Piedmont Realty Trust, Inc. · NYSE:PDM
Piedmont Realty Trust — Piedmont Office Realty Trust — NAREIT 2019
37 slides from Piedmont Realty Trust's conference presentation, November 2019
Slide 1: Investor Presentation November 2019 – NAREIT
INVESTOR PRESENTATION NOVEMBER 2019 – NAREIT
Slide 2: Introduction
INTRODUCTION Piedmont Office Realty Trust, Inc. (also referred to herein as “Piedmont” or the “Company”) (NYSE: PDM) is an owner, manager, developer, redeveloper and operator of high-quality, Class A office properties in select sub-markets located primarily within seven major eastern U.S. office mar
Slide 3: Points of Discussion
POINTS OF DISCUSSION
Slide 4: Points of Discussion: Corporate Objectives and 2019 YTD Highlights
POINTS OF DISCUSSION CORPORATE OBJECTIVES 2019 YTD HIGHLIGHTS • Decreased exposure to SW Washington DC submarket with Concentrate Ownership in Specific Submarkets sale of One Independence Square for $170M at a 5.5% FFO Balance of CBD, Urban Infill and “Hub-urban” Locations Across Our Core Markets yi
Slide 5: Piedmont Corporate Overview
PIEDMONT CORPORATE OVERVIEW
Slide 6: Piedmont at a Glance
PIEDMONT AT A GLANCE AS OF 9/30/2019 Corporate Overview AS OF 9/30/2019 Portfolio Overview5 (INCLUDING PRO FORMA ADJUSTMENTS) Ticker (NYSE) PDM Square Feet (millions) 16.0 Equity Market Cap as of 10/31/2019 (billions) $2.8 Number of In-Service Properties 54 Five-Year Total Return (10/31/14-10/31/19)
Slide 7: Recent Performance
RECENT PERFORMANCE DELIVERING RESULTS FOR SHAREHOLDERS AND GROWING NAV One Year TSR GreenStreet Estimated NAV- Growth As of October 31, 2019 As of October 31, 2019 30.0% 10% 23.4% 19.5% 17.8% 15.5% 4% 3.0% 2% 1% -3.5% Last 3 Years Last 12 Months NYC Diverse GW Sunbelt DC Diverse NGW West Coast PDM S
Slide 8: Who is Piedmont?
WHO IS PIEDMONT? QUALITY, DISTINCTIVE PORTFOLIO ACCRETIVE CAPITAL RECYCLING GLENRIDGE HIGHLANDS ONE & TWO Atlanta, GA FINANCIAL STRENGTH AND FLEXIBILITY LOCAL OPERATIONAL MANAGEMENT ARLINGTON GATEWAY ARLINGTON, VA 7
Slide 9: Quality, Distinctive Portfolio
QUALITY, DISTINCTIVE PORTFOLIO SEVEN OF THE NATION’S LARGEST MARKETS: WELL-LOCATED, AMENITIZED OFFICE ENVIRONMENTS – CBD, URBAN INFILL & “HUB-URBAN” NODES 18% 14% 14% 13% 13% 13% 12% 12% 13% 11% 11% 11% 10% 10% 9% 9% 8% 0% Atlanta NY/NJ Minneapolis DC Boston Dallas Orlando Chicago* Other (HOU & PHI)
Slide 10: Quality, Distinctive Portfolio: Organic NOI Growth
QUALITY, DISTINCTIVE PORTFOLIO ORGANIC NOI GROWTH Capitalizing on Future Expirations (% of ALR 6) Proforma Lease Expirations (% of ALR 6) Realizing Contractual Cash Flow As of 9/30/2019, with pro forma adjustments* As of 9/30/2019, with pro forma adjustments* As of 9/30/2019, as reported 94% 12% Cur
Slide 11: Accretive Capital Recycling
ACCRETIVE CAPITAL RECYCLING ACCRETIVELY RECYCLING CAPITAL- SINCE 2014, PIEDMONT HAS RECYCLED $1.4 BILLION OF DISPOSITION CAPITAL INTO REAL ESTATE ASSETS AT ROUGHLY ~150 BPS HIGHER YIELD THAN DISPOSED ASSETS Recent Acquisitions as Redeployment Evidence 25 Mall Rd., Burlington Excelsior Blvd., Minneap
Slide 12: Accretive Capital Recycling: Reimagining the Portfolio
ACCRETIVE CAPITAL RECYCLING REIMAGINING THE PORTFOLIO PIEDMONT IS SELECTIVELY IDENTIFYING REPOSITIONING OPPORTUNITIES TO CREATE ADDITIONAL VALUE Rationale for Investment • Activate and energize the environment for tenants • Basis remains at significant discount to development ✓ User needs are evolvi
Slide 13: Selective Development to Expand Large-Scale Positions
ACCRETIVE CAPITAL RECYCLING SELECTIVE DEVELOPMENT TO EXPAND LARGE-SCALE POSITIONS 1,000,000 SF 250,000 SF 250,000 SF Lake Mary, FL Atlanta, GA Atlanta, GA Adjacent to 400 & 500 TownPark Adjacent to Glenridge Highlands One & Two Adjacent to The Medici Land Basis: $6.5M Land Basis: $2.0M Land Basis: $
Slide 14: Financial Strength and Flexibility
FINANCIAL STRENGTH AND FLEXIBILITY LADDERED DEBT MATURITY SCHEDULE $400,000 $329,033 $350,000 $250,000 $160,000 2019 2020 2021 2022 2023 2024 2025 Term Loan & Revolver 8 & Bonds Bonds Term Loan 5 Wall 1901 Market DEBT PROFILE Floating Rate Encumbered NOI Secured 7% 9% 13% Unsecured 87% Unencumbered
Slide 15: Local Operational Management
LOCAL OPERATIONAL MANAGEMENT REAL ESTATE IS A LOCAL BUSINESS George Wells Piedmont maintains four regional offices to ensure local expertise is EVP, Real Estate Operations leveraged and relationships are cultivated within our markets. MIDWEST REGION - CHICAGO Chicago and Minneapolis Tom Prescott 7 b
Slide 16: Piedmont's Commitment to ESG
PIEDMONT’S COMMITMENT TO ESG ENVIRONMENTAL RESPONSIBILITY GOVERNANCE GOALS ACHIEVEMENTS On behalf of all our stakeholders, Piedmont is dedicated to environmentally sustainable practices which enhance our commitment to • Board of Directors • 20% reduction in energy • 93% of our buildings have BOMA 36
Slide 17: Appendix
APPENDIX
Slide 18: Atlanta
ATLANTA CONCENTRATED POSITIONS IN THREE ATLANTA SUBMARKETS WITH LAND TO ACCOMMODATE GROWTH Central Perimeter Three Buildings 1.1 million SF Adjacent land for 250,000 SF Central Perimeter Galleria Buckhead The Galleria Five Buildings 2.1 million SF Adjacent land for 900,000 SF Buckhead One Building 1
Slide 19: Atlanta: The Galleria Is Consolidated for the First Time
ATLANTA THE GALLERIA IS CONSOLIDATED FOR THE FIRST TIME: WITH THE ACQUISITION OF GALLERIA 400, 500 AND 600, PIEDMONT NOW OWNS 2.1M SF AND 12 ACRES FOR DEVELOPMENT IN ONE OF ATLANTA’S MOST VIBRANT PROFESSIONAL ENVIRONMENTS The Galleria Office Towers ❑ Strong Demographic Trends The Galleria is located
Slide 20: Atlanta: Strong Demographic Trends
ATLANTA STRONG DEMOGRAPHIC TRENDS ATLANTA’S COBB COUNTY FOSTERS A PRO-BUSINESS ENVIRONMENT WITH A PLETHORA OF AMENITIES AND YOUNG TALENT #1 32% ~$700M ~$900M Superior Access to/from Multiple Destinations: #1 private investment made improvements including lowest property taxes in submarket in Atlanta
Slide 21: Atlanta: Amenity-Rich Walkability in the Galleria Submarket
ATLANTA AMENITY-RICH WALKABILITY IN THE URBANIZED GALLERIA SUBMARKET OVER 6,500 PEOPLE OCCUPY THE GALLERIA OFFICE TOWERS ON A DAILY BASIS • 7 Cafes ONSITE • 5 Conference Centers • 6,000 SF Fitness Facility with Locker Rooms 20
Slide 22: Atlanta: Competitive Investment Basis
ATLANTA COMPETITIVE INVESTMENT BASIS WITH UNMATCHED SCALE IN A DYNAMIC “HUBURB” OFFERS BUSINESSES AN ECONOMICAL, VIBRANT ALTERNATIVE TO ATTRACT AND RETAIN TODAY’S WORKFORCE Piedmont Galleria Investment Relative Rental Rates by Market (includes parking) $55 40% discount ~$500M ~$215 ~55% Original Inv
Slide 23: Atlanta: Galleria Complex Is 88% Leased
ATLANTA THE GALLERIA COMPLEX IS 88% LEASED WITH A FAVORABLE EXPIRATION SCHEDULE TO CAPTURE NEAR-TERM RENTAL RATE MARK TO MARKET UPSIDE What Piedmont’s Accomplished Thus Far… What’s Ahead… Galleria 200 and 300 Galleria 100, 200, 300, 400, 600 $28.22 $28.34 Annual Expirations and Availability (000s SF
Slide 24: Atlanta: Step One of a Placemaking Repositioning
ATLANTA STEP ONE OF A PLACEMAKING REPOSITIONING: PIEDMONT PLANS TO LEAD A SIGNIFICANT ENHANCEMENT OF THE GALLERIA To date, fragmented ownership has restricted potential activation and prohibited the opportunity to introduce new additional retail, hotel, or residential components to the complex. Pied
Slide 25: Boston - Burlington Submarket
BOSTON BOSTON - BURLINGTON SUBMARKET PDM Submarket Investment Submarket Rents Burlington $40/SF $270M ~$285 ~30% Original Original Est. Current 7% Basis Discount Contribution to Investment Investment to Replacement Total PDM ALR per SF Cost PDM Assets’ Performance Submarket vs. National Average Rent
Slide 26: Boston - Burlington Amenity Base
BOSTON BOSTON - BURLINGTON AMENITY BASE • 3 Cafes ONSITE • Conference Center Burlington Mall • 4,000 SF of Fitness Facilities with Locker Rooms Burlington Marketplace The District at Burlington Representative Tenants 25
Slide 27: Orlando - CBD
ORLANDO ORLANDO - CBD PDM Submarket Investment Submarket Rents Lake Mary $26/SF $365M ~$250 ~40% Original Original Est. Current 9% Basis Discount Contribution to Investment Investment to Replacement Total PDM ALR per SF Cost Maitland $25/SF PDM Assets’ Performance Submarket vs. National Average Rent
Slide 28: Orlando - CBD Amenity Base
ORLANDO ORLANDO – CBD AMENITY BASE • 3 Cafes ONSITE • Conference Center • 5,000 SF Fitness Facility with Locker Rooms Representative Tenants 27
Slide 29: Orlando - Lake Mary Submarket
ORLANDO ORLANDO – LAKE MARY SUBMARKET PDM Submarket Investment Submarket Rents Lake Mary $26/SF $55M ~$175 ~20+% Original Original Est. Current 2% Basis Discount Contribution to Investment Investment to Replacement Total PDM ALR per SF Cost Maitland $25/SF PDM Assets’ Performance Submarket vs. Natio
Slide 30: Orlando - Lake Mary Amenity Base
ORLANDO ORLANDO – LAKE MARY AMENITY BASE • Foodsby Service at Both Properties ONSITE • Conference Center Future Development • 1,000 SF Fitness Facility with Locker Rooms Representative Tenants 29
Slide 31: Dallas - Las Colinas Submarket
DALLAS DALLAS – LAS COLINAS SUBMARKET PDM Submarket Investment Submarket Rents $295M ~$175 ~40% 8% Las Colinas $25/SF Est. Current Original Original Preston Center $38/SF Basis Discount Contribution to Investment Investment to Replacement Total PDM ALR per SF Cost PDM Assets’ Performance Submarket v
Slide 32: Dallas - Las Colinas Amenity Base
DALLAS DALLAS – LAS COLINAS AMENITY BASE 2 Miles Southeast Representative Tenants • 7 Cafes ONSITE • 6 Conference Centers • 25,000 SF of Fitness Facilities with Locker Rooms 31
Slide 33: Washington DC - R-B Corridor Submarket
WASHINGTON, DC WASHINGTON DC – R-B CORRIDOR SUBMARKET PDM Submarket Investment Submarket Rents $350M ~$405 ~20% Original Original Est. Current 8% DC CBD $54/SF East End $57/SF Basis Discount Contribution to Investment Investment to Replacement Total PDM ALR per SF Cost R-B Corridor $42/SF Capitol Hi
Slide 34: Washington DC - R-B Corridor Amenity Base
WASHINGTON, DC WASHINGTON DC – R-B CORRIDOR AMENITY BASE • 10 Cafes ONSITE • 1 Conference Center • 5,000 SF of Fitness Facilities with Locker Rooms • 3 Bike Lockers Representative Tenants 33
Slide 35: Appendix - Footnotes
APPENDIX - FOOTNOTES 1 Projected FFO yield for the twelve month period beginning March, 2019 and ending February, 2020. 2 The projected 2020 CY FFO yield for Galleria 100, Galleria 400, and Galleria 600 is 6.9% at a weighted occupancy of 84%. 3 Projected FFO yield for the twelve month periods subseq
Slide 36: Primary Discussion Topics
PRIMARY DISCUSSION TOPICS EY Portfolio Refinement 2018-2019...Simplifying the Footprint RQ Reinvesting to Drive Future Growth Select Sales OUT Select Investments _ Portfolio sale $430M Atlanta (tidgs. oniyy $304M 7. D.C. (District) $170M ioe » Boston STAM | wg 18% Los Angeles $160M Yield Minneapolis
Slide 37: Footnotes
FOOTNOTES + Acquisition dates: Galleria 200- 10/16, Galleria 300- 11/15, 5 Wall- 6/14, 5&15 Wayside- 3/13, One Wayside- 8/16, 25 Mall- 12/18, CNL l&ll- 8/16, ST Center- 11/15 ? GreenStreet Advisors, Office Sector Update August 2019 3 SNL updated 11.7.19 * GreenStreet Advisors, Office Sector Update A