Piedmont Realty Trust (NYSE:PDM) executives emphasized improving office-market fundamentals and a surge in leasing activity during the company’s fourth-quarter 2025 earnings call, pointing to a large backlog of signed-but-uncommenced leases that management expects to drive stronger occupancy and earnings in 2026.
Management highlights a shifting office backdrop and record leasing year
President and CEO Brent Smith said momentum in the national office market “clearly shifted” in the latter part of 2025, citing research indicating peak vacancy for the cycle and improving demand for “best-in-class assets.” Smith referenced a JLL survey showing the number of Fortune 100 companies requiring a five-day in-office workweek rising to about 55% from 5% two years ago, and described supply constraints such as lower sublet availability and limited new deliveries.
Fourth-quarter leasing, rent growth, and backlog
In the fourth quarter, Piedmont completed about 679,000 square feet of leasing, with roughly 70% tied to new tenants, ending the year at 89.6% leased—up 120 basis points over the course of 2025, according to Smith.
Chief Operating Officer George Wells said the company completed 60 transactions totaling nearly 700,000 square feet, with new deal activity representing 69% of total volume and 54% of that activity filling current vacancy. Wells also noted that the weighted average lease term for new deal activity was about nine years, and that for the sixth straight quarter, expansions exceeded contractions. The company’s retention rate for the period was 63%.
Management highlighted continued rent growth on new leasing. Smith said rental rates on leases executed in the quarter for space vacant less than a year rose about 12% on a cash basis and 21% on an accrual basis. Wells added that the portfolio posted 12% and 21% cash and accrual roll-ups, respectively, and said the average accrual-based roll-up over the past eight quarters was 17%.
Piedmont ended the year with a sizeable backlog of uncommenced leases. Smith said the company had almost 2 million square feet of leases representing $68 million of future annualized cash rents, with “substantially all” commencing by the end of 2026. Wells said nearly 90% of new leases signed will begin recognizing GAAP rent in 2026.
Market-level color: Atlanta and Orlando stand out; redevelopments advance
Wells called Atlanta and Dallas key drivers of lease economics, and described Atlanta as Piedmont’s “most productive market” in the fourth quarter, with 23 deals totaling 336,000 square feet—about half of company volume. At Galleria on the Park, Piedmont signed a 48,000-square-foot corporate headquarters relocation with a 10-year term, which Wells said helped support higher asking rents at the project. He also discussed leasing progress at 999 Peachtree, which he said is now 93% leased after capturing nine new deals for 130,000 square feet over the past year.
Orlando also contributed meaningfully, with 10 deals totaling 125,000 square feet, or 18% of company volume, Wells said. He highlighted leasing at Piedmont’s 222 Orange redevelopment, where three additional floors were leased during the quarter, moving lease percentage from 46% to 77%.
Smith and Wells both pointed to progress in the company’s out-of-service redevelopment portfolio—two projects in Minneapolis and one in Orlando. Smith said the out-of-service portfolio was 62% leased at year-end 2025 after being “essentially vacant” at year-end 2024, with most leases expected to commence during 2026. Wells said the out-of-service portfolio was nearly 80% leased when including deals in the legal stage, and said Piedmont anticipates stabilization by the end of 2026 or early 2027.
Key 2026 expirations and the leasing pipeline
Wells discussed Piedmont’s two largest 2026 expirations: Epsilon in Dallas and the City of New York at 60 Broad in New York. In Dallas, management said it is making progress on retaining Epsilon and attracting new tenants for a portion of the expiration at the Las Colinas Connection project, which Wells said is currently 99% leased. At 60 Broad, Wells said Piedmont has “affirmed deal terms” with the new administration for the City of New York lease, with internal reviews and a public hearing still required before execution; he said the company expects an executed lease later in the year.
For 2026, Wells said total expirations are about 9% of the portfolio, with the second quarter the most impacted. He added that aside from the largest expirations discussed, remaining 2026 expirations are “negligible.” Despite the timing considerations, Wells said the company is projecting positive net absorption and expects to end 2026 around 90% leased for the total portfolio including redevelopment assets.
Management said leasing momentum continued into the new year. Smith cited more than 200,000 square feet of leases already signed in 2026, while Wells said the pipeline included nearly 600,000 square feet in the legal stage. Wells noted that outstanding proposals have declined moderately due to limited large blocks of space, totaling a combined 1.8 million square feet for operating and redevelopment portfolios.
Financial results, refinancing activity, and 2026 guidance
Chief Financial Officer Sherry Rexroad reported fourth-quarter 2025 core funds from operations (Core FFO) of $0.35 per diluted share, compared with $0.37 per diluted share in the fourth quarter of 2024. She attributed the decline primarily to the sale of two projects during 2025 and higher net interest expense stemming from refinancing activity, partially offset by higher economic occupancy and rental rate growth. Rexroad said fourth-quarter 2025 adjusted funds from operations (AFFO) was approximately $18.7 million.
Rexroad also detailed refinancing steps taken during the quarter. Piedmont issued $400 million of new bonds and used proceeds to repurchase about $245 million of its 9.25% 2028 bonds, with remaining proceeds used to pay down its revolving credit facility. Combined with earlier open-market repurchases of higher-coupon bonds, Rexroad said the actions are expected to save approximately $0.04 per year on an annual basis. Piedmont ended the year with about $550 million of revolver capacity and no final debt maturities until 2028, she said.
For 2026, Piedmont introduced Core FFO guidance of $1.47 to $1.53 per diluted share, which Rexroad said would be $0.08 higher at the midpoint than 2025 results. She said the guidance reflects property NOI growth equivalent to $0.08 to $0.13 per share and reduced interest expense of $0.01 to $0.02 per share, partially offset by lower capitalized interest as redevelopment projects come online. The company expects 2026 leasing activity of 1.7 million to 2.0 million square feet and projected year-end portfolio lease percentage of about 89.5% to 90.5%, along with mid-single-digit same-store NOI growth on both a cash and accrual basis. Rexroad said the commenced/occupied percentage is expected to increase about 400 basis points from 81% at year-end 2025 to 85% at year-end 2026.
Management noted the 2026 guidance does not assume any speculative acquisitions, dispositions, or additional refinancing activity.
In closing remarks, Smith said the company believes the occupancy trough occurred in the fourth quarter of 2025 and that macro factors, portfolio repositioning, and its service model can support mid-single-digit organic FFO growth in 2026 and 2027. He also reiterated that Alex Valente was promoted to co-chief operating officer and will work alongside Wells on new operational initiatives and oversight of much of Piedmont’s eastern portfolio.
About Piedmont Realty Trust (NYSE:PDM)
Piedmont Realty Trust is a real estate investment trust (REIT) headquartered in Atlanta, Georgia, that focuses on the ownership, acquisition and management of office properties. The company’s portfolio comprises a mix of multi-tenant and single-tenant buildings, with a particular emphasis on small- to mid-size office campuses and urban infill properties. Piedmont Realty Trust structures its leases and property services to support a diversified base of tenants, including professional services firms, government agencies and technology companies.
The company’s operating model combines property management, leasing and strategic capital allocation to enhance asset value and drive income stability.
