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x
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Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2017
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o
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
to
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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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11695 Johns Creek Parkway Ste. 350, Johns Creek, Georgia
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30097
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of exchange on which registered
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COMMON STOCK
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NEW YORK STOCK EXCHANGE
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FORM 10-K
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PIEDMONT OFFICE REALTY TRUST, INC.
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TABLE OF CONTENTS
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PART I.
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Page No.
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Item 1.
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Item 1A.
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Item 1B.
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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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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV.
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Item 15.
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•
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Economic, regulatory, socio-economic and/or technology changes (including accounting standards) that impact the real estate market generally, or that could affect patterns of use of commercial office space;
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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 specifically the eight markets in which we primarily operate where we have high concentrations of our Annualized Lease Revenue (see definition in
Item 1. Business
of this Annual Report on Form 10-K);
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•
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Lease terminations, lease defaults, or changes in the financial condition of our tenants, 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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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”), or otherwise adversely affect our stockholders;
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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 this Annual Report on Form 10-K.
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•
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changes in the national, regional, and local economic climate, particularly in markets in which we have a concentration of properties;
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•
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local office market conditions such as employment rates and changes in the supply of, or demand for, space in properties similar to those that we own within a particular area;
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•
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changes in the patterns of office or parking garage use due to technological advances which may make telecommuting more prevalent or reduce the demand for office workers or parking spaces generally;
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•
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increased demand for "co-working" or sharing of office space with other companies;
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•
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increased supply of office space due to the conversion of other asset classes such as shopping malls and other retail establishments to office space;
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•
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the attractiveness of our properties to potential tenants;
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•
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changes in interest rates and availability of permanent mortgage funds that may render the sale of a property difficult or unattractive or otherwise reduce returns to stockholders;
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•
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the financial stability of our tenants, including bankruptcies, financial difficulties, or lease defaults by our tenants;
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•
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changes in operating costs and expenses, including costs for maintenance, insurance, and real estate taxes, and our ability to control rents in light of such changes;
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•
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the need to periodically fund the costs to repair, renovate, and re-let space;
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•
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earthquakes, tornadoes, hurricanes and other natural disasters, civil unrest, terrorist acts or acts of war, which may result in uninsured or under insured losses;
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•
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changes in, or increased costs of compliance with, governmental regulations, including those governing usage, zoning, the environment, and taxes; and
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•
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significant changes in accounting standards and tax laws.
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•
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we may acquire properties or other real estate-related investments that are not initially accretive to our results upon acquisition or accept lower cash flows in anticipation of longer term appreciation, and we may not successfully manage and lease those properties to meet our expectations;
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•
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we may not achieve expected cost savings and operating efficiencies;
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•
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we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations;
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•
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management attention may be diverted to the integration of acquired properties, which in some cases may turn out to be less compatible with our operating strategy than originally anticipated;
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•
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we may not be able to support the acquired property through one of our existing property management offices and may not successfully open new satellite offices to serve additional markets;
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•
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the acquired properties may not perform as well as we anticipate due to various factors, including changes in macro-economic conditions and the demand for office space; and
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•
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we may acquire properties without any recourse, or with only limited recourse, for liabilities, whether known or unknown, such as clean-up of environmental contamination, unknown/undisclosed latent structural issues or maintenance problems, claims by tenants, vendors or other persons against the former owners of the properties, and claims for indemnification by general partners, directors, officers, and others indemnified by the former owners of the properties.
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•
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development projects in which we have invested may be abandoned and the related investment will be impaired;
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•
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we may not be able to obtain, or may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations;
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•
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we may not be able to obtain land on which to develop;
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•
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we may not be able to obtain financing for development projects, or obtain financing on favorable terms;
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•
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construction costs of a project may exceed the original estimates or construction may not be concluded on schedule, making the project less profitable than originally estimated or not profitable at all (including the possibility of errors or omissions in the project's design, contract default, contractor or subcontractor default, performance bond surety default, the effects of local weather conditions, the possibility of local or national strikes and the possibility of shortages in materials, building supplies or energy and fuel for equipment);
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•
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tenants which pre-lease space or contract with us for a build-to-suit project may default prior to occupying the project;
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•
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upon completion of construction, we may not be able to obtain, or obtain on advantageous terms, permanent financing for activities that we financed through construction loans; and
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•
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we may not achieve sufficient occupancy levels and/or obtain sufficient rents to ensure the profitability of a completed project.
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•
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in these investments, we may not have exclusive control over the development, financing, leasing, management, and other aspects of the project, which may prevent us from taking actions that are opposed by our joint venture partners;
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•
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joint venture agreements often restrict the transfer of a co-venturer’s interest or may otherwise restrict our ability to sell the interest when we desire or on advantageous terms;
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•
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we may not be in a position to exercise sole decision-making authority regarding the property or joint venture, which could create the potential risk of creating impasses on decisions, such as acquisitions or sales;
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•
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such co-venturer may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals;
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•
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such co-venturer may be in a position to take action contrary to our instructions, requests, policies or objectives, including our current policy with respect to maintaining our qualification as a REIT;
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•
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the possibility that our co-venturer in an investment might become bankrupt, which would mean that we and any other remaining co-venturers would generally remain liable for the joint venture’s liabilities;
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•
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our relationships with our co-venturers are contractual in nature and may be terminated or dissolved under the terms of the applicable joint venture agreements and, in such event, we may not continue to own or operate the interests or assets underlying such relationship or may need to purchase such interests or assets at a premium to the market price to continue ownership;
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•
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disputes between us and our co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and efforts on our business and could result in subjecting the properties owned by the applicable joint venture to additional risk; or
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•
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we may, in certain circumstances, be liable for the actions of our co-venturers, and the activities of a joint venture could adversely affect our ability to qualify as a REIT, even though we do not control the joint venture.
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•
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within the limits provided in our charter, prevent the ownership, transfer, and/or accumulation of stock in order to protect our status as a REIT or for any other reason deemed to be in our best interest and the interest of our stockholders;
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•
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issue additional shares of stock without obtaining stockholder approval, which could dilute the ownership of our then-current stockholders;
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•
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amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue, without obtaining stockholder approval;
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•
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classify or reclassify any unissued shares of our common or preferred stock and set the preferences, rights and other terms of such classified or reclassified shares, without obtaining stockholder approval;
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•
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amend our bylaws;
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•
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employ and compensate affiliates;
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•
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direct our resources toward investments, which ultimately may not appreciate over time;
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•
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change creditworthiness standards with respect to our tenants;
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•
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change our investment or borrowing policies;
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•
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determine that it is no longer in our best interest to attempt to qualify, or to continue to qualify, as a REIT; and
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•
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suspend, modify or terminate the dividend reinvestment plan.
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•
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“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting stock or any affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder and thereafter impose supermajority voting requirements on these combinations; and
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•
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“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the stockholder, except solely by virtue of a revocable proxy, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
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•
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cash available for distribution;
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•
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our results of operations and anticipated future results of operations;
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•
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our financial condition, especially in relation to our anticipated future capital needs of our properties;
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•
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the level of reserves we establish for future capital expenditures;
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•
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the distribution requirements for REITs under the Code;
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•
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the level of distributions paid by comparable listed REITs;
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•
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our operating expenses; and
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•
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other factors our board of directors deems relevant.
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•
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actual or anticipated variations in our quarterly operating results;
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•
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changes in our earnings estimates or publication of research reports about us or the real estate industry, although no assurance can be given that any research reports about us will be published or the accuracy of such reports;
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•
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changes in our dividend policy;
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•
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future sales of substantial amounts of our common stock by our existing or future stockholders;
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•
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increases in market interest rates, which may lead purchasers of our stock to demand a higher yield;
|
•
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changes in market valuations of similar companies;
|
•
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adverse market reaction to any increased indebtedness we incur in the future;
|
•
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additions or departures of key personnel;
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•
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actions by institutional stockholders;
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•
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material, adverse litigation judgments;
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•
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speculation in the press or investment community; and
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•
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general market and economic conditions.
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Location
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Annualized
Lease Revenue
(in thousands)
|
|
Rentable Square
Feet (in thousands) |
|
Percentage of
Annualized
Lease Revenue (%)
|
|
Percent Leased (%)
|
|||||
Washington, D.C.
|
|
$
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69,693
|
|
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1,947
|
|
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13.8
|
|
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72.2
|
|
New York
|
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68,909
|
|
|
1,771
|
|
|
13.6
|
|
|
98.7
|
|
|
Atlanta
|
|
59,913
|
|
|
2,249
|
|
|
11.8
|
|
|
96.4
|
|
|
Minneapolis
|
|
56,000
|
|
|
1,833
|
|
|
11.0
|
|
|
93.8
|
|
|
Dallas
|
|
55,589
|
|
|
2,114
|
|
|
11.0
|
|
|
93.2
|
|
|
Chicago
|
|
52,768
|
|
|
1,453
|
|
|
10.4
|
|
|
96.3
|
|
|
Boston
|
|
48,391
|
|
|
1,594
|
|
|
9.5
|
|
|
98.6
|
|
|
Orlando
|
|
48,277
|
|
|
1,573
|
|
|
9.5
|
|
|
95.5
|
|
|
Other
(1)
|
|
47,522
|
|
|
1,942
|
|
|
9.4
|
|
|
84.5
|
|
|
|
|
$
|
507,062
|
|
|
16,476
|
|
|
100.0
|
|
|
91.8
|
|
(1)
|
Includes 1901 Market Street in Philadelphia, Pennsylvania; 1430 Enclave Parkway and Enclave Place in Houston, Texas; and 800 North Brand Boulevard in Glendale,California.
|
Year of Lease Expiration
|
|
Annualized
Lease Revenue
(in thousands)
|
|
Percentage of
Annualized
Lease Revenue (%)
|
|||
Available space
|
|
$
|
—
|
|
|
—
|
|
2018
|
|
38,056
|
|
|
7.5
|
|
|
2019
|
|
58,894
|
|
|
11.6
|
|
|
2020
|
|
43,637
|
|
|
8.6
|
|
|
2021
|
|
30,291
|
|
|
6.0
|
|
|
2022
|
|
39,124
|
|
|
7.7
|
|
|
2023
|
|
31,362
|
|
|
6.2
|
|
|
2024
|
|
54,415
|
|
|
10.7
|
|
|
2025
|
|
21,612
|
|
|
4.3
|
|
|
2026
|
|
27,420
|
|
|
5.4
|
|
|
2027
|
|
45,505
|
|
|
9.0
|
|
|
2028
|
|
34,437
|
|
|
6.8
|
|
|
2029
|
|
21,232
|
|
|
4.2
|
|
|
Thereafter
|
|
61,077
|
|
|
12.0
|
|
|
|
|
$
|
507,062
|
|
|
100.0
|
|
|
2017 Quarters
|
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
||||||||
High
(1)
|
$
|
23.08
|
|
|
$
|
22.74
|
|
|
$
|
21.48
|
|
|
$
|
20.54
|
|
|
Low
(1)
|
$
|
20.42
|
|
|
$
|
20.80
|
|
|
$
|
19.75
|
|
|
$
|
19.10
|
|
|
Dividend per common share
(1)
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.71
|
|
(2)
|
|
|
|
|
|
|
|
|
|
||||||||
|
2016 Quarters
|
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
||||||||
High
|
$
|
20.49
|
|
|
$
|
21.54
|
|
|
$
|
22.28
|
|
|
$
|
21.76
|
|
|
Low
|
$
|
16.93
|
|
|
$
|
19.36
|
|
|
$
|
20.34
|
|
|
$
|
18.61
|
|
|
Dividend per common share
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
(1)
|
The closing sales prices for each period listed above in fiscal year ended December 31, 2017, represent the actual closing prices and have not been adjusted to reflect dividends paid.
|
(2)
|
On December 13, 2017, Piedmont's board of directors declared a special dividend of $0.50 per share. The record date was December 26, 2017, and the payment was made on January 9, 2018.
|
|
As of the year ended December 31,
|
|||||||||||||||||
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||
Piedmont Office Realty Trust, Inc.
|
$
|
100.00
|
|
$
|
95.63
|
|
$
|
113.93
|
|
$
|
119.60
|
|
$
|
138.28
|
|
$
|
138.41
|
|
S&P 500
|
$
|
100.00
|
|
$
|
132.39
|
|
$
|
150.51
|
|
$
|
152.59
|
|
$
|
170.84
|
|
$
|
208.14
|
|
FTSE NAREIT Equity REITs
|
$
|
100.00
|
|
$
|
102.47
|
|
$
|
133.35
|
|
$
|
137.61
|
|
$
|
149.33
|
|
$
|
157.14
|
|
FTSE NAREIT Equity Office
|
$
|
100.00
|
|
$
|
105.57
|
|
$
|
132.87
|
|
$
|
133.25
|
|
$
|
150.80
|
|
$
|
158.71
|
|
Period
|
Total Number of
Shares Purchased
(in 000’s)
|
|
Average Price Paid
per Share
(1)
|
|
Total Number of
Shares Purchased
as Part of
Publicly Announced
Program
(in 000’s)
(2)
|
|
Maximum Approximate
Dollar Value of Shares
Available That May
Yet Be Purchased
Under the Program
(in 000’s)
|
|
||||||
October 1, 2017 to October 31, 2017
|
925
|
|
|
$
|
19.38
|
|
|
925
|
|
|
$
|
228,177
|
|
|
November 1, 2017 to November 30, 2017
|
577
|
|
|
$
|
19.78
|
|
|
577
|
|
|
$
|
216,751
|
|
|
December 1, 2017 to December 31, 2017
|
1,436
|
|
|
$
|
19.84
|
|
|
1,436
|
|
|
$
|
188,249
|
|
(2)
|
Total
|
2,938
|
|
|
$
|
19.68
|
|
|
2,938
|
|
|
|
|
|
(1)
|
On December 13, 2017, Piedmont's board of directors declared a special dividend of $0.50 per share. The record date was December 26, 2017, and the payment was made on January 9, 2018. The average price paid per share has not been adjusted to reflect the special dividend.
|
(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. See
Note 19
to our accompanying consolidated financial statements for more information.
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Statement of Income Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues
|
$
|
574,173
|
|
|
$
|
555,715
|
|
|
$
|
584,769
|
|
|
$
|
566,252
|
|
|
$
|
549,610
|
|
Property operating costs
|
$
|
220,630
|
|
|
$
|
218,934
|
|
|
$
|
242,022
|
|
|
$
|
239,431
|
|
|
$
|
220,965
|
|
Depreciation and amortization
|
$
|
194,655
|
|
|
$
|
202,852
|
|
|
$
|
195,389
|
|
|
$
|
195,175
|
|
|
$
|
166,070
|
|
Impairment loss on real estate assets
|
$
|
46,461
|
|
|
$
|
33,901
|
|
|
$
|
43,301
|
|
|
$
|
—
|
|
|
$
|
—
|
|
General and administrative expenses
|
$
|
31,130
|
|
|
$
|
29,244
|
|
|
$
|
30,346
|
|
|
$
|
23,825
|
|
|
$
|
21,695
|
|
Other income/(expense), inclusive of interest expense
|
$
|
(63,622
|
)
|
|
$
|
(64,477
|
)
|
|
$
|
(72,158
|
)
|
|
$
|
(67,742
|
)
|
|
$
|
(68,682
|
)
|
Income from continuing operations
|
$
|
17,675
|
|
|
$
|
6,307
|
|
|
$
|
1,553
|
|
|
$
|
40,079
|
|
|
$
|
72,198
|
|
Income, impairment loss, and gain on sale of real estate assets from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
83
|
|
|
$
|
1,216
|
|
|
$
|
20,798
|
|
Gain on sale of real estate assets not classified as discontinued operations
|
$
|
115,874
|
|
|
$
|
93,410
|
|
|
$
|
129,683
|
|
|
$
|
870
|
|
|
$
|
—
|
|
Net loss/(income) applicable to noncontrolling interest
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
(15
|
)
|
|
$
|
(15
|
)
|
|
$
|
(15
|
)
|
Net income applicable to Piedmont
|
$
|
133,564
|
|
|
$
|
99,732
|
|
|
$
|
131,304
|
|
|
$
|
42,150
|
|
|
$
|
92,981
|
|
Per-Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Per weighted-average common share data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations per share—basic and diluted
|
$
|
0.92
|
|
|
$
|
0.69
|
|
|
$
|
0.87
|
|
|
$
|
0.26
|
|
|
$
|
0.44
|
|
Income from discontinued operations per share—basic and diluted
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.01
|
|
|
$
|
0.13
|
|
Net income applicable to Piedmont per share—basic and diluted
|
$
|
0.92
|
|
|
$
|
0.69
|
|
|
$
|
0.87
|
|
|
$
|
0.27
|
|
|
$
|
0.57
|
|
Cash dividends declared per common share
|
$
|
1.34
|
|
|
$
|
0.84
|
|
|
$
|
0.84
|
|
|
$
|
0.81
|
|
|
$
|
0.80
|
|
Weighted-average shares outstanding—basic (in thousands)
|
145,044
|
|
|
145,230
|
|
|
150,538
|
|
|
154,452
|
|
|
165,013
|
|
|||||
Weighted-average shares outstanding—diluted (in thousands)
|
145,380
|
|
|
145,635
|
|
|
150,880
|
|
|
154,585
|
|
|
165,137
|
|
|||||
Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
3,999,967
|
|
|
$
|
4,368,168
|
|
|
$
|
4,361,511
|
|
|
$
|
4,756,496
|
|
|
$
|
4,627,189
|
|
Total stockholders’ equity
|
$
|
1,986,489
|
|
|
$
|
2,097,703
|
|
|
$
|
2,123,420
|
|
|
$
|
2,280,677
|
|
|
$
|
2,431,019
|
|
Outstanding debt
|
$
|
1,726,927
|
|
|
$
|
2,020,475
|
|
|
$
|
2,029,510
|
|
|
$
|
2,269,922
|
|
|
$
|
1,993,446
|
|
Ratio of Earnings to Fixed Charges
|
2.9
|
|
|
2.4
|
|
|
2.7
|
|
|
1.5
|
|
|
2.1
|
|
|||||
NAREIT Funds from Operations Data
(1)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP net income applicable to common stock
|
$
|
133,564
|
|
|
$
|
99,732
|
|
|
$
|
131,304
|
|
|
$
|
42,150
|
|
|
$
|
92,981
|
|
Depreciation and amortization
|
193,904
|
|
|
202,268
|
|
|
194,943
|
|
|
195,345
|
|
|
170,158
|
|
|||||
Loss on consolidation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
898
|
|
|||||
Impairment loss
|
46,461
|
|
|
33,901
|
|
|
43,301
|
|
|
—
|
|
|
13,381
|
|
|||||
Gain on sale- wholly-owned properties and unconsolidated partnerships
|
(119,557
|
)
|
|
(93,410
|
)
|
|
(129,682
|
)
|
|
(963
|
)
|
|
(26,880
|
)
|
|||||
NAREIT Funds From Operations applicable to common stock
(1)
|
$
|
254,372
|
|
|
$
|
242,491
|
|
|
$
|
239,866
|
|
|
$
|
236,532
|
|
|
$
|
250,538
|
|
Acquisition costs
|
6
|
|
|
976
|
|
|
919
|
|
|
560
|
|
|
1,763
|
|
|||||
Loss on settlement of swaps
|
—
|
|
|
—
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|||||
Net loss/(recoveries) of casualty loss and litigation settlements
|
—
|
|
|
(34
|
)
|
|
278
|
|
|
(6,992
|
)
|
|
(11,828
|
)
|
|||||
Core Funds From Operations applicable to common stock
(1)
|
$
|
254,378
|
|
|
$
|
243,433
|
|
|
$
|
241,101
|
|
|
$
|
230,100
|
|
|
$
|
240,473
|
|
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on Senior Notes
|
2,496
|
|
|
2,610
|
|
|
2,547
|
|
|
2,632
|
|
|
2,664
|
|
|||||
Depreciation of non real estate assets
|
809
|
|
|
841
|
|
|
755
|
|
|
508
|
|
|
406
|
|
|||||
Straight-line effects of lease revenue and net effect of amortization of below-market in-place lease intangibles
|
(28,067
|
)
|
|
(26,609
|
)
|
|
(20,305
|
)
|
|
(33,848
|
)
|
|
(23,375
|
)
|
|||||
Stock-based and other non-cash compensation
|
6,139
|
|
|
5,620
|
|
|
7,090
|
|
|
3,975
|
|
|
1,590
|
|
|||||
Acquisition costs
|
(6
|
)
|
|
(976
|
)
|
|
(919
|
)
|
|
(560
|
)
|
|
(1,763
|
)
|
|||||
Non-incremental capital expenditures
|
(35,437
|
)
|
|
(35,568
|
)
|
|
(44,136
|
)
|
|
(84,630
|
)
|
|
(102,977
|
)
|
|||||
Adjusted Funds From Operations applicable to common stock
(1)
|
$
|
200,312
|
|
|
$
|
189,351
|
|
|
$
|
186,133
|
|
|
$
|
118,177
|
|
|
$
|
117,018
|
|
(1)
|
Net income calculated in accordance with GAAP is the starting point for calculating Funds from Operations, Core Funds From Operations, and Adjusted Funds From Operations. See "
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
December 31, 2017
|
|
|
December 31, 2016
|
|
||
Capital expenditures for new development
|
$
|
6,490
|
|
|
$
|
18,886
|
|
Capital expenditures for redevelopment/ renovations
|
980
|
|
|
8,532
|
|
||
Other capital expenditures, including tenant improvements
|
72,361
|
|
|
82,810
|
|
||
Total capital expenditures
(1)
|
$
|
79,831
|
|
|
$
|
110,228
|
|
(1)
|
Of the total amounts paid, approximately
$0.3 million
and
$7.1 million
related to soft costs such as capitalized interest, payroll, and other general and administrative expenses for the year ended
December 31, 2017
and
2016
, respectively.
|
|
December 31, 2017
|
|
% of Revenues
|
|
December 31, 2016
|
|
% of Revenues
|
|
Variance
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
475.8
|
|
|
|
|
$
|
459.9
|
|
|
|
|
$
|
15.9
|
|
||
Tenant reimbursements
|
96.7
|
|
|
|
|
93.9
|
|
|
|
|
2.8
|
|
|||||
Property management fee revenue
|
1.7
|
|
|
|
|
1.9
|
|
|
|
|
(0.2
|
)
|
|||||
Total revenues
|
574.2
|
|
|
100
|
%
|
|
555.7
|
|
|
100
|
%
|
|
18.5
|
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
220.6
|
|
|
38
|
%
|
|
218.9
|
|
|
39
|
%
|
|
1.7
|
|
|||
Depreciation
|
119.3
|
|
|
21
|
%
|
|
127.7
|
|
|
23
|
%
|
|
(8.4
|
)
|
|||
Amortization
|
75.4
|
|
|
13
|
%
|
|
75.1
|
|
|
14
|
%
|
|
0.3
|
|
|||
Impairment losses on real estate assets
|
46.5
|
|
|
8
|
%
|
|
33.9
|
|
|
6
|
%
|
|
12.6
|
|
|||
General and administrative
|
31.1
|
|
|
6
|
%
|
|
29.3
|
|
|
5
|
%
|
|
1.8
|
|
|||
Real estate operating income
|
81.3
|
|
|
14
|
%
|
|
70.8
|
|
|
13
|
%
|
|
10.5
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(68.1
|
)
|
|
12
|
%
|
|
(64.9
|
)
|
|
12
|
%
|
|
(3.2
|
)
|
|||
Other income/(expense)
|
0.7
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
0.7
|
|
|||
Net recoveries from casualty events
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|||
Equity in income of unconsolidated joint ventures
|
3.8
|
|
|
1
|
%
|
|
0.4
|
|
|
—
|
%
|
|
3.4
|
|
|||
Income from continuing operations
|
$
|
17.7
|
|
|
3
|
%
|
|
$
|
6.3
|
|
|
1
|
%
|
|
$
|
11.4
|
|
Gain on sale of real estate assets
|
$
|
115.9
|
|
|
|
|
$
|
93.4
|
|
|
|
|
$
|
22.5
|
|
|
December 31, 2016
|
|
% of Revenues
|
|
December 31, 2015
|
|
% of Revenues
|
|
Variance
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
459.9
|
|
|
|
|
$
|
468.9
|
|
|
|
|
$
|
(9.0
|
)
|
||
Tenant reimbursements
|
93.9
|
|
|
|
|
113.9
|
|
|
|
|
(20.0
|
)
|
|||||
Property management fee revenue
|
1.9
|
|
|
|
|
2.0
|
|
|
|
|
(0.1
|
)
|
|||||
Total revenues
|
555.7
|
|
|
100
|
%
|
|
584.8
|
|
|
100
|
%
|
|
(29.1
|
)
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
218.9
|
|
|
39
|
%
|
|
242.0
|
|
|
41
|
%
|
|
(23.1
|
)
|
|||
Depreciation
|
127.7
|
|
|
23
|
%
|
|
134.5
|
|
|
23
|
%
|
|
(6.8
|
)
|
|||
Amortization
|
75.1
|
|
|
14
|
%
|
|
60.9
|
|
|
11
|
%
|
|
14.2
|
|
|||
Impairment loss on real estate assets
|
33.9
|
|
|
6
|
%
|
|
43.3
|
|
|
7
|
%
|
|
(9.4
|
)
|
|||
General and administrative expense
|
29.3
|
|
|
5
|
%
|
|
30.4
|
|
|
5
|
%
|
|
(1.1
|
)
|
|||
Real estate operating income
|
70.8
|
|
|
13
|
%
|
|
73.7
|
|
|
13
|
%
|
|
(2.9
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(64.9
|
)
|
|
12
|
%
|
|
(74.0
|
)
|
|
13
|
%
|
|
9.1
|
|
|||
Other income/(expense)
|
—
|
|
|
—
|
%
|
|
1.6
|
|
|
—
|
%
|
|
(1.6
|
)
|
|||
Net loss from casualty events
|
—
|
|
|
—
|
%
|
|
(0.3
|
)
|
|
—
|
%
|
|
0.3
|
|
|||
Equity in income of unconsolidated joint ventures
|
0.4
|
|
|
—
|
%
|
|
0.6
|
|
|
—
|
%
|
|
(0.2
|
)
|
|||
Income from continuing operations
|
$
|
6.3
|
|
|
1
|
%
|
|
$
|
1.6
|
|
|
—
|
%
|
|
$
|
4.7
|
|
Income from discontinued operations
|
$
|
—
|
|
|
|
|
$
|
0.1
|
|
|
|
|
$
|
(0.1
|
)
|
||
Gain on sale of real estate assets
|
$
|
93.4
|
|
|
|
|
$
|
129.7
|
|
|
|
|
$
|
(36.3
|
)
|
|
2017
|
|
Per
Share
(1)
|
|
2016
|
|
Per
Share
(1)
|
|
2015
|
|
Per
Share
(1)
|
||||||||||||
GAAP net income applicable to common stock
|
$
|
133,564
|
|
|
$
|
0.92
|
|
|
$
|
99,732
|
|
|
$
|
0.69
|
|
|
$
|
131,304
|
|
|
$
|
0.87
|
|
Depreciation of real assets
(2)
|
118,577
|
|
|
0.82
|
|
|
127,129
|
|
|
0.87
|
|
|
133,992
|
|
|
0.89
|
|
||||||
Amortization of lease-related costs
(2)
|
75,327
|
|
|
0.52
|
|
|
75,139
|
|
|
0.52
|
|
|
60,951
|
|
|
0.40
|
|
||||||
Impairment loss on real estate assets
|
46,461
|
|
|
0.32
|
|
|
33,901
|
|
|
0.23
|
|
|
43,301
|
|
|
0.29
|
|
||||||
Gain on sale- wholly-owned properties
|
(115,874
|
)
|
|
(0.80
|
)
|
|
(93,410
|
)
|
|
(0.64
|
)
|
|
(129,682
|
)
|
|
(0.86
|
)
|
||||||
Gain on sale- unconsolidated partnerships
|
(3,683
|
)
|
|
(0.03
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
NAREIT Funds From Operations applicable to common stock
|
$
|
254,372
|
|
|
$
|
1.75
|
|
|
$
|
242,491
|
|
|
$
|
1.67
|
|
|
$
|
239,866
|
|
|
$
|
1.59
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Acquisition costs
|
6
|
|
|
—
|
|
|
976
|
|
|
—
|
|
|
919
|
|
|
0.01
|
|
||||||
Loss on settlement of swaps
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
—
|
|
||||||
Net loss/(recoveries) from casualty events
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
278
|
|
|
—
|
|
||||||
Core Funds From Operations applicable to common stock
|
$
|
254,378
|
|
|
$
|
1.75
|
|
|
$
|
243,433
|
|
|
$
|
1.67
|
|
|
$
|
241,101
|
|
|
$
|
1.60
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on Unsecured Senior Notes
|
2,496
|
|
|
|
|
2,610
|
|
|
|
|
2,547
|
|
|
|
|||||||||
Depreciation of non real estate assets
|
809
|
|
|
|
|
841
|
|
|
|
|
755
|
|
|
|
|||||||||
Straight-line effects of lease revenue
(2)
|
(21,492
|
)
|
|
|
|
(21,544
|
)
|
|
|
|
(15,734
|
)
|
|
|
|||||||||
Stock-based and other non-cash compensation
|
6,139
|
|
|
|
|
5,620
|
|
|
|
|
7,090
|
|
|
|
|||||||||
Net effect of amortization of below-market in-place lease intangibles
|
(6,575
|
)
|
|
|
|
(5,065
|
)
|
|
|
|
(4,571
|
)
|
|
|
|||||||||
Acquisition costs
|
(6
|
)
|
|
|
|
(976
|
)
|
|
|
|
(919
|
)
|
|
|
|||||||||
Non-incremental capital expenditures
(3)
|
(35,437
|
)
|
|
|
|
(35,568
|
)
|
|
|
|
(44,136
|
)
|
|
|
|||||||||
Adjusted Funds From Operations applicable to common stock
|
$
|
200,312
|
|
|
|
|
$
|
189,351
|
|
|
|
|
$
|
186,133
|
|
|
|
||||||
Weighted-average shares outstanding – diluted
|
145,380
|
|
|
|
|
145,635
|
|
|
|
|
150,880
|
|
|
|
(1)
|
Based on weighted-average shares outstanding—diluted.
|
(2)
|
Includes adjustments for wholly-owned properties (including discontinued operations), as well as such adjustments 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
|
||||||||||||
|
December 31,
2017 |
|
December 31,
2016 |
|
December 31,
2017 |
|
December 31,
2016 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income applicable to Piedmont (GAAP basis)
|
$
|
133,564
|
|
|
$
|
99,732
|
|
|
$
|
133,564
|
|
|
$
|
99,732
|
|
|
|
|
|
|
|
|
|
||||||||
Net income applicable to noncontrolling interest
|
(15
|
)
|
|
(15
|
)
|
|
(15
|
)
|
|
(15
|
)
|
||||
Interest expense
|
68,124
|
|
|
64,860
|
|
|
68,124
|
|
|
64,860
|
|
||||
Depreciation
(1)
|
119,386
|
|
|
127,970
|
|
|
119,386
|
|
|
127,970
|
|
||||
Amortization
(1)
|
75,327
|
|
|
75,139
|
|
|
75,327
|
|
|
75,139
|
|
||||
Acquisition costs
|
6
|
|
|
976
|
|
|
6
|
|
|
976
|
|
||||
Impairment loss on real estate assets
(1)
|
46,461
|
|
|
33,901
|
|
|
46,461
|
|
|
33,901
|
|
||||
Net recoveries from casualty events
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
||||
Gain on sale of real estate assets, net
(1)
|
(119,557
|
)
|
|
(93,410
|
)
|
|
(119,557
|
)
|
|
(93,410
|
)
|
||||
General & administrative expenses
(1)
|
31,186
|
|
|
29,306
|
|
|
31,186
|
|
|
29,306
|
|
||||
Management fee revenue
|
(872
|
)
|
|
(1,034
|
)
|
|
(872
|
)
|
|
(1,034
|
)
|
||||
Other income
(1)
|
(303
|
)
|
|
(458
|
)
|
|
(303
|
)
|
|
(458
|
)
|
||||
Straight-line rent effects of lease revenue
(1)
|
(21,492
|
)
|
|
(21,544
|
)
|
|
|
|
|
||||||
Amortization of lease-related intangibles
(1)
|
(6,575
|
)
|
|
(5,065
|
)
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Property NOI
|
$
|
325,240
|
|
|
$
|
310,324
|
|
|
$
|
353,307
|
|
|
$
|
336,933
|
|
|
|
|
|
|
|
|
|
||||||||
Net operating income from:
|
|
|
|
|
|
|
|
||||||||
Acquisitions
(2)
|
(18,385
|
)
|
|
(7,333
|
)
|
|
(29,216
|
)
|
|
(9,175
|
)
|
||||
Dispositions
(3)
|
(11,431
|
)
|
|
(32,550
|
)
|
|
(11,491
|
)
|
|
(33,761
|
)
|
||||
Other investments
(4)
|
(371
|
)
|
|
(497
|
)
|
|
(2,987
|
)
|
|
(1,311
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Same Store NOI
|
$
|
295,053
|
|
|
$
|
269,944
|
|
|
$
|
309,613
|
|
|
$
|
292,686
|
|
|
|
|
|
|
|
|
|
||||||||
Change period over period in Same Store NOI
|
9.3
|
%
|
|
N/A
|
|
|
5.8
|
%
|
|
N/A
|
|
(1)
|
Includes amounts attributable to consolidated properties, including discontinued operations, and our proportionate share of amounts attributable to unconsolidated joint ventures.
|
(2)
|
Acquisitions consist of 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; 750 West John Carpenter Freeway in Irving, Texas, purchased on November 30, 2016; and Norman Pointe I in Bloomington, Minnesota, purchased on December 28, 2017.
|
(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; Sarasota Commerce Center II in Sarasota, Florida, sold on June 16, 2017; and Two Independence Square in Washington, D.C., sold on July 5, 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
|
||||||||||||
|
December 31,
2017 |
|
December 31,
2016 |
|
December 31,
2017 |
|
December 31,
2016 |
||||||||
Washington, D.C.
|
$
|
44,795
|
|
|
$
|
49,181
|
|
|
$
|
53,125
|
|
|
$
|
60,878
|
|
New York
|
40,884
|
|
|
39,335
|
|
|
39,617
|
|
|
37,567
|
|
||||
Chicago
|
36,014
|
|
|
29,489
|
|
|
37,570
|
|
|
33,064
|
|
||||
Atlanta
|
33,216
|
|
|
28,930
|
|
|
39,378
|
|
|
33,871
|
|
||||
Minneapolis
|
26,300
|
|
|
24,686
|
|
|
24,932
|
|
|
23,713
|
|
||||
Dallas
|
29,901
|
|
|
26,907
|
|
|
31,461
|
|
|
27,518
|
|
||||
Boston
|
35,914
|
|
|
34,451
|
|
|
40,721
|
|
|
34,381
|
|
||||
Orlando
|
25,206
|
|
|
16,728
|
|
|
30,384
|
|
|
19,671
|
|
||||
Other
(1)
|
53,010
|
|
|
60,617
|
|
|
56,119
|
|
|
66,270
|
|
||||
|
$
|
325,240
|
|
|
$
|
310,324
|
|
|
$
|
353,307
|
|
|
$
|
336,933
|
|
(1)
|
Includes amounts attributable to corporate entities, as well as properties outside of our core operating markets.
|
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)
|
|
$
|
1,733,670
|
|
|
$
|
170,882
|
|
(2)
|
$
|
625,086
|
|
(3) (4) (5)
|
$
|
187,702
|
|
|
$
|
750,000
|
|
Operating lease obligations
(6)
|
|
2,811
|
|
|
93
|
|
|
186
|
|
|
186
|
|
|
2,346
|
|
|||||
Total
|
|
$
|
1,736,481
|
|
|
$
|
170,975
|
|
|
$
|
625,272
|
|
|
$
|
187,888
|
|
|
$
|
752,346
|
|
(1)
|
Amounts include principal payments only and balances outstanding as of
December 31, 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
$67.6 million
during the year ended
December 31, 2017
, and expect to pay interest in
|
(2)
|
Includes the balance of the $170 Million Unsecured 2015 Term Loan as of December 31, 2017; however, on January 4, 2018, Piedmont fully repaid the balance of this facility without penalty.
|
(3)
|
Includes the balance outstanding as of
December 31, 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.
|
(4)
|
Includes the balance of the $300 Million Unsecured 2013 Term Loan as of December 31, 2017; however, on January 4, 2018, Piedmont fully repaid the balance of this facility without penalty.
|
(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 expense (comprised of combination of variable contractual rate and settlements under interest rate swap agreements) through maturity in January 2020.
|
(6)
|
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
December 31, 2017
is presented above. On January 4, 2018, Piedmont closed on the sale of the 2001 NW 64th Street building as part of a portfolio disposition (see
Note 14
). The purchaser assumed the ground lease and, as such, Piedmont will have no future operating lease obligations associated with this property.
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Maturing debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Variable rate repayments
|
$
|
170,000
|
|
(2)
|
$
|
23,000
|
|
(3)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
193,000
|
|
Variable rate average interest rate
(1)
|
2.54
|
%
|
|
2.57
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2.54
|
%
|
|||||||
Fixed rate repayments
|
$
|
882
|
|
|
$
|
301,014
|
|
(4)
|
$
|
301,072
|
|
(5)
|
$
|
27,702
|
|
|
$
|
160,000
|
|
|
$
|
750,000
|
|
|
$
|
1,540,670
|
|
Fixed rate average interest rate
(1)
|
5.55
|
%
|
|
2.79
|
%
|
|
3.36
|
%
|
|
5.55
|
%
|
|
3.48
|
%
|
|
3.96
|
%
|
|
3.59
|
%
|
(1)
|
See
Note 5
to our accompanying consolidated financial statements for further details on our debt structure.
|
(2)
|
Includes the balance of the $170 Million Unsecured 2015 Term Loan as of December 31, 2017; however, on January 4, 2018, Piedmont fully repaid the balance of this facility without penalty.
|
(3)
|
Includes the balance of our $500 Million Unsecured 2015 Line of Credit. However, we 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 we are not then in default and upon payment of extension fees.
|
(4)
|
Includes the balance of the $300 Million Unsecured 2013 Term Loan as of December 31, 2017; however, on January 4, 2018, Piedmont fully repaid the balance of this facility without penalty.
|
(5)
|
The amount includes the $300 Million Unsecured 2011 Term Loan which 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 3.35% through maturity.
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
Maturing debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Variable rate repayments
|
$
|
—
|
|
|
$
|
170,000
|
|
(2)
|
$
|
178,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
348,000
|
|
Variable rate average interest rate
(1)
|
—
|
%
|
|
1.78
|
%
|
|
1.74
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.76
|
%
|
|||||||
Fixed rate repayments
|
$
|
140,834
|
|
|
$
|
960
|
|
|
$
|
301,014
|
|
(3)
|
$
|
301,072
|
|
(4)
|
$
|
27,702
|
|
|
$
|
910,000
|
|
|
$
|
1,681,582
|
|
Fixed rate average interest rate
(1)
|
5.76
|
%
|
|
5.55
|
%
|
|
2.79
|
%
|
|
3.36
|
%
|
|
5.55
|
%
|
|
3.88
|
%
|
|
3.77
|
%
|
(1)
|
See
Note 5
of our accompanying consolidated financial statements for further details on our debt structure.
|
(2)
|
Includes the balance of the $170 Million Unsecured 2015 Term Loan as of December 31, 2017; however, on January 4, 2018, Piedmont fully repaid the balance of this facility without penalty.
|
(3)
|
The amount includes the $300 Million Unsecured 2013 Term Loan which has a stated variable rate; however, Piedmont has 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%. On January 4, 2018, Piedmont fully repaid the balance of this facility without penalty.
|
(4)
|
The amount includes the $300 Million Unsecured 2011 Term Loan which 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 3.35% through January 15, 2020.
|
•
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of our assets;
|
•
|
provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of management and/or members of the board of directors; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
|
(a)
|
1. The financial statements begin on page F-4 of this Annual Report on Form 10-K, and the list of the financial statements contained herein is set forth on page F-1, which is hereby incorporated by reference.
|
(a)
|
2. Schedule III—Real Estate Assets and Accumulated Depreciation.
|
(b)
|
The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.
|
(c)
|
See (a) 2. above.
|
Piedmont Office Realty Trust, Inc.
|
||
(Registrant)
|
||
|
|
|
By:
|
|
/s/ D
ONALD
A. M
ILLER
, CFA
|
|
|
Donald A. Miller, CFA
|
|
|
President, Principal Executive Officer, and Director
|
Signature
|
|
Title
|
Date
|
|
|
|
|
/s/ F
RANK
C. M
C
D
OWELL
|
|
Chairman, and Director
|
February 21, 2018
|
Frank C. McDowell
|
|
|
|
|
|
|
|
/s/ W
ESLEY
E. C
ANTRELL
|
|
Director
|
February 21, 2018
|
Wesley E. Cantrell
|
|
|
|
|
|
|
|
/s/ B
ARBARA
B.
L
ANG
|
|
Director
|
February 21, 2018
|
Barbara B. Lang
|
|
|
|
|
|
|
|
/s/ R
AYMOND
G. M
ILNES
, J
R
.
|
|
Director
|
February 21, 2018
|
Raymond G. Milnes, Jr.
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/s/ J
EFFREY
L. S
WOPE
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Director
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February 21, 2018
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Jeffrey L. Swope
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/s/ D
ALE
H. T
AYSOM
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Director
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February 21, 2018
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Dale H. Taysom
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/s/ K
ELLY
H. B
ARRETT
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Director
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February 21, 2018
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Kelly H. Barrett
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/s/ D
ONALD
A. M
ILLER
, CFA
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President and Director
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February 21, 2018
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Donald A. Miller, CFA
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(Principal Executive Officer)
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/s/ R
OBERT
E. B
OWERS
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Chief Financial Officer and Executive Vice-President
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February 21, 2018
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Robert E. Bowers
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(Principal Financial Officer)
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/s/ L
AURA
P. M
OON
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Chief Accounting Officer
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February 21, 2018
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Laura P. Moon
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(Principal Accounting Officer)
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Exhibit Number
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Description of Document
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3.1
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3.2
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3.3
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3.4
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3.5
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4.1
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4.2
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4.3
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4.4
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4.5
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10.1
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10.2
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10.3
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10.4
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10.5
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10.6
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10.7
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10.8
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10.9
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10.10
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10.11
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10.12
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10.13
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10.14*
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10.15*
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10.16*
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10.17*
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10.18*
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10.19*
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10.20*
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10.21*
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10.22*
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10.23*
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10.24*
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10.25*
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10.26*
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10.27*
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10.28*
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10.29*
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10.30*
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10.31
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10.32
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10.33
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10.34
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10.35
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10.36
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10.37
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10.38
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10.39*
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10.40*
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10.41*
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10.42
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12.1
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21.1
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23.1
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31.1
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31.2
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32.1
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32.2
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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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Financial Statements
|
Page
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|
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Financial Statement Schedule
|
|
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December 31, 2017
|
|
December 31, 2016
|
||||
Assets:
|
|
|
|
||||
Real estate assets, at cost:
|
|
|
|
||||
Land
|
$
|
544,794
|
|
|
$
|
542,640
|
|
Buildings and improvements, less accumulated depreciation of $785,206 and $700,304 as of December 31, 2017 and December 31, 2016, respectively
|
2,418,023
|
|
|
2,442,178
|
|
||
Intangible lease assets, less accumulated amortization of $99,145 and $109,152 as of December 31, 2017 and December 31, 2016, respectively
|
77,805
|
|
|
99,695
|
|
||
Construction in progress
|
11,710
|
|
|
34,460
|
|
||
Real estate assets held for sale, net
|
332,410
|
|
|
612,719
|
|
||
Total real estate assets
|
3,384,742
|
|
|
3,731,692
|
|
||
Investment in and amounts due from unconsolidated joint venture
|
10
|
|
|
7,360
|
|
||
Cash and cash equivalents
|
7,382
|
|
|
6,992
|
|
||
Tenant receivables, net of allowance for doubtful accounts of $539 and $197 as of December 31, 2017 and December 31, 2016, respectively
|
12,139
|
|
|
26,494
|
|
||
Straight-line rent receivables
|
163,160
|
|
|
136,862
|
|
||
Restricted cash and escrows
|
1,373
|
|
|
1,212
|
|
||
Prepaid expenses and other assets
|
22,517
|
|
|
23,281
|
|
||
Goodwill
|
98,918
|
|
|
98,918
|
|
||
Interest rate swaps
|
688
|
|
|
—
|
|
||
Deferred lease costs, less accumulated amortization of $183,740 and $159,531 as of December 31, 2017 and December 31, 2016, respectively
|
261,907
|
|
|
276,725
|
|
||
Other assets held for sale, net
|
47,131
|
|
|
58,632
|
|
||
Total assets
|
$
|
3,999,967
|
|
|
$
|
4,368,168
|
|
Liabilities:
|
|
|
|
||||
Unsecured debt, net of discount and unamortized debt issuance costs of $7,689 and $10,269 as of December 31, 2017 and December 31, 2016, respectively
|
$
|
1,535,311
|
|
|
$
|
1,687,731
|
|
Secured debt, net of premiums and unamortized debt issuance costs of $946 and $1,161 as of December 31, 2017 and December 31, 2016, respectively
|
191,616
|
|
|
332,744
|
|
||
Accounts payable, accrued expenses, dividends payable, and accrued capital expenditures
|
216,653
|
|
|
165,410
|
|
||
Deferred income
|
29,582
|
|
|
28,406
|
|
||
Intangible lease liabilities, less accumulated amortization of $55,847 and $48,377 as of December 31, 2017 and December 31, 2016, respectively
|
38,458
|
|
|
47,537
|
|
||
Interest rate swaps
|
1,478
|
|
|
8,169
|
|
||
Other liabilities held for sale, net
|
380
|
|
|
468
|
|
||
Total liabilities
|
2,013,478
|
|
|
2,270,465
|
|
||
Commitments and Contingencies
|
—
|
|
|
—
|
|
||
Stockholders’ Equity:
|
|
|
|
||||
Shares-in-trust, 150,000,000 shares authorized, none outstanding as of December 31, 2017 or December 31, 2016
|
—
|
|
|
—
|
|
||
Preferred stock, no par value, 100,000,000 shares authorized, none outstanding as of December 31, 2017 or December 31, 2016
|
—
|
|
|
—
|
|
||
Common stock, $.01 par value; 750,000,000 shares authorized, 142,358,940 shares issued and outstanding as of December 31, 2017; and 145,235,313 shares issued and outstanding at December 31, 2016
|
1,424
|
|
|
1,452
|
|
||
Additional paid-in capital
|
3,677,360
|
|
|
3,673,128
|
|
||
Cumulative distributions in excess of earnings
|
(1,702,281
|
)
|
|
(1,580,863
|
)
|
||
Other comprehensive income
|
8,164
|
|
|
2,104
|
|
||
Piedmont stockholders’ equity
|
1,984,667
|
|
|
2,095,821
|
|
||
Noncontrolling interest
|
1,822
|
|
|
1,882
|
|
||
Total stockholders’ equity
|
1,986,489
|
|
|
2,097,703
|
|
||
Total liabilities and stockholders’ equity
|
$
|
3,999,967
|
|
|
$
|
4,368,168
|
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Rental income
|
$
|
475,777
|
|
|
$
|
459,890
|
|
|
$
|
468,872
|
|
Tenant reimbursements
|
96,711
|
|
|
93,961
|
|
|
113,881
|
|
|||
Property management fee revenue
|
1,685
|
|
|
1,864
|
|
|
2,016
|
|
|||
|
574,173
|
|
|
555,715
|
|
|
584,769
|
|
|||
Expenses:
|
|
|
|
|
|
||||||
Property operating costs
|
220,630
|
|
|
218,934
|
|
|
242,022
|
|
|||
Depreciation
|
119,288
|
|
|
127,733
|
|
|
134,503
|
|
|||
Amortization
|
75,367
|
|
|
75,119
|
|
|
60,886
|
|
|||
Impairment loss on real estate assets
|
46,461
|
|
|
33,901
|
|
|
43,301
|
|
|||
General and administrative
|
31,130
|
|
|
29,244
|
|
|
30,346
|
|
|||
|
492,876
|
|
|
484,931
|
|
|
511,058
|
|
|||
Real estate operating income
|
81,297
|
|
|
70,784
|
|
|
73,711
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense
|
(68,124
|
)
|
|
(64,860
|
)
|
|
(73,998
|
)
|
|||
Other income/(expense)
|
657
|
|
|
(13
|
)
|
|
1,565
|
|
|||
Net recoveries/(loss) from casualty events
|
—
|
|
|
34
|
|
|
(278
|
)
|
|||
Equity in income of unconsolidated joint ventures
|
3,845
|
|
|
362
|
|
|
553
|
|
|||
|
(63,622
|
)
|
|
(64,477
|
)
|
|
(72,158
|
)
|
|||
Income from continuing operations
|
17,675
|
|
|
6,307
|
|
|
1,553
|
|
|||
Discontinued operations:
|
|
|
|
|
|
||||||
Operating income
|
—
|
|
|
—
|
|
|
84
|
|
|||
Loss on sale of real estate assets
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Income from discontinued operations
|
—
|
|
|
—
|
|
|
83
|
|
|||
Gain on sale of real estate assets
|
115,874
|
|
|
93,410
|
|
|
129,683
|
|
|||
Net income
|
133,549
|
|
|
99,717
|
|
|
131,319
|
|
|||
Plus: Net loss/(income) applicable to noncontrolling interest
|
15
|
|
|
15
|
|
|
(15
|
)
|
|||
Net income applicable to Piedmont
|
$
|
133,564
|
|
|
$
|
99,732
|
|
|
$
|
131,304
|
|
Per share information— basic and diluted:
|
|
|
|
|
|
||||||
Income from continuing operations and gain on sale of real estate assets
|
$
|
0.92
|
|
|
$
|
0.69
|
|
|
$
|
0.87
|
|
Income from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net income applicable to common stockholders
|
$
|
0.92
|
|
|
$
|
0.69
|
|
|
$
|
0.87
|
|
Weighted-average shares outstanding—basic
|
145,043,503
|
|
|
145,230,382
|
|
|
150,537,757
|
|
|||
Weighted-average shares outstanding—diluted
|
145,379,994
|
|
|
145,634,953
|
|
|
150,880,116
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income applicable to Piedmont
|
|
|
$
|
133,564
|
|
|
|
|
$
|
99,732
|
|
|
|
|
$
|
131,304
|
|
|||
Other comprehensive income/(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Effective portion of gain/(loss) on derivative instruments that are designated and qualify as cash flow hedges (See
Note 7
)
|
2,479
|
|
|
|
|
(4,126
|
)
|
|
|
|
(12,509
|
)
|
|
|
||||||
Reclassification of previously recorded loss included in net income (See
Note 7
)
|
3,502
|
|
|
|
|
4,548
|
|
|
|
|
5,875
|
|
|
|
||||||
Gain/(loss) on investment in available for sale securities
|
79
|
|
|
|
|
21
|
|
|
|
|
(6
|
)
|
|
|
||||||
Other comprehensive income/(loss)
|
|
|
6,060
|
|
|
|
|
443
|
|
|
|
|
(6,640
|
)
|
||||||
Comprehensive income applicable to Piedmont
|
|
|
$
|
139,624
|
|
|
|
|
$
|
100,175
|
|
|
|
|
$
|
124,664
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Cumulative
Distributions in
Excess of Earnings
|
|
Other
Comprehensive
Income/(Loss)
|
|
Noncontrolling
Interest
|
|
Total
Stockholders’
Equity
|
|||||||||||||||
Shares
|
|
Amount
|
|
|||||||||||||||||||||||
Balance, December 31, 2014
|
154,324
|
|
|
$
|
1,543
|
|
|
$
|
3,666,182
|
|
|
$
|
(1,396,958
|
)
|
|
$
|
8,301
|
|
|
$
|
1,609
|
|
|
$
|
2,280,677
|
|
Share repurchases as part of 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 preferred 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
|
—
|
|
|
—
|
|
|
—
|
|
|
131,304
|
|
|
—
|
|
|
—
|
|
|
131,304
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,640
|
)
|
|
—
|
|
|
(6,640
|
)
|
||||||
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
|
|
||||||
Share repurchases as part of an announced plan
|
(3,133
|
)
|
|
(31
|
)
|
|
—
|
|
|
(61,719
|
)
|
|
—
|
|
|
—
|
|
|
(61,750
|
)
|
||||||
Offering costs
|
—
|
|
|
—
|
|
|
(182
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(182
|
)
|
||||||
Dividends to common stockholders ($1.34 per share), dividends to preferred stockholders of subsidiary, and dividends reinvested
|
—
|
|
|
—
|
|
|
(233
|
)
|
|
(193,263
|
)
|
|
—
|
|
|
(45
|
)
|
|
(193,541
|
)
|
||||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
|
257
|
|
|
3
|
|
|
4,647
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,650
|
|
||||||
Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(15
|
)
|
||||||
Net income applicable to Piedmont
|
—
|
|
|
—
|
|
|
—
|
|
|
133,564
|
|
|
—
|
|
|
—
|
|
|
133,564
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,060
|
|
|
—
|
|
|
6,060
|
|
||||||
Balance, December 31, 2017
|
142,359
|
|
|
$
|
1,424
|
|
|
$
|
3,677,360
|
|
|
$
|
(1,702,281
|
)
|
|
$
|
8,164
|
|
|
$
|
1,822
|
|
|
$
|
1,986,489
|
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
133,549
|
|
|
$
|
99,717
|
|
|
$
|
131,319
|
|
Operating distributions received from unconsolidated joint ventures
|
11
|
|
|
579
|
|
|
774
|
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
119,288
|
|
|
127,733
|
|
|
134,503
|
|
|||
Amortization of debt issuance costs
|
1,588
|
|
|
1,702
|
|
|
1,768
|
|
|||
Loss on settlement of forward starting interest rate swaps
|
—
|
|
|
—
|
|
|
(1,284
|
)
|
|||
Other amortization
|
73,944
|
|
|
74,373
|
|
|
61,221
|
|
|||
Impairment loss on real estate assets
|
46,461
|
|
|
33,901
|
|
|
43,301
|
|
|||
Stock compensation expense
|
9,196
|
|
|
7,928
|
|
|
8,789
|
|
|||
Equity in income of unconsolidated joint ventures
|
(3,845
|
)
|
|
(362
|
)
|
|
(553
|
)
|
|||
Gain on sale of real estate assets, net
|
(115,874
|
)
|
|
(93,410
|
)
|
|
(129,683
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Increase in tenant and straight-line rent receivables, net
|
(21,392
|
)
|
|
(26,747
|
)
|
|
(29,478
|
)
|
|||
Decrease/(increase) in prepaid expenses and other assets
|
384
|
|
|
1,437
|
|
|
(1,440
|
)
|
|||
Increase/(decrease) in accounts payable and accrued expenses
|
(1,521
|
)
|
|
3,555
|
|
|
(162
|
)
|
|||
Increase in deferred income
|
1,016
|
|
|
1,441
|
|
|
4,613
|
|
|||
Net cash provided by operating activities
|
242,805
|
|
|
231,847
|
|
|
223,688
|
|
|||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Acquisition of real estate assets and intangibles
|
(35,262
|
)
|
|
(349,668
|
)
|
|
(387,923
|
)
|
|||
Capitalized expenditures, net of accruals
|
(79,831
|
)
|
|
(110,228
|
)
|
|
(118,671
|
)
|
|||
Redemption of noncontrolling interest in unconsolidated variable interest entity
|
—
|
|
|
—
|
|
|
(4,000
|
)
|
|||
Net sale proceeds from wholly-owned properties
|
375,518
|
|
|
365,918
|
|
|
848,169
|
|
|||
Net sale proceeds received from unconsolidated joint ventures
|
12,334
|
|
|
—
|
|
|
—
|
|
|||
Investments in unconsolidated joint ventures
|
(1,162
|
)
|
|
—
|
|
|
—
|
|
|||
Deferred lease costs paid
|
(30,985
|
)
|
|
(25,896
|
)
|
|
(37,683
|
)
|
|||
Net cash provided by/(used in) investing activities
|
240,612
|
|
|
(119,874
|
)
|
|
299,892
|
|
|||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Debt issuance costs paid
|
(132
|
)
|
|
(264
|
)
|
|
(1,081
|
)
|
|||
Proceeds from debt
|
180,000
|
|
|
695,000
|
|
|
1,301,858
|
|
|||
Repayments of debt
|
(476,401
|
)
|
|
(706,875
|
)
|
|
(1,544,301
|
)
|
|||
Costs of issuance of common stock
|
(182
|
)
|
|
(342
|
)
|
|
(326
|
)
|
|||
Shares withheld to pay tax obligations related to employee stock compensation
|
(3,403
|
)
|
|
(2,344
|
)
|
|
(1,710
|
)
|
|||
Repurchases of common stock as part of announced plan
|
(60,474
|
)
|
|
(7,943
|
)
|
|
(158,860
|
)
|
|||
Dividends paid and discount on dividend reinvestments
|
(122,274
|
)
|
|
(91,616
|
)
|
|
(126,531
|
)
|
|||
Net cash used in financing activities
|
(482,866
|
)
|
|
(114,384
|
)
|
|
(530,951
|
)
|
|||
Net increase/(decrease) in cash, cash equivalents, and restricted cash and escrows
|
551
|
|
|
(2,411
|
)
|
|
(7,371
|
)
|
|||
Cash, cash equivalents, and restricted cash and escrows, beginning of year
|
8,204
|
|
|
10,615
|
|
|
17,986
|
|
|||
Cash, cash equivalents, and restricted cash and escrows, end of year
|
$
|
8,755
|
|
|
$
|
8,204
|
|
|
$
|
10,615
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Intangible Lease Assets:
|
|
|
|
||||
Above-Market In-Place Lease Assets
|
$
|
11,935
|
|
|
$
|
25,425
|
|
In-Place Lease Valuation
|
$
|
165,015
|
|
|
$
|
183,422
|
|
Intangible Lease Origination Costs (included as component of Deferred Lease Costs)
|
$
|
250,539
|
|
|
$
|
261,075
|
|
Intangible Lease Liabilities (Below-Market In-Place Leases)
|
$
|
95,620
|
|
|
$
|
97,230
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Amortization of Intangible Lease Origination Costs and In-Place Lease Valuation included in amortization expense
|
$
|
58,467
|
|
|
$
|
58,150
|
|
|
$
|
42,278
|
|
Amortization of Above-Market and Below-Market In-Place Lease intangibles as a net increase to rental revenues
|
$
|
6,575
|
|
|
$
|
5,066
|
|
|
$
|
4,571
|
|
|
Intangible Lease Assets
|
|
|
|
|
||||||||||
|
Above-Market
In-place Lease Assets |
|
In-Place Lease Valuation
|
|
Intangible Lease
Origination Costs
(1)
|
|
Below-Market
In-place Lease
Liabilities
(2)
|
||||||||
For the year ending December 31:
|
|
|
|
|
|
|
|
||||||||
2018
|
$
|
1,600
|
|
|
$
|
18,497
|
|
|
$
|
28,023
|
|
|
$
|
8,449
|
|
2019
|
910
|
|
|
14,181
|
|
|
23,102
|
|
|
7,263
|
|
||||
2020
|
157
|
|
|
10,179
|
|
|
17,739
|
|
|
5,669
|
|
||||
2021
|
104
|
|
|
9,013
|
|
|
15,685
|
|
|
5,468
|
|
||||
2022
|
84
|
|
|
7,869
|
|
|
13,752
|
|
|
4,847
|
|
||||
Thereafter
|
142
|
|
|
15,069
|
|
|
27,800
|
|
|
7,142
|
|
||||
|
$
|
2,997
|
|
|
$
|
74,808
|
|
|
$
|
126,101
|
|
|
$
|
38,838
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-Average Amortization Period (in years)
|
3
|
|
|
6
|
|
|
7
|
|
|
6
|
|
(1)
|
Included as a component of Deferred Lease Costs in the accompanying consolidated balance sheets.
|
(2)
|
Includes approximately
$0.4 million
of future amortization of below-market in-place lease intangibles related to our 2017 Disposition Portfolio (see
Note 14
) below, which is classified as Other Liabilities Held for Sale, Net, on the accompanying consolidated balance sheets. These net below-market in-place lease intangibles will be included in the gain/loss on real estate assets upon their disposition on January 4, 2018.
|
•
|
escrow accounts held by lenders to pay future real estate taxes, insurance, debt service, and tenant improvements;
|
•
|
net sales proceeds from property sales held by qualified intermediary for potential Section 1031 exchange;
|
•
|
earnest money paid in connection with future acquisitions; and
|
•
|
security and utility deposits paid by tenants per the terms of their respective leases.
|
•
|
prepaid property taxes, insurance and operating costs;
|
•
|
deferred common area maintenance costs which will be reimbursed by tenants over specified time periods;
|
•
|
receivables which are unrelated to tenants, for example, insurance proceeds receivable from insurers related to casualty losses; and
|
•
|
equipment, furniture and fixtures, and tenant improvements for Piedmont’s corporate office and property management office space, net of accumulated depreciation.
|
•
|
Approximately
$50.8 million
,
$50.1 million
, and
$42.5 million
of deferred lease costs for the years ended
December 31, 2017
,
2016
, and
2015
, respectively, are included in amortization expense; and
|
•
|
Approximately
$4.8 million
,
$3.9 million
, and
$4.7 million
, of deferred lease costs related to lease incentives granted to tenants for the years ended
December 31, 2017
,
2016
, and
2015
, respectively, was included as an offset to rental income.
|
•
|
prepaid rent from tenants; and
|
•
|
tenant reimbursements related to operating expense or property tax expenses which may be due to tenants as part of an annual operating expense reconciliation.
|
Property
|
|
Metropolitan Statistical Area
|
|
Date of Acquisition
|
|
Ownership Percentage Acquired
|
|
Rentable Square Feet (Unaudited)
|
|
Percentage Leased as of Acquisition (Unaudited)
|
|
Net Contractual Purchase Price
(in millions)
|
|||||
Norman Pointe I
|
|
Minneapolis, Minnesota
|
|
December 28, 2017
|
|
100
|
%
|
|
213,851
|
|
|
71
|
%
|
|
$
|
35.2
|
|
Facility
(1)
|
|
Stated Rate
|
|
Effective Rate
(2)
|
|
Maturity
|
|
Amount Outstanding as of
|
||||||||
|
2017
|
|
2016
|
|||||||||||||
Secured (Fixed)
|
|
|
|
|
|
|
|
|
|
|
||||||
$140 Million WDC Fixed-Rate Loans
|
|
5.76
|
%
|
|
5.76
|
%
|
|
11/1/2017
|
|
$
|
—
|
|
|
$
|
140,000
|
|
$35 Million Fixed-Rate Loan
(3)
|
|
5.55
|
%
|
|
3.75
|
%
|
|
9/1/2021
|
|
30,670
|
|
|
31,583
|
|
||
$160 Million Fixed-Rate Loan
(4)
|
|
3.48
|
%
|
|
3.58
|
%
|
|
7/5/2022
|
|
160,000
|
|
|
160,000
|
|
||
Net premium and unamortized debt issuance costs
|
|
|
|
|
|
|
|
946
|
|
|
1,161
|
|
||||
Subtotal/Weighted Average
(5)
|
|
3.81
|
%
|
|
|
|
|
|
191,616
|
|
|
332,744
|
|
|||
Unsecured (Variable and Fixed)
|
|
|
|
|
|
|
|
|
|
|
||||||
$170 Million Unsecured 2015 Term Loan
(6)
|
|
LIBOR + 1.125%
|
|
|
2.54
|
%
|
|
5/15/2018
|
|
170,000
|
|
(7)
|
170,000
|
|
||
$300 Million Unsecured 2013 Term Loan
|
|
LIBOR + 1.20%
|
|
|
2.78
|
%
|
(8)
|
1/31/2019
|
|
300,000
|
|
(7)
|
300,000
|
|
||
$500 Million Unsecured 2015 Line of Credit
(6)
|
|
LIBOR + 1.00%
|
|
|
2.57
|
%
|
|
6/18/2019
|
(9)
|
23,000
|
|
|
178,000
|
|
||
$300 Million Unsecured 2011 Term Loan
|
|
LIBOR + 1.15%
|
|
|
3.35
|
%
|
(8)
|
1/15/2020
|
|
300,000
|
|
|
300,000
|
|
||
$350 Million Unsecured Senior Notes
|
|
3.40
|
%
|
|
3.43
|
%
|
|
6/01/2023
|
|
350,000
|
|
|
350,000
|
|
||
$400 Million Unsecured Senior Notes
|
|
4.45
|
%
|
|
4.10
|
%
|
|
3/15/2024
|
|
400,000
|
|
|
400,000
|
|
||
Discounts and unamortized debt issuance costs
|
|
|
|
|
|
|
|
(7,689)
|
|
|
(10,269)
|
|
||||
Subtotal/Weighted Average
(5)
|
|
3.43
|
%
|
|
|
|
|
|
1,535,311
|
|
|
1,687,731
|
|
|||
Total/Weighted Average
(5)
|
|
3.48
|
%
|
|
|
|
|
|
$
|
1,726,927
|
|
|
$
|
2,020,475
|
|
(1)
|
Other than the
$35 Million
Fixed-Rate Loan, all of Piedmont’s outstanding debt as of
December 31, 2017
and
2016
is interest-only.
|
(2)
|
Effective rate after consideration of settled or in-place interest rate swap agreements, issuance premiums/discounts, and/or fair market value adjustments upon assumption of debt.
|
(3)
|
Collateralized by the 5 Wall Street building in Burlington, Massachusetts.
|
(4)
|
Collateralized by the 1901 Market Street building in Philadelphia, Pennsylvania.
|
(5)
|
Weighted average is based on contractual balance of outstanding debt and the stated or effectively fixed interest rates in the table as of
December 31, 2017
.
|
(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 over the selected rate based on Piedmont’s current credit rating.
|
(7)
|
On January 4, 2018, Piedmont repaid the entire outstanding balance of the
$170 Million
Unsecured 2015 Term Loan and the
$300 Million
Unsecured 2013 Term Loan without penalty.
|
(8)
|
Facility has a stated variable rate; however, Piedmont has entered into interest rate swap agreements which effectively fix, exclusive of Piedmont's credit rating, the rate shown as the effective rate.
|
(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.
|
2018
|
$
|
170,882
|
|
(1)
|
2019
|
324,014
|
|
(1)
(2)
|
|
2020
|
301,072
|
|
|
|
2021
|
27,702
|
|
|
|
2022
|
160,000
|
|
|
|
Thereafter
|
750,000
|
|
|
|
Total
|
$
|
1,733,670
|
|
|
(1)
|
On January 4, 2018, Piedmont repaid the entire outstanding balance of the
$170 Million
Unsecured 2015 Term Loan and the
$300 Million
Unsecured 2013 Term Loan without penalty, which were scheduled to mature on May 15, 2018 and January 31, 2019, respectively.
|
(2)
|
Includes the balance outstanding as of
December 31, 2017
on the
$500 Million
Unsecured 2015 Line of Credit of
$23 million
. 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.
|
Entity
|
Piedmont’s
%
Ownership
of Entity
|
|
Related
Building
|
|
Net Carrying Amount as of
December 31,
2017
|
|
Net Carrying Amount as of
December 31,
2016
|
|
Primary Beneficiary
Considerations
|
|||||
1201 Eye Street N.W. Associates, LLC
|
98.6
|
%
|
(1)
|
1201 Eye
Street
|
|
$
|
81.1
|
|
|
$
|
(6.7
|
)
|
|
In accordance with the partnership’s governing documents, Piedmont currently receives 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
|
98.1
|
%
|
(1)
|
1225 Eye
Street
|
|
$
|
65.2
|
|
|
$
|
9.9
|
|
|
In accordance with the partnership’s governing documents, Piedmont currently receives 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
|
|
$
|
263.2
|
|
|
$
|
262.4
|
|
|
The Omnibus Agreement with the previous owner includes equity participation rights upon sale of the property 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.
|
(1)
|
During the year ended
December 31, 2017
, Piedmont repaid the
$140 million
mortgage secured by the 1201 and 1225 Eye Street properties, and recapitalized the LLCs holding each asset, increasing Piedmont's ownership from
49.5%
in each of the LLCs to the amounts stated above.
|
Interest Rate Derivatives:
|
|
Number of Swap Agreements
|
|
Associated Debt Instrument
|
|
Notional Amount
(in millions)
|
|
Effective Date
|
|
Maturity Date
|
|||
Interest rate swaps
|
|
4
|
|
(1)
|
$300 Million Unsecured 2013 Term Loan
|
|
$
|
200
|
|
|
1/30/2014
|
|
1/31/2019
|
Interest rate swaps
|
|
2
|
|
(1)
|
$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
|
|
|
|
|
|
(1)
|
In January 2018, Piedmont terminated these interest rate swap agreements in conjunction with the repayment of the
$300 Million
Unsecured 2013 Term Loan (see
Note 5
above). As a result of the termination, Piedmont received approximately
$0.8 million
from its counterparties for settlement of swaps and will recognize a net, non-cash loss of approximately
$1.1 million
in its statement of operations for the three months ending March 31, 2018.
|
Interest rate swaps classified as:
|
December 31, 2017
|
|
December 31, 2016
|
||||
Gross derivative assets
|
$
|
688
|
|
|
$
|
—
|
|
Gross derivative liabilities
|
(1,478
|
)
|
|
(8,169
|
)
|
||
Net derivative liability
|
$
|
(790
|
)
|
|
$
|
(8,169
|
)
|
Interest Rate Swaps in Cash Flow Hedging Relationships
|
2017
|
|
2016
|
|
2015
|
||||||
Amount of gain/(loss) recognized in OCI on derivatives
|
$
|
2,479
|
|
|
$
|
(4,126
|
)
|
|
$
|
(12,509
|
)
|
Amount of previously recorded loss reclassified from accumulated OCI into interest expense
|
$
|
3,502
|
|
|
$
|
4,548
|
|
|
$
|
5,875
|
|
|
December 31, 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)
|
$
|
7,382
|
|
|
$
|
7,382
|
|
|
Level 1
|
|
$
|
6,992
|
|
|
$
|
6,992
|
|
|
Level 1
|
Tenant receivables, net
(1)
|
$
|
12,139
|
|
|
$
|
12,139
|
|
|
Level 1
|
|
$
|
26,494
|
|
|
$
|
26,494
|
|
|
Level 1
|
Restricted cash and escrows
(1)
|
$
|
1,373
|
|
|
$
|
1,373
|
|
|
Level 1
|
|
$
|
1,212
|
|
|
$
|
1,212
|
|
|
Level 1
|
Interest rate swap asset
|
$
|
688
|
|
|
$
|
688
|
|
|
Level 2
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Level 2
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued expenses
(1)
|
$
|
126,429
|
|
|
$
|
126,429
|
|
|
Level 1
|
|
$
|
44,733
|
|
|
$
|
44,733
|
|
|
Level 1
|
Interest rate swap liability
|
$
|
1,478
|
|
|
$
|
1,478
|
|
|
Level 2
|
|
$
|
8,169
|
|
|
$
|
8,169
|
|
|
Level 2
|
Debt, net
|
$
|
1,726,927
|
|
|
$
|
1,759,905
|
|
|
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 its short-term maturity.
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Eastpoint I & II
(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,195
|
|
2 Gatehall Drive
(1)
|
|
—
|
|
|
—
|
|
|
37,106
|
|
|||
150 West Jefferson
(1)
|
|
—
|
|
|
8,259
|
|
|
—
|
|
|||
9221 Corporate Boulevard
(2)
|
|
—
|
|
|
2,692
|
|
|
—
|
|
|||
9200 and 9211 Corporate Boulevard
(3)
|
|
—
|
|
|
22,950
|
|
|
—
|
|
|||
Disposal Group of 13 Assets
(4)
|
|
46,461
|
|
|
—
|
|
|
—
|
|
|||
Total impairment loss on real estate assets
(5)
|
|
$
|
46,461
|
|
|
$
|
33,901
|
|
|
$
|
43,301
|
|
(1)
|
Piedmont recognized an impairment loss on real estate assets based upon the difference between the carrying value of the asset including a proportionate amount of goodwill (because the asset met the definition of a disposed "business" at the time of measurement) and the contracted 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 year ended December 31, 2016 calculated as the difference between the carrying value of the asset including a proportionate amount of goodwill and the anticipated contract sales price, less estimated selling costs.
|
(3)
|
Piedmont elected to sell its remaining
two
assets and exit the Rockville, Maryland sub-market of Washington, D.C., after selling the 9221 Corporate Boulevard building in July 2016 (mentioned above). Upon management's change in its hold period assumption for the assets from a long-term hold to a near-term sale, Piedmont recognized an impairment loss of approximately
$23.0 million
. The impairment loss was calculated as the difference between the carrying value of the asset including a proportionate amount of goodwill and the anticipated contracted sales price, less estimated selling costs.
|
(4)
|
During the fourth quarter 2017, Piedmont's management changed its hold period assumption and subsequently determined that a near-term sale was more than 50% probable for a disposal group of real estate assets. Piedmont recognized an impairment loss on this disposal group (see
Note 14
) based upon the difference between the carrying value of the assets (which did not include a proportionate amount of goodwill because the disposal group did not meet the definition of a disposed "business" at the time of measurement) and the contracted sales price, less estimated selling costs.
|
(5)
|
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.
|
|
2018
|
$
|
93
|
|
|
2019
|
93
|
|
|
|
2020
|
93
|
|
|
|
2021
|
93
|
|
|
|
2022
|
93
|
|
|
|
Thereafter
|
2,346
|
|
|
|
Total
|
$
|
2,811
|
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested and Potential 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
|
57,526
|
|
|
$
|
24.68
|
|
Performance Stock Awards Vested
|
(118,446
|
)
|
|
$
|
22.00
|
|
Deferred Stock Awards Vested
|
(305,107
|
)
|
|
$
|
19.34
|
|
Deferred Stock Awards Forfeited
|
(9,010
|
)
|
|
$
|
19.93
|
|
Unvested and Potential Stock Awards as of December 31, 2017
|
868,437
|
|
|
$
|
21.69
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Weighted-Average Grant Date Fair Value of Deferred Stock Granted During the Period (per share)
|
$
|
21.38
|
|
|
$
|
19.96
|
|
|
$
|
17.59
|
|
Total Grant Date Fair Value of Deferred Stock Vested During the Period
|
$
|
5,899
|
|
|
$
|
4,806
|
|
|
$
|
4,239
|
|
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 years ended
December 31, 2017
and
2016
, respectively.
|
(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
December 31, 2017
.
|
(2)
|
Estimated based on Piedmont's cumulative TSR for the respective performance period through
December 31, 2017
. Share estimates are subject to change in future periods based upon Piedmont's relative performance compared to its peers' total stockholder return.
|
|
2017
|
|
2016
|
|
2015
|
|||
Weighted-average common shares—basic
|
145,044
|
|
|
145,230
|
|
|
150,538
|
|
Plus: Incremental weighted-average shares from time-vested deferred and performance stock awards
|
336
|
|
|
405
|
|
|
342
|
|
Weighted-average common shares—diluted
|
145,380
|
|
|
145,635
|
|
|
150,880
|
|
|
|
|
|
|
|
|||
Common stock issued and outstanding as of period end
|
142,359
|
|
|
145,235
|
|
|
145,512
|
|
Years ending December 31:
|
|
All properties owned as of December 31, 2017
|
|
Excluding properties held for sale as of December 31, 2017
|
||||
2018
|
|
$
|
417,643
|
|
|
$
|
377,447
|
|
2019
|
|
401,120
|
|
|
361,280
|
|
||
2020
|
|
377,556
|
|
|
338,269
|
|
||
2021
|
|
344,991
|
|
|
307,008
|
|
||
2022
|
|
316,053
|
|
|
287,175
|
|
||
Thereafter
|
|
1,348,156
|
|
|
1,298,890
|
|
||
Total
|
|
$
|
3,205,519
|
|
|
$
|
2,970,069
|
|
Buildings Sold
|
|
Location
|
|
Date of Sale
|
|
Gain/(Loss) on Sale
|
|
Net Sales Proceeds
|
|
||||
3900 Dallas Parkway
|
|
Plano, Texas
|
|
January 30, 2015
|
|
$
|
8,940
|
|
|
$
|
25,803
|
|
|
5601 Headquarters Drive
|
|
Plano, Texas
|
|
April 28, 2015
|
|
$
|
6,390
|
|
|
$
|
33,326
|
|
|
River Corporate Center
|
|
Tempe, Arizona
|
|
April 29, 2015
|
|
$
|
4,144
|
|
|
$
|
24,223
|
|
|
Copper Ridge Center
|
|
Lyndhurst, New Jersey
|
|
May 1, 2015
|
|
$
|
11,358
|
|
|
$
|
50,372
|
|
(1)
|
Eastpoint I & II
|
|
Mayfield Heights, Ohio
|
|
July 28, 2015
|
|
$
|
(177
|
)
|
(2)
|
$
|
17,342
|
|
|
3750 Brookside Parkway
|
|
Alpharetta, Georgia
|
|
August 10, 2015
|
|
$
|
761
|
|
|
$
|
13,624
|
|
|
Chandler Forum
|
|
Chandler, Arizona
|
|
September 1, 2015
|
|
$
|
13,805
|
|
|
$
|
32,267
|
|
|
Aon Center
|
|
Chicago, Illinois
|
|
October 29, 2015
|
|
$
|
84,218
|
|
|
$
|
646,243
|
|
|
2 Gatehall Drive
|
|
Parsippany, New Jersey
|
|
December 21, 2015
|
|
$
|
162
|
|
(2)
|
$
|
50,369
|
|
|
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
|
|
(3)
|
9221 Corporate Boulevard
|
|
Rockville, Maryland
|
|
July 27, 2016
|
|
$
|
(192
|
)
|
(2)
|
$
|
12,035
|
|
|
150 West Jefferson
|
|
Detroit, Michigan
|
|
July 29, 2016
|
|
$
|
(664
|
)
|
(2)
|
$
|
77,844
|
|
|
9200 and 9211 Corporate Boulevard
|
|
Rockville, Maryland
|
|
September 28, 2016
|
|
$
|
(41
|
)
|
(2)
|
$
|
12,519
|
|
|
11695 Johns Creek Parkway
|
|
Johns Creek, Georgia
|
|
December 22, 2016
|
|
$
|
1,978
|
|
|
$
|
13,827
|
|
|
Braker Pointe III
|
|
Austin, Texas
|
|
December 29, 2016
|
|
$
|
18,579
|
|
|
$
|
48,006
|
|
|
Sarasota Commerce Center II
|
|
Sarasota, Florida
|
|
June 16, 2017
|
|
$
|
6,493
|
|
|
$
|
23,090
|
|
|
Two Independence Square
|
|
Washington, D.C.
|
|
July 5, 2017
|
|
$
|
109,381
|
|
|
$
|
352,428
|
|
|
8560 Upland Drive
|
|
Denver, Colorado
|
|
July 27, 2017
|
|
$
|
3,683
|
|
|
$
|
12,334
|
|
(4)
|
(1)
|
As part of the transaction, Piedmont accepted a secured promissory note from the buyer for the remaining
$45.4 million
owed on the sale. During the year ended December 31, 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 discussed in
Note 9
above, Piedmont recognized an impairment loss prior to, or in conjunction with, the sale of the property. Therefore, any gain/(loss) recognized upon the consummation of the sale consists solely of adjustments made subsequent to the sale for closing cost estimates or post-closing prorations.
|
(3)
|
As part of the transaction, Piedmont accepted a secured promissory note from the buyer for
$33.0 million
, and the note receivable was repaid in full during the year ended December 31, 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.
|
(4)
|
Property was owned as part of the unconsolidated joint venture, Fund XIII and REIT Joint Venture. As such, the gain on sale is presented as equity in income/(loss) of unconsolidated joint ventures. Amounts shown above reflect Piedmont's approximate
72%
ownership.
|
Building
|
|
Location
|
Desert Canyon 300
|
|
Phoenix, Arizona
|
Windy Point I and II
|
|
Schaumburg, Illinois
|
2300 Cabot Drive
|
|
Lisle, Illinois
|
1075 West Entrance Drive
|
|
Auburn Hills, Michigan
|
Auburn Hills Corporate Center
|
|
Auburn Hills, Michigan
|
5301 Maryland Way
|
|
Brentwood, Tennessee
|
Suwanee Gateway One
|
|
Suwanee, Georgia
|
5601 Hiatus Road
|
|
Tamarac, Florida
|
2001 NW 64th Street
|
|
Fort Lauderdale, Florida
|
Piedmont Pointe I & II
|
|
Bethesda, Maryland
|
1200 Crown Colony Drive
|
|
Quincy, Massachusetts
|
2120 West End Avenue
|
|
Nashville, Tennessee
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Real estate assets held for sale, net:
|
|
|
|
|
||||
Land
|
|
$
|
74,498
|
|
|
$
|
127,209
|
|
Building and improvements, less accumulated depreciation of $169,116 and $244,269 as of December 31, 2017, and 2016, respectively
|
|
255,634
|
|
|
485,145
|
|
||
Construction in progress
|
|
2,278
|
|
|
365
|
|
||
Total real estate assets held for sale, net
|
|
$
|
332,410
|
|
|
$
|
612,719
|
|
|
|
|
|
|
||||
Other assets held for sale, net:
|
|
|
|
|
||||
Straight-line rent receivables
|
|
$
|
25,975
|
|
|
$
|
28,986
|
|
Prepaid expenses and other assets
|
|
328
|
|
|
374
|
|
||
Deferred lease costs, less accumulated amortization of $16,549 and $18,937 as of December 31, 2017 and 2016, respectively
|
|
20,828
|
|
|
29,272
|
|
||
Total other assets held for sale, net
|
|
$
|
47,131
|
|
|
$
|
58,632
|
|
|
|
|
|
|
||||
Other liabilities held for sale, net:
|
|
|
|
|
||||
Intangible lease liabilities, less accumulated amortization of $935 and $848 as of December 31, 2017 and 2016, respectively
|
|
$
|
380
|
|
|
$
|
468
|
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Rental income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Tenant reimbursements
|
—
|
|
|
—
|
|
|
64
|
|
|||
|
—
|
|
|
—
|
|
|
83
|
|
|||
Expenses:
|
|
|
|
|
|
||||||
Property operating costs
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
|
|
|
|
|
|
||||||
Operating income, excluding loss on sale of real estate assets
|
—
|
|
|
—
|
|
|
84
|
|
|||
Loss on sale of real estate assets
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Income from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
83
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Accrued capital expenditures and deferred lease costs
|
$
|
11,276
|
|
|
$
|
14,427
|
|
|
$
|
20,630
|
|
Change in accrued dividends and discount on dividend reinvestments
|
$
|
71,267
|
|
|
$
|
30,532
|
|
|
$
|
—
|
|
Change in accrued share repurchases as part of an announced plan
|
$
|
1,276
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment in consolidated joint venture
|
$
|
63,026
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash and cash equivalents
|
|
$
|
7,382
|
|
|
$
|
6,992
|
|
|
$
|
5,441
|
|
Restricted cash and escrows:
|
|
|
|
|
|
|
||||||
Real estate tax and escrowed cash
|
|
833
|
|
|
757
|
|
|
4,772
|
|
|||
Security and utility deposit escrows
|
|
540
|
|
|
455
|
|
|
402
|
|
|||
Total cash, cash equivalents, and restricted cash and escrows shown in the consolidated statement of cash flows
|
|
$
|
8,755
|
|
|
$
|
8,204
|
|
|
$
|
10,615
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
GAAP basis financial statement net income
|
$
|
133,564
|
|
|
$
|
99,732
|
|
|
$
|
131,304
|
|
Increase (decrease) in net income resulting from:
|
|
|
|
|
|
||||||
Depreciation and amortization expense recognized for financial reporting purposes in excess of/(less than) amounts recognized for income tax purposes
|
62,916
|
|
|
69,214
|
|
|
(1,717
|
)
|
|||
Rental income accrued for income tax purposes less than amounts for financial reporting purposes
|
(25,432
|
)
|
|
(18,964
|
)
|
|
(12,123
|
)
|
|||
Net amortization of above/below-market lease intangibles for income tax purposes in excess of amounts for financial reporting purposes
|
(6,041
|
)
|
|
(4,895
|
)
|
|
(4,614
|
)
|
|||
Gain on disposal of property for financial reporting purposes less than/(in excess of) amounts for income tax purposes
|
10,068
|
|
|
(118,713
|
)
|
|
(43,493
|
)
|
|||
Taxable income/(loss) of Piedmont Washington Properties, Inc., in excess of/(less than) amount for financial reporting purposes
|
176
|
|
|
(1,042
|
)
|
|
2,491
|
|
|||
Other expenses, including impairment loss on real estate assets, for financial reporting purposes in excess of amounts for income tax purposes
|
49,859
|
|
|
42,019
|
|
|
54,425
|
|
|||
Taxable income for Piedmont Office Holdings, Inc. in excess of/(less than) amount for financial reporting purposes
|
(28
|
)
|
|
648
|
|
|
—
|
|
|||
Income tax basis net income, prior to dividends paid deduction
|
$
|
225,082
|
|
|
$
|
67,999
|
|
|
$
|
126,273
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Ordinary income
|
53.61
|
%
|
|
81.77
|
%
|
|
31.75
|
%
|
Return of capital
|
—
|
%
|
|
18.23
|
%
|
|
—
|
%
|
Capital gains
|
46.39
|
%
|
|
—
|
%
|
|
68.25
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
2017
|
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
||||||||
Revenues
|
$
|
148,463
|
|
|
$
|
148,679
|
|
|
$
|
137,587
|
|
|
$
|
139,444
|
|
|
Real estate operating income/(loss)
|
$
|
33,300
|
|
|
$
|
35,491
|
|
|
$
|
28,756
|
|
|
$
|
(16,250
|
)
|
|
Income/(loss) from continuing operations
|
$
|
15,154
|
|
|
$
|
17,215
|
|
|
$
|
16,617
|
|
|
$
|
(31,311
|
)
|
|
Gain/(loss) on sale of real estate assets
|
$
|
(53
|
)
|
|
$
|
6,492
|
|
|
$
|
109,512
|
|
|
$
|
(77
|
)
|
|
Net income/(loss) applicable to Piedmont
|
$
|
15,104
|
|
|
$
|
23,710
|
|
|
$
|
126,133
|
|
|
$
|
(31,383
|
)
|
|
Basic and diluted earnings/(loss) per share
|
$
|
0.10
|
|
|
$
|
0.16
|
|
|
$
|
0.87
|
|
|
$
|
(0.21
|
)
|
|
Dividends declared per share
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.71
|
|
(1)
|
(1)
|
On December 13, 2017, Piedmont's board of directors declared a special dividend of
$0.50
per share. The record date was December 26, 2017, and the payment date was January 9, 2018.
|
|
2016
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
Revenues
|
$
|
138,012
|
|
|
$
|
135,307
|
|
|
$
|
138,485
|
|
|
$
|
143,911
|
|
Real estate operating income/(loss)
|
$
|
26,372
|
|
|
$
|
14,791
|
|
|
$
|
2,988
|
|
|
$
|
26,633
|
|
Income/(loss) from continuing operations
|
$
|
10,396
|
|
|
$
|
(1,553
|
)
|
|
$
|
(13,065
|
)
|
|
$
|
10,529
|
|
Income/(loss) from discontinued operations
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
Gain/(loss) on sale of real estate assets
|
$
|
(20
|
)
|
|
$
|
73,835
|
|
|
$
|
(57
|
)
|
|
$
|
19,652
|
|
Net income/(loss) applicable to Piedmont
|
$
|
10,372
|
|
|
$
|
72,278
|
|
|
$
|
(13,107
|
)
|
|
$
|
30,189
|
|
Basic and diluted earnings/(loss) per share
|
$
|
0.07
|
|
|
$
|
0.50
|
|
|
$
|
(0.09
|
)
|
|
$
|
0.21
|
|
Dividends declared per share
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
Condensed Consolidated Balance Sheets
|
|||||||||||||||||||
As of December 31, 2017
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate assets, at cost:
|
|
|
|
|
|
|
|
|
|
||||||||||
Land
|
$
|
36,094
|
|
|
$
|
—
|
|
|
$
|
508,700
|
|
|
$
|
—
|
|
|
$
|
544,794
|
|
Buildings and improvements, less accumulated depreciation
|
180,886
|
|
|
—
|
|
|
2,237,437
|
|
|
(300
|
)
|
|
2,418,023
|
|
|||||
Intangible lease assets, less accumulated amortization
|
181
|
|
|
—
|
|
|
77,624
|
|
|
—
|
|
|
77,805
|
|
|||||
Construction in progress
|
85
|
|
|
—
|
|
|
11,625
|
|
|
—
|
|
|
11,710
|
|
|||||
Real estate assets held for sale, net
|
32,815
|
|
|
—
|
|
|
299,595
|
|
|
—
|
|
|
332,410
|
|
|||||
Total real estate assets
|
250,061
|
|
|
—
|
|
|
3,134,981
|
|
|
(300
|
)
|
|
3,384,742
|
|
|||||
Cash and cash equivalents
|
3,890
|
|
|
150
|
|
|
3,342
|
|
|
—
|
|
|
7,382
|
|
|||||
Tenant and straight-line receivables, net, and amounts due from unconsolidated joint ventures
|
16,891
|
|
|
—
|
|
|
158,418
|
|
|
—
|
|
|
175,309
|
|
|||||
Advances to affiliates
|
6,297,632
|
|
|
1,674,276
|
|
|
—
|
|
|
(7,971,908
|
)
|
|
—
|
|
|||||
Investment in subsidiary
|
—
|
|
|
3,437,299
|
|
|
172
|
|
|
(3,437,471
|
)
|
|
—
|
|
|||||
Notes receivable
|
88,810
|
|
|
—
|
|
|
144,500
|
|
|
(233,310
|
)
|
|
—
|
|
|||||
Prepaid expenses, restricted cash, escrows, interest rate swap, and other assets
|
5,094
|
|
|
2
|
|
|
20,222
|
|
|
(740
|
)
|
|
24,578
|
|
|||||
Goodwill
|
98,918
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
98,918
|
|
|||||
Deferred lease costs, net
|
16,611
|
|
|
—
|
|
|
245,296
|
|
|
—
|
|
|
261,907
|
|
|||||
Other assets held for sale, net
|
2,266
|
|
|
—
|
|
|
44,865
|
|
|
—
|
|
|
47,131
|
|
|||||
Total assets
|
$
|
6,780,173
|
|
|
$
|
5,111,727
|
|
|
$
|
3,751,796
|
|
|
$
|
(11,643,729
|
)
|
|
$
|
3,999,967
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt, net
|
$
|
1,535,239
|
|
|
$
|
—
|
|
|
$
|
424,998
|
|
|
$
|
(233,310
|
)
|
|
$
|
1,726,927
|
|
Accounts payable, accrued expenses, dividends payable, and accrued capital expenditures
|
20,279
|
|
|
104,028
|
|
|
93,086
|
|
|
(740
|
)
|
|
216,653
|
|
|||||
Advances from affiliates
|
941,494
|
|
|
5,277,957
|
|
|
1,850,712
|
|
|
(8,070,163
|
)
|
|
—
|
|
|||||
Deferred income
|
3,631
|
|
|
—
|
|
|
25,951
|
|
|
—
|
|
|
29,582
|
|
|||||
Intangible lease liabilities, net
|
—
|
|
|
—
|
|
|
38,458
|
|
|
—
|
|
|
38,458
|
|
|||||
Interest rate swaps
|
1,478
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,478
|
|
|||||
Other liabilities held for sale, net
|
—
|
|
|
—
|
|
|
380
|
|
|
—
|
|
|
380
|
|
|||||
Total liabilities
|
2,502,121
|
|
|
5,381,985
|
|
|
2,433,585
|
|
|
(8,304,213
|
)
|
|
2,013,478
|
|
|||||
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
—
|
|
|
1,424
|
|
|
—
|
|
|
—
|
|
|
1,424
|
|
|||||
Additional paid-in capital
|
3,433,299
|
|
|
3,680,232
|
|
|
1,300
|
|
|
(3,437,471
|
)
|
|
3,677,360
|
|
|||||
Retained/(cumulative distributions in excess of) earnings
|
836,589
|
|
|
(3,951,914
|
)
|
|
1,315,089
|
|
|
97,955
|
|
|
(1,702,281
|
)
|
|||||
Other comprehensive loss
|
8,164
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,164
|
|
|||||
Piedmont stockholders’ equity
|
4,278,052
|
|
|
(270,258
|
)
|
|
1,316,389
|
|
|
(3,339,516
|
)
|
|
1,984,667
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
1,822
|
|
|
—
|
|
|
1,822
|
|
|||||
Total stockholders’ equity
|
4,278,052
|
|
|
(270,258
|
)
|
|
1,318,211
|
|
|
(3,339,516
|
)
|
|
1,986,489
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
6,780,173
|
|
|
$
|
5,111,727
|
|
|
$
|
3,751,796
|
|
|
$
|
(11,643,729
|
)
|
|
$
|
3,999,967
|
|
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
|
$
|
38,298
|
|
|
$
|
—
|
|
|
$
|
504,342
|
|
|
$
|
—
|
|
|
$
|
542,640
|
|
Buildings and improvements, less accumulated depreciation
|
202,084
|
|
|
—
|
|
|
2,240,394
|
|
|
(300
|
)
|
|
2,442,178
|
|
|||||
Intangible lease assets, less accumulated amortization
|
725
|
|
|
—
|
|
|
98,970
|
|
|
—
|
|
|
99,695
|
|
|||||
Construction in progress
|
145
|
|
|
—
|
|
|
34,315
|
|
|
—
|
|
|
34,460
|
|
|||||
Real estate assets held for sale, net
|
33,945
|
|
|
—
|
|
|
578,774
|
|
|
—
|
|
|
612,719
|
|
|||||
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
|
18,517
|
|
|
—
|
|
|
144,839
|
|
|
—
|
|
|
163,356
|
|
|||||
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
|
6,173
|
|
|
—
|
|
|
20,217
|
|
|
(1,897
|
)
|
|
24,493
|
|
|||||
Goodwill
|
98,918
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
98,918
|
|
|||||
Deferred lease costs, net
|
14,776
|
|
|
—
|
|
|
261,949
|
|
|
—
|
|
|
276,725
|
|
|||||
Other assets held for sale, net
|
3,432
|
|
|
—
|
|
|
55,200
|
|
|
—
|
|
|
58,632
|
|
|||||
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
|
—
|
|
|
—
|
|
|
47,537
|
|
|
—
|
|
|
47,537
|
|
|||||
Interest rate swaps
|
8,169
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,169
|
|
|||||
Other liabilities held for sale, net
|
—
|
|
|
—
|
|
|
468
|
|
|
—
|
|
|
468
|
|
|||||
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 loss
|
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 year ended December 31, 2017
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
42,593
|
|
|
$
|
—
|
|
|
$
|
434,975
|
|
|
$
|
(1,791
|
)
|
|
$
|
475,777
|
|
Tenant reimbursements
|
11,660
|
|
|
—
|
|
|
85,525
|
|
|
(474
|
)
|
|
96,711
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
18,155
|
|
|
(16,470
|
)
|
|
1,685
|
|
|||||
|
54,253
|
|
|
—
|
|
|
538,655
|
|
|
(18,735
|
)
|
|
574,173
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
22,805
|
|
|
—
|
|
|
216,560
|
|
|
(18,735
|
)
|
|
220,630
|
|
|||||
Depreciation
|
12,995
|
|
|
—
|
|
|
106,293
|
|
|
—
|
|
|
119,288
|
|
|||||
Amortization
|
3,049
|
|
|
—
|
|
|
72,318
|
|
|
—
|
|
|
75,367
|
|
|||||
Impairment loss on real estate assets
|
87
|
|
|
—
|
|
|
46,374
|
|
|
—
|
|
|
46,461
|
|
|||||
General and administrative
|
6,443
|
|
|
347
|
|
|
24,340
|
|
|
—
|
|
|
31,130
|
|
|||||
|
45,379
|
|
|
347
|
|
|
465,885
|
|
|
(18,735
|
)
|
|
492,876
|
|
|||||
Real estate operating income/(loss)
|
8,874
|
|
|
(347
|
)
|
|
72,770
|
|
|
—
|
|
|
81,297
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(56,769
|
)
|
|
—
|
|
|
(26,715
|
)
|
|
15,360
|
|
|
(68,124
|
)
|
|||||
Other income/(expense)
|
9,168
|
|
|
—
|
|
|
6,849
|
|
|
(15,360
|
)
|
|
657
|
|
|||||
Equity in income of unconsolidated joint ventures
|
3,845
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,845
|
|
|||||
|
(43,756
|
)
|
|
—
|
|
|
(19,866
|
)
|
|
—
|
|
|
(63,622
|
)
|
|||||
Income/(loss) from continuing operations
|
(34,882
|
)
|
|
(347
|
)
|
|
52,904
|
|
|
—
|
|
|
17,675
|
|
|||||
Gain on sale of real estate assets
|
6,431
|
|
|
—
|
|
|
109,443
|
|
|
—
|
|
|
115,874
|
|
|||||
Net income/(loss)
|
(28,451
|
)
|
|
(347
|
)
|
|
162,347
|
|
|
—
|
|
|
133,549
|
|
|||||
Plus: Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
(28,451
|
)
|
|
$
|
(347
|
)
|
|
$
|
162,362
|
|
|
$
|
—
|
|
|
$
|
133,564
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the year ended December 31, 2016
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
55,007
|
|
|
$
|
—
|
|
|
$
|
407,514
|
|
|
$
|
(2,631
|
)
|
|
$
|
459,890
|
|
Tenant reimbursements
|
14,081
|
|
|
—
|
|
|
80,378
|
|
|
(498
|
)
|
|
93,961
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
16,897
|
|
|
(15,033
|
)
|
|
1,864
|
|
|||||
|
69,088
|
|
|
—
|
|
|
504,789
|
|
|
(18,162
|
)
|
|
555,715
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
31,967
|
|
|
—
|
|
|
205,344
|
|
|
(18,377
|
)
|
|
218,934
|
|
|||||
Depreciation
|
16,657
|
|
|
—
|
|
|
111,076
|
|
|
—
|
|
|
127,733
|
|
|||||
Amortization
|
3,715
|
|
|
—
|
|
|
71,404
|
|
|
—
|
|
|
75,119
|
|
|||||
Impairment loss on real estate assets
|
8,259
|
|
|
—
|
|
|
25,642
|
|
|
—
|
|
|
33,901
|
|
|||||
General and administrative
|
28,314
|
|
|
311
|
|
|
36,065
|
|
|
(35,446
|
)
|
|
29,244
|
|
|||||
|
88,912
|
|
|
311
|
|
|
449,531
|
|
|
(53,823
|
)
|
|
484,931
|
|
|||||
Real estate operating income/(loss)
|
(19,824
|
)
|
|
(311
|
)
|
|
55,258
|
|
|
35,661
|
|
|
70,784
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(49,108
|
)
|
|
—
|
|
|
(27,636
|
)
|
|
11,884
|
|
|
(64,860
|
)
|
|||||
Other income/(expense)
|
9,560
|
|
|
282
|
|
|
2,029
|
|
|
(11,884
|
)
|
|
(13
|
)
|
|||||
Net recoveries from casualty events
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
|||||
Equity in income of unconsolidated joint ventures
|
362
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
362
|
|
|||||
|
(39,186
|
)
|
|
282
|
|
|
(25,573
|
)
|
|
—
|
|
|
(64,477
|
)
|
|||||
Income/(loss) from continuing operations
|
(59,010
|
)
|
|
(29
|
)
|
|
29,685
|
|
|
35,661
|
|
|
6,307
|
|
|||||
Gain on sale of real estate assets
|
31,275
|
|
|
—
|
|
|
62,135
|
|
|
—
|
|
|
93,410
|
|
|||||
Net income/(loss)
|
(27,735
|
)
|
|
(29
|
)
|
|
91,820
|
|
|
35,661
|
|
|
99,717
|
|
|||||
Plus: Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
(27,735
|
)
|
|
$
|
(29
|
)
|
|
$
|
91,835
|
|
|
$
|
35,661
|
|
|
$
|
99,732
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the year ended December 31, 2015
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
67,317
|
|
|
$
|
—
|
|
|
$
|
404,460
|
|
|
$
|
(2,905
|
)
|
|
$
|
468,872
|
|
Tenant reimbursements
|
13,340
|
|
|
—
|
|
|
100,955
|
|
|
(414
|
)
|
|
113,881
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
17,801
|
|
|
(15,785
|
)
|
|
2,016
|
|
|||||
|
80,657
|
|
|
—
|
|
|
523,216
|
|
|
(19,104
|
)
|
|
584,769
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
36,380
|
|
|
—
|
|
|
225,428
|
|
|
(19,786
|
)
|
|
242,022
|
|
|||||
Depreciation
|
20,891
|
|
|
—
|
|
|
113,612
|
|
|
—
|
|
|
134,503
|
|
|||||
Amortization
|
4,598
|
|
|
—
|
|
|
56,288
|
|
|
—
|
|
|
60,886
|
|
|||||
Impairment loss
|
6,195
|
|
|
—
|
|
|
37,106
|
|
|
—
|
|
|
43,301
|
|
|||||
General and administrative
|
29,645
|
|
|
341
|
|
|
35,923
|
|
|
(35,563
|
)
|
|
30,346
|
|
|||||
|
97,709
|
|
|
341
|
|
|
468,357
|
|
|
(55,349
|
)
|
|
511,058
|
|
|||||
Real estate operating income/(loss)
|
(17,052
|
)
|
|
(341
|
)
|
|
54,859
|
|
|
36,245
|
|
|
73,711
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(51,704
|
)
|
|
—
|
|
|
(33,540
|
)
|
|
11,246
|
|
|
(73,998
|
)
|
|||||
Other income/(expense)
|
12,600
|
|
|
—
|
|
|
211
|
|
|
(11,246
|
)
|
|
1,565
|
|
|||||
Net recoveries/(loss) from casualty events
|
23
|
|
|
—
|
|
|
(301
|
)
|
|
—
|
|
|
(278
|
)
|
|||||
Equity in loss of unconsolidated joint ventures
|
553
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
553
|
|
|||||
|
(38,528
|
)
|
|
—
|
|
|
(33,630
|
)
|
|
—
|
|
|
(72,158
|
)
|
|||||
Income/(loss) from continuing operations
|
(55,580
|
)
|
|
(341
|
)
|
|
21,229
|
|
|
36,245
|
|
|
1,553
|
|
|||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income
|
15
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
84
|
|
|||||
Loss on sale of real estate assets
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Income from discontinued operations
|
14
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
83
|
|
|||||
Gain on sale of real estate assets
|
45,225
|
|
|
—
|
|
|
84,458
|
|
|
—
|
|
|
129,683
|
|
|||||
Net income/(loss)
|
(10,341
|
)
|
|
(341
|
)
|
|
105,756
|
|
|
36,245
|
|
|
131,319
|
|
|||||
Plus: Net income applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
(10,341
|
)
|
|
$
|
(341
|
)
|
|
$
|
105,741
|
|
|
$
|
36,245
|
|
|
$
|
131,304
|
|
Condensed Consolidated Statements of Cash Flows
|
|||||||||||||||||||
For the year ended December 31, 2017
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Cash Provided By/(Used In) Operating Activities
|
$
|
(18,989
|
)
|
|
$
|
5,497
|
|
|
$
|
256,297
|
|
|
$
|
—
|
|
|
$
|
242,805
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets, consolidated joint venture, and real estate related intangibles, net of accruals
|
(1,614
|
)
|
|
—
|
|
|
(113,479
|
)
|
|
—
|
|
|
(115,093
|
)
|
|||||
Intercompany note receivable
|
100
|
|
|
—
|
|
|
(48,710
|
)
|
|
48,610
|
|
|
—
|
|
|||||
Net sales proceeds from wholly-owned properties
|
23,028
|
|
|
—
|
|
|
352,490
|
|
|
—
|
|
|
375,518
|
|
|||||
Net sales proceeds received from unconsolidated joint ventures
|
12,334
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,334
|
|
|||||
Investments in unconsolidated joint ventures
|
(1,162
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,162
|
)
|
|||||
Deferred lease costs paid
|
(4,081
|
)
|
|
—
|
|
|
(26,904
|
)
|
|
—
|
|
|
(30,985
|
)
|
|||||
Net cash provided by/(used in) investing activities
|
28,605
|
|
|
—
|
|
|
163,397
|
|
|
48,610
|
|
|
240,612
|
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance costs paid
|
(132
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(132
|
)
|
|||||
Proceeds from debt
|
180,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
180,000
|
|
|||||
Repayments of debt
|
(335,000
|
)
|
|
—
|
|
|
(141,401
|
)
|
|
—
|
|
|
(476,401
|
)
|
|||||
Intercompany note payable
|
(14,289
|
)
|
|
—
|
|
|
62,899
|
|
|
(48,610
|
)
|
|
—
|
|
|||||
Costs of issuance of common stock
|
—
|
|
|
(182
|
)
|
|
—
|
|
|
—
|
|
|
(182
|
)
|
|||||
Shares withheld to pay tax obligations related to employee stock compensation
|
—
|
|
|
(3,403
|
)
|
|
—
|
|
|
—
|
|
|
(3,403
|
)
|
|||||
Repurchases of common stock as part of announced plan
|
—
|
|
|
(60,474
|
)
|
|
—
|
|
|
—
|
|
|
(60,474
|
)
|
|||||
(Distributions to)/repayments from affiliates
|
160,019
|
|
|
180,791
|
|
|
(340,810
|
)
|
|
—
|
|
|
—
|
|
|||||
Dividends paid and discount on dividend reinvestments
|
—
|
|
|
(122,229
|
)
|
|
(45
|
)
|
|
—
|
|
|
(122,274
|
)
|
|||||
Net cash provided by/(used in) financing activities
|
(9,402
|
)
|
|
(5,497
|
)
|
|
(419,357
|
)
|
|
(48,610
|
)
|
|
(482,866
|
)
|
|||||
Net increase/(decrease) in cash, cash equivalents, and restricted cash and escrows
|
214
|
|
|
—
|
|
|
337
|
|
|
—
|
|
|
551
|
|
|||||
Cash, cash equivalents, and restricted cash and escrows, beginning of year
|
3,693
|
|
|
150
|
|
|
4,361
|
|
|
—
|
|
|
8,204
|
|
|||||
Cash, cash equivalents, and restricted cash and escrows, end of year
|
$
|
3,907
|
|
|
$
|
150
|
|
|
$
|
4,698
|
|
|
$
|
—
|
|
|
$
|
8,755
|
|
Condensed Consolidated Statements of Cash Flows
|
|||||||||||||||||||
For the year ended December 31, 2016
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Cash Provided By/(Used In) Operating Activities
|
$
|
(26,263
|
)
|
|
$
|
5,214
|
|
|
$
|
217,236
|
|
|
$
|
35,660
|
|
|
$
|
231,847
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets, consolidated joint venture, and real estate related intangibles, net of accruals
|
(5,060
|
)
|
|
—
|
|
|
(454,836
|
)
|
|
—
|
|
|
(459,896
|
)
|
|||||
Intercompany note receivable
|
440
|
|
|
—
|
|
|
(71,900
|
)
|
|
71,460
|
|
|
—
|
|
|||||
Redemption of noncontrolling interest in unconsolidated variable interest entity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net sales proceeds from wholly-owned properties
|
200,220
|
|
|
—
|
|
|
165,698
|
|
|
—
|
|
|
365,918
|
|
|||||
Deferred lease costs paid
|
(2,758
|
)
|
|
—
|
|
|
(23,138
|
)
|
|
—
|
|
|
(25,896
|
)
|
|||||
Net cash provided by/(used in) investing activities
|
192,842
|
|
|
—
|
|
|
(384,176
|
)
|
|
71,460
|
|
|
(119,874
|
)
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance costs paid
|
(264
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(264
|
)
|
|||||
Proceeds from debt
|
695,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
695,000
|
|
|||||
Repayments of debt
|
(538,000
|
)
|
|
—
|
|
|
(168,875
|
)
|
|
—
|
|
|
(706,875
|
)
|
|||||
Intercompany note payable
|
(9,600
|
)
|
|
—
|
|
|
81,060
|
|
|
(71,460
|
)
|
|
—
|
|
|||||
Costs of issuance of common stock
|
—
|
|
|
(342
|
)
|
|
—
|
|
|
—
|
|
|
(342
|
)
|
|||||
Shares withheld to pay tax obligations related to employee stock compensation
|
—
|
|
|
(2,344
|
)
|
|
—
|
|
|
—
|
|
|
(2,344
|
)
|
|||||
Repurchases of common stock as part of announced plan
|
—
|
|
|
(7,943
|
)
|
|
—
|
|
|
—
|
|
|
(7,943
|
)
|
|||||
(Distributions to)/repayments from affiliates
|
(312,218
|
)
|
|
97,016
|
|
|
250,862
|
|
|
(35,660
|
)
|
|
—
|
|
|||||
Dividends paid and discount on dividend reinvestments
|
—
|
|
|
(91,601
|
)
|
|
(15
|
)
|
|
—
|
|
|
(91,616
|
)
|
|||||
Net cash provided by/(used in) financing activities
|
(165,082
|
)
|
|
(5,214
|
)
|
|
163,032
|
|
|
(107,120
|
)
|
|
(114,384
|
)
|
|||||
Net increase/(decrease) in cash, cash equivalents, and restricted cash and escrows
|
1,497
|
|
|
—
|
|
|
(3,908
|
)
|
|
—
|
|
|
(2,411
|
)
|
|||||
Cash, cash equivalents, and restricted cash and escrows, beginning of year
|
2,196
|
|
|
150
|
|
|
8,269
|
|
|
—
|
|
|
10,615
|
|
|||||
Cash, cash equivalents, and restricted cash and escrows, end of year
|
$
|
3,693
|
|
|
$
|
150
|
|
|
$
|
4,361
|
|
|
$
|
—
|
|
|
$
|
8,204
|
|
Condensed Consolidated Statements of Cash Flows
|
|||||||||||||||||||
For the year ended December 31, 2015
|
|||||||||||||||||||
(in thousands)
|
Issuer
|
|
Guarantor
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Cash Provided/(Used In) by Operating Activities
|
$
|
(27,077
|
)
|
|
$
|
4,699
|
|
|
$
|
209,821
|
|
|
$
|
36,245
|
|
|
$
|
223,688
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets, consolidated joint venture, and real estate related intangibles, net of accruals
|
(12,303
|
)
|
|
—
|
|
|
(494,291
|
)
|
|
—
|
|
|
(506,594
|
)
|
|||||
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
|
151,557
|
|
|
—
|
|
|
696,612
|
|
|
—
|
|
|
848,169
|
|
|||||
Deferred lease costs paid
|
(3,792
|
)
|
|
—
|
|
|
(33,891
|
)
|
|
—
|
|
|
(37,683
|
)
|
|||||
Net cash provided by/(used in) investing activities
|
207,462
|
|
|
—
|
|
|
164,430
|
|
|
(72,000
|
)
|
|
299,892
|
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance costs paid
|
(575
|
)
|
|
—
|
|
|
(506
|
)
|
|
—
|
|
|
(1,081
|
)
|
|||||
Proceeds from debt
|
1,142,577
|
|
|
—
|
|
|
159,281
|
|
|
—
|
|
|
1,301,858
|
|
|||||
Repayments of debt
|
(1,438,000
|
)
|
|
—
|
|
|
(106,301
|
)
|
|
—
|
|
|
(1,544,301
|
)
|
|||||
Intercompany note payable
|
—
|
|
|
—
|
|
|
(72,000
|
)
|
|
72,000
|
|
|
—
|
|
|||||
Net costs of issuance of common stock
|
—
|
|
|
(326
|
)
|
|
—
|
|
|
—
|
|
|
(326
|
)
|
|||||
Shares withheld to pay tax obligations related to employee stock compensation
|
—
|
|
|
(1,710
|
)
|
|
—
|
|
|
—
|
|
|
(1,710
|
)
|
|||||
Repurchases of common stock as part of announced plan
|
—
|
|
|
(158,860
|
)
|
|
—
|
|
|
—
|
|
|
(158,860
|
)
|
|||||
(Distributions to)/repayments from affiliates
|
104,495
|
|
|
281,073
|
|
|
(349,323
|
)
|
|
(36,245
|
)
|
|
—
|
|
|||||
Dividends paid and discount on dividend reinvestments
|
—
|
|
|
(126,516
|
)
|
|
(15
|
)
|
|
—
|
|
|
(126,531
|
)
|
|||||
Net cash provided by/(used in) financing activities
|
(191,503
|
)
|
|
(6,339
|
)
|
|
(368,864
|
)
|
|
35,755
|
|
|
(530,951
|
)
|
|||||
Net increase/(decrease) in cash, cash equivalents, and restricted cash and escrows
|
(11,118
|
)
|
|
(1,640
|
)
|
|
5,387
|
|
|
—
|
|
|
(7,371
|
)
|
|||||
Cash, cash equivalents, and restricted cash and escrows, beginning of year
|
13,314
|
|
|
1,790
|
|
|
2,882
|
|
|
—
|
|
|
17,986
|
|
|||||
Cash, cash equivalents, and restricted cash and escrows, end of year
|
$
|
2,196
|
|
|
$
|
150
|
|
|
$
|
8,269
|
|
|
$
|
—
|
|
|
$
|
10,615
|
|
(a)
|
Total initial cost excludes purchase price allocated to intangible lease origination costs and intangible lease liabilities.
|
(b)
|
Includes write-offs of fully depreciated/amortized capitalized assets, as well as impairment loss on real estate assets.
|
(c)
|
The net carrying value of Piedmont’s total assets for federal income tax purposes is approximately
$4.2 billion
.
|
(d)
|
Piedmont’s assets are depreciated or amortized using the straight-line method over the useful lives of the assets by class. Generally, Tenant Improvements and Lease Intangibles are amortized over the lease term. Generally, Building Improvements are depreciated over
5
-
25
years, Land Improvements are depreciated over
20
-
25
years, and Buildings are depreciated over
40
years.
|
(e)
|
During the year ended
December 31, 2017
, Piedmont repaid the mortgage secured by the 1225 Eye Street property located in Washington, D.C., and recapitalized the 1225 Eye Street N.W. Associates, LLC, increasing Piedmont's ownership from
49.5%
to
98.1%
. Piedmont is deemed to have control over the joint venture and, as such, consolidates the joint venture, including the building.
|
(f)
|
During the year ended
December 31, 2017
, Piedmont repaid the mortgage secured by the 1201 Eye Street property located in Washington, D.C., and recapitalized the 1201 Eye Street N.W. Associates, LLC, increasing Piedmont's ownership from
49.5%
to
98.6%
. Piedmont is deemed to have control over the joint venture and, as such, consolidates the joint venture, including the building.
|
(g)
|
As part of the acquisition of the property, Piedmont purchased an adjoining, developable land parcel of
3.5
acres for
$1.0 million
.
|
(h)
|
Represents solar panels at the 400 Bridgewater Crossing building.
|
(i)
|
Undeveloped Land Parcels includes land parcels which Piedmont may develop in the future.
|
(j)
|
2017 Disposition Portfolio includes the following properties which were reclassified as held for sale as of December 31, 2017: 1200 Crown Colony Drive, 5601 Hiatus Road, Windy Point I, Windy Point II, 2001 NW 64th Street, Desert Canyon 300, Auburn Hills Corporate Center, 1075 West Entrance Drive, 2300 Cabot Drive, Piedmont Pointe I, Piedmont Pointe II, Suwanee Gateway One, 5301 Maryland Way, and 2120 West End Avenue. Further, 2001 NW 64th Street was owned subject to a long-term ground lease; however, this lease was assumed by the purchaser upon closing. The 2017 Disposition Portfolio closed on January 4, 2018.
|
|
2017
|
|
2016
|
|
2015
|
|
||||||
Real Estate:
|
|
|
|
|
|
|
||||||
Balance at the beginning of the year
|
$
|
4,800,025
|
|
|
$
|
4,725,096
|
|
|
$
|
5,267,615
|
|
|
Additions to/improvements of real estate
|
85,368
|
|
|
422,908
|
|
|
452,106
|
|
|
|||
Assets disposed
(1)
|
(353,911
|
)
|
|
(296,319
|
)
|
|
(926,592
|
)
|
|
|||
Assets impaired
|
(46,461
|
)
|
(2)
|
(30,898
|
)
|
(3)
|
(40,169
|
)
|
(3)
|
|||
Write-offs of intangible assets
(4)
|
(37,188
|
)
|
|
(11,896
|
)
|
|
(7,768
|
)
|
|
|||
Write-offs of fully depreciated/amortized assets
|
(9,624
|
)
|
|
(8,866
|
)
|
|
(20,096
|
)
|
|
|||
Balance at the end of the year
|
$
|
4,438,209
|
|
|
$
|
4,800,025
|
|
|
$
|
4,725,096
|
|
|
Accumulated Depreciation and Amortization:
|
|
|
|
|
|
|
||||||
Balance at the beginning of the year
|
$
|
1,058,704
|
|
|
$
|
1,019,663
|
|
|
$
|
1,182,556
|
|
|
Depreciation and amortization expense
|
145,837
|
|
|
155,274
|
|
|
155,009
|
|
|
|||
Assets disposed
(1)
|
(104,262
|
)
|
|
(95,471
|
)
|
|
(290,038
|
)
|
|
|||
Write-offs of intangible assets
(4)
|
(37,188
|
)
|
|
(11,896
|
)
|
|
(7,768
|
)
|
|
|||
Write-offs of fully depreciated/amortized assets
|
(9,624
|
)
|
|
(8,866
|
)
|
|
(20,096
|
)
|
|
|||
Balance at the end of the year
|
$
|
1,053,467
|
|
|
$
|
1,058,704
|
|
|
$
|
1,019,663
|
|
|
(1)
|
Includes the disposition of the 8560 Upland Drive property, Piedmont's last remaining investment in an unconsolidated joint venture.
|
(2)
|
Piedmont recognized an impairment loss on a disposal group of real estate assets as part of the 2017 Disposition Portfolio (see
Note 9
).
|
(3)
|
Does not include impairment loss recognized on other assets as a result of the allocation of goodwill (see
Note 9
).
|
(4)
|
Consists of write-offs of intangible lease assets related to lease restructurings, amendments and terminations.
|
By:
|
Piedmont 1901 Market Business Trust, a Delaware statutory trust, its sole member
|
Name:
|
Cheryl T. Esteridge
|
Title:
|
Second
Vice President
|
|
Year ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest Expense
|
$
|
68,313
|
|
|
$
|
69,415
|
|
|
$
|
77,764
|
|
|
$
|
76,520
|
|
|
$
|
73,614
|
|
Interest Expense Included in Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
68,313
|
|
|
69,415
|
|
|
77,764
|
|
|
76,520
|
|
|
73,614
|
|
|||||
Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from Continuing Operations
(1)
|
133,549
|
|
|
99,717
|
|
|
131,236
|
|
|
40,949
|
|
|
72,198
|
|
|||||
Less Equity in (Income)/Loss of Unconsolidated Joint Ventures
|
(3,845
|
)
|
|
(362
|
)
|
|
(553
|
)
|
|
350
|
|
|
3,676
|
|
|||||
Operating Distributions Received from Unconsolidated Joint Ventures
|
11
|
|
|
579
|
|
|
774
|
|
|
266
|
|
|
1,475
|
|
|||||
Fixed Charges
|
68,313
|
|
|
69,415
|
|
|
77,764
|
|
|
76,520
|
|
|
73,614
|
|
|||||
Less Preferred Dividends of Consolidated Subsidiaries
|
(15
|
)
|
|
(16
|
)
|
|
(15
|
)
|
|
(15
|
)
|
|
(15
|
)
|
|||||
Total
|
$
|
198,013
|
|
|
$
|
169,333
|
|
|
$
|
209,206
|
|
|
$
|
118,070
|
|
|
$
|
150,948
|
|
Ratio of Earnings to Fixed Charges:
(2)
|
2.9
|
|
2.4
|
|
2.7
|
|
1.5
|
|
2.1
|
(1)
|
Includes gain/(loss) on sale of real estate assets.
|
(2)
|
There was no preferred stock outstanding for any of the periods shown above. Accordingly, the ratio of earnings to combined fixed charges and preferred stock dividends was identical to the ratio of earnings to fixed charges for each period.
|
Subsidiary
|
|
State of Organization
|
Piedmont Operating Partnership, LP
|
|
Delaware
|
Piedmont Washington Properties, Inc.
|
|
Maryland
|
Piedmont Office Holdings, Inc.
|
|
Georgia
|
Piedmont Office Management, LLC
|
|
Georgia
|
Piedmont Government Services, LLC
|
|
Georgia
|
Piedmont Leasing, LLC
|
|
Delaware
|
Piedmont Power, LLC
|
|
Delaware
|
Piedmont-Las Colinas Springing Member, LLC
|
|
Delaware
|
Piedmont 1901 Market Business Trust
|
|
Delaware
|
Piedmont 1901 Market LLC
|
|
Delaware
|
Piedmont Bridgewater I, LLC
|
|
Delaware
|
Piedmont-Bridgewater, NJ, LLC
|
|
Delaware
|
Piedmont-Independence Square, LLC
|
|
Delaware
|
Piedmont-3100 Clarendon LLC
|
|
Delaware
|
Piedmont-1075 West Entrance, LLC
|
|
Delaware
|
Piedmont-Multi-State Owner, LLC
|
|
Delaware
|
Piedmont-Nashville, TN, LLC
|
|
Delaware
|
Piedmont-One Brattle Square I, LLC
|
|
Delaware
|
Piedmont-One Brattle Square II, LLC
|
|
Delaware
|
4250 North Fairfax Property LLC
|
|
Delaware
|
4250 N. Fairfax Owner, LLC
|
|
Delaware
|
400 Virginia Avenue LLC
|
|
Delaware
|
1201 Eye Street, N.W. Associates LLC
|
|
Delaware
|
1215 ESDI, LLC
|
|
Delaware
|
1225 Equity LLC
|
|
Delaware
|
1225 Eye Street, N.W. Associates LLC
|
|
Delaware
|
1201 Equity LLC
|
|
Delaware
|
TTF Lending LLC
|
|
Delaware
|
TZO Lending LLC
|
|
Delaware
|
Piedmont-Two Pierce Place, LLC
|
|
Delaware
|
Piedmont-Las Colinas Corporate Center I, LP
|
|
Delaware
|
Piedmont-Las Colinas Corporate Center I, GP, LLC
|
|
Delaware
|
Piedmont-Las Colinas Corporate Center II, LP
|
|
Delaware
|
Piedmont-Las Colinas Corporate Center II, GP, LLC
|
|
Delaware
|
Cypress Concourse A, LLC
|
|
Delaware
|
Piedmont 60 Broad Street, LLC
|
|
Delaware
|
Piedmont-800 Nicollet Avenue, LLC
|
|
Delaware
|
Piedmont-800 Nicollet Avenue Owner, LLC
|
|
Delaware
|
Piedmont-800 Nicollet Avenue Springing Member, LLC
|
|
Delaware
|
800 North Brand Glendale, CA, LLC
|
|
Delaware
|
Piedmont-1430 Enclave Parkway, L.P.
|
|
Delaware
|
Piedmont-1430 Enclave Parkway, GP, LLC
|
|
Delaware
|
Enclave Parkway Development, LLC
|
|
Delaware
|
Enclave Parkway Development, L.P.
|
|
Delaware
|
Piedmont-Windy Point I, LLC
|
|
Delaware
|
Piedmont-Windy Point II, LLC
|
|
Delaware
|
Piedmont-2300 Cabot Drive, LLC
|
|
Delaware
|
Rock Spring, L.L.C.
|
|
Delaware
|
Rock Spring II, L.L.C.
|
|
Delaware
|
500 W Monroe Mezz II, LLC
|
|
Delaware
|
500 W Monroe Mezz I-B, LLC
|
|
Delaware
|
500 W Monroe Chicago, LLC
|
|
Delaware
|
Piedmont 500 West Monroe Mezz I, LLC
|
|
Delaware
|
Piedmont 500 West Monroe Fee, LLC
|
|
Delaware
|
Suwanee Gateway One, LLC
|
|
Delaware
|
Meridian Crossings, LLC
|
|
Delaware
|
Dupree Atlanta, LLC
|
|
Delaware
|
Medici Atlanta, LLC
|
|
Delaware
|
Presidential Way Woburn, LLC
|
|
Delaware
|
400 TownPark, LLC
|
|
Delaware
|
Gavitello, Atlanta, LLC
|
|
Delaware
|
Glenridge Highlands III, LLC
|
|
Delaware
|
Piedmont - 901 N. Glebe, LLC
|
|
Delaware
|
Piedmont 5 & 15 Wayside, LLC
|
|
Delaware
|
Piedmont JV Partnership Interests, LLC
|
|
Delaware
|
Piedmont OP - Piedmont JV Partnership Interests, LLC Joint Venture (MI/TN)
|
|
Georgia
|
Piedmont Royal Lane, LP
|
|
Delaware
|
Piedmont Royal Lane GP, LLC
|
|
Delaware
|
Piedmont 6565 MacArthur Boulevard, LP
|
|
Delaware
|
Piedmont 6565 MacArthur Boulevard GP, LLC
|
|
Delaware
|
Piedmont One Lincoln Park, LP
|
|
Delaware
|
Piedmont One Lincoln Park GP, LLC
|
|
Delaware
|
Piedmont 161 Corporate Center, LP
|
|
Delaware
|
Piedmont 161 Corporate Center GP, LLC
|
|
Delaware
|
Piedmont 5 Wall Street Burlington, LLC
|
|
Delaware
|
Piedmont 1155 PCW, LLC
|
|
Delaware
|
Piedmont - Two Pierce Place Land, LLC
|
|
Delaware
|
Piedmont TownPark Land, LLC
|
|
Delaware
|
Piedmont Park Place, LP
|
|
Delaware
|
Piedmont Park Place, GP, LLC
|
|
Delaware
|
Piedmont HBC, LLC
|
|
Delaware
|
Piedmont 500 TownPark, LLC
|
|
Delaware
|
Piedmont 80 Central, LLC
|
|
Delaware
|
Piedmont 300 Galleria, LLC
|
|
Delaware
|
Piedmont 200 & 250 South Orange Avenue, LLC
|
|
Delaware
|
Piedmont Glenridge Highlands One, LLC
|
|
Delaware
|
Piedmont Suwanee Gateway Land, LLC
|
|
Delaware
|
Piedmont Lending I, LLC
|
|
Delaware
|
Piedmont Lending II, LLC
|
|
Delaware
|
Piedmont Towers Orlando Member, LLC
|
|
Delaware
|
Piedmont-CNL Towers Orlando, LLC
|
|
Delaware
|
Piedmont-CNL Towers Orlando Owner, LLC
|
|
Delaware
|
Piedmont One Wayside, LLC
|
|
Delaware
|
Piedmont 200 Galleria, LLC
|
|
Delaware
|
Piedmont 200 Galleria Owner, LLC
|
|
Delaware
|
Piedmont 750 W John Carpenter, LLC
|
|
Delaware
|
Piedmont Norman Pointe I, LLC
|
|
Delaware
|
1.
|
I have reviewed this annual report on Form 10-K 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 officers 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 officers 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/ D
ONALD
A. M
ILLER
, CFA
|
|
|
Donald A. Miller, CFA
|
|
|
Principal Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K 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 officers 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 officers 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/ R
OBERT
E. B
OWERS
|
|
|
Robert E. Bowers
|
|
|
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/ D
ONALD
A. M
ILLER
, CFA
|
|
|
Donald A. Miller, CFA
|
|
|
Chief Executive Officer
|
|
|
February 21, 2018
|
(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/ R
OBERT
E. B
OWERS
|
|
|
Robert E. Bowers
|
|
|
Chief Financial Officer
|
|
|
February 21, 2018
|