Core Insights - Piedmont Office Realty Trust has secured a significant lease agreement with Travel + Leisure Co for its new corporate headquarters in downtown Orlando, marking the largest lease in the area since 2019 [1][2] Company Overview - Piedmont Office Realty Trust, Inc. is a real estate investment trust (REIT) focused on owning, managing, and developing Class A office properties, primarily in the Sunbelt region, with a portfolio valued at approximately $5 billion and encompassing around 16 million square feet [3] - The company is recognized for its commitment to sustainability, being named a 2024 ENERGY STAR Partner of the Year – Sustained Excellence [3] Lease Agreement Details - Travel + Leisure has signed a lease for the entire 5-story building at 501 W. Church, which spans approximately 182,000 square feet, and plans to employ around 900 individuals at this location [1] - The lease extends through 2040, and Piedmont intends to renovate and rebrand the building to enhance the office experience for Travel + Leisure employees, including modern amenities such as a fitness center and conference center [1] Economic Impact - The collaboration between Piedmont and local authorities, including Mayor Dyer's administration and the Orlando Economic Partnership, has been pivotal in attracting this major lease, contributing to the economic vibrancy of downtown Orlando [2]

Piedmont Office Realty Trust, Inc. (NYSE:PDM) Q1 2024 Earnings Conference Call May 1, 2024 9:00 AM ET Company Participants Laura Moon - Chief Accounting Officer Brent Smith - President and Chief Executive Officer George Wells - Chief Operating Officer Chris Kollme - Executive Vice President, Investments Bobby Bowers - Chief Financial Officer Conference Call Participants Anthony Paolone - JPMorgan Nick Thillman - Baird Dylan Burzinski - Green Street Operator Good day and welcome to the Piedmont Office Realty ...

EXHIBIT 99.2 Piedmont Office Realty Trust, Inc. Quarterly Supplemental Information Index | | Page | | Page | | --- | --- | --- | --- | | Introduction | | | | | Corporate Data | 3 | | | | Investor Information | 4 | Supporting Information | | | Earnings Release | 5 | Definitions | 32 | | Key Performance Indicators | 8 | Research Coverage | 33 | | Financials | | Non-GAAP Reconciliations | 34 | | Balance Sheets | 9 | In-Service Portfolio Detail | 36 | | Income Statements | 10 | Major Leases Not Yet Commenced an ...

```markdown [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements based on management's beliefs and assumptions, which are subject to known and unknown risks and uncertainties [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=3.1%20Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements based on management's beliefs and assumptions, which are subject to known and unknown risks and uncertainties - **Forward-looking statements** are based on management's beliefs and assumptions, subject to various known and unknown risks and uncertainties[10](index=10&type=chunk)[11](index=11&type=chunk) - Key risk factors include economic, regulatory, socio-economic (e.g., work from home), and technological changes impacting the real estate market, competition, lease terminations/defaults, **impairment charges**, illiquidity of real estate investments, development delays, cybersecurity incidents, and inflation[12](index=12&type=chunk)[15](index=15&type=chunk) - Management does not undertake any obligation to publicly update **forward-looking statements** in light of new information or future events[14](index=14&type=chunk) [PART I. Financial Information](index=5&type=section&id=PART%20I%20Financial%20Information) This part presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents **Piedmont Office Realty Trust, Inc.'s** unaudited consolidated financial statements for the three months ended **March 31, 2024** and **2023**, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Total real estate assets | $3,452,475 | $3,512,527 | | Cash and cash equivalents | $3,544 | $825 | | Total assets | $3,993,996 | $4,057,082 | | Unsecured debt, net | $1,875,042 | $1,858,717 | | Secured debt | $195,028 | $195,879 | | Total liabilities | $2,312,084 | $2,334,110 | | Total stockholders' equity | $1,681,912 | $1,722,972 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (in thousands, except per share) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Rental and tenant reimbursement revenue | $139,081 | $136,829 | | Total revenues | $144,538 | $142,367 | | Property operating costs | $59,444 | $57,791 | | Depreciation | $38,869 | $35,797 | | Amortization | $18,120 | $22,031 | | Impairment charges | $18,432 | — | | General and administrative | $7,612 | $7,691 | | Total expenses | $142,477 | $123,310 | | Interest expense | $(29,714) | $(22,077) | | Net loss applicable to Piedmont | $(27,763) | $(1,367) | | Net loss per common share | $(0.22) | $(0.01) | [Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss applicable to Piedmont | $(27,763) | $(1,367) | | Effective portion of gain/(loss) on derivative instruments (cash flow hedges) | $2,431 | $(1,103) | | Minus: Reclassification of net gain included in net income | $(1,103) | $(484) | | Other comprehensive income/(loss) | $1,328 | $(1,587) | | Comprehensive loss applicable to Piedmont | $(26,435) | $(2,954) | [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | Balance, December 31, 2023 | Balance, March 31, 2024 | | :-------------------------------- | :------------------------- | :---------------------- | | Total Stockholders' Equity | $1,722,972 | $1,681,912 | | Dividends to common stockholders | $(15,479) | $(25,965) | | Net loss applicable to Piedmont | $(27,763) | $(1,367) | | Other comprehensive income/(loss) | $1,328 | $(1,587) | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $23,361 | $40,398 | | Net cash used in investing activities | $(1,967) | $(45,402) | | Net cash (used in)/provided by financing activities | $(17,835) | $160,180 | | Net increase in cash, cash equivalents, and restricted cash and escrows | $3,559 | $155,176 | | Cash, cash equivalents, and restricted cash and escrows, end of period | $7,765 | $174,776 | [Condensed Notes to Consolidated Financial Statements](index=11&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) [Note 1. Organization](index=11&type=section&id=Note%201.%20Organization) - **Piedmont Office Realty Trust, Inc. (NYSE: PDM)** is a **Maryland corporation** operating as a **REIT**, focused on ownership, management, development, redevelopment, and operation of **high-quality, Class A office properties** primarily in major U.S. **Sunbelt markets**[32](index=32&type=chunk) - As of **March 31, 2024**, **Piedmont** owned **49 in-service office properties** and **two redevelopment assets**, comprising **16.0 million square feet** and **87.8% leased**[33](index=33&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=11&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The consolidated financial statements are prepared in accordance with **SEC rules and GAAP**, with all intercompany balances and transactions eliminated[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - **Piedmont** has elected to be taxed as a **REIT**, generally not subject to federal income taxes if it distributes at least **90%** of its annual **REIT** taxable income[38](index=38&type=chunk) Rental and Tenant Reimbursement Revenue (in thousands) | Type of Payment | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :---------------- | :-------------------------------- | :-------------------------------- | | Fixed payments | $113,313 | $112,560 | | Variable payments | $25,768 | $24,269 | | Total | $139,081 | $136,829 | - New accounting pronouncements (ASU 2023-07 on Segment Reporting and ASU 2023-09 on Income Tax Disclosure) are being evaluated, but no material impact on consolidated financial statements is anticipated[40](index=40&type=chunk)[41](index=41&type=chunk) [Note 3. Debt](index=13&type=section&id=Note%203.%20Debt) - **Piedmont** entered into a **new $200 million unsecured, syndicated bank term loan** with a **3-year term** maturing **January 29, 2027**, with an **effective rate of 6.22%** as of **March 31, 2024**[42](index=42&type=chunk) - The company repaid **$100 million** on the **$200 Million Unsecured 2022 Term Loan Facility** and **$190 million** on the **$215 Million Unsecured 2023 Term Loan**, extending the remaining **$25 million** of the latter to **January 31, 2025**[44](index=44&type=chunk) - The remaining **$50.2 million balance** of the **$400 Million Unsecured Senior Notes due 2024** was repaid using proceeds from **real estate asset dispositions**[45](index=45&type=chunk) Summary of Indebtedness (in thousands) | Facility Type | Amount Outstanding (Mar 31, 2024) | Amount Outstanding (Dec 31, 2023) | Weighted Average Effective Rate (Mar 31, 2024) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------------------------------- | | Secured (Fixed) | $195,028 | $195,879 | 4.10% | | Unsecured (Variable and Fixed) | $1,875,042 | $1,858,717 | 5.99% | | Total Debt | $2,070,070 | $2,054,596 | 5.81% | - **Piedmont** made **interest payments** of **$46.0 million** for the three months ended **March 31, 2024**, compared to **$23.4 million** for the same period in **2023**[47](index=47&type=chunk)[48](index=48&type=chunk) [Note 4. Derivative Instruments](index=15&type=section&id=Note%204.%20Derivative%20Instruments) - **Piedmont** uses **interest rate swap agreements** as **cash flow hedges** to manage **interest rate risk exposure** from **variable rate debt**, aiming to **stabilize interest expense**[50](index=50&type=chunk)[51](index=51&type=chunk) - During **Q1 2024**, **Piedmont** entered into **two interest rate swap agreements** to partially hedge the **$200 Million Unsecured 2024 Term Loan**, with a maximum hedging period of **22 months**[52](index=52&type=chunk) Interest Rate Derivatives Outstanding (in millions) | Associated Debt Instrument | Total Notional Amount (Mar 31, 2024) | | :------------------------- | :----------------------------------- | | $250 Million Unsecured 2018 Term Loan | $250 | | $200 Million Unsecured 2024 Term Loan | $80 | | Total | $330 | Gain/(Loss) on Interest Rate Derivatives (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :---------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Amount of gain/(loss) recognized in OCI | $2,431 | $(1,103) | | Amount of previously recorded gain reclassified from OCI into interest expense | $1,103 | $484 | - **$2.3 million** is estimated to be reclassified from OCI as a decrease in **interest expense** over the next twelve months[54](index=54&type=chunk) [Note 5. Fair Value Measurement of Financial Instruments](index=16&type=section&id=Note%205.%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) Fair Value of Financial Instruments (in thousands) | Financial Instrument | Carrying Value (Mar 31, 2024) | Estimated Fair Value (Mar 31, 2024) | Level Within Fair Value Hierarchy | | :------------------- | :---------------------------- | :---------------------------------- | :-------------------------------- | | Cash and cash equivalents | $3,544 | $3,544 | Level 1 | | Tenant receivables, net | $10,338 | $10,338 | Level 1 | | Restricted cash and escrows | $4,221 | $4,221 | Level 1 | | Interest rate swaps | $4,148 | $4,148 | Level 2 | | Accounts payable and accrued expenses | $13,903 | $13,903 | Level 1 | | Debt, net | $2,070,070 | $1,970,703 | Level 2 | - The **Fair value of debt** is estimated using **discounted cash flow analysis** and **observable market-based inputs (Level 2)**[56](index=56&type=chunk)[57](index=57&type=chunk) - **Interest rate swaps are carried at estimated fair value**, determined using **discounted cash flow analysis** and **observable market-based inputs (Level 2)**, with **credit risk** factored in but not materially impacting fair value[58](index=58&type=chunk) [Note 6. Impairment Charges](index=17&type=section&id=Note%206.%20Impairment%20Charges) - **Piedmont** recognized an **impairment charge** of **$17.5 million** for the **750 West John Carpenter Freeway building** in **Irving, Texas**, due to a **shortened intended hold period**[59](index=59&type=chunk) - An additional **impairment loss** of **$0.9 million** was recognized in conjunction with the sale of **One Lincoln Park** in **Dallas, Texas**[60](index=60&type=chunk) [Note 7. Commitments and Contingencies](index=17&type=section&id=Note%207.%20Commitments%20and%20Contingencies) - **Piedmont** is committed to funding **tenant improvements, leasing commissions, and building improvements** under existing lease agreements, with **one individually significant tenant allowance commitment greater than $10 million** as of **March 31, 2024**[61](index=61&type=chunk) - **No reductions in tenant reimbursement revenues occurred** during the three months ended **March 31, 2024** or **2023** due to tenant audits/disputes[62](index=62&type=chunk) [Note 8. Property Dispositions](index=18&type=section&id=Note%208.%20Property%20Dispositions) - During **Q1 2024**, **Piedmont** sold the **One Lincoln Park building** in **Dallas, Texas**, for **net sale proceeds** of **$53.3 million**, which were used to repay **debt**[63](index=63&type=chunk) [Note 9. Stock Based Compensation](index=18&type=section&id=Note%209.%20Stock%20Based%20Compensation) - **Stock-based compensation** includes **deferred stock award units** (vesting over three or four years for employees, one year for independent directors) and multi-year **performance share programs** contingent on **TSR performance** relative to a peer group[64](index=64&type=chunk)[65](index=65&type=chunk) Stock Award Activity Highlights (in thousands, except per share) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :---------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Weighted-Average Grant Date Fair Value per share of Deferred Stock Granted | $6.55 | $10.03 | | Total Grant Date Fair Value of Deferred Stock Vested | $3,801 | $4,073 | - **$17.9 million** of **unrecognized compensation cost** related to unvested and potential stock awards remained, to be recorded over a **weighted-average vesting period** of **1.8 years**[67](index=67&type=chunk) [Note 10. Supplemental Disclosures for the Statement of Consolidated Cash Flows](index=20&type=section&id=Note%2010.%20Supplemental%20Disclosures%20for%20the%20Statement%20of%20Consolidated%20Cash%20Flows) Non-Cash Investing and Financing Activities (in thousands) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Tenant improvements funded by tenants | $5,590 | $2,318 | | Accrued capital expenditures and deferred lease costs | $25,731 | $15,709 | | Change in accrued dividends | $(15,142) | $(25,358) | Reconciliation of Cash, Cash Equivalents, and Restricted Cash and Escrows (in thousands) | Metric | March 31, 2024 | March 31, 2023 | | :-------------------------------------------------------------------------------- | :------------- | :------------- | | Total cash, cash equivalents, and restricted cash and escrows, beginning of period | $4,206 | $19,600 | | Total cash, cash equivalents, and restricted cash and escrows, end of period | $7,765 | $174,776 | [Note 11. Earnings Per Share](index=20&type=section&id=Note%2011.%20Earnings%20Per%20Share) - **Earnings per share** is computed using **basic weighted-average common shares outstanding** due to **net losses** recognized for both the three months ended **March 31, 2024** and **2023**[69](index=69&type=chunk) [Note 12. Segment Information](index=20&type=section&id=Note%2012.%20Segment%20Information) - **Piedmont's chief operating decision maker (CODM)** evaluates performance based on **geographic segments**: **Atlanta, Dallas, Orlando, Northern Virginia/Washington, D.C., Minneapolis, New York, and Boston**[70](index=70&type=chunk) - **Accrual-based net operating income (NOI)** by **geographic segment** is the **primary performance measure**, calculated by deducting **property operating costs** from **lease revenues** and **other property related income**[71](index=71&type=chunk) Accrual-Based Lease Revenue and Other Property Related Income by Segment (in thousands) | Segment | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Atlanta | $41,770 | $39,217 | | Dallas | $28,705 | $28,282 | | Orlando | $15,349 | $15,414 | | Northern Virginia/Washington, D.C. | $15,581 | $14,899 | | Minneapolis | $13,117 | $14,961 | | New York | $13,691 | $13,485 | | Boston | $11,143 | $10,251 | | Total reportable segments | $139,356 | $136,509 | | Other | $5,182 | $5,858 | | Total Revenues | $144,538 | $142,367 | NOI by Geographic Reportable Segment (in thousands) | Segment | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Atlanta | $26,143 | $25,186 | | Dallas | $16,535 | $15,776 | | Orlando | $9,014 | $9,265 | | Northern Virginia/Washington, D.C. | $9,311 | $8,980 | | Minneapolis | $6,630 | $8,222 | | New York | $7,249 | $7,371 | | Boston | $7,182 | $6,333 | | Total reportable segments | $82,064 | $81,133 | | Other | $3,142 | $3,366 | | Total NOI | $85,206 | $84,499 | - **Atlanta NOI increased** due to new leases at **Galleria on the Park**, while **Minneapolis NOI decreased** due to a **lease expiration** and property designation as a **redevelopment asset**[106](index=106&type=chunk)[107](index=107&type=chunk) - **Boston NOI increased** due to **Microsoft's expansion** at the **5 & 15 Wayside Road building**[108](index=108&type=chunk) [Note 13. Subsequent Event](index=22&type=section&id=Note%2013.%20Subsequent%20Event) - On **April 24, 2024**, **Piedmont's** board of directors declared a **dividend** of **$0.125 per common share** for the **second quarter of 2024**, payable on **June 14, 2024**, to **stockholders of record as of May 24, 2024**[75](index=75&type=chunk) - The **financial statements are unaudited** and prepared in accordance with **SEC rules and GAAP**, reflecting **management's necessary adjustments** for fair presentation[16](index=16&type=chunk)[34](index=34&type=chunk) - **Piedmont operates as a REIT**, owning **49 in-service office properties** and **two redevelopment assets**, totaling **16.0 million square feet** and **87.8% leased** as of **March 31, 2024**[32](index=32&type=chunk)[33](index=33&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of **Piedmont's** financial condition and results of operations for the three months ended **March 31, 2024**, compared to the same period in **2023** - **Net loss applicable to common stockholders** for **Q1 2024** was **$27.8 million ($0.22 per share)**, significantly higher than **$1.4 million ($0.01 per share)** in **Q1 2023**, primarily due to an **$18.4 million impairment charge** and **$7.6 million increased interest expense**[87](index=87&type=chunk) - **Total revenues increased** by **$2.2 million**, driven by higher **rental and tenant reimbursement revenue** due to **rental rate roll-ups**, **lease commencements**, and **increased tenant reimbursements**[88](index=88&type=chunk)[89](index=89&type=chunk) - **Property operating costs increased** by **$1.7 million** due to higher recoverable operating expenses as **tenant utilization and leased percentage increased**[91](index=91&type=chunk) - **Interest expense increased** by **$7.6 million**, mainly due to **higher interest rates on floating-rate debt** and **refinancing at higher rates**[95](index=95&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) - **Primary sources of immediate liquidity** include **cash on hand**, **cash flows from operations**, proceeds from **property dispositions**, and **borrowings** under the **$600 Million Unsecured 2022 Line of Credit**[78](index=78&type=chunk) - **Next scheduled debt maturities** are **$25 million of the $215 Million Unsecured 2023 Term Loan** and the **$250 Million Unsecured 2018 Term Loan**, both due in **Q1 2025**, with repayment anticipated from existing **credit lines**, **dispositions**, or **new borrowings**[78](index=78&type=chunk) Capital Expenditures (in thousands) | Type of Expenditure | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Capital expenditures for redevelopment/renovations | $17,522 | $12,633 | | Other capital expenditures, including building and tenant improvements | $28,541 | $23,551 | | Total capital expenditures | $46,063 | $36,184 | - For leases executed in **Q1 2024**, committed **tenant improvement allowances** and **lease commissions** were **$5.13 per square foot per year** of **lease term**, down from **$6.18** in **Q1 2023**[82](index=82&type=chunk) - The amount and form of **future dividends** depend on **cash flow**, **debt repayments**, **development projects**, **acquisitions**, **capital expenditures**, and **REIT status requirements**[85](index=85&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Selected Consolidated Statements of Operations Data (in millions) | Metric | March 31, 2024 | % of Revenues (2024) | March 31, 2023 | % of Revenues (2023) | Variance | | :-------------------------------- | :------------- | :------------------- | :------------- | :------------------- | :------- | | Rental and tenant reimbursement revenue | $139.1 | | $136.8 | | $2.3 | | Total revenues | $144.5 | 100% | $142.3 | 100% | $2.2 | | Property operating costs | $59.5 | 41% | $57.8 | 41% | $1.7 | | Depreciation | $38.9 | 27% | $35.8 | 24% | $3.1 | | Amortization | $18.1 | 13% | $22.0 | 15% | $(3.9) | | Impairment charges | $18.4 | 13% | — | —% | $18.4 | | General and administrative | $7.6 | 5% | $7.7 | 5% | $(0.1) | | Total expenses | $142.5 | | $123.3 | | $19.2 | | Interest expense | $(29.7) | 20% | $(22.1) | 15% | $(7.6) | | Net loss | $(27.8) | (19)% | $(1.4) | —% | $(26.4) | - **Rental and tenant reimbursement revenue increased** by **$2.3 million** due to **rental rate roll-ups**, **lease commencements**, and higher **tenant reimbursements**[89](index=89&type=chunk) - **Depreciation expense increased** by **$3.1 million** due to additional building and tenant improvements placed in service, while **amortization expense decreased** by **$3.9 million** as certain **lease intangible assets** became fully amortized[92](index=92&type=chunk)[93](index=93&type=chunk) - A **$0.4 million loss on early extinguishment of debt** was recognized from the payoff of the **$100 million** balance on the **$200 Million Unsecured 2022 Term Loan Facility**[97](index=97&type=chunk) [Issuer and Guarantor Financial Information](index=28&type=section&id=Issuer%20and%20Guarantor%20Financial%20Information) - **Piedmont OP** has **$1.2 billion** in **senior unsecured notes outstanding**, fully and unconditionally guaranteed by **Piedmont**, the parent entity[99](index=99&type=chunk)[100](index=100&type=chunk) - **Piedmont's guarantee ranks equally** with its other **senior unsecured indebtedness** but is effectively subordinated to any future **secured indebtedness**[100](index=100&type=chunk) Combined Financial Information of Piedmont OP and Piedmont (in thousands) | Metric | As of March 31, 2024 | As of December 31, 2023 | | :-------------------- | :------------------- | :---------------------- | | Total assets | $285,895 | $285,116 | | Total liabilities | $1,911,103 | $1,926,434 | | Metric | For the Three Months Ended March 31, 2024 | | :-------------------- | :---------------------------------------- | | Total revenues | $11,611 | | Net loss | $(27,824) | [Net Operating Income by Geographic Segment](index=29&type=section&id=Net%20Operating%20Income%20by%20Geographic%20Segment) - **Piedmont's CODM** assesses performance using **geographic segments**: **Atlanta, Dallas, Orlando, Northern Virginia/Washington, D.C., Minneapolis, New York, and Boston**[104](index=104&type=chunk) Accrual-Basis NOI by Geographic Segment (in thousands) | Segment | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Atlanta | $26,143 | $25,186 | | Dallas | $16,535 | $15,776 | | Orlando | $9,014 | $9,265 | | Northern Virginia/Washington, D.C. | $9,311 | $8,980 | | Minneapolis | $6,630 | $8,222 | | New York | $7,249 | $7,371 | | Boston | $7,182 | $6,333 | | Total reportable segments | $82,064 | $81,133 | | Other | $3,142 | $3,366 | | Total NOI | $85,206 | $84,499 | - **Atlanta NOI increased** due to new leases at **Galleria on the Park**, while **Minneapolis NOI decreased** due to a **lease expiration** and property designation as a **redevelopment asset**[106](index=106&type=chunk)[107](index=107&type=chunk) - **Boston NOI increased** due to **Microsoft's expansion** at the **5 & 15 Wayside Road building**[108](index=108&type=chunk) [Funds From Operations ("FFO"), Core Funds From Operations ("Core FFO"), and Adjusted Funds From Operations ("AFFO")](index=29&type=section&id=Funds%20From%20Operations%20(%22FFO%22),%20Core%20Funds%20From%20Operations%20(%22Core%20FFO%22),%20and%20Adjusted%20Funds%20From%20Operations%20(%22AFFO%22)) **FFO**, **Core FFO**, and **AFFO** are **non-GAAP financial measures** used to provide a more complete understanding of performance for real estate companies, supplementing **GAAP net income/(loss)** Reconciliation of Net Loss to FFO, Core FFO, and AFFO (in thousands, except per share) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | GAAP net loss applicable to common stock | $(27,763) | $(1,367) | | NAREIT Funds From Operations applicable to common stock | $47,367 | $56,344 | | Core Funds From Operations applicable to common stock | $47,753 | $56,344 | | Adjusted Funds From Operations applicable to common stock | $24,741 | $36,792 | | NAREIT Funds From Operations per share (diluted) | $0.38 | $0.46 | | Core Funds From Operations per share (diluted) | $0.39 | $0.46 | - **Non-incremental capital expenditures**, which do not enhance **income-generating capacity**, were **$20.6 million** in **Q1 2024**, up from **$14.5 million** in **Q1 2023**[115](index=115&type=chunk) [Property and Same Store Net Operating Income](index=31&type=section&id=Property%20and%20Same%20Store%20Net%20Operating%20Income) **Property NOI** and **Same Store NOI** are **non-GAAP measures** used to assess **operating results**, focusing on income generated by properties without administrative overhead Property NOI and Same Store NOI (in thousands) | Metric | Cash Basis (Mar 31, 2024) | Cash Basis (Mar 31, 2023) | Accrual Basis (Mar 31, 2024) | Accrual Basis (Mar 31, 2023) | | :-------------------- | :------------------------ | :------------------------ | :--------------------------- | :--------------------------- | | Property NOI | $80,295 | $77,496 | $85,206 | $84,499 | | Same Store NOI | $79,570 | $75,721 | $84,060 | $82,327 | | Change period over period in Same Store NOI | 5.1% | N/A | 2.1% | N/A | - The **leased percentage of the portfolio increased** to **87.8%** as of **March 31, 2024**, from **87.1%** as of **December 31, 2023**, with **500,000 square feet** of **leasing completed** in **Q1 2024**[121](index=121&type=chunk) - **Piedmont** experienced an **8.0% cash rent roll-up** and an **18.6% accrual rent roll-up** on **executed leases** for space vacant one year or less during **Q1 2024**[123](index=123&type=chunk) - As of **March 31, 2024**, there were **1.3 million square feet** of **executed leases** for vacant space yet to commence or under **rental abatement**, representing **$42 million** of **future additional annual cash rents**[122](index=122&type=chunk) [Election as a REIT](index=34&type=section&id=Election%20as%20a%20REIT) **Piedmont** has elected to be taxed as a **REIT** and intends to continue to qualify, requiring distribution of at least **90%** of its **adjusted REIT taxable income** - Failure to qualify as a **REIT** could materially adversely affect **net income** and **cash available for distribution**[125](index=125&type=chunk) [Inflation](index=34&type=section&id=Inflation) **Piedmont** is exposed to **inflation risk**, but most tenant leases include provisions like **rent steps** and **reimbursement billings** for **operating expenses**, **real estate taxes**, and **insurance** to mitigate this risk - Due to the **long-term nature of leases**, **reimbursement rates** may not readjust frequently enough to fully cover inflation[126](index=126&type=chunk) [Application of Critical Accounting Estimates](index=34&type=section&id=Application%20of%20Critical%20Accounting%20Estimates) The preparation of financial statements requires management to make judgments and estimates, particularly in assessing **impairment**, **goodwill recoverability**, and **collectability of receivables** - **No material changes** to **critical accounting policies and estimates** occurred during the three months ended **March 31, 2024**[127](index=127&type=chunk) [Commitments and Contingencies](index=34&type=section&id=Commitments%20and%20Contingencies) **Piedmont** is subject to certain **Commitments and Contingencies**, as further explained in **Note 7** to the consolidated financial statements[128](index=128&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses **Piedmont's** exposure to **market risk**, primarily **interest rate risk**, due to fluctuations in prevailing market interest rates - **Piedmont's primary market risk exposure** is **interest rate risk**, stemming from **borrowings** under its **$600 Million Unsecured 2022 Line of Credit**, **$120 million** of the **$200 Million 2024 Unsecured Term Loan**, and the **$25 million** remaining balance on its **$215 Million Unsecured 2023 Term Loan**[129](index=129&type=chunk) - The company's **risk management objectives** include limiting the impact of interest rate changes on earnings and cash flow through a **low-to-moderate level of borrowings** and managing **rate variability**[130](index=130&type=chunk) - As of **March 31, 2024**, **total outstanding debt** subject to **fixed or effectively fixed interest rates** was **$1.7 billion**, with an **average effective interest rate** of **5.66%**[132](index=132&type=chunk) - **Total outstanding debt** subject to **variable interest rates** was **$361 million**, with an **average effective interest rate** of **6.55%**[133](index=133&type=chunk) - A **1.0% increase** in **variable interest rates** on existing outstanding **borrowings** as of **March 31, 2024**, would **increase interest expense** by **$3.6 million** on a **per annum basis**[133](index=133&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms management's conclusion that **Piedmont's disclosure controls and procedures were effective** as of **March 31, 2024**, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely - Management, including the **Principal Executive Officer** and **Principal Financial Officer**, concluded that **disclosure controls and procedures were effective** as of **March 31, 2024**[134](index=134&type=chunk) - **Disclosure controls** provide **reasonable assurance** that information required to be disclosed is accumulated and communicated timely[134](index=134&type=chunk) - There were **no material changes in internal control over financial reporting** during the quarter ended **March 31, 2024**[135](index=135&type=chunk) [PART II. Other Information](index=37&type=section&id=PART%20II%20Other%20Information) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) **Piedmont** is not subject to any **material pending legal proceedings**, though it is involved in routine litigation arising from its real estate operations - **Piedmont** is **not subject to any material pending legal proceedings**[137](index=137&type=chunk) - **Routine litigation** arising from real estate operations is expected to be **covered by insurance** and **not materially affect financial condition, results of operations, or liquidity**[137](index=137&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been **no known material changes** to the **risk factors** previously disclosed in the company's **Annual Report on Form 10-K** for the year ended **December 31, 2023** - **No known material changes** from the **risk factors** previously disclosed in the **Annual Report on Form 10-K** for the year ended **December 31, 2023**[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates that there were **no unregistered sales of equity securities** during the **first quarter of 2024** - There were **no unregistered sales of equity securities** during the **first quarter of 2024**[142](index=142&type=chunk) [Item 3. Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is marked as **Not applicable**, indicating no defaults upon senior securities - **Not applicable**[139](index=139&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as **Not applicable**, indicating no mine safety disclosures - **Not applicable**[140](index=140&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) This item states that there is no other information to report - **None**[141](index=141&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all **Exhibits** filed with the **Form 10-Q**, including articles of amendment, bylaws, various stock award agreements, debt agreements, certifications, and **XBRL** documents - **Exhibits** include **corporate governance documents** (Articles of Amendment, Bylaws), **compensatory plans** (Employee and Director Deferred Stock Award Agreements, Performance Share Award Agreement), and **debt agreements** (Term Loan Agreement)[143](index=143&type=chunk) - **Certifications** from the **Principal Executive Officer** and **Principal Financial Officer** pursuant to **Sections 302 and 906** of the **Sarbanes-Oxley Act of 2002** are also included[143](index=143&type=chunk) - **XBRL (eXtensible Business Reporting Language) documents** are provided for interactive data filing[143](index=143&type=chunk)[146](index=146&type=chunk) [Signatures](index=39&type=section&id=Signatures) This section contains the required signatures for the **Form 10-Q**, confirming its submission by duly authorized officers of **Piedmont Office Realty Trust, Inc.** - The report is signed by **Robert E. Bowers, Chief Financial Officer and Executive Vice President**, on behalf of **Piedmont Office Realty Trust, Inc.**, dated **April 30, 2024**[148](index=148&type=chunk) ```

Part I [Business](index=7&type=section&id=Item%201.%20Business) Piedmont is a REIT focused on owning and operating Class A office properties, primarily in U.S. Sunbelt markets, with 51 properties totaling **16.6 million** square feet and **87.1%** leased as of December 31, 2023 - Piedmont is a REIT focused on owning and operating high-quality, **Class A** office properties primarily in major U.S. **Sunbelt markets**[27](index=27&type=chunk) Portfolio Overview as of December 31, 2023 | Metric | Value | | :--- | :--- | | In-service office properties | 51 | | Total square feet | ~16.6 million | | Leased Percentage | 87.1% | | Sunbelt Market Concentration (by ALR) | ~70% | | Largest Tenant Concentration (by ALR) | < 5% | - The company's primary strategies include redeveloping properties to enhance amenities, proactive asset management to maximize occupancy, recycling capital by selling non-core assets to fund new investments, and maintaining a conservative leverage strategy[31](index=31&type=chunk)[32](index=32&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - As of December 31, 2023, the company had **150 employees** and emphasizes diversity, equity, and inclusion, including a scholarship program with Historically Black Colleges and Universities[38](index=38&type=chunk)[40](index=40&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from economic changes, competition, tenant defaults, cybersecurity, anti-takeover provisions, REIT qualification, and debt financing - **Business & Operations Risks**: The company faces risks from economic and technological changes impacting office space demand (e.g., work-from-home), intense competition, tenant defaults, development and construction delays, cybersecurity incidents, and the physical and transitional effects of climate change[53](index=53&type=chunk)[57](index=57&type=chunk)[61](index=61&type=chunk)[81](index=81&type=chunk)[103](index=103&type=chunk) - **Organization & Structure Risks**: Anti-takeover provisions in organizational documents, charter limitations on stock ownership (**9.8%**), and the board's ability to take actions without stockholder approval may discourage changes in control[109](index=109&type=chunk)[111](index=111&type=chunk)[113](index=113&type=chunk) - **Tax Risks**: A primary risk is the potential failure to qualify as a REIT, which would result in corporate-level taxation and reduce distributable earnings, alongside exposure to changes in tax laws[124](index=124&type=chunk)[128](index=128&type=chunk) - **Debt Financing Risks**: The company's indebtedness of approximately **$2.1 billion** as of year-end 2023 exposes it to risks from rising interest rates, which could increase debt service costs and make refinancing difficult, with restrictive covenants also limiting operational flexibility[137](index=137&type=chunk)[140](index=140&type=chunk)[142](index=142&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There were no unresolved SEC staff comments as of December 31, 2023 - There were no unresolved SEC staff comments as of December 31, 2023[161](index=161&type=chunk) [Cybersecurity](index=28&type=section&id=Item%201C.%20Cybersecurity) Piedmont manages cybersecurity risk through a formal program involving regular assessments, an incident response plan, third-party support, and board oversight - The company employs an enterprise risk management program that includes a specific cybersecurity risk assessment every eighteen months and an annual review of its Incident Response Plan[162](index=162&type=chunk) - A standing management committee, including the CFO and a third-party managed security service provider (MSSP), oversees cybersecurity strategy, risk assessments, and vulnerability testing[162](index=162&type=chunk)[163](index=163&type=chunk) - The Audit Committee of the board of directors provides oversight for cybersecurity risk, receiving quarterly updates from management, with the committee chair holding a Certificate in Cybersecurity Oversight from the NACD[170](index=170&type=chunk) - While no material cybersecurity incidents have occurred, the company maintains a proactive approach including employee training, a business continuity plan, and an information security risk insurance policy[168](index=168&type=chunk) [Properties](index=30&type=section&id=Item%202.%20Properties) Piedmont's portfolio as of December 31, 2023, included 51 office properties, **87.1%** leased, with **70%** of its **$575.5 million** ALR from Sunbelt markets Geographic Diversification of In-Service Portfolio (as of Dec 31, 2023) | Location | Annualized Lease Revenue (in thousands) | % of Total ALR | Percent Leased (%) | | :--- | :--- | :--- | :--- | | Atlanta | $163,389 | 28.4% | 91.1% | | Dallas | $112,753 | 19.6% | 80.4% | | Northern Virginia/Washington, D.C. | $66,190 | 11.5% | 77.9% | | Minneapolis | $65,381 | 11.4% | 89.6% | | Orlando | $59,582 | 10.4% | 95.0% | | New York | $49,142 | 8.5% | 87.3% | | Boston | $39,301 | 6.8% | 85.0% | | **Total** | **$575,467** | **100.0%** | **87.1%** | Lease Expiration Schedule (as of Dec 31, 2023) | Year of Lease Expiration | Percentage of Annualized Lease Revenue (%) | | :--- | :--- | | 2024 | 7.4% | | 2025 | 12.1% | | 2026 | 11.2% | | 2027 | 9.3% | | 2028 | 11.8% | | Thereafter | 48.2% | - Annualized Lease Revenue (ALR) increased to **$575.5 million** as of December 31, 2023, from **$555.3 million** as of December 31, 2022[175](index=175&type=chunk) [Legal Proceedings](index=31&type=section&id=Item%203.%20Legal%20Proceedings) The company is not subject to any material pending legal proceedings, with routine litigation expected to be covered by insurance - The company is not subject to any material pending legal proceedings and expects routine litigation to be covered by insurance without material adverse effect[180](index=180&type=chunk) [Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[181](index=181&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=32&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Piedmont's common stock (PDM) trades on NYSE; the company reduced its quarterly dividend in 2023, made no share repurchases, and its stock underperformed key indices - The quarterly dividend was reduced from **$0.21** per share for Q1 and Q2 2023 to **$0.125** per share for Q3 and Q4 2023[186](index=186&type=chunk) - No shares were repurchased during 2023; the board-authorized stock repurchase program, with **$150.5 million** remaining capacity, expired in February 2024 with no additional purchases[187](index=187&type=chunk)[194](index=194&type=chunk) Cumulative Total Return Performance (2018-2023) | Index | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Piedmont Office Realty Trust, Inc. | $100.00 | $135.92 | $104.01 | $123.38 | $65.70 | $56.04 | | FTSE NAREIT Equity Office | $100.00 | $131.42 | $107.19 | $130.77 | $81.58 | $83.23 | | FTSE NAREIT Equity REITs | $100.00 | $126.00 | $115.92 | $166.04 | $125.58 | $142.83 | | S&P 500 | $100.00 | $131.49 | $155.68 | $200.37 | $164.08 | $207.21 | [Reserved]](index=34&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Piedmont reported a **$48.4 million** net loss in 2023, primarily due to reduced real estate gains and higher interest expense, while maintaining sufficient liquidity - Primary sources of liquidity are cash on hand, cash flow from operations, proceeds from dispositions, and borrowings under its **$600 million** unsecured line of credit, with the company believing it has sufficient liquidity for the foreseeable future[198](index=198&type=chunk) Capital Expenditures (in thousands) | Category | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Redevelopment/renovations | $57,630 | $59,435 | | Other capital expenditures (building/tenant improvements) | $100,561 | $61,924 | | **Total capital expenditures** | **$158,191** | **$121,359** | Results of Operations Summary (2023 vs 2022, in millions) | Metric | 2023 | 2022 | Variance | | :--- | :--- | :--- | :--- | | Total Revenues | $577.7 | $563.8 | $13.9 | | Interest Expense | ($101.3) | ($65.7) | ($35.6) | | Gain on sale of real estate assets | $1.9 | $151.7 | ($149.8) | | **Net Income/(Loss)** | **($48.4)** | **$146.8** | **($195.2)** | Funds From Operations (FFO) Reconciliation (per diluted share) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | GAAP net income/(loss) per share | ($0.39) | $1.19 | | NAREIT FFO per share | $1.73 | $1.98 | | **Core FFO per share** | **$1.74** | **$2.00** | - Same Store NOI for 2023 increased **2.2%** on a cash basis but decreased **1.0%** on an accrual basis compared to 2022, with the cash basis increase driven by rental rate roll-ups and new lease commencements[249](index=249&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its **$2.1 billion** variable-rate debt, largely fixed or hedged, with a **1.0%** rate increase impacting annual interest expense by **$3.7 million** - The primary market risk is interest rate fluctuations on variable-rate debt, with the company aiming to limit this impact through a low-to-moderate level of borrowing and using fixed-rate debt and derivatives[263](index=263&type=chunk)[264](index=264&type=chunk) - As of December 31, 2023, total consolidated debt was approximately **$2.1 billion**, with approximately **$1.7 billion** subject to fixed or effectively-fixed interest rates[137](index=137&type=chunk)[267](index=267&type=chunk) - A **1.0%** increase in variable interest rates on outstanding borrowings as of December 31, 2023, would increase annual interest expense by approximately **$3.7 million**[268](index=268&type=chunk) [Financial Statements and Supplementary Data](index=49&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The company's audited consolidated financial statements and supplementary data are presented starting on page F-1 of the report - The financial statements and supplementary data are set forth beginning on page F-1 of the report[269](index=269&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=49&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no disagreements with the independent registered public accountants regarding accounting and financial disclosure in 2023 or 2022 - There were no disagreements with accountants during the years ended December 31, 2023 or 2022[270](index=270&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with an unqualified attestation report - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[271](index=271&type=chunk) - Based on an assessment using the 2013 COSO framework, management believes that the company's internal control over financial reporting was effective as of December 31, 2023[274](index=274&type=chunk) - Piedmont's independent registered public accounting firm, Deloitte & Touche LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[275](index=275&type=chunk)[280](index=280&type=chunk) [Other Information](index=52&type=section&id=Item%209B.%20Other%20Information) No director or officer adopted or terminated any Rule 10b5-1 trading plan or similar arrangement for company securities - No director or officer has adopted or terminated a Rule 10b5-1 trading plan or other similar trading arrangement[287](index=287&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=52&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - None[288](index=288&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=53&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's definitive proxy statement for the 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders[291](index=291&type=chunk) [Executive Compensation](index=53&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's definitive proxy statement for the 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders[293](index=293&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=53&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the company's definitive proxy statement for the 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders[294](index=294&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=53&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's definitive proxy statement for the 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders[295](index=295&type=chunk) [Principal Accountant Fees and Services](index=53&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's definitive proxy statement for the 2024 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders[296](index=296&type=chunk) Part IV [Exhibit and Financial Statement Schedules](index=54&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed with the report, with consolidated financial statements beginning on page F-5 - This section lists the financial statements and exhibits filed with the report; the consolidated financial statements begin on page F-5[298](index=298&type=chunk) [Form 10-K Summary](index=59&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - None[306](index=306&type=chunk)

Financial Data and Key Metrics Changes - AFFO generated during Q4 2023 was approximately $32 million, or $128 million on an annualized basis, providing over 2x coverage of the current dividend [25] - Core FFO per diluted share for Q4 2023 was $0.41, down from $0.50 per diluted share for Q4 2022, reflecting increased interest expense and the impact of property net operating income from the sale of the Cambridge Massachusetts portfolio [29] - Cash same-store NOI increased by 2.2% in 2023, an improvement from a 1.9% increase in 2022 [79] Business Line Data and Key Metrics Changes - New tenant leasing totaled 830,000 square feet in 2023, the largest annual amount in the last five years, achieving a year-end portfolio goal of 87% leased [71] - Tenant retention rates spiked to 84%, influenced by the U.S. Bank renewal, and remained consistently high at 70% over the past four quarters [93] - Leasing capital spent for the quarter was approximately $5.40 per square foot per lease year, almost 10% less than recent averages [93] Market Data and Key Metrics Changes - The overall lease percentage increased by 40 basis points to end the quarter at 87.1%, slightly above previously announced guidance [92] - Most new tenant activity, approximately 90%, occurred in the Sunbelt portfolio, where the majority of vacancies reside [92] - The Atlanta portfolio achieved over 91% lease with an absorption rate of 640 basis points over the last 12 months [90] Company Strategy and Development Direction - The company is focused on creating distinct environments in well-located properties, capitalizing on the demand for high-quality office spaces [18] - The operational strategy aims to capture market share from small to medium-sized businesses and larger corporate tenants returning to the market [85] - The company plans to continue addressing debt maturities and is optimistic about potential opportunities in the second half of 2024 and into 2025 [23][101] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the 2024 leasing prospects, citing a healthy pipeline and modest absorption trends [58][102] - The company anticipates a trough in earnings and vacancy in mid-2024 due to increased interest expenses and known tenant vacates [53] - Despite challenges, management believes the company is well-positioned with a strong balance sheet and limited near-term debt maturities [43][87] Other Important Information - The company has a backlog of 1.1 million square feet of leases yet to commence, equating to approximately $35 million in future annualized cash rents [80] - The company refinanced over $1 billion worth of debt, significantly improving liquidity and preserving a largely unencumbered pool of assets [82] - Same-store NOI on both cash and accrual basis is estimated to be positive in the low single-digit range for 2024 [46] Q&A Session Summary Question: Clarification on occupancy and guidance - Management confirmed that the 87% to 88% lease rate guidance includes the two assets being taken out of service for redevelopment [54][57] Question: Understanding of capital sources and uses - Management indicated that any dispositions would primarily be used to pay down debt, with expectations of selling around $100 million to $200 million over the next 18 to 24 months [130][131] Question: Leasing year-to-date and pipeline details - Approximately 50% of the 260,000 square feet executed year-to-date is new leasing, with the other 50% being renewals [109]

Piedmont Office Realty Trust, Inc. (NYSE:PDM) Q3 2023 Earnings Conference Call October 31, 2023 9:00 AM ET Company Participants Laura Moon - Senior Vice President & Chief Accounting Officer Brent Smith - President & Chief Executive Officer George Wells - Chief Operating Officer Chris Kollme - Executive Vice President, Investments Bobby Bowers - Chief Financial Officer Conference Call Participants Ray Zhang - JPMorgan Nicholas Thillman - Baird Dylan Burzinski - Green Street Operator Greetings, and welcome t ...

[Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides details on Piedmont Office Realty Trust, Inc.'s filing of its Quarterly Report on Form 10-Q, including its filer status and outstanding common stock [Filing Details](index=1&type=section&id=Filing%20Details) Piedmont Office Realty Trust, Inc. filed its Quarterly Report on Form 10-Q for the period ended September 30, 2023, confirming compliance with filing requirements and its status as a large accelerated filer. As of October 27, 2023, 123,713,423 shares of common stock were outstanding - Registrant is Piedmont Office Realty Trust, Inc., a Maryland corporation, with Commission file number 001-34626[2](index=2&type=chunk) - The report is a Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the period ended September 30, 2023[2](index=2&type=chunk) Filer Status | Filer Status | | | | | :--- | :--- | :--- | :--- | | Large accelerated filer | x | Accelerated filer | ☐ | | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | | | | Emerging growth company | ☐ | - Number of shares outstanding of the Registrant's common stock, as of October 27, 2023: **123,713,423 shares**[5](index=5&type=chunk) [Cautionary Note Regarding Forward-Looking Statements and Disclosures](index=3&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements%20and%20Disclosures) This section outlines the forward-looking nature of statements within the report, emphasizing inherent risks and uncertainties that could impact actual results [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements based on management's beliefs and assumptions, which involve known and unknown risks and uncertainties that could cause actual results to differ materially. Key risk factors include economic, regulatory, and technological changes impacting real estate, competition, lease defaults, impairment charges, and risks associated with acquisitions, dispositions, and debt - Statements regarding future events, developments, and performance, as well as management's expectations, beliefs, plans, estimates, or projections, are forward-looking statements[10](index=10&type=chunk) - These statements are based on beliefs and assumptions of management, which could prove inaccurate, and involve known and unknown risks and uncertainties that could cause actual results to differ materially[11](index=11&type=chunk) - Key risk factors include: - Economic, regulatory, socio-economic (e.g., work from home), and technological changes impacting the real estate market[12](index=12&type=chunk)[16](index=16&type=chunk) - Impact of competition on lease renewals or re-letting space[12](index=12&type=chunk)[16](index=16&type=chunk) - Lease terminations, defaults, contractions, or changes in tenant financial condition[12](index=12&type=chunk)[16](index=16&type=chunk) - Impairment charges on long-lived assets or goodwill[12](index=12&type=chunk)[16](index=16&type=chunk) - Illiquidity of real estate investments and regulatory restrictions on REITs[12](index=12&type=chunk)[16](index=16&type=chunk) - Risks associated with acquisition and disposition of properties, development delays, and cybersecurity incidents[12](index=12&type=chunk)[16](index=16&type=chunk) - Costs of complying with governmental laws and regulations, uninsured losses, and risks with government tenants[12](index=12&type=chunk)[16](index=16&type=chunk) - Significant price and volume fluctuations in public markets and risks associated with incurring mortgage and other indebtedness, including rising interest rates[12](index=12&type=chunk)[16](index=16&type=chunk) - Inflation and potential recession impacts[12](index=12&type=chunk)[16](index=16&type=chunk) [Information Regarding Disclosures Presented](index=4&type=section&id=Information%20Regarding%20Disclosures%20Presented) This section defines Annualized Lease Revenue (ALR) as current rental payments multiplied by 12, excluding abatements and certain non-commenced leases, and specifies calculation methods for different payment frequencies and unleased space - Annualized Lease Revenue ("ALR") is calculated by multiplying current rental payments (base rent plus operating expense reimbursements, excluding abatements and certain non-commenced leases) by **12**[15](index=15&type=chunk) - For contractual rents or operating expense reimbursements collected annually, semi-annually, or quarterly, amounts are multiplied by a factor of **1, 2, or 4**, respectively[15](index=15&type=chunk) - For executed but not commenced leases on unleased space, ALR is calculated by multiplying the initial monthly base rental payment (excluding abatements) plus any operating expense reimbursements by **12**[15](index=15&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents Piedmont's unaudited consolidated financial statements and related notes, offering a comprehensive view of its financial position and performance [Item 1. Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents Piedmont's unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, prepared in accordance with GAAP. It also includes condensed notes providing detailed information on organization, accounting policies, debt, derivatives, fair value measurements, goodwill impairment, commitments, stock-based compensation, cash flow disclosures, earnings per share, segment information, and a subsequent event [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets provide a snapshot of the company's assets, liabilities, and equity as of September 30, 2023, and December 31, 2022 Consolidated Balance Sheet Highlights (in thousands) | Item | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :-------------------------------- | :----------------------- | :------------- | | Total real estate assets | $3,502,576 | $3,500,624 | | Cash and cash equivalents | $5,044 | $16,536 | | Total assets | $4,073,778 | $4,085,525 | | Unsecured debt, net | $1,853,598 | $1,786,681 | | Secured debt | $196,721 | $197,000 | | Total liabilities | $2,306,713 | $2,236,270 | | Total stockholders' equity | $1,767,065 | $1,849,255 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income or loss for the three and nine months ended September 30, 2023 and 2022 Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total Revenues | $146,986 | $144,100 | $432,425 | $416,558 | | Total Expenses | $136,157 | $123,860 | $382,922 | $353,357 | | Interest expense | $(27,361) | $(17,244) | $(72,827) | $(44,917) | | Net income/(loss) applicable to Piedmont | $(17,002) | $3,331 | $(20,357) | $71,261 | | Net income/(loss) applicable to common stockholders (per share) | $(0.14) | $0.03 | $(0.16) | $0.58 | | Weighted-average common shares outstanding – basic | 123,696,475 | 123,395,381 | 123,639,797 | 123,329,626 | - Net loss applicable to Piedmont for the three months ended September 30, 2023, was **$(17,002) thousand**, a significant decrease from net income of **$3,331 thousand** in the prior year period[23](index=23&type=chunk) - For the nine months ended September 30, 2023, net loss applicable to Piedmont was **$(20,357) thousand**, compared to net income of **$71,261 thousand** in the prior year period[23](index=23&type=chunk) [Consolidated Statements of Comprehensive Income/(Loss)](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%2F%28Loss%29) This statement presents the net income or loss and other comprehensive income components, leading to total comprehensive income or loss for the periods presented Consolidated Statements of Comprehensive Income/(Loss) Highlights (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income/(loss) applicable to Piedmont | $(17,002) | $3,331 | $(20,357) | $71,261 | | Other comprehensive income | $259 | $2,856 | $1,961 | $8,960 | | Comprehensive income/(loss) applicable to Piedmont | $(16,743) | $6,187 | $(18,396) | $80,221 | [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated other comprehensive income, for the periods presented Consolidated Statements of Stockholders' Equity Highlights (in thousands, except per share amounts) | Item | Balance, Sep 30, 2023 | Balance, Dec 31, 2022 | | :-------------------------------- | :-------------------- | :-------------------- | | Common Stock (Shares) | 123,696 | 123,440 | | Common Stock (Amount) | $1,237 | $1,234 | | Additional Paid-In Capital | $3,714,629 | $3,711,005 | | Cumulative Distributions in Excess of Earnings | $(1,943,652) | $(1,855,893) | | Accumulated Other Comprehensive Income/(Loss) | $(6,718) | $(8,679) | | Total Stockholders' Equity | $1,767,065 | $1,849,255 | - Total stockholders' equity decreased from **$1,849,255 thousand** as of December 31, 2022, to **$1,767,065 thousand** as of September 30, 2023[30](index=30&type=chunk) - Dividends to common stockholders for the nine months ended September 30, 2023, totaled **$(67,402) thousand** (**$0.545 per share**)[30](index=30&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement details the cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2023 and 2022 Consolidated Statements of Cash Flows Highlights (in thousands) | Item | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $160,531 | $163,984 | | Net cash used in investing activities | $(136,995) | $(120,352) | | Net cash used in financing activities | $(32,109) | $(39,648) | | Net (decrease)/increase in cash, cash equivalents, and restricted cash and escrows | $(8,573) | $3,984 | | Cash, cash equivalents, and restricted cash and escrows, end of period | $11,027 | $12,844 | - Net cash provided by operating activities slightly decreased from **$163,984 thousand** in 2022 to **$160,531 thousand** in 2023[32](index=32&type=chunk) - Net cash used in investing activities increased from **$(120,352) thousand** in 2022 to **$(136,995) thousand** in 2023, primarily due to higher capitalized expenditures[32](index=32&type=chunk) [Condensed Notes to Consolidated Financial Statements](index=12&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) These notes provide essential details and explanations supporting the consolidated financial statements, covering accounting policies, debt, derivatives, and other key financial aspects [Note 1. Organization](index=12&type=section&id=Note%201.%20Organization) This note describes Piedmont Office Realty Trust, Inc. as a Maryland REIT focused on Class A office properties in U.S. Sunbelt markets - Piedmont Office Realty Trust, Inc. (NYSE: PDM) is a Maryland corporation operating as a REIT, focused on ownership, management, development, redevelopment, and operation of high-quality, Class A office properties primarily in major U.S. Sunbelt markets[35](index=35&type=chunk) - As of September 30, 2023, Piedmont owned **51 in-service office properties** and one redevelopment asset, comprising approximately **16.6 million square feet** and **86.7% leased**[36](index=36&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=12&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and policies used in preparing the consolidated financial statements, including GAAP compliance and REIT taxation election - Consolidated financial statements are prepared in accordance with SEC rules and GAAP, with interim periods including all normal and recurring adjustments[37](index=37&type=chunk) - Piedmont has elected to be taxed as a REIT, generally not subject to federal income taxes if it distributes at least **90%** of its annual REIT taxable income[41](index=41&type=chunk) Rental and Tenant Reimbursement Revenue (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Fixed payments | $115,250 | $114,280 | $340,048 | $334,256 | | Variable payments | $26,284 | $25,292 | $75,818 | $69,379 | | Total Rental and Tenant Reimbursement Revenue | $141,534 | $139,572 | $415,866 | $403,635 | [Note 3. Debt](index=13&type=section&id=Note%203.%20Debt) This note details the company's debt structure, including senior notes, term loan facilities, and their associated terms and interest rates - Piedmont OP issued **$400 million** of **9.250% senior notes** due 2028, with net proceeds used to fund the purchase of **$350 million** of **4.45% senior notes** due 2024 and repay borrowings under the **$600 Million Unsecured 2022 Line of Credit**[43](index=43&type=chunk)[44](index=44&type=chunk) - A new **$215 million**, floating-rate, unsecured term loan facility was entered into, maturing January 31, 2024, with an option to extend for one year[47](index=47&type=chunk) - The **$250 million unsecured 2018 term loan facility** was amended to convert its reference interest rate from LIBOR to SOFR[49](index=49&type=chunk) Summary of Indebtedness Outstanding (in thousands) | Facility | Effective Rate (Sep 30, 2023) | Maturity | Amount Outstanding as of Sep 30, 2023 | Amount Outstanding as of Dec 31, 2022 | | :-------------------------------- | :---------------------------- | :------- | :------------------------------------ | :------------------------------------ | | Secured (Fixed) | 4.10% | 10/1/2028 | $196,721 | $197,000 | | Unsecured (Variable and Fixed) Weighted Average | 5.60% | Various | $1,853,598 | $1,786,681 | | Total/Weighted Average | 5.46% | Various | $2,050,319 | $1,983,681 | [Note 4. Derivative Instruments](index=15&type=section&id=Note%204.%20Derivative%20Instruments) This note describes Piedmont's use of interest rate swap agreements as cash flow hedges to manage interest rate risk and stabilize interest expense - Piedmont uses interest rate swap agreements as cash flow hedges to manage interest rate risk exposure from variable rate debt, aiming to stabilize interest expense[54](index=54&type=chunk)[55](index=55&type=chunk) - All remaining LIBOR-designated interest rate swap agreements were amended to SOFR to match underlying debt terms[56](index=56&type=chunk) Interest Rate Derivatives Outstanding (in millions) | Associated Debt Instrument | Number of Swap Agreements | Total Notional Amount | | :-------------------------------- | :------------------------ | :-------------------- | | $250 Million Unsecured 2018 Term Loan | 2 | $100 | | $250 Million Unsecured 2018 Term Loan | 3 | $75 | | $250 Million Unsecured 2018 Term Loan | 3 | $75 | | Total | | $250 | Gain/(Loss) on Interest Rate Derivatives (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Amount of gain recognized in OCI | $1,248 | $2,662 | $4,270 | $7,507 | | Amount of previously recorded gain/(loss) reclassified from OCI into interest expense | $989 | $(194) | $2,309 | $(1,453) | [Note 5. Fair Value Measurement of Financial Instruments](index=17&type=section&id=Note%205.%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) This note provides fair value measurements for Piedmont's financial instruments, including cash, interest rate swaps, and debt, categorized by valuation hierarchy levels - Piedmont's financial instruments include cash, tenant receivables, restricted cash, interest rate swaps, and debt[60](index=60&type=chunk) Fair Value of Financial Instruments (in thousands) | Financial Instrument | Carrying Value (Sep 30, 2023) | Estimated Fair Value (Sep 30, 2023) | Level Within Fair Value Hierarchy | Carrying Value (Dec 31, 2022) | Estimated Fair Value (Dec 31, 2022) | | :-------------------------------- | :------------------------------ | :---------------------------------- | :-------------------------------- | :------------------------------ | :---------------------------------- | | Cash and cash equivalents | $5,044 | $5,044 | Level 1 | $16,536 | $16,536 | | Interest rate swaps | $5,841 | $5,841 | Level 2 | $4,183 | $4,183 | | Debt, net | $2,050,319 | $1,868,624 | Level 2 | $1,983,681 | $1,825,723 | - Debt and interest rate swaps are valued using discounted cash flow analysis with observable market-based inputs (**Level 2**), considering contractual terms and interest rate curves[61](index=61&type=chunk)[62](index=62&type=chunk) [Note 6. Goodwill Impairment Charge](index=18&type=section&id=Note%206.%20Goodwill%20Impairment%20Charge) This note details the approximately $11.0 million goodwill impairment charge recorded for the Minneapolis reporting unit during Q3 2023 - During Q3 2023, Piedmont recorded an approximately **$11.0 million goodwill impairment charge** for its Minneapolis reporting unit due to the carrying value exceeding its estimated fair value[64](index=64&type=chunk)[65](index=65&type=chunk) - The fair value measurement was based on **Level 3 valuations**, involving projections of discounted future cash flows with unobservable assumptions like capitalization rates (**8.50% to 9.00%**) and discount rates (**8.50% to 9.25%**)[66](index=66&type=chunk) [Note 7. Commitments and Contingencies](index=18&type=section&id=Note%207.%20Commitments%20and%20Contingencies) This note outlines Piedmont's commitments for tenant improvements and leasing commissions, and confirms no material reductions in rental revenues from disputes - Piedmont is committed to funding tenant improvements, leasing commissions, and building improvements under existing lease agreements[67](index=67&type=chunk) - No reductions in rental and reimbursement revenues related to tenant audits/disputes occurred during the three and nine months ended September 30, 2023 or 2022[68](index=68&type=chunk) [Note 8. Stock Based Compensation](index=18&type=section&id=Note%208.%20Stock%20Based%20Compensation) This note details the company's stock-based compensation plans, including deferred stock awards and performance share programs, and the associated expense recognized - Stock-based compensation includes deferred stock award units (vesting over **3-4 years** or **1 year** for directors) and multi-year performance share programs contingent on TSR performance relative to peers[69](index=69&type=chunk)[70](index=70&type=chunk) Stock Award Activity Highlights (Shares) | Item | As of Dec 31, 2022 | As of Sep 30, 2023 | | :-------------------------------- | :----------------- | :----------------- | | Unvested and Potential Stock Awards | 729,424 | 1,151,718 | | Deferred Stock Awards Granted (9M 2023) | N/A | 987,094 | | Performance Stock Awards Granted (9M 2023) | N/A | 424,922 | | Performance Stock Awards Vested (9M 2023) | N/A | (90,064) | | Deferred Stock Awards Vested (9M 2023) | N/A | (334,020) | - Piedmont recognized approximately **$2.1 million** and **$6.0 million** in stock compensation expense for the three and nine months ended September 30, 2023, respectively[73](index=73&type=chunk) [Note 9. Supplemental Disclosures for the Statement of Consolidated Cash Flows](index=21&type=section&id=Note%209.%20Supplemental%20Disclosures%20for%20the%20Statement%20of%20Consolidated%20Cash%20Flows) This note provides additional details on non-cash investing and financing activities and a reconciliation of cash, cash equivalents, and restricted cash and escrows Non-Cash Investing and Financing Activities (in thousands) | Item | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Tenant improvements funded by tenants | $30,790 | $2,928 | | Accrued capital expenditures and deferred lease costs | $17,458 | $18,424 | | Change in accrued dividends | $(25,358) | $(26,048) | Reconciliation of Cash, Cash Equivalents, and Restricted Cash and Escrows (in thousands) | Item | 2023 | 2022 | | :-------------------------------- | :----- | :----- | | Beginning of period | $19,600 | $8,860 | | End of period | $11,027 | $12,844 | [Note 10. Earnings Per Share](index=21&type=section&id=Note%2010.%20Earnings%20Per%20Share) This note explains the calculation of basic and diluted earnings per share, including the treatment of anti-dilutive shares - Basic EPS is net income/(loss) available to common stockholders divided by weighted average common shares outstanding; diluted EPS includes potential dilution from unvested stock awards[76](index=76&type=chunk) - Weighted average outstanding anti-dilutive shares excluded from diluted EPS calculation were approximately **1,388,320** for Q3 2023 and **1,216,637** for 9M 2023[76](index=76&type=chunk) Weighted-Average Common Shares (in thousands) | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Weighted-average common shares – basic | 123,696 | 123,395 | 123,640 | 123,330 | | Weighted-average common shares – diluted | 123,696 | 123,697 | 123,640 | 123,631 | [Note 11. Segment Information](index=22&type=section&id=Note%2011.%20Segment%20Information) This note presents financial information by geographic segment, with accrual-based net operating income (NOI) as the primary performance measure - Piedmont's CODM evaluates performance using geographic segments: Atlanta, Dallas, Orlando, Washington, D.C./Northern Virginia, Minneapolis, New York, and Boston[78](index=78&type=chunk) - Accrual-based net operating income ('NOI') by geographic segment is the primary performance measure, calculated by deducting property operating costs from lease revenues and other property related income[79](index=79&type=chunk) Total Revenues by Geographic Segment (in thousands) | Segment | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Atlanta | $40,433 | $34,026 | $119,860 | $92,558 | | Dallas | $28,619 | $28,379 | $84,680 | $81,881 | | Orlando | $15,234 | $15,131 | $46,112 | $43,513 | | Washington, D.C./Northern Virginia | $15,251 | $15,608 | $45,029 | $46,980 | | Minneapolis | $16,700 | $15,470 | $47,125 | $45,987 | | New York | $13,940 | $14,525 | $40,674 | $42,461 | | Boston | $10,875 | $14,735 | $31,642 | $44,797 | | Total reportable segments | $141,052 | $137,874 | $415,122 | $398,177 | | Other | $5,934 | $6,226 | $17,303 | $18,381 | | Total Revenues | $146,986 | $144,100 | $432,425 | $416,558 | NOI by Geographic Segment (in thousands) | Segment | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Atlanta | $25,965 | $21,627 | $77,247 | $58,354 | | Dallas | $16,334 | $15,325 | $47,313 | $47,189 | | Orlando | $8,895 | $8,865 | $27,446 | $26,206 | | Washington, D.C./Northern Virginia | $9,183 | $9,712 | $27,156 | $29,851 | | Minneapolis | $9,166 | $8,072 | $25,622 | $23,950 | | New York | $7,565 | $7,959 | $22,286 | $23,901 | | Boston | $6,422 | $9,646 | $19,213 | $29,922 | | Total reportable segments | $83,530 | $81,206 | $246,283 | $239,373 | | Other | $3,544 | $3,893 | $9,956 | $10,794 | | Total NOI | $87,074 | $85,099 | $256,239 | $250,167 | [Note 12. Subsequent Event](index=23&type=section&id=Note%2012.%20Subsequent%20Event) This note discloses the declaration of a Q4 2023 dividend of $0.125 per common share by Piedmont's board on October 25, 2023 - On October 25, 2023, Piedmont's board declared a Q4 2023 dividend of **$0.125 per common share**, payable January 2, 2024, to stockholders of record as of November 24, 2023[82](index=82&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of Piedmont's financial condition and results of operations, covering liquidity, capital resources, operational performance comparisons, guarantor information, segment NOI, non-GAAP financial measures (FFO, Core FFO, AFFO, Property NOI, Same Store NOI), portfolio overview, and critical accounting estimates. It highlights a net loss for the period, increased interest expense, and a goodwill impairment charge, alongside strategic capital management and dividend adjustments [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Piedmont's sources of liquidity, capital expenditure plans, and strategies for managing debt and dividends - Primary immediate liquidity sources include cash on hand, cash flows from operations, potential property dispositions, and borrowings under the **$600 Million Unsecured 2022 Line of Credit**, which had **$443 million available** as of September 30, 2023[85](index=85&type=chunk) - Piedmont anticipates exercising the one-year extension option on the **$215 Million Unsecured 2023 Term Loan** (due January 2024) to January 2025[85](index=85&type=chunk) - The remaining **$50.2 million** of **$400 Million Unsecured Senior Notes** due 2024 will be repaid upon maturity in March 2024 using cash on hand and credit line borrowings[85](index=85&type=chunk) Capital Expenditures (in thousands) | Type | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Redevelopment/renovations | $40,634 | $47,172 | | Other capital expenditures (building & tenant improvements) | $72,758 | $48,335 | | Total capital expenditures | $113,392 | $95,507 | - Committed to spend approximately **$6.20 per square foot per year** of lease term for tenant improvement allowances and lease commissions for leases executed during the nine months ended September 30, 2023, up from **$4.93** in the prior year[89](index=89&type=chunk) - The annual dividend was reduced from **$0.84 per share** to **$0.50 per share** starting Q3 2023, reducing cash used for dividends by approximately **$40 million annually**[92](index=92&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, highlighting changes in revenues, expenses, and net income or loss for the reported periods [Overview](index=26&type=section&id=Overview%20%28Results%20of%20Operations%29) This overview summarizes the key drivers behind the net loss for Q3 2023, including increased interest expense and a goodwill impairment charge - Net loss applicable to common stockholders for Q3 2023 was approximately **$17.0 million** (**$0.14 per diluted share**), compared to net income of **$3.3 million** (**$0.03 per diluted share**) for Q3 2022[93](index=93&type=chunk) - The decrease in net income was driven by a **$10.1 million increase in interest expense**, an **$11.0 million non-cash goodwill impairment charge**, and an **$0.8 million loss on early extinguishment of debt**[93](index=93&type=chunk) [Comparison of Three Months Ended September 30, 2023 vs 2022](index=27&type=section&id=Comparison%20of%20the%20three%20months%20ended%20September%2030%2C%202023%20versus%20the%20three%20months%20ended%20September%2030%2C%202022) This section compares the financial performance for the three months ended September 30, 2023, against the same period in 2022, detailing revenue and expense variances Selected Financial Data (Three Months Ended Sep 30, in millions) | Item | 2023 | % of Revenues | 2022 | % of Revenues | Variance | | :-------------------------------- | :--- | :------------ | :--- | :------------ | :------- | | Total revenues | $146.9 | 100 % | $144.0 | 100 % | $2.9 | | Property operating costs | $59.8 | 41 % | $59.0 | 41 % | $0.8 | | Depreciation | $38.1 | 26 % | $34.9 | 24 % | $3.2 | | Amortization | $20.2 | 14 % | $23.3 | 16 % | $(3.1) | | Goodwill impairment charge | $11.0 | 7 % | — | — % | $11.0 | | Interest expense | $(27.4) | 19 % | $(17.2) | 12 % | $(10.2) | | Net income/(loss) | $(17.0) | (12)% | $3.3 | 2 % | $(20.3) | - Rental and tenant reimbursement revenue increased by **$2.0 million**, primarily due to capital recycling activity and higher tenant reimbursements from increased building utilization[95](index=95&type=chunk) - Interest expense increased by **$10.2 million**, mainly due to higher interest rates[101](index=101&type=chunk) [Comparison of Nine Months Ended September 30, 2023 vs 2022](index=29&type=section&id=Comparison%20of%20the%20nine%20months%20ended%20September%2030%2C%202023%20versus%20the%20nine%20months%20ended%20September%2030%2C%202022) This section compares the financial performance for the nine months ended September 30, 2023, against the same period in 2022, detailing revenue, expense, and gain on sale variances Selected Financial Data (Nine Months Ended Sep 30, in millions) | Item | 2023 | % of Revenues | 2022 | % of Revenues | Variance | | :-------------------------------- | :--- | :------------ | :--- | :------------ | :------- | | Total revenues | $432.3 | 100 % | $416.5 | 100 % | $15.8 | | Property operating costs | $176.0 | 41 % | $166.3 | 40 % | $9.7 | | Depreciation | $110.4 | 25 % | $98.8 | 24 % | $11.6 | | Amortization | $63.5 | 15 % | $67.0 | 16 % | $(3.5) | | Goodwill impairment charge | $11.0 | 3 % | — | — % | $11.0 | | Interest expense | $(72.8) | 16 % | $(44.9) | 11 % | $(27.9) | | Gain on sale of real estate assets | — | — % | $50.7 | 12 % | $(50.7) | | Net income/(loss) | $(20.4) | (5)% | $71.3 | 17 % | $(91.7) | - Rental and tenant reimbursement revenue increased by **$12.2 million**, driven by capital recycling and higher tenant reimbursements[105](index=105&type=chunk) - Interest expense increased by **$27.9 million**, primarily due to increased interest rates and a higher average debt balance[112](index=112&type=chunk) - A **$50.7 million gain on sale of real estate assets** was recognized in 2022, primarily from the sale of 225 & 235 Presidential Way buildings, with no comparable gain in 2023[115](index=115&type=chunk) [Issuer and Guarantor Financial Information](index=31&type=section&id=Issuer%20and%20Guarantor%20Financial%20Information) This section provides combined financial information for Piedmont OP and Piedmont, Inc., detailing outstanding senior unsecured notes and the nature of Piedmont's guarantee - Piedmont OP has approximately **$1.1 billion in senior unsecured notes** outstanding, fully and unconditionally guaranteed by Piedmont[116](index=116&type=chunk)[117](index=117&type=chunk) - Piedmont's guarantee ranks equally with its other senior unsecured indebtedness but is effectively subordinated to any future secured debt[117](index=117&type=chunk) Combined Balances of Piedmont OP and Piedmont, Inc. (in thousands) | Item | As of Sep 30, 2023 | As of Dec 31, 2022 | | :-------------------------------- | :----------------- | :----------------- | | Total assets | $312,479 | $325,884 | | Total liabilities | $1,890,513 | $1,845,551 | | Total revenues (9M 2023) | $36,842 | N/A | | Net loss (9M 2023) | $(72,634) | N/A | [Net Operating Income by Geographic Segment](index=32&type=section&id=Net%20Operating%20Income%20by%20Geographic%20Segment) This section analyzes Net Operating Income (NOI) across Piedmont's various geographic segments, highlighting performance drivers and changes - Piedmont's CODM assesses performance using geographic segments: Atlanta, Dallas, Orlando, Washington, D.C./Northern Virginia, Minneapolis, New York, and Boston[121](index=121&type=chunk) Accrual-Basis NOI by Geographic Segment (in thousands) | Segment | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Atlanta | $25,965 | $21,627 | $77,247 | $58,354 | | Dallas | $16,334 | $15,325 | $47,313 | $47,189 | | Orlando | $8,895 | $8,865 | $27,446 | $26,206 | | Washington, D.C./Northern Virginia | $9,183 | $9,712 | $27,156 | $29,851 | | Minneapolis | $9,166 | $8,072 | $25,622 | $23,950 | | New York | $7,565 | $7,959 | $22,286 | $23,901 | | Boston | $6,422 | $9,646 | $19,213 | $29,922 | | Total reportable segments | $83,530 | $81,206 | $246,283 | $239,373 | | Other | $3,544 | $3,893 | $9,956 | $10,794 | | Total NOI | $87,074 | $85,099 | $256,239 | $250,167 | - Atlanta NOI increased primarily due to the acquisition of **1180 Peachtree Street** during the third quarter of 2022[123](index=123&type=chunk) - Washington, D.C. NOI decreased due to the early termination of certain leases at **Arlington Gateway** in late 2022[124](index=124&type=chunk) - Boston NOI decreased primarily due to the disposition of the **225 and 235 Presidential Way assets** in January 2022 and the disposition of the **Cambridge Portfolio** in December 2022[125](index=125&type=chunk) [Funds From Operations (FFO), Core Funds From Operations (Core FFO), and Adjusted Funds From Operations (AFFO)](index=32&type=section&id=Funds%20From%20Operations%20%28FFO%29%2C%20Core%20Funds%20From%20Operations%20%28Core%20FFO%29%2C%20and%20Adjusted%20Funds%20From%20Operations%20%28AFFO%29) This section defines and reconciles non-GAAP financial measures (FFO, Core FFO, and AFFO) used to evaluate the operating performance of real estate companies - FFO, Core FFO, and AFFO are non-GAAP financial measures used to provide a more complete understanding of operating performance for real estate companies[126](index=126&type=chunk) - FFO is calculated per NAREIT definition, Core FFO adjusts FFO for non-recurring items, and AFFO further adjusts Core FFO for non-incremental capital expenditures and non-cash items[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) Reconciliation of Net Income/(Loss) to FFO, Core FFO, and AFFO (in thousands, except per share amounts) | Item | Three Months Ended Sep 30, 2023 | Per Share | Three Months Ended Sep 30, 2022 | Per Share | Nine Months Ended Sep 30, 2023 | Per Share | Nine Months Ended Sep 30, 2022 | Per Share | | :-------------------------------- | :------------------------------ | :-------- | :------------------------------ | :-------- | :----------------------------- | :-------- | :----------------------------- | :-------- | | GAAP net income/(loss) applicable to common stock | $(17,002) | $(0.14) | $3,331 | $0.03 | $(20,357) | $(0.16) | $71,261 | $0.58 | | NAREIT Funds From Operations applicable to common stock | $51,896 | $0.42 | $61,352 | $0.50 | $163,775 | $1.32 | $185,835 | $1.50 | | Core Funds From Operations applicable to common stock | $52,716 | $0.43 | $61,352 | $0.50 | $164,595 | $1.33 | $185,835 | $1.50 | | Adjusted Funds From Operations applicable to common stock | $39,939 | N/A | $43,482 | N/A | $121,175 | N/A | $130,958 | N/A | [Property and Same Store Net Operating Income](index=35&type=section&id=Property%20and%20Same%20Store%20Net%20Operating%20Income) This section presents Property NOI and Same Store NOI, non-GAAP measures used to assess the operating performance of the company's property portfolio - Property NOI is a non-GAAP measure assessing operating results by adjusting net income for interest, depreciation, amortization, impairments, gains/losses from sales, and other infrequent items[132](index=132&type=chunk) - Same Store NOI focuses on properties owned throughout both current and prior reporting periods, excluding those out of service for development[134](index=134&type=chunk) Reconciliation to Property NOI and Same Store NOI (in thousands) | Item | Three Months Ended Sep 30, 2023 (Cash Basis) | Three Months Ended Sep 30, 2022 (Cash Basis) | Nine Months Ended Sep 30, 2023 (Cash Basis) | Nine Months Ended Sep 30, 2022 (Cash Basis) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income/(loss) applicable to Piedmont (GAAP basis) | $(17,002) | $3,331 | $(20,357) | $71,261 | | Property NOI | $81,575 | $77,285 | $237,862 | $229,574 | | Same Store NOI | $75,874 | $72,042 | $221,728 | $218,874 | | Change period over period in Same Store NOI | 5.3 % | N/A | 1.3 % | N/A | - Same Store NOI (cash basis) increased by **5.3%** for the three months ended September 30, 2023, and **1.3%** for the nine months ended September 30, 2023, primarily due to rental rate roll-ups and new leases commencing or abatements expiring[146](index=146&type=chunk)[138](index=138&type=chunk) [Portfolio Overview and Key Metrics](index=39&type=section&id=Portfolio%20Overview%20and%20Key%20Metrics) This section provides an overview of the company's property portfolio, including leased percentage, impact of lease terms, REIT election, inflation, and critical accounting estimates [Leased Percentage](index=39&type=section&id=Leased%20Percentage) This section highlights the portfolio's occupancy rate and recent leasing activity, including new tenant leases - Portfolio occupancy increased to **86.7% leased** as of September 30, 2023, up from **86.2%** as of June 30, 2023[142](index=142&type=chunk) - Approximately **302,000 square feet** of leasing was completed in Q3 2023, including **170,000 square feet** of new tenant leases[142](index=142&type=chunk) [Impact of Downtime, Abatement Periods, and Rental Rate Changes](index=39&type=section&id=Impact%20of%20Downtime%2C%20Abatement%20Periods%2C%20and%20Rental%20Rate%20Changes) This section analyzes how lease commencement delays, rental abatements, and changes in rental rates affect the company's revenue and NOI - Lease commencement for new tenants typically occurs **6-18 months** after execution, impacting Property NOI and Same Store NOI[143](index=143&type=chunk) - As of September 30, 2023, **1.1 million square feet** of executed leases for vacant space were yet to commence or under rental abatement, representing approximately **$36 million** of additional annual cash revenue[144](index=144&type=chunk) - Experienced an **11.7% cash rent roll-up** and **10.3% accrual rent roll-up** on executed leases for space vacant one year or less during Q3 2023[145](index=145&type=chunk) - For the nine months ended September 30, 2023, experienced a **9.8% cash rent roll-up** and **13.5% accrual rent roll-up** on executed leases for space vacant one year or less[145](index=145&type=chunk) [Election as a REIT](index=40&type=section&id=Election%20as%20a%20REIT) This section confirms Piedmont's election to be taxed as a REIT since 1998, outlining the associated distribution requirements and asset limitations - Piedmont has elected to be taxed as a REIT since **1998**, requiring distribution of at least **90%** of its annual REIT taxable income to avoid federal income tax[147](index=147&type=chunk) - Investments in Taxable REIT Subsidiaries (TRS) cannot exceed **20%** of total assets to maintain REIT qualification[147](index=147&type=chunk) [Inflation](index=40&type=section&id=Inflation) This section addresses Piedmont's exposure to inflation risk and the mitigating provisions within its long-term lease agreements - Piedmont is exposed to inflation risk due to long-term leases, but most leases include provisions like rent steps and reimbursement billings for operating expenses, real estate taxes, and insurance to mitigate this risk[148](index=148&type=chunk) [Application of Critical Accounting Estimates](index=40&type=section&id=Application%20of%20Critical%20Accounting%20Estimates) This section confirms that no material changes occurred in critical accounting policies during the nine months ended September 30, 2023 - Preparation of financial statements requires management judgment and estimates in applying GAAP, with no material changes to critical accounting policies during the nine months ended September 30, 2023[149](index=149&type=chunk) [Commitments and Contingencies](index=41&type=section&id=Commitments%20and%20Contingencies%20%28MD%26A%29) This section refers to Note 7 for further details on Piedmont's commitments and contingencies - Piedmont is subject to certain commitments and contingencies, as further explained in Note 7 to the consolidated financial statements[150](index=150&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Piedmont's primary market risk is interest rate risk, stemming from variable-rate debt facilities. The company manages this risk through a low-to-moderate level of borrowings and fixed/effectively-fixed interest rates on most debt. A 1.0% increase in variable interest rates would increase annual interest expense by approximately $5.7 million - Piedmont's primary market risk exposure is interest rate risk, particularly from borrowings under its **$600 Million Unsecured 2022 Line of Credit**, **$200 Million 2022 Unsecured Term Loan Facility**, and **$215 Million Unsecured 2023 Term Loan**[151](index=151&type=chunk) - Interest rate risk management objectives include limiting the impact of interest rate changes through low-to-moderate borrowings and managing rate variability, with most debt (approximately **$1.5 billion**) being fixed or effectively-fixed[152](index=152&type=chunk)[154](index=154&type=chunk) - A **1.0% increase** in variable interest rates on existing outstanding borrowings as of September 30, 2023, would increase interest expense by approximately **$5.7 million annually**[155](index=155&type=chunk) Variable Rate Debt Details (as of Sep 30, 2023) | Facility | Stated Rate | Total Interest Rate | | :-------------------------------- | :---------- | :------------------ | | $600 Million Unsecured 2022 Line of Credit | Adjusted SOFR + 0.84% | 6.24% | | $200 Million Unsecured 2022 Term Loan Facility | Adjusted SOFR + 1.00% | 6.43% | | $215 Million Unsecured 2023 Term Loan | Adjusted SOFR + 1.05% | 6.45% | [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Principal Executive Officer and Principal Financial Officer, concluded that Piedmont's disclosure controls and procedures were effective as of September 30, 2023, ensuring timely and accurate reporting. There were no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of September 30, 2023, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[156](index=156&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2023[157](index=157&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity security sales, and other disclosures, providing additional context to the company's operations [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Piedmont is not subject to any material pending legal proceedings, only routine litigation covered by insurance, which management does not expect to materially adversely affect financial condition, results of operations, or liquidity - Piedmont is not subject to any material pending legal proceedings, only routine litigation arising in the ordinary course of business[159](index=159&type=chunk) - Management expects routine legal proceedings to be covered by insurance and not to materially adversely affect financial condition, results of operations, or liquidity[159](index=159&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor has been identified regarding the potential loss of uninsured deposits in the event of bank failures, which could reduce available cash. No other material changes to previously disclosed risk factors were noted - A new risk factor highlights the potential for loss of deposits exceeding federally insured levels (**$250,000**) if banking institutions fail, which could reduce cash available for distributions, debt repayment, or investments[160](index=160&type=chunk)[161](index=161&type=chunk) - No other known material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or repurchases of common stock during the third quarter of 2023. Approximately $150.5 million remains available under the stock repurchase program through February 2024 - No unregistered sales of equity securities occurred during the third quarter of 2023[166](index=166&type=chunk) - No repurchases of common stock occurred during the third quarter of 2023[166](index=166&type=chunk) - Approximately **$150.5 million** remains available under the stock repurchase program to make share repurchases through February 2024[166](index=166&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the reporting period - Not applicable[164](index=164&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period - Not applicable[165](index=165&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - None[166](index=166&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, debt instruments, certifications, and XBRL-related documents - Exhibit 4.1: Supplemental Indenture, dated as of July 20, 2023, by and among Piedmont Operating Partnership, LP, Piedmont Office Realty Trust, Inc. and U.S. Bank Trust Company, National Association, as trustee[167](index=167&type=chunk) - Exhibit 31.1 and 31.2: Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002[167](index=167&type=chunk) - Exhibit 32.1 and 32.2: Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002[167](index=167&type=chunk) [SIGNATURES](index=45&type=section&id=SIGNATURES) This section formally concludes the report with the signature of the authorized financial officer, confirming its submission - The report was signed on October 30, 2023, by Robert E. Bowers, Chief Financial Officer and Executive Vice President (Principal Financial Officer and Duly Authorized Officer) of Piedmont Office Realty Trust, Inc.[169](index=169&type=chunk)

Piedmont Office Realty Trust, Inc. (NYSE:PDM) Q2 2023 Earnings Conference Call July 20, 2023 5:00 PM ET Company Participants Eddie Guilbert - Investor Relations Brent Smith - President and Chief Executive Officer George Wells - Executive Vice President and Chief Operating Officer Chris Kollme - Executive Vice President of Investments Bobby Bowers - Executive Vice President and Chief Financial and Administrative Officer Conference Call Participants Nicholas Thillman - Robert W. Baird & Co. Inc. Dylan Burzins ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________ _______________________________________________________________________________________ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the Quarterly Period Ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the Transition Period From ...