- Sold Five Properties for $130.8 Million,
Increasing Year-to-Date Sales to Over $300 Million
- Continued Deleveraging of Balance Sheet
Peakstone Realty Trust ("PKST" or the "Company") (NYSE: PKST), a
real estate investment trust focused on owning and operating a
high-quality, newer-vintage portfolio of predominantly
single-tenant industrial and office properties, today announced its
financial results for the quarter ended June 30, 2023.
Second Quarter 2023
Highlights
- Revenue of approximately $62.5 million.
- Net loss of approximately $(452.4) million; net loss
attributable to common shareholders of approximately $(416.5)
million, or $(11.59) per basic and diluted share. Net loss for the
quarter was impacted primarily due to non-cash impairments,
property dispositions, and non-recurring expenses.
- Funds from Operations (“FFO”) 1 of $(0.27) per basic and
diluted share/unit. FFO for the quarter was impacted primarily due
to property dispositions and non-recurring expenses.
- Adjusted Funds from Operation ("AFFO")1 of $0.73 per basic and
diluted share/unit.
- Same Store Cash Net Operating Income (“Same Store Cash NOI”)2
of approximately $48.0 million.
- Portfolio occupancy increased to 96% based on rentable square
feet.
- Board of Trustees declared a dividend of $0.225 per common
share for the second quarter.
- Subsequent to quarter-end, the Board of Trustees approved a
$200 million ATM offering program.
“We continue to successfully execute our disposition and
deleveraging strategy” stated Michael J. Escalante, PKST's Chief
Executive Officer. “Due to our cycle-tested team’s experience and
capital markets proficiency, we have enhanced our balance sheet
through the sale of non-core assets. These sales have enabled us to
further improve our leverage metrics, refine our asset composition,
and strengthen the financial profile of the Company. Our
high-quality, resilient portfolio is delivering consistent
performance, and we remain focused on working towards achieving an
investment-grade rating.”
Portfolio
As of June 30, 2023, the Company’s wholly-owned portfolio (i)
consisted of 73 properties located in 24 states with a weighted
average remaining lease term of approximately 6.5 years, (ii) was
96.0% leased based on rentable square feet with an average economic
occupancy of 95.4% comprised of Industrial (100%), Office (97.0%),
and Other (81.2%), and (iii) generated approximately 63.5% of
annualized base rent3 pursuant to leases with respect to which the
tenant, the guarantor or a non-guarantor parent of the tenant has
an investment grade credit rating or what management believes is a
generally equivalent rating4.
Transaction Activity
During the second quarter, the Company sold five office
properties for gross disposition proceeds of $130.8 million. The
Company recognized a net loss of approximately $9.7 million as a
result of these sales. For the six months ended June 30, 2023, the
Company sold eight properties for gross disposition proceeds of
$300.4 million. The Company recognized a net gain of approximately
$20.9 million as a result of these sales.
Financial/Operating
Results
Revenue
In the second quarter, total revenue was approximately $62.5
million compared to $123.1 million for the same quarter last year.
This $60.6 million change in revenue is primarily due to the
disposition of 48 properties in 2022 and 8 properties in the first
half of 2023.
Net (Loss) Income Attributable to Common Shareholders
In the second quarter, net loss attributable to common
shareholders was approximately $(416.5) million, or $(11.59) per
basic and diluted share, compared to net loss attributable to
common shareholders of approximately $(72.2) million, or $(2.00)
per basic and diluted share, for the same quarter last year. The
change is primarily due to (i) the $60.6 million change in revenue
resulting from property dispositions in 2022 and 2023, (ii)
non-cash real estate impairments of office assets of $397.4
million, and (iii) non-recurring expenses of $28.3 million ($0.72
per basic and diluted share) consisting of $21.3 million ($0.54 per
basic and diluted share) for transaction expenses related to
listing of the Company’s shares on the NYSE, approximately $5.0
million ($0.13 per basic and diluted share) non-cash expense from
the initial issuance of the now redeemed Series A Preferred Shares
(as defined below), and $2.0 million ($0.05 per basic and diluted
share) relating to employee severance.
FFO
In the second quarter, FFO was approximately $(10.7) million, or
$(0.27) per basic and diluted share/unit, compared to $56.5
million, or $1.43 per basic and diluted share/unit, for the same
quarter last year. The change in FFO is primarily due to (i) the
$60.6 million change in revenue resulting from property
dispositions in 2022 and 2023, (ii) non-recurring expenses of $28.3
million ($0.72 per basic and diluted share/unit) consisting of
$21.3 million ($0.54 per basic and diluted share/unit) for
transaction expenses related to the listing of the Company’s shares
on the NYSE, approximately $5.0 million ($0.13 per basic and
diluted share/unit) non-cash expense from the initial issuance of
the now redeemed Series A Preferred Shares, and $2.0 million ($0.05
per basic and diluted share/unit) relating to employee severance.
Excluding the $28.3 million of non-recurring expenses, FFO for the
second quarter would have been approximately $17.6 million, or
$0.45 per basic and diluted share/unit.
AFFO
In the second quarter, AFFO was approximately $28.7 million, or
$0.73 per basic and diluted share/unit, compared to $62.0 million,
or $1.57 per basic and diluted share/unit, for the same quarter
last year. The difference in AFFO is primarily due to the change in
revenue resulting from property dispositions in 2022 and 2023.
Same Store Cash NOI
In the second quarter, Same Store Cash NOI was approximately
$48.0 million compared to $55.0 million in the same quarter last
year. The change in Same Store Cash NOI is primarily due to $8.2
million of non-recurring termination income recognized in the prior
year. Excluding this termination income from the same quarter in
2022, Same Store Cash NOI for the second quarter would have
increased $1.2 million, or 2.5%, compared to the same quarter last
year.
Balance Sheet
As of June 30, 2023, the Company had $360.6 million in cash on
hand and $34.0 million of available capacity on the Revolver, for
total liquidity of $394.6 million. The Company’s total consolidated
debt was approximately $1.5 billion. Including the effect of the
Company’s interest rate swap agreements with a total notional
amount of $750.0 million, the Company’s weighted average interest
rate as of June 30, 2023 was 4.16% for both the Company’s
fixed-rate and variable-rate debt combined. During the second
quarter, the Company incurred a $397.4 million non-cash real estate
impairment resulting from changes related to anticipated hold
periods, estimated selling prices, and potential vacancies that
impacted the recoverability of these assets.
On April 10, 2023, the Company redeemed all 5,000,000 shares of
Series A Preferred Cumulative Perpetual Convertible Preferred Stock
(the “Series A Preferred Shares”) which were issued to and held by
a third-party international investor) by making (i) a redemption
payment of $125 million (with a redemption fee of approximately
$1.9 million being waived) and (ii) paying accrued preferred
distributions of approximately $2.4 million. Additionally, the
Company had $5.0 million of capitalized offering costs from the
initial issuance of the Series A Preferred Shares which were
written off during the quarter as a non-cash expense.
ATM Offering Program
On August 2, 2023, the Board of Trustees approved a $200 million
ATM offering program to provide the Company additional flexibility
to manage its balance sheet, diversify its capital sourcing
options, and offer an efficient mechanism to access capital in the
future.
Dividends
On June 20, 2023, the Board declared a distribution for the
second quarter in the amount of $0.225 per common share. The
Company paid such distributions on July 17, 2023 to shareholders of
record as of June 30, 2023.
Second Quarter 2023 Earnings
Webcast
PKST will host a webcast to present the second quarter results
on Tuesday, August 8, 2023 at 5:00 p.m. Eastern Time. To access the
webcast, please visit
https://investors.pkst.com/investors/events-and-presentations/events/event-details/2023/Second-Quarter-2023-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. As of June 30, 2023,
Peakstone’s wholly-owned portfolio consists of 18.2 million square
feet across 24 states 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; occupancy,
rent deferrals and the financial condition of our tenants; 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; 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; our future capital expenditures, operating
expenses, net income, operating income, cash flow and developments
and trends of the real estate industry; whether we will be
successful in the pursuit of our business plan, including any
dispositions; whether we will succeed in our investment objectives;
any fluctuation and/or volatility of the trading price of our
common shares; risks associated with our dependence on key
personnel whose continued service is not guaranteed; and other
factors, including those risks disclosed in “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our most recent Annual Report on Form
10-K or Quarterly Report on Form 10-Q filed with the U.S.
Securities and Exchange Commission.
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, of 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
U.S. GAAP financial measures, this document contains and may refer
to certain non-GAAP financial measures. These non-GAAP financial
measures are in addition to, not a substitute for or superior to,
measures of financial performance prepared in accordance with GAAP.
These non-GAAP financial measures should not be considered
replacements for, and should be read together with, the most
comparable GAAP financial measures. Reconciliations to the most
directly comparable GAAP financial measures and statements of why
management believes these measures are useful to investors are
included in this Appendix if the reconciliation is not presented on
the page in which the measure is published.
___________________________________
1 See below for the definitions of FFO and AFFO and for a
reconciliation of FFO and AFFO to the most directly comparable GAAP
financial measure. 2 Same Store Cash Net Operating Income is a
non-GAAP financial measure. See below for the definition of Same
Store Cash Net Operating Income and for a reconciliation of Same
Store Cash Net Operating Income. 3 “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, 2023, unless otherwise specified, multiplied
by 12 months. For properties in the Company's portfolio that had
rent abatement periods as of June 30, 2023, we used the monthly
contractual base rent payable following expiration of the
abatement. 4 “Investment grade” means an investment grade credit
rating from a NRSRO approved by the U.S. Securities and Exchange
Commission (e.g., Moody’s Investors Service, Inc., S&P Global
Ratings and/or Fitch Ratings Inc.) or a non-NRSRO credit rating
(e.g., Bloomberg’s default risk rating) that management believes is
generally equivalent to an NRSRO investment grade rating;
management can provide no assurance as to the comparability of
these ratings methodologies or that any particular rating for a
company is indicative of the rating that a single NRSRO would
provide in the event that it rated all companies for which the
Company provides credit ratings; to the extent such companies are
rated only by non-NRSRO ratings providers, such ratings providers
may use methodologies that are different and less rigorous than
those applied by NRSROs. In the context of Peakstone’s portfolio,
references to “investment grade” include, and credit ratings
provided by Peakstone may refer to, tenants, guarantors, and
non-guarantor parent entities. There can be no assurance that such
guarantors or parent entities will satisfy the tenant’s lease
obligations, and accordingly, any such credit rating may not be
indicative of the creditworthiness of the Company's tenants.
PEAKSTONE REALTY TRUST
CONSOLIDATED BALANCE
SHEETS
(Unaudited; in thousands,
except units and share amounts)
June 30, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
360,626
$
233,180
Restricted cash
3,042
4,764
Real estate:
Land
245,872
327,408
Building and improvements
2,045,409
2,631,965
Tenant origination and absorption cost
421,795
535,889
Construction in progress
1,576
1,994
Total real estate
2,714,652
3,497,256
Less: accumulated depreciation and
amortization
(526,085
)
(644,639
)
Total real estate, net
2,188,567
2,852,617
Investments in unconsolidated entity
146,395
178,647
Intangible assets, net
31,315
33,861
Deferred rent receivable
63,053
79,572
Deferred leasing costs, net
17,432
26,507
Goodwill
94,678
94,678
Right of use asset
34,615
35,453
Interest rate swap asset
41,046
41,404
Other assets
29,457
31,877
Real estate assets and other assets held
for sale, net
—
20,816
Total assets
$
3,010,226
$
3,633,376
LIABILITIES AND EQUITY
Debt, net
1,460,536
1,485,402
Restricted reserves
627
627
Distributions payable
8,295
12,402
Due to related parties
1,043
1,458
Intangible liabilities, net
17,989
20,658
Lease liability
46,368
46,519
Accrued expenses and other liabilities
80,542
80,175
Total liabilities
1,615,400
1,647,241
Commitments and contingencies (Note
13)
Perpetual convertible preferred shares
—
125,000
Noncontrolling interests subject to
redemption; zero and 61,788 units as of June 30, 2023 and December
31, 2022
—
3,812
Shareholders’ equity:
Common shares, $0.001 par value;
800,000,000 shares authorized; 35,924,476 and 35,999,898 shares
outstanding in the aggregate as of June 30, 2023 and December 31,
2022, respectively
36
36
Additional paid-in capital
2,959,011
2,948,600
Cumulative distributions
(1,059,668
)
(1,036,678
)
Accumulated (loss) income
(680,369
)
(269,926
)
Accumulated other comprehensive income
(loss)
40,282
40,636
Total shareholders’ equity
1,259,292
1,682,668
Noncontrolling interests
135,534
174,655
Total equity
1,394,826
1,857,323
Total liabilities and equity
$
3,010,226
$
3,633,376
PEAKSTONE REALTY TRUST
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited; in thousands,
except share and per share amounts)
Three Months Ended June
30,
2023
2022
Revenue:
Rental income
$
62,540
$
123,073
Expenses:
Property operating expense
6,919
14,335
Property tax expense
5,545
11,482
Property management fees
430
1,045
General and administrative expenses
12,030
8,750
Corporate operating expenses to related
parties
341
416
Depreciation and amortization
30,472
59,980
Real estate impairment provision
397,373
75,557
Total expenses
453,110
171,565
Income before other income and
(expenses)
(390,570
)
(48,492
)
Other income (expenses):
Interest expense
(16,068
)
(22,366
)
Other income (loss), net
2,747
(196
)
Net loss from investment in unconsolidated
entity
(17,508
)
—
Gain (loss) from disposition of assets
(9,701
)
—
Transaction expenses
(21,303
)
(5,545
)
Net (loss) income
(452,403
)
(76,599
)
Distributions to redeemable preferred
shareholders
—
(2,516
)
Preferred units redemption
(4,970
)
—
Net (income) loss attributable to
noncontrolling interests
40,909
6,952
Net income (loss) attributable to
controlling interest
(416,464
)
(72,163
)
Distributions to redeemable noncontrolling
interests attributable to common shareholders
(13
)
(44
)
Net (loss) income attributable to common
shareholders
$
(416,477
)
$
(72,207
)
Net (loss) income attributable to common
shareholders per share, basic and diluted
$
(11.59
)
$
(2.00
)
Weighted average number of common shares
outstanding, basic and diluted
35,922,706
36,079,905
Cash distributions declared per common
share
$
0.23
$
0.79
PEAKSTONE REALTY TRUST Funds from
Operations and Adjusted Funds from Operations (Unaudited; in
thousands except share and per share amounts)
FFO and AFFO are non-GAAP financial measures that we believe 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 distributions. 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, the Company believes that the use
of FFO, together with the required GAAP presentations, provides a
more complete understanding of the Company's performance relative
to its 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 the
Company does, making comparisons less meaningful.
Additionally, the Company uses AFFO as a non-GAAP financial
measure to evaluate the Company's 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-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. FFO and AFFO
have been revised to include amounts available to both common
shareholders and limited partners for all periods presented.
AFFO is a measure used among the Company's peer group. The
Company also believes that AFFO is a recognized measure of
sustainable operating performance by the REIT industry. Further,
the Company believes AFFO is useful in comparing the sustainability
of its operating performance with the sustainability of the
operating performance of other real estate companies.
Management believes that AFFO is a beneficial indicator of its
ongoing portfolio performance and ability to sustain its current
distribution level. More specifically, AFFO isolates the financial
results of the Company's 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 or the Company's future ability
to make or sustain distributions. By providing FFO and AFFO, the
Company presents information that assists investors in aligning
their analysis with management’s analysis of long-term operating
activities.
For all of these reasons, the Company believes 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 the Company's real estate
portfolio. However, a material limitation associated with FFO and
AFFO is that they are not indicative of the Company's cash
available to fund distributions since other uses of cash, such as
capital expenditures at the Company's 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 the Company does not continue to operate
under its current business plan as noted above. 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 the Company may have to adjust the calculation and
characterization of this non-GAAP measure.
Three Months Ended June
30,
2023
2022
Net (loss) income
$
(452,403
)
$
(76,599
)
Adjustments:
Depreciation of building and
improvements
19,538
32,494
Amortization of leasing costs and
intangibles
11,031
27,575
Impairment provision, real estate
397,373
75,557
Equity interest of depreciation of
building and improvements - unconsolidated entities
9,020
—
Gain from disposition of assets, net
9,701
—
FFO
(5,740
)
59,027
Distribution to redeemable preferred
shareholders
—
(2,516
)
Preferred units redemption charge
(4,970
)
—
FFO attributable to common shareholders
and limited partners
$
(10,710
)
$
56,511
Reconciliation of FFO to AFFO:
FFO attributable to common shareholders
and limited partners
$
(10,710
)
$
56,511
Adjustments:
Revenues in excess of cash received,
net
(2,644
)
(3,389
)
Amortization of share-based
compensation
2,626
1,685
Deferred rent - ground lease
435
511
Unrealized loss (gain) on investments
(5
)
68
Amortization of above/(below) market rent,
net
(291
)
(432
)
Amortization of debt premium/(discount),
net
83
102
Amortization of ground leasehold
interests
(97
)
(90
)
Amortization of below tax benefit
amortization
372
372
Amortization of deferred financing
costs
655
840
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
—
10
Employee separation expense
2,042
2
Transaction expenses
21,303
5,545
Amortization of lease inducements
49
284
Preferred units redemption charge
4,970
—
AFFO available to common shareholders and
limited partners
$
28,667
$
62,019
FFO per share, basic and diluted
$
(0.27
)
$
1.43
AFFO per share, basic and diluted
$
0.73
$
1.57
Weighted-average common shares outstanding
- basic and diluted EPS
35,922,706
36,079,905
Weighted-average OP Units
3,528,666
3,537,654
Weighted-average common shares and OP
Units outstanding - basic and diluted FFO/AFFO
39,451,372
39,617,559
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 the 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. 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 three months ended June 30,
2023 and June 30, 2022 (dollars in thousands):
Three Months Ended June
30,
2023
2022
Reconciliation of Net Income to Total
NOI
Net income
$
(452,403
)
$
(76,599
)
General and administrative expenses
12,030
8,750
Corporate operating expenses to related
parties
341
416
Impairment provision, real estate
397,373
75,557
Depreciation and amortization
30,472
59,980
Interest expense
16,068
22,366
Other loss (income), net
(2,747
)
196
Loss from investment in unconsolidated
entities
17,508
—
Gain from disposition of assets
9,701
—
Transaction expense
21,303
5,545
Total NOI
$
49,646
$
96,211
Non-Cash Adjustments:
Straight line rent
(2,645
)
(2,632
)
In-place lease amortization
(291
)
(432
)
Deferred termination income
—
(758
)
Deferred ground lease
435
511
Other intangible amortization
372
372
Inducement amortization
49
284
Total Cash NOI
$
47,566
$
93,556
Same Store Cash NOI Adjustments
Recently acquired properties
—
—
Recently disposed properties
529
(38,249
)
Same store inducement amortization
adjustment
(49
)
(284
)
Total Same Store Cash NOI
Adjustments
480
(38,533
)
Total Same Store Cash NOI
$
48,046
$
55,023
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808039171/en/
Investor Relations: ir@pkst.com
Media: Joele Frank, Wilkinson Brimmer Katcher
peakstone@joelefrank.com
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