Peakstone Realty Trust · NYSE:PKST
Peakstone Realty Trust — Investor Presentation (June 2023)
47 slides from Peakstone Realty Trust's investor presentation, Jun 5, 2023
Slide 1: Investor Presentation June 2023
Investor Presentation June 2023
Slide 2: Disclaimers / Forward-Looking Disclosure
Disclaimers / Forward-Looking Disclosure This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, the Private Securities Litigation Reform Act of 1995 and other feder
Slide 3: Today's Presenters
Today’s Presenters MICHAEL ESCALANTE CHIEF EXECUTIVE OFFICER & PRESIDENT JAVIER BITAR CHIEF FINANCIAL OFFICER & TREASURER 1
Slide 4: Table of Contents
Table of Contents 2 II. A Deeper Dive • More About Our Industrial and Office Segments • Value Creation Capabilities • Capitalization Overview RH – Patterson, CA PepsiCo – Lakeland, FL TransDigm – Whippany, NJ I. Peakstone Overview 01 03 02
Slide 5: Peakstone Overview
Vk] Peakstone PEAKSTONE OVERVIEW
Slide 6: A Compelling Investment Opportunity
A Compelling Investment Opportunity 3 Amazon – Pataskala, OH Experienced, cycle-tested team with strong financial alignment and a real estate operator’s mindset Self-funded business model through limited capital recycling and free cash flow Wholly-owned, high-quality, newer-vintage portfolio of pred
Slide 7: Peakstone is a Differentiated Net Lease Industrial and Office REIT
4 Peakstone is a Differentiated Net Lease Industrial and Office REIT Wholly-Owned Portfolio Highlights ZF WABCO – North Charleston, SC Keurig Dr. Pepper – Boston, MA Samsonite – Jacksonville, FL 3M – Dekalb, IL York – Greenwood Village, CO AT&T (3 Properties) – Redmond, WA18.7mm Rentable Sq. Ft 96%
Slide 8: 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 Notes: $ in millions. Data is for wholly-owned assets and Office JV as of March 31, 2023 adjusted to reflect property sales through May 31, 2023. See detailed property lists for Office, Industrial and Other
Slide 9: An Overview of Other Segment Assets
Vacant Buildings01 Raytheon - Charlotte, NC 02 Short-Term WALT 6 Hitachi Astemo - Columbus, OH Franklin Center - Columbia, MD Partially Leased0403 Cross-Collateralized Assets Asset Attributes Other Segment Debt as of 3/31/2023 Other Segment Key Figures 20 Properties $40.7mm ABR 2.9 WALT (Years)2 17%
Slide 10: High-Quality, Well-Located Industrial and Office Segment Properties
7 High-Quality, Well-Located Industrial and Office Segment Properties Industrial Office / Data Center • Avnet • Freeport McMoRan • McKesson • onsemi Arizona AT&T (3 Properties) RH Guild Mortgage IGT Occidental Petroleum Maxar Technologies York Hopkins Corteva Agriscience MISO International Paper Cig
Slide 11: Optimizing Portfolio and Balance Sheet
Entered JV with Workspace Property Trust and an institutional buyer • Sold 46 office properties for significant cash proceeds • De-levered balance sheet • Eliminated future capex Closed Five Dispositions of Wholly-Owned Assets YTD in 2023 • $237mm of gross proceeds o $169mm in 1Q 2023 o $68mm subseq
Slide 12: Primary Long-Term Objective to Maximize Shareholder Value Over Time
Object / Logo Primary Long-Term Objective to Maximize Shareholder Value Over Time Object / Logo 03 05 01 04 02 Future focus on acquiring distribution / warehouse assets with market leading building specifications Maximize flexibility by targeting investment grade rating Improve per share metrics thr
Slide 13: Entrepreneurial & Cycle-Tested Team with Proven Public Real Estate Operating Experience
10 Entrepreneurial & Cycle-Tested Team with Proven Public Real Estate Operating Experience CAPITAL MARKETS ASSET MANAGEMENT LEASING ACCOUNTING & FINANCE ACQUISITIONS & DEVELOPMENT Peakstone Management Team Overview Highly experienced executive management team1 ─ Average ~34 years of real e
Slide 14: A Deeper Dive
A DEEPER DIVE 01 More About Our Industrial and Office Segments 02 Value Creation Capabilities 03 Capitalization Overview
Slide 15: More About Our Industrial and Office Segments
More About Our Industrial and Office Segments01
Slide 16: Industrial and Office Segment Attributes
Notes: Data is for wholly-owned assets as of March 31, 2023 adjusted to reflect property sales through May 31, 2023. (1) Weighted average based on ABR. (2) Based on average property CoStar star rating on a scale from 1 (low) to 5 (high) and is shown as a % of RSF. (3) Represents distribution / wareh
Slide 17: Strategically Located and Critical to the Business Operations of Tenants
MISO – Carmel, IN Pepsi Bottling Ventures – Winston-Salem, NC 12 Essential to Tenant Operations Modern, High-Quality Buildings with Market-Leading Specifications Significant Tenant Investment Difficult-to-Replicate Locations or High-Growth Markets Strategically Located and Critical to the Business O
Slide 18: Well-Positioned and Diversified Across High-Growth Markets
Phoenix 16% Boston 14% Denver 9% Birmingham 8% Northern New Jersey 7% Charlotte 7% San Diego 6% Las Vegas 4% Memphis 4% Pittsburgh 3% Other 22% Chicago 18% Columbus 16% Stockton/ Modesto 15% Jacksonville 8% Savannah 7% Tampa 7% Detroit 6% Cleveland 6% Hampton Roads 5% Winston-Salem 4% Other 8% 13 No
Slide 19: Port-Adjacent Industrial Segment Assets
Top 10 US Miles to % of Property Name Nearest Port Port Rank #1 Port Segment ABR TransDigm Port Newark (Port of NY/NJ) 2 25 2% Shaw Industries Port of Savannah 4 11 7% Huntington Ingalls (500 West Park Lane) Port of Virginia 6 23 3% Huntington Ingalls (300 West Park Lane) Port of Virginia 6 23 3% ZF
Slide 20: Tenant Industry Diversification
Materials 13% Capital Goods 12% Health Care Equipment & Services 12% Food, Beverage & Tobacco 10% Utilities 9% 10 Other Industries 44% Capital Goods 23% E-Commerce 17% Consumer Durables & Apparel 15% Retailing 15% Food, Beverage & Tobacco 11% 3 Other Industries 19% Peakstone Realty Trust has no affi
Slide 21: Majority Investment Grade Tenancy
IG Rated 70% Sub-IG/Not Rated 30% IG Rated 59% Sub-IG/Not Rated 41% 16 Notes: Data is for wholly-owned assets as of March 31, 2023 adjusted to reflect property sales through May 31, 2023. Industrial Segment Investment Grade Tenants by % of Segment ABR Office Segment Investment Grade Tenants by % of
Slide 22: Near-Term Stability with Long-Term Ability to Capitalize on Opportunities
8% 3% 10% 18% 3% 15% 17% 26% '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 and Thereafter 2% 1% 3% 4% 12% 7% 21% 14% 9% 27% '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 and Thereafter 17 % Office Segment ABR Expiring Per Year 6.8 Industrial Segment WALT (yrs.)1 Notes: Data is for wholly-owned assets as of Marc
Slide 23: Significant Upside Through Industrial Segment Mark-to-Market Opportunity
Upside Potential: Notes: Based on management’s estimated market rents. Data is for wholly-owned assets as of March 31, 2023 adjusted to reflect property sales through May 31, 2023. (1) Illustrative cash releasing spreads are based on management’s estimated market rents today divided by each tenant’s
Slide 24: Office Segment Attributes
Notes: Data is for wholly-owned assets as of March 31, 2023 adjusted to reflect property sales through May 31, 2023. (1) Based on average property CoStar star rating on a scale from 1 (low) to 5 (high) and is shown as a % of RSF. (2) Weighted average based on ABR. (3) Based on ABR. (4) Includes leas
Slide 25: Value Creation Capabilities
02 Value Creation Capabilities
Slide 26: Versatile Investment Strategies
Repositioning and Development Opportunities Corporate M&A Joint Ventures Signature REIT 20 Cycle-tested team with insight, experience, relationships and creativity to source, structure, and execute on multiple transaction types Amazon – Arlington Heights, IL RH – Patterson, CA Versatile Investment S
Slide 27: Team Has Proven Experience Identifying and Executing Value Creation Opportunities
21 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 term enhancement with no downtime and no out-of-pocket capital investment ✓ Increased the rental rate PSF by 6.4%
Slide 28: Capitalization Overview
kl Peakstone (03) Capitalization Overview
Slide 29: Wholly-Owned Balance Sheet and Liquidity Overview
22 Notes: $ in thousands. EBITDA is a non-GAAP financial measure. For a reconciliation to the most directly comparable GAAP financial measure, see slide 31. (1) Represents the 2Q23 sales of an Office segment property in Houston, TX, and an Other segment property in Lone Tree, CO. (2) On April 10, 20
Slide 30: Wholly-Owned Balance Sheet and Liquidity Overview (Cont'd)
23 Wholly-Owned Balance Sheet and Liquidity Overview (Cont’d) 03 Notes: $ in millions. (1) Excludes pro rata share of JV debt. Reflects the redemption of $125mm of perpetual convertible preferred shares. (2) Reflects cash and cash equivalents as of March 31, 2023, adjusted for proceeds from 2Q23 ass
Slide 31: Building Blocks of Net Asset Value
24 Wholly-Owned LQA Cash NOI1 Balance Sheet Components Cash & Restricted Cash2 $ 307 Book Value of Office JV $ 165 Other Assets $ 79 Building Blocks of Net Asset Value 03 Notes: $ in millions. (1) As of March 31, 2023 as adjusted for 2Q23 asset sales. LQA Cash NOI is net of carrying costs for vacant
Slide 32: A Compelling Investment Opportunity
A Compelling Investment Opportunity 25 Amazon – Pataskala, OH Experienced, cycle-tested team with strong financial alignment and a real estate operator’s mindset Self-funded business model through limited capital recycling and free cash flow Wholly-owned, high-quality, newer-vintage portfolio of pre
Slide 33: Appendix
Vk] Peakstone APPENDIX
Slide 34: Highly Reputable Board of Trustees
Notes: Reflects board of trustees post-listing; independent trustees shaded. 26 Highly Reputable Board of Trustees Casey Wold Chair • Current Chief Executive Officer and Managing Partner of Vanderbilt Office Properties • Served as Senior Managing Director of Tishman Speyer and was a member of the In
Slide 35: ESG
E S G • Minimize environmental impact of our buildings • Emphasize the health and well-being of building occupants • Environmentally Sustainable Practices: ─ In-office sustainability initiatives ─ Consider environmental impact in investment decisions ─ Partner with our tenants on sustainability proj
Slide 36: Office JV Key Stats
28 Office JV Key Stats JV Portfolio Stats1 August 2022 Date Entered JV $165mm Book Value of Equity3 $1.3bn Transaction Value1 Workspace Property Trust / Institutional Buyer JV Partner2 59 / 46 Office Buildings / Properties 8.6mm Rentable Square Feet 22 Markets 14 States Vanguard – Charlotte, NC 2500
Slide 37: Reconciliation of Non-GAAP Financial Measures
29 Reconciliation of Non-GAAP Financial Measures Wholly-Owned Reconciliation of Net Income to NOI Notes: $ in thousands. (1) NOI is net of carrying costs for vacant assets. Quarter Ended 03/31/2023 Net (loss) income $9,017 General and administrative expenses 9,912 Corporate operating expenses to aff
Slide 38: Reconciliation of Non-GAAP Financial Measures (Cont'd)
30 Reconciliation of Non-GAAP Financial Measures (Cont’d) Wholly-Owned NOI and Cash NOI Notes: $ in thousands. (1) NOI is net of carrying costs for vacant assets. (2) Adjustment for the 1Q23 sales of properties located in (i) Irvine, CA, (ii) Clinton, SC, and (iii) Herndon, VA. (3) Adjustment for th
Slide 39: Reconciliation of Non-GAAP Financial Measures (Cont'd)
31 Reconciliation of Non-GAAP Financial Measures (Cont’d) Net (loss) income to Normalized EBITDAre Notes: $ in thousands. (1) Transaction expenses for the quarter primarily consisted of initial listing-related expenses. (2) Adjustment for the 2Q23 sales of an Office segment property in Houston, TX,
Slide 40: Detailed Wholly-Owned Portfolio Summary
32 Detailed Wholly-Owned Portfolio Summary Notes: Data is for wholly-owned assets as of March 31, 2023 adjusted to reflect property sales through May 31, 2023. Properties sorted by % of Total ABR. (1) Year shown is either the year built or year substantially renovated. (2) Total calculated as a weig
Slide 41: Detailed Wholly-Owned Portfolio Summary (Cont'd)
33 Detailed Wholly-Owned Portfolio Summary (Cont’d) # Segment Property / Tenant Name Address Property Market Property State Building Square Feet Tenancy Type Property Sub-Type % Leased ² Year Built / Renovated ¹ ³ Property WALT ³ % of Total ABR 31 Office McKesson (5601 N. Pima Road) 5601 N. Pima Rd.
Slide 42: Detailed Wholly-Owned Portfolio Summary (Cont'd)
34 Detailed Wholly-Owned Portfolio Summary (Cont’d) Notes: Data is for wholly-owned assets as of March 31, 2023 adjusted to reflect property sales through May 31, 2023. Properties sorted by % of Total ABR. (1) Year shown is either the year built or year substantially renovated. (2) Total calculated
Slide 43: Definitions
35 Definitions Term Definition 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 March 31, 2023, unless otherwise specified, multiplied by 12 mo
Slide 44: Definitions (Cont'd)
36 Definitions (Cont’d) Term Definition EBITDAre “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
Slide 45: Definitions (Cont'd)
37 Definitions (Cont’d) Term Definition 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
Slide 46: Definitions (Cont'd)
38 Definitions (Cont’d) Term Definition Normalized EBITDAre (Consolidated) “Normalized EBITDAre (Consolidated)” represents Normalized EBITDAre adjusted to exclude items related to any unconsolidated entities. We calculated Normalized EBITDAre (Consolidated) as follows: Management believes these adju
Slide 47: Definitions (Cont'd)
39 Definitions (Cont’d) Term Definition Net Debt “Net Debt” is total consolidated debt less cash and cash equivalents (excluding restricted cash). Net Debt (pro rata share) “Net Debt (pro rata share)” is total consolidated debt plus unconsolidated debt (pro rata share), less cash and cash equivalent
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