Peakstone Realty Trust · NYSE:PKST
Peakstone Realty Trust — Q4 2023 Earnings Presentation
45 slides from Peakstone Realty Trust's earnings presentation, Feb 22, 2024
Slide 1: Investor Presentation Fourth Quarter 2023
Investor Presentation Fourth Quarter 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. Company Overview II. A Deeper Dive PepsiCo – Lakeland, FL • 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: Compelling Investment Opportunity
Compelling Investment Opportunity High-quality, newer-vintage portfolio of predominantly single-tenant industrial and office 01 properties located in diverse, strategic growth markets Shaw Industries – Savannah, GA 02 Self-funded business model through capital recycling and free cash flow 03 Experie
Slide 6: Differentiated Net Lease Industrial and Office REIT
Differentiated Net Lease Industrial and Office REIT Portfolio Highlights 17.9mm 13 years ZF WABCO – North Charleston, SC AT&T (3 Properties) – Redmond, WA Rentable Sq. Ft Average Building Age2 Keurig Dr. Pepper – Boston, MA York – Greenwood Village, CO 96% 72% Leased1 of ABR from Coastal & Sunbelt M
Slide 7: Cash Flows with Built-in Long-Term Growth Prospects
Cash Flows with Built-in Long-Term Growth Prospects Industrial Segment Office Segment Other Segment Portfolio Total (Office & Industrial) Property Count 71 19 35 17 Rentable Sq. Ft (mm) 17.9 9.0 5.6 3.3 In-Place ABR (mm) $196.7 $49.0 / 25% $110.7 / 56% $37.0 / 19% LQA Adjusted Cash NOI (mm)1 $196.6
Slide 8: 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 (3 Properties) • Berry Global Massachusetts 31 Markets • Rapiscan Systems • Keurig Dr Pepper (2 Properties) of ABR from Coastal 72% & Sunbelt Markets Atlas Copco New Jersey Roush • TransDigm Cor
Slide 9: Optimizing Portfolio and Balance Sheet
Optimizing Portfolio and Balance Sheet Execution Highlights Go-Forward Strategy DispositionsClosed 11 Dispositions in 2023 Maintain Our Expand Existing Stabilized • $336mm of gross proceeds in 2023 Portfolio of High- Self-Funded Portfolio by • $27mm of gross proceeds in 4Q 2023 Quality, Well- Abil
Slide 10: Primary Long-Term Objective is to Maximize Shareholder Value
Primary Long-Term Objective is to Maximize Shareholder Value 01 Improve per share metrics through internal and external growth Implement multi-channel investment strategy across the risk 02 and capital spectrum Object Object//Logo Logo 03 Expansion focused on investing in industrial properties Selec
Slide 11: 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 Highly experienced Executive Management Team1 MARKETS ─ Average ~34 years of real estate experience INVESTMENTS & DEVELOPMENT ─ Decades of experience operating public
Slide 12: A Deeper Dive
A DEEPER DIVE 01 Industrial and Office Segments 02 Value Creation Capabilities 03 Capitalization Overview
Slide 13: Industrial and Office Segments
01 Industrial and Office Segments
Slide 14: 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 79% Average Building Age1 of RSF from Properties Average Building Age1 of RSF from Propert
Slide 15: Strategically Located and Central to the Business Operations of Tenants
01 Strategically Located and Central to the Business Operations of Tenants PepsiCo – Lakeland, FL Roush Industries – Allen Park, MI Modern, High-Quality Buildings Difficult-to-Replicate Locations with Market-Leading Specifications MISO – Carmel, IN Pepsi Bottling Ventures – Winston-Salem, NC Central
Slide 16: Industrial and Office Segments Well-Positioned and Diversified Across Markets
01 Industrial and Office Segments Well-Positioned and Diversified Across Established and High-Growth Markets Industrial Segment Markets Office Segment Markets by % of Segment ABR by % of Segment ABR Notes: Data as of December 31, 2023. (1) No individual market included within “other” accounts for mo
Slide 17: 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 18: Leased to High-Quality Tenants Diversified Across Industries
Leased to High-Quality Tenants Diversified Across Industries 01 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 7.6 18% 1 Baa14 5.9 10% 2 HY13 6.7 15% 2 BBB+ 20.2 8% 3 A34 2.8 10% 3
Slide 19: Majority Investment Grade Tenancy
Majority Investment Grade Tenancy 01 Industrial Segment Investment Grade Office Segment Investment Grade Tenants1 by % of Segment ABR Tenants1 by % of Segment ABR Notes: Data as of December 31, 2023. (1) Weighted average based on ABR. Represents ratings of tenants, guarantors or non-guarantor parent
Slide 20: 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 6.7 7.6 IndustrialSegment Office Segment WALT(yrs.)1 WALT (yrs.)1 Notes: Data as of December 31, 2023. (1) Weighted average based on ABR. 16
Slide 21: 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 22: Differentiated Office Segment Assets
Differentiated Office Segment Assets 01 High-Quality Assets 79% of rentable square feet from properties with 4+ Star rating1 and Modern Buildings 11-year Average Building Age2 IGT – Las Vegas, NV Established and High- 80% of ABR generated from Coastal or Sunbelt markets3 Growth Markets Locat
Slide 23: Value Creation Capabilities
02 Value Creation Capabilities
Slide 24: Versatile Investment Strategies
Versatile Investment Strategies 02 Cycle-tested team with insight, experience, relationships and creativity to source, structure, and execute on multiple transaction types Property & Portfolio Tax Deferred Strategies Investments Amazon – Pataskala, OH Avnet – Chandler, AZ Repositioning and C
Slide 25: 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 26: Capitalization Overview
Wi) Peakstone (03) Capitalization Overview
Slide 27: Progress Strengthening Balance Sheet
Progress Strengthening Balance Sheet 03 Capitalization Overview As of As of As of As of As of Effective 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Rate 1 Term Secured Fixed Rate Mortgages $539,803 $518,930 $517,146 $498,224 $491,545 4.42% 3.7 Total Secured Debt $539,803 $518,930 $517,146 $4
Slide 28: Consolidated Balance Sheet and Liquidity Overview
Consolidated Balance Sheet and Liquidity Overview 03 Debt Maturity as of 12/31/231 Other Balance Sheet Highlights as of 12/31/231 Total Credit Facility: $1.3 billion Total Liquidity: $551mm • Net Consolidated Debt / Total Gross • Revolving Credit Facility: $750mm Real Estate: 40% • Cash and Cash Equ
Slide 29: Building Blocks of Net Asset Value
Building Blocks of Net Asset Value 03 LQA Adjusted Cash NOI1 Balance Sheet Components Industrial Segment $ 50 Cash & Restricted Cash2 $ 401 + Other Balance Sheet Assets $ 63 Office Segment $ 113 + Total Consolidated Debt $ 1,442 Other Segment $ 34 Other Balance Sheet Liabilities $ 88 Notes: $ in mil
Slide 30: Compelling Investment Opportunity
Compelling Investment Opportunity High-quality, newer-vintage portfolio of predominantly single-tenant industrial and office 01 properties located in diverse, strategic growth markets Shaw Industries – Savannah, GA 02 Self-funded business model through limited capital recycling and free cash flow 03
Slide 31: Appendix
APPENDIX
Slide 32: Overview of Other Segment Assets
Overview of Other Segment Assets Other Segment Key Figures 17 3.3mm 2.6 Properties Square Feet WALT (Years)1 Crosspoint– Phoenix, AZ Raytheon - Charlotte, NC 01 Vacant Buildings 02 Short-Term WALT 12 Properties* Subject to Non-Recourse Portfolio Mortgage Loans Asset Attributes Other Segment Non-Reco
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: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Net Income to NOI Quarter Ended 12/31/2023 Net (loss) income (21,767) General and administrative 11,551 Corporate operating expenses to related parties 178 Goodwill Impairment provision 16,031 Real estate impairment provision 12,138 Dep
Slide 36: Reconciliation of Non-GAAP Financial Measures (Cont'd)
Reconciliation of Non-GAAP Financial Measures (Cont’d) NOI and Cash NOI Quarter Ended December 31, 2023 Industrial Industrial Office & Office Other Total Portfolio 1 4Q23 NOI $12,651 $28,748 $41,399 $8,927 $50,326 Non-cash adjustments Straight line rent (69) (595) (664) 460 (204) In-place lease amor
Slide 37: Reconciliation of Non-GAAP Financial Measures (Cont'd)
Reconciliation of Non-GAAP Financial Measures (Cont’d) Net (loss) income to Normalized EBITDAre Quarter Ended 12/31/2023 Net (loss) income (21,767) Interest expense 16,415 Depreciation and amortization 25,373 EBITDA 20,021 (Gain) loss on sales of real estate, net (4,507) Loss on investment in uncons
Slide 38: Detailed Portfolio Summary
Detailed 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 Tenant Wareh
Slide 39: Detailed Portfolio Summary (Cont'd)
Detailed 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 4 31 Office McKesson (5801 North Pima Road) 5801 North Pima Rd. Phoenix
Slide 40: Detailed Portfolio Summary (Cont'd)
Detailed 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 New Jersey NJ 2
Slide 41: 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 December 31, 2023, unless otherwise specified, multiplied by 12 months. For ABR (“Annualized Ba
Slide 42: 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 43: 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 44: 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 45: 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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