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Real Estate Assets | 12 Months Ended
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Dec. 31, 2013
Real Estate [Abstract] |
Real Estate Assets | Real Estate Assets Acquisitions During 2013, we acquired:
• | our joint venture partner's 60.0% interest in our HIW-KC Orlando, LLC joint venture, which owned five office properties in Orlando, FL encompassing 1.3 million rentable square feet, for a net purchase price of $112.8 million. We previously accounted for our 40.0% interest in this joint venture using the equity method of accounting. The assets and liabilities of the joint venture are now wholly owned and are recorded in our Consolidated Financial Statements, including assets recorded at fair value of $188.0 million and secured debt recorded at fair value of $127.9 million, with an effective interest rate of 3.11%. This debt matures in July 2014. As a result of acquiring a controlling interest in this joint venture, our previously held equity interest was remeasured at a fair value of $75.2 million resulting in a gain of $7.5 million, which represents the difference between the fair market value of our previously held equity interest and the carrying value of our investment on the date of acquisition. The fair market value of our previously held equity interest was determined by management based on information available at the acquisition date and on current assumptions as to future operations;
• | an office property in Nashville, TN encompassing 520,000 rentable square feet for a net purchase price of $150.1 million;
• | our Highwoods DLF 97/26 DLF 99/32, LP joint venture partner's 57.0% interest in two office properties in Atlanta, GA encompassing 505,000 rentable square feet for a net purchase price of $44.5 million, including the assumption of secured debt recorded at fair value of $37.6 million, with an effective interest rate of 3.34%. This debt matures in April 2015;
• | an office property in Atlanta, GA encompassing 553,000 rentable square feet for a purchase price of $140.1 million;
• | two office properties in Tampa, FL encompassing 372,000 rentable square feet for a purchase price of $52.5 million;
• | two office properties in Greensboro, NC encompassing 195,000 rentable square feet for a purchase price of $30.8 million; and
• | five acres of land in Memphis, TN on which a build-to-suit development project is underway for a purchase price of $4.8 million.
We expensed $1.8 million of acquisition costs (included in general and administrative expenses) in 2013 related to these acquisitions. The assets acquired and liabilities assumed were recorded at fair value as determined by management based on information available at the acquisition date and on current assumptions as to future operations. 2. Real Estate Assets - Continued The following table sets forth a summary of the fair value of the major assets acquired and liabilities assumed relating to the 2013 acquisitions in Orlando, FL and Nashville, TN and the 553,000 rentable square foot office property in Atlanta, GA discussed in the preceding paragraphs:
| Total Purchase Price Allocation
Real estate assets | $ | 445,396 |
Acquisition-related intangible assets (in deferred financing and leasing costs) | 50,595 |
Mortgages and notes payable | (127,891 | )
Acquisition-related below market lease liabilities (in accounts payable, accrued expenses and other liabilities) | (17,818 | )
Total allocation | $ | 350,282 |
The following table sets forth our rental and other revenues and net income, adjusted for interest expense and depreciation and amortization related to purchase price allocations, acquisition costs and equity in earnings of unconsolidated affiliates previously recognized as income assuming the Orlando, FL, Nashville, TN and Atlanta, GA acquisitions discussed in the preceding paragraph had been completed as of January 1, 2012:
| Year Ended December 31,
| 2013 |  | 2012
| (unaudited)
Pro forma rental and other revenues | $ | 593,778 |  |  | $ | 541,092 |
Pro forma net income | $ | 121,754 |  |  | $ | 69,111 |
Pro forma earnings per share - basic | $ | 1.33 |  |  | $ | 0.82 |
Pro forma earnings per share - diluted | $ | 1.33 |  |  | $ | 0.83 |
The 2013 acquisitions in Orlando, FL, Nashville, TN and Atlanta, GA discussed in the preceding paragraphs resulted in revenues of $25.0 million and net losses of $0.2 million recorded in the Consolidated Statements of Income for the year ended December 31, 2013. During 2012, we acquired:
• | a 492,000 rentable square foot office property in Atlanta, GA for a purchase price of $144.9 million;
• | a 616,000 rentable square foot office property in Pittsburgh, PA for a purchase price of $91.2 million;
• | three medical office properties in Greensboro, NC for a purchase price of $29.6 million, which consisted of the issuance of 66,864 Common Units to noncontrolling interests, contingent consideration with fair value at the acquisition date of $0.7 million, and the assumption of secured debt due August 2014 recorded at fair value of $7.9 million, with an effective interest rate of 4.06%;
• | a 178,300 rentable square foot office property in Cary, NC from our Highwoods DLF 98/29, LLC joint venture for an agreed upon value of $26.0 million, the net proceeds of which were used to reduce the balance of the advance due to us from the joint venture; and
• | 68 acres of development land currently zoned for 1.3 million rentable square feet of future office development in Nashville, TN for a purchase price of $15.0 million.
We expensed $1.5 million of acquisition costs (included in general and administrative expenses) in 2012 related to these acquisitions. The assets acquired and liabilities assumed were recorded at fair value as determined by management based on information available at the acquisition date and on current assumptions as to future operations. 2. Real Estate Assets - Continued The following table sets forth a summary of the fair value of the major assets acquired and liabilities assumed relating to the acquisition of the 492,000 rentable square foot office building in Atlanta, GA discussed in the preceding paragraph:
| Total Purchase Price Allocation
Real estate assets | $ | 135,128 |
Acquisition-related intangible assets (in deferred financing and leasing costs) | 21,637 |
Acquisition-related below market lease liabilities (in accounts payable, accrued expenses and other liabilities) | (11,875 | )
Total allocation | $ | 144,890 |
The following table sets forth our rental and other revenues and net income, adjusted for interest expense and depreciation and amortization related to purchase price allocations and acquisition costs, assuming the 492,000 rentable square foot office building in Atlanta, GA discussed in the preceding paragraphs had been acquired on January 1, 2011:
| Year Ended December 31,
| 2012 |  | 2011
| (unaudited)
Pro forma rental and other revenues | $ | 499,557 |  |  | $ | 448,420 |
Pro forma net income | $ | 84,135 |  |  | $ | 44,817 |
Pro forma earnings per share - basic | $ | 1.02 |  |  | $ | 0.49 |
Pro forma earnings per share - diluted | $ | 1.01 |  |  | $ | 0.49 |
During 2011, we acquired a six-building, 1.54 million rentable 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 (included in general and administrative expenses). Additionally, we acquired a 503,000 rentable 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. The following table sets forth a summary of the fair value of the major assets acquired and liabilities assumed relating to the acquisitions discussed in the preceding paragraph:
| Total Purchase Price Allocation
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 below market lease liabilities (in accounts payable, accrued expenses and other liabilities) | (15,627 | )
Total allocation | $ | 266,797 |
2. Real Estate Assets - Continued The following table sets forth our rental and other revenues and net income, adjusted for interest expense and depreciation and amortization related to purchase price allocations and acquisition costs, assuming the 1.54 million rentable square foot office complex in Pittsburgh, PA and the 503,000 rentable square foot office building in Atlanta, GA discussed in the preceding paragraph had been acquired on January 1, 2011:
| Year Ended December 31, 2011
| (unaudited)
Pro forma rental and other revenues | $ | 473,584 |
Pro forma net income | $ | 45,674 |
Pro forma earnings per share - basic | $ | 0.50 |
Pro forma earnings per share - diluted | $ | 0.50 |
During 2011, we also acquired a 48,000 rentable square foot medical office property in Raleigh, NC for $8.9 million and expensed $0.1 million of acquisition costs related to this transaction. Dispositions During 2013, we sold:
• | eight office properties in Greenville, SC for a sale price of $57.9 million (before $0.1 million in closing credits to buyer for unfunded tenant improvements and after $0.3 million in closing credits to buyer for free rent) and recorded a gain on disposition of discontinued operations of $3.1 million;
• | an office property in Tampa, FL for a sale price of $11.5 million (before $0.6 million in closing credits to buyer for unfunded tenant improvements) and recorded a gain on disposition of discontinued operations of $2.8 million;
• | an office property in Atlanta, GA for a sale price of $13.8 million and recorded a gain on disposition of discontinued operations of $3.0 million;
• | four office properties in Winston-Salem, NC for a sale price of $6.2 million and recorded a gain on disposition of discontinued operations of $0.1 million;
• | an office property in Winston-Salem, NC for a sale price of $5.3 million and recorded a gain on disposition of discontinued operations of $2.5 million;
• | an office property in Tampa, FL for a sale price of $11.6 million and recorded a gain on disposition of discontinued operations of $1.2 million;
• | sixteen industrial properties and a land parcel in a single transaction in Atlanta, GA for a sale price of $91.6 million (before $0.3 million in closing credits to buyer for unfunded tenant improvements and after $0.3 million in closing credits to buyer for free rent). We recorded gains on disposition of discontinued operations of $36.7 million related to the industrial properties and a gain on disposition of property of less than $0.1 million related to the land parcel;
• | five industrial properties in Atlanta, GA for a sale price of $4.5 million (after $0.1 million in closing credits to buyer for free rent) and recorded a gain on disposition of discontinued operations of less than $0.1 million;
• | six industrial properties and a land parcel in a single transaction in Atlanta, GA for a sale price of $38.7 million (before $1.8 million in closing credits to buyer for unfunded tenant improvements and after $1.3 million in closing credits to buyer for free rent) and recorded a gain on disposition of discontinued operations of $13.2 million;
2. Real Estate Assets - Continued
• | two industrial properties in Atlanta, GA for a sale price of $4.8 million and recorded a loss on disposition of discontinued operations of less than $0.1 million; and
• | two office properties in Orlando, FL for a sale price of $14.6 million (before $0.8 million in closing credits to buyer for unfunded tenant improvements) and recorded a loss on disposition of discontinued operations of $0.3 million.
Additionally, in connection with the disposition of an office property in Jackson, MS in the third quarter of 2012, we had the right to receive additional cash consideration of up to $1.5 million upon the satisfaction of a certain post-closing requirement. The post-closing requirement was satisfied and the cash consideration was received during 2013. Accordingly, we recognized $1.5 million in additional gain on disposition of discontinued operations in 2013. During 2012, we sold:
• | three buildings in Jackson, MS and Atlanta, GA for a sale price of $86.5 million and recorded a gain on disposition of discontinued operations of $14.0 million;
• | five office properties in Nashville, TN for a sale price of $41.0 million and recorded a gain on disposition of discontinued operations of $7.0 million;
• | an office property in Pinellas County, FL for a sale price of $9.5 million and recorded a gain on disposition of discontinued operations of $1.4 million;
• | an office property in Kansas City, MO for a sale price of $6.5 million and recorded a gain on disposition of discontinued operations of $1.9 million;
• | 96 vacant rental residential units in Kansas City, MO for a sale price of $11.0 million and recorded a gain on disposition of discontinued operations of $5.1 million; and
• | 17 for-sale residential condominiums in Raleigh, NC for a sale price of $5.5 million and recorded a net gain of $0.4 million. All for-sale residential condominiums were sold as of December 31, 2012.
During 2011, we sold an office property and adjacent land parcel in a single transaction in Winston-Salem, NC for $15.0 million and recorded a gain on disposition of discontinued operations of $2.6 million related to the office property and a gain on disposition of property of $0.3 million related to the land. Impairments During 2013, we recorded impairments of real estate assets of $1.1 million on four properties in a single office park in Winston-Salem, NC and $1.1 million on seven industrial properties in Atlanta, GA. During 2011, we recorded impairments of real estate assets of $2.4 million on two office properties in Orlando, FL. These impairments were due to a change in the assumed timing of future dispositions and leasing assumptions, which reduced the future expected cash flows from the impaired properties.

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- Definition The entire disclosure for real estate owned (as defined). Generally, the largest component of real estate owned by lenders is assets taken in settlement of troubled loans through surrender or foreclosure. Real estate investments, real estate loans that qualify as investments in real estate, and premises that are no longer used in operations may also be included in real estate owned. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 11 -Article 9 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 45 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=28367877&loc=d3e4437-111522 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 35 -Paragraph 43 -URI http://asc.fasb.org/extlink&oid=29634951&loc=d3e1739-110224 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.9-03.10(4)) -URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 28 -Article 12 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph c -Subparagraph Schedule III -Article 5 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 40 -Section 40 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6905009&loc=d3e18511-111553 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 40 -Section 40 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6905009&loc=d3e18551-111553 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 10 -Subparagraph 4 -Article 9 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 35 -Paragraph 17 -URI http://asc.fasb.org/extlink&oid=29634951&loc=d3e1424-110224 + Details
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