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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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Emerging growth 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;
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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 our Annualized Lease Revenue (see definition below);
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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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The effect on us of adverse market and economic conditions, including any resulting impairment charges on both our long-lived assets or goodwill;
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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, including the resulting impediment on our ability to quickly respond to adverse changes in the performance of our properties;
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•
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The risks and uncertainties associated with our acquisition of properties, many of which risks and uncertainties may not be known at the time of acquisition;
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•
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Development and construction delays and resultant increased costs and risks;
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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;
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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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The effect of future offerings of debt or equity securities or changes in market interest rates 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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Any change in the financial condition of any of our large lead tenants;
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•
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The effect of any litigation to which we are, or may become, subject;
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•
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Changes in tax laws impacting REITs and real estate in general, as well as our ability to continue to qualify as a REIT under the Internal Revenue Code of 1986 (the “Code”);
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•
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The future effectiveness of our internal controls and procedures; and
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•
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Other factors, including the risk factors discussed under Item 1A. of our Amended Annual Report on Form 10-K/A for the year ended
December 31, 2016
.
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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,
2017 |
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December 31,
2016 |
||||
Assets:
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Real estate assets, at cost:
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Land
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$
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614,934
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$
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617,138
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Buildings and improvements, less accumulated depreciation of $896,964 and $856,254 as of June 30, 2017 and December 31, 2016, respectively
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2,742,327
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2,754,106
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Intangible lease assets, less accumulated amortization of $94,551 and $109,152 as of June 30, 2017 and December 31, 2016, respectively
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84,989
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99,695
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Construction in progress
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15,651
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34,814
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Real estate assets held for sale, net
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225,071
|
|
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225,939
|
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||
Total real estate assets
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3,682,972
|
|
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3,731,692
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Investments in and amounts due from unconsolidated joint ventures
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7,762
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|
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7,360
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Cash and cash equivalents
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9,596
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|
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6,992
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Tenant receivables, net of allowance for doubtful accounts of $587 and $197 as of June 30, 2017 and December 31, 2016, respectively
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24,269
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26,494
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Straight-line rent receivables
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177,463
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163,789
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Restricted cash and escrows
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1,290
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1,212
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Prepaid expenses and other assets
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29,454
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23,201
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Goodwill
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98,918
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98,918
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Deferred lease costs, less accumulated amortization of $187,122 and $175,643 as of June 30, 2017 and December 31, 2016, respectively
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278,366
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298,695
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Other assets held for sale, net
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10,222
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|
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9,815
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Total assets
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$
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4,320,312
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$
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4,368,168
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Liabilities:
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Unsecured debt, net of discount and unamortized debt issuance costs of $9,014 and $10,269 as of June 30, 2017 and December 31, 2016, respectively
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$
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1,720,986
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$
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1,687,731
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Secured debt, net of premiums and unamortized debt issuance costs of $1,063 and $1,161 as of June 30, 2017 and December 31, 2016, respectively
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332,196
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332,744
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Accounts payable, accrued expenses, and accrued capital expenditures
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111,011
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165,410
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Deferred income
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27,416
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28,406
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Intangible lease liabilities, less accumulated amortization of $52,751 and $49,225 as of June 30, 2017 and December 31, 2016, respectively
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43,328
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48,005
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Interest rate swaps
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5,061
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8,169
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Total liabilities
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2,239,998
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2,270,465
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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, 2017 or December 31, 2016
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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, 2017 or December 31, 2016
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—
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—
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Common stock, $.01 par value, 750,000,000 shares authorized; 145,489,845 and 145,235,313 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively
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1,455
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1,452
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Additional paid-in capital
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3,675,562
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3,673,128
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Cumulative distributions in excess of earnings
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(1,603,119
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)
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(1,580,863
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)
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Other comprehensive income
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4,547
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2,104
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Piedmont stockholders’ equity
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2,078,445
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2,095,821
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Noncontrolling interest
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1,869
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1,882
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Total stockholders’ equity
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2,080,314
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2,097,703
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Total liabilities and stockholders’ equity
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$
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4,320,312
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$
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4,368,168
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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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2017
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2016
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2017
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2016
|
||||||||
Revenues:
|
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|
||||||||
Rental income
|
$
|
124,248
|
|
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$
|
111,767
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$
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247,698
|
|
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$
|
226,505
|
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Tenant reimbursements
|
24,044
|
|
|
23,086
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|
|
48,544
|
|
|
45,837
|
|
||||
Property management fee revenue
|
387
|
|
|
454
|
|
|
900
|
|
|
977
|
|
||||
|
148,679
|
|
|
135,307
|
|
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297,142
|
|
|
273,319
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
55,779
|
|
|
52,292
|
|
|
111,163
|
|
|
106,571
|
|
||||
Depreciation
|
30,059
|
|
|
31,556
|
|
|
60,827
|
|
|
63,338
|
|
||||
Amortization
|
19,314
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|
|
17,402
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|
|
39,729
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|
|
35,208
|
|
||||
Impairment loss on real estate assets
|
—
|
|
|
10,950
|
|
|
—
|
|
|
10,950
|
|
||||
General and administrative
|
8,036
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|
|
8,316
|
|
|
16,632
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|
|
16,089
|
|
||||
|
113,188
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|
|
120,516
|
|
|
228,351
|
|
|
232,156
|
|
||||
Real estate operating income
|
35,491
|
|
|
14,791
|
|
|
68,791
|
|
|
41,163
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(18,421
|
)
|
|
(16,413
|
)
|
|
(36,478
|
)
|
|
(32,798
|
)
|
||||
Other income/(expense)
|
38
|
|
|
(41
|
)
|
|
(62
|
)
|
|
253
|
|
||||
Equity in income of unconsolidated joint ventures
|
107
|
|
|
110
|
|
|
118
|
|
|
225
|
|
||||
|
(18,276
|
)
|
|
(16,344
|
)
|
|
(36,422
|
)
|
|
(32,320
|
)
|
||||
Income/(loss) from continuing operations
|
17,215
|
|
|
(1,553
|
)
|
|
32,369
|
|
|
8,843
|
|
||||
Discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Operating loss
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Loss from discontinued operations
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Gain on sale of real estate assets, net
|
6,492
|
|
|
73,835
|
|
|
6,439
|
|
|
73,815
|
|
||||
Net income
|
23,707
|
|
|
72,281
|
|
|
38,808
|
|
|
82,657
|
|
||||
Less: Net loss/(income) applicable to noncontrolling interest
|
3
|
|
|
(3
|
)
|
|
6
|
|
|
(7
|
)
|
||||
Net income applicable to Piedmont
|
$
|
23,710
|
|
|
$
|
72,278
|
|
|
$
|
38,814
|
|
|
$
|
82,650
|
|
Per share information – basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations and gain on sale of real estate assets
|
$
|
0.16
|
|
|
$
|
0.50
|
|
|
$
|
0.27
|
|
|
$
|
0.57
|
|
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income applicable to common stockholders
|
$
|
0.16
|
|
|
$
|
0.50
|
|
|
$
|
0.27
|
|
|
$
|
0.57
|
|
Weighted-average common shares outstanding – basic
|
145,412,524
|
|
|
145,178,601
|
|
|
145,350,074
|
|
|
145,227,539
|
|
||||
Weighted-average common shares outstanding – diluted
|
145,813,130
|
|
|
145,698,723
|
|
|
145,779,709
|
|
|
145,765,149
|
|
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income applicable to Piedmont
|
|
|
$
|
23,710
|
|
|
|
|
$
|
72,278
|
|
|
|
|
$
|
38,814
|
|
|
|
|
$
|
82,650
|
|
||||
Other comprehensive income/(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective portion of gain/(loss) on derivative instruments that are designated and qualify as cash flow hedges (See
Note 5)
|
(911
|
)
|
|
|
|
(4,068
|
)
|
|
|
|
132
|
|
|
|
|
(15,029
|
)
|
|
|
||||||||
Plus: Reclassification of previously recorded loss included in net income (See
Note 5
)
|
977
|
|
|
|
|
1,113
|
|
|
|
|
2,283
|
|
|
|
|
|
2,246
|
|
|
|
|
||||||
Gain on investment in available for sale securities
|
15
|
|
|
|
|
13
|
|
|
|
|
28
|
|
|
|
|
12
|
|
|
|
||||||||
Other comprehensive income/(loss)
|
|
|
81
|
|
|
|
|
(2,942
|
)
|
|
|
|
2,443
|
|
|
|
|
(12,771
|
)
|
||||||||
Comprehensive income applicable to Piedmont
|
|
|
$
|
23,791
|
|
|
|
|
$
|
69,336
|
|
|
|
|
$
|
41,257
|
|
|
|
|
$
|
69,879
|
|
|
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, 2015
|
145,512
|
|
|
$
|
1,455
|
|
|
$
|
3,669,977
|
|
|
$
|
(1,550,698
|
)
|
|
$
|
1,661
|
|
|
$
|
1,025
|
|
|
$
|
2,123,420
|
|
Share repurchases as part of an announced plan
|
(462
|
)
|
|
(5
|
)
|
|
—
|
|
|
(7,938
|
)
|
|
—
|
|
|
—
|
|
|
(7,943
|
)
|
||||||
Offering costs
|
—
|
|
|
—
|
|
|
(342
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(342
|
)
|
||||||
Noncontrolling interest in consolidated joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
888
|
|
|
888
|
|
||||||
Dividends to common stockholders ($0.84 per share), dividends to preferred stockholders of subsidiary, and dividends reinvested
|
—
|
|
|
—
|
|
|
(173
|
)
|
|
(121,959
|
)
|
|
—
|
|
|
(16
|
)
|
|
(122,148
|
)
|
||||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
|
185
|
|
|
2
|
|
|
3,666
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,668
|
|
||||||
Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(15
|
)
|
||||||
Net income applicable to Piedmont
|
—
|
|
|
—
|
|
|
—
|
|
|
99,732
|
|
|
—
|
|
|
—
|
|
|
99,732
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
443
|
|
|
—
|
|
|
443
|
|
||||||
Balance, December 31, 2016
|
145,235
|
|
|
1,452
|
|
|
3,673,128
|
|
|
(1,580,863
|
)
|
|
2,104
|
|
|
1,882
|
|
|
2,097,703
|
|
||||||
Offering costs
|
|
|
|
|
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
(76
|
)
|
||||||
Dividends to common stockholders ($0.42 per share), dividends to preferred stockholders of subsidiary, and dividends reinvested
|
|
|
|
|
|
|
(55
|
)
|
|
(61,070
|
)
|
|
|
|
|
(7
|
)
|
|
(61,132
|
)
|
||||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
|
255
|
|
|
3
|
|
|
2,565
|
|
|
|
|
|
|
|
|
|
|
|
2,568
|
|
||||||
Net loss applicable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6
|
)
|
|
(6
|
)
|
||||||
Net income applicable to Piedmont
|
|
|
|
|
|
|
|
|
|
38,814
|
|
|
|
|
|
|
|
|
38,814
|
|
||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
2,443
|
|
|
|
|
|
2,443
|
|
||||||
Balance, June 30, 2017
|
145,490
|
|
|
$
|
1,455
|
|
|
$
|
3,675,562
|
|
|
$
|
(1,603,119
|
)
|
|
$
|
4,547
|
|
|
$
|
1,869
|
|
|
$
|
2,080,314
|
|
|
(Unaudited)
|
||||||
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
38,808
|
|
|
$
|
82,657
|
|
Operating distributions received from unconsolidated joint ventures
|
—
|
|
|
389
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
60,827
|
|
|
63,338
|
|
||
Amortization of debt issuance costs
|
810
|
|
|
842
|
|
||
Other amortization
|
39,034
|
|
|
34,912
|
|
||
Impairment loss on real estate assets
|
—
|
|
|
10,950
|
|
||
Stock compensation expense
|
5,403
|
|
|
5,653
|
|
||
Equity in income of unconsolidated joint ventures
|
(118
|
)
|
|
(225
|
)
|
||
Gain on sale of real estate assets, net
|
(6,439
|
)
|
|
(73,815
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Increase in tenant and straight-line rent receivables, net
|
(13,078
|
)
|
|
(8,795
|
)
|
||
(Increase)/decrease in restricted cash and escrows
|
(428
|
)
|
|
4,230
|
|
||
Increase in prepaid expenses and other assets
|
(6,558
|
)
|
|
(4,745
|
)
|
||
Decrease in accounts payable and accrued expenses
|
(5,471
|
)
|
|
(9,785
|
)
|
||
Decrease in deferred income
|
(1,128
|
)
|
|
(2,862
|
)
|
||
Net cash provided by operating activities
|
111,662
|
|
|
102,744
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Acquisition of real estate assets, related intangibles, and cash held in escrow for acquisitions
|
—
|
|
|
(10,000
|
)
|
||
Capitalized expenditures, net of accruals
|
(58,320
|
)
|
|
(54,422
|
)
|
||
Net sales proceeds from wholly-owned properties
|
23,023
|
|
|
201,690
|
|
||
Investments in unconsolidated joint ventures
|
(284
|
)
|
|
—
|
|
||
Deferred lease costs paid
|
(9,563
|
)
|
|
(6,266
|
)
|
||
Net cash (used in)/provided by investing activities
|
(45,144
|
)
|
|
131,002
|
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Debt issuance costs paid
|
(102
|
)
|
|
(138
|
)
|
||
Proceeds from debt
|
147,000
|
|
|
211,000
|
|
||
Repayments of debt
|
(115,694
|
)
|
|
(357,597
|
)
|
||
Costs of issuance of common stock
|
(74
|
)
|
|
(42
|
)
|
||
Shares withheld to pay tax obligations related to employee stock compensation
|
(3,380
|
)
|
|
(2,283
|
)
|
||
Repurchases of common stock as part of announced plan
|
—
|
|
|
(7,943
|
)
|
||
Dividends paid and discount on dividend reinvestments
|
(91,664
|
)
|
|
(61,075
|
)
|
||
Net cash used in financing activities
|
(63,914
|
)
|
|
(218,078
|
)
|
||
Net increase in cash and cash equivalents
|
2,604
|
|
|
15,668
|
|
||
Cash and cash equivalents, beginning of period
|
6,992
|
|
|
5,441
|
|
||
Cash and cash equivalents, end of period
|
$
|
9,596
|
|
|
$
|
21,109
|
|
|
|
|
|
||||
Supplemental Disclosures of Significant Noncash Investing and Financing Activities:
|
|
|
|
||||
Accrued dividends and discount on dividend reinvestments
|
$
|
(30,532
|
)
|
|
$
|
—
|
|
Accrued capital expenditures and deferred lease costs
|
$
|
9,417
|
|
|
$
|
25,146
|
|
Facility
(1)
|
|
Stated Rate
|
|
Effective Rate
(2)
|
|
Maturity
|
|
Amount Outstanding as of
|
||||||||
|
June 30, 2017
|
|
December 31, 2016
|
|||||||||||||
Secured (Fixed)
|
|
|
|
|
|
|
|
|
|
|
||||||
$140 Million WDC Fixed-Rate Loans
(3)
|
|
5.76
|
%
|
|
5.76
|
%
|
|
11/1/2017
|
|
$
|
140,000
|
|
(4)
|
$
|
140,000
|
|
$35 Million Fixed-Rate Loan
(5)
|
|
5.55
|
%
|
|
3.75
|
%
|
|
9/1/2021
|
|
31,133
|
|
|
31,583
|
|
||
$160 Million Fixed-Rate Loan
(6)
|
|
3.48
|
%
|
|
3.58
|
%
|
|
7/5/2022
|
|
160,000
|
|
|
160,000
|
|
||
Net premium and unamortized debt issuance costs
|
|
|
|
|
|
|
|
1,063
|
|
|
1,161
|
|
||||
Subtotal/Weighted Average
(7)
|
|
4.64
|
%
|
|
|
|
|
|
332,196
|
|
|
332,744
|
|
|||
Unsecured (Variable and Fixed)
|
|
|
|
|
|
|
|
|
|
|
||||||
$170 Million Unsecured 2015 Term Loan
(8)
|
|
LIBOR + 1.125%
|
|
|
2.29
|
%
|
|
5/15/2018
|
|
170,000
|
|
|
170,000
|
|
||
$300 Million Unsecured 2013 Term Loan
|
|
LIBOR + 1.20%
|
|
|
2.78
|
%
|
|
1/31/2019
|
|
300,000
|
|
|
300,000
|
|
||
$500 Million Unsecured 2015 Line of Credit
(8)
|
|
LIBOR + 1.00%
|
|
|
2.14
|
%
|
|
6/18/2019
|
(9)
|
210,000
|
|
(10)
|
178,000
|
|
||
$300 Million Unsecured 2011 Term Loan
|
|
LIBOR + 1.15%
|
|
|
3.35
|
%
|
|
1/15/2020
|
|
300,000
|
|
|
300,000
|
|
||
$350 Million Senior Notes
|
|
3.40
|
%
|
|
3.43
|
%
|
|
6/01/2023
|
|
350,000
|
|
|
350,000
|
|
||
$400 Million Senior Notes
|
|
4.45
|
%
|
|
4.10
|
%
|
|
3/15/2024
|
|
400,000
|
|
|
400,000
|
|
||
Discounts and unamortized debt issuance costs
|
|
|
|
|
|
|
|
(9,014)
|
|
|
(10,269)
|
|
||||
Subtotal/Weighted Average
(7)
|
|
3.26
|
%
|
|
|
|
|
|
1,720,986
|
|
|
1,687,731
|
|
|||
Total/Weighted Average
(7)
|
|
3.48
|
%
|
|
|
|
|
|
$
|
2,053,182
|
|
|
$
|
2,020,475
|
|
(1)
|
Other than the
$35 Million
Fixed-Rate Loan, all of Piedmont’s outstanding debt as of
June 30, 2017
and
December 31, 2016
is interest-only.
|
(2)
|
Effective rate after consideration of settled or in place interest rate swap agreements and/or issuance premiums or discounts.
|
(3)
|
Collateralized by the 1201 and 1225 Eye Street buildings in Washington, D.C.
|
(4)
|
(5)
|
Collateralized by the 5 Wall Street building in Burlington, Massachusetts.
|
(6)
|
Collateralized by the 1901 Market Street building in Philadelphia, Pennsylvania.
|
(7)
|
Weighted average is based on contractual balance of outstanding debt and the stated or effectively fixed interest rates in the table as of
June 30, 2017
.
|
(8)
|
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 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)
|
Entity
|
|
Piedmont’s
%
Ownership
of Entity
|
|
Related
Building
|
|
Consolidated/
Unconsolidated
|
|
Net Carrying
Amount as of
June 30, 2017
|
|
Net Carrying
Amount as of
December 31, 2016
|
|
Primary Beneficiary
Considerations
|
||||
1201 Eye Street N.W. Associates, LLC
|
|
49.5%
|
|
1201 Eye Street
|
|
Consolidated
|
|
$
|
(0.9
|
)
|
|
$
|
(6.7
|
)
|
|
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
|
|
$
|
8.8
|
|
|
$
|
9.9
|
|
|
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
|
|
$
|
267.6
|
|
|
$
|
262.4
|
|
|
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 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
|
|
Interest rate swaps
|
|
3
|
|
$300 Million Unsecured 2011 Term Loan
|
|
300
|
|
|
11/22/2016
|
|
1/15/2020
|
|
Total
|
|
|
|
|
|
$
|
600
|
|
|
|
|
|
Interest rate swaps classified as:
|
June 30,
2017 |
|
December 31,
2016 |
||||
Gross derivative assets
|
$
|
—
|
|
|
$
|
—
|
|
Gross derivative liabilities
|
5,061
|
|
|
8,169
|
|
||
Net derivative liability
|
$
|
5,061
|
|
|
$
|
8,169
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Interest Rate Swaps in Cash Flow Hedging Relationships
|
June 30,
2017 |
|
June 30,
2016 |
|
June 30,
2017 |
|
June 30,
2016 |
||||||||
Amount of gain/(loss) recognized in OCI
|
$
|
(911
|
)
|
|
$
|
(4,068
|
)
|
|
$
|
132
|
|
|
$
|
(15,029
|
)
|
Amount of previously recorded loss reclassified from accumulated OCI into interest expense
|
$
|
977
|
|
|
$
|
1,113
|
|
|
$
|
2,283
|
|
|
$
|
2,246
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||
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)
|
$
|
9,596
|
|
|
$
|
9,596
|
|
|
Level 1
|
|
$
|
6,992
|
|
|
$
|
6,992
|
|
|
Level 1
|
Tenant receivables, net
(1)
|
$
|
24,269
|
|
|
$
|
24,269
|
|
|
Level 1
|
|
$
|
26,494
|
|
|
$
|
26,494
|
|
|
Level 1
|
Restricted cash and escrows
(1)
|
$
|
1,290
|
|
|
$
|
1,290
|
|
|
Level 1
|
|
$
|
1,212
|
|
|
$
|
1,212
|
|
|
Level 1
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued expenses
(1)
|
$
|
12,935
|
|
|
$
|
12,935
|
|
|
Level 1
|
|
$
|
44,733
|
|
|
$
|
44,733
|
|
|
Level 1
|
Interest rate swap
|
$
|
5,061
|
|
|
$
|
5,061
|
|
|
Level 2
|
|
$
|
8,169
|
|
|
$
|
8,169
|
|
|
Level 2
|
Debt, net
|
$
|
2,053,182
|
|
|
$
|
2,081,120
|
|
|
Level 2
|
|
$
|
2,020,475
|
|
|
$
|
2,027,436
|
|
|
Level 2
|
(1)
|
For the periods presented, the carrying value of these financial instruments approximates estimated fair value due to their short-term maturity.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
150 West Jefferson
(1)
|
$
|
—
|
|
|
$
|
8,259
|
|
|
$
|
—
|
|
|
$
|
8,259
|
|
9221 Corporate Boulevard
(2)
|
—
|
|
|
2,691
|
|
|
—
|
|
|
2,691
|
|
||||
Total impairment loss on real estate assets
(3)
|
$
|
—
|
|
|
$
|
10,950
|
|
|
$
|
—
|
|
|
$
|
10,950
|
|
(1)
|
Piedmont recognized an impairment loss on real estate assets based upon the difference between the carrying value of the asset and the anticipated contract sales price, less estimated selling costs.
|
(2)
|
Piedmont, using a probability-weighted model heavily weighted towards the short-term sale of the 9221 Corporate Boulevard building in Rockville, Maryland, determined that the carrying value would not be recovered from the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. As a result, Piedmont recognized a loss on impairment of approximately
$2.7 million
during the six months ended June 30, 2016 calculated as the difference between the carrying value of the asset and the anticipated contract sales price, less estimated selling costs.
|
(3)
|
The fair value measurements used in the evaluation of the non-financial assets above are considered to be Level 1 valuations within the fair value hierarchy as defined by GAAP, as there are direct observations and transactions involving the assets by unrelated, third-party purchasers.
|
Buildings Sold
(1)
|
|
Location
|
|
Date of Sale
|
|
Gain/(Loss) on Sale
|
|
Net Sales Proceeds
|
||||
1055 East Colorado Boulevard
|
|
Pasadena, California
|
|
April 21, 2016
|
|
$
|
29,462
|
|
|
$
|
60,076
|
|
Fairway Center II
|
|
Brea, California
|
|
April 28, 2016
|
|
$
|
14,406
|
|
|
$
|
33,062
|
|
1901 Main Street
|
|
Irvine, California
|
|
May 2, 2016
|
|
$
|
29,964
|
|
|
$
|
63,149
|
|
Sarasota Commerce Center II
|
|
Sarasota, Florida
|
|
June 16, 2017
|
|
$
|
6,497
|
|
|
$
|
23,094
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Real estate assets held for sale, net:
|
|
|
|
|
||||
Land
|
|
$
|
52,710
|
|
|
$
|
52,710
|
|
Building and improvements, less accumulated depreciation of $89,187 and $88,319 as of June 30, 2017 and December 31, 2016, respectively
|
|
172,350
|
|
|
173,218
|
|
||
Construction in progress
|
|
11
|
|
|
11
|
|
||
Total real estate assets held for sale, net
|
|
$
|
225,071
|
|
|
$
|
225,939
|
|
|
|
|
|
|
||||
Other assets held for sale, net:
|
|
|
|
|
||||
Straight-line rent receivables
|
|
$
|
2,225
|
|
|
$
|
2,059
|
|
Prepaid expenses and other assets
|
|
762
|
|
|
454
|
|
||
Deferred lease costs, less accumulated amortization of $2,892 and $2,825 as of June 30, 2017 and December 31, 2016, respectively
|
|
7,235
|
|
|
7,302
|
|
||
Total other assets held for sale, net
|
|
$
|
10,222
|
|
|
$
|
9,815
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2017
|
|
June 30, 2016
|
|
June 30, 2017
|
|
June 30, 2016
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Tenant reimbursements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
General and administrative
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Loss on sale of real estate assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Income from discontinued operations
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested Stock Awards as of December 31, 2016
|
944,223
|
|
|
$
|
19.44
|
|
Deferred Stock Awards Granted
|
299,251
|
|
|
$
|
21.38
|
|
Increase in Estimated Potential Future Performance Share Awards, net of forfeitures
|
150,537
|
|
|
$
|
28.37
|
|
Performance Stock Awards Vested
|
(118,446
|
)
|
|
$
|
22.00
|
|
Deferred Stock Awards Vested
|
(301,921
|
)
|
|
$
|
19.35
|
|
Deferred Stock Awards Forfeited
|
(4,761
|
)
|
|
$
|
19.57
|
|
Unvested Stock Awards as of June 30, 2017
|
968,883
|
|
|
$
|
21.94
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2017 |
|
June 30,
2016 |
|
June 30,
2017 |
|
June 30,
2016 |
||||||||
Weighted-Average Grant Date Fair Value of Deferred Stock Granted During the Period
|
$
|
21.38
|
|
|
$
|
19.96
|
|
|
$
|
21.38
|
|
|
$
|
19.96
|
|
Total Grant Date Fair Value of Deferred Stock Vested During the Period
|
$
|
5,551
|
|
|
$
|
4,319
|
|
|
$
|
5,841
|
|
|
$
|
4,659
|
|
Share-based Liability Awards Paid During the Period
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,877
|
|
|
$
|
1,127
|
|
(1)
|
Amounts reflect the issuance of performance share awards related to the 2014-16 and 2013-15 Performance Share Plans during the six months ended June 30, 2017 and 2016, respectively.
|
Date of grant
|
|
Type of Award
|
|
Net Shares
Granted
(1)
|
|
Grant
Date Fair
Value
|
|
Vesting Schedule
|
|
Unvested Shares as of June 30, 2017
|
|
||||
January 3, 2014
|
|
Deferred Stock Award
|
|
86,769
|
|
|
$
|
16.56
|
|
|
Of the shares granted, 20% vested or will vest on January 3, 2015, 2016, 2017, 2018, and 2019, respectively.
|
|
35,094
|
|
|
May 1, 2015
|
|
Deferred Stock Award
|
|
216,919
|
|
|
$
|
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.
|
|
67,747
|
|
|
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.
|
|
229,828
|
|
(2)
|
May 24, 2016
|
|
Deferred Stock Award
|
|
233,073
|
|
|
$
|
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.
|
|
134,117
|
|
|
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.
|
|
85,792
|
|
(2)
|
May 18, 2017
|
|
Deferred Stock Award-Board of Directors
|
|
26,187
|
|
|
$
|
21.38
|
|
|
Of the shares granted, 100% will vest by May 18, 2018.
|
|
26,187
|
|
|
May 18, 2017
|
|
Deferred Stock Award
|
|
246,808
|
|
|
$
|
21.38
|
|
|
Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 18, 2018, 2019, and 2020, respectively.
|
|
202,233
|
|
|
May 18, 2017
|
|
Fiscal Year 2017-2019 Performance Share Program
|
|
—
|
|
|
$
|
30.45
|
|
|
Shares awarded, if any, will vest immediately upon determination of award in 2020.
|
|
187,885
|
|
(2)
|
Total
|
|
|
|
|
|
|
|
|
|
968,883
|
|
|
(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, 2017
.
|
(2)
|
Estimated based on Piedmont's cumulative TSR for the respective performance period through
June 30, 2017
. 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, 2017
|
|
June 30, 2016
|
|
June 30, 2017
|
|
June 30, 2016
|
Weighted-average common shares – basic
|
145,413
|
|
145,179
|
|
145,350
|
|
145,228
|
Plus: Incremental weighted-average shares from time-vested deferred and performance stock awards
|
400
|
|
520
|
|
430
|
|
537
|
Weighted-average common shares – diluted
|
145,813
|
|
145,699
|
|
145,780
|
|
145,765
|
|
|
|
|
|
|
|
|
Common stock issued and outstanding as of period end
|
|
|
|
|
145,490
|
|
145,230
|
Condensed Consolidated Balance Sheets
|
|||||||||||||||||||
As of June 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate assets, at cost:
|
|
|
|
|
|
|
|
|
|
||||||||||
Land
|
$
|
43,929
|
|
|
$
|
—
|
|
|
$
|
571,005
|
|
|
$
|
—
|
|
|
$
|
614,934
|
|
Buildings and improvements, less accumulated depreciation
|
209,091
|
|
|
—
|
|
|
2,533,536
|
|
|
(300
|
)
|
|
2,742,327
|
|
|||||
Intangible lease assets, less accumulated amortization
|
453
|
|
|
—
|
|
|
84,536
|
|
|
—
|
|
|
84,989
|
|
|||||
Construction in progress
|
572
|
|
|
—
|
|
|
15,079
|
|
|
—
|
|
|
15,651
|
|
|||||
Real estate assets held for sale, net
|
—
|
|
|
—
|
|
|
225,071
|
|
|
—
|
|
|
225,071
|
|
|||||
Total real estate assets
|
254,045
|
|
|
—
|
|
|
3,429,227
|
|
|
(300
|
)
|
|
3,682,972
|
|
|||||
Investments in and amounts due from unconsolidated joint ventures
|
7,762
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,762
|
|
|||||
Cash and cash equivalents
|
5,181
|
|
|
150
|
|
|
4,265
|
|
|
—
|
|
|
9,596
|
|
|||||
Tenant and straight-line rent receivables, net
|
17,266
|
|
|
—
|
|
|
184,466
|
|
|
—
|
|
|
201,732
|
|
|||||
Advances to affiliates
|
6,465,350
|
|
|
1,316,446
|
|
|
—
|
|
|
(7,781,796
|
)
|
|
—
|
|
|||||
Investment in subsidiary
|
—
|
|
|
3,569,494
|
|
|
178
|
|
|
(3,569,672
|
)
|
|
—
|
|
|||||
Notes receivable
|
88,910
|
|
|
—
|
|
|
95,790
|
|
|
(184,700
|
)
|
|
—
|
|
|||||
Prepaid expenses, restricted cash, escrows, and other assets
|
5,007
|
|
|
76
|
|
|
26,752
|
|
|
(1,091
|
)
|
|
30,744
|
|
|||||
Goodwill
|
98,918
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
98,918
|
|
|||||
Deferred lease costs, net
|
14,500
|
|
|
—
|
|
|
263,866
|
|
|
—
|
|
|
278,366
|
|
|||||
Other assets held for sale, net
|
—
|
|
|
—
|
|
|
10,222
|
|
|
—
|
|
|
10,222
|
|
|||||
Total assets
|
$
|
6,956,939
|
|
|
$
|
4,886,166
|
|
|
$
|
4,014,766
|
|
|
$
|
(11,537,559
|
)
|
|
$
|
4,320,312
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt, net
|
$
|
1,735,196
|
|
|
$
|
—
|
|
|
$
|
502,686
|
|
|
$
|
(184,700
|
)
|
|
$
|
2,053,182
|
|
Accounts payable, accrued expenses, and accrued capital expenditures
|
16,328
|
|
|
565
|
|
|
95,209
|
|
|
(1,091
|
)
|
|
111,011
|
|
|||||
Advances from affiliates
|
729,007
|
|
|
5,100,839
|
|
|
2,050,205
|
|
|
(7,880,051
|
)
|
|
—
|
|
|||||
Deferred income
|
2,934
|
|
|
—
|
|
|
24,482
|
|
|
—
|
|
|
27,416
|
|
|||||
Intangible lease liabilities, net
|
—
|
|
|
—
|
|
|
43,328
|
|
|
—
|
|
|
43,328
|
|
|||||
Interest rate swaps
|
5,061
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,061
|
|
|||||
Total liabilities
|
2,488,526
|
|
|
5,101,404
|
|
|
2,715,910
|
|
|
(8,065,842
|
)
|
|
2,239,998
|
|
|||||
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
—
|
|
|
1,455
|
|
|
—
|
|
|
—
|
|
|
1,455
|
|
|||||
Additional paid-in capital
|
3,565,494
|
|
|
3,678,434
|
|
|
1,306
|
|
|
(3,569,672
|
)
|
|
3,675,562
|
|
|||||
Retained/(cumulative distributions in excess of) earnings
|
898,372
|
|
|
(3,895,127
|
)
|
|
1,295,681
|
|
|
97,955
|
|
|
(1,603,119
|
)
|
|||||
Other comprehensive loss
|
4,547
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,547
|
|
|||||
Piedmont stockholders’ equity
|
4,468,413
|
|
|
(215,238
|
)
|
|
1,296,987
|
|
|
(3,471,717
|
)
|
|
2,078,445
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
1,869
|
|
|
—
|
|
|
1,869
|
|
|||||
Total stockholders’ equity
|
4,468,413
|
|
|
(215,238
|
)
|
|
1,298,856
|
|
|
(3,471,717
|
)
|
|
2,080,314
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
6,956,939
|
|
|
$
|
4,886,166
|
|
|
$
|
4,014,766
|
|
|
$
|
(11,537,559
|
)
|
|
$
|
4,320,312
|
|
Condensed Consolidated Balance Sheets
|
|||||||||||||||||||
As of December 31, 2016
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate assets, at cost:
|
|
|
|
|
|
|
|
|
|
||||||||||
Land
|
$
|
46,133
|
|
|
$
|
—
|
|
|
$
|
571,005
|
|
|
$
|
—
|
|
|
$
|
617,138
|
|
Buildings and improvements, less accumulated depreciation
|
228,194
|
|
|
—
|
|
|
2,526,212
|
|
|
(300
|
)
|
|
2,754,106
|
|
|||||
Intangible lease assets, less accumulated amortization
|
725
|
|
|
—
|
|
|
98,970
|
|
|
—
|
|
|
99,695
|
|
|||||
Construction in progress
|
145
|
|
|
—
|
|
|
34,669
|
|
|
—
|
|
|
34,814
|
|
|||||
Real estate assets held for sale, net
|
—
|
|
|
—
|
|
|
225,939
|
|
|
—
|
|
|
225,939
|
|
|||||
Total real estate assets
|
275,197
|
|
|
—
|
|
|
3,456,795
|
|
|
(300
|
)
|
|
3,731,692
|
|
|||||
Investments in and amounts due from unconsolidated joint ventures
|
7,360
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,360
|
|
|||||
Cash and cash equivalents
|
3,674
|
|
|
150
|
|
|
3,168
|
|
|
—
|
|
|
6,992
|
|
|||||
Tenant and straight-line rent receivables, net
|
20,159
|
|
|
—
|
|
|
170,124
|
|
|
—
|
|
|
190,283
|
|
|||||
Advances to affiliates
|
6,464,135
|
|
|
1,315,616
|
|
|
—
|
|
|
(7,779,751
|
)
|
|
—
|
|
|||||
Investment in subsidiary
|
—
|
|
|
3,630,564
|
|
|
181
|
|
|
(3,630,745
|
)
|
|
—
|
|
|||||
Notes receivable
|
88,910
|
|
|
—
|
|
|
95,790
|
|
|
(184,700
|
)
|
|
—
|
|
|||||
Prepaid expenses, restricted cash, escrows, and other assets
|
6,189
|
|
|
—
|
|
|
20,121
|
|
|
(1,897
|
)
|
|
24,413
|
|
|||||
Goodwill
|
98,918
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
98,918
|
|
|||||
Deferred lease costs, net
|
16,550
|
|
|
—
|
|
|
282,145
|
|
|
—
|
|
|
298,695
|
|
|||||
Other assets held for sale, net
|
—
|
|
|
—
|
|
|
9,815
|
|
|
—
|
|
|
9,815
|
|
|||||
Total assets
|
$
|
6,981,092
|
|
|
$
|
4,946,330
|
|
|
$
|
4,038,139
|
|
|
$
|
(11,597,393
|
)
|
|
$
|
4,368,168
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt, net
|
$
|
1,701,933
|
|
|
$
|
—
|
|
|
$
|
503,242
|
|
|
$
|
(184,700
|
)
|
|
$
|
2,020,475
|
|
Accounts payable, accrued expenses, and accrued capital expenditures
|
17,365
|
|
|
31,230
|
|
|
118,712
|
|
|
(1,897
|
)
|
|
165,410
|
|
|||||
Advances from affiliates
|
708,340
|
|
|
5,071,521
|
|
|
2,098,146
|
|
|
(7,878,007
|
)
|
|
—
|
|
|||||
Deferred income
|
5,206
|
|
|
—
|
|
|
23,200
|
|
|
—
|
|
|
28,406
|
|
|||||
Intangible lease liabilities, net
|
—
|
|
|
—
|
|
|
48,005
|
|
|
—
|
|
|
48,005
|
|
|||||
Interest rate swaps
|
8,169
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,169
|
|
|||||
Total liabilities
|
2,441,013
|
|
|
5,102,751
|
|
|
2,791,305
|
|
|
(8,064,604
|
)
|
|
2,270,465
|
|
|||||
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
—
|
|
|
1,452
|
|
|
—
|
|
|
—
|
|
|
1,452
|
|
|||||
Additional paid-in capital
|
3,626,564
|
|
|
3,676,000
|
|
|
1,309
|
|
|
(3,630,745
|
)
|
|
3,673,128
|
|
|||||
Retained/(cumulative distributions in excess of) earnings
|
911,411
|
|
|
(3,833,873
|
)
|
|
1,243,643
|
|
|
97,956
|
|
|
(1,580,863
|
)
|
|||||
Other comprehensive income
|
2,104
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,104
|
|
|||||
Piedmont stockholders’ equity
|
4,540,079
|
|
|
(156,421
|
)
|
|
1,244,952
|
|
|
(3,532,789
|
)
|
|
2,095,821
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
1,882
|
|
|
—
|
|
|
1,882
|
|
|||||
Total stockholders’ equity
|
4,540,079
|
|
|
(156,421
|
)
|
|
1,246,834
|
|
|
(3,532,789
|
)
|
|
2,097,703
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
6,981,092
|
|
|
$
|
4,946,330
|
|
|
$
|
4,038,139
|
|
|
$
|
(11,597,393
|
)
|
|
$
|
4,368,168
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the three months ended June 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
11,092
|
|
|
$
|
—
|
|
|
$
|
113,641
|
|
|
$
|
(485
|
)
|
|
$
|
124,248
|
|
Tenant reimbursements
|
2,964
|
|
|
—
|
|
|
21,207
|
|
|
(127
|
)
|
|
24,044
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
4,577
|
|
|
(4,190
|
)
|
|
387
|
|
|||||
|
14,056
|
|
|
—
|
|
|
139,425
|
|
|
(4,802
|
)
|
|
148,679
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
5,853
|
|
|
—
|
|
|
54,728
|
|
|
(4,802
|
)
|
|
55,779
|
|
|||||
Depreciation
|
3,281
|
|
|
—
|
|
|
26,778
|
|
|
—
|
|
|
30,059
|
|
|||||
Amortization
|
803
|
|
|
—
|
|
|
18,511
|
|
|
—
|
|
|
19,314
|
|
|||||
General and administrative
|
1,528
|
|
|
81
|
|
|
6,427
|
|
|
—
|
|
|
8,036
|
|
|||||
|
11,465
|
|
|
81
|
|
|
106,444
|
|
|
(4,802
|
)
|
|
113,188
|
|
|||||
Real estate operating income/(loss)
|
2,591
|
|
|
(81
|
)
|
|
32,981
|
|
|
—
|
|
|
35,491
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(14,810
|
)
|
|
—
|
|
|
(7,262
|
)
|
|
3,651
|
|
|
(18,421
|
)
|
|||||
Other income/(expense)
|
2,240
|
|
|
—
|
|
|
1,449
|
|
|
(3,651
|
)
|
|
38
|
|
|||||
Equity in income of unconsolidated joint ventures
|
107
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
107
|
|
|||||
|
(12,463
|
)
|
|
—
|
|
|
(5,813
|
)
|
|
—
|
|
|
(18,276
|
)
|
|||||
Income/(loss) from continuing operations
|
(9,872
|
)
|
|
(81
|
)
|
|
27,168
|
|
|
—
|
|
|
17,215
|
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Income from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gain/(loss) on sale of real estate assets, net
|
6,495
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
6,492
|
|
|||||
Net income/(loss)
|
(3,377
|
)
|
|
(81
|
)
|
|
27,165
|
|
|
—
|
|
|
23,707
|
|
|||||
Less: Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
(3,377
|
)
|
|
$
|
(81
|
)
|
|
$
|
27,168
|
|
|
$
|
—
|
|
|
$
|
23,710
|
|
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
|
8,319
|
|
|
—
|
|
|
48,568
|
|
|
(4,595
|
)
|
|
52,292
|
|
|||||
Depreciation
|
4,476
|
|
|
—
|
|
|
27,080
|
|
|
—
|
|
|
31,556
|
|
|||||
Amortization
|
941
|
|
|
—
|
|
|
16,461
|
|
|
—
|
|
|
17,402
|
|
|||||
Impairment loss on real estate assets
|
8,258
|
|
|
—
|
|
|
2,692
|
|
|
—
|
|
|
10,950
|
|
|||||
General and administrative
|
8,107
|
|
|
92
|
|
|
10,213
|
|
|
(10,096
|
)
|
|
8,316
|
|
|||||
|
30,101
|
|
|
92
|
|
|
105,014
|
|
|
(14,691
|
)
|
|
120,516
|
|
|||||
Real estate operating income/(loss)
|
(11,687
|
)
|
|
(92
|
)
|
|
16,433
|
|
|
10,137
|
|
|
14,791
|
|
|||||
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
|
110
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
110
|
|
|||||
|
(10,325
|
)
|
|
282
|
|
|
(6,301
|
)
|
|
—
|
|
|
(16,344
|
)
|
|||||
Income/(loss) from continuing operations
|
(22,012
|
)
|
|
190
|
|
|
10,132
|
|
|
10,137
|
|
|
(1,553
|
)
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating loss
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Gain on sale of real estate assets, net
|
29,966
|
|
|
—
|
|
|
43,869
|
|
|
—
|
|
|
73,835
|
|
|||||
Net income
|
7,954
|
|
|
190
|
|
|
54,000
|
|
|
10,137
|
|
|
72,281
|
|
|||||
Less: Net income applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Net income applicable to Piedmont
|
$
|
7,954
|
|
|
$
|
190
|
|
|
$
|
53,997
|
|
|
$
|
10,137
|
|
|
$
|
72,278
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the six months ended June 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
22,517
|
|
|
$
|
—
|
|
|
$
|
226,125
|
|
|
$
|
(944
|
)
|
|
$
|
247,698
|
|
Tenant reimbursements
|
5,964
|
|
|
—
|
|
|
42,810
|
|
|
(230
|
)
|
|
48,544
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
9,201
|
|
|
(8,301
|
)
|
|
900
|
|
|||||
|
28,481
|
|
|
—
|
|
|
278,136
|
|
|
(9,475
|
)
|
|
297,142
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
11,655
|
|
|
—
|
|
|
108,983
|
|
|
(9,475
|
)
|
|
111,163
|
|
|||||
Depreciation
|
6,744
|
|
|
—
|
|
|
54,083
|
|
|
—
|
|
|
60,827
|
|
|||||
Amortization
|
1,659
|
|
|
—
|
|
|
38,070
|
|
|
—
|
|
|
39,729
|
|
|||||
General and administrative
|
3,231
|
|
|
183
|
|
|
13,218
|
|
|
—
|
|
|
16,632
|
|
|||||
|
23,289
|
|
|
183
|
|
|
214,354
|
|
|
(9,475
|
)
|
|
228,351
|
|
|||||
Real estate operating income/(loss)
|
5,192
|
|
|
(183
|
)
|
|
63,782
|
|
|
—
|
|
|
68,791
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(29,254
|
)
|
|
—
|
|
|
(14,514
|
)
|
|
7,290
|
|
|
(36,478
|
)
|
|||||
Other income/(expense)
|
4,469
|
|
|
—
|
|
|
2,759
|
|
|
(7,290
|
)
|
|
(62
|
)
|
|||||
Equity in income of unconsolidated joint ventures
|
118
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
118
|
|
|||||
|
(24,667
|
)
|
|
—
|
|
|
(11,755
|
)
|
|
—
|
|
|
(36,422
|
)
|
|||||
Income/(loss) from continuing operations
|
(19,475
|
)
|
|
(183
|
)
|
|
52,027
|
|
|
—
|
|
|
32,369
|
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Income from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gain on sale of real estate assets, net
|
6,434
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
6,439
|
|
|||||
Net income/(loss)
|
(13,041
|
)
|
|
(183
|
)
|
|
52,032
|
|
|
—
|
|
|
38,808
|
|
|||||
Less: Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
(13,041
|
)
|
|
$
|
(183
|
)
|
|
$
|
52,038
|
|
|
$
|
—
|
|
|
$
|
38,814
|
|
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
|
16,762
|
|
|
—
|
|
|
99,083
|
|
|
(9,274
|
)
|
|
106,571
|
|
|||||
Depreciation
|
9,376
|
|
|
—
|
|
|
53,962
|
|
|
—
|
|
|
63,338
|
|
|||||
Amortization
|
1,991
|
|
|
—
|
|
|
33,217
|
|
|
—
|
|
|
35,208
|
|
|||||
Impairment loss of real estate assets
|
8,259
|
|
|
—
|
|
|
2,691
|
|
|
—
|
|
|
10,950
|
|
|||||
General and administrative
|
15,615
|
|
|
168
|
|
|
19,864
|
|
|
(19,558
|
)
|
|
16,089
|
|
|||||
|
52,003
|
|
|
168
|
|
|
208,817
|
|
|
(28,832
|
)
|
|
232,156
|
|
|||||
Real estate operating income/(loss)
|
(14,850
|
)
|
|
(168
|
)
|
|
36,554
|
|
|
19,627
|
|
|
41,163
|
|
|||||
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
|
225
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
225
|
|
|||||
|
(19,735
|
)
|
|
282
|
|
|
(12,867
|
)
|
|
—
|
|
|
(32,320
|
)
|
|||||
Net income/(loss)
|
(34,585
|
)
|
|
114
|
|
|
23,687
|
|
|
19,627
|
|
|
8,843
|
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating loss
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Gain on sale of real estate assets, net
|
29,962
|
|
|
—
|
|
|
43,853
|
|
|
—
|
|
|
73,815
|
|
|||||
Net income/(loss)
|
(4,623
|
)
|
|
114
|
|
|
67,539
|
|
|
19,627
|
|
|
82,657
|
|
|||||
Less: Net income applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
(4,623
|
)
|
|
$
|
114
|
|
|
$
|
67,532
|
|
|
$
|
19,627
|
|
|
$
|
82,650
|
|
Condensed Consolidated Statements of Cash Flows
|
|||||||||||||||||||
For the six months ended June 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Cash Provided by/(Used in) Operating Activities
|
$
|
(10,028
|
)
|
|
$
|
3,091
|
|
|
$
|
118,599
|
|
|
$
|
—
|
|
|
$
|
111,662
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets, consolidated joint venture, and real estate related intangibles, net of accruals
|
(757
|
)
|
|
—
|
|
|
(57,563
|
)
|
|
—
|
|
|
(58,320
|
)
|
|||||
Net sales proceeds from wholly-owned properties
|
23,032
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
23,023
|
|
|||||
Investments in unconsolidated joint ventures
|
(284
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(284
|
)
|
|||||
Deferred lease costs paid
|
(736
|
)
|
|
—
|
|
|
(8,827
|
)
|
|
—
|
|
|
(9,563
|
)
|
|||||
Net cash provided by/(used in) investing activities
|
21,255
|
|
|
—
|
|
|
(66,399
|
)
|
|
—
|
|
|
(45,144
|
)
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance costs paid
|
(102
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(102
|
)
|
|||||
Proceeds from debt
|
147,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
147,000
|
|
|||||
Repayments of debt
|
(115,000
|
)
|
|
—
|
|
|
(694
|
)
|
|
—
|
|
|
(115,694
|
)
|
|||||
Costs of issuance of common stock
|
—
|
|
|
(74
|
)
|
|
—
|
|
|
—
|
|
|
(74
|
)
|
|||||
Shares withheld to pay tax obligations related to employee stock compensation
|
—
|
|
|
(3,380
|
)
|
|
—
|
|
|
—
|
|
|
(3,380
|
)
|
|||||
(Distributions to)/repayments from affiliates
|
(41,618
|
)
|
|
92,020
|
|
|
(50,402
|
)
|
|
—
|
|
|
—
|
|
|||||
Dividends paid and discount on dividend reinvestments
|
—
|
|
|
(91,657
|
)
|
|
(7
|
)
|
|
—
|
|
|
(91,664
|
)
|
|||||
Net cash used in financing activities
|
(9,720
|
)
|
|
(3,091
|
)
|
|
(51,103
|
)
|
|
—
|
|
|
(63,914
|
)
|
|||||
Net increase in cash and cash equivalents
|
1,507
|
|
|
—
|
|
|
1,097
|
|
|
—
|
|
|
2,604
|
|
|||||
Cash and cash equivalents, beginning of period
|
3,674
|
|
|
150
|
|
|
3,168
|
|
|
—
|
|
|
6,992
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
5,181
|
|
|
$
|
150
|
|
|
$
|
4,265
|
|
|
$
|
—
|
|
|
$
|
9,596
|
|
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/(Used in) 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 used in financing activities
|
(65,575
|
)
|
|
(3,075
|
)
|
|
(139,400
|
)
|
|
(10,028
|
)
|
|
(218,078
|
)
|
|||||
Net increase 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
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Six Months Ended
|
||||||
|
June 30, 2017
|
|
June 30, 2016
|
||||
|
|
|
|
||||
|
|
|
|
||||
Capital expenditures for new development
|
$
|
4,516
|
|
|
$
|
7,782
|
|
Capital expenditures for redevelopment/renovations
|
634
|
|
|
5,030
|
|
||
Other capital expenditures, including tenant improvements
|
53,170
|
|
|
41,610
|
|
||
Total capital expenditures
(1)
|
$
|
58,320
|
|
|
$
|
54,422
|
|
(1)
|
Of the total amounts paid, approximately
$0.2 million
and
$3.0 million
relates to soft costs such as capitalized interest, payroll, and other general and administrative expenses for the
six months ended
June 30, 2017
and
2016
, respectively.
|
|
June 30,
2017 |
|
% of Revenues
|
|
June 30,
2016 |
|
% of Revenues
|
|
Variance
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
124.3
|
|
|
|
|
$
|
111.8
|
|
|
|
|
$
|
12.5
|
|
||
Tenant reimbursements
|
24.0
|
|
|
|
|
23.1
|
|
|
|
|
0.9
|
|
|||||
Property management fee revenue
|
0.4
|
|
|
|
|
0.4
|
|
|
|
|
—
|
|
|||||
Total revenues
|
148.7
|
|
|
100
|
%
|
|
135.3
|
|
|
100
|
%
|
|
13.4
|
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
55.8
|
|
|
38
|
%
|
|
52.3
|
|
|
39
|
%
|
|
3.5
|
|
|||
Depreciation
|
30.1
|
|
|
20
|
%
|
|
31.6
|
|
|
23
|
%
|
|
(1.5
|
)
|
|||
Amortization
|
19.3
|
|
|
13
|
%
|
|
17.4
|
|
|
13
|
%
|
|
1.9
|
|
|||
Impairment loss on real estate assets
|
—
|
|
|
—
|
%
|
|
10.9
|
|
|
8
|
%
|
|
(10.9
|
)
|
|||
General and administrative
|
8.0
|
|
|
5
|
%
|
|
8.3
|
|
|
6
|
%
|
|
(0.3
|
)
|
|||
Real estate operating income
|
35.5
|
|
|
24
|
%
|
|
14.8
|
|
|
11
|
%
|
|
20.7
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(18.4
|
)
|
|
12
|
%
|
|
(16.4
|
)
|
|
12
|
%
|
|
(2.0
|
)
|
|||
Other income/(expense)
|
—
|
|
|
—
|
%
|
|
(0.1
|
)
|
|
—
|
%
|
|
0.1
|
|
|||
Equity in income of unconsolidated joint ventures
|
0.1
|
|
|
—
|
%
|
|
0.1
|
|
|
—
|
%
|
|
—
|
|
|||
Income/(loss) from continuing operations
|
$
|
17.2
|
|
|
12
|
%
|
|
$
|
(1.6
|
)
|
|
1
|
%
|
|
$
|
18.8
|
|
Gain on sale of real estate assets, net
|
$
|
6.5
|
|
|
|
|
$
|
73.8
|
|
|
|
|
$
|
(67.3
|
)
|
|
June 30,
2017 |
|
% of Revenues
|
|
June 30,
2016 |
|
% of Revenues
|
|
Variance
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
247.7
|
|
|
|
|
$
|
226.5
|
|
|
|
|
$
|
21.2
|
|
||
Tenant reimbursements
|
48.5
|
|
|
|
|
45.8
|
|
|
|
|
2.7
|
|
|||||
Property management fee revenue
|
0.9
|
|
|
|
|
1.0
|
|
|
|
|
(0.1
|
)
|
|||||
Total revenues
|
297.1
|
|
|
100
|
%
|
|
273.3
|
|
|
100
|
%
|
|
23.8
|
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
111.2
|
|
|
38
|
%
|
|
106.6
|
|
|
39
|
%
|
|
4.6
|
|
|||
Depreciation
|
60.8
|
|
|
20
|
%
|
|
63.3
|
|
|
23
|
%
|
|
(2.5
|
)
|
|||
Amortization
|
39.7
|
|
|
13
|
%
|
|
35.2
|
|
|
13
|
%
|
|
4.5
|
|
|||
Impairment loss on real estate assets
|
—
|
|
|
—
|
%
|
|
10.9
|
|
|
4
|
%
|
|
(10.9
|
)
|
|||
General and administrative
|
16.6
|
|
|
6
|
%
|
|
16.1
|
|
|
6
|
%
|
|
0.5
|
|
|||
Real estate operating income
|
68.8
|
|
|
23
|
%
|
|
41.2
|
|
|
15
|
%
|
|
27.6
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(36.5
|
)
|
|
12
|
%
|
|
(32.8
|
)
|
|
12
|
%
|
|
(3.7
|
)
|
|||
Other income/(expense)
|
—
|
|
|
—
|
%
|
|
0.2
|
|
|
—
|
%
|
|
(0.2
|
)
|
|||
Equity in income of unconsolidated joint ventures
|
0.1
|
|
|
—
|
%
|
|
0.2
|
|
|
—
|
%
|
|
(0.1
|
)
|
|||
Income from continuing operations
|
$
|
32.4
|
|
|
11
|
%
|
|
$
|
8.8
|
|
|
3
|
%
|
|
$
|
23.6
|
|
Gain on sale of real estate assets, net
|
$
|
6.4
|
|
|
|
|
$
|
73.8
|
|
|
|
|
$
|
(67.4
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||||
|
June 30, 2017
|
|
Per
Share
(1)
|
|
June 30, 2016
|
|
Per
Share
(1)
|
|
June 30, 2017
|
|
Per
Share
(1)
|
|
June 30, 2016
|
|
Per
Share
(1)
|
||||||||||||||||
GAAP net income applicable to common stock
|
$
|
23,710
|
|
|
$
|
0.16
|
|
|
$
|
72,278
|
|
|
$
|
0.50
|
|
|
$
|
38,814
|
|
|
$
|
0.27
|
|
|
$
|
82,650
|
|
|
$
|
0.57
|
|
Depreciation of real estate assets
(2)
|
29,932
|
|
|
0.21
|
|
|
31,442
|
|
|
0.21
|
|
|
60,561
|
|
|
0.41
|
|
|
63,081
|
|
|
0.43
|
|
||||||||
Amortization of lease-related costs
(2)
|
19,315
|
|
|
0.13
|
|
|
17,418
|
|
|
0.12
|
|
|
39,721
|
|
|
0.27
|
|
|
35,240
|
|
|
0.24
|
|
||||||||
Impairment loss on real estate assets
|
—
|
|
|
—
|
|
|
10,950
|
|
|
0.08
|
|
|
—
|
|
|
—
|
|
|
10,950
|
|
|
0.08
|
|
||||||||
Gain on sale - wholly-owned properties, net
|
(6,492
|
)
|
|
(0.04
|
)
|
|
(73,835
|
)
|
|
(0.51
|
)
|
|
(6,439
|
)
|
|
(0.04
|
)
|
|
(73,815
|
)
|
|
(0.51
|
)
|
||||||||
NAREIT Funds From Operations applicable to common stock
|
$
|
66,465
|
|
|
$
|
0.46
|
|
|
$
|
58,253
|
|
|
$
|
0.40
|
|
|
$
|
132,657
|
|
|
$
|
0.91
|
|
|
$
|
118,106
|
|
|
$
|
0.81
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition costs
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
17
|
|
|
—
|
|
||||||||
Core Funds From Operations applicable to common stock
|
$
|
66,465
|
|
|
$
|
0.46
|
|
|
$
|
58,258
|
|
|
$
|
0.40
|
|
|
$
|
132,663
|
|
|
$
|
0.91
|
|
|
$
|
118,123
|
|
|
$
|
0.81
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on debt
|
628
|
|
|
|
|
643
|
|
|
|
|
1,258
|
|
|
|
|
1,290
|
|
|
|
||||||||||||
Depreciation of non real estate assets
|
184
|
|
|
|
|
175
|
|
|
|
|
379
|
|
|
|
|
379
|
|
|
|
||||||||||||
Straight-line effects of lease revenue
(2)
|
(6,634
|
)
|
|
|
|
(3,127
|
)
|
|
|
|
(12,337
|
)
|
|
|
|
(10,975
|
)
|
|
|
||||||||||||
Stock-based and other non-cash compensation
|
911
|
|
|
|
|
1,477
|
|
|
|
|
2,952
|
|
|
|
|
3,405
|
|
|
|
||||||||||||
Net effect of amortization of above and below-market in-place lease intangibles
|
(1,611
|
)
|
|
|
|
(1,290
|
)
|
|
|
|
(3,170
|
)
|
|
|
|
(2,528
|
)
|
|
|
||||||||||||
Acquisition costs
|
—
|
|
|
|
|
(5
|
)
|
|
|
|
(6
|
)
|
|
|
|
(17
|
)
|
|
|
||||||||||||
Non-incremental capital expenditures
(3)
|
(9,073
|
)
|
|
|
|
(6,455
|
)
|
|
|
|
(16,745
|
)
|
|
|
|
(16,451
|
)
|
|
|
||||||||||||
Adjusted Funds From Operations applicable to common stock
|
$
|
50,870
|
|
|
|
|
$
|
49,676
|
|
|
|
|
$
|
104,994
|
|
|
|
|
$
|
93,226
|
|
|
|
||||||||
Weighted-average shares outstanding – diluted
|
145,813
|
|
|
|
|
145,699
|
|
|
|
|
145,780
|
|
|
|
|
145,765
|
|
|
|
(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 rental rates 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.
|
|
Cash Basis
|
|
Accrual Basis
|
||||||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||
|
June 30,
2017 |
|
June 30,
2016 |
|
June 30,
2017 |
|
June 30,
2016 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income applicable to Piedmont (GAAP basis)
|
$
|
23,710
|
|
|
$
|
72,278
|
|
|
$
|
23,710
|
|
|
$
|
72,278
|
|
|
|
|
|
|
|
|
|
||||||||
Net income/(loss) applicable to noncontrolling interest
|
(3
|
)
|
|
3
|
|
|
(3
|
)
|
|
3
|
|
||||
Interest expense
|
18,421
|
|
|
16,413
|
|
|
18,421
|
|
|
16,413
|
|
||||
Depreciation
(1)
|
30,116
|
|
|
31,617
|
|
|
30,116
|
|
|
31,617
|
|
||||
Amortization
(1)
|
19,315
|
|
|
17,418
|
|
|
19,315
|
|
|
17,418
|
|
||||
Acquisition costs
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Impairment loss on real estate assets
(1)
|
—
|
|
|
10,950
|
|
|
—
|
|
|
10,950
|
|
||||
Loss from casualty events
|
(26
|
)
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
||||
Gain on sale of real estate assets, net
(1)
|
(6,492
|
)
|
|
(73,835
|
)
|
|
(6,492
|
)
|
|
(73,835
|
)
|
||||
General & administrative expenses
(1)
|
8,059
|
|
|
8,351
|
|
|
8,059
|
|
|
8,351
|
|
||||
Management fee revenue
|
(168
|
)
|
|
(224
|
)
|
|
(168
|
)
|
|
(224
|
)
|
||||
Other (income)/expense
(1)
|
(12
|
)
|
|
543
|
|
|
(12
|
)
|
|
543
|
|
||||
Straight-line rent effects of lease revenue
(1)
|
(6,634
|
)
|
|
(3,127
|
)
|
|
|
|
|
||||||
Amortization of lease-related intangibles
(1)
|
(1,611
|
)
|
|
(1,290
|
)
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Property NOI
|
$
|
84,675
|
|
|
$
|
79,102
|
|
|
$
|
92,920
|
|
|
$
|
83,519
|
|
|
|
|
|
|
|
|
|
||||||||
Net operating loss/(income) from:
|
|
|
|
|
|
|
|
||||||||
Acquisitions
(2)
|
(3,317
|
)
|
|
—
|
|
|
(7,061
|
)
|
|
—
|
|
||||
Dispositions
(3)
|
(128
|
)
|
|
(4,412
|
)
|
|
(81
|
)
|
|
(4,528
|
)
|
||||
Other investments
(4)
|
384
|
|
|
52
|
|
|
(657
|
)
|
|
(118
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Same Store NOI
|
$
|
81,614
|
|
|
$
|
74,742
|
|
|
$
|
85,121
|
|
|
$
|
78,873
|
|
|
|
|
|
|
|
|
|
||||||||
Change period over period in Same Store NOI
|
9.2
|
%
|
|
N/A
|
|
|
7.9
|
%
|
|
N/A
|
|
(1)
|
Includes amounts applicable to consolidated properties and our proportionate share of amounts applicable to unconsolidated joint ventures.
|
(2)
|
Acquisitions consist of CNL Center I and CNL Center II in Orlando, Florida, purchased on August 1, 2016; One Wayside Road in Burlington, Massachusetts, purchased on August 10, 2016; Galleria 200 in Atlanta, Georgia, purchased on October 7, 2016; and 750 West John Carpenter Freeway in Irving, Texas, purchased on November 30, 2016.
|
(3)
|
Dispositions consist of 1055 East Colorado Boulevard in Pasadena, California, sold on April 21, 2016; Fairway Center II in Brea, California, sold on April 28, 2016; 1901 Main Street in Irvine, California, sold on May 2, 2016; 9221 Corporate Boulevard in Rockville, Maryland, sold on July 27, 2016; 150 West Jefferson in Detroit, Michigan, sold on July 29, 2016; 9200 and 9211 Corporate Boulevard in Rockville, Maryland, sold on September 28, 2016; 11695 Johns Creek Parkway in Johns Creek, Georgia, sold on December 22, 2016; Braker Pointe III in Austin, Texas, sold on December 29, 2016; and Sarasota Commerce Center II in Sarasota, Florida, sold on June 16, 2017.
|
(4)
|
Other investments consist of our investments in unconsolidated joint ventures, active redevelopment and development projects, land, and recently completed redevelopment and development projects for which some portion of operating expenses were capitalized during the current and/or prior year reporting periods. The operating results from 3100 Clarendon Boulevard in Arlington, Virginia, Enclave Place in Houston, Texas, and 500 TownPark in Lake Mary, Florida, are included in this line item.
|
|
Cash Basis
|
|
Accrual Basis
|
||||||||||||
|
Six Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2017 |
|
June 30,
2016 |
|
June 30,
2017 |
|
June 30,
2016 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income applicable to Piedmont (GAAP basis)
|
$
|
38,814
|
|
|
$
|
82,650
|
|
|
$
|
38,814
|
|
|
$
|
82,650
|
|
|
|
|
|
|
|
|
|
||||||||
Net income/(loss) applicable to noncontrolling interest
|
(6
|
)
|
|
7
|
|
|
(6
|
)
|
|
7
|
|
||||
Interest expense
|
36,478
|
|
|
32,798
|
|
|
36,478
|
|
|
32,798
|
|
||||
Depreciation
(1)
|
60,940
|
|
|
63,460
|
|
|
60,940
|
|
|
63,460
|
|
||||
Amortization
(1)
|
39,721
|
|
|
35,240
|
|
|
39,721
|
|
|
35,240
|
|
||||
Acquisition costs
|
6
|
|
|
17
|
|
|
6
|
|
|
17
|
|
||||
Impairment loss on real estate assets
(1)
|
—
|
|
|
10,950
|
|
|
—
|
|
|
10,950
|
|
||||
Loss from casualty events
|
32
|
|
|
—
|
|
|
32
|
|
|
—
|
|
||||
Gain on sale of real estate assets, net
(1)
|
(6,439
|
)
|
|
(73,815
|
)
|
|
(6,439
|
)
|
|
(73,815
|
)
|
||||
General & administrative expenses
(1)
|
16,660
|
|
|
16,128
|
|
|
16,660
|
|
|
16,128
|
|
||||
Management fee revenue
|
(484
|
)
|
|
(515
|
)
|
|
(484
|
)
|
|
(515
|
)
|
||||
Other (income)/expense
(1)
|
25
|
|
|
236
|
|
|
25
|
|
|
236
|
|
||||
Straight-line rent effects of lease revenue
(1)
|
(12,337
|
)
|
|
(10,975
|
)
|
|
|
|
|
||||||
Amortization of lease-related intangibles
(1)
|
(3,170
|
)
|
|
(2,528
|
)
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Property NOI
|
$
|
170,240
|
|
|
$
|
153,653
|
|
|
$
|
185,747
|
|
|
$
|
167,156
|
|
|
|
|
|
|
|
|
|
||||||||
Net operating loss/(income) from:
|
|
|
|
|
|
|
|
||||||||
Acquisitions
(2)
|
(8,084
|
)
|
|
—
|
|
|
(14,115
|
)
|
|
—
|
|
||||
Dispositions
(3)
|
(764
|
)
|
|
(10,052
|
)
|
|
(662
|
)
|
|
(10,660
|
)
|
||||
Other investments
(4)
|
664
|
|
|
(19
|
)
|
|
(1,043
|
)
|
|
(212
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Same Store NOI
|
$
|
162,056
|
|
|
$
|
143,582
|
|
|
$
|
169,927
|
|
|
$
|
156,284
|
|
|
|
|
|
|
|
|
|
||||||||
Change period over period in Same Store NOI
|
12.9
|
%
|
|
N/A
|
|
|
8.7
|
%
|
|
N/A
|
|
(1)
|
Includes amounts applicable to consolidated properties and our proportionate share of amounts applicable to unconsolidated joint ventures.
|
(2)
|
Acquisitions consist of CNL Center I and CNL Center II in Orlando, Florida, purchased on August 1, 2016; One Wayside Road in Burlington, Massachusetts, purchased on August 10, 2016; Galleria 200 in Atlanta, Georgia, purchased on October 7, 2016; and 750 West John Carpenter Freeway in Irving, Texas, purchased on November 30, 2016.
|
(3)
|
Dispositions consist of 1055 East Colorado Boulevard in Pasadena, California, sold on April 21, 2016; Fairway Center II in Brea, California, sold on April 28, 2016; 1901 Main Street in Irvine, California, sold on May 2, 2016; 9221 Corporate Boulevard in Rockville, Maryland, sold on July 27, 2016; 150 West Jefferson in Detroit, Michigan, sold on July 29, 2016; 9200 and 9211 Corporate Boulevard in Rockville, Maryland, sold on September 28, 2016; 11695 Johns Creek Parkway in Johns Creek, Georgia, sold on December 22, 2016; Braker Pointe III in Austin, Texas, sold on December 29, 2016; and Sarasota Commerce Center II in Sarasota, Florida, sold on June 16, 2017.
|
(4)
|
Other investments consist of our investments in unconsolidated joint ventures, active redevelopment and development projects, land, and recently completed redevelopment and development projects for which some portion of operating expenses were capitalized during the current and/or prior year reporting periods. The operating results from 3100 Clarendon Boulevard in Arlington, Virginia, Enclave Place in Houston, Texas, and 500 TownPark in Lake Mary, Florida, are included in this line item.
|
Buildings
|
40 years
|
Building improvements
|
5-25 years
|
Land improvements
|
20-25 years
|
Tenant allowances
|
Lease term
|
Furniture, fixtures, and equipment
|
3-5 years
|
Intangible lease assets
|
Lease term
|
|
Payments Due by Period
|
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
|
||||||||||
Long-term debt
(1)
|
$
|
2,061,132
|
|
|
$
|
310,858
|
|
(2)
|
$
|
812,029
|
|
(3)(4)(5)(6)
|
$
|
28,245
|
|
|
$
|
910,000
|
|
|
Operating lease obligations
(7)
|
2,858
|
|
|
93
|
|
|
186
|
|
|
187
|
|
|
2,392
|
|
|
|||||
Total
|
$
|
2,063,990
|
|
|
$
|
310,951
|
|
|
$
|
812,215
|
|
|
$
|
28,432
|
|
|
$
|
912,392
|
|
|
(1)
|
Amounts include principal payments only and balances outstanding as of
June 30, 2017
, 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
$36.0 million
during the
six months ended
June 30, 2017
, 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)
|
Subsequent to June 30, 2017, Piedmont utilized its prepayment option and fully repaid the
$140
Million WDC Fixed-Rate Loans without penalty.
|
(3)
|
Subsequent to June 30, 2017, Piedmont repaid the entire balance of the
$500 Million
Unsecured 2015 Line of Credit.
|
(4)
|
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.
|
(5)
|
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
3.35%
through maturity. As such, we estimate incurring, exclusive of changes to our credit rating, approximately $10.1 million per annum in total interest (comprised of combination of variable contractual rate and settlements under interest rate swap agreements) through maturity in January 2020.
|
(6)
|
Includes the balance outstanding as of
June 30, 2017
of the $500 Million Unsecured 2015 Line of Credit. However, Piedmont may extend the term for up to one additional year (through two available six month extensions to a final extended maturity date of June 18, 2020) provided Piedmont is not then in default and upon payment of extension fees.
|
(7)
|
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, 2017
are 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
2017
.
|
(b)
|
Not applicable.
|
(c)
|
During the three months ended
June 30, 2017
, 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, 2017
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, 2017 to April 30, 2017
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
70,238
|
|
|
May 1, 2017 to May 31, 2017
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
250,000
|
|
|
June 1, 2017 to June 30, 2017
|
56
|
|
|
$
|
21.03
|
|
|
—
|
|
|
$
|
250,000
|
|
(2)
|
Total
|
56
|
|
|
$
|
21.03
|
|
|
—
|
|
|
|
|
(1)
|
Under our amended and restated DRP, as set forth in a Current Report on Form 8-K filed February 24, 2011, we have the option to either issue shares that we purchase in the open market or issue shares directly from Piedmont from authorized but unissued shares. Such election will take place at the settlement of each quarterly dividend in which there are participants in our DRP, and may change from quarter to quarter based on our judgment of the best use of proceeds for Piedmont.
|
(2)
|
Amounts available for purchase relate only to our stock repurchase plan, which was authorized on May 2, 2017. Our Board of Directors authorized the repurchase of up to $250 million of shares of our common stock pursuant to the stock repurchase plan between May 2, 2017 and May 2, 2019. The share repurchase plan is separate from shares purchased for DRP issuance.
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
|
|
PIEDMONT OFFICE REALTY TRUST, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
Dated:
|
August 2, 2017
|
By:
|
/s/ Robert E. Bowers
|
|
|
|
Robert E. Bowers
|
|
|
|
Chief Financial Officer and Executive Vice President
|
|
|
|
(Principal Financial Officer and Duly Authorized Officer)
|
Exhibit
Number
|
|
|
Description of Document
|
3.1
|
|
|
|
|
|
|
|
3.2
|
|
|
|
|
|
|
|
3.3
|
|
|
|
|
|
|
|
3.4
|
|
|
|
|
|
|
|
3.5
|
|
|
|
|
|
|
|
10.1*
|
|
|
|
|
|
|
|
10.2*
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
1.
|
I have reviewed this Form 10-Q for the quarter ended
June 30, 2017
of Piedmont Office Realty Trust, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
By:
|
/s/ Donald A. Miller, CFA
|
|
|
Donald A. Miller, CFA
|
|
|
Chief Executive Officer and President
(Principal Executive Officer)
|
1.
|
I have reviewed this Form 10-Q for the quarter ended
June 30, 2017
of Piedmont Office Realty Trust, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
By:
|
/s/ Robert E. Bowers
|
|
|
Robert E. Bowers
|
|
|
Chief Financial Officer and Executive Vice
President (Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
By:
|
/s/ Donald A. Miller, CFA
|
|
|
Donald A. Miller, CFA
|
|
|
Chief Executive Officer and President
|
|
|
August 2, 2017
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
By:
|
/s/ Robert E. Bowers
|
|
|
Robert E. Bowers
|
|
|
Chief Financial Officer
and Executive Vice President
|
|
|
August 2, 2017
|
|