Piedmont Realty Trust's 2025 Q2 Earnings Call: Navigating Key Contradictions in Dividends, Leasing, and Capital Strategy

Dividend suspension and reinstatement, leasing guidance and expectations, leasing activity and market demand, capital allocation and acquisition strategy, capital allocation and asset sales are the key contradictions discussed in Piedmont Realty Trust's latest 2025Q2 earnings call.



Leasing Success and Growth:
- Piedmont Realty Trust achieved 712,000 square feet of leasing in Q2 2025, with more than 60% being new tenant leases, the most since 2018.
- The company's in-service lease percentage increased by 140 basis points to 88.7% year-over-year.
- This success was driven by high demand for Piedmont's modern work environment, which attracted significant interest from large tenants seeking high-quality office spaces.

Rental Rate and Financial Performance:
- The company experienced rental increases, with cash and accrual basis roll-ups at 7% and 14% for space leased less than a year.
- Piedmont's net effective rents were approximately $20.78 per square foot, with a weighted average starting cash rent of $43 per square foot in key markets like Atlanta and Dallas.
- These trends were supported by limited new office construction and high demand for Piedmont's differentiated assets, enabling the company to maintain strong financial performance.

Dividend Strategy and Financial Management:
- Piedmont repurchased approximately $68 million of 9.25% bonds, expected to result in $7.5 million of annual interest savings.
- The company affirmed its 2025 annual core FFO guidance in the range of $1.38 to $1.44 per diluted share.
- These strategic financial moves reflect Piedmont's ongoing efforts to optimize its balance sheet and ensure long-term financial stability.

Market and Investment Strategy:
- Piedmont focuses on expanding its exposure in the Sunbelt region, with a goal to reach 80% of its portfolio in these markets.
- The company continues to consider dispositions of noncore assets, including land sales, to fund strategic investments.
- This strategy is driven by the belief that the Sunbelt region offers more growth potential and aligns with Piedmont's long-term goals of increasing rental rates and occupancy levels.