pdm-20200729
0001042776false00010427762020-07-292020-07-29


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  July 29, 2020
 
Piedmont Office Realty Trust, Inc.
(Exact name of registrant as specified in its charter)
 
Commission File Number:  001-34626
 
Maryland58-2328421
(State or other jurisdiction of(IRS Employer
incorporation)Identification No.)

5565 Glenridge Connector Ste. 450
Atlanta, Georgia 30342

(Address of principal executive offices, including zip code)
 
(770) 418-8800
(Registrant's telephone number, including area code)
 
Not applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valuePDMNew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o




Item 2.02 Results of Operations and Financial Condition.

On July 29, 2020, Piedmont Office Realty Trust, Inc. (the "Registrant") issued a press release announcing its financial results for the second quarter 2020, and published supplemental information for the second quarter 2020 to its website. The press release and the supplemental information are attached hereto as Exhibit 99.1 and 99.2, respectively, and are incorporated herein by reference. Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibits and the information set forth therein are deemed to have been furnished and shall not be deemed to be “filed” under the Securities Exchange Act of 1934.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit No.Description
99.1
99.2
104Cover Page Interactive Data File (embedded within the Inline XBRL document)







SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
 
  Piedmont Office Realty Trust, Inc.
 (Registrant)
Dated:July 29, 2020By:/s/    Robert E. Bowers
  Robert E. Bowers
  Chief Financial Officer and Executive Vice President




Document

EXHIBIT 99.1
https://cdn.kscope.io/07ffae0cab750bb5f4b001b160776617-image121.jpg

Piedmont Office Realty Trust Reports Second Quarter 2020 Results
ATLANTA, July 29, 2020--Piedmont Office Realty Trust, Inc. ("Piedmont" or the "Company") (NYSE:PDM), an owner of Class A office properties located primarily in select sub-markets within seven major Eastern U.S. office markets, today announced its results for the quarter ended June 30, 2020.

Highlights for the Quarter Ended June 30, 2020:

Reported net income applicable to common stockholders of $192.4 million, or $1.52 per diluted share, for the quarter ended June 30, 2020, as compared with $8.2 million, or $0.06 per diluted share, for the quarter ended June 30, 2019;
Achieved a 14% increase in Core Funds From Operations, reporting $0.49 per diluted share for the quarter ended June 30, 2020 as compared to $0.43 for the quarter ended June 30, 2019;
Completed the disposition of 1901 Market Street, the Company's only Philadelphia asset, for approximately $360 million, resulting in the recognition of a $191.4 million gain on sale of real estate assets that is included in the second quarter's results of operations;
Related to the sale of 1901 Market Street, the Company prepaid a $160 million mortgage secured by the property, resulting in the recognition of a $9.3 loss on early extinguishment of debt that is also included in the second quarter's results of operations;
Completed approximately 271,000 square feet of primarily renewal leasing, resulting in an approximately 3.7% and 6.4% roll up in cash and accrual rents, respectively, on leases executed during the quarter for space vacant for one year or less; and
Collected 99% of billed tenant receivables during the second quarter.

Commenting on the second quarter's results, Brent Smith, President and Chief Executive Officer, said, "The sale of 1901 Market Street was definitely the highlight of our quarter, concluding a successful recycling story for Piedmont, and allowing us to dispose of a long-term, 100%-leased asset in a non-strategic market, and to fully reinvest the proceeds accretively into a strategic submarket in Dallas. As a result of this significant transaction, 96% of our annualized lease revenue is now generated from our seven core markets, with approximately half from Sunbelt locations. While new leasing activity was curtailed during the quarter due to the COVID-19 restrictions, we continue to experience good lease renewals and strong rent collections from our portfolio of credit-worthy tenants and are thankful for the strong balance sheet and liquidity position that have always been a part of our operating objectives. We are beginning to see improved leasing activity in several of our markets, which are easily accessible, provide convenient, walkable amenities and are not dependent on mass transit."

Results for the Quarter ended June 30, 2020

Piedmont recognized net income applicable to common stockholders for the three months ended June 30, 2020 of $192.4 million, or $1.52 per diluted share, as compared with $8.2 million, or $0.06 per diluted



share, for the three months ended June 30, 2019. The second quarter of 2020 included a $191.4 million gain on sale of real estate asset and a $9.3 million loss on early extinguishment of debt associated with the sale of 1901 Market Street in Philadelphia, PA and resulting repayment of the $160 million mortgage associated with the property during the quarter.
Funds From Operations ("FFO"), which removes the impact of the gain on sale of real estate asset mentioned above, as well as depreciation and amortization, was $0.41 per diluted share for both the three months ended June 30, 2020 and 2019. The second quarter of 2020's results include the $9.3 million loss on early extinguishment of debt mentioned above, offset by rental rate growth throughout the portfolio over the past twelve months, cost savings from reduced active occupancy, the commencement of certain large leases, and net acquisition and disposition activity since April 1, 2019.
Core Funds From Operations ("Core FFO"), which removes the loss on early extinguishment of debt mentioned above, as well as the same items enumerated in calculating FFO, was $0.49 per diluted share for the three months ended June 30, 2020, as compared with $0.43 per diluted share for the three months ended June 30, 2019 reflecting rental rate growth throughout the portfolio over the past twelve months, the commencement of certain large leases, as well as net acquisition and disposition activity since April 1, 2019.
Total revenues and property operating costs were $134.6 million and $53.1 million, respectively, for the three months ended June 30, 2020, compared to $130.7 million and $52.4 million, respectively, for the second quarter of 2019, with both line items reflecting the commencement of new leases, lower costs from reduced active occupancy, the expiration of operating expense recovery abatements, and net transactional activity during the twelve months prior to June 30, 2020. General and administrative expense was $5.9 million for the second quarter of 2020 as compared to $12.4 million for the same period in 2019, with the three months ended June 30, 2020 reflecting decreased accruals for stock based compensation, while the amount for the second quarter of 2019 reflects $3.2 million of one-time expenses associated with the senior management transition that took place on June 30, 2019.

Leasing Update

During the three months ended June 30, 2020, Piedmont completed approximately 271,000 square feet of leasing across its portfolio, with most activity centering around renewals. The most significant lease executed during the second quarter was Brother International's renewal of their approximately 102,000 square feet at 200 Bridgewater Crossing in Bridgewater, NJ. The second quarter's executed leases for recently occupied space reflected a 3.7% roll up in cash rents and 6.4% increase in accrual rents.
As of June 30, 2020, the Company's reported leased percentage and weighted average remaining lease term were approximately 89% and 6.3 years, respectively, with approximately 1.5 million square feet of executed leases for vacant space yet to commence or under rental abatement. Other than the City of New York's 313,000 square foot lease that is currently in holdover status at 60 Broad Street in New York, the Company has no other lease expirations greater than 1% of annualized lease revenue during the eighteen month period following June 30, 2020. The Company remains in advanced discussions for the long-term renewal of substantially all of the City of New York's leased square footage.
Same Store Net Operating Income ("Same Store NOI") increased 1.7% and decreased (2.3)% on a cash and accrual basis, respectively, for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019. The increase in cash basis Same Store NOI was attributable to the expiration of lease abatements while the decrease in accrual basis Same Store NOI was primarily the result of the recognition of charges against rental revenue for tenant-specific and general collectibility risks during the second quarter of 2020. Details outlining Piedmont's largest upcoming lease commencements and expirations, the status of certain major leasing activity and a schedule of the largest



lease abatements can be found in the Company's quarterly supplemental information package available at www.piedmontreit.com.

Transactional and Financing Update

During the three months ended June 30, 2020, Piedmont sold its approximately 801,000 square foot, 45-story, 100%-leased 1901 Market Street building in Philadelphia, PA for approximately $360 million, or $450 per square foot, and recognized a gain on sale of real estate assets of approximately $191.4 million in its second quarter results of operations. Additionally, as a result of the sale, Piedmont repaid the $160 million mortgage associated with the property and recognized a loss on early extinguishment of debt of $9.3 million as a result of the prepayment and write-off of unamortized debt issuance costs. The Company used a portion of the remaining proceeds of the sale to pay off the balance outstanding on its $500 million unsecured line of credit and, as a result, the full capacity of the $500 million line is currently available. The transaction was structured as a 1031 exchange with the Company's recent purchase of the Dallas Galleria Office Towers for tax purposes; therefore no special distribution of the gain on sale will be required. As a result of the disposition of 1901 Market Street, 96% of Piedmont’s annualized lease revenue is now generated from its seven core markets, with approximately half derived from its Sunbelt locations.

Third Quarter 2020 Dividend Declaration

On July 29, 2020, the board of directors of Piedmont declared a dividend for the third quarter of 2020 in the amount of $0.21 per share on its common stock to stockholders of record as of the close of business on August 28, 2020, payable on September 18, 2020.

Impact of COVID-19 on Guidance for 2020

As the duration and severity of the COVID-19 pandemic and the longer-term consequences on the economy and our tenants continue to be unknown, the Company is not providing guidance for 2020 at this time. Notwithstanding the economic backdrop, Piedmont has a strong, diversified tenant base, a majority of which is investment grade quality. Consequently, during the second quarter of 2020 the Company collected 99% of billed tenant receivables, net of approximately $3.6 million of tenant cash receipts that have been deferred until later in 2020 or 2021.
Additionally, the Company has a prudent balance sheet with excellent liquidity, including approximately $30 million in cash and full availability under its $500 million line of credit at June 30, 2020 and no debt maturities until late 2021. Despite the widespread impacts of the COVID-19 pandemic on the global economy, the Company currently anticipates that its overall leased percentage and expected 2020 financial performance will not be severely impacted by the pandemic.
While it is no longer providing guidance for 2020, the Company is providing additional information regarding performance year-to-date, identified trends and its current expectations for how the pandemic could impact performance for the year when compared to its original expectations for the year:

New tenant leasing activity slowed during the second quarter. The Company believes this trend will continue throughout the third quarter, likely pushing “new tenant” leasing goals out several months, and modestly lowering 2020 net operating income (“NOI”) by approximately $5 million.
Piedmont’s transient parking income is estimated to be lower by approximately $2 million for the year.
With respect to retail tenant income, which is about 1% of the Company’s total 2020 revenues, overall retail NOI is estimated to be lower by approximately $2 million for the year.



In addition to the items above, during the second quarter, the Company took an approximate charge of $1.8 million against rental revenue in recognition of an increase in collectibility risk. As a precautionary measure, the Company also established an additional approximately $5 million general reserve for potential future losses, which is approximately 1% of the Company’s annualized revenue.
The Company expects lower operating expenses at its buildings during 2020. The Company-portion of the operating expense savings is anticipated to be $1 to $2 million for the year.
The Company anticipates $5 million lower interest expense for 2020 due to lower prevailing interest rates.

These identified impacts of the COVID-19 pandemic on NOI during 2020 equate to a net reduction of approximately $10-12 million from our original expectations for the year. These estimated effects of COVID-19 on the Company's financial performance are based upon the premise that the economic slowdown abates during the fourth quarter of 2020. The Company will reevaluate guidance once the longer-term consequences of the COVID-19 pandemic on the economy and our tenants can be more thoroughly considered.

Non-GAAP Financial Measures

To supplement the presentation of the Company’s financial results prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), this release and the accompanying quarterly supplemental information as of and for the period ended June 30, 2020 contain certain financial measures that are not prepared in accordance with GAAP, including FFO, Core FFO, AFFO, Same Store NOI (cash and accrual basis), Property NOI (cash and accrual basis), EBITDAre, and Core EBITDA. Definitions and reconciliations of each of these non-GAAP measures to their most comparable GAAP metrics are included below and in the accompanying quarterly supplemental information.
Each of the non-GAAP measures included in this release and the accompanying quarterly supplemental financial information has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of the Company’s results calculated in accordance with GAAP. In addition, because not all companies use identical calculations, the Company’s presentation of non-GAAP measures in this release and the accompanying quarterly supplemental information may not be comparable to similarly titled measures disclosed by other companies, including other REITs. The Company may also change the calculation of any of the non-GAAP measures included in this news release and the accompanying supplemental financial information from time to time in light of its then existing operations.

Conference Call Information

Piedmont has scheduled a conference call and an audio web cast for Thursday, July 30, 2020 at 11:00 A.M. Eastern daylight time. The live, listen-only, audio web cast of the call may be accessed on the Company's website at http://investor.piedmontreit.com/news-and-events/events-calendar. Dial-in numbers for analysts who plan to actively participate in the call are (844) 369-8770 for participants in the United States and Canada and (862) 298-0840 for international participants. A replay of the conference call will be available through 11:00 A.M. Eastern daylight time on August 13, 2020, and may be accessed by dialing (877) 481-4010 for participants in the United States and Canada and (919) 882-2331 for international participants, followed by conference identification code 35682. A web cast replay will also be available after the conference call in the Investor Relations section of the Company's website. During the audio web cast and conference call, the Company's management team will review second quarter 2020 performance, discuss recent events, and conduct a question-and-answer period.




Supplemental Information

Quarterly supplemental information as of and for the period ended June 30, 2020 can be accessed on the Company`s website under the Investor Relations section at www.piedmontreit.com.

About Piedmont Office Realty Trust

Piedmont Office Realty Trust, Inc. (NYSE: PDM) is an owner, manager, developer, redeveloper, and operator of high-quality, Class A office properties located primarily in select sub-markets within seven major Eastern U.S. office markets, with the majority of its revenue being generated from the Sunbelt. Its geographically-diversified, approximately $5 billion portfolio is currently comprised of approximately 17 million square feet. The Company is a fully-integrated, self-managed real estate investment trust (REIT) with local management offices in each of its markets and is investment-grade rated by S&P Global Ratings (BBB) and Moody’s (Baa2). At the end of the second quarter, approximately 63% of the company’s portfolio was ENERGY STAR certified and approximately 41% was LEED certified. For more information, see www.piedmontreit.com.

Forward Looking Statements

Certain statements contained in this press release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company intends for all such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such information is subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of the Company`s performance in future periods. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "believe," "continue" or similar words or phrases that are predictions of future events or trends and which do not relate solely to historical matters. Examples of such statements in this press release include: whether the Company's overall leased percentage and expected 2020 financial performance will be severely impacted by the pandemic; whether new tenant leasing activity will continue to be slow throughout the third quarter, pushing “new tenant” leasing goals out several months, and modestly lowering 2020 net operating income (“NOI”) by approximately $5 million; whether Piedmont’s transient parking income will be lower by approximately $2 million for the year; whether overall retail NOI will be lower by approximately $2 million for the year; whether the Company will realize operating expense savings of $1 to $2 million for the year; whether the Company will realize $5 million of interest expense savings for 2020 due to lower prevailing interest rates; whether the identified impacts of the COVID-19 pandemic on NOI during 2020 will equate to a net reduction of approximately $10-12 million from our original expectations for the year; and whether the economic slowdown will abate during the fourth quarter of 2020.

The following are some of the factors that could cause the Company's actual results and its expectations to differ materially from those described in the Company's forward-looking statements: actual or threatened public health epidemics or outbreaks, such as the novel coronavirus (COVID-19) pandemic that the world is currently experiencing, and governmental and private measures taken to combat such health crises, which may affect our personnel, tenants, and the costs of operating our assets; economic, regulatory, socioeconomic changes, and/or technology changes (including accounting standards) that impact the real estate market generally, or that could affect patterns of use of commercial office space;



the impact of competition on our efforts to renew existing leases or re-let space on terms similar to existing leases; changes in the economies and other conditions affecting the office sector in general and specifically the seven markets in which we primarily operate where we have high concentrations of our annualized lease revenue; lease terminations, lease defaults, or changes in the financial condition of our tenants, particularly by one of our large lead tenants; adverse market and economic conditions, including any resulting impairment charges on both our long-lived assets or goodwill resulting therefrom; the success of our real estate strategies and investment objectives, including our ability to identify and consummate suitable acquisitions and divestitures; the illiquidity of real estate investments, including regulatory restrictions to which REITs are subject and the resulting impediment on our ability to quickly respond to adverse changes in the performance of our properties; the risks and uncertainties associated with our acquisition and disposition of properties, many of which risks and uncertainties may not be known at the time of acquisition or disposition; development and construction delays and resultant increased costs and risks; our real estate development strategies may not be successful; future acts of terrorism or armed hostilities in any of the major metropolitan areas in which we own properties, or future cybersecurity attacks against us or any of our tenants; costs of complying with governmental laws and regulations; additional risks and costs associated with directly managing properties occupied by government tenants, including an increased risk of default by government tenants during periods in which state or federal governments are shut down or on furlough; significant price and volume fluctuations in the public markets, including on the exchange which we listed our common stock; changes in the method pursuant to which the LIBOR rates are determined and the potential phasing out of LIBOR after 2021; the effect of future offerings of debt or equity securities or changes in market interest rates on the value of our common stock; uncertainties associated with environmental and other regulatory matters; potential changes in political environment and reduction in federal and/or state funding of our governmental tenants; changes in the financial condition of our tenants directly or indirectly resulting from geopolitical developments that could negatively affect international trade, including the uncertainty surrounding the United Kingdom’s withdrawal from the European Union, the termination or threatened termination of existing international trade agreements, or the implementation of tariffs or retaliatory tariffs on imported or exported goods; the effect of any litigation to which we are, or may become, subject; additional risks and costs associated with owning properties occupied by co-working tenants, including risks of default during start-up and during economic downturns; changes in tax laws impacting REITs and real estate in general, as well as our ability to continue to qualify as a REIT under the Internal Revenue Code of 1986 or otherwise adversely affect our stockholders; the future effectiveness of our internal controls and procedures; and other factors, including the risk factors discussed under Item 1A. of Piedmont’s Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the three months ended March 31, 2020 and June 30, 2020.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company cannot guarantee the accuracy of any such forward-looking statements contained in this press release, and the Company does not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.




Research Analysts/ Institutional Investors Contact:
Eddie Guilbert
770-418-8592
research.analysts@piedmontreit.com

Shareholder Services/Transfer Agent Services Contact:
Computershare, Inc.
866-354-3485
investor.services@piedmontreit.com



Piedmont Office Realty Trust, Inc.
Consolidated Balance Sheets
 (in thousands)
June 30, 2020December 31, 2019
(unaudited)
Assets:
Real estate assets, at cost:
Land
$505,228  $485,560  
Buildings and improvements
3,258,713  2,943,685  
Buildings and improvements, accumulated depreciation
(776,870) (730,750) 
Intangible lease assets
164,145  125,171  
Intangible lease assets, accumulated amortization
(58,148) (50,766) 
Construction in progress
51,045  29,920  
Real estate assets held for sale, gross—  233,951  
Real estate assets held for sale, accumulated depreciation and amortization
—  (94,261) 
Total real estate assets
3,144,113  2,942,510  
Cash and cash equivalents
36,469  13,545  
Tenant receivables
8,494  8,226  
Straight line rent receivables
147,418  132,342  
Restricted cash and escrows
1,769  1,841  
Prepaid expenses and other assets
33,017  25,427  
Goodwill
98,918  98,918  
Deferred lease costs, gross
459,398  413,071  
Deferred lease costs, accumulated depreciation
(159,883) (147,324) 
Other assets held for sale, gross
—  63,158  
Other assets held for sale, accumulated depreciation
—  (34,957) 
Total assets$3,769,713  $3,516,757  
Liabilities:
Unsecured debt, net of discount and unamortized debt issuance costs
$1,592,693  $1,292,374  
Secured debt, inclusive of premium and unamortized debt issuance costs
28,784  189,030  
Accounts payable, accrued expenses, and accrued capital expenditures
95,419  117,496  
Dividends payable
—  26,427  
Deferred income
35,226  34,609  
Intangible lease liabilities, less accumulated amortization
41,179  25,069  
Interest rate swaps
28,575  5,121  
Other liabilities held for sale
—  7,657  
Total liabilities1,821,876  1,697,783  
Stockholders' equity :
Common stock
1,260  1,258  
Additional paid in capital
3,691,377  3,686,398  
Cumulative distributions in excess of earnings
(1,723,147) (1,871,375) 
Other comprehensive income
(23,360) 967  
Piedmont stockholders' equity1,946,130  1,817,248  
Non-controlling interest
1,707  1,726  
Total stockholders' equity1,947,837  1,818,974  
Total liabilities and stockholders' equity$3,769,713  $3,516,757  
Number of shares of common stock outstanding as of end of period126,025  125,783  




Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands, except for per share data)
Three Months EndedSix Months Ended
6/30/20206/30/20196/30/20206/30/2019
Revenues:
Rental and tenant reimbursement revenue$131,247  $125,468  $263,401  $251,634  
Property management fee revenue622  422  1,395  2,414  
Other property related income2,762  4,778  7,006  9,556  
Total revenues
134,631  130,668  271,802  263,604  
Expenses:
Property operating costs53,148  52,380  106,338  104,185  
Depreciation27,200  26,348  55,084  52,873  
Amortization24,349  18,461  47,980  36,161  
General and administrative5,937  12,418  14,580  21,786  
Total operating expenses
110,634  109,607  223,982  215,005  
Other income (expense):
Interest expense(13,953) (15,112) (29,217) (30,605) 
Other income349  752  498  1,029  
Loss on early extinguishment of debt(9,336) —  (9,336) —  
Gain on sale of real estate assets191,369  1,451  191,372  39,338  
Total other income (expense)
168,429  (12,909) 153,317  9,762  
Net income192,426  8,152  201,137  58,361  
Net loss/(income) applicable to noncontrolling interest  (1) —  
Net income applicable to Piedmont$192,427  $8,153  $201,136  $58,361  
Weighted average common shares outstanding - diluted126,500  126,491  126,456  126,404  
Net income per share applicable to common stockholders - diluted$1.52  $0.06  $1.59  $0.46  












Piedmont Office Realty Trust, Inc.
Funds From Operations, Core Funds From Operations and Adjusted Funds From Operations
Unaudited (in thousands, except for per share data)
Three Months EndedSix Months Ended
6/30/20206/30/20196/30/20206/30/2019
GAAP net income applicable to common stock$192,427  $8,153  $201,136  $58,361  
Depreciation of real estate assets(1)
26,873  26,128  54,424  52,437  
Amortization of lease-related costs
24,336  18,446  47,954  36,131  
Gain on sale of real estate assets
(191,369) (1,451) (191,372) (39,338) 
NAREIT Funds From Operations applicable to common stock*
52,267  51,276  112,142  107,591  
Retirement and separation expenses associated with senior management transition in June 2019
—  3,175  —  3,175  
Loss on early extinguishment of debt
9,336  —  9,336  —  
Core Funds From Operations applicable to common stock*61,603  54,451  121,478  110,766  
Amortization of debt issuance costs, fair market adjustments on notes payable, and discounts on debt
672  525  1,249  1,048  
Depreciation of non real estate assets
319  212  644  420  
Straight-line effects of lease revenue
(7,278) (3,223) (14,063) (5,906) 
Stock-based compensation adjustments
645  2,184  2,945  4,964  
Net effect of amortization of above/below-market in-place lease intangibles
(3,304) (2,088) (6,277) (4,086) 
Non-incremental capital expenditures(2)
(7,689) (9,691) (42,451) (3)(13,058) 
Adjusted Funds From Operations applicable to common stock*$44,968  $42,370  $63,525  $94,148  
Weighted average common shares outstanding - diluted126,500  126,491  126,456  126,404  
Funds From Operations per share (diluted)$0.41  $0.41  $0.89  $0.85  
Core Funds From Operations per share (diluted)$0.49  $0.43  $0.96  $0.88  

(1)Excludes depreciation of non real estate assets.

(2)Capital expenditures of a recurring nature related to tenant improvements and leasing commissions that do not incrementally enhance the underlying assets' income generating capacity. Tenant improvements, leasing commissions, building capital and deferred lease incentives incurred to lease space that was vacant at acquisition, leasing costs for spaces vacant for greater than one year, leasing costs for spaces at newly acquired properties for which in-place leases expire shortly after acquisition, improvements associated with the expansion of a building and renovations that change the underlying classification of a building are excluded from this measure.

(3)Includes the leasing commission for the approximately 20-year, 520,000-square-foot renewal and expansion of the State of New York's lease at our 60 Broad Street building in New York City that was executed during the fourth quarter of 2019.






Piedmont Office Realty Trust, Inc.
EBITDAre, Core EBITDA, Property Net Operating Income (Cash and Accrual), Same Store Net Operating Income (Cash and Accrual)
Unaudited (in thousands)
Cash BasisAccrual Basis
Three Months EndedThree Months Ended
6/30/20206/30/20196/30/20206/30/2019
Net income applicable to Piedmont (GAAP)$192,427  $8,153  $192,427  $8,153  
Net loss applicable to noncontrolling interest
(1) (1) (1) (1) 
Interest expense
13,953  15,112  13,953  15,112  
Depreciation
27,192  26,340  27,192  26,340  
Amortization
24,336  18,446  24,336  18,446  
Gain on sale of real estate assets
(191,369) (1,451) (191,369) (1,451) 
EBITDAre*
66,538  66,599  66,538  66,599  
Loss on early extinguishment of debt
9,336  —  9,336  —  
Retirement and separation expenses associated with senior management transition
—  3,175  —  3,175  
Core EBITDA*75,874  69,774  75,874  69,774  
General & administrative expenses
5,937  9,244  5,937  9,244  
Management fee revenue
(282) (201) (282) (201) 
Other income
(134) (56) (134) (56) 
       Non-cash general reserve for uncollectible accounts4,865  —  
Straight line effects of lease revenue
(7,278) (3,223) 
Amortization of lease-related intangibles
(3,304) (2,088) 
Property NOI*75,678  73,450  81,395  78,761  
Net operating income from:
Acquisitions
(10,109) (921) (13,518) (1,155) 
Dispositions
(4,384) (12,320) (5,195) (13,424) 
Other investments(1)
(224) (246) (177) (220) 
Same Store NOI*$60,961  $59,963  $62,505  $63,962  
Change period over period in Same Store NOI1.7 %N/A(2.3)%N/A

(1)Other investments consist of our investments in active redevelopment and development projects, land, and recently completed redevelopment and development projects for which some portion of operating expenses were capitalized during the current or prior reporting periods. The operating results from Two Pierce Place in Itasca, IL are included in this line item.




Piedmont Office Realty Trust, Inc.
EBITDAre, Core EBITDA, Property Net Operating Income (Cash and Accrual), Same Store Net Operating Income (Cash and Accrual)
Unaudited (in thousands)
Cash BasisAccrual Basis
Six Months EndedSix Months Ended
6/30/20206/30/20196/30/20206/30/2019
Net income applicable to Piedmont (GAAP)$201,136  $58,361  $201,136  $58,361  
Net income applicable to noncontrolling interest —   —  
Interest expense29,217  30,605  29,217  30,605  
Depreciation55,069  52,858  55,069  52,858  
Amortization47,954  36,131  47,954  36,131  
Gain on sale of real estate assets(191,372) (39,338) (191,372) (39,338) 
EBITDAre*142,005  138,617  142,005  138,617  
Loss on early extinguishment of debt9,336  —  9,336  —  
Retirement and separation expenses associated with senior management transition—  3,175  —  3,175  
Core EBITDA*151,341  141,792  151,341  141,792  
General & administrative expenses14,580  18,611  14,580  18,611  
Management fee revenue(677) (2,023) (677) (2,023) 
Other (income)\expense(67) (118) (67) (118) 
Non-cash general reserve for uncollectible accounts4,865  —  
Straight line effects of lease revenue(14,063) (5,906) 
Amortization of lease-related intangibles(6,277) (4,086) 
Property NOI*149,702  148,270  165,177  158,262  
Net operating income from:
Acquisitions(18,214) (920) (23,786) (1,155) 
Dispositions(8,979) (27,177) (10,655) (27,826) 
Other investments(1)
(306) (285) (239) (270) 
Same Store NOI *$122,203  $119,888  $130,497  $129,011  
Change period over period in Same Store NOI1.9 %N/A1.2 %N/A


(1)Other investments consist of our investments in active redevelopment and development projects, land, and recently completed redevelopment and development projects for which some portion of operating expenses were capitalized during the current or prior reporting periods. The operating results from Two Pierce Place in Itasca, IL are included in this line item.



*Definitions:

Funds From Operations ("FFO"): The Company calculates FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. NAREIT currently defines FFO as net income (computed in accordance with GAAP), excluding gains or losses from sales of property and impairment losses, adding back depreciation and amortization on real estate assets, and after the same adjustments for unconsolidated partnerships and joint ventures. These adjustments can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates. FFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that FFO is helpful to investors as a supplemental performance measure because it excludes the effects of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs, which implicitly assumes that the value of real estate diminishes predictably over time. The Company also believes that FFO can help facilitate comparisons of operating performance between periods and with other REITs. However, other REITs may not define FFO in accordance with the NAREIT definition, or may interpret the current NAREIT definition differently than the Company; therefore, the Company’s computation of FFO may not be comparable to that of such other REITs.

Core Funds From Operations ("Core FFO"): The Company calculates Core FFO by starting with FFO, as defined by NAREIT, and adjusting for gains or losses on the extinguishment of swaps and/or debt, acquisition-related expenses (that are not capitalized) and any significant non-recurring items. Core FFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that Core FFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to the Company’s core business operations. As a result, the Company believes that Core FFO can help facilitate comparisons of operating performance between periods and provides a more meaningful predictor of future earnings potential. Other REITs may not define Core FFO in the same manner as the Company; therefore, the Company’s computation of Core FFO may not be comparable to that of other REITs.

Adjusted Funds From Operations ("AFFO"): The Company calculates AFFO by starting with Core FFO and adjusting for non-incremental capital expenditures and acquisition-related costs (that are not capitalized) and then adding back non-cash items including: non-real estate depreciation, straight-lined rents and fair value lease adjustments, non-cash components of interest expense and compensation expense, and by making similar adjustments for unconsolidated partnerships and joint ventures. AFFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that AFFO is helpful to investors as a meaningful supplemental comparative performance measure of our ability to make incremental capital investments. Other REITs may not define AFFO in the same manner as the Company; therefore, the Company’s computation of AFFO may not be comparable to that of other REITs.

EBITDAre: The Company calculates EBITDAre in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. NAREIT currently defines EBITDAre as net income (computed in accordance with GAAP) adjusted for gains or losses from sales of property, impairment losses, depreciation on real estate assets, amortization on real estate assets, interest expense and taxes, along with the same adjustments for unconsolidated partnerships and joint ventures. Some of the adjustments mentioned can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates. EBITDAre is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that EBITDAre is helpful to investors as a supplemental performance measure because it provides a metric for understanding the Company’s results from ongoing operations without taking into account the effects of non-cash expenses (such as depreciation and amortization) and capitalization and capital structure expenses (such as interest expense and taxes). The Company also believes that EBITDAre can help facilitate comparisons of operating performance between periods and with other REITs. However, other REITs may not define EBITDAre in accordance with the NAREIT definition, or may interpret the current NAREIT definition differently than the Company; therefore, the Company’s computation of EBITDAre may not be comparable to that of such other REITs.

Property Net Operating Income ("Property NOI"): The Company calculates Property NOI by starting with Core EBITDA and adjusting for general and administrative expense, income associated with property management performed by Piedmont for other organizations and other income or expense items for the Company, such as interest income from loan investments or costs from the pursuit of non-consummated transactions. The Company may present this measure on an accrual basis or a cash basis. When presented on a cash basis, the effects of straight lined rents and fair value lease revenue are also eliminated. Property NOI is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that Property NOI is helpful to investors as a supplemental comparative performance measure of income generated by its properties alone without the administrative overhead of the Company. Other REITs may not define Property NOI in the same manner as the Company; therefore, the Company’s computation of Property NOI may not be comparable to that of other REITs.

Same Store Net Operating Income ("Same Store NOI"): The Company calculates Same Store NOI as Property NOI attributable to the properties for which the following criteria were met during the entire span of the current and prior year reporting periods: (i) they were owned, (ii) they were not under development / redevelopment, and (iii) none of the operating expenses for which were capitalized. Same Store NOI also excludes amounts attributable to land assets. The Company may present this measure on an accrual basis or a cash basis. When presented on a cash basis, the effects of straight lined rents and fair value lease revenue are also eliminated. Same Store NOI is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that Same Store NOI is helpful to investors as a supplemental comparative performance measure of the income generated from the same group of properties from one period to the next. Other REITs may not define Same Store NOI in the same manner as the Company; therefore, the Company’s computation of Same Store NOI may not be comparable to that of other REITs.


Document


EXHIBIT 99.2




https://cdn.kscope.io/07ffae0cab750bb5f4b001b160776617-image111.jpg



Quarterly Supplemental Information
June 30, 2020











Corporate HeadquartersInstitutional Analyst ContactInvestor Relations
5565 Glenridge Connector, Suite 450Telephone: 770.418.8592Telephone: 866.354.3485
Atlanta, GA 30342research.analysts@piedmontreit.cominvestor.services@piedmontreit.com
Telephone: 770.418.8800www.piedmontreit.com




Piedmont Office Realty Trust, Inc.
Quarterly Supplemental Information
Index


PagePage
IntroductionOther Investments
Corporate DataOther Investments Detail
Investor InformationSupporting Information
Financial HighlightsDefinitions
FinancialsResearch Coverage
Balance SheetsNon-GAAP Reconciliations
Income StatementsProperty Detail - In-Service Portfolio
Key Performance IndicatorsCOVID-19 Update
Funds From Operations / Adjusted Funds From OperationsRisks, Uncertainties and Limitations
Same Store Analysis
Capitalization Analysis
Debt Summary
Debt Detail
Debt Covenant & Ratio Analysis
Operational & Portfolio Information - Office Investments
Tenant Diversification
Tenant Credit Rating & Lease Distribution Information
Leased Percentage Information
Rental Rate Roll Up / Roll Down Analysis
Lease Expiration Schedule
Quarterly Lease Expirations
Annual Lease Expirations
Capital Expenditures
Contractual Tenant Improvements & Leasing Commissions
Geographic Diversification
Geographic Diversification by Location Type
Industry Diversification
Property Investment Activity
Notice to Readers:
Please refer to page 47 for a discussion of important risks related to the business of Piedmont Office Realty Trust, Inc., as well as an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information. Considering these risks, uncertainties, assumptions, and limitations, the forward-looking statements about leasing, financial operations, leasing prospects, acquisitions, dispositions, etc. contained in this quarterly supplemental information report may differ from actual results.
Certain prior period amounts have been reclassified to conform to the current period financial statement presentation. In addition, many of the schedules herein contain rounding to the nearest thousands or millions and, therefore, the schedules may not total due to this rounding convention.
To supplement the presentation of the Company’s financial results prepared in accordance with U.S. generally accepted accounting principles (GAAP), this report contains certain financial measures that are not prepared in accordance with GAAP, including FFO, Core FFO, AFFO, Same Store NOI, Property NOI, EBITDAre and Core EBITDA. Definitions and reconciliations of these non-GAAP measures to their most comparable GAAP metrics are included beginning on page 39. Each of the non-GAAP measures included in this report has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of the Company’s results calculated in accordance with GAAP. In addition, because not all companies use identical calculations, the Company’s presentation of non-GAAP measures in this report may not be comparable to similarly titled measures disclosed by other companies, including other REITs. The Company may also change the calculation of any of the non-GAAP measures included in this report from time to time in light of its then existing operations.
In certain presentations herein, the Company has provided disaggregated financial and operational data (for example, some pieces of information are displayed by geography, industry, or lease expiration year) for informational purposes for readers; however, regardless of the various presentation approaches taken herein, we continue to evaluate and utilize our consolidated financial results in making operating decisions, allocating resources, and assessing our performance.




Piedmont Office Realty Trust, Inc.
Corporate Data


Piedmont Office Realty Trust, Inc. (also referred to herein as "Piedmont" or the "Company") (NYSE: PDM) is an owner, manager, developer, redeveloper and operator of high-quality, Class A office properties in select sub-markets located primarily within seven major Eastern U.S. office markets, with approximately half of its revenue generated from the Sunbelt. Its geographically-diversified, approximately $5 billion portfolio is comprised of approximately 17 million square feet (as of the date of release of this report). The Company is a fully-integrated, self-managed real estate investment trust ("REIT") with local management offices in each of its markets and is investment-grade rated by Standard & Poor’s and Moody’s. At the end of the second quarter of 2020, approximately 63% of the Company's portfolio was Energy Star certified and approximately 41% was LEED certified. Piedmont is headquartered in Atlanta, GA.

This data supplements the information provided in our reports filed with the Securities and Exchange Commission and should be reviewed in conjunction with such filings.

As ofAs of
June 30, 2020December 31, 2019
Number of consolidated office properties (1) (2)
5755
Rentable square footage (in thousands) (1) (2)
17,16416,533
Percent leased (2) (3)
88.6 %89.7 %
Capitalization (in thousands):
Total debt - principal amount outstanding (excludes premiums, discounts, and deferred financing costs)$1,628,245$1,488,687
Equity market capitalization (4)
$2,093,279$2,797,423
Total market capitalization (4)
$3,721,524$4,286,110
Total debt / Total market capitalization (4)
43.8 %34.7 %
Average net debt to Core EBITDA6.2 x5.4 x
Normalized average net debt to Core EBITDA (5)
5.6 x
Total debt / Total gross assets34.2 %32.5 %
Common stock data:
High closing price during quarter$19.97$22.44
Low closing price during quarter$13.60$20.32
Closing price of common stock at period end$16.61$22.24
Weighted average fully diluted shares outstanding during quarter (in thousands)126,500126,359
Shares of common stock issued and outstanding at period end (in thousands)126,025125,783
Annual regular dividend per share (6)
$0.84$0.84
Rating / Outlook:
Standard & Poor'sBBB / StableBBB / Stable
Moody'sBaa2 / StableBaa2 / Stable
Employees138134

(1)As of June 30, 2020, our consolidated office portfolio consisted of 57 properties. During the first quarter of 2020, we acquired One Galleria Tower, Two Galleria Tower and Three Galleria Tower, three office buildings comprised of 1,435,000 square feet in total, along with a 1.9 acre developable land parcel, located in Dallas, TX. During the second quarter of 2020, we sold 1901 Market Street, an 801,000 square foot office building located in Philadelphia, PA.
(2)
This measure is presented for our consolidated office properties and the metric for December 31, 2019, has been restated to include one redevelopment property that was placed back into service on January 1, 2020. The redevelopment property is Two Pierce Place, a 484,000 square foot office building located in Itasca, IL.
(3)
Calculated as square footage associated with commenced leases plus square footage associated with executed but uncommenced leases for vacant spaces, divided by total rentable square footage, all as of the relevant date, expressed as a percentage. Please refer to page 27 for additional analyses regarding Piedmont's leased percentage.
(4)Reflects common stock closing price, shares outstanding and outstanding debt as of the end of the reporting period, as appropriate.
(5)
The average net debt to Core EBITDA ratio temporarily increased in early 2020 with the purchase of Dallas Galleria Office Towers using debt which was subsequently repaid with the sale of 1901 Market Street in Philadelphia, PA. The sale of 1901 Market Street did not close until late June 2020. Because our reported average net debt to Core EBITDA calculation is time-weighted, the positive effects of the sale of 1901 Market Street on this metric primarily due to the related reduction in outstanding debt are only marginally reflected in the measure for the period ended June 30, 2020. In order to disclose the anticipated effect of the sale of the asset on the metric for a full quarter, we calculated a normalized average net debt to Core EBITDA ratio. This normalized calculation starts with the Company's reported average net debt to Core EBITDA for the second quarter of 2020 and incorporates pro forma adjustments: 1) to remove the Core EBITDA contribution from 1901 Market Street to the Company's quarterly Core EBITDA and 2) to include the debt reductions related to the asset sale as if they occurred on April 1, 2020. The reduction to Core EBITDA for the second quarter of 2020 was $5,317,000 and the reduction to average net debt was $285,088,000.
(6)Total of the regular dividends per share for which record dates occurred over the prior four quarters.

3


Piedmont Office Realty Trust, Inc.
Investor Information
Corporate
5565 Glenridge Connector, Suite 450
Atlanta, Georgia 30342
770.418.8800
www.piedmontreit.com

Executive Management
C. Brent SmithRobert E. BowersEdward H. Guilbert, IIIChristopher A. Kollme
Chief Executive Officer, PresidentChief Financial and Administrative OfficerExecutive Vice President, Finance,Executive Vice President,
and Directorand Executive Vice PresidentAssistant Secretary and TreasurerFinance & Strategy
Investor Relations Contact
Laura P. MoonJoseph H. PangburnThomas R. PrescottAlex Valente
Chief Accounting Officer andExecutive Vice President,Executive Vice President,Executive Vice President,
Senior Vice PresidentSouthwest RegionMidwest RegionSoutheast Region
George WellsRobert K. Wiberg
Executive Vice President,Executive Vice President,
Real Estate OperationsNortheast Region and Head of Development
Board of Directors
Frank C. McDowellDale H. TaysomKelly H. BarrettWesley E. Cantrell
Director, Chairman of the Board of Directors,Director, Vice Chairman of the Director, Chair of the Audit Committee, Director, Chair of the Governance
Chair of the Compensation Committee, andBoard of Directors, and Member of theand Member of the Governance CommitteeCommittee, and Member of the
Member of the Audit and Governance CommitteesAudit and Capital CommitteesCompensation Committee
Glenn G. CohenBarbara B. LangC. Brent SmithJeffery L. Swope
Director and Member of the Audit CommitteeDirector and Member of the CompensationChief Executive Officer, PresidentDirector, Chair of the Capital
and Governance Committeesand DirectorCommittee, and Member of the
Compensation Committee

Transfer AgentCorporate Counsel
ComputershareKing & Spalding
P.O. Box 301701180 Peachtree Street, NE
College Station, TX 77842-3170Atlanta, GA 30309
Phone: 866.354.3485Phone: 404.572.4600

4


Piedmont Office Realty Trust, Inc.
Financial Highlights
As of June 30, 2020

Financial Results (1)

Net income attributable to Piedmont for the quarter ended June 30, 2020 was $192.4 million, or $1.52 per share (diluted), compared to $8.2 million, or $0.06 per share (diluted), for the same quarter in 2019. Net income attributable to Piedmont for the six months ended June 30, 2020 was $201.1 million, or $1.59 per share (diluted), compared to $58.4 million, or $0.46 per share (diluted), for the same period in 2019. The increase in net income attributable to Piedmont for the three months and the six months ended June 30, 2020 when compared to the same periods in 2019 was principally due to the larger amount of net gains recorded in 2020 when compared to 2019 attributable to real estate asset and related debt transactions completed during the respective periods. In addition, 2020 results increased due to higher revenues in 2020 when compared to 2019 related to accrual basis rental rate increases associated with recent leasing activity across the portfolio as well as accretive capital recycling activities over the prior year. Partially offsetting the increase in net income attributable to Piedmont were higher amortization and depreciation expenses in 2020 when compared to 2019 attributable to over $720 million of acquisitions completed since the beginning of 2019.

Funds from operations (FFO) for the quarter ended June 30, 2020 was $52.3 million, or $0.41 per share (diluted), compared to $51.3 million, or $0.41 per share (diluted), for the same quarter in 2019. FFO for the six months ended June 30, 2020 was $112.1 million, or $0.89 per share (diluted), compared to $107.6 million, or $0.85 per share (diluted), for the same period in 2019. The increase in FFO for the three months and the six months ended June 30, 2020 when compared to the same periods in 2019 was principally the result of growth in revenue attributable to accrual basis rental rate increases associated with recent leasing activity across the portfolio as well as accretive capital recycling activities over the prior year, partially offset by a loss on the early extinguishment of debt recorded in 2020 as a result of the sale of 1901 Market Street in Philadelphia, PA and the repayment of the associated mortgage.

Core funds from operations (Core FFO) for the quarter ended June 30, 2020 was $61.6 million, or $0.49 per share (diluted), compared to $54.5 million, or $0.43 per share (diluted), for the same quarter in 2019. Core FFO for the six months ended June 30, 2020 was $121.5 million, or $0.96 per share (diluted), compared to $110.8 million, or $0.88 per share (diluted), for the same period in 2019. The increase in Core FFO for the three months and the six months ended June 30, 2020 when compared to the same periods in 2019 was primarily attributable to accrual basis rental rate increases associated with recent leasing activity across the portfolio as well as accretive capital recycling activities over the prior year.

Adjusted funds from operations (AFFO) for the quarter ended June 30, 2020 was $45.0 million, compared to $42.4 million for the same quarter in 2019. AFFO for the six months ended June 30, 2020 was $63.5 million, compared to $94.1 million for the same period in 2019. The increase in AFFO for the three months ended June 30, 2020 when compared to the same period in 2019 was primarily attributable to the same items described above for changes in Core FFO. The decrease in AFFO for the six months ended June 30, 2020 when compared to the same period in 2019 was primarily due to a greater amount of non-incremental capital expenditures during the first quarter of 2020 related to the large amount of recently executed new and renewal leases in our portfolio, including the 20-year lease renewal with the State of New York at 60 Broad Street in New York, NY, for which leasing commissions totaling $16.1 million were paid during the first quarter.

Update Related to COVID-19

During the second quarter of 2020, our buildings remained open and fully operational for our tenants, many of whom have the need for essential employees to continue to work in our buildings. As of June 2020, tenant occupancy per building varied, ranging up to 30% of our normal tenant population on any given day. The highest space utilization rate was observed at our properties located in Sunbelt markets.

We feel fortunate to have duration and durability in the cash flow generated by our tenant base. The majority of our tenants are of investment grade quality, and our in place leases have a weighted average lease term remaining of over 6 years. Only approximately 1% of our revenues are related to retail tenants and approximately 2% of our 2020 budgeted revenues are associated with the co-working sector, both of which have been particularly hard hit by the economic effects of the pandemic. Additionally, only approximately 1% of our annual revenues comes from transient parking.







(1)
FFO, Core FFO and AFFO are supplemental non-GAAP financial measures. See page 39 for definitions of these non-GAAP financial measures, and pages 15 and 41 for reconciliations of FFO, Core FFO and AFFO to Net Income.
5



As a result of our diversification, limited exposure to the sectors of the economy most impacted by the pandemic and strong tenant credit profile, we have collected approximately 99% of the rents that were due for April, May and June based on contractual lease terms. However, our tenant base is not immune from the economic effects of the pandemic. During the quarter, we received requests from a small number of our tenants, predominantly from those operating in the retail, hospitality, travel, consulting and co-working sectors, for some type of rent relief. To date, of the approximately 1,000 leases in our portfolio, we have entered into rent relief agreements with approximately 50 tenants. The rent relief agreements were entered into with tenants occupying approximately 4% of the square footage in our portfolio. A total of approximately $4.5 million of rental obligations was addressed in the rent relief arrangements ($3.6 million of which was related to second quarter receipts) with the preponderance being rent deferrals, with an average deferral period of between 3 and 4 months with repayment occurring late in 2020 or in 2021 with interest.

As a result of COVID-19's impact on our tenants' operations, Piedmont undertook a review of outstanding tenant receivables, including assessing the collectability risk associated with the receivables, as well as evaluated the possibility that future financial duress may be suffered by some portion of the Company’s tenant base. Given the unique nature of the pandemic and the associated impact on the economy and the businesses of our tenants, Piedmont recorded approximately $1.8 million in charges against rental revenue in recognition of an increase in collectibility risk. Furthermore, as a precautionary measure, the Company also established an approximately $5 million general reserve for potential future losses, which is approximately 1% of the Company’s Annualized Lease Revenue. The Company will continue to reassess the reserve and make adjustments to the reserve as it deems appropriate.

Regarding Piedmont’s liquidity and capitalization, management believes the Company has sufficient liquidity and capital capacity to withstand the effects of the economic slowdown associated with COVID-19 and will be able to meet all of its financial obligations, including the servicing of its debt, as well as to meet all of its debt covenants, each with a significant buffer to the relevant threshold. Piedmont is in a strong balance sheet position, with over $30 million in cash and full availability under our $500 million line of credit. As of June 30, 2020, our debt to gross assets ratio was approximately 34%.

The COVID-19 pandemic had only a limited impact on the Company’s overall results during the first half of 2020. However, we do expect the coronavirus pandemic to continue to impact our tenants' operations and financial results and their ability to pay their lease obligations during the third quarter and potentially beyond. The short-term financial impacts caused by the pandemic on 2020 results are yet to be fully realized and will depend upon how long the economic disruption associated with the pandemic lasts. Leasing activity has slowed and will likely continue to delay some of the expected growth in the portfolio; some additional tenants, most likely small businesses, may ask for some additional rent deferrals; and a few tenant improvements and redevelopment projects will be delayed. Because the ultimate impact to the Company's financial performance will depend upon how long the economic disruption associated with the pandemic lasts, we are not providing financial guidance at the present time; we will provide revised guidance once the depth and duration of the disruption becomes more clear.

Operations and Leasing

As of June 30, 2020, Piedmont had 57 in-service office properties located primarily in seven major office markets in the eastern portion of the United States, with approximately half of our revenue coming from Sunbelt markets. On a square footage leased basis, our total in-service office portfolio was 88.6% leased as of June 30, 2020, as compared to 89.7% at December 31, 2019 (restated to include one out-of-service asset, Two Pierce Place in Itasca, IL, which was placed back into service on January 1, 2020). A main contributor to the reduction in leased percentage as of June 30, 2020 was the sale of the 100% leased 1901 Market Street in Philadelphia, PA, during the second quarter of 2020. Please refer to page 27 for additional leased percentage information.

The weighted average remaining lease term of our in-service portfolio was 6.3 years(1) as of June 30, 2020 as compared to 7.0 years at December 31, 2019. A contributor to the reduction in weighted average remaining lease term was the sale of 1901 Market Street in Philadelphia, PA, an 801,000 square foot, fully-leased building with approximately 13 years of lease term remaining. Our weighted average adjusted Annualized Lease Revenue(2) per square foot for our in-service portfolio was $36.17 as of June 30, 2020.

During the three months ended June 30, 2020, the Company completed approximately 271,000 square feet of leasing activity. Of the total leasing activity completed during the quarter, we signed renewal leases for approximately 259,000 square feet. During the six months ended June 30, 2020, the Company completed approximately 688,000 square feet of leasing activity, of which approximately 132,000 square feet was related to new tenant leases. The average committed capital for tenant improvements and leasing commissions per square foot per year of lease term for all leasing activity completed during the six months ended June 30, 2020 (net of commitment expirations during the period) was $5.28 (see page 33).


(1)
Remaining lease term (after taking into account leases for vacant spaces which had been executed but not commenced as of June 30, 2020) is weighted based on Annualized Lease Revenue, as defined on page 39.
(2)Annualized Lease Revenue is adjusted for buildings at which tenants pay operating expenses directly to include such operating expenses as if they were paid by the Company and reimbursed by the tenants as under a typical net lease structure, thereby incorporating the effective gross rental rate for those buildings.
6


Of the 271,000 square feet of leases executed during the three months ended June 30, 2020, five leases were greater than 10,000 square feet at our office properties. Information on those leases is set forth below.
TenantPropertyMarketSquare Feet
Leased
Expiration
Year
Lease Type
Brother International Corporation200 Bridgewater CrossingNew York101,7242026Renewal
RGN-South East, LLCGlenridge Highlands OneAtlanta25,3322023Renewal
CareerStaff Unlimited, LLCLas Colinas Corporate Center IDallas17,4622026Renewal / Expansion
Merrill Lynch, Pierce, Fenner & Smith Inc.Galleria 300Atlanta11,8172025Renewal / Contraction
Buck Global, LLCGalleria 100Atlanta11,4022026Renewal

At the end of the second quarter of 2020, there was one tenant whose lease individually contributed greater than 1% in Annualized Lease Revenue expiring during the eighteen month period following June 30, 2020. Information regarding the leasing status of the space associated with this tenant's lease is presented below.
TenantPropertyProperty LocationNet
Square
Footage
Expiring
Net Percentage of
Current Quarter
Annualized Lease
Revenue Expiring
(%)
ExpirationCurrent Leasing Status
City of New York60 Broad StreetNew York, NY313,0222.9%In HoldoverThe tenant is currently in holdover. The Company is in advanced discussions with the tenant regarding a lease renewal.


Future Lease Commencements and Abatements

As of June 30, 2020, our overall leased percentage was 88.6% and our economic leased percentage was 81.1%. The difference between overall leased percentage and economic leased percentage is attributable to two factors:

1)leases which have been contractually entered into for currently vacant spaces but have not yet commenced (amounting to 348,733 square feet of leases as of June 30, 2020, or 2.0% of the portfolio); and
2)leases which have commenced but are within rental abatement or deferral periods (amounting to 1,122,142 square feet of leases as of June 30, 2020, or a 5.5% impact to leased percentage on an economic basis).

The gap between reported leased percentage and economic leased percentage will fluctuate over time as (1) new leases are signed for vacant spaces, (2) abatements and deferrals associated with existing or newly executed leases commence and expire, and/or (3) properties are bought and sold. See below for more detail on existing large leases with abatements and deferrals. The gap this quarter between reported leased percentage and economic leased percentage increased by approximately 2.3% as a result of COVID-related rent relief (primarily rent deferrals).

Piedmont has leases with many large corporate office space users. The average size of lease in the Company's portfolio is approximately 20,000 square feet. Due to the large size and length of term of new leases, Piedmont typically signs leases several months in advance of their anticipated lease commencement dates. Presented below is a schedule of uncommenced leases greater than 50,000 square feet and their anticipated commencement dates. Lease renewals are excluded from this schedule.
TenantPropertyProperty LocationSquare Feet
Leased
Space StatusEstimated
Commencement
Date
New /
Expansion
Amazon.com Services, Inc.One Galleria TowerDallas, TX81,628VacantQ3 2020New
WeWork Companies Inc.200 South Orange AvenueOrlando, FL71,344Vacant
Late 2021 (1)
New
salesforce.com5 Wall StreetBurlington, MA51,913Not VacantQ3 2021New

(1)In the construction permitting process, the tenant has been required by the local government to make modifications to its space plans resulting in a delay of the receipt of construction permits.
7


New leases frequently provide rental abatement concessions to tenants and these abatements typically occur at the beginning of the leases. Additionally, the Company has recently entered into rent deferral agreements with some tenants as a result of COVID-19's impact on their financial operations. The currently reported cash net operating income and AFFO understate the Company's long-term cash generation ability from existing signed leases due to several leases being in abatement or deferral periods. Presented below is a schedule of leases with abatements or deferrals of 50,000 square feet or greater that are either currently under abatement or deferral or will be so within the next twelve months. (1)

Abatements
TenantPropertyProperty LocationAbated Square FeetLease Commencement DateRemaining Abatement ScheduleLease Expiration
Transocean Offshore Deepwater Drilling, Inc.Enclave PlaceHouston, TX300,906
Q4 2019
Commencement through April 2021
Q2 2036
Advanced Micro Devices, Inc.90 Central StreetBoxborough, MA107,244Q1 2021January through March 2021Q1 2028


COVID-19 - Related Rent Deferrals

TenantPropertyProperty LocationSquare FeetDeferral TermsRepayment ScheduleLease Expiration
Travelport, LPGalleria 300Atlanta, GA123,193
April through June 2020 (2)
October 2020 through March 2021 (2)
Q1 2025
Ansira Partners, Inc.Three Galleria TowerDallas, TX88,084
May through July 2020 (3)
December 2020 or
January through December 2021 (3)
Q4 2028
Neovia Logistics, LPLas Colinas Corporate Center IIIrving, TX54,682
May through July 2020 (4)
December 2020 or
January through December 2021 (4)
Q2 2024


Financing and Capital Activity

Among Piedmont's stated strategic objectives is to harvest capital through the disposition of non-core assets and assets in which the Company believes the value potential during its ownership has been reached and to use the sale proceeds to:
invest in real estate assets with higher overall return prospects and/or strategic merits in one of our identified operating markets where we have a significant operating presence with a competitive operating advantage and that otherwise meet our strategic criteria;
reduce leverage levels by repaying outstanding debt; and/or
repurchase Company stock when it is believed to be trading at a significant discount to NAV.
Information on the Company's recent accomplishments in furtherance of its strategic objectives is presented below.

Dispositions
On June 25, 2020, Piedmont completed the sale of 1901 Market Street, a 45-story, 100% leased, 801,000 square foot office building, located in Philadelphia, PA, for $360.0 million, or approximately $450 per square foot. The sale allowed the Company to exit a non-strategic market and an asset in which it believed the value potential during its ownership period had been realized. The Company recorded a $191 million gain on the sale of the asset; however, for federal tax purposes, the sale proceeds from 1901 Market Street were deemed reinvested during the first quarter of 2020 into the Dallas Galleria Office Towers through a reverse 1031 exchange investment structure, eliminating the need for a special distribution of the large capital gain. The sale proceeds from 1901 Market Street were redeployed strategically into one of the Company's operating markets and an investment providing both a higher yield and stronger growth prospects. As a result of the sale, approximately 96% of Piedmont's Annualized Lease Revenue is generated from its seven operating markets, with approximately 50% of its Annualized Lease Revenue coming from Sunbelt markets. The Company initially used funds drawn from its line of credit to complete the purchase of the Dallas Galleria Office Towers in the first quarter of 2020 in advance of the sale of 1901 Market Street. Once proceeds from the sale of 1901 Market Street were available in the second quarter of 2020, the Company paid off a $160 million mortgage associated with the property and it repaid all amounts outstanding on its revolving line of credit; additional detail on the debt repayments can be found under the Finance heading below.

(1)The State of New York lease does not contain any rental abatement provisions. The tenant's space will be reconstructed over a period of approximately four years. During the construction period, the tenant will not be required to pay rental charges for certain spaces that are under construction and not usable by the tenant. The amount of space for which the tenant will not be required to pay rent will vary over time and is expected to average approximately 80,000 square feet over the construction time period.
(2)Travelport, LP will fully repay deferred charges in six installments at 0% interest over the 6-month period from October 2020 through March 2021. As a condition to completing the rent deferral with no interest charges, the tenant also extended its lease by one month.
(3)Ansira Partners, Inc. will either fully repay deferred charges on or before December 31, 2020 at 0% interest or it will pay monthly installments over the period of January through December 2021, at 6% interest.
(4)Neovia Logistics, LP will either fully repay deferred charges on or before December 31, 2020 at 0% interest or it will pay monthly installments over the period of January through December 2021, at 6% interest. As a condition to completing the rent deferral, the tenant increased its security deposit.
8



Acquisitions
There were no acquisitions completed during the quarter ended June 30, 2020.

For additional information on acquisitions and dispositions completed over the previous eighteen months, please refer to page 37.

Development / Redevelopment
During the fourth quarter of 2019, Piedmont commenced an approximately $18.5 million redevelopment of 200 South Orange Avenue in Orlando, FL. The project will allow the Company to reposition the property, creating a premier environment for downtown office tenants - vibrant, inviting, communal and modern. The redevelopment plan includes a redesigned lobby and entry experience, an energized outdoor park, the addition of new food and beverage options, an upgraded conference center, a tenant lounge, and a new crown lighting system. As of June 30, 2020, the project remained on schedule and within budget.

Additional detail on the Company's developable land parcels, all of which are located adjacent to existing Piedmont properties, as well as information on current redevelopment projects, can be found on page 38.

Finance
During the second quarter of 2020, Piedmont completed the sale of 1901 Market Street in Philadelphia, PA, and used the net sale proceeds to repay debt. Specifically, the Company repaid a $160 million mortgage secured by the sold property as well as the entire outstanding balance on its $500 million unsecured line of credit. As a result of the debt repayment, Piedmont has full availability on its $500 million unsecured line of credit and only one remaining $28.2 million mortgage (over 98% of its debt is now unsecured and approximately 99% of its Annualized Lease Revenue is now unencumbered). The Company's total debt outstanding amounts to $1.6 billion as of the end of the second quarter of 2020, with a normalized average net debt to Core EBITDA ratio of 5.6 x. (1)

As of June 30, 2020, our ratio of total debt to total gross assets was 34.2%, and the same measure at December 31, 2019 was 32.5%. This debt ratio is based on total principal amount outstanding for our various loans as of the relevant measurement date.

As of June 30, 2020, our average net debt to Core EBITDA ratio was 6.2 x (our normalized average net debt to Core EBITDA ratio was 5.6 x(1)), and the same measure at December 31, 2019 was 5.4 x.

Stock Repurchase Program
No repurchases of the Company's common stock were completed during the first half of 2020. During 2019, the Company repurchased approximately 0.7 million shares at an average price of $17.14 per share, or approximately $12.5 million in aggregate (before the consideration of transaction costs). As of quarter end, Board-approved capacity remaining for additional repurchases totaled $200 million under the stock repurchase plan. Repurchases of stock under the program are made at the Company's discretion and are dependent on market conditions, the discount to estimated net asset value, other investment opportunities and other factors that the Company deems relevant.

Dividend
On April 29, 2020, the Board of Directors of Piedmont declared a dividend for the second quarter of 2020 in the amount of $0.21 per common share outstanding to stockholders of record as of the close of business on May 29, 2020. The dividend was paid on June 19, 2020.









(1)
The average net debt to Core EBITDA ratio temporarily increased in early 2020 with the purchase of Dallas Galleria Office Towers using debt which was subsequently repaid with the sale of 1901 Market Street in Philadelphia, PA. The sale of 1901 Market Street did not close until late June 2020. Because our reported average net debt to Core EBITDA calculation is time-weighted, the positive effects of the sale of 1901 Market Street on this metric primarily due to the related reduction in outstanding debt are only marginally reflected in the measure for the period ended June 30, 2020. In order to disclose the anticipated effect of the sale of the asset on the metric for a full quarter, we calculated a normalized average net debt to Core EBITDA ratio. This normalized calculation starts with the Company's reported average net debt to Core EBITDA for the second quarter of 2020 and incorporates pro forma adjustments: 1) to remove the Core EBITDA contribution from 1901 Market Street to the Company's quarterly Core EBITDA and 2) to include the debt reductions related to the asset sale as if they occurred on April 1, 2020. The reduction to Core EBITDA for the second quarter of 2020 was $5,317,000 and the reduction to average net debt was $285,088,000.

9


Subsequent Events
On July 29, 2020, the Board of Directors of Piedmont declared a dividend for the third quarter of 2020 in the amount of $0.21 per common share outstanding to stockholders of record as of the close of business on August 28, 2020. The dividend is expected to be paid on September 18, 2020.

Guidance for 2020

Since the duration and severity of the COVID-19 pandemic and the longer-term consequences on the economy and our tenants continue to be unknown, the Company is not providing guidance for 2020 at this time. Notwithstanding the economic backdrop, Piedmont has a strong, diversified tenant base, a majority of which is investment grade quality. Consequently, the Company has collected 99% of billed tenant receivables for the second quarter of 2020, which is net of approximately $3.6 million of tenant cash receipts that have been deferred until later in 2020 or 2021.
Additionally, the Company has a prudent balance sheet with excellent liquidity, including approximately $30 million in cash and the full availability under its $500 million line of credit at June 30, 2020 and no debt maturities until late 2021. Despite the widespread impacts of the COVID-19 pandemic on the global economy, the Company currently anticipates that its overall leased percentage and expected 2020 financial performance will not be severely impacted by the pandemic.
While it is not providing guidance for 2020, the Company is providing additional information regarding performance year-to-date, identified trends and its current expectations for how the pandemic could impact performance for the year when compared to its original expectations for the year:
New tenant leasing activity slowed during the second quarter. Although new tenant prospects have increased, particularly in Sunbelt markets, the Company believes this slow trend will continue throughout the third quarter, likely pushing all “new tenant” leasing goals out several months, which will modestly lower our originally anticipated net operating income (“NOI”) for 2020 by approximately $5 million, and lower our originally anticipated year end leased percentage.
Much of Piedmont’s customary transient parking income will not be received during the third quarter and results will be similar to those for the second quarter; NOI from transient parking is estimated to be lower by approximately $2 million for the year.
With respect to retail tenant income, which amounted to about 1% of the Company’s originally budgeted 2020 revenues, overall retail NOI is currently projected to be approximately $2 million lower than original expectations.
In addition to the above, during the second quarter, the Company took an approximate charge of $1.8 million against rental revenue in recognition of an increase in collectibility risk. Further, as a precautionary measure, the Company established an approximately $5 million general reserve for potential future losses, which is approximately 1% of its Annualized Lease Revenue.
With lower active occupancy levels in our buildings, the Company expects its portion of operating expense savings to amount to $1 to $2 million for the year.
Due to lower interest rates and a delay in anticipated financing activity for the year, the Company expects interest expense savings of approximately $5 million.
While the Company is not aware of other tenant situations that would indicate material reductions in collections in 2020, it does not believe the impact of the pandemic on subsequent months’ rent collections can be reasonably estimated at this time.

These identified impacts of the COVID-19 pandemic on net operating income during 2020 equate to a net reduction of approximately $10 million to $12 million from our original expectations for the year. The estimated effects of COVID-19 on the Company's financial performance are based upon the premise that the economic slowdown abates during the fourth quarter of 2020.
The Company will reevaluate guidance once the longer-term consequences of the COVID-19 pandemic on the economy and our tenants can be more thoroughly considered.

10


Piedmont Office Realty Trust, Inc.
Consolidated Balance Sheets
Unaudited (in thousands)

June 30, 2020March 31, 2020December 31, 2019September 30, 2019June 30, 2019
Assets:
Real estate, at cost:
Land assets$505,228  $505,234  $485,560  $485,610  $459,660  
Buildings and improvements3,258,713  3,249,947  2,943,685  2,920,067  2,737,978  
Buildings and improvements, accumulated depreciation(776,870) (755,152) (730,750) (706,774) (689,657) 
Intangible lease asset164,145  167,972  125,171  131,843  138,200  
Intangible lease asset, accumulated amortization(58,148) (52,538) (50,766) (50,474) (66,300) 
Construction in progress51,045  42,028  29,920  13,866  13,231  
Real estate assets held for sale, gross—  233,951  233,951  508,624  508,566  
Real estate assets held for sale, accumulated depreciation & amortization—  (96,164) (94,261) (153,936) (149,588) 
Total real estate assets3,144,113  3,295,278  2,942,510  3,148,826  2,952,090  
Cash and cash equivalents36,469  7,920  13,545  10,284  7,748  
Tenant receivables, net of allowance for doubtful accounts8,494  10,596  8,226  10,091  10,494  
Straight line rent receivable147,418  139,617  132,342  128,786  127,354  
Escrow deposits and restricted cash1,769  1,758  1,841  1,820  1,480  
Prepaid expenses and other assets33,017  23,933  25,427  27,143  32,564  
Goodwill98,918  98,918  98,918  98,918  98,918  
Interest rate swap—  —  —  —  10  
Deferred lease costs, gross459,398  463,760  413,071  396,724  381,012  
Deferred lease costs, accumulated amortization(159,883) (148,972) (147,324) (139,092) (155,009) 
Other assets held for sale, gross—  63,524  63,158  111,661  110,911  
Other assets held for sale, accumulated amortization—  (35,516) (34,957) (43,230) (42,205) 
Total assets$3,769,713  $3,920,816  $3,516,757  $3,751,931  $3,525,367  
Liabilities:
Unsecured debt, net of discount$1,592,693  $1,743,905  $1,292,374  $1,689,793  $1,472,194  
Secured debt28,784  188,779  189,030  189,451  189,782  
Accounts payable, accrued expenses, and accrued capital expenditures95,419  90,459  143,923  114,812  87,519  
Deferred income35,226  35,443  34,609  27,985  24,641  
Intangible lease liabilities, less accumulated amortization41,179  44,646  25,069  26,814  24,069  
Interest rate swaps28,575  26,709  5,121  6,862  5,549  
Other liabilities held for sale—  7,158  7,657  15,431  18,638  
Total liabilities$1,821,876  $2,137,099  $1,697,783  $2,071,148  $1,822,392  
Stockholders' equity:
Common stock1,260  1,259  1,258  1,258  1,258  
Additional paid in capital3,691,377  3,690,821  3,686,398  3,685,504  3,687,881  
Cumulative distributions in excess of earnings(1,723,147) (1,889,109) (1,871,375) (2,007,438) (1,989,446) 
Other comprehensive loss(23,360) (20,976) 967  (283) 1,530  
Piedmont stockholders' equity1,946,130  1,781,995  1,817,248  1,679,041  1,701,223  
Non-controlling interest1,707  1,722  1,726  1,742  1,752  
Total stockholders' equity1,947,837  1,783,717  1,818,974  1,680,783  1,702,975  
Total liabilities, redeemable common stock and stockholders' equity$3,769,713  $3,920,816  $3,516,757  $3,751,931  $3,525,367  
Common stock outstanding at end of period126,025  125,921  125,783  125,783  125,783  

11


Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands except for per share data)

Three Months Ended
6/30/20203/31/202012/31/20199/30/20196/30/2019
Revenues:
Rental income (1)
$109,714  $111,496  $106,742  $105,207  $102,637  
Tenant reimbursements (1)
21,533  20,658  22,950  25,372  22,831  
Property management fee revenue622  773  579  405  422  
Other property related income2,762  4,244  3,882  4,437  4,778  
134,631  137,171  134,153  135,421  130,668  
Expenses:
Property operating costs53,148  53,190  52,582  54,613  52,380  
Depreciation27,200  27,884  26,011  27,131  26,348  
Amortization24,349  23,631  21,000  19,505  18,461  
Impairment loss on real estate assets—  —  7,000  1,953  —  
General and administrative5,937  8,643  8,159  7,950  12,418  
110,634  113,348  114,752  111,152  109,607  
Other income / (expense):
Interest expense(13,953) (15,264) (14,844) (16,145) (15,112) 
Other income / (expense)349  149  279  263  752  
Gain / (loss) on extinguishment of debt(9,336) —  —  —  —  
Gain / (loss) on sale of real estate (2)
191,369   157,640  32  1,451  
Net income192,426  8,711  162,476  8,419  8,152  
Less: Net (income) / loss attributable to noncontrolling interest (2)    
Net income attributable to Piedmont$192,427  $8,709  $162,478  $8,422  $8,153  
Weighted average common shares outstanding - diluted126,500