Piedmont Realty Trust, Inc. · NYSE:PDM
Piedmont Realty Trust — Piedmont Office Realty Trust — NAREIT REITweek 2017
17 slides from Piedmont Realty Trust's conference presentation, Nov 13, 2017
Slide 1: Investor Presentation November 2017
Investor Presentation November 2017
Slide 2: Piedmont Office Realty Trust, Inc. disclaimer and forward-looking statements
Piedmont Office Realty Trust, Inc. (also referred to herein as “Piedmont” or the “Company”) (NYSE: PDM) is an owner, manager, developer and operator of high-quality, Class A office properties in select sub-markets located primarily within eight major eastern U.S. office markets. The Company’s geogra
Slide 3: Piedmont Overview
9% 9% 10% 10% 11% 12% 13% 14% ORLANDO MINNEAPOLIS BOSTON DALLAS ATLANTA CHICAGO NY METRO WASHINGTON DC Piedmont Overview Square Feet (millions) 18.8 Number of Properties 66 Weighted Average Lease Term 6.5 years % Leased 89.2% Median Building Age 18 years Annualized Lease Revenue (millions) $548.2 %
Slide 4: Who is Piedmont?
3 Who is Piedmont? DIFFERENTIATED PORTFOLIO DISCIPLINED CAPITAL ALLOCATOR FINANCIAL STRENGTH AND FLEXIBILITY PROACTIVE OPERATIONAL MANAGEMENT PATHS TO GROWTH SUPERIOR VALUE PROPOSITION ARLINGTON GATEWAY Arlington, VA ONE BRATTLE SQUARE Cambridge, MA
Slide 5: Differentiated Portfolio: Target Markets
Why These Markets: • Historical and projected rental rate growth • Barriers to entry • Heavy amenity base • Proximity to transportation hubs • Ideal for large, corporate users • Ample size and scale for liquidity • Fragmented/limited REIT ownership • Favorable business environment / supportive loc
Slide 6: Piedmont's Markets Offer Attractive Fundamentals
5 LTM Employment Growth JLL Office Outlook US, Q3 2017 Year-Over-Year Employment Growth Baird Equity Research, September 2017 Construction as a % of Total Inventory CoStar Office Statistics, Q3 2017 Number of Fortune 1000 Headquarters per 1 million of Population Geolounge 2016 Fortune 1000 Informati
Slide 7: Disciplined Capital Allocator: Acquisition Activity Since IPO
6 A tlanta - N o rthwes t O rlando - C B D B osto n - 128 N o rt h D allas - Las C olina s Invested (# buildings, $MM) 2 4 bldgs, $192 million Discount to Replacement Cost 3 43% ’17 Submarket Vacancy 4 15.1% ’18-’19 Submarket Cl A Rent Growth 5 6.2% Invested (# buildings, $MM) 2 3 bldgs, $338 millio
Slide 8: Disciplined Capital Allocator: Capital Recycling and Buybacks
$14.50 $15.50 $16.50 $17.50 $18.50 $19.50 $20.50 $21.50 $22.50 $23.50 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 7 $679 $917 $889 $(1,064) $(748) $(1,754) Acquisitions Dispositions Disciplined Capital Allocator Non-Core Dispositions Strategic Acquisitions Net Seller $385M Net Sel
Slide 9: Financial Strength and Flexibility
8 500 WEST MONROE Chicago, IL Financial Strength and Flexibility Debt Composition As of 9/30/2017 Debt Maturity Schedule - Using Sale Proceeds to Reduce Debt Moody’s Baa2 S&P BBB WELL-LADDERED MATURITY SCHEDULE WITH ACCESS TO DEBT AND EQUITY MARKETS $0 $200 $400 $600 2017 2018 2019 2020 2021 2022 20
Slide 10: Proactive Operational Management
9 Proactive Operational Management PIEDMONT MAINTAINS FIVE REGIONAL OFFICE LOCATIONS TO OPTIMIZE EFFICIENCY AND TENANT-CENTRIC FOCUS • EVP Oversight Brent Smith • Markets Boston New York • Region SF 3.6M • Leased % 98% (at 9/30/17) NORTHEAST REGION • EVP Oversight Bob Wiberg • Markets Washington • R
Slide 11: Paths to Growth: Organic NOI Growth Potential
ORGANIC NOI GROWTH POTENTIAL 83.4% 3.6% 2.2% 80.0% 82.0% 84.0% 86.0% 88.0% 90.0% 10 Realizing Contractual Cash Flow As of 9/30/2017 Economic Leased +/- $20 to 25 million of Cash NOI Leased but Not Yet Commenced Under Abatement Paths to Growth Capitalizing on Future Expirations (% of ALR 6) As of 9/3
Slide 12: Paths to Growth: Selective Development Land Holdings
Land Basis: $1.9M Submarket Class A Direct Vacancy: 13.4% (Central Perimeter) 11 Paths to Growth Strategically-Located Land Holdings for Future Development (minimum 70% pre-lease); All Land Holdings are Adjacent to Existing Core Locations 1,000,000 SF Lake Mary, FL Adjacent to 400 & 500 TownPark SEL
Slide 13: Paths to Growth: Strong Balance Sheet
12 Paths to Growth STRONG BALANCE SHEET WITH CAPACITY FOR EXPANSION Data as of 9/30/2017 5.6x Debt/EBITDA 33.0% Net Debt/Gross Assets • No complicated joint ventures • Approximately 93% of portfolio NOI is unencumbered • 90% fixed rate debt • Predominately public and bank debt LOW LEVERAGE SIMPLE CA
Slide 14: Superior Value Proposition
13 Superior Value Proposition Sharpe Ratio 8 Annualized Total ReturnAnnual Standard Deviation ATTRACTIVE RISK-ADJUSTED RETURNS PIEDMONT INCEPTION THROUGH OCTOBER 31, 2017 UNDERVALUED WITHIN THE OFFICE REIT SECTOR Price / NAV 9 Price / 2018 Consensus FFO 10 BXP CXP PGRE BXP PGRE CXP BDN CLI CUZ EQC F
Slide 15: Portfolio Sale Update
Portfolio Sale Update 1 2 2 2 2 3 1 1 # # Market exited; number of properties sold Market exposure reduced; submarket exited; number of properties sold Chicago suburbs Phoenix Atlanta suburbs South Florida Boston suburbs Maryland suburbs Detroit Nashville SUMMARY OF TRANSACTIONS # Market exposure re
Slide 16: Portfolio Sale Update: Enhanced Focus
Strategic Operating Markets, 47 Other, 10 Strategic Operating Markets, 40 Other, 3 Portfolio Sale Update ENHANCED FOCUS CURRENT UPON CLOSING 57 Projects 43 Projects (1) DEBT METRICS (2) 5.6x to 4.7x Debt/EBITDA 33% to 27% Net Debt/Gross Assets 89% to 91% Leased 18.8 to 16.3 Million Square Feet REMAI
Slide 17: Appendix - Footnotes
16 Appendix - Footnotes 1 Includes Annualized Lease Revenue attributable to tenants with an investment grade credit rating and tenants that do not have a credit rating but have well- established businesses, such as Independence Blue Cross, Towers Watson, Brother International, and RaceTrac Petroleum