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): July 3, 1998
HIGHWOODS REALTY LIMITED PARTNERSHIP
(Exact name of registrant specified in its charter)
North Carolina 0-21731 56-1869557
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(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
On July 13, 1998, Highwoods Properties, Inc. (the "Company") completed
its previously reported merger (the "J.C. Nichols Transaction") with J.C.
Nichols Company, a Missouri real estate operating company ("JCN"), pursuant to a
merger agreement dated as of December 22, 1997 (as amended on April 29, 1998,
the "Merger Agreement"). Prior to consummation of the J.C. Nichols Transaction,
J.C. Nichols had been subject to the information requirements of the Securities
Exchange Act of 1934, as amended, and, in accordance therewith, filed reports
and other information with the Securities and Exchange Commission.
As a result of the J.C. Nichols Transaction, Highwoods Realty Limited
Partnership (the "Operating Partnership") owns or has an ownership interest in
57 office, industrial and retail properties and 17 multifamily communities in
the Kansas City metropolitan area. The following table sets forth certain
information about the properties acquired in the Kansas City metropolitan area
as of June 30, 1998:
JCN KANSAS CITY PROPERTIES
Wholly Partially Weighted Average Rentable
Type of Owned Owned Total Ownership Square Percent
Property Properties Properties Properties Interest Feet Leased
-------- ---------- ---------- ---------- -------- ---- ------
Office 24 2 26 79% 1,459,000 95%
Industrial 13 --- 13 100% 337,000 75%
Retail 18 --- 18 100% 2,443,000 96%
Multifamily 17 --- 17 100% 1,906 Units 96%
As a result of the J.C. Nichols Transaction, the Operating Partnership
also has an ownership interest in 22 office and industrial properties and one
multifamily community in the Des Moines, Iowa area. The following table sets
forth certain information about the properties acquired in the Des Moines
metropolitan area as of June 30, 1998:
JCN DES MOINES PROPERTIES
Wholly Partially Weighted Average Rentable
Type of Owned Owned Total Ownership Square Percent
Property Properties Properties Properties Interest Feet Leased
-------- ---------- ---------- ---------- -------- ---- ------
Office --- 21 21 56% 1,345,000 96%
Industrial --- 1 1 49.5% 200,000 100%
Multifamily --- 1 1 65% 418 Units 98%
Additionally, the Operating Partnership acquired over 500 acres of land
for future development in Kansas City and Des Moines.
Under the terms of the Merger Agreement, the Company acquired all of
the outstanding common stock, $.01 par value, of J.C. Nichols ("J.C. Nichols
Common Stock"). Under the Merger Agreement, J.C. Nichols shareholders were
entitled to receive either 2.03 shares of common stock, $.01 par value, of the
Company ("Highwoods Common Stock") or $65 in cash for each share of J.C. Nichols
Common Stock. However, the Merger Agreement limited the aggregate cash payment
to J.C. Nichols shareholders to 40% of the total consideration. The exchange
ratio reflects the average closing price of Highwoods Common Stock over the 20
trading days preceding the closing date of the J.C.
Nichols Transaction. The J.C. Nichols Transaction was valued at approximately
$544 million and consisted of the issuance of approximately 5.63 million shares
of Highwoods Common Stock, the assumption of approximately $229 million of debt,
the incurrence of approximately $15 million in transaction costs and a cash
payment of approximately $120 million, net of cash acquired of approximately $59
million.
The properties acquired in the J.C. Nichols Transaction include the
Country Club Plaza in Kansas City, of which the Operating Partnership owns
approximately 1.0 million square feet of retail space (encompassing 15 square
blocks), approximately 940,000 square feet of office space and 510 apartment
units. As of June 30, 1998, the Country Club Plaza was approximately 96% leased.
The Country Club Plaza is presently undergoing an expansion and restoration
expected to add approximately 800,000 square feet of retail, office and hotel
space and 350 apartment units with an estimated cost of approximately $240
million. The Operating Partnership intends to complete the development in the
Country Club Plaza previously planned by J.C. Nichols.
Upon completion of the J.C. Nichols Transaction, the Operating
Partnership has succeeded to the interests of J.C. Nichols in a strategic
alliance with Kessinger/Hunter & Company, Inc. ("Kessinger/Hunter") pursuant to
which Kessinger/Hunter manages and leases the office, industrial and retail
properties in the greater Kansas City metropolitan area. The Operating
Partnership currently has a 30% ownership interest in the strategic alliance
with Kessinger/Hunter and has two additional options to acquire up to a 65%
ownership interest in the strategic alliance. The Operating Partnership has also
succeeded to the interests of J.C. Nichols in a strategic alliance with R&R
Investors, Ltd. ("R&R") pursuant to which R&R manages and leases the properties
in which the Operating Partnership has an ownership interest in the Des Moines
area. The Operating Partnership has an ownership interest of 50% or more in each
of the properties in the Des Moines area.
As a result of the J.C. Nichols Transaction, the J.C. Nichols
operations have become a division of the Operating Partnership, Barrett Brady,
former president and chief executive officer of J.C. Nichols, has become a
senior vice president of the Operating Partnership responsible for its midwest
operations and approximately 100 employees of J.C. Nichols have joined the
Operating Partnership. In addition, Kay Nichols Callison has joined the
Company's board of directors.
Item 5. OTHER EVENTS
On July 3, 1998, the Operating Partnership obtained a new $600 million
revolving line of credit (the "Revolving Loan") from a group of 14 lender banks.
The Revolving Loan was arranged and syndicated by NationsBanc Montgomery
Securities LLC. NationsBank is the administrative agent, First Union National
Bank is the syndication agent and Wells Fargo Bank is the documentation agent.
Other lenders include: Managing Agents--Bank of America, CommerzBank AG,
Wachovia Bank, Centura Bank, and PNC Bank; Co-Agents--Fleet National Bank,
AmSouth Bank, and Dresdner Bank AG; and Participants--DG Bank, Mellon Bank and
Firstrust Savings.
The Revolving Loan matures in July 2001 and replaces the Operating
Partnership's two existing revolving loans aggregating $430 million. The
Revolving Loan carries an interest rate based upon the Operating Partnership's
senior unsecured credit rating. At the Operating Partnership's current BBB/Baa2
senior unsecured rating, interest accrues on borrowings at an average interest
rate of LIBOR plus 80 basis points. The Revolving Loan also includes a $300
million competitive bid sub-facility.
The obligations of the Operating Partnership under the Revolving Loan
are guaranteed by the Company, its sole general partner, and certain
subsidiaries of the Company and the Operating Partnership.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses 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 September 25,
1998.
(b) Pro forma financial information
See text at Item 7(a)
(c) Exhibits
10.1 Credit Agreement among Highwoods Realty Limited
Partnership, Highwoods Properties, Inc., the
Subsidiaries named therein and the Lenders named
therein, dated as of July 3, 1998
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 REALTY LIMITED PARTNERSHIP
By: Highwoods Properties, Inc., its general partner
By: /s/ Carman J. Liuzzo
__________________________________________
Carman J. Liuzzo
Vice President and Chief Financial Officer
Date: July 23, 1998