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~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934

For the Transition Period From Toto

Commission file number 001-34626

Piedmont Office Realty Trust, Inc.

(Exact name of registrant as specified in its charter)

____________________________________________________


Maryland						58-2328421
(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 class

Trading Symbol(s)

Name of exchange on which registered

Common Stock, $0.01 par value

PDM

New 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 filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller 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:~~October 27, 2023:

~~123,395,381~~123,713,423 shares

Table of Contents

FORM 10-Q

PIEDMONT OFFICE REALTY TRUST, INC.

TABLE OF CONTENTS


			Page No.
PART I	Financial Information

	Item 1.	Consolidated Financial Statements	5

		Consolidated Balance Sheets—September 30, ~~2022~~2023 (Unaudited) and December 31, ~~2021~~2022	6

		Consolidated Statements of ~~Income~~Operations (Unaudited) for the Three and ~~Nine~~ N ine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	7

		Consolidated Statements of Comprehensive ~~Income~~Income/(Loss) (Unaudited) for the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	8

		Consolidated Statements of Stockholders' Equity (Unaudited) for the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	9

		Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	11

		Condensed Notes to Consolidated Financial Statements (Unaudited)	12

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2624

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4240

	Item 4.	Controls and Procedures	4340

PART II.	Other Information

	Item 1.	Legal Proceedings	4442

	Item 1A.	Risk Factors	4442

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4442

	Item 3.	Defaults Upon Senior Securities	4442

	Item 4.	Mine Safety Disclosures	4442

	Item 5.	Other Information	4442

	Item 6.	Exhibits	4543

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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,~~financing, and operating objectives; discussions regarding future dividends and share repurchases; and discussions regarding potential acquisition and disposition activity and 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);~~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~~cybersecurity incidents, including cybersecurity incidents against us or any of our properties or tenants, or a deficiency in our identification, assessment or management of cybersecurity ~~which could negatively impact~~threats impacting our ~~business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships;~~operations;

•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")~~Risks associated with incurring mortgage 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~~other indebtedness, including changing capital reserve requirements on our lenders and rapidly rising interest rates for new debt financings;

•A downgrade in our credit rating, which could, among other effects, trigger an increase in the ~~public bond markets could impact~~stated rate of one or more of our ~~ability to finance properties or refinance existing~~unsecured debt ~~or significantly increase operating/financing costs;~~instruments;

~~Table of Contents~~

•The effect of future offerings of debt or equity securities on the value of our common stock;

Table of Contents

•Additional risks and costs associated with inflation and continuing increases in the rate of inflation, including the ~~possibility~~impact of a ~~recession that could negatively impact our operations and the operations of our tenants and their ability to pay rent;~~possible recession;

•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;~~crises; and

•Other factors, including the risk factor described in Item 1A. Risk Factors of this Quarterly Report on Form 10-Q, as well as the risk factors discussed under Item 1A. of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

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~~Annualized Lease Revenue ("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.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.

The information presented in the accompanying consolidated balance sheets and related consolidated statements of ~~income,~~operations, 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.~~2022. Piedmont’s results of operations for the nine months ended September 30, ~~2022~~2023 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)					(Unaudited)
		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Assets:	Assets:					Assets:
Real estate assets, at cost:	Real estate assets, at cost:					Real estate assets, at cost:
Land	Land	$	578,722	$	529,941	Land	$	567,244	$	567,244
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
Buildings and improvements, less accumulated depreciation of $1,013,019 and $915,010 as of September 30, 2023 and December 31, 2022, respectively						Buildings and improvements, less accumulated depreciation of $1,013,019 and $915,010 as of September 30, 2023 and December 31, 2022, respectively	2,769,366		2,766,990
Intangible lease assets, less accumulated amortization of $86,197 and $90,694 as of September 30, 2023 and December 31, 2022, respectively						Intangible lease assets, less accumulated amortization of $86,197 and $90,694 as of September 30, 2023 and December 31, 2022, respectively	91,387		114,380
Construction in progress	Construction in progress	44,977		43,406		Construction in progress	74,579		52,010
Real estate assets held for sale, net		—		63,887

Total real estate assets	Total real estate assets	3,572,591		3,245,311		Total real estate assets	3,502,576		3,500,624

Cash and cash equivalents	Cash and cash equivalents	10,653		7,419		Cash and cash equivalents	5,044		16,536
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
Tenant receivables, net of allowance for doubtful accounts of $0 and $1,000 as of September 30, 2023 and December 31, 2022, respectively						Tenant receivables, net of allowance for doubtful accounts of $0 and $1,000 as of September 30, 2023 and December 31, 2022, respectively	8,806		4,762
Straight-line rent receivables	Straight-line rent receivables	173,122		162,632		Straight-line rent receivables	181,843		172,019
Notes receivable		—		118,500

Restricted cash and escrows	Restricted cash and escrows	2,191		1,441		Restricted cash and escrows	5,983		3,064
Prepaid expenses and other assets	Prepaid expenses and other assets	23,925		20,485		Prepaid expenses and other assets	26,156		17,152
Goodwill	Goodwill	98,918		98,918		Goodwill	71,980		82,937
Interest rate swaps	Interest rate swaps	3,760		—		Interest rate swaps	5,841		4,183
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
Deferred lease costs, less accumulated amortization of $217,804 and $221,731 as of September 30, 2023 and December 31, 2022, respectively						Deferred lease costs, less accumulated amortization of $217,804 and $221,731 as of September 30, 2023 and December 31, 2022, respectively	265,549		284,248

Total assets	Total assets	$	4,185,493	$	3,930,665	Total assets	$	4,073,778	$	4,085,525
Liabilities:	Liabilities:					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
Unsecured debt, net of discount and unamortized debt issuance costs of $18,556 and $13,319 as of September 30, 2023 and December 31, 2022, respectively						Unsecured debt, net of discount and unamortized debt issuance costs of $18,556 and $13,319 as of September 30, 2023 and December 31, 2022, respectively	$	1,853,598	$	1,786,681
Secured debt	Secured debt	197,000		—		Secured debt	196,721		197,000
Accounts payable, accrued expenses and accrued capital expenditures	Accounts payable, accrued expenses and accrued capital expenditures	111,262		114,453		Accounts payable, accrued expenses and accrued capital expenditures	120,579		110,306
Dividends payable	Dividends payable	—		26,048		Dividends payable	—		25,357
Deferred income	Deferred income	70,798		80,686		Deferred income	89,990		59,977
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
Intangible lease liabilities, less accumulated amortization of $36,985 and $36,423 as of September 30, 2023 and December 31, 2022, respectively						Intangible lease liabilities, less accumulated amortization of $36,985 and $36,423 as of September 30, 2023 and December 31, 2022, respectively	45,825		56,949

Total liabilities	Total liabilities	2,388,162		2,143,242		Total liabilities	2,306,713		2,236,270
Commitments and Contingencies (Note 7)	Commitments and Contingencies (Note 7)	—		—		Commitments and Contingencies (Note 7)	—		—
Stockholders’ Equity:	Stockholders’ Equity:					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
Shares-in-trust, 150,000,000 shares authorized; none outstanding as of September 30, 2023 or December 31, 2022						Shares-in-trust, 150,000,000 shares authorized; none outstanding as of September 30, 2023 or December 31, 2022	—		—
Preferred stock, no par value, 100,000,000 shares authorized; none outstanding as of September 30, 2023 or December 31, 2022						Preferred stock, no par value, 100,000,000 shares authorized; none outstanding as of September 30, 2023 or December 31, 2022	—		—
Common stock, $0.01 par value, 750,000,000 shares authorized; 123,696,475 and 123,439,558 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively						Common stock, $0.01 par value, 750,000,000 shares authorized; 123,696,475 and 123,439,558 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	1,237		1,234
Additional paid-in capital	Additional paid-in capital	3,709,234		3,701,798		Additional paid-in capital	3,714,629		3,711,005
Cumulative distributions in excess of earnings	Cumulative distributions in excess of earnings	(1,905,544)		(1,899,081)		Cumulative distributions in excess of earnings	(1,943,652)		(1,855,893)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(9,194)		(18,154)		Accumulated other comprehensive loss	(6,718)		(8,679)
Piedmont stockholders’ equity	Piedmont stockholders’ equity	1,795,730		1,785,794		Piedmont stockholders’ equity	1,765,496		1,847,667
Noncontrolling interest	Noncontrolling interest	1,601		1,629		Noncontrolling interest	1,569		1,588

Total stockholders’ equity	Total stockholders’ equity	1,797,331		1,787,423		Total stockholders’ equity	1,767,065		1,849,255
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	4,185,493	$	3,930,665	Total liabilities and stockholders’ equity	$	4,073,778	$	4,085,525

See accompanying notes

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PIEDMONT OFFICE REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS (UNAUDITED)

(in thousands, except for share and per share amounts)


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30,				September 30,					September 30,				September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues:	Revenues:									Revenues:

Rental and tenant reimbursement revenue	Rental and tenant reimbursement revenue	$	139,572	$	127,427	$	403,635	$	380,306	Rental and tenant reimbursement revenue	$	141,534	$	139,572	$	415,866	$	403,635
Property management fee revenue	Property management fee revenue	303		626		1,280		1,920		Property management fee revenue	396		303		1,340		1,280
Other property related income	Other property related income	4,225		3,018		11,643		8,320		Other property related income	5,056		4,225		15,219		11,643
		144,100		131,071		416,558		390,546			146,986		144,100		432,425		416,558
Expenses:	Expenses:									Expenses:
Property operating costs	Property operating costs	59,039		51,767		166,295		154,849		Property operating costs	59,847		59,039		176,006		166,295
Depreciation	Depreciation	34,941		30,562		98,828		88,663		Depreciation	38,150		34,941		110,422		98,828
Amortization	Amortization	23,290		20,373		67,022		63,978		Amortization	20,160		23,290		63,524		67,022

Goodwill impairment charge										Goodwill impairment charge	10,957		—		10,957		—
General and administrative	General and administrative	6,590		6,955		21,212		22,417		General and administrative	7,043		6,590		22,013		21,212
		123,860		109,657		353,357		329,907			136,157		123,860		382,922		353,357

Other income (expense):	Other income (expense):									Other income (expense):
Interest expense	Interest expense	(17,244)		(12,450)		(44,917)		(37,375)		Interest expense	(27,361)		(17,244)		(72,827)		(44,917)
Other income	Other income	335		2,337		2,302		7,324		Other income	351		335		3,794		2,302

Loss on early extinguishment of debt										Loss on early extinguishment of debt	(820)		—		(820)		—
Gain on sale of real estate assets	Gain on sale of real estate assets	—		—		50,674		—		Gain on sale of real estate assets	—		—		—		50,674
		(16,909)		(10,113)		8,059		(30,051)			(27,830)		(16,909)		(69,853)		8,059

Net income		3,331		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
Net income/(loss)										Net income/(loss)	(17,001)		3,331		(20,350)		71,260
Net loss/(income) applicable to noncontrolling interest										Net loss/(income) applicable to noncontrolling interest	(1)		—		(7)		1
Net income/(loss) applicable to Piedmont										Net income/(loss) applicable to Piedmont	$	(17,002)	$	3,331	$	(20,357)	$	71,261

Per share information – basic and diluted:	Per share information – basic and diluted:									Per share information – basic and diluted:

Net income applicable to common stockholders		$	0.03	$	0.09	$	0.58	$	0.25
Net income/(loss) applicable to common stockholders										Net income/(loss) applicable to common stockholders	$	(0.14)	$	0.03	$	(0.16)	$	0.58
Weighted-average common shares outstanding – basic	Weighted-average common shares outstanding – basic	123,395,381		124,135,556		123,329,626		124,056,908		Weighted-average common shares outstanding – basic	123,696,475		123,395,381		123,639,797		123,329,626
Weighted-average common shares outstanding – diluted	Weighted-average common shares outstanding – diluted	123,697,455		124,627,409		123,630,501		124,471,786		Weighted-average common shares outstanding – diluted	123,696,475		123,697,455		123,639,797		123,630,501

See accompanying notes

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PIEDMONT OFFICE REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME~~INCOME/(LOSS) (UNAUDITED)

(in thousands)

Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
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 income 2,856 1,332 8,960 4,064
Comprehensive income applicable to Piedmont $ 6,187 $ 12,638 $ 80,221 $ 34,661


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022

Net income/(loss) applicable to Piedmont		$	(17,002)		$	3,331		$	(20,357)		$	71,261
Other comprehensive income:
Effective portion of gain on derivative instruments that are designated and qualify as cash flow hedges (See Note 4)	1,248			2,662			4,270			7,507
Plus: Reclassification of net loss/(gain) included in net income (See Note 4)	(989)			194			(2,309)			1,453

Other comprehensive income		259			2,856			1,961			8,960
Comprehensive income/(loss) applicable to Piedmont		$	(16,743)		$	6,187		$	(18,396)		$	80,221

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~~2023 AND ~~2021~~2022

(in thousands, except per share amounts)


																Common Stock			Additional Paid-In Capital		Cumulative Distributions in Excess of Earnings		Accumulated Other Comprehensive Income/(Loss)		Non- controlling Interest		Total Stockholders’ Equity
																Shares	Amount
Balance, June 30, 2023															Balance, June 30, 2023	123,692	$	1,237	$	3,712,688	$	(1,911,188)	$	(6,977)	$	1,574	$	1,797,334

Dividends to common stockholders ($0.125 per share) and stockholders of subsidiaries															Dividends to common stockholders ($0.125 per share) and stockholders of subsidiaries	—	—		—		(15,462)		—		(6)		(15,468)
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax															Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax	4	—		1,941		—		—		—		1,941
Net income applicable to noncontrolling interest															Net income applicable to noncontrolling interest	—	—		—		—		—		1		1
Net loss applicable to Piedmont															Net loss applicable to Piedmont	—	—		—		(17,002)		—		—		(17,002)
Other comprehensive income															Other comprehensive income	—	—		—		—		259		—		259
Balance, September 30, 2023															Balance, September 30, 2023	123,696	$	1,237	$	3,714,629	$	(1,943,652)	$	(6,718)	$	1,569	$	1,767,065

		Common Stock			Additional Paid-In Capital		Cumulative Distributions in Excess of Earnings		Accumulated Other Comprehensive Income/(Loss)		Non- controlling Interest		Total Stockholders’ Equity			Common Stock			Additional Paid-In Capital		Cumulative Distributions in Excess of Earnings		Accumulated Other Comprehensive Income/(Loss)		Non- controlling Interest		Total Stockholders’ Equity
		Shares	Amount													Shares	Amount
Balance, June 30, 2022	Balance, June 30, 2022	123,390	$	1,234	$	3,707,833	$	(1,882,962)	$	(12,050)	$	1,608	$	1,815,663	Balance, June 30, 2022	123,390	$	1,234	$	3,707,833	$	(1,882,962)	$	(12,050)	$	1,608	$	1,815,663

Costs of issuance of common stock	Costs of issuance of common stock	—	—		(461)		—		—		—		(461)		Costs of issuance of common stock	—	—		(461)		—		—		—		(461)
Dividends to common stockholders ($0.21 per share) and stockholders of subsidiaries	Dividends to common stockholders ($0.21 per share) and stockholders of subsidiaries	—	—		—		(25,913)		—		(7)		(25,920)		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	Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax	5	—		1,862		—		—		—		1,862		Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax	5	—		1,862		—		—		—		1,862

Net income applicable to Piedmont	Net income applicable to Piedmont	—	—		—		3,331		—		—		3,331		Net income applicable to Piedmont	—	—		—		3,331		—		—		3,331
Other comprehensive income	Other comprehensive income	—	—		—		—		2,856		—		2,856		Other comprehensive income	—	—		—		—		2,856		—		2,856
Balance, September 30, 2022	Balance, September 30, 2022	123,395	$	1,234	$	3,709,234	$	(1,905,544)	$	(9,194)	$	1,601	$	1,797,331	Balance, September 30, 2022	123,395	$	1,234	$	3,709,234	$	(1,905,544)	$	(9,194)	$	1,601	$	1,797,331

		Common Stock			Additional Paid-In Capital		Cumulative Distributions in Excess of Earnings		Accumulated Other Comprehensive Income/(Loss)		Non- controlling Interest		Total Stockholders’ Equity
		Shares	Amount
Balance, June 30, 2021		124,132	$	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, 2021		124,136	$	1,241	$	3,700,208	$	(1,822,441)	$	(20,036)	$	1,647	$	1,860,619

See accompanying notes

Table of Contents

PIEDMONT OFFICE REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, ~~2022~~2023 AND ~~2021~~2022

(in thousands, except per share amounts)

Common Stock Additional Paid-In Capital Cumulative Distributions in Excess of Earnings Accumulated
Other
Comprehensive
Income/(Loss) Non- controlling Interest Total Stockholders’ Equity
Shares Amount
Balance, December 31, 2021 123,077 $ 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 tax 318 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, 2022 123,395 $ 1,234 $ 3,709,234 $ (1,905,544) $ (9,194) $ 1,601 $ 1,797,331


	Common Stock			Additional Paid-In Capital		Cumulative Distributions in Excess of Earnings		Accumulated Other Comprehensive Income/(Loss)		Non- controlling Interest		Total Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2022	123,440	$	1,234	$	3,711,005	$	(1,855,893)	$	(8,679)	$	1,588	$	1,849,255


Dividends to common stockholders ($0.545 per share) and stockholders of subsidiaries	—	—		—		(67,402)		—		(26)		(67,428)
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax	256	3		3,624		—		—		—		3,627
Net income applicable to noncontrolling interest	—	—		—		—		—		7		7
Net loss applicable to Piedmont	—	—		—		(20,357)		—		—		(20,357)
Other comprehensive income	—	—		—		—		1,961		—		1,961
Balance, September 30, 2023	123,696	$	1,237	$	3,714,629	$	(1,943,652)	$	(6,718)	$	1,569	$	1,767,065

Common Stock Additional Paid-In Capital Cumulative Distributions in Excess of Earnings Accumulated
Other
Comprehensive
Income/(Loss) Non- controlling Interest Total Stockholders’ Equity
Shares Amount
Balance, December 31, 2020 123,839 $ 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 tax 297 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, 2021 124,136 $ 1,241 $ 3,700,208 $ (1,822,441) $ (20,036) $ 1,647 $ 1,860,619


	Common Stock			Additional Paid-In Capital		Cumulative Distributions in Excess of Earnings		Accumulated Other Comprehensive Income/(Loss)		Non- controlling Interest		Total Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2021	123,077	$	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 tax	318	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, 2022	123,395	$	1,234	$	3,709,234	$	(1,905,544)	$	(9,194)	$	1,601	$	1,797,331

See accompanying notes

Table of Contents

PIEDMONT OFFICE REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


		Nine Months Ended					Nine Months Ended
		September 30,					September 30,
		2022		2021			2023		2022
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income		$	71,260	$	30,588
Net income/(loss)						Net income/(loss)	$	(20,350)	$	71,260

Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:						Adjustments to reconcile net income/(loss) to net cash provided by operating activities:

Depreciation	Depreciation	98,828		88,663		Depreciation	110,422		98,828
Amortization of debt issuance costs inclusive of settled interest rate swaps	Amortization of debt issuance costs inclusive of settled interest rate swaps	2,738		2,396		Amortization of debt issuance costs inclusive of settled interest rate swaps	4,263		2,738

Other amortization	Other amortization	60,457		58,743		Other amortization	55,897		60,457

General reserve/ (reversal) for uncollectible accounts		(2,000)		412
Goodwill impairment charge						Goodwill impairment charge	10,957		—
Loss on early extinguishment of debt						Loss on early extinguishment of debt	287		—
Reversal of general reserve for uncollectible accounts						Reversal of general reserve for uncollectible accounts	(1,000)		(2,000)
Stock compensation expense	Stock compensation expense	6,880		8,201		Stock compensation expense	6,029		6,880

Gain on sale of real estate assets	Gain on sale of real estate assets	(50,674)		—		Gain on sale of real estate assets	—		(50,674)

Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Increase in tenant and straight-line rent receivables	Increase in tenant and straight-line rent receivables	(14,760)		(13,448)		Increase in tenant and straight-line rent receivables	(13,015)		(14,760)

Increase in prepaid expenses and other assets	Increase in prepaid expenses and other assets	(933)		(2,815)		Increase in prepaid expenses and other assets	(8,789)		(933)
Cash received upon settlement of interest rate swaps		—		623

Increase in accounts payable and accrued expenses	Increase in accounts payable and accrued expenses	4,571		342		Increase in accounts payable and accrued expenses	16,606		4,571
Decrease in deferred income	Decrease in deferred income	(12,383)		(8,671)		Decrease in deferred income	(776)		(12,383)
Net cash provided by operating activities	Net cash provided by operating activities	163,984		165,034		Net cash provided by operating activities	160,531		163,984
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Acquisition of real estate assets, net of related debt assumed, and intangibles	Acquisition of real estate assets, net of related debt assumed, and intangibles	(270,899)		—		Acquisition of real estate assets, net of related debt assumed, and intangibles	—		(270,899)
Capitalized expenditures	Capitalized expenditures	(95,507)		(83,477)		Capitalized expenditures	(113,392)		(95,507)

Net sales proceeds from wholly-owned properties	Net sales proceeds from wholly-owned properties	143,596		—		Net sales proceeds from wholly-owned properties	—		143,596

Proceeds from notes receivable	Proceeds from notes receivable	118,500		—		Proceeds from notes receivable	—		118,500
Deferred lease costs paid	Deferred lease costs paid	(16,042)		(10,324)		Deferred lease costs paid	(23,603)		(16,042)
Net cash used in investing activities	Net cash used in investing activities	(120,352)		(93,801)		Net cash used in investing activities	(136,995)		(120,352)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Debt issuance and other costs paid	Debt issuance and other costs paid	(194)		(454)		Debt issuance and other costs paid	(1,720)		(194)
Proceeds from debt	Proceeds from debt	761,420		526,580		Proceeds from debt	1,112,203		761,420
Repayments of debt	Repayments of debt	(693,000)		(484,610)		Repayments of debt	(1,048,125)		(693,000)

Costs of issuance of common stock	Costs of issuance of common stock	(311)		(55)		Costs of issuance of common stock	—		(311)
Value of shares withheld for payment of taxes related to employee stock compensation	Value of shares withheld for payment of taxes related to employee stock compensation	(3,764)		(3,050)		Value of shares withheld for payment of taxes related to employee stock compensation	(1,681)		(3,764)
Repurchases of common stock as part of announced plan		—		(685)

Dividends paid	Dividends paid	(103,799)		(103,891)		Dividends paid	(92,786)		(103,799)
Net cash used in financing activities	Net cash used in financing activities	(39,648)		(66,165)		Net cash used in financing activities	(32,109)		(39,648)
Net increase in cash, cash equivalents, and restricted cash and escrows		3,984		5,068
Net (decrease)/increase in cash, cash equivalents, and restricted cash and escrows						Net (decrease)/increase in cash, cash equivalents, and restricted cash and escrows	(8,573)		3,984
Cash, cash equivalents, and restricted cash and escrows, beginning of period	Cash, cash equivalents, and restricted cash and escrows, beginning of period	8,860		9,214		Cash, cash equivalents, and restricted cash and escrows, beginning of period	19,600		8,860
Cash, cash equivalents, and restricted cash and escrows, end of period	Cash, cash equivalents, and restricted cash and escrows, end of period	$	12,844	$	14,282	Cash, cash equivalents, and restricted cash and escrows, end of period	$	11,027	$	12,844

See accompanying notes

Table of Contents

PIEDMONT OFFICE REALTY TRUST, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, ~~2022~~2023

(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.~~major U.S. Sunbelt markets. 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,~~2023, Piedmont owned 5351 in-service ~~Class A~~ office properties and one redevelopment asset, primarily located ~~within the Sunbelt.~~in major U.S. Sunbelt office markets. As of September 30, ~~2022,~~2023, the in-service ~~portfolio~~office properties comprised approximately ~~16.8~~16.6 million square feet (unaudited) and ~~was 86.8%~~were 86.7% leased.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The consolidated financial statements of Piedmont ~~have been~~are 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.~~2022.

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~~judgments regarding the recoverability of goodwill, and the assessment of the ~~collectibility~~collectability 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.

Table of Contents

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~~operations for the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, as follows (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Fixed payments	Fixed payments	$	114,280	$	105,592	$	334,256	$	315,971	Fixed payments	$	115,250	$	114,280	$	340,048	$	334,256
Variable payments	Variable payments	25,292		21,835		69,379		64,335		Variable payments	26,284		25,292		75,818		69,379
Total Rental and Tenant Reimbursement Revenue	Total Rental and Tenant Reimbursement Revenue	$	139,572	$	127,427	$	403,635	$	380,306	Total Rental and Tenant Reimbursement Revenue	$	141,534	$	139,572	$	415,866	$	403,635

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$0.1 million and ~~$60,000~~$0.2 million as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, 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~~2023 and ~~2021,~~2022, Piedmont recognized approximately $20,000 and $60,000, respectively, of operating lease costs related to these office space leases. As of September 30, ~~2022,~~2023, the remaining lease term of Piedmont's right of use asset ~~had ended; however,~~is approximately 1 year, and the ~~lease was renewed effective October 1, 2022 for 26 months.~~discount rate is 3.86%.

~~Intangible Assets~~3. Debt

During the nine months ended September 30, 2023, Piedmont OP issued $400 million in aggregate principal amount of 9.250% senior notes due 2028 (the “$400 Million Unsecured Senior Notes”), which mature on July 20, 2028. Upon issuance of the $400 Million Unsecured Senior Notes, Piedmont OP received proceeds of $396 million, reflecting a discount of $4 million which will be amortized as interest expense under the effective interest method over the 5-year term of the $400 Million Unsecured Senior Notes. The $400 Million Unsecured Senior Notes are fully and ~~Liabilities Resulting from Purchasing Real Estate Assets~~unconditionally guaranteed by Piedmont. Interest on the $400 Million Unsecured Senior Notes is payable semi-annually on January 20 and July 20 of each year commencing January 20, 2024, and is subject to adjustment if Piedmont's corporate credit rating falls below investment grade, as defined in the credit agreement.

~~Upon~~The net proceeds from the ~~acquisition of real properties, Piedmont allocates~~$400 Million Unsecured Senior Notes were used to fund the purchase ~~price~~of approximately $350 million aggregate principal amount of Piedmont OP's 4.45% senior notes due 2024 that were validly tendered and accepted for purchase in a tender offer commenced substantially concurrently with the offering of the ~~properties~~$400 Million Unsecured Senior Notes. In conjunction with the purchase, Piedmont recognized approximately $0.8 million of loss on early extinguishment of debt, comprised of the pro-rata write-off of unamortized debt issuance costs, as well as fees paid. The remaining proceeds from $400 Million Unsecured Senior Notes were used to ~~tangible assets, consisting~~repay a portion of ~~land, building, site improvements, and identified intangible assets and liabilities, including~~ the ~~value~~borrowings outstanding under the $600 Million Unsecured 2022 Line 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~~.Credit.

~~Gross intangible~~The $400 Million Unsecured Senior Notes are subject to certain typical covenants that, subject to certain exceptions including (a) a limitation on the ability of Piedmont and Piedmont OP to, among other things, incur additional secured and unsecured indebtedness; (b) a limitation on the ability of Piedmont and Piedmont OP to merge, consolidate, sell, lease or otherwise dispose of their properties and assets substantially as an entirety; and ~~liabilities arising from in-place leases, inclusive~~(c) a requirement that Piedmont maintain a pool 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, 2022 December 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
unencumbered assets.

Table of Contents

~~For~~During the ~~three and~~ nine months ended September 30, ~~2022 and 2021, respectively,~~2023, Piedmont ~~recognized amortization of intangible lease costs as follows (in thousands):~~

Three Months Ended Nine 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:
2023 160 29,545 34,523 12,625
2024 126 22,101 26,919 10,071
2025 48 16,680 21,541 8,441
2026 22 13,146 18,228 6,904
2027 13 10,426 15,010 5,814
Thereafter 30 22,192 33,220 13,139
$ 450 $ 123,077 $ 159,943 $ 60,694
Weighted-Average Amortization Period (in years) 4 6 6 6

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

~~Table of Contents~~

~~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$350 Million Unsecured ~~Term Loan Facility (further described in~~ ~~Note~~ 4 ~~below), as well as~~Senior Notes, using cash on hand, proceeds from the $215 Million Unsecured 2023 Term Loan discussed below, and ~~our~~borrowings under the $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 improvements~~	~~336,219~~
~~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~~During 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~~nine months ended September 30, ~~2022,~~2023, 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~~$215 million, floating-rate, unsecured term loan facility (the “$~~200~~215 Million Unsecured 2023 Term ~~Loan Facility”~~Loan”) ~~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~~$215 Million Unsecured 2023 Term Loan ~~Facility~~ is ~~six months,~~one year, with an option to extend ~~twice~~ for an additional ~~three months~~one year for a final maturity date of ~~July 24, 2023.~~January 31, 2025. 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%~~0.85% to ~~1.65%~~1.70% based upon the then current credit rating of Piedmont. As of September 30, ~~2022,~~2023, the applicable interest rate spread on the loan was ~~1.00%.~~

~~During~~1.05%, and 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 Crediteffective rate 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.6.45%.

The ~~$600~~$215 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~~2023 Term Loan ~~Facility have~~has 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.

Finally, during the nine months ended September 30, 2023, Piedmont amended its $250 million, floating-rate, unsecured term loan facility (the "$250 Million Unsecured 2018 Term Loan") to convert the reference interest rate from LIBOR to SOFR, along with the various other related amendments necessary to affect this conversion.

The following table summarizes the terms of Piedmont’s indebtedness outstanding as of September 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):


Facility (1)	Facility (1)	Stated Rate		Effective Rate (2)			Maturity		Amount Outstanding as of				Facility (1)	Stated Rate		Effective Rate (2)			Maturity		Amount Outstanding as of
									September 30, 2022		December 31, 2021										September 30, 2023		December 31, 2022
Secured (Fixed)	Secured (Fixed)												Secured (Fixed)
$197 Million Fixed Rate Mortgage	$197 Million Fixed Rate Mortgage	4.10	%				10/1/2028		$	197,000	$	—	$197 Million Fixed Rate Mortgage	4.10	%	4.10	%		10/1/2028		$	196,721	$	197,000

Subtotal	Subtotal								197,000		—		Subtotal								196,721		197,000
Unsecured (Variable and Fixed)	Unsecured (Variable and Fixed)												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	$350 Million Unsecured Senior Notes due 2023	3.40	%	3.43	%		6/01/2023	(5)	350,000		350,000		$350 Million Unsecured Senior Notes due 2023	3.40	%	3.43	%		6/01/2023		—		350,000
$215 Million Unsecured 2023 Term Loan													$215 Million Unsecured 2023 Term Loan	SOFR + 1.05%		6.45	%	(3)	1/31/2024	(4)	215,000		—
$400 Million Unsecured Senior Notes due 2024	$400 Million Unsecured Senior Notes due 2024	4.45	%	4.10	%		3/15/2024		400,000		400,000		$400 Million Unsecured Senior Notes due 2024	4.45	%	4.10	%		3/15/2024	(5)	50,154		400,000
$200 Million Unsecured 2022 Term Loan Facility													$200 Million Unsecured 2022 Term Loan Facility	SOFR + 1.00%		6.43	%	(3)	12/16/2024	(6)	200,000		200,000
$250 Million Unsecured 2018 Term Loan	$250 Million Unsecured 2018 Term Loan	LIBOR + 0.95%		3.86	%	(6)	3/31/2025		250,000		250,000		$250 Million Unsecured 2018 Term Loan	SOFR + 0.95%		4.54	%		3/31/2025		250,000		250,000
$600 Million Unsecured 2022 Line of Credit(7)		SOFR + 0.85%		3.86	%	(3)	6/30/2026	(8)	162,000		290,000
$600 Million Unsecured 2022 Line of Credit													$600 Million Unsecured 2022 Line of Credit	SOFR + 0.84%		6.24	%	(3)	6/30/2026	(7)	157,000		—
$400 Million Unsecured Senior Notes due 2028													$400 Million Unsecured Senior Notes due 2028	9.25	%	9.50	%		7/20/2028		400,000		—
$300 Million Unsecured Senior Notes due 2030	$300 Million Unsecured Senior Notes due 2030	3.15	%	3.90	%		8/15/2030		300,000		300,000		$300 Million Unsecured Senior Notes due 2030	3.15	%	3.90	%		8/15/2030		300,000		300,000
$300 Million Unsecured Senior Notes due 2032	$300 Million Unsecured Senior Notes due 2032	2.75	%	2.78	%		4/1/2032		300,000		300,000		$300 Million Unsecured Senior Notes due 2032	2.75	%	2.78	%		4/1/2032		300,000		300,000
Discounts and unamortized debt issuance costs	Discounts and unamortized debt issuance costs								(13,592)		(12,210)		Discounts and unamortized debt issuance costs								(18,556)		(13,319)
Subtotal/Weighted Average (9)		3.65	%						$	1,948,408	$	1,877,790
Total/Weighted Average (9)		3.69	%						$	2,145,408	$	1,877,790
Subtotal/Weighted Average (8)													Subtotal/Weighted Average (8)	5.60	%						$	1,853,598	$	1,786,681
Total/Weighted Average (8)													Total/Weighted Average (8)	5.46	%						$	2,050,319	$	1,983,681

(1)All of Piedmont’s outstanding debt as of September 30, ~~2022~~2023 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.~~Street.

(2)Effective rate after consideration of settled or in-place interest rate swap agreements and issuance discounts.

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(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~~The all-in interest rate associated with each SOFR ~~selections are~~interest period selection is comprised of the relevant adjusted SOFR rate (comprised of the relevant base SOFR interest rate plus a fixed adjustment of 0.10%) and is 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~~an additional ~~months (through two available~~ ~~three~~ ~~month extensions~~year to a final extended maturity date of ~~July 24, 2023)~~January 31, 2025 provided Piedmont is not then in default and upon payment of extension fees.

(5)Piedmont currently intends to repay the ~~$350~~outstanding $50.2 million balance on the $400 Million Unsecured Senior Notes due ~~2023~~2024 through ~~debt refinancing,~~selective property dispositions, cash on hand from operations, and/or ~~draws~~borrowings under its existing $600 ~~million~~Million Unsecured 2022 Line of Credit.

(6)~~The facility has~~Piedmont may extend the term for six additional months to 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 thefinal extended maturity date of ~~the loan. For the remaining variable portion~~June 18, 2025, provided Piedmont is not then in default and all representations and warranties are true and correct in all material respects and upon payment 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).~~extension fees.

(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)~~(8)Weighted average is based on contractual balance of outstanding debt and the stated or effectively fixed interest rates as of September 30, ~~2022.~~2023.

Piedmont made interest payments on all debt facilities, including interest rate swap cash settlements, of approximately ~~$18.3~~$24.9 million and ~~$16.2~~$18.3 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and approximately ~~$46.9~~$70.0 million and ~~$41.5~~$46.9 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Also, Piedmont capitalized interest of approximately ~~$1.1~~$1.9 million and ~~$1.0~~$1.1 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and approximately ~~$3.2~~$4.5 million and ~~$2.7~~$3.2 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. As of September 30, ~~2022,~~2023, Piedmont believes it was in compliance with all financial covenants associated with its debt instruments.

See Note 65 for a description of Piedmont’s estimated fair value of debt as of September 30, ~~2022.~~2023.

5.4. Derivative Instruments

Risk Management Objective of Using Derivatives

In addition to operational risks which arise in the normal course of business, Piedmont is exposed to economic risks such as interest rate, liquidity, and credit risk. In certain situations, Piedmont has entered into derivative financial instruments, ~~such as~~specifically interest rate swap ~~agreements and other similar~~ agreements, to manage interest rate risk exposure arising from current or future variable rate debt transactions. Interest rate swap agreements involve the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Piedmont’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements.

Cash Flow Hedges of Interest Rate Risk

Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for Piedmont making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

During the ~~three~~nine months ended September 30, ~~2021,~~2023, Piedmont ~~entered into, and subsequently settled, one forward starting~~amended its two remaining LIBOR-designated interest rate swap ~~agreement with a notional value~~agreements to change the reference rate from LIBOR to SOFR to match the amended underlying debt terms (see Note 3 above). All of ~~$50 million to hedge the risk of changes in the interest-related~~Piedmont's interest rate swap agreements are designated as effective cash flows associated with the issuance of the $300 Million Unsecured Senior Notes due 2032. The settlement resulted in a gain of approximately $0.6 million, which was recorded as accumulated other comprehensive income ("OCI")flow hedges and ~~is being amortized as an offset to interest expense over ten years.~~

are now designated using SOFR. The maximum length of time over which Piedmont is hedging its exposure to the variability in future cash flows for forecasted transactions is 3018 months.

A detail of Piedmont’s interest rate derivatives outstanding as of September 30, ~~2022~~2023 is as follows:

Interest Rate Derivatives: Number of Swap Agreements Associated Debt Instrument Total Notional Amount
(in millions) Effective Date Maturity Date
Interest rate swaps 2 $250 Million Unsecured 2018 Term Loan $ 100 3/29/2018 3/31/2025

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Interest Rate Derivatives:

Number of Swap Agreements

Associated Debt Instrument

Total Notional Amount
(in millions)

Effective Date

Maturity Date

Interest rate swaps

$250 Million Unsecured 2018 Term Loan

100

3/29/2018

3/31/2025

Interest rate swaps

$250 Million Unsecured 2018 Term Loan

12/2/2022

3/31/2025

Interest rate swaps

$250 Million Unsecured 2018 Term Loan

12/12/2022

3/31/2025

Total

250

Piedmont presents its interest rate derivatives on its consolidated balance sheets on a gross basis as interest rate swap assets and interest rate swap liabilities. A detail of Piedmont’s interest rate derivatives on a gross and net basis as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, is as follows (in thousands):

Interest rate swaps classified as: September 30,
2022 December 31,
2021
Gross derivative assets $ 3,760 $ —
Gross derivative liabilities — (4,924)
Net derivative asset/(liability) $ 3,760 $ (4,924)


Interest rate swaps classified as:	September 30, 2023		December 31, 2022
Gross derivative assets	$	5,841	$	4,183
Gross derivative liabilities	—		—
Net derivative asset	$	5,841	$	4,183

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The gain/(loss) on Piedmont's interest rate derivatives, including previously settled forward swaps, that was recorded in OCI and the accompanying consolidated statements of ~~income~~operations as a component of interest expense for the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, is as follows (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
Interest Rate Swaps in Cash Flow Hedging Relationships	Interest Rate Swaps in Cash Flow Hedging Relationships	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		Interest Rate Swaps in Cash Flow Hedging Relationships	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Amount of gain recognized in OCI	Amount of gain recognized in OCI	$	2,662	$	582	$	7,507	$	1,848	Amount of gain recognized in OCI	$	1,248	$	2,662	$	4,270	$	7,507
Amount of previously recorded loss reclassified from OCI into interest expense		$	(194)	$	(750)	$	(1,453)	$	(2,216)
Amount of previously recorded gain/(loss) reclassified from OCI into interest expense										Amount of previously recorded gain/(loss) reclassified from OCI into interest expense	$	989	$	(194)	$	2,309	$	(1,453)

Total amount of interest expense presented in the consolidated statements of income		$	(17,244)	$	(12,450)	$	(44,917)	$	(37,375)
Total amount of interest expense presented in the consolidated statements of operations										Total amount of interest expense presented in the consolidated statements of operations	$	(27,361)	$	(17,244)	$	(72,827)	$	(44,917)

Piedmont estimates that approximately ~~$1.3~~$3.2 million will be reclassified from OCI as ana decrease in interest expense over the next twelve months. Additionally, see Note 65 for fair value disclosures of Piedmont's derivative instruments.

Credit-risk-related Contingent Features

Piedmont has agreements with its derivative counterparties that contain a provision whereby if Piedmont defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Piedmont could also be declared in default on its derivative obligations. If Piedmont were to breach any of the contractual provisions of the derivative contracts, it could be required to settle its liability obligations under the agreements at their termination value of the estimated fair values plus accrued interest. However, as of September 30, ~~2022, both~~2023, all of Piedmont's interest rate swap agreements are in an asset position. Additionally, Piedmont has rights of set-off under certain of its derivative agreements related to potential termination fees and amounts payable under the agreements, if a termination were to occur.

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5. Fair Value Measurement of Financial Instruments

Piedmont considers its cash and cash equivalents, tenant receivables, ~~notes receivable,~~ restricted cash and escrows, accounts payable and accrued expenses, interest rate swap agreements, and debt to meet the definition of financial instruments. The following table sets forth the carrying and estimated fair value for each of Piedmont’s financial instruments, as well as its level within the GAAP fair value hierarchy, as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively (in thousands):


		September 30, 2022					December 31, 2021						September 30, 2023					December 31, 2022
Financial Instrument	Financial Instrument	Carrying Value		Estimated Fair Value		Level Within Fair Value Hierarchy	Carrying Value		Estimated Fair Value		Level Within Fair Value Hierarchy	Financial Instrument	Carrying Value		Estimated Fair Value		Level Within Fair Value Hierarchy	Carrying Value		Estimated Fair Value		Level Within Fair Value Hierarchy
Assets:	Assets:											Assets:
Cash and cash equivalents (1)	Cash and cash equivalents (1)	$	10,653	$	10,653	Level 1	$	7,419	$	7,419	Level 1	Cash and cash equivalents (1)	$	5,044	$	5,044	Level 1	$	16,536	$	16,536	Level 1
Tenant receivables, net (1)	Tenant receivables, net (1)	$	7,796	$	7,796	Level 1	$	2,995	$	2,995	Level 1	Tenant receivables, net (1)	$	8,806	$	8,806	Level 1	$	4,762	$	4,762	Level 1
Notes receivable		$	—	$	—	Level 2	$	118,500	$	120,075	Level 2

Restricted cash and escrows (1)	Restricted cash and escrows (1)	$	2,191	$	2,191	Level 1	$	1,441	$	1,441	Level 1	Restricted cash and escrows (1)	$	5,983	$	5,983	Level 1	$	3,064	$	3,064	Level 1
Interest rate swaps	Interest rate swaps	$	3,760	$	3,760	Level 2	$	—	$	—	Level 2	Interest rate swaps	$	5,841	$	5,841	Level 2	$	4,183	$	4,183	Level 2
Liabilities:	Liabilities:											Liabilities:
Accounts payable and accrued expenses (1)	Accounts payable and accrued expenses (1)	$	16,712	$	16,712	Level 1	$	45,065	$	45,065	Level 1	Accounts payable and accrued expenses (1)	$	15,224	$	15,224	Level 1	$	63,225	$	63,225	Level 1
Interest rate swaps		$	—	$	—	Level 2	$	4,924	$	4,924	Level 2

Debt, net	Debt, net	$	2,145,408	$	1,997,395	Level 2	$	1,877,790	$	1,938,563	Level 2	Debt, net	$	2,050,319	$	1,868,624	Level 2	$	1,983,681	$	1,825,723	Level 2

(1)For the periods presented, the carrying value of these financial instruments, net of applicable allowance, approximates estimated fair value due to their short-term maturity.

Piedmont's debt was carried at book value as of September 30, ~~2022~~2023 and December 31, ~~2021, and its notes receivable were carried at book value as of December 31, 2021;~~2022; however, Piedmont's estimate of ~~the~~its fair value ~~of each of these financial instruments as of each period end~~ is disclosed in the table above. Piedmont uses widely accepted valuation techniques including discounted cash flow analysis based on the contractual terms of ~~its notes receivables and~~the debt facilities, including the period to maturity

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of each ~~note receivable and debt facility,~~instrument, and uses observable market-based inputs for similar ~~loan and~~ debt facilities which have transacted recently in the market. Therefore, the estimated fair values determined are considered to be based on significant other observable inputs (Level 2). Scaling adjustments are made to these inputs to make them applicable to the remaining life of Piedmont's ~~notes receivables and~~ outstanding debt. Consequently, the estimated fair values of the notes receivable and debt as of December 31, 2021 and the estimated fair value of debt as of September 30, 2022 are considered to be based on significant other observable inputs (Level 2). Piedmont has not changed its valuation technique for estimating the fair value of its ~~notes receivable or~~ debt.

Piedmont’s interest rate swap agreements presented above, and as further discussed in Note 54, are classified as “Interest rate swaps” in the accompanying consolidated balance sheets and were carried at estimated fair value as of September 30, ~~2022~~2023 and December 31, ~~2021.~~2022. The valuation of these derivative instruments was determined using widely accepted valuation techniques including discounted cash flow analysis based on the contractual terms of the derivatives, including the period to maturity of each instrument, and uses observable market-based inputs, including interest rate curves and implied volatilities. Therefore, the estimated fair values determined are considered to be based on significant other observable inputs (Level 2). In addition, Piedmont considered both its own and the respective counterparties’ risk of nonperformance in determining the estimated fair value of its derivative financial instruments by estimating the current and potential future exposure under the derivative financial instruments as of the valuation date. The credit risk of Piedmont and its counterparties was factored into the calculation of the estimated fair value of the interest rate swaps; however, as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, this credit valuation adjustment did not comprise a material portion of the estimated fair value. Therefore, Piedmont believes that any unobservable inputs used to determine the estimated fair values of its derivative financial instruments are not significant to the fair value measurements in their entirety, and does not consider any of its derivatives to be Level 3 financial instruments.

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6. Goodwill Impairment Charge

During the three months ended September 30, 2023, Piedmont considered the decline in its stock price to be an indicator of impairment and performed an interim impairment assessment of its goodwill balance. This assessment involved comparing the estimated fair value of each of its reporting units (see Note 11) to the reporting unit’s carrying value, inclusive of the goodwill balance allocated to the reporting unit.

Estimation of the fair value of each reporting unit involved the projection of discounted future cash flows using certain assumptions that are subjective in nature, including assumptions regarding future market rental rates and the number of months it may take to re-lease a property subsequent to the expiration of current lease agreements, as well as future property operating expenses, among other factors. Based on its analysis, Piedmont determined that the only reporting unit where the carrying value exceeded the estimated fair value (inclusive of the assigned goodwill balance) as of September 30, 2023 was the Minneapolis reporting unit. Consequently, Piedmont recorded an approximately $11.0 million goodwill impairment charge equal to the goodwill balance that had been assigned to the Minneapolis reporting unit in the accompanying consolidated statement of operations.

The fair value measurements used in the evaluation described above are considered to be Level 3 valuations within the fair value hierarchy as defined by GAAP as the measurements involve projections of discounted future cash flows, which are derived from unobservable assumptions, the most subjective of which are capitalization rates and discount rates for each respective reporting unit. The range of discount rates and the capitalization rate used in the analysis for the Minneapolis reporting unit were 8.50% to 9.25% and 8.50% to 9.00%, respectively.

7. Commitments and Contingencies

Commitments Under Existing Lease Agreements

As a recurring part of its business, Piedmont is typically required under its executed lease agreements to fund tenant improvements, leasing commissions, and building improvements. In addition, certain agreements contain provisions that require Piedmont to issue corporate or property guarantees to provide funding for capital improvements or other financial obligations. Such commitments ~~will be~~are accrued and capitalized as the related expenditures are incurred. In addition to the amounts that Piedmont has already committed to as a part of executed leases, Piedmont also anticipates continuing to incur similar market-based tenant improvement allowances and leasing commissions in conjunction with procuring future leases for its existing portfolio of properties. Both the timing and magnitude of expenditures related to future leasing activity can vary due to a number of factors and are highly dependent on the size of the leased square footage and the competitive market conditions of the particular office market at the time a lease is being negotiated.

Contingencies Related to Tenant Audits/Disputes

Certain lease agreements include provisions that grant tenants the right to engage independent auditors to audit their annual operating expense reconciliations. Such audits may result in different interpretations of language in the lease agreements from that made by Piedmont, which could result in requests for refunds of previously recognized tenant reimbursement revenues, resulting in financial loss to Piedmont. There were no reductions in rental and reimbursement revenues related to such tenant audits/disputes during the three orand nine months ended September 30, ~~2022~~2023 or ~~2021.~~2022.

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~~8. Property Dispositions~~

~~The following properties were sold during the nine months ended September 30, 2022 (in thousands):~~

Buildings Sold Location / Reportable Segment Date of Sale Gain on Sale of Real Estate Assets Net Sales Proceeds
Two Pierce Place Itasca, Illinois / Other January 25, 2022 $ 1,741 $ 24,272
225 and 235 Presidential Way Boston, Massachusetts / Boston January 28, 2022 48,933 119,324
Total $ 50,674 $ 143,596

The 225 and 235 Presidential Way assets met the criteria to be presented in the accompanying consolidated balance sheet as held for sale assets as of December 31, 2021. Details of such amounts as of December 31, 2021 are as follows (in thousands):

~~December 31, 2021~~

~~Real estate assets held for sale, net:~~

~~Land~~

~~7,750~~

~~Building and improvements, less accumulated depreciation of $16,699 as of December 31, 2021~~

~~55,110~~

~~Construction in progress~~

~~1,027~~

~~Total real estate assets held for sale, net~~

~~63,887~~

~~Other assets held for sale, net:~~

~~Straight-line rent receivables~~

~~2,966~~

~~Deferred lease costs, less accumulated amortization of $996 as of December 31, 2021~~

~~5,427~~

~~Total other assets held for sale, net~~

~~8,393~~

Also during the nine months ended September 30, 2022, Piedmont received $118.5 million in proceeds from the payoff of two notes receivable that Piedmont had received in late 2020 from the buyer of its remaining New Jersey properties. The proceeds were used to pay down Piedmont's unsecured line of credit.

9.8. Stock Based Compensation

~~The~~Annually, the Compensation Committee of Piedmont's Board of Directors has granted deferred stock award units to ~~eligible~~certain employees at its ~~discretion based upon the previous year's financial results measured against various board approved performance metrics. Most employee~~discretion. Employee awards typically vest ratably over three or four years. In addition, Piedmont's independent directors receive an annual grant of deferred stock award units for services rendered and such awards vest over a one year service period.

Certain management employees' long-term equity incentive program is split ~~equally~~ between the deferred stock award units described above and a multi-year performance share program whereby actual awards are contingent upon Piedmont's total stockholder return ("TSR") performance relative to the TSR of a peer group of office REITs. The target incentives for these ~~certain~~ employees, as well as the peer group to be used for comparative purposes, are predetermined by the board of directors, advised by an outside compensation consultant. ~~None~~The number of ~~the~~ shares ~~potentially~~ earned, if any, are ~~awarded until~~determined at the end of the multi-year performance period (or upon termination) and vest ~~upon award and are pro-rated if certain terminations occur before~~immediately. In the event that a participant's employment is terminated prior to the end of the multi-year ~~period.~~period, in certain circumstances the participant may be entitled to a pro-rated award based on Piedmont's TSR relative performance as of the termination date. The grant date fair value of the multi-year performance share awards is ~~estimated using the Monte Carlo valuation method.~~

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estimated using the Monte Carlo valuation method and is recognized ratably over the performance period.

A rollforward of Piedmont's equity based award activity for the nine months ended September 30, ~~2022~~2023 is as follows:


		Shares	Weighted-Average Grant Date Fair Value			Shares	Weighted-Average Grant Date Fair Value
Unvested and Potential Stock Awards as of December 31, 2021		1,099,181	$	23.97
Unvested and Potential Stock Awards as of December 31, 2022					Unvested and Potential Stock Awards as of December 31, 2022	729,424	$	19.21
Deferred Stock Awards Granted	Deferred Stock Awards Granted	299,322	$	16.54	Deferred Stock Awards Granted	987,094	$	9.60
Performance Stock Awards Granted					Performance Stock Awards Granted	424,922	$	12.37
Change in Estimated Potential Share Awards based on TSR Performance	Change in Estimated Potential Share Awards based on TSR Performance	119,589	$	19.67	Change in Estimated Potential Share Awards based on TSR Performance	(548,754)	$	14.33
Performance Stock Awards Vested	Performance Stock Awards Vested	(267,744)	$	29.43	Performance Stock Awards Vested	(90,064)	$	25.83
Deferred Stock Awards Vested	Deferred Stock Awards Vested	(266,675)	$	19.15	Deferred Stock Awards Vested	(334,020)	$	15.17
Deferred Stock Awards Forfeited	Deferred Stock Awards Forfeited	(4,953)	$	18.08	Deferred Stock Awards Forfeited	(16,884)	$	11.26
Unvested and Potential Stock Awards as of September 30, 2022		978,720	$	20.27
Unvested and Potential Stock Awards as of September 30, 2023					Unvested and Potential Stock Awards as of September 30, 2023	1,151,718	$	11.50

The following table provides additional information regarding stock award activity during the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively (in thousands, except per share amounts):


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Weighted-Average Grant Date Fair Value per share of Deferred Stock Granted During the Period	Weighted-Average Grant Date Fair Value per share of Deferred Stock Granted During the Period	$	—	$	—	$	16.54	$	17.24	Weighted-Average Grant Date Fair Value per share of Deferred Stock Granted During the Period	$	—	$	—	$	9.60	$	16.54
Total Grant Date Fair Value of Deferred Stock Vested During the Period	Total Grant Date Fair Value of Deferred Stock Vested During the Period	$	200	$	206	$	5,106	$	5,208	Total Grant Date Fair Value of Deferred Stock Vested During the Period	$	200	$	200	$	5,066	$	5,106
Share-based Liability Awards Paid During the Period (1)	Share-based Liability Awards Paid During the Period (1)	$	—	$	—	$	5,481	$	3,610	Share-based Liability Awards Paid During the Period (1)	$	—	$	—	$	—	$	5,481

(1)Reflects the value of stock earned pursuant to the 2019-21 ~~and 2018-20~~ Performance Share ~~Plans~~Plan paid out during the nine months ended September 30, ~~2022 and 2021, respectively.~~2022.

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A detail of Piedmont’s outstanding stock awards and programs as of September 30, ~~2022~~2023 is as follows:


Date of grant	Date of grant	Type of Award	Net Shares Granted (1)		Grant Date Fair Value		Vesting Schedule	Unvested Shares		Date of grant	Type of Award	Net Shares Granted (1)		Grant Date Fair Value		Vesting Schedule	Unvested Shares

May 3, 2019	May 3, 2019	Deferred Stock Award	30,958	(2)	$	21.04	Of the shares granted, 20% vested or will vest on July 1, 2020, 2021, 2022, 2023 and 2024 respectively.	19,011		May 3, 2019	Deferred Stock Award	26,385	(2)	$	21.04	Of the shares granted, 20% vested or will vest on July 1, 2020, 2021, 2022, 2023 and 2024 respectively.	9,505

February 19, 2020		Deferred Stock Award	142,083		$	24.41	Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on February 19, 2021, 2022, and 2023, respectively.	41,801
March 19, 2020		Fiscal Year 2020-2022 Performance Share Program	—		$	25.83	Shares awarded, if any, will vest immediately upon determination of award in 2023.	207,931	(3)

February 17, 2021	February 17, 2021	Deferred Stock Award	239,521		$	17.15	Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on February 17, 2022, 2023, and 2024, respectively.	129,527		February 17, 2021	Deferred Stock Award	212,739		$	17.15	Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on February 17, 2022, 2023, and 2024, respectively.	57,229
February 18, 2021	February 18, 2021	Fiscal Year 2021-2023 Performance Share Program	—		$	23.04	Shares awarded, if any, will vest immediately upon determination of award in 2024.	154,712	(3)	February 18, 2021	2021-2023 Performance Share Program	—		$	23.04	Shares awarded, if any, will vest immediately upon determination of award in 2024.	—	(3)

February 10, 2022	February 10, 2022	Deferred Stock Award	231,933		$	16.85	Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on February 10, 2023, 2024, and 2025, respectively.	190,374		February 10, 2022	Deferred Stock Award	172,523		$	16.85	Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on February 10, 2023, 2024, and 2025, respectively.	111,516
February 17, 2022	February 17, 2022	Fiscal Year 2022-2024 Performance Share Program	—		$	17.77	Shares awarded, if any, will vest immediately upon determination of award in 2025.	194,330	(3)	February 17, 2022	2022-2024 Performance Share Program	—		$	17.77	Shares awarded, if any, will vest immediately upon determination of award in 2025.	116,111	(3)
May 11, 2022		Deferred Stock Award-Board of Directors	41,034		$	14.62	Of the shares granted, 100% will vest on the earlier of the 2023 Annual Meeting or May 11, 2023.	41,034

February 13, 2023										February 13, 2023	Deferred Stock Award	398,024		$	10.55	Of the shares granted, 25% vested on the date of grant, and 25% vested or will vest on February 13, 2024, 2025, and 2026, respectively.	326,430
February 23, 2023										February 23, 2023	2023-2025 Performance Share Program	—		$	12.37	Shares awarded, if any, will vest immediately upon determination of award in 2026.	—	(3)
February 23, 2023										February 23, 2023	Deferred Stock Award	418,725		$	9.47	Of the shares granted, 25% will vest on February 23, 2024, 2025, 2026, and 2027 respectively.	409,167
May 10, 2023										May 10, 2023	Deferred Stock Award-Board of Directors	121,760		$	6.57	Of the shares granted, 100% will vest on the earlier of the 2024 Annual Meeting or May 10, 2024.	121,760
Total	Total							978,720		Total							1,151,718

(1)Amounts reflect the total original grant to employees and independent directors, net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations through September 30, ~~2022.~~2023.

(2)~~Includes~~Reflects a special, one-time deferred stock award to Piedmont's Chief Executive Officer effective on July 1, 2019, the date of his promotion to the position, which vests in ratable installments over a five year period beginning July 1, 2020.

(3)Estimated based on Piedmont's cumulative TSR for the respective performance period through September 30, ~~2022.~~2023. Share estimates are subject to change in future periods based upon Piedmont's relative TSR performance compared to its peer group of office REITs.

During the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, Piedmont recognized approximately ~~$2.0~~$2.1 million and ~~$1.8~~$2.0 million, respectively, of compensation expense related to stock awards, all of which related to the amortization of unvested and potential stock awards and fair value adjustment for liability awards. During the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, Piedmont recognized approximately ~~$6.9~~$6.0 million and ~~$8.2~~$6.9 million, respectively, of compensation expense related to stock awards, of which $6.0 million and $5.8 million, ~~and $6.9 million~~respectively, is related to the amortization of unvested and potential stock awards and fair value adjustment for liability awards. During the nine months ended September 30, ~~2022, 318,686~~2023, 256,917 shares (net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations) were issued to employees and independent directors. As of September 30, ~~2022,~~2023, approximately ~~$8.0~~$14.0 million of unrecognized compensation cost related to unvested and potential stock awards remained, which Piedmont will record in its consolidated statements of ~~income~~operations over a weighted-average vesting period of approximately ~~one year.~~1.3 years.

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~~10.~~9. Supplemental Disclosures for the Statement of Consolidated Cash Flows

Certain non-cash investing and financing activities for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 (in thousands) are outlined below:


		Nine Months Ended					Nine Months Ended
		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022
Tenant improvements funded by tenants						Tenant improvements funded by tenants	$	30,790	$	2,928
Accrued capital expenditures and deferred lease costs	Accrued capital expenditures and deferred lease costs	$	18,424	$	40,697	Accrued capital expenditures and deferred lease costs	$	17,458	$	18,424
Change in accrued dividends	Change in accrued dividends	$	(26,048)	$	(25,682)	Change in accrued dividends	$	(25,358)	$	(26,048)

Change in accrued share repurchases as part of an announced plan		$	—	$	(685)
Accrued deferred financing costs		$	71	$	495

Change in accrued deferred financing costs						Change in accrued deferred financing costs	$	(32)	$	71
Accrued stock issuance costs	Accrued stock issuance costs	$	150	$	—	Accrued stock issuance costs	$	—	$	150

The following table provides a reconciliation of cash, cash equivalents, and restricted cash and escrows as presented in the accompanying consolidated statements of cash flows for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, to the consolidated balance sheets for the respective period (in thousands):

2022 2021
Cash and cash equivalents, beginning of period $ 7,419 $ 7,331
Restricted cash and escrows, beginning of period 1,441 1,883
Total cash, cash equivalents, and restricted cash and escrows as presented in the accompanying consolidated statement of cash flows, beginning of period $ 8,860 $ 9,214
Cash and cash equivalents, end of period $ 10,653 $ 8,189
Restricted cash and escrows, end of period 2,191 6,093
Total cash, cash equivalents, and restricted cash and escrows as presented in the accompanying consolidated statement of cash flows, end of period $ 12,844 $ 14,282


	2023		2022
Cash and cash equivalents, beginning of period	$	16,536	$	7,419
Restricted cash and escrows, beginning of period	3,064		1,441


Total cash, cash equivalents, and restricted cash and escrows as presented in the accompanying consolidated statement of cash flows, beginning of period	$	19,600	$	8,860

Cash and cash equivalents, end of period	$	5,044	$	10,653
Restricted cash and escrows, end of period	5,983		2,191


Total cash, cash equivalents, and restricted cash and escrows as presented in the accompanying consolidated statement of cash flows, end of period	$	11,027	$	12,844

Amounts in restricted cash and escrows typically represent: escrow accounts required for future property repairs; escrow accounts for the payment of real estate taxes as required under certain of Piedmont's debt agreements; earnest money deposited by a buyer to secure the purchase of one of Piedmont's properties; or security or utility deposits held for tenants as a condition of their lease agreement.

~~11.~~10. Earnings Per Share

There are no adjustments to “Net ~~income~~income/(loss) applicable to Piedmont” for the diluted earnings per share computations.

Net ~~income~~income/(loss) per share-basic is calculated as net ~~income~~income/(loss) available to common stockholders divided by the weighted average number of common shares outstanding during the period. Net ~~income~~income/(loss) per share-diluted is calculated as net ~~income~~income/(loss) available to common stockholders divided by the diluted weighted average number of common shares outstanding during the period, including unvested deferred stock awards. Diluted weighted average number of common shares reflects the potential dilution under the treasury stock method that would occur if the remaining unvested and potential stock awards vested and resulted in additional common shares outstanding. Unvested and potential stock awards which are determined to be anti-dilutive are not included in the calculation of diluted weighted average common shares. For the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, Piedmont calculated and excluded weighted average outstanding anti-dilutive shares of approximately ~~194,330~~1,388,320 and ~~145,222,~~194,330, respectively, and for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, Piedmont calculated and excluded weighted average outstanding anti-dilutive shares of ~~346,695~~1,216,637 and ~~313,140,~~346,695, respectively.

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The following table reconciles the denominator for the basic and diluted earnings per share computations shown on the consolidated statements of ~~income~~operations for the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively (in thousands):


		Three Months Ended		Nine Months Ended			Three Months Ended		Nine Months Ended
		September 30, 2022	September 30, 2021	September 30, 2022	September 30, 2021		September 30, 2023	September 30, 2022	September 30, 2023	September 30, 2022
Weighted-average common shares – basic	Weighted-average common shares – basic	123,395	124,136	123,330	124,057	Weighted-average common shares – basic	123,696	123,395	123,640	123,330
Plus: Incremental weighted-average shares from time-vested deferred and performance stock awards	Plus: Incremental weighted-average shares from time-vested deferred and performance stock awards	302	491	301	415	Plus: Incremental weighted-average shares from time-vested deferred and performance stock awards	—	302	—	301
Weighted-average common shares – diluted	Weighted-average common shares – diluted	123,697	124,627	123,631	124,472	Weighted-average common shares – diluted	123,696	123,697	123,640	123,631

~~12.~~11. Segment Information

Piedmont's President and Chief Executive Officer has been identified as Piedmont's chief operating decision maker ("CODM"), as defined by GAAP. The CODM evaluates Piedmont's portfolio and assesses the ongoing operations and performance of its properties utilizing the following geographic segments: Atlanta, Dallas, Orlando, Washington, D.C.~~, Boston, Orlando,~~/Northern Virginia, Minneapolis, New York, and ~~Minneapolis.~~Boston. These operating segments are also Piedmont’s reportable segments. As of September 30, ~~2022,~~2023, Piedmont also owned two properties in Houston that do not meet the definition of an operating or reportable segment as the CODM does not regularly review these properties for purposes of allocating resources or assessing performance. Further, Piedmont does not maintain a significant presence or anticipate further investment in this market. These two properties are the primary contributors to accrual-based net operating income ("NOI") included in "Other" below. During the periods presented, there have been no material inter segment transactions. The accounting policies of the reportable segments are the same as Piedmont's accounting policies.

~~NOI~~Accrual-based net operating income ("NOI") by geographic segment is the primary performance measure reviewed by Piedmont's CODM to assess operating performance and consists only of revenues and expenses directly related to real estate rental operations. NOI is calculated by deducting property operating costs from lease revenues and other property related income. NOI reflects property acquisitions and dispositions, occupancy levels, rental rate increases or decreases, and the recoverability of operating expenses. Piedmont's calculation of NOI may not be directly comparable to similarly titled measures calculated by other REITs.

Asset value information and capital expenditures by segment are not reported because the CODM does not use these measures to assess performance.

The following table presents accrual-based lease revenue and other property related income included in NOI by geographic reportable segment (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Atlanta	Atlanta	$	34,026	$	23,795	$	92,558	$	69,644	Atlanta	$	40,433	$	34,026	$	119,860	$	92,558
Dallas	Dallas	28,379		26,478		81,881		82,903		Dallas	28,619		28,379		84,680		81,881
Washington, D.C.		15,608		15,654		46,980		44,937
Orlando										Orlando	15,234		15,131		46,112		43,513
Washington, D.C./Northern Virginia										Washington, D.C./Northern Virginia	15,251		15,608		45,029		46,980
Minneapolis										Minneapolis	16,700		15,470		47,125		45,987
New York										New York	13,940		14,525		40,674		42,461
Boston	Boston	14,735		16,992		44,797		48,226		Boston	10,875		14,735		31,642		44,797
Orlando		15,131		13,074		43,513		41,453
New York		14,525		12,845		42,461		39,329
Minneapolis		15,470		15,788		45,987		46,142
Total reportable segments	Total reportable segments	137,874		124,626		398,177		372,634		Total reportable segments	141,052		137,874		415,122		398,177
Other	Other	6,226		6,445		18,381		17,912		Other	5,934		6,226		17,303		18,381
Total Revenues	Total Revenues	$	144,100	$	131,071	$	416,558	$	390,546	Total Revenues	$	146,986	$	144,100	$	432,425	$	416,558

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The following table presents NOI by geographic reportable segment (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Atlanta	Atlanta	$	21,627	$	15,127	$	58,354	$	44,725	Atlanta	$	25,965	$	21,627	$	77,247	$	58,354
Dallas	Dallas	15,325		16,246		47,189		50,267		Dallas	16,334		15,325		47,313		47,189
Washington, D.C.		9,712		9,802		29,851		27,460
Orlando										Orlando	8,895		8,865		27,446		26,206
Washington, D.C./Northern Virginia										Washington, D.C./Northern Virginia	9,183		9,712		27,156		29,851
Minneapolis										Minneapolis	9,166		8,072		25,622		23,950
New York										New York	7,565		7,959		22,286		23,901
Boston	Boston	9,646		12,058		29,922		33,829		Boston	6,422		9,646		19,213		29,922
Orlando		8,865		7,656		26,206		25,743
New York		7,959		7,502		23,901		22,636
Minneapolis		8,072		8,089		23,950		24,556
Total reportable segments	Total reportable segments	81,206		76,480		239,373		229,216		Total reportable segments	83,530		81,206		246,283		239,373
Other	Other	3,893		2,731		10,794		6,436		Other	3,544		3,893		9,956		10,794
Total NOI	Total NOI	$	85,099	$	79,211	$	250,167	$	235,652	Total NOI	$	87,074	$	85,099	$	256,239	$	250,167

A reconciliation of Net ~~income~~income/(loss) applicable to Piedmont to NOI is presented below (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net income applicable to Piedmont		$	3,331	$	11,306	$	71,261	$	30,597
Net income/(loss) applicable to Piedmont										Net income/(loss) applicable to Piedmont	$	(17,002)	$	3,331	$	(20,357)	$	71,261
Management fee revenue (1)	Management fee revenue (1)	(177)		(309)		(743)		(946)		Management fee revenue (1)	(210)		(177)		(756)		(743)

Depreciation and amortization	Depreciation and amortization	58,230		50,935		165,850		152,641		Depreciation and amortization	58,311		58,230		173,946		165,850

Goodwill impairment charge										Goodwill impairment charge	10,957		—		10,957		—

General and administrative expenses	General and administrative expenses	6,590		6,955		21,212		22,417		General and administrative expenses	7,043		6,590		22,013		21,212
Interest expense	Interest expense	17,244		12,450		44,917		37,375		Interest expense	27,361		17,244		72,827		44,917
Other income	Other income	(119)		(2,121)		(1,655)		(6,423)		Other income	(207)		(119)		(3,218)		(1,655)

Loss on early extinguishment of debt										Loss on early extinguishment of debt	820		—		820		—
Gain on sale of real estate assets	Gain on sale of real estate assets	—		—		(50,674)		—		Gain on sale of real estate assets	—		—		—		(50,674)
Net loss applicable to noncontrolling interests		—		(5)		(1)		(9)
Total NOI		$	85,099	$	79,211	$	250,167	$	235,652
Net income/(loss) applicable to noncontrolling interest										Net income/(loss) applicable to noncontrolling interest	1		—		7		(1)
NOI										NOI	$	87,074	$	85,099	$	256,239	$	250,167

(1)Presented net of related operating expenses incurred to earn such management fee revenue. Such operating expenses are a component of property operating costs in the accompanying consolidated statements of ~~income.~~operations.

~~13.~~12. Subsequent Event

Fourth Quarter Dividend Declaration

On October 25, ~~2022,~~2023, the board of directors of Piedmont declared a dividend for the fourth quarter of ~~2022~~2023 in the amount of ~~$0.21~~$0.125 per common share outstanding to stockholders of record as of the close of business on November ~~25, 2022.~~24, 2023. Such dividend will be paid on January ~~3, 2023.~~2, 2024.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto of Piedmont Office Realty Trust, Inc. (“Piedmont,” "we," "our," or "us"). See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I, as well as the consolidated financial statements and accompanying notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Liquidity and Capital Resources

We intend to use cash on hand, cash flows generated from the operation of our properties, net proceeds from the potential disposition of select properties, and borrowings under our $600 Million Unsecured 2022 Line of Credit as our primary sources of immediate liquidity. ~~When necessary,~~Our next scheduled debt maturity is our $215 Million Unsecured 2023 Term Loan in January of 2024; however, we ~~may seek other new secured or unsecured borrowings from third party lenders or issue~~currently anticipate exercising the one year extension option on that facility (see Note 3 to our accompanying consolidated financial statements) to extend the maturity date to January of 2025. Our only other debt ~~or equity securities~~maturity over the next twelve months is the remaining $50.2 million of our $400 Million Unsecured Senior Notes due 2024, which we anticipate repaying upon maturity in March of 2024 using cash on hand and borrowings under our $600 Million Unsecured 2022 Line of Credit. Our $600 Million Unsecured 2022 Line of Credit had $443 million of availability as ~~additional sources~~ of ~~capital. The nature and timing of these additional sources of capital will be highly dependent on market conditions.~~September 30, 2023. We believe that we have sufficient liquidity to meet our obligations for the foreseeable future.

During the quarter ended September 30, 2022, we acquired 1180 Peachtree Street, an iconic, 41-story, Class AA, LEED Platinum, trophy office building located at the epicenter of Midtown Atlanta, Georgia, for a net purchase price of approximately $465 million, comprised of approximately $268 million in cash and the assumption of an existing $197 million, 4.10% mortgage secured by the property. The cash portion of the net purchase price was funded primarily from the proceeds of a $200 million, unsecured, floating rate, term loan put in place during the three months ended September 30, 2022 and bearing interest at Adjusted Term SOFR + 100 bps. On a longer-term basis, we anticipate using the net sales proceeds from the disposition of non-strategic assets over the next several quarters to ultimately fund the acquisition and maintain an approximately leverage-neutral balance sheet.

Our most consistent use of capital has historically been, and we believe will continue to be, to fund capital expenditures for our existing portfolio of properties. During the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 we incurred the following types of capital expenditures (in thousands):


		Nine Months Ended					Nine Months Ended
		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022

Capital expenditures for redevelopment/renovations	Capital expenditures for redevelopment/renovations	$	49,592	$	39,422	Capital expenditures for redevelopment/renovations	$	40,634	$	47,172

Other capital expenditures, including building and tenant improvements	Other capital expenditures, including building and tenant improvements	45,915		44,055		Other capital expenditures, including building and tenant improvements	72,758		48,335
Total capital expenditures (1)	Total capital expenditures (1)	$	95,507	$	83,477	Total capital expenditures (1)	$	113,392	$	95,507

(1)Of the total amounts paid, approximately ~~$5.2~~$7.1 million and ~~$4.5~~$5.2 million relates to soft costs such as capitalized interest, payroll, and other property operating costs for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

"Capital expenditures for redevelopment/renovations" during both the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 related to building upgrades, primarily to the lobbies and the addition of tenant amenities at our 60 Broad Street building in New York ~~City; our 200 South Orange Avenue building in Orlando, Florida; and~~City, our Galleria Tower buildings in Dallas, Texas, as well as our Galleria buildings, 1155 Perimeter Center West, and 999 Peachtree Street in Atlanta, Georgia, among others.

"Other capital expenditures, including building and tenant improvements" includes all other capital expenditures during the period and is typically comprised of tenant and building improvements necessary to lease, maintain, or provide enhancements, including energy efficient equipment, to our existing portfolio of office properties.

We currently do not anticipate incurring any unusually large or material capital expenditures within any given year in order to meet recognized sustainable development standards, and achieve our environmental impact goals.

Given that our operating model ~~sometimes~~frequently results in leases for ~~large~~multiple blocks of space to credit-worthy tenants, our leasing success can result in capital outlays ~~that~~which vary ~~significantly~~ from one reporting period to another ~~depending~~based upon the specific leases executed. For leases executed during the nine months ended September 30, ~~2022,~~2023, we committed to spend approximately ~~$4.93~~$6.20 per square foot per year of lease term for tenant improvement allowances and lease commissions (net of expired lease commitments) as compared to ~~$3.95~~$4.93 (net of expired lease commitments) for the nine months ended September 30, 2021. Commitments per square foot per year of lease term for tenant improvement allowances and lease commissions (net of expired lease commitments) for the nine months ended September 30, 2021 were unusually low as they reflected the 330,000 square foot, five-year extension of the New York City lease at our 60 Broad Street asset, which did not include a tenant improvement allowance.2022.

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In addition to the amounts that we have already committed to as a part of executed leases, we also anticipate continuing to incur similar market-based tenant improvement allowances and leasing commissions in conjunction with procuring future leases for our existing portfolio of properties. Both the timing and magnitude of expenditures related to future leasing activity can vary due to a number of factors and are highly dependent on the size of the leased square footage and the competitive market conditions of the particular office market at the time a lease is being negotiated.

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Although repayment of debt is currently our priority, there are other uses of capital that may arise from time to time as part of our ~~typical~~ operations. Subject to the identification and availability of attractive investment opportunities and our ability to consummate such acquisitions on satisfactory terms, acquiring new assets consistent with our investment strategy could also be a significant use of capital. ~~We may also use capital resources to repurchase additional shares of our common stock under our stock repurchase program when~~Additionally, we believe the stock is trading disparately from our peers and at a significant discount to net asset value or when we otherwise believe such stock repurchases are prudent. As of September 30, 2022, we hadhave approximately $150.5 million of board-authorized share repurchase capacity remaining ~~capacity~~ under ~~the~~our share repurchase program which ~~may~~could be used for share repurchases through February 2024. Finally, we have two scheduled debt maturities, the $200 Million Unsecured Term Loan Facility and the $350 Million Unsecured Senior Notes, within the next twelve months, which we intend to repay through sales of select properties, debt refinancing, cash on hand, cash flow from operations, and/or draws under our existing $600 Million Unsecured 2022 Line of Credit.

We may also use capital resources to pay dividends to our stockholders. Given the significant increase in interest expense during the nine months ended September 30, 2023 (see Results of Operations below), we reduced our annual dividend from $0.84 per share to $0.50 per share beginning with the third quarter of 2023. This reduction will reduce the cash used to pay the dividend by approximately $40 million on an annual basis. The amount and form of payment (cash or stock issuance) of future dividends to be paid to our stockholders will continue to be largely dependent upon (i) the amount of cash generated from our operating activities; (ii) our expectations of future cash flows; (iii) our determination of near-term cash needs for debt repayments, development projects, and selective acquisitions of new properties; (iv) the timing of significant expenditures for tenant improvements, leasing commissions, building redevelopment projects, and general property capital improvements; (v) long-term dividend payout ratios for comparable companies; (vi) our ability to continue to access additional sources of capital, including potential sales of our properties; and (vii) the amount required to be distributed to maintain our status as a REIT. With the fluctuating nature of cash flows and expenditures, we may periodically borrow funds on a short-term basis to cover timing differences in cash receipts and cash ~~disbursements.~~disbursements, including to pay dividends to our stockholders.

Results of Operations

Overview

Net ~~income~~loss applicable to common stockholders for the three months ended September 30, ~~2022~~2023 was approximately ~~$3.3~~$17.0 million, or ~~$0.03~~$0.14 per diluted share, as compared with net income applicable to common stockholders of ~~$11.3~~$3.3 million, or ~~$0.09~~$0.03 per diluted share, for the three months ended September 30, ~~2021.~~2022. The decrease ~~reflects~~in net income reflects: (i) a ~~$7.3 million increase in depreciation and amortization expense primarily resulting from acquisition activity during the current period, as well as a $4.8~~$10.1 million increase in interest ~~expense. The increase in interest~~ expense ~~was~~ driven by increased interest rates on our ~~variable rate~~ debt ~~as well as a higher average debt balance outstanding~~ during the ~~quarter. Other income also decreased approximately $2.0~~third quarter of 2023 as compared to 2022; (ii) an $11.0 million ~~for~~non-cash impairment charge related to the ~~three months ended September 30, 2022~~reduction in our carrying value of goodwill during the third quarter of 2023; and (iii) a $0.8 million loss on early extinguishment of debt related to refinancing activity completed during the quarter (see Note 3 to our accompanying consolidated financial statements). These decreases were partially offset by continued growth in Property Net Operating Income as compared to the ~~three months ended September 30, 2021 due to the payoff~~third quarter of ~~notes receivable due from the purchaser of our New Jersey Portfolio in March of~~ 2022.

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Comparison of the three months ended September 30, ~~2022~~2023 versus the three months ended September 30, ~~2021~~2022

Income from Continuing Operations

The following table sets forth selected data from our consolidated statements of ~~income~~operations for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, as well as each balance as a percentage of total revenues for the same periods presented (dollars in millions):


		September 30, 2022		% of Revenues		September 30, 2021		% of Revenues		Variance			September 30, 2023		% of Revenues		September 30, 2022		% of Revenues		Variance
Revenue:	Revenue:											Revenue:

Rental and tenant reimbursement revenue	Rental and tenant reimbursement revenue	$	139.5			$	127.4			$	12.1	Rental and tenant reimbursement revenue	$	141.5			$	139.5			$	2.0
Property management fee revenue	Property management fee revenue	0.3				0.6				(0.3)		Property management fee revenue	0.4				0.3				0.1
Other property related income	Other property related income	4.2				3.0				1.2		Other property related income	5.0				4.2				0.8
Total revenues	Total revenues	144.0		100	%	131.0		100	%	13.0		Total revenues	146.9		100	%	144.0		100	%	2.9
Expense:	Expense:											Expense:
Property operating costs	Property operating costs	59.0		41	%	51.7		39	%	7.3		Property operating costs	59.8		41	%	59.0		41	%	0.8
Depreciation	Depreciation	34.9		24	%	30.5		23	%	4.4		Depreciation	38.1		26	%	34.9		24	%	3.2
Amortization	Amortization	23.3		16	%	20.4		16	%	2.9		Amortization	20.2		14	%	23.3		16	%	(3.1)

Goodwill impairment charge												Goodwill impairment charge	11.0		7	%	—		—	%	11.0
General and administrative	General and administrative	6.6		5	%	7.0		5	%	(0.4)		General and administrative	7.0		4	%	6.6		5	%	0.4
		123.8				109.6				14.2			136.1				123.8				12.3
Other income (expense):	Other income (expense):											Other income (expense):
Interest expense	Interest expense	(17.2)		12	%	(12.4)		10	%	(4.8)		Interest expense	(27.4)		19	%	(17.2)		12	%	(10.2)
Other income/(expense)		0.3		—	%	2.3		2	%	(2.0)
Other income												Other income	0.4		—	%	0.3		—	%	0.1

Loss on early extinguishment of debt												Loss on early extinguishment of debt	(0.8)		1	%	—		—	%	(0.8)

Net income/(loss)												Net income/(loss)	$	(17.0)	(12)	%	$	3.3	2	%	$	(20.3)

Net income		$	3.3	2	%	$	11.3	9	%	$	(8.0)

Revenue

Rental and tenant reimbursement revenue increased approximately ~~$12.1~~$2.0 million for the three months ended September 30, ~~2022,~~2023, as compared to the same period in the prior year. The increase was primarily due to capital recycling activity ~~(the 1180 Peachtree Street purchase), rental rate increases associated with recent leasing activity across the portfolio,~~completed during 2022 and higher tenant reimbursements as a result of higher recoverable operating expenses during the current period as tenant utilization of our buildings continued to increase during 2023 as compared to the prior period.

Other property related income increased approximately ~~$1.2~~$0.8 million for the three months ended September 30, 2022 as compared to the same period in the prior year primarily due to increased parking revenue associated with properties acquired during the twelve months ended September 30, 2022 and higher transient parking volume at our buildings during the current period.

~~Expense~~

Property operating costs increased approximately $7.3 million for the three months ended September 30, 2022, as compared to the same period in the prior year. The variance was primarily due to higher recoverable operating expenses such as janitorial and utilities resulting from higher tenant utilization during the current period as compared to the prior period. Higher real estate taxes in certain jurisdictions associated with increased assessed property values also contributed to the increase, as well as acquisition activity completed during the twelve months ended September 30, 2022.

Depreciation expense increased approximately $4.4 million for the three months ended September 30, 2022 as compared to the same period in the prior year. The increase was primarily due to additional building and tenant improvements placed in service subsequent to July 1, 2021 as well as capital recycling activity during the twelve months ended September 30, 2022.

Amortization expense increased approximately $2.9 million for the three months ended September 30, 2022 as compared to the same period in the prior year primarily due to additional amortization associated with property acquisitions during the twelve months ended September 30, 2022, partially offset by certain lease intangible assets at our existing properties becoming fully amortized during the twelve months ended September 30, 2022.

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General and administrative expense decreased approximately $0.4 million for the three months ended September 30, 2022 as compared to the same period in the prior year, primarily reflecting decreased accruals for potential performance-based compensation.

~~Other Income (Expense)~~

Interest expense increased approximately $4.8 million for the three months ended September 30, 2022 as compared to the same period in the prior year primarily driven by a higher average debt balance outstanding during the quarter as a result of the purchase of 1180 Peachtree Street, as well as increased interest rates on our variable rate debt.

Other income/(expense) decreased approximately $2.0 million for the three months ended September 30, 2022 as compared to the same period in the prior year due to the payoff of notes receivable due from the purchaser of our New Jersey Portfolio in March of 2022.

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~~Results of Operations~~

~~Comparison of the nine months ended September 30, 2022 versus the nine months ended September 30, 2021~~

The following table sets forth selected data from our consolidated statements of income for the nine months ended September 30, 2022 and 2021, respectively, as well as each balance as a percentage of total revenues for the same period presented (dollars in millions):

September 30,
2022 % of Revenues September 30,
2021 % of Revenues Variance
Revenue:
Rental and tenant reimbursement revenue $ 403.6 $ 380.3 $ 23.3
Property management fee revenue 1.3 1.9 (0.6)
Other property related income 11.6 8.3 3.3
Total revenues 416.5 100 % 390.5 100 % 26.0
Expense:
Property operating costs 166.3 40 % 154.8 40 % 11.5
Depreciation 98.8 23 % 88.6 23 % 10.2
Amortization 67.0 16 % 64.0 16 % 3.0
General and administrative 21.2 5 % 22.4 5 % (1.2)
353.3 329.8 23.5
Other income (expense):
Interest expense (44.9) 11 % (37.4) 10 % (7.5)
Other income 2.3 — % 7.3 2 % (5.0)
Gain on sale of real estate assets 50.7 12 % — — % 50.7
Net income $ 71.3 17 % $ 30.6 8 % $ 40.7

~~Revenue~~

Rental and tenant reimbursement revenue increased approximately $23.3 million for the nine months ended September 30, 2022 as compared to the same period in the prior year. The increase was primarily due to capital recycling activity, rental rate increases associated with recent leasing activity across the portfolio, and higher tenant reimbursements as a result of higher recoverable operating expenses as compared to the prior period.

~~Other property related income increased approximately $3.3 million for the nine months ended September 30, 2022~~2023 as compared to the same period in the prior year primarily due to higher transient parking at our buildings during the current period, as compared to the prior ~~period, and additional~~period. Additionally, parking revenue associated with ~~properties acquired~~the acquisition of 1180 Peachtree Street during the ~~twelve months ended September 30, 2022.~~third quarter of 2022 also contributed to the increase.

Expense

Property operating costs increased approximately ~~$11.5~~$0.8 million for the ~~nine~~three months ended September 30, ~~2022~~2023, as compared to the same period in the prior year. The variance was primarily due to higher recoverable operating expenses such as janitorial, security, and utilities resulting from higher tenant utilization during the current period, ~~and~~as well as capital recycling activity completed during ~~the twelve months ended September 30,~~ 2022. Lower real estate taxes in certain jurisdictions, including favorable tax appeals at certain assets, partially offset these increases.

Depreciation expense increased approximately ~~$10.2~~$3.2 million for the ~~nine~~three months ended September 30, ~~2022~~2023 as compared to the same period in the prior year. The increase was primarily due to additional building and tenant improvements acquired and/or placed in service during the twelve months ended September 30, ~~2022.~~2023.

Amortization expense ~~increased~~decreased approximately ~~$3.0~~$3.1 million for the ~~nine~~three months ended September 30, ~~2022~~2023 as compared to the same period in the prior ~~year~~year. The decrease was primarily due to ~~additional~~ amortization expense associated with ~~property acquisitions during the twelve months ended September 30, 2022, partially offset by~~ certain lease intangible assets at our existing properties becoming fully amortized during the twelve months ended September 30, ~~2022.~~

2023. The decrease

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~~General and administrative expenses decreased approximately $1.2 million for~~was partially offset by additional amortization associated with the ~~nine~~acquisition of 1180 Peachtree Street, purchased in August 2022.

During the three months ended September 30, ~~2022 as compared to~~2023, we reduced the ~~same period~~carrying amount of goodwill resulting in the ~~prior year, primarily reflecting decreased accruals~~recognition of a non-cash impairment charge of approximately $11.0 million. See Note 6 to our accompanying consolidated financial statements for ~~potential performance-based compensation.~~further details.

Other Income (Expense)

Interest expense increased approximately ~~$7.5~~$10.2 million for the ~~nine~~three months ended September 30, ~~2022~~2023, as compared to the same period in the prior year, primarily driven by increased interest rates during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. The increase was partially offset by a $0.8 million increase in capitalized interest associated with various redevelopment projects in progress during the three months ended September 30, 2023.

The $0.8 million loss on early extinguishment of debt for the three months ended September 30, 2023 is comprised of the pro-rata write-off of unamortized debt issuance costs and discounts associated with the early repurchase of approximately $350 million aggregate principal amount of the $400 Million Unsecured Senior Notes due 2024, as well as fees paid, during the quarter ended September 30, 2023 (see Note 3 to our accompanying consolidated financial statements).

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Comparison of the nine months ended September 30, 2023 versus the nine months ended September 30, 2022

The following table sets forth selected data from our consolidated statements of operations for the nine months ended September 30, 2023 and 2022, respectively, as well as each balance as a percentage of total revenues for the same period presented (dollars in millions):


	September 30, 2023		% of Revenues		September 30, 2022		% of Revenues		Variance
Revenue:


Rental and tenant reimbursement revenue	$	415.8			$	403.6			$	12.2
Property management fee revenue	1.3				1.3				—
Other property related income	15.2				11.6				3.6
Total revenues	432.3		100	%	416.5		100	%	15.8
Expense:
Property operating costs	176.0		41	%	166.3		40	%	9.7
Depreciation	110.4		25	%	98.8		24	%	11.6
Amortization	63.5		15	%	67.0		16	%	(3.5)
Goodwill impairment charge	11.0		3	%	—		—	%	11.0
General and administrative	22.0		5	%	21.2		5	%	0.8
	382.9				353.3				29.6
Other income (expense):
Interest expense	(72.8)		16	%	(44.9)		11	%	(27.9)
Other income	3.8		—	%	2.3		1	%	1.5



Loss on early extinguishment of debt	(0.8)		—	%	—		—	%	(0.8)
Gain on sale of real estate assets	—		—	%	50.7		12	%	(50.7)
Net income/(loss)	$	(20.4)	(5)	%	$	71.3	17	%	$	(91.7)

Revenue

Rental and tenant reimbursement revenue increased approximately $12.2 million for the nine months ended September 30, 2023 as compared to the same period in the prior year. The increase was primarily due to capital recycling activity completed during 2022 and higher tenant reimbursements as a result of higher recoverable operating expenses during the current period as tenant utilization of our buildings continued to increase during 2023 as compared to the prior period.

Other property related income increased approximately $3.6 million for the nine months ended September 30, 2023 as compared to the same period in the prior year primarily due to higher transient parking at our buildings during the current period, as compared to the prior period. Additionally, parking revenue associated with the 1180 Peachtree Street building acquired during the third quarter of 2022 also contributed to the increase.

Expense

Property operating costs increased approximately $9.7 million for the nine months ended September 30, 2023 as compared to the same period in the prior year. The variance was primarily due to higher recoverable operating expenses such as janitorial, security, and utilities resulting from higher tenant utilization during the current period, and capital recycling activity completed during 2022.

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Depreciation expense increased approximately $11.6 million for the nine months ended September 30, 2023 as compared to the same period in the prior year. The increase was primarily due to additional building and tenant improvements acquired and/or placed in service subsequent to January 1, 2022, as well as the acquisition of 1180 Peachtree Street mentioned above.

Amortization expense decreased approximately $3.5 million for the nine months ended September 30, 2023 as compared to the same period in the prior year. The decrease in amortization expense associated with certain lease intangible assets at our existing properties becoming fully amortized subsequent to January 1, 2022 was largely offset by additional amortization associated with the acquisition of 1180 Peachtree Street mentioned above.

During the nine months ended September 30, 2023, we reduced the carrying amount of goodwill resulting in the recognition of a non-cash impairment charge of approximately $11.0 million. See Note 6 to our accompanying consolidated financial statements for further details.

Other Income (Expense)

Interest expense increased approximately $27.9 million for the nine months ended September 30, 2023 as compared to the same period in the prior year primarily driven by increased interest rates during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, as well as a higher average debt balance outstanding during the current ~~period as a result of the purchase of 1180 Peachtree Street, as well as increased interest rates on our variable rate debt.~~period. This increase was partially offset by a ~~$0.5~~$1.3 million increase in capitalized interest associated with various redevelopment projects in progress during the nine months ended September 30, ~~2022.~~2023.

Other income ~~decreased~~increased approximately ~~$5.0~~$1.5 million for the nine months ended September 30, ~~2022~~2023 as compared to the same period in the prior year due to interest income earned on cash invested prior to the ~~payoff~~repayment of ~~notes receivable due from~~ the ~~purchaser of our New Jersey Portfolio~~$350 Million Unsecured Senior Notes in ~~March of 2022.~~June 2023; consequently, we do not expect such interest income to recur in future periods.

~~Gain~~The loss on early extinguishment of debt for the nine months ended September 30, 2023 is comprised of the pro-rata write-off of unamortized debt issuance costs and discounts associated with the early repurchase of approximately $350 million aggregate principal amount of the $400 Million Unsecured Senior Notes due 2024, as well as fees paid, during the quarter ended September 30, 2023 (see Note 3 to our accompanying consolidated financial statements).

The $50.7 million gain on sale of real estate assets during the nine months ended September 30, 2022 primarily consisted of the gain recognized on the sale of the 225 & 235 Presidential Way buildings, which closed in January of 2022.

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Issuer and Guarantor Financial Information

As of September 30, 2023, Piedmont, through its wholly-owned subsidiary Piedmont ~~Operating Partnership, LP ("Piedmont OP" or the "Issuer"), has issued~~OP, had four separate issuances totaling approximately $1.1 billion of senior unsecured notes payable ~~of $350 million that mature in 2023, $400 million~~outstanding that mature in 2024, ~~and two separate issuances of $300 million each, that mature in~~2028, 2030 and 2032 ~~respectively,~~(see Note 3 to our accompanying consolidated financial statements for additional details regarding each of these issuances) (collectively, the "Notes"). The Notes are senior unsecured obligations of Piedmont OP, ~~and~~ rank equally in right of payment with all of Piedmont OP's other existing and future senior unsecured indebtedness, and would be effectively subordinated in right of payment to any of Piedmont OP’s future mortgage or ~~any~~ other ~~future~~ secured indebtedness (to the extent of the value of the collateral securing such indebtedness) and to all existing and future indebtedness and other liabilities of Piedmont OP’s subsidiaries, whether secured or unsecured.

The Notes are fully and unconditionally guaranteed by Piedmont, ~~Office Realty Trust, Inc. (the "Guarantor"),~~ the parent entity that consolidates Piedmont OP and all other subsidiaries. ~~By execution of the guarantee, the Guarantor~~In particular, Piedmont guarantees to each holder of the Notes that the principal and interest on the Notes will be paid in full when due, whether at the maturity dates of the respective loans, or upon acceleration, upon redemption, or ~~otherwise, and~~otherwise; interest on overdue principal and interest on any overdue interest, if any, on the Notes will also be paid in full when due; and all other obligations of the Issuer to the holders of the Notes will be promptly paid in full. ~~The Guarantor's~~Piedmont's guarantee of the Notes is its senior unsecured obligation and ranks equally in right of payment with all of ~~the Guarantor's~~Piedmont's other existing and future senior unsecured indebtedness and guarantees. ~~The Guarantor’s~~Piedmont’s guarantee of the Notes is effectively subordinated in right of payment to any future mortgage or other secured indebtedness or secured guarantees of ~~the Guarantor~~Piedmont (to the extent of the value of the collateral securing such indebtedness and guarantees); and all existing and future indebtedness and other liabilities, whether secured or unsecured, of ~~the Guarantor’s~~Piedmont’s subsidiaries.

In the event of the bankruptcy, liquidation, reorganization or other winding up of Piedmont OP or ~~the Guarantor,~~Piedmont, assets that secure any of their respective secured indebtedness and other secured obligations will be available to pay their respective obligations under the Notes or the guarantee, as applicable, and their other respective unsecured indebtedness and other unsecured obligations only after all of their respective indebtedness and other obligations secured by those assets have been repaid in full.

~~The non-Guarantors~~All non-guarantor subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Notes, or to make any funds available therefore, whether by dividends, loans, distributions or other payments.

Pursuant to Rule 13-01 of Regulation S-X, Guarantors and Issuers of Guaranteed Securities Registered or Being Registered, the following tables present summarized financial information for Piedmont OP as ~~Issuer~~issuer and Piedmont ~~Office Realty Trust, Inc.~~ as ~~Guarantor~~guarantor on a combined basis after elimination of (i) intercompany transactions and balances among ~~the Issuer~~Piedmont OP and ~~the Guarantor~~Piedmont and (ii) equity in earnings from and investments in any subsidiary that is a ~~non-Guarantor~~non-guarantor (in thousands):


Combined Balances of Piedmont OP and Piedmont Office Realty Trust, Inc. as Issuer and Guarantor, respectively		As of September 30, 2022		As of December 31, 2021
Combined Balances of Piedmont OP and Piedmont, Inc. as Issuer and Guarantor, respectively						Combined Balances of Piedmont OP and Piedmont, Inc. as Issuer and Guarantor, respectively	As of September 30, 2023		As of December 31, 2022

Due from non-guarantor subsidiary	Due from non-guarantor subsidiary	$	900	$	900	Due from non-guarantor subsidiary	$	900	$	900
Total assets	Total assets	$	358,622	$	352,788	Total assets	$	312,479	$	325,884
Total liabilities	Total liabilities	$	1,982,165	$	1,945,846	Total liabilities	$	1,890,513	$	1,845,551

				For the Nine Months Ended September 30, 2022					For the Nine Months Ended September 30, 2023
Total revenues	Total revenues			$	39,419	Total revenues			$	36,842
Net loss	Net loss			$	(37,769)	Net loss			$	(72,634)

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Net Operating Income by Geographic Segment

Our ~~President and Chief Executive Officer has been identified as our~~ chief operating decision maker ("CODM"), ~~as defined by GAAP. Our CODM~~who is our President and Chief Executive Officer, evaluates ~~Piedmont's~~our portfolio and assesses the ongoing operations and performance of ~~its~~our properties utilizing the following geographic segments: Atlanta, Dallas, Orlando, Washington, D.C.~~, Boston, Orlando,~~/Northern Virginia, Minneapolis, New York, and ~~Minneapolis.~~Boston. These operating segments are also our reportable segments. AsAdditionally, as of September 30, ~~2022,~~2023, we ~~also~~ owned two properties in Houston that dodid not meet the definition of an operating or reportable segment as the CODM does not regularly review these properties for purposes of allocating resources or assessing ~~performance. Further, we do~~performance, and Piedmont does not maintain a significant presence or anticipate further investment in ~~this market.~~these markets. These two properties are ~~the primary contributors to NOI~~ included in "Other" below. See Note 1211 to the accompanying consolidated financial statements for additional information and a reconciliation of Net ~~income~~income/(loss) applicable to Piedmont to accrual-based net operating income ("NOI").

The following table presents accrual-basis NOI by geographic segment (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Atlanta	Atlanta	$	21,627	$	15,127	$	58,354	$	44,725	Atlanta	$	25,965	$	21,627	$	77,247	$	58,354
Dallas	Dallas	15,325		16,246		47,189		50,267		Dallas	16,334		15,325		47,313		47,189
Washington, D.C.		9,712		9,802		29,851		27,460
Orlando										Orlando	8,895		8,865		27,446		26,206
Washington, D.C./Northern Virginia										Washington, D.C./Northern Virginia	9,183		9,712		27,156		29,851
Minneapolis										Minneapolis	9,166		8,072		25,622		23,950
New York										New York	7,565		7,959		22,286		23,901
Boston	Boston	9,646		12,058		29,922		33,829		Boston	6,422		9,646		19,213		29,922
Orlando		8,865		7,656		26,206		25,743
New York		7,959		7,502		23,901		22,636
Minneapolis		8,072		8,089		23,950		24,556
Total reportable segments	Total reportable segments	81,206		76,480		239,373		229,216		Total reportable segments	83,530		81,206		246,283		239,373
Other	Other	3,893		2,731		10,794		6,436		Other	3,544		3,893		9,956		10,794
Total NOI	Total NOI	$	85,099	$	79,211	$	250,167	$	235,652	Total NOI	$	87,074	$	85,099	$	256,239	$	250,167

Comparison of the Nine Months Ended September 30, ~~2022~~2023 Versus the Nine Months Ended September 30, ~~2021~~2022

Atlanta

NOI increased primarily due to the acquisition of ~~999 Peachtree Street during the fourth quarter of 2021 and~~ 1180 Peachtree Street during the third quarter of 2022.

~~Dallas~~

NOI decreased primarily due to a contraction by a tenant at our 750 West John Carpenter Freeway during fourth quarter 2021, as well as an expiration of a lease at our One Galleria Tower property during 2021.

Washington, D.C.

NOI ~~increased~~decreased due to the ~~commencement~~early termination of certain leases ~~subsequent to July 1, 2021, primarily~~ at ~~400 Virginia Avenue and 3100 Clarendon Boulevard.~~Arlington Gateway in late 2022.

Boston

NOI decreased primarily due to the disposition of the 225 and 235 Presidential Way assets in January 2022 and the disposition of the One Brattle Square and 1414 Massachusetts assets (the Cambridge Portfolio) in December 2022.

~~Other~~

NOI increased primarily due to the expiration of rental and operating expense abatements associated with the Transocean lease at our Enclave Place building in Houston, Texas during the second quarter of 2021.

~~Table of Contents~~

Funds From Operations ("FFO"), Core Funds From Operations ("Core FFO"), and Adjusted Funds From Operations

(“AFFO”)

Net ~~income~~income/(loss) calculated in accordance with GAAP is the starting point for calculating FFO, Core FFO, and AFFO. These metrics are non-GAAP financial measures and should not be viewed as an alternative measurement of our operating performance to net ~~income.~~income/(loss). Management believes that accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting alone to be insufficient. As a result, we believe that the additive use of FFO, Core FFO, and AFFO, together with the required GAAP presentation, provides a more complete understanding of our performance relative to our competitors and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities.

Table of Contents

We calculate FFO in accordance with the current National Association of Real Estate Investment Trusts ("NAREIT") definition. NAREIT currently defines FFO as Net ~~income~~income/(loss) (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. Other REITs may not define FFO in accordance with the NAREIT definition, or may interpret the current NAREIT definition differently than we do; therefore, our computation of FFO may not be comparable to the computation made by other REITs.

We calculate 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 or infrequent items. Core FFO is a non-GAAP financial measure and should not be viewed as an alternative to net ~~income~~income/(loss) calculated in accordance with GAAP as a measurement of our operating performance. We believe 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 our core recurring business operations. As a result, we believe 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 us; therefore, our computation of Core FFO may not be comparable to the computation made by other REITs.

We calculate 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~~income/(loss) calculated in accordance with GAAP as a measurement of our operating performance. We believe that AFFO is helpful to investors as a meaningful supplemental comparative performance measure of our ability to make incremental capital investments in new properties or enhancements to existing properties that improve revenue growth potential. Other REITs may not define AFFO in the same manner as us; therefore, our computation of AFFO may not be comparable to the computation of other REITs.

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Reconciliations of net ~~income~~income/(loss) applicable to common stock to FFO, Core FFO, and AFFO are presented below (in thousands except per share amounts):

Three Months Ended Nine Months Ended
September 30,
2022
Per
Share(1)
September 30,
2021
Per
Share(1)
September 30,
2022
Per
Share(1)
September 30,
2021
Per
Share(1)
GAAP net income applicable to common stock $ 3,331 $ 0.03 $ 11,306 $ 0.09 $ 71,261 $ 0.58 $ 30,597 $ 0.25
Depreciation of real estate assets 34,743 0.28 30,336 0.25 98,262 0.79 87,873 0.71
Amortization of lease-related costs 23,278 0.19 20,362 0.16 66,986 0.54 63,943 0.51
Gain on sale of real estate assets — — — — (50,674) (0.41) — —
NAREIT Funds From Operations and Core Funds From Operations applicable to common stock 61,352 $ 0.50 62,004 $ 0.50 185,835 $ 1.50 182,413 $ 1.47
Adjustments:
Amortization of debt issuance costs, fair market value adjustments on notes payable, and discounts on debt 922 849 2,463 2,076
Depreciation of non real estate assets 189 216 537 762
Straight-line effects of lease revenue (3,268) (2,122) (8,874) (8,627)
Stock-based compensation adjustments 1,950 1,637 3,116 5,152
Amortization of lease-related intangibles (3,542) (2,731) (9,713) (8,192)
Non-incremental capital expenditures (2)
(14,121) (18,640) (42,406) (52,849)
Adjusted Funds From Operations applicable to common stock $ 43,482 $ 41,213 $ 130,958 $ 120,735
Weighted-average shares outstanding – diluted 123,697 124,627 123,631 124,472


	Three Months Ended								Nine Months Ended
	September 30, 2023		Per Share(1)		September 30, 2022		Per Share(1)		September 30, 2023		Per Share(1)		September 30, 2022		Per Share(1)
GAAP net income/(loss) applicable to common stock	$	(17,002)	$	(0.14)	$	3,331	$	0.03	$	(20,357)	$	(0.16)	$	71,261	$	0.58
Depreciation of real estate assets	37,790		0.31		34,743		0.28		109,680		0.88		98,262		0.79
Amortization of lease-related costs	20,151		0.16		23,278		0.19		63,495		0.51		66,986		0.54
Goodwill impairment charge	10,957		0.09		—		—		10,957		0.09		—		—
Gain on sale of real estate assets	—		—		—		—		—		—		(50,674)		(0.41)


NAREIT Funds From Operations applicable to common stock	$	51,896	$	0.42	$	61,352	$	0.50	$	163,775	$	1.32	$	185,835	$	1.50
Adjustments:


Loss on early extinguishment of debt	820		0.01		—		—		820		0.01		—		—

Core Funds From Operations applicable to common stock	52,716		$	0.43	61,352		$	0.50	164,595		$	1.33	185,835		$	1.50
Adjustments:
Amortization of debt issuance costs and discounts on debt	1,410				922				3,961				2,463
Depreciation of non real estate assets	350				189				711				537
Straight-line effects of lease revenue	(418)				(3,268)				(6,360)				(8,874)

Stock-based compensation adjustments	2,070				1,950				4,348				3,116
Amortization of lease-related intangibles	(4,479)				(3,542)				(11,010)				(9,713)


Non-incremental capital expenditures (2)	(11,710)				(14,121)				(35,070)				(42,406)
Adjusted Funds From Operations applicable to common stock	$	39,939			$	43,482			$	121,175			$	130,958
Weighted-average shares outstanding – diluted	123,781		(3)		123,697				123,689		(3)		123,631

(1)Based on weighted average shares outstanding – diluted.

(2)We define non-incremental capital expenditures as 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 shares are not included when calculating net loss per diluted share applicable to Piedmont for the three and nine months ended September 30, 2023 as they would reduce the loss per share presented.

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Property and Same Store Net Operating Income

Property Net Operating Income ("Property NOI") is a non-GAAP measure which we use to assess our operating results. We calculate Property NOI beginning with Net ~~income~~income/(loss) (calculated in accordance with GAAP) before adjusting for interest, depreciation and amortization and removing any impairments and 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. Furthermore, we remove general and administrative expenses, income associated with property management performed by us for other organizations, and other income or expense items, such as interest income from loan investments. For Property NOI (cash basis), the effects of non-cash general reserve for uncollectible accounts, straight-lined rents and fair value lease revenue are also eliminated; while such effects are not adjusted in calculating Property NOI (accrual basis). Property NOI is a non-GAAP financial measure and should not be viewed as an alternative to net ~~income~~income/(loss) calculated in accordance with GAAP as a measurement of our operating performance. We believe that Property NOI, on either a cash or accrual basis, is helpful to investors as a supplemental comparative performance measure of income generated by our properties alone without our administrative overhead. Other REITs may not define Property NOI in the same manner as we do; therefore, our computation of Property NOI may not be comparable to that of other REITs.

Table of Contents

We calculate Same Store Net Operating Income ("Same Store NOI") as Property NOI attributable to the properties (excluding undeveloped land parcels) that were (i) owned by us during the entire span of the current and prior year reporting periods; and (ii) that were not ~~being developed~~out of service for development or ~~redeveloped during those periods; and (iii) for which no operating expenses were capitalized~~redevelopment during those periods. Same Store NOI, on either a cash or accrual basis, is a non-GAAP financial measure and should not be viewed as an alternative to net ~~income~~income/(loss) calculated in accordance with GAAP as a measurement of our operating performance. We believe 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 we do; therefore, our computation of Same Store NOI may not be comparable to that of other REITs.

~~Table of Contents~~

The following table sets forth a reconciliation from net income calculated in accordance with GAAP to EBITDAre, Core EBITDA, Property NOI, and Same Store NOI, on both a cash and accrual basis, for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively (in thousands):


		Cash Basis					Accrual Basis						Cash Basis					Accrual Basis
		Three Months Ended					Three Months Ended						Three Months Ended					Three Months Ended
		September 30, 2022			September 30, 2021		September 30, 2022			September 30, 2021			September 30, 2023			September 30, 2022		September 30, 2023			September 30, 2022

Net income applicable to Piedmont (GAAP basis)		$	3,331		$	11,306	$	3,331		$	11,306
Net income/(loss) applicable to Piedmont (GAAP basis)												Net income/(loss) applicable to Piedmont (GAAP basis)	$	(17,002)		$	3,331	$	(17,002)		$	3,331

Net loss applicable to noncontrolling interest		—			(5)		—			(5)
Net income/(loss) applicable to noncontrolling interest												Net income/(loss) applicable to noncontrolling interest	1			—		1			—
Interest expense	Interest expense	17,244			12,450		17,244			12,450		Interest expense	27,361			17,244		27,361			17,244
Depreciation	Depreciation	34,931			30,552		34,931			30,552		Depreciation	38,140			34,931		38,140			34,931
Amortization	Amortization	23,278			20,362		23,278			20,362		Amortization	20,151			23,278		20,151			23,278
Depreciation and amortization attributable to noncontrolling interests	Depreciation and amortization attributable to noncontrolling interests	21			21		21			21		Depreciation and amortization attributable to noncontrolling interests	20			21		20			21

Goodwill impairment charge												Goodwill impairment charge	10,957			—		10,957			—

EBITDAre(1)												EBITDAre(1)	$	79,628		$	78,805	$	79,628		$	78,805
Loss on early extinguishment of debt												Loss on early extinguishment of debt	820			—		820			—

EBITDAre(1) and Core EBITDA(2)		78,805			74,686		78,805			74,686
Core EBITDA(2)												Core EBITDA(2)	80,448			78,805		80,448			78,805
General & administrative expenses	General & administrative expenses	6,590			6,955		6,590			6,955		General & administrative expenses	7,043			6,590		7,043			6,590
Management fee revenue (3)	Management fee revenue (3)	(177)			(309)		(177)			(309)		Management fee revenue (3)	(210)			(177)		(210)			(177)
Other income	Other income	(119)			(2,121)		(119)			(2,121)		Other income	(207)			(119)		(207)			(119)
Non-cash general reserve/(reversal) for uncollectible accounts		(1,000)			—
Reversal of non-cash general reserve for uncollectible accounts												Reversal of non-cash general reserve for uncollectible accounts	(600)			(1,000)
Straight-line rent effects of lease revenue	Straight-line rent effects of lease revenue	(3,268)			(2,122)							Straight-line rent effects of lease revenue	(418)			(3,268)
Straight line effects of lease revenue attributable to noncontrolling interests	Straight line effects of lease revenue attributable to noncontrolling interests	(4)			1							Straight line effects of lease revenue attributable to noncontrolling interests	(2)			(4)
Amortization of lease-related intangibles	Amortization of lease-related intangibles	(3,542)			(2,731)							Amortization of lease-related intangibles	(4,479)			(3,542)

Property NOI	Property NOI	77,285			74,359		85,099			79,211		Property NOI	81,575			77,285		87,074			85,099

Net operating income from:	Net operating income from:											Net operating income from:
Acquisitions (4)	Acquisitions (4)	(5,423)			—		(7,895)			—		Acquisitions (4)	(5,941)			(2,867)		(7,404)			(4,164)
Dispositions (5)	Dispositions (5)	1			(2,308)		1			(2,427)		Dispositions (5)	28			(2,587)		28			(2,579)
Other investments (6)	Other investments (6)	211			267		150			324		Other investments (6)	212			211		111			150

Same Store NOI	Same Store NOI	$	72,074		$	72,318	$	77,355		$	77,108	Same Store NOI	$	75,874		$	72,042	$	79,809		$	78,506

Change period over period in Same Store NOI	Change period over period in Same Store NOI	(0.3)		%	N/A		0.3		%	N/A		Change period over period in Same Store NOI	5.3		%	N/A		1.7		%	N/A

Table of Contents

(1)We calculate Earnings Before Interest, Taxes, Depreciation, and Amortization- Real Estate ("EBITDAre") in accordance with the current 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 our operating performance. We believe that EBITDAre is helpful to investors as a supplemental performance measure because it provides a metric for understanding our 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). We also believe 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 us; therefore, our computation of EBITDAre may not be comparable to that of such other REITs.

(2)We calculate Core Earnings Before Interest, Taxes, Depreciation, and Amortization ("Core EBITDA") as net income (computed in accordance with GAAP) before interest, taxes, depreciation and amortization and incrementally removing any impairment losses,

~~Table of Contents~~

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 our operating performance. We believe that Core EBITDA is helpful to investors as a supplemental performance measure because it provides a metric for understanding the performance of our 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 our business. Other REITs may not define Core EBITDA in the same manner as us; therefore, our computation of Core EBITDA may not be comparable to that of other REITs.

(3)Presented net of related operating expenses incurred to earn such management fee revenue.

(4)Acquisitions include ~~999~~1180 Peachtree Street ~~purchased during the fourth quarter of 2021, and 1180 Peachtree Street,~~in Atlanta, Georgia purchased during the third quarter of ~~2022, both located in Atlanta, Georgia.~~2022.

(5)Dispositions include ~~Two Pierce Place~~One Brattle Square and 1414 Massachusetts Avenue in ~~Itasca, Illinois and 225 and 235 Presidential Way~~Cambridge, Massachusetts, sold in ~~Woburn, Massachusetts, all sold during~~ the ~~first~~fourth quarter of 2022.

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

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The following table sets forth a reconciliation of net ~~income~~income/(loss) calculated in accordance with GAAP to EBITDAre, Core EBITDA, Property NOI, and Same Store NOI, on both a cash and accrual basis, for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):


		Cash Basis					Accrual Basis						Cash Basis					Accrual Basis
		Nine Months Ended					Nine Months Ended						Nine Months Ended					Nine Months Ended
		September 30, 2022			September 30, 2021		September 30, 2022			September 30, 2021			September 30, 2023			September 30, 2022		September 30, 2023			September 30, 2022

Net income applicable to Piedmont (GAAP)		$	71,261		$	30,597	$	71,261		$	30,597
Net income/(loss) applicable to Piedmont (GAAP)												Net income/(loss) applicable to Piedmont (GAAP)	$	(20,357)		$	71,261	$	(20,357)		$	71,261

Net loss applicable to noncontrolling interest		(1)			(9)		(1)			(9)
Net income/(loss) applicable to noncontrolling interest												Net income/(loss) applicable to noncontrolling interest	7			(1)		7			(1)
Interest expense	Interest expense	44,917			37,375		44,917			37,375		Interest expense	72,827			44,917		72,827			44,917
Depreciation	Depreciation	98,799			88,635		98,799			88,635		Depreciation	110,391			98,799		110,391			98,799
Amortization	Amortization	66,986			63,943		66,986			63,943		Amortization	63,495			66,986		63,495			66,986
Depreciation and amortization attributable to noncontrolling interests	Depreciation and amortization attributable to noncontrolling interests	65			63		65			63		Depreciation and amortization attributable to noncontrolling interests	60			65		60			65

Goodwill impairment charge												Goodwill impairment charge	10,957			—		10,957			—

Gain on sale of real estate assets	Gain on sale of real estate assets	(50,674)			—		(50,674)			—		Gain on sale of real estate assets	—			(50,674)		—			(50,674)

EBITDAre(1)												EBITDAre(1)	$	237,380		$	231,353	$	237,380		$	231,353
Loss on early extinguishment of debt												Loss on early extinguishment of debt	820			—		820			—

EBITDAre(1) and Core EBITDA(2)		231,353			220,604		231,353			220,604
Core EBITDA(2)												Core EBITDA(2)	238,200			231,353		238,200			231,353
General & administrative expenses	General & administrative expenses	21,212			22,417		21,212			22,417		General & administrative expenses	22,013			21,212		22,013			21,212
Management fee revenue (3)	Management fee revenue (3)	(743)			(946)		(743)			(946)		Management fee revenue (3)	(756)			(743)		(756)			(743)
Other income	Other income	(1,655)			(6,423)		(1,655)			(6,423)		Other income	(3,218)			(1,655)		(3,218)			(1,655)
Non-cash general reserve/(reversal) for uncollectible accounts		(2,000)			412
Reversal of non-cash general reserve for uncollectible accounts												Reversal of non-cash general reserve for uncollectible accounts	(1,000)			(2,000)
Straight-line effects of lease revenue	Straight-line effects of lease revenue	(8,874)			(8,627)							Straight-line effects of lease revenue	(6,360)			(8,874)
Straight line effects of lease revenue attributable to noncontrolling interests	Straight line effects of lease revenue attributable to noncontrolling interests	(6)			2							Straight line effects of lease revenue attributable to noncontrolling interests	(7)			(6)
Amortization of lease-related intangibles	Amortization of lease-related intangibles	(9,713)			(8,192)							Amortization of lease-related intangibles	(11,010)			(9,713)

Property NOI	Property NOI	229,574			219,247		250,167			235,652		Property NOI	237,862			229,574		256,239			250,167

Net operating (income)/loss from:	Net operating (income)/loss from:											Net operating (income)/loss from:
Acquisitions (4)	Acquisitions (4)	(10,791)			—		(15,692)			—		Acquisitions (4)	(16,784)			(2,867)		(22,384)			(4,164)
Dispositions (5)	Dispositions (5)	(567)			(5,724)		(638)			(6,317)		Dispositions (5)	102			(8,372)		102			(8,437)
Other investments (6)	Other investments (6)	539			624		528			793		Other investments (6)	548			539		244			528

Same Store NOI	Same Store NOI	$	218,755		$	214,147	$	234,365		$	230,128	Same Store NOI	$	221,728		$	218,874	$	234,201		$	238,094

Change period over period in Same Store NOI	Change period over period in Same Store NOI	2.2		%	N/A		1.8		%	N/A		Change period over period in Same Store NOI	1.3		%	N/A		(1.6)		%	N/A

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(1)We calculate ~~EBITDAre~~Earnings Before Interest, Taxes, Depreciation, and Amortization- Real Estate ("EBITDAre") in accordance with the current NAREIT definition. NAREIT currently defines EBITDAre as net ~~income~~income/(loss) (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 our operating performance. We believe that EBITDAre is helpful to investors as a supplemental performance measure because it provides a metric for understanding our 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). We also believe 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 us; therefore, our computation of EBITDAre may not be comparable to that of such other REITs.

(2)We calculate Core ~~EBITDA~~Earnings Before Interest, Taxes, Depreciation, and Amortization ("Core EBITDA") as net ~~income~~income/(loss) (computed in accordance with GAAP) before interest, taxes, depreciation and amortization and ~~incrementally~~ removing any impairment losses, gains or losses from sales of property and other significant infrequent items that create volatility within our earnings and make it difficult to determine the earnings generated by our core ongoing business. Core EBITDA is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of our operating performance. We believe that Core EBITDA is helpful to investors as a supplemental performance measure because it provides a metric for understanding the performance of our 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 our business. Other REITs may not define Core EBITDA in the same manner as us; therefore, our computation of Core EBITDA may not be comparable to that of other REITs.

(3)Presented net of related operating expenses incurred to earn such management fee revenue.

(5)Dispositions include Two Pierce Place in Itasca, Illinois and 225 and 235 Presidential Way in Woburn, Massachusetts, ~~all~~ sold during the first quarter of 2022, and One Brattle Square and 1414 Massachusetts Avenue in Cambridge, Massachusetts, sold in the fourth quarter of 2022.

(6)Other investments include ~~active out-of-service~~properties out of service for redevelopment ~~and~~or development projects, land, and recently completed redevelopment and development ~~projects.~~projects for which some portion of operating expenses were capitalized during the current and/or prior year reporting periods. The operating results from 222 South Orange Avenue in Orlando, Florida, are included in this line item.

Overview

Our portfolio isconsists of office properties located within identified growth submarkets in large metropolitan cities concentrated primarily in the Sunbelt. We typically lease space to creditworthy corporate or governmental tenants on a long-term basis. As of September 30, ~~2022,~~2023, our average lease was approximately 15,000 square feet with approximately six years of lease term remaining. ~~Consequently, leased~~Leased percentage, as well as rent roll ups and roll downs, which we experience as a result of re-leasing, can fluctuate widely between buildings and between tenants, depending on when a particular lease is scheduled to commence or expire.

Leased Percentage

Our portfolio ~~was 86.8%~~occupancy increased to 86.7% leased as of September 30, ~~2022,~~2023, as compared to ~~85.5%~~86.2% leased as of ~~December 31, 2021 and~~June 30, 2023. During the three months ended September 30, 2023, we completed approximately 302,000 square feet of leasing, including approximately 170,000 of new tenant leases which increased our leased percentage. Additionally, scheduled lease expirations for the portfolio as a whole for the ~~remainder~~rest of ~~2022 and~~ 2023 represent ~~less than 10%~~approximately 2% of our ALR, some portion of which may renew. To the extent the square footage from new leases for currently vacant space ~~exceed~~exceeds or ~~fall~~falls short of the square footage associated with non-renewing expirations, such leases would increase or decrease our overall leased percentage, respectively.

Impact of Downtime, Abatement Periods, and Rental Rate Changes

Commencement of a lease associated with a new ~~leases~~tenant in the property typically occurs 6-18 months after the lease execution date, after refurbishment of the space is completed. The downtime between a lease expiration and the new lease's commencement can negatively impact Property NOI and Same Store NOI comparisons (both accrual and cash basis). In addition, office leases for both new and ~~renewal,~~renewing tenants often contain upfront rental and/or operating expense abatement periods which delay the cash flow benefits of the lease even after the new ~~lease~~ or ~~renewal~~renewed lease has commenced, ~~and~~ negatively ~~impact~~impacting Property NOI and Same Store NOI on a cash basis until such abatements expire. As of September 30, ~~2022,~~2023, we had

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approximately ~~1.2~~1.1 million square feet of executed leases for vacant space yet to commence or under rental abatement, representing approximately ~~$38~~$36 million of additional annual cash revenue.

If we are unable to replace expiring leases with new or renewal leases at rental rates equal to or greater than the expiring rates, rental rate roll downs could occur and negatively impact Property NOI and Same Store NOI comparisons. As mentioned above, our diverse portfolio and the magnitude of some of our ~~tenant's~~tenants' leased ~~space~~spaces can result in rent roll ups and roll downs that can

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fluctuate widely on a building-by-building and a quarter-to-quarter basis. During the three months ended September 30, ~~2022,~~2023, we experienced a ~~33.1%~~11.7% and ~~37.6%~~10.3% roll up in cash and accrual rents, respectively, on executed leases related to space vacant one year or less. Both increases for the quarter were impacted by a lease renewal and extension executed with a tenant at our Three Galleria Tower building in Dallas, Texas during the three months ended September 30, 2022. If the effects of this lease transaction were to be removed, the percentage change in cash and accrual rents for the three months ended September 30, 2022 would be 9.9% and 12.6%, respectively. During the nine months ended September 30, ~~2022,~~2023, we experienced a ~~10.5%~~9.8% and ~~18.5%~~13.5% roll up in cash and accrual rents, ~~respectively.~~respectively, on executed leases related to space vacant one year or less.

During the three months ended September 30, 2023, Same Store NOI ~~was effectively flat~~increased by 5.3% and 1.7% on a cash and accrual basis, respectively, ~~for the three months ended September 30, 2022~~ as compared to the same period in the prior ~~year. However, Same Store NOI increased 2.2% and 1.8% on an cash and accrual basis, respectively, for~~year primarily due to rental rate roll-ups, as well as new leases commencing or leases with expiring rental or operating expense abatements beginning to outweigh leases that expired during the first nine months ~~ended September 30, 2022 as compared to the same period in the prior year. The primary drivers~~ of ~~the increases in both metrics were increased rental rates and the expiration of abatements at certain of our properties. Property NOI and~~ 2023.Same Store NOI comparisons for any given period fluctuate as a result of the mix of net leasing activity in individual properties during the respective period.

Election as a REIT

We have elected to be taxed as a REIT under the Code and have operated as such beginning with our taxable year ended December 31, 1998. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our adjusted REIT taxable income, computed without regard to the dividends-paid deduction and by excluding net capital gains attributable to our stockholders, as defined by the Code. As a REIT, we generally will not be subject to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we may be subject to federal income taxes on our taxable income for that year and for the four years following the year during which qualification is lost and/or penalties, unless the IRS grants us relief under certain statutory provisions. Such an event could materially adversely affect our net ~~income~~income/(loss) and net cash available for distribution to our stockholders. However, we believe that we are organized and operate in such a manner as to qualify for treatment as a REIT and intend to continue to operate in the foreseeable future in such a manner that we will remain qualified as a REIT for federal income tax purposes. We have elected to treat one of our ~~wholly-owned~~wholly owned subsidiaries as a taxable REIT ~~subsidiary. This~~ subsidiary ("TRS"). Our TRS performs non-customary services for tenants of buildings that we own, ~~and~~including real estate and non-real estate ~~related-services; however, any~~related-services. Any earnings related to such services performed by our ~~taxable REIT subsidiary~~TRS are subject to federal and state income taxes. In addition, for us to continue to qualify as a REIT, our investments in ~~taxable REIT subsidiaries~~TRS cannot exceed 20% of the value of our total assets.

Inflation

We are exposed to inflation risk, as income from long-term leases is the primary source of our cash flows from operations. There are provisions in the majority of our tenant leases that are intended to protect us from, and mitigate the risk of, the impact of inflation. These provisions include rent steps, reimbursement billings for operating expense pass-through charges, real estate tax, and insurance ~~reimbursements~~ on a per square-foot basis, or in some cases, annual reimbursement of operating expenses above certain per square-foot allowances. However, due to the long-term nature of the leases, the leases may not readjust their reimbursement rates frequently enough to fully cover inflation.

Application of Critical Accounting Estimates

Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to use ~~judgement~~judgment in the application of accounting policies, including making estimates and assumptions. These ~~judgements~~judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our ~~judgement~~judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus, resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses. Refer to our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for a discussion of our critical accounting policies and estimates. There have been no material changes to these policies during the nine months ended September 30, ~~2022.~~2023.

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Commitments and Contingencies

We are subject to certain commitments and contingencies with regard to certain transactions. Refer to Note 7 to our consolidated financial statements for further explanation.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our future income, cash flows, and estimated fair values of our financial instruments depend in part upon prevailing market interest rates. Market risk is the exposure to loss resulting from changes in interest rates, foreign currency, exchange rates, commodity prices, and equity prices. As of September 30, ~~2022,~~2023, our potential for exposure to market risk includes interest rate fluctuations in connection with borrowings under our $600 Million Unsecured 2022 Line of Credit, ~~$150 million of our $250 Million Unsecured 2018 Term Loan, and~~ the $200 Million 2022 Unsecured Term Loan ~~Facility.~~Facility, and the $215 Million Unsecured 2023 Term Loan. As a result, the primary market risk to which we believe we are exposed is interest rate risk. Many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control contribute to interest rate risk, including changes in the method pursuant to which ~~LIBOR rates and~~ SOFR rates are determined. Furthermore, the United Kingdom Financial Conduct Authority, which regulates LIBOR, has announced that USD LIBOR will no longer by published after June 30, 2023. Piedmont has completed an initial evaluation of its credit agreements which reference LIBOR and determined that each of these agreements already contain "fallback" language allowing for the establishment of an alternate rate of interest that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the U.S. at that time by Piedmont and the respective agent, as defined in the respective agreements.

Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flow primarily through a low-to-moderate level of overall borrowings, as well as managing the variability in rate fluctuations on our outstanding debt. As such, all of our debt as of September 30, 2023, other than ~~the $600 Million Unsecured 2022 Line of Credit, $150 million of our $250 Million Unsecured 2018 Term Loan and our $200 Million Unsecured Term Loan Facility~~those variable rate facilities mentioned above, is currently based on fixed or effectively-fixed interest rates to hedge against volatility in the credit markets. We do not enter into derivative or interest rate transactions for speculative purposes, as such all of our debt and derivative instruments were entered into for purposes other than trading purposes.

The estimated fair value of our debt was approximately ~~$2.0~~$1.9 billion and ~~$1.9~~$1.8 billion as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Our interest rate swap agreements in place as of September 30, ~~2022~~2023 and December 31, ~~2021~~2022 carried a notional amount totaling ~~$100~~$250 million with a weighted-average fixed interest rate of ~~3.56%~~4.54%.

As of September 30, ~~2022,~~2023, our total outstanding debt subject to fixed, or effectively fixed, interest rates totaling approximately ~~$1.6~~$1.5 billion has an average effective interest rate of approximately ~~3.58%~~5.10% per annum with expirations ranging from ~~2023~~2024 to 2032. A change in the market interest rate impacts the net financial instrument position of our fixed-rate debt portfolio but has no impact on interest incurred or cash flows for that portfolio.

As of September 30, ~~2022,~~2023, we had ~~$162.0~~$157 million outstanding on our $600 Million Unsecured 2022 Line of Credit. Our $600 Million Unsecured 2022 Line of Credit currently has a stated rate of Adjusted SOFR plus ~~0.85%~~0.84% per annum (based on our current corporate credit rating), resulting in a total interest rate of 3.86%. The current stated interest rate spread on $150 million of the $250 Million Unsecured 2018 Term Loan that is not effectively fixed through interest rate swaps is LIBOR plus 0.95% (based on our current corporate credit rating), which, as of September 30, 2022, resulted in a total interest rate on $150 million of the $250 Million Unsecured 2018 Term Loan of 4.07%6.24%. Our $200 Million Unsecured 2022 Term Loan Facility has a stated rate of Adjusted SOFR plus 1.00% per annum (based on our current corporate credit rating), resulting in a total interest rate of ~~4.13%~~6.43%. Our $215 Million Unsecured 2023 Term Loan has a stated rate of Adjusted SOFR plus 1.05% per annum (based on our current corporate credit rating), resulting in a total interest rate of 6.45%. To the extent that we borrow additional funds in the future under the $600 Million Unsecured 2022 Line of Credit or potential future variable-rate ~~lines of credit,~~debt facilities, we would have exposure to increases in interest rates, which would potentially increase our cost of debt. Additionally, a 1.0% increase in variable interest rates on our existing outstanding borrowings as of September 30, ~~2022~~2023 would increase interest expense approximately ~~$5.1~~$5.7 million on a per annum basis.

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ITEM 4. CONTROLS AND PROCEDURES

Management’s Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of management, including the Principal Executive Officer and the Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the quarterly period covered by this report. Based upon that evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report in providing a reasonable level of assurance that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in applicable SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed by us in the reports we file under the Exchange Act is accumulated and communicated to our management, including the Principal Executive Officer and the Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not subject to any material pending legal proceedings. However, we are subject to routine litigation arising in the ordinary course of owning and operating real estate assets. Our management expects that these ordinary routine legal proceedings will be covered by insurance and does not expect these legal proceedings to have a material adverse effect on our financial condition, results of operations, or liquidity. Additionally, management is not aware of any legal proceedings against Piedmont contemplated by governmental authorities.

ITEM 1A. RISK FACTORS

The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions and make additional investments.

The Federal Deposit Insurance Corporation only insures amounts up to $250,000 per depositor. We have cash and cash equivalents and restricted cash deposited in certain financial institutions in excess of federally insured levels. Recently, we have seen the abrupt failure of more than one regional bank. Although we hold cash primarily in the top ten banks in the United States and we did not experience any loss related to the recent bank failures, if any of the banking institutions in which we deposit funds ultimately fails, we may lose amounts of our deposits over federally insured levels. The loss of our deposits could reduce the amount of cash we have available to distribute, to pay down maturing debt, or to invest, and could result in a decline in the value of our stockholders' investment.

There have been no other known material changes, other than as described above, from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)There were no unregistered sales of equity securities during the third quarter of ~~2022.~~2023.

(b)Not applicable.

(c)There were no repurchases of shares of our common stock during the third quarter of ~~2022.~~2023. As of September 30, ~~2022,~~2023, approximately $150.5 million remains available under our stock repurchase program to make share repurchases through February 2024, at the discretion of management.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On November 1, 2022, Piedmont entered into an employment agreement with its Executive Vice-President and Chief Operating Officer, George M. Wells. The terms of the agreement are substantially the same as the terms of other employment agreements that Piedmont has previously entered into with certain of its executive officers, including: annual renewal unless either party gives 90 day written notice; a claw back provision if Piedmont is required to prepare an accounting restatement due to Piedmont’s material noncompliance, as a result of misconduct, with any financial reporting requirement under the securities laws; and one-year of severance under certain circumstances in the event that his employment is terminated. For additional information, please refer to the description of Piedmont’s employment agreements with its executive officers included in Piedmont’s 2022 Proxy Statement filed on March 18, 2022 and the text of Mr. Wells’ employment agreement filed as Exhibit 10.4 to this Quarterly Report on Form 10-Q, which is incorporated herein by reference.None.

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ITEM 6. EXHIBITS

Exhibit

Number

Description of Document

3.1

Third Articles of Amendment and Restatement of Piedmont Office Realty Trust, Inc. (the “Company”) (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed on March 16, 2010).

3.2

Articles of Amendment of the Company effective June 30, 2011 (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on July 6, 2011).

3.3

Articles Supplementary of the Company effective June 30, 2011 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on July 6, 2011).

3.4

Articles Supplementary to the Third Articles of Amendment and Restatement of the Company, as supplemented and amended (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed on November 14, 2016).

3.5

Articles of Amendment to the Third Articles of Amendment and Restatement of the Company, as supplemented and amended (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 23, 2018).

3.6

Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on March 19, 2019).

~~10.1~~

Term Loan Agreement dated as of July 22, 2022, by and among Piedmont Operating Partnership, LP, as Borrower, Piedmont Office Realty Trust, Inc., as Parent, Truist Securities, Inc., as Lead Arranger and Book Manager, Truist Bank, as Administrative Agent, and the other financial institutions initially signatory thereto and their assignees (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on July 27, 2022)

~~10.2~~

Loan Assignment and Assumption Agreement and Omnibus Amendment to Note, Loan Agreement and Other Loan Documents (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on August 16, 2022)

~~10.3~~

Loan Agreement dated as of September 10, 2018 by and between 1180 Peachtree Office Investors, LLC, as Borrower, and Metlife Real Estate Lending LLC, as Lender (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed on August 16, 2022)

~~10.4~~

~~Employment Agreement dated November 1, 2022, by and between the Company and George M. Wells~~

4.1

Supplemental Indenture, dated as of July 20, 2023, by and among Piedmont Operating Partnership, LP, Piedmont Office Realty Trust, Inc. and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K, filed on July 20, 2023).

4.2

Form of 9.250% Senior Notes due 2028 (incorporated by reference and included in Exhibit 4.2 to the Company's Current Report on Form 8-K, filed July 20, 2023).

22.1

Subsidiary Issuer of Guaranteed Securities ~~(incorporated by reference to Exhibit 22.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2021, filed on February 17, 2022)~~

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		PIEDMONT OFFICE REALTY TRUST, INC.
		(Registrant)

Dated:	~~November 2, 2022~~October 30, 2023	By:	/s/ Robert E. Bowers
			Robert E. Bowers
			Chief Financial Officer and Executive Vice President
			(Principal Financial Officer and Duly Authorized Officer)

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	September 30, 2022		December 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


	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:
2023	160		29,545		34,523		12,625
2024	126		22,101		26,919		10,071
2025	48		16,680		21,541		8,441
2026	22		13,146		18,228		6,904
2027	13		10,426		15,010		5,814
Thereafter	30		22,192		33,220		13,139
	$	450	$	123,077	$	159,943	$	60,694

Weighted-Average Amortization Period (in years)	4		6		6		6


Buildings Sold	Location / Reportable Segment	Date of Sale	Gain on Sale of Real Estate Assets		Net Sales Proceeds





























Two Pierce Place	Itasca, Illinois / Other	January 25, 2022	$	1,741	$	24,272
225 and 235 Presidential Way	Boston, Massachusetts / Boston	January 28, 2022	48,933		119,324
Total			$	50,674	$	143,596