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): January 9, 1997
HIGHWOODS/FORSYTH LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
North Carolina 333-3890-01 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
Item 2. Acquisition or Disposition of Assets
General
On January 9, 1997, Highwoods/Forsyth Limited Partnership (the
"Partnership") announced two significant transactions in suburban Atlanta,
Georgia. The Partnership has agreed to enter into a business
combination with Anderson Properties, Inc. ("Anderson Properties") and acquire a
portfolio of industrial, office and undeveloped properties from affiliates of
Anderson Properties (the "Anderson Transaction"). The Partnership also closed
the acquisition of Century Center Office Park and an affiliated property
portfolio (the "Century Acquisition"). As part of the transactions, the
Partnership formed an Atlanta Division, Highwoods Anderson, headed by Gene
Anderson. Mr. Anderson is supported by 65 employees, each of whom managed,
leased or performed other services for the properties involved in the Anderson
Transaction and the Century Acquisition prior to joining Highwoods Anderson.
The portfolios include 32 in-service industrial properties totaling 2.3
million square feet, 23 in-service office properties totaling 1.3 million square
feet, three industrial development projects totaling 402,000 square feet and 315
acres of development land. As of December 31, 1996, the office properties and
the in-service industrial properties involved in the Anderson Transaction and
the Century Acquisition were 98% and 96% leased, respectively.
The aggregate cost of the portfolios (assuming the completion of the
three development projects) is expected to be $230.1 million. The purchase price
consists of $108.3 million in cash, $28.1 million in debt assumption and $93.7
million in Units in the Partnership (valued at $29.25 per Unit, the
market value of a share of Common Stock at the time of the signing of letters of
intent relating to the transactions). Approximately $14.4 million of the Units
are newly created Class B Units, which differ from other Units in that they are
not eligible for cash distributions. The Class B Units will convert to regular
Units in 25% annual installments commencing one year from issuance. Prior to
such conversion, such Units will not be redeemable for cash or Common Stock. All
other Units issued in the transactions are also subject to restrictions on
transfer or redemption. Such lock-up restrictions are lifted over a three-year
period in equal annual installments commencing with the first anniversary of the
date of issuance.
Anderson Transaction
The Anderson Transaction involves six office properties and 28
industrial properties totaling 1.9 million rentable square feet, three
industrial development projects totaling 402,000 square feet and 295 acres of
development land. The master agreement relating to the Anderson Transaction
calls for a closing no later than February 15, 1997; however, the transaction is
contingent on the completion of due diligence and other customary closing
conditions. No assurance can be given that all or part of the transaction will
close. The purchase price of the Anderson Transaction is expected to consist of
the issuance of $38.1 million of Units, the assumption of $8.7 million of debt
and a cash payment of $55.2 million. The cash amount includes $14.4 million
expected to be paid to complete the three development projects. The Units
include $14.4 million of Class B Units.
The in-service properties were 95% leased to 175 tenants as of December
31, 1996, and are primarily located in business park settings in North Atlanta
or near Hartsfield International Airport. The in-service industrial properties
are warehouse and bulk distribution facilities that are generally leased on a
multi-tenant basis. The development projects have a cost-to-date of $5.2 million
and are expected to be completed during 1997.
The undeveloped land expected to be acquired in the Anderson
Transaction is located in four business parks. The majority of the undeveloped
land includes the Atlanta Tradeport complex (108 acres) ("Atlanta Tradeport")
and Bluegrass Business Center (158 acres) ("Bluegrass"). Atlanta Tradeport is a
260-acre, integrated, mixed-use domestic and international business complex
designed as Atlanta's only general purpose Foreign Trade Zone. Located nine
miles south of downtown, Atlanta Tradeport is directly east of and contiguous to
Hartsfield International Airport. Bluegrass is approximately 15 miles north of
Interstate-285 and approximately two miles south of the planned outer loop.
Currently, 19 companies have chosen to locate in Bluegrass including
Lockheed/Martin, Amoco, Siemens and UPS. The balance of the undeveloped land is
located in Chastain Place (10 acres) and Newpoint (19 acres). Both locations are
close to interstate highways and major area malls.
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As part of the Anderson Transaction, the Partnership established an
Atlanta Division, Highwoods Anderson, which is headed by Anderson Properties'
president, Gene Anderson. Mr. Anderson has over 25 years of commercial
real estate experience in the Atlanta area. All 25 employees of Anderson
Properties have joined Highwoods Anderson, including the four other
members of Anderson Properties' management, each of whom have at least
12 years of commercial real estate experience. Assuming consummation of the
Anderson Transaction, Mr. Anderson would one of the Partnership's largest
equity holders with 1,046,000 Units and would become a member of the Board of
Directors of Highwoods Properties, Inc.
Century Center Transaction
On January 9, 1996, the Partnership acquired the 17-building Century
Center Office Park, four affiliated industrial properties and 20 acres of
development land located in suburban Atlanta, Georgia. The properties total
1.6 million rentable square feet and as of December 31, 1996, were 99% leased.
The cost of the transaction was $55.6 million in Units, the assumption of $19.4
million of secured debt and a cash payment of $53.1 million drawn from the
Partnership's $280 million credit facility. All Units issued in the transaction
are subject to restrictions on transfer and redemption. Such restrictions
are scheduled to expire over a three-year period in equal annual installments
commencing one year from the date of issuance. Prior to their acquisition
by the Partnership, the acquired properties were leased and managed by White
& Associates Management Group, 40 employees of which have been retained
by Highwoods Anderson to continue the lease administration, property
management, development, engineering and maintenance of the properties.
The 1.2-million square foot, 17-building Century Center Office Park is
adjacent to Interstate-85 in north central Atlanta. Century Center Office Park
is located on approximately 77 acres and was 99% leased at December 31, 1996.
Its tenants include AT&T, BellSouth, the Federal government (four agencies),
MBNA, Egleston Hospitals and Arkwright. The four industrial properties acquired
in the transaction are located in two business parks and were 100% leased at
December 31, 1996. The Partnership's acquisition also includes three
development parcels totaling 20 acres in Century Center Office Park. The master
plan for the office park envisions an additional 800,000 square feet of office
space on such parcels.
Sixty-one acres of the Century Center Office Park are controlled under
long-term fixed rental ground leases that expire in 2058. The rent under the
lease is approximately $180,000 per year with scheduled 10% increases in 1999
and 2009. The leases do not contain a right to purchase the subject land.
Disclosure Regarding Forward-Looking Statements
Certain matters discussed herein are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Act of 1934, as amended. Those statements are
identified by words such as "expect," "should" and words of similar import.
Forward-looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which might not even
be anticipated. Although the Partnership believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, it can give no assurance that its expectations will be
achieved. Factors that could cause actual results to differ materially
from the Partnership's current expectations include general economic
conditions; risks associated with the development and acquisition of
properties, including risks that the development or acquisitions may not be
completed on schedule; and risks associated with the consummation of the
Anderson and Century Center transactions, including risks
that the parties fail to secure required consents or that the transactions
otherwise fail to close.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired
It is impracticable to provide the required financial
statements at the time of the filing of this report. The
required financial statements will be filed as soon as
practicable, but not later than March 25, 1997.
(b) Pro forma financial statements
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See text at Item 7(a).
(c) Exhibits
2.1 Contribution and Exchange Agreement by and among
Century Center group, Highwoods/Forsyth Limited
Partnership and Highwoods Properties, Inc. dated
December 31, 1996. (Exhibit includes list of omitted
schedules, together with an agreement to furnish
supplementally a copy of any omitted schedule to the
Commission upon request.)
2.2 Master Agreement of Merger and Acquisition by and
among Highwoods Properties, Inc., Highwoods/Forsyth
Limited Partnership, Anderson Properties, Inc., Gene
Anderson, and the partnerships and limited liability
companies listed therein dated January 9, 1997.
(Exhibit includes list of omitted schedules, together
with an agreement to furnish supplementally a copy of
any omitted schedule to the Commission upon request.)
10.1* Employment Agreement between Highwoods Properties,
Inc. and Gene Anderson dated January __, 1997.
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*To be filed by amendment following execution of the agreement.
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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 partnership
Date: January 24, 1997 /s/ Carman J. Liuzzo
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Carman J. Liuzzo
Vice President and Chief Financial Officer
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