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In addition, during this call we’ll refer to non-GAAP financial measures such as funds from operation, core FFO, AFFO and EBITDA. The definitions and reconciliations of our non-GAAP measures are contained in the supplemental financial information available on the company’s website.I will review our financial results after Don Miller; our CEO discusses some of the quarter’s highlights. In addition, we are also joined today by Ray Owens, our EVP of Capital Markets; Laura Moon, our Chief Accounting Officer; Bo Reddic, our EVP of Real Estate Operations, and Eddie Guilbert, our VP of Finance and Strategic Planning, all of whom can provide additional perspective during the question-and-answer portion of the call. I’ll now turn the call over to Don. Donald A. Miller Good morning everyone. Thank you for taking time to join us this morning as we review our first quarter 2012 results and as we comment on the leasing and transactional environment in which we face. As we reflect on our results for the quarter which were in line with our expectations, it is appropriate to put our current performance into context and give our constituents further insight into our expectations. Going into 2011, we had identified our biggest challenge as the large lease expiration schedule that we face in the coming years. In fact at that point 37% of our portfolio revenues were tied to leases expiring in the next three years. As we were coming upon the half-way point in that process, it is important to highlight both our accomplishments as well as the remaining challenges. Let’s start with occupancy. During the first quarter our occupancy rates fell between 1.5% to 2% depending on the measurement. Our stabilized portfolio dropped from 89.1% at year end to 87.5%, and overall occupancy fell from 84.4% from 86.5%. To those of you who follow us closely, this does not come as much of a surprise since we have been communicating for several quarters, the move outs of Kirkland & Ellis at Aon center, Marsh at 500 West Monroe, and Santa Fe Aventis at Bridgewater during the first quarter. The net rentable square feet of these three expirations account for more than our drop in occupancy.
Our economic occupancy measures are even lower as a result of downtime between leases and free rent period for new leases that have recently commenced. For these reasons we had added new schedules to our quarterly supplemental information, which all illustrates commencement dates for new leases on page seven of the supplemental, and building-by-building occupancy levels on page 42 to help with analysis of your financial projections for Piedmont.The better news is that as a result of the record leasing year in 2011, the 4 million square feet, our expectations of a strong second half of 2012, confidence in renewal of our large lease rollovers still yet to expire, and especially the lower lease expirations that we have in years 2014 to 2017, we expect the first of 2012 to be the trial for this cycle for Piedmont’s operating metrics. As a result of all the leasing activity and associated downtimes and free rent periods, we have added substantial same-store and NOY decline of 8% to 9% in the first quarter of 2012 relative to the first three months of 2011. Sequentially, we are forecasting an improvement in same-store performance during the second half of the year, and we expect the full year to be done in the 68% range on a cash basis, and down approximately 3% on a GAAP basis. These numbers should improve depending on our Washington DC government lease exposure in 2013 and start to grow substantially in 2014 and beyond. Read the rest of this transcript for free on seekingalpha.com