pdm-20220727
0001042776false00010427762022-07-272022-07-27

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):  July 27, 2022
 
Piedmont Office Realty Trust, Inc.
(Exact name of registrant as specified in its charter)
 
Commission File Number:  001-34626
 
Maryland58-2328421
(State or other jurisdiction of(IRS Employer
incorporation)Identification No.)

5565 Glenridge Connector Ste. 450
Atlanta, Georgia 30342

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

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

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

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

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

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

Emerging growth company 

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




Item 2.02    Results of Operations and Financial Condition.

On July 27, 2022, Piedmont Office Realty Trust, Inc. (the "Registrant") issued a press release announcing its financial results for the second quarter 2022, and published supplemental information for the second quarter 2022 to its website. The press release and the supplemental information are attached hereto as Exhibit 99.1 and 99.2, respectively, and are incorporated herein by reference. Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibits and the information set forth therein are deemed to have been furnished and shall not be deemed to be “filed” under the Securities Exchange Act of 1934.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits:

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







SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
 
  Piedmont Office Realty Trust, Inc.
 (Registrant)
Dated:July 27, 2022By:/s/    Robert E. Bowers
  Robert E. Bowers
  Chief Financial Officer and Executive Vice President




Document

EXHIBIT 99.1
https://cdn.kscope.io/5392e576d96028a07578809fe0b375a0-image1a.jpg

Piedmont Office Realty Trust Reports Second Quarter 2022 Results
ATLANTA, July 27, 2022--Piedmont Office Realty Trust, Inc. ("Piedmont" or the "Company") (NYSE:PDM), an owner of Class A office properties located primarily in the Sunbelt, today announced its results for the quarter ended June 30, 2022.

Highlights for the Quarter Ended June 30, 2022:

Financial Results:
The Company recognized net income applicable to Piedmont of $8.0 million, or $0.06 per diluted share, for the quarter ended June 30, 2022, as compared to $9.9 million, or $0.08 per diluted share, for the quarter ended June 30, 2021.
Core Funds From Operations ("Core FFO"), was $0.50 per diluted share for the quarter ended June 30, 2022, compared to $0.48 per diluted share for the quarter ended June 30, 2021.
Same Store Net Operating Income ("Same Store NOI") increased 1.8% and 2.8% on a cash and accrual basis, respectively, for the quarter ended June 30, 2022 as compared to the quarter ended June 30, 2021.
Leasing:
The Company completed approximately 724,000 square feet of leasing during the quarter ended June 30, 2022, including approximately 233,000 square feet related to new tenant leasing.
The largest new tenant lease was with Kimley-Horn and Associates for approximately 61,000 square feet through 2034 at 200 South Orange Avenue in Orlando, FL.
Renewal leasing completed during the quarter included an intermediate extension of US Bank's approximately 340,000 square feet at One and Two Meridian Crossings in Minneapolis through 2024, which is part of Piedmont's negotiation with US Bank on a longer term extension for the majority of their space in Minneapolis.
Cash and accrual basis rents on leases executed during the quarter ended June 30, 2022 for space vacant one year or less increased approximately 3% and 12%, respectively.
The portfolio increased to 87.0% leased as of June 30, 2022, from 85.5% as of December 31, 2021.
The Company's scheduled lease expirations for the remainder of the year ending December 31, 2022 and the year ending December 31, 2023 are low, representing approximately 3% and 8%, respectively, of its annualized lease revenue.
Excluding the one large renewal for US Bank mentioned above, the weighted average lease term for the over 50 leases executed during the second quarter was approximately 6.5 years.
As of June 30, 2022, the Company had approximately 1.2 million square feet of executed leases for vacant space yet to commence or under rental abatement, representing approximately $36 million of annual revenue.



Capital Markets:
Piedmont entered into a binding contract to purchase 1180 Peachtree Street, an iconic, 41-story, Class AA office building located at the epicenter of Midtown Atlanta, GA, for a net purchase price of $465 million, which includes the assumption of an existing $197 million, 4.1% fixed rate mortgage maturing in 2028 secured by the property. The LEED Platinum, 95% leased building has over seven years of weighted-average lease term at roughly 20% below-market rents and provides tenants with a best-in-class amenity set along with unmatched views of the city of Atlanta across its full-glass façade. With this second skyline defining acquisition in the Midtown Atlanta submarket in the last twelve months, Piedmont will own 1.3 million square feet in this dynamic submarket and will be the largest office owner along Peachtree Street in Midtown. The transaction is expected to close during the third quarter of 2022 with an initial accrual-basis NOI yield of 6.3%. On an interim basis, the cash portion of the net purchase price will be funded primarily from the proceeds of a new $200 million bridge loan described below; however, the Company anticipates using the net sales proceeds from the disposition of non-strategic assets over the next 12 months, including a 1031 Exchange of its Cambridge assets, to ultimately fund the acquisition.

Balance Sheet (including subsequent event):
Amended and restated our $500 million line of credit, increasing the capacity to $600 million and pushing the final extended maturity out to 2027.
The Company's net debt-to-Core EBITDA ratio for the second quarter of 2022 was 5.5 x on an annualized basis and 5.7 x on a trailing twelve month basis.
The Company has no secured debt and its Debt-to-Gross Assets ratio was 34.6% as of June 30, 2022.
On July 22, 2022, Piedmont entered into a $200 million delayed-draw, unsecured, floating rate term loan facility initially bearing interest at Adjusted Term SOFR Rate (as defined in the term loan agreement) + 100 bps. The proceeds will be used to fund, on an interim basis, a majority of the cash portion of the 1180 Peachtree Street acquisition mentioned above, pending subsequent dispositions of assets intended to make the acquisition leverage neutral from a balance sheet perspective.

ESG and Operations:
Piedmont was recognized as a 2022 ENERGY STAR® Partner of the Year, marking the second year in a row that the Company has achieved the designation.
The Company was selected as a 2022 Green Lease Leader by the Institute for Market Transformation and the U.S. Department of Energy’s Better Buildings Alliance.
Piedmont funded need-based scholarships at Howard University and Morehouse College.

Commenting on second quarter results, Brent Smith, Piedmont's President and Chief Executive Officer, said, "Second quarter was another strong quarter for Piedmont. We delivered our fourth consecutive quarter of over 200,000 square feet of new tenant leasing volume, which is above pre-pandemic levels, resulting in attractive economics and again demonstrating tenant preference for outstanding, amenity-rich environments offered at cost-conscious rental rates. We also laid the groundwork for the strategic acquisition of 1180 Peachtree Street, the most recognizable office building in Midtown Atlanta and solidifying our Sunbelt position with an estimated 67% of our annual revenue being generated from the region after the 1180 Peachtree Street and Cambridge transactions close. Finally, we were very pleased to be named an ENERGY



STAR Partner of the Year for the second consecutive year, as well as a 2022 Green Lease Leader, during the second quarter, demonstrating our continued commitment to maintaining a sustainable portfolio. "

Third Quarter 2022 Dividend Declaration

On July 27, 2022, the board of directors of Piedmont declared a dividend for the third quarter of 2022 in the amount of $0.21 per share on its common stock to stockholders of record as of the close of business on August 26, 2022, payable on September 16, 2022.

Guidance for 2022

After considering year-to-date results and updated forecasts, which particularly include increased interest rate projections and more conservative lease commencement date assumptions, the Company is narrowing its previously provided guidance for the year ending December 31, 2022 as follows:

RevisedPrevious
(in millions, except per share data)LowHighLowHigh
Net income$80$83$80$84
Add:
Depreciation133 136 134 138 
Amortization84 86 83 85 
Deduct:
Gain on sale of real estate assets(51)(51)(51)(51)
NAREIT FFO and Core FFO applicable to common stock$246$254$246$256
NAREIT FFO and Core FFO per diluted share$1.99$2.05$1.99$2.07

This guidance reflects management's view of current market conditions and incorporates certain economic and operational assumptions and projections, including the impacts of completed transactional activity through July of 2022. In addition, the Company's guidance is based on information available to management as of the date of this release. The guidance includes the acquisition of 1180 Peachtree Street during the third quarter of 2022, the bridge financing of the acquisition, and the subsequent disposition of non-strategic assets totaling approximately $400 million over the next 12 months. The guidance does not include any other acquisitions. Actual results could differ materially from these estimates based on a variety of factors, particularly the timing of any future acquisitions and dispositions, as well as those factors discussed under "Forward Looking Statements" below.

Note that individual quarters may fluctuate on both a cash basis and an accrual basis due to the timing of 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 expense, and one-time revenue or expense events.

Non-GAAP Financial Measures

To supplement the presentation of the Company’s financial results prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), this release and the accompanying quarterly supplemental information as of and for the period ended June 30, 2022 contain certain financial measures



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

Conference Call Information

Piedmont has scheduled a conference call and an audio web cast for Thursday, July 28, 2022 at 9:00 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 (877) 545-0523 for participants in the United States and Canada and (973) 528-0016 for international participants. Participant Access Code is 918676. A replay of the conference call will be available through 9:00 A.M. Eastern daylight time on August 11, 2022, 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 46152. A web cast replay will also be available after the conference call in the Investor Relations section of the Company's website. During the audio web cast and conference call, the Company's management team will review second quarter 2022 performance, discuss recent events, and conduct a question-and-answer period.

Supplemental Information

Quarterly supplemental information as of and for the period ended June 30, 2022 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 the Sunbelt. Its approximately $5 billion portfolio is currently comprised of approximately 16 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 2022 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 the acquisition of 1180 Peachtree Street will close; whether the subsequent disposition of non-strategic assets totaling approximately $400 million over the next 12 months will occur; 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, 2022. 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, socio-economic 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 markets in which we primarily operate where we have high concentrations of our annualized lease revenue; lease terminations, lease defaults, lease contractions, 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, including the potential of supply chain disruptions, and resultant increased costs and risks; our real estate redevelopment and 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 properties or 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 London Interbank Offered Rate ("LIBOR") rates are determined and the planned phasing out of United States dollar ("USD") LIBOR after June 2023; rising interest rates which could affect our return on investments and/or 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; additional risks and costs associated with inflation and continuing increases in the rate of inflation, including the possibility of a recession that could negatively impact our operations and the operations of our tenants and their ability to pay rent; uncertainties associated with environmental and 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 important supply chains and



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 experienced during the COVID-19 pandemic, as well as governmental and private measures taken to combat such health crises, could have a material adverse effect on our business operations and financial results; the adequacy of our general reserve related to tenant lease-related assets 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, 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)
June 30, 2022December 31, 2021
Assets:
Real estate assets, at cost:
Land
$521,789 $529,941 
Buildings and improvements
3,389,650 3,374,903 
Buildings and improvements, accumulated depreciation
(892,131)(861,206)
Intangible lease assets
164,194 178,157 
Intangible lease assets, accumulated amortization
(85,459)(83,777)
Construction in progress
41,544 43,406 
Real estate assets held for sale, gross— 80,586 
Real estate assets held for sale, accumulated depreciation and amortization
— (16,699)
Total real estate assets
3,139,587 3,245,311 
Cash and cash equivalents
6,397 7,419 
Tenant receivables
5,164 2,995 
Straight line rent receivables
168,797 162,632 
Notes receivable
— 118,500 
Restricted cash and escrows
1,459 1,441 
Prepaid expenses and other assets
26,955 20,485 
Goodwill
98,918 98,918 
Interest rate swaps
996 — 
Deferred lease costs, gross
459,038 469,671 
Deferred lease costs, accumulated depreciation
(211,757)(205,100)
Other assets held for sale, gross
— 9,389 
Other assets held for sale, accumulated depreciation
— (996)
Total assets$3,695,554 $3,930,665 
Liabilities:
Unsecured debt, net of discount and unamortized debt issuance costs of $14,222 and $12,210, respectively
$1,674,778 $1,877,790 
Accounts payable, accrued expenses, and accrued capital expenditures
99,724 114,453 
Dividends payable
— 26,048 
Deferred income
72,422 80,686 
Intangible lease liabilities, less accumulated amortization
32,967 39,341 
Interest rate swaps
— 4,924 
Total liabilities1,879,891 2,143,242 
Stockholders' equity:
Common stock
1,234 1,231 
Additional paid in capital
3,707,833 3,701,798 
Cumulative distributions in excess of earnings
(1,882,962)(1,899,081)
Other comprehensive income
(12,050)(18,154)
Piedmont stockholders' equity1,814,055 1,785,794 
Noncontrolling interest
1,608 1,629 
Total stockholders' equity1,815,663 1,787,423 
Total liabilities and stockholders' equity$3,695,554 $3,930,665 



Number of shares of common stock outstanding as of end of period123,390 123,077 
Net debt (Unsecured debt less Cash and cash equivalents)1,668,381 1,870,371 
Total Principal Amount of Debt Outstanding (Unsecured debt plus discount and unamortized debt issuance costs)1,689,000 1,890,000 



Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands, except for per share data)
Three Months EndedSix Months Ended
6/30/20226/30/20216/30/20226/30/2021
Revenues:
Rental and tenant reimbursement revenue$132,151 $126,967 $264,063 $252,879 
Property management fee revenue326 536 977 1,294 
Other property related income3,832 2,715 7,418 5,302 
Total revenues
136,309 130,218 272,458 259,475 
Expenses:
Property operating costs53,634 51,658 107,256 103,082 
Depreciation32,372 29,998 63,887 58,101 
Amortization21,480 20,693 43,732 43,605 
General and administrative7,027 8,211 14,622 15,462 
Total operating expenses
114,513 110,560 229,497 220,250 
Other income (expense):
Interest expense(13,775)(12,345)(27,673)(24,925)
Other (expense)/income(57)2,631 1,967 4,987 
Gain on sale of real estate assets— 50,674 — 
Total other income (expense)
(13,831)(9,714)24,968 (19,938)
Net income7,965 9,944 67,929 19,287 
Net loss applicable to noncontrolling interest
Net income applicable to Piedmont$7,966 $9,947 $67,930 $19,291 
Weighted average common shares outstanding - diluted123,679 124,704 123,617 124,555 
Net income per share applicable to common stockholders - diluted$0.06 $0.08 $0.55 $0.15 



Piedmont Office Realty Trust, Inc.
Funds From Operations, Core Funds From Operations and Adjusted Funds From Operations
Unaudited (in thousands, except for per share data)
Three Months EndedSix Months Ended
6/30/20226/30/20216/30/20226/30/2021
GAAP net income applicable to common stock$7,966 $9,947 $67,930 $19,291 
Depreciation of real estate assets(1)
32,187 29,725 63,519 57,537 
Amortization of lease-related costs
21,468 20,681 43,708 43,581 
Gain on sale of real estate assets
(1)— (50,674)— 
NAREIT Funds From Operations and Core Funds from Operations applicable to common stock*61,620 60,353 124,483 120,409 
Amortization of debt issuance costs, fair market adjustments on notes payable, and discounts on debt
763 573 1,541 1,227 
Depreciation of non real estate assets
175 264 348 546 
Straight-line effects of lease revenue
(3,029)(2,402)(5,606)(6,505)
Stock-based compensation adjustments
1,718 2,404 1,166 3,515 
Net effect of amortization of above/below-market in-place lease intangibles
(3,009)(2,669)(6,171)(5,461)
Non-incremental capital expenditures(2)
(9,338)(16,862)(28,285)(34,209)
Adjusted Funds From Operations applicable to common stock*$48,900 $41,661 $87,476 $79,522 
Weighted average common shares outstanding - diluted123,679 124,704 123,617 124,555 
Funds From Operations and Core Funds From Operations per share (diluted)$0.50 $0.48 $1.01 $0.97 

(1)Excludes depreciation of non real estate assets.

(2)Capital expenditures of a recurring nature related to tenant improvements, leasing commissions and building capital 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 either enhance the rental rates of a building or change the property’s underlying classification, such as from a Class B to a Class A property, are excluded from this measure.










Piedmont Office Realty Trust, Inc.
EBITDAre, Core EBITDA, Property Net Operating Income (Cash and Accrual), Same Store Net Operating Income (Cash and Accrual)
Unaudited (in thousands)
Cash BasisAccrual Basis
Three Months EndedThree Months Ended
6/30/20226/30/20216/30/20226/30/2021
Net income applicable to Piedmont (GAAP)$7,966$9,947 $7,966$9,947 
Net loss applicable to noncontrolling interest
(1)(3)(1)(3)
Interest expense
13,77512,345 13,77512,345 
Depreciation
32,36229,989 32,36229,989 
Amortization
21,46820,681 21,46820,681 
Depreciation and amortization attributable to noncontrolling interests2221 2221 
Gain on sale of real estate assets
(1)— (1)— 
EBITDAre* and Core EBITDA*
75,59172,980 75,59172,980 
General & administrative expenses
7,0278,211 7,0278,211 
Management fee revenue
(203)(247)(203)(247)
Other income
273(2,162)273(2,162)
       Non-cash general reserve for uncollectible accounts(1,000)— 
Straight line effects of lease revenue
(3,029)(2,402)
Straight line effects of lease revenue attributable to noncontrolling interests(1)— 
Amortization of lease-related intangibles
(3,009)(2,669)
Property NOI*75,64973,711 82,68878,782 
Net operating (income)/loss from:
Acquisitions
(2,673)— (3,961)— 
Dispositions
(92)(2,194)(92)(2,387)
Other investments(1)
138202 130258 
Same Store NOI*$73,022$71,719 $78,765$76,653 
Change period over period in Same Store NOI1.8%N/A2.8 %N/A


(1)Other investments consist of our investments in active, out-of-service redevelopment and development projects, land, and recently completed redevelopment and development projects. The operating results of 222 South Orange Avenue in Orlando, FL, are included in this line item.




Piedmont Office Realty Trust, Inc.
EBITDAre, Core EBITDA, Property Net Operating Income (Cash and Accrual), Same Store Net Operating Income (Cash and Accrual)
Unaudited (in thousands)
Cash BasisAccrual Basis
Six Months EndedSix Months Ended
6/30/20226/30/20216/30/20226/30/2021
Net income applicable to Piedmont (GAAP)$67,930$19,291 $67,930$19,291 
Net loss applicable to noncontrolling interest
(1)(4)(1)(4)
Interest expense
27,67324,925 27,67324,925 
Depreciation
63,86758,083 63,86758,083 
Amortization
43,70843,581 43,70843,581 
Depreciation and amortization attributable to noncontrolling interests4442 4442 
Gain on sale of real estate assets
(50,674)— (50,674)— 
EBITDAre* and Core EBITDA*152,547145,918 152,547145,918 
General & administrative expenses
14,62215,462 14,62215,462 
Management fee revenue
(565)(637)(565)(637)
Other income
(1,536)(4,302)(1,536)(4,302)
       Non-cash general reserve for uncollectible accounts(1,000)412 
Straight line effects of lease revenue
(5,606)(6,505)
Straight line effects of lease revenue attributable to noncontrolling interests(1)
Amortization of lease-related intangibles
(6,171)(5,461)
Property NOI*152,290144,888 165,068156,441 
Net operating income from:
Acquisitions
(5,370)— (7,797)— 
Dispositions
(568)(3,415)(639)(3,889)
Other investments(1)
328356 377468 
Same Store NOI*$146,680$141,829 $157,009$153,020 
Change period over period in Same Store NOI3.4 %N/A2.6 %N/A

(1)Other investments consist of our investments in active redevelopment and development projects, land, and recently completed redevelopment and development projects for which some portion of operating expenses were capitalized during the current or prior reporting periods. The operating results from 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 non-cash general reserve for uncollectible accounts, 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. 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/5392e576d96028a07578809fe0b375a0-q2_2022supplementalcovera.jpg



Piedmont Office Realty Trust, Inc.
Quarterly Supplemental Information
Index
PagePage
IntroductionOther Investments
Corporate DataOther Investments Detail
Investor InformationSupporting Information
Earnings ReleaseDefinitions
Key Performance IndicatorsResearch Coverage
FinancialsNon-GAAP Reconciliations
Balance SheetsIn-Service Portfolio Detail
Income StatementsMajor Leases Not Yet Commenced and Major Abatements
Funds From Operations / Adjusted Funds From OperationsRisks, Uncertainties and Limitations
Same Store Analysis
Capitalization Analysis
Debt Summary
Debt Detail
Debt Covenant & Ratio Analysis
Operational & Portfolio Information - Office 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
Contractual Tenant Improvements & Leasing Commissions
Geographic Diversification
Geographic Diversification by Location Type
Industry Diversification
Property Investment Activity
Notice to Readers:
Please refer to page 41 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 34. 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 located primarily in the Sunbelt. 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 both 2021 and 2022, and it was the only office REIT headquartered in the Southeast to receive those designations. At the end of the second quarter of 2022, approximately 84% of the Company's square footage was Energy Star certified and approximately 47% was LEED certified. Piedmont is headquartered in Atlanta, GA.

This data supplements the information provided in our reports filed with the Securities and Exchange Commission and should be reviewed in conjunction with such filings.
As ofAs of
June 30, 2022December 31, 2021
Number of consolidated in-service office properties (1)
5255
Rentable square footage (in thousands) (1)
16,12917,051
Percent leased (2)
87.0 %85.5 %
Capitalization (in thousands):
Total debt - principal amount outstanding (excludes premiums, discounts, and deferred financing costs)$1,689,000$1,890,000
Equity market capitalization (3)
$1,618,883$2,262,150
Total market capitalization (3)
$3,307,883$4,152,150
Total debt / Total market capitalization (3)
51.1 %45.5 %
Average net debt to Core EBITDA - quarterly5.5 x6.0 x
Average net debt to Core EBITDA - trailing twelve months5.7 x5.7 x
Total debt / Total gross assets34.6 %37.1 %
Common stock data:
High closing price during quarter$17.34$19.37
Low closing price during quarter$12.81$17.11
Closing price of common stock at period end$13.12$18.38
Weighted average fully diluted shares outstanding during quarter (in thousands)123,679124,412
Shares of common stock issued and outstanding at period end (in thousands)123,390123,077
Annual regular dividend per share (4)
$0.84$0.84
Rating / Outlook:
Standard & Poor'sBBB / StableBBB / Stable
Moody'sBaa2 / StableBaa2 / Stable
Employees137134
(1)As of June 30, 2022, our consolidated office portfolio consisted of 52 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 23 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 TreasurerInvestmentsSenior 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. BarrettGlenn G. Cohen
Director, Chair of the Board of Directors, andDirector, Vice Chair of the Director, Chair of the Audit Committee, Director, Chair of the Compensation
Member of the Compensation and GovernanceBoard of Directors, and Member of theand Member of the Governance CommitteeCommittee, and Member of the Audit
CommitteesAudit and Capital Committees and Capital Committees
Barbara B. LangC. Brent SmithJeffrey L. Swope
Director, Chair of the Governance CommitteeChief Executive Officer, PresidentDirector, Chair of the Capital
(including ESG), and Member of theand DirectorCommittee, and Member of the
Compensation 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 Second Quarter 2022 Results

ATLANTA, July 27, 2022--Piedmont Office Realty Trust, Inc. ("Piedmont" or the "Company") (NYSE:PDM), an owner of Class A office properties located primarily in the Sunbelt, today announced its results for the quarter ended June 30, 2022.

Highlights for the Quarter Ended June 30, 2022:

Financial Results:
The Company recognized net income applicable to Piedmont of $8.0 million, or $0.06 per diluted share, for the quarter ended June 30, 2022, as compared to $9.9 million, or $0.08 per diluted share, for the quarter ended June 30, 2021.
Core Funds From Operations ("Core FFO"), was $0.50 per diluted share for the quarter ended June 30, 2022, compared to $0.48 per diluted share for the quarter ended June 30, 2021.
Same Store Net Operating Income ("Same Store NOI") increased 1.8% and 2.8% on a cash and accrual basis, respectively, for the quarter ended June 30, 2022 as compared to the quarter ended June 30, 2021.
Leasing:
The Company completed approximately 724,000 square feet of leasing during the quarter ended June 30, 2022, including approximately 233,000 square feet related to new tenant leasing.
The largest new tenant lease was with Kimley-Horn and Associates for approximately 61,000 square feet through 2034 at 200 South Orange Avenue in Orlando, FL.
Renewal leasing completed during the quarter included an intermediate extension of US Bank's approximately 340,000 square feet at One and Two Meridian Crossings in Minneapolis through 2024, which is part of Piedmont's negotiation with US Bank on a longer term extension for the majority of their space in Minneapolis.
Cash and accrual basis rents on leases executed during the quarter ended June 30, 2022 for space vacant one year or less increased approximately 3% and 12%, respectively.
The portfolio increased to 87.0% leased as of June 30, 2022, from 85.5% as of December 31, 2021.
The Company's scheduled lease expirations for the remainder of the year ending December 31, 2022 and the year ending December 31, 2023 are low, representing approximately 3% and 8%, respectively, of its annualized lease revenue.
Excluding the one large renewal for US Bank mentioned above, the weighted average lease term for the over 50 leases executed during the second quarter was approximately 6.5 years.
As of June 30, 2022, the Company had approximately 1.2 million square feet of executed leases for vacant space yet to commence or under rental abatement, representing approximately $36 million of annual revenue.
Capital Markets:
Piedmont entered into a binding contract to purchase 1180 Peachtree Street, an iconic, 41-story, Class AA office building located at the epicenter of Midtown Atlanta, GA, for a net purchase price of $465 million, which includes the assumption of an existing $197 million, 4.1% fixed rate mortgage maturing in 2028 secured by the property. The LEED Platinum, 95% leased building has over seven years of weighted-average lease term at roughly 20% below-market rents and provides tenants with a best-in-class amenity set along with unmatched views of the city of Atlanta across its full-glass façade. With this second skyline defining acquisition in the Midtown Atlanta submarket in the last twelve months, Piedmont will own 1.3 million square feet in this dynamic submarket and will be the largest office owner along Peachtree Street in Midtown. The transaction is expected to close during the third quarter of 2022 with an initial accrual-basis NOI yield of 6.3%. On an interim basis, the cash portion of the net purchase price will be funded primarily from the proceeds of a new $200 million bridge loan described below; however, the Company anticipates using the net sales proceeds from the disposition of non-strategic assets over the next 12 months, including a 1031 Exchange of its Cambridge assets, to ultimately fund the acquisition.

5



Balance Sheet (including subsequent event):
Amended and restated our $500 million line of credit, increasing the capacity to $600 million and pushing the final extended maturity out to 2027.
The Company's net debt-to-Core EBITDA ratio for the second quarter of 2022 was 5.5 x on an annualized basis and 5.7 x on a trailing twelve month basis.
The Company has no secured debt and its Debt-to-Gross Assets ratio was 34.6% as of June 30, 2022.
On July 22, 2022, Piedmont entered into a $200 million delayed-draw, unsecured, floating rate term loan facility initially bearing interest at Adjusted Term SOFR Rate (as defined in the term loan agreement) + 100 bps. The proceeds will be used to fund, on an interim basis, a majority of the cash portion of the 1180 Peachtree Street acquisition mentioned above, pending subsequent dispositions of assets intended to make the acquisition leverage neutral from a balance sheet perspective.

ESG and Operations:
Piedmont was recognized as a 2022 ENERGY STAR® Partner of the Year, marking the second year in a row that the Company has achieved the designation.
The Company was selected as a 2022 Green Lease Leader by the Institute for Market Transformation and the U.S. Department of Energy’s Better Buildings Alliance.
Piedmont funded need-based scholarships at Howard University and Morehouse College.

Commenting on second quarter results, Brent Smith, Piedmont's President and Chief Executive Officer, said, "Second quarter was another strong quarter for Piedmont. We delivered our fourth consecutive quarter of over 200,000 square feet of new tenant leasing volume, which is above pre-pandemic levels, resulting in attractive economics and again demonstrating tenant preference for outstanding, amenity-rich environments offered at cost-conscious rental rates. We also laid the groundwork for the strategic acquisition of 1180 Peachtree Street, the most recognizable office building in Midtown Atlanta and solidifying our Sunbelt position with an estimated 67% of our annual revenue being generated from the region after the 1180 Peachtree Street and Cambridge transactions close. Finally, we were very pleased to be named an ENERGY STAR Partner of the Year for the second consecutive year, as well as a 2022 Green Lease Leader, during the second quarter, demonstrating our continued commitment to maintaining a sustainable portfolio. "

Third Quarter 2022 Dividend Declaration

On July 27, 2022, the board of directors of Piedmont declared a dividend for the third quarter of 2022 in the amount of $0.21 per share on its common stock to stockholders of record as of the close of business on August 26, 2022, payable on September 16, 2022.


6



Guidance for 2022

After considering year-to-date results and updated forecasts, which particularly include increased interest rate projections and more conservative lease commencement date assumptions, the Company is narrowing its previously provided guidance for the year ending December 31, 2022 as follows:

RevisedPrevious
(in millions, except per share data)LowHighLowHigh
Net income$80$83$80$84
Add:
Depreciation133 136 134 138 
Amortization84 86 83 85 
Deduct:
Gain on sale of real estate assets(51)(51)(51)(51)
NAREIT FFO and Core FFO applicable to common stock$246$254$246$256
NAREIT FFO and Core FFO per diluted share$1.99$2.05$1.99$2.07

This guidance reflects management's view of current market conditions and incorporates certain economic and operational assumptions and projections, including the impacts of completed transactional activity through July of 2022. In addition, the Company's guidance is based on information available to management as of the date of this release. The guidance includes the acquisition of 1180 Peachtree Street during the third quarter of 2022, the bridge financing of the acquisition, and the subsequent disposition of non-strategic assets totaling approximately $400 million over the next 12 months. The guidance does not include any other acquisitions. Actual results could differ materially from these estimates based on a variety of factors, particularly the timing of any future acquisitions and dispositions, as well as those factors discussed on page 41.

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 expense, and one-time revenue or expense events.

7


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 34 and reconciliations are provided beginning on page 36.
Three Months Ended
Selected Operating Data6/30/20223/31/202212/31/20219/30/20216/30/2021
Percent leased (1)
87.0 %87.0 %85.5 %85.9 %85.9 %
Percent leased - economic (2)
80.7 %81.4 %81.5 %81.6 %82.6 %
Total revenues$136,309$136,149$138,164$131,071$130,218
Net income / (loss) applicable to Piedmont$7,966$59,964-$31,750$11,306$9,947
Net income / (loss) per share applicable to common stockholders - diluted$0.06$0.49-$0.26$0.09$0.08
Core EBITDA$75,591$76,956$77,130$74,686$72,980
Core FFO applicable to common stock$61,620$62,863$63,009$62,004$60,353
Core FFO per share - diluted$0.50$0.51$0.51$0.50$0.48
AFFO applicable to common stock$48,900$38,576$39,399$41,213$41,661
Gross regular dividends (3)
$25,912$25,899$26,048$26,068$26,068
Regular dividends per share (3)
$0.21$0.21$0.21$0.21$0.21
Same store net operating income - cash basis (4)
1.8 %5.1 %5.8 %11.6 %4.8 %
Same store net operating income - accrual basis (4)
2.8 %2.5 %5.2 %5.0 %4.7 %
Rental rate roll up / roll down - cash rents (5)
2.5 %4.8 %3.0 %10.5 %18.2 %
Rental rate roll up / roll down - accrual rents (5)
12.2 %12.9 %6.9 %16.1 %27.4 %
Selected Balance Sheet Data
Total real estate assets, net$3,139,587$3,147,362$3,245,311$3,085,457$3,079,707
Total assets$3,695,554$3,699,640$3,930,665$3,760,648$3,758,311
Total liabilities$1,879,891$1,869,166$2,143,242$1,900,029$1,885,803
Ratios & Information for Debt Holders
Core EBITDA margin (6)
55.5 %56.5 %55.8 %57.0 %56.0 %
Fixed charge coverage ratio (7)
5.1 x5.2 x5.2 x5.5 x5.4 x
Average net debt to Core EBITDA - quarterly (8)
5.5 x5.9 x6.0 x5.5 x5.7 x
Total gross real estate assets$4,117,177$4,097,332$4,206,993$4,012,060$3,979,955
Net debt (9)
$1,681,144$1,672,332$1,881,140$1,663,718$1,666,300
(1)
Please refer to page 23 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)
Please refer to the three pages starting with page 13 for additional same store net operating income information. The statistic provided for each of the prior quarters is based on the same store property population applicable at the time that the metric was initially reported.
(5)
Please refer to page 24 for additional roll up / roll down analysis information.
(6)Core EBITDA margin is calculated as Core EBITDA divided by total revenues.
(7)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 $1,117,131 for the quarter ended June 30, 2022, $963,350 for the quarter ended March 31, 2022, $994,675 for the quarter ended December 31, 2021, $1,009,904 for the quarter ended September 30, 2021, and $875,804 for the quarter ended June 30, 2021; the Company had no principal amortization for the quarters ended June 30, 2022, March 31, 2022, December 31, 2021 and 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.
(8)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.
(9)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.

8


Piedmont Office Realty Trust, Inc.
Consolidated Balance Sheets
Unaudited (in thousands)
June 30, 2022March 31, 2022December 31, 2021September 30, 2021June 30, 2021
Assets:
Real estate, at cost:
Land assets$521,789 $521,789 $529,941 $476,717 $476,717 
Buildings and improvements3,389,650 3,351,807 3,374,903 3,259,369 3,203,286 
Buildings and improvements, accumulated depreciation(892,131)(863,306)(861,206)(829,832)(804,400)
Intangible lease asset164,194 173,017 178,157 148,945 155,002 
Intangible lease asset, accumulated amortization(85,459)(86,664)(83,777)(80,072)(79,149)
Construction in progress41,544 50,719 43,406 48,226 67,033 
Real estate assets held for sale, gross— — 80,586 78,803 77,917 
Real estate assets held for sale, accumulated depreciation & amortization— — (16,699)(16,699)(16,699)
Total real estate assets3,139,587 3,147,362 3,245,311 3,085,457 3,079,707 
Cash and cash equivalents6,397 7,211 7,419 8,189 8,122 
Tenant receivables, net of allowance for doubtful accounts5,164 3,095 2,995 8,678 6,530 
Straight line rent receivable168,797 164,776 162,632 159,871 156,912 
Notes receivable— — 118,500 118,500 118,500 
Escrow deposits and restricted cash1,459 1,457 1,441 6,093 1,578 
Prepaid expenses and other assets26,955 21,318 20,485 24,915 29,469 
Goodwill98,918 98,918 98,918 98,918 98,918 
Interest rate swap996 — — — — 
Deferred lease costs, gross459,038 466,234 469,671 437,020 441,488 
Deferred lease costs, accumulated amortization(211,757)(210,731)(205,100)(195,255)(191,045)
Other assets held for sale, gross— — 9,389 9,258 9,128 
Other assets held for sale, accumulated amortization— — (996)(996)(996)
Total assets$3,695,554 $3,699,640 $3,930,665 $3,760,648 $3,758,311 
Liabilities:
Unsecured debt, net of discount$1,674,778 $1,669,553 $1,877,790 $1,665,101 $1,666,570 
Accounts payable, accrued expenses, and accrued capital expenditures99,724 83,609 140,501 127,675 111,562 
Deferred income72,422 79,493 80,686 73,614 70,594 
Intangible lease liabilities, less accumulated amortization32,967 36,077 39,341 26,924 29,761 
Interest rate swaps— 434 4,924 6,715 7,316 
Total liabilities1,879,891 1,869,166 2,143,242 1,900,029 1,885,803 
Stockholders' equity:
Common stock1,234 1,233 1,231 1,241 1,241 
Additional paid in capital3,707,833 3,706,207 3,701,798 3,700,208 3,698,656 
Cumulative distributions in excess of earnings(1,882,962)(1,865,016)(1,899,081)(1,822,441)(1,807,679)
Other comprehensive loss(12,050)(13,573)(18,154)(20,036)(21,368)
Piedmont stockholders' equity1,814,055 1,828,851 1,785,794 1,858,972 1,870,850 
Non-controlling interest1,608 1,623 1,629 1,647 1,658 
Total stockholders' equity1,815,663 1,830,474 1,787,423 1,860,619 1,872,508 
Total liabilities, redeemable common stock and stockholders' equity$3,695,554 $3,699,640 $3,930,665 $3,760,648 $3,758,311 
Common stock outstanding at end of period123,390 123,331 123,077 124,136 124,132 

9


Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands except for per share data)
Three Months Ended
6/30/20223/31/202212/31/20219/30/20216/30/2021
Revenues:
Rental income (1)
$110,244 $109,732 $111,203 $105,592 $105,209 
Tenant reimbursements (1)
21,907 22,180 23,110 21,835 21,758 
Property management fee revenue326 651 576 626 536 
Other property related income3,832 3,586 3,275 3,018 2,715 
136,309 136,149 138,164 131,071 130,218 
Expenses:
Property operating costs53,634 53,622 56,083 51,767 51,658 
Depreciation32,372 31,515 31,952 30,562 29,998 
Amortization21,480 22,252 22,014 20,373 20,693 
Impairment loss on real estate assets (2)
— — 41,000 — — 
General and administrative7,027 7,595 7,835 6,955 8,211 
114,513 114,984 158,884 109,657 110,560 
Other income / (expense):
Interest expense(13,775)(13,898)(13,917)(12,450)(12,345)
Other income / (expense)(57)2,024 2,882 2,337 2,631 
Gain / (loss) on sale of real estate (2)
50,673 — — — 
Net income / (loss)7,965 59,964 (31,755)11,301 9,944 
Less: Net (income) / loss applicable to noncontrolling interest— 
Net income / (loss) applicable to Piedmont$7,966 $59,964 $(31,750)$11,306 $9,947 
Weighted average common shares outstanding - diluted123,679 123,510 123,742 124,627 124,704 
Net income / (loss) per share applicable to common stockholders - diluted$0.06 $0.49 $(0.26)$0.09 $0.08 
Common stock outstanding at end of period123,390 123,331 123,077 124,136 124,132 











(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 first quarter of 2022 was primarily related to the sale of 225 and 235 Presidential Way in Woburn, MA. The impairment loss reflected in the fourth quarter of 2021 was related to a reduction in the holding period assumptions for Two Pierce Place in Itasca, IL. Two Pierce Place was subsequently sold in the first quarter of 2022.
10


Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands except for per share data)
Three Months EndedSix Months Ended
6/30/20226/30/2021Change ($)Change (%)6/30/20226/30/2021Change ($)Change (%)
Revenues:
Rental income (1)
$110,244 $105,209 $5,035 4.8 %$219,976 $210,379 $9,597 4.6 %
Tenant reimbursements (1)
21,907 21,758 149 0.7 %44,087 42,500 1,587 3.7 %
Property management fee revenue326 536 (210)(39.2)%977 1,294 (317)(24.5)%
Other property related income3,832 2,715 1,117 41.1 %7,418 5,302 2,116 39.9 %
136,309 130,218 6,091 4.7 %272,458 259,475 12,983 5.0 %
Expenses:
Property operating costs53,634 51,658 (1,976)(3.8)%107,256 103,082 (4,174)(4.0)%
Depreciation32,372 29,998 (2,374)(7.9)%63,887 58,101 (5,786)(10.0)%
Amortization21,480 20,693 (787)(3.8)%43,732 43,605 (127)(0.3)%
General and administrative7,027 8,211 1,184 14.4 %14,622 15,462 840 5.4 %
114,513 110,560 (3,953)(3.6)%229,497 220,250 (9,247)(4.2)%
Other income / (expense):
Interest expense(13,775)(12,345)(1,430)(11.6)%(27,673)(24,925)(2,748)(11.0)%
Other income / (expense)(57)2,631 (2,688)(102.2)%1,967 4,987 (3,020)(60.6)%
Gain / (loss) on sale of real estate (2)
— 100.0 %50,674 — 50,674 100.0 %
Net income / (loss)7,965 9,944 (1,979)(19.9)%67,929 19,287 48,642 252.2 %
Less: Net (income) / loss applicable to noncontrolling interest(2)(66.7)%(3)(75.0)%
Net income / (loss) applicable to Piedmont$7,966 $9,947 $(1,981)(19.9)%$67,930 $19,291 $48,639 252.1 %
Weighted average common shares outstanding - diluted123,679 124,704 123,617 124,555 
Net income / (loss) per share applicable to common stockholders - diluted$0.06 $0.08 $0.55 $0.15 
Common stock outstanding at end of period123,390 124,132 123,390 124,132 














(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 six months ended June 30, 2022 was primarily related to the sale of 225 and 235 Presidential Way in Woburn, MA.
11


Piedmont Office Realty Trust, Inc.
Funds From Operations, Core Funds From Operations and Adjusted Funds From Operations
Unaudited (in thousands except for per share data)
Three Months EndedSix Months Ended
6/30/20226/30/20216/30/20226/30/2021
GAAP net income / (loss) applicable to common stock$7,966 $9,947 $67,930 $19,291 
Depreciation (1) (2)
32,187 29,725 63,519 57,537 
Amortization (1)
21,468 20,681 43,708 43,581 
Loss / (gain) on sale of properties
(1)— (50,674)— 
NAREIT funds from operations and core funds from operations applicable to common stock61,620 60,353 124,483 120,409 
Adjustments:
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on senior notes763 573 1,541 1,227 
Depreciation of non real estate assets175 264 348 546 
Straight-line effects of lease revenue (1)
(3,029)(2,402)(5,606)(6,505)
Stock-based compensation adjustments1,718 2,404 1,166 3,515 
Amortization of lease-related intangibles (1)
(3,009)(2,669)(6,171)(5,461)
Non-incremental capital expenditures (3)
   Building/Construction/Development(4,748)(4,231)(8,254)(17,152)
   Tenant Improvements(3,402)(9,504)(14,908)(12,729)
   Leasing Costs(1,188)(3,127)(5,123)(4,328)
Adjusted funds from operations applicable to common stock$48,900 $41,661 $87,476 $79,522 
Weighted average common shares outstanding - diluted123,679 124,704 123,617 124,555 
Funds from operations per share (diluted)$0.50 $0.48 $1.01 $0.97 
Core funds from operations per share (diluted)$0.50 $0.48 $1.01 $0.97 
Change period over period4.2 %4.1 %
Common stock outstanding at end of period123,390 124,132 123,390 124,132 






(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 34.

12


Piedmont Office Realty Trust, Inc.
Same Store Net Operating Income (Cash Basis)
Unaudited (in thousands)
Three Months EndedSix Months Ended
6/30/20226/30/20216/30/20226/30/2021
Net income / (loss) applicable to Piedmont$7,966 $9,947 $67,930 $19,291 
Net income / (loss) applicable to noncontrolling interest(1)(3)(1)(4)
Interest expense
13,775 12,345 27,673 24,925 
Depreciation (1)
32,362 29,989 63,867 58,083 
Amortization (1)
21,468 20,681 43,708 43,581 
Depreciation and amortization attributable to noncontrolling interests22 21 44 42 
(Gain) / loss on sale of properties
(1)— (50,674)— 
EBITDAre and Core EBITDA (2)
75,591 72,980 152,547 145,918 
General & administrative expenses
7,027 8,211 14,622 15,462 
Non-cash general reserve for uncollectible accounts (3)
(1,000)— (1,000)412 
Management fee revenue (4)
(203)(247)(565)(637)
Other (income) / expense (1) (5)
273 (2,162)(1,536)(4,302)
Straight-line effects of lease revenue (1)
(3,029)(2,402)(5,606)(6,505)
Straight-line effects of lease revenue attributable to noncontrolling interests(1)— (1)
Amortization of lease-related intangibles (1)
(3,009)(2,669)(6,171)(5,461)
Property net operating income (cash basis)75,649 73,711 152,290 144,888 
Deduct net operating (income) / loss from:
Acquisitions (6)
(2,673)— (5,370)— 
Dispositions (7)
(92)(2,194)(568)(3,415)
Other investments (8)
138 202 328 356 
Same store net operating income (cash basis)$73,022 $71,719 $146,680 $141,829 
Change period over period1.8 %N/A3.4 %N/A
(1)Includes our proportionate share of amounts attributable to consolidated properties.
(2)The Company has historically recognized approximately $2 to $3 million of termination income on an annual basis. Given the size of its asset base and the number of tenants with which it conducts business, Piedmont considers termination income of that magnitude to be a normal part of its operations and a recurring part of its revenue stream; however, the recognition of termination income is typically variable between quarters and throughout any given year and is dependent upon when during the year the Company receives termination notices from tenants. During the three months ended June 30, 2022, Piedmont recognized $0.4 million of termination income, as compared with a negligible amount during the same period in 2021. During the six months ended June 30, 2022, Piedmont recognized $0.6 million of termination income, as compared with $2.7 million during the same period in 2021.
(3)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.
(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 999 Peachtree Street in Atlanta, GA, purchased on October 22, 2021.
(7)Dispositions include Two Pierce Place in Itasca, IL, sold on January 25, 2022, and 225 and 235 Presidential Way in Woburn, MA, sold on January 28, 2022.
(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 33. The operating results from 222 South Orange Avenue in Orlando, FL, are included in this line item.
13


Piedmont Office Realty Trust, Inc.
Same Store Net Operating Income (Accrual Basis)
Unaudited (in thousands)
Three Months EndedSix Months Ended
6/30/20226/30/20216/30/20226/30/2021
Net income / (loss) applicable to Piedmont$7,966 $9,947 $67,930 $19,291 
Net income / (loss) applicable to noncontrolling interest(1)(3)(1)(4)
Interest expense
13,775 12,345 27,673 24,925 
Depreciation (1)
32,362 29,989 63,867 58,083 
Amortization (1)
21,468 20,681 43,708 43,581 
Depreciation and amortization attributable to noncontrolling interests22 21 44 42 
(Gain) / loss on sale of properties
(1)— (50,674)— 
EBITDAre and Core EBITDA (2)
75,591 72,980 152,547 145,918 
General & administrative expenses
7,027 8,211 14,622 15,462 
Management fee revenue (3)
(203)(247)(565)(637)
Other (income) / expense (1) (4)
273 (2,162)(1,536)(4,302)
Property net operating income (accrual basis)82,688 78,782 165,068 156,441 
Deduct net operating (income) / loss from:
Acquisitions (5)
(3,961)— (7,797)— 
Dispositions (6)
(92)(2,387)(639)(3,889)
Other investments (7)
130 258 377 468 
Same store net operating income (accrual basis)$78,765 $76,653 $157,009 $153,020 
Change period over period2.8 %N/A2.6 %N/A
(1)Includes our proportionate share of amounts attributable to consolidated properties.
(2)The Company has historically recognized approximately $2 to $3 million of termination income on an annual basis. Given the size of its asset base and the number of tenants with which it conducts business, Piedmont considers termination income of that magnitude to be a normal part of its operations and a recurring part of its revenue stream; however, the recognition of termination income is typically variable between quarters and throughout any given year and is dependent upon when during the year the Company receives termination notices from tenants. During the three months ended June 30, 2022, Piedmont recognized $0.4 million of termination income, as compared with a negligible amount during the same period in 2021. During the six months ended June 30, 2022, Piedmont recognized $0.6 million of termination income, as compared with $2.7 million during the same period in 2021.
(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 999 Peachtree Street in Atlanta, GA, purchased on October 22, 2021.
(6)Dispositions include Two Pierce Place in Itasca, IL, sold on January 25, 2022, and 225 and 235 Presidential Way in Woburn, MA, sold on January 28, 2022.
(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 33. 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 (Financial Components)
Unaudited (in thousands)

Three Months EndedSix Months Ended
6/30/20226/30/2021Change ($)Change (%)6/30/20226/30/2021Change ($)Change (%)
Revenue
Cash rental income (1)
$100,081 $97,703 $2,378 2.4 %$199,302 $193,847 $5,455 2.8 %
Tenant reimbursements (2)
21,645 21,126 519 2.5 %43,372 41,267 2,105 5.1 %
Straight line effects of lease revenue (3)
2,584 2,209 375 17.0 %4,861 6,031 (1,170)(19.4)%
Amortization of lease-related intangibles2,159 2,725 (566)(20.8)%4,468 5,572 (1,104)(19.8)%
Total rents
126,469 123,763 2,706 2.2 %252,003 246,717 5,286 2.1 %
Other property related income (4)
3,562 2,952 610 20.7 %7,050 5,858 1,192 20.3 %
Total revenue130,031 126,715 3,316 2.6 %259,053 252,575 6,478 2.6 %
Property operating expense (5)
51,482 50,278 (1,204)(2.4)%102,475 99,986 (2,489)(2.5)%
Property other income / (expense) 216 216 — — % 431 431 — — %
Same store net operating income (accrual)$78,765 $76,653 $