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]

Financial Data and Key Metrics Changes - For Q2 2025, total revenue was approximately $54 million and cash NOI was approximately $43 million [11] - Net loss attributable to common shareholders was approximately $265 million or $7.22 per share, primarily due to noncash impairments of approximately $286 million [11] - FFO was approximately $23.9 million or $0.60 per share on a fully diluted basis, while core FFO was approximately $23.8 million or $0.60 per share [12] - Same store cash NOI increased by 6.3% overall, with a 9.3% increase in the industrial segment and a 4.7% increase in the office segment [12] - Total liquidity at quarter end was approximately $356 million, with a cash balance of approximately $264 million [13] Business Line Data and Key Metrics Changes - The industrial outdoor storage (iOS) segment saw an increase in ABR by over 25% since the beginning of the year [9] - The office segment now represents 35% of the net book value of real estate assets, down from a higher percentage as the company divests office properties [10] Market Data and Key Metrics Changes - The company sold seven office properties for $158 million through quarter end and an additional two properties for $24 million after quarter end, totaling $216 million year to date [10] - The company recognized a noncash impairment of approximately $286 million related to 18 office properties, reflecting updated expectations for sale pricing [10] Company Strategy and Development Direction - The company is focused on transforming into an industrial REIT, emphasizing growth in the iOS subsector through acquisitions and leasing while divesting remaining office assets [5] - The strategy includes reducing leverage and aligning the portfolio with higher growth opportunities in the industrial sector [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and ability to execute, highlighting the importance of reshaping the portfolio and reallocating capital to higher growth iOS opportunities [17] - The board approved a dividend of 10 cents per common share for Q3, reflecting the ongoing transition to an exclusively industrial strategy [14] Other Important Information - The company has a significant pipeline for acquisitions in the iOS space, with a focus on markets with strong demand growth and supply constraints [46] - The weighted average interest rate on all debt is approximately 5.47% after recent interest rate swaps [14] Q&A Session Summary Question: Can you provide more insight into the Board's thinking around the dividend? - Management indicated that the dividend aligns with the cash flow characteristics of the industrial outdoor storage segment and reflects the transition to an industrial REIT [18] Question: What is the renewal percentage for iOS leases? - Management noted that there is very little rollover, with only 0.4% vacancy in the operating portfolio, and they expect most tenants to renew their leases [20] Question: What are the cap rates for iOS acquisitions and office sales? - Management did not provide individual cap rates but mentioned that aggregated data is available for analysis [25] Question: How will proceeds from office sales be used? - Management stated that they aim to reduce leverage below six times debt to EBITDA while remaining active in the acquisition market [29] Question: Has competition increased in the iOS space? - Management confirmed that the market is active with increased capital for iOS, but their experience and national portfolio provide a competitive advantage [33] Question: What triggered the impairment this quarter? - The impairment was driven by the acceleration of sales and a shorter anticipated hold period, necessitating a fair value calculation [39] Question: What is currently in the iOS pipeline? - Management refrained from disclosing specific details but confirmed a sufficient pipeline with opportunities in markets with strong demand and supply constraints [45]

Business Strategy - The company is accelerating its shift to an Industrial REIT, focusing on Industrial Outdoor Storage (IOS) and traditional industrial assets, with the intention to scale IOS and exit the office sector[12] - The company is committed to selling all remaining office properties, having already completed approximately $2.2 billion in office dispositions since 2022, with an expected acceleration in the pace of sales[13] Portfolio Performance and Acquisitions - The company increased IOS Annualized Base Rent (ABR) by over 25% since the beginning of the year[16] - The company acquired two IOS assets for approximately $52 million, encompassing approximately 36.2 usable acres and generating $3.2 million in ABR, with an estimated 13% mark-to-market opportunity[5] - The company completed $158 million in sales during the quarter and an additional $24 million subsequent to quarter-end, bringing the year-to-date sales total to $216 million[5] Financial Position - The company is targeting a Net Debt / EBITDAre ratio at or below 6.0x and is using interest rate swaps to manage floating-rate exposure[13] - The company's Net Debt / Adjusted EBITDAre was 7.0x in Q1 2025, 6.4x in Q2 2025, and a pro forma 6.6x for Q2 2025[5] - The remaining office net book value is $615 million, representing approximately 35% of the real estate net book value[5] Industrial Portfolio Composition - The industrial portfolio consists of 53 IOS properties and 19 traditional industrial assets[48] - The industrial portfolio is approximately 100% leased, with a weighted average lease term (WALT) of 5.1 years and in-place ABR of $78.7 million[43] - The industrial portfolio has embedded growth potential, driven by an estimated 38% mark-to-market opportunity and contractual rent escalations averaging 2.5%[43]

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements reflect a significant net loss driven by real estate impairments and a strategic portfolio shift [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $264,392 | $146,514 | $117,878 | | Total real estate, net | $1,706,264 | $2,264,048 | ($557,784) | | **Total assets** | **$2,190,570** | **$2,676,232** | **($485,662)** | | Debt, net | $1,246,767 | $1,344,619 | ($97,852) | | **Total liabilities** | **$1,414,333** | **$1,524,210** | **($109,877)** | | **Total equity** | **$776,237** | **$1,152,022** | **($375,785)** | - The significant decrease in total assets and equity is primarily driven by **property dispositions and real estate impairment charges**, reflecting the company's strategic shift away from office properties[16](index=16&type=chunk) [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Rental income | $54,026 | $55,952 | $110,997 | $115,179 | | Real estate impairment provision | $286,126 | $6,505 | $338,083 | $7,881 | | **Net (loss) income** | **($286,760)** | **($4,101)** | **($340,162)** | **$1,369** | | **Net (loss) income attributable to common shareholders** | **($265,300)** | **($3,768)** | **($314,683)** | **$1,257** | | **Net (loss) income per share, basic and diluted** | **($7.22)** | **($0.11)** | **($8.57)** | **$0.03** | - The company reported a substantial net loss for the three and six months ended June 30, 2025, primarily due to a significant increase in real estate impairment provisions, which rose to **$338.1 million** for the six-month period compared to just **$7.9 million** in the prior year period[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $39,740 | $40,728 | | Net cash provided by investing activities | $197,206 | $67,870 | | Net cash used in financing activities | ($118,444) | ($48,312) | - Investing activities provided a significant source of cash (**$197.2 million**) in the first six months of 2025, largely from **$187.0 million** in proceeds from property dispositions[29](index=29&type=chunk)[30](index=30&type=chunk) - This cash was partly used for financing activities, including a **$100.0 million** paydown of the credit facility[29](index=29&type=chunk)[30](index=30&type=chunk) [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes cover the strategic transition to an industrial-only REIT, significant impairments, and segment performance shifts - The Company is executing a strategic transition to become an industrial-only REIT, focusing on growth in the industrial outdoor storage (IOS) sector while actively divesting its office properties[32](index=32&type=chunk) Real Estate Dispositions - Six Months Ended June 30, 2025 | Segment | Number of Properties | Gross Sales Price | Gain (Loss) | | :--- | :--- | :--- | :--- | | Office | 9 | $192,431 | ($1,545) | Real Estate Impairments - Six Months Ended June 30, 2025 | Segment | Number of Properties | Impairment Amount | | :--- | :--- | :--- | | Office | 24 | $334,924 | | Industrial | 1 | $3,159 | | **Total** | **25** | **$338,083** | - Subsequent to quarter-end, the company acquired two IOS properties for **$52.4 million** and sold two Office segment properties for **$23.6 million**, continuing its strategic portfolio reshaping[140](index=140&type=chunk)[141](index=141&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic shift to an industrial REIT, portfolio performance, non-GAAP measures, and capital resources [Overview and Business Environment](index=36&type=section&id=Overview%20and%20Business%20Environment) - The company is strategically transitioning to become an industrial-only REIT, targeting growth in the Industrial Outdoor Storage (IOS) sector while divesting office properties[144](index=144&type=chunk)[164](index=164&type=chunk) - Management believes long-term demand for industrial real estate will remain strong due to onshoring trends, e-commerce growth, and supply constraints[166](index=166&type=chunk)[167](index=167&type=chunk) Top 5 Tenants by Annualized Base Rent (ABR) as of June 30, 2025 | Tenant | ABR (in thousands) | % of Total ABR | | :--- | :--- | :--- | | Keurig Dr. Pepper | $11,897 | 7.1% | | Amazon | $10,003 | 6.0% | | Southern Company Services | $9,597 | 5.7% | | Maxar | $7,916 | 4.7% | | Freeport McMoRan | $7,867 | 4.7% | [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Same Store NOI Change - Q2 2025 vs Q2 2024 (in thousands) | Segment | Q2 2025 Same Store NOI | Q2 2024 Same Store NOI | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Industrial | $12,918 | $12,854 | $64 | 0% | | Office | $22,447 | $22,018 | $429 | 2% | | **Total** | **$35,365** | **$34,872** | **$493** | **1%** | Total Portfolio NOI Change - Six Months Ended June 30 (in thousands) | Segment | H1 2025 NOI | H1 2024 NOI | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Industrial | $41,887 | $25,369 | $16,518 | 65% | | Office | $51,704 | $54,843 | ($3,139) | (6)% | | Other | $0 | $12,838 | ($12,838) | (100)% | | **Total** | **$93,591** | **$93,050** | **$541** | **1%** | - The net loss of **$340.2 million** for H1 2025 was primarily driven by a **$330.2 million** year-over-year increase in real estate impairment charges related to the planned disposition of office properties[192](index=192&type=chunk)[198](index=198&type=chunk) - The significant **65% increase in Industrial NOI** for H1 2025 was driven by the acquisition of the IOS Portfolio in late 2024, while the decrease in Office and Other NOI reflects the impact of property dispositions[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) [Non-GAAP Financial Measures](index=49&type=section&id=Non-GAAP%20Financial%20Measures) FFO, Core FFO, and AFFO per Share/Unit | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | FFO per share/unit | $0.60 | $0.65 | $1.22 | $1.18 | | Core FFO per share/unit | $0.60 | $0.65 | $1.22 | $1.30 | | AFFO per share/unit | $0.61 | $0.70 | $1.24 | $1.40 | - FFO is significantly higher than net income primarily due to the exclusion of large non-cash charges for real estate impairment (**$286.1M in Q2 2025**) and depreciation[213](index=213&type=chunk) Total Cash NOI (in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $43,196 | $44,002 | | Six Months Ended June 30 | $88,798 | $91,333 | [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had **$264.4 million in cash** and cash equivalents and **$91.4 million of available undrawn capacity** under its Revolving Credit Facility[219](index=219&type=chunk)[220](index=220&type=chunk) Consolidated Debt Summary as of June 30, 2025 (in thousands) | Debt Type | Amount | | :--- | :--- | | Total Secured Debt | $360,326 | | Total Unsecured Debt | $900,000 | | **Total Debt** | **$1,260,326** | | Unamortized Costs & Discounts, net | ($13,559) | | **Total Debt, net** | **$1,246,767** | - In April 2025, the company made a **$100.0 million paydown** of its Revolving Loan and was in compliance with all debt covenants as of June 30, 2025[233](index=233&type=chunk)[232](index=232&type=chunk) - On August 5, 2025, the Board declared a quarterly dividend of **$0.10 per common share**, a reduction from the previous quarter's **$0.225 per share** dividend[139](index=139&type=chunk)[226](index=226&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk from variable-rate debt, which is managed through interest rate swaps - The company's primary market risk exposure is to interest rate changes on its variable-rate debt[238](index=238&type=chunk) - As of June 30, 2025, the company's debt consisted of approximately **$1.1 billion in fixed-rate debt** (including swaps) and **$150.0 million in variable-rate debt**[241](index=241&type=chunk) - A hypothetical **100 basis point increase** in interest rates would decrease annual earnings and cash flows by approximately **$3.3 million**, after accounting for interest rate swaps[241](index=241&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[243](index=243&type=chunk) - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[244](index=244&type=chunk) [PART II. OTHER INFORMATION](index=59&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that there are no material pending legal proceedings to which it is a party - The company reported no material legal proceedings[245](index=245&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There were no material changes to the risk factors from the company's most recent Form 10-K[246](index=246&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no sales of unregistered securities or repurchases of its equity securities during the relevant periods - During the six months ended June 30, 2025, there were no sales of unregistered securities[247](index=247&type=chunk) - The Company did not repurchase any of its shares during the three months ended June 30, 2025[248](index=248&type=chunk) [Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None reported[249](index=249&type=chunk) [Other Information](index=59&type=section&id=Item%205.%20Other%20Information) No trustee or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - No trustee or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[251](index=251&type=chunk) [Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and interactive data files

[Executive Summary & Business Update](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Update) Peakstone Realty Trust is strategically transforming into an industrial REIT with a focus on Industrial Outdoor Storage (IOS), reporting Q2 2025 revenue of $54.0 million, a significant net loss due to impairment, and a 6.3% increase in Same Store Cash NOI [Company Overview & Strategic Direction](index=1&type=section&id=Company%20Overview%20%26%20Strategic%20Direction) Peakstone Realty Trust is actively transforming into an industrial REIT, with a strategic focus on Industrial Outdoor Storage (IOS). Industrial assets now constitute approximately 65% of the net book value of its real estate assets. The company is executing this strategy through IOS acquisitions, leasing, and the monetization of its office portfolio, while also reducing leverage - Peakstone Realty Trust is accelerating its shift to an industrial REIT, with a strategic emphasis on **Industrial Outdoor Storage ("IOS")**[1](index=1&type=chunk)[20](index=20&type=chunk) - Industrial assets now represent approximately **65%** of the net book value of the company's real estate assets[2](index=2&type=chunk) - Key achievements include expanding IOS footprint with two acquisitions, fully leasing an IOS redevelopment property, completing **$182 million** in office sales, and improving leverage to **6.6x** from **7.0x**[2](index=2&type=chunk) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) For Q2 2025, Peakstone Realty Trust reported approximately $54.0 million in revenue and a significant net loss of $(286.8) million, primarily due to a $286.1 million non-cash impairment on office properties. Core FFO was $0.60 per share/unit, and AFFO was $0.61 per share/unit. Same Store Cash NOI increased by 6.3% year-over-year | Metric | Value (approx.) | | :----- | :-------------- | | Revenue | $54.0 million | | Net loss | $(286.8) million | | Net loss attributable to common shareholders | $(265.3) million | | Net loss per basic and diluted share | $(7.22) | | Core FFO per basic and diluted share/unit | $0.60 | | AFFO per basic and diluted share/unit | $0.61 | | Same Store Cash NOI | $35.6 million | | Same Store Cash NOI increase YoY | 6.3% | - The net loss was primarily driven by a **$286.1 million** non-cash impairment, largely attributable to **18 office properties**, due to shortened anticipated hold periods and estimated selling prices[3](index=3&type=chunk) [Portfolio Performance & Activity](index=2&type=section&id=Portfolio%20Performance%20%26%20Activity) This section details Peakstone's portfolio composition, including industrial and office assets, and summarizes recent acquisition, leasing, and disposition activities, particularly focusing on IOS expansion and office divestment [Portfolio Overview](index=2&type=section&id=Portfolio%20Overview) As of June 30, 2025, Peakstone's portfolio consisted of 94 properties, including 89 operating and 5 redevelopment properties, segmented into Industrial and Office. The Industrial segment, comprising 70 properties (46 IOS, 19 Traditional Industrial, 5 Redevelopment), showed strong occupancy. The Office segment had 24 operating properties with 98.6% occupancy | Segment | Number of Properties | Occupancy Percentage (rentable sq ft) | Occupancy Percentage (usable acres) | WALT (in years) | ABR ($ in thousands) | Percentage of ABR | | :-------------------- | :------------------- | :---------------------------------- | :-------------------------------- | :-------------- | :------------------- | :---------------- | | Industrial | 70 | 100.0 % | 99.6 % | 5.1 | $74,898 | 44.6% | | Operating | 65 | — | — | 5.1 | $74,898 | 44.6% | | IOS | 46 | — | 99.6 % | 4.4 | $24,453 | 14.6% | | Traditional Industrial | 19 | 100.0 % | — | 5.5 | $50,445 | 30.0% | | Redevelopment | 5 | — | — | — | — | —% | | Office | 24 | 98.6% | — | 6.3 | $93,098 | 55.4% | | Operating | 24 | 98.6% | — | 6.3 | $93,098 | 55.4% | | **Portfolio Total / Weighted-Average** | **94** | **99.5%** | **99.6 %** | **5.8** | **$167,996** | **100.0%** | [Acquisition Activity](index=2&type=section&id=Acquisition%20Activity) Subsequent to the second quarter, Peakstone Realty Trust acquired two IOS properties for a total of $52.4 million. These acquisitions include a 27.0-acre property in Smyrna, GA, and a 9.2-acre property in Port Charlotte, FL, both 100% leased with favorable WALT and annual rent escalations - Acquired **two IOS properties** for **$52.4 million** subsequent to quarter-end[9](index=9&type=chunk) - A **27.0 usable acre IOS property** in Smyrna, GA, acquired for **$42.0 million**, **100% leased** with a **5.0-year WALT** and **3.8% average annual rent escalations**[9](index=9&type=chunk) - A **9.2 usable acre IOS property** in Port Charlotte, FL, acquired for **$10.4 million**, **100% leased** with a **6.8-year WALT** and **3% average annual rent escalations**[9](index=9&type=chunk) [Leasing Activity](index=2&type=section&id=Leasing%20Activity) Subsequent to quarter-end, the Company secured a new 2.5-year, full-site lease for 7.5 usable acres at an IOS redevelopment property in Savannah, GA, which includes 4% annual rent escalations - Executed a new **2.5-year, full-site lease** for **7.5 usable acres** at an IOS redevelopment property in Savannah, GA, with **4% annual rent escalations**, subsequent to quarter-end[7](index=7&type=chunk) [Disposition Activity](index=2&type=section&id=Disposition%20Activity) Peakstone Realty Trust continued its office portfolio divestment, selling seven properties totaling 836,500 square feet for approximately $158 million during the quarter. An additional two properties were sold for approximately $24 million subsequent to quarter-end - Sold **seven office properties** totaling **836,500 square feet** for approximately **$158 million** during the quarter[10](index=10&type=chunk) - Sold **two additional office properties** totaling **178,700 square feet** for approximately **$24 million** subsequent to quarter-end[10](index=10&type=chunk) [Detailed Financial Results](index=3&type=section&id=Detailed%20Financial%20Results) This section provides a detailed breakdown of Peakstone's Q2 2025 financial performance, including revenue, net loss, Core FFO, AFFO, and Same Store Cash NOI, with comparisons to the prior year [Revenue](index=3&type=section&id=Revenue) Total revenue for the second quarter of 2025 was approximately $54.0 million, a decrease from $56.0 million reported in the same quarter last year | Metric | Q2 2025 | Q2 2024 | | :----- | :------ | :------ | | Total Revenue | $54.0 million | $56.0 million | [Net Loss Attributable to Common Shareholders](index=3&type=section&id=Net%20Loss%20Attributable%20to%20Common%20Shareholders) The net loss attributable to common shareholders significantly widened to approximately $(265.3) million, or $(7.22) per basic and diluted share, in Q2 2025, compared to a net loss of $(3.8) million, or $(0.11) per share, in Q2 2024. This substantial increase was primarily due to a large non-cash impairment charge | Metric | Q2 2025 | Q2 2024 | | :----- | :------ | :------ | | Net loss attributable to common shareholders | $(265.3) million | $(3.8) million | | Net loss per basic and diluted share | $(7.22) | $(0.11) | [Core FFO and AFFO](index=3&type=section&id=Core%20FFO%20and%20AFFO) Core FFO for Q2 2025 was $23.8 million, or $0.60 per basic and diluted share/unit, down from $25.6 million, or $0.65 per share/unit, in Q2 2024. AFFO also decreased to $24.3 million, or $0.61 per share/unit, from $27.6 million, or $0.70 per share/unit, in the prior year's quarter | Metric | Q2 2025 | Q2 2024 | | :----- | :------ | :------ | | Core FFO | $23.8 million | $25.6 million | | Core FFO per basic and diluted share/unit | $0.60 | $0.65 | | AFFO | $24.3 million | $27.6 million | | AFFO per basic and diluted share/unit | $0.61 | $0.70 | [Same Store Cash NOI](index=3&type=section&id=Same%20Store%20Cash%20NOI) Same Store Cash NOI increased by 6.3% to approximately $35.6 million in Q2 2025, up from $33.5 million in the same quarter last year. The Industrial segment contributed significantly with a 9.3% increase, while the Office segment saw a 4.7% rise | Segment | Q2 2025 (USD in Thousands) | % Change vs Q2 2024 | | :-------------------- | :------------------------- | :------------------ | | Industrial | $12,549 | 9.3% | | Office | $23,079 | 4.7% | | **Total / Weighted-Average** | **$35,628** | **6.3%** | [Financial Position & Capital Management](index=3&type=section&id=Financial%20Position%20%26%20Capital%20Management) This section outlines Peakstone's balance sheet metrics, including debt, liquidity, and leverage, and details dividend declarations for Q2 and Q3 2025, reflecting the company's capital management strategy [Balance Sheet Metrics](index=3&type=section&id=Balance%20Sheet%20Metrics) As of June 30, 2025, Peakstone Realty Trust reported total debt of $1,260.3 million and net debt of $995.9 million. The company maintained total liquidity of $355.8 million and a net debt to Adjusted EBITDAre ratio of 6.4x, reflecting an improvement from the prior quarter | Metric ($ in millions, unless otherwise noted) | As of June 30, 2025 | | :------------------------------------ | :------------------ | | Total Debt | $1,260.3 | | Cash and Cash Equivalents | $264.4 | | Net Debt | $995.9 | | Available Revolver Capacity | $91.4 | | Total Liquidity | $355.8 | | Weighted Average Debt Maturity | 3.0 years | | Fixed Rate Debt, including Swaps (%) | 88% | | Total Wtd. Avg. Effective Interest Rate (including Swaps) | 4.38% | | Net Debt to Adjusted EBITDAre | 6.4x | - Leverage improved to **6.6x**, down from **7.0x** at the end of the first quarter[2](index=2&type=chunk) [Dividends](index=4&type=section&id=Dividends) The company paid a dividend of $0.225 per common share for Q2 2025 on July 17, 2025. The Board of Trustees approved a Q3 2025 dividend of $0.10 per common share, payable on October 17, 2025, aligning with the anticipated cash flow profile of the industrial segment | Dividend Quarter | Amount per Common Share | Record Date | Payment Date | | :--------------- | :---------------------- | :---------- | :----------- | | Q2 2025 | $0.225 | June 30, 2025 | July 17, 2025 | | Q3 2025 | $0.10 | September 30, 2025 | October 17, 2025 | - The Board of Trustees has set the dividend to a level that aligns with the anticipated cash flow profile of the industrial segment, establishing a foundation as the company continues to scale IOS[2](index=2&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's consolidated balance sheets and statements of operations, offering a comprehensive view of its financial position and performance for the reported periods [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets provide a detailed snapshot of the company's financial position as of June 30, 2025, and December 31, 2024, showing total assets, liabilities, and equity. Total assets decreased from $2,676.2 million at year-end 2024 to $2,190.6 million at Q2 2025 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total assets | $2,190,570 | $2,676,232 | | Total liabilities | $1,414,333 | $1,524,210 | | Total equity | $776,237 | $1,152,022 | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations detail the company's financial performance for the three and six months ended June 30, 2025, and 2024. It highlights a significant increase in net loss attributable to common shareholders in Q2 2025, primarily due to a substantial real estate impairment provision | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Rental income | $54,026 | $55,952 | | Total expenses | $326,720 | $49,318 | | Net (loss) income | $(286,760) | $(4,101) | | Net (loss) income attributable to common shareholders | $(265,300) | $(3,768) | | Net (loss) income per share, basic and diluted | $(7.22) | $(0.11) | - Real estate impairment provision increased significantly to **$286,126 thousand** in Q2 2025 from **$6,505 thousand** in Q2 2024[32](index=32&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section defines and reconciles key non-GAAP financial measures, including FFO, Core FFO, AFFO, NOI, Cash NOI, Same Store Cash NOI, EBITDA, EBITDAre, and Adjusted EBITDAre, providing alternative perspectives on the company's operational and financial performance [Funds from Operations (FFO, Core FFO, AFFO)](index=9&type=section&id=Funds%20from%20Operations%20(FFO%2C%20Core%20FFO%2C%20AFFO)) FFO, Core FFO, and AFFO are non-GAAP measures used to supplement GAAP net earnings, providing insights into operating performance by excluding certain non-cash items and real estate-specific adjustments. For Q2 2025, FFO was $23.9 million, Core FFO was $23.8 million, and AFFO was $24.3 million, all showing a decrease compared to Q2 2024 - **FFO** is defined by NAREIT as GAAP net income or loss, excluding gains/losses from sales of depreciable real estate assets, impairment losses, and real estate-related depreciation and amortization[35](index=35&type=chunk) - **Core FFO** adjusts FFO to exclude items like goodwill impairment, debt extinguishment gains/losses, unrealized derivative gains/losses, and transaction costs, to better reflect core business operations[36](index=36&type=chunk) - **AFFO** further adjusts Core FFO for non-cash items such as straight-line rent, share-based compensation amortization, and deferred rent, to provide a useful supplemental measure of operating performance[37](index=37&type=chunk) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | | :----- | :--------------------- | :--------------------- | | FFO | $23,898 | $25,556 | | Core FFO | $23,832 | $25,637 | | AFFO | $24,271 | $27,563 | | FFO per share/unit | $0.60 | $0.65 | | Core FFO per share/unit | $0.60 | $0.65 | | AFFO per share/unit | $0.61 | $0.70 | [Net Operating Income (NOI, Cash NOI, Same Store Cash NOI)](index=11&type=section&id=Net%20Operating%20Income%20(NOI%2C%20Cash%20NOI%2C%20Same%20Store%20Cash%20NOI)) NOI, Cash NOI, and Same Store Cash NOI are non-GAAP measures used to assess property-level operating performance, excluding corporate and financing costs. For Q2 2025, Total NOI was $45.4 million, Total Cash NOI was $43.2 million, and Total Same Store Cash NOI increased by 6.3% to $35.6 million - **NOI** is a non-GAAP measure calculated as net income or loss, excluding general and administrative expenses, interest expense, depreciation and amortization, impairment of real estate, and gains/losses on sales of real estate[39](index=39&type=chunk) - **Cash NOI** adjusts NOI by excluding the effect of straight-line rent and amortization of acquired above- and below-market lease intangibles[39](index=39&type=chunk) - **Same Store Cash NOI** applies Cash NOI to properties held for the entirety of all periods presented, adjusted for lease termination fees, to measure actual cash basis rental growth[39](index=39&type=chunk) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | | :----- | :--------------------- | :--------------------- | | Total NOI | $45,392 | $45,422 | | Total Cash NOI | $43,196 | $44,002 | | Total Same Store Cash NOI | $35,628 | $33,522 | [EBITDA, EBITDAre, and Adjusted EBITDAre](index=13&type=section&id=EBITDA%2C%20EBITDAre%2C%20and%20Adjusted%20EBITDAre) EBITDA, EBITDAre, and Adjusted EBITDAre are non-GAAP financial measures used to evaluate the company's business performance by excluding certain non-operating and non-cash items. For Q2 2025, EBITDA was $(248.3) million, EBITDAre was $38.9 million, and Adjusted EBITDAre was $38.8 million - **EBITDA** is defined as earnings before interest, tax, depreciation and amortization[47](index=47&type=chunk) - **EBITDAre**, as defined by NAREIT, adjusts GAAP net income/loss by adding back interest expense, income tax expense, depreciation and amortization, and accounting for gains/losses on property dispositions and impairment write-downs[48](index=48&type=chunk) - **Adjusted EBITDAre** further modifies EBITDAre to exclude acquisition-related expenses, employee separation expenses, stock-based compensation, and other non-portfolio performance indicators, including adjustments for full-period NOI on acquired/disposed properties[49](index=49&type=chunk) | Metric | Q2 2025 (in thousands) | | :----- | :--------------------- | | Net loss | $(286,760) | | EBITDA | $(248,255) | | EBITDAre | $38,937 | | Adjusted EBITDAre | $38,799 | [Appendix & Other Information](index=4&type=section&id=Appendix%20%26%20Other%20Information) This section includes supplementary information such as details for the earnings webcast, an overview of Peakstone Realty Trust, cautionary statements regarding forward-looking statements, a notice on non-GAAP financial measures, and key definitions [Earnings Webcast](index=4&type=section&id=Earnings%20Webcast) Peakstone Realty Trust will host a webcast on Thursday, August 7, 2025, at 5:00 p.m. Eastern Time to present its second quarter 2025 results. Details for accessing the live webcast and replay are provided - The Company will host a webcast to present the second quarter 2025 results on **Thursday, August 7, 2025 at 5:00 p.m. Eastern Time**[19](index=19&type=chunk) - Access details: https://investors.pkst.com/investors/events-and-presentations/events/event-details/2025/Second-Quarter-2025-Earnings-Call/default.aspx or via phone at **1-877-407-9716 (domestic)** / **1-201-493-6779 (international)**[19](index=19&type=chunk) [About Peakstone Realty Trust](index=4&type=section&id=About%20Peakstone%20Realty%20Trust) Peakstone Realty Trust (NYSE: PKST) is a real estate investment trust focused on a strategic transition to an industrial REIT, specifically targeting growth in the industrial outdoor storage (IOS) sector. This strategy involves divesting office assets and expanding its IOS platform to drive long-term value creation - Peakstone Realty Trust (NYSE: PKST) is a REIT executing a strategic transition to an **industrial REIT**, targeting growth in the **industrial outdoor storage ("IOS") sector**[20](index=20&type=chunk) - The company is actively reshaping its portfolio by divesting office assets and growing its IOS platform to drive long-term value creation[20](index=20&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This section highlights that the document contains forward-looking statements, which are subject to numerous known and unknown risks, uncertainties, and changes in circumstances. These factors could cause actual results to differ materially from projections, and investors are advised not to place undue reliance on these statements - The document contains forward-looking statements covered by safe harbor provisions, relating to expectations, beliefs, projections, future plans, and strategies[23](index=23&type=chunk) - Forward-looking statements are subject to numerous known and unknown risks, uncertainties, assumptions, and changes in circumstances that may cause actual results to differ significantly[24](index=24&type=chunk) - Investors are cautioned not to place undue reliance on any forward-looking statements, which are based only on information currently available[26](index=26&type=chunk) [Notice Regarding Non-GAAP Financial Measures](index=6&type=section&id=Notice%20Regarding%20Non-GAAP%20Financial%20Measures) This notice clarifies that the document includes non-GAAP financial measures, which are presented as supplemental information and are not intended to be substitutes for or superior to GAAP measures. Reconciliations to the most directly comparable GAAP financial measures are provided - This document contains and may refer to certain non-GAAP financial measures in addition to U.S. GAAP financial measures[27](index=27&type=chunk) - These non-GAAP measures are not substitutes for or superior to measures of financial performance prepared in accordance with GAAP[27](index=27&type=chunk) - Reconciliations to the most directly comparable GAAP financial measures are included where applicable[27](index=27&type=chunk) [Appendix: Key Definitions](index=15&type=section&id=Appendix%3A%20Key%20Definitions) This appendix provides definitions for key operational and financial terms used throughout the report, including Annualized Base Rent (ABR), Net Debt, Occupancy, and Weighted Average Lease Term (WALT) - **"Annualized Base Rent"** or **"ABR"** is the monthly contractual base rent for commenced leases, excluding abatements, multiplied by 12 months, deducting base year operating expenses for gross and modified leases[51](index=51&type=chunk) - **"Net Debt"** is total debt (excluding deferred financing costs and debt premiums/discounts) less cash and cash equivalents (excluding restricted cash)[52](index=52&type=chunk) - **"WALT"** is the weighted average lease term in years (excluding unexercised renewal options and early termination rights) based on Annualized Base Rent[53](index=53&type=chunk)

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