For the past several years, we have been focused upon a strategy of repositioning our portfolio by reducing the number of markets we operate within and recycling the proceeds into existing key locations which we believe have the greatest potential to contribute to enterprise value over time. Since 2005 we have exited nineteen markets and plan to exit an additional eight over the next few years so that we are predominantly concentrated in the top ten U.S. office markets by 2015. We have a demonstrated capital allocation track record including transacting $5.9 billion and $1.7 billion in property acquisitions and dispositions, respectively, during our fourteen year operating history. Piedmont has maintained a low-leverage (typically around 30%) strategy which allows capacity for growth as transactional opportunities arise.
Piedmont values operational excellence and is ranked fourth overall and second for REITs for number of buildings with Building Owners Management Association ("BOMA") 360 designations, a program that evaluates six major areas of building operations and management and benchmarks a building's performance against industry standards. The achievement of such a designation recognizes excellence in building operations and management. We also have focused on environmental sustainability initiatives at our properties, and approximately 72% of our office portfolio (based on Annualized Lease Revenue) maintains Energy Star labels as of December 31, 2011.
We foster long-term relationships with our high-credit quality, diverse tenant base as evidenced by our 77% tenant retention rate over the past six years. No tenant other than the U.S. government accounts for more than 6% of our Annualized Lease Revenue and 70% of our Annualized Lease Revenue is derived from investment grade companies or government agencies.
Our primary objectives are to maximize stockholder value by increasing cash flow from operations, achieving sustainable growth in FFO and realizing long-term capital appreciation. The strategies we intend to execute to achieve these objectives include:
Capitalizing on Acquisition/Investment Opportunities. Our overall acquisition/investment strategy focuses on properties in markets that are generally characterized by their diverse industry base, attractive supply and demand ratios and appeal to institutional investors. We target attractively priced properties that complement our existing portfolio from a risk management and diversification perspective
Proactive Asset Management, Leasing Capabilities and Property Management. Proactive asset and property management encompasses a number of operating initiatives designed to maximize occupancy and rental rates, including the following:
- devoting significant resources to building and cultivating our relationships with commercial real estate executives;
- maintaining satellite offices in markets in which we have a significant presence;
- demonstrating our commitment to our tenants by maintaining the high quality of our properties;
- driving a significant volume of leasing transactions in a manner that provides optimal returns by using creative approaches, including early extension, lease wrap-arounds and restructurings. We manage portfolio risk by structuring lease expirations to avoid, among other things, having multiple leases expire in the same market in a relatively short period of time;
- applying our leasing and operational expertise in meeting the specialized requirements of federal, state and local government agencies to attract and retain these types of tenants;
- evaluating potential tenants based on third-party and internal assessments of creditworthiness; and
- using our purchasing power and market knowledge to reduce our operating costs and those of our tenants.
Recycling Capital Efficiently. We use our proven, disciplined capital recycling capabilities to maximize total return to our stockholders by selectively disposing of non-core assets and assets where returns appear to have been maximized, and redeploying the proceeds into new investment opportunities with higher overall return prospects.
Financing Strategy. We employ a conservative leverage strategy by maintaining a debt-to-gross assets ratio of between 30%-40%. To effectively manage our long-term leverage strategy, we continue to analyze various sources of debt capital to determine which sources will be the most advantageous to our investment strategy at any particular point in time.
Use of Joint Ventures to Improve Returns and Mitigate Risk. We may enter into strategic joint ventures with third parties to acquire, develop, improve or dispose of properties, thereby reducing the amount of capital required by us to make investments, diversifying our sources of capital and allowing us to reduce the concentration of certain properties and/or markets without disrupting our operating performance or local operating capabilities.
Redevelopment and Repositioning of Properties. As circumstances warrant, we may redevelop or reposition properties within our portfolio to increase both occupancy and rental rates or create additional amenities for our tenants, thereby improving returns on our invested capital.