|
|
Maryland
|
001-13100
|
56-1871668
|
|
|
(State or other jurisdiction
of incorporation or organization)
|
(Commission
File Number)
|
(I.R.S. Employer
Identification Number)
|
|
|
North Carolina
|
000-21731
|
56-1869557
|
|
|
(State or other jurisdiction
of incorporation or organization)
|
(Commission
File Number)
|
(I.R.S. Employer
Identification Number)
|
|
|
•
|
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.
|
•
|
Consolidated Financial Statements;
|
•
|
Note 12 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.
|
|
Page
|
|
|
PART I - FINANCIAL INFORMATION
|
|
ITEM 1.
FINANCIAL STATEMENTS (unaudited)
|
|
|
|
|
|
ITEM 4.
CONTROLS AND PROCEDURES
|
|
|
|
PART II - OTHER INFORMATION
|
|
ITEM 5.
OTHER INFORMATION
|
|
ITEM 6.
EXHIBITS
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Assets:
|
|
|
|
||||
Real estate assets, at cost:
|
|
|
|
||||
Land
|
$
|
485,086
|
|
|
$
|
485,956
|
|
Buildings and tenant improvements
|
4,609,648
|
|
|
4,590,490
|
|
||
Development in-process
|
178,008
|
|
|
88,452
|
|
||
Land held for development
|
124,558
|
|
|
74,765
|
|
||
|
5,397,300
|
|
|
5,239,663
|
|
||
Less-accumulated depreciation
|
(1,248,643
|
)
|
|
(1,202,424
|
)
|
||
Net real estate assets
|
4,148,657
|
|
|
4,037,239
|
|
||
Real estate and other assets, net, held for sale
|
—
|
|
|
14,118
|
|
||
Cash and cash equivalents
|
4,232
|
|
|
3,272
|
|
||
Restricted cash
|
5,686
|
|
|
85,061
|
|
||
Accounts receivable, net of allowance of $1,034 and $753, respectively
|
19,350
|
|
|
24,397
|
|
||
Mortgages and notes receivable, net of allowance of $61 and $72, respectively
|
5,927
|
|
|
6,425
|
|
||
Accrued straight-line rents receivable, net of allowance of $567 and $819, respectively
|
213,110
|
|
|
200,131
|
|
||
Investments in and advances to unconsolidated affiliates
|
23,212
|
|
|
23,897
|
|
||
Deferred leasing costs, net of accumulated amortization of $144,555 and $143,512, respectively
|
195,068
|
|
|
200,679
|
|
||
Prepaid expenses and other assets, net of accumulated depreciation of $19,200 and $19,092,
respectively |
37,729
|
|
|
28,572
|
|
||
Total Assets
|
$
|
4,652,971
|
|
|
$
|
4,623,791
|
|
Liabilities, Noncontrolling Interests in the Operating Partnership and Equity:
|
|
|
|
||||
Mortgages and notes payable, net
|
$
|
2,055,004
|
|
|
$
|
2,014,333
|
|
Accounts payable, accrued expenses and other liabilities
|
215,451
|
|
|
228,215
|
|
||
Total Liabilities
|
2,270,455
|
|
|
2,242,548
|
|
||
Commitments and contingencies
|
|
|
|
||||
Noncontrolling interests in the Operating Partnership
|
142,323
|
|
|
144,009
|
|
||
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), 28,887 and 28,892 shares issued and outstanding, respectively |
28,887
|
|
|
28,892
|
|
||
Common Stock, $.01 par value, 200,000,000 authorized shares;
|
|
|
|
||||
103,459,115 and 103,266,875 shares issued and outstanding, respectively
|
1,035
|
|
|
1,033
|
|
||
Additional paid-in capital
|
2,936,636
|
|
|
2,929,399
|
|
||
Distributions in excess of net income available for common stockholders
|
(759,788
|
)
|
|
(747,344
|
)
|
||
Accumulated other comprehensive income
|
15,956
|
|
|
7,838
|
|
||
Total Stockholders’ Equity
|
2,222,726
|
|
|
2,219,818
|
|
||
Noncontrolling interests in consolidated affiliates
|
17,467
|
|
|
17,416
|
|
||
Total Equity
|
2,240,193
|
|
|
2,237,234
|
|
||
Total Liabilities, Noncontrolling Interests in the Operating Partnership and Equity
|
$
|
4,652,971
|
|
|
$
|
4,623,791
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Rental and other revenues
|
$
|
178,792
|
|
|
$
|
177,283
|
|
|
$
|
359,230
|
|
|
$
|
346,691
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Rental property and other expenses
|
59,663
|
|
|
58,854
|
|
|
119,095
|
|
|
116,250
|
|
||||
Depreciation and amortization
|
56,694
|
|
|
55,816
|
|
|
114,262
|
|
|
111,961
|
|
||||
General and administrative
|
9,540
|
|
|
9,050
|
|
|
21,318
|
|
|
20,540
|
|
||||
Total operating expenses
|
125,897
|
|
|
123,720
|
|
|
254,675
|
|
|
248,751
|
|
||||
Interest expense:
|
|
|
|
|
|
|
|
||||||||
Contractual
|
17,155
|
|
|
15,345
|
|
|
34,860
|
|
|
32,368
|
|
||||
Amortization of debt issuance costs
|
722
|
|
|
809
|
|
|
1,408
|
|
|
1,649
|
|
||||
|
17,877
|
|
|
16,154
|
|
|
36,268
|
|
|
34,017
|
|
||||
Other income:
|
|
|
|
|
|
|
|
||||||||
Interest and other income
|
462
|
|
|
564
|
|
|
917
|
|
|
1,248
|
|
||||
Gains on debt extinguishment
|
—
|
|
|
826
|
|
|
—
|
|
|
826
|
|
||||
|
462
|
|
|
1,390
|
|
|
917
|
|
|
2,074
|
|
||||
Income before disposition of investment properties and activity in unconsolidated affiliates
|
35,480
|
|
|
38,799
|
|
|
69,204
|
|
|
65,997
|
|
||||
Gains on disposition of property
|
16,972
|
|
|
—
|
|
|
16,972
|
|
|
5,332
|
|
||||
Equity in earnings of unconsolidated affiliates
|
546
|
|
|
755
|
|
|
1,068
|
|
|
1,710
|
|
||||
Net income
|
52,998
|
|
|
39,554
|
|
|
87,244
|
|
|
73,039
|
|
||||
Net (income) attributable to noncontrolling interests in the Operating Partnership
|
(1,381
|
)
|
|
(1,043
|
)
|
|
(2,269
|
)
|
|
(1,931
|
)
|
||||
Net (income) attributable to noncontrolling interests in consolidated affiliates
|
(308
|
)
|
|
(299
|
)
|
|
(594
|
)
|
|
(599
|
)
|
||||
Dividends on Preferred Stock
|
(623
|
)
|
|
(623
|
)
|
|
(1,246
|
)
|
|
(1,246
|
)
|
||||
Net income available for common stockholders
|
$
|
50,686
|
|
|
$
|
37,589
|
|
|
$
|
83,135
|
|
|
$
|
69,263
|
|
Earnings per Common Share – basic:
|
|
|
|
|
|
|
|
||||||||
Net income available for common stockholders
|
$
|
0.49
|
|
|
$
|
0.37
|
|
|
$
|
0.80
|
|
|
$
|
0.68
|
|
Weighted average Common Shares outstanding – basic
|
103,428
|
|
|
102,475
|
|
|
103,376
|
|
|
102,109
|
|
||||
Earnings per Common Share – diluted:
|
|
|
|
|
|
|
|
||||||||
Net income available for common stockholders
|
$
|
0.49
|
|
|
$
|
0.37
|
|
|
$
|
0.80
|
|
|
$
|
0.68
|
|
Weighted average Common Shares outstanding – diluted
|
106,267
|
|
|
105,386
|
|
|
106,216
|
|
|
105,026
|
|
||||
Dividends declared per Common Share
|
$
|
0.4625
|
|
|
$
|
0.4400
|
|
|
$
|
0.9250
|
|
|
$
|
0.8800
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
52,998
|
|
|
$
|
39,554
|
|
|
$
|
87,244
|
|
|
$
|
73,039
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains/(losses) on cash flow hedges
|
862
|
|
|
(136
|
)
|
|
8,739
|
|
|
316
|
|
||||
Amortization of cash flow hedges
|
(515
|
)
|
|
297
|
|
|
(621
|
)
|
|
781
|
|
||||
Total other comprehensive income
|
347
|
|
|
161
|
|
|
8,118
|
|
|
1,097
|
|
||||
Total comprehensive income
|
53,345
|
|
|
39,715
|
|
|
95,362
|
|
|
74,136
|
|
||||
Less-comprehensive (income) attributable to noncontrolling interests
|
(1,689
|
)
|
|
(1,342
|
)
|
|
(2,863
|
)
|
|
(2,530
|
)
|
||||
Comprehensive income attributable to common stockholders
|
$
|
51,656
|
|
|
$
|
38,373
|
|
|
$
|
92,499
|
|
|
$
|
71,606
|
|
|
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
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95,579
|
)
|
|
(95,579
|
)
|
|||||||
Dividends on Preferred Stock
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(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
|
|
|
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, 2016
|
101,665,554
|
|
|
$
|
1,017
|
|
|
$
|
28,920
|
|
|
$
|
2,850,881
|
|
|
$
|
4,949
|
|
|
$
|
17,961
|
|
|
$
|
(749,412
|
)
|
|
$
|
2,154,316
|
|
Issuances of Common Stock, net of issuance costs and tax withholdings
|
1,453,935
|
|
|
15
|
|
|
—
|
|
|
69,818
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69,833
|
|
|||||||
Conversions of Common Units to Common Stock
|
6,000
|
|
|
—
|
|
|
—
|
|
|
305
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
305
|
|
|||||||
Dividends on Common Stock
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(89,952
|
)
|
|
(89,952
|
)
|
||||||||
Dividends on Preferred Stock
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,246
|
)
|
|
(1,246
|
)
|
||||||||
Adjustment of noncontrolling interests in the Operating Partnership to fair value
|
|
|
—
|
|
|
—
|
|
|
287
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
287
|
|
||||||||
Distributions to noncontrolling interests in consolidated affiliates
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(858
|
)
|
|
—
|
|
|
(858
|
)
|
||||||||
Issuances of restricted stock
|
110,748
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Redemptions/repurchases of Preferred Stock
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
||||||||
Share-based compensation expense, net of forfeitures
|
—
|
|
|
—
|
|
|
—
|
|
|
4,837
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,837
|
|
|||||||
Net (income) attributable to noncontrolling interests in the Operating Partnership
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,931
|
)
|
|
(1,931
|
)
|
||||||||
Net (income) attributable to noncontrolling interests in consolidated affiliates
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
599
|
|
|
(599
|
)
|
|
—
|
|
||||||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73,039
|
|
|
73,039
|
|
||||||||
Other comprehensive income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,097
|
|
|
—
|
|
|
—
|
|
|
1,097
|
|
||||||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,136
|
|
||||||||||||||
Balance at June 30, 2017
|
103,236,237
|
|
|
$
|
1,032
|
|
|
$
|
28,905
|
|
|
$
|
2,926,128
|
|
|
$
|
6,046
|
|
|
$
|
17,702
|
|
|
$
|
(770,101
|
)
|
|
$
|
2,209,712
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
87,244
|
|
|
$
|
73,039
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
114,262
|
|
|
111,961
|
|
||
Amortization of lease incentives and acquisition-related intangible assets and liabilities
|
(960
|
)
|
|
(345
|
)
|
||
Share-based compensation expense
|
5,468
|
|
|
4,837
|
|
||
Allowance for losses on accounts and accrued straight-line rents receivable
|
192
|
|
|
110
|
|
||
Accrued interest on mortgages and notes receivable
|
(225
|
)
|
|
(274
|
)
|
||
Amortization of debt issuance costs
|
1,408
|
|
|
1,649
|
|
||
Amortization of cash flow hedges
|
(621
|
)
|
|
781
|
|
||
Amortization of mortgages and notes payable fair value adjustments
|
694
|
|
|
139
|
|
||
Gains on debt extinguishment
|
—
|
|
|
(826
|
)
|
||
Net gains on disposition of property
|
(16,972
|
)
|
|
(5,332
|
)
|
||
Equity in earnings of unconsolidated affiliates
|
(1,068
|
)
|
|
(1,710
|
)
|
||
Distributions of earnings from unconsolidated affiliates
|
1,706
|
|
|
2,907
|
|
||
Settlement of cash flow hedges
|
7,216
|
|
|
7,322
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
4,469
|
|
|
4,358
|
|
||
Prepaid expenses and other assets
|
(5,232
|
)
|
|
(1,455
|
)
|
||
Accrued straight-line rents receivable
|
(12,707
|
)
|
|
(15,228
|
)
|
||
Accounts payable, accrued expenses and other liabilities
|
(916
|
)
|
|
(9,818
|
)
|
||
Net cash provided by operating activities
|
183,958
|
|
|
172,115
|
|
||
Investing activities:
|
|
|
|
||||
Investments in acquired real estate and related intangible assets, net of cash acquired
|
(50,649
|
)
|
|
—
|
|
||
Investments in development in-process
|
(85,717
|
)
|
|
(97,096
|
)
|
||
Investments in tenant improvements and deferred leasing costs
|
(61,990
|
)
|
|
(54,119
|
)
|
||
Investments in building improvements
|
(34,652
|
)
|
|
(31,070
|
)
|
||
Net proceeds from disposition of real estate assets
|
33,453
|
|
|
11,532
|
|
||
Distributions of capital from unconsolidated affiliates
|
105
|
|
|
7,445
|
|
||
Repayments of mortgages and notes receivable
|
758
|
|
|
2,357
|
|
||
Investments in and advances to unconsolidated affiliates
|
—
|
|
|
(172
|
)
|
||
Changes in other investing activities
|
(3,147
|
)
|
|
(4,033
|
)
|
||
Net cash used in investing activities
|
(201,839
|
)
|
|
(165,156
|
)
|
||
Financing activities:
|
|
|
|
||||
Dividends on Common Stock
|
(95,579
|
)
|
|
(89,952
|
)
|
||
Special dividend on Common Stock
|
—
|
|
|
(81,205
|
)
|
||
Redemptions/repurchases of Preferred Stock
|
(5
|
)
|
|
(15
|
)
|
||
Dividends on Preferred Stock
|
(1,246
|
)
|
|
(1,246
|
)
|
||
Distributions to noncontrolling interests in the Operating Partnership
|
(2,599
|
)
|
|
(2,495
|
)
|
||
Special distribution to noncontrolling interests in the Operating Partnership
|
—
|
|
|
(2,271
|
)
|
||
Distributions to noncontrolling interests in consolidated affiliates
|
(543
|
)
|
|
(858
|
)
|
||
Proceeds from the issuance of Common Stock
|
2,052
|
|
|
74,987
|
|
||
Costs paid for the issuance of Common Stock
|
(28
|
)
|
|
(1,199
|
)
|
||
Repurchase of shares related to tax withholdings
|
(1,609
|
)
|
|
(3,955
|
)
|
||
Borrowings on revolving credit facility
|
257,400
|
|
|
425,300
|
|
||
Repayments of revolving credit facility
|
(360,400
|
)
|
|
(314,300
|
)
|
||
Borrowings on mortgages and notes payable
|
345,863
|
|
|
456,001
|
|
||
Repayments of mortgages and notes payable
|
(200,892
|
)
|
|
(506,679
|
)
|
||
Payments of debt extinguishment costs
|
—
|
|
|
(57
|
)
|
||
Changes in debt issuance costs and other financing activities
|
(2,948
|
)
|
|
(3,688
|
)
|
||
Net cash used in financing activities
|
(60,534
|
)
|
|
(51,632
|
)
|
||
Net decrease in cash and cash equivalents and restricted cash
|
$
|
(78,415
|
)
|
|
$
|
(44,673
|
)
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Net decrease in cash and cash equivalents and restricted cash
|
$
|
(78,415
|
)
|
|
$
|
(44,673
|
)
|
Cash and cash equivalents and restricted cash at beginning of the period
|
88,333
|
|
|
78,631
|
|
||
Cash and cash equivalents and restricted cash at end of the period
|
$
|
9,918
|
|
|
$
|
33,958
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Cash and cash equivalents at end of the period
|
$
|
4,232
|
|
|
$
|
13,346
|
|
Restricted cash at end of the period
|
5,686
|
|
|
20,612
|
|
||
Cash and cash equivalents and restricted cash at end of the period
|
$
|
9,918
|
|
|
$
|
33,958
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Cash paid for interest, net of amounts capitalized
|
$
|
33,273
|
|
|
$
|
34,930
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Unrealized gains on cash flow hedges
|
$
|
8,739
|
|
|
$
|
316
|
|
Conversions of Common Units to Common Stock
|
1,084
|
|
|
305
|
|
||
Changes in accrued capital expenditures
|
(10,574
|
)
|
|
(21,961
|
)
|
||
Write-off of fully depreciated real estate assets
|
48,011
|
|
|
28,449
|
|
||
Write-off of fully amortized leasing costs
|
19,717
|
|
|
15,023
|
|
||
Write-off of fully amortized debt issuance costs
|
2,705
|
|
|
4,324
|
|
||
Adjustment of noncontrolling interests in the Operating Partnership to fair value
|
(272
|
)
|
|
(287
|
)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Assets:
|
|
|
|
||||
Real estate assets, at cost:
|
|
|
|
||||
Land
|
$
|
485,086
|
|
|
$
|
485,956
|
|
Buildings and tenant improvements
|
4,609,648
|
|
|
4,590,490
|
|
||
Development in-process
|
178,008
|
|
|
88,452
|
|
||
Land held for development
|
124,558
|
|
|
74,765
|
|
||
|
5,397,300
|
|
|
5,239,663
|
|
||
Less-accumulated depreciation
|
(1,248,643
|
)
|
|
(1,202,424
|
)
|
||
Net real estate assets
|
4,148,657
|
|
|
4,037,239
|
|
||
Real estate and other assets, net, held for sale
|
—
|
|
|
14,118
|
|
||
Cash and cash equivalents
|
4,232
|
|
|
3,272
|
|
||
Restricted cash
|
5,686
|
|
|
85,061
|
|
||
Accounts receivable, net of allowance of $1,034 and $753, respectively
|
19,350
|
|
|
24,397
|
|
||
Mortgages and notes receivable, net of allowance of $61 and $72, respectively
|
5,927
|
|
|
6,425
|
|
||
Accrued straight-line rents receivable, net of allowance of $567 and $819, respectively
|
213,110
|
|
|
200,131
|
|
||
Investments in and advances to unconsolidated affiliates
|
23,212
|
|
|
23,897
|
|
||
Deferred leasing costs, net of accumulated amortization of $144,555 and $143,512, respectively
|
195,068
|
|
|
200,679
|
|
||
Prepaid expenses and other assets, net of accumulated depreciation of $19,200 and $19,092,
respectively |
37,729
|
|
|
28,572
|
|
||
Total Assets
|
$
|
4,652,971
|
|
|
$
|
4,623,791
|
|
Liabilities, Redeemable Operating Partnership Units and Capital:
|
|
|
|
||||
Mortgages and notes payable, net
|
$
|
2,055,004
|
|
|
$
|
2,014,333
|
|
Accounts payable, accrued expenses and other liabilities
|
215,451
|
|
|
228,215
|
|
||
Total Liabilities
|
2,270,455
|
|
|
2,242,548
|
|
||
Commitments and contingencies
|
|
|
|
||||
Redeemable Operating Partnership Units:
|
|
|
|
||||
Common Units, 2,805,508 and 2,828,704 outstanding, respectively
|
142,323
|
|
|
144,009
|
|
||
Series A Preferred Units (liquidation preference $1,000 per unit), 28,887 and 28,892 units issued and
outstanding, respectively |
28,887
|
|
|
28,892
|
|
||
Total Redeemable Operating Partnership Units
|
171,210
|
|
|
172,901
|
|
||
Capital:
|
|
|
|
||||
Common Units:
|
|
|
|
||||
General partner Common Units, 1,058,558 and 1,056,868 outstanding, respectively
|
21,778
|
|
|
21,830
|
|
||
Limited partner Common Units, 101,991,748 and 101,801,198 outstanding, respectively
|
2,156,105
|
|
|
2,161,258
|
|
||
Accumulated other comprehensive income
|
15,956
|
|
|
7,838
|
|
||
Noncontrolling interests in consolidated affiliates
|
17,467
|
|
|
17,416
|
|
||
Total Capital
|
2,211,306
|
|
|
2,208,342
|
|
||
Total Liabilities, Redeemable Operating Partnership Units and Capital
|
$
|
4,652,971
|
|
|
$
|
4,623,791
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Rental and other revenues
|
$
|
178,792
|
|
|
$
|
177,283
|
|
|
$
|
359,230
|
|
|
$
|
346,691
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Rental property and other expenses
|
59,663
|
|
|
58,854
|
|
|
119,095
|
|
|
116,250
|
|
||||
Depreciation and amortization
|
56,694
|
|
|
55,816
|
|
|
114,262
|
|
|
111,961
|
|
||||
General and administrative
|
9,540
|
|
|
9,050
|
|
|
21,318
|
|
|
20,540
|
|
||||
Total operating expenses
|
125,897
|
|
|
123,720
|
|
|
254,675
|
|
|
248,751
|
|
||||
Interest expense:
|
|
|
|
|
|
|
|
||||||||
Contractual
|
17,155
|
|
|
15,345
|
|
|
34,860
|
|
|
32,368
|
|
||||
Amortization of debt issuance costs
|
722
|
|
|
809
|
|
|
1,408
|
|
|
1,649
|
|
||||
|
17,877
|
|
|
16,154
|
|
|
36,268
|
|
|
34,017
|
|
||||
Other income:
|
|
|
|
|
|
|
|
||||||||
Interest and other income
|
462
|
|
|
564
|
|
|
917
|
|
|
1,248
|
|
||||
Gains on debt extinguishment
|
—
|
|
|
826
|
|
|
—
|
|
|
826
|
|
||||
|
462
|
|
|
1,390
|
|
|
917
|
|
|
2,074
|
|
||||
Income before disposition of investment properties and activity in unconsolidated affiliates
|
35,480
|
|
|
38,799
|
|
|
69,204
|
|
|
65,997
|
|
||||
Gains on disposition of property
|
16,972
|
|
|
—
|
|
|
16,972
|
|
|
5,332
|
|
||||
Equity in earnings of unconsolidated affiliates
|
546
|
|
|
755
|
|
|
1,068
|
|
|
1,710
|
|
||||
Net income
|
52,998
|
|
|
39,554
|
|
|
87,244
|
|
|
73,039
|
|
||||
Net (income) attributable to noncontrolling interests in consolidated affiliates
|
(308
|
)
|
|
(299
|
)
|
|
(594
|
)
|
|
(599
|
)
|
||||
Distributions on Preferred Units
|
(623
|
)
|
|
(623
|
)
|
|
(1,246
|
)
|
|
(1,246
|
)
|
||||
Net income available for common unitholders
|
$
|
52,067
|
|
|
$
|
38,632
|
|
|
$
|
85,404
|
|
|
$
|
71,194
|
|
Earnings per Common Unit – basic:
|
|
|
|
|
|
|
|
||||||||
Net income available for common unitholders
|
$
|
0.49
|
|
|
$
|
0.37
|
|
|
$
|
0.81
|
|
|
$
|
0.68
|
|
Weighted average Common Units outstanding – basic
|
105,826
|
|
|
104,900
|
|
|
105,778
|
|
|
104,536
|
|
||||
Earnings per Common Unit – diluted:
|
|
|
|
|
|
|
|
||||||||
Net income available for common unitholders
|
$
|
0.49
|
|
|
$
|
0.37
|
|
|
$
|
0.81
|
|
|
$
|
0.68
|
|
Weighted average Common Units outstanding – diluted
|
105,858
|
|
|
104,977
|
|
|
105,807
|
|
|
104,617
|
|
||||
Distributions declared per Common Unit
|
$
|
0.4625
|
|
|
$
|
0.4400
|
|
|
$
|
0.9250
|
|
|
$
|
0.8800
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
52,998
|
|
|
$
|
39,554
|
|
|
$
|
87,244
|
|
|
$
|
73,039
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains/(losses) on cash flow hedges
|
862
|
|
|
(136
|
)
|
|
8,739
|
|
|
316
|
|
||||
Amortization of cash flow hedges
|
(515
|
)
|
|
297
|
|
|
(621
|
)
|
|
781
|
|
||||
Total other comprehensive income
|
347
|
|
|
161
|
|
|
8,118
|
|
|
1,097
|
|
||||
Total comprehensive income
|
53,345
|
|
|
39,715
|
|
|
95,362
|
|
|
74,136
|
|
||||
Less-comprehensive (income) attributable to noncontrolling interests
|
(308
|
)
|
|
(299
|
)
|
|
(594
|
)
|
|
(599
|
)
|
||||
Comprehensive income attributable to common unitholders
|
$
|
53,037
|
|
|
$
|
39,416
|
|
|
$
|
94,768
|
|
|
$
|
73,537
|
|
|
Common Units
|
|
Accumulated
Other
Comprehensive Income
|
|
Noncontrolling
Interests in
Consolidated
Affiliates
|
|
Total
|
||||||||||||
|
General
Partners’
Capital
|
|
Limited
Partners’
Capital
|
|
|||||||||||||||
Balance at December 31, 2017
|
$
|
21,830
|
|
|
$
|
2,161,258
|
|
|
$
|
7,838
|
|
|
$
|
17,416
|
|
|
$
|
2,208,342
|
|
Issuances of Common Units, net of issuance costs and tax withholdings
|
4
|
|
|
411
|
|
|
—
|
|
|
—
|
|
|
415
|
|
|||||
Distributions on Common Units
|
(978
|
)
|
|
(96,822
|
)
|
|
—
|
|
|
—
|
|
|
(97,800
|
)
|
|||||
Distributions on Preferred Units
|
(12
|
)
|
|
(1,234
|
)
|
|
—
|
|
|
—
|
|
|
(1,246
|
)
|
|||||
Share-based compensation expense, net of forfeitures
|
55
|
|
|
5,413
|
|
|
—
|
|
|
—
|
|
|
5,468
|
|
|||||
Distributions to noncontrolling interests in consolidated affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(543
|
)
|
|
(543
|
)
|
|||||
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner
|
13
|
|
|
1,295
|
|
|
—
|
|
|
—
|
|
|
1,308
|
|
|||||
Net (income) attributable to noncontrolling interests in consolidated affiliates
|
(6
|
)
|
|
(588
|
)
|
|
—
|
|
|
594
|
|
|
—
|
|
|||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
872
|
|
|
86,372
|
|
|
—
|
|
|
—
|
|
|
87,244
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
8,118
|
|
|
—
|
|
|
8,118
|
|
|||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
95,362
|
|
|||||||||
Balance at June 30, 2018
|
$
|
21,778
|
|
|
$
|
2,156,105
|
|
|
$
|
15,956
|
|
|
$
|
17,467
|
|
|
$
|
2,211,306
|
|
|
Common Units
|
|
Accumulated
Other
Comprehensive Income
|
|
Noncontrolling
Interests in
Consolidated
Affiliates
|
|
Total
|
||||||||||||
|
General
Partners’
Capital
|
|
Limited
Partners’
Capital
|
|
|||||||||||||||
Balance at December 31, 2016
|
$
|
21,023
|
|
|
$
|
2,081,463
|
|
|
$
|
4,949
|
|
|
$
|
17,961
|
|
|
$
|
2,125,396
|
|
Issuances of Common Units, net of issuance costs and tax withholdings
|
698
|
|
|
69,135
|
|
|
—
|
|
|
—
|
|
|
69,833
|
|
|||||
Distributions on Common Units
|
(920
|
)
|
|
(91,167
|
)
|
|
—
|
|
|
—
|
|
|
(92,087
|
)
|
|||||
Distributions on Preferred Units
|
(12
|
)
|
|
(1,234
|
)
|
|
—
|
|
|
—
|
|
|
(1,246
|
)
|
|||||
Share-based compensation expense, net of forfeitures
|
48
|
|
|
4,789
|
|
|
—
|
|
|
—
|
|
|
4,837
|
|
|||||
Distributions to noncontrolling interests in consolidated affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
(858
|
)
|
|
(858
|
)
|
|||||
Adjustment of Redeemable Common Units to fair value and contributions/distributions from/to the General Partner
|
7
|
|
|
789
|
|
|
—
|
|
|
—
|
|
|
796
|
|
|||||
Net (income) attributable to noncontrolling interests in consolidated affiliates
|
(6
|
)
|
|
(593
|
)
|
|
—
|
|
|
599
|
|
|
—
|
|
|||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
730
|
|
|
72,309
|
|
|
—
|
|
|
—
|
|
|
73,039
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
1,097
|
|
|
—
|
|
|
1,097
|
|
|||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
74,136
|
|
|||||||||
Balance at June 30, 2017
|
$
|
21,568
|
|
|
$
|
2,135,491
|
|
|
$
|
6,046
|
|
|
$
|
17,702
|
|
|
$
|
2,180,807
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
87,244
|
|
|
$
|
73,039
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
114,262
|
|
|
111,961
|
|
||
Amortization of lease incentives and acquisition-related intangible assets and liabilities
|
(960
|
)
|
|
(345
|
)
|
||
Share-based compensation expense
|
5,468
|
|
|
4,837
|
|
||
Allowance for losses on accounts and accrued straight-line rents receivable
|
192
|
|
|
110
|
|
||
Accrued interest on mortgages and notes receivable
|
(225
|
)
|
|
(274
|
)
|
||
Amortization of debt issuance costs
|
1,408
|
|
|
1,649
|
|
||
Amortization of cash flow hedges
|
(621
|
)
|
|
781
|
|
||
Amortization of mortgages and notes payable fair value adjustments
|
694
|
|
|
139
|
|
||
Gains on debt extinguishment
|
—
|
|
|
(826
|
)
|
||
Net gains on disposition of property
|
(16,972
|
)
|
|
(5,332
|
)
|
||
Equity in earnings of unconsolidated affiliates
|
(1,068
|
)
|
|
(1,710
|
)
|
||
Distributions of earnings from unconsolidated affiliates
|
1,706
|
|
|
2,907
|
|
||
Settlement of cash flow hedges
|
7,216
|
|
|
7,322
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
4,469
|
|
|
4,358
|
|
||
Prepaid expenses and other assets
|
(5,232
|
)
|
|
(1,455
|
)
|
||
Accrued straight-line rents receivable
|
(12,707
|
)
|
|
(15,228
|
)
|
||
Accounts payable, accrued expenses and other liabilities
|
(916
|
)
|
|
(9,818
|
)
|
||
Net cash provided by operating activities
|
183,958
|
|
|
172,115
|
|
||
Investing activities:
|
|
|
|
||||
Investments in acquired real estate and related intangible assets, net of cash acquired
|
(50,649
|
)
|
|
—
|
|
||
Investments in development in-process
|
(85,717
|
)
|
|
(97,096
|
)
|
||
Investments in tenant improvements and deferred leasing costs
|
(61,990
|
)
|
|
(54,119
|
)
|
||
Investments in building improvements
|
(34,652
|
)
|
|
(31,070
|
)
|
||
Net proceeds from disposition of real estate assets
|
33,453
|
|
|
11,532
|
|
||
Distributions of capital from unconsolidated affiliates
|
105
|
|
|
7,445
|
|
||
Repayments of mortgages and notes receivable
|
758
|
|
|
2,357
|
|
||
Investments in and advances to unconsolidated affiliates
|
—
|
|
|
(172
|
)
|
||
Changes in other investing activities
|
(3,147
|
)
|
|
(4,033
|
)
|
||
Net cash used in investing activities
|
(201,839
|
)
|
|
(165,156
|
)
|
||
Financing activities:
|
|
|
|
||||
Distributions on Common Units
|
(97,800
|
)
|
|
(92,087
|
)
|
||
Special distribution on Common Units
|
—
|
|
|
(83,149
|
)
|
||
Redemptions/repurchases of Preferred Units
|
(5
|
)
|
|
(15
|
)
|
||
Distributions on Preferred Units
|
(1,246
|
)
|
|
(1,246
|
)
|
||
Distributions to noncontrolling interests in consolidated affiliates
|
(543
|
)
|
|
(858
|
)
|
||
Proceeds from the issuance of Common Units
|
2,052
|
|
|
74,987
|
|
||
Costs paid for the issuance of Common Units
|
(28
|
)
|
|
(1,199
|
)
|
||
Repurchase of units related to tax withholdings
|
(1,609
|
)
|
|
(3,955
|
)
|
||
Borrowings on revolving credit facility
|
257,400
|
|
|
425,300
|
|
||
Repayments of revolving credit facility
|
(360,400
|
)
|
|
(314,300
|
)
|
||
Borrowings on mortgages and notes payable
|
345,863
|
|
|
456,001
|
|
||
Repayments of mortgages and notes payable
|
(200,892
|
)
|
|
(506,679
|
)
|
||
Payments of debt extinguishment costs
|
—
|
|
|
(57
|
)
|
||
Changes in debt issuance costs and other financing activities
|
(3,326
|
)
|
|
(4,375
|
)
|
||
Net cash used in financing activities
|
(60,534
|
)
|
|
(51,632
|
)
|
||
Net decrease in cash and cash equivalents and restricted cash
|
$
|
(78,415
|
)
|
|
$
|
(44,673
|
)
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Net decrease in cash and cash equivalents and restricted cash
|
$
|
(78,415
|
)
|
|
$
|
(44,673
|
)
|
Cash and cash equivalents and restricted cash at beginning of the period
|
88,333
|
|
|
78,631
|
|
||
Cash and cash equivalents and restricted cash at end of the period
|
$
|
9,918
|
|
|
$
|
33,958
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Cash and cash equivalents at end of the period
|
$
|
4,232
|
|
|
$
|
13,346
|
|
Restricted cash at end of the period
|
5,686
|
|
|
20,612
|
|
||
Cash and cash equivalents and restricted cash at end of the period
|
$
|
9,918
|
|
|
$
|
33,958
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Cash paid for interest, net of amounts capitalized
|
$
|
33,273
|
|
|
$
|
34,930
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Unrealized gains on cash flow hedges
|
$
|
8,739
|
|
|
$
|
316
|
|
Changes in accrued capital expenditures
|
(10,574
|
)
|
|
(21,961
|
)
|
||
Write-off of fully depreciated real estate assets
|
48,011
|
|
|
28,449
|
|
||
Write-off of fully amortized leasing costs
|
19,717
|
|
|
15,023
|
|
||
Write-off of fully amortized debt issuance costs
|
2,705
|
|
|
4,324
|
|
||
Adjustment of Redeemable Common Units to fair value
|
(1,686
|
)
|
|
(1,156
|
)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Assets:
|
|
|
|
||||
Deferred leasing costs (including lease incentives and above market lease and in-place lease acquisition-related intangible assets)
|
$
|
339,623
|
|
|
$
|
344,191
|
|
Less accumulated amortization
|
(144,555
|
)
|
|
(143,512
|
)
|
||
|
$
|
195,068
|
|
|
$
|
200,679
|
|
Liabilities (in accounts payable, accrued expenses and other liabilities):
|
|
|
|
||||
Acquisition-related below market lease liabilities
|
$
|
58,847
|
|
|
$
|
59,947
|
|
Less accumulated amortization
|
(30,133
|
)
|
|
(28,214
|
)
|
||
|
$
|
28,714
|
|
|
$
|
31,733
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Amortization of deferred leasing costs and acquisition-related intangible assets (in depreciation and amortization)
|
$
|
9,207
|
|
|
$
|
10,133
|
|
|
$
|
18,702
|
|
|
$
|
20,752
|
|
Amortization of lease incentives (in rental and other revenues)
|
$
|
476
|
|
|
$
|
443
|
|
|
$
|
905
|
|
|
$
|
840
|
|
Amortization of acquisition-related intangible assets (in rental and other revenues)
|
$
|
429
|
|
|
$
|
675
|
|
|
$
|
877
|
|
|
$
|
1,711
|
|
Amortization of acquisition-related intangible assets (in rental property and other expenses)
|
$
|
139
|
|
|
$
|
139
|
|
|
$
|
276
|
|
|
$
|
276
|
|
Amortization of acquisition-related below market lease liabilities (in rental and other revenues)
|
$
|
(1,495
|
)
|
|
$
|
(1,592
|
)
|
|
$
|
(3,018
|
)
|
|
$
|
(3,172
|
)
|
|
|
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 Assets (in Rental Property and Other Expenses)
|
|
Amortization of Acquisition-Related Below Market Lease Liabilities (in Rental and Other Revenues)
|
||||||||||
July 1 through December 31, 2018
|
|
$
|
18,504
|
|
|
$
|
866
|
|
|
$
|
784
|
|
|
$
|
277
|
|
|
$
|
(2,918
|
)
|
2019
|
|
32,788
|
|
|
1,578
|
|
|
1,273
|
|
|
553
|
|
|
(5,446
|
)
|
|||||
2020
|
|
28,231
|
|
|
1,311
|
|
|
959
|
|
|
518
|
|
|
(5,186
|
)
|
|||||
2021
|
|
23,756
|
|
|
1,086
|
|
|
632
|
|
|
—
|
|
|
(4,377
|
)
|
|||||
2022
|
|
19,520
|
|
|
872
|
|
|
462
|
|
|
—
|
|
|
(3,264
|
)
|
|||||
Thereafter
|
|
54,783
|
|
|
4,907
|
|
|
1,408
|
|
|
—
|
|
|
(7,523
|
)
|
|||||
|
|
$
|
177,582
|
|
|
$
|
10,620
|
|
|
$
|
5,518
|
|
|
$
|
1,348
|
|
|
$
|
(28,714
|
)
|
Weighted average remaining amortization periods as of June 30, 2018 (in years)
|
|
7.5
|
|
|
10.0
|
|
|
6.5
|
|
|
2.5
|
|
|
6.2
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Secured indebtedness
|
$
|
98,089
|
|
|
$
|
98,981
|
|
Unsecured indebtedness
|
1,967,062
|
|
|
1,923,513
|
|
||
Less-unamortized debt issuance costs
|
(10,147
|
)
|
|
(8,161
|
)
|
||
Total mortgages and notes payable, net
|
$
|
2,055,004
|
|
|
$
|
2,014,333
|
|
•
|
available cash and cash equivalents;
|
•
|
cash flows from operating activities;
|
•
|
issuance of debt securities by the Operating Partnership (some of which debt securities may be hedged to a fixed interest rate pursuant to the forward-starting swaps referred to in Note 6);
|
•
|
issuance of secured debt;
|
•
|
bank term loans;
|
•
|
borrowings under our revolving credit facility;
|
•
|
issuance of equity securities by the Company or the Operating Partnership; and
|
•
|
the disposition of non-core assets.
|
6.
|
Derivative Financial Instruments
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Derivatives:
|
|
|
|
||||
Derivatives designated as cash flow hedges in prepaid expenses and other assets:
|
|
|
|
||||
Interest rate swaps
|
$
|
2,871
|
|
|
$
|
1,286
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Derivatives Designated as Cash Flow Hedges:
|
|
|
|
|
|
|
|
||||||||
Amount of unrealized gains/(losses) recognized in accumulated other comprehensive income on derivatives (effective portion):
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
862
|
|
|
$
|
(136
|
)
|
|
$
|
8,739
|
|
|
$
|
316
|
|
Amount of (gains)/losses reclassified out of accumulated other comprehensive income into contractual interest expense (effective portion):
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
(515
|
)
|
|
$
|
297
|
|
|
$
|
(621
|
)
|
|
$
|
781
|
|
7.
|
Noncontrolling Interests
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Beginning noncontrolling interests in the Operating Partnership
|
$
|
144,009
|
|
|
$
|
144,802
|
|
Adjustment of noncontrolling interests in the Operating Partnership to fair value
|
(272
|
)
|
|
(287
|
)
|
||
Conversions of Common Units to Common Stock
|
(1,084
|
)
|
|
(305
|
)
|
||
Net income attributable to noncontrolling interests in the Operating Partnership
|
2,269
|
|
|
1,931
|
|
||
Distributions to noncontrolling interests in the Operating Partnership
|
(2,599
|
)
|
|
(2,495
|
)
|
||
Total noncontrolling interests in the Operating Partnership
|
$
|
142,323
|
|
|
$
|
143,646
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income available for common stockholders
|
$
|
50,686
|
|
|
$
|
37,589
|
|
|
$
|
83,135
|
|
|
$
|
69,263
|
|
Increase in additional paid in capital from conversions of Common Units
to Common Stock |
182
|
|
|
203
|
|
|
1,084
|
|
|
305
|
|
||||
Change from net income available for common stockholders and transfers from noncontrolling interests
|
$
|
50,868
|
|
|
$
|
37,792
|
|
|
$
|
84,219
|
|
|
$
|
69,568
|
|
8.
|
Disclosure About Fair Value of Financial Instruments
|
8.
|
Disclosure About Fair Value of Financial Instruments - Continued
|
|
|
|
|
Level 1
|
|
Level 2
|
||||||
|
|
Total
|
|
Quoted Prices
in Active
Markets for Identical Assets or Liabilities
|
|
Significant Observable Inputs
|
||||||
Fair Value at June 30, 2018:
|
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
|
||||||
Mortgages and notes receivable, at fair value
(1)
|
|
$
|
5,927
|
|
|
$
|
—
|
|
|
$
|
5,927
|
|
Interest rate swaps (in prepaid expenses and other assets)
|
|
2,871
|
|
|
—
|
|
|
2,871
|
|
|||
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
|
|
2,371
|
|
|
2,371
|
|
|
—
|
|
|||
Total Assets
|
|
$
|
11,169
|
|
|
$
|
2,371
|
|
|
$
|
8,798
|
|
Noncontrolling Interests in the Operating Partnership
|
|
$
|
142,323
|
|
|
$
|
142,323
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
||||||
Mortgages and notes payable, net, at fair value
(1)
|
|
$
|
2,024,245
|
|
|
$
|
—
|
|
|
$
|
2,024,245
|
|
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
|
|
2,371
|
|
|
2,371
|
|
|
—
|
|
|||
Total Liabilities
|
|
$
|
2,026,616
|
|
|
$
|
2,371
|
|
|
$
|
2,024,245
|
|
Fair Value at December 31, 2017:
|
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
|
||||||
Mortgages and notes receivable, at fair value
(1)
|
|
$
|
6,425
|
|
|
$
|
—
|
|
|
$
|
6,425
|
|
Interest rate swaps (in prepaid expenses and other assets)
|
|
1,286
|
|
|
—
|
|
|
1,286
|
|
|||
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)
|
|
2,388
|
|
|
2,388
|
|
|
—
|
|
|||
Total Assets
|
|
$
|
10,099
|
|
|
$
|
2,388
|
|
|
$
|
7,711
|
|
Noncontrolling Interests in the Operating Partnership
|
|
$
|
144,009
|
|
|
$
|
144,009
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
||||||
Mortgages and notes payable, net, at fair value
(1)
|
|
$
|
2,015,689
|
|
|
$
|
—
|
|
|
$
|
2,015,689
|
|
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)
|
|
2,388
|
|
|
2,388
|
|
|
—
|
|
|||
Total Liabilities
|
|
$
|
2,018,077
|
|
|
$
|
2,388
|
|
|
$
|
2,015,689
|
|
9.
|
Share-Based Payments
|
10.
|
Accumulated Other Comprehensive Income
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
15,609
|
|
|
$
|
5,885
|
|
|
$
|
7,838
|
|
|
$
|
4,949
|
|
Unrealized gains/(losses) on cash flow hedges
|
862
|
|
|
(136
|
)
|
|
8,739
|
|
|
316
|
|
||||
Amortization of cash flow hedges
(1)
|
(515
|
)
|
|
297
|
|
|
(621
|
)
|
|
781
|
|
||||
Total accumulated other comprehensive income
|
$
|
15,956
|
|
|
$
|
6,046
|
|
|
$
|
15,956
|
|
|
$
|
6,046
|
|
11.
|
Real Estate and Other Assets Held For Sale
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Assets:
|
|
|
|
||||
Land
|
$
|
—
|
|
|
$
|
870
|
|
Buildings and tenant improvements
|
—
|
|
|
21,318
|
|
||
Land held for development
|
—
|
|
|
355
|
|
||
Less-accumulated depreciation
|
—
|
|
|
(9,304
|
)
|
||
Net real estate assets
|
—
|
|
|
13,239
|
|
||
Accrued straight-line rents receivable
|
—
|
|
|
591
|
|
||
Deferred leasing costs, net
|
—
|
|
|
253
|
|
||
Prepaid expenses and other assets
|
—
|
|
|
35
|
|
||
Real estate and other assets, net, held for sale
|
$
|
—
|
|
|
$
|
14,118
|
|
12.
|
Earnings Per Share and Per Unit
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Earnings per Common Share - basic:
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
52,998
|
|
|
$
|
39,554
|
|
|
$
|
87,244
|
|
|
$
|
73,039
|
|
Net (income) attributable to noncontrolling interests in the Operating Partnership
|
(1,381
|
)
|
|
(1,043
|
)
|
|
(2,269
|
)
|
|
(1,931
|
)
|
||||
Net (income) attributable to noncontrolling interests in consolidated affiliates
|
(308
|
)
|
|
(299
|
)
|
|
(594
|
)
|
|
(599
|
)
|
||||
Dividends on Preferred Stock
|
(623
|
)
|
|
(623
|
)
|
|
(1,246
|
)
|
|
(1,246
|
)
|
||||
Net income available for common stockholders
|
$
|
50,686
|
|
|
$
|
37,589
|
|
|
$
|
83,135
|
|
|
$
|
69,263
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per Common Share – weighted average shares
|
103,428
|
|
|
102,475
|
|
|
103,376
|
|
|
102,109
|
|
||||
Net income available for common stockholders
|
$
|
0.49
|
|
|
$
|
0.37
|
|
|
$
|
0.80
|
|
|
$
|
0.68
|
|
Earnings per Common Share - diluted:
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
52,998
|
|
|
$
|
39,554
|
|
|
$
|
87,244
|
|
|
$
|
73,039
|
|
Net (income) attributable to noncontrolling interests in consolidated affiliates
|
(308
|
)
|
|
(299
|
)
|
|
(594
|
)
|
|
(599
|
)
|
||||
Dividends on Preferred Stock
|
(623
|
)
|
|
(623
|
)
|
|
(1,246
|
)
|
|
(1,246
|
)
|
||||
Net income available for common stockholders before net (income) attributable to noncontrolling interests in the Operating Partnership
|
$
|
52,067
|
|
|
$
|
38,632
|
|
|
$
|
85,404
|
|
|
$
|
71,194
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per Common Share – weighted average shares
|
103,428
|
|
|
102,475
|
|
|
103,376
|
|
|
102,109
|
|
||||
Add:
|
|
|
|
|
|
|
|
||||||||
Stock options using the treasury method
|
32
|
|
|
77
|
|
|
29
|
|
|
81
|
|
||||
Noncontrolling interests Common Units
|
2,807
|
|
|
2,834
|
|
|
2,811
|
|
|
2,836
|
|
||||
Denominator for diluted earnings per Common Share – adjusted weighted average shares and assumed conversions
(1)
|
106,267
|
|
|
105,386
|
|
|
106,216
|
|
|
105,026
|
|
||||
Net income available for common stockholders
|
$
|
0.49
|
|
|
$
|
0.37
|
|
|
$
|
0.80
|
|
|
$
|
0.68
|
|
(1)
|
Includes all unvested restricted stock where dividends on such restricted stock are non-forfeitable.
|
12.
|
Earnings Per Share and Per Unit - Continued
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Earnings per Common Unit - basic:
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
52,998
|
|
|
$
|
39,554
|
|
|
$
|
87,244
|
|
|
$
|
73,039
|
|
Net (income) attributable to noncontrolling interests in consolidated affiliates
|
(308
|
)
|
|
(299
|
)
|
|
(594
|
)
|
|
(599
|
)
|
||||
Distributions on Preferred Units
|
(623
|
)
|
|
(623
|
)
|
|
(1,246
|
)
|
|
(1,246
|
)
|
||||
Net income available for common unitholders
|
$
|
52,067
|
|
|
$
|
38,632
|
|
|
$
|
85,404
|
|
|
$
|
71,194
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per Common Unit – weighted average units
|
105,826
|
|
|
104,900
|
|
|
105,778
|
|
|
104,536
|
|
||||
Net income available for common unitholders
|
$
|
0.49
|
|
|
$
|
0.37
|
|
|
$
|
0.81
|
|
|
$
|
0.68
|
|
Earnings per Common Unit - diluted:
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
52,998
|
|
|
$
|
39,554
|
|
|
$
|
87,244
|
|
|
$
|
73,039
|
|
Net (income) attributable to noncontrolling interests in consolidated affiliates
|
(308
|
)
|
|
(299
|
)
|
|
(594
|
)
|
|
(599
|
)
|
||||
Distributions on Preferred Units
|
(623
|
)
|
|
(623
|
)
|
|
(1,246
|
)
|
|
(1,246
|
)
|
||||
Net income available for common unitholders
|
$
|
52,067
|
|
|
$
|
38,632
|
|
|
$
|
85,404
|
|
|
$
|
71,194
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per Common Unit – weighted average units
|
105,826
|
|
|
104,900
|
|
|
105,778
|
|
|
104,536
|
|
||||
Add:
|
|
|
|
|
|
|
|
||||||||
Stock options using the treasury method
|
32
|
|
|
77
|
|
|
29
|
|
|
81
|
|
||||
Denominator for diluted earnings per Common Unit – adjusted weighted average units and assumed conversions
(1)
|
105,858
|
|
|
104,977
|
|
|
105,807
|
|
|
104,617
|
|
||||
Net income available for common unitholders
|
$
|
0.49
|
|
|
$
|
0.37
|
|
|
$
|
0.81
|
|
|
$
|
0.68
|
|
(1)
|
Includes all unvested restricted stock where distributions on such restricted stock are non-forfeitable.
|
13.
|
Segment Information
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Rental and Other Revenues:
|
|
|
|
|
|
|
|
||||||||
Office:
|
|
|
|
|
|
|
|
||||||||
Atlanta
|
$
|
34,777
|
|
|
$
|
35,347
|
|
|
$
|
70,260
|
|
|
$
|
69,556
|
|
Greensboro
|
5,378
|
|
|
5,284
|
|
|
11,404
|
|
|
10,586
|
|
||||
Memphis
|
9,899
|
|
|
11,823
|
|
|
20,107
|
|
|
23,618
|
|
||||
Nashville
|
30,669
|
|
|
28,836
|
|
|
61,392
|
|
|
52,526
|
|
||||
Orlando
|
13,451
|
|
|
12,436
|
|
|
26,751
|
|
|
24,874
|
|
||||
Pittsburgh
|
15,323
|
|
|
14,852
|
|
|
30,605
|
|
|
29,701
|
|
||||
Raleigh
|
29,282
|
|
|
30,097
|
|
|
59,086
|
|
|
59,643
|
|
||||
Richmond
|
10,893
|
|
|
11,106
|
|
|
21,942
|
|
|
22,048
|
|
||||
Tampa
|
25,841
|
|
|
24,250
|
|
|
51,266
|
|
|
47,506
|
|
||||
Total Office Segment
|
175,513
|
|
|
174,031
|
|
|
352,813
|
|
|
340,058
|
|
||||
Other
|
3,279
|
|
|
3,252
|
|
|
6,417
|
|
|
6,633
|
|
||||
Total Rental and Other Revenues
|
$
|
178,792
|
|
|
$
|
177,283
|
|
|
$
|
359,230
|
|
|
$
|
346,691
|
|
Net Operating Income:
|
|
|
|
|
|
|
|
||||||||
Office:
|
|
|
|
|
|
|
|
||||||||
Atlanta
|
$
|
21,608
|
|
|
$
|
22,544
|
|
|
$
|
44,278
|
|
|
$
|
44,550
|
|
Greensboro
|
3,434
|
|
|
3,391
|
|
|
7,445
|
|
|
6,749
|
|
||||
Memphis
|
6,173
|
|
|
7,272
|
|
|
12,818
|
|
|
14,544
|
|
||||
Nashville
|
22,427
|
|
|
21,626
|
|
|
44,410
|
|
|
38,250
|
|
||||
Orlando
|
8,093
|
|
|
7,430
|
|
|
16,356
|
|
|
15,008
|
|
||||
Pittsburgh
|
9,249
|
|
|
8,949
|
|
|
18,220
|
|
|
17,574
|
|
||||
Raleigh
|
21,494
|
|
|
21,920
|
|
|
43,366
|
|
|
43,385
|
|
||||
Richmond
|
7,659
|
|
|
7,845
|
|
|
15,240
|
|
|
15,466
|
|
||||
Tampa
|
16,500
|
|
|
15,203
|
|
|
33,260
|
|
|
30,325
|
|
||||
Total Office Segment
|
116,637
|
|
|
116,180
|
|
|
235,393
|
|
|
225,851
|
|
||||
Other
|
2,492
|
|
|
2,249
|
|
|
4,742
|
|
|
4,590
|
|
||||
Total Net Operating Income
|
119,129
|
|
|
118,429
|
|
|
240,135
|
|
|
230,441
|
|
||||
Reconciliation to income before disposition of investment properties and activity in unconsolidated affiliates:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
(56,694
|
)
|
|
(55,816
|
)
|
|
(114,262
|
)
|
|
(111,961
|
)
|
||||
General and administrative expenses
|
(9,540
|
)
|
|
(9,050
|
)
|
|
(21,318
|
)
|
|
(20,540
|
)
|
||||
Interest expense
|
(17,877
|
)
|
|
(16,154
|
)
|
|
(36,268
|
)
|
|
(34,017
|
)
|
||||
Other income
|
462
|
|
|
1,390
|
|
|
917
|
|
|
2,074
|
|
||||
Income before disposition of investment properties and activity in unconsolidated affiliates
|
$
|
35,480
|
|
|
$
|
38,799
|
|
|
$
|
69,204
|
|
|
$
|
65,997
|
|
•
|
the financial condition of our customers could deteriorate;
|
•
|
we may not be able to lease or re-lease second generation space, defined as previously occupied space that becomes available for lease, quickly or on as favorable terms as old leases;
|
•
|
we may not be able to lease newly constructed buildings as quickly or on as favorable terms as originally anticipated;
|
•
|
we may not be able to complete development, acquisition, reinvestment, disposition or joint venture projects as quickly or on as favorable terms as anticipated;
|
•
|
development activity in our existing markets could result in an excessive supply relative to customer demand;
|
•
|
our markets may suffer declines in economic and/or office employment growth;
|
•
|
unanticipated increases in interest rates could increase our debt service costs;
|
•
|
unanticipated increases in operating expenses could negatively impact our operating results;
|
•
|
we may not be able to meet our liquidity requirements or obtain capital on favorable terms to fund our working capital needs and growth initiatives or repay or refinance outstanding debt upon maturity; and
|
•
|
the Company could lose key executive officers.
|
•
|
owning high-quality, differentiated office buildings in the BBDs of our core markets;
|
•
|
improving the operating results of our properties through concentrated leasing, asset management, cost control and customer service efforts;
|
•
|
developing and acquiring office buildings in BBDs that improve the overall quality of our portfolio and generate attractive returns over the long term for our stockholders;
|
•
|
disposing of properties no longer considered to be core assets primarily due to location, age, quality and/or overall strategic fit; and
|
•
|
maintaining a balance sheet with ample liquidity to meet our funding needs and growth prospects.
|
|
New
|
|
Renewal
|
|
All Office
|
||||||
Leased space (in rentable square feet)
|
188,522
|
|
|
928,472
|
|
|
1,116,994
|
|
|||
Average term (in years - rentable square foot weighted)
|
6.7
|
|
|
6.7
|
|
|
6.7
|
|
|||
Base rents (per rentable square foot)
(1)
|
$
|
28.91
|
|
|
$
|
27.23
|
|
|
$
|
27.51
|
|
Rent concessions (per rentable square foot)
(1)
|
(0.77
|
)
|
|
(0.50
|
)
|
|
(0.55
|
)
|
|||
GAAP rents (per rentable square foot)
(1)
|
$
|
28.14
|
|
|
$
|
26.73
|
|
|
$
|
26.96
|
|
Tenant improvements (per rentable square foot)
(1)
|
$
|
4.41
|
|
|
$
|
2.12
|
|
|
$
|
2.51
|
|
Leasing commissions (per rentable square foot)
(1)
|
$
|
1.06
|
|
|
$
|
0.56
|
|
|
$
|
0.64
|
|
(1)
|
Weighted average per rentable square foot on an annual basis over the lease term.
|
•
|
cash flow from operating activities;
|
•
|
bank term loans and borrowings under our revolving credit facility;
|
•
|
the issuance of unsecured debt;
|
•
|
the issuance of secured debt;
|
•
|
the issuance of equity securities by the Company or the Operating Partnership; and
|
•
|
the disposition of non-core assets.
|
|
Six Months Ended
June 30, |
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Net Cash Provided By Operating Activities
|
$
|
183,958
|
|
|
$
|
172,115
|
|
|
$
|
11,843
|
|
Net Cash Used In Investing Activities
|
(201,839
|
)
|
|
(165,156
|
)
|
|
(36,683
|
)
|
|||
Net Cash Used In Financing Activities
|
(60,534
|
)
|
|
(51,632
|
)
|
|
(8,902
|
)
|
|||
Total Cash Flows
|
$
|
(78,415
|
)
|
|
$
|
(44,673
|
)
|
|
$
|
(33,742
|
)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Mortgages and notes payable, net, at recorded book value
|
$
|
2,055,004
|
|
|
$
|
2,014,333
|
|
Preferred Stock, at liquidation value
|
$
|
28,887
|
|
|
$
|
28,892
|
|
Common Stock outstanding
|
103,459
|
|
|
103,267
|
|
||
Common Units outstanding (not owned by the Company)
|
2,806
|
|
|
2,829
|
|
||
Per share stock price at period end
|
$
|
50.73
|
|
|
$
|
50.91
|
|
Market value of Common Stock and Common Units
|
$
|
5,390,823
|
|
|
$
|
5,401,347
|
|
Total capitalization
|
$
|
7,474,714
|
|
|
$
|
7,444,572
|
|
Property
|
|
Market
|
|
Rentable Square Feet
|
|
Anticipated Total Investment (1)
|
|
Investment As Of June 30, 2018 (1)
|
|
Pre Leased %
|
|
Estimated Completion
|
|
Estimated Stabilization
|
||||||
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
||||||||
Virginia Urology
|
|
Richmond
|
|
87,000
|
|
|
$
|
29,140
|
|
|
$
|
25,039
|
|
|
100.0
|
%
|
|
3Q18
|
|
3Q18
|
751 Corporate Center
|
|
Raleigh
|
|
89,700
|
|
|
21,850
|
|
|
16,540
|
|
|
89.2
|
|
|
4Q18
|
|
4Q20
|
||
MetLife III
|
|
Raleigh
|
|
219,000
|
|
|
64,500
|
|
|
43,208
|
|
|
100.0
|
|
|
2Q19
|
|
2Q21
|
||
Virginia Springs I
|
|
Nashville
|
|
109,000
|
|
|
34,300
|
|
|
14,910
|
|
|
37.7
|
|
|
2Q19
|
|
3Q20
|
||
Mars Petcare - Ovation
|
|
Nashville
|
|
223,700
|
|
|
96,200
|
|
|
53,301
|
|
|
100.0
|
|
|
3Q19
|
|
3Q19
|
||
Asurion
(2)
|
|
Nashville
|
|
550,600
|
|
|
285,000
|
|
|
26,787
|
|
|
98.3
|
|
|
4Q21
|
|
1Q22
|
||
|
|
|
|
1,279,000
|
|
|
$
|
530,990
|
|
|
$
|
179,785
|
|
|
93.2
|
%
|
|
|
|
|
(1)
|
Includes deferred lease commissions which are classified in deferred leasing costs on our Consolidated Balance Sheets.
|
(2)
|
Recorded on our Consolidated Balance Sheets in land held for development, not development in-process.
|
•
|
Net income/(loss) computed in accordance with GAAP;
|
•
|
Less net income attributable to noncontrolling interests in consolidated affiliates;
|
•
|
Plus depreciation and amortization of depreciable operating properties;
|
•
|
Less gains, or plus losses, from sales of depreciable operating properties, plus impairments on depreciable operating properties and excluding items that are classified as extraordinary items under GAAP;
|
•
|
Plus or minus our share of adjustments, including depreciation and amortization of depreciable operating properties, for unconsolidated joint venture investments (to reflect funds from operations on the same basis); and
|
•
|
Plus or minus adjustments for depreciation and amortization and gains/(losses) on sales of depreciable operating properties, plus impairments on depreciable operating properties, and noncontrolling interests in consolidated affiliates related to discontinued operations.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Funds from operations:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
52,998
|
|
|
$
|
39,554
|
|
|
$
|
87,244
|
|
|
$
|
73,039
|
|
Net (income) attributable to noncontrolling interests in consolidated affiliates
|
(308
|
)
|
|
(299
|
)
|
|
(594
|
)
|
|
(599
|
)
|
||||
Depreciation and amortization of real estate assets
|
55,954
|
|
|
55,116
|
|
|
112,789
|
|
|
110,591
|
|
||||
(Gains) on disposition of depreciable properties
|
(16,433
|
)
|
|
—
|
|
|
(16,433
|
)
|
|
(5,332
|
)
|
||||
Unconsolidated affiliates:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization of real estate assets
|
565
|
|
|
732
|
|
|
1,076
|
|
|
1,394
|
|
||||
Funds from operations
|
92,776
|
|
|
95,103
|
|
|
184,082
|
|
|
179,093
|
|
||||
Dividends on Preferred Stock
|
(623
|
)
|
|
(623
|
)
|
|
(1,246
|
)
|
|
(1,246
|
)
|
||||
Funds from operations available for common stockholders
|
$
|
92,153
|
|
|
$
|
94,480
|
|
|
$
|
182,836
|
|
|
$
|
177,847
|
|
Funds from operations available for common stockholders per share
|
$
|
0.87
|
|
|
$
|
0.90
|
|
|
$
|
1.72
|
|
|
$
|
1.69
|
|
Weighted average shares outstanding
(1)
|
106,267
|
|
|
105,386
|
|
|
106,216
|
|
|
105,026
|
|
(1)
|
Includes assumed conversion of all potentially dilutive Common Stock equivalents.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Income before disposition of investment properties and activity in unconsolidated affiliates
|
$
|
35,480
|
|
|
$
|
38,799
|
|
|
$
|
69,204
|
|
|
$
|
65,997
|
|
Other income
|
(462
|
)
|
|
(1,390
|
)
|
|
(917
|
)
|
|
(2,074
|
)
|
||||
Interest expense
|
17,877
|
|
|
16,154
|
|
|
36,268
|
|
|
34,017
|
|
||||
General and administrative expenses
|
9,540
|
|
|
9,050
|
|
|
21,318
|
|
|
20,540
|
|
||||
Depreciation and amortization
|
56,694
|
|
|
55,816
|
|
|
114,262
|
|
|
111,961
|
|
||||
Net operating income
|
119,129
|
|
|
118,429
|
|
|
240,135
|
|
|
230,441
|
|
||||
Less – non same property and other net operating income
|
(10,608
|
)
|
|
(9,945
|
)
|
|
(21,359
|
)
|
|
(14,654
|
)
|
||||
Same property net operating income
|
$
|
108,521
|
|
|
$
|
108,484
|
|
|
$
|
218,776
|
|
|
$
|
215,787
|
|
|
|
|
|
|
|
|
|
||||||||
Same property net operating income
|
$
|
108,521
|
|
|
$
|
108,484
|
|
|
$
|
218,776
|
|
|
$
|
215,787
|
|
Less – lease termination fees, straight-line rent and other non-cash adjustments
|
(4,978
|
)
|
|
(3,772
|
)
|
|
(10,145
|
)
|
|
(8,838
|
)
|
||||
Same property cash net operating income
|
$
|
103,543
|
|
|
$
|
104,712
|
|
|
$
|
208,631
|
|
|
$
|
206,949
|
|
Exhibit
Number
|
Description
|
10.1
|
|
12.1
|
|
12.2
|
|
31.1
|
|
31.2
|
|
31.3
|
|
31.4
|
|
32.1
|
|
32.2
|
|
32.3
|
|
32.4
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Extension Labels Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Highwoods Properties, Inc.
|
|
By:
|
/s/ Mark F. Mulhern
|
|
Mark F. Mulhern
|
|
Executive Vice President and Chief Financial Officer
|
Highwoods Realty Limited Partnership
|
|
By:
|
Highwoods Properties, Inc., its sole general partner
|
By:
|
/s/ Mark F. Mulhern
|
|
Mark F. Mulhern
|
|
Executive Vice President and Chief Financial Officer
|
|
GENERAL PARTNER:
|
||
|
HIGHWOODS PROPERTIES, INC.,
a Maryland corporation
|
||
|
By:
|
/s/ Jeffrey D. Miller
|
|
|
|
Jeffrey D. Miller
|
|
|
|
Executive Vice President, General Counsel and Secretary
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2018 |
||
Earnings:
|
|
|
||
Income before equity in earnings of unconsolidated affiliates
|
|
$
|
86,176
|
|
Fixed charges
|
|
40,442
|
|
|
Capitalized interest
|
|
(2,912
|
)
|
|
Distributions of earnings from unconsolidated affiliates
|
|
1,706
|
|
|
Total earnings
|
|
$
|
125,412
|
|
|
|
|
||
Fixed charges and Preferred Stock dividends:
|
|
|
||
Contractual interest expense
|
|
$
|
34,860
|
|
Amortization of debt issuance costs
|
|
1,408
|
|
|
Capitalized interest
|
|
2,912
|
|
|
Interest component of rental expense
|
|
1,262
|
|
|
Total fixed charges
|
|
40,442
|
|
|
Preferred Stock dividends
|
|
1,246
|
|
|
Total fixed charges and Preferred Stock dividends
|
|
$
|
41,688
|
|
|
|
|
||
Ratio of earnings to fixed charges
|
|
3.10
|
|
|
Ratio of earnings to combined fixed charges and Preferred Stock dividends
|
|
3.01
|
|
|
|
Six Months Ended
June 30, 2018 |
||
Earnings:
|
|
|
||
Income before equity in earnings of unconsolidated affiliates
|
|
$
|
86,176
|
|
Fixed charges
|
|
40,442
|
|
|
Capitalized interest
|
|
(2,912
|
)
|
|
Distributions of earnings from unconsolidated affiliates
|
|
1,706
|
|
|
Total earnings
|
|
$
|
125,412
|
|
|
|
|
||
Fixed charges and Preferred Unit distributions:
|
|
|
||
Contractual interest expense
|
|
$
|
34,860
|
|
Amortization of debt issuance costs
|
|
1,408
|
|
|
Capitalized interest
|
|
2,912
|
|
|
Interest component of rental expense
|
|
1,262
|
|
|
Total fixed charges
|
|
40,442
|
|
|
Preferred Unit distributions
|
|
1,246
|
|
|
Total fixed charges and Preferred Unit distributions
|
|
$
|
41,688
|
|
|
|
|
||
Ratio of earnings to fixed charges
|
|
3.10
|
|
|
Ratio of earnings to combined fixed charges and Preferred Unit distributions
|
|
3.01
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Highwoods Properties, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit Committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
/s/ Edward J. Fritsch
|
Edward J. Fritsch
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Highwoods Properties, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
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5.
|
The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit Committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
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(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
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/s/ Mark F. Mulhern
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Mark F. Mulhern
Executive Vice President and Chief Financial Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Highwoods Realty Limited Partnership;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
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4.
|
The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit Committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
/s/ Edward J. Fritsch
|
Edward J. Fritsch
President and Chief Executive Officer of the General Partner
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Highwoods Realty Limited Partnership;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit Committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
/s/ Mark F. Mulhern
|
Mark F. Mulhern
Executive Vice President and Chief Financial Officer of the General Partner
|
1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Edward J. Fritsch
|
Edward J. Fritsch
President and Chief Executive Officer
|
July 24, 2018
|
1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Mark F. Mulhern
|
Mark F. Mulhern
Executive Vice President and Chief Financial Officer
|
July 24, 2018
|
1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.
|
/s/ Edward J. Fritsch
|
Edward J. Fritsch
President and Chief Executive Officer of the General Partner
|
July 24, 2018
|
1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.
|
/s/ Mark F. Mulhern
|
Mark F. Mulhern
Executive Vice President and Chief Financial Officer of the General Partner
|
July 24, 2018
|