Piedmont Office Realty Trust Reports First Quarter 2020 Results
Highlights for the Quarter Ended
- Reported net income applicable to common stockholders of
$8.7 million, or $0.07per diluted share, for the quarter ended March 31, 2020, as compared with $50.2 million(which included a $37.9 milliongain on sale of real estate asset), or $0.40per diluted share, for the quarter ended March 31, 2019;
- Achieved Core Funds From Operations ("Core FFO") of
$0.47per diluted share for the quarter ended March 31, 2020as compared to $0.45for the quarter ended March 31, 2019;
- Completed approximately 417,000 square feet of leasing, including approximately 120,000 square feet of new tenant leasing;
- Reported an approximately 5.0% and 15.4% roll up in cash and accrual rents, respectively, on leases executed during the quarter for space vacant one year or less;
- Reported a 2.2% and 4.2% increase in the current quarter's Same Store NOI-Cash Basis and Same Store NOI-Accrual Basis, respectively, as compared to the quarter ended
March 31, 2019;
- Completed the acquisition of the
Dallas Galleria Office Towers, a 1.4 million square foot project plus a 1.9-acre developable land parcel located in Dallas, TX, for approximately $396 million;
- Entered into a binding contract to sell
1901 Market Streetin Philadelphia, PAfor $360 million; and,
- Entered into a
$300 millionunsecured term loan and used the proceeds to pay down its $500 millionline of credit.
Commenting on the quarter's results,
Results for the Quarter ended
Piedmont recognized net income applicable to common stockholders for the three months ended
Funds From Operations ("FFO") and Core FFO, which remove the impact of the gain on sale mentioned above, as well as depreciation and amortization, were both
Total revenues and property operating costs were
During the three months ended
Boston: Advanced Micro Devices, Inc. renewed to 2028 approximately 107,000 square feet at 90 Central;
Orlando: Greenberg Traurig. P.A. renewed to 2031 approximately 37,000 square feet at CNL Center I and at 200 South Orange Avenue, Jones Lang LaSalle Americas, Inc.signed a renewal and expansion to 2025 totaling approximately 20,000 square feet;
Washington: Association for Unmanned Vehicle Systems Internationalsigned a new lease to 2030 for approximately 15,000 square feet at 3100 Clarendon Boulevardand Cavan Solutions, Inc.signed a new lease to 2028 for approximately 10,000 square feet at 400 Virgina Avenue;
Dallas: Starr Indemnity and Liability Co.signed a renewal and expansion totaling approximately 14,000 square feet through 2029 at One Lincoln Park;
- In Minneapolis: McGrann Shea Carnival Straughn and Lamb renewed approximately 13,000 square feet to 2025 at US Bancorp Center; and
Chicago: Kiewit Infrastructure Companysigned a new lease to 2031 for approximately 13,000 square feet at Two Pierce Place.
Same Store NOI ("SSNOI") increased 2.2% and 4.2% on a cash and accrual basis, respectively, for the three months ended
Transactional and Financing Update
As previously announced, during the three months ended
The Galleria is a 3.7 million square foot master-planned, mixed-use development with unmatched connectivity to the
Also during the three months ended
Finally, during the three months ended
Second Quarter 2020 Dividend Declaration
Impact of COVID-19 on Guidance for 2020
Since the duration and severity of the COVID-19 pandemic and the longer-term consequences on the economy and our tenants are unknown at this time, the Company is withdrawing its guidance for 2020. That said, Piedmont has a strong, diversified tenant base, a majority of which is investment grade quality. Additionally, the Company has a prudent balance sheet with excellent liquidity, including approximately
- New tenant leasing activity during April has slowed and the Company believes this trend will continue throughout the quarter, likely pushing all “new tenant” leasing goals out at least a quarter, which will modestly lower net operating income (“NOI”) for 2020 by approximately
$1.5 million, and lower our originally anticipated year end leased percentage.
- Much of Piedmont’s transient parking income for the second quarter will not occur and will reduce NOI by approximately
- With respect to retail tenant income, which is about 1% of the Company’s total 2020 revenues, retail NOI is estimated to decline by approximately
- To date, approximately 96% of April’s rents have been collected and only a limited number of the remaining tenants that have yet to pay April’s rents are requesting deferral of second quarter rents.
- As of this time, the Company has amended lease terms for tenants which will defer approximately
$1 millionof rents per month for an average of three months, or in total about one-half of a percent of annualized revenues.
- While the Company is not aware of other tenant situations that would indicate material reductions in collections in future month, it does not believe the impact of the pandemic on subsequent months’ rent collections can be reasonably estimated at this time.
These identified impacts of the COVID-19 pandemic on net operating income during 2020 equate to approximately
The Company will reevaluate guidance once current “shelter-in-place” orders that are in effect for all of its operating markets are lifted and the longer-term consequences of the COVID-19 pandemic on the economy and our tenants can more thoroughly be considered.
Non-GAAP Financial Measures
To supplement the presentation of the Company’s financial results prepared in accordance with
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.
Conference Call Information
Piedmont has scheduled a conference call and an audio web cast for
Quarterly supplemental information as of and for the period ended
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: whether the sale of
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: actual or threatened public health epidemics or outbreaks, such as the novel coronavirus (COVID-19) pandemic that the world is currently experiencing, and governmental and private measures taken to combat such health crises, which may affect our personnel, tenants, and the costs of operating our assets; economic, regulatory, socioeconomic changes, 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 specifically the seven markets in which we primarily operate where we have high concentrations of our annualized lease revenue; lease terminations, lease defaults, or changes in the financial condition of our tenants, particularly by one of our large lead tenants; adverse market and economic conditions, including any resulting impairment charges on both our long-lived assets or goodwill resulting therefrom; 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 regulatory restrictions to which REITs are subject and 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 and disposition of properties, many of which risks and uncertainties may not be known at the time of acquisition or disposition; development and construction delays and resultant increased costs and risks; our real estate development strategies may not be successful; future acts of terrorism or armed hostilities 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, including an increased risk of default by government tenants during periods in which state or federal governments are shut down or on furlough; significant price and volume fluctuations in the public markets, including on the exchange which we listed our common stock; changes in the method pursuant to which the LIBOR rates are determined and the potential phasing out of LIBOR after 2021; 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; changes in the financial condition of our tenants directly or indirectly resulting from geopolitical developments that could negatively affect international trade, including the uncertainty surrounding the United Kingdom’s withdrawal from the
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.
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Source: Piedmont Office Realty Trust, Inc.