Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt

Debt

During the six months ended June 30, 2022, Piedmont amended and restated its $500 Million Unsecured 2018 Line of Credit. The $500 Million Unsecured 2018 Line of Credit had an initial maturity date of September 30, 2022. As amended and restated, the size of the line of credit has been expanded to $600 million (the "$600 Million Unsecured 2022 Line of Credit"). The term of the new $600 Million Unsecured 2022 Line of Credit has been extended to June 30, 2026, and Piedmont may extend the term for up to one additional year (through two available six-month extensions) provided Piedmont is not then in default and all representations and warranties are true and correct in all material respects and upon payment of applicable extension fees. Under certain terms of the agreement, Piedmont may increase the new facility by up to an additional $500 million, to an aggregate size of $1.1 billion, provided that no existing bank has any obligation to participate in such increase. Piedmont paid customary arrangement and upfront fees to the lenders in connection with the closing of the new facility.

The $600 Million Unsecured 2022 Line of Credit has the option to bear interest at varying levels (determined with reference to the greater of the credit rating for Piedmont or Piedmont OP) based on the Adjusted Term SOFR Rate, Adjusted Daily Effective SOFR Rate, or the Base Rate, all as defined in the facility agreement. Further, the Base Rate is defined as the greater of the prime rate, the federal funds rate plus 0.5%, or the Adjusted Term SOFR Rate for a one-month period plus 1.0%. The term SOFR loans are available with interest periods selected by Piedmont of one, three, or six months. The stated interest rate spread over Adjusted SOFR can vary from 0.725% to 1.4% based upon the greater of the then current credit rating of Piedmont. As of June 30, 2022, based upon Piedmont’s current BBB (S&P) credit rating, the current stated Adjusted SOFR spread on the loan is 0.85%.

The $600 Million Unsecured 2022 Line of Credit has certain financial covenants that require, among other things, the maintenance of an unencumbered interest rate 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.

The following table summarizes the terms of Piedmont’s indebtedness outstanding as of June 30, 2022 and December 31, 2021 (in thousands):

Facility (1)	Stated Rate		Effective Rate (2)			Maturity		Amount Outstanding as of
								June 30, 2022		December 31, 2021
$350 Million Unsecured Senior Notes due 2023	3.40	%	3.43	%		6/01/2023	(3)	$	350,000	$	350,000
$400 Million Unsecured Senior Notes due 2024	4.45	%	4.10	%		3/15/2024		400,000		400,000
$250 Million Unsecured 2018 Term Loan	LIBOR + 0.95%		2.98	%	(4)	3/31/2025		250,000		250,000
$600 Million Unsecured 2022 Line of Credit(5)	SOFR + 0.85%		2.45	%	(6)	6/30/2026	(7)	89,000		290,000
$300 Million Unsecured Senior Notes due 2030	3.15	%	3.90	%		8/15/2030		300,000		300,000
$300 Million Unsecured Senior Notes due 2032	2.75	%	2.78	%		4/1/2032		300,000		300,000
Discounts and unamortized debt issuance costs								(14,222)		(12,210)
Total/Weighted Average (8)	3.38	%						$	1,674,778	$	1,877,790

(1)All of Piedmont’s outstanding debt as of June 30, 2022 is unsecured and interest-only until maturity.

(2)Effective rate after consideration of settled or in-place interest rate swap agreements and issuance discounts.

(3)Piedmont currently intends to repay the $350 Million Unsecured Senior Notes due 2023 through debt refinancing, cash on hand, cash flow from operations, and/or draws under its existing $600 Million Unsecured 2022 Line of Credit.

(4)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, 2022 (see Note 4 for more detail).

(5)As mentioned above, during the three months ended June 30, 2022, Piedmont amended and restated its $500 Million Unsecured 2018 Line of Credit and it is now reflected as the $600 Million Unsecured 2022 Line of Credit. The $500 Million Unsecured 2018 Line of Credit had a stated rate of LIBOR + 0.90% as of December 31, 2021.

(6)On a periodic basis, Piedmont may select from multiple interest rate options, including the prime rate and various-length SOFR locks on all or a portion of the principal. All SOFR 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 June 30, 2027) provided Piedmont is not then in default and upon payment of extension fees.

(8)Weighted average is based on contractual balance of outstanding debt and the stated or effectively fixed interest rates as of June 30, 2022.

Piedmont made interest payments on all debt facilities, including interest rate swap cash settlements, of approximately $12.8 million and $8.8 million for the three months ended June 30, 2022 and 2021, respectively, and approximately $28.6 million and $25.3 million for the six months ended June 30, 2022 and 2021, respectively. Also, Piedmont capitalized interest of approximately $1.1 million and $0.9 million for the three months ended June 30, 2022 and 2021, respectively, and approximately $2.1 million and $1.7 million for the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, Piedmont believes it was in compliance with all financial covenants associated with its debt instruments.

See Note 5 for a description of Piedmont’s estimated fair value of debt as of June 30, 2022.