Piedmont Realty Trust, Inc. · NYSE:PDM
Piedmont Realty Trust — NAREIT REITweek: REITworld 2024
29 slides from Piedmont Realty Trust's conference presentation, November 2024
Slide 1: REITWORLD 2024 Investor Presentation
REITWORLD 2024 Investor Presentation November 2024 0
Slide 2: Disclaimer
DISCLAIMER Piedmont Office Realty Trust, Inc. (also referred to herein as "Piedmont" or the "Company") (NYSE: PDM) is an owner, manager, developer, redeveloper, and operator of high-quality, Class A office properties located primarily in the Sunbelt. The Company is a fully integrated, self-managed r
Slide 3: Piedmont Overview
PIEDMONT OVERVIEW 1180 Peachtree SUNBELT-FOCUSED portfolio of differentiated professional environments STRATEGIC capital allocator NIMBLE, well-capitalized owner SUSTAINABLE COMMUNITY minded leader 22
Slide 4: Piedmont Overview
PIEDMONT OVERVIEW In-Service Projects 30 Senior Unsecured Notes Rating Baa3 / BBB- (Moody’s / S&P) In-Service Square Footage 15.3 million Net Debt to Gross Assets 39% Percent Leased 88.8% Net Debt to EBITDA (TTM) 6.7x Weighted Average Lease Term 6.0 years Current Dividend Yield 1 4.9% Percent ALR De
Slide 5: Piedmont Overview: ALR by Market and Industry
PIEDMONT OVERVIEW 1180 Peachtree 999 Peachtree ALR by Market ALR by Industry 1 Atlanta 31% Business Services 15% Dallas 18% Engineering, Accounting, Less than 2% of ALR Orlando 11% 14% Research, Management &… derived from New York 10% Legal Services 10% coworking Minneapolis 8% and limited 70% of AL
Slide 6: Office Environment: Conditions on the Ground are Steadily Improving
OFFICE ENVIRONMENT Conditions on the Ground are Steadily Improving Gross leasing activity (excludes co-working, 000s SF) 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - 2019 2020 2021 2022 2023 2024 Downsizing rate for major tenants U.S. office groundbreaking volume (millions SF) The average tena
Slide 7: Office Environment: Office Stock is Under-Demolished
OFFICE ENVIRONMENT Office Stock is Under-Demolished Office inventory removals (millions SF) 1% 10% 30% 39% 35 Office inventory removals of buildings of buildings of buildings of buildings 30 reach fourth consecutive year of record volume in late 25 September 20 15 10 5 17% 60% 90% 0% of total U.S. o
Slide 8: What's Resonating: Hospitality-Infused Spaces
WHAT’S RESONATING HOSPITALITY-INFUSED SPACES US Bancorp Center 87% OF PORTFOLIO ALR CONTAINS COLLABORATION/TRAINING SPACES Galleria on the Park Three Galleria 77
Slide 9: What's Resonating: Amenity-Rich Environments
WHAT’S RESONATING AMENITY-RICH ENVIRONMENTS Starbucks at Galleria on the Park 95% OF PORTFOLIO ALR CONTAINS FOOD AND BEVERAGE OFFERINGS NoVA Farmer’s Markets Toyota Music Factory C+S Seafood at Galleria on the Park Truist Park The Battery ATL Colony Square Food Hall 88
Slide 10: What's Resonating: Room to Breathe
WHAT’S RESONATING ROOM TO BREATHE 1180 Peachtree 79% OF PORTFOLIO ALR CONTAINS OUTDOOR MEETING SPACES 999 Peachtree CNL Center Two Galleria The Exchange 99
Slide 11: What's Resonating: Health and Wellness
WHAT’S RESONATING HEALTH AND WELLNESS IronWorx Studio 91% OF PORTFOLIO ALR CONTAINS AN ELEVATED FITNESS SPACE Glenridge Highlands US Bancorp Center Galleria on the Park 10 10
Slide 12: What's Resonating: Community-Centered Experience
WHAT’S RESONATING COMMUNITY-CXPERIENCE ENTERED EXPERIENCE ALL OF OUR MULTI-TENANTED ASSETS HAVE TENANT ENGAGEMENT PROGRAMS "What employees want is exactly what Piedmont's doing. They want places Masters Watch Party where they can collaborate, where they can eat, where they can be comfortable, and wh
Slide 13: Differentiated Real Estate is Ageless
DIFFERENTIATED REAL ESTATE IS AGELESS Piedmont is Proving that Leasing Success and Flight to Quality are Not Dictated by Age Piedmont’s Operational Focus Piedmont’s Total Leasing by Age Since 2Q 2020 1 (SF in 000s) - 500 1,000 1,500 2,000 2,500 3,000 Hospitality- Compelling 2015-Current Driven Highl
Slide 14: Differentiated Real Estate is Ageless
DIFFERENTIATED REAL ESTATE IS AGELESS CNL Center I & II | Built 1996, 2006 Arlington Gateway| Built 2005 Galleria 600 | Built 2002 1180 Peachtree| Built 2006 999 Peachtree| Built 1987 US Bancorp| Built 2000 13 13
Slide 15: Delivering Consistent Results
DELIVERING CONSISTENT RESULTS Piedmont Leasing Performance Since Q2 2020, over 9.3 million square feet (~ 60% of its current total portfolio)…. New 2,270 2,250 2,240 2,150 720 2,000 Glenridge Highlands - Atlanta 730 830 760 940 1,110 260 2019 2020 2021 2022 2023 2024 YTD In-service Leased % 91.2% 86
Slide 16: Delivering Consistent Results: Submarket Positions
DELIVERING CONSISTENT RESULTS ATLANTA – Cumberland / Galleria Submarket ORLANDO – CBD Submarket 2.2M SF $40.00 1.6M SF $34.50 PDM owned PDM owned 1 ~ $32.50 29% 21% Market share ~ $33.75 Market share ~$525M ~$450M Invested Invested Submarket rents PDM Asking rents Submarket rents PDM Asking rents AT
Slide 17: Delivering Consistent Results: Same Store Cash NOI Growth
DELIVERING CONSISTENT RESULTS Office Sector Historical Same Store Cash NOI Growth – 2018-2023 Average 4.9% 4.8% 3.5% 3.1% 3.0% 2.8% 2.6% 2.4% 2.0% 2.0% 1.9% 1.9% 1.8% 1.3% 1.0% 0.1% KRC ESRT PDM CUZ AAT PGRE BXP HPP HIW EQC SLG CDP VNO DEI BDN JBGS Source: Green Street Advisors Office Sector Update
Slide 18: Targeted Capital Rotation to the Sunbelt
TARGETED CAPITAL ROTATION TO THE SUNBELT Consistent Portfolio Optimization Through Capital Recycling Acquisitions Dispositions Expand Midtown Atlanta Expand Dallas ACQUIRED: Expand Atlanta Enter Midtown $1.4 billion Atlanta Weighted Average $412 $465 Leased of 85% $304 $224 ($77) SOLD: ($313) Non-st
Slide 19: Value Creation Through Accretive Reinvestment
VALUE CREATION THROUGH ACCRETIVE REINVESTMENT Piedmont has invested across its portfolio; activating and repositioning targeted assets positioned for growth. 25 Mall Road, Boston 60 Broad, New York Creating Value with Low-Risk Investment • Highly accretive incremental returns • Driver of significant
Slide 20: Value Creation Through Accretive Reinvestment: Realized
VALUE CREATION THROUGH ACCRETIVE REINVESTMENT Sample Realized Value Creation Asset / % Leased at % Leased at % GAAP NOI Annual GAAP Location Trough Q3 2024 Increase NOI Increase 999 Peachtree 77% 89% Atlanta, GA 15% $2.3M Q4 2021 622K SF Crescent Ridge II 72% 96% Minneapolis, MN 44% $1.5M Q1 2022 29
Slide 21: Value Creation Through Accretive Reinvestment: In Process
VALUE CREATION THROUGH ACCRETIVE REINVESTMENT Sample Value Creation In Process Asset / % Leased at Estimated Lease up Potential Location Q3 2024 Completion Date Opportunity Annual NOI 1 The Exchange 78% 2 4Q 2024 170K SF $6.4M Orlando, FL Three Galleria 88% 4Q 2025 62K SF 3 $3.2M Dallas, TX Arlingto
Slide 22: Value Creation Through Accretive Reinvestment: To Come
VALUE CREATION THROUGH ACCRETIVE REINVESTMENT Sample Value Creation To Come Asset / Estimated Estimated Lease up Potential Location Cost/SF Basis/SF Completion Date Opportunity Annual NOI 1 Meridian $15 $107 2Q 2025 367K SF $14.0M Minneapolis, MN Excelsior $15 $67 1Q 2026 259K SF $9.6M Minneapolis,
Slide 23: Value Creation Case Study
VALUE CREATION CASE STUDY 999 Peachtree $224M 78% Acquisition price Leased prior to ($360/SF) reposition • Reposition and renovate lobby and outdoor area • Three new restaurants • New conference and fitness center $266M 89% All-In basis including Leased as of Q3 2024 reposition and TI/LC ($427/sf) I
Slide 24: Value Creation Case Study
VALUE CREATION CASE STUDY Galleria 600 $97M 44% Acquisition price Leased prior to ($219/SF) reposition • Reposition and renovate lobby • Two new restaurants, including outdoor food and beverage option (see rendering) $131M 95% All-In basis including Leased as of Q3 2024 reposition and TI/LC ($296/sf
Slide 25: Value Creation Case Study
VALUE CREATION CASE STUDY Galleria 200 $70M 81% Acquisition price Leased prior to ($165/SF) reposition • Reposition and renovate lobby • Introduce Starbucks location on ground floor • New conference facility to seat ~150 $104M 97% All-In basis including Leased as of Q3 2024 reposition and TI/LC ($23
Slide 26: Financial Strength and Flexibility
FINANCIAL STRENGTH AND FLEXIBILITY PIEDMONT MAINTAINS A CONSERVATIVE, SIMPLE BALANCE SHEET PRO FORMA DEBT METRICS ANNUAL EARNINGS NORMALIZED RUN-RATE 39.0% 6.7x Baa3 BBB- EBITDA $305M - $315M Net Debt to Net Debt to Moody’s S&P Interest Expense (net) $125M - $120M Gross Assets Core EBITDA (TTM) Seni
Slide 27: Committed to a Sustainable Community
COMMITTED TO A SUSTAINABLE COMMUNITY PORTFOLIO ACCOMPLISHMENTS ENVIRONMENTAL GOALS GRESB Rating, 2024 30% Reduction Energy Use Intensity • Ranked in top decile for all participating by 2030 listed American companies • Highest sustainability rating of “5 Star” second year in a row 30% Reduction Water
Slide 28: PDM Trading Levels
PDM TRADING LEVELS Piedmont has outperformed the sector YTD but remains a compelling relative value proposition. YTD TSR (%) 1 78.0 51.9 48.6 46.3 34.5 30.2 28.1 17.6 10.7 9.2 4.6 1.9 -3.9 -11.7 -23.4 -55.8 SLG VNO HIW PDM CUZ DEI CDP BXP ESRT BDN KRC PGRE JBGS CIO FSP HPP Implied $/SF (GSA) 2 $711
Slide 29: www.piedmontreit.com
www.piedmontreit.com Corporate Headquarters Institutional AnalystContact InvestorRelations 5565 Glenridge Connector, suite 450 T: 770.418.8592 T: 866.354.3485 Atlanta, GA 30342 E: research.analysts@piedmontreit.com E: investor.services@piedmontreit.com T: 770.418.8800 28
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