PIEDMONT OFFICE REALTY TRUST INC Reports Operating Results (10-Q)
Piedmont Office Realty Trust, Inc. has a market cap of $2.94 billion; its shares were traded at around $17.8 with a P/E ratio of 13 and P/S ratio of 5.4. The dividend yield of Piedmont Office Realty Trust, Inc. stocks is 4.6%. Piedmont Office Realty Trust, Inc. had an annual average earning growth of 25.9% over the past 5 years.
Highlight of Business Operations:Certain lease agreements include provisions that, at the option of the tenant, may obligate Piedmont to provide funding for capital improvements. Under its existing lease agreements, Piedmont may be required to fund significant tenant improvements, leasing commissions, and building improvements. In addition, certain agreements contain provisions that require Piedmont to issue corporate or property guarantees to provide funding for capital improvements or other financial obligations. Further, Piedmont classifies such tenant and building improvements into two classes: (i) improvements which incrementally enhance the building's asset value by expanding its revenue generating capacity (“incremental capital expenditures”) and (ii) improvements which maintain the building's existing asset value and its revenue generating capacity (“non-incremental capital expenditures”). As of September 30, 2012, Piedmont anticipates funding potential non-incremental capital expenditures for tenant improvements of approximately $122.0 million related to its existing lease portfolio over the respective lease terms, the majority of which Piedmont
Certain lease agreements include provisions that grant tenants the right to engage independent auditors to audit their annual operating expense reconciliations. Such audits may result in the re-interpretation of language in the lease agreements which could result in the refund of previously recognized tenant reimbursement revenues, resulting in financial loss to Piedmont. Piedmont recorded additional expense related to such tenant audits/disputes of approximately $0.2 million and $0.0 million during the three months ended September 30, 2012 and September 30, 2011, respectively, and approximately $0.2 million for both the nine month periods ended September 30, 2012 and September 30, 2011.
We intend to use cash flows generated from the operation of our wholly-owned properties, distributions from our joint ventures, proceeds from selective property dispositions, and proceeds from our $500 Million Unsecured Line of Credit as our primary sources of immediate liquidity. During the three months ended September 30, 2012, we entered into a new $500 Million Unsecured Line of Credit to replace the expiring $500 Million Unsecured Facility. All amounts outstanding on the $500 Million Unsecured Facility were transferred to the $500 Million Unsecured Line of Credit at closing. Depending on the timing and volume of our property acquisition and disposition activities, we may also seek other financing opportunities (such as issuance of additional equity or debt securities or additional borrowings from third-party lenders) afforded to us based on our relatively low leverage and quality asset base as additional sources of capital; however, the availability and attractiveness of terms for these sources of capital is highly dependent on market conditions. As of September 30, 2012 approximately $22.5 million of net sales proceeds related to the tax deferred exchange of certain real estate assets under Section 1031 of the Internal Revenue Code (“IRC”) was held in escrow pending the acquisition of replacement properties. If suitable replacement properties are not identified within the requisite time frame allowed under the IRC, these proceeds will be returned to the Company as unrestricted cash and become immediately available to fund expenditures. As of the time of this filing, we had $153.5 million outstanding under our $500 Million Unsecured Line of Credit. As a result, we had approximately $327.1 million under this facility available for future borrowing (approximately $19.4 million of capacity is reserved as security for outstanding letters of credit required by various third parties).
Property management fee revenue increased from approximately $0.1 million for the three months ended September 30, 2011 to approximately $0.5 million for the three months ended September 30, 2012. The increase is directly attributable to retaining the property management of the 35 West Wacker Drive building in Chicago, Illinois subsequent to selling the building to an unrelated third-party in December 2011.
Property management fee revenue increased from approximately $1.3 million for the nine months ended September 30, 2011 to approximately $1.7 million for the nine months ended September 30, 2012. The increase is primarily attributable to retaining the property management of the 35 West Wacker Drive building in Chicago, Illinois subsequent to selling the building to an unrelated
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