PIEDMONT OFFICE REALTY TRUST, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS (form 10-Q)

Published: 2021-10-27 16:20:11 ET PDM

Liquidity and Capital Resources

36,382 $ 27,462

Other capital expenditures, including building and tenant improvements

83,477 $ 80,007

"Other capital expenditures, including building and tenant improvements" includes all other capital expenditures during the period and is typically comprised of tenant and building improvements necessary to lease, maintain, or provide enhancements to our existing portfolio of office properties.

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Results of Operations

Overview

Income from Continuing Operations

(0.9)

(0.1)

Expense

Property operating costs decreased approximately $1.5 million for the three months ended September 30, 2021, as compared to the same period in the prior year, reflecting lower real estate taxes at certain properties, as well as disposition activity that occurred during 2020.

General and administrative expense increased approximately $1.4 million for the three months ended September 30, 2021 as

Other Income (Expense)

Comparison of the nine months ended September 30, 2021 versus the nine months ended September 30, 2020

(11.4)

(0.2)

9.3

Other Income (Expense)

Other income increased approximately $6.5 million for the nine months ended September 30, 2021 as compared to the same period in the prior year. The variance is attributable to interest income recognized on notes receivable due from the purchaser of our New Jersey Portfolio in October 2020. The notes receivable mature in October 2023 and are secured by the two Bridgewater Crossing properties, sold in 2020.

The non-Guarantors are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Notes, or to make any funds available therefore, whether by dividends, loans, distributions or other payments.

Realty Trust, Inc. as Issuer and Guarantor, respectively September 30, 2021

The following table presents NOI by geographic segment (in thousands):

Comparison of the Nine Months Ended September 30, 2021 Versus the Nine Months Ended September 30, 2020

NOI increased primarily as a result of the purchase of the Dallas Galleria Office Towers in February 2020.

New York

NOI decreased primarily due to the sale of the New Jersey Portfolio in October 2020.

NOI decreased primarily as a result of the sale of 1901 Market Street building in Philadelphia, Pennsylvania in June 2020.

Funds From Operations ("FFO"), Core Funds From Operations ("Core FFO"), and Adjusted Funds From Operations ("AFFO")

$ 8,943 $ 0.07 $ 30,597 $ 0.25 $ 210,079 $ 1.66 Depreciation of real estate assets

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Net income applicable to Piedmont (GAAP basis) $ 11,306 $

8,943 $ 11,306 $ 8,943

73,250 $ 74,686 $ 73,250 General & administrative expenses

(33)

(6,315)

(5)

Net income applicable to Piedmont (GAAP basis) $ 30,597 $

210,079 $ 30,597 $ 210,079

215,296 $ 220,604 $ 215,296 Loss on early extinguishment of debt

224,632 $ 220,604 $ 224,632 General & administrative expenses

4,831

(20,378)

(12)

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Overview

Leased Percentage

Impact of Downtime, Abatement Periods, and Rental Rate Changes

Election as a REIT

Inflation

Off-Balance Sheet Arrangements

We are not dependent on off-balance sheet financing arrangements for liquidity. As of September 30, 2021, we had no off-balance sheet arrangements.

Application of Critical Accounting Policies

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(1)Contractual obligations do not include amounts committed for tenant or capital improvements under leases where Piedmont is the lessor. However, see