Sun Belt-focused office REIT Piedmont Office Realty Trust is feeling the burn of the struggling asset class with its new loan.

The company took out $400M in debt at a 9.25% interest rate, more than double the rate of the loan it is replacing, it revealed last week in a filing with the Securities and Exchange Commission.

The loan, first reported by Reuters, will be used to pay off debt maturing in 2024, and the new debt will be due in 2028.

“While the coupon rate on the new debt is certainly a high-water mark for Piedmont, it is unfortunately reflective of where the market currently is for commercial office properties,” Piedmont CEO Brent Smith said during an earnings call Friday, according to Seeking Alpha’s transcript.

Smith said the company went through an “extensive” process of looking at capital-raising options, including asset sales, taking out mortgages on properties, issuing debt in the unsecured market and corporate-level structured financings, but the unsecured bond market provided the best option.

The higher interest rate will result in an additional $20M in annual expenses, Piedmont Chief Financial and Administrative Officer Bobby Bowers said during the call.

He said the increased cost would “negatively impact 2023 earnings” at a rate of $.08 per diluted share over the rest of the year.

The company's stock price has fallen by more than 7% since the news was announced July 20, dropping from $7.95 last Thursday morning to $7.36 Wednesday morning.

Piedmont reported a net loss of around $2M during the second quarter, compared with a net gain of roughly $8M during the same period last year.

Piedmont owns a 17M SF office portfolio valued at an estimated $5B. The REIT operates in Atlanta, Dallas, Boston, Minneapolis, New York, Orlando, Northern Virginia and Washington, D.C.

CORRECTION, JULY  27, 12 P.M. ET: A previous version of this story included an incorrect image of Arlington Gateway. It has been updated.