pdm-20211027
0001042776false00010427762021-10-272021-10-27

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):  October 27, 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 October 27, 2021, Piedmont Office Realty Trust, Inc. (the "Registrant") issued a press release announcing its financial results for the third quarter 2021, and published supplemental information for the third 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:October 27, 2021By:/s/    Robert E. Bowers
  Robert E. Bowers
  Chief Financial Officer and Executive Vice President




Document

EXHIBIT 99.1
https://cdn.kscope.io/4f39fba7d1d2a6db082d312a09a86fbd-image1.jpg

Piedmont Office Realty Trust Reports Third Quarter 2021 Results and Raises Guidance
ATLANTA, October 27, 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 September 30, 2021.

Highlights for the Quarter Ended September 30, 2021:

Financial Results:
The Company reported net income applicable to Piedmont of $11.3 million, or $0.09 per diluted share, for the quarter ended September 30, 2021, as compared to $8.9 million, or $0.07 per diluted share, for the quarter ended September 30, 2020.
Piedmont reported Core Funds From Operations ("Core FFO") of $62.0 million, or $0.50 per diluted share, for the quarter ended September 30, 2021, as compared to $60.2 million, or $0.48 per diluted share, for the quarter ended September 30, 2020.
Piedmont reported an 12% and 5% increase in Same Store Net Operating Income ("Same Store NOI") on a cash and accrual basis, respectively, for the quarter ended September 30, 2021 as compared to the quarter ended September 30, 2020.
The Company has raised and narrowed its 2021 financial guidance to a range of $1.95 to $1.98 per diluted share of Core FFO, as compared to its previously announced range of $1.90 to $1.96 per diluted share of Core FFO.
Leasing:
The Company completed approximately 509,000 square feet of leasing across all of its major markets, including approximately 221,000 square feet of new tenant leasing.
Piedmont reported an approximately 11% and 16% roll up in cash and accrual basis rents, respectively, based on leases executed during the quarter ended September 30, 2021 for space vacant one year or less.
The Company's reported average lease size was approximately 15,000 square feet and the portfolio was approximately 86% leased as of September 30, 2021.
Capital Markets (Including Subsequent Event):
As previously announced, the Company is under 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 in early 2022, subject to customary closing conditions.
On October 22, 2021, Piedmont acquired 999 Peachtree Street, a 622,000 square foot, approximately 77% leased, LEED Platinum, 28-story, office building located in Atlanta, GA for $223.9 million, or $360 psf.



After the completion of both of the above transactions, approximately 55% of the Company's Annualized Lease Revenue will be generated from the Sunbelt.
Balance Sheet:
The Company issued $300 million in aggregate principal amount of 2.75% Senior Notes due 2032 and used the proceeds to repay, without penalty, its Amended and Restated $300 million Unsecured 2011 Term Loan that was scheduled to mature in November of 2021.
The Company's average net debt-to-Core EBITDA ratio as of September 30, 2021 was 5.5 x.
The Company's Debt-to-Gross Assets ratio was 34.4% as of September 30, 2021.
As of September 30, 2021, the Company had no secured debt and approximately $422 million of available capacity on its $500 million line of credit.
ESG and Operations:
Piedmont's entire approximately 17 million square foot portfolio has been submitted to the International WELL Building Institute ("IWBI") for WELL Health-Safety Rating.
All three of the Dallas Galleria Office Towers obtained Building Owners and Managers Association ("BOMA") 360 Designations.
Three buildings won regional The Outstanding Building of the Year ("TOBY") awards.
Piedmont awarded scholarships to two students, one at Howard University in Washington, D.C. and the other at Morehouse College in Atlanta, GA.
Piedmont was recognized by the Make-a-Wish Georgia chapter for outstanding community involvement through its 2020 annual Make-a-Wish grant.

Commenting on third quarter results, Brent Smith, President and Chief Executive Officer, said, "In addition to reporting strong financial metrics for the quarter, we also made progress on a number of strategic objectives including a sizeable debt refinancing, major capital recycling transaction, and numerous ESG initiatives. Perhaps most encouraging to our business was that new tenant leasing returned to pre-pandemic levels, demonstrating both optimism around the office sector’s recovery and the resiliency of our portfolio." Smith added, "Furthermore, we are extremely excited to announce our acquisition and vision for 999 Peachtree Street, an iconic building located in the heart of midtown Atlanta. This LEED Platinum building provides Piedmont with a foothold in one of the most vibrant, active submarkets in the country at an attractive basis and with immediate scale. We look forward to revitalizing the asset and driving income growth by providing a unique, differentiated product with outdoor amenities that are unmatched in the submarket today."

Results for the Quarter ended September 30, 2021

Piedmont recognized net income applicable to Piedmont for the three months ended September 30, 2021 of $11.3 million, or $0.09 per diluted share, compared to $8.9 million, or $0.07 per diluted share, for the three months ended September 30, 2020, with the $0.02 per share increase primarily attributable to rising rental rates, decreased operating expenses, particularly related to our landlord's portion of real estate taxes, as well as the expiration of operating expense recovery abatements on certain leases. These improvements were partially offset by a 0.9% reduction in our overall leased percentage on a year-to-date basis as a result of reduced new leasing activity in 2020 and the first half of 2021 due to the COVID-19 pandemic.
FFO and Core FFO, which remove the impact of gains and losses on sales of real estate assets, as well as depreciation and amortization, were both $62.0 million, or $0.50 per diluted share, for the three months



ended September 30, 2021 as compared to $60.2 million, or $0.48 per diluted share, for the three months ended September 30, 2020. The $0.02 per share increase in both metrics was primarily attributable to the same factors noted in net income above.
Total revenues were $131.1 million for the three months ended September 30, 2021, compared to $131.7 million for the three months ended September 30, 2020, with the loss of revenue related to 2020 disposition activity generally being offset by higher rental rates and reimbursement and other income at certain properties in 2021.
Property operating costs were $51.8 million for the three months ended September 30, 2021, as compared with $53.3 million for the three months ended September 30, 2020, with the decrease primarily related to lower real estate taxes at certain properties, as well as the impact of disposition activity that occurred during 2020.
General and administrative expense was $7.0 million for the third quarter of 2021, as compared to $5.5 million for the same period in 2020, with the three months ended September 30, 2020 primarily reflecting reduced accruals during 2020 for potential performance based compensation tied to operating results, particularly leasing, which was impacted by the COVID-19 pandemic.

Leasing Update

During the three months ended September 30, 2021, Piedmont completed approximately 509,000 square feet of leasing, which was widely dispersed throughout the portfolio and included approximately 221,000 square feet of new tenant leasing. The weighted average lease term for the approximately 50 leases executed during the third quarter was 6.4 years with the largest lease completed during the third quarter being a 10-year renewal and expansion totaling approximately 155,000 square feet at 5&15 Wayside in Burlington, MA. No other individual lease executed during the quarter was as large as 25,000 square feet.
Leases executed during the third quarter of 2021 for recently occupied space reflected a 10.5% and 16.1% roll up in cash and accrual rents, respectively. As of September 30, 2021, the Company's reported leased percentage and weighted average remaining lease term were approximately 86% and 6.1 years, respectively.
Same Store NOI increased 11.6% and 5.0% on a cash and accrual basis, respectively, for the quarter ended September 30, 2021 as compared to the quarter ended September 30, 2020, with the increase in both metrics primarily attributable to rising rental rates and decreased operating expenses, particularly property taxes, as well as the expiration of abatements at certain properties, partially offset by lower overall occupancy (0.9% year-to-date) due to slow leasing in 2020 and the first half of 2021 due to the COVID-19 pandemic. As of September 30, 2021, the Company had approximately 770,000 square feet of executed leases for vacant space yet to commence or under rental abatement.

Financing and Transactional Activity

During the three months ended September 30, 2021, the Company issued $300 million in aggregate principal amount of 2.75% Senior Notes due 2032 and used the proceeds to repay its Amended and Restated $300 million Unsecured 2011 Term Loan that was scheduled to mature in November of 2021.

As previously announced, the Company is under binding contract to sell 225 and 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 in early 2022, subject to customary closing conditions.




Subsequent to quarter end, on October 22, 2021, Piedmont acquired 999 Peachtree Street, a 622,000 square foot, approximately 77% leased, LEED-Platinum, 28-story, office building located in Atlanta, GA for $223.9 million, or $360 psf. Located at the corner of Peachtree and 10th Streets in the heart of Midtown, the property offers spectacular views of the Midtown skyline and nearby Piedmont Park. Superior accessibility to the interstate, MARTA (commuter rail system) and the Midtown/ Beltline bike path, along with premier amenities and close proximity to Georgia Tech and more than 30,000 residents within a 1-mile radius, make 999 Peachtree Street a compelling location for prospective tenants. The acquisition marks Piedmont's entry into Midtown Atlanta, one of the most vibrant, active submarkets in the country. Piedmont plans an exciting redevelopment project to revitalize the asset and deliver a premiere tenant experience.

ESG and Other Operational Initiatives

In addition to Piedmont's Atlanta Galleria assets that have already received a WELL Health-Safety rating, the remainder of Piedmont's entire approximately 17 million square foot portfolio has been submitted to the IWBI for WELL Health-Safety Rating. The WELL Health-Safety Rating is an evidence-based, third-party verified rating for all new and existing building and facility types focused on operational policies, maintenance protocols, occupant engagement and emergency plans to prioritize the health and safety of their staff, visitors and stakeholders during the COVID-19 crisis and for the long-term.

All three of the Company's Dallas Galleria Office Towers obtained BOMA 360 Designations during the three months ended September 30, 2021. Consequently, approximately 90% of the Company's portfolio is now designated as BOMA 360. In addition, three buildings - 5 Wall Street in Boston, MA and Norman Pointe I and US Bancorp Center, both in Minneapolis, MN - won regional TOBY awards.

During the three months ended September 30, 2021, Piedmont awarded scholarships to two students, one at Howard University in Washington, D.C. and the other at Morehouse College in Atlanta, GA. The scholarships were awarded pursuant to the Piedmont Office Realty Trust Scholarship Program, whereby Piedmont has partnered with two Historically Black Colleges and Universities to provide need-based, scholastic support to selected rising sophomores interested in pursuing a career related to the real estate industry along with the opportunity to join Piedmont in a summer internship position.

Fourth Quarter 2021 Dividend Declaration

On October 27, 2021, the board of directors of Piedmont declared a dividend for the fourth 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 November 26, 2021, payable on January 4, 2022.

Guidance for 2021

The Company has raised and narrowed its 2021 financial guidance for calendar year 2021 to a range of $1.95 to $1.98 per diluted share of Core FFO, as compared to its previously announced range of $1.90 to $1.96 per diluted share of Core FFO. This guidance is based upon management's assumptions, estimates and expectations based on information available to management as of the date of this release. These estimates reflect year-to-date operating and leasing results, as well as 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. They also include the effect of the acquisition of 999 Peachtree Street, but no other acquisition or disposition activity that may be completed during the year. Actual results could differ materially from these estimates based on a variety of factors as discussed under "Forward-Looking Statements" below.




(in millions, except per share data)LowHigh
Net Income$40$41
Add:
Depreciation119 121 
Amortization84 85 
NAREIT FFO and Core FFO applicable to common stock$243$247
NAREIT FFO and Core FFO per diluted share$1.95$1.98

Note that individual quarters may fluctuate on both a cash basis and an accrual basis due to 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 September 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, October 28, 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 (888) 506-0062 for participants in the United States and Canada and (973) 528-0011 for international participants. Participant Access Code is 439514. A replay of the conference call will be available through 11:00 A.M. Eastern time on November 11, 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 43158. 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 third 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 September 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: whether approximately 55% of the Company's Annualized Lease Revenue will be generated from the Sunbelt after completion of the acquisition of 999 Peachtree Street and the disposition of 225 and 235 Presidential Way; whether the Company will revitalize 999 Peachtree Street and drive income growth by providing a unique, differentiated product with outdoor amenities that are unmatched in the Midtown Atlanta submarket today; 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: 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 other tax law changes which may adversely affect our stockholders; the future effectiveness of our internal controls and procedures; 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; and other factors, including the risk factors discussed under Item 1A. of Piedmont’s Annual Report on Form 10-K for the year ended December 31, 2020 and Quarterly Report on Form 10-Q for the nine months ended September 30, 2021, 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)
September 30, 2021December 31, 2020
Assets:
Real estate assets, at cost:
Land
$476,717 $476,716 
Buildings and improvements
3,259,369 3,123,042 
Buildings and improvements, accumulated depreciation
(829,832)(751,521)
Intangible lease assets
148,945 158,444 
Intangible lease assets, accumulated amortization
(80,072)(67,850)
Construction in progress
48,226 56,749 
Real estate assets held for sale, gross78,803 76,475 
Real estate assets held for sale, accumulated depreciation and amortization
(16,699)(16,021)
Total real estate assets
3,085,457 3,056,034 
Cash and cash equivalents
8,189 7,331 
Tenant receivables
8,678 8,448 
Straight line rent receivables
159,871 148,797 
Notes receivable
118,500 118,500 
Restricted cash and escrows
6,093 1,883 
Prepaid expenses and other assets
24,915 23,277 
Goodwill
98,918 98,918 
Deferred lease costs, gross
437,020 444,211 
Deferred lease costs, accumulated depreciation
(195,255)(171,817)
Other assets held for sale, gross
9,258 5,030 
Other assets held for sale, accumulated depreciation
(996)(802)
Total assets$3,760,648 $3,739,810 
Liabilities:
Unsecured debt, net of discount and unamortized debt issuance costs of $12,899 and $10,932, respectively
$1,665,101 $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
127,675 111,997 
Dividends payable
— 25,683 
Deferred income
73,614 36,891 
Intangible lease liabilities, less accumulated amortization
26,924 35,440 
Interest rate swaps
6,715 9,834 
Total liabilities1,900,029 1,841,849 
Stockholders' equity:
Common stock
1,241 1,238 
Additional paid in capital
3,700,208 3,693,996 
Cumulative distributions in excess of earnings
(1,822,441)(1,774,856)
Other comprehensive income
(20,036)(24,100)
Piedmont stockholders' equity1,858,972 1,896,278 
Noncontrolling interest
1,647 1,683 
Total stockholders' equity1,860,619 1,897,961 
Total liabilities and stockholders' equity$3,760,648 $3,739,810 



Number of shares of common stock outstanding as of end of period124,136 123,839 
Net debt (Unsecured and Secured debt, less Cash and cash equivalents)1,656,912 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)1,678,000 1,632,610 



Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands, except for per share data)
Three Months EndedNine Months Ended
9/30/20219/30/20209/30/20219/30/2020
Revenues:
Rental and tenant reimbursement revenue$127,427 $128,280 $380,306 $391,681 
Property management fee revenue626 751 1,920 2,146 
Other property related income3,018 2,662 8,320 9,668 
Total revenues
131,071 131,693 390,546 403,495 
Expenses:
Property operating costs51,767 53,293 154,849 159,631 
Depreciation30,562 28,255 88,663 83,339 
Amortization20,373 22,990 63,978 70,970 
General and administrative6,955 5,469 22,417 20,049 
Total operating expenses
109,657 110,007 329,907 333,989 
Other income (expense):
Interest expense(12,450)(12,725)(37,375)(41,942)
Other income2,337 319 7,324 817 
Loss on early extinguishment of debt— — — (9,336)
Gain/(loss) on sale of real estate assets— (340)— 191,032 
Total other income (expense)
(10,113)(12,746)(30,051)140,571 
Net income11,301 8,940 30,588 210,077 
Net loss applicable to noncontrolling interest
Net income applicable to Piedmont$11,306 $8,943 $30,597 $210,079 
Weighted average common shares outstanding - diluted124,627 126,385 124,472 126,302 
Net income per share applicable to common stockholders - diluted$0.09 $0.07 $0.25 $1.66 











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 EndedNine Months Ended
9/30/20219/30/20209/30/20219/30/2020
GAAP net income applicable to common stock$11,306 $8,943 $30,597 $210,079 
Depreciation of real estate assets(1)
30,336 27,960 87,873 82,384 
Amortization of lease-related costs
20,362 22,976 63,943 70,930 
(Gain)/loss on sale of real estate assets
— 340 — (191,032)
NAREIT Funds From Operations applicable to common stock*62,004 60,219 182,413 172,361 
Loss on early extinguishment of debt
— — — 9,336 
Core Funds From Operations applicable to common stock*62,004 60,219 182,413 181,697 
Amortization of debt issuance costs, fair market adjustments on notes payable, and discounts on debt
849 931 2,076 2,180 
Depreciation of non real estate assets
216 286 762 930 
Straight-line effects of lease revenue
(2,122)(6,315)(8,627)(20,378)
Stock-based compensation adjustments
1,637 1,336 5,152 4,281 
Net effect of amortization of above/below-market in-place lease intangibles
(2,731)(3,240)(8,192)(9,517)
Non-incremental capital expenditures(2)
(18,640)(15,611)(52,849)(58,062)(3)
Adjusted Funds From Operations applicable to common stock*$41,213 $37,606 $120,735 $101,131 
Weighted average common shares outstanding - diluted124,627 126,385 124,472 126,302 
Funds From Operations per share (diluted)$0.50 $0.48 $1.47 $1.36 
Core Funds From Operations per share (diluted)$0.50 $0.48 $1.47 $1.44 

(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
9/30/20219/30/20209/30/20219/30/2020
Net income applicable to Piedmont (GAAP)$11,306$8,943 $11,306$8,943 
Net loss applicable to noncontrolling interest
(5)(3)(5)(3)
Interest expense
12,45012,725 12,45012,725 
Depreciation
30,55228,247 30,55228,247 
Amortization
20,36222,976 20,36222,976 
Depreciation and amortization attributable to noncontrolling interests2122 2122 
Loss on sale of real estate assets
340 340 
EBITDAre* and Core EBITDA*
74,68673,250 74,68673,250 
General & administrative expenses
6,9555,469 6,9555,469 
Management fee revenue
(309)(422)(309)(422)
Other income
(2,121)(104)(2,121)(104)
       Non-cash general reserve for uncollectible accounts(33)
Straight line effects of lease revenue
(2,122)(6,315)
Straight line effects of lease revenue attributable to noncontrolling interests1(5)
Amortization of lease-related intangibles
(2,731)(3,240)
Property NOI*74,35968,600 79,21178,193 
Net operating income from:
Acquisitions
(8,012)(6,041)(9,621)(8,505)
Dispositions
(359)(3,338)(359)(3,191)
Other investments(1)
254150 311(286)
Same Store NOI*$66,242$59,371 $69,542$66,211 
Change period over period in Same Store NOI11.6%N/A5.0 %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
Nine Months EndedNine Months Ended
9/30/20219/30/20209/30/20219/30/2020
Net income applicable to Piedmont (GAAP)$30,597$210,079 $30,597$210,079 
Net loss applicable to noncontrolling interest
(9)(2)(9)(2)
Interest expense
37,37541,942 37,37541,942 
Depreciation
88,63583,315 88,63583,315 
Amortization
63,94370,930 63,94370,930 
Depreciation and amortization attributable to noncontrolling interests6364 6364 
Gain on sale of real estate assets
(191,032)(191,032)
EBITDAre*
220,604215,296 220,604215,296 
Loss on early extinguishment of debt9,336 9,336 
Core EBITDA*220,604224,632 220,604224,632 
General & administrative expenses
22,41720,049 22,41720,049 
Management fee revenue
(946)(1,098)(946)(1,098)
Other income
(6,423)(170)(6,423)(170)
       Non-cash general reserve for uncollectible accounts4124,831 
Straight line effects of lease revenue
(8,627)(20,378)
Straight line effects of lease revenue attributable to noncontrolling interests2(12)
Amortization of lease-related intangibles
(8,192)(9,517)
Property NOI*219,247218,337 235,652243,413 
Net operating income from:
Acquisitions
(24,214)(15,320)(29,244)(21,246)
Dispositions
(204)(20,225)(204)(21,330)
Other investments(1)
580388 748551 
Same Store NOI*$195,409$183,180 $206,952$201,388 
Change period over period in Same Store NOI6.7 %N/A2.8 %N/A

(1)Other investments include active out-of-service 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/4f39fba7d1d2a6db082d312a09a86fbd-newsuppcoverphoto10-25x21a.jpg



Piedmont Office Realty Trust, Inc.
Quarterly Supplemental Information
Index
PagePage
IntroductionOther Investments
Corporate DataOther Investments Detail
Investor InformationSupporting Information
Earnings ReleaseDefinitions
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. The Company was designated an Energy Star Partner of the Year for 2021, and it is the only office REIT headquartered in the Southeast to receive that designation. At the end of the third 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
September 30, 2021December 31, 2020
Number of consolidated in-service office properties (1)
5454
Rentable square footage (in thousands) (1)
16,42816,428
Percent leased (2)
85.9 %86.8 %
Capitalization (in thousands):
Total debt - principal amount outstanding (excludes premiums, discounts, and deferred financing costs)$1,678,000$1,632,610
Equity market capitalization (3)
$2,163,684$2,009,914
Total market capitalization (3)
$3,841,684$3,642,524
Total debt / Total market capitalization (3)
43.7 %44.8 %
Average net debt to Core EBITDA5.5 x5.8 x
Total debt / Total gross assets34.4 %34.4 %
Common stock data:
High closing price during quarter$19.40$16.95
Low closing price during quarter$16.79$11.42
Closing price of common stock at period end$17.43$16.23
Weighted average fully diluted shares outstanding during quarter (in thousands)124,627125,544
Shares of common stock issued and outstanding at period end (in thousands)124,136123,839
Annual regular dividend per share (4)
$0.84$0.84
Rating / Outlook:
Standard & Poor'sBBB / StableBBB / Stable
Moody'sBaa2 / StableBaa2 / Stable
Employees130137
(1)As of September 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. BowersGeorge Wells
Chief Executive Officer, PresidentChief Financial and Administrative OfficerChief Operating Officer and
and Directorand Executive Vice PresidentExecutive Vice President
Edward H. Guilbert, IIIChristopher A. KollmeLaura P. MoonJoseph H. Pangburn
Executive Vice President, Finance,Executive Vice President,Chief Accounting Officer andExecutive Vice President,
Assistant Secretary and TreasurerStrategySenior Vice PresidentSouthwest Region
Investor Relations Contact
Thomas R. PrescottAlex ValenteRobert K. Wiberg
Executive Vice President,Executive Vice President,Executive Vice President,
Midwest Region and Co-Head ofSoutheast RegionNortheast Region and Co-Head of
DevelopmentDevelopment
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 CounselInstitutional Analyst ContactInvestor Relations
ComputershareKing & SpaldingPhone: 770.418.8592Phone: 866.354.3485
P.O. Box 301701180 Peachtree Street, NEresearch.analysts@piedmontreit.cominvestor.services@piedmontreit.com
College Station, TX 77842-3170Atlanta, GA 30309www.piedmontreit.com
Phone: 866.354.3485Phone: 404.572.4600

4


Piedmont Office Realty Trust, Inc.
Earnings Release
Piedmont Office Realty Trust Reports Third Quarter 2021 Results and Raises Guidance

ATLANTA, October 27, 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 September 30, 2021.

Highlights for the Quarter Ended September 30, 2021:

Financial Results:
The Company reported net income applicable to Piedmont of $11.3 million, or $0.09 per diluted share, for the quarter ended September 30, 2021, as compared to $8.9 million, or $0.07 per diluted share, for the quarter ended September 30, 2020.
Piedmont reported Core Funds From Operations ("Core FFO") of $62.0 million, or $0.50 per diluted share, for the quarter ended September 30, 2021, as compared to $60.2 million, or $0.48 per diluted share, for the quarter ended September 30, 2020.
Piedmont reported an approximately 12% and 5% increase in Same Store Net Operating Income ("Same Store NOI") on a cash and accrual basis, respectively, for the quarter ended September 30, 2021 as compared to the quarter ended September 30, 2020.
The Company has raised and narrowed its 2021 financial guidance to a range of $1.95 to $1.98 per diluted share of Core FFO, as compared to its previously announced range of $1.90 to $1.96 per diluted share of Core FFO.
Leasing:
The Company completed approximately 509,000 square feet of leasing across all of its major markets, including approximately 221,000 square feet of new tenant leasing.
Piedmont reported an approximately 11% and 16% roll up in cash and accrual basis rents, respectively, based on leases executed during the quarter ended September 30, 2021 for space vacant one year or less.
The Company's reported average lease size was approximately 15,000 square feet and the portfolio was approximately 86% leased as of September 30, 2021.
Capital Markets (Including Subsequent Event):
As previously announced, the Company is under 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 in early 2022, subject to customary closing conditions.
On October 22, 2021, Piedmont acquired 999 Peachtree Street, a 622,000 square foot, approximately 77% leased, LEED Platinum, 28-story, office building located in Atlanta, GA for $223.9 million, or $360 per square foot.
After the completion of both of the above transactions, approximately 55% of the Company's Annualized Lease Revenue will be generated from the Sunbelt.
Balance Sheet:
The Company issued $300 million in aggregate principal amount of 2.75% Senior Notes due 2032 and used the proceeds to repay, without penalty, its Amended and Restated $300 million Unsecured 2011 Term Loan that was scheduled to mature in November of 2021.

The Company's average net debt-to-Core EBITDA ratio as of September 30, 2021 was 5.5 x.
The Company's Debt-to-Gross Assets ratio was 34.4% as of September 30, 2021.
As of September 30, 2021, the Company had no secured debt and approximately $422 million of available capacity on its $500 million line of credit.
5


ESG and Operations:
Piedmont's entire approximately 17 million square foot portfolio has been submitted to the International WELL Building Institute ("IWBI") for WELL Health-Safety Rating.
All three of the Dallas Galleria Office Towers obtained Building Owners and Managers Association ("BOMA") 360 Designations.
Three buildings won regional The Outstanding Building of the Year ("TOBY") awards.
Piedmont awarded scholarships to two students, one at Howard University in Washington, D.C. and the other at Morehouse College in Atlanta, GA.
Piedmont was recognized by the Make-a-Wish Georgia chapter for outstanding community involvement through its 2020 annual Make-a-Wish grant.

Commenting on third quarter results, Brent Smith, President and Chief Executive Officer, said, "In addition to reporting strong financial metrics for the quarter, we also made progress on a number of strategic objectives including a sizeable debt refinancing, major capital recycling transaction, and numerous ESG initiatives. Perhaps most encouraging to our business was that new tenant leasing returned to pre-pandemic levels, demonstrating both optimism around the office sector’s recovery and the resiliency of our portfolio." Smith added, "Furthermore, we are extremely excited to announce our acquisition and vision for 999 Peachtree Street, an iconic building located in the heart of midtown Atlanta. This LEED Platinum building provides Piedmont with a foothold in one of the most vibrant, active submarkets in the country at an attractive basis and with immediate scale. We look forward to revitalizing the asset and driving income growth by providing a unique, differentiated product with outdoor amenities that are unmatched in the submarket today."

Results for the Quarter ended September 30, 2021

Piedmont recognized net income applicable to Piedmont for the three months ended September 30, 2021 of $11.3 million, or $0.09 per diluted share, compared to $8.9 million, or $0.07 per diluted share, for the three months ended September 30, 2020, with the $0.02 per share increase primarily attributable to rising rental rates, decreased operating expenses, particularly related to our landlord's portion of real estate taxes, as well as the expiration of operating expense recovery abatements on certain leases. These improvements were partially offset by a 0.9% reduction in our overall leased percentage on a year-to-date basis as a result of reduced new leasing activity in 2020 and the first half of 2021 due to the COVID-19 pandemic.
FFO and Core FFO, which remove the impact of gains and losses on sales of real estate assets, as well as depreciation and amortization, were both $62.0 million, or $0.50 per diluted share, for the three months ended September 30, 2021 as compared to $60.2 million, or $0.48 per diluted share, for the three months ended September 30, 2020. The $0.02 per share increase in both metrics was primarily attributable to the same factors noted in net income above.
Total revenues were $131.1 million for the three months ended September 30, 2021, compared to $131.7 million for the three months ended September 30, 2020, with the loss of revenue related to 2020 disposition activity generally being offset by higher rental rates and reimbursement and other income at certain properties in 2021.
Property operating costs were $51.8 million for the three months ended September 30, 2021, as compared with $53.3 million for the three months ended September 30, 2020, with the decrease primarily related to lower real estate taxes at certain properties, as well as the impact of disposition activity that occurred during 2020.
General and administrative expense was $7.0 million for the third quarter of 2021, as compared to $5.5 million for the same period in 2020, with the three months ended September 30, 2020 primarily reflecting reduced accruals during 2020 for potential performance based compensation tied to operating results, particularly leasing, which was impacted by the COVID-19 pandemic.

Leasing Update

During the three months ended September 30, 2021, Piedmont completed approximately 509,000 square feet of leasing, which was widely dispersed throughout the portfolio and included approximately 221,000 square feet of new tenant leasing. The weighted average lease term for the approximately 50 leases executed during the third quarter was 6.4 years with the largest lease completed during the third quarter being a 10-year renewal and expansion totaling approximately 155,000 square feet at 5&15 Wayside in Burlington, MA. No other individual lease executed during the quarter was as large as 25,000 square feet.
Leases executed during the third quarter of 2021 for recently occupied space reflected a 10.5% and 16.1% roll up in cash and accrual rents, respectively. As of September 30, 2021, the Company's reported leased percentage and weighted average remaining lease term were approximately 86% and 6.1 years, respectively.
Same Store NOI increased 11.6% and 5.0% on a cash and accrual basis, respectively, for the quarter ended September 30, 2021 as compared to the quarter ended September 30, 2020, with the increase in both metrics primarily attributable to rising rental rates and decreased operating expenses, particularly property taxes, as well as the expiration of abatements at certain properties, partially offset by lower overall occupancy (0.9% year-to-date) due to slow leasing in 2020 and the first half of 2021 due to the COVID-19 pandemic. As of September 30, 2021, the Company had approximately 770,000 square feet of executed leases for vacant space yet to commence or under rental abatement.

6


Financing and Transactional Activity

During the three months ended September 30, 2021, the Company issued $300 million in aggregate principal amount of 2.75% Senior Notes due 2032 and used the proceeds to repay its Amended and Restated $300 million Unsecured 2011 Term Loan that was scheduled to mature in November of 2021.

As previously announced, the Company is under binding contract to sell 225 and 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 in early 2022, subject to customary closing conditions.

Subsequent to quarter end, on October 22, 2021, Piedmont acquired 999 Peachtree Street, a 622,000 square foot, approximately 77% leased, LEED-Platinum, 28-story, office building located in Atlanta, GA for $223.9 million, or $360 psf. Located at the corner of Peachtree and 10th Streets in the heart of Midtown, the property offers spectacular views of the Midtown skyline and nearby Piedmont Park. Superior accessibility to the interstate, MARTA (commuter rail system) and the Midtown/ Beltline bike path, along with premier amenities and close proximity to Georgia Tech and more than 30,000 residents within a 1-mile radius, make 999 Peachtree Street a compelling location for prospective tenants. The acquisition marks Piedmont's entry into Midtown Atlanta, one of the most vibrant, active submarkets in the country. Piedmont plans an exciting redevelopment project to revitalize the asset and deliver a premiere tenant experience.

ESG and Other Operational Initiatives

In addition to Piedmont's Atlanta Galleria assets that have already received a WELL Health-Safety rating, the remainder of Piedmont's entire approximately 17 million square foot portfolio has been submitted to the IWBI for WELL Health-Safety Rating. The WELL Health-Safety Rating is an evidence-based, third-party verified rating for all new and existing building and facility types focused on operational policies, maintenance protocols, occupant engagement and emergency plans to prioritize the health and safety of their staff, visitors and stakeholders during the COVID-19 crisis and for the long-term.

All three of the Company's Dallas Galleria Office Towers obtained BOMA 360 Designations during the three months ended September 30, 2021. Consequently, approximately 90% of the Company's portfolio is now designated as BOMA 360. In addition, three buildings - 5 Wall Street in Boston, MA and Norman Pointe I and US Bancorp Center, both in Minneapolis, MN - won regional TOBY awards.

During the three months ended September 30, 2021, Piedmont awarded scholarships to two students, one at Howard University in Washington, D.C. and the other at Morehouse College in Atlanta, GA. The scholarships were awarded pursuant to the Piedmont Office Realty Trust Scholarship Program, whereby Piedmont has partnered with two Historically Black Colleges and Universities to provide need-based, scholastic support to selected rising sophomores interested in pursuing a career related to the real estate industry along with the opportunity to join Piedmont in a summer internship position.

Fourth Quarter 2021 Dividend Declaration

On October 27, 2021, the board of directors of Piedmont declared a dividend for the fourth 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 November 26, 2021, payable on January 4, 2022.

7



Guidance for 2021

The Company has raised and narrowed its 2021 financial guidance for calendar year 2021 to a range of $1.95 to $1.98 per diluted share of Core FFO, as compared to its previously announced range of $1.90 to $1.96 per diluted share of Core FFO. This guidance is based upon management's assumptions, estimates and expectations based on information available to management as of the date of this release. These estimates reflect year-to-date operating and leasing results, as well as 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. They also include the effect of the acquisition of 999 Peachtree Street, but no other acquisition or disposition activity that may be completed during the year. Actual results could differ materially from these estimates based on a variety of factors as discussed on page 42.

(in millions, except per share data)LowHigh
Net Income$40$41
Add:
Depreciation119 121 
Amortization84 85 
NAREIT FFO and Core FFO applicable to common stock$243$247
NAREIT FFO and Core FFO per diluted share$1.95$1.98

Note that individual quarters may fluctuate on both a cash basis and an accrual basis due to 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.


8


Piedmont Office Realty Trust, Inc.
Consolidated Balance Sheets
Unaudited (in thousands)
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020
Assets:
Real estate, at cost:
Land assets$476,717 $476,717 $476,717 $476,716 $497,478 
Buildings and improvements3,259,369 3,203,286 3,170,152 3,123,042 3,215,255 
Buildings and improvements, accumulated depreciation(829,832)(804,400)(776,577)(751,521)(787,602)
Intangible lease asset148,945 155,002 155,634 158,444 161,870 
Intangible lease asset, accumulated amortization(80,072)(79,149)(72,475)(67,850)(63,353)
Construction in progress48,226 67,033 47,498 56,749 56,393 
Real estate assets held for sale, gross78,803 77,917 76,797 76,475 76,475 
Real estate assets held for sale, accumulated depreciation & amortization(16,699)(16,699)(16,487)(16,021)(15,558)
Total real estate assets3,085,457 3,079,707 3,061,259 3,056,034 3,140,958 
Cash and cash equivalents8,189 8,122 10,689 7,331 23,958 
Tenant receivables, net of allowance for doubtful accounts8,678 6,530 4,545 8,448 11,301 
Straight line rent receivable159,871 156,912 153,727 148,797 152,171 
Notes receivable118,500 118,500 118,500 118,500 — 
Escrow deposits and restricted cash6,093 1,578 1,741 1,883 1,781 
Prepaid expenses and other assets24,915 29,469 22,647 23,277 28,074 
Goodwill98,918 98,918 98,918 98,918 98,918 
Deferred lease costs, gross437,020 441,488 439,342 444,211 460,773 
Deferred lease costs, accumulated amortization(195,255)(191,045)(181,499)(171,817)(169,307)
Other assets held for sale, gross9,258 9,128 8,941 5,030 5,123 
Other assets held for sale, accumulated amortization(996)(996)(936)(802)(668)
Total assets$3,760,648 $3,758,311 $3,737,874 $3,739,810 $3,753,082 
Liabilities:
Unsecured debt, net of discount$1,665,101 $1,666,570 $1,633,819 $1,594,068 $1,588,411 
Secured debt— — 27,628 27,936 28,424 
Accounts payable, accrued expenses, and accrued capital expenditures127,675 111,562 92,183 137,680 120,763 
Deferred income73,614 70,594 56,638 36,891 36,613 
Intangible lease liabilities, less accumulated amortization26,924 29,761 32,607 35,440 38,324 
Interest rate swaps6,715 7,316 7,654 9,834 10,618 
Other liabilities held for sale— — — — — 
Total liabilities$1,900,029 $1,885,803 $1,850,529 $1,841,849 $1,823,153 
Stockholders' equity:
Common stock1,241 1,241 1,240 1,238 1,260 
Additional paid in capital3,700,208 3,698,656 3,697,801 3,693,996 3,692,634 
Cumulative distributions in excess of earnings(1,822,441)(1,807,679)(1,791,558)(1,774,856)(1,740,670)
Other comprehensive loss(20,036)(21,368)(21,813)(24,100)(24,993)
Piedmont stockholders' equity1,858,972 1,870,850 1,885,670 1,896,278 1,928,231 
Non-controlling interest1,647 1,658 1,675 1,683 1,698 
Total stockholders' equity1,860,619 1,872,508 1,887,345 1,897,961 1,929,929 
Total liabilities, redeemable common stock and stockholders' equity$3,760,648 $3,758,311 $3,737,874 $3,739,810 $3,753,082 
Common stock outstanding at end of period124,136 124,132 124,029 123,839 126,029 

9


Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands except for per share data)
Three Months Ended
9/30/20216/30/20213/31/202112/31/20209/30/2020
Revenues:
Rental income (1)
$105,592 $105,209 $105,170 $104,560 $108,071 
Tenant reimbursements (1)
21,835 21,758 20,742 23,712 20,209 
Property management fee revenue626 536 758 721 751 
Other property related income3,018 2,715 2,587 2,536 2,662 
131,071 130,218 129,257 131,529 131,693 
Expenses:
Property operating costs51,767 51,658 51,424 55,302 53,293 
Depreciation30,562 29,998 28,103 27,236 28,255 
Amortization20,373 20,693 22,912 22,324 22,990 
General and administrative6,955 8,211 7,251 7,415 5,469 
109,657 110,560 109,690 112,277 110,007 
Other income / (expense):
Interest expense(12,450)(12,345)(12,580)(13,048)(12,725)
Other income / (expense)2,337 2,631 2,356 1,770 319 
Gain / (loss) on extinguishment of debt— — — — — 
Gain / (loss) on sale of real estate (2)
— — — 14,634 (340)
Net income11,301 9,944 9,343 22,608 8,940 
Less: Net (income) / loss applicable to noncontrolling interest
Net income applicable to Piedmont$11,306 $9,947 $9,344 $22,609 $8,943 
Weighted average common shares outstanding - diluted124,627 124,704 124,450 125,544 126,385 
Net income per share available to common stockholders - diluted$0.09 $0.08 $0.08 $0.18 $0.07 
Common stock outstanding at end of period124,136 124,132 124,029 123,839 126,029 





(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 net sale of a three property portfolio in northern New Jersey.
10


Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands except for per share data)
Three Months EndedNine Months Ended
9/30/20219/30/2020Change ($)Change (%)9/30/20219/30/2020Change ($)Change (%)
Revenues:
Rental income (1)
$105,592 $108,071 $(2,479)(2.3)%$315,971 $329,281 $(13,310)(4.0)%
Tenant reimbursements (1)
21,835 20,209 1,626 8.0 %64,335 62,400 1,935 3.1 %
Property management fee revenue626 751 (125)(16.6)%1,920 2,146 (226)(10.5)%
Other property related income3,018 2,662 356 13.4 %8,320 9,668 (1,348)(13.9)%
131,071 131,693 (622)(0.5)%390,546 403,495 (12,949)(3.2)%
Expenses:
Property operating costs51,767 53,293 1,526 2.9 %154,849 159,631 4,782 3.0 %
Depreciation30,562 28,255 (2,307)(8.2)%88,663 83,339 (5,324)(6.4)%
Amortization20,373 22,990 2,617 11.4 %63,978 70,970 6,992 9.9 %
General and administrative6,955 5,469 (1,486)(27.2)%22,417 20,049 (2,368)(11.8)%
109,657 110,007 350 0.3 %329,907 333,989 4,082 1.2 %
Other income / (expense):
Interest expense(12,450)(12,725)275 2.2 %(37,375)(41,942)4,567 10.9 %
Other income / (expense)2,337 319 2,018 632.6 %7,324 817 6,507 796.5 %
Gain / (loss) on extinguishment of debt— — — — (9,336)9,336 100.0 %
Gain / (loss) on sale of real estate (2)
— (340)340 100.0 %— 191,032 (191,032)(100.0)%
Net income11,301 8,940 2,361 26.4 %30,588 210,077 (179,489)(85.4)%
Less: Net (income) / loss applicable to noncontrolling interest66.7 %350.0 %
Net income applicable to Piedmont$11,306 $8,943 $2,363 26.4 %$30,597 $210,079 $(179,482)(85.4)%
Weighted average common shares outstanding - diluted124,627 126,385 124,472 126,302 
Net income per share available to common stockholders - diluted$0.09 $0.07 $0.25 $1.66 
Common stock outstanding at end of period124,136 126,029 124,136 126,029 





(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 nine months ended September 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 Data9/30/20216/30/20213/31/202112/31/20209/30/2020
Percent leased (1)
85.9 %85.9 %86.0 %86.8 %86.9 %
Percent leased - economic (1) (2)
81.6 %82.6 %80.6 %82.0 %80.7 %
Total revenues$131,071$130,218$129,257$131,529$131,693
Net income attributable to Piedmont$11,306$9,947$9,344$22,609$8,943
Core EBITDA$74,686$72,980$72,938$70,582$73,250
Core FFO applicable to common stock$62,004$60,353$60,056$57,229$60,219
Core FFO per share - diluted$0.50$0.48$0.48$0.46$0.48
AFFO applicable to common stock$41,213$41,661$37,861$36,291$37,606
Gross regular dividends (3)
$26,068$26,068$26,046$26,145$26,466
Regular dividends per share (3)
$0.21$0.21$0.21$0.21$0.21
Selected Balance Sheet Data
Total real estate assets, net$3,085,457$3,079,707$3,061,259$3,056,034$3,140,958
Total assets$3,760,648$3,758,311$3,737,874$3,739,810$3,753,082
Total liabilities$1,900,029$1,885,803$1,850,529$1,841,849$1,823,153
Ratios & Information for Debt Holders
Core EBITDA margin (4)
57.0 %56.0 %56.4 %53.7 %55.6 %
Fixed charge coverage ratio (5)
5.5 x5.4 x5.4 x5.1 x5.5 x
Average net debt to Core EBITDA (6)
5.5 x5.7 x5.6 x5.8 x5.5 x
Total gross real estate assets$4,012,060$3,979,955$3,926,798$3,891,426$4,007,471
Net debt (7)
$1,663,718$1,666,300$1,658,995$1,623,396$1,602,237
(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.
(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 $1,009,904 for the quarter ended September 30, 2021, $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, and $236,290 for the quarter ended September 30, 2020; the Company had no principal amortization for the quarter ended September 30, 2021, as its last remaining amortizing loan was repaid during the second quarter of 2021; 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, and $269,838 for the quarter ended September 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 EndedNine Months Ended
9/30/20219/30/20209/30/20219/30/2020
GAAP net income applicable to common stock$11,306 $8,943 $30,597 $210,079 
Depreciation (1) (2)
30,336 27,960 87,873 82,384 
Amortization (1)
20,362 22,976 63,943 70,930 
Loss / (gain) on sale of properties
— 340 — (191,032)
NAREIT funds from operations and core funds from operations applicable to common stock62,004 60,219 182,413 172,361 
Adjustments:
Loss / (gain) on extinguishment of debt— — — 9,336 
Core funds from operations applicable to common stock62,004 60,219 182,413 181,697 
Adjustments:
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on senior notes849 931 2,076 2,180 
Depreciation of non real estate assets216 286 762 930 
Straight-line effects of lease revenue (1)
(2,122)(6,315)(8,627)(20,378)
Stock-based compensation adjustments1,637 1,336 5,152 4,281 
Amortization of lease-related intangibles (1)
(2,731)(3,240)(8,192)(9,517)
Non-incremental capital expenditures (3)
(18,640)(15,611)(52,849)(58,062)
Adjusted funds from operations applicable to common stock$41,213 $37,606 $120,735 $101,131 
Weighted average common shares outstanding - diluted124,627 126,385 124,472 126,302 
Funds from operations per share (diluted)$0.50 $0.48 $1.47 $1.36 
Core funds from operations per share (diluted)$0.50 $0.48 $1.47 $1.44 
Common stock outstanding at end of period124,136 126,029 124,136 126,029 




(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.

13


Piedmont Office Realty Trust, Inc.
Same Store Net Operating Income (Cash Basis)
Unaudited (in thousands)
Three Months EndedNine Months Ended
9/30/20219/30/20209/30/20219/30/2020
Net income attributable to Piedmont$11,306 $8,943 $30,597 $210,079 
Net income / (loss) attributable to noncontrolling interest(5)(3)(9)(2)
Interest expense
12,450 12,725 37,375 41,942 
Depreciation (1)
30,552 28,247 88,635 83,315 
Amortization (1)
20,362 22,976 63,943 70,930 
Depreciation and amortization attributable to noncontrolling interests21 22 63 64 
Loss / (gain) on sale of properties
— 340 — (191,032)
EBITDAre
74,686 73,250 220,604 215,296 
(Gain) / loss on extinguishment of debt— — — 9,336 
Core EBITDA (2)
74,686 73,250 220,604 224,632 
General & administrative expenses
6,955 5,469 22,417 20,049 
Non-cash general reserve for uncollectible accounts (3)
— (33)412 4,831 
Management fee revenue (4)
(309)(422)(946)(1,098)
Other (income) / expense (1) (5)
(2,121)(104)(6,423)(170)
Straight-line effects of lease revenue (1)
(2,122)(6,315)(8,627)(20,378)
Straight-line effects of lease revenue attributable to noncontrolling interests(5)(12)
Amortization of lease-related intangibles (1)
(2,731)(3,240)(8,192)(9,517)
Property net operating income (cash basis)74,359 68,600 219,247 218,337 
Deduct net operating (income) / loss from:
Acquisitions (6)
(8,012)(6,041)(24,214)(15,320)
Dispositions (7)
(359)(3,338)(204)(20,225)
Other investments (8)
254 150 580 388 
Same store net operating income (cash basis)$66,242 $59,371 $195,409 $183,180 
Change period over period11.6 %N/A6.7 %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 September 30, 2021, Piedmont recognized $0.1 million of termination income, as compared with $0.4 million during the same quarterly period in 2020. During the nine months ended September 30, 2021, Piedmont recognized $2.8 million in termination income, as compared with $1.5 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 EndedNine Months Ended
9/30/20219/30/20209/30/20219/30/2020
Net income attributable to Piedmont$11,306 $8,943 $30,597 $210,079 
Net income / (loss) attributable to noncontrolling interest(5)(3)(9)(2)
Interest expense
12,450 12,725 37,375 41,942 
Depreciation (1)
30,552 28,247 88,635 83,315 
Amortization (1)
20,362 22,976 63,943 70,930 
Depreciation and amortization attributable to noncontrolling interests21 22 63 64 
Loss / (gain) on sale of properties
— 340 — (191,032)
EBITDAre
74,686 73,250 220,604 215,296 
(Gain) / loss on extinguishment of debt— — — 9,336 
Core EBITDA (2)
74,686 73,250 220,604 224,632 
General & administrative expenses
6,955 5,469 22,417 20,049 
Management fee revenue (3)
(309)(422)(946)(1,098)
Other (income) / expense (1) (4)
(2,121)(104)(6,423)(170)
Property net operating income (accrual basis)79,211 78,193 235,652 243,413 
Deduct net operating (income) / loss from:
Acquisitions (5)
(9,621)(8,505)(29,244)(21,246)
Dispositions (6)
(359)(3,191)(204)(21,330)
Other investments (7)
311 (286)748 551 
Same store net operating income (accrual basis)$69,542 $66,211 $206,952 $201,388 
Change period over period5.0 %N/A2.8 %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 September 30, 2021, Piedmont recognized $0.1 million of termination income, as compared with $0.4 million during the same quarterly period in 2020. During the nine months ended September 30, 2021, Piedmont recognized $2.8 million in termination income, as compared with $1.5 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 EndedNine Months Ended
9/30/20219/30/2020Change ($)Change (%)9/30/20219/30/2020Change ($)Change (%)
Revenue
Cash rental income (1)
$92,043 $86,487 $5,556 6.4 %$272,632 $256,212 $16,420 6.4 %
Tenant reimbursements (2)
18,638 16,511 2,127 12.9 %53,990 53,641 349 0.7 %
Straight line effects of lease revenue (3)
1,784 5,389 (3,605)(66.9)%7,566 18,049 (10,483)(58.1)%
Amortization of lease-related intangibles1,516 1,418 98 6.9 %4,389 4,990 (601)(12.0)%
Total rents
113,981 109,805 4,176 3.8 %338,577 332,892 5,685 1.7 %
Other property related income (4)
2,820 2,569 251 9.8 %7,887 9,626 (1,739)(18.1)%
Total revenue116,801 112,374 4,427 3.9 %346,464 342,518 3,946 1.2 %
Property operating expense47,475 46,378 (1,097)(2.4)%140,159 141,776 1,617 1.1 %
Property other income / (expense) 216 215 1.0 0.5 %647 646 1.0 0.2 %
Same store net operating income (accrual)$69,542 $66,211 $3,331 5.0 %$206,952 $201,388 $5,564 2.8 %
Less:
Straight line effects of lease revenue(1,784)(5,389)3,605 66.9 %(7,566)(18,049)10,483 58.1 %
Amortization of lease-related intangibles(1,516)(1,418)(98)(6.9)%(4,389)(4,990)601 12.0 %