Piedmont Raises Outlook as Rental Pricing Strengthens
Average net effective rent reached a company record of $25.56 per square foot.
Piedmont Realty Trust (PDM), an office real-estate investment trust, raised its full-year earnings outlook after higher rents and new lease commencements lifted second-quarter Core FFO.
The increase marked Piedmont’s second consecutive outlook boost as leasing economics strengthened despite lower activity from a year earlier. Cash rent spreads widened to 14.1% from 11.1% in the first quarter and 7.3% a year earlier, while accrual spreads reached 32.4%.
Revenue rose 2.7% from a year earlier to $144.1 million, accelerating from the first quarter’s 0.6% sequential increase. Core FFO climbed to $47.9 million, or $0.38 a share, from $44.5 million, or $0.36 a share, a year earlier. The net loss narrowed to $11.1 million, or $0.09 a share, from $16.8 million, or $0.14 a share.
Core EBITDA increased to $80.1 million from $76.9 million a year earlier, and the margin expanded to 55.6% from 54.8%. Cash-basis same-store net operating income rose 9.0%, easing from 11.1% in the first quarter but reversing a 2.0% decline a year earlier, as higher rents and lease commencements or expired abatements outweighed lease expirations.
Leasing volume increased 6.5% sequentially to 459,000 square feet, though it remained 35.5% below the year-earlier period. Renewals accounted for more of the activity as renewal leasing rose to 197,000 square feet and new-tenant leasing declined to 262,000 square feet. In-service leased occupancy slipped to 88.9% from 89.3% in the first quarter.
Piedmont’s 2026 Core FFO forecast is now $190 million to $197 million, or $1.50 to $1.55 a share, compared with its initial range of $186 million to $194 million, or $1.47 to $1.53 a share. The company also lifted its cash- and accrual-basis same-store NOI growth assumptions by two percentage points to ranges of 5% to 8%.
About 900,000 square feet of signed leases awaiting commencement represented $39 million of prospective annual cash rent, while space under rent abatements represented another $28 million. Piedmont also expanded its term loan to $400 million, extended its maturity to May 2031 and ended the quarter with its entire $600 million revolver available and no debt maturities until 2028.