Piedmont Office Realty Trust to Sell 14 Office Properties

November 28, 2017

Piedmont Office Realty Trust to Sell 14 Office Properties

November 28, 2017 | James Sprow | Blue Vault


CoStar Group reported Piedmont Office Realty Trust (NYSE: PDM) announced it is in the process of selling 14 office buildings across the country to two different buyers for a total minimum gross sales price of approximately $425.9 million. The Atlanta-based REIT is exiting four markets: Detroit, Nashville, South Florida, and Phoenix. The REIT owns seven office buildings in those markets.

The properties to be sold total 2.6 million square feet and have a combined occupancy of 76%. The sale price could increase an additional $5 million to $10 million if certain leasing targets are met within six months after the closing date, which Piedmont expects will be in January 2018.

Piedmont is also reducing the number of submarkets where it owns property within several of its core markets, including in Atlanta, Boston, and Washington DC’s Maryland suburbs. It is also reducing its exposure in Chicago where three of the buildings being sold are located and where it owns 11 properties in total.

“As we’ve indicated before, we believe that being a net seller today is the right thing to do at this point in the cycle,” Robert Bowers, CFO Piedmont told analysts this month.

During the third quarter, the REIT completed two sales: Two Independence Square at 300 E St. SW in Washington D.C for $360 million, or $593 per square foot; and 8560 Upland Drive, an 149,000 square foot office/warehouse building, which was Piedmont’s last asset in Denver, sold $17.6 million.

Piedmont Office Realty Trust, Inc. commenced operations in 1998 as a nontraded REIT program called Wells Real Estate Investment Trust, Inc. Through four public offerings, the REIT raised approximately $4.7 billion in gross offering proceeds, issuing 471.5 million common shares.

On February 10, 2010, the re-named REIT listed its Class A common stock on the New York Stock Exchange. It recapitalized its common stock, creating three Class B “tranches” that converted to Class A common over the following 11 months to become exchange tradeable. According to Blue Vault’s Nontraded REIT Full-Cycle Performance Study, the REIT’s average rate of return to its initial shareholders was 5.19% through the listing of its final tranche of common stock. 



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Gregory De Jong, CFP, Co-Founder of Paragon Advisors, LLC.
July 7, 2015

Blue Vault is just what advisors need to size up the different offerings in the nontraded REIT market. Just as importantly, it’s what the industry needs to encourage best practices among REITs.