Piedmont Realty Trust, Inc. · NYSE:PDM

Piedmont Realty Trust — Piedmont Office Realty Trust — NAREIT 2012

40 slides from Piedmont Realty Trust's conference presentation, Jun 12, 2012

  1. Slide 1: May 2012

    0 © 2012 Piedmont Office Realty Trust, Inc. May 2012

  2. Slide 2: Company description and forward-looking statements

    1 Piedmont Office Realty Trust, Inc. (“Piedmont” or the “Company”) (NYSE: PDM) is a fully-integrated and self-managed real estate investment trust (“REIT”) specializing in the acquisition, ownership, management, development and disposition of primarily high-quality Class A office buildings located p

  3. Slide 3: Investment Summary

    2 Investment Summary • Sixth largest office REIT(1) by equity market capitalization ($3.1 billion as of 05/01/12) • Class A office properties in major U.S. markets • Long-term relationships with high-credit quality, diverse tenant base • Demonstrated capital allocation track record • Focused investm

  4. Slide 4: Class A Office Properties in Major U.S. Markets

    3 Class A Office Properties in Major U.S. Markets © 2012 Piedmont Office Realty Trust, Inc. 200 & 400 Bridgewater Crossing, Bridgewater, NJ 1201 Eye Street, Washington, DC

  5. Slide 5: Market Focus

    4 Market Focus © 2012 Piedmont Office Realty Trust, Inc. • Approximately 77% of our ALR comes from the following six markets: – Chicago – Washington, DC – New York – Minneapolis – Los Angeles – Boston • High-Quality Class A Portfolio (1) – 75 office properties – 20.6 million square feet – 51% CBD, 3

  6. Slide 6: Long-term Relationships with High Credit Quality, Diverse Tenant Base

    5 Long-term Relationships with High Credit Quality, Diverse Tenant Base One Brattle Square, Cambridge, MA © 2012 Piedmont Office Realty Trust, Inc. Harvard University Two Independence Square, Washington, D.C. NASA

  7. Slide 7: Top tenants and credit ratings

    6 ** Various expirations ranging from 2012 to 2027. Notes: (1) Denotes the year in which the lease for the majority of the tenant’s space expires. (2) Equal to ALR for each tenant divided by the total ALR at March 31, 2012 for our entire office portfolio, expressed as a percentage. (3) Credit rating

  8. Slide 8: Lease Expiration & Retention

    4.3 8.5 9.6 8.1 5.4 6.3 7.8 5.0 2.9 23.1 0.9 4.0 0.7 0.3 0.1 1.6 3.6 1.7 6.1 5.2 12.5 10.3 8.1 5.7 6.4 9.4 8.6 4.6 29.2 0 5 10 15 20 25 30 2012 2013 2014 2015 2016 2017 2018 2019 2020 Thereafter 7 Expiration & Retention (%) Notes: (1) Equal to ALR expiring each year divided by the total ALR at March

  9. Slide 9: Leasing Accomplishments

    8 © 2012 Piedmont Office Realty Trust, Inc. 800 N. Brand Blvd., Glendale, CA Notes: (1) Inclusive of leasing completed at unconsolidated joint venture properties. (2) For the period from January 1, 2006 to March 31, 2012. US Bancorp Center, Minneapolis, MN Leasing Accomplishments • Total leasing vol

  10. Slide 10: Major Leasing in 2011 and 2012

    9 © 2012 Piedmont Office Realty Trust, Inc. 800 N. Brand Blvd., Glendale, CA Major Leasing in 2011 and 2012 1075 West Entrance Drive, Auburn Hills, MI Recent Leasing Activity – Lease extension signed with General Services Administration on behalf of NASA for 597,253 square feet at Two Independence S

  11. Slide 11: Demonstrated Capital Allocation Track Record

    10 Demonstrated Capital Allocation Track Record © 2012 Piedmont Office Realty Trust, Inc. 1200 Enclave Parkway, Houston, TX Meridian Crossings, Richfield, MN 500 W. Monroe Street, Chicago, IL

  12. Slide 12: Proven Capital-Recycling Discipline

    11 44 791 527 15 218 91 464 59 5,000 1,000 0 1,000 1998 - 2004 2005 - 2008 2009 & After 11 Proven Capital-Recycling Discipline 2005 Special Dividend: $4.86 / Share ($MM) Acquisitions Transaction History (1) ($MM) 1998 – 2004 2005 – 2008 2009 & After Asset Acquisitions 5,002.4 464.4 462.3 % of Total

  13. Slide 13: Capital Recycling: Issaquah disposition and Houston acquisition

    12 Capital Recycling Disposition – Eastpointe Corporate Center, Issaquah, WA – $32 Million ($205/sf) – Closed July 2011 – Occupancy at sale: 19% – Net Rents: $16/sf – Leasing challenge due to vacancy (81%) – Exited a non-strategic market © 2012 Piedmont Office Realty Trust, Inc. Acquisition – 1200 E

  14. Slide 14: Capital Recycling: Chicago disposition and acquisition

    13 Capital Recycling Disposition – 35 W. Wacker Drive, Chicago, IL – Trophy Asset – $401 Million ($359/sf) – Closed December 2011 – Acquired for $298 Million ($267/sf) – Reduced Chicago Exposure and 2014 Debt Maturities – Unleveraged FFO yield: approximately 6% © 2012 Piedmont Office Realty Trust, I

  15. Slide 15: Value-Add Acquisitions

    14 Value-Add Acquisitions • During the last approximately 18 months, Piedmont has acquired five value-add assets totaling $291 MM at an average occupancy rate of 36% © 2012 Piedmont Office Realty Trust, Inc. Property Name Location Acquisition Date Cost per Square Foot Year Built Occupancy At Purchas

  16. Slide 16: Capital Allocation Framework

    15 Capital Allocation Framework • Strategically-timed acquisitions in concentration & opportunistic markets • Dispositions of non-core and opportunistic assets – Five assets totaling $72.2 million and 471,000 square feet so far in 2012; exit from Portland, OR market – On May 31, 2012, sold 26200 Ent

  17. Slide 17: Focused Investment Strategy in Select Markets

    16 Focused Investment Strategy in Select Markets © 2012 Piedmont Office Realty Trust, Inc. 800 N. Brand Blvd., Glendale, CA 1225 Eye Street, Washington, D.C. 60 Broad Street, New York, NY

  18. Slide 18: Focused Markets Strategy

    17 Focused Markets Strategy © 2012 Piedmont Office Realty Trust, Inc. • Continue consolidation into top U.S. markets – Target markets selected based upon presence of major corporations, projected office job growth, and barriers to entry – Target markets by 2015 (10 to 12 markets) Concentration Oppor

  19. Slide 19: Focused Markets Strategy with Local Market Presence

    18 Focused Markets Strategy with Local Market Presence © 2012 Piedmont Office Realty Trust, Inc. 17 Markets Exited: • Tacoma • Salt Lake • San Antonio • Memphis • Knoxville • Jacksonville • Fort Myers • Tampa • Raleigh • Richmond • Harrisburg • Indianapolis • Oklahoma City • Des Moines • Grand Rapid

  20. Slide 20: Investment Strategy

    19 Investment Strategy • Value / basis investment orientation • Accretive to enterprise value • Core markets focus • Attention to key asset fundamentals – Quality of construction – Age of product – Location – Competition – Lease expiration schedule – Credit quality of tenants – In-place rents as com

  21. Slide 21: Operational Excellence

    Operational Excellence 20 © 2012 Piedmont Office Realty Trust, Inc. Las Colinas Corporate Center, Irving, TX Crescent Ridge II, Minnetonka, MN LEED - Gold BOMA 360 Energy Star

  22. Slide 22: Operational Excellence – Local Management Teams

    21 Operational Excellence – Local Management Teams Mark E. Reeder South Regional Manager Based in Central Florida • 26 years of experience • 2006 – 2012, Piedmont • Experience with Taylor & Mathis © 2012 Piedmont Office Realty Trust, Inc. Daniel M. Dillon Mid-Atlantic Regional Manager Based in Washi

  23. Slide 23: Operational Excellence – Consistent Award Winner

    22 © 2012 Piedmont Office Realty Trust, Inc. • BOMA 360 • Recognizes best practices in all major areas of building operations and management and indicates that a property is being managed to the highest standard of excellence • Piedmont was ranked third overall and second for REITs for number of bui

  24. Slide 24: Operational Excellence – Environmental Sustainability

    23 © 2012 Piedmont Office Realty Trust, Inc. • LEED (Leadership in Energy and Environmental Design) • Internationally-recognized green building certification system • Eight staff members possess LEED credentials; Company is member of US Green Building Council • Five buildings are LEED certified, wit

  25. Slide 25: Strong Balance Sheet with Capacity for Growth

    24 Strong Balance Sheet with Capacity for Growth © 2012 Piedmont Office Realty Trust, Inc. Piedmont Pointe I and II, Bethesda, MD The Medici, Atlanta, GA

  26. Slide 26: Low Leverage and Stable Portfolio Enhance Access to Liquidity

    $4,327 $65 $575 $105 $468 $140 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 Total Assets 2012 2013 2014 2015 2016 2017 and thereafter 25 Capitalization and Operating Stats ($MM) 03/31/2012 Equity Market Capitalization $ 3,064 Total Market Capitalization $ 4,417 Book Value of Equit

  27. Slide 27: High Quality Large Blocks of Space Available

    26 © 2012 Piedmont Office Realty Trust, Inc. • High Quality Large Blocks of Space Available CBD – Aon Center, Chicago, IL: 457,946 square feet – 500 West Monroe Street, Chicago, IL: 375,959 square feet Urban Infill – Piedmont Pointe I & II, Bethesda, MA: 178,572 square feet – 800 North Brand, Glenda

  28. Slide 28: Balance Sheet Capacity and Benchmarks

    27 5 Year Plan – Balance Sheet – Capacity © 2012 Piedmont Office Realty Trust, Inc. • Balance sheet and geographic benchmarks – Maintain investment grade rating – ≤ 40% leverage – ≥ 50% of debt is unsecured debt – ≤ 25% of debt matures in any 1 year period billion 1.4 1.4 1.2 3.9 3.9 0.0 2.0 4.0 6.0

  29. Slide 29: Corporate Governance

    Corporate Governance 28 © 2012 Piedmont Office Realty Trust, Inc. Glenridge Highlands II, Atlanta, GA AON Center, Chicago, IL 4250 N. Fairfax Drive, Arlington, VA

  30. Slide 30: Management Team

    29 Management Team Donald A. Miller, CFA President, Director and Chief Executive Officer • 27 years of experience • 2007 – 2012 President, Director and CEO, Piedmont • 2003 – 2007 Chief Real Estate Officer, Wells Real Estate Funds • 1994 – 2003 Lend Lease (last position held – Head of U.S. Equity Re

  31. Slide 31: Corporate Governance Profile

    Note: (1) Includes Maryland Law “Business and Combination Provision” (Section 3-602) and “Control Share Acquisition” (Section 3-701 through 3-710). 30 Corporate Governance Profile Experienced Board with governance decision power vested in stockholders © 2012 Piedmont Office Realty Trust, Inc. • 8 ou

  32. Slide 32: Investment Summary

    31 Investment Summary • High-quality Class A portfolio – Geographically diversified – Creditworthy tenants; weighted average remaining lease term of 6.6 years; 74% tenant retention rate (1) • Focused asset / property management and investment strategy – 11 regional offices directing efficient, hands

  33. Slide 33: Summary Overview and Outlook for 2012

    Summary Overview • Effects of the 2008-2011 Economic Environment • Rent Roll-downs • Contraction of Space • Downtime • Increased Transaction Activity • Projected $300 MM of acquisitions in 2012; seven properties totaling $389 MM acquired in 2011 • Approximately $200 MM of dispositions projected in 2

  34. Slide 34: Appendix

    33 © 2012 Piedmont Office Realty Trust, Inc. Appendix

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    34 © 2012 Piedmont Office Realty Trust, Inc.

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    35 © 2012 Piedmont Office Realty Trust, Inc.

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    36 © 2012 Piedmont Office Realty Trust, Inc.

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    37 © 2012 Piedmont Office Realty Trust, Inc.

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    38 © 2012 Piedmont Office Realty Trust, Inc.

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    39 © 2012 Piedmont Office Realty Trust, Inc.

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