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Investments In and Advances To Affiliates | 12 Months Ended
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Dec. 31, 2015
Equity Method Investments and Joint Ventures [Abstract] |
Investments In and Advances To Affiliates | Investments in and Advances to Affiliates Unconsolidated Affiliates We have equity interests of up to 50.0% in various joint ventures with unrelated third parties that are accounted for using the equity method of accounting because we have the ability to exercise significant influence over their operating and financial policies. The following table sets forth our ownership in unconsolidated affiliates at December 31, 2015:
Joint Venture |  | Location of Properties |  | Ownership Interest
Concourse Center Associates, LLC |  | Greensboro, NC |  | 50.0%
Plaza Colonnade, LLC |  | Kansas City, MO |  | 50.0%
Highwoods DLF 97/26 DLF 99/32, LP |  | Orlando, FL |  | 42.9%
Kessinger/Hunter & Company, LC |  | Kansas City, MO |  | 26.5%
Highwoods DLF Forum, LLC |  | Raleigh, NC |  | 25.0%
Highwoods DLF 98/29, LLC |  | Orlando, FL |  | 22.8%
4600 Madison Associates, LP |  | Kansas City, MO |  | 12.5%
4. Investments in and Advances to Affiliates – Continued The following table sets forth the summarized balance sheets of our unconsolidated affiliates:
| December 31,
| 2015 |  | 2014
|  |  | (as revised)
Balance Sheets: |  |  |
Assets: |  |  |
Real estate assets, net | $ | 163,852 |  |  | $ | 239,142 |
All other assets, net | 53,511 |  |  | 61,290 |
Total Assets | $ | 217,363 |  |  | $ | 300,432 |
Liabilities and Partners’ or Shareholders’ Equity: |  |  |
Mortgages and notes payable (1) | $ | 141,580 |  |  | $ | 191,587 |
All other liabilities | 6,547 |  |  | 11,967 |
Partners’ or shareholders’ equity | 69,236 |  |  | 96,878 |
Total Liabilities and Partners’ or Shareholders’ Equity | $ | 217,363 |  |  | $ | 300,432 |
Our share of historical partners’ or shareholders’ equity | $ | 21,022 |  |  | $ | 30,784 |
Advances to unconsolidated affiliates | 448 |  |  | 20,864 |
Difference between cost of investments and the net book value of underlying net assets | (794 | ) |  | (963 | )
Carrying value of investments in and advances to unconsolidated affiliates | $ | 20,676 |  |  | $ | 50,685 |
Our share of unconsolidated non-recourse mortgage debt (1) | $ | 49,242 |  |  | $ | 60,972 |
__________
(1) | Our share of scheduled future principal payments, including amortization, due on mortgages and notes payable at December 31, 2015 is as follows:
2016 | $ | 4,407 |
2017 | 20,817 |
2018 | 19,580 |
2019 | 563 |
2020 | 562 |
Thereafter | 3,313 |
| $ | 49,242 |
All of this joint venture debt is non-recourse to us except in the case of customary exceptions pertaining to such matters as misuse of funds, environmental conditions, material misrepresentations and voluntary or uncontested involuntary bankruptcy events. 4. Investments in and Advances to Affiliates – Continued The following table sets forth the summarized income statements of our unconsolidated affiliates:
| Year Ended December 31,
| 2015 |  | 2014 |  | 2013
Income Statements: |  |  |  |  |
Rental and other revenues | $ | 48,118 |  |  | $ | 50,514 |  |  | $ | 82,168 |
Expenses: |  |  |  |  |
Rental property and other expenses | 22,721 |  |  | 25,159 |  |  | 41,284 |
Depreciation and amortization | 12,257 |  |  | 13,310 |  |  | 20,928 |
Impairments of real estate assets | — |  |  | — |  |  | 20,077 |
Interest expense | 7,196 |  |  | 8,847 |  |  | 14,994 |
Total expenses | 42,174 |  |  | 47,316 |  |  | 97,283 |
Income/(loss) before disposition of property | 5,944 |  |  | 3,198 |  |  | (15,115 | )
Gains on disposition of property | 18,181 |  |  | 2,998 |  |  | 20,501 |
Net income | $ | 24,125 |  |  | $ | 6,196 |  |  | $ | 5,386 |
The following summarizes additional information related to certain of our unconsolidated affiliates: - Board of Trade Investment Company ("Board of Trade") During 2014, Board of Trade sold a building to an unrelated third party for gross proceeds of $8.3 million and recorded a gain of $1.9 million. As our cost basis was different from the basis reflected at the entity level, we recorded a net impairment charge on our investment of $0.4 million. This charge represented the other-than-temporary decline in the fair value below the carrying value of our investment. Our 49.0% interest in Board of Trade was redeemed in exchange for $4.7 million in cash. - Highwoods KC Glenridge Office, LLC ("KC Glenridge Office") and Highwoods KC Glenridge Land, LLC ("KC Glenridge Land") During 2015, KC Glenridge Office and KC Glenridge Land collectively sold two buildings and land to an unrelated third party for an aggregate sale price of $24.5 million (before closing credits to buyer of $0.3 million for unfunded tenant improvements) and recorded gains on disposition of property of $2.4 million. We recorded $0.9 million as our share of these gains through equity in earnings of unconsolidated affiliates. During 2014, KC Glenridge Office paid at maturity the remaining $14.9 million balance on a secured mortgage loan with an effective interest rate of 4.84%. - HIW-KC Orlando, LLC See Note 2 for a description of our acquisition of our partner's 60.0% equity interest in this joint venture during 2013. 4. Investments in and Advances to Affiliates – Continued - Lofts at Weston, LLC ("Weston Lofts") During 2011, we and Ravin Partners, LLC (“Ravin”) formed Weston Lofts, in which we had a 50.0% ownership interest. We contributed 15.0 acres of land at an agreed upon value of $2.4 million to this joint venture, and Ravin contributed $1.2 million in cash and agreed to guarantee the joint venture's development loan. The joint venture then distributed $1.2 million to us and we recorded a gain of $0.3 million on this transaction. Ravin was the developer, manager and leasing agent and received customary fees from the joint venture, which constructed 215 residential units at a total cost of $25.9 million. During 2013, Weston Lofts sold the 215 residential units to an unrelated third party for gross proceeds of $38.3 million and recorded a gain of $12.2 million. As a result, we received aggregate net distributions of $9.4 million and recorded our share of the gain of $3.2 million, which is net of $1.7 million in taxes incurred by our taxable REIT subsidiary, in equity in earnings of unconsolidated affiliates. Our share of the gain was less than 50.0% due to Ravin's preferred return as the developer. - Highwoods DLF 97/26 DLF 99/32, LP (“DLF II”) During 2015, DLF II sold a building to an unrelated third party for a sale price of $7.0 million and recorded a gain on disposition of property of $2.1 million. We recorded $1.1 million as our share of this gain through equity in earnings of unconsolidated affiliates. See Note 2 for a description of our acquisition of two buildings in Atlanta, GA from DLF II during 2013. During 2013, DLF II sold a building to an unrelated third party for a sale price of $10.1 million (after $0.3 million in closing credits to buyer for free rent) and recorded a gain on disposition of property of less than $0.1 million. As our cost basis was different from the basis reflected at the joint venture level, we recorded $0.4 million of gain through equity in earnings of unconsolidated affiliates. - Kessinger/Hunter & Company, LC ("Kessinger/Hunter") Kessinger/Hunter, which is managed by our joint venture partner, provides leasing services, among other things, to certain buildings that we wholly own in Kansas City, MO in exchange for customary fees from us. Kessinger/Hunter received $0.3 million, $0.6 million and $0.2 million from us for these services in 2015, 2014 and 2013, respectively. - Highwoods DLF Forum, LLC (“Forum”) During 2013, Forum obtained a $71.7 million, five-year secured mortgage loan from a third party lender, bearing a floating interest rate of LIBOR plus 190 basis points, which was used by the joint venture to repay a secured loan at maturity to a third party lender. This loan is scheduled to mature in November 2018. - Highwoods DLF 98/29, LLC (“DLF I”) See Note 2 for a description of our acquisition of a building in Orlando, FL from DLF I during 2015. The joint venture recorded a gain on disposition of property of $13.7 million. Our share of $3.1 million was recorded as a reduction to real estate assets. During 2014, DLF I sold a building to an unrelated third party for a sale price of $13.7 million (before $0.4 million in closing credits to buyer for free rent) and recorded a gain on disposition of property of $1.0 million. We recorded $0.2 million as our share of this gain through equity in earnings of unconsolidated affiliates. During 2013, DLF I sold a building to an unrelated third party for a sale price of $5.9 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. We recorded less than $0.1 million as our share of this gain through equity in earnings of unconsolidated affiliates. 4. Investments in and Advances to Affiliates – Continued During 2013, DLF I recorded impairments of real estate assets of $20.1 million on buildings in Orlando, FL, Atlanta, GA and Charlotte, NC. We recorded $4.5 million as our share of these impairment charges through equity in earnings of unconsolidated affiliates. These impairments were due to a change in the assumed timing of future dispositions and/or leasing assumptions, which reduced the future expected cash flows from the impaired properties. - Other Activities We receive development, management and leasing fees for services provided to certain of our joint ventures. These fees are recognized in income to the extent of our respective joint venture partner's interest. During the years ended December 31, 2015, 2014 and 2013, we recognized $1.4 million, $1.2 million and $2.9 million, respectively, of development/construction, management and leasing fees from our unconsolidated joint ventures. At December 31, 2015 and 2014, we had receivables of $0.1 million and $0.5 million, respectively, related to these fees in accounts receivable. Consolidated Affiliates The following summarizes our consolidated affiliates: - Highwoods-Markel Associates, LLC (“Markel”) We have a 50.0% ownership interest in Markel. We are the manager and leasing agent for Markel's properties, which are located in Richmond, VA in exchange for customary management and leasing fees. We consolidate Markel since we are the managing member and control the major operating and financial policies of the entity. As controlling member, we have an obligation to cause this property-owning entity to distribute proceeds of liquidation to the noncontrolling interest member in these partially owned properties only if the net proceeds received by the entity from the sale of Markel's assets warrant a distribution as determined by the governing agreement. We estimate the value of noncontrolling interest distributions would have been $19.4 million had the entity been liquidated at December 31, 2015. This estimated settlement value is based on the fair value of the underlying properties which is based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for customers, changes in market rental rates and costs to operate each property. If the entity's underlying assets are worth less than the underlying liabilities on the date of such liquidation, we would have no obligation to remit any consideration to the noncontrolling interest holder. See Note 2 for a description of our acquisition of the noncontrolling member's 50.0% interest in a building owned by Markel during 2014. - Harborview We had a 20.0% interest in Harborview, which had been accounted for as a financing obligation since our partner had the right to put its 80.0% equity interest back to us any time prior to September 11, 2015. During 2012, we also provided a three-year $20.8 million interest-only secured loan to Harborview that was scheduled to mature in September 2015. During the second quarter of 2015, as a result of our partner’s irrevocable exercise of a buy-sell provision in our Harborview joint venture agreement, our partner’s right to put its 80.0% equity interest back to us became no longer exercisable, which resulted in recording the original contribution transaction as a partial sale. As a result, we were required to begin accounting for Harborview using the equity method of accounting. See Note 1. During the third quarter of 2015, we sold our 20.0% interest in Harborview to our partner for net proceeds of $6.9 million and recorded a $4.2 million gain on disposition of investment in unconsolidated affiliate. The $20.8 million interest-only secured loan previously provided by us to Harborview was paid in full upon consummation of the sale.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32847-111569 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32787-111569 + Details
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