Piedmont Realty Trust (PDM) risk factors, FY2024 10-K

Risks Related to Our Business and Operations

1. 01Economic, regulatory, socio-economic or technology changes that impact the real estate market generally, or that could affect patterns of use of commercial office space, may cause our operating results to suffer and decrease the value of our properties
2. 02We face considerable competition in the leasing market and may be unable to renew existing leases or re-let space on terms similar to the existing leases, and we may expend significant capital in our efforts to re-let space
3. 03Our rental revenues will be significantly influenced by the conditions of the office market in general and of the specific markets in which we operate
4. 04We may be adversely affected by trends in the office real estate industry
5. 05We depend on tenants for our revenue, and accordingly, lease terminations or tenant defaults, particularly by one of our significant lead tenants, could adversely affect the income produced by our properties
6. 06Some of our leases provide tenants with the right to terminate their leases early
7. 07We may face additional risks and costs associated with directly managing properties occupied by government tenants
8. 08Adverse market and economic conditions may cause us to recognize impairment charges on tangible real estate and related lease intangible assets or otherwise impact our performance
9. 09Adverse market and economic conditions could cause us to recognize impairment charges on our goodwill
10. 10Our earnings growth will partially depend upon future acquisitions of properties, and we may not be successful in identifying and consummating suitable acquisitions that meet our investment criteria
11. 11Future acquisitions of properties may not yield anticipated returns, may disrupt our business, and may strain management resources
12. 12We may acquire properties in new markets, where we may face risks associated with investing in an unfamiliar market
13. 13The illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties
14. 14We may not be able to dispose of properties that no longer meet our strategic plans or to timely and efficiently apply the proceeds from any disposition of properties
15. 15Our real estate redevelopment and development strategies may not be successful
16. 16Future terrorist attacks, armed hostilities, or civil unrest in the major metropolitan areas in which we own properties could significantly impact the demand for, and value of, our properties
17. 17Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition and our cash flow, and there can be no assurance as to future costs and the scope of coverage that may be available under insurance policies
18. 18Should one of our insurance carriers become insolvent, we would be adversely affected
19. 19Our joint venture investments could be adversely affected by a lack of sole decision-making authority and our reliance on joint venture partners’ financial condition
20. 20Costs of complying with governmental laws and regulations may reduce our net income and cash flows
21. 21As the present or former owner or operator of real property, we could become subject to liability for environmental contamination, regardless of whether we caused such contamination
22. 22We could become subject to liability for adverse environmental conditions in the buildings on our property
23. 23As the owner of real property, we could become subject to liability for a tenant’s failure to comply with environmental requirements regarding the handling and disposal of regulated substances and wastes or for non-compliance with health and safety requirements, which requirements are subject to change
24. 24We face risks associated with the physical effects of climate change
25. 25We may face risks associated with the transition to a lower-carbon economy
26. 26We depend on key personnel, each of whom would be difficult to replace
27. 27We may be subject to litigation, which could have a material adverse effect on our financial condition
28. 28If our disclosure controls or internal controls over financial reporting are not effective, investors could lose confidence in our reported financial information

Risks Related to Our Organization and Structure

1. 29Our organizational documents contain provisions that may have an anti-takeover effect, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or otherwise benefit our stockholders
2. 30In order to preserve our REIT status, our charter limits the number of shares a person may own, which may discourage a takeover that could result in a premium price for our common stock or otherwise benefit our stockholders
3. 31Our board of directors can take many actions without stockholder approval
4. 32Our charter permits our board of directors to issue stock with terms that may subordinate the rights of our common stockholders, which may discourage a third party from acquiring us in a manner that could result in a premium price for our common stock or otherwise benefit our stockholders
5. 33Our board of directors could elect for us to be subject to certain Maryland law limitations on changes in control that could have the effect of preventing transactions in the best interest of our stockholders
6. 34control share acquisition involving our company. However, our board of directors still has the ability to opt into the business combination provisions and the control share provisions of Maryland law in the future
7. 35Our rights and the rights of our stockholders to recover claims against our board of directors and officers are limited, which could reduce our recovery and our stockholders’ recovery against them if they negligently cause us to incur losses

Risks Related to Tax Matters

1. 36Our failure to qualify as a REIT could adversely affect our operations and our ability to make distributions
2. 37Failure of our operating partnership to be treated as a disregarded entity or a partnership would have serious adverse consequences to our stockholders
3. 38Changes in tax laws may eliminate the benefits of REIT status, prevent us from maintaining our qualification as a REIT, or otherwise adversely affect our stockholders
4. 39Even if we qualify as a REIT, we may incur certain tax liabilities that would reduce our cash flow and impair our ability to make distributions
5. 40Differences between the recognition of taxable income and the actual receipt of cash could require us to sell assets or borrow funds on a short-term or long-term basis to meet the distribution requirements of the Code
6. 41Distributions made by REITs do not qualify for the reduced tax rates that apply to certain other corporate distributions
7. 42A recharacterization of transactions undertaken by our operating partnership may result in lost tax benefits or prohibited transactions, which would diminish cash distributions to our stockholders, or even cause us to lose REIT status
8. 43We face possible adverse changes in state and local tax laws regarding the treatment of REITs and their stockholders, which may result in an increase in our tax liability
9. 44Property taxes may decrease returns on real estate
10. 45We have incurred and are likely to continue to incur mortgage and other indebtedness, which may increase our business risks
11. 46Rising interest rates may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our net income, and the amount of cash distributions we can make
12. 47Agreements governing our existing indebtedness contain, and future financing arrangements will likely contain, restrictive covenants relating to our operations, which could limit our ability to make distributions to our stockholders
13. 48Increases in interest rates would cause the amount of our variable-rate debt payments to also increase and could limit our ability to make distributions to our stockholders
14. 49Changes in interest rates could have adverse effects on our cash flows as a result of our interest rate derivative contracts
15. 50A downgrade in our credit ratings, the credit ratings of the Operating Partnership or the credit ratings of our or the Operating Partnership's unsecured debt securities could materially adversely affect our business and financial condition

General Risks

1. 51Any change in our dividend policy could have a material adverse effect on the market price of our common stock
2. 52There are significant price and volume fluctuations in the public markets, including on the exchange which we listed our common stock
3. 53Future offerings of debt securities, which would be senior to our common stock upon liquidation, or equity securities, which would dilute our existing stockholders and may be senior to our common stock for the purposes of distributions, may adversely affect the market price of our common stock
4. 54Market interest rates may have an effect on the value of our common stock
5. 55If securities analysts do not publish research or reports about our business or if they downgrade our common stock or our sector, the price of our common stock could decline
6. 56The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions and make additional investments