Piedmont Office Realty Trust (PDM) Q2 2012 Earnings Call August 02, 2012 10:00 am ET Executives Robert E. Bowers - Chief Financial Officer, Executive Vice President and Treasurer Donald A. Miller - Chief Executive Officer, President and Director Analysts Anthony Paolone - JP Morgan Chase & Co, Research Division Michael Knott - Green Street Advisors, Inc., Research Division Brendan Maiorana - Wells Fargo Securities, LLC, Research Division John W. Guinee - Stifel, Nicolaus & Co., Inc., Research Division Paul E. Adornato - BMO Capital Markets U.S. Chris Caton - Morgan Stanley, Research Division Presentation Operator
Previous Statements by PDM
» Piedmont Office Realty Trust's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Piedmont Office Realty Trust's CEO Discusses Q4 2011 Results - Earnings Call Transcript
» Piedmont Office Realty Trust's CEO Discusses Q3 2011 Results - Earnings Call Transcript
In addition, during this call today, we'll refer to non-GAAP financial measures, such as funds from operations, core FFO, AFFO and EBITDA. The definitions and reconciliations of non-GAAP measures are contained in the supplemental financial information available on the company's website.I'll review our financial results in a minute after Don Miller, our CEO, discusses some of the quarter's highlights. Don? Donald A. Miller Good morning, everyone. Thank you for taking the time to join us this morning as we review our second quarter 2012 financial and operational results and share our perspectives on the current leasing and transactional environment. It's just Bobby, Eddie Guilbert, our VP of strategic planning and me on the call this morning as we are still in New York for meetings, following our quarterly board meeting held here yesterday. We will do our best to answer your questions and if we don't have the details readily available, we will certainly follow-up with public disclosure as appropriate. For this quarter's leasing activity, during the quarter, we executed approximately 600,000 square feet of total leasing, bringing our leasing for the year through June to 1.4 million square feet. While the total amount of completed leasing transactions for the quarter is a little lighter than we expected, we believe that a substantial volume of potential transactions is in the pipeline, which is anticipated to execute in the coming weeks. Of the leasing executed during the quarter, the 3 largest leases were in 11-plus year lease of approximately 123,000 square feet for the headquarters of Piper Jaffray at U.S. Bancorp Center in Minneapolis, and approximately a 100,000 square-foot, 10-plus year lease for the U.S. headquarters of Brother International at 200 Bridgewater Crossing in Bridgewater, New Jersey, and an approximately 80,000 square-foot 10-plus year renewal for the headquarters of HD Vest Financial Services at Las Colinas Corporate Center in Dallas. Details of other significant leases executed during the quarter are outlined in our supplemental package available on the website.
As I reminded everyone yesterday -- I'm sorry, as I reminded everyone last quarter, we expect the first half of 2012 to be the trough of this cycle for Piedmont's occupancy and net operating income statistics. Our quarter-over-quarter occupancy metrics showed modest improvement and we expect that trend to continue over the latter half of the year as several large new leases are under negotiation. We project that our same-store cash NOI will slow its decline over the remainder of the year as 600,000 square feet of new leases commenced and as the free rent periods burn off on 1.3 million square feet of current leases. Combined, these contractual leases and free rent burn off should contribute approximately $0.20 per share in annual FFO going forward over the next couple of years.Lease expirations totaling only 3.9% of our annualized leasing revenue remain in 2012. Looking ahead to the expiration schedule for the next 5 years, 2013 is the last major year of lease expirations, with 12.3% of our annualized lease revenues set for expiration, of which 1/3 is associated with our BP lease at Aon Center in December of next year. We are working through several of our large remaining near-term lease expirations, including 2 in our government portfolio in Washington D.C., the 330,000 square-foot lease with OCC at One Independence Square, which is set to expire in early 2013, and a 220,000 square-foot lease with National Park Service at 1201 Eye Street, which is now in holdover and the GSA is yet issue their FFO. Read the rest of this transcript for free on seekingalpha.com