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x
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Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2018
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o
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to to
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Maryland
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58-2328421
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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5565 Glenridge Connector Ste. 450, Atlanta, Georgia
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30342
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of exchange on which registered
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COMMON STOCK
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NEW YORK STOCK EXCHANGE
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FORM 10-K
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PIEDMONT OFFICE REALTY TRUST, INC.
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TABLE OF CONTENTS
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PART I.
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Page No.
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV.
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Item 15.
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•
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Economic, regulatory, socio-economic changes, and/or technology changes (including accounting standards) that impact the real estate market generally, or that could affect patterns of use of commercial office space;
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•
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The impact of competition on our efforts to renew existing leases or re-let space on terms similar to existing leases;
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•
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Changes in the economies and other conditions affecting the office sector in general and specifically the eight markets in which we primarily operate where we have high concentrations of our Annualized Lease Revenue (see definition in Item 1. Business of this Annual Report on Form 10-K);
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•
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Lease terminations, lease defaults, or changes in the financial condition of our tenants, particularly by one of our large lead tenants;
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•
|
Adverse market and economic conditions, including any resulting impairment charges on both our long-lived assets or goodwill resulting therefrom;
|
•
|
The success of our real estate strategies and investment objectives, including our ability to identify and consummate suitable acquisitions and divestitures;
|
•
|
The illiquidity of real estate investments, including regulatory restrictions to which REITs are subject and the resulting impediment on our ability to quickly respond to adverse changes in the performance of our properties;
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•
|
The risks and uncertainties associated with our acquisition and disposition of properties, many of which risks and uncertainties may not be known at the time of acquisition or disposition;
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•
|
Development and construction delays and resultant increased costs and risks;
|
•
|
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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•
|
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, including an increased risk of default by government tenants during periods in which state or federal governments are shut down or on furlough;
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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;
|
•
|
Changes in the method pursuant to which the LIBOR rates are determined and the potential phasing out of LIBOR after 2021:
|
•
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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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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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Changes in the financial condition of our tenants directly or indirectly resulting from geopolitical developments that could negatively affect international trade, including the United Kingdom's referendum to withdraw from the European Union, the termination or threatened termination of existing international trade agreements, or the implementation of tariffs or retaliatory tariffs on imported or exported goods;
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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 this Annual Report on Form 10-K.
|
•
|
changes in the national, regional, and local economic climate, particularly in markets in which we have a concentration of properties;
|
•
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local office market conditions such as employment rates and changes in the supply of, or demand for, space in properties similar to those that we own within a particular area;
|
•
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changes in the patterns of office or parking garage use due to technological advances which may make telecommuting more prevalent or reduce the demand for office workers or parking spaces generally;
|
•
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increased demand for "co-working" or sharing of office space with other companies;
|
•
|
increased supply of office space due to the conversion of other asset classes such as shopping malls and other retail establishments to office space;
|
•
|
the attractiveness of our properties to potential tenants;
|
•
|
changes in interest rates and availability of permanent mortgage funds that may render the sale of a property difficult or unattractive or otherwise reduce returns to stockholders;
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•
|
the financial stability of our tenants, including bankruptcies, financial difficulties, or lease defaults by our tenants;
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•
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changes in operating costs and expenses, including costs for maintenance, insurance, and real estate taxes, and our ability to control rents in light of such changes;
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•
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the need to periodically fund the costs to repair, renovate, and re-let space;
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•
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earthquakes, tornadoes, hurricanes and other natural disasters, civil unrest, terrorist acts or acts of war, which may result in uninsured or under insured losses;
|
•
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changes in, or increased costs of compliance with, governmental regulations, including those governing usage, zoning, the environment, and taxes; and
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•
|
significant changes in accounting standards and tax laws.
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•
|
we may acquire properties or other real estate-related investments that are not initially accretive to our results upon acquisition or accept lower cash flows in anticipation of longer term appreciation, and we may not successfully manage and lease those properties to meet our expectations;
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•
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we may not achieve expected cost savings and operating efficiencies;
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•
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we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations;
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•
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management attention may be diverted to the integration of acquired properties, which in some cases may turn out to be less compatible with our operating strategy than originally anticipated;
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•
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we may not be able to support the acquired property through one of our existing property management offices and may not successfully open new satellite offices to serve additional markets;
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•
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the acquired properties may not perform as well as we anticipate due to various factors, including changes in macro-economic conditions and the demand for office space; and
|
•
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we may acquire properties without any recourse, or with only limited recourse, for liabilities, whether known or unknown, such as clean-up of environmental contamination, unknown/undisclosed latent structural issues or maintenance problems, claims by tenants, vendors or other persons against the former owners of the properties, and claims for indemnification by general partners, directors, officers, and others indemnified by the former owners of the properties.
|
•
|
development projects in which we have invested may be abandoned and the related investment will be impaired;
|
•
|
we may not be able to obtain, or may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations;
|
•
|
we may not be able to obtain land on which to develop;
|
•
|
we may not be able to obtain financing for development projects, or obtain financing on favorable terms;
|
•
|
construction costs of a project may exceed the original estimates or construction may not be concluded on schedule, making the project less profitable than originally estimated or not profitable at all (including the possibility of errors or omissions in the project's design, contract default, contractor or subcontractor default, performance bond surety default, the effects of local weather conditions, the possibility of local or national strikes and the possibility of shortages in materials, building supplies or energy and fuel for equipment);
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•
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tenants which pre-lease space or contract with us for a build-to-suit project may default prior to occupying the project;
|
•
|
upon completion of construction, we may not be able to obtain, or obtain on advantageous terms, permanent financing for activities that we financed through construction loans; and
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•
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we may not achieve sufficient occupancy levels and/or obtain sufficient rents to ensure the profitability of a completed project.
|
•
|
in these investments, we may not have exclusive control over the development, financing, leasing, management, and other aspects of the project, which may prevent us from taking actions that are opposed by our joint venture partners;
|
•
|
joint venture agreements often restrict the transfer of a co-venturer’s interest or may otherwise restrict our ability to sell the interest when we desire or on advantageous terms;
|
•
|
we may not be in a position to exercise sole decision-making authority regarding the property or joint venture, which could create the potential risk of creating impasses on decisions, such as acquisitions or sales;
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•
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such co-venturer may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals;
|
•
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such co-venturer may be in a position to take action contrary to our instructions, requests, policies or objectives, including our current policy with respect to maintaining our qualification as a REIT;
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•
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the possibility that our co-venturer in an investment might become bankrupt, which would mean that we and any other remaining co-venturers would generally remain liable for the joint venture’s liabilities;
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•
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our relationships with our co-venturers are contractual in nature and may be terminated or dissolved under the terms of the applicable joint venture agreements and, in such event, we may not continue to own or operate the interests or assets underlying such relationship or may need to purchase such interests or assets at a premium to the market price to continue ownership;
|
•
|
disputes between us and our co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and efforts on our business and could result in subjecting the properties owned by the applicable joint venture to additional risk; or
|
•
|
we may, in certain circumstances, be liable for the actions of our co-venturers, and the activities of a joint venture could adversely affect our ability to qualify as a REIT, even though we do not control the joint venture.
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•
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within the limits provided in our charter, prevent the ownership, transfer, and/or accumulation of stock in order to protect our status as a REIT or for any other reason deemed to be in our best interest and the interest of our stockholders;
|
•
|
issue additional shares of stock without obtaining stockholder approval, which could dilute the ownership of our then-current stockholders;
|
•
|
amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue, without obtaining stockholder approval;
|
•
|
classify or reclassify any unissued shares of our common or preferred stock and set the preferences, rights and other terms of such classified or reclassified shares, without obtaining stockholder approval;
|
•
|
employ and compensate affiliates;
|
•
|
direct our resources toward investments, which ultimately may not appreciate over time;
|
•
|
change creditworthiness standards with respect to our tenants;
|
•
|
change our investment or borrowing policies;
|
•
|
determine that it is no longer in our best interest to attempt to qualify, or to continue to qualify, as a REIT; and
|
•
|
suspend, modify or terminate the dividend reinvestment plan.
|
•
|
“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting stock or any affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding stock) or an
|
•
|
“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the stockholder, except solely by virtue of a revocable proxy, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
|
•
|
cash available for distribution;
|
•
|
our results of operations and anticipated future results of operations;
|
•
|
our financial condition, especially in relation to our anticipated future capital needs of our properties;
|
•
|
the level of reserves we establish for future capital expenditures;
|
•
|
the distribution requirements for REITs under the Code;
|
•
|
the level of distributions paid by comparable listed REITs;
|
•
|
our operating expenses; and
|
•
|
other factors our board of directors deems relevant.
|
•
|
actual or anticipated variations in our quarterly operating results;
|
•
|
changes in our earnings estimates or publication of research reports about us or the real estate industry, although no assurance can be given that any research reports about us will be published or the accuracy of such reports;
|
•
|
changes in our dividend policy;
|
•
|
future sales of substantial amounts of our common stock by our existing or future stockholders;
|
•
|
increases in market interest rates, which may lead purchasers of our stock to demand a higher yield;
|
•
|
changes in market valuations of similar companies;
|
•
|
adverse market reaction to any increased indebtedness we incur in the future;
|
•
|
additions or departures of key personnel;
|
•
|
actions by institutional stockholders;
|
•
|
material, adverse litigation judgments;
|
•
|
speculation in the press or investment community; and
|
•
|
general market and economic conditions.
|
Location
|
|
Annualized
Lease Revenue
(in thousands)
|
|
Rentable Square
Feet (in thousands) |
|
Percentage of
Annualized
Lease Revenue (%)
|
|
Percent Leased (%)
|
|||||
Washington, D.C.
|
|
$
|
75,939
|
|
|
1,950
|
|
|
14.6
|
|
|
77.6
|
|
New York
|
|
70,144
|
|
|
1,772
|
|
|
13.5
|
|
|
97.5
|
|
|
Minneapolis
|
|
63,620
|
|
|
2,104
|
|
|
12.2
|
|
|
95.5
|
|
|
Atlanta
|
|
61,673
|
|
|
2,249
|
|
|
11.9
|
|
|
95.6
|
|
|
Boston
|
|
58,083
|
|
|
1,882
|
|
|
11.2
|
|
|
96.7
|
|
|
Dallas
|
|
53,805
|
|
|
2,114
|
|
|
10.3
|
|
|
88.2
|
|
|
Orlando
|
|
53,128
|
|
|
1,755
|
|
|
10.2
|
|
|
95.6
|
|
|
Chicago
|
|
42,202
|
|
|
967
|
|
|
8.1
|
|
|
98.1
|
|
|
Other (1)
|
|
41,428
|
|
|
1,415
|
|
|
8.0
|
|
|
100
|
|
|
|
|
$
|
520,022
|
|
|
16,208
|
|
|
100.0
|
|
|
93.3
|
|
(1)
|
Includes 1901 Market Street in Philadelphia, Pennsylvania; 1430 Enclave Parkway and Enclave Place in Houston, Texas.
|
Year of Lease Expiration
|
|
Annualized
Lease Revenue
(in thousands)
|
|
Percentage of
Annualized
Lease Revenue (%)
|
|||
Available space
|
|
$
|
—
|
|
|
—
|
|
2019
|
|
67,179
|
|
|
12.9
|
|
|
2020
|
|
40,555
|
|
|
7.8
|
|
|
2021
|
|
19,500
|
|
|
3.8
|
|
|
2022
|
|
39,133
|
|
|
7.5
|
|
|
2023
|
|
44,272
|
|
|
8.5
|
|
|
2024
|
|
62,568
|
|
|
12.0
|
|
|
2025
|
|
23,001
|
|
|
4.4
|
|
|
2026
|
|
28,506
|
|
|
5.5
|
|
|
2027
|
|
46,176
|
|
|
8.9
|
|
|
2028
|
|
47,119
|
|
|
9.1
|
|
|
2029
|
|
22,354
|
|
|
4.3
|
|
|
2030
|
|
14,653
|
|
|
2.8
|
|
|
2031
|
|
14,236
|
|
|
2.7
|
|
|
Thereafter
|
|
50,770
|
|
|
9.8
|
|
|
|
|
$
|
520,022
|
|
|
100.0
|
|
|
As of the year ended December 31,
|
|||||||||||||||||
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
||||||||||||
Piedmont Office Realty Trust, Inc.
|
$
|
100.00
|
|
$
|
119.14
|
|
$
|
125.07
|
|
$
|
144.60
|
|
$
|
144.74
|
|
$
|
131.57
|
|
FTSE NAREIT Equity Office
|
$
|
100.00
|
|
$
|
125.86
|
|
$
|
126.22
|
|
$
|
142.84
|
|
$
|
150.33
|
|
$
|
128.54
|
|
FTSE NAREIT Equity REITs
|
$
|
100.00
|
|
$
|
130.14
|
|
$
|
134.30
|
|
$
|
145.74
|
|
$
|
153.36
|
|
$
|
146.27
|
|
S&P 500
|
$
|
100.00
|
|
$
|
113.69
|
|
$
|
115.26
|
|
$
|
129.05
|
|
$
|
157.22
|
|
$
|
150.33
|
|
Period
|
Total Number of
Shares Purchased
(in 000’s)
|
|
Average Price Paid
per Share
|
|
Total Number of
Shares Purchased
as Part of
Publicly Announced
Program
(in 000’s) (1)
|
|
Maximum Approximate
Dollar Value of Shares
Available That May
Yet Be Purchased
Under the Program
(in 000’s)
|
|
||||||
October 1, 2018 to October 31, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
123,464
|
|
|
November 1, 2018 to November 30, 2018
|
56
|
|
|
$
|
17.86
|
|
|
56
|
|
|
$
|
122,461
|
|
|
December 1, 2018 to December 31, 2018
|
2,097
|
|
|
$
|
17.11
|
|
|
2,097
|
|
|
$
|
86,572
|
|
(1)
|
Total
|
2,153
|
|
|
$
|
17.13
|
|
|
2,153
|
|
|
|
|
|
(1)
|
Amounts available for purchase relate only to our Board-authorized stock repurchase plan under our current authorization to repurchase shares of our common stock through February 21, 2020.
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Statement of Income Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues
|
$
|
525,967
|
|
|
$
|
574,173
|
|
|
$
|
555,715
|
|
|
$
|
584,769
|
|
|
$
|
566,252
|
|
Property operating costs
|
$
|
209,338
|
|
|
$
|
222,441
|
|
|
$
|
220,796
|
|
|
$
|
244,090
|
|
|
$
|
241,128
|
|
Depreciation and amortization
|
$
|
171,251
|
|
|
$
|
194,655
|
|
|
$
|
202,852
|
|
|
$
|
195,389
|
|
|
$
|
195,175
|
|
Impairment loss on real estate assets
|
$
|
—
|
|
|
$
|
46,461
|
|
|
$
|
33,901
|
|
|
$
|
43,301
|
|
|
$
|
—
|
|
General and administrative expenses
|
$
|
29,713
|
|
|
$
|
29,319
|
|
|
$
|
27,382
|
|
|
$
|
28,278
|
|
|
$
|
22,128
|
|
Interest and other expense
|
$
|
(61,065
|
)
|
|
$
|
(63,622
|
)
|
|
$
|
(64,477
|
)
|
|
$
|
(72,158
|
)
|
|
$
|
(67,742
|
)
|
Gain on sale of real estate assets not classified as discontinued operations
|
$
|
75,691
|
|
|
$
|
115,874
|
|
|
$
|
93,410
|
|
|
$
|
129,683
|
|
|
$
|
870
|
|
Income from continuing operations
|
$
|
130,291
|
|
|
$
|
133,549
|
|
|
$
|
99,717
|
|
|
$
|
131,236
|
|
|
$
|
40,949
|
|
Per-Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Per weighted-average common share data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations per share—basic and diluted
|
$
|
1.00
|
|
|
$
|
0.92
|
|
|
$
|
0.69
|
|
|
$
|
0.87
|
|
|
$
|
0.26
|
|
Cash dividends declared per common share
|
$
|
0.84
|
|
|
$
|
1.34
|
|
|
$
|
0.84
|
|
|
$
|
0.84
|
|
|
$
|
0.81
|
|
Weighted-average shares outstanding—basic (in thousands)
|
130,161
|
|
|
145,044
|
|
|
145,230
|
|
|
150,538
|
|
|
154,452
|
|
|||||
Weighted-average shares outstanding—diluted (in thousands)
|
130,636
|
|
|
145,380
|
|
|
145,635
|
|
|
150,880
|
|
|
154,585
|
|
|||||
Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
3,592,429
|
|
|
$
|
3,999,967
|
|
|
$
|
4,368,168
|
|
|
$
|
4,361,511
|
|
|
$
|
4,756,496
|
|
Total stockholders’ equity
|
$
|
1,712,140
|
|
|
$
|
1,986,489
|
|
|
$
|
2,097,703
|
|
|
$
|
2,123,420
|
|
|
$
|
2,280,677
|
|
Outstanding debt
|
$
|
1,685,472
|
|
|
$
|
1,726,927
|
|
|
$
|
2,020,475
|
|
|
$
|
2,029,510
|
|
|
$
|
2,269,922
|
|
NAREIT Funds from Operations Data (1):
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP net income applicable to common stock
|
$
|
130,296
|
|
|
$
|
133,564
|
|
|
$
|
99,732
|
|
|
$
|
131,304
|
|
|
$
|
42,150
|
|
Depreciation and amortization
|
170,348
|
|
|
193,904
|
|
|
202,268
|
|
|
194,943
|
|
|
195,345
|
|
|||||
Impairment loss
|
—
|
|
|
46,461
|
|
|
33,901
|
|
|
43,301
|
|
|
—
|
|
|||||
Gain on sale- wholly-owned properties and unconsolidated partnerships
|
(75,691
|
)
|
|
(119,557
|
)
|
|
(93,410
|
)
|
|
(129,682
|
)
|
|
(963
|
)
|
|||||
NAREIT Funds From Operations applicable to common stock (1)
|
$
|
224,953
|
|
|
$
|
254,372
|
|
|
$
|
242,491
|
|
|
$
|
239,866
|
|
|
$
|
236,532
|
|
Acquisition costs
|
—
|
|
|
6
|
|
|
976
|
|
|
919
|
|
|
560
|
|
|||||
Loss on extinguishment of debt
|
1,680
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
—
|
|
|||||
Net loss/(recoveries) of casualty loss and litigation settlements
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
278
|
|
|
(6,992
|
)
|
|||||
Core Funds From Operations applicable to common stock (1)
|
$
|
226,633
|
|
|
$
|
254,378
|
|
|
$
|
243,433
|
|
|
$
|
241,101
|
|
|
$
|
230,100
|
|
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on Senior Notes
|
2,083
|
|
|
2,496
|
|
|
2,610
|
|
|
2,547
|
|
|
2,632
|
|
|||||
Depreciation of non real estate assets
|
813
|
|
|
809
|
|
|
841
|
|
|
755
|
|
|
508
|
|
|||||
Straight-line effects of lease revenue and net effect of amortization of below-market in-place lease intangibles
|
(21,595
|
)
|
|
(28,067
|
)
|
|
(26,609
|
)
|
|
(20,305
|
)
|
|
(33,848
|
)
|
|||||
Stock-based and other non-cash compensation
|
7,528
|
|
|
6,139
|
|
|
5,620
|
|
|
7,090
|
|
|
3,975
|
|
|||||
Acquisition costs
|
—
|
|
|
(6
|
)
|
|
(976
|
)
|
|
(919
|
)
|
|
(560
|
)
|
|||||
Non-incremental capital expenditures
|
(44,004
|
)
|
|
(35,437
|
)
|
|
(35,568
|
)
|
|
(44,136
|
)
|
|
(84,630
|
)
|
|||||
Adjusted Funds From Operations applicable to common stock (1)
|
$
|
171,458
|
|
|
$
|
200,312
|
|
|
$
|
189,351
|
|
|
$
|
186,133
|
|
|
$
|
118,177
|
|
(1)
|
Net income calculated in accordance with GAAP is the starting point for calculating Funds from Operations, Core Funds From Operations, and Adjusted Funds From Operations. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — Funds from Operations, Core Funds from Operations, and Adjusted Funds From Operations" below for a description and reconciliation of the calculations as presented.
|
|
December 31, 2018
|
|
|
December 31, 2017
|
|
||
Capital expenditures for new development
|
$
|
78
|
|
|
$
|
6,490
|
|
Capital expenditures for redevelopment/ renovations
|
9,892
|
|
|
2,113
|
|
||
Capital expenditures previously credited as part of property acquisition
|
—
|
|
|
10,340
|
|
||
Other capital expenditures, including building and tenant improvements
|
62,135
|
|
|
60,888
|
|
||
Total capital expenditures (1)
|
$
|
72,105
|
|
|
$
|
79,831
|
|
(1)
|
Of the total amounts paid, approximately $2.0 million and $0.3 million related to soft costs such as capitalized interest, payroll, and other general and administrative expenses for the year ended December 31, 2018 and 2017, respectively.
|
|
December 31, 2018
|
|
% of Revenues
|
|
December 31, 2017
|
|
% of Revenues
|
|
Variance
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
411.7
|
|
|
|
|
$
|
455.1
|
|
|
|
|
$
|
(43.4
|
)
|
||
Tenant reimbursements
|
92.7
|
|
|
|
|
98.2
|
|
|
|
|
(5.5
|
)
|
|||||
Property management fee revenue
|
1.5
|
|
|
|
|
1.7
|
|
|
|
|
(0.2
|
)
|
|||||
Other property related income
|
20.1
|
|
|
|
|
19.2
|
|
|
|
|
0.9
|
|
|||||
Total revenues
|
526.0
|
|
|
100
|
%
|
|
574.2
|
|
|
100
|
%
|
|
(48.2
|
)
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
209.3
|
|
|
40
|
%
|
|
222.4
|
|
|
39
|
%
|
|
(13.1
|
)
|
|||
Depreciation
|
108.0
|
|
|
20
|
%
|
|
119.3
|
|
|
21
|
%
|
|
(11.3
|
)
|
|||
Amortization
|
63.3
|
|
|
12
|
%
|
|
75.4
|
|
|
13
|
%
|
|
(12.1
|
)
|
|||
Impairment losses on real estate assets
|
—
|
|
|
—
|
%
|
|
46.5
|
|
|
8
|
%
|
|
(46.5
|
)
|
|||
General and administrative
|
29.7
|
|
|
6
|
%
|
|
29.3
|
|
|
5
|
%
|
|
0.4
|
|
|||
|
115.7
|
|
|
22
|
%
|
|
81.3
|
|
|
14
|
%
|
|
34.4
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(61.0
|
)
|
|
12
|
%
|
|
(68.1
|
)
|
|
12
|
%
|
|
7.1
|
|
|||
Other income
|
1.6
|
|
|
—
|
%
|
|
0.6
|
|
|
—
|
%
|
|
1.0
|
|
|||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
—
|
%
|
|
3.8
|
|
|
1
|
%
|
|
(3.8
|
)
|
|||
Loss on extinguishment of debt
|
(1.7
|
)
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(1.7
|
)
|
|||
Gain on sale of real estate assets
|
75.7
|
|
|
15
|
%
|
|
115.9
|
|
|
20
|
%
|
|
(40.2
|
)
|
|||
Net income
|
$
|
130.3
|
|
|
25
|
%
|
|
$
|
133.5
|
|
|
23
|
%
|
|
$
|
(3.2
|
)
|
|
December 31, 2017
|
|
% of Revenues
|
|
December 31, 2016
|
|
% of Revenues
|
|
Variance
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
455.1
|
|
|
|
|
$
|
439.9
|
|
|
|
|
$
|
15.2
|
|
||
Tenant reimbursements
|
98.2
|
|
|
|
|
94.9
|
|
|
|
|
3.3
|
|
|||||
Property management fee revenue
|
1.7
|
|
|
|
|
1.9
|
|
|
|
|
(0.2
|
)
|
|||||
Other property related revenue
|
19.2
|
|
|
|
|
19.0
|
|
|
|
|
0.2
|
|
|||||
Total revenues
|
574.2
|
|
|
100
|
%
|
|
555.7
|
|
|
100
|
%
|
|
18.5
|
|
|||
Expense:
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating costs
|
222.4
|
|
|
39
|
%
|
|
220.8
|
|
|
40
|
%
|
|
1.6
|
|
|||
Depreciation
|
119.3
|
|
|
21
|
%
|
|
127.7
|
|
|
23
|
%
|
|
(8.4
|
)
|
|||
Amortization
|
75.4
|
|
|
13
|
%
|
|
75.1
|
|
|
13
|
%
|
|
0.3
|
|
|||
Impairment loss on real estate assets
|
46.5
|
|
|
8
|
%
|
|
33.9
|
|
|
6
|
%
|
|
12.6
|
|
|||
General and administrative expense
|
29.3
|
|
|
5
|
%
|
|
27.4
|
|
|
5
|
%
|
|
1.9
|
|
|||
|
81.3
|
|
|
14
|
%
|
|
70.8
|
|
|
13
|
%
|
|
10.5
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(68.1
|
)
|
|
12
|
%
|
|
(64.9
|
)
|
|
12
|
%
|
|
(3.2
|
)
|
|||
Other income
|
0.6
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
0.6
|
|
|||
Equity in income of unconsolidated joint ventures
|
3.8
|
|
|
1
|
%
|
|
0.4
|
|
|
—
|
%
|
|
3.4
|
|
|||
Gain on sale of real estate assets, net
|
115.9
|
|
|
20
|
%
|
|
93.4
|
|
|
17
|
%
|
|
22.5
|
|
|||
Net income
|
$
|
133.5
|
|
|
23
|
%
|
|
$
|
99.7
|
|
|
18
|
%
|
|
$
|
33.8
|
|
|
2018
|
|
Per
Share (1)
|
|
2017
|
|
Per
Share(1)
|
|
2016
|
|
Per
Share(1)
|
||||||||||||
GAAP net income applicable to common stock
|
$
|
130,296
|
|
|
$
|
1.00
|
|
|
$
|
133,564
|
|
|
$
|
0.92
|
|
|
$
|
99,732
|
|
|
$
|
0.69
|
|
Depreciation of real assets (2)
|
107,113
|
|
|
0.82
|
|
|
118,577
|
|
|
0.82
|
|
|
127,129
|
|
|
0.87
|
|
||||||
Amortization of lease-related costs (2)
|
63,235
|
|
|
0.48
|
|
|
75,327
|
|
|
0.52
|
|
|
75,139
|
|
|
0.52
|
|
||||||
Impairment loss on real estate assets
|
—
|
|
|
—
|
|
|
46,461
|
|
|
0.32
|
|
|
33,901
|
|
|
0.23
|
|
||||||
Gain on sale- wholly-owned properties
|
(75,691
|
)
|
|
(0.58
|
)
|
|
(115,874
|
)
|
|
(0.80
|
)
|
|
(93,410
|
)
|
|
(0.64
|
)
|
||||||
Gain on sale- unconsolidated partnerships
|
—
|
|
|
—
|
|
|
(3,683
|
)
|
|
(0.03
|
)
|
|
—
|
|
|
—
|
|
||||||
NAREIT Funds From Operations applicable to common stock
|
$
|
224,953
|
|
|
$
|
1.72
|
|
|
$
|
254,372
|
|
|
$
|
1.75
|
|
|
$
|
242,491
|
|
|
$
|
1.67
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Acquisition costs
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
976
|
|
|
—
|
|
||||||
Loss on extinguishment of debt
|
1,680
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net recoveries from casualty events
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
||||||
Core Funds From Operations applicable to common stock
|
$
|
226,633
|
|
|
$
|
1.73
|
|
|
$
|
254,378
|
|
|
$
|
1.75
|
|
|
$
|
243,433
|
|
|
$
|
1.67
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on Unsecured Senior Notes
|
2,083
|
|
|
|
|
2,496
|
|
|
|
|
2,610
|
|
|
|
|||||||||
Depreciation of non real estate assets
|
813
|
|
|
|
|
809
|
|
|
|
|
841
|
|
|
|
|||||||||
Straight-line effects of lease revenue (2)
|
(13,980
|
)
|
|
|
|
(21,492
|
)
|
|
|
|
(21,544
|
)
|
|
|
|||||||||
Stock-based and other non-cash compensation
|
7,528
|
|
|
|
|
6,139
|
|
|
|
|
5,620
|
|
|
|
|||||||||
Net effect of amortization of below-market in-place lease intangibles
|
(7,615
|
)
|
|
|
|
(6,575
|
)
|
|
|
|
(5,065
|
)
|
|
|
|||||||||
Acquisition costs
|
—
|
|
|
|
|
(6
|
)
|
|
|
|
(976
|
)
|
|
|
|||||||||
Non-incremental capital expenditures (3)
|
(44,004
|
)
|
|
|
|
(35,437
|
)
|
|
|
|
(35,568
|
)
|
|
|
|||||||||
Adjusted Funds From Operations applicable to common stock
|
$
|
171,458
|
|
|
|
|
$
|
200,312
|
|
|
|
|
$
|
189,351
|
|
|
|
||||||
Weighted-average shares outstanding – diluted
|
130,636
|
|
|
|
|
145,380
|
|
|
|
|
145,635
|
|
|
|
(1)
|
Based on weighted-average shares outstanding—diluted.
|
(2)
|
Includes adjustments for wholly-owned properties, as well as such adjustments for our proportionate ownership in unconsolidated joint ventures.
|
(3)
|
Piedmont defines non-incremental capital expenditures as capital expenditures of a recurring nature related to tenant improvements, leasing commissions, and building capital that do not incrementally enhance the underlying assets' income generating capacity. Tenant improvements, leasing commissions, building capital and deferred lease incentives incurred to lease space that was vacant at acquisition, leasing costs for spaces vacant for greater than one year, leasing costs for spaces at newly acquired properties for which in-place leases expire shortly after acquisition, improvements associated with the expansion of a building, and renovations that either enhance the rental rates of a building or change the property's underlying classification, such as from a Class B to a Class A property, are excluded from this measure.
|
|
Cash Basis
|
|
Accrual Basis
|
||||||||||||
|
December 31,
2018 |
|
December 31,
2017 |
|
December 31,
2018 |
|
December 31,
2017 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income applicable to Piedmont (GAAP basis)
|
$
|
130,296
|
|
|
$
|
133,564
|
|
|
$
|
130,296
|
|
|
$
|
133,564
|
|
|
|
|
|
|
|
|
|
||||||||
Net income applicable to noncontrolling interest
|
(5
|
)
|
|
(15
|
)
|
|
(5
|
)
|
|
(15
|
)
|
||||
Interest expense
|
61,023
|
|
|
68,124
|
|
|
61,023
|
|
|
68,124
|
|
||||
Loss on extinguishment of debt
|
1,680
|
|
|
—
|
|
|
1,680
|
|
|
—
|
|
||||
Depreciation (1)
|
107,927
|
|
|
119,386
|
|
|
107,927
|
|
|
119,386
|
|
||||
Amortization (1)
|
63,235
|
|
|
75,327
|
|
|
63,235
|
|
|
75,327
|
|
||||
Acquisition costs
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||
Impairment loss on real estate assets (1)
|
—
|
|
|
46,461
|
|
|
—
|
|
|
46,461
|
|
||||
Gain on sale of real estate assets, net (1)
|
(75,691
|
)
|
|
(119,557
|
)
|
|
(75,691
|
)
|
|
(119,557
|
)
|
||||
General & administrative expenses(1)
|
29,713
|
|
|
29,374
|
|
|
29,713
|
|
|
29,374
|
|
||||
Management fee revenue
|
(712
|
)
|
|
(922
|
)
|
|
(712
|
)
|
|
(922
|
)
|
||||
Other income(1)
|
(418
|
)
|
|
(303
|
)
|
|
(418
|
)
|
|
(303
|
)
|
||||
Straight-line rent effects of lease revenue(1)
|
(13,980
|
)
|
|
(21,492
|
)
|
|
|
|
|
||||||
Amortization of lease-related intangibles(1)
|
(7,615
|
)
|
|
(6,575
|
)
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Property NOI
|
$
|
295,453
|
|
|
$
|
323,378
|
|
|
$
|
317,048
|
|
|
$
|
351,445
|
|
|
|
|
|
|
|
|
|
||||||||
Net operating income from:
|
|
|
|
|
|
|
|
||||||||
Acquisitions(2)
|
(4,718
|
)
|
|
(23
|
)
|
|
(5,993
|
)
|
|
(27
|
)
|
||||
Dispositions(3)
|
(13,841
|
)
|
|
(58,177
|
)
|
|
(11,396
|
)
|
|
(54,650
|
)
|
||||
Other investments(4)
|
(3,730
|
)
|
|
(8,718
|
)
|
|
(4,021
|
)
|
|
(9,418
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Same Store NOI
|
$
|
273,164
|
|
|
$
|
256,460
|
|
|
$
|
295,638
|
|
|
$
|
287,350
|
|
|
|
|
|
|
|
|
|
||||||||
Change period over period in Same Store NOI
|
6.5
|
%
|
|
N/A
|
|
|
2.9
|
%
|
|
N/A
|
|
(1)
|
Includes amounts attributable to consolidated properties and our proportionate share of amounts attributable to unconsolidated joint ventures.
|
(2)
|
Acquisitions consist of Norman Pointe I in Bloomington, Minnesota, purchased on December 28, 2017; 501 West Church Street in Orlando, Florida, purchased on February 23, 2018; 9320 Excelsior Boulevard in Hopkins, Minnesota, purchased on October 25, 2018; and 25 Burlington Mall Road in Burlington, Massachusetts, purchased on December 12, 2018.
|
(3)
|
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; a 14-property portfolio sold on January 4, 2018 (comprised of 2300 Cabot Drive in Lisle, Illinois; Windy Point I and II in Schaumburg, Illinois; Suwanee Gateway One and land in Suwanee, Georgia; 1200 Crown Colony Drive in Quincy, Massachusetts; Piedmont Pointe I and II in Bethesda, Maryland; 1075 West Entrance Drive and Auburn Hills Corporate Center in Auburn Hills, Michigan; 5601 Hiatus Road in Tamarac, Florida; 2001 NW 64th Street in Ft. Lauderdale, Florida; Desert Canyon 300 in Phoenix, Arizona; 5301 Maryland Way in Brentwood, Tennessee; and 2120 West End Avenue in Nashville, Tennessee); and 800 North Brand Boulevard in Glendale, California, sold on November 29, 2018.
|
(4)
|
Other investments consist of our investments in unconsolidated joint ventures, active redevelopment and development projects, land, and recently completed redevelopment and development projects for which some portion of operating expenses were capitalized during the current and/or prior year reporting periods. The operating results from 500 TownPark in Lake Mary, Florida, and Two Pierce Place in Itasca, Illinois, are included in this line item.
|
•
|
whether the lease agreement requires landlord approval of how the tenant improvement allowance is spent prior to installation of the tenant improvements;
|
•
|
whether the lease agreement requires the tenant to provide evidence to the landlord supporting the cost and what the tenant improvement allowance was spent on prior to payment by the landlord for such tenant improvements;
|
•
|
whether the tenant improvements are unique to the tenant or reusable by other tenants;
|
•
|
whether the tenant is permitted to alter or remove the tenant improvements without the consent of the landlord or without compensating the landlord for any lost utility or diminution in fair value; and
|
•
|
whether the ownership of the tenant improvements remains with the landlord or remains with the tenant at the end of the lease term.
|
ASU
|
Title
|
Summary
|
Anticipated Impact on Our 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.
|
No material impact.
|
|
|
|
|
ASU 2018-10
|
Codification Improvements to Topic 842, Leases
|
Clarifications and technical corrections to ASU 2016-02.
|
No material impact.
|
|
|
|
|
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 qualify to be accounted for as a part of the underlying lease.
|
|
|
|
|
ASU 2018-20
|
Leases (Topic 842)
Narrow-Scope Improvements for Lessors
|
Allows lessors to exclude sales taxes collected from lessees from revenue; also stipulates certain requirements related to variable consideration; and also requires the lessor to allocate, rather than recognize, certain variable payments to lease and non-lease components when changes to the facts and circumstances of the basis of the payments occurs.
|
No material impact.
|
•
|
a package of practical expedients, applied together, which do not require the reassessment of (1) any expired or existing contracts to determine if they contain a lease; (2) lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases;
|
•
|
the presentation of comparative periods in the year of adoption under ASC 840 (the former leasing guidance), which effectively allows for an initial adoption of ASC 842 (the new leasing guidance) on January 1, 2019.
|
|
|
Payments Due by Period
|
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
|
||||||||||
Long-term debt (1) (2)
|
|
$
|
1,694,706
|
|
|
$
|
932
|
|
|
$
|
328,774
|
|
(3)
|
$
|
715,000
|
|
(4)
|
$
|
650,000
|
|
(5)
|
(1)
|
Amounts include principal payments only and balances outstanding as of December 31, 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 $63.1 million during the year ended December 31, 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 of our accompanying consolidated financial statements.
|
(2)
|
Piedmont does not have any ground leases, nor does Piedmont have any material obligations as lessee under operating lease agreements as of December 31, 2018. See Note 8 to our accompanying consolidated financial statements for amounts committed to tenants for improvements, the timing of which may fluctuate.
|
(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 balance outstanding as of December 31, 2018 of the $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.
|
(5)
|
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. As such, we estimate incurring, exclusive of changes to our credit rating, approximately $6.2 million per annum in total hedged interest (comprised of combination of variable contractual rate and settlements under interest rate swap agreements) through March 2020, and $4.2 million per annum in total hedged interest from March 2020 through March 2025. 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 December 31, 2018) over the selected interest rate based on our then current credit rating.
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
||||||||||||||
Maturing debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Variable rate repayments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
205,000
|
|
(3)
|
$
|
—
|
|
|
$
|
100,000
|
|
(4)
|
$
|
305,000
|
|
Variable rate average interest rate (1)
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
3.35
|
%
|
|
—
|
%
|
|
4.12
|
%
|
|
3.60
|
%
|
|||||||
Fixed rate repayments
|
$
|
932
|
|
|
$
|
1,072
|
|
|
$
|
327,702
|
|
(2)
|
$
|
160,000
|
|
|
$
|
350,000
|
|
|
$
|
550,000
|
|
(4)
|
$
|
1,389,706
|
|
Fixed rate average interest rate (1)
|
5.55
|
%
|
|
5.55
|
%
|
|
3.40
|
%
|
|
3.48
|
%
|
|
3.40
|
%
|
|
4.36
|
%
|
|
3.79
|
%
|
(1)
|
See Note 4 to our accompanying consolidated financial statements for further details on our debt structure.
|
(2)
|
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.
|
(3)
|
Includes the balance of our $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.
|
(4)
|
During the year ended December 31, 2018, Piedmont entered into a $250 million unsecured term loan facility (the “$250 Million Unsecured 2018 Term Loan”) with a consortium of lenders. 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 2020 leaving the remaining $100 million principal at the variable rate. Fixed rate payments also includes $400 million of Unsecured Senior Notes.
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Maturing debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Variable rate repayments
|
$
|
170,000
|
|
(2)
|
$
|
23,000
|
|
(3)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
193,000
|
|
Variable rate average interest rate (1)
|
2.54
|
%
|
|
2.57
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2.54
|
%
|
|||||||
Fixed rate repayments
|
$
|
882
|
|
|
$
|
301,014
|
|
(4)
|
$
|
301,072
|
|
(5)
|
$
|
27,702
|
|
|
$
|
160,000
|
|
|
$
|
750,000
|
|
|
$
|
1,540,670
|
|
Fixed rate average interest rate (1)
|
5.55
|
%
|
|
2.79
|
%
|
|
3.36
|
%
|
|
5.55
|
%
|
|
3.48
|
%
|
|
3.96
|
%
|
|
3.59
|
%
|
(1)
|
See Note 4 to our accompanying consolidated financial statements for further details on our debt structure.
|
(2)
|
Includes the balance of the $170 Million Unsecured 2015 Term Loan as of December 31, 2017; however, on January 4, 2018, Piedmont fully repaid the balance of this facility without penalty.
|
(3)
|
Includes the balance on our $500 Million Unsecured 2015 Line of Credit which was repaid on September 28, 2018, and the balance was transferred to the $500 Million Unsecured 2018 Line of Credit. The $500 Million Unsecured 2018 Line of Credit has a maturity of September 30, 2022. 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.
|
(4)
|
Includes the balance of the $300 Million Unsecured 2013 Term Loan as of December 31, 2017; however, on January 4, 2018, Piedmont fully repaid the balance of this facility without penalty.
|
(5)
|
The amount includes the $300 Million Unsecured 2011 Term Loan which was Amended and Restated on September 28, 2018, amending, among other things, the maturity date from January 2020 to November 30, 2021. The Amended and Restated $300 Million Unsecured 2011 Term Loan 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.
|
•
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of our assets;
|
•
|
provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of management and/or members of the board of directors; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
|
(a)
|
(a)
|
2. Schedule III—Real Estate Assets and Accumulated Depreciation.
|
(b)
|
The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.
|
(c)
|
See (a) 2. above.
|
Piedmont Office Realty Trust, Inc.
|
||
(Registrant)
|
||
|
|
|
By:
|
|
/s/ DONALD A. MILLER, CFA
|
|
|
Donald A. Miller, CFA
|
|
|
Chief Executive Officer, Principal Executive Officer, and Director
|
Signature
|
|
Title
|
Date
|
|
|
|
|
/s/ FRANK C. MCDOWELL
|
|
Chairman, and Director
|
February 20, 2019
|
Frank C. McDowell
|
|
|
|
|
|
|
|
/s/ WESLEY E. CANTRELL
|
|
Director
|
February 20, 2019
|
Wesley E. Cantrell
|
|
|
|
|
|
|
|
/s/ BARBARA B. LANG
|
|
Director
|
February 20, 2019
|
Barbara B. Lang
|
|
|
|
|
|
|
|
/s/ RAYMOND G. MILNES, JR.
|
|
Director
|
February 20, 2019
|
Raymond G. Milnes, Jr.
|
|
|
|
|
|
|
|
/s/ JEFFREY L. SWOPE
|
|
Director
|
February 20, 2019
|
Jeffrey L. Swope
|
|
|
|
|
|
|
|
/s/ DALE H. TAYSOM
|
|
Director
|
February 20, 2019
|
Dale H. Taysom
|
|
|
|
|
|
|
|
/s/ KELLY H. BARRETT
|
|
Director
|
February 20, 2019
|
Kelly H. Barrett
|
|
|
|
|
|
|
|
/s/ DONALD A. MILLER, CFA
|
|
Chief Executive Officer and Director
|
February 20, 2019
|
Donald A. Miller, CFA
|
|
(Principal Executive Officer)
|
|
|
|
|
|
/s/ ROBERT E. BOWERS
|
|
Chief Financial Officer and Executive Vice-President
|
February 20, 2019
|
Robert E. Bowers
|
|
(Principal Financial Officer)
|
|
|
|
|
|
/s/ LAURA P. MOON
|
|
Chief Accounting Officer
|
February 20, 2019
|
Laura P. Moon
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
Exhibit Number
|
|
Description of Document
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
3.6
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
10.6*
|
|
|
|
|
|
10.7*
|
|
|
|
|
|
10.8*
|
|
|
|
|
|
10.9*
|
|
|
|
|
|
10.10*
|
|
|
|
|
|
10.11*
|
|
|
|
|
|
10.12*
|
|
|
|
|
|
10.13*
|
|
|
|
|
|
10.14*
|
|
|
|
|
|
10.15*
|
|
|
|
|
|
10.16*
|
|
|
|
|
|
10.17*
|
|
|
|
|
|
10.18*
|
|
|
|
|
|
10.19
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22
|
|
|
|
|
|
10.23
|
|
|
|
|
|
10.24
|
|
|
|
|
|
10.25*
|
|
|
|
|
|
10.26*
|
|
|
|
|
|
10.27*
|
|
|
|
|
|
10.28
|
|
|
|
|
|
10.29
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31*
|
|
|
|
|
|
21.1
|
|
|
|
|
|
23.1
|
|
|
|
|
|
23.2
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101.INS
|
|
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
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
Financial Statements
|
Page
|
|
|
Financial Statement Schedule
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Assets:
|
|
|
|
||||
Real estate assets, at cost:
|
|
|
|
||||
Land
|
$
|
507,422
|
|
|
$
|
490,625
|
|
Buildings and improvements, less accumulated depreciation of $772,093 and $683,770 as of December 31, 2018 and December 31, 2017, respectively
|
2,305,096
|
|
|
2,243,519
|
|
||
Intangible lease assets, less accumulated amortization of $87,391 and $99,145 as of December 31, 2018 and December 31, 2017, respectively
|
77,676
|
|
|
77,805
|
|
||
Construction in progress
|
15,848
|
|
|
11,344
|
|
||
Real estate assets held for sale, net
|
110,552
|
|
|
561,449
|
|
||
Total real estate assets
|
3,016,594
|
|
|
3,384,742
|
|
||
Investment in and amounts due from unconsolidated joint venture
|
—
|
|
|
10
|
|
||
Cash and cash equivalents
|
4,571
|
|
|
7,382
|
|
||
Tenant receivables, net of allowance for doubtful accounts of $504 and $539 as of December 31, 2018 and December 31, 2017, respectively
|
10,800
|
|
|
12,139
|
|
||
Straight-line rent receivables
|
162,589
|
|
|
144,469
|
|
||
Restricted cash and escrows
|
1,463
|
|
|
1,373
|
|
||
Prepaid expenses and other assets
|
25,356
|
|
|
20,778
|
|
||
Goodwill
|
98,918
|
|
|
98,918
|
|
||
Interest rate swaps
|
1,199
|
|
|
688
|
|
||
Deferred lease costs, less accumulated amortization of $183,611 and $180,120 as of December 31, 2018 and December 31, 2017, respectively
|
250,148
|
|
|
245,175
|
|
||
Other assets held for sale, net
|
20,791
|
|
|
84,293
|
|
||
Total assets
|
$
|
3,592,429
|
|
|
$
|
3,999,967
|
|
Liabilities:
|
|
|
|
||||
Unsecured debt, net of discount and unamortized debt issuance costs of $9,879 and $7,689 as of December 31, 2018 and December 31, 2017, respectively
|
$
|
1,495,121
|
|
|
$
|
1,535,311
|
|
Secured debt, net of premiums and unamortized debt issuance costs of $645 and $946 as of December 31, 2018 and December 31, 2017, respectively
|
190,351
|
|
|
191,616
|
|
||
Accounts payable, accrued expenses, and accrued capital expenditures
|
102,519
|
|
|
114,853
|
|
||
Dividends payable
|
26,972
|
|
|
101,800
|
|
||
Deferred income
|
28,779
|
|
|
29,582
|
|
||
Intangible lease liabilities, less accumulated amortization of $59,144 and $55,847 as of December 31, 2018 and December 31, 2017, respectively
|
35,708
|
|
|
38,458
|
|
||
Interest rate swaps
|
839
|
|
|
1,478
|
|
||
Other liabilities held for sale, net
|
—
|
|
|
380
|
|
||
Total liabilities
|
1,880,289
|
|
|
2,013,478
|
|
||
Commitments and Contingencies (Note 8)
|
—
|
|
|
—
|
|
||
Stockholders’ Equity:
|
|
|
|
||||
Shares-in-trust, 150,000,000 shares authorized, none outstanding as of December 31, 2018 or December 31, 2017
|
—
|
|
|
—
|
|
||
Preferred stock, no par value, 100,000,000 shares authorized, none outstanding as of December 31, 2018 or December 31, 2017
|
—
|
|
|
—
|
|
||
Common stock, $.01 par value; 750,000,000 shares authorized, 126,218,554 shares issued and outstanding as of December 31, 2018; and 142,358,940 shares issued and outstanding at December 31, 2017
|
1,262
|
|
|
1,424
|
|
||
Additional paid-in capital
|
3,683,186
|
|
|
3,677,360
|
|
||
Cumulative distributions in excess of earnings
|
(1,982,542
|
)
|
|
(1,702,281
|
)
|
||
Other comprehensive income
|
8,462
|
|
|
8,164
|
|
||
Piedmont stockholders’ equity
|
1,710,368
|
|
|
1,984,667
|
|
||
Noncontrolling interest
|
1,772
|
|
|
1,822
|
|
||
Total stockholders’ equity
|
1,712,140
|
|
|
1,986,489
|
|
||
Total liabilities and stockholders’ equity
|
$
|
3,592,429
|
|
|
$
|
3,999,967
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Rental income
|
$
|
411,667
|
|
|
$
|
455,125
|
|
|
$
|
439,918
|
|
Tenant reimbursements
|
92,743
|
|
|
98,139
|
|
|
94,901
|
|
|||
Property management fee revenue
|
1,450
|
|
|
1,735
|
|
|
1,914
|
|
|||
Other property related income
|
20,107
|
|
|
19,174
|
|
|
18,982
|
|
|||
|
525,967
|
|
|
574,173
|
|
|
555,715
|
|
|||
Expenses:
|
|
|
|
|
|
||||||
Property operating costs
|
209,338
|
|
|
222,441
|
|
|
220,796
|
|
|||
Depreciation
|
107,956
|
|
|
119,288
|
|
|
127,733
|
|
|||
Amortization
|
63,295
|
|
|
75,367
|
|
|
75,119
|
|
|||
Impairment loss on real estate assets
|
—
|
|
|
46,461
|
|
|
33,901
|
|
|||
General and administrative
|
29,713
|
|
|
29,319
|
|
|
27,382
|
|
|||
|
410,302
|
|
|
492,876
|
|
|
484,931
|
|
|||
|
115,665
|
|
|
81,297
|
|
|
70,784
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense
|
(61,023
|
)
|
|
(68,124
|
)
|
|
(64,860
|
)
|
|||
Other income/(expense)
|
1,638
|
|
|
657
|
|
|
(13
|
)
|
|||
Net recoveries from casualty events
|
—
|
|
|
—
|
|
|
34
|
|
|||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
3,845
|
|
|
362
|
|
|||
Loss on extinguishment of debt
|
(1,680
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on sale of real estate assets, net
|
75,691
|
|
|
115,874
|
|
|
93,410
|
|
|||
|
14,626
|
|
|
52,252
|
|
|
28,933
|
|
|||
Net income
|
130,291
|
|
|
133,549
|
|
|
99,717
|
|
|||
Net loss applicable to noncontrolling interest
|
5
|
|
|
15
|
|
|
15
|
|
|||
Net income applicable to Piedmont
|
$
|
130,296
|
|
|
$
|
133,564
|
|
|
$
|
99,732
|
|
Per share information— basic and diluted:
|
|
|
|
|
|
||||||
Net income applicable to common stockholders
|
$
|
1.00
|
|
|
$
|
0.92
|
|
|
$
|
0.69
|
|
Weighted-average shares outstanding—basic
|
130,161,202
|
|
|
145,043,503
|
|
|
145,230,382
|
|
|||
Weighted-average shares outstanding—diluted
|
130,635,650
|
|
|
145,379,994
|
|
|
145,634,953
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income applicable to Piedmont
|
|
|
$
|
130,296
|
|
|
|
|
$
|
133,564
|
|
|
|
|
$
|
99,732
|
|
|||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Effective portion of gain/(loss) on derivative instruments that are designated and qualify as cash flow hedges (See Note 5)
|
692
|
|
|
|
|
2,479
|
|
|
|
|
(4,126
|
)
|
|
|
||||||
(300
|
)
|
|
|
|
3,502
|
|
|
|
|
4,548
|
|
|
|
|||||||
Gain on investment in available for sale securities
|
—
|
|
|
|
|
79
|
|
|
|
|
21
|
|
|
|
||||||
Other comprehensive income
|
|
|
392
|
|
|
|
|
6,060
|
|
|
|
|
443
|
|
||||||
Comprehensive income applicable to Piedmont
|
|
|
$
|
130,688
|
|
|
|
|
$
|
139,624
|
|
|
|
|
$
|
100,175
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Cumulative
Distributions in
Excess of Earnings
|
|
Other
Comprehensive
Income/(Loss)
|
|
Noncontrolling
Interest
|
|
Total
Stockholders’
Equity
|
|||||||||||||||
Shares
|
|
Amount
|
|
|||||||||||||||||||||||
Balance, December 31, 2015
|
145,512
|
|
|
$
|
1,455
|
|
|
$
|
3,669,977
|
|
|
$
|
(1,550,698
|
)
|
|
$
|
1,661
|
|
|
$
|
1,025
|
|
|
$
|
2,123,420
|
|
Share repurchases as part of announced plan
|
(462
|
)
|
|
(5
|
)
|
|
—
|
|
|
(7,938
|
)
|
|
—
|
|
|
—
|
|
|
(7,943
|
)
|
||||||
Offering costs
|
—
|
|
|
—
|
|
|
(342
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(342
|
)
|
||||||
Noncontrolling interest in consolidated joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
888
|
|
|
888
|
|
||||||
Dividends to common stockholders ($0.84 per share), stockholders of subsidiaries, and dividends reinvested
|
—
|
|
|
—
|
|
|
(173
|
)
|
|
(121,959
|
)
|
|
—
|
|
|
(16
|
)
|
|
(122,148
|
)
|
||||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
|
185
|
|
|
2
|
|
|
3,666
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,668
|
|
||||||
Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(15
|
)
|
||||||
Net income applicable to Piedmont
|
—
|
|
|
—
|
|
|
—
|
|
|
99,732
|
|
|
—
|
|
|
—
|
|
|
99,732
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
443
|
|
|
—
|
|
|
443
|
|
||||||
Balance, December 31, 2016
|
145,235
|
|
|
1,452
|
|
|
3,673,128
|
|
|
(1,580,863
|
)
|
|
2,104
|
|
|
1,882
|
|
|
2,097,703
|
|
||||||
Share repurchases as part of an announced plan
|
(3,133
|
)
|
|
(31
|
)
|
|
—
|
|
|
(61,719
|
)
|
|
—
|
|
|
—
|
|
|
(61,750
|
)
|
||||||
Offering costs
|
—
|
|
|
—
|
|
|
(182
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(182
|
)
|
||||||
Dividends to common stockholders ($1.34 per share), 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
|
(16,495
|
)
|
|
(165
|
)
|
|
—
|
|
|
(301,513
|
)
|
|
—
|
|
|
—
|
|
|
(301,678
|
)
|
||||||
Offering costs
|
—
|
|
|
—
|
|
|
(85
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(85
|
)
|
||||||
Dividends to common stockholders ($0.84 per share), stockholders of subsidiaries, and dividends reinvested
|
—
|
|
|
—
|
|
|
(82
|
)
|
|
(109,138
|
)
|
|
—
|
|
|
(45
|
)
|
|
(109,265
|
)
|
||||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
|
355
|
|
|
3
|
|
|
5,993
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,996
|
|
||||||
Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||
Net income applicable to Piedmont
|
—
|
|
|
—
|
|
|
—
|
|
|
130,296
|
|
|
—
|
|
|
—
|
|
|
130,296
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
392
|
|
|
—
|
|
|
392
|
|
||||||
Balance, December 31, 2018
|
126,219
|
|
|
$
|
1,262
|
|
|
$
|
3,683,186
|
|
|
$
|
(1,982,542
|
)
|
|
$
|
8,462
|
|
|
$
|
1,772
|
|
|
$
|
1,712,140
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
130,291
|
|
|
$
|
133,549
|
|
|
$
|
99,717
|
|
Operating distributions received from unconsolidated joint ventures
|
10
|
|
|
11
|
|
|
579
|
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
107,956
|
|
|
119,288
|
|
|
127,733
|
|
|||
Amortization of debt issuance costs net of favorable settlement of interest rate swaps
|
(250
|
)
|
|
1,588
|
|
|
1,702
|
|
|||
Other amortization
|
58,330
|
|
|
73,944
|
|
|
74,373
|
|
|||
Impairment loss on real estate assets
|
—
|
|
|
46,461
|
|
|
33,901
|
|
|||
Loss on extinguishment of debt
|
1,665
|
|
|
—
|
|
|
—
|
|
|||
Stock compensation expense
|
9,737
|
|
|
9,196
|
|
|
7,928
|
|
|||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
(3,845
|
)
|
|
(362
|
)
|
|||
Gain on sale of real estate assets
|
(75,691
|
)
|
|
(115,874
|
)
|
|
(93,410
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Increase in tenant and straight-line rent receivables, net
|
(16,094
|
)
|
|
(21,392
|
)
|
|
(26,747
|
)
|
|||
Decrease/(increase) in prepaid expenses and other assets
|
(3,095
|
)
|
|
384
|
|
|
1,437
|
|
|||
Increase/(decrease) in accounts payable and accrued expenses
|
(9,092
|
)
|
|
(1,521
|
)
|
|
3,555
|
|
|||
Increase/(decrease) in deferred income
|
(898
|
)
|
|
1,016
|
|
|
1,441
|
|
|||
Net cash provided by operating activities
|
202,869
|
|
|
242,805
|
|
|
231,847
|
|
|||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Acquisition of real estate assets and intangibles
|
(151,914
|
)
|
|
(35,262
|
)
|
|
(349,668
|
)
|
|||
Capitalized expenditures
|
(72,105
|
)
|
|
(79,831
|
)
|
|
(110,228
|
)
|
|||
Net sale proceeds from wholly-owned properties
|
575,227
|
|
|
375,518
|
|
|
365,918
|
|
|||
Net sale proceeds received from unconsolidated joint ventures
|
—
|
|
|
12,334
|
|
|
—
|
|
|||
Investments in unconsolidated joint ventures
|
—
|
|
|
(1,162
|
)
|
|
—
|
|
|||
Note receivable issuance
|
(3,200
|
)
|
|
—
|
|
|
—
|
|
|||
Note receivable repayment
|
3,200
|
|
|
—
|
|
|
—
|
|
|||
Deferred lease costs paid
|
(27,430
|
)
|
|
(30,985
|
)
|
|
(25,896
|
)
|
|||
Net cash provided by/(used in) investing activities
|
323,778
|
|
|
240,612
|
|
|
(119,874
|
)
|
|||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Debt issuance and other costs paid
|
(1,040
|
)
|
|
(132
|
)
|
|
(264
|
)
|
|||
Proceeds from debt
|
977,062
|
|
|
180,000
|
|
|
695,000
|
|
|||
Repayments of debt
|
(1,020,455
|
)
|
|
(476,401
|
)
|
|
(706,875
|
)
|
|||
Costs of issuance of common stock
|
(85
|
)
|
|
(182
|
)
|
|
(342
|
)
|
|||
Value of shares withheld for payment of taxes related to employee stock compensation
|
(2,219
|
)
|
|
(3,403
|
)
|
|
(2,344
|
)
|
|||
Repurchases of common stock as part of announced plan
|
(298,538
|
)
|
|
(60,474
|
)
|
|
(7,943
|
)
|
|||
Dividends paid and discount on dividend reinvestments
|
(184,093
|
)
|
|
(122,274
|
)
|
|
(91,616
|
)
|
|||
Net cash used in financing activities
|
(529,368
|
)
|
|
(482,866
|
)
|
|
(114,384
|
)
|
|||
Net increase/(decrease) in cash, cash equivalents, and restricted cash and escrows
|
(2,721
|
)
|
|
551
|
|
|
(2,411
|
)
|
|||
Cash, cash equivalents, and restricted cash and escrows, beginning of year
|
8,755
|
|
|
8,204
|
|
|
10,615
|
|
|||
Cash, cash equivalents, and restricted cash and escrows, end of year
|
$
|
6,034
|
|
|
$
|
8,755
|
|
|
$
|
8,204
|
|
Buildings
|
40 years
|
Building improvements
|
5-25 years
|
Land improvements
|
20-25 years
|
Tenant allowances
|
Lease term
|
Furniture, fixtures, and equipment
|
3-5 years
|
Intangible lease assets
|
Lease term
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Intangible Lease Assets:
|
|
|
|
||||
Above-Market In-Place Lease Assets
|
$
|
7,620
|
|
|
$
|
11,935
|
|
In-Place Lease Valuation
|
$
|
157,447
|
|
|
$
|
165,015
|
|
Intangible Lease Origination Costs (included as component of Deferred Lease Costs)
|
$
|
241,516
|
|
|
$
|
250,539
|
|
Intangible Lease Liabilities (Below-Market In-Place Leases)
|
$
|
94,852
|
|
|
$
|
95,620
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Amortization of Intangible Lease Origination Costs and In-Place Lease Valuation included in amortization expense
|
$
|
48,940
|
|
|
$
|
58,467
|
|
|
$
|
58,150
|
|
Amortization of Above-Market and Below-Market In-Place Lease intangibles as a net increase to rental revenues
|
$
|
7,615
|
|
|
$
|
6,575
|
|
|
$
|
5,066
|
|
|
Intangible Lease Assets
|
|
|
|
|
||||||||||
|
Above-Market
In-place Lease Assets |
|
In-Place Lease Valuation
|
|
Intangible Lease
Origination Costs (1)
|
|
Below-Market
In-place Lease
Liabilities
|
||||||||
For the year ending December 31:
|
|
|
|
|
|
|
|
||||||||
2019
|
$
|
938
|
|
|
$
|
20,876
|
|
|
$
|
29,503
|
|
|
$
|
8,273
|
|
2020
|
197
|
|
|
14,540
|
|
|
22,570
|
|
|
6,654
|
|
||||
2021
|
141
|
|
|
12,449
|
|
|
19,818
|
|
|
6,443
|
|
||||
2022
|
121
|
|
|
10,948
|
|
|
17,550
|
|
|
5,878
|
|
||||
2023
|
97
|
|
|
7,370
|
|
|
11,774
|
|
|
4,367
|
|
||||
Thereafter
|
64
|
|
|
9,935
|
|
|
18,952
|
|
|
4,093
|
|
||||
|
$
|
1,558
|
|
|
$
|
76,118
|
|
|
$
|
120,167
|
|
|
$
|
35,708
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-Average Amortization Period (in years)
|
3
|
|
|
5
|
|
|
6
|
|
|
6
|
|
(1)
|
Included as a component of Deferred Lease Costs in the accompanying consolidated balance sheets.
|
•
|
escrow accounts held by lenders to pay future real estate taxes, insurance, debt service, and tenant improvements;
|
•
|
net sales proceeds from property sales held by qualified intermediary for potential Section 1031 exchange;
|
•
|
earnest money paid in connection with future acquisitions; and
|
•
|
security and utility deposits paid by tenants per the terms of their respective leases.
|
•
|
prepaid property taxes, insurance and operating costs;
|
•
|
receivables which are unrelated to tenants, for example, insurance proceeds receivable from insurers related to casualty losses; and
|
•
|
equipment, furniture and fixtures, and tenant improvements for Piedmont’s corporate office and property management office space, net of accumulated depreciation.
|
•
|
Approximately $43.6 million, $50.8 million, and $50.1 million of deferred lease costs for the years ended December 31, 2018, 2017, and 2016, respectively, are included in amortization expense; and
|
•
|
Approximately $2.6 million, $4.8 million, and $3.9 million, of deferred lease costs related to lease incentives granted to tenants for the years ended December 31, 2018, 2017, and 2016, respectively, was included as an offset to rental income.
|
•
|
prepaid rent from tenants; and
|
•
|
tenant reimbursements related to operating expense or property tax expenses which may be due to tenants as part of an annual operating expense reconciliation.
|
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.
|
No material impact.
|
|
|
|
|
ASU 2018-10
|
Codification Improvements to Topic 842, Leases
|
Clarifications and technical corrections to ASU 2016-02.
|
No material impact.
|
|
|
|
|
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 qualify to be accounted for as a part of the underlying lease.
|
|
|
|
|
ASU 2018-20
|
Leases (Topic 842)
Narrow-Scope Improvements for Lessors
|
Allows lessors to exclude sales taxes collected from lessees from revenue; also stipulates certain requirements related to variable consideration; and also requires the lessor to allocate, rather than recognize, certain variable payments to lease and non-lease components when changes to the facts and circumstances of the basis of the payments occurs.
|
No material impact.
|
•
|
a package of practical expedients, applied together, which do not require the reassessment of (1) any expired or existing contracts to determine if they contain a lease; (2) lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases;
|
•
|
the presentation of comparative periods in the year of adoption under ASC 840 (the former leasing guidance), which effectively allows for an initial adoption of ASC 842 (the new leasing guidance) on January 1, 2019.
|
Property
|
|
Metropolitan Statistical Area
|
|
Date of Acquisition
|
|
Ownership Percentage Acquired
|
|
Rentable Square Feet (Unaudited)
|
|
Percentage Leased as of Acquisition (Unaudited)
|
|
Net Contractual Purchase Price
(in millions)
|
|||||
501 West Church Street
|
|
Orlando, Florida
|
|
February 23, 2018
|
|
100
|
%
|
|
182,461
|
|
|
100
|
%
|
|
$
|
28.0
|
|
9320 Excelsior Boulevard
|
|
Minneapolis, Minnesota
|
|
October 25, 2018
|
|
100
|
%
|
|
267,724
|
|
|
100
|
%
|
|
$
|
48.7
|
|
25 Burlington Mall Road
|
|
Boston, Massachusetts
|
|
December 12, 2018
|
|
100
|
%
|
|
287,776
|
|
|
89
|
%
|
|
$
|
74.0
|
|
Facility (1)
|
|
Stated Rate
|
|
Effective Rate (2)
|
|
Maturity
|
|
Amount Outstanding as of
|
||||||||||
|
2018
|
|
2017
|
|||||||||||||||
Secured (Fixed)
|
|
|
|
|
|
|
|
|
|
|
||||||||
$35 Million Fixed-Rate Loan (3)
|
|
5.55
|
%
|
|
3.75
|
%
|
|
9/1/2021
|
|
$
|
29,706
|
|
|
$
|
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
|
|
|
|
|
|
|
|
645
|
|
|
946
|
|
||||||
Subtotal/Weighted Average (5)
|
|
3.80
|
%
|
|
|
|
|
|
190,351
|
|
|
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%
|
|
|
3.35
|
%
|
|
9/30/2022
|
(8
|
)
|
205,000
|
|
|
—
|
|
|||
Amended and Restated $300 Million Unsecured 2011 Term Loan
|
|
LIBOR + 1.00%
|
|
|
3.20
|
%
|
(7)
|
11/30/2021
|
|
300,000
|
|
|
300,000
|
|
||||
$350 Million Unsecured Senior Notes
|
|
3.40
|
%
|
|
3.43
|
%
|
|
6/01/2023
|
|
350,000
|
|
|
350,000
|
|
||||
$400 Million Unsecured Senior Notes
|
|
4.45
|
%
|
|
4.10
|
%
|
|
3/15/2024
|
|
400,000
|
|
|
400,000
|
|
||||
$250 Million Unsecured 2018 Term Loan
|
|
LIBOR + 1.60%
|
|
|
4.12
|
%
|
(9
|
)
|
3/31/2025
|
|
250,000
|
|
|
—
|
|
|||
Discounts and unamortized debt issuance costs
|
|
|
|
|
|
|
|
(9,879)
|
|
|
(7,689)
|
|
||||||
Subtotal/Weighted Average (5)
|
|
3.75
|
%
|
|
|
|
|
|
1,495,121
|
|
|
1,535,311
|
|
|||||
Total/Weighted Average (5)
|
|
3.76
|
%
|
|
|
|
|
|
$
|
1,685,472
|
|
|
$
|
1,726,927
|
|
(1)
|
Other than the $35 Million Fixed-Rate Loan, all of Piedmont’s outstanding debt as of December 31, 2018 and 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 December 31, 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 5 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 December 31, 2018.
|
2019
|
$
|
932
|
|
|
2020
|
1,072
|
|
|
|
2021
|
327,702
|
|
|
|
2022
|
365,000
|
|
(1)
|
|
2023
|
350,000
|
|
|
|
Thereafter
|
650,000
|
|
|
|
Total
|
$
|
1,694,706
|
|
|
(1)
|
Includes the balance outstanding as of December 31, 2018 on the $500 Million Unsecured 2018 Line of Credit of $205 million. However, Piedmont may extend the term for up to one additional year (through two available six month extensions to a final extended maturity date of September 29, 2023) provided Piedmont is not then in default and upon payment of extension fees.
|
Interest Rate Derivatives:
|
|
Number of Swap Agreements
|
|
Associated Debt Instrument
|
|
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:
|
December 31, 2018
|
|
December 31, 2017
|
||||
Gross derivative assets
|
$
|
1,199
|
|
|
$
|
688
|
|
Gross derivative liabilities
|
(839
|
)
|
|
(1,478
|
)
|
||
Net derivative asset/(liability)
|
$
|
360
|
|
|
$
|
(790
|
)
|
Interest Rate Swaps in Cash Flow Hedging Relationships
|
2018
|
|
2017
|
|
2016
|
||||||
Amount of gain/(loss) recognized in OCI
|
$
|
692
|
|
|
$
|
2,479
|
|
|
$
|
(4,126
|
)
|
Amount of previously recorded gain/(loss) reclassified from OCI into Interest Expense
|
$
|
1,558
|
|
|
$
|
(3,502
|
)
|
|
$
|
(4,548
|
)
|
Amount of loss recognized on derivative reclassified from OCI into Loss on Extinguishment of Debt
|
$
|
(1,258
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Total amount of Interest Expense presented in the consolidated statements of income
|
$
|
(61,023
|
)
|
|
$
|
(68,124
|
)
|
|
$
|
(64,860
|
)
|
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).
|
|
December 31, 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)
|
$
|
4,571
|
|
|
$
|
4,571
|
|
|
Level 1
|
|
$
|
7,382
|
|
|
$
|
7,382
|
|
|
Level 1
|
Tenant receivables, net (1)
|
$
|
10,800
|
|
|
$
|
10,800
|
|
|
Level 1
|
|
$
|
12,139
|
|
|
$
|
12,139
|
|
|
Level 1
|
Restricted cash and escrows (1)
|
$
|
1,463
|
|
|
$
|
1,463
|
|
|
Level 1
|
|
$
|
1,373
|
|
|
$
|
1,373
|
|
|
Level 1
|
Interest rate swaps
|
$
|
1,199
|
|
|
$
|
1,199
|
|
|
Level 2
|
|
$
|
688
|
|
|
$
|
688
|
|
|
Level 2
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued expenses (1)
|
$
|
47,328
|
|
|
$
|
47,328
|
|
|
Level 1
|
|
$
|
126,429
|
|
|
$
|
126,429
|
|
|
Level 1
|
Interest rate swaps
|
$
|
839
|
|
|
$
|
839
|
|
|
Level 2
|
|
$
|
1,478
|
|
|
$
|
1,478
|
|
|
Level 2
|
Debt, net
|
$
|
1,685,472
|
|
|
$
|
1,698,213
|
|
|
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 its short-term maturity.
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
150 West Jefferson (1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,259
|
|
9221 Corporate Boulevard (2)
|
|
—
|
|
|
—
|
|
|
2,692
|
|
|||
9200 and 9211 Corporate Boulevard (3)
|
|
—
|
|
|
—
|
|
|
22,950
|
|
|||
Disposal Group of 13 Assets (4)
|
|
—
|
|
|
46,461
|
|
|
—
|
|
|||
Total impairment loss on real estate assets (5)
|
|
$
|
—
|
|
|
$
|
46,461
|
|
|
$
|
33,901
|
|
(1)
|
Piedmont recognized an impairment loss on real estate assets based upon the difference between the carrying value of the asset including a proportionate amount of goodwill (because the asset met the definition of a disposed "business" at the time of measurement) and the contracted sales price, less estimated selling costs.
|
(2)
|
Piedmont determined that the carrying value would not be recovered from the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. As a result, Piedmont recognized a loss on impairment of approximately $2.7 million during the year ended December 31, 2016 calculated as the difference between the carrying value of the asset including a proportionate amount of goodwill and the anticipated contract sales price, less estimated selling costs.
|
(3)
|
Piedmont elected to sell its remaining two assets and exit the Rockville, Maryland sub-market of Washington, D.C., after selling the 9221 Corporate Boulevard building in July 2016. Upon management's change in its hold period assumption for the assets from a long-term hold to a near-term sale, Piedmont recognized an impairment loss of approximately $23.0 million. The impairment loss was calculated as the difference between the carrying value of the asset including a proportionate amount of goodwill and the anticipated contracted sales price, less estimated selling costs.
|
(4)
|
The impairment loss was calculated as the difference between the carrying value of the asset and the anticipated contracted sales price, less estimated selling costs.
|
(5)
|
The fair value measurements used in the evaluation of the non-financial assets above are considered to be Level 1 valuations within the fair value hierarchy as defined by GAAP, as there are direct observations and transactions involving the assets by unrelated, third party purchasers.
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested and Potential Stock Awards as of December 31, 2017
|
868,437
|
|
|
$
|
21.69
|
|
Deferred Stock Awards Granted
|
354,236
|
|
|
$
|
17.84
|
|
Increase in Estimated Potential Future Performance Share Awards, net of forfeitures
|
506,793
|
|
|
$
|
25.20
|
|
Performance Stock Awards Vested
|
(161,005
|
)
|
|
$
|
18.47
|
|
Deferred Stock Awards Vested
|
(332,019
|
)
|
|
$
|
19.21
|
|
Deferred Stock Awards Forfeited
|
(8,959
|
)
|
|
$
|
19.77
|
|
Unvested and Potential Stock Awards as of December 31, 2018
|
1,227,483
|
|
|
$
|
23.14
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Weighted-Average Grant Date Fair Value of Deferred Stock Granted During the Period (per share)
|
$
|
17.84
|
|
|
$
|
21.38
|
|
|
$
|
19.96
|
|
Total Grant Date Fair Value of Deferred Stock Vested
During the Period
|
$
|
6,378
|
|
|
$
|
5,899
|
|
|
$
|
4,806
|
|
Share-based Liability Awards Paid During the Period (1)
|
$
|
2,947
|
|
|
$
|
2,877
|
|
|
$
|
1,127
|
|
(1)
|
Amounts reflect the issuance of performance share awards related to the 2015-17, 2014-16, and 2013-15 Performance Share Plans during the years ended December 31, 2018, 2017, and 2016 respectively.
|
Date of grant
|
|
Type of Award
|
|
Net Shares
Granted (1)
|
|
Grant
Date Fair
Value
|
|
Vesting Schedule
|
|
Unvested and Potential Shares as of
December 31, 2018
|
|
||||
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% of the shares vest on May 24, 2017, 2018, and 2019, respectively.
|
|
60,487
|
|
|
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.
|
|
139,127
|
|
(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.
|
|
123,343
|
|
|
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.
|
|
251,123
|
|
(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.
|
|
239,567
|
|
|
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.
|
|
366,032
|
|
(2)
|
Total
|
|
1,227,483
|
|
|
(1)
|
Amounts reflect the total grant to employees and independent directors, net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations through December 31, 2018.
|
(2)
|
Estimated based on Piedmont's cumulative TSR for the respective performance period through December 31, 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.
|
|
2018
|
|
2017
|
|
2016
|
|||
Weighted-average common shares—basic
|
130,161
|
|
|
145,044
|
|
|
145,230
|
|
Plus: Incremental weighted-average shares from time-vested deferred and performance stock awards
|
475
|
|
|
336
|
|
|
405
|
|
Weighted-average common shares—diluted
|
130,636
|
|
|
145,380
|
|
|
145,635
|
|
|
|
|
|
|
|
|||
Common stock issued and outstanding as of period end
|
126,219
|
|
|
142,359
|
|
|
145,235
|
|
Years ending December 31:
|
|
|
||
2019
|
|
$
|
370,495
|
|
2020
|
|
352,541
|
|
|
2021
|
|
337,951
|
|
|
2022
|
|
324,960
|
|
|
2023
|
|
291,603
|
|
|
Thereafter
|
|
1,247,649
|
|
|
Total
|
|
$
|
2,925,199
|
|
Buildings Sold
|
|
Location
|
|
Date of Sale
|
|
Gain/(Loss) on Sale of Real Estate Assets
|
|
Net Sales Proceeds
|
|
||||
1055 East Colorado Boulevard
|
|
Pasadena, California
|
|
April 21, 2016
|
|
$
|
29,462
|
|
|
$
|
60,076
|
|
|
Fairway Center II
|
|
Brea, California
|
|
April 28, 2016
|
|
$
|
14,406
|
|
|
$
|
33,062
|
|
|
1901 Main Street
|
|
Irvine, California
|
|
May 2, 2016
|
|
$
|
29,964
|
|
|
$
|
63,149
|
|
(1)
|
9221 Corporate Boulevard
|
|
Rockville, Maryland
|
|
July 27, 2016
|
|
$
|
(192
|
)
|
(2)
|
$
|
12,035
|
|
|
150 West Jefferson
|
|
Detroit, Michigan
|
|
July 29, 2016
|
|
$
|
(664
|
)
|
(2)
|
$
|
77,844
|
|
|
9200 and 9211 Corporate Boulevard
|
|
Rockville, Maryland
|
|
September 28, 2016
|
|
$
|
(41
|
)
|
(2)
|
$
|
12,519
|
|
|
11695 Johns Creek Parkway
|
|
Johns Creek, Georgia
|
|
December 22, 2016
|
|
$
|
1,978
|
|
|
$
|
13,827
|
|
|
Braker Pointe III
|
|
Austin, Texas
|
|
December 29, 2016
|
|
$
|
18,579
|
|
|
$
|
48,006
|
|
|
Sarasota Commerce Center II
|
|
Sarasota, Florida
|
|
June 16, 2017
|
|
$
|
6,493
|
|
|
$
|
23,090
|
|
|
Two Independence Square
|
|
Washington, D.C.
|
|
July 5, 2017
|
|
$
|
109,381
|
|
|
$
|
352,428
|
|
|
8560 Upland Drive
|
|
Denver, Colorado
|
|
July 27, 2017
|
|
$
|
3,683
|
|
|
$
|
12,334
|
|
(3)
|
2017 Disposition Portfolio(4)
|
|
Various(4)
|
|
January 4, 2018
|
|
$
|
45,275
|
|
|
$
|
419,644
|
|
(5)
|
800 North Brand Boulevard
|
|
Glendale, California
|
|
November 29, 2018
|
|
$
|
30,416
|
|
|
$
|
155,583
|
|
|
(1)
|
Piedmont accepted a secured promissory note from the buyer for $33.0 million of the sales proceeds which was subsequently repaid in full. As such, the full proceeds from the sale of the property are reflected in the accompanying consolidated statements of cash flows as net sales proceeds from the sale of wholly-owned properties.
|
(2)
|
As discussed in Note 7 above, Piedmont recognized an impairment loss prior to, or in conjunction with, the sale of the property. Therefore, loss recognized upon the consummation of the sale consists solely of adjustments made subsequent to the sale for closing cost estimates or post-closing prorations.
|
(3)
|
Property was owned as part of an unconsolidated joint venture. As such, the gain on sale is presented as equity in income/(loss) of unconsolidated joint ventures in the accompanying consolidated statement of income. Amounts shown above reflect Piedmont's approximate 72% ownership.
|
(4)
|
The 2017 Disposition Portfolio is comprised of the following properties: Desert Canyon 300 in Phoenix, Arizona; Windy Point I & II in Schaumburg, Illinois; 2300 Cabot Drive in Lisle, Illinois; 1075 West Entrance Drive in Auburn Hills, Michigan; Auburn Hills Corporate Center in Auburn Hills, Michigan; 5301 Maryland Way in Brentwood, Tennessee; Suwanee Gateway One in Suwanee, Georgia; 5601 Hiatus Road in Tamarac, Florida; Piedmont Pointe I & II in Bethesda, Maryland; 1200 Crown Colony Drive in Quincy, Massachusetts; and 2120 West End Avenue in Nashville, Tennessee.
|
(5)
|
Piedmont accepted a secured promissory note from the buyer for $3.2 million which was subsequently repaid in full.
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Real estate assets held for sale, net:
|
|
|
|
|
||||
Land
|
|
$
|
30,562
|
|
|
$
|
128,668
|
|
Building and improvements, less accumulated depreciation of $48,453 and $270,552 as of December 31, 2018, and 2017, respectively
|
|
77,936
|
|
|
430,136
|
|
||
Construction in progress
|
|
2,054
|
|
|
2,645
|
|
||
Total real estate assets held for sale, net
|
|
$
|
110,552
|
|
|
$
|
561,449
|
|
|
|
|
|
|
||||
Other assets held for sale, net:
|
|
|
|
|
||||
Straight-line rent receivables
|
|
$
|
10,756
|
|
|
$
|
44,666
|
|
Prepaid expenses and other assets
|
|
430
|
|
|
2,067
|
|
||
Deferred lease costs, less accumulated amortization of $2,446 and $20,169 as of December 31, 2018 and 2017, respectively
|
|
9,605
|
|
|
37,560
|
|
||
Total other assets held for sale, net
|
|
$
|
20,791
|
|
|
$
|
84,293
|
|
|
|
|
|
|
||||
Other liabilities held for sale, net:
|
|
|
|
|
||||
Intangible lease liabilities, less accumulated amortization of $0 and $935 as of December 31, 2018 and 2017, respectively
|
|
$
|
—
|
|
|
$
|
380
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Accrued capital expenditures and deferred lease costs
|
$
|
10,854
|
|
|
$
|
11,276
|
|
|
$
|
14,427
|
|
Change in accrued dividends and discount on dividend reinvestments
|
$
|
(74,828
|
)
|
|
$
|
71,267
|
|
|
$
|
30,532
|
|
Change in accrued share repurchases as part of an announced plan
|
$
|
3,140
|
|
|
$
|
1,276
|
|
|
$
|
—
|
|
Investment in consolidated joint venture
|
$
|
—
|
|
|
$
|
63,026
|
|
|
$
|
—
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash and cash equivalents, beginning of period
|
|
$
|
7,382
|
|
|
$
|
6,992
|
|
|
$
|
5,441
|
|
Restricted cash and escrows, beginning of period
|
|
1,373
|
|
|
1,212
|
|
|
5,174
|
|
|||
Total cash, cash equivalents, and restricted cash and escrows shown in the consolidated statement of cash flows, beginning of period
|
|
$
|
8,755
|
|
|
$
|
8,204
|
|
|
$
|
10,615
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents, end of period
|
|
$
|
4,571
|
|
|
$
|
7,382
|
|
|
$
|
6,992
|
|
Restricted cash and escrows, end of period
|
|
1,463
|
|
|
1,373
|
|
|
1,212
|
|
|||
Total cash, cash equivalents, and restricted cash and escrows shown in the consolidated statement of cash flows, end of period
|
|
$
|
6,034
|
|
|
$
|
8,755
|
|
|
$
|
8,204
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
GAAP basis financial statement net income
|
$
|
130,296
|
|
|
$
|
133,564
|
|
|
$
|
99,732
|
|
Increase/(decrease) in net income resulting from:
|
|
|
|
|
|
||||||
Depreciation and amortization expense recognized for financial reporting purposes in excess of amounts recognized for income tax purposes
|
54,420
|
|
|
62,916
|
|
|
69,214
|
|
|||
Rental income accrued for income tax purposes less than amounts for financial reporting purposes
|
(9,681
|
)
|
|
(25,432
|
)
|
|
(18,964
|
)
|
|||
Net amortization of above/below-market lease intangibles for income tax purposes in excess of amounts for financial reporting purposes
|
(7,453
|
)
|
|
(6,041
|
)
|
|
(4,895
|
)
|
|||
Gain on disposal of property for financial reporting purposes less than/(in excess of) amounts for income tax purposes
|
(36,241
|
)
|
|
10,068
|
|
|
(118,713
|
)
|
|||
Taxable income or loss of Piedmont Washington Properties, Inc., in excess of/(less than) amount for financial reporting purposes
|
(2,089
|
)
|
|
176
|
|
|
(1,042
|
)
|
|||
Other expenses, including impairment loss on real estate assets, for financial reporting purposes in excess of/ (less than) amounts for income tax purposes
|
(37,394
|
)
|
|
49,859
|
|
|
42,019
|
|
|||
Taxable income for POH in excess of/(less than) amount for financial reporting purposes
|
(64
|
)
|
|
(28
|
)
|
|
648
|
|
|||
Income tax basis net income, prior to dividends paid deduction
|
$
|
91,794
|
|
|
$
|
225,082
|
|
|
$
|
67,999
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Ordinary income
|
100.00
|
%
|
|
53.61
|
%
|
|
81.77
|
%
|
Return of capital
|
—
|
%
|
|
—
|
%
|
|
18.23
|
%
|
Capital gains
|
—
|
%
|
|
46.39
|
%
|
|
—
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
2018
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
Revenues
|
$
|
129,900
|
|
|
$
|
129,174
|
|
|
$
|
129,708
|
|
|
$
|
137,185
|
|
Gain/(loss) on sale of real estate assets
|
$
|
45,209
|
|
|
$
|
(23
|
)
|
|
$
|
—
|
|
|
$
|
30,505
|
|
Net income
|
$
|
57,828
|
|
|
$
|
10,940
|
|
|
$
|
16,114
|
|
|
$
|
45,409
|
|
Net income applicable to Piedmont
|
$
|
57,830
|
|
|
$
|
10,942
|
|
|
$
|
16,114
|
|
|
$
|
45,410
|
|
Basic earnings per share
|
$
|
0.43
|
|
|
$
|
0.09
|
|
|
$
|
0.13
|
|
|
$
|
0.35
|
|
Diluted earnings per share
|
$
|
0.42
|
|
|
$
|
0.09
|
|
|
$
|
0.13
|
|
|
$
|
0.35
|
|
Dividends declared per share
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
2017
|
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
||||||||
Revenues
|
$
|
148,463
|
|
|
$
|
148,679
|
|
|
$
|
137,587
|
|
|
$
|
139,444
|
|
|
Gain/(loss) on sale of real estate assets
|
$
|
(53
|
)
|
|
$
|
6,492
|
|
|
$
|
109,512
|
|
|
$
|
(77
|
)
|
|
Net income/(loss)
|
$
|
15,101
|
|
|
$
|
23,707
|
|
|
$
|
126,129
|
|
|
$
|
(31,388
|
)
|
|
Net income/(loss) applicable to Piedmont
|
$
|
15,104
|
|
|
$
|
23,710
|
|
|
$
|
126,133
|
|
|
$
|
(31,383
|
)
|
|
Basic and diluted earnings/(loss) per share
|
$
|
0.10
|
|
|
$
|
0.16
|
|
|
$
|
0.87
|
|
|
$
|
(0.21
|
)
|
|
Dividends declared per share
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.71
|
|
(1)
|
(1)
|
On December 13, 2017, Piedmont's board of directors declared a special dividend of $0.50 per share.
|
Condensed Consolidated Balance Sheets
|
|||||||||||||||||||
As of December 31, 2018
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate assets, at cost:
|
|
|
|
|
|
|
|
|
|
||||||||||
Land
|
$
|
—
|
|
|
$
|
36,094
|
|
|
$
|
471,328
|
|
|
$
|
—
|
|
|
$
|
507,422
|
|
Buildings and improvements, less accumulated depreciation
|
—
|
|
|
176,927
|
|
|
2,128,469
|
|
|
(300
|
)
|
|
2,305,096
|
|
|||||
Intangible lease assets, less accumulated amortization
|
—
|
|
|
—
|
|
|
77,676
|
|
|
—
|
|
|
77,676
|
|
|||||
Construction in progress
|
—
|
|
|
5,708
|
|
|
10,140
|
|
|
—
|
|
|
15,848
|
|
|||||
Real estate assets held for sale, net
|
—
|
|
|
—
|
|
|
110,552
|
|
|
—
|
|
|
110,552
|
|
|||||
Total real estate assets
|
—
|
|
|
218,729
|
|
|
2,798,165
|
|
|
(300
|
)
|
|
3,016,594
|
|
|||||
Cash and cash equivalents
|
150
|
|
|
—
|
|
|
4,939
|
|
|
(518
|
)
|
|
4,571
|
|
|||||
Tenant and straight-line receivables, net
|
—
|
|
|
16,143
|
|
|
157,246
|
|
|
—
|
|
|
173,389
|
|
|||||
Investment in subsidiaries
|
1,744,122
|
|
|
2,704,337
|
|
|
166
|
|
|
(4,448,625
|
)
|
|
—
|
|
|||||
Notes receivable
|
—
|
|
|
810
|
|
|
144,500
|
|
|
(145,310
|
)
|
|
—
|
|
|||||
Prepaid expenses, restricted cash, escrows, interest rate swaps, and other assets
|
42
|
|
|
5,682
|
|
|
22,318
|
|
|
(24
|
)
|
|
28,018
|
|
|||||
Goodwill
|
—
|
|
|
98,918
|
|
|
—
|
|
|
—
|
|
|
98,918
|
|
|||||
Deferred lease costs, net
|
—
|
|
|
15,158
|
|
|
234,990
|
|
|
—
|
|
|
250,148
|
|
|||||
Other assets held for sale, net
|
—
|
|
|
—
|
|
|
20,791
|
|
|
—
|
|
|
20,791
|
|
|||||
Total assets
|
$
|
1,744,314
|
|
|
$
|
3,059,777
|
|
|
$
|
3,383,115
|
|
|
$
|
(4,594,777
|
)
|
|
$
|
3,592,429
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt, net
|
$
|
—
|
|
|
$
|
1,495,904
|
|
|
$
|
335,717
|
|
|
$
|
(145,310
|
)
|
|
$
|
1,686,311
|
|
Accounts payable, accrued expenses, dividends payable, interest rate swaps and accrued capital expenditures
|
32,174
|
|
|
14,543
|
|
|
83,316
|
|
|
(542
|
)
|
|
129,491
|
|
|||||
Deferred income
|
—
|
|
|
2,274
|
|
|
26,505
|
|
|
—
|
|
|
28,779
|
|
|||||
Intangible lease liabilities, net
|
—
|
|
|
—
|
|
|
35,708
|
|
|
—
|
|
|
35,708
|
|
|||||
Total liabilities
|
32,174
|
|
|
1,512,721
|
|
|
481,246
|
|
|
(145,852
|
)
|
|
1,880,289
|
|
|||||
Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total stockholders’ equity
|
1,712,140
|
|
|
1,547,056
|
|
|
2,901,869
|
|
|
(4,448,925
|
)
|
|
1,712,140
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
1,744,314
|
|
|
$
|
3,059,777
|
|
|
$
|
3,383,115
|
|
|
$
|
(4,594,777
|
)
|
|
$
|
3,592,429
|
|
Condensed Consolidated 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
|
|
|
$
|
454,531
|
|
|
$
|
—
|
|
|
$
|
490,625
|
|
Buildings and improvements, less accumulated depreciation
|
—
|
|
|
180,886
|
|
|
2,062,933
|
|
|
(300
|
)
|
|
2,243,519
|
|
|||||
Intangible lease assets, less accumulated amortization
|
—
|
|
|
181
|
|
|
77,624
|
|
|
—
|
|
|
77,805
|
|
|||||
Construction in progress
|
—
|
|
|
85
|
|
|
11,259
|
|
|
—
|
|
|
11,344
|
|
|||||
Real estate assets held for sale, net
|
—
|
|
|
32,815
|
|
|
528,634
|
|
|
—
|
|
|
561,449
|
|
|||||
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 from unconsolidated joint ventures
|
—
|
|
|
16,891
|
|
|
139,727
|
|
|
—
|
|
|
156,618
|
|
|||||
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 swaps and other assets
|
2
|
|
|
5,094
|
|
|
18,483
|
|
|
(740
|
)
|
|
22,839
|
|
|||||
Goodwill
|
—
|
|
|
98,918
|
|
|
—
|
|
|
—
|
|
|
98,918
|
|
|||||
Deferred lease costs, net
|
—
|
|
|
16,611
|
|
|
228,564
|
|
|
—
|
|
|
245,175
|
|
|||||
Other assets held for sale, net
|
—
|
|
|
2,266
|
|
|
82,027
|
|
|
—
|
|
|
84,293
|
|
|||||
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
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the year ended December 31, 2018
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
—
|
|
|
$
|
35,221
|
|
|
$
|
378,473
|
|
|
$
|
(2,027
|
)
|
|
$
|
411,667
|
|
Tenant reimbursements
|
—
|
|
|
9,489
|
|
|
83,700
|
|
|
(446
|
)
|
|
92,743
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
17,118
|
|
|
(15,668
|
)
|
|
1,450
|
|
|||||
Other property related income
|
—
|
|
|
130
|
|
|
19,977
|
|
|
—
|
|
|
20,107
|
|
|||||
|
—
|
|
|
44,840
|
|
|
499,268
|
|
|
(18,141
|
)
|
|
525,967
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
—
|
|
|
19,583
|
|
|
207,896
|
|
|
(18,141
|
)
|
|
209,338
|
|
|||||
Depreciation
|
—
|
|
|
11,514
|
|
|
96,442
|
|
|
—
|
|
|
107,956
|
|
|||||
Amortization
|
—
|
|
|
1,990
|
|
|
61,305
|
|
|
—
|
|
|
63,295
|
|
|||||
Impairment loss on real estate assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
General and administrative
|
289
|
|
|
6,576
|
|
|
22,848
|
|
|
—
|
|
|
29,713
|
|
|||||
|
289
|
|
|
39,663
|
|
|
388,491
|
|
|
(18,141
|
)
|
|
410,302
|
|
|||||
|
(289
|
)
|
|
5,177
|
|
|
110,777
|
|
|
—
|
|
|
115,665
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
—
|
|
|
(54,095
|
)
|
|
(14,558
|
)
|
|
7,630
|
|
|
(61,023
|
)
|
|||||
Other income/(expense)
|
—
|
|
|
144
|
|
|
9,124
|
|
|
(7,630
|
)
|
|
1,638
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
(1,680
|
)
|
|
—
|
|
|
—
|
|
|
(1,680
|
)
|
|||||
Gain on sale of real estate assets
|
—
|
|
|
1,417
|
|
|
74,274
|
|
|
—
|
|
|
75,691
|
|
|||||
|
—
|
|
|
(54,214
|
)
|
|
68,840
|
|
|
—
|
|
|
14,626
|
|
|||||
Income/(loss) before consolidated subsidiaries
|
(289
|
)
|
|
(49,037
|
)
|
|
179,617
|
|
|
—
|
|
|
130,291
|
|
|||||
Income from subsidiaries
|
130,585
|
|
|
178,648
|
|
|
—
|
|
|
(309,233
|
)
|
|
—
|
|
|||||
Net income
|
130,296
|
|
|
129,611
|
|
|
179,617
|
|
|
(309,233
|
)
|
|
130,291
|
|
|||||
Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
Net income applicable to Piedmont
|
$
|
130,296
|
|
|
$
|
129,611
|
|
|
$
|
179,622
|
|
|
$
|
(309,233
|
)
|
|
$
|
130,296
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the year ended December 31, 2017
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
—
|
|
|
$
|
42,407
|
|
|
$
|
414,509
|
|
|
$
|
(1,791
|
)
|
|
$
|
455,125
|
|
Tenant reimbursements
|
—
|
|
|
11,702
|
|
|
86,911
|
|
|
(474
|
)
|
|
98,139
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
18,205
|
|
|
(16,470
|
)
|
|
1,735
|
|
|||||
Other property related income
|
—
|
|
|
144
|
|
|
19,030
|
|
|
—
|
|
|
19,174
|
|
|||||
|
—
|
|
|
54,253
|
|
|
538,655
|
|
|
(18,735
|
)
|
|
574,173
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
—
|
|
|
22,805
|
|
|
218,371
|
|
|
(18,735
|
)
|
|
222,441
|
|
|||||
Depreciation
|
—
|
|
|
12,995
|
|
|
106,293
|
|
|
—
|
|
|
119,288
|
|
|||||
Amortization
|
—
|
|
|
3,049
|
|
|
72,318
|
|
|
—
|
|
|
75,367
|
|
|||||
Impairment loss on real estate assets
|
—
|
|
|
87
|
|
|
46,374
|
|
|
—
|
|
|
46,461
|
|
|||||
General and administrative
|
347
|
|
|
6,443
|
|
|
22,529
|
|
|
—
|
|
|
29,319
|
|
|||||
|
347
|
|
|
45,379
|
|
|
465,885
|
|
|
(18,735
|
)
|
|
492,876
|
|
|||||
|
(347
|
)
|
|
8,874
|
|
|
72,770
|
|
|
—
|
|
|
81,297
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
—
|
|
|
(56,769
|
)
|
|
(26,715
|
)
|
|
15,360
|
|
|
(68,124
|
)
|
|||||
Other income/(expense)
|
—
|
|
|
9,168
|
|
|
6,849
|
|
|
(15,360
|
)
|
|
657
|
|
|||||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
3,845
|
|
|
—
|
|
|
—
|
|
|
3,845
|
|
|||||
Gain on sale of real estate assets, net
|
—
|
|
|
6,431
|
|
|
109,443
|
|
|
—
|
|
|
115,874
|
|
|||||
|
—
|
|
|
(37,325
|
)
|
|
89,577
|
|
|
—
|
|
|
52,252
|
|
|||||
Net income/(loss)
|
(347
|
)
|
|
(28,451
|
)
|
|
162,347
|
|
|
—
|
|
|
133,549
|
|
|||||
Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
(347
|
)
|
|
$
|
(28,451
|
)
|
|
$
|
162,362
|
|
|
$
|
—
|
|
|
$
|
133,564
|
|
Condensed Consolidated Statements of Income
|
|||||||||||||||||||
For the year ended December 31, 2016
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
$
|
—
|
|
|
$
|
53,527
|
|
|
$
|
389,022
|
|
|
$
|
(2,631
|
)
|
|
$
|
439,918
|
|
Tenant reimbursements
|
—
|
|
|
14,295
|
|
|
81,104
|
|
|
(498
|
)
|
|
94,901
|
|
|||||
Property management fee revenue
|
—
|
|
|
—
|
|
|
16,947
|
|
|
(15,033
|
)
|
|
1,914
|
|
|||||
Other property related income
|
—
|
|
|
1,266
|
|
|
17,716
|
|
|
—
|
|
|
18,982
|
|
|||||
|
—
|
|
|
69,088
|
|
|
504,789
|
|
|
(18,162
|
)
|
|
555,715
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Property operating costs
|
—
|
|
|
33,829
|
|
|
205,344
|
|
|
(18,377
|
)
|
|
220,796
|
|
|||||
Depreciation
|
—
|
|
|
16,657
|
|
|
111,076
|
|
|
—
|
|
|
127,733
|
|
|||||
Amortization
|
—
|
|
|
3,715
|
|
|
71,404
|
|
|
—
|
|
|
75,119
|
|
|||||
Impairment loss
|
—
|
|
|
8,259
|
|
|
25,642
|
|
|
—
|
|
|
33,901
|
|
|||||
General and administrative
|
311
|
|
|
26,452
|
|
|
36,065
|
|
|
(35,446
|
)
|
|
27,382
|
|
|||||
|
311
|
|
|
88,912
|
|
|
449,531
|
|
|
(53,823
|
)
|
|
484,931
|
|
|||||
|
(311
|
)
|
|
(19,824
|
)
|
|
55,258
|
|
|
35,661
|
|
|
70,784
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
—
|
|
|
(49,108
|
)
|
|
(27,636
|
)
|
|
11,884
|
|
|
(64,860
|
)
|
|||||
Other income/(expense)
|
282
|
|
|
9,560
|
|
|
2,029
|
|
|
(11,884
|
)
|
|
(13
|
)
|
|||||
Net recoveries from casualty events
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
|||||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
362
|
|
|
—
|
|
|
—
|
|
|
362
|
|
|||||
Gain on sale of real estate assets, net
|
—
|
|
|
31,275
|
|
|
62,135
|
|
|
—
|
|
|
93,410
|
|
|||||
|
282
|
|
|
(7,911
|
)
|
|
36,562
|
|
|
—
|
|
|
28,933
|
|
|||||
Net income/(loss)
|
(29
|
)
|
|
(27,735
|
)
|
|
91,820
|
|
|
35,661
|
|
|
99,717
|
|
|||||
Net loss applicable to noncontrolling interest
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|||||
Net income/(loss) applicable to Piedmont
|
$
|
(29
|
)
|
|
$
|
(27,735
|
)
|
|
$
|
91,835
|
|
|
$
|
35,661
|
|
|
$
|
99,732
|
|
Consolidating Statements of Comprehensive Income
|
|||||||||||||||||||
For the Year Ended December 31, 2018
|
|||||||||||||||||||
(in thousands)
|
Piedmont (Parent) (Guarantor)
|
|
Piedmont OP (the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Piedmont
(Consolidated) |
||||||||||
Net income
|
$
|
130,296
|
|
|
$
|
129,611
|
|
|
$
|
179,622
|
|
|
$
|
(309,233
|
)
|
|
$
|
130,296
|
|
Effective portion of gain/(loss) on derivative instruments that are designated and qualify as cash flow hedges
|
692
|
|
|
692
|
|
|
—
|
|
|
(692
|
)
|
|
692
|
|
|||||
Plus: Reclassification of net (gain)/loss included in net income
|
(300
|
)
|
|
(300
|
)
|
|
—
|
|
|
300
|
|
|
(300
|
)
|
|||||
Other comprehensive income
|
392
|
|
|
392
|
|
|
—
|
|
|
(392
|
)
|
|
392
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
$
|
130,688
|
|
|
$
|
130,003
|
|
|
$
|
179,622
|
|
|
$
|
(309,625
|
)
|
|
$
|
130,688
|
|
Condensed Consolidated Statements of Cash Flows
|
|||||||||||||||||||
For the year ended December 31, 2018
|
|||||||||||||||||||
(in thousands)
|
Piedmont (Parent) (Guarantor)
|
|
Piedmont OP (the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Cash Provided By/(Used In) Operating Activities
|
$
|
135,755
|
|
|
$
|
141,293
|
|
|
$
|
235,562
|
|
|
$
|
(309,741
|
)
|
|
$
|
202,869
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets, consolidated joint venture, and real estate related intangibles, net of accruals
|
—
|
|
|
(14,479
|
)
|
|
(209,540
|
)
|
|
—
|
|
|
(224,019
|
)
|
|||||
Intercompany note receivable
|
—
|
|
|
88,000
|
|
|
—
|
|
|
(88,000
|
)
|
|
—
|
|
|||||
Net sales proceeds from wholly-owned properties
|
—
|
|
|
36,572
|
|
|
538,655
|
|
|
—
|
|
|
575,227
|
|
|||||
Note receivable issuance
|
—
|
|
|
—
|
|
|
(3,200
|
)
|
|
—
|
|
|
(3,200
|
)
|
|||||
Note receivable payment
|
—
|
|
|
—
|
|
|
3,200
|
|
|
—
|
|
|
3,200
|
|
|||||
Deferred lease costs paid
|
—
|
|
|
(3,090
|
)
|
|
(24,340
|
)
|
|
—
|
|
|
(27,430
|
)
|
|||||
Distributions from subsidiaries
|
349,135
|
|
|
5,405
|
|
|
—
|
|
|
(354,540
|
)
|
|
—
|
|
|||||
Net cash provided by/(used in) investing activities
|
349,135
|
|
|
112,408
|
|
|
304,775
|
|
|
(442,540
|
)
|
|
323,778
|
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance costs paid
|
—
|
|
|
(1,040
|
)
|
|
—
|
|
|
—
|
|
|
(1,040
|
)
|
|||||
Proceeds from debt
|
—
|
|
|
977,062
|
|
|
—
|
|
|
—
|
|
|
977,062
|
|
|||||
Repayments of debt
|
—
|
|
|
(1,019,000
|
)
|
|
(1,455
|
)
|
|
—
|
|
|
(1,020,455
|
)
|
|||||
Intercompany note payable
|
—
|
|
|
—
|
|
|
(88,000
|
)
|
|
88,000
|
|
|
—
|
|
|||||
Costs of issuance of common stock
|
(85
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(85
|
)
|
|||||
Value of shares withheld to pay tax obligations related to employee stock compensation
|
(2,219
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,219
|
)
|
|||||
Repurchases of common stock as part of announced plan
|
(298,538
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(298,538
|
)
|
|||||
Distributions
|
(184,048
|
)
|
|
(214,596
|
)
|
|
(449,212
|
)
|
|
663,763
|
|
|
(184,093
|
)
|
|||||
Net cash provided by/(used in) financing activities
|
(484,890
|
)
|
|
(257,574
|
)
|
|
(538,667
|
)
|
|
751,763
|
|
|
(529,368
|
)
|
|||||
Net increase/(decrease) in cash, cash equivalents, and restricted cash and escrows
|
—
|
|
|
(3,873
|
)
|
|
1,670
|
|
|
(518
|
)
|
|
(2,721
|
)
|
|||||
Cash, cash equivalents, and restricted cash and escrows, beginning of year
|
150
|
|
|
3,907
|
|
|
4,698
|
|
|
—
|
|
|
8,755
|
|
|||||
Cash, cash equivalents, and restricted cash and escrows, end of year
|
$
|
150
|
|
|
$
|
34
|
|
|
$
|
6,368
|
|
|
$
|
(518
|
)
|
|
$
|
6,034
|
|
Condensed Consolidated Statements of Cash Flows
|
|||||||||||||||||||
For the year ended December 31, 2017
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Cash Provided By/(Used In) Operating Activities
|
$
|
5,497
|
|
|
$
|
(18,989
|
)
|
|
$
|
256,297
|
|
|
$
|
—
|
|
|
$
|
242,805
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets, consolidated joint venture, and real estate related intangibles, net of accruals
|
—
|
|
|
(1,614
|
)
|
|
(113,479
|
)
|
|
—
|
|
|
(115,093
|
)
|
|||||
Intercompany note receivable
|
—
|
|
|
100
|
|
|
(48,710
|
)
|
|
48,610
|
|
|
—
|
|
|||||
Net sales proceeds from wholly-owned properties
|
—
|
|
|
23,028
|
|
|
352,490
|
|
|
—
|
|
|
375,518
|
|
|||||
Net sales proceeds received from unconsolidated joint ventures
|
—
|
|
|
12,334
|
|
|
—
|
|
|
—
|
|
|
12,334
|
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
(1,162
|
)
|
|
—
|
|
|
—
|
|
|
(1,162
|
)
|
|||||
Deferred lease costs paid
|
—
|
|
|
(4,081
|
)
|
|
(26,904
|
)
|
|
—
|
|
|
(30,985
|
)
|
|||||
Net cash provided by/(used in) investing activities
|
—
|
|
|
28,605
|
|
|
163,397
|
|
|
48,610
|
|
|
240,612
|
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance costs paid
|
—
|
|
|
(132
|
)
|
|
—
|
|
|
—
|
|
|
(132
|
)
|
|||||
Proceeds from debt
|
—
|
|
|
180,000
|
|
|
—
|
|
|
—
|
|
|
180,000
|
|
|||||
Repayments of debt
|
—
|
|
|
(335,000
|
)
|
|
(141,401
|
)
|
|
—
|
|
|
(476,401
|
)
|
|||||
Intercompany note payable
|
—
|
|
|
(14,289
|
)
|
|
62,899
|
|
|
(48,610
|
)
|
|
—
|
|
|||||
Costs of issuance of common stock
|
(182
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(182
|
)
|
|||||
Value of shares withheld to pay tax obligations related to employee stock compensation
|
(3,403
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,403
|
)
|
|||||
Repurchases of common stock as part of announced plan
|
(60,474
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(60,474
|
)
|
|||||
(Distributions to)/repayments from affiliates
|
180,791
|
|
|
160,019
|
|
|
(340,810
|
)
|
|
—
|
|
|
—
|
|
|||||
Dividends paid and discount on dividend reinvestments
|
(122,229
|
)
|
|
—
|
|
|
(45
|
)
|
|
—
|
|
|
(122,274
|
)
|
|||||
Net cash provided by/(used in) financing activities
|
(5,497
|
)
|
|
(9,402
|
)
|
|
(419,357
|
)
|
|
(48,610
|
)
|
|
(482,866
|
)
|
|||||
Net increase/(decrease) in cash, cash equivalents, and restricted cash and escrows
|
—
|
|
|
214
|
|
|
337
|
|
|
—
|
|
|
551
|
|
|||||
Cash, cash equivalents, and restricted cash and escrows, beginning of year
|
150
|
|
|
3,693
|
|
|
4,361
|
|
|
—
|
|
|
8,204
|
|
|||||
Cash, cash equivalents, and restricted cash and escrows, end of year
|
$
|
150
|
|
|
$
|
3,907
|
|
|
$
|
4,698
|
|
|
$
|
—
|
|
|
$
|
8,755
|
|
Condensed Consolidated Statements of Cash Flows
|
|||||||||||||||||||
For the year ended December 31, 2016
|
|||||||||||||||||||
(in thousands)
|
Piedmont
(Parent)
(Guarantor)
|
|
Piedmont OP
(the Issuer)
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Cash Provided/(Used In) by Operating Activities
|
$
|
5,214
|
|
|
$
|
(26,263
|
)
|
|
$
|
217,236
|
|
|
$
|
35,660
|
|
|
$
|
231,847
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in real estate assets, consolidated joint venture, and real estate related intangibles, net of accruals
|
—
|
|
|
(5,060
|
)
|
|
(454,836
|
)
|
|
—
|
|
|
(459,896
|
)
|
|||||
Intercompany note receivable
|
—
|
|
|
440
|
|
|
(71,900
|
)
|
|
71,460
|
|
|
—
|
|
|||||
Net sales proceeds from wholly-owned properties
|
—
|
|
|
200,220
|
|
|
165,698
|
|
|
—
|
|
|
365,918
|
|
|||||
Deferred lease costs paid
|
—
|
|
|
(2,758
|
)
|
|
(23,138
|
)
|
|
—
|
|
|
(25,896
|
)
|
|||||
Net cash provided by/(used in) investing activities
|
—
|
|
|
192,842
|
|
|
(384,176
|
)
|
|
71,460
|
|
|
(119,874
|
)
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance costs paid
|
—
|
|
|
(264
|
)
|
|
—
|
|
|
—
|
|
|
(264
|
)
|
|||||
Proceeds from debt
|
—
|
|
|
695,000
|
|
|
—
|
|
|
—
|
|
|
695,000
|
|
|||||
Repayments of debt
|
—
|
|
|
(538,000
|
)
|
|
(168,875
|
)
|
|
—
|
|
|
(706,875
|
)
|
|||||
Intercompany note payable
|
—
|
|
|
(9,600
|
)
|
|
81,060
|
|
|
(71,460
|
)
|
|
—
|
|
|||||
Costs of issuance of common stock
|
(342
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(342
|
)
|
|||||
Value of shares withheld to pay tax obligations related to employee stock compensation
|
(2,344
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,344
|
)
|
|||||
Repurchases of common stock as part of announced plan
|
(7,943
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,943
|
)
|
|||||
(Distributions to)/repayments from affiliates
|
97,016
|
|
|
(312,218
|
)
|
|
250,862
|
|
|
(35,660
|
)
|
|
—
|
|
|||||
Dividends paid and discount on dividend reinvestments
|
(91,601
|
)
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(91,616
|
)
|
|||||
Net cash provided by/(used in) financing activities
|
(5,214
|
)
|
|
(165,082
|
)
|
|
163,032
|
|
|
(107,120
|
)
|
|
(114,384
|
)
|
|||||
Net increase/(decrease) in cash, cash equivalents, and restricted cash and escrows
|
—
|
|
|
1,497
|
|
|
(3,908
|
)
|
|
—
|
|
|
(2,411
|
)
|
|||||
Cash, cash equivalents, and restricted cash and escrows, beginning of year
|
150
|
|
|
2,196
|
|
|
8,269
|
|
|
—
|
|
|
10,615
|
|
|||||
Cash, cash equivalents, and restricted cash and escrows, end of year
|
$
|
150
|
|
|
$
|
3,693
|
|
|
$
|
4,361
|
|
|
$
|
—
|
|
|
$
|
8,204
|
|
(a)
|
Total initial cost excludes purchase price allocated to intangible lease origination costs and intangible lease liabilities.
|
(b)
|
Includes write-offs of fully depreciated/amortized capitalized assets, as well as impairment loss on real estate assets.
|
(c)
|
The net carrying value of Piedmont’s total assets for federal income tax purposes is approximately $3.6 billion.
|
(d)
|
Piedmont’s assets are depreciated or amortized using the straight-line method over the useful lives of the assets by class. Generally, Tenant Improvements and Lease Intangibles are amortized over the lease term. Generally, Building Improvements are depreciated over 5 - 25 years, Land Improvements are depreciated over 20 - 25 years, and Buildings are depreciated over 40 years.
|
(e)
|
Represents solar panels at the 400 Bridgewater Crossing building.
|
(f)
|
Undeveloped Land Parcels includes land parcels which Piedmont may develop in the future.
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
Real Estate:
|
|
|
|
|
|
|
||||||
Balance at the beginning of the year
|
$
|
4,438,209
|
|
|
$
|
4,800,025
|
|
|
$
|
4,725,096
|
|
|
Additions to/improvements of real estate
|
206,442
|
|
|
85,368
|
|
|
422,908
|
|
|
|||
Assets disposed
|
(675,692
|
)
|
|
(353,911
|
)
|
(1)
|
(296,319
|
)
|
|
|||
Assets impaired
|
—
|
|
|
(46,461
|
)
|
(2)
|
(30,898
|
)
|
(3)
|
|||
Write-offs of intangible assets (4)
|
(33,067
|
)
|
|
(37,188
|
)
|
|
(11,896
|
)
|
|
|||
Write-offs of fully depreciated/amortized assets
|
(11,361
|
)
|
|
(9,624
|
)
|
|
(8,866
|
)
|
|
|||
Balance at the end of the year
|
$
|
3,924,531
|
|
|
$
|
4,438,209
|
|
|
$
|
4,800,025
|
|
|
Accumulated Depreciation and Amortization:
|
|
|
|
|
|
|
||||||
Balance at the beginning of the year
|
$
|
1,053,467
|
|
|
$
|
1,058,704
|
|
|
$
|
1,019,663
|
|
|
Depreciation and amortization expense
|
128,456
|
|
|
145,837
|
|
|
155,274
|
|
|
|||
Assets disposed
|
(229,558
|
)
|
|
(104,262
|
)
|
(1)
|
(95,471
|
)
|
|
|||
Write-offs of intangible assets (4)
|
(33,067
|
)
|
|
(37,188
|
)
|
|
(11,896
|
)
|
|
|||
Write-offs of fully depreciated/amortized assets
|
(11,361
|
)
|
|
(9,624
|
)
|
|
(8,866
|
)
|
|
|||
Balance at the end of the year
|
$
|
907,937
|
|
|
$
|
1,053,467
|
|
|
$
|
1,058,704
|
|
|
(1)
|
Includes the disposition of the 8560 Upland Drive property, Piedmont's last remaining investment in an unconsolidated joint venture.
|
(2)
|
Piedmont recognized an impairment loss on a disposal group of real estate assets as part of the 2017 Disposition Portfolio (see Note 7).
|
(3)
|
Does not include impairment loss recognized on other assets as a result of the allocation of goodwill (see Note 7).
|
(4)
|
Consists of write-offs of intangible lease assets related to lease restructurings, amendments, and terminations.
|
5.
|
Covenants.
|
6.
|
Other Provisions.
|
Subsidiary
|
|
State of Organization
|
Piedmont Operating Partnership, LP
|
|
Delaware
|
Piedmont Washington Properties, Inc.
|
|
Maryland
|
Piedmont Office Holdings, Inc.
|
|
Georgia
|
Piedmont Office Management, LLC
|
|
Georgia
|
Piedmont Government Services, LLC
|
|
Georgia
|
Piedmont Leasing, LLC
|
|
Delaware
|
Piedmont Power, LLC
|
|
Delaware
|
Piedmont-Las Colinas Springing Member, LLC
|
|
Delaware
|
Piedmont 1901 Market Business Trust
|
|
Delaware
|
Piedmont 1901 Market LLC
|
|
Delaware
|
Piedmont Bridgewater I, LLC
|
|
Delaware
|
Piedmont-Bridgewater, NJ, LLC
|
|
Delaware
|
Piedmont-Independence Square, LLC
|
|
Delaware
|
Piedmont-3100 Clarendon LLC
|
|
Delaware
|
Piedmont-1075 West Entrance, LLC
|
|
Delaware
|
Piedmont-Multi-State Owner, LLC
|
|
Delaware
|
Piedmont-Nashville, TN, LLC
|
|
Delaware
|
Piedmont-One Brattle Square I, LLC
|
|
Delaware
|
Piedmont-One Brattle Square II, LLC
|
|
Delaware
|
4250 North Fairfax Property LLC
|
|
Delaware
|
4250 N. Fairfax Owner, LLC
|
|
Delaware
|
400 Virginia Avenue LLC
|
|
Delaware
|
1201 Eye Street, N.W. Associates LLC
|
|
Delaware
|
1215 ESDI, LLC
|
|
Delaware
|
1225 Equity LLC
|
|
Delaware
|
1225 Eye Street, N.W. Associates LLC
|
|
Delaware
|
1201 Equity LLC
|
|
Delaware
|
TTF Lending LLC
|
|
Delaware
|
TZO Lending LLC
|
|
Delaware
|
Piedmont-Two Pierce Place, LLC
|
|
Delaware
|
Piedmont-Las Colinas Corporate Center I, LP
|
|
Delaware
|
Piedmont-Las Colinas Corporate Center I, GP, LLC
|
|
Delaware
|
Piedmont-Las Colinas Corporate Center II, LP
|
|
Delaware
|
Piedmont-Las Colinas Corporate Center II, GP, LLC
|
|
Delaware
|
Cypress Concourse A, LLC
|
|
Delaware
|
Piedmont 60 Broad Street, LLC
|
|
Delaware
|
Piedmont-800 Nicollet Avenue, LLC
|
|
Delaware
|
Piedmont-800 Nicollet Avenue Owner, LLC
|
|
Delaware
|
Piedmont-800 Nicollet Avenue Springing Member, LLC
|
|
Delaware
|
800 North Brand Glendale, CA, LLC
|
|
Delaware
|
Piedmont-1430 Enclave Parkway, L.P.
|
|
Delaware
|
Piedmont-1430 Enclave Parkway, GP, LLC
|
|
Delaware
|
Enclave Place GP, LLC
|
|
Delaware
|
Enclave Parkway Development, L.P.
|
|
Delaware
|
Piedmont-Windy Point I, LLC
|
|
Delaware
|
Piedmont-Windy Point II, LLC
|
|
Delaware
|
Piedmont-2300 Cabot Drive, LLC
|
|
Delaware
|
Rock Spring, L.L.C.
|
|
Delaware
|
Rock Spring II, L.L.C.
|
|
Delaware
|
500 W Monroe Mezz II, LLC
|
|
Delaware
|
500 W Monroe Mezz I-B, LLC
|
|
Delaware
|
500 W Monroe Chicago, LLC
|
|
Delaware
|
Piedmont 500 West Monroe Mezz I, LLC
|
|
Delaware
|
Piedmont 500 West Monroe Fee, LLC
|
|
Delaware
|
Suwanee Gateway One, LLC
|
|
Delaware
|
Meridian Crossings, LLC
|
|
Delaware
|
Dupree Atlanta, LLC
|
|
Delaware
|
Medici Atlanta, LLC
|
|
Delaware
|
Presidential Way Woburn, LLC
|
|
Delaware
|
400 TownPark, LLC
|
|
Delaware
|
Gavitello, Atlanta, LLC
|
|
Delaware
|
Glenridge Highlands III, LLC
|
|
Delaware
|
Piedmont - 901 N. Glebe, LLC
|
|
Delaware
|
Piedmont 5 & 15 Wayside, LLC
|
|
Delaware
|
Piedmont JV Partnership Interests, LLC
|
|
Delaware
|
Piedmont OP - Piedmont JV Partnership Interests, LLC Joint Venture (MI/TN)
|
|
Georgia
|
Piedmont Royal Lane, LP
|
|
Delaware
|
Piedmont Royal Lane GP, LLC
|
|
Delaware
|
Piedmont 6565 MacArthur Boulevard, LP
|
|
Delaware
|
Piedmont 6565 MacArthur Boulevard GP, LLC
|
|
Delaware
|
Piedmont One Lincoln Park, LP
|
|
Delaware
|
Piedmont One Lincoln Park GP, LLC
|
|
Delaware
|
Piedmont 161 Corporate Center, LP
|
|
Delaware
|
Piedmont 161 Corporate Center GP, LLC
|
|
Delaware
|
Piedmont 5 Wall Street Burlington, LLC
|
|
Delaware
|
Piedmont 1155 PCW, LLC
|
|
Delaware
|
Piedmont - Two Pierce Place Land, LLC
|
|
Delaware
|
Piedmont TownPark Land, LLC
|
|
Delaware
|
Piedmont Park Place, LP
|
|
Delaware
|
Piedmont Park Place, GP, LLC
|
|
Delaware
|
Piedmont HBC, LLC
|
|
Delaware
|
Piedmont 500 TownPark, LLC
|
|
Delaware
|
Piedmont 80 Central, LLC
|
|
Delaware
|
Piedmont 300 Galleria, LLC
|
|
Delaware
|
Piedmont 200 & 250 South Orange Avenue, LLC
|
|
Delaware
|
Piedmont Glenridge Highlands One, LLC
|
|
Delaware
|
Piedmont Suwanee Gateway Land, LLC
|
|
Delaware
|
Piedmont Lending I, LLC
|
|
Delaware
|
Piedmont Lending II, LLC
|
|
Delaware
|
Piedmont Towers Orlando Member, LLC
|
|
Delaware
|
Piedmont-CNL Towers Orlando, LLC
|
|
Delaware
|
Piedmont-CNL Towers Orlando Owner, LLC
|
|
Delaware
|
Piedmont One Wayside, LLC
|
|
Delaware
|
Piedmont 200 Galleria, LLC
|
|
Delaware
|
Piedmont 200 Galleria Owner, LLC
|
|
Delaware
|
Piedmont 750 W John Carpenter, LLC
|
|
Delaware
|
Piedmont Norman Pointe I, LLC
|
|
Delaware
|
Piedmont 501 W Church Street, LLC
|
|
Delaware
|
Piedmont 9320 Excelsior, LLC
|
|
Delaware
|
Piedmont 25 Mall Road, LLC
|
|
Delaware
|
•
|
Registration Statement (Form S-3ASR No. 333-212973) of Piedmont Office Realty Trust, Inc.,
|
•
|
Registration Statement (Form S-3D No. 333-166858) of Piedmont Office Realty Trust Inc., and
|
•
|
Registration Statement (Form S-8 Nos. 333-218087, 333-142448, 333-48422, and 333-81319) of Piedmont Office Realty Trust, Inc.;
|
1.
|
I have reviewed this annual report on Form 10-K of Piedmont Office Realty Trust, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
|
/s/ DONALD A. MILLER, CFA
|
|
|
Donald A. Miller, CFA
|
|
|
Principal Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Piedmont Office Realty Trust, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
|
/s/ ROBERT E. BOWERS
|
|
|
Robert E. Bowers
|
|
|
Principal Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
By:
|
|
/s/ DONALD A. MILLER, CFA
|
|
|
Donald A. Miller, CFA
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Chief Executive Officer
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February 20, 2019
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
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By:
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/s/ ROBERT E. BOWERS
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Robert E. Bowers
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Chief Financial Officer
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February 20, 2019
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