Sherry Rexroad, executive vice president and CFO at Piedmont Office Realty Trust, Inc . (NYSE:PDM), was a guest on the latest episode of Nareit’s REIT Report podcast.
Rexroad discussed ways to work within the current environment of shifting interest rates, recession worries, and geopolitical tensions in order to remain consistent on strategy. “It’s really important to differentiate between short-term volatility and secular change. Short-term volatility needs to be managed and monitored. It can be a distraction if you let it be,” she said.
She noted that between 2019 and 2022, Piedmont shifted $1.4 billion of assets, or roughly a third of the portfolio, out of Chicago, Washington, D.C., Philadelphia, New Jersey, and Cambridge, Massachusetts, and into Atlanta and Dallas.
In terms of her priorities as CFO, Rexroad said the REIT has no debt due until 2028 and is actively working on balance sheet management to avoid any concentration of refinancing in the future. “We are constantly trying to optimize the composition of the portfolio and we have a long history of recycling capital. That requires an ongoing objective review of potential acquisitions, dispositions, and redevelopment capital,” she said.
During the interview, Rexroad also noted that:
- Piedmont’s Sun Belt markets continue to be vibrant. “When we pair the fact that demand is approaching pre-pandemic levels and that there is no new development planned until the end of the decade, the result is high demand focused on the top quartile of assets.”
- Piedmont’s portfolio is about 70% Sun Belt-focused, and the REIT sees that moving to 85% in the near to intermediate term.
- Any acquisitions at this time are likely to be in the form of JVs. “Historically, we've bought and sold approximately $400 million per year, and we expect to see more opportunity in the second half of 2025 and into 2026 as the capital markets ease.”