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Piedmont's Baa2 Rating Affirmed by Moody's, Outlook Stable

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Moody's Investors Service, the rating arm of Moody’s Corporation (MCO - Free Report) , has affirmed Piedmont Office Realty Trust, Inc.’s (PDM - Free Report) senior unsecured debt rating of Baa2. The rating agency has also maintained its outlook at stable.

Johns Creek, GA-based Piedmont specializes in the acquisition, ownership, management and development of commercial real estate properties. The Baa2 rating indicates the company’s top-quality assets, decent operating margins, reasonable leverage and robust fixed charge coverage. The rating has also taken into account the challenges faced by the company such as exposure to some tough markets like Washington DC and Houston, portfolio repositioning and chances  of higher scrutiny due to the recent accounting restatement.

The stable outlook is based on the rating agency’s expectation that Piedmont will maintain a sturdy balance sheet and good liquidity through portfolio repositioning.

Notably, in the last 18 months, Piedmont purchased nine assets for $674 million in the target markets of Dallas, Atlanta, Boston and Orlando. During the same time period, the company sold nine office properties in non-strategic markets for $382 million.

Shares of Piedmont have underperformed the Zacks categorized REIT and Equity Trust – Other industry in the last three months. Shares of the company decreased 5.7%, while the industry grew 0.1%. In the last seven days, both its second-quarter and full-year 2017 funds from operations (FFO) per share estimates remained unchanged.



Currently, Piedmont carries a Zacks Rank #3 (Hold) while Moody's has a Zacks Rank 2 (Buy).

Investors interested in the REIT space, may consider better-ranked stocks like Gaming and Leisure Properties, Inc. (GLPI - Free Report) and American Tower Corporation (AMT - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last 30 days, Gaming and Leisure Properties’ FFO per share for second-quarter 2017 remained unchanged at 77 cents.

In the last 30 days, American Tower Corporation’s FFO per share for second-quarter 2017 remained unchanged at $1.55.

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All EPS numbers presented in this write up represent FFO per share.

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