While shares of Peakstone Realty Trust (NYSE: PKST ) have performed poorly over the past year, shares rallied 5% on Friday after Q1 results, which showed progress on leasing new properties and exiting more of its legacy office exposure. The company has significant asset Over fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question ...

分组1 - Peakstone Realty Trust reported quarterly funds from operations (FFO) of $0.62 per share, exceeding the Zacks Consensus Estimate of $0.59 per share, but down from $0.70 per share a year ago, representing an FFO surprise of 5.08% [1] - The company posted revenues of $56.97 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 1.99%, and down from $59.23 million year-over-year [2] - Over the last four quarters, Peakstone Realty Trust has surpassed consensus FFO estimates two times, but has not beaten consensus revenue estimates [2] 分组2 - The stock has added about 0.6% since the beginning of the year, while the S&P 500 has declined by 4.3% [3] - The current consensus FFO estimate for the coming quarter is $0.60 on revenues of $55.88 million, and for the current fiscal year, it is $2.18 on revenues of $219.83 million [7] - The Zacks Industry Rank for REIT and Equity Trust - Other is currently in the bottom 42% of over 250 Zacks industries, indicating potential underperformance compared to the top 50% of ranked industries [8]

Financial Data and Key Metrics Changes - Total revenue for the quarter was approximately $57 million, with cash NOI around $46 million [12] - Net loss attributable to common shareholders was approximately $49.4 million, or $1.35 per share, including a noncash impairment of about $52 million related to potential asset sales in the office segment [12] - Same store cash NOI increased by 5.8% in the industrial segment and 3.1% in the office segment, resulting in an overall increase of 4% compared to the same quarter last year [12] - Core FFO and AFFO were both approximately $24.6 million, or $0.62 per share on a fully diluted basis [12] Business Line Data and Key Metrics Changes - The industrial segment's ABR increased by $2.4 million quarter over quarter, driven by a 10% rise in AVR from iOS properties [4] - Industrial segment ABR represented 41% of total ABR at quarter end and 43% on a pro forma basis after accounting for office dispositions [5] - Significant leasing activity included a fully leased iOS redevelopment property in Everett, Washington, contributing approximately $1.7 million in incremental ABR [5][6] Market Data and Key Metrics Changes - The company has closed approximately $144 million in office asset sales year to date, with strong investor demand for office assets [5][9] - Office properties with more than five years of remaining term are generally priced on a cap rate basis between 7.5% and 12.5% on in-place NOI [10] - The company has completed over $2 billion in office sales across more than 30 markets over the past three years [9] Company Strategy and Development Direction - The company is transitioning to an industrial REIT, focusing on growth in the industrial outdoor storage (iOS) subsector [4] - The strategy includes reshaping the portfolio through targeted iOS growth initiatives and strategic asset sales, primarily in the office segment [4] - The company aims to divest office assets to reallocate capital to higher growth opportunities within the iOS space and reduce leverage [18] Management's Comments on Operating Environment and Future Outlook - Management believes high-quality iOS properties in supply-constrained markets present significant long-term growth opportunities [18] - The company expects to continue paying dividends quarterly, with future decisions made by the board of trustees [17] - Management is optimistic about the future and is actively engaged in the marketplace during the transition [56][57] Other Important Information - The company introduced two new reporting metrics: core FFO and adjusted EBITDAre to enhance comparability in evaluating ongoing performance [11] - Total liquidity at quarter end was approximately $336 million, consisting of cash and available revolver capacity [13] - The weighted average interest rate for all debt remains at 4.4%, with 88% of the debt fixed [16] Q&A Session Summary Question: Can you help us think about the ABR at the remaining five iOS sites? - Management indicated that they are not providing specific guidance on ABR ranges due to the variety of locations but are comfortable with the ranges previously indicated [20][21] Question: What are you seeing in the market regarding additional acquisition opportunities? - Management noted a balanced approach to growth and leverage, with a good pipeline of individual deals and portfolios being evaluated [22][24][25] Question: What is your target leverage and timeline for bringing it down to a comfortable level? - Management's target leverage is in the six times range or below, and they are currently at 6.8 times after recent asset sales [32][33] Question: What will determine how much you push the gas on office dispositions? - Management stated that dispositions are evaluated on a case-by-case basis, focusing on maximizing shareholder value and achieving favorable pricing [36][38] Question: What characteristics differentiate office assets at the lower end of the cap rate range versus the higher end? - Management explained that the differentiation generally comes down to lease duration and specific property characteristics [42][43] Question: How would you characterize tenant demand in the IOS segment? - Management reported stable demand, with interest from tenants willing to take properties as is, and no significant changes in demand since acquiring the properties [49][51]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was approximately $57 million, with cash NOI around $46 million [12] - Net loss attributable to common shareholders was approximately $49.4 million, or $1.35 per share, including a noncash impairment of about $52 million related to potential asset sales in the office segment [12] - Same store cash NOI increased by 4% year-over-year, with a 5.8% increase in the industrial segment and a 3.1% increase in the office segment [12] Business Line Data and Key Metrics Changes - The industrial segment's ABR increased by $2.4 million quarter-over-quarter, driven by a 10% rise in AVR from iOS properties [4] - Industrial segment ABR represented 41% of total ABR at quarter end, increasing to 43% on a pro forma basis after subsequent office dispositions [5] - The company closed $144 million in office asset sales year-to-date, including two properties totaling 251,000 square feet for approximately $34 million during Q1 [8] Market Data and Key Metrics Changes - The company has completed over $2 billion in office sales across more than 30 markets over the past three years, indicating strong investor demand for office assets [9] - Office assets with more than five years of remaining term are generally priced on a cap rate basis between 7.5% and 12.5% on in-place NOI [10] Company Strategy and Development Direction - The company is transitioning to an industrial REIT, focusing on growth in the industrial outdoor storage (iOS) subsector [4] - The strategy includes divesting office assets to reallocate capital to higher growth opportunities within the iOS space [17] - The company aims to reduce leverage while driving sustainable growth and enhancing shareholder value [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth opportunities presented by high-quality iOS properties in supply-constrained markets [17] - The company is committed to maintaining or potentially accelerating the pace of office dispositions, depending on market conditions [10][36] Other Important Information - The company introduced new reporting metrics, core FFO and adjusted EBITDAre, to enhance comparability in evaluating ongoing performance [11] - Total liquidity at quarter end was approximately $336 million, consisting of cash and available revolver capacity [13] - The weighted average interest rate for all debt remains at 4.4%, with 88% of the debt being fixed [15] Q&A Session Summary Question: Can you help us think about the ABR at the remaining five iOS sites? - Management indicated they are not providing specific guidance on ABR ranges due to the variety of locations but expressed comfort with previously indicated returns on cost [19][20] Question: What are you seeing in the market regarding additional acquisition opportunities? - Management noted a balanced approach to growth and leverage, with a good pipeline of individual deals and portfolios being evaluated [21][25] Question: What is your target leverage and timeline for bringing it down? - Management confirmed a target leverage in the six times range or below, with current leverage at 6.8 times after recent asset sales [30][32] Question: What will determine the pace of office dispositions? - Management stated that dispositions are evaluated on a case-by-case basis, aiming to maximize shareholder value while being open to market opportunities [36][38] Question: What characteristics differentiate office assets at the lower and higher ends of the cap rate range? - Management explained that duration and specific asset characteristics play a significant role in determining cap rates, with shorter lease terms complicating the valuation [42][44] Question: How is tenant demand characterized today in the IOS segment? - Management reported stable demand, with ongoing discussions with various tenants and interest in properties being offered as-is [49][51]

First Quarter 2025 Disclaimers / Forward-Looking Disclosure Cautionary Statement Regarding Forward-Looking Statements 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, as amended (the "Exchange Act"). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisi ...

Financial Performance - Rental income for the three months ended March 31, 2025, was $56,971 thousand, down from $59,227 thousand in the same period of 2024, a decrease of about 4%[18] - The net loss attributable to common shareholders for the three months ended March 31, 2025, was $49,382 thousand, compared to a net income of $5,025 thousand in the same period of 2024[18] - The company reported a comprehensive loss of $65,487 thousand for the three months ended March 31, 2025, compared to a comprehensive income of $5,603 thousand in the prior year[21] - For the three months ended March 31, 2025, Peakstone Realty Trust reported a net loss of $53,401,000 compared to a net income of $5,470,000 for the same period in 2024[27] - Total NOI for the three months ended March 31, 2025, was $48,200,000, a slight increase of 1.2% from $47,627,000 in the same period of 2024[121] Asset and Equity Changes - Total assets decreased from $2,676,232 thousand as of December 31, 2024, to $2,595,197 thousand as of March 31, 2025, representing a decline of approximately 3%[16] - The company’s total shareholders' equity decreased from $1,085,221 thousand as of December 31, 2024, to $1,019,152 thousand as of March 31, 2025, a decline of about 6%[16] - As of March 31, 2025, total real estate assets net amounted to $2,054,790,000, down from $2,264,048,000 as of December 31, 2024[125] Expenses and Losses - Total expenses surged to $94,861 thousand for the three months ended March 31, 2025, compared to $46,237 thousand in the prior year, indicating an increase of approximately 105%[18] - The company incurred a real estate impairment provision of $51,957 thousand for the three months ended March 31, 2025, compared to $1,376 thousand in the same period of 2024[18] - General and administrative expenses decreased to $8,553,000 in Q1 2025 from $9,680,000 in Q1 2024, a reduction of 11.6%[125] Cash and Debt Management - Cash and cash equivalents increased from $146,514 thousand as of December 31, 2024, to $204,017 thousand as of March 31, 2025, reflecting a growth of approximately 39%[16] - Debt remained relatively stable, with a slight increase from $1,344,619 thousand as of December 31, 2024, to $1,345,686 thousand as of March 31, 2025[16] - As of March 31, 2025, the total consolidated debt of Peakstone Realty Trust is $1,360,326,000, with a weighted average effective interest rate of 4.41%[5] - The total secured debt amounts to $360,326,000, with the largest component being the BOA II Loan at $250,000,000, maturing in May 2028[5] - The total unsecured debt is $1,000,000,000, which includes a revolving loan of $465,000,000 maturing in July 2028[5] Real Estate and Portfolio Management - Peakstone Realty Trust's portfolio consisted of 101 properties, including 96 operating properties and five redevelopment properties, as of March 31, 2025[32] - The Company had no acquisitions of real estate during the three months ended March 31, 2025, and March 31, 2024[47] - The Company disposed of real estate with a total gross sales price of $34,031 during the three months ended March 31, 2025, resulting in a loss of $479, contrasting with a total gross sales price of $79,525 and a gain of $9,177 for the same period in 2024[48] Shareholder Information - The company declared dividends to common shareholders totaling $8,318,000 in Q1 2025, slightly up from $8,193,000 in Q1 2024[28] - The company declared a cash dividend of $0.225 per common share for the quarter ended March 31, 2025, payable on April 17, 2025[126] - As of March 31, 2025, there were 871,916 unvested restricted shares, reflecting an increase from 392,566 as of December 31, 2024[92] Future Outlook and Strategies - The company is transitioning to an industrial REIT, focusing on growth in the industrial outdoor storage subsector and divesting non-core assets[30] - The company plans to use interest rate hedging instruments to mitigate exposure to interest rate fluctuations[219] - An increase of 100 basis points in interest rates could decrease future earnings and cash flows by approximately $4.6 million annually[221]

Revenue and Income - Revenue for Q1 2025 was approximately $57.0 million, a decrease from $59.2 million in the same quarter last year[12] - Rental income for the three months ended March 31, 2025, was $56,971 thousand, down from $59,227 thousand in the same period of 2024, a decrease of about 4%[32] - The net loss attributable to common shareholders for Q1 2025 was $49,382 thousand, contrasting with a net income of $5,025 thousand in Q1 2024[32] - The net loss for the three months ended March 31, 2025, was $(53,401), compared to a net income of $5,470 in the same period of 2024[40] Funds from Operations - Core Funds from Operations (Core FFO) was $0.62 per share, down from $0.65 per share in Q1 2024[14] - Adjusted Funds from Operations (AFFO) was also $0.62 per share, compared to $0.70 per share in the same quarter last year[14] - Funds from Operations (FFO) for Q1 2025 were reported at $24,569 thousand, an increase from $21,180 thousand in Q1 2024, reflecting a growth of about 11%[38] - Core Funds from Operations (Core FFO) decreased to $24,617 thousand in Q1 2025 from $25,585 thousand in Q1 2024, a decline of approximately 4%[38] - Adjusted Funds from Operations (AFFO) available to common shareholders and limited partners was $24,820 thousand in Q1 2025, down from $27,780 thousand in Q1 2024, a decrease of about 10%[38] Expenses and Liabilities - Total expenses surged to $94,861 thousand in Q1 2025, compared to $46,237 thousand in Q1 2024, indicating an increase of approximately 105%[32] - Total liabilities slightly decreased from $1,524,210 thousand as of December 31, 2024, to $1,516,401 thousand as of March 31, 2025, a reduction of about 1%[30] - Total debt as of March 31, 2025, was $1,360.3 million, with a net debt to Adjusted EBITDAre ratio of 7.0x[18] Real Estate and Operations - The company sold $144 million of office properties year-to-date, including $34 million in Q1 2025[5] - A new IOS lease for 3.3 usable acres commenced with a releasing spread of 185% (cash) and 218% (GAAP)[9] - The company completed a 9.8-year, full-site lease for all 37 usable acres at the Everett, WA IOS redevelopment property[10] - The Industrial segment's annualized base rent (ABR) grew by $2.4 million quarter-over-quarter, representing 41% of total ABR during the quarter[4] Performance Metrics - Same Store Cash Net Operating Income (Same Store Cash NOI) increased by 4.0% to approximately $39.0 million compared to $37.5 million in Q1 2024[15] - For the three months ended March 31, 2025, the total NOI was $48,200, compared to $47,627 for the same period in 2024, representing an increase of 1.2%[40] - The Cash NOI for the three months ended March 31, 2025, was $45,604, a decrease of 3.1% from $47,330 in 2024[40] - The Industrial Cash NOI increased significantly to $18,423 in Q1 2025 from $11,817 in Q1 2024, marking a growth of 56.5%[40] - The Office Cash NOI decreased slightly to $27,181 in Q1 2025 from $27,504 in Q1 2024, a decline of 1.2%[40] - The total Same Store Cash NOI for Q1 2025 was $39,001, up 3.9% from $37,514 in Q1 2024[40] Impairment and Adjustments - The company reported a significant real estate impairment provision of $51,957 thousand in Q1 2025, compared to only $1,376 thousand in Q1 2024[32] - The company reported an impairment provision for real estate of $51,957 in Q1 2025, compared to $1,376 in Q1 2024[40] - Adjusted EBITDAre for Q1 2025 was $41,231, reflecting the company's ongoing operating performance adjustments[50] - Interest expense for Q1 2025 was $15,978, slightly down from $16,148 in Q1 2024[40] Shareholder Information - The weighted-average number of common shares outstanding increased from 36,309,019 in Q1 2024 to 36,726,154 in Q1 2025[38] - The company plans to enhance comparability and consistency in evaluating ongoing operating performance with the introduction of Adjusted EBITDAre[49]

REIT Performance Overview - The REIT sector experienced a total return of -4.92% in March, underperforming the Dow Jones Industrial Average (-4.1%) but faring better than the S&P 500 (-5.6%) and NASDAQ (-8.1%) [1] - The Vanguard Real Estate ETF (VNQ) outperformed the average REIT with a return of -2.58% in March and a year-to-date return of +2.69% compared to -3.36% for the average REIT [1] - The spread between the 2025 FFO multiples of large cap REITs (18.1x) and small cap REITs (12.9x) increased, indicating that investors are paying 40.3% more for each dollar of FFO from large cap REITs [1] Performance by Market Capitalization - Micro cap REITs underperformed significantly with a return of -16.19%, while large cap REITs returned -2.04%, mid caps -2.63%, and small caps -4.16% [3] - Year-to-date, large cap REITs have outperformed small caps by 568 basis points [3] Property Type Performance - Only 33.33% of REIT property types had a positive total return in March, with a 14% spread between the best (Casino +2.40%, Single Family Housing +2.00%) and worst performing property types (Office -11.60%, Hotel -11.11%) [5] - In the first quarter of 2025, Data Centers (-16.35%), Office (-15.95%), and Hotels (-15.74%) were the worst performers, while Health Care (+10.87%), Casino (+10.24%), and Timber (+9.56%) led the sector [6] Average Returns by Property Type - The average returns for various property types in March were as follows: - Office: -11.60% - Hotel: -11.11% - Casino: +2.40% - Single Family Housing: +2.00% - REIT Average: -4.92% [6] Price/FFO Multiples - The average P/FFO for the REIT sector decreased from 14.3x to 13.9x in March, with 27.8% of property types experiencing multiple expansion and 66.7% seeing contraction [8] - Data Centers (25.2x), Land (23.8x), and Multifamily (20.5x) have the highest average multiples, while Hotels (6.2x) and Offices (8.4x) are the only types with single-digit FFO multiples [8] Individual Security Performance - Peakstone Realty Trust (PKST) was the best performing REIT in March with a return of +13.10%, followed by Crown Castle (CCI) at +12.44% and CareTrust REIT (CTRE) at +11.77% [10] - Wheeler REIT (WHLR) continued its decline with a staggering -75.88% return in March, marking a -95.31% drop in the first three months of 2025 [11] Dividend Yield Insights - High dividend yields are a significant attraction for investors in the REIT sector, especially as many REITs are trading below their NAV, leading to opportunities for attractive yields [15]

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 was approximately $58 million, with cash NOI around $48 million [21] - Net income attributable to common shareholders was approximately $12.7 million or $0.35 per share [21] - FFO was approximately $29.2 million or $0.74 per share on a fully diluted basis, while AFFO was approximately $25.6 million or $0.65 per share [21] - Same-store cash NOI was approximately $39 million, reflecting a 0.4% increase compared to the same quarter last year [22] - For the full year 2024, AFFO was approximately $106.6 million or $2.69 per share on a fully diluted basis [23] Business Line Data and Key Metrics Changes - The company acquired a 51-property infill industrial outdoor storage portfolio for $490 million, increasing industrial ABR to nearly 40% of total ABR, up from 25% at the beginning of 2024 [6][17] - The company divested $317 million of non-core assets, including the elimination of the entire other segment [7][11] - Leasing activity included approximately 837,000 square feet leased with a weighted average lease term of 4.5 years, achieving favorable re-leasing spreads of 32% on a GAAP basis and 23% on a cash basis [14] Market Data and Key Metrics Changes - The operating portfolio consists of 103 properties, with 64 in the industrial segment and 33 in the office segment [16] - The industrial segment ABR now accounts for nearly 40% of total ABR, with IOS properties being 100% leased and a potential 70% mark-to-market opportunity [17] - The office segment properties are 99% leased with 60% investment-grade tenancy [18] Company Strategy and Development Direction - The company is focusing on shifting its portfolio towards industrial assets, particularly IOS properties, which are characterized by low building-to-land ratios and significant supply constraints [9][10] - The strategic plan includes maintaining a disciplined approach to debt levels while pursuing growth through targeted acquisitions in the IOS sector [32] - The company aims to balance growth with deleveraging, targeting a net debt to EBITDA ratio of 6:1 [74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the IOS sector and the company's ability to drive long-term shareholder value [10][33] - The management noted strong demand for properties and positive leasing activity, indicating a favorable operating environment [15][47] - Future dividend decisions will be made by the Board of Trustees, but the company expects to continue paying dividends quarterly [30] Other Important Information - The company successfully amended and extended its credit facility, allowing for the extension of $750 million of near-term maturities to 2028 [25] - The company extinguished all associated AIG debt following the sale of non-core assets, improving its leverage position [54] Q&A Session Summary Question: Comments on acquisition appetite for IOS vs traditional industrial properties - Management indicated a strong focus on IOS assets due to better growth dynamics and a favorable cap rate differential [36][37] Question: Interest in office portfolio and buyer demand - Management noted local specialists are finding current prices appealing, and 44% of gross proceeds came from existing tenants [43][44] Question: Use of proceeds from the sale of the Other segment - Majority of proceeds were used to pay off AIG debt, with a balanced approach to leverage and growth [54][55] Question: Future of industrial ABR expiring in 2026 - Management is optimistic about tenant renewals and is actively discussing lease expirations with tenants [58][59] Question: Marketing of the office portfolio and buyer interest - Properties are on the market, and there is a sense of increased positivity in buyer demand compared to previous years [78]

Investor Presentation Fourth Quarter 2024 Disclaimers / Forward-Looking Disclosure Cautionary Statement Regarding Forward-Looking Statements 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, as amended (the "Exchange Act"). We intend for all such forward-looking statements to be covered by the applica ...