In This Article:
Release Date: April 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Piedmont Office Realty Trust Inc (NYSE:PDM) completed approximately 363,000 square feet of total leasing during the first quarter, with half related to new tenant leases.
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Leases executed during the quarter reflected double-digit rental rate roll-ups on both a cash and GAAP basis.
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The company successfully refinanced its $600 million line of credit and paid off a $250 million term loan.
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Leasing momentum remains strong, with over 275,000 square feet of leases signed in April alone.
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Piedmont's premium office space continues to attract and retain customers, with expansions exceeding contractions for the third straight quarter.
Negative Points
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Macroeconomic uncertainty caused national gross leasing volume to slow moderately, impacting leasing activity.
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Net absorption turned negative again, driven by federal lease terminations, particularly affecting the DC Metro area.
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The company decided to suspend its dividend to fund growth and reduce leverage, which may concern income-focused investors.
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Core FFO per diluted share decreased to $0.36 from $0.39 year-over-year, partly due to increased net interest expense.
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The gap between leased percentage and economic leased percentage is at its widest in over a decade at 10.6%, indicating a delay in cash flow realization.
Q & A Highlights
Q: Hi guys, thanks for taking the question. Just wanted to touch on sort of the leasing pipeline and decision to sort of keep guidance maintained. Is there some conservatism baked in given heightened macro uncertainty today? A: Hi Dylan, it's Brent. The leasing pipeline is strong at roughly 750,000 square feet, with 275,000 executed in April. We expect the remaining portion to be executed in the next 2 to 4 months. While we have a strong leasing pipeline, it won't impact 2025 guidance but will bolster growth for 2026. If the economy holds up, we might revise our leasing volume guidance for the year up in the second quarter.
Q: Awesome, that's great details. I guess there's one more for me. When do you expect the gap between leased percentage and economic leased percentage to close? Is that largely a 2026 event? A: Yes, the suspension of the dividend will provide approximately $60 million of additional cash flow annually. These retained earnings will be earmarked for internal growth and leasing momentum. We might reevaluate and potentially reinstate the dividend in the latter part of 2026, focusing on maintaining liquidity and improving the balance sheet.