SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 4, 1998
HIGHWOODS /FORSYTH LIMITED PARTNERSHIP
(Exact name of registrant specified in its charter)
North Carolina 0-21731 56-1869557
(State of Formation) (Commission File Number) (IRS Employer
Identification No.)
3100 Smoketree Court, Suite 600, Raleigh, North Carolina 27604
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (919) 872-4924
<PAGE>
ITEM 5. OTHER EVENTS
The purpose of this filing is to set forth audited financial statements
of a certain business recently acquired by Highwoods/Forsyth Limited
Partnership.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
GARCIA PROPERTIES
Report of Independent Auditors
Combined Statement of Revenue and Certain Expenses
Notes to Combined Statement of Revenue and Certain Expenses
(b) Pro Forma Information
NONE
(c) Exhibits
23 Consent of Independent Auditors
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HIGHWOODS/FORSYTH LIMITED PARTNERSHIP
By: Highwoods Properties, Inc., its general partner
By: /s/ Carman J. Liuzzo
Carman J. Liuzzo
Vice President and Chief Financial Officer
Date: June 5, 1998
<PAGE>
Audited Combined Financial Statement
Garcia Properties
YEAR ENDED DECEMBER 31, 1997
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
Garcia Properties
Audited Combined Financial Statement
Year ended December 31, 1997
CONTENTS
Report of Independent Auditors................................................1
Audited Combined Financial Statement
Combined Statement of Revenue and Certain Expenses............................2
Notes to Combined Statement of Revenue and Certain Expenses...................3
<PAGE>
[ERNST & YOUNG LLP LETTERHEAD]
Report of Independent Auditors
To the Board of Directors and Stockholders
Highwoods Properties, Inc.
We have audited the accompanying Combined Statement of Revenue and Certain
Expenses of Garcia Properties as described in Note 1 for the year ended December
31, 1997. This financial statement is the responsibility of Garcia Properties'
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the basis of accounting used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying Combined Statement of Revenue and Certain Expenses was prepared
using the basis of accounting described in Note 1 for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission for
inclusion in the Form 8-K of Highwoods Properties, Inc. and is not intended to
be a complete presentation of Garcia Properties' revenue and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses described in Note 1 of
Garcia Properties for the year ended December 31, 1997, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Raleigh, North Carolina
January 30, 1998
<PAGE>
Garcia Properties
Combined Statement of Revenue and Certain Expenses
Year ended December 31, 1997
Rental income $ 10,312,122
Expenses:
Utilities 992,662
Taxes 853,801
Repairs and maintenance 1,737,538
Insurance 147,654
----------------------
Total expenses 3,731,655
----------------------
Revenue in excess of certain expenses $ 6,580,467
======================
SEE ACCOMPANYING NOTES.
<PAGE>
Garcia Properties
Notes to Combined Statement of Revenue and Certain Expenses
December 31, 1997
1. BASIS OF PRESENTATION
Presented herein is the Combined Statement of Revenue and Certain Expenses
related to the operations of nineteen commercial real estate properties
(including twenty-six buildings and one parcel of land) located in the Tampa,
Florida metropolitan market identified as Garcia Properties.
Garcia Properties is not a legal entity but rather a combination of the
operations of certain real estate properties under common control (Garcia
Enterprises) expected to be acquired by Highwoods Properties, Inc. The
accompanying Combined Statement of Revenue and Certain Expenses includes the
accounts of the following commercial real estate properties, each of which is
owned by entities not affiliated with Highwoods Properties, Inc.
PROPERTY NUMBER OF PROPERTIES
----------------------------------------------------------
Bryan Dairy Business Park 2
Bay Vista Garden I 1
Bay Vista Garden II 1
Bay Vista Office Center 1
Bay View 1
Bay Vista Retail Center 1
Bay Vista - Vacant land 1
Clearwater Pointe 1
Clearwater Tower 1
Cross Bayou 1
Interstate Business Park 7
Marathon Center 2
Northside Office Park 1
Northside Retail Center 1
Pinebrook Business Center 1
Starkey Center 1
Summit Building 1
Westshore Square 1
Park Place 1
The accompanying financial statement is prepared in accordance with Rule 3-14 of
Regulation S-X and thus is not necessarily representative of the actual
operations for the year presented as certain expenses that may not be comparable
to the expenses expected to be incurred by Highwoods Properties, Inc. in the
proposed future operations of the aforementioned properties have been excluded.
Expenses excluded consist of interest, depreciation and general and
administrative expenses not directly related to future operations.
<PAGE>
Garcia Properties
Notes to Combined Statement of Revenue and Certain Expenses (continued)
2. SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Rental income is recognized on a straight-line basis over the term of the lease.
Certain lease agreements contain provisions which provide reimbursement of real
estate taxes, insurance, advertising and certain common area maintenance (CAM)
costs. These additional rents are recorded on the accrual basis. All rent and
other receivables from tenants are due from commercial building tenants located
in the properties.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those amounts.
3. LEASES
Garcia Properties are being leased to tenants under operating leases that will
expire over the next seven years. The minimum rental amounts under the leases
are either subject to scheduled fixed increases or adjustments based on the
Consumer Price Index. Generally, the leases also require that the tenants
reimburse Garcia Properties for increases in certain costs above their base year
costs.
Expected future minimum rents to be received over the next five years and
thereafter from tenants for leases in effect at December 31, 1997 are as
follows:
TOTAL
---------------------
1998 $10,419,981
1999 7,441,745
2000 4,975,303
2001 3,639,334
2002 2,003,800
Thereafter 1,200,127
---------------------
$29,680,290
=====================
<PAGE>
Garcia Properties
Notes to Combined Statement of Revenue and Certain Expenses (continued)
4. ENVIRONMENTAL MATTERS
All of the Company's properties have been subjected to Phase I environmental
reviews. Such reviews have not revealed, nor is management aware of, any
environmental liability that management believes would have a material adverse
effect on the accompanying combined financial statement.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements (Form S-3 Nos. 33-93572, 33-97712, 333-08985, 333-13519, 333-24165,
333-31183, 333-39247, 333-43475, 333- 51671-01 and 333-51759, Form S-4 No.
333-55725 and Form S-8 Nos. 333-12117, 333-29759, 333-29763 and 333-55901) and
related Prospectuses of Highwoods Properties, Inc. and in the Registration
Statement (Form S-3 Nos. 333-31183-01 and 333-51671) and related Prospectus of
Highwoods/Forsyth Limited Partnership of our report dated January 30, 1998 with
respect to the statement of revenue and certain expenses of Garcia Properties
for the year ended December 31, 1997 included in the Current Report on Form 8-K
of Highwoods/Forsyth Limited Partnership dated February 4, 1998, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
/s/ Ernst & Young
Raleigh, North Carolina
June 5, 1998
