ATLANTA, August 2, 2017
--Piedmont Office Realty Trust, Inc. ("Piedmont" or the "Company")
(NYSE:PDM), an owner of Class A office properties in select
sub-markets located primarily within eight major Eastern U.S.
office markets, today announced its results for the quarter ended
June 30, 2017.
Highlights for the Three Months
Ended June 30, 2017:
-
Reported Net Income Applicable to Common
Stockholders of $0.16 per diluted share;
-
Achieved Core Funds From Operations ("Core FFO")
of $0.46 per diluted share as compared with $0.40 for the quarter
ended June 30, 2016;
-
Reported a 9.2% increase in Same Store NOI- Cash
Basis;
-
Completed approximately 362,000 square feet of
leasing during the second quarter, of which over half related to
new leases;
-
Sold Sarasota Commerce Center II for $23.5
million, marking the Company's exit from the Sarasota, FL market;
and
-
Entered into a binding contract to sell 8560
Upland Drive, the Company's last asset located in the Denver, CO
market.
-
Additionally, subsequent to quarter end,
Piedmont successfully completed the sale of Two Independence
Square, an approximately 606,000 square foot office building
located in Washington, D.C., for approximately $360 million, or
$593 per square foot.
Donald A. Miller, CFA, President and Chief
Executive Officer, commented, "We delivered solid financial results
this quarter, and just after quarter end we closed on the sale of
Two Independence Square which was an important disposition for the
Company. It was our largest non-strategic asset in
Washington, D.C. and the sale captured significant value for our
stockholders. Although leasing has been sluggish in the first
half of 2017, our forward leasing pipeline provides optimism headed
into the second half of the year."
Results for the Quarter ended
June 30, 2017
Piedmont recognized net income applicable to
common stockholders for the three months ended June 30, 2017 of
$23.7 million, or $0.16 per diluted share, as compared with $72.3
million, or $0.50 per diluted share, for the three months ended
June 30, 2016. The prior quarter included approximately $73.8
million, or $0.51 per diluted share attributable to gains on sales
of real estate assets, whereas the current quarter included
approximately $6.5 million, or $0.04 of such gains.
Funds From Operations ("FFO"), which removes the
impact of the gains on sales mentioned above, as well as
depreciation and amortization, and Core FFO, which further removes
the impact of acquisition expenses, were both $0.46 per diluted
share for the three months ended June 30, 2017, as compared with
$0.40 per diluted share for the three months ended June 30, 2016,
with the increase primarily due to new leases commencing and net
acquisition transactional activity over the last twelve months.
Revenues and property operating costs for the
three months ended June 30, 2017 also increased due to net
transactional activity and new leases commencing over the last
twelve months. Revenues and property operating costs for the three
months ended June 30, 2017 were $148.7 million and $55.8 million,
respectively, compared to $135.3 million and $52.3 million,
respectively, for the same period a year ago.
General and administrative expense was $8.0
million for the three months ended June 30, 2017, compared to $8.3
million for the same period in 2016, primarily as a result of
decreased accruals for potential stock-based compensation expense
during the current period. Interest expense increased $2.0 million
for the three months ended June 30, 2017, as compared to the three
months ended June 30, 2016, primarily due to a net increase in the
average debt outstanding during the current quarter.
Leasing
Update
The Company's leasing volume for the quarter ended
June 30, 2017 totaled approximately 362,000 square feet, with
approximately half of that volume related to new leases. Our
most productive market during the second quarter was Dallas,
TX where we completed almost 100,000 square feet of leases
highlighted by the following:
· Caris
Life Sciences, LLC signed a 27,000 square foot, 10+ year new lease
at 750 West John Carpenter Freeway;
· Covey Park Energy signed a
19,000 square foot, 5-year lease expansion and short-term extension
at One Lincoln Park; and
· Veterans United Home Loans
executed an almost 19,000 square foot, 5+ year lease renewal and
expansion at Las Colinas Corporate Center II.
Other leasing highlights for the second quarter of
2017 included: NAI Brannen Goddard completed a 28,000 square
foot, 5-year lease renewal at Glenridge Highlands One in Atlanta,
GA; The General Services Administration (GSA) signed a 21,000
square foot, 5-year lease renewal at 400 Virginia Avenue in
Washington, D.C; and R-T Specialty, LLC signed an 11,000 square
foot, 11+ year lease expansion at 500 West Monroe Street in
Chicago, IL.
The Company's leased percentage was 91.0%, and
weighted average lease term was approximately 6.7 years as of June
30, 2017, both comparable with the first quarter of 2017. Same
Store NOI increased 9.2% and 7.9% on a cash and accrual basis,
respectively, compared to the second quarter of the prior year,
primarily reflecting expiration of abatement periods and the
commencement of leases over the last twelve months. Details
outlining Piedmont's significant upcoming lease expirations, the
status of current leasing activity, and a schedule of significant
near-term abatement periods can be found in the Company's quarterly
supplemental information package available at
www.piedmontreit.com.
Transactional Activity
During the second quarter, Piedmont disposed of
Sarasota Commerce Center II for $23.5 million, or $158 per square
foot, marking Piedmont's exit from the Sarasota, FL office market,
and entered into a binding contract to sell 8560 Upland Drive,
Piedmont's last asset in the Denver, CO market and last asset held
through an unconsolidated joint venture. The Upland Drive
sale subsequently closed on July 27, 2017.
Additionally, subsequent to quarter end, the Company successfully
completed the sale of one of its largest non-strategic properties,
Two Independence Square, located at 300 E Street, S.W. in
Washington D.C for approximately $360 million, or $593 per square
foot. The 606,000 square foot, 9-story, office building is
100% leased and has served as the headquarters for the National
Aeronautics and Space Administration (NASA) since its construction.
Subsequent to quarter end, net sales proceeds were used to pay off
the balance outstanding on the Company's $500 million line of
credit and a $140 million maturing mortgage.
Third Quarter 2017 Dividend
Declaration
On August 1, 2017, the board of
directors of Piedmont declared dividends for the third quarter of
2017 in the amount of $0.21 per share on its common stock to
stockholders of record as of the close of business on August 25,
2017, payable on September 15, 2017.
Guidance for
2017
Based on the consummation of the
sale of Two Independence Square and management's expectations for
the remainder of the year, the Company is narrowing its previously
issued guidance for full-year 2017 as follows:
(in millions, except per share data) |
|
Low |
|
High |
Net
Income |
|
$172 |
- |
$178 |
Add: |
|
|
|
|
Depreciation |
|
121 |
|
|
126 |
Amortization |
|
73 |
|
|
78 |
Less: Gain on Sale of Real Estate Assets |
|
(115 |
) |
- |
(123) |
NAREIT
FFO and Core FFO applicable to Common Stock |
|
251 |
|
|
259 |
NAREIT
FFO and Core FFO per diluted share |
|
$1.72 |
- |
$1.78 |
These estimates reflect management's view of
current market conditions and incorporate certain economic and
operational assumptions and projections. Actual results could
differ materially from these estimates based on a variety of
factors, including major acquisitions and dispositions, as well as
those factors discussed under "Forward Looking Statements"
below.
Note that individual quarters may fluctuate on
both a cash basis and an accrual basis due to lease commencements
and expirations, abatement periods, the timing of repairs and
maintenance, capital expenditures, capital markets activities,
seasonal general and administrative expenses, and one-time revenue
or expense events. In addition, the Company's guidance is based on
information available to management as of the date of this
release.
Non-GAAP Financial
Measures
To supplement the presentation of the Company's
financial results prepared in accordance with U.S. generally
accepted accounting principles ("GAAP"), this release and the
accompanying quarterly supplemental information as of and for the
period ended June 30, 2017 contain certain financial measures that
are not prepared in accordance with GAAP, including FFO, Core FFO,
AFFO, Same Store NOI (cash basis), Property NOI (cash basis) and
Core EBITDA. Definitions and reconciliations of each of these
non-GAAP measures to their most comparable GAAP metrics are
included below and in the accompanying quarterly supplemental
information.
Each of the non-GAAP measures included in this
release and the accompanying quarterly supplemental financial
information has limitations as an analytical tool and should not be
considered in isolation or as a substitute for an analysis of the
Company's results calculated in accordance with GAAP. In addition,
because not all companies use identical calculations, the Company's
presentation of non-GAAP measures in this release and the
accompanying quarterly supplemental information may not be
comparable to similarly titled measures disclosed by other
companies, including other REITs. The Company may also change the
calculation of any of the non-GAAP measures included in this news
release and the accompanying supplemental financial information
from time to time in light of its then existing operations to
include other adjustments that may affect its operations.
Conference Call
Information
Piedmont has scheduled a conference call and an
audio web cast for Thursday, August 3, 2017 at 10:00 A.M. Eastern
daylight time. The live audio web cast of the call may be accessed
on the Company's website at www.piedmontreit.com in the Investor
Relations section. Dial-in numbers are (877) 407-0778 for
participants in the United States and Canada and (201) 689-8565 for
international participants. A replay of the conference call will be
available through 10 A.M. EDT on August 17, 2017, and may be
accessed by dialing (877) 481-4010 for participants in the United
States and Canada and (919) 882-2331 for international
participants, followed by conference identification code 16154. A
web cast replay will also be available after the conference call in
the Investor Relations section of the Company's website. During the
audio web cast and conference call, the Company's management team
will review second quarter 2017 performance, discuss recent events,
and conduct a question-and-answer period.
Supplemental Information
Quarterly supplemental information as of and for
the period ended June 30, 2017 can be accessed on the Company`s
website under the Investor Relations section at
www.piedmontreit.com.
About Piedmont Office Realty
Trust
Piedmont Office Realty Trust, Inc. (NYSE: PDM) is
an owner, manager, developer, and operator of high-quality, Class A
office properties in select submarkets located primarily within
eight major U.S. office markets. Its geographically-diversified,
over $5 billion portfolio is comprised of approximately 20 million
square feet. The Company is a fully-integrated, self-managed real
estate investment trust (REIT) with local management offices in
each of its major markets and is investment-grade rated by Standard
& Poor's (BBB) and Moody's (Baa2). For more information, see
www.piedmontreit.com.
Forward Looking
Statements
Certain statements contained in this press release
constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Company intends for all such
forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in Section 27A
of the Securities Act and Section 21E of the Exchange Act, as
applicable. Such information is subject to certain risks and
uncertainties, as well as known and unknown risks, which could
cause actual results to differ materially from those projected or
anticipated. Therefore, such statements are not intended to be a
guarantee of the Company`s performance in future periods. Such
forward-looking statements can generally be identified by our use
of forward-looking terminology such as "may," "will," "expect,"
"intend," "anticipate," "believe," "continue" or similar words or
phrases that are predictions of future events or trends and which
do not relate solely to historical matters. Examples of such
statements in this press release include the Company's optimism
regarding it's leasing pipeline and whether the pipeline will
result in increased leasing volume during the second half of the
year and the Company's estimated range of Net Income, Depreciation,
Amortization, Gain on Sale of Real Estate Assets, NAREIT FFO/Core
FFO and NAREIT FFO/Core FFO per diluted share for the year ending
December 31, 2017.
The following are some of the factors that could
cause the Company`s actual results and its expectations to differ
materially from those described in the Company`s forward-looking
statements: Economic, regulatory, and/or socio-economic changes
(including accounting standards) that impact the real estate market
generally, or that could affect patterns of use of commercial
office space; the impact of competition on our efforts to renew
existing leases or re-let space on terms similar to existing
leases; changes in the economies and other conditions affecting the
office sector in general and the specific markets in which we
operate, particularly in Washington, D.C., the New York
metropolitan area, and Chicago where we have high concentrations of
our Annualized Lease Revenue; lease terminations or lease defaults,
particularly by one of our large lead tenants; the effect on us of
adverse market and economic conditions, including any resulting
impairment charges on both our long-lived assets or goodwill; the
success of our real estate strategies and investment objectives,
including our ability to identify and consummate suitable
acquisitions and divestitures; the illiquidity of real estate
investments, including the resulting impediment on our ability to
quickly respond to adverse changes in the performance of our
properties; the risks and uncertainties associated with our
acquisition of properties, many of which risks and uncertainties
may not be known at the time of acquisition; development and
construction delays and resultant increased costs and risks; our
real estate development strategies may not be successful; future
acts of terrorism in any of the major metropolitan areas in which
we own properties, or future cybersecurity attacks against us or
any of our tenants; costs of complying with governmental laws and
regulations; additional risks and costs associated with directly
managing properties occupied by government tenants; the effect of
future offerings of debt or equity securities or changes in market
interest rates on the value of our common stock; uncertainties
associated with environmental and other regulatory matters;
potential changes in political environment and reduction in federal
and/or state funding of our governmental tenants; any change in the
financial condition of any of our large lead tenants; the effect of
any litigation to which we are, or may become, subject; changes in
tax laws impacting REITs and real estate in general, as well as our
ability to continue to qualify as a REIT under the Internal Revenue
Code of 1986 (the "Code"); the future effectiveness of our internal
controls and procedures; and other factors, including the risk
factors discussed under Item 1A. of Piedmont's Amended Annual
Report on Form 10-K/A for the year ended December 31,
2016.
Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the
date of this press release. The Company cannot guarantee the
accuracy of any such forward-looking statements contained in this
press release, and the Company does not intend to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events, or otherwise.
Research Analysts/ Institutional Investors
Contact:
Eddie Guilbert
770-418-8592
research.analysts@piedmontreit.com
Shareholder Services/Transfer Agent Services
Contact:
Computershare, Inc.
866-354-3485
investor.services@piedmontreit.com
PDM Q2 2017 Financials
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Piedmont Office Realty Trust, Inc. via
Globenewswire
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