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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________ 
FORM 10-Q
_______________________________________________________________________________________  
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934
For the Quarterly Period Ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934
For the Transition Period From                      To                     
Commission file number 001-34626
Piedmont Office Realty Trust, Inc.
(Exact name of registrant as specified in its charter)
 ____________________________________________________ 
Maryland58-2328421
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)

5565 Glenridge Connector Ste. 450
Atlanta, Georgia 30342
(Address of principal executive offices) (Zip Code)
(770) 418-8800
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  x No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer
Non-accelerated filerSmaller reporting company
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
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No   x
Number of shares outstanding of the Registrant’s
common stock, as of November 1, 2022:
123,395,381 shares



Table of Contents
FORM 10-Q
PIEDMONT OFFICE REALTY TRUST, INC.
TABLE OF CONTENTS
 
 Page No.
PART IFinancial Information
Item 1.
Item 2.
Item 3.
Item 4.
PART II.Other Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Form 10-Q may constitute forward-looking statements within the meaning of the federal securities laws. In addition, Piedmont Office Realty Trust, Inc. ("Piedmont," "we," "our," or "us"), or our executive officers on our behalf, may from time to time make forward-looking statements in reports and other documents we file with the Securities and Exchange Commission or in connection with other written or oral statements made to the press, potential investors, or others. Statements regarding future events and developments and our future performance, as well as management’s expectations, beliefs, plans, estimates, or projections relating to the future, are forward-looking statements. Forward-looking statements include statements preceded by, followed by, or that include the words “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Examples of such statements in this report include descriptions of our real estate, financings, and operating objectives; discussions regarding future dividends and share repurchases; and discussions regarding the potential impact of economic conditions on our real estate and lease portfolio, among others.

These statements are based on beliefs and assumptions of our management, which in turn are based on information available at the time the statements are made. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding the demand for office space in the markets in which we operate, competitive conditions, and general economic conditions. These assumptions could prove inaccurate. The forward-looking statements also involve certain known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond our ability to control or predict. Such factors include, but are not limited to, the following:

Economic, regulatory, socio-economic (including work from home), technological (e.g. Metaverse, Zoom, etc), and other changes (including accounting standards) that impact the real estate market generally, the office sector or the patterns of use of commercial office space in general, or the markets where we primarily operate or have high concentrations of Annualized Lease Revenue (“ALR”) (see definition below);
The impact of competition on our efforts to renew existing leases or re-let space on terms similar to existing leases;
Lease terminations, lease defaults, lease contractions, or changes in the financial condition of our tenants, particularly by one of our large lead tenants;
Impairment charges on our long-lived assets or goodwill resulting therefrom;
The success of our real estate strategies and investment objectives, including our ability to implement successful redevelopment and development strategies or identify and consummate suitable acquisitions and divestitures;
The illiquidity of real estate investments, including economic changes, such as rising interest rates, which could impact the number of buyers/sellers of our target properties, and regulatory restrictions to which real estate investment trusts ("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;
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, including environmental standards imposed on office building owners;
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, such as potential changes in the political environment, a reduction in federal or state funding of our governmental tenants, or an increased risk of default by government tenants during periods in which state or federal governments are shut down or on furlough;
Significant price and volume fluctuations in the public markets, including on the exchange which we listed our common stock;
Changes in the method pursuant to which the London Interbank Offered Rate ("LIBOR") and the Secured Overnight Financing Rate (“SOFR”) rates are determined and the planned phasing out of United States dollar ("USD") LIBOR after June 2023;
Changing capital reserve requirements on our lenders and rapidly rising interest rates in the public bond markets could impact our ability to finance properties or refinance existing debt or significantly increase operating/financing costs;
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The effect of future offerings of debt or equity securities 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;
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 (the “Code”), 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 our Annual Report on Form 10-K for the year ended December 31, 2021.

Management believes these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and management undertakes no obligation to update publicly any of them in light of new information or future events.

Information Regarding Disclosures Presented

ALR is calculated by multiplying (i) current rental payments (defined as base rent plus operating expense reimbursements, if payable by the tenant on a monthly basis under the terms of a lease that has been executed, but excluding (a) rental abatements and (b) rental payments related to executed but not commenced leases for space that was covered by an existing lease), by (ii) 12. In instances in which contractual rents or operating expense reimbursements are collected on an annual, semi-annual, or quarterly basis, such amounts are multiplied by a factor of 1, 2, or 4, respectively, to calculate the annualized figure. For leases that have been executed but not commenced relating to unleased space, ALR is calculated by multiplying (i) the monthly base rental payment (excluding abatements) plus any operating expense reimbursements for the initial month of the lease term, by (ii) 12. Unless stated otherwise, this measure excludes revenues associated with development properties and properties taken out of service for redevelopment, if any.
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PART I.     FINANCIAL INFORMATION

ITEM 1.    CONSOLIDATED FINANCIAL STATEMENTS.

The information presented in the accompanying consolidated balance sheets and related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows reflects all adjustments that are, in management’s opinion, necessary for a fair and consistent presentation of financial position, results of operations, and cash flows in accordance with generally accepted accounting principles ("GAAP").
The accompanying financial statements should be read in conjunction with the notes to Piedmont’s financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report on Form 10-Q and with Piedmont’s Annual Report on Form 10-K for the year ended December 31, 2021. Piedmont’s results of operations for the nine months ended September 30, 2022 are not necessarily indicative of the operating results expected for the full year.
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PIEDMONT OFFICE REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share and per share amounts)
(Unaudited)
September 30,
2022
December 31,
2021
Assets:
Real estate assets, at cost:
Land
$578,722 $529,941 
Buildings and improvements, less accumulated depreciation of $926,357 and $861,206 as of September 30, 2022 and December 31, 2021, respectively
2,825,365 2,513,697 
Intangible lease assets, less accumulated amortization of $88,721 and $83,777 as of September 30, 2022 and December 31, 2021, respectively
123,527 94,380 
Construction in progress
44,977 43,406 
Real estate assets held for sale, net 63,887 
Total real estate assets3,572,591 3,245,311 
Cash and cash equivalents10,653 7,419 
Tenant receivables, net of allowance for doubtful accounts of $2,000 and $4,000 as of September 30, 2022 and December 31, 2021, respectively
7,796 2,995 
Straight-line rent receivables173,122 162,632 
Notes receivable 118,500 
Restricted cash and escrows2,191 1,441 
Prepaid expenses and other assets23,925 20,485 
Goodwill98,918 98,918 
Interest rate swaps
3,760  
Deferred lease costs, less accumulated amortization of $218,399 and $205,100 as of September 30, 2022 and December 31, 2021, respectively
292,537 264,571 
Other assets held for sale, net 8,393 
Total assets$4,185,493 $3,930,665 
Liabilities:
Unsecured debt, net of discount and unamortized debt issuance costs of $13,592 and $12,210 as of September 30, 2022 and December 31, 2021, respectively
$1,948,408 $1,877,790 
Secured debt
197,000  
Accounts payable, accrued expenses and accrued capital expenditures111,262 114,453 
Dividends payable 26,048 
Deferred income70,798 80,686 
Intangible lease liabilities, less accumulated amortization of $38,636 and $35,880 as of September 30, 2022 and December 31, 2021, respectively
60,694 39,341 
Interest rate swaps 4,924 
Total liabilities2,388,162 2,143,242 
Commitments and Contingencies (Note 7)
  
Stockholders’ Equity:
Shares-in-trust, 150,000,000 shares authorized; none outstanding as of September 30, 2022 or December 31, 2021
  
Preferred stock, no par value, 100,000,000 shares authorized; none outstanding as of September 30, 2022 or December 31, 2021
  
Common stock, $0.01 par value, 750,000,000 shares authorized; 123,395,381 and 123,076,695 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
1,234 1,231 
Additional paid-in capital3,709,234 3,701,798 
Cumulative distributions in excess of earnings(1,905,544)(1,899,081)
Accumulated other comprehensive loss(9,194)(18,154)
Piedmont stockholders’ equity1,795,730 1,785,794 
Noncontrolling interest1,601 1,629 
Total stockholders’ equity1,797,331 1,787,423 
Total liabilities and stockholders’ equity$4,185,493 $3,930,665 
See accompanying notes
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PIEDMONT OFFICE REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except for share and per share amounts)
 
Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Revenues:
Rental and tenant reimbursement revenue$139,572 $127,427 $403,635 $380,306 
Property management fee revenue303 626 1,280 1,920 
Other property related income4,225 3,018 11,643 8,320 
144,100 131,071 416,558 390,546 
Expenses:
Property operating costs59,039 51,767 166,295 154,849 
Depreciation34,941 30,562 98,828 88,663 
Amortization23,290 20,373 67,022 63,978 
General and administrative
6,590 6,955 21,212 22,417 
123,860 109,657 353,357 329,907 
Other income (expense):
Interest expense(17,244)(12,450)(44,917)(37,375)
Other income335 2,337 2,302 7,324 
Gain on sale of real estate assets  50,674  
(16,909)(10,113)8,059 (30,051)
Net income3,331 11,301 71,260 30,588 
Net loss applicable to noncontrolling interest
 5 1 9 
Net income applicable to Piedmont$3,331 $11,306 $71,261 $30,597 
Per share information – basic and diluted:
Net income applicable to common stockholders$0.03 $0.09 $0.58 $0.25 
Weighted-average common shares outstanding – basic123,395,381 124,135,556 123,329,626 124,056,908 
Weighted-average common shares outstanding – diluted123,697,455 124,627,409 123,630,501 124,471,786 
See accompanying notes
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PIEDMONT OFFICE REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(in thousands)

Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Net income applicable to Piedmont$3,331 $11,306 $71,261 $30,597 
Other comprehensive income:
Effective portion of gain on derivative instruments that are designated and qualify as cash flow hedges (See Note 5)
2,662 582 7,507 1,848 
Plus: Reclassification of net loss included in net income (See Note 5)
194 750 1,453 2,216 
Other comprehensive income2,856 1,332 8,960 4,064 
Comprehensive income applicable to Piedmont
$6,187 $12,638 $80,221 $34,661 

See accompanying notes
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PIEDMONT OFFICE REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(in thousands, except per share amounts)
 Common  StockAdditional
Paid-In
Capital
Cumulative
Distributions
in Excess of
Earnings
Accumulated
Other
Comprehensive
Income/(Loss)
Non-
controlling
Interest
Total
Stockholders’
Equity
 SharesAmount
Balance, June 30, 2022123,390 $1,234 $3,707,833 $(1,882,962)$(12,050)$1,608 $1,815,663 
Costs of issuance of common stock  (461)   (461)
Dividends to common stockholders ($0.21 per share) and stockholders of subsidiaries
   (25,913) (7)(25,920)
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
5  1,862    1,862 
Net income applicable to Piedmont   3,331   3,331 
Other comprehensive income    2,856  2,856 
Balance, September 30, 2022123,395 $1,234 $3,709,234 $(1,905,544)$(9,194)$1,601 $1,797,331 
Common  StockAdditional
Paid-In
Capital
Cumulative
Distributions
in Excess of
Earnings
Accumulated
Other
Comprehensive
Income/(Loss)
Non-
controlling
Interest
Total
Stockholders’
Equity
SharesAmount
Balance, June 30, 2021124,132 $1,241 $3,698,656 $(1,807,679)$(21,368)$1,658 $1,872,508 
Dividends to common stockholders ($0.21 per share) and stockholders of subsidiaries
— — — (26,068)— (6)(26,074)
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax
4 — 1,552 — — — 1,552 
Net loss applicable to noncontrolling interest— — — — — (5)(5)
Net income applicable to Piedmont— — — 11,306 — — 11,306 
Other comprehensive income— — — — 1,332 — 1,332 
Balance, September 30, 2021124,136 $1,241 $3,700,208 $(1,822,441)$(20,036)$1,647 $1,860,619 


See accompanying notes
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PIEDMONT OFFICE REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(in thousands, except per share amounts)

Common StockAdditional Paid-In CapitalCumulative Distributions in Excess of EarningsAccumulated
Other
Comprehensive
Income/(Loss)
Non- controlling InterestTotal Stockholders’ Equity
SharesAmount
Balance, December 31, 2021123,077 $1,231 $3,701,798 $(1,899,081)$(18,154)$1,629 $1,787,423 
Costs of issuance of common stock  (461)   (461)
Dividends to common stockholders ($0.63 per share) and stockholders of subsidiaries
   (77,724) (27)(77,751)
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax318 3 7,897    7,900 
Net loss applicable to noncontrolling interest     (1)(1)
Net income applicable to Piedmont   71,261   71,261 
Other comprehensive income    8,960  8,960 
Balance, September 30, 2022123,395 $1,234 $3,709,234 $(1,905,544)$(9,194)$1,601 $1,797,331 

Common StockAdditional Paid-In CapitalCumulative Distributions in Excess of EarningsAccumulated
Other
Comprehensive
Income/(Loss)
Non- controlling InterestTotal Stockholders’ Equity
SharesAmount
Balance, December 31, 2020123,839 $1,238 $3,693,996 $(1,774,856)$(24,100)$1,683 $1,897,961 
Costs of issuance of common stock— — (55)— — — (55)
Dividends to common stockholders ($0.63 per share) and stockholders of subsidiaries
— — — (78,182)— (27)(78,209)
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax297 3 6,267 — — — 6,270 
Net loss applicable to noncontrolling interest— — — — — (9)(9)
Net income applicable to Piedmont— — — 30,597 — — 30,597 
Other comprehensive income— — — — 4,064 — 4,064 
Balance, September 30, 2021124,136 $1,241 $3,700,208 $(1,822,441)$(20,036)$1,647 $1,860,619 

See accompanying notes
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PIEDMONT OFFICE REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands) 
Nine Months Ended
September 30,
20222021
Cash Flows from Operating Activities:
Net income$71,260 $30,588 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation98,828 88,663 
Amortization of debt issuance costs inclusive of settled interest rate swaps
2,738 2,396 
Other amortization60,457 58,743 
General reserve/ (reversal) for uncollectible accounts(2,000)412 
Stock compensation expense6,880 8,201 
Gain on sale of real estate assets(50,674) 
Changes in assets and liabilities:
Increase in tenant and straight-line rent receivables(14,760)(13,448)
Increase in prepaid expenses and other assets(933)(2,815)
Cash received upon settlement of interest rate swaps 623 
Increase in accounts payable and accrued expenses4,571 342 
Decrease in deferred income(12,383)(8,671)
Net cash provided by operating activities163,984 165,034 
Cash Flows from Investing Activities:
Acquisition of real estate assets, net of related debt assumed, and intangibles(270,899) 
Capitalized expenditures(95,507)(83,477)
Net sales proceeds from wholly-owned properties143,596  
Proceeds from notes receivable 118,500  
Deferred lease costs paid(16,042)(10,324)
Net cash used in investing activities(120,352)(93,801)
Cash Flows from Financing Activities:
Debt issuance and other costs paid(194)(454)
Proceeds from debt761,420 526,580 
Repayments of debt(693,000)(484,610)
Costs of issuance of common stock(311)(55)
Value of shares withheld for payment of taxes related to employee stock compensation(3,764)(3,050)
Repurchases of common stock as part of announced plan (685)
Dividends paid(103,799)(103,891)
Net cash used in financing activities(39,648)(66,165)
Net increase in cash, cash equivalents, and restricted cash and escrows3,984 5,068 
Cash, cash equivalents, and restricted cash and escrows, beginning of period8,860 9,214 
Cash, cash equivalents, and restricted cash and escrows, end of period$12,844 $14,282 

See accompanying notes
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PIEDMONT OFFICE REALTY TRUST, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(Unaudited)

1.    Organization
Piedmont Office Realty Trust, Inc. (“Piedmont”) (NYSE: PDM) is a Maryland corporation that operates in a manner so as to qualify as a real estate investment trust (“REIT”) for federal income tax purposes and engages in the ownership, management, development, redevelopment, and operation of high-quality, Class A office properties located primarily in the Sunbelt. Piedmont was incorporated in 1997 and commenced operations in 1998. Piedmont conducts business through its wholly-owned subsidiary, Piedmont Operating Partnership, L.P. (“Piedmont OP”), a Delaware limited partnership. Piedmont OP owns properties directly, through wholly-owned subsidiaries, and through various joint ventures which it controls. References to Piedmont herein shall include Piedmont and all of its subsidiaries, including Piedmont OP and its subsidiaries and joint ventures.

As of September 30, 2022, Piedmont owned 53 in-service, Class A office properties and one redevelopment asset, primarily located within the Sunbelt. As of September 30, 2022, the in-service portfolio comprised approximately 16.8 million square feet (unaudited) and was 86.8% leased.

2.    Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation

The consolidated financial statements of Piedmont have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Results for these interim periods are not necessarily indicative of a full year’s results.

Piedmont’s consolidated financial statements include the accounts of Piedmont, Piedmont’s wholly-owned subsidiaries, any variable interest entity ("VIE") of which Piedmont or any of its wholly-owned subsidiaries is considered to have the power to direct the activities of the entity and the obligation to absorb losses/right to receive benefits, or any entity in which Piedmont or any of its wholly-owned subsidiaries owns a controlling interest. In determining whether Piedmont or Piedmont OP has a controlling interest, the following factors, among others, are considered: equity ownership, voting rights, protective rights of investors, and participatory rights of investors. For further information, refer to the financial statements and footnotes included in Piedmont’s Annual Report on Form 10-K for the year ended December 31, 2021.

All intercompany balances and transactions have been eliminated upon consolidation.

Further, Piedmont has formed special purpose entities to acquire and hold real estate. Each special purpose entity is a separate legal entity. Consequently, the assets of these special purpose entities are not available to all creditors of Piedmont. The assets owned by these special purpose entities are being reported on a consolidated basis with Piedmont’s assets for financial reporting purposes only.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and notes. The most significant of these estimates include the underlying cash flows and holding periods used in assessing impairment, judgements regarding the recoverability of goodwill, and the assessment of the collectibility of receivables. While Piedmont has made, what it believes to be, appropriate accounting estimates based on the facts and circumstances available as of the reporting date, actual results could materially differ from those estimates.

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Income Taxes

Piedmont has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and has operated as such, beginning with its taxable year ended December 31, 1998. To qualify as a REIT, Piedmont must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income. As a REIT, Piedmont is generally not subject to federal income taxes, subject to fulfilling, among other things, its taxable income distribution requirement. Piedmont is subject to certain taxes related to the operations of properties in certain locations, as well as operations conducted by its taxable REIT subsidiary which have been provided for in the financial statements.

Operating Leases

Piedmont recognized the following fixed and variable lease payments, which together comprised rental and tenant reimbursement revenue in the accompanying consolidated statements of income for the three and nine months ended September 30, 2022 and 2021, respectively, as follows (in thousands):

Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Fixed payments$114,280 $105,592 $334,256 $315,971 
Variable payments25,292 21,835 69,379 64,335 
Total Rental and Tenant Reimbursement Revenue
$139,572 $127,427 $403,635 $380,306 

Operating leases where Piedmont is the lessee relate primarily to office space in buildings owned by third parties. Piedmont's right of use asset and corresponding lease liability was approximately $0 and $60,000 as of September 30, 2022 and December 31, 2021, respectively. The right of use asset is recorded as a component of prepaid expenses and other assets, whereas the corresponding liability is presented as a component of accounts payable, accrued expenses, and accrued capital expenditures in the accompanying consolidated balance sheets. For both the three and nine months ended September 30, 2022 and 2021, Piedmont recognized approximately $20,000 and $60,000, respectively, of operating lease costs related to these office space leases. As of September 30, 2022, the lease term of Piedmont's right of use asset had ended; however, the lease was renewed effective October 1, 2022 for 26 months.

Intangible Assets and Liabilities Resulting from Purchasing Real Estate Assets

Upon the acquisition of real properties, Piedmont allocates the purchase price of the properties to tangible assets, consisting of land, building, site improvements, and identified intangible assets and liabilities, including the value of in-place leases, based in each case on Piedmont's estimate of their fair values in accordance with Accounting Standards Codification ("ASC") 820 Fair Value Measurements.

Gross intangible lease assets and liabilities arising from in-place leases, inclusive of amounts classified as real estate assets held for sale, recorded at acquisition as of September 30, 2022 and December 31, 2021, respectively, are as follows (in thousands):

September 30, 2022December 31, 2021
Intangible Lease Assets:
Above-Market In-Place Lease Assets$1,967 $1,882 
In-Place Lease Valuation$210,281 $176,275 
Intangible Lease Origination Costs (included as component of Deferred Lease Costs)$296,672 $266,575 
Intangible Lease Liabilities (Below-Market In-Place Leases)$99,330 $75,221 

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For the three and nine months ended September 30, 2022 and 2021, respectively, Piedmont recognized amortization of intangible lease costs as follows (in thousands):

Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Amortization of Intangible Lease Origination Costs and In-Place Lease Valuation included in amortization expense$18,905 $16,580 $54,582 $51,208 
Amortization of Above-Market and Below-Market In-Place Lease intangibles as a net increase to rental revenues$3,542 $2,686 $9,713 $8,082 

Net intangible assets and liabilities as of September 30, 2022 will be amortized as follows (in thousands):

Intangible Lease Assets
Above-Market
In-place
Lease Assets
In-Place Lease Valuation
Intangible Lease
Origination Costs (1)
Below-Market
In-place Lease
Liabilities
For the remainder of 2022$51 $8,987 $10,502 $3,700 
For the years ending December 31:
2023160 29,545 34,523 12,625 
2024126 22,101 26,919 10,071 
202548 16,680 21,541 8,441 
202622 13,146 18,228 6,904 
202713 10,426 15,010 5,814 
Thereafter30 22,192 33,220 13,139 
$450 $123,077 $159,943 $60,694 
Weighted-Average Amortization Period (in years)4666

(1)Included as a component of Deferred Lease Costs in the accompanying consolidated balance sheets.

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3.    Acquisitions

During the three months ended September 30, 2022, Piedmont acquired 100% of the ownership interest in 1180 Peachtree Street in Midtown Atlanta, Georgia (part of the Atlanta geographic segment), consisting of 691,092 square feet and 95% leased. The net contractual purchase price of $465.7 million included the assumption of an existing $197 million, 4.10% mortgage secured by the property. The remaining cash portion of the purchase price was primarily funded using a new $200 Million Unsecured Term Loan Facility (further described in Note 4 below), as well as cash on hand and our $600 Million Unsecured 2022 Line of Credit.

The purchase price of 1180 Peachtree Street, inclusive of approximately $2.2 million of closing costs, was allocated as follows:

1180 Peachtree Street
Land$56,932 
Building and improvements336,219 
Intangible lease assets (1)
53,426 
Lease acquisition costs, net of tenant credits received from seller (1)
(4,071)
Intangible lease origination costs (1)
56,748 
Intangible lease liabilities (1)
(31,355)
Total allocated purchase price$467,899 
Assumption of secured mortgage note(197,000)
Net cash paid upon acquisition$270,899 

(1)Amortization of in-place lease intangibles and lease acquisition costs are recognized using the straight-line method over approximately 7.4 years, the average remaining life of in-place leases.


4.    Debt

As noted above, in conjunction with the acquisition of 1180 Peachtree Street during the three months ended September 30, 2022, Piedmont entered into a Loan Assignment and Assumption Agreement for an existing $197 million fixed rate mortgage secured by the property (the “$197 Million Fixed Rate Mortgage”). The $197 Million Fixed Rate Mortgage has a remaining term of approximately six years and a final maturity date of October 1, 2028. Interest only at a fixed rate of 4.10% per annum is payable until October 1, 2023, at which point the loan becomes amortizing.

Piedmont also entered into a new $200 million, floating-rate, unsecured term loan facility (the “$200 Million Unsecured Term Loan Facility”) during the three months ended September 30, 2022 to fund the majority of the cash portion of the 1180 Peachtree Street purchase price. The term of the $200 Million Unsecured Term Loan Facility is six months, with an option to extend twice for an additional three months for a final maturity date of July 24, 2023. Piedmont may prepay the loan in whole or in part, at any time without premium or penalty. The stated interest rate spread over Adjusted Term SOFR can vary from 0.80% to 1.65% based upon the then current credit rating of Piedmont. As of September 30, 2022, the applicable interest rate spread on the loan was 1.00%.

During the nine months ended September 30, 2022, Piedmont amended and restated its $500 Million Unsecured 2018 Line of Credit which had an initial maturity date of September 30, 2022. As amended and restated, the capacity of the line of credit has been expanded to $600 million (the "$600 Million Unsecured 2022 Line of Credit"). The term of the new $600 Million Unsecured 2022 Line of Credit was extended to June 30, 2026, and Piedmont may extend the term for up to one additional year (through two available six-month extensions) provided Piedmont is not then in default and all representations and warranties are true and correct in all material respects and upon payment of applicable extension fees. Under certain terms of the agreement, Piedmont may increase the new facility by up to an additional $500 million, to an aggregate size of $1.1 billion, provided that no existing bank has any obligation to participate in such increase. Piedmont paid customary arrangement and upfront fees to the lenders in connection with the closing of the new facility.

The $600 Million Unsecured 2022 Line of Credit has the option to bear interest at varying levels (determined with reference to the greater of the credit rating for Piedmont or Piedmont OP) based on the Adjusted Term SOFR Rate, Adjusted Daily Effective SOFR Rate, or the Base Rate, all as defined in the facility agreement. Further, the Base Rate is defined as the greater of the
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prime rate, the federal funds rate plus 0.5%, or the Adjusted Term SOFR Rate for a one-month period plus 1.0%. The term SOFR loans are available with interest periods selected by Piedmont of one, three, or six months. The stated interest rate spread over Adjusted SOFR can vary from 0.725% to 1.4% based upon the greater of the then current credit rating of Piedmont or Piedmont OP. As of September 30, 2022, based upon Piedmont’s current BBB credit rating, the current stated Adjusted SOFR spread on the loan is 0.85%.

The $600 Million Unsecured 2022 Line of Credit and the $200 Million Unsecured Term Loan Facility have certain financial covenants that require, among other things, the maintenance of an unencumbered interest rate coverage ratio of at least 1.75, an unencumbered leverage ratio of at least 1.60, a fixed charge coverage ratio of at least 1.50, a leverage ratio of no more than 0.60, and a secured debt ratio of no more than 0.40.

The following table summarizes the terms of Piedmont’s indebtedness outstanding as of September 30, 2022 and December 31, 2021 (in thousands):

Facility (1)
Stated Rate
Effective Rate (2)
MaturityAmount Outstanding as of
September 30, 2022December 31, 2021
Secured (Fixed)
$197 Million Fixed Rate Mortgage
4.10 %10/1/2028$197,000 $ 
Subtotal197,000  
Unsecured (Variable and Fixed)
$200 Million Unsecured Term Loan Facility
SOFR + 1.00%
4.13 %
(3)
1/23/2023
(4)
$200,000 $ 
$350 Million Unsecured Senior Notes due 2023
3.40 %3.43 %6/01/2023
(5)
350,000 350,000 
$400 Million Unsecured Senior Notes due 2024
4.45 %4.10 %3/15/2024400,000 400,000 
$250 Million Unsecured 2018 Term Loan
LIBOR + 0.95%
3.86 %
(6)
3/31/2025250,000 250,000 
$600 Million Unsecured 2022 Line of Credit(7)
SOFR + 0.85%
3.86 %
(3)
6/30/2026
(8)
162,000 290,000 
$300 Million Unsecured Senior Notes due 2030
3.15 %3.90 %

8/15/2030300,000 300,000 
$300 Million Unsecured Senior Notes due 2032
2.75 %2.78 %

4/1/2032300,000 300,000 
Discounts and unamortized debt issuance costs
(13,592)(12,210)
Subtotal/Weighted Average (9)
3.65 %$1,948,408 $1,877,790 
Total/Weighted Average (9)
3.69 %$2,145,408 $1,877,790 

(1)All of Piedmont’s outstanding debt as of September 30, 2022 is unsecured and interest-only until maturity, except for the $197 Million Fixed Rate Mortgage, secured by 1180 Peachtree Street, which will begin amortizing principal in October 2023.
(2)Effective rate after consideration of settled or in-place interest rate swap agreements and issuance discounts.
(3)On a periodic basis, Piedmont may select from multiple interest rate options, including the prime rate and various-length SOFR locks on all or a portion of the principal. All SOFR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating.
(4)Piedmont intends to repay the $200 Million Unsecured Term Loan Facility due January 2023 using the net sales proceeds from the future disposition of properties, cash on hand from operations, and/or draws under its existing $600 Million Unsecured 2022 Line of Credit. Additionally, Piedmont may extend the term for up to six additional months (through two available three month extensions to a final extended maturity date of July 24, 2023) provided Piedmont is not then in default and upon payment of extension fees.
(5)Piedmont currently intends to repay the $350 Million Unsecured Senior Notes due 2023 through debt refinancing, cash on hand from operations, and/or draws under its existing $600 million Unsecured 2022 Line of Credit.
(6)The facility has a stated variable rate; however, Piedmont has entered into interest rate swap agreements which effectively fix, exclusive of changes to Piedmont's credit rating, $100 million of the principal balance to 3.56% through the maturity date of the loan. For the remaining variable portion of the loan, Piedmont may periodically select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion there of. All LIBOR selections are subject to an additional spread
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over the selected rate based on Piedmont’s current credit rating. The rate presented is the weighted-average rate for the effectively fixed and variable portions of the debt outstanding as of September 30, 2022 (see Note 5 for more detail).
(7)The $500 Million Unsecured 2018 Line of Credit was amended and restated during the nine months ended September 30, 2022 and is now reflected as the $600 Million Unsecured 2022 Line of Credit. The $500 Million Unsecured 2018 Line of Credit had a stated rate of LIBOR + 0.90% as of December 31, 2021.
(8)Piedmont may extend the term for up to one additional year (through two available six month extensions to a final extended maturity date of June 30, 2027) provided Piedmont is not then in default and upon payment of extension fees.
(9)Weighted average is based on contractual balance of outstanding debt and the stated or effectively fixed interest rates as of September 30, 2022.

Piedmont made interest payments on all debt facilities, including interest rate swap cash settlements, of approximately $18.3 million and $16.2 million for the three months ended September 30, 2022 and 2021, respectively, and approximately $46.9 million and $41.5 million for the nine months ended September 30, 2022 and 2021, respectively. Also, Piedmont capitalized interest of approximately $1.1 million and $1.0 million for the three months ended September 30, 2022 and 2021, respectively, and approximately $3.2 million and $2.7 million for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, Piedmont believes it was in compliance with all financial covenants associated with its debt instruments.

See Note 6