other assets, accumulated amortization $ 18,590 $ 17,830
Equity/Capital:    
Series A Preferred Stock, dividend rate percentage (in hundredths) 8.625% 8.625%
Series A Preferred Stock, par value (in dollars per share) $ 0.01 $ 0.01
Series A Preferred Stock, authorized shares (in shares) 50,000,000 50,000,000
Series A Preferred Stock, liquidation preference (in dollars per share) $ 1,000 $ 1,000
Series A Preferred Stock, shares issued (in shares) 29,030 29,050
Series A Preferred Stock, shares outstanding (in shares) 29,030 29,050
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) 97,392,301 96,091,932
Common Stock, shares outstanding (in shares) 97,392,301 96,091,932
Highwoods Realty Limited Partnership [Member]    
Assets:    
Accounts receivable allowance $ 1,003 $ 928
Mortgages and notes receivable allowance 282 287
Accrued straight-line rents receivable allowance 468 257
Deferred leasing costs, accumulated amortization 122,630 115,172
Prepaid expenses and other assets, accumulated amortization $ 18,590 $ 17,830
Redeemable Operating Partnership Units: [Abstract]    
Redeemable Common Units outstanding (in shares) 2,899,752 2,899,752
Series A Preferred Units, liquidation preference (in dollars per share) $ 1,000 $ 1,000
Series A Preferred Units, issued (in shares) 29,030 29,050
Series A Preferred Units, outstanding (in shares) 29,030 29,050
Common Units: [Abstract]    
General partners' capital account, units outstanding (in shares) 998,832 985,829
Limited partners' capital account, units outstanding (in shares) 95,984,660 94,697,294
v3.4.0.3
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Rental and other revenues $ 164,859 $ 145,236
Operating expenses:    
Rental property and other expenses 57,580 52,514
Depreciation and amortization 53,494 46,867
General and administrative 11,137 11,243
Total operating expenses 122,211 110,624
Interest expense:    
Contractual 19,715 20,442
Amortization of debt issuance costs 990 800
Total interest expense 20,705 21,242
Other income:    
Interest and other income 517 582
Total other income 517 582
Income from continuing operations before disposition of investment properties and activity in unconsolidated affiliates 22,460 13,952
Gains on disposition of property 4,397 1,157
Equity in earnings of unconsolidated affiliates 1,285 1,811
Income from continuing operations 28,142 16,920
Discontinued operations:    
Income from discontinued operations 4,097 3,915
Net gains on disposition of discontinued operations 414,496 0
Total income from discontinued operations 418,593 3,915
Net income 446,735 20,835
Net (income) attributable to noncontrolling interests in the Operating Partnership (13,011) (596)
Net (income) attributable to noncontrolling interests in consolidated affiliates (308) (296)
Dividends on Preferred Stock (626) (627)
Net income available for common stockholders $ 432,790 $ 19,316
Earnings per Common Share – basic:    
Income from continuing operations available for common stockholders (in dollars per share) $ 0.27 $ 0.17
Income from discontinued operations available for common stockholders (in dollars per share) 4.22 0.04
Net income available for common stockholders (in dollars per share) $ 4.49 $ 0.21
Weighted average Common Shares outstanding - basic (in shares) 96,373 93,222
Earnings per Common Share - diluted:    
Income from continuing operations available for common stockholders (in dollars per share) $ 0.27 $ 0.17
Income from discontinued operations available for common stockholders (in dollars per share) 4.22 0.04
Net income available for common stockholders (in dollars per share) $ 4.49 $ 0.21
Weighted average Common Shares outstanding - diluted (in shares) [1],[2] 99,357 96,279
Dividends declared per Common Share (in dollars per share) $ 0.425 $ 0.425
Net income available for common stockholders:    
Income from continuing operations available for common stockholders $ 26,462 $ 15,521
Income from discontinued operations available for common stockholders 406,328 3,795
Net income available for common stockholders 432,790 19,316
Highwoods Realty Limited Partnership [Member]    
Rental and other revenues 164,859 145,236
Operating expenses:    
Rental property and other expenses 57,580 52,514
Depreciation and amortization 53,494 46,867
General and administrative 11,137 11,243
Total operating expenses 122,211 110,624
Interest expense:    
Contractual 19,715 20,442
Amortization of debt issuance costs 990 800
Total interest expense 20,705 21,242
Other income:    
Interest and other income 517 582
Total other income 517 582
Income from continuing operations before disposition of investment properties and activity in unconsolidated affiliates 22,460 13,952
Gains on disposition of property 4,397 1,157
Equity in earnings of unconsolidated affiliates 1,285 1,811
Income from continuing operations 28,142 16,920
Discontinued operations:    
Income from discontinued operations 4,097 3,915
Net gains on disposition of discontinued operations 414,496 0
Total income from discontinued operations 418,593 3,915
Net income 446,735 20,835
Net (income) attributable to noncontrolling interests in consolidated affiliates (308) (296)
Distributions on Preferred Units (626) (627)
Net income available for common unitholders $ 445,801 $ 19,912
Earnings per Common Unit - basic:    
Income from continuing operations available for common unitholders (in dollars per share) $ 0.28 $ 0.17
Income from discontinued operations available for common unitholders (in dollars per share) 4.23 0.04
Net income available for common unitholders (in dollars per share) $ 4.51 $ 0.21
Weighted average Common Units outstanding - basic (in shares) 98,864 95,746
Earnings per Common Unit - diluted:    
Income from continuing operations available for common unitholders (in dollars per share) $ 0.28 $ 0.17
Income from discontinued operations available for common unitholders (in dollars per share) 4.23 0.04
Net income available for common unitholders (in dollars per share) $ 4.51 $ 0.21
Weighted average Common Units outstanding - diluted (in shares) [3],[4] 98,948 95,870
Distributions declared per Common Unit (in dollars per unit) $ 0.425 $ 0.425
Net income available for common unitholders:    
Income from continuing operations available for common unitholders $ 27,208 $ 15,997
Income from discontinued operations available for common unitholders 418,593 3,915
Net income available for common unitholders $ 445,801 $ 19,912
[1] Includes all unvested restricted stock where dividends on such restricted stock are non-forfeitable.
[2] There were 0.4 million and 0.2 million options outstanding during the three months ended March 31, 2016 and 2015, respectively, that were not included in the computation of diluted earnings per share because the impact of including such options would be anti-dilutive.
[3] Includes all unvested restricted stock where dividends on such restricted stock are non-forfeitable.
[4] There were 0.4 million and 0.2 million options outstanding during the three months ended March 31, 2016 and 2015, respectively, that were not included in the computation of diluted earnings per unit because the impact of including such options would be anti-dilutive.
v3.4.0.3
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Comprehensive income:    
Net income $ 446,735 $ 20,835
Other comprehensive income/(loss):    
Unrealized gains on tax increment financing bond 0 193
Unrealized losses on cash flow hedges (3,635) (2,914)
Amortization of cash flow hedges 795 924
Total other comprehensive loss (2,840) (1,797)
Total comprehensive income 443,895 19,038
Less-comprehensive (income) attributable to noncontrolling interests (13,319) (892)
Comprehensive income attributable to common stockholders/Comprehensive income attributable to common unitholders 430,576 18,146
Highwoods Realty Limited Partnership [Member]    
Comprehensive income:    
Net income 446,735 20,835
Other comprehensive income/(loss):    
Unrealized gains on tax increment financing bond 0 193
Unrealized losses on cash flow hedges (3,635) (2,914)
Amortization of cash flow hedges 795 924
Total other comprehensive loss (2,840) (1,797)
Total comprehensive income 443,895 19,038
Less-comprehensive (income) attributable to noncontrolling interests (308) (296)
Comprehensive income attributable to common stockholders/Comprehensive income attributable to common unitholders $ 443,587 $ 18,742
v3.4.0.3
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, 2014     92,907,310                  
Balance at Dec. 31, 2014 $ 1,551,091 $ 1,522,223 $ 929 $ 29,060 $ 15,078 $ 1,492,948 $ 2,464,275 $ (3,912) $ (3,912) $ 18,109 $ 18,109 $ (957,370)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   40,567     406 40,161     0   0  
Distributions paid on Common Units   (40,637)     (406) (40,231)     0   0  
Distributions paid on Preferred Units   (627)     (6) (621)     0   0  
Issuances of Common Stock, net of issuance costs and tax withholdings - Shares     989,417                  
Issuances of Common Stock, net of issuance costs and tax withholdings 40,567   $ 10 0     40,557 0   0   0
Conversions of Common Units to Common Stock - Shares     26,820                  
Conversions of Common Units to Common Stock 1,206   $ 0 0     1,206 0   0   0
Dividends on Common Stock (39,563)   0 0     0 0   0   (39,563)
Dividends on Preferred Stock (627)   0 0     0 0   0   (627)
Adjustment of noncontrolling interests in the Operating Partnership to fair value (5,036)   0 0     (5,036) 0   0   0
Distributions to noncontrolling interests in consolidated affiliates (321) (321) $ 0 0 0 0 0 0 0 (321) (321) 0
Issuances of restricted stock - shares     123,571                  
Issuances of restricted stock 0   $ 0 0     0 0   0   0
Redemptions/repurchases of Preferred Stock (10)   0 (10)     0 0   0   0
Share-based compensation expense, net of forfeitures 3,866 3,866 1 0 39 3,827 3,865 0 0 0 0 0
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   (3,544)     (36) (3,508)     0   0  
Net (income) attributable to noncontrolling interests in the Operating Partnership (596)   0 0     0 0   0   (596)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0 0 0 (3) (293) 0 0 0 296 296 (296)
Comprehensive income:                        
Net income 20,835 20,835 0 0 208 20,627 0 0 0 0 0 20,835
Other comprehensive loss (1,797) (1,797) $ 0 0 0 0 0 (1,797) (1,797) 0 0 0
Total comprehensive income 19,038 19,038                    
Balance (in shares) at Mar. 31, 2015     94,047,118                  
Balance at Mar. 31, 2015 $ 1,569,615 1,540,565 $ 940 29,050 15,280 1,512,910 2,504,867 (5,709) (5,709) 18,084 18,084 (977,617)
Balance (in shares) at Dec. 31, 2015 96,091,932   96,091,932                  
Balance at Dec. 31, 2015 $ 1,619,282 1,590,232 $ 961 29,050 15,759 1,560,309 2,598,242 (3,811) (3,811) 17,975 17,975 (1,023,135)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Issuances of Common Units, net of issuance costs and tax withholdings   50,898     509 50,389     0   0  
Distributions paid on Common Units   (41,939)     (419) (41,520)     0   0  
Distributions paid on Preferred Units   (626)     (6) (620)     0   0  
Issuances of Common Stock, net of issuance costs and tax withholdings - Shares     1,177,885                  
Issuances of Common Stock, net of issuance costs and tax withholdings 50,898   $ 12 0     50,886 0   0   0
Conversions of Common Units to Common Stock 0                      
Dividends on Common Stock (40,881)   0 0     0 0   0   (40,881)
Dividends on Preferred Stock (626)   0 0     0 0   0   (626)
Adjustment of noncontrolling interests in the Operating Partnership to fair value (429)   0 0     (429) 0   0   0
Distributions to noncontrolling interests in consolidated affiliates (320) (320) $ 0 0 0 0 0 0 0 (320) (320) 0
Issuances of restricted stock - shares     122,832                  
Issuances of restricted stock 0   $ 0 0     0 0   0   0
Redemptions/repurchases of Preferred Stock (20)   $ 0 (20)     0 0   0   0
Share-based compensation expense, net of forfeitures - shares     (348)                  
Share-based compensation expense, net of forfeitures 3,556 3,556 $ 1 0 36 3,520 3,555 0 0 0 0 0
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner   (12,382)     (124) (12,258)     0   0  
Net (income) attributable to noncontrolling interests in the Operating Partnership (13,011)   0 0     0 0   0   (13,011)
Net (income) attributable to noncontrolling interests in consolidated affiliates 0 0 0 0 (3) (305) 0 0 0 308 308 (308)
Comprehensive income:                        
Net income 446,735 446,735 0 0 4,467 442,268 0 0 0 0 0 446,735
Other comprehensive loss (2,840) (2,840) $ 0 0 0 0 0 (2,840) (2,840) 0 0 0
Total comprehensive income $ 443,895 443,895                    
Balance (in shares) at Mar. 31, 2016 97,392,301   97,392,301                  
Balance at Mar. 31, 2016 $ 2,062,344 $ 2,033,314 $ 974 $ 29,030 $ 20,219 $ 2,001,783 $ 2,652,254 $ (6,651) $ (6,651) $ 17,963 $ 17,963 $ (631,226)
v3.4.0.3
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Operating activities:    
Net income $ 446,735 $ 20,835
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 53,494 50,308
Amortization of lease incentives and acquisition-related intangible assets and liabilities 108 (67)
Share-based compensation expense 3,556 3,866
Allowance for losses on accounts and accrued straight-line rents receivable 1,077 417
Accrued interest on mortgages and notes receivable (42) (170)
Amortization of debt issuance costs 990 800
Amortization of cash flow hedges 795 924
Amortization of mortgages and notes payable fair value adjustments (59) 57
Net gains on disposition of property (418,893) (1,157)
Equity in earnings of unconsolidated affiliates (1,285) (1,811)
Distributions of earnings from unconsolidated affiliates 717 1,386
Changes in operating assets and liabilities:    
Accounts receivable 601 3,166
Prepaid expenses and other assets (6,577) (6,769)
Accrued straight-line rents receivable (6,624) (5,591)
Accounts payable, accrued expenses and other liabilities (26,358) (33,088)
Net cash provided by operating activities 48,235 33,106
Investing activities:    
Investments in development in-process (33,188) (11,232)
Investments in tenant improvements and deferred leasing costs (23,513) (30,008)
Investments in building improvements (16,479) (12,081)
Net proceeds from disposition of real estate assets 661,390 5,650
Distributions of capital from unconsolidated affiliates 2,118 394
Investments in mortgages and notes receivable (7,602) (938)
Repayments of mortgages and notes receivable 79 87
Investments in and advances to unconsolidated affiliates (105) 0
Changes in restricted cash and other investing activities (248,865) 993
Net cash provided by/(used in) investing activities 333,835 (47,135)
Financing activities:    
Dividends on Common Stock (40,881) (39,563)
Redemptions/repurchases of Preferred Stock (20) (10)
Dividends on Preferred Stock (626) (627)
Distributions to noncontrolling interests in the Operating Partnership (1,232) (1,248)
Distributions to noncontrolling interests in consolidated affiliates (320) (321)
Proceeds from the issuance of Common Stock 54,915 44,937
Costs paid for the issuance of Common Stock (788) (643)
Repurchase of shares related to tax withholdings (3,229) (3,727)
Borrowings on revolving credit facility 66,400 110,900
Repayments of revolving credit facility (107,400) (91,900)
Repayments of mortgages and notes payable (350,535) (1,220)
Changes in debt issuance costs and other financing activities (45) 0
Net cash provided by/(used in) financing activities (383,761) 16,578
Net increase/(decrease) in cash and cash equivalents (1,691) 2,549
Cash and cash equivalents at beginning of the period 5,036 8,832
Cash and cash equivalents at end of the period 3,345 11,381
Supplemental disclosure of cash flow information:    
Cash paid for interest, net of amounts capitalized 20,951 21,480
Supplemental disclosure of non-cash investing and financing activities:    
Unrealized losses on cash flow hedges (3,635) (2,914)
Conversions of Common Units to Common Stock 0 1,206
Changes in accrued capital expenditures (5,978) (2,697)
Write-off of fully depreciated real estate assets 12,579 15,020
Write-off of fully amortized debt issuance and leasing costs 5,282 10,147
Adjustment of noncontrolling interests in the Operating Partnership to fair value 429 5,036
Unrealized gains on tax increment financing bond 0 193
Highwoods Realty Limited Partnership [Member]    
Operating activities:    
Net income 446,735 20,835
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 53,494 50,308
Amortization of lease incentives and acquisition-related intangible assets and liabilities 108 (67)
Share-based compensation expense 3,556 3,866
Allowance for losses on accounts and accrued straight-line rents receivable 1,077 417
Accrued interest on mortgages and notes receivable (42) (170)
Amortization of debt issuance costs 990 800
Amortization of cash flow hedges 795 924
Amortization of mortgages and notes payable fair value adjustments (59) 57
Net gains on disposition of property (418,893) (1,157)
Equity in earnings of unconsolidated affiliates (1,285) (1,811)
Distributions of earnings from unconsolidated affiliates 717 1,386
Changes in operating assets and liabilities:    
Accounts receivable 601 3,166
Prepaid expenses and other assets (6,577) (6,769)
Accrued straight-line rents receivable (6,624) (5,591)
Accounts payable, accrued expenses and other liabilities (26,358) (33,002)
Net cash provided by operating activities 48,235 33,192
Investing activities:    
Investments in development in-process (33,188) (11,232)
Investments in tenant improvements and deferred leasing costs (23,513) (30,008)
Investments in building improvements (16,479) (12,081)
Net proceeds from disposition of real estate assets 661,390 5,650
Distributions of capital from unconsolidated affiliates 2,118 394
Investments in mortgages and notes receivable (7,602) (938)
Repayments of mortgages and notes receivable 79 87
Investments in and advances to unconsolidated affiliates (105) 0
Changes in restricted cash and other investing activities (248,865) 993
Net cash provided by/(used in) investing activities 333,835 (47,135)
Financing activities:    
Distributions on Common Units (41,939) (40,637)
Redemptions/repurchases of Preferred Units (20) (10)
Distributions on Preferred Units (626) (627)
Distributions to noncontrolling interests in consolidated affiliates (320) (321)
Proceeds from the issuance of Common Units 54,915 44,937
Costs paid for the issuance of Common Units (788) (643)
Repurchase of units related to tax withholdings (3,229) (3,727)
Borrowings on revolving credit facility 66,400 110,900
Repayments of revolving credit facility (107,400) (91,900)
Repayments of mortgages and notes payable (350,535) (1,220)
Changes in debt issuance costs and other financing activities (219) (366)
Net cash provided by/(used in) financing activities (383,761) 16,386
Net increase/(decrease) in cash and cash equivalents (1,691) 2,443
Cash and cash equivalents at beginning of the period 5,036 8,938
Cash and cash equivalents at end of the period 3,345 11,381
Supplemental disclosure of cash flow information:    
Cash paid for interest, net of amounts capitalized 20,951 21,480
Supplemental disclosure of non-cash investing and financing activities:    
Unrealized losses on cash flow hedges (3,635) (2,914)
Changes in accrued capital expenditures (5,978) (2,697)
Write-off of fully depreciated real estate assets 12,579 15,020
Write-off of fully amortized debt issuance and leasing costs 5,282 10,147
Adjustment of Redeemable Common Units to fair value 12,208 3,178
Unrealized gains on tax increment financing bond $ 0 $ 193
v3.4.0.3
Description of Business and Significant Accounting Policies
 3 Months Ended
Mar. 31, 2016
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 March 31, 2016, we owned or had an interest in 31.2 million rentable square feet of in-service properties, 1.3 million rentable square feet of properties under development and approximately 500 acres of development land.
 
The Company is the sole general partner of the Operating Partnership. At March 31, 2016, the Company owned all of the Preferred Units and 97.0 million, or 97.1%, of the Common Units in the Operating Partnership. Limited partners owned the remaining 2.9 million Common Units.

Common Stock Offerings
 
During the three months ended March 31, 2016, the Company issued 1,054,496 shares of Common Stock under its equity distribution agreements at an average gross sales price of $45.86 per share and received net proceeds, after sales commissions, of $47.6 million.

Basis of Presentation
 
Our Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Our Consolidated Statements of Income for the three months ended March 31, 2015 were retrospectively revised from previously reported amounts to reclassify the operations for those properties classified as discontinued operations. 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. In addition, we consolidate those entities deemed to be variable interest entities in which we are determined to be the primary beneficiary. At March 31, 2016, we had involvement with, but are not the primary beneficiary in, an entity that we concluded to be a variable interest entity. 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 2015 Annual Report on Form 10-K.

During 2015, as a result of our partner’s irrevocable exercise of a buy-sell provision in our SF-HIW Harborview Plaza, LP joint venture agreement, our partner’s right to put its 80.0% equity interest back to us became no longer exercisable. As a result, we recorded the original contribution transaction as a partial sale. Our investment in this joint venture then qualified for the equity method of accounting, which resulted in the retrospective revision of our Consolidated Balance Sheets and Consolidated Statements of Equity and Capital for prior periods. Such retrospective revision is denoted using "as revised" on our Consolidated Statements of Equity and Capital as of March 31, 2015.

1.    Description of Business and Significant Accounting Policies – Continued

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.

Recently Issued Accounting Standards

The Financial Accounting Standards Board ("FASB") recently issued an accounting standards update that requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that we identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when we satisfy the performance obligations. We will also be required to disclose information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The accounting standards update is required to be adopted in 2018. Retrospective application is required either to all periods presented or with the cumulative effect of initial adoption recognized in the period of adoption. We are in the process of evaluating this accounting standards update.
 
The FASB recently issued an accounting standards update that amended consolidation requirements. The amendments significantly change the consolidation analysis required under GAAP and require companies to reevaluate all previous consolidation conclusions. We adopted the accounting standards update as of January 1, 2016 and there was no impact to consolidated entities included in our Consolidated Financial Statements. However, in reevaluating our previous consolidation conclusions upon adoption of the accounting standards update, we determined our 12.5% equity interest in an unconsolidated affiliate to be an interest in a variable interest entity because certain of its limited partners do not have substantive kick-out or participating rights. We do not qualify as the primary beneficiary since our obligation to absorb losses and receive benefits of the variable interest entity is less than that of the other general partner. Accordingly, the entity is not consolidated. Our maximum exposure to loss with respect to this arrangement is limited to the $1.6 million carrying value of our 12.5% investment in the unconsolidated affiliate.
 
The FASB recently issued an accounting standards update that requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability to which they relate, consistent with debt discounts, as opposed to being presented as assets. For debt issuance costs related to revolving credit facilities, the FASB allows the presentation of debt issuance costs as an asset. We adopted the accounting standards update as of January 1, 2016 with retrospective application to our December 31, 2015 Consolidated Balance Sheets. The effect of the adoption was to reclassify debt issuance costs from deferred financing and leasing costs, net of accumulated amortization, as follows: $7.8 million to a contra account as a deduction from the related mortgages and notes payable and $2.1 million to prepaid expenses and other assets. There was no effect on our Consolidated Statements of Income.

The FASB recently issued an accounting standards update which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors.  The accounting standards update requires lessors to account for leases using an approach that is substantially equivalent to the existing guidance and is effective for reporting periods beginning after December 15, 2018 with early adoption permitted.  We are in the process of evaluating this accounting standards update.
v3.4.0.3
Real Estate Assets
 3 Months Ended
Mar. 31, 2016
Real Estate [Abstract]  
Real Estate Assets
Real Estate Assets
Dispositions
 
During the first quarter of 2016, we sold:
 
•
substantially all of our wholly-owned Country Club Plaza assets in Kansas City (which we refer to as the “Plaza assets”) for a sale price of $660.0 million (before closing credits to buyer of $4.8 million). We recorded gains on disposition of discontinued operations of $414.5 million and a gain on disposition of property of $1.3 million related to the land;
 

2.    Real Estate Assets - Continued

•
a 32,000 square foot building for a sale price of $4.7 million (before closing credits to buyer of $0.1 million) and recorded a gain on disposition of property of $1.1 million. The buyer, which leased 79% of the building, is a family business controlled by a director of the Company. The sale price exceeded the value set forth in an appraisal performed by a reputable independent commercial real estate services firm that has no relationship with the director or any of his affiliates; and

•
a building for a sale price of $6.4 million (before closing credits to buyer of $0.5 million) and recorded a gain on disposition of property of $2.0 million.
v3.4.0.3
Mortgages and Notes Receivable
 3 Months Ended
Mar. 31, 2016
Receivables [Abstract]  
Mortgages and Notes Receivable
Mortgages and Notes Receivable

Mortgages and notes receivable were $9.7 million and $2.1 million at March 31, 2016 and December 31, 2015, respectively. We evaluate the ability to collect our mortgages and notes receivable by monitoring the leasing statistics and/or market fundamentals of these assets. As of March 31, 2016, our mortgages and notes receivable were not in default and there were no other indicators of impairment.
v3.4.0.3
Investments In and Advances To Unconsolidated Affiliates
 3 Months Ended
Mar. 31, 2016
Equity Method Investments and Joint Ventures [Abstract]  
Investments In and Advances To Unconsolidated Affiliates
Investments in and Advances to 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 their operating and financial policies.
 
The following table sets forth the summarized income statements of our unconsolidated affiliates:
 
Three Months Ended
March 31,
 
2016
 
2015
Income Statements:
 
 
 
Rental and other revenues
$
10,772

 
$
12,231

Expenses:
 
 
 
Rental property and other expenses
4,715

 
5,667

Depreciation and amortization
2,747

 
3,115

Interest expense
1,377

 
2,149

Total expenses
8,839

 
10,931

Income before disposition of property
1,933

 
1,300

Gains on disposition of property
902

 
2,127

Net income
$
2,835

 
$
3,427



During the first quarter of 2016, Concourse Center Associates, LLC sold two buildings and land to an unrelated third party for an aggregate sale price of $11.0 million and recorded losses on disposition of property of $0.1 million. As our cost basis was different from the basis reflected at the joint venture level, we recorded $0.4 million of gains through equity in earnings of unconsolidated affiliates. Simultaneously with the sale, the joint venture repaid all $6.6 million of its secured debt.

During the first quarter of 2016, 4600 Madison Associates, LP sold land to an unrelated third party for a sale price of $3.4 million and recorded a gain on disposition of property of $1.0 million. We recorded $0.1 million as our share of this gain through equity in earnings of unconsolidated affiliates. Simultaneously with the sale, the joint venture used all of the proceeds to pay down $3.4 million on its secured mortgage loan with an effective interest rate of 6.85%.
v3.4.0.3
Intangible Assets and Below Market Lease Liabilities
 3 Months Ended
Mar. 31, 2016
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:
 
 
March 31,
2016
 
December 31,
2015
Assets:
 
 
 
Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets)
$
347,089

 
$
346,937

Less accumulated amortization
(122,630
)
 
(115,172
)
 
$
224,459

 
$
231,765

 
 
 
 
Liabilities (in accounts payable, accrued expenses and other liabilities):
 
 
 
Acquisition-related below market lease liabilities
$
63,628

 
$
63,830

Less accumulated amortization
(19,497
)
 
(17,927
)
 
$
44,131

 
$
45,903


The following table sets forth amortization of intangible assets and below market lease liabilities:
 
 
Three Months Ended
March 31,
 
2016
 
2015
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)
$
11,335

 
$
10,001

Amortization of lease incentives (in rental and other revenues)
$
711

 
$
351

Amortization of acquisition-related intangible assets (in rental and other revenues)
$
1,031

 
$
1,166

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

 
$
137

Amortization of acquisition-related below market lease liabilities (in rental and other revenues)
$
(1,772
)
 
$
(1,732
)

The following table sets forth scheduled future amortization of intangible assets and below market lease liabilities:
 
 
 
Amortization of Deferred Leasing Costs and Acquisition-Related Intangible Assets (in Depreciation and Amortization)
 
Amortization of Lease Incentives (in Rental and Other Revenues)
 
Amortization of Acquisition-Related Intangible Assets (in Rental and Other Revenues)
 
Amortization of Acquisition-Related Intangible Assets (in Rental Property and Other Expenses)
 
Amortization of Acquisition-Related Below Market Lease Liabilities (in Rental and Other Revenues)
April 1 through December 31, 2016
 
$
34,295

 
$
1,011

 
$
2,805

 
$
415

 
$
(5,225
)
2017
 
38,954

 
1,275

 
2,650

 
553

 
(6,619
)
2018
 
32,108

 
1,171

 
1,706

 
553

 
(6,228
)
2019
 
26,469

 
961

 
1,305

 
553

 
(5,737
)
2020
 
21,882

 
725

 
988

 
525

 
(5,408
)
Thereafter
 
48,940

 
2,056

 
2,559

 
—

 
(14,914
)
 
 
$
202,648

 
$
7,199

 
$
12,013

 
$
2,599

 
$
(44,131
)
Weighted average remaining amortization periods as of March 31, 2016 (in years)
 
6.7

 
7.2

 
6.1

 
4.7

 
7.7
v3.4.0.3
Mortgages and Notes Payable
 3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Mortgages and Notes Payable
Mortgages and Notes Payable
 
The following table sets forth our mortgages and notes payable:
 
 
March 31,
2016
 
December 31,
2015
Secured indebtedness
$
174,475

 
$
175,281

Unsecured indebtedness
1,933,536

 
2,324,333

Less-unamortized debt issuance costs
(7,074
)
 
(7,801
)
Total mortgages and notes payable, net
$
2,100,937

 
$
2,491,813


 
At March 31, 2016, our secured mortgage loans were collateralized by real estate assets with an aggregate undepreciated book value of $315.8 million.
 
Our $475.0 million unsecured revolving credit facility is scheduled to mature in January 2018 and includes an accordion feature that allows for an additional $75.0 million of borrowing capacity subject to additional lender commitments. Assuming no defaults have occurred, we have an option to extend the maturity for two additional six-month periods. The interest rate at our current credit ratings is LIBOR plus 110 basis points and the annual facility fee is 20 basis points. There was $258.0 million and $257.0 million outstanding under our revolving credit facility at March 31, 2016 and April 19, 2016, respectively. At both March 31, 2016 and April 19, 2016, we had $0.2 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 March 31, 2016 and April 19, 2016 was $216.8 million and $217.8 million, respectively.

During the first quarter of 2016, we prepaid without penalty the $350.0 million balance on our unsecured bridge facility that was originally scheduled to mature in March 2016.

We are currently in compliance with financial covenants and other requirements with respect to our consolidated debt.
v3.4.0.3
Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments
 
During the first quarter of 2016, we obtained $150.0 million notional amount of forward-starting swaps that effectively lock the underlying treasury rate at 1.90% with respect to a forecasted debt issuance expected to occur between June 15, 2016 and March 15, 2017. The counterparties under the swaps are major financial institutions.

Our interest rate swaps have been designated as and are being accounted for as cash flow hedges with changes in fair value recorded in other comprehensive income/(loss) each reporting period. No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on our cash flow hedges during the three months ended March 31, 2016 and 2015. We have no collateral requirements related to our interest rate swaps.

Amounts reported in accumulated other comprehensive loss ("AOCL") related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the period from April 1, 2016 through March 31, 2017, we estimate that $3.3 million will be reclassified to interest expense.

The following table sets forth the fair value of our derivatives:
 
 
March 31,
2016
 
December 31,
2015
Derivatives:
 
 
 
Derivatives designated as cash flow hedges in accounts payable, accrued expenses and other liabilities:
 
 
 
Interest rate swaps
$
5,992

 
$
3,073





7.
Derivative Financial Instruments - Continued

The following table sets forth the effect of our cash flow hedges on AOCL and interest expense:
 
 
Three Months Ended
March 31,
 
2016
 
2015
Derivatives Designated as Cash Flow Hedges:
 
 
 
Amount of unrealized losses recognized in AOCL on derivatives (effective portion):
 
 
 
Interest rate swaps
$
(3,635
)
 
$
(2,914
)
Amount of losses reclassified out of AOCL into contractual interest expense (effective portion):
 
 
 
Interest rate swaps
$
795

 
$
924
v3.4.0.3
Noncontrolling Interests
 3 Months Ended
Mar. 31, 2016
Noncontrolling Interest [Abstract]  
Noncontrolling Interests
Noncontrolling Interests

Noncontrolling Interests in Consolidated Affiliates
 
At March 31, 2016, our noncontrolling interests in consolidated affiliates relate to our joint venture partner's 50.0% interest in office properties in Richmond, VA. Our joint venture partner is an unrelated third party.

Noncontrolling Interests in the Operating Partnership

The following table sets forth the Company's noncontrolling interests in the Operating Partnership:
 
 
Three Months Ended
March 31,
 
2016
 
2015
Beginning noncontrolling interests in the Operating Partnership
$
126,429

 
$
130,048

Adjustment of noncontrolling interests in the Operating Partnership to fair value
429

 
5,036

Conversions of Common Units to Common Stock
—

 
(1,206
)
Net income attributable to noncontrolling interests in the Operating Partnership
13,011

 
596

Distributions to noncontrolling interests in the Operating Partnership
(1,232
)
 
(1,248
)
Total noncontrolling interests in the Operating Partnership
$
138,637

 
$
133,226


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
March 31,
 
2016
 
2015
Net income available for common stockholders
$
432,790

 
$
19,316

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

 
1,206

Change from net income available for common stockholders and transfers from noncontrolling interests
$
432,790

 
$
20,522
v3.4.0.3
Disclosure About Fair Value of Financial Instruments
 3 Months Ended
Mar. 31, 2016
Fair Value Disclosures [Abstract]  
Disclosure About Fair Value of Financial Instruments
Disclosure About Fair Value of Financial Instruments

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

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

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

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

Our Level 2 asset is 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 asset included our tax increment financing bond, which was not routinely traded but whose fair value was determined by the income approach utilizing contractual cash flows and market-based interest rates to estimate the projected redemption value based on quoted bid/ask prices for similar unrated municipal bonds.
 
Our Level 3 liability was the fair value of our financing obligation, which was estimated by the income approach to approximate the price that would be paid in an orderly transaction between market participants, utilizing: (1) contractual cash flows; (2) market-based interest rates; and (3) a number of other assumptions including demand for space, competition for customers, changes in market rental rates, costs of operation and expected ownership periods.


9.
Disclosure About Fair Value of Financial Instruments - Continued

The following table sets forth our assets and liabilities and the Company's noncontrolling interests in the Operating Partnership that are measured at fair value within the fair value hierarchy.
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
 
Total
 
Quoted Prices
in Active
Markets for Identical Assets or Liabilities
 
Significant Observable Inputs
 
Significant Unobservable Inputs
Fair Value at March 31, 2016:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Mortgages and notes receivable, at fair value (1)
 
$
9,661

 
$
—

 
$
9,661

 
$
—

Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
2,521

 
2,521

 
—

 
—

Total Assets
 
$
12,182

 
$
2,521

 
$
9,661

 
$
—

Noncontrolling Interests in the Operating Partnership
 
$
138,637

 
$
138,637

 
$
—

 
$
—

Liabilities:
 
 
 
 
 
 
 
 
Mortgages and notes payable, net, at fair value (1)
 
$
2,131,771

 
$
—

 
$
2,131,771

 
$
—

Interest rate swaps (in accounts payable, accrued expenses and other liabilities)
 
5,992

 
—

 
5,992

 
—

Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
2,521

 
2,521

 
—

 
—

Total Liabilities
 
$
2,140,284

 
$
2,521

 
$
2,137,763

 
$
—

Fair Value at December 31, 2015:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Mortgages and notes receivable, at fair value (1)
 
$
2,096

 
$
—

 
$
2,096

 
$
—

Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
2,736

 
2,736

 
—

 
—

Tax increment financing bond (in real estate and other assets, net, held for sale) (2)
 
11,197

 
—

 
—

 
11,197

Total Assets
 
$
16,029

 
$
2,736

 
$
2,096

 
$
11,197

Noncontrolling Interests in the Operating Partnership
 
$
126,429

 
$
126,429

 
$
—

 
$
—

Liabilities:
 
 
 
 
 
 
 
 
Mortgages and notes payable, net, at fair value (1)
 
$
2,517,589

 
$
—

 
$
2,517,589

 
$
—

Interest rate swaps (in accounts payable, accrued expenses and other liabilities)
 
3,073

 
—

 
3,073

 
—

Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
2,736

 
2,736

 
—

 
—

Financing obligation, at fair value (in liabilities held for sale) (1) (2)
 
7,402

 
—

 
—

 
7,402

Total Liabilities
 
$
2,530,800

 
$
2,736

 
$
2,520,662

 
$
7,402


__________
(1)    Amounts recorded at historical cost on our Consolidated Balance Sheets at March 31, 2016 and December 31, 2015.
(2)    Sold during the first quarter of 2016 in conjunction with the sale of the Plaza assets.
9.
Disclosure About Fair Value of Financial Instruments - Continued

The following table sets forth the changes in our Level 3 asset, which was recorded at fair value on our Consolidated Balance Sheets:

 
Three Months Ended
March 31,
 
2016
 
2015
Asset:
 
 
 
Tax Increment Financing Bond:
 
 
 
Beginning balance
$
11,197

 
$
12,447

Assigned to the buyer of the Plaza assets
(11,197
)
 
—

Unrealized gains (in AOCL)
—

 
193

Ending balance
$
—

 
$
12,640



During 2007, we acquired a tax increment financing bond associated with a parking garage developed by us, which was assigned to the buyer of the Plaza assets in the first quarter of 2016. The estimated fair value at the date of sale was equal to the outstanding principal amount due on the bond.
 
The following table sets forth quantitative information about the unobservable input of our Level 3 asset, which was recorded at fair value on our Consolidated Balance Sheets:
 
 
Valuation
Technique
 
Unobservable
Input
 
Rate as of
 
 
 
December 31,
2015
Asset:
 
 
 
 
 
Tax increment financing bond
Income approach
 
Discount rate
 
6.93%
v3.4.0.3
Share-Based Payments
 3 Months Ended
Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Payments
Share-Based Payments
 
During the three months ended March 31, 2016, the Company granted 244,664 stock options with an exercise price equal to the closing market price of a share of Common Stock on the date of grant. The fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model, which resulted in a weighted average grant date fair value per share of $4.61. During the three months ended March 31, 2016, the Company also granted 66,486 shares of time-based restricted stock and 56,346 shares of total return-based restricted stock with weighted average grant date fair values per share of $43.19 and $41.25, respectively. We recorded share-based compensation expense of $3.6 million and $3.9 million during the three months ended March 31, 2016 and 2015, respectively. At March 31, 2016, there was $7.8 million of total unrecognized share-based compensation costs, which will be recognized over a weighted average remaining contractual term of 2.7 years.
v3.4.0.3
Accumulated Other Comprehensive Loss
 3 Months Ended
Mar. 31, 2016
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 AOCL:
 
 
Three Months Ended
March 31,
 
2016
 
2015
Tax increment financing bond:
 
 
 
Beginning balance
$
—

 
$
(445
)
Unrealized gains on tax increment financing bond
—

 
193

Ending balance
—

 
(252
)
Cash flow hedges:
 
 
 
Beginning balance
(3,811
)
 
(3,467
)
Unrealized losses on cash flow hedges
(3,635
)
 
(2,914
)
Amortization of cash flow hedges (1)
795

 
924

Ending balance
(6,651
)
 
(5,457
)
Total accumulated other comprehensive loss
$
(6,651
)
 
$
(5,709
)
__________
(1)    Amounts reclassified out of AOCL into contractual interest expense.
v3.4.0.3
Real Estate, Other Assets and Liabilities Held For Sale and Discontinued Operations
 3 Months Ended
Mar. 31, 2016
Discontinued Operations and Disposal Groups [Abstract]  
Real Estate and Other Assets Held For Sale and Discontinued Operations
Real Estate, Other Assets and Liabilities Held For Sale and Discontinued Operations

The following tables set forth the assets and liabilities related to discontinued operations at March 31, 2016 and December 31, 2015 and the results of operations and cash flows for the three months ended March 31, 2016 and 2015:

 
March 31,
2016
 
December 31,
2015
Assets:
 
 
 
Land
$
—