Debt

During the three months ended March 31, 2015, Piedmont entered into a $170 million unsecured term loan facility (the “$170 Million Unsecured 2015 Term Loan”) with a consortium of lenders. The term of the $170 Million Unsecured 2015 Term Loan is approximately three years with a maturity date of May 15, 2018; however, Piedmont may prepay the $170 Million Unsecured 2015 Term Loan, in whole or in part, at any time without premium or penalty. The proceeds of the $170 Million Unsecured 2015 Term Loan were used to pay off the principal maturing on the $50 Million Unsecured Term Loan, and the remaining net proceeds were used to pay down the balance outstanding under the $500 Million Unsecured Line of Credit.

The $170 Million Unsecured 2015 Term Loan has the option to bear interest at varying levels based on (i) the London Interbank Offered Rate (“LIBOR”) or Base Rate, defined as the greater of the prime rate, the federal funds rate plus one-half of one percent, or LIBOR for a one-month period plus one percent, (ii) the credit rating levels issued for the Registrant, and (iii) for LIBOR loans, an interest period selected by Piedmont OP of one, two, three, or six months, or to the extent available from all lenders in each case, one year or periods of less than one month. The stated interest rate spread over LIBOR can vary from 0.9% to 1.75% based upon the then current credit rating of Piedmont. As of March 31, 2015, the stated interest rate spread on the $170 Million Unsecured 2015 Term Loan was 1.125%.

Under the $170 Million Unsecured 2015 Term Loan, Piedmont is subject to certain financial covenants that require, among other things, the maintenance of an unencumbered interest coverage ratio of at least 1.75, an unencumbered leverage ratio of at least 1.60, a fixed charge coverage ratio of at least 1.50, a leverage ratio of no more than 0.60, and a secured debt ratio of no more than 0.40. As of March 31, 2015, Piedmont believes it was in compliance with all financial covenants associated with its debt instruments.

Additionally, during the three months ended March 31, 2015, Piedmont incurred additional working capital borrowings of $88.0 million and, utilizing a portion of the proceeds of the $170 Million Unsecured 2015 Term Loan described above, as well as other cash on hand, made repayments totaling $159.0 million on its $500 Million Unsecured Line of Credit. Piedmont also made interest payments on all debt facilities, including interest rate swap cash settlements, of approximately $20.4 million and $16.5 million for the three months ended March 31, 2015 and 2014, respectively. Piedmont capitalized interest of $0.8 million and $0.4 million for the three months ended March 31, 2015 and 2014, respectively.

The following table summarizes the terms of Piedmont’s indebtedness outstanding as of March 31, 2015 and December 31, 2014 (in thousands):



Facility	Collateral	Stated Rate⁽¹⁾			Maturity		Amount Outstanding as of
Facility	Collateral	Stated Rate⁽¹⁾			Maturity		March 31, 2015		December 31, 2014
Secured (Fixed)
$105 Million Fixed-Rate Loan	US Bancorp Center	5.29	%	⁽²⁾	5/11/2015		$	105,000	$	105,000
$125 Million Fixed-Rate Loan	Four Property Collateralized Pool ⁽³⁾	5.50	%		4/1/2016		125,000		125,000
$42.5 Million Fixed-Rate Loan	Las Colinas Corporate Center I & II	5.70	%		10/11/2016		42,525		42,525
$140 Million WDC Fixed-Rate Loans	1201 & 1225 Eye Street	5.76	%		11/1/2017		140,000		140,000
$35 Million Fixed-Rate Loan	5 Wall Street	5.55	%	⁽⁴⁾	9/1/2021		36,266		36,520
Subtotal/Weighted Average ⁽⁵⁾		5.56	%				448,791		449,045
Unsecured (Variable and Fixed)
$300 Million Unsecured 2011 Term Loan		LIBOR + 1.15%		⁽⁶⁾	1/15/2020		298,996		298,944
$500 Million Unsecured Line of Credit		LIBOR + 1.175%		⁽⁷⁾	8/19/2016	⁽⁸⁾	363,000		434,000
$350 Million Unsecured Senior Notes		3.40	%	⁽⁹⁾	6/1/2023		348,831		348,800
$300 Million Unsecured 2013 Term Loan		LIBOR + 1.20%		⁽¹⁰⁾	1/31/2019		300,000		300,000
$400 Million Unsecured Senior Notes		4.45	%	⁽¹¹⁾	3/15/2024		396,914		396,832
$50 Million Unsecured Term Loan		LIBOR + 1.15%			4/1/2015		—		49,968
$170 Million Unsecured 2015 Term Loan		LIBOR + 1.125%		⁽¹²⁾	5/15/2018		169,577		—
Subtotal/Weighted Average ⁽⁵⁾		2.78	%				1,877,318		1,828,544
Total/ Weighted Average ⁽⁵⁾		3.31	%				$	2,326,109	$	2,277,589


⁽¹⁾	Other than the $35 Million Fixed-Rate Loan, all of Piedmont’s outstanding debt as of March 31, 2015 and December 31, 2014 is interest-only.


⁽²⁾	On April 10, 2015, Piedmont repaid in full the balance on the $105 Million Fixed-Rate Loan.


⁽³⁾	Property collateralized pool includes 1430 Enclave Parkway in Houston, Texas, Windy Point I and II in Schaumburg, Illinois, and 1055 East Colorado Boulevard in Pasadena, California.


⁽⁴⁾	The$35 Million Fixed-Rate Loan has a contractual fixed rate of 5.55% ; however, the amortization of the premium recorded in order to adjust the note to its estimated fair value, results in an effective interest rate of 3.75%.


⁽⁵⁾	Weighted average is based on contractual balance of outstanding debt and interest rates in the table as of March 31, 2015.


⁽⁶⁾	The $300 Million Unsecured 2011 Term Loan has a stated variable rate; however, Piedmont has entered into interest rate swap agreements which effectively fix, exclusive of changes to Piedmont's credit rating, the rate on this facility to 2.39% through the original maturity date of November 22, 2016 and 3.35% from November 22, 2016 to January 15, 2020.

⁽⁷⁾

Piedmont may select from multiple interest rate options with each draw, including the prime rate and various-length LIBOR locks. All LIBOR selections are subject to an additional spread (1.175% as of March 31, 2015) over the selected rate based on Piedmont’s current credit rating. The outstanding balance as of March 31, 2015 consisted of 30-day LIBOR draws at a rate of 0.18% (subject to the additional spread mentioned above).


⁽⁸⁾	Piedmont may extend the term for up to one additional year (through two available six month extensions to a final extended maturity date of August 21, 2017) provided Piedmont is not then in default and upon payment of extension fees.


⁽⁹⁾	The $350 Million Senior Notes have a fixed coupon rate of 3.40%, however, as a result of the issuance of the notes at a discount, Piedmont recognizes an effective interest rate on this debt issuance of 3.45%. After consideration of the impact of settled interest rate swap agreements, in addition to the issuance discount, the effective interest rate on this debt is 3.43%.


⁽¹⁰⁾	The $300 Million Unsecured 2013 Term Loan has a stated variable rate; however, Piedmont entered into interest rate swap agreements which effectively fix, absent any changes to Piedmont's credit rating, the rate on this facility to 2.78% .


⁽¹¹⁾	The $400 Million Senior Notes have a fixed coupon rate of 4.45%, however, as a result of the issuance of the notes at a discount, Piedmont recognizes an effective interest rate on this debt issuance of 4.48%. After consideration of the impact of settled interest rate swap agreements, in addition to the issuance discount, the effective interest rate on this debt is 4.10%.

⁽¹²⁾

Piedmont may select from multiple interest rate options, including the prime rate and various-length LIBOR locks. All LIBOR selections are subject to an additional spread (1.125% as of March 31, 2015) over the selected rate based on Piedmont’s current credit rating. The outstanding balance as of March 31, 2015 consisted of a 30-day LIBOR draw at a rate of 0.18% (subject to the additional spread mentioned above).