Piedmont Office Realty Trust (PDM) Q4 2023 earnings summary

Executive summary

• 2.2 million sq. ft. leased in 2023, including 831,000 sq. ft. of new-tenant leasing, the highest annual total since 2018; positive portfolio absorption at attractive economics.

• Year-end leased percentage rose to 87.1% from 86.7% a year earlier; leasing pipeline remained strong entering 2024.

• 2023 GAAP results were pressured by lower real estate sale gains and higher interest expense, while refinancing activity addressed most 2024 and 2025 maturities.

Financial highlights

• Q4 2023 revenue was $145.3 million vs. $147.2 million YoY; FY revenue was $577.8 million vs. $563.8 million.

• Q4 net loss was $28.0 million, or $0.23 diluted share, vs. net income of $75.6 million, or $0.61, in Q4 2022; lower sale gains and higher interest expense drove the decline.

• FY net loss was $48.4 million, or $0.39 diluted share, vs. net income of $146.8 million, or $1.19, in 2022; FY gain on sale was $1.9 million vs. $151.7 million.

• Core FFO per diluted share was $0.41 in Q4 vs. $0.50 YoY and $1.74 for FY 2023 vs. $2.00 in 2022; higher interest expense and lower Property NOI weighed on Q4.

Outlook and guidance

• FY 2024 guidance: net loss of $41 million to $47 million and Core FFO of $182 million to $194 million, or $1.46 to $1.56 per diluted share.

• Assumptions include 1.5–2.0 million sq. ft. of leasing, year-end in-service leased percentage of 87–88%, and same-store NOI flat to up 2% on cash and accrual bases.

• Guidance assumes interest expense of $119–121 million and G&A expense of $29–30 million; no speculative acquisitions, dispositions, or refinancings are included.