Maryland | 58-2328421 | |
(State or other jurisdiction of | (IRS Employer | |
incorporation) | Identification No.) |
Piedmont Office Realty Trust, Inc. | |||||
(Registrant) | |||||
Dated: | February 7, 2018 | By: | /s/ Robert E. Bowers | ||
Robert E. Bowers | |||||
Chief Financial Officer and Executive Vice President |
• | Completed almost 900,000 square feet of leasing during the fourth quarter, resulting in approximately 20% and 25% roll ups in cash and accrual rents, respectively, and bringing total leasing for the year to over two million square feet and year-end leased percentage to approximately 90%; |
• | Due to the timing of completion of transactional activity undertaken in 2017, reported Net Loss Applicable to Common Stockholders of $(0.21) per diluted share for the quarter and Net Income Applicable to Common Stockholders of $0.92 per diluted share for the year ended December 31, 2017; |
• | Achieved Core Funds From Operations ("Core FFO") of $0.42 and $1.75 per diluted share for the quarter and year ended December 31, 2017, respectively; |
• | Reported increases of approximately 4% and 9% in Same Store NOI- Cash Basis for the quarter and year ended December 31, 2017, respectively; |
• | Acquired Norman Pointe I during the fourth quarter, an approximately 214,000 square foot, 7-story, Class-A, value-add office building located in close proximity to Piedmont's existing Minneapolis, MN assets; |
• | Sold one joint venture asset and two wholly-owned properties during the year, including Two Independence Square, one of the Company's largest Washington, D.C. assets, for an aggregate of approximately $396 million in gross proceeds; |
• | Paid down debt using net disposition proceeds from the property sales mentioned above, resulting in decreased leverage levels and substantially improved debt metrics; |
• | Repurchased 3.1 million shares for a total of $61.8 million under the Company's board-approved stock repurchase program during the year ended December 31, 2017, leaving $188 million in authorized capacity remaining under the program as of December 31, 2017; and, |
• | Entered into two binding contracts to sell a total of 14 non-strategic properties for approximately $426 million, which closed on January 4, 2018, and thereby exit four office markets. |
• | US Bancorp’s approximately 51,000 square foot expansion of its existing space at US Bancorp Center in Minneapolis, MN for 6+ years through 2024; |
• | Harvard University’s expansion of approximately 15,000 square feet and renewal of 5,000 square feet at One Brattle Square in Cambridge, MA to 2030; and |
• | Consilium Staffing, LLC’s renewal of approximately 15,000 square feet and expansion by an additional 4,000 square feet at 161 Corporate Center in Irving, TX to 2021. |
◦ | Desert Canyon 300, Phoenix, AZ |
◦ | Windy Point I and II, Schaumburg, IL |
◦ | 2300 Cabot Drive, Lisle, IL |
◦ | 1075 West Entrance Drive, Auburn Hills, MI |
◦ | Auburn Hills Corporate Center, Auburn Hills, MI |
◦ | 5301 Maryland Way, Brentwood, TN |
◦ | Suwanee Gateway One, Suwanee, GA |
◦ | 5601 Hiatus Road, Tamarac, FL |
◦ | 2001 NW 64th Street, Fort Lauderdale, FL |
◦ | Piedmont Pointe I & II, Bethesda, MD |
◦ | 1200 Crown Colony Drive, Quincy, MA |
◦ | 2120 West End Avenue, Nashville, TN |
(in millions, except per share data) | Low | High | ||||||
Net Income | $93 | - | $98 | |||||
Add: | ||||||||
Depreciation | 112 | - | 116 | |||||
Amortization | 60 | - | 64 | |||||
Less: Gain on Sale of Real Estate Assets | (39 | ) | - | (42) | ||||
NAREIT FFO applicable to Common Stock | $ | 226 | - | $ | 236 | |||
NAREIT FFO per diluted share | $1.64 | - | $1.71 | |||||
Less: Loss on Early Extinguishment of Debt / Termination of Interest Rate Swaps | $1 | - | $1 | |||||
Core FFO applicable to Common Stock | $ | 227 | - | $ | 237 | |||
Core FFO per diluted share | $1.64 | - | $1.72 |
Piedmont Office Realty Trust, Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
Unaudited (in thousands) | ||||||||
December 31, 2017 | December 31, 2016 | |||||||
Assets: | ||||||||
Real estate assets, at cost: | ||||||||
Land | $ | 544,794 | $ | 542,640 | ||||
Buildings and improvements | 3,203,229 | 3,142,482 | ||||||
Buildings and improvements, accumulated depreciation | (785,206 | ) | (700,304 | ) | ||||
Intangible lease assets | 176,950 | 208,847 | ||||||
Intangible lease assets, accumulated amortization | (99,145 | ) | (109,152 | ) | ||||
Construction in progress | 11,710 | 34,460 | ||||||
Real estate assets held for sale, gross | 501,526 | 856,988 | ||||||
Real estate assets held for sale, accumulated depreciation and amortization | (169,116 | ) | (244,269 | ) | ||||
Total real estate assets | 3,384,742 | 3,731,692 | ||||||
Investments in and amounts due from unconsolidated joint ventures | 10 | 7,360 | ||||||
Cash and cash equivalents | 7,382 | 6,992 | ||||||
Tenant receivables, net of allowance for doubtful accounts | 12,139 | 26,494 | ||||||
Straight line rent receivables | 163,160 | 136,862 | ||||||
Restricted cash and escrows | 1,373 | 1,212 | ||||||
Prepaid expenses and other assets | 22,517 | 23,281 | ||||||
Goodwill | 98,918 | 98,918 | ||||||
Interest rate swaps | 688 | — | ||||||
Deferred lease costs, less accumulated amortization | 261,907 | 276,725 | ||||||
Other assets held for sale, net | 47,131 | 58,632 | ||||||
Total assets | $ | 3,999,967 | $ | 4,368,168 | ||||
Liabilities: | ||||||||
Unsecured debt, net of discount and unamortized debt issuance costs | $ | 1,535,311 | $ | 1,687,731 | ||||
Secured debt, net of premiums and unamortized debt issuance costs | 191,616 | 332,744 | ||||||
Accounts payable, accrued expenses, dividends payable, and accrued capital expenditures | 216,653 | 165,410 | ||||||
Deferred income | 29,582 | 28,406 | ||||||
Intangible lease liabilities, less accumulated amortization | 38,458 | 47,537 | ||||||
Interest rate swaps | 1,478 | 8,169 | ||||||
Other liabilities held for sale, net | 380 | 468 | ||||||
Total liabilities | 2,013,478 | 2,270,465 | ||||||
Stockholders' equity : | ||||||||
Common stock | 1,424 | 1,452 | ||||||
Additional paid in capital | 3,677,360 | 3,673,128 | ||||||
Cumulative distributions in excess of earnings | (1,702,281 | ) | (1,580,863 | ) | ||||
Other comprehensive income | 8,164 | 2,104 | ||||||
Piedmont stockholders' equity | 1,984,667 | 2,095,821 | ||||||
Non-controlling interest | 1,822 | 1,882 | ||||||
Total stockholders' equity | 1,986,489 | 2,097,703 | ||||||
Total liabilities and stockholders' equity | $ | 3,999,967 | $ | 4,368,168 | ||||
Number of shares of common stock outstanding as of end of period | 142,359 | 145,235 |
Piedmont Office Realty Trust, Inc. | |||||||||||||||
Consolidated Statements of Income | |||||||||||||||
Unaudited (in thousands, except for per share data) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
12/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | ||||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 114,729 | $ | 119,564 | $ | 475,777 | $ | 459,890 | |||||||
Tenant reimbursements | 24,371 | 23,961 | 96,711 | 93,961 | |||||||||||
Property management fee revenue | 344 | 386 | 1,685 | 1,864 | |||||||||||
Total revenues | 139,444 | 143,911 | 574,173 | 555,715 | |||||||||||
Expenses: | |||||||||||||||
Property operating costs | 55,377 | 57,496 | 220,630 | 218,934 | |||||||||||
Depreciation | 28,461 | 32,785 | 119,288 | 127,733 | |||||||||||
Amortization | 17,515 | 21,271 | 75,367 | 75,119 | |||||||||||
Impairment loss on real estate assets | 46,461 | — | 46,461 | 33,901 | |||||||||||
General and administrative | 7,880 | 5,726 | 31,130 | 29,244 | |||||||||||
Total operating expenses | 155,694 | 117,278 | 492,876 | 484,931 | |||||||||||
Real estate operating income/(loss) | (16,250 | ) | 26,633 | 81,297 | 70,784 | ||||||||||
Other income (expense): | |||||||||||||||
Interest expense | (15,463 | ) | (16,566 | ) | (68,124 | ) | (64,860 | ) | |||||||
Other income/(expense) | 429 | 454 | 657 | (13 | ) | ||||||||||
Net recoveries from casualty events | — | — | — | 34 | |||||||||||
Equity in income of unconsolidated joint ventures | (27 | ) | 8 | 3,845 | 362 | ||||||||||
Total other expense | (15,061 | ) | (16,104 | ) | (63,622 | ) | (64,477 | ) | |||||||
Income/(loss) from continuing operations | (31,311 | ) | 10,529 | 17,675 | 6,307 | ||||||||||
Gain/(loss) on sale of real estate assets | (77 | ) | 19,652 | 115,874 | 93,410 | ||||||||||
Net income/(loss) | (31,388 | ) | 30,181 | 133,549 | 99,717 | ||||||||||
Plus: Net income applicable to noncontrolling interest | 5 | 8 | 15 | 15 | |||||||||||
Net income/(loss) applicable to Piedmont | $ | (31,383 | ) | $ | 30,189 | $ | 133,564 | $ | 99,732 | ||||||
Weighted average common shares outstanding - diluted* | 144,503 | 145,764 | 145,380 | 145,635 | |||||||||||
Per Share Information -- diluted: | |||||||||||||||
Net income/(loss) applicable to common stockholders | $ | (0.21 | ) | $ | 0.21 | $ | 0.92 | $ | 0.69 | ||||||
*Number of shares of common stock outstanding as of end of period | 142,359 | 145,235 | 142,359 | 145,235 |
Piedmont Office Realty Trust, Inc. | |||||||||||||||
Funds From Operations, Core Funds From Operations and Adjusted Funds From Operations | |||||||||||||||
Unaudited (in thousands, except for per share data) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
12/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | ||||||||||||
GAAP net income/(loss) applicable to common stock | $ | (31,383 | ) | $ | 30,189 | $ | 133,564 | $ | 99,732 | ||||||
Depreciation of real estate assets(1) (2) | 28,242 | 32,597 | 118,577 | 127,129 | |||||||||||
Amortization of lease-related costs(1) | 17,499 | 21,259 | 75,327 | 75,139 | |||||||||||
Impairment loss on real estate assets | 46,461 | — | 46,461 | 33,901 | |||||||||||
(Gain)/loss on sale of real estate assets (1) | 77 | (19,652 | ) | (119,557 | ) | (93,410 | ) | ||||||||
NAREIT Funds From Operations applicable to common stock* | 60,896 | 64,393 | 254,372 | 242,491 | |||||||||||
Acquisition costs | — | 4 | 6 | 976 | |||||||||||
Net recoveries from casualty events | — | — | — | (34 | ) | ||||||||||
Core Funds From Operations applicable to common stock* | 60,896 | 64,397 | 254,378 | 243,433 | |||||||||||
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on Unsecured Senior Notes | 604 | 667 | 2,496 | 2,610 | |||||||||||
Depreciation of non real estate assets | 212 | 246 | 809 | 841 | |||||||||||
Straight-line effects of lease revenue (1) | (5,553 | ) | (6,429 | ) | (21,492 | ) | (21,544 | ) | |||||||
Stock-based and other non-cash compensation | 1,937 | 284 | 6,139 | 5,620 | |||||||||||
Net effect of amortization of below-market in-place lease intangibles (1) | (1,685 | ) | (1,385 | ) | (6,575 | ) | (5,065 | ) | |||||||
Acquisition costs | — | (4 | ) | (6 | ) | (976 | ) | ||||||||
Non-incremental capital expenditures (3) | (13,463 | ) | (12,135 | ) | (35,437 | ) | (35,568 | ) | |||||||
Adjusted funds from operations applicable to common stock* | $ | 42,948 | $ | 45,641 | $ | 200,312 | $ | 189,351 | |||||||
Weighted average common shares outstanding - diluted** | 144,503 | 145,764 | 145,380 | 145,635 | |||||||||||
Funds from operations per share (diluted) | $ | 0.42 | $ | 0.44 | $ | 1.75 | $ | 1.67 | |||||||
Core funds from operations per share (diluted) | $ | 0.42 | $ | 0.44 | $ | 1.75 | $ | 1.67 | |||||||
**Number of shares of common stock outstanding as of end of period | 142,359 | 145,235 | 142,359 | 145,235 |
Funds From Operations ("FFO"): The Company calculates FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. NAREIT currently defines FFO as net income (computed in accordance with GAAP), excluding gains or losses from sales of property and impairment losses, adding back depreciation and amortization on real estate assets, and after the same adjustments for unconsolidated partnerships and joint ventures. These adjustments can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates. FFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that FFO is helpful to investors as a supplemental performance measure because it excludes the effects of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs, which implicitly assumes that the value of real estate diminishes predictably over time. The Company also believes that FFO can help facilitate comparisons of operating performance between periods and with other REITs. However, other REITs may not define FFO in accordance with the NAREIT definition, or may interpret the current NAREIT definition differently than the Company; therefore, the Company’s computation of FFO may not be comparable to that of such other REITs. |
Core Funds From Operations ("Core FFO"): The Company calculates Core FFO by starting with FFO, as defined by NAREIT, and adjusting for gains or losses on the extinguishment of swaps and/or debt, acquisition-related expenses and any significant non-recurring items. Core FFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that Core FFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to the Company’s core business operations. As a result, the Company believes that Core FFO can help facilitate comparisons of operating performance between periods and provides a more meaningful predictor of future earnings potential. Other REITs may not define Core FFO in the same manner as the Company; therefore, the Company’s computation of Core FFO may not be comparable to that of other REITs. |
Adjusted Funds From Operations ("AFFO"): The Company calculates AFFO by starting with Core FFO and adjusting for non-incremental capital expenditures and acquisition-related costs and then adding back non-cash items including: non-real estate depreciation, straight-lined rents and fair value lease adjustments, non-cash components of interest expense and compensation expense, and by making similar adjustments for unconsolidated partnerships and joint ventures. AFFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that AFFO is helpful to investors as a meaningful supplemental comparative performance measure of our ability to make incremental capital investments. Other REITs may not define AFFO in the same manner as the Company; therefore, the Company’s computation of AFFO may not be comparable to that of other REITs. |
Piedmont Office Realty Trust, Inc. | |||||||||||||||
EBITDAre, Core EBITDA, Property Net Operating Income (Cash and Accrual), Same Store Net Operating Income (Cash and Accrual) | |||||||||||||||
Unaudited (in thousands) | |||||||||||||||
Cash Basis | Accrual Basis | ||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
12/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | ||||||||||||
GAAP net income/ (loss) applicable to common stock | $ | (31,383 | ) | $ | 30,189 | $ | (31,383 | ) | $ | 30,189 | |||||
Net income applicable to noncontrolling interest | (5 | ) | (8 | ) | (5 | ) | (8 | ) | |||||||
Interest expense | 15,463 | 16,566 | 15,463 | 16,566 | |||||||||||
Depreciation (1) | 28,454 | 32,844 | 28,454 | 32,844 | |||||||||||
Amortization (1) | 17,499 | 21,259 | 17,499 | 21,259 | |||||||||||
Impairment loss on real estate assets | 46,461 | — | 46,461 | — | |||||||||||
(Gain)/loss on sale of real estate assets (1) | 77 | (19,652 | ) | 77 | (19,652 | ) | |||||||||
EBITDAre | 76,566 | 81,198 | 76,566 | 81,198 | |||||||||||
Acquisition costs | — | 4 | — | 4 | |||||||||||
Net (recoveries)/loss from casualty events | (57 | ) | — | (57 | ) | — | |||||||||
Core EBITDA* | 76,509 | 81,202 | 76,509 | 81,202 | |||||||||||
General & administrative expenses (1) | 7,895 | 5,741 | 7,895 | 5,741 | |||||||||||
Management fee revenue | (149 | ) | (224 | ) | (149 | ) | (224 | ) | |||||||
Other income (1) | (156 | ) | (459 | ) | (156 | ) | (459 | ) | |||||||
Straight line effects of lease revenue (1) | (5,553 | ) | (6,429 | ) | |||||||||||
Amortization of lease-related intangibles (1) | (1,685 | ) | (1,385 | ) | |||||||||||
Property NOI* | 76,861 | 78,446 | 84,099 | 86,260 | |||||||||||
Net operating income from: | |||||||||||||||
Acquisitions | (5,183 | ) | (4,848 | ) | (7,056 | ) | (6,396 | ) | |||||||
Dispositions | (29 | ) | (5,527 | ) | (29 | ) | (5,719 | ) | |||||||
Other investments (2) | (891 | ) | (136 | ) | (1,135 | ) | (438 | ) | |||||||
Same Store NOI * | $ | 70,758 | $ | 67,935 | $ | 75,879 | $ | 73,707 | |||||||
Change period over period in Same Store NOI | 4.2 | % | N/A | 2.9 | % | N/A | |||||||||
Piedmont Office Realty Trust, Inc. | |||||||||||||||
EBITDAre, Core EBITDA, Property Net Operating Income (Cash and Accrual), Same Store Net Operating Income (Cash and Accrual) | |||||||||||||||
Unaudited (in thousands) | |||||||||||||||
Cash Basis | Accrual Basis | ||||||||||||||
Year Ended | Year Ended | ||||||||||||||
12/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | ||||||||||||
GAAP net income applicable to common stock | $ | 133,564 | $ | 99,732 | $ | 133,564 | $ | 99,732 | |||||||
Net income applicable to noncontrolling interest | (15 | ) | (15 | ) | (15 | ) | (15 | ) | |||||||
Interest expense | 68,124 | 64,860 | 68,124 | 64,860 | |||||||||||
Depreciation (1) | 119,386 | 127,970 | 119,386 | 127,970 | |||||||||||
Amortization (1) | 75,327 | 75,139 | 75,327 | 75,139 | |||||||||||
Impairment loss on real estate assets | 46,461 | 33,901 | 46,461 | 33,901 | |||||||||||
Gain on sale of real estate assets (1) | (119,557 | ) | (93,410 | ) | (119,557 | ) | (93,410 | ) | |||||||
EBITDAre | 323,290 | 308,177 | 323,290 | 308,177 | |||||||||||
Acquisition costs | 6 | 976 | 6 | 976 | |||||||||||
Net recoveries from casualty events | — | (34 | ) | — | (34 | ) | |||||||||
Core EBITDA* | 323,296 | 309,119 | 323,296 | 309,119 | |||||||||||
General & administrative expenses (1) | 31,186 | 29,306 | 31,186 | 29,306 | |||||||||||
Management fee revenue | (872 | ) | (1,034 | ) | (872 | ) | (1,034 | ) | |||||||
Other income (1) | (303 | ) | (458 | ) | (303 | ) | (458 | ) | |||||||
Straight line effects of lease revenue (1) | (21,492 | ) | (21,544 | ) | |||||||||||
Amortization of lease-related intangibles (1) | (6,575 | ) | (5,065 | ) | |||||||||||
Property NOI* | 325,240 | 310,324 | 353,307 | 336,933 | |||||||||||
Net operating income from: | |||||||||||||||
Acquisitions | (18,385 | ) | (7,333 | ) | (29,216 | ) | (9,175 | ) | |||||||
Dispositions | (11,431 | ) | (32,550 | ) | (11,491 | ) | (33,761 | ) | |||||||
Other investments(2) | (371 | ) | (497 | ) | (2,987 | ) | (1,311 | ) | |||||||
Same Store NOI * | $ | 295,053 | $ | 269,944 | $ | 309,613 | $ | 292,686 | |||||||
Change period over period in Same Store NOI | 9.3 | % | N/A | 5.8 | % | N/A |
Corporate Headquarters | Institutional Analyst Contact | Investor Relations |
11695 Johns Creek Parkway, Suite 350 | Telephone: 770.418.8592 | Telephone: 866.354.3485 |
Johns Creek, GA 30097 | research.analysts@piedmontreit.com | investor.services@piedmontreit.com |
Telephone: 770.418.8800 | www.piedmontreit.com |
Page | Page | |||
Introduction | Other Investments | |||
Corporate Data | Other Investments Detail | |||
Investor Information | Supporting Information | |||
Financial Highlights | Definitions | |||
Financials | Research Coverage | |||
Balance Sheets | Non-GAAP Reconciliations & Other Detail | |||
Income Statements | Property Detail - In-Service Portfolio | |||
Key Performance Indicators | Company Metrics after Fourteen Property Disposition | |||
Funds From Operations / Adjusted Funds From Operations | Risks, Uncertainties and Limitations | |||
Same Store Analysis | ||||
Capitalization Analysis | ||||
Debt Summary | ||||
Debt Detail | ||||
Debt Covenant & Ratio Analysis | ||||
Operational & Portfolio Information - Office Investments | ||||
Tenant Diversification | ||||
Tenant Credit Rating & Lease Distribution Information | ||||
Leased Percentage Information | ||||
Rental Rate Roll Up / Roll Down Analysis | ||||
Lease Expiration Schedule | ||||
Quarterly Lease Expirations | ||||
Annual Lease Expirations | ||||
Capital Expenditures & Commitments | ||||
Contractual Tenant Improvements & Leasing Commissions | ||||
Geographic Diversification | ||||
Geographic Diversification by Location Type | ||||
Industry Diversification | ||||
Property Investment Activity |
Notice to Readers: |
Please refer to page 49 for a discussion of important risks related to the business of Piedmont Office Realty Trust, Inc., as well as an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information. Considering these risks, uncertainties, assumptions, and limitations, the forward-looking statements about leasing, financial operations, leasing prospects, etc. contained in this quarterly supplemental information report may differ from actual results. |
Certain prior period amounts have been reclassified to conform to the current period financial statement presentation. In addition, many of the schedules herein contain rounding to the nearest thousands or millions and, therefore, the schedules may not total due to this rounding convention. |
To supplement the presentation of the Company’s financial results prepared in accordance with U.S. generally accepted accounting principles (GAAP), this report contains certain financial measures that are not prepared in accordance with GAAP, including FFO, Core FFO, AFFO, Same Store NOI, Property NOI, EBITDAre and Core EBITDA. Definitions and reconciliations of these non-GAAP measures to their most comparable GAAP metrics are included beginning on page 39. Each of the non-GAAP measures included in this report 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 report 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 report from time to time in light of its then existing operations to include other adjustments that may affect its operations. |
With Pro Forma Adjustments for | As of | As of | |||
the Sale of 14 Properties | December 31, 2017 | December 31, 2016 | |||
Number of consolidated office properties (1) | 53 (2) | 67 | 65 | ||
Rentable square footage (in thousands) (1) | 16,476 (2) | 19,061 | 18,885 | ||
Percent leased (3) | 91.8% (2) | 89.7 | % | 91.9 | % |
Capitalization (in thousands): | |||||
Total debt - principal amount outstanding (excludes premiums, discounts, and deferred financing costs) | $1,318,670 (2) | $1,733,670 | $2,029,582 | ||
Equity market capitalization (4) | $2,791,659 | $3,036,870 | |||
Total market capitalization (4) | $4,525,329 | $5,066,452 | |||
Total debt / Total market capitalization (4) | approximately 32% (2) | 38.3 | % | 40.1 | % |
Average net debt to Core EBITDA | under 5x's (estimated) (2) | 5.6 x | 6.4 x | ||
Total debt / Total gross assets | approximately 30% (2) | 34.3 | % | 37.4 | % |
Common stock data: | |||||
High closing price during quarter | $20.40 | $21.53 | |||
Low closing price during quarter | $19.21 | $18.62 | |||
Closing price of common stock at period end | $19.61 | $20.91 | |||
Weighted average fully diluted shares outstanding during quarter (in thousands) | 144,503 | 145,764 | |||
Shares of common stock issued and outstanding at period end (in thousands) | 142,359 | 145,235 | |||
Annual regular dividend per share (5) | $0.84 | $0.84 | |||
Rating / Outlook | |||||
Standard & Poor's | BBB / Stable | BBB / Stable | |||
Moody's | Baa2 / Stable | Baa2 / Stable | |||
Employees | 129 (2) | 136 | 137 |
(1) | As of December 31, 2017, our consolidated office portfolio consisted of 67 properties. As of December 31, 2016, our consolidated office portfolio excluded two properties under development, one property that was out of service for redevelopment, and one unconsolidated joint venture property. The three development and redevelopment properties were placed in service on January 1, 2017. There were no acquisitions or dispositions of office properties completed during the first quarter of 2017. During the second quarter of 2017, we sold Sarasota Commerce Center II, a 149,000 square foot office building located in Sarasota, FL. During the third quarter of 2017, we sold Two Independence Square, a 606,000 square foot office building located in Washington, DC, and 8560 Upland Drive, the Company's last remaining unconsolidated joint venture property, comprised of 149,000 square feet and located in Englewood, CO. During the fourth quarter of 2017, we acquired Norman Pointe I, a 214,000 square foot office building located in Bloomington, MN. |
(2) | On January 4, 2018, Piedmont completed the disposition of 14 properties and used the net sales proceeds to repay debt. Figure represents the impact on this measure on a pro forma basis of the sales of the properties. Please refer to page 47 for additional details regarding the sales of the properties and the impact on various metrics for the Company. |
(3) | Calculated as square footage associated with commenced leases plus square footage associated with executed but uncommenced leases for vacant spaces, divided by total rentable square footage, all as of the relevant date, expressed as a percentage. This measure is presented for our consolidated office properties and excludes unconsolidated joint venture properties. This measure presented as of December 31, 2016, has been restated to include two development properties and one re-development property that were placed into service effective January 1, 2017. The development properties that were placed in service are Enclave Place, a 301,000 square foot office property located in Houston, TX, and 500 TownPark, a 134,000 square foot office property located in Lake Mary, FL; the re-development property that was placed in service is 3100 Clarendon Boulevard, a 261,000 square foot office property located in Arlington, VA. Please refer to page 27 for additional analyses regarding Piedmont's leased percentage. |
(4) | Reflects common stock closing price as of the end of the reporting period. |
(5) | Total of the per share regular dividends declared over the prior four quarters. The Company declared a special dividend of $0.50 per share in December 2017 which is not included in this calculation. |
Corporate |
11695 Johns Creek Parkway, Suite 350 |
Johns Creek, Georgia 30097 |
770.418.8800 |
www.piedmontreit.com |
Executive Management | |||
Donald A. Miller, CFA | Robert E. Bowers | C. Brent Smith | Edward H. Guilbert, III |
Chief Executive Officer, President | Chief Financial Officer and Executive | Chief Investment Officer and Executive | Senior Vice President, Finance and |
and Director | Vice President | Vice President, Northeast Region | Treasurer - Investor Relations Contact |
Christopher A. Kollme | Laura P. Moon | Joseph H. Pangburn | Thomas R. Prescott |
Executive Vice President, | Chief Accounting Officer and | Executive Vice President, | Executive Vice President, |
Finance & Strategy | Senior Vice President | Southwest Region | Midwest Region |
Carroll A. Reddic, IV | George Wells | Robert K. Wiberg | |
Executive Vice President, | Executive Vice President, | Executive Vice President, | |
Real Estate Operations and Assistant | Southeast Region | Mid-Atlantic Region and | |
Secretary | Head of Development | ||
Board of Directors | |||
Frank C. McDowell | Dale H. Taysom | Kelly H. Barrett | Wesley E. Cantrell |
Director, Chairman of the | Director and Vice Chairman of the | Director, Member of Audit and | Director and Chairman of |
Board of Directors and Chairman | Board of Directors | Governance Committees | Governance Committee |
of Compensation Committee | |||
Barbara B. Lang | Donald A. Miller, CFA | Raymond G. Milnes, Jr. | Jeffery L. Swope |
Director, Member of Compensation and | Chief Executive Officer, President | Director and Chairman of | Director and Chairman of |
Governance Committees | and Director | Audit Committee | Capital Committee |
Transfer Agent | Corporate Counsel |
Computershare | King & Spalding |
P.O. Box 30170 | 1180 Peachtree Street, NE |
College Station, TX 77842-3170 | Atlanta, GA 30309 |
Phone: 866.354.3485 | Phone: 404.572.4600 |
(1) | |
(2) | Accounting standards require that any anticipated loss from an asset sale be recorded as an impairment charge when the likelihood of a sale becomes probable. Conversely, any gain on the sale of an asset is recorded when the sale transaction closes. Therefore, Piedmont recorded impairment losses associated with the multiple asset disposition during the fourth quarter of 2017; however, it also anticipates recording gains related to the same multiple asset disposition during the first quarter of 2018. |
(3) | Piedmont early adopted the revised FASB standard on the accounting treatment of Business Combinations, which results in certain real asset transactions falling outside the scope of the standard. The result is that, in many cases, acquisition costs will be capitalized, and, therefore, will not be included in net income. In such cases, there will be no add-back of acquisition expenses to Core FFO. This revised standard is applied to transactions occurring after October 1, 2016. |
(4) | Restated to include two development properties and one redevelopment property that were placed in service on January 1, 2017. |
(5) | Remaining lease term (after taking into account leases for vacant spaces which had been executed but not commenced as of December 31, 2017) is weighted based on Annualized Lease Revenue, as defined on page 39. |
Tenant | Property | Property Location | Square Feet Leased | Expiration Year | Lease Type |
Raytheon Company | 225 & 235 Presidential Way | Woburn, MA | 440,130 | 2024 | Renewal |
Gartner, Inc. | 6011 Connection Drive | Irving, TX | 152,086 | 2034 | New |
US Bancorp | US Bancorp Center | Minneapolis, MN | 51,280 | 2024 | Expansion |
President and Fellows of Harvard College | One Brattle Square | Cambridge, MA | 20,509 | 2030 | Renewal / Expansion |
Consilium Staffing, LLC | 161 Corporate Center | Irving, TX | 19,293 | 2021 | Renewal / Expansion |
AmeriCredit Financial Services, Inc. | 400 TownPark | Lake Mary, FL | 15,367 | 2025 | New |
Axios Media, Inc. | 3100 Clarendon Boulevard | Arlington, VA | 15,301 | 2029 | New |
Amazon Corporate, LLC | 4250 North Fairfax Drive | Arlington, VA | 12,988 | 2024 | Expansion |
Kinetica DB, Inc. | Arlington Gateway | Arlington, VA | 12,766 | 2025 | New |
KPMG, LLP | CNL Center II | Orlando, FL | 12,590 | 2030 | New |
Applied Predictive Technologies, Inc. | 4250 North Fairfax Drive | Arlington, VA | 10,454 | 2028 | Expansion |
Tenant | Property | Property Location | Net Square Footage Expiring | Net Percentage of Current Quarter Annualized Lease Revenue Expiring (%) | Expiration | Current Leasing Status |
Gallagher | Two Pierce Place | Itasca, IL | 286,892 | 1.6% | Q1 2018 | Of the 306,890 square feet currently leased to Gallagher, approximately 20,000 square feet have been leased to CivilTech Engineering under its lease executed in 2016. The remaining available space is actively being marketed for lease; a $10 million redevelopment of the property commenced in early 2018. |
State of New York | 60 Broad Street | New York, NY | 480,708 | 4.6% | Q1 2019 | The Company is in preliminary discussions with the tenant regarding a potential renewal of the lease. |
Current Tenant | Property | Property Location | Net Square Footage Expiring Over Next 18 Months | Net Percentage of Current Quarter Annualized Lease Revenue Expiring Next 18 Mos. (%) | Expiration | Current Leasing Status |
Goldman Sachs | 6011 & 6031 Connection Drive | Irving, TX | 55,124 | 0.2% | Q1 2018 | During the fourth quarter, Gartner, Inc. signed a 152,000 square foot, full-building lease at 6011 Connection Drive, which is currently occupied by Goldman Sachs. The new lease is anticipated to commence in stages beginning in the third quarter of 2018 and expire in 2034. The remaining 55,000 square feet of available space is actively being marketed for lease. |
Raytheon Company | 225 & 235 Presidential Way | Woburn, MA | — | —% | Q2 2024 | During the fourth quarter, Raytheon executed a five-year lease extension for the entirety of the 440,000 square feet that it occupies. The new lease extended the expiration date from Q2 2019 to Q2 2024. |
1) | leases which have been contractually entered into for currently vacant spaces but have not yet commenced (amounting to 393,279 square feet of leases as of December 31, 2017, or 2.2% of the office portfolio); and |
2) | leases which have commenced but the tenants have not commenced paying full rent due to rental abatements (amounting to 1,184,020 square feet of leases as of December 31, 2017, or a 5.4% impact to leased percentage on an economic basis). |
Tenant | Property | Property Location | Square Feet Leased | Space Status | Estimated Commencement Date | New / Expansion |
United States of America (Social Security Administration Commissioner) | One Independence Square | Washington, DC | 52,720 | Vacant | Q2 2018 | New |
US Bancorp | US Bancorp Center | Minneapolis, MN | 51,280 | Vacant | Q2 2018 | Expansion |
International Food Policy Research Institute (2) | 1201 Eye Street | Washington, DC | 56,461 | Vacant | Q2 2018 | New |
Gartner, Inc. | 6011 Connection Drive | Irving, TX | 152,086 | Not Vacant | Q3 2018 (71,439 SF)(3) Q3 2019 (26,695 SF) Q3 2020 (53,952 SF) | New |
salesforce.com (formerly Demandware, Inc.) | 5 Wall Street | Burlington, MA | 127,408 | Not Vacant | Q4 2019 (75,495 SF) Q3 2021 (51,913 SF) | New |
Children's Hospital Los Angeles | 800 North Brand Boulevard | Glendale, CA | 50,285 | Not Vacant | Q2 2021 | New |
(1) | The schedule is not specifically intended to provide details about the current population of executed but not commenced leases; it does, however, provide details for all uncommenced leases that are greater than 50,000 square feet in size and not renewals, whether or not the spaces for which the leases were signed are vacant. |
(2) | The first phase of the lease, which consists of 45,476 square feet of previously vacant space, commenced in the second quarter of 2017. The second phase, consisting of 56,461 square feet, will commence in the second quarter of 2018. |
(3) | While the commencement of the Gartner lease will be phased, only the first phase of 71,439 square feet will receive ten months of rental abatements. The other two phases will not receive rental abatements. |
Tenant | Property | Property Location | Abated Square Feet | Abatement Schedule | Lease Expiration |
FCA US, LLC | 1075 West Entrance Drive | Auburn Hills, MI | 210,000 | September through December 2017 | Q3 2024 |
SunTrust Bank | SunTrust Center | Orlando, FL | 120,000 | October through December 2017 | Q3 2019 |
Norris, McLaughlin & Marcus | 400 Bridgewater Crossing | Bridgewater, NJ | 78,088 | October through December 2017 | Q4 2029 |
Neovia Logistics, LP | Las Colinas Corporate Center II | Irving, TX | 54,682 | December 2017 | Q2 2024 |
Tenant | Property | Property Location | Abated Square Feet | Remaining Abatement Schedule | Lease Expiration |
Applied Predictive Technologies, Inc. | 4250 North Fairfax Drive | Arlington, VA | 87,786 | June 2017 through February 2018 (on 87,786 square feet); March through May 2018 (on 102,324 square feet) | Q2 2028 |
RaceTrac Petroleum, Inc. | Galleria 200 | Atlanta, GA | 133,707 | July 2017 through May 2018 | Q3 2032 |
Mitsubishi Hitachi Power Systems | 400 TownPark | Lake Mary, FL | 75,321 | February and March 2018 | Q1 2026 |
US Bancorp | US Bancorp Center | Minneapolis, MN | 51,280 | April through June 2018 | Q2 2024 |
International Food Policy Research Institute | 1201 Eye Street | Washington, DC | 101,937 | May 2018 through April 2019 | Q2 2029 |
United States of America (Social Security Administration Commissioner) | One Independence Square | Washington, DC | 52,720 | June 2018 through May 2019 | Q2 2028 |
Gartner, Inc. | 6011 Connection Drive | Irving, TX | 71,439 | September 2018 through June 2019 | Q2 2034 |
Norris, McLaughlin & Marcus | 400 Bridgewater Crossing | Bridgewater, NJ | 61,642 | October through December 2018; November and December 2019 | Q4 2029 |
• | invest in real estate assets with higher overall return prospects in selected markets in which we have, or plan to have, a significant operating presence with a competitive advantage and that otherwise meet our strategic criteria; |
• | reduce leverage levels by repaying outstanding debt; and/or |
• | repurchase Company stock when market conditions allow. |
• | Enhance its balance sheet through the repayment of $470 million of outstanding bank term debt that was scheduled to mature in 2018 and 2019 (the Company has no additional debt maturities until 2020); |
• | Acquire a high-quality, value-add asset within one of our core markets at a significant discount to replacement cost; and |
• | Repurchase stock at what the Company estimates to be a substantial discount to net asset value. |
Property | City | State | Rentable Square Footage |
Desert Canyon 300 | Phoenix | AZ | 148 |
5601 Hiatus Road | Tamarac | FL | 100 |
2001 NW 64th Street | Ft. Lauderdale | FL | 48 |
Auburn Hills Corporate Center | Auburn Hills | MI | 120 |
1075 West Entrance Drive | Auburn Hills | MI | 210 |
2120 West End Avenue | Nashville | TN | 312 |
5301 Maryland Way | Brentwood | TN | 201 |
Piedmont Pointe I | Bethesda | MD | 189 |
Piedmont Pointe II | Bethesda | MD | 238 |
Windy Point I | Schaumburg | IL | 187 |
Windy Point II | Schaumburg | IL | 301 |
2300 Cabot Drive | Lisle | IL | 153 |
1200 Crown Colony Drive | Quincy | MA | 235 |
Suwanee Gateway One | Suwanee | GA | 143 |
Total | 2,585 |
(1) | In July 2017, the Company sold Two Independence Square in Washington, DC with a large tax-basis gain which was the primary driver for a $0.50 per share special dividend. The Company was able to forgo the payment of the special dividend on the shares it repurchased subsequent to the large asset sale in July 2017 and up to the time at which its stock began trading ex-dividend for the special dividend. If the special dividend that would have otherwise been payable on the shares repurchased were to be deducted from the amount paid for the repurchases during the applicable period, the weighted average stock repurchase price per share during the fourth quarter and calendar year of 2017 would have been $19.22 and $19.26, respectively. |
Low | High | ||
Net Income | $93 million | to | $98 million |
Add: | |||
Depreciation | 112 million | to | 116 million |
Amortization | 60 million | to | 64 million |
Less: | |||
Gain on Sale of Real Estate Assets | (39) million | to | (42) million |
NAREIT Funds from Operations applicable to Common Stock | $226 million | $236 million | |
NAREIT Funds from Operations per diluted share | $1.64 | to | $1.71 |
Less: | |||
Loss on Early Extinguishment of Debt / Termination of Interest Rate Swaps | $1 million | to | $1 million |
Core Funds From Operations | $227 million | to | $237 million |
Core Funds from Operations per diluted share | $1.64 | to | $1.72 |
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||
Assets: | |||||||||||||||||||
Real estate, at cost: | |||||||||||||||||||
Land assets | $ | 544,794 | $ | 540,436 | $ | 540,436 | $ | 542,640 | $ | 542,640 | |||||||||
Buildings and improvements | 3,203,229 | 3,178,184 | 3,168,725 | 3,178,655 | 3,142,482 | ||||||||||||||
Buildings and improvements, accumulated depreciation | (785,206 | ) | (758,800 | ) | (733,568 | ) | (722,397 | ) | (700,304 | ) | |||||||||
Intangible lease asset | 176,950 | 171,965 | 179,540 | 205,061 | 208,847 | ||||||||||||||
Intangible lease asset, accumulated amortization | (99,145 | ) | (93,265 | ) | (94,551 | ) | (113,129 | ) | (109,152 | ) | |||||||||
Construction in progress | 11,710 | 7,560 | 14,671 | 18,664 | 34,460 | ||||||||||||||
Real estate assets held for sale, gross | 501,526 | 546,979 | 860,302 | 858,320 | 856,988 | ||||||||||||||
Real estate assets held for sale, accumulated depreciation & amortization | (169,116 | ) | (167,305 | ) | (252,583 | ) | (248,651 | ) | (244,269 | ) | |||||||||
Total real estate assets | 3,384,742 | 3,425,754 | 3,682,972 | 3,719,163 | 3,731,692 | ||||||||||||||
Investments in and amounts due from unconsolidated joint ventures | 10 | 49 | 7,762 | 7,654 | 7,360 | ||||||||||||||
Cash and cash equivalents | 7,382 | 36,108 | 9,596 | 6,808 | 6,992 | ||||||||||||||
Tenant receivables, net of allowance for doubtful accounts | 12,139 | 12,802 | 24,269 | 25,194 | 26,494 | ||||||||||||||
Straight line rent receivable | 163,160 | 157,289 | 152,084 | 144,513 | 136,862 | ||||||||||||||
Escrow deposits and restricted cash | 1,373 | 1,260 | 1,290 | 1,253 | 1,212 | ||||||||||||||
Prepaid expenses and other assets | 22,517 | 27,893 | 29,866 | 21,214 | 23,281 | ||||||||||||||
Goodwill | 98,918 | 98,918 | 98,918 | 98,918 | 98,918 | ||||||||||||||
Interest rate swap | 688 | 34 | — | — | — | ||||||||||||||
Deferred lease costs, less accumulated amortization | 261,907 | 253,608 | 257,677 | 268,328 | 276,725 | ||||||||||||||
Other assets held for sale | 47,131 | 46,935 | 55,878 | 57,695 | 58,632 | ||||||||||||||
Total assets | $ | 3,999,967 | $ | 4,060,650 | $ | 4,320,312 | $ | 4,350,740 | $ | 4,368,168 | |||||||||
Liabilities: | |||||||||||||||||||
Unsecured debt, net of discount | $ | 1,535,311 | $ | 1,511,663 | $ | 1,720,986 | $ | 1,733,343 | $ | 1,687,731 | |||||||||
Secured debt | 191,616 | 191,923 | 332,196 | 332,471 | 332,744 | ||||||||||||||
Accounts payable, accrued expenses, and accrued capital expenditures | 216,653 | 108,120 | 111,011 | 116,077 | 165,410 | ||||||||||||||
Deferred income | 29,582 | 29,970 | 27,416 | 30,683 | 28,406 | ||||||||||||||
Intangible lease liabilities, less accumulated amortization | 38,458 | 40,662 | 42,905 | 45,148 | 47,537 | ||||||||||||||
Interest rate swaps | 1,478 | 3,915 | 5,061 | 5,475 | 8,169 | ||||||||||||||
Other liabilities held for sale | 380 | 402 | 423 | 446 | 468 | ||||||||||||||
Total liabilities | $ | 2,013,478 | $ | 1,886,655 | $ | 2,239,998 | $ | 2,263,643 | $ | 2,270,465 | |||||||||
Stockholders' equity: | |||||||||||||||||||
Common stock | 1,424 | 1,453 | 1,455 | 1,453 | 1,452 | ||||||||||||||
Additional paid in capital | 3,677,360 | 3,676,706 | 3,675,562 | 3,675,575 | 3,673,128 | ||||||||||||||
Cumulative distributions in excess of earnings | (1,702,281 | ) | (1,511,428 | ) | (1,603,119 | ) | (1,596,276 | ) | (1,580,863 | ) | |||||||||
Other comprehensive loss | 8,164 | 5,400 | 4,547 | 4,466 | 2,104 | ||||||||||||||
Piedmont stockholders' equity | 1,984,667 | 2,172,131 | 2,078,445 | 2,085,218 | 2,095,821 | ||||||||||||||
Non-controlling interest | 1,822 | 1,864 | 1,869 | 1,879 | 1,882 | ||||||||||||||
Total stockholders' equity | 1,986,489 | 2,173,995 | 2,080,314 | 2,087,097 | 2,097,703 | ||||||||||||||
Total liabilities, redeemable common stock and stockholders' equity | $ | 3,999,967 | $ | 4,060,650 | $ | 4,320,312 | $ | 4,350,740 | $ | 4,368,168 | |||||||||
Common stock outstanding at end of period | 142,359 | 145,295 | 145,490 | 145,320 | 145,235 |
Three Months Ended | ||||||||||||||||||||
12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | 12/31/2016 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Rental income | $ | 114,729 | $ | 113,350 | $ | 124,248 | $ | 123,450 | $ | 119,564 | ||||||||||
Tenant reimbursements | 24,371 | 23,796 | 24,044 | 24,500 | 23,961 | |||||||||||||||
Property management fee revenue | 344 | 441 | 387 | 513 | 386 | |||||||||||||||
139,444 | 137,587 | 148,679 | 148,463 | 143,911 | ||||||||||||||||
Expenses: | ||||||||||||||||||||
Property operating costs | 55,377 | 54,090 | 55,779 | 55,384 | 57,496 | |||||||||||||||
Depreciation | 28,461 | 30,000 | 30,059 | 30,768 | 32,785 | |||||||||||||||
Amortization | 17,515 | 18,123 | 19,314 | 20,415 | 21,271 | |||||||||||||||
Impairment loss on real estate assets (1) | 46,461 | — | — | — | — | |||||||||||||||
General and administrative | 7,880 | 6,618 | 8,036 | 8,596 | 5,726 | |||||||||||||||
155,694 | 108,831 | 113,188 | 115,163 | 117,278 | ||||||||||||||||
Real estate operating income | (16,250 | ) | 28,756 | 35,491 | 33,300 | 26,633 | ||||||||||||||
Other income / (expense): | ||||||||||||||||||||
Interest expense | (15,463 | ) | (16,183 | ) | (18,421 | ) | (18,057 | ) | (16,566 | ) | ||||||||||
Other income / (expense) | 429 | 290 | 38 | (100 | ) | 454 | ||||||||||||||
Equity in income / (loss) of unconsolidated joint ventures | (27 | ) | 3,754 | 107 | 11 | 8 | ||||||||||||||
(15,061 | ) | (12,139 | ) | (18,276 | ) | (18,146 | ) | (16,104 | ) | |||||||||||
Income from continuing operations | (31,311 | ) | 16,617 | 17,215 | 15,154 | 10,529 | ||||||||||||||
Discontinued operations: | ||||||||||||||||||||
Operating income, excluding impairment loss | — | — | — | — | — | |||||||||||||||
Gain / (loss) on sale of properties | — | — | — | — | — | |||||||||||||||
Income / (loss) from discontinued operations | — | — | — | — | — | |||||||||||||||
Gain / (loss) on sale of real estate (2) | (77 | ) | 109,512 | 6,492 | (53 | ) | 19,652 | |||||||||||||
Net income | (31,388 | ) | 126,129 | 23,707 | 15,101 | 30,181 | ||||||||||||||
Less: Net income attributable to noncontrolling interest | 5 | 4 | 3 | 3 | 8 | |||||||||||||||
Net income attributable to Piedmont | $ | (31,383 | ) | $ | 126,133 | $ | 23,710 | $ | 15,104 | $ | 30,189 | |||||||||
Weighted average common shares outstanding - diluted | 144,503 | 145,719 | 145,813 | 145,833 | 145,764 | |||||||||||||||
Net income per share available to common stockholders - diluted | $ | (0.21 | ) | $ | 0.87 | $ | 0.16 | $ | 0.10 | $ | 0.21 | |||||||||
Common stock outstanding at end of period | 142,359 | 145,295 | 145,490 | 145,320 | 145,235 |
(1) | The impairment loss on real estate assets recorded in the fourth quarter of 2017 was related to certain properties within the multiple asset disposition that closed at the beginning of 2018. Accounting standards require that any anticipated loss from an asset sale be recorded as an impairment charge when the likelihood of a sale becomes probable. Conversely, any gain on the sale of an asset is not recorded until the sale transaction closes. Therefore, Piedmont recorded an impairment loss associated with the multiple asset sale during the fourth quarter of 2017; however, it also anticipates recording a gain related to the same multiple asset sale during the first quarter of 2018. |
(2) | The gain on sale of real estate reflected in the third quarter of 2017 was related to the sale of Two Independence Square in Washington, DC, on which the Company recorded a $109.5 million gain. The gain on sale of real estate reflected in the second quarter of 2017 was related to the sale of Sarasota Commerce Center II in Sarasota, FL, on which the Company recorded a $6.5 million gain. The gain in the fourth quarter of 2016 was primarily related to the sale of Braker Pointe III in Austin, TX, on which the Company recorded an $18.6 million gain. |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||
12/31/2017 | 12/31/2016 | Change ($) | Change (%) | 12/31/2017 | 12/31/2016 | Change ($) | Change (%) | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||||
Rental income | $ | 114,729 | $ | 119,564 | $ | (4,835 | ) | (4.0 | )% | $ | 475,777 | $ | 459,890 | $ | 15,887 | 3.5 | % | ||||||||
Tenant reimbursements | 24,371 | 23,961 | 410 | 1.7 | % | 96,711 | 93,961 | 2,750 | 2.9 | % | |||||||||||||||
Property management fee revenue | 344 | 386 | (42 | ) | (10.9 | )% | 1,685 | 1,864 | (179 | ) | (9.6 | )% | |||||||||||||
139,444 | 143,911 | (4,467 | ) | (3.1 | )% | 574,173 | 555,715 | 18,458 | 3.3 | % | |||||||||||||||
Expenses: | |||||||||||||||||||||||||
Property operating costs | 55,377 | 57,496 | 2,119 | 3.7 | % | 220,630 | 218,934 | (1,696 | ) | (0.8 | )% | ||||||||||||||
Depreciation | 28,461 | 32,785 | 4,324 | 13.2 | % | 119,288 | 127,733 | 8,445 | 6.6 | % | |||||||||||||||
Amortization | 17,515 | 21,271 | 3,756 | 17.7 | % | 75,367 | 75,119 | (248 | ) | (0.3 | )% | ||||||||||||||
Impairment loss on real estate assets (1) | 46,461 | — | (46,461 | ) | (100.0 | )% | 46,461 | 33,901 | (12,560 | ) | (37.0 | )% | |||||||||||||
General and administrative | 7,880 | 5,726 | (2,154 | ) | (37.6 | )% | 31,130 | 29,244 | (1,886 | ) | (6.4 | )% | |||||||||||||
155,694 | 117,278 | (38,416 | ) | (32.8 | )% | 492,876 | 484,931 | (7,945 | ) | (1.6 | )% | ||||||||||||||
Real estate operating income | (16,250 | ) | 26,633 | (42,883 | ) | (161.0 | )% | 81,297 | 70,784 | 10,513 | 14.9 | % | |||||||||||||
Other income / (expense): | |||||||||||||||||||||||||
Interest expense | (15,463 | ) | (16,566 | ) | 1,103 | 6.7 | % | (68,124 | ) | (64,860 | ) | (3,264 | ) | (5.0 | )% | ||||||||||
Other income / (expense) | 429 | 454 | (25 | ) | (5.5 | )% | 657 | (13 | ) | 670 | 5,153.8 | % | |||||||||||||
Net recoveries / (loss) from casualty events | — | — | — | — | 34 | (34 | ) | (100.0 | )% | ||||||||||||||||
Equity in income / (loss) of unconsolidated joint ventures | (27 | ) | 8 | (35 | ) | (437.5 | )% | 3,845 | 362 | 3,483 | 962.2 | % | |||||||||||||
(15,061 | ) | (16,104 | ) | 1,043 | 6.5 | % | (63,622 | ) | (64,477 | ) | 855 | 1.3 | % | ||||||||||||
Income from continuing operations | (31,311 | ) | 10,529 | (41,840 | ) | (397.4 | )% | 17,675 | 6,307 | 11,368 | 180.2 | % | |||||||||||||
Discontinued operations: | |||||||||||||||||||||||||
Operating income, excluding impairment loss | — | — | — | — | — | — | |||||||||||||||||||
Gain / (loss) on sale of properties | — | — | — | — | — | — | |||||||||||||||||||
Income / (loss) from discontinued operations | — | — | — | — | — | — | |||||||||||||||||||
Gain / (loss) on sale of real estate (2) | (77 | ) | 19,652 | (19,729 | ) | (100.4 | )% | 115,874 | 93,410 | 22,464 | 24.0 | % | |||||||||||||
Net income | (31,388 | ) | 30,181 | (61,569 | ) | (204.0 | )% | 133,549 | 99,717 | 33,832 | 33.9 | % | |||||||||||||
Less: Net income attributable to noncontrolling interest | 5 | 8 | (3 | ) | (37.5 | )% | 15 | 15 | — | — | % | ||||||||||||||
Net income attributable to Piedmont | $ | (31,383 | ) | $ | 30,189 | $ | (61,572 | ) | (204.0 | )% | $ | 133,564 | $ | 99,732 | $ | 33,832 | 33.9 | % | |||||||
Weighted average common shares outstanding - diluted | 144,503 | 145,764 | 145,380 | 145,635 | |||||||||||||||||||||
Net income per share available to common stockholders - diluted | $ | (0.21 | ) | $ | 0.21 | $ | 0.92 | $ | 0.69 | ||||||||||||||||
Common stock outstanding at end of period | 142,359 | 145,235 | 142,359 | 145,235 |
(1) | The impairment loss on real estate assets for the three months ended December 31, 2017 was related to certain properties within the multiple asset disposition that closed at the beginning of 2018. Accounting standards require that any anticipated loss from an asset sale be recorded as an impairment charge when the likelihood of a sale becomes probable. Conversely, any gain on the sale of an asset is not recorded until the sale transaction closes. Therefore, Piedmont recorded an impairment loss associated with the multiple asset sale during the fourth quarter of 2017; however, it also anticipates recording a gain related to the same multiple asset sale during the first quarter of 2018. |
(2) | The gain on sale of real estate for the twelve months ended December 31, 2017 was primarily related to the sale of Two Independence Square in Washington, DC, on which the Company recorded a $109.5 million gain. The gain on sale of real estate for the three months ended December 31, 2016 was primarily related to the sale of Braker Pointe III in Austin, TX, on which the Company recorded an $18.6 million gain. In addition to the gain attributable to the sale of Braker Pointe III, the gain on sale of real estate for the twelve months ended December 31, 2016 was primarily related to the sales in the second quarter of 2016 of 1055 East Colorado Boulevard in Pasadena, CA, on which the Company recorded a $29.5 million gain; Fairway Center II in Brea, CA, on which the Company recorded a $14.4 million gain; and 1901 Main Street in Irvine, CA, on which the Company recorded a $30.0 million gain. |
This section of our supplemental report includes non-GAAP financial measures, including, but not limited to, Earnings Before Interest, Taxes, Depreciation, and Amortization for real estate (EBITDAre), Core Earnings Before Interest, Taxes, Depreciation, and Amortization (Core EBITDA), Funds from Operations (FFO), Core Funds from Operations (Core FFO), and Adjusted Funds from Operations (AFFO). Definitions of these non-GAAP measures are provided on page 39 and reconciliations are provided beginning on page 41. |
With Pro Forma Adjustments for | Three Months Ended | |||||||||||||||
Selected Operating Data | the Sale of 14 Properties | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | 12/31/2016 | ||||||||||
Percent leased (1) | 91.8% (2) | 89.7 | % | 89.2 | % | 91.0 | % | 91.5 | % | 91.9 | % | (3) | ||||
Percent leased - economic (1) (4) | 84.5% (2) | 82.1 | % | 83.4 | % | 84.4 | % | 84.1 | % | 83.8 | % | (3) | ||||
Rental income | $114,729 | $113,350 | $124,248 | $123,450 | $119,564 | |||||||||||
Total revenues | $139,444 | $137,587 | $148,679 | $148,463 | $143,911 | |||||||||||
Total operating expenses | $155,694 | $108,831 | $113,188 | $115,163 | $117,278 | |||||||||||
Core EBITDA | $76,509 | $77,242 | $85,041 | $84,505 | $81,202 | |||||||||||
Core FFO applicable to common stock | $60,896 | $60,819 | $66,465 | $66,198 | $64,397 | |||||||||||
Core FFO per share - diluted | $0.42 | $0.42 | $0.46 | $0.45 | $0.44 | |||||||||||
AFFO applicable to common stock | $42,948 | $52,370 | $50,870 | $54,124 | $45,641 | |||||||||||
Gross regular dividends (5) | $30,276 | $30,549 | $30,553 | $30,517 | $30,499 | |||||||||||
Regular dividends per share | $0.210 | $0.210 | $0.210 | $0.210 | $0.210 | |||||||||||
Gross special dividends (5) (6) | $71,367 | $0 | $0 | $0 | $0 | |||||||||||
Special dividends per share | $0.500 | NA | NA | NA | NA | |||||||||||
Selected Balance Sheet Data | ||||||||||||||||
Total real estate assets | $3,384,742 | $3,425,754 | $3,682,972 | $3,719,163 | $3,731,692 | |||||||||||
Total assets | $3,999,967 | $4,060,650 | $4,320,312 | $4,350,740 | $4,368,168 | |||||||||||
Total liabilities | $2,013,478 | $1,886,655 | $2,239,998 | $2,263,643 | $2,270,465 | |||||||||||
Ratios & Information for Debt Holders | ||||||||||||||||
Core EBITDA margin (7) | 54.9 | % | 56.1 | % | 57.2 | % | 56.9 | % | 56.4 | % | ||||||
Fixed charge coverage ratio (8) | over 5x (2) | 4.9 x | 4.7 x | 4.6 x | 4.6 x | 4.5 x | ||||||||||
Average net debt to Core EBITDA (9) | under 5x's (estimated) (2) | 5.6 x | 5.6 x | 6.0 x | 6.1 x | 6.4 x | ||||||||||
Total gross real estate assets | $4,438,209 | $4,445,124 | $4,763,674 | $4,803,340 | $4,785,417 | |||||||||||
Net debt (10) | $1,724,915 | $1,673,535 | $2,050,246 | $2,066,298 | $2,021,378 |
(1) | Please refer to page 27 for additional leased percentage information. |
(2) | On January 4, 2018, Piedmont completed the disposition of 14 properties and used the net sales proceeds to repay debt. Figure represents the impact on this measure on a pro forma basis of the sales of the properties. Please refer to page 47 for additional details regarding the sales of the properties and the impact on various metrics for the Company. |
(3) | Percent leased and percent leased - economic as of December 31, 2016 have been restated to include two development properties and one re-development property that were placed into service effective January 1, 2017. The development properties that were placed in service are Enclave Place, a 301,000 square foot office property located in Houston, TX, and 500 TownPark, a 134,000 square foot office property located in Lake Mary, FL; the re-development property that was placed in service is 3100 Clarendon Boulevard, a 261,000 square foot office property located in Arlington, VA. |
(4) | Economic leased percentage excludes the square footage associated with executed but not commenced leases for currently vacant spaces and the square footage associated with tenants receiving rental abatements (after proportional adjustments for tenants receiving only partial rental abatements). Due to variations in rental abatement structures whereby some abatements are provided for the first few months of each lease year as opposed to being provided entirely at the beginning of the lease, there will be variability to the economic leased percentage over time as abatements commence and expire. Please see the Future Lease Commencements and Abatements section of Financial Highlights for details on near-term abatements for large leases. |
(5) | Dividends are reflected in the quarter in which they were declared. |
(6) | On December 13, 2017, the Board of Directors of Piedmont declared a special dividend in the amount of $0.50 per common share outstanding to stockholders of record as of the close of business on December 26, 2017 as a result of taxable gains realized on property sales occurring during 2017. |
(7) | Core EBITDA margin is calculated as Core EBITDA divided by total revenues (including revenues associated with discontinued operations). |
(8) | The fixed charge coverage ratio is calculated as Core EBITDA divided by the sum of interest expense, principal amortization, capitalized interest and preferred dividends. The Company had no preferred dividends during any of the periods presented; the Company had capitalized interest of $37,908 for the quarter ended December 31, 2017, $37,259 for the quarter ended September 30, 2017, $35,376 for the quarter ended June 30, 2017, $78,939 for the quarter ended March 31, 2017, and $1,181,074 for the quarter ended December 31, 2016; the Company had principal amortization of $232,796 for the quarter ending December 31, 2017, $229,596 for the quarter ended September 30, 2017, $226,439 for the quarter ended June 30, 2017, $223,326 for the quarter ended March 31, 2017, and $220,256 for the quarter ended December 31, 2016. |
(9) | For the purposes of this calculation, we annualize the period's Core EBITDA and use the average daily balance of debt outstanding during the period, less cash and cash equivalents and escrow deposits and restricted cash as of the end of the period. |
(10) | Net debt is calculated as the total principal amount of debt outstanding minus cash and cash equivalents and escrow deposits and restricted cash as of the end of the period. The decrease in net debt during the third quarter of 2017 was primarily attributable to the use of the proceeds from the sale of Two Independence Square in Washington, DC, to repay debt. |
Three Months Ended | Twelve Months Ended | |||||||||||||||
12/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | |||||||||||||
GAAP net income applicable to common stock | $ | (31,383 | ) | $ | 30,189 | $ | 133,564 | $ | 99,732 | |||||||
Depreciation (1) (2) | 28,242 | 32,597 | 118,577 | 127,129 | ||||||||||||
Amortization (1) | 17,499 | 21,259 | 75,327 | 75,139 | ||||||||||||
Impairment loss (1) | 46,461 | — | 46,461 | 33,901 | ||||||||||||
Loss / (gain) on sale of properties (1) | 77 | (19,652 | ) | (119,557 | ) | (93,410 | ) | |||||||||
NAREIT funds from operations applicable to common stock | 60,896 | 64,393 | 254,372 | 242,491 | ||||||||||||
Adjustments: | ||||||||||||||||
Acquisition costs | — | 4 | 6 | 976 | ||||||||||||
Net (recoveries) / loss from casualty events (1) | — | — | — | (34 | ) | |||||||||||
Core funds from operations applicable to common stock | 60,896 | 64,397 | 254,378 | 243,433 | ||||||||||||
Adjustments: | ||||||||||||||||
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on senior notes | 604 | 667 | 2,496 | 2,610 | ||||||||||||
Depreciation of non real estate assets | 212 | 246 | 809 | 841 | ||||||||||||
Straight-line effects of lease revenue (1) | (5,553 | ) | (6,429 | ) | (21,492 | ) | (21,544 | ) | ||||||||
Stock-based and other non-cash compensation expense | 1,937 | 284 | 6,139 | 5,620 | ||||||||||||
Amortization of lease-related intangibles (1) | (1,685 | ) | (1,385 | ) | (6,575 | ) | (5,065 | ) | ||||||||
Acquisition costs | — | (4 | ) | (6 | ) | (976 | ) | |||||||||
Non-incremental capital expenditures (3) | (13,463 | ) | (12,135 | ) | (35,437 | ) | (35,568 | ) | ||||||||
Adjusted funds from operations applicable to common stock | $ | 42,948 | $ | 45,641 | $ | 200,312 | $ | 189,351 | ||||||||
Weighted average common shares outstanding - diluted | 144,503 | 145,764 | 145,380 | 145,635 | ||||||||||||
Funds from operations per share (diluted) | $ | 0.42 | $ | 0.44 | $ | 1.75 | $ | 1.67 | ||||||||
Core funds from operations per share (diluted) | $ | 0.42 | $ | 0.44 | $ | 1.75 | $ | 1.67 | ||||||||
Common stock outstanding at end of period | 142,359 | 145,235 | 142,359 | 145,235 |
(1) | Includes our proportionate share of amounts attributable to consolidated properties and unconsolidated joint ventures. |
(2) | Excludes depreciation of non real estate assets. |
(3) | Non-incremental capital expenditures are defined on page 39. |
Three Months Ended | Twelve Months Ended | ||||||||||||||
12/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | ||||||||||||
Net income attributable to Piedmont | $ | (31,383 | ) | $ | 30,189 | $ | 133,564 | $ | 99,732 | ||||||
Net income attributable to noncontrolling interest | (5 | ) | (8 | ) | (15 | ) | (15 | ) | |||||||
Interest expense (1) | 15,463 | 16,566 | 68,124 | 64,860 | |||||||||||
Depreciation (1) (2) | 28,454 | 32,844 | 119,386 | 127,970 | |||||||||||
Amortization (1) (2) | 17,499 | 21,259 | 75,327 | 75,139 | |||||||||||
Impairment loss (1) | 46,461 | — | 46,461 | 33,901 | |||||||||||
Loss / (gain) on sale of properties (1) | 77 | (19,652 | ) | (119,557 | ) | (93,410 | ) | ||||||||
EBITDAre | 76,566 | 81,198 | 323,290 | 308,177 | |||||||||||
Acquisition costs | — | 4 | 6 | 976 | |||||||||||
Net (recoveries) / loss from casualty events (1) | (57 | ) | — | — | (34 | ) | |||||||||
Core EBITDA | 76,509 | 81,202 | 323,296 | 309,119 | |||||||||||
General & administrative expenses (1) | 7,895 | 5,741 | 31,186 | 29,306 | |||||||||||
Management fee revenue (3) | (149 | ) | (224 | ) | (872 | ) | (1,034 | ) | |||||||
Other (income) / expense (1) (4) | (156 | ) | (459 | ) | (303 | ) | (458 | ) | |||||||
Straight-line effects of lease revenue (1) | (5,553 | ) | (6,429 | ) | (21,492 | ) | (21,544 | ) | |||||||
Amortization of lease-related intangibles (1) | (1,685 | ) | (1,385 | ) | (6,575 | ) | (5,065 | ) | |||||||
Property net operating income (cash basis) | 76,861 | 78,446 | 325,240 | 310,324 | |||||||||||
Deduct net operating (income) / loss from: | |||||||||||||||
Acquisitions (5) | (5,183 | ) | (4,848 | ) | (18,385 | ) | (7,333 | ) | |||||||
Dispositions (6) | (29 | ) | (5,527 | ) | (11,431 | ) | (32,550 | ) | |||||||
Other investments (7) | (891 | ) | (136 | ) | (371 | ) | (497 | ) | |||||||
Same store net operating income (cash basis) | $ | 70,758 | $ | 67,935 | $ | 295,053 | $ | 269,944 | |||||||
Change period over period | 4.2 | % | N/A | 9.3 | % | N/A |
(1) | Includes our proportionate share of amounts attributable to consolidated properties and unconsolidated joint ventures. |
(2) | Excludes amounts attributable to noncontrolling interests. Depreciation related to noncontrolling interests for the three months ended December 31, 2017 and 2016 and the twelve months ended December 31, 2017 and 2016 amounted to (in thousands) $7, $7, $30 and $12, respectively. Amortization related to noncontrolling interests for the three months ended December 31, 2017 and 2016 and the twelve months ended December 31, 2017 and 2016 amounted to (in thousands) $16, $20, $64 and $36, respectively. |
(3) | Presented net of related operating expenses incurred to earn the revenue; therefore, the information presented on this line will not tie to the data presented on the income statements. Expenses incurred to earn the revenue for the three months ended December 31, 2017 and 2016 and the twelve months ended December 31, 2017 and 2016 amounted to (in thousands) $196, $162, $813, and $830, respectively. |
(4) | Figures presented on this line may not tie back to the relevant sources as some activity is attributable to property operations and is, therefore, presented in property net operating income. Certain prior period amounts have been reclassified to conform to the current period financial statement presentation. Amounts attributable to property operations for the three months ended December 31, 2017 and 2016 and the twelve months ended December 31, 2017 and 2016 were (in thousands) $216, $0, $359, and $506, respectively. |
(5) | Acquisitions consist of CNL Center I and CNL Center II in Orlando, FL, purchased on August 1, 2016; One Wayside Road in Burlington, MA, purchased on August 10, 2016; Galleria 200 in Atlanta, GA, purchased on October 7, 2016; 750 West John Carpenter Freeway in Irving, TX, purchased on November 30, 2016; and Norman Pointe I in Bloomington, MN, purchased on December 28, 2017. |
(6) | Dispositions consist of 1055 East Colorado Boulevard in Pasadena, CA, sold on April 21, 2016; Fairway Center II in Brea, CA, sold on April 28, 2016; 1901 Main Street in Irvine, CA, sold on May 2, 2016; 9221 Corporate Boulevard in Rockville, MD, sold on July 27, 2016; 150 West Jefferson in Detroit, MI, sold on July 29, 2016; 9200 and 9211 Corporate Boulevard in Rockville, MD, sold on September 28, 2016; 11695 Johns Creek Parkway in Johns Creek, GA, sold on December 22, 2016; Braker Pointe III in Austin, TX, sold on December 29, 2016; Sarasota Commerce Center II in Sarasota, FL, sold on June 16, 2017; and Two Independence Square in Washington, DC, sold on July 5, 2017. |
(7) | Other investments consist of our interests in unconsolidated joint ventures, active redevelopment and development projects, land, and recently completed redevelopment and development projects for which some portion of operating expenses were capitalized during the current and/or prior year reporting periods. Additional information on our land holdings can be found on page #SectionPage#. The operating results from 3100 Clarendon Boulevard in Arlington, VA, Enclave Place in Houston, TX, and 500 TownPark in Lake Mary, FL, are included in this line item. |
Same Store Net Operating Income (Cash Basis) | |||||||||||||||||||||||
Contributions from Strategic Operating Markets | Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
12/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | ||||||||||||||||||||
$ | % | $ | % | $ | % | $ | % | ||||||||||||||||
New York (1) | $ | 10,071 | 14.2 | $ | 8,461 | 12.5 | $ | 40,717 | 13.8 | $ | 38,206 | 14.2 | |||||||||||
Chicago (2) | 9,832 | 13.9 | 7,632 | 11.2 | 36,035 | 12.2 | 29,244 | 10.8 | |||||||||||||||
Boston (3) | 7,875 | 11.1 | 8,360 | 12.3 | 32,907 | 11.2 | 31,993 | 11.8 | |||||||||||||||
Washington, D.C. (4) | 7,156 | 10.1 | 6,999 | 10.3 | 32,898 | 11.1 | 27,136 | 10.1 | |||||||||||||||
Atlanta (5) | 7,810 | 11.1 | 7,033 | 10.3 | 30,627 | 10.4 | 27,028 | 10.0 | |||||||||||||||
Dallas | 6,386 | 9.0 | 6,838 | 10.1 | 27,041 | 9.2 | 26,516 | 9.8 | |||||||||||||||
Minneapolis (6) | 6,604 | 9.3 | 6,225 | 9.2 | 26,277 | 8.9 | 24,534 | 9.1 | |||||||||||||||
Orlando (7) | 2,714 | 3.9 | 2,272 | 3.3 | 13,574 | 4.6 | 12,324 | 4.6 | |||||||||||||||
Other (8) | 12,310 | 17.4 | 14,115 | 20.8 | 54,977 | 18.6 | 52,963 | 19.6 | |||||||||||||||
Total | $ | 70,758 | 100.0 | $ | 67,935 | 100.0 | $ | 295,053 | 100.0 | $ | 269,944 | 100.0 | |||||||||||
(1) | The increase in metropolitan New York Same Store Net Operating Income for the three months and the twelve months ended December 31, 2017 as compared to the same periods in 2016 was primarily related to increased economic occupancy attributable to recent leasing activity as well as lease restructuring income. |
(2) | The increase in Chicago Same Store Net Operating Income for the three months and the twelve months ended December 31, 2017 as compared to the same periods in 2016 was primarily a result of increased economic occupancy at 500 West Monroe Street in Chicago, IL. |
(3) | The increase in Boston Same Store Net Operating Income for the twelve months ended December 31, 2017 as compared to the same period in 2016 was related to lease restructuring income, the majority of which was recorded during the first quarter of 2017. |
(4) | The increase in Washington, D.C. Same Store Net Operating Income for the twelve months ended December 31, 2017 as compared to the same period in 2016 was primarily a result of increased economic occupancy at One Independence Square and 1225 Eye Street, both located in Washington, D.C., and 4250 North Fairfax Drive in Arlington, VA, offset somewhat by the loss of rental income associated with lease expirations at Arlington Gateway in Arlington, VA, and 1201 Eye Street in Washington, D.C. |
(5) | The increase in Atlanta Same Store Net Operating Income for the three months and the twelve months ended December 31, 2017 as compared to the same periods in 2016 was primarily related to increased economic occupancy at Galleria 300, Glenridge Highlands One, Glenridge Highlands Two, and The Medici, all located in Atlanta, GA. |
(6) | The increase in Minneapolis Same Store Net Operating Income for the twelve months ended December 31, 2017 as compared to the same period in 2016 was primarily a result of increased economic occupancy at US Bancorp Center in Minneapolis, MN. |
(7) | The increase in Orlando Same Store Net Operating Income for the twelve months ended December 31, 2017 as compared to the same period in 2016 was primarily attributable to increased economic occupancy as well as increased parking income at SunTrust Center in Orlando, FL. |
(8) | The decrease in Other Same Store Net Operating Income for the three months ended December 31, 2017 as compared to the same period in 2016 was primarily attributable to the expiration of a large lease at Desert Canyon 300 in Phoenix, AZ, and a rental abatement associated with the lease renewal of the full-building tenant at 1075 West Entrance Drive in Auburn Hills, MI. The increase in Other Same Store Net Operating Income for the twelve months ended December 31, 2017 as compared to the same period in 2016 was primarily attributable to the expiration of the rental abatement period associated with a lease at 800 North Brand Boulevard in Glendale, CA. |
Three Months Ended | Twelve Months Ended | ||||||||||||||
12/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | ||||||||||||
Net income attributable to Piedmont | $ | (31,383 | ) | $ | 30,189 | $ | 133,564 | $ | 99,732 | ||||||
Net income attributable to noncontrolling interest | (5 | ) | (8 | ) | (15 | ) | (15 | ) | |||||||
Interest expense (1) | 15,463 | 16,566 | 68,124 | 64,860 | |||||||||||
Depreciation (1) (2) | 28,454 | 32,844 | 119,386 | 127,970 | |||||||||||
Amortization (1) (2) | 17,499 | 21,259 | 75,327 | 75,139 | |||||||||||
Impairment loss (1) | 46,461 | — | 46,461 | 33,901 | |||||||||||
Loss / (gain) on sale of properties (1) | 77 | (19,652 | ) | (119,557 | ) | (93,410 | ) | ||||||||
EBITDAre | 76,566 | 81,198 | 323,290 | 308,177 | |||||||||||
Acquisition costs | — | 4 | 6 | 976 | |||||||||||
Net (recoveries) / loss from casualty events (1) | (57 | ) | — | — | (34 | ) | |||||||||
Core EBITDA | 76,509 | 81,202 | 323,296 | 309,119 | |||||||||||
General & administrative expenses (1) | 7,895 | 5,741 | 31,186 | 29,306 | |||||||||||
Management fee revenue (3) | (149 | ) | (224 | ) | (872 | ) | (1,034 | ) | |||||||
Other (income) / expense (1) (4) | (156 | ) | (459 | ) | (303 | ) | (458 | ) | |||||||
Property net operating income (accrual basis) | 84,099 | 86,260 | 353,307 | 336,933 | |||||||||||
Deduct net operating (income) / loss from: | |||||||||||||||
Acquisitions (5) | (7,056 | ) | (6,396 | ) | (29,216 | ) | (9,175 | ) | |||||||
Dispositions (6) | (29 | ) | (5,719 | ) | (11,491 | ) | (33,761 | ) | |||||||
Other investments (7) | (1,135 | ) | (438 | ) | (2,987 | ) | (1,311 | ) | |||||||
Same store net operating income (accrual basis) | $ | 75,879 | $ | 73,707 | $ | 309,613 | $ | 292,686 | |||||||
Change period over period | 2.9 | % | N/A | 5.8 | % | N/A |
(1) | Includes our proportionate share of amounts attributable to consolidated properties and unconsolidated joint ventures. |
(2) | Excludes amounts attributable to noncontrolling interests. Depreciation related to noncontrolling interests for the three months ended December 31, 2017 and 2016 and the twelve months ended December 31, 2017 and 2016 amounted to (in thousands) $7, $7, $30 and $12, respectively. Amortization related to noncontrolling interests for the three months ended December 31, 2017 and 2016 and the twelve months ended December 31, 2017 and 2016 amounted to (in thousands) $16, $20, $64 and $36, respectively. |
(3) | Presented net of related operating expenses incurred to earn the revenue; therefore, the information presented on this line will not tie to the data presented on the income statements. Expenses incurred to earn the revenue for the three months ended December 31, 2017 and 2016 and the twelve months ended December 31, 2017 and 2016 amounted to (in thousands) $196, $162, $813, and $830, respectively. |
(4) | Figures presented on this line may not tie back to the relevant sources as some activity is attributable to property operations and is, therefore, presented in property net operating income. Certain prior period amounts have been reclassified to conform to the current period financial statement presentation. Amounts attributable to property operations for the three months ended December 31, 2017 and 2016 and the twelve months ended December 31, 2017 and 2016 were (in thousands) $216, $0, $359, and $506, respectively. |
(5) | Acquisitions consist of CNL Center I and CNL Center II in Orlando, FL, purchased on August 1, 2016; One Wayside Road in Burlington, MA, purchased on August 10, 2016; Galleria 200 in Atlanta, GA, purchased on October 7, 2016; 750 West John Carpenter Freeway in Irving, TX, purchased on November 30, 2016; and Norman Pointe I in Bloomington, MN, purchased on December 28, 2017. |
(6) | Dispositions consist of 1055 East Colorado Boulevard in Pasadena, CA, sold on April 21, 2016; Fairway Center II in Brea, CA, sold on April 28, 2016; 1901 Main Street in Irvine, CA, sold on May 2, 2016; 9221 Corporate Boulevard in Rockville, MD, sold on July 27, 2016; 150 West Jefferson in Detroit, MI, sold on July 29, 2016; 9200 and 9211 Corporate Boulevard in Rockville, MD, sold on September 28, 2016; 11695 Johns Creek Parkway in Johns Creek, GA, sold on December 22, 2016; Braker Pointe III in Austin, TX, sold on December 29, 2016; Sarasota Commerce Center II in Sarasota, FL, sold on June 16, 2017; and Two Independence Square in Washington, DC, sold on July 5, 2017. |
(7) | Other investments consist of our interests in unconsolidated joint ventures, active redevelopment and development projects, land, and recently completed redevelopment and development projects for which some portion of operating expenses were capitalized during the current and/or prior year reporting periods. Additional information on our land holdings can be found on page 38. The operating results from 3100 Clarendon Boulevard in Arlington, VA, Enclave Place in Houston, TX, and 500 TownPark in Lake Mary, FL, are included in this line item. |
Same Store Net Operating Income (Accrual Basis) | |||||||||||||||||||||||
Contributions from Strategic Operating Markets | Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
12/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | ||||||||||||||||||||
$ | % | $ | % | $ | % | $ | % | ||||||||||||||||
Washington, D.C. (1) | $ | 8,699 | 11.5 | $ | 10,015 | 13.6 | $ | 39,781 | 12.9 | $ | 37,033 | 12.7 | |||||||||||
New York (2) | 9,806 | 12.9 | 7,826 | 10.6 | 39,450 | 12.7 | 36,438 | 12.4 | |||||||||||||||
Chicago (3) | 9,757 | 12.9 | 8,646 | 11.7 | 37,592 | 12.1 | 32,819 | 11.2 | |||||||||||||||
Boston (4) | 9,136 | 12.0 | 8,306 | 11.3 | 35,221 | 11.4 | 32,073 | 11.0 | |||||||||||||||
Atlanta (5) | 8,006 | 10.5 | 7,815 | 10.6 | 32,320 | 10.4 | 30,939 | 10.6 | |||||||||||||||
Dallas | 6,515 | 8.6 | 7,053 | 9.6 | 27,518 | 8.9 | 27,050 | 9.2 | |||||||||||||||
Minneapolis (6) | 6,291 | 8.3 | 5,979 | 8.1 | 24,905 | 8.0 | 23,561 | 8.0 | |||||||||||||||
Orlando | 3,713 | 4.9 | 3,546 | 4.8 | 14,772 | 4.8 | 14,312 | 4.9 | |||||||||||||||
Other | 13,956 | 18.4 | 14,521 | 19.7 | 58,054 | 18.8 | 58,461 | 20.0 | |||||||||||||||
Total | $ | 75,879 | 100.0 | $ | 73,707 | 100.0 | $ | 309,613 | 100.0 | $ | 292,686 | 100.0 | |||||||||||
(1) | The decrease in Washington, D.C. Same Store Net Operating Income for the three months ended December 31, 2017 as compared to the same period in 2016 was primarily attributable to lease expirations at Arlington Gateway in Arlington, VA, and 1201 Eye Street in Washington, D.C. The increase in Washington, D.C. Same Store Net Operating Income for the twelve months ended December 31, 2017 as compared to the same period in 2016 was primarily attributable to increased rental income due the commencement of several new leases at One Independence Square and 1225 Eye Street, both located in Washington, D.C., and 4250 North Fairfax Drive in Arlington, VA. |
(2) | The increase in metropolitan New York Same Store Net Operating Income for the three months and the twelve months ended December 31, 2017 as compared to the same periods in 2016 was primarily attributable to increased rental income resulting from recent leasing activity and lease restructuring income at 200 and 400 Bridgewater Crossing in Bridgewater, NJ. |
(3) | The increase in Chicago Same Store Net Operating Income for the three months and the twelve months ended December 31, 2017 as compared to the same periods in 2016 was primarily attributable to increased rental income resulting from the commencement of several new leases at 500 West Monroe Street in Chicago, IL. |
(4) | The increase in Boston Same Store Net Operating Income for the twelve months ended December 31, 2017 as compared to the same period in 2016 was attributable to lease restructuring income, the majority of which was recorded in the first quarter of 2017, and recent leasing activity. |
(5) | The increase in Atlanta Same Store Net Operating Income for the twelve months ended December 31, 2017 as compared to the same period in 2016 was primarily attributable to increased rental income due to the commencement of new leases at Galleria 300 and Glenridge Highlands One, both located in Atlanta, GA. |
(6) | The increase in Minneapolis Same Store Net Operating Income for the twelve months ended December 31, 2017 as compared to the same period in 2016 was primarily attributable to increased rental income resulting from the commencement of several new leases at US Bancorp Center in Minneapolis, MN. |
With Pro Forma Adjustments for | As of | As of | ||||||
the Sale of 14 Properties | December 31, 2017 | December 31, 2016 | ||||||
Market Capitalization | ||||||||
Common stock price (1) | $ | 19.61 | $ | 20.91 | ||||
Total shares outstanding | 142,359 | 145,235 | ||||||
Equity market capitalization (1) | $ | 2,791,659 | $ | 3,036,870 | ||||
Total debt - principal amount outstanding (excludes premiums, discounts, and deferred financing costs) | $1,318,670 (2) | $ | 1,733,670 | $ | 2,029,582 | |||
Total market capitalization (1) | $ | 4,525,329 | $ | 5,066,452 | ||||
Total debt / Total market capitalization (1) | approximately 32% (2) | 38.3 | % | 40.1 | % | |||
Ratios & Information for Debt Holders | ||||||||
Total gross real estate assets (3) | $ | 4,438,209 | $ | 4,785,417 | ||||
Total debt / Total gross real estate assets (3) | 39.1 | % | 42.4 | % | ||||
Total debt / Total gross assets (4) | approximately 30% (2) | 34.3 | % | 37.4 | % | |||
Average net debt to Core EBITDA (5) | under 5x's (estimated) (2) | 5.6 x | 6.4 x |
(1) | Reflects common stock closing price as of the end of the reporting period. |
(2) | On January 4, 2018, Piedmont completed the disposition of 14 properties and used the net sales proceeds to repay debt. Figure represents the impact on this measure on a pro forma basis of the sales of the properties. Please refer to page 47 for additional details regarding the sales of the properties and the impact on various metrics for the Company. |
(3) | Gross real estate assets is defined as total real estate assets with the add-back of accumulated depreciation and accumulated amortization related to real estate assets. |
(4) | Gross assets is defined as total assets with the add-back of accumulated depreciation and accumulated amortization related to real estate assets. |
(5) | For the purposes of this calculation, we annualize the Core EBITDA for the quarter and use the average daily balance of debt outstanding during the quarter, less cash and cash equivalents and escrow deposits and restricted cash as of the end of the quarter. |
Floating Rate & Fixed Rate Debt | |||||
Debt (1) | Principal Amount Outstanding | Weighted Average Stated Interest Rate (2) | Weighted Average Maturity | ||
Floating Rate | $193,000 | (3) | 2.54% | 7.4 months | |
Fixed Rate | 1,540,670 | 3.59% | 47.9 months | ||
Total | $1,733,670 | 3.48% | 43.4 months |
Unsecured & Secured Debt | ||||||
Debt (1) | Principal Amount Outstanding | Weighted Average Stated Interest Rate (2) | Weighted Average Maturity | |||
Unsecured | $1,543,000 | 3.43% | 42.3 months | |||
Secured | 190,670 | 3.81% | 52.5 months | |||
Total | $1,733,670 | 3.48% | 43.4 months |
Debt Maturities | |||||||
Maturity Year | Secured Debt - Principal Amount Outstanding (1) | Unsecured Debt - Principal Amount Outstanding (1) | Weighted Average Stated Interest Rate (2) | Percentage of Total | |||
2018 | $— | $170,000 | (4) | 2.54% | 9.8% | ||
2019 | — | 300,000 | (4) | 2.78% | 17.3% | ||
2020 | — | 323,000 | (5) | 3.29% | 18.6% | ||
2021 | 30,670 | — | 5.55% | (6) | 1.8% | ||
2022 | 160,000 | — | 3.48% | 9.2% | |||
2023 + | — | 750,000 | 3.96% | 43.3% | |||
Total | $190,670 | $1,543,000 | 3.48% | 100.0% |
(1) | All of Piedmont's outstanding debt as of December 31, 2017, was interest-only debt with the exception of the $30.7 million of debt associated with 5 Wall Street located in Burlington, MA. |
(2) | Weighted average stated interest rate is calculated based upon the principal amounts outstanding. |
(3) | Amount represents the $23 million outstanding balance as of December 31, 2017 on the $500 million unsecured revolving credit facility and the $170 million unsecured term loan. Two other loans, the $300 million unsecured term loan that closed in 2011 and the $300 million unsecured term loan that closed in 2013, have stated variable rates. However, Piedmont entered into $300 million in notional amount of interest rate swap agreements which effectively fix the interest rate on the 2011 unsecured term loan at 3.35% through its maturity date of January 15, 2020, assuming no credit rating change for the Company, and $300 million in notional amount of interest rate swap agreements which effectively fix the interest rate on the 2013 unsecured term loan at 2.78% through its maturity date of January 31, 2019, assuming no credit rating change for the Company. The 2011 unsecured term loan and the 2013 unsecured term loan, therefore, are reflected as fixed rate debt. |
(4) | On January 4, 2018, Piedmont repaid the $300 million unsecured term loan that closed in 2013 and the $170 million unsecured term loan with no prepayment penalties. The debt repayments were made with the proceeds from the sales of 14 properties along with a borrowing under the Company's unsecured revolving line of credit. For additional information, please refer to the Subsequent Events section of Financial Highlights on page 10 and a presentation of certain pro forma statistical metrics for the Company at December 31, 2017 after taking into account the debt repayment on page 47. |
(5) | The initial maturity date of the $500 million unsecured revolving credit facility is June 18, 2019; however, there are two, six-month extension options available under the facility providing for a final extended maturity date of June 18, 2020. For the purposes of this schedule, we reflect the maturity date of the facility as the final extended maturity date of June 2020. |
(6) | The $35.0 million fixed-rate loan has a stated interest rate of 5.55%; however, upon acquiring 5 Wall Street and assuming the loan, the Company marked the debt to its estimated fair value as of that time, resulting in an effective interest rate of 3.75%. |
Facility (1) | Property | Stated Rate | Maturity | Principal Amount Outstanding as of December 31, 2017 | ||||
Secured | ||||||||
$35.0 Million Fixed-Rate Loan (2) | 5 Wall Street | 5.55 | % | (3) | 9/1/2021 | $ | 30,670 | |
$160.0 Million Fixed-Rate Loan | 1901 Market Street | 3.48 | % | (4) | 7/5/2022 | 160,000 | ||
Subtotal / Weighted Average (5) | 3.81 | % | $ | 190,670 | ||||
Unsecured | ||||||||
$170.0 Million Unsecured 2015 Term Loan | N/A | 2.54 | % | (6) | 5/15/2018 | $ | 170,000 | |
$300.0 Million Unsecured 2013 Term Loan | N/A | 2.78 | % | (7) | 1/31/2019 | 300,000 | ||
$300.0 Million Unsecured 2011 Term Loan | N/A | 3.35 | % | (8) | 1/15/2020 | 300,000 | ||
$500.0 Million Unsecured Line of Credit (9) | N/A | 2.57 | % | (10) | 6/18/2020 | 23,000 | ||
$350.0 Million Unsecured Senior Notes | N/A | 3.40 | % | (11) | 6/1/2023 | 350,000 | ||
$400.0 Million Unsecured Senior Notes | N/A | 4.45 | % | (12) | 3/15/2024 | 400,000 | ||
Subtotal / Weighted Average (5) | 3.43 | % | $ | 1,543,000 | ||||
Total Debt - Principal Amount Outstanding / Weighted Average Stated Rate (5) | 3.48 | % | $ | 1,733,670 | ||||
GAAP Accounting Adjustments (13) | (6,743 | ) | ||||||
Total Debt - GAAP Amount Outstanding | $ | 1,726,927 |
(1) | All of Piedmont’s outstanding debt as of December 31, 2017, was interest-only debt with the exception of the $30.7 million of debt associated with 5 Wall Street located in Burlington, MA. |
(2) | The loan is amortizing based on a 25-year amortization schedule. |
(3) | The loan has a stated interest rate of 5.55%; however, upon acquiring 5 Wall Street and assuming the loan, the Company marked the debt to its estimated fair value as of that time, resulting in an effective interest rate of 3.75%. |
(4) | The stated interest rate on the $160 million fixed-rate loan is 3.48%. After the application of interest rate hedges, the effective cost of the financing is approximately 3.58%. |
(5) | Weighted average is based on the principal amount outstanding and interest rate at December 31, 2017. |
(6) | The $170 million unsecured term loan has a variable interest rate. Piedmont may select from multiple interest rate options under the facility, including the prime rate and various length LIBOR locks. All LIBOR selections are subject to an additional spread (1.125% as of December 31, 2017) over the selected rate based on Piedmont’s current credit rating. On January 4, 2018, Piedmont repaid the loan with no prepayment penalty. The debt repayment was made with the proceeds from the sales of 14 properties along with a borrowing under the Company's unsecured revolving line of credit. For additional information, please refer to the Subsequent Events section of Financial Highlights on page 10 and a presentation of certain pro forma statistical metrics for the Company at December 31, 2017 after taking into account the debt repayment on page 47. |
(7) | The $300 million unsecured term loan that closed in 2013 has a stated variable rate; however, Piedmont entered into interest rate swap agreements which effectively fix the interest rate on this loan at 2.78% through its maturity date of January 31, 2019, assuming no credit rating change for the Company. On January 4, 2018, Piedmont repaid the loan with no prepayment penalty and terminated the related interest rate swap agreements. The debt repayment was made with the proceeds from the sales of 14 properties along with a borrowing under the Company's unsecured revolving line of credit. For additional information, please refer to the Subsequent Events section of Financial Highlights on page 10 and a presentation of certain pro forma statistical metrics for the Company at December 31, 2017 after taking into account the debt repayment on page 47. |
(8) | The $300 million unsecured term loan that closed in 2011 has a stated variable rate; however, Piedmont entered into interest rate swap agreements which effectively fix the interest rate on this loan at 3.35% through its maturity date of January 15, 2020, assuming no credit rating change for the Company. |
(9) | All of Piedmont’s outstanding debt as of December 31, 2017, was term debt with the exception of $23 million outstanding on our unsecured revolving credit facility. The $500 million unsecured revolving credit facility has an initial maturity date of June 18, 2019; however, there are two, six-month extension options available under the facility providing for a total extension of up to one year to June 18, 2020. The final extended maturity date is presented on this schedule. |
(10) | The interest rate presented for the $500 million unsecured revolving credit facility is the weighted average interest rate for all outstanding draws as of December 31, 2017. Piedmont may select from multiple interest rate options with each draw under the facility, including the prime rate and various length LIBOR locks. All LIBOR selections are subject to an additional spread (1.00% as of December 31, 2017) over the selected rate based on Piedmont’s current credit rating. |
(11) | The $350 million unsecured senior notes were offered for sale at 99.601% of the principal amount. The resulting effective cost of the financing is approximately 3.45% before the consideration of transaction costs and proceeds from interest rate hedges. After the application of proceeds from interest rate hedges, the effective cost of the financing is approximately 3.43%. |
(12) | The $400 million unsecured senior notes were offered for sale at 99.791% of the principal amount. The resulting effective cost of the financing is approximately 4.48% before the consideration of transaction costs and proceeds from interest rate hedges. After the application of proceeds from interest rate hedges, the effective cost of the financing is approximately 4.10%. |
(13) | The GAAP accounting adjustments relate to original issue discounts, third-party fees, and lender fees resulting from the procurement processes for our various debt facilities, along with debt fair value adjustments associated with the assumed 5 Wall Street debt. The original issue discounts and fees, along with the debt fair value adjustments, are amortized to interest expense over the contractual term of the related debt. |
Three Months Ended | ||||||
Bank Debt Covenant Compliance (1) | Required | 12/31/2017 | 9/30/2017 | 06/30/2017 | 3/31/2017 | 12/31/2016 |
Maximum leverage ratio | 0.60 | 0.34 | 0.34 | 0.38 | 0.38 | 0.39 |
Minimum fixed charge coverage ratio (2) | 1.50 | 4.29 | 4.24 | 4.19 | 4.19 | 4.10 |
Maximum secured indebtedness ratio | 0.40 | 0.04 | 0.04 | 0.06 | 0.06 | 0.06 |
Minimum unencumbered leverage ratio | 1.60 | 3.09 | 3.09 | 2.79 | 2.77 | 2.66 |
Minimum unencumbered interest coverage ratio (3) | 1.75 | 5.11 | 5.15 | 5.01 | 5.12 | 5.07 |
Three Months Ended | ||||||
Bond Covenant Compliance (4) | Required | 12/31/2017 | 9/30/2017 | 06/30/2017 | 3/31/2017 | 12/31/2016 |
Total debt to total assets | 60% or less | 38.9% | 38.1% | 43.1% | 43.0% | 42.2% |
Secured debt to total assets | 40% or less | 4.3% | 4.3% | 6.9% | 6.9% | 6.9% |
Ratio of consolidated EBITDA to interest expense | 1.50 or greater | 4.95 | 4.93 | 4.97 | 4.98 | 4.99 |
Unencumbered assets to unsecured debt | 150% or greater | 269% | 276% | 248% | 249% | 255% |
Three Months Ended | Twelve Months Ended | Twelve Months Ended | |
Other Debt Coverage Ratios for Debt Holders | December 31, 2017 | December 31, 2017 | December 31, 2016 |
Average net debt to core EBITDA (5) | 5.6 x | 5.8 x | 6.4 x |
Fixed charge coverage ratio (6) | 4.9 x | 4.7 x | 4.4 x |
Interest coverage ratio (7) | 4.9 x | 4.7 x | 4.5 x |
(1) | Bank debt covenant compliance calculations relate to specific calculations detailed in the relevant credit agreements. |
(2) | Defined as EBITDA for the trailing four quarters (including the Company's share of EBITDA from unconsolidated interests), less one-time or non-recurring gains or losses, less a $0.15 per square foot capital reserve, and excluding the impact of straight line rent leveling adjustments and amortization of intangibles divided by the Company's share of fixed charges, as more particularly described in the credit agreements. This definition of fixed charge coverage ratio as prescribed by our credit agreements is different from the fixed charge coverage ratio definition employed elsewhere within this report. |
(3) | Defined as net operating income for the trailing four quarters for unencumbered assets (including the Company's share of net operating income from partially-owned entities and subsidiaries that are deemed to be unencumbered) less a $0.15 per square foot capital reserve divided by the Company's share of interest expense associated with unsecured financings only, as more particularly described in the credit agreements. |
(4) | Bond covenant compliance calculations relate to specific calculations prescribed in the relevant debt agreements. Please refer to the Indenture dated May 9, 2013, and the Indenture and the Supplemental Indenture dated March 6, 2014, for detailed information about the calculations. |
(5) | For the purposes of this calculation, we use the average daily balance of debt outstanding during the period, less cash and cash equivalents and escrow deposits and restricted cash as of the end of the period. |
(6) | Fixed charge coverage ratio is calculated as Core EBITDA divided by the sum of interest expense, principal amortization, capitalized interest and preferred dividends. The Company had no preferred dividends during the periods ended December 31, 2017 and December 31, 2016. The Company had capitalized interest of $37,908 for the three months ended December 31, 2017, $189,482 for the twelve months ended December 31, 2017, and $4,555,407 for the twelve months ended December 31, 2016. The Company had principal amortization of $232,796 for the three months ended December 31, 2017, $912,157 for the twelve months ended December 31, 2017, and $863,022 for the twelve months ended December 31, 2016. |
(7) | Interest coverage ratio is calculated as Core EBITDA divided by the sum of interest expense and capitalized interest. The Company had capitalized interest of $37,908 for the three months ended December 31, 2017, $189,482 for the twelve months ended December 31, 2017, and $4,555,407 for the twelve months ended December 31, 2016. |
Tenant | Credit Rating (2) | Number of Properties | Lease Expiration (3) | Annualized Lease Revenue | Percentage of Annualized Lease Revenue (%) | Leased Square Footage | Percentage of Leased Square Footage (%) | ||
State of New York | AA+ / Aa1 | 1 | 2019 | $25,755 | 4.6 | 481 | 2.8 | ||
US Bancorp | A+ / A1 | 3 | 2023 / 2024 | 24,054 | 4.3 | 783 | 4.6 | ||
Independence Blue Cross | No Rating Available | 1 | 2033 | 18,731 | 3.3 | 801 | 4.7 | ||
GE | A / A2 | 1 | 2027 | 16,854 | 3.0 | 452 | 2.6 | ||
Nestle | AA- / Aa2 | 1 | 2021 | 12,300 | 2.2 | 401 | 2.3 | ||
City of New York | AA / Aa2 | 1 | 2020 | 10,896 | 1.9 | 313 | 1.8 | ||
U.S. Government (4) | AA+ / Aaa | 4 | 2018 - 2032 | (5) | 10,703 | 1.9 | 229 | 1.3 | |
Gallagher | No Rating Available | 2 | 2018 | 9,737 | 1.7 | 315 | 1.8 | ||
Catamaran | A+ / A3 | 1 | 2025 | 8,847 | 1.6 | 301 | 1.8 | ||
Nuance Communications | BB- / Ba3 | 2 | 2018 / 2030 | (6) | 8,344 | 1.5 | 247 | 1.4 | |
Caterpillar Financial | A / A3 | 1 | 2022 | 8,309 | 1.5 | 312 | 1.8 | ||
Motorola Solutions | BBB- / Baa3 | 1 | 2028 | 8,165 | 1.5 | 206 | 1.2 | ||
Harvard University | AAA / Aaa | 2 | 2032 / 2033 | 7,787 | 1.4 | 129 | 0.8 | ||
District of Columbia | AA / Aa1 | 2 | 2028 | 7,148 | 1.3 | 146 | 0.9 | ||
Raytheon | A / A3 | 2 | 2024 | 6,442 | 1.1 | 440 | 2.6 | ||
Henry M Jackson | No Rating Available | 2 | 2022 | 6,025 | 1.1 | 145 | 0.9 | ||
Schlumberger Technology | AA- / A1 | 1 | 2020 | 5,952 | 1.1 | 163 | 1.0 | ||
Goldman Sachs | BBB+ / A3 | 2 | 2018 | 5,920 | 1.1 | 207 | 1.2 | ||
First Data Corporation | B+ / B1 | 1 | 2027 | 5,868 | 1.0 | 201 | 1.2 | ||
Epsilon Data Management | No Rating Available | 1 | 2026 | 5,832 | 1.0 | 222 | 1.3 | ||
SunTrust Bank | BBB+ / Baa1 | 3 | 2019 / 2025 | (7) | 5,634 | 1.0 | 145 | 0.9 | |
International Food Policy Research Institute | No Rating Available | 1 | 2029 | 5,581 | 1.0 | 102 | 0.6 | ||
CVS Caremark | BBB+ / Baa1 | 1 | 2022 | 5,533 | 1.0 | 208 | 1.2 | ||
Other | Various | 330,926 | 58.9 | 10,142 | 59.3 | ||||
Total | $561,343 | 100.0 | 17,091 | 100.0 |
(1) | This schedule presents all tenants contributing 1.0% or more to Annualized Lease Revenue. |
(2) | Credit rating may reflect the credit rating of the parent or a guarantor. When available, both the Standard & Poor's credit rating and the Moody's credit rating are provided. The absence of a credit rating for a tenant is no indication of the creditworthiness of the tenant; in most cases, the lack of a credit rating reflects that the tenant has not sought such a rating. |
(3) | Unless otherwise indicated, Lease Expiration represents the expiration year of the majority of the square footage leased by the tenant. |
(4) | The Company sold Two Independence Square in Washington, D.C., during the third quarter of 2017. The building is fully leased to the United States of America and functions as the headquarters of NASA. As a result of the sale of the building, the percentage of Annualized Lease Revenue derived from our various leasing relationships with the U.S. Government decreased from 8.2% as of December 31, 2016 to 1.9% as of December 31, 2017. |
(5) | There are several leases with several different agencies of the U.S. Government with expiration years ranging from 2018 to 2032. Of the total population of U.S. Government leases, leases contributing 1.5% to Annualized Lease Revenue expire in 2025 and after. |
(6) | Of the total amount of space leased to the tenant, the lease for approximately 46,000 square feet expires in 2018 and the lease for approximately 201,000 square feet expires in 2030. |
(7) | Of the total amount of space leased to the tenant, the leases for approximately 129,000 square feet expire in 2019 and the lease for approximately 16,000 square feet expires in 2025. |
Rating Level | Annualized Lease Revenue (in thousands) | Percentage of Annualized Lease Revenue (%) | |
AAA / Aaa | $23,969 | 4.3 | |
AA / Aa | 80,646 | 14.4 | |
A / A | 108,878 | 19.4 | |
BBB / Baa | 57,335 | 10.2 | |
BB / Ba | 31,800 | 5.7 | |
B / B | 28,656 | 5.1 | |
Below | 2,376 | 0.4 | |
Not rated (2) | 227,683 | 40.5 | |
Total | $561,343 | 100.0 | |
Lease Size | Number of Leases | Percentage of Leases (%) | Annualized Lease Revenue (in thousands) | Percentage of Annualized Lease Revenue (%) | Leased Square Footage (in thousands) | Percentage of Leased Square Footage (%) | |
2,500 or Less | 268 | 32.3 | $21,723 | 3.9 | 214 | 1.3 | |
2,501 - 10,000 | 288 | 34.8 | 50,570 | 9.0 | 1,512 | 8.8 | |
10,001 - 20,000 | 102 | 12.3 | 45,508 | 8.1 | 1,427 | 8.4 | |
20,001 - 40,000 | 76 | 9.2 | 73,704 | 13.1 | 2,181 | 12.8 | |
40,001 - 100,000 | 50 | 6.0 | 99,035 | 17.6 | 2,913 | 17.0 | |
Greater than 100,000 | 45 | 5.4 | 270,803 | 48.3 | 8,844 | 51.7 | |
Total | 829 | 100.0 | $561,343 | 100.0 | 17,091 | 100.0 | |
(1) | Credit rating may reflect the credit rating of the parent or a guarantor. Where differences exist between the Standard & Poor's credit rating for a tenant and the Moody's credit rating for a tenant, the higher credit rating is selected for this analysis. |
(2) | The classification of a tenant as "not rated" is no indication of the creditworthiness of the tenant; in most cases, the lack of a credit rating reflects that the tenant has not sought such a rating. Included in this category are such tenants as Independence Blue Cross, Piper Jaffray, Brother International, and RaceTrac Petroleum. |
Three Months Ended | Three Months Ended | |||||||||||||||
December 31, 2017 | December 31, 2016 | |||||||||||||||
Leased Square Footage | Rentable Square Footage | Percent Leased (1) | Leased Square Footage | Rentable Square Footage | Percent Leased (1) | |||||||||||
As of September 30, 20xx | 16,817 | 18,847 | 89.2 | % | 17,221 | 18,442 | 93.4 | % | ||||||||
Leases signed during the period | 867 | 329 | ||||||||||||||
Less: lease renewals signed during period | (544 | ) | (163 | ) | ||||||||||||
New leases signed during period | 323 | 166 | ||||||||||||||
Less: new leases signed during period for currently occupied space | (151 | ) | (67 | ) | ||||||||||||
New leases commencing during period | 172 | 99 | ||||||||||||||
Leases expired during period and other | (49 | ) | — | (16 | ) | (7 | ) | |||||||||
Subtotal | 16,940 | 18,847 | 89.9 | % | 17,304 | 18,435 | 93.9 | % | ||||||||
Acquisitions and properties placed in service during period | 151 | 214 | 831 | 1,443 | (3 | ) | ||||||||||
Dispositions during period | — | — | (139 | ) | (297 | ) | ||||||||||
As of December 31, 20xx (2) | 17,091 | 19,061 | 89.7 | % | 17,996 | 19,581 | 91.9 | % | (3 | ) | ||||||
Twelve Months Ended | Twelve Months Ended | ||||||||||||||
December 31, 2017 | December 31, 2016 | ||||||||||||||
Leased Square Footage | Rentable Square Footage | Percent Leased (1) | Leased Square Footage | Rentable Square Footage | Percent Leased (1) | ||||||||||
As of December 31, 20xx (3) | 17,996 | 19,581 | 91.9 | % | 17,323 | 18,934 | 91.5 | % | |||||||
Leases signed during period | 2,070 | 1,956 | |||||||||||||
Less: lease renewals signed during period | (1,199 | ) | (881 | ) | |||||||||||
New leases signed during period | 871 | 1,075 | |||||||||||||
Less: new leases signed during period for currently occupied space | (321 | ) | (235 | ) | |||||||||||
New leases commencing during period | 550 | 840 | |||||||||||||
Leases expired during period and other | (863 | ) | 21 | (701 | ) | (5 | ) | ||||||||
Subtotal | 17,683 | 19,602 | 90.2 | % | 17,462 | 18,929 | 92.2 | % | |||||||
Acquisitions and properties placed in service during period | 151 | 214 | 1,624 | 2,262 | (3) | ||||||||||
Dispositions during period | (743 | ) | (755 | ) | (1,090 | ) | (1,610 | ) | |||||||
As of December 31, 20xx (2) | 17,091 | 19,061 | 89.7 | % | 17,996 | 19,581 | 91.9 | % | (3) | ||||||
Same Store Analysis | |||||||||||||||
Less acquisitions / dispositions after December 31, 2016 and developments / redevelopments (4) (5) | (151 | ) | (214 | ) | 70.6 | % | (745 | ) | (755 | ) | 98.7 | % | |||
Same Store Leased Percentage (2) | 16,940 | 18,847 | 89.9 | % | 17,251 | 18,826 | 91.6 | % | |||||||
(1) | Calculated as square footage associated with commenced leases as of period end with the addition of square footage associated with uncommenced leases for spaces vacant as of period end, divided by total rentable square footage as of period end, expressed as a percentage. |
(2) | The square footage associated with leases with end of period expiration dates is included in the end of the period leased square footage. |
(3) | Leased Square Footage and Rentable Square Footage as of December 31, 2016 have been restated to include two development properties and one re-development property that were placed into service effective January 1, 2017. The development properties that were placed in service are Enclave Place, a 301,000 square foot office property located in Houston, TX, and 500 TownPark, a 134,000 square foot office property located in Lake Mary, FL; the re-development property that was placed in service is 3100 Clarendon Boulevard, a 261,000 square foot office property located in Arlington, VA. |
(4) | |
(5) | Dispositions completed during the previous twelve months are deducted from the previous period data and acquisitions completed during the previous twelve months are deducted from the current period data. Redevelopments commenced during the previous twelve months are deducted from the previous period data and developments and redevelopments placed in service during the previous twelve months are deducted from the current period data. |
Three Months Ended | ||||||
December 31, 2017 | ||||||
Square Feet | % of Total Signed During Period | % of Rentable Square Footage | % Change Cash Rents (2) | % Change Accrual Rents (3) (4) | ||
Leases executed for spaces vacant one year or less | 611 | 70.5% | 3.2% | 20.6% | 24.9% | (6) |
Leases executed for spaces excluded from analysis (5) | 256 | 29.5% |
Twelve Months Ended | ||||||
December 31, 2017 | ||||||
Square Feet | % of Total Signed During Period | % of Rentable Square Footage | % Change Cash Rents (2) | % Change Accrual Rents (3) (4) | ||
Leases executed for spaces vacant one year or less | 1,335 | 64.5% | 7.0% | 10.3% | 16.5% | |
Leases executed for spaces excluded from analysis (5) | 735 | 35.5% | ||||
(1) | The population analyzed consists of consolidated office leases executed during the period with lease terms of greater than one year. Leases associated with storage spaces, management offices, newly acquired assets for which there is less than one year of operating history, and unconsolidated joint venture assets are excluded from this analysis. |
(2) | For the purposes of this analysis, the last twelve months of cash paying rents of the previous leases are compared to the first twelve months of cash paying rents of the new leases in order to calculate the percentage change. |
(3) | For the purposes of this analysis, the accrual basis rents of the previous leases are compared to the accrual basis rents of the new leases in order to calculate the percentage change. For newly signed leases which have variations in accrual basis rents, whether because of known future expansions, contractions, lease expense recovery structure changes, or other similar reasons, the weighted average of such varying accrual basis rents is used for the purposes of this analysis. |
(4) | For leases under which a tenant may use, at its discretion, a portion of its tenant improvement allowance for expenses other than those related to improvements to its space, an assumption is made that the tenant elects to use any such portion of its tenant improvement allowance for improvements to its space prior to the commencement of its lease, unless the Company is notified otherwise by the tenant. This assumption is made based upon historical usage patterns of tenant improvement allowances by the Company's tenants. |
(5) | Represents leases signed at our consolidated office assets that do not qualify for inclusion in the analysis primarily because the spaces for which the new leases were signed had been vacant for greater than one year. |
(6) | The results for the fourth quarter of 2017 were influenced by one large transaction, the 440,000 square foot renewal of Raytheon Company at 225 and 235 Presidential Way in Woburn, MA. If the effects of this transaction were to be removed, the percent change in cash rents would be 4.6% and the percent change in accrual rents would be 19.3%. |
Expiration Year | Annualized Lease Revenue (1) | Percentage of Annualized Lease Revenue (%) | Rentable Square Footage | Percentage of Rentable Square Footage (%) | |
Vacant | $— | — | 1,970 | 10.3 | |
2018 (2) | 40,528 | 7.2 | 1,316 | 6.9 | |
2019 (3) | 59,994 | 10.7 | 1,615 | 8.5 | |
2020 | 46,711 | 8.3 | 1,536 | 8.1 | |
2021 | 30,835 | 5.5 | 976 | 5.1 | |
2022 | 55,022 | 9.8 | 1,723 | 9.0 | |
2023 | 35,010 | 6.2 | 1,181 | 6.2 | |
2024 | 65,570 | 11.7 | 2,395 | 12.6 | |
2025 | 32,635 | 5.8 | 994 | 5.2 | |
2026 | 28,100 | 5.0 | 874 | 4.6 | |
2027 | 49,636 | 8.9 | 1,407 | 7.4 | |
2028 | 34,993 | 6.2 | 879 | 4.6 | |
2029 | 21,232 | 3.8 | 558 | 2.9 | |
Thereafter | 61,077 | 10.9 | 1,637 | 8.6 | |
Total / Weighted Average | $561,343 | 100.0 | 19,061 | 100.0 |
Average Lease Term Remaining | |
12/31/2017 | 6.5 years |
12/31/2016 | 6.9 years |
(1) | Annualized rental income associated with each newly executed lease for currently occupied space is incorporated herein only at the expiration date for the current lease. Annualized rental income associated with each such new lease is removed from the expiry year of the current lease and added to the expiry year of the new lease. These adjustments effectively incorporate known roll ups and roll downs into the expiration schedule. |
(2) | Includes leases with an expiration date of December 31, 2017, comprised of 65,000 square feet and Annualized Lease Revenue of $1.7 million. |
(3) | Leases and other revenue-producing agreements on a month-to-month basis, comprised of approximately 14,000 square feet and Annualized Lease Revenue of $0.4 million, are assigned a lease expiration date of a year and a day beyond the period end date. |
Q1 2018 (1) | Q2 2018 | Q3 2018 | Q4 2018 | |||||||||
Location | Expiring Square Footage | Expiring Lease Revenue (2) | Expiring Square Footage | Expiring Lease Revenue (2) | Expiring Square Footage | Expiring Lease Revenue (2) | Expiring Square Footage | Expiring Lease Revenue (2) | ||||
Atlanta | 12 | $327 | 23 | $623 | 26 | $771 | 25 | $651 | ||||
Boston | 71 | 2,443 | — | — | 2 | 45 | 81 | 2,364 | ||||
Chicago | 290 | 8,812 | 42 | 1,386 | 5 | 119 | 30 | 747 | ||||
Dallas | 109 | 3,121 | 16 | 385 | 42 | 789 | 34 | 966 | ||||
Minneapolis | — | 1 | 6 | 232 | 9 | 364 | 4 | 129 | ||||
New York | 7 | 229 | 28 | 916 | — | — | 39 | 1,234 | ||||
Orlando | 38 | 1,059 | 2 | 73 | 10 | 290 | 52 | 1,531 | ||||
Washington, D.C. | 13 | 694 | 25 | 1,185 | 4 | 113 | 5 | 225 | ||||
Other | 52 | 1,585 | 12 | 288 | 52 | 1,193 | 150 | 5,488 | ||||
Total / Weighted Average (3) | 592 | $18,271 | 154 | $5,088 | 150 | $3,684 | 420 | $13,335 |
(1) | Includes leases with an expiration date of December 31, 2017, comprised of 65,000 square feet and expiring lease revenue of $1.9 million. No such adjustments are made to other periods presented. |
(2) | Expiring Lease Revenue is calculated as expiring square footage multiplied by the gross rent per square foot of the tenant currently leasing the space. |
(3) | Total expiring lease revenue in any given year will not tie to the expiring Annualized Lease Revenue presented on the Lease Expiration Schedule on the previous page as the Lease Expiration Schedule accounts for the revenue effects of newly signed leases. Reflected herein are expiring revenues based on in-place rental rates. |
12/31/2018 (1) | 12/31/2019 | 12/31/2020 | 12/31/2021 | 12/31/2022 | ||||||||||
Location | Expiring Square Footage | Expiring Lease Revenue (2) | Expiring Square Footage | Expiring Lease Revenue (2) | Expiring Square Footage | Expiring Lease Revenue (2) | Expiring Square Footage | Expiring Lease Revenue (2) | Expiring Square Footage | Expiring Lease Revenue (2) | ||||
Atlanta | 86 | $2,372 | 450 | $12,378 | 240 | $6,135 | 147 | $4,197 | 373 | $10,109 | ||||
Boston | 154 | 4,852 | 6 | 200 | 156 | 3,383 | 78 | 1,576 | 91 | 4,087 | ||||
Chicago | 367 | 11,065 | 16 | 452 | 104 | 2,696 | 21 | 631 | 24 | 732 | ||||
Dallas | 201 | 5,261 | 182 | 5,633 | 130 | 3,659 | 107 | 3,049 | 405 | 11,782 | ||||
Minneapolis | 20 | 725 | 143 | 4,390 | 107 | 4,017 | 91 | 3,116 | 58 | 2,035 | ||||
New York | 74 | 2,379 | 489 | 26,532 | 503 | 15,845 | 92 | 4,265 | 79 | 2,553 | ||||
Orlando | 102 | 2,953 | 270 | 9,211 | 50 | 1,216 | 29 | 851 | 112 | 3,452 | ||||
Washington, D.C. | 47 | 2,217 | 59 | 2,662 | 79 | 3,815 | 95 | 4,494 | 260 | 11,807 | ||||
Other | 265 | 8,554 | — | — | 167 | 6,046 | 316 | 9,622 | 321 | 8,532 | ||||
Total / Weighted Average (3) | 1,316 | $40,378 | 1,615 | $61,458 | 1,536 | $46,812 | 976 | $31,801 | 1,723 | $55,089 |
(1) | Includes leases with an expiration date of December 31, 2017, comprised of 65,000 square feet and expiring lease revenue of $1.9 million. No such adjustments are made to other periods presented. |
(2) | Expiring Lease Revenue is calculated as expiring square footage multiplied by the gross rent per square foot of the tenant currently leasing the space. |
(3) | Total expiring lease revenue in any given year will not tie to the expiring Annualized Lease Revenue presented on the Lease Expiration Schedule on page 29 as the Lease Expiration Schedule accounts for the revenue effects of newly signed leases. Reflected herein are expiring revenues based on in-place rental rates. |
For the Three Months Ended | |||||||||||||||||||
12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | 12/31/2016 | |||||||||||||||
Non-incremental | |||||||||||||||||||
Building / construction / development | $ | 2,081 | $ | 984 | $ | 2,883 | $ | 1,070 | $ | 1,479 | |||||||||
Tenant improvements | 3,909 | 2,450 | 4,619 | 4,797 | 4,547 | ||||||||||||||
Leasing costs | 7,473 | 1,795 | 1,571 | 1,805 | 6,109 | ||||||||||||||
Total non-incremental | 13,463 | 5,229 | 9,073 | 7,672 | 12,135 | ||||||||||||||
Incremental | |||||||||||||||||||
Building / construction / development | 4,932 | 2,365 | 1,689 | 6,348 | 10,098 | ||||||||||||||
Tenant improvements | 4,317 | 9,501 | 12,345 | 15,784 | 5,893 | ||||||||||||||
Leasing costs | 2,412 | 2,359 | 3,251 | 1,473 | 4,180 | ||||||||||||||
Total incremental | 11,661 | 14,225 | 17,285 | 23,605 | 20,171 | ||||||||||||||
Total capital expenditures | $ | 25,124 | $ | 19,454 | $ | 26,358 | $ | 31,277 | $ | 32,306 |
Non-incremental tenant improvement commitments (1) | |||||||
Non-incremental tenant improvement commitments outstanding as of September 30, 2017 | $ | 32,062 | |||||
New non-incremental tenant improvement commitments related to leases executed during period | 14,842 | ||||||
Non-incremental tenant improvement expenditures | (3,909 | ) | |||||
Tenant improvement expenditures fulfilled through accrued liabilities already presented on Piedmont's balance sheet, expired commitments or other adjustments | (994 | ) | |||||
Non-incremental tenant improvement commitments fulfilled, expired or other adjustments | (4,903 | ) | |||||
Total as of December 31, 2017 | $ | 42,001 | |||||
NOTE: | The information presented on this page is for all consolidated assets. |
(1) | Commitments are unexpired contractual non-incremental tenant improvement obligations for leases executed in current and prior periods that have not yet been incurred, are due over the next five years, and have not otherwise been presented on Piedmont's financial statements. The four largest commitments total approximately $22.9 million, or 55% of the total outstanding commitments. |
Three Months Ended December 31, 2017 | Twelve Months Ended December 31, 2017 | For the Year Ended | |||||||||||
2016 | 2015 | 2014 | 2013 | ||||||||||
Renewal Leases | |||||||||||||
Number of leases | 14 | 64 | 79 | 74 | 56 | 56 | |||||||
Square feet | 543,442 | 1,198,603 | 880,289 | 1,334,398 | 959,424 | 2,376,177 | |||||||
Tenant improvements per square foot (1) | $6.47 | $7.84 | $7.36 | $16.91 | $19.02 | $14.24 | |||||||
Leasing commissions per square foot | $5.11 | $4.80 | $5.76 | $8.29 | $8.33 | $4.66 | |||||||
Total per square foot | $11.58 | $12.64 | $13.12 | $25.20 | $27.35 | $18.90 | |||||||
Tenant improvements per square foot per year of lease term | $1.51 | $1.84 | $1.35 | $2.90 | $2.97 | $1.88 | |||||||
Leasing commissions per square foot per year of lease term | $1.19 | $1.12 | $1.05 | $1.42 | $1.30 | $0.62 | |||||||
Total per square foot per year of lease term | $2.70 | $2.96 | $2.40 | $4.32 | (2) | $4.27 | (3) | $2.50 | |||||
New Leases | |||||||||||||
Number of leases | 17 | 74 | 93 | 90 | 98 | 87 | |||||||
Square feet | 322,448 | 855,069 | 1,065,630 | 1,563,866 | 1,142,743 | 1,050,428 | |||||||
Tenant improvements per square foot (1) | $52.81 | $41.19 | $40.78 | $60.41 | $34.46 | $35.74 | |||||||
Leasing commissions per square foot | $21.33 | $15.90 | $15.13 | $20.23 | $15.19 | $12.94 | |||||||
Total per square foot | $74.14 | $57.09 | $55.91 | $80.64 | $49.65 | $48.68 | |||||||
Tenant improvements per square foot per year of lease term | $4.70 | $4.73 | $5.01 | $5.68 | $3.78 | $4.17 | |||||||
Leasing commissions per square foot per year of lease term | $1.90 | $1.83 | $1.86 | $1.90 | $1.66 | $1.51 | |||||||
Total per square foot per year of lease term | $6.60 | $6.56 | $6.87 | $7.58 | (4) | $5.44 | $5.68 | ||||||
Total | |||||||||||||
Number of leases | 31 | 138 | 172 | 164 | 154 | 143 | |||||||
Square feet | 865,890 | 2,053,672 | 1,945,919 | 2,898,264 | 2,102,167 | 3,426,605 | |||||||
Tenant improvements per square foot (1) | $23.73 | $21.73 | $25.66 | $40.38 | $27.41 | $20.83 | |||||||
Leasing commissions per square foot | $11.15 | $9.42 | $10.89 | $14.73 | $12.06 | $7.20 | |||||||
Total per square foot | $34.88 | $31.15 | $36.55 | $55.11 | $39.47 | $28.03 | |||||||
Tenant improvements per square foot per year of lease term | $3.45 | $3.55 | $3.70 | $4.79 | $3.48 | $2.64 | |||||||
Leasing commissions per square foot per year of lease term | $1.62 | $1.54 | $1.57 | $1.75 | $1.53 | $0.91 | |||||||
Total per square foot per year of lease term | $5.07 | $5.09 | $5.27 | $6.54 | (4) | $5.01 | (3) | $3.55 | |||||
Less Adjustment for Current Period Commitment Expirations (5) | |||||||||||||
Expired tenant improvements (not paid out) per square foot | -$3.56 | -$2.72 | -$1.12 | -$2.77 | -$5.60 | -$5.47 | |||||||
Adjusted total per square foot | $31.32 | $28.42 | $35.43 | $52.34 | $33.87 | $22.56 | |||||||
Adjusted total per square foot per year of lease term | $4.55 | $4.65 | $5.11 | $6.21 | $4.30 | $2.86 |
NOTE: | This information is presented for our consolidated office assets only and excludes activity associated with storage and license spaces. |
(1) | For leases under which a tenant may use, at its discretion, a portion of its tenant improvement allowance for expenses other than those related to improvements to its space, an assumption is made that the tenant elects to use any such portion of its tenant improvement allowance for improvements to its space prior to the commencement of its lease, unless the Company is notified otherwise by the tenant. This assumption is made based upon historical usage patterns of tenant improvement allowances by the Company's tenants. |
(2) | The average committed capital cost per square foot per year of lease term for renewal leases completed during 2015 was higher than our historical performance on this measure primarily as a result of four large lease renewals, two of which were completed in the Washington, D.C. market, that involved higher capital commitments. If the costs associated with those renewals were to be removed from the average committed capital cost calculation, the average committed capital cost per square foot per year of lease term for renewal leases completed during 2015 would be $3.33. |
(3) | During 2014, we completed one large, 15-year lease renewal and expansion with a significant capital commitment with Jones Lang LaSalle at Aon Center in Chicago, IL. If the costs associated with this lease were to be removed from the average committed capital cost calculation, the average committed capital cost per square foot per year of lease term for renewal leases and total leases completed during 2014 would be $2.12 and $4.47, respectively. |
(4) | During 2015, we completed seven new leases in Washington, D.C., and Chicago, IL, comprising 680,035 square feet with above-average capital commitments. If the costs associated with those new leases were to be removed from the average committed capital cost calculation, the average committed capital cost per square foot per year of lease term for new leases and total leases completed during 2015 would be $5.42 and $4.88, respectively. |
(5) | The Company has historically reported capital committed in leasing transactions at lease signing with no subsequent updates for variations and/or changes in tenants' uses of tenant improvement allowances. Many times, tenants do not use the full allowance provided in their leases or they let portions of their tenant improvement allowances expire. In an effort to provide additional clarity on the actual cost of completed leasing transactions, tenant improvement allowances that have expired in the current period or can no longer be used by tenants is disclosed in this section and are deducted from the current period's capital commitments per square foot of leased space in an effort to provide a better estimation of leasing transaction costs over time. |
Location | Number of Properties | Annualized Lease Revenue | Percentage of Annualized Lease Revenue (%) | Rentable Square Footage | Percentage of Rentable Square Footage (%) | Leased Square Footage | Percent Leased (%) | |
Washington, D.C. | 9 | $80,503 | 14.3 | (1) | 2,374 | 12.5 | 1,670 | 70.3 |
New York | 4 | 68,909 | 12.3 | 1,771 | 9.3 | 1,748 | 98.7 | |
Chicago | 5 | 67,634 | 12.0 | 2,094 | 11.0 | 1,924 | 91.9 | |
Atlanta | 8 | 61,669 | 11.0 | 2,392 | 12.5 | 2,239 | 93.6 | |
Minneapolis | 5 | 56,000 | 10.0 | 1,833 | 9.6 | 1,720 | 93.8 | |
Dallas | 10 | 55,589 | 9.9 | 2,114 | 11.1 | 1,971 | 93.2 | |
Boston | 10 | 53,139 | 9.5 | 1,829 | 9.6 | 1,806 | 98.7 | |
Orlando | 5 | 48,277 | 8.6 | 1,573 | 8.2 | 1,503 | 95.5 | |
Other | 11 | 69,623 | 12.4 | 3,081 | 16.2 | 2,510 | 81.5 | |
Total / Weighted Average | 67 | $561,343 | 100.0 | 19,061 | 100.0 | 17,091 | 89.7 |
(1) | The Company sold Two Independence Square in Washington, D.C., during the third quarter of 2017. As a result of the sale of the building, the percentage of Annualized Lease Revenue derived from the Washington, D.C. market decreased from 19.5% as of December 31, 2016 to 14.3% as of December 31, 2017. |
CBD / URBAN INFILL | SUBURBAN | TOTAL | ||||||||||||||
Location | State | Number of Properties | Percentage of Annualized Lease Revenue (%) | Rentable Square Footage | Percentage of Rentable Square Footage (%) | Number of Properties | Percentage of Annualized Lease Revenue (%) | Rentable Square Footage | Percentage of Rentable Square Footage (%) | Number of Properties | Percentage of Annualized Lease Revenue (%) | Rentable Square Footage | Percentage of Rentable Square Footage (%) | |||
Washington, D.C. | DC, VA, MD | 9 | 14.3 | 2,374 | 12.5 | — | — | — | — | 9 | 14.3 | 2,374 | 12.5 | |||
New York | NY, NJ | 1 | 8.7 | 1,033 | 5.4 | 3 | 3.6 | 738 | 3.9 | 4 | 12.3 | 1,771 | 9.3 | |||
Chicago | IL | 1 | 6.9 | 967 | 5.1 | 4 | 5.1 | 1,127 | 5.9 | 5 | 12.0 | 2,094 | 11.0 | |||
Atlanta | GA | 6 | 10.0 | 2,111 | 11.1 | 2 | 1.0 | 281 | 1.4 | 8 | 11.0 | 2,392 | 12.5 | |||
Minneapolis | MN | 1 | 5.7 | 934 | 4.9 | 4 | 4.3 | 899 | 4.7 | 5 | 10.0 | 1,833 | 9.6 | |||
Dallas | TX | 2 | 2.5 | 440 | 2.3 | 8 | 7.4 | 1,674 | 8.8 | 10 | 9.9 | 2,114 | 11.1 | |||
Boston | MA | 2 | 2.2 | 174 | 0.9 | 8 | 7.3 | 1,655 | 8.7 | 10 | 9.5 | 1,829 | 9.6 | |||
Orlando | FL | 3 | 7.2 | 1,263 | 6.6 | 2 | 1.4 | 310 | 1.6 | 5 | 8.6 | 1,573 | 8.2 | |||
Other | 3 | 7.9 | 1,640 | 8.6 | 8 | 4.5 | 1,441 | 7.6 | 11 | 12.4 | 3,081 | 16.2 | ||||
Total / Weighted Average | 28 | 65.4 | 10,936 | 57.4 | 39 | 34.6 | 8,125 | 42.6 | 67 | 100.0 | 19,061 | 100.0 |
Percentage of | |||||||
Number of | Percentage of Total | Annualized Lease | Annualized Lease | Leased Square | Percentage of Leased | ||
Industry | Tenants | Tenants (%) | Revenue | Revenue (%) | Footage | Square Footage (%) | |
Business Services | 81 | 12.3 | $62,685 | 11.2 | 2,011 | 11.8 | |
Governmental Entity | 4 | 0.6 | 47,398 | 8.4 | (1) | 956 | 5.6 |
Depository Institutions | 18 | 2.7 | 43,979 | 7.8 | 1,440 | 8.4 | |
Engineering, Accounting, Research, Management & Related Services | 80 | 12.1 | 38,353 | 6.8 | 1,097 | 6.4 | |
Insurance Carriers | 20 | 3.0 | 32,112 | 5.7 | 1,250 | 7.3 | |
Insurance Agents, Brokers & Services | 20 | 3.0 | 29,957 | 5.3 | 975 | 5.7 | |
Nondepository Credit Institutions | 16 | 2.4 | 29,763 | 5.3 | 921 | 5.4 | |
Security & Commodity Brokers, Dealers, Exchanges & Services | 41 | 6.2 | 23,098 | 4.1 | 715 | 4.2 | |
Legal Services | 50 | 7.6 | 22,951 | 4.1 | 725 | 4.2 | |
Communications | 44 | 6.7 | 22,356 | 4.0 | 647 | 3.8 | |
Electronic & Other Electrical Equipment & Components, Except Computer | 12 | 1.8 | 19,656 | 3.5 | 565 | 3.3 | |
Real Estate | 34 | 5.1 | 16,645 | 3.0 | 501 | 2.9 | |
Eating & Drinking Places | 43 | 6.5 | 14,948 | 2.7 | 461 | 2.7 | |
Holding and Other Investment Offices | 29 | 4.4 | 12,536 | 2.2 | 391 | 2.3 | |
Food & Kindred Products | 2 | 0.3 | 12,375 | 2.2 | 403 | 2.4 | |
Other | 167 | 25.3 | 132,531 | 23.7 | 4,033 | 23.6 | |
Total | 661 | 100.0 | $561,343 | 100.0 | 17,091 | 100.0 |
(1) | The Company sold Two Independence Square in Washington, D.C., during the third quarter of 2017. The building is fully leased to the United States of America and functions as the headquarters of NASA. As a result of the sale of the building, the percentage of Annualized Lease Revenue derived from Governmental Entities decreased from 14.4% as of December 31, 2016 to 8.4% as of December 31, 2017. |
Property | Location | Acquisition Date | Percent Ownership (%) | Year Built | Purchase Price | Rentable Square Footage | Percent Leased at Acquisition (%) | |
CNL Center I and CNL Center II | Orlando, FL | 8/1/2016 | 99 | 1999 & 2006 | $166,745 | 622 | 95 | |
One Wayside Road | Burlington, MA | 8/10/2016 | 100 | 1997 | 62,900 | 201 | 100 | |
Galleria 200 | Atlanta, GA | 10/7/2016 | 100 | 1984 | 69,604 | 432 | 89 | |
750 West John Carpenter Freeway | Irving, TX | 11/30/2016 | 100 | 1999 | 49,585 | 315 | 78 | |
John Carpenter Freeway Land | Irving, TX | 11/30/2016 | 100 | N/A | 1,000 | N/A | N/A | |
Norman Pointe I | Bloomington, MN | 12/28/2017 | 100 | 2000 | 35,159 | 214 | 71 | |
Total / Weighted Average | $384,993 | 1,784 | 88 |
Property | Location | Disposition Date | Percent Ownership (%) | Year Built | Sale Price | Rentable Square Footage | Percent Leased at Disposition (%) | |
9221 Corporate Boulevard | Rockville, MD | 7/27/2016 | 100 | 1989 | $12,650 | 115 | 0 | |
150 West Jefferson | Detroit, MI | 7/29/2016 | 100 | 1989 | 81,500 | 490 | 88 | |
9200 & 9211 Corporate Boulevard | Rockville, MD | 9/28/2016 | 100 | 1982 & 1989 | 13,250 | 225 | 19 | |
11695 Johns Creek Parkway | Johns Creek, GA | 12/22/2016 | 100 | 2001 | 14,000 | 101 | 91 | |
Braker Pointe III | Austin, TX | 12/29/2016 | 100 | 2001 | 49,250 | 196 | 18 | |
Sarasota Commerce Center II | Sarasota, FL | 6/16/2017 | 100 | 1999 | 23,500 | 149 | 92 | |
Two Independence Square | Washington, DC | 7/5/2017 | 100 | 1991 | 359,600 | 606 | 100 | |
8560 Upland Drive (1) | Englewood, CO | 7/27/2017 | 72 | 2001 | 17,600 | 149 | 100 | |
Total / Weighted Average | $571,350 | 2,031 | 73 |
Property | Location | Disposition Date | Percent Ownership (%) | Year Built | Sale Price | Rentable Square Footage | Percent Leased at Disposition (%) | |
2300 Cabot Drive | Lisle, IL | 100 | 1998 | 153 | 86 | |||
Windy Point I | Schaumburg, IL | 100 | 1999 | 187 | 50 | |||
Windy Point II | Schaumburg, IL | 100 | 2001 | 301 | 100 | |||
Suwanee Gateway One and Land | Suwanee, GA | 100 | 2008 | 143 | 50 | |||
1200 Crown Colony Drive | Quincy, MA | 100 | 1990 | 235 | 100 | |||
Piedmont Pointe I | Bethesda, MD | 100 | 2007 | 189 | 68 | |||
Piedmont Pointe II | Bethesda, MD | 100 | 2008 | 238 | 57 | |||
1075 West Entrance Drive | Auburn Hills, MI | 100 | 2001 | 210 | 100 | |||
Auburn Hills Corporate Center | Auburn Hills, MI | 100 | 2001 | 120 | 59 | |||
5601 Hiatus Road | Tamarac, FL | 100 | 2001 | 100 | 50 | |||
2001 NW 64th Street | Ft. Lauderdale, FL | 100 | 2001 | 48 | 81 | |||
Desert Canyon 300 | Phoenix, AZ | 100 | 2001 | 148 | 35 | |||
5301 Maryland Way | Brentwood, TN | 100 | 1989 | 201 | 67 | |||
Subtotal - Portfolio of 13 Properties | 1/4/2018 | $334,985 | 2,273 | 73 | ||||
2120 West End Avenue | Nashville, TN | 1/4/2018 | 100 | 2000 | 90,900 | 312 | 100 | |
Total / Weighted Average | $425,885 | 2,585 | 76 |
(1) | The sale price and rentable square footage presented for 8560 Upland Drive are gross figures and have not been adjusted for Piedmont's ownership percentage; however, the weighted average percent leased at disposition for dispositions completed over the previous eighteen months includes this property at the Company's pro rata share of ownership. |
Property | Location | Adjacent Piedmont Property | Acres | Real Estate Book Value |
Gavitello | Atlanta, GA | The Medici | 2.0 | $2,691 |
Glenridge Highlands Three | Atlanta, GA | Glenridge Highlands One and Two | 3.0 | 1,938 |
Suwanee Gateway | Suwanee, GA | Suwanee Gateway One | 5.0 | 1,401 |
State Highway 161 | Irving, TX | Las Colinas Corporate Center I and II, 161 Corporate Center | 4.5 | 3,320 |
Royal Lane | Irving, TX | 6011, 6021 and 6031 Connection Drive | 10.6 | 2,834 |
John Carpenter Freeway | Irving, TX | 750 West John Carpenter Freeway | 3.5 | 1,000 |
TownPark | Lake Mary, FL | 400 and 500 TownPark | 18.9 | 6,192 |
Total | 47.5 | $19,376 |
Included below are definitions of various terms used throughout this supplemental report, including definitions of certain non-GAAP financial measures and the reasons why the Company’s management believes these measures provide useful information to investors about the Company’s financial condition and results of operations. Reconciliations of any non-GAAP financial measures defined below are included beginning on page 41. |
Adjusted Funds From Operations ("AFFO"): The Company calculates AFFO by starting with Core FFO and adjusting for non-incremental capital expenditures and acquisition-related costs and then adding back non-cash items including: non-real estate depreciation, straight-lined rents and fair value lease adjustments, non-cash components of interest expense and compensation expense, and by making similar adjustments for unconsolidated partnerships and joint ventures. AFFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that AFFO is helpful to investors as a meaningful supplemental comparative performance measure of our ability to make incremental capital investments. Other REITs may not define AFFO in the same manner as the Company; therefore, the Company’s computation of AFFO may not be comparable to that of other REITs. |
Annualized Lease Revenue ("ALR"): ALR is calculated by multiplying (i) rental payments (defined as base rent plus operating expense reimbursements, if payable by the tenant on a monthly basis under the terms of a lease that has been executed, but excluding a) rental abatements and b) rental payments related to executed but not commenced leases for space that was covered by an existing lease), by (ii) 12. In instances in which contractual rents or operating expense reimbursements are collected on an annual, semi-annual, or quarterly basis, such amounts are multiplied by a factor of 1, 2, or 4, respectively, to calculate the annualized figure. For leases that have been executed but not commenced relating to un-leased space, ALR is calculated by multiplying (i) the monthly base rental payment (excluding abatements) plus any operating expense reimbursements for the initial month of the lease term, by (ii) 12. Unless stated otherwise, this measure excludes revenues associated with our unconsolidated joint venture properties and development / re-development properties, if any. |
Core EBITDA: The Company calculates Core EBITDA as net income (computed in accordance with GAAP) before interest, taxes, depreciation and amortization and incrementally removing any impairment losses, gains or losses from sales of property and other significant infrequent items that create volatility within our earnings and make it difficult to determine the earnings generated by our core ongoing business. Core EBITDA is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that Core EBITDA is helpful to investors as a supplemental performance measure because it provides a metric for understanding the performance of the Company’s results from ongoing operations without taking into account the effects of non-cash expenses (such as depreciation and amortization), as well as items that are not part of normal day-to-day operations of the Company’s business. Other REITs may not define Core EBITDA in the same manner as the Company; therefore, the Company’s computation of Core EBITDA may not be comparable to that of other REITs. |
Core Funds From Operations ("Core FFO"): The Company calculates Core FFO by starting with FFO, as defined by NAREIT, and adjusting for gains or losses on the extinguishment of swaps and/or debt, acquisition-related expenses and any significant non-recurring items. Core FFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that Core FFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to the Company’s core business operations. As a result, the Company believes that Core FFO can help facilitate comparisons of operating performance between periods and provides a more meaningful predictor of future earnings potential. Other REITs may not define Core FFO in the same manner as the Company; therefore, the Company’s computation of Core FFO may not be comparable to that of other REITs. |
EBITDA: EBITDA is defined as net income before interest, taxes, depreciation and amortization. |
EBITDAre: The Company calculates EBITDAre in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. NAREIT currently defines EBITDAre as net income (computed in accordance with GAAP) adjusted for gains or losses from sales of property, impairment losses, depreciation on real estate assets, amortization on real estate assets, interest expense and taxes, along with the same adjustments for unconsolidated partnerships and joint ventures. Some of the adjustments mentioned can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates. EBITDAre is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that EBITDAre is helpful to investors as a supplemental performance measure because it provides a metric for understanding the Company’s results from ongoing operations without taking into account the effects of non-cash expenses (such as depreciation and amortization) and capitalization and capital structure expenses (such as interest expense and taxes). The Company also believes that EBITDAre can help facilitate comparisons of operating performance between periods and with other REITs. However, other REITs may not define EBITDAre in accordance with the NAREIT definition, or may interpret the current NAREIT definition differently than the Company; therefore, the Company’s computation of EBITDAre may not be comparable to that of such other REITs. |
Funds From Operations ("FFO"): The Company calculates FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. NAREIT currently defines FFO as net income (computed in accordance with GAAP), excluding gains or losses from sales of property and impairment losses, adding back depreciation and amortization on real estate assets, and after the same adjustments for unconsolidated partnerships and joint ventures. These adjustments can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates. FFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that FFO is helpful to investors as a supplemental performance measure because it excludes the effects of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs, which implicitly assumes that the value of real estate diminishes predictably over time. The Company also believes that FFO can help facilitate comparisons of operating performance between periods and with other REITs. However, other REITs may not define FFO in accordance with the NAREIT definition, or may interpret the current NAREIT definition differently than the Company; therefore, the Company’s computation of FFO may not be comparable to that of such other REITs. |
Gross Assets: Gross Assets is defined as total assets with the add-back of accumulated depreciation and accumulated amortization related to real estate assets. |
Gross Real Estate Assets: Gross Real Estate Assets is defined as total real estate assets with the add-back of accumulated depreciation and accumulated amortization related to real estate assets. |
Incremental Capital Expenditures: Incremental Capital Expenditures are defined as capital expenditures of a non-recurring nature that incrementally enhance the underlying assets' income generating capacity. Tenant improvements, leasing commissions, building capital and deferred lease incentives ("Leasing Costs") incurred to lease space that was vacant at acquisition, Leasing Costs for spaces vacant for greater than one year, Leasing Costs for spaces at newly acquired properties for which in-place leases expire shortly after acquisition, improvements associated with the expansion of a building and renovations that change the underlying classification of a building are included in this measure. |
NOI from Unconsolidated Joint Ventures: NOI from Unconsolidated Joint Ventures is defined as Property NOI attributable to our interests in properties owned through unconsolidated partnerships. We present this measure on an accrual basis and a cash basis, which eliminates the effects of straight lined rents and fair value lease revenue. NOI from Unconsolidated Joint Ventures is a non-GAAP measure and therefore may not be comparable to similarly defined data provided by other REITs. |
Non-Incremental Capital Expenditures: Non-Incremental Capital Expenditures are defined as capital expenditures of a recurring nature related to tenant improvements and leasing commissions that do not incrementally enhance the underlying assets' income generating capacity. We exclude first generation tenant improvements and leasing commissions from this measure, in addition to other capital expenditures that qualify as Incremental Capital Expenditures, as defined above. |
Property Net Operating Income ("Property NOI"): The Company calculates Property NOI by starting with Core EBITDA and adjusting for general and administrative expense, income associated with property management performed by Piedmont for other organizations and other income or expense items for the Company, such as interest income from loan investments or costs from the pursuit of non-consummated transactions. The Company may present this measure on an accrual basis or a cash basis. When presented on a cash basis, the effects of straight lined rents and fair value lease revenue are also eliminated. Property NOI is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that Property NOI is helpful to investors as a supplemental comparative performance measure of income generated by its properties alone without the administrative overhead of the Company. Other REITs may not define Property NOI in the same manner as the Company; therefore, the Company’s computation of Property NOI may not be comparable to that of other REITs. |
Same Store Net Operating Income ("Same Store NOI"): The Company calculates Same Store NOI as Property NOI attributable to the properties for which the following criteria were met during the entire span of the current and prior year reporting periods: (i) they were owned, (ii) they were not under development / redevelopment, and (iii) none of the operating expenses for which were capitalized. Same Store NOI also excludes amounts attributable to unconsolidated joint venture and land assets. The Company may present this measure on an accrual basis or a cash basis. When presented on a cash basis, the effects of straight lined rents and fair value lease revenue are also eliminated. Same Store NOI is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that Same Store NOI is helpful to investors as a supplemental comparative performance measure of the income generated from the same group of properties from one period to the next. Other REITs may not define Same Store NOI in the same manner as the Company; therefore, the Company’s computation of Same Store NOI may not be comparable to that of other REITs. |
Same Store Properties: Same Store Properties is defined as those properties for which the following criteria were met during the entire span of the current and prior year reporting periods: (i) they were owned, (ii) they were not under development / redevelopment, and (iii) none of the operating expenses for which were capitalized. Same Store Properties excludes unconsolidated joint venture and land assets. |
Barry Oxford | Jed Reagan | Anthony Paolone, CFA | |
D.A. Davidson & Company | Green Street Advisors | JP Morgan | |
260 Madison Avenue, 8th Floor | 660 Newport Center Drive, Suite 800 | 383 Madison Avenue | |
New York, NY 10016 | Newport Beach, CA 92660 | 34th Floor | |
Phone: (212) 240-9871 | Phone: (949) 640-8780 | New York, NY 10179 | |
Phone: (212) 622-6682 | |||
David Rodgers, CFA | John W. Guinee, III | Michael Lewis, CFA | |
Robert W. Baird & Co. | Stifel, Nicolaus & Company | SunTrust Robinson Humphrey | |
200 Public Square | One South Street | 711 Fifth Avenue, 14th Floor | |
Suite 1650 | 16th Floor | New York, NY 10022 | |
Cleveland, OH 44139 | Baltimore, MD 21202 | Phone: (212) 319-5659 | |
Phone: (216) 737-7341 | Phone: (443) 224-1307 | ||
Mark S. Streeter, CFA | ||
JP Morgan | ||
383 Madison Avenue | ||
3rd Floor | ||
New York, NY 10179 | ||
Phone: (212) 834-5086 | ||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||
12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | |||||||||||||||||||||
GAAP net income applicable to common stock | $ | (31,383 | ) | $ | 126,133 | $ | 23,710 | $ | 15,104 | $ | 30,189 | $ | 133,564 | $ | 99,732 | ||||||||||||
Depreciation (1) (2) | 28,242 | 29,774 | 29,932 | 30,629 | 32,597 | 118,577 | 127,129 | ||||||||||||||||||||
Amortization (1) | 17,499 | 18,107 | 19,315 | 20,406 | 21,259 | 75,327 | 75,139 | ||||||||||||||||||||
Impairment loss (1) | 46,461 | — | — | — | — | 46,461 | 33,901 | ||||||||||||||||||||
Loss / (gain) on sale of properties (1) | 77 | (113,195 | ) | (6,492 | ) | 53 | (19,652 | ) | (119,557 | ) | (93,410 | ) | |||||||||||||||
NAREIT funds from operations applicable to common stock | 60,896 | 60,819 | 66,465 | 66,192 | 64,393 | 254,372 | 242,491 | ||||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||
Acquisition costs | — | — | — | 6 | 4 | 6 | 976 | ||||||||||||||||||||
Net (recoveries) / loss from casualty events (1) | — | — | — | — | — | — | (34 | ) | |||||||||||||||||||
Core funds from operations applicable to common stock | 60,896 | 60,819 | 66,465 | 66,198 | 64,397 | 254,378 | 243,433 | ||||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on senior notes | 604 | 634 | 628 | 630 | 667 | 2,496 | 2,610 | ||||||||||||||||||||
Depreciation of non real estate assets | 212 | 218 | 184 | 195 | 246 | 809 | 841 | ||||||||||||||||||||
Straight-line effects of lease revenue (1) | (5,553 | ) | (3,602 | ) | (6,634 | ) | (5,703 | ) | (6,429 | ) | (21,492 | ) | (21,544 | ) | |||||||||||||
Stock-based and other non-cash compensation expense | 1,937 | 1,250 | 911 | 2,041 | 284 | 6,139 | 5,620 | ||||||||||||||||||||
Amortization of lease-related intangibles (1) | (1,685 | ) | (1,720 | ) | (1,611 | ) | (1,559 | ) | (1,385 | ) | (6,575 | ) | (5,065 | ) | |||||||||||||
Acquisition costs | — | — | — | (6 | ) | (4 | ) | (6 | ) | (976 | ) | ||||||||||||||||
Non-incremental capital expenditures | (13,463 | ) | (5,229 | ) | (9,073 | ) | (7,672 | ) | (12,135 | ) | (35,437 | ) | (35,568 | ) | |||||||||||||
Adjusted funds from operations applicable to common stock | $ | 42,948 | $ | 52,370 | $ | 50,870 | $ | 54,124 | $ | 45,641 | $ | 200,312 | $ | 189,351 |
(1) | Includes our proportionate share of amounts attributable to consolidated properties and unconsolidated joint ventures. |
(2) | Excludes depreciation of non real estate assets. |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||
12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | |||||||||||||||||||||
Net income attributable to Piedmont | $ | (31,383 | ) | $ | 126,133 | $ | 23,710 | $ | 15,104 | $ | 30,189 | $ | 133,564 | $ | 99,732 | ||||||||||||
Net income attributable to noncontrolling interest | (5 | ) | (4 | ) | (3 | ) | (3 | ) | (8 | ) | (15 | ) | (15 | ) | |||||||||||||
Interest expense | 15,463 | 16,183 | 18,421 | 18,057 | 16,566 | 68,124 | 64,860 | ||||||||||||||||||||
Depreciation | 28,454 | 29,993 | 30,116 | 30,824 | 32,844 | 119,386 | 127,970 | ||||||||||||||||||||
Amortization | 17,499 | 18,107 | 19,315 | 20,406 | 21,259 | 75,327 | 75,139 | ||||||||||||||||||||
Impairment loss | 46,461 | — | — | — | — | 46,461 | 33,901 | ||||||||||||||||||||
Loss / (gain) on sale of properties | 77 | (113,195 | ) | (6,492 | ) | 53 | (19,652 | ) | (119,557 | ) | (93,410 | ) | |||||||||||||||
EBITDAre | 76,566 | 77,217 | 85,067 | 84,441 | 81,198 | 323,290 | 308,177 | ||||||||||||||||||||
Acquisition costs | — | — | — | 6 | 4 | 6 | 976 | ||||||||||||||||||||
Net (recoveries) / loss from casualty events | (57 | ) | 25 | (26 | ) | 58 | — | — | (34 | ) | |||||||||||||||||
Core EBITDA | 76,509 | 77,242 | 85,041 | 84,505 | 81,202 | 323,296 | 309,119 | ||||||||||||||||||||
General & administrative expenses | 7,895 | 6,631 | 8,059 | 8,602 | 5,741 | 31,186 | 29,306 | ||||||||||||||||||||
Management fee revenue | (149 | ) | (241 | ) | (168 | ) | (317 | ) | (224 | ) | (872 | ) | (1,034 | ) | |||||||||||||
Other (income) / expense | (156 | ) | (171 | ) | (12 | ) | 36 | (459 | ) | (303 | ) | (458 | ) | ||||||||||||||
Straight-line effects of lease revenue | (5,553 | ) | (3,602 | ) | (6,634 | ) | (5,703 | ) | (6,429 | ) | (21,492 | ) | (21,544 | ) | |||||||||||||
Amortization of lease-related intangibles | (1,685 | ) | (1,720 | ) | (1,611 | ) | (1,559 | ) | (1,385 | ) | (6,575 | ) | (5,065 | ) | |||||||||||||
Property net operating income (cash basis) | 76,861 | 78,139 | 84,675 | 85,564 | 78,446 | 325,240 | 310,324 | ||||||||||||||||||||
Deduct net operating (income) / loss from: | |||||||||||||||||||||||||||
Acquisitions | (5,183 | ) | (4,584 | ) | (3,548 | ) | (5,068 | ) | (4,848 | ) | (18,385 | ) | (7,333 | ) | |||||||||||||
Dispositions | (29 | ) | (9 | ) | (5,354 | ) | (6,040 | ) | (5,527 | ) | (11,431 | ) | (32,550 | ) | |||||||||||||
Other investments | (891 | ) | (99 | ) | 361 | 259 | (136 | ) | (371 | ) | (497 | ) | |||||||||||||||
Same store net operating income (cash basis) | $ | 70,758 | $ | 73,447 | $ | 76,134 | $ | 74,715 | $ | 67,935 | $ | 295,053 | $ | 269,944 |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||
12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | 12/31/2016 | 12/31/2017 | 12/31/2016 | |||||||||||||||||||||
Equity in income of unconsolidated joint ventures | $ | (27 | ) | $ | 3,754 | $ | 107 | $ | 11 | $ | 8 | $ | 3,845 | $ | 362 | ||||||||||||
Interest expense | — | — | — | — | — | — | — | ||||||||||||||||||||
Depreciation | — | — | 65 | 64 | 65 | 129 | 249 | ||||||||||||||||||||
Amortization | — | — | 16 | 8 | 8 | 24 | 56 | ||||||||||||||||||||
Impairment loss | — | — | — | — | — | — | — | ||||||||||||||||||||
Loss / (gain) on sale of properties | — | (3,683 | ) | — | — | — | (3,683 | ) | — | ||||||||||||||||||
EBITDAre and Core EBITDA | (27 | ) | 71 | 188 | 83 | 81 | 315 | 667 | |||||||||||||||||||
General and administrative expenses | 15 | 13 | 22 | 5 | 15 | 55 | 63 | ||||||||||||||||||||
Other (income) / expense | — | — | — | — | — | — | — | ||||||||||||||||||||
Property net operating income (accrual basis) | (12 | ) | 84 | 210 | 88 | 96 | 370 | 730 | |||||||||||||||||||
Straight-line effects of lease revenue | — | (41 | ) | (95 | ) | 2 | (1 | ) | (134 | ) | — | ||||||||||||||||
Amortization of lease-related intangibles | — | — | — | — | — | — | — | ||||||||||||||||||||
Property net operating income (cash basis) | $ | (12 | ) | $ | 43 | $ | 115 | $ | 90 | $ | 95 | $ | 236 | $ | 730 |
Property | City | State | Percent Ownership | Year Built / Major Refurbishment | Rentable Square Footage Owned | Leased Percentage | Commenced Leased Percentage | Economic Leased Percentage (2) | Annualized Lease Revenue | |||
PROPERTIES REMAINING AFTER FOURTEEN-PROPERTY DISPOSITION (3) | ||||||||||||
Atlanta | ||||||||||||
Glenridge Highlands Two | Atlanta | GA | 100.0% | 2000 | 426 | 100.0 | % | 97.4 | % | 97.4 | % | 12,039 |
The Dupree | Atlanta | GA | 100.0% | 1997 | 138 | 100.0 | % | 100.0 | % | 100.0 | % | 3,761 |
The Medici | Atlanta | GA | 100.0% | 2008 | 156 | 100.0 | % | 100.0 | % | 96.8 | % | 4,800 |
1155 Perimeter Center West | Atlanta | GA | 100.0% | 2000 | 377 | 100.0 | % | 100.0 | % | 100.0 | % | 10,157 |
Galleria 300 | Atlanta | GA | 100.0% | 1987 | 432 | 97.0 | % | 97.0 | % | 96.5 | % | 11,200 |
Glenridge Highlands One | Atlanta | GA | 100.0% | 1998 | 288 | 95.1 | % | 95.1 | % | 95.1 | % | 8,053 |
Galleria 200 | Atlanta | GA | 100.0% | 1984 | 432 | 87.3 | % | 87.3 | % | 55.1 | % | 9,903 |
Metropolitan Area Subtotal / Weighted Average | 2,249 | 96.4 | % | 95.9 | % | 89.4 | % | 59,913 | ||||
Boston | ||||||||||||
80 Central Street | Boxborough | MA | 100.0% | 1988 | 150 | 85.3 | % | 85.3 | % | 85.3 | % | 2,644 |
90 Central Street | Boxborough | MA | 100.0% | 2001 | 175 | 100.0 | % | 100.0 | % | 100.0 | % | 3,806 |
1414 Massachusetts Avenue | Cambridge | MA | 100.0% | 1873 / 1956 | 78 | 100.0 | % | 100.0 | % | 100.0 | % | 5,021 |
One Brattle Square | Cambridge | MA | 100.0% | 1991 | 96 | 99.0 | % | 99.0 | % | 83.3 | % | 7,367 |
225 Presidential Way | Woburn | MA | 100.0% | 2001 | 202 | 100.0 | % | 100.0 | % | 100.0 | % | 2,963 |
235 Presidential Way | Woburn | MA | 100.0% | 2000 | 238 | 100.0 | % | 100.0 | % | 100.0 | % | 3,479 |
5 & 15 Wayside Road | Burlington | MA | 100.0% | 1999 & 2001 | 272 | 100.0 | % | 100.0 | % | 87.9 | % | 9,378 |
5 Wall Street | Burlington | MA | 100.0% | 2008 | 182 | 100.0 | % | 100.0 | % | 100.0 | % | 6,894 |
One Wayside Road | Burlington | MA | 100.0% | 1997 | 201 | 100.0 | % | 100.0 | % | 100.0 | % | 6,839 |
Metropolitan Area Subtotal / Weighted Average | 1,594 | 98.6 | % | 98.6 | % | 95.5 | % | 48,391 | ||||
Chicago | ||||||||||||
Two Pierce Place | Itasca | IL | 100.0% | 1991 | 486 | 98.1 | % | 97.7 | % | 96.7 | % | 13,689 |
500 West Monroe Street | Chicago | IL | 100.0% | 1991 | 967 | 95.3 | % | 95.3 | % | 93.6 | % | 39,079 |
Metropolitan Area Subtotal / Weighted Average | 1,453 | 96.3 | % | 96.1 | % | 94.6 | % | 52,768 |
Property | City | State | Percent Ownership | Year Built / Major Refurbishment | Rentable Square Footage Owned | Leased Percentage | Commenced Leased Percentage | Economic Leased Percentage (2) | Annualized Lease Revenue | |||
Dallas | ||||||||||||
6031 Connection Drive | Irving | TX | 100.0% | 1999 | 232 | 87.9 | % | 76.7 | % | 65.1 | % | 5,515 |
6021 Connection Drive | Irving | TX | 100.0% | 2000 | 222 | 100.0 | % | 100.0 | % | 100.0 | % | 5,922 |
6011 Connection Drive | Irving | TX | 100.0% | 1999 | 152 | 100.0 | % | 100.0 | % | 100.0 | % | 4,331 |
Las Colinas Corporate Center I | Irving | TX | 100.0% | 1998 | 159 | 88.1 | % | 88.1 | % | 81.1 | % | 3,820 |
Las Colinas Corporate Center II | Irving | TX | 100.0% | 1998 | 228 | 92.5 | % | 90.4 | % | 65.8 | % | 5,775 |
6565 North MacArthur Boulevard | Irving | TX | 100.0% | 1998 | 260 | 93.5 | % | 93.5 | % | 92.7 | % | 6,352 |
One Lincoln Park | Dallas | TX | 100.0% | 1999 | 262 | 99.6 | % | 99.6 | % | 99.6 | % | 8,088 |
161 Corporate Center | Irving | TX | 100.0% | 1998 | 105 | 100.0 | % | 96.2 | % | 87.6 | % | 2,631 |
Park Place on Turtle Creek | Dallas | TX | 100.0% | 1986 | 178 | 89.9 | % | 87.6 | % | 87.6 | % | 6,065 |
750 West John Carpenter Freeway | Irving | TX | 100.0% | 1999 | 316 | 86.4 | % | 86.4 | % | 78.2 | % | 7,090 |
Metropolitan Area Subtotal / Weighted Average | 2,114 | 93.2 | % | 91.4 | % | 85.2 | % | 55,589 | ||||
Minneapolis | ||||||||||||
Crescent Ridge II | Minnetonka | MN | 100.0% | 2000 | 301 | 90.4 | % | 90.4 | % | 90.0 | % | 8,565 |
US Bancorp Center | Minneapolis | MN | 100.0% | 2000 | 934 | 98.2 | % | 92.5 | % | 88.9 | % | 31,682 |
One Meridian Crossings | Richfield | MN | 100.0% | 1997 | 195 | 100.0 | % | 100.0 | % | 100.0 | % | 5,819 |
Two Meridian Crossings | Richfield | MN | 100.0% | 1998 | 189 | 97.9 | % | 97.9 | % | 97.9 | % | 5,520 |
Norman Pointe I | Bloomington | MN | 100.0% | 2000 | 214 | 70.6 | % | 70.6 | % | 66.4 | % | 4,414 |
Metropolitan Area Subtotal / Weighted Average | 1,833 | 93.8 | % | 90.9 | % | 88.5 | % | 56,000 | ||||
New York | ||||||||||||
200 Bridgewater Crossing | Bridgewater | NJ | 100.0% | 2002 | 309 | 97.7 | % | 95.8 | % | 95.8 | % | 8,883 |
60 Broad Street | New York | NY | 100.0% | 1962 | 1,033 | 98.5 | % | 98.5 | % | 98.5 | % | 48,505 |
600 Corporate Drive | Lebanon | NJ | 100.0% | 2005 | 125 | 100.0 | % | 100.0 | % | 100.0 | % | 2,514 |
400 Bridgewater Crossing | Bridgewater | NJ | 100.0% | 2002 | 304 | 100.0 | % | 100.0 | % | 74.3 | % | 9,007 |
Metropolitan Area Subtotal / Weighted Average | 1,771 | 98.7 | % | 98.4 | % | 94.0 | % | 68,909 | ||||
Orlando | ||||||||||||
400 TownPark | Lake Mary | FL | 100.0% | 2008 | 176 | 97.7 | % | 89.2 | % | 89.2 | % | 4,362 |
500 TownPark | Lake Mary | FL | 100.0% | 2016 | 134 | 90.3 | % | 79.9 | % | 79.9 | % | 3,422 |
SunTrust Center | Orlando | FL | 100.0% | 1988 | 646 | 93.7 | % | 89.9 | % | 69.7 | % | 20,525 |
CNL Center I | Orlando | FL | 99.0% | 1999 | 347 | 98.6 | % | 96.5 | % | 96.5 | % | 10,991 |
CNL Center II | Orlando | FL | 99.0% | 2006 | 270 | 97.4 | % | 92.6 | % | 83.7 | % | 8,977 |
Metropolitan Area Subtotal / Weighted Average | 1,573 | 95.5 | % | 90.9 | % | 81.1 | % | 48,277 | ||||
Washington, D.C. | ||||||||||||
1201 Eye Street | Washington | DC | 98.6% (4) | 2001 | 269 | 47.6 | % | 26.8 | % | 15.2 | % | 7,762 |
1225 Eye Street | Washington | DC | 98.1% (4) | 1986 | 225 | 94.7 | % | 90.2 | % | 89.3 | % | 11,173 |
3100 Clarendon Boulevard | Arlington | VA | 100.0% | 1987 / 2015 | 261 | 51.7 | % | 39.5 | % | 29.9 | % | 6,266 |
400 Virginia Avenue | Washington | DC | 100.0% | 1985 | 224 | 71.4 | % | 71.4 | % | 65.6 | % | 7,753 |
4250 North Fairfax Drive | Arlington | VA | 100.0% | 1998 | 308 | 92.9 | % | 80.5 | % | 51.9 | % | 13,314 |
One Independence Square | Washington | DC | 100.0% | 1991 | 334 | 93.7 | % | 77.8 | % | 72.8 | % | 14,767 |
Arlington Gateway | Arlington | VA | 100.0% | 2005 | 326 | 52.5 | % | 46.0 | % | 42.9 | % | 8,658 |
Metropolitan Area Subtotal / Weighted Average | 1,947 | 72.2 | % | 61.4 | % | 51.9 | % | 69,693 |
Property | City | State | Percent Ownership | Year Built / Major Refurbishment | Rentable Square Footage Owned | Leased Percentage | Commenced Leased Percentage | Economic Leased Percentage (2) | Annualized Lease Revenue | |||
Other | ||||||||||||
800 North Brand Boulevard | Glendale | CA | 100.0% | 1990 | 527 | 100.0 | % | 100.0 | % | 100.0 | % | 17,348 |
1901 Market Street | Philadelphia | PA | 100.0% | 1987 / 2014 | 801 | 100.0 | % | 100.0 | % | 100.0 | % | 18,731 |
Enclave Place | Houston | TX | 100.0% | 2015 | 301 | — | % | — | % | — | % | 0 |
1430 Enclave Parkway | Houston | TX | 100.0% | 1994 | 313 | 100.0 | % | 100.0 | % | 100.0 | % | 11,443 |
Subtotal / Weighted Average | 1,942 | 84.5 | % | 84.5 | % | 84.5 | % | 47,522 | ||||
Subtotal - Properties Remaining After Fourteen-Property Disposition | 16,476 | 91.8 | % | 89.4 | % | 84.5 | % | $507,062 | ||||
FOURTEEN PROPERTIES INCLUDED IN DISPOSITION (3) | ||||||||||||
Suwanee Gateway One | Suwanee | GA | 100.0% | 2008 | 143 | 50.3 | % | 50.3 | % | 48.3 | % | $1,756 |
1200 Crown Colony Drive | Quincy | MA | 100.0% | 1990 | 235 | 100.0 | % | 100.0 | % | 100.0 | % | 4,748 |
Windy Point I | Schaumburg | IL | 100.0% | 1999 | 187 | 49.7 | % | 49.7 | % | 49.7 | % | 2,825 |
Windy Point II | Schaumburg | IL | 100.0% | 2001 | 301 | 100.0 | % | 100.0 | % | 100.0 | % | 8,847 |
2300 Cabot Drive | Lisle | IL | 100.0% | 1998 | 153 | 85.6 | % | 79.7 | % | 78.4 | % | 3,194 |
Piedmont Pointe I | Bethesda | MD | 100.0% | 2007 | 189 | 67.7 | % | 67.7 | % | 67.7 | % | 5,301 |
Piedmont Pointe II | Bethesda | MD | 100.0% | 2008 | 238 | 57.1 | % | 57.1 | % | 57.1 | % | 5,509 |
Desert Canyon 300 | Phoenix | AZ | 100.0% | 2001 | 148 | 35.1 | % | 35.1 | % | 35.1 | % | 1,193 |
5601 Hiatus Road | Tamarac | FL | 100.0% | 2001 | 100 | 50.0 | % | 50.0 | % | 50.0 | % | 1,395 |
2001 NW 64th Street | Ft. Lauderdale | FL | 100.0% | 2001 | 48 | 81.3 | % | 41.7 | % | 41.7 | % | 953 |
Auburn Hills Corporate Center | Auburn Hills | MI | 100.0% | 2001 | 120 | 59.2 | % | 59.2 | % | 59.2 | % | 1,504 |
1075 West Entrance Drive | Auburn Hills | MI | 100.0% | 2001 | 210 | 100.0 | % | 100.0 | % | 2.4 | % | 4,616 |
2120 West End Avenue | Nashville | TN | 100.0% | 2000 | 312 | 100.0 | % | 100.0 | % | 100.0 | % | 8,309 |
5301 Maryland Way | Brentwood | TN | 100.0% | 1989 | 201 | 67.2 | % | 67.2 | % | 67.2 | % | 4,131 |
Subtotal - Fourteen Properties Included In Disposition | 2,585 | 76.0 | % | 74.9 | % | 66.8 | % | $54,281 | ||||
Grand Total - Properties Owned at December 31, 2017 | 19,061 | 89.7 | % | 87.5 | % | 82.1 | % | $561,343 | ||||
(1) | This schedule includes information for Piedmont's in-service portfolio of properties only. Information on investments excluded from this schedule can be found on page 38. |
(2) | Economic leased percentage excludes the square footage associated with executed but not commenced leases for currently vacant spaces and the square footage associated with tenants receiving rental abatements (after proportional adjustments for tenants receiving only partial rental abatements). |
(3) | On January 4, 2018, Piedmont completed the disposition of 14 properties. For the purposes of this schedule, the 53 properties owned by the Company subsequent to the sales of the 14 properties are presented in the upper portion of the schedule, grouped within the relevant strategic operating market and shown separately from the assets included in the multiple-property disposition. The properties included in the multiple-property disposition are presented as one group at the bottom of the schedule. This presentation methodology was undertaken to provide readers with clear information on the properties owned by the Company in each strategic operating market subsequent to the disposition. Please refer to page 47 for additional details regarding the sales of the properties and the pro forma impact on various metrics for the Company as a result of the sales. |
(4) | Although Piedmont owns 98.6% of 1201 Eye Street and 98.1% of 1225 Eye Street, it is entitled to 100% of the cash flows for each asset pursuant to the terms of each property ownership entity's joint venture agreement. |
As of December 31, 2017 | ||||||||
As of December 31, 2017 | with Pro Forma Adjustments for the Sale of Fourteen Properties in January 2018 | |||||||
Debt Metrics | ||||||||
Total debt / Total gross assets | 34.3 | % | approximately 30% | |||||
Average net debt to Core EBITDA (1) (2) | 5.6 x | under 5x's (estimated) | ||||||
Fixed charge coverage ratio (3) | 4.9 x | over 5x | ||||||
Principal amount of debt - fixed rate | $1,540,670 | 88.9 | % | $1,240,670 | 94.1 | % | ||
Principal amount of debt - floating rate | $193,000 | 11.1 | % | $78,000 | 5.9 | % | ||
Principal amount of debt - unsecured | $1,543,000 | 89.0 | % | $1,128,000 | 85.5 | % | ||
Principal amount of debt - secured | $190,670 | 11.0 | % | $190,670 | 14.5 | % | ||
General Statistical Metrics | ||||||||
Number of consolidated office properties | 67 | 53 | ||||||
Rentable square footage | 19,061 | 16,476 | ||||||
Percent leased | 89.7 | % | 91.8 | % | ||||
Percent leased - commenced | 87.5 | % | 89.4 | % | ||||
Percent leased - economic | 82.1 | % | 84.5 | % | ||||
Non-incremental tenant improvement commitments | $42,001 | $38,644 | ||||||
Weighted average lease term remaining | 6.5 years | 6.6 years | ||||||
Employees | 136 | 129 |
(1) | Average net debt as of December 31, 2017 on a pro forma basis is calculated as the Company’s average net debt for the quarter ended December 31, 2017 (i) reduced by $470 million for the repayment of the $300 million unsecured term loan that was set to mature in 2019 and the $170 million unsecured term loan that was set to mature in 2018, (ii) increased for a borrowing under the Company’s revolving line of credit to supplement disposition proceeds in the payoff of the $170 million unsecured term loan, and (iii) increased to account for a full quarter's impact of the borrowing completed on December 28, 2017 to fund the acquisition of Norman Pointe I in Bloomington, MN. |
(2) | Core EBITDA as of December 31, 2017 on a pro forma basis is calculated as Core EBITDA for the quarter ended December 31, 2017, adjusted to (i) remove contributions from the fourteen properties sold in January 2018, and (ii) add estimated full-quarter contributions from Norman Pointe I in Bloomington, MN, which was purchased on December 28, 2017. The resultant figure is then annualized for the purposes of this calculation. |
(3) | Fixed charges as of December 31, 2017 on a pro forma basis are calculated as the Company’s fixed charges for the quarter ended December 31, 2017, adjusted to (i) remove interest expense associated with the Company's $300 million unsecured term loan that was set to mature in 2019 and its $170 million unsecured term loan that was set to mature in 2018, (ii) add interest expense associated with a borrowing under the Company's revolving line of credit that was used to supplement disposition proceeds in the repayment of the $170 million unsecured term loan, and (iii) add interest expense in order to account for a full quarter's impact of the line of credit borrowing on December 28, 2017 to complete the acquisition of Norman Pointe I in Bloomington, MN. |
As Reported | Pro Forma for the Sale of Fourteen Properties in January 2018 (1) | ||||
Expiration Year | Annualized Lease Revenue | Percentage of Annualized Lease Revenue (%) | Annualized Lease Revenue | Percentage of Annualized Lease Revenue (%) | |
Vacant | $— | — | $— | — | |
2018 | 40,528 | 7.2 | 38,056 | 7.5 | |
2019 | 59,994 | 10.7 | 58,894 | 11.6 | |
2020 | 46,711 | 8.3 | 43,637 | 8.6 | |
2021 | 30,835 | 5.5 | 30,291 | 6.0 | |
2022 | 55,022 | 9.8 | 39,124 | 7.7 | |
2023 | 35,010 | 6.2 | 31,362 | 6.2 | |
2024 | 65,570 | 11.7 | 54,415 | 10.7 | |
2025 | 32,635 | 5.8 | 21,612 | 4.3 | |
2026 | 28,100 | 5.0 | 27,420 | 5.4 | |
2027 | 49,636 | 8.9 | 45,505 | 9.0 | |
2028 | 34,993 | 6.2 | 34,437 | 6.8 | |
2029 | 21,232 | 3.8 | 21,232 | 4.2 | |
Thereafter | 61,077 | 10.9 | 61,077 | 12.0 | |
Total | $561,343 | 100.0 | $507,062 | 100.0 |
Property | City | State | Rentable Square Footage |
Desert Canyon 300 | Phoenix | AZ | 148 |
5601 Hiatus Road | Tamarac | FL | 100 |
2001 NW 64th Street | Ft. Lauderdale | FL | 48 |
Auburn Hills Corporate Center | Auburn Hills | MI | 120 |
1075 West Entrance Drive | Auburn Hills | MI | 210 |
2120 West End Avenue | Nashville | TN | 312 |
5301 Maryland Way | Brentwood | TN | 201 |
Piedmont Pointe I | Bethesda | MD | 189 |
Piedmont Pointe II | Bethesda | MD | 238 |
Windy Point I | Schaumburg | IL | 187 |
Windy Point II | Schaumburg | IL | 301 |
2300 Cabot Drive | Lisle | IL | 153 |
1200 Crown Colony Drive | Quincy | MA | 235 |
Suwanee Gateway One | Suwanee | GA | 143 |
Total | 2,585 | ||
As Reported | Pro Forma for the Sale of Fourteen Properties in January 2018 (1) | ||||||||||
Location | Annualized Lease Revenue | Percentage of Annualized Lease Revenue (%) | Rentable Square Footage | Percentage of Rentable Square Footage (%) | Percent Leased (%) | Annualized Lease Revenue | Percentage of Annualized Lease Revenue (%) | Rentable Square Footage | Percentage of Rentable Square Footage (%) | Percent Leased (%) | |
Washington, D.C. | $80,503 | 14.3 | 2,374 | 12.5 | 70.3 | $69,693 | 13.8 | 1,947 | 11.8 | 72.2 | |
New York | 68,909 | 12.3 | 1,771 | 9.3 | 98.7 | 68,909 | 13.6 | 1,771 | 10.8 | 98.7 | |
Chicago | 67,634 | 12.0 | 2,094 | 11.0 | 91.9 | 52,768 | 10.4 | 1,453 | 8.8 | 96.3 | |
Atlanta | 61,669 | 11.0 | 2,392 | 12.5 | 93.6 | 59,913 | 11.8 | 2,249 | 13.7 | 96.4 | |
Minneapolis | 56,000 | 10.0 | 1,833 | 9.6 | 93.8 | 56,000 | 11.0 | 1,833 | 11.1 | 93.8 | |
Dallas | 55,589 | 9.9 | 2,114 | 11.1 | 93.2 | 55,589 | 11.0 | 2,114 | 12.8 | 93.2 | |
Boston | 53,139 | 9.5 | 1,829 | 9.6 | 98.7 | 48,391 | 9.5 | 1,594 | 9.7 | 98.6 | |
Orlando | 48,277 | 8.6 | 1,573 | 8.2 | 95.5 | 48,277 | 9.5 | 1,573 | 9.5 | 95.5 | |
Other | 69,623 | 12.4 | 3,081 | 16.2 | 81.5 | 47,522 | 9.4 | 1,942 | 11.8 | 84.5 | |
Total | $561,343 | 100.0 | 19,061 | 100.0 | 89.7 | $507,062 | 100.0 | 16,476 | 100.0 | 91.8 | |
CBD / Urban Infill | 65.4 | 68.7 | |||||||||
Suburban | 34.6 | 31.3 | |||||||||
(1) | Pro forma Annualized Lease Revenue is calculated by starting with the Company's Annualized Lease Revenue as of December 31, 2017, and deducting therefrom the contributions provided by the fourteen properties sold in January 2018. |