PKST - Earnings call transcript Q1 2024

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Operator

Greetings, and welcome to Peakstone Realty Trust First Quarter 2024 Earnings Webcast. [Operator Instructions]. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure your my Mikayla now is to host, introduce Lynch. It you. Thank

begin. You may

Mikayla Lynch

beyond the forward-looking and we the at and Thank and these on First website those harbor Investor obligation update call Realty revise subject of provisions. Furthermore, that Call all and company to results Peakstone you. in Securities applicable numerous of updated Private our variety any forward-looking differ statements considered be Quarter this are out filed to statements date by or at data with with facts as Earlier on company's or to thank the by safe report risks Earnings harbor statements for most making risks by any underlying will use in on this the Good views Act new questions. Please statements statements our on afternoon, changes in Reform including, the investor for annual and XX-K you publicly reflect methods affected webcast. Form the complying presentation law. Litigation joining recent for are unknown are to of by events XX-Q or are any forward-looking Investors the these release, an note changes assumptions disclaim Statements for assumptions after not our future contained XXXX posted with or except may quarterly control, forward-looking made or significantly a call, earnings forward-looking us uncertainties, ir@pkst.com this of covered to for and known those changes factors without in forward-looking. that report XXXX required www.pkst.com. may team other events Webcast. and Form on of and information, intends supplemental safe be limitation, any which the factors SEC. We include company reach today, page purposes Relations cause Trust's our contained Please to expressed of in about circumstances current future forward-looking actual statements The statements than the are those to historical provisions reflect that statements and and

this on non-GAAP adjusted to company operations, as measures funds from and the Additionally, from adjusted EBITDAre operations, call, may certain refer funds EBITDAre. financial such

You the company's can reconciliation the in to comparable tabular the most find GAAP these filings a non-GAAP of numbers measures financial with currently SEC.

over CFO. CEO the that, and On I'll With Escalante, Bitar, hand Javier President; the today are call and Mike call to Mike.

Michael Escalante

thank today. Good listed afternoon, was XX joining a company. call you as our and for X-year anniversary our April

of our sheet have occasion, align the we aimed quarter, first the As further alignment elimination this optimizing balance our proud plan, with relationships. At accounts segment we strategic for our our am of ABR our with mark tenant I during leasing effective and in and made Other now by bolstering of XX% this to close the sustainable driven and of our disposition progress executing on plan at other growth segment, quarter, the portfolio our long-term our strategies the only In objectives. progressed portfolio. we

of for with buildings years, representing industrial provide these X of with next continue tenancy rollover newer office and stability minimal a minimal ABR requirements. capital credit wall and Our Significant segments X high-quality near-term the segments. to combined years, in X.X% X.X the

strong minimal for and with GAAP a Northrop acumen core XX% our Carolina, leasing of approximately Concord, secured GAAP costs Nevada, X Grumman and in which strong A releasing to leasing market XX%, square extension XX,XXX MGM in Owens of X-year, X-year, lease portfolio. We assets. releasing accomplishments a with lease Moving XX% noncore XX% XX% and spread. cash execution these we market with weighted XX,XXX environment, consisted feet sales with foot further square Beavercreek, of and GAAP team's stage with and segment, securing a our other evolving lease underscore and cash leases sets on foot lease the These extensions XXX,XXX releasing our success this extensions and Las totaling for spreads GAAP no releasing Corning In foot X% our Ohio segment XX% cash a in lease spread. with the in agility, a X% respectively. In These average activity. Vegas, cash North potential in lease within leasing X-year extension had successful or XX,XXX with extension spread. square square

XX-year, In addition at executed XXX,XXX to commenced property. square Tennessee office activity previously our our the foot lease during Nashville, quarter, this segment leasing

portfolio now reduced of Again, improved the experience, the non-stabilized assets XXX,XXX of dispositions sold X feet. our drove segment, meaningfully overall These our our Turning to quarter million. relationships engagement of sold and industry proactive were nearly $XX.X for totaling tenant team's million. $XX a metrics. In segment X for Other properties, total Other dispositions. successful properties size the we sales square office and initiatives our the The in

or the and our With that, Overall, for communication disposition Javier? tenant of the We million a lease we the the am This At office in square be with foot fixed-price the our of also XXX,XXX and our to for property option. In this totaling price. I sale located sold in $XX X-year of differentiator. remaining. turn the a Johnston, proactive had of to feet. Javier will collaboration call review results. with pleased XXX,XXX segment, Corteva, activity to team one existing million. our closing, continues the the property the property experienced and X.X pursuant Iowa, quarter. Corteva was leasing resulted manufacturing to the building tenant sale, To innovative years purchase time in sold to financial $XX.X the I square disposition to over note a facilitate issued X/X

Javier Bitar

of portfolio, quarter. which consolidated end our leverage continued a would resulted first Thanks, X.Xx Mike. the highlight in ratio EBITDAre normalized debt We to like for to net of the reduction at the

the million Total million. Net million million reporting results. per rent relating abatement held X.X% X A quarter the per on and the But to noncash existing for to increase XXth in was pending a grown shareholders our of result $XX.X quarter at which $XX.X to would Moving million, asset as a our a common approximately a of same commencement by first $XX.X a other cash was compared as quarter the last of year. NAREIT, segment our for was impairments. sale share. diluted result an revenue same-store $X.XX basis. impairment or NOI sales. Same-store $XX.X NOI or with lease, was share defined FFO $X.X $X.X for on This of classified in financial million as income associated cash sale million approximately inclusive attributable have is Other NOI goodwill year by $X $X.XX fully approximately end X.X%. segment, was and relating to was quarter to

basis the normalized was a FFO on share. AFFO for diluted quarter would been X% share G&A $X.X noncash XXXX or goodwill fully a $XX.X to improvement Excluding the million, was million have our impairment, per approximately compared run and $X.XX rate. approximately quarterly $X.XX per

sheet. our Moving on balance to

of accounts is our range, the $X held significant for earning interest of million A in $XXX million. which quarter. $XXX we income cash nearly million on from March of our approximately cash, undrawn revolver liquidity increase XX, $XX interest total in in capacity portion a X% of being and in available money year-end generated million XXXX, of As market million $XXX the had XXXX

on Regarding credit $X.X our balance our we million debt. being facility billion approximately $XXX the with consolidated debt, consisting of secured mortgage had outstanding,

After quarter, of loan the Other connection our $XX.X million segment debt manufacturing million our was approximately the paying $XX deducting reduction for net debt. our $XXX our secured cash, sale AIG of net mortgage This off we paying principal to property debt in a compared reduced XX with million year-end and down highway secured on $XX million in or by our loans.

as As net our of I debt from X.Xx. result net real to XX.X% by improved our And mentioned, previously XXX activity, ratio basis debt is EBITDAre to this to points gross normalized a XX.X%. estate

our average our maturities X.X approximately of weighted near-term exercise term average of interest our rate credit which XX-month rates, recent these end with rate XXXX. the be Regarding debt the of was which effect XX% approximately taking swaps, extension, inclusive of of the And outstanding to into account swaps, no facility July volatility. Including weighted maturity limits fixed significant XXXX, maturity a until the will the rate X.XX%. years, to total leaving has rate debt, exposure interest interest our interest

on the common we for April Finally, quarter, for and dividend a XX. of $X.XX paid share first

we Trustees. Overall, and future flexibility, While Board be ended on the ample a us dividends advance with made by quarter dividend business positions quarterly our company all balance expects will well the plan. of continue to basis, to the sheet which decisions liquidity paying

the Mike to Now for call remarks. I back turn closing will

Michael Escalante

Thank you, Javier.

Our outlook market on is industrial positive. the

We are and spreads. translates capture which to well strong growth, to releasing future positioned rent past

properties of industrial operations our the tenants. modern strategically located generally central Our to business specifications and are have are

less to age we our while markets attributes, segment equal. slowdown key differentiators portfolios rollover equilibrium. the X provide our all these are and over in these The Given assets. We relatively in expect near-term years being the that benefit than young that office construction are office limited industrial created next assets the of X% believe not stability reach

and growth to shareholder ability navigate are maximize the evolving We market, value. our opportunities for confident unlock in

will Operator? turn over the questions now operator We analysts. the to to few take call from a

Operator

Instructions]. [Operator

of comes Dennerlein The first Bank Josh America. with from question

Farrell Granath

bit industrial of portfolio. if This is give Farrell a little in on color Granath abatement on I wondering rent you the was the Josh. behalf could more

Javier Bitar

our for our it last occur so sure. XXth in properties. the we and happened Yes, of industrial quarter of rent the This this back-ended one in one to was that year, leases abatement

Farrell Granath

saying this the ending And year, of their when lease? the XXth is

Javier Bitar

of X-year opted ending term. for the that. They've a extension The original beyond

Farrell Granath

closed Okay. walk on cap it on things ask kind also had Is cap to to coming rates of about through dispositions. rates that the last possible the quarter? And I wanted in

Michael Escalante

NAREIT. -- Hopefully Escalante. out We've can It's hello, another one you of see Farrell. Mike

last on been stabilized a we have beginning assets one-off basis. we sold. generally track that not of So them the on keeping the since We've commented of year

properties have are vacant. remaining those being term vacant So to nearly or some opposed that as

is So average cap over the assets, that entire time frame, stabilized now I our rate X.X%. think weighted

cumulative of the like quarter, X.X%, as was think something last I that.

little So bit a up.

Farrell Granath

investment capital at between and and split the investment-grade sell cap thinking about the investment I construction grade recycling? to And guess, assets. and are gross just about guess portfolio rate? ability it's and I your gross thinking How coming sub when thinking stronger about grade that the sub a of to the you when Or

Javier Bitar

I'm portfolio very But we legacy towards I fully sure not weighted that your a has heavily been investment-grade have understand question. tenancy.

the think, consideration segment office of Our XX% nearly into at X arriving is taking itself. Industrial segment, XX% our And components that. I is

of our under XX% holdings more is So industrial which core are and office segment, combined. just

We -- on can investment that X other are IP. more segment our think And seller only see segment. that remain in I Slide the of -- that our properties is active across you XX% it's think in our grade I

more And so been the that's active we've sales where side. on

in -- buyers know regional community don't debt it I assisted of getting that the So for potential and the purposes arranging attracting has on buy it's been banks side. and

I If your question. you that not, if answers think follow-on? do have a

Operator

at time. questions closing back further to now no this comments. are Michael for hand I'll There

Michael Escalante

that in and greatly up raise cash engaged you, engaged sort this thank particular sheet the and side, team. And proves we've the achieved, leasing for right very attending the of the We got ability that and much the makeup our everyone of team to is value following the both composition improve operator, our appreciate And trust team marketplace. all maximizing of and performance Thank just the for your balance disposition and think and on portfolio. support to you, abilities I the be in our we've the call.

next So the and call. the see this We'll you you for time thank Operator? on attending term.

Operator

teleconference. today's concludes This

may your for at Thank your lines this participation. time. you disconnect You

Peakstone Realty Trust (PKST) 7 May 242024 Q1 Earnings call transcript