Peakstone Realty Trust

Greetings, and welcome to Peakstone Realty Trust First Quarter 2025 Earnings Webcast Conference Call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Steve Sweat, Investor Relations. Please go ahead, Sam.

Good afternoon, and thank you for joining us for Peakstone Realty Trust's first quarter 2025 earnings call and webcast. Earlier today, we posted an earnings release supplemental and updated investor presentation to the investors page on our website at www.pkst.com. Please reach out to our investor relations team at ir.pkst.com with any questions. The company will be making forward-looking statements, which include any statements that are not historical facts on today's webcast. Such forward-looking statements are based on expectations that involve risks and uncertainties. It could cause actual results to differ materially. For further discussion of risks related to our business, please see our annual report on Form 10-K and subsequent filings with the SEC. Additionally, on this call, the company may refer to certain non-GAAP financial measures, such as funds from operations, core funds from operations, adjusted funds from operations, EBITRE, and adjusted EBITRE. You can find a tabular reconciliation of these non-GAAP financial measures comparable to the most currently GAAP numbers in the company's earnings release and filings with the SEC. On the call today are Mike Escalante, CEO and President, and Javier Bitar, CFO. With that, I'll hand the call over to Mike.

Good afternoon, and thank you for joining our call today. We continue to make meaningful progress on our strategic transition to an industrial REIT with growth in the industrial outdoor storage or iOS subsector, serving as the cornerstone of this transformation. As part of this strategy, we are actively reshaping the portfolio through the targeted iOS growth initiatives and strategic asset sales, primarily focused on the office segment. This quarter, we increased industrial segment ABR by $2.4 million quarter over quarter, driven by a 10% rise in ABR from our iOS properties, underscoring the strong fundamentals and the compelling growth trajectory of our high-quality iOS assets. On the disposition front, we've closed $144 million of office asset sales year-to-date, advancing our efforts to better align the portfolio with our long-term strategic goals. Thanks to strong leasing across our IOS portfolio and the continued execution of these office sales, industrial segment ABR represented 41% of total ABR at quarter end and 43% on a pro forma basis after giving effect to office dispositions completed subsequent to quarter end. Leasing activity related to our IOS assets played a central role in this quarter's industrial ABR growth. And we'd like to provide more detail on the transactions that drove this performance. Most notably, we fully leased our largest IOS redevelopment property, 37 usable acres in Everett, Washington, largely on a no-cost basis to a local lumber mill operator. This full-site 9.8-year lease contributed approximately $1.7 million of incremental AVR to our industrial segment and contains 8% annual rent escalations on average. While the initial rent is below market, completing this lease without the anticipated redevelopment spend enabled us to drive a meaningful increase in our IOS AVR and quickly achieve in-place yields of 5.9%, on a cash basis and 8.8% on a GAAP basis. This lease provides a path to higher rent and enhances the internal growth profile of our iOS portfolio. Additional leasing activity, highlighting the strong mark-to-market opportunities in our iOS portfolio, included the commencement of a new 6.5-year lease for 3.3 usable acres at our Mableton, Georgia property, which added $0.3 million in ABR during the quarter. This lease includes 3.5% annual escalations and resulted in weighted average releasing spreads of 185% on a cash basis and 218% on a gap basis. Moving on to dispositions, as I mentioned earlier, year to date, we've closed approximately $144 million of office asset sales, underscoring both the successful execution of our office disposition strategy and the continued investor demand for the office assets in our portfolio. During the first quarter, we completed the sale of two properties totaling 251,000 square feet for approximately $34 million. These included our 40 white property in Baltimore, and our Heritage III property in Dallas-Fort Worth. Subsequent to quarter end, we closed on the sale of three additional properties totaling 520,000 square feet for approximately $110 million. These sales consisted of our LPL properties in Charlotte and our Cigna property in Pittsburgh. All three assets were classified as held for sale at quarter end. Now I'd like to take a moment to provide some additional detail on what we're seeing in the market as it relates to our office dispositions. We've been highly effective in generating strong outcomes from the sale of our office assets. Over the past three years, we've completed over $2 billion in office sales across more than 30 markets, with buyers including both third-party investors and existing tenants. These sales have provided greater clarity around market pricing expectations and transaction timing. While we don't provide formal guidance on cap rates or pricing, closed transaction data suggests that, depending on tenancy, market, and asset characteristics, our office assets with more than five years of remaining term have generally been priced on a cap rate basis in the range of 7.5% to 12.5% on in-place NOIs. Office assets with shorter lease terms have generally been priced on a per-square-foot basis, ranging from $50 to $175. The pricing reflects a combination of estimated vacant building value and the net present value of the remaining rental stream. We continue to see solid interest in our office properties and remain committed to maintaining or potentially accelerating the pace of our office dispositions through year-end. While we recognize the capital markets environment may evolve, we're well positioned to adapt and continue executing thoughtfully on these sales. With that, I will turn the call over to Javier to review our financial results and capital markets activity. Javier?