Piedmont Realty Trust, Inc. · NYSE:PDM
Piedmont Realty Trust — Piedmont Office Realty Trust — Investor Presentation (June 2009)
41 slides from Piedmont Realty Trust's investor presentation, Jun 29, 2009
Slide 1: Corporate Presentation
Corporate Presentation Donald A. Miller, CFA President & CEO Exhibit 99.1
Slide 2: What Piedmont Wants You To Know
What Piedmont Wants You To Know • The points made in this presentation represent the intentions of Piedmont’s management team as of the date of the presentation given. • Uncertainties in the regulatory, economic, and real estate markets may adversely affect the company’s ability to meet its objectiv
Slide 3: History
History June '08 Mar. '09 Jul. '07 Aug. '07 Dec. '07 June '98 Dec. '03 Apr. '05 Apr. '07 - Active operations commenced - Received investment grade credit ratings (BBB from S&P and Baa3 from Moody’s) - 27 property portfolio sale - $189.5mm gain - $748.5mm special dividend - Advisor internalization -
Slide 4: Portfolio Characteristics
Portfolio Characteristics 91% % Leased 34% Leverage Ratio (estimated NAV basis) 84% % Leased – Office Building Industry Average 61% Leverage Ratio – Publicly Traded REIT Office Average Weighted Average Lease Term Remaining (years) # of Properties 21,012 Square Feet (in thousands) As of March 31, 200
Slide 5: Board of Directors
Board of Directors Back row from left to right: Jeff Swope (Managing Partner of Champion Partners, LTD, a nationwide real estate developer), Bill Keogler (Retired, member of board of Robinson Humphrey & chairman of Keogler, Morgan & Co., a brokerage firm), Wes Cantrell (Retired CEO, Lanier Worldwide
Slide 6: Senior Management
Senior Management Carroll A. (Bo) Reddic, IV EVP, Real Estate Operations Donald A. Miller, CFA President & CEO Robert E. Bowers CFO Raymond L. Owens EVP, Capital Markets Laura P. Moon Chief Accounting Officer
Slide 7: Property Management Offices
Property Management Offices New Hampshire W. Virginia Maine Rhode Island Connecticut Manhattan / L.I. New Jersey Delaware Maryland D.C. Massachusetts Vermont New York Pennsylvania N.Carolina Virginia Washington Oregon California Nevada Utah Arizona Idaho Montana Wyoming Colorado New Mexico Tennessee
Slide 8: Foundations of Conservative Real Estate Investment Strategy
Foundations of Conservative Real Estate Investment Strategy • High-quality properties • Real estate diversification • Lower leverage • Stable income stream
Slide 9: Representative Washington, D.C. Properties
Piedmont Office Realty Trust Representative Washington, D.C. Properties One & Two Independence Square Washington D.C. 1201 Eye Street Washington D.C. 4250 N. Fairfax Drive Arlington, VA Piedmont Pointe I & II 6720 Rockledge Drive Bethesda, MD Lockheed Martin I & II 9200 Corporate Boulevard Rockville
Slide 10: Representative NY/North East Metropolitan Properties
Piedmont Office Realty Trust Representative NY/North East Metropolitan Properties 200 & 400 Crossing Boulevard Bridgewater, NJ Nine Polito Avenue Lyndhurst, NJ 60 Broad Street New York, NY 1901 Market Street Philadelphia, PA One Brattle Square Cambridge, MA
Slide 11: Representative Chicago Properties
Piedmont Office Realty Trust Representative Chicago Properties 35 W. Wacker Drive Chicago, IL Windy Point I & II 1600 McConnor Parkway Schaumburg, IL AON Center 200 East Randolph Drive Chicago, IL Two Pierce Place Itasca, IL
Slide 12: Representative Southern Region Properties
Piedmont Office Realty Trust Representative Southern Region Properties Las Colinas Corporate Center I & II 6363 North State Hwy. 161 Irving, TX 6011 & 6021 Connection Drive Irving, TX Braker Pointe III 10801 North MoPac Expressway Austin, TX Glenridge Highlands II 5565 Glenridge Connector Atlanta, G
Slide 13: Representative California Properties
Piedmont Office Realty Trust Representative California Properties 1055 East Colorado Boulevard Pasadena, CA Nestle 800 North Brand Boulevard Glendale, CA 1901 Main Street Irvine, CA 26200 Enterprise Way Lake Forest, CA 675 Placentia Avenue Brea, CA
Slide 14: Financial Highlights – Steady Growth
Financial Highlights – Steady Growth (In Millions & % of Revenue) 2006 % 2007 % 2008 % Rental Income $431 $442 $455 Tenant Reimbursement Other Revenues, Continuing Ops Property Ops Expenses -198 -212 -221 Net Int, Depr & Amortization -222 -230 -236 Other Expenses - - - Income, Continuing Ops Discont
Slide 15: Selected Financial Highlights
Selected Financial Highlights (fiscal year, values in millions, except per share data) 2006 2007 2008 • Results of Operations – Revenues $571 $593 $622 – Funds from Operations $276 $285 $295 – Property Net Operating Income $343 $361 $379 – Net Income $133 $134 $131 • Per Diluted Common Share – Funds
Slide 16: Tenant Diversification (as of March 31, 2009)
Tenant Diversification (as of March 31, 2009) Tenant Base Rating is for parent company, Public is Groupe SA Kirkland & Ellis is ranked # by The America Lawyer’s 2008 AmLaw Rankings Winston & Strawn is ranked # by The America Lawyer’s 2008 AmLaw Rankings Rating is for parent company, Omnicom Group Te
Slide 17: Real Estate Diversification
Real Estate Diversification
Slide 18: Geographic Diversification
Geographic Diversification Percentage of annualized gross rental revenues (as of March 31, 2009)
Slide 19: Industry Diversification
Industry Diversification Percentage of annualized gross rental revenues (as of March 31, 2009) for all industries representing 3% or greater
Slide 20: Lease Expiration Schedule
Lease Expiration Schedule Percentage of annualized gross rental revenues (as of March 31, 2009)
Slide 21: ili
ili BERMONT
Slide 22: Capital Structure/Risk Ratios
Capital Structure/Risk Ratios Equity/Debt: As of March 31, 2009 Leverage 34% Enterprise Value $5.08 b Equity (Using Dec. 31, 2008’s $7.40 valuation) $3.57 b Unsecured Debt $0.36 b Secured Debt $1.15 b Total Debt $1.51 b Percentage of Estimated Net Value Of Assets Unencumbered 47% Excludes eight unco
Slide 23: Leverage Ratios
Leverage Ratios Piedmont (Based on Dec 31, 2008 estimated NAV of $7.40 per share) 34% Publicly Traded REIT Office Sector Average 61% All Publicly Traded REIT Sectors Average 56% Ratios Fixed Charge Coverage Ratio 4.9 Interest Expense Coverage 5.2 Ratings: Standard & Poors BBB Moody’s Baa3 Leverage R
Slide 24: Debt maturity schedule as of March 31, 2009
Debt maturity schedule as of March 31, 2009 ($ in millions) Debt Maturities $695 $45 $140 $168 $105 $250 $113 2009 2010 2011 2012 2013 2014 2015 2016 2017 Secured debt Unsecured debt 37% LTV 41% LTV 50% LTV 68% LTV 58% LTV The schedule assumes one-year extensions for the $250 Million Unsecured Term
Slide 25: Execution of Investment Strategy
Execution of Investment Strategy
Slide 26: Execution of Investment Strategy
Execution of Investment Strategy • Strive to produce attractive risk adjusted returns • Expense management/strong stewardship • Capitalize on (selective) strategic investment opportunities • Create an attractive liquidity event (while keeping all options open) as soon as practical
Slide 27: 1430 Enclave Parkway, Houston, TX
• Acquired December 2000 • Sysco Corporation leased 106,516 SF through September 2008 • Shaw Group leased 206,048 SF through December 2010 • Sysco started construction on a corporate campus in 2005 to consolidate operations • Shaw Group executed an early renewal and expansion in 2008 for the entire
Slide 28: 5565 Glenridge Connector, Atlanta, GA
• Acquired August 2003 • Originally 76% leased to Cingular through December 2010 • AT&T acquired Cingular in 2006 and exercised termination option effective December 2008 • First Data Corp consolidating operations from Denver and Omaha • Executed lease with First Data Corp for 183,375 SF through Feb
Slide 29: Aon Center, 200 East Randolph Drive, Chicago, IL
• Kirkland & Ellis lease for 497,800 SF expires in December 2011 • KPMG leased 260,641 SF of the Kirkland & Ellis space through August 2027 • Federal Home Loan Bank of Chicago subleased 63,402 SF through December 2013 and converts to a direct lease through December 2024 • Microsoft leased 78,163 SF
Slide 30: Performance
Performance
Slide 31: Distributions to Stockholders since Inception to June 15, 09
Distributions to Stockholders since Inception to June 15, 2009 (in Millions) • Dividend Income $1,927 • Special Capital Distributions • Redemptions of Stock • Total Distributions $3,630
Slide 32: Investor Payback on Initial Capital Outlay
Investor Payback on Initial Capital Outlay 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2004 2003 2002 2001 2000 1999 Investment Year Note: Analysis assumes all shares are purchased on the first day of any given Investment Year. Percentage of Initial Outlay Paid Back Through March 31, 2009
Slide 33: Investor Performance Comparison – 1999 and 2004 Investor
Investor Performance Comparison – 1999 and 2004 Investor Compound Annual Growth Rate of Piedmont vs. Other Indices Over a 5-Year and 10-Year Horizon -10% -5% 0% 5% 10% 15% Piedmont NAREIT (Office Only) S&P 500 BC Agg Bond Index Note: Piedmont returns are net of investment management fees. 4/1/99 to
Slide 34: Recent Decisions
Recent Decisions
Slide 35: Recent Decisions By Piedmont Board
Recent Decisions By Piedmont Board • Estimated net asset value reduced from $8.70 to $7.40 • Dividend reduced from $0.5868 to $0.42 per share per annum • Reset DRP pricing – 95% of NAV ($7.03) • Reset SRP pricing – lower of cost or 95% of NAV ($7.03) • Limited SRP to $100 million in 2009 – which app
Slide 36: Determination of Estimated Net Asset Value
Determination of Estimated Net Asset Value • By prospectus, update valuations each year • Average cost/share = $8.38 (original cost – return of capital) • Valuation to date: September 30, 2005 $8.70 September 30, 2006 $8.93 December 31, 2007 $8.70 December 31, 2008 $7.40 • Hired outside appraisal fi
Slide 37: Dividend Cuts
Dividend Cuts • 65 of 120 US publicly traded REITs have reduced dividends by an average of 62% since 2008 • 10 of 17 office REITs have reduced dividends by average of 54% • Other industries – many blue chip companies have cut dividends drastically (JP Morgan, GE, Bank of America, Dow Chemical, Alcoa
Slide 38: Reasons For Dividend Reduction
Reasons For Dividend Reduction • Match expected cash flow production during heavier lease expiration period • Provide for capital needed for lease activity in future years • Proactively provide sufficient liquidity for future debt maturities • Enhance the stability of investment grade rating • Provi
Slide 39: Looking Ahead
Looking Ahead
Slide 40: Expectations and Strategy
Expectations and Strategy Near Term: • Slower leasing environment for office sector • Lower occupancy and FFO for most office REIT’s • Conserve cash position to retain and attract quality tenants and pay down debt Liquidity Options: • Continue to evaluate all options (IPO, public listing, merger, sa
Slide 41: Expectations and Strategy
Expectations and Strategy Capital Structure: • Maintain low leverage strategy • Monitor debt maturities for opportunities to refinance or raise new equity Portfolio Management: • Recycle capital out of lower growth properties/markets into higher potential return office property investments • Positio
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