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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934
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Maryland
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58-2328421
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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Large Accelerated filer
x
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Accelerated filer
o
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Non-Accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page No.
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PART I.
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Financial Statements
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Other Information
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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•
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Economic, regulatory, and/or socio-economic changes (including accounting standards) that impact the real estate market generally, or that could affect patterns of use of commercial office space, may cause our operating results to suffer and decrease the value of our real estate properties;
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•
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The impact of competition on our efforts to renew existing leases or re-let space on terms similar to existing leases;
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•
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Changes in the economies and other conditions affecting the office sector in general and the specific markets in which we operate, particularly in Chicago, Washington, D.C., and the New York metropolitan area, where we have high concentrations of office properties;
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•
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Lease terminations or lease defaults, particularly by one of our large lead tenants;
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•
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Adverse market and economic conditions may negatively affect us and could cause us to recognize impairment charges on both our long-lived assets or goodwill or otherwise impact our performance;
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•
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The success of our real estate strategies and investment objectives, including our ability to identify and consummate suitable acquisitions;
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•
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The illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties;
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•
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Acquisitions of properties may have unknown risks and other liabilities at the time of acquisition;
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•
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Development and construction delays and resultant increased costs and risks may negatively impact our operating results;
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•
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Our real estate development strategies may not be successful;
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•
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Future terrorist attacks in the major metropolitan areas in which we own properties could significantly impact the demand for, and value of, our properties;
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•
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Costs of complying with governmental laws and regulations;
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•
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Additional risks and costs associated with directly managing properties occupied by government tenants;
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•
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Future offerings of debt or equity securities may adversely affect the market price of our common stock;
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•
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Changes in market interest rates may have an effect on the value of our common stock;
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•
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Uncertainties associated with environmental and other regulatory matters;
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•
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Potential changes in political environment and reduction in federal and/or state funding of our governmental tenants;
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•
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We may be subject to litigation, which could have a material adverse effect on our financial condition;
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•
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Changes in tax laws impacting REITs and real estate in general, as well as Piedmont’s ability to continue to qualify as a REIT under the Internal Revenue Code (the “Code”); and
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•
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Other factors, including the risk factors discussed under Item 1A. of Piedmont’s Annual Report on Form 10-K for the year ended
December 31, 2014
.
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ITEM 1.
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CONSOLIDATED FINANCIAL STATEMENTS
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(Unaudited)
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June 30,
2015 |
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December 31,
2014 |
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Assets:
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||||
Real estate assets, at cost:
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Land
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$
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696,713
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$
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698,519
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Buildings and improvements, less accumulated depreciation of $1,108,333 and $1,075,395 as of June 30, 2015 and December 31, 2014, respectively
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3,154,044
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3,196,660
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Intangible lease assets, less accumulated amortization of $88,954 and $79,860 as of June 30, 2015 and December 31, 2014, respectively
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64,152
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70,177
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Construction in progress
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64,804
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63,382
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Real estate assets held for sale
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26,111
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|
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46,354
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Total real estate assets
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4,005,824
|
|
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4,075,092
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Investments in and amounts due from unconsolidated joint ventures
|
7,714
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7,798
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Cash and cash equivalents
|
8,997
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12,306
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Tenant receivables, net of allowance for doubtful accounts of $110 and $231 as of June 30, 2015 and December 31, 2014, respectively
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25,474
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27,711
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Notes receivable
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45,400
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—
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Straight-line rent receivables
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171,241
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167,657
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Restricted cash and escrows
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521
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5,679
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Prepaid expenses and other assets
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32,791
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27,820
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Goodwill
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180,097
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180,097
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Interest rate swaps
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8,290
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430
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Deferred financing costs, less accumulated amortization of $6,629 and $6,067 as of June 30, 2015 and December 31, 2014, respectively
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7,491
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7,667
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Deferred lease costs, less accumulated amortization of $156,509 and $142,132 as of June 30, 2015 and December 31, 2014, respectively
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283,756
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278,461
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Other assets held for sale
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3,706
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4,783
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Total assets
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$
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4,781,302
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$
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4,795,501
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Liabilities:
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Unsecured debt, net of discount of $7,462 and $5,456 as of June 30, 2015 and December 31, 2014, respectively
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$
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1,817,538
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$
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1,828,544
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Secured debt, inclusive of premium of $2,305 and $3,258 as of June 30, 2015 and December 31, 2014, respectively
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502,757
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449,045
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Accounts payable, accrued expenses, and accrued capital expenditures
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128,898
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133,988
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Deferred income
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26,633
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22,215
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Intangible lease liabilities, less accumulated amortization of $41,446 and $37,964 as of June 30, 2015 and December 31, 2014, respectively
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41,214
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43,277
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Interest rate swaps
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8,411
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6,417
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Total liabilities
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2,525,451
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2,483,486
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Commitments and Contingencies
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—
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—
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Stockholders’ Equity:
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Shares-in-trust, 150,000,000 shares authorized; none outstanding as of June 30, 2015 or December 31, 2014
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—
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—
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Preferred stock, no par value, 100,000,000 shares authorized; none outstanding as of June 30, 2015 or December 31, 2014
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—
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—
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Common stock, $.01 par value, 750,000,000 shares authorized; 151,833,222 and 154,324,089 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively
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1,518
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1,543
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Additional paid-in capital
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3,668,378
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3,666,182
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Cumulative distributions in excess of earnings
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(1,427,312
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)
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(1,365,620
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)
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Other comprehensive income
|
12,242
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|
|
8,301
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Piedmont stockholders’ equity
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2,254,826
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2,310,406
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Noncontrolling interest
|
1,025
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1,609
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Total stockholders’ equity
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2,255,851
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2,312,015
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Total liabilities and stockholders’ equity
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$
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4,781,302
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$
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4,795,501
|
|
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(Unaudited)
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(Unaudited)
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||||||||||||
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Three Months Ended
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Six Months Ended
|
||||||||||||
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June 30,
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June 30,
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||||||||||||
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2015
|
|
2014
|
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2015
|
|
2014
|
||||||||
Revenues:
|
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||||||||
Rental income
|
$
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117,454
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$
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113,287
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$
|
235,261
|
|
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$
|
224,191
|
|
Tenant reimbursements
|
28,813
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|
24,745
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|
|
60,203
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|
|
49,674
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|
||||
Property management fee revenue
|
467
|
|
|
548
|
|
|
1,029
|
|
|
1,035
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|
||||
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146,734
|
|
|
138,580
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|
296,493
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|
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274,900
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|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
61,479
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|
|
57,136
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|
|
125,715
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|
|
115,407
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|
||||
Depreciation
|
36,039
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|
|
34,144
|
|
|
72,271
|
|
|
67,788
|
|
||||
Amortization
|
14,955
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|
13,599
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|
|
29,625
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|
|
28,172
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|
||||
Impairment loss on real estate asset
|
5,354
|
|
|
—
|
|
|
5,354
|
|
|
—
|
|
||||
General and administrative
|
8,083
|
|
|
7,145
|
|
|
14,490
|
|
|
11,700
|
|
||||
|
125,910
|
|
|
112,024
|
|
|
247,455
|
|
|
223,067
|
|
||||
Real estate operating income
|
20,824
|
|
|
26,556
|
|
|
49,038
|
|
|
51,833
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(18,172
|
)
|
|
(18,012
|
)
|
|
(37,188
|
)
|
|
(36,938
|
)
|
||||
Other income/(expense)
|
596
|
|
|
(366
|
)
|
|
415
|
|
|
(456
|
)
|
||||
Net recoveries from casualty events and litigation settlements
|
—
|
|
|
1,480
|
|
|
—
|
|
|
4,522
|
|
||||
Equity in income/(loss) of unconsolidated joint ventures
|
124
|
|
|
(333
|
)
|
|
283
|
|
|
(599
|
)
|
||||
|
(17,452
|
)
|
|
(17,231
|
)
|
|
(36,490
|
)
|
|
(33,471
|
)
|
||||
Income from continuing operations
|
3,372
|
|
|
9,325
|
|
|
12,548
|
|
|
18,362
|
|
||||
Discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Operating income/(loss)
|
(3
|
)
|
|
514
|
|
|
(3
|
)
|
|
980
|
|
||||
Gain on sale of real estate assets
|
—
|
|
|
1,304
|
|
|
—
|
|
|
1,198
|
|
||||
Income/(loss) from discontinued operations
|
(3
|
)
|
|
1,818
|
|
|
(3
|
)
|
|
2,178
|
|
||||
Gain on sale of real estate assets
|
26,611
|
|
|
1,140
|
|
|
36,684
|
|
|
1,140
|
|
||||
Net income
|
29,980
|
|
|
12,283
|
|
|
49,229
|
|
|
21,680
|
|
||||
Less: Net income attributable to noncontrolling interest
|
(4
|
)
|
|
(4
|
)
|
|
(8
|
)
|
|
(8
|
)
|
||||
Net income attributable to Piedmont
|
$
|
29,976
|
|
|
$
|
12,279
|
|
|
$
|
49,221
|
|
|
$
|
21,672
|
|
Per share information – basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations and gain on sale of real estate assets
|
$
|
0.20
|
|
|
$
|
0.07
|
|
|
$
|
0.32
|
|
|
$
|
0.13
|
|
Income from discontinued operations
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.01
|
|
||||
Net income available to common stockholders
|
$
|
0.20
|
|
|
$
|
0.08
|
|
|
$
|
0.32
|
|
|
$
|
0.14
|
|
Weighted-average common shares outstanding – basic
|
153,559,076
|
|
|
154,318,592
|
|
|
153,946,898
|
|
|
154,582,519
|
|
||||
Weighted-average common shares outstanding – diluted
|
153,757,404
|
|
|
154,444,508
|
|
|
154,174,270
|
|
|
154,727,805
|
|
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||||||||||||||
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|
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|
|
|
||||||||||||
Net income attributable to Piedmont
|
|
|
$
|
29,976
|
|
|
|
|
$
|
12,279
|
|
|
|
|
$
|
49,221
|
|
|
|
|
$
|
21,672
|
|
||||
Other comprehensive income/(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective portion of gain/(loss) on derivative instruments that are designated and qualify as cash flow hedges (See Note 5)
|
16,079
|
|
|
|
|
(3,617
|
)
|
|
|
|
874
|
|
|
|
|
(13,502
|
)
|
|
|
||||||||
Plus: Reclassification of previously recorded loss included in net income (See Note 5)
|
1,602
|
|
|
|
|
1,159
|
|
|
|
|
3,069
|
|
|
|
|
|
2,328
|
|
|
|
|
||||||
Unrealized loss on investment in available for sale securities
|
(2
|
)
|
|
|
|
—
|
|
|
|
|
(2
|
)
|
|
|
|
—
|
|
|
|
||||||||
Other comprehensive income/(loss)
|
|
|
17,679
|
|
|
|
|
(2,458
|
)
|
|
|
|
3,941
|
|
|
|
|
(11,174
|
)
|
||||||||
Comprehensive income attributable to Piedmont
|
|
|
$
|
47,655
|
|
|
|
|
$
|
9,821
|
|
|
|
|
$
|
53,162
|
|
|
|
|
$
|
10,498
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Cumulative
Distributions
in Excess of
Earnings
|
|
Other
Comprehensive
Income/(Loss)
|
|
Non-
controlling
Interest
|
|
Total
Stockholders’
Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance, December 31, 2013
|
157,461
|
|
|
$
|
1,575
|
|
|
$
|
3,668,906
|
|
|
$
|
(1,231,209
|
)
|
|
$
|
20,278
|
|
|
$
|
1,609
|
|
|
$
|
2,461,159
|
|
Share repurchases as part of an announced plan
|
(3,190
|
)
|
|
(32
|
)
|
|
—
|
|
|
(52,764
|
)
|
|
—
|
|
|
—
|
|
|
(52,796
|
)
|
||||||
Retirement of shares returned from escrow
|
(85
|
)
|
|
(1
|
)
|
|
(1,478
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,479
|
)
|
||||||
Redemption of noncontrolling interest in consolidated variable interest entity
|
—
|
|
|
—
|
|
|
(4,054
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,054
|
)
|
||||||
Dividends to common stockholders ($0.81 per share), dividends to shareholders of subsidiary, and dividends reinvested
|
—
|
|
|
—
|
|
|
(188
|
)
|
|
(124,995
|
)
|
|
—
|
|
|
(15
|
)
|
|
(125,198
|
)
|
||||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
|
138
|
|
|
1
|
|
|
2,996
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,997
|
|
||||||
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||||
Net income attributable to Piedmont
|
—
|
|
|
—
|
|
|
—
|
|
|
43,348
|
|
|
—
|
|
|
—
|
|
|
43,348
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,977
|
)
|
|
—
|
|
|
(11,977
|
)
|
||||||
Balance, December 31, 2014
|
154,324
|
|
|
1,543
|
|
|
3,666,182
|
|
|
(1,365,620
|
)
|
|
8,301
|
|
|
1,609
|
|
|
2,312,015
|
|
||||||
Share repurchases as part of an announced plan
|
(2,649
|
)
|
|
(26
|
)
|
|
—
|
|
|
(46,233
|
)
|
|
—
|
|
|
—
|
|
|
(46,259
|
)
|
||||||
Offering costs
|
—
|
|
|
—
|
|
|
(326
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(326
|
)
|
||||||
Redemption of noncontrolling interest in consolidated variable interest entity
|
—
|
|
|
—
|
|
|
54
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54
|
|
||||||
Reallocation of noncontrolling interest of subsidiary
|
—
|
|
|
—
|
|
|
1,128
|
|
|
—
|
|
|
—
|
|
|
(584
|
)
|
|
544
|
|
||||||
Dividends to common stockholders ($0.42 per share), dividends to shareholders of subsidiary, and dividends reinvested
|
—
|
|
|
—
|
|
|
(140
|
)
|
|
(64,680
|
)
|
|
—
|
|
|
(8
|
)
|
|
(64,828
|
)
|
||||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
|
158
|
|
|
1
|
|
|
1,480
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,481
|
|
||||||
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
||||||
Net income attributable to Piedmont
|
—
|
|
|
—
|
|
|
—
|
|
|
49,221
|
|
|
—
|
|
|
—
|
|
|
49,221
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,941
|
|
|
—
|
|
|
3,941
|
|
||||||
Balance, June 30, 2015
|
151,833
|
|
|
$
|
1,518
|
|
|
$
|
3,668,378
|
|
|
$
|
(1,427,312
|
)
|
|
$
|
12,242
|
|
|
$
|
1,025
|
|
|
$
|
2,255,851
|
|
|
(Unaudited)
|
||||||
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2015
|
|
2014
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
49,229
|
|
|
$
|
21,680
|
|
Operating distributions received from unconsolidated joint ventures
|
368
|
|
|
266
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
72,271
|
|
|
67,871
|
|
||
Amortization of deferred financing costs
|
866
|
|
|
1,047
|
|
||
Gain/(loss) on settlement of forward starting interest rate swaps
|
(1,284
|
)
|
|
14,960
|
|
||
Other amortization
|
29,890
|
|
|
27,649
|
|
||
Impairment loss on real estate asset
|
5,354
|
|
|
—
|
|
||
Stock compensation expense
|
2,417
|
|
|
1,907
|
|
||
Equity in loss/(income) of unconsolidated joint ventures
|
(283
|
)
|
|
599
|
|
||
Gain on sale of real estate assets
|
(36,684
|
)
|
|
(2,338
|
)
|
||
Retirement of shares returned from escrow
|
—
|
|
|
(1,479
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Increase in tenant and straight-line rent receivables, net
|
(16,447
|
)
|
|
(14,236
|
)
|
||
Increase in restricted cash and escrows
|
(266
|
)
|
|
(117
|
)
|
||
Increase in prepaid expenses and other assets
|
(5,071
|
)
|
|
(7,062
|
)
|
||
Decrease in accounts payable and accrued expenses
|
(9,762
|
)
|
|
(1,396
|
)
|
||
Increase/(decrease) in deferred income
|
4,235
|
|
|
(456
|
)
|
||
Net cash provided by operating activities
|
94,833
|
|
|
108,895
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Acquisition of real estate assets and related intangibles
|
(45,185
|
)
|
|
(29,180
|
)
|
||
Capitalized expenditures, net of accruals
|
(62,587
|
)
|
|
(68,936
|
)
|
||
Redemption of noncontrolling interest in unconsolidated variable interest entity
|
(4,000
|
)
|
|
—
|
|
||
Net sales proceeds from wholly-owned properties
|
87,925
|
|
|
46,240
|
|
||
Net sales proceeds from unconsolidated joint ventures
|
—
|
|
|
6,017
|
|
||
Investments in unconsolidated joint ventures
|
—
|
|
|
(42
|
)
|
||
Deferred lease costs paid
|
(10,678
|
)
|
|
(11,370
|
)
|
||
Net cash used in investing activities
|
(34,525
|
)
|
|
(57,271
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Deferred financing costs paid
|
(830
|
)
|
|
(1,016
|
)
|
||
Proceeds from debt
|
1,054,857
|
|
|
846,564
|
|
||
Repayments of debt
|
(1,012,576
|
)
|
|
(779,070
|
)
|
||
Costs of issuance of common stock
|
(326
|
)
|
|
—
|
|
||
Repurchases of common stock as part of announced plan
|
(39,914
|
)
|
|
(54,685
|
)
|
||
Dividends paid and discount on dividend reinvestments
|
(64,828
|
)
|
|
(61,827
|
)
|
||
Net cash used in financing activities
|
(63,617
|
)
|
|
(50,034
|
)
|
||
Net (decrease)/increase in cash and cash equivalents
|
(3,309
|
)
|
|
1,590
|
|
||
Cash and cash equivalents, beginning of period
|
12,306
|
|
|
6,973
|
|
||
Cash and cash equivalents, end of period
|
$
|
8,997
|
|
|
$
|
8,563
|
|
|
|
|
|
||||
Supplemental Disclosures of Significant Noncash Investing and Financing Activities:
|
|
|
|
||||
Change in accrued share repurchases as part of an announced plan
|
$
|
6,345
|
|
|
$
|
(2,005
|
)
|
Accrued capital expenditures and deferred lease costs
|
$
|
15,930
|
|
|
$
|
13,010
|
|
Accrued deferred financing costs
|
$
|
75
|
|
|
$
|
5
|
|
3.
|
Acquisitions
|
Property
|
|
Metropolitan Statistical Area
|
|
Date of Acquisition
|
|
Rentable Square Feet
|
|
Percentage Leased as of Acquisition
|
|
Purchase Price
(in millions)
|
|||||
Park Place on Turtle Creek
|
|
Dallas, TX
|
|
January 16, 2015
|
|
177,844
|
|
|
88
|
%
|
|
$
|
46.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Land Parcel
|
|
Metropolitan Statistical Area
|
|
Date of Acquisition
|
|
Acreage
|
|
Contractual Purchase Price
(in millions) |
|
|
|||||
Two Pierce Land Parcel
|
|
Chicago, IL
|
|
June 2, 2015
|
|
4.73
|
|
|
$
|
3.7
|
|
|
|
Facility
|
|
Collateral
|
|
Stated Rate
(1)
|
|
Maturity
|
|
Amount Outstanding as of
|
|||||||
|
June 30,
2015 |
|
December 31,
2014 |
||||||||||||
Secured (Fixed)
|
|
|
|
|
|
|
|
|
|
|
|||||
$105 Million Fixed-Rate Loan
|
|
US Bancorp Center
|
|
5.29
|
%
|
|
5/11/2015
|
|
$
|
—
|
|
|
$
|
105,000
|
|
$125 Million Fixed-Rate Loan
|
|
Four Property Collateralized
Pool
(2)
|
|
5.50
|
%
|
|
4/1/2016
|
|
125,000
|
|
|
125,000
|
|
||
$42.5 Million Fixed-Rate Loan
|
|
Las Colinas Corporate
Center I & II
|
|
5.70
|
%
|
|
10/11/2016
|
|
42,525
|
|
|
42,525
|
|
||
$140 Million WDC Fixed-Rate Loans
|
|
1201 & 1225 Eye Street
|
|
5.76
|
%
|
|
11/1/2017
|
|
140,000
|
|
|
140,000
|
|
||
$35 Million Fixed-Rate Loan
|
|
5 Wall Street
|
|
5.55
|
%
|
(3)
|
9/1/2021
|
|
35,943
|
|
|
36,520
|
|
||
$160 Million Fixed-Rate Loan
|
|
1901 Market Street
|
|
3.48
|
%
|
(4)
|
7/5/2022
|
|
159,289
|
|
|
—
|
|
||
Subtotal/Weighted Average
(5)
|
|
|
|
4.95
|
%
|
|
|
|
502,757
|
|
|
449,045
|
|
||
Unsecured (Variable and Fixed)
|
|
|
|
|
|
|
|
|
|
|
|||||
$300 Million Unsecured 2011 Term Loan
|
|
|
|
LIBOR + 1.15%
|
|
(6)
|
1/15/2020
|
|
299,048
|
|
|
298,944
|
|
||
$500 Million Unsecured Line of Credit
|
|
|
|
LIBOR + 1.175%
|
|
|
8/19/2016
|
|
—
|
|
|
434,000
|
|
||
$500 Million Unsecured 2015 Line of Credit
|
|
|
|
LIBOR + 1.00%
|
|
(7)
|
6/18/2019
|
(8)
|
303,020
|
|
|
—
|
|
||
$350 Million Unsecured Senior Notes
|
|
|
|
3.40
|
%
|
(9)
|
6/1/2023
|
|
348,862
|
|
|
348,800
|
|
||
$300 Million Unsecured 2013 Term Loan
|
|
|
|
LIBOR + 1.20%
|
|
(10)
|
1/31/2019
|
|
300,000
|
|
|
300,000
|
|
||
$400 Million Unsecured Senior Notes
|
|
|
|
4.45
|
%
|
(11)
|
3/15/2024
|
|
396,997
|
|
|
396,832
|
|
||
$50 Million Unsecured Term Loan
|
|
|
|
LIBOR + 1.15%
|
|
|
4/1/2015
|
|
—
|
|
|
49,968
|
|
||
$170 Million Unsecured 2015 Term Loan
|
|
|
|
LIBOR + 1.125%
|
|
(12)
|
5/15/2018
|
|
169,611
|
|
|
—
|
|
||
Subtotal/Weighted Average
(5)
|
|
|
|
2.80
|
%
|
|
|
|
1,817,538
|
|
|
1,828,544
|
|
||
Total/ Weighted Average
(5)
|
|
|
|
3.26
|
%
|
|
|
|
$
|
2,320,295
|
|
|
$
|
2,277,589
|
|
(1)
|
Other than the
$35 Million
Fixed-Rate Loan, all of Piedmont’s outstanding debt as of
June 30, 2015
and
December 31, 2014
is interest-only.
|
(2)
|
Property collateralized pool includes 1430 Enclave Parkway in Houston, Texas, Windy Point I and II in Schaumburg, Illinois, and 1055 East Colorado Boulevard in Pasadena, California.
|
(3)
|
The
$35 Million
Fixed-Rate Loan has a contractual fixed rate of
5.55%
; however, the amortization of the premium recorded in order to adjust the note to its estimated fair value, results in an effective interest rate of
3.75%
.
|
(4)
|
The
$160 Million
Fixed-Rate Loan has a fixed coupon rate of
3.48%
, however, after consideration of the impact of settled interest rate swap agreements, the effective interest rate on this debt is
3.58%
.
|
(5)
|
Weighted average is based on contractual balance of outstanding debt and interest rates in the table as of
June 30, 2015
.
|
(6)
|
The
$300 Million
Unsecured 2011 Term Loan has a stated variable rate; however, Piedmont has entered into interest rate swap agreements which effectively fix, exclusive of changes to Piedmont's credit rating, the rate on this facility to
2.39%
through the original maturity date of November 22, 2016 and
3.35%
from November 22, 2016 to January 15, 2020.
|
(7)
|
Piedmont may select from multiple interest rate options with each draw, including the prime rate and various-length LIBOR locks. All LIBOR selections are subject to an additional spread (
1.00%
as of
June 30, 2015
) over the selected rate based on Piedmont’s current credit rating. The outstanding balance as of
June 30, 2015
consisted of 30-day LIBOR draws at a rate of
0.19%
(subject to the additional spread mentioned above).
|
(8)
|
Piedmont may extend the term for up to
one
additional year (through
two
available
six
month extensions to a final extended maturity date of June 18, 2020) provided Piedmont is not then in default and upon payment of extension fees.
|
(9)
|
The
$350 Million
Senior Notes have a fixed coupon rate of
3.40%
, however, as a result of the issuance of the notes at a discount, Piedmont recognizes an effective interest rate on this debt issuance of
3.45%
. After consideration of the impact of settled interest rate swap agreements, in addition to the issuance discount, the effective interest rate on this debt is
3.43%
.
|
(10)
|
The
$300 Million
Unsecured 2013 Term Loan has a stated variable rate; however, Piedmont entered into interest rate swap agreements which effectively fix, absent any changes to Piedmont's credit rating, the rate on this facility to
2.78%
.
|
(11)
|
The
$400 Million
Senior Notes have a fixed coupon rate of
4.45%
, however, as a result of the issuance of the notes at a discount, Piedmont recognizes an effective interest rate on this debt issuance of
4.48%
. After consideration of the impact of settled interest rate swap agreements, in addition to the issuance discount, the effective interest rate on this debt is
4.10%
.
|
(12)
|
On a periodic basis, Piedmont may select from multiple interest rate options, including the prime rate and various-length LIBOR locks. All LIBOR selections are subject to an additional spread (
1.125%
as of
June 30, 2015
) over the selected rate based on Piedmont’s current credit rating. The principal balance as of
June 30, 2015
consisted of the 30-day LIBOR rate of
0.19%
(subject to the additional spread mentioned above).
|
Interest Rate Derivatives:
|
|
Number of Swap Agreements
|
|
Associated Debt Instrument
|
|
Total Notional Amount
(in millions)
|
|
Effective Date
|
|
Maturity Date
|
||
Interest rate swaps
|
|
4
|
|
$300 Million Unsecured 2011 Term Loan
|
|
$
|
300
|
|
|
11/22/2011
|
|
11/22/2016
|
Interest rate swaps
|
|
4
|
|
$300 Million Unsecured 2013 Term Loan
|
|
200
|
|
|
1/30/2014
|
|
1/31/2019
|
|
Interest rate swaps
|
|
2
|
|
$300 Million Unsecured 2013 Term Loan
|
|
100
|
|
|
8/29/2014
|
|
1/31/2019
|
|
Forward starting interest rate swaps
|
|
3
|
|
$300 Million Unsecured 2011 Term Loan
|
|
300
|
|
|
11/22/2016
|
|
1/15/2020
|
|
Forward starting interest rate swaps
|
|
4
|
|
Potential Future Issuance
|
|
250
|
|
|
2/25/2016
|
|
2/25/2026
|
|
Total
|
|
|
|
|
|
$
|
1,150
|
|
|
|
|
|
Interest rate swaps classified as:
|
June 30,
2015 |
|
December 31,
2014 |
||||
Gross derivative assets
|
$
|
8,290
|
|
|
$
|
430
|
|
Gross derivative liabilities
|
(8,411
|
)
|
|
(6,417
|
)
|
||
Net derivative liability
|
$
|
(121
|
)
|
|
$
|
(5,987
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Derivative in
Cash Flow Hedging
Relationships (Interest Rate Swaps) (in thousands)
|
June 30,
2015 |
|
June 30,
2014 |
|
June 30,
2015 |
|
June 30,
2014 |
||||||||
Amount of gain/(loss) recognized in OCI on derivative
|
$
|
16,079
|
|
|
$
|
(3,617
|
)
|
|
$
|
874
|
|
|
$
|
(13,502
|
)
|
Amount of previously recorded loss reclassified from accumulated OCI into interest expense
|
$
|
1,602
|
|
|
$
|
1,159
|
|
|
$
|
3,069
|
|
|
$
|
2,328
|
|
Entity
|
|
Piedmont’s
%
Ownership
of Entity
|
|
Related
Building
|
|
Consolidated/
Unconsolidated
|
|
Net Carrying
Amount as of
June 30, 2015
|
|
Net Carrying
Amount as of
December 31,
2014
|
|
Primary Beneficiary
Considerations
|
||||
1201 Eye Street NW Associates, LLC
|
|
49.5%
|
|
1201 Eye Street
|
|
Consolidated
|
|
$
|
(3.4
|
)
|
|
$
|
(2.8
|
)
|
|
In accordance with the partnership’s governing documents, Piedmont is entitled to 100% of the cash flow of the entity until certain financial returns are achieved and has sole discretion in directing the management and leasing activities of the building.
|
1225 Eye Street NW Associates, LLC
|
|
49.5%
|
|
1225 Eye Street
|
|
Consolidated
|
|
$
|
1.1
|
|
|
$
|
(1.1
|
)
|
|
In accordance with the partnership’s governing documents, Piedmont is entitled to 100% of the cash flow of the entity until certain financial returns are achieved and has sole discretion in directing the management and leasing activities of the building.
|
Piedmont 500 W. Monroe Fee, LLC
|
|
100%
|
|
500 W. Monroe
|
|
Consolidated
|
|
$
|
243.6
|
|
|
$
|
245.3
|
|
|
The Omnibus Agreement with the previous owner includes equity participation rights for the previous owner, if certain financial returns are achieved; however, Piedmont has sole decision making authority and is entitled to the economic benefits of the property until such returns are met.
|
Piedmont TownPark Land, LLC
|
|
100%
|
|
Land Parcel Adjacent to 400 TownPark building
|
|
Consolidated
|
|
$
|
8.0
|
|
|
$
|
7.9
|
|
|
The equity participation and service fee agreement includes equity participation rights for the third party manager if certain defined events occur and certain returns on investment are achieved; however, Piedmont has sole decision making authority and is entitled to the economic benefits of the property until such events occur and returns are achieved.
|
|
June 30, 2015
|
|
December 31, 2014
|
||||||||||||||||
Financial Instrument
|
Carrying Value
|
|
Estimated Fair Value
|
|
Level Within Fair Value Hierarchy
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Level Within Fair Value Hierarchy
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
(1)
|
$
|
8,997
|
|
|
$
|
8,997
|
|
|
Level 1
|
|
$
|
12,306
|
|
|
$
|
12,306
|
|
|
Level 1
|
Tenant receivables, net
(1)
|
$
|
25,474
|
|
|
$
|
25,474
|
|
|
Level 1
|
|
$
|
27,711
|
|
|
$
|
27,711
|
|
|
Level 1
|
Notes receivable
(1)
|
$
|
45,400
|
|
|
$
|
45,400
|
|
|
Level 1
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Level 1
|
Restricted cash and escrows
(1)
|
$
|
521
|
|
|
$
|
521
|
|
|
Level 1
|
|
$
|
5,679
|
|
|
$
|
5,679
|
|
|
Level 1
|
Interest rate swap asset
|
$
|
8,290
|
|
|
$
|
8,290
|
|
|
Level 2
|
|
$
|
430
|
|
|
$
|
430
|
|
|
Level 2
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued expenses
(1)
|
$
|
18,814
|
|
|
$
|
18,814
|
|
|
Level 1
|
|
$
|
14,395
|
|
|
$
|
14,395
|
|
|
Level 1
|
Interest rate swap liability
|
$
|
8,411
|
|
|
$
|
8,411
|
|
|
Level 2
|
|
$
|
6,417
|
|
|
$
|
6,417
|
|
|
Level 2
|
Debt
|
$
|
2,320,295
|
|
|
$
|
2,332,695
|
|
|
Level 2
|
|
$
|
2,277,589
|
|
|
$
|
2,314,020
|
|
|
Level 2
|
(1)
|
For the periods presented, the carrying value of these financial instruments approximates estimated fair value due to their short-term maturity.
|
Buildings Sold
|
|
Location
|
|
Date of Sale
|
|
Gain/(Loss) on Sale
|
|
Net Sales Proceeds
|
|
||||
2020 W. 89th Street
|
|
Leawood, Kansas
|
|
May 19, 2014
|
|
$
|
1,132
|
|
|
$
|
5,515
|
|
|
Two Park Center
(1)
|
|
Hoffman Estates, Illinois
|
|
May 29, 2014
|
|
$
|
(169
|
)
|
|
$
|
6,017
|
|
|
3900 Dallas Parkway
|
|
Plano, Texas
|
|
January 30, 2015
|
|
$
|
10,073
|
|
|
$
|
25,803
|
|
|
5601 Headquarters Drive
|
|
Plano, Texas
|
|
April 28, 2015
|
|
$
|
7,959
|
|
|
$
|
33,326
|
|
|
River Corporate Center
|
|
Tempe, Arizona
|
|
April 29, 2015
|
|
$
|
5,303
|
|
|
$
|
24,228
|
|
|
Copper Ridge Center
|
|
Lyndhurst, New Jersey
|
|
May 1, 2015
|
|
$
|
13,349
|
|
|
$
|
4,568
|
|
(2)
|
(1)
|
Property was owned as part the unconsolidated joint venture, Fund XIII and REIT Joint Venture. As such, the loss on sale was presented as equity in income/(loss) of unconsolidated joint ventures.
|
(2)
|
As part of the transaction, Piedmont accepted a secured promissory note from the buyer for the remaining
$45.4 million
owed on the sale. The note bears interest at a rate of
8.45%
and a matures on December 31, 2015. The maturity date may be extended for
two
terms of
six
months each upon
30
days prior written notice and a 25 bps extension fee.
|
|
|
June 30, 2015
|
|
December 31, 2014
|
||||
Real estate assets held for sale, net:
|
|
|
|
|
||||
Land
|
|
$
|
4,281
|
|
|
$
|
5,798
|
|
Building and improvements, less accumulated depreciation of $12,828 and $23,009 as of June 30, 2015 and December 31, 2014, respectively
|
|
21,633
|
|
|
40,546
|
|
||
Construction in progress
|
|
197
|
|
|
10
|
|
||
Total real estate assets held for sale, net
|
|
$
|
26,111
|
|
|
$
|
46,354
|
|
|
|
|
|
|
||||
Other assets held for sale, net:
|
|
|
|
|
||||
Straight-line rent receivables
|
|
$
|
1,904
|
|
|
$
|
2,643
|
|
Deferred lease costs, less accumulated amortization of $919 and $2,335 as of June 30, 2015 and December 31, 2014, respectively
|
|
1,802
|
|
|
2,140
|
|
||
Total other assets held for sale, net
|
|
$
|
3,706
|
|
|
$
|
4,783
|
|
Buildings Sold
|
|
Location
|
|
Date of Sale
|
|
Gain/(Loss) on Sale
|
|
Net Sales Proceeds
|
||||
11107 and 11109 Sunset Hills Road
|
|
Reston, Virginia
|
|
March 19, 2014
|
|
$
|
(102
|
)
|
|
$
|
22,326
|
|
1441 West Long Lake Road
|
|
Troy, Michigan
|
|
April 30, 2014
|
|
$
|
562
|
|
|
$
|
7,202
|
|
4685 Investment Drive
|
|
Troy, Michigan
|
|
April 30, 2014
|
|
$
|
747
|
|
|
$
|
11,198
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2015
|
|
June 30, 2014
|
|
June 30, 2015
|
|
June 30, 2014
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
—
|
|
|
$
|
191
|
|
|
$
|
—
|
|
|
$
|
1,365
|
|
Tenant reimbursements
|
(3
|
)
|
|
2
|
|
|
(3
|
)
|
|
114
|
|
||||
Property management fee revenue
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
|
(3
|
)
|
|
194
|
|
|
(3
|
)
|
|
1,480
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
(1
|
)
|
|
(323
|
)
|
|
(1
|
)
|
|
182
|
|
||||
Depreciation
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
||||
Amortization
|
—
|
|
|
—
|
|
|
—
|
|
|
223
|
|
||||
General and administrative
|
1
|
|
|
3
|
|
|
1
|
|
|
6
|
|
||||
|
—
|
|
|
(320
|
)
|
|
—
|
|
|
494
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income/(expense)
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income/(loss), excluding gain on sale
|
(3
|
)
|
|
514
|
|
|
(3
|
)
|
|
980
|
|
||||
Gain on sale of real estate assets
|
—
|
|
|
1,304
|
|
|
—
|
|
|
1,198
|
|
||||
Income/(loss) from discontinued operations
|
$
|
(3
|
)
|
|
$
|
1,818
|
|
|
$
|
(3
|
)
|
|
$
|
2,178
|
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested Deferred Stock Awards as of December 31, 2014
|
506,404
|
|
|
$
|
18.12
|
|
Deferred Stock Awards Granted During Six Months Ended June 30, 2015
|
298,541
|
|
|
$
|
17.59
|
|
Adjustment to Estimated Future Grants of Performance Share Awards During Six Months Ended June 30, 2015
|
202,658
|
|
|
$
|
17.73
|
|
Deferred Stock Awards Vested During Six Months Ended June 30, 2015
|
(226,312
|
)
|
|
$
|
17.97
|
|
Deferred Stock Awards Forfeited During Six Months Ended June 30, 2015
|
(2,435
|
)
|
|
$
|
18.06
|
|
Unvested Deferred Stock Awards as of June 30, 2015
|
778,856
|
|
|
$
|
17.86
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2015 |
|
June 30,
2014 |
|
June 30,
2015 |
|
June 30,
2014 |
||||||||
Weighted-Average Grant Date Fair Value of Shares Granted During the Period (per share)
|
$
|
17.59
|
|
|
$
|
18.51
|
|
|
$
|
17.59
|
|
|
$
|
17.78
|
|
Total Grant Date Fair Value of Shares Vested During the Period
|
$
|
3,727
|
|
|
$
|
3,191
|
|
|
$
|
4,073
|
|
|
$
|
3,195
|
|
Share-based Liability Awards Paid During the Period
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Amount reflects the issuance of performance share awards during the period.
|
Date of grant
|
|
Type of Award
|
|
Net Shares
Granted
(1)
|
|
Grant
Date Fair
Value
|
|
Vesting Schedule
|
|
Unvested Shares as of June 30, 2015
|
|
||||
April 4, 2012
|
|
Deferred Stock Award
|
|
20,121
|
|
|
$
|
17.80
|
|
|
Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on April 4, 2013, 2014, and 2015, respectively.
|
|
6,770
|
|
(2)
|
April 2, 2013
|
|
Deferred Stock Award
|
|
118,174
|
|
|
$
|
19.47
|
|
|
Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on April 2, 2014, 2015, and 2016, respectively.
|
|
38,065
|
|
|
April 2, 2013
|
|
Fiscal Year 2013-2015 Performance Share Program
|
|
—
|
|
|
$
|
18.91
|
|
|
Shares awarded, if any, will vest immediately upon determination of award in 2016.
|
|
—
|
|
(3)
|
January 3, 2014
|
|
Deferred Stock Award
|
|
95,476
|
|
|
$
|
16.45
|
|
|
Of the shares granted, 20% will vest on January 3, 2015, 2016, 2017, 2018, and 2019, respectively.
|
|
82,673
|
|
|
May 9, 2014
|
|
Deferred Stock Award
|
|
163,163
|
|
|
$
|
18.47
|
|
|
Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 9, 2015, 2016, and 2017, respectively.
|
|
97,762
|
|
|
May 9, 2014
|
|
Fiscal Year 2014-2016 Performance Share Program
|
|
—
|
|
|
$
|
18.51
|
|
|
Shares awarded, if any, will vest immediately upon determination of award in 2017.
|
|
159,271
|
|
(4)
|
May 1, 2015
|
|
Deferred Stock Award
|
|
271,228
|
|
|
$
|
17.59
|
|
|
Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 1, 2016, 2017, and 2018, respectively.
|
|
222,484
|
|
|
May 1, 2015
|
|
Fiscal Year 2015-2017 Performance Share Program
|
|
—
|
|
|
$
|
17.59
|
|
|
Shares awarded, if any, will vest immediately upon determination of award in 2018.
|
|
171,831
|
|
(4)
|
Total
|
|
|
|
|
|
|
|
|
|
778,856
|
|
|
(1)
|
Amounts reflect the total grant to employees, net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations through
June 30, 2015
.
|
(2)
|
Unvested shares outstanding represent grants made to
two
employees beginning their employment in 2012 subsequent to April 4, 2012, and such shares will fully vest by November 7, 2015.
|
(3)
|
Estimated based on Piedmont's cumulative total stockholder return ("TSR") for the respective performance period through
June 30, 2015
. As of
June 30, 2015
, Piedmont's TSR for the fiscal year 2013-2015 performance share program was below threshold. Share estimates are subject to change in future periods based on both Piedmont's and its peers' stock performance and dividends paid.
|
(4)
|
Estimated based on Piedmont's cumulative TSR for the respective performance period through
June 30, 2015
. Share estimates are subject to change in future periods based on both Piedmont's and its peers' stock performance and dividends paid.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 30, 2015
|
|
June 30, 2014
|
|
June 30, 2015
|
|
June 30, 2014
|
Weighted-average common shares – basic
|
153,559
|
|
154,319
|
|
153,947
|
|
154,583
|
Plus incremental weighted-average shares from time-vested conversions:
|
|
|
|
|
|
|
|
Deferred stock awards
|
198
|
|
126
|
|
227
|
|
145
|
Weighted-average common shares – diluted
(1)
|
153,757
|
|
154,445
|
|
154,174
|
|
154,728
|
(1)
|
Due to repurchases of common stock in May and June 2015, Piedmont has
151,833,222
shares of common stock outstanding as of June 30, 2015.
|
Condensed Consolidated Balance Sheets
|
|||||||||||||||||||
As of June 30, 2015
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate assets, at cost:
|
|
|
|
|
|
|
|
|
|
||||||||||
Land
|
$
|
66,997
|
|
|
$
|
—
|
|
|
$
|
629,716
|
|
|
$
|
—
|
|
|
$
|
696,713
|
|
Buildings and improvements, less accumulated depreciation
|
355,127
|
|
|
—
|
|
|
2,799,217
|
|
|
(300
|
)
|
|
3,154,044
|
|
|||||
Intangible lease assets, less accumulated amortization
|
1,541
|
|
|
—
|
|
|
62,611
|
|
|
—
|
|
|
64,152
|
|
|||||
Construction in progress
|
2,298
|
|
|
—
|
|
|
62,506
|
|
|
—
|
|
|
64,804
|
|
|||||
Real estate assets held for sale, net
|
26,111
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,111
|
|
|||||
Total real estate assets
|
452,074
|
|
|
—
|
|
|
3,554,050
|
|
|
(300
|
)
|
|
4,005,824
|
|
|||||
Investments in and amounts due from unconsolidated joint ventures
|
7,714
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,714
|
|
|||||
Cash and cash equivalents
|
6,164
|
|
|
150
|
|
|
2,683
|
|
|
—
|
|
|
8,997
|
|
|||||
Tenant and straight-line rent receivables, net
|
28,213
|
|
|
—
|
|
|
168,502
|
|
|
—
|
|
|
196,715
|
|
|||||
Advances to affiliates
|
6,337,046
|
|
|
1,261,120
|
|
|
—
|
|
|
(7,598,166
|
)
|
|
—
|
|
|||||
Investment in subsidiary
|
—
|
|
|
3,814,131
|
|
|
189
|
|
|
(3,814,320
|
)
|
|
—
|
|
|||||
Notes receivable
|
134,750
|
|
|
—
|
|
|
23,890
|
|
|
(113,240
|
)
|
|
45,400
|
|
|||||
Prepaid expenses, restricted cash, escrows, and other assets
|
6,214
|
|
|
77
|
|
|
28,520
|
|
|
(1,499
|
)
|
|
33,312
|
|
|||||
Goodwill
|
180,097
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
180,097
|
|
|||||
Interest rate swaps
|
8,290
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,290
|
|
|||||
Deferred financing costs, net
|
6,699
|
|
|
—
|
|
|
792
|
|
|
—
|
|
|
7,491
|
|
|||||
Deferred lease costs, net
|
23,388
|
|
|
—
|
|
|
260,368
|
|
|
—
|
|
|
283,756
|
|
|||||
Other assets held for sale, net
|
3,706
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,706
|
|
|||||
Total assets
|
$
|
7,194,355
|
|
|
$
|
5,075,478
|
|
|
$
|
4,038,994
|
|
|
$
|
(11,527,525
|
)
|
|
$
|
4,781,302
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt, net
|
$
|
1,841,428
|
|
|
$
|
—
|
|
|
$
|
592,107
|
|
|
$
|
(113,240
|
)
|
|
$
|
2,320,295
|
|
Accounts payable, accrued expenses, and accrued capital expenditures
|
16,042
|
|
|
6,783
|
|
|
107,572
|
|
|
(1,499
|
)
|
|
128,898
|
|
|||||
Advances from affiliates
|
558,055
|
|
|
4,925,597
|
|
|
2,180,736
|
|
|
(7,664,388
|
)
|
|
—
|
|
|||||
Deferred income
|
4,069
|
|
|
—
|
|
|
22,564
|
|
|
—
|
|
|
26,633
|
|
|||||
Intangible lease liabilities, net
|
—
|
|
|
—
|
|
|
41,214
|
|
|
—
|
|
|
41,214
|
|
|||||
Interest rate swaps
|
8,411
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,411
|
|
|||||
Total liabilities
|
2,428,005
|
|
|
4,932,380
|
|
|
2,944,193
|
|
|
(7,779,127
|
)
|
|
2,525,451
|
|
|||||
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
—
|
|
|
1,518
|
|
|
—
|
|
|
—
|
|
|
1,518
|
|
|||||
Additional paid-in capital
|
3,810,131
|
|
|
3,671,250
|
|
|
1,317
|
|
|
(3,814,320
|
)
|
|
3,668,378
|
|
|||||
Retained/(cumulative distributions in excess of) earnings
|
943,977
|
|
|
(3,529,670
|
)
|
|
1,092,459
|
|
|
65,922
|
|
|
(1,427,312
|
)
|
|||||
Other comprehensive loss
|
12,242
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,242
|
|
|||||
Piedmont stockholders’ equity
|
4,766,350
|
|
|
143,098
|
|
|
1,093,776
|
|
|
(3,748,398
|
)
|
|
2,254,826
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
1,025
|
|
|
—
|
|
|
1,025
|
|
|||||
Total stockholders’ equity
|
4,766,350
|
|
|
143,098
|
|
|
1,094,801
|
|
|
(3,748,398
|
)
|
|
2,255,851
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
7,194,355
|
|
|
$
|
5,075,478
|
|
|
$
|
4,038,994
|
|
|
$
|
(11,527,525
|
)
|
|
$
|
4,781,302
|
|
Condensed Consolidated Balance Sheets
|
|||||||||||||||||||
As of December 31, 2014
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate assets, at cost:
|
|
|
|
|
|
|
|
|
|
||||||||||
Land
|
$
|
77,125
|
|
|
$
|
—
|
|
|
$
|
621,394
|
|
|
$
|
—
|
|
|
$
|
698,519
|
|
Buildings and improvements, less accumulated depreciation
|
414,515
|
|
|
—
|
|
|
2,782,445
|
|
|
(300
|
)
|
|
3,196,660
|
|
|||||
Intangible lease assets, less accumulated amortization
|
1,812
|
|
|
—
|
|
|
68,365
|
|
|
—
|
|
|
70,177
|
|
|||||
Construction in progress
|
1,345
|
|
|
—
|
|
|
62,037
|
|
|
—
|
|
|
63,382
|
|
|||||
Real estate assets held for sale, net
|
46,354
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,354
|
|
|||||
Total real estate assets
|
541,151
|
|
|
—
|
|
|
3,534,241
|
|
|
(300
|
)
|
|
4,075,092
|
|
|||||
Investments in and amounts due from unconsolidated joint ventures
|
7,798
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,798
|
|
|||||
Cash and cash equivalents
|
8,143
|
|
|
1,790
|
|
|
2,373
|
|
|
—
|
|
|
12,306
|
|
|||||
Tenant and straight-line rent receivables, net
|
35,363
|
|
|
—
|
|
|
160,005
|
|
|
—
|
|
|
195,368
|
|
|||||
Advances to affiliates
|
6,084,243
|
|
|
1,282,443
|
|
|
—
|
|
|
(7,366,686
|
)
|
|
—
|
|
|||||
Investment in subsidiary
|
—
|
|
|
3,878,811
|
|
|
192
|
|
|
(3,879,003
|
)
|
|
—
|
|
|||||
Notes receivable
|
161,350
|
|
|
—
|
|
|
23,890
|
|
|
(185,240
|
)
|
|
—
|
|
|||||
Prepaid expenses, restricted cash, escrows, and other assets
|
10,912
|
|
|
—
|
|
|
23,541
|
|
|
(954
|
)
|
|
33,499
|
|
|||||
Goodwill
|
180,097
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
180,097
|
|
|||||
Interest rate swaps
|
430
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
430
|
|
|||||
Deferred financing costs, net
|
7,242
|
|
|
—
|
|
|
425
|
|
|
—
|
|
|
7,667
|
|
|||||
Deferred lease costs, net
|
29,696
|
|
|
—
|
|
|
248,765
|
|
|
—
|
|
|
278,461
|
|
|||||
Other assets held for sale, net
|
4,783
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,783
|
|
|||||
Total assets
|
$
|
7,071,208
|
|
|
$
|
5,163,044
|
|
|
$
|
3,993,432
|
|
|
$
|
(11,432,183
|
)
|
|
$
|
4,795,501
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt, net
|
$
|
1,852,434
|
|
|
$
|
—
|
|
|
$
|
610,395
|
|
|
$
|
(185,240
|
)
|
|
$
|
2,277,589
|
|
Accounts payable, accrued expenses, and accrued capital expenditures
|
19,403
|
|
|
465
|
|
|
115,074
|
|
|
(954
|
)
|
|
133,988
|
|
|||||
Advances from affiliates
|
376,122
|
|
|
4,909,362
|
|
|
2,138,140
|
|
|
(7,423,624
|
)
|
|
—
|
|
|||||
Deferred income
|
4,998
|
|
|
—
|
|
|
17,217
|
|
|
—
|
|
|
22,215
|
|
|||||
Intangible lease liabilities, net
|
—
|
|
|
—
|
|
|
43,277
|
|
|
—
|
|
|
43,277
|
|
|||||
Interest rate swaps
|
6,417
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,417
|
|
|||||
Total liabilities
|
2,259,374
|
|
|
4,909,827
|
|
|
2,924,103
|
|
|
(7,609,818
|
)
|
|
2,483,486
|
|
|||||
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
—
|
|
|
1,543
|
|
|
—
|
|
|
—
|
|
|
1,543
|
|
|||||
Additional paid-in capital
|
3,874,757
|
|
|
3,670,236
|
|
|
192
|
|
|
(3,879,003
|
)
|
|
3,666,182
|
|
|||||
Retained/(cumulative distributions in excess of) earnings
|
928,776
|
|
|
(3,418,562
|
)
|
|
1,067,528
|
|
|
56,638
|
|
|
(1,365,620
|
)
|
|||||
Other comprehensive loss
|
8,301
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,301
|
|
|||||
Piedmont stockholders’ equity
|
4,811,834
|
|
|
253,217
|
|
|
1,067,720
|
|
|
(3,822,365
|
)
|
|
2,310,406
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
1,609
|
|
|
—
|
|
|
1,609
|
|
|||||
Total stockholders’ equity
|
4,811,834
|
|
|
253,217
|
|
|
1,069,329
|
|
|
(3,822,365
|
)
|
|
2,312,015
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
7,071,208
|
|
|
$
|
5,163,044
|
|
|
$
|
3,993,432
|
|
|
$
|
(11,432,183
|
)
|
|
$
|
4,795,501
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the three months ended June 30, 2015
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
17,046
|
|
|
$
|
—
|
|
|
$
|
101,137
|
|
|
$
|
(729
|
)
|
|
$
|
117,454
|
|
Tenant reimbursements
|
3,557
|
|
|
—
|
|
|
25,427
|
|
|
(171
|
)
|
|
28,813
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
4,501
|
|
|
(4,034
|
)
|
|
467
|
|
|||||
|
20,603
|
|
|
—
|
|
|
131,065
|
|
|
(4,934
|
)
|
|
146,734
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
9,550
|
|
|
—
|
|
|
57,046
|
|
|
(5,117
|
)
|
|
61,479
|
|
|||||
Depreciation
|
5,159
|
|
|
—
|
|
|
30,880
|
|
|
—
|
|
|
36,039
|
|
|||||
Amortization
|
1,096
|
|
|
—
|
|
|
13,859
|
|
|
—
|
|
|
14,955
|
|
|||||
Impairment loss on real estate asset
|
5,354
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,354
|
|
|||||
General and administrative
|
7,904
|
|
|
84
|
|
|
9,263
|
|
|
(9,168
|
)
|
|
8,083
|
|
|||||
|
29,063
|
|
|
84
|
|
|
111,048
|
|
|
(14,285
|
)
|
|
125,910
|
|
|||||
Real estate operating income
|
(8,460
|
)
|
|
(84
|
)
|
|
20,017
|
|
|
9,351
|
|
|
20,824
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(13,441
|
)
|
|
—
|
|
|
(7,769
|
)
|
|
3,038
|
|
|
(18,172
|
)
|
|||||
Other income/(expense)
|
3,392
|
|
|
—
|
|
|
242
|
|
|
(3,038
|
)
|
|
596
|
|
|||||
Equity in income of unconsolidated joint ventures
|
124
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
124
|
|
|||||
|
(9,925
|
)
|
|
—
|
|
|
(7,527
|
)
|
|
—
|
|
|
(17,452
|
)
|
|||||
Income from continuing operations
|
(18,385
|
)
|
|
(84
|
)
|
|
12,490
|
|
|
9,351
|
|
|
3,372
|
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating loss
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Loss from discontinued operations
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Gain on sale of real estate assets
|
26,611
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,611
|
|
|||||
Net income
|
8,224
|
|
|
(84
|
)
|
|
12,489
|
|
|
9,351
|
|
|
29,980
|
|
|||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||||
Net income attributable to Piedmont
|
$
|
8,224
|
|
|
$
|
(84
|
)
|
|
$
|
12,485
|
|
|
$
|
9,351
|
|
|
$
|
29,976
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the three months ended June 30, 2014
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
17,109
|
|
|
$
|
—
|
|
|
$
|
97,694
|
|
|
$
|
(1,516
|
)
|
|
$
|
113,287
|
|
Tenant reimbursements
|
3,917
|
|
|
—
|
|
|
20,921
|
|
|
(93
|
)
|
|
24,745
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
3,939
|
|
|
(3,391
|
)
|
|
548
|
|
|||||
|
21,026
|
|
|
—
|
|
|
122,554
|
|
|
(5,000
|
)
|
|
138,580
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
10,330
|
|
|
—
|
|
|
52,008
|
|
|
(5,202
|
)
|
|
57,136
|
|
|||||
Depreciation
|
5,650
|
|
|
—
|
|
|
28,494
|
|
|
—
|
|
|
34,144
|
|
|||||
Amortization
|
1,105
|
|
|
—
|
|
|
12,494
|
|
|
—
|
|
|
13,599
|
|
|||||
General and administrative
|
6,949
|
|
|
66
|
|
|
7,851
|
|
|
(7,721
|
)
|
|
7,145
|
|
|||||
|
24,034
|
|
|
66
|
|
|
100,847
|
|
|
(12,923
|
)
|
|
112,024
|
|
|||||
Real estate operating income
|
(3,008
|
)
|
|
(66
|
)
|
|
21,707
|
|
|
7,923
|
|
|
26,556
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(12,482
|
)
|
|
—
|
|
|
(8,664
|
)
|
|
3,134
|
|
|
(18,012
|
)
|
|||||
Other income/(expense)
|
2,797
|
|
|
35
|
|
|
(64
|
)
|
|
(3,134
|
)
|
|
(366
|
)
|
|||||
Net recoveries from casualty events and litigation settlements
|
1
|
|
|
1,479
|
|
|
—
|
|
|
—
|
|
|
1,480
|
|
|||||
Equity in loss of unconsolidated joint ventures
|
(333
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(333
|
)
|
|||||
|
(10,017
|
)
|
|
1,514
|
|
|
(8,728
|
)
|
|
—
|
|
|
(17,231
|
)
|
|||||
Income from continuing operations
|
(13,025
|
)
|
|
1,448
|
|
|
12,979
|
|
|
7,923
|
|
|
9,325
|
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income
|
461
|
|
|
—
|
|
|
53
|
|
|
—
|
|
|
514
|
|
|||||
Gain on sale of real estate assets
|
557
|
|
|
—
|
|
|
747
|
|
|
—
|
|
|
1,304
|
|
|||||
Income from discontinued operations
|
1,018
|
|
|
—
|
|
|
800
|
|
|
—
|
|
|
1,818
|
|
|||||
Gain on sale of real estate assets
|
—
|
|
|
—
|
|
|
1,140
|
|
|
—
|
|
|
1,140
|
|
|||||
Net income
|
(12,007
|
)
|
|
1,448
|
|
|
14,919
|
|
|
7,923
|
|
|
12,283
|
|
|||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||||
Net income attributable to Piedmont
|
$
|
(12,007
|
)
|
|
$
|
1,448
|
|
|
$
|
14,915
|
|
|
$
|
7,923
|
|
|
$
|
12,279
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the six months ended June 30, 2015
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
35,983
|
|
|
$
|
—
|
|
|
$
|
200,714
|
|
|
$
|
(1,436
|
)
|
|
$
|
235,261
|
|
Tenant reimbursements
|
7,802
|
|
|
—
|
|
|
52,700
|
|
|
(299
|
)
|
|
60,203
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
8,940
|
|
|
(7,911
|
)
|
|
1,029
|
|
|||||
|
43,785
|
|
|
—
|
|
|
262,354
|
|
|
(9,646
|
)
|
|
296,493
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
20,211
|
|
|
—
|
|
|
115,541
|
|
|
(10,037
|
)
|
|
125,715
|
|
|||||
Depreciation
|
10,961
|
|
|
—
|
|
|
61,310
|
|
|
—
|
|
|
72,271
|
|
|||||
Amortization
|
2,350
|
|
|
—
|
|
|
27,275
|
|
|
—
|
|
|
29,625
|
|
|||||
Impairment loss on real estate asset
|
5,354
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,354
|
|
|||||
General and administrative
|
14,104
|
|
|
195
|
|
|
16,988
|
|
|
(16,797
|
)
|
|
14,490
|
|
|||||
|
52,980
|
|
|
195
|
|
|
221,114
|
|
|
(26,834
|
)
|
|
247,455
|
|
|||||
Real estate operating income
|
(9,195
|
)
|
|
(195
|
)
|
|
41,240
|
|
|
17,188
|
|
|
49,038
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(26,630
|
)
|
|
—
|
|
|
(16,717
|
)
|
|
6,159
|
|
|
(37,188
|
)
|
|||||
Other income/(expense)
|
6,159
|
|
|
—
|
|
|
415
|
|
|
(6,159
|
)
|
|
415
|
|
|||||
Equity in income of unconsolidated joint ventures
|
283
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
283
|
|
|||||
|
(20,188
|
)
|
|
—
|
|
|
(16,302
|
)
|
|
—
|
|
|
(36,490
|
)
|
|||||
Income from continuing operations
|
(29,383
|
)
|
|
(195
|
)
|
|
24,938
|
|
|
17,188
|
|
|
12,548
|
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating loss
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Loss from discontinued operations
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Gain on sale of real estate assets
|
36,684
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,684
|
|
|||||
Net income
|
7,299
|
|
|
(195
|
)
|
|
24,937
|
|
|
17,188
|
|
|
49,229
|
|
|||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||||
Net income attributable to Piedmont
|
$
|
7,299
|
|
|
$
|
(195
|
)
|
|
$
|
24,929
|
|
|
$
|
17,188
|
|
|
$
|
49,221
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the six months ended June 30, 2014
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
34,510
|
|
|
$
|
—
|
|
|
$
|
192,850
|
|
|
$
|
(3,169
|
)
|
|
$
|
224,191
|
|
Tenant reimbursements
|
7,778
|
|
|
—
|
|
|
42,100
|
|
|
(204
|
)
|
|
49,674
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
8,110
|
|
|
(7,075
|
)
|
|
1,035
|
|
|||||
|
42,288
|
|
|
—
|
|
|
243,060
|
|
|
(10,448
|
)
|
|
274,900
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
20,375
|
|
|
—
|
|
|
105,886
|
|
|
(10,854
|
)
|
|
115,407
|
|
|||||
Depreciation
|
11,490
|
|
|
—
|
|
|
56,298
|
|
|
—
|
|
|
67,788
|
|
|||||
Amortization
|
2,217
|
|
|
—
|
|
|
25,955
|
|
|
—
|
|
|
28,172
|
|
|||||
General and administrative
|
11,418
|
|
|
143
|
|
|
13,812
|
|
|
(13,673
|
)
|
|
11,700
|
|
|||||
|
45,500
|
|
|
143
|
|
|
201,951
|
|
|
(24,527
|
)
|
|
223,067
|
|
|||||
Real estate operating income
|
(3,212
|
)
|
|
(143
|
)
|
|
41,109
|
|
|
14,079
|
|
|
51,833
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(21,602
|
)
|
|
—
|
|
|
(21,603
|
)
|
|
6,267
|
|
|
(36,938
|
)
|
|||||
Other income/(expense)
|
5,560
|
|
|
69
|
|
|
182
|
|
|
(6,267
|
)
|
|
(456
|
)
|
|||||
Net recoveries from casualty events and litigation settlements
|
1,352
|
|
|
1,479
|
|
|
1,691
|
|
|
—
|
|
|
4,522
|
|
|||||
Equity in loss of unconsolidated joint ventures
|
(599
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(599
|
)
|
|||||
|
(15,289
|
)
|
|
1,548
|
|
|
(19,730
|
)
|
|
—
|
|
|
(33,471
|
)
|
|||||
Income from continuing operations
|
(18,501
|
)
|
|
1,405
|
|
|
21,379
|
|
|
14,079
|
|
|
18,362
|
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income
|
941
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
980
|
|
|||||
Gain on sale of real estate assets, net
|
451
|
|
|
—
|
|
|
747
|
|
|
—
|
|
|
1,198
|
|
|||||
Income from discontinued operations
|
1,392
|
|
|
—
|
|
|
786
|
|
|
—
|
|
|
2,178
|
|
|||||
Gain on sale of real estate assets
|
—
|
|
|
—
|
|
|
1,140
|
|
|
—
|
|
|
1,140
|
|
|||||
Net income
|
(17,109
|
)
|
|
1,405
|
|
|
23,305
|
|
|
14,079
|
|
|
21,680
|
|
|||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||||
Net income attributable to Piedmont
|
$
|
(17,109
|
)
|
|
$
|
1,405
|
|
|
$
|
23,297
|
|
|
$
|
14,079
|
|
|
$
|
21,672
|
|
Condensed Consolidated Statements of Cash Flows
|
|||||||||||||||||||
For the six months ended June 30, 2015
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Cash Provided by Operating Activities
|
$
|
(15,322
|
)
|
|
$
|
1,215
|
|
|
$
|
91,753
|
|
|
$
|
17,187
|
|
|
$
|
94,833
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets and real estate related intangibles, net of accruals
|
(10,269
|
)
|
|
—
|
|
|
(97,503
|
)
|
|
—
|
|
|
(107,772
|
)
|
|||||
Redemption of noncontrolling interest in unconsolidated variable interest entity
|
—
|
|
|
—
|
|
|
(4,000
|
)
|
|
—
|
|
|
(4,000
|
)
|
|||||
Intercompany note receivable
|
72,000
|
|
|
—
|
|
|
—
|
|
|
(72,000
|
)
|
|
—
|
|
|||||
Net sales proceeds from wholly-owned properties
|
87,925
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87,925
|
|
|||||
Deferred lease costs paid
|
(2,027
|
)
|
|
—
|
|
|
(8,651
|
)
|
|
—
|
|
|
(10,678
|
)
|
|||||
Net cash used in investing activities
|
147,629
|
|
|
—
|
|
|
(110,154
|
)
|
|
(72,000
|
)
|
|
(34,525
|
)
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deferred financing costs paid
|
(423
|
)
|
|
—
|
|
|
(407
|
)
|
|
—
|
|
|
(830
|
)
|
|||||
Proceeds from debt
|
895,578
|
|
|
—
|
|
|
159,279
|
|
|
—
|
|
|
1,054,857
|
|
|||||
Repayments of debt
|
(907,000
|
)
|
|
—
|
|
|
(177,576
|
)
|
|
72,000
|
|
|
(1,012,576
|
)
|
|||||
Costs of issuance of common stock
|
—
|
|
|
(326
|
)
|
|
—
|
|
|
—
|
|
|
(326
|
)
|
|||||
Repurchases of common stock as part of announced plan
|
—
|
|
|
(39,914
|
)
|
|
—
|
|
|
—
|
|
|
(39,914
|
)
|
|||||
(Distributions to)/repayments from affiliates
|
(122,441
|
)
|
|
102,205
|
|
|
37,423
|
|
|
(17,187
|
)
|
|
—
|
|
|||||
Dividends paid and discount on dividend reinvestments
|
—
|
|
|
(64,820
|
)
|
|
(8
|
)
|
|
—
|
|
|
(64,828
|
)
|
|||||
Net cash used in financing activities
|
(134,286
|
)
|
|
(2,855
|
)
|
|
18,711
|
|
|
54,813
|
|
|
(63,617
|
)
|
|||||
Net decrease in cash and cash equivalents
|
(1,979
|
)
|
|
(1,640
|
)
|
|
310
|
|
|
—
|
|
|
(3,309
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
8,143
|
|
|
1,790
|
|
|
2,373
|
|
|
—
|
|
|
12,306
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
6,164
|
|
|
$
|
150
|
|
|
$
|
2,683
|
|
|
$
|
—
|
|
|
$
|
8,997
|
|
Condensed Consolidated Statements of Cash Flows
|
|||||||||||||||||||
For the six months ended June 30, 2014
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Cash Provided by Operating Activities
|
$
|
9,461
|
|
|
$
|
1,259
|
|
|
$
|
84,096
|
|
|
$
|
14,079
|
|
|
$
|
108,895
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets and real estate related intangibles, net of accruals
|
(13,072
|
)
|
|
—
|
|
|
(85,044
|
)
|
|
—
|
|
|
(98,116
|
)
|
|||||
Intercompany note receivable
|
(100
|
)
|
|
—
|
|
|
—
|
|
|
100
|
|
|
—
|
|
|||||
Net sales proceeds from wholly-owned properties
|
29,519
|
|
|
—
|
|
|
16,721
|
|
|
—
|
|
|
46,240
|
|
|||||
Net sales proceeds received from unconsolidated joint ventures
|
6,017
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,017
|
|
|||||
Investments in unconsolidated joint ventures
|
(42
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
|||||
Deferred lease costs paid
|
(2,403
|
)
|
|
—
|
|
|
(8,967
|
)
|
|
—
|
|
|
(11,370
|
)
|
|||||
Net cash used in investing activities
|
19,919
|
|
|
—
|
|
|
(77,290
|
)
|
|
100
|
|
|
(57,271
|
)
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deferred financing costs paid
|
(1,016
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,016
|
)
|
|||||
Proceeds from debt
|
846,564
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
846,564
|
|
|||||
Repayments of debt
|
(204,000
|
)
|
|
—
|
|
|
(575,070
|
)
|
|
—
|
|
|
(779,070
|
)
|
|||||
Intercompany note payable
|
—
|
|
|
—
|
|
|
100
|
|
|
(100
|
)
|
|
—
|
|
|||||
Repurchases of common stock as part of announced plan
|
—
|
|
|
(54,685
|
)
|
|
—
|
|
|
—
|
|
|
(54,685
|
)
|
|||||
(Distributions to)/repayments from affiliates
|
(668,859
|
)
|
|
115,245
|
|
|
567,693
|
|
|
(14,079
|
)
|
|
—
|
|
|||||
Dividends paid and discount on dividend reinvestments
|
—
|
|
|
(61,819
|
)
|
|
(8
|
)
|
|
—
|
|
|
(61,827
|
)
|
|||||
Net cash used in financing activities
|
(27,311
|
)
|
|
(1,259
|
)
|
|
(7,285
|
)
|
|
(14,179
|
)
|
|
(50,034
|
)
|
|||||
Net increase in cash and cash equivalents
|
2,069
|
|
|
—
|
|
|
(479
|
)
|
|
—
|
|
|
1,590
|
|
|||||
Cash and cash equivalents, beginning of period
|
3,261
|
|
|
150
|
|
|
3,562
|
|
|
—
|
|
|
6,973
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
5,330
|
|
|
$
|
150
|
|
|
$
|
3,083
|
|
|
$
|
—
|
|
|
$
|
8,563
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Six Months Ended
|
||||||
|
June 30, 2015
|
|
June 30, 2014
|
||||
|
|
|
|
||||
|
|
|
|
||||
Capital expenditures for development
|
$
|
20,434
|
|
|
$
|
1,789
|
|
Capital expenditures for redevelopment/renovations
|
10,728
|
|
|
2,783
|
|
||
Other capital expenditures, including tenant improvements
|
31,425
|
|
|
64,364
|
|
||
Total capital expenditures
(1)
|
$
|
62,587
|
|
|
$
|
68,936
|
|
(1)
|
Of the total amounts paid, approximately
$2.8 million
and
$1.6 million
relates to soft costs such as capitalized interest, payroll, and other general and administrative expenses for the
six months ended
June 30, 2015
and
2014
, respectively.
|
|
June 30,
2015 |
|
%
|
|
June 30,
2014 |
|
%
|
|
$
Increase (Decrease) |
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
117.5
|
|
|
|
|
$
|
113.3
|
|
|
|
|
$
|
4.2
|
|
||
Tenant reimbursements
|
28.8
|
|
|
|
|
24.8
|
|
|
|
|
4.0
|
|
|||||
Property management fee revenue
|
0.4
|
|
|
|
|
0.5
|
|
|
|
|
(0.1
|
)
|
|||||
Total revenues
|
146.7
|
|
|
100
|
%
|
|
138.6
|
|
|
100
|
%
|
|
8.1
|
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
61.5
|
|
|
42
|
%
|
|
57.1
|
|
|
41
|
%
|
|
4.4
|
|
|||
Depreciation
|
36.0
|
|
|
24
|
%
|
|
34.1
|
|
|
25
|
%
|
|
1.9
|
|
|||
Amortization
|
15.0
|
|
|
10
|
%
|
|
13.6
|
|
|
10
|
%
|
|
1.4
|
|
|||
Impairment loss on real estate asset
|
5.3
|
|
|
4
|
%
|
|
—
|
|
|
—
|
%
|
|
5.3
|
|
|||
General and administrative
|
8.1
|
|
|
6
|
%
|
|
7.2
|
|
|
5
|
%
|
|
0.9
|
|
|||
Real estate operating income
|
20.8
|
|
|
14
|
%
|
|
26.6
|
|
|
19
|
%
|
|
(5.8
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(18.1
|
)
|
|
12
|
%
|
|
(18.0
|
)
|
|
13
|
%
|
|
(0.1
|
)
|
|||
Other income/(expense)
|
0.6
|
|
|
—
|
%
|
|
(0.4
|
)
|
|
—
|
%
|
|
1.0
|
|
|||
Net recoveries from casualty events and litigation settlements
|
—
|
|
|
—
|
%
|
|
1.4
|
|
|
1
|
%
|
|
(1.4
|
)
|
|||
Equity in income/(loss) of unconsolidated joint ventures
|
0.1
|
|
|
—
|
%
|
|
(0.3
|
)
|
|
—
|
%
|
|
0.4
|
|
|||
Income from continuing operations
|
$
|
3.4
|
|
|
2
|
%
|
|
$
|
9.3
|
|
|
7
|
%
|
|
$
|
(5.9
|
)
|
Income from discontinued operations
|
$
|
—
|
|
|
|
|
$
|
1.8
|
|
|
|
|
$
|
(1.8
|
)
|
|
June 30,
2015 |
|
%
|
|
June 30,
2014 |
|
%
|
|
$
Increase (Decrease) |
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
235.3
|
|
|
|
|
$
|
224.2
|
|
|
|
|
$
|
11.1
|
|
||
Tenant reimbursements
|
60.2
|
|
|
|
|
49.7
|
|
|
|
|
10.5
|
|
|||||
Property management fee revenue
|
1.0
|
|
|
|
|
1.0
|
|
|
|
|
—
|
|
|||||
Total revenues
|
296.5
|
|
|
100
|
%
|
|
274.9
|
|
|
100
|
%
|
|
21.6
|
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
125.7
|
|
|
42
|
%
|
|
115.4
|
|
|
42
|
%
|
|
10.3
|
|
|||
Depreciation
|
72.4
|
|
|
24
|
%
|
|
67.8
|
|
|
25
|
%
|
|
4.6
|
|
|||
Amortization
|
29.6
|
|
|
10
|
%
|
|
28.2
|
|
|
10
|
%
|
|
1.4
|
|
|||
Impairment loss on real estate asset
|
5.3
|
|
|
2
|
%
|
|
—
|
|
|
—
|
%
|
|
5.3
|
|
|||
General and administrative
|
14.5
|
|
|
5
|
%
|
|
11.7
|
|
|
4
|
%
|
|
2.8
|
|
|||
Real estate operating income
|
49.0
|
|
|
17
|
%
|
|
51.8
|
|
|
19
|
%
|
|
(2.8
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(37.2
|
)
|
|
—
|
%
|
|
(36.9
|
)
|
|
—
|
%
|
|
(0.3
|
)
|
|||
Other income/(expense)
|
0.4
|
|
|
—
|
%
|
|
(0.4
|
)
|
|
—
|
%
|
|
0.8
|
|
|||
Net recoveries from casualty events and litigation settlements
|
—
|
|
|
—
|
%
|
|
4.5
|
|
|
2
|
%
|
|
(4.5
|
)
|
|||
Equity in income/(loss) of unconsolidated joint ventures
|
0.3
|
|
|
—
|
%
|
|
(0.6
|
)
|
|
—
|
%
|
|
0.9
|
|
|||
Income from continuing operations
|
$
|
12.5
|
|
|
4
|
%
|
|
$
|
18.4
|
|
|
7
|
%
|
|
$
|
(5.9
|
)
|
Income from discontinued operations
|
$
|
—
|
|
|
|
|
$
|
2.2
|
|
|
|
|
$
|
(2.2
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||||
|
June 30, 2015
|
|
Per
Share
(1)
|
|
June 30, 2014
|
|
Per
Share
(1)
|
|
June 30, 2015
|
|
Per
Share
(1)
|
|
June 30, 2014
|
|
Per
Share
(1)
|
||||||||||||||||
GAAP net income applicable to common stock
|
$
|
29,976
|
|
|
$
|
0.20
|
|
|
$
|
12,279
|
|
|
$
|
0.08
|
|
|
$
|
49,221
|
|
|
$
|
0.32
|
|
|
$
|
21,672
|
|
|
$
|
0.14
|
|
Depreciation of real estate assets
(2)
|
35,935
|
|
|
0.23
|
|
|
34,119
|
|
|
0.22
|
|
|
72,032
|
|
|
0.47
|
|
|
67,846
|
|
|
0.44
|
|
||||||||
Amortization of lease-related costs
(2)
|
14,971
|
|
|
0.10
|
|
|
13,608
|
|
|
0.09
|
|
|
29,657
|
|
|
0.19
|
|
|
28,412
|
|
|
0.18
|
|
||||||||
Impairment loss on real estate asset
|
5,354
|
|
|
0.03
|
|
|
—
|
|
|
—
|
|
|
5,354
|
|
|
0.03
|
|
|
—
|
|
|
—
|
|
||||||||
(Gain)/loss on sale - wholly-owned properties, net
|
(26,611
|
)
|
|
(0.17
|
)
|
|
(2,444
|
)
|
|
(0.02
|
)
|
|
(36,684
|
)
|
|
(0.23
|
)
|
|
(2,338
|
)
|
|
(0.01
|
)
|
||||||||
Loss on sale- unconsolidated partnership
|
—
|
|
|
—
|
|
|
169
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
169
|
|
|
—
|
|
||||||||
NAREIT Funds From Operations applicable to common stock
|
$
|
59,625
|
|
|
$
|
0.39
|
|
|
$
|
57,731
|
|
|
$
|
0.37
|
|
|
$
|
119,580
|
|
|
$
|
0.78
|
|
|
$
|
115,761
|
|
|
$
|
0.75
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition costs
|
3
|
|
|
—
|
|
|
363
|
|
|
0.01
|
|
|
147
|
|
|
—
|
|
|
429
|
|
|
—
|
|
||||||||
Loss on extinguishment of swaps
|
132
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
132
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net recoveries from casualty events and litigation settlements
|
—
|
|
|
—
|
|
|
(1,480
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
(4,522
|
)
|
|
(0.03
|
)
|
||||||||
Core Funds From Operations applicable to common stock
|
$
|
59,760
|
|
|
$
|
0.39
|
|
|
$
|
56,614
|
|
|
$
|
0.37
|
|
|
$
|
119,859
|
|
|
$
|
0.78
|
|
|
$
|
111,668
|
|
|
$
|
0.72
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred financing cost amortization
|
680
|
|
|
—
|
|
|
615
|
|
|
0.01
|
|
|
1,404
|
|
|
0.01
|
|
|
1,478
|
|
|
0.01
|
|
||||||||
Amortization of estimated fair market adjustments on notes payable
|
(121
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(242
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
||||||||
Amortization of discount on senior notes
|
49
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
97
|
|
|
—
|
|
|
81
|
|
|
—
|
|
||||||||
Depreciation of non real estate assets
|
165
|
|
|
—
|
|
|
115
|
|
|
—
|
|
|
361
|
|
|
—
|
|
|
229
|
|
|
—
|
|
||||||||
Straight-line effects of lease
revenue
(2)
|
(3,745
|
)
|
|
(0.02
|
)
|
|
(7,758
|
)
|
|
(0.05
|
)
|
|
(8,255
|
)
|
|
(0.06
|
)
|
|
(17,170
|
)
|
|
(0.10
|
)
|
||||||||
Stock-based and other non-cash compensation
|
1,692
|
|
|
0.01
|
|
|
1,271
|
|
|
0.01
|
|
|
2,417
|
|
|
0.02
|
|
|
1,907
|
|
|
0.01
|
|
||||||||
Net effect of amortization of above and below-market in-place lease intangibles
|
(1,102
|
)
|
|
(0.01
|
)
|
|
(1,279
|
)
|
|
(0.01
|
)
|
|
(2,224
|
)
|
|
(0.02
|
)
|
|
(2,643
|
)
|
|
(0.02
|
)
|
||||||||
Acquisition costs
|
(3
|
)
|
|
—
|
|
|
(363
|
)
|
|
(0.01
|
)
|
|
(147
|
)
|
|
—
|
|
|
(429
|
)
|
|
—
|
|
||||||||
Non-incremental capital expenditures
(3)
|
(11,641
|
)
|
|
(0.07
|
)
|
|
(26,151
|
)
|
|
(0.17
|
)
|
|
(21,928
|
)
|
|
(0.14
|
)
|
|
(39,972
|
)
|
|
(0.26
|
)
|
||||||||
Adjusted Funds From Operations applicable to common stock
|
$
|
45,734
|
|
|
$
|
0.30
|
|
|
$
|
23,105
|
|
|
$
|
0.15
|
|
|
$
|
91,342
|
|
|
$
|
0.59
|
|
|
$
|
55,143
|
|
|
$
|
0.36
|
|
Weighted-average shares outstanding – diluted
|
153,757
|
|
|
|
|
154,445
|
|
|
|
|
154,174
|
|
|
|
|
154,728
|
|
|
|
(1)
|
Based on weighted average shares outstanding – diluted.
|
(2)
|
Includes amounts for wholly-owned properties, as well as such amounts for our proportionate ownership in unconsolidated joint ventures.
|
(3)
|
Piedmont defines non-incremental capital expenditures as capital expenditures of a recurring nature related to tenant improvements, leasing commissions, and building capital that do not incrementally enhance the underlying assets' income generating capacity. Tenant improvements, leasing commissions, building capital and deferred lease incentives 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 either change the underlying classification from a Class B to a Class A property or enhance the marketability of a building are excluded from this measure.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2015 |
|
June 30,
2014 |
|
June 30,
2015 |
|
June 30,
2014 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Piedmont (GAAP basis)
|
$
|
29,976
|
|
|
$
|
12,279
|
|
|
$
|
49,221
|
|
|
$
|
21,672
|
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to noncontrolling interest
|
4
|
|
|
4
|
|
|
8
|
|
|
8
|
|
||||
Interest expense
|
18,172
|
|
|
18,012
|
|
|
37,188
|
|
|
36,938
|
|
||||
Depreciation
(1)
|
36,100
|
|
|
34,234
|
|
|
72,393
|
|
|
68,075
|
|
||||
Amortization
(1)
|
14,971
|
|
|
13,608
|
|
|
29,657
|
|
|
28,412
|
|
||||
Acquisition costs
|
3
|
|
|
363
|
|
|
147
|
|
|
429
|
|
||||
Impairment loss on real estate asset
(1)
|
5,354
|
|
|
—
|
|
|
5,354
|
|
|
—
|
|
||||
Net recoveries of casualty events and litigation settlements
(1)
|
—
|
|
|
(1,480
|
)
|
|
—
|
|
|
(4,522
|
)
|
||||
Gain on sale of properties
(1)
|
(26,611
|
)
|
|
(2,275
|
)
|
|
(36,684
|
)
|
|
(2,169
|
)
|
||||
General & administrative expenses
(1)
|
8,102
|
|
|
7,159
|
|
|
14,518
|
|
|
11,742
|
|
||||
Management fee revenue
|
(232
|
)
|
|
(281
|
)
|
|
(562
|
)
|
|
(540
|
)
|
||||
Other (income)/expense
(1)
|
(599
|
)
|
|
3
|
|
|
(562
|
)
|
|
32
|
|
||||
Straight line rent effects of lease revenue
(1)
|
(3,745
|
)
|
|
(7,758
|
)
|
|
(8,255
|
)
|
|
(17,170
|
)
|
||||
Amortization of lease-related intangibles
(1)
|
(1,102
|
)
|
|
(1,279
|
)
|
|
(2,224
|
)
|
|
(2,643
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Property NOI (cash basis)
|
$
|
80,393
|
|
|
$
|
72,589
|
|
|
$
|
160,199
|
|
|
$
|
140,264
|
|
|
|
|
|
|
|
|
|
||||||||
Change period over period in Property NOI (cash basis)
|
10.8
|
%
|
|
N/A
|
|
|
14.2
|
%
|
|
N/A
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net operating loss/(income) from:
|
|
|
|
|
|
|
|
||||||||
Acquisitions
(2)
|
(2,842
|
)
|
|
(55
|
)
|
|
(5,507
|
)
|
|
(55
|
)
|
||||
Dispositions
(3)
|
(562
|
)
|
|
(3,230
|
)
|
|
(2,700
|
)
|
|
(6,718
|
)
|
||||
Other investments
(4)
|
(251
|
)
|
|
89
|
|
|
(546
|
)
|
|
472
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Same Store NOI (cash basis)
|
$
|
76,738
|
|
|
$
|
69,393
|
|
|
$
|
151,446
|
|
|
$
|
133,963
|
|
|
|
|
|
|
|
|
|
||||||||
Change period over period in Same Store NOI (cash basis)
|
10.6
|
%
|
|
N/A
|
|
|
13.1
|
%
|
|
N/A
|
|
(1)
|
Includes amounts attributable to consolidated properties, including discontinued operations, and our proportionate share of amounts attributable to unconsolidated joint ventures.
|
(2)
|
Acquisitions consist of 5 Wall Street in Burlington, Massachusetts, purchased on June 27, 2014; 1155 Perimeter Center West in Atlanta, Georgia, purchased on August 28, 2014; TownPark Land, purchased on November 21, 2014; and Park Place on Turtle Creek in Dallas, Texas, purchased on January 16, 2015.
|
(3)
|
Dispositions consist of 11107 and 11109 Sunset Hills Road in Reston, Virginia, sold on March 19, 2014; 1441 West Long Lake Road and 4685 Investment Drive in Troy, Michigan, sold on April 30, 2014; 2020 West 89th Street in Leawood, Kansas, sold on May 19, 2014; 3900 Dallas Parkway in Plano, Texas, sold on January 30, 2015; 5601 Headquarters Drive, sold on April 28, 2015; River Corporate Center, sold on April 29, 2015; and Copper Ridge Center, sold on May 1, 2015.
|
(4)
|
Other investments consist of operating results from our investments in unconsolidated joint ventures and our redevelopment project at 3100 Clarendon Boulevard.
|
Buildings
|
40 years
|
Building improvements
|
5-25 years
|
Land improvements
|
20-25 years
|
Tenant allowances
|
Lease term
|
Furniture, fixtures, and equipment
|
3-5 years
|
Intangible lease assets
|
Lease term
|
|
Payments Due by Period
|
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
|
||||||||||
Long-term debt
(1)
|
$
|
2,325,452
|
|
|
$
|
125,836
|
|
|
$
|
354,342
|
|
|
$
|
907,029
|
|
(2) (3) (4)
|
$
|
938,245
|
|
|
Operating lease obligations
(5)
|
3,044
|
|
|
93
|
|
|
186
|
|
|
187
|
|
|
2,578
|
|
|
|||||
Total
|
$
|
2,328,496
|
|
|
$
|
125,929
|
|
|
$
|
354,528
|
|
|
$
|
907,216
|
|
|
$
|
940,823
|
|
|
(1)
|
Amounts include principal payments only and balances outstanding as of
June 30, 2015
, not including unamortized issuance discounts or estimated fair value adjustments. We made interest payments, including payments under our interest rate swaps, of approximately
$38.7 million
during the
six months ended
June 30, 2015
, and expect to pay interest in future periods on outstanding debt obligations based on the rates and terms disclosed herein and in Note 4 of our accompanying consolidated financial statements.
|
(2)
|
Includes the balance outstanding as of
June 30, 2015
of the $500 Million 2015 Unsecured Line of Credit. However, Piedmont may extend the term for up to one additional year (through two available six month extensions to a final extended maturity date of June 18, 2020) provided Piedmont is not then in default and upon payment of extension fees.
|
(3)
|
Includes the $300 Million Unsecured 2013 Term Loan which has a stated variable rate; however, we have entered into interest rate swap agreements which effectively fix, exclusive of changes to our credit rating, the rate on this facility to
2.78%
through maturity. As such, we estimate incurring, exclusive of changes to our credit rating, approximately $8.3 million per annum in total interest (comprised of combination of variable contractual rate and settlements under interest rate swap agreements) through maturity in January 2019.
|
(4)
|
Includes the $300 Million Unsecured 2011 Term Loan which has a stated variable rate; however, we have entered into interest rate swap agreements which effectively fix, exclusive of changes to our credit rating, the rate on this facility to
2.39%
through the original maturity date of November 22, 2016 and
3.35%
for the extension period (November 22, 2016 to January 15, 2020). As such, we estimate incurring, exclusive of changes to our credit rating, approximately $7.2 million per annum in total interest (comprised of combination of variable contractual rate and settlements under interest rate swap agreements) through the original maturity of the debt facility in November 2016, and approximately $10.1 million per annum for the extension period ending in January 2020.
|
(5)
|
The 2001 NW 64th Street building in Ft. Lauderdale, Florida is subject to a ground lease with expiration dates of 2048. The aggregate remaining payments required under the terms of these operating leases as of
June 30, 2015
are presented above.
|
•
|
Commitments Under Existing Lease Agreements;
|
•
|
Contingencies Related to Tenant Audits/Disputes; and
|
•
|
Letters of Credit.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
(a)
|
There were no unregistered sales of equity securities during the
second
quarter
2015
.
|
(b)
|
Not applicable.
|
(c)
|
During the quarter ended
June 30, 2015
, we repurchased shares of our common stock in the open market in order to reissue such shares under our dividend reinvestment plan (the "DRP"), as well as repurchasing and retiring shares as part of our stock repurchase plan. During June of 2015, we exhausted our existing authority to repurchase shares of common stock as part of our stock repurchase plan. However, on June 23, 2015, our board of directors authorized the repurchase of up to $200 million of additional shares of our common stock over the next two years.
|
Period
|
Total Number of
Shares Purchased
(in 000’s)
(1)
|
|
Average Price Paid
per Share
|
|
Total Number of
Shares Purchased
as Part of
Publicly Announced
Plan
(in 000’s)
|
|
Maximum Approximate
Dollar Value of Shares
Available That May
Yet Be Purchased
Under the Plan
(in 000’s)
|
|
||||||
April 1, 2015 to April 30, 2015
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
37,040
|
|
|
May 1, 2015 to May 31, 2015
|
1,173
|
|
|
$
|
17.49
|
|
|
1,173
|
|
|
$
|
16,508
|
|
|
June 1, 2015 to June 30, 2015
|
1,681
|
|
|
$
|
17.46
|
|
|
1,476
|
|
|
$
|
190,781
|
|
(2)
|
Total
|
2,854
|
|
|
$
|
17.47
|
|
|
2,649
|
|
|
|
|
(1)
|
Under our amended and restated DRP, as set forth in a Current Report on Form 8-K filed February 24, 2011, we have the option to either issue shares that we purchase in the open market or issue shares directly from Piedmont from authorized but unissued shares. Such election will take place at the settlement of each quarterly dividend in which there are participants in our DRP, and may change from quarter to quarter based on our judgment of the best use of proceeds for Piedmont.
|
(2)
|
Amounts available for purchase relate only to our stock repurchase plan, which was announced on June 24, 2015. Our board of directors authorized the repurchase of up to $200 million of additional shares of our common stock pursuant to the stock repurchase plan prior to the second quarter ended June 30, 2017. The share repurchase plan is separate from shares purchased for DRP issuance.
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
|
|
PIEDMONT OFFICE REALTY TRUST, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
Dated:
|
July 29, 2015
|
By:
|
/s/ Robert E. Bowers
|
|
|
|
Robert E. Bowers
|
|
|
|
Chief Financial Officer and Executive Vice President
|
|
|
|
(Principal Financial Officer and Duly Authorized Officer)
|
Exhibit
Number
|
|
Description of Document
|
|
3.1
|
|
|
Third Articles of Amendment and Restatement of Piedmont Office Realty Trust, Inc. (the “Company”) (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed on March 16, 2010)
|
|
|
|
|
3.2
|
|
|
Articles of Amendment of the Company effective June 30, 2011 (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on July 6, 2011)
|
|
|
|
|
3.3
|
|
|
Articles Supplementary of the Company effective June 30, 2011 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on July 6, 2011)
|
|
|
|
|
3.4
|
|
|
Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on January 22, 2010)
|
|
|
|
|
10.1
|
|
|
Revolving Credit Agreement dated June 18, 2015, by and among Piedmont Operating Partnership, LP, the Registrant, Suntrust Robinson Humphrey, Inc., U.S. Bank National Association, PNC Capital Markets LLC, Suntrust Bank, and the other financial institutions initially signatory thereto and their assignees (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 24, 2015)
|
|
|
|
|
10.2
|
|
|
Loan Agreement dated as of June 23, 2015 between Piedmont 1901 Market LLC, as Borrower and The Prudential Insurance Company of America, as Lender (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on June 24, 2015)
|
|
|
|
|
10.3
|
|
|
Open-End Mortgage and Security Agreement (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on June 24, 2015)
|
|
|
|
|
10.4*
|
|
|
Long-Term Incentive Program as amended effective April 28, 2015
|
|
|
|
|
10.5*
|
|
|
Form of Employee Deferred Stock Award Agreement for 2007 Omnibus Incentive Plan of the Company effective April 28, 2015
|
|
|
|
|
31.1
|
|
|
Rule 13a-14(a)/15d-14(a) Certification, executed by Donald A. Miller, CFA, Principal Executive Officer of the Company
|
|
|
|
|
31.2
|
|
|
Rule 13a-14(a)/15d-14(a) Certification, executed by Robert E. Bowers, Principal Financial Officer of the Company
|
|
|
|
|
32.1
|
|
|
Certification required by Rule 13a-14(b)/15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, executed by Donald A. Miller, CFA, Chief Executive Officer and President of the Company
|
|
|
|
|
32.2
|
|
|
Certification required by Rule 13a-14(b)/15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, executed by Robert E. Bowers, Chief Financial Officer and Executive Vice-President of the Company
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
1.
|
I have reviewed this Form 10-Q for the quarter ended
June 30, 2015
of Piedmont Office Realty Trust, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
By:
|
/s/ Donald A. Miller, CFA
|
|
|
Donald A. Miller, CFA
|
|
|
Chief Executive Officer and President
(Principal Executive Officer)
|
1.
|
I have reviewed this Form 10-Q for the quarter ended
June 30, 2015
of Piedmont Office Realty Trust, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
By:
|
/s/ Robert E. Bowers
|
|
|
Robert E. Bowers
|
|
|
Chief Financial Officer and Executive Vice
President (Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
By:
|
/s/ Donald A. Miller, CFA
|
|
|
Donald A. Miller, CFA
|
|
|
Chief Executive Officer and President
|
|
|
July 29, 2015
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
By:
|
/s/ Robert E. Bowers
|
|
|
Robert E. Bowers
|
|
|
Chief Financial Officer
and Executive Vice President
|
|
|
July 29, 2015
|
|