Piedmont Office Realty Trust (PDM) Q3 2024 earnings summary

Executive summary

• Achieved record leasing activity with over 2 million sq ft leased year-to-date, raising the portfolio leased rate to 88.8% as of September 30, 2024, the highest since 2015, and maintained a robust pipeline of 3 million sq ft in proposals.

• Net loss for Q3 2024 was $11.5 million ($0.09 per share), an improvement from a $17.0 million loss in Q3 2023, mainly due to the absence of prior year impairment charges.

• Portfolio comprised 30 in-service projects and three redevelopment projects totaling 15.3 million sq. ft., with broad-based leasing across industries and geographies, especially in Sunbelt markets.

• Management transition announced, with CFO Bobby Bowers stepping down and Sherry Rexroad appointed as the new CFO.

Financial highlights

• Core FFO per diluted share for Q3 2024 was $0.36, down from $0.43 in Q3 2023, mainly due to higher net interest expense and lower rental income from property sales and lease downtime.

• Q3 2024 total revenues were $139.3 million, down from $147.0 million in Q3 2023; rental and tenant reimbursement revenue fell by $8.7 million year-over-year.

• Same Store NOI for Q3 2024 decreased by 0.8% (cash) and 2.1% (accrual) year-over-year, but increased 3.2% (cash) and 1.3% (accrual) for the nine months.

• Liquidity remains strong with $600 million in undrawn credit and over $130 million in cash.

• All $1.4 billion of maturing debt over the last 18 months has been refinanced, with no significant maturities until 2027 except a $250 million term loan due March 2025.

Outlook and guidance

• 2024 annual Core FFO guidance narrowed to $1.48–$1.50 per share, with no change to the midpoint; net loss expected between $62–$60 million.

• Same-store NOI guidance for 2024 remains at 2%–3% growth.

• Lease percentage for the in-service portfolio projected to reach 88%–89% by year-end, with 2.4–2.6 million sq ft of executed leasing.

• Management expects improving quarterly results in 2025 as newly executed leases commence and lease expirations remain low.

• No speculative acquisitions, dispositions, or refinancing included in guidance.