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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 March 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from [ ] to [ ]
403772953_logotree12.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 103,885,918 shares of Common Stock outstanding as of April 21, 2020.
 




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 April 21, 2020, 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 March 31, 2020 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 MARCH 31, 2020

TABLE OF CONTENTS

 
Page
 
 
PART I - FINANCIAL INFORMATION
 
 
 
 
 
PART II - OTHER INFORMATION
 
ITEM 1A.  RISK FACTORS
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)
 
March 31,
2020
 
December 31,
2019
Assets:
 
 
 
Real estate assets, at cost:
 
 
 
Land
$
482,658

 
$
515,095

Buildings and tenant improvements
4,959,136

 
5,128,150

Development in-process
184,400

 
172,706

Land held for development
128,984

 
99,163

 
5,755,178

 
5,915,114

Less-accumulated depreciation
(1,337,174
)
 
(1,388,566
)
Net real estate assets
4,418,004

 
4,526,548

Real estate and other assets, net, held for sale
2,726

 
20,790

Cash and cash equivalents
12,696

 
9,505

Restricted cash
111,393

 
5,237

Accounts receivable
26,326

 
23,370

Mortgages and notes receivable
1,489

 
1,501

Accrued straight-line rents receivable
239,669

 
234,652

Investments in and advances to unconsolidated affiliates
26,286

 
26,298

Deferred leasing costs, net of accumulated amortization of $146,438 and $146,125, respectively
225,258

 
231,347

Prepaid expenses and other assets, net of accumulated depreciation of $19,909 and $20,017, respectively
66,862

 
58,996

Total Assets
$
5,130,709

 
$
5,138,244

Liabilities, Noncontrolling Interests in the Operating Partnership and Equity:
 
 
 
Mortgages and notes payable, net
$
2,410,189

 
$
2,543,710

Accounts payable, accrued expenses and other liabilities
264,986

 
286,911

Total Liabilities
2,675,175

 
2,830,621

Commitments and contingencies

 

Noncontrolling interests in the Operating Partnership
100,674

 
133,216

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), 28,856 and 28,859 shares issued and outstanding, respectively
28,856

 
28,859

Common Stock, $.01 par value, 200,000,000 authorized shares;
 
 
 
 103,885,918 and 103,756,046 shares issued and outstanding, respectively
1,039

 
1,038

Additional paid-in capital
3,000,614

 
2,954,779

Distributions in excess of net income available for common stockholders
(696,070
)
 
(831,808
)
Accumulated other comprehensive loss
(1,676
)
 
(471
)
Total Stockholders’ Equity
2,332,763

 
2,152,397

Noncontrolling interests in consolidated affiliates
22,097

 
22,010

Total Equity
2,354,860

 
2,174,407

Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity
$
5,130,709

 
$
5,138,244

 
See accompanying notes to consolidated financial statements.

3

Table of Contents


HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Income
(Unaudited and in thousands, except per share amounts)
 
Three Months Ended
March 31,
 
2020
 
2019
Rental and other revenues
$
192,800

 
$
172,363

Operating expenses:
 
 
 
Rental property and other expenses
62,202

 
60,551

Depreciation and amortization
61,150

 
69,204

General and administrative
10,930

 
12,381

Total operating expenses
134,282

 
142,136

Interest expense
21,277

 
18,739

Other income/(loss)
69

 
(3,766
)
Gains on disposition of property
153,067

 

Equity in earnings of unconsolidated affiliates
963

 
664

Net income
191,340

 
8,386

Net (income) attributable to noncontrolling interests in the Operating Partnership
(4,960
)
 
(193
)
Net (income) attributable to noncontrolling interests in consolidated affiliates
(285
)
 
(316
)
Dividends on Preferred Stock
(622
)
 
(622
)
Net income available for common stockholders
$
185,473


$
7,255

Earnings per Common Share – basic:
 
 
 
Net income available for common stockholders
$
1.79

 
$
0.07

Weighted average Common Shares outstanding – basic
103,813

 
103,600

Earnings per Common Share – diluted:
 
 
 
Net income available for common stockholders
$
1.79

 
$
0.07

Weighted average Common Shares outstanding – diluted
106,633

 
106,357

 
See accompanying notes to consolidated financial statements.

4

Table of Contents

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Comprehensive Income
(Unaudited and in thousands)
 
Three Months Ended
March 31,
 
2020
 
2019
Comprehensive income:
 
 
 
Net income
$
191,340

 
$
8,386

Other comprehensive loss:
 
 
 
Unrealized losses on cash flow hedges
(1,133
)
 
(1,904
)
Amortization of cash flow hedges
(72
)
 
(515
)
Total other comprehensive loss
(1,205
)
 
(2,419
)
Total comprehensive income
190,135

 
5,967

Less-comprehensive (income) attributable to noncontrolling interests
(5,245
)
 
(509
)
Comprehensive income attributable to common stockholders
$
184,890

 
$
5,458

 
See accompanying notes to consolidated financial statements.



5

Table of Contents

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Equity
(Unaudited and in thousands, except share amounts)
 
 
Three Months Ended March 31, 2020
 
Number of Common Shares
 
Common Stock
 
Series A Cumulative Redeemable Preferred Shares
 
Additional Paid-In Capital
 
Accumulated Other Compre-hensive Loss
 
Non-controlling Interests in Consolidated Affiliates
 
Distributions in Excess of Net Income Available for Common Stockholders
 
Total
Balance at December 31, 2019
103,756,046

 
$
1,038

 
$
28,859

 
$
2,954,779

 
$
(471
)
 
$
22,010

 
$
(831,808
)
 
$
2,174,407

Issuances of Common Stock, net of issuance costs and tax withholdings
(13,266
)
 

 

 
1,039

 

 

 

 
1,039

Dividends on Common Stock ($0.48 per share)
 
 

 

 

 

 

 
(49,735
)
 
(49,735
)
Dividends on Preferred Stock ($21.5625 per share)
 
 

 

 

 

 

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

 

 
42,301

 

 

 

 
42,301

Distributions to noncontrolling interests in consolidated affiliates
 
 

 

 

 

 
(198
)
 

 
(198
)
Issuances of restricted stock
149,304

 

 

 

 

 

 

 

Redemptions/repurchases of Preferred Stock
 
 

 
(3
)
 

 

 

 

 
(3
)
Share-based compensation expense, net of forfeitures
(6,166
)
 
1

 

 
2,495

 

 

 

 
2,496

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

 

 

 

 

 
(4,960
)
 
(4,960
)
Net (income) attributable to noncontrolling interests in consolidated affiliates
 
 

 

 

 

 
285

 
(285
)
 

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 

 

 

 

 

 
191,340

 
191,340

Other comprehensive loss
 
 

 

 

 
(1,205
)
 

 

 
(1,205
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
190,135

Balance at March 31, 2020
103,885,918

 
$
1,039

 
$
28,856

 
$
3,000,614

 
$
(1,676
)
 
$
22,097

 
$
(696,070
)
 
$
2,354,860

 
 
Three Months Ended March 31, 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
(33,377
)
 

 

 
(1,128
)
 

 

 

 
(1,128
)
Conversions of Common Units to Common Stock
3,000

 

 

 
131

 

 

 

 
131

Dividends on Common Stock ($0.475 per share)
 
 

 

 

 

 

 
(49,175
)
 
(49,175
)
Dividends on Preferred Stock ($21.5625 per share)
 
 

 

 

 

 

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

 

 
(23,254
)
 

 

 

 
(23,254
)
Distributions to noncontrolling interests in consolidated affiliates
 
 

 

 

 

 
(308
)
 

 
(308
)
Issuances of restricted stock
164,190

 

 

 

 

 

 

 

Redemptions/repurchases of Preferred Stock
 
 

 
(18
)
 

 

 

 

 
(18
)
Share-based compensation expense, net of forfeitures
(259
)
 
1

 

 
4,571

 

 

 

 
4,572

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

 

 

 

 

 
(193
)
 
(193
)
Net (income) attributable to noncontrolling interests in consolidated affiliates
 
 

 

 

 

 
316

 
(316
)
 

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 

 

 

 

 

 
8,386

 
8,386

Other comprehensive loss
 
 

 

 

 
(2,419
)
 

 

 
(2,419
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,967

Balance at March 31, 2019
103,690,619

 
$
1,037

 
$
28,859

 
$
2,956,517

 
$
7,494

 
$
17,584

 
$
(811,223
)
 
$
2,200,268


See accompanying notes to consolidated financial statements.

6

Table of Contents

HIGHWOODS PROPERTIES, INC.
Consolidated Statements of Cash Flows
(Unaudited and in thousands)
 
Three Months Ended
March 31,
 
2020
 
2019
Operating activities:
 
 
 
Net income
$
191,340

 
$
8,386

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
61,150

 
69,204

Amortization of lease incentives and acquisition-related intangible assets and liabilities
(649
)
 
1,689

Share-based compensation expense
2,496

 
4,572

Credit losses on operating lease receivables
1,249

 
7,315

Write-off of mortgages and notes receivable

 
4,087

Accrued interest on mortgages and notes receivable
(31
)
 
(85
)
Amortization of debt issuance costs
767

 
736

Amortization of cash flow hedges
(72
)
 
(515
)
Amortization of mortgages and notes payable fair value adjustments
426

 
385

Losses on debt extinguishment

 
375

Net gains on disposition of property
(153,067
)
 

Equity in earnings of unconsolidated affiliates
(963
)
 
(664
)
Distributions of earnings from unconsolidated affiliates
341

 
609

Settlement of cash flow hedges

 
(5,144
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
824

 
(2,583
)
Prepaid expenses and other assets
(8,745
)
 
(6,953
)
Accrued straight-line rents receivable
(10,888
)
 
(6,903
)
Accounts payable, accrued expenses and other liabilities
(20,564
)
 
(11,798
)
Net cash provided by operating activities
63,614

 
62,713

Investing activities:
 
 
 
Investments in acquired real estate and related intangible assets, net of cash acquired
(55
)
 

Investments in development in-process
(36,122
)
 
(28,555
)
Investments in tenant improvements and deferred leasing costs
(49,825
)
 
(38,544
)
Investments in building improvements
(15,254
)
 
(12,517
)
Net proceeds from disposition of real estate assets
331,761

 

Distributions of capital from unconsolidated affiliates
72

 
29

Investments in mortgages and notes receivable
(32
)
 

Repayments of mortgages and notes receivable
75

 
74

Changes in other investing activities
477

 
(1,989
)
Net cash provided by/(used in) investing activities
231,097

 
(81,502
)
Financing activities:
 
 
 
Dividends on Common Stock
(49,735
)
 
(49,175
)
Redemptions/repurchases of Preferred Stock
(3
)
 
(18
)
Dividends on Preferred Stock
(622
)
 
(622
)
Distributions to noncontrolling interests in the Operating Partnership
(1,364
)
 
(1,300
)
Distributions to noncontrolling interests in consolidated affiliates
(198
)
 
(308
)
Proceeds from the issuance of Common Stock
2,343

 
652

Costs paid for the issuance of Common Stock
(180
)
 

Repurchase of shares related to tax withholdings
(1,124
)
 
(1,780
)
Borrowings on revolving credit facility
110,000

 
98,300

Repayments of revolving credit facility
(244,000
)
 
(145,300
)
Borrowings on mortgages and notes payable

 
349,010

Repayments of mortgages and notes payable
(481
)
 
(225,462
)
Changes in debt issuance costs and other financing activities

 
(2,884
)
Net cash provided by/(used in) financing activities
(185,364
)
 
21,113

Net increase in cash and cash equivalents and restricted cash
$
109,347

 
$
2,324

 
See accompanying notes to consolidated financial statements.


7

Table of Contents

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

 
Three Months Ended
March 31,
 
2020
 
2019
Net increase in cash and cash equivalents and restricted cash
$
109,347

 
$
2,324

Cash and cash equivalents and restricted cash at beginning of the period
14,742

 
10,143

Cash and cash equivalents and restricted cash at end of the period
$
124,089

 
$
12,467


Reconciliation of cash and cash equivalents and restricted cash:

 
Three Months Ended
March 31,
 
2020
 
2019
Cash and cash equivalents at end of the period
$
12,696

 
$
4,827

Restricted cash at end of the period
111,393

 
7,640

Cash and cash equivalents and restricted cash at end of the period
$
124,089

 
$
12,467


Supplemental disclosure of cash flow information:
 
 
Three Months Ended
March 31,
 
2020
 
2019
Cash paid for interest, net of amounts capitalized
$
25,321

 
$
23,924


Supplemental disclosure of non-cash investing and financing activities:
 
 
Three Months Ended
March 31,
 
2020
 
2019
Unrealized losses on cash flow hedges
$
(1,133
)
 
$
(1,904
)
Conversions of Common Units to Common Stock

 
131

Changes in accrued capital expenditures (1)
(4,789
)
 
(119
)
Write-off of fully depreciated real estate assets
12,033

 
23,880

Write-off of fully amortized leasing costs
5,842

 
12,671

Write-off of fully amortized debt issuance costs

 
828

Adjustment of noncontrolling interests in the Operating Partnership to fair value
(42,301
)
 
23,254

Issuances of Common Units to acquire real estate assets
6,163

 

Initial recognition of lease liabilities related to right of use assets

 
35,349

__________

(1)
Accrued capital expenditures included in accounts payable, accrued expenses and other liabilities at March 31, 2020 and 2019 were $63.2 million and $62.2 million, respectively.

See accompanying notes to consolidated financial statements.

8

Table of Contents

HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Balance Sheets
(Unaudited and in thousands, except unit and per unit data)
 
March 31,
2020
 
December 31,
2019
Assets:
 
 
 
Real estate assets, at cost:
 
 
 
Land
$
482,658

 
$
515,095

Buildings and tenant improvements
4,959,136

 
5,128,150

Development in-process
184,400

 
172,706

Land held for development
128,984

 
99,163

 
5,755,178

 
5,915,114

Less-accumulated depreciation
(1,337,174
)
 
(1,388,566
)
Net real estate assets
4,418,004

 
4,526,548

Real estate and other assets, net, held for sale
2,726

 
20,790

Cash and cash equivalents
12,696

 
9,505

Restricted cash
111,393

 
5,237

Accounts receivable
26,326

 
23,370

Mortgages and notes receivable
1,489

 
1,501

Accrued straight-line rents receivable
239,669

 
234,652

Investments in and advances to unconsolidated affiliates
26,286

 
26,298

Deferred leasing costs, net of accumulated amortization of $146,438 and $146,125, respectively
225,258

 
231,347

Prepaid expenses and other assets, net of accumulated depreciation of $19,909 and $20,017, respectively
66,862

 
58,996

Total Assets
$
5,130,709

 
$
5,138,244

Liabilities, Redeemable Operating Partnership Units and Capital:
 
 
 
Mortgages and notes payable, net
$
2,410,189

 
$
2,543,710

Accounts payable, accrued expenses and other liabilities
264,986

 
286,911

Total Liabilities
2,675,175

 
2,830,621

Commitments and contingencies

 

Redeemable Operating Partnership Units:
 
 
 
Common Units, 2,842,295 and 2,723,703 outstanding, respectively
100,674

 
133,216

Series A Preferred Units (liquidation preference $1,000 per unit), 28,856 and 28,859 units issued and outstanding, respectively
28,856

 
28,859

Total Redeemable Operating Partnership Units
129,530

 
162,075

Capital:
 
 
 
Common Units:
 
 
 
General partner Common Units, 1,063,194 and 1,060,709 outstanding, respectively
23,055

 
21,240

Limited partner Common Units, 102,413,915 and 102,286,528 outstanding, respectively
2,282,528

 
2,102,769

Accumulated other comprehensive loss
(1,676
)
 
(471
)
Noncontrolling interests in consolidated affiliates
22,097

 
22,010

Total Capital
2,326,004

 
2,145,548

Total Liabilities, Redeemable Operating Partnership Units and Capital
$
5,130,709

 
$
5,138,244

 
See accompanying notes to consolidated financial statements.

9

Table of Contents

HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Income
(Unaudited and in thousands, except per unit amounts)
 
Three Months Ended
March 31,
 
2020
 
2019
Rental and other revenues
$
192,800

 
$
172,363

Operating expenses:
 
 
 
Rental property and other expenses
62,202

 
60,551

Depreciation and amortization
61,150

 
69,204

General and administrative
10,930

 
12,381

Total operating expenses
134,282

 
142,136

Interest expense
21,277

 
18,739

Other income/(loss)
69

 
(3,766
)
Gains on disposition of property
153,067

 

Equity in earnings of unconsolidated affiliates
963

 
664

Net income
191,340

 
8,386

Net (income) attributable to noncontrolling interests in consolidated affiliates
(285
)
 
(316
)
Distributions on Preferred Units
(622
)
 
(622
)
Net income available for common unitholders
$
190,433

 
$
7,448

Earnings per Common Unit – basic:
 
 
 
Net income available for common unitholders
$
1.79

 
$
0.07

Weighted average Common Units outstanding – basic
106,199

 
105,928

Earnings per Common Unit – diluted:
 
 
 
Net income available for common unitholders
$
1.79

 
$
0.07

Weighted average Common Units outstanding – diluted
106,224

 
105,948

 
See accompanying notes to consolidated financial statements.

10

Table of Contents

HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Comprehensive Income
(Unaudited and in thousands)
 
Three Months Ended
March 31,
 
2020
 
2019
Comprehensive income:
 
 
 
Net income
$
191,340

 
$
8,386

Other comprehensive loss:
 
 
 
Unrealized losses on cash flow hedges
(1,133
)
 
(1,904
)
Amortization of cash flow hedges
(72
)
 
(515
)
Total other comprehensive loss
(1,205
)
 
(2,419
)
Total comprehensive income
190,135

 
5,967

Less-comprehensive (income) attributable to noncontrolling interests
(285
)
 
(316
)
Comprehensive income attributable to common unitholders
$
189,850

 
$
5,651

 
See accompanying notes to consolidated financial statements.


11

Table of Contents

HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Capital
(Unaudited and in thousands)

 
Three Months Ended March 31, 2020
 
Common Units
 
Accumulated
Other
Comprehensive Loss
 
Noncontrolling
Interests in
Consolidated
Affiliates
 
Total
 
General
Partners’
Capital
 
Limited
Partners’
Capital
 
Balance at December 31, 2019
$
21,240

 
$
2,102,769

 
$
(471
)
 
$
22,010

 
$
2,145,548

Issuances of Common Units, net of issuance costs and tax withholdings
72

 
7,130

 

 

 
7,202

Distributions on Common Units ($0.48 per unit)
(509
)
 
(50,394
)
 

 

 
(50,903
)
Distributions on Preferred Units ($21.5625 per unit)
(6
)
 
(616
)
 

 

 
(622
)
Share-based compensation expense, net of forfeitures
25

 
2,471

 

 

 
2,496

Distributions to noncontrolling interests in consolidated affiliates

 

 

 
(198
)
 
(198
)
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner
323

 
32,023

 

 

 
32,346

Net (income) attributable to noncontrolling interests in consolidated affiliates
(3
)
 
(282
)
 

 
285

 

Comprehensive income:
 
 

 
 
 
 
 
 
Net income
1,913

 
189,427

 

 

 
191,340

Other comprehensive loss

 

 
(1,205
)
 

 
(1,205
)
Total comprehensive income
 
 
 
 
 
 
 
 
190,135

Balance at March 31, 2020
$
23,055

 
$
2,282,528

 
$
(1,676
)
 
$
22,097

 
$
2,326,004


 
Three Months Ended March 31, 2019
 
Common Units
 
Accumulated
Other
Comprehensive Income
 
Noncontrolling
Interests in
Consolidated
Affiliates
 
Total
 
General
Partners’
Capital
 
Limited
Partners’
Capital
 
Balance at December 31, 2018
$
22,078

 
$
2,185,852

 
$
9,913

 
$
17,576

 
$
2,235,419

Issuances of Common Units, net of issuance costs and tax withholdings
(11
)
 
(1,117
)
 

 

 
(1,128
)
Distributions on Common Units ($0.475 per unit)
(503
)
 
(49,778
)
 

 

 
(50,281
)
Distributions on Preferred Units ($21.5625 per unit)
(6
)
 
(616
)
 

 

 
(622
)
Share-based compensation expense, net of forfeitures
46

 
4,526

 

 

 
4,572

Distributions to noncontrolling interests in consolidated affiliates

 

 

 
(308
)
 
(308
)
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner
(222
)
 
(21,988
)
 

 

 
(22,210
)
Net (income) attributable to noncontrolling interests in consolidated affiliates
(3
)
 
(313
)
 

 
316

 

Comprehensive income:
 
 
 
 
 
 
 
 
 
Net income
84

 
8,302

 

 

 
8,386

Other comprehensive loss

 

 
(2,419
)
 

 
(2,419
)
Total comprehensive income
 
 
 
 
 
 
 
 
5,967

Balance at March 31, 2019
$
21,463

 
$
2,124,868

 
$
7,494

 
$
17,584

 
$
2,171,409


See accompanying notes to consolidated financial statements.

12

Table of Contents

HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows
(Unaudited and in thousands)
 
Three Months Ended
March 31,
 
2020
 
2019
Operating activities:
 
 
 
Net income
$
191,340

 
$
8,386

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
61,150

 
69,204

Amortization of lease incentives and acquisition-related intangible assets and liabilities
(649
)
 
1,689

Share-based compensation expense
2,496

 
4,572

Credit losses on operating lease receivables
1,249

 
7,315

Write-off of mortgages and notes receivable

 
4,087

Accrued interest on mortgages and notes receivable
(31
)
 
(85
)
Amortization of debt issuance costs
767

 
736

Amortization of cash flow hedges
(72
)
 
(515
)
Amortization of mortgages and notes payable fair value adjustments
426

 
385

Losses on debt extinguishment

 
375

Net gains on disposition of property
(153,067
)
 

Equity in earnings of unconsolidated affiliates
(963
)
 
(664
)
Distributions of earnings from unconsolidated affiliates
341

 
609

Settlement of cash flow hedges

 
(5,144
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
824

 
(2,583
)
Prepaid expenses and other assets
(8,745
)
 
(6,953
)
Accrued straight-line rents receivable
(10,888
)
 
(6,903
)
Accounts payable, accrued expenses and other liabilities
(20,564
)
 
(11,798
)
Net cash provided by operating activities
63,614

 
62,713

Investing activities:
 
 
 
Investments in acquired real estate and related intangible assets, net of cash acquired
(55
)
 

Investments in development in-process
(36,122
)
 
(28,555
)
Investments in tenant improvements and deferred leasing costs
(49,825
)
 
(38,544
)
Investments in building improvements
(15,254
)
 
(12,517
)
Net proceeds from disposition of real estate assets
331,761

 

Distributions of capital from unconsolidated affiliates
72

 
29

Investments in mortgages and notes receivable
(32
)
 

Repayments of mortgages and notes receivable
75

 
74

Changes in other investing activities
477

 
(1,989
)
Net cash provided by/(used in) investing activities
231,097

 
(81,502
)
Financing activities:
 
 
 
Distributions on Common Units
(50,903
)
 
(50,281
)
Redemptions/repurchases of Preferred Units
(3
)
 
(18
)
Distributions on Preferred Units
(622
)
 
(622
)
Distributions to noncontrolling interests in consolidated affiliates
(198
)
 
(308
)
Proceeds from the issuance of Common Units
2,343

 
652

Costs paid for the issuance of Common Units
(180
)
 

Repurchase of units related to tax withholdings
(1,124
)
 
(1,780
)
Borrowings on revolving credit facility
110,000

 
98,300

Repayments of revolving credit facility
(244,000
)
 
(145,300
)
Borrowings on mortgages and notes payable

 
349,010

Repayments of mortgages and notes payable
(481
)
 
(225,462
)
Changes in debt issuance costs and other financing activities
(196
)
 
(3,078
)
Net cash provided by/(used in) financing activities
(185,364
)
 
21,113

Net increase in cash and cash equivalents and restricted cash
$
109,347

 
$
2,324

 
See accompanying notes to consolidated financial statements.

13

Table of Contents


HIGHWOODS REALTY LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows - Continued
(Unaudited and in thousands)

 
Three Months Ended
March 31,
 
2020
 
2019
Net increase in cash and cash equivalents and restricted cash
$
109,347

 
$
2,324

Cash and cash equivalents and restricted cash at beginning of the period
14,742

 
10,143

Cash and cash equivalents and restricted cash at end of the period
$
124,089

 
$
12,467


Reconciliation of cash and cash equivalents and restricted cash:

 
Three Months Ended
March 31,