Peakstone Realty Trust Reports Second Quarter 2024 Results
Peakstone Realty Trust (NYSE: PKST), a real estate investment trust, announced its financial results for Q2 2024. The company reported revenue of approximately $56.0 million and a net loss of $(3.8) million, or $(0.11) per share. AFFO stood at $0.70 per share, and Same Store Cash NOI saw a 1.7% increase to $44.2 million.
Key developments include a 304,600 sq. ft. lease extension, bringing the total leasing activity for the first half of 2024 to 546,000 sq. ft., and the sale of a property for $8.7 million. The company's portfolio was 96.3% leased, with a weighted average lease term of 6.6 years.
Financially, the company extended its credit facility, reducing borrowing costs and increasing flexibility. Key details include a $907 million unsecured credit facility and an average interest rate of 3.67%.
The Board approved a dividend of $0.225 per share for Q3, payable on October 17, 2024.
Peakstone Realty Trust (NYSE: PKST), un fondo di investimento immobiliare, ha annunciato i suoi risultati finanziari per il secondo trimestre del 2024. L'azienda ha registrato entrate di circa 56,0 milioni di dollari e una perdita netta di $(3,8) milioni, ovvero $(0,11) per azione. AFFO si è attestato a $0,70 per azione e Same Store Cash NOI ha visto un incremento dell'1,7% a 44,2 milioni di dollari.
Sviluppi chiave includono un prolungamento di affitto di 304.600 piedi quadrati, portando l'attività totale di affitto per la prima metà del 2024 a 546.000 piedi quadrati, e la vendita di un immobile per 8,7 milioni di dollari. Il portafoglio dell’azienda era affittato al 96,3%, con una durata media di locazione di 6,6 anni.
Dal punto di vista finanziario, l'azienda ha esteso la sua linea di credito, riducendo i costi di indebitamento e aumentando la flessibilità. I dettagli principali includono una linea di credito non garantita di 907 milioni di dollari e un tasso d'interesse medio del 3,67%.
Il Consiglio ha approvato un dividendo di $0,225 per azione per il terzo trimestre, pagabile il 17 ottobre 2024.
Peakstone Realty Trust (NYSE: PKST), un fideicomiso de inversión en bienes raíces, anunció sus resultados financieros para el segundo trimestre de 2024. La compañía reportó ingresos de aproximadamente $56.0 millones y una pérdida neta de $(3.8) millones, o $(0.11) por acción. AFFO se situó en $0.70 por acción, y Same Store Cash NOI vio un aumento del 1.7% a $44.2 millones.
Los desarrollos clave incluyen una prórroga de arrendamiento de 304,600 pies cuadrados, llevando la actividad total de arrendamiento para la primera mitad de 2024 a 546,000 pies cuadrados, y la venta de una propiedad por $8.7 millones. La cartera de la empresa estaba arrendada en un 96.3%, con un plazo de arrendamiento promedio de 6.6 años.
Financieramente, la compañía extendió su línea de crédito, reduciendo los costos de endeudamiento y aumentando la flexibilidad. Los detalles clave incluyen una línea de crédito no garantizada de $907 millones y una tasa de interés promedio del 3.67%.
La Junta aprobó un dividendo de $0.225 por acción para el tercer trimestre, pagadero el 17 de octubre de 2024.
Peakstone Realty Trust (NYSE: PKST)는 부동산 투자 신탁으로서 2024년 2분기 재무 결과를 발표했습니다. 회사는 약 5,600만 달러의 매출과 $(3.8) 백만 달러의 순손실을 보고했으며, 주당 $(0.11)입니다. AFFO는 주당 $0.70, 동일 점포 현금 NOI는 1.7% 증가하여 $4420만 달러를 기록했습니다.
주요 개발 사항으로는 304,600 평방 피트 임대 연장이 있으며, 2024년 상반기 총 임대 활동은 546,000 평방 피트에 달하고, 870만 달러에 부동산이 판매되었습니다. 회사의 포트폴리오는 96.3% 임대되었으며, 평균 임대 기간은 6.6년입니다.
재무적으로, 회사는 신용 시설을 연장하여 차입 비용을 줄이고 유연성을 높였습니다. 주요 상세는 9억 700만 달러의 무담보 신용 시설과 평균 이자율 3.67%입니다.
이사회는 2024년 3분기 주당 $0.225의 배당금을 승인했으며, 이는 2024년 10월 17일에 지급됩니다.
Peakstone Realty Trust (NYSE: PKST), un fonds d'investissement immobilier, a annoncé ses résultats financiers pour le deuxième trimestre de 2024. L'entreprise a rapporté des revenus d'environ 56,0 millions de dollars et une perte nette de $(3,8) millions, soit $(0,11) par action. AFFO s'élevait à 0,70 $ par action et le Same Store Cash NOI a connu une augmentation de 1,7 % pour atteindre 44,2 millions de dollars.
Parmi les développements clés, on trouve une prolongation de bail de 304 600 pieds carrés, portant l'activité totale de location pour le premier semestre 2024 à 546 000 pieds carrés, ainsi que la vente d'un bien pour 8,7 millions de dollars. Le portefeuille de l'entreprise était loué à 96,3 %, avec une durée moyenne de bail de 6,6 ans.
D'un point de vue financier, l'entreprise a prolongé sa ligne de crédit, réduisant les coûts d'emprunt et augmentant la flexibilité. Les détails clés comprennent une ligne de crédit non garantie de 907 millions de dollars et un taux d'intérêt moyen de 3,67 %.
Le conseil d'administration a approuvé un dividende de 0,225 $ par action pour le 3ème trimestre, payable le 17 octobre 2024.
Peakstone Realty Trust (NYSE: PKST), ein Immobilien-Investmentfonds, gab seine finanziellen Ergebnisse für das 2. Quartal 2024 bekannt. Das Unternehmen berichtete von Umsätzen in Höhe von etwa 56,0 Millionen US-Dollar sowie einem Nettoverlust von $(3,8) Millionen, was $(0,11) pro Aktie entspricht. AFFO betrug $0,70 pro Aktie, und der Same Store Cash NOI stieg um 1,7% auf 44,2 Millionen US-Dollar.
Zu den wichtigsten Entwicklungen gehört eine Verlängerung des Mietvertrags über 304.600 Quadratfuß, wodurch die gesamte Vermietungstätigkeit für die erste Hälfte von 2024 auf 546.000 Quadratfuß anstieg, sowie der Verkauf einer Immobilie für 8,7 Millionen US-Dollar. Das Portfolio des Unternehmens war zu 96,3% vermietet, mit einer durchschnittlichen Mietdauer von 6,6 Jahren.
Finanziell hat das Unternehmen seine Kreditlinie verlängert, um die Kosten für die Kreditaufnahme zu senken und die Flexibilität zu erhöhen. Zu den wichtigsten Details gehören eine unbesicherte Kreditlinie in Höhe von 907 Millionen US-Dollar und ein durchschnittlicher Zinssatz von 3,67%.
Der Vorstand genehmigte eine Dividende von $0,225 pro Aktie für das 3. Quartal, zahlbar am 17. Oktober 2024.
- Revenue of approximately $56.0 million.
- AFFO of $0.70 per share.
- Same Store Cash NOI increased 1.7% to $44.2 million.
- Extended credit facility, reducing borrowing costs.
- Portfolio 96.3% leased with a weighted average lease term of 6.6 years.
- Board approved a dividend of $0.225 per share for Q3.
- Net loss of $(3.8) million, or $(0.11) per share.
- Revenue decreased from $62.5 million in the same quarter last year.
- AFFO decreased from $0.73 per share in the same quarter last year.
Insights
Peakstone Realty Trust's Q2 2024 results reveal a mixed financial picture. While the company reported a net loss of
The successful amendment of their credit facility is a significant development, extending debt maturities and lowering borrowing costs. This improved financial flexibility, coupled with a high occupancy rate of
Peakstone's portfolio composition and leasing activity demonstrate resilience in a challenging market. The company's focus on industrial and office properties, with
The high percentage of investment-grade tenants (
- Successfully Extended Credit Facility
- Completed 546,000 Square Feet of Leasing During the First Half of 2024
“During the second quarter, we continued to proactively manage our balance sheet, optimize our portfolio composition, and achieve strong industrial releasing spreads. As a testament to our effective operational efforts and our well-leased, diversified portfolio, we successfully amended our credit facility subsequent to quarter-end. In connection with the closing of the amended facility, we have extended our debt maturities, lowered our borrowing costs, and provided the Company with a solid foundation for growth. Notably, the amended facility provides us with increased flexibility to make industrial investments and build long-term shareholder value over time,” said Michael Escalante, CEO.
Second Quarter 2024 Highlights
-
Revenue of approximately
.$56.0 million -
Net loss of approximately
; net loss attributable to common shareholders of approximately$(4.1) million , or$(3.8) million per basic and diluted share.$(0.11) -
Adjusted Funds from Operations (“AFFO”) of
per basic and diluted share/unit.$0.70 -
Same Store Cash Net Operating Income (“Same Store Cash NOI”) of approximately
, a$44.2 million 1.7% increase compared to the same quarter last year. - Completed 304,600-square-foot lease extension, bringing leasing activity in the first half of 2024 to 546,000 square feet.
-
Sold one Other segment property for
.$8.7 million -
Paid a dividend of
per common share.$0.22 5
Portfolio
The Company’s wholly owned portfolio had the following characteristics as of June 30, 2024:
Segment |
|
Number of Properties |
|
Percentage Leased (Based on Rentable Sq. Ft.) |
|
Weighted Average Lease Term (WALT) (in years) |
|
Investment Grade (Wtd. Avg. % Based on ABR) |
|
Percentage of ABR |
Industrial |
|
19 |
|
100.0 % |
|
6.2 |
|
58.6 % |
|
26.4 % |
Office |
|
34 |
|
98.7 % |
|
7.4 |
|
60.8 % |
|
60.1 % |
Industrial and Office |
|
53 |
|
99.5 % |
|
7.0 |
|
60.1 % |
|
86.5 % |
Other |
|
13 |
|
74.8 % |
|
3.4 |
|
40.2 % |
|
13.5 % |
Total |
|
66 |
|
96.3 % |
|
6.6 |
|
57.4 % |
|
100.0 % |
Transaction Activity
The Company sold one property in the Other segment totaling 56,600 square feet for
Leasing Activity
In the Industrial Segment:
-
Finalized the fair market rental rate and annual escalations for a previously executed, 5-year, 817,700-square-foot lease extension at a property in
Jacksonville, FL. The finalized terms result in a28% GAAP and7% cash releasing spread and an increase in the annual rent escalations from approximately1.00% to3.75% .
In the Office Segment:
-
A previously executed, 7.7-year, 82,800-square-foot new lease commenced at a property in
Largo, FL.
In the Other segment:
-
Executed a 304,600-square-foot, one-year lease extension at an industrial property in
Columbus, OH at a40% GAAP and63% cash releasing spread.
Financial Results for the Second Quarter
Revenue
Total revenue was approximately
Net Loss Attributable to Common Shareholders
Net loss attributable to common shareholders was approximately
AFFO
AFFO was approximately
Same Store Cash NOI
Same Store Cash NOI increased
Credit Facility
During the quarter, the Company exercised its option to extend the maturity date of its revolving credit facility to January 31, 2026.
Subsequent to quarter-end, on July 25, 2024, the Company further improved its financial flexibility and solidified its long-term debt profile by amending and extending its credit facility. Key highlights of the amended facility are as follows:
-
Size/Term:
unsecured credit facility comprised of a$907 million revolver (extended maturity to July 2028), a$547 million term loan (extended maturity to July 2028), and a$210 million term loan (unchanged maturity in April 2026).$150 million -
Interest Rate:
3.67% weighted average effective rate inclusive of current floating to fixed SOFR interest rate swaps maturing on July 1, 2025.$750 million
Balance Sheet
Below is a table showing quarter-end and proforma quarter-end (reflecting the credit facility amendment) balance sheet metrics.
Metric |
|
Balance Sheet As of June 30, 2024 |
|
Proforma Balance Sheet Reflecting Credit Facility Amendment As of June 30, 2024 |
Outstanding Facility Balance (in millions) |
|
|
|
|
Cash Balance (in millions) |
|
|
|
|
Available Capacity (in millions) |
|
|
|
|
Total Liquidity (in millions) |
|
|
|
|
Consolidated Net Debt (in millions) |
|
|
|
|
Weighted Average Debt Maturity |
|
2.1 years |
|
3.5 years |
Fixed Rate Debt (%) |
|
|
|
|
SOFR Interest Rate Swaps (Wtd. Avg. Rate) |
|
|
|
|
Consolidated Wtd. Avg. Interest Rate (including Swaps) |
|
|
|
|
Net Debt to Normalized EBITDAre |
|
5.9x |
|
6.4x |
Dividends
The Board of Trustees approved a dividend for the quarter ended September 30, 2024 in the amount of
As previously announced, the Company paid a dividend for the second quarter in the amount of
Second Quarter 2024 Earnings Webcast
The Company will host a webcast to present the second quarter results on Thursday, August 8, 2024 at 5:00 p.m. Eastern Time. To access the webcast, please visit https://investors.pkst.com/investors/events-and-presentations/events/event-details/2024/Second-Quarter-2024-Earnings-Call/default.aspx at least ten minutes prior to the scheduled start time to register and install any necessary software. A replay of the webcast will be available on the Company’s website shortly after the initial presentation. To access by phone, please use the following dial-in numbers. For domestic callers, please dial 1-877-407-9716; for international callers, please dial 1-201-493-6779.
About Peakstone Realty Trust
Peakstone Realty Trust (NYSE: PKST) is an internally managed real estate investment trust (REIT) that owns and operates a high-quality, newer-vintage portfolio of predominantly single-tenant industrial and office properties. These assets are generally leased to creditworthy tenants under long-term net lease agreements with contractual rent escalations and are situated in primarily high-growth, strategic coastal and sunbelt markets.
Additional information is available at www.pkst.com.
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 provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
The forward-looking statements contained in this document reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: general economic and financial conditions; market volatility; inflation; any potential recession or threat of recession; interest rates; recent and ongoing disruption in the debt and banking markets; tenant, geographic concentration, and the financial condition of our tenants; competition for tenants and competition with sellers of similar properties if we elect to dispose of our properties; our access to, and the availability of capital; whether we will be able to refinance or repay debt; whether work-from-home trends or other factors will impact the attractiveness of industrial and/or office assets; whether we will be successful in renewing leases as they expire; future financial and operating results, plans, objectives, expectations and intentions; our ability to manage cash flows; dilution resulting from equity issuances; expected sources of financing, including the ability to maintain the commitments under our revolving credit facility, and the availability and attractiveness of the terms of any such financing; legislative and regulatory changes that could adversely affect our business; cybersecurity incidents or other disruptions to our or our third party information technology systems; our ability to maintain our status as a REIT and our Operating Partnership as a partnership for
While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future performance. The forward-looking statements speak only as of the date of this document. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this document, except as required by applicable law. We caution investors not to place undue reliance on any forward-looking statements, which are based only on information currently available to us.
Notice Regarding Non-GAAP Financial Measures: In addition to
PEAKSTONE REALTY TRUST CONSOLIDATED BALANCE SHEETS (Unaudited; in thousands, except units and share amounts) |
|||||||
|
|
||||||
|
June 30, 2024 |
|
December 31, 2023 |
||||
ASSETS |
|
|
|
||||
Cash and cash equivalents |
$ |
446,800 |
|
|
$ |
391,802 |
|
Restricted cash |
|
14,496 |
|
|
|
9,208 |
|
Real estate: |
|
|
|
||||
Land |
|
225,330 |
|
|
|
231,175 |
|
Building and improvements |
|
1,942,591 |
|
|
|
1,968,314 |
|
Tenant origination and absorption cost |
|
394,728 |
|
|
|
402,251 |
|
Construction in progress |
|
1,069 |
|
|
|
8,371 |
|
Total real estate |
|
2,563,718 |
|
|
|
2,610,111 |
|
Less: accumulated depreciation and amortization |
|
(581,421 |
) |
|
|
(550,552 |
) |
Total real estate, net |
|
1,982,297 |
|
|
|
2,059,559 |
|
Intangible assets, net |
|
28,281 |
|
|
|
29,690 |
|
Deferred rent receivable |
|
65,289 |
|
|
|
63,272 |
|
Deferred leasing costs, net |
|
18,117 |
|
|
|
19,112 |
|
Goodwill |
|
74,052 |
|
|
|
78,647 |
|
Right of use assets |
|
33,771 |
|
|
|
33,736 |
|
Interest rate swap asset |
|
22,710 |
|
|
|
26,942 |
|
Other assets |
|
42,172 |
|
|
|
27,446 |
|
Real estate assets and other assets held for sale, net |
|
2,730 |
|
|
|
50,211 |
|
Total assets |
$ |
2,730,715 |
|
|
$ |
2,789,625 |
|
LIABILITIES AND EQUITY |
|
|
|
||||
Debt, net |
|
1,408,517 |
|
|
|
1,435,923 |
|
Distributions payable |
|
8,486 |
|
|
|
8,344 |
|
Due to related parties |
|
573 |
|
|
|
573 |
|
Intangible liabilities, net |
|
14,552 |
|
|
|
16,023 |
|
Lease liability |
|
46,934 |
|
|
|
46,281 |
|
Accrued expenses and other liabilities |
|
64,970 |
|
|
|
78,229 |
|
Liabilities held for sale |
|
92 |
|
|
|
539 |
|
Total liabilities |
|
1,544,124 |
|
|
|
1,585,912 |
|
Commitments and contingencies (Note 13) |
|
|
|
||||
Shareholders’ equity: |
|
|
|
||||
Common shares, |
|
37 |
|
|
|
36 |
|
Additional paid-in capital |
|
2,994,303 |
|
|
|
2,990,085 |
|
Cumulative distributions |
|
(1,092,609 |
) |
|
|
(1,076,000 |
) |
Accumulated deficit |
|
(826,597 |
) |
|
|
(827,854 |
) |
Accumulated other comprehensive income |
|
21,986 |
|
|
|
25,817 |
|
Total shareholders’ equity |
|
1,097,120 |
|
|
|
1,112,084 |
|
Noncontrolling interests |
|
89,471 |
|
|
|
91,629 |
|
Total equity |
|
1,186,591 |
|
|
|
1,203,713 |
|
Total liabilities and equity |
$ |
2,730,715 |
|
|
$ |
2,789,625 |
|
PEAKSTONE REALTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; in thousands, except share and per share amounts) |
|||||||
|
Three Months Ended June 30, |
||||||
|
|
2024 |
|
|
|
2023 |
|
Revenue: |
|
|
|
||||
Rental income |
$ |
55,952 |
|
|
$ |
62,540 |
|
Expenses: |
|
|
|
||||
Property operating expense |
|
5,658 |
|
|
|
6,919 |
|
Property tax expense |
|
4,513 |
|
|
|
5,545 |
|
Property management fees |
|
359 |
|
|
|
430 |
|
General and administrative expenses |
|
9,116 |
|
|
|
12,030 |
|
Corporate operating expenses to related parties |
|
169 |
|
|
|
341 |
|
Depreciation and amortization |
|
22,998 |
|
|
|
30,472 |
|
Real estate impairment provision |
|
6,505 |
|
|
|
397,373 |
|
Total expenses |
|
49,318 |
|
|
|
453,110 |
|
Income before other income (expenses) |
|
6,634 |
|
|
|
(390,570 |
) |
Other income (expenses): |
|
|
|
||||
Interest expense |
|
(15,845 |
) |
|
|
(16,068 |
) |
Other income, net |
|
5,167 |
|
|
|
2,747 |
|
Net loss from investment in unconsolidated entity |
|
— |
|
|
|
(17,508 |
) |
Loss from disposition of assets |
|
(57 |
) |
|
|
(9,701 |
) |
Transaction expenses |
|
— |
|
|
|
(21,303 |
) |
Net loss |
|
(4,101 |
) |
|
|
(452,403 |
) |
Distributions to redeemable preferred shareholders |
|
— |
|
|
|
(4,970 |
) |
Net loss attributable to noncontrolling interests |
|
333 |
|
|
|
40,909 |
|
Net loss attributable to controlling interests |
|
(3,768 |
) |
|
|
(416,464 |
) |
Distributions to redeemable noncontrolling interests attributable to common shareholders |
|
— |
|
|
|
(13 |
) |
Net loss attributable to common shareholders |
$ |
(3,768 |
) |
|
$ |
(416,477 |
) |
Net loss attributable to common shareholders per share, basic and diluted |
$ |
(0.11 |
) |
|
$ |
(11.59 |
) |
Weighted-average number of common shares outstanding, basic and diluted |
|
36,349,950 |
|
|
|
35,922,706 |
|
PEAKSTONE REALTY TRUST
Funds from Operations and Adjusted Funds from Operations
(Unaudited; in thousands except share and per share amounts)
Our reported results are presented in accordance with GAAP. We also disclose Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”) both of which are non-GAAP financial measures. We believe these two non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.
We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). FFO is defined as net income or loss computed in accordance with GAAP, excluding extraordinary items, as defined by GAAP, and gains and losses from sales of depreciable real estate assets, adding back impairment write-downs of depreciable real estate assets, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated partnerships, joint ventures and preferred dividends. Because FFO calculations exclude such items as depreciation and amortization of depreciable real estate assets and gains and losses from sales of depreciable real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods and between other REITs. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. It should be noted, however, that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do, making comparisons less meaningful.
Additionally, we use AFFO as a non-GAAP financial measure to evaluate our operating performance. AFFO excludes non-routine and certain non-cash items such as revenues in excess of cash received, amortization of share-based compensation net, deferred rent, amortization of in-place lease valuation, acquisition or investment-related costs, financed termination fee, net of payments received, gain or loss from the extinguishment of debt, unrealized gains (losses) on derivative instruments, write-off transaction costs and other one-time transactions. We believe that AFFO is a recognized measure of sustainable operating performance by the REIT industry and is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies. Management believes that AFFO is a beneficial indicator of our ongoing portfolio performance and isolates the financial results of our operations. AFFO, however, is not considered an appropriate measure of historical earnings as it excludes certain significant costs that are otherwise included in reported earnings. Further, since the measure is based on historical financial information, AFFO for the period presented may not be indicative of future results.
By providing FFO and AFFO, we present information that assists investors in aligning their analysis with management’s analysis of long-term operating activities. FFO and AFFO have been revised to include amounts available to both common shareholders and limited partners for all periods presented.
For all of these reasons, we believe the non-GAAP measures of FFO and AFFO, in addition to net income (loss) are helpful supplemental performance measures and useful to investors in evaluating the performance of our real estate portfolio. However, a material limitation associated with FFO and AFFO is that they are not indicative of our cash available to fund the payment of dividends since other uses of cash, such as capital expenditures at our properties and principal payments of debt, are not deducted when calculating FFO and AFFO. The use of AFFO as a measure of long-term operating performance on value is also limited if we do not continue to operate under our current business plan. FFO and AFFO should not be viewed as a more prominent measure of performance than net income (loss) and each should be reviewed in connection with GAAP measurements.
Neither the SEC, NAREIT, nor any other applicable regulatory body has opined on the acceptability of the adjustments contemplated to adjust FFO in order to calculate AFFO and its use as a non-GAAP performance measure. In the future, NAREIT may decide to standardize the allowable exclusions across the REIT industry, and we may have to adjust the calculation and characterization of this non-GAAP measure.
|
Three Months Ended June 30, |
||||||
|
|
2024 |
|
|
|
2023 |
|
Net loss |
$ |
(4,101 |
) |
|
$ |
(452,403 |
) |
Adjustments: |
|
|
|
||||
Depreciation of building and improvements |
|
15,424 |
|
|
|
19,538 |
|
Amortization of leasing costs and intangibles |
|
7,671 |
|
|
|
11,031 |
|
Impairment provision, real estate |
|
6,505 |
|
|
|
397,373 |
|
Equity interest of depreciation of building and improvements - unconsolidated entity |
|
— |
|
|
|
9,020 |
|
Gain from disposition of assets, net |
|
57 |
|
|
|
9,701 |
|
FFO |
|
25,556 |
|
|
|
(5,740 |
) |
Preferred units redemption charge |
|
— |
|
|
|
(4,970 |
) |
FFO attributable to common shareholders and limited partners |
$ |
25,556 |
|
|
$ |
(10,710 |
) |
Reconciliation of FFO to AFFO: |
|
|
|
||||
FFO attributable to common shareholders and limited partners |
$ |
25,556 |
|
|
$ |
(10,710 |
) |
Adjustments: |
|
|
|
||||
Revenues in excess of cash received, net |
|
(1,819 |
) |
|
|
(2,644 |
) |
Amortization of share-based compensation |
|
2,379 |
|
|
|
2,626 |
|
Deferred rent - ground lease |
|
399 |
|
|
|
435 |
|
Unrealized loss (gain) on investments |
|
(47 |
) |
|
|
(5 |
) |
Amortization of above/(below) market rent, net |
|
(372 |
) |
|
|
(291 |
) |
Amortization of debt premium/(discount), net |
|
20 |
|
|
|
83 |
|
Amortization of ground leasehold interests |
|
(97 |
) |
|
|
(97 |
) |
Amortization of below tax benefit amortization |
|
372 |
|
|
|
372 |
|
Amortization of deferred financing costs |
|
1,044 |
|
|
|
655 |
|
Amortization of lease inducements |
|
— |
|
|
|
49 |
|
Company's share of amortization of deferred financing costs- unconsolidated entity |
|
— |
|
|
|
10,655 |
|
Company's share of revenues in excess of cash received (straight-line rents) - unconsolidated entity |
|
— |
|
|
|
(750 |
) |
Company's share of amortization of above market rent - unconsolidated entity |
|
— |
|
|
|
(26 |
) |
Write-off of transaction costs |
|
69 |
|
|
|
— |
|
Employee separation expense |
|
59 |
|
|
|
2,042 |
|
Transaction expenses |
|
— |
|
|
|
21,303 |
|
Preferred units redemption charge |
|
— |
|
|
|
4,970 |
|
AFFO available to common shareholders and limited partners |
$ |
27,563 |
|
|
$ |
28,667 |
|
FFO per share/unit, basic and diluted |
$ |
0.65 |
|
|
$ |
(0.27 |
) |
AFFO per share/unit, basic and diluted |
$ |
0.70 |
|
|
$ |
0.73 |
|
|
|
|
|
||||
Weighted-average common shares outstanding - basic and diluted shares |
|
36,349,950 |
|
|
|
35,922,706 |
|
Weighted-average OP Units outstanding (1) |
|
3,215,665 |
|
|
|
3,528,666 |
|
Weighted-average common shares and OP Units outstanding - basic and diluted FFO/AFFO |
|
39,565,615 |
|
|
|
39,451,372 |
|
(1) |
|
Represents weighted-average outstanding common units of the Company’s operating partnership, PKST OP, L.P., that are owned by unitholders other than Peakstone Realty Trust. Represents the noncontrolling interest in the Company's operating partnership. |
PEAKSTONE REALTY TRUST
Net Operating Income, including Cash and Same Store Cash NOI
(Unaudited; in thousands)
Net operating income ("NOI”) is a non-GAAP financial measure calculated as net (loss) income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding equity in earnings of our unconsolidated real estate joint ventures, general and administrative expenses, interest expense, depreciation and amortization, impairment of real estate, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, investment income or loss and termination income. Net operating income on a cash basis (“Cash NOI”) is net operating income adjusted to exclude the effect of straight-line rent and amortization of acquired above-and below market lease intangibles adjustments required by GAAP. Net operating income on a cash basis for our Same Store portfolio (“Same Store Cash NOI”) is Cash NOI for properties held for the entirety of all periods presented, with an adjustment for lease termination fees to provide a better measure of actual cash basis rental growth for our Same Store portfolio. We believe that NOI, Cash NOI and Same-Store Cash NOI are helpful to investors as additional measures of operating performance because we believe they help both investors and management to understand the core operations of our properties excluding corporate and financing-related costs and non-cash depreciation and amortization. NOI, Cash NOI and Same Store Cash NOI are unlevered operating performance metrics of our properties and allow for a useful comparison of the operating performance of individual assets or groups of assets. These measures thereby provide an operating perspective not immediately apparent from GAAP income from operations or net income (loss). In addition, NOI, Cash NOI and Same Store Cash NOI are considered by many in the real estate industry to be useful starting points for determining the value of a real estate asset or group of assets. Because NOI, Cash NOI and Same Store Cash NOI exclude depreciation and amortization and capture neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of NOI, Cash NOI and Same Store Cash NOI as measures of our performance is limited. Therefore, NOI, Cash NOI and Same Store Cash NOI should not be considered as alternatives to net (loss) income, as computed in accordance with GAAP. NOI, Cash NOI and Same Store Cash NOI may not be comparable to similarly titled measures of other companies.
Our calculation of each of NOI, Cash NOI and Same Store Cash NOI is presented in the following table for the three months ended June 30, 2024 and June 30, 2023 (dollars in thousands):
|
|
Three Months Ended June 30, |
||||||
|
|
|
2024 |
|
|
2023 |
|
|
Reconciliation of Net Loss to Total NOI |
|
|
|
|
||||
Net loss |
|
$ |
(4,101 |
) |
|
$ |
(452,403 |
) |
General and administrative expenses |
|
|
9,116 |
|
|
|
12,030 |
|
Corporate operating expenses to related parties |
|
|
169 |
|
|
|
341 |
|
Real estate impairment provision |
|
|
6,505 |
|
|
|
397,373 |
|
Depreciation and amortization |
|
|
22,998 |
|
|
|
30,472 |
|
Interest expense |
|
|
15,845 |
|
|
|
16,068 |
|
Other (income) expense, net |
|
|
(5,167 |
) |
|
|
(2,747 |
) |
Loss from investment in unconsolidated entities |
|
|
— |
|
|
|
17,508 |
|
Loss (gain) from disposition of assets |
|
|
57 |
|
|
|
9,701 |
|
Transaction expenses |
|
|
— |
|
|
|
21,303 |
|
Total NOI |
|
$ |
45,422 |
|
|
$ |
49,646 |
|
|
|
|
|
|
||||
Cash NOI Adjustments |
|
|
|
|
||||
Industrial Segment: |
|
|
|
|
||||
Industrial NOI |
|
$ |
12,854 |
|
|
$ |
12,320 |
|
Straight-line rent |
|
|
(1,277 |
) |
|
|
(107 |
) |
Amortization of acquired lease intangibles |
|
|
(96 |
) |
|
|
(96 |
) |
Industrial Cash NOI |
|
|
11,481 |
|
|
|
12,117 |
|
|
|
|
|
|
||||
Office Segment: |
|
|
|
|
||||
Office NOI |
|
|
27,328 |
|
|
|
28,923 |
|
Straight-line rent |
|
|
(716 |
) |
|
|
(2,831 |
) |
Amortization of acquired lease intangibles |
|
|
(130 |
) |
|
|
(67 |
) |
Deferred ground/Office lease |
|
|
425 |
|
|
|
439 |
|
Other intangible amortization |
|
|
372 |
|
|
|
372 |
|
Inducement amortization |
|
|
— |
|
|
|
49 |
|
Office Cash NOI |
|
|
27,279 |
|
|
|
26,885 |
|
|
|
|
|
|
||||
Other Segment: |
|
|
|
|
||||
Other NOI |
|
|
5,240 |
|
|
|
8,403 |
|
Straight-line rent |
|
|
174 |
|
|
|
294 |
|
Amortization of acquired lease intangibles |
|
|
(146 |
) |
|
|
(128 |
) |
Deferred ground/Office lease |
|
|
(26 |
) |
|
|
(4 |
) |
Other Cash NOI |
|
|
5,242 |
|
|
|
8,565 |
|
Total Cash NOI |
|
$ |
44,002 |
|
|
$ |
47,567 |
|
|
|
|
|
|
||||
Same Store Cash NOI Adjustments |
|
|
|
|
||||
Industrial Cash NOI |
|
$ |
11,481 |
|
|
$ |
12,117 |
|
Cash NOI for recently disposed properties |
|
|
— |
|
|
|
7 |
|
Industrial Same Store Cash NOI |
|
|
11,481 |
|
|
|
12,124 |
|
|
|
|
|
|
||||
Office Cash NOI |
|
|
27,279 |
|
|
|
26,885 |
|
Cash NOI for recently disposed |
|
|
12 |
|
|
|
(987 |
) |
Inducement adjustment for non-same store property |
|
|
— |
|
|
|
(49 |
) |
Office Same Store Cash NOI |
|
|
27,291 |
|
|
|
25,849 |
|
|
|
|
|
|
||||
Other Cash NOI |
|
|
5,242 |
|
|
|
8,565 |
|
Cash NOI for recently disposed |
|
|
190 |
|
|
|
(3,086 |
) |
Other Same Store Cash NOI |
|
|
5,432 |
|
|
|
5,479 |
|
Total Same Store Cash NOI |
|
$ |
44,204 |
|
|
$ |
43,452 |
|
PEAKSTONE REALTY TRUST
Appendix
Annualized Base Rent, Investment Grade, and Normalized EBITDAre Definitions
“Annualized base rent” or “ABR” means the contractual base rent excluding abatement periods and deducting base year operating expenses for gross and modified gross leases as of June 30, 2024, unless otherwise specified, multiplied by 12 months. For properties in the Company's portfolio that had rent abatement periods as of June 30, 2024, we used the monthly contractual base rent payable following expiration of the abatement.
“Investment grade” means an investment grade credit rating from a NRSRO approved by the
“Net Debt” is total consolidated debt less cash and cash equivalents (excluding restricted cash).
“Normalized EBITDAre” is a non-GAAP supplemental performance measure to evaluate the operating performance of the Company. Normalized EBITDAre, as defined by the Company, represents EBITDAre (as defined by NAREIT), modified to exclude items such as acquisition-related expenses, employee separation expenses and other items that we believe are not indicative of the performance of our portfolio. Normalized EBITDAre also excludes the Normalized EBITDAre impact of properties sold during the period and extrapolate the operations of acquired properties to estimate a full quarter of ownership (in each case, as if such disposition or acquisition had occurred on the first day of the quarter). We may also exclude the annualizing of other large transaction items such as termination income recognized during the quarter. Management believes these adjustments to reconcile to Normalized EBITDAre provides investors with supplemental performance information that is consistent with the performance models and analysis used by management and provides investors a view of the performance of our portfolio over time. However, because Normalized EBITDAre is calculated before recurring cash charges, including interest expense and income taxes, and is not adjusted for capital expenditures or other recurring cash requirements of our business, its utility as a measure of our liquidity is limited. Therefore, Normalized EBITDAre should not be considered as an alternative to net income, as computed in accordance with GAAP. Normalized EBITDAre may not be comparable to similarly titled measures of other companies. Please refer to the Supplemental Report for the definition of Normalized EBITDAre (Consolidated).
View source version on businesswire.com: https://www.businesswire.com/news/home/20240808768261/en/
Investor Relations:
ir@pkst.com
Source: Peakstone Realty Trust
FAQ
What were Peakstone Realty Trust's Q2 2024 earnings?
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