ATLANTA, November 1, 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
September 30, 2017.
Highlights for the Three Months
Ended September 30, 2017:
-
Reported Net Income Applicable to Common
Stockholders of $0.87 per diluted share;
-
Achieved Core Funds From Operations ("Core FFO")
of $0.42 per diluted share;
-
Reported a 5.2% increase in Same Store NOI- Cash
Basis;
-
Completed approximately 450,000 square feet of
leasing during the third quarter, approximately 45% of which
related to new leases;
-
Sold Two Independence Square, an approximately
606,000 square foot office building located in Washington, D.C.,
for an approximately $110 million gain, which is included in the
Company's results for the quarter;
-
Sold 8560 Upland Drive, the Company's last asset
located in the Denver, CO market; and
-
With the pay down of debt using disposition
proceeds, decreased leverage levels and substantially improved debt
metrics.
Donald A. Miller, CFA, President and Chief
Executive Officer, commented, "We saw a continued modest leasing
environment during the third quarter, but feel optimistic regarding
expected leasing volume headed into the last quarter of the
year. The completion of the sale of Two Independence Square
allowed us to capture a significant gain for our stockholders while
reducing our total exposure to the Washington, D.C. market and
strengthening our balance sheet by using the proceeds to pay down
debt."
Results for the Quarter ended
September 30, 2017
Piedmont recognized net income applicable to
common stockholders for the three months ended September 30, 2017
of $126.1 million, or $0.87 per diluted share, as compared with a
loss of $13.1 million, or $(0.09) per diluted share, for the three
months ended September 30, 2016. The current quarter included
approximately $113.2 million, or $0.78 per diluted share, of gains
related to the sales of real estate assets, whereas the prior
quarter included an approximately$23.0 million, or $(0.16) per
diluted share, impairment loss.
Funds From Operations ("FFO"), which removes the
impact of the gains on sales and impairment loss mentioned above,
as well as depreciation and amortization, and Core FFO, which
further removes the
impact of acquisition expenses, were both $0.42 per diluted share
for the three months ended September 30, 2017, compared to $0.41
and $0.42 per diluted share in FFO and Core FFO, respectively, for
the three months ended September 30, 2016.
Revenues and property operating costs were $137.6
million and $54.1 million, respectively, for the three months ended
September 30, 2017, both comparable with the third quarter of 2016,
as increases in these items associated with new leases commencing
and properties acquired over the last twelve months substantially
offset decreases associated with the sale of eight properties since
July 1, 2016.
General and administrative expense was $6.6
million for the three months ended September 30, 2017, compared to
$7.4 million for the same period in 2016, primarily as a result of
decreased accruals for potential stock-based compensation expense
during the current period.
Equity in income of unconsolidated joint ventures
was approximately $3.8 million for the three months ended September
30, 2017, reflecting an approximate $3.7 million gain associated
with the sale of the Company's proportionate share of 8560 Upland
Drive during the quarter.
Gain on sale of real estate assets was $109.5
million for the three months ended September 30, 2017, reflecting
the gain on sale of our Two Independence Square building, located
in Washington, D.C. mentioned above.
Leasing
Update
The Company's leasing volume for the quarter ended
September 30, 2017 totaled approximately 447,000 square feet, with
approximately 203,000 square feet of that volume related to new
leases. Leasing highlights for the quarter included the
following:
Detroit, MI - FCA US, LLC
(Fiat Chrysler) renewed its 210,000 square foot lease for five
years at 1075 West Entrance in Auburn Hills, MI;
Orlando, FL -
WithumSmith+Brown PC signed an approximately 20,000 square foot,
12-year new lease at SunTrust Center, in downtown Orlando, FL; and
Robinhood Markets, Inc. signed a new approximately 14,000 square
foot, 7+ year lease at 500 TownPark, in Lake Mary, FL.
Also in Florida, the law firm of Phelan Hallinan
Diamond & Jones completed an approximately 19,000 square foot,
10+ year new lease at 2001 NW 64th Street in
Ft. Lauderdale, FL.
Washington, D.C. - A business
analytics software company signed an approximately 15,000 square
foot, 10+ year new lease at 4250 North Fairfax Drive in Arlington,
VA.
Also in the Washington, D.C. area, Federal
Advisory Partners completed an approximately 12,000 square foot,
11+ year new lease at 3100 Clarendon Boulevard Arlington, VA.
The Company's leased percentage was 89.2%, and
weighted average lease term was approximately 6.5 years as of
September 30, 2017, both down from the second quarter of 2017
primarily due to the expiration of two leases in our Washington,
D.C. portfolio as well as the sale of the 100% leased Two
Independence Square building during the quarter. Same Store NOI
increased 5.2% and 1.1% on a cash and accrual basis, respectively,
compared to the third quarter of the prior year, primarily
reflecting the 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 lease abatement
periods can be found in the Company's quarterly supplemental
information package available at www.piedmontreit.com.
Transactional and Financing
Activity
During the third quarter, the Company successfully
completed two sales:
-
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.
-
8560 Upland Drive, an approximately 149,000
square foot office/warehouse building, which was Piedmont's last
asset in the Denver, CO market, as well as the last asset held
through an unconsolidated joint venture for approximately $17.6
million.
The net sales proceeds of the above dispositions
were used to repay the balance outstanding on the Company's $500
million line of credit and a $140 million maturing mortgage,
thereby improving leverage ratios and debt metrics and providing
capacity for strategic acquisition opportunities should they
arise.
During the third quarter of 2017, the Company
repurchased almost 200,000 shares of common stock under its share
repurchase program at an average price of $19.92 per share, or
approximately $3.9 million. As of quarter end, Board-approved
capacity remaining for additional repurchases totaled approximately
$246.1 million under the stock repurchase plan.
Fourth Quarter 2017 Dividend
Declaration
On October 31, 2017, the board of
directors of Piedmont declared dividends for the fourth 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 November 24,
2017, payable on January 4, 2018.
Guidance for
2017
Based on 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 |
|
$176 |
- |
$178 |
Add: |
|
|
|
|
Depreciation |
|
121 |
|
- |
124 |
Amortization |
|
75 |
|
- |
76 |
Less: Gain on Sale of Real Estate Assets |
|
(119 |
) |
- |
(121) |
NAREIT
FFO and Core FFO applicable to Common Stock |
|
$253 |
|
- |
$257 |
NAREIT
FFO and Core FFO per diluted share |
|
$1.74 |
- |
$1.76 |
These estimates reflect the Company disposing of
more assets (net of acquisitions) during calendar 2017 than
originally anticipated and 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
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 September 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),
EBITDAre, 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, November 2, 2017 at 11:00 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 11 A.M. EST on November 16, 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 21787. 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 third 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 September 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 19 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 expected leasing volume and whether it will result
in actual leasing volume during the fourth quarter 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 Q3 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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