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Section 1: 10-Q (10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended June 30, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from [ ] to [ ]
398851960_logotree09.jpg
HIGHWOODS PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland
001-13100
56-1871668
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification Number)
 
HIGHWOODS REALTY LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
North Carolina
000-21731
56-1869557
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification Number)
 
3100 Smoketree Court, Suite 600
Raleigh, NC 27604
(Address of principal executive offices) (Zip Code)
919-872-4924
(Registrants’ telephone number, including area code)
___________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, $.01 par value, of Highwoods Properties, Inc.
HIW
New York Stock Exchange
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Highwoods Properties, Inc.  Yes      No     Highwoods Realty Limited Partnership  Yes      No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Highwoods Properties, Inc.  Yes      No     Highwoods Realty Limited Partnership  Yes      No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of 'large accelerated filer,' 'accelerated filer,' 'smaller reporting company,' and 'emerging growth company' in Rule 12b-2 of the Exchange Act.
Highwoods Properties, Inc.
Large accelerated filer    Accelerated filer    Non-accelerated filer    Smaller reporting company   Emerging growth company
Highwoods Realty Limited Partnership
Large accelerated filer    Accelerated filer    Non-accelerated filer    Smaller reporting company    Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Highwoods Properties, Inc.          Highwoods Realty Limited Partnership   
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Highwoods Properties, Inc.  Yes      No     Highwoods Realty Limited Partnership  Yes      No
 
The Company had 103,724,379 shares of Common Stock outstanding as of July 16, 2019.
 




EXPLANATORY NOTE

We refer to Highwoods Properties, Inc. as the “Company,” Highwoods Realty Limited Partnership as the “Operating Partnership,” the Company’s common stock as “Common Stock” or “Common Shares,” the Company’s preferred stock as “Preferred Stock” or “Preferred Shares,” the Operating Partnership’s common partnership interests as “Common Units” and the Operating Partnership’s preferred partnership interests as “Preferred Units.” References to “we” and “our” mean the Company and the Operating Partnership, collectively, unless the context indicates otherwise.

The Company conducts its activities through the Operating Partnership and is its sole general partner. The partnership agreement provides that the Operating Partnership will assume and pay when due, or reimburse the Company for payment of, all costs and expenses relating to the ownership and operations of, or for the benefit of, the Operating Partnership. The partnership agreement further provides that all expenses of the Company are deemed to be incurred for the benefit of the Operating Partnership.

Certain information contained herein is presented as of July 16, 2019, the latest practicable date for financial information prior to the filing of this Quarterly Report.

This report combines the Quarterly Reports on Form 10-Q for the period ended June 30, 2019 of the Company and the Operating Partnership. We believe combining the quarterly reports into this single report results in the following benefits:

combined reports better reflect how management and investors view the business as a single operating unit;

combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;

combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and

combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

Consolidated Financial Statements;

Note 13 to Consolidated Financial Statements - Earnings Per Share and Per Unit;

Item 4 - Controls and Procedures; and

Item 6 - Certifications of CEO and CFO Pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.





HIGHWOODS PROPERTIES, INC.
HIGHWOODS REALTY LIMITED PARTNERSHIP

QUARTERLY REPORT FOR THE PERIOD ENDED JUNE 30, 2019

TABLE OF CONTENTS

 
Page
 
 
PART I - FINANCIAL INFORMATION
 
 
 
 
 
PART II - OTHER INFORMATION
 
ITEM 6. EXHIBITS



2

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

HIGHWOODS PROPERTIES, INC.
Consolidated Balance Sheets
(Unaudited and in thousands, except share and per share data)
 
June 30,
2019
 
December 31,
2018
Assets:
 
 
 
Real estate assets, at cost:
 
 
 
Land
$
495,753

 
$
491,441

Buildings and tenant improvements
4,835,323

 
4,676,862

Development in-process
63,118

 
165,537

Land held for development
137,340

 
128,248

 
5,531,534

 
5,462,088

Less-accumulated depreciation
(1,360,108
)
 
(1,296,562
)
Net real estate assets
4,171,426

 
4,165,526

Real estate and other assets, net, held for sale
8,839

 

Cash and cash equivalents
4,530

 
3,769

Restricted cash
8,977

 
6,374

Accounts receivable
37,703

 
25,952

Mortgages and notes receivable, net of allowance of $28 and $44, respectively
1,583

 
5,599

Accrued straight-line rents receivable
226,614

 
220,088

Investments in and advances to unconsolidated affiliates
23,584

 
23,585

Deferred leasing costs, net of accumulated amortization of $152,334 and $149,275, respectively
195,863

 
195,273

Prepaid expenses and other assets, net of accumulated depreciation of $19,418 and $18,074, respectively
63,494

 
28,843

Total Assets
$
4,742,613

 
$
4,675,009

Liabilities, Noncontrolling Interests in the Operating Partnership and Equity:
 
 
 
Mortgages and notes payable, net
$
2,161,965

 
$
2,085,831

Accounts payable, accrued expenses and other liabilities
257,338

 
218,922

Total Liabilities
2,419,303

 
2,304,753

Commitments and contingencies

 

Noncontrolling interests in the Operating Partnership
112,778

 
105,960

Equity:
 
 
 
Preferred Stock, $.01 par value, 50,000,000 authorized shares;
 
 
 
8.625% Series A Cumulative Redeemable Preferred Shares (liquidation preference $1,000 per share), 28,859 and 28,877 shares issued and outstanding, respectively
28,859

 
28,877

Common Stock, $.01 par value, 200,000,000 authorized shares;
 
 
 
103,704,603 and 103,557,065 shares issued and outstanding, respectively
1,037

 
1,036

Additional paid-in capital
2,972,798

 
2,976,197

Distributions in excess of net income available for common stockholders
(821,051
)
 
(769,303
)
Accumulated other comprehensive income
6,488

 
9,913

Total Stockholders’ Equity
2,188,131

 
2,246,720

Noncontrolling interests in consolidated affiliates
22,401

 
17,576

Total Equity
2,210,532

 
2,264,296

Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity
$
4,742,613

 
$
4,675,009

 
See accompanying notes to consolidated financial statements.

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Table of Contents

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Income
(Unaudited and in thousands, except per share amounts)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Rental and other revenues
$
184,070

 
$
178,792

 
$
356,433

 
$
359,230

Operating expenses:
 
 
 
 
 
 
 
Rental property and other expenses
60,558

 
59,663

 
121,109

 
119,095

Depreciation and amortization
59,460

 
56,694

 
128,664

 
114,262

Impairments of real estate assets
531

 

 
531

 

General and administrative
9,560

 
9,540

 
21,941

 
21,318

Total operating expenses
130,109

 
125,897

 
272,245

 
254,675

Interest expense
20,356

 
17,877

 
39,095

 
36,268

Other income/(loss)
321

 
462

 
(3,445
)
 
917

Gains on disposition of property
6,703

 
16,972

 
6,703

 
16,972

Equity in earnings of unconsolidated affiliates
765

 
546

 
1,429

 
1,068

Net income
41,394

 
52,998

 
49,780

 
87,244

Net (income) attributable to noncontrolling interests in the Operating Partnership
(1,044
)
 
(1,381
)
 
(1,237
)
 
(2,269
)
Net (income) attributable to noncontrolling interests in consolidated affiliates
(306
)
 
(308
)
 
(622
)
 
(594
)
Dividends on Preferred Stock
(622
)
 
(623
)
 
(1,244
)
 
(1,246
)
Net income available for common stockholders
$
39,422

 
$
50,686


$
46,677


$
83,135

Earnings per Common Share – basic:
 
 
 
 
 
 
 
Net income available for common stockholders
$
0.38

 
$
0.49

 
$
0.45

 
$
0.80

Weighted average Common Shares outstanding – basic
103,693

 
103,428

 
103,647

 
103,376

Earnings per Common Share – diluted:
 
 
 
 
 
 
 
Net income available for common stockholders
$
0.38

 
$
0.49

 
$
0.45

 
$
0.80

Weighted average Common Shares outstanding – diluted
106,445

 
106,267

 
106,402

 
106,216

 
See accompanying notes to consolidated financial statements.

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Table of Contents

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Comprehensive Income
(Unaudited and in thousands)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Comprehensive income:
 
 
 
 
 
 
 
Net income
$
41,394

 
$
52,998

 
$
49,780

 
$
87,244

Other comprehensive income/(loss):
 
 
 
 
 
 
 
Unrealized gains/(losses) on cash flow hedges
(646
)
 
862

 
(2,550
)
 
8,739

Amortization of cash flow hedges
(360
)
 
(515
)
 
(875
)
 
(621
)
Total other comprehensive income/(loss)
(1,006
)
 
347

 
(3,425
)
 
8,118

Total comprehensive income
40,388

 
53,345

 
46,355

 
95,362

Less-comprehensive (income) attributable to noncontrolling interests
(1,350
)
 
(1,689
)
 
(1,859
)
 
(2,863
)
Comprehensive income attributable to common stockholders
$
39,038

 
$
51,656

 
$
44,496

 
$
92,499

 
See accompanying notes to consolidated financial statements.



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Table of Contents

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Equity
(Unaudited and in thousands, except share amounts)
 
 
Three Months Ended June 30, 2019
 
Number of Common Shares
 
Common Stock
 
Series A Cumulative Redeemable Preferred Shares
 
Additional Paid-In Capital
 
Accumulated Other Compre-hensive Income
 
Non-controlling Interests in Consolidated Affiliates
 
Distributions in Excess of Net Income Available for Common Stockholders
 
Total
Balance at March 31, 2019
103,690,619

 
$
1,037

 
$
28,859

 
$
2,956,517

 
$
7,494

 
$
17,584

 
$
(811,223
)
 
$
2,200,268

Issuances of Common Stock, net of issuance costs and tax withholdings
9,672

 

 

 
397

 

 

 

 
397

Conversions of Common Units to Common Stock
5,000

 

 

 
222

 

 

 

 
222

Dividends on Common Stock ($0.475 per share)
 
 

 

 

 

 

 
(49,250
)
 
(49,250
)
Dividends on Preferred Stock ($21.5625 per share)
 
 

 

 

 

 

 
(622
)
 
(622
)
Adjustment of noncontrolling interests in the Operating Partnership to fair value
 
 

 

 
14,722

 

 

 

 
14,722

Distributions to noncontrolling interests in consolidated affiliates
 
 

 

 

 

 
(476
)
 

 
(476
)
Contributions from noncontrolling interests in consolidated affiliates
 
 

 

 

 

 
4,987

 

 
4,987

Share-based compensation expense, net of forfeitures
(688
)
 

 

 
940

 

 

 

 
940

Net (income) attributable to noncontrolling interests in the Operating Partnership
 
 

 

 

 

 

 
(1,044
)
 
(1,044
)
Net (income) attributable to noncontrolling interests in consolidated affiliates
 
 

 

 

 

 
306

 
(306
)
 

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 

 

 

 

 

 
41,394

 
41,394

Other comprehensive loss
 
 

 

 

 
(1,006
)
 

 

 
(1,006
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40,388

Balance at June 30, 2019
103,704,603

 
$
1,037

 
$
28,859

 
$
2,972,798

 
$
6,488

 
$
22,401

 
$
(821,051
)
 
$
2,210,532

 
 
Six Months Ended June 30, 2019
 
Number of Common Shares
 
Common Stock
 
Series A Cumulative Redeemable Preferred Shares
 
Additional Paid-In Capital
 
Accumulated Other Compre-hensive Income
 
Non-controlling Interests in Consolidated Affiliates
 
Distributions in Excess of Net Income Available for Common Stockholders
 
Total
Balance at December 31, 2018
103,557,065

 
$
1,036

 
$
28,877

 
$
2,976,197

 
$
9,913

 
$
17,576

 
$
(769,303
)
 
$
2,264,296

Issuances of Common Stock, net of issuance costs and tax withholdings
(23,705
)
 

 

 
(731
)
 

 

 

 
(731
)
Conversions of Common Units to Common Stock
8,000

 

 

 
353

 

 

 

 
353

Dividends on Common Stock ($0.95 per share)


 

 

 

 

 

 
(98,425
)
 
(98,425
)
Dividends on Preferred Stock ($43.125 per share)


 

 

 

 

 

 
(1,244
)
 
(1,244
)
Adjustment of noncontrolling interests in the Operating Partnership to fair value


 

 

 
(8,532
)
 

 

 

 
(8,532
)
Distributions to noncontrolling interests in consolidated affiliates


 

 

 

 

 
(784
)
 

 
(784
)
Contributions from noncontrolling interests in consolidated affiliates


 

 

 

 

 
4,987

 

 
4,987

Issuances of restricted stock
164,190

 

 

 

 

 

 

 

Redemptions/repurchases of Preferred Stock
 
 

 
(18
)
 

 

 

 

 
(18
)
Share-based compensation expense, net of forfeitures
(947
)
 
1

 

 
5,511

 

 

 

 
5,512

Net (income) attributable to noncontrolling interests in the Operating Partnership


 

 

 

 

 

 
(1,237
)
 
(1,237
)
Net (income) attributable to noncontrolling interests in consolidated affiliates


 

 

 

 

 
622

 
(622
)
 

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income


 

 

 

 

 

 
49,780

 
49,780

Other comprehensive loss


 

 

 

 
(3,425
)
 

 

 
(3,425
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
46,355

Balance at June 30, 2019
103,704,603

 
$
1,037

 
$
28,859

 
$
2,972,798

 
$
6,488

 
$
22,401

 
$
(821,051
)
 
$
2,210,532

See accompanying notes to consolidated financial statements.

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Table of Contents

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Equity - Continued
(Unaudited and in thousands, except share amounts)
 
 
Three Months Ended June 30, 2018
 
Number of Common Shares
 
Common Stock
 
Series A Cumulative Redeemable Preferred Shares
 
Additional Paid-In Capital
 
Accumulated Other Compre-hensive Income
 
Non-controlling Interests in Consolidated Affiliates
 
Distributions in Excess of Net Income Available for Common Stockholders
 
Total
Balance at March 31, 2018
103,421,754

 
$
1,034

 
$
28,887

 
$
2,953,148

 
$
15,609

 
$
17,464

 
$
(762,642
)
 
$
2,253,500

Issuances of Common Stock, net of issuance costs and tax withholdings
33,361

 

 

 
1,444

 

 

 

 
1,444

Conversions of Common Units to Common Stock
4,000

 

 

 
182

 

 

 

 
182

Dividends on Common Stock ($0.4625 per share)
 
 

 

 

 

 

 
(47,832
)
 
(47,832
)
Dividends on Preferred Stock ($21.5625 per share)
 
 

 

 

 

 

 
(623
)
 
(623
)
Adjustment of noncontrolling interests in the Operating Partnership to fair value
 
 

 

 
(19,310
)
 

 

 

 
(19,310
)
Distributions to noncontrolling interests in consolidated affiliates
 
 

 

 

 

 
(305
)
 

 
(305
)
Share-based compensation expense, net of forfeitures

 
1

 

 
1,172

 

 

 

 
1,173

Net (income) attributable to noncontrolling interests in the Operating Partnership
 
 

 

 

 

 

 
(1,381
)
 
(1,381
)
Net (income) attributable to noncontrolling interests in consolidated affiliates
 
 

 

 

 

 
308

 
(308
)
 

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 

 

 

 

 

 
52,998

 
52,998

Other comprehensive income
 
 

 

 

 
347

 

 

 
347

Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53,345

Balance at June 30, 2018
103,459,115

 
$
1,035

 
$
28,887

 
$
2,936,636

 
$
15,956

 
$
17,467

 
$
(759,788
)
 
$
2,240,193

 
 
Six Months Ended June 30, 2018
 
Number of Common Shares
 
Common Stock
 
Series A Cumulative Redeemable Preferred Shares
 
Additional Paid-In Capital
 
Accumulated Other Compre-hensive Income
 
Non-controlling Interests in Consolidated Affiliates
 
Distributions in Excess of Net Income Available for Common Stockholders
 
Total
Balance at December 31, 2017
103,266,875

 
$
1,033

 
$
28,892

 
$
2,929,399

 
$
7,838

 
$
17,416

 
$
(747,344
)
 
$
2,237,234

Issuances of Common Stock, net of issuance costs and tax withholdings
(3,396
)
 

 

 
415

 

 

 

 
415

Conversions of Common Units to Common Stock
23,196

 

 

 
1,084

 

 

 

 
1,084

Dividends on Common Stock ($0.925 per share)

 

 

 

 

 

 
(95,579
)
 
(95,579
)
Dividends on Preferred Stock ($43.125 per share)

 

 

 

 

 

 
(1,246
)
 
(1,246
)
Adjustment of noncontrolling interests in the Operating Partnership to fair value

 

 

 
272

 

 

 

 
272

Distributions to noncontrolling interests in consolidated affiliates

 

 

 

 

 
(543
)
 

 
(543
)
Issuances of restricted stock
172,440

 

 

 

 

 

 

 

Redemptions/repurchases of Preferred Stock

 

 
(5
)
 

 

 

 

 
(5
)
Share-based compensation expense, net of forfeitures

 
2

 

 
5,466

 

 

 

 
5,468

Net (income) attributable to noncontrolling interests in the Operating Partnership

 

 

 

 

 

 
(2,269
)
 
(2,269
)
Net (income) attributable to noncontrolling interests in consolidated affiliates

 

 

 

 

 
594

 
(594
)
 

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 

 
87,244

 
87,244

Other comprehensive income

 

 

 

 
8,118

 

 

 
8,118

Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
95,362

Balance at June 30, 2018
103,459,115

 
$
1,035

 
$
28,887

 
$
2,936,636

 
$
15,956

 
$
17,467

 
$
(759,788
)
 
$
2,240,193

See accompanying notes to consolidated financial statements.

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Table of Contents

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Cash Flows
(Unaudited and in thousands)
 
Six Months Ended
June 30,
 
2019
 
2018
Operating activities:
 
 
 
Net income
$
49,780

 
$
87,244

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
128,664

 
114,262

Amortization of lease incentives and acquisition-related intangible assets and liabilities
868

 
(960
)
Share-based compensation expense
5,512

 
5,468

Credit losses on operating lease receivables
8,144

 
192

Write-off of mortgages and notes receivable
4,087

 

Accrued interest on mortgages and notes receivable
(118
)
 
(225
)
Amortization of debt issuance costs
1,455

 
1,408

Amortization of cash flow hedges
(875
)
 
(621
)
Amortization of mortgages and notes payable fair value adjustments
787

 
694

Impairments of real estate assets
531

 

Losses on debt extinguishment
375

 

Net gains on disposition of property
(6,703
)
 
(16,972
)
Equity in earnings of unconsolidated affiliates
(1,429
)
 
(1,068
)
Distributions of earnings from unconsolidated affiliates
669

 
1,706

Settlement of cash flow hedges
(5,144
)
 
7,216

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(5,507
)
 
4,469

Prepaid expenses and other assets
(3,305
)
 
(5,232
)
Accrued straight-line rents receivable
(14,273
)
 
(12,707
)
Accounts payable, accrued expenses and other liabilities
9,771

 
(916
)
Net cash provided by operating activities
173,289

 
183,958

Investing activities:
 
 
 
Investments in acquired real estate and related intangible assets, net of cash acquired
(12,795
)
 
(50,649
)
Investments in development in-process
(50,884
)
 
(85,717
)
Investments in tenant improvements and deferred leasing costs
(78,449
)
 
(61,990
)
Investments in building improvements
(24,113
)
 
(34,652
)
Net proceeds from disposition of real estate assets
31,510

 
33,453

Distributions of capital from unconsolidated affiliates
29

 
105

Repayments of mortgages and notes receivable
147

 
758

Changes in other investing activities
(4,272
)
 
(3,147
)
Net cash used in investing activities
(138,827
)
 
(201,839
)
Financing activities:
 
 
 
Dividends on Common Stock
(98,425
)
 
(95,579
)
Redemptions/repurchases of Preferred Stock
(18
)
 
(5
)
Dividends on Preferred Stock
(1,244
)
 
(1,246
)
Distributions to noncontrolling interests in the Operating Partnership
(2,598
)
 
(2,599
)
Distributions to noncontrolling interests in consolidated affiliates
(784
)
 
(543
)
Proceeds from the issuance of Common Stock
1,049

 
2,052

Costs paid for the issuance of Common Stock

 
(28
)
Repurchase of shares related to tax withholdings
(1,780
)
 
(1,609
)
Borrowings on revolving credit facility
169,400

 
257,400

Repayments of revolving credit facility
(215,400
)
 
(360,400
)
Borrowings on mortgages and notes payable
349,010

 
345,863

Repayments of mortgages and notes payable
(225,929
)
 
(200,892
)
Changes in debt issuance costs and other financing activities
(4,379
)
 
(2,948
)
Net cash used in financing activities
(31,098
)
 
(60,534
)
Net increase/(decrease) in cash and cash equivalents and restricted cash
$
3,364

 
$
(78,415
)
 
See accompanying notes to consolidated financial statements.


8

Table of Contents

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Cash Flows – Continued
(Unaudited and in thousands)

 
Six Months Ended
June 30,
 
2019
 
2018
Net increase/(decrease) in cash and cash equivalents and restricted cash
$
3,364

 
$
(78,415
)
Cash and cash equivalents and restricted cash at beginning of the period
10,143

 
88,333

Cash and cash equivalents and restricted cash at end of the period
$
13,507

 
$
9,918


Reconciliation of cash and cash equivalents and restricted cash:

 
Six Months Ended
June 30,
 
2019
 
2018
Cash and cash equivalents at end of the period
$
4,530

 
$
4,232

Restricted cash at end of the period
8,977

 
5,686

Cash and cash equivalents and restricted cash at end of the period
$
13,507

 
$
9,918


Supplemental disclosure of cash flow information:
 
 
Six Months Ended
June 30,
 
2019
 
2018
Cash paid for interest, net of amounts capitalized
$
33,378

 
$
33,273


Supplemental disclosure of non-cash investing and financing activities:
 
 
Six Months Ended
June 30,
 
2019
 
2018
Unrealized gains/(losses) on cash flow hedges
$
(2,550
)
 
$
8,739

Conversions of Common Units to Common Stock
353

 
1,084

Changes in accrued capital expenditures
2,027

 
(10,574
)
Write-off of fully depreciated real estate assets
36,188

 
48,011

Write-off of fully amortized leasing costs
19,900

 
19,717

Write-off of fully amortized debt issuance costs
828

 
2,705

Adjustment of noncontrolling interests in the Operating Partnership to fair value
8,532

 
(272
)
Contributions from noncontrolling interests in consolidated affiliates
4,987

 

Initial recognition of lease liabilities related to right of use assets
35,349

 

 
See accompanying notes to consolidated financial statements.

9

Table of Contents

HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Balance Sheets
(Unaudited and in thousands, except unit and per unit data)
 
June 30,
2019
 
December 31,
2018
Assets:
 
 
 
Real estate assets, at cost:
 
 
 
Land
$
495,753

 
$
491,441

Buildings and tenant improvements
4,835,323

 
4,676,862

Development in-process
63,118

 
165,537

Land held for development
137,340

 
128,248

 
5,531,534

 
5,462,088

Less-accumulated depreciation
(1,360,108
)
 
(1,296,562
)
Net real estate assets
4,171,426

 
4,165,526

Real estate and other assets, net, held for sale
8,839

 

Cash and cash equivalents
4,530

 
3,769

Restricted cash
8,977

 
6,374

Accounts receivable
37,703

 
25,952

Mortgages and notes receivable, net of allowance of $28 and $44, respectively
1,583

 
5,599

Accrued straight-line rents receivable
226,614

 
220,088

Investments in and advances to unconsolidated affiliates
23,584

 
23,585

Deferred leasing costs, net of accumulated amortization of $152,334 and $149,275, respectively
195,863

 
195,273

Prepaid expenses and other assets, net of accumulated depreciation of $19,418 and $18,074, respectively