Financial Data and Key Metrics Changes - Core FFO per diluted share for Q2 2025 was $0.36, down from $0.37 in Q2 2024, primarily due to higher net interest expenses from refinancing activities [24] - AFFO generated during Q2 2025 was approximately $16 million [25] - The company anticipates annual core FFO guidance in the range of $1.38 to $1.44 per diluted share, with no material changes to previously published assumptions [26] Business Line Data and Key Metrics Changes - Total leasing success in Q2 2025 reached 712,000 square feet, with year-to-date leasing exceeding 1,000,000 square feet [6] - Approximately two-thirds of Q2 leasing activity was related to new tenant leases, marking the highest new tenant leasing in a single quarter since 2018 [6][7] - Rental rates for spaces vacant less than a year reflected over 7% increases, with almost 14% roll-ups on a cash and accrual basis, respectively [9] Market Data and Key Metrics Changes - Demand for office space is increasing, with JLL Research noting a 5.8% growth in active space requirements, the highest level of demand since 2021 [10] - National occupancy remained stable, with Piedmont observing positive absorption in four of its operating markets [10] - The out-of-service portfolio was over 30% leased by the end of Q2 and is expected to reach stabilization by the end of next year [8] Company Strategy and Development Direction - The company is focusing on creating modern work environments and is well-positioned to benefit from the flight to quality in office buildings [6] - The leasing guidance for 2025 has been increased to a range of 2,200,000 to 2,400,000 square feet, reflecting an increase of over 800,000 square feet compared to the original guidance [11] - The company plans to continue selective capital deployment to drive lease percentage and increase rental rates, aiming for FFO and cash flow growth [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about leasing prospects, citing strong demand from large tenants and a lack of new office construction [10] - The company anticipates that the majority of new leasing will benefit earnings in 2026 and beyond [11] - Management noted that the current high interest rates and inflation are expected to diminish new office supply and push construction costs higher, which will support rental rate growth [9] Other Important Information - The company repurchased approximately $68 million of its bonds during the quarter, resulting in a $7.5 million loss on early extinguishment of debt, but expected to save $7.5 million in total interest over the next three years [25] - The company has approximately $450 million of availability under its revolving line of credit and no final debt maturities until 2028 [26] Q&A Session Summary Question: What are the longer-term goals for exposures within markets? - Management indicated a focus on increasing exposure to the Sunbelt markets, aiming to raise the current 70% exposure to around 80% [34] Question: Can you touch on some of the larger pending vacancies and activity? - Management highlighted a strong pipeline with about 2,200,000 square feet of outstanding proposals, with significant activity in Atlanta and Dallas [37] Question: What offsets should be considered in terms of guidance? - Management noted that while leasing strength is strong, most of it will translate into growth in 2026 and beyond, which is why the bottom line guidance was not revised up [48] Question: How do you think about the buyer group and potential outcomes? - Management mentioned that the sales market is improving, particularly for core quality assets, and they are focused on disposing of non-core assets [54] Question: What is driving the reinvigoration of leasing activity? - Management identified several factors, including the need for larger tenants to upgrade their office experience and the return-to-office mandates [64]