Piedmont Realty Trust, Inc. · NYSE:PDM
Piedmont Realty Trust — Piedmont Office Realty Trust — Investor Presentation (April 2009)
51 slides from Piedmont Realty Trust's investor presentation, Apr 1, 2009
Slide 1: Investor Presentation
Investor Presentation Donald A. Miller, CFA President & CEO Exhibit 99.1
Slide 2: What Piedmont Wants You To Know
What Piedmont Wants You To Know Certain statements contained herein may be deemed to be forward-looking statements under the federal securities laws, and Piedmont intends that such forward- looking statements be subject to the safe-harbor provisions. All forward-looking statements are qualified in t
Slide 3: History
History • June 1998 – Active operations commenced • December 2003 – Closed fourth and final offering – $5.2bn of equity raised (including DRP proceeds) • April 2005 – 27 property portfolio sale – $189.5mm gain – $748.5mm special dividend • April 2007 – Advisor internalization – 76 employees of the f
Slide 4: Portfolio Characteristics
Portfolio Characteristics 92% % Leased 34% Leverage Ratio (estimated NAV basis) 85% % Leased – Building Industry Average 63% Leverage Ratio – Publicly Traded REIT Average Weighted Average Lease Term Remaining (years) # of Properties 21,012 Square Feet (in thousands) As of December 31, Excludes eight
Slide 5: 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 Lisa M. Tyler Director, Human Resources Laura P. Moon Chief Accounting Officer Alison M. Mills Director, Risk Management
Slide 6: 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 7: Foundations of Conservative Real Estate Investment Strategy
Foundations of Conservative Real Estate Investment Strategy • High-quality properties/stable income stream • Real estate diversification • Lower leverage
Slide 8: Quality Properties
Quality Properties One & Two Independence Square Washington, D.C. 35 West Wacker Drive Chicago, IL 800 North Brand Boulevard Glendale, CA Glenridge Highlands II Atlanta, GA
Slide 9: Broad Street
60 Broad Street New York, NY Piedmont Properties AON Center 200 East Randolph Drive Chicago, IL 1201 Eye Street Washington, D.C.
Slide 10: Piedmont Properties & Crossing Boulevard
Piedmont Properties 200 & 400 Crossing Boulevard Bridgewater, NJ 1901 Market Street Philadelphia, PA Nine Polito Avenue Lyndhurst, NJ
Slide 11: Piedmont Properties
Piedmont Properties Lockheed Martin I & II Corporate Boulevard Rockville, MD Piedmont Pointe I & II Rockledge Drive Bethesda, MD 1201 Eye Street Washington, D.C.
Slide 12: Quality Properties West Wacker
Quality Properties 35 West Wacker Drive Chicago, IL 800 North Brand Boulevard Glendale, CA Glenridge Highlands II Atlanta, GA 60 Broad Street New York, NY
Slide 13: Piedmont Properties
Piedmont Properties AON Center 200 East Randolph Drive Chicago, IL Nokia Connection Drive Irving, TX US Bancorp 800 Nicollet Mall Minneapolis, MN
Slide 14: Piedmont Properties
Piedmont Properties One & Two Independence Square Washington D.C. 1201 Eye Street Washington D.C. 4250 N. Fairfax Arlington, VA
Slide 15: Broad Street
60 Broad Street New York, NY Piedmont Properties AON Center 200 East Randolph Drive Chicago, IL Glenridge Highlands II 5565 Glenridge Connector Atlanta, GA
Slide 16: Piedmont Properties
Piedmont Properties 1055 East Colorado Pasadena, CA Nestle 800 North Brand Boulevard Glendale, CA 1901 Main Street Irvine, CA
Slide 17: Piedmont Properties
Piedmont Properties Las Colinas Corporate Center I & II North State Hwy. 161 Irving, TX Nokia Connection Drive Irving, TX Harcourt North MoPac Expressway Austin, TX
Slide 18: Piedmont Properties
th Piedmont Properties Bellsouth Advertising 2001 NW 64 Street Ft. Lauderdale, FL Convergys 5601 Hiatus Road Tamarac, FL Sarasota Commerce Center II 101 Arthur Anderson Parkway Sarasota, FL
Slide 19: Piedmont Properties
Piedmont Properties 3750 Brookside Parkway Alpharetta, GA 11695 Johns Creek Parkway Johns Creek, GA Glenridge Highlands II 5565 Glenridge Connector Atlanta, GA
Slide 20: Piedmont Properties
Piedmont Properties US Bancorp 800 Nicollet Mall Minneapolis, MN Crescent Ridge II 10900 Wayzata Boulevard Minnetonka, MN Two Pierce Place Itasca, IL
Slide 21: Piedmont Properties W. Wacker
Piedmont Properties 35 W. Wacker Chicago, IL Windy Pointe I & II McConnor Parkway Schaumburg, IL AON Center 200 East Randolph Drive Chicago, IL
Slide 22: Piedmont Properties
Piedmont Properties AON Center 200 East Randolph Drive Chicago, IL Glenridge Highlands II 5565 Glenridge Connector Atlanta, GA 1901 Market Street Philadelphia, PA
Slide 23: Piedmont Properties & Crossing Boulevard
Piedmont Properties 200 & 400 Crossing Boulevard Bridgewater, NJ Nine Polito Avenue Lyndhurst, NJ 60 Broad Street New York, NY
Slide 24: Financial Highlights
Funds From Operations Revenues For years ended December 31, 2006, 2007 and 2008 (in millions) Income From Continuing Operations Financial Highlights $593.2 $622.0 $571.4 $500.0 $550.0 $600.0 $650.0 $285.5 $294.9 $275.8 $200.0 $250.0 $300.0 $112.1 $131.3 $96.9 $50.0 $100.0 $150.0 4% 5% 16% 17% 4% 3%
Slide 25: Tenant diversification (as of December 31, 2008)
Tenant diversification (as of December 31, 2008) Tenant Base Tenant Name (Ranked by % of AGR) Annualized Gross Rental Revenues ($000's) Percentage of Annualized Gross Rental Revenues S&P Credit Rating US Government (11 agencies) 61,823 11.4% AAA BP Corporation 25,565 4.7% AA Leo Burnett (Publicis) 2
Slide 26: Real Estate Diversification
Real Estate Diversification
Slide 27: Geographic Diversification
Geographic Diversification Percentage of annualized gross rental revenues (as of December 31, 2008) 25% 19% 16% 6% 6% 4% 4% 4% 3% 3% 2% 2% 1% 1% 4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 22.0% 24.0% 26.0% 28.0% 30.0%
Slide 28: Industry Diversification
Industry Diversification Percentage of annualized gross rental revenues (as of December 31, 2008) for all industries representing 3% or greater 16% 14% 9% 7% 5% 5% 5% 5% 3% 3% 3% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0%
Slide 29: Lease Expiration Schedule
Lease Expiration Schedule Percentage of annualized gross rental revenues (as of December 31, 2008) 8% 9% 16% 19% 12% 8% 5% 5% 2% 5% 4% 1% 0% 1% 5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0%
Slide 30: ili
ili BERMONT
Slide 31: Leverage Ratios
Leverage Ratios (Based on estimated NAV of $7.40 per share) 34% Publicly Traded REIT Office Sector Average 63% All Publicly Traded REIT Sectors Average 66% Leverage Ratio Total liabilities as a percentage of current value of assets. Source: Green Street Advisors, Inc. March 18, 2009
Slide 32: Debt maturity schedule as of December 31, 2008
Debt maturity schedule as of December 31, 2008 ($ in millions) Debt Maturities $695 $45 $140 $168 $105 $250 $121 Secured debt Unsecured debt The schedule assumes one-year extensions for the $250 Million Unsecured Term Loan and for the $500 Million Unsecured Line of Credit.
Slide 33: Hypothetical Effects of Interest Rates and Cap Rates on a Leveraged Real Estate Portfolio
6.0% 6.1% 6.4% 7.3% 6.0% 5.8% 5.4% 4.3% 6.0% 5.4% 4.4% 1.3% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 5.50% Rate 6.50% Rate 7.50% Rate Interest Rate 0% Loan-to-Value 25% Loan-to-Value 50% Loan-to-Value 75% Loan-to-Value Assumptions: • Initial Cap Rate = 7.0% • Initial After Fee Return = 6.0% • 10-yr Note = 4.5
Slide 34: Hypothetical Effects of Interest Rates and Cap Rates on a Leveraged Real Estate Portfolio
Assumptions: • Initial Cap Rate = 7.0% • Initial After-Fee Return = 6.0% • 10-yr Note = 4.50% • Assume interest rates increase by 100-200 basis points • Increase in interest rate leads to commensurate increase in cap rates • Increased cap rate results in a decline in the market value of the portfoli
Slide 35: Investment Strategy
Investment Strategy
Slide 36: Execution of Investment Strategy
Execution of Investment Strategy • Strive to produce attractive risk adjusted returns • Tenant relationships/landlord of choice • Expense management/strong stewardship • Opportunities to create value/leasing activity • Capitalize on (selective) strategic investment opportunities • Create an attracti
Slide 37: Investor Performance Comparison
Investor Performance Comparison – 1999 and 2004 Investor Compound Annual Growth Rate of Piedmont vs. Other Indices Over a 5-Year and 10-Year Hold Period -10% -5% 0% 5% 10% 15% 10-Year Hold 5-Year Hold NAREIT (Office Only) S&P 500 BC Agg Bond Index Note: Piedmont returns are net of investment managem
Slide 38: Investor Payback on Initial Capital Outlay
Investor Payback on Initial Capital Outlay Note: Analysis assumes all shares are purchased on the first day of any given Investment Year. Percentage of Initial Outlay Paid Back Based on Investment Year 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Investment Year
Slide 39: Opportunities to Create Value
Opportunities to Create Value
Slide 40: Lease Extensions/Restructuring
Lease Extensions/Restructuring • Three-building Nokia complex acquired in August • Originally Building I and III leased through July • Early termination of Building III lease effective July 2006 with concurrent re-lease to Goldman Sachs affiliate from January 2007 through March 2018 • Mid 2007, nego
Slide 41: Lease Extension/Restructuring
• 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 42: Leasing Activity
Atlanta, GA 406,241 SF $84mm Purchase Price • 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 wit
Slide 43: Leasing Activity
• 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 44: Recent Decisions
Recent Decisions
Slide 45: 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 – estimated
Slide 46: 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 47: Dividend Cuts
Dividend Cuts (Source- Morgan Keegan) • 56 of 121 US publicly traded REITs have reduced dividends by an average of 61% since 2008 • 9 of 13 office REITs have reduced dividends by average of 46% • Other industries – many blue chip companies have cut dividends drastically (JP Morgan, GE, Bank of Ameri
Slide 48: Reasons For Dividend Reduction
Reasons For Dividend Reduction • Proactively provide sufficient liquidity for debt maturing in • Provide cash flow for lease activity in future years • Provide funding for selective acquisitions • Enhance the stability of investment grade rating
Slide 49: Looking Ahead
Looking Ahead
Slide 50: Piedmont Objectives
Piedmont Objectives If the economy continues to falter: • Closely monitor tenant credit status • Conserve cash position to retain and attract quality tenants and pay down debt • Strive to maintain a predictable revenue source and cash flow When the economy begins to recover: • Look for accretive acq
Slide 51: Piedmont Objectives
Piedmont Objectives • Continue to focus on office properties • Continue to follow our low leverage strategy • Continue to pursue high quality tenants and premium properties • Continue to be good stewards of all that has been entrusted to us, and • Continue to creatively explore all liquidity options
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