Peakstone Realty Trust · NYSE:PKST
Peakstone Realty Trust — Q4 2024 Earnings Presentation
38 slides from Peakstone Realty Trust's earnings presentation, Feb 20, 2025
Slide 1: Investor Presentation Fourth Quarter 2024
Investor Presentation Fourth Quarter 2024
Slide 2: Disclaimers / Forward-Looking Disclosure
Disclaimers / Forward-Looking Disclosure Cautionary Statement Regarding Forward-Looking Statements This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”
Slide 3: Agenda
Agenda 1 Investment Opportunity 2 Why Industrial Outdoor Storage (IOS)? 3 Portfolio Overview 4 Industrial Segment 5 Office Segment 6 Redevelopment Highlights 7 Capitalization Overview 3
Slide 4: Investment Opportunity
1 Investment Opportunity Shift Towards Industrial Continues Investment Strategy Focused on Industrial Outdoor Storage (IOS) Properties Go-Forward Strategy Demonstrated Ability to Execute ✓ Acquired $490mm premier IOS portfolio Grow portfolio via industrial outdoor ✓ Increased Industrial segment to ~
Slide 5: Agenda
Agenda 1 Investment Opportunity 2 Why Industrial Outdoor Storage (IOS)? 3 Portfolio Overview 4 Industrial Segment 5 Office Segment 6 Redevelopment Highlights 7 Capitalization Overview 5
Slide 6: IOS – Compelling Opportunity
2 IOS – Compelling Opportunity …IOS sites in infill submarkets are Large, highly fragmented subsector priced to deliver risk-adjusted expected returns that are superior to those available on most other commercial real estate property Significant and persistent investments… supply constraints Green S
Slide 7: IOS – Subsector Characteristics
2 IOS – Subsector Characteristics Large ($200bn+)1, Highly Fragmented Subsector Barriers to Supply ▪ Users and individuals own a significant share ▪ Limited infill land zoned for IOS near major logistics hubs ▪ Few institutional owners ▪ Existing IOS supply reduced each year due to redevelopment ▪ F
Slide 8: Agenda
Agenda 1 Investment Opportunity 2 Why Industrial Outdoor Storage (IOS)? 3 Portfolio Overview 4 Industrial Segment 5 Office Segment 6 Redevelopment Highlights 7 Capitalization Overview 8
Slide 9: Portfolio Overview
3 Portfolio Overview Industrial Segment Traditional Portfolio IOS Office Industrial Total Properties 51 19 33 103 Usable Acres / RSF 440 9.0mm 5.4mm 440 / 14.4mm In-Place ABR (mm) $22.2 + $50.2 + $112.7 = $185.1 WALT (years)1 4.4 6.0 6.9 6.4 % Leased2 ~100% 100% 99% NA % Leased to IG Tenants1,3 47%
Slide 10: Recent Acquisition – IOS Portfolio
3 Recent Acquisition – IOS Portfolio Investment Highlights Strategic Rationale $490mm / Q4 2024 ▪ Strategically compelling off-market acquisition that will drive Purchase Price / Quarter long-term shareholder value ▪ Significantly enhances growth profile – potential ~70% 51 properties / 440 usable a
Slide 11: Agenda
Agenda 1 Investment Opportunity 2 Why Industrial Outdoor Storage (IOS)? 3 Portfolio Overview 4 Industrial Segment 5 Office Segment 6 Redevelopment Highlights 7 Capitalization Overview 11
Slide 12: Industrial Segment Comprises Two Highly Complementary Property Types
4 Industrial Segment Comprises Two Highly Complementary Property Types – IOS & Traditional Industrial Shared Market Dynamics Similar Tenant Profile ▪ Limited availability of well-located assets ▪ Industrial tenants ▪ Barriers to entry for new development ▪ National and regional tenants ▪ Low vacancy
Slide 13: Expansive, Infill-Focused Industrial Portfolio
4 Expansive, Infill-Focused Industrial Portfolio Industrial Segment 5 Columbus, OH 11% of ABR 19 90 95 States Detroit, MI Philadelphia, PA 4% of ABR 75 90 7% of ABR 32 Stockton / Modesto, CA 11% of ABR 80 80 Markets 80 Chicago, IL 13% of ABR 70 70 70 Hampton Roads, VA ~58% 5 15 25 5% of ABR Coastal
Slide 14: High-Quality and High-Growth Industrial Assets
4 High-Quality and High-Growth Industrial Assets Segment Characteristics IOS ~70% 70% 8.6 Mark-to-Market Coastal & Average Sunbelt1 Site Acreage Traditional Industrial ~24% 13 years 32’ Mark-to-Market Average Average Building Age2 Clear Height3 Notes: Data as of December 31, 2024. (1) Weighted avera
Slide 15: Attractive Industrial Segment Lease Maturity Schedules
4 Attractive Industrial Segment Lease Maturity Schedules 4.4 IOS 6.0 Traditional$141,194 Industrial (1) Traditional IOS Industrial WALT (yrs.)1 WALT (yrs.)1 Notes: Data as of December 31, 2024. (1) Weighted average based on applicable ABR. 15
Slide 16: Diversified Industrial Portfolio in Growth Markets
4 Diversified Industrial Portfolio in Growth Markets Industrial Segment Top 10 Tenants Industrial Segment Top 10 Markets % of % of Segment Traditional IOS 1 Top 10 Tenants Rating WALT (yrs.) Segment ABR Market ABR Industrial RSF Usable Acres 1 AA 6.6 14% Chicago 13% 1,354,700 4 2 B1 5.7 11% Columbus
Slide 17: Significant Industrial Mark-to-Market Opportunity
4 Significant Industrial Mark-to-Market Opportunity Blends to ~38% Mark-to-Market mm mm mm mm ~38% IOS Represents an ~24% Mark-to-Market Represents an ~62% ~70% Mark-to-Market Traditional Industrial Notes: Data as of December 31, 2024. 17
Slide 18: Agenda
Agenda 1 Investment Opportunity 2 Why Industrial Outdoor Storage (IOS)? 3 Portfolio Overview 4 Industrial Segment 5 Office Segment 6 Redevelopment Highlights 7 Capitalization Overview 18
Slide 19: Geographically Diversified Office Segment
5 Geographically Diversified Office Segment 16 States AT&T (3 Properties) Massachusetts 18 Markets • Rapiscan Systems • Keurig Dr Pepper (2 Properties) New Jersey • Travel & Leisure Office PPG • Zoetis Express Scripts Occidental Petroleum Maxar Technologies MISO Maryland York IGT • 40 Wight UEOS / B
Slide 20: High-Quality Office Assets
5 High-Quality Office Assets ◼ 83% of rentable square feet from properties with 4+ Star rating1 Newer Vintage Buildings ◼ 12-year Average Building Age2 Established and ◼ 83% of ABR generated from Coastal or Sunbelt markets High-Growth Markets ◼ Located in markets with strong demographic trends ◼ 56%
Slide 21: Credit Office Tenants with Limited Near-Term Roll
5 Credit Office Tenants with Limited Near-Term Roll Segment Characteristics 30 Tenants 99% Leased1 Lease Expiration Schedule 60% Investment Grade2,3 Limited near-term rollover (only 18% of Office segment ABR through 2027) 6.9-Year WALT 18% ABR rolling through 2027 Notes: Data as of December 31, 2024
Slide 22: Diversified Office Segment Tenants
5 Diversified Office Segment Tenants Office Segment Top 10 Tenants 1 Top 10 Tenants Rating WALT (yrs.) % of Segment ABR 1 Baa1 4.9 11% 2 A- 19.2 8% 3 BBB- 11.8 8% 4 Not Rated 5.5 7% 5 Baa1 2.4 7% 6 A3 3.8 6% 7 BB- 4.7 5% 8 BB+ 6.0 5% 9 BBB 5.2 5% 10 HY3 5.9 4% Top 10 Subtotal / Average 7.4 65% Notes
Slide 23: Agenda
Agenda 1 Investment Opportunity 2 Why Industrial Outdoor Storage (IOS)? 3 Portfolio Overview 4 Industrial Segment 5 Office Segment 6 Redevelopment Highlights 7 Capitalization Overview 23
Slide 24: Redevelopment Strategy
6 Redevelopment Strategy 1. Leverage our vertically-integrated platform with redevelopment expertise 2. Select strategically located sites 3. Prioritize opportunities that generate attractive risk-adjusted returns 4. Construct versatile improvements that appeal to multiple tenant types 5. Partner wi
Slide 25: Redevelopment Properties
6 Redevelopment Properties 1 Everett, WA Savannah, GA 4 Redevelopment Opportunities 6 IOS Properties 2 Kennesaw, GA Burlington, NJ 5 82 Usable Acres $9-10.5mm Est. NOI at Stabilization 3 Hatfield, PA Burlington, NJ 6 7.5-8.0% Target Yield1 25 Notes: Data as of December 31, 2024. A Redevelopment Prop
Slide 26: Agenda
Agenda 1 Investment Opportunity 2 Why Industrial Outdoor Storage (IOS)? 3 Portfolio Overview 4 Industrial Segment 5 Office Segment 6 Redevelopment Highlights 7 Capitalization Overview 26
Slide 27: Capitalization
7 Capitalization Debt Capitalization Debt Maturity Schedule2 Effective Remaining Balance as of % of Debt Maturing Interest Rate¹ Term² 12/31/2024 1, 00 Secured Fixed Rate Mortgages 4.8% 4.1 $360 1, 400 Total Secured Debt 4.8% 4.1 $360 Unsecured Debt 1, 200 Revolving Line of Credit ($547mm Capacity)
Slide 28: Abbreviated Building Blocks of Net Asset Value
7 Abbreviated Building Blocks of Net Asset Value In-Place ABR as of 12/31/2024 Key Balance Sheet Components As of 12/31/2024 Industrial Segment $ 72.4 Cash $ 146.5 Office Segment $ 112.7 Total Debt $ 1,360.3 Total $ 185.1 Notes: $ in millions. Data as of December 31, 2024. 28
Slide 29: Appendix
APPENDIX 29
Slide 30: Team Expertise
Team Expertise Cycle-Tested Team Investment & Ownership Strategies ✓ Highly experienced team including IOS specialists ✓ ─ Executive management1 Property & Portfolio Investments ─ Average ~35 years of real estate experience ─ Decades of experience operating public companies ✓ Repositioning and ─ Sen
Slide 31: Highly Reputable Board of Trustees
Highly Reputable Board of Trustees Independent Trustees • Current Chief Executive Officer and Managing Partner of Vanderbilt Office Properties Casey Wold • Served as Senior Managing Director of Tishman Speyer and was a member of the Investment and Management committees Chair • Served as CIO and COO
Slide 32: Corporate Responsibility
Corporate Responsibility E S G • Minimize environmental impact of our assets • Diverse executive management team • Sound corporate governance essential to the success of our organization and stakeholders • Emphasize the health and well-being of our tenants • Individual differences and a diverse and
Slide 33: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net Income to Normalized EBITDAre Quarter Ended 12/31/2024 Net income 13,816 Interest expense 15,916 Depreciation and amortization 25,826 EBITDA 55,558 Gain on sales of real estate, net 2,538 Impairment provision, real estate (13,123) EBITDAre 44,974 Adj
Slide 34: Definitions
Definitions Term Definition “Annualized Base Rent” or “ABR” is calculated as the monthly contractual base rent for leases that have commenced as of the end of the quarter, excluding rent abatements, multiplied by 12 months and deducting base year operating expenses for gross and modified B (“ nnuali
Slide 35: Definitions (Cont'd)
Definitions (Cont’d) Term Definition “EBITDAre” is defined by The National Association of Real Estate Investment Trusts ("NAREIT") as follows (a) GAAP Net Income plus (b) interest expense plus (c) income tax expense plus (d) depreciation and amortization plus/minus (e) losses and gains on the dispos
Slide 36: Definitions (Cont'd)
Definitions (Cont’d) Term Definition “Mark-to-Market” is calculated as management’s estimate of market rents as of December 31, 2024, divided by in-place monthly contractual base rent excluding rent abatements and deducting base year operating expenses for gross and modified gross leases as of that
Slide 37: Definitions (Cont'd)
Definitions (Cont’d) Term Definition Net operating income (“NOI”) is a non-GAAP financial measure calculated as net (loss) income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding general and administrative expenses, interest expense, depreci
Slide 38: Definitions (Cont'd)
Definitions (Cont’d) Term Definition “Occupancy" is the leased square footage or usable acres, as applicable, under leases that have commenced as of the end of the Occupancy or quarter. "Occupancy Percentage" is total applicable Occupancy divided by the total applicable leasable square footage or us
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