ATLANTA, August 1, 2018
--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, 2018.
Highlights for the Three Months
Ended June 30, 2018:
-
Reported Net Income Applicable to Common
Stockholders of $0.09 per diluted share for the quarter;
-
Achieved Core Funds From Operations ("Core FFO")
of $0.41 per diluted share for the quarter;
-
Completed almost 425,000 square feet of leasing
during the quarter; and
-
Repurchased 1.9 million shares of the Company's
common stock at an average price of $17.67 per share under the
Company's board-approved stock repurchase program.
Commenting on the Company's second quarter 2018
results, Donald A. Miller, CFA, President and Chief Executive
Officer, said, "Second quarter financial results were in line with
our expectations, and increased clarity for the remainder of the
year allows us to marginally increase both FFO and cash-basis Same
Store NOI guidance for 2018. We are encouraged by the increase in
prospective leasing activity that we have seen across all of our
strategic markets in recent months, activity which hopefully bodes
well for the lease up of currently available vacant space during
the last half of 2018." Continuing further, Miller said
"Additionally, we were able to continue to take advantage of the
displacement in the equity markets early in the second quarter by
acquiring almost two million shares of Company stock at what we
believe is a significant discount to net asset value. While
we did not close on any capital transactions during the quarter, we
are working on several previously disclosed disposition
opportunities that we hope to consummate in the coming
quarters."
Results for the Quarter ended
June 30, 2018
Piedmont recognized net income applicable to
common stockholders for the three months ended June 30, 2018 of
$10.9 million, or $0.09 per diluted share, as compared with net
income of $23.7 million, or $0.16 per diluted share, for the three
months ended June 30, 2017. The three months ended June 30, 2017
included an approximately $6.5 million, or $0.04 per diluted share,
gain on sale of real estate assets compared to de minimis gain/loss
activity in the second quarter of the current year. The
remaining decrease between quarters is primarily attributable to
the sale of sixteen wholly-owned assets and one unconsolidated
joint venture since June of 2017.
Funds From Operations ("FFO") and Core FFO, which
remove the impact of the gain/loss on sales of real estate assets
mentioned above (as well as depreciation and amortization), were
both $0.41 per diluted share for the three months ended June 30,
2018, as compared with $0.46 for the three months ended June 30,
2017, with the decrease being attributable to the property sales
mentioned above.
Revenues and property operating costs were $129.2
million and $52.6 million, respectively, for the three months ended
June 30, 2018, compared to $148.7 million and $56.3 million,
respectively, for the second quarter of 2017, with the decrease in
both items primarily attributable to the property sales mentioned
above.
General and administrative expense was $8.3
million for the second quarter of 2018, compared to $7.5 million
for the same period in 2017, primarily as a result of increased
accruals for potential performance-based stock compensation as a
result of improved relative stock performance during the three
months ended June 30, 2018.
Loss on sale of real estate assets was $(23,000)
for the second quarter of 2018, as compared to a gain of $6.5
million for the three months ended June 30, 2017, with the second
quarter of the previous year reflecting the sale of Sarasota
Commerce Center II.
In addition, net income available to common
stockholders per share, FFO per diluted share, and Core FFO per
diluted share for the three months ended June 30, 2018 were all
favorably impacted by an approximately 17.1 million share decrease
in our weighted average shares outstanding. The decrease is a
result of the repurchase of shares pursuant to the Company's stock
repurchase program during the twelve months ended June 30, 2018,
including 1.9 million shares repurchased at an average price of
$17.67 per share during the quarter ended June 30, 2018.
Leasing
Update
The Company's leasing volume for the second
quarter totaled approximately 425,000 square feet, approximately
one-third of which related to new leasing. Significant leases
completed during the quarter included:
·
In Houston, TX - Schlumberger Technology
Corporation executed a renewal and expansion totaling approximately
226,000 square feet at 1430 Enclave Parkway for 10 years through
2028;
· In
Atlanta - Access Clinical Partners, LLC signed a renewal
and expansion totaling approximately 28,000 square feet at
Glenridge Highlands One through 2026;
· In
Boston - Symantec Corporation renewed for approximately 27,000
square feet at 80 Central Street through 2026;
· In
Washington, D.C. - The Association for the Advancement of
Medical Instrumentation completed a 26,000 square foot lease at
Arlington Gateway for 12 years; and
· In
Chicago - Dahlquist and Lutzow Architects executed a renewal
and expansion totaling almost 17,000 square feet through 2027, and
Chicago Office Technology Group, Inc. renewed their approximately
13,000 square feet through 2024.
With no significant lease expirations for the
remainder of 2018, the Company's reported leased percentage and
weighted average lease term were approximately 90.6% and 6.7 years,
respectively, as of June 30, 2018, as compared to 89.7% and 6.5
years, respectively, as of December 31, 2017. Same Store NOI
increased 2.3% on a cash basis for the three months ended June 30,
2018 as compared to the three months ended June 30, 2017 as several
large lease abatements expired; accrual-basis Same Store NOI
decreased 1.6% for the three months ended June 30, 2018 as compared
to the second quarter of 2017, with 150,000 square feet of space in
downtime at the 6011 Connection Drive building in Dallas, Texas
before the lease with Gartner commences later in the third quarter.
Details outlining Piedmont's largest upcoming lease expirations,
the status of certain major leasing activity, and a schedule of the
largest lease abatement periods can be found in the Company's
quarterly supplemental information package available at
www.piedmontreit.com.
Third Quarter 2018 Dividend
Declaration
On August 1, 2018, the board of
directors of Piedmont declared dividends for the third quarter of
2018 in the amount of $0.21 per share on its common stock to
stockholders of record as of the close of business on August 31,
2018, payable on September 21, 2018.
Guidance for
2018
The Company increases its
previously announced guidance for full-year 2018 as follows:
(in millions, except per share data) |
|
Low |
|
High |
Net
Income |
|
$94 |
- |
$98 |
Add: |
|
|
|
|
Depreciation |
|
109 |
|
- |
111 |
Amortization |
|
61 |
|
- |
63 |
Less: Gain on Sale of Real Estate Assets |
|
(45 |
) |
- |
(46) |
NAREIT
FFO applicable to Common Stock |
|
$ |
219 |
|
- |
$226 |
NAREIT
FFO per diluted share |
|
$1.68 |
- |
$1.73 |
|
|
|
|
|
Less: Loss on Extinguishment of Debt |
|
$2 |
- |
$2 |
Core
FFO applicable to Common Stock |
|
$ |
221 |
|
- |
$228 |
Core
FFO per diluted share |
|
$1.69 |
- |
$1.75 |
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, particularly the timing of any future 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, accrued potential
performance-based compensation 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, 2018 contain certain financial measures that
are not prepared in accordance with GAAP, including FFO, Core FFO,
AFFO, Same Store NOI (cash and accrual basis), Property NOI (cash
and accrual 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, August 2, 2018 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. EDT on August 16, 2018, 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 34364. 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 2018 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, 2018 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 sub-markets located primarily within
eight major U.S. office markets. Its geographically-diversified,
almost $5 billion portfolio is currently comprised of approximately
17 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, 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, 2018.
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, socio-economic and/or technology
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; 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; significant
price and volume fluctuations in the public markets, including on
the exchange which we listed our common stock; 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 Annual Report
on Form 10-K for the year ended December 31, 2017.
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 2018 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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