Piedmont Office Realty Trust, Inc. (NYSE:PDM) Files An 8-K Results of Operations and Financial Condition
Item 2.02 Results of Operations and Financial Condition
On May 3, 2017, Piedmont Office Realty Trust, Inc. (the Registrant)
issued a press release announcing its financial results for the
first>quarter 2017, and published supplemental information for
the first>quarter 2017>to its website. The press release and
the supplemental information are attached hereto as Exhibit 99.1
and 99.2, respectively, and are incorporated herein by reference.
to the rules and regulations of the Securities and Exchange
Commission, such exhibits and the information set forth therein are
deemed to have been furnished and shall not be deemed to be filed
under the Securities Exchange Act of 1934.
issued a press release announcing its financial results for the
first>quarter 2017, and published supplemental information for
the first>quarter 2017>to its website. The press release and
the supplemental information are attached hereto as Exhibit 99.1
and 99.2, respectively, and are incorporated herein by reference.
to the rules and regulations of the Securities and Exchange
Commission, such exhibits and the information set forth therein are
deemed to have been furnished and shall not be deemed to be filed
under the Securities Exchange Act of 1934.
Item 4.02 Non-Reliance on Previously Issued Financial Statement
or a Related Audit Report or Completed Interim Review
or a Related Audit Report or Completed Interim Review
On May 2, 2017, the Audit Committee of the Board of Directors of
the Company, acting on the recommendation of management, and after
discussion with Ernst Young LLP (EY), the Registrants independent
registered public accounting firm, concluded that the Registrants
audited financial statements as of December 31, 2016 and 2015 and
for the three years ended December 31, 2016 included in the
Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2016, and the unaudited condensed consolidated
financial statements for the interim periods within those years,
included in the Company’s Quarterly Reports on Form 10-Q
previously filed with the Securities and Exchange Commission (the
“SEC”) should be restated to reflect the correction of the errors
discussed below. In addition, it was concluded that managements
report on the effectiveness of internal control over financial
reporting as of December 31, 2016 and 2015 and EYs reports both on
the consolidated financial statements as of December 31, 2016 and
2015 and for the three years ended December 31, 2016 as well as
EY’s reports on the effectiveness of internal control over
financial reporting as of December 31, 2016 and 2015, should no
longer be relied upon.
the Company, acting on the recommendation of management, and after
discussion with Ernst Young LLP (EY), the Registrants independent
registered public accounting firm, concluded that the Registrants
audited financial statements as of December 31, 2016 and 2015 and
for the three years ended December 31, 2016 included in the
Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2016, and the unaudited condensed consolidated
financial statements for the interim periods within those years,
included in the Company’s Quarterly Reports on Form 10-Q
previously filed with the Securities and Exchange Commission (the
“SEC”) should be restated to reflect the correction of the errors
discussed below. In addition, it was concluded that managements
report on the effectiveness of internal control over financial
reporting as of December 31, 2016 and 2015 and EYs reports both on
the consolidated financial statements as of December 31, 2016 and
2015 and for the three years ended December 31, 2016 as well as
EY’s reports on the effectiveness of internal control over
financial reporting as of December 31, 2016 and 2015, should no
longer be relied upon.
Historically, the Registrant has not allocated a portion of its
goodwill to the carrying value of real estate held for sale and
real estate sold when determining impairments or gain or loss on
sale, as was required under Accounting Standard Codification 350.
As a result, the Registrant has overstated previously reported
gains on dispositions of real estate assets or, in certain
instances, understated the loss on impairment of real estate
assets, in periods beginning after December 1, 2010 through
September 30, 2016. The cumulative estimated impact of the non-cash
adjustments to correct these errors will be a reduction in goodwill
and a corresponding increase in cumulative distributions in excess
of earnings of approximately $81.2 million as of December 31, 2016.
As of December 31, 2015, the cumulative estimated impact of the
non-cash adjustments to correct these errors will be a reduction in
goodwill and cumulative distributions in excess of earnings of
approximately $75.3 million and $73.0 million, respectively, and a
corresponding increase in other assets held for sale of
approximately $2.3 million. The estimated reduction in earnings for
the years ended December 31, 2016, 2015, and 2014 is approximately
$8.2 million, $41.7 million, and $2.4 million, respectively. The
impact on amounts prior to 2014 will be revised when the amended
reports are filed.
goodwill to the carrying value of real estate held for sale and
real estate sold when determining impairments or gain or loss on
sale, as was required under Accounting Standard Codification 350.
As a result, the Registrant has overstated previously reported
gains on dispositions of real estate assets or, in certain
instances, understated the loss on impairment of real estate
assets, in periods beginning after December 1, 2010 through
September 30, 2016. The cumulative estimated impact of the non-cash
adjustments to correct these errors will be a reduction in goodwill
and a corresponding increase in cumulative distributions in excess
of earnings of approximately $81.2 million as of December 31, 2016.
As of December 31, 2015, the cumulative estimated impact of the
non-cash adjustments to correct these errors will be a reduction in
goodwill and cumulative distributions in excess of earnings of
approximately $75.3 million and $73.0 million, respectively, and a
corresponding increase in other assets held for sale of
approximately $2.3 million. The estimated reduction in earnings for
the years ended December 31, 2016, 2015, and 2014 is approximately
$8.2 million, $41.7 million, and $2.4 million, respectively. The
impact on amounts prior to 2014 will be revised when the amended
reports are filed.
The non-cash adjustments to correct this error have been reflected
in the financial information included in the Registrants press
release and supplemental financial information attached as Exhibit
99.1 and 99.2, respectively, to this Current Report on Form 8-K.
Non-GAAP measures such as funds from operations, core funds from
operations, adjusted funds from operations and same store NOI
reported in the press release and for prior periods were not
impacted by this error. In addition, the Registrant believes it
remains in compliance with all of its debt agreements and financial
covenants.
in the financial information included in the Registrants press
release and supplemental financial information attached as Exhibit
99.1 and 99.2, respectively, to this Current Report on Form 8-K.
Non-GAAP measures such as funds from operations, core funds from
operations, adjusted funds from operations and same store NOI
reported in the press release and for prior periods were not
impacted by this error. In addition, the Registrant believes it
remains in compliance with all of its debt agreements and financial
covenants.
While the Company currently expects to complete this process
prior to or concurrently with filing its Quarterly Report on Form
10-Q for the quarter ended March 31, 2017, there can be no
assurance as to the precise timing when this process will be
completed or what periods will be impacted as a result; however,
the Company expects to timely file its Quarterly Report on Form
10-Q for the quarter ended March 31, 2017 by May 10, 2017. Prior
to or concurrently with that filing, the Registrant expects to
amend its previously issued audited consolidated financial
statements and other financial information contained in its
Annual Report on Form 10-K for the year ended December 31, 2016
to correct these errors once its final analysis and the related
audit procedures by EY are complete.
prior to or concurrently with filing its Quarterly Report on Form
10-Q for the quarter ended March 31, 2017, there can be no
assurance as to the precise timing when this process will be
completed or what periods will be impacted as a result; however,
the Company expects to timely file its Quarterly Report on Form
10-Q for the quarter ended March 31, 2017 by May 10, 2017. Prior
to or concurrently with that filing, the Registrant expects to
amend its previously issued audited consolidated financial
statements and other financial information contained in its
Annual Report on Form 10-K for the year ended December 31, 2016
to correct these errors once its final analysis and the related
audit procedures by EY are complete.
The following tables summarize the anticipated effects of the
non-cash adjustments to correct these errors to amounts previously
reported:
non-cash adjustments to correct these errors to amounts previously
reported:
|
Unaudited (in thousands, except per share data)
|
|||||||||
|
As of and for the year ended December 31, 2016
|
|||||||||
|
|
Previously Reported
|
Adjustment
|
As Restated
|
||||||
|
Consolidated Balance Sheet Data
|
|
|
|
||||||
|
Goodwill
|
$
|
180,097
|
$
|
(81,179
|
)
|
$
|
98,918
|
||
|
Total assets
|
$
|
4,449,347
|
|
$
|
(81,179
|
)
|
$
|
4,368,168
|
|
|
Cumulative distributions in excess of earnings
|
$
|
(1,499,684
|
)
|
$
|
(81,179
|
)
|
$
|
(1,580,863
|
)
|
|
Piedmont stockholders equity
|
$
|
2,177,000
|
|
$
|
(81,179
|
)
|
$
|
2,095,821
|
|
|
Total stockholders equity
|
$
|
2,178,882
|
$
|
(81,179
|
)
|
$
|
2,097,703
|
||
|
Total liabilities and stockholders equity
|
$
|
4,449,347
|
|
$
|
(81,179
|
)
|
$
|
4,368,168
|
|
|
|
|
|
|
||||||
|
Consolidated Statement of Income Data
|
|
|
|
||||||
|
Impairment loss on real estate assets
|
$
|
30,898
|
$
|
3,003
|
$
|
33,901
|
|||
|
Gain on sale of real estate assets
|
$
|
98,562
|
|
$
|
(5,152
|
)
|
$
|
93,410
|
|
|
Net income
|
$
|
107,872
|
$
|
(8,155
|
)
|
$
|
99,717
|
||
|
Net income applicable to Piedmont
|
$
|
107,887
|
|
$
|
(8,155
|
)
|
$
|
99,732
|
|
|
|
|
|
|
||||||
|
Net income applicable to common stockholders (in dollars
per diluted share) |
$
|
0.74
|
|
$
|
(0.05
|
)
|
$
|
0.69
|
|
|
Unaudited (in thousands, except per share data)
|
|||||||||
|
As of and for the year ended December 31, 2015
|
|||||||||
|
|
Previously Reported
|
Adjustment
|
As Restated
|
||||||
|
Consolidated Balance Sheet Data
|
|
|
|
||||||
|
Goodwill
|
$
|
180,097
|
$
|
(75,311
|
)
|
$
|
104,786
|
||
|
Other assets held for sale, net
|
$
|
8,490
|
|
$
|
2,287
|
|
$
|
10,777
|
|
|
Total assets
|
$
|
4,434,535
|
$
|
(73,024
|
)
|
$
|
4,361,511
|
||
|
Cumulative distributions in excess of earnings
|
$
|
(1,477,674
|
)
|
$
|
(73,024
|
)
|
$
|
(1,550,698
|
)
|
|
Piedmont stockholders equity
|
$
|
2,195,419
|
$
|
(73,024
|
)
|
$
|
2,122,395
|
||
|
Total stockholders equity
|
$
|
2,196,444
|
|
$
|
(73,024
|
)
|
$
|
2,123,420
|
|
|
Total liabilities and stockholders equity
|
$
|
4,434,535
|
$
|
(73,024
|
)
|
$
|
4,361,511
|
||
|
|
|
|
|
||||||
|
Consolidated Statement of Income Data
|
|
|
|
||||||
|
Impairment loss on real estate assets
|
$
|
40,169
|
|
$
|
2,631
|
|
$
|
42,800
|
|
|
Gain on sale of real estate assets (discontinued
continuing operations) |
$
|
168,236
|
$
|
(39,055
|
)
|
$
|
129,181
|
||
|
Net income
|
$
|
173,005
|
|
$
|
(41,686
|
)
|
$
|
131,319
|
|
|
Net income applicable to Piedmont
|
$
|
172,990
|
$
|
(41,686
|
)
|
$
|
131,304
|
||
|
|
|
|
|
||||||
|
Net income applicable to common stockholders (in dollars
per diluted share) |
$
|
1.15
|
$
|
(0.28
|
)
|
$
|
0.87
|
|
Unaudited (in thousands, except per share data)
|
|||||||||
|
As of and for the year ended December 31, 2014
|
|||||||||
|
|
Previously Reported
|
Adjustment
|
As Restated
|
||||||
|
|
|
|
|
||||||
|
Consolidated Statement of Income Data
|
|
|
|
||||||
|
Impairment loss on real estate assets
|
$
|
|
$
|
1,548
|
|
$
|
1,548
|
|
|
|
Gain on sale of real estate assets (discontinued
continuing operations) |
$
|
2,330
|
$
|
(818
|
)
|
$
|
1,512
|
||
|
Net income
|
$
|
43,363
|
|
$
|
(2,366
|
)
|
$
|
40,997
|
|
|
Net income applicable to Piedmont
|
$
|
43,348
|
$
|
(2,366
|
)
|
$
|
40,982
|
||
|
|
|
|
|
||||||
|
Net income applicable to common stockholders (in dollars
per diluted share) |
$
|
0.28
|
$
|
(0.01
|
)
|
$
|
0.27
|
Forward-Looking and Cautionary Statements
Certain statements contained in this Current Report on Form 8-K
constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the Securities Act),
and Section 21E of the Securities Exchange Act of 1934, as amended
(the Exchange Act). The Registrant intends for all such
forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in Section 27A
of the Securities Act and Section 21E of the Exchange Act, as
applicable. Such information is subject to certain risks and
uncertainties, as well as known and unknown risks, which could
cause actual results to differ materially from those anticipated.
Therefore, such statements are not intended to be a guarantee of
the Registrants performance in future periods. Such forward-looking
statements can generally be identified by our use of
forward-looking terminology such as may, will, expect, intend,
anticipate, believe, continue or similar words or phrases that are
predictions of future events or trends and which do not relate
solely to historical matters. Examples of such statements include
the estimated impact of the error in goodwill reporting discussed
above and the expected timing for filing amended financial
statements and public reports correcting this error.
constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the Securities Act),
and Section 21E of the Securities Exchange Act of 1934, as amended
(the Exchange Act). The Registrant intends for all such
forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in Section 27A
of the Securities Act and Section 21E of the Exchange Act, as
applicable. Such information is subject to certain risks and
uncertainties, as well as known and unknown risks, which could
cause actual results to differ materially from those anticipated.
Therefore, such statements are not intended to be a guarantee of
the Registrants performance in future periods. Such forward-looking
statements can generally be identified by our use of
forward-looking terminology such as may, will, expect, intend,
anticipate, believe, continue or similar words or phrases that are
predictions of future events or trends and which do not relate
solely to historical matters. Examples of such statements include
the estimated impact of the error in goodwill reporting discussed
above and the expected timing for filing amended financial
statements and public reports correcting this error.
The following are some of the factors that could cause the
Registrants actual results and its expectations to differ
materially from those described in the Registrants forward-looking
statements: the results of the Registrants preparation of
amendments to its previously filed financial statements and public
reports, including any audit or review of such amendments by EY;
the Registrants confirmation of the time periods to be covered by
such amendments; the implementation of any necessary changes to the
Registrants internal controls and procedures in a timely and cost
efficient manner; the future effectiveness of the Registrants
internal controls and procedures; and other factors detailed in the
Registrants most recent Annual Report on Form 10-K for the period
ended December 31, 2016, and other documents the Registrant files
with the Securities and Exchange Commission.
Registrants actual results and its expectations to differ
materially from those described in the Registrants forward-looking
statements: the results of the Registrants preparation of
amendments to its previously filed financial statements and public
reports, including any audit or review of such amendments by EY;
the Registrants confirmation of the time periods to be covered by
such amendments; the implementation of any necessary changes to the
Registrants internal controls and procedures in a timely and cost
efficient manner; the future effectiveness of the Registrants
internal controls and procedures; and other factors detailed in the
Registrants most recent Annual Report on Form 10-K for the period
ended December 31, 2016, and other documents the Registrant files
with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
Current Report on Form 8-K. The Registrant cannot guarantee the
accuracy of any such forward-looking statements contained in this
Current Report on Form 8-K, and the Registrant does not intend to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise.
forward-looking statements, which speak only as of the date of this
Current Report on Form 8-K. The Registrant cannot guarantee the
accuracy of any such forward-looking statements contained in this
Current Report on Form 8-K, and the Registrant does not intend to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits:
|
Exhibit No.
|
|
Description
|
|
99.1
|
|
Press release dated May 3, 2017.
|
|
|
|
|
|
99.2
|
|
Piedmont Office Realty Trust, Inc. Quarterly Supplemental
Information for the First Quarter 2017. |
>
>
About Piedmont Office Realty Trust, Inc.> (NYSE:PDM)
Piedmont Office Realty Trust, Inc. is an integrated self-managed real estate investment trust (REIT). The Company’s business consists primarily of owning, managing, operating, leasing, acquiring, developing, investing in, and disposing of office real estate assets. As of December 31, 2016, the Company owned and operated 65 in-service office properties, one redevelopment asset, two development assets and one office building through an unconsolidated joint venture. Its properties are located in areas, including New York, Chicago, Atlanta, Dallas, Boston, Minneapolis and Orlando. Its tenant base includes industries, such as business services, depository institutions, educational services, real estate, legal services and insurance carriers. The Company conducts business primarily through Piedmont Operating Partnership, L.P. (Piedmont OP). It performs the management of its buildings through its subsidiaries, including Piedmont Government Services, LLC and Piedmont Office Management, LLC. Piedmont Office Realty Trust, Inc.> (NYSE:PDM) Recent Trading Information
Piedmont Office Realty Trust, Inc.> (NYSE:PDM) closed its last trading session down -0.12 at 21.97 with 568,156 shares trading hands.
