- Piedmont Office Realty Trust halted its dividend payouts for the first time in its 15-year history to conserve $60M annually for tenant build-outs and leasing activities.
- More than 10% of Piedmont’s tenants have signed leases but are not yet paying rent, impacting short-term cash flow while setting up for a future $67M annual revenue boost.
- Despite strong leasing momentum, the company posted a $10M loss in Q1, and its stock dropped 14% following the dividend announcement before partially recovering.
Atlanta-based Piedmont Office Realty Trust suspended its dividend to preserve cash for leasing costs, as reported by Bisnow. The move comes amid a period of diminished rent cash flow and robust leasing activity across its portfolio.
A First in Company History
CEO Brent Smith confirmed the dividend halt — which will free up an estimated $60M annually — during the company’s latest earnings call. Prior to this, Piedmont had consistently paid a 12.5 cents-per-share dividend since mid-2023. Smith said the company is prioritizing tenant build-outs to maintain leasing momentum, rather than incurring new debt or selling assets in a weak market.
The Details
Piedmont’s earnings report revealed that companies leasing nearly 2M SF of office space were either receiving free rent or had yet to commence leases at the end of the first quarter. Smith expects these leases to eventually boost annual revenues by $67M, though he cautioned that dividend payments likely won’t resume before late 2026.
The REIT reported a $10M loss in the first quarter, narrowing from a $27.7M loss the year before, with revenues dipping slightly to $136M from $139M year-over-year.
Following the dividend news, Piedmont’s stock fell 14% to $5.75 before rebounding slightly, ending Wednesday at $5.91 per share. Overall, its shares are down roughly 35% year-to-date.
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Leasing Activity Remains Strong
Despite near-term financial pressures, leasing activity across Piedmont Office Realty Trust’s portfolio remains robust. The firm currently has 3M SF of lease proposals in play, with 750K SF already signed or nearing final documentation in the second quarter. Metro Atlanta remains its strongest market, generating $44.7M in first-quarter revenues.
Recent Atlanta leasing highlights include:
- Brand Industrial Services and GE Verona at Galleria 600, both currently under free rent periods.
- A 31K SF, 14-year lease by law firm Chamberlain Hrdlicka at 999 Peachtree, setting a new rent high of $55 per SF, significantly above the $39 per SF previously achieved.
- Another law firm doubled its space at 999 Peachtree, and more backfill opportunities are underway for space vacated by Eversheds Sutherland.
Piedmont’s leased occupancy rate ticked slightly down to 88.1% at the end of Q1 but remains higher than a year ago. Executives reaffirmed their goal of reaching 89% to 90% occupancy by year-end.
Why It Matters
The dividend suspension underscores the difficult balancing act office REITs face: managing near-term financial strain while positioning for long-term growth in a challenging market. Leasing momentum and a healthy pipeline suggest Piedmont is laying the groundwork for future revenue expansion once free rent periods expire.
What’s Next
Smith and his team are focused on maintaining leasing momentum and completing tenant build-outs to transition signed leases into paying tenants. Investors can expect continued volatility until rental revenues fully materialize, but Piedmont is betting that its current strategy will pay off in late 2026 and beyond.
