2013-05-02 23:04:01 -
ATLANTA, May 2, 2013 --Piedmont Office Realty Trust, Inc. ("Piedmont" or the
"Company") (NYSE:PDM), an owner of primarily Class A properties located
predominantly in the ten largest U.S. office markets, today announced its
results for the quarter ended March 31, 2013.
Highlights for the Three Months Ended March 31, 2013:
* Achieved Core Funds From Operations ("CFFO") of $0.37 per diluted share for
* Purchased two properties in our concentration markets;
* Disposed of one non-core asset and contracted to sell another opportunistic
* Completed 487,000 square feet of leasing.
Donald A. Miller, CFA, President and Chief Executive Officer stated, "We
executed well this quarter from a transactional perspective. We bought two Class
properties in our targeted concentration markets, disposed of another non-core
asset, and locked in value creation for our stockholders through the sale of
1200 Enclave. At the same time, we also delivered solid operational results.
Although our leasing activity was lighter than it has been for the last several
quarters, we feel good about the pipeline for the remainder of 2013."
Results for the Three Months Ended March 31, 2013
Piedmont's net income available to common stockholders for the first quarter of
2013 was $14.7 million, or $0.09 per diluted share, as compared with $37.2
million, or $0.22 per diluted share, for the first quarter of 2012. The first
quarter results of the prior year included $17.8 million, or $0.10 per diluted
share, in gain on sale associated with properties that were sold during the
three months ended March 31, 2012. The current quarter includes a $6.4 million,
or $0.04 per diluted share, impairment loss recognized in conjunction with the
write-down in value and subsequent sale of the 1111 Durham Avenue property.
Income from continuing operations increased from $0.11 per diluted share for the
three months ended March 31, 2012 to $0.13 per diluted share for the three
months ended March 31, 2013.
Revenues for the quarter ended March 31, 2013 were $134.3 million, as compared
with $131.1 million for the same period a year ago, primarily reflecting
increased revenues associated with the commencement of several significant
leases over the previous twelve months as well as the acquisition of two
additional properties during the quarter ended March 31, 2013.
Property operating costs were $52.9 million for the quarter ended March
31, 2013, which was comparable to the prior period of $51.7 million. General and
administrative expense decreased approximately $0.7 million compared to the
previous year's first quarter primarily due to a decrease in legal expense.
Funds From Operations ("FFO") for the current quarter totaled $60.2 million, or
$0.36 per diluted share, as compared with $60.0 million, or $0.35 per diluted
share, for the quarter ended March 31, 2012. The prior year's first quarter
included $0.01 per diluted share in FFO contribution associated with eight
properties that were sold subsequent to January 1, 2012.
Core FFO, which primarily excludes transaction costs associated with two
acquisitions made during the quarter, totaled $61.6 million, or $0.37 per
diluted share, for the current quarter, as compared to $60.0 million, or $0.35
per diluted share, for the quarter ended March 31, 2012. The first quarter of
2012 included $0.01 per diluted share in Core FFO contribution associated with
eight properties that were sold subsequent to January 1, 2012.
Adjusted FFO ("AFFO") for the first quarter of 2013 totaled $36.6 million, or
$0.22 per diluted share, as compared to $50.1 million, or $0.29 per diluted
share, in the first quarter of 2012, reflecting increased capital expenditures
associated with re-tenanting certain properties.
During the first quarter of 2013, the Company executed approximately 487,000
square feet of leasing throughout its markets. Of the leases signed during the
quarter, approximately 367,000 square feet, or 75%, was renewal-related and
120,000 square feet, or 25%, was with new tenants.
Same store net operating income (on a cash basis) for the quarter of $75.5
million was comparable to the quarter ended March 31, 2012. As of March
31, 2013, the Company had approximately 0.4 million square feet of signed leases
that have yet to commence for vacant spaces and an additional 2.0 million square
feet of commenced leases that were in some form of abatement.
The Company's overall portfolio was 86.0% leased as of March 31, 2013, with a
weighted average lease term remaining of approximately 7.1 years, a 6 month
increase from a year ago. The stabilized portfolio was 88.9% leased as of March
31, 2013 as compared to 87.5% leased as of March 31, 2012. Details outlining
Piedmont's significant upcoming lease expirations and the status of current
leasing activity can be found in the Company's quarterly supplemental
Capital Markets, Financing and Other Activities
As previously announced, during the three months ended March 31, 2013, Piedmont
acquired two properties, Arlington Gateway in the Washington D.C. office market
and 5&15 Wayside Road in the Boston market.
Arlington Gateway is a twelve-story, Class-A office property located at 901
North Glebe Road in Arlington, VA. Piedmont acquired the 334,000 square foot
office building for approximately $175.6 million or $526 per square foot.
Constructed in 2005, this LEED Gold and Energy Star Certified trophy property is
located on the Metro line in the desirable Rosslyn-Ballston Corridor and is 99%
leased exclusively to non-government tenants.
5 & 15 Wayside Road is a Class-A office project located in Burlington,
Massachusetts. The 271,000 square foot office complex is comprised of two
interconnected, four-story and five-story office buildings constructed in 1999
and 2001. The complex is currently 95% leased to three tenants.
Additionally during the quarter, Piedmont disposed of 1111 Durham Avenue, a non-
core asset located in South Plainfield, NJ. A long-term lease expired during
the first quarter of 2013, and after assessing the aged building (constructed in
1975) and leasing prospects, Piedmont determined that the sale price should
appropriately represent the land value of the asset. As a result, Piedmont
disposed of the 1111 Durham Avenue building for a gross sale price of
approximately $4.0 million, exclusive of closing costs. The Company recognized a
$6.4 million, non-cash impairment charge in conjunction with reclassifying the
asset to held-for-sale.
Finally, during the first quarter, Piedmont entered into a contract to sell
1200 Enclave Parkway for approximately $48.8 million, or $326 per square foot.
Piedmont acquired this property in early 2011 for $18.5 million. The 150,000
square foot building was constructed in 1999 and was approximately 18% leased
when acquired. During 2012, we completed two leases with Schlumberger Technology
Corporation which effectively leased 97% of the building to a credit-worthy
tenant through 2024. The sale was completed on May 1, 2013.
Piedmont's gross assets amounted to $5.5 billion as of March 31, 2013. Total
debt was approximately $1.7 billion as of March 31, 2013 as compared to $1.4
billion as of December 31, 2012. The Company's total debt-to-gross assets ratio
was 30.8% as of March 31, 2013 as compared with 27.2% as of December 31, 2012.
Net debt to annualized core EBITDA ratio was 5.2 x and the Company`s fixed
charge coverage ratio was 4.8 x times. As of March 31, 2013, Piedmont had cash
and capacity on its unsecured line of credit of approximately $86.2 million.
Subsequent to Quarter End
On May 2, 2013, the Board of Directors of Piedmont declared a dividend for the
second quarter of 2013 in the amount of $0.20 per common share outstanding to
stockholders of record as of the close of business on May 31, 2013. Such
dividends are to be paid on June 21, 2013.
Guidance for 2013
Based on management's expectations, the Company affirms its previous financial
guidance for full-year 2013 as follows:
$80 -- 98
Add: Depreciation and Amortization $155 -- 160 Million
Deduct: Estimated Insurance Recoveries $10 -- 15 Million
$225 - 243
Core FFO per diluted share $1.35 - $1.45
These estimates reflect management's view of current market conditions and
incorporate certain economic and operational assumptions and projections such as
the move out of two governmental tenants and the decrease in net operations as a
result of the sale of seven assets during 2012. This annual guidance includes
the continued repositioning of the portfolio with estimated dispositions and
acquisitions approximating $300 million and $400 million, respectively, during
2013. Actual results could differ from these estimates. Note that individual
quarters may fluctuate on both a cash basis and an accrual basis due to lease
commencements and expirations, the timing of repairs and maintenance, capital
expenditures, capital markets activities 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
This release contains certain supplemental non-GAAP financial measures such as
FFO, AFFO, Core FFO, Same store net operating income, and Core EBITDA. See below
for definitions and reconciliations of these metrics to their most comparable
Conference Call Information
Piedmont has scheduled a conference call and an audio webcast for Friday, May
3, 2013 at 10:00 A.M. Eastern daylight time ("EDT"). The live audio webcast of
the call may be accessed on the Company's website at www.piedmontreit.com in the
Investor Relations section. Dial-in numbers are (888) 430-8709 for participants
in the United States and Canada and (719)325-2354 for international
participants. The passcode is 4302736. A replay of the conference call will be
available from 1:00 pm EDT on May 3, 2013 until 1:00 pm EDT on May 17, 2013, and
can be accessed by dialing (888)203-1112 for participants in the United States
and Canada and (719)457-0820 for international participants, followed by
passcode 4302736. A webcast replay will also be available after the conference
call in the Investor Relations section of the Company's website. During the
audio webcast and conference call, the Company's management team will review
first quarter 2013 performance, discuss recent events and conduct a question-
Quarterly Supplemental Information as of and for the period ended March
31, 2013 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 a fully-integrated and self-
managed real estate investment trust (REIT) specializing in high-quality, Class
A office properties located primarily in the ten largest U.S. office markets,
including Chicago, Washington, D.C., New York, Los Angeles, Boston, and
Dallas. As of March 31, 2013, Piedmont's 75 wholly-owned office buildings were
comprised of over 20 million rentable square feet. The Company is headquartered
in Atlanta, GA, with local management offices in each of its major markets.
Piedmont is investment-grade rated by Standard & Poor's and Moody's and has
maintained a low-leverage strategy while acquiring and disposing of properties
during its fourteen year operating history. For more information, see
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,"
"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 expected leasing pipeline and estimated range of Net
Income, Depreciation and Amortization, Insurance Recoveries, Core FFO and Core
FFO per diluted share for the year ending December 31, 2013.
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: market and economic conditions remain
challenging and the demand for office space, rental rates and property values
may continue to lag the general economic recovery causing the Company's
business, results of operations, cash flows, financial condition and access to
capital to be adversely affected or otherwise impact performance, including the
potential recognition of impairment charges; the success of the Company's real
estate strategies and investment objectives, including the Company's ability to
identify and consummate suitable acquisitions; lease terminations or lease
defaults, particularly by one of the Company's large lead tenants; the impact of
competition on the Company's efforts to renew existing leases or re-let space on
terms similar to existing leases; changes in the economies and other conditions
of the office market in general and of the specific markets in which the Company
operates, particularly in Chicago, Washington, D.C., and the New York
metropolitan area; economic and regulatory changes, including accounting
standards, that impact the real estate market generally; additional risks and
costs associated with directly managing properties occupied by government
tenants; adverse market and economic conditions may continue to adversely affect
the Company and could cause the Company to recognize impairment charges or
otherwise impact the Company's performance; availability of financing and the
Company's lending banks' ability to honor existing line of credit commitments;
costs of complying with governmental laws and regulations; uncertainties
associated with environmental and other regulatory matters; potential changes in
political environment and reduction in federal and/or state funding of the
Company's governmental tenants; the Company may be subject to litigation, which
could have a material adverse effect on the Company's financial condition; the
Company's ability to continue to qualify as a real estate investment trust under
the Internal Revenue Code; and other factors detailed in the Company`s most
recent Annual Report on Form 10-K for the period ended December 31, 2012, and
other documents the Company files with the Securities and Exchange Commission.
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:
Shareholder Services/Transfer Agent Services Contact:
PDM Q1 2013 :
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Source: Piedmont Office Realty Trust, Inc. via Thomson Reuters ONE