Piedmont Office Realty Trust Reports Fourth Quarter and Annual 2020 Results
Highlights for the Quarter and Year Ended
- The timing of dispositions over the last two years and the recording of related gains, significantly impacted the results of the quarter and year ended
December 31, 2020. The Company reported net income applicable to common stockholders of $22.6 million, or $0.18per diluted share, and $232.7 million, or $1.85per diluted share, for the quarter and year ended December 31, 2020, respectively, as compared with $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.
- Piedmont reported an approximate 6% year over year increase in Core Funds From Operations which eliminates the effect of gains and losses on dispositions, with
$0.46per diluted share and $1.89per diluted share for the quarter and year ended December 31, 2020, respectively, as compared to $0.46per diluted share and $1.79per diluted share for the quarter and year ended December 31, 2019, respectively.
- The Company completed 1.1 million square feet of leasing during the year ended
December 31, 2020, including approximately 189,000 square feet during the fourth quarter.
- Piedmont recognized a 3.5% and 10.2% roll up in cash and accrual rents, respectively, for the year ended
December 31, 2020with a 2.2% roll down and 5.3% roll up in cash and accrual rents, respectively, for the quarter ended December 31, 2020on executed leases for space vacant one year or less.
- The Company collected over 99% of billed tenant receivables for the year ended
December 31, 2020.
- During the fourth quarter, Piedmont sold a portfolio consisting of its final three assets located in New Jersey:
600 Corporate Driveand 200 and 400 Bridgewater Crossing, for approximately $130 million, or $176per square foot, resulting in a gain of $14.6 million;
- The Company acquired
222 South Orange Avenueduring the fourth quarter. The approximately 127,000 square foot office building, which is connected to Piedmont's 200 South Orange Avenueoffice tower located in downtown Orlando, FL, was acquired for $20 million, or $157per square foot.
- During the fourth quarter, 2.2 million shares of the Company's common stock were repurchased at an average price of
Commenting on fourth quarter and annual 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 gains on sale and impairment loss mentioned above (as well as depreciation and amortization), were both
The per share results for the fourth quarter and the year of 2020 include the repurchase of approximately 2.2 million shares of the Company's common stock during the fourth quarter at an average price of
Total revenues were
Property operating costs were
General and administrative expense was
Results for the Year ended
Piedmont recognized net income applicable to common stockholders for the year ended
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 per diluted share, which further removes the non-recurring expenses mentioned in the previous paragraph, was
Total revenues were
Property operating costs were
Results for the year ended
During the three months ended
Atlanta: Powerplan, Inc.renewed approximately 34,000 square feet at Galleria 300 through 2028.
Washington, D.C.: CenturyLink Communications, LLCrenewed approximately 25,000 square feet at 4250 North Fairfax through 2026.
- In Minneapolis:
The Moscoe Group, Increnewed approximately 24,000 square feet at Crescent Ridge Center II through 2026.
Dallas: C-III Capital Partners, LLCsigned a new lease for approximately 10,000 square feet at 6031 Connection Drive.
Leases executed during the fourth quarter for recently occupied space reflected a 2.2% roll down and 5.3% roll up in cash and accrual rents, respectively. For the year, leases executed reflected an overall roll up of 3.5% and 10.2% for cash and accrual basis rents, respectively.
Other than the
Same Store Net Operating Income ("Same Store NOI") decreased 1.7% and 0.2% on a cash and accrual basis, respectively, for the year ended
Details outlining Piedmont's largest upcoming lease commencements and expirations, the status of certain major leasing activity and a schedule of the largest lease abatements can be found in the Company's quarterly supplemental information package available at www.piedmontreit.com.
During the three months ended
Also during the three months ended
Finally, during the three months ended
First Quarter 2021 Dividend Declaration
Guidance for 2021
While the longer-term consequences on the economy and our tenants as a result of the COVID-19 pandemic continue to be unknown, the approval and distribution of vaccines create the opportunity for business to return to more normal activity over the course of 2021. Our projections for 2021 include the assumption of a gradual ramping up of business over the year with a return to a more typical state of operations during the second half of 2021, and anticipate Same Store NOI growth in the 3-5% range.
Notwithstanding the uncertain economic backdrop that currently remains, Piedmont has a strong, diversified tenant base, of which a majority is investment grade quality, that resulted in the collection of over 99% of our scheduled rent payments during the year ended
The following financial guidance for calendar year 2021 is based upon management's assumptions, estimates and expectations at this time. This financial guidance does not include the effects of any potential acquisition or disposition activity that may be completed during the year.
|(in millions, except per share data)||Low||High|
|NAREIT FFO and Core FFO applicable to common stock||$||231||$||244|
|NAREIT FFO and Core FFO per diluted share||$||1.86||$||1.96|
These estimates reflect management's view of current market conditions and incorporate certain economic and operational assumptions and projections, including those related to the pace and strength of the economic recovery from the COVID-19 pandemic. Actual results could differ from these estimates. Note that individual quarters may fluctuate on both a cash basis and an accrual basis due to the timing of the business recovery from the COVID-19 pandemic, the timing of lease commencements and expirations, abatement periods, 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 or other forward-looking statements. The above guidance is based on information available to management as of the date of this supplemental report. Actual results could differ materially from these estimates based on a variety of factors as discussed under "Forward-Looking Statements" below.
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
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: the assumption that business will gradually return to a more typical state of operations over the course of 2021; and the Company's estimated range of Net Income, Depreciation, Amortization, NAREIT FFO/Core FFO and NAREIT FFO/Core FFO per diluted share for the year ending
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 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, tenants' operations and ability to pay lease obligations, demand for office space, and the costs of operating our assets; the adequacy of our general reserve related to tenant lease-related assets established as a result of the COVID-19 pandemic, as well as the impact of any increase in this reserve or the establishment of any other reserve in the future; 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, civil unrest, 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; uninsured losses or losses in excess of our insurance coverage, and our inability to obtain adequate insurance coverage at a reasonable cost; 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 interest rates and changes in the method pursuant to which the LIBOR rates are determined and the phasing out of LIBOR after 2021; high mortgage rates which could affect our ability to finance or refinance properties; 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.