Piedmont Office Realty Trust Reports Fourth Quarter and Annual 2019 Results
Highlights for the Quarter and Year Ended
- Reported net income applicable to common stockholders of
$162.5 million, or $1.29per diluted share, and $229.3 million, or $1.82per diluted share, for the quarter and year ended December 31, 2019, respectively, as compared with $45.4 million, or $0.35per diluted share, and $130.3 million, or $1.00per diluted share, for the quarter and year ended December 31, 2018, respectively.
- Achieved Core Funds From Operations ("Core FFO") of
$0.46and $1.79per diluted share for the quarter and year ended December 31, 2019, respectively.
- Completed approximately 867,000 square feet of leasing during the quarter ended
December 31, 2019, including the 520,000 square foot renewal and expansion of one of the Company's largest tenants, the State of New Yorkat 60 Broad Streetin New York City, bringing total leasing for the year to 2.3 million square feet.
- Reported an approximately 7.4% and 23.2% roll up in cash and accrual rents, respectively, on executed leases for space vacant one year or less for the quarter ended
December 31, 2019and a 9.8% and a 21.6% roll up in cash and accrual rents, respectively, on executed leases for space vacant one year or less for the year ended December 31, 2019.
- Reported an 8.2% and 5.2% increase in Same Store NOI-Cash Basis and Same Store NOI - Accrual Basis, respectively, for the quarter ended
December 31, 2019, as compared to the quarter ended December 31, 2018and a 5.7% and 2.5% increase in Same Store NOI-Cash Basis and Same Store NOI - Accrual Basis, respectively, for the year ended December 31, 2019, as compared to the year ended December 31, 2018.
- During the quarter ended
December 31, 2019, completed the sale of 500 West Monroe Street, a 46-story, approximately 967,000 square foot, 100% leased, trophy office building located in the West Loop submarket of downtown Chicago, ILfor a gross sales price of $412 million, or $426psf, which resulted in the recognition of a gain on sale of real estate assets of approximately $158 millionduring the fourth quarter.
- Entered into a binding contract to acquire a 1.4 million square foot project located in
Dallas, TXfor approximately $400 million. The transaction is expected to close during the first quarter of 2020. It will be initially funded using the Company's $500 millionline of credit and ultimately is expected to be largely funded through the disposition of 1901 Market Streetin Philadelphia, PA.
Commenting on the quarter's results,
Results for the Quarter ended
Funds From Operations ("FFO") and Core FFO, which remove the impact of the gains on sale and impairment loss mentioned above, as well as depreciation and amortization, were both
Per share results were also favorably impacted by an approximately 2.5 million share decrease in the Company's weighted average shares outstanding for the three months ended
Total revenues and property operating costs were
Results for the Year ended
Funds From Operations ("FFO") which removes the impact of the gains on sales of real estate assets and impairment charges mentioned above (as well as depreciation and amortization), was
Core FFO, which further removes
Per share results were also favorably impacted by an approximately 4.5 million share decrease in the Company's weighted average shares outstanding for the year ended
Total revenues and property operating costs were
Current year results also reflect increased amortization expense related to intangible assets associated with the recent acquisitions of Galleria 100, 400, and 600 and higher general and administrative expense associated with increased accruals for potential performance-based equity compensation as a result of the Company's relative stock performance during the year ended
During the three months ended
Orlando: Orange County Floridarenewed approximately 49,000 square feet at 200 South Orange Avenue, and Foundry Commerial, LLCsigned a new lease for approximately 24,000 square feet at CNL Center II;
- In Minneapolis:
Cherne Contracting Corporationsigned a new lease for approximately 32,000 square feet at Norman Pointe I;
Washington: Leidos, Increnewed approximately 27,000 square feet at 400 Virginia Avenue;
Dallas: Drees Custom Homes, LPrenewed approximately 18,000 square feet at 161 Corporate Center; and,
Atlanta: Crawford Investment Council, Inc.signed a renewal and expansion totaling approximately 17,000 square feet at Galleria 600, and Southern Communications Services, Inc.renewed approximately 16,000 square feet at Glenridge Highlands One.
As previously announced, during the three months ended
First Quarter 2020 Dividend Declaration
Guidance for 2020
Based on management's expectations, the Company is introducing guidance for the year ending
|(in millions, except per share data)||Low||High|
|NAREIT FFO and Core FFO applicable to common stock||$||240||-||$||252|
|NAREIT FFO and Core FFO per diluted share||$||1.90||-||$||2.00|
These estimates reflect management's view of current market conditions and incorporate certain economic and operational assumptions and projections, including but not limited to: the acquisition of a 1.4 million square foot project in
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 expenses, 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
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
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 Company will continue to experience leasing momentum across its various markets; whether the Company's leasing activity for the year ended
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; 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; 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; changes in the method pursuant to which the LIBOR rates are determined and the potential phasing out of LIBOR; 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, including an increased risk of default by government tenants during periods in which state or federal governments are shut down or on furlough; any change in the financial condition of any of our large lead tenants; changes in the financial condition of our tenants directly or indirectly resulting from 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.