Good day, ladies and gentlemen, and welcome to the Piedmont Office Realty Trust, Inc.'s Third Quarter 2020 Earnings Conference Call. All lines have been on a listen-only mode and the floor will be open for your questions and comments following the presentation. At this time, it is my pleasure to turn the floor over to your host for today, Mr. Eddie Guilbert. Sir, the floor is yours.

Thank you, operator. Good morning, everyone. We thank you for joining us today for Piedmont's Third Quarter 2020 Earnings Conference Call. Last night, we filed our Form 10-Q and an 8-K that includes our earnings release and our unaudited supplemental information for the third quarter. All of this information is available on our website at piedmontreit.com under the Investor Relations section. During this call, we'll refer to certain non-GAAP financial measures, such as FFO, core FFO, AFFO, and same-store NOI. The definitions and reconciliations of these non-GAAP measures are contained in the earnings release and in the supplemental financial information. On today's call, the company's prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters which are subject to risks and uncertainties, and therefore, actual results may differ from those we anticipate and discuss today. The risks and uncertainties of these forward-looking statements are discussed in detail in our press release as well as our SEC filings. We encourage everyone to review the more detailed discussion related to risks associated with forward-looking statements in our SEC filings. Examples of forward-looking statements include those related to Piedmont's future revenues and operating income, dividends and financial guidance, future leasing and investment activity and the impact of the COVID-19 pandemic on the company's financial and operational results. You should not place any undue reliance on any of these forward-looking statements, and these statements speak only as of the date they are made. At this time, our President and Chief Executive Officer, Brent Smith, will provide some opening comments and discuss our third quarter results and accomplishments. Brent?

Good morning, everyone, and thank you for joining us on today's call. Despite the challenging operating environment, the third quarter was another solid quarter for Piedmont in terms of operations, financial results, and strategic objectives. We saw an increase in new leasing activity, and we are very encouraged by the uptick in leasing tours and proposals. This trend is continuing into the fourth quarter as our leasing pipeline continues to rebuild. But let me be clear, we are not back to levels of pre-pandemic activity. Operationally, we continue to feel very fortunate that most of our tenants are of investment-grade quality and subject to long-term leases with a weighted average lease term remaining for the portfolio over six years. We continue to collect substantially all of our billed rents, 99% for the third quarter. These collections are net of approximately 60 total lease modification agreements year-to-date that we have entered into with our tenants, a majority of whom are retail-related businesses and have experienced disruptions in their operations as a result of the pandemic. As we indicated last quarter, most of these agreements now totaling $6.7 million year-to-date in cash rent billings are deferrals of three to four months of rent, the bulk of which are to be paid back in the fourth quarter of this year or in 2021. I'll remind everyone that during the second quarter, we did establish a $4.9 million general reserve related primarily to those tenants with whom we've agreed to some form of rental relief, should these businesses be unable to repay the deferred amounts when they become due or should their operations fail. As of today, we still have $4.8 million of this reserve in place, and I imagine we will be well into 2021 before we will know how all these tenants will perform. In addition to the availability of general receivables reserve, I will note that we did recognize $700,000 of specific account bad debt expense during the third quarter, bringing our total specific bad debt expense for the year to $2.5 million or about 0.5% of ALR. While COVID has affected leasing demand, we do feel fortunate to have completed 229,000 square feet of leasing during the third quarter, with over 1/3 related to new tenants. These leasing results exclude the 172,000 square foot lease that is backfilling most of the space related to First Data, which was acquired earlier this year by Fiserv. The new tenant, Deluxe Corporation, will be investing over $10 million to establish a technology innovation center in our 5565 Glenridge Highlands II building. And according to the Georgia Governor's office, they will create over 700 new jobs for the Atlanta community. With a significant investment in workforce and the innovation center, we believe it bodes well for a longer-term tenancy at our headquarters location in Glenridge Highlands. Aside from this lease, the most significant new tenant lease that was executed during the quarter was for approximately 56,000 square feet at 400 Virginia Avenue in Washington, D.C., with the district's Department of Employee Services. A more detailed list of these leases executed during the quarter is included in our quarterly supplemental information that was filed last night. With regards to leasing activity in our markets, those where we are currently seeing the strongest activity taking place are in the Washington, D.C. area, Boston, and our Sunbelt markets. We have concerns regarding the pandemic impact on lease rental rates and concessions. But with approximately 1 million square feet of leasing completed through the third quarter of 2020, we are encouraged that rents have held relatively steady, with cash rent rolls for the year increasing approximately 5% and accrual-based rents up over 11%. Looking at renewals, other than the New York City lease at 60 Broad Street, we have no other significant expirations until the end of 2022. We continue to make progress on the city of New York's 300,000 square foot lease that is currently in holdover as we are diligently working with them towards executing a renewal. We still anticipate a short-term renewal to be executed around the end of the year, with a longer-term deal still expected sometime in the latter half of 2021. There are no development projects currently underway, and all of our redevelopment projects and tenant build-out programs are relatively modest in scale and are on budget and on schedule. Our lease occupancy percentage has declined this year, largely due to the slowdown in leasing activity attributable to the pandemic. Likewise, our same-store cash NOI comparison, which is basically flat on a year-to-date basis, has been impacted approximately 2% by the $6.7 million of tenant lease modification agreements we've entered into. Turning to capital transactions. Obviously, as the economy slowed from the pandemic, transactional activity did as well. We did not complete any acquisitions or dispositions during the third quarter. But after the quarter end, we completed a portfolio sale, allowing us to dispose of our final three remaining New Jersey properties. The sale consisted of 600 Corporate Drive located in Lebanon, New Jersey and 200 and 400 Bridgewater Crossing located in Bridgewater, New Jersey, for approximately $130 million or $176 per square foot. The sale completes our exit from the New Jersey office market and refines our New York portfolio to our position in Lower Manhattan. Also after September 30, Piedmont acquired 222 South Orange Avenue for $20 million or approximately $157 per square foot. 222 South Orange is approximately 127,000 square foot office building located at what we believe is the pin corner location for downtown Orlando, Florida and Orange Avenue and Church Street, and the building is directly connected to our 200 South Orange Avenue asset, physically sharing several connection points, including a large atrium lobby. This acquisition provides our property with direct frontage now on Orange Avenue. Piedmont plans to immediately begin a redevelopment of the property to reposition the asset to a standard consistent with the 200 South Orange trophy tower. Finally, one of the accomplishments this past quarter that I'm most pleased with was the issuance of our first green bond. We used the proceeds from this $300 million bond issuance to provide the long-term funding for the LEED-certified acquisition that we completed earlier this year of the Galleria Office Towers in Dallas, Texas. Bobby will talk more specifics about the terms of the bond in a moment, but at Piedmont, we're dedicated to providing the highest quality office properties while responsibly managing our impact on the environment. We strive to own and manage workplaces that are environmentally cautious, productive, and healthy for our tenants and employees. To that end, I hope you'll take a moment to review our latest environmental, social, and governance, or ESG, report that was also issued during the third quarter and is available on our corporate website. You will see that Piedmont is not only environmentally sensitive, but we are also serious about serving our local communities and schools. And we're committed to treating fairly and equally all individuals we engage, including our tenants, employees, and vendors. Furthermore, we were proud of our top social score provided by proxy advisory service. I will add, we do this all because we believe passionately that this is truly the right thing to do. Together, we are all stronger and better. At this point, I will turn the call over to Bobby to walk you through the financial highlights of the quarter and guidance for 2020. Bobby?

Thanks, Brent. I'll discuss some of our financial highlights for the quarter; I encourage you to please review the earnings release and supplemental financial information which were filed last night for more complete details. For the third quarter of 2020, we reported $0.48 per diluted share of core FFO, a $0.03 or 6% increase compared to the third quarter of 2019, reflecting rental rate roll-ups across the portfolio as well as the benefits of accretive capital recycling activity since the third quarter of last year. The company's core FFO earnings have grown year-over-year, however, our top line revenue growth for the year is a little less than we originally anticipated due to reduced transient parking and retail revenues since the onset of the pandemic and slower leasing activity that Brent discussed due to uncertainties, shelter-in-place orders, and travel restrictions. There are, however, no unusual income items embedded in our year-to-date revenues, such as large termination fees or settlement income. Although, netted against our total year-to-date revenues are entries totaling $2.6 million for the write-off of specific tenant receivables as well as a reserve of $4.8 million. Partially offsetting these items are lower property operating expenses, resulting primarily from reduced utility charges and janitorial costs. Daily occupancy at our buildings is slowly recovering, but it varies greatly by location and by type of tenancy usage. With all of our buildings remaining open and fully operational throughout 2020, we have some tenants associated with government services or defense-related tenancy that are near-normal occupancy, while others have active physical usage still in the teens or 20% range. The buildings located in the Sunbelt do tend to have higher overall occupancy today as shelter-in-place restrictions were lifted earlier than in other regions of the country. Turning to cash flow and financing activity. AFFO was approximately $38 million for the third quarter, well in excess of our third-quarter dividend. As Brent mentioned, we did issue $300 million of 3.15% green bonds during the quarter. They are 10-year senior notes, and we used the proceeds to repay all of the outstanding borrowings under the $300 million unsecured 2020 term loan that we put in place earlier this year to temporarily fund the acquisition of the Galleria Office Towers. We ended the third quarter with approximately $24 million of cash and have the full $500 million capacity available on our line of credit with no debt maturities until late 2021. As anticipated, our average net debt to core EBITDA ratio for the third quarter of 2020 improved to 5.5 times, reflecting the sale of 1901 Market Street in June of this year and the use of proceeds to pay down debt. Also, our debt to gross asset ratio was approximately 34% at the end of the third quarter. At this time, I'd like to revisit the topic of guidance for the year. Today, we believe we've identified most of the near-term impacts of COVID-19 on our 2020 operations. This equates to a total impact of approximately $6 million to $8 million for the year compared to the original 2020 guidance that we provided last February. The major COVID impacts are as follows: while we have begun to experience an uptick in leasing tours and proposals during the third and early fourth quarters, overall, we believe new tenant leasing for 2020 will be less than originally expected, modestly lowering 2020 occupancy and lowering net operating income, or NOI, by approximately $5 million. Likewise, our transient parking income is estimated to be lower by approximately $2 million to $3 million for the year. Also, overall retail NOI, which comprises approximately 1% of the company's total 2020 revenues is estimated to be lower by approximately $2 million for the year. In addition, during the nine months ended September 30, 2020, as I mentioned earlier, we've taken approximately $2.6 million in bad debt charges against rental revenue as well as a $4.8 million general reserve against billed tenant receivables and straight-line rent receivables. Offsetting these items are operating expenses, net of our tenants' share, that are expected to be lower by $3 million to $4 million for the year. Also, we estimate $5 million of lower interest expense for 2020, due to lower prevailing interest rates. Finally, we believe general and administrative expenses will be lower by $1 million to $2 million for the year. Based upon these projections, we are reinstating guidance for the year ended December 31, 2020, with a core FFO range of $1.88 to $1.90 per diluted share, which is at the low end of our original guidance. These estimates include the acquisition and disposition activity in Orlando and New Jersey that we discussed earlier, but no additional capital transactions are included in these projections. At this time, I'll turn the call back over to Brent for some closing comments.

Thank you, Bobby. In April this year, we withdrew our annual 2020 guidance due to the vast number of uncertainties created by the pandemic. Still today, the longer-term consequences on the economy and on our tenants continue to be unknown, especially as it relates to the future occupancy trends and tenant usage within the office sector. That said, as we help our clients evaluate their commercial real estate requirements, discussions of densification of office space are virtually nonexistent. Instead, CEOs are turning their focus towards the impact work-from-home has had on productivity, operating efficiently, and corporate culture, which are being balanced against trends for more flexibility and work schedules. Notwithstanding these uncertainties and economic ramifications, I believe Piedmont is well-positioned for the future. We have a strong diversified tenant base, a majority of which is investment-grade quality with long-term leases and with little near-term expiration. The company has a prudent balance sheet with excellent liquidity, and we consider adequate and appropriate reserves. We also believe that Piedmont's portfolio of assets will be attractive locations for future tenants, located in many rich urban and suburban locations that do not depend on mass transit and are more convenient to workforce housing. When I became CEO a little over a year ago, I laid out four key strategic objectives for Piedmont that I believe would best serve our investors. First, to accelerate the transition of our portfolio of properties into targeted high-growth amenity-rich office nodes within a few select markets. Second, accomplish this portfolio transition while improving the overall quality of our properties and to do so accretively to financial earnings. Third, commit to maintain the highest quality of tenant experience and satisfaction through the ongoing redevelopment and repositioning of our properties and amenities. And finally, that Piedmont further bolster our best-in-class ESG platform, focusing on enhancing our market-leading social and environmental practices while maintaining our accountability with the highest governance standards. I could not be more proud of how the Piedmont team has risen to the challenge and continued to execute on these strategic objectives even in the midst of a global pandemic. This fall, we exited the New Jersey market, completed the strategic acquisition of our Orange Avenue asset in Orlando, launched the Piedmont scholarship program for historically black colleges and universities within our operating communities and accomplished our green bond offering. With regards to our financial goals, we're pleased to have reinstated 2020 earnings guidance 6% above our 2019 operating results. With that, I’ll now ask our operator to provide our listeners with instructions on how they can submit their questions. We will attempt to answer all your questions now or we'll make appropriate public disclosure later, if necessary. Operator?

Thank you. Ladies and gentlemen the floor is now open for your questions. [Operator Instructions] We’ll go first to Dave Rodgers with Baird.

Hey good morning guys. Brent maybe I’ll start with you with a couple of questions. I guess, can you talk about the utilization of the portfolio, specifically maybe by asset type or by metropolitan market? And then I wanted to dovetail that in with you had talked about the pipeline is beginning to improve. And so maybe in the utilization comment, also talk about average tenant size and market with the pipeline as well.

Okay, good morning Dave. I appreciate your time today. It's a little bit of a very complex question. We'll try to throw some generalities around that. But I think what we're really seeing from a utilization standpoint is continued occupancy from tenants coming back, particularly over the last couple of months and after Labor Day. But still seeing, I would say, diminished levels in the north, probably in the neighborhood of 10% to 20% of the pre-COVID levels. And then the south, a little bit more activity, depending again on market, but call it anywhere from 15% to 40%, depending on the building in the market. I would say, though, we also have the mission-critical and government-related facilities and/or spaces and buildings that are 80% to 100%. It's tough to really draw a general conclusion. But for the tenant mix, I'd say we're also seeing larger national tenants generally, as you've read in the headlines, postpone coming back to the market. But we are seeing smaller tenancy come back faster particularly in the Sunbelt. We're also seeing a number of coworking locations actually even achieving over – well over 50% utilization, in some instances, up to 80-plus at their facilities now. I think we're seeing it really vary across the board, and there's really no way to pinpoint one data point. Hopefully, that gives you a little bit of clarity around what we're seeing. When it comes to leasing pipeline, I'd say it went to almost nonexistent during the pandemic, although we kept a few deals alive. We really started in earnest to rebuild to mid-summer. We've continued to see that accelerate and rebuild further. I'd say that that is generally going to continue to improve if we don't see a meaningful second or a third wave, whatever you want to characterize it this fall. We're hopeful that we're going to continue that momentum into next year. I will say, when it comes to renewals, we are seeing many tenants decide to try to do a shorter-term renewal. We're fighting for longer terms, and that's generally playing itself out. We have a few larger national tenants that know their business very well and consider this an opportunity to extend out the term on a larger lease and capture a favorable rate. We're also seeing some of those larger potential renewals start to take shape at the moment. We're hopeful, but the main message there is the pipeline is continuing to rebuild off of what was a very low level in the summer.

Great, thank you for that color. I wanted to turn to the asset sales in New Jersey subsequent to the end of the quarter. Can you talk about the pricing, the discussions, any retrade on that, kind of why the timing was right now? Any cap rate color that you can provide on discussions and the ultimate disposition of those assets?

Yes, thanks Dave. I think when we began the year, it was really our objective to clean up what I would consider the Mid-Atlantic/Northeast portfolio, in terms of getting out of what we would consider non-core assets. Everybody knew and we were pretty vocal around our affiliate execution and wanting to get that off the portfolio and it being non-core. We were less full around New Jersey, but it's always been a goal of ours to continue to refine our New York City holdings to just the Lower Manhattan positions. It was really a strategic objective overall. We had dialogue with a number of parties prepandemic and really had anticipated disposing of the asset maybe a little sooner in the year than what actually transpired. We felt like we were able to achieve a pricing level that was reasonable relative to where we thought the value was prepandemic and where those discussions were. Overall, generating cash and GAAP cap rate, call it, in the high 7s to 8 zip code, felt pretty good given where we want to focus the rest of the business on and be more strategic longer term. We did reach a transaction level – sorry, a transaction with one of the interested parties. We discussed the deal with a number of parties but went with one that we were comfortable with. It's about a few earn-outs and/or other leasing components still to play out here over the next, call it, few months. We look forward to sharing all the final details on the next call. Overall, though, I'd also point out, we think this is a good example of pricing within our portfolio, but you're going to continue to see private market transactions that I think will be well inside on a cap rate basis to where some of either us or our peers trade from an implied cap rate basis. I think that's just one example. Frankly, I would consider these probably one of our toughest markets and one of our highest cap rates. I point out that we did trade it inside of, frankly, where our stock trades today.

Last for me. On the city of New York, what's the risk that they just pick up and move somewhere else?

We feel like that risk is very low, as we've talked about in the past. It's a pretty unique building. It fits their needs very well from a user group, the size of the space and its access being as a dedicated lobby and elevator bank. Obviously, we recognize the issues with the municipality, but everything from a leasing process continues to kind of go as we would expect it to in the process. It's slow. It's always slow dealing with government tenants, but nothing's really changed from what we've talked about in the past. We do anticipate having a shorter-term renewal sign somewhere around the end of the year. The longer-term deal is still going to take some time to play out and finalize, similar to what we did with the state last year in 2019, and we'll do that again. That longer-term lease is still tracking to the end of next year.

Okay, thank you.

Thanks, Dave.

With no other questions holding, I'd like to turn the conference back to Mr. Brent Smith for any additional, or closing comments.

Thank you. I appreciate everybody joining us on today's call. I will remind you, we've got NAREIT virtually coming up in a few weeks. We've got a tight schedule, but we'd love to include anybody else that is interested in meeting with management. We're excited about the prospects that we have in the leasing pipeline, as you mentioned before. I think we'll continue to see that grow. We look forward to discussing that more at NAREIT and then, of course, in January on our fourth quarter call. Everyone, have a great Halloween weekend, and thank you for your time.

Ladies and gentlemen that will conclude today’s presentation. We thank you for your participation. You may disconnect at this time and have a great day.