Debt

6 Months Ended

Jun. 30, 2020

During the six months ended June 30, 2020, Piedmont entered into a new $150 million term loan facility and amended it to increase the principal amount to $300 million (as so amended, the "$300 Million Unsecured 2020 Term Loan"). Piedmont drew the full $300 million available under the $300 Million Unsecured 2020 Term Loan and used the proceeds to repay outstanding draws on its $500 Million Unsecured 2018 Line of Credit.

Additionally, during the six months ended June 30, 2020, Piedmont amended the $250 Million Unsecured 2018 Term Loan to reduce the applicable interest rate spread from LIBOR plus 160 basis points to LIBOR plus 95 basis points, based on Piedmont's current credit rating.

Finally, during the six months ended June 30, 2020, Piedmont sold the 1901 Market Street building (see Note 8 for further details) and used the majority of the net sale proceeds to repay the $160 Million Fixed-Rate Loan that was secured by the property and all outstanding borrowings under the $500 Million Unsecured 2018 Line of Credit. As a result of repaying the $160 Million Fixed-Rate Loan in advance of its stated maturity, Piedmont recognized a $9.3 million loss on early extinguishment of debt comprised of a prepayment penalty and unamortized deferred financing costs.

The following table summarizes the terms of Piedmont’s indebtedness outstanding as of June 30, 2020 and December 31, 2019 (in thousands):


Facility ⁽¹⁾	Stated Rate		Effective Rate ⁽²⁾			Maturity		Amount Outstanding as of
												June 30, 2020	December 31, 2019
Secured (Fixed)







$35 Million Fixed-Rate Loan ⁽³⁾	5.55	%	3.75	%		9/1/2021		$	28,245	$	28,687
$160 Million Fixed-Rate Loan ⁽⁴⁾	3.48	%	3.58	%		7/5/2022		—		160,000
Net premium and unamortized debt issuance costs								539		343
Subtotal/Weighted Average ⁽⁵⁾	5.55	%						28,784		189,030
Unsecured (Variable and Fixed)





Amended and Restated $300 Million Unsecured 2011 Term Loan ⁽⁶⁾	LIBOR + 1.00%		1.19	%		11/30/2021		300,000		300,000
$500 Million Unsecured 2018 Line of Credit ⁽⁶⁾	LIBOR + 0.90%		—	%		9/30/2022	⁽⁷⁾	—		—
$350 Million Unsecured Senior Notes	3.40	%	3.43	%		6/01/2023		350,000		350,000
$400 Million Unsecured Senior Notes	4.45	%	4.10	%		3/15/2024		400,000		400,000
$250 Million Unsecured 2018 Term Loan	LIBOR + 0.95%		2.10	%	⁽⁸⁾	3/31/2025		250,000		250,000
$300 Million Unsecured 2020 Term Loan⁽⁶⁾	LIBOR + 1.40%		1.60	%		3/12/2021	⁽⁹⁾	300,000		—
Discounts and unamortized debt issuance costs								(7,307)		(7,626)
Subtotal/Weighted Average ⁽⁵⁾	2.71	%						1,592,693		1,292,374
Total/Weighted Average ⁽⁵⁾	2.76	%						$	1,621,477	$	1,481,404

⁽¹⁾Other than one mortgage, the $35 Million Fixed-Rate Loan, all of Piedmont’s outstanding debt as of June 30, 2020 and December 31, 2019 is interest-only until maturity.

⁽²⁾Effective rate after consideration of settled or in-place interest rate swap agreements, issuance premiums/discounts, and/or fair market value adjustments upon assumption of debt.

⁽³⁾Collateralized by the 5 Wall Street building in Burlington, Massachusetts.

⁽⁴⁾Previously collateralized by the 1901 Market Street building in Philadelphia, Pennsylvania.

⁽⁵⁾Weighted average is based on contractual balance of outstanding debt and the stated or effectively fixed interest rates as of June 30, 2020.

⁽⁶⁾On a periodic basis, Piedmont may select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion of the principal. All LIBOR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating.

⁽⁷⁾Piedmont may extend the term for up to one additional year (through two available six month extensions to a final extended maturity date of September 29, 2023) provided Piedmont is not then in default and upon payment of extension fees.

⁽⁸⁾The facility 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, $100 million of the principal balance to 3.56% through the maturity date of the loan. For the remaining variable portion of the loan, Piedmont may periodically select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion of the principal. All LIBOR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating. The rate presented is the weighted-average rate for the effectively fixed and variable portions of the debt outstanding as of June 30, 2020 (see Note 5 for more detail).

⁽⁹⁾Piedmont may extend the term for up to one additional year (through two available six month extensions to a final extended maturity date of March 11, 2022), provided Piedmont is not then in default and upon payment of extension fees.

Piedmont made interest payments on all debt facilities, including interest rate swap cash settlements, of approximately $13.0 million and $14.3 million for the three months ended June 30, 2020 and 2019, respectively, and approximately $29.0 million and $31.9 million for the six months ended June 30, 2020 and 2019, respectively. Also, Piedmont capitalized interest of approximately $0.2 million and $0.6 million for the three months ended June 30, 2020 and 2019, respectively, and approximately $0.4 million and $1.1 million for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, Piedmont believes it was in compliance with all financial covenants associated with its debt instruments.

See Note 6 for a description of Piedmont’s estimated fair value of debt as of June 30, 2020.