Peakstone Realty Trust · NYSE:PKST
Peakstone Realty Trust — Q3 2024 Earnings Presentation
44 slides from Peakstone Realty Trust's earnings presentation, Oct 30, 2024
Slide 1: Investor Presentation Third Quarter 2024
Investor Presentation Third Quarter 2024
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
REALTY TRUST PEAKSTONE OVERVIEW
Slide 5: Compelling Investment Opportunity
Compelling Investment Opportunity 01 High-quality, well-located industrial properties with modern specifications located in diverse, strategic growth markets Shaw Industries – Savannah, GA 02 High-quality, newer vintage office properties located in markets with strong demographic trends 03 Experienc
Slide 6: Differentiated Portfolio Offering Stability and Growth
Differentiated Portfolio Offering Stability and Growth Industrial Highlights ZF WABCO – North Charleston, SC AT&T (3 Properties) – Redmond, WA 100% 13 years 53% Leased1 Average Building Age2 of ABR from Coastal & Sunbelt Markets2 Office Highlights 3M – Dekalb, IL York – Greenwood Village, CO 99% 12
Slide 7: Portfolio Overview
Portfolio Overview Industrial & Industrial Office Other Portfolio Office Segment Segment Segment Total Segments Property Count 19 33 52 10 62 Rentable Sq. Ft 9,001,800 5,360,700 14,362,500 1,878,300 16,240,800 In-Place ABR (mm) $50.0 / 27.5% $112.3 / 61.8% $162.3 $19.5 / 10.7% $181.8 LQA Adjusted Ca
Slide 8: High-Quality, Well-Located Industrial and Office Segment Properties
High-Quality, Well-Located Industrial and Office Segment Properties Illinois 22 States AT&T • 3M • Amazon (3 Properties) • Berry Global Massachusetts 29 Markets • Rapiscan Systems • Keurig Dr Pepper (2 Properties) Industrial Atlas Copco New Jersey Roush • TransDigm Office / Data Center PPG • Travel
Slide 9: Substantial Accomplishments Post-Listing
Substantial Accomplishments Post-Listing Company Positioned for Growth Significantly reduced leverage from 7.1x at listing to 6.2x in 3Q24 1 Successful amendment and extension of credit facility $1.8bn of office asset sales over the last two years and exited Office Joint Venture 2 3 Optimiza
Slide 10: Progressing Disposition of Other Segment Properties
Progressing Disposition of Other Segment 21 Properties At Listing (4/13/23) $40.0mm ABR 19.1% of Portfolio ABR 17 Properties 2023 Year-End $37.0mm ABR 18.8% of Portfolio ABR 10 Properties As of $19.5mm ABR 9/30/24 10.7% of Portfolio ABR Notes: Data as of September 30, 2024. 9
Slide 11: Primary Long-Term Objective - Maximize Shareholder Value
Primary Long-Term Objective - Maximize Shareholder Value Maintain a stabilized portfolio of high-quality, well-located 01 real estate 02 Improve per share metrics through internal and external growth Implement industrial investment strategy across the risk and Object Object//Logo Logo 03 capital spe
Slide 12: Entrepreneurial & Cycle-Tested Team
Entrepreneurial & Cycle-Tested Team Peakstone Management Team Overview CAPITAL Highly experienced Team MARKETS ─ Executive Management1 INVESTMENTS & ─ Average ~35 years of real estate experience DEVELOPMENT ─ Decades of experience operating public companies ASSET ─ Senior Professionals2 MANAGEMENT
Slide 13: A Deeper Dive
A DEEPER DIVE 01 Industrial and Office Segments 02 Value Creation Capabilities 03 Capitalization Overview 12
Slide 14: Industrial and Office Segments
01 Industrial and Office Segments 13
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% 12 years 83% Average Building Age1 of RSF from Properties Average Building Age1 of RSF from Propert
Slide 16: 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 17: Segments Well-Positioned and Diversified Across Established and High-Growth 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 September 30, 2024. (1) No individual market included within “other” accounts for m
Slide 18: Industrial Segment: 49% of ABR from Properties Proximate to Top US Ports
01 Industrial Segment: 49% of ABR from Properties Proximate to Top US Ports Port-Adjacent Industrial Segment Assets Top 10 U.S. Miles to % of 1 Property Name Nearest Port Port Rank # Port Segment ABR Port Newark TransDigm 3 25 2% (Port of NY/NJ) Shaw Industries Port of Savannah 4 11 7% Huntington In
Slide 19: 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 4 1 AA 6.8 17% 1 Baa1 5.1 11% 2 B14 5.9 15% 2 A- 19.5 8% 3 A34 2.1 10% 3 B
Slide 20: Industrial Segment: Lease Expiration Schedule
01 Industrial Segment: Lease Expiration Schedule 6.3 IndustrialSegment WALT(yrs.)1 Notes: Data as of September 30, 2024. (1) Weighted average based on ABR. 19
Slide 21: Industrial Segment: Significant Mark-to-Market Opportunity
01 Industrial Segment: Significant Mark-to-Market Opportunity Industrial Segment In-Place ABR vs Market Rent Significant Embedded Value Illustrative Cash Releasing PSF x 9.0mm Total Spreads at Current SF Market Rent1 Potential Potential Upside: Upside: +62% RH – Patterson, CA +73% Shaw Industries –
Slide 22: Office Segment: High-Quality Assets
Office Segment: High-Quality Assets 01 83% of rentable square feet from properties with 4+ Star rating1 Newer Vintage Buildings 12-year Average Building Age2 IGT – Las Vegas, NV Established and High- 83% of ABR generated from Coastal or Sunbelt markets Growth Markets Located in markets with
Slide 23: Office Segment: Lease Expiration Schedule
01 Office Segment: Lease Expiration Schedule 7.2 Office Segment WALT (yrs.)1 Limited near-term rollover (only 4% of Office Segment ABR through 2026) Notes: Data as of September 30, 2024. (1) Weighted average based on ABR. 22
Slide 24: Value Creation Capabilities
02 Value Creation Capabilities 23
Slide 25: 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 26: Proven Experience Identifying and Executing Value Creation Opportunities
02 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 term enha
Slide 27: Capitalization Overview
03 Capitalization Overview 26
Slide 28: Credit Facility Amendment and Extension
Credit Facility Amendment and Extension 03 Credit Facility Amendment Key Highlights1 $907 million unsecured credit facility Resulting Debt Metrics Fixed Unsecured $547 million $210 million $150 million revolver term loan term loan Floating3 Secured extended maturity to extended maturity to unchanged
Slide 29: Leverage Overview
Leverage Overview 03 Effective As of As of As of As of As of Interest Rate 1 Term 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 Secured Fixed Rate Mortgages 4.43% 3.1 $433,018 $463,999 $471,083 $491,545 $498,224 Total Secured Debt $433,018 $463,999 $471,083 $491,545 $498,224 Unsecured Debt 2026
Slide 30: Debt Maturity
Debt Maturity 03 Debt Maturity 29 Notes: $ in millions.
Slide 31: Abbreviated Building Blocks of Net Asset Value, Industrial and Office Segments
03 Abbreviated Building Blocks of Net Asset Value, Industrial and Office Segments In-Place ABR as of 9/30/24 Balance Sheet Components As of 9/30/241 Industrial Segment $ 50.0 Cash2 $ 246 Office Segment $ 112.3 Total Debt $ 1,000 Total $ 162.3 Excludes ABR and Balance Sheet Components related to the
Slide 32: Appendix
REALTY TRUST 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: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Net (loss) Income to NOI Quarter Ended 9/30/2024 Net (loss) income (26,549) General and administrative 9,122 Corporate operating expenses to related parties 141 Real estate impairment provision 42,894 Depreciation and amortization 22,74
Slide 36: Reconciliation of Non-GAAP Financial Measures (Cont'd)
Reconciliation of Non-GAAP Financial Measures (Cont’d) NOI and Cash NOI Quarter Ended September 30, 2024 Industrial Industrial Office & Office Other Total Portfolio 3Q24 NOI $12,698 $27,447 $40,145 $3,714 $43,859 Non-cash adjustments Straight line rent (1,473) (706) (2,179) (18) (2,197) In-place lea
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 9/30/2024 Net (loss) income (26,549) Interest expense 14,140 Depreciation and amortization 22,742 EBITDA 10,333 Gain (loss) on sales of real estate, net (16,125) Impairment provision, real e
Slide 38: Property List
Property List 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 Road Stockton/Modesto CA 1,501,400 Single Tenant Warehouse 100.0% 20
Slide 39: Property List (Cont'd)
Property List (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 N. Pima Road) 5801 N. Pima Road Phoenix AZ 124,900 Single
Slide 40: Property List (Cont'd)
Property List (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 53 Other Wyndham Hotels & Resorts 22 Sylvan Way Northern New Jersey NJ 249,400 Single T
Slide 41: Definitions
Definitions Term Definition “Annualized Base Rent” or “ABR” means the contractual base rent excluding rent abatements and deducting base year operating expenses for gross and modified gross leases as of September 30, 2024, unless otherwise specified, multiplied by 12 months. For ABR (“Annualized Bas
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-re
Slide 44: Definitions (Cont'd)
Definitions (Cont’d) Term Definition Net operating income (“NOI”) is a non-GAAP financial measure calculated as net (loss) income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding general and administrative expenses, interest expense, depreci
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