Real Estate Assets

Acquisitions

During 2015, we acquired:


•	a building in Tampa, FL encompassing 528,000 rentable square feet for a net purchase price of $113.5 million and an adjacent land parcel for a purchase price of $2.2 million;


•	two buildings in Atlanta, GA encompassing 896,000 rentable square feet for a net purchase price of $290.3 million;


•	land in Atlanta, GA for a purchase price and related transaction costs of $5.2 million (including contingent consideration of $0.9 million); and


•	our Highwoods DLF 98/29, LLC joint venture partner’s 77.2% interest in a building in Orlando, FL encompassing 168,000 rentable square feet in exchange for the assumption of secured debt recorded at fair value of $19.3 million (see Note 6).

We expensed $1.0 million of acquisition costs (included in general and administrative expenses) in 2015 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.

The following table sets forth a summary of the fair value of the major assets acquired and liabilities assumed relating to the above-referenced acquisition of two buildings in Atlanta, GA during 2015:



	Total Purchase Price Allocation
Real estate assets	$	275,639
Acquisition-related intangible assets (in deferred financing and leasing costs)	23,722
Acquisition-related below market lease liabilities (in accounts payable, accrued expenses and other liabilities)	(9,076		)
Total allocation	$	290,285

The following table sets forth the Company's revenues and net income, adjusted for interest expense, straight-line rental income, depreciation and amortization related to purchase price allocations and acquisition costs, assuming the above-referenced acquisition of two buildings in Atlanta, GA during 2015 had been completed as of January 1, 2014:



	Year Ended December 31,
	2015		2014
	(unaudited)
Pro forma revenues	$	626,067	$	584,650
Pro forma net income	$	103,485	$	113,284
Pro forma net income available for common stockholders	$	96,797	$	105,769
Pro forma earnings per share - basic	$	1.03	$	1.17
Pro forma earnings per share - diluted	$	1.02	$	1.17

The above-referenced acquisition of two buildings in Atlanta, GA during 2015 resulted in revenues of $7.3 million and net loss of $1.2 million recorded in the Consolidated Statements of Income for the year ended December 31, 2015.

2. Real Estate Assets - Continued

During 2014, we acquired:


•	a building in Orlando, FL encompassing 246,000 rentable square feet for a purchase price of $67.4 million;


•	our partner's 50.0% interest in a building owned by our consolidated Highwoods-Markel Associates, LLC joint venture in Richmond, VA encompassing 66,000 rentable square feet for a purchase price of $4.2 million, which is recorded as acquisition of noncontrolling interest in consolidated affiliate;


•	land in Nashville, TN for a purchase price and related transaction costs of $15.8 million (including contingent consideration of $3.3 million); and


•	a building in Raleigh, NC encompassing 374,000 rentable square feet for a purchase price of $83.8 million.

We expensed $0.5 million of acquisition costs (included in general and administrative expenses) in 2014 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.

During 2013, we acquired:

•

our joint venture partner's 60.0% interest in our HIW-KC Orlando, LLC joint venture, which owned five buildings 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 has since been repaid. 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;


•	a building 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 buildings 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 has since been repaid;


•	a building in Atlanta, GA encompassing 553,000 rentable square feet for a purchase price of $140.1 million;


•	two buildings in Tampa, FL encompassing 372,000 rentable square feet for a purchase price of $52.5 million;


•	two buildings in Greensboro, NC encompassing 195,000 rentable square feet for a purchase price of $30.8 million; and


•	land in Memphis, TN 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 above-referenced acquisitions of a building in Orlando, FL and Nashville, TN and the 553,000 rentable square foot building in Atlanta, GA during 2013:



	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 the Company's revenues and net income, adjusted for interest expense, straight-line rental income, depreciation and amortization related to purchase price allocations, acquisition costs and equity in earnings of unconsolidated affiliates previously recognized as income assuming the above-referenced acquisitions of buildings in Orlando, FL, Nashville, TN and Atlanta, GA during 2013 had been completed as of January 1, 2012:



	Year Ended December 31,
	2013
	(unaudited)
Pro forma revenues	$	538,890
Pro forma net income	$	121,754
Pro forma net income available for common stockholders	$	113,606
Pro forma earnings per share - basic	$	1.33
Pro forma earnings per share - diluted	$	1.33

The above-referenced acquisitions of buildings in Orlando, FL, Nashville, TN and Atlanta, GA during 2013 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.

Dispositions

During 2015, we sold a total of three buildings and land for an aggregate sale price of $27.8 million and recorded aggregate gains on disposition of property of $9.2 million, net of $0.5 million in taxes payable by our taxable REIT subsidiary.

During 2014, we sold a total of 33 buildings and land for an aggregate sale price of $187.3 million (before closing credits to buyer of $8.6 million for unfunded building and tenant improvements and $2.9 million for free rent) and recorded aggregate gains on disposition of property of $44.4 million.

During 2013, we sold a total of 47 buildings and land for an aggregate sale price of $260.5 million (before closing credits to buyer of $3.6 million for unfunded tenant improvements and after $2.0 million in closing credits to buyer for free rent) and recorded aggregate gains on disposition of discontinued operations of $62.3 million. Additionally, in connection with the disposition of a building in 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.

2. Real Estate Assets - Continued

Impairments

During 2014, we recorded an impairment of real estate assets of $0.6 million on a building in Greensboro, NC. During 2013, we recorded impairments of real estate assets of $1.1 million on four buildings in a single office park in Winston-Salem, NC and $1.1 million on seven buildings in Atlanta, GA. 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.