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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): 06/29/2009
Piedmont Office Realty Trust, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 000-25739
| MD | 58-2328421 | |
| (State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) |
11695 Johns Creek Parkway
Suite 350
Johns Creek, GA 30097-1523
(Address of principal executive offices, including zip code)
770-418-8800
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01. | Regulation FD Disclosure |
On June 29, 2009, Piedmont Office Realty Trust, Inc. (the “Registrant”) updated the corporate presentation used originally for its regional stockholder meetings to include current information as of March 31, 2009 (unless otherwise noted within the presentation). This updated corporate presentation is attached as Exhibit 99.1 to this Current Report on Form 8-K. Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein are deemed to have been furnished and shall not be deemed to be “filed” under the Securities Exchange Act of 1934.
Additionally, the exhibit to this Form 8-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including discussions regarding any liquidity event of the Registrant and other factors that may affect future earnings or financial results. Such forward-looking statements can generally be identified by the Registrant’s use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe” or other similar words. Information given in this exhibit relating to leasing, the Registrant’s estimated net asset value and other facts and figures are given as of the date of this filing. Factors that may cause actual results to differ materially include changes in general economic conditions, changes in real estate conditions, increases in interest rates, lease-up risks, lack of availability of financing or other capital proceeds and additional borrowings under our unsecured line of credit or other debt facilities. Piedmont Office Realty Trust is closed to new investors. SEC filings: www.sec.gov.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibit:
| Exhibit No. |
Description | |
| 99.1 | Updated Piedmont Corporate Presentation |
Signature(s)
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Piedmont Office Realty Trust, Inc. | ||||
| Date: June 29, 2009 | By: | /s/ Robert E. Bowers | ||
| Robert E. Bowers | ||||
| Chief Financial Officer and Executive Vice-President | ||||
Exhibit Index
| Exhibit No. |
Description | |
| EX 99.1 | Updated Piedmont Corporate Presentation |
 © 2007 Piedmont Office Realty Trust, Inc. Corporate Presentation Donald A. Miller, CFA President & CEO Exhibit 99.1 |
 © 2007 Piedmont Office Realty Trust, Inc. What Piedmont Wants You To Know • The points made in this presentation represent the intentions of Piedmont’s management team as of the date of the presentation given. • Uncertainties in the regulatory, economic, and real estate markets may adversely affect the company’s ability to meet its objectives. • If Real Estate initiatives cannot attract financially stable tenants, vacancies or defaults may occur that may reduce the portfolio’s return. • Properties that incur vacancies may be difficult to sell or re-lease. • Future financial performance of the company and the performance of real estate is difficult to predict. • Information is accurate at the time of the presentation; however, lease dates and the ability to meet our stated objectives are subject to change. • Data presented reflects Piedmont portfolio as of March 31, 2009 unless otherwise noted. Certain statements contained herein may be deemed to be forward-looking statements under the federal
securities laws, and Piedmont intends that such forward- looking statements be subject to
the safe-harbor provisions. All forward-looking statements are qualified in their entirety by this cautionary statement. Such statements generally can be identified by our use of words such as “may,”
“will,” “can,” “intend,” “anticipate,” “estimate,” “think,” “continue,” or other similar words. Legislative, economic, and financial factors could cause actual results to vary materially from those
expressed in forward-looking statements. |
 © 2007 Piedmont Office Realty Trust, Inc. History June '08 Mar. '09 Jul. '07 Aug. '07 Dec. '07 June '98 Dec. '03 Apr. '05 Apr. '07 - Active operations commenced - Received investment grade credit ratings (BBB from S&P and Baa3 from Moody’s) - 27 property portfolio sale - $189.5mm gain - $748.5mm special dividend - Advisor internalization - 76 employees moved from Wells to Piedmont - Closed fourth and final offering - $4.7bn of equity raised (including DRP proceeds) - Changed name from Wells REIT to Piedmont Office Realty Trust, Inc. - Liquidity event extension approved - Extended for up to 3 years from January 30, 2008 - $250 million unsecured debt '99 '00 '01 '02 '04 '06 Acquired $4.9 billion of Class A office property - $500 million credit facility |
 © 2007 Piedmont Office Realty Trust, Inc. Portfolio Characteristics 91% % Leased 1 34% Leverage Ratio (estimated NAV basis) 3 84% % Leased – Office Building Industry Average 2 61% Leverage Ratio – Publicly Traded REIT Office Average 4 6 Weighted Average Lease Term Remaining (years) 1 76 # of Properties 1 21,012 Square Feet (in thousands) 1 As of March 31, 2009 1 Excludes eight unconsolidated joint-venture properties 2 Source: Jones Lang LaSalle US Office Insight Q1 2009 3 Calculated as total liabilities / most recent estimated net value of assets 4 Source: Green Street Advisors, Inc. May 31, 2009 |
 © 2007 Piedmont Office Realty Trust, Inc. Board of Directors Back row from left to right: Jeff Swope (Managing Partner of Champion Partners, LTD, a nationwide real estate
developer), Bill Keogler (Retired, member of board of Robinson Humphrey & chairman of Keogler, Morgan & Co., a brokerage firm), Wes Cantrell (Retired CEO, Lanier Worldwide, Inc.), Don Moss (Retired Group Vice President, Avon, Inc.), Don Miller (CEO, Piedmont Office Realty Trust, Inc.) Front row from left to right: Frank McDowell (Retired CEO, BRE Properties Inc.), Wayne Woody (Retired Professional
Practice Director, KPMG), Mike Buchanan (Retired Managing Director of Real Estate Banking Group, Bank of America) |
 © 2007 Piedmont Office Realty Trust, Inc. Senior Management Carroll A. (Bo) Reddic, IV EVP, Real Estate Operations Donald A. Miller, CFA President & CEO Robert E. Bowers CFO Raymond L. Owens EVP, Capital Markets Laura P. Moon Chief Accounting Officer |
 © 2007 Piedmont Office Realty Trust, Inc. Property Management Offices New Hampshire W. Virginia Maine Rhode Island Connecticut Manhattan / L.I. New Jersey Delaware Maryland D.C. Massachusetts Vermont New York Pennsylvania N.Carolina Virginia Washington Oregon California Nevada Utah Arizona Idaho Montana Wyoming Colorado New Mexico Tennessee Oklahoma Louisiana Missis- sippi Alabama Arkansas Georgia Florida Texas S. Carolina Nebraska South Dakota North Dakota Iowa Minnesota Wisconsin Kentucky Indiana Michigan Kansas Missouri Illinois Ohio Regional Office City Office SOUTH REGION Tampa 5.3 Million SF Managed MIDWEST REGION Minneapolis 5.9 Million SF Managed WEST REGION Los Angeles 2.9 Million SF Managed EAST REGION Washington DC 4.0 Million SF Managed Dan Cote Regional Manager - West Mark Reeder Regional Manager - South Dan Dillon Regional Manager - East Kevin Fossum Regional Manager - Midwest |
 © 2007 Piedmont Office Realty Trust, Inc. Foundations of Conservative Real Estate Investment Strategy • High-quality properties • Real estate diversification • Lower leverage • Stable income stream |
 © 2007 Piedmont Office Realty Trust, Inc. Piedmont Office Realty Trust Representative Washington, D.C. Properties One & Two Independence Square Washington D.C. 1201 Eye Street Washington D.C. 4250 N. Fairfax Drive Arlington, VA Piedmont Pointe I & II 6720 Rockledge Drive Bethesda, MD Lockheed Martin I & II 9200 Corporate Boulevard Rockville, MD |
 © 2007 Piedmont Office Realty Trust, Inc. Piedmont Office Realty Trust Representative NY/North East Metropolitan Properties 200 & 400 Crossing Boulevard Bridgewater, NJ Nine Polito Avenue Lyndhurst, NJ 60 Broad Street New York, NY 1901 Market Street Philadelphia, PA One Brattle Square Cambridge, MA |
 © 2007 Piedmont Office Realty Trust, Inc. Piedmont Office Realty Trust Representative Chicago Properties 35 W. Wacker Drive Chicago, IL Windy Point I & II 1600 McConnor Parkway Schaumburg, IL AON Center 200 East Randolph Drive Chicago, IL Two Pierce Place Itasca, IL |
 © 2007 Piedmont Office Realty Trust, Inc. Piedmont Office Realty Trust Representative Southern Region Properties Las Colinas Corporate Center I & II 6363 North State Hwy. 161 Irving, TX 6011 & 6021 Connection Drive Irving, TX Braker Pointe III 10801 North MoPac Expressway Austin, TX Glenridge Highlands II 5565 Glenridge Connector Atlanta, GA 2120 West End Avenue Nashville, TN |
 © 2007 Piedmont Office Realty Trust, Inc. Piedmont Office Realty Trust Representative California Properties 1055 East Colorado Boulevard Pasadena, CA Nestle 800 North Brand Boulevard Glendale, CA 1901 Main Street Irvine, CA 26200 Enterprise Way Lake Forest, CA 675 Placentia Avenue Brea, CA |
 © 2007 Piedmont Office Realty Trust, Inc. Financial Highlights – Steady Growth (In Millions & % of Revenue) 2006 % 2007 % 2008 % Rental Income $431 75 $442 75 $455 74 Tenant Reimbursement 131 23 143 24 150 24 Other 9 2 8 1 17 2 Revenues, Continuing Ops 571 100 593 100 622 100 Property Ops Expenses -198 35 -212 35 -221 36 Net Int, Depr & Amortization -222 39 -230 39 -236 38 Other Expenses - 54 9 - 39 7 - 34 5 Income, Continuing Ops 97 17 112 19 131 21 Discontinued Ops Income 9 1 0 Depr & Amortization 170 173 164 Other 0 -1 0 FFO $276 48 $285 48 $295 48 FFO/Share $0.60 $0.59 $0.62 Note: Gains/Losses on sales of assets are excluded from Income from Continuing Operations
and from FFO |
 © 2007 Piedmont Office Realty Trust, Inc. Selected Financial Highlights (fiscal year, values in millions, except per share data) 2006 2007 2008 • Results of Operations – Revenues $571 $593 $622 – Funds from Operations $276 $285 $295 – Property Net Operating Income $343 $361 $379 – Net Income $133 $134 $131 • Per Diluted Common Share – Funds from Operations $0.60 $0.59 $0.62 – Net Income $0.29 $0.28 $0.27 – Dividends Paid $0.59 $0.59 $0.59 • Financial Position – Total Assets $4,451 $4,580 $4,557 – Stockholders’ Equity $2,851 $2,880 $2,697 |
 © 2007 Piedmont Office Realty Trust, Inc. Tenant Base Tenant Diversification (as of March 31, 2009) 1 Rating is for parent company, Public is Groupe SA 2 Kirkland & Ellis is ranked # 7 by The America Lawyer’s 2008 AmLaw 100 Rankings 3 Winston & Strawn is ranked # 34 by The America Lawyer’s 2008 AmLaw 100 Rankings 4 Rating is for parent company, Omnicom Group Tenant Name (Ranked by % of AGR) Annualized Gross Rental Revenues ($000's) Percentage of Annualized Gross Rental Revenues S&P Credit Rating US Government (11 agencies) 60,974 11.2% AAA BP Corporation 25,637 4.7% AA Leo Burnett (Publicis) 1 21,353 3.9% BBB+ State of New York 20,307 3.7% AA Nestle 18,677 3.4% AA US Bancorp 17,548 3.2% A+ Sanofi-Aventis 17,270 3.2% AA- Kirkland & Ellis 2 15,537 2.8% N/A Independence Blue Cross 15,185 2.8% N/A Winston & Strawn 3 14,838 2.7% N/A Zurich American 10,593 1.9% AA- DDB Needham (Omnicom) 4 9,917 1.8% A- The Shaw Group 9,966 1.8% BB+ Lockheed Martin 8,538 1.6% A- State Street Bank 8,882 1.6% AA- Other 269,968 49.7% 545,190 100.0% |
 © 2007 Piedmont Office Realty Trust, Inc. Real Estate Diversification |
 © 2007 Piedmont Office Realty Trust, Inc. Geographic Diversification Percentage of annualized gross rental revenues (as of March 31, 2009)
|
 © 2007 Piedmont Office Realty Trust, Inc. Industry Diversification Percentage of annualized gross rental revenues (as of March 31, 2009) for all industries representing 3% or greater |
 © 2007 Piedmont Office Realty Trust, Inc. Lease Expiration Schedule Percentage of annualized gross rental revenues (as of March 31, 2009)
|
 © 2007 Piedmont Office Realty Trust, Inc. Leverage |
 © 2007 Piedmont Office Realty Trust, Inc. Capital Structure/Risk Ratios Equity/Debt: As of March 31, 2009 Leverage 34% Enterprise Value $5.08 b Equity (Using Dec. 31, 2008’s $7.40 valuation) $3.57 b Unsecured Debt $0.36 b Secured Debt $1.15 b Total Debt $1.51 b Percentage of Estimated Net Value Of Assets Unencumbered 47% 1 Excludes eight unconsolidated joint-venture properties. 53% 47% Encumbered Unencumbered 66% 34% Equity Debt 1 24% 76% Secured Debt Unsecured Debt |
 © 2007 Piedmont Office Realty Trust, Inc. Leverage Ratios Piedmont (Based on Dec 31, 2008 estimated NAV of $7.40 per
share) 34% Publicly Traded REIT Office Sector Average 61% All Publicly Traded REIT Sectors Average 56% Ratios Fixed Charge Coverage Ratio 4.9 Interest Expense Coverage 5.2 Ratings: Standard & Poors BBB Moody’s Baa3 Leverage Ratio 1 1 Total liabilities as of March 31, 2009 as a percentage of most recent estimated net value of assets. 2 Source: Green Street Advisors, Inc. May 31, 2009 2 2 |
 © 2007 Piedmont Office Realty Trust, Inc. Debt Maturities $695 $45 $140 $168 $105 $250 $113 2009 2010 2011 2012 2013 2014 2015 2016 2017 Secured debt Unsecured debt Debt maturity schedule as of March 31, 2009 ($ in millions) 1 1 37% LTV 41% LTV 50% LTV 68% LTV 58% LTV 2 2 2 2 2 1 The schedule assumes one-year extensions for the $250 Million Unsecured Term Loan and for the $500 Million Unsecured Line of Credit. 2 Based upon December 31, 2008 estimated net value of assets. |
 © 2007 Piedmont Office Realty Trust, Inc. Execution of Investment Strategy |
 © 2007 Piedmont Office Realty Trust, Inc. Execution of Investment Strategy • Strive to produce attractive risk adjusted returns • Expense management/strong stewardship • Capitalize on (selective) strategic investment opportunities • Create an attractive liquidity event (while keeping all options open) as soon as practical |
 © 2007 Piedmont Office Realty Trust, Inc. • Acquired December 2000 • Sysco Corporation leased 106,516 SF through September 2008 • Shaw Group leased 206,048 SF through December 2010 • Sysco started construction on a corporate campus in 2005 to consolidate operations • Shaw Group executed an early renewal and expansion in 2008 for the entire building through December 2018 • Shaw Group renewal and expansion maintains 100% occupancy and eliminates downtime 1430 Enclave Parkway, Houston, TX Effective negotiations extend lease term and maintain 100% occupancy Houston, TX 312,564 SF $45mm Purchase Price |
 © 2007 Piedmont Office Realty Trust, Inc. • Acquired August 2003 • Originally 76% leased to Cingular through December 2010 • AT&T acquired Cingular in 2006 and exercised termination option effective December 2008 • First Data Corp consolidating operations from Denver and Omaha • Executed lease with First Data Corp for 183,375 SF through February 2020 • First Data lease backfills nearly 60% of terminated space with little downtime 5565 Glenridge Connector, Atlanta, GA Aggressive marketing maximizes occupancy and limits downtime Atlanta, GA 406,241 SF $84mm Purchase Price |
 © 2007 Piedmont Office Realty Trust, Inc. • Kirkland & Ellis lease for 497,800 SF expires in December 2011 • KPMG leased 260,641 SF of the Kirkland & Ellis space through August 2027 • Federal Home Loan Bank of Chicago subleased 63,402 SF through December 2013 and converts to a direct lease through December 2024 • Microsoft leased 78,163 SF through October 2019, absorbing 3% of vacant space • Increased occupancy from 88% to 93% and reduced rollover risk Aon Center, 200 East Randolph Drive, Chicago, IL Strong landlord balance sheet attracts new tenants Chicago, IL 2,678,252 SF $465.2mm Purchase Price |
 © 2007 Piedmont Office Realty Trust, Inc. Performance |
 © 2007 Piedmont Office Realty Trust, Inc. Distributions to Stockholders since Inception to June 15, 2009 (in Millions) • Dividend Income $1,927 • Special Capital Distributions 749 • Redemptions of Stock 954 • Total Distributions $3,630 |
 © 2007 Piedmont Office Realty Trust, Inc. Investor Payback on Initial Capital Outlay 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2004 2003 2002 2001 2000 1999 Investment Year Note: Analysis assumes all shares are purchased on the first day of any given Investment
Year. Percentage of Initial Outlay Paid Back Through March 31, 2009 |
 © 2007 Piedmont Office Realty Trust, Inc. Investor Performance Comparison – 1999 and 2004 Investor Compound Annual Growth Rate of Piedmont vs. Other Indices Over a 5-Year and 10-Year Horizon -10% -5% 0% 5% 10% 15% Piedmont NAREIT (Office Only) S&P 500 BC Agg Bond Index Note: Piedmont returns are net of investment management fees. 4/1/99 to 3/31/09 4/1/04 to 3/31/09 |
 © 2007 Piedmont Office Realty Trust, Inc. Recent Decisions |
 © 2007 Piedmont Office Realty Trust, Inc. Recent Decisions By Piedmont Board • Estimated net asset value reduced from $8.70 to $7.40 • Dividend reduced from $0.5868 to $0.42 per share per annum • Reset DRP pricing – 95% of NAV ($7.03) • Reset SRP pricing – lower of cost or 95% of NAV ($7.03) • Limited SRP to $100 million in 2009 – which approximates proceeds from the dividend reinvestment program |
 © 2007 Piedmont Office Realty Trust, Inc. Determination of Estimated Net Asset Value • By prospectus, update valuations each year • Average cost/share = $8.38 (original cost – return of capital) • Valuation to date: September 30, 2005 $8.70 September 30, 2006 $8.93 December 31, 2007 $8.70 December 31, 2008 $7.40 • Hired outside appraisal firm to value all properties • Take estimated current value of properties, adjust debt and receivables to estimated fair value at Dec. 31, 2008, add remaining balance sheet items and divide by number of shares outstanding at Dec. 31, 2008. |
 © 2007 Piedmont Office Realty Trust, Inc. Dividend Cuts • 65 of 120 US publicly traded REITs have reduced dividends by an average of 62% since 2008 • 10 of 17 office REITs have reduced dividends by average of 54% • Other industries – many blue chip companies have cut dividends drastically (JP Morgan, GE, Bank of America, Dow Chemical, Alcoa, Pfizer – all over 50%) (Source- Morgan Keegan) |
 © 2007 Piedmont Office Realty Trust, Inc. Reasons For Dividend Reduction • Match expected cash flow production during heavier lease expiration period • Provide for capital needed for lease activity in future years • Proactively provide sufficient liquidity for future debt maturities • Enhance the stability of investment grade rating • Provide funding for highly selective acquisitions |
 © 2007 Piedmont Office Realty Trust, Inc. Looking Ahead |
 © 2007 Piedmont Office Realty Trust, Inc. Expectations and Strategy Near Term: • Slower leasing environment for office sector • Lower occupancy and FFO for most office REIT’s • Conserve cash position to retain and attract quality tenants and pay down debt Liquidity Options: • Continue to evaluate all options (IPO, public listing, merger, sale, orderly
liquidation, etc.) • Also evaluate new equity and debt raising options to provide for future potential redemptions |
 © 2007 Piedmont Office Realty Trust, Inc. Expectations and Strategy Capital Structure: • Maintain low leverage strategy • Monitor debt maturities for opportunities to refinance or raise new equity Portfolio Management: • Recycle capital out of lower growth properties/markets into higher potential return office property investments • Position company to take advantage of potential for higher inflation period • Aggressively pursue creditworthy tenants for vacancies and existing tenants for renewals |