pdm-20230208
0001042776false00010427762023-02-082023-02-08

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):  February 8, 2023
 
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 February 8, 2023, Piedmont Office Realty Trust, Inc. (the "Registrant") issued a press release announcing its financial results for the fourth quarter 2022, as well as the year ended December 31, 2022, and published supplemental information for the fourth quarter 2022, as well as the year ended December 31, 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:February 8, 2023By:/s/    Robert E. Bowers
  Robert E. Bowers
  Chief Financial Officer and Executive Vice President




Document

EXHIBIT 99.1
https://cdn.kscope.io/ec922caf989d71bebba201b5aefeb119-image1.jpg

Piedmont Office Realty Trust Reports Fourth Quarter and Annual 2022 Results
ATLANTA, February 8, 2023--Piedmont Office Realty Trust, Inc. ("Piedmont" or the "Company") (NYSE:PDM), an owner of Class A office properties located primarily in major U.S. Sunbelt markets, today announced its results for the quarter and year ended December 31, 2022.

Highlights for the Three Months and Year Ended December 31, 2022:

Financial Results:
Three Months EndedYear Ended
(in 000s other than per share amounts and %)December 31, 2022December 31, 2021December 31, 2022December 31, 2021
Net income/(loss) applicable to Piedmont$75,569$(31,750)$146,830$(1,153)
Net income/(loss) per share applicable to common stockholders - diluted $0.61$(0.26)$1.19$(0.01)
Gain on sale of real estate assets$101,055$151,729
Impairment losses$25,981$41,000$25,981$41,000
Core Funds From Operations ("Core FFO") applicable to common stock$61,235$63,009$247,070$245,422
Core FFO per diluted share$0.50$0.51$2.00$1.97
Increase in Same Store Net Operating Income ("Same Store NOI") - Cash Basis1.6%1.9 %
(Decrease)\Increase in Same Store NOI - Accrual Basis(0.7)%1.1 %
Adjusted Funds From Operations applicable to common stock$47,082$39,399$178,040$160,134
Net income applicable to Piedmont for the three months ended December 31, 2022 included the following:
$101.1 million in gain on sale of real estate assets primarily associated with the previously announced sales of the Company's two Cambridge, MA properties during the fourth quarter;
$26.0 million of non-cash impairment losses associated with: (a) a partial write down of the Company's goodwill balance driven by the decline of the stock market and the Company's stock price during the fourth quarter; and (b) the write down of one property as a result of a reduction in the assumed hold period for that particular asset;
$2.2 million in severance costs associated with a reorganization of the Company's management structure during the fourth quarter; and,
A $6.8 million increase in interest expense driven by a higher average debt balance during the fourth quarter as a result of the acquisition of 1180 Peachtree Street in Atlanta during the third quarter and higher interest rates on the Company's variable rate debt. Other income for the fourth quarter also decreased approximately $2.5 million due to the payoff



of notes receivable due from the purchaser of the Company's New Jersey Portfolio in March of 2022. This increase in interest expense and decrease in other income were partially offset by additional property operating income as a result of successful leasing, rental rate roll ups and asset recycling activity over the last twelve months.
Net loss applicable to Piedmont for the fourth quarter of 2021 did not include any gain on sale of real estate assets or severance costs, but did include a $41.0 million impairment loss on an asset subsequently sold during 2022.
Core FFO, which removes the impact of the gains on sale of real estate assets, impairment losses, and severance costs enumerated above, as well as depreciation and amortization expense, was $0.50 per diluted share for the fourth quarter of 2022 as compared to $0.51 per diluted share for the fourth quarter of 2021, with the $.01 per diluted share decrease primarily attributable to the $6.8 million, or $.06 per diluted share, increase in interest expense during the fourth quarter of 2022 noted above.
Leasing:
Three Months Ended December 31, 2022Year Ended December 31, 2022
# of transactions42 203 
Total leasing sf433,0002,153,000
New tenant leasing sf164,000763,000
Cash rent roll up6.5 %9.7 %
Accrual rent roll up11.5 %17.2 %
Leased Percentage as of period end86.7 %
The Company completed approximately 2.2 million square feet of leasing transactions during 2022, including the largest amount of annual new tenant leasing since 2018.
The largest new tenant lease completed during the fourth quarter was an approximately 28,000 square foot lease with Cadence Bank through 2035 at 999 Peachtree Street in Atlanta, GA.
The largest renewal and expansion lease completed during the fourth quarter totaled approximately 58,000 square feet with Institute for Justice through 2037 at Arlington Gateway in Arlington, VA.
The Company's scheduled lease expirations for 2023 are low, representing approximately 7% of its annualized lease revenue.
As of December 31, 2022, the Company had approximately 1.14 million square feet of executed leases for vacant space yet to commence or under rental abatement, representing approximately $33 million of future additional annual cash revenue.
The Company's leased percentage as of December 31, 2022 was 86.7%, up from 85.5% at December 31, 2021, and down 0.1% for the fourth quarter of 2022 due to the disposition of the 94% leased Cambridge, MA assets during the quarter.
Capital Markets:
During the fourth quarter, the Company completed the sale of its two, 94% leased, Cambridge, MA properties, One Brattle Square and 1414 Massachusetts, resulting in a $102.6 million gain on sale of real estate assets that is included in the Company's results of operations. The combined approximately $160 million in sales proceeds from the two transactions was used to pay off the



outstanding balance on the Company’s $600 million line of credit, leaving the full capacity of the line available as of December 31, 2022.

Balance Sheet (including description of a subsequent event):
December 31, 2022December 31, 2021
Total Real Estate Assets (in millions)
$3,501$3,245
Total Assets (in millions)
$4,086$3,931
Total Debt (in millions)
$1,984$1,878
Weighted Average Cost of Debt3.89 %2.93 %
Debt-to-Gross Assets Ratio37.6 %37.1 %
Average Net Debt-to-Core EBITDA (ttm)6.0 x5.7 x
During the fourth quarter, the Company addressed its largest near-term debt maturity by amending its $200 million unsecured term loan facility to extend the final maturity date to June 2025. All other terms of the facility remain unchanged.
As previously announced, on January 31, 2023, the Company also entered into an additional new $215 million term loan facility priced at adjusted SOFR + 105 bps with a final extended maturity date of January 31, 2025. The Company intends to use the proceeds from the facility, along with a combination of cash on hand, proceeds from select property dispositions, and/or draws on its $600 million line of credit to repay its $350 million in Unsecured Senior Notes that mature June 1, 2023.

ESG and Operations:
During the fourth quarter, Piedmont received its inaugural GRESB® assessment, achieving an overall 4 star designation and “Green Star” recognition. The Company's annual ESG Report which includes Sustainability Accounting Standards Board (SASB) metrics and information that aligns with the Task Force on Climate-related Financial Disclosures (TCFD) framework is available on the Company's website at www.piedmontreit.com/ESG.

Commenting on annual and fourth quarter results, Brent Smith, Piedmont's President and Chief Executive Officer, said, "Despite facing the challenging operating and economic environment that unfolded during 2022, we were able to accomplish a number of key objectives for the year, including the execution of approximately 2.2 million square feet of leasing at meaningfully higher rental rates and the completion of a strategic Midtown Atlanta acquisition paired with several non-core dispositions that furthered our concentration in the Sunbelt to over two-thirds of our annualized lease revenue. We also strengthened our cash position, increasing liquidity ahead of our 2023 debt maturity and bolstering our balance sheet. The fourth quarter also reflects a continuation of these same annual themes: the completion of approximately 433,000 square feet of total leasing, 164,000 square feet of which related to new tenant leases; the completion of the disposition of our Cambridge, MA assets, resulting in the recognition of a nine-digit gain; and the extension of our most near-term debt maturity. Looking ahead, we are encouraged by the approximately 230,000 square feet of leasing already executed thus far in 2023, with over 100,000 square feet of that for new tenant space, demonstrating that leasing velocity has not wavered compared to last year."




First Quarter 2023 Dividend

As previously announced, on February 1, 2023, the board of directors of Piedmont declared a dividend for the first quarter of 2023 in the amount of $0.21 per share on its common stock to stockholders of record as of the close of business on February 24, 2023, payable on March 17, 2023.

Guidance for 2023

Due to higher projected interest costs, the Company is introducing the following guidance for the year ending December 31, 2023:

(in millions, except per share data)LowHigh
Net income/(loss)$(1)$1
Add:
Depreciation144 151 
Amortization80 84 
Core FFO applicable to common stock$223$236
Core FFO applicable to common stock per diluted share$1.80$1.90

The Company anticipates continued growth in its Property NOI and SSNOI during the forthcoming year ending December 31, 2023.
Executed leasing activity for 2023 is estimated to be in the range of 1.6 to 2.0 million square feet with year-end leased percentage anticipated to be between 87-88%, before the impacts of acquisition and disposition activity.
This guidance is based on information available to management as of the date of this release and reflects management's view of current market conditions, including the following specific assumptions and projections:
The largest impact on 2023 guidance is increased interest expense. With an over 400 bps increase in the Federal Funds Rate rates during 2022 and further increases projected during 2023, along with two new floating rate term loans priced at adjusted SOFR plus 100 and 105 bps, respectively, replacing $350 million of 10-year bonds maturing in June at an effective rate of 3.43%, projected interest expense for 2023 is estimated to increase approximately $27 million over 2022 total interest expense.
2023 guidance includes General and Administrative expenses of approximately $29 million.
No speculative acquisitions or dispositions are included in the above guidance. The Company will adjust guidance throughout the year as such transactions occur.
Note that actual results could differ materially from these estimates and individual quarters may fluctuate on both a cash basis and an accrual basis due to the timing of any future dispositions, significant 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, one-time revenue or expense events, and other factors discussed under "Forward Looking Statements" below.




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 December 31, 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, February 9, 2023 at 9:00 A.M. Eastern time. The live, listen-only, audio web cast of the call may be accessed on the Company's website at http://investor.piedmontreit.com/news-and-events/events-calendar. Dial-in numbers for analysts who plan to actively participate in the call are (888) 506-0062 for participants in the United States and Canada and (973) 528-0011 for international participants. Participant Access Code is 985382. A replay of the conference call will be available through 9:00 A.M. Eastern time on February 23, 2023, 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 47462. 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 fourth quarter and annual 2022 performance, discuss recent events, and conduct a question-and-answer period.

Supplemental Information

Quarterly supplemental information as of and for the period ended December 31, 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 major U.S. Sunbelt markets. Its approximately $5 billion portfolio is currently comprised of approximately 17 million square feet. The Company is a fully integrated, self-managed real estate investment trust (REIT) with local management offices in each of its markets and is investment-grade rated by S&P Global Ratings (BBB) and Moody’s (Baa2). Piedmont is a 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 known and unknown risks and uncertainties, which could cause actual results to differ materially from those 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 the Company's use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue" or similar words or phrases that indicate predictions of future events or trends or that do not relate solely to historical matters. Examples of such statements in this press release include the Company's estimated range of Net Income, Depreciation, Amortization, Core FFO and Core FFO per diluted share for the year ending December 31, 2023. 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 (including work from home), technological (e.g. Metaverse, Zoom, etc), and other changes 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; 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 are determined and the planned phasing out of United States dollar 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; 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, 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)
December 31, 2022December 31, 2021
Assets:
Real estate assets, at cost:
Land
$567,244 $529,941 
Buildings and improvements
3,682,000 3,374,903 
Buildings and improvements, accumulated depreciation
(915,010)(861,206)
Intangible lease assets
205,074 178,157 
Intangible lease assets, accumulated amortization
(90,694)(83,777)
Construction in progress
52,010 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
3,500,624 3,245,311 
Cash and cash equivalents
16,536 7,419 
Tenant receivables
4,762 2,995 
Straight line rent receivables
172,019 162,632 
Notes receivable
— 118,500 
Restricted cash and escrows
3,064 1,441 
Prepaid expenses and other assets
17,152 20,485 
Goodwill
82,937 98,918 
Interest rate swaps
4,183 — 
Deferred lease costs, gross
505,979 469,671 
Deferred lease costs, accumulated depreciation
(221,731)(205,100)
Other assets held for sale, gross
— 9,389 
Other assets held for sale, accumulated depreciation
— (996)
Total assets$4,085,525 $3,930,665 
Liabilities:
Unsecured debt, net of discount and unamortized debt issuance costs of $13,319 and $12,210, respectively
$1,786,681 $1,877,790 
        Secured Debt197,000 — 
Accounts payable, accrued expenses, and accrued capital expenditures
110,306 114,453 
Dividends payable
25,357 26,048 
Deferred income
59,977 80,686 
Intangible lease liabilities, less accumulated amortization
56,949 39,341 
Interest rate swaps
— 4,924 
Total liabilities2,236,270 2,143,242 
Stockholders' equity:
Common stock
1,234 1,231 
Additional paid in capital
3,711,005 3,701,798 
Cumulative distributions in excess of earnings
(1,855,893)(1,899,081)
Other comprehensive income
(8,679)(18,154)
Piedmont stockholders' equity1,847,667 1,785,794 
Noncontrolling interest
1,588 1,629 
Total stockholders' equity1,849,255 1,787,423 
Total liabilities and stockholders' equity$4,085,525 $3,930,665 



Number of shares of common stock outstanding as of end of period123,440 123,077 
Net debt (Unsecured and Secured Debt less Cash and cash equivalents)1,967,145 1,870,371 
Total Principal Amount of Debt Outstanding (Unsecured and Secured Debt plus discount and unamortized debt issuance costs)1,997,000 1,890,000 



Piedmont Office Realty Trust, Inc.
Consolidated Statements of Operations
Unaudited (in thousands, except for per share data)
Three Months EndedYear Ended
12/31/202212/31/202112/31/202212/31/2021
Revenues:
Rental and tenant reimbursement revenue$142,106 $134,313 $545,741 $514,619 
Property management fee revenue395 576 1,675 2,496 
Other property related income4,707 3,275 16,350 11,595 
Total revenues
147,208 138,164 563,766 528,710 
Expenses:
Property operating costs59,763 56,083 226,058 210,932 
Depreciation34,788 31,952 133,616 120,615 
Amortization23,915 22,014 90,937 85,992 
Impairment losses25,981 41,000 25,981 41,000 
General and administrative7,915 7,835 29,127 30,252 
Total operating expenses
152,362 158,884 505,719 488,791 
Other income (expense):
Interest expense(20,739)(13,917)(65,656)(51,292)
Other income408 2,882 2,710 10,206 
Gain on sale of real estate assets101,055 — 151,729 — 
Total other income (expense)
80,724 (11,035)88,783 (41,086)
Net income/(loss)75,570 (31,755)146,830 (1,167)
Net (income)/loss applicable to noncontrolling interest(1)— 14 
Net income/ (loss) applicable to Piedmont$75,569 $(31,750)$146,830 $(1,153)
Weighted average common shares outstanding - diluted123,633 123,742 123,524 123,978 
Net income/ (loss) per share applicable to common stockholders - diluted$0.61 $(0.26)$1.19 $(0.01)



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 EndedYear Ended
12/31/202212/31/202112/31/202212/31/2021
GAAP net income/(loss) applicable to common stock$75,569 $(31,750)$146,830 $(1,153)
Depreciation of real estate assets(1)
34,587 31,756 132,849 119,629 
Amortization of lease-related costs
23,905 22,003 90,891 85,946 
Impairment losses
25,981 41,000 25,981 41,000 
Gain on sale of real estate assets
(101,055)— (151,729)— 
NAREIT Funds From Operations applicable to common stock*58,987 63,009 244,822 245,422 
Severance costs associated with Q4 management reorganization2,248 — 2,248 — 
Core Funds From Operations applicable to common stock*61,235 63,009 247,070 245,422 
Amortization of debt issuance costs, fair market adjustments on notes payable, and discounts on debt
926 781 3,389 2,857 
Depreciation of non real estate assets
191 187 728 949 
Straight-line effects of lease revenue
(2,356)(1,939)(11,230)(10,566)
Stock-based compensation adjustments
1,717 2,772 4,833 7,924 
Net effect of amortization of above/below-market in-place lease intangibles
(3,713)(3,098)(13,426)(11,290)
Non-incremental capital expenditures(2)
(10,918)(22,313)(53,324)(75,162)
Adjusted Funds From Operations applicable to common stock*$47,082 $39,399 $178,040 $160,134 
Weighted average common shares outstanding - diluted123,633 124,412 
(3)
123,524 124,455 
(3)
NAREIT Funds From Operations per share (diluted)$0.48 $0.51 $1.98 $1.97 
Core Funds From Operations per share (diluted)$0.50 $0.51 $2.00 $1.97 

(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.

(3)Includes potential dilution under the treasury stock method that would occur if our remaining unvested and potential stock awards vested and resulted in additional common shares outstanding. Such dilution is not included when calculating Net loss per diluted share applicable to Piedmont for the quarter and year ended December 31, 2021 as it would reduce the loss per share presented.










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
12/31/202212/31/202112/31/202212/31/2021
Net income/(loss) applicable to Piedmont (GAAP)$75,569$(31,750)$75,569$(31,750)
Net income/(loss) applicable to noncontrolling interest
1(5)1(5)
Interest expense
20,73913,917 20,73913,917 
Depreciation
34,77831,943 34,77831,943 
Amortization
23,90522,003 23,90522,003 
Depreciation and amortization attributable to noncontrolling interests2022 2022 
Impairment losses
25,98141,000 25,98141,000 
Gain on sale of real estate assets
(101,055)— (101,055)— 
EBITDAre*
79,93877,130 79,93877,130 
Severance costs associated with Q4 management reorganization:2,248— 2,248— 
Core EBITDA*82,18677,130 82,18677,130 
General & administrative expenses
5,6687,835 5,6687,835 
Management fee revenue
(261)(323)(261)(323)
Other income
(193)(2,667)(193)(2,667)
       Reversal of non-cash general reserve for uncollectible accounts(1,000)(965)
Straight line effects of lease revenue
(2,356)(1,939)
Straight line effects of lease revenue attributable to noncontrolling interests(4)
Amortization of lease-related intangibles
(3,713)(3,098)
Property NOI*80,32775,974 87,40081,975 
Net operating (income)/loss from:
Acquisitions
(7,928)(2,460)(11,363)(3,273)
Dispositions
(2,342)(4,555)(2,389)(4,663)
Other investments(1)
224217 123275 
Same Store NOI*$70,281$69,176 $73,771$74,314 
Change period over period in Same Store NOI1.6%N/A(0.7)%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
Year EndedYear Ended
12/31/202212/31/202112/31/202212/31/2021
Net income/(loss) applicable to Piedmont (GAAP)$146,830$(1,153)$146,830$(1,153)
Net loss applicable to noncontrolling interest
(14)(14)
Interest expense
65,65651,292 65,65651,292 
Depreciation
133,577120,578 133,577120,578 
Amortization
90,89185,946 90,89185,946 
Depreciation and amortization attributable to noncontrolling interests8584 8584 
Impairment losses
25,98141,000 25,98141,000 
Gain on sale of real estate assets
(151,729)— (151,729)— 
EBITDAre*
311,291297,733 311,291297,733 
Severance costs associated with Q4 management reorganization2,248— 2,248— 
Core EBITDA*313,539297,733 313,539297,733 
General & administrative expenses
26,87930,252 26,87930,252 
Management fee revenue
(1,004)(1,269)(1,004)(1,269)
Other income
(1,847)(9,089)(1,847)(9,089)
Reversal of non-cash general reserve for uncollectible accounts(3,000)(553)
Straight line effects of lease revenue
(11,230)(10,566)
Straight line effects of lease revenue attributable to noncontrolling interests(10)
Amortization of lease-related intangibles
(13,426)(11,290)
Property NOI*309,901295,221 337,567317,627 
Net operating income/(loss) from:
Acquisitions
(18,720)(2,460)(27,055)(3,273)
Dispositions
(10,714)(17,572)(10,826)(18,400)
Other investments(1)
763841 6511,067 
Same Store NOI*$281,230$276,030 $300,337$297,021 
Change period over period in Same Store NOI1.9 %N/A1.1 %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, if any. 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 infrequent or non-recurring 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, if any. 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 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/ec922caf989d71bebba201b5aefeb119-q4_2022supplementalcover.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 major U.S. Sunbelt markets. 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 fourth quarter of 2022, approximately 87% of the Company's square footage was Energy Star certified and approximately 50% 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
December 31, 2022December 31, 2021
Number of consolidated in-service office properties (1)
5155
Rentable square footage (in thousands) (1)
16,65817,051
Percent leased (2)
86.7 %85.5 %
Capitalization (in thousands):
Total debt - GAAP$1,983,681$1,877,790
Total principal amount of debt outstanding (excludes premiums, discounts, and deferred financing costs)$1,997,000$1,890,000
Equity market capitalization (3)
$1,131,941$2,262,150
Total market capitalization (3)
$3,128,941$4,152,150
Total principal amount of debt / Total market capitalization (3)
63.8 %45.5 %
Average net principal amount of debt to Core EBITDA - quarterly (4)
6.4 x6.0 x
Average net principal amount of debt to Core EBITDA - trailing twelve months (5)
6.0 x5.7 x
Total principal amount of debt / Total gross assets (6)
37.6 %37.1 %
Common stock data:
High closing price during quarter$10.92$19.37
Low closing price during quarter$8.80$17.11
Closing price of common stock at period end$9.17$18.38
Weighted average fully diluted shares outstanding during quarter (in thousands)123,633124,412
Shares of common stock issued and outstanding at period end (in thousands)123,440123,077
Annual regular dividend per share (7)
$0.84$0.84
Rating / Outlook:
Standard & Poor'sBBB / StableBBB / Stable
Moody'sBaa2 / StableBaa2 / Stable
Employees149134
(1)As of December 31, 2022, our consolidated office portfolio consisted of 51 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 principal amount of debt outstanding as of the end of the reporting period, as appropriate.
(4)For the purposes of this calculation, we annualize the Core EBITDA for the quarter and use the average daily principal balance of debt outstanding during the quarter, less cash and cash equivalents and escrow deposits and restricted cash as of the end of the quarter.
(5)For the purposes of this calculation, we use the sum of Core EBITDA for the trailing four quarters and the average daily principal balance of debt outstanding for the trailing four quarters, less the average of cash and cash equivalents and escrow deposits and restricted cash as of the end of each quarter in the trailing four quarter period.
(6)Total gross assets is defined as total assets with the add-back of accumulated depreciation and accumulated amortization related to real estate assets and accumulated amortization related to deferred lease costs.
(7)Total of the regular dividends per share for which record dates occurred over the last 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
Kevin D. FossumEdward H. Guilbert, IIIChristopher A. KollmeDamian J. Miller
Senior Vice President,Executive Vice President, Finance,Executive Vice President,Executive Vice President,
Property Management andAssistant Secretary and TreasurerInvestmentsDallas
MinneapolisInvestor Relations Contact
Laura P. MoonAlex ValenteRobert K. Wiberg
Chief Accounting Officer andExecutive Vice President,Executive Vice President,
Senior Vice PresidentSoutheast RegionNortheast Region and Co-Head of
Development
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 Committeesand Capital Committees
Venkatesh S. DurvasulaMary HagerBarbara B. LangC. Brent Smith
Director and Member of the Capital CommitteeDirector and Member of the Director, Chair of the Governance CommitteeChief Executive Officer, President
Governance Committee(including ESG), and Member of theand Director
Compensation Committee
Jeffrey L. Swope
Director, Chair of the Capital
Committee, and Member of the
Compensation Committee
Transfer AgentCorporate CounselInstitutional Analyst ContactInvestor Relations
ComputershareKing & SpaldingPhone: 770.418.8592Phone: 866.354.3485
P.O. Box 430061180 Peachtree Street, NEresearch.analysts@piedmontreit.cominvestor.services@piedmontreit.com
Providence, RI 02940-3078Atlanta, GA 30309www.piedmontreit.com
Phone: 866.354.3485Phone: 404.572.4600
4


Piedmont Office Realty Trust, Inc.
Earnings Release
Piedmont Office Realty Trust Reports Fourth Quarter and Annual 2022 Results

ATLANTA, February 8, 2023--Piedmont Office Realty Trust, Inc. ("Piedmont" or the "Company") (NYSE:PDM), an owner of Class A office properties located primarily in major U.S. Sunbelt markets, today announced its results for the quarter and year ended December 31, 2022.

Highlights for the Three Months and Year Ended December 31, 2022:

Financial Results:
Three Months EndedYear Ended
(in 000s other than per share amounts and %)December 31, 2022December 31, 2021December 31, 2022December 31, 2021
Net income/(loss) applicable to Piedmont$75,569$(31,750)$146,830$(1,153)
Net income/(loss) per share applicable to common stockholders - diluted$0$0$0$0
Gain on sale of real estate assets$101,055$0$151,729$0
Impairment losses$25,981$41,000$25,981$41,000
Core Funds From Operations ("Core FFO") applicable to common stock$61,235$63,009$247,070$245,422
Core FFO per diluted share$0$0$0$0
Increase in Same Store Net Operating Income ("Same Store NOI") - Cash Basis1.6%1.9 %
(Decrease)\Increase in Same Store NOI - Accrual Basis(0.7)%1.1 %
Adjusted Funds From Operations applicable to common stock$47,082$39,399$178,040$160,134
Net income applicable to Piedmont for the three months ended December 31, 2022 included the following:
$101.1 million in gain on sale of real estate assets primarily associated with the previously announced sales of the Company's two Cambridge, MA properties during the fourth quarter;
$26.0 million of non-cash impairment losses associated with: (a) a partial write down of the Company's goodwill balance driven by the decline of the stock market and the Company's stock price during the fourth quarter; and (b) the write down of one property as a result of a reduction in the assumed hold period for that particular asset;
$2.2 million in severance costs associated with a reorganization of the Company's management structure during the fourth quarter; and,
A $6.8 million increase in interest expense driven by a higher average debt balance during the fourth quarter as a result of the acquisition of 1180 Peachtree Street in Atlanta during the third quarter and higher interest rates on the Company's variable rate debt. Other income for the fourth quarter also decreased approximately $2.5 million due to the payoff of notes receivable due from the purchaser of the Company's New Jersey Portfolio in March of 2022. This increase in interest expense and decrease in other income were partially offset by additional property operating income as a result of successful leasing, rental rate roll ups and asset recycling activity over the last twelve months.
Net loss applicable to Piedmont for the fourth quarter of 2021 did not include any gain on sale of real estate assets or severance costs, but did include a $41.0 million impairment loss on an asset subsequently sold during 2022.
Core FFO, which removes the impact of the gains on sale of real estate assets, impairment losses, and severance costs enumerated above, as well as depreciation and amortization expense, was $0.50 per diluted share for the fourth quarter of 2022 as compared to $0.51 per diluted share for the fourth quarter of 2021, with the $.01 per diluted share decrease primarily attributable to the $6.8 million, or $.06 per diluted share, increase in interest expense during the fourth quarter of 2022 noted above.

5


Leasing:
Three Months Ended December 31, 2022Year Ended December 31, 2022
# of transactions42 203 
Total leasing sf433,0002,153,000
New tenant leasing sf164,000763,000
Cash rent roll up6.5 %9.7 %
Accrual rent roll up11.5 %17.2 %
Leased Percentage as of period end86.7 %
The Company completed approximately 2.2 million square feet of leasing transactions during 2022, including the largest amount of annual new tenant leasing since 2018.
The largest new tenant lease completed during the fourth quarter was an approximately 28,000 square foot lease with Cadence Bank through 2035 at 999 Peachtree Street in Atlanta, GA.
The largest renewal and expansion lease completed during the fourth quarter totaled approximately 58,000 square feet with Institute for Justice through 2037 at Arlington Gateway in Arlington, VA.
The Company's scheduled lease expirations for 2023 are low, representing approximately 7% of its annualized lease revenue.
As of December 31, 2022, the Company had approximately 1.14 million square feet of executed leases for vacant space yet to commence or under rental abatement, representing approximately $33 million of future additional annual cash revenue.
The Company's leased percentage as of December 31, 2022 was 86.7%, up from 85.5% at December 31, 2021, and down 0.1% for the fourth quarter of 2022 due to the disposition of the 94% leased Cambridge, MA assets during the quarter.
Capital Markets:
During the fourth quarter, the Company completed the sale of its two, 94% leased, Cambridge, MA properties, One Brattle Square and 1414 Massachusetts, resulting in a $102.6 million gain on sale of real estate assets that is included in the Company's results of operations. The combined approximately $160 million in sales proceeds from the two transactions was used to pay off the outstanding balance on the Company’s $600 million line of credit, leaving the full capacity of the line available as of December 31, 2022.
Balance Sheet (including description of a subsequent event):
December 31, 2022December 31, 2021
Total Real Estate Assets (in millions)
$3,501$3,245
Total Assets (in millions)
$4,086$3,931
Total Debt (in millions)
$1,984$1,878
Weighted Average Cost of Debt3.89 %2.93 %
Debt-to-Gross Assets Ratio37.6 %37.1 %
Average Net Debt-to-Core EBITDA (ttm)6.0 x5.7 x
During the fourth quarter, the Company addressed its largest near-term debt maturity by amending its $200 million unsecured term loan facility to extend the final maturity date to June 2025. All other terms of the facility remain unchanged.
As previously announced, on January 31, 2023, the Company also entered into an additional new $215 million term loan facility priced at adjusted SOFR + 105 bps with a final extended maturity date of January 31, 2025. The Company intends to use the proceeds from the facility, along with a combination of cash on hand, proceeds from select property dispositions, and/or draws on its $600 million line of credit to repay its $350 million in Unsecured Senior Notes that mature June 1, 2023.


6


ESG and Operations:
During the fourth quarter, Piedmont received its inaugural GRESB® assessment, achieving an overall 4 star designation and “Green Star” recognition. The Company's annual ESG Report which includes Sustainability Accounting Standards Board (SASB) metrics and information that aligns with the Task Force on Climate-related Financial Disclosures (TCFD) framework is available on the Company's website at www.piedmontreit.com/ESG.

Commenting on annual and fourth quarter results, Brent Smith, Piedmont's President and Chief Executive Officer, said, "Despite facing the challenging operating and economic environment that unfolded during 2022, we were able to accomplish a number of key objectives for the year, including the execution of approximately 2.2 million square feet of leasing at meaningfully higher rental rates and the completion of a strategic Midtown Atlanta acquisition paired with several non-core dispositions that furthered our concentration in the Sunbelt to over two-thirds of our annualized lease revenue. We also strengthened our cash position, increasing liquidity ahead of our 2023 debt maturity and bolstering our balance sheet. The fourth quarter also reflects a continuation of these same annual themes: the completion of approximately 433,000 square feet of total leasing, 164,000 square feet of which related to new tenant leases; the completion of the disposition of our Cambridge, MA assets, resulting in the recognition of a nine-digit gain; and the extension of our most near-term debt maturity. Looking ahead, we are encouraged by the approximately 230,000 square feet of leasing already executed thus far in 2023, with over 100,000 square feet of that for new tenant space, demonstrating that leasing velocity has not wavered compared to last year."

First Quarter 2023 Dividend

As previously announced, on February 1, 2023, the board of directors of Piedmont declared a dividend for the first quarter of 2023 in the amount of $0.21 per share on its common stock to stockholders of record as of the close of business on February 24, 2023, payable on March 17, 2023.

Guidance for 2023

Due to higher projected interest costs, the Company is introducing the following guidance for the year ending December 31, 2023:

(in millions, except per share data)LowHigh
Net income($1)$1
Add:
Depreciation144 151 
Amortization80 84 
Deduct:
Gain on sale of real estate assets
Core FFO applicable to common stock$223$236
Core FFO per diluted share$1.80$1.90

The Company anticipates continued growth in its Property NOI and SSNOI during the forthcoming year ending December 31, 2023.
Executed leasing activity for 2023 is estimated to be in the range of 1.6 to 2.0 million square feet with year-end leased percentage anticipated to be between 87-88%, before the impacts of acquisition and disposition activity.
This guidance is based on information available to management as of the date of this release and reflects management's view of current market conditions, including the following specific assumptions and projections:
The largest impact on 2023 guidance is increased interest expense. With an over 400 bps increase in the Federal Funds Rate rates during 2022 and further increases projected during 2023, along with two new floating rate term loans priced at adjusted SOFR plus 100 and 105 bps, respectively, replacing $350 million of 10-year bonds maturing in June at an effective rate of 3.43%, projected interest expense for 2023 is estimated to increase approximately $27 million over 2022 total interest expense.
2023 guidance includes General and Administrative expenses of approximately $29 million.
No speculative acquisitions or dispositions are included in the above guidance. The Company will adjust guidance throughout the year as such transactions occur.
Note that actual results could differ materially from these estimates and individual quarters may fluctuate on both a cash basis and an accrual basis due to the timing of any future dispositions, significant 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), Adjusted Funds from Operations (AFFO), and Same Store Net Operating Income (Same Store NOI). Definitions of these non-GAAP measures are provided on page 34 and reconciliations are provided beginning on page 36.
Three Months Ended
Selected Operating Data12/31/20229/30/20226/30/20223/31/202212/31/2021
Percent leased (1)
86.7 %86.8 %87.0 %87.0 %85.5 %
Percent leased - economic (2)
81.1 %80.6 %80.7 %81.4 %81.5 %
Total revenues$147,208$144,100$136,309$136,149$138,164
Net income / (loss) applicable to Piedmont$75,569$3,331$7,966$59,964-$31,750
Net income / (loss) per share applicable to common stockholders - diluted$0.61$0.03$0.06$0.49-$0.26
Core EBITDA$82,186$78,805$75,591$76,956$77,130
Core FFO applicable to common stock$61,235$61,352$61,620$62,863$63,009
Core FFO per share - diluted$0.50$0.50$0.50$0.51$0.51
AFFO applicable to common stock$47,082$43,482$48,900$38,576$39,399
Gross regular dividends (3)
$25,918$25,913$25,912$25,899$26,048
Regular dividends per share (3)
$0.21$0.21$0.21$0.21$0.21
Same store net operating income - accrual basis (4)
-0.7 %0.3 %2.8 %2.5 %5.2 %
Same store net operating income - cash basis (4)
1.6 %-0.3 %1.8 %5.1 %5.8 %
Rental rate roll up / roll down - accrual rents (5)
11.5 %37.6 %12.2 %12.9 %6.9 %
Rental rate roll up / roll down - cash rents (5)
6.5 %33.1 %2.5 %4.8 %3.0 %
Selected Balance Sheet Data
Total real estate assets, net$3,500,624$3,572,591$3,139,587$3,147,362$3,245,311
Total assets$4,085,525$4,185,493$3,695,554$3,699,640$3,930,665
Total liabilities$2,236,270$2,388,162$1,879,891$1,869,166$2,143,242
Ratios & Information for Debt Holders
Core EBITDA margin (6)
55.8 %54.7 %55.5 %56.5 %55.8 %
Fixed charge coverage ratio (7)
3.8 x4.3 x5.1 x5.2 x5.2 x
Average net principal amount of debt to Core EBITDA - quarterly (8)
6.4 x6.2 x5.5 x5.9 x6.0 x
Total gross real estate assets (9)
$4,506,328$4,587,669$4,117,177$4,097,332$4,206,993
Total debt - GAAP$1,983,681$2,145,408$1,674,778$1,669,553$1,877,790
Net principal amount of debt (10)
$1,977,400$2,146,156$1,681,144$1,672,332$1,881,140
(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 reconciliations to net income and 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 (none during periods presented), capitalized interest and preferred dividends (none during periods presented). The Company had capitalized interest of $1,002,603 for the quarter ended December 31, 2022, $1,094,713 for the quarter ended September 30, 2022, $1,117,131 for the quarter ended June 30, 2022, $963,350 for the quarter ended March 31, 2022, and $994,675 for the quarter ended December 31, 2021.
(8)For the purposes of this calculation, we annualize the Core EBITDA for the quarter and use the average daily principal balance of debt outstanding during the quarter, less cash and cash equivalents and escrow deposits and restricted cash as of the end of the quarter.
(9)Total gross assets is defined as total assets with the add-back of accumulated depreciation and accumulated amortization related to real estate assets and accumulated amortization related to deferred lease costs.
(10)Net principal amount of debt is calculated and defined as the total principal amount of debt outstanding minus cash and cash equivalents and escrow deposits and restricted cash all as of the end of the period.
8


Piedmont Office Realty Trust, Inc.
Consolidated Balance Sheets
Unaudited (in thousands)
December 31, 2022September 30, 2022June 30, 2022March 31, 2022December 31, 2021
Assets:
Real estate, at cost:
Land assets$567,244 $578,722 $521,789 $521,789 $529,941 
Buildings and improvements3,682,000 3,751,722 3,389,650 3,351,807 3,374,903 
Buildings and improvements, accumulated depreciation(915,010)(926,357)(892,131)(863,306)(861,206)
Intangible lease asset205,074 212,248 164,194 173,017 178,157 
Intangible lease asset, accumulated amortization(90,694)(88,721)(85,459)(86,664)(83,777)
Construction in progress52,010 44,977 41,544 50,719 43,406 
Real estate assets held for sale, gross— — — — 80,586 
Real estate assets held for sale, accumulated depreciation & amortization— — — — (16,699)
Total real estate assets3,500,624 3,572,591 3,139,587 3,147,362 3,245,311 
Cash and cash equivalents16,536 10,653 6,397 7,211 7,419 
Tenant receivables, net of allowance for doubtful accounts4,762 7,796 5,164 3,095 2,995 
Straight line rent receivable172,019 173,122 168,797 164,776 162,632 
Notes receivable— — — — 118,500 
Escrow deposits and restricted cash3,064 2,191 1,459 1,457 1,441 
Prepaid expenses and other assets17,152 23,925 26,955 21,318 20,485 
Goodwill82,937 98,918 98,918 98,918 98,918 
Interest rate swap4,183 3,760 996 — — 
Deferred lease costs, gross505,979 510,936 459,038 466,234 469,671 
Deferred lease costs, accumulated amortization(221,731)(218,399)(211,757)(210,731)(205,100)
Other assets held for sale, gross— — — — 9,389 
Other assets held for sale, accumulated amortization— — — — (996)
Total assets$4,085,525 $4,185,493 $3,695,554 $3,699,640 $3,930,665 
Liabilities:
Unsecured debt, net of discount$1,786,681 $1,948,408 $1,674,778 $1,669,553 $1,877,790 
Secured debt197,000 197,000 — — — 
Accounts payable, accrued expenses, and accrued capital expenditures135,663 111,262 99,724 83,609 140,501 
Deferred income59,977 70,798 72,422 79,493 80,686 
Intangible lease liabilities, less accumulated amortization56,949 60,694 32,967 36,077 39,341 
Interest rate swaps— — — 434 4,924 
Total liabilities2,236,270 2,388,162 1,879,891 1,869,166 2,143,242 
Stockholders' equity:
Common stock1,234 1,234 1,234 1,233 1,231 
Additional paid in capital3,711,005 3,709,234 3,707,833 3,706,207 3,701,798 
Cumulative distributions in excess of earnings(1,855,893)(1,905,544)(1,882,962)(1,865,016)(1,899,081)
Other comprehensive loss(8,679)(9,194)(12,050)(13,573)(18,154)
Piedmont stockholders' equity1,847,667 1,795,730 1,814,055 1,828,851 1,785,794 
Non-controlling interest1,588 1,601 1,608 1,623 1,629 
Total stockholders' equity1,849,255 1,797,331 1,815,663 1,830,474 1,787,423 
Total liabilities, redeemable common stock and stockholders' equity$4,085,525 $4,185,493 $3,695,554 $3,699,640 $3,930,665 
Common stock outstanding at end of period123,440 123,395 123,390 123,331 123,077 

9


Piedmont Office Realty Trust, Inc.
Consolidated Statements of Income
Unaudited (in thousands except for per share data)
Three Months Ended
12/31/20229/30/20226/30/20223/31/202212/31/2021
Revenues:
Rental income (1)
$117,148 $114,280 $110,244 $109,732 $111,203 
Tenant reimbursements (1)
24,958 25,292 21,907 22,180 23,110 
Property management fee revenue395 303 326 651 576 
Other property related income4,707 4,225 3,832 3,586 3,275 
147,208 144,100 136,309 136,149 138,164 
Expenses:
Property operating costs59,763 59,039 53,634 53,622 56,083 
Depreciation34,788 34,941 32,372 31,515 31,952 
Amortization23,915 23,290 21,480 22,252 22,014 
Impairment loss (2)
25,981 — — — 41,000 
General and administrative7,915 6,590 7,027 7,595 7,835 
152,362 123,860 114,513 114,984 158,884 
Other income / (expense):
Interest expense(20,739)(17,244)(13,775)(13,898)(13,917)
Other income / (expense)408 335 (57)2,024 2,882 
Gain / (loss) on sale of real estate (2)
101,055 — 50,673 — 
Net income / (loss)75,570 3,331 7,965 59,964 (31,755)
Less: Net (income) / loss applicable to noncontrolling interest(1)— — 
Net income / (loss) applicable to Piedmont$75,569 $3,331 $7,966 $59,964 $(31,750)
Weighted average common shares outstanding - diluted123,633 123,697 123,679 123,510 123,742 
Net income / (loss) per share applicable to common stockholders - diluted$0.61 $0.03 $0.06 $0.49 $(0.26)
Common stock outstanding at end of period123,440 123,395 123,390 123,331 123,077 









(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 combine amounts presented on the rental income line with amounts presented on the tenant reimbursements line and present that aggregated figure on one line entitled "rental and tenant reimbursement revenue." The amounts presented on this line were determined based upon the Company's interpretation of the rental charges and billing method provisions in each of the Company's lease documents.
(2)
The gain on sale of real estate reflected in the fourth quarter of 2022 was primarily related to the sales of One Brattle Square and 1414 Massachusetts Avenue, both in Cambridge, MA. The impairment loss reflected in the fourth quarter of 2022 was related to (a) a partial write down of the Company's goodwill balance driven by the decline of the stock market and the Company's stock price during the fourth quarter; and (b) the write down of one property as a result of a reduction in the assumed hold period for that particular asset. 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 EndedTwelve Months Ended
12/31/202212/31/2021Change ($)Change (%)12/31/202212/31/2021Change ($)Change (%)
Revenues:
Rental income (1)
$117,148 $111,203 $5,945 5.3 %$451,404 $427,174 $24,230 5.7 %
Tenant reimbursements (1)
24,958 23,110 1,848 8.0 %94,337 87,445 6,892 7.9 %
Property management fee revenue395 576 (181)(31.4)%1,675 2,496 (821)(32.9)%
Other property related income4,707 3,275 1,432 43.7 %16,350 11,595 4,755 41.0 %
147,208 138,164 9,044 6.5 %563,766 528,710 35,056 6.6 %
Expenses:
Property operating costs59,763 56,083 (3,680)(6.6)%226,058 210,932 (15,126)(7.2)%
Depreciation34,788 31,952 (2,836)(8.9)%133,616 120,615 (13,001)(10.8)%
Amortization23,915 22,014 (1,901)(8.6)%90,937 85,992 (4,945)(5.8)%
Impairment loss (2)
25,981 41,000 15,019 36.6 %25,981 41,000 15,019 36.6 %
General and administrative7,915 7,835 (80)(1.0)%29,127 30,252 1,125 3.7 %
152,362 158,884 6,522 4.1 %505,719 488,791 (16,928)(3.5)%
Other income / (expense):
Interest expense(20,739)(13,917)(6,822)(49.0)%(65,656)(51,292)(14,364)(28.0)%
Other income / (expense)408 2,882 (2,474)(85.8)%2,710 10,206 (7,496)(73.4)%
Gain / (loss) on sale of real estate (3)
101,055 — 101,055 100.0 %151,729 — 151,729 100.0 %
Net income / (loss)75,570 (31,755)107,325 338.0 %146,830 (1,167)147,997 12,681.8 %
Less: Net (income) / loss applicable to noncontrolling interest(1)(6)(120.0)%— 14 (14)(100.0)%
Net income / (loss) applicable to Piedmont$75,569 $(31,750)$107,319 338.0 %$146,830 $(1,153)$147,983 12,834.6 %
Weighted average common shares outstanding - diluted123,633 123,742 123,524 123,978 
Net income / (loss) per share applicable to common stockholders - diluted$0.61 $(0.26)$1.19 $(0.01)
Common stock outstanding at end of period123,440 123,077 123,440 123,077 








(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 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 impairment loss for the three months and the twelve months ended December 31, 2022 was related to (a) a partial write down of the Company's goodwill balance driven by the decline of the stock market and the Company's stock price during the fourth quarter; and (b) the write down of one property as a result of a reduction in the assumed hold period for that particular asset. The impairment loss for the three months and the twelve months ended December 31, 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.
(3)The gain on sale of real estate for the three months ended December 31, 2022 was primarily related to the sales of One Brattle Square and 1414 Massachusetts Avenue, both in Cambridge, MA. The gain on sale of real estate for the twelve months ended December 31, 2022 was primarily related to the sales of One Brattle Square and 1414 Massachusetts Avenue, both in Cambridge, MA, and 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 EndedTwelve Months Ended
12/31/202212/31/202112/31/202212/31/2021
GAAP net income / (loss) applicable to common stock$75,569 $(31,750)$146,830 $(1,153)
Depreciation (1) (2)
34,587 31,756 132,849 119,629 
Amortization (1)
23,905 22,003 90,891 85,946 
Impairment loss
25,981 41,000 25,981 41,000 
Loss / (gain) on sale of properties
(101,055)— (151,729)— 
NAREIT funds from operations applicable to common stock58,987 63,009 244,822 245,422 
Adjustments:
Severance costs associated with fourth quarter 2022 management reorganization2,248 — 2,248 — 
Core funds from operations applicable to common stock61,235 63,009 247,070 245,422 
Adjustments:
Amortization of debt issuance costs, fair market adjustments on notes payable, and discount on senior notes926 781 3,389 2,857 
Depreciation of non real estate assets191 187 728 949 
Straight-line effects of lease revenue (1)
(2,356)(1,939)(11,230)(10,566)
Stock-based compensation adjustments1,717 2,772 4,833 7,924 
Amortization of lease-related intangibles (1)
(3,713)(3,098)(13,426)(11,290)
Non-incremental capital expenditures (3)
   Building/Construction/Development(3,967)(7,660)(19,118)(33,410)
   Tenant Improvements(2,934)(10,223)(20,989)(28,892)
   Leasing Costs(4,017)(4,430)(13,217)(12,860)
Adjusted funds from operations applicable to common stock$47,082 $39,399 $178,040 $160,134 
Weighted average common shares outstanding - diluted123,633 124,412 123,524 124,455 
Funds from operations per share (diluted)$0.48 $0.51 $1.98 $1.97 
Core funds from operations per share (diluted)$0.50 $0.51 $2.00 $1.97 
Common stock outstanding at end of period123,440 123,077 123,440 123,077 

(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 EndedTwelve Months Ended
12/31/202212/31/202112/31/202212/31/2021
Net income / (loss) applicable to Piedmont$75,569 $(31,750)$146,830 $(1,153)
Net income / (loss) applicable to noncontrolling interest(5)— (14)
Interest expense
20,739 13,917 65,656 51,292 
Depreciation (1)
34,778 31,943 133,577 120,578 
Amortization (1)
23,905 22,003 90,891 85,946 
Depreciation and amortization attributable to noncontrolling interests20 22 85 84 
Impairment loss
25,981 41,000 25,981 41,000 
(Gain) / loss on sale of properties
(101,055)— (151,729)— 
EBITDAre
79,938 77,130 311,291 297,733 
Severance costs associated with fourth quarter 2022 management reorganization2,248 — 2,248 — 
Core EBITDA (2)
82,186 77,130 313,539 297,733 
General & administrative expenses
5,668 7,835 26,879 30,252 
Non-cash general reserve for uncollectible accounts (3)
(1,000)(965)(3,000)(553)
Management fee revenue (4)
(261)(323)(1,004)(1,269)
Other (income) / expense (1) (5)
(193)(2,667)(1,847)(9,089)
Straight-line effects of lease revenue (1)
(2,356)(1,939)(11,230)(10,566)
Straight-line effects of lease revenue attributable to noncontrolling interests(4)(10)
Amortization of lease-related intangibles (1)
(3,713)(3,098)(13,426)(11,290)
Property net operating income (cash basis)80,327 75,974 309,901 295,221 
Deduct net operating (income) / loss from:
Acquisitions (6)
(7,928)(2,460)(18,720)(2,460)
Dispositions (7)
(2,342)(4,555)(10,714)(17,572)
Other investments (8)
224 217 763 841 
Same store net operating income (cash basis)$70,281 $69,176 $281,230 $276,030 
Change period over period1.6 %N/A1.9 %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 December 31, 2022, Piedmont recognized $1.0 million of termination income, as compared with $0.2 million during the same period in 2021. During the twelve months ended December 31, 2022, Piedmont recognized $2.1 million of termination income, as compared with $3.0 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 in the fourth quarter of 2021, and 1180 Peachtree Street in Atlanta, GA, purchased in the third quarter of 2022.
(7)Dispositions include Two Pierce Place in Itasca, IL and 225 and 235 Presidential Way in Woburn, MA, sold in the first quarter of 2022, and One Brattle Square and 1414 Massachusetts Avenue in Cambridge, MA, sold in the fourth quarter of 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 EndedTwelve Months Ended
12/31/202212/31/202112/31/202212/31/2021