HIGHWOODS PROPERTIES, INC., 10-Q filed on 10/27/2011
Quarterly Report
Document And Entity Information (USD $)
9 Months Ended
Sep. 30, 2011
Jun. 30, 2010
Entity Registrant Name
HIGHWOODS PROPERTIES INC 
 
Entity Central Index Key
0000921082 
 
Current Fiscal Year End Date
--12-31 
 
Entity Well-known Seasoned Issuer
Yes 
 
Entity Voluntary Filers
No 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Public Float
 
$ 1,963,562,043 
Entity Common Stock, Shares Outstanding
72,579,381 
 
Document Fiscal Year Focus
2011 
 
Document Fiscal Period Focus
Q3 
 
Document Type
10-Q 
 
Amendment Flag
FALSE 
 
Document Period End Date
Sep. 30, 2011 
 
Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands
Sep. 30, 2011
Dec. 31, 2010
Real estate assets, at cost:
 
 
Land
$ 368,948 
$ 345,088 
Buildings and tenant improvements
3,115,149 
2,883,092 
Development in process
7,576 
4,524 
Land held for development
106,975 
107,101 
Total real estate assets
3,598,648 
3,339,805 
Less-accumulated depreciation
(878,702)
(830,153)
Net real estate assets
2,719,946 
2,509,652 
For-sale residential condominiums
4,995 
8,225 
Real estate and other assets, net, held for sale
0 
13,607 
Cash and cash equivalents
11,088 
14,206 
Restricted cash
23,230 
4,399 
Accounts receivable, net of allowance of $3,581 and $3,595, respectively
23,443 
20,716 
Mortgages and notes receivable, net of allowance of $545 and $868, respectively
18,706 
19,044 
Accrued straight-line rents receivable, net of allowance of $1,366 and $2,209, respectively
102,338 
93,178 
Investment in and advances to unconsolidated affiliates
99,910 
63,607 
Deferred financing and leasing costs, net of accumulated amortization of $60,950 and $59,360, respectively
129,311 
85,001 
Prepaid expenses and other assets
38,940 
40,200 
Total Assets
3,171,907 
2,871,835 
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Equity:
 
 
Mortgages and notes payable
1,893,981 
1,522,945 
Accounts payable, accrued expenses and other liabilities
127,664 
106,716 
Financing obligations
32,775 
33,114 
Total Liabilities
2,054,420 
1,662,775 
Commitments and contingencies
 
 
Noncontrolling interests in the Operating Partnership
105,995 
120,838 
Equity:
 
 
Common Stock, $.01 par value, 200,000,000 authorized shares; 72,579,381 and 71,690,487 shares issued and outstanding, respectively
726 
717 
Additional paid-in capital
1,807,107 
1,766,886 
Distributions in excess of net income available for common stockholders
(826,435)
(761,785)
Accumulated other comprehensive loss
(3,606)
(3,648)
Total Stockholders' Equity
1,006,869 
1,083,762 
Noncontrolling interests in consolidated affiliates
4,623 
4,460 
Total Equity
1,011,492 
1,088,222 
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Equity
3,171,907 
2,871,835 
Highwoods Realty Limited Partnership [Member]
 
 
Real estate assets, at cost:
 
 
Land
368,948 
345,088 
Buildings and tenant improvements
3,115,149 
2,883,092 
Development in process
7,576 
4,524 
Land held for development
106,975 
107,101 
Total real estate assets
3,598,648 
3,339,805 
Less-accumulated depreciation
(878,702)
(830,153)
Net real estate assets
2,719,946 
2,509,652 
For-sale residential condominiums
4,995 
8,225 
Real estate and other assets, net, held for sale
0 
13,607 
Cash and cash equivalents
11,023 
14,198 
Restricted cash
23,230 
4,399 
Accounts receivable, net of allowance of $3,581 and $3,595, respectively
23,443 
20,716 
Mortgages and notes receivable, net of allowance of $545 and $868, respectively
18,706 
19,044 
Accrued straight-line rents receivable, net of allowance of $1,366 and $2,209, respectively
102,338 
93,178 
Investment in and advances to unconsolidated affiliates
98,784 
62,451 
Deferred financing and leasing costs, net of accumulated amortization of $60,950 and $59,360, respectively
129,311 
85,001 
Prepaid expenses and other assets
38,896 
40,200 
Total Assets
3,170,672 
2,870,671 
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Liabilities, Redeemable Operating Partnership Units and Equity:
 
 
Mortgages and notes payable
1,893,981 
1,522,945 
Accounts payable, accrued expenses and other liabilities
127,664 
106,716 
Financing obligations
32,775 
33,114 
Total Liabilities
2,054,420 
1,662,775 
Commitments and contingencies
 
 
Redeemable Operating Partnership Units:
 
 
Common Units, 3,750,679 and 3,793,987 outstanding, respectively
105,995 
120,838 
Total Redeemable Operating Partnership Units
135,072 
202,430 
Equity:
 
 
General partner Common Units, 759,213 and 750,757 outstanding, respectively
9,800 
10,044 
Limited partner Common Units, 71,411,359 and 70,530,921 outstanding, respectively
970,363 
994,610 
Accumulated other comprehensive loss
(3,606)
(3,648)
Noncontrolling interests in consolidated affiliates
4,623 
4,460 
Total Equity
981,180 
1,005,466 
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity/Total Liabilities, Redeemable Operating Partnership Units and Equity
3,170,672 
2,870,671 
8.625% Series A Cumulative Redeemable Preferred Stock [Member]
 
 
Equity:
 
 
Preferred Stock
29,077 
29,092 
8.000% Series B Cumulative Redeemable Preferred Stock [Member]
 
 
Equity:
 
 
Preferred Stock
0 
52,500 
Series A Preferred Units [Member]
 
 
Redeemable Operating Partnership Units:
 
 
Preferred Units
29,077 
29,092 
Series B Preferred Units [Member]
 
 
Redeemable Operating Partnership Units:
 
 
Preferred Units
$ 0 
$ 52,500 
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands, except Share data
Sep. 30, 2011
Dec. 31, 2010
Assets:
 
 
Accounts receivable allowance
$ 3,581 
$ 3,595 
Mortgages and notes receivable allowance
545 
868 
Accrued straight-line rents receivable allowance
1,366 
2,209 
Deferred financing and leasing costs, accumulated amortization
60,950 
59,360 
Equity:
 
 
Preferred Stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Preferred Stock, authorized shares (in shares)
50,000,000 
50,000,000 
Common Stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common Stock, authorized shares (in shares)
200,000,000 
200,000,000 
Common Stock, shares issued (in shares)
72,579,381 
71,690,487 
Common Stock, shares outstanding (in shares)
72,579,381 
71,690,487 
Highwoods Realty Limited Partnership [Member]
 
 
Assets:
 
 
Accounts receivable allowance
3,581 
3,595 
Mortgages and notes receivable allowance
545 
868 
Accrued straight-line rents receivable allowance
1,366 
2,209 
Deferred financing and leasing costs, accumulated amortization
$ 60,950 
$ 59,360 
Redeemable Operating Partnership Units:
 
 
Redeemable Common Units, outstanding (in shares)
3,750,679 
3,793,987 
Common Units: [Abstract]
 
 
General Partner Common Units, outstanding (in shares)
759,213 
750,757 
Limited Partner Common Units, outstanding (in shares)
71,411,359 
70,530,921 
8.625% Series A Cumulative Redeemable Preferred Stock [Member]
 
 
Equity:
 
 
Preferred stock, liquidation preference (in dollars per share)
$ 1,000 
$ 1,000 
Preferred stock, shares issued (in shares)
29,077 
29,092 
Preferred stock, shares outstanding (in shares)
29,077 
29,092 
8.000% Series B Cumulative Redeemable Preferred Stock [Member]
 
 
Equity:
 
 
Preferred stock, liquidation preference (in dollars per share)
$ 25 
$ 25 
Preferred stock, shares issued (in shares)
0 
2,100,000 
Preferred stock, shares outstanding (in shares)
0 
2,100,000 
Series A Preferred Units [Member]
 
 
Redeemable Operating Partnership Units:
 
 
Preferred Units, liquidation preference (in dollars per share)
$ 1,000 
$ 1,000 
Preferred Units, issued (in shares)
29,077 
29,092 
Preferred Units, outstanding (in shares)
29,077 
29,092 
Series B Preferred Units [Member]
 
 
Redeemable Operating Partnership Units:
 
 
Preferred Units, liquidation preference (in dollars per share)
$ 25 
$ 25 
Preferred Units, issued (in shares)
0 
2,100,000 
Preferred Units, outstanding (in shares)
0 
2,100,000 
Consolidated Statements of Income (Unaudited) (USD $)
In Thousands, except Per Share data
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Rental and other revenues
$ 122,086 
$ 115,528 
$ 354,122 
$ 343,796 
Operating expenses:
 
 
 
 
Rental property and other expenses
46,019 
43,339 
128,360 
122,986 
Depreciation and amortization
36,320 
34,183 
103,467 
100,081 
Impairment of assets held for use
2,429 
0 
2,429 
0 
General and administrative
12,212 
8,882 
27,983 
24,369 
Total operating expenses
96,980 
86,404 
262,239 
247,436 
Interest expense:
 
 
 
 
Contractual
23,356 
22,020 
68,727 
65,527 
Amortization of deferred financing costs
806 
858 
2,448 
2,528 
Financing obligations
228 
460 
665 
1,330 
Total interest expense
24,390 
23,338 
71,840 
69,385 
Other income:
 
 
 
 
Interest and other income
1,505 
1,709 
5,277 
4,374 
Loss on debt extinguishment
0 
(85)
(24)
(85)
Total other income
1,505 
1,624 
5,253 
4,289 
Income from continuing operations before disposition of property, condominiums and investment in unconsolidated affiliates and equity in earnings of unconsolidated affiliates
2,221 
7,410 
25,296 
31,264 
Gains on disposition of property
262 
19 
462 
55 
Gains/(losses) on for-sale residential condominiums
(476)
54 
(322)
407 
Gains on disposition of investment in unconsolidated affiliates
2,282 
0 
2,282 
25,330 
Equity in earnings of unconsolidated affiliates
1,113 
1,018 
3,933 
2,701 
Income from continuing operations
5,402 
8,501 
31,651 
59,757 
Discontinued operations:
 
 
 
 
Income from discontinued operations
269 
272 
897 
1,233 
Net gains/(losses) on disposition of discontinued operations
2,573 
0 
2,573 
(86)
Total discontinued operations
2,842 
272 
3,470 
1,147 
Net income
8,244 
8,773 
35,121 
60,904 
Net (income) attributable to noncontrolling interests in the Operating Partnership
(366)
(366)
(1,496)
(2,819)
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates
(249)
148 
(554)
(281)
Dividends on Preferred Stock
(627)
(1,677)
(3,926)
(5,031)
Excess of Preferred Stock redemption/repurchase cost over carrying value
0 
0 
(1,895)
0 
Net income available for common stockholders
7,002 
6,878 
27,250 
52,773 
Earnings per Common Share - basic:
 
 
 
 
Income from continuing operations available for common stockholders (in dollars per share)
$ 0.06 
$ 0.10 
$ 0.33 
$ 0.72 
Income from discontinued operations available for common stockholders (in dollars per share)
$ 0.04 
$ 0 
$ 0.05 
$ 0.02 
Net income available for common stockholders (in dollars per share)
$ 0.10 
$ 0.10 
$ 0.38 
$ 0.74 
Weighted average Common Shares outstanding - basic (in shares)
72,492 
71,631 
72,176 
71,549 
Earnings per Common Share - diluted:
 
 
 
 
Income from continuing operations available for common stockholders (in dollars per share)
$ 0.06 
$ 0.10 
$ 0.33 
$ 0.72 
Income from discontinued operations available for common stockholders (in dollars per share)
$ 0.04 
$ 0 
$ 0.05 
$ 0.02 
Net income available for common stockholders (in dollars per share)
$ 0.10 
$ 0.10 
$ 0.38 
$ 0.74 
Weighted average Common Shares outstanding - diluted (in shares)
76,402 1
75,638 1
76,127 1
75,537 1
Dividends declared per Common Share (in dollars per share)
$ 0.425 
$ 0.425 
$ 1.275 
$ 1.275 
Net income available for common stockholders:
 
 
 
 
Income from continuing operations available for common stockholders
4,301 
6,620 
23,953 
51,684 
Income from discontinued operations available for common stockholders
2,701 
258 
3,297 
1,089 
Net income available for common stockholders
7,002 
6,878 
27,250 
52,773 
Highwoods Realty Limited Partnership [Member]
 
 
 
 
Rental and other revenues
122,086 
115,528 
354,122 
343,796 
Operating expenses:
 
 
 
 
Rental property and other expenses
45,951 
43,339 
128,378 
122,776 
Depreciation and amortization
36,320 
34,183 
103,467 
100,081 
Impairment of assets held for use
2,429 
0 
2,429 
0 
General and administrative
12,280 
8,882 
27,965 
24,579 
Total operating expenses
96,980 
86,404 
262,239 
247,436 
Interest expense:
 
 
 
 
Contractual
23,356 
22,020 
68,727 
65,527 
Amortization of deferred financing costs
806 
858 
2,448 
2,528 
Financing obligations
228 
460 
665 
1,330 
Total interest expense
24,390 
23,338 
71,840 
69,385 
Other income:
 
 
 
 
Interest and other income
1,505 
1,709 
5,277 
4,374 
Loss on debt extinguishment
0 
(85)
(24)
(85)
Total other income
1,505 
1,624 
5,253 
4,289 
Income from continuing operations before disposition of property, condominiums and investment in unconsolidated affiliates and equity in earnings of unconsolidated affiliates
2,221 
7,410 
25,296 
31,264 
Gains on disposition of property
262 
19 
462 
55 
Gains/(losses) on for-sale residential condominiums
(476)
54 
(322)
407 
Gains on disposition of investment in unconsolidated affiliates
2,282 
0 
2,282 
25,330 
Equity in earnings of unconsolidated affiliates
1,113 
1,033 
3,945 
2,705 
Income from continuing operations
5,402 
8,516 
31,663 
59,761 
Discontinued operations:
 
 
 
 
Income from discontinued operations
269 
272 
897 
1,233 
Net gains/(losses) on disposition of discontinued operations
2,573 
0 
2,573 
(86)
Total discontinued operations
2,842 
272 
3,470 
1,147 
Net income
8,244 
8,788 
35,133 
60,908 
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates
(249)
148 
(554)
(281)
Distributions on Preferred Units
(627)
(1,677)
(3,926)
(5,031)
Excess of Preferred Unit redemption/repurchase cost over carrying value
0 
0 
(1,895)
0 
Net income available for common unitholders
7,368 
7,259 
28,758 
55,596 
Earnings per Common Unit - basic:
 
 
 
 
Income from continuing operations available for common unitholders (in dollars per share)
$ 0.06 
$ 0.10 
$ 0.33 
$ 0.72 
Income from discontinued operations available for common unitholders (in dollars per share)
$ 0.04 
$ 0 
$ 0.05 
$ 0.02 
Net income available for common unitholders (in dollars per share)
$ 0.10 
$ 0.10 
$ 0.38 
$ 0.74 
Weighted average Common Units outstanding - basic (in shares)
75,855 
75,019 
75,549 
74,945 
Earnings per Common Unit - diluted:
 
 
 
 
Income from continuing operations available for common unitholders (in dollars per share)
$ 0.06 
$ 0.10 
$ 0.33 
$ 0.72 
Income from discontinued operations available for common unitholders (in dollars per share)
$ 0.04 
$ 0 
$ 0.05 
$ 0.02 
Net income available for common unitholders (in dollars per share)
$ 0.10 
$ 0.10 
$ 0.38 
$ 0.74 
Weighted average Common Units outstanding - diluted (in shares)
75,993 
75,229 
75,718 
75,128 
Distributions declared per Common Unit (in dollars per share)
$ 0.425 
$ 0.425 
$ 1.275 
$ 1.275 
Net income available for common unitholders:
 
 
 
 
Income from continuing operations available for common unitholders
4,526 
6,987 
25,288 
54,449 
Income from discontinued operations available for common unitholders
2,842 
272 
3,470 
1,147 
Net income available for common unitholders
$ 7,368 
$ 7,259 
$ 28,758 
$ 55,596 
Consolidated Statements of Equity (Unaudited) (USD $)
In Thousands, except Share data
Total
Common Stock [Member]
Series A Cumulative Redeemable Preferred Shares [Member]
Series B Cumulative Redeemable Preferred Shares [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Noncontrolling Interests in Consolidated Affiliates [Member]
Distributions in Excess of Net Income Available for Common Stockholders [Member]
Highwoods Realty Limited Partnership [Member]
Highwoods Realty Limited Partnership [Member]
General Partner Common Units [Member]
Highwoods Realty Limited Partnership [Member]
Limited Partner Common Units [Member]
Highwoods Realty Limited Partnership [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Highwoods Realty Limited Partnership [Member]
Noncontrolling Interests in Consolidated Affiliates [Member]
Balance at Dec. 31, 2009
$ 1,133,143 
$ 713 
$ 29,092 
$ 52,500 
$ 1,751,398 
$ (3,811)
$ 5,183 
$ (701,932)
$ 1,050,185 
$ 10,485 
$ 1,038,328 
$ (3,811)
$ 5,183 
Balance (in shares) at Dec. 31, 2009
 
71,285,303 
 
 
 
 
 
 
 
 
 
 
 
Issuance of Common Units, net
 
 
 
 
 
 
 
 
2,076 
21 
2,055 
 
 
Distributions on Preferred Units
 
 
 
 
 
 
 
 
(5,031)
(50)
(4,981)
 
 
Distributions on Common Units
 
 
 
 
 
 
 
 
(95,533)
(956)
(94,577)
 
 
Issuances of Common Stock - Shares
 
112,815 
 
 
 
 
 
 
 
 
 
 
 
Issuances of Common Stock, net
2,076 
1 
 
 
2,075 
 
 
 
 
 
 
 
 
Conversion of Common Units to Common Stock - Shares
 
93,971 
 
 
 
 
 
 
 
 
 
 
 
Conversion of Common Units to Common Stock
2,958 
1 
 
 
2,957 
 
 
 
 
 
 
 
 
Dividends on Common Stock
(91,197)
 
 
 
 
 
 
(91,197)
 
 
 
 
 
Dividends on Preferred Stock
(5,031)
 
 
 
 
 
 
(5,031)
 
 
 
 
 
Adjustment of noncontrolling interests in the Operating Partnership to fair value
1,480 
 
 
 
1,480 
 
 
 
 
 
 
 
 
Distributions to noncontrolling interests in consolidated affiliates
(506)
 
 
 
 
 
(506)
 
(506)
 
 
 
(506)
Issuances of restricted stock, net - Shares
 
164,143 
 
 
 
 
 
 
 
 
 
 
 
Issuances of restricted stock, net
0 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation expense
5,060 
2 
 
 
5,058 
 
 
 
5,060 
51 
5,009 
 
 
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner
 
 
 
 
 
 
 
 
6,132 
61 
6,071 
 
 
Net (income) attributable to noncontrolling interests in the Operating Partnership
(2,819)
 
 
 
 
 
 
(2,819)
 
 
 
 
 
Net (income) attributable to noncontrolling interests in consolidated affiliates
0 
 
 
 
 
 
281 
(281)
0 
(3)
(278)
 
281 
Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
60,904 
 
 
 
 
 
 
60,904 
60,908 
609 
60,299 
 
 
Other comprehensive income
836 
 
 
 
 
836 
 
 
836 
 
 
836 
 
Total comprehensive income
61,740 
 
 
 
 
 
 
 
61,744 
 
 
 
 
Balance at Sep. 30, 2010
1,106,904 
717 
29,092 
52,500 
1,762,968 
(2,975)
4,958 
(740,356)
1,024,127 
10,218 
1,011,926 
(2,975)
4,958 
Balance (in shares) at Sep. 30, 2010
 
71,656,232 
 
 
 
 
 
 
 
 
 
 
 
Balance at Jun. 30, 2010
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation expense
1,600 
 
 
 
 
 
 
 
 
 
 
 
 
Net (income) attributable to noncontrolling interests in the Operating Partnership
(366)
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
8,773 
 
 
 
 
 
 
 
8,788 
 
 
 
 
Other comprehensive income
300 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income
9,073 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at Sep. 30, 2010
1,106,904 
 
29,092 
52,500 
 
 
 
 
1,024,127 
 
 
 
 
Balance at Dec. 31, 2010
1,088,222 
717 
29,092 
52,500 
1,766,886 
(3,648)
4,460 
(761,785)
1,005,466 
10,044 
994,610 
(3,648)
4,460 
Balance (in shares) at Dec. 31, 2010
71,690,487 
71,690,487 
 
 
 
 
 
 
 
 
 
 
 
Issuance of Common Units, net
 
 
 
 
 
 
 
 
22,043 
220 
21,823 
 
 
Distributions on Preferred Units
 
 
 
 
 
 
 
 
(3,926)
(39)
(3,887)
 
 
Distributions on Common Units
 
 
 
 
 
 
 
 
(96,197)
(962)
(95,235)
 
 
Issuances of Common Stock - Shares
 
711,234 
 
 
 
 
 
 
 
 
 
 
 
Issuances of Common Stock, net
22,043 
7 
 
 
22,036 
 
 
 
 
 
 
 
 
Conversion of Common Units to Common Stock - Shares
 
43,308 
 
 
 
 
 
 
 
 
 
 
 
Conversion of Common Units to Common Stock
1,344 
 
 
 
1,344 
 
 
 
 
 
 
 
 
Dividends on Common Stock
(91,900)
 
 
 
 
 
 
(91,900)
 
 
 
 
 
Dividends on Preferred Stock
(3,926)
 
 
 
 
 
 
(3,926)
 
 
 
 
 
Adjustment of noncontrolling interests in the Operating Partnership to fair value
10,177 
 
 
 
10,177 
 
 
 
 
 
 
 
 
Distributions to noncontrolling interests in consolidated affiliates
(391)
 
 
 
 
 
(391)
 
(391)
 
 
 
(391)
Issuances of restricted stock, net - Shares
 
134,352 
 
 
 
 
 
 
 
 
 
 
 
Issuances of restricted stock, net
0 
 
 
 
 
 
 
 
 
 
 
 
 
Redemptions/repurchases of Preferred Stock
(52,515)
 
(15)
(52,500)
1,895 
 
 
(1,895)
 
 
 
 
 
Share-based compensation expense
4,771 
2 
 
 
4,769 
 
 
 
4,771 
48 
4,723 
 
 
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner
 
 
 
 
 
 
 
 
14,239 
144 
14,095 
 
 
Net (income) attributable to noncontrolling interests in the Operating Partnership
(1,496)
 
 
 
 
 
 
(1,496)
 
 
 
 
 
Net (income) attributable to noncontrolling interests in consolidated affiliates
0 
 
 
 
 
 
554 
(554)
0 
(6)
(548)
 
554 
Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
35,121 
 
 
 
 
 
 
35,121 
35,133 
351 
34,782 
 
 
Other comprehensive income
42 
 
 
 
 
42 
 
 
42 
 
 
42 
 
Total comprehensive income
35,163 
 
 
 
 
 
 
 
35,175 
 
 
 
 
Balance at Sep. 30, 2011
1,011,492 
726 
29,077 
0 
1,807,107 
(3,606)
4,623 
(826,435)
981,180 
9,800 
970,363 
(3,606)
4,623 
Balance (in shares) at Sep. 30, 2011
72,579,381 
72,579,381 
 
 
 
 
 
 
 
 
 
 
 
Balance at Jun. 30, 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation expense
1,300 
 
 
 
 
 
 
 
 
 
 
 
 
Net (income) attributable to noncontrolling interests in the Operating Partnership
(366)
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
8,244 
 
 
 
 
 
 
 
8,244 
 
 
 
 
Other comprehensive income
570 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income
8,814 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at Sep. 30, 2011
$ 1,011,492 
 
 
 
 
 
 
 
$ 981,180 
 
 
 
 
Balance (in shares) at Sep. 30, 2011
72,579,381 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands
9 Months Ended
Sep. 30,
2011
2010
Operating activities:
 
 
Net income
$ 35,121 
$ 60,904 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
103,594 
100,728 
Amortization of lease incentives and acquisition-related intangible assets and liabilities
1,347 
807 
Share-based compensation expense
4,771 
5,060 
Allowance for losses on accounts and accrued straight-line rents receivable
1,586 
3,605 
Amortization of deferred financing costs
2,448 
2,528 
Amortization of settled cash-flow hedges
(87)
262 
Impairment of assets held for use
2,429 
0 
Loss on debt extinguishment
24 
85 
Net (gains)/losses on disposition of property
(3,035)
31 
(Gains)/losses on for-sale residential condominiums
322 
(407)
Gains on disposition of investment in unconsolidated affiliates
(2,282)
(25,330)
Equity in earnings of unconsolidated affiliates
(3,933)
(2,701)
Changes in financing obligations
(339)
103 
Distributions of earnings from unconsolidated affiliates
3,400 
2,933 
Changes in operating assets and liabilities:
 
 
Accounts receivable
(3,493)
(4,689)
Prepaid expenses and other assets
(586)
(195)
Accrued straight-line rents receivable
(9,280)
(8,477)
Accounts payable, accrued expenses and other liabilities
4,118 
7,407 
Net cash provided by operating activities
136,125 
142,654 
Investing activities:
 
 
Additions to real estate assets and deferred leasing costs
(150,558)
(66,370)
Net proceeds from disposition of real estate assets
16,530 
6,801 
Net proceeds from disposition of for-sale residential condominiums
2,770 
3,732 
Proceeds from disposition of investment in unconsolidated affiliates
4,756 
15,000 
Distributions of capital from unconsolidated affiliates
1,304 
1,591 
Repayments of mortgages and notes receivable
338 
231 
Investment in and advances to unconsolidated affiliates
(39,665)
(907)
Changes in restricted cash and other investing activities
(15,598)
2,396 
Net cash used in investing activities
(180,123)
(37,526)
Financing activities:
 
 
Dividends on Common Stock
(91,900)
(91,197)
Redemptions/repurchases of Preferred Stock
(52,515)
0 
Dividends on Preferred Stock
(3,926)
(5,031)
Distributions to noncontrolling interests in the Operating Partnership
(4,818)
(4,857)
Distributions to noncontrolling interests in consolidated affiliates
(391)
(506)
Net proceeds from the issuance of Common Stock
22,043 
2,076 
Borrowings on revolving credit facility
285,400 
4,000 
Repayments of revolving credit facility
(150,400)
(4,000)
Borrowings on mortgages and notes payable
200,000 
10,368 
Repayments of mortgages and notes payable
(156,602)
(18,205)
Additions to deferred financing costs and other financing activities
(6,011)
(506)
Net cash provided by/(used in) financing activities
40,880 
(107,858)
Net decrease in cash and cash equivalents
(3,118)
(2,730)
Cash and cash equivalents at beginning of the period
14,206 
23,699 
Cash and cash equivalents at end of the period
11,088 
20,969 
Supplemental disclosure of cash flow information:
 
 
Cash paid for interest, net of amounts capitalized
69,321 
66,435 
Supplemental disclosure of non-cash investing and financing activities:
 
 
Conversion of Common Units to Common Stock
1,344 
2,958 
Change in accrued capital expenditures
3,707 
890 
Write-off of fully depreciated real estate assets
39,039 
34,703 
Write-off of fully amortized deferred financing and leasing costs
13,683 
11,521 
Unrealized gains/(losses) on marketable securities of non-qualified deferred compensation plan
(354)
489 
Settlement of financing obligation
0 
4,184 
Adjustment of noncontrolling interests in the Operating Partnership to fair value
(10,177)
(1,480)
Unrealized gain on tax increment financing bond
129 
471 
Mortgages receivable from seller financing
0 
17,030 
Assumption of mortgages and notes payable related to acquisition activities
192,367 
40,306 
Highwoods Realty Limited Partnership [Member]
 
 
Operating activities:
 
 
Net income
35,133 
60,908 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
103,594 
100,728 
Amortization of lease incentives and acquisition-related intangible assets and liabilities
1,347 
807 
Share-based compensation expense
4,771 
5,060 
Allowance for losses on accounts and accrued straight-line rents receivable
1,586 
3,605 
Amortization of deferred financing costs
2,448 
2,528 
Amortization of settled cash-flow hedges
(87)
262 
Impairment of assets held for use
2,429 
0 
Loss on debt extinguishment
24 
85 
Net (gains)/losses on disposition of property
(3,035)
31 
(Gains)/losses on for-sale residential condominiums
322 
(407)
Gains on disposition of investment in unconsolidated affiliates
(2,282)
(25,330)
Equity in earnings of unconsolidated affiliates
(3,945)
(2,705)
Changes in financing obligations
(339)
103 
Distributions of earnings from unconsolidated affiliates
3,382 
2,887 
Changes in operating assets and liabilities:
 
 
Accounts receivable
(3,493)
(4,689)
Prepaid expenses and other assets
(542)
(177)
Accrued straight-line rents receivable
(9,280)
(8,477)
Accounts payable, accrued expenses and other liabilities
4,118 
7,407 
Net cash provided by operating activities
136,151 
142,626 
Investing activities:
 
 
Additions to real estate assets and deferred leasing costs
(150,558)
(66,370)
Net proceeds from disposition of real estate assets
16,530 
6,801 
Net proceeds from disposition of for-sale residential condominiums
2,770 
3,732 
Proceeds from disposition of investment in unconsolidated affiliates
4,756 
15,000 
Distributions of capital from unconsolidated affiliates
1,304 
1,591 
Repayments of mortgages and notes receivable
338 
231 
Investment in and advances to unconsolidated affiliates
(39,665)
(907)
Changes in restricted cash and other investing activities
(15,598)
2,398 
Net cash used in investing activities
(180,123)
(37,524)
Financing activities:
 
 
Distributions on Common Units
(96,197)
(95,533)
Redemptions/repurchases of Preferred Units
(52,515)
0 
Distributions on Preferred Units
(3,926)
(5,031)
Distributions to noncontrolling interests in consolidated affiliates
(391)
(506)
Net proceeds from the issuance of Common Units
22,043 
2,076 
Borrowings on revolving credit facility
285,400 
4,000 
Repayments of revolving credit facility
(150,400)
(4,000)
Borrowings on mortgages and notes payable
200,000 
10,368 
Repayments of mortgages and notes payable
(156,602)
(18,205)
Additions to deferred financing costs and other financing activities
(6,615)
(853)
Net cash provided by/(used in) financing activities
40,797 
(107,684)
Net decrease in cash and cash equivalents
(3,175)
(2,582)
Cash and cash equivalents at beginning of the period
14,198 
23,519 
Cash and cash equivalents at end of the period
11,023 
20,937 
Supplemental disclosure of cash flow information:
 
 
Cash paid for interest, net of amounts capitalized
69,321 
66,435 
Supplemental disclosure of non-cash investing and financing activities:
 
 
Change in accrued capital expenditures
3,707 
890 
Write-off of fully depreciated real estate assets
39,039 
34,703 
Write-off of fully amortized deferred financing and leasing costs
13,683 
11,521 
Unrealized gains/(losses) on marketable securities of non-qualified deferred compensation plan
(354)
489 
Settlement of financing obligation
0 
4,184 
Adjustment of Redeemable Common Units to fair value
(14,843)
(6,476)
Unrealized gain on tax increment financing bond
129 
471 
Mortgages receivable from seller financing
0 
17,030 
Assumption of mortgages and notes payable related to acquisition activities
$ 192,367 
$ 40,306 
Description of Business and Significant Accounting Policies
Description of Business and Significant Accounting Policies
1.      Description of Business and Significant Accounting Policies

Description of Business

The Company is a fully-integrated, self-administered and self-managed equity 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 virtually all of its activities through the Operating Partnership. At September 30, 2011, the Company and/or the Operating Partnership wholly owned: 302 in-service office, industrial and retail properties, comprising 29.2 million square feet; 96 rental residential units; 18 for-sale residential condominiums; 601 acres of undeveloped land suitable for future development, of which 523 acres are considered core holdings; and an additional office property that is considered completed but not yet stabilized.

The Company is the sole general partner of the Operating Partnership. At September 30, 2011, the Company owned all of the Preferred Units and 72.2 million, or 95.1%, of the Common Units. Limited partners (including one officer and two directors of the Company) own the remaining 3.8 million Common Units. Generally, the Operating Partnership is obligated to redeem each Common Unit at the request of the holder thereof for cash equal to the value of one share of Common Stock, $.01 par value, based on the average of the market price for the 10 trading days immediately preceding the notice date of such redemption provided that the Company, at its option, may elect to acquire any such Common Units presented for redemption for cash or one share of Common Stock. The Common Units owned by the Company are not redeemable. During the nine months ended September 30, 2011, the Company redeemed 43,308 Common Units for a like number of shares of Common Stock.

Common Stock Offering

We have entered into equity sales agreements with various financial institutions to offer and sell, from time to time, shares of our Common Stock by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices or as otherwise agreed with any of the institutions. During the third quarter of 2011, we issued 142,000 shares of Common Stock under these agreements at an average price of $34.21 per share raising net proceeds, after sales commissions and expenses, of $4.8 million.

Basis of Presentation

Our Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Our Consolidated Statements of Income for the three and nine months ended September 30, 2010 were revised from previously reported amounts to reflect those properties sold or held for sale which required discontinued operations presentation.

Our Consolidated Financial Statements include the Operating Partnership, wholly owned subsidiaries and those entities in which we have the controlling financial interest. All significant intercompany transactions and accounts have been eliminated. At September 30, 2011 and December 31, 2010, we were not involved with any entities that were determined to be variable interest entities.

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 omitted certain notes and other information from the interim consolidated financial statements presented in this Quarterly Report on Form 10-Q as permitted by SEC rules and regulations. These Consolidated Financial Statements should be read in conjunction with our 2010 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 the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Recently Issued Accounting Standards

Beginning with our Quarterly Report on Form 10-Q for the three months ended March 31, 2012, we will be required to enhance our disclosure of assets and liabilities measured at fair value. This includes disclosing any significant transfers between Levels 1 and 2 of the fair value hierarchy, additional quantitative and qualitative information regarding fair value measurements categorized as Level 3 of the fair value hierarchy and the hierarchy classification for items whose fair value is not recorded on our Consolidated Balance Sheets but is disclosed in our Notes to Consolidated Financial Statements. Additionally, we will be required to present comprehensive income on the face of our Consolidated Statements of Income, which previously has been disclosed in our Notes to Consolidated Financial Statements.
Real Estate Assets
Real Estate Assets
2.      Real Estate Assets

Acquisitions

In the third quarter of 2011, we acquired a six-building, 1.54 million square foot office complex in Pittsburgh, PA for a purchase price of $188.5 million. The purchase price included the assumption of secured debt recorded at fair value of $124.5 million, with an effective interest rate of 4.27%, including amortization of deferred financing costs. This debt matures in November 2017. We expensed $4.0 million of costs related to this acquisition, which are included in general and administrative expense for the three and nine months ended September 30, 2011.

In the third quarter of 2011, we also acquired a 503,000 square foot office building in Atlanta, GA for a purchase price of $78.3 million. The purchase price included the assumption of secured debt recorded at fair value of $67.9 million, with an effective interest rate of 5.45%, including amortization of deferred financing costs. This debt matures in January 2014. We expensed $0.3 million of costs related to this acquisition, which are included in general and administrative expense for the three and nine months ended September 30, 2011.

The assets acquired and liabilities assumed were recorded at preliminary estimates of fair value as determined by management based on information available at the acquisition date and on current assumptions as to future operations. These estimates are subject to change during the measurement period upon the completion of acquisition accounting, including the finalization of asset valuations. The following table sets forth a summary of the preliminary acquisition purchase price consideration for each major class of assets acquired and liabilities assumed in the acquisitions discussed above:

   
Total
Purchase Price Consideration
 
Real estate assets
 
$
241,602
 
Acquisition-related intangible assets (in deferred financing and leasing costs)
   
39,721
 
Furniture, fixtures and equipment (in prepaid expenses and other assets)
   
1,101
 
Acquisition-related intangible liabilities (in accounts payable, accrued expenses and other liabilities)
   
(15,627
)
Total consideration
 
$
266,797
 
 
The following tables set forth our rental and other revenues and net income, adjusted for interest expense and depreciation and amortization related to purchase price allocation, assuming the acquisitions discussed above both occurred as of the beginning of each annual reporting period:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Proforma rental and other revenues
 
$
133,669
 
$
129,590
 
$
393,640
 
$
385,400
 
Proforma net income
 
$
7,568
 
$
8,180
 
$
32,823
 
$
59,124
 
Proforma earnings per share - basic
 
$
0.09
 
$
0.09
 
$
0.34
 
$
0.71
 
Proforma earnings per share - diluted
 
$
0.09
 
$
0.09
 
$
0.34
 
$
0.71
 

Dispositions

During the third quarter of 2011, we sold an office property and adjacent land parcel in one transaction in Winston-Salem, NC for gross proceeds of $15.0 million. We recorded gain on disposition of discontinued operations of $2.6 million and gain on disposition of property of $0.3 million related to the office property and land, respectively, in the third quarter of 2011.

Impairments

We recorded impairment of assets held for use of $2.4 million in the third quarter of 2011 on two office properties located in Orlando, FL due to a change in the assumed timing of future disposition. Impairments can arise from a number of factors; accordingly, there can be no assurances that we will not be required to record additional impairment charges in the future.
Mortgages and Notes Receivable
Mortgages and Notes Receivable
3.      Mortgages and Notes Receivable

The following table sets forth our mortgages and notes receivable:

   
September 30,
2011
 
December 31,
2010
 
Seller financing (first mortgages)
 
$
17,180
 
$
17,180
 
Less allowance
   
—
   
—
 
     
17,180
   
17,180
 
Promissory notes
   
2,071
   
2,732
 
Less allowance
   
(545
)
 
(868
)
     
1,526
   
1,864
 
Mortgages and notes receivable, net
 
$
18,706
 
$
19,044
 

The following table sets forth our notes receivable allowance, which relates only to promissory notes:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Beginning notes receivable allowance
 
$
617
 
$
771
 
$
868
 
$
698
 
Bad debt expense
   
—
   
240
   
184
   
328
 
Write-offs
   
(1
)
 
(6
)
 
(365
)
 
(11
)
Recoveries/other
   
(71
)
 
(55
)
 
(142
)
 
(65
)
Total notes receivable allowance
 
$
545
 
$
950
 
$
545
 
$
950
 

Our mortgages and notes receivable consists primarily of seller financing issued in conjunction with two disposition transactions in the second quarter of 2010. As of September 30, 2011, the contractual payments on both mortgages receivable were current and there were no indications of impairment on the receivables.
Investment in and Advances to Unconsolidated Affiliates
Investment In and Advances To Affiliates
4.      Investment in and Advances to Unconsolidated Affiliates

We have equity interests of 50.0% or less in various joint ventures with unrelated third parties and a debt interest in one of those joint ventures, as described below. The following table sets forth the combined, summarized income statements for our unconsolidated joint ventures:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Income Statements:
                         
Revenues                                                                      
 
$
25,623
 
$
26,517
 
$
75,619
 
$
93,819
 
Expenses:
                         
Rental property and other expenses
   
10,805
   
12,664
   
33,576
   
45,463
 
Depreciation and amortization
   
6,759
   
6,730
   
19,670
   
24,108
 
Interest expense
   
5,976
   
6,094
   
17,841
   
21,892
 
Total expenses
   
23,540
   
25,488
   
71,087
   
91,463
 
Net income
 
$
2,083
 
$
1,029
 
$
4,532
 
$
2,356
 
Our share of:
                         
Depreciation and amortization of real estate assets
 
$
2,066
 
$
2,115
 
$
6,192
 
$
8,193
 
Interest expense
 
$
1,965
 
$
2,190
 
$
6,159
 
$
8,368
 
Net income
 
$
442
 
$
432
 
$
2,112
 
$
952
 
                           
Our share of net income
 
$
442
 
$
432
 
$
2,112
 
$
952
 
Purchase accounting and management, leasing and other fees adjustments
   
671
   
586
   
1,821
   
1,749
 
Equity in earnings of unconsolidated affiliates
 
$
1,113
 
$
1,018
 
$
3,933
 
$
2,701
 

In the third quarter of 2011, our joint venture partner exercised its option to acquire our 10.0% equity interest in the HIW Development B, LLC joint venture, which recently completed construction of a build-to-suit office property in Charlotte, NC. As a result, we received gross proceeds of $4.8 million and recorded a gain on disposition of investment in unconsolidated affiliate related to this merchant build project of $2.3 million in the third quarter of 2011.
Intangible Assets and Liabilities
Intangible Assets and Liabilities
5.      Intangible Assets and Liabilities

The following table sets forth total intangible assets and liabilities, net of accumulated amortization:

   
September 30,
2011
 
December 31,
2010
 
Assets:
             
Deferred financing costs
 
$
19,168
 
$
16,412
 
Less accumulated amortization
   
(6,192
)
 
(7,054
)
     
12,976
   
9,358
 
Deferred leasing costs (including lease incentives and acquisition-related intangible assets)
   
171,093
   
127,949
 
Less accumulated amortization
   
(54,758
)
 
(52,306
)
     
116,335
   
75,643
 
Deferred financing and leasing costs, net
 
$
129,311
 
$
85,001
 
               
Liabilities (in accounts payable, accrued expenses and other liabilities):
             
Acquisition-related intangible liabilities
 
$
16,455
 
$
658
 
Less accumulated amortization
   
(425
)
 
(125
)
   
$
16,030
 
$
533
 

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

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Amortization of deferred financing costs
 
$
806
 
$
858
 
$
2,448
 
$
2,528
 
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)
 
$
5,188
 
$
3,912
 
$
13,945
 
$
11,495
 
Amortization of lease incentives (in rental and other revenues)
 
$
368
 
$
270
 
$
1,009
 
$
807
 
Amortization of acquisition-related intangible assets (in rental and other revenues)
 
$
240
 
$
200
 
$
618
 
$
318
 
Amortization of acquisition-related intangible liabilities (in rental and other revenues)
 
$
(229
)
$
(27
)
$
(280
)
$
(69
)

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

   
Amortization of Deferred Financing Costs
 
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 Liabilities (in Rental and Other Revenues)
 
October 1, 2011 through December 31, 2011
 
$
931
 
$
6,263
 
$
323
 
$
271
 
$
(141
)
2012                                                 
   
3,192
   
22,604
   
1,234
   
1,049
   
(556
)
2013                                                 
   
2,956
   
17,849
   
1,080
   
802
   
(542
)
2014                                                 
   
2,660
   
13,609
   
913
   
505
   
(467
)
2015                                                 
   
2,064
   
9,950
   
695
   
335
   
(421
)
Thereafter                                                 
   
1,173
   
35,214
   
2,536
   
1,103
   
(13,903
)
   
$
12,976
 
$
105,489
 
$
6,781
 
$
4,065
 
$
(16,030
)
 
The weighted average remaining amortization periods for deferred financing costs, deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization), lease incentives (in rental and other revenues), acquisition-related intangible assets (in rental and other revenues) and acquisition-related intangible liabilities (in rental and other revenues) were 3.9 years, 6.4 years, 8.1 years, 5.8 years and 8.8 years, respectively, as of September 30, 2011.

In connection with the acquisitions of office properties in Atlanta, GA and Pittsburgh, PA in the third quarter of 2011, we recorded $1.6 million of above market lease intangible assets, $38.1 million of in-place lease intangible assets and $15.6 million of below market lease intangible liabilities with weighted average amortization periods of 5.4 years, 6.7 years and 8.8 years, respectively.
Mortgages and Notes Payable
Mortgages and Notes Payable
6.      Mortgages and Notes Payable

The following table sets forth our consolidated mortgages and notes payable:

   
September 30,
2011
 
December 31,
2010
 
Secured indebtedness                                                                                                      
 
$
937,846
 
$
754,399
 
Unsecured indebtedness                                                                                                      
   
956,135
   
768,546
 
Total mortgages and notes payable
 
$
1,893,981
 
$
1,522,945
 

At September 30, 2011, our secured mortgage loans were secured by real estate assets with an aggregate undepreciated book value of $1.5 billion.

In the third quarter of 2011, we obtained a new $475.0 million unsecured revolving credit facility, which replaced our previously existing $400.0 million revolving credit facility. Our new revolving credit facility is originally scheduled to mature on July 27, 2015. Assuming no defaults have occurred, we have an option to extend the maturity for an additional year. The new credit facility includes an accordion feature that allows for an additional $75.0 million of borrowing capacity subject to additional lender commitments. The interest rate on the new facility at our current credit ratings is LIBOR plus 150 basis points and the annual facility fee is 35 basis points. The interest rate and facility fee under the new facility are based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s. The financial and other covenants under the new facility are substantially the same as our previous credit facility. There was $165.0 million and $347.0 million outstanding under our revolving credit facility at September 30, 2011 and October 20, 2011, respectively. At both September 30, 2011 and October 20, 2011, 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 September 30, 2011 and October 20, 2011 was $309.8 million and $127.8 million, respectively.

Our secured construction facility, which has $52.1 million outstanding at September 30, 2011, is scheduled to mature on December 20, 2011. Assuming no defaults have occurred, we have the option to extend the maturity date for an additional one-year period. The interest rate is LIBOR plus 85 basis points.

We are currently in compliance with the debt covenants and other requirements with respect to our outstanding debt.

Noncontrolling Interests
Noncontrolling Interests
7.      Noncontrolling Interests

Noncontrolling Interests in the Operating Partnership

Noncontrolling interests in the Operating Partnership relate to the ownership of Common Units by various individuals and entities other than the Company. The following table sets forth noncontrolling interests in the Operating Partnership:

   
Nine Months Ended
September 30,
 
   
2011
 
2010
 
Beginning noncontrolling interests in the Operating Partnership
 
$
120,838
 
$
129,769
 
Adjustments of noncontrolling interests in the Operating Partnership to fair value
   
(10,177
)
 
(1,480
)
Conversion of Common Units to Common Stock
   
(1,344
)
 
(2,958
)
Net income attributable to noncontrolling interests in the Operating Partnership
   
1,496
   
2,819
 
Distributions to noncontrolling interests in the Operating Partnership
   
(4,818
)
 
(4,857
)
Total noncontrolling interests in the Operating Partnership
 
$
105,995
 
$
123,293
 

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

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Net income available for common stockholders
 
$
7,002
 
$
6,878
 
$
27,250
 
$
52,773
 
Increase in additional paid in capital from conversion of Common Units to Common Stock
   
709
   
—
   
1,344
   
2,957
 
Change in equity from net income available for common stockholders and conversion of Common Units to Common Stock
 
$
7,711
 
$
6,878
 
$
28,594
 
$
55,730
 

Noncontrolling Interests in Consolidated Affiliates

At September 30, 2011, noncontrolling interests in consolidated affiliates relates to our joint venture partner’s 50.0% interest in office properties located in Richmond, VA. Our joint venture partner is an unrelated third party.
Disclosure About Fair Value of Financial Instruments
Disclosure About Fair Value of Financial Instruments
8.      Disclosure About Fair Value of Financial Instruments

The following summarizes the three levels of inputs that we use to measure fair value, as well as the assets, noncontrolling interests in the Operating Partnership and liabilities that we recognize at fair value using those levels of inputs.

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

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

We had no Level 2 assets or liabilities at both September 30, 2011 and December 31, 2010.

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 are our tax increment financing bond, which is not routinely traded but whose fair value is determined using an estimate of projected redemption value based on quoted bid/ask prices for similar unrated municipal bonds, and real estate assets recorded at fair value on a non-recurring basis as a result of our quarterly impairment analysis, which were valued using broker opinions of value, substantiated by internal cash flow analyses.

The following tables set forth the assets, noncontrolling interests in the Operating Partnership and liability that we measure at fair value by level within the fair value hierarchy. We determine the level based on the lowest level of substantive input used to determine fair value.

   
September 30,
2011
 
Level 1
 
Level 3
 
Assets:
                   
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
$
2,919
 
$
2,919
 
$
—
 
Tax increment financing bond (in prepaid expenses and other assets)
   
15,828
   
—
   
15,828
 
Impaired real estate assets
   
7,772
   
—
   
7,772
 
Total Assets
 
$
26,519
 
$
2,919
 
$
23,600
 
                     
Noncontrolling Interests in the Operating Partnership
 
$
105,995
 
$
105,995
 
$
—
 
                     
Liability:
                   
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
$
2,919
 
$
2,919
 
$
—
 


   
December 31,
2010
 
Level 1
 
Level 3
 
Assets:
                   
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
$
3,479
 
$
3,479
 
$
—
 
Tax increment financing bond (in prepaid expenses and other assets)
   
15,699
   
—
   
15,699
 
Total Assets
 
$
19,178
 
$
3,479
 
$
15,699
 
                     
Noncontrolling Interests in the Operating Partnership
 
$
120,838
 
$
120,838
 
$
—
 
                     
Liability:
                   
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
$
4,091
 
$
4,091
 
$
—
 
 
The following table sets forth our Level 3 asset:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Asset:
                         
Tax Increment Financing Bond
                         
Beginning balance
 
$
15,228
 
$
17,017
 
$
15,699
 
$
16,871
 
Unrealized gain (in AOCL)
   
600
   
325
   
129
   
471
 
Ending balance
 
$
15,828
 
$
17,342
 
$
15,828
 
$
17,342
 

We own a tax increment financing bond associated with a property developed by us. This bond amortizes to maturity in 2020. The estimated fair value at September 30, 2011 was $2.4 million below the outstanding principal due on the bond. If the yield-to-maturity used to fair value this bond was 100 basis points higher or lower, the fair value of the bond would have been $0.6 million lower or higher, respectively, as of September 30, 2011. Currently, we intend to hold this bond and have concluded that we will not be required to sell this bond before recovery of the bond principal. Payment of the principal and interest for the bond is guaranteed by us and, therefore, we have recorded no credit losses related to the bond in the three and nine months ended September 30, 2011 and 2010. There is no legal right of offset with the liability, which we report as a financing obligation, related to this tax increment financing bond.

The following table sets forth the carrying amounts and fair values of our financial instruments not disclosed elsewhere in this Quarterly Report on Form 10-Q:

   
Carrying
Amount
 
Fair Value
 
September 30, 2011
             
Mortgages and notes receivable
 
$
18,706
 
$
19,094
 
Mortgages and notes payable
 
$
1,893,981
 
$
1,987,983
 
Financing obligations
 
$
32,775
 
$
21,252
 
               
December 31, 2010
             
Mortgages and notes receivable                                                                                                
 
$
19,044
 
$
19,093
 
Mortgages and notes payable                                                                                                
 
$
1,522,945
 
$
1,581,518
 
Financing obligations                                                                                                
 
$
33,114
 
$
23,880
 

The fair values of our mortgages and notes receivable, mortgages and notes payable and financing obligations were estimated using the income or market approaches to approximate the price that would be paid in an orderly transaction between market participants on the respective measurement dates. The carrying values of our cash and cash equivalents, restricted cash, accounts receivable, marketable securities of non-qualified deferred compensation plan, tax increment financing bond, non-qualified deferred compensation obligation and noncontrolling interests in the Operating Partnership are equal to or approximate fair value.


Share-Based Payments
Share-Based Payments
9.      Share-Based Payments

During the nine months ended September 30, 2011, we granted 146,581 stock options with an exercise price equal to the closing market price of a share of our Common Stock on the date of grant. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, which resulted in a weighted average grant date fair value per share of $6.47. During the nine months ended September 30, 2011, we also granted 76,966 shares of time-based restricted stock and 57,386 shares of total return-based restricted stock with weighted average grant date fair values per share of $33.70 and $41.02, respectively. We recorded stock-based compensation expense of $1.3 million and $1.6 million during the three months ended September 30, 2011 and 2010, respectively, and $4.8 million and $5.1 million during the nine months ended September 30, 2011 and 2010, respectively. At September 30, 2011, there was $6.9 million of total unrecognized stock-based compensation costs, which will be recognized over a weighted average remaining service period of 2.2 years.
Comprehensive Income and Accumulated Other Comprehensive Loss
Comprehensive Income and Accumulated Other Comprehensive Loss
10.      Comprehensive Income and Accumulated Other Comprehensive Loss

The following table sets forth the components of comprehensive income:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Net income                                                                             
 
$
8,244
 
$
8,773
 
$
35,121
 
$
60,904
 
Other comprehensive income:
                         
Unrealized gain on tax increment financing bond
   
600
   
325
   
129
   
471
 
Amortization of settled cash-flow hedges
   
(30
)
 
(25
)
 
(87
)
 
262
 
Sale of cash-flow hedge related to disposition of investment in unconsolidated affiliate
   
—
   
—
   
—
   
103
 
Total other comprehensive income
   
570
   
300
   
42
   
836
 
Total comprehensive income
 
$
8,814
 
$
9,073
 
$
35,163
 
$
61,740
 

The following table sets forth the components of accumulated other comprehensive loss (“AOCL”):

   
September 30,
2011
 
December 31,
2010
 
Tax increment financing bond                                                                                                      
 
$
2,413
 
$
2,543
 
Settled cash-flow hedges                                                                                                      
   
1,193
   
1,105
 
Total accumulated other comprehensive loss
 
$
3,606
 
$
3,648
 


Discontinued Operations
Discontinued Operations
11.      Discontinued Operations

The following table sets forth our operations which required classification as discontinued operations:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Rental and other revenues                                                                                     
 
$
480
 
$
535
 
$
1,593
 
$
3,092
 
Operating expenses:
                         
Rental property and other expenses
   
211
   
166
   
570
   
1,214
 
Depreciation and amortization
   
—
   
98
   
127
   
647
 
Total operating expenses
   
211
   
264
   
697
   
1,861
 
Other income
   
—
   
1
   
1
   
2
 
Income from discontinued operations
   
269
   
272
   
897
   
1,233
 
Net gains/(losses) on disposition of discontinued operations
   
2,573
   
—
   
2,573
   
(86
)
Total discontinued operations                                                                                     
 
$
2,842
 
$
272
 
$
3,470
 
$
1,147
 

The following table sets forth the major classes of assets and liabilities of the properties classified as held for sale:

   
September 30,
2011
 
December 31,
2010
 
Assets:
             
Land
 
$
—
 
$
2,788
 
Buildings and tenant improvements                                                                                                 
   
—
   
12,707
 
Land held for development                                                                                                 
   
—
   
2,766
 
Total real estate assets                                                                                            
   
—
   
18,261
 
Less accumulated depreciation                                                                                                 
   
—
   
(5,012
)
Net real estate assets
   
—
   
13,249
 
Deferred leasing costs, net
   
—
   
58
 
Accrued straight line rents receivable
   
—
   
257
 
Prepaid expenses and other assets
   
—
   
43
 
Real estate and other assets, net, held for sale
 
$
—
 
$
13,607
 
Tenant security deposits, deferred rents and accrued costs (1)
 
$
—
 
$
11
 
__________
 
(1)
Included in accounts payable, accrued expenses and other liabilities.
 
Earnings Per Share
Earnings Per Share
12.      Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per Common Share:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Earnings per Common Share - basic:
                         
Numerator:
                         
Income from continuing operations
 
$
5,402
 
$
8,501
 
$
31,651
 
$
59,757
 
Net (income) attributable to noncontrolling  interests in the Operating Partnership from continuing operations
   
(225
)
 
(352
)
 
(1,323
)
 
(2,761
)
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates from continuing operations
   
(249
)
 
148
   
(554
)
 
(281
)
Dividends on Preferred Stock
   
(627
)
 
(1,677
)
 
(3,926
)
 
(5,031
)
Excess of Preferred Stock redemption/repurchase cost over carrying value
   
—
   
—
   
(1,895
)
 
—
 
Income from continuing operations available for common stockholders
   
4,301
   
6,620
   
23,953
   
51,684
 
Income from discontinued operations
   
2,842
   
272
   
3,470
   
1,147
 
Net (income) attributable to noncontrolling interests in the Operating Partnership from discontinued operations
   
(141
)
 
(14
)
 
(173
)
 
(58
)
Income from discontinued operations available for common stockholders
   
2,701
   
258
   
3,297
   
1,089
 
Net income available for common stockholders
 
$
7,002
 
$
6,878
 
$
27,250
 
$
52,773
 
Denominator:
                         
Denominator for basic earnings per Common Share – weighted average shares
   
72,492
   
71,631
   
72,176
   
71,549
 
Earnings per Common Share – basic:
                         
Income from continuing operations available for common stockholders
 
$
0.06
 
$
0.10
 
$
0.33
 
$
0.72
 
Income from discontinued operations available for common stockholders
   
0.04
   
—
   
0.05
   
0.02
 
Net income available for common stockholders
 
$
0.10
 
$
0.10
 
$
0.38
 
$
0.74
 
Earnings per Common Share - diluted:
                         
Numerator:
                         
Income from continuing operations
 
$
5,402
 
$
8,501
 
$
31,651
 
$
59,757
 
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates from continuing operations
   
(249
)
 
148
   
(554
)
 
(281
)
Dividends on Preferred Stock
   
(627
)
 
(1,677
)
 
(3,926
)
 
(5,031
)
Excess of Preferred Stock redemption/repurchase cost over carrying value
   
—
   
—
   
(1,895
)
 
—
 
Income from continuing operations available for common stockholders before net (income) attributable to noncontrolling interests in the Operating Partnership
   
4,526
   
6,972
   
25,276
   
54,445
 
Income from discontinued operations available for common stockholders
   
2,842
   
272
   
3,470
   
1,147
 
Net income available for common stockholders before net (income) attributable to noncontrolling interests in the Operating Partnership
 
$
7,368
 
$
7,244
 
$
28,746
 
$
55,592
 
Denominator:
                         
Denominator for basic earnings per Common Share –weighted average shares
   
72,492
   
71,631
   
72,176
   
71,549
 
Add:
                         
Stock options using the treasury method
   
138
   
210
   
169
   
183
 
Noncontrolling interests partnership units
   
3,772
   
3,797
   
3,782
   
3,805
 
Denominator for diluted earnings per Common Share – adjusted weighted average shares and assumed conversions (1)
   
76,402
   
75,638
   
76,127
   
75,537
 
Earnings per Common Share – diluted:
                         
Income from continuing operations available for common stockholders
 
$
0.06
  $
0.10
  $
0.33
  $
0.72
 
Income from discontinued operations available for common stockholders
   
0.04
   
—
   
0.05
   
0.02
 
Net income available for common stockholders
 
$
0.10
  $
0.10
  $
0.38
  $
0.74
 
__________
 
(1)
There were 0.4 million and 0.7 million options outstanding during the three months ended September 30, 2011 and 2010, respectively, and 0.3 million and 0.7 million options outstanding during the nine months ended September 30, 2011 and 2010, respectively, that were not included in the computation of diluted earnings per share because the impact of including such options would be anti-dilutive.

Segment Information
Segment Information
13.      Segment Information

The following table summarizes the rental and other revenues and net operating income, the primary industry property-level performance metric which is defined as rental and other revenues less rental property and other expenses, for each reportable segment:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Rental and Other Revenues: (1)
                         
Office:
                         
Atlanta, GA
 
$
13,045
 
$
11,869
 
$
37,290
 
$
36,066
 
Greenville, SC
   
3,617
   
3,312
   
10,560
   
10,439
 
Kansas City, MO
   
3,559
   
3,673
   
10,801
   
11,044
 
Memphis, TN
   
10,270
   
9,692
   
30,450
   
24,888
 
Nashville, TN
   
15,598
   
14,598
   
45,576
   
44,562
 
Orlando, FL
   
2,677
   
2,920
   
7,614
   
8,985
 
Piedmont Triad, NC
   
4,914
   
5,270
   
15,549
   
16,034
 
Pittsburgh, PA
   
1,582
   
—
   
1,582
   
—
 
Raleigh, NC
   
20,051
   
18,843
   
59,472
   
56,174
 
Richmond, VA
   
13,378
   
12,209
   
36,431
   
35,485
 
Tampa, FL
   
17,776
   
17,830
   
52,026
   
53,807
 
Total Office Segment
   
106,467
   
100,216
   
307,351
   
297,484
 
Industrial:
                         
Atlanta, GA
   
3,976
   
3,660
   
11,938
   
11,477
 
Piedmont Triad, NC
   
3,151
   
3,259
   
8,955
   
9,324
 
Total Industrial Segment
   
7,127
   
6,919
   
20,893
   
20,801
 
Retail:
                         
Kansas City, MO
   
8,492
   
8,105
   
25,594
   
24,542
 
Total Retail Segment
   
8,492
   
8,105
   
25,594
   
24,542
 
Residential:
                         
Kansas City, MO                                                         
   
—
   
288
   
284
   
969
 
Total Residential Segment
   
—
   
288
   
284
   
969
 
Total Rental and Other Revenues                                                                    
 
$
122,086
 
$
115,528
 
$
354,122
 
$
343,796
 


   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Net Operating Income: (1)
                         
Office:
                         
Atlanta, GA
 
$
8,053
 
$
7,388
 
$
23,518
 
$
22,848
 
Greenville, SC
   
2,097
   
1,858
   
6,239
   
6,307
 
Kansas City, MO
   
2,023
   
2,159
   
6,250
   
6,699
 
Memphis, TN
   
5,698
   
5,506
   
16,921
   
15,013
 
Nashville, TN
   
10,247
   
9,488
   
30,227
   
29,422
 
Orlando, FL
   
1,378
   
1,554
   
3,830
   
4,891
 
Piedmont Triad, NC
   
2,896
   
3,486
   
9,946
   
10,577
 
Pittsburgh, PA
   
897
   
—
   
897
   
—
 
Raleigh, NC
   
13,903
   
12,527
   
41,394
   
38,203
 
Richmond, VA
   
7,769
   
7,631
   
23,857
   
23,985
 
Tampa, FL
   
11,003
   
10,900
   
32,194
   
32,711
 
Total Office Segment
   
65,964
   
62,497
   
195,273
   
190,656
 
Industrial:
                         
Atlanta, GA
   
2,859
   
2,492
   
8,699
   
8,055
 
Piedmont Triad, NC
   
2,251
   
2,459
   
6,583
   
6,834
 
Total Industrial Segment
   
5,110
   
4,951
   
15,282
   
14,889
 
Retail:
                         
Kansas City, MO
   
5,027
   
4,573
   
15,149
   
14,671
 
Total Retail Segment
   
5,027
   
4,573
   
15,149
   
14,671
 
Residential:
                         
Kansas City, MO (2)
   
(34
)
 
168
   
58
   
594
 
Total Residential Segment
   
(34
)
 
168
   
58
   
594
 
Total Net Operating Income                                                                    
   
76,067
   
72,189
   
225,762
   
220,810
 
Reconciliation to income from continuing operations before disposition of property, condominiums and investment in unconsolidated affiliates and equity in earnings of unconsolidated affiliates:
                         
Depreciation and amortization
   
(36,320
)
 
(34,183
)
 
(103,467
)
 
(100,081
)
Impairment of assets held for use
   
(2,429
)
 
—
   
(2,429
)
 
—
 
General and administrative expense
   
(12,212
)
 
(8,882
)
 
(27,983
)
 
(24,369
)
Interest expense
   
(24,390
)
 
(23,338
)
 
(71,840
)
 
(69,385
)
Interest and other income
   
1,505
   
1,624
   
5,253
   
4,289
 
Income from continuing operations before disposition of property, condominiums and investment in unconsolidated affiliates and equity in earnings of unconsolidated affiliates
 
$
2,221
 
$
7,410
 
$
25,296
 
$
31,264
 
__________
 
(1)
Net of discontinued operations.
 
(2)
Negative NOI with no corresponding revenues represents expensed real estate taxes and other carrying costs with little or no corresponding revenue.


Subsequent Events
Subsequent Events
14.      Subsequent Events

On October 3, 2011, we repaid the remaining balance of $184.4 million of a secured mortgage loan bearing interest of 7.05% that was scheduled to mature in January 2012. We incurred no penalty related to this early repayment.

Description of Business and Significant Accounting Policies (LP)
Description of Business and Significant Accounting Policies (LP)
1.      Description of Business and Significant Accounting Policies

Description of Business

The Company is a fully-integrated, self-administered and self-managed equity 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 virtually all of its activities through the Operating Partnership. At September 30, 2011, the Company and/or the Operating Partnership wholly owned: 302 in-service office, industrial and retail properties, comprising 29.2 million square feet; 96 rental residential units; 18 for-sale residential condominiums; 601 acres of undeveloped land suitable for future development, of which 523 acres are considered core holdings; and an additional office property that is considered completed but not yet stabilized.

The Company is the sole general partner of the Operating Partnership. At September 30, 2011, the Company owned all of the Preferred Units and 72.2 million, or 95.1%, of the Common Units. Limited partners (including one officer and two directors of the Company) own the remaining 3.8 million Common Units. Generally, the Operating Partnership is obligated to redeem each Common Unit at the request of the holder thereof for cash equal to the value of one share of Common Stock, $.01 par value, based on the average of the market price for the 10 trading days immediately preceding the notice date of such redemption provided that the Company, at its option, may elect to acquire any such Common Units presented for redemption for cash or one share of Common Stock. The Common Units owned by the Company are not redeemable. During the nine months ended September 30, 2011, the Company redeemed 43,308 Common Units for a like number of shares of Common Stock.

Common Stock Offering

We have entered into equity sales agreements with various financial institutions to offer and sell, from time to time, shares of our Common Stock by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices or as otherwise agreed with any of the institutions. During the third quarter of 2011, we issued 142,000 shares of Common Stock under these agreements at an average price of $34.21 per share raising net proceeds, after sales commissions and expenses, of $4.8 million.

Basis of Presentation

Our Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Our Consolidated Statements of Income for the three and nine months ended September 30, 2010 were revised from previously reported amounts to reflect those properties sold or held for sale which required discontinued operations presentation.

Our Consolidated Financial Statements include the Operating Partnership, wholly owned subsidiaries and those entities in which we have the controlling financial interest. All significant intercompany transactions and accounts have been eliminated. At September 30, 2011 and December 31, 2010, we were not involved with any entities that were determined to be variable interest entities.

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 omitted certain notes and other information from the interim consolidated financial statements presented in this Quarterly Report on Form 10-Q as permitted by SEC rules and regulations. These Consolidated Financial Statements should be read in conjunction with our 2010 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 the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Recently Issued Accounting Standards

Beginning with our Quarterly Report on Form 10-Q for the three months ended March 31, 2012, we will be required to enhance our disclosure of assets and liabilities measured at fair value. This includes disclosing any significant transfers between Levels 1 and 2 of the fair value hierarchy, additional quantitative and qualitative information regarding fair value measurements categorized as Level 3 of the fair value hierarchy and the hierarchy classification for items whose fair value is not recorded on our Consolidated Balance Sheets but is disclosed in our Notes to Consolidated Financial Statements. Additionally, we will be required to present comprehensive income on the face of our Consolidated Statements of Income, which previously has been disclosed in our Notes to Consolidated Financial Statements.
Real Estate Assets (LP)
Real Estate Assets
2.      Real Estate Assets

Acquisitions

In the third quarter of 2011, we acquired a six-building, 1.54 million square foot office complex in Pittsburgh, PA for a purchase price of $188.5 million. The purchase price included the assumption of secured debt recorded at fair value of $124.5 million, with an effective interest rate of 4.27%, including amortization of deferred financing costs. This debt matures in November 2017. We expensed $4.0 million of costs related to this acquisition, which are included in general and administrative expense for the three and nine months ended September 30, 2011.

In the third quarter of 2011, we also acquired a 503,000 square foot office building in Atlanta, GA for a purchase price of $78.3 million. The purchase price included the assumption of secured debt recorded at fair value of $67.9 million, with an effective interest rate of 5.45%, including amortization of deferred financing costs. This debt matures in January 2014. We expensed $0.3 million of costs related to this acquisition, which are included in general and administrative expense for the three and nine months ended September 30, 2011.

The assets acquired and liabilities assumed were recorded at preliminary estimates of fair value as determined by management based on information available at the acquisition date and on current assumptions as to future operations. These estimates are subject to change during the measurement period upon the completion of acquisition accounting, including the finalization of asset valuations. The following table sets forth a summary of the preliminary acquisition purchase price consideration for each major class of assets acquired and liabilities assumed in the acquisitions discussed above:

   
Total
Purchase Price Consideration
 
Real estate assets
 
$
241,602
 
Acquisition-related intangible assets (in deferred financing and leasing costs)
   
39,721
 
Furniture, fixtures and equipment (in prepaid expenses and other assets)
   
1,101
 
Acquisition-related intangible liabilities (in accounts payable, accrued expenses and other liabilities)
   
(15,627
)
Total consideration
 
$
266,797
 
 
The following tables set forth our rental and other revenues and net income, adjusted for interest expense and depreciation and amortization related to purchase price allocation, assuming the acquisitions discussed above both occurred as of the beginning of each annual reporting period:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Proforma rental and other revenues
 
$
133,669
 
$
129,590
 
$
393,640
 
$
385,400
 
Proforma net income
 
$
7,568
 
$
8,180
 
$
32,823
 
$
59,124
 
Proforma earnings per share - basic
 
$
0.09
 
$
0.09
 
$
0.34
 
$
0.71
 
Proforma earnings per share - diluted
 
$
0.09
 
$
0.09
 
$
0.34
 
$
0.71
 

Dispositions

During the third quarter of 2011, we sold an office property and adjacent land parcel in one transaction in Winston-Salem, NC for gross proceeds of $15.0 million. We recorded gain on disposition of discontinued operations of $2.6 million and gain on disposition of property of $0.3 million related to the office property and land, respectively, in the third quarter of 2011.

Impairments

We recorded impairment of assets held for use of $2.4 million in the third quarter of 2011 on two office properties located in Orlando, FL due to a change in the assumed timing of future disposition. Impairments can arise from a number of factors; accordingly, there can be no assurances that we will not be required to record additional impairment charges in the future.
Mortgages and Notes Receivable (LP)
Mortgages and Notes Receivable (LP)
3.      Mortgages and Notes Receivable

The following table sets forth our mortgages and notes receivable:

   
September 30,
2011
 
December 31,
2010
 
Seller financing (first mortgages)
 
$
17,180
 
$
17,180
 
Less allowance
   
—
   
—
 
     
17,180
   
17,180
 
Promissory notes
   
2,071
   
2,732
 
Less allowance
   
(545
)
 
(868
)
     
1,526
   
1,864
 
Mortgages and notes receivable, net
 
$
18,706
 
$
19,044
 

The following table sets forth our notes receivable allowance, which relates only to promissory notes:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Beginning notes receivable allowance
 
$
617
 
$
771
 
$
868
 
$
698
 
Bad debt expense
   
—
   
240
   
184
   
328
 
Write-offs
   
(1
)
 
(6
)
 
(365
)
 
(11
)
Recoveries/other
   
(71
)
 
(55
)
 
(142
)
 
(65
)
Total notes receivable allowance
 
$
545
 
$
950
 
$
545
 
$
950
 

Our mortgages and notes receivable consists primarily of seller financing issued in conjunction with two disposition transactions in the second quarter of 2010. As of September 30, 2011, the contractual payments on both mortgages receivable were current and there were no indications of impairment on the receivables.
Investment in Unconsolidated Affiliates (LP)
Investment In and Advances To Affiliates (LP)
4.      Investment in and Advances to Unconsolidated Affiliates

We have equity interests of 50.0% or less in various joint ventures with unrelated third parties and a debt interest in one of those joint ventures, as described below. The following table sets forth the combined, summarized income statements for our unconsolidated joint ventures:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Income Statements:
                         
Revenues                                                                      
 
$
24,618
 
$
25,508
 
$
72,576
 
$
90,774
 
Expenses:
                         
Rental property and other expenses
   
10,239
   
12,096
   
31,765
   
43,751
 
Depreciation and amortization
   
6,437
   
6,364
   
18,736
   
23,005
 
Interest expense
   
5,802
   
5,907
   
17,310
   
21,311
 
Total expenses
   
22,478
   
24,367
   
67,811
   
88,067
 
Net income
 
$
2,140
 
$
1,141
 
$
4,765
 
$
2,707
 
Our share of:
                         
Depreciation and amortization of real estate assets
 
$
2,028
 
$
2,076
 
$
6,078
 
$
8,077
 
Interest expense
 
$
1,944
 
$
2,166
 
$
6,093
 
$
8,294
 
Net income
 
$
448
 
$
454
 
$
2,142
 
$
989
 
                           
Our share of net income
 
$
448
 
$
454
 
$
2,142
 
$
989
 
Purchase accounting and management, leasing and other fees adjustments
   
665
   
579
   
1,803
   
1,716
 
Equity in earnings of unconsolidated affiliates
 
$
1,113
 
$
1,033
 
$
3,945
 
$
2,705
 

In the third quarter of 2011, our joint venture partner exercised its option to acquire our 10.0% equity interest in the HIW Development B, LLC joint venture, which recently completed construction of a build-to-suit office property in Charlotte, NC. As a result, we received gross proceeds of $4.8 million and recorded a gain on disposition of investment in unconsolidated affiliate related to this merchant build project of $2.3 million in the third quarter of 2011.

Intangible Assets and Liabilities (LP)
Intangible Assets and Liabilities
5.      Intangible Assets and Liabilities

The following table sets forth total intangible assets and liabilities, net of accumulated amortization:

   
September 30,
2011
 
December 31,
2010
 
Assets:
             
Deferred financing costs
 
$
19,168
 
$
16,412
 
Less accumulated amortization
   
(6,192
)
 
(7,054
)
     
12,976
   
9,358
 
Deferred leasing costs (including lease incentives and acquisition-related intangible assets)
   
171,093
   
127,949
 
Less accumulated amortization
   
(54,758
)
 
(52,306
)
     
116,335
   
75,643
 
Deferred financing and leasing costs, net
 
$
129,311
 
$
85,001
 
               
Liabilities (in accounts payable, accrued expenses and other liabilities):
             
Acquisition-related intangible liabilities
 
$
16,455
 
$
658
 
Less accumulated amortization
   
(425
)
 
(125
)
   
$
16,030
 
$
533
 

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

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Amortization of deferred financing costs
 
$
806
 
$
858
 
$
2,448
 
$
2,528
 
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)
 
$
5,188
 
$
3,912
 
$
13,945
 
$
11,495
 
Amortization of lease incentives (in rental and other revenues)
 
$
368
 
$
270
 
$
1,009
 
$
807
 
Amortization of acquisition-related intangible assets (in rental and other revenues)
 
$
240
 
$
200
 
$
618
 
$
318
 
Amortization of acquisition-related intangible liabilities (in rental and other revenues)
 
$
(229
)
$
(27
)
$
(280
)
$
(69
)

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

   
Amortization of Deferred Financing Costs
 
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 Liabilities (in Rental and Other Revenues)
 
October 1, 2011 through December 31, 2011
 
$
931
 
$
6,263
 
$
323
 
$
271
 
$
(141
)
2012                                                 
   
3,192
   
22,604
   
1,234
   
1,049
   
(556
)
2013                                                 
   
2,956
   
17,849
   
1,080
   
802
   
(542
)
2014                                                 
   
2,660
   
13,609
   
913
   
505
   
(467
)
2015                                                 
   
2,064
   
9,950
   
695
   
335
   
(421
)
Thereafter                                                 
   
1,173
   
35,214
   
2,536
   
1,103
   
(13,903
)
   
$
12,976
 
$
105,489
 
$
6,781
 
$
4,065
 
$
(16,030
)
 
The weighted average remaining amortization periods for deferred financing costs, deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization), lease incentives (in rental and other revenues), acquisition-related intangible assets (in rental and other revenues) and acquisition-related intangible liabilities (in rental and other revenues) were 3.9 years, 6.4 years, 8.1 years, 5.8 years and 8.8 years, respectively, as of September 30, 2011.

In connection with the acquisitions of office properties in Atlanta, GA and Pittsburgh, PA in the third quarter of 2011, we recorded $1.6 million of above market lease intangible assets, $38.1 million of in-place lease intangible assets and $15.6 million of below market lease intangible liabilities with weighted average amortization periods of 5.4 years, 6.7 years and 8.8 years, respectively.
Mortgages and Notes Payable (LP)
Mortgages and Notes Payable (LP)
6.      Mortgages and Notes Payable

The following table sets forth our consolidated mortgages and notes payable:

   
September 30,
2011
 
December 31,
2010
 
Secured indebtedness                                                                                                      
 
$
937,846
 
$
754,399
 
Unsecured indebtedness                                                                                                      
   
956,135
   
768,546
 
Total mortgages and notes payable
 
$
1,893,981
 
$
1,522,945
 

At September 30, 2011, our secured mortgage loans were secured by real estate assets with an aggregate undepreciated book value of $1.5 billion.

In the third quarter of 2011, we obtained a new $475.0 million unsecured revolving credit facility, which replaced our previously existing $400.0 million revolving credit facility. Our new revolving credit facility is originally scheduled to mature on July 27, 2015. Assuming no defaults have occurred, we have an option to extend the maturity for an additional year. The new credit facility includes an accordion feature that allows for an additional $75.0 million of borrowing capacity subject to additional lender commitments. The interest rate on the new facility at our current credit ratings is LIBOR plus 150 basis points and the annual facility fee is 35 basis points. The interest rate and facility fee under the new facility are based on the higher of the publicly announced ratings from Moody’s Investors Service or Standard & Poor’s. The financial and other covenants under the new facility are substantially the same as our previous credit facility. There was $165.0 million and $347.0 million outstanding under our revolving credit facility at September 30, 2011 and October 20, 2011, respectively. At both September 30, 2011 and October 20, 2011, 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 September 30, 2011 and October 20, 2011 was $309.8 million and $127.8 million, respectively.

Our secured construction facility, which has $52.1 million outstanding at September 30, 2011, is scheduled to mature on December 20, 2011. Assuming no defaults have occurred, we have the option to extend the maturity date for an additional one-year period. The interest rate is LIBOR plus 85 basis points.

We are currently in compliance with the debt covenants and other requirements with respect to our outstanding debt.

Noncontrolling Interests (LP)
Noncontrolling Interests (LP)
7.      Noncontrolling Interests

Noncontrolling Interests in Consolidated Affiliates

At September 30, 2011, noncontrolling interests in consolidated affiliates relates to our joint venture partner’s 50.0% interest in office properties located in Richmond, VA. Our joint venture partner is an unrelated third party.
Disclosure About Fair Value of Financial Instruments (LP)
Disclosure About Fair Value of Financial Instruments (LP)
8.      Disclosure About Fair Value of Financial Instruments

The following summarizes the three levels of inputs that we use to measure fair value, as well as the assets, noncontrolling interests in the Operating Partnership and liabilities that we recognize at fair value using those levels of inputs.

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

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

We had no Level 2 assets or liabilities at both September 30, 2011 and December 31, 2010.

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 are our tax increment financing bond, which is not routinely traded but whose fair value is determined using an estimate of projected redemption value based on quoted bid/ask prices for similar unrated municipal bonds, and real estate assets recorded at fair value on a non-recurring basis as a result of our quarterly impairment analysis, which were valued using broker opinions of value, substantiated by internal cash flow analyses.

The following tables set forth the assets, noncontrolling interests in the Operating Partnership and liability that we measure at fair value by level within the fair value hierarchy. We determine the level based on the lowest level of substantive input used to determine fair value.

   
September 30,
2011
 
Level 1
 
Level 3
 
Assets:
                   
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
$
2,919
 
$
2,919
 
$
—
 
Tax increment financing bond (in prepaid expenses and other assets)
   
15,828
   
—
   
15,828
 
Impaired real estate assets
   
7,772
   
—
   
7,772
 
Total Assets
 
$
26,519
 
$
2,919
 
$
23,600
 
                     
Noncontrolling Interests in the Operating Partnership
 
$
105,995
 
$
105,995
 
$
—
 
                     
Liability:
                   
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
$
2,919
 
$
2,919
 
$
—
 


   
December 31,
2010
 
Level 1
 
Level 3
 
Assets:
                   
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
$
3,479
 
$
3,479
 
$
—
 
Tax increment financing bond (in prepaid expenses and other assets)
   
15,699
   
—
   
15,699
 
Total Assets
 
$
19,178
 
$
3,479
 
$
15,699
 
                     
Noncontrolling Interests in the Operating Partnership
 
$
120,838
 
$
120,838
 
$
—
 
                     
Liability:
                   
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
$
4,091
 
$
4,091
 
$
—
 
 
The following table sets forth our Level 3 asset:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Asset:
                         
Tax Increment Financing Bond
                         
Beginning balance
 
$
15,228
 
$
17,017
 
$
15,699
 
$
16,871
 
Unrealized gain (in AOCL)
   
600
   
325
   
129
   
471
 
Ending balance
 
$
15,828
 
$
17,342
 
$
15,828
 
$
17,342
 

We own a tax increment financing bond associated with a property developed by us. This bond amortizes to maturity in 2020. The estimated fair value at September 30, 2011 was $2.4 million below the outstanding principal due on the bond. If the yield-to-maturity used to fair value this bond was 100 basis points higher or lower, the fair value of the bond would have been $0.6 million lower or higher, respectively, as of September 30, 2011. Currently, we intend to hold this bond and have concluded that we will not be required to sell this bond before recovery of the bond principal. Payment of the principal and interest for the bond is guaranteed by us and, therefore, we have recorded no credit losses related to the bond in the three and nine months ended September 30, 2011 and 2010. There is no legal right of offset with the liability, which we report as a financing obligation, related to this tax increment financing bond.

The following table sets forth the carrying amounts and fair values of our financial instruments not disclosed elsewhere in this Quarterly Report on Form 10-Q:

   
Carrying
Amount
 
Fair Value
 
September 30, 2011
             
Mortgages and notes receivable
 
$
18,706
 
$
19,094
 
Mortgages and notes payable
 
$
1,893,981
 
$
1,987,983
 
Financing obligations
 
$
32,775
 
$
21,252
 
               
December 31, 2010
             
Mortgages and notes receivable                                                                                                
 
$
19,044
 
$
19,093
 
Mortgages and notes payable                                                                                                
 
$
1,522,945
 
$
1,581,518
 
Financing obligations                                                                                                
 
$
33,114
 
$
23,880
 

The fair values of our mortgages and notes receivable, mortgages and notes payable and financing obligations were estimated using the income or market approaches to approximate the price that would be paid in an orderly transaction between market participants on the respective measurement dates. The carrying values of our cash and cash equivalents, restricted cash, accounts receivable, marketable securities of non-qualified deferred compensation plan, tax increment financing bond, non-qualified deferred compensation obligation and noncontrolling interests in the Operating Partnership are equal to or approximate fair value.


Share-Based Payments (LP)
Share-Based Payments (LP)
9.      Share-Based Payments

During the nine months ended September 30, 2011, the Company granted 146,581 stock options with an exercise price equal to the closing market price of a share of its Common Stock on the date of grant. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, which resulted in a weighted average grant date fair value per share of $6.47. During the nine months ended September 30, 2011, the Company also granted 76,966 shares of time-based restricted stock and 57,386 shares of total return-based restricted stock with weighted average grant date fair values per share of $33.70 and $41.02, respectively. We recorded stock-based compensation expense of $1.3 million and $1.6 million during the three months ended September 30, 2011 and 2010, respectively, and $4.8 million and $5.1 million during the nine months ended September 30, 2011 and 2010, respectively. At September 30, 2011, there was $6.9 million of total unrecognized stock-based compensation costs, which will be recognized over a weighted average remaining service period of 2.2 years.
Comprehensive Income and Accumulated Other Comprehensive Loss (LP)
Comprehensive Income and Accumulated Other Comprehensive Loss (LP)
10.      Comprehensive Income and Accumulated Other Comprehensive Loss

The following table sets forth the components of comprehensive income:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Net income                                                                             
 
$
8,244
 
$
8,788
 
$
35,133
 
$
60,908
 
Other comprehensive income:
                         
Unrealized gain on tax increment financing bond
   
600
   
325
   
129
   
471
 
Amortization of settled cash-flow hedges
   
(30
)
 
(25
)
 
(87
)
 
262
 
Sale of cash-flow hedge related to disposition of investment in unconsolidated affiliate
   
—
   
—
   
—
   
103
 
Total other comprehensive income
   
570
   
300
   
42
   
836
 
Total comprehensive income
 
$
8,814
 
$
9,088
 
$
35,175
 
$
61,744
 

The following table sets forth the components of accumulated other comprehensive loss (“AOCL”):

   
September 30,
2011
 
December 31,
2010
 
Tax increment financing bond                                                                                                      
 
$
2,413
 
$
2,543
 
Settled cash-flow hedges                                                                                                      
   
1,193
   
1,105
 
Total accumulated other comprehensive loss
 
$
3,606
 
$
3,648
 


Discontinued Operations (LP)
Discontinued Operations (LP)
11.      Discontinued Operations

The following table sets forth our operations which required classification as discontinued operations:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Rental and other revenues                                                                                     
 
$
480
 
$
535
 
$
1,593
 
$
3,092
 
Operating expenses:
                         
Rental property and other expenses
   
211
   
166
   
570
   
1,214
 
Depreciation and amortization
   
—
   
98
   
127
   
647
 
Total operating expenses
   
211
   
264
   
697
   
1,861
 
Other income
   
—
   
1
   
1
   
2
 
Income from discontinued operations
   
269
   
272
   
897
   
1,233
 
Net gains/(losses) on disposition of discontinued operations
   
2,573
   
—
   
2,573
   
(86
)
Total discontinued operations                                                                                     
 
$
2,842
 
$
272
 
$
3,470
 
$
1,147
 

The following table sets forth the major classes of assets and liabilities of the properties classified as held for sale:

   
September 30,
2011
 
December 31,
2010
 
Assets:
             
Land
 
$
—
 
$
2,788
 
Buildings and tenant improvements                                                                                                 
   
—
   
12,707
 
Land held for development                                                                                                 
   
—
   
2,766
 
Total real estate assets                                                                                            
   
—
   
18,261
 
Less accumulated depreciation                                                                                                 
   
—
   
(5,012
)
Net real estate assets
   
—
   
13,249
 
Deferred leasing costs, net
   
—
   
58
 
Accrued straight line rents receivable
   
—
   
257
 
Prepaid expenses and other assets
   
—
   
43
 
Real estate and other assets, net, held for sale
 
$
—
 
$
13,607
 
Tenant security deposits, deferred rents and accrued costs (1)
 
$
—
 
$
11
 
__________
 
(1)
Included in accounts payable, accrued expenses and other liabilities.
 
Earnings Per Unit (LP)
Earnings Per Unit (LP)
12.      Earnings Per Unit

The following table sets forth the computation of basic and diluted earnings per Common Unit:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Earnings per Common Unit - basic:
                         
Numerator:
                         
Income from continuing operations
 
$
5,402
 
$
8,516
 
$
31,663
 
$
59,761
 
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates from continuing operations
   
(249
)
 
148
   
(554
)
 
(281
)
Distributions on Preferred Units
   
(627
)
 
(1,677
)
 
(3,926
)
 
(5,031
)
Excess of Preferred Unit redemption/repurchase cost over carrying value
   
—
   
—
   
(1,895
)
 
—
 
Income from continuing operations available for common unitholders
   
4,526
   
6,987
   
25,288
   
54,449
 
Income from discontinued operations
   
2,842
   
272
   
3,470
   
1,147
 
Net income available for common unitholders
 
$
7,368
 
$
7,259
 
$
28,758
 
$
55,596
 
Denominator:
                         
Denominator for basic earnings per Common Unit – weighted average units
   
75,855
   
75,019
   
75,549
   
74,945
 
Earnings per Common Unit – basic:
                         
Income from continuing operations available for common unitholders
 
$
0.06
 
$
0.10
 
$
0.33
 
$
0.72
 
Income from discontinued operations available for common unitholders
   
0.04
   
—
   
0.05
   
0.02
 
Net income available for common unitholders
 
$
0.10
 
$
0.10
 
$
0.38
 
$
0.74
 
Earnings per Common Unit - diluted:
                         
Numerator:
                         
Income from continuing operations
 
$
5,402
 
$
8,516
 
$
31,663
 
$
59,761
 
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates from continuing operations
   
(249
)
 
148
   
(554
)
 
(281
)
Distributions on Preferred Units
   
(627
)
 
(1,677
)
 
(3,926
)
 
(5,031
)
Excess of Preferred Unit redemption/repurchase cost over carrying value
   
—
   
—
   
(1,895
)
 
—
 
Income from continuing operations available for common unitholders
   
4,526
   
6,987
   
25,288
   
54,449
 
Income from discontinued operations
   
2,842
   
272
   
3,470
   
1,147
 
Net income available for common unitholders
 
$
7,368
 
$
7,259
 
$
28,758
 
$
55,596
 
Denominator:
                         
Denominator for basic earnings per Common Unit –weighted average units
   
75,855
   
75,019
   
75,549
   
74,945
 
Add:
                         
Units options using the treasury method
   
138
   
210
   
169
   
183
 
Denominator for diluted earnings per Common Unit – adjusted weighted average units and assumed conversions (1)
   
75,993
   
75,229
   
75,718
   
75,128
 
Earnings per Common Unit – diluted:
                         
Income from continuing operations available for common unitholders
 
$
0.06
 
$
0.10
 
$
0.33
 
$
0.72
 
Income from discontinued operations available for common unitholders
   
0.04
   
—
   
0.05
   
0.02
 
Net income available for common unitholders
 
$
0.10
 
$
0.10
 
$
0.38
 
$
0.74
 
__________
 
(1)
There were 0.4 million and 0.7 million options outstanding during the three months ended September 30, 2011 and 2010, respectively, and 0.3 million and 0.7 million options outstanding during the nine months ended September 30, 2011 and 2010, respectively, that were not included in the computation of diluted earnings per share because the impact of including such options would be anti-dilutive.
Segment Information (LP)
Segment Information (LP)
13.      Segment Information

The following table summarizes the rental and other revenues and net operating income, the primary industry property-level performance metric which is defined as rental and other revenues less rental property and other expenses, for each reportable segment:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Rental and Other Revenues: (1)
                         
Office:
                         
Atlanta, GA
 
$
13,045
 
$
11,869
 
$
37,290
 
$
36,066
 
Greenville, SC
   
3,617
   
3,312
   
10,560
   
10,439
 
Kansas City, MO
   
3,559
   
3,673
   
10,801
   
11,044
 
Memphis, TN
   
10,270
   
9,692
   
30,450
   
24,888
 
Nashville, TN
   
15,598
   
14,598
   
45,576
   
44,562
 
Orlando, FL
   
2,677
   
2,920
   
7,614
   
8,985
 
Piedmont Triad, NC
   
4,914
   
5,270
   
15,549
   
16,034
 
Pittsburgh, PA
   
1,582
   
—
   
1,582
   
—
 
Raleigh, NC
   
20,051
   
18,843
   
59,472
   
56,174
 
Richmond, VA
   
13,378
   
12,209
   
36,431
   
35,485
 
Tampa, FL
   
17,776
   
17,830
   
52,026
   
53,807
 
Total Office Segment
   
106,467
   
100,216
   
307,351
   
297,484
 
Industrial:
                         
Atlanta, GA
   
3,976
   
3,660
   
11,938
   
11,477
 
Piedmont Triad, NC
   
3,151
   
3,259
   
8,955
   
9,324
 
Total Industrial Segment
   
7,127
   
6,919
   
20,893
   
20,801
 
Retail:
                         
Kansas City, MO
   
8,492
   
8,105
   
25,594
   
24,542
 
Total Retail Segment
   
8,492
   
8,105
   
25,594
   
24,542
 
Residential:
                         
Kansas City, MO                                                         
   
—
   
288
   
284
   
969
 
Total Residential Segment
   
—
   
288
   
284
   
969
 
Total Rental and Other Revenues                                                                    
 
$
122,086
 
$
115,528
 
$
354,122
 
$
343,796
 


   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Net Operating Income: (1)
                         
Office:
                         
Atlanta, GA
 
$
8,059
 
$
7,388
 
$
23,518
 
$
22,870
 
Greenville, SC
   
2,099
   
1,858
   
6,238
   
6,313
 
Kansas City, MO
   
2,025
   
2,159
   
6,249
   
6,705
 
Memphis, TN
   
5,703
   
5,506
   
16,919
   
15,026
 
Nashville, TN
   
10,257
   
9,488
   
30,225
   
29,450
 
Orlando, FL
   
1,379
   
1,554
   
3,830
   
4,896
 
Piedmont Triad, NC
   
2,898
   
3,486
   
9,945
   
10,586
 
Pittsburgh, PA
   
897
   
—
   
897
   
—
 
Raleigh, NC
   
13,918
   
12,527
   
41,391
   
38,241
 
Richmond, VA
   
7,776
   
7,631
   
23,856
   
24,008
 
Tampa, FL
   
11,013
   
10,900
   
32,192
   
32,742
 
Total Office Segment
   
66,024
   
62,497
   
195,260
   
190,837
 
Industrial:
                         
Atlanta, GA
   
2,861
   
2,492
   
8,698
   
8,063
 
Piedmont Triad, NC
   
2,253
   
2,459
   
6,582
   
6,840
 
Total Industrial Segment
   
5,114
   
4,951
   
15,280
   
14,903
 
Retail:
                         
Kansas City, MO
   
5,031
   
4,573
   
15,146
   
14,685
 
Total Retail Segment
   
5,031
   
4,573
   
15,146
   
14,685
 
Residential:
                         
Kansas City, MO (2)
   
(34
)
 
168
   
58
   
595
 
Total Residential Segment
   
(34
)
 
168
   
58
   
595
 
Total Net Operating Income                                                                    
   
76,135
   
72,189
   
225,744
   
221,020
 
Reconciliation to income from continuing operations before disposition of property, condominiums and investment in unconsolidated affiliates and equity in earnings of unconsolidated affiliates:
                         
Depreciation and amortization
   
(36,320
)
 
(34,183
)
 
(103,467
)
 
(100,081
)
Impairment of assets held for use
   
(2,429
)
 
—
   
(2,429
)
 
—
 
General and administrative expense
   
(12,280
)
 
(8,882
)
 
(27,965
)
 
(24,579
)
Interest expense
   
(24,390
)
 
(23,338
)
 
(71,840
)
 
(69,385
)
Interest and other income
   
1,505
   
1,624
   
5,253
   
4,289
 
Income from continuing operations before disposition of property, condominiums and investment in unconsolidated affiliates and equity in earnings of unconsolidated affiliates
 
$
2,221
 
$
7,410
 
$
25,296
 
$
31,264
 
__________
 
(1)
Net of discontinued operations.
 
(2)
Negative NOI with no corresponding revenues represents expensed real estate taxes and other carrying costs with little or no corresponding revenue.


Subsequent Events (LP)
Subsequent Events (LP)
14.      Subsequent Events

On October 3, 2011, we repaid the remaining balance of $184.4 million of a secured mortgage loan bearing interest of 7.05% that was scheduled to mature in January 2012. We incurred no penalty related to this early repayment.

Real Estate Assets (Tables)
Schedule of Purchase Price Allocations, table 
The assets acquired and liabilities assumed were recorded at preliminary estimates of fair value as determined by management based on information available at the acquisition date and on current assumptions as to future operations. These estimates are subject to change during the measurement period upon the completion of acquisition accounting, including the finalization of asset valuations. The following table sets forth a summary of the preliminary acquisition purchase price consideration for each major class of assets acquired and liabilities assumed in the acquisitions discussed above:

   
Total
Purchase Price Consideration
 
Real estate assets
 
$
241,602
 
Acquisition-related intangible assets (in deferred financing and leasing costs)
   
39,721
 
Furniture, fixtures and equipment (in prepaid expenses and other assets)
   
1,101
 
Acquisition-related intangible liabilities (in accounts payable, accrued expenses and other liabilities)
   
(15,627
)
Total consideration
 
$
266,797
 
 
Schedule of Business Acquisitions, Pro Forma, table 
The following tables set forth our rental and other revenues and net income, adjusted for interest expense and depreciation and amortization related to purchase price allocation, assuming the acquisitions discussed above both occurred as of the beginning of each annual reporting period:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Proforma rental and other revenues
 
$
133,669
 
$
129,590
 
$
393,640
 
$
385,400
 
Proforma net income
 
$
7,568
 
$
8,180
 
$
32,823
 
$
59,124
 
Proforma earnings per share - basic
 
$
0.09
 
$
0.09
 
$
0.34
 
$
0.71
 
Proforma earnings per share - diluted
 
$
0.09
 
$
0.09
 
$
0.34
 
$
0.71
 

Mortgages and Notes Receivable (Tables)
Mortgages and Notes Receivable 
The following table sets forth our mortgages and notes receivable:

   
September 30,
2011
 
December 31,
2010
 
Seller financing (first mortgages)
 
$
17,180
 
$
17,180
 
Less allowance
   
-
   
-
 
     
17,180
   
17,180
 
Promissory notes
   
2,071
   
2,732
 
Less allowance
   
(545
)
 
(868
)
     
1,526
   
1,864
 
Mortgages and notes receivable, net
 
$
18,706
 
$
19,044
 

Schedule of notes receivable allowance 
The following table sets forth our notes receivable allowance, which relates only to promissory notes:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Beginning notes receivable allowance
 
$
617
 
$
771
 
$
868
 
$
698
 
Bad debt expense
   
-
   
240
   
184
   
328
 
Write-offs
   
(1
)
 
(6
)
 
(365
)
 
(11
)
Recoveries/other
   
(71
)
 
(55
)
 
(142
)
 
(65
)
Total notes receivable allowance
 
$
545
 
$
950
 
$
545
 
$
950
 

Investment in and Advances to Unconsolidated Affiliates (Tables)
Investments in and Advances To Affiliates
We have equity interests of 50.0% or less in various joint ventures with unrelated third parties and a debt interest in one of those joint ventures, as described below. The following table sets forth the combined, summarized income statements for our unconsolidated joint ventures:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Income Statements:
                         
Revenues                                                                      
 
$
25,623
 
$
26,517
 
$
75,619
 
$
93,819
 
Expenses:
                         
Rental property and other expenses
   
10,805
   
12,664
   
33,576
   
45,463
 
Depreciation and amortization
   
6,759
   
6,730
   
19,670
   
24,108
 
Interest expense
   
5,976
   
6,094
   
17,841
   
21,892
 
Total expenses
   
23,540
   
25,488
   
71,087
   
91,463
 
Net income
 
$
2,083
 
$
1,029
 
$
4,532
 
$
2,356
 
Our share of:
                         
Depreciation and amortization of real estate assets
 
$
2,066
 
$
2,115
 
$
6,192
 
$
8,193
 
Interest expense
 
$
1,965
 
$
2,190
 
$
6,159
 
$
8,368
 
Net income
 
$
442
 
$
432
 
$
2,112
 
$
952
 
                           
Our share of net income
 
$
442
 
$
432
 
$
2,112
 
$
952
 
Purchase accounting and management, leasing and other fees adjustments
   
671
   
586
   
1,821
   
1,749
 
Equity in earnings of unconsolidated affiliates
 
$
1,113
 
$
1,018
 
$
3,933
 
$
2,701
 

Intangible Assets and Liabilities (Tables)
Total intangible assets and liabilities 
The following table sets forth total intangible assets and liabilities, net of accumulated amortization:

   
September 30,
2011
 
December 31,
2010
 
Assets:
             
Deferred financing costs
 
$
19,168
 
$
16,412
 
Less accumulated amortization
   
(6,192
)
 
(7,054
)
     
12,976
   
9,358
 
Deferred leasing costs (including lease incentives and acquisition-related intangible assets)
   
171,093
   
127,949
 
Less accumulated amortization
   
(54,758
)
 
(52,306
)
     
116,335
   
75,643
 
Deferred financing and leasing costs, net
 
$
129,311
 
$
85,001
 
               
Liabilities (in accounts payable, accrued expenses and other liabilities):
             
Acquisition-related intangible liabilities
 
$
16,455
 
$
658
 
Less accumulated amortization
   
(425
)
 
(125
)
   
$
16,030
 
$
533
Amortization of intangible assets and liabilities 
The following table sets forth amortization of intangible assets and liabilities:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Amortization of deferred financing costs
 
$
806
 
$
858
 
$
2,448
 
$
2,528
 
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)
 
$
5,188
 
$
3,912
 
$
13,945
 
$
11,495
 
Amortization of lease incentives (in rental and other revenues)
 
$
368
 
$
270
 
$
1,009
 
$
807
 
Amortization of acquisition-related intangible assets (in rental and other revenues)
 
$
240
 
$
200
 
$
618
 
$
318
 
Amortization of acquisition-related intangible liabilities (in rental and other revenues)
 
$
(229
)
$
(27
)
$
(280
)
$
(69
)

Scheduled future amortization of intangible assets and liabilities 
The following table sets forth scheduled future amortization of intangible assets and liabilities:

   
Amortization of Deferred Financing Costs
 
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 Liabilities (in Rental and Other Revenues)
 
October 1, 2011 through December 31, 2011
 
$
931
 
$
6,263
 
$
323
 
$
271
 
$
(141
)
2012                                                 
   
3,192
   
22,604
   
1,234
   
1,049
   
(556
)
2013                                                 
   
2,956
   
17,849
   
1,080
   
802
   
(542
)
2014                                                 
   
2,660
   
13,609
   
913
   
505
   
(467
)
2015                                                 
   
2,064
   
9,950
   
695
   
335
   
(421
)
Thereafter                                                 
   
1,173
   
35,214
   
2,536
   
1,103
   
(13,903
)
   
$
12,976
 
$
105,489
 
$
6,781
 
$
4,065
 
$
(16,030
)
Mortgages and Notes Payable (Tables)
Consolidated mortgages and notes payable
The following table sets forth our consolidated mortgages and notes payable:

   
September 30,
2011
 
December 31,
2010
 
Secured indebtedness                                                                                                      
 
$
937,846
 
$
754,399
 
Unsecured indebtedness                                                                                                      
   
956,135
   
768,546
 
Total mortgages and notes payable
 
$
1,893,981
 
$
1,522,945
 

Noncontrolling Interests (Tables)
Noncontrolling Interests in the Operating Partnership 
Noncontrolling interests in the Operating Partnership relate to the ownership of Common Units by various individuals and entities other than the Company. The following table sets forth noncontrolling interests in the Operating Partnership:

   
Nine Months Ended
September 30,
 
   
2011
 
2010
 
Beginning noncontrolling interests in the Operating Partnership
 
$
120,838
 
$
129,769
 
Adjustments of noncontrolling interests in the Operating Partnership to fair value
   
(10,177
)
 
(1,480
)
Conversion of Common Units to Common Stock
   
(1,344
)
 
(2,958
)
Net income attributable to noncontrolling interests in the Operating Partnership
   
1,496
   
2,819
 
Distributions to noncontrolling interests in the Operating Partnership
   
(4,818
)
 
(4,857
)
Total noncontrolling interests in the Operating Partnership
 
$
105,995
 
$
123,293
 

Net Income Available for Common Stockholders and Transfers From Noncontrolling Interests in the Operating Partnership 
The following table sets forth net income available for common stockholders and transfers from noncontrolling interests in the Operating Partnership:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Net income available for common stockholders
 
$
7,002
 
$
6,878
 
$
27,250
 
$
52,773
 
Increase in additional paid in capital from conversion of Common Units to Common Stock
   
709
   
-
   
1,344
   
2,957
 
Change in equity from net income available for common stockholders and conversion of Common Units to Common Stock
 
$
7,711
 
$
6,878
 
$
28,594
 
$
55,730
 

Disclosure About Fair Value of Financial Instruments (Tables)
Fair value measurements of assets, liabilities and noncontrolling interests 
The following tables set forth the assets, noncontrolling interests in the Operating Partnership and liability that we measure at fair value by level within the fair value hierarchy. We determine the level based on the lowest level of substantive input used to determine fair value.

   
September 30,
2011
 
Level 1
 
Level 3
 
Assets:
                   
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
$
2,919
 
$
2,919
 
$
-
 
Tax increment financing bond (in prepaid expenses and other assets)
   
15,828
   
-
   
15,828
 
Impaired real estate assets
   
7,772
   
-
   
7,772
 
Total Assets
 
$
26,519
 
$
2,919
 
$
23,600
 
                     
Noncontrolling Interests in the Operating Partnership
 
$
105,995
 
$
105,995
 
$
-
 
                     
Liability:
                   
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
$
2,919
 
$
2,919
 
$
-
 


   
December 31,
2010
 
Level 1
 
Level 3
 
Assets:
                   
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
 
$
3,479
 
$
3,479
 
$
-
 
Tax increment financing bond (in prepaid expenses and other assets)
   
15,699
   
-
   
15,699
 
Total Assets
 
$
19,178
 
$
3,479
 
$
15,699
 
                     
Noncontrolling Interests in the Operating Partnership
 
$
120,838
 
$
120,838
 
$
-
 
                     
Liability:
                   
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
 
$
4,091
 
$
4,091
 
$
-
 
 
Fair value measurements, unobservable inputs reconciliation 
The following table sets forth our Level 3 asset:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Asset:
                         
Tax Increment Financing Bond
                         
Beginning balance
 
$
15,228
 
$
17,017
 
$
15,699
 
$
16,871
 
Unrealized gain (in AOCL)
   
600
   
325
   
129
   
471
 
Ending balance
 
$
15,828
 
$
17,342
 
$
15,828
 
$
17,342
 

Fair value and carrying amounts of assets and liabilities, by balance sheet line item 
The following table sets forth the carrying amounts and fair values of our financial instruments not disclosed elsewhere in this Quarterly Report on Form 10-Q:

   
Carrying
Amount
 
Fair Value
 
September 30, 2011
             
Mortgages and notes receivable
 
$
18,706
 
$
19,094
 
Mortgages and notes payable
 
$
1,893,981
 
$
1,987,983
 
Financing obligations
 
$
32,775
 
$
21,252
 
               
December 31, 2010
             
Mortgages and notes receivable                                                                                                
 
$
19,044
 
$
19,093
 
Mortgages and notes payable                                                                                                
 
$
1,522,945
 
$
1,581,518
 
Financing obligations                                                                                                
 
$
33,114
 
$
23,880
 

Comprehensive Income and Accumulated Other Comprehensive Loss (Tables)
Components of comprehensive income 
The following table sets forth the components of comprehensive income:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Net income                                                                             
 
$
8,244
 
$
8,773
 
$
35,121
 
$
60,904
 
Other comprehensive income:
                         
Unrealized gain on tax increment financing bond
   
600
   
325
   
129
   
471
 
Amortization of settled cash-flow hedges
   
(30
)
 
(25
)
 
(87
)
 
262
 
Sale of cash-flow hedge related to disposition of investment in unconsolidated affiliate
   
-
   
-
   
-
   
103
 
Total other comprehensive income
   
570
   
300
   
42
   
836
 
Total comprehensive income
 
$
8,814
 
$
9,073
 
$
35,163
 
$
61,740
 

Components of accumulated comprehensive loss 
The following table sets forth the components of accumulated other comprehensive loss ("AOCL"):

   
September 30,
2011
 
December 31,
2010
 
Tax increment financing bond                                                                                                      
 
$
2,413
 
$
2,543
 
Settled cash-flow hedges                                                                                                      
   
1,193
   
1,105
 
Total accumulated other comprehensive loss
 
$
3,606
 
$
3,648
 


Discontinued Operations (Tables)
Operations classified as discontinued operations 
The following table sets forth our operations which required classification as discontinued operations:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Rental and other revenues                                                                                     
 
$
480
 
$
535
 
$
1,593
 
$
3,092
 
Operating expenses:
                         
Rental property and other expenses
   
211
   
166
   
570
   
1,214
 
Depreciation and amortization
   
-
   
98
   
127
   
647
 
Total operating expenses
   
211
   
264
   
697
   
1,861
 
Other income
   
-
   
1
   
1
   
2
 
Income from discontinued operations
   
269
   
272
   
897
   
1,233
 
Net gains/(losses) on disposition of discontinued operations
   
2,573
   
-
   
2,573
   
(86
)
Total discontinued operations                                                                                     
 
$
2,842
 
$
272
 
$
3,470
 
$
1,147
 

Major classes of assets and liabilities of the properties classified as held for sale 
The following table sets forth the major classes of assets and liabilities of the properties classified as held for sale:

   
September 30,
2011
 
December 31,
2010
 
Assets:
             
Land
 
$
-
 
$
2,788
 
Buildings and tenant improvements                                                                                                 
   
-
   
12,707
 
Land held for development                                                                                                 
   
-
   
2,766
 
Total real estate assets                                                                                            
   
-
   
18,261
 
Less accumulated depreciation                                                                                                 
   
-
   
(5,012
)
Net real estate assets
   
-
   
13,249
 
Deferred leasing costs, net
   
-
   
58
 
Accrued straight line rents receivable
   
-
   
257
 
Prepaid expenses and other assets
   
-
   
43
 
Real estate and other assets, net, held for sale
 
$
-
 
$
13,607
 
Tenant security deposits, deferred rents and accrued costs (1)
 
$
-
 
$
11
 
__________
 
(1)
Included in accounts payable, accrued expenses and other liabilities.
Earnings Per Share (Tables)
Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per Common Share:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Earnings per Common Share - basic:
                         
Numerator:
                         
Income from continuing operations
 
$
5,402
 
$
8,501
 
$
31,651
 
$
59,757
 
Net (income) attributable to noncontrolling  interests in the Operating Partnership from continuing operations
   
(225
)
 
(352
)
 
(1,323
)
 
(2,761
)
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates from continuing operations
   
(249
)
 
148
   
(554
)
 
(281
)
Dividends on Preferred Stock
   
(627
)
 
(1,677
)
 
(3,926
)
 
(5,031
)
Excess of Preferred Stock redemption/repurchase cost over carrying value
   
—
   
—
   
(1,895
)
 
—
 
Income from continuing operations available for common stockholders
   
4,301
   
6,620
   
23,953
   
51,684
 
Income from discontinued operations
   
2,842
   
272
   
3,470
   
1,147
 
Net (income) attributable to noncontrolling interests in the Operating Partnership from discontinued operations
   
(141
)
 
(14
)
 
(173
)
 
(58
)
Income from discontinued operations available for common stockholders
   
2,701
   
258
   
3,297
   
1,089
 
Net income available for common stockholders
 
$
7,002
 
$
6,878
 
$
27,250
 
$
52,773
 
Denominator:
                         
Denominator for basic earnings per Common Share – weighted average shares
   
72,492
   
71,631
   
72,176
   
71,549
 
Earnings per Common Share – basic:
                         
Income from continuing operations available for common stockholders
 
$
0.06
 
$
0.10
 
$
0.33
 
$
0.72
 
Income from discontinued operations available for common stockholders
   
0.04
   
—
   
0.05
   
0.02
 
Net income available for common stockholders
 
$
0.10
 
$
0.10
 
$
0.38
 
$
0.74
 
Earnings per Common Share - diluted:
                         
Numerator:
                         
Income from continuing operations
 
$
5,402
 
$
8,501
 
$
31,651
 
$
59,757
 
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates from continuing operations
   
(249
)
 
148
   
(554
)
 
(281
)
Dividends on Preferred Stock
   
(627
)
 
(1,677
)
 
(3,926
)
 
(5,031
)
Excess of Preferred Stock redemption/repurchase cost over carrying value
   
—
   
—
   
(1,895
)
 
—
 
Income from continuing operations available for common stockholders before net (income) attributable to noncontrolling interests in the Operating Partnership
   
4,526
   
6,972
   
25,276
   
54,445
 
Income from discontinued operations available for common stockholders
   
2,842
   
272
   
3,470
   
1,147
 
Net income available for common stockholders before net (income) attributable to noncontrolling interests in the Operating Partnership
 
$
7,368
 
$
7,244
 
$
28,746
 
$
55,592
 
Denominator:
                         
Denominator for basic earnings per Common Share –weighted average shares
   
72,492
   
71,631
   
72,176
   
71,549
 
Add:
                         
Stock options using the treasury method
   
138
   
210
   
169
   
183
 
Noncontrolling interests partnership units
   
3,772
   
3,797
   
3,782
   
3,805
 
Denominator for diluted earnings per Common Share – adjusted weighted average shares and assumed conversions (1)
   
76,402
   
75,638
   
76,127
   
75,537
 
Earnings per Common Share – diluted:
                         
Income from continuing operations available for common stockholders
 
$
0.06
  $
0.10
  $
0.33
  $
0.72
 
Income from discontinued operations available for common stockholders
   
0.04
   
—
   
0.05
   
0.02
 
Net income available for common stockholders
 
$
0.10
  $
0.10
  $
0.38
  $
0.74
 
__________
 
(1)
There were 0.4 million and 0.7 million options outstanding during the three months ended September 30, 2011 and 2010, respectively, and 0.3 million and 0.7 million options outstanding during the nine months ended September 30, 2011 and 2010, respectively, that were not included in the computation of diluted earnings per share because the impact of including such options would be anti-dilutive.
Segment Information (Tables)
Segment Information
The following table summarizes the rental and other revenues and net operating income, the primary industry property-level performance metric which is defined as rental and other revenues less rental property and other expenses, for each reportable segment:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Rental and Other Revenues: (1)
                         
Office:
                         
Atlanta, GA
 
$
13,045
 
$
11,869
 
$
37,290
 
$
36,066
 
Greenville, SC
   
3,617
   
3,312
   
10,560
   
10,439
 
Kansas City, MO
   
3,559
   
3,673
   
10,801
   
11,044
 
Memphis, TN
   
10,270
   
9,692
   
30,450
   
24,888
 
Nashville, TN
   
15,598
   
14,598
   
45,576
   
44,562
 
Orlando, FL
   
2,677
   
2,920
   
7,614
   
8,985
 
Piedmont Triad, NC
   
4,914
   
5,270
   
15,549
   
16,034
 
Pittsburgh, PA
   
1,582
   
—
   
1,582
   
—
 
Raleigh, NC
   
20,051
   
18,843
   
59,472
   
56,174
 
Richmond, VA
   
13,378
   
12,209
   
36,431
   
35,485
 
Tampa, FL
   
17,776
   
17,830
   
52,026
   
53,807
 
Total Office Segment
   
106,467
   
100,216
   
307,351
   
297,484
 
Industrial:
                         
Atlanta, GA
   
3,976
   
3,660
   
11,938
   
11,477
 
Piedmont Triad, NC
   
3,151
   
3,259
   
8,955
   
9,324
 
Total Industrial Segment
   
7,127
   
6,919
   
20,893
   
20,801
 
Retail:
                         
Kansas City, MO
   
8,492
   
8,105
   
25,594
   
24,542
 
Total Retail Segment
   
8,492
   
8,105
   
25,594
   
24,542
 
Residential:
                         
Kansas City, MO                                                         
   
—
   
288
   
284
   
969
 
Total Residential Segment
   
—
   
288
   
284
   
969
 
Total Rental and Other Revenues                                                                    
 
$
122,086
 
$
115,528
 
$
354,122
 
$
343,796
 


   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2011
 
2010
 
2011
 
2010
 
Net Operating Income: (1)
                         
Office:
                         
Atlanta, GA
 
$
8,053
 
$
7,388
 
$
23,518
 
$
22,848
 
Greenville, SC
   
2,097
   
1,858
   
6,239
   
6,307
 
Kansas City, MO
   
2,023
   
2,159
   
6,250
   
6,699
 
Memphis, TN
   
5,698
   
5,506
   
16,921
   
15,013
 
Nashville, TN
   
10,247
   
9,488
   
30,227
   
29,422
 
Orlando, FL
   
1,378
   
1,554
   
3,830
   
4,891
 
Piedmont Triad, NC
   
2,896
   
3,486
   
9,946
   
10,577
 
Pittsburgh, PA
   
897
   
—
   
897
   
—
 
Raleigh, NC
   
13,903
   
12,527
   
41,394
   
38,203
 
Richmond, VA
   
7,769
   
7,631
   
23,857
   
23,985
 
Tampa, FL
   
11,003
   
10,900
   
32,194
   
32,711
 
Total Office Segment
   
65,964
   
62,497
   
195,273
   
190,656
 
Industrial:
                         
Atlanta, GA
   
2,859
   
2,492
   
8,699
   
8,055
 
Piedmont Triad, NC
   
2,251
   
2,459
   
6,583
   
6,834
 
Total Industrial Segment
   
5,110
   
4,951
   
15,282
   
14,889
 
Retail:
                         
Kansas City, MO
   
5,027
   
4,573
   
15,149
   
14,671
 
Total Retail Segment
   
5,027
   
4,573
   
15,149
   
14,671
 
Residential:
                         
Kansas City, MO (2)
   
(34
)
 
168
   
58
   
594
 
Total Residential Segment
   
(34
)
 
168
   
58
   
594
 
Total Net Operating Income                                                                    
   
76,067
   
72,189
   
225,762
   
220,810
 
Reconciliation to income from continuing operations before disposition of property, condominiums and investment in unconsolidated affiliates and equity in earnings of unconsolidated affiliates:
                         
Depreciation and amortization
   
(36,320
)
 
(34,183
)
 
(103,467
)
 
(100,081
)
Impairment of assets held for use
   
(2,429
)
 
—
   
(2,429
)
 
—
 
General and administrative expense
   
(12,212
)
 
(8,882
)
 
(27,983
)
 
(24,369
)
Interest expense
   
(24,390
)
 
(23,338
)
 
(71,840
)
 
(69,385
)
Interest and other income
   
1,505
   
1,624
   
5,253
   
4,289
 
Income from continuing operations before disposition of property, condominiums and investment in unconsolidated affiliates and equity in earnings of unconsolidated affiliates
 
$
2,221
 
$
7,410
 
$
25,296
 
$
31,264
 
__________
 
(1)
Net of discontinued operations.
 
(2)
Negative NOI with no corresponding revenues represents expensed real estate taxes and other carrying costs with little or no corresponding revenue.


Description of Business and Significant Accounting Policies (Details) (USD $)
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Dec. 31, 2010
Description of Business and Significant Accounting Policies [Abstract]
 
 
 
 
 
In-service office, industrial and retail properties (in units)
302 
 
302 
 
 
Square footage of commercial property (in sq feet)
29,200,000 
 
29,200,000 
 
 
Rental residential units (in units)
96 
 
96 
 
 
Residential condominiums for sale (in units)
18 
 
18 
 
 
Undeveloped land suitable for future development (in acres)
601 
 
601 
 
 
Undeveloped land considered core holdings (in acres)
523 
 
523 
 
 
Office properties completed but not yet stabilized
1 
 
1 
 
 
Percentage of ownership of Common Units
95.10% 
 
95.10% 
 
 
Common Units of partnership owned by The Company
72,200,000 
 
72,200,000 
 
 
Common Units of partnership not owned by the Company
3,800,000 
 
3,800,000 
 
 
Common Stock par value
$ 0.01 
 
$ 0.01 
 
$ 0.01 
Number of officers of the Company who are also limited partners
1 
 
1 
 
 
Number of directors of the Company who are also limited partners
2 
 
2 
 
 
Common units redeemed for a like number of common shares of stock (in shares)
 
 
43,308 
 
 
Number of trading days preceeding Redemption Notice Date
10 
 
10 
 
 
Number of Common Stock Sold During Period (in shares)
142,000 
 
 
 
 
Average Price of Common Stock Sold During Period
$ 34.21 
 
 
 
 
Net Proceeds of Common Stock Sold During Period
$ 4,800,000 
 
 
 
 
Excess of Preferred Stock redemption/repurchase cost over carrying value
$ 0 
$ 0 
$ 1,895,000 
$ 0 
 
Number of common units required to convert to one share of common stock (in shares)
1 
 
1 
 
 
Real Estate Assets (Details) (USD $)
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Business Acquisition, Purchase Price Allocation [Abstract]
 
 
 
 
Amount of real estate assets acquired
$ 241,602,000 
 
$ 241,602,000 
 
Amount of acquisition-related intangible assets (in deferred leasing and financing costs) acquired
39,721,000 
 
39,721,000 
 
Amount of furniture, fixtures and equipment (in prepaid and other assets) acquired
1,101,000 
 
1,101,000 
 
Amount of acquisition-related intangible liabilities (in accounts payable, accrued liabilities and other expenses) assumed
(15,627,000)
 
(15,627,000)
 
Total consideration from the acquisition
266,797,000 
 
266,797,000 
 
Business Acquisition, Proforma Information [Abstract]
 
 
 
 
Proforma rental and other revenues
133,669,000 
129,590,000 
393,640,000 
385,400,000 
Proforma net income
7,568,000 
8,180,000 
32,823,000 
59,124,000 
Proforma earnings per share - basic
$ 0.09 
$ 0.09 
$ 0.34 
$ 0.71 
Proforma earnings per share - diluted
$ 0.09 
$ 0.09 
$ 0.34 
$ 0.71 
Dispositions [Abstract]
 
 
 
 
Gain on disposition of discontinued operations
2,573,000 
0 
2,573,000 
(86,000)
Gains on disposition of property
262,000 
19,000 
462,000 
55,000 
Impairments [Abstract]
 
 
 
 
Impairment of assets held for use
2,429,000 
0 
2,429,000 
0 
Number of impaired properties
2 
 
2 
 
Atlanta, GA Office Property Acquisition [Member]
 
 
 
 
Acquisitions [Abstract]
 
 
 
 
Acquisition rentable square feet
503,000 
 
 
 
Acquisition purchase price
78,300,000 
 
78,300,000 
 
Fair value of assumed debt from the acquisition
67,900,000 
 
67,900,000 
 
Effective interest rate of assumed secured debt from the acquisition
5.45% 
 
5.45% 
 
Maturity date of assumed debt from the acquisition
Jan. 01, 2014 
 
Jan. 01, 2014 
 
Acquisition-related costs
 
 
300,000 
 
Pittsburgh, PA Office Property Acquisition [Member]
 
 
 
 
Acquisitions [Abstract]
 
 
 
 
Acquisition rentable square feet
1,540,000 
 
 
 
Acquisition purchase price
188,500,000 
 
188,500,000 
 
Fair value of assumed debt from the acquisition
124,500,000 
 
124,500,000 
 
Effective interest rate of assumed secured debt from the acquisition
4.27% 
 
4.27% 
 
Maturity date of assumed debt from the acquisition
Nov. 01, 2017 
 
Nov. 01, 2017 
 
Acquisition-related costs
 
 
4,000,000 
 
Winston Salem, NC Disposition [Member]
 
 
 
 
Dispositions [Abstract]
 
 
 
 
Gross proceeds from the sale of real estate
15,000,000 
 
 
 
Gain on disposition of discontinued operations
2,600,000 
 
 
 
Gains on disposition of property
$ 300,000 
 
 
 
Mortgages and Notes Receivable (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
3 Months Ended
Jun. 30, 2010
2011
2010
Dec. 31, 2010
Schedule of mortgages and notes receivable
 
 
 
 
 
 
Seller financing (first mortgages)
$ 17,180 
 
 
$ 17,180 
 
$ 17,180 
Less allowance
0 
 
 
0 
 
0 
Seller financing, net
17,180 
 
 
17,180 
 
17,180 
Promissory notes
2,071 
 
 
2,071 
 
2,732 
Less allowance
(545)
 
 
(545)
 
(868)
Promissory notes, net
1,526 
 
 
1,526 
 
1,864 
Mortgages and notes receivable, net
18,706 
 
 
18,706 
 
19,044 
Notes receivable allowance, promissory notes
 
 
 
 
 
 
Beginning notes receivable allowance
617 
771 
 
868 
698 
 
Bad debt expense
0 
240 
 
184 
328 
 
Write-offs
(1)
(6)
 
(365)
(11)
 
Recoveries/other
(71)
(55)
 
(142)
(65)
 
Total notes receivable allowance
$ 545 
$ 950 
$ 771 
$ 545 
$ 950 
 
Number Of Transactions With Seller Financing
 
 
2 
 
 
 
Investment in and Advances to Unconsolidated Affiliates (Details) (USD $)
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Investments in Affiliates [Line Items]
 
 
 
 
Percentage of equity interest in joint ventures, maximum
50.00% 
 
50.00% 
 
Number of joint ventures with debt investment
1 
 
1 
 
Income Statement [Abstract]
 
 
 
 
Revenues
$ 25,623,000 
$ 26,517,000 
$ 75,619,000 
$ 93,819,000 
Expenses:
 
 
 
 
Rental property and other expenses
10,805,000 
12,664,000 
33,576,000 
45,463,000 
Depreciation and amortization
6,759,000 
6,730,000 
19,670,000 
24,108,000 
Interest expense
5,976,000 
6,094,000 
17,841,000 
21,892,000 
Total expenses
23,540,000 
25,488,000 
71,087,000 
91,463,000 
Net income
2,083,000 
1,029,000 
4,532,000 
2,356,000 
Our share of:
 
 
 
 
Depreciation and amortization of real estate assets
2,066,000 
2,115,000 
6,192,000 
8,193,000 
Interest expense
1,965,000 
2,190,000 
6,159,000 
8,368,000 
Net income
442,000 
432,000 
2,112,000 
952,000 
Our share of net income
442,000 
432,000 
2,112,000 
952,000 
Purchase accounting and management, leasing and other fees adjustments
671,000 
586,000 
1,821,000 
1,749,000 
Equity in earnings of unconsolidated affiliates
1,113,000 
1,018,000 
3,933,000 
2,701,000 
Gross proceeds received from disposition of investment in unconsolidated affiliate
 
 
4,756,000 
15,000,000 
HIW Development B, LLC joint venture [Member]
 
 
 
 
Our share of:
 
 
 
 
Percentage of equity interest in joint venture (in hundredths)
10.00% 
 
10.00% 
 
Gross proceeds received from disposition of investment in unconsolidated affiliate
 
 
4,800,000 
 
Gain recorded on disposition of investment in unconsolidated affiliate
$ 2,300,000 
 
 
 
Intangible Assets and Liabilities (Details) (USD $)
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Dec. 31, 2010
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Deferred financing and leasing costs, net
$ 129,311,000 
 
$ 129,311,000 
 
$ 85,001,000 
Amortization of intangible assets and liabilities [Abstract]
 
 
 
 
 
Amortization of deferred financing costs
806,000 
858,000 
2,448,000 
2,528,000 
 
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)
5,188,000 
3,912,000 
13,945,000 
11,495,000 
 
Amortization of lease incentives (in rental and other revenues)
368,000 
270,000 
1,009,000 
807,000 
 
Amortization of acquisition-related intangible assets (in rental and other revenues)
240,000 
200,000 
618,000 
318,000 
 
Amortization of acquisition-related intangible liabilities (in rental and other revenues)
(229,000)
(27,000)
(280,000)
(69,000)
 
Weighted average remaining amortization periods for intangible assets and liabilities [Abstract]
 
 
 
 
 
Deferred financing costs (in years)
3.9 
 
3.9 
 
 
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization) (in years)
6.4 
 
6.4 
 
 
Lease incentives (in rental and other revenues) (in years)
8.1 
 
8.1 
 
 
Amortization of acquisition-related intangible assets (in rental and other revenues) (in years)
5.8 
 
5.8 
 
 
Amortization of acquisition-related intangible liabilities (in rental and other revenues) (in years)
8.8 
 
8.8 
 
 
Intangible assets and liabilities from new acquisitions [Abstract]
 
 
 
 
 
Acquired above market lease intangible assets
1,600 
 
 
 
 
Acquired in-place lease intangible assets
38,100 
 
 
 
 
Assumed below market lease intangible liabilities
15,600 
 
 
 
 
Weighted average amortization periods, above market (in years)
5.4 
 
5.4 
 
 
Weighted average amortization periods, in-place (in years)
6.7 
 
6.7 
 
 
Weighted average amortization periods, below market (in years)
8.8 
 
8.8 
 
 
Deferred Financing Costs [Member]
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Deferred financing costs, deferred leasing costs and acquisition-related intangible liabilities, gross
19,168,000 
 
19,168,000 
 
16,412,000 
Deferred financing costs, deferred leasing costs and acquisition-related intangible liabilities, accumulated amortization
(6,192,000)
 
(6,192,000)
 
(7,054,000)
Deferred financing costs, deferred leasing costs and acquisition-related intangible liabilities, net
12,976,000 
 
12,976,000 
 
9,358,000 
Deferred Leasing Costs [Member]
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Deferred financing costs, deferred leasing costs and acquisition-related intangible liabilities, gross
171,093,000 
 
171,093,000 
 
127,949,000 
Deferred financing costs, deferred leasing costs and acquisition-related intangible liabilities, accumulated amortization
(54,758,000)
 
(54,758,000)
 
(52,306,000)
Deferred financing costs, deferred leasing costs and acquisition-related intangible liabilities, net
116,335,000 
 
116,335,000 
 
75,643,000 
Acquisition-Related Intangible Liabilities [Member]
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Deferred financing costs, deferred leasing costs and acquisition-related intangible liabilities, gross
16,455,000 
 
16,455,000 
 
658,000 
Deferred financing costs, deferred leasing costs and acquisition-related intangible liabilities, accumulated amortization
(425,000)
 
(425,000)
 
(125,000)
Deferred financing costs, deferred leasing costs and acquisition-related intangible liabilities, net
16,030,000 
 
16,030,000 
 
533,000 
Acquisition Related Intangible Assets Amortization Recorded in Rental and Other Revenues [Member]
 
 
 
 
 
Scheduled future amortization of intangible assets and liabilities
 
 
 
 
 
October 1, 2011 through December 31, 2011
 
 
271,000 
 
 
2012
 
 
1,049,000 
 
 
2013
 
 
802,000 
 
 
2014
 
 
505,000 
 
 
2015
 
 
335,000 
 
 
Thereafter
 
 
1,103,000 
 
 
Total future amortization of intangible assets and liabilities
 
 
4,065,000 
 
 
Acquisition Related Intangible Liabilities Amortization Recorded in Rental and Other Revenues [Member]
 
 
 
 
 
Scheduled future amortization of intangible assets and liabilities
 
 
 
 
 
October 1, 2011 through December 31, 2011
 
 
(141,000)
 
 
2012
 
 
(556,000)
 
 
2013
 
 
(542,000)
 
 
2014
 
 
(467,000)
 
 
2015
 
 
(421,000)
 
 
Thereafter
 
 
(13,903,000)
 
 
Total future amortization of intangible assets and liabilities
 
 
(16,030,000)
 
 
Deferred Financing Costs Amortization Recorded in Interest Expense[Member]
 
 
 
 
 
Scheduled future amortization of intangible assets and liabilities
 
 
 
 
 
October 1, 2011 through December 31, 2011
 
 
931,000 
 
 
2012
 
 
3,192,000 
 
 
2013
 
 
2,956,000 
 
 
2014
 
 
2,660,000 
 
 
2015
 
 
2,064,000 
 
 
Thereafter
 
 
1,173,000 
 
 
Total future amortization of intangible assets and liabilities
 
 
12,976,000 
 
 
Deferred Leasing Costs and Acquisition-Related Intangible Assets Amortization Recorded in Depreciation and Amortization [Member]
 
 
 
 
 
Scheduled future amortization of intangible assets and liabilities
 
 
 
 
 
October 1, 2011 through December 31, 2011
 
 
6,263,000 
 
 
2012
 
 
22,604,000 
 
 
2013
 
 
17,849,000 
 
 
2014
 
 
13,609,000 
 
 
2015
 
 
9,950,000 
 
 
Thereafter
 
 
35,214,000 
 
 
Total future amortization of intangible assets and liabilities
 
 
105,489,000 
 
 
Lease Incentives Amortization Recorded in Rental and Other Revenues [Member]
 
 
 
 
 
Scheduled future amortization of intangible assets and liabilities
 
 
 
 
 
October 1, 2011 through December 31, 2011
 
 
323,000 
 
 
2012
 
 
1,234,000 
 
 
2013
 
 
1,080,000 
 
 
2014
 
 
913,000 
 
 
2015
 
 
695,000 
 
 
Thereafter
 
 
2,536,000 
 
 
Total future amortization of intangible assets and liabilities
 
 
$ 6,781,000 
 
 
Mortgages and Notes Payable (Details) (USD $)
Sep. 30, 2011
Dec. 31, 2010
Sep. 30, 2011
Secured indebtedness [Member]
Dec. 31, 2010
Secured indebtedness [Member]
Sep. 30, 2011
Unsecured indebtedness [Member]
Dec. 31, 2010
Unsecured indebtedness [Member]
9 Months Ended
Sep. 30, 2011
Unsecured revolving credit facility [Member]
Oct. 20, 2011
Unsecured revolving credit facility [Member]
9 Months Ended
Sep. 30, 2011
Secured construction facility [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
Total mortgages and notes payable
$ 1,893,981,000 
$ 1,522,945,000 
$ 937,846,000 
$ 754,399,000 
$ 956,135,000 
$ 768,546,000 
 
 
 
Aggregate undepreciated book value of secured real estate assets
1,500,000,000 
 
 
 
 
 
 
 
 
Line Of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity
 
 
 
 
 
 
475,000,000 
 
 
Maximum borrowing capacity for previous revolving credit facility
 
 
 
 
 
 
400,000,000 
 
 
Maturity date
 
 
 
 
 
 
Jul. 27, 2015 
 
Dec. 20, 2011 
Additional borrowing capacity
 
 
 
 
 
 
75,000,000 
 
 
Interest rate
 
 
 
 
 
 
LIBOR plus 150 basis points 
 
LIBOR plus 85 basis points 
Annual facility fee (in hundredths)
 
 
 
 
 
 
0.35% 
 
 
Amount outstanding
 
 
 
 
 
 
165,000,000 
347,000,000 
52,100,000 
Outstanding letters of credit
 
 
 
 
 
 
200,000 
200,000 
 
Unused borrowing capacity
 
 
 
 
 
 
$ 309,800,000 
$ 127,800,000 
 
Term of optional extension (in years)
 
 
 
 
 
 
1 
 
1 
Noncontrolling Interests (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Noncontrolling Interests in the Operating Partnership
 
 
 
 
Beginning noncontrolling interests in the Operating Partnership
 
 
$ 120,838 
$ 129,769 
Adjustments of noncontrolling interests in the Operating Partnership to fair value
 
 
(10,177)
(1,480)
Conversion of Common Units to Common Stock
 
 
(1,344)
(2,958)
Net income attributable to noncontrolling interests in the Operating Partnership
366 
366 
1,496 
2,819 
Distributions to noncontrolling interests in the Operating Partnership
 
 
(4,818)
(4,857)
Total noncontrolling interests in the Operating Partnership
105,995 
123,293 
105,995 
123,293 
Net Income Available for Common Stockholders and Transfers From Noncontrolling Interests in the Operating Partnership.
 
 
 
 
Net income available for common stockholders
7,002 
6,878 
27,250 
52,773 
Increase in additional paid in capital from conversion of Common Units to Common Stock
709 
0 
1,344 
2,957 
Change in equity from net income available for common stockholders and conversion of Common Units to Common Stock
$ 7,711 
$ 6,878 
$ 28,594 
$ 55,730 
Consolidated joint venture, partner's interest (in hundredths)
50.00% 
 
50.00% 
 
Disclosure About Fair Value of Financial Instruments (Details) (USD $)
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Dec. 31, 2010
Assets [Abstract]
 
 
 
 
 
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
$ 2,919,000 
 
$ 2,919,000 
 
$ 3,479,000 
Tax increment financing bond (in prepaid expenses and other assets)
15,828,000 
 
15,828,000 
 
15,699,000 
Impaired real estate assets
7,772,000 
 
7,772,000 
 
 
Total Assets
26,519,000 
 
26,519,000 
 
19,178,000 
Noncontrolling Interests in the Operating Partnership
105,995,000 
 
105,995,000 
 
120,838,000 
Liability [Abstract]
 
 
 
 
 
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
2,919,000 
 
2,919,000 
 
4,091,000 
Tax increment financing bond [Abstract]
 
 
 
 
 
Unrealized gain (in AOCL)
600,000 
325,000 
129,000 
471,000 
 
Amount by which outstanding principal amount exceeds estimated fair value
2,413,000 
 
2,413,000 
 
2,543,000 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
 
 
Mortgages and notes receivable
18,706,000 
 
18,706,000 
 
19,044,000 
Mortgages and notes payable
1,893,981,000 
 
1,893,981,000 
 
1,522,945,000 
Financing obligations
32,775,000 
 
32,775,000 
 
33,114,000 
Level 1 [Member]
 
 
 
 
 
Assets [Abstract]
 
 
 
 
 
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
2,919,000 
 
2,919,000 
 
3,479,000 
Total Assets
2,919,000 
 
2,919,000 
 
3,479,000 
Noncontrolling Interests in the Operating Partnership
105,995,000 
 
105,995,000 
 
120,838,000 
Liability [Abstract]
 
 
 
 
 
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
2,919,000 
 
2,919,000 
 
4,091,000 
Level 3 [Member]
 
 
 
 
 
Assets [Abstract]
 
 
 
 
 
Tax increment financing bond (in prepaid expenses and other assets)
15,828,000 
 
15,828,000 
 
15,699,000 
Impaired real estate assets
7,772,000 
 
7,772,000 
 
 
Total Assets
23,600,000 
 
23,600,000 
 
15,699,000 
Tax Increment Financing Bond [Member]
 
 
 
 
 
Tax increment financing bond [Abstract]
 
 
 
 
 
Beginning balance
15,228,000 
17,017,000 
15,699,000 
16,871,000 
 
Unrealized gain (in AOCL)
600,000 
325,000 
129,000 
471,000 
 
Ending balance
15,828,000 
17,342,000 
15,828,000 
17,342,000 
 
Amount by which outstanding principal amount exceeds estimated fair value
2,400,000 
 
2,400,000 
 
 
Maturity date
 
 
Dec. 20, 2020 
 
 
Decrease in fair value of bond if yield-to-maturity was 100 basis points higher
600,000 
 
600,000 
 
 
Increase in fair value of bond if yield-to-maturity was 100 basis points lower
600,000 
 
600,000 
 
 
Fair value [Member]
 
 
 
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
 
 
Mortgages and notes receivable
19,094,000 
 
19,094,000 
 
19,093,000 
Mortgages and notes payable
1,987,983,000 
 
1,987,983,000 
 
1,581,518,000 
Financing obligations
21,252,000 
 
21,252,000 
 
23,880,000 
Carrying value [Member]
 
 
 
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
 
 
Mortgages and notes receivable
18,706,000 
 
18,706,000 
 
19,044,000 
Mortgages and notes payable
1,893,981,000 
 
1,893,981,000 
 
1,522,945,000 
Financing obligations
$ 32,775,000 
 
$ 32,775,000 
 
$ 33,114,000 
Share-Based Payments (Details) (USD $)
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Stock-based compensation expense
$ 1,300,000 
$ 1,600,000 
$ 4,771,000 
$ 5,060,000 
Total unrecognized stock-based compensation costs
$ 6,900,000 
 
$ 6,900,000 
 
Weighted average remaining contractual term for recognition of unrecognized stock-based compensation costs (in years)
2.2 
 
2.2 
 
Stock Options [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Options granted
 
 
146,581 
 
Weighted average grant date fair value of each stock option granted (in dollars per option)
 
 
$ 6.47 
 
Time Based Restricted Stock [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Shares granted (in shares)
 
 
76,966 
 
Weighted average grant date fair values per share of restricted stock (in dollars per share)
 
 
$ 33.70 
 
Total-Return Based Restricted Stock [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Shares granted (in shares)
 
 
57,386 
 
Weighted average grant date fair values per share of restricted stock (in dollars per share)
 
 
$ 41.02 
 
Comprehensive Income and Accumulated Other Comprehensive Loss (Details) (USD $)
In Thousands
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Dec. 31, 2010
Comprehensive Income and Accumulated Other Comprehensive Loss [Abstract]
 
 
 
 
 
Net income
$ 8,244 
$ 8,773 
$ 35,121 
$ 60,904 
 
Other comprehensive income/(loss):
 
 
 
 
 
Unrealized gain on tax increment financing bond
600 
325 
129 
471 
 
Amortization of settled cash-flow hedges
(30)
(25)
(87)
262 
 
Sale of cash-flow hedge related to disposition of investment in unconsolidated affiliate
0 
0 
0 
103 
 
Total other comprehensive income
570 
300 
42 
836 
 
Total comprehensive income
8,814 
9,073 
35,163 
61,740 
 
Components of AOCL
 
 
 
 
 
Tax increment financing bond
2,413 
 
2,413 
 
2,543 
Settled cash-flow hedges
1,193 
 
1,193 
 
1,105 
Total accumulated other comprehensive loss
$ 3,606 
 
$ 3,606 
 
$ 3,648 
Discontinued Operations (Details) (USD $)
In Thousands
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Dec. 31, 2010
Discontinued Operations [Abstract]
 
 
 
 
 
Rental and other revenues
$ 480 
$ 535 
$ 1,593 
$ 3,092 
 
Operating expenses:
 
 
 
 
 
Rental property and other expenses
211 
166 
570 
1,214 
 
Depreciation and amortization
0 
98 
127 
647 
 
Total operating expenses
211 
264 
697 
1,861 
 
Other Income
0 
1 
1 
2 
 
Income from discontinued operations
269 
272 
897 
1,233 
 
Net gains/(losses) on disposition of discontinued operations
2,573 
0 
2,573 
(86)
 
Total discontinued operations
2,842 
272 
3,470 
1,147 
 
Assets:
 
 
 
 
 
Land
0 
 
0 
 
2,788 
Buildings and tenant improvements
0 
 
0 
 
12,707 
Land held for development
0 
 
0 
 
2,766 
Total real estate assets
0 
 
0 
 
18,261 
Less accumulated depreciation
0 
 
0 
 
(5,012)
Net real estate assets
0 
 
0 
 
13,249 
Deferred leasing costs, net
0 
 
0 
 
58 
Accrued straight line rents receivable
0 
 
0 
 
257 
Prepaid expenses and other assets
0 
 
0 
 
43 
Real estate and other assets, net, held for sale
0 
 
0 
 
13,607 
Tenant security deposits, deferred rents and accrued costs
$ 0 1
 
$ 0 1
 
$ 11 1
Earnings Per Share (Details) (USD $)
In Thousands, except Share data
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Numerator:
 
 
 
 
Income from continuing operations
$ 5,402 
$ 8,501 
$ 31,651 
$ 59,757 
Net (income) attributable to noncontrolling interests in the Operating Partnership from continuing operations
(225)
(352)
(1,323)
(2,761)
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates from continuing operations
(249)
148 
(554)
(281)
Dividends on Preferred Stock
(627)
(1,677)
(3,926)
(5,031)
Excess of Preferred Stock redemption/repurchase cost over carrying value
0 
0 
(1,895)
0 
Income from continuing operations available for common stockholders
4,301 
6,620 
23,953 
51,684 
Income from discontinued operations
2,842 
272 
3,470 
1,147 
Net (income) attributable to noncontrolling interests in the Operating Partnership from discontinued operations
(141)
(14)
(173)
(58)
Income from discontinued operations available for common stockholders
2,701 
258 
3,297 
1,089 
Net income available for common stockholders
7,002 
6,878 
27,250 
52,773 
Denominator:
 
 
 
 
Denominator for basic earnings per Common Share - weighted average shares
72,492,000 
71,631,000 
72,176,000 
71,549,000 
Earnings per Common Share - basic:
 
 
 
 
Income from continuing operations available for common stockholders (in dollars per share)
$ 0.06 
$ 0.10 
$ 0.33 
$ 0.72 
Income from discontinued operations available for common stockholders (in dollars per share)
$ 0.04 
$ 0 
$ 0.05 
$ 0.02 
Net income available for common stockholders (in dollars per share)
$ 0.10 
$ 0.10 
$ 0.38 
$ 0.74 
Numerator:
 
 
 
 
Income from continuing operations
5,402 
8,501 
31,651 
59,757 
Net (income)/loss attributable to noncontrolling interests in consolidated affiliates from continuing operations
(249)
148 
(554)
(281)
Dividends on Preferred Stock
(627)
(1,677)
(3,926)
(5,031)
Excess of Preferred Stock redemption/repurchase cost over carrying value
0 
0 
(1,895)
0 
Income from continuing operations available for common stockholders before net (income) attributable to noncontrolling interests in the Operating Partnership
4,526 
6,972 
25,276 
54,445 
Income from discontinued operations available for common stockholders
2,842 
272 
3,470 
1,147 
Net income available for common stockholders before net (income) attributable to noncontrolling interests in the Operating Partnership
$ 7,368 
$ 7,244 
$ 28,746 
$ 55,592 
Denominator:
 
 
 
 
Denominator for basic earnings per Common Share -weighted average shares
72,492,000 
71,631,000 
72,176,000 
71,549,000 
Stock options using the treasury method
138,000 
210,000 
169,000 
183,000 
Noncontrolling interests partnership units
3,772,000 
3,797,000 
3,782,000 
3,805,000 
Denominator for diluted earnings per Common Share - adjusted weighted average shares and assumed conversions (1)
76,402,000 1
75,638,000 1
76,127,000 1
75,537,000 1
Earnings per Common Share - diluted:
 
 
 
 
Income from continuing operations available for common stockholders (in dollars per share)
$ 0.06 
$ 0.10 
$ 0.33 
$ 0.72 
Income from discontinued operations available for common stockholders (in dollars per share)
$ 0.04 
$ 0 
$ 0.05 
$ 0.02 
Net income available for common stockholders (in dollars per share)
$ 0.10 
$ 0.10 
$ 0.38 
$ 0.74 
Number of anti-dilutive options and warrants not included in earnings per share (in dollars per share)
400,000 
700,000 
300,000 
700,000 
Segment Information (Details) (USD $)
In Thousands
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
$ 122,086 
$ 115,528 
$ 354,122 
$ 343,796 
Total Net Operating Income
76,067 
72,189 
225,762 
220,810 
Depreciation and amortization
(36,320)
(34,183)
(103,467)
(100,081)
Impairment of assets held for use
(2,429)
0 
(2,429)
0 
General and administrative expense
(12,212)
(8,882)
(27,983)
(24,369)
Interest expense
(24,390)
(23,338)
(71,840)
(69,385)
Interest and other income
1,505 
1,624 
5,253 
4,289 
Income from continuing operations before disposition of property, condominiums and investment in unconsolidated affiliates and equity in earnings of unconsolidated affiliates
2,221 
7,410 
25,296 
31,264 
Office Atlanta, GA [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
13,045 
11,869 
37,290 
36,066 
Total Net Operating Income
8,053 
7,388 
23,518 
22,848 
Office Greenville, SC [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
3,617 
3,312 
10,560 
10,439 
Total Net Operating Income
2,097 
1,858 
6,239 
6,307 
Office Kansas City, MO [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
3,559 
3,673 
10,801 
11,044 
Total Net Operating Income
2,023 
2,159 
6,250 
6,699 
Office Memphis, TN [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
10,270 
9,692 
30,450 
24,888 
Total Net Operating Income
5,698 
5,506 
16,921 
15,013 
Office Nashville, TN [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
15,598 
14,598 
45,576 
44,562 
Total Net Operating Income
10,247 
9,488 
30,227 
29,422 
Office Orlando, FL [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
2,677 
2,920 
7,614 
8,985 
Total Net Operating Income
1,378 
1,554 
3,830 
4,891 
Office Piedmont Triad, NC [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
4,914 
5,270 
15,549 
16,034 
Total Net Operating Income
2,896 
3,486 
9,946 
10,577 
Office Raleigh, NC [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
20,051 
18,843 
59,472 
56,174 
Total Net Operating Income
13,903 
12,527 
41,394 
38,203 
Office Richmond, VA [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
13,378 
12,209 
36,431 
35,485 
Total Net Operating Income
7,769 
7,631 
23,857 
23,985 
Office Tampa, FL [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
17,776 
17,830 
52,026 
53,807 
Total Net Operating Income
11,003 
10,900 
32,194 
32,711 
Office Total Segment [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
106,467 1
100,216 1
307,351 1
297,484 1
Total Net Operating Income
65,964 1
62,497 1
195,273 1
190,656 1
Industrial Atlanta, GA [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
3,976 
3,660 
11,938 
11,477 
Total Net Operating Income
2,859 
2,492 
8,699 
8,055 
Industrial Piedmont Triad, NC [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
3,151 
3,259 
8,955 
9,324 
Total Net Operating Income
2,251 
2,459 
6,583 
6,834 
Industrial Total Segment [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
7,127 1
6,919 1
20,893 1
20,801 1
Total Net Operating Income
5,110 1
4,951 1
15,282 1
14,889 1
Retail Kansas City, MO [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
8,492 
8,105 
25,594 
24,542 
Total Net Operating Income
5,027 
4,573 
15,149 
14,671 
Total Retail Segment [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
8,492 1
8,105 1
25,594 1
24,542 1
Total Net Operating Income
5,027 1
4,573 1
15,149 1
14,671 1
Residential Kansas City, MO [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
0 
288 
284 
969 
Total Net Operating Income
(34)2
168 
58 
594 
Total Residential Segment [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
0 1
288 1
284 1
969 1
Total Net Operating Income
(34)1
168 1
58 1
594 1
Office Pittsburgh, PA [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Rental and Other Revenues
1,582 
0 
1,582 
0 
Total Net Operating Income
$ 897 
$ 0 
$ 897 
$ 0 
Subsequent Events (Details) (Mortgage Loans Repayment [Member], USD $)
In Millions, unless otherwise specified
0 Months Ended
Oct. 3, 2011
Mortgage Loans Repayment [Member]
 
Early repayment of debt
$ 184.4 
Interest rate (in hundredths)
7.05% 
Scheduled maturity date
Jan. 01, 2012