Core Viewpoint - Peakstone Realty Trust (PKST) has experienced flat performance over the past year, indicating a muted market response to its stock [1] Company Changes - Historically, Peakstone has operated as an office REIT but is currently undergoing significant changes by selling its office portfolio due to sector pressures [1] Investment Strategy - The company has a history of making contrarian bets based on macro views and stock-specific turnaround stories to achieve outsized returns with a favorable risk/reward profile [1]

Financial Data and Key Metrics Changes - Total revenue for the quarter was approximately $25.8 million from continuing operations, excluding revenue from office discontinued operations of approximately $25.2 million [10] - Net income attributable to common shareholders was approximately $3.5 million, or 9 cents per share [10] - Funds from operations (FFO) was approximately $18.3 million, or 46 cents per share on a fully diluted basis [10] - Core FFO was approximately $19.1 million, or $0.48 per share on a fully diluted basis [11] - Adjusted funds from operations (AFFO) was approximately $18.6 million, or $0.47 per share on a fully diluted basis [11] - Same-store cash net operating income (NOI) increased by 3.7% compared to the same quarter last year [11] Business Line Data and Key Metrics Changes - The industrial portfolio now generates more than 60% of the company's annual base rent (ABR) [4] - The IOS operating portfolio achieved 100% leasing with weighted average releasing spreads of 116% on a cash basis and 120% on a GAAP basis [5] - Incremental IOS ABR generated from new leases, renewals, and proactive lease modifications exceeded $1 million during the quarter [5] Market Data and Key Metrics Changes - The IOS market fundamentals remain solid, characterized by strong tenant demand and persistent supply constraints, keeping vacancies low and supporting healthy rent growth [5] - The company executed a new eight-year lease in Philadelphia with 7.7% average annual rent escalations [6] - In Houston, a new lease was signed with releasing spreads of 9% on a cash basis and 7% on a GAAP basis [6] Company Strategy and Development Direction - The company is focused on a strategic transformation into an industrial-only REIT, emphasizing growth in the industrial outdoor storage sector [4] - The company plans to continue disciplined office sales and targeted IOS acquisitions to strengthen its balance sheet [4] - The company aims to utilize proceeds from office sales to pay down debt, with expectations of completing a majority of these sales by the end of the year [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and ability to create value for shareholders, supported by solid liquidity and a growing IOS investment pipeline [4] - The company noted that the lender community has become more accepting, which may facilitate future acquisitions [19] - Management highlighted the importance of maintaining a flexible balance sheet to respond to market opportunities [19] Other Important Information - Total liquidity at quarter end was approximately $438 million, with a cash balance of approximately $326 million [11] - The company paid a dividend of $0.10 per common share on October 17th and announced a fourth-quarter dividend of the same amount [14][15] - The company reduced total debt by approximately $450 million, improving total leverage to 5.4 times on a pro forma basis [4] Q&A Session Summary Question: When should we expect an acceleration in IOS acquisitions? - Management indicated that they will continue disciplined management of growth and strengthening of the balance sheet, with a current debt ratio of 5.4 times [18] Question: Have you seen any increased competition for IOS assets? - Management noted that there is more acceptance in the market rather than increased competition, with a flexible balance sheet allowing for disciplined responses to opportunities [19] Question: What is the sustainable same-store NOI growth for the portfolio? - Management stated that they are not providing guidance at this time but emphasized transparency and the availability of metrics for analysis [22] Question: How confident are you in achieving the pricing range for remaining office sales? - Management expressed confidence, stating that virtually every asset is engaged and half are officially under control [29]

Portfolio Overview - As of September 30, 2025, the company's portfolio comprised 86 properties, with 70 in the Industrial segment and 16 in the Office segment, which were classified as held for sale and reported within discontinued operations[9] - The Industrial segment's occupancy rate was 100.0% based on rentable square feet and 99.6% based on usable acres, with a weighted average lease term (WALT) of 4.7 years and annualized base rent (ABR) of $74.632 million, representing 50.9% of the total ABR[10] - The Office segment had an occupancy rate of 97.9%, a WALT of 4.6 years, and an ABR of $72.003 million, accounting for 49.1% of the total ABR[10] - In 2025, the company acquired industrial outdoor storage (IOS) assets totaling 38.7 usable acres for a contractual purchase price of $57.718 million[12] - Dispositions from continuing operations in the quarter ended September 30, 2025, included 3 industrial segment properties with 761,500 square feet, resulting in gross sales price of $71.584 million and a gain of $6.641 million[12] - Dispositions from discontinued operations in the quarter ended September 30, 2025, included 8 office segment properties with 1,224,800 square feet, resulting in gross sales price of $247.450 million and a gain of $24.767 million[13] Financial Performance - For the quarter ended September 30, 2025, the company reported a net loss attributable to common shareholders from continuing operations of $0.18 per share and net income attributable to common shareholders from discontinued operations of $0.27 per share[19] - FFO per share/unit was $0.46, Core FFO per share/unit was $0.48, and AFFO per share/unit was $0.47[19] - Adjusted EBITDAre for the quarter ended September 30, 2025, was $33.397 million[19] - Total Industrial segment revenue for the quarter ended September 30, 2025, was $25.800 million, with $11.484 million from IOS and $14.316 million from Traditional Industrial[22] - Total Industrial segment NOI for the quarter ended September 30, 2025, was $22.520 million, with $10.245 million from IOS and $12.275 million from Traditional Industrial[23]

Financial Performance - Rental income for the three months ended September 30, 2025, was $25,800 thousand, down from $26,731 thousand in the same period of 2024, a decrease of about 3.5%[19] - The net loss attributable to common shareholders for the three months ended September 30, 2025, was $3,499 thousand, compared to a loss of $24,395 thousand in the same period of 2024, showing an improvement of about 86%[19] - The company reported a net income of $3,780 thousand for the three months ended September 30, 2025, contrasting with a net loss of $26,549 thousand in the same period of 2024[21] - For the nine months ended September 30, 2025, the net loss was $336.381 million, compared to a net loss of $25.180 million for the same period in 2024[28] - The company reported a significant net loss of $265,300,000 for the quarter ending June 30, 2025[25] - Total comprehensive loss for the quarter ending June 30, 2024, was $19,195,000[23] Assets and Liabilities - Total assets decreased from $2,676,232 thousand as of December 31, 2024, to $1,986,374 thousand as of September 30, 2025, representing a decline of approximately 26%[16] - The total liabilities decreased from $1,524,210 thousand as of December 31, 2024, to $1,209,518 thousand as of September 30, 2025, a reduction of approximately 21%[16] - As of September 30, 2025, the company's total gross investment in real estate (excluding discontinued operations) was $1,263,937,000, down from $1,493,143,000 as of December 31, 2024[62] - The total real estate related to discontinued operations was $403,539,000 as of September 30, 2025, down from $995,152,000 as of December 31, 2024, indicating a reduction of about 59%[154] - The total real estate assets for industrial real estate net was $1,066,052,000 as of September 30, 2025, down from $1,100,936,000 as of December 31, 2024, a decrease of about 3%[154] Cash Flow and Investments - Cash and cash equivalents increased from $146,514 thousand as of December 31, 2024, to $326,085 thousand as of September 30, 2025, reflecting a growth of approximately 122%[16] - The net cash provided by operating activities for continuing operations was $2.715 million, an improvement from a net cash used of $1.608 million in 2024[28] - The company reported a net cash provided by investing activities of $450.282 million, significantly higher than $102.929 million in 2024[30] - The principal pay down of indebtedness for the credit facility was $200 million, compared to $10 million in the previous year[30] Real Estate Operations - The company is executing a strategic transition to an industrial-only real estate investment trust (REIT), focusing on growth in the industrial outdoor storage (IOS) sector[32] - The company completed the sale of 11 Office Discontinued Operations Properties during the nine months ended September 30, 2025[47] - The company acquired three industrial outdoor storage properties for a total purchase price of $57,106,000 during the three months ended September 30, 2025[65] - The company disposed of nine properties for a total gross sales price of $233,415,000 during the nine months ended September 30, 2025, resulting in a gain of $6,407,000[67] Shareholder Information - As of September 30, 2024, Peakstone Realty Trust reported total shareholders' equity of $1,132,171,000, with common shares totaling 36,377,254[23] - The company declared dividends to common shareholders amounting to $8,284,000 during the quarter ending June 30, 2024[23] - The company declared a cash dividend of $0.10 per common share for the quarter ended September 30, 2025, payable on or about October 17, 2025[155] - The Company had 36,790,867 common shares outstanding as of September 30, 2025, following its listing on the New York Stock Exchange on April 13, 2023[107][108] Debt and Interest Rates - The total consolidated debt as of September 30, 2025, was $1,050.8 million, down from $1,360.3 million as of December 31, 2024, reflecting a reduction of 22.7%[85] - The weighted average effective interest rate for the company's total debt was 5.46% as of September 30, 2025[85] - The Company has interest rate swaps with a notional amount of $550 million, effective from July 1, 2025, to July 1, 2029, converting SOFR to a weighted average fixed rate of 3.58%[96] - An increase of 100 basis points in interest rates would decrease future earnings and cash flows by approximately $1.9 million annually, considering the effect of interest rate swaps[272] Impairments and Expenses - The company experienced a significant real estate impairment provision of $18,195 thousand for the nine months ended September 30, 2025, compared to $50,774 thousand in the same period of 2024[19] - Total expenses for the nine months ended September 30, 2025, were $390,788,000, significantly higher than $50,493,000 in 2024, primarily due to a real estate impairment provision of $345,492,000[50] - The company recorded real estate impairments of $25.6 million related to eight Office Discontinued Operations Properties during the three months ended September 30, 2025, due to shortened anticipated hold periods and estimated selling prices[76] Other Financial Metrics - The accumulated deficit as of September 30, 2024, was $850,992,000, reflecting an increase from $826,597,000 as of June 30, 2024[23] - The fair value of total secured debt as of September 30, 2025, was $242,675, down from $250,766 as of December 31, 2024[106] - The Company recognized $70.6 million in lease income related to operating lease payments for the nine months ended September 30, 2025, compared to $74.1 million for the same period in 2024, indicating a decrease of 6.5%[133]

Revenue and Income - Revenue from continuing operations was approximately $25.8 million, a decrease from $26.7 million in the same quarter last year[12]. - Net income attributable to common shareholders was approximately $3.5 million, or $0.09 per share, compared to a net loss of approximately $(24.4) million, or $(0.67) per share, for the same quarter last year[13]. - Rental income for the three months ended September 30, 2025, was $25,800 thousand, down from $26,731 thousand in the same period of 2024, a decrease of about 3.5%[32]. - Net income for the three months ended September 30, 2025, was $3,780, compared to a net loss of $26,549 in the same period of 2024[42]. - The company reported a net income from discontinued operations of $10,813 for Q3 2025, compared to $9,583 in Q3 2024, showing a year-over-year increase of approximately 12.9%[53]. Funds from Operations - Core Funds from Operations (Core FFO) was approximately $19.1 million, or $0.48 per share, down from $24.0 million, or $0.61 per share, in the same quarter last year[14]. - Adjusted Funds from Operations (AFFO) was approximately $18.6 million, or $0.47 per share, compared to $25.7 million, or $0.65 per share, for the same quarter last year[14]. - Funds from Operations (FFO) for the three months ended September 30, 2025, were $18,312 thousand, down from $23,060 thousand in 2024, a decrease of about 20.5%[38]. - Core Funds from Operations (Core FFO) for the three months ended September 30, 2025, were $19,057 thousand, compared to $23,959 thousand in 2024, reflecting a decline of approximately 20.5%[38]. - Adjusted Funds from Operations (AFFO) for the three months ended September 30, 2025, were $18,637 thousand, down from $25,689 thousand in 2024, a decrease of about 27.4%[38]. Expenses and Liabilities - Total expenses for the three months ended September 30, 2025, were $24,648 thousand, significantly lower than $68,880 thousand in the same period of 2024, indicating a reduction of approximately 64%[32]. - Total liabilities decreased from $1,524,210 thousand as of December 31, 2024, to $1,209,518 thousand as of September 30, 2025, a reduction of about 20.6%[30]. - The Company ended the quarter with a liquidity of $438.0 million, including cash and cash equivalents of $326.1 million[19]. Asset and Equity Changes - Total assets decreased from $2,676,232 thousand as of December 31, 2024, to $1,986,374 thousand as of September 30, 2025, representing a decline of approximately 26%[30]. - Shareholders' equity decreased from $1,152,022 thousand as of December 31, 2024, to $776,856 thousand as of September 30, 2025, representing a decline of approximately 32.5%[30]. Operational Performance - Same Store Cash Net Operating Income (Same Store Cash NOI) increased by 3.7% to approximately $11.4 million compared to the same quarter last year[16]. - Total Net Operating Income (NOI) increased to $22,520 for Q3 2025, up from $20,738 in Q3 2024, representing a growth of approximately 8.5%[42]. - Cash NOI for the same store portfolio was $11,390 in Q3 2025, compared to $10,986 in Q3 2024, indicating an increase of about 3.7%[42]. - EBITDA for Q3 2025 was reported at $41,848, while EBITDAre was $36,045, reflecting the company's operational performance[51]. - Adjusted EBITDAre for Q3 2025 stood at $33,397, demonstrating the company's ability to manage expenses effectively[51]. Real Estate Transactions - The Company executed several Industrial Outdoor Storage (IOS) leases that will add approximately $1.1 million of incremental IOS ABR, with weighted average releasing spreads of 116% on a cash basis[9]. - The Company sold eight office properties totaling approximately 1.2 million square feet for approximately $247.5 million during the quarter[15]. - Rental income from discontinued operations was $25,225 in Q3 2025, down from $28,229 in Q3 2024, a decrease of approximately 7.1%[53]. - Total expenses related to discontinued operations increased to $37,330 in Q3 2025, compared to $17,120 in Q3 2024, primarily due to real estate impairment provisions[53]. - The company recorded a real estate impairment provision of $25,604 in Q3 2025, compared to none in Q3 2024, indicating a significant change in asset valuation[53].

Core Insights - Alluvial Capital Management's fund achieved a 15.5% increase in Q3 2025, resulting in year-to-date returns of 33.6%, marking the third-best quarterly performance in its 9-year history [1] Company Overview - Peakstone Realty Trust (NYSE:PKST) is a real estate investment trust focusing on transitioning its portfolio towards industrial properties [2][3] - As of October 28, 2025, Peakstone Realty Trust's stock closed at $14.02 per share, with a market capitalization of $515.81 million [2] Performance Metrics - Peakstone Realty Trust experienced a one-month return of 6.21% and a 52-week gain of 5.89% [2] - The trust has seen a 20% increase this year as it shifts from mixed office and industrial properties to purely industrial properties [3] Investment Sentiment - Peakstone Realty Trust is not listed among the 30 Most Popular Stocks Among Hedge Funds, with a belief that certain AI stocks present greater upside potential and lower downside risk [4]

Core Viewpoint - Peakstone Realty Trust is transitioning to an industrial REIT focusing on growth in the industrial outdoor storage sector [1] Financial Results Announcement - The company will release its third quarter 2025 financial results after the market closes on November 5, 2025 [1] - A webcast to present the results is scheduled for November 5, 2025, at 5:00 p.m. Eastern Time [1]

Core Viewpoint - Peakstone Realty Trust is transitioning to an industrial REIT focusing on growth in the industrial outdoor storage sector [1] Financial Results Announcement - The company will release its third quarter 2025 financial results after the market closes on November 5, 2025 [1] - A webcast to present the results is scheduled for November 5, 2025, at 5:00 p.m. Eastern Time [1]

Company Overview - Peakstone Realty Trust (PKST) is transitioning its business model by divesting from office properties to concentrate fully on the industrial sector, specifically in the Industrial Outdoor Storage (IOS) segment [1]. Market Context - The shift in focus is influenced by the rise of remote work trends following the COVID-19 pandemic, which has altered the demand for traditional office spaces [1].

Core Insights - Peakstone Realty Trust reported better-than-expected operational earnings in Q2 2025, with adjusted funds from operations (AFFO) per share at $0.61, significantly above the analyst estimate of $0.05 [1][5] - The company experienced a substantial net loss of $(265.3 million) due to a major non-cash impairment of $286.1 million on office assets, highlighting ongoing challenges in the office property sector [1][6] - Peakstone is actively transitioning its portfolio from office properties to industrial real estate, particularly focusing on the Industrial Outdoor Storage (IOS) sector [4][12] Financial Performance - GAAP revenue for Q2 2025 was $54.0 million, slightly above the consensus but down 3.6% from $56.0 million in Q2 2024 [2][5] - Same Store Cash Net Operating Income (NOI) increased by 6.3%, with industrial properties showing a 9.3% rise, indicating core rental growth despite challenges in the office sector [7] - The company declared a Q3 2025 dividend of $0.10 per share, a reduction of over 50% from the previous quarter, reflecting the evolving cash flow profile [11] Strategic Developments - Peakstone Realty Trust has intensified its pivot away from office properties, selling $158 million in office assets and planning further dispositions [6][12] - The company completed two IOS acquisitions totaling $52.4 million and secured a new lease for IOS redevelopment in Savannah, Georgia [8] - Management expects to accelerate the pace of office asset sales in the coming months to further reduce office exposure and expand the IOS footprint [12][13] Capital Management - The net debt to adjusted EBITDAre ratio improved to 6.4x from 6.6x, aided by proceeds from office sales [10] - Cash and equivalents at quarter-end were $264.4 million, with total liquidity of $355.8 million, indicating a strong liquidity position [10] - Nearly 88% of the company's debt is funded at fixed rates, with a weighted average debt maturity of three years, supporting financial stability [10]