Piedmont Realty Trust, Inc. · NYSE:PDM
Piedmont Realty Trust — Piedmont Office Realty Trust — Investor Presentation (February 2019)
31 slides from Piedmont Realty Trust's investor presentation, February 2019
Slide 1: Investor Presentation February 2019
INVESTOR PRESENTATION FEBRUARY 2019
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 and operator of high-quality, Class A office properties in select sub-markets located primarily within eight major eastern U.S. office markets. The Com
Slide 3: Primary Discussion Topics
PRIMARY DISCUSSION TOPICS
Slide 4: Piedmont Overview
PIEDMONT OVERVIEW Corporate Overview AS OF 12/31/2018 Portfolio Overview 2 AS OF 12/31/2018 Ticker (NYSE) PDM Square Feet (millions) 16.2 Equity Market Cap as of 2/1/2019 (billions) $2.5 Number of In-Service Properties 54 Three-Year Total Return (1/29/16-2/1/19) 20.8% % Leased 93.3% Gross Assets (bi
Slide 5: Looking Back: 2018 Recap
LOOKING BACK: 2018 RECAP Operational Activity In-Service Leased % 93.3% Same Store Cash NOI GAAP Lease Roll-Ups 9.1% 9.3% 360bps 6.5% 9.1% 16.5% 6.5% 12.2% 4.8% 10.2% 89.7% 9.1% Increase in Same Store Cash GAAP Lease Occupancy NOI Growth Rollups YE 2017 YE 2018 2015 2016 2017 2018 2015 2016 2017 201
Slide 6: Looking Forward: 2019 Areas of Focus
LOOKING FORWARD: 2019 AREAS OF FOCUS Piedmont is well-positioned in 2019 and will remain focused on key initiatives. 2019 Areas of Focus Operational Capital Allocation Balance Sheet and Liquidity Address remaining sizable expirations in 2019 Redeploy sales proceeds from low-cap rate, non- Maintain f
Slide 7: Piedmont Corporate Overview
PIEDMONT CORPORATE OVERVIEW
Slide 8: Who Is Piedmont?
WHO IS PIEDMONT? DIVERSIFIED PORTFOLIO PATHS TO GROWTH DISCIPLINED CAPITAL ALLOCATOR ARLINGTON GATEWAY Arlington, VA PROACTIVE OPERATIONAL MANAGEMENT FINANCIAL STRENGTH AND FLEXIBILITY SUPERIOR RISK / REWARD PROPOSITION ONE BRATTLE SQUARE Cambridge, MA 7
Slide 9: Diversified Portfolio: Eight Eastern Markets
DIVERSIFIED PORTFOLIO Portfolio Concentrated within Eight of the Nation’s Largest Eastern Markets Why These Markets and Specific Submarkets: • Historical and projected rental rate growth • Barriers to entry • Heavy amenity base • • Proximity to transportation hubs Ideal for large, corporate users
Slide 10: Diversified Portfolio: Market Fundamentals and Outlook
DIVERSIFIED PORTFOLIO Piedmont’s Markets Offer Attractive Fundamentals and Favorable Outlook LTM Employment Growth Construction as a % of Total Inventory JLL Office Outlook US, Q4 2018 CoStar Office Statistics, Q4 2018 3.5% 10 Year Historical Average 3.0% National Average 1.8% 2.5% 2.0% PDM Average*
Slide 11: Paths to Growth: Organic NOI Growth Potential
PATHS TO GROWTH Organic NOI Growth Potential Capitalizing on Future Expirations (% of ALR 7) Proforma Lease Expirations (% of ALR 7) As of 12/31/2018 As of 12/31/2018 Expected: After signing anticipated renewal 12.0% SunTrust, 0.9% leases with NY State and NY City; average 10.0% Wendy's/Arbys, 1.1%
Slide 12: Paths to Growth: Selective Development
PATHS TO GROWTH Selective Development to Expand Large-scale Positions as of 12/31/2018 Strategically-Located Land Holdings for Future Development (minimum 70% pre-lease); All Land Holdings are Adjacent to Existing Core Locations 1,000,000 SF 250,000 SF 250,000 SF Lake Mary, FL Atlanta, GA Atlanta, G
Slide 13: Disciplined Capital Allocator
DISCIPLINED CAPITAL ALLOCATOR Since 2014, Piedmont has recycled $1 billion of disposition capital into real estate assets at roughly 150 bps higher yield Non-Core Strategic Acquisition Strategy Dispositions Acquisitions • Recycle non-core/mature assets into accretive and value-enhancing acquisitions
Slide 14: Disciplined Capital Allocator: Recent Acquisitions
DISCIPLINED CAPITAL ALLOCATOR Piedmont sits in a unique situation in which its remaining non-core assets are expected to generate low cap rates upon sale; we believe we will continue to reinvest in our core markets at accretive spreads. ‘Sell at low cap rates, buy at higher cap rates’ is an uncommon
Slide 15: Disciplined Capital Allocator: Dallas Spotlight
DISCIPLINED CAPITAL ALLOCATOR Seizing Opportunities - Concentrated Capital Deployment in Atlanta, Boston, Dallas, & Orlando Dallas Spotlight – Creating Value in a Strategic Market Results: Strong NOI Growth and Value Accretion Recognizing the Opportunity Cash NOI Growth (9) Occupancy Growth (10) • I
Slide 16: Disciplined Capital Allocator: Stock Repurchase and NAV Impact
DISCIPLINED CAPITAL ALLOCATOR Piedmont has Created Value through the Opportunistic Measuring the Impact of Recent Capital Allocation Acquisition of ~$850M of its Stock NAV Impact Scenarios: Q4 17 through Q4 18 Activity Calculated using different assumed starting NAVs per share and otherwise publicly
Slide 17: Delivering Unique Environments: US Bancorp Center
DISCIPLINED CAPITAL ALLOCATOR Opportunity: Delivering Unique Environments US BANCORP CENTER, MINNEAPOLIS Fitness Center Overlooking Downtown Built 2000, acquired May 2003 Iconic asset in Minneapolis CBD Expected Scope: • Convert entire 31st floor (previously housed mechanical systems) to tenant amen
Slide 18: Delivering Unique Environments: SunTrust Center
DISCIPLINED CAPITAL ALLOCATOR Opportunity: Delivering Unique Environments SUNTRUST CENTER, ORLANDO Balcony Overlooking Park Built 1988, acquired November 2015 Pin corner location at Orange and Church Street Expected Scope: • Planned lobby conversion including the addition of downtown’s first food ha
Slide 19: Delivering Unique Environments: Two Pierce Place
DISCIPLINED CAPITAL ALLOCATOR Opportunity: Delivering Unique Environments TWO PIERCE PLACE, CHICAGO Lobby Renovation Built 1991, acquired November 2006 Second-tallest office building in Chicagoland outside of CBD; strategically located near O’Hare Int’l Airport Expected Scope: • Complete renovation
Slide 20: Proactive Operational Management
PROACTIVE OPERATIONAL MANAGEMENT Piedmont maintains five regional offices to ensure local expertise is leveraged and relationships are cultivated within our markets. CHICAGO- Midwest Region Real Estate is a Local Business… Chicago and Minneapolis 8 buildings 3.6 million SF NEW YORK- Northeast Region
Slide 21: Financial Strength and Flexibility
FINANCIAL STRENGTH AND FLEXIBILITY Laddered Debt Maturity Schedule $400,000 $365,000 $350,000 $329,706 $250,000 2019 2020 2021 2022 2023 2024 2025 Term Loan Revolver 16 & Bonds Bonds Term Loan & 5 Wall 1901 Market Debt Profile Encumbered NOI Floating Rate Secured 8% 18% 11% 500 WEST MONROE – CHICAGO
Slide 22: Superior Risk/Reward Proposition
SUPERIOR RISK/REWARD PROPOSITION Why You Should Consider Piedmont… Growing Income Risk-Adjusted Returns Accretive Capital • ~$25-30 million of cash NOI currently • One of the highest Sharpe ratios in the Redeployment under abatement or not yet commenced office sector • Reinvest sale proceeds of low-
Slide 23: Attractive Risk-Adjusted Returns
SUPERIOR RISK/REWARD PROPOSITION Attractive Risk-Adjusted Returns Piedmont IPO through January 31, 2019 Sharpe Ratio 17 Annual Standard Deviation Annualized Total Return 0.49 21.8% 0.46 8.9% 8.7% 18.1% 17.3% 0.27 6.1% BLOOMBERG OFFICE PIEDMONT COMPETITIVE SET BLOOMBERG PIEDMONT COMPETITIVE SET BLOOM
Slide 24: Outlook: 2019 Guidance
OUTLOOK 2019 Guidance • Anticipated Core FFO of $1.74 to $1.80 per share • Despite the sale or anticipated sale of over $950 million (net) of assets since the beginning of 2017, the mid-point of our guidance range represents an increase of $0.02 per share over 2017’s performance • Guidance includes
Slide 25: Appendix
Appendix 24
Slide 26: Appendix – Exhibit 1: Balance Sheet
Appendix – Exhibit 1: Balance Sheet 25
Slide 27: Appendix – Exhibit 2: Income Statement
Appendix – Exhibit 2: Income Statement 26
Slide 28: Appendix – Exhibit 3: Funds From Operations
Appendix – Exhibit 3: Funds From Operations 27
Slide 29: Appendix – Exhibit 4: Historical TI & LC Commitments
Appendix – Exhibit 4: Historical TI & LC Commitments 28
Slide 30: Appendix – Exhibit 5: Projected Capex as a % of NOI
Appendix – Exhibit 5: Projected Capex as a % of NOI 29
Slide 31: Appendix - Footnotes
APPENDIX- FOOTNOTES 1 For the purposes of the calculation, we annualize the quarter’s Core EBITDA and use the average daily balance of debt outstanding during the period, less cash and cash equivalents and escrow deposits and restricted cash as of the end of the period. 2 Statistical information pre
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