PIEDMONT OFFICE REALTY TRUST INC Reports Operating Results (10-Q)
Piedmont Office Realty Trust Inc. has a market cap of $3.43 billion; its shares were traded at around $19.89 with a P/E ratio of 15.3 and P/S ratio of 5.9. The dividend yield of Piedmont Office Realty Trust Inc. stocks is 6.3%.
Highlight of Business Operations: Rental income decreased from approximately $110.5 million for the three months ended March 31, 2010 to approximately $109.8 million for the three months ended March 31, 2011. This variance relates primarily to an adjustment to accelerate both the amortization of above/below market intangibles as well as straight-line rental revenue in the current period related primarily to lease terminations at the 400 Bridgewater Crossing Building in Bridgewater, New Jersey, and the 1901 Main Street Building in Irvine, California of $0.4 million. The remainder of the variance is due to recognition of additional parking revenue at our 4250 North Fairfax Drive Building in Arlington, Virginia in the prior year which did not reoccur in the current year. Although, we did see an increase in rental income due to the addition in the second half of 2010 of both the One and Two Meridian Crossings Buildings located in Richfield, Minnesota, these increases were offset by higher vacancies in the current period and a decrease in rental rates at various other properties.
Property operating costs decreased approximately $0.3 million for the three months ended March 31, 2011 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 $2.1 million. However, this favorable variance was mostly offset by higher recoverable tenant-requested services (i.e., billback expenses) of approximately $0.5 million, higher recoverable repair and maintenance costs of approximately $0.5 million, and an additional increase in recoverable utility, landscaping, and janitorial costs totaling approximately $0.8 million. Approximately $0.5 million of the increases in recoverable property operating costs mentioned above are attributable to the addition of the One and Two Meridian Crossings Buildings in October 2010 as well as the addition of the Suwanee Gateway One Building in Suwanee, Georgia, which we acquired in September 2010.
Amortization expense increased approximately $0.7 million for the three months ended March 31, 2011 compared to the same period in the prior year. The increase primarily relates to approximately $1.3 million of adjustments to accelerate amortization expense on certain lease intangible assets related to various lease terminations at certain of our buildings. The increase was also partially attributable to an increase in amortization related to new deferred lease acquisition costs associated with the acquisition or renewal of tenants leases subsequent to March 31, 2010 of approximately $0.4 million, which are amortized over the life of the respective leases. However, these increases were offset by lower amortization expense of approximately $1.0 million recognized for lease intangible assets arising from initial purchase price allocations in accordance with GAAP that fully amortized subsequent to March 31, 2010.
General and administrative expenses increased approximately $0.2 million for the quarter ended March 31, 2011 compared to the same period in the prior year. The increase is primary attributable to higher employee salary and benefit costs of approximately $0.5 million, primarily due to the new stock performance component of the 2010 Long Term Incentive Compensation Plan which effects long-term incentive compensation grants for officers and resulted in earlier recognition of expense as compared to the prior year. Additionally, we incurred higher legal fees related to our defense of ongoing litigation during the current period of approximately $0.3 million. These increases were partially offset by higher transfer agent expenses in the prior period associated with our recapitalization, listing of our shares on the New York Stock Exchange, and related investor support expenses of approximately $0.6 million.
Interest expense decreased approximately $1.9 million for the three months ended March 31, 2011 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 the prior period. The decrease is also attributable to lower net borrowings on our $500 Unsecured Facility in the current period.
Income from continuing operations per share on a fully diluted basis increased from a $0.18 for the three months ended March 31, 2010 to $0.20 for the three months ended March 31, 2011 primarily due to lower interest expense and the recognition of deferred income upon consolidation of the 500 W. Monroe Building, as well as a non-recurring, non-cash gain of approximately $1.9 million recognized upon such consolidation of the VIE containing the 500 W. Monroe Building and 500 W. Monroe Loans. These increases were partially offset by lower tenant reimbursements.
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