Piedmont operating unit prices $200m exchangeable notes due 2031

Piedmont Operating Partnership, LP has successfully issued $200 million in 2.875% exchangeable senior notes due in 2031, according to a press release. The notes, backed by the parent company Piedmont Realty Trust (NYSE:PDM), are set to mature on September 17, 2026. Initial investors were given the option to purchase an additional $30 million in notes within 13 days of the issuance.

These senior, unsecured notes will provide semi-annual interest payments beginning February 1, 2027, and will mature on February 1, 2031. The exchange rate is set at 79.0514 shares of Piedmont common stock for every $1,000 principal amount of notes, which works out to a $12.65 per share price - a 37.5% premium from the $9.20 closing price of Piedmont shares on Monday.

Noteholders can only exchange their notes under specific conditions before November 1, 2030, and then at any time before two trading days before maturity. The Operating Partnership anticipates receiving around $194.3 million net proceeds after accounting for discounts and expenses, or $223.5 million if investors exercise their option for more notes.

The funds will be used to retire existing 9.250% senior notes due in 2028, including premiums and accrued interest. The company aims to repurchase approximately $50 million worth of Piedmont common shares, valued at $9.20 per share, from select note purchasers through private negotiations. The notes are redeemable at the Operating Partnership's discretion starting August 6, 2029, if Piedmont's stock price rises above 130% of the exchange price for a certain duration and meets additional requirements.