Peakstone Realty Trust · NYSE:PKST
Peakstone Realty Trust — Q4 2023 Earnings Presentation
65 slides from Peakstone Realty Trust's earnings presentation, Feb 22, 2024
Slide 1: Supplemental Information Fourth Quarter 2023
Supplemental Information Fourth Quarter 2023
Slide 2: Table of Contents
2 Table of Contents Page Company Highlights 4 Financial Information 8 Debt & Capitalization 23 Leasing Activity & Asset Management 28 Components of Net Asset Value 31 Property Information 33 Portfolio Characteristics 38 Notes & Definitions 58
Slide 3: Disclaimer
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 71 Properties 17.9M Square Feet 24 States 96.4%3 Leased 25%/56%/19%1 Industrial/ Office/Other 6.5 Years1 WALT 61.2%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 6.7 $ 48,977 58.7 % Office5 35 95.5 5,603,000 7.6 110,762 68.1 TOTAL / WEIGHTED AVERAGE INDUSTRIAL AND
Slide 7: Fourth Quarter Key Metrics
7 Consolidated Leverage $550.9 million40.2% Net Debt / Total Gross Real Estate $0.29/$0.80 FFO/AFFO Per Share/Unit2 6.2x Net Debt / Normalized EBITDAre (consol.)4 Total Revenue $63.1 million Same Store Cash NOI3 Liquidity5 1 Calculated based on weighted average number of common shares outstanding -
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 36,054,940. 2 Calculated based on weighted average number of common shares outstanding - basic and diluted of 36,054,940 and weighted average number of OP Units outstanding of 3,404,247 for a total of
Slide 10: Revenue, NOI and Cash NOI by Segment
10 For the Quarter Ended (Unaudited, USD in thousands) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 REVENUE BY SEGMENT Industrial $ 14,796 $ 13,934 $ 13,981 $ 14,594 $ 15,945 Office 34,525 34,022 34,999 39,189 45,643 Industrial and Office Total 49,321 47,956 48,980 53,783 61,588 Other 13,737
Slide 11: Consolidated Statements of Operations
11 For the Quarter Ended (Unaudited, USD in thousands, except per share metrics) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 REVENUES Rental income $ 63,058 $ 61,713 $ 62,540 $ 66,973 $ 75,893 EXPENSES Property operating expense 7,232 7,829 6,919 7,110 9,357 Property tax expense 5,079 5,077
Slide 12: Consolidated Balance Sheets - Assets
12 As of (Unaudited, USD in thousands) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 ASSETS Cash and cash equivalents $ 391,802 $ 364,446 $ 360,626 $ 368,210 $ 233,180 Restricted cash1 9,208 5,651 3,042 1,999 4,764 Real estate Land 231,175 244,369 245,872 316,341 327,408 Building and improveme
Slide 13: Consolidated Balance Sheets - Liabilities and Equity
13 As of (Unaudited, USD in thousands) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 LIABILITIES AND EQUITY Debt, net $ 1,435,923 $ 1,442,003 $ 1,460,536 $ 1,461,584 $ 1,485,402 Distributions payable 8,344 8,296 8,295 5,164 12,402 Due to related parties 573 706 1,043 876 1,458 Intangible liabi
Slide 14: Reconciliation of Net Income to Total NOI (Quarterly)
14 For the Quarter Ended (Unaudited, USD in thousands) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 Net (loss) income $ (21,767) $ (139,948) $ (452,403) $ 9,017 $ (248,142) General and administrative 11,551 1 9,653 12,030 1 9,728 11,532 Corporate operating expenses to related parties 178 257
Slide 15: Reconciliation of Net Income to Total NOI (Annual)
15 For the Year Ended (Unaudited, USD in thousands) 12/31/2023 12/31/2022 Net (loss) income $ (605,102) $ (441,382) General and administrative 42,962 38,995 Corporate operating expenses to related parties 1,154 1,349 Real estate impairment provision 409,512 127,577 Goodwill impairment provision 16,0
Slide 16: NOI to Cash NOI Reconciliation (Quarter)
16 For the Quarter Ended For the Quarter Ended 12/31/2023 12/31/2022 (Unaudited, USD in thousands) Industrial Office Total Industrial and Office Other Total Portfolio Industrial Office Total Industrial and Office Other Total Portfolio Revenue $ 14,796 $ 34,525 $ 49,321 $ 13,737 $ 63,058 $ 15,945 $ 4
Slide 17: NOI to Cash NOI Reconciliation (Year)
17 For the Year Ended For the Year Ended 12/31/2023 12/31/2022 (Unaudited, USD in thousands) Industrial Office Total Industrial and Office Other Total Portfolio Industrial Office Total Industrial and Office Other Total Portfolio Revenue $ 57,304 $ 142,734 $ 200,038 $ 54,246 $ 254,284 $ 61,347 $ 297,
Slide 18: Same Store Cash NOI
18 For the Quarter Ended For the Year Ended (Unaudited, USD in thousands) 12/31/2023 12/31/2022 12/31/2023 12/31/2022 CASH NOI ALLOCATION � Industrial $ 12,485 $ 13,300 $ 48,897 $ 52,051 Office 28,763 32,723 112,470 $ 221,391 Industrial and Office Total $ 41,248 $ 46,023 $ 161,367 $ 273,442 � Other
Slide 19: Reconciliation of Net Income to FFO and AFFO
19 For the Quarter Ended (Unaudited, USD in thousands, except per share metrics) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 Reconciliation of Net (Loss) Income to Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) NET (LOSS) INCOME $ (21,767) $ (139,948) $ (452,403) $ 9,0
Slide 20: Reconciliation of Net Income to EBITDAre
20 For the Quarter Ended (Unaudited, USD in thousands) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 Reconciliation of Net income (loss) to EBITDAre Net (loss) income $ (21,767) $ (139,948) $ (452,403) $ 9,017 $ (248,142) Interest expense 16,415 16,126 16,068 17,014 16,501 Depreciation and amo
Slide 21: Unconsolidated Office Joint Venture - Condensed Financial Information
21 For the Quarter Ended (Unaudited, USD in thousands) 12/31/2023 1 9/30/20231 6/30/2023 1 3/31/20231 12/31/20221 Total revenues $ 49,598 $ 50,889 $ 49,917 $ 44,789 $ 16,500 Expenses: Operating expenses (18,167) (16,838) (16,611) (15,822) (5,550) General and administrative (1,856) (1,699) (2,174) (1
Slide 22: Capital Expenditures
22 For the Quarter Ended (Unaudited, USD in thousands) 12/31/2023 % of NOI1 9/30/2023 % of NOI1 6/30/2023 % of NOI1 3/31/2023 % of NOI1 12/31/2022 % of NOI1 Maintenance Capital Expenditures by segment: Industrial $ 651 1.3 % $ 30 0.1 % $ 505 1.0 % $ — — % $ 358 0.6 % Office — — — — — — — — 325 0.5 T
Slide 23: Debt & Capitalization
Debt & Capitalization
Slide 24: Capitalization and Net Debt
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 5.38% (SOFR), plus spreads of 1.25% (T
Slide 25: Consolidated Debt Summary
25 As of (Unaudited, USD in thousands) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 SECURED FIXED-RATE DEBT Mortgage borrowings on wholly-owned portfolio $ 491,545 $ 498,224 $ 517,146 $ 518,930 $ 539,803 Total Secured Fixed-Rate Debt 491,545 498,224 517,146 518,930 539,803 UNSECURED FLOATING-
Slide 26: Secured Debt Detail
26 (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 $ 17,439 BOA II Loan 1 4.32% 5/1/2028 250,000 Total Industrial and Office 267,439 OTHER Highway 94 Mortgage
Slide 27: Debt Maturity Schedule
27 1 Represents the Highway 94 mortgage loan. | 2 Represents the Pepsi Bottling Ventures mortgage loan. | 3 Represents the AIG II loan. | 4 Represents the 2025 Term Loan. | 5 Represents the Revolving Loan. As of December 31, 2023, the maturity date of the Revolving Loan was March 30, 2024 (with two
Slide 28: Leasing Activity & Asset Management
Leasing Activity & Asset Management
Slide 29: New and Renewal Leases
29 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) Net Rent Change From Prior Lease (GAAP) N
Slide 30: Portfolio Square Footage and Occupancy Changes
30 1 Occupancy changes reflect leases with commencements during the quarter. 2 Expiring with renewal square footage includes expirations accelerated due to early renewal. The Company executed early extensions with Samsonite and TransDigm in the quarter, which had original lease expiration dates of N
Slide 31: Components of Net Asset Value
Components of Net Asset Value
Slide 32: Components of Net Asset Value
32 (Unaudited, USD in thousands) Annualized Base Rent Balance Sheet Components (cont'd) ABR Percentage of ABR LIABILITIES Industrial � � Revolving loan and term loans2 $ 950,000 Investment grade1 $ 28,727 14.6 % Mortgages payable2 491,545 � Sub-investment grade1 15,298 7.8 Distributions payable 8,34
Slide 33: Property Information
Property Information
Slide 34: Property List
34 USD in thousands, except Annualized Base Rent / SF metrics Segment Property/Tenant Name Address Property Market Property State Building Square Feet Tenancy Type Leased %1 Property Sub Type Year Built/ Renovated2 Property WALT3 % of Total ABR3 1 Industrial RH 825 Rogers Road Stockton/Modesto CA 1,
Slide 35: Property List (Office)
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 %1 Property Sub Type Year Built/ Renovated2 Property WALT3 % of Total ABR3 20 Office Southern Company 3525 & 3535 Colonnade Par
Slide 36: Property List (Office, 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 40 Office Occidental Petroleum 501 North Division Stre
Slide 37: Property List (Other)
37 Property List (continued) As of December 31, 2023 USD in thousands, except Annualized Base Rent / SF metrics Segment Property / Tenant Name Address Property Market Property State Building Square Feet Tenancy Type Leased %1 Property Sub-Type Year Built/ Renovated2 Property WALT3 % of Total ABR3 55
Slide 38: Portfolio Characteristics
Portfolio Characteristics
Slide 39: Lease Escalations by Segment
39 1 Weighted average rental increase is based on the remaining term of each lease as of December 31, 2023. Excludes leases with remaining term less than one year. Lease Escalation Frequency % of ABR Wtd. Avg. Annual Growth Rate 1 Annually 85.9% 2.1% Every 5 Years 10.8 0.7 Other Frequencies 1.5 — No
Slide 40: Tenant Concentration: Consolidated
40 Top 10 Tenants Tenant/Major Tenant Rating1 % of ABR2 WALT (years)3 1 Keurig Dr. Pepper, Inc. Baa14 5.9% 5.9 2 Southern Company Services, Inc. BBB+ 4.7 20.2 3 LPL Holdings, Inc. BBB- 4.4 12.8 4 Amazon5 AA 4.4 7.6 5 Freeport McMoRan Baa14 4.0 3.4 6 Maxar Technologies HY56 3.9 6.5 7 RH HY16 3.8 6.7
Slide 41: Tenant Concentration: Industrial and Office
41 Top 10 Tenants Tenant/Major Tenant Rating1 % of ABR2 WALT (years)3 1 Keurig Dr. Pepper, Inc. Baa14 7.2% 5.9 2 Southern Company Services, Inc. BBB+ 5.8 20.2 3 LPL Holdings, Inc. BBB- 5.4 12.8 4 Amazon5 AA 5.4 7.6 5 Freeport McMoRan Baa14 4.9 3.4 6 Maxar Technologies HY56 4.8 6.5 7 RH HY16 4.7 6.7
Slide 42: Tenant Concentration: Industrial
42 Top 10 Tenants Tenant/Major Tenant Rating1 % of ABR2 WALT (years)3 1 Amazon4 AA 17.5% 7.6 2 RH HY15 15.3 6.7 3 3M Company A3 6 10.2 2.8 4 Samsonite, LLC BB 8.4 5.9 5 Shaw Industries, Inc. AA 6.8 9.3 6 Pepsi Co. A+ 6.6 4.6 7 Amcor Rigid Plastics USA, LLC BBB 5.5 8.8 8 Huntington Ingalls, Inc. BBB-
Slide 43: Tenant Concentration: Office
43 Top 10 Tenants Tenant/Major Tenant Rating1 % of ABR2 WALT (years)3 1 Keurig Dr. Pepper Baa14 10.4% 5.9 2 Southern Company Services, BBB+ 8.3 20.2 3 LPL Holdings BBB- 7.9 12.8 4 Freeport McMoRan Baa1 4 7.1 3.4 5 Maxar Technologies HY55 7.0 6.5 6 McKesson Corporation A- 5.5 4.8 7 Travel & Leisure,
Slide 44: Industry Concentration: Consolidated
44 Industry Concentration: Consolidated As of December 31, 2023 Top 10 Industries Top 20 Sub-Industries Industry % of ABR1 Sub-Industry % of ABR1 1 Capital Goods 16.5 % 1 Aerospace & Defense 10.7 2 Consumer Services 11.0 2 Soft Drinks 8.5 3 Materials 10.2 3 Hotels, Resorts & Cruise Lines 6.7 4 Food,
Slide 45: Industry Concentration: Industrial and Office
45 Industry Concentration: Industrial and Office As of December 31, 2023 Top 10 Industries Top 20 Sub-Industries Industry % of ABR1 Sub-Industry % of ABR1 1 Capital Goods 14.8 % 1 Soft Drinks 10.4 % 2 Materials 12.5 2 Aerospace & Defense 10.1 3 Food, Beverage & Tobacco 10.4 3 Renewable Electricity 5
Slide 46: Industry Concentration: Industrial
46 Industry Concentration: Industrial As of December 31, 20232021 Top 8 Industries Top 14 Sub-Industries Industry % of ABR1 Sub-Industry % of ABR1 1 Capital Goods 22.9 % 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 C
Slide 47: Industry Concentration: Office
47 Industry Concentration: Office As of December 31, 2023 2021 Top 10 Industries Top 20 Sub-Industries Industry % of ABR1 Sub-Industry % of ABR1 1 Materials 14.3 % 1 Aerospace & Defense 11.3 % 2 Capital Goods 11.3 2 Soft Drinks 10.4 3 Food, Beverage & Tobacco 10.4 3 Renewable Electricity 8.3 4 Utili
Slide 48: Market Concentration: Consolidated
48 Geographic Distribution (% of ABR1) Market Concentration: Consolidated As of December 31, 2023 (USD in thousands) Top 10 Markets (% of ABR) Markets ABR % of ABR1 1 Phoenix $ 23,336 11.9 % 2 Northern New Jersey 19,532 9.9 3 Denver 14,100 7.2 4 Boston 12,449 6.3 5 Charlotte 12,266 6.2 6 Birmingham
Slide 49: Market Concentration: Industrial and Office
49 Geographic Distribution (% of ABR1) Market Concentration: Industrial and Office As of December 31, 2023 (USD in thousands) Top 10 Markets (% of ABR) Markets ABR % of ABR1 1 Phoenix $ 20,032 12.5 % 2 Boston 12,449 7.8 3 Denver 10,711 6.7 4 Northern New Jersey 10,107 6.3 5 Birmingham 9,224 5.8 6 Ch
Slide 50: Market Concentration: Industrial
50 Geographic Distribution (% of ABR1) Market Concentration: Industrial As of December 31, 2023 (USD in thousands) Top 10 Markets (% of ABR) Markets ABR % of ABR1 1 Chicago $ 8,865 18.1 % 2 Columbus 7,685 15.7 3 Stockton/Modesto 7,487 15.3 4 Jacksonville 4,094 8.4 5 Savannah 3,335 6.8 6 Tampa 3,214
Slide 51: Market Concentration: Office
51 Geographic Distribution (% of ABR1) Market Concentration: Office As of December 31, 2023 (USD in thousands) Top 10 Markets (% of ABR) Markets ABR % of ABR1 1 Phoenix $ 20,032 18.1 % 2 Boston 12,449 11.2 3 Denver 10,711 9.7 4 Birmingham 9,224 8.3 5 Northern New Jersey 8,983 8.1 6 Charlotte 8,701 7
Slide 52: Market Concentrations: Other
52 Geographic Distribution (% of ABR1) Market Concentrations: Other As of December 31, 2023 (USD in thousands) Top 10 Markets (% of ABR) Markets ABR % of ABR1 1 Northern New Jersey $ 9,425 25.5 % 2 Houston 4,618 12.5 3 Charlotte 3,565 9.6 4 Denver 3,389 9.2 5 Phoenix 3,304 8.9 6 Jefferson City 2,798
Slide 53: Lease Expirations: Consolidated
53 Lease Expirations: Consolidated As of December 31, 2023 (USD in thousands) Lease Maturity Schedule (by ABR) 1 Based on ABR for wholly-owned portfolio. $17,045 $8,090 $13,308 $14,349 $18,726 $38,756 $26,458 $15,951 $11,379 $32,669 2024 2025 2026 2027 2028 2029 2030 2031 2032 >2032 Expiring Leases
Slide 54: Lease Expirations: Industrial and Office
54 Lease Expirations: Industrial and Office As of December 31, 2023 (USD in thousands) Lease Maturity Schedule (by ABR) $1,002 $3,330 $10,616 $14,349 $15,327 $31,162 $25,024 $15,951 $10,611 $32,367 2024 2025 2026 2027 2028 2029 2030 2031 2032 >2032 Expiring Leases Year Industrial Office Approx. Squa
Slide 55: Lease Expirations: Industrial
55 Lease Expirations: Industrial As of December 31, 2023 (USD in thousands) Lease Maturity Schedule (by ABR) $— $1,377 $5,000 $— $7,494 $5,613 $7,487 $8,590 $4,647 $8,769 2024 2025 2026 2027 2028 2029 2030 2031 2032 >2032 Expiring Leases Year Leases Approx. Square Feet ABR % of ABR1 2024 — — $ — — %
Slide 56: Lease Expirations: Office
56 Lease Expirations: Office As of December 31, 2023 (USD in thousands) Lease Maturity Schedule (by ABR) $1,002 $1,953 $5,616 $14,349 $7,833 $25,549 $17,537 $7,361 $5,964 $23,598 2024 2025 2026 2027 2028 2029 2030 2031 2032 >2032 Expiring Leases Year Leases Approx. Square Feet ABR % of ABR1 2024 1 5
Slide 57: Lease Expirations: Other
57 Lease Expirations: Other As of December 31, 2023 (USD in thousands) Lease Maturity Schedule (by ABR1) $16,043 $4,760 $2,692 $— $3,399 $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 2024 8 1,340,500 $ 16,04
Slide 58: Notes & Definitions
Notes & Definitions
Slide 59: Notes & Definitions
59 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 December 31, 2023, unless otherwise specified, multiplied by 12 months. F
Slide 60: Notes & Definitions: FFO and AFFO
60 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 61: Notes & Definitions: FFO and AFFO (continued)
61 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 62: Notes & Definitions: NOI, Cash NOI and Same Store Cash NOI
62 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 63: Notes & Definitions: NOI to Cash NOI Reconciliation
63 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 9/30/2023 6/30/2023 3/31/2023 (Unaudited, USD in thousands) Industrial Office Other Total Portfolio I
Slide 64: Notes & Definitions: Normalized EBITDAre
64 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 65: Notes & Definitions: Operating Margin, Per Share, WALT
65 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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