PKST - Earnings call transcript Q3 2024

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Operator

Good afternoon, and welcome to Peakstone Realty Trust's Third Quarter 2024 Earnings Webcast. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Senior Vice President of Corporate Finance and Strategy, Mikayla Lynch. Please go ahead, ma'am.

Mikayla Lynch

Thank you. you XXXX us Earnings thank Trust Peakstone and Quarter Third Call afternoon, for for joining Realty Good and Webcast. posted to on we updated today, an supplemental release, Earlier and investor presentation website the our page Investors at www.pkst.com. earnings an Relations our questions. out ir@pkst.com at Investor reach with team Please to any company Please note the the webcast. forward-looking of this use by statements on made and are facts on not are historical this Statements forward-looking. call which may include statements considered Securities provisions. Act for as the of amended, applicable amended with forward-looking all for for Section XXXX statements Securities making is be safe XXE forward-looking complying Private these harbor statements the Litigation XXXX, provisions of of contained XXXX as The Act company and purposes intends Securities statements of covered to harbor Exchange the the in safe of Act of by Reform Section and those XXA

current of Furthermore, to in any uncertainties, unknown could about on XX-Q contained and recent affected statement filed views future report the events most and and and the any may assumptions in actual reflect changes that statements are known variety those risks, expressed to XX-K significantly limitation, the circumstances risks than including, reports a cause forward-looking by numerous our beyond our factors that those Form on SEC. annual subsequent company's control, quarterly be forward-looking and subject and are differ without in results with Form

call, statement by revise after factors, forward-looking changes future or We of or new methods, update required or applicable to changes date disclaim data events in the as any to obligation assumptions this information, any reflect law. underlying or publicly except other

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

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

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

Michael Escalante

today. leasing team's generated call our and very are The the our We result our sell and facility, assets to joining office third quarter. continued for amended you thank ability successfully venture. positive complex productive a outcomes, company of direct market to exited joint the credit exceptional navigate and accomplishments These afternoon, environment. Good fully office had our extended

With excited for a we firm expansion. established, explore are areas foundation industrial to

we As I in announced credit key successfully last unsecured quarter, amending a July, our milestone, achieved facility.

result that capital importantly, we a most sustainable extended and debt our a we well amendment, of this our positions maturities structure lowered costs. borrowing have growth. future us As for And

quarter, economic had the X.X well-located a investment-grade mark-to-market years, segment opportunity. a tenancy potential of of high-quality, end our industrial XX% the WALT XXX% At occupancy, XX% and

ABR a of minimal segment tenancy, newer high-quality X% had near-term X occupancy, XX% years XXXX expiring economic minimal next capital newer and WALT with through vintage Our buildings with only XX% rollover X.X years, office the in near-term investment-grade of requirements.

completed our of nearly assets. disposition other segment have the We

on the The for XX% our other these segments aiming we to segment the year-end. sales sale, other and portfolio by X% of All and are ABR close in are remaining now our accounts of approximately only of market NOI. still portfolio properties for

control the do timing. we fully However, not

we $X.X we In properties for the segment. expirations XXXX have $XX approximately asset lease sold from assets for our in feet $XX.X X quarter, With our We sold our million. million. this other we totaling this eliminated from XXX,XXX million, sold square segment Office X for segment and X sale,

quarter other we held sales, addition to for sale. assets X In segment these classified closed as end, at had

leasing. to turning Now

for the achieving leasing strategic expertise our a market. our in to showcase The testament activity this are by to continue strong, favorable re-leasing We demand resulting quarter. positive spreads the properties

October Hills, lease re-leasing addressed XXX,XXX at square X, takes property XX-year foot terms lease in XXXX. we In our Auburn effect The Industrial in cash sole our XX% a by XX% and extension GAAP This a segment, expiration spread. XXXX the executing result extension Michigan.

X% previously. increased part rent were escalations from annually the X.XX% extension, of the As to

And in in in XX% to Vegas, XX% results. we XX,XXX XXXX the segment, of re-leasing over other commenced our September I'll review the cash lease, executed a properties Las With our one Nevada at at new a to GAAP turn that, square Javier? X-year foot and Javier spread. call which financial

Javier Bitar

of million. attributable approximately $XX.X sharing potential million Thanks, common a to Mike. or assets our $XX shareholders to revenue was segment. quarter. was inclusive was sales of impairment per million an million noncash like other financial $XX approximately results $XX I'd and to begin related our of Total Net by loss few the for NOI approximately $X.XX share, highlights approximately in

was cash approximately last in compared have The diluted $XX.X a on year. share on $XX.X was basis, approximately rent But continues of fully in same abatement to AFFO our million, $X.XX segment, share a NOI or lease quarter X.X% for grown the November basis. period by continuing this a XXXX. decrease or XXth the $XX same-store defined and was through approximately million fully NAREIT a pre-existing for as million year FFO Same-store by per cash abatement per would diluted a NOI Industrial $X.XX X.X%. lease

Most the $X.X quarter on invested in in support capacity which interest was our our providing accounts, revolver million $XXX and approximately Available us market initiatives. growth million, $XXX balance industrial approximately flexibility $XXX Total our quarter. approximately of of generated income ample At to to cash this cash liquidity liquidity balance was Moving with was money million. sheet. end, million. approximately was

approximately facility balance had of secured of nonrecourse on billion We debt. mortgage total credit the debt comprised outstanding being $X.X $XXX million with our

activity. by following as debt a the quarter-over-quarter $XXX decreased total million of result outstanding Our

of credit revolver As a paid amendment paydown of facility, million, we $XXX reduction on million $XXX part a and term $XX including on and one down of the of our extension balance. our of loans million our

secured million $XX with loans our deducting $XX off by proceeds of approximately $XXX loan effect our was mortgage in and Ventures all and After interest unsecured, We our cash, swaps, the the was paid our asset has Bottling of rates net million XXX% interest fully rate were segment rate sales. from paid Including X.XX%. debt, Pepsi million. debt down average and our fixed for weighted Other debt our for AIG

And ratio EBITDAre to normalized was net X.Xx. debt our

During fully venture we exited this interest transferred quarter, joint the Office and investment. our our in

recall, in and quarter third you was on If write-off investment, loss this no or we XXXX, complete there the therefore, this took transaction. a gain of

of share per is share payable of fourth For amount of paid on December XX. approved quarter Board the on common dividend the the third holders the quarter, XX January And October XX. a dividend that per we Trustees for a common in $X.XXX $X.XXX of on record to

to pass company be dividends will With a paying made call on to Mike. basis, quarterly Board future I will dividend the continue the expects decisions that, back the Trustees. While by of all continue to

Michael Escalante

Javier. our real on industrial you, the estate we Thank successes, are past strategically Building in market. opportunities to positioned on capitalize

projecting the the industrial sector, will longer-term future about optimistic tailwinds are of persist. We that favorable

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

Operator

[Operator Joshua Instructions] Dennerlein Bank question first of America. of from comes Our

Farrell Granath

plan is behalf would and Farrell ask, on how Josh. about forward. you industrial kind Granath a comment This of that made of going the I be to a expansion wanted

benchmarks you expansionary process if could into characterize turn the be you and would more you to different offensive to I maybe overcome into industrial. reach that wondering an or So be hurdles before of entering looking to was some more

Michael Escalante

Farrell. Thanks,

quarter this debt now. to the we've X:X we've was that but we've think of as marker of second is that, deleveraging matter that -- looking of to or messaging affect X.Xx been year. that been we to able But for EBITDA, we've to wanted got some all in a second reach starting relative effectively quite quarter that, truth to So a we listing, that starting, at the we were the been last identified doing so I not doing and since ratio time things obviously, that right,

And We of cash are in keep for outperform create out people relative to to, valuations. thinking relative opportunities portfolio. to market what positive Office essence, flow the looking we continuing to are the

performance has valuation in the side the that the and excess able people to leasing quite the we've good far on think both us. been that giving the Office of been achieve and are sales on I

So are we direction think Overall, in concerned, lean minor -- to is now stated, our again, this we've as right the of going all for of with make good. setting the which, as the in markets. spite to up of some that industrial, the far on forward portfolio headwinds sort occurring of as in fundamentals industrial quite purposes the we're specific associated supply some side are eventually

has with fact the happy market if the opportunity, us that also you back think will. an given I we're quite

over have they moderated In extremely are much time. maybe overly and Cap low, low, were quite XXXX, more normalized today. low rates

to for structure terms seeing some got portfolio cost cost in capital like sustainable of our debt in of industrial we of -- The marketplace our cap ability capital We rent in below-market the will yields the a of stabilized that of values or what as We've be fixed has in the think buy, to we of predominantly what a the foreseeable we're and see be rates of So debt relative longevity our really there. future. capital. in then marketplace. would rolls going terms sort result you sort ultimately, the

we're that do. active need care of taking lot and we a everything our we quite powder we've -- think created So dry looking, of in and -- of we're to

of out vehicle of through the looking And vehicle. the now back so we're the the front of instead of

Farrell Granath

more. one just And Great. Definitely.

that's strong spreads trend into these in or the coming think was from of segment. at resigning if seeing escalators of last leases. play curious how those I your slight just more top a out? was just had of re-leasing decrease I conversations are a end of for you if to was seeing either kind you So quarter. your industrial curious know you're I the there strength kind

Michael Escalante

I have and in lack occupancy our any our segments, of of core is a of its of know, -- if our our in don't really we industrial because you data terms points -- lot extremely portfolio mean, any in and you Office. will, the of rollover as strong

work able of of deal what that we've we rent we a very pleased numbers that off. XX-year in been escalators executed data on the to And been achieve. with think, in to not lot So the I Hills, frankly, terms But Michigan. got points Auburn we've did

up X% to I a that annual was our X.XX% what number went from in escalators think lease.

ability pretty there. a dramatic terms to rents our it's increase increase of So in

specifically were one the but don't referring I we positive. quite you so what I know was thing like feel did to, do And

Operator

session. hand over Thank Escalante, remarks. Michael closing that concludes you. now gentlemen, will CEO, the for our Ladies and Q&A to I

Michael Escalante

Thank support you for in and interest once again firm. your our

I continuing do we quite the said do to pleased... Excuse listing. would we through. Brad, you're us, We're time at think coming everything that we're of

sorry that So for interruption.

very for pleased the for excited about organization and performance our the you in your thank restate very Operator, lean organization us just industrial. and I'll call. of through joining from conclude we very, listening into as interest the I future Thank appreciate company the So that. you today the today. with for

Operator

disconnect concludes Thank for today's you Thank you you, now sir. and attending, may lines. That your Thank you. event.

Peakstone Realty Trust (PKST) 30 Oct 242024 Q3 Earnings call transcript