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PIEDMONT OFFICE REALTY TRUST INC Reports Operating Results (10-Q)

November 10, 2010 | About:
10qk

10qk

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PIEDMONT OFFICE REALTY TRUST INC (PDM) filed Quarterly Report for the period ended 2010-09-30.

Piedmont Office Realty Trust Inc has a market cap of $3.15 billion; its shares were traded at around $18.25 with and P/S ratio of 5.2. The dividend yield of Piedmont Office Realty Trust Inc stocks is 6.9%.PDM is in the portfolios of Bruce Kovner of Caxton Associates, Pioneer Investments.

Highlight of Business Operations:

Rental income decreased from approximately $111.3 million for the three months ended September 30, 2009 to approximately $110.8 million for the three months ended September 30, 2010. This variance relates primarily to a non-recurring adjustment to rental income in 2009 at our 3100 Clarendon Boulevard Building in Washington, D.C. to recognize an increase in rental income and parking fees for a tenant that renewed its lease at higher rates, which were retroactive to June 2008. The decrease was partially offset by an adjustment to accelerate straight-line rental revenue in the prior period related to a lease termination at the Chandler Forum Building in Phoenix, Arizona. Tenant reimbursements decreased from approximately $36.9 million for the three months ended September 30, 2009 to approximately $29.7 million for the three months ended September 30, 2010 primarily due to lower recoverable estimated property taxes of approximately $7.4 million at several of our buildings.

Property operating costs decreased approximately $11.0 million for the three months ended September 30, 2010 compared to the same period in the prior year. This variance is primarily the result of successful appeals of the assessed values at several of our buildings resulting in lower estimated property tax expense of approximately $11.9 million. This favorable variance was partially offset by higher recoverable tenant-requested services (i.e., billback expenses) of approximately $0.4 million and higher non-recoverable property operating costs of approximately $0.4 million, mostly due to utility and repair costs.

Interest expense decreased approximately $2.1 million for the three months ended September 30, 2010 compared to the same period in the prior year because we extended the $250 Million Term Loan in June 2010, and entered into new interest rate swap agreements with four counterparties to effectively fix the interest rate on the loan at 2.36%, as compared to 4.97% in 2009. The decrease is also attributable to lower net borrowings on our $500 Million Unsecured Facility during the current year due to the receipt of approximately $184.4 million in net offering proceeds in February 2010.

Interest and other income decreased approximately $1.0 million for the three months ended September 30, 2010 compared to the same period in the prior year. The variance is due to a non-recurring settlement of an acquisition contingency in our favor for an acquisition which closed in 2003 of approximately $0.8 million. Piedmont also received approximately $0.2 million more interest income in the prior year, mainly from Piedmonts two investments in mezzanine debt, both of which are secured by a pledge of the equity interest of the entity owning a 46-story, Class A, commercial office building located in downtown Chicago, Illinois.

Income/(loss) from continuing operations per share on a fully diluted basis increased from a $(0.06) loss for the three months ended September 30, 2009 to income of $0.22 for the three months ended September 30, 2010 primarily as a result of the impairment loss incurred in the prior period; as well as lower operating expenses primarily related to lower estimated property tax assessments at several of our buildings, and approximately $4.2 million of termination fee income included in other rental income recognized during the current period.

Rental income decreased from approximately $333.0 million for the nine months ended September 30, 2009 to approximately $331.9 million for the nine months ended September 30, 2010. This decrease relates primarily to lower occupancy during the current period at our Aon Center Building in Chicago, Illinois, the 110 Hidden Lake Circle Building in Duncan, South Carolina, and the 1901 Main Street Building in Irvine, California. The unfavorable decrease was partially offset by an increase in occupancy at our Glenridge Highlands Two Building in Atlanta, Georgia as well as higher rental rates at our 60 Broad Street Building in New York, New York. Tenant reimbursements decreased from approximately $113.1 million for the nine months ended September 30, 2009 to approximately $98.1 million for the nine months ended September 30, 2010 primarily due to lower recoverable estimated property taxes of approximately $9.2 million at several of our buildings. The decrease is also attributable to lower recoverable tenant-requested services and utility costs totaling approximately $2.8 million, as well as an overall reduction in recoverable expenses due to a partial lease termination at the Aon Center Building.

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