[Introduction](index=3&type=section&id=Introduction) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The company's forward-looking statements are subject to inherent risks and uncertainties, with actual results potentially differing due to various factors - The company's forward-looking statements, including its **2025 guidance**, are subject to significant risks and uncertainties that could cause actual results to differ[8](index=8&type=chunk) - Key risk factors encompass **economic and technological changes** impacting the office sector, **competition**, **tenant financial health**, **rising interest rates**, and **risks in property acquisitions, dispositions, and development delays**[9](index=9&type=chunk)[11](index=11&type=chunk) [Earnings Release](index=5&type=section&id=Earnings%20Release) Piedmont reported a **Q2 2025 net loss of $16.8 million**, widened by debt extinguishment, yet achieved significant leasing success and raised **2025 leasing guidance** - Executed over **700,000 square feet of leasing in Q2 2025**, with new tenant leasing reaching its highest quarterly volume since **2018**[13](index=13&type=chunk) - **Annual leasing guidance for 2025 increased by over 50%** to **2.2 - 2.4 million square feet**[13](index=13&type=chunk) Q2 2025 Financial Highlights (vs. Q2 2024) | Metric | Three Months Ended June 30, 2025 (in millions USD) | Three Months Ended June 30, 2024 (in millions USD) | | :--- | :--- | :--- | | Net Loss | $(16.8) | $(9.8) | | Net Loss per Share | $(0.14) | $(0.08) | | Core FFO per Share | $0.36 | $0.37 | | Same Store NOI (Cash) | (2.0)% | 5.7% | | Same Store NOI (Accrual) | 1.7% | 3.7% | Q2 2025 Leasing & Balance Sheet Highlights | Metric | Q2 2025 | | :--- | :--- | | Total Leasing (sq ft) | 712,000 | | New Tenant Leasing (sq ft) | 468,000 | | Cash Rent Roll Up | 7.3% | | Leased Percentage | 88.7% | | Total Debt (USD) | $2.18 billion | | Avg Net Debt to Core EBITDA | 6.9x | - Sold **80 and 90 Central** for approximately **$29.5 million**, recognizing a **gain of $1.2 million**[18](index=18&type=chunk) - Repurchased approximately **$67.5 million of 9.25% Senior Unsecured Notes due 2028**, incurring a **$7.5 million loss on early extinguishment** but anticipating **$7.5 million in interest savings** over **three years**[20](index=20&type=chunk) Full Year 2025 Guidance | Metric | Low (in millions USD) | High (in millions USD) | | :--- | :--- | :--- | | Net Loss | $(54) | $(51) | | NAREIT FFO | $167 | $175 | | Core FFO | $175 | $183 | | Core FFO per Diluted Share (USD) | $1.38 | $1.44 | [Company Information](index=8&type=section&id=Company%20Information) [Company Overview](index=8&type=section&id=Company%20Overview) Piedmont Realty Trust is a self-managed real estate company specializing in Class A office properties, primarily in U.S. Sunbelt markets - Piedmont is a fully integrated, self-managed real estate company focused on **Class A office properties**[25](index=25&type=chunk) - The company operates a portfolio of **16 million square feet**, primarily located in major **U.S. Sunbelt markets**[25](index=25&type=chunk) - Senior unsecured notes are **investment-grade rated** by Moody's, Standard & Poor's, and Fitch Ratings[25](index=25&type=chunk) [Research Coverage & Credit Ratings](index=9&type=section&id=Research%20Coverage%20%26%20Credit%20Ratings) The company is covered by equity research analysts, with issuer credit ratings of Baa3 (Stable) from Moody's, BB+ (Stable) from S&P, and BBB- (Stable) from Fitch Credit Ratings | Rating Agency | Issuer Credit Rating | Senior Unsecured Notes Rating | | :--- | :--- | :--- | | Moody's | Baa3 (Stable) | Baa3 | | Standard & Poor's | BB+ (Stable) | BBB- | | Fitch | BBB- (Stable) | BBB- | [Portfolio Statistics & Key Performance Indicators](index=10&type=section&id=Portfolio%20Statistics%20%26%20Key%20Performance%20Indicators) [Quarterly Performance Trends](index=10&type=section&id=Quarterly%20Performance%20Trends) Q2 2025 saw the portfolio's leased percentage at **88.7%**, Core FFO at **$0.36 per diluted share**, and average net debt to Core EBITDA at **6.9x** Key Performance Indicators (Quarterly Trend) | Metric | 6/30/2025 | 3/31/2025 | 12/31/2024 | 9/30/2024 | 6/30/2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Leased percentage | 88.7% | 88.1% | 88.4% | 88.8% | 87.3% | | Total square feet leased (sq ft) | 712k | 363k | 433k | 461k | 1,038k | | Core FFO per share (USD) | $0.36 | $0.36 | $0.37 | $0.36 | $0.37 | | Same store NOI - cash | -2.0% | -2.0% | 0.9% | -0.8% | 5.7% | | Total debt - GAAP (in billions USD) | $2.18 | $2.19 | $2.22 | $2.22 | $2.22 | Key Debt Ratios (Quarterly Trend) | Ratio | 6/30/2025 | 3/31/2025 | 12/31/2024 | 9/30/2024 | 6/30/2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net debt / Total gross assets | 40.3% | 40.3% | 39.2% | 39.0% | 39.1% | | Avg net debt to Core EBITDA (ttm) | 6.9x | 6.9x | 6.8x | 6.7x | 6.6x | | Fixed charge coverage ratio | 2.1x | 2.2x | 2.2x | 2.1x | 2.3x | [Financials](index=12&type=section&id=Financials) [Consolidated Balance Sheets](index=12&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were approximately **$4.0 billion**, total liabilities **$2.4 billion**, and total stockholders' equity **$1.5 billion** Balance Sheet Summary (as of June 30, 2025) | Account | Amount (in thousands) | | :--- | :--- | | Total Real Estate Assets | $3,417,231 | | Cash and Cash Equivalents | $3,314 | | **Total Assets** | **$3,980,263** | | Total Debt (Unsecured & Secured) | $2,177,752 | | **Total Liabilities** | **$2,432,253** | | **Total Stockholders' Equity** | **$1,548,010** | [Consolidated Statements of Income](index=13&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2025 total revenues were **$140.3 million**, with a net loss of **$16.8 million** (or **$0.14 per share**), driven by debt extinguishment and higher interest Income Statement Summary (Three Months Ended) | (in thousands) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $140,292 | $143,262 | | Property Operating Costs | $55,610 | $58,565 | | Interest Expense | $(31,954) | $(29,569) | | Loss on Early Extinguishment of Debt | $(7,500) | $— | | **Net Loss Applicable to Piedmont** | **$(16,808)** | **$(9,809)** | | **Net Loss Per Share** | **$(0.14)** | **$(0.08)** | [Funds From Operations & Adjusted Funds From Operations](index=15&type=section&id=Funds%20From%20Operations%20%26%20Adjusted%20Funds%20From%20Operations) Q2 2025 NAREIT FFO was **$37.0 million** (**$0.30/share**), Core FFO **$44.5 million** (**$0.36/share**), and Adjusted FFO (AFFO) **$16.2 million** FFO Reconciliation Summary (Three Months Ended June 30) | (in thousands, except per share) | 2025 | 2024 | | :--- | :--- | :--- | | GAAP Net Loss | $(16,808) | $(9,809) | | Depreciation & Amortization | $55,044 | $56,560 | | NAREIT FFO | $37,012 | $46,751 | | Loss on early extinguishment of debt | $7,500 | $— | | **Core FFO** | **$44,512** | **$46,751** | | **Core FFO per share (diluted)** | **$0.36** | **$0.37** | | **Adjusted FFO (AFFO)** | **$16,241** | **$24,685** | [Same Store Net Operating Income](index=16&type=section&id=Same%20Store%20Net%20Operating%20Income) Q2 2025 Same Store NOI decreased **2.0%** cash basis due to lease timing, while increasing **1.7%** accrual basis due to straight-line rent effects Same Store NOI Growth (YoY) | Period | Cash Basis | Accrual Basis | | :--- | :--- | :--- | | **Three Months Ended 6/30/2025** | (2.0)% | 1.7% | | **Six Months Ended 6/30/2025** | (2.2)% | 2.3% | - The difference between cash and accrual NOI is largely driven by a **69.4% increase in straight-line rent effects** for the quarter, indicating significant rent escalations and abatements in newly signed leases[52](index=52&type=chunk) [Debt Summary](index=19&type=section&id=Debt%20Summary) As of June 30, 2025, total principal debt was **$2.2 billion** with a **5.99%** weighted average interest rate and **49.3 months** weighted average maturity Debt Composition (as of June 30, 2025) | Debt Type | Principal Outstanding (in thousands USD) | Weighted Avg. Interest Rate | Weighted Avg. Maturity (months) | | :--- | :--- | :--- | :--- | | Fixed Rate | $2,048,101 | 6.02% | 48.5 | | Floating Rate | $151,000 | 5.60% | 60.0 | | **Total** | **$2,199,101** | **5.99%** | **49.3** | Debt Maturities by Year | Maturity Year | Principal Outstanding (in thousands USD) | Percentage of Total Debt | | :--- | :--- | :--- | | 2025-2027 | $— | — | | 2028 | $1,048,101 | 47.7% | | 2029 | $400,000 | 18.2% | | 2030 | $451,000 | 20.5% | | 2032 | $300,000 | 13.6% | - The company is in compliance with all its **bank and bond debt covenants** as of **June 30, 2025**, with significant cushion on key metrics like **leverage ratio** and **fixed charge coverage**[62](index=62&type=chunk) [Operational & Leasing Information](index=22&type=section&id=Operational%20%26%20Leasing%20Information) [Leasing Activity & Occupancy](index=22&type=section&id=Leasing%20Activity%20%26%20Occupancy) Portfolio leased percentage rose to **88.7%** in Q2 2025, with cash rental rates increasing **7.3%** for new leases and a **$71 million** future annual cash rent pipeline - The portfolio's **leased percentage rose to 88.7%** at the end of **Q2 2025**, a **140 basis point increase** year-over-year[69](index=69&type=chunk) Rental Rate Roll Up (Q2 2025) | Metric | % Change | | :--- | :--- | | Cash Rents | 7.3% | | Accrual Rents | 13.6% | - Contractual tenant improvements and leasing commissions for leases signed in **Q2 2025** totaled **$7.52 per square foot per year of lease term**[75](index=75&type=chunk) - As of **June 30, 2025**, the company had **730,000 sq ft of uncommenced leases** for vacant space, representing **$28.6 million in future annual cash rent**[83](index=83&type=chunk) - An additional **1.3 million sq ft of leases were under abatement**, representing **$41.9 million in future annual cash rent**[83](index=83&type=chunk) [Lease Expiration Schedule](index=27&type=section&id=Lease%20Expiration%20Schedule) The portfolio has a **6.0-year** weighted average remaining lease term, with **4.2%** of rentable SF expiring in remainder of 2025 and **10.0%** in 2026 - The **weighted average remaining lease term** for the portfolio is **6.0 years** as of **June 30, 2025**[86](index=86&type=chunk) Annual Lease Expirations (% of Rentable Square Footage) | Expiration Year | % of Rentable SF | | :--- | :--- | | 2025 | 4.2% | | 2026 | 10.0% | | 2027 | 9.0% | | 2028 | 8.2% | | 2029 | 8.8% | | Thereafter | 57.8% | [Diversification Tables](index=30&type=section&id=Diversification%20Tables) [Tenant, Industry, and Geographic Diversification](index=30&type=section&id=Tenant%2C%20Industry%2C%20and%20Geographic%20Diversification) Top 10 tenants account for **25.5%** of ALR, **46.5%** of ALR from investment-grade/governmental tenants, with Atlanta (**31.5%**) and Dallas (**19.5%**) as largest markets - The top tenant, **State of New York**, contributes **5.0% of Annualized Lease Revenue (ALR)**. The **top 10 tenants combined contribute 25.5% of ALR**[97](index=97&type=chunk) - **46.5% of ALR** is derived from **investment-grade rated tenants** (BBB-/Baa3 or higher) and **governmental entities**[100](index=100&type=chunk)[103](index=103&type=chunk) - The largest industry concentrations are **Business Services (14.6% of ALR)**, **Engineering/Accounting/Management (13.5%)**, and **Legal Services (10.8%)**[103](index=103&type=chunk) Geographic Diversification by ALR | Location | % of Annualized Lease Revenue | | :--- | :--- | | Atlanta | 31.5% | | Dallas | 19.5% | | Orlando | 11.6% | | Northern Virginia / D.C. | 9.9% | | New York | 9.6% | | Minneapolis | 8.5% | | Boston | 5.8% | | Other | 3.6% | - The portfolio is split between **Urban Infill/Suburban locations (59.8% of ALR)** and **Central Business District (CBD) locations (40.2% of ALR)**[109](index=109&type=chunk) [Portfolio Information](index=35&type=section&id=Portfolio%20Information) [Portfolio Detail and Investment Activity](index=35&type=section&id=Portfolio%20Detail%20and%20Investment%20Activity) The in-service portfolio comprises **29 projects** (**14.9 million sq ft**) at **88.7% leased**, with **three projects** (**788,000 sq ft**) out-of-service for redevelopment - The **in-service portfolio comprises 29 projects** and **14.9 million sq ft**, with a **leased percentage of 88.7%** and a commenced leased percentage of **85.0%**[111](index=111&type=chunk)[112](index=112&type=chunk) - **Three projects totaling 788,000 sq ft** in Orlando and Minneapolis are currently **out-of-service for redevelopment** and are **30.5% pre-leased**[112](index=112&type=chunk)[114](index=114&type=chunk) Recent Dispositions | Property | Market | Disposition Period | Sale Price (millions USD) | | :--- | :--- | :--- | :--- | | One Lincoln Park | Dallas | Q1 2024 | $54.0 | | 750 West John Carpenter | Dallas | Q3 2024 | $23.0 | | 80 and 90 Central | Boston | Q2 2025 | $29.5 | - The company owns **57.2 acres of developable land** with a book value of **$50.2 million**, primarily located in Atlanta, Dallas, and Orlando[117](index=117&type=chunk) [Supporting Information](index=38&type=section&id=Supporting%20Information) [Definitions and Non-GAAP Reconciliations](index=38&type=section&id=Definitions%20and%20Non-GAAP%20Reconciliations) This section defines and reconciles non-GAAP financial measures including FFO, Core FFO, AFFO, EBITDAre, and Same Store NOI to comparable GAAP figures - Provides definitions for **non-GAAP measures** including **Funds From Operations (FFO)**, **Core FFO**, **Adjusted FFO (AFFO)**, **Core EBITDA**, and **Same Store Net Operating Income (Same Store NOI)**[119](index=119&type=chunk)[122](index=122&type=chunk)[129](index=129&type=chunk) - Includes detailed tables reconciling **GAAP Net Income (Loss)** to **NAREIT FFO**, **Core FFO**, and **AFFO** on a quarterly basis for the last **five quarters**[133](index=133&type=chunk) - Contains reconciliations of **GAAP Net Income (Loss)** to **Same Store Net Operating Income** on both a cash and accrual basis[134](index=134&type=chunk)

Core Insights - Piedmont Realty Trust has released its financial and operational results for Q2 2025, indicating ongoing performance evaluation and transparency to investors [1] - A conference call is scheduled for July 29, 2025, at 9:00 a.m. ET to discuss the second quarter performance and recent events [2] Company Overview - Piedmont Realty Trust is a fully integrated, self-managed real estate investment company, focusing on delivering exceptional office environments [4] - The company owns, manages, develops, and operates 16 million square feet of Class A properties across major U.S. Sunbelt markets [4] - Piedmont Realty Trust is recognized for its hospitality-driven approach and commitment to enhancing workplace experiences through its "Piedmont PLACEs" [4]

Financial Performance - Rental and tenant reimbursement revenue for the three months ended June 30, 2025, was $133,954 thousand, a decrease of 4.97% compared to $136,670 thousand for the same period in 2024[21] - Net loss applicable to Piedmont for the six months ended June 30, 2025, was $26,912 thousand, compared to a net loss of $37,572 thousand for the same period in 2024, indicating an improvement of approximately 28.5%[21] - The company reported a comprehensive loss applicable to Piedmont of $(16,106) thousand for the three months ended June 30, 2025, compared to $(9,899) thousand for the same period in 2024, indicating a worsening of approximately 62.5%[23] - For the six months ended June 30, 2025, Piedmont reported a net loss of $26.9 million compared to a net loss of $37.6 million for the same period in 2024, reflecting a 28% improvement in net loss year-over-year[29] - Total revenues for the six months ended June 30, 2025, were $282,978,000, a decrease from $287,800,000 in the same period of 2024, reflecting a decline of about 1.9%[73] - Net operating income (NOI) for the six months ended June 30, 2025, was $169,531,000, slightly down from $169,755,000 in the same period of 2024, showing a decrease of approximately 0.1%[76] - Piedmont's total revenues for the three months ended June 30, 2025, were $140,292,000, compared to $143,262,000 in the same period of 2024, indicating a decrease of approximately 2.0%[72] Assets and Liabilities - Total assets decreased to $3,980,263 thousand as of June 30, 2025, from $4,114,651 thousand at December 31, 2024, representing a decline of approximately 3.25%[19] - Total liabilities decreased to $2,432,253 thousand as of June 30, 2025, from $2,526,524 thousand at December 31, 2024, reflecting a reduction of about 3.73%[19] - Total stockholders' equity decreased to $1,548,010 thousand as of June 30, 2025, from $1,588,127 thousand at December 31, 2024, a decline of approximately 2.52%[19] - Piedmont's total outstanding debt as of June 30, 2025, was approximately $2.0 billion, with an average effective interest rate of 6.02% per annum[142] - As of June 30, 2025, Piedmont's total outstanding debt was $2,177.75 million, with a weighted average interest rate of 5.99%[53] Cash Flow and Capital Expenditures - Cash and cash equivalents significantly decreased to $3,314 thousand as of June 30, 2025, from $109,637 thousand at December 31, 2024, a decline of approximately 96.97%[19] - Piedmont's cash, cash equivalents, and restricted cash decreased to $7.8 million as of June 30, 2025, from $143.8 million at the end of the previous period[29] - Piedmont's net cash provided by operating activities for the six months ended June 30, 2025, was $53.8 million, down from $90.2 million in the same period of 2024[29] - Dividends paid to common stockholders for the six months ended June 30, 2025, totaled $30.9 million, compared to $46.1 million in the same period of 2024[29] Debt and Interest - The company recorded a loss on early extinguishment of debt of $8,000 thousand for the six months ended June 30, 2025, compared to a loss of $386 thousand for the same period in 2024, indicating a significant increase in losses[21] - Interest payments for the three months ended June 30, 2025, were approximately $14.3 million, compared to $16.7 million for the same period in 2024, reflecting a decrease of 14.4%[45] - Piedmont had $151.0 million outstanding on its $600 million Unsecured 2022 Line of Credit, which has a stated rate of Adjusted SOFR plus 1.05% per annum, resulting in a total interest rate of 5.60%[143] - Piedmont's interest rate swap agreements as of June 30, 2025, had a notional amount of $325 million with a weighted-average fixed interest rate of 5.48%[141] Impairments and Gains - Piedmont recognized an impairment charge of approximately $17.5 million for the 750 West John Carpenter Freeway building due to a shortened hold period and inability to recover carrying value from future cash flows[55] - An additional impairment charge of approximately $0.9 million was recognized for the sale of One Lincoln Park in Dallas, Texas, during the same period[56] - During the six months ended June 30, 2025, Piedmont sold properties including One Lincoln Park for net sales proceeds of $53.308 million and recognized a gain of $0.7 million related to the 750 West John Carpenter building[60] Stockholder Information - The weighted-average common shares outstanding for the six months ended June 30, 2025, were 124,359,010, compared to 123,876,562 for the same period in 2024, showing a slight increase of about 0.39%[21] - Piedmont's stock-based compensation expense for the six months ended June 30, 2025, was approximately $4.6 million, compared to $4.1 million for the same period in 2024[66] - As of June 30, 2025, Piedmont had approximately $18.7 million of unrecognized compensation cost related to unvested and potential stock awards, to be recorded over a weighted-average vesting period of about two years[66] - The weighted-average grant date fair value per share of deferred stock granted during the six months ended June 30, 2025, was $8.15[64] Portfolio and Occupancy - As of June 30, 2025, Piedmont's portfolio consisted of 29 in-service projects totaling approximately 14.9 million square feet, with an occupancy rate of 88.7%[32]

Core Viewpoint - Piedmont Realty Trust will release its second quarter financial results on July 28, 2025, after market close, with a conference call scheduled for July 29, 2025, at 9:00 a.m. ET to discuss performance and recent events [1]. Company Overview - Piedmont Realty Trust is a fully integrated, self-managed real estate investment company focused on delivering exceptional office environments, managing 16 million square feet of Class A properties across major U.S. Sunbelt markets [3]. - The company is recognized for its hospitality-driven approach and commitment to transforming buildings into premier "Piedmont PLACEs" that enhance clients' workplace experiences [3]. Conference Call Details - The conference call will be broadcast live in listen-only mode on the company's investor relations website [1]. - Analysts are advised to dial in at least fifteen minutes prior to the start time for a timely connection, with domestic and international numbers provided [2]. - A replay of the conference call will be available until August 12, 2025, with specific access codes for domestic and international listeners [2].

Core Viewpoint - Piedmont Office Realty Trust has rebranded to Piedmont Realty Trust, Inc. to better align with its focus on creating premium work environments known as Piedmont PLACEs [1][2]. Company Strategy - The company aims to transform traditional office spaces into environments that foster collaboration, convenience, and a sense of community, catering to modern employee needs [2]. - Piedmont PLACEs are designed to enhance the workplace experience, regardless of location, by providing intentional spaces that promote service and connection [2][4]. Company Overview - Piedmont Realty Trust is a fully integrated, self-managed real estate investment company that owns, manages, develops, and operates 16 million square feet of Class A properties across major U.S. Sunbelt markets [4]. - The company is recognized for its hospitality-driven approach and commitment to enhancing client workplace experiences through its premier Piedmont PLACEs [4].

Group 1 - The article discusses the short time horizon some investors have when trading stocks, suggesting that a focus on long-term investment strategies is more beneficial [1] - The author emphasizes the importance of identifying high-yield Real Estate Investment Trusts (REITs) that provide stable passive income and potential mean reversion [1] - The investment approach is rooted in fundamental economic insights to assess market trends, prioritizing value and income-focused strategies [1] Group 2 - The author has a beneficial long position in the shares of PDM, indicating a personal investment interest in the company [2] - The article expresses the author's opinions without any external compensation, highlighting an independent analysis [2] - There is a disclaimer regarding the lack of business relationships with any mentioned companies, reinforcing the independence of the analysis [2]

Company Overview - Piedmont Office Realty Trust, Inc. is a self-managed real estate investment trust (REIT) focused on owning, managing, developing, and redeveloping Class A office properties primarily in the Sunbelt region, with a portfolio valued at approximately $5 billion and comprising around 16 million square feet [3]. Leasing Activity - In the second quarter of 2025, the company has completed over 500,000 square feet of leasing, with 350,000 square feet attributed to new tenants, and year-to-date leasing volume totals over 850,000 square feet [1]. - Approximately 70% of the new tenant leases are for currently vacant space, indicating strong demand for available properties [1]. - The company signed two significant long-term leases: 93,000 square feet with a global professional services firm in Dallas and 84,000 square feet with a global frozen food distributor in Minneapolis [1]. Operational Performance - The leasing momentum has accelerated in April and May, with no observed slowdown in leasing demand or decision-making despite economic challenges [2]. - The client pipeline remains strong, with over 400,000 square feet of leases in legal documentation, more than half of which are for currently vacant space [2]. - There are 2.6 million square feet of leases in the proposal stage, reflecting the effectiveness of the company's investments and service quality [2]. Revised Guidance - The company has increased its 2025 leasing guidance to a range of 1.8 to 2.0 million square feet, up from the initial guidance of 1.4 to 1.6 million square feet [2].

Sometimes, I just feel lucky. As a contrarian investor with a long-term horizon, I'm just enjoying investing right now. Because Mr. Market seems to be losing his mind.I'm Luuk Wierenga, an economics teacher from the Netherlands with a strong focus on income investing. My investment journey began during COVID-19, and since then, I've specialized in identifying high-yield Real Estate Investment Trusts (REITS) that provide stable passive income and/or a possible mean reversion. As an educator, I apply fundamen ...

I ventured into investing in high school in 2011, mainly in REITs, preferred stocks, and high-yield bonds, starting a fascination with markets and the economy that has not faded despite the years. More recently I have been combining long stock positions with covered calls and cash secured puts. I approach investing purely from a fundamental long-term point of view. On Seeking Alpha I mostly cover REITs and financials, with occasional articles on ETFs and other stocks driven by a macro trade idea.Analyst’s D ...

Financial Data and Key Metrics Changes - Core FFO per diluted share for Q1 2025 was $0.36, down from $0.39 in Q1 2024, primarily due to increased net interest expense and lower rental income from property sales and lease expirations [24] - AFFO generated during Q1 2025 was approximately $23.5 million, consistent with previous quarters, while CapEx returned to normalized levels [24] - The company has no final debt maturities until 2028 and approximately $500 million available under its revolving line of credit [24] Business Line Data and Key Metrics Changes - The company completed approximately 363,000 square feet of total leasing in Q1 2025, with about half related to new tenant leases [5][14] - Lease economics showed a 10-19% roll-up in rents on both cash and accrual bases, with average rental rates near $47 per square foot compared to $38 per square foot in 2023 [16] - The leasing pipeline remains strong with approximately 750,000 square feet executed or in a legal stage, and outstanding proposals at 3 million square feet [20] Market Data and Key Metrics Changes - The occupier market recovery is ongoing, with national employers increasing in-office mandates, although macroeconomic uncertainty has caused a slight slowdown in national gross leasing volume [6][7] - Sublease availability remains around 5%, with only 10,000 square feet expiring in 2025 [16] - The company noted that Atlanta was the most active segment, accounting for a third of the overall leasing volume in Q1 2025 [16] Company Strategy and Development Direction - The company has decided to suspend its dividend to fund long-term growth and retain earnings for capital expenditures related to leasing [11] - Management aims to focus on leasing momentum and increasing rental rates, which are expected to lead to FFO and cash flow growth [26] - The company is cautious about leveraging additional debt, prioritizing retained earnings for internal growth and maintaining a strong balance sheet [11][46] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about leasing prospects, with a strong pipeline and record levels of tour activity [20] - The company anticipates achieving its year-end lease percentage guidance of 89% to 90% [20] - Management is focused on maintaining liquidity and improving the balance sheet while navigating economic uncertainties [46] Other Important Information - The company completed its last refinancing activity in Q1 2025, including paying off a $250 million term loan and extending a $600 million line of credit [6] - The company has a backlog of $67 million in annualized revenue from leases yet to commence or in their free rent period [10] Q&A Session Summary Question: Thoughts on leasing pipeline and guidance maintenance - Management noted a strong leasing pipeline of approximately $750,000, with good momentum in April, but remains cautious due to macro uncertainties [30][32] Question: Historical gap between lease percentage and economic lease percentage - Management indicated that the suspension of the dividend would provide additional cash flow for internal growth, with a focus on leasing momentum [35][36] Question: Insights on the dividend suspension and its implications - Management explained that the decision to suspend the dividend was influenced by the need to fund leasing momentum and maintain a strong balance sheet, with retained earnings earmarked for leasing and capital expenditures [40][44]