Piedmont Office Realty Trust Completes Sale of 1901 Market Street in Philadelphia

Rhea-AI Summary

Piedmont Office Realty Trust (NYSE: PDM) has sold its sole Philadelphia asset, 1901 Market Street, for approximately $360 million or $450 per square foot. Post-sale, 96% of the company's annualized lease revenue will come from its seven core markets, mainly in the Sunbelt region. The sale, part of a strategic shift, allows Piedmont to reinvest proceeds into the recently acquired Dallas Galleria Office Towers. The transaction is structured as a 1031 exchange, avoiding special distributions despite significant gains.

Positive

• Sale of 1901 Market Street for approximately $360 million enhances portfolio focus on strategic markets.
• 96% of annualized lease revenue now derives from core markets, predominantly in the Sunbelt.
• Proceeds reinvested into Dallas Galleria Office Towers, indicating growth strategy.
• Transaction structured as a 1031 exchange, avoiding special distributions despite a nine-digit gain.

Negative

• None.

Atlanta, GA, June 30, 2020 (GLOBE NEWSWIRE) -- Piedmont Office Realty Trust, Inc. ("Piedmont") (NYSE:PDM), an owner of Class A office properties located primarily in select amenity-rich sub-markets within seven major Eastern U.S. office markets, today announced that it has completed the sale of its only Philadelphia asset, 1901 Market Street, for approximately $360 million, or $450 per square foot.  As a result of the disposition of 1901 Market Street, 96% of Piedmont’s annualized lease revenue is now generated from its seven core markets, with a majority from its Sunbelt locations.

1901 Market Street is a 45-story, approximately 800,000 square foot building situated on approximately three-quarters of an acre in the heart of downtown Philadelphia.  Piedmont has owned the building since 2003 during which time it has been exclusively leased to the buyer, Independence Blue Cross.

Commenting on the transaction, C. Brent Smith, Piedmont’s President and Chief Executive Officer, said “The sale of 1901 Market Street concludes a successful recycling story for Piedmont, allowing us to dispose of a long-term, 100%-leased asset in a non-strategic market where we believe the value potential during our ownership has been realized and to fully reinvest the proceeds accretively into our recent purchase of Dallas Galleria Office Towers.  The transaction was structured as a 1031 exchange for tax purposes; therefore, no special distribution will be required despite the nine-digit gain on the sale of 1901 Market.  Overall, this transaction represents a good strategic move for the purchaser and a phenomenal outcome for our stockholders.”

About Piedmont Office Realty Trust

Piedmont Office Realty Trust, Inc. (NYSE: PDM) is an owner, manager, developer, redeveloper, and operator of high-quality, Class A office properties located primarily in select sub-markets within seven major Eastern U.S. office markets, with the majority of its revenue being generated from the Sunbelt. Its geographically-diversified, approximately $5 billion portfolio is currently comprised of approximately 17 million square feet. The Company is a fully-integrated, self-managed real estate investment trust (REIT) with local management offices in each of its markets and is investment-grade rated by S&P Global Ratings (BBB) and Moody’s (Baa2). At the end of the first quarter, approximately 64% of the company’s portfolio was ENERGY STAR certified and approximately 40% was LEED certified. For more information, see www.piedmontreit.com.

Meredi Lee            
Company:  Piedmont Office Realty Trust
Phone:       1 770 418 8800
Email:        investor.relations@Piedmontreit.com 

FAQ

What was the sale price of 1901 Market Street?

Piedmont sold 1901 Market Street for approximately $360 million.

How much of Piedmont's annual lease revenue is from core markets after the sale?

After the sale, 96% of Piedmont's annualized lease revenue comes from its core markets.

What type of tax strategy was used for the sale of 1901 Market Street?

The transaction was structured as a 1031 exchange for tax purposes.

What will Piedmont do with the proceeds from the sale?

Piedmont plans to reinvest the proceeds into the recently acquired Dallas Galleria Office Towers.

What markets does Piedmont focus on after the sale?

Piedmont focuses on seven core markets, primarily in the Sunbelt region.