Piedmont Realty Trust, Inc.

5. Derivative Instruments

Risk Management Objective of Using Derivatives

In addition to operational risks which arise in the normal course of business, Piedmont is exposed to economic risks such as interest rate, liquidity, and credit risk. From time to time, Piedmont has entered into derivative financial instruments, specifically interest rate swap agreements, to manage interest rate risk exposure arising from current or future variable rate debt transactions. Piedmont’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements.

Cash Flow Hedges of Interest Rate Risk

Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for Piedmont making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

During the nine months ended September 30, 2026, Piedmont entered into three interest rate swap agreements in conjunction with the recast and upsize of the $400 Million Unsecured 2026 Term Loan (see Note 4 above) to hedge $200 million of the principal balance through June 1, 2028. Piedmont's interest rate swap agreements are designated as effective cash flow hedges and are indexed to SOFR. As of September 30, 2026, the maximum length of time over which Piedmont is hedging its exposure to the variability in future cash flows for forecasted transactions is 20 months.

A detail of Piedmont’s interest rate derivatives outstanding as of September 30, 2026 is as follows:

Piedmont presents its interest rate derivatives on its consolidated balance sheets on a gross basis as interest rate swap assets and interest rate swap liabilities. A detail of Piedmont’s interest rate derivatives on a gross and net basis as of September 30, 2026 and December 31, 2025, respectively, is as follows (in thousands):

The gain/(loss) on Piedmont's interest rate derivatives, including previously settled forward swaps, that was recorded in OCI and the accompanying consolidated statements of operations as a component of interest expense for the three and nine months ended September 30, 2026 and 2025, respectively, is as follows (in thousands):

Piedmont estimates that approximately $0.7 million will be reclassified from OCI as an increase to interest expense over the next twelve months. Additionally, see Note 6 for fair value disclosures of Piedmont's derivative instruments.

Credit-risk-related Contingent Features

Piedmont has agreements with its derivative counterparties that contain a provision whereby if Piedmont defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Piedmont could also be declared in default on its derivative obligations. If Piedmont were to breach any of the contractual provisions of the derivative contracts, it could be required to settle its liability obligations under the agreements at their termination value of the estimated fair values plus accrued interest. However, as of September 30, 2026, all of Piedmont's net interest rate swap agreements are in an asset position. Additionally, Piedmont has rights of set-off under certain of its derivative agreements related to potential termination fees and amounts payable under the agreements, if a termination were to occur.

6. Fair Value Measurement of Financial Instruments

Piedmont considers its cash and cash equivalents, tenant receivables, restricted cash and escrows, accounts payable and accrued expenses, interest rate swap agreements, and debt to meet the definition of financial instruments. The following table sets forth the carrying and estimated fair value for each of Piedmont’s financial instruments, as well as its level within the GAAP fair value hierarchy, as of September 30, 2026 and December 31, 2025, respectively (in thousands):

(1)For the periods presented, the carrying value of these financial instruments approximates estimated fair value due to their short-term maturity.

Piedmont's debt was carried at book value as of September 30, 2026 and December 31, 2025; however, Piedmont's estimate of its fair value is disclosed in the table above. Piedmont uses widely accepted valuation techniques including discounted cash flow analysis based on the contractual terms of the debt facilities, including the period to maturity of each instrument, and uses observable market-based inputs for similar debt facilities which have transacted recently in the market. Therefore, the estimated fair values determined are considered to be based on significant other observable inputs (Level 2). Scaling adjustments are made to these inputs to make them applicable to the remaining life of Piedmont's outstanding debt. Piedmont has not changed its valuation technique for estimating the fair value of its debt.

Piedmont’s interest rate swap agreements presented above, and as further discussed in Note 5, are classified as “Interest rate swaps” in the accompanying consolidated balance sheets and were carried at estimated fair value as of September 30, 2026 and December 31, 2025. The valuation of these derivative instruments was determined using widely accepted valuation techniques including discounted cash flow analysis based on the contractual terms of the derivatives, including the period to maturity of each instrument, and uses observable market-based inputs, including interest rate curves and implied volatilities. Therefore, the estimated fair values determined are considered to be based on significant other observable inputs (Level 2). In addition, Piedmont considered both its own and the respective counterparties’ risk of nonperformance in determining the estimated fair value of its derivative financial instruments by estimating the current and potential future exposure under the derivative financial instruments as of the valuation date. The credit risk of Piedmont and its counterparties was factored into the calculation of the estimated fair value of the interest rate swaps; however, as of September 30, 2026 and December 31, 2025, this credit valuation adjustment did not comprise a material portion of the estimated fair value. Therefore, Piedmont believes that any unobservable inputs used to determine the estimated fair values of its derivative financial instruments are not significant to the fair value measurements in their entirety, and does not consider any of its derivatives to be Level 3 financial instruments.

7. Goodwill

The carrying amount of Piedmont’s goodwill allocated to each of its reportable segments in total and net of accumulated impairment charges, as of September 30, 2026 and December 31, 2025 were as follows (in thousands):

8. Commitments and Contingencies

Commitments Under Existing Lease Agreements

As a recurring part of its business, Piedmont is typically required under its executed lease agreements to fund tenant improvements, leasing commissions, and building improvements. In addition, certain agreements contain provisions that require Piedmont to issue corporate or property guarantees to provide funding for capital improvements or other financial obligations. As of September 30, 2026, Piedmont hadno individually significant tenant allowance commitment greater than $10 million. These commitments will be capitalized as the related expenditures are incurred.

Contingencies Related to Tenant Audits/Disputes

Certain lease agreements include provisions that grant tenants the right to engage independent auditors to audit their annual operating expense reconciliations. Such audits may result in different interpretations of language in the lease agreements from that made by Piedmont, which could result in requests for refunds of previously recognized tenant reimbursement revenues, resulting in financial loss to Piedmont. There wereno such reductions during the three and nine months ended September 30, 2026 or 2025.

9. Property Dispositions and Assets Held for Sale

The following properties and land parcel were sold during the nine months ended September 30, 2026 and 2025 (in thousands):

Additionally, during the nine months ended September 30, 2025, Piedmont recognized a gain on sale of real estate assets of $0.7 million related to the return of amounts held in escrow for the 750 West John Carpenter building sold in July 2024.

As of September 30, 2026, Piedmont was under a binding contract to sell the Enclave Place project in Houston, Texas for approximately $81.8 million, which is in excess of net book value. Consequently, the project, which is assigned to the Other geographic reportable segment, met the criteria for held for sale classification as of September 30, 2026 and the assets are presented as held for sale as of both September 30, 2026 and December 31, 2025 for comparability in the accompanying consolidated balance sheets. Additionally, the Royal Lane land parcel was sold in August 2026. The assets of this land parcel remain presented as held for sale as of December 31, 2025. Details of amounts held for sale are presented below (in thousands):

10. Stock Based Compensation

Annually, the Compensation Committee of Piedmont's Board of Directors has granted deferred stock award units to certain employees at its discretion. Employee awards typically vest ratably over four years. In addition, Piedmont's independent directors receive an annual grant of deferred stock award units for services rendered and such awards vest over aone-year service period.

In addition to the time-based awards discussed above, certain management employees also participate in a multi-year performance share program whereby actual awards are contingent upon Piedmont's total stockholder return ("TSR") performance relative to the TSR of a peer group of office REITs. The number of shares earned, if any, are determined at the end of the multi-year performance period (or upon the participant's termination) and vest immediately. The grant date fair value of the multi-year performance share awards is estimated using the Monte Carlo valuation method and is recognized ratably over the performance period.

A roll forward of Piedmont's equity-based award activity for the nine months ended September 30, 2026 is as follows:

The following table provides additional information regarding stock award activity during the three and nine months ended September 30, 2026 and 2025, respectively (in thousands, except per share amounts):

A detail of Piedmont’s outstanding stock awards and programs as of September 30, 2026 is as follows:

(1)Amounts reflect the total original grant to employees and independent directors, net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations through September 30, 2026.

(2)Estimated based on Piedmont's cumulative TSR for the respective performance period through September 30, 2026. Share estimates are subject to change in future periods based upon Piedmont's relative TSR performance compared to its peer group of office REITs.

During the three months ended September 30, 2026 and 2025, Piedmont recognized approximately $2.5 million and $2.6 million, respectively, of compensation expense related to the amortization of unvested and potential stock awards. During each of the nine months ended September 30, 2026 and 2025, Piedmont recognized approximately $7.2 million of compensation expense related to the amortization of unvested and potential stock awards. During the nine months ended September 30, 2026,613,547 shares (net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations) were issued to employees and independent directors. As of September 30, 2026, approximately $16.4 million of unrecognized compensation cost related to unvested and potential stock awards remained, which Piedmont will record in its consolidated statements of operations over a weighted-average vesting period of approximatelyone year.

11. Supplemental Disclosures for the Statement of Consolidated Cash Flows

Certain non-cash investing and financing activities for the nine months ended September 30, 2026 and 2025 (in thousands) are outlined below:

(1)Accrued capital expenditures and deferred lease costs included in accounts payable, accrued expenses, and accrued capital expenditures as of September 30, 2026 and 2025 were approximately $37.0 million, and $32.9 million, respectively.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash and escrows as presented in the accompanying consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025, to the consolidated balance sheets for the respective period (in thousands):

Amounts in restricted cash and escrows typically represent: escrow accounts required for future property repairs; escrow accounts for the payment of real estate taxes as required under certain of Piedmont's debt agreements; earnest money deposited by a buyer to secure the purchase of one of Piedmont's properties; or security or utility deposits held for tenants as a condition of their lease agreement.

12. Earnings Per Share

Piedmont has unvested deferred stock awards and outstanding exchangeable notes that could result in the issuance of common shares in future periods. Because Piedmont reported a net loss for all periods presented, the effects of these instruments were excluded from the calculation of diluted net loss per share as their inclusion would have been antidilutive.

13. Segment Information

Piedmont's President and Chief Executive Officer has been identified as Piedmont's chief operating decision maker (the "CODM"), as defined by GAAP. The CODM evaluates Piedmont's portfolio and assesses the ongoing operations and performance of its projects utilizing the following geographic segments: Atlanta, Dallas, Orlando, Northern Virginia/Washington, D.C., Minneapolis, New York, and Boston. These seven operating segments are also Piedmont’s reportable segments. As of September 30, 2026, Piedmont also ownedtwo projects in Houston that do 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. Further, Piedmont does not maintain a significant presence nor anticipate further investment in this market. Thesetwo projects are the primary contributors to accrual-based net operating income ("NOI") included in "Other" below. During the periods presented, there have been no material inter-segment transactions. The accounting policies of the reportable segments are the same as Piedmont's accounting policies.

NOI by geographic segment is the primary performance measure reviewed by Piedmont's CODM to assess operating performance and consists only of revenues and expenses directly related to real estate rental operations. NOI is calculated by deducting property operating costs and adjusting for other segment items from lease revenues and other property related income. Other segment items consist primarily of allocated costs and salaries, which are recognized at the respective properties and eliminated in the preparation of consolidated financial statements. NOI reflects property acquisitions and dispositions, occupancy levels, rental rate increases or decreases, and the recoverability of operating expenses. Piedmont's calculation of NOI may not be directly comparable to similarly titled measures calculated by other REITs.

Asset value information and capital expenditures by segment are not reported because the CODM does not use these measures to assess performance.

The following table presents accrual-based revenues, expenses, and other segment items included in NOI by geographic reportable segment for the three months ended September 30, 2026 and 2025 (in thousands):

The following table presents accrual-based revenues, property operating costs, and other segment items included in NOI by geographic reportable segment for the nine months ended September 30, 2026 and 2025 (in thousands):

A reconciliation of Net loss applicable to Piedmont to NOI is presented below (in thousands):

(1)Presented net of related operating expenses incurred to earn such management fee revenue. Such operating expenses are a component of property operating costs in the accompanying consolidated statements of operations.