Investments in and Advances to Affiliates

Unconsolidated Affiliates

We have equity interests of up to 50.0% in various joint ventures with unrelated third parties that are accounted for using the equity method of accounting because we have the ability to exercise significant influence over the operating and financial policies of the joint venture investment.

The following table sets forth our ownership in unconsolidated affiliates at December 31, 2016:



Joint Venture	Location	Ownership Interest
Plaza Colonnade, Tenant-in-Common	Kansas City	50.0%
Highwoods DLF 97/26 DLF 99/32, LP	Orlando	42.9%
Kessinger/Hunter & Company, LC	Kansas City	26.5%
Highwoods DLF Forum, LLC	Raleigh	25.0%
Highwoods DLF 98/29, LLC	Orlando	22.8%

4. Investments in and Advances to Affiliates – Continued

The following table sets forth the summarized balance sheets of our unconsolidated affiliates:



	December 31,
	2016			2015
Balance Sheets:
Assets:
Real estate assets, net	$	141,105		$	163,852
All other assets, net	58,467			53,511
Total Assets	$	199,572		$	217,363
Liabilities and Partners’ or Stockholders’ Equity:
Mortgages and notes payable, net	$	122,560		$	141,580
All other liabilities	9,512			6,547
Partners’ or stockholders’ equity	67,500			69,236
Total Liabilities and Partners’ or Stockholders’ Equity	$	199,572		$	217,363
Our share of historical partners’ or stockholders’ equity	$	20,032		$	21,022
Advances to unconsolidated affiliates	—			448
Difference between cost of investments and the net book value of underlying net assets	(1,186		)	(794		)
Carrying value of investments in and advances to unconsolidated affiliates	$	18,846		$	20,676

The following table sets forth the summarized income statements of our unconsolidated affiliates:



	Year Ended December 31,
	2016		2015		2014
Income Statements:
Rental and other revenues	$	42,344	$	48,118	$	50,514
Expenses:
Rental property and other expenses	17,808		22,721		25,159
Depreciation and amortization	10,348		12,257		13,310
Interest expense	5,191		7,196		8,847
Total expenses	33,347		42,174		47,316
Income before disposition of property	8,997		5,944		3,198
Gains on disposition of property	22,247		18,181		2,998
Net income	$	31,244	$	24,125	$	6,196

The following summarizes additional information related to certain of our unconsolidated affiliates:

- Concourse Center Associates, LLC ("Concourse")

During 2016, Concourse (a joint venture in which we owned a 50.0% interest) sold two buildings and land to an unrelated third party for an aggregate sale price of $11.0 million and recorded losses on disposition of property of $0.1 million. As our cost basis was different from the basis reflected at the joint venture level, we recorded $0.4 million of gains through equity in earnings of unconsolidated affiliates. Simultaneously with the sale, the joint venture repaid all $6.6 million of its debt.

4. Investments in and Advances to Affiliates – Continued

- Highwoods DLF 97/26 DLF 99/32, LP (“DLF II”)

During 2015, DLF II sold a building to an unrelated third party for a sale price of $7.0 million and recorded a gain on disposition of property of $2.1 million. We recorded $1.1 million as our share of this gain through equity in earnings of unconsolidated affiliates.

- Kessinger/Hunter & Company, LC ("Kessinger/Hunter")

Kessinger/Hunter, which is managed by our joint venture partner, provides leasing services, among other things, to certain buildings that we currently own and/or previously owned in Kansas City in exchange for customary fees from us. Kessinger/Hunter received $0.4 million, $0.3 million and $0.6 million from us for these services in 2016, 2015 and 2014, respectively.

- Highwoods DLF 98/29, LLC (“DLF I”)

See Note 2 for a description of our acquisition of a building in Orlando from DLF I during 2015. The joint venture recorded a gain on disposition of property of $13.7 million. Our share of $3.1 million was recorded as a reduction to real estate assets.

During 2014, DLF I sold a building to an unrelated third party for a sale price of $13.7 million (before $0.4 million in closing credits to buyer for free rent) and recorded a gain on disposition of property of $1.0 million. We recorded $0.2 million as our share of this gain through equity in earnings of unconsolidated affiliates.

- 4600 Madison Associates, LP ("4600 Madison")

During 2016, 4600 Madison (a joint venture in which we owned a 12.5% interest) sold a building and land in separate transactions to unrelated third parties for an aggregate sale price of $36.1 million and recorded gains on disposition of property of $22.3 million. As our cost basis was different from the basis reflected at the joint venture level, we recorded $1.9 million of gains through equity in earnings of unconsolidated affiliates. Simultaneously with the sales, the joint venture repaid all $9.7 million of its debt.

- Board of Trade Investment Company ("Board of Trade")

During 2014, Board of Trade (a joint venture in which we owned a 49.0% interest) sold a building to an unrelated third party for gross proceeds of $8.3 million and recorded a gain of $1.9 million. As our cost basis was different from the basis reflected at the entity level, we recorded a net impairment charge on our investment of $0.4 million. This charge represented the other-than-temporary decline in the fair value below the carrying value of our investment. Our interest in Board of Trade was redeemed in exchange for $4.7 million in cash.

- Highwoods KC Glenridge Office, LLC ("KC Glenridge Office") and Highwoods KC Glenridge Land, LLC ("KC Glenridge Land")

During 2015, KC Glenridge Office (a joint venture in which we owned a 40.0% interest) and KC Glenridge Land (a joint venture in which we owned a 39.9% interest) collectively sold two buildings and land to an unrelated third party for an aggregate sale price of $24.5 million (before closing credits to buyer of $0.3 million for unfunded tenant improvements) and recorded gains on disposition of property of $2.4 million. We recorded $0.9 million as our share of these gains through equity in earnings of unconsolidated affiliates.

During 2014, KC Glenridge Office paid at maturity the remaining $14.9 million balance on a secured mortgage loan with an effective interest rate of 4.84%.

4. Investments in and Advances to Affiliates – Continued

- Other Activities

We receive development, management and leasing fees for services provided to certain of our joint ventures. These fees are recognized in income to the extent of our respective joint venture partner's interest. During the years ended December 31, 2016, 2015 and 2014, we recognized $0.8 million, $1.4 million and $1.2 million, respectively, of development/construction, management and leasing fees from our unconsolidated joint ventures. At both December 31, 2016 and 2015, we had receivables of $0.1 million related to these fees in accounts receivable.

Consolidated Affiliates

The following summarizes our consolidated affiliates:

- Highwoods-Markel Associates, LLC (“Markel”)

We have a 50.0% ownership interest in Markel. We are the manager and leasing agent for Markel's properties, which are located in Richmond in exchange for customary management and leasing fees. We consolidate Markel since we are the managing member and control the major operating and financial policies of the entity. As controlling member, we have an obligation to cause this property-owning entity to distribute proceeds of liquidation to the noncontrolling interest member in these partially owned properties only if the net proceeds received by the entity from the sale of any of Markel's assets warrant a distribution as determined by the agreement governing the joint venture. We estimate the value of such noncontrolling interest distributions would have been $24.8 million had the entity been liquidated at December 31, 2016. This estimated settlement value is based on the fair value of the underlying properties which is based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for customers, changes in market rental rates and costs to operate each property. If the entity's underlying assets are worth less than the underlying liabilities on the date of such liquidation, we would have no obligation to remit any consideration to the noncontrolling interest holder.

See Note 2 for a description of our acquisition of the noncontrolling member's 50.0% interest in a building owned by Markel during 2014.

- Harborview

We had a 20.0% interest in Harborview, which had been accounted for as a financing obligation since our partner had the right to put its 80.0% equity interest back to us any time prior to September 11, 2015. During 2012, we also provided a three-year $20.8 million interest-only secured loan to Harborview that was scheduled to mature in September 2015.

During the second quarter of 2015, as a result of our partner’s irrevocable exercise of a buy-sell provision in our Harborview joint venture agreement, our partner’s right to put its 80.0% equity interest back to us became no longer exercisable, which resulted in recording the original contribution transaction as a partial sale. As a result, we were required to begin accounting for Harborview using the equity method of accounting. See Note 1.

During the third quarter of 2015, we sold our 20.0% interest in Harborview to our partner for net proceeds of $6.9 million and recorded a $4.2 million gain on disposition of investment in unconsolidated affiliate. The $20.8 million interest-only secured loan previously provided by us to Harborview was paid in full upon consummation of the sale.