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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 Washington, D.C., the New York metropolitan area, and Chicago 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 and divestitures;
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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 acts of terrorism in any of the major metropolitan areas in which we own properties, or future cybersecurity attacks against us or any of our tenants, 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 of 1986, as amended; 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, 2015
.
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ITEM 1.
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CONSOLIDATED FINANCIAL STATEMENTS
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(Unaudited)
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||||
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June 30,
2016 |
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December 31,
2015 |
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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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656,240
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$
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676,091
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Buildings and improvements, less accumulated depreciation of $919,863 and $889,857 as of June 30, 2016 and December 31, 2015, respectively
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2,780,501
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2,837,463
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Intangible lease assets, less accumulated amortization of $95,908 and $93,012 as of June 30, 2016 and December 31, 2015, respectively
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71,794
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84,663
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Construction in progress
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25,187
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20,975
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Real estate assets held for sale, net
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69,766
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76,614
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Total real estate assets
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3,603,488
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3,695,806
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Investments in and amounts due from unconsolidated joint ventures
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7,413
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7,577
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Cash and cash equivalents
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21,109
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5,441
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Tenant receivables, net of allowance for doubtful accounts of $141 and $83 as of June 30, 2016 and December 31, 2015, respectively
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21,338
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26,339
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Straight-line rent receivables
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154,627
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147,393
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Note receivable
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—
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45,400
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Restricted cash and escrows
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10,595
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5,174
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Prepaid expenses and other assets
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29,731
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24,777
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Goodwill
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180,097
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180,097
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Deferred lease costs, less accumulated amortization of $157,609 and $146,700 as of June 30, 2016 and December 31, 2015, respectively
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261,340
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288,041
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Other assets held for sale, net
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8,761
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8,490
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Total assets
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$
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4,298,499
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$
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4,434,535
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Liabilities:
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Unsecured debt, net of discount and unamortized debt issuance costs of $11,551 and $12,779 as of June 30, 2016 and December 31, 2015, respectively
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$
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1,508,449
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$
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1,528,221
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Secured debt, net of premiums and unamortized debt issuance costs of $1,249 and $1,319 as of June 30, 2016 and December 31, 2015, respectively
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375,865
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501,289
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Accounts payable, accrued expenses, and accrued capital expenditures
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122,387
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128,465
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Deferred income
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24,036
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27,270
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Intangible lease liabilities, less accumulated amortization of $45,130 and $42,315 as of June 30, 2016 and December 31, 2015, respectively
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38,970
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42,853
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Interest rate swaps
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22,079
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9,993
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Total liabilities
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2,091,786
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2,238,091
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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, 2016 or December 31, 2015
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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, 2016 or December 31, 2015
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—
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—
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Common stock, $.01 par value, 750,000,000 shares authorized; 145,229,642 and 145,511,644 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively
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1,452
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1,455
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Additional paid-in capital
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3,671,475
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3,669,977
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Cumulative distributions in excess of earnings
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(1,456,129
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)
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(1,477,674
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)
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Other comprehensive income/(loss)
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(11,110
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)
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1,661
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Piedmont stockholders’ equity
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2,205,688
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2,195,419
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Noncontrolling interest
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1,025
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1,025
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Total stockholders’ equity
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2,206,713
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2,196,444
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Total liabilities and stockholders’ equity
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$
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4,298,499
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$
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4,434,535
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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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||||||||||||
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June 30,
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June 30,
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||||||||||||
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2016
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2015
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2016
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|
2015
|
||||||||
Revenues:
|
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||||||||
Rental income
|
$
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111,767
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$
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117,454
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$
|
226,505
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$
|
235,261
|
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Tenant reimbursements
|
23,086
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28,813
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|
|
45,837
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|
|
60,203
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|
||||
Property management fee revenue
|
454
|
|
|
467
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|
|
977
|
|
|
1,029
|
|
||||
|
135,307
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|
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146,734
|
|
|
273,319
|
|
|
296,493
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|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
52,280
|
|
|
61,479
|
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|
106,468
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|
|
125,715
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|
||||
Depreciation
|
31,556
|
|
|
36,039
|
|
|
63,338
|
|
|
72,271
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|
||||
Amortization
|
17,402
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|
14,955
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|
35,208
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|
|
29,625
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|
||||
Impairment loss on real estate assets
|
8,308
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|
|
5,354
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8,308
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|
5,354
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|
||||
General and administrative
|
8,328
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|
|
8,083
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|
|
16,192
|
|
|
14,490
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|
||||
|
117,874
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|
|
125,910
|
|
|
229,514
|
|
|
247,455
|
|
||||
Real estate operating income
|
17,433
|
|
|
20,824
|
|
|
43,805
|
|
|
49,038
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(16,413
|
)
|
|
(18,172
|
)
|
|
(32,798
|
)
|
|
(37,188
|
)
|
||||
Other income/(expense)
|
(41
|
)
|
|
596
|
|
|
253
|
|
|
415
|
|
||||
Equity in income of unconsolidated joint ventures
|
111
|
|
|
124
|
|
|
226
|
|
|
283
|
|
||||
|
(16,343
|
)
|
|
(17,452
|
)
|
|
(32,319
|
)
|
|
(36,490
|
)
|
||||
Income from continuing operations
|
1,090
|
|
|
3,372
|
|
|
11,486
|
|
|
12,548
|
|
||||
Discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Operating loss
|
(1
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(3
|
)
|
||||
Loss from discontinued operations
|
(1
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(3
|
)
|
||||
Gain on sale of real estate assets
|
78,987
|
|
|
26,611
|
|
|
78,967
|
|
|
36,684
|
|
||||
Net income
|
80,076
|
|
|
29,980
|
|
|
90,452
|
|
|
49,229
|
|
||||
Less: Net income applicable to noncontrolling interest
|
(4
|
)
|
|
(4
|
)
|
|
(8
|
)
|
|
(8
|
)
|
||||
Net income applicable to Piedmont
|
$
|
80,072
|
|
|
$
|
29,976
|
|
|
$
|
90,444
|
|
|
$
|
49,221
|
|
Per share information – basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations and gain on sale of real estate assets
|
$
|
0.55
|
|
|
$
|
0.20
|
|
|
$
|
0.62
|
|
|
$
|
0.32
|
|
Net income applicable to common stockholders
|
$
|
0.55
|
|
|
$
|
0.20
|
|
|
$
|
0.62
|
|
|
$
|
0.32
|
|
Weighted-average common shares outstanding – basic
|
145,178,601
|
|
|
153,559,076
|
|
|
145,227,539
|
|
|
153,946,898
|
|
||||
Weighted-average common shares outstanding – diluted
|
145,698,723
|
|
|
153,757,404
|
|
|
145,765,149
|
|
|
154,174,270
|
|
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||||||
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|
|
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|
|
|
||||||||||||
Net income applicable to Piedmont
|
|
|
$
|
80,072
|
|
|
|
|
$
|
29,976
|
|
|
|
|
$
|
90,444
|
|
|
|
|
$
|
49,221
|
|
||||
Other comprehensive income/(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective portion of gain/(loss) on derivative instruments that are designated and qualify as cash flow hedges (See
Note 5
)
|
(4,068
|
)
|
|
|
|
16,079
|
|
|
|
|
(15,029
|
)
|
|
|
|
874
|
|
|
|
||||||||
Plus: Reclassification of previously recorded loss included in net income (See
Note 5
)
|
1,113
|
|
|
|
|
1,602
|
|
|
|
|
2,246
|
|
|
|
|
|
3,069
|
|
|
|
|
||||||
Gain/(loss) on investment in available for sale securities
|
13
|
|
|
|
|
(2
|
)
|
|
|
|
12
|
|
|
|
|
(2
|
)
|
|
|
||||||||
Other comprehensive income/(loss)
|
|
|
(2,942
|
)
|
|
|
|
17,679
|
|
|
|
|
(12,771
|
)
|
|
|
|
3,941
|
|
||||||||
Comprehensive income applicable to Piedmont
|
|
|
$
|
77,130
|
|
|
|
|
$
|
47,655
|
|
|
|
|
$
|
77,673
|
|
|
|
|
$
|
53,162
|
|
|
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, 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
|
(8,980
|
)
|
|
(90
|
)
|
|
—
|
|
|
(158,770
|
)
|
|
—
|
|
|
—
|
|
|
(158,860
|
)
|
||||||
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 ($0.84 per share), dividends to stockholders of subsidiary, and dividends reinvested
|
—
|
|
|
—
|
|
|
(242
|
)
|
|
(126,274
|
)
|
|
—
|
|
|
(15
|
)
|
|
(126,531
|
)
|
||||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
|
168
|
|
|
2
|
|
|
3,181
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,183
|
|
||||||
Net income applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||||
Net income applicable to Piedmont
|
—
|
|
|
—
|
|
|
—
|
|
|
172,990
|
|
|
—
|
|
|
—
|
|
|
172,990
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,640
|
)
|
|
—
|
|
|
(6,640
|
)
|
||||||
Balance, December 31, 2015
|
145,512
|
|
|
1,455
|
|
|
3,669,977
|
|
|
(1,477,674
|
)
|
|
1,661
|
|
|
1,025
|
|
|
2,196,444
|
|
||||||
Share repurchases as part of an announced plan
|
(462
|
)
|
|
(5
|
)
|
|
—
|
|
|
(7,938
|
)
|
|
—
|
|
|
—
|
|
|
(7,943
|
)
|
||||||
Offering costs
|
—
|
|
|
—
|
|
|
(42
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
||||||
Dividends to common stockholders ($0.42 per share), dividends to stockholders of subsidiary, and dividends reinvested
|
—
|
|
|
—
|
|
|
(106
|
)
|
|
(60,961
|
)
|
|
—
|
|
|
(8
|
)
|
|
(61,075
|
)
|
||||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
|
180
|
|
|
2
|
|
|
1,646
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,648
|
|
||||||
Net income applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
||||||
Net income applicable to Piedmont
|
—
|
|
|
—
|
|
|
—
|
|
|
90,444
|
|
|
—
|
|
|
—
|
|
|
90,444
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,771
|
)
|
|
—
|
|
|
(12,771
|
)
|
||||||
Balance, June 30, 2016
|
145,230
|
|
|
$
|
1,452
|
|
|
$
|
3,671,475
|
|
|
$
|
(1,456,129
|
)
|
|
$
|
(11,110
|
)
|
|
$
|
1,025
|
|
|
$
|
2,206,713
|
|
|
(Unaudited)
|
||||||
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
90,452
|
|
|
$
|
49,229
|
|
Operating distributions received from unconsolidated joint ventures
|
389
|
|
|
368
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
63,338
|
|
|
72,271
|
|
||
Amortization of debt issuance costs
|
842
|
|
|
866
|
|
||
Loss on settlement of forward starting interest rate swaps
|
—
|
|
|
(1,284
|
)
|
||
Other amortization
|
34,912
|
|
|
29,890
|
|
||
Impairment loss on real estate assets
|
8,308
|
|
|
5,354
|
|
||
Stock compensation expense
|
5,653
|
|
|
4,071
|
|
||
Equity in income of unconsolidated joint ventures
|
(226
|
)
|
|
(283
|
)
|
||
Gain on sale of real estate assets
|
(78,967
|
)
|
|
(36,684
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Increase in tenant and straight-line rent receivables, net
|
(8,795
|
)
|
|
(16,447
|
)
|
||
Decrease/(increase) in restricted cash and escrows
|
4,230
|
|
|
(266
|
)
|
||
Increase in prepaid expenses and other assets
|
(4,745
|
)
|
|
(5,071
|
)
|
||
Decrease in accounts payable and accrued expenses
|
(9,785
|
)
|
|
(9,762
|
)
|
||
(Decrease)/increase in deferred income
|
(2,862
|
)
|
|
4,235
|
|
||
Net cash provided by operating activities
|
102,744
|
|
|
96,487
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Acquisition of real estate assets and related intangibles
|
(10,000
|
)
|
|
(45,185
|
)
|
||
Capitalized expenditures, net of accruals
|
(54,422
|
)
|
|
(62,587
|
)
|
||
Redemption of noncontrolling interest in unconsolidated variable interest entity
|
—
|
|
|
(4,000
|
)
|
||
Net sales proceeds from wholly-owned properties
|
201,690
|
|
|
87,925
|
|
||
Deferred lease costs paid
|
(6,266
|
)
|
|
(10,678
|
)
|
||
Net cash provided by/(used in) investing activities
|
131,002
|
|
|
(34,525
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Debt issuance costs paid
|
(138
|
)
|
|
(830
|
)
|
||
Proceeds from debt
|
211,000
|
|
|
1,054,857
|
|
||
Repayments of debt
|
(357,597
|
)
|
|
(1,012,576
|
)
|
||
Costs of issuance of common stock
|
(42
|
)
|
|
(326
|
)
|
||
Shares withheld to pay tax obligations related to employee stock compensation
|
(2,283
|
)
|
|
(1,654
|
)
|
||
Repurchases of common stock as part of announced plan
|
(7,943
|
)
|
|
(39,914
|
)
|
||
Dividends paid and discount on dividend reinvestments
|
(61,075
|
)
|
|
(64,828
|
)
|
||
Net cash used in financing activities
|
(218,078
|
)
|
|
(65,271
|
)
|
||
Net increase/(decrease) in cash and cash equivalents
|
15,668
|
|
|
(3,309
|
)
|
||
Cash and cash equivalents, beginning of period
|
5,441
|
|
|
12,306
|
|
||
Cash and cash equivalents, end of period
|
$
|
21,109
|
|
|
$
|
8,997
|
|
|
|
|
|
||||
Supplemental Disclosures of Significant Noncash Investing and Financing Activities:
|
|
|
|
||||
Change in accrued share repurchases as part of an announced plan
|
$
|
—
|
|
|
$
|
6,345
|
|
Accrued capital expenditures and deferred lease costs
|
$
|
25,146
|
|
|
$
|
15,930
|
|
Accrued deferred financing costs
|
$
|
—
|
|
|
$
|
75
|
|
Facility
|
|
Collateral
|
|
Stated Rate
(1)
|
|
Maturity
|
|
Amount Outstanding as of
|
|||||||
|
June 30,
2016 |
|
December 31,
2015 |
||||||||||||
Secured (Fixed)
|
|
|
|
|
|
|
|
|
|
|
|||||
$125.0 Million Fixed-Rate Loan
|
|
Four Property Collateralized Pool
|
|
5.50
|
%
|
|
4/1/2016
|
|
$
|
—
|
|
|
$
|
125,000
|
|
$42.5 Million Fixed-Rate Loan
|
|
Las Colinas Corporate Center I & II
|
|
5.70
|
%
|
|
10/11/2016
|
|
42,525
|
|
(2)
|
42,525
|
|
||
$140.0 Million WDC Fixed-Rate Loans
|
|
1201 & 1225 Eye Street
|
|
5.76
|
%
|
|
11/1/2017
|
|
140,000
|
|
|
140,000
|
|
||
$35.0 Million Fixed-Rate Loan
|
|
5 Wall Street
|
|
5.55
|
%
|
(3)
|
9/1/2021
|
|
32,091
|
|
|
32,445
|
|
||
$160.0 Million Fixed-Rate Loan
|
|
1901 Market Street
|
|
3.48
|
%
|
(4)
|
7/5/2022
|
|
160,000
|
|
|
160,000
|
|
||
Net premium and unamortized debt issuance costs
|
|
|
|
|
|
|
|
1,249
|
|
|
1,319
|
|
|||
Subtotal/Weighted Average
(5)
|
|
|
|
4.76
|
%
|
|
|
|
375,865
|
|
|
501,289
|
|
||
Unsecured (Variable and Fixed)
|
|
|
|
|
|
|
|
|
|
|
|||||
$170 Million Unsecured 2015 Term Loan
|
|
|
|
LIBOR + 1.125%
|
|
(6)
|
5/15/2018
|
|
170,000
|
|
|
170,000
|
|
||
$300 Million Unsecured 2013 Term Loan
|
|
|
|
LIBOR + 1.20%
|
|
(7)
|
1/31/2019
|
|
300,000
|
|
|
300,000
|
|
||
$500 Million Unsecured 2015 Line of Credit
|
|
|
|
LIBOR + 1.00%
|
|
(8)
|
6/18/2019
|
(9)
|
—
|
|
|
21,000
|
|
||
$300 Million Unsecured 2011 Term Loan
|
|
|
|
LIBOR + 1.15%
|
|
(10)
|
1/15/2020
|
|
300,000
|
|
|
300,000
|
|
||
$350 Million Senior Notes
|
|
|
|
3.40
|
%
|
(11)
|
6/01/2023
|
|
350,000
|
|
|
350,000
|
|
||
$400 Million Senior Notes
|
|
|
|
4.45
|
%
|
(12)
|
3/15/2024
|
|
400,000
|
|
|
400,000
|
|
||
Discounts and unamortized debt issuance costs
|
|
|
|
|
|
|
|
(11,551)
|
|
|
(12,779)
|
|
|||
Subtotal/Weighted Average
(5)
|
|
|
|
3.15
|
%
|
|
|
|
1,508,449
|
|
|
1,528,221
|
|
||
Total/Weighted Average
(5)
|
|
|
|
3.47
|
%
|
|
|
|
$
|
1,884,314
|
|
|
$
|
2,029,510
|
|
(1)
|
Other than the
$35 Million
Fixed-Rate Loan, all of Piedmont’s outstanding debt as of
June 30, 2016
and
December 31, 2015
is interest-only.
|
(2)
|
Amount was repaid in full on July 11, 2016.
|
(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, 2016
.
|
(6)
|
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, 2016
) over the selected rate based on Piedmont’s current credit rating. The principal balance as of
June 30, 2016
consisted of the 30-day LIBOR rate of
0.45%
(subject to the additional spread mentioned above).
|
(7)
|
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%
.
|
(8)
|
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, 2016
) over the selected rate based on Piedmont’s current credit rating.
|
(9)
|
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.
|
(10)
|
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.
|
(11)
|
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%
.
|
(12)
|
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%
.
|
Entity
|
|
Piedmont’s
%
Ownership
of Entity
|
|
Related
Building
|
|
Consolidated/
Unconsolidated
|
|
Net Carrying
Amount as of
June 30, 2016
|
|
Net Carrying
Amount as of
December 31, 2015
|
|
Primary Beneficiary
Considerations
|
||||
1201 Eye Street N.W. Associates, LLC
|
|
49.5%
|
|
1201 Eye Street
|
|
Consolidated
|
|
$
|
(8.5
|
)
|
|
$
|
(7.4
|
)
|
|
In accordance with the partnership’s governing documents, Piedmont is entitled to 100% of the cash flow of the entity and has sole discretion in directing the management and leasing activities of the building.
|
1225 Eye Street N.W. Associates, LLC
|
|
49.5%
|
|
1225 Eye Street
|
|
Consolidated
|
|
$
|
9.3
|
|
|
$
|
3.8
|
|
|
In accordance with the partnership’s governing documents, Piedmont is entitled to 100% of the cash flow of the entity 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
|
|
$
|
252.1
|
|
|
$
|
251.4
|
|
|
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 100% of the economic benefits of the property until such returns are met.
|
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
|
|
Total
|
|
|
|
|
|
$
|
900
|
|
|
|
|
|
Interest rate swaps classified as:
|
June 30,
2016 |
|
December 31,
2015 |
||||
Gross derivative assets
|
$
|
—
|
|
|
$
|
—
|
|
Gross derivative liabilities
|
22,079
|
|
|
9,993
|
|
||
Net derivative liability
|
$
|
22,079
|
|
|
$
|
9,993
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Interest Rate Swaps in Cash Flow Hedging Relationships
|
June 30,
2016 |
|
June 30,
2015 |
|
June 30,
2016 |
|
June 30,
2015 |
||||||||
Amount of gain/(loss) recognized in OCI on derivative
|
$
|
(4,068
|
)
|
|
$
|
16,079
|
|
|
$
|
(15,029
|
)
|
|
$
|
874
|
|
Amount of previously recorded loss reclassified from accumulated OCI into interest expense
|
$
|
1,113
|
|
|
$
|
1,602
|
|
|
$
|
2,246
|
|
|
$
|
3,069
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||
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)
|
$
|
21,109
|
|
|
$
|
21,109
|
|
|
Level 1
|
|
$
|
5,441
|
|
|
$
|
5,441
|
|
|
Level 1
|
Tenant receivables, net
(1)
|
$
|
21,338
|
|
|
$
|
21,338
|
|
|
Level 1
|
|
$
|
26,339
|
|
|
$
|
26,339
|
|
|
Level 1
|
Notes receivable
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
Level 1
|
|
$
|
45,400
|
|
|
$
|
45,400
|
|
|
Level 1
|
Restricted cash and escrows
(1)
|
$
|
10,595
|
|
|
$
|
10,595
|
|
|
Level 1
|
|
$
|
5,174
|
|
|
$
|
5,174
|
|
|
Level 1
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued expenses
(1)
|
$
|
10,934
|
|
|
$
|
10,934
|
|
|
Level 1
|
|
$
|
13,188
|
|
|
$
|
13,188
|
|
|
Level 1
|
Interest rate swap liability
|
$
|
22,079
|
|
|
$
|
22,079
|
|
|
Level 2
|
|
$
|
9,993
|
|
|
$
|
9,993
|
|
|
Level 2
|
Debt
|
$
|
1,884,314
|
|
|
$
|
1,930,100
|
|
|
Level 2
|
|
$
|
2,029,510
|
|
|
$
|
2,039,139
|
|
|
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 on Sale
|
|
Net Sales Proceeds
|
|
||||
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
|
|
$
|
5,297
|
|
|
$
|
24,223
|
|
|
Copper Ridge Center
|
|
Lyndhurst, New Jersey
|
|
May 1, 2015
|
|
$
|
13,711
|
|
|
$
|
50,372
|
|
(1)
|
1055 East Colorado
|
|
Pasadena, California
|
|
April 21, 2016
|
|
$
|
31,502
|
|
|
$
|
60,077
|
|
|
Fairway Center II
|
|
Brea, California
|
|
April 28, 2016
|
|
$
|
15,469
|
|
|
$
|
33,063
|
|
|
1901 Main Street
|
|
Irvine, California
|
|
May 2, 2016
|
|
$
|
32,016
|
|
|
$
|
63,150
|
|
(2)
|
(1)
|
As part of the transaction, Piedmont accepted a secured promissory note from the buyer for
$45.4 million
. During the
six months ended
June 30, 2016
, the note receivable was repaid in full and such proceeds are reflected in the accompanying consolidated statements of cash flows as net sales proceeds from the sale of wholly-owned properties.
|
(2)
|
As part of the transaction, Piedmont accepted a secured promissory note from the buyer for
$33.0 million
; however, the note receivable was repaid in full by
June 30, 2016
. As such, the full proceeds from the sale of the property are reflected in the accompanying consolidated statements of cash flows as net sales proceeds from the sale of wholly-owned properties.
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Real estate assets held for sale, net:
|
|
|
|
|
||||
Land
|
|
$
|
9,759
|
|
|
$
|
9,759
|
|
Building and improvements, less accumulated depreciation of $33,336 and $32,162 as of June 30, 2016 and December 31, 2015, respectively
|
|
59,998
|
|
|
66,840
|
|
||
Construction in progress
|
|
9
|
|
|
15
|
|
||
Total real estate assets held for sale, net
|
|
$
|
69,766
|
|
|
$
|
76,614
|
|
|
|
|
|
|
||||
Other assets held for sale, net:
|
|
|
|
|
||||
Straight-line rent receivables
|
|
$
|
5,109
|
|
|
$
|
4,729
|
|
Prepaid expenses and other assets
|
|
36
|
|
|
66
|
|
||
Deferred lease costs, less accumulated amortization of $1,429 and $1,162 as of June 30, 2016 and December 31, 2015, respectively
|
|
3,616
|
|
|
3,695
|
|
||
Total other assets held for sale, net
|
|
$
|
8,761
|
|
|
$
|
8,490
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2016
|
|
June 30, 2015
|
|
June 30, 2016
|
|
June 30, 2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Tenant reimbursements
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
General and administrative
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating loss
|
(1
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(3
|
)
|
||||
Loss from discontinued operations
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested Stock Awards as of December 31, 2015
|
959,446
|
|
|
$
|
18.67
|
|
Deferred Stock Awards Granted
|
319,083
|
|
|
$
|
19.96
|
|
Increase in Estimated Potential Future Performance Share Awards
|
222,080
|
|
|
$
|
22.64
|
|
Performance Stock Awards Vested
|
(53,287
|
)
|
|
$
|
18.91
|
|
Deferred Stock Awards Vested
|
(250,323
|
)
|
|
$
|
18.61
|
|
Deferred Stock Awards Forfeited
|
(1,002
|
)
|
|
$
|
19.04
|
|
Unvested Stock Awards as of June 30, 2016
|
1,195,997
|
|
|
$
|
19.75
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2016 |
|
June 30,
2015 |
|
June 30,
2016 |
|
June 30,
2015 |
||||||||
Weighted-Average Grant Date Fair Value of Shares Granted During the Period (per share)
|
$
|
19.96
|
|
|
$
|
17.59
|
|
|
$
|
19.96
|
|
|
$
|
17.59
|
|
Total Grant Date Fair Value of Shares Vested During the Period
|
$
|
4,319
|
|
|
$
|
3,727
|
|
|
$
|
4,659
|
|
|
$
|
4,073
|
|
Share-based Liability Awards Paid During the Period
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,127
|
|
|
$
|
—
|
|
(1)
|
Amount reflects the issuance of performance share awards related to the 2013-15 Performance Share Plan 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, 2016
|
|
||||
January 3, 2014
|
|
Deferred Stock Award
|
|
87,706
|
|
|
$
|
16.45
|
|
|
Of the shares granted, 20% vested or will vest on January 3, 2015, 2016, 2017, 2018, and 2019, respectively.
|
|
62,004
|
|
|
May 9, 2014
|
|
Deferred Stock Award
|
|
145,436
|
|
|
$
|
18.46
|
|
|
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.
|
|
48,205
|
|
|
May 9, 2014
|
|
Fiscal Year 2014-2016 Performance Share Program
|
|
—
|
|
|
$
|
22.00
|
|
|
Shares awarded, if any, will vest immediately upon determination of award in 2017.
|
|
227,074
|
|
(2)
|
May 1, 2015
|
|
Deferred Stock Award
|
|
244,283
|
|
|
$
|
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.
|
|
143,652
|
|
|
May 1, 2015
|
|
Fiscal Year 2015-2017 Performance Share Program
|
|
—
|
|
|
$
|
18.42
|
|
|
Shares awarded, if any, will vest immediately upon determination of award in 2018.
|
|
329,921
|
|
(2)
|
May 12, 2016
|
|
Deferred Stock Award-Board of Directors
|
|
31,368
|
|
|
$
|
20.40
|
|
|
Of the shares granted, 100% will vest on May 12, 2017.
|
|
31,368
|
|
|
May 24, 2016
|
|
Deferred Stock Award
|
|
260,335
|
|
|
$
|
19.91
|
|
|
Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 24, 2017, 2018, and 2019, respectively.
|
|
214,916
|
|
|
May 24, 2016
|
|
Fiscal Year 2016-2018 Performance Share Program
|
|
—
|
|
|
$
|
23.02
|
|
|
Shares awarded, if any, will vest immediately upon determination of award in 2019.
|
|
138,857
|
|
(2)
|
Total
|
|
|
|
|
|
|
|
|
|
1,195,997
|
|
|
(1)
|
Amounts reflect the total grant to employees and independent directors, net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations through
June 30, 2016
.
|
(2)
|
Estimated based on Piedmont's cumulative TSR for the respective performance period through
June 30, 2016
. 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, 2016
|
|
June 30, 2015
|
|
June 30, 2016
|
|
June 30, 2015
|
Weighted-average common shares – basic
|
145,179
|
|
153,559
|
|
145,228
|
|
153,947
|
Plus incremental weighted-average shares from time-vested conversions:
|
|
|
|
|
|
|
|
Deferred and performance stock awards
|
520
|
|
198
|
|
537
|
|
227
|
Weighted-average common shares – diluted
(1)
|
145,699
|
|
153,757
|
|
145,765
|
|
154,174
|
(1)
|
Due to repurchases of common stock during the current year, Piedmont has
145,229,642
shares of common stock outstanding as of
June 30, 2016
.
|
Condensed Consolidated Balance Sheets
|
|||||||||||||||||||
As of June 30, 2016
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate assets, at cost:
|
|
|
|
|
|
|
|
|
|
||||||||||
Land
|
$
|
48,213
|
|
|
$
|
—
|
|
|
$
|
608,027
|
|
|
$
|
—
|
|
|
$
|
656,240
|
|
Buildings and improvements, less accumulated depreciation
|
242,179
|
|
|
—
|
|
|
2,538,622
|
|
|
(300
|
)
|
|
2,780,501
|
|
|||||
Intangible lease assets, less accumulated amortization
|
997
|
|
|
—
|
|
|
70,797
|
|
|
—
|
|
|
71,794
|
|
|||||
Construction in progress
|
387
|
|
|
—
|
|
|
24,800
|
|
|
—
|
|
|
25,187
|
|
|||||
Real estate assets held for sale, net
|
69,766
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69,766
|
|
|||||
Total real estate assets
|
361,542
|
|
|
—
|
|
|
3,242,246
|
|
|
(300
|
)
|
|
3,603,488
|
|
|||||
Investments in and amounts due from unconsolidated joint ventures
|
7,413
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,413
|
|
|||||
Cash and cash equivalents
|
16,270
|
|
|
150
|
|
|
4,689
|
|
|
—
|
|
|
21,109
|
|
|||||
Tenant and straight-line rent receivables, net
|
20,448
|
|
|
—
|
|
|
155,517
|
|
|
—
|
|
|
175,965
|
|
|||||
Advances to affiliates
|
6,115,364
|
|
|
1,283,243
|
|
|
—
|
|
|
(7,398,607
|
)
|
|
—
|
|
|||||
Investment in subsidiary
|
—
|
|
|
3,691,562
|
|
|
184
|
|
|
(3,691,746
|
)
|
|
—
|
|
|||||
Notes receivable
|
89,350
|
|
|
—
|
|
|
14,289
|
|
|
(103,639
|
)
|
|
—
|
|
|||||
Prepaid expenses, restricted cash, escrows, and other assets
|
17,069
|
|
|
75
|
|
|
24,839
|
|
|
(1,657
|
)
|
|
40,326
|
|
|||||
Goodwill
|
180,097
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
180,097
|
|
|||||
Deferred lease costs, net
|
18,115
|
|
|
—
|
|
|
243,225
|
|
|
—
|
|
|
261,340
|
|
|||||
Other assets held for sale, net
|
8,761
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,761
|
|
|||||
Total assets
|
$
|
6,834,429
|
|
|
$
|
4,975,030
|
|
|
$
|
3,684,989
|
|
|
$
|
(11,195,949
|
)
|
|
$
|
4,298,499
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt, net
|
$
|
1,522,642
|
|
|
$
|
—
|
|
|
$
|
465,311
|
|
|
$
|
(103,639
|
)
|
|
$
|
1,884,314
|
|
Accounts payable, accrued expenses, and accrued capital expenditures
|
17,525
|
|
|
573
|
|
|
105,946
|
|
|
(1,657
|
)
|
|
122,387
|
|
|||||
Advances from affiliates
|
641,314
|
|
|
5,071,390
|
|
|
1,775,933
|
|
|
(7,488,637
|
)
|
|
—
|
|
|||||
Deferred income
|
4,077
|
|
|
—
|
|
|
19,959
|
|
|
—
|
|
|
24,036
|
|
|||||
Intangible lease liabilities, net
|
—
|
|
|
—
|
|
|
38,970
|
|
|
—
|
|
|
38,970
|
|
|||||
Interest rate swaps
|
22,079
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,079
|
|
|||||
Total liabilities
|
2,207,637
|
|
|
5,071,963
|
|
|
2,406,119
|
|
|
(7,593,933
|
)
|
|
2,091,786
|
|
|||||
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
—
|
|
|
1,452
|
|
|
—
|
|
|
—
|
|
|
1,452
|
|
|||||
Additional paid-in capital
|
3,687,562
|
|
|
3,674,348
|
|
|
1,311
|
|
|
(3,691,746
|
)
|
|
3,671,475
|
|
|||||
Retained/(cumulative distributions in excess of) earnings
|
950,340
|
|
|
(3,772,733
|
)
|
|
1,276,534
|
|
|
89,730
|
|
|
(1,456,129
|
)
|
|||||
Other comprehensive loss
|
(11,110
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,110
|
)
|
|||||
Piedmont stockholders’ equity
|
4,626,792
|
|
|
(96,933
|
)
|
|
1,277,845
|
|
|
(3,602,016
|
)
|
|
2,205,688
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
1,025
|
|
|
—
|
|
|
1,025
|
|
|||||
Total stockholders’ equity
|
4,626,792
|
|
|
(96,933
|
)
|
|
1,278,870
|
|
|
(3,602,016
|
)
|
|
2,206,713
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
6,834,429
|
|
|
$
|
4,975,030
|
|
|
$
|
3,684,989
|
|
|
$
|
(11,195,949
|
)
|
|
$
|
4,298,499
|
|
Condensed Consolidated Balance Sheets
|
|||||||||||||||||||
As of December 31, 2015
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate assets, at cost:
|
|
|
|
|
|
|
|
|
|
||||||||||
Land
|
$
|
54,459
|
|
|
$
|
—
|
|
|
$
|
621,632
|
|
|
$
|
—
|
|
|
$
|
676,091
|
|
Buildings and improvements, less accumulated depreciation
|
270,057
|
|
|
—
|
|
|
2,567,706
|
|
|
(300
|
)
|
|
2,837,463
|
|
|||||
Intangible lease assets, less accumulated amortization
|
1,268
|
|
|
—
|
|
|
83,395
|
|
|
—
|
|
|
84,663
|
|
|||||
Construction in progress
|
240
|
|
|
—
|
|
|
20,735
|
|
|
—
|
|
|
20,975
|
|
|||||
Real estate assets held for sale, net
|
76,614
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76,614
|
|
|||||
Total real estate assets
|
402,638
|
|
|
—
|
|
|
3,293,468
|
|
|
(300
|
)
|
|
3,695,806
|
|
|||||
Investments in and amounts due from unconsolidated joint ventures
|
7,577
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,577
|
|
|||||
Cash and cash equivalents
|
2,174
|
|
|
150
|
|
|
3,117
|
|
|
—
|
|
|
5,441
|
|
|||||
Tenant and straight-line rent receivables, net
|
23,738
|
|
|
—
|
|
|
149,994
|
|
|
—
|
|
|
173,732
|
|
|||||
Advances to affiliates
|
6,073,606
|
|
|
1,251,530
|
|
|
—
|
|
|
(7,325,136
|
)
|
|
—
|
|
|||||
Investment in subsidiary
|
—
|
|
|
3,752,523
|
|
|
186
|
|
|
(3,752,709
|
)
|
|
—
|
|
|||||
Notes receivable
|
134,750
|
|
|
—
|
|
|
23,890
|
|
|
(113,240
|
)
|
|
45,400
|
|
|||||
Prepaid expenses, restricted cash, escrows, and other assets
|
7,091
|
|
|
—
|
|
|
24,118
|
|
|
(1,258
|
)
|
|
29,951
|
|
|||||
Goodwill
|
180,097
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
180,097
|
|
|||||
Deferred lease costs, net
|
20,939
|
|
|
—
|
|
|
267,102
|
|
|
—
|
|
|
288,041
|
|
|||||
Other assets held for sale, net
|
8,490
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,490
|
|
|||||
Total assets
|
$
|
6,861,100
|
|
|
$
|
5,004,203
|
|
|
$
|
3,761,875
|
|
|
$
|
(11,192,643
|
)
|
|
$
|
4,434,535
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt, net
|
$
|
1,552,007
|
|
|
$
|
—
|
|
|
$
|
590,743
|
|
|
$
|
(113,240
|
)
|
|
$
|
2,029,510
|
|
Accounts payable, accrued expenses, and accrued capital expenditures
|
18,954
|
|
|
580
|
|
|
110,189
|
|
|
(1,258
|
)
|
|
128,465
|
|
|||||
Advances from affiliates
|
580,526
|
|
|
5,033,266
|
|
|
1,788,840
|
|
|
(7,402,632
|
)
|
|
—
|
|
|||||
Deferred income
|
5,905
|
|
|
—
|
|
|
21,365
|
|
|
—
|
|
|
27,270
|
|
|||||
Intangible lease liabilities, net
|
—
|
|
|
—
|
|
|
42,853
|
|
|
—
|
|
|
42,853
|
|
|||||
Interest rate swaps
|
9,993
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,993
|
|
|||||
Total liabilities
|
2,167,385
|
|
|
5,033,846
|
|
|
2,553,990
|
|
|
(7,517,130
|
)
|
|
2,238,091
|
|
|||||
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
—
|
|
|
1,455
|
|
|
—
|
|
|
—
|
|
|
1,455
|
|
|||||
Additional paid-in capital
|
3,748,524
|
|
|
3,672,849
|
|
|
1,314
|
|
|
(3,752,710
|
)
|
|
3,669,977
|
|
|||||
Retained/(cumulative distributions in excess of) earnings
|
943,530
|
|
|
(3,703,947
|
)
|
|
1,205,546
|
|
|
77,197
|
|
|
(1,477,674
|
)
|
|||||
Other comprehensive loss
|
1,661
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,661
|
|
|||||
Piedmont stockholders’ equity
|
4,693,715
|
|
|
(29,643
|
)
|
|
1,206,860
|
|
|
(3,675,513
|
)
|
|
2,195,419
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
1,025
|
|
|
—
|
|
|
1,025
|
|
|||||
Total stockholders’ equity
|
4,693,715
|
|
|
(29,643
|
)
|
|
1,207,885
|
|
|
(3,675,513
|
)
|
|
2,196,444
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
6,861,100
|
|
|
$
|
5,004,203
|
|
|
$
|
3,761,875
|
|
|
$
|
(11,192,643
|
)
|
|
$
|
4,434,535
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the three months ended June 30, 2016
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
14,661
|
|
|
$
|
—
|
|
|
$
|
97,860
|
|
|
$
|
(754
|
)
|
|
$
|
111,767
|
|
Tenant reimbursements
|
3,753
|
|
|
—
|
|
|
19,409
|
|
|
(76
|
)
|
|
23,086
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
4,178
|
|
|
(3,724
|
)
|
|
454
|
|
|||||
|
18,414
|
|
|
—
|
|
|
121,447
|
|
|
(4,554
|
)
|
|
135,307
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
8,307
|
|
|
—
|
|
|
48,568
|
|
|
(4,595
|
)
|
|
52,280
|
|
|||||
Depreciation
|
4,476
|
|
|
—
|
|
|
27,080
|
|
|
—
|
|
|
31,556
|
|
|||||
Amortization
|
941
|
|
|
—
|
|
|
16,461
|
|
|
—
|
|
|
17,402
|
|
|||||
Impairment loss on real estate assets
|
5,972
|
|
|
—
|
|
|
2,336
|
|
|
—
|
|
|
8,308
|
|
|||||
General and administrative
|
8,119
|
|
|
92
|
|
|
10,213
|
|
|
(10,096
|
)
|
|
8,328
|
|
|||||
|
27,815
|
|
|
92
|
|
|
104,658
|
|
|
(14,691
|
)
|
|
117,874
|
|
|||||
Real estate operating income/(loss)
|
(9,401
|
)
|
|
(92
|
)
|
|
16,789
|
|
|
10,137
|
|
|
17,433
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(12,170
|
)
|
|
—
|
|
|
(6,666
|
)
|
|
2,423
|
|
|
(16,413
|
)
|
|||||
Other income/(expense)
|
1,735
|
|
|
282
|
|
|
365
|
|
|
(2,423
|
)
|
|
(41
|
)
|
|||||
Equity in income of unconsolidated joint ventures
|
111
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
111
|
|
|||||
|
(10,324
|
)
|
|
282
|
|
|
(6,301
|
)
|
|
—
|
|
|
(16,343
|
)
|
|||||
Income/(loss) from continuing operations
|
(19,725
|
)
|
|
190
|
|
|
10,488
|
|
|
10,137
|
|
|
1,090
|
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating loss
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Gain on sale of real estate assets
|
32,017
|
|
|
—
|
|
|
46,970
|
|
|
—
|
|
|
78,987
|
|
|||||
Net income
|
12,292
|
|
|
190
|
|
|
57,457
|
|
|
10,137
|
|
|
80,076
|
|
|||||
Less: Net income applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||||
Net income applicable to Piedmont
|
$
|
12,292
|
|
|
$
|
190
|
|
|
$
|
57,453
|
|
|
$
|
10,137
|
|
|
$
|
80,072
|
|
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 assets
|
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/(loss)
|
(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/(loss) 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/(loss)
|
8,224
|
|
|
(84
|
)
|
|
12,489
|
|
|
9,351
|
|
|
29,980
|
|
|||||
Less: Net income applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
8,224
|
|
|
$
|
(84
|
)
|
|
$
|
12,485
|
|
|
$
|
9,351
|
|
|
$
|
29,976
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the six months ended June 30, 2016
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
30,127
|
|
|
$
|
—
|
|
|
$
|
197,896
|
|
|
$
|
(1,518
|
)
|
|
$
|
226,505
|
|
Tenant reimbursements
|
7,026
|
|
|
—
|
|
|
38,980
|
|
|
(169
|
)
|
|
45,837
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
8,495
|
|
|
(7,518
|
)
|
|
977
|
|
|||||
|
37,153
|
|
|
—
|
|
|
245,371
|
|
|
(9,205
|
)
|
|
273,319
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
16,659
|
|
|
—
|
|
|
99,083
|
|
|
(9,274
|
)
|
|
106,468
|
|
|||||
Depreciation
|
9,376
|
|
|
—
|
|
|
53,962
|
|
|
—
|
|
|
63,338
|
|
|||||
Amortization
|
1,991
|
|
|
—
|
|
|
33,217
|
|
|
—
|
|
|
35,208
|
|
|||||
Impairment loss on real estate assets
|
5,972
|
|
|
—
|
|
|
2,336
|
|
|
—
|
|
|
8,308
|
|
|||||
General and administrative
|
15,718
|
|
|
168
|
|
|
19,864
|
|
|
(19,558
|
)
|
|
16,192
|
|
|||||
|
49,716
|
|
|
168
|
|
|
208,462
|
|
|
(28,832
|
)
|
|
229,514
|
|
|||||
Real estate operating income/(loss)
|
(12,563
|
)
|
|
(168
|
)
|
|
36,909
|
|
|
19,627
|
|
|
43,805
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(24,360
|
)
|
|
—
|
|
|
(13,404
|
)
|
|
4,966
|
|
|
(32,798
|
)
|
|||||
Other income/(expense)
|
4,400
|
|
|
282
|
|
|
537
|
|
|
(4,966
|
)
|
|
253
|
|
|||||
Equity in income of unconsolidated joint ventures
|
226
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
226
|
|
|||||
|
(19,734
|
)
|
|
282
|
|
|
(12,867
|
)
|
|
—
|
|
|
(32,319
|
)
|
|||||
Income/(loss) from continuing operations
|
(32,297
|
)
|
|
114
|
|
|
24,042
|
|
|
19,627
|
|
|
11,486
|
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating loss
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Gain on sale of real estate assets
|
32,012
|
|
|
—
|
|
|
46,955
|
|
|
—
|
|
|
78,967
|
|
|||||
Net income/(loss)
|
(285
|
)
|
|
114
|
|
|
70,996
|
|
|
19,627
|
|
|
90,452
|
|
|||||
Less: Net income applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
(285
|
)
|
|
$
|
114
|
|
|
$
|
70,988
|
|
|
$
|
19,627
|
|
|
$
|
90,444
|
|
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 of real estate assets
|
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/(loss)
|
(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/(loss) 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/(loss)
|
7,299
|
|
|
(195
|
)
|
|
24,937
|
|
|
17,188
|
|
|
49,229
|
|
|||||
Less: Net income applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
7,299
|
|
|
$
|
(195
|
)
|
|
$
|
24,929
|
|
|
$
|
17,188
|
|
|
$
|
49,221
|
|
Condensed Consolidated Statements of Cash Flows
|
|||||||||||||||||||
For the six months ended June 30, 2016
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Cash Provided by Operating Activities
|
$
|
(14,105
|
)
|
|
$
|
3,075
|
|
|
$
|
94,146
|
|
|
$
|
19,628
|
|
|
$
|
102,744
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets and real estate related intangibles, net of accruals
|
(13,062
|
)
|
|
—
|
|
|
(51,360
|
)
|
|
—
|
|
|
(64,422
|
)
|
|||||
Intercompany note receivable
|
—
|
|
|
—
|
|
|
9,600
|
|
|
(9,600
|
)
|
|
—
|
|
|||||
Net sales proceeds from wholly-owned properties
|
108,550
|
|
|
—
|
|
|
93,140
|
|
|
—
|
|
|
201,690
|
|
|||||
Deferred lease costs paid
|
(1,712
|
)
|
|
—
|
|
|
(4,554
|
)
|
|
—
|
|
|
(6,266
|
)
|
|||||
Net cash provided by/(used in) investing activities
|
93,776
|
|
|
—
|
|
|
46,826
|
|
|
(9,600
|
)
|
|
131,002
|
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance costs paid
|
(138
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(138
|
)
|
|||||
Proceeds from debt
|
211,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
211,000
|
|
|||||
Repayments of debt
|
(232,000
|
)
|
|
—
|
|
|
(125,597
|
)
|
|
—
|
|
|
(357,597
|
)
|
|||||
Intercompany note payable
|
(9,600
|
)
|
|
—
|
|
|
—
|
|
|
9,600
|
|
|
—
|
|
|||||
Costs of issuance of common stock
|
—
|
|
|
(42
|
)
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
|||||
Shares withheld to pay tax obligations related to employee stock compensation
|
—
|
|
|
(2,283
|
)
|
|
—
|
|
|
—
|
|
|
(2,283
|
)
|
|||||
Repurchases of common stock as part of announced plan
|
—
|
|
|
(7,943
|
)
|
|
—
|
|
|
—
|
|
|
(7,943
|
)
|
|||||
(Distributions to)/repayments from affiliates
|
(34,837
|
)
|
|
68,259
|
|
|
(13,794
|
)
|
|
(19,628
|
)
|
|
—
|
|
|||||
Dividends paid and discount on dividend reinvestments
|
—
|
|
|
(61,066
|
)
|
|
(9
|
)
|
|
—
|
|
|
(61,075
|
)
|
|||||
Net cash provided by/(used in) financing activities
|
(65,575
|
)
|
|
(3,075
|
)
|
|
(139,400
|
)
|
|
(10,028
|
)
|
|
(218,078
|
)
|
|||||
Net decrease in cash and cash equivalents
|
14,096
|
|
|
—
|
|
|
1,572
|
|
|
—
|
|
|
15,668
|
|
|||||
Cash and cash equivalents, beginning of period
|
2,174
|
|
|
150
|
|
|
3,117
|
|
|
—
|
|
|
5,441
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
16,270
|
|
|
$
|
150
|
|
|
$
|
4,689
|
|
|
$
|
—
|
|
|
$
|
21,109
|
|
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
|
)
|
|
$
|
2,869
|
|
|
$
|
91,753
|
|
|
$
|
17,187
|
|
|
$
|
96,487
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets and real estate related intangibles, net of accruals
|
(10,269
|
)
|
|
—
|
|
|
(97,503
|
)
|
|
—
|
|
|
(107,772
|
)
|
|||||
Intercompany note receivable
|
72,000
|
|
|
—
|
|
|
—
|
|
|
(72,000
|
)
|
|
—
|
|
|||||
Redemption of noncontrolling interest in unconsolidated variable interest entity
|
—
|
|
|
—
|
|
|
(4,000
|
)
|
|
—
|
|
|
(4,000
|
)
|
|||||
Net sales proceeds from wholly-owned properties
|
87,925
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87,925
|
|
|||||
Deferred lease costs paid
|
(2,027
|
)
|
|
—
|
|
|
(8,651
|
)
|
|
—
|
|
|
(10,678
|
)
|
|||||
Net cash provided by/(used in) investing activities
|
147,629
|
|
|
—
|
|
|
(110,154
|
)
|
|
(72,000
|
)
|
|
(34,525
|
)
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance 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
|
)
|
|||||
Shares withheld to pay tax obligations related to employee stock compensation
|
—
|
|
|
(1,654
|
)
|
|
—
|
|
|
—
|
|
|
(1,654
|
)
|
|||||
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 provided/(used in) by financing activities
|
(134,286
|
)
|
|
(4,509
|
)
|
|
18,711
|
|
|
54,813
|
|
|
(65,271
|
)
|
|||||
Net increase/(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
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Six Months Ended
|
||||||
|
June 30, 2016
|
|
June 30, 2015
|
||||
|
|
|
|
||||
|
|
|
|
||||
Capital expenditures for development
|
$
|
7,782
|
|
|
$
|
20,434
|
|
Capital expenditures for redevelopment/renovations
|
5,030
|
|
|
10,728
|
|
||
Other capital expenditures, including tenant improvements
|
41,610
|
|
|
31,425
|
|
||
Total capital expenditures
(1)
|
$
|
54,422
|
|
|
$
|
62,587
|
|
(1)
|
Of the total amounts paid, approximately
$3.0 million
and
$2.8 million
relates to soft costs such as capitalized interest, payroll, and other general and administrative expenses for the
six months ended
June 30, 2016
and
2015
, respectively.
|
|
June 30,
2016 |
|
%
|
|
June 30,
2015 |
|
%
|
|
Variance
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
111.8
|
|
|
|
|
$
|
117.5
|
|
|
|
|
$
|
(5.7
|
)
|
||
Tenant reimbursements
|
23.1
|
|
|
|
|
28.8
|
|
|
|
|
(5.7
|
)
|
|||||
Property management fee revenue
|
0.4
|
|
|
|
|
0.4
|
|
|
|
|
—
|
|
|||||
Total revenues
|
135.3
|
|
|
100
|
%
|
|
146.7
|
|
|
100
|
%
|
|
(11.4
|
)
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
52.3
|
|
|
39
|
%
|
|
61.4
|
|
|
42
|
%
|
|
(9.1
|
)
|
|||
Depreciation
|
31.6
|
|
|
23
|
%
|
|
36.0
|
|
|
25
|
%
|
|
(4.4
|
)
|
|||
Amortization
|
17.4
|
|
|
13
|
%
|
|
15.0
|
|
|
10
|
%
|
|
2.4
|
|
|||
Impairment loss on real estate assets
|
8.3
|
|
|
6
|
%
|
|
5.4
|
|
|
4
|
%
|
|
2.9
|
|
|||
General and administrative
|
8.3
|
|
|
6
|
%
|
|
8.1
|
|
|
5
|
%
|
|
0.2
|
|
|||
Real estate operating income
|
17.4
|
|
|
13
|
%
|
|
20.8
|
|
|
14
|
%
|
|
(3.4
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(16.4
|
)
|
|
12
|
%
|
|
(18.1
|
)
|
|
12
|
%
|
|
1.7
|
|
|||
Other income/(expense)
|
—
|
|
|
—
|
%
|
|
0.6
|
|
|
—
|
%
|
|
(0.6
|
)
|
|||
Equity in income of unconsolidated joint ventures
|
0.1
|
|
|
—
|
%
|
|
0.1
|
|
|
—
|
%
|
|
—
|
|
|||
Income from continuing operations
|
$
|
1.1
|
|
|
1
|
%
|
|
$
|
3.4
|
|
|
2
|
%
|
|
$
|
(2.3
|
)
|
Gain on sale of real estate assets
|
$
|
79.0
|
|
|
|
|
$
|
26.6
|
|
|
|
|
$
|
52.4
|
|
|
June 30,
2016 |
|
%
|
|
June 30,
2015 |
|
%
|
|
Variance
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
226.5
|
|
|
|
|
$
|
235.3
|
|
|
|
|
$
|
(8.8
|
)
|
||
Tenant reimbursements
|
45.8
|
|
|
|
|
60.2
|
|
|
|
|
(14.4
|
)
|
|||||
Property management fee revenue
|
1.0
|
|
|
|
|
1.0
|
|
|
|
|
—
|
|
|||||
Total revenues
|
273.3
|
|
|
100
|
%
|
|
296.5
|
|
|
100
|
%
|
|
(23.2
|
)
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
106.5
|
|
|
39
|
%
|
|
125.7
|
|
|
42
|
%
|
|
(19.2
|
)
|
|||
Depreciation
|
63.3
|
|
|
23
|
%
|
|
72.3
|
|
|
24
|
%
|
|
(9.0
|
)
|
|||
Amortization
|
35.2
|
|
|
13
|
%
|
|
29.6
|
|
|
10
|
%
|
|
5.6
|
|
|||
Impairment loss on real estate assets
|
8.3
|
|
|
3
|
%
|
|
5.4
|
|
|
2
|
%
|
|
2.9
|
|
|||
General and administrative
|
16.2
|
|
|
6
|
%
|
|
14.5
|
|
|
5
|
%
|
|
1.7
|
|
|||
Real estate operating income
|
43.8
|
|
|
16
|
%
|
|
49.0
|
|
|
17
|
%
|
|
(5.2
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(32.8
|
)
|
|
12
|
%
|
|
(37.2
|
)
|
|
13
|
%
|
|
4.4
|
|
|||
Other income/(expense)
|
0.3
|
|
|
—
|
%
|
|
0.4
|
|
|
—
|
%
|
|
(0.1
|
)
|
|||
Equity in income of unconsolidated joint ventures
|
0.2
|
|
|
—
|
%
|
|
0.3
|
|
|
—
|
%
|
|
(0.1
|
)
|
|||
Income from continuing operations
|
$
|
11.5
|
|
|
4
|
%
|
|
$
|
12.5
|
|
|
4
|
%
|
|
$
|
(1.0
|
)
|
Gain on sale of real estate assets
|
$
|
79.0
|
|
|
|
|
$
|
36.7
|
|
|
|
|
$
|
42.3
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||||
|
June 30, 2016
|
|
Per
Share
(1)
|
|
June 30, 2015
|
|
Per
Share
(1)
|
|
June 30, 2016
|
|
Per
Share
(1)
|
|
June 30, 2015
|
|
Per
Share
(1)
|
||||||||||||||||
GAAP net income applicable to common stock
|
$
|
80,072
|
|
|
$
|
0.55
|
|
|
$
|
29,976
|
|
|
$
|
0.20
|
|
|
$
|
90,444
|
|
|
$
|
0.62
|
|
|
$
|
49,221
|
|
|
$
|
0.32
|
|
Depreciation of real estate assets
(2)
|
31,442
|
|
|
0.21
|
|
|
35,935
|
|
|
0.23
|
|
|
63,081
|
|
|
0.43
|
|
|
72,032
|
|
|
0.47
|
|
||||||||
Amortization of lease-related costs
(2)
|
17,418
|
|
|
0.12
|
|
|
14,971
|
|
|
0.10
|
|
|
35,240
|
|
|
0.24
|
|
|
29,657
|
|
|
0.19
|
|
||||||||
Impairment loss on real estate assets
|
8,308
|
|
|
0.06
|
|
|
5,354
|
|
|
0.03
|
|
|
8,308
|
|
|
0.06
|
|
|
5,354
|
|
|
0.03
|
|
||||||||
Gain on sale - wholly-owned properties, net
|
(78,987
|
)
|
|
(0.54
|
)
|
|
(26,611
|
)
|
|
(0.17
|
)
|
|
(78,967
|
)
|
|
(0.54
|
)
|
|
(36,684
|
)
|
|
(0.23
|
)
|
||||||||
NAREIT Funds From Operations applicable to common stock
|
$
|
58,253
|
|
|
$
|
0.40
|
|
|
$
|
59,625
|
|
|
$
|
0.39
|
|
|
$
|
118,106
|
|
|
$
|
0.81
|
|
|
$
|
119,580
|
|
|
$
|
0.78
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition costs
|
5
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
147
|
|
|
—
|
|
||||||||
Loss on settlement of swaps
|
—
|
|
|
—
|
|
|
132
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
132
|
|
|
—
|
|
||||||||
Core Funds From Operations applicable to common stock
|
$
|
58,258
|
|
|
$
|
0.40
|
|
|
$
|
59,760
|
|
|
$
|
0.39
|
|
|
$
|
118,123
|
|
|
$
|
0.81
|
|
|
$
|
119,859
|
|
|
$
|
0.78
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on debt
|
643
|
|
|
—
|
|
|
608
|
|
|
—
|
|
|
1,290
|
|
|
0.01
|
|
|
1,259
|
|
|
0.01
|
|
||||||||
Depreciation of non real estate assets
|
175
|
|
|
—
|
|
|
165
|
|
|
—
|
|
|
379
|
|
|
—
|
|
|
361
|
|
|
—
|
|
||||||||
Straight-line effects of lease revenue
(2)
|
(3,127
|
)
|
|
(0.02
|
)
|
|
(3,745
|
)
|
|
(0.02
|
)
|
|
(10,975
|
)
|
|
(0.07
|
)
|
|
(8,255
|
)
|
|
(0.06
|
)
|
||||||||
Stock-based and other non-cash compensation
|
1,477
|
|
|
0.01
|
|
|
1,692
|
|
|
0.01
|
|
|
3,405
|
|
|
0.02
|
|
|
2,417
|
|
|
0.02
|
|
||||||||
Net effect of amortization of above and below-market in-place lease intangibles
|
(1,290
|
)
|
|
(0.01
|
)
|
|
(1,102
|
)
|
|
(0.01
|
)
|
|
(2,528
|
)
|
|
(0.02
|
)
|
|
(2,224
|
)
|
|
(0.02
|
)
|
||||||||
Acquisition costs
|
(5
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
(147
|
)
|
|
—
|
|
||||||||
Non-incremental capital expenditures
(3)
|
(6,455
|
)
|
|
(0.04
|
)
|
|
(11,641
|
)
|
|
(0.07
|
)
|
|
(16,451
|
)
|
|
(0.11
|
)
|
|
(21,928
|
)
|
|
(0.14
|
)
|
||||||||
Adjusted Funds From Operations applicable to common stock
|
$
|
49,676
|
|
|
$
|
0.34
|
|
|
$
|
45,734
|
|
|
$
|
0.30
|
|
|
$
|
93,226
|
|
|
$
|
0.64
|
|
|
$
|
91,342
|
|
|
$
|
0.59
|
|
Weighted-average shares outstanding – diluted
|
145,699
|
|
|
|
|
153,757
|
|
|
|
|
145,765
|
|
|
|
|
154,174
|
|
|
|
(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 enhance the marketability of a building or change the property's underlying classification, such as from a Class B to a Class A property, are excluded from this measure.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2016 |
|
June 30,
2015 |
|
June 30,
2016 |
|
June 30,
2015 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income applicable to Piedmont (GAAP basis)
|
$
|
80,072
|
|
|
$
|
29,976
|
|
|
$
|
90,444
|
|
|
$
|
49,221
|
|
|
|
|
|
|
|
|
|
||||||||
Net income applicable to noncontrolling interest
|
4
|
|
|
4
|
|
|
8
|
|
|
8
|
|
||||
Interest expense
|
16,413
|
|
|
18,172
|
|
|
32,798
|
|
|
37,188
|
|
||||
Depreciation
(1)
|
31,616
|
|
|
36,100
|
|
|
63,459
|
|
|
72,393
|
|
||||
Amortization
(1)
|
17,418
|
|
|
14,971
|
|
|
35,240
|
|
|
29,657
|
|
||||
Acquisition costs
|
5
|
|
|
3
|
|
|
17
|
|
|
147
|
|
||||
Impairment loss on real estate assets
(1)
|
8,308
|
|
|
5,354
|
|
|
8,308
|
|
|
5,354
|
|
||||
Gain on sale of properties
(1)
|
(78,987
|
)
|
|
(26,611
|
)
|
|
(78,967
|
)
|
|
(36,684
|
)
|
||||
General & administrative expenses
(1)
|
8,364
|
|
|
8,102
|
|
|
16,232
|
|
|
14,518
|
|
||||
Management fee revenue
|
(224
|
)
|
|
(232
|
)
|
|
(515
|
)
|
|
(562
|
)
|
||||
Other (income)/expense
(1)
|
543
|
|
|
(599
|
)
|
|
236
|
|
|
(562
|
)
|
||||
Straight line rent effects of lease revenue
(1)
|
(3,127
|
)
|
|
(3,745
|
)
|
|
(10,975
|
)
|
|
(8,255
|
)
|
||||
Amortization of lease-related intangibles
(1)
|
(1,290
|
)
|
|
(1,102
|
)
|
|
(2,528
|
)
|
|
(2,224
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Property NOI (cash basis)
|
$
|
79,115
|
|
|
$
|
80,393
|
|
|
$
|
153,757
|
|
|
$
|
160,199
|
|
|
|
|
|
|
|
|
|
||||||||
Net operating loss/(income) from:
|
|
|
|
|
|
|
|
||||||||
Acquisitions
(2)
|
(5,437
|
)
|
|
(667
|
)
|
|
(10,652
|
)
|
|
(1,179
|
)
|
||||
Dispositions
(3)
|
(985
|
)
|
|
(11,293
|
)
|
|
(2,970
|
)
|
|
(23,753
|
)
|
||||
Other investments
(4)
|
(9
|
)
|
|
(248
|
)
|
|
(135
|
)
|
|
(518
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Same Store NOI (cash basis)
|
$
|
72,684
|
|
|
$
|
68,185
|
|
|
$
|
140,000
|
|
|
$
|
134,749
|
|
|
|
|
|
|
|
|
|
||||||||
Change period over period in Same Store NOI (cash basis)
|
6.6
|
%
|
|
N/A
|
|
|
3.9
|
%
|
|
N/A
|
|
(1)
|
Includes amounts applicable to consolidated properties and our proportionate share of amounts applicable to unconsolidated joint ventures.
|
(2)
|
Acquisitions consist of Park Place on Turtle Creek in Dallas, Texas, purchased on January 16, 2015; 80 Central Street in Boxborough, Massachusetts, purchased on July 24, 2015; SunTrust Center in Orlando, Florida, purchased on November 4, 2015; Galleria 300 in Atlanta, Georgia, purchased on November 4, 2015; and Glenridge Highlands One in Atlanta, Georgia, purchased on November 24, 2015.
|
(3)
|
Dispositions consist of 3900 Dallas Parkway in Plano, Texas, sold on January 30, 2015; 5601 Headquarters Drive in Plano, Texas, sold on April 28, 2015; River Corporate Center in Tempe, Arizona, sold on April 29, 2015; Copper Ridge Center in Lyndhurst, New Jersey, sold on May 1, 2015; Eastpoint I and II in Mayfield Heights, Ohio, sold on July 28, 2015; 3750 Brookside Parkway in Alpharetta, Georgia, sold on August 10, 2015; Chandler Forum in Chandler, Arizona, sold on September 1, 2015; Aon Center in Chicago, Illinois, sold on October 29, 2015; 2 Gatehall Drive in Parsippany, New Jersey, sold on December 21, 2015; 1055 East Colorado Boulevard in Pasadena, California, sold on April 21, 2016; Fairway Center II in Brea, California, sold on April 28, 2016; and 1901 Main Street in Irvine, California, sold on May 2, 2016.
|
(4)
|
Other investments consist of operating results from our investments in unconsolidated joint ventures and redevelopment and development projects.
|
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)
|
$
|
1,894,616
|
|
|
$
|
43,408
|
|
|
$
|
611,920
|
|
(2)
|
$
|
302,145
|
|
(3)
|
$
|
937,143
|
|
|
Operating lease obligations
(4)
|
2,951
|
|
|
93
|
|
|
186
|
|
|
187
|
|
|
2,485
|
|
|
|||||
Total
|
$
|
1,897,567
|
|
|
$
|
43,501
|
|
|
$
|
612,106
|
|
|
$
|
302,332
|
|
|
$
|
939,628
|
|
|
(1)
|
Amounts include principal payments only and balances outstanding as of
June 30, 2016
, not including unamortized issuance discounts, debt issuance costs paid to lenders, or estimated fair value adjustments. We made interest payments, including payments under our interest rate swaps, of approximately
$15.4 million
during the
six months ended
June 30, 2016
, and expect to pay interest in future periods on outstanding debt obligations based on the rates and terms disclosed herein and in
Note 3
of our accompanying consolidated financial statements.
|
(2)
|
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.
|
(3)
|
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.
|
(4)
|
The 2001 NW 64th Street building in Ft. Lauderdale, Florida is subject to a ground lease with an expiration date in 2048. The aggregate remaining payments required under the terms of this operating lease as of
June 30, 2016
is presented above.
|
•
|
Commitments Under Existing Lease Agreements; and
|
•
|
Contingencies Related to Tenant Audits/Disputes.
|
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
2016
.
|
(b)
|
Not applicable.
|
(c)
|
During the three months ended
June 30, 2016
, we repurchased shares of our common stock in the open market solely in order to reissue such shares under our dividend reinvestment plan (the "DRP"). Such stock repurchases for the quarter ended June 30, 2016 are as follows:
|
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, 2016 to April 30, 2016
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
70,238
|
|
|
May 1, 2016 to May 31, 2016
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
70,238
|
|
|
June 1, 2016 to June 30, 2016
|
87
|
|
|
$
|
20.25
|
|
|
—
|
|
|
$
|
70,238
|
|
(2)
|
Total
|
87
|
|
|
$
|
20.25
|
|
|
—
|
|
|
|
|
(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.
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(2)
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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 shares of our common stock pursuant to the stock repurchase plan through June 23, 2017. The share repurchase plan is separate from shares purchased for DRP issuance.
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ITEM 3.
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DEFAULTS UPON SENIOR SECURITIES
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ITEM 4.
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MINE SAFETY DISCLOSURES
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ITEM 5.
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OTHER INFORMATION
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ITEM 6.
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EXHIBITS
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PIEDMONT OFFICE REALTY TRUST, INC.
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(Registrant)
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Dated:
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August 3, 2016
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By:
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/s/ Robert E. Bowers
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Robert E. Bowers
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Chief Financial Officer and Executive Vice President
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(Principal Financial Officer and Duly Authorized Officer)
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Exhibit
Number
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Description of Document
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3.1
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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)
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3.2
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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)
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3.3
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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)
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3.4
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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)
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10.1*
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Long-Term Incentive Program (Amendment No. 2 Effective April 27, 2016)
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31.1
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Rule 13a-14(a)/15d-14(a) Certification, executed by Donald A. Miller, CFA, Principal Executive Officer of the Company
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31.2
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Rule 13a-14(a)/15d-14(a) Certification, executed by Robert E. Bowers, Principal Financial Officer of the Company
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32.1
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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
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32.2
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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
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase
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101.LAB
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XBRL Taxonomy Extension Label Linkbase
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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1.
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Definitions
. For the purposes of the LTIP, the following terms shall have the meanings set forth below:
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2.
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Grant of LTIP Awards
. Subject to the terms and provisions of the Plan and the LTIP, each year the Committee may grant LTIP Awards to such Participants in such amount and pursuant to such terms and conditions (to the extent consistent with the LTIP and the Plan) as the Committee may determine and as set forth in the applicable LTIP Award agreement. LTIP Awards are generally granted to Participants with respect to successive overlapping Performance Cycles. Not later than 120 days after the commencement of each Performance Cycle or as otherwise required by the Plan, the Committee shall establish in writing the LTIP Awards for such Performance Cycle, which shall include the applicable Target Amount, the Performance Levels, the Peer Group, and any required Performance Adjustments.
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4.
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Settlement of LTIP Awards
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1.
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I have reviewed this Form 10-Q for the quarter ended
June 30, 2016
of Piedmont Office Realty Trust, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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.
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By:
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/s/ Donald A. Miller, CFA
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Donald A. Miller, CFA
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Chief Executive Officer and President
(Principal Executive Officer)
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1.
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I have reviewed this Form 10-Q for the quarter ended
June 30, 2016
of Piedmont Office Realty Trust, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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.
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By:
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/s/ Robert E. Bowers
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Robert E. Bowers
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Chief Financial Officer and Executive Vice
President (Principal Financial Officer)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
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By:
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/s/ Donald A. Miller, CFA
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Donald A. Miller, CFA
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Chief Executive Officer and President
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August 3, 2016
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
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By:
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/s/ Robert E. Bowers
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Robert E. Bowers
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Chief Financial Officer
and Executive Vice President
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August 3, 2016
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