View:
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): 09/22/2009
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 September 22, 2009, Piedmont Office Realty Trust, Inc. (the “Registrant”) updated the corporate presentation attached as Exhibit 99.1 to this current report on Form 8-K to include current information as of June 30, 2009 (unless otherwise noted within the presentation). 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, or prior to, 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: September 22, 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 |
 © 2009 Piedmont Office Realty Trust, Inc. 1 Corporate Presentation Donald A. Miller, CFA President & CEO Exhibit 99.1 |
 2 © 2009 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 June 30, 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. |
 3 © 2009 Piedmont Office Realty Trust, Inc. History |
 4 © 2009 Piedmont Office Realty Trust, Inc. Portfolio Characteristics As of June 30, 2009 Square Feet (in thousands) 1 21,012 # of Properties 1 76 Weighted Average Lease Term Remaining (years) 1 5.5 % Leased 1 90% % Leased – Office Building Industry Average 2 83% Leverage Ratio (estimated NAV basis) 3 35% Leverage Ratio – Publicly Traded REIT Office Average 4 51% 1 Excludes eight unconsolidated joint-venture properties 2 Source: Jones Lang LaSalle Q2 2009 3 Calculated as total liabilities / most recent estimated net value of assets 4 Source: SNL, August, 2009 |
 5 © 2009 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) |
 6 © 2009 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 |
 7 © 2009 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 |
 8 © 2009 Piedmont Office Realty Trust, Inc. Foundations of Conservative Real Estate Investment Strategy • High-quality properties • Real estate diversification • Lower leverage • Stable income stream |
 9 © 2009 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 |
 10 © 2009 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 |
 11 © 2009 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 |
 12 © 2009 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 |
 13 © 2009 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 |
 14 © 2009 Piedmont Office Realty Trust, Inc. Financial Highlights (In Millions) FY2006 FY2007 FY2008 6 mo’09 Rental Income $431
$442 $455 $225 Tenant Reimbursement 131 143 150 76 Other 9 8 17 2 Revenues, Continuing Ops 571 593 622
303 Property Ops Expenses -198 -212
-221 -114 Net Int, Depr & Amortization -222 -230
-236 -116 Other Expenses - 54 - 39 - 34 - 16 Income, Continuing Ops 97
112 131 57 Discontinued Ops Income 9
1 0 0 Depr & Amortization 170
173 164
80 Other 0
-1 0
0 FFO $276 $285 $295 $137 FFO/Share $0.60
$0.59 $0.62 $0.29
Note: Gains/Losses on sales of assets are excluded from Income from Continuing
Operations and from FFO |
 15 © 2009 Piedmont Office Realty Trust, Inc. Tenant Base Tenant Diversification (as of June 30, 2009) ** Various expirations ranging from March 2011 to May 2018 1 Rating is for parent company, Publicis 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) US Government (11 agencies) BP Corporation Leo Burnett (Publicis) 1 State of New York Nestle US Bancorp Sanofi-Aventis Kirkland & Ellis 2 Independence Blue Cross Winston & Strawn 3 Zurich American DDB Needham (Omnicom) 4 The Shaw Group Lockheed Martin State Street Bank Other Annualized Gross Rental Revenues ($000's) Percentage of Annualized Gross Rental Revenues S&P Credit Rating 11.3% AAA 4.7% AA 3.9% BBB+ 3.7% AA 3.4% AA 3.2% A+ 3.2% AA- 2.9% N/A 2.8% N/A 2.7% N/A 2.0% AA- 1.9% A- 1.8% BB+ 62,029 25,637 21,353 20,170 18,695 17,548 17,270 15,559 15,185 14,881 10,593 10,075 9,966 8,538 1.6% A- 8,882 1.6% A+ 266,420 49.3% 542,801 100.0% Expiration Date ** December 2013 March 2019 December 2012 November 2015 May 2014 March 2012 December 2011 November 2023 December 2024 August 2011 June 2018 December 2018 January 2014 March 2011 Various |
 © 2009 Piedmont Office Realty Trust, Inc. 16 Real Estate Diversification |
 17 © 2009 Piedmont Office Realty Trust, Inc. 25% 19% 17% 6% 6% 5% 4% 4% 3% 2% 2% 1% 1% 1% 4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 22.0% 24.0% 26.0% 28.0% 30.0% Geographic Diversification Percentage of annualized gross rental revenues (as of June 30, 2009)
|
 18 © 2009 Piedmont Office Realty Trust, Inc. Industry Diversification Percentage of annualized gross rental revenues (as of June 30, 2009) for all industries representing 3% or greater |
 19 © 2009 Piedmont Office Realty Trust, Inc. 4% 9% 16% 19% 12% 8% 7% 5% 2% 5% 13% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% Lease Expiration Schedule Percentage of annualized gross rental revenues (as of June 30, 2009)
|
 © 2009 Piedmont Office Realty Trust, Inc. 20 Leverage |
 21 © 2009 Piedmont Office Realty Trust, Inc. Capital Structure/Risk Ratios As of June 30, 2009 Leverage 35% Enterprise Value (1) $5.1 b Equity (1) $3.5 b Unsecured Debt $0.4 b Secured Debt $1.2 b Total Debt $1.6 b Percentage of Estimated Value of Assets Unencumbered (2) 47% 1 Using Dec. 31, 2008’s valuation 2 Excludes eight unconsolidated joint-venture properties. 53% 47% Encumbered Unencumbered 65% 35% Equity Debt 74% 26% Secured Debt Unsecured Debt |
 22 © 2009 Piedmont Office Realty Trust, Inc. Leverage Ratios Piedmont (Based on Dec. 31, 2008 estimated NAV of $7.40 per share) 35% Publicly Traded REIT Office Sector Average ² 51% All Publicly Traded REIT Sectors Average ² 48% 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 June 30, 2009 as a percentage of most recent estimated net value
of assets. 2 Source: SNL, August 2009. |
 23 © 2009 Piedmont Office Realty Trust, Inc. Debt Maturities $695 $45 $140 $168 $105 $250 $158 2009 2010 2011 2012 2013 2014 2015 2016 2017 Secured debt Unsecured debt 1 The schedule assumes one-year extensions for the $250 Million Unsecured Term Loan and for the $500 Million Unsecured Line of Credit. 2 Based upon December 31, 2008 estimated net value of assets. Debt maturity schedule as of June 30, 2009 ($ in millions) 1 1 37% LTV 2 41% LTV 2 50% LTV 2 68% LTV 2 58% LTV 2 |
 © 2009 Piedmont Office Realty Trust, Inc. 24 Execution of Investment Strategy |
 25 © 2009 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 |
 26 © 2009 Piedmont Office Realty Trust, Inc. Houston, TX 312,564 SF $45mm Purchase Price • 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
|
 27 © 2009 Piedmont Office Realty Trust, Inc. Atlanta, GA 406,241 SF $84mm Purchase Price • 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
|
 28 © 2009 Piedmont Office Realty Trust, Inc. Chicago, IL 2,678,252 SF $465.2mm Purchase Price • 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 |
 © 2009 Piedmont Office Realty Trust, Inc. 29 Performance |
 30 © 2009 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 |
 31 © 2009 Piedmont Office Realty Trust, Inc. Investor Payback on Initial Capital Outlay Note: Analysis assumes all shares are purchased on the first day of any given Investment Year. Percentage of Initial Outlay Paid Back Through June 30, 2009 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2004 2003 2002 2001 2000 1999 Investment Year |
 32 © 2009 Piedmont Office Realty Trust, Inc. Investor Performance Comparison – 1999 and 2004 Investor 5.67% 4.08% 3.73% -3.87% -2.22% -2.24% 5.98% 5.01% -6% -4% -2% 0% 2% 4% 6% 10-Year Hold 5-Year Hold Piedmont NAREIT (Office Only) S&P 500 BC Agg Bond Index Note: Piedmont returns are net of investment management fees. 7/1/99 to 6/30/09 7/1/04 to 6/30/09 Compound Annual Return of Piedmont vs. Other Indices Over a 5-Year and 10-Year
Hold Period |
 © 2009 Piedmont Office Realty Trust, Inc. 33 Valuation |
 34 © 2009 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. |
 © 2009 Piedmont Office Realty Trust, Inc. 35 Strategic Considerations |
 36 © 2009 Piedmont Office Realty Trust, Inc. Reasons For Dividend Reduction in March ‘09 • 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 |
 37 © 2009 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 |
 38 © 2009 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 |