Piedmont Realty Trust, Inc.

Previous wording

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto of Piedmont Office Realty Trust, Inc. (“Piedmont,” "we," "our," or "us"). See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I, as well as the consolidated financial statements and accompanying notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto of Piedmont Realty Trust, Inc. (“Piedmont,” "we," "our," or "us"). See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I, as well as the consolidated financial statements and accompanying notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

We intend to use cash on hand, cash flows generated from the operation of our properties, net proceeds from the disposition of select properties, and borrowings under our $600 Million Unsecured 2022 Line of Credit as our primary sources of immediate liquidity. As of the date of this filing, we had approximately $500 million of borrowing capacity available under our $600 Million Unsecured 2022 Line of Credit and no required debt maturities until 2028. Consequently, we believe that we have sufficient liquidity to meet our obligations for the foreseeable future ; however, as part of our overall debt management strategy, we may seek other new secured or unsecured borrowings from third party lenders or issue other debt or equity securities as additional sources of capital. The nature and timing of these additional sources of capital will be highly dependent on market conditions.

Current wording

We intend to use cash on hand, cash flows generated from the operation of our properties, net proceeds from the disposition of select properties, and borrowings under our $600 Million Unsecured 2022 Line of Credit as our primary sources of immediate liquidity. As of June 30, 2025, we had approximately $450 million of borrowing capacity available under our $600 Million Unsecured 2022 Line of Credit and no required debt maturities until 2028. Consequently, we believe that we have sufficient liquidity to meet our obligations for the foreseeable future; however, as part of our overall debt management strategy, we may seek other new secured or unsecured borrowings from third party lenders or issue other debt or equity securities as additional sources of capital. The nature and timing of these additional sources of capital will be highly dependent on market conditions.

Previous wording

Our most consistent use of capital has historically been, and we believe will continue to be, to fund capital expenditures for our existing portfolio of properties. During the three months ended March 31, 2025 and 2024 we incurred the following types of capital expenditures (in thousands):

Current wording

Our most consistent use of capital has historically been, and we believe will continue to be, to fund capital expenditures for our existing portfolio of properties. During the six months ended June 30, 2025 and 2024 we incurred the following types of capital expenditures (in thousands):

Previous wording

(1)Of the total amounts paid, approximately $5.5 million and $4.0 million relates to soft costs such as capitalized interest, payroll, and other property operating costs for the three months ended March 31, 2025 and 2024, respectively.

Current wording

(1)Of the total amounts paid, approximately $10.2 million and $8.2 million relates to soft costs such as capitalized interest, payroll, and other property operating costs for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Capital expenditures for redevelopment/renovations noted above during both the three months ended March 31, 2025 and 2024 related to building upgrades, primarily to the lobbies and the addition of tenant amenities at certain of our buildings and assets under redevelopment, including: Galleria Towers in Dallas, Texas; The Exchange in Orlando, Florida; Galleria on the Park in Atlanta, Georgia, and Meridian in suburban Minneapolis, Minnesota, among others.

Current wording

Capital expenditures for redevelopment/renovations noted above during both the six months ended June 30, 2025 and 2024 related to building upgrades, primarily to the lobbies and the addition of tenant amenities at certain of our buildings and assets under redevelopment, including: US Bancorp Center in Minneapolis, Minnesota; Galleria Towers in Dallas, Texas; The Exchange in Orlando, Florida; Galleria on the Park in Atlanta, Georgia, 60 Broad in New York, New York, and Meridian in suburban Minneapolis, Minnesota, among others.

Previous wording

We currently do not anticipate incurring any unusually large or material capital expenditures within any given year in order to meet recognized sustainable development standards, and achieve our environmental impact goals.

Current wording

We currently do not anticipate incurring any unusually large or material capital expenditures within any given year in order to meet recognized sustainable development standards or achieve our environmental impact goals.

Previous wording

Given that our operating model frequently results in leases for multiple blocks of space to credit-worthy tenants, our leasing success can result in capital outlays which vary from one reporting period to another based upon the specific leases executed. For leases executed during the three months ended March 31, 2025, we committed to spend approximately $6.69 per square foot per year of lease term for tenant improvement allowances and lease commissions (net of expired lease commitments) as compared to $5.13 (net of expired lease commitments) for the three months ended March 31, 2024. As of March 31, 2025, we had one individually significant unrecorded tenant allowance commitment greater than $10 million.

Current wording

Given that our operating model frequently results in leases for multiple blocks of space to credit-worthy tenants, our leasing success can result in capital outlays which vary from one reporting period to another based upon the specific leases executed. For leases executed during the six months ended June 30, 2025, we committed to spend approximately $6.72 per square foot per year of lease term for tenant improvement allowances and lease commissions (net of expired lease commitments) as compared to $5.85 (net of expired lease commitments) for the six months ended June 30, 2024 with the increase in the current period attributable to the significant amount of new tenant leasing completed. As of June 30, 2025, we had one individually significant unrecorded tenant allowance commitment greater than $10 million.

Previous wording

We also use capital resources to pay dividends to our stockholders. The amount and form of payment (cash or stock issuance), if any, of future dividends to be paid to our stockholders will continue to be largely dependent upon (i) the amount of cash generated from our operating activities; (ii) our expectations of future cash flows; (iii) our determination of near-term cash needs for debt repayments, development projects, and selective acquisitions of new properties; (iv) the timing of significant expenditures for tenant improvements, leasing commissions, building redevelopment projects, and general property capital improvements; (v) long-term dividend payout ratios for comparable companies; (vi) our ability to continue to access additional sources of capital, including potential sales of our properties; (vii) our desire to reduce overall leverage; and (viii) the amount required to be distributed to maintain our status as a REIT. With the fluctuating nature of cash flows and expenditures, we may periodically borrow funds on a short-term basis to cover timing differences in cash receipts and cash disbursements, including to pay dividends to our stockholders.

Current wording

Finally, we may also use capital resources to pay dividends to our stockholders. The amount and form of payment (cash or stock issuance), if any, of future dividends to be paid to our stockholders will continue to be largely dependent upon (i) the amount of cash generated from our operating activities; (ii) our expectations of future cash flows; (iii) our determination of near-term cash needs for debt repayments, development projects, and selective acquisitions of new properties; (iv) the timing of significant expenditures for tenant improvements, leasing commissions, building redevelopment projects, and general property capital improvements; (v) long-term dividend payout ratios for comparable companies; (vi) our ability to continue to access additional sources of capital, including potential sales of our properties; (vii) our desire to reduce overall leverage; and (viii) the amount required to be distributed to maintain our status as a REIT. With the fluctuating nature of cash flows and expenditures, we may periodically borrow funds on a short-term basis to cover timing differences in cash receipts and cash disbursements, including to pay dividends to our stockholders.

Previous wording

Net loss applicable to common stockholders for the three months ended March 31, 2025 was approximately $10.1 million, or $0.08 per diluted share, as compared with net loss applicable to common stockholders of $27.8 million, or $0.22 per diluted share, for the three months ended March 31, 2024. The primary driver of the $17.7 million decrease in net loss was the non-recurrence of an approximately $18.4 million impairment charge recognized during the first quarter of 2024. This decrease was partially offset by increased interest expense, net of interest income, during the three months ended March 31, 2025 as compared to the same period in the prior year.

Current wording

Net loss applicable to common stockholders for the three months ended June 30, 2025 was approximately $16.8 million, or $0.14 per diluted share, as compared with net loss applicable to common stockholders of $9.8 million, or $0.08 per diluted share, for the three months ended June 30, 2024. The primary driver of the increase in net loss was an approximately $7.5 million loss on early extinguishment of debt recognized during the second quarter of 2025.

Previous wording

The following table sets forth selected data from our consolidated statements of operations for the three months ended March 31, 2025 and 2024, respectively, as well as each balance as a percentage of total revenues for the same period presented (dollars in millions):

Current wording

The following table sets forth selected data from our consolidated statements of operations for the three months ended June 30, 2025 and 2024, respectively, as well as each balance as a percentage of total revenues for each period presented (dollars in millions):

Previous wording

Depreciation expense increased approximately $2.0 million for the three months ended March 31, 2025 as compared to the same period in the prior year. The increase was primarily due to additional building and tenant improvements placed in service subsequent to January 1, 2024.

Current wording

Depreciation expense increased approximately $1.8 million for the three months ended June 30, 2025 as compared to the same period in the prior year. The increase was primarily due to additional building improvements placed in service subsequent to April 1, 2024.

Previous wording

Interest expense increased approximately $2.0 million for the three months ended March 31, 2025 as compared to the same period in the prior year primarily driven by refinancing activity at higher interest rates during the twelve months ended March 31, 2025.

Current wording

Interest expense increased approximately $2.4 million for the three months ended June 30, 2025, as compared to the same period in the prior year primarily driven by refinancing activity at higher interest rates during the twelve months ended June 30, 2025.

Previous wording

Rental and tenant reimbursement revenue decreased approximately $3.0 million for the three months ended March 31, 2025 as compared to the same period in the prior year. The decrease was primarily due to downtime between certain large tenant expirations and the commencement of recently executed leases, as well as the disposition of two properties in 2024. The impact of these decreases is partially offset by the roll up of rental rates and new leases commencing during the twelve months ended March 31, 2025.

Current wording

Rental and tenant reimbursement revenue decreased approximately $5.8 million for the six months ended June 30, 2025 as compared to the same period in the prior year. The decrease was primarily due to downtime between certain large tenant expirations and the commencement of recently executed leases, as well as the disposition of four projects subsequent to January 1, 2024. The impact of these decreases was partially offset by the roll-up of rental rates and new leases commencing during the twelve months ended June 30, 2025.

Previous wording

Other property related income increased approximately $1.2 million for the three months ended March 31, 2025 as compared to the same period in the prior year primarily due to increased occupancy and utilization at our properties and higher transient parking at our office projects during the current period, as compared to the prior period.

Current wording

Other property related income increased approximately $1.4 million for the six months ended June 30, 2025 as compared to the same period in the prior year primarily due to increased parking income associated with increased utilization and higher transient parking at our office projects during the current period, as compared to the prior period.

Previous wording

Amortization expense decreased approximately $2.7 million for the three months ended March 31, 2025 as compared to the same period in the prior year. The decrease in amortization expense is associated with certain lease intangible assets at our existing projects becoming fully amortized subsequent to January 1, 2024.

Current wording

Amortization expense decreased approximately $6.0 million for the six months ended June 30, 2025 as compared to the same period in the prior year. The decrease in amortization expense is associated with certain lease intangible assets at our existing projects becoming fully amortized subsequent to January 1, 2024.

Previous wording

During the three months ended March 31, 2024, we recognized a non-cash impairment charge of approximately $18.4 million primarily related to shortening the projected hold period for one property. See Note 6 to our accompanying consolidated financial statements for further details.

Current wording

During the six months ended June 30, 2024, we recognized a non-cash impairment charge of approximately $18.4 million primarily related to shortening the projected hold period for one property. See Note 6 to our accompanying consolidated financial statements for further details.

Previous wording

Gain on sale of real estate assets during the three months ended March 31, 2025 primarily consists of the gain recognized on the sale of the 161 Corporate Boulevard building, which closed in February of 2025, as well as recognition of the return of amounts held in escrow for the 750 West John Carpenter building sold in July 2024.

Current wording

Gain on sale of real estate assets during the six months ended June 30, 2025 primarily consists of the gain recognized on the sale of the 80 and 90 Central project in Boston, Massachusetts, which closed in May of 2025, as well as recognition of the return of amounts held in escrow for the 750 West John Carpenter building sold in July 2024.

Previous wording

As of March 31, 2025, Piedmont, through its wholly-owned subsidiary Piedmont OP, had four separate issuances totaling approximately $1.6 billion of senior unsecured notes payable outstanding that mature in 2028, 2029, 2030 and 2032 (see Note 3 to our accompanying consolidated financial statements for additional details regarding each of these issuances) (collectively, the "Notes"). The Notes are senior unsecured obligations of Piedmont OP, rank equally in right of payment with all of Piedmont OP's other existing and future senior unsecured indebtedness, and would be effectively subordinated in right of payment to any of Piedmont OP’s future mortgage or other secured indebtedness (to the extent of the value of the collateral securing such indebtedness) and to all existing and future indebtedness and other liabilities of Piedmont OP’s subsidiaries, whether secured or unsecured.

Current wording

As of June 30, 2025, Piedmont, through its wholly-owned subsidiary Piedmont OP, had four separate issuances totaling approximately $1.5 billion of senior unsecured notes payable outstanding that mature in 2028, 2029, 2030 and 2032 (see Note 3 to our accompanying consolidated financial statements for additional details regarding each of these issuances) (collectively, the "Notes"). The Notes are senior unsecured obligations of Piedmont OP, rank equally in right of payment with all of Piedmont OP's other existing and future senior unsecured indebtedness, and would be effectively subordinated in right of payment to any of Piedmont OP’s future mortgage or other secured indebtedness (to the extent of the value of the collateral securing such indebtedness) and to all existing and future indebtedness and other liabilities of Piedmont OP’s subsidiaries, whether secured or unsecured.

Previous wording

Our President and Chief Executive Officer is our chief operating decision maker ("CODM"), who evaluates our portfolio and assesses the ongoing operations and performance of our projects utilizing the following geographic segments: Atlanta, Dallas, Orlando, Northern Virginia/Washington, D.C., Minneapolis, New York, and Boston. These operating segments are also our reportable segments. Additionally, as of March 31, 2025, we owned two properties in Houston that did not meet the definition of an operating or reportable segment as the CODM does not regularly review these properties for purposes of allocating resources or assessing performance, and we do not maintain a significant presence or anticipate further investment in this market. These two properties are included in "Other" below. See Note 12 to the accompanying consolidated financial statements for additional information and a reconciliation of Net loss applicable to Piedmont to Net Operating Income ("NOI").

Current wording

Our President and Chief Executive Officer is our chief operating decision maker ("CODM"), who evaluates our portfolio and assesses the ongoing operations and performance of our projects utilizing the following geographic segments: Atlanta, Dallas, Orlando, Northern Virginia/Washington, D.C., Minneapolis, New York, and Boston. These operating segments are also our reportable segments. Additionally, as of June 30, 2025, we owned two properties in Houston that did not meet the definition of an operating or reportable segment as the CODM does not regularly review these properties for purposes of allocating resources or assessing performance, and we do not maintain a significant presence or anticipate further investment in this market. These two properties are included in "Other" below. See Note 13 to the accompanying consolidated financial statements for additional information and a reconciliation of Net loss applicable to Piedmont to accrual-based net operating income ("NOI").

Previous wording

The following table presents accrual-basis NOI by geographic segment (in thousands):

Current wording

The following table presents NOI by geographic segment (in thousands):

Previous wording

NOI increased due to several leases commencing at our Galleria on the Park and Glenridge Highlands projects during the three months ended March 31, 2025 as compared to the same period in the prior year.

Current wording

NOI increased due to several leases commencing at our Galleria on the Park and Glenridge Highlands projects during the six months ended June 30, 2025 as compared to the same period in the prior year.

Previous wording

NOI decreased primarily due to the expiration or downsizing of certain tenants at our 1201 & 1225 Eye Street project, our 4250 North Fairfax Drive project, and our Arlington Gateway project during the three months ended March 31, 2025 as compared to the same period in the prior year.

Current wording

NOI decreased primarily due to the expiration or downsizing of certain tenants at our 1201 & 1225 Eye Street project, our 4250 North Fairfax Drive project, and our Arlington Gateway project during the six months ended June 30, 2025 as compared to the same period in the prior year.

Previous wording

Reconciliations of net loss applicable to common stock to FFO, Core FFO, and AFFO for the three months ended March 31, 2025 and 2024 are presented below (in thousands except per share amounts):

Current wording

Reconciliations of net loss applicable to common stock to FFO, Core FFO, and AFFO for the three and six months ended June 30, 2025 and 2024 are presented below (in thousands except per share amounts):

Previous wording

(2)Includes potential dilution under the treasury stock method that would occur if our remaining unvested and potential stock awards vested and resulted in additional common shares outstanding. Such shares are not included when calculating net loss per share applicable to Piedmont for the three months ended March 31, 2025 and 2024, respectively, as they would reduce the loss per share presented.

Current wording

(2)Includes potential dilution under the treasury stock method that would occur if our remaining unvested and potential stock awards vested and resulted in additional common shares outstanding. Such shares are not included when calculating net loss per share applicable to Piedmont for the three and six months ended June 30, 2025 and 2024, respectively, as they would reduce the loss per share presented.

Previous wording

Core FFO was $0.36 per diluted share for the first quarter of 2025, as compared to $0.39 per diluted share for the first quarter of 2024. Approximately $0.01 of the decrease is due to increased interest expense, net of interest income, with the remaining decrease attributable to the sale of two properties and the downtime associated with the expiration of a few large leases during the twelve months ended March 31, 2025, before newly executed leases commence.

Current wording

NAREIT FFO applicable to common stock was $0.66 per diluted share for the six months ended June 30,2025, as compared to $0.76 per diluted share for the same period in the prior year due primarily to the recognition of loss on early extinguishment of debt associated with debt retired during the current period. Core FFO applicable to common stock was $0.72 per diluted share for the six months ended June 30, 2025, as compared to $0.76 per diluted share for the same period in the prior year. Approximately $0.03 of the decrease is due to increased interest expense, net of interest income, with the remaining decrease attributable to the sale of four projects subsequent to January 1, 2024 and the downtime associated with the expiration of a few large leases during the twelve months ended June 30, 2025, before newly executed leases commence.

Previous wording

Property Net Operating Income ("Property NOI") is a non-GAAP measure which we use to assess our operating results. We calculate Property NOI beginning with Net income/(loss) (calculated in accordance with GAAP) before adjusting for interest, depreciation and amortization and removing any impairments and gains or losses from sales of property and other significant infrequent items that create volatility within our earnings and make it difficult to determine the earnings generated by our core ongoing business. Furthermore, we remove general and administrative expenses, income associated with property management performed by us for other organizations, and other income or expense items, such as interest income from loan investments. For Property NOI (cash basis), the effects of the reversal of the non-cash general reserve for uncollectible accounts, straight-lined rents and fair value lease revenue are also eliminated; while such effects are not adjusted in calculating Property NOI (accrual basis). Property NOI is a non-GAAP financial measure and should not be viewed as an alternative to net income/(loss) calculated in accordance with GAAP as a measurement of our operating performance. We believe that Property NOI, on either a cash or accrual basis, is helpful to investors as a supplemental comparative performance measure of income generated by our properties alone without our administrative overhead. Other REITs may not define Property NOI in the same manner as we do; therefore, our computation of Property NOI may not be comparable to that of other REITs.

Current wording

Property Net Operating Income ("Property NOI") is a non-GAAP measure which we use to assess our operating results. We calculate Property NOI beginning with Net income/(loss) (calculated in accordance with GAAP) before adjusting for interest, depreciation and amortization and removing any impairments and gains or losses from sales of property and other significant infrequent items that create volatility within our earnings and make it difficult to determine the earnings generated by our core ongoing business. Furthermore, we remove general and administrative expenses, income associated with property management performed by us for other organizations, and other income or expense items. For Property NOI (cash basis), straight-lined rents and fair value lease revenue are also eliminated; while such effects are not adjusted in calculating Property NOI (accrual basis). Property NOI is a non-GAAP financial measure and should not be viewed as an alternative to net income/(loss) calculated in accordance with GAAP as a measurement of our operating performance. We believe that Property NOI, on either a cash or accrual basis, is helpful to investors as a supplemental comparative performance measure of income generated by our properties alone without our administrative overhead. Other REITs may not define Property NOI in the same manner as we do; therefore, our computation of Property NOI may not be comparable to that of other REITs.

Previous wording

(1)We calculate Earnings Before Interest, Taxes, Depreciation, and Amortization- Real Estate ("EBITDAre") in accordance with the current NAREIT definition. NAREIT currently defines EBITDAre as net income/(loss) (computed in accordance with GAAP) adjusted for gains or losses from sales of property, impairment charges, depreciation on real estate assets, amortization on real estate assets, interest expense and taxes, along with the same adjustments for joint ventures. Some of the adjustments mentioned can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates. EBITDAre is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of our operating performance. We believe that EBITDAre is helpful to investors as a supplemental performance measure because it provides a metric for understanding our results from ongoing operations without taking into account the effects of non-cash expenses (such as depreciation and amortization) and capitalization and capital structure expenses (such as interest expense and taxes). We also believe that EBITDAre can help facilitate comparisons of operating performance between periods and with other REITs. However, other REITs may not define EBITDAre in accordance with the NAREIT definition, or may interpret the current NAREIT definition differently than us; therefore, our computation of EBITDAre may not be comparable to that of such other REITs.

Current wording

(1)We calculate Earnings Before Interest, Taxes, Depreciation, and Amortization- Real Estate ("EBITDAre") in accordance with the current NAREIT definition. NAREIT currently defines EBITDAre as net income (computed in accordance with GAAP) adjusted for gains or losses from sales of property, impairment charges, depreciation on real estate assets, amortization on real estate assets, interest expense and taxes, along with the same adjustments for joint ventures. Some of the adjustments mentioned can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates. EBITDAre is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of our operating performance. We believe that EBITDAre is helpful to investors as a supplemental performance measure because it provides a metric for understanding our results from ongoing operations without taking into account the effects of non-cash expenses (such as depreciation and amortization) and capitalization and capital structure expenses (such as interest expense and taxes). We also believe that EBITDAre can help facilitate comparisons of operating performance between periods and with other REITs. However, other REITs may not define EBITDAre in accordance with the NAREIT definition, or may interpret the current NAREIT definition differently than us; therefore, our computation of EBITDAre may not be comparable to that of such other REITs.

Previous wording

(2)We calculate Core Earnings Before Interest, Taxes, Depreciation, and Amortization ("Core EBITDA") as Net loss (computed in accordance with GAAP) before interest, taxes, depreciation and amortization and removing any impairment charges, gains or losses from sales of property and other significant infrequent items that create volatility within our earnings and make it difficult to determine the earnings generated by our core ongoing business. Core EBITDA is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of our operating performance. We believe that Core EBITDA is helpful to investors as a supplemental performance measure because it provides a metric for understanding the performance of our results from ongoing operations without taking into account the effects of non-cash expenses (such as depreciation and amortization), as well as items that are not part of normal day-to-day operations of our business. Other REITs may not define Core EBITDA in the same manner as us; therefore, our computation of Core EBITDA may not be comparable to that of other REITs.

Current wording

(2)We calculate Core Earnings Before Interest, Taxes, Depreciation, and Amortization ("Core EBITDA") as net income (computed in accordance with GAAP) before interest, taxes, depreciation and amortization and incrementally removing any impairment charges, gains or losses from sales of property, loss on early extinguishment of debt, and other significant infrequent items that create volatility within our earnings and make it difficult to determine the earnings generated by our core ongoing business. Core EBITDA is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of our operating performance. We believe that Core EBITDA is helpful to investors as a supplemental performance measure because it provides a metric for understanding the performance of our results from ongoing operations without taking into account the effects of non-cash expenses (such as depreciation and amortization), as well as items that are not part of normal day-to-day operations of our business. Other REITs may not define Core EBITDA in the same manner as us; therefore, our computation of Core EBITDA may not be comparable to that of other REITs.

Previous wording

(4)Dispositions include 161 Corporate Center in Irving, Texas, sold in the first quarter 2025, One Lincoln Park in Dallas, Texas, sold in the first quarter of 2024, and 750 West John Carpenter Freeway in Irving, Texas, sold in the third quarter of 2024.

Current wording

(4)Dispositions include 80 and 90 Central, sold in the second quarter of 2025, 161 Corporate Center, sold in the first quarter of 2025, 750 West John Carpenter Freeway, sold in the third quarter of 2024, and One Lincoln Park, sold in the first quarter of 2024.

Previous wording

The following table sets forth a reconciliation of net loss calculated in accordance with GAAP to EBITDAre, Core EBITDA, Property NOI, and Same Store NOI, on both a cash and accrual basis, for the three months ended March 31, 2025 and 2024 (in thousands):

Current wording

The following table sets forth a reconciliation of net loss calculated in accordance with GAAP to EBITDAre, Core EBITDA, Property NOI, and Same Store NOI, on both a cash and accrual basis, for the six months ended June 30, 2025 and 2024 (in thousands):

Previous wording

During the three months ended March 31, 2025, the leased percentage of our in-service portfolio remained relatively flat, 88.1% leased as of March 31, 2025 compared to 88.4% leased as of December 31, 2024, as square footage associated with new tenant leases for vacant space largely offset square footage associated with expiring leases. As of March 31, 2025, scheduled lease expirations for the remainder of 2025 represented 6% of our ALR. To the extent the square footage from new leases for currently vacant space in our in-service portfolio exceeds or falls short of the square footage associated with non-renewing expirations, such leases would increase or decrease our in-service leased percentage, respectively. As of March 31, 2025, three projects, 222 South Orange Avenue in Orlando, Florida, and 9320 Excelsior Boulevard and Meridian, both in suburban Minneapolis, Minnesota, were classified as out of service as they undergo redevelopment.

Current wording

During the six months ended June 30, 2025, the leased percentage of our in-service portfolio increased to 88.7% leased as of June 30, 2025 as compared to 88.4% leased as of December 31, 2024, as square footage associated with new tenant leases for vacant space outweighed square footage associated with expiring leases. As of June 30, 2025, scheduled lease expirations for the remainder of 2025 represented 4% of our ALR. To the extent the square footage from new leases for currently vacant space in our in-service portfolio exceeds or falls short of the square footage associated with non-renewing expirations, such leases would increase or decrease our in-service leased percentage, respectively. As of June 30, 2025, three projects, 222 South Orange Avenue in Orlando, Florida, and 9320 Excelsior Boulevard and Meridian, both in suburban Minneapolis, Minnesota, were classified as out of service as they undergo redevelopment.

Previous wording

Commencement of a lease associated with a new tenant typically occurs 6-18 months after the lease execution date, after refurbishment of the space is completed. The downtime between a lease expiration and the new lease's commencement can negatively impact Property NOI and Same Store NOI comparisons (both accrual and cash basis). In addition, office leases for both new and renewing tenants often contain upfront rental and/or operating expense abatement periods which delay the cash flow benefits of the lease even after the new or renewed lease has commenced, negatively impacting Property NOI and Same Store NOI on a cash basis until such abatements expire. As of March 31, 2025, we had approximately 1.9 million square feet of executed leases for vacant space yet to commence or under rental abatement, representing approximately $67 million of future additional annual cash rents.

Current wording

Commencement of a lease associated with a new tenant typically occurs 6-18 months after the lease execution date, after refurbishment of the space is completed. The downtime between a lease expiration and the new lease's commencement can negatively impact Property NOI and Same Store NOI comparisons (both accrual and cash basis). In addition, office leases for both new and renewing tenants often contain upfront rental and/or operating expense abatement periods which delay the cash flow benefits of the lease even after the new or renewed lease has commenced, negatively impacting Property NOI and Same Store NOI on a cash basis until such abatements expire. As of June 30, 2025, we had approximately 2.0 million square feet of executed leases for vacant space yet to commence or under rental abatement, representing approximately $71 million of future additional annual cash rents.

Previous wording

If we are unable to replace expiring leases with new or renewal leases at rental rates equal to or greater than the expiring rates, rental rate roll downs could occur and negatively impact Property NOI and Same Store NOI comparisons. As discussed above, our diverse portfolio and the magnitude of some of our tenants' leased spaces can result in rent roll ups and roll downs that can fluctuate widely on a project-by-project and a quarter-to-quarter basis. During the three months ended March 31, 2025, we experienced an 10.3% and 18.6% roll up in cash and accrual rents, respectively, on executed leases related to space vacant one year or less.

Current wording

If we are unable to replace expiring leases with new or renewal leases at rental rates equal to or greater than the expiring rates, rental rate roll-downs could occur and negatively impact Property NOI and Same Store NOI comparisons. As discussed above, our diverse portfolio and the magnitude of some of our tenants' leased spaces can result in rent roll-ups and roll-downs that can fluctuate widely on a project-by-project and a quarter-to-quarter basis. During the three months ended June 30, 2025, we experienced an 7.3% and 13.6% roll-up in cash and accrual rents, respectively, on executed leases related to space vacant one year or less.

Previous wording

During the three months ended March 31, 2025, Same Store NOI increased by 3.2% on an accrual basis as the commencement of new leases outweighed expiring leases; however, Same Store NOI on a cash basis decreased 2.0% as abatement periods for certain significant new leases have not elapsed yet. Same Store NOI comparisons for any given period fluctuate as a result of the mix of net leasing activity in individual properties during the respective period.

Current wording

During the three months ended June 30, 2025, Same Store NOI increased by 1.7% on an accrual basis as the commencement of new leases outweighed expiring leases; however, Same Store NOI on a cash basis decreased 2.0% as certain significant new leases have either not commenced yet or their abatement period has not elapsed. Same Store NOI comparisons for any given period fluctuate as a result of the mix of net leasing activity in individual properties during the respective period.

Previous wording

Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus, resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses. Refer to our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of our critical accounting policies and estimates. There have been no material changes to these policies during the three months ended March 31, 2025.

Current wording

Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus, resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses. Refer to our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of our critical accounting policies and estimates. There have been no material changes to these policies during the six months ended June 30, 2025.