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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934
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Maryland
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58-2328421
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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Large Accelerated filer x
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Accelerated filer o
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Non-Accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company o
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Emerging growth company o
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Page No.
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PART I.
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Financial Statements
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Other Information
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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•
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Economic, regulatory, and/or socio-economic changes (including accounting standards) that impact the real estate market generally, or that could affect patterns of use of commercial office space;
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•
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The impact of competition on our efforts to renew existing leases or re-let space on terms similar to existing leases;
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•
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Changes in the economies and other conditions affecting the office sector in general and specifically the eight markets in which we primarily operate where we have high concentrations of our Annualized Lease Revenue (see definition below);
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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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Significant price and volume fluctuations in the public markets, including on the exchange which we listed our common stock;
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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 real estate investment trusts ("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 our Annual Report on Form 10-K for the year ended December 31, 2017.
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ITEM 1.
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CONSOLIDATED FINANCIAL STATEMENTS
|
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(Unaudited)
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||||
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September 30,
2018 |
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December 31,
2017 |
||||
Assets:
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Real estate assets, at cost:
|
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||||
Land
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$
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523,994
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$
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521,186
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Buildings and improvements, less accumulated depreciation of $797,222 and $728,134 as of September 30, 2018 and December 31, 2017, respectively
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2,309,803
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2,325,282
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||
Intangible lease assets, less accumulated amortization of $84,268 and $99,145 as of September 30, 2018 and December 31, 2017, respectively
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65,527
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|
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77,805
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Construction in progress
|
22,753
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|
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11,681
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Real estate assets held for sale, net
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113,918
|
|
|
448,788
|
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||
Total real estate assets
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3,035,995
|
|
|
3,384,742
|
|
||
Amounts due from unconsolidated joint ventures
|
—
|
|
|
10
|
|
||
Cash and cash equivalents
|
6,807
|
|
|
7,382
|
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Tenant receivables, net of allowance for doubtful accounts of $599 and $539 as of September 30, 2018 and December 31, 2017, respectively
|
10,522
|
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12,139
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Straight-line rent receivables
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168,745
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154,384
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Note receivable
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3,200
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|
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—
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Restricted cash and escrows
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1,374
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|
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1,373
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Prepaid expenses and other assets
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31,470
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21,222
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Goodwill
|
98,918
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98,918
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Interest rate swaps
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4,069
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|
688
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Deferred lease costs, less accumulated amortization of $177,412 and $181,579 as of September 30, 2018 and December 31, 2017, respectively
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250,038
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257,916
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Other assets held for sale, net
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12,752
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61,193
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Total assets
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$
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3,623,890
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$
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3,999,967
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Liabilities:
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Unsecured debt, net of discount and unamortized debt issuance costs of $10,382 and $7,689 as of September 30, 2018 and December 31, 2017, respectively
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$
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1,524,618
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$
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1,535,311
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Secured debt, net of premiums and unamortized debt issuance costs of $720 and $946 as of September 30, 2018 and December 31, 2017, respectively
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190,753
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191,616
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Accounts payable, accrued expenses, dividends payable, and accrued capital expenditures
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109,087
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216,653
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Deferred income
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27,450
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29,582
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Intangible lease liabilities, less accumulated amortization of $56,876 and $55,847 as of September 30, 2018 and December 31, 2017, respectively
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37,986
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38,458
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Interest rate swaps
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—
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1,478
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Other liabilities held for sale, net
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—
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380
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Total liabilities
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1,889,894
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2,013,478
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Commitments and Contingencies
|
—
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—
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Stockholders’ Equity:
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||||
Shares-in-trust, 150,000,000 shares authorized; none outstanding as of September 30, 2018 or December 31, 2017
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—
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—
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Preferred stock, no par value, 100,000,000 shares authorized; none outstanding as of September 30, 2018 or December 31, 2017
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—
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—
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Common stock, $.01 par value, 750,000,000 shares authorized; 128,371,442 and 142,358,940 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively
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1,284
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1,424
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Additional paid-in capital
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3,682,209
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3,677,360
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Cumulative distributions in excess of earnings
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(1,964,135
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)
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(1,702,281
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)
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Other comprehensive income
|
12,851
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8,164
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Piedmont stockholders’ equity
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1,732,209
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1,984,667
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Noncontrolling interest
|
1,787
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1,822
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Total stockholders’ equity
|
1,733,996
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1,986,489
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Total liabilities and stockholders’ equity
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$
|
3,623,890
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$
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3,999,967
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(Unaudited)
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(Unaudited)
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||||||||||||
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Three Months Ended
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Nine Months Ended
|
||||||||||||
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September 30,
|
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September 30,
|
||||||||||||
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2018
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2017
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2018
|
|
2017
|
||||||||
Revenues:
|
|
|
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|
||||||||
Rental income
|
$
|
101,348
|
|
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$
|
108,868
|
|
|
$
|
304,280
|
|
|
$
|
345,399
|
|
Tenant reimbursements
|
23,170
|
|
|
24,253
|
|
|
68,211
|
|
|
73,375
|
|
||||
Property management fee revenue
|
368
|
|
|
454
|
|
|
1,059
|
|
|
1,379
|
|
||||
Other property related income
|
4,822
|
|
|
4,012
|
|
|
15,232
|
|
|
14,576
|
|
||||
|
129,708
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|
137,587
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|
388,782
|
|
|
434,729
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|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
49,679
|
|
|
54,518
|
|
|
154,175
|
|
|
166,635
|
|
||||
Depreciation
|
26,852
|
|
|
30,000
|
|
|
81,112
|
|
|
90,827
|
|
||||
Amortization
|
14,840
|
|
|
18,123
|
|
|
46,818
|
|
|
57,852
|
|
||||
General and administrative
|
6,677
|
|
|
6,190
|
|
|
21,487
|
|
|
21,868
|
|
||||
|
98,048
|
|
|
108,831
|
|
|
303,592
|
|
|
337,182
|
|
||||
Real estate operating income
|
31,660
|
|
|
28,756
|
|
|
85,190
|
|
|
97,547
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(15,849
|
)
|
|
(16,183
|
)
|
|
(45,294
|
)
|
|
(52,661
|
)
|
||||
Other income
|
303
|
|
|
290
|
|
|
1,480
|
|
|
228
|
|
||||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
3,754
|
|
|
—
|
|
|
3,872
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
(1,680
|
)
|
|
—
|
|
||||
Gain on sale of real estate assets
|
—
|
|
|
109,512
|
|
|
45,186
|
|
|
115,951
|
|
||||
Net income
|
16,114
|
|
|
126,129
|
|
|
84,882
|
|
|
164,937
|
|
||||
Plus: Net loss applicable to noncontrolling interest
|
—
|
|
|
4
|
|
|
4
|
|
|
10
|
|
||||
Net income applicable to Piedmont
|
$
|
16,114
|
|
|
$
|
126,133
|
|
|
$
|
84,886
|
|
|
$
|
164,947
|
|
Per share information – basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Net income applicable to common stockholders
|
$
|
0.13
|
|
|
$
|
0.87
|
|
|
$
|
0.65
|
|
|
$
|
1.13
|
|
Weighted-average common shares outstanding – basic
|
128,371,062
|
|
|
145,415,678
|
|
|
130,837,223
|
|
|
145,372,182
|
|
||||
Weighted-average common shares outstanding – diluted
|
128,818,658
|
|
|
145,719,431
|
|
|
131,187,127
|
|
|
145,679,582
|
|
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income applicable to Piedmont
|
|
|
$
|
16,114
|
|
|
|
|
$
|
126,133
|
|
|
|
|
$
|
84,886
|
|
|
|
|
$
|
164,947
|
|
||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective portion of gain on derivative instruments that are designated and qualify as cash flow hedges (See Note 6)
|
1,145
|
|
|
|
|
175
|
|
|
|
|
4,408
|
|
|
|
|
307
|
|
|
|
||||||||
(434
|
)
|
|
|
|
653
|
|
|
|
|
373
|
|
|
|
|
|
2,936
|
|
|
|
|
|||||||
Gain on investment in available for sale securities
|
—
|
|
|
|
|
25
|
|
|
|
|
—
|
|
|
|
|
53
|
|
|
|
||||||||
Other comprehensive income
|
|
|
711
|
|
|
|
|
853
|
|
|
|
|
4,781
|
|
|
|
|
3,296
|
|
||||||||
Comprehensive income applicable to Piedmont
|
|
|
$
|
16,825
|
|
|
|
|
$
|
126,986
|
|
|
|
|
$
|
89,667
|
|
|
|
|
$
|
168,243
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Cumulative
Distributions
in Excess of
Earnings
|
|
Other
Comprehensive
Income/(Loss)
|
|
Non-
controlling
Interest
|
|
Total
Stockholders’
Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance, December 31, 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), stockholders of subsidiaries, 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
|
|
||||||
Cumulative effect of accounting change (adoption of ASU 2016-01)
|
—
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|
(94
|
)
|
|
—
|
|
|
—
|
|
||||||
Share repurchases as part of an announced plan
|
(14,343
|
)
|
|
(143
|
)
|
|
—
|
|
|
(264,642
|
)
|
|
—
|
|
|
—
|
|
|
(264,785
|
)
|
||||||
Dividends to common stockholders ($0.63 per share), stockholders of subsidiaries, and dividends reinvested
|
—
|
|
|
—
|
|
|
(56
|
)
|
|
(82,192
|
)
|
|
—
|
|
|
(31
|
)
|
|
(82,279
|
)
|
||||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
|
355
|
|
|
3
|
|
|
4,905
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,908
|
|
||||||
Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Net income applicable to Piedmont
|
—
|
|
|
—
|
|
|
—
|
|
|
84,886
|
|
|
—
|
|
|
—
|
|
|
84,886
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,781
|
|
|
—
|
|
|
4,781
|
|
||||||
Balance, September 30, 2018
|
128,371
|
|
|
$
|
1,284
|
|
|
$
|
3,682,209
|
|
|
$
|
(1,964,135
|
)
|
|
$
|
12,851
|
|
|
$
|
1,787
|
|
|
$
|
1,733,996
|
|
|
(Unaudited)
|
||||||
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
84,882
|
|
|
$
|
164,937
|
|
Operating distributions received from unconsolidated joint ventures
|
10
|
|
|
—
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
81,112
|
|
|
90,827
|
|
||
Amortization of debt issuance costs net of favorable settlement of interest rate swaps
|
(215
|
)
|
|
1,214
|
|
||
Other amortization
|
42,882
|
|
|
57,146
|
|
||
Loss on extinguishment of debt
|
1,665
|
|
|
—
|
|
||
Stock compensation expense
|
6,671
|
|
|
6,657
|
|
||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
(3,872
|
)
|
||
Gain on sale of real estate assets
|
(45,186
|
)
|
|
(115,951
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Increase in tenant and straight-line rent receivables, net
|
(12,361
|
)
|
|
(15,040
|
)
|
||
Increase in prepaid expenses and other assets
|
(8,496
|
)
|
|
(5,188
|
)
|
||
Decrease in accounts payable and accrued expenses
|
(10,377
|
)
|
|
(5,863
|
)
|
||
(Decrease)/increase in deferred income
|
(2,265
|
)
|
|
1,513
|
|
||
Net cash provided by operating activities
|
138,322
|
|
|
176,380
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Acquisition of real estate assets and related intangibles
|
(28,176
|
)
|
|
—
|
|
||
Capitalized expenditures
|
(44,998
|
)
|
|
(65,407
|
)
|
||
Net sales proceeds from wholly-owned properties
|
419,554
|
|
|
375,199
|
|
||
Net sales proceeds from unconsolidated joint ventures
|
—
|
|
|
12,334
|
|
||
Investments in unconsolidated joint ventures
|
—
|
|
|
(1,162
|
)
|
||
Note receivable issuance
|
(3,200
|
)
|
|
—
|
|
||
Deferred lease costs paid
|
(15,831
|
)
|
|
(19,419
|
)
|
||
Net cash provided by investing activities
|
327,349
|
|
|
301,545
|
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Debt issuance and other costs paid
|
(947
|
)
|
|
(101
|
)
|
||
Proceeds from debt
|
820,061
|
|
|
147,000
|
|
||
Repayments of debt
|
(833,005
|
)
|
|
(466,046
|
)
|
||
Costs of issuance of common stock
|
—
|
|
|
(97
|
)
|
||
Value of shares withheld for payment of taxes related to employee stock compensation
|
(2,219
|
)
|
|
(3,385
|
)
|
||
Repurchases of common stock as part of announced plan
|
(266,062
|
)
|
|
(3,895
|
)
|
||
Dividends paid and discount on dividend reinvestments
|
(184,073
|
)
|
|
(122,237
|
)
|
||
Net cash used in financing activities
|
(466,245
|
)
|
|
(448,761
|
)
|
||
Net (decrease)/increase in cash, cash equivalents, and restricted cash and escrows
|
(574
|
)
|
|
29,164
|
|
||
Cash, cash equivalents, and restricted cash and escrows, beginning of period
|
8,755
|
|
|
8,204
|
|
||
Cash, cash equivalents, and restricted cash and escrows, end of period
|
$
|
8,181
|
|
|
$
|
37,368
|
|
|
|
|
(After Adoption of Revenue Recognition Amendments)
|
||||
|
Three Months Ended
September 30, 2018
|
|
Three Months Ended
September 30, 2017
|
||||
Rental income
|
$
|
101,348
|
|
|
$
|
108,868
|
|
Tenant reimbursements
|
23,170
|
|
|
24,253
|
|
||
Property management fee revenue
|
368
|
|
|
454
|
|
||
Other property related income
|
4,822
|
|
|
4,012
|
|
||
Total revenues
|
$
|
129,708
|
|
|
$
|
137,587
|
|
ASU
|
Title
|
Summary
|
Anticipated Impact on Piedmont's Consolidated Financial Statements Based on Management’s Assessment to Date
|
ASU 2018-01
|
Leases (Topic 842) Land Easement Practical Expedient for Transition to Topic 842
|
Clarifies that a land easement is required to be evaluated to determine whether it should be accounted for as a lease upon adoption of ASU 2016-02; also provides an optional practical transition expedient allowing entities not currently assessing land easements under existing leasing guidance prior to adoption of ASU 2016-02 to not apply the new guidance to land easements existing at the date of initial adoption of ASU 2016-02.
|
Not applicable as Piedmont has no land easements.
|
|
|
|
|
ASU 2018-10
|
Codification Improvements to Topic 842, Leases
|
Clarifications and technical corrections to ASU 2016-02.
|
No material impact expected.
|
|
|
|
|
ASU 2018-11
|
Leases (Topic 842) Targeted Improvements
|
Allows certain non-lease operating expense reimbursements which are included in the underlying stated lease rate to be accounted for as part of the lease provided certain criteria are met under an optional practical expedient.
|
All of Piedmont’s operating expense reimbursements are expected to qualify to be accounted for as a part of the underlying lease.
|
Property
|
|
Metropolitan Statistical Area
|
|
Date of Acquisition
|
|
Ownership Percentage Acquired
|
|
Rentable Square Feet
|
|
Percentage Leased as of Acquisition
|
|
Net Contractual Purchase Price
(in millions)
|
|||||
501 West Church Street
|
|
Orlando, Florida
|
|
February 23, 2018
|
|
100
|
%
|
|
182,461
|
|
|
100
|
%
|
|
$
|
28.2
|
|
Facility (1)
|
|
Stated Rate
|
|
Effective Rate (2)
|
|
Maturity
|
|
Amount Outstanding as of
|
||||||||
|
September 30, 2018
|
|
December 31, 2017
|
|||||||||||||
Secured (Fixed)
|
|
|
|
|
|
|
|
|
|
|
||||||
$35 Million Fixed-Rate Loan (3)
|
|
5.55
|
%
|
|
3.75
|
%
|
|
9/1/2021
|
|
$
|
30,033
|
|
|
$
|
30,670
|
|
$160 Million Fixed-Rate Loan (4)
|
|
3.48
|
%
|
|
3.58
|
%
|
|
7/5/2022
|
|
160,000
|
|
|
160,000
|
|
||
Net premium and unamortized debt issuance costs
|
|
|
|
|
|
|
|
720
|
|
|
946
|
|
||||
Subtotal/Weighted Average (5)
|
|
3.81
|
%
|
|
|
|
|
|
190,753
|
|
|
191,616
|
|
|||
Unsecured (Variable and Fixed)
|
|
|
|
|
|
|
|
|
|
|
||||||
$170 Million Unsecured 2015 Term Loan
|
|
LIBOR + 1.125%
|
|
|
2.54
|
%
|
|
5/15/2018
|
|
—
|
|
|
170,000
|
|
||
$300 Million Unsecured 2013 Term Loan
|
|
LIBOR + 1.20%
|
|
|
2.78
|
%
|
(7)
|
1/31/2019
|
|
—
|
|
|
300,000
|
|
||
$500 Million Unsecured 2015 Line of Credit (6)
|
|
LIBOR + 1.00%
|
|
|
3.17
|
%
|
|
6/18/2019
|
|
—
|
|
|
23,000
|
|
||
$500 Million Unsecured 2018 Line of Credit (6)
|
|
LIBOR + 0.90%
|
|
|
3.15
|
%
|
|
9/30/2022
|
(8)
|
235,000
|
|
|
—
|
|
||
Amended and Restated $300 Million Unsecured 2011 Term Loan
|
|
LIBOR + 1.00%
|
|
|
3.20
|
%
|
(7)
|
11/30/2021
|
|
300,000
|
|
|
300,000
|
|
||
$350 Million Senior Notes
|
|
3.40
|
%
|
|
3.43
|
%
|
|
6/01/2023
|
|
350,000
|
|
|
350,000
|
|
||
$400 Million Senior Notes
|
|
4.45
|
%
|
|
4.10
|
%
|
|
3/15/2024
|
|
400,000
|
|
|
400,000
|
|
||
$250 Million Unsecured 2018 Term Loan
|
|
LIBOR + 1.60%
|
|
|
4.00
|
%
|
(9)
|
3/31/2025
|
|
250,000
|
|
|
—
|
|
||
Discounts and unamortized debt issuance costs
|
|
|
|
|
|
|
|
(10,382)
|
|
|
(7,689)
|
|
||||
Subtotal/Weighted Average (5)
|
|
3.69
|
%
|
|
|
|
|
|
1,524,618
|
|
|
1,535,311
|
|
|||
Total/Weighted Average (5)
|
|
3.71
|
%
|
|
|
|
|
|
$
|
1,715,371
|
|
|
$
|
1,726,927
|
|
(1)
|
Other than the $35 Million Fixed-Rate Loan, all of Piedmont’s outstanding debt as of September 30, 2018 and December 31, 2017 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 as of September 30, 2018.
|
(6)
|
On a periodic basis, Piedmont may select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion of the principal. All LIBOR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating.
|
(7)
|
The facility has a stated variable rate; however, Piedmont has entered into interest rate swap agreements which effectively fix, exclusive of changes in Piedmont's credit rating, the rate to that shown as the effective rate through the maturity date of the interest rate swap agreements (see Note 6 for more detail).
|
(8)
|
Piedmont may extend the term for up to one additional year (through two available six month extensions to a final extended maturity date of September 29, 2023) provided Piedmont is not then in default and upon payment of extension fees.
|
(9)
|
The facility 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, $150 million of the principal balance to 4.11% through March 29, 2020, and $100 million of the principal balance to 4.21% from March 30, 2020 through the maturity date of the loan. For the remaining variable portion of the loan, Piedmont may periodically select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion of the principal. All LIBOR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating. The rate presented is the weighted-average rate for the effectively fixed and variable portions of the debt outstanding as of September 30, 2018.
|
|
|
Piedmont's
%
|
|
|
|
Net Carrying
Amount as of
|
|
Net Carrying
Amount as of
|
|
|
||||
Entity
|
|
Ownership
of Entity
|
|
Related
Building
|
|
September 30, 2018
|
|
December 31, 2017
|
|
Primary Beneficiary Considerations
|
||||
1201 Eye Street N.W. Associates, LLC
|
|
98.6%
|
|
1201 Eye Street
|
|
$
|
89.2
|
|
|
$
|
81.1
|
|
|
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%
|
|
1225 Eye Street
|
|
$
|
64.8
|
|
|
$
|
65.2
|
|
|
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
|
|
$
|
256.2
|
|
|
$
|
263.2
|
|
|
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.
|
Interest Rate Derivatives:
|
|
Number of Swap Agreements
|
|
Associated Debt Instrument
|
|
Total Notional Amount
(in millions)
|
|
Effective Date
|
|
Maturity Date
|
||
Interest rate swaps
|
|
3
|
|
Amended and Restated $300 Million Unsecured 2011 Term Loan
|
|
$
|
300
|
|
|
11/22/2016
|
|
1/15/2020
|
Interest rate swaps
|
|
2
|
|
$250 Million Unsecured 2018 Term Loan
|
|
$
|
100
|
|
|
3/29/2018
|
|
3/31/2025
|
Interest rate swaps
|
|
1
|
|
$250 Million Unsecured 2018 Term Loan
|
|
$
|
50
|
|
|
3/29/2018
|
|
3/29/2020
|
Total
|
|
|
|
|
|
$
|
450
|
|
|
|
|
|
Interest rate swaps classified as:
|
September 30,
2018 |
|
December 31,
2017 |
||||
Gross derivative assets
|
$
|
4,069
|
|
|
$
|
688
|
|
Gross derivative liabilities
|
—
|
|
|
(1,478
|
)
|
||
Net derivative asset/(liability)
|
$
|
4,069
|
|
|
$
|
(790
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Interest Rate Swaps in Cash Flow Hedging Relationships
|
September 30,
2018 |
|
September 30,
2017 |
|
September 30,
2018 |
|
September 30,
2017 |
||||||||
Amount of gain recognized in OCI
|
$
|
1,145
|
|
|
$
|
175
|
|
|
$
|
4,408
|
|
|
$
|
307
|
|
Amount of previously recorded gain/(loss) reclassified from OCI into Interest Expense
|
$
|
434
|
|
|
$
|
(653
|
)
|
|
$
|
885
|
|
|
$
|
(2,936
|
)
|
Amount of loss recognized on derivatives reclassified from OCI into Loss on Extinguishment of Debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,258
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Total amount of Interest Expense presented in the consolidated statements of income
|
$
|
15,849
|
|
|
$
|
16,183
|
|
|
$
|
45,294
|
|
|
$
|
52,661
|
|
Total amount of Loss on Extinguishment of Debt presented in the consolidated statements of income (1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,680
|
|
|
$
|
—
|
|
(1)
|
Includes the write-off of approximately $0.4 million of discounts and unamortized debt issuance costs associated with the repayment of debt (see Note 4).
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||
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)
|
$
|
6,807
|
|
|
$
|
6,807
|
|
|
Level 1
|
|
$
|
7,382
|
|
|
$
|
7,382
|
|
|
Level 1
|
Tenant receivables, net(1)
|
$
|
10,522
|
|
|
$
|
10,522
|
|
|
Level 1
|
|
$
|
12,139
|
|
|
$
|
12,139
|
|
|
Level 1
|
Notes receivable (1)
|
$
|
3,200
|
|
|
$
|
3,200
|
|
|
Level 1
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Level 1
|
Restricted cash and escrows(1)
|
$
|
1,374
|
|
|
$
|
1,374
|
|
|
Level 1
|
|
$
|
1,373
|
|
|
$
|
1,373
|
|
|
Level 1
|
Interest rate swaps
|
$
|
4,069
|
|
|
$
|
4,069
|
|
|
Level 2
|
|
$
|
688
|
|
|
$
|
688
|
|
|
Level 2
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued expenses(1)
|
$
|
14,584
|
|
|
$
|
14,584
|
|
|
Level 1
|
|
$
|
126,429
|
|
|
$
|
126,429
|
|
|
Level 1
|
Interest rate swaps
|
$
|
—
|
|
|
$
|
—
|
|
|
Level 2
|
|
$
|
1,478
|
|
|
$
|
1,478
|
|
|
Level 2
|
Debt, net
|
$
|
1,715,371
|
|
|
$
|
1,714,923
|
|
|
Level 2
|
|
$
|
1,726,927
|
|
|
$
|
1,759,905
|
|
|
Level 2
|
(1)
|
For the periods presented, the carrying value of these financial instruments approximates estimated fair value due to their short-term maturity.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Real estate assets held for sale, net:
|
|
|
|
|
||||
Land
|
|
$
|
23,608
|
|
|
$
|
98,106
|
|
Building and improvements, less accumulated depreciation of $60,434 and $226,188 as of September 30, 2018 and December 31, 2017, respectively
|
|
90,281
|
|
|
348,374
|
|
||
Construction in progress
|
|
29
|
|
|
2,308
|
|
||
Total real estate assets held for sale, net
|
|
$
|
113,918
|
|
|
$
|
448,788
|
|
|
|
|
|
|
||||
Other assets held for sale, net:
|
|
|
|
|
||||
Straight-line rent receivables
|
|
$
|
7,607
|
|
|
$
|
34,750
|
|
Prepaid expenses and other assets
|
|
1,157
|
|
|
1,624
|
|
||
Deferred lease costs, less accumulated amortization of $2,364 and $18,710 as of September 30, 2018 and December 31, 2017, respectively
|
|
3,988
|
|
|
24,819
|
|
||
Total other assets held for sale, net
|
|
$
|
12,752
|
|
|
$
|
61,193
|
|
|
|
|
|
|
||||
Other liabilities held for sale, net:
|
|
|
|
|
||||
Intangible lease liabilities, less accumulated amortization of $0 and $935 as of September 30, 2018 and December 31, 2017, respectively
|
|
$
|
—
|
|
|
$
|
380
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2018 |
|
September 30,
2017 |
|
September 30,
2018 |
|
September 30,
2017 |
||||||||
Weighted-Average Grant Date Fair Value of Deferred Stock Granted During the Period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17.84
|
|
|
$
|
21.38
|
|
Total Grant Date Fair Value of Deferred Stock Vested During the Period
|
$
|
16
|
|
|
$
|
11
|
|
|
$
|
6,378
|
|
|
$
|
5,852
|
|
Share-based Liability Awards Paid During the Period(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,947
|
|
|
$
|
2,877
|
|
(1)
|
Amounts reflect the issuance of performance share awards related to the 2014-16 and 2015-17 Performance Share Plans during the nine months ended September 30, 2018 and 2017, respectively.
|
Date of grant
|
|
Type of Award
|
|
Net Shares
Granted (1)
|
|
Grant
Date Fair
Value
|
|
Vesting Schedule
|
|
Unvested Shares
|
|
||||
January 3, 2014
|
|
Deferred Stock Award
|
|
72,969
|
|
|
$
|
16.45
|
|
|
Of the shares granted, 20% vested or will vest on January 3, 2015, 2016, 2017, 2018, and 2019, respectively.
|
|
16,416
|
|
|
May 24, 2016
|
|
Deferred Stock Award
|
|
208,003
|
|
|
$
|
19.91
|
|
|
Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 24, 2017, 2018, and 2019, respectively.
|
|
60,591
|
|
|
May 24, 2016
|
|
Fiscal Year 2016-2018 Performance Share Program
|
|
—
|
|
|
$
|
23.02
|
|
|
Shares awarded, if any, will vest immediately upon determination of award in 2019.
|
|
99,337
|
|
(2)
|
May 18, 2017
|
|
Deferred Stock Award
|
|
219,863
|
|
|
$
|
21.38
|
|
|
Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 18, 2018, 2019, and 2020, respectively.
|
|
123,507
|
|
|
May 18, 2017
|
|
Fiscal Year 2017-2019 Performance Share Program
|
|
—
|
|
|
$
|
30.45
|
|
|
Shares awarded, if any, will vest immediately upon determination of award in 2020.
|
|
143,335
|
|
(2)
|
May 17, 2018
|
|
Deferred Stock Award-Board of Directors
|
|
31,388
|
|
|
$
|
17.84
|
|
|
Of the shares granted, 100% will vest by May 17, 2019.
|
|
31,388
|
|
|
May 17, 2018
|
|
Deferred Stock Award
|
|
302,706
|
|
|
$
|
17.84
|
|
|
Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 17, 2019, 2020, and 2021, respectively.
|
|
239,777
|
|
|
May 17, 2018
|
|
Fiscal Year 2018-2020 Performance Share Program
|
|
—
|
|
|
$
|
23.52
|
|
|
Shares awarded, if any, will vest immediately upon determination of award in 2021.
|
|
320,644
|
|
(2)
|
Total
|
|
|
|
|
|
|
|
|
|
1,034,995
|
|
|
(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 September 30, 2018.
|
(2)
|
Estimated based on Piedmont's cumulative TSR for the respective performance period through September 30, 2018. Share estimates are subject to change in future periods based upon Piedmont's relative performance compared to its peer group of office REITs' total stockholder return.
|
|
Nine Months Ended
|
||||||
|
September 30, 2018
|
|
September 30, 2017
|
||||
Accrued capital expenditures and deferred lease costs
|
$
|
21,784
|
|
|
$
|
8,590
|
|
Change in accrued dividends and discount on dividend reinvestments
|
$
|
(101,794
|
)
|
|
$
|
(30,531
|
)
|
Change in accrued share repurchases as part of an announced plan
|
$
|
(1,277
|
)
|
|
$
|
—
|
|
Investment in consolidated joint venture
|
$
|
—
|
|
|
$
|
63,026
|
|
|
|
Nine Months Ended
|
||||||
|
|
September 30, 2018
|
|
September 30, 2017
|
||||
Cash and cash equivalents, beginning of period
|
|
$
|
7,382
|
|
|
$
|
6,992
|
|
Restricted cash and escrows, beginning of period
|
|
1,373
|
|
|
1,212
|
|
||
Total cash, cash equivalents, and restricted cash and escrows shown in the consolidated statement of cash flows, beginning of period
|
|
$
|
8,755
|
|
|
$
|
8,204
|
|
|
|
|
|
|
||||
Cash and cash equivalents, end of period
|
|
$
|
6,807
|
|
|
$
|
36,108
|
|
Restricted cash and escrows, end of period
|
|
1,374
|
|
|
1,260
|
|
||
Total cash, cash equivalents, and restricted cash and escrows shown in the consolidated statement of cash flows, end of period
|
|
$
|
8,181
|
|
|
$
|
37,368
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
Weighted-average common shares – basic
|
128,371
|
|
145,416
|
|
130,837
|
|
145,372
|
Plus: Incremental weighted-average shares from time-vested deferred and performance stock awards
|
448
|
|
303
|
|
350
|
|
308
|
Weighted-average common shares – diluted
|
128,819
|
|
145,719
|
|
131,187
|
|
145,680
|
|
|
|
|
|
|
|
|
Common stock issued and outstanding as of period end
|
|
|
|
|
128,371
|
|
145,295
|
Condensed Consolidating Balance Sheets
|
|||||||||||||||||||
As of September 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Piedmont
(Consolidated)
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate assets, at cost:
|
|
|
|
|
|
|
|
|
|
||||||||||
Land
|
$
|
—
|
|
|
$
|
36,094
|
|
|
$
|
487,900
|
|
|
$
|
—
|
|
|
$
|
523,994
|
|
Buildings and improvements, less accumulated depreciation
|
—
|
|
|
174,627
|
|
|
2,135,476
|
|
|
(300
|
)
|
|
2,309,803
|
|
|||||
Intangible lease assets, less accumulated amortization
|
—
|
|
|
—
|
|
|
65,527
|
|
|
—
|
|
|
65,527
|
|
|||||
Construction in progress
|
—
|
|
|
2,915
|
|
|
19,838
|
|
|
—
|
|
|
22,753
|
|
|||||
Real estate assets held for sale, net
|
—
|
|
|
—
|
|
|
113,918
|
|
|
—
|
|
|
113,918
|
|
|||||
Total real estate assets
|
—
|
|
|
213,636
|
|
|
2,822,659
|
|
|
(300
|
)
|
|
3,035,995
|
|
|||||
Cash and cash equivalents
|
150
|
|
|
3,024
|
|
|
3,633
|
|
|
—
|
|
|
6,807
|
|
|||||
Tenant and straight-line rent receivables, net
|
—
|
|
|
15,757
|
|
|
163,510
|
|
|
—
|
|
|
179,267
|
|
|||||
Investment in subsidiaries
|
1,734,476
|
|
|
2,789,292
|
|
|
168
|
|
|
(4,523,936
|
)
|
|
—
|
|
|||||
Notes receivable
|
—
|
|
|
810
|
|
|
147,700
|
|
|
(145,310
|
)
|
|
3,200
|
|
|||||
Prepaid expenses, restricted cash, escrows, interest rate swaps, and other assets
|
80
|
|
|
8,971
|
|
|
27,871
|
|
|
(9
|
)
|
|
36,913
|
|
|||||
Goodwill
|
—
|
|
|
98,918
|
|
|
—
|
|
|
—
|
|
|
98,918
|
|
|||||
Deferred lease costs, net
|
—
|
|
|
15,625
|
|
|
234,413
|
|
|
—
|
|
|
250,038
|
|
|||||
Other assets held for sale, net
|
|
|
—
|
|
|
12,752
|
|
|
—
|
|
|
12,752
|
|
||||||
Total assets
|
$
|
1,734,706
|
|
|
$
|
3,146,033
|
|
|
$
|
3,412,706
|
|
|
$
|
(4,669,555
|
)
|
|
$
|
3,623,890
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt, net
|
$
|
—
|
|
|
$
|
1,524,558
|
|
|
$
|
336,123
|
|
|
$
|
(145,310
|
)
|
|
$
|
1,715,371
|
|
Accounts payable, accrued expenses, and accrued capital expenditures
|
710
|
|
|
14,321
|
|
|
94,065
|
|
|
(9
|
)
|
|
109,087
|
|
|||||
Deferred income
|
—
|
|
|
1,853
|
|
|
25,597
|
|
|
—
|
|
|
27,450
|
|
|||||
Intangible lease liabilities, net
|
—
|
|
|
—
|
|
|
37,986
|
|
|
—
|
|
|
37,986
|
|
|||||
Total liabilities
|
710
|
|
|
1,540,732
|
|
|
493,771
|
|
|
(145,319
|
)
|
|
1,889,894
|
|
|||||
Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total stockholders’ equity
|
1,733,996
|
|
|
1,605,301
|
|
|
2,918,935
|
|
|
(4,524,236
|
)
|
|
1,733,996
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
1,734,706
|
|
|
$
|
3,146,033
|
|
|
$
|
3,412,706
|
|
|
$
|
(4,669,555
|
)
|
|
$
|
3,623,890
|
|
Condensed Consolidating Balance Sheets
|
|||||||||||||||||||
As of December 31, 2017
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Piedmont
(Consolidated)
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate assets, at cost:
|
|
|
|
|
|
|
|
|
|
||||||||||
Land
|
$
|
—
|
|
|
$
|
36,094
|
|
|
$
|
485,092
|
|
|
$
|
—
|
|
|
$
|
521,186
|
|
Buildings and improvements, less accumulated depreciation
|
—
|
|
|
180,886
|
|
|
2,144,696
|
|
|
(300
|
)
|
|
2,325,282
|
|
|||||
Intangible lease assets, less accumulated amortization
|
—
|
|
|
181
|
|
|
77,624
|
|
|
—
|
|
|
77,805
|
|
|||||
Construction in progress
|
—
|
|
|
85
|
|
|
11,596
|
|
|
—
|
|
|
11,681
|
|
|||||
Real estate assets held for sale, net
|
—
|
|
|
32,815
|
|
|
415,973
|
|
|
—
|
|
|
448,788
|
|
|||||
Total real estate assets
|
—
|
|
|
250,061
|
|
|
3,134,981
|
|
|
(300
|
)
|
|
3,384,742
|
|
|||||
Cash and cash equivalents
|
150
|
|
|
3,890
|
|
|
3,342
|
|
|
—
|
|
|
7,382
|
|
|||||
Tenant and straight-line rent receivables, net, and amounts due from unconsolidated joint ventures
|
—
|
|
|
16,891
|
|
|
149,642
|
|
|
—
|
|
|
166,533
|
|
|||||
Advances to affiliates
|
1,674,276
|
|
|
6,297,632
|
|
|
—
|
|
|
(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 swaps and other assets
|
2
|
|
|
5,094
|
|
|
18,927
|
|
|
(740
|
)
|
|
23,283
|
|
|||||
Goodwill
|
—
|
|
|
98,918
|
|
|
—
|
|
|
—
|
|
|
98,918
|
|
|||||
Deferred lease costs, net
|
—
|
|
|
16,611
|
|
|
241,305
|
|
|
—
|
|
|
257,916
|
|
|||||
Other assets held for sale, net
|
—
|
|
|
2,266
|
|
|
58,927
|
|
|
—
|
|
|
61,193
|
|
|||||
Total assets
|
$
|
5,111,727
|
|
|
$
|
6,780,173
|
|
|
$
|
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
|
104,028
|
|
|
20,279
|
|
|
93,086
|
|
|
(740
|
)
|
|
216,653
|
|
|||||
Advances from affiliates
|
5,277,957
|
|
|
941,494
|
|
|
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
|
|
|||||
Liabilities held for sale, net
|
—
|
|
|
—
|
|
|
380
|
|
|
—
|
|
|
380
|
|
|||||
Total liabilities
|
5,381,985
|
|
|
2,502,121
|
|
|
2,433,585
|
|
|
(8,304,213
|
)
|
|
2,013,478
|
|
|||||
Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total stockholders’ equity
|
(270,258
|
)
|
|
4,278,052
|
|
|
1,318,211
|
|
|
(3,339,516
|
)
|
|
1,986,489
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
5,111,727
|
|
|
$
|
6,780,173
|
|
|
$
|
3,751,796
|
|
|
$
|
(11,643,729
|
)
|
|
$
|
3,999,967
|
|
Consolidating Statements of Income
|
|||||||||||||||||||
For the three months ended September 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
—
|
|
|
$
|
8,403
|
|
|
$
|
93,498
|
|
|
$
|
(553
|
)
|
|
$
|
101,348
|
|
Tenant reimbursements
|
—
|
|
|
2,458
|
|
|
20,853
|
|
|
(141
|
)
|
|
23,170
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
4,296
|
|
|
(3,928
|
)
|
|
368
|
|
|||||
Other property related income
|
—
|
|
|
35
|
|
|
4,787
|
|
|
—
|
|
|
4,822
|
|
|||||
|
—
|
|
|
10,896
|
|
|
123,434
|
|
|
(4,622
|
)
|
|
129,708
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
—
|
|
|
4,973
|
|
|
49,328
|
|
|
(4,622
|
)
|
|
49,679
|
|
|||||
Depreciation
|
—
|
|
|
2,816
|
|
|
24,036
|
|
|
—
|
|
|
26,852
|
|
|||||
Amortization
|
—
|
|
|
446
|
|
|
14,394
|
|
|
—
|
|
|
14,840
|
|
|||||
General and administrative
|
42
|
|
|
1,424
|
|
|
5,211
|
|
|
—
|
|
|
6,677
|
|
|||||
|
42
|
|
|
9,659
|
|
|
92,969
|
|
|
(4,622
|
)
|
|
98,048
|
|
|||||
Real estate operating income/(loss)
|
(42
|
)
|
|
1,237
|
|
|
30,465
|
|
|
—
|
|
|
31,660
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
—
|
|
|
(14,119
|
)
|
|
(3,624
|
)
|
|
1,894
|
|
|
(15,849
|
)
|
|||||
Other income/(expense)
|
—
|
|
|
40
|
|
|
2,157
|
|
|
(1,894
|
)
|
|
303
|
|
|||||
|
—
|
|
|
(14,079
|
)
|
|
(1,467
|
)
|
|
—
|
|
|
(15,546
|
)
|
|||||
Income/(loss) before consolidated subsidiaries
|
(42
|
)
|
|
(12,842
|
)
|
|
28,998
|
|
|
—
|
|
|
16,114
|
|
|||||
Income from subsidiaries
|
16,156
|
|
|
26,787
|
|
|
—
|
|
|
(42,943
|
)
|
|
—
|
|
|||||
Net income
|
16,114
|
|
|
13,945
|
|
|
28,998
|
|
|
(42,943
|
)
|
|
16,114
|
|
|||||
Plus: Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income applicable to Piedmont
|
$
|
16,114
|
|
|
$
|
13,945
|
|
|
$
|
28,998
|
|
|
$
|
(42,943
|
)
|
|
$
|
16,114
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidating Statements of Income
|
|||||||||||||||||||
For the three months ended September 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
—
|
|
|
$
|
10,185
|
|
|
$
|
99,109
|
|
|
$
|
(426
|
)
|
|
$
|
108,868
|
|
Tenant reimbursements
|
—
|
|
|
2,381
|
|
|
22,014
|
|
|
(142
|
)
|
|
24,253
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
4,566
|
|
|
(4,112
|
)
|
|
454
|
|
|||||
Other property related income
|
—
|
|
|
42
|
|
|
3,970
|
|
|
—
|
|
|
4,012
|
|
|||||
|
—
|
|
|
12,608
|
|
|
129,659
|
|
|
(4,680
|
)
|
|
137,587
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
—
|
|
|
5,372
|
|
|
53,826
|
|
|
(4,680
|
)
|
|
54,518
|
|
|||||
Depreciation
|
—
|
|
|
3,199
|
|
|
26,801
|
|
|
—
|
|
|
30,000
|
|
|||||
Amortization
|
—
|
|
|
740
|
|
|
17,383
|
|
|
—
|
|
|
18,123
|
|
|||||
General and administrative
|
77
|
|
|
1,539
|
|
|
4,574
|
|
|
—
|
|
|
6,190
|
|
|||||
|
77
|
|
|
10,850
|
|
|
102,584
|
|
|
(4,680
|
)
|
|
108,831
|
|
|||||
Real estate operating income/(loss)
|
(77
|
)
|
|
1,758
|
|
|
27,075
|
|
|
—
|
|
|
28,756
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
—
|
|
|
(13,795
|
)
|
|
(6,354
|
)
|
|
3,966
|
|
|
(16,183
|
)
|
|||||
Other income/(expense)
|
—
|
|
|
2,404
|
|
|
1,852
|
|
|
(3,966
|
)
|
|
290
|
|
|||||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
3,754
|
|
|
—
|
|
|
—
|
|
|
3,754
|
|
|||||
Gain/(loss) on sale of real estate assets, net
|
—
|
|
|
(4
|
)
|
|
109,516
|
|
|
—
|
|
|
109,512
|
|
|||||
Net income/(loss)
|
(77
|
)
|
|
(5,883
|
)
|
|
132,089
|
|
|
—
|
|
|
126,129
|
|
|||||
Plus: Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
(77
|
)
|
|
$
|
(5,883
|
)
|
|
$
|
132,093
|
|
|
$
|
—
|
|
|
$
|
126,133
|
|
Consolidating Statements of Income
|
|||||||||||||||||||
For the nine months ended September 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
—
|
|
|
$
|
26,456
|
|
|
$
|
279,292
|
|
|
$
|
(1,468
|
)
|
|
$
|
304,280
|
|
Tenant reimbursements
|
—
|
|
|
7,298
|
|
|
61,247
|
|
|
(334
|
)
|
|
68,211
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
12,625
|
|
|
(11,566
|
)
|
|
1,059
|
|
|||||
Other property related income
|
—
|
|
|
92
|
|
|
15,140
|
|
|
—
|
|
|
15,232
|
|
|||||
|
—
|
|
|
33,846
|
|
|
368,304
|
|
|
(13,368
|
)
|
|
388,782
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
—
|
|
|
14,614
|
|
|
152,929
|
|
|
(13,368
|
)
|
|
154,175
|
|
|||||
Depreciation
|
—
|
|
|
8,527
|
|
|
72,585
|
|
|
—
|
|
|
81,112
|
|
|||||
Amortization
|
—
|
|
|
1,520
|
|
|
45,298
|
|
|
—
|
|
|
46,818
|
|
|||||
General and administrative
|
228
|
|
|
4,849
|
|
|
16,410
|
|
|
—
|
|
|
21,487
|
|
|||||
|
228
|
|
|
29,510
|
|
|
287,222
|
|
|
(13,368
|
)
|
|
303,592
|
|
|||||
Real estate operating income/(loss)
|
(228
|
)
|
|
4,336
|
|
|
81,082
|
|
|
—
|
|
|
85,190
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
—
|
|
|
(40,093
|
)
|
|
(10,937
|
)
|
|
5,736
|
|
|
(45,294
|
)
|
|||||
Other income/(expense)
|
—
|
|
|
200
|
|
|
7,016
|
|
|
(5,736
|
)
|
|
1,480
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
(1,680
|
)
|
|
—
|
|
|
—
|
|
|
(1,680
|
)
|
|||||
Gain on sale of real estate assets, net
|
—
|
|
|
1,417
|
|
|
43,769
|
|
|
—
|
|
|
45,186
|
|
|||||
|
—
|
|
|
(40,156
|
)
|
|
39,848
|
|
|
—
|
|
|
(308
|
)
|
|||||
Income/(loss) before consolidated subsidiaries
|
(228
|
)
|
|
(35,820
|
)
|
|
120,930
|
|
|
—
|
|
|
84,882
|
|
|||||
Income from subsidiaries
|
85,114
|
|
|
119,013
|
|
|
—
|
|
|
(204,127
|
)
|
|
—
|
|
|||||
Net income
|
84,886
|
|
|
83,193
|
|
|
120,930
|
|
|
(204,127
|
)
|
|
84,882
|
|
|||||
Plus: Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Net income applicable to Piedmont
|
$
|
84,886
|
|
|
$
|
83,193
|
|
|
$
|
120,934
|
|
|
$
|
(204,127
|
)
|
|
$
|
84,886
|
|
Consolidating Statements of Income
|
|||||||||||||||||||
For the nine months ended September 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
—
|
|
|
$
|
32,641
|
|
|
$
|
314,128
|
|
|
$
|
(1,370
|
)
|
|
$
|
345,399
|
|
Tenant reimbursements
|
—
|
|
|
8,352
|
|
|
65,396
|
|
|
(373
|
)
|
|
73,375
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
13,791
|
|
|
(12,412
|
)
|
|
1,379
|
|
|||||
Other property related income
|
—
|
|
|
97
|
|
|
14,479
|
|
|
—
|
|
|
14,576
|
|
|||||
|
—
|
|
|
41,090
|
|
|
407,794
|
|
|
(14,155
|
)
|
|
434,729
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
—
|
|
|
17,027
|
|
|
163,763
|
|
|
(14,155
|
)
|
|
166,635
|
|
|||||
Depreciation
|
—
|
|
|
9,943
|
|
|
80,884
|
|
|
—
|
|
|
90,827
|
|
|||||
Amortization
|
—
|
|
|
2,399
|
|
|
55,453
|
|
|
—
|
|
|
57,852
|
|
|||||
General and administrative
|
261
|
|
|
4,798
|
|
|
16,809
|
|
|
—
|
|
|
21,868
|
|
|||||
|
261
|
|
|
34,167
|
|
|
316,909
|
|
|
(14,155
|
)
|
|
337,182
|
|
|||||
Real estate operating income/(loss)
|
(261
|
)
|
|
6,923
|
|
|
90,885
|
|
|
—
|
|
|
97,547
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
—
|
|
|
(43,049
|
)
|
|
(20,868
|
)
|
|
11,256
|
|
|
(52,661
|
)
|
|||||
Other income/(expense)
|
—
|
|
|
6,873
|
|
|
4,611
|
|
|
(11,256
|
)
|
|
228
|
|
|||||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
3,872
|
|
|
—
|
|
|
—
|
|
|
3,872
|
|
|||||
Gain on sale of real estate assets, net
|
—
|
|
|
6,430
|
|
|
109,521
|
|
|
—
|
|
|
115,951
|
|
|||||
Net income/(loss)
|
(261
|
)
|
|
(18,951
|
)
|
|
184,149
|
|
|
—
|
|
|
164,937
|
|
|||||
Plus: Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
(261
|
)
|
|
$
|
(18,951
|
)
|
|
$
|
184,159
|
|
|
$
|
—
|
|
|
$
|
164,947
|
|
Consolidating Statements of Comprehensive Income
|
|||||||||||||||||||
For the Three Months Ended September 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Piedmont
(Consolidated)
|
||||||||||
Net income
|
$
|
16,114
|
|
|
$
|
13,945
|
|
|
$
|
28,998
|
|
|
$
|
(42,943
|
)
|
|
$
|
16,114
|
|
Effective portion of gain on derivative instruments that are designated and qualify as cash flow hedges
|
1,145
|
|
|
1,145
|
|
|
—
|
|
|
(1,145
|
)
|
|
1,145
|
|
|||||
Plus: Reclassification of gain included in net income
|
(434
|
)
|
|
(434
|
)
|
|
—
|
|
|
434
|
|
|
(434
|
)
|
|||||
Other comprehensive income
|
711
|
|
|
711
|
|
|
—
|
|
|
(711
|
)
|
|
711
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
$
|
16,825
|
|
|
$
|
14,656
|
|
|
$
|
28,998
|
|
|
$
|
(43,654
|
)
|
|
$
|
16,825
|
|
Consolidating Statements of Comprehensive Income
|
|||||||||||||||||||
For the Nine Months Ended September 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent) (Guarantor) |
|
Piedmont OP
(the Issuer) |
|
Non-Guarantors
|
|
Eliminations
|
|
Piedmont
(Consolidated) |
||||||||||
Net income
|
$
|
84,886
|
|
|
$
|
83,193
|
|
|
$
|
120,934
|
|
|
$
|
(204,127
|
)
|
|
$
|
84,886
|
|
Effective portion of gain on derivatives instruments that are designated and qualify as cash flow hedges
|
4,408
|
|
|
4,408
|
|
|
—
|
|
|
(4,408
|
)
|
|
4,408
|
|
|||||
Plus: Reclassification of net loss included in net income
|
373
|
|
|
373
|
|
|
—
|
|
|
(373
|
)
|
|
373
|
|
|||||
Other comprehensive income
|
4,781
|
|
|
4,781
|
|
|
—
|
|
|
(4,781
|
)
|
|
4,781
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
$
|
89,667
|
|
|
$
|
87,974
|
|
|
$
|
120,934
|
|
|
$
|
(208,908
|
)
|
|
$
|
89,667
|
|
Condensed Consolidating Statements of Cash Flows
|
|||||||||||||||||||
For the nine months ended September 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Piedmont
(Consolidated)
|
||||||||||
Net Cash Provided by Operating Activities
|
$
|
89,540
|
|
|
$
|
89,639
|
|
|
$
|
164,063
|
|
|
$
|
(204,920
|
)
|
|
$
|
138,322
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets and real estate related intangibles
|
—
|
|
|
(6,074
|
)
|
|
(67,100
|
)
|
|
—
|
|
|
(73,174
|
)
|
|||||
Intercompany note receivable
|
—
|
|
|
88,000
|
|
|
—
|
|
|
(88,000
|
)
|
|
—
|
|
|||||
Net sales proceeds from wholly-owned properties
|
—
|
|
|
36,572
|
|
|
382,982
|
|
|
—
|
|
|
419,554
|
|
|||||
Note receivable issuance
|
—
|
|
|
—
|
|
|
(3,200
|
)
|
|
—
|
|
|
(3,200
|
)
|
|||||
Deferred lease costs paid
|
—
|
|
|
(1,826
|
)
|
|
(14,005
|
)
|
|
—
|
|
|
(15,831
|
)
|
|||||
Distributions from subsidiaries
|
362,784
|
|
|
64,633
|
|
|
—
|
|
|
(427,417
|
)
|
|
—
|
|
|||||
Net cash provided by investing activities
|
362,784
|
|
|
181,305
|
|
|
298,677
|
|
|
(515,417
|
)
|
|
327,349
|
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance and other costs paid
|
—
|
|
|
(947
|
)
|
|
—
|
|
|
—
|
|
|
(947
|
)
|
|||||
Proceeds from debt
|
—
|
|
|
820,061
|
|
|
—
|
|
|
—
|
|
|
820,061
|
|
|||||
Repayments of debt
|
—
|
|
|
(832,000
|
)
|
|
(1,005
|
)
|
|
—
|
|
|
(833,005
|
)
|
|||||
Intercompany note payable
|
—
|
|
|
—
|
|
|
(88,000
|
)
|
|
88,000
|
|
|
—
|
|
|||||
Value of shares withheld for payment of taxes related to employee stock compensation
|
(2,219
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,219
|
)
|
|||||
Repurchases of common stock as part of announced plan
|
(266,062
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(266,062
|
)
|
|||||
Distributions
|
(184,043
|
)
|
|
(258,907
|
)
|
|
(373,460
|
)
|
|
632,337
|
|
|
(184,073
|
)
|
|||||
Net cash used in financing activities
|
(452,324
|
)
|
|
(271,793
|
)
|
|
(462,465
|
)
|
|
720,337
|
|
|
(466,245
|
)
|
|||||
Net increase/(decrease) in cash, cash equivalents, and restricted cash and escrows
|
—
|
|
|
(849
|
)
|
|
275
|
|
|
—
|
|
|
(574
|
)
|
|||||
Cash, cash equivalents, and restricted cash and escrows, beginning of period
|
150
|
|
|
3,906
|
|
|
4,699
|
|
|
—
|
|
|
8,755
|
|
|||||
Cash, cash equivalents, and restricted cash and escrows, end of period
|
$
|
150
|
|
|
$
|
3,057
|
|
|
$
|
4,974
|
|
|
$
|
—
|
|
|
$
|
8,181
|
|
Condensed Consolidating Statements of Cash Flows
|
|||||||||||||||||||
For the nine months ended September 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Piedmont
(Consolidated)
|
||||||||||
Net Cash Provided by/(Used in) Operating Activities
|
$
|
4,335
|
|
|
$
|
(15,468
|
)
|
|
$
|
187,513
|
|
|
$
|
—
|
|
|
$
|
176,380
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets, and real estate related intangibles
|
—
|
|
|
(793
|
)
|
|
(64,614
|
)
|
|
—
|
|
|
(65,407
|
)
|
|||||
Intercompany note receivable
|
—
|
|
|
—
|
|
|
(48,710
|
)
|
|
48,710
|
|
|
—
|
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
(1,162
|
)
|
|
—
|
|
|
—
|
|
|
(1,162
|
)
|
|||||
Net sales proceeds from wholly-owned properties
|
—
|
|
|
23,028
|
|
|
352,171
|
|
|
—
|
|
|
375,199
|
|
|||||
Net sales proceeds received from unconsolidated joint ventures
|
—
|
|
|
12,334
|
|
|
—
|
|
|
—
|
|
|
12,334
|
|
|||||
Deferred lease costs paid
|
—
|
|
|
(858
|
)
|
|
(18,561
|
)
|
|
—
|
|
|
(19,419
|
)
|
|||||
Net cash provided by investing activities
|
—
|
|
|
32,549
|
|
|
220,286
|
|
|
48,710
|
|
|
301,545
|
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance costs paid
|
—
|
|
|
(102
|
)
|
|
1
|
|
|
—
|
|
|
(101
|
)
|
|||||
Proceeds from debt
|
—
|
|
|
147,000
|
|
|
—
|
|
|
—
|
|
|
147,000
|
|
|||||
Repayments of debt
|
—
|
|
|
(325,000
|
)
|
|
(141,046
|
)
|
|
—
|
|
|
(466,046
|
)
|
|||||
Intercompany note payable
|
—
|
|
|
(14,289
|
)
|
|
62,999
|
|
|
(48,710
|
)
|
|
—
|
|
|||||
Costs of issuance of common stock
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|||||
Value of shares withheld for payment of taxes related to employee stock compensation
|
(3,385
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,385
|
)
|
|||||
Repurchases of common stock as part of announced plan
|
(3,895
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,895
|
)
|
|||||
(Distributions to)/repayments from affiliates
|
125,271
|
|
|
197,519
|
|
|
(322,790
|
)
|
|
—
|
|
|
—
|
|
|||||
Dividends paid and discount on dividend reinvestments
|
(122,229
|
)
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(122,237
|
)
|
|||||
Net cash provided by/(used in) financing activities
|
(4,335
|
)
|
|
5,128
|
|
|
(400,844
|
)
|
|
(48,710
|
)
|
|
(448,761
|
)
|
|||||
Net increase in cash, cash equivalents, and restricted cash and escrows
|
—
|
|
|
22,209
|
|
|
6,955
|
|
|
—
|
|
|
29,164
|
|
|||||
Cash, cash equivalents, and restricted cash and escrows, beginning of period
|
150
|
|
|
3,693
|
|
|
4,361
|
|
|
—
|
|
|
8,204
|
|
|||||
Cash, cash equivalents, and restricted cash and escrows, end of period
|
$
|
150
|
|
|
$
|
25,902
|
|
|
$
|
11,316
|
|
|
$
|
—
|
|
|
$
|
37,368
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Nine Months Ended
|
||||||
|
September 30, 2018
|
|
September 30, 2017
|
||||
Capital expenditures for new development
|
$
|
32
|
|
|
$
|
4,794
|
|
Capital expenditures for redevelopment/renovations
|
7,546
|
|
|
1,006
|
|
||
Capital expenditures previously credited as part of property acquisition
|
—
|
|
|
9,254
|
|
||
Other capital expenditures, including building and tenant improvements
|
37,420
|
|
|
50,353
|
|
||
Total capital expenditures(1)
|
$
|
44,998
|
|
|
$
|
65,407
|
|
(1)
|
Of the total amounts paid, approximately $1.2 million and $0.2 million relates to soft costs such as capitalized interest, payroll, and other general and administrative expenses for the nine months ended September 30, 2018 and 2017, respectively.
|
|
September 30,
2018 |
|
% of Revenues
|
|
September 30,
2017 |
|
% of Revenues
|
|
Variance
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
101.3
|
|
|
|
|
$
|
108.9
|
|
|
|
|
$
|
(7.6
|
)
|
||
Tenant reimbursements
|
23.2
|
|
|
|
|
24.2
|
|
|
|
|
(1.0
|
)
|
|||||
Property management fee revenue
|
0.4
|
|
|
|
|
0.5
|
|
|
|
|
(0.1
|
)
|
|||||
Other property related income
|
4.8
|
|
|
|
|
4.0
|
|
|
|
|
0.8
|
|
|||||
Total revenues
|
129.7
|
|
|
100
|
%
|
|
137.6
|
|
|
100
|
%
|
|
(7.9
|
)
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
49.7
|
|
|
38
|
%
|
|
54.5
|
|
|
40
|
%
|
|
(4.8
|
)
|
|||
Depreciation
|
26.9
|
|
|
21
|
%
|
|
30.0
|
|
|
22
|
%
|
|
(3.1
|
)
|
|||
Amortization
|
14.8
|
|
|
12
|
%
|
|
18.1
|
|
|
13
|
%
|
|
(3.3
|
)
|
|||
General and administrative
|
6.7
|
|
|
5
|
%
|
|
6.2
|
|
|
4
|
%
|
|
0.5
|
|
|||
Real estate operating income
|
31.6
|
|
|
24
|
%
|
|
28.8
|
|
|
21
|
%
|
|
2.8
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(15.8
|
)
|
|
12
|
%
|
|
(16.2
|
)
|
|
12
|
%
|
|
0.4
|
|
|||
Other income
|
0.3
|
|
|
—
|
%
|
|
0.3
|
|
|
—
|
%
|
|
—
|
|
|||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
—
|
%
|
|
3.7
|
|
|
3
|
%
|
|
(3.7
|
)
|
|||
Gain on sale of real estate assets, net
|
—
|
|
|
—
|
%
|
|
109.5
|
|
|
80
|
%
|
|
(109.5
|
)
|
|||
Net income
|
$
|
16.1
|
|
|
12
|
%
|
|
$
|
126.1
|
|
|
92
|
%
|
|
$
|
(110.0
|
)
|
|
September 30,
2018 |
|
% of Revenues
|
|
September 30,
2017 |
|
% of Revenues
|
|
Variance
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
304.3
|
|
|
|
|
$
|
345.4
|
|
|
|
|
$
|
(41.1
|
)
|
||
Tenant reimbursements
|
68.2
|
|
|
|
|
73.4
|
|
|
|
|
(5.2
|
)
|
|||||
Property management fee revenue
|
1.1
|
|
|
|
|
1.4
|
|
|
|
|
(0.3
|
)
|
|||||
Other rental income
|
15.2
|
|
|
|
|
14.5
|
|
|
|
|
0.7
|
|
|||||
Total revenues
|
388.8
|
|
|
100
|
%
|
|
434.7
|
|
|
100
|
%
|
|
(45.9
|
)
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
154.2
|
|
|
40
|
%
|
|
166.6
|
|
|
38
|
%
|
|
(12.4
|
)
|
|||
Depreciation
|
81.1
|
|
|
21
|
%
|
|
90.8
|
|
|
22
|
%
|
|
(9.7
|
)
|
|||
Amortization
|
46.8
|
|
|
12
|
%
|
|
57.9
|
|
|
13
|
%
|
|
(11.1
|
)
|
|||
General and administrative
|
21.5
|
|
|
5
|
%
|
|
21.9
|
|
|
5
|
%
|
|
(0.4
|
)
|
|||
Real estate operating income
|
85.2
|
|
|
22
|
%
|
|
97.5
|
|
|
22
|
%
|
|
(12.3
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(45.3
|
)
|
|
12
|
%
|
|
(52.7
|
)
|
|
12
|
%
|
|
7.4
|
|
|||
Other income
|
1.5
|
|
|
—
|
%
|
|
0.2
|
|
|
—
|
%
|
|
1.3
|
|
|||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
—
|
%
|
|
3.9
|
|
|
1
|
%
|
|
(3.9
|
)
|
|||
Loss on extinguishment of debt
|
(1.7
|
)
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(1.7
|
)
|
|||
Gain on sale of real estate assets, net
|
45.2
|
|
|
12
|
%
|
|
116.0
|
|
|
27
|
%
|
|
(70.8
|
)
|
|||
Net income
|
$
|
84.9
|
|
|
22
|
%
|
|
$
|
164.9
|
|
|
38
|
%
|
|
$
|
(80.0
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||||||
|
September 30, 2018
|
|
Per
Share(1)
|
|
September 30, 2017
|
|
Per
Share(1)
|
|
September 30, 2018
|
|
Per
Share(1)
|
|
September 30, 2017
|
|
Per
Share(1)
|
||||||||||||||||
GAAP net income applicable to common stock
|
$
|
16,114
|
|
|
$
|
0.13
|
|
|
$
|
126,133
|
|
|
$
|
0.87
|
|
|
$
|
84,886
|
|
|
$
|
0.65
|
|
|
$
|
164,947
|
|
|
$
|
1.13
|
|
Depreciation of real estate assets (2)
|
26,668
|
|
|
0.21
|
|
|
29,774
|
|
|
0.20
|
|
|
80,531
|
|
|
0.61
|
|
|
90,335
|
|
|
0.62
|
|
||||||||
Amortization of lease-related costs (2)
|
14,828
|
|
|
0.11
|
|
|
18,107
|
|
|
0.12
|
|
|
46,773
|
|
|
0.35
|
|
|
57,828
|
|
|
0.40
|
|
||||||||
Gain on sale - wholly-owned properties
|
—
|
|
|
—
|
|
|
(109,512
|
)
|
|
(0.75
|
)
|
|
(45,186
|
)
|
|
(0.34
|
)
|
|
(115,951
|
)
|
|
(0.80
|
)
|
||||||||
Gain on sale- unconsolidated partnership
|
—
|
|
|
—
|
|
|
(3,683
|
)
|
|
(0.02
|
)
|
|
—
|
|
|
—
|
|
|
(3,683
|
)
|
|
(0.02
|
)
|
||||||||
NAREIT Funds From Operations applicable to common stock
|
$
|
57,610
|
|
|
$
|
0.45
|
|
|
$
|
60,819
|
|
|
$
|
0.42
|
|
|
$
|
167,004
|
|
|
$
|
1.27
|
|
|
$
|
193,476
|
|
|
$
|
1.33
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,680
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
||||||||
Core Funds From Operations applicable to common stock
|
$
|
57,610
|
|
|
$
|
0.45
|
|
|
$
|
60,819
|
|
|
$
|
0.42
|
|
|
$
|
168,684
|
|
|
$
|
1.29
|
|
|
$
|
193,482
|
|
|
$
|
1.33
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Amortization of debt issuance costs, fair market value adjustments on notes payable, and discount on debt
|
550
|
|
|
|
|
634
|
|
|
|
|
1,561
|
|
|
|
|
1,892
|
|
|
|
||||||||||||
Depreciation of non real estate assets
|
176
|
|
|
|
|
218
|
|
|
|
|
558
|
|
|
|
|
597
|
|
|
|
||||||||||||
Straight-line effects of lease revenue (2)
|
(3,210
|
)
|
|
|
|
(3,602
|
)
|
|
|
|
(11,489
|
)
|
|
|
|
(15,939
|
)
|
|
|
||||||||||||
Stock-based and other non-cash compensation
|
1,661
|
|
|
|
|
1,250
|
|
|
|
|
4,462
|
|
|
|
|
4,202
|
|
|
|
||||||||||||
Net effect of amortization of above and below-market in-place lease intangibles
|
(2,006
|
)
|
|
|
|
(1,720
|
)
|
|
|
|
(5,636
|
)
|
|
|
|
(4,890
|
)
|
|
|
||||||||||||
Acquisition costs
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(6
|
)
|
|
|
||||||||||||
Non-incremental capital expenditures (3)
|
(9,276
|
)
|
|
|
|
(5,229
|
)
|
|
|
|
(27,407
|
)
|
|
|
|
(21,974
|
)
|
|
|
||||||||||||
Adjusted Funds From Operations applicable to common stock
|
$
|
45,505
|
|
|
|
|
$
|
52,370
|
|
|
|
|
$
|
130,733
|
|
|
|
|
$
|
157,364
|
|
|
|
||||||||
Weighted-average shares outstanding – diluted
|
128,819
|
|
|
|
|
145,719
|
|
|
|
|
131,187
|
|
|
|
|
145,680
|
|
|
|
||||||||||||
Common stock issued and outstanding as of period end
|
128,371
|
|
|
|
|
145,295
|
|
|
|
|
128,371
|
|
|
|
|
145,295
|
|
|
|
(1)
|
Based on weighted average shares outstanding – diluted.
|
(2)
|
Includes amounts for wholly-owned properties, as well as such amounts for our proportionate ownership in unconsolidated joint ventures.
|
(3)
|
We define non-incremental capital expenditures as capital expenditures of a recurring nature related to tenant improvements, leasing commissions, and building capital that do not incrementally enhance the underlying assets' income generating capacity. Tenant improvements, leasing commissions, building capital and deferred lease incentives incurred to lease space that was vacant at acquisition, leasing costs for spaces vacant for greater than one year, leasing costs for spaces at newly acquired properties for which in-place leases expire shortly after acquisition, improvements associated with the expansion of a building, and renovations that either enhance the rental rates of a building or change the property's underlying classification, such as from a Class B to a Class A property, are excluded from this measure.
|
|
Cash Basis
|
|
Accrual Basis
|
||||||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||
|
September 30,
2018 |
|
September 30,
2017 |
|
September 30,
2018 |
|
September 30,
2017 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income applicable to Piedmont (GAAP basis)
|
$
|
16,114
|
|
|
$
|
126,133
|
|
|
$
|
16,114
|
|
|
$
|
126,133
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss applicable to noncontrolling interest
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
||||
Interest expense
|
15,849
|
|
|
16,183
|
|
|
15,849
|
|
|
16,183
|
|
||||
Depreciation (1)
|
26,844
|
|
|
29,993
|
|
|
26,844
|
|
|
29,993
|
|
||||
Amortization (1)
|
14,828
|
|
|
18,107
|
|
|
14,828
|
|
|
18,107
|
|
||||
Net loss from casualty events
|
—
|
|
|
25
|
|
|
—
|
|
|
25
|
|
||||
Gain on sale of real estate assets (1)
|
—
|
|
|
(113,195
|
)
|
|
—
|
|
|
(113,195
|
)
|
||||
General & administrative expenses (1)
|
6,677
|
|
|
6,202
|
|
|
6,677
|
|
|
6,202
|
|
||||
Management fee revenue (2)
|
(181
|
)
|
|
(253
|
)
|
|
(181
|
)
|
|
(253
|
)
|
||||
Other income (1)
|
(87
|
)
|
|
(171
|
)
|
|
(87
|
)
|
|
(171
|
)
|
||||
Straight-line rent effects of lease revenue (1)
|
(3,210
|
)
|
|
(3,602
|
)
|
|
|
|
|
||||||
Amortization of lease-related intangibles (1)
|
(2,006
|
)
|
|
(1,720
|
)
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Property NOI
|
$
|
74,828
|
|
|
$
|
77,698
|
|
|
$
|
80,044
|
|
|
$
|
83,020
|
|
|
|
|
|
|
|
|
|
||||||||
Net operating income from:
|
|
|
|
|
|
|
|
||||||||
Acquisitions (3)
|
(958
|
)
|
|
—
|
|
|
(1,292
|
)
|
|
—
|
|
||||
Dispositions (4)
|
(122
|
)
|
|
(8,001
|
)
|
|
(122
|
)
|
|
(7,675
|
)
|
||||
Other investments (5)
|
(659
|
)
|
|
(2,339
|
)
|
|
(827
|
)
|
|
(2,301
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Same Store NOI
|
$
|
73,089
|
|
|
$
|
67,358
|
|
|
$
|
77,803
|
|
|
$
|
73,044
|
|
|
|
|
|
|
|
|
|
||||||||
Change period over period in Same Store NOI
|
8.5
|
%
|
|
N/A
|
|
|
6.5
|
%
|
|
N/A
|
|
(1)
|
Includes amounts applicable to consolidated properties and our proportionate share of amounts applicable to unconsolidated joint ventures.
|
(2)
|
Presented net of related operating expenses incurred to earn the revenue.
|
(3)
|
Acquisitions consist of Norman Pointe I in Bloomington, Minnesota, purchased on December 28, 2017; and 501 West Church Street in Orlando, Florida, purchased on February 23, 2018.
|
(4)
|
Dispositions consist of Sarasota Commerce Center II in Sarasota, Florida, sold on June 16, 2017; Two Independence Square in Washington, D.C., sold on July 5, 2017; and the 14-property, 2017 Disposition Portfolio sale completed on January 4, 2018.
|
(5)
|
Other investments consist of our interests in unconsolidated joint ventures, active redevelopment and development projects, land, and recently completed redevelopment and development projects for which some portion of operating expenses were capitalized during the current and/or prior year reporting periods. The operating results from 500 TownPark in Lake Mary, Florida, and Two Pierce Place in Itasca, Illinois, are included in this line item.
|
|
Cash Basis
|
|
Accrual Basis
|
||||||||||||
|
Nine Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2018 |
|
September 30,
2017 |
|
September 30,
2018 |
|
September 30,
2017 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income applicable to Piedmont (GAAP basis)
|
$
|
84,886
|
|
|
$
|
164,947
|
|
|
$
|
84,886
|
|
|
$
|
164,947
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss applicable to noncontrolling interest
|
(4
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|
(10
|
)
|
||||
Interest expense
|
45,294
|
|
|
52,661
|
|
|
45,294
|
|
|
52,661
|
|
||||
Loss on extinguishment of debt
|
1,680
|
|
|
—
|
|
|
1,680
|
|
|
—
|
|
||||
Depreciation (1)
|
81,090
|
|
|
90,933
|
|
|
81,090
|
|
|
90,933
|
|
||||
Amortization (1)
|
46,773
|
|
|
57,828
|
|
|
46,773
|
|
|
57,828
|
|
||||
Acquisition costs
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||
Net loss from casualty events
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||
Gain on sale of real estate assets (1)
|
(45,186
|
)
|
|
(119,634
|
)
|
|
(45,186
|
)
|
|
(119,634
|
)
|
||||
General & administrative expenses (1)
|
21,487
|
|
|
21,907
|
|
|
21,487
|
|
|
21,907
|
|
||||
Management fee revenue (2)
|
(531
|
)
|
|
(762
|
)
|
|
(531
|
)
|
|
(762
|
)
|
||||
Other income (1)
|
(475
|
)
|
|
(146
|
)
|
|
(475
|
)
|
|
(146
|
)
|
||||
Straight-line rent effects of lease revenue (1)
|
(11,489
|
)
|
|
(15,939
|
)
|
|
|
|
|
||||||
Amortization of lease-related intangibles (1)
|
(5,636
|
)
|
|
(4,890
|
)
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Property NOI
|
$
|
217,889
|
|
|
$
|
246,958
|
|
|
$
|
235,014
|
|
|
$
|
267,787
|
|
|
|
|
|
|
|
|
|
||||||||
Net operating income from:
|
|
|
|
|
|
|
|
||||||||
Acquisitions (3)
|
(2,540
|
)
|
|
—
|
|
|
(3,424
|
)
|
|
—
|
|
||||
Dispositions (4)
|
(509
|
)
|
|
(39,077
|
)
|
|
(500
|
)
|
|
(36,331
|
)
|
||||
Other investments (5)
|
(3,096
|
)
|
|
(6,277
|
)
|
|
(3,309
|
)
|
|
(7,079
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Same Store NOI
|
$
|
211,744
|
|
|
$
|
201,604
|
|
|
$
|
227,781
|
|
|
$
|
224,377
|
|
|
|
|
|
|
|
|
|
||||||||
Change period over period in Same Store NOI
|
5.0
|
%
|
|
N/A
|
|
|
1.5
|
%
|
|
N/A
|
|
(1)
|
Includes amounts applicable to consolidated properties and our proportionate share of amounts applicable to unconsolidated joint ventures.
|
(2)
|
Presented net of related operating expenses incurred to earn the revenue.
|
(3)
|
Acquisitions consist of Norman Pointe I in Bloomington, Minnesota, purchased on December 28, 2017; and 501 West Church Street in Orlando, Florida, purchased on February 23, 2018.
|
(4)
|
Dispositions consist of Sarasota Commerce Center II in Sarasota, Florida, sold on June 16, 2017; Two Independence Square in Washington, D.C., sold on July 5, 2017; and the 14-property, 2017 Disposition Portfolio sale completed on January 4, 2018.
|
(5)
|
Other investments consist of our interests in unconsolidated joint ventures, active redevelopment and development projects, land, and recently completed redevelopment and development projects for which some portion of operating expenses were capitalized during the current and/or prior year reporting periods. The operating results from 500 TownPark in Lake Mary, Florida, and Two Pierce Place in Itasca, Illinois, are included in this line item.
|
ASU
|
Title
|
Summary
|
Anticipated Impact on Piedmont's Consolidated Financial Statements Based on Management’s Assessment to Date
|
ASU 2018-01
|
Leases (Topic 842) Land Easement Practical Expedient for Transition to Topic 842
|
Clarifies that a land easement is required to be evaluated to determine whether it should be accounted for as a lease upon adoption of ASU 2016-02; also provides an optional practical transition expedient allowing entities not currently assessing land easements under existing leasing guidance prior to adoption of ASU 2016-02 to not apply the new guidance to land easements existing at the date of initial adoption of ASU 2016-02.
|
Not applicable as we have no land easements.
|
|
|
|
|
ASU 2018-10
|
Codification Improvements to Topic 842, Leases
|
Clarifications and technical corrections to ASU 2016-02.
|
No material impact expected.
|
|
|
|
|
ASU 2018-11
|
Leases (Topic 842) Targeted Improvements
|
Allows certain non-lease operating expense reimbursements which are included in the underlying stated lease rate to be accounted for as part of the lease provided certain criteria are met under an optional practical expedient.
|
All of our operating expense reimbursements are expected to qualify to be accounted for as a part of the underlying lease.
|
|
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)
|
$
|
1,725,033
|
|
|
$
|
1,000
|
|
|
$
|
29,033
|
|
|
$
|
1,045,000
|
|
(2)(3)
|
$
|
650,000
|
|
(4)
|
(1)
|
Amounts include principal payments only and balances outstanding as of September 30, 2018, 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 $48.7 million during the nine months ended September 30, 2018, and expect to pay interest in future periods on outstanding debt obligations based on the rates and terms disclosed herein and in Note 4 to our accompanying consolidated financial statements.
|
(2)
|
Includes the balance outstanding as of September 30, 2018 of the new $500 Million Unsecured 2018 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 September 29, 2023) provided we are not then in default and upon payment of extension fees.
|
(3)
|
Includes the Amended and Restated $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 3.20% through January 15, 2020. As such, we estimate incurring, exclusive of changes to our credit rating, approximately $9.6 million per annum in total interest (comprised of combination of variable contractual rate and settlements under interest rate swap agreements) through January 2020.
|
(4)
|
Includes the $250 Million Unsecured 2018 Term Loan, which has a stated variable rate; however, we entered into $100 million in notional amount of seven-year interest rate swap agreements and $50 million in notional amount of two-year interest rate swap agreements, resulting in an effectively fixed interest rate on $150 million of the term loan at 4.11% through March 29, 2020 and on $100 million of the term loan at 4.21% from March 30, 2020 through the loan's maturity date of March 31, 2025, assuming no change in our credit rating. For the portion of the $250 Million Unsecured 2018 Term Loan that continues to have a variable interest rate, we may select from multiple interest rate options, including the prime rate and various length LIBOR locks. All LIBOR selections are subject to an additional spread (1.60% as of March 31, 2018) over the selected interest rate based on our then current credit rating.
|
•
|
Commitments Under Existing Lease Agreements; and
|
•
|
Contingencies Related to Tenant Audits/Disputes.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
(a)
|
There were no unregistered sales of equity securities during the third quarter 2018.
|
(b)
|
Not applicable.
|
(c)
|
During the third quarter 2018, 12,922 shares (at an average price of $18.95 per share) were purchased by our transfer agent on the open market and conveyed to participants in our Amended and Restated Dividend Reinvestment Plan ("DRP") cumulatively for the third quarter 2018 dividend (paid on September 21, 2018). Such stock repurchases for the quarter ended September 30, 2018 are as follows:
|
Period
|
Total Number of
Shares Purchased
(in thousands)
|
|
Average Price Paid
per Share
|
|
Total Number of
Shares Purchased
as Part of
Publicly Announced
Plan
(in thousands) (1)
|
|
Maximum Approximate
Dollar Value of Shares
Available That May
Yet Be Purchased
Under the Plan
(in thousands)
|
|
||||||
July 1, 2018 to July 31, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
123,464
|
|
|
August 1, 2018 to August 31, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
123,464
|
|
|
September 1, 2018 to September 30, 2018 (2)
|
13
|
|
|
$
|
18.95
|
|
|
—
|
|
|
$
|
123,464
|
|
(1)
|
Total
|
13
|
|
|
$
|
18.95
|
|
|
—
|
|
|
|
|
(1)
|
Amounts available for purchase relate only to our Board-authorized stock repurchase plan, and no repurchases were made during the current quarter. As of September 30, 2018, we have $123.5 million of availability remaining under our current authorization to repurchase shares of our common stock through February 21, 2020. The share repurchase plan is separate from shares purchased for DRP issuance.
|
(2)
|
Under our DRP, as set forth in a Current Report on Form 8-K filed February 24, 2011, we have the option to either issue shares that we purchase in the open market or issue shares directly from Piedmont from authorized but unissued shares. Such election will take place at the settlement of each quarterly dividend in which there are participants in our DRP, and may change from quarter to quarter based on our judgment of the best use of proceeds for Piedmont.
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ITEM 3.
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DEFAULTS UPON SENIOR SECURITIES
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ITEM 4.
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MINE SAFETY DISCLOSURES
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ITEM 5.
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OTHER INFORMATION
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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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3.6
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10.1
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10.2
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10.3
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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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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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PIEDMONT OFFICE REALTY TRUST, INC.
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(Registrant)
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Dated:
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October 30, 2018
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By:
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/s/ Robert E. Bowers
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Robert E. Bowers
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Chief Financial Officer and Executive Vice President
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(Principal Financial Officer and Duly Authorized Officer)
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By:
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Piedmont Office Realty Trust, Inc., its General Partner
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PIEDMONT OFFICE REALTY TRUST, INC.
By: _______________________
Name:
Title:
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1.
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I have reviewed this Form 10-Q for the quarter ended September 30, 2018 of Piedmont Office Realty Trust, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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By:
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/s/ Donald A. Miller, CFA
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Donald A. Miller, CFA
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|
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Principal Executive Officer
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1.
|
I have reviewed this Form 10-Q for the quarter ended September 30, 2018 of Piedmont Office Realty Trust, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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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
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
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By:
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/s/ Robert E. Bowers
|
|
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Robert E. Bowers
|
|
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Principal Financial Officer
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(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
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By:
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/s/ Donald A. Miller, CFA
|
|
|
Donald A. Miller, CFA
|
|
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Chief Executive Officer
|
|
|
October 30, 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:
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/s/ Robert E. Bowers
|
|
|
Robert E. Bowers
|
|
|
Chief Financial Officer
|
|
|
October 30, 2018
|
|