Peakstone Realty Trust · NYSE:PKST
Peakstone Realty Trust — Q3 2023 Earnings Presentation
66 slides from Peakstone Realty Trust's earnings presentation, Nov 9, 2023
Slide 1: Supplemental Information Third Quarter 2023
Supplemental Information Third Quarter 2023
Slide 2: Table of Contents
2 Table of Contents Page Company Highlights 5 Financial Information 8 Debt & Capitalization 23 Leasing Activity & Asset Management 29 Components of Net Asset Value 31 Property Information 33 Portfolio Characteristics 38 Notes & Definitions 58
Slide 3: Disclaimer on Forward-Looking Statements
3 Disclaimer Disclaimer on 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”), and Section 21E of the Securities Exchange
Slide 4: Company Highlights
Company Highlights
Slide 5: High-Quality Portfolio of Office & Industrial Properties Net-Leased to Creditworthy Tenants
5 High-Quality Portfolio of Office & Industrial Properties Net-Leased to a Diversified Pool of Creditworthy Tenants4 73 Properties 18.1M Square Feet 24 States 96.4%3 Leased 24%/56%/20%1 Industrial/ Office/Other 6.3 Years1 WALT 60.1%1,2 Investment Grade 1.9%1 Avg. Annual Rent Escalations 1 Weighted a
Slide 6: Portfolio Summary by Segment
6 (Unaudited, USD in thousands) Number of Properties Economic Occupancy1 Total Rentable Square Feet WALT (years)2 Annualized Base Rent Investment Grade by Segment3 Industrial4 19 100.0 % 9,001,800 6.3 $ 48,777 58.5 % Office5 36 97.0 5,684,400 7.7 113,528 64.8 TOTAL / WEIGHTED AVERAGE INDUSTRIAL AND
Slide 7: Third Quarter Financial Highlights
7 Consolidated Leverage $516.6 million40.0% Net Debt + Preferred / Total Gross Real Estate (consol.) $(2.79)/$0.78 FFO/AFFO Per Share/Unit2 6.4x Net Debt + Preferred / Normalized EBITDAre (consol.)4 Total Revenues $61.7 million Same Store Cash NOI3 Liquidity5 1 Calculated based on weighted average n
Slide 8: Financial Information
4» | Peakstone Financial Information
Slide 9: Selected Financial Data
9 1 Calculated based on weighted average number of common shares outstanding - basic and diluted of 35,975,483. 2 Calculated based on weighted average number of common shares outstanding - basic and diluted of 35,975,483 and weighted average number of OP Units outstanding of 3,482,977 for a total of
Slide 10: Selected Financial Data by Segment
10 For the Quarter Ended (Unaudited, USD in thousands) 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 REVENUES BY SEGMENT Industrial $ 13,934 $ 13,981 $ 14,594 $ 15,945 $ 15,095 Office 34,022 34,999 39,189 45,643 72,128 Industrial and Office Total 47,956 48,980 53,783 61,588 87,223 Other 13,757
Slide 11: Consolidated Statements of Operations
11 For the Quarter Ended (Unaudited, USD in thousands, except per share metrics) 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 REVENUES Rental income $ 61,713 $ 62,540 $ 66,973 $ 75,893 $ 101,330 EXPENSES Property operating expense 7,829 6,919 7,110 9,357 13,716 Property tax expense 5,077 5,545
Slide 12: Consolidated Balance Sheets - Assets
12 As of (Unaudited, USD in thousands) 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 ASSETS Cash and cash equivalents $ 364,446 $ 360,626 $ 368,210 $ 233,180 $ 75,838 Restricted cash 5,651 3,042 1,999 4,764 12,045 Real estate Land 244,369 245,872 316,341 327,408 380,998 Building and improvement
Slide 13: Consolidated Balance Sheets - Liabilities and Equity
13 As of (Unaudited, USD in thousands) 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 LIABILITIES AND EQUITY Debt, net $ 1,442,003 $ 1,460,536 $ 1,461,584 $ 1,485,402 $ 1,486,783 Distributions payable 8,296 8,295 5,164 12,402 12,111 Due to related parties 706 1,043 876 1,458 1,636 Intangible lia
Slide 14: Reconciliation of Net Income to Total NOI - Quarterly
14 For the Quarter Ended (Unaudited, USD in thousands) 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Net (loss) income $ (139,948) $ (452,403) $ 9,017 $ (248,142) $ (119,373) General and administrative 9,653 12,030 1 9,728 11,532 9,521 Corporate operating expenses to related parties 257 341 378
Slide 15: Reconciliation of Net Income to Total NOI - Nine Months
15 For the Nine Months Ended (Unaudited, USD in thousands) 9/30/2023 9/30/2022 Net (loss) income $ (583,332) $ (193,240) General and administrative 31,411 27,463 Corporate operating expenses to related parties 975 1,065 Real estate impairment provision 397,373 86,254 Depreciation and amortization 86
Slide 16: NOI and Cash NOI Reconciliation - Quarter
16 For the Quarter Ended For the Quarter Ended 9/30/2023 9/30/2022 (Unaudited, USD in thousands) Industrial Office Total Industrial and Office Other Total Portfolio Industrial Office Total Industrial and Office Other Total Portfolio Revenue $ 13,934 $ 34,022 $ 47,956 $ 13,757 $ 61,713 $ 15,095 $ 72,
Slide 17: NOI and Cash NOI Reconciliation - Nine Months
17 For the Nine Months Ended For the Nine Months Ended 9/30/2023 9/30/2022 (Unaudited, USD in thousands) Industrial Office Total Industrial and Office Other Total Portfolio Industrial Office Total Industrial and Office Other Total Portfolio Revenue $ 42,508 $ 108,210 $ 150,718 $ 40,508 $ 191,226 $ 4
Slide 18: Same Store Cash NOI
18 For the Quarter Ended For the Nine Months Ended (Unaudited, USD in thousands) 9/30/2023 9/30/2022 9/30/2023 9/30/2022 CASH NOI ALLOCATION � Industrial $ 11,901 $ 12,846 $ 36,411 $ 38,754 Office 27,430 52,879 83,708 $ 188,656 Industrial and Office Total $ 39,331 $ 65,725 $ 120,119 $ 227,410 � Othe
Slide 19: Reconciliation of Net Income to FFO and AFFO
19 For the Quarter Ended (Unaudited, USD in thousands, except per share metrics) 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Reconciliation of Net (Loss) Income to Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) NET (LOSS) INCOME $ (139,948) $ (452,403) $ 9,017 $ (248,14
Slide 20: Reconciliation of Net Income to EBITDAre
20 For the Quarter Ended (Unaudited, USD in thousands) 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Reconciliation of Net income (loss) to EBITDAre Net (loss) income $ (139,948) $ (452,403) $ 9,017 $ (248,142) $ (119,373) Interest expense 16,126 16,068 17,014 16,501 24,283 Depreciation and amo
Slide 21: Unconsolidated Office Joint Venture - Condensed Financial Information
21 For the Quarter Ended (Unaudited, USD in thousands) 9/30/20231 6/30/2023 1 3/31/20231 12/31/20221 9/30/2022 Total revenues $ 50,889 $ 49,917 $ 44,789 $ 16,500 $ — Expenses: Operating expenses (16,838) (16,611) (15,822) (5,550) — General and administrative (1,699) (2,174) (1,481) (500) — Depreciat
Slide 22: Capital Expenditures
22 For the Quarter Ended (Unaudited, USD in thousands) 9/30/2023 % of NOI1 6/30/2023 % of NOI1 3/31/2023 % of NOI1 12/31/2022 % of NOI1 9/30/2022 % of NOI1 Maintenance Capital Expenditures by segment: Industrial $ 30 0.1 % $ 505 1.0 % $ — — % $ 358 0.6 % $ — — % Office — — — — — — 325 0.5 (22) — Tot
Slide 23: Debt & Capitalization
Debt & Capitalization
Slide 24: Debt Summary
24 1The contractual rate for the Company's unsecured debt excludes the impact of fixed-rate swaps and uses the applicable Secured Overnight Financing Rate ("SOFR" or SOF rate"). Inclusive of a five day look-back per the credit facility agreement, the rates were 5.31%, plus spreads of 1.25% (Term Loa
Slide 25: Capitalization and Debt Ratios
25 1 The Company has no obligation to contribute capital to the unconsolidated joint venture and has no guarantee requirement related to the debt of the unconsolidated joint venture. 2On April 10, 2023, the Company redeemed all issued and outstanding preferred shares (5mm Series A Preferred Shares w
Slide 26: Consolidated Debt Summary
26 As of (Unaudited, USD in thousands) 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 SECURED FIXED-RATE DEBT Mortgage borrowings on wholly-owned portfolio $ 498,224 $ 517,146 $ 518,930 $ 539,803 $ 541,689 Total Secured Fixed-Rate Debt 498,224 517,146 518,930 539,803 541,689 UNSECURED FLOATING-R
Slide 27: Secured Debt Detail
27 (Unaudited, USD in thousands) SECURED DEBT Collateral Contractual Interest Rate Maturity Date Outstanding Balance INDUSTRIAL AND OFFICE Pepsi Bottling Ventures Mortgage Loan 3.69% 10/1/2024 $ 17,540 BOA II Loan 1 4.32% 5/1/2028 250,000 Total Industrial and Office 267,540 OTHER Highway 94 Mortgage
Slide 28: Debt Maturity Schedule
28 1 Represents the Highway 94 mortgage loan. | 2 Represents the Pepsi Bottling Ventures mortgage loan. | 3 Represents the AIG II mortgage loan. | 4 Represents the 2025 Term Loan. | 5 Represents the 2026 Term Loan. | 6 Represents the Revolving Line of Credit. The Revolver has a maturity date of Sept
Slide 29: Leasing Activity & Asset Management
Leasing Activity & Asset Management
Slide 30: Leasing Activity - Executed Leases
30 NEW AND RENEWAL LEASES Tenant / Property Segment Location New Lease Start Date New Lease Expiration Date Term (Yrs) Square Feet Leasing Commissions $/SF Tenant Improvement $/SF Starting Net Rent/SF Prior Net Rent/SF Net Rent Change From Prior Lease (Cash) NEW LEASES None New leases total / weight
Slide 31: Portfolio Occupancy and Square Footage Changes
31 1 Occupancy changes reflect leases with commencements during the quarter. 2 Expiring square footage includes square footage for lease renewals that were executed in the current quarter. This includes leases which may be effective in the current quarter or in future quarters. During Q3, this inclu
Slide 32: Components of Net Asset Value
Components of Net Asset Value
Slide 33: Net Asset Value Components
33 (Unaudited, USD in thousands) Annualized Base Rent Balance Sheet Components (cont'd) ABR Percentage of ABR LIABILITIES Industrial � � � Revolving credit facility and term loans2 $ 950,000 Investment grade1 $ 28,527 14.1 % Mortgages payable2 498,224 � Sub-investment grade1 15,298 7.5 Accrued tenan
Slide 34: Property Information
Property Information
Slide 35: Property List
35 USD in thousands, except Annualized Base Rent / SF metrics Segment Property/Tenant Name Address Property Market Property State Building Square Feet Tenancy Type Leased %2 Property Sub Type Year Built/ Renovated1 Property WALT3 % of Total ABR3 1 Industrial RH 825 Rogers Road Stockton/Modesto CA 1,
Slide 36: Property List (continued)
36 USD in thousands, except Annualized Base Rent / SF metrics Segment Property / Tenant Name Address Property Market Property State Building Square Feet Tenancy Type Leased %2 Property Sub Type Year Built/ Renovated1 Property WALT3 % of Total ABR3 20 Office Southern Company 3525 & 3535 Colonnade Par
Slide 37: Property List (continued)
37 USD in thousands, except Annualized Base Rent / SF metrics Segment Property/Tenant Name Address Property Market Property State Building Square Feet Tenancy Type Leased %2 Property Sub Type Year Built/ Renovated1 Property WALT3 % of Total ABR3 40 Office Occidental Petroleum 501 North Division Stre
Slide 38: Property List (continued)
38 Property List (continued) As of September 30, 2023 (1) Year shown is either the year built or year substantially renovated. (2) Total calculated as a weighted average based on rentable square feet. (3) Total calculated as a weighted average based on ABR. (4) Lease restricts certain disclosures. U
Slide 39: Portfolio Characteristics
Portfolio Characteristics
Slide 40: Lease Escalations by Segment
40 1 Weighted average rental increase is based on the remaining term of each lease as of September 30, 2023. Excludes leases with remaining term less than one year. Lease Escalation Frequency % of ABR Wtd. Avg. Annual Growth Rate 1 Annually 86.1% 2.2% Every 5 Years 10.6 0.7 Other Frequencies 1.5 — N
Slide 41: Tenant Concentration: Consolidated
41 Top 10 Tenants Tenant/Major Tenant Rating1 % of ABR2 WALT (years)3 1 Keurig Dr. Pepper Baa14 5.7% 6.1 2 Southern Company Services BBB+ 4.5 20.5 3 LPL Holdings BBB- 4.2 13.1 4 Amazon5 AA 4.2 7.8 5 Freeport McMoRan Baa24 3.9 3.6 6 Maxar Technologies HY56 3.8 6.8 7 RH HY16 3.7 6.9 8 Wyndham Hotels &
Slide 42: Tenant Concentration: Industrial and Office
42 Top 10 Tenants Tenant/Major Tenant Rating1 % of ABR2 WALT (years)3 1 Keurig Dr. Pepper Baa14 7.1% 6.1 2 Southern Company Services BBB+ 5.7 20.5 3 LPL Holdings BBB- 5.3 13.1 4 Amazon5 AA 5.3 7.8 5 Freeport McMoRan Baa24 4.8 3.6 6 Maxar Technologies HY56 4.8 6.8 7 RH HY16 4.6 6.9 8 McKesson A- 3.8
Slide 43: Tenant Concentration: Industrial
43 Top 10 Tenants Tenant/Major Tenant Rating1 % of ABR2 WALT (years)3 1 Amazon4 AA 17.5% 7.8 2 RH HY15 15.3 6.9 3 3M Company A2 6 10.0 3.1 4 Samsonite BB 8.4 1.2 5 Shaw Industries AA 6.8 9.5 6 PepsiCo A+ 6.6 4.8 7 Amcor BBB 5.5 9.1 8 Huntington Ingalls BBB- 5.3 4.3 9 Pepsi Bottling Ventures, LLC A2
Slide 44: Tenant Concentration: Office
44 Top 10 Tenants Tenant/Major Tenant Rating1 % of ABR2 WALT (years)3 1 Keurig Dr. Pepper Baa14 10.2% 6.1 2 Southern Company Services BBB+ 8.1 20.5 3 LPL Holdings BBB- 7.5 13.1 4 Freeport McMoRan Baa2 4 6.9 3.6 5 Maxar Technologies HY55 6.8 6.8 6 McKesson A- 5.4 5.0 7 Travel & Leisure, Co. BB- 5.1 5
Slide 45: Industry Concentration: Consolidated
45 Industry Concentration: Consolidated As of September 30, 2023 Top 10 Industries Top 20 Sub-Industries Industry % of ABR1 Sub-Industry % of ABR1 1 Capital Goods 15.9 % 1 Aerospace & Defense 10.4 2 Consumer Services 10.6 2 Soft Drinks 8.2 3 Materials 9.8 3 Hotels, Resorts & Cruise Lines 6.5 4 Food,
Slide 46: Industry Concentration: Industrial and Office
46 Industry Concentration: Industrial and Office As of September 30, 2023 Top 10 Industries Top 20 Sub-Industries Industry % of ABR1 Sub-Industry % of ABR1 1 Capital Goods 14.6 % 1 Soft Drinks 10.3 % 2 Materials 12.3 2 Aerospace & Defense 10.0 3 Food, Beverage & Tobacco 10.3 3 Health Care Services 5
Slide 47: Industry Concentration: Industrial
47 Industry Concentration: Industrial As of September 30, 20232021 Top 8 Industries Top 14 Sub-Industries Industry % of ABR1 Sub-Industry % of ABR1 1 Capital Goods 22.8 % 1 Internet & Direct Marketing Retail 17.5 % 2 E-Commerce 17.5 2 Homefurnishing Retail 15.3 3 Retailing 15.3 3 Soft Drinks 10.5 4
Slide 48: Industry Concentration: Office
48 Industry Concentration: Office As of September 30, 2023 2021 Top 10 Industries Top 20 Sub-Industries Industry % of ABR1 Sub-Industry % of ABR1 1 Materials 13.9 % 1 Aerospace & Defense 11.0 % 2 Capital Goods 11.0 2 Soft Drinks 10.2 3 Health Care Equipment & Services 10.7 3 Health Care Services 8.2
Slide 49: Market Concentration: Consolidated
49 Geographic Distribution (% of ABR1) Market Concentration: Consolidated As of September 30, 2023 (USD in thousands) Top 10 Markets (% of ABR) Markets ABR % of ABR1 1 Phoenix $ 23,280 11.5 % 2 Northern New Jersey 19,490 9.6 3 Denver 14,100 7.0 4 Boston 12,449 6.1 5 Charlotte 12,117 6.0 6 Birmingham
Slide 50: Market Concentration: Industrial and Office
50 Geographic Distribution (% of ABR1) Market Concentration: Industrial and Office As of September 30, 2023 (USD in thousands) Top 10 Markets (% of ABR) Markets ABR % of ABR1 1 Phoenix $ 20,032 12.3 % 2 Boston 12,449 7.7 3 Denver 10,711 6.6 4 Northern New Jersey 10,065 6.2 5 Birmingham 9,224 5.7 6 C
Slide 51: Market Concentration: Industrial
51 Geographic Distribution (% of ABR1) Market Concentration: Industrial As of September 30, 2023 (USD in thousands) Top 10 Markets (% of ABR) Markets ABR % of ABR1 1 Chicago $ 8,719 17.9 % 2 Columbus 7,685 15.8 3 Stockton/Modesto 7,487 15.3 4 Jacksonville 4,094 8.4 5 Savannah 3,335 6.8 6 Tampa 3,214
Slide 52: Market Concentration: Office
52 Geographic Distribution (% of ABR1) Market Concentration: Office As of September 30, 2023 (USD in thousands) Top 10 Markets (% of ABR) Markets ABR % of ABR1 1 Phoenix $ 20,032 17.6 % 2 Boston 12,449 11.0 3 Denver 10,711 9.4 4 Birmingham 9,224 8.1 5 Northern New Jersey 8,941 7.9 6 Charlotte 8,552
Slide 53: Lease Expirations: Consolidated
53 Lease Expirations: Consolidated As of September 30, 2023 (USD in thousands) Lease Maturity Schedule (by ABR) 1 Based on ABR for wholly-owned portfolio. 2 Excludes approximately 4.5K of square feet, from two properties, subject to leases with third parties for building amenities that do not genera
Slide 54: Lease Expirations: Industrial and Office
54 Lease Expirations: Industrial and Office As of September 30, 2023 (USD in thousands) Lease Maturity Schedule (by ABR) $5,076 $4,717 $10,518 $14,349 $16,377 $27,026 $25,024 $17,636 $10,557 $31,025 2024 2025 2026 2027 2028 2029 2030 2031 2032 >2032 Expiring Leases Year Industrial Office Approx. Squ
Slide 55: Lease Expirations: Industrial
55 Lease Expirations: Industrial As of September 30, 2023 (USD in thousands) Lease Maturity Schedule (by ABR) $4,094 $1,377 $4,902 $— $8,618 $1,519 $7,487 $8,542 $4,593 $7,645 2024 2025 2026 2027 2028 2029 2030 2031 2032 >2032 Expiring Leases Year Leases Approx. Square Feet ABR % of ABR1 Remaining 2
Slide 56: Lease Expirations: Office
56 Lease Expirations: Office As of September 30, 2023 (USD in thousands) Lease Maturity Schedule (by ABR) $982 $3,340 $5,616 $14,349 $7,759 $25,507 $17,537 $9,094 $5,964 $23,380 2024 2025 2026 2027 2028 2029 2030 2031 2032 >2032 Expiring Leases Year Leases Approx. Square Feet ABR % of ABR1 Remaining
Slide 57: Lease Expirations: Other
57 Lease Expirations: Other As of September 30, 2023 (USD in thousands) Lease Maturity Schedule (by ABR1) $19,658 $4,760 $2,692 $— $3,343 $7,594 $1,434 $— $768 $302 2024 2025 2026 2027 2028 2029 2030 2031 2032 >2032 Expiring Leases Year Total Approx. Square Feet ABR % of ABR1 Remaining 2023 — — $ —
Slide 58: Market Concentrations: Other
58 Geographic Distribution (% of ABR1) Market Concentrations: Other As of September 30, 2023 (USD in thousands) Top 10 Markets (% of ABR) Markets ABR % of ABR1 1 Northern New Jersey $ 9,425 23.2 % 2 Houston 8,233 20.3 3 Charlotte 3,565 8.8 4 Denver 3,389 8.4 5 Phoenix 3,248 8.0 6 Jefferson City 2,79
Slide 59: Notes & Definitions
Notes & Definitions
Slide 60: Notes & Definitions
60 Notes & Definitions ABR (Annualized Base Rent) “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 September 30, 2023, unless otherwise specified, multiplied by 12 months.
Slide 61: Notes & Definitions (continued) - FFO and AFFO
61 Notes & Definitions (continued) Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO") "FFO" and "AFFO" are non-GAAP financial measures that we believe are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the opera
Slide 62: Notes & Definitions (continued) - FFO and AFFO
62 Notes & Definitions (continued) FFO and AFFO - cont. Management believes that AFFO is a beneficial indicator of its ongoing portfolio performance and ability to sustain its current distribution level. More specifically, AFFO isolates the financial results of the Company's operations. AFFO, howeve
Slide 63: Notes & Definitions (continued) - NOI, Cash NOI, Same Store
63 Notes & Definitions (continued) Net Operating Income (NOI), Cash NOI, and Same Store Cash NOI “NOI” is a non-GAAP measure calculated as net (loss) income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding equity in the earnings of our uncon
Slide 64: Notes & Definitions (continued) - NOI to Cash NOI Reconciliation
64 Notes & Definitions (continued) The table below represents a reconciliation of NOI to Cash NOI for the interim periods presented in the "Selected Financial Data" on page 10. For the Quarter Ended 6/30/2023 3/31/2023 12/31/2022 (Unaudited, USD in thousands) Industrial Office Other Total Portfolio
Slide 65: Notes & Definitions - Normalized EBITDAre
65 Notes & Definitions Normalized EBITDAre “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 acquisiti
Slide 66: Notes & Definitions (continued)
66 Notes & Definitions (continued) Operating Margin "Operating Margin" is NOI/Revenue. Per Share "Per Share" data represents basic and diluted shares and reflects the impact of the Company's one-for-nine reverse share split. Pro Rata "Pro rata" represents the Company's share of the unconsolidated jo
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