Piedmont Realty Trust, Inc. · NYSE:PDM
Piedmont Realty Trust — Piedmont Office Realty Trust — Nareit REITweek 2024
25 slides from Piedmont Realty Trust's conference presentation, June 2024
Slide 1: Nareit REITweek June 2024
Nareit REITweek June 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 major U.S. Sunbelt markets. The Company is a fully-integrated,
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 999 Peachtree Projects 32 Moody’s / S&P Ratings Baa3 / BBB- Square Footage 16.0 million Net Debt to Gross Assets 38.8% Percent Leased 87.8% Net Debt to EBITDA (TTM) 6.5x Weighted Average Lease Term 5.7 years Percent SF LEED Certified 72% Percent ALR Derived from Sunbelt 69% Percent
Slide 5: Portfolio Built For Hospitality-Infused Spaces
PORTFOLIO BUILT FOR… HOSPITALITY-INFUSED SPACES US Bancorp Center 86% OF PORTFOLIO ALR CONTAINS COLLABORATION/TRAINING SPACES Galleria on the Park Three Galleria 44
Slide 6: Portfolio Built For Amenity-Rich Environments
PORTFOLIO BUILT FOR… 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 55
Slide 7: Portfolio Built For Room to Breathe
PORTFOLIO BUILT FOR… ROOM TO BREATHE 1180 Peachtree 80% OF PORTFOLIO ALR CONTAINS OUTDOOR MEETING SPACES 999 Peachtree CNL Center Two Galleria The Exchange 66
Slide 8: Portfolio Built For Health and Wellness
PORTFOLIO BUILT FOR… HEALTH AND WELLNESS IronWorx Studio 91% OF PORTFOLIO ALR CONTAINS AN ELEVATED FITNESS SPACE Glenridge Highlands US Bancorp Center Galleria on the Park 77
Slide 9: Portfolio Built For Community Experience
PORTFOLIO BUILT FOR… The company didn’t limit its search for office space to the COMMUNITY-CXPERIENCE ENTERED EXPERIENCE Cumberland-Galleria market. It tried to get some perspective on the advantages of moving to an area ALL OF OUR MULTI-TENANTED ASSETS HAVE TENANT ENGAGEMENT PROGRAMS where employee
Slide 10: Not All Office Competes Equally
NOT ALL OFFICE COMPETES EQUALLY Leasing Is Not Determined by “Year Built” Since the onset of COVID, Piedmont has leased almost 8.5 million square feet equating to over 50% of its current portfolio. Many factors influence a building’s demand profile. National Net Absorption by Age Since COVID-19 Onse
Slide 11: Sample Piedmont Assets Built Before 2015
SAMPLE PIEDMONT ASSETS BUILT BEFORE 2015… 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 10 10
Slide 12: Not All Office Competes Equally
NOT ALL OFFICE COMPETES EQUALLY News Headlines Have Influenced Market Perception vs. Reality “In our dataset of 2.7 billion RSF across the Top-25 MSAs…50% of vacancy is concentrated in the bottom 10% of assets.” 1 How Piedmont Competes Piedmont Cash Rental Rate Roll-Ups 9.8% 9.7% Hospitality-Driven
Slide 13: Leasing Success
LEASING SUCCESS Compelling YTD leasing statistics with healthy pipeline for the second half of 2024. ~$52M backlog of Leasing Volume (000 SF) cash revenue3 New Renewal SF in Abatement or Yet to Commence 1,600 1,550 1,520 1,390 1,410 1,140 1,120 1,010 940 850 750 830 720 730 760 660 410 260 2019 2020
Slide 14: Industry Leading Cash Flow Growth
INDUSTRY LEADING CASH FLOW GROWTH Office Sector Historical Same Store NOI Growth – 2018-2023 Average 7.1% PDM 2024 Cash SSNOI Guidance: 1.0% - 3.0% 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% ARE KRC ESRT PDM CUZ AAT PGRE BXP HPP HIW EQC SLG CDP VNO DEI BDN JBGS 1
Slide 15: Targeted High-Service Offering Catering to Small and Medium Sized Enterprises
TARGETED HIGH-SERVICE OFFERING CATERING TO SMALL AND MEDIUM SIZED ENTERPRISES Portfolio Average Lease Size (SF) 45,000 40,300 40,000 35,000 30,000 25,000 20,000 14,700 15,000 10,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Looking Ahead The average size of remaining
Slide 16: Next Four Quarters' Expiration Schedule Proforma
NEXT FOUR QUARTERS’ EXPIRATION SCHEDULE PROFORMA Other than one announced vacate in suburban Minneapolis expected in Q2, Piedmont has a very limited lease expiration schedule for the remainder of 2024...equating to only 5% of ALR rolling by year end. Expiring SF (000s) Q2 2024 Q3 2024 Q4 2024 Q1 202
Slide 17: Effective Capital Rotation to the Sunbelt
EFFECTIVE CAPITAL ROTATION TO THE SUNBELT 2019 2020 2021 2022 Expand Atlanta Expand Dallas Enter Midtown Expand Midtown Atlanta Atlanta ACQUIRED: $412 $465 $1.4 billion $304 Weighted Average $224 Leased of 85% SOLD: $1.4 billion ($313) Weighted Average Leased of 95% ($490) ($595) West Loop (CHI) Exi
Slide 18: Portfolio Overview
PORTFOLIO OVERVIEW 1180 Peachtree 999 Peachtree ALR by Market ALR by Industry1 Atlanta 30% Business Services 14% Dallas 19% Engineering, Accounting,… 14% Less than 2% of ALR Orlando 10% Legal Services 10% derived from Minneapolis 10% coworking New York 9% Governmental Entity 8% and limited 69% of AL
Slide 19: Concentrated Nodes in Mixed Use Environments Yield Differentiated Rents
CONCENTRATED NODES IN MIXED USE ENVIRONMENTS YIELD DIFFERENTIATED RENTS ATLANTA – Cumberland / Galleria Submarket ORLANDO – CBD Submarket $40.00 2.1M SF 1.6M SF $34.50 PDM owned PDM owned1 ~ $32.25 28% 20% Market share Market share ~ $31.95 ~$525M ~$450M Invested Invested Submarket rents PDM Asking
Slide 20: Redevelopment Track Record
REDEVELOPMENT TRACK RECORD GALLERIA 600| ATLANTA CRESCENT RIDGE II| MINNEAPOLIS 44% 93% 176% 72% 87% 43% Leased Trough Q1 ‘24 GAAP NOI Leased Trough Q1 ’24 GAAP NOI (Q4 ‘21) Leased Increase (Q1 ‘22) Leased Increase 999 PEACHTREE | ATLANTA 501 W CHURCH| ORLANDO 77% 89% 10% 0% 100% 63% Leased Trough Q
Slide 21: Leaseup Opportunities Underway
LEASEUP OPPORTUNITIES UNDERWAY THE EXCHANGE | ORLANDO THREE GALLERIA| DALLAS 89% 3Q 2024 72k SF Walker’s 88% 3Q 2024 62k SF Very Leased Redevelopment Complete Leaseup Oppty Paradise1 Leased2 Redevelopment Complete Leaseup Oppty2 Walkable1 ARLINGTON GATEWAY | NORTHERN VA 25 BURLINGTON MALL | BOSTON 8
Slide 22: Future Redevelopment Opportunities
FUTURE REDEVELOPMENT OPPORTUNITIES MERIDIAN CROSSINGS | MINNEAPOLIS EXCELSIOR CROSSINGS | MINNEAPOLIS 5% 4Q 2024 367k SF $15/SF $107/SF 0% 1Q 2025 250k SF $15/SF $67/SF Leased1 Redevelopment Leaseup Anticipated Basis Leased Redevelopment Leaseup Anticipated Basis Complete Oppty1 Cost Complete Oppty
Slide 23: Financial Strength and Flexibility
FINANCIAL STRENGTH AND FLEXIBILITY PIEDMONT MAINTAINS A CONSERVATIVE, SIMPLE BALANCE SHEET PRO FORMA DEBT METRICS NORMALIZED RUN-RATE – FUNDS AVAILABLE 38.8% 6.5x Baa3 BBB- EBITDA – 2024 $310M - $320M Net Debt to Net Debt to Moody’s S&P Interest Expense – 2024 $123M - $115M Gross Assets Core EBITDA
Slide 24: Committed to a Sustainable Community
COMMITTED TO A SUSTAINABLE COMMUNITY PORTFOLIO ACCOMPLISHMENTS ENVIRONMENTAL GOALS GRESB Rating, 2023 30% Reduction Energy Use Intensity One of 12 among 72 reporting REITs by 2030 LEED 30% Reduction Water Use Intensity Certified 72% of Total Square Footage by 2030 57% LEED Gold or Higher Energy Star
Slide 25: www.piedmontreit.com
www.piedmontreit.com Corporate Headquarters Institutional AnalystContact Investor Relations 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 24