Just after USAir filed for Chapter 11 bankruptcy protection on Aug. 11, Highwoods reported that all but $74,000 of the airline's August rent on Highwoods' properties was current. The REIT later learned it would not receive the money from the USAir checks it deposited this month.
Highwoods holds seven USAir lease agreements covering 414,059 sf of space in Winston-Salem, NC. About 55,000 sf of USAir's space in Highwoods' Madison Park complex is subleased to Partners Health Plans of North Carolina.
A majority of the USAir office space is utilized as reservation call centers, considered vital to the airline's ongoing operations.
In its SEC filing, Highwoods says that under bankruptcy law, USAir is liable for rents incurred in the post-petition period until the leases are assumed or rejected by bankruptcy court.
The USAir leases are not the only Highwoods' rental payments in jeopardy. According to published reports, during the second quarter, Highwoods took a $3-million charge as a reserve for rent it may not receive from WorldCom, also in Chapter 11. The telecommunications company leases one million sf in Highwoods' properties.
Together, the USAir and WorldCom leases with Highwoods represent $24.4 million a year in revenue, according to published reports.
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