The Print

Piedmont Realty Trust, Inc. (NYSE:PDM) said its operating partnership, Piedmont Operating Partnership, LP, priced $200 million of 2.875% exchangeable senior notes due 2031 on Sept. 14, with settlement scheduled for Sept. 17. Piedmont will fully and unconditionally guarantee the notes on a senior, unsecured basis. The office REIT plans to use the financing as part of a broader package to redeem all $287.3 million of its outstanding 9.250% senior notes due 2028.

The coupon change is eye-catching, but the transaction is not a simple 9.25%-to-2.875% refinancing. Piedmont expects to combine a portion of the net proceeds from the notes with proceeds from certain at-the-market forward equity settlements, cash on hand and revolver borrowings. It also expects to use about $50 million of the note proceeds to repurchase 5,434,782 common shares at $9.20 each.

That means the financing touches both sides of the per-share equation. The repurchase would reduce the current common-share count. ATM forward settlements would add shares when they settle. The exchangeable notes are not current dilution but could affect the denominator later depending on how exchanges are settled. The useful test is what the completed financing mix does to Core FFO per share, not the coupon headline by itself.

The 2028 Notes Are The Expensive Piece

Piedmont had $287.258 million of the 9.250% notes outstanding at June 30. At the stated coupon, those notes represent about $26.6 million of annual cash interest before other costs or accounting adjustments.

The balance is less than half of the original $600 million issue after Piedmont repurchased about $67.5 million in the second quarter of 2025 and another $245.2 million in the fourth quarter.

The new $200 million exchangeable notes carry a 2.875% coupon, equal to $5.75 million of annual stated interest on the $200 million base offering. Estimated net proceeds are about $194.3 million, or approximately $223.5 million if the initial purchasers exercise their option to buy an additional $30 million of notes in full.

The difference between $26.6 million and $5.75 million is not Piedmont’s expected annual interest savings. The principal amounts differ, and multiple funding sources will be used to retire the 2028 notes. The redemption also requires the applicable make-whole premium and accrued and unpaid interest. Revolver borrowings carry their own cost, while forward equity changes the capital structure without creating the same contractual interest obligation.

Piedmont also said in its second-quarter results that interest expense remained elevated following refinancing activity completed in a higher-rate environment.

The Share Count Moves In Both Directions

The planned $50 million concurrent repurchase covers 5,434,782 shares at $9.20. Compared with 125.133 million common shares outstanding at June 30, that is about 4.34% on a simple share-count calculation.

That percentage is not Piedmont’s final reduction in shares outstanding. The company also plans to settle certain forward sale transactions under its ATM program, and the current disclosures do not provide a final post-settlement common-share count.

The exchangeable notes create another potential share-count variable. Their initial exchange rate is 79.0514 shares per $1,000 principal amount, equivalent to a $12.65 initial exchange price, about 37.5% above Piedmont’s $9.20 closing price on Sept. 14.

That exchange rate is not a current dilution figure. The Operating Partnership can settle exchanges in cash or a combination of cash and Piedmont common stock, and the exchange rate can be adjusted under specified conditions. The number of shares, if any, ultimately delivered therefore remains unresolved.

Core FFO Per Share Is The Check

Piedmont reported second-quarter Core FFO of $0.38 per diluted share, up from $0.36 a year earlier. Its 2026 outlook calls for Core FFO of $1.50 to $1.55 per diluted share.

The company’s 2026 outlook, reiterated with its second-quarter results, stated that no speculative acquisitions, dispositions or refinancing transactions were included. That makes the guidance a pre-transaction baseline rather than an estimate of the September financing’s effect.

At June 30, total debt was about $2.25 billion, while fixed or effectively fixed debt carried an average effective interest rate of about 5.57%.

The capital-allocation context also extends to the dividend. Piedmont did not declare or pay common dividends during the first half of 2026. Its second-quarter 10-Q said future dividends will depend partly on near-term debt repayment needs, access to additional sources of capital and the company’s desire to reduce overall leverage. The filing did not provide a timetable for a dividend resumption.

The September transaction targets the highest stated coupon in the debt stack, but it does so with a mix of exchangeable debt, equity settlement, cash, revolver borrowings and a simultaneous share repurchase.

The next useful number is therefore not a mechanical coupon spread. It is Core FFO per share after the 2028 notes are retired and the related equity transactions settle. The lower coupon changes one component of the numerator. The final funding costs and share count determine what reaches each common share.

Sources: Piedmont Realty Trust SEC filings and company disclosures dated July 28, September 14 and September 15, 2026. DFB calculations are derived from disclosed figures.

The author holds no position in any security mentioned. Structural research, not personalized investment advice.

Further dividend structure research is published at dividendforensics.com.

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