Greetings. Welcome to the Piedmont Office Realty Trust First Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Laura Moon. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us today for Piedmont's first quarter 2025 earnings conference call. Last night, we filed our 10-Q and an 8-K that includes our earnings release and our unaudited supplemental information for the first quarter of 2025 that is available for your review on our website at piedmontreit.com under the Investor Relations section. During this call, you will hear from senior officers at Piedmont. Their prepared remarks followed by answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements address matters which are subject to risks and uncertainties and therefore actual results may differ from those we anticipate and discuss today. The risks and uncertainties of these forward-looking statements are discussed in our press release as well as our SEC filings. We encourage everyone to review the more detailed discussion related to risks associated with forward-looking statements in our SEC filings. Examples of forward-looking statements include those related to Piedmont's future revenues and operating income, dividends and financial guidance, future financing, leasing and investment activity and the impacts of this activity on the company's financial and operational results. You should not place any undue reliance on any of these forward-looking statements and these statements are based upon the information and estimates we have reviewed as of the date the statements are made. Also on today's call, representatives of the company may refer to certain non-GAAP financial measures such as FFO, core FFO, AFFO and same-store NOI. The definitions and reconciliations of these non-GAAP measures are contained in the earnings release and supplemental financial information which were filed last night. At this time, our President and Chief Executive Officer, Brent Smith will provide some opening comments regarding first quarter 2025 operating results. Brent?

Thanks, Laura. Good morning, everyone and thank you for joining us today as we review our first quarter 2025 results. In addition to Laura, on the line with me this morning are George Wells, our Chief Operating Officer; Chris Kollme, our EVP of Investments; and Sherry Rexroad, our Chief Financial Officer. We'll have the usual full accompanying of our management team available to answer your questions as well. We are very pleased with our solid start to 2025 completing approximately 363,000 square feet of total leasing during the quarter, with roughly half related to new tenant leases. The overall volume is especially encouraging given that the first quarter is typically the slowest quarter of any given year and the leases executed were spread throughout the portfolio, with almost every market executing at least one lease for 10,000 square feet or greater. Further, leases executed during the quarter reflected double-digit rental rate roll ups on both a cash and GAAP basis. And additionally, as we disclosed on last quarter's call, we completed our last bit of required refinancing activity during the first quarter, including paying off a $250 million term loan that was scheduled to mature in March and extending our $600 million line of credit. As for broader market commentary, the occupier market recovery appears to be continuing to progress as more national employers such as JP Morgan continue to change their mandate to five days a week, adding to a chorus of large office users like Amazon, realizing the benefits of more in office interaction. In many cases, these users have discovered they don't have enough space to accomplish this shift and are exploring expansion options, something we've seen in our own portfolio as George will touch on in a moment. Against the strengthening backdrop, however, macroeconomic uncertainty emerged…

Thanks, Brent. Piedmont’s premium office space continues to attract and retain customers that value a modern highly amenitized workplace environment. Creating that special place is more than just renovating a project’s common areas. It’s also about balancing impactful design with a range of purposeful social spaces. During the first quarter our Galleria 600 lobby rejuvenation was awarded the Best of Special Projects award from the International Interior Design Association’s Georgia Chapter. Our market leading place making efforts are being recognized and are contributing to consistent positive quarterly results. During the first quarter we completed 57 transactions for approximately 363,000 square feet of total overall volume, well on track towards our overall goal of 1.5 million square feet and evenly split between new deal and renewal activity. Regarding new deal transactions, approximately 80,000 square feet commences in the first half of 2025 and 100,000 square feet commences in the first half of 2026 with an overall new volume delivering a weighted average lease term of 10 years. Expansions exceeded contractions for the third straight quarter, a clear sign of more in-office attendance. Our trailing 12 month retention came in at 67%. Lease economics were very favorable with an approximately 10% and 19% roll up or increase in rents for the quarter on a cash and accrual basis respectively. Our leasing capital spend of $6.69 per square foot was slightly elevated when compared with the past several quarters as several law firm deals were completed. However, this translated into higher than average rental rates near $47 per square foot as compared to $38 per square foot in 2023. Sublease availability continues to hover around 5% with only 10,000 square feet expiring in 2025. Atlanta was our most active segment this quarter, closing on 12 deals for 122,000 square feet or a third…

Thanks, George. I'll just provide a very brief update. Last quarter we reported that we were in advance negotiations for the disposition of two small non-core assets and I'm pleased to report that one has closed and the other is expected to close later this quarter. Combined, these two deals will generate approximately $35 million in gross proceeds. We have another two to three assets that are currently being marketed, but it is too early to comment on specifics or to speculate on timing. On the acquisitions front. We remain engaged in each of our key markets and continue to think creatively about ways to leverage our operating platform while conserving our capital resources. With that, I'll pass it on to Sherry to cover our financial results. Sherry?

Thank you, Chris. While we will be discussing some of this quarter's financial highlights today. Please review the entire earnings release and the accompanying supplemental financial information, which were filed yesterday for more complete detail. Core FFO per diluted share for the first quarter of 2025 was $0.36 versus $0.39 per diluted share for the first quarter of 2024. Approximately a $0.01 of the decrease is due to increased net interest expense. As a result of refinancing activity over the past 12 months, with the remaining decrease attributable to lower reported rental income due to the sale of two properties, as well as downtime associated with the expiration of a few large leases over the last 12 months. The lease with Travel + Leisure in Orlando will commence in the fourth quarter and provide approximately $5.7 million of additional annualized rent. That's 1% of ALR, or one third of our executed but uncommenced future revenue. AFFO generated during the first quarter of 2025 was approximately $23.5 million in line with the last several quarters and CapEx returned to more normalized levels during Q1 as we wrapped up several major building redevelopment projects around year end. Turning to the balance sheet. We covered the Q1 refinancing activity that Brent mentioned in detail on our last call. So I won't go into the particulars again, but rather just highlight that we currently have no final debt maturities until 2028 and approximately $500 million of availability under our revolving line of credit. Based on the current forward yield curve, we expect all of our unsecured debt maturing for the rest of this decade will be refinanced at lower interest rates and thus be a tailwind to FFO per share growth. At this time, I'd like to affirm our 2025 annual core FFO guidance in the range of $1.38 to $1.44 per diluted share, with no material changes to our previously published assumptions. Based on the timing of when certain leases are scheduled to commence, we currently anticipate core FFO will dip a bit over the next two quarters and then improve in Q4 as some larger recently executed leases, such as the Travel + Leisure lease in Orlando commence, with NOI continuing to improve in 2026. Please refer to Page 26 of the supplemental information filed last night for details of major leases that have not yet commenced or currently in abatement. As of March 31, 2025, the company had 1.9 million square feet of executed leases yet to commence or under abatement. This future cash flow is testament to the leasing success of the team and will fuel future earnings growth, although it does demand additional capital spend as Brent outlined. With that, I will turn the call over to Brent for closing comments. Brent?

Thank you, George, Chris and Sherry. We here at Piedmont remain laser focused on our core business designing, leasing and managing best-in-class work environments. We believe that the recent investments that we made in our portfolio combined with our customer centric place making mindset continue to set us apart in the office sector and we will continue to garner more than our fair share of the leasing market. We will be selective with capital deployment and concentrate our resources on driving lease percentage and increasing rental rate, which will ultimately result in FFO and cash flow growth. With that, I will now ask the operator to provide our listeners with instructions on how they can submit their questions. Operator?

Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Dylan Burzinski with Green Street. Please proceed.

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. Obviously good leasing so far to date in April, positive commentary on sort of the leasing pipeline and touring activity. So it just sounds like you guys are on track to sort of exceed some of the leasing targets that you guys outlined in guidance or reaffirmed in guidance, I should say. So just curious, sort of is there some conservatism baked in given heightened macro uncertainty today?

Hi, Dylan, it's Brent. Appreciate you joining us this morning and good question. Jumping into it, the leasing pipelines we noted in the earnings release, very strong at roughly 750,000 as we – in total as we talked about 275 of that 750 has been executed in the month of April. The remaining portion we would expect to be executed in the next call it two to four months or so. But overall good momentum. And behind that, as George alluded to, our pipeline for tour activities and overall proposals are at record levels over 3 million square feet. But as we all know, it takes a long time from lease to construction to commencement and then into free rent period onto cash paying rents. And so while we have a strong leasing pipeline, I wouldn't imagine it to impact guidance for 2025, but certainly would continue to bolster growth for 2026. As you know, we have about 1.1 million to 1.2 million square feet to accomplish post the first quarter and we've already done a significant number of that already in the month of April. If we also backed out the New York City lease, which is again over 300,000 square feet, given what we've got remaining in the pipeline, it is potentially possible that we would accomplish our leasing goals sometime around late summer. If I had to estimate if the economy holds up and our legal stage pipeline holds up as well, which we've not seen any deterioration in that. So you're correct. It is conceivable that if the strength in the markets hold true, then on the second quarter's earnings call, we may revise our leasing volume guidance for the year up potentially 200,000 square feet or more depending on what we continue to accomplish on the leasing side. We are cautious just given post Liberation Day a lot of uncertainty in the market. But again, as I noted, we have not seen a deterioration and we are still seeing large users, i.e., the backfill tenant for Ryan, which we executed in the month of April for about 95,000 square feet in our Dallas Galleria building. And we're just not seeing that right now waiver. But we'll revisit that in the second quarter when we have just a little bit more clarity around that pipeline and more clarity around the impact of the uncertainty in the market. But we still remain very cautiously optimistic that that would be the case.

Awesome. That's great details, Brent. Appreciate that. I guess just one more for me. I mean, obviously, historically wide gap between lease percentage and economic lease percentage in the portfolio today, as you guys alluded to in your prepared remarks. So I guess are you able to help sort of frame when you think you can get back to. I think the historical spread was closer to 500 basis points versus over 1,000 basis points today. When you expect that gap to close that largely a 2026 [ph] then or do you expect that sort of close over the next few years as leases start to commence? Can you just help frame like the timeline on when that should largely compress?

Yes. So, suspension of the dividend is going to provide approximately $60 million of additional cash flow annually retained within the company. And given that we are going to have a partial year of suspension this year in 2025. Those retained earnings are going to be mainly earmarked for internal growth, just continuing the leasing momentum. And we certainly don't want the team to put pencils down, you will, after late summer. So that'll be earmarked for the internal growth. As we move into 2026 and more leases begin to cash flow, we'll be able to have some excess retained earnings that could be utilized to pay down debt or likely continue to fund a lot of leasing momentum as well. So I think we're hesitant to kind of say when things would definitively be reevaluated and a dividend turned back on, but I would imagine it would be latter part of 2026 at the earliest, given the focus that we have begin to remain, continue to have excess liquidity and continue to improve the balance sheet.

Thanks. That's it for me. Really appreciate it.

The next question comes from Nick Thillman with Baird. Nick, please proceed.

Hey, good morning, guys. Brent, maybe just circling back on the dividend, kind of maybe walk us through some of the thoughts behind it. Maybe what – was there any pressure from the banks when it comes to lending? How much with not being fully funded? Is then maybe on the rating agencies what kind of metrics they're looking at when evaluating you guys because you said that played a part? And then kind of what you have earmarked for kind of TIs and CapEx out of the dollars that are going to be saved from that.

Great series of questions, Nick. I'll try to tackle those one at a time. And again, thanks for joining us today. First, just around our thoughts around the dividend. Piedmont is a company we've leased since the pandemic over 10 million square feet – about 10.3 million square feet and remarkably about a third of that has been in the last 18 months or so, 3.6 million square feet. And that equates to about a quarter of the operating portfolio as it stands today. So we have record levels, if you will, of uncommenced and free rent tenancy. So while our earnings and EBITDA remain very strong, right now we're in a period unique to the company's life cycle where cash flow is diminished from rent and we have a lot of leasing momentum and we want to continue that momentum. And so really as we thought about sources and use, sorry, use sources of that capital to fund that growth, of course there were dispositions as an alternative. However, given again post Liberation Day, the uncertainty of accomplishing those dividends, sorry, those dispositions just continue to come into play and recognizing that we still have a couple of assets under contract, but certainly I think the probability of closing has diminished slightly. But we still are hopeful and expect that they will go to closing some time this year. But we couldn't rely on that as a source. As we thought about, raising equity, I think where our current share price stands today, that also really doesn't make a lot of rationale from a finance perspective. We thought about, yes, you could utilize leverage. We have ample capacity in our line of credit and certainly a lot of support from our banking relationships. We just recast a term loan…

That was a lot of questions and very helpful answer. So I appreciate that. And then quick one just on George, the 3 million square feet of proposals, that's a pickup quarter-over-quarter. Any markets you're noticing, I know you highlighted kind of Dallas, Atlanta and Minneapolis in particular, but any of the other markets seeing a pickup as well? Or is it those three kind of driving that, that uptick?

Good morning, Nick, and welcome. I would tell you those three markets is where most of our vacancies sit. So it's not surprising that 87% of our new activity coming in that proposal type pipeline is heading in that direction. I mean, New York and Orlando is pretty stable. Right. We're sitting in the lower to mid-90s. I'd say, Boston is probably still sitting around 86% for us, although I would say, it's not quite the velocity of the first few markets that I mentioned, and then Dallas is kind of just sitting stagnant at this point.

That's it for me. Thank you, guys.

If there are any remaining questions…

Just to clarify Nick there, George meant D.C. was not Dallas. D.C. he misspoke, was flat. Sorry. Go ahead, operator.

Absolutely. [Operator Instructions] Okay, we have no further questions in the queue. I will now turn the floor back over to Brent Smith for any closing remarks.

I want to appreciate everyone for joining us here today again at Piedmont. We are extremely excited about the volume and the success we're having on the leasing front that will lead to operational growth and excited about where the platform is headed. Obviously, a lot of leasing accomplished in April. We are going to continue to update investors. We have Wells conference next week, May 6 and May 7 for Wells Fargo. And then of course, first week in June will be Nareit our REITweek Conference held in New York. So I'd encourage investors to come to Atlanta, spend time with management or contact Sherry, Jennifer to have a chance to set up a one-on-one at either of those conferences. Again, thank you everyone. We look forward to continuing to update you on the leasing front. Have a great day.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.