<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 12, 1995
HIGHWOODS PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MARYLAND 001-13100 56-1871668
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification Number)
3100 SMOKETREE COURT, SUITE 700 27604
RALEIGH, NC (Zip Code)
(Address of principal executive office)
</TABLE>
Registrant's telephone number, including area code: (919) 872-4924
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Item 2 is hereby amended and restated in its entirety:
On July 12, 1995, Highwoods Properties, Inc. (the "Company") acquired a
914,000-square foot industrial and service center portfolio consisting of 47
buildings located in Greensboro, North Carolina and nine buildings located in
Charlotte, North Carolina (the "Bissell Portfolio"). As part of the acquisition,
the Company will initially acquire six acres of development land and will
acquire 20 additional acres over a five-year period. The aggregate purchase
price of approximately $38.7 million was paid through the issuance of 81,716
units of limited partnership interest ("Units") of Highwoods/Forsyth Limited
Partnership, formerly Highwoods Realty Limited Partnership (the "Operating
Partnership"), the assumption of $6.7 million of indebtedness, the payment of
$28.3 million in cash and a deferred payment of $1.6 million. The $28.3 million
cash payment was financed with a $12.3 million first mortgage loan and a $16.0
million draw under the Company's existing $80.0 million credit facility (the
"Credit Facility"). The deferred payment will be payable in installments as the
balance of the 20 acres of development land are placed in service or five years
from the closing, whichever occurs first.
The Bissell Portfolio is currently 97% leased and contains 167,000 square
feet of warehouse space and 747,000 square feet of service center space. The
portfolio is leased primarily to local and regional tenants engaged in
distribution and light manufacturing. Eighty-two percent (753,000 square feet)
of the portfolio is located in Greensboro. Twenty acres of the development land
is zoned for office development and is located in the Piedmont Triad
International Airport submarket. This portion of the Bissell Portfolio increases
the Company's dominance of the Airport submarket and extends its position in the
West Greensboro submarket. The balance of the Bissell Portfolio is one business
park fronting Interstate 77 in southwest Charlotte where the Company has two
existing business parks.
On July 20, 1995, the Company acquired a 275,000-square foot,
five-building, suburban office complex located in Durham, North Carolina (the
"Hock Portfolio"). The Hock Portfolio is currently 96% leased. The aggregate
purchase price of approximately $21.6 million was paid through the issuance of
183,000 Units and the assumption of approximately $17.0 million of indebtedness,
which was repaid at closing through a draw under the Credit Facility. As part of
the transaction, the Company was granted certain development rights with respect
to approximately 78 acres of development land adjacent to the Hock Portfolio.
On July 12, 1995, the Company acquired two suburban office properties
located in the Innsbrook Office Center in Richmond, Virginia (the "Initial
Innsbrook Portfolio"). The properties encompass 97,253 square feet and are 99%
leased. The aggregate purchase price of $8.3 million was paid through the
assumption of a $7.9 million, 10.6% first mortgage and cash of $.4 million. The
Company is in negotiations with the current first mortgage lender to refinance
the mortgage. The Innsbrook Office Center is located in Henrico County, adjacent
to Interstate 64 and Interstate 295. The Innsbrook Office Center encompasses
approximately 800 acres, with 2.3 million rentable square feet of developed
office space, which is approximately 98.3% leased.
On July 20, 1995, the Company entered into a contract to acquire three
suburban office properties and a service center property (the "Ross-Kreckman
Portfolio") also located in the Innsbrook Office Center. The properties
encompass 110,644 square feet and are 96% leased. The aggregate purchase price
of $9.0 million will be paid through the issuance of Units valued at
approximately $1.0 million, the assumption of approximately $6.7 million of
indebtedness and the payment of approximately $1.3 million in cash, subject to
adjustment. The number of Units to be issued will be based upon the average
closing price of the Company's Common Stock for the 20 days prior to closing.
The closing is expected to occur by August 31, 1995.
In connection with the acquisition of the Ross-Kreckman Portfolio, the
Company will establish a Richmond office containing a separate operating
division, which will be managed by Paul Kreckman and Stephen Ross, currently the
principals of Ross-Kreckman Management Corporation, a Richmond-based developer
and operator of office properties ("RMC"). In connection with the establishment
of the Richmond office, it is expected that all of the current six employees of
RMC will become employees of the Company. As part of the acquisition of the
Ross-Kreckman Portfolio, the Company will also acquire certain property
management contracts and personal property from RMC for $100,000 in cash.
On July 20, 1995, the Company entered into a contract to acquire a 70,423
square foot suburban office property and 53,309 square foot service center
property (collectively the "DEQ Property"), also located in the Innsbrook Office
Center (the "DEQ Transaction"). The properties encompass 123,732 square feet and
are 92% leased. The aggregate purchase price of $9.3 million will paid through
the issuance of Units valued at $1.0 million and the assumption of
1
<PAGE>
approximately $8.3 million of indebtedness. The number of Units to be issued
will be based upon the average closing price of the Company's Common Stock for
the 20 days prior to closing. In connection with the DEQ Transaction, the
Company has entered into a contract with the original developer of the Innsbrook
Office Center to acquire 62 acres of development land in the park at a fixed
price of $9.9 million (the "DEQ Land"). The acquisition is conditioned upon the
closing of the DEQ Transaction. The Company will acquire 10 acres of this land
at the closing of the transaction for an aggregate purchase price of $1.5
million to be paid through the issuance of Units valued at $.6 million and
approximately $.9 million in cash. The Company will acquire the remaining 52
acres over a 5-year period commencing with the closing date. The partnership
that owns the two DEQ buildings is currently in a Chapter 11 Bankruptcy
proceeding. Accordingly, the sale of the two DEQ buildings is subject to the
approval of the Bankruptcy Court. The closing of both transactions is expected
to occur in October 1995.
ITEM 7(B). PRO FORMA FINANCIAL INFORMATION.
The pro forma financial information called for by paragraph (b) of Item 7
is hereby amended and restated in its entirety:
2
<PAGE>
HIGHWOODS PROPERTIES, INC.
PRO FORMA CONDENSED COMBINING BALANCE SHEET (UNAUDITED)
AS OF JUNE 30, 1995
(IN THOUSANDS)
The following unaudited pro forma condensed combining balance sheet is
presented as if the following transactions had been consummated on June 30,
1995: (a) the acquisition of the Bissell Portfolio, the Hock Portfolio, the
Initial Innsbrook Portfolio, the Ross-Kreckman Portfolio and the DEQ Transaction
(collectively, the "Acquired Properties") and (b) the sale of 4,200,000 shares
of the Company's Common Stock at an assumed price of $24.50 per share (the
"Offering") and the application of a portion of the proceeds thereof to reduce
borrowings under the Company's existing $80.0 million credit facility (the
"Credit Facility"). This unaudited pro forma condensed combining balance sheet
should be read in conjunction with the pro forma condensed combining statement
of operations of the Company and its historical audited financial statements for
the year ended December 31, 1994 and its unaudited financial statements for the
quarter and six months ended June 30, 1995.
The pro forma condensed combining balance sheet is unaudited and is not
necessarily indicative of what the actual financial position would have been had
the aforementioned transactions actually occurred on June 30, 1995 nor does it
purport to represent the future financial position of the Company.
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
HIGHWOODS ALL
PROPERTIES, INC. ACQUIRED OFFERING &
HISTORICAL(A) PROPERTIES(B) OTHER(C)
<S> <C> <C> <C>
ASSETS
Rental property, net......................................... $ 436,616 $88,300 $ --
Cash, restricted cash and cash equivalents................... 5,645 -- 47,536
Accounts and notes receivables............................... 6,665 -- --
Deferred financing costs, net................................ 8,347 -- --
Other assets................................................. 3,794 -- --
$ 461,067 $88,300 $ 47,536
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgages and notes payable.................................. $ 146,505 $79,000 $(49,510)
Accounts payable, accrued expenses and other................. 5,841 -- --
Total liabilities............................................ 152,346 79,000 (49,510)
Minority Interest............................................ 64,189 9,300 --
Stockholders' equity:
Common stock............................................... 146 -- 42
Additional paid in capital................................. 245,022 -- 97,004
Retained deficit........................................... (636) -- --
Total stockholder's equity................................... 244,532 -- 97,046
$ 461,067 $88,300 $ 47,536
<CAPTION>
HIGHWOODS
PROPERTIES, INC.
PRO
FORMA
<S> <C>
ASSETS
Rental property, net......................................... $524,916
Cash, restricted cash and cash equivalents................... 53,181
Accounts and notes receivables............................... 6,665
Deferred financing costs, net................................ 8,347
Other assets................................................. 3,794
$596,903
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgages and notes payable.................................. $175,995
Accounts payable, accrued expenses and other................. 5,841
Total liabilities............................................ 181,836
Minority Interest............................................ 73,489
Stockholders' equity:
Common stock............................................... 188
Additional paid in capital................................. 342,026
Retained deficit........................................... (636)
Total stockholder's equity................................... 341,578
$596,903
</TABLE>
See accompanying notes to pro forma condensed combining financial statements.
3
<PAGE>
HIGHWOODS PROPERTIES, INC.
PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following unaudited pro forma condensed combining statements of
operations are presented as if the following transactions had been consummated
on January 1, 1995: (a) the acquisition of 57 properties, 76 acres of
development land and the business operations of Forsyth Properties, Inc. and its
affiliates (the "Forsyth Transaction"), (b) the acquisition of six properties
(the "Research Commons Properties") and 60 acres of development land located in
the Research Commons office park (the "Research Commons Acquisition"), (c) the
sale of 5,640,000 shares of Common Stock of the Company at a price of $20.75 per
share issued in connection with the Forsyth Transaction (the "Second Offering"),
(d) the acquisition of the Acquired Properties, (e) this Offering and the
application of a portion of the proceeds thereof to reduce borrowings under the
Credit Facility and (f) the Company qualified as a REIT and, therefore,
distributed all of its taxable income and incurred no income tax expense during
the period. This unaudited pro forma condensed combining statement of operations
should be read in conjunction with the pro forma condensed balance sheet of the
Company and the historical financial statements and notes thereto of the Company
(included in the Company's Form 10-K for the period ended December 31, 1994),
the historical financial statements of the Acquired Properties (included in the
Company's Form 8-K dated July 12, 1995) for the year ended December 31, 1994 and
the six months ended June 30, 1995, and the unaudited financial statements of
the Company as of June 30, 1995 and for the six months then ended (included in
the Company's Form 10-Q for the period ended June 30, 1995) and the accompanying
notes.
The pro forma condensed combining statement of operations is unaudited and
is not necessarily indicative of what the actual results would have been had the
aforementioned transactions actually occurred on January 1, 1995, nor does it
purport to represent the operations of the Company for future periods.
<TABLE>
<CAPTION>
TOTAL
HIGHWOODS
FORSYTH AND PROPERTIES, INC.
HIGHWOODS RESEARCH COMMONS COMBINED PRO FORMA
PROPERTIES, INC. PREACQUISITION FROM ALL
JANUARY 1, 1995 TO RESULTS AND SECOND JANUARY 1, 1995 TO ACQUIRED OFFERING AND
JUNE 30, 1995 (D) OFFERING (E) JUNE 30, 1995 PROPERTIES (F) OTHER (G)
<S> <C> <C> <C> <C> <C>
REVENUE:
Rental property....... $ 29,971 $ 4,362 $ 34,333 $6,584 $ --
Other income.......... 393 50 443 135
30,364 4,412 34,776 6,719 --
OPERATING EXPENSES:
Rental property....... 7,251 923 8,174 1,509 108(1)
Leasing, development
and construction...
Depreciation and
amortization....... 4,543 985 5,528 904(1) --
Interest expense:
Contractual........ 4,908 888 5,796 2,668(2) (1,278)(2)
Amortization of
deferred
financing
costs............ 830 46 876
5,738 934 6,672 2,668 (1,278)
General and
administrative..... 1,124 83 1,207 78(3)
Income before
minority
interest......... 11,708 1,487 13,195 1,638 1,092
Minority interest..... (2,070) (384) (2,454) (174)(4)
Income before
extraordinary
item............. $ 9,638 $ 1,103 $ 10,741 $1,638 $ 918
Net income per
common share
outstanding......
<CAPTION>
HIGHWOODS
PROPERTIES, INC.
PRO FORMA
<S> <C>
REVENUE:
Rental property....... $ 40,917
Other income.......... 578
41,495
OPERATING EXPENSES:
Rental property....... 9,791
Leasing, development
and construction...
Depreciation and
amortization....... 6,432
Interest expense:
Contractual........ 7,186
Amortization of
deferred
financing
costs............ 876
8,062
General and
administrative..... 1,285
Income before
minority
interest......... 15,925
Minority interest..... (2,628)
Income before
extraordinary
item............. $ 13,297
Net income per
common share
outstanding...... $ .70
</TABLE>
See accompanying notes to pro forma condensed combining financial statements.
4
<PAGE>
HIGHWOODS PROPERTIES, INC.
PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following unaudited pro forma condensed combining statements of
operations are presented as if the following transactions had been consummated
on January 1, 1994: (a) the acquisition by the Company's predecessor (the
"Highwoods Group") of 27 properties owned by unaffiliated third parties (the
"Initial Acquisition Properties"), (b) the sale of 8,510,000 shares of the
Company's Common Stock at $21 per share (the "IPO") and related initial
formation transactions (the "Formation Transactions"), (c) the Forsyth
Transaction and the Research Commons Acquisition, (d) the Second Offering, (e)
the acquisition of the Acquired Properties, (f) this Offering and the
application of a portion of the proceeds thereof to reduce borrowings under the
Credit Facility and (g) the Company qualified as a REIT and, therefore,
distributed all of its taxable income and incurred no income tax expense during
the period. This unaudited pro forma condensed combining statement of operations
should be read in conjunction with the pro forma condensed balance sheet of the
Company and the historical financial statements and notes thereto of the Company
(included in the Company's Form 10-K for the period ended December 31, 1994),
the historical financial statements of the Acquired Properties (included in the
Company's Form 8-K dated July 12, 1995) for the year ended December 31, 1994 and
the six months ended June 30, 1995 and the unaudited financial statements as of
June 30, 1995 and for the six months then ended (included in the Company's Form
10-Q for the period ended June 30, 1995) and the accompanying notes.
The pro forma condensed combining statement of operations is unaudited
and is not necessarily indicative of what the actual results would have been had
the aforementioned transactions actually occurred on January 1, 1994, nor does
it purport to represent the operations of the Company for future periods.
<TABLE>
<CAPTION>
JANUARY 1, 1994 TO
JUNE 13, 1994 HIGHWOODS INITIAL PUBLIC FORSYTH/
HIGHWOODS INITIAL PROPERTIES, INC. OFFERING AND RESEARCH
GROUP ACQUISITION FROM JUNE 14, 1994 TO FORMATION COMMONS SECOND
HISTORICAL(H) PROPERTIES(I) DECEMBER 31, 1994(J) TRANSACTIONS(K) ACQUISITIONS(L) OFFERING(M)
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Rental property.......... $ 4,953 $ 9,752 $19,011 $ (90)(1) $29,163 $ --
Distribution from Service
Companies.............. -- -- 100 100(2) -- 206(1)
Other Income............. 1,695 -- 331 (1,570)(3) 4,470 (3,898)(1)
6,648 9,752 19,442 (1,560) 33,633 (3,692)
OPERATING EXPENSES:
Rental property.......... 2,247 3,196 5,110 (876)(4) 7,517 (432)(2)
Leasing, development and
construction........... 349 -- -- (349)(5) 3,118 (3,118)(1)
Depreciation and
amortization........... 834 1,794 2,607 (597)(6) 7,872 421(3)
Interest expense:
Contractual............ 2,410 2,516 2,482 (3,113)(7) 13,271 (6,914)(4)
Amortization of
deferred financing
costs................ 64 -- 738 507(8) 289 53(5)
2,474 2,516 3,220 (2,606) 13,560 (6,861)
General and
administrative......... 280 -- 810 44(9) 2,179 (1,666)(6)
Income before minority
interest............. 464 2,246 7,695 2,824 (613) 7,964
Minority interest........ -- -- (808) (581)(10) -- (2,583)(7)
Income (loss) before
extraordinary item... $ 464 $ 2,246 $ 6,887 $ 2,243 $ (613) $ 5,381
Net income per common
share outstanding....
<CAPTION>
TOTAL HIGHWOODS
PROPERTIES, INC. PRO FORMA ADJUSTMENTS
COMBINED PRO FORMA ALL OFFERING HIGHWOODS
FROM JANUARY 1, 1994 TO ACQUIRED AND PROPERTIES, INC.
DECEMBER 31, 1994 PROPERTIES(N) OTHER(O) PRO FORMA
<S> <<C> <C> <C> <C>
REVENUE:
Rental property.......... $62,789 $11,952 $ -- $ 74,741
Distribution from Service
Companies.............. 406 -- -- 406
Other Income............. 1,028 227 --(1) 1,255
64,223 12,179 -- 76,402
OPERATING EXPENSES:
Rental property.......... 16,762 3,231 216(1) 20,209
Leasing, development and
construction........... -- -- --
Depreciation and
amortization........... 12,931 1,808(1) -- 14,739
Interest expense:
Contractual............ 10,652 5,335(2) (2,555)(2) 13,432
Amortization of
deferred financing
costs................ 1,651 -- -- 1,651
12,303 5,335 (2,555) 15,083
General and
administrative......... 1,647 155(3) 1,802
Income before minority
interest............. 20,580 1,805 2,184 24,569
Minority interest........ (3,972) -- (82)(4) (4,054)
Income (loss) before
extraordinary item... $16,608 $ 1,805 $ 2,102 $ 20,515
Net income per common
share outstanding.... $ 1.09(p)
</TABLE>
See accompanying notes to pro forma condensed combining financial
statements.
5
<PAGE>
HIGHWOODS PROPERTIES, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARES AND UNITS)
PRO FORMA CONDENSED COMBINING BALANCE SHEET
(a.) Reflects the Company's historical balance sheet as of June 30, 1995.
(b.) To reflect the acquisition of the real estate assets of the Acquired
Properties for the approximate consideration as follows (in thousands):
<TABLE>
<CAPTION>
TOTAL
NEW DEBT ACQUISITION
PROPERTY DEBT ASSUMED EQUITY ISSUED INCURRED PRICE
<S> <C> <C> <C> <C>
Bissell Portfolio.................................................... $ 6,700 $ 2,100 $29,800 $38,600
Hock Portfolio....................................................... 17,000 4,600 21,600
Initial Innsbrook Portfolio.......................................... 7,900 400 8,300
Ross-Kreckman Portfolio.............................................. 6,700 1,000 1,300 9,000
DEQ Property......................................................... 8,300 1,000 9,300
DEQ Land............................................................. 600 900 1,500
Total................................................................ $ 46,600 $ 9,300 $32,400 $88,300
</TABLE>
(c.) Reflects the effects of this Offering including the expected net
proceeds to be received from the issuance of 4,200,000 shares of Common Stock,
$.01 par value, at $24.50 per share ($97,046). The proceeds of $97,046 are to be
used to reduce the borrowings under the Credit Facility by $49,510.
PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS -- FOR THE SIX MONTHS
ENDED JUNE 30, 1995
(d.) Reflects the actual historical unaudited operations of Highwoods
Properties, Inc. for the period from January 1, 1995 to June 30, 1995.
(e.) Reflects the Second Offering and historical operations of the Research
Commons Properties and Forsyth, adjusted on a pro forma basis for interest and
depreciation expense, for the period from January 1, 1995 through the dates of
acquisition, February 10, 1995 and February 25, 1995 for the Research Commons
Properties and Forsyth, respectively.
(f.) Reflects the operations of the Bissell Portfolio, Hock Portfolio,
Initial Innsbrook Portfolio, Ross-Kreckman Portfolio, DEQ Property, and DEQ
Land.
(1.) Depreciation expense on buildings (40 years).
(2.) Interest expense on mortgage debt, associated with the Acquired
Properties of $64,547 at a weighted average interest rate of 8.27%.
(g.) Reflects the following adjustments based on this Offering and the
acquisition of the Acquired Properties.
(1.) The addition of certain rental property expenses as a result of
acquiring the Bissell Portfolio and the Ross-Kreckman Portfolio.
(2.) The reduction in interest expense associated with the repayment
of debt of $49,510 with the proceeds of the Offering and refinancing of
certain mortgage debt with the proceeds of the Credit Facility.
(3.) The addition of certain incremental general and administrative
expenses as a result of acquiring the Bissell Portfolio and the
Ross-Kreckman Portfolio.
(4.) The 16.5% interest of the minority interest unit holders in the
Operating Partnership.
6
<PAGE>
PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS -- FOR THE YEAR ENDED
DECEMBER 31, 1994
(h.) Reflects the actual historical operations for the Highwoods Group for
the period from January 1, 1994 to June 13, 1994.
(i.) Reflects the actual historical operations for the Initial Acquisition
Properties for the period from January 1, 1994 to June 13, 1994.
(j.) Reflects the actual historical operations of Highwoods Properties,
Inc. from June 14, 1994 to December 31, 1994.
(k.) Reflects the following adjustments related to the IPO and the
Formation Transactions:
(1.) The elimination of inter-company rental income.
(2.) Net cash flow available for distribution from Highwoods Leasing
Company ("Highwoods Leasing") and Highwoods Realty Services, Inc. ("HR
Services").
(3.) The elimination of management and leasing fees and other income
related to the Initial Acquisition Properties which will not be earned in
future periods and elimination of the remaining fee income related to
Highwoods Leasing and HR Services which are accounted for under the cost
method of accounting.
(4.) The estimated decrease in operating expenses resulting from the
estimated expenses to operate all properties on a combined, self-managed
basis as compared to separate entities historically. Major components of
the decrease relate to the provision of management and leasing services by
employees of the Company for which fees were paid historically.
(5.) The elimination of costs incurred by Highwoods Leasing and HR
Services in performing their services for the properties and third parties.
(6.) An adjustment to depreciation expense to reflect the depreciable
lives for buildings (40 years) and for equipment (7 years).
(7.) The reduction in mortgage interest costs associated with the
repayment of certain mortgage debt with the proceeds of the IPO.
(8.) The amortization of the interest rate cap and other deferred
financing costs.
(9.) The estimated incremental general and administrative costs of
doing business as a public company and elimination of costs incurred by
Highwoods Leasing and HR Services in performing their services for
third-parties. Highwoods Leasing and HR Services have subsequently been
merged to form Highwoods Services, Inc.
(10.) The 10.5% interest of the minority interest unit holders in the
Operating Partnership.
(l.) Reflects the actual historical rental revenue and certain expenses of
the Research Commons Properties and the Forsyth properties, the actual
historical operations of Forsyth and certain pro forma adjustments to reflect
depreciation expense on building and tenant improvements and to reflect interest
expense on the debt associated with the purchase of these properties.
(m.) Reflects the following adjustments based on the Second Offering, the
Research Commons Acquisition and the Forsyth Transaction:
(1.) The elimination of the operations of the Forsyth service
companies and accounting for the net cash flow distributable on the cost
method of accounting.
(2.) Reclassification of certain property level expenses of the
Company to general and administrative expenses.
(3.) To increase depreciation expense based on the cost basis
allocated to the rental properties using a 40 year life for buildings, a 7
year life for equipment and the life of the lease for tenant improvements
($454) and eliminate the operations of the Forsyth service companies ($33).
7
<PAGE>
(4.) The reduction in interest expense associated with the repayment
of debt with the proceeds of the Second Offering and the overallotment and
the refinancing of certain mortgage debt with the proceeds of the Credit
Facility.
(5.) The amortization of the expected financing costs associated with
expanding the Credit Facility.
(6.) The elimination of certain incremental general and administrative
expenses of the combined Company ($75), the elimination of non recurring
abandoned offering costs ($1,483), the addition of certain property level
expenses of the Company reclassified to general and administrative expenses
$432 and elimination of the operations of the Forsyth service companies
($540).
(7.) The 19.3% interest of the minority interest unit holders in the
Operating Partnership.
(n.) Reflects the audited combined operations of the Bissell Portfolio and
the Hock Portfolio, and also includes the unaudited operations of the Initial
Innsbrook Portfolio, the Ross-Kreckman Portfolio, the DEQ Property and the DEQ
Land.
(1.) Depreciation expense on buildings (40 years).
(2.) Interest expense on mortgage debt associated with the Acquired
Properties of $64,547 at a weighted average interest rate of 8.27%.
(o.) Reflects the following adjustments based on this Offering and the
acquisition of the Acquired Properties:
(1.) The addition of certain rental property expenses as a result of
acquiring the Bissell Portfolio and the Ross-Kreckman Portfolio.
(2.) The reduction in interest expense associated with the repayment
of debt with the proceeds of this Offering and the refinancing of certain
mortgage debt with the proceeds of the Credit Facility.
(3.) The addition of certain incremental general and administrative
expenses as a result of acquiring the Bissell Portfolio and the
Ross-Kreckman Portfolio.
(4.) The 16.5% interest of the minority interest unit holders in the
Operating Partnership.
(p.) Pro Forma net income per common share outstanding is based upon
18,826,190 shares of Common Stock expected to be outstanding after this
Offering.
8
<PAGE>
Item 7 (c). EXHIBITS
23.1 Consent of Ernst & Young LLP
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized, on June 3, 1996.
HIGHWOODS PROPERTIES, INC.
(Registrant)
By: /s/ CARMAN J. LIUZZO
CARMAN J. LIUZZO
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND TREASURER
Date: June 3, 1996
9
<PAGE>
EXHIBIT INDEX
23.1 Consent of Ernst & Young LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
(Form S-3 Nos. 33-93572, 33-97712 and 333-3890) and related Prospectuses of
Highwoods Properties, Inc. and to the incorporation therein of our report dated
July 18, 1995 with respect to the audited combined Statement of Revenue and
Certain Expenses of the Acquired Properties for the year ended December 31, 1994
included in its Current Report on Form 8-K/A dated September 7, 1996 as amended
on June 3, 1996, filed with the Securities Exchange Commission.
ERNST & YOUNG LLP
Raleigh, North Carolina
June 3, 1996
