Peakstone Realty Trust · NYSE:PKST
Peakstone Realty Trust — Q2 2023 Earnings Presentation
46 slides from Peakstone Realty Trust's earnings presentation, Aug 8, 2023
Slide 1: Investor Presentation
Investor Presentation August 2023
Slide 2: Disclaimers / Forward-Looking Disclosure
Disclaimers / Forward-Looking Disclosure 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”), and Section 21E of the Securities Exchange Act of 1934,
Slide 3: Table of Contents
Table of Contents I. Peakstone Overview II. A Deeper Dive PepsiCo – Lakeland, FL • More About Our Industrial and Office Segments 01 • Value Creation Capabilities 02 RH – Patterson, CA • Capitalization Overview 03 TransDigm – Whippany, NJ 2
Slide 4: Peakstone Overview
PEAKSTONE OVERVIEW
Slide 5: A Compelling Investment Opportunity
A Compelling Investment Opportunity Wholly-owned, high-quality, newer-vintage portfolio of predominantly single-tenant industrial 01 and office properties located in diverse, strategic growth markets Shaw Industries – Savannah, GA 02 Self-funded business model through limited capital recycling and f
Slide 6: Peakstone is a Differentiated Net Lease Industrial and Office REIT
Peakstone is a Differentiated Net Lease Industrial and Office REIT Wholly-Owned Portfolio Highlights ZF WABCO – North Charleston, SC AT&T (3 Properties) – Redmond, WA 18.2mm 13 years Rentable Sq. Ft Average Building Age2 Keurig Dr. Pepper – Boston, MA York – Greenwood Village, CO 96% 73% Leased1 of
Slide 7: Wholly-Owned Portfolio Provides Durable Cash Flows with Built-in Long-Term Growth Prospects
Wholly-Owned Portfolio Provides Durable Cash Flows with Built- in Long-Term Growth Prospects Wholly-Owned Industrial Segment Office Segment Other Segment Total (Office & Industrial) Property Count 73 19 35 19 Rentable Sq. Ft (mm) 18.2 9.0 5.7 3.5 In-Place ABR (mm) $201.8 $48.4 / 24% $112.3 / 56% $41
Slide 8: An Overview of Other Segment Assets
An Overview of Other Segment Assets Other Segment Key Figures 19 17% / 83% 3.5mm Properties Industrial / Office1 Rentable Gold Pointe – Rancho Cordova, CA Raytheon - Charlotte, NC Square Feet 01 Vacant Buildings 02 Short-Term WALT $41.1mm 2.7 82% ABR WALT (Years)2 % Leased3 Asset Attributes Other Se
Slide 9: High-Quality, Well-Located Industrial and Office Segment Properties
High-Quality, Well-Located Industrial and Office Segment Properties Illinois 23 States AT&T • 3M • Amazon • Berry Global Massachusetts (3 Properties) 32 Markets • Rapiscan Systems • Keurig Dr Pepper (2 Properties) of ABR from Coastal 72% & Sunbelt Markets Atlas Copco New Jersey Corteva Agriscience R
Slide 10: Optimizing Portfolio and Balance Sheet
Optimizing Portfolio and Balance Sheet Executed Go-Forward Strategy ✓ Closed Eight Dispositions of Wholly-Owned Assets in 2023 • $131mm of gross proceeds in 2Q 2023 Maintain a Stabilized Build Upon Existing Portfolio • $300mm of gross proceeds YTD 2023 Portfolio of High- Self-Funded by Selectively A
Slide 11: Primary Long-Term Objective to Maximize Shareholder Value Over Time
Primary Long-Term Objective to Maximize Shareholder Value Over Time 01 Improve per share metrics through internal and external growth Multi-channel investment strategy across the risk and capital 02 spectrum Future focus on acquiring distribution / warehouse assets with Object Object//Logo Logo 03 m
Slide 12: Entrepreneurial & Cycle-Tested Team with Proven Public Real Estate Operating Experience
Entrepreneurial & Cycle-Tested Team with Proven Public Real Estate Operating Experience Peakstone Management Team Overview CAPITAL MARKETS ✓ Highly experienced executive management team1 ACQUISITIONS & ─ Average ~34 years of real estate experience DEVELOPMENT ─ Decades of experience operating public
Slide 13: A Deeper Dive
A DEEPER DIVE 01 More About Our Industrial and Office Segments 02 Value Creation Capabilities 03 Capitalization Overview
Slide 14: More About Our Industrial and Office Segments
01 More About Our Industrial and Office Segments
Slide 15: Industrial and Office Segment Attributes
01 Industrial and Office Segment Attributes Industrial Segment Office Segment Samsonite – Jacksonville, FL Amazon – Pataskala, OH onsemi – Scottsdale, AZ International Paper – Memphis, TN 13 years 91% 11 years 78% Average Building Age1 of RSF from Properties Average Building Age1 of RSF from Propert
Slide 16: Strategically Located and Critical to the Business Operations of Tenants
01 Strategically Located and Critical to the Business Operations of Tenants PepsiCo – Lakeland, FL Roush Industries – Allen Park, MI Modern, High-Quality Buildings Difficult-to-Replicate Locations or with Market-Leading Specifications High-Growth Markets MISO – Carmel, IN Pepsi Bottling Ventures – W
Slide 17: Industrial and Office Segments Well-Positioned and Diversified Across High-Growth Markets
01 Industrial and Office Segments Well-Positioned and Diversified Across High-Growth Markets Industrial Segment Markets Office Segment Markets by % of Segment ABR by % of Segment ABR Notes: Data is for wholly-owned assets as of June 30, 2023. 13
Slide 18: 49% of Industrial Segment ABR from Properties Proximate to Top US Ports
01 49% of Industrial Segment ABR from Properties Proximate to Top US Ports Port-Adjacent Industrial Segment Assets Top 10 US Miles to % of 1 Property Name Nearest Port Port Rank # Port Segment ABR Port Newark TransDigm 2 25 2% (Port of NY/NJ) Shaw Industries Port of Savannah 4 11 7% Huntington Ingal
Slide 19: Leased to High-Quality Tenants Diversified Across Industries
01 Leased to High-Quality Tenants Diversified Across Industries Industrial Segment Office Segment 1 2 1 2 Top 10 Industrial Tenants Rating WALT (yrs.) % of Segment ABR Top 10 Office Tenants Rating WALT (yrs.) % of Segment ABR 1 AA 8.1 17% 1 Baa14 6.4 10% 3 2 IG10 7.2 15% 2 BBB+ 20.7 8% 3 A24 3.3 10%
Slide 20: Majority Investment Grade Tenancy, 100% Historical Rent Collection
01 Majority Investment Grade Tenancy 100% Historical Rent Collection Industrial Segment Investment Grade Office Segment Investment Grade Tenants1 by % of Segment ABR Tenants1 by % of Segment ABR Notes: Data is for wholly-owned assets as of June 30, 2023. (1) Weighted average based on ABR. Represents
Slide 21: Near-Term Stability with Long-Term Ability to Capitalize on Opportunities
01 Near-Term Stability with Long-Term Ability to Capitalize on Opportunities % Industrial Segment ABR Expiring Per Year % Office Segment ABR Expiring Per Year 6.6 7.9 IndustrialSegment Office Segment WALT(yrs.)1 WALT (yrs.)1 Notes: Data is for wholly-owned assets as of June 30, 2023. (1) Weighted av
Slide 22: Significant Upside Through Industrial Segment Mark-to-Market Opportunity
01 Significant Upside Through Industrial Segment Mark-to- Market Opportunity Industrial Segment Industrial Segment Significant Embedded Value In-Place ABR PSF vs Total In-Place ABR vs Illustrative Cash Releasing Market Rent PSF Market Rent Spreads at Current x 9.0mm Market Rent1 Upside SF Potential:
Slide 23: Differentiated Office Segment Assets
01 Differentiated Office Segment Assets ◼ 78% of rentable square feet from properties with 4+ Star rating High-Quality Assets (CoStar)1 and Modern Buildings ◼ 11-year Average Building Age2 IGT – Las Vegas, NV ◼ 81% of ABR generated from Coastal or SunBelt markets3 High-Growth Markets ◼ Located in ma
Slide 24: Value Creation Capabilities
02 Value Creation Capabilities
Slide 25: Versatile Investment Strategies
02 Versatile Investment Strategies ✓ Property & Portfolio ✓ Tax Deferred Strategies Acquisitions Amazon – Pataskala, OH Avnet – Chandler, AZ ✓ Repositioning and ✓ Corporate M&A Development Opportunities Amazon – Arlington Heights, IL Signature REIT ✓ Joint Ventures ✓ Proactive Asset Management RH –
Slide 26: Team Has Proven Experience Identifying and Executing Value Creation Opportunities
02 Team Has Proven Experience Identifying and Executing Value Creation Opportunities Amazon – Arlington Heights, IL Repositioning ✓ Generated significant value accretion through an early lease termination that provided proceeds for a strategic R&D-to-warehouse conversion ✓ Achieved credit and lease
Slide 27: Capitalization Overview
Wik] Peakstone (3) Capitalization Overview
Slide 28: Balance Sheet and Liquidity Overview
03 Balance Sheet and Liquidity Overview Capitalization Overview As of As of As of 12/31/2022 3/31/2023 6/30/2023 Rate 1 Term Secured Fixed Rate Mortgages $539,803 $518,930 $517,146 4.49% 4.0 Total Secured Debt $539,803 $518,930 $517,146 Unsecured Debt 2024 Term Loan 400,000 - - 2025 Term Loan 400,00
Slide 29: Wholly-Owned Balance Sheet and Liquidity Overview (Cont'd)
03 Wholly-Owned Balance Sheet and Liquidity Overview (Cont’d) Consolidated Debt Maturity as of 6/30/231 Other Balance Sheet Highlights as of 6/30/231 Fixed Rate Mortgages Term Loans Total Liquidity: $395mm Revolver Loan Remaining Revolver Commitment • Net Consolidated Debt / Total Gross Real Estate:
Slide 30: Building Blocks of Net Asset Value
03 Building Blocks of Net Asset Value Wholly-Owned LQA Cash NOI1 Balance Sheet Components Industrial Segment $ 48 Cash & Restricted Cash2 $ 364 + Book Value of Office JV $ 146 Office Segment $ 108 + Other Assets $ 72 Other Segment $ 36 Total Consolidated Debt $ 1,467 Other Liabilities $ 86 Notes: $
Slide 31: A Compelling Investment Opportunity
A Compelling Investment Opportunity Wholly-owned, high-quality, newer-vintage portfolio of predominantly single-tenant industrial 01 and office properties located in diverse, strategic growth markets Shaw Industries – Savannah, GA 02 Self-funded business model through limited capital recycling and f
Slide 32: Appendix
APPENDIX
Slide 33: 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 34: Corporate Responsibility Commitment
Corporate Responsibility Commitment Fully committed to ESG initiatives E S G • Minimize environmental impact of our buildings • Diverse executive management team • Sound corporate governance essential to the success of our organization and stakeholders • Emphasize the health and well-being of buildi
Slide 35: Our Office Joint Venture
Our Office Joint Venture Office JV Key Stats JV Portfolio Stats1 August 2022 Date Entered JV Vanguard – Charlotte, NC 2500 Windy Ridge Parkway – Atlanta, GA 59 / 46 Office Buildings / Properties $1.3bn Transaction Value1 22 49% Markets Minority Interest $146mm Duke Bridges I – Frisco, TX 2 Circle St
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Wholly-Owned Reconciliation of Net Income to NOI Quarter Ended 6/30/2023 Net (loss) income (452,403) General and administrative expenses 12,030 Corporate operating expenses to related parties 341 Real estate impairment provision 397,373 Depreciation and
Slide 37: Reconciliation of Non-GAAP Financial Measures (Cont'd)
Reconciliation of Non-GAAP Financial Measures (Cont’d) Wholly-Owned NOI and Cash NOI Quarter Ended 06/30/2023 Industrial Total Industrial Office and Office Other Portfolio 1 2Q23 NOI $12,320 $28,923 $41,243 $8,403 $49,646 Non-cash adjustments Straight line rent (107) (2,831) (2,938) 293 (2,645) In-p
Slide 38: Reconciliation of Non-GAAP Financial Measures (Cont'd)
Reconciliation of Non-GAAP Financial Measures (Cont’d) Net (loss) income to Normalized EBITDAre Quarter Ended 06/30/2023 Net (loss) income (452,403) Interest expense 16,068 Depreciation and amortization 30,472 2Q23 EBITDA (405,863) Loss (Gain) on sales of real estate, net 9,701 Loss on investment in
Slide 39: Detailed Wholly-Owned Portfolio Summary
Detailed Wholly-Owned Portfolio Summary Property Building Square Year Built / Property % of Total 2 13 3 # Segment Property / Tenant Name Address Property Market State Feet Tenancy Type Property Sub Type % Leased Renovated WALT ABR 01 Industrial RH 825 Rogers Rd. Stockton/Modesto CA 1,501,400 Single
Slide 40: Detailed Wholly-Owned Portfolio Summary (Cont'd)
Detailed Wholly-Owned Portfolio Summary (Cont’d) Property Building Square Year Built / Property % of Total 2 13 3 # Segment Property / Tenant Name Address Property Market State Feet Tenancy Type Property Sub Type % Leased Renovated WALT ABR 31 Office McKesson (5801 North Pima Road) 5801 North Pima R
Slide 41: Detailed Wholly-Owned Portfolio Summary (Cont'd)
Detailed Wholly-Owned Portfolio Summary (Cont’d) Property Building Square Year Built / Property % of Total 2 13 3 # Segment Property / Tenant Name Address Property Market State Feet Tenancy Type Property Sub Type % Leased Renovated WALT ABR 55 Other Wyndham Hotels & Resorts 22 Sylvan Way Northern Ne
Slide 42: Definitions
Definitions Term Definition “Annualized Base Rent” or “ABR” means the contractual base rent excluding abatement periods and deducting base year operating expenses for gross and modified gross leases as of June 30, 2023, unless otherwise specified, multiplied by 12 months. For properties ABR (“Annual
Slide 43: 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 dispo
Slide 44: Definitions (Cont'd)
Definitions (Cont’d) Term Definition “Normalized EBITDAre” is a non-GAAP supplemental performance measure to evaluate the operating performance of the Company. Normalized EBITDAre, as defined by the Company, represents EBITDAre(as defined by NAREIT), modified to exclude items such as acquisition-rel
Slide 45: Definitions (Cont'd)
Definitions (Cont’d) Term Definition "Normalized EBITDAre (Consolidated)" represents Normalized EBITDAre adjusted to exclude items related to any unconsolidated entities. We calculated Normalized EBITDAre (Consolidated) as follows: Normalized EBITDAre (Consolidated) Management believes these adjustm
Slide 46: Definitions (Cont'd)
Definitions (Cont’d) Term Definition “Net Debt (pro rata share)” is total consolidated debt plus unconsolidated debt (pro rata share), less cash and cash equivalents (excluding Net Debt (pro rata share) restricted cash). “NOI” is a non-GAAP measure calculated as net (loss) income, the most directly
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