Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 28, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Transition Report | false | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Entity File Number | 001-34626 | |
Entity Registrant Name | Piedmont Office Realty Trust, Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 58-2328421 | |
Entity Address, Address Line One | 5565 Glenridge Connector Ste. 450 | |
Entity Address, City or Town | Atlanta | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30342 | |
City Area Code | 770 | |
Local Phone Number | 418-8800 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | PDM | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 126,028,762 | |
Document Fiscal Year Focus | 2020 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Central Index Key | 0001042776 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Real estate assets, at cost: | ||
Land | $ 505,228 | $ 485,560 |
Buildings and improvements, less accumulated depreciation of $776,870 and $730,750 as of June 30, 2020 and December 31, 2019, respectively | 2,481,843 | 2,212,935 |
Intangible lease assets, less accumulated amortization of $58,148 and $50,766 as of June 30, 2020 and December 31, 2019, respectively | 105,997 | 74,405 |
Construction in progress | 51,045 | 29,920 |
Real estate assets held for sale, net | 0 | 139,690 |
Total real estate assets | 3,144,113 | 2,942,510 |
Cash and cash equivalents | 36,469 | 13,545 |
Tenant receivables, net of allowance for doubtful accounts of $4,865 and $0 as of June 30, 2020 and December 31, 2019, respectively | 8,494 | 8,226 |
Straight-line rent receivables | 147,418 | 132,342 |
Restricted cash and escrows | 1,769 | 1,841 |
Prepaid expenses and other assets | 33,017 | 25,427 |
Goodwill | 98,918 | 98,918 |
Deferred lease costs, less accumulated amortization of $159,883 and $147,324 as of June 30, 2020 and December 31, 2019, respectively | 299,515 | 265,747 |
Other assets held for sale, net | 0 | 28,201 |
Total assets | 3,769,713 | 3,516,757 |
Liabilities: | ||
Unsecured debt, net of discount and unamortized debt issuance costs of $7,307 and $7,626 as of June 30, 2020 and December 31, 2019, respectively | 1,592,693 | 1,292,374 |
Secured debt, net of premiums and unamortized debt issuance costs of $539 and $343 as of June 30, 2020 and December 31, 2019, respectively | 28,784 | 189,030 |
Accounts payable, accrued expenses and accrued capital expenditures | 95,419 | 117,496 |
Dividends payable | 0 | 26,427 |
Deferred income | 35,226 | 34,609 |
Intangible lease liabilities, less accumulated amortization of $21,856 and $19,607 as of June 30, 2020 and December 31, 2019, respectively | 41,179 | 25,069 |
Interest rate swaps | 28,575 | 5,121 |
Other liabilities held for sale | 0 | 7,657 |
Total liabilities | 1,821,876 | 1,697,783 |
Commitments and Contingencies (Note 7) | 0 | 0 |
Stockholders’ Equity: | ||
Shares-in-trust, 150,000,000 shares authorized; none outstanding as of June 30, 2020 or December 31, 2019 | 0 | 0 |
Preferred stock, no par value, 100,000,000 shares authorized; none outstanding as of June 30, 2020 or December 31, 2019 | 0 | 0 |
Common stock, $0.01 par value, 750,000,000 shares authorized; 126,025,255 and 125,783,408 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 1,260 | 1,258 |
Additional paid-in capital | 3,691,377 | 3,686,398 |
Cumulative distributions in excess of earnings | (1,723,147) | (1,871,375) |
Other comprehensive income/(loss) | (23,360) | 967 |
Piedmont stockholders’ equity | 1,946,130 | 1,817,248 |
Noncontrolling interest | 1,707 | 1,726 |
Total stockholders’ equity | 1,947,837 | 1,818,974 |
Total liabilities and stockholders’ equity | $ 3,769,713 | $ 3,516,757 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Intangible lease assets, accumulated amortization | $ 58,148 | $ 50,766 |
Tenant receivables, allowance for doubtful accounts | 4,865 | 0 |
Deferred lease costs, accumulated amortization | 159,883 | 147,324 |
Liabilities: | ||
Intangible lease liabilities, accumulated amortization | $ 21,856 | $ 19,607 |
Stockholders’ Equity: | ||
Shares-in-trust, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Shares-in-trust, shares outstanding (in shares) | 0 | 0 |
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 750,000,000 | 750,000,000 |
Common stock, shares issued (in shares) | 126,025,255 | 125,783,408 |
Common stock, shares outstanding (in shares) | 126,025,255 | 125,783,408 |
Unsecured Debt | ||
Liabilities: | ||
Discount (premiums) and unamortized debt issuance costs | $ 7,307 | $ 7,626 |
Secured Debt | ||
Liabilities: | ||
Discount (premiums) and unamortized debt issuance costs | (539) | (343) |
Building and improvements | ||
Assets: | ||
Buildings and improvements, accumulated depreciation | $ 776,870 | $ 730,750 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Rental and tenant reimbursement revenue | $ 131,247 | $ 125,468 | $ 263,401 | $ 251,634 |
Total revenues | 134,631 | 130,668 | 271,802 | 263,604 |
Expenses: | ||||
Property operating costs | 53,148 | 52,380 | 106,338 | 104,185 |
Depreciation | 27,200 | 26,348 | 55,084 | 52,873 |
Amortization | 24,349 | 18,461 | 47,980 | 36,161 |
General and administrative | 5,937 | 12,418 | 14,580 | 21,786 |
Expenses | 110,634 | 109,607 | 223,982 | 215,005 |
Other income (expense): | ||||
Interest expense | (13,953) | (15,112) | (29,217) | (30,605) |
Other income | 349 | 752 | 498 | 1,029 |
Loss on early extinguishment of debt | (9,336) | 0 | (9,336) | 0 |
Gain on sale of real estate assets | 191,369 | 1,451 | 191,372 | 39,338 |
Nonoperating income (expense) | 168,429 | (12,909) | 153,317 | 9,762 |
Net income | 192,426 | 8,152 | 201,137 | 58,361 |
Net loss/(income) applicable to noncontrolling interest | 1 | 1 | (1) | 0 |
Net income applicable to Piedmont | $ 192,427 | $ 8,153 | $ 201,136 | $ 58,361 |
Per share information – basic: | ||||
Net income applicable to common stockholders (in dollars per share) | $ 1.53 | $ 0.06 | $ 1.60 | $ 0.46 |
Per share information – diluted: | ||||
Net income applicable to common stockholders (in dollars per share) | $ 1.52 | $ 0.06 | $ 1.59 | $ 0.46 |
Weighted-average common shares outstanding – basic (in shares) | 125,974,762 | 125,693,365 | 125,917,859 | 125,633,777 |
Weighted-average common shares outstanding – diluted (in shares) | 126,500,254 | 126,490,507 | 126,455,538 | 126,404,294 |
Property management fee revenue | ||||
Revenues: | ||||
Property management and other property related revenue | $ 622 | $ 422 | $ 1,395 | $ 2,414 |
Other property related income | ||||
Revenues: | ||||
Property management and other property related revenue | $ 2,762 | $ 4,778 | $ 7,006 | $ 9,556 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income applicable to Piedmont | $ 192,427 | $ 8,153 | $ 201,136 | $ 58,361 |
Other comprehensive loss: | ||||
Effective portion of loss on derivative instruments that are designated and qualify as cash flow hedges (See Note 5) | (2,569) | (3,465) | (24,506) | (5,489) |
Plus/(less): Reclassification of net (gain)/loss included in net income (See Note 5) | 185 | (672) | 179 | (1,443) |
Other comprehensive loss | (2,384) | (4,137) | (24,327) | (6,932) |
Comprehensive income applicable to Piedmont | $ 190,043 | $ 4,016 | $ 176,809 | $ 51,429 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Cumulative Distributions in Excess of Earnings | Other Comprehensive Income/(Loss) | Non- controlling Interest |
Beginning balance (in shares) at Dec. 31, 2018 | 126,219,000 | |||||
Balance at Dec. 31, 2018 | $ 1,712,140 | $ 1,262 | $ 3,683,186 | $ (1,982,542) | $ 8,462 | $ 1,772 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share repurchases as part of announced plan (in shares) | (728,000) | |||||
Share repurchases as part of an announced plan | (12,482) | $ (7) | (12,475) | |||
Dividends to common stockholders, stockholders of subsidiaries, and dividends reinvested | (52,952) | (142) | (52,790) | (20) | ||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax (in shares) | 292,000 | |||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax | 4,840 | $ 3 | 4,837 | |||
Net loss applicable to noncontrolling interest | 0 | |||||
Net income applicable to Piedmont | 58,361 | 58,361 | ||||
Other comprehensive loss | (6,932) | (6,932) | ||||
Ending balance (in shares) at Jun. 30, 2019 | 125,783,000 | |||||
Balance at Jun. 30, 2019 | 1,702,975 | $ 1,258 | 3,687,881 | (1,989,446) | 1,530 | 1,752 |
Beginning balance (in shares) at Mar. 31, 2019 | 125,597,000 | |||||
Balance at Mar. 31, 2019 | 1,723,522 | $ 1,256 | 3,686,017 | (1,971,184) | 5,667 | 1,766 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Dividends to common stockholders, stockholders of subsidiaries, and dividends reinvested | (26,522) | (94) | (26,415) | (13) | ||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax (in shares) | 186,000 | |||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax | 1,960 | $ 2 | 1,958 | |||
Net loss applicable to noncontrolling interest | (1) | (1) | ||||
Net income applicable to Piedmont | 8,153 | 8,153 | ||||
Other comprehensive loss | (4,137) | (4,137) | ||||
Ending balance (in shares) at Jun. 30, 2019 | 125,783,000 | |||||
Balance at Jun. 30, 2019 | $ 1,702,975 | $ 1,258 | 3,687,881 | (1,989,446) | 1,530 | 1,752 |
Beginning balance (in shares) at Dec. 31, 2019 | 125,783,408 | 125,783,000 | ||||
Balance at Dec. 31, 2019 | $ 1,818,974 | $ 1,258 | 3,686,398 | (1,871,375) | 967 | 1,726 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Dividends to common stockholders, stockholders of subsidiaries, and dividends reinvested | (52,933) | (5) | (52,908) | (20) | ||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax (in shares) | 242,000 | |||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax | 4,986 | $ 2 | 4,984 | |||
Net loss applicable to noncontrolling interest | 1 | 1 | ||||
Net income applicable to Piedmont | 201,136 | 201,136 | ||||
Other comprehensive loss | $ (24,327) | (24,327) | ||||
Ending balance (in shares) at Jun. 30, 2020 | 126,025,255 | 126,025,000 | ||||
Balance at Jun. 30, 2020 | $ 1,947,837 | $ 1,260 | 3,691,377 | (1,723,147) | (23,360) | 1,707 |
Beginning balance (in shares) at Mar. 31, 2020 | 125,921,000 | |||||
Balance at Mar. 31, 2020 | 1,783,717 | $ 1,259 | 3,690,821 | (1,889,109) | (20,976) | 1,722 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Dividends to common stockholders, stockholders of subsidiaries, and dividends reinvested | (26,479) | (26,465) | (14) | |||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax (in shares) | 104,000 | |||||
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax | 557 | $ 1 | 556 | |||
Net loss applicable to noncontrolling interest | (1) | (1) | ||||
Net income applicable to Piedmont | 192,427 | 192,427 | ||||
Other comprehensive loss | $ (2,384) | (2,384) | ||||
Ending balance (in shares) at Jun. 30, 2020 | 126,025,255 | 126,025,000 | ||||
Balance at Jun. 30, 2020 | $ 1,947,837 | $ 1,260 | $ 3,691,377 | $ (1,723,147) | $ (23,360) | $ 1,707 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||
Dividends to common stockholders per share (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.42 | $ 0.42 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flows from Operating Activities: | ||
Net income | $ 201,137 | $ 58,361 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 55,084 | 52,873 |
Amortization of debt issuance costs net of favorable settlement of interest rate swaps | 530 | 261 |
Other amortization | 43,435 | 33,650 |
Loss on early extinguishment of debt | 349 | 0 |
General reserve for uncollectible accounts | 4,865 | 0 |
Stock compensation expense | 5,545 | 9,831 |
Gain on sale of real estate assets | (191,372) | (39,338) |
Changes in assets and liabilities: | ||
Increase in tenant and straight-line rent receivables | (20,923) | (8,683) |
Increase in prepaid expenses and other assets | (8,464) | (7,644) |
Increase/(decrease) in accounts payable and accrued expenses | 518 | (5,255) |
Decrease in deferred income | (124) | (2,117) |
Net cash provided by operating activities | 90,580 | 91,939 |
Cash Flows from Investing Activities: | ||
Acquisition of real estate assets and intangibles | (396,745) | (94,581) |
Capitalized expenditures | (54,952) | (32,279) |
Net sales proceeds from wholly-owned properties | 350,752 | 168,342 |
Deferred lease costs paid | (23,072) | (5,358) |
Net cash (used in)/provided by investing activities | (124,017) | 36,124 |
Cash Flows from Financing Activities: | ||
Debt issuance and other costs paid | (409) | (88) |
Proceeds from debt | 840,625 | 253,000 |
Repayments of debt | (701,441) | (277,663) |
Discount paid due to loan modification | (525) | 0 |
Value of shares withheld for payment of taxes related to employee stock compensation | (2,601) | (3,295) |
Repurchases of common stock as part of announced plan | 0 | (16,899) |
Dividends paid and discount on dividend reinvestments | (79,360) | (79,924) |
Net cash provided by/(used in) financing activities | 56,289 | (124,869) |
Net increase in cash, cash equivalents, and restricted cash and escrows | 22,852 | 3,194 |
Cash, cash equivalents, and restricted cash and escrows, beginning of period | 15,386 | 6,034 |
Cash, cash equivalents, and restricted cash and escrows, end of period | $ 38,238 | $ 9,228 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Piedmont Office Realty Trust, Inc. (“Piedmont”) (NYSE: PDM) is a Maryland corporation that operates in a manner so as to qualify as a real estate investment trust (“REIT”) for federal income tax purposes and engages in the acquisition, development, redevelopment, management, and ownership of commercial real estate properties located primarily in select sub-markets within seven major Eastern U.S. office markets, including properties that are under construction, are newly constructed, or have operating histories. Piedmont was incorporated in 1997 and commenced operations in 1998. Piedmont conducts business primarily through Piedmont Operating Partnership, L.P. (“Piedmont OP”), a Delaware limited partnership, as well as performing the management of its buildings through two wholly-owned subsidiaries, Piedmont Government Services, LLC and Piedmont Office Management, LLC. Piedmont owns 99.9% of, and is the sole general partner of, Piedmont OP and as such, possesses full legal control and authority over the operations of Piedmont OP. The remaining 0.1% ownership interest of Piedmont OP is held indirectly by Piedmont through its wholly-owned, taxable REIT subsidiary, Piedmont Office Holdings, Inc. ("POH"), the sole limited partner of Piedmont OP. Piedmont OP owns properties directly, through wholly-owned subsidiaries, and through various joint ventures which it controls. References to Piedmont herein shall include Piedmont and all of its subsidiaries, including Piedmont OP and its subsidiaries and joint ventures. As of June 30, 2020, Piedmont owned 57 in-service office properties in select sub-markets located within seven major U.S. office markets: Atlanta, Boston, Dallas, Minneapolis, New York, Orlando, and Washington, D.C. As of June 30, 2020, Piedmont's 57 in-service office properties comprised approximately 17.2 million square feet of primarily Class A commercial office space and were 88.6% leased. Piedmont internally evaluates all of its real estate assets as one operating segment, and accordingly does not report segment information. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The consolidated financial statements of Piedmont have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Results for these interim periods are not necessarily indicative of a full year’s results. Piedmont’s consolidated financial statements include the accounts of Piedmont, Piedmont’s wholly-owned subsidiaries, any variable interest entity ("VIE") for which Piedmont or any of its wholly-owned subsidiaries is considered to have the power to direct the activities of the entity and the obligation to absorb losses/right to receive benefits, or any entity in which Piedmont or any of its wholly-owned subsidiaries owns a controlling interest. In determining whether Piedmont or Piedmont OP has a controlling interest, the following factors, among others, are considered: equity ownership, voting rights, protective rights of investors, and participatory rights of investors. For further information, refer to the financial statements and footnotes included in Piedmont’s Annual Report on Form 10-K for the year ended December 31, 2019. All intercompany balances and transactions have been eliminated upon consolidation. Further, Piedmont has formed special purpose entities to acquire and hold real estate. Each special purpose entity is a separate legal entity. Consequently, the assets of these special purpose entities are not available to all creditors of Piedmont. The assets owned by these special purpose entities are being reported on a consolidated basis with Piedmont’s assets for financial reporting purposes only. Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and notes. The most significant of these estimates include the underlying cash flows and holding periods used in assessing impairment, judgements regarding the recoverability of goodwill, and the assessment of the collectibility of receivables. Future impacts of the COVID-19 pandemic on Piedmont and its tenants may affect these and other estimates used in the preparation of these financial statements. While Piedmont has made, what it believes to be, appropriate accounting estimates based on the facts and circumstances available as of the reporting date, actual results could materially differ from those estimates. Income Taxes Piedmont has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and has operated as such, beginning with its taxable year ended December 31, 1998. To qualify as a REIT, Piedmont must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income. As a REIT, Piedmont is generally not subject to federal income taxes, subject to fulfilling, among other things, its taxable income distribution requirement. Piedmont is subject to certain taxes related to the operations of properties in certain locations, as well as operations conducted by its taxable REIT subsidiary, POH, which have been provided for in the financial statements. Operating Leases Piedmont recognized the following fixed and variable lease payments, which together comprised rental and tenant reimbursement revenue in the accompanying consolidated statements of income for the three and six months ended June 30, 2020 and 2019, respectively, as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Fixed payments $ 109,714 $ 102,637 $ 221,210 $ 206,296 Variable payments 21,533 22,831 42,191 45,338 Total Rental and Tenant Reimbursement Revenue $ 131,247 $ 125,468 $ 263,401 $ 251,634 Operating leases where Piedmont is the lessee relat e primarily to office space in buildings owned by third parties. For both the three and six months ended June 30, 2020 and 2019, Piedmont recognized approximately $20,000 and $41,000, respectively, of operating lease costs related to these office space leases. As of June 30, 2020 , the weighted-average lease term of Piedmont's right of use assets is approximately two years, and the weighted-average discount rate is 3.35%. Intangible Assets and Liabilities Resulting from Purchasing Real Estate Assets Upon the acquisition of real properties, Piedmont allocates the purchase price of the properties to tangible assets, consisting of land, building, site improvements, and identified intangible assets and liabilities, including the value of in-place leases, based in each case on Piedmont's estimate of their fair values in accordance with Accounting Standards Codification ("ASC") 820 Fair Value Measurements . Gross intangible lease assets and liabilities arising from in-place leases, inclusive of amounts classified as real estate assets held for sale, recorded at acquisition as of June 30, 2020 and December 31, 2019, respectively, are as follows (in thousands): June 30, 2020 December 31, 2019 Intangible Lease Assets: Above-Market In-Place Lease Assets $ 1,457 $ 2,082 In-Place Lease Valuation $ 162,688 $ 157,101 Intangible Lease Origination Costs (included as component of Deferred Lease Costs) $ 258,054 $ 256,627 Intangible Lease Liabilities (Below-Market In-Place Leases) $ 63,035 $ 84,292 For the three and six months ended June 30, 2020 and 2019, respectively, Piedmont recognized amortization of intangible lease costs as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Amortization of Intangible Lease Origination Costs and In-Place Lease Valuation included in amortization expense $ 20,406 $ 14,992 $ 40,152 $ 29,176 Amortization of Above-Market and Below-Market In-Place Lease intangibles as a net increase to rental revenues $ 3,304 $ 2,088 $ 6,277 $ 4,086 Net intangible assets and liabilities as of June 30, 2020 will be amortized as follows (in thousands): Intangible Lease Assets Above-Market In-Place Lease Valuation Intangible Lease Origination Costs (1) Below-Market For the remainder of 2020 $ 116 $ 15,442 $ 21,036 $ 5,775 For the years ending December 31: 2021 183 27,635 38,743 10,863 2022 152 20,773 30,527 8,422 2023 103 13,923 21,019 5,139 2024 70 9,141 14,463 3,238 2025 6 5,658 10,069 2,072 Thereafter 18 12,777 24,881 5,670 $ 648 $ 105,349 $ 160,738 $ 41,179 Weighted-Average Amortization Period (in years) 4 5 6 5 (1) Included as a component of Deferred Lease Costs in the accompanying consolidated balance sheets. Accounting Pronouncements and Amendments Adopted during the Six Months Ended June 30, 2020 Reference Rate Reform Relief Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848) ("ASU 2020-04"), was issued in March 2020. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the six months ended June 30, 2020, Piedmont elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. Piedmont continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. Financial Instruments- Credit Loss Amendments On January 1, 2020, Piedmont adopted ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments , as well as ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and ASU No. 2019-05, Financial Instruments- Credit Losses: Targeted Transition Relief (collectively the "Credit Loss Amendments"). The provisions of the Credit Loss Amendments replace the "incurred loss" approach with an "expected loss" model for impairing trade and other receivables, held-to-maturity debt securities, net investment in leases, and off-balance-sheet credit exposures, which will generally result in earlier recognition of allowances for credit losses. However, the Financial Accounting Standards Board (the "FASB") also issued ASU No. 2018-19 Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which is effective concurrent with the Credit Loss Amendments, and excludes receivables arising from operating leases from the scope of the Credit Loss Amendments and affirms that such receivables should be evaluated for collectibility as prescribed by ASC 842 Leases . As s ubstantially all of Piedmont's receivables are operating lease receivables there was no material impact to Piedmont's accompanying consolidated financial statements or disclosures as a result of adoption of the Credit Loss Amendments. During the six months ended June 30, 2020, the FASB issued a Staff Q&A on Topic 842 and Topic 840 (lease accounting guidance): Accounting for lease concessions related to the effects of the COVID-19 pandemic . Generally, changes to payment terms not contemplated by the lease contract should be accounted for under Topic 842 as a lease modification. The FASB staff has provided relief from this modification guidance through an accounting policy election, provided that changes to the payment terms do not result in a substantial increase in the rights of either the lessee or the lessor under the lease. Piedmont has elected not to apply the relief provided by the FASB Staff, and has instead accounted for all rent relief agreements as result of COVID-19 as lease modifications. See further details concerning rent relief agreements with Piedmont's tenants in Note 7 below. Reclassifications Certain prior period amounts presented in the accompanying consolidated balance sheets have been reclassified as of December 31, 2019 to conform to the current period financial statement presentation related to the 1901 Market Street building, which was classified as held for sale as of March 31, 2020, and sold on June 25, 2020. (see Note 8 ). |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Acquisitions | Acquisitions During the six months ended June 30, 2020, Piedmont acquired three properties and adjacent developable land (collectively the "Dallas Galleria Office Towers") using cash on hand and available funds from the $500 Million Unsecured 2018 Line of Credit, as noted below: Property Metropolitan Statistical Area Date of Acquisition Ownership Percentage Acquired Rentable Square Feet Percentage Leased as of Acquisition Net Contractual Purchase Price (1) (in millions) Dallas Galleria Office Towers Dallas, Texas February 12, 2020 100% 1,435,466 95% $396.2 (1) Price includes the purchase of an adjacent parcel of approximately 1.9 acres of developable land. The purchase price of the Dallas Galleria Office Towers and undeveloped land, inclusive of approximately $0.6 million of closing costs, was allocated as follows: Dallas Galleria Office Towers and Undeveloped Land Land $ 19,674 Building and improvements 293,760 Intangible lease assets (1) 49,177 Lease acquisition costs, net of tenant credits received from seller (1) 1,344 Intangible lease origination costs (1) 55,060 Intangible lease liabilities (1) (22,169) Total purchase price $ 396,846 (1) Amortization of in-place lease intangibles and lease acquisition costs are recognized using the straight-line method over approximately 5.2 years, the average remaining life of in-place leases. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt During the six months ended June 30, 2020, Piedmont entered into a new $150 million term loan facility and amended it to increase the principal amount to $300 million (as so amended, the "$300 Million Unsecured 2020 Term Loan"). Piedmont drew the full $300 million available under the $300 Million Unsecured 2020 Term Loan and used the proceeds to repay outstanding draws on its $500 Million Unsecured 2018 Line of Credit. Additionally, during the six months ended June 30, 2020, Piedmont amended the $250 Million Unsecured 2018 Term Loan to reduce the applicable interest rate spread from LIBOR plus 160 basis points to LIBOR plus 95 basis points, based on Piedmont's current credit rating. Finally, during the six months ended June 30, 2020, Piedmont sold the 1901 Market Street building (see Note 8 for further details) and used the majority of the net sale proceeds to repay the $160 Million Fixed-Rate Loan that was secured by the property and all outstanding borrowings under the $500 Million Unsecured 2018 Line of Credit. As a result of repaying the $160 Million Fixed-Rate Loan in advance of its stated maturity, Piedmont recognized a $9.3 million loss on early extinguishment of debt comprised of a prepayment penalty and unamortized deferred financing costs. The following table summarizes the terms of Piedmont’s indebtedness outstanding as of June 30, 2020 and December 31, 2019 (in thousands): Facility (1) Stated Rate Effective Rate (2) Maturity Amount Outstanding as of June 30, 2020 December 31, 2019 Secured (Fixed) $35 Million Fixed-Rate Loan (3) 5.55 % 3.75 % 9/1/2021 $ 28,245 $ 28,687 $160 Million Fixed-Rate Loan (4) 3.48 % 3.58 % 7/5/2022 — 160,000 Net premium and unamortized debt issuance costs 539 343 Subtotal/Weighted Average (5) 5.55 % 28,784 189,030 Unsecured (Variable and Fixed) Amended and Restated $300 Million Unsecured 2011 Term Loan (6) LIBOR + 1.00% 1.19 % 11/30/2021 300,000 300,000 $500 Million Unsecured 2018 Line of Credit (6) LIBOR + 0.90% — % 9/30/2022 (7) — — $350 Million Unsecured Senior Notes 3.40 % 3.43 % 6/01/2023 350,000 350,000 $400 Million Unsecured Senior Notes 4.45 % 4.10 % 3/15/2024 400,000 400,000 $250 Million Unsecured 2018 Term Loan LIBOR + 0.95% 2.10 % (8) 3/31/2025 250,000 250,000 $300 Million Unsecured 2020 Term Loan (6) LIBOR + 1.40% 1.60 % 3/12/2021 (9) 300,000 — Discounts and unamortized debt issuance costs (7,307) (7,626) Subtotal/Weighted Average (5) 2.71 % 1,592,693 1,292,374 Total/Weighted Average (5) 2.76 % $ 1,621,477 $ 1,481,404 (1) Other than one mortgage, the $35 Million Fixed-Rate Loan, all of Piedmont’s outstanding debt as of June 30, 2020 and December 31, 2019 is interest-only until maturity. (2) Effective rate after consideration of settled or in-place interest rate swap agreements, issuance premiums/discounts, and/or fair market value adjustments upon assumption of debt. (3) Collateralized by the 5 Wall Street building in Burlington, Massachusetts. (4) Previously collateralized by the 1901 Market Street building in Philadelphia, Pennsylvania. (5) Weighted average is based on contractual balance of outstanding debt and the stated or effectively fixed interest rates as of June 30, 2020. (6) On a periodic basis, Piedmont may select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion of the principal. All LIBOR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating. (7) Piedmont may extend the term for up to one six (8) The facility has a stated variable rate; however, Piedmont has entered into interest rate swap agreements which effectively fix, exclusive of changes to Piedmont's credit rating, $100 million of the principal balance to 3.56% through the maturity date of the loan. For the remaining variable portion of the loan, Piedmont may periodically select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion of the principal. All LIBOR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating. The rate presented is the weighted-average rate for the effectively fixed and variable portions of the debt outstanding as of June 30, 2020 (see Note 5 for more detail). (9) Piedmont may extend the term for up to one six Piedmont made interest payments on all debt facilities, including interest rate swap cash settlements, of approximately $13.0 million and $14.3 million for the three months ended June 30, 2020 and 2019, respectively, and approximately $29.0 million and $31.9 million for the six months ended June 30, 2020 and 2019, respectively. Also, Piedmont capitalized interest of approximately $0.2 million and $0.6 million for the three months ended June 30, 2020 and 2019, respectively, and approximately $0.4 million and $1.1 million for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, Piedmont believes it was in compliance with all financial covenants associated with its debt instruments. See Note 6 for a description of Piedmont’s estimated fair value of debt as of June 30, 2020. |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments Risk Management Objective of Using Derivatives In addition to operational risks which arise in the normal course of business, Piedmont is exposed to economic risks such as interest rate, liquidity, and credit risk. In certain situations, Piedmont has entered into derivative financial instruments such as interest rate swap agreements and other similar agreements to manage interest rate risk exposure arising from current or future variable rate debt transactions. Interest rate swap agreements involve the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Piedmont’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. Cash Flow Hedges of Interest Rate Risk Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for Piedmont making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of June 30, 2020, Piedmont was party to interest rate swap agreements, all of which are designated as effective cash flow hedges. During the six months ended June 30, 2020, Piedmont entered into four forward starting interest swap agreements with a total notional value of $200 million to hedge the risk of changes in the interest-related cash flows associated with various future issuances of long-term debt prior to December 31, 2020. As of June 30, 2020, Piedmont has interest rate swaps in effect which hedge the variable cash flows covering $100 million of the $250 Million Unsecured 2018 Term Loan. The maximum length of time over which Piedmont is hedging its exposure to the variability in future cash flows for forecasted transactions is 120 months. A detail of Piedmont’s interest rate derivatives outstanding as of June 30, 2020 is as follows: Interest Rate Derivatives: Number of Swap Agreements Associated Debt Instrument Total Notional Amount Effective Date Maturity Date Interest rate swaps 2 $250 Million Unsecured 2018 Term Loan $ 100 3/29/2018 3/31/2025 Forward starting interest rate swaps 4 N/A 200 3/2/2020 3/2/2030 Total 6 $ 300 Piedmont presents its interest rate derivatives on its consolidated balance sheets on a gross basis as interest rate swap assets and interest rate swap liabilities. A detail of Piedmont’s interest rate derivatives on a gross and net basis as of June 30, 2020 and December 31, 2019, respectively, is as follows (in thousands): Interest rate swaps classified as: June 30, December 31, Gross derivative assets $ — $ — Gross derivative liabilities (28,575) (5,121) Net derivative liability $ (28,575) $ (5,121) The loss on Piedmont's interest rate derivatives, including previously settled forward swaps, that was recorded in other comprehensive income ("OCI") and the accompanying consolidated statements of income as a component of interest expense for the three and six months ended June 30, 2020 and 2019, respectively, was as follows (in thousands): Three Months Ended Six Months Ended Interest Rate Swaps in Cash Flow Hedging Relationships June 30, June 30, June 30, June 30, Amount of loss recognized in OCI $ (2,569) $ (3,465) $ (24,506) $ (5,489) Amount of previously recorded gain/(loss) reclassified from OCI into Interest Expense $ (185) $ 672 $ (179) $ 1,443 Total amount of Interest Expense presented in the consolidated statements of income $ (13,953) $ (15,112) $ (29,217) $ (30,605) Piedmont estimates that approximately $0.4 million will be reclassified from OCI as an increase in interest expense over the next twelve months. Piedmont recognized no hedge ineffectiveness on its cash flow hedges during the three and six months ended June 30, 2020 and 2019, respectively. Additionally, see Note 6 for fair value disclosures of Piedmont's derivative instruments. Credit-risk-related Contingent Features Piedmont has agreements with its derivative counterparties that contain a provision whereby if Piedmont defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Piedmont could also be declared in default on its derivative obligations. If Piedmont were to breach any of the contractual provisions of the derivative contracts, it could be required to settle its liability obligations under the agreements at their termination value of the estimated fair values plus accrued interest, or approximately $29.2 million as of June 30, 2020. Additionally, Piedmont has rights of set-off under certain of its derivative agreements related to potential te rmination fees and amounts payable under the agreements, if a termination were to occur. |
Fair Value Measurement of Finan
Fair Value Measurement of Financial Instruments | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement of Financial Instruments | Fair Value Measurement of Financial Instruments Piedmont considers its cash and cash equivalents, tenant receivables, restricted cash and escrows, accounts payable and accrued expenses, interest rate swap agreements, and debt to meet the definition of financial instruments. The following table sets forth the carrying and estimated fair value for each of Piedmont’s financial instruments, as well as its level within the GAAP fair value hierarchy, as of June 30, 2020 and December 31, 2019, respectively (in thousands): June 30, 2020 December 31, 2019 Financial Instrument Carrying Value Estimated Level Within Fair Value Hierarchy Carrying Value Estimated Level Within Fair Value Hierarchy Assets: Cash and cash equivalents (1) $ 36,469 $ 36,469 Level 1 $ 13,545 $ 13,545 Level 1 Tenant receivables, net of allowance for doubtful accounts (1) $ 8,494 $ 8,494 Level 1 $ 8,226 $ 8,226 Level 1 Restricted cash and escrows (1) $ 1,769 $ 1,769 Level 1 $ 1,841 $ 1,841 Level 1 Liabilities: Accounts payable and accrued expenses (1) $ 9,942 $ 9,942 Level 1 $ 50,049 $ 50,049 Level 1 Interest rate swaps $ 28,575 $ 28,575 Level 2 $ 5,121 $ 5,121 Level 2 Debt, net $ 1,621,477 $ 1,649,544 Level 2 $ 1,481,404 $ 1,536,687 Level 2 (1) For the periods presented, the carrying value of these financial instruments, net of applicable allowance, approximates estimated fair value due to their short-term maturity. Piedmont's debt was carried at book value as of June 30, 2020 and December 31, 2019; however, Piedmont's estimate of its fair value is disclosed in the table above. Piedmont uses widely accepted valuation techniques including discounted cash flow analysis based on the contractual terms of the debt facilities, including the period to maturity of each instrument, and uses observable market-based inputs for similar debt facilities which have transacted recently in the market. Therefore, the estimated fair values determined are considered to be based on significant other observable inputs (Level 2). Scaling adjustments are made to these inputs to make them applicable to the remaining life of Piedmont's outstanding debt. Piedmont has not changed its valuation technique for estimating the fair value of its debt. Piedmont’s interest rate swap agreements presented above, and as further discussed in Note 5 are classified as “Interest rate swap” liabilities in the accompanying consolidated balance sheets and were carried at estimated fair value as of June 30, 2020 and December 31, 2019. The valuation of these derivative instruments was determined using widely accepted valuation techniques including discounted cash flow analysis based on the contractual terms of the derivatives, including the period to maturity of each instrument, and uses observable market-based inputs, including interest rate curves and implied volatilities. Therefore, the estimated fair values determined are considered to be based on significant other observable inputs (Level 2). In addition, Piedmont considered both its own and the respective counterparties’ risk of nonperformance in determining the estimated fair value of its derivative financial instruments by estimating the current and potential future exposure under the derivative financial instruments that both Piedmont and the counterparties were at risk for as of the valuation date. The credit risk of Piedmont and its counterparties was factored into the calculation of the estimated fair value of the interest rate swaps; however, as of June 30, 2020 and December 31, 2019, this credit valuation adjustment did not comprise a material portion of the estimated fair value. Therefore, Piedmont believes that any unobservable inputs used to determine the estimated fair values of its derivative financial instruments are not significant to the fair value measurements in their entirety, and does not consider any of its derivative financial instruments to be Level 3 liabilities. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments Under Existing Lease Agreements As a recurring part of its business, Piedmont is typically required under its executed lease agreements to fund tenant improvements, leasing commissions, and building improvements. In addition, certain agreements contain provisions that require Piedmont to issue corporate or property guarantees to provide funding for capital improvements or other financial obligations. As of June 30, 2020 , Piedmont had one individually significant unrecorded tenant allowance commitment of approximately $53.6 million for the approximately 20-year, 520,000 square foot renewal and expansion of one of Piedmont's largest tenants, the State of New York, at the 60 Broad Street building in New York City. This commitment will be accrued and capitalized as the related expenditures are incurred. Contingencies Related to Tenant Audits/Disputes Certain lease agreements include provisions that grant tenants the right to engage independent auditors to audit their annual operating expense reconciliations. Such audits may result in different interpretations of language in the lease agreements from that made by Piedmont, whic h could result in requests for refunds of previously recognized tenant reimbursement revenues, resulting in financial loss to Piedmont. There were no reductions in rental and reimbursement revenues related to such tenant audits/disputes during the six months ended June 30, 2020 or 2019. Contingencies Related to the COVID-19 Pandemic During the second quarter of 2020, Piedmont continued to experience the repercussions of the COVID-19 pandemic including forced closures and other restrictions that have had a material adverse effect on the global economy and the regional U.S. economies in which Piedmont operates. Specifically, the pandemic has negatively impacted the trading price of Piedmont's common stock and some of Piedmont's tenants' ability to pay their rent. Piedmont has entered into lease modification agreements with approximately 50 of its tenants, a majority of which are small retail operators, who have experienced disruptions in their business as a result of the pandemic. Most of these agreements typically defer the payment of three months of rent until later in 2020, and in some cases into 2021. In addition, during the three months ended June 30, 2020, Piedmont took an approximate charge of $1.8 million against rental and tenant reimbursement revenue in recognition of an increase in collectability risk. Further, as a precautionary measure, Piedmont established an approximately $4.9 million general reserve for potential future collectibility issues. Piedmont’s financial statements as of and for the six months ended June 30, 2020 have been prepared in light of these circumstances. Piedmont has continued to follow the policies described in the footnotes to Piedmont’s Annual Report on Form 10-K for the year ended December 31, 2019, including those related to impairment and estimates of the likelihood of collectibility of amounts due from tenants. While the impact of the COVID-19 pandemic on Piedmont's business has not been severe to date, the long-term impact of the pandemic on its tenants and the global economy is uncertain and will depend on the scope, severity and duration of the pandemic. A prolonged economic downturn or recession resulting from the pandemic could adversely affect many of Piedmont's tenants which could, in turn, adversely impact Piedmont's business, financial condition and results of operations. Piedmont will continue to work closely with its tenants and address their concerns on a case-by-case basis, seeking solutions that address immediate cash flow interruptions while maintaining long term lease obligations. |
Assets Held for Sale
Assets Held for Sale | 6 Months Ended |
Jun. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Assets Held for Sale and Property Disposition | Assets Held for Sale and Property Disposition As of June 30, 2020, no properties met the criteria for held for sale classification; however, as of March 31, 2020, the 1901 Market Street building in Philadelphia, Pennsylvania, which sold during the three months ended June 30, 2020, met the criteria for held for sale classification. Consequently its assets and liabilities as of December 31, 2019 are presented as held for sale for comparability in the accompanying consolidated balance sheets. In conjunction with the sale of 1901 Market Street, Piedmont recognized net sales proceeds of approximately $350.8 million resulting in gain on sale of real estate assets of approximately $191.4 million. June 30, 2020 December 31, 2019 Real estate assets held for sale, net: Land $ — $ 20,829 Building and improvements, less accumulated depreciation of $0 and $66,823 as of June 30, 2020 and December 31, 2019, respectively — 112,287 Intangible lease assets, less accumulated amortization of $0 and $27,438 as of June 30, 2020 and December 31, 2019, respectively — 6,574 Total real estate assets held for sale, net $ — $ 139,690 Other assets held for sale, net: Straight-line rent receivables $ — $ 18,776 Deferred lease costs, less accumulated amortization of $0 and $34,957 as of June 30, 2020 and December 31, 2019, respectively — 9,425 Total other assets held for sale, net $ — $ 28,201 Other liabilities held for sale: Intangible lease liabilities, less accumulated amortization of $0 and $31,959 as of June 30, 2020 and December 31, 2019, respectively $ — $ 7,657 |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation | Stock Based Compensation The Compensation Committee of Piedmont's Board of Directors has periodically granted deferred stock award units to all of Piedmont's employees and independent directors. Most employee awards are time-vested and typically vest ratably over a multi-year period and independent director awards vest over one year. Certain management employees' long-term equity incentive program is split equally between the time-vested award units and a multi-year performance share program whereby the actual awards are contingent upon Piedmont's total stockholder return ("TSR") relative to a peer group of office REITs' TSR. The long-term equity incentives for these certain employees, as well as the peer group, is predetermined by the Board of Directors, advised by an outside compensation consultant. Any shares earned are awarded at the end of the multi-year performance period and vest upon award. The fair values of the multi-year performance share awards are estimated using a Monte Carlo valuation method. A rollforward of Piedmont's equity based award activity for the six months ended June 30, 2020 is as follows: Shares Weighted-Average Grant Date Fair Value Unvested and Potential Stock Awards as of December 31, 2019 1,045,020 $ 25.15 Deferred Stock Awards Granted 242,586 $ 22.39 Increase in Estimated Potential Share Award based on TSR Performance 332,690 $ 25.83 Performance Stock Awards Vested (153,368) $ 30.45 Deferred Stock Awards Vested (218,972) $ 21.05 Deferred Stock Awards Forfeited (6,516) $ 21.68 Unvested and Potential Stock Awards as of June 30, 2020 1,241,440 $ 24.88 The following table provides additional information regarding stock award activity during the three and six months ended June 30, 2020 and 2019, respectively (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Weighted-Average Grant Date Fair Value per share of Deferred Stock Granted During the Period $ 13.76 $ 21.02 $ 22.39 $ 21.02 Total Grant Date Fair Value of Deferred Stock Vested During the Period $ 3,392 $ 8,318 $ 4,608 $ 8,658 Share-based Liability Awards Paid During the Period (1) $ — $ — $ 4,116 $ 3,239 (1) Amounts reflect the issuance of performance share awards related to the 2017-19 and 2016-18 Performance Share Plans during the six months ended June 30, 2020 and 2019, respectively. A detail of Piedmont’s outstanding stock awards as of June 30, 2020 is as follows: Date of grant Type of Award Net Shares Granted (1) Grant Vesting Schedule Unvested Shares May 17, 2018 Deferred Stock Award 250,680 $ 17.84 Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 17, 2019, 2020, and 2021, respectively. 52,895 May 17, 2018 Fiscal Year 2018-2020 Performance Share Program — $ 23.52 Shares awarded, if any, will vest immediately upon determination of award in 2021. 200,674 (2) May 3, 2019 Deferred Stock Award 280,997 $ 21.04 Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 3, 2020, 2021, and 2022, respectively. 143,774 May 3, 2019 Fiscal Year 2019-2021 Performance Share Program — $ 29.43 Shares awarded, if any, will vest immediately upon determination of award in 2022. 321,286 (2) February 19, 2020 Deferred Stock Award 178,309 $ 24.41 Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on February 19, 2021, 2022, and 2023, respectively. 144,341 March 19, 2020 Fiscal Year 2020-2022 Performance Share Program — $ 25.83 Shares awarded, if any, will vest immediately upon determination of award in 2023. 332,690 (2) May 13, 2020 Deferred Stock Award-Board of Directors 45,780 $ 13.76 Of the shares granted, 100% will vest by May 13, 2021. 45,780 Total 1,241,440 (1) Amounts reflect the total original grant to employees and independent directors, net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations through June 30, 2020. (2) Estimated based on Piedmont's cumulative TSR for the respective performance period through June 30, 2020. Share estimates are subject to change in future periods based upon Piedmont's relative performance compared to its peer group of office REITs' TSR. During the three months ended June 30, 2020 and 2019, Piedmont recognized approximately $1.6 million and $4.4 million, respectively, of compensation expense related to stock awards of which $1.6 million and $2.9 million, respectively, is related to the amortization of unvested deferred shares and the fair value adjustment to performance shares. During the six months ended June 30, 2020 and 2019, Piedmont recognized approximately $5.5 million and $8.3 million, respectively, of compensation expense related to stock awards of which $4.3 million and $6.8 million is related to the amortization of unvested deferred shares and the fair value adjustment to performance shares. During the six months ended June 30, 2020, a net total of 241,847 shares were issued to employees and directors. As of June 30, 2020, approximately $9.0 million of unrecognized compensation cost related to unvested deferred stock awards remained, which Piedmont will record in its consolidated statements of income over a weighted-average vesting period of approximately two years. |
Supplemental Disclosures for th
Supplemental Disclosures for the Statement of Consolidated Cash Flows | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Disclosures for the Statement of Consolidated Cash Flows | Supplemental Disclosures for the Statement of Consolidated Cash Flows Certain non cash investing and financing activities for the six months ended June 30, 2020 and 2019, (in thousands) are outlined below: Six Months Ended June 30, June 30, Accrued capital expenditures and deferred lease costs $ 16,380 $ 11,989 Change in accrued dividends and discount on dividend reinvestments $ (26,427) $ (26,972) Change in accrued share repurchases as part of an announced plan $ — $ (4,417) The following table provides a reconciliation of cash, cash equivalents, and restricted cash and escrows as presented in the accompanying consolidated statement of cash flows for the six months ended June 30, 2020 and 2019, to the consolidated balance sheets for the respective period (in thousands): 2020 2019 Cash and cash equivalents as of January 1, 2020 and 2019, respectively $ 13,545 $ 4,571 Restricted cash and escrows as of January 1, 2020 and 2019, respectively 1,841 1,463 Cash, cash equivalents, and restricted cash and escrows, beginning of period, as presented in the accompanying consolidated statement of cash flows $ 15,386 $ 6,034 Cash and cash equivalents as of June 30, 2020 and 2019, respectively $ 36,469 $ 7,748 Restricted cash and escrows as of June 30, 2020 and 2019, respectively 1,769 1,480 Cash, cash equivalents, and restricted cash and escrows, end of period, as presented in the accompanying consolidated statement of cash flows $ 38,238 $ 9,228 Amounts in restricted cash and escrows typically represent escrow accounts for the payment of real estate taxes which are required under certain of Piedmont's debt agreements; earnest money deposited by a buyer to secure the purchase of one of Piedmont's properties; or security or utility deposits held for tenants as a condition of their lease agreement. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share There are no adjustments to “Net income applicable to Piedmont” for the diluted earnings per share computations. Net income per share-basic is calculated as net income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Net income per share-diluted is calculated as net income available to common stockholders divided by the diluted weighted average number of common shares outstanding during the period, including unvested deferred stock awards. Diluted weighted average number of common shares reflects the potential dilution under the treasury stock method that would occur if the remaining unvested deferred stock awards vested and resulted in additional common shares outstanding. Unvested deferred stock awards which are determined to be anti-dilutive are not included in the calculation of diluted weighted average common shares. For the three months ended June 30, 2020 and 2019, Piedmont calculated and excluded anti-dilutive shares of 46,663 and 104,439, respectively, and for the six months ended June 30, 2020 and 2019, Piedmont calculated and excluded anti-dilutive shares of 109,229 and 200,111, respectively. The following table reconciles the denominator for the basic and diluted earnings per share computations shown on the consolidated statements of income for the three and six months ended June 30, 2020 and 2019, respectively (in thousands): Three Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Weighted-average common shares – basic 125,975 125,693 125,918 125,634 Plus: Incremental weighted-average shares from time-vested deferred and performance stock awards 525 798 538 770 Weighted-average common shares – diluted 126,500 126,491 126,456 126,404 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Third Quarter Dividend Declaration On July 29, 2020, the Board of Directors of Piedmont declared a dividend for the third quarter of 2020 in the amount of $0.21 per common share outstanding to stockholders of record as of the close of business on August 28, 2020. Such dividend will be paid on September 18, 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The consolidated financial statements of Piedmont have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Results for these interim periods are not necessarily indicative of a full year’s results. |
Principles of Consolidation | Piedmont’s consolidated financial statements include the accounts of Piedmont, Piedmont’s wholly-owned subsidiaries, any variable interest entity ("VIE") for which Piedmont or any of its wholly-owned subsidiaries is considered to have the power to direct the activities of the entity and the obligation to absorb losses/right to receive benefits, or any entity in which Piedmont or any of its wholly-owned subsidiaries owns a controlling interest. In determining whether Piedmont or Piedmont OP has a controlling interest, the following factors, among others, are considered: equity ownership, voting rights, protective rights of investors, and participatory rights of investors. For further information, refer to the financial statements and footnotes included in Piedmont’s Annual Report on Form 10-K for the year ended December 31, 2019. All intercompany balances and transactions have been eliminated upon consolidation. Further, Piedmont has formed special purpose entities to acquire and hold real estate. Each special purpose entity is a separate legal entity. Consequently, the assets of these special purpose entities are not available to all creditors of Piedmont. The assets owned by these special purpose entities are being reported on a consolidated basis with Piedmont’s assets for financial reporting purposes only. |
Use of Estimates | Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and notes. The most significant of these estimates include the underlying cash flows and holding periods used in assessing impairment, judgements regarding the recoverability of goodwill, and the assessment of the collectibility of receivables. Future impacts of the COVID-19 pandemic on Piedmont and its tenants may affect these and other estimates used in the preparation of these financial statements. While Piedmont has made, what it believes to be, appropriate accounting estimates based on the facts and circumstances available as of the reporting date, actual results could materially differ from those estimates. |
Income Taxes | Income Taxes Piedmont has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and has operated as such, beginning with its taxable year ended December 31, 1998. To qualify as a REIT, Piedmont must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income. As a REIT, Piedmont is generally not subject to federal income taxes, subject to fulfilling, among other things, its taxable income distribution requirement. Piedmont is subject to certain taxes related to the operations of properties in certain locations, as well as operations conducted by its taxable REIT subsidiary, POH, which have been provided for in the financial statements. |
Intangible Assets And Liabilities Resulting From Purchasing Real Estate Assets | Intangible Assets and Liabilities Resulting from Purchasing Real Estate Assets Upon the acquisition of real properties, Piedmont allocates the purchase price of the properties to tangible assets, consisting of land, building, site improvements, and identified intangible assets and liabilities, including the value of in-place leases, based in each case on Piedmont's estimate of their fair values in accordance with Accounting Standards Codification ("ASC") 820 Fair Value Measurements . |
Recent Accounting Pronouncements | Accounting Pronouncements and Amendments Adopted during the Six Months Ended June 30, 2020 Reference Rate Reform Relief Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848) ("ASU 2020-04"), was issued in March 2020. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the six months ended June 30, 2020, Piedmont elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. Piedmont continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. Financial Instruments- Credit Loss Amendments On January 1, 2020, Piedmont adopted ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments , as well as ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and ASU No. 2019-05, Financial Instruments- Credit Losses: Targeted Transition Relief (collectively the "Credit Loss Amendments"). The provisions of the Credit Loss Amendments replace the "incurred loss" approach with an "expected loss" model for impairing trade and other receivables, held-to-maturity debt securities, net investment in leases, and off-balance-sheet credit exposures, which will generally result in earlier recognition of allowances for credit losses. However, the Financial Accounting Standards Board (the "FASB") also issued ASU No. 2018-19 Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which is effective concurrent with the Credit Loss Amendments, and excludes receivables arising from operating leases from the scope of the Credit Loss Amendments and affirms that such receivables should be evaluated for collectibility as prescribed by ASC 842 Leases . As s ubstantially all of Piedmont's receivables are operating lease receivables there was no material impact to Piedmont's accompanying consolidated financial statements or disclosures as a result of adoption of the Credit Loss Amendments. During the six months ended June 30, 2020, the FASB issued a Staff Q&A on Topic 842 and Topic 840 (lease accounting guidance): Accounting for lease concessions related to the effects of the COVID-19 pandemic . Generally, changes to payment terms not contemplated by the lease contract should be accounted for under Topic 842 as a lease modification. The FASB staff has provided relief from this modification guidance through an accounting policy election, provided that changes to the payment terms do not result in a substantial increase in the rights of either the lessee or the lessor under the lease. Piedmont has elected not to apply the relief provided by the FASB Staff, and has instead accounted for all rent relief agreements as result of COVID-19 as lease modifications. See further details concerning rent relief agreements with Piedmont's tenants in Note 7 below. Reclassifications Certain prior period amounts presented in the accompanying consolidated balance sheets have been reclassified as of December 31, 2019 to conform to the current period financial statement presentation related to the 1901 Market Street building, which was classified as held for sale as of March 31, 2020, and sold on June 25, 2020. (see Note 8 ). |
Risk Management Objective of Using Derivatives | Risk Management Objective of Using Derivatives In addition to operational risks which arise in the normal course of business, Piedmont is exposed to economic risks such as interest rate, liquidity, and credit risk. In certain situations, Piedmont has entered into derivative financial instruments such as interest rate swap agreements and other similar agreements to manage interest rate risk exposure arising from current or future variable rate debt transactions. Interest rate swap agreements involve the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Piedmont’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Fixed and Variable Lease Revenue | Piedmont recognized the following fixed and variable lease payments, which together comprised rental and tenant reimbursement revenue in the accompanying consolidated statements of income for the three and six months ended June 30, 2020 and 2019, respectively, as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Fixed payments $ 109,714 $ 102,637 $ 221,210 $ 206,296 Variable payments 21,533 22,831 42,191 45,338 Total Rental and Tenant Reimbursement Revenue $ 131,247 $ 125,468 $ 263,401 $ 251,634 |
Schedule of Intangible Lease Assets and Liabilities | Gross intangible lease assets and liabilities arising from in-place leases, inclusive of amounts classified as real estate assets held for sale, recorded at acquisition as of June 30, 2020 and December 31, 2019, respectively, are as follows (in thousands): June 30, 2020 December 31, 2019 Intangible Lease Assets: Above-Market In-Place Lease Assets $ 1,457 $ 2,082 In-Place Lease Valuation $ 162,688 $ 157,101 Intangible Lease Origination Costs (included as component of Deferred Lease Costs) $ 258,054 $ 256,627 Intangible Lease Liabilities (Below-Market In-Place Leases) $ 63,035 $ 84,292 |
Amortization Of Intangible Lease Costs | For the three and six months ended June 30, 2020 and 2019, respectively, Piedmont recognized amortization of intangible lease costs as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Amortization of Intangible Lease Origination Costs and In-Place Lease Valuation included in amortization expense $ 20,406 $ 14,992 $ 40,152 $ 29,176 Amortization of Above-Market and Below-Market In-Place Lease intangibles as a net increase to rental revenues $ 3,304 $ 2,088 $ 6,277 $ 4,086 |
Future Amortization of Intangible Assets and Liabilities | Net intangible assets and liabilities as of June 30, 2020 will be amortized as follows (in thousands): Intangible Lease Assets Above-Market In-Place Lease Valuation Intangible Lease Origination Costs (1) Below-Market For the remainder of 2020 $ 116 $ 15,442 $ 21,036 $ 5,775 For the years ending December 31: 2021 183 27,635 38,743 10,863 2022 152 20,773 30,527 8,422 2023 103 13,923 21,019 5,139 2024 70 9,141 14,463 3,238 2025 6 5,658 10,069 2,072 Thereafter 18 12,777 24,881 5,670 $ 648 $ 105,349 $ 160,738 $ 41,179 Weighted-Average Amortization Period (in years) 4 5 6 5 (1) Included as a component of Deferred Lease Costs in the accompanying consolidated balance sheets. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Purchased Assets | During the six months ended June 30, 2020, Piedmont acquired three properties and adjacent developable land (collectively the "Dallas Galleria Office Towers") using cash on hand and available funds from the $500 Million Unsecured 2018 Line of Credit, as noted below: Property Metropolitan Statistical Area Date of Acquisition Ownership Percentage Acquired Rentable Square Feet Percentage Leased as of Acquisition Net Contractual Purchase Price (1) (in millions) Dallas Galleria Office Towers Dallas, Texas February 12, 2020 100% 1,435,466 95% $396.2 (1) Price includes the purchase of an adjacent parcel of approximately 1.9 acres of developable land. |
Schedule of Purchase Price Allocation | The purchase price of the Dallas Galleria Office Towers and undeveloped land, inclusive of approximately $0.6 million of closing costs, was allocated as follows: Dallas Galleria Office Towers and Undeveloped Land Land $ 19,674 Building and improvements 293,760 Intangible lease assets (1) 49,177 Lease acquisition costs, net of tenant credits received from seller (1) 1,344 Intangible lease origination costs (1) 55,060 Intangible lease liabilities (1) (22,169) Total purchase price $ 396,846 (1) Amortization of in-place lease intangibles and lease acquisition costs are recognized using the straight-line method over approximately 5.2 years, the average remaining life of in-place leases. |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The following table summarizes the terms of Piedmont’s indebtedness outstanding as of June 30, 2020 and December 31, 2019 (in thousands): Facility (1) Stated Rate Effective Rate (2) Maturity Amount Outstanding as of June 30, 2020 December 31, 2019 Secured (Fixed) $35 Million Fixed-Rate Loan (3) 5.55 % 3.75 % 9/1/2021 $ 28,245 $ 28,687 $160 Million Fixed-Rate Loan (4) 3.48 % 3.58 % 7/5/2022 — 160,000 Net premium and unamortized debt issuance costs 539 343 Subtotal/Weighted Average (5) 5.55 % 28,784 189,030 Unsecured (Variable and Fixed) Amended and Restated $300 Million Unsecured 2011 Term Loan (6) LIBOR + 1.00% 1.19 % 11/30/2021 300,000 300,000 $500 Million Unsecured 2018 Line of Credit (6) LIBOR + 0.90% — % 9/30/2022 (7) — — $350 Million Unsecured Senior Notes 3.40 % 3.43 % 6/01/2023 350,000 350,000 $400 Million Unsecured Senior Notes 4.45 % 4.10 % 3/15/2024 400,000 400,000 $250 Million Unsecured 2018 Term Loan LIBOR + 0.95% 2.10 % (8) 3/31/2025 250,000 250,000 $300 Million Unsecured 2020 Term Loan (6) LIBOR + 1.40% 1.60 % 3/12/2021 (9) 300,000 — Discounts and unamortized debt issuance costs (7,307) (7,626) Subtotal/Weighted Average (5) 2.71 % 1,592,693 1,292,374 Total/Weighted Average (5) 2.76 % $ 1,621,477 $ 1,481,404 (1) Other than one mortgage, the $35 Million Fixed-Rate Loan, all of Piedmont’s outstanding debt as of June 30, 2020 and December 31, 2019 is interest-only until maturity. (2) Effective rate after consideration of settled or in-place interest rate swap agreements, issuance premiums/discounts, and/or fair market value adjustments upon assumption of debt. (3) Collateralized by the 5 Wall Street building in Burlington, Massachusetts. (4) Previously collateralized by the 1901 Market Street building in Philadelphia, Pennsylvania. (5) Weighted average is based on contractual balance of outstanding debt and the stated or effectively fixed interest rates as of June 30, 2020. (6) On a periodic basis, Piedmont may select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion of the principal. All LIBOR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating. (7) Piedmont may extend the term for up to one six (8) The facility has a stated variable rate; however, Piedmont has entered into interest rate swap agreements which effectively fix, exclusive of changes to Piedmont's credit rating, $100 million of the principal balance to 3.56% through the maturity date of the loan. For the remaining variable portion of the loan, Piedmont may periodically select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion of the principal. All LIBOR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating. The rate presented is the weighted-average rate for the effectively fixed and variable portions of the debt outstanding as of June 30, 2020 (see Note 5 for more detail). (9) Piedmont may extend the term for up to one six |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Notional Amounts of Outstanding Derivative Positions | A detail of Piedmont’s interest rate derivatives outstanding as of June 30, 2020 is as follows: Interest Rate Derivatives: Number of Swap Agreements Associated Debt Instrument Total Notional Amount Effective Date Maturity Date Interest rate swaps 2 $250 Million Unsecured 2018 Term Loan $ 100 3/29/2018 3/31/2025 Forward starting interest rate swaps 4 N/A 200 3/2/2020 3/2/2030 Total 6 $ 300 |
Schedule of Interest Rate Derivatives | A detail of Piedmont’s interest rate derivatives on a gross and net basis as of June 30, 2020 and December 31, 2019, respectively, is as follows (in thousands): Interest rate swaps classified as: June 30, December 31, Gross derivative assets $ — $ — Gross derivative liabilities (28,575) (5,121) Net derivative liability $ (28,575) $ (5,121) |
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The loss on Piedmont's interest rate derivatives, including previously settled forward swaps, that was recorded in other comprehensive income ("OCI") and the accompanying consolidated statements of income as a component of interest expense for the three and six months ended June 30, 2020 and 2019, respectively, was as follows (in thousands): Three Months Ended Six Months Ended Interest Rate Swaps in Cash Flow Hedging Relationships June 30, June 30, June 30, June 30, Amount of loss recognized in OCI $ (2,569) $ (3,465) $ (24,506) $ (5,489) Amount of previously recorded gain/(loss) reclassified from OCI into Interest Expense $ (185) $ 672 $ (179) $ 1,443 Total amount of Interest Expense presented in the consolidated statements of income $ (13,953) $ (15,112) $ (29,217) $ (30,605) |
Fair Value Measurement of Fin_2
Fair Value Measurement of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value, by Balance Sheet Grouping | The following table sets forth the carrying and estimated fair value for each of Piedmont’s financial instruments, as well as its level within the GAAP fair value hierarchy, as of June 30, 2020 and December 31, 2019, respectively (in thousands): June 30, 2020 December 31, 2019 Financial Instrument Carrying Value Estimated Level Within Fair Value Hierarchy Carrying Value Estimated Level Within Fair Value Hierarchy Assets: Cash and cash equivalents (1) $ 36,469 $ 36,469 Level 1 $ 13,545 $ 13,545 Level 1 Tenant receivables, net of allowance for doubtful accounts (1) $ 8,494 $ 8,494 Level 1 $ 8,226 $ 8,226 Level 1 Restricted cash and escrows (1) $ 1,769 $ 1,769 Level 1 $ 1,841 $ 1,841 Level 1 Liabilities: Accounts payable and accrued expenses (1) $ 9,942 $ 9,942 Level 1 $ 50,049 $ 50,049 Level 1 Interest rate swaps $ 28,575 $ 28,575 Level 2 $ 5,121 $ 5,121 Level 2 Debt, net $ 1,621,477 $ 1,649,544 Level 2 $ 1,481,404 $ 1,536,687 Level 2 (1) For the periods presented, the carrying value of these financial instruments, net of applicable allowance, approximates estimated fair value due to their short-term maturity. |
Assets Held for Sale and Proper
Assets Held for Sale and Property Disposition (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Assets Held for Sale | June 30, 2020 December 31, 2019 Real estate assets held for sale, net: Land $ — $ 20,829 Building and improvements, less accumulated depreciation of $0 and $66,823 as of June 30, 2020 and December 31, 2019, respectively — 112,287 Intangible lease assets, less accumulated amortization of $0 and $27,438 as of June 30, 2020 and December 31, 2019, respectively — 6,574 Total real estate assets held for sale, net $ — $ 139,690 Other assets held for sale, net: Straight-line rent receivables $ — $ 18,776 Deferred lease costs, less accumulated amortization of $0 and $34,957 as of June 30, 2020 and December 31, 2019, respectively — 9,425 Total other assets held for sale, net $ — $ 28,201 Other liabilities held for sale: Intangible lease liabilities, less accumulated amortization of $0 and $31,959 as of June 30, 2020 and December 31, 2019, respectively $ — $ 7,657 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Nonvested Share Activity | A rollforward of Piedmont's equity based award activity for the six months ended June 30, 2020 is as follows: Shares Weighted-Average Grant Date Fair Value Unvested and Potential Stock Awards as of December 31, 2019 1,045,020 $ 25.15 Deferred Stock Awards Granted 242,586 $ 22.39 Increase in Estimated Potential Share Award based on TSR Performance 332,690 $ 25.83 Performance Stock Awards Vested (153,368) $ 30.45 Deferred Stock Awards Vested (218,972) $ 21.05 Deferred Stock Awards Forfeited (6,516) $ 21.68 Unvested and Potential Stock Awards as of June 30, 2020 1,241,440 $ 24.88 The following table provides additional information regarding stock award activity during the three and six months ended June 30, 2020 and 2019, respectively (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Weighted-Average Grant Date Fair Value per share of Deferred Stock Granted During the Period $ 13.76 $ 21.02 $ 22.39 $ 21.02 Total Grant Date Fair Value of Deferred Stock Vested During the Period $ 3,392 $ 8,318 $ 4,608 $ 8,658 Share-based Liability Awards Paid During the Period (1) $ — $ — $ 4,116 $ 3,239 (1) Amounts reflect the issuance of performance share awards related to the 2017-19 and 2016-18 Performance Share Plans during the six months ended June 30, 2020 and 2019, respectively. |
Schedule of Outstanding Employee Stock Awards | A detail of Piedmont’s outstanding stock awards as of June 30, 2020 is as follows: Date of grant Type of Award Net Shares Granted (1) Grant Vesting Schedule Unvested Shares May 17, 2018 Deferred Stock Award 250,680 $ 17.84 Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 17, 2019, 2020, and 2021, respectively. 52,895 May 17, 2018 Fiscal Year 2018-2020 Performance Share Program — $ 23.52 Shares awarded, if any, will vest immediately upon determination of award in 2021. 200,674 (2) May 3, 2019 Deferred Stock Award 280,997 $ 21.04 Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on May 3, 2020, 2021, and 2022, respectively. 143,774 May 3, 2019 Fiscal Year 2019-2021 Performance Share Program — $ 29.43 Shares awarded, if any, will vest immediately upon determination of award in 2022. 321,286 (2) February 19, 2020 Deferred Stock Award 178,309 $ 24.41 Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on February 19, 2021, 2022, and 2023, respectively. 144,341 March 19, 2020 Fiscal Year 2020-2022 Performance Share Program — $ 25.83 Shares awarded, if any, will vest immediately upon determination of award in 2023. 332,690 (2) May 13, 2020 Deferred Stock Award-Board of Directors 45,780 $ 13.76 Of the shares granted, 100% will vest by May 13, 2021. 45,780 Total 1,241,440 (1) Amounts reflect the total original grant to employees and independent directors, net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations through June 30, 2020. (2) Estimated based on Piedmont's cumulative TSR for the respective performance period through June 30, 2020. Share estimates are subject to change in future periods based upon Piedmont's relative performance compared to its peer group of office REITs' TSR. |
Supplemental Disclosures for _2
Supplemental Disclosures for the Statement of Consolidated Cash Flows (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | Certain non cash investing and financing activities for the six months ended June 30, 2020 and 2019, (in thousands) are outlined below: Six Months Ended June 30, June 30, Accrued capital expenditures and deferred lease costs $ 16,380 $ 11,989 Change in accrued dividends and discount on dividend reinvestments $ (26,427) $ (26,972) Change in accrued share repurchases as part of an announced plan $ — $ (4,417) The following table provides a reconciliation of cash, cash equivalents, and restricted cash and escrows as presented in the accompanying consolidated statement of cash flows for the six months ended June 30, 2020 and 2019, to the consolidated balance sheets for the respective period (in thousands): 2020 2019 Cash and cash equivalents as of January 1, 2020 and 2019, respectively $ 13,545 $ 4,571 Restricted cash and escrows as of January 1, 2020 and 2019, respectively 1,841 1,463 Cash, cash equivalents, and restricted cash and escrows, beginning of period, as presented in the accompanying consolidated statement of cash flows $ 15,386 $ 6,034 Cash and cash equivalents as of June 30, 2020 and 2019, respectively $ 36,469 $ 7,748 Restricted cash and escrows as of June 30, 2020 and 2019, respectively 1,769 1,480 Cash, cash equivalents, and restricted cash and escrows, end of period, as presented in the accompanying consolidated statement of cash flows $ 38,238 $ 9,228 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Weighted Average Number of Shares | The following table reconciles the denominator for the basic and diluted earnings per share computations shown on the consolidated statements of income for the three and six months ended June 30, 2020 and 2019, respectively (in thousands): Three Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Weighted-average common shares – basic 125,975 125,693 125,918 125,634 Plus: Incremental weighted-average shares from time-vested deferred and performance stock awards 525 798 538 770 Weighted-average common shares – diluted 126,500 126,491 126,456 126,404 |
Organization (Details)
Organization (Details) ft² in Millions | 6 Months Ended | |
Jun. 30, 2020ft²propertysubsidiarysegment | Feb. 12, 2020 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||
Number of major U.S. office markets | 7 | |
Number of wholly-owned subsidiaries | subsidiary | 2 | |
Number of real estate properties | 57 | |
Area of real estate property (in sq ft) | ft² | 17.2 | |
Percentage leased | 88.60% | 95.00% |
Number of operating segments | segment | 1 | |
Piedmont Office Realty Trust, Inc. | ||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||
Percentage ownership by sole general partner | 99.90% | |
Piedmont Office Holdings, Inc. | ||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||
Percentage ownership by sole limited partner | 0.10% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Schedule of Fixed and Variable Lease Payments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | ||||
Fixed payments | $ 109,714 | $ 102,637 | $ 221,210 | $ 206,296 |
Variable payments | 21,533 | 22,831 | 42,191 | 45,338 |
Total Rental and Tenant Reimbursement Revenue | $ 131,247 | $ 125,468 | $ 263,401 | $ 251,634 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Concentration Risk [Line Items] | ||||
Operating lease costs | $ 41 | $ 41 | ||
Weighted-average lease term of right-of-use assets | 2 years | |||
Right of use assets weighted-average discount rate | 3.35% | 3.35% | ||
Accounting Standards Update 2016-02 | ||||
Concentration Risk [Line Items] | ||||
Operating lease costs | $ 20 | $ 20 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Schedule of Intangible Assets and Liabilities) (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Real Estate Properties [Line Items] | ||
Intangible lease liabilities (below market in-place leases) | $ 63,035 | $ 84,292 |
Above-Market In-Place Lease Assets | ||
Real Estate Properties [Line Items] | ||
Intangible lease assets | 1,457 | 2,082 |
In-Place Lease Valuation | ||
Real Estate Properties [Line Items] | ||
Intangible lease assets | 162,688 | 157,101 |
Intangible Lease Origination Costs (included as component of Deferred Lease Costs) | ||
Real Estate Properties [Line Items] | ||
Intangible lease assets | $ 258,054 | $ 256,627 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Amortization of Lease Costs) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | ||||
Amortization of Intangible Lease Origination Costs and In-Place Lease Valuation included in amortization expense | $ 20,406 | $ 14,992 | $ 40,152 | $ 29,176 |
Amortization of Above-Market and Below-Market In-Place Lease intangibles as a net increase to rental revenues | $ 3,304 | $ 2,088 | $ 6,277 | $ 4,086 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Future Amortization of Intangible Assets and Liabilities) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
Intangible lease assets, total | $ 105,997 | $ 74,405 |
Below Market Lease, Amortization Income, Maturity Schedule [Abstract] | ||
For the remainder of 2020 | 5,775 | |
2021 | 10,863 | |
2022 | 8,422 | |
2023 | 5,139 | |
2024 | 3,238 | |
2025 | 2,072 | |
Thereafter | 5,670 | |
Below market in-place lease liabilities, total | $ 41,179 | |
Below market in-place lease liabilities, weighted average amortization period (in years) | 5 years | |
Above-Market In-Place Lease Assets | ||
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
For the remainder of 2020 | $ 116 | |
2021 | 183 | |
2022 | 152 | |
2023 | 103 | |
2024 | 70 | |
2025 | 6 | |
Thereafter | 18 | |
Intangible lease assets, total | $ 648 | |
Below Market Lease, Amortization Income, Maturity Schedule [Abstract] | ||
Intangible lease assets, weighted average amortization period (in years) | 4 years | |
In-Place Lease Valuation | ||
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
For the remainder of 2020 | $ 15,442 | |
2021 | 27,635 | |
2022 | 20,773 | |
2023 | 13,923 | |
2024 | 9,141 | |
2025 | 5,658 | |
Thereafter | 12,777 | |
Intangible lease assets, total | $ 105,349 | |
Below Market Lease, Amortization Income, Maturity Schedule [Abstract] | ||
Intangible lease assets, weighted average amortization period (in years) | 5 years | |
Intangible Lease Origination Costs (included as component of Deferred Lease Costs) | ||
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
For the remainder of 2020 | $ 21,036 | |
2021 | 38,743 | |
2022 | 30,527 | |
2023 | 21,019 | |
2024 | 14,463 | |
2025 | 10,069 | |
Thereafter | 24,881 | |
Intangible lease assets, total | $ 160,738 | |
Below Market Lease, Amortization Income, Maturity Schedule [Abstract] | ||
Intangible lease assets, weighted average amortization period (in years) | 6 years |
Acquisitions (Additional Inform
Acquisitions (Additional Information) (Details) | Feb. 12, 2020USD ($)aft² | Jun. 30, 2020USD ($)ft²property |
Property, Plant and Equipment [Line Items] | ||
Rentable square feet (in sq ft) | ft² | 17,200,000 | |
Percentage leased as of acquisition | 95.00% | 88.60% |
$500 Million Unsecured 2018 Line of Credit | Unsecured Debt | ||
Property, Plant and Equipment [Line Items] | ||
Face amount of debt instrument | $ 500,000,000 | |
Dallas Galleria Office Towers | ||
Property, Plant and Equipment [Line Items] | ||
Number of properties acquired | property | 3 | |
Ownership percentage acquired | 100.00% | |
Rentable square feet (in sq ft) | ft² | 1,435,466 | |
Net contractual purchase price | $ 396,200,000 | |
Area of land acquired (in acres) | a | 1.9 | |
Closing costs | $ 600,000 |
Acquisitions (Purchase Price Al
Acquisitions (Purchase Price Allocation) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2020 | Feb. 12, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Land | $ 505,228 | $ 485,560 | |
Dallas Galleria Office Towers | |||
Property, Plant and Equipment [Line Items] | |||
Land | $ 19,674 | ||
Building and improvements | 293,760 | ||
Intangible lease assets | 49,177 | ||
Lease acquisition costs, net of tenant credits received from seller | 1,344 | ||
Intangible lease organization costs | 55,060 | ||
Intangible lease liabilities | (22,169) | ||
Total purchase price | $ 396,846 | ||
Acquired intangible assets, remaining amortization period | 5 years 2 months 12 days |
Debt (Narrative) (Details)
Debt (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | |||||
Loss on early extinguishment of debt | $ 9,336,000 | $ 0 | $ 9,336,000 | $ 0 | |
Interest paid | 13,000,000 | 14,300,000 | 29,000,000 | 31,900,000 | |
Interest costs capitalized | 200,000 | $ 600,000 | 400,000 | $ 1,100,000 | |
$300 Million Unsecured 2020 Term Loan Prior To Amendment | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt instrument | 150,000,000 | 150,000,000 | |||
$300 Million Unsecured 2020 Term Loan | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt instrument | 300,000,000 | $ 300,000,000 | |||
$300 Million Unsecured 2020 Term Loan | Unsecured Debt | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 1.40% | ||||
$300 Million Unsecured 2020 Term Loan | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt instrument | 300,000,000 | $ 300,000,000 | |||
$500 Million Unsecured 2018 Line of Credit | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt instrument | 500,000,000 | $ 500,000,000 | |||
$500 Million Unsecured 2018 Line of Credit | Unsecured Debt | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 0.90% | ||||
$250 Million Unsecured 2018 Term Loan | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 0.95% | 1.60% | |||
$250 Million Unsecured 2018 Term Loan | Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt instrument | 250,000,000 | $ 250,000,000 | |||
$250 Million Unsecured 2018 Term Loan | Unsecured Debt | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 0.95% | ||||
$160 Million Fixed Rate Loan | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt instrument | $ 160,000,000 | $ 160,000,000 |
Debt (Schedule of Debt) (Detail
Debt (Schedule of Debt) (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020USD ($)extension | Dec. 31, 2019USD ($) | |
Debt Instrument [Line Items] | ||
Weighted average rate (percent) | 2.76% | |
Amount outstanding | $ 1,621,477,000 | $ 1,481,404,000 |
Notional amount of interest rate swap agreements | $ 300,000,000 | |
$250 Million Unsecured 2018 Term Loan | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 0.95% | 1.60% |
Secured Debt | ||
Debt Instrument [Line Items] | ||
Weighted average rate (percent) | 5.55% | |
Amount outstanding | $ 28,784,000 | $ 189,030,000 |
Net premium (discounts) and unamortized debt issuance costs | $ 539,000 | 343,000 |
Secured Debt | $35 Million Fixed-Rate Loan | ||
Debt Instrument [Line Items] | ||
Stated rate (percent) | 5.55% | |
Effective interest rate (percent) | 3.75% | |
Amount outstanding | $ 28,245,000 | 28,687,000 |
Face amount of debt instrument | $ 35,000,000 | 35,000,000 |
Secured Debt | $160 Million Fixed Rate Loan | ||
Debt Instrument [Line Items] | ||
Stated rate (percent) | 3.48% | |
Effective interest rate (percent) | 3.58% | |
Amount outstanding | $ 0 | 160,000,000 |
Face amount of debt instrument | $ 160,000,000 | |
Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Weighted average rate (percent) | 2.71% | |
Amount outstanding | $ 1,592,693,000 | 1,292,374,000 |
Net premium (discounts) and unamortized debt issuance costs | $ (7,307,000) | (7,626,000) |
Unsecured Debt | Amended and Restated $300 Million Unsecured 2011 Term Loan | ||
Debt Instrument [Line Items] | ||
Effective interest rate (percent) | 1.19% | |
Amount outstanding | $ 300,000,000 | 300,000,000 |
Face amount of debt instrument | $ 300,000,000 | |
Unsecured Debt | Amended and Restated $300 Million Unsecured 2011 Term Loan | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 1.00% | |
Unsecured Debt | $500 Million Unsecured 2018 Line of Credit | ||
Debt Instrument [Line Items] | ||
Face amount of debt instrument | $ 500,000,000 | |
Maximum extension period (in years) | 1 year | |
Number of extension periods | extension | 2 | |
Extension period (in months) | 6 months | |
Unsecured Debt | $500 Million Unsecured 2018 Line of Credit | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 0.90% | |
Unsecured Debt | $500 Million Unsecured 2018 Line of Credit | Line of Credit | ||
Debt Instrument [Line Items] | ||
Effective interest rate (percent) | 0.00% | |
Amount outstanding | $ 0 | 0 |
Unsecured Debt | $350 Million Unsecured Senior Notes | ||
Debt Instrument [Line Items] | ||
Stated rate (percent) | 3.40% | |
Effective interest rate (percent) | 3.43% | |
Amount outstanding | $ 350,000,000 | 350,000,000 |
Face amount of debt instrument | $ 350,000,000 | |
Unsecured Debt | $400 Million Unsecured Senior Notes | ||
Debt Instrument [Line Items] | ||
Stated rate (percent) | 4.45% | |
Effective interest rate (percent) | 4.10% | |
Amount outstanding | $ 400,000,000 | 400,000,000 |
Face amount of debt instrument | $ 400,000,000 | |
Unsecured Debt | $250 Million Unsecured 2018 Term Loan | ||
Debt Instrument [Line Items] | ||
Effective interest rate (percent) | 2.10% | |
Amount outstanding | $ 250,000,000 | 250,000,000 |
Face amount of debt instrument | $ 250,000,000 | |
Interest rate on derivative instrument | 3.56% | |
Unsecured Debt | $250 Million Unsecured 2018 Term Loan | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 0.95% | |
Unsecured Debt | $300 Million Unsecured 2020 Term Loan | ||
Debt Instrument [Line Items] | ||
Effective interest rate (percent) | 1.60% | |
Amount outstanding | $ 300,000,000 | $ 0 |
Face amount of debt instrument | $ 300,000,000 | |
Maximum extension period (in years) | 1 year | |
Number of extension periods | extension | 2 | |
Extension period (in months) | 6 months | |
Unsecured Debt | $300 Million Unsecured 2020 Term Loan | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 1.40% | |
Interest rate swaps | $250 Million Unsecured 2018 Term Loan | ||
Debt Instrument [Line Items] | ||
Notional amount of interest rate swap agreements | $ 100,000,000 |
Derivative Instruments (Details
Derivative Instruments (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($)contract | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)contract | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Derivative [Line Items] | |||||
Number of Swap Agreements | contract | 6 | 6 | |||
Notional amount | $ 300,000,000 | $ 300,000,000 | |||
Maximum period of extension term | 120 months | ||||
Interest rate swaps classified as: | |||||
Gross derivative assets | 0 | $ 0 | $ 0 | ||
Gross derivative liabilities | (28,575,000) | (28,575,000) | (5,121,000) | ||
Net derivative liability | (28,575,000) | (28,575,000) | $ (5,121,000) | ||
Amount of loss recognized in OCI | (2,569,000) | $ (3,465,000) | (24,506,000) | $ (5,489,000) | |
Total amount of Interest Expense presented in the consolidated statements of income | (13,953,000) | (15,112,000) | (29,217,000) | (30,605,000) | |
Gain (loss) to be reclassified | 400,000 | 400,000 | |||
Gain (loss) from hedge ineffectiveness | 0 | 0 | 0 | 0 | |
Assets needed for immediate settlement, aggregate fair value | $ 29,200,000 | $ 29,200,000 | |||
Forward starting interest rate swaps | |||||
Derivative [Line Items] | |||||
Number of Swap Agreements | contract | 4 | 4 | |||
Notional amount | $ 200,000,000 | $ 200,000,000 | |||
Interest rate swaps | |||||
Interest rate swaps classified as: | |||||
Total amount of Interest Expense presented in the consolidated statements of income | (13,953,000) | (15,112,000) | (29,217,000) | (30,605,000) | |
Interest rate swaps | Interest Expense | |||||
Interest rate swaps classified as: | |||||
Amount of loss recognized in OCI | (2,569,000) | (3,465,000) | (24,506,000) | (5,489,000) | |
Amount of gain/(loss) reclassified from OCI | $ (185,000) | $ 672,000 | $ (179,000) | $ 1,443,000 | |
$250 Million Unsecured 2018 Term Loan | Interest rate swaps | |||||
Derivative [Line Items] | |||||
Number of Swap Agreements | contract | 2 | 2 | |||
Notional amount | $ 100,000,000 | $ 100,000,000 | |||
Unsecured Debt | $250 Million Unsecured 2018 Term Loan | |||||
Derivative [Line Items] | |||||
Face amount of debt instrument | 250,000,000 | 250,000,000 | |||
Unsecured Debt | $250 Million Unsecured 2018 Term Loan | Interest rate swaps | |||||
Derivative [Line Items] | |||||
Hedged portion of long-term debt | 100,000,000 | 100,000,000 | |||
Face amount of debt instrument | $ 250,000,000 | $ 250,000,000 |
Fair Value Measurement of Fin_3
Fair Value Measurement of Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swaps | $ 28,575 | $ 5,121 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 36,469 | 13,545 |
Restricted cash and escrows | 1,769 | 1,841 |
Accounts payable and accrued expenses | 9,942 | 50,049 |
Debt, net | 1,621,477 | 1,481,404 |
Tenant receivables, net of allowance for doubtful accounts | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Receivables | 8,494 | 8,226 |
Level 1 | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 36,469 | 13,545 |
Restricted cash and escrows | 1,769 | 1,841 |
Accounts payable and accrued expenses | 9,942 | 50,049 |
Level 1 | Tenant receivables, net of allowance for doubtful accounts | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Receivables | 8,494 | 8,226 |
Level 2 | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt, net | 1,649,544 | 1,536,687 |
Interest rate swaps | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swaps | 28,575 | 5,121 |
Interest rate swaps | Level 2 | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swaps | $ 28,575 | $ 5,121 |
Commitments and Contingencies (
Commitments and Contingencies (Details) ft² in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($)ft²Joint_VenturenumberOfTenants | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)ft²Joint_VenturenumberOfTenants | Jun. 30, 2019USD ($) | |
Loss Contingencies [Line Items] | ||||
Number of unrecorded tenant allowance commitments | Joint_Venture | 1 | 1 | ||
Unrecorded tenant allowance commitment | $ 53,600,000 | $ 53,600,000 | ||
Unrecorded tenant allowance renewal term | 20 years | |||
Unrecorded tenant allowance expansion area (in sq. ft) | ft² | 520 | 520 | ||
Contingencies Related to COVID-19 Pandemic | ||||
Loss Contingencies [Line Items] | ||||
Number of tenants with lease modification agreements | numberOfTenants | 50 | 50 | ||
Charges against lease income, tenant specific | $ 1,800,000 | |||
Charges against lease income, general reserves | 4,900,000 | |||
Collectibility of Tenant Reimbursements | ||||
Loss Contingencies [Line Items] | ||||
Reductions in reimbursement revenues | $ 0 | $ 0 | $ 0 | $ 0 |
Assets Held for Sale and Prop_2
Assets Held for Sale and Property Disposition (Details) $ in Thousands | 3 Months Ended | |
Jun. 30, 2020USD ($)property | Dec. 31, 2019USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of properties held for sale | property | 0 | |
Accumulated amortization (intangible lease assets) | $ 58,148 | $ 50,766 |
Total other assets held for sale, net | 0 | 28,201 |
Intangible lease liabilities, less accumulated amortization of $0 and $31,959 as of June 30, 2020 and December 31, 2019, respectively | 0 | 7,657 |
Intangible lease liabilities, accumulated amortization | 21,856 | 19,607 |
1901 Market Street | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Proceeds from sale of property | 350,800 | |
Gain on sale of real estate assets | 191,400 | |
Disposal Group, Held-for-sale, Not Discontinued Operations | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Total real estate assets held for sale, net | 0 | 139,690 |
Straight-line rent receivables | 0 | 18,776 |
Deferred lease costs, less accumulated amortization of $0 and $34,957 as of June 30, 2020 and December 31, 2019, respectively | 0 | 9,425 |
Accumulated amortization on deferred lease costs | 0 | 34,957 |
Total other assets held for sale, net | 0 | 28,201 |
Intangible lease liabilities, less accumulated amortization of $0 and $31,959 as of June 30, 2020 and December 31, 2019, respectively | 0 | 7,657 |
Intangible lease liabilities, accumulated amortization | 0 | 31,959 |
Disposal Group, Held-for-sale, Not Discontinued Operations | Intangible lease assets | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Intangible lease assets, less accumulated amortization of $0 and $27,438 as of June 30, 2020 and December 31, 2019, respectively | 0 | 6,574 |
Accumulated amortization (intangible lease assets) | 0 | 27,438 |
Disposal Group, Held-for-sale, Not Discontinued Operations | Land | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Real estate assets held for sale, net | 0 | 20,829 |
Disposal Group, Held-for-sale, Not Discontinued Operations | Building and building improvements | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Real estate assets held for sale, net | 0 | 112,287 |
Accumulated depreciation (building improvements) | $ 0 | $ 66,823 |
Stock Based Compensation (Narra
Stock Based Compensation (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense related to stock awards | $ 1.6 | $ 4.4 | $ 5.5 | $ 8.3 |
Amortization of unvested shares | 1.6 | $ 2.9 | $ 4.3 | $ 6.8 |
Total shares issued to employees, directors, and officers (in shares) | 241,847 | |||
Unrecognized compensation cost related to nonvested | $ 9 | $ 9 | ||
Independent Director Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period | 1 year | |||
Weighted Average | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation cost related to nonvested, weighted-average vesting period | 2 years |
Stock Based Compensation (Rollf
Stock Based Compensation (Rollforward of Stock Awards) (Details) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Shares | ||||
Increase in estimated potential share award based on TSR performance (in shares) | 332,690 | |||
Unvested and potential stock awards, end of period (in shares) | 1,241,440 | 1,241,440 | ||
Weighted-Average Grant Date Fair Value | ||||
Increase in estimated potential share award (in dollars per share) | $ 25.83 | |||
Stock Awards | ||||
Shares | ||||
Unvested and potential stock awards, beginning of period (in shares) | 1,045,020 | |||
Unvested and potential stock awards, end of period (in shares) | 1,241,440 | 1,241,440 | ||
Weighted-Average Grant Date Fair Value | ||||
Unvested and potential stock awards, beginning of period (in dollars per share) | $ 25.15 | |||
Unvested and potential stock awards, end of period (in dollars per share) | $ 24.88 | $ 24.88 | ||
Deferred Stock Awards | ||||
Shares | ||||
Deferred stock awards granted (in shares) | 242,586 | |||
Stock awards vested (in shares) | (218,972) | |||
Deferred stock awards forfeited (in shares) | (6,516) | |||
Weighted-Average Grant Date Fair Value | ||||
Deferred stock awards granted (in dollars per share) | $ 13.76 | $ 21.02 | $ 22.39 | $ 21.02 |
Stock awards vested (in dollars per share) | 21.05 | |||
Deferred stock awards forfeited (in dollars per share) | $ 21.68 | |||
Performance Share Awards | ||||
Shares | ||||
Stock awards vested (in shares) | (153,368) | |||
Weighted-Average Grant Date Fair Value | ||||
Stock awards vested (in dollars per share) | $ 30.45 |
Stock Based Compensation (Addit
Stock Based Compensation (Additional Information Regarding Stock Award Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Deferred Stock Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-Average Grant Date Fair Value per share of Deferred Stock Granted During the Period (in dollars per share) | $ 13.76 | $ 21.02 | $ 22.39 | $ 21.02 |
Total Grant Date Fair Value of Deferred Stock Vested During the Period | $ 3,392 | $ 8,318 | $ 4,608 | $ 8,658 |
Performance Share Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Liability Awards Paid During the Period | $ 0 | $ 0 | $ 4,116 | $ 3,239 |
Stock Based Compensation (Outst
Stock Based Compensation (Outstanding Employee Stock Awards) (Details) - $ / shares | May 03, 2019 | May 17, 2018 | Jun. 30, 2020 | May 13, 2020 | Mar. 19, 2020 | Feb. 19, 2020 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unvested shares (in shares) | 1,241,440 | ||||||
Stock Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Grant date fair value (in dollars per share) | $ 24.88 | $ 25.15 | |||||
Unvested shares (in shares) | 1,241,440 | 1,045,020 | |||||
Deferred Stock Awards | Deferred Stock Award, Granted May 17, 2018 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Net Shares Granted (in shares) | 250,680 | ||||||
Grant date fair value (in dollars per share) | $ 17.84 | ||||||
Unvested shares (in shares) | 52,895 | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted May 17, 2018 | Year 1 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted May 17, 2018 | Year 2 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted May 17, 2018 | Year 3 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted May 17, 2018 | Year 4 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted May 3, 2019 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Net Shares Granted (in shares) | 280,997 | ||||||
Grant date fair value (in dollars per share) | $ 21.04 | ||||||
Unvested shares (in shares) | 143,774 | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted May 3, 2019 | Year 1 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted May 3, 2019 | Year 2 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted May 3, 2019 | Year 3 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted May 3, 2019 | Year 4 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted February 19, 2020 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Net Shares Granted (in shares) | 178,309 | ||||||
Grant date fair value (in dollars per share) | $ 24.41 | ||||||
Unvested shares (in shares) | 144,341 | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted February 19, 2020 | Year 1 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted February 19, 2020 | Year 2 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted February 19, 2020 | Year 3 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted February 19, 2020 | Year 4 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Deferred Stock Awards | Deferred Stock Award, Granted May 13, 2020 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Net Shares Granted (in shares) | 45,780 | ||||||
Grant date fair value (in dollars per share) | $ 13.76 | ||||||
Vesting percentage | 100.00% | ||||||
Unvested shares (in shares) | 45,780 | ||||||
Performance Share Awards | Performance Share Program Award, Granted May 17, 2018 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Net Shares Granted (in shares) | 0 | ||||||
Grant date fair value (in dollars per share) | $ 23.52 | ||||||
Unvested shares (in shares) | 200,674 | ||||||
Performance Share Awards | Performance Share Program Award, Granted May 3, 2019 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Net Shares Granted (in shares) | 0 | ||||||
Grant date fair value (in dollars per share) | $ 29.43 | ||||||
Unvested shares (in shares) | 321,286 | ||||||
Performance Share Awards | Performance Share Program Award, Granted March 19, 2020 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Net Shares Granted (in shares) | 0 | ||||||
Grant date fair value (in dollars per share) | $ 25.83 | ||||||
Unvested shares (in shares) | 332,690 |
Supplemental Disclosures for _3
Supplemental Disclosures for the Statement of Consolidated Cash Flows (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Supplemental Cash Flow Elements [Abstract] | ||||
Accrued capital expenditures and deferred lease costs | $ 16,380 | $ 11,989 | ||
Change in accrued dividends and discount on dividend reinvestments | (26,427) | (26,972) | ||
Change in accrued share repurchases as part of an announced plan | 0 | (4,417) | ||
Cash and cash equivalents | 36,469 | 7,748 | $ 13,545 | $ 4,571 |
Restricted cash and escrows | 1,769 | 1,480 | 1,841 | 1,463 |
Total cash, cash equivalents, and restricted cash and escrows shown in the consolidated statement of cash flows | $ 38,238 | $ 9,228 | $ 15,386 | $ 6,034 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Anti-dilutive shares excluded (in shares) | 46,663 | 104,439 | 109,229 | 200,111 |
Weighted-average common shares – basic (in shares) | 125,974,762 | 125,693,365 | 125,917,859 | 125,633,777 |
Plus: Incremental weighted-average shares from time-vested deferred and performance stock awards (in shares) | 525,000 | 798,000 | 538,000 | 770,000 |
Weighted-average common shares – diluted (in shares) | 126,500,254 | 126,490,507 | 126,455,538 | 126,404,294 |
Subsequent Events (Details)
Subsequent Events (Details) | Jul. 29, 2020$ / shares |
Subsequent Event | |
Subsequent Event [Line Items] | |
Common stock dividends (in dollars per share) | $ 0.21 |