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(Mark One)

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

OR

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

For the Transition Period From                      To                     

 ____________________________________________________ 

Maryland						58-2328421
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

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

Large accelerated filer

x

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐ No   x

123,395,381 shares

 

									Page No.
PART I			Financial Information
			Item 1.			Consolidated Financial Statements			5
						Consolidated Balance Sheets—September 30, 2022 (Unaudited) and December 31, 2021			6
						Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021			7
						Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021			8
						Consolidated Statements of Stockholders' Equity (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021			9
						Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2022 and 2021			11
						Condensed Notes to Consolidated Financial Statements (Unaudited)			12
			Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
			Item 3.			Quantitative and Qualitative Disclosures About Market Risk			42
			Item 4.			Controls and Procedures			43
PART II.			Other Information
			Item 1.			Legal Proceedings			44
			Item 1A.			Risk Factors			44
			Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			44
			Item 3.			Defaults Upon Senior Securities			44
			Item 4.			Mine Safety Disclosures			44
			Item 5.			Other Information			44
			Item 6.			Exhibits			45

•Economic, regulatory, socio-economic (including work from home), technological (e.g. Metaverse, Zoom, etc), and other changes (including accounting standards) that impact the real estate market generally, the office sector or the patterns of use of commercial office space in general, or the markets where we primarily operate or have high concentrations of Annualized Lease Revenue (“ALR”) (see definition below);

•The impact of competition on our efforts to renew existing leases or re-let space on terms similar to existing leases;

•Lease terminations, lease defaults, lease contractions, or changes in the financial condition of our tenants, particularly by one of our large lead tenants;

•Impairment charges on our long-lived assets or goodwill resulting therefrom;

•The success of our real estate strategies and investment objectives, including our ability to implement successful redevelopment and development strategies or identify and consummate suitable acquisitions and divestitures;

•The illiquidity of real estate investments, including economic changes, such as rising interest rates, which could impact the number of buyers/sellers of our target properties, and regulatory restrictions to which real estate investment trusts ("REITs") are subject and the resulting impediment on our ability to quickly respond to adverse changes in the performance of our properties;

•The risks and uncertainties associated with our acquisition and disposition of properties, many of which risks and uncertainties may not be known at the time of acquisition or disposition;

•Development and construction delays, including the potential of supply chain disruptions, and resultant increased costs and risks;

•Future acts of terrorism, civil unrest, or armed hostilities in any of the major metropolitan areas in which we own properties, or future cybersecurity attacks against any of our properties or our tenants;

•Risks related to the occurrence of cyber incidents, or a deficiency in our cybersecurity, which could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships;

•Costs of complying with governmental laws and regulations, including environmental standards imposed on office building owners;

•Uninsured losses or losses in excess of our insurance coverage, and our inability to obtain adequate insurance coverage at a reasonable cost;

•Additional risks and costs associated with directly managing properties occupied by government tenants, such as potential changes in the political environment, a reduction in federal or state funding of our governmental tenants, or an increased risk of default by government tenants during periods in which state or federal governments are shut down or on furlough;

•Significant price and volume fluctuations in the public markets, including on the exchange which we listed our common stock;

•Changes in the method pursuant to which the London Interbank Offered Rate ("LIBOR") and the Secured Overnight Financing Rate (“SOFR”) rates are determined and the planned phasing out of United States dollar ("USD") LIBOR after June 2023;

•Changing capital reserve requirements on our lenders and rapidly rising interest rates in the public bond markets could impact our ability to finance properties or refinance existing debt or significantly increase operating/financing costs;

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

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

•Uncertainties associated with environmental and regulatory matters;

•Changes in the financial condition of our tenants directly or indirectly resulting from geopolitical developments that could negatively affect important supply chains and international trade, the termination or threatened termination of existing international trade agreements, or the implementation of tariffs or retaliatory tariffs on imported or exported goods;

•The effect of any litigation to which we are, or may become, subject;

•Additional risks and costs associated with owning properties occupied by tenants in particular industries, such as oil and gas, hospitality, travel, co-working, etc., including risks of default during start-up and during economic downturns;

•Changes in tax laws impacting REITs and real estate in general, as well as our ability to continue to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), or other tax law changes which may adversely affect our stockholders;

•The future effectiveness of our internal controls and procedures;

•Actual or threatened public health epidemics or outbreaks, such as experienced during the COVID-19 pandemic, as well as governmental and private measures taken to combat such health crises, could have a material adverse effect on our business operations and financial results;

•The adequacy of our general reserve related to tenant lease-related assets or the establishment of any other reserve in the future; and

•Other factors, including the risk factors discussed under Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2021.

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

			(Unaudited)
			September 30, 2022						December 31, 2021
Assets:
Real estate assets, at cost:
Land			$	578,722					$	529,941
Buildings and improvements, less accumulated depreciation of $926,357 and $861,206 as of September 30, 2022 and December 31, 2021, respectively			2,825,365						2,513,697
Intangible lease assets, less accumulated amortization of $88,721 and $83,777 as of September 30, 2022 and December 31, 2021, respectively			123,527						94,380
Construction in progress			44,977						43,406
Real estate assets held for sale, net			—						63,887
Total real estate assets			3,572,591						3,245,311
Cash and cash equivalents			10,653						7,419
Tenant receivables, net of allowance for doubtful accounts of $2,000 and $4,000 as of September 30, 2022 and December 31, 2021, respectively			7,796						2,995
Straight-line rent receivables			173,122						162,632
Notes receivable			—						118,500
Restricted cash and escrows			2,191						1,441
Prepaid expenses and other assets			23,925						20,485
Goodwill			98,918						98,918
Interest rate swaps			3,760						—
Deferred lease costs, less accumulated amortization of $218,399 and $205,100 as of September 30, 2022 and December 31, 2021, respectively			292,537						264,571
Other assets held for sale, net			—						8,393
Total assets			$	4,185,493					$	3,930,665
Liabilities:
Unsecured debt, net of discount and unamortized debt issuance costs of $13,592 and $12,210 as of September 30, 2022 and December 31, 2021, respectively			$	1,948,408					$	1,877,790
Secured debt			197,000						—
Accounts payable, accrued expenses and accrued capital expenditures			111,262						114,453
Dividends payable			—						26,048
Deferred income			70,798						80,686
Intangible lease liabilities, less accumulated amortization of $38,636 and $35,880 as of September 30, 2022 and December 31, 2021, respectively			60,694						39,341
Interest rate swaps			—						4,924
Total liabilities			2,388,162						2,143,242
Commitments and Contingencies (Note 7)			—						—
Stockholders’ Equity:
Shares-in-trust, 150,000,000 shares authorized; none outstanding as of September 30, 2022 or December 31, 2021			—						—
Preferred stock, no par value, 100,000,000 shares authorized; none outstanding as of September 30, 2022 or December 31, 2021			—						—
Common stock, $0.01 par value, 750,000,000 shares authorized; 123,395,381 and 123,076,695 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively			1,234						1,231
Additional paid-in capital			3,709,234						3,701,798
Cumulative distributions in excess of earnings			(1,905,544)						(1,899,081)
Accumulated other comprehensive loss			(9,194)						(18,154)
Piedmont stockholders’ equity			1,795,730						1,785,794
Noncontrolling interest			1,601						1,629
Total stockholders’ equity			1,797,331						1,787,423
Total liabilities and stockholders’ equity			$	4,185,493					$	3,930,665

 

			Three Months Ended												Nine Months Ended
			September 30,												September 30,
			2022						2021						2022						2021
Revenues:
Rental and tenant reimbursement revenue			$	139,572					$	127,427					$	403,635					$	380,306
Property management fee revenue			303						626						1,280						1,920
Other property related income			4,225						3,018						11,643						8,320
			144,100						131,071						416,558						390,546
Expenses:
Property operating costs			59,039						51,767						166,295						154,849
Depreciation			34,941						30,562						98,828						88,663
Amortization			23,290						20,373						67,022						63,978
General and administrative			6,590						6,955						21,212						22,417
			123,860						109,657						353,357						329,907
Other income (expense):
Interest expense			(17,244)						(12,450)						(44,917)						(37,375)
Other income			335						2,337						2,302						7,324
Gain on sale of real estate assets			—						—						50,674						—
			(16,909)						(10,113)						8,059						(30,051)
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
Per share information – basic and diluted:
Net income applicable to common stockholders			$	0.03					$	0.09					$	0.58					$	0.25
Weighted-average common shares outstanding – basic			123,395,381						124,135,556						123,329,626						124,056,908
Weighted-average common shares outstanding – diluted			123,697,455						124,627,409						123,630,501						124,471,786

			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

			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, 2022			123,390						$	1,234					$	3,707,833					$	(1,882,962)					$	(12,050)					$	1,608					$	1,815,663
Costs of issuance of common stock			—						—						(461)						—						—						—						(461)
Dividends to common stockholders ($0.21 per share) and stockholders of subsidiaries			—						—						—						(25,913)						—						(7)						(25,920)
Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax			5						—						1,862						—						—						—						1,862
Net income applicable to Piedmont			—						—						—						3,331						—						—						3,331
Other comprehensive income			—						—						—						—						2,856						—						2,856
Balance, September 30, 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

			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, 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

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

			Nine Months Ended
			September 30,
			2022						2021
Cash Flows from Operating Activities:
Net income			$	71,260					$	30,588
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			98,828						88,663
Amortization of debt issuance costs inclusive of settled interest rate swaps			2,738						2,396
Other amortization			60,457						58,743
General reserve/ (reversal) for uncollectible accounts			(2,000)						412
Stock compensation expense			6,880						8,201
Gain on sale of real estate assets			(50,674)						—
Changes in assets and liabilities:
Increase in tenant and straight-line rent receivables			(14,760)						(13,448)
Increase in prepaid expenses and other assets			(933)						(2,815)
Cash received upon settlement of interest rate swaps			—						623
Increase in accounts payable and accrued expenses			4,571						342
Decrease in deferred income			(12,383)						(8,671)
Net cash provided by operating activities			163,984						165,034
Cash Flows from Investing Activities:
Acquisition of real estate assets, net of related debt assumed, and intangibles			(270,899)						—
Capitalized expenditures			(95,507)						(83,477)
Net sales proceeds from wholly-owned properties			143,596						—
Proceeds from notes receivable			118,500						—
Deferred lease costs paid			(16,042)						(10,324)
Net cash used in investing activities			(120,352)						(93,801)
Cash Flows from Financing Activities:
Debt issuance and other costs paid			(194)						(454)
Proceeds from debt			761,420						526,580
Repayments of debt			(693,000)						(484,610)
Costs of issuance of common stock			(311)						(55)
Value of shares withheld for payment of taxes related to employee stock compensation			(3,764)						(3,050)
Repurchases of common stock as part of announced plan			—						(685)
Dividends paid			(103,799)						(103,891)
Net cash used in financing activities			(39,648)						(66,165)
Net increase in cash, cash equivalents, and restricted cash and escrows			3,984						5,068
Cash, cash equivalents, and restricted cash and escrows, beginning of period			8,860						9,214
Cash, cash equivalents, and restricted cash and escrows, end of period			$	12,844					$	14,282

			Three Months Ended												Nine Months Ended
			September 30, 2022						September 30, 2021						September 30, 2022						September 30, 2021
Fixed payments			$	114,280					$	105,592					$	334,256					$	315,971
Variable payments			25,292						21,835						69,379						64,335
Total Rental and Tenant Reimbursement Revenue			$	139,572					$	127,427					$	403,635					$	380,306

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

			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

			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

			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 the accompanying consolidated balance sheets.

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

			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 the straight-line method over approximately 7.4 years, the average remaining life of in-place leases.

Facility (1)						Stated Rate						Effective Rate (2)						Maturity						Amount Outstanding as of
																								September 30, 2022						December 31, 2021
Secured (Fixed)
$197 Million Fixed Rate Mortgage						4.10		%										10/1/2028						$	197,000					$	—
Subtotal																								197,000						—
Unsecured (Variable and Fixed)
$200 Million Unsecured Term Loan Facility						SOFR + 1.00%						4.13		%	(3)			1/23/2023			(4)			$	200,000					$	—
$350 Million Unsecured Senior Notes due 2023						3.40		%				3.43		%				6/01/2023			(5)			350,000						350,000
$400 Million Unsecured Senior Notes due 2024						4.45		%				4.10		%				3/15/2024						400,000						400,000
$250 Million Unsecured 2018 Term Loan						LIBOR + 0.95%						3.86		%	(6)			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
$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						2.75		%				2.78		%				4/1/2032						300,000						300,000
Discounts and unamortized debt issuance costs																								(13,592)						(12,210)
Subtotal/Weighted Average (9)						3.65		%																$	1,948,408					$	1,877,790
Total/Weighted Average (9)						3.69		%																$	2,145,408					$	1,877,790

(1)All of Piedmont’s outstanding debt as of September 30, 2022 is unsecured and interest-only until maturity, except for the $197 Million Fixed Rate Mortgage, secured by 1180 Peachtree Street, which will begin amortizing principal in October 2023.

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

(3)On a periodic basis, Piedmont may select from multiple interest rate options, including the prime rate and various-length SOFR locks on all or a portion of the principal. All SOFR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating.

(4)Piedmont intends to repay the $200 Million Unsecured Term Loan Facility due January 2023 using the net sales proceeds from the future disposition of properties, cash on hand from operations, and/or draws under its existing $600 Million Unsecured 2022 Line of Credit. Additionally, Piedmont may extend the term for up to six additional months (through two available three month extensions to a final extended maturity date of July 24, 2023) provided Piedmont is not then in default and upon payment of extension fees.

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

(6)The facility has a stated variable rate; however, Piedmont has entered into interest rate swap agreements which effectively fix, exclusive of changes to Piedmont's credit rating, $100 million of the principal balance to 3.56% through the maturity date of the loan. For the remaining variable portion of the loan, Piedmont may periodically select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion there of. All LIBOR selections are subject to an additional spread

over the selected rate based on Piedmont’s current credit rating. The rate presented is the weighted-average rate for the effectively fixed and variable portions of the debt outstanding as of September 30, 2022 (see Note 5 for more detail).

(7)The $500 Million Unsecured 2018 Line of Credit was amended and restated during the nine months ended September 30, 2022 and is now reflected as the $600 Million Unsecured 2022 Line of Credit. The $500 Million Unsecured 2018 Line of Credit had a stated rate of LIBOR + 0.90% as of December 31, 2021.

(8)Piedmont may extend the term for up to one additional year (through two available six month extensions to a final extended maturity date of June 30, 2027) provided Piedmont is not then in default and upon payment of extension fees.

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

See Note 6 for a description of Piedmont’s estimated fair value of debt as of September 30, 2022.

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

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)

			Three Months Ended												Nine Months Ended
Interest Rate Swaps in Cash Flow Hedging Relationships			September 30, 2022						September 30, 2021						September 30, 2022						September 30, 2021
Amount of gain recognized in OCI			$	2,662					$	582					$	7,507					$	1,848
Amount of previously recorded loss reclassified from OCI into interest expense			$	(194)					$	(750)					$	(1,453)					$	(2,216)
Total amount of interest expense presented in the consolidated statements of income			$	(17,244)					$	(12,450)					$	(44,917)					$	(37,375)

Piedmont estimates that approximately $1.3 million will be reclassified from OCI as an decrease in interest expense over the next twelve months. Additionally, see Note 6 for fair value disclosures of Piedmont's derivative instruments.

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 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.

			September 30, 2022																		December 31, 2021
Financial Instrument			Carrying Value						Estimated Fair Value						Level Within Fair Value Hierarchy						Carrying Value						Estimated Fair Value						Level Within Fair Value Hierarchy
Assets:
Cash and cash equivalents (1)			$	10,653					$	10,653					Level 1						$	7,419					$	7,419					Level 1
Tenant receivables, net (1)			$	7,796					$	7,796					Level 1						$	2,995					$	2,995					Level 1
Notes receivable			$	—					$	—					Level 2						$	118,500					$	120,075					Level 2
Restricted cash and escrows (1)			$	2,191					$	2,191					Level 1						$	1,441					$	1,441					Level 1
Interest rate swaps			$	3,760					$	3,760					Level 2						$	—					$	—					Level 2
Liabilities:
Accounts payable and accrued expenses (1)			$	16,712					$	16,712					Level 1						$	45,065					$	45,065					Level 1
Interest rate swaps			$	—					$	—					Level 2						$	4,924					$	4,924					Level 2
Debt, net			$	2,145,408					$	1,997,395					Level 2						$	1,877,790					$	1,938,563					Level 2

Piedmont’s interest rate swap agreements presented above, and as further discussed in Note 5, are classified as “Interest rate swaps” in the accompanying consolidated balance sheets and were carried at estimated fair value as of September 30, 2022 and December 31, 2021. 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 and December 31, 2021, 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.

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

												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

			Shares						Weighted-Average Grant Date Fair Value
Unvested and Potential Stock Awards as of December 31, 2021			1,099,181						$	23.97
Deferred Stock Awards Granted			299,322						$	16.54
Change in Estimated Potential Share Awards based on TSR Performance			119,589						$	19.67
Performance Stock Awards Vested			(267,744)						$	29.43
Deferred Stock Awards Vested			(266,675)						$	19.15
Deferred Stock Awards Forfeited			(4,953)						$	18.08
Unvested and Potential Stock Awards as of September 30, 2022			978,720						$	20.27

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

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

Date of grant						Type of Award						Net Shares Granted (1)						Grant Date Fair Value						Vesting Schedule						Unvested Shares
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
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						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 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 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 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)
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
Total																														978,720