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."
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