pdm-20210728
0001042776false00010427762021-07-282021-07-28

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 28, 2021
 
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 28, 2021, Piedmont Office Realty Trust, Inc. (the "Registrant") issued a press release announcing its financial results for the second quarter 2021, and published supplemental information for the second quarter 2021 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 28, 2021By:/s/    Robert E. Bowers
  Robert E. Bowers
  Chief Financial Officer and Executive Vice President




Document

EXHIBIT 99.1
https://cdn.kscope.io/e55ee6afa11b15b6d4ea10dfc3a9331b-image1b.jpg

Piedmont Office Realty Trust Reports Second Quarter 2021 Results and Raises Midpoint of 2021 Guidance
ATLANTA, July 28, 2021--Piedmont Office Realty Trust, Inc. ("Piedmont" or the "Company") (NYSE:PDM), an owner of Class A office properties located primarily in seven major Eastern U.S. markets with a majority of its revenue being generated from the Sunbelt, today announced its results for the quarter ended June 30, 2021.

Highlights for the Quarter Ended June 30, 2021:

Financial Results:
The Company reported net income applicable to common stockholders of $9.9 million, or $0.08 per diluted share, for the quarter ended June 30, 2021, as compared to $192.4 million, or $1.52 per diluted share, for the quarter ended June 30, 2020 with the prior year's second quarter reflecting a $191.4 million gain on the sale of 1901 Market Street,
Piedmont reported Core Funds From Operations of $60.4 million, or $0.48 per diluted share, for the quarter ended June 30, 2021, as compared to $61.6 million, or $0.49 per diluted share, for the quarter ended June 30, 2020.
Piedmont reported an approximately 5% increase in Same Store Net Operating Income, on both a cash basis and accrual basis, for the quarter ended June 30, 2021, as compared to the quarter ended June 30, 2020.
Leasing:
The Company completed over 664,000 square feet of leasing, including approximately 154,000 square feet of new tenant leasing, as well as a 5-year, 313,000 square foot renewal with the City of New York at 60 Broad Street.
Piedmont reported a 27.4% and a 18.2% roll up in accrual and cash basis rents, respectively, based on leases executed during the quarter ended June 30, 2021 for space vacant one year or less.
Occupancy remained relatively flat, ending the downward pressure caused by reduced leasing activity during the COVID-19 pandemic.
Capital Markets:
Entered into a binding contract to sell 225 & 235 Presidential Way in Woburn, MA for $129.0 million, or $293 per square foot, to an investment-grade buyer. The sale is expected to close near the end of 2021, subject to customary closing conditions.
Balance Sheet:
The Company repaid its last remaining secured debt during the second quarter of 2021, a $35 million fixed rate mortgage. As of June 30, 2021, the Company had no collateralized real estate assets.
The Company's average net debt-to-Core EBITDA ratio as of June 30, 2021 was 5.7 x.



The Company's Debt-to-Gross Assets ratio was 34.6% as of June 30, 2021.
As of June 30, 2021, the Company had approximately $424 million of available capacity on its $500 million line of credit.
ESG:
The Company published its Environmental, Social, and Governance ("ESG"") Annual Report which incorporates all Sustainability Accounting Standards Board ("SASB") metrics and aligns with Task Force on Climate-related Financial Disclosure ("TCFD") disclosure and is available on Piedmont's website, www.piedmontreit.com, under the ESG tab.
Reductions in water usage, power consumption, greenhouse gas emissions, and improved waste management resulted in Piedmont being named an ENERGY STAR Partner of the Year for 2021.
Brent Smith, President and Chief Executive Officer, said, "We are very pleased with our second quarter results - with solid financial metrics, strong leasing momentum reflecting attractive economics, and a binding contract for the strategic sale of two recently renewed, 100%-leased assets. We are particularly encouraged by our leasing results which included extending one or our largest tenants, the City of New York, for five years, as well as signing over 150,000 square feet of new tenant leasing. Additionally, we believe the current pipeline indicates continued momentum into the fall as tenant prospects continue to demand vibrant and active office environments such as ours."

Results for the Quarter ended June 30, 2021

Piedmont recognized net income applicable to common stockholders for the three months ended June 30, 2021 of $9.9 million, or $0.08 per diluted share, compared to $192.4 million, or $1.52 per diluted share, for the three months ended June 30, 2020. 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.
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 $60.4 million, or $0.48 per diluted share, for the three months ended June 30, 2021 as compared to $52.3 million, or $0.41 per diluted share, for the three months ended June 30, 2020 with the second quarter of 2020 including the $9.3 million, or $0.07 per diluted share, loss on early extinguishment of debt mentioned above.
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 $60.4 million, or $0.48 per diluted share, for the three months ended June 30, 2021, as compared with $61.6 million, or $0.49 per diluted share, for the three months ended June 30, 2020.
Total revenues were $130.2 million for the three months ended June 30, 2021, compared to $134.6 million for the three months ended June 30, 2020, with the second quarter of 2021 primarily reflecting the impact of disposition activity that occurred during 2020 and comparatively lower overall portfolio occupancy resulting from reduced leasing activity during the pandemic.
Property operating costs were $51.7 million for the three months ended June 30, 2021, as compared with $53.1 million for the three months ended June 30, 2020, reflecting the impact of disposition activity that occurred during 2020.
General and administrative expense was $8.2 million for the first quarter of 2021, as compared to $5.9 million for the same period in 2020, with the three months ended June 30, 2020 primarily reflecting reduced accruals for potential performance based compensation during the COVID-19 pandemic.




Leasing Update

During the three months ended June 30, 2021, Piedmont completed approximately 664,000 square feet of leasing, which was widely dispersed across its portfolio, including approximately 154,000 square feet of new tenant leasing. The weighted average lease term for leases executed during the second quarter was 5.8 years with the largest lease completed during the second quarter being a 5-year renewal of the City of New York's 313,000 square foot lease at 60 Broad Street in New York. Other significant leasing highlights during the quarter included the following:
In Atlanta: Greensky, LLC and Campbell & Brannon, LLC renewed 51,000 square feet and 11,000 square feet, respectively at Glenridge Highlands Two; Balfour Beatty Construction, LLC signed a new tenant lease for approximately 12,000 square feet at Galleria 300.
In Orlando: AssuredPartners, Inc. signed a new tenant lease for approximately 44,000 square feet, and Valley National Bank signed a renewal and expansion totaling approximately 11,000 square feet at CNL Center I.
In Dallas: Dairy Farmers of America, Inc. signed a new tenant lease for approximately 44,000 square feet at One Lincoln Park, and Alcority Capital LLC renewed approximately 10,000 square feet at 6565 North MacArthur Boulevard.
Leases executed during the second quarter of 2021 for recently occupied space reflected a 27.4% and 18.2% roll up in accrual and cash rents, respectively. As of June 30, 2021, the Company's reported leased percentage and weighted average remaining lease term were approximately 86% and 6.1 years, respectively.
Same Store Net Operating Income ("Same Store NOI") increased 4.8% and 4.7% on a cash and accrual basis, respectively, for the quarter ended June 30, 2021 as compared to the quarter ended June 30, 2020 with both increases primarily attributable to the burn off of rental abatements at certain properties. As of June 30, 2021, the Company had approximately 613,000 square feet of executed leases for vacant space yet to commence or under rental abatement.
Further 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 Activity

During the three months ended June 30, 2021, the Company entered into a binding contract to sell 225 and 235 Presidential Way, sister buildings comprising approximately 440,000 square feet, located in Woburn, MA and 100% leased to Raytheon Company through 2024, to an investment grade buyer for approximately $129.0 million, or $293 per square foot. The transaction is expected to close near the end of 2021, subject to customary closing conditions.

During the three months ended June 30, 2021, the Company repaid its only remaining secured debt, a $35 million fixed rate mortgage, previously secured by 5 Wall Street in Burlington, MA.




ESG Initiatives

The Company recently published its ESG Annual Report which incorporates expanded environmental reporting to include all SASB metrics and incorporates information that aligns with the TCFD. Highlights of the report, which is available on Piedmont's website, www.piedmontreit.com, under the ESG tab, include:

Establishment of the Piedmont Scholars Program at Morehouse University in Atlanta and Howard University in Washington, D.C;
Issuance of the Company's inaugural green bonds with proceeds used to purchase a Leadership in Energy and Environmental Design ("LEED") certified project in Dallas, TX;
Ranking third out of all office REITs and twelfth out of 79 REITs in Green Street’s 2019 Corporate Governance Rankings;
Scoring a "1" (highest possible rating) on its ISS Governance QualityScore (as of July 1, 2021).
As of June 30, 2021, Piedmont's portfolio of 56 office properties included:
20 LEED certified buildings;
45 buildings with Building Owners and Managers Association ("BOMA") 360 designations;
42 ENERGY STAR certified buildings;
13 The Outstanding Building of the Year ("TOBY") past or present award winners; and
5 WELL Health & Safety rated buildings.
Piedmont is one of the top five companies nationwide with the most BOMA360 buildings and renewals and plans to obtain portfolio-wide WELL Health & Safety Certification in 2021.

Third Quarter 2021 Dividend Declaration

On July 28, 2021, the board of directors of Piedmont declared a dividend for the third quarter of 2021 in the amount of $0.21 per share on its common stock to stockholders of record as of the close of business on August 27, 2021, payable on September 17, 2021.

Guidance for 2021

The following financial guidance for calendar year 2021 has been raised to the upper end of our previously published range (which was $1.86 to $1.96) and is based upon management's assumptions, estimates and expectations at this time. Further, the Company is raising its expectation of Same Store NOI - cash basis growth from the previously provided 3-5% range to the 5-7% range. Our projections for 2021 include the assumption of a gradual ramping up of business over the year with a return to a more typical state of



operations during the second half of 2021. This financial guidance does not include the effects of any potential acquisition or disposition activity that may be completed during the year.

(in millions, except per share data)LowHigh
Net Income$38$40
Add:
Depreciation117 120 
Amortization82 84 
NAREIT FFO and Core FFO applicable to common stock$237$244
NAREIT FFO and Core FFO per diluted share$1.90$1.96

The above financial guidance is based on information available to management as of the date of this release and does not include the effects of any potential acquisition or disposition activity that may be completed during the year. These estimates reflect management's view of current market conditions and incorporate certain economic and operational assumptions and projections, including those related to the pace and strength of the ongoing economic recovery from the COVID-19 pandemic. Actual results could differ materially from these estimates based on a variety of factors as discussed under "Forward-Looking Statements" below.

Note that individual quarters may fluctuate on both a cash basis and an accrual basis due to the timing of the business recovery from the COVID-19 pandemic, the timing of lease commencements and expirations, abatement periods, repairs and maintenance expenses, capital expenditures, capital markets activities, seasonal general and administrative expenses, accrued potential performance-based compensation expenses, and one-time revenue or expense events.

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, 2021 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 29, 2021 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) 602-0380 for participants in the United States and Canada and (862) 298-0970 for international participants. A replay of the conference call will be available through 11:00 A.M. Eastern daylight time on August 12, 2021, 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 42037. 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 2021 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, 2021 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). Piedmont is a 2021 ENERGY STAR Partner of the Year. 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," "estimate," "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: the anticipated continued momentum in the Company's leasing pipeline, the expected timing of dispositions, and the Company's estimated range of Net Income, Depreciation, Amortization, NAREIT FFO/Core FFO and NAREIT FFO/Core FFO per diluted share for the



year ending December 31, 2021. These statements are based on beliefs and assumptions of Piedmont’s management, which in turn are based on information available at the time the statements are made.

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 ongoing COVID-19 pandemic, and governmental and private measures taken to combat such health crises, which may affect our personnel, tenants, tenants' operations and ability to pay lease obligations, demand for office space, and the costs of operating our assets; the adequacy of our general reserve related to tenant lease-related assets established as a result of the COVID-19 pandemic, as well as the impact of any increase in this reserve or the establishment of any other reserve in the future; 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, civil unrest, or armed hostilities in any of the major metropolitan areas in which we own properties, or future cybersecurity attacks against any of our tenants; risks related to the occurrence of cyber incidents, or a deficiency in our cybersecurity, which could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships; costs of complying with governmental laws and regulations; uninsured losses or losses in excess of our insurance coverage, and our inability to obtain adequate insurance coverage at a reasonable cost; 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 interest rates and changes in the method pursuant to which the LIBOR rates are determined and the planned phasing out of USD LIBOR after June 2023; high interest rates which could affect our ability to finance or refinance properties; 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 the 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, 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 tenants in particular industries, such as oil and gas, hospitality, travel, co-working, etc., 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, as amended, 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 most



recent Annual Report on Form 10-K and other documents we file with the Securities and Exchange Commission.

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 (Unaudited)
 (in thousands)
June 30, 2021December 31, 2020
Assets:
Real estate assets, at cost:
Land
$476,717 $476,716 
Buildings and improvements
3,203,286 3,123,042 
Buildings and improvements, accumulated depreciation
(804,400)(751,521)
Intangible lease assets
155,002 158,444 
Intangible lease assets, accumulated amortization
(79,149)(67,850)
Construction in progress
67,033 56,749 
Real estate assets held for sale, gross77,917 76,475 
Real estate assets held for sale, accumulated depreciation and amortization
(16,699)(16,021)
Total real estate assets
3,079,707 3,056,034 
Cash and cash equivalents
8,122 7,331 
Tenant receivables
6,530 8,448 
Straight line rent receivables
156,912 148,797 
Notes receivable
118,500 118,500 
Restricted cash and escrows
1,578 1,883 
Prepaid expenses and other assets
29,469 23,277 
Goodwill
98,918 98,918 
Deferred lease costs, gross
441,488 444,211 
Deferred lease costs, accumulated depreciation
(191,045)(171,817)
Other assets held for sale, gross
9,128 5,030 
Other assets held for sale, accumulated depreciation
(996)(802)
Total assets$3,758,311 $3,739,810 
Liabilities:
Unsecured debt, net of discount and unamortized debt issuance costs of $9,430 and $10,932, respectively
$1,666,570 $1,594,068 
Secured debt, inclusive of premium and unamortized debt issuance costs of $0 and $326, respectively
— 27,936 
Accounts payable, accrued expenses, and accrued capital expenditures
111,562 111,997 
Dividends payable
— 25,683 
Deferred income
70,594 36,891 
Intangible lease liabilities, less accumulated amortization
29,761 35,440 
Interest rate swaps
7,316 9,834 
Total liabilities1,885,803 1,841,849 
Stockholders' equity:
Common stock
1,241 1,238 
Additional paid in capital
3,698,656 3,693,996 
Cumulative distributions in excess of earnings
(1,807,679)(1,774,856)
Other comprehensive income
(21,368)(24,100)
Piedmont stockholders' equity1,870,850 1,896,278 
Noncontrolling interest
1,658 1,683 
Total stockholders' equity1,872,508 1,897,961 
Total liabilities and stockholders' equity$3,758,311 $3,739,810 
Number of shares of common stock outstanding as of end of period124,132 123,839 



Net debt (Unsecured and Secured debt, less Cash and cash equivalents)1,658,448 1,614,673 
Total Principal Amount of Debt Outstanding (Unsecured debt plus discount and unamortized debt issuance costs and Secured debt less premium and unamortized debt issuance costs)1,676,000 1,632,610 



Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands, except for per share data)
Three Months EndedSix Months Ended
6/30/20216/30/20206/30/20216/30/2020
Revenues:
Rental and tenant reimbursement revenue$126,967 $131,247 $252,879 $263,401 
Property management fee revenue536 622 1,294 1,395 
Other property related income2,715 2,762 5,302 7,006 
Total revenues
130,218 134,631 259,475 271,802 
Expenses:
Property operating costs51,658 53,148 103,082 106,338 
Depreciation29,998 27,200 58,101 55,084 
Amortization20,693 24,349 43,605 47,980 
General and administrative8,211 5,937 15,462 14,580 
Total operating expenses
110,560 110,634 220,250 223,982 
Other income (expense):
Interest expense(12,345)(13,953)(24,925)(29,217)
Other income2,631 349 4,987 498 
Loss on early extinguishment of debt— (9,336)— (9,336)
Gain on sale of real estate assets— 191,369 — 191,372 
Total other income (expense)
(9,714)168,429 (19,938)153,317 
Net income9,944 192,426 19,287 201,137 
Net loss/(income) applicable to noncontrolling interest(1)
Net income applicable to Piedmont$9,947 $192,427 $19,291 $201,136 
Weighted average common shares outstanding - diluted124,704 126,500 124,555 126,456 
Net income per share applicable to common stockholders - diluted$0.08 $1.52 $0.15 $1.59 











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
6/30/20216/30/20206/30/20216/30/2020
GAAP net income applicable to common stock$9,947 $192,427 $19,291 $201,136 
Depreciation of real estate assets(1)
29,725 26,873 57,537 54,424 
Amortization of lease-related costs
20,681 24,336 43,581 47,954 
Gain on sale of real estate assets
— (191,369)— (191,372)
NAREIT Funds From Operations and Core Funds from Operations applicable to common stock*60,353 52,267 120,409 112,142 
Loss on early extinguishment of debt
— 9,336 — 9,336 
Core Funds From Operations applicable to common stock*60,353 61,603 120,409 121,478 
Amortization of debt issuance costs, fair market adjustments on notes payable, and discounts on debt
573 672 1,227 1,249 
Depreciation of non real estate assets
264 319 546 644 
Straight-line effects of lease revenue
(2,402)(7,278)(6,505)(14,063)
Stock-based compensation adjustments
2,404 645 3,515 2,945 
Net effect of amortization of above/below-market in-place lease intangibles
(2,669)(3,304)(5,461)(6,277)
Non-incremental capital expenditures(2)
(16,862)(7,689)(34,209)(42,451)(3)
Adjusted Funds From Operations applicable to common stock*$41,661 $44,968 $79,522 $63,525 
Weighted average common shares outstanding - diluted124,704 126,500 124,555 126,456 
Funds From Operations per share (diluted)$0.48 $0.41 $0.97 $0.89 
Core Funds From Operations per share (diluted)$0.48 $0.49 $0.97 $0.96 

(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
6/30/20216/30/20206/30/20216/30/2020
Net income applicable to Piedmont (GAAP)$9,947$192,427 $9,947$192,427 
Net loss applicable to noncontrolling interest
(3)(1)(3)(1)
Interest expense
12,34513,953 12,34513,953 
Depreciation
29,98927,192 29,98927,192 
Amortization
20,68124,336 20,68124,336 
Depreciation and amortization attributable to noncontrolling interests2121 2121 
Gain on sale of real estate assets
(191,369)(191,369)
EBITDAre *
72,98066,559 72,98066,559 
Loss on early extinguishment of debt9,336 9,336 
Core EBITDA*72,98075,895 72,98075,895 
General & administrative expenses
8,2115,937 8,2115,937 
Management fee revenue
(247)(282)(247)(282)
Other income
(2,162)(134)(2,162)(134)
       Non-cash general reserve for uncollectible accounts4,865 
Straight line effects of lease revenue
(2,402)(7,278)
Straight line effects of lease revenue attributable to noncontrolling interests(3)
Amortization of lease-related intangibles
(2,669)(3,304)
Property NOI*73,71175,696 78,78281,416 
Net operating income from:
Acquisitions
(8,761)(5,740)(10,412)(8,012)
Dispositions
(258)(8,186)(258)(8,777)
Other investments(1)
182134 238680 
Same Store NOI*$64,874$61,904 $68,350$65,307 
Change period over period in Same Store NOI4.8%N/A4.7 %N/A





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
6/30/20216/30/20206/30/20216/30/2020
Net income applicable to Piedmont (GAAP)$19,291$201,136 $19,291$201,136 
Net (loss)/income applicable to noncontrolling interest
(4)(4)
Interest expense
24,92529,217 24,92529,217 
Depreciation
58,08355,068 58,08355,068 
Amortization
43,58147,954 43,58147,954 
Depreciation and amortization attributable to noncontrolling interests4242 4242 
Gain on sale of real estate assets
(191,372)(191,372)
EBITDAre*
145,918142,046 145,918142,046 
Loss on early extinguishment of debt9,336 9,336 
Core EBITDA*145,918151,382 145,918151,382 
General & administrative expenses
15,46214,580 15,46214,580 
Management fee revenue
(637)(677)(637)(677)
Other income
(4,302)(67)(4,302)(67)
       Non-cash general reserve for uncollectible accounts4124,865 
Straight line effects of lease revenue
(6,505)(14,063)
Straight line effects of lease revenue attributable to noncontrolling interests1(6)
Amortization of lease-related intangibles
(5,461)(6,277)
Property NOI*144,888149,737 156,441165,218 
Net operating income from:
Acquisitions
(16,202)(9,279)(19,624)(12,741)
Dispositions
155(16,887)155(18,138)
Other investments(1)
326238 438838 
Same Store NOI*$129,167$123,809 $137,410$135,177 
Change period over period in Same Store NOI4.3 %N/A1.7 %N/A

(1)Other investments consist of active redevelopment and development projects, land, and recently completed redevelopment and development projects. The operating results from 222 South Orange Avenue in Orlando, FL 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 (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investment in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, along with appropriate adjustments to those reconciling items for 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 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 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 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 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.

Core EBITDA: The Company calculates Core EBITDA as net income (computed in accordance with GAAP) before interest, taxes, depreciation and amortization and incrementally removing any impairment losses, gains or losses from sales of property and other significant infrequent items that create volatility within our earnings and make it difficult to determine the earnings generated by our core ongoing business. Core EBITDA 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 EBITDA is helpful to investors as a supplemental performance measure because it provides a metric for understanding the performance of the Company’s results from ongoing operations without taking into account the effects of non-cash expenses (such as depreciation and amortization), as well as items that are not part of normal day-to-day operations of the Company’s business. Other REITs may not define Core EBITDA in the same manner as the Company; therefore, the Company’s computation of Core EBITDA may not be comparable to that of 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/e55ee6afa11b15b6d4ea10dfc3a9331b-image1c.jpg



Quarterly Supplemental Information
June 30, 2021










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 IndicatorsRisks, Uncertainties and Limitations
Funds From Operations / Adjusted Funds From Operations
Same Store Analysis
Capitalization Analysis
Debt Summary
Debt Detail
Debt Covenant & Ratio Analysis
Operational & Portfolio Information - Office Property 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 42 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 36. 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.




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 submarkets located primarily within seven major Eastern U.S. office markets, with over 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 2021, approximately 76% of the Company's portfolio was Energy Star certified and approximately 43% 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, 2021December 31, 2020
Number of consolidated in-service office properties (1)
5454
Rentable square footage (in thousands) (1)
16,43516,428
Percent leased (2)
85.9 %86.8 %
Capitalization (in thousands):
Total debt - principal amount outstanding (excludes premiums, discounts, and deferred financing costs)$1,676,000$1,632,610
Equity market capitalization (3)
$2,292,717$2,009,914
Total market capitalization (3)
$3,968,717$3,642,524
Total debt / Total market capitalization (3)
42.2 %44.8 %
Average net debt to Core EBITDA5.7 x5.8 x
Total debt / Total gross assets34.6 %34.4 %
Common stock data:
High closing price during quarter$20.29$16.95
Low closing price during quarter$17.59$11.42
Closing price of common stock at period end$18.47$16.23
Weighted average fully diluted shares outstanding during quarter (in thousands)124,704125,544
Shares of common stock issued and outstanding at period end (in thousands)124,132123,839
Annual regular dividend per share (4)
$0.84$0.84
Rating / Outlook:
Standard & Poor'sBBB / StableBBB / Stable
Moody'sBaa2 / StableBaa2 / Stable
Employees128137
(1)As of June 30, 2021, our consolidated office portfolio consisted of 54 properties (exclusive of one 127,000 square foot property that was out of service for redevelopment, 222 South Orange Avenue in Orlando, FL).
(2)
Calculated as square footage associated with commenced leases plus square footage associated with executed but uncommenced leases for vacant spaces at our in-service properties, divided by total rentable in-service square footage, all as of the relevant date, expressed as a percentage. Please refer to page 24 for additional analyses regarding Piedmont's leased percentage.
(3)Reflects common stock closing price, shares outstanding and outstanding debt as of the end of the reporting period, as appropriate.
(4)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 TreasurerCapital & 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 Region and Co-Head ofSoutheast Region
Development
George WellsRobert K. Wiberg
Chief Operating Officer andExecutive Vice President,
Executive Vice PresidentNortheast Region and Co-Head of
Development
Board of Directors
Frank C. McDowellDale H. TaysomKelly H. BarrettWesley E. Cantrell
Director, Chair of the Board of Directors,Director, Vice Chair of the Director, Chair of the Audit Committee, Director and Member of the Governance
Chair of the Compensation Committee, andBoard of Directors, and Member of theand Member of the Governance Committeeand Compensation Committees
Member of the Governance CommitteeAudit and Capital Committees
Glenn G. CohenBarbara B. LangC. Brent SmithJeffery L. Swope
Director and Member of the Audit and CapitalDirector, Chair of the Governance Committee, Chief Executive Officer, PresidentDirector, Chair of the Capital
Committeesand Member of the Compensationand DirectorCommittee, and Member of the
CommitteeCompensation 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, 2021
Financial Results (1)

Net income applicable to Piedmont for the quarter ended June 30, 2021 was $9.9 million, or $0.08 per share (diluted), compared to $192.4 million, or $1.52 per share (diluted), for the same quarter in 2020. Net income applicable to Piedmont for the six months ended June 30, 2021 was $19.3 million, or $0.15 per share (diluted), compared to $201.1 million, or $1.59 per share (diluted), for the same period in 2020. The decrease in net income attributable to Piedmont for the three months and the six months ended June 30, 2021 when compared to the same periods in 2020 was principally due to a $191.4 million gain recorded in the second quarter of 2020 attributable to one asset sale. There have been no asset sales thus far in 2021. See the Financing and Capital Activity section below for information on a pending sale as of June 30, 2021.

Funds from operations (FFO) for the quarter ended June 30, 2021 was $60.4 million, or $0.48 per share (diluted), compared to $52.3 million, or $0.41 per share (diluted), for the same quarter in 2020. FFO for the six months ended June 30, 2021 was $120.4 million, or $0.97 per share (diluted), compared to $112.1 million, or $0.89 per share (diluted), for the same period in 2020. The increase in FFO for the three months and the six months ended June 30, 2021 when compared to the same periods in 2020 was principally due to a loss on the early extinguishment of debt recorded in 2020 as a result of the sale of 1901 Market Street in Philadelphia, PA for a significant gain and the repayment of the associated mortgage.

Core funds from operations (Core FFO) for the quarter ended June 30, 2021 was $60.4 million, or $0.48 per share (diluted), compared to $61.6 million, or $0.49 per share (diluted), for the same quarter in 2020. Core FFO for the six months ended June 30, 2021 was $120.4 million, or $0.97 per share (diluted), compared to $121.5 million, or $0.96 per share (diluted), for the same period in 2020. Core FFO for the three months and the six months ended June 30, 2021 was comparable to that of the same periods in 2020. The slight decrease in Core FFO in 2021 when compared to 2020 was primarily attributable to reduced transient parking revenue and lower overall occupancy resulting from the COVID-19 pandemic.

The per share results for 2021 were positively impacted by the repurchase of approximately 2.2 million shares of common stock in 2020 for a total of approximately $30.6 million (before the consideration of transaction costs).

Adjusted funds from operations (AFFO) for the quarter ended June 30, 2021 was $41.7 million, compared to $45.0 million for the same quarter in 2020. AFFO for the six months ended June 30, 2021 was $79.5 million, compared to $63.5 million for the same period in 2020. The decrease in AFFO for the three months ended June 30, 2021 when compared to the same period in 2020 was primarily due to a greater amount of non-incremental capital expenditures in 2021, principally related to the continuing re-stack of the State of New York space and the associated tenant improvements at 60 Broad Street in New York, NY attributable to the tenant's recently completed 20-year lease renewal. The approximately $16 million increase in AFFO for the six months ended June 30, 2021 when compared to the same period in 2020 was primarily due to the payment of leasing commissions totaling $16.1 million related to the State of New York lease at 60 Broad Street during the first quarter of 2020.

Operations and Leasing

As of June 30, 2021, Piedmont had 54 in-service office properties located primarily in select submarkets within seven major office markets in the eastern portion of the United States, with over half of our revenue coming from the Sunbelt. On a square footage leased basis, our total in-service office portfolio was 85.9% leased as of June 30, 2021, as compared to 86.8% at December 31, 2020. Please refer to page 24 for additional leased percentage information.

The weighted average remaining lease term of our in-service portfolio was 6.1 years(2) as of June 30, 2021, unchanged from December 31, 2020. Our weighted average adjusted Annualized Lease Revenue(3) per square foot for our in-service portfolio was $37.21 as of June 30, 2021.

(1)
FFO, Core FFO and AFFO are supplemental non-GAAP financial measures. See page 36 for definitions of these non-GAAP financial measures, and pages 13 and 38 for reconciliations of FFO, Core FFO and AFFO to net income.
(2)
Remaining lease term (after taking into account leases for vacant spaces which had been executed but not commenced as of June 30, 2021) is weighted based on Annualized Lease Revenue, as defined on page 36.
(3)For the purposes of this calculation, Annualized Lease Revenue is adjusted for leases under which tenants pay a majority of a given building's 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 leases.

5


During the three months ended June 30, 2021, the Company completed approximately 664,000 square feet of leasing activity. Of the total leasing activity completed during the quarter, we signed new tenant leases for approximately 154,000 square feet. During the six months ended June 30, 2021, the Company completed approximately 1,343,000 square feet of leasing activity, of which approximately 308,000 square feet was related to new tenants. 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, 2021 (net of commitment expirations during the period) was $3.57 (see page 30).

The leasing results for the quarter include a large lease renewal. In June 2021, the City of New York executed an approximately 313,000 square foot lease renewal through 2026 at 60 Broad Street in New York, NY. The Company is in ongoing discussions with the City of New York regarding a longer-term lease renewal at the building.

Of the 664,000 square feet of leases executed during the three months ended June 30, 2021, significant leases greater than 10,000 square feet are as follows.
TenantPropertyMarketSquare Feet
Leased
Expiration
Year
Lease Type
The City of New York60 Broad StreetNew York313,0222026Renewal
Greensky, LLCGlenridge Highlands TwoAtlanta51,4742029Renewal
AssuredPartners, Inc.CNL Center IOrlando43,8882035New
Dairy Farmers of America, Inc.One Lincoln ParkDallas43,8142034New
Balfour Beatty Construction, LLCGalleria 300Atlanta12,4442024New
Valley National BankCNL Center IOrlando10,6452032Renewal / Contraction
Alcority, LLC6565 North MacArthur BoulevardDallas10,3282025New

At the end of the second quarter of 2021, there was one tenant whose lease individually contributed greater than 1% in Annualized Lease Revenue expiring during the eighteen month period following June 30, 2021. 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
CVS Caremark750 West John Carpenter FreewayIrving, TX208,1611.2%Q4 2022
The Company has been in communication with the tenant regarding lease renewal options.

Future Lease Commencements and Abatements

As of June 30, 2021, our overall leased percentage was 85.9% and our economic leased percentage was 82.6%. 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 approximately 248,000 square feet of leases as of June 30, 2021, or 1.5% of the portfolio); and
2)leases which have commenced but are within rental abatement periods (amounting to approximately 353,000 square feet of leases as of June 30, 2021, or a 1.8% 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.


6


Future Lease Commencements
Piedmont has leases with many large corporate office space users. The average size of lease in the Company's portfolio is approximately 15,000 square feet. Due to the large size and length of term of new leases, Piedmont typically signs leases at least several months in advance of their anticipated lease commencement dates. Presented below is a schedule of uncommenced new 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
District of Columbia Department of General Services400 Virginia AvenueWashington, DC56,04243,000 SF VacantQ1 2022New
Ascend Learning, LLC25 Burlington Mall RoadBurlington, MA52,558VacantQ3 2021New
salesforce.com5 Wall StreetBurlington, MA51,913Not VacantQ3 2021New

Abatements
New leases frequently provide rental abatement concessions to tenants and these abatements typically occur at the beginning of the leases. The currently reported cash net operating income and AFFO understate the Company's long-term cash generation ability from existing leases due to some leases being in abatement periods. Presented below is a schedule of leases with abatements of 50,000 square feet or greater that either were under abatement as of June 30, 2021 or will be under abatement within the next twelve months. (1)
TenantPropertyProperty LocationAbated Square FeetLease Commencement DateRemaining Abatement ScheduleLease Expiration
Ascend Learning, LLC25 Burlington Mall RoadBurlington, MA52,558Q3 2021July through December 2021Q4 2033
Greensky, LLCGlenridge Highlands TwoAtlanta, GA51,474Q2 2022August 2021 through February 2022Q4 2029
District of Columbia Department of General Services400 Virginia AvenueWashington, DC56,042Q1 2022January through early July 2022Q4 2032
VMware, Inc.1155 Perimeter Center WestAtlanta, GA159,838Q1 2022April, May and July 2022Q3 2027

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:
continue to invest in accessible, amenity-rich real estate assets with higher overall return prospects and/or strategic merits in one of its identified office markets where it has a significant operating presence with a competitive operating advantage and that otherwise meet its 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 activities in furtherance of its strategic objectives is presented below.

Dispositions
During the second quarter of 2021, Piedmont entered into a binding contract to sell 225 and 235 Presidential Way, two 100% leased, five-story office buildings with attached three-story parking structures, located in Woburn, MA, for $129.0 million, or $293 per square foot, to an investment-grade buyer. The sale is expected to close around the end of 2021. Piedmont recently completed a long-term lease renewal with the tenant occupying both properties, Raytheon. Through the sale of the assets, Piedmont will be able to harvest the value created during its ownership and redeploy the proceeds into opportunities with higher growth prospects.

Acquisitions
There were no acquisitions completed during the quarter ended June 30, 2021.

For additional information on acquisitions and dispositions completed over the previous eighteen months, please refer to page 34.


(1)The State of New York lease at 60 Broad Street in New York, NY, does not contain any rental abatement provisions. The tenant's space will be reconstructed over a period of up to 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.




7



Development / Redevelopment
An approximately $18.5 million redevelopment of 200 South Orange Avenue in Orlando, FL is underway. The project will allow the Company to reposition the property, creating a premier environment for downtown office tenants. 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, 2021, the project is near completion and remains on budget.

Details on the Company's developable land parcels, all of which are located adjacent to existing Piedmont properties, as well as information on its upcoming redevelopment project, can be found on page 35.

Finance
As of June 30, 2021, our ratio of total debt to total gross assets was 34.6%, and the same measure at December 31, 2020 was 34.4%. This debt ratio is based on total principal amount outstanding for our various loans as of the relevant measurement date.

As of June 30, 2021, our average net debt to Core EBITDA ratio was 5.7 x, compared to 5.8 x as of December 31, 2020.

Stock Repurchase Program
No repurchases of the Company's common stock were completed during the first two quarters of 2021. As of quarter end, Board-approved capacity remaining for additional repurchases totaled approximately $170 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 28, 2021, the Board of Directors of Piedmont declared a dividend for the second quarter of 2021 in the amount of $0.21 per common share outstanding to stockholders of record as of the close of business on May 28, 2021. The dividend was paid on June 18, 2021.

Subsequent Events
On July 28, 2021, the Board of Directors of Piedmont declared a dividend for the third quarter of 2021 in the amount of $0.21 per common share outstanding to stockholders of record as of the close of business on August 27, 2021. The dividend is expected to be paid on September 17, 2021.

Guidance for 2021

The following financial guidance for calendar year 2021 has been raised to the upper end of our previously published range and is based upon management's assumptions, estimates and expectations at this time. Our projections for 2021 include the assumption of a gradual ramping up of business over the year with a return to a more typical state of operations during the latter half of 2021. This financial guidance does not include the effects of any potential acquisition or disposition activity that may be completed during the year.
(in millions, except per share data)LowHigh
Net Income$38-$40
Add:
Depreciation117 -120
Amortization82 -84
NAREIT Funds from Operations and Core Funds from Operations applicable to common stock$237-$244
NAREIT Funds from Operations and Core Funds from Operations per diluted share$1.90-$1.96
These estimates reflect management's view of current market conditions and incorporate certain economic and operational assumptions and projections, including those related to the pace and strength of the economic recovery from the COVID-19 pandemic. Actual results could differ from these estimates. Note that individual quarters my fluctuate on both a cash basis and an accrual basis due to the timing of the business recovery from the COVID-19 pandemic, the timing of lease commencements and expirations, abatement periods, repairs and maintenance expenses, capital expenditures, capital markets activities, seasonal general and administrative expenses, accrued potential performance-based compensation expenses, and one-time revenue or expense events. The above guidance is based on information available to management as of the date of this supplemental report. Actual results could differ materially from these estimates based on a variety of factors as discussed on page 42.

8


Piedmont Office Realty Trust, Inc.
Consolidated Balance Sheets
Unaudited (in thousands)
June 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
Assets:
Real estate, at cost:
Land assets$476,717 $476,717 $476,716 $497,478 $497,478 
Buildings and improvements3,203,286 3,170,152 3,123,042 3,215,255 3,189,988 
Buildings and improvements, accumulated depreciation(804,400)(776,577)(751,521)(787,602)(761,775)
Intangible lease asset155,002 155,634 158,444 161,870 164,145 
Intangible lease asset, accumulated amortization(79,149)(72,475)(67,850)(63,353)(58,148)
Construction in progress67,033 47,498 56,749 56,393 51,045 
Real estate assets held for sale, gross77,917 76,797 76,475 76,475 76,475 
Real estate assets held for sale, accumulated depreciation & amortization(16,699)(16,487)(16,021)(15,558)(15,095)
Total real estate assets3,079,707 3,061,259 3,056,034 3,140,958 3,144,113 
Cash and cash equivalents8,122 10,689 7,331 23,958 36,469 
Tenant receivables, net of allowance for doubtful accounts6,530 4,545 8,448 11,301 8,494 
Straight line rent receivable156,912 153,727 148,797 152,171 144,876 
Notes receivable118,500 118,500 118,500 — — 
Escrow deposits and restricted cash1,578 1,741 1,883 1,781 1,769 
Prepaid expenses and other assets29,469 22,647 23,277 28,074 33,017 
Goodwill98,918 98,918 98,918 98,918 98,918 
Deferred lease costs, gross441,488 439,342 444,211 460,773 456,724 
Deferred lease costs, accumulated amortization(191,045)(181,499)(171,817)(169,307)(159,348)
Other assets held for sale, gross9,128 8,941 5,030 5,123 5,216 
Other assets held for sale, accumulated amortization(996)(936)(802)(668)(535)
Total assets$3,758,311 $3,737,874 $3,739,810 $3,753,082 $3,769,713 
Liabilities:
Unsecured debt, net of discount$1,666,570 $1,633,819 $1,594,068 $1,588,411 $1,592,693 
Secured debt— 27,628 27,936 28,424 28,784 
Accounts payable, accrued expenses, and accrued capital expenditures111,562 92,183 137,680 120,763 95,419 
Deferred income70,594 56,638 36,891 36,613 35,226 
Intangible lease liabilities, less accumulated amortization29,761 32,607 35,440 38,324 41,179 
Interest rate swaps7,316 7,654 9,834 10,618 28,575 
Other liabilities held for sale— — — — — 
Total liabilities$1,885,803 $1,850,529 $1,841,849 $1,823,153 $1,821,876 
Stockholders' equity:
Common stock1,241 1,240 1,238 1,260 1,260 
Additional paid in capital3,698,656 3,697,801 3,693,996 3,692,634 3,691,377 
Cumulative distributions in excess of earnings(1,807,679)(1,791,558)(1,774,856)(1,740,670)(1,723,147)
Other comprehensive loss(21,368)(21,813)(24,100)(24,993)(23,360)
Piedmont stockholders' equity1,870,850 1,885,670 1,896,278 1,928,231 1,946,130 
Non-controlling interest1,658 1,675 1,683 1,698 1,707 
Total stockholders' equity1,872,508 1,887,345 1,897,961 1,929,929 1,947,837 
Total liabilities, redeemable common stock and stockholders' equity$3,758,311 $3,737,874 $3,739,810 $3,753,082 $3,769,713 
Common stock outstanding at end of period124,132 124,029 123,839 126,029 126,025 

9


Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands except for per share data)
Three Months Ended
6/30/20213/31/202112/31/20209/30/20206/30/2020
Revenues:
Rental income (1)
$105,209 $105,170 $104,560 $108,071 $109,714 
Tenant reimbursements (1)
21,758 20,742 23,712 20,209 21,533 
Property management fee revenue536 758 721 751 622 
Other property related income2,715 2,587 2,536 2,662 2,762 
130,218 129,257 131,529 131,693 134,631 
Expenses:
Property operating costs51,658 51,424 55,302 53,293 53,148 
Depreciation29,998 28,103 27,236 28,255 27,200 
Amortization20,693 22,912 22,324 22,990 24,349 
General and administrative8,211 7,251 7,415 5,469 5,937 
110,560 109,690 112,277 110,007 110,634 
Other income / (expense):
Interest expense(12,345)(12,580)(13,048)(12,725)(13,953)
Other income / (expense)2,631 2,356 1,770 319 349 
Gain / (loss) on extinguishment of debt— — — — (9,336)
Gain / (loss) on sale of real estate (2)
— — 14,634 (340)191,369 
Net income9,944 9,343 22,608 8,940 192,426 
Less: Net (income) / loss applicable to noncontrolling interest
Net income applicable to Piedmont$9,947 $9,344 $22,609 $8,943 $192,427 
Weighted average common shares outstanding - diluted124,704 124,450 125,544 126,385 126,500 
Net income per share available to common stockholders - diluted$0.08 $0.08 $0.18 $0.07 $1.52 
Common stock outstanding at end of period124,132 124,029 123,839 126,029 126,025 





(1)The presentation method used for this line is not in conformance with GAAP. To be in conformance with the current GAAP standard, the Company would need to combine amounts presented on the rental income line with amounts presented on the tenant reimbursements line and present that aggregated figure on one line entitled "rental and tenant reimbursement revenue." The amounts presented on this line were determined based upon the Company's interpretation of the rental charges and billing method provisions in each of the Company's lease documents.
(2)The gain on sale of real estate reflected in the fourth quarter of 2020 was primarily related to the sales of 200 and 400 Bridgewater Crossing in Bridgewater, NJ. The gain on sale of real estate reflected in the second quarter of 2020 was primarily related to the sale of 1901 Market Street in Philadelphia, PA.
10


Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands except for per share data)
Three Months EndedSix Months Ended
6/30/20216/30/2020Change ($)Change (%)6/30/20216/30/2020Change ($)Change (%)
Revenues:
Rental income (1)
$105,209 $109,714 $(4,505)(4.1)%$210,379 $221,210 $(10,831)(4.9)%
Tenant reimbursements (1)
21,758 21,533 225 1.0 %42,500 42,191 309 0.7 %
Property management fee revenue536 622 (86)(13.8)%1,294 1,395 (101)(7.2)%
Other property related income2,715 2,762 (47)(1.7)%5,302 7,006 (1,704)(24.3)%
130,218 134,631 (4,413)(3.3)%259,475 271,802 (12,327)(4.5)%
Expenses:
Property operating costs51,658 53,148 1,490 2.8 %103,082 106,338 3,256 3.1 %
Depreciation29,998 27,200 (2,798)(10.3)%58,101 55,084 (3,017)(5.5)%
Amortization20,693 24,349 3,656 15.0 %43,605 47,980 4,375 9.1 %
General and administrative8,211 5,937 (2,274)(38.3)%15,462 14,580 (882)(6.0)%
110,560 110,634 74 0.1 %220,250 223,982 3,732 1.7 %
Other income / (expense):
Interest expense(12,345)(13,953)1,608 11.5 %(24,925)(29,217)4,292 14.7 %
Other income / (expense)2,631 349 2,282 653.9 %4,987 498 4,489 901.4 %
Gain / (loss) on extinguishment of debt— (9,336)9,336 100.0 %— (9,336)9,336 100.0 %
Gain / (loss) on sale of real estate (2)
— 191,369 (191,369)(100.0)%— 191,372 (191,372)(100.0)%
Net income9,944 192,426 (182,482)(94.8)%19,287 201,137 (181,850)(90.4)%
Less: Net (income) / loss applicable to noncontrolling interest200.0 %(1)500.0 %
Net income applicable to Piedmont$9,947 $192,427 $(182,480)(94.8)%$19,291 $201,136 $(181,845)(90.4)%
Weighted average common shares outstanding - diluted124,704 126,500 124,555 126,456 
Net income per share available to common stockholders - diluted$0.08 $1.52 $0.15 $1.59 
Common stock outstanding at end of period124,132 126,025 124,132 126,025 





(1)The presentation method used for this line is not in conformance with GAAP. To be in conformance with the current GAAP standard, the Company would need to combine amounts presented on the rental income line with amounts presented on the tenant reimbursements line and present that aggregated figure on one line entitled "rental and tenant reimbursement revenue." The amounts presented on this line were determined based upon the Company's interpretation of the rental charges and billing method provisions in each of the Company's lease documents.
(2)The gain on sale of real estate for the three months and the six months ended June 30, 2020 was primarily related to the sale of 1901 Market Street in Philadelphia, PA.

11


Piedmont Office Realty Trust, Inc.
Key Performance Indicators
Unaudited (in thousands except for per share data)
This section of our supplemental report includes non-GAAP financial measures, including, but not limited to, Earnings Before Interest, Taxes, Depreciation, and Amortization for real estate (EBITDAre), Core Earnings Before Interest, Taxes, Depreciation, and Amortization (Core EBITDA), Funds from Operations (FFO), Core Funds from Operations (Core FFO), and Adjusted Funds from Operations (AFFO). Definitions of these non-GAAP measures are provided on page 36 and reconciliations are provided beginning on page 38.
Three Months Ended
Selected Operating Data6/30/20213/31/202112/31/20209/30/20206/30/2020
Percent leased (1)
85.9 %86.0 %86.8 %86.9 %88.6 %
Percent leased - economic (1) (2)
82.6 %80.6 %82.0 %80.7 %81.1 %
Total revenues$130,218$129,257$131,529$131,693$134,631
Net income attributable to Piedmont$9,947$9,344$22,609$8,943$192,427
Core EBITDA$72,980$72,938$70,582$73,250$75,895
Core FFO applicable to common stock$60,353$60,056$57,229$60,219$61,603
Core FFO per share - diluted$0.48$0.48$0.46$0.48$0.49
AFFO applicable to common stock$41,661$37,861$36,291$37,606$44,968
Gross regular dividends (3)
$26,068$26,046$26,145$26,466$26,465
Regular dividends per share (3)
$0.21$0.21$0.21$0.21$0.21
Selected Balance Sheet Data
Total real estate assets, net$3,079,707$3,061,259$3,056,034$3,140,958$3,144,113
Total assets$3,758,311$3,737,874$3,739,810$3,753,082$3,769,713
Total liabilities$1,885,803$1,850,529$1,841,849$1,823,153$1,821,876
Ratios & Information for Debt Holders
Core EBITDA margin (4)
56.0 %56.4 %53.7 %55.6 %56.4 %
Fixed charge coverage ratio (5)
5.4 x5.4 x5.1 x5.5 x5.3 x
Average net debt to Core EBITDA (6)
5.7 x5.6 x5.8 x5.5 x6.2 x
Total gross real estate assets$3,979,955$3,926,798$3,891,426$4,007,471$3,979,131
Net debt (7)
$1,666,300$1,658,995$1,623,396$1,602,237$1,590,007
(1)
Please refer to page 24 for additional leased percentage information.
(2)Economic leased percentage excludes the square footage associated with executed but not commenced leases for currently vacant spaces and the square footage associated with tenants receiving rental abatements (after proportional adjustments for tenants receiving only partial rental abatements). Due to variations in rental abatement structures, there will be variability to the economic leased percentage over time as abatements commence and expire. Please see the Future Lease Commencements and Abatements section of Financial Highlights for details on near-term abatements for large leases.
(3)Dividends are reflected in the quarter in which the record date occurred.
(4)Core EBITDA margin is calculated as Core EBITDA divided by total revenues.
(5)The fixed charge coverage ratio is calculated as Core EBITDA divided by the sum of interest expense, principal amortization, capitalized interest and preferred dividends. The Company had no preferred dividends during any of the periods presented; the Company had capitalized interest of $875,804 for the quarter ended June 30, 2021, $812,649 for the quarter ended March 31, 2021, $368,965 for the quarter ended December 31, 2020, $236,290 for the quarter ended September 30, 2020, and $183,846 for the quarter ended June 30, 2020; the Company had principal amortization of $187,087 for the quarter ended June 30, 2021, $185,368 for the quarter ended March 31, 2021, $365,644 for the quarter ended December 31, 2020, $269,838 for the quarter ended September 30, 2020, and $266,128 for the quarter ended June 30, 2020.
(6)For the purposes of this calculation, we annualize the period's Core EBITDA and use the average daily balance of debt outstanding during the period, less cash and cash equivalents and escrow deposits and restricted cash as of the end of the period.
(7)Net debt is calculated as the total principal amount of debt outstanding minus cash and cash equivalents and escrow deposits and restricted cash as of the end of the period.

12


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
6/30/20216/30/20206/30/20216/30/2020
GAAP net income applicable to common stock$9,947 $192,427 $19,291 $201,136 
Depreciation (1) (2)
29,725 26,873 57,537 54,424 
Amortization (1)
20,681 24,336 43,581 47,954 
Loss / (gain) on sale of properties
— (191,369)— (191,372)
NAREIT funds from operations and core funds from operations applicable to common stock60,353 52,267 120,409 112,142 
Adjustments:
Loss / (gain) on extinguishment of debt— 9,336 — 9,336 
Core funds from operations applicable to common stock60,353 61,603 120,409 121,478 
Adjustments:
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on senior notes573 672 1,227 1,249 
Depreciation of non real estate assets264 319 546 644 
Straight-line effects of lease revenue (1)
(2,402)(7,278)(6,505)(14,063)
Stock-based compensation adjustments2,404 645 3,515 2,945 
Amortization of lease-related intangibles (1)
(2,669)(3,304)(5,461)(6,277)
Non-incremental capital expenditures (3)
(16,862)(7,689)(34,209)(42,451)
Adjusted funds from operations applicable to common stock$41,661 $44,968 $79,522 $63,525 
Weighted average common shares outstanding - diluted124,704 126,500 124,555 126,456 
Funds from operations per share (diluted)$0.48 $0.41 $0.97 $0.89 
Core funds from operations per share (diluted)$0.48 $0.49 $0.97 $0.96 
Common stock outstanding at end of period124,132 126,025 124,132 126,025 




(1)Includes our proportionate share of amounts attributable to consolidated properties.
(2)Excludes depreciation of non real estate assets.
(3)
Non-incremental capital expenditures are defined on page 36. Non-incremental capital expenditures for the six months ended June 30, 2020 include approximately $20.4 million of leasing commissions, with the largest contributor to that amount being the $16.1 million of leasing commissions related to the 20-year, approximately 500,000 square foot lease renewal with the State of New York at 60 Broad Street in New York, NY.

13


Piedmont Office Realty Trust, Inc.
Same Store Net Operating Income (Cash Basis)
Unaudited (in thousands)
Three Months EndedSix Months Ended
6/30/20216/30/20206/30/20216/30/2020
Net income attributable to Piedmont$9,947 $192,427 $19,291 $201,136 
Net income / (loss) attributable to noncontrolling interest(3)(1)(4)
Interest expense
12,345 13,953 24,925 29,217 
Depreciation (1)
29,989 27,192 58,083 55,068 
Amortization (1)
20,681 24,336 43,581 47,954 
Depreciation and amortization attributable to noncontrolling interests21 21 42 42 
Loss / (gain) on sale of properties
— (191,369)— (191,372)
EBITDAre
72,980 66,559 145,918 142,046 
(Gain) / loss on extinguishment of debt— 9,336 — 9,336 
Core EBITDA (2)
72,980 75,895 145,918 151,382 
General & administrative expenses
8,211 5,937 15,462 14,580 
Non-cash general reserve for uncollectible accounts (3)
— 4,865 412 4,865 
Management fee revenue (4)
(247)(282)(637)(677)
Other (income) / expense (1) (5)
(2,162)(134)(4,302)(67)
Straight-line effects of lease revenue (1)
(2,402)(7,278)(6,505)(14,063)
Straight-line effects of lease revenue attributable to noncontrolling interests— (3)(6)
Amortization of lease-related intangibles (1)
(2,669)(3,304)(5,461)(6,277)
Property net operating income (cash basis)73,711 75,696 144,888 149,737 
Deduct net operating (income) / loss from:
Acquisitions (6)
(8,761)(5,740)(16,202)(9,279)
Dispositions (7)
(258)(8,186)155 (16,887)
Other investments (8)
182 134 326 238 
Same store net operating income (cash basis)$64,874 $61,904 $129,167 $123,809 
Change period over period4.8 %N/A4.3 %N/A
(1)Includes our proportionate share of amounts attributable to consolidated properties.
(2)The Company has historically recognized approximately $2 to $3 million of termination income on an annual basis. Given the size of its asset base and the number of tenants with which it conducts business, Piedmont considers termination income of that magnitude to be a normal part of its operations and a recurring part of its revenue stream; however, the recognition of termination income is typically variable between quarters and throughout any given year and is dependent upon when during the year the Company receives termination notices from tenants. During the three months ended June 30, 2021, Piedmont recognized a negligible amount of termination income, as compared with $0.5 million during the same period in 2020. During the six months ended June 30, 2021, Piedmont recognized $2.7 million in termination income, as compared with $1.1 million during the same period in 2020.
(3)As a result of COVID-19 and as a precautionary measure, during the second quarter of 2020, the Company established a general reserve for potential future losses on customer accounts. The general reserve is non-cash in nature and, therefore, any changes in the reserve are removed from the calculation of cash basis same store net operating income. No such reserves were made in any periods prior to the second quarter of 2020.
(4)Presented net of related operating expenses incurred to earn the revenue; therefore, the information presented on this line will not tie to the data presented on the income statements.
(5)Figures presented on this line may not tie back to the relevant sources as some activity is attributable to property operations and is, therefore, presented in property net operating income.
(6)Acquisitions include One Galleria Tower, Two Galleria Tower and Three Galleria Tower in Dallas, TX, purchased on February 12, 2020.
(7)Dispositions include 1901 Market Street in Philadelphia, PA, sold on June 25, 2020, and the New Jersey property portfolio sold on October 28, 2020 (consisting of the Company's final remaining assets in the state, 200 and 400 Bridgewater Crossing in Bridgewater, NJ, and 600 Corporate Drive in Lebanon, NJ).
(8)
Other investments include active out-of-service redevelopment and development projects, land, and recently completed redevelopment and development projects. Additional information on our land holdings can be found on page 35. The operating results from 222 South Orange Avenue in Orlando, FL, are included in this line item.
14


Piedmont Office Realty Trust, Inc.
Same Store Net Operating Income (Accrual Basis)
Unaudited (in thousands)
Three Months EndedSix Months Ended
6/30/20216/30/20206/30/20216/30/2020
Net income attributable to Piedmont$9,947 $192,427 $19,291 $201,136 
Net income / (loss) attributable to noncontrolling interest(3)(1)(4)
Interest expense
12,345 13,953 24,925 29,217 
Depreciation (1)
29,989 27,192 58,083 55,068 
Amortization (1)
20,681 24,336 43,581 47,954 
Depreciation and amortization attributable to noncontrolling interests21 21 42 42 
Loss / (gain) on sale of properties
— (191,369)— (191,372)
EBITDAre
72,980 66,559 145,918 142,046 
(Gain) / loss on extinguishment of debt— 9,336 — 9,336 
Core EBITDA (2)
72,980 75,895 145,918 151,382 
General & administrative expenses
8,211 5,937 15,462 14,580 
Management fee revenue (3)
(247)(282)(637)(677)
Other (income) / expense (1) (4)
(2,162)(134)(4,302)(67)
Property net operating income (accrual basis)78,782 81,416 156,441 165,218 
Deduct net operating (income) / loss from:
Acquisitions (5)
(10,412)(8,012)(19,624)(12,741)
Dispositions (6)
(258)(8,777)155 (18,138)
Other investments (7)
238 680 438 838 
Same store net operating income (accrual basis)$68,350 $65,307 $137,410 $135,177 
Change period over period4.7 %N/A1.7 %N/A
(1)Includes our proportionate share of amounts attributable to consolidated properties.
(2)The Company has historically recognized approximately $2 to $3 million of termination income on an annual basis. Given the size of its asset base and the number of tenants with which it conducts business, Piedmont considers termination income of that magnitude to be a normal part of its operations and a recurring part of its revenue stream; however, the recognition of termination income is typically variable between quarters and throughout any given year and is dependent upon when during the year the Company receives termination notices from tenants. During the three months ended June 30, 2021, Piedmont recognized a negligible amount of termination income, as compared with $0.5 million during the same period in 2020. During the six months ended June 30, 2021, Piedmont recognized $2.7 million in termination income, as compared with $1.1 million during the same period in 2020.
(3)Presented net of related operating expenses incurred to earn the revenue; therefore, the information presented on this line will not tie to the data presented on the income statements.
(4)Figures presented on this line may not tie back to the relevant sources as some activity is attributable to property operations and is, therefore, presented in property net operating income.
(5)Acquisitions include One Galleria Tower, Two Galleria Tower and Three Galleria Tower in Dallas, TX, purchased on February 12, 2020.
(6)Dispositions include 1901 Market Street in Philadelphia, PA, sold on June 25, 2020, and the New Jersey property portfolio sold on October 28, 2020 (consisting of the Company's final remaining assets in the state, 200 and 400 Bridgewater Crossing in Bridgewater, NJ, and 600 Corporate Drive in Lebanon, NJ).
(7)
Other investments include active out-of-service redevelopment and development projects, land, and recently completed redevelopment and development projects. Additional information on our land holdings can be found on page 35. The operating results from 222 South Orange Avenue in Orlando, FL, are included in this line item.




15


Piedmont Office Realty Trust, Inc.
Same Store Net Operating Income (Financial Components)
Unaudited (in thousands)

Three Months EndedSix Months Ended
6/30/20216/30/2020Change ($)Change (%)6/30/20216/30/2020Change ($)Change (%)
Revenue
Cash rental income (1)
$90,404 $82,337 $8,067 9.8 %$180,589 $169,724 $10,865 6.4 %
Tenant reimbursements (2)
17,697 17,867 (170)(1.0)%35,352 37,130 (1,778)(4.8)%
Straight line effects of lease revenue (3)
2,041