Piedmont Realty Trust, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Management’s Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures We carried out an evaluation, under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods in SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Report of Management on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining effective internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as a process designed by, or under the supervision of, the principal executive and principal financial officers, or persons performing similar functions, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: • pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of our assets; • provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of management and/or members of the board of directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of the inherent limitations of internal control over financial reporting, including the possibility of human error and the circumvention or overriding of controls, material misstatements may not be prevented or detected on a timely basis. In addition, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with policies or procedures may deteriorate. Accordingly, even internal controls determined to be effective can provide only reasonable assurance that the information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized, and represented within the time periods required. Our management has assessed the effectiveness of our internal control over financial reporting at December 31, 2021. To make this assessment, we used the criteria for effective internal control over financial reporting described in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, our management believes that, as of December 31, 2021, our system of internal control over financial reporting was effective. Piedmont’s independent registered public accounting firm has issued an attestation report on the effectiveness of Piedmont’s internal control over financial reporting, which appears in this Annual Report. Changes in Internal Control Over Financial Reporting There have been no significant changes in our internal control over financial reporting during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 48 Table of Contents Index to Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Piedmont Office Realty Trust, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Piedmont Office Realty Trust, Inc. and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 17, 2022, expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying report of management on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Atlanta, Georgia February 17, 2022 49 Table of Contents Index to Financial Statements ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 50 Table of Contents Index to Financial Statements PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Pursuant to Paragraph G(3) of the General Instructions to Form 10-K, the information required by Part III (Items 10, 11, 12, 13, and 14) is being incorporated by reference herein from our definitive proxy statement to be filed with the SEC within 120 days of the end of the fiscal year ended December 31, 2021 in connection with our 2022 Annual Meeting of Stockholders. We have adopted a Code of Ethics, which is available on Piedmont’s website at www.piedmontreit.com under the “Investor Relations” section. Any amendments to, or waivers of, the Code of Ethics will be disclosed on our website promptly following the date of such amendment or waiver. The information contained on our website is not incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 will be set forth in our definitive proxy statement to be filed with the SEC within 120 days of the end of the fiscal year ended December 31, 2021, and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by Item 12 will be set forth in our definitive proxy statement to be filed with the SEC within 120 days of the end of the fiscal year ended December 31, 2021, and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE The information required by Item 13 will be set forth in our definitive proxy statement to be filed with the SEC within 120 days of the end of the fiscal year ended December 31, 2021, and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by Item 14 will be set forth in our definitive proxy statement to be filed with the SEC within 120 days of the end of the fiscal year ended December 31, 2021, and is incorporated herein by reference. 51 Table of Contents Index to Financial Statements PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) 1. The financial statements begin on page F-4 of this Annual Report on Form 10-K, and the list of the financial statements contained herein is set forth on page F-1 , which is hereby incorporated by reference. (a) 2. Schedule III—Real Estate Assets and Accumulated Depreciation. Information with respect to this item begins on page S-1 of this Annual Report on Form 10-K. Other schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto. (b) The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto. (c) See (a) 2. above. 52 Table of Contents Index to Financial Statements SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 17 th day of February, 2022. Piedmont Office Realty Trust, Inc. (Registrant) By: /s/ C. B RENT S MITH C. Brent Smith Chief Executive Officer, Principal Executive Officer, and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity as and on the date indicated. Signature Title Date /s/ F RANK C. M C D OWELL Chairman, and Director February 17, 2022 Frank C. McDowell /s/ D ALE H. T AYSOM Vice-Chairman, and Director February 17, 2022 Dale H. Taysom /s/ K ELLY H. B ARRETT Director February 17, 2022 Kelly H. Barrett /s/ W ESLEY E. C ANTRELL Director February 17, 2022 Wesley E. Cantrell /s/ G LENN G. C OHEN Director February 17, 2022 Glenn G. Cohen /s/ B ARBARA B. L ANG Director February 17, 2022 Barbara B. Lang /s/ J EFFREY L. S WOPE Director February 17, 2022 Jeffrey L. Swope /s/ C. B RENT S MITH Chief Executive Officer and Director February 17, 2022 C. Brent Smith (Principal Executive Officer) /s/ R OBERT E. B OWERS Chief Financial Officer and Executive Vice-President February 17, 2022 Robert E. Bowers (Principal Financial Officer) /s/ L AURA P. M OON Chief Accounting Officer February 17, 2022 Laura P. Moon (Principal Accounting Officer) 53 Table of Contents Index to Financial Statements EXHIBIT INDEX TO 2021 FORM 10-K OF PIEDMONT OFFICE REALTY TRUST, INC. Exhibit Number Description of Document 3.1 Third Articles of Amendment and Restatement of Piedmont Office Realty Trust, Inc. (the "Company") (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, filed on March 16, 2010) 3.2 Articles of Amendment of the Company effective June 30, 2011 (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on July 6, 2011) 3.3 Articles Supplementary of the Company effective June 30, 2011 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on July 6, 2011) 3.4 Articles Supplementary to the Third Articles of Amendment and Restatement of the Company, as supplemented and amended (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed on November 14, 2016) 3.5 Articles of Amendment to the Third Articles of Amendment and Restatement of the Company, as supplemented and amended (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed on May 23, 2018) 3.6 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed on March 19, 2019) 4.1 Indenture, dated May 9, 2013, by and among Piedmont Operating Partnership, LP (the "Operating Partnership"), the Company and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, filed on May 13, 2013) 4.2 Form of 3.40% Senior Notes due 2023 (included in Exhibit 4.1 hereto) 4.3 Indenture, dated March 6, 2014, by and among the Operating Partnership, Piedmont Office Realty Trust, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, filed on March 6, 2014) 4.4 Supplemental Indenture, dated March 6, 2014, by and among the Operating Partnership, Piedmont Office Realty Trust, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K, filed on March 6, 2014) 4.5 Form of 4.450% Senior Notes due 2024 (included in Exhibit 4.2 hereto) 4.6 Supplemental Indenture, dated August 12, 2020, by and among Piedmont Operating Partnership, LP, Piedmont Office Realty Trust, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on August 12, 2020) 4.7 Form of 3.150% Senior Notes due 2030 (included in Exhibit 4.1) (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed on August 12, 2020) 4.8 Description of Securities registered pursuant to Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.15 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019, filed on February 19, 2020) 4.9 Supplemental Indenture, dated as of September 20, 2021, by and among Piedmont Operating Partnership, LP, Piedmont Office Realty Trust, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K, filed on September 20, 2021) 4.10 Form of 2.75% Senior Notes due 2023 (included in Exhibit 4.9) 10.1 Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated January 1, 2000 (incorporated by reference to Exhibit 10.64 to the Company's Annual Report on Form 10-K for the year ended December 31, 2000, filed on March 28, 2001) 10.2 Amendment to Agreement of Limited Partnership of the Operating Partnership, as Amended and Restated as of January 1, 2000, dated April 16, 2007 (incorporated by reference to Exhibit 99.8 to the Company’s Current Report on Form 8-K, filed on April 20, 2007) 54 Table of Contents Index to Financial Statements 10.3 Amendment to Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership, as Amended and Restated as of January 1, 2000, dated August 8, 2007 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed on August 10, 2007) 10.4 Amended and Restated Dividend Reinvestment Plan of the Company adopted February 24, 2011 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed on February 24, 2011) 10.5* The Piedmont Office Realty Trust, Inc. Executive Nonqualified Deferred Compensation Plan dated December 5, 2013 (incorporated by reference to Exhibit 10.39 to the Company's Annual Report on Form 10-K for the year ended December 31, 2013, filed on February 18, 2014) 10.6* The Piedmont Office Realty Trust, Inc. Executive Nonqualified Deferred Compensation Plan Adoption Agreement dated December 5, 2013 (incorporated by reference to Exhibit 10.40 to the Company's Annual Report on Form 10-K for the year ended December 31, 2013, filed on February 18, 2014) 10.7* Employment Agreement dated April 16, 2007, by and between the Company and Robert E. Bowers (incorporated by reference to Exhibit 99.9 to the Company’s Current Report on Form 8-K, filed on April 20, 2007) 10.8* Employment Agreement dated May 14, 2007, by and between the Company and Laura P. Moon (incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K, filed on May 14, 2007) 10.9* Offer Letter Dated October 17, 2012 among the Company and Robert K. Wiberg (incorporated by reference to Exhibit 10.41 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 27, 2013) 10.10* Employment Agreement dated January 1, 2019, by and between the Company and Christopher Kollme (incorporated by reference to Exhibit 10.31 to the Company's Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 20, 2019) 10.11* Retirement Agreement and General Release by and between the Company and Donald A. Miller (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on March 19, 2019) 10.12* Employment Agreement, dated as of March 19, 2019, between the Company and C. Brent Smith (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed on March 19, 2019) 10.13* Consulting Agreement, dated as of November 28, 2016, by and between the Company and Raymond L. Owens (incorporated by reference to Exhibit 10.29 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 21, 2017) 10.14* Confidential Retirement Agreement and General Release, dated as of November 28, 2016, by and between the Company and Raymond L. Owens (incorporated by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 21, 2017) 10.15 Amended and Restated Term Loan Agreement Dated as Of September 28, 2018 by and among Piedmont Operating Partnership, LP, as Borrower, Piedmont Office Realty Trust, Inc., as Parent, JPMorgan Chase Bank, N.A., and SunTrust Robinson Humphrey, Inc., as Co-Lead Arrangers and Book Managers, JPMorgan Chase Bank, N.A., as Administrative Agent, SunTrust Bank as Syndication Agent, and the other financial institutions initially signatory thereto and their assignees (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on October 2, 2018) 10.16* Piedmont Office Realty Trust, Inc. Amended and Restated 2007 Omnibus Incentive Plan (incorporated by reference to Appendix A to the Company's Proxy Statement for its 2017 Annual Meeting of Stockholders filed with the Commission on March 22, 2017) 10.17* Amendment Number Three to the Piedmont Office Realty Trust, Inc. Long-Term Incentive Program effective May 2, 2017 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, filed on August 2, 2017) 10.18* Form of Employee Deferred Stock Award Agreement for Amended and Restated 2007 Omnibus Incentive Plan of the Company effective May 2, 2017 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, filed on August 2, 2017) 55 Table of Contents Index to Financial Statements 10.19 Term Loan Agreement, dated as of March 29, 2018, by and among Piedmont Operating Partnership, LP, as Borrower, Piedmont Office Realty Trust, Inc., as Parent, U.S. Bank National Association, PNC Capital Markets LLC, and SunTrust Robinson Humphrey, Inc., as Joint Lead Arrangers and Joint Book Runners, U.S. Bank National Association, as Administrative Agent, PNC Bank, National Association and SunTrust Bank as Syndication Agents, and the other banks signatory thereto as Lenders (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed April 3, 2018) 10.20 Amendment No. 1, dated as of September 28, 2018, to the Term Loan Agreement between Piedmont Operating Partnership, LP, as Borrower and U.S. Bank National Association as Administrative Agent dated as of March 29, 2018 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, filed on October 30, 2018) 10.21 Amendment No. 2, dated as of March 3, 2020, to the Term Loan Agreement dated March 29, 2018, between Piedmont Operating Partnership, LP, as Borrower and U.S. Bank National Association as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, filed on April 29, 2020) 10.22 Revolving Credit Agreement Dated as of September 28, 2018 by and among Piedmont Operating Partnership, LP, as Borrower, Piedmont Office Realty Trust, Inc., as Parent, JPMorgan Chase Bank, N.A., SunTrust Robinson Humphrey, Inc., U.S. Bank National Association and PNC Capital Markets LLC, as Joint Lead Arrangers and Joint Bookrunners, JPMorgan Chase Bank, N.A., as Administrative Agent, SunTrust Bank, U.S. Bank National Association and PNC Bank, National Association, as Syndication Agents, Bank Of America, N.A., BMO Harris Bank, N.A., Branch Banking and Trust Company, Morgan Stanley Senior Funding, Inc., TD Bank, N.A., The Bank Of Nova Scotia and Wells Fargo Bank, N.A. as Documentation Agents, and the other financial institutions initially signatory thereto and their assignees (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed October 2, 2018) 10.23* Form of Employee Deferred Stock Award Agreement for Amended and Restated 2007 Omnibus Incentive Plan of the Company effective February 19, 2020 (incorporated by reference to Exhibit 10.33 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019, filed on February 19, 2020) 10.24* Form of Director Deferred Stock Award Agreement for Amended and Restated 2007 Omnibus Incentive Plan of the Company effective February 19, 2020 (incorporated by reference to Exhibit 10.34 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019, filed on February 19, 2020) 10.25 Purchase and Sale Agreement Between SPUS7 Galleria, LP, as Seller and Piedmont Dallas Galleria, LLC, as Purchaser (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed February 12, 2020) 10.26 Term Loan Agreement, dated February 10, 2020, by and among Piedmont Operating Partnership, LP, as Borrower, Piedmont Office Realty Trust, Inc. as Parent, Suntrust Robinson Humphrey, Inc., as Lead Arranger and Book Manager, Truist Bank, as Administrative Agent, and the other financial institutions initially signatory hereto and their assignees as Lenders (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 12, 2020) 10.27 Amendment No. 1 to Term Loan Agreement, dated March 24, 2020, by and among Piedmont Operating Partnership, LP, as Borrower, Truist Bank, as administrative agent and lender, and JPMorgan Chase Bank, N.A. and U.S. Bank National Association, as new Lenders (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 30, 2020) 10.28* Piedmont Office Realty Trust, Inc. Long-Term Incentive Program Award Agreement dated May 3, 2019 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, filed on April 29, 2020) 10.29* Amendment No. 4 to Piedmont Office Realty Trust, Inc.'s Long-Term Incentive Program effective March 19, 2020 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed on July 28, 2021) 10.30* Piedmont Office Realty Trust, Inc. Long-Term Incentive Program Award Agreement effective March 19, 2020 (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, filed on April 29, 2020) 10.31* Piedmont Realty Trust, Inc. Second Amended and Restated 2007 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed May 12, 2021) 56 Table of Contents Index to Financial Statements 10.32* Form of Employee Deferred Stock Award Agreement for Second Amended and Restated 2007 Omnibus Incentive Plan of the Company (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021 filed on April 28, 2021) 10.33* Form of Employee Officer Deferred Stock Award Agreement for Second Amended and Restated 2007 Omnibus Incentive Plan of the Company (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021 filed on April 28, 2021) 10.34* Form of Director Deferred Stock Award Agreement for Second Amended and Restated 2007 Omnibus Incentive Plan of the Company (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021 filed on April 28, 2021) 21.1 List of Subsidiaries of the Company 22.1 Subsidiary Issuer of Guaranteed Securities 23.1 Consent of Deloitte & Touche LLP 31.1** Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2** Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002 32.1*** Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2*** Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH XBRL Taxonomy Extension Schema 101.CAL XBRL Taxonomy Extension Calculation Linkbase 101.DEF XBRL Taxonomy Extension Definition Linkbase 101.LAB XBRL Taxonomy Extension Label Linkbase 101.PRE XBRL Taxonomy Extension Presentation Linkbase 104.1 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Identifies each management contract or compensatory plan required to be filed. ** Filed herewith. *** Furnished herewith. 57 Table of Contents Index to Financial Statements INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB Firm # 34 ) F- 2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F- 4 Consolidated Statements of Operations for the Years December 31, 2021, 2020, and 2019 F- 5 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021, 2020, and 2019 F- 6 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2021, 2020, and 2019 F- 7 Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020, and 2019 F- 8 Notes to Consolidated Financial Statements F- 9 Financial Statement Schedule Schedule III - Real Estate Assets and Accumulated Depreciation S- 1 F-1 Table of Contents Index to Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Piedmont Office Realty Trust, Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Piedmont Office Realty Trust, Inc. and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 17, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenues—Refer to Note 2 (Revenue Recognition) to the financial statements Critical Audit Matter Description Rental and tenant reimbursement revenue consists of revenue from leases with the Company’s tenants, as well as reimbursements for services prescribed by such leases. The Company recognizes fixed base rental payments, as well as any fixed portions of reimbursement income, on a straight-line basis over the term of the related lease. The timing of rental revenue recognition is largely dependent on whether the Company is the owner of tenant improvements at the leased property. In determining whether the Company or the tenant owns such tenant improvements, the Company considers a number of factors, including, among other things: whether the tenant is obligated by the terms of the lease agreement to construct or install the leasehold improvements as a condition of the lease; whether the landlord can require the lessee to make specified improvements or otherwise enforce its economic rights to those assets; whether the tenant is required to provide the landlord with documentation supporting the cost of tenant improvements prior to reimbursement by the landlord; and whether the leasehold improvements are unique to the tenant or could reasonably be used by other parties. F-2 Table of Contents Index to Financial Statements The determination of whether the Company or its tenant owns the tenant improvements and the timing and amount of revenue recognition requires the exercise of significant judgment by management based on the facts and circumstances of the specific lease arrangement and is not based on any one factor. Auditing management’s conclusions with respect to these matters often is complex and requires subjective judgment. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to management’s determination of the owner of the tenant improvements and the related impact on the timing and amount of revenue recognition, included the following, among others: • We tested the effectiveness of controls over revenue recognition, including the determination of the owner of tenant improvements and the timing and amounts of rental revenues to be recognized over the term of the related lease. • We selected a sample of lease agreements and performed the following to evaluate the appropriateness of management’s conclusions regarding the owner of the tenant improvements and the timing and amount of revenue recognition: ◦ Evaluated the reasonableness and consistency of the factors considered by management to determine the owner of the tenant improvements and compared such factors to the terms in the lease agreement and other supporting documents. ◦ Tested the timing and amounts recognized as rental revenue, including any amortization of deferred revenue or lease incentives, by independently calculating such rental revenue amounts to be recognized and comparing it to the amounts recorded by the Company. /s/ Deloitte & Touche LLP Atlanta, Georgia February 17, 2022 We have served as the Company's auditor since 2018. F-3 Table of Contents Index to Financial Statements PIEDMONT OFFICE REALTY TRUST, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per-share amounts) December 31, 2021 December 31, 2020 Assets: Real estate assets, at cost: Land $ 529,941 $ 476,716 Buildings and improvements, less accumulated depreciation of $ 861,206 and $ 751,521 as of December 31, 2021 and December 31, 2020, respectively 2,513,697 2,371,521 Intangible lease assets, less accumulated amortization of $ 83,777 and $ 67,850 as of December 31, 2021 and December 31, 2020, respectively 94,380 90,594 Construction in progress 43,406 56,749 Real estate assets held for sale, net 63,887 60,454 Total real estate assets 3,245,311 3,056,034 Cash and cash equivalents 7,419 7,331 Tenant receivables, net of allowance for doubtful accounts of $ 4,000 and $ 4,553 as of December 31, 2021 and December 31, 2020, respectively 2,995 8,448 Straight-line rent receivables 162,632 148,797 Notes receivable 118,500 118,500 Restricted cash and escrows 1,441 1,883 Prepaid expenses and other assets 20,485 23,277 Goodwill 98,918 98,918 Deferred lease costs, less accumulated amortization of $ 205,100 and $ 171,817 as of December 31, 2021 and December 31, 2020, respectively 264,571 272,394 Other assets held for sale, net 8,393 4,228 Total assets $ 3,930,665 $ 3,739,810 Liabilities: Unsecured debt, net of discount and unamortized debt issuance costs of $ 12,210 and $ 10,932 as of December 31, 2021 and December 31, 2020, respectively $ 1,877,790 $ 1,594,068 Secured debt, inclusive of premiums and unamortized debt issuance costs of $ — and $ 326 as of December 31, 2021 and December 31, 2020, respectively — 27,936 Accounts payable, accrued expenses, and accrued capital expenditures 114,453 111,997 Dividends payable 26,048 25,683 Deferred income 80,686 36,891 Intangible lease liabilities, less accumulated amortization of $ 35,880 and $ 27,344 as of December 31, 2021 and December 31, 2020, respectively 39,341 35,440 Interest rate swaps 4,924 9,834 Total liabilities 2,143,242 1,841,849 Commitments and Contingencies ( Note 8 ) — — Stockholders’ Equity: Shares-in-trust, 150,000,000 shares authorized, none outstanding as of December 31, 2021 or December 31, 2020 — — Preferred stock, no par value, 100,000,000 shares authorized, none outstanding as of December 31, 2021 or December 31, 2020 — — Common stock, $ 0.01 par value; 750,000,000 shares authorized, 123,076,695 shares issued and outstanding as of December 31, 2021; and 123,839,419 shares issued and outstanding at December 31, 2020 1,231 1,238 Additional paid-in capital 3,701,798 3,693,996 Cumulative distributions in excess of earnings ( 1,899,081 ) ( 1,774,856 ) Accumulated other comprehensive loss ( 18,154 ) ( 24,100 ) Piedmont stockholders’ equity 1,785,794 1,896,278 Noncontrolling interest 1,629 1,683 Total stockholders’ equity 1,787,423 1,897,961 Total liabilities and stockholders’ equity $ 3,930,665 $ 3,739,810 See accompanying notes. F-4 Table of Contents Index to Financial Statements PIEDMONT OFFICE REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per-share amounts) Years Ended December 31, 2021 2020 2019 Revenues: Rental and tenant reimbursement revenue $ 514,619 $ 519,953 $ 511,905 Property management fee revenue 2,496 2,867 3,398 Other property related income 11,595 12,204 17,875 528,710 535,024 533,178 Expenses: Property operating costs 210,932 214,933 211,380 Depreciation 120,615 110,575 106,015 Amortization 85,992 93,294 76,666 Impairment loss on real estate assets 41,000 — 8,953 General and administrative 30,252 27,464 37,895 488,791 446,266 440,909 Other income (expense): Interest expense ( 51,292 ) ( 54,990 ) ( 61,594 ) Other income 10,206 2,587 1,571 Loss on extinguishment of debt — ( 9,336 ) — Gain on sale of real estate assets — 205,666 197,010 ( 41,086 ) 143,927 136,987 Net income/(loss) ( 1,167 ) 232,685 229,256 Net loss applicable to noncontrolling interest 14 3 5 Net income/(loss) applicable to Piedmont $ ( 1,153 ) $ 232,688 $ 229,261 Per share information— basic and diluted: Net income/(loss) applicable to common stockholders $ ( 0.01 ) $ 1.85 $ 1.82 Weighted-average shares outstanding—basic 123,977,616 125,730,460 125,709,207 Weighted-average shares outstanding—diluted 123,977,616 126,104,321 126,182,137 See accompanying notes. F-5 Table of Contents Index to Financial Statements PIEDMONT OFFICE REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Years Ended December 31, 2021 2020 2019 Net income/(loss) applicable to Piedmont $ ( 1,153 ) $ 232,688 $ 229,261 Other comprehensive income/(loss): Effective portion of gain/(loss) on derivative instruments that are designated and qualify as cash flow hedges (See Note 5 ) 2,994 ( 26,794 ) ( 5,659 ) Plus/(less): Reclassification of net loss/(gain) included in net income (See Note 5 ) 2,952 1,727 ( 1,836 ) Other comprehensive income/(loss) 5,946 ( 25,067 ) ( 7,495 ) Comprehensive income applicable to Piedmont $ 4,793 $ 207,621 $ 221,766 See accompanying notes. F-6 Table of Contents Index to Financial Statements PIEDMONT OFFICE REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except per-share amounts) Common Stock Additional Paid-In Capital Cumulative Distributions in Excess of Earnings Accumulated Other Comprehensive Income/(Loss) Noncontrolling Interest Total Stockholders’ Equity Shares Amount Balance, December 31, 2018 126,219 $ 1,262 $ 3,683,186 $ ( 1,982,542 ) $ 8,462 $ 1,772 $ 1,712,140 Share repurchases as part of announced plan ( 728 ) ( 7 ) — ( 12,475 ) — — ( 12,482 ) Offering costs — — ( 710 ) — — — ( 710 ) Dividends to common stockholders ($ 0.84 per share), stockholders of subsidiaries, and dividends reinvested — — ( 228 ) ( 105,619 ) — ( 41 ) ( 105,888 ) Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax 292 3 4,150 — — — 4,153 Net loss applicable to noncontrolling interest — — — — — ( 5 ) ( 5 ) Net income applicable to Piedmont — — — 229,261 — — 229,261 Other comprehensive loss — — — — ( 7,495 ) — ( 7,495 ) Balance, December 31, 2019 125,783 1,258 3,686,398 ( 1,871,375 ) 967 1,726 1,818,974 Share repurchases as part of announced plan ( 2,190 ) ( 22 ) — ( 30,649 ) — — ( 30,671 ) Dividends to common stockholders ($ 0.84 per share), stockholders of subsidiaries, and dividends reinvested — — ( 5 ) ( 105,520 ) — ( 40 ) ( 105,565 ) Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax 246 2 7,603 — — — 7,605 Net loss applicable to noncontrolling interest — — — — — ( 3 ) ( 3 ) Net income applicable to Piedmont — — — 232,688 — — 232,688 Other comprehensive loss — — — — ( 25,067 ) — ( 25,067 ) Balance, December 31, 2020 123,839 1,238 3,693,996 ( 1,774,856 ) ( 24,100 ) 1,683 1,897,961 Share repurchases as part of announced plan ( 1,060 ) ( 10 ) — ( 18,842 ) — — ( 18,852 ) Offering costs — — ( 55 ) — — — ( 55 ) Dividends to common stockholders ($ 0.84 per share) and stockholders of subsidiaries — — — ( 104,230 ) — ( 40 ) ( 104,270 ) Shares issued and amortized under the 2007 Omnibus Incentive Plan, net of tax 298 3 7,857 — — — 7,860 Net loss applicable to noncontrolling interest — — — — — ( 14 ) ( 14 ) Net loss applicable to Piedmont — — — ( 1,153 ) — — ( 1,153 ) Other comprehensive income — — — — 5,946 — 5,946 Balance, December 31, 2021 123,077 $ 1,231 $ 3,701,798 $ ( 1,899,081 ) $ ( 18,154 ) $ 1,629 $ 1,787,423 See accompanying notes. F-7 Table of Contents Index to Financial Statements PIEDMONT OFFICE REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2021 2020 2019 Cash Flows from Operating Activities: Net income/(loss) $ ( 1,167 ) $ 232,685 $ 229,256 Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Depreciation 120,615 110,575 106,015 Amortization of debt issuance costs inclusive of settled interest rate swaps 3,270 2,080 87 Other amortization 78,657 84,534 71,609 Impairment loss on real estate assets 41,000 — 8,953 Loss on extinguishment of debt — 349 — General reserve/(recovery) for uncollectible accounts ( 553 ) 4,553 — Stock compensation expense 10,984 9,718 15,446 Gain on sale of real estate assets — ( 205,666 ) ( 197,010 ) Changes in other operating assets and liabilities: Increase in tenant and straight-line rent receivables ( 9,691 ) ( 30,887 ) ( 15,706 ) Decrease in prepaid expenses and other assets 1,294 823 309 Cash received/(paid) upon settlement of interest rate swaps 623 ( 19,930 ) — Increase/(decrease) in accounts payable and accrued expenses 1,861 6,264 ( 11,251 ) (Decrease)/increase in deferred income ( 4,690 ) ( 1,814 ) 776 Net cash provided by operating activities 242,203 193,284 208,484 Cash Flows from Investing Activities: Acquisition of real estate assets, intangibles, and undeveloped land parcels ( 226,011 ) ( 417,056 ) ( 326,200 ) Capitalized expenditures ( 122,626 ) ( 112,580 ) ( 103,553 ) Sales proceeds from wholly-owned properties — 360,094 589,767 Deferred lease costs paid ( 20,295 ) ( 28,334 ) ( 25,639 ) Net cash (used in)/provided by investing activities ( 368,932 ) ( 197,876 ) 134,375 Cash Flows from Financing Activities: Debt issuance and other costs paid ( 1,038 ) ( 1,363 ) ( 151 ) Proceeds from debt 789,580 1,174,383 592,000 Repayments of debt ( 535,610 ) ( 1,035,077 ) ( 798,019 ) Discount paid due to loan modification — ( 525 ) — Costs of issuance of common stock ( 55 ) — ( 710 ) Value of shares withheld for payment of taxes related to employee stock compensation ( 3,060 ) ( 2,703 ) ( 3,295 ) Repurchases of common stock as part of announced plan ( 19,537 ) ( 29,986 ) ( 16,899 ) Dividends paid and discount on dividend reinvestments ( 103,905 ) ( 106,309 ) ( 106,433 ) Net cash provided by/(used in) financing activities 126,375 ( 1,580 ) ( 333,507 ) Net (decrease)/increase in cash, cash equivalents, and restricted cash and escrows ( 354 ) ( 6,172 ) 9,352 Cash, cash equivalents, and restricted cash and escrows, beginning of year 9,214 15,386 6,034 Cash, cash equivalents, and restricted cash and escrows, end of year $ 8,860 $ 9,214 $ 15,386 See accompanying notes. F-8 Table of Contents Index to Financial Statements PIEDMONT OFFICE REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021, 2020, AND 2019 1. Organization Piedmont Office Realty Trust, Inc. (“Piedmont”) (NYSE: PDM) is a Maryland corporation that operates in a manner so as to qualify as a real estate investment trust (“REIT”) for federal income tax purposes and engages in the ownership, management, development, redevelopment, and operation of high-quality, Class A office properties located primarily in select sub-markets within seven major U.S. office markets, with a majority of its revenue being generated from Sunbelt markets. Piedmont was incorporated in 1997 and commenced operations in 1998. Piedmont conducts business through its wholly-owned subsidiary, Piedmont Operating Partnership, L.P. (“Piedmont OP”), a Delaware limited partnership. Piedmont OP owns properties directly, through wholly-owned subsidiaries, and through various joint ventures which it controls. References to Piedmont herein shall include Piedmont and all of its subsidiaries, including Piedmont OP and its subsidiaries and joint ventures As of December 31, 2021, Piedmont owned 55 in-service office properties and one redevelopment asset in select sub-markets located within seven major U.S. office markets: Dallas, Atlanta, Washington, D.C., Minneapolis, Boston, Orlando, and New York. As of December 31, 2021, Piedmont's 55 in-service office properties comprised approximately 17.1 million square feet (unaudited) of primarily Class A commercial office space and were approximately 86 % leased. 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The consolidated financial statements of Piedmont are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of Piedmont, Piedmont’s wholly-owned subsidiaries, any variable interest entity ("VIE") of which Piedmont or any of its wholly-owned subsidiaries is considered to have the power to direct the activities of the entity and the obligation to absorb losses/right to receive benefits, or any entity in which Piedmont or any of its wholly-owned subsidiaries owns a controlling interest. In determining whether Piedmont or Piedmont OP has a controlling interest, the following factors, among others, are considered: equity ownership, voting rights, protective rights of investors, and participatory rights of investors. Piedmont owns a majority interest in four properties through three joint ventures. Two of these joint ventures, 1201 and 1225 Eye Street, NW Associates, own the 1201 and 1225 Eye Street buildings, respectively, in Washington, D.C. The other joint venture, Piedmont-CNL Towers Orlando, LLC, owns CNL Center I and II, in Orlando, Florida. All three joint venture investments are consolidated under the voting model. Accordingly, Piedmont’s consolidated financial statements include the accounts of 1201 Eye Street, NW Associates, LLC, 1225 Eye Street, NW Associates, LLC, and Piedmont-CNL Towers Orlando, LLC. All inter-company balances and transactions have been eliminated upon consolidation. Further, Piedmont has formed special purpose entities to acquire and hold real estate. Each special purpose entity is a separate legal entity and consequently the assets of the special purpose entities are not available to all creditors of Piedmont. The assets owned by these special purpose entities are being reported on a consolidated basis with Piedmont’s assets for financial reporting purposes only. Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and notes. The most significant of these estimates includes the underlying cash flows and holding periods used in assessing impairment, judgements regarding the recoverability of goodwill, and the assessment of the collectibility of receivables. While Piedmont has made, what it believes to be, appropriate accounting estimates based on the facts and circumstances available as of the reporting date, actual results could materially differ from those estimates. F-9 Table of Contents Index to Financial Statements Real Estate Assets Piedmont classifies its real estate assets as long-lived assets held for use or as long-lived assets held for sale. Held for use assets are stated at cost, as adjusted for any impairment loss, less accumulated depreciation. Held for sale assets are carried at lower of depreciated cost or estimated fair value, less estimated costs to sell. Piedmont generally reclassifies assets as held for sale once a sales contract has been executed and earnest money has become non-refundable. Amounts capitalized to real estate assets consist of the cost of acquisition or construction, any tenant improvements or major improvements, betterments that extend the useful life of the related asset, and transaction costs associated with the acquisition of an individual asset that does not qualify as a business combination. All repairs and maintenance are expensed as incurred. Additionally, Piedmont capitalizes interest while the development, or redevelopment, of a real estate asset is in progress. Piedmont’s real estate assets are depreciated or amortized using the straight-line method over the following useful lives: Buildings 40 years Building improvements 5 - 25 years Land improvements 20 - 25 years Tenant allowances Lease term Furniture, fixtures, and equipment 3 - 10 years Intangible lease assets Lease term Piedmont continually monitors events and changes in circumstances that could indicate that the carrying amounts of the real estate and related intangible assets of either operating properties or properties under construction in which Piedmont has an ownership interest, either directly or through investments in joint ventures, may not be recoverable. When indicators of potential impairment are present, management assesses whether the respective carrying values will be recovered from the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition for assets held for use, or from the estimated fair values, less costs to sell, for assets held for sale. In the event that the expected undiscounted future cash flows for assets held for use or the estimated fair value, less costs to sell, for assets held for sale do not exceed the respective asset carrying value, management adjusts such assets to the respective estimated fair values and recognizes an impairment loss. Estimated fair values are calculated based on the following information, depending upon availability, in order of preference: (i) recently quoted market prices, (ii) market prices for comparable properties, or (iii) the present value of undiscounted cash flows, including estimated sales value (which is based on key assumptions such as estimated market rents, lease-up periods, estimated lease terms, and capitalization and discount rates) less estimated selling costs. Fair Value of Assets and Liabilities of Acquired Properties Upon the acquisition of real properties, Piedmont records the fair value of properties (plus any related acquisition costs) allocated based on relative fair value as tangible assets, consisting of land and building, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases, based on their estimated fair values. Substantially all of Piedmont's property acquisitions qualify as asset acquisitions under Accounting Standards Codification ("ASC") 805, Business Combinations . The estimated fair values of the tangible assets of an acquired property are determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and building based on management’s determination of the estimated fair value of these assets. Management relies on a sales comparison approach using closed land sales and listings in determining the land value, and determines the as-if-vacant estimated fair value of a property using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance, and other operating expenses and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates the cost to execute similar leases including leasing commissions, legal, and other related costs. The estimated fair values of above-market and below-market in-place leases are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of market rates for the corresponding in-place leases, measured over a period equal to the remaining terms of the leases, taking into consideration the probability of renewals for any below-market leases. The capitalized above-market and below-market lease values are recorded as intangible lease assets or liabilities and amortized as an adjustment to rental revenues over the remaining terms of the respective leases. F-10 Table of Contents Index to Financial Statements The estimated fair values of in-place leases include an estimate of the direct costs associated with obtaining the acquired or "in place" tenant, estimates of opportunity costs associated with lost rentals that are avoided by acquiring an in-place lease. The amount capitalized as direct costs associated with obtaining a tenant include commissions, tenant improvements, and other direct costs and are estimated based on management’s consideration of current market costs to execute a similar lease. These direct lease origination costs are included in deferred lease costs in the accompanying consolidated balance sheets and are amortized to expense over the remaining terms of the respective leases. The value of opportunity costs is calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. These lease intangibles are included in intangible lease assets in the accompanying consolidated balance sheets and are amortized to expense over the remaining terms of the respective leases. Gross intangible assets and liabilities, inclusive of amounts classified as real estate assets held for sale, recorded at acquisition as of December 31, 2021 and 2020, respectively, are as follows (in thousands): December 31, 2021 December 31, 2020 Intangible Lease Assets: Above-Market In-Place Lease Assets $ 1,882 $ 2,167 In-Place Lease Valuation $ 176,275 $ 156,277 Intangible Lease Origination Costs (included as component of Deferred Lease Costs) $ 266,575 $ 250,367 Intangible Lease Liabilities (Below-Market In-Place Leases) $ 75,221 $ 62,784 For the years ended December 31, 2021, 2020, and 2019, respectively, Piedmont recognized amortization of intangible lease costs in the accompanying consolidated statements of operations, as follows (in thousands): 2021 2020 2019 Amortization of Intangible Lease Origination Costs and In-Place Lease Valuation included in Amortization $ 69,388 $ 77,000 $ 62,413 Amortization of Above-Market and Below-Market In-Place Lease Intangibles as a net increase to Rental and Tenant Reimbursement Revenue $ 11,180 $ 12,191 $ 8,322 Net intangible assets and liabilities as of December 31, 2021 will be amortized as follows (in thousands): Intangible Lease Assets Above-Market In-place Lease Assets In-Place Lease Valuation Intangible Lease Origination Costs (1) Below-Market In-place Lease Liabilities For the year ending December 31: 2022 $ 323 $ 28,725 $ 37,612 $ 11,806 2023 126 20,569 27,044 8,291 2024 93 14,819 19,828 6,139 2025 27 10,388 14,753 4,645 2026 15 7,158 11,531 3,159 Thereafter 12 12,125 23,050 5,301 $ 596 $ 93,784 $ 133,818 $ 39,341 Weighted-Average Amortization Period (in years) 3 5 5 5 (1) Included as a component of Deferred Lease Costs in the accompanying consolidated balance sheets. Cash and Cash Equivalents Piedmont considers all highly-liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash and short-term investments. The majority of Piedmont’s cash and cash equivalents are held at major commercial banks and at times may exceed the Federal Deposit Insurance Corporation limit of $250,000. Short-term investments consist of investments in money market accounts stated at cost, which approximates estimated fair F-11 Table of Contents Index to Financial Statements value, and available-for-sale securities associated with Piedmont's non-qualified deferred compensation program carried at estimated fair value. Tenant Receivables and Straight-line Rent Receivables Tenant receivables are comprised of rental and reimbursement billings due from tenants, and straight-line rent receivables representing the cumulative amount of future adjustments necessary to present rental income on a straight-line basis. Piedmont evaluates the collectibility of its operating lease receivables on a tenant/lease-specific basis and recognizes changes in the collectibility assessment of its operating lease receivables as a reduction of rental and tenant reimbursement revenues. Allowance for Doubtful Accounts As detailed above, Piedmont records contra-revenue adjustments for tenant/lease-specific changes in the collectibility assessments of its operating lease receivables as a reduction of rental and tenant reimbursement revenues. These charges reduce tenant and straight-line rent receivable to net realizable value upon recognition. In addition, during the year ended December 31, 2020, Piedmont also established an allowance for doubtful accounts for amounts that may become uncollectible in the future. Details of Piedmont's allowance for doubtful accounts for the years ended December 31, 2021, 2020, and 2019 are as follows: Balance at Beginning of Period Additions Charged as Reduction of Revenue Deductions and Write-offs Balance at End of Period Year Ended December 31, 2021 $ 4,553 $ 35 $ ( 588 ) $ 4,000 2020 $ — $ 8,734 $ ( 4,181 ) $ 4,553 Restricted Cash and Escrows Restricted cash and escrows principally relate to the following types of items: • escrow accounts held by lenders to pay future real estate taxes, insurance, debt service, and tenant improvements; • net sales proceeds from property sales held by qualified intermediary for potential Section 1031 exchange; • earnest money paid in connection with future acquisitions; and • security and utility deposits paid by tenants per the terms of their respective leases. Restricted cash and escrows are generally reclassified to other asset or liability accounts upon being used to purchase assets, satisfy obligations, or settle tenant obligations. Prepaid Expenses and Other Assets Prepaid expenses and other assets are primarily comprised of the following items: • prepaid property taxes, insurance and operating costs; • receivables which are unrelated to tenants, for example, insurance proceeds receivable from insurers related to casualty losses; and • equipment, furniture and fixtures, and tenant improvements for Piedmont’s corporate office and property management office space, net of accumulated depreciation. Prepaid expenses and other assets will be expensed as utilized or depreciated in the case of Piedmont's corporate assets. Balances without a future economic benefit are expensed as they are identified. F-12 Table of Contents Index to Financial Statements Goodwill Goodwill is the excess of cost of an acquired entity over the amounts specifically assigned to assets acquired and liabilities assumed in purchase accounting for business combinations, and is allocated to each of Piedmont's seven reporting units. Piedmont tests the carrying value of the goodwill assigned to each of its seven reporting units for impairment on an annual basis, or on an interim basis if an event occurs or circumstances change that would indicate that a material indicator of impairment exists. Such interim circumstances may include, but are not limited to, significant adverse changes in legal factors or in the general business climate, adverse action or assessment by a regulator, unanticipated competition, the loss of key personnel, or persistent declines in an entity’s stock price below carrying value of the entity. Piedmont first assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that a material indicator of impairment exists. If Piedmont concludes, after assessing the totality of events and circumstances during the qualitative analysis, that a material indicator does exist and that it is more likely than not that the goodwill balance in one or more reporting units is impaired, then Piedmont will recognize a goodwill impairment loss equal to the excess of the reporting unit’s carrying amount over its estimated fair value (not to exceed the total goodwill allocated to that reporting unit). There were no changes in the carrying amount of Piedmont's goodwill during the year ended December 31, 2021. Interest Rate Derivatives Piedmont periodically enters into interest rate derivative agreements to hedge its exposure to changing interest rates. As of December 31, 2021 and 2020, all of Piedmont's interest rate derivatives were designated as effective cash flow hedges and carried on the balance sheet at estimated fair value. Piedmont reassesses the effectiveness of its derivatives designated as cash flow hedges on a regular basis to determine if they continue to be highly effective and if the forecasted transactions remain highly probable. Piedmont does not use derivatives for trading or speculative purposes. The changes in estimated fair value of interest rate swap agreements designated as effective cash flow hedges are recorded in other comprehensive income (“OCI”), and subsequently reclassified to earnings when the hedged transactions occur. The estimated fair value of the interest rate derivative agreement is recorded as interest rate derivative asset or as interest rate derivative liability in the accompanying consolidated balance sheets. Amounts received or paid under interest rate derivative agreements are recorded as reductions or additions to interest expense in the consolidated statements of operations as incurred. Additionally, when Piedmont settles forward starting swap agreements, any gain or loss is recorded as accumulated other comprehensive income and is amortized to interest expense over the term of the respective notes on a straight line basis (which approximates the effective interest method). Further, Piedmont classifies cash flows from the settlement of hedging derivative instruments in the same category as the underlying exposure which is being hedged. Settlements resulting from the hedge of Piedmont's exposure to interest rate changes are classified as operating cash flows in the accompanying consolidated statements of cash flows. Deferred Lease Costs Deferred lease costs are comprised of costs and incentives incurred to acquire operating leases. In addition to direct costs, deferred lease costs also include intangible lease origination costs related to in-place leases acquired as part of a property acquisition. Deferred lease costs are amortized on a straight-line basis over the terms of the related underlying leases in the accompanying consolidated statements of operations as follows: • Approximately $ 56.4 million, $ 60.2 million, and $ 50.3 million of deferred lease costs are included in amortization expense for the years ended December 31, 2021, 2020, and 2019, respectively; and • Approximately $ 3.9 million, $ 3.4 million, and $ 3.2 million, of deferred lease costs related to lease incentives granted to tenants are included as an offset to rental and tenant reimbursement revenue for the years ended December 31, 2021, 2020, and 2019, respectively. Upon receipt of an early lease termination notice, Piedmont recognizes any unamortized deferred lease costs ratably over the revised remaining term of the lease after giving effect to the termination notice. If there is no remaining lease term and no other obligation to provide the tenant space in the property, then any unamortized tenant-specific costs are recognized immediately. F-13 Table of Contents Index to Financial Statements Debt When mortgage debt is assumed upon the acquisition of real property, Piedmont adjusts the loan to relative fair value with a corresponding adjustment to building and other intangible assets assumed as part of the purchase. The fair value adjustment is amortized to interest expense over the term of the loan using the effective interest method. Amortization of such fair value adjustments was approximately $ 0.3 million, $ 0.5 million, and $ 0.5 million for the years ended December 31, 2021, 2020, and 2019, respectively. Piedmont records premiums and discounts on debt issuances as an increase/decrease to the principal amount of the loan in the accompanying consolidated balance sheets, and amortizes such premiums or discounts as a component of interest expense over the life of the underlying loan facility using the effective interest method. Piedmont recorded discount amortization of approximately $ 0.5 million, $ 0.3 million and $ 0.2 million for the years ended December 31, 2021, 2020, and 2019, respectively. Piedmont presents all debt issuance costs as an offset to the principal amount of debt in the accompanying consolidated balance sheets. Piedmont amortizes these costs to interest expense on a straight-line basis (which approximates the effective interest rate method) over the terms of the related financing arrangements. Piedmont recognized amortization of such costs for the years ended December 31, 2021, 2020, and 2019 of approximately $ 2.7 million, $ 3.0 million, and $ 2.4 million, respectively. Deferred income Deferred income is primarily comprised of the following items: • prepaid rent from tenants; • tenant reimbursements related to operating expense or property tax expenses which may be due to tenants as part of an annual operating expense reconciliation; and • tenant improvement allowance overages or improvements funded by the tenant where Piedmont owns the underlying improvements. Deferred income related to prepaid rents from tenants will be recognized as rental income in the period it is earned. Amounts related to operating expense reconciliations or property tax expense are relieved when the tenant's reconciliation is completed in accordance with the underlying lease, and payment is issued to the tenant. Tenant improvement allowance overages or improvements paid for by the tenant, where Piedmont owns all of the underlying improvements, are recorded as deferred income and amortized on a straight-line basis into rental and tenant reimbursement revenue over the term of the respective leases. Shares-in-trust To date, Piedmont has not issued any shares-in-trust; however, under Piedmont’s charter, it has authority to issue a total of 150,000,000 shares-in-trust, which would be issued only in the event that there is a purported transfer of, or other change in or affecting the ownership of, Piedmont’s capital stock that would result in a violation of the ownership limits that are included in Piedmont’s charter to protect its REIT status. Preferred Stock To date, Piedmont has not issued any shares of preferred stock; however, Piedmont is authorized to issue up to 100,000,000 shares of one or more classes or series of preferred stock. Piedmont’s board of directors may determine the relative rights, preferences, and privileges of any class or series of preferred stock that may be issued, and can be more beneficial than the rights, preferences, and privileges attributable to Piedmont’s common stock. F-14 Table of Contents Index to Financial Statements Common Stock Under Piedmont’s charter, it has authority to issue a total of 750,000,000 shares of common stock with a par value of $ 0.01 per share. Each share of common stock is entitled to one vote and participates in distributions equally. In February 2020, the board of directors re-authorized the stock repurchase program for up to $ 200 million in share repurchases under which Piedmont may repurchase its own shares from time to time, in accordance with applicable securities laws, in the open market or in privately negotiated transactions. The timing of repurchases is dependent upon market conditions and other factors, and repurchases may be commenced or suspended from time to time in Piedmont's discretion, without prior notice. As of December 31, 2021, Piedmont had approximately $ 150.5 million of remaining capacity under the program which may be used for share repurchases through February 2022. On February 17, 2022, Piedmont's board of directors extended the existing stock repurchase authorization through February 2024. Equity Securities Issued At-The-Market Under Piedmont's at-the-market stock offering program ("ATM program"), Piedmont may offer and sell shares of its common stock from time to time in “at-the-market” offerings with an aggregate gross sales price of up to $ 250 million. In connection with the ATM Program, Piedmont may, at its discretion, enter into forward equity sale agreements. The use of a forward equity sale agreement would allow Piedmont to lock in a share price on the sale of shares of its common stock at the time the agreement is executed, but defer receiving the proceeds from the sale of shares until a later date, allowing Piedmont to better align such funding with its capital needs. Sales of shares of Piedmont’s common stock through its banking relationships, if any, will be made in amounts and at times to be determined by Piedmont from time to time, but Piedmont has no obligation to sell any of the shares in the offering and may suspend sales in connection with the offering at any time. Sales of Piedmont's common stock under forward equity sale agreements, if undertaken, meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments based on the following assessments: (i) none of the agreements’ exercise contingencies were based on observable markets or indices besides those related to the market for Piedmont's own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to Piedmont's own stock. Underwriting commissions and offering costs incurred in connection with all common equity offerings, including any potential issuances under Piedmont's ATM Program, are reflected as a reduction of additional paid-in capital. Dividends As a REIT, Piedmont is required by the Internal Revenue Code of 1986, as amended (the “Code”), to make distributions to stockholders each taxable year equal to at least 90% of its annual taxable income, computed without regard to the dividends-paid deduction and by excluding net capital gains attributable to stockholders (“REIT taxable income”). Piedmont previously sponsored a dividend reinvestment plan ("DRP") pursuant to which common stockholders could elect (if their brokerage agreements allowed) to reinvest an amount equal to the dividends declared on their common shares into additional shares of Piedmont’s common stock in lieu of receiving cash dividends. During the year ended December 31, 2020, the board of directors terminated the company-funded DRP offered through its transfer agent. Noncontrolling Interest Noncontrolling interest is the equity interest of consolidated entities that is not owned by Piedmont. Noncontrolling interest is adjusted for the noncontrolling partners' share of contributions, distributions, and earnings (losses) in accordance with the respective partnership agreement. Earnings allocated to such noncontrolling partners are recorded as income applicable to noncontrolling interest in the accompanying consolidated statements of operations. Revenue Recognition Piedmont's revenues consist of the following: Rental and tenant reimbursement income - consists of revenue from leases with Piedmont's tenants, as well as reimbursements for services prescribed by such leases. Piedmont evaluates contracts at commencement to determine if the contract contains a lease. If a contract is determined to contain a lease, the lease is evaluated to determine whether it is an operating, sales-type, or a direct financing lease. All of Piedmont's leases where Piedmont is the lessor are for the lessee's use of space in Piedmont's commercial office properties and are classified as operating leases. In most lease arrangements, Piedmont finances improvements to leased space and is deemed the owner of the tenant improvements. The determination of who owns the improvements, whether payments to tenants constitute lease incentives or F-15 Table of Contents Index to Financial Statements tenant improvements, and the timing of revenue recognition requires the exercise of significant judgment based on the facts and circumstances of the specific lease arrangement and is not based on any one factor. When evaluating whether Piedmont or its tenant owns the improvements, management considers a number of factors, including, among other things: • whether the tenant is obligated by the terms of the lease agreement to construct or install the leasehold improvements as a condition of the lease; • whether the landlord can require the lessee to make specified improvements or otherwise enforce its economic rights to those assets; • whether the tenant is required to provide the landlord with documentation supporting the cost of tenant improvements prior to reimbursement by the landlord; • whether the landlord is obligated to fund cost overruns for the construction of leasehold improvements; • whether the leasehold improvements are unique to the tenant or could reasonably be used by other parties; and • whether the estimated economic life of the leasehold improvements is long enough to allow for a significant residual value that could benefit the landlord at the end of the lease term. These tenant improvements are recorded as capital assets by Piedmont and depreciated, typically over the lease term. Payments made by tenants for tenant improvements owned by Piedmont are treated as deferred revenues and amortized into rental and tenant reimbursement revenue over the lease term. The timing of rental revenue recognition is largely dependent on our conclusion as to whether Piedmont, or its tenant, is the owner of tenant improvements at the leased property. When Piedmont owns the tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the finished space, which is typically when the improvements being recorded as Piedmont's asset are substantially complete. In some instances, Piedmont may cede control of the leased space to the tenant to be responsible for tenant-owned improvements for the space. In such arrangements, payments made by Piedmont to its tenant are treated as lease incentives and amortized as a reduction to rental and tenant reimbursement revenue over the lease term, which typically begins once the tenant takes possession of the unimproved space. Lease payments are typically comprised of both fixed base rental payments and separately billed variable lease payments for reimbursement of services performed by Piedmont for the tenant as prescribed by the lease. Fixed base rental payments, as well as any fixed portion of reimbursement income, are recognized on a straight-line basis over the lease term. Tenant reimbursements are recognized as revenue in the period that the related operating cost is incurred. Rents and tenant reimbursements collected in advance are recorded as deferred income in the accompanying consolidated balance sheets. Property management fee revenue - consists of revenue earned by Piedmont related to operating and managing office properties owned by other third-parties. Such income is within the scope of ASC 606, Revenue from Contracts with Customers ("ASC 606"). Because property management services represent a performance obligation that are satisfied over the length of the contract, not at any specific point in time, and have the same measure of transfer (time elapsed), property management fee revenue is recognized over time. Any variable consideration transferred as part of these management agreements is recognized in the quarter that the underlying cash receipts are collected, consistent with the allocation objective of allocating the transaction price in an amount that depicts the amount of consideration to which Piedmont expects to be entitled in exchange for transferring the promised service to the customer. Other property related income - consists of all other property related income from Piedmont's customers (tenants) that is not derived from a contract meeting the definition of a lease and is therefore also within the scope of ASC 606. Examples of such income include parking revenue and income from licenses with unrelated third-parties to place antennae and/or fiber optic cables in or on Piedmont's buildings. These services also represent a performance obligation that is satisfied over the length of the contract, not at any specific point in time, and has the same measure of transfer (time elapsed); therefore, revenue related to these licenses is also recognized over time. Gains on the sale of real estate assets, like all non-lease related revenue, are subject to a five-step model requiring that Piedmont identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue upon satisfaction of the performance obligations. In circumstances where Piedmont contracts to sell a property with material post-sale involvement, such involvement must be accounted for as a separate performance obligation in the contract and a portion of the sales price allocated to each performance obligation. When the post-sale involvement performance obligation is satisfied, the portion of the sales price allocated to it will be recognized as gain on sale of real estate assets. Property dispositions with no continuing involvement will continue to be recognized upon closing of the sale. In circumstances where Piedmont extends seller financing as part of a sale of real estate assets, Piedmont assesses the collectibility of the notes receivable as of each reporting period end. F-16 Table of Contents Index to Financial Statements Notes receivable that are deemed to be uncollectible or fully in default are reduced to their net realizable value, which approximates their fair value. Stock-based Compensation Piedmont has issued stock-based compensation in the form of restricted stock to its employees and board of directors. For employees, such compensation has been issued pursuant to Piedmont's Long-term Incentive Compensation ("LTIC") program. The LTIC program is comprised of an annual restricted stock grant component (the "Restricted Stock Award" program) and a multi-year performance share component (the "Performance Share" program). Awards granted pursuant to the Restricted Stock Award and Performance Share programs, as well as director's awards, are classified as equity awards or liability awards based on the underlying terms of the program agreement. Awards classified as equity awards are expensed straight-line over the vesting period, with issuances recorded as a reduction to additional paid in capital. Forfeitures are recorded when they occur. Awards classified as liability awards are remeasured at each reporting period over the service period, with issuances recorded as a reduction to accrued expense. The compensation expense recognized related to both of these award types is recorded as property operating costs for those employees whose job is related to property operations and as general and administrative expense for all other employees and board of directors in the accompanying consolidated statements of operations. Non-qualified Deferred Compensation Plan Piedmont previously offered a non-qualified deferred compensation plan ("NQDC Plan") to certain employees which allowed the employee to elect to defer receipt of compensation, including both cash and stock-based compensation, until future taxable years. As of December 31, 2019, Piedmont suspended the NQDC Plan so that no additional amounts may be deferred. Amounts deferred prior to the suspension of the NQDC Plan are invested in trading securities held in a "rabbi trust" and are measured using quoted market prices as of the reporting date, with changes in fair value recognized in net income/(loss). As of December 31, 2021 and 2020, Piedmont held approximately $ 0.9 million and $ 0.8 million, respectively, of these trading securities. Such investments are included in cash equivalents due to their short-term, liquid nature, with the corresponding liability included in accounts payable, accrued expenses, and accrued capital expenditures in the accompanying consolidated balance sheets. Net Income/(Loss) Available to Common Stockholders Per Share Net income/(loss) per share-basic is calculated as net income/(loss) available to common stockholders divided by the weighted average number of common shares outstanding during the period. Net income/(loss) per share-diluted is calculated as net income/(loss) available to common stockholders divided by the diluted weighted average number of common shares outstanding during the period, including the dilutive effect of nonvested restricted stock. The dilutive effect of nonvested restricted stock is calculated using the treasury stock method to determine the number of additional common shares that would become outstanding if the remaining unvested restricted stock awards vested. Further, Piedmont has elected to use the "end of the reporting period" convention when using the treasury stock method to calculate the dilutive effect of any shares issued pursuant to forward equity sale agreements in connection with Piedmont's ATM Program described above. Under this methodology, the assumed sale proceeds are calculated using the closing price of Piedmont's stock as of the end of the respective reporting period. Income Taxes Piedmont has elected to be taxed as a REIT under the Code, and has operated as such, beginning with its taxable year ended December 31, 1998. To qualify as a REIT, Piedmont must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income. As a REIT, Piedmont is generally not subject to federal income taxes, subject to fulfilling, among other things, its taxable income distribution requirement. However, Piedmont is subject to federal income taxes related to the operations conducted by its taxable REIT subsidiary which have been provided for in the financial statements. These operations resulted in approximately $( 379,000 ), $ 4,000 , and $ 160,000 in income tax expense/(recoveries) for the years ended December 31, 2021, 2020, and 2019, respectively, as a component of other income/(expense) in the accompanying consolidated statements of operations. Further, Piedmont is subject to certain state and local taxes related to the operations of properties in certain locations, which have been provided for in property operating costs in the accompanying consolidated financial statements. Reclassifications Certain prior period amounts presented in the accompanying consolidated balance sheets related to the 225 and 235 Presidential Way buildings, which were classified as held for sale as of June 30, 2021 and sold in January 2022 (see Note 13 ) have been reclassified as of December 31, 2020 to conform to the current period financial statement presentation. F-17 Table of Contents Index to Financial Statements 3. Acquisitions During the year ended December 31, 2021, Piedmont acquired the 999 Peachtree Street building, using cash on hand and available funds from the $ 500 Million Unsecured 2018 Line of Credit. Details are as follows: Property Metropolitan Statistical Area Date of Acquisition Ownership Percentage Acquired Rentable Square Feet Percentage Leased as of Acquisition Purchase Price (in millions) 999 Peachtree Street Atlanta, Georgia October 22, 2021 100 % 621,946 77 % $ 223.9 Further, Piedmont purchased the remaining undeveloped land parcels and common areas within the Galleria Atlanta development in November 2021 for approximately $ 4.0 million, giving Piedmont total control of all aspects of the office park. 4. Debt During the year ended December 31, 2021, Piedmont issued, through Piedmont OP, $ 300 million in aggregate principal amount of 2.75 % Senior Notes due 2032 (the “$ 300 Million Unsecured Senior Notes due 2032”), which mature on April 1, 2032. Upon issuance of the $ 300 Million Unsecured Senior Notes due 2032, Piedmont OP received proceeds of approximately $ 298.5 million, reflecting a discount of approximately $ 1.5 million which is amortized as interest expense using the effective interest method over the 10-year and 6-month term of the $ 300 Million Unsecured Senior Notes due 2032. In addition, in conjunction with the issuance, Piedmont settled one forward starting interest rate swap, consisting of a notional amount of $ 50 million. The settlement of the swap resulted in a gain of approximately $ 0.6 million that was recorded as accumulated other comprehensive income and will be amortized as a decrease in interest expense over 10 years (see Note 5 for further detail). The proceeds from the $ 300 Million Unsecured Senior Notes due 2032 were used to fully repay, without penalty, the Amended and Restated $ 300 Million Unsecured 2011 Term Loan. Interest on the $ 300 Million Unsecured Senior Notes due 2032 is payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2022. The $ 300 Million Unsecured Senior Notes due 2032 are fully and unconditionally guaranteed on a senior unsecured basis by Piedmont. Piedmont OP may, at its option, redeem the $ 300 Million Unsecured Senior Notes due 2032, in whole or in part, prior to January 1, 2032, at a redemption price equal to the greater of (i) 100 % of the principal amount of the $ 300 Million Unsecured Senior Notes due 2032 to be redeemed and (ii) a “make-whole” amount, plus any unpaid accrued interest. In addition, at any time on or after January 1, 2032, Piedmont OP may, at its option, redeem the $ 300 Million Unsecured Senior Notes due 2032, in whole or in part, at a redemption price equal to 100 % of the principal amount of the $ 300 Million Unsecured Senior Notes due 2032 to be redeemed plus unpaid accrued interest. The $ 300 Million Unsecured Senior Notes due 2032 are subject to certain typical covenants that, subject to certain exceptions: (a) limit the ability of Piedmont and Piedmont OP to, among other things, incur additional secured and unsecured indebtedness; (b) limit the ability of Piedmont and Piedmont OP to merge, consolidate, sell, lease or otherwise dispose of their properties and assets substantially as an entirety; and (c) require Piedmont to maintain a pool of unencumbered assets. The $ 300 Million Unsecured Senior Notes due 2032 are also subject to customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the $ 300 Million Unsecured Senior Notes due 2032 to become or to be declared due and payable. F-18 Table of Contents Index to Financial Statements The following table summarizes the terms of Piedmont’s indebtedness outstanding as of December 31, 2021 and 2020, including net discounts/premiums and unamortized debt issuance costs (in thousands): Facility Stated Rate Effective Rate (2) Maturity Amount Outstanding as of 2021 (1) 2020 Secured (Fixed) $ 35 Million Fixed-Rate Loan 5.55 % — % 9/1/2021 (3) $ — $ 27,610 Net premium and unamortized debt issuance costs — 326 Subtotal — 27,936 Unsecured (Variable and Fixed) Amended and Restated $ 300 Million Unsecured 2011 Term Loan LIBOR + 1.00 % — % 11/30/2021 (4) — 300,000 $ 500 Million Unsecured 2018 Line of Credit (5) LIBOR + 0.90 % 1.01 % 9/30/2022 (6) 290,000 5,000 $ 350 Million Unsecured Senior Notes due 2023 3.40 % 3.43 % 6/01/2023 350,000 350,000 $ 400 Million Unsecured Senior Notes due 2024 4.45 % 4.10 % 3/15/2024 400,000 400,000 $ 250 Million Unsecured 2018 Term Loan LIBOR + 0.95 % 2.05 % (7) 3/31/2025 250,000 250,000 $ 300 Million Unsecured Senior Notes due 2030 3.15 % 3.90 % 8/15/2030 300,000 300,000 $ 300 Million Unsecured Senior Notes due 2032 2.75 % 2.78 % (8) 4/1/2032 300,000 — Discounts and unamortized debt issuance costs ( 12,210 ) ( 10,932 ) Subtotal/Weighted Average (9) 2.93 % 1,877,790 1,594,068 Total $ 1,877,790 $ 1,622,004 (1) All of Piedmont’s outstanding debt as of December 31, 2021 is interest-only until maturity. (2) Effective rate after consideration of settled or in-place interest rate swap agreements and issuance discounts. (3) Repaid on June 1, 2021 without penalty. (4) Repaid on September 20, 2021 without penalty. (5) On a periodic basis, Piedmont may select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion of the principal. All LIBOR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating. (6) Piedmont may extend the term for up to one additional year (through two available six months extensions to a final extended maturity date of September 29, 2023) provided Piedmont is not then in default and upon payment of extension fees. (7) The facility has a stated variable rate; however, Piedmont has entered into interest rate swap agreements which effectively fix, exclusive of changes to Piedmont's credit rating, $ 100 million of the principal balance to 3.56 % through the maturity date of the loan. For the remaining variable portion of the loan, Piedmont may periodically select from multiple interest rate options, including the prime rate and various-length LIBOR locks on all or a portion of the principal. All LIBOR selections are subject to an additional spread over the selected rate based on Piedmont’s current credit rating. The rate presented is the weighted-average rate for the effectively fixed and variable portions of the debt outstanding as of December 31, 2021 (see Note 5 for more detail). (8) The $ 300 Million Unsecured Senior Notes due 2032 have a fixed coupon rate of 2.75 %, however, as a result of the issuance of the notes at a discount and after consideration of the impact of a settled interest rate swap agreement, the effective interest rate on this debt is 2.78 %. (9) Weighted average is based on contractual balance of outstanding debt and the stated or effectively fixed interest rates as of December 31, 2021. F-19 Table of Contents Index to Financial Statements A summary of Piedmont's consolidated principal outstanding for aggregate debt maturities of its indebtedness as of December 31, 2021, is provided below (in thousands): 2022 $ 290,000 (1) 2023 350,000 2024 400,000 2025 250,000 2026 — Thereafter 600,000 Total $ 1,890,000 (1) Includes the balance outstanding as of December 31, 2021 on the $ 500 million Unsecured 2018 Line of Credit of $ 290 million. However, Piedmont may extend the term for up to one additional year (through two available six months extensions to a final extended maturity date of September 29, 2023) provided Piedmont is not then in default and upon payment of extension fees. Piedmont’s weighted-average interest rate as of December 31, 2021 and 2020, for the aforementioned borrowings was approximately 2.93 % and 3.03 %, respectively. Piedmont made interest payments on all indebtedness, including interest rate swap cash settlements, of approximately $ 49.4 million, $ 50.7 million, and $ 64.0 million during the years ended December 31, 2021, 2020, and 2019, respectively. Also, Piedmont capitalized interest of approximately $ 3.7 million, $ 1.0 million, and $ 2.1 million for the years ended December 31, 2021, 2020, and 2019, respectively. As of December 31, 2021, Piedmont believes it was in compliance with all financial covenants associated with its debt instruments. See Note 6 for a description of Piedmont’s estimated fair value of debt as of December 31, 2021. 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. In certain situations, Piedmont has entered into derivative financial instruments such as interest rate swap agreements and other similar agreements to manage interest rate risk exposure arising from current or future variable rate debt transactions. Interest rate swap agreements involve the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. 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 year ended December 31, 2021, Piedmont entered into, and subsequently settled, one forward starting interest rate swap agreement with a notional value of $ 50 million to hedge the risk of changes in the interest-related cash flows associated with the issuance of the $ 300 Million Unsecured Senior Notes due 2032 (see Note 4 ). The settlement resulted in a gain of approximately $ 0.6 million, which was recorded as accumulated OCI and is being amortized as an offset to interest expense over the following ten years . During the year ended December 31, 2020, Piedmont entered into and subsequently settled four forward starting interest rate swap agreements with a total notional value of $ 200 million to hedge the risk of changes in the interest-related cash flows associated with the issuance of the $ 300 Million Unsecured Senior Notes due 2030. The settlement resulted in a loss of approximately $ 19.9 million, which was recorded as accumulated OCI and is being amortized as additional interest expense over the ten-year term of the $ 300 Million Unsecured Senior Notes due 2030. Finally, as of December 31, 2021, Piedmont was party to two other interest rate swap agreements, which are designated as effective cash flow hedges and hedge the variable cash flows covering $ 100 million of the $ 250 Million Unsecured 2018 Term Loan. The maximum length of time over which Piedmont is hedging its exposure to the variability in future cash flows related to these interest rate swap agreements is 39 months. F-20 Table of Contents Index to Financial Statements A detail of Piedmont’s interest rate derivatives outstanding as of December 31, 2021 is as follows: Interest Rate Derivatives: Number of Swap Agreements Associated Debt Instrument Notional Amount (in millions) Effective Date Maturity Date Interest rate swaps 2 $ 250 Million Unsecured 2018 Term Loan $ 100 3/29/2018 3/31/2025 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 December 31, 2021 and 2020, respectively, is as follows (in thousands): Interest rate swaps classified as: December 31, 2021 December 31, 2020 Gross derivative assets $ — $ — Gross derivative liabilities ( 4,924 ) ( 9,834 ) Net derivative liability $ ( 4,924 ) $ ( 9,834 ) The gain/(loss) on Piedmont's interest rate derivatives, including previously settled forward starting interest rate swaps, that was recorded in OCI and the accompanying consolidated statements of operations as a component of interest expense for the years ended December 31, 2021, 2020, and 2019, respectively, was as follows (in thousands): Interest Rate Swaps in Cash Flow Hedging Relationships: 2021 2020 2019 Amount of gain/(loss) recognized in OCI $ 2,994 $ ( 26,794 ) $ ( 5,659 ) Amount of previously recorded gain/(loss) reclassified from OCI into Interest Expense $ ( 2,952 ) $ ( 1,727 ) $ 1,836 Total amount of Interest Expense presented in the consolidated statements of operations $ ( 51,292 ) $ ( 54,990 ) $ ( 61,594 ) Total amount of Loss on Extinguishment of Debt presented in the consolidated statements of operations $ — $ ( 9,336 ) $ — Piedmont estimates that approximately $ 2.5 million will be reclassified from OCI as an increase to interest expense over the next twelve months. Piedmont did not recognize any hedge ineffectiveness on its cash flow hedges during the three years ended December 31, 2021. 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, or approximately $ 5.0 million as of December 31, 2021. Additionally, Piedmont has rights of set-off under certain of its derivative agreements related to potential te rmination fees and amounts payable under the agreements, if a termination were to occur. F-21 Table of Contents Index to Financial Statements 6. Fair Value Measurements of Financial Instruments Piedmont considers its cash and cash equivalents, tenant receivables, notes receivable, 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 December 31, 2021 and 2020, respectively (in thousands): December 31, 2021 December 31, 2020 Financial Instrument Carrying Value Estimated Fair Value Level Within Fair Value Hierarchy Carrying Value Estimated Fair Value Level Within Fair Value Hierarchy Assets: Cash and cash equivalents (1) $ 7,419 $ 7,419 Level 1 $ 7,331 $ 7,331 Level 1 Tenant receivables, net (1) $ 2,995 $ 2,995 Level 1 $ 8,448 $ 8,448 Level 1 Notes receivable $ 118,500 $ 120,075 Level 2 $ 118,500 $ 118,500 Level 2 Restricted cash and escrows (1) $ 1,441 $ 1,441 Level 1 $ 1,883 $ 1,883 Level 1 Liabilities: Accounts payable and accrued expenses (1) $ 45,065 $ 45,065 Level 1 $ 45,345 $ 45,345 Level 1 Interest rate swaps $ 4,924 $ 4,924 Level 2 $ 9,834 $ 9,834 Level 2 Debt, net $ 1,877,790 $ 1,938,563 Level 2 $ 1,622,004 $ 1,690,377 Level 2 (1) For the periods presented, the carrying value of these financial instruments approximates estimated fair value due to its short-term maturity. Piedmont's notes receivable and debt were carried at book value as of December 31, 2021 and 2020; however, Piedmont's estimate of the fair value of each of these financial instruments as of each period end is disclosed in the table above. Piedmont issued notes receivable in conjunction with the sale of properties to an unrelated third-party buyer in October 2020. As the facts and circumstances as of December 31, 2020 were substantially unchanged since the issuance of the notes receivable in October 2020, Piedmont determined that the book value of the notes approximated their estimated fair value as of December 31, 2020. Piedmont uses widely accepted valuation techniques including discounted cash flow analysis based on the contractual terms of its notes receivables and debt, including the period to maturity of each note receivable and debt facility, and uses observable market-based inputs for similar loan and debt facilities which have transacted recently in the market. Scaling adjustments are made to these inputs to make them applicable to the remaining life of Piedmont's notes receivables and outstanding debt. Consequently, the estimated fair values of the notes receivable as of December 31, 2021 and debt as of both December 31, 2020 and December 31, 2021 are considered to be based on significant other observable inputs (Level 2). Piedmont’s interest rate swap agreements presented above, and as further discussed in Note 5 , are classified as “Interest rate swap” liabilities in the accompanying consolidated balance sheets and were carried at estimated fair value as of December 31, 2021 and 2020. 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 that both Piedmont and the counterparties were at risk for 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 December 31, 2021 and 2020, 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 derivative financial instruments to be Level 3 measurements. Piedmont has not changed its valuation technique for estimating the fair value of its notes receivable, debt, or interest rate swap agreements. F-22 Table of Contents Index to Financial Statements 7. Impairment Loss on Real Estate Assets Piedmont recorded the following impairment losses on real estate assets for the years ended December 31, 2021, 2020, and 2019 (in thousands): 2021 2020 2019 Two Pierce Place (1) $ 41,000 $ — $ — The Dupree (2) — — 1,953 600 Corporate Drive (3) — — 7,000 Total impairment loss on real estate assets $ 41,000 $ — $ 8,953 (1) Management shortened the intended hold period for the property during the quarter ended December 31, 2021, and in doing so determined that the carrying value would not be recovered from the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. As a result, Piedmont recognized a loss on impairment calculated as the difference between the carrying value of the asset and the estimated fair value less costs to sell. The estimated fair value was determined based on the net contract price subsequently entered into with an unrelated, third-party purchaser. The fair value measurements used in the evaluation of the non-financial assets above are considered to be Level 1 valuations within the fair value hierarchy as defined by GAAP, as there are direct observations and transactions involving the assets by unrelated, third-party purchasers. (2) The impairment loss recognized was the result of reducing the asset's carrying value to reflect its fair value, estimated based on the net contract price negotiated with a unrelated, third-party purchaser. (3) Management shortened the intended hold period for the property, and in doing so determined that the carrying value would not be recovered from the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. As a result, Piedmont recognized a loss on impairment calculated as the difference between the carrying value of the asset and the estimated fair value less costs to sell. The estimated fair value was determined using widely available market quotations for similar properties, as well as discounted cash flow analysis. Key assumptions used in the analysis were a capitalization and discount rate of 14 % and estimated selling costs of 0.75 %. 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 December 31, 2021, Piedmont had one individually significant unrecorded tenant allowance commitment of approximately $ 18.4 million for the approximately 20-year , approximately 520,000 square foot renewal and expansion on behalf of Piedmont's largest tenant, the State of New York at the 60 Broad Street building in New York City. This commitment 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 were no reductions in rental and reimbursement revenues related to such tenant audits/disputes during the year ended December 31, 2021 or 2020. However, Piedmont recorded net recoveries of previously recognized reductions in rental and reimbursement revenues of $ 0.6 million related to tenant audits/disputes during the year ended December 31, 2019. Contingencies Related to the COVID-19 Pandemic The long-term impacts of the COVID-19 pandemic on our tenants and the global economy remain unclear and any adverse effect on certain of Piedmont's tenant's operating results or future leasing decisions could, in turn, adversely impact Piedmont's business, financial condition and results of operations. F-23 Table of Contents Index to Financial Statements Litigation Piedmont is from time to time a party to legal proceedings, which arise in the ordinary course of its business. None of these ordinary course legal proceedings are reasonably likely to have a material adverse effect on results of operations or financial condition. Piedmont is not aware of any such legal proceedings contemplated by governmental authorities. 9. Related-Party Transactions During the year ended December 31, 2019, Piedmont entered into employment or retirement agreements with certain of its current and former executive officers as more fully described in its Definitive Proxy Statement and Current Report on Form 8-K filed on March 19, 2019. Further, during the years ended December 31, 2021, 2020, and 2019, Piedmont recognized approximately $ 0.0 million , $ 0.1 million, and $ 0.2 million, respectively, of expense related to a consulting agreement with its former Chief Investment Officer. There were no other related-party transactions during the three years ended December 31, 2021 . 10. Stock Based Compensation The Compensation Committee of Piedmont's board of directors has typically granted deferred stock award units to all of Piedmont's employees based upon the previous year's financial results measured against various board approved performance metrics. Most employee awards vest ratably over three years . In addition, Piedmont's independent directors receive an annual grant of deferred stock award units for services rendered and such awards vest over a one year service period. Certain management employees' long-term equity incentive program is split equally between the deferred stock award units described above and 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 target incentives for these certain employees, as well as the peer group to be used for comparative purposes, are predetermined by the board of directors, advised by an outside compensation consultant. None of the shares potentially earned are awarded until the end of the multi-year performance period and vest upon award. The grant date fair value of the multi-year performance share awards is estimated using the Monte Carlo valuation method. F-24 Table of Contents Index to Financial Statements A rollforward of Piedmont's equity based award activity for the year ended December 31, 2021 is as follows: Shares Weighted-Average Grant Date Fair Value Unvested and Potential Stock Awards as of December 31, 2020 1,009,530 $ 24.37 Deferred Stock Awards Granted 331,354 $ 17.24 Increase in Estimated Potential Share Awards based on relative TSR Performance for the performance period to date 272,297 $ 24.47 Performance Stock Awards Vested ( 200,674 ) $ 23.52 Deferred Stock Awards Vested ( 279,136 ) $ 18.78 Deferred Stock Awards Forfeited ( 34,190 ) $ 19.56 Unvested and Potential Stock Awards as of December 31, 2021 1,099,181 $ 23.97 The following table provides additional information regarding stock award activity during the years ended 2021, 2020, and 2019 (in thousands except for per share amounts): 2021 2020 2019 Weighted-Average Grant Date Fair Value of Deferred Stock Granted During the Period $ 17.24 $ 22.39 $ 21.02 Total Grant Date Fair Value of Deferred Stock Vested During the Period $ 5,242 $ 4,826 $ 8,658 Share-based Liability Awards Paid During the Period (1) $ 3,610 $ 4,116 $ 6,683 (1) Amounts reflect the issuance of performance share awards related to the 2018-20, 2017-19, and 2016-18 Performance Share Plans during the years ended December 31, 2021, 2020, and 2019, respectively, as well as performance share award liabilities settled in cash in July 2019 for retirement and separation associated with the senior management transition on June 30, 2019. F-25 Table of Contents Index to Financial Statements A detail of Piedmont’s outstanding employee restricted stock awards and programs as of December 31, 2021 is as follows: Date of grant Type of Award Net Shares Granted (1) Grant Date Fair Value Vesting Schedule Unvested and Potential Shares as of December 31, 2021 May 3, 2019 Deferred Stock Award 250,643 $ 21.04 Of the shares granted, 25 % vested on the date of grant, and 25 % vested or will vest on May 3, 2020, 2021, and 2022, respectively. 72,071 May 3, 2019 Fiscal Year 2019-2021 Performance Share Program — $ 29.43 Shares awarded, if any, will vest immediately upon determination of award in 2022. 267,744 (2) February 19, 2020 Deferred Stock Award 158,960 $ 24.41 Of the shares granted, 25 % vested on the date of grant, and 25 % vested or will vest on February 19, 2021, 2022, and 2023, respectively. 86,294 March 19, 2020 Fiscal Year 2020-2022 Performance Share Program — $ 25.83 Shares awarded, if any, will vest immediately upon determination of award in 2023. 249,518 (2) February 17, 2021 Deferred Stock Award 266,172 $ 17.15 Of the shares granted, 25 % vested on the date of grant, and 25 % vested or will vest on February 17, 2022, 2023, and 2024, respectively. 200,611 February 18, 2021 Fiscal Year 2021-2023 Performance Share Program — $ 23.04 Shares awarded, if any, will vest immediately upon determination of award in 2024. 187,866 (2) May 11, 2021 Deferred Stock Award-Board of Directors 35,077 $ 17.96 Of the shares granted, 100 % will vest by May 11, 2022. 35,077 Total 1,099,181 (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 December 31, 2021. (2) Estimated based on Piedmont's cumulative TSR for the respective performance period through December 31, 2021. 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 years ended December 31, 2021, 2020, and 2019, Piedmont recognized approximately $ 11.0 million, $ 9.7 million and $ 15.1 million of compensation expense related to stock awards, of which approximately $ 9.7 million, $ 8.5 million and $ 13.6 million related to the amortization of unvested shares and potential stock awards and the fair value adjustment for liability awards, respectively. During the year ended December 31, 2021, a total of 297,403 shares (net of shares surrendered upon vesting to satisfy required minimum tax withholding obligations) were issued to employees and independent directors. As of December 31, 2021, approximately $ 6.8 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 approximately one year . 11. Earnings Per Share There are no adjustments to “Net income/(loss) applicable to Piedmont” for the diluted earnings per share computations. Net income/(loss) per share-basic is calculated as net income/(loss) available to common stockholders divided by the weighted average number of common shares outstanding during the period. Net income/(loss) per share-diluted is calculated as net income/(loss) available to common stockholders divided by the diluted weighted average number of common shares F-26 Table of Contents Index to Financial Statements outstanding during the period, including unvested deferred stock awards. Diluted weighted average number of common shares reflects the potential dilution under the treasury stock method that would occur if the remaining unvested and potential stock awards vested and resulted in additional common shares outstanding. Unvested and potential stock awards which are determined to be anti-dilutive are not included in the calculation of diluted weighted average common shares. For each of the years ended December 31, 2021, 2020, and 2019, Piedmont calculated and excluded weighted average outstanding anti-dilutive shares of approximately 1,114,025 , 289,681 , and 156,317 , respectively. The following table reconciles the denominator for the basic and diluted earnings per share computations shown on the consolidated statements of operations for the years ended December 31, 2021, 2020, and 2019, respectively (in thousands): 2021 2020 2019 Weighted-average common shares—basic 123,978 125,730 125,709 Plus: Incremental weighted-average shares from time-vested deferred and performance stock awards — 374 473 Weighted-average common shares—diluted 123,978 126,104 126,182 12. Operating Leases Piedmont’s real estate assets are leased to tenants under operating leases for which the terms vary, including certain provisions to extend the lease term, options for early terminations subject to specified penalties, and other terms and conditions as negotiated. Piedmont retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant; however, generally they are not significant. Exposure to credit risk is limited to the extent that tenant receivables exceed this amount. Security deposits liabilities related to tenant leases are included in accounts payable, accrued expenses, and accrued capital expenditures in the accompanying consolidated balance sheets. The future minimum rental income from Piedmont’s investment in real estate assets under non-cancelable operating leases as of December 31, 2021 is presented below (in thousands): Years ending December 31: 2022 $ 410,387 2023 390,093 2024 357,834 2025 316,986 2026 270,815 Thereafter 1,152,345 Total $ 2,898,460 Piedmont recognized the following fixed and variable lease payments, which together comprised rental and tenant reimbursement revenue in the accompanying consolidated statements of operations for the years ended December 31, 2021, 2020, and 2019, respectively, as follows (in thousands): 2021 2020 2019 Fixed payments $ 427,174 $ 433,841 $ 418,245 Variable payments 87,445 86,112 93,660 Total Rental and Tenant Reimbursement Revenue $ 514,619 $ 519,953 $ 511,905 Operating leases where Piedmont is the lessee relat e primarily to office space in buildings owned by third parties. Piedmont's right to use asset and corresponding lease liability , using Piedmont's incremental borrowing rate as the lease discount rate, was approximately $ 0.1 million for the year ended December 31, 2021 and approximately $ 0.2 million for the year ended December 31, 2020. For both the years ended December 31, 2021 and December 31, 2020, Piedmont recognized approximately F-27 Table of Contents Index to Financial Statements $ 0.1 million of operating lease costs. As of December 31, 2021, the lease term of Piedmont's right of use asset is less than 1 year, and the discount rate is 1.06 %. 13. Property Dispositions and Assets Held for Sale Property Dispositions None of Piedmont's property dispositions during the three years ended December 31, 2021 met the criteria to be reported as discontinued operations. The operational results and gain on sale of real estate assets are presented as continuing operations in the accompanying consolidated statements of operations, unless otherwise indicated below. Details of such properties sold are presented below (in thousands): Buildings Sold Location Date of Sale Gain on Sale of Real Estate Assets Net Sales Proceeds One Independence Square Washington, D.C. February 28, 2019 $ 33,176 $ 163,623 The Dupree Atlanta, Georgia September 4, 2019 $ — (1) $ 12,631 500 West Monroe Street Chicago, Illinois October 28, 2019 $ 157,739 $ 408,851 1901 Market Street Philadelphia, Pennsylvania June 25, 2020 $ 191,030 $ 350,805 New Jersey Portfolio Various (2) October 28, 2020 $ 14,636 $ 9,289 (3) (1) As discussed in Note 7 above, Piedmont recognized an impairment loss prior to the sale of the property. (2) The New Jersey Portfolio is comprised of the following three properties: 200 Bridgewater Crossing in Bridgewater, New Jersey; 400 Bridgewater Crossing in Bridgewater, New Jersey; and 600 Corporate Drive in Lebanon, New Jersey. (3) Piedmont accepted a secured $ 102.8 million promissory note from the buyer, which matures on October 31, 2023 and bears interest at 6 % per annum. The note may be extended for three available one-year periods upon payment of applicable extension fees. Further, Piedmont also accepted a mezzanine note for $ 15.7 million, bearing interest at 13.55 % per annum, which may be repaid any time before the October 31, 2023 maturity without penalty. F-28 Table of Contents Index to Financial Statements Assets Held for Sale On January 28, 2022, Piedmont sold the 225 and 235 Presidential Way assets in Woburn, Massachusetts for $ 129.0 million, or $ 293 per square foot. The assets, which were assigned to the Boston geographic reportable segment, met the criteria for held for sale classification in the accompanying consolidated balance sheets both as of December 31, 2021, as well as December 31, 2020 for comparability. Details of amounts held for sale as of December 31, 2021 and 2020 are presented below (in thousands): December 31, 2021 December 31, 2020 Real estate assets held for sale, net: Land $ 7,750 $ 7,750 Building and improvements, less accumulated depreciation of $ 16,699 and $ 16,021 as of December 31, 2021, and 2020, respectively 55,110 52,704 Construction in progress 1,027 — Total real estate assets held for sale, net $ 63,887 $ 60,454 Other assets held for sale, net: Straight-line rent receivables $ 2,966 $ 2,356 Deferred lease costs, less accumulated amortization of $ 996 and $ 802 as of December 31, 2021 and 2020, respectively 5,427 1,872 Total other assets held for sale, net $ 8,393 $ 4,228 14. Supplemental Disclosures for the Statement of Consolidated Cash Flows Certain noncash investing and financing activities for the years ended December 31, 2021, 2020, and 2019 (in thousands) are outlined below: 2021 2020 2019 Accrued capital expenditures and deferred lease costs $ 24,817 $ 20,103 $ 38,366 Change in accrued dividends $ ( 365 ) $ ( 744 ) $ ( 545 ) Change in accrued share repurchases as part of an announced plan $ ( 685 ) $ 685 $ ( 4,417 ) Notes receivable issued in conjunction with property dispositions $ — $ 118,500 $ — 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 years ended December 31, 2021, 2020, and 2019 to the consolidated balance sheets for the respective period (in thousands): 2021 2020 2019 Cash and cash equivalents, beginning of period $ 7,331 $ 13,545 $ 4,571 Restricted cash and escrows, beginning of period 1,883 1,841 1,463 Total cash, cash equivalents, and restricted cash and escrows as presented in the accompanying consolidated statement of cash flows, beginning of period $ 9,214 $ 15,386 $ 6,034 Cash and cash equivalents, end of period $ 7,419 $ 7,331 $ 13,545 Restricted cash and escrows, end of period 1,441 1,883 1,841 Total cash, cash equivalents, and restricted cash and escrows as presented in the accompanying consolidated statement of cash flows, end of period $ 8,860 $ 9,214 $ 15,386 F-29 Table of Contents Index to Financial Statements 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. 15. Income Taxes Piedmont’s income tax basis net income/(loss) for the years ended December 31, 2021, 2020, and 2019, is calculated as follows (in thousands): 2021 2020 2019 GAAP basis financial statement net income/(loss) $ ( 1,153 ) $ 232,688 $ 229,261 Increase/(decrease) in net income/(loss) resulting from: Depreciation and amortization expense recognized for financial reporting purposes in excess of amounts recognized for income tax purposes 75,969 73,784 10,381 Rental income accrued for income tax purposes less than amounts for financial reporting purposes ( 18,798 ) ( 25,726 ) ( 34,804 ) Net amortization of above/below-market lease intangibles for income tax purposes in excess of amounts for financial reporting purposes ( 9,465 ) ( 11,625 ) ( 7,698 ) Gain on disposal of property for financial reporting purposes in excess of amounts for income tax purposes — ( 222,037 ) ( 85,463 ) Taxable income or loss of Piedmont Washington Properties, Inc., in excess of amount for financial reporting purposes 3,518 1,345 411 Other expenses, including impairment loss on real estate assets, for financial reporting purposes in excess of amounts for income tax purposes 51,095 10,970 23,127 Taxable income for POH in excess of/(less than) amount for financial reporting purposes ( 654 ) 1,499 175 Income tax basis net income, prior to dividends paid deduction $ 100,512 $ 60,898 $ 135,390 For income tax purposes, dividends to common stockholders are characterized as ordinary income, capital gains, or as a return of a stockholder’s invested capital. The composition of Piedmont’s distributions per common share is presented below: 2021 2020 2019 Ordinary income 96.34 % 91.91 % 29.82 % Return of capital 3.66 % 8.09 % — % Capital gains — % — % 70.18 % 100 % 100 % 100 % Piedmont has no uncertain tax positions as of December 31, 2021 and 2020, respectively. Piedmont recognized approximately $ 0 , $ 1.0 million, $ 1.4 million of recoveries of previously recorded estimated accrued interest and penalties for the years ended December 31, 2021, 2020 and 2019. The tax years 2018 to 2020 remain open to examination by various federal and state taxing authorities. 16. Segment Information Piedmont's President and Chief Executive Officer has been identified as Piedmont's chief operating decision maker ("CODM"), as defined by GAAP. The CODM evaluates Piedmont's portfolio and assesses the ongoing operations and performance of its properties utilizing the following geographic segments: Dallas, Atlanta, Washington, D.C., Minneapolis, Boston, Orlando, and New York. These operating segments are also Piedmont’s reportable segments. As of December 31, 2021, Piedmont also owned two properties in Houston and one property in Chicago 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. Subsequent to December 31, 2021, Piedmont sold the last remaining asset owned in the Chicago office market (see Note 17 ). Further, Piedmont does not maintain a significant presence or anticipate further investment in these markets. These three properties are included in "Corporate and 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. F-30 Table of Contents Index to Financial Statements Accrual-based net operating income ("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 from lease revenues and other property related income. 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 lease revenue and other property related income included in NOI by geographic reportable segment (in thousands): Years Ended December 31, 2021 2020 2019 Dallas $ 110,729 $ 101,727 $ 55,346 Atlanta 98,330 95,403 75,699 Washington, D.C. 60,329 59,760 64,481 Minneapolis 61,563 61,465 64,318 Boston 65,445 61,338 64,739 Orlando 54,603 54,886 57,084 New York 52,454 69,827 75,587 Total reportable segments 503,453 504,406 457,254 Corporate and other 25,257 30,618 75,924 Total Revenues $ 528,710 $ 535,024 $ 533,178 The following table presents NOI by geographic reportable segments (in thousands): Years Ended December 31, 2021 2020 2019 Dallas $ 66,155 $ 59,845 $ 29,438 Atlanta 62,772 60,276 47,287 Washington, D.C. 36,914 36,696 41,167 Minneapolis 32,538 33,588 35,610 Boston 45,587 41,722 44,016 Orlando 33,449 34,427 35,433 New York 30,049 38,990 44,036 Total reportable segments 307,464 305,544 276,987 Corporate and other 10,163 13,915 43,637 Total NOI $ 317,627 $ 319,459 $ 320,624 F-31 Table of Contents Index to Financial Statements A reconciliation of Net income/(loss) applicable to Piedmont to NOI is presented below (in thousands): Years Ended December 31, 2021 2020 2019 Net income/(loss) applicable to Piedmont $ ( 1,153 ) $ 232,688 $ 229,261 Management fee revenue (1) ( 1,269 ) ( 1,495 ) ( 2,518 ) Depreciation and amortization 206,608 203,869 182,682 Impairment loss on real estate assets 41,000 — 8,953 General and administrative expenses 30,252 27,464 37,895 Interest expense 51,292 54,990 61,594 Other income ( 9,089 ) ( 1,724 ) ( 228 ) Loss on extinguishment of debt — 9,336 — Gain on sale of real estate assets — ( 205,666 ) ( 197,010 ) Net loss applicable to noncontrolling interests ( 14 ) ( 3 ) ( 5 ) NOI $ 317,627 $ 319,459 $ 320,624 (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. 17. Subsequent Events Declaration of Dividend for the First Quarter 2022 On February 2, 2022, the board of directors declared a dividend for the first quarter 2022 in the amount of $ 0.21 per share on its common stock to stockholders of record as of the close of business on February 25, 2022, payable on March 18, 2022. Sale of Two Pierce Place On January 25, 2022, Piedmont sold the Two Pierce Place building in Itasca, Illinois, the last remaining asset owned in the Chicago office market, for a sales price of approximately $ 24.0 million. Sale of 225/235 Presidential Way On January 28, 2022, Piedmont sold the 225 and 235 Presidential Way assets in Woburn, Massachusetts for $ 129.0 million. F-32 Table of Contents Index to Financial Statements Piedmont Office Realty Trust, Inc. Schedule III - Real Estate and Accumulated Depreciation December 31, 2021 (dollars in thousands) Initial Cost to Piedmont Gross Amount of Which Carried at December 31, 2021 Description (1) Location Ownership Percentage Encumbrances Land Buildings and Improvements Total (2) Costs Capitalized Subsequent to Acquisition (3) Land Buildings and Improvements Total (4) Accumulated Depreciation and Amortization Date of Construction Date Acquired Life on which Depreciation and Amortization in Latest Statements of Comprehensive Income is Computed (in years) (5) 1430 ENCLAVE PARKWAY Houston, TX 100 % None 7,100 37,915 45,015 7,248 5,506 46,757 52,263 22,978 1994 12/21/2000 0 - 40 CRESCENT RIDGE II Minnetonka, MN 100 % None 7,700 45,154 52,854 13,398 8,021 58,231 66,252 30,731 2000 12/21/2000 0 - 40 90 CENTRAL STREET Boxborough, MA 100 % None 3,642 29,497 33,139 3,437 3,642 32,934 36,576 15,631 2001 5/3/2002 0 - 40 6031 CONNECTION DRIVE Irving, TX 100 % None 3,157 43,656 46,813 8,461 3,157 52,117 55,274 23,355 1999 8/15/2002 0 - 40 6021 CONNECTION DRIVE Irving, TX 100 % None 3,157 42,662 45,819 11,546 3,157 54,208 57,365 27,836 2000 8/15/2002 0 - 40 6011 CONNECTION DRIVE Irving, TX 100 % None 3,157 29,034 32,191 18,524 3,157 47,558 50,715 17,235 1999 8/15/2002 0 - 40 US BANCORP CENTER Minneapolis, MN 100 % None 11,138 175,629 186,767 31,266 11,138 206,895 218,033 98,531 2000 5/1/2003 0 - 40 GLENRIDGE HIGHLANDS TWO Atlanta, GA 100 % None 6,662 69,031 75,693 ( 7,667 ) 6,662 61,364 68,026 26,905 2000 8/1/2003 0 - 40 400 VIRGINIA AVE Washington, DC 100 % None 22,146 49,740 71,886 7,109 22,146 56,849 78,995 22,783 1985 11/19/2003 0 - 40 4250 NORTH FAIRFAX DRIVE Arlington, VA 100 % None 13,636 70,918 84,554 18,285 13,636 89,203 102,839 39,660 1998 11/19/2003 0 - 40 1225 EYE STREET Washington, DC 98.1 % None 21,959 47,602 69,561 9,961 21,959 57,563 79,522 28,068 1986 11/19/2003 0 - 40 1201 EYE STREET Washington, DC 98.6 % None 31,985 63,139 95,124 12,836 31,985 75,975 107,960 32,023 2001 11/19/2003 0 - 40 60 BROAD STREET New York, NY 100 % None 32,522 168,986 201,508 79,454 60,708 220,254 280,962 69,099 1962 12/31/2003 0 - 40 1414 MASSACHUSETTS AVENUE Cambridge, MA 100 % None 4,210 35,821 40,031 ( 5,837 ) 4,365 29,829 34,194 12,625 1873 1/8/2004 0 - 40 ONE BRATTLE SQUARE Cambridge, MA 100 % None 6,974 64,940 71,914 ( 20,120 ) 7,113 44,681 51,794 20,315 1991 2/26/2004 0 - 40 3100 CLARENDON BOULEVARD Arlington, VA 100 % None 11,700 69,705 81,405 50,889 11,791 120,503 132,294 43,413 1987 12/9/2004 0 - 40 LAS COLINAS CORPORATE CENTER I Irving, TX 100 % None 3,912 18,830 22,742 ( 3,183 ) 2,543 17,016 19,559 7,238 1998 8/31/2006 0 - 40 LAS COLINAS CORPORATE CENTER II Irving, TX 100 % None 4,496 29,881 34,377 ( 1,721 ) 2,543 30,113 32,656 13,229 1998 8/31/2006 0 - 40 S-1 Table of Contents Index to Financial Statements Initial Cost Gross Amount of Which Carried at December 31, 2021 Description (1) Location Ownership Percentage Encumbrances Land Buildings and Improvements Total (2) Costs Capitalized Subsequent to Acquisition (3) Land Buildings and Improvements Total (4) Accumulated Depreciation and Amortization Date of Construction Date Acquired Life on which Depreciation and Amortization in Latest Statements of Comprehensive Income is Computed (in years) (5) TWO PIERCE PLACE (6) Itasca, IL 100 % None 4,370 70,632 75,002 ( 26,780 ) 8,156 40,066 48,222 28,288 1991 12/7/2006 0 - 40 ONE MERIDIAN CROSSINGS Richfield, MN 100 % None 2,919 24,398 27,317 629 2,919 25,027 27,946 7,891 1997 10/1/2010 0 - 40 TWO MERIDIAN CROSSINGS Richfield, MN 100 % None 2,661 25,742 28,403 654 2,661 26,396 29,057 8,240 1998 10/1/2010 0 - 40 THE MEDICI Atlanta, GA 100 % None 1,780 11,510 13,290 5,830 1,780 17,340 19,120 7,150 2008 6/7/2011 0 - 40 225 PRESIDENTIAL WAY (7) Boston, MA 100 % None 3,626 36,916 40,542 ( 3,534 ) 3,612 33,396 37,008 7,686 2001 9/13/2011 0 - 40 235 PRESIDENTIAL WAY (7) Boston, MA 100 % None 4,154 44,048 48,202 ( 4,624 ) 4,138 39,440 43,578 9,012 2000 9/13/2011 0 - 40 400 TOWNPARK Lake Mary, FL 100 % None 2,570 20,555 23,125 5,635 2,570 26,190 28,760 9,198 2008 11/10/2011 0 - 40 ARLINGTON GATEWAY Arlington, VA 100 % None 36,930 129,070 166,000 3,443 36,930 132,513 169,443 31,625 2005 3/4/2013 0 - 40 5 & 15 WAYSIDE ROAD Burlington, MA 100 % None 7,190 55,445 62,635 7,852 7,190 63,297 70,487 18,510 1999 / 2001 3/22/2013 0 - 40 6565 MACARTHUR BOULEVARD Irving, TX 100 % None 4,820 37,767 42,587 1,462 4,820 39,229 44,049 9,633 1998 12/5/2013 0 - 40 ONE LINCOLN PARK Dallas, TX 100 % None 6,640 44,810 51,450 4,075 6,640 48,885 55,525 12,430 1999 12/20/2013 0 - 40 161 CORPORATE CENTER Irving, TX 100 % None 2,020 10,680 12,700 ( 714 ) 2,020 9,966 11,986 2,485 1998 12/30/2013 0 - 40 5 WALL STREET Burlington, MA 100 % None 9,560 50,276 59,836 6,108 9,560 56,384 65,944 10,311 2008 6/27/2014 0 - 40 1155 PERIMETER CENTER WEST Atlanta, GA 100 % None 5,870 66,849 72,719 15,433 5,870 82,282 88,152 16,320 2000 8/28/2014 0 - 40 500 TOWNPARK Lake Mary, FL 100 % None 2,147 21,925 24,072 5,123 2,147 27,048 29,195 4,551 2016 N/A 0 - 40 PARK PLACE ON TURTLE CREEK Dallas, TX 100 % None 4,470 38,048 42,518 6,298 4,470 44,346 48,816 9,337 1986 1/16/2015 0 - 40 80 CENTRAL STREET Boxborough, MA 100 % None 1,980 8,930 10,910 3,574 1,980 12,504 14,484 2,762 1988 7/24/2015 0 - 40 ENCLAVE PLACE Houston, TX 100 % None 1,890 60,094 61,984 35,319 1,890 95,413 97,303 14,106 2015 N/A 0 - 40 200 SOUTH ORANGE AVENUE Orlando, FL 100 % None 11,660 139,015 150,675 27,491 11,660 166,506 178,166 27,673 1988 11/4/2015 0 - 40 GALLERIA 300 Atlanta, GA 100 % None 4,000 73,554 77,554 7,698 4,000 81,252 85,252 16,151 1987 11/4/2015 0 - 40 S-2 Table of Contents Index to Financial Statements Initial Cost Gross Amount of Which Carried at December 31, 2021 Description (1) Location Ownership Percentage Encumbrances Land Buildings and Improvements Total (2) Costs Capitalized Subsequent to Acquisition (3) Land Buildings and Improvements Total (4) Accumulated Depreciation and Amortization Date of Construction Date Acquired Life on which Depreciation and Amortization in Latest Statements of Comprehensive Income is Computed (in years) (5) GLENRIDGE HIGHLANDS ONE Atlanta, GA 100 % None 5,960 50,013 55,973 3,835 5,960 53,848 59,808 10,211 1998 11/24/2015 0 - 40 CNL CENTER I Orlando, FL 99 % None 6,470 77,858 84,328 2,131 6,470 79,989 86,459 14,759 1999 8/1/2016 0 - 40 CNL CENTER II Orlando, FL 99 % None 4,550 55,609 60,159 494 4,550 56,103 60,653 11,268 2006 8/1/2016 0 - 40 ONE WAYSIDE ROAD Boston, MA 100 % None 6,240 57,124 63,364 1,900 6,240 59,024 65,264 8,622 1997 / 2008 8/10/2016 0 - 40 GALLERIA 200 Atlanta, GA 100 % None 6,470 55,825 62,295 13,762 6,470 69,587 76,057 10,881 1984 10/7/2016 0 - 40 750 WEST JOHN CARPENTER FREEWAY Irving, TX 100 % None 7,860 36,303 44,163 3,766 7,860 40,069 47,929 10,713 1999 11/30/2016 0 - 40 NORMAN POINTE I Bloomington, MN 100 % None 4,358 22,322 26,680 4,466 4,361 26,785 31,146 4,887 2000 12/28/2017 0 - 40 501 WEST CHURCH STREET Orlando, FL 100 % None 2,805 28,119 30,924 — 2,805 28,119 30,924 4,576 2003 2/23/2018 0 - 40 9320 EXCELSIOR BOULEVARD Hopkins, MN 100 % None 3,760 35,289 39,049 ( 553 ) 3,707 34,789 38,496 6,593 2010 10/25/2018 0 - 40 25 BURLINGTON MALL ROAD Burlington, MA 100 % None 10,230 54,787 65,017 7,178 10,230 61,965 72,195 7,859 1987 12/12/2018 0 - 40 GALLERIA 100 Atlanta, GA 100 % None 7,285 72,449 79,734 1,430 7,285 73,879 81,164 10,790 1982 5/6/2019 0 - 40 GALLERIA 400 Atlanta, GA 100 % None 5,687 92,915 98,602 1,484 5,687 94,399 100,086 9,742 1999 8/23/2019 0 - 40 GALLERIA 600 Atlanta, GA 100 % None 5,418 81,003 86,421 ( 128 ) 5,418 80,875 86,293 7,212 2002 8/23/2019 0 - 40 ONE GALLERIA TOWER Dallas, TX 100 % None 5,286 107,767 113,053 11,321 5,286 119,088 124,374 12,535 1982 2/12/2020 0 40 TWO GALLERIA TOWER Dallas, TX 100 % None 3,835 109,605 113,440 3,432 3,836 113,036 116,872 10,774 1985 2/12/2020 0 40 THREE GALLERIA TOWER Dallas, TX 100 % None 6,541 125,490 132,031 1,743 6,541 127,233 133,774 12,352 1991 2/12/2020 0 40 222 SOUTH ORANGE AVENUE Orlando, FL 100 % None 1,899 18,417 20,316 1,756 1,899 20,173 22,072 15 1959 10/29/2020 0 40 999 PEACHTREE STREET Atlanta, GA 100 % None 49,067 156,109 205,176 178 49,067 156,287 205,354 2,191 1987 10/22/2021 0 40 UNDEVELOPED LAND PARCELS (6) Various 100 % None 48,667 — 48,667 1,634 45,777 4,524 50,301 688 N/A Various N/A Total—All Properties $ 512,898 $ 3,299,408 $ 3,812,306 $ 394,687 $ 537,691 $ 3,669,302 $ 4,206,993 $ 961,682 (1) All of Piedmont's properties are office buildings, except for the separately described Undeveloped Land Parcels. (2) Total initial cost excludes purchase price allocated to intangible lease origination costs and intangible lease liabilities. (3) Includes improvements and carrying costs capitalized subsequent to acquisition, as well as reductions related to write-offs of fully depreciated/amortized capitalized assets and impairment losses on real estate assets. S-3 Table of Contents Index to Financial Statements (4) The net carrying value of Piedmont’s total assets for federal income tax purposes is approximately $ 3.7 billion. (5) Piedmont’s assets are depreciated or amortized using the straight-line method over the useful lives of the assets by class. Generally, Tenant Improvements and Lease Intangibles are amortized over the lease term. Generally, Building Improvements are depreciated over 5 - 25 years, Land Improvements are depreciated over 20 - 25 years, and Buildings are depreciated over 40 years. (6) During the year ended December 31, 2021, Piedmont recognized a $ 41.0 million impairment charge on the Two Pierce Place asset. See Note 7 for further detail. (7) As of December 31, 2021, the 225 and 235 Presidential Way assets were under a binding contract to be sold, and were presented as held for sale in the accompanying consolidated balance sheets. See N ote 13 for further information. The sale of the assets closed on January 28, 2022. (8) Undeveloped Land Parcels includes land parcels that Piedmont may develop in the future. Piedmont Office Realty Trust, Inc. Schedule III - Real Estate and Accumulated Depreciation December 31, 2021 (dollars in thousands) 2021 2020 2019 Real Estate: Balance at the beginning of the year $ 3,891,426 $ 3,818,287 $ 3,924,531 Additions to/improvements of real estate 379,516 493,760 406,832 Assets disposed — ( 393,231 ) ( 452,672 ) Assets impaired (1) ( 41,000 ) — ( 8,953 ) Write-offs of intangible assets (2) ( 13,646 ) ( 15,891 ) ( 36,428 ) Write-offs of fully depreciated/amortized assets ( 9,303 ) ( 11,499 ) ( 15,023 ) Balance at the end of the year $ 4,206,993 $ 3,891,426 $ 3,818,287 Accumulated Depreciation and Amortization: Balance at the beginning of the year $ 835,392 $ 875,777 $ 907,937 Depreciation and amortization expense 149,239 142,762 132,600 Assets disposed — ( 155,757 ) ( 113,309 ) Write-offs of intangible assets (2) ( 13,646 ) ( 15,891 ) ( 36,428 ) Write-offs of fully depreciated/amortized assets ( 9,303 ) ( 11,499 ) ( 15,023 ) Balance at the end of the year $ 961,682 $ 835,392 $ 875,777 (1) Piedmont recognized an impairment loss on the Two Pierce Place building during the year ended December 31, 2021, as well as the Dupree building and the 600 Corporate Drive building during the year ended December 31, 2019 (see Note 7 ). (2) Consists of write-offs of intangible lease assets related to lease restructurings, amendments, and terminations. S-4