Piedmont Office Realty Trust Announces Pricing of Senior Notes Offering

Rhea-AI Summary

Piedmont Office Realty Trust, Inc. has priced an offering of $400 million senior unsecured notes due 2028. The net proceeds will be used to fund the purchase of outstanding senior notes due 2024. If the tender offer is not consummated, the remaining net proceeds will be used for debt repayment and general corporate purposes.

Positive

• Piedmont has successfully priced an offering of $400 million senior unsecured notes, which indicates investor confidence in the company's financial stability.

Negative

• If the tender offer is not consummated or the aggregate consideration for the 2024 notes is less than the net proceeds, Piedmont may need to use the remaining funds for debt repayment, which could negatively impact its financial flexibility.

Atlanta, July 18, 2023 (GLOBE NEWSWIRE) -- Piedmont Office Realty Trust, Inc. (the “Company” or “Piedmont”) (NYSE:PDM) announced today that its operating partnership, Piedmont Operating Partnership, LP (the “Operating Partnership”), has priced an offering of $400 million aggregate principal amount of 9.250% senior unsecured notes due 2028 at 99.000% of the principal amount. The offering is expected to close on July 20, 2023, subject to the satisfaction of customary closing conditions.

Piedmont intends to use the net proceeds from the offering, together with cash on hand, if necessary, to fund the purchase of all of its outstanding 4.45% senior notes due 2024 that are validly tendered and accepted for purchase in the tender offer commenced substantially concurrently with the offering. In the event that the tender offer is not consummated, or the aggregate consideration for all 2024 notes that are validly tendered and accepted for purchase in the tender offer is less than the net proceeds from the offering, Piedmont intends to use the remaining net proceeds from the offering to repay borrowings outstanding under its 2022 line of credit, with any remaining amount being used for working capital, capital expenditures and other general corporate purposes, which may include repayment of other borrowings outstanding. 

The notes will be fully and unconditionally guaranteed on a senior unsecured basis by the Company.

BofA Securities, J.P. Morgan, Truist Securities, TD Securities, Wells Fargo Securities, Morgan Stanley, U.S. Bancorp, and Scotiabank are acting as joint book-running managers. PNC Capital Markets and Ramirez & Co. are acting as co-managers.

A shelf registration statement relating to these securities is effective with the Securities and Exchange Commission. The offering may be made only by means of a prospectus supplement and accompanying prospectus. Copies of these documents may be obtained by contacting BofA Securities, Inc., NC1-004-03-43, 200 North College Street, 3rd Floor, Charlotte, NC 28255-0001, Attention: Prospectus Department or by email at dg.prospectus_requests@bofa.com; J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York, 10179, Attention: Investment Grade Syndicate Desk, 3rd Floor, telephone collect at 1-212-834-4533; Truist Securities, Inc., 3333 Peachtree Road NE, Atlanta, GA 30326, Attn: Prospectus Dept, Telephone: (800) 685-4786; TD Securities (USA) LLC, 1 Vanderbilt Avenue 11^th Floor New York, New York 10017, Attention: Transaction Advisory Group or Toll-Free at 1-855-495-9846; or Wells Fargo Securities, LLC at 608 2nd Avenue South, Suite 1000, Minneapolis, Minnesota 55402, Attention: WFS Customer Service, or by calling: 1-800-645-3751, or by emailing: wfscustomerservice@wellsfargo.com. Electronic copies of these documents are also available from the Securities and Exchange Commission’s website at www.sec.gov.

This press release is neither an offer to purchase nor a solicitation of an offer to sell the notes, nor shall it constitute an offer, solicitation or sale in any state or jurisdiction in which such offer, solicitation or sale is unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Piedmont Office Realty Trust

Piedmont Office Realty Trust, Inc. (NYSE:PDM) is an owner, manager, developer, redeveloper, and operator of high-quality, Class A office properties located primarily in major U.S. Sunbelt markets. Its approximately $5 billion portfolio is currently comprised of approximately 17 million square feet. The Company is a fully integrated, self-managed real estate investment trust (REIT) with local management offices in each of its markets. Piedmont is a 2023 ENERGY STAR Partner of the Year.

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends for all such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such information is subject to certain known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. Therefore, such statements are not intended to be a guarantee of the Company`s performance in future periods. Such forward-looking statements can generally be identified by the Company's use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or similar words or phrases that indicate predictions of future events or trends or that do not relate solely to historical matters. These statements are based on beliefs and assumptions of Piedmont’s management, which in turn are based on information available at the time the statements are made.

The following are some of the factors that could cause the Company's actual results and its expectations to differ materially from those described in the Company’s forward-looking statements: economic, regulatory, socio-economic (including work from home), technological (e.g. Metaverse, Zoom, etc.), and other changes that impact the real estate market generally, the office sector or the patterns of use of commercial office space in general, or the markets where we primarily operate or have high concentrations of annualized lease revenue; impact of competition on our efforts to renew existing leases or re-let space on terms similar to existing leases; lease terminations, lease defaults, lease contractions, or changes in the financial condition of our tenants, particularly by one of our large lead tenants; impairment charges on our long-lived assets or goodwill resulting therefrom; the success of our real estate strategies and investment objectives, including our ability to implement successful redevelopment and development strategies or identify and consummate suitable acquisitions and divestitures; the illiquidity of real estate investments, including economic changes, such as rising interest rates, which could impact the number of buyers/sellers of our target properties, and regulatory restrictions to which real estate investment trusts (“REITs”) are subject and the resulting impediment on our ability to quickly respond to adverse changes in the performance of our properties; the risks and uncertainties associated with our acquisition and disposition of properties, many of which risks and uncertainties may not be known at the time of acquisition or disposition; development and construction delays, including the potential of supply chain disruptions, and resultant increased costs and risks; future acts of terrorism, civil unrest, or armed hostilities in any of the major metropolitan areas in which we own properties, or future cybersecurity attacks against any of our properties or our tenants; risks related to the occurrence of cyber incidents, or a deficiency in our cybersecurity, which could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships; costs of complying with governmental laws and regulations, including environmental standards imposed on office building owners; uninsured losses or losses in excess of our insurance coverage, and our inability to obtain adequate insurance coverage at a reasonable cost; additional risks and costs associated with directly managing properties occupied by government tenants, such as potential changes in the political environment, a reduction in federal or state funding of our governmental tenants, or an increased risk of default by government tenants during periods in which state or federal governments are shut down or on furlough; significant price and volume fluctuations in the public markets, including on the exchange which we listed our common stock; risks associated with incurring mortgage and other indebtedness, including changing capital reserve requirements on our lenders and rapidly rising interest rates in the public bond markets, could impact our ability to finance properties or refinance existing debt or significantly increase operating/financing costs; a downgrade in our credit rating could materially adversely affect our business and financial condition, and would trigger an interest rate increase on the senior unsecured notes due 2028; the effect of future offerings of debt or equity securities on the value of our common stock; additional risks and costs associated with inflation and continuing increases in the rate of inflation, including the possibility of a recession that could negatively impact our operations and the operations of our tenants and their ability to pay rent; uncertainties associated with environmental and regulatory matters; changes in the financial condition of our tenants directly or indirectly resulting from geopolitical developments that could negatively affect important supply chains and international trade, the termination or threatened termination of existing international trade agreements, or the implementation of tariffs or retaliatory tariffs on imported or exported goods; the effect of any litigation to which we are, or may become, subject; additional risks and costs associated with owning properties occupied by tenants in particular industries, such as oil and gas, hospitality, travel, co-working, etc., including risks of default during start-up and during economic downturns; changes in tax laws impacting REITs and real estate in general, as well as our ability to continue to qualify as a REIT under the Internal Revenue Code of 1986, as amended, or other tax law changes which may adversely affect our stockholders; the future effectiveness of our internal controls and procedures; actual or threatened public health epidemics or outbreaks, such as the COVID-19 pandemic, as well as governmental and private measures taken to combat such health crises, could have a material adverse effect on our business operations and financial results; the adequacy of our general reserve related to tenant lease-related assets or the establishment of any other reserve in the future; and other factors, including the risk factors discussed under Item 1A. of Piedmont’s Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company cannot guarantee the accuracy of any such forward-looking statements contained in this press release, and the Company does not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Contacts

Research Analysts/Institutional Investors Contact:
Eddie Guilbert
770-418-8592
research.analysts@piedmontreit.com

FAQ

What is Piedmont Office Realty Trust, Inc. offering?

Piedmont is offering $400 million senior unsecured notes due 2028.

What will the net proceeds be used for?

The net proceeds will be used to fund the purchase of outstanding senior notes due 2024.

What happens if the tender offer is not consummated?

If the tender offer is not consummated, Piedmont may use the remaining funds for debt repayment and general corporate purposes.

Who are the joint book-running managers for the offering?

The joint book-running managers for the offering are BofA Securities, J.P. Morgan, Truist Securities, TD Securities, Wells Fargo Securities, Morgan Stanley, U.S. Bancorp, and Scotiabank.

Where can I obtain copies of the prospectus and accompanying documents?

Copies of the prospectus and accompanying documents can be obtained from the respective book-running managers or the Securities and Exchange Commission's website.