X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

ATLANTA-In the wake of Arlington, VA-based US Airways Group’s filing for Chapter 11 bankruptcy protection Aug. 11, Raleigh, NC-based Highwoods Properties is assessing its risk on seven of the airline’s leases in Winston-Salem, NC totaling 414,059 sf and representing annual realized rental revenue of $6.9 million.

The average remaining lease term was 5.4 years as of June 30, Highwoods says in a prepared statement. The $6.9 million represents about 1.5% of Highwoods’ total annualized rental revenue.

USAir is subleasing about 55,000 sf to a third party. Highwoods estimates the balance of the space is about 75%-utilized by USAir, primarily as reservation call centers.

USAir is current on base rental payments applied to 303,827 sf through the end of this month but has not made an August base payment of $74,000 on the balance of space, according to Highwoods.

Carman Liuzzo, Highwoods’ chief financial officer, tells GlobeSt.com: “Although the leases increase year-over-year, according to a schedule, we have to account for their revenue evenly. According to generally accepted accounting practices, what we have recorded in revenue over the length of the leases to date exceeds the amount USAir is obligated to pay us–and, therefore, has actually paid–by $495,000.”

According to the lease agreements, that money would actually be received by Highwoods in the later years of the lease.

The bankruptcy court has 60 days to rule on the disposition of USAir’s obligation to Highwoods and other creditors.

Meanwhile, U.S. Bankruptcy Judge Robert Mayer in Alexandria, VA, is allowing the airline access to $75 million to keep flying through September while it attempts to expedite its reorganization.

Liuzzo tells GlobeSt.com, “We have no expectations regarding the judge’s decisions or whether the leases will be accepted or rejected in bankruptcy court.”

In its statement, Highwoods says, “Due to the inherent uncertainties of the bankruptcy process, (we are) not able to predict the impact of USAir’s bankruptcy on its leasing and occupancy of Highwoods’ properties or on (its) financial condition and the results of operations.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt. NET LEASE Spring 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.