Piedmont Office Realty Trust Reports Third Quarter 2020 Results
Highlights for the Quarter Ended
- Reported net income applicable to common stockholders of
$8.9 million, or $0.07per diluted share, for the quarter ended September 30, 2020, as compared with $8.4 million, or $0.07per diluted share, for the quarter ended September 30, 2019;
- Reported Core Funds From Operations of
$0.48per diluted share for the quarter ended September 30, 2020as compared to $0.45for the quarter ended September 30, 2019;
- Completed approximately 229,000 square feet of leasing (excluding a 172,000 square foot back fill lease), with over a third related to new tenants;
- Executed leases for the quarter reflected cash rent roll ups of 6.5% and accrual rent increases of 9.1%;
- Collected approximately 99% of billed tenant receivables for the third quarter; and
- Completed inaugural "green" bond issuance -
$300 millionin aggregate principal amount of 3.15% Senior Notes due 2030 used to provide long-term financing for the acquisition of the LEED-certified Galleria Office Towersin Dallas, TX.
Subsequent to Quarter End:
- Sold a portfolio of the three remaining assets located in NJ:
600 Corporate Driveand 200 and 400 Bridgewater Crossing, for approximately $130 million, or $176per square foot;
222 South Orange Avenue, an approximately 127,000 square foot office building connected to Piedmont's 200 South Orange Avenueoffice tower located in downtown Orlando, FLfor $20 million, or $157per square foot; and
- Declared fourth quarter dividend of
Commenting on the third 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, were both
Total revenues and property operating costs were
During the three months ended
Other than the
Same Store Net Operating Income ("Same Store NOI") decreased 5.7% and increased 0.4% on a cash and accrual basis, respectively, for the three months ended
During the three months ended
Also subsequent to
Fourth Quarter 2020 Dividend Declaration
Guidance for 2020
The longer-term consequences on the economy and our tenants as a result of the COVID-19 pandemic continue to be unknown. Notwithstanding the economic backdrop, Piedmont has a strong, diversified tenant base, a majority of which is investment grade quality. During the third quarter of 2020, the Company collected approximately 99% of billed tenant receivables, net of approximately
Additional information regarding the Company's year-to-date performance, identified trends, and current expectations related to the pandemic's impact on 2020 annual performance as compared to the Company's original expectations for the year are as follows:
- While the Company has experienced an uptick in leasing tours and proposals during the third and early fourth quarter, overall “new tenant” leasing for 2020 will be less than originally expected, modestly lowering 2020 net operating income (“NOI”) by approximately
- Piedmont’s transient parking income is estimated to be lower by approximately
$2to $3 millionfor the year.
- Overall retail NOI, which comprises approximately 1% of the Company’s total 2020 revenues, is estimated to be lower by approximately
$2 millionfor the year.
- During the nine months ended
September 30, 2020, the Company has taken approximately $2.6 millionin bad debt charges against rental revenue in recognition of an increase in collectibility risk. The Company also has recorded a $4.8 milliongeneral reserve against billed and straight-line rent tenant receivables.
- Reduced operating expenses (net of tenants' share) at the Company's buildings during 2020 are anticipated to be
$3to $4 millionfor the year.
- The Company anticipates
$5 millionlower interest expense for 2020 due to lower prevailing interest rates.
- The Company anticipates
$1to $2 millionin lower general and administrative expenses for the year.
The above identified impacts of the COVID-19 pandemic on NOI during 2020 equate to a net reduction of approximately
Based on management's current expectations, the Company is reinstating guidance for the year ending
|(in millions, except per share data)||Low||High|
|Less: Gain on Sale of Real Estate Assets||(191||)||-||(192||)|
|NAREIT FFO applicable to common stock||$||229||-||$||231|
|NAREIT FFO per diluted share||$||1.81||-||$||1.83|
|Less: Loss on Early Extinguishment of Debt||9||-||9|
|Core FFO applicable to common stock||$||238||-||$||240|
|Core FFO per diluted share||$||1.88||-||$||1.90|
These estimates reflect management's view of current market conditions and incorporate the impacts and trends noted above as well as the effects of the fourth quarter acquisition and disposition activity noted above. The above guidance is based on information available to management as of the date of this release. 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
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 substantially all of the statements contained in the section labeled "Guidance for 2020" (including all statements regarding our expected results of operations for the current fiscal year).
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, 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 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 special 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 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.