Piedmont Office Realty Trust Inc

Good morning, everybody, and welcome to the Piedmont Office Realty Trust Incorporated's first quarter 2023 earnings call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Mr. Eddie Gilbert. Eddie, you may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us today for Piedmont's first quarter 2023 earnings conference call. Last night, we filed our form 10Q and an 8K that includes our earnings release and our unaudited supplemental information for the first quarter that's available for your review on our website at piedmontreit.com under the investor relations section. During this call, you'll hear from senior officers at Piedmont. Their prepared remarks, followed by answers to your questions, will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements address matters which are subject to risks and uncertainties, and therefore, actual results may differ from those we anticipate and discuss today. The risks and uncertainties of these forward-looking statements are discussed in our press release as well as our SEC filings. We encourage everyone to review the more detailed discussion related to risks associated with forward-looking statements in our SEC filings. Examples of forward-looking statements include those related to Piedmont's future revenues and operating income, dividends and financial guidance, future leasing and investment activity, and the impacts of this activity on the company's financial and operational results. You should not place any underreliance on any of these forward-looking statements and these statements are based upon the information and estimates we've reviewed as of the date the statements are made. Also on today's call, representatives of the company may refer to certain non-GAAP financial measures such as FFO, Core FFO, AFFO, and Same Store NOI. The definitions and reconciliations of these non-GAAP measures are contained in the earnings release and in the supplemental financial information which were filed last night. At this time, our President and Chief Executive Officer, Brent Smith will provide some opening comments regarding first quarter's operating results. Brent?

Thanks, Eddie, and good morning, everyone. Thank you again for joining us on today's call as we review our first quarter results. In addition to Eddie, on the line with me this morning are other members of the senior management team. Following me, you'll hear from George Wells, our chief operating officer, Chris Colmy, our EVP of investments, and Bobby Bowers, our chief financial officer. The first quarter of 2023 demonstrated continued resiliency in leasing, with Piedmont's prospective tenant pipeline holding steady and meaningful tenant lease volumes executed during the first three months of the year. In total, we executed almost 550,000 square feet of leasing, with approximately half of that to new tenants, the greatest amount of new tenant leasing on a quarterly basis since 2018. This leasing was comprised of mostly long-term deals, generating an average lease term of eight years and delivering attractive cash rental rate roll-ups of almost 6%. Operational metrics were generally positive. And while Piedmont did generate strong new leasing activity, the success was somewhat mitigated by roughly 80,000 square foot known tenant move out in our suburban Boston market. Roll-ups on cash renewal rental rates were in line with past years. where we've consistently generated positive roll-ups of 5 to 10%. However, cash, same story in OI, was down slightly this quarter due to the timing of lease commitments and expiration. The market for office tenancy is highly competitive, particularly considering the economic and secular headwinds facing the industry. That said, Piedmont continues to demonstrate that high-quality, amenitized work environments operated by well-capitalized, service-minded landlords continue to generate demand from small and medium-sized businesses, as well as larger, non-tech corporate tenants. The flight to quality occurring in the market is playing to Piedmont's strategy, providing premier workspaces at meaningfully lower rental rates versus new construction. In fact, Piedmont has achieved over 200,000 square feet of new tenant leasing, five out of the last seven quarters. which is higher than our average pre-pandemic leasing metrics, a testament to the success of our customer strategy. As in recent quarters, companies requiring a full floor or less continue to drive our leasing demand. And building on this theme, our average lease size in the first quarter was approximately 12,000 square feet. And we are deliberately focused on attracting this key customer segment through our sales approach, property amenities, and hospitality-minded service model and it's benefiting Piedmont as these small and medium businesses continue to grow and hire new employees, while we see larger corporate tenants generally reducing headcount and office space requirements. In short, our leasing formula is working and we continue to be optimistic about the value proposition for our customers and the opportunity to continue our leasing success, particularly in today's capital-constrained market. The flight to quality buildings and owner-operators is favoring landlords like Piedmont. And in fact, I'm pleased to share that over 200,000 square feet of leasing has already been executed in the second quarter of 2023, of which over 125,000 square feet is for new tenant space, bringing our total new tenant leasing for the year to almost 400,000 square feet. That's more than half the new tenant leasing we completed during all of 2022, achieved in just the first four months of 2023. Furthermore, Our leasing pipeline remains robust, including 350,000 square feet of leases currently in active negotiation and documentation. As Bobby will delve into further in a moment, our balance sheet and liquidity remains strong. A differentiating factor is prospective tenants scrutinize the capital structure of potential future office buildings and landlords. This differentiation amongst office product is driving increased market share for the highest quality placemaking assets and well-capitalized landlords. And given the disruption in the broader capital markets, transactional activity remains challenging, and new construction starts for office development are virtually nonexistent. With limited new development, we do expect that tenant demand will remain focused on the best existing properties within a submarket. Last, I want to publicly congratulate the Piedmont team for once again being designated as an Energy Star Partner of the Year for the third straight year. It takes a firm-wide effort for the Piedmont portfolio to maintain one of the highest percentages of Energy Star designated properties in the industry, and it's gratifying when our commitment to maintain sustainable, wellness-oriented work environments is recognized. Before turning the call over to George, I want to thank the outstanding employees at Piedmont who provide excellent service to our customers each and every day. Their dedication, resilience, and hard work continue to drive our leasing success. With that, I hand the call over to George, with Chris and Bobby to follow, to provide further details on the quarter and our outlook. George?