Executive Summary

Q1 2025 revenue was $57.0M, down 3.8% year over year due to strategic office dispositions; Core FFO per share came in at $0.62, and AFFO per share was $0.62 .
Results vs consensus: revenue beat by ~$2.5M (actual $56.97M vs $54.52M consensus)* and Core FFO/FFO per share beat by ~$$0.03 (actual $0.62 vs $0.594 consensus); GAAP EPS was a significant miss driven by a ~$52M non‑cash real estate impairment (actual $(1.35) vs $(0.085) consensus) .
Strategic shift to industrial/IOS accelerated: Industrial ABR rose by $2.4M QoQ; IOS ABR grew 10% QoQ, supported by full-site leasing of a 37-acre Everett, WA IOS redevelopment; average annual IOS rent escalations increased to 2.8% .
Balance sheet improved post quarter-end with ~$144M office sales YTD and pro forma net debt/Adjusted EBITDAre at ~6.8x; Q2 dividend maintained at $0.225 per share .

What Went Well and What Went Wrong

What Went Well

Fully leased largest IOS redevelopment (37 acres, Everett, WA) on a 9.8-year term, driving ~10% QoQ growth in IOS ABR and improving industrial mix: “We fully leased our largest IOS redevelopment site, driving a 10% quarter-over-quarter increase in IOS annualized base rent (ABR)” .
Strong execution on dispositions and deleveraging trajectory: “Year-to-date, we have completed over $144 million of office property dispositions…we remain committed to maintaining—or potentially accelerating—this pace of office sales through year-end” .
Same Store Cash NOI grew 4.0% YoY overall (Industrial +5.8%, Office +3.1%), evidencing operating strength amid portfolio repositioning .

What Went Wrong

GAAP net loss of $(49.4)M and EPS of $(1.35) driven by ~$51.96M non-cash real estate impairment tied to planned/suspected office asset sales; this created a sharp GAAP miss vs EPS consensus* .
Revenue fell YoY to ~$57.0M from $59.2M as office dispositions reduced rent base; Office revenue was $32.94M in Q1 2025 vs $32.999M in Q1 2024; Other segment revenue contribution was eliminated vs prior year .
AFFO per share declined to $0.62 from $0.70 YoY as dispositions and non-cash adjustments (including straight-line rent and amortization items) reduced run-rate FFO/AFFO versus the prior year .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$59.227	$57.934	$56.971
Net Income Attributable to Common Shareholders ($USD Millions)	$5.025	$12.712	$(49.382)
EPS (Basic & Diluted, $)	$0.14	$0.35	$(1.35)
FFO per share/unit ($)	$0.54	$0.74	$0.62
Core FFO per share/unit ($)	$0.65	$0.63	$0.62
AFFO per share/unit ($)	$0.70	$0.65	$0.62
Adjusted EBITDAre ($USD Thousands)	$40,905	$42,607	$41,231
Cash NOI ($USD Thousands)	$47,330	$47,698	$45,604
Same Store Cash NOI ($USD Thousands)	$37,514	—	$39,001

Segment revenue (oldest → newest):

Segment Revenue ($USD Thousands)	Q3 2024	Q4 2024	Q1 2025
IOS	$0	$5,464	$8,975
Traditional Industrial	$14,918	$14,981	$15,058
Total Industrial	$14,918	$20,445	$24,033
Office	$33,234	$33,318	$32,938
Other	$6,808	$4,171	$0
Total Revenue	$54,960	$57,934	$56,971

Key operating KPIs:

KPI	Q1 2025
Properties (Operating/Total)	96 operating, 101 total
Occupancy (RSF / usable acres, weighted avg)	99.6% RSF / 99.6% usable acres
WALT (years, weighted by ABR)	6.2 years
Total ABR ($USD Thousands)	$183,067
Industrial ABR (% of total)	40.8% (43% pro forma after April dispos)
IOS average annual escalations	Increased from 2.3% to 2.8%
Same Store Cash NOI growth YoY	+4.0% (Industrial +5.8%; Office +3.1%)
Cash & Equivalents ($USD Millions)	$204.0
Net Debt ($USD Millions)	$1,156.3
Total Liquidity ($USD Millions)	$286.0
Weighted Avg Debt Maturity / Effective Rate	3.3 years / 4.41% (incl. swaps)
Net Debt / Adjusted EBITDAre	7.0x

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per common share	Q2 2025	$0.225 (Q1 paid Apr 17, 2025)	$0.225 payable Jul 17, 2025; record date Jun 30	Maintained
Leverage target (Net Debt/EBITDAre)	Multi‑quarter	~6x longer‑term target reiterated in 2024	Reaffirmed ~6x target; pro forma ~6.8x after post‑Q1 sales	Maintained
Office dispositions pace	2025	“Aim to close remaining ‘Other’ and continue Office dispos” (2024)	“Maintain—or potentially accelerate—pace of office sales through year-end”	Potential acceleration
Reporting metrics	From Jan 1, 2025	Prior “Normalized EBITDAre”	Introduced “Adjusted EBITDAre” and “Core FFO” for enhanced comparability	Framework updated
IOS rent escalations	Ongoing	2.3% average escalations	2.8% average escalations (IOS)	Raised portfolio escalators (metric update)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q1 2025)	Trend
Strategic shift to Industrial/IOS	Building liquidity; credit facility amended to enable industrial growth	Foundation set for industrial expansion; nearly eliminated “Other” segment	Industrial ABR up $2.4M QoQ; IOS ABR +10%; full-site lease at Everett	Accelerating
Office dispositions	Continued sales in “Other” and Office; buyers widening	Sold 4 assets for ~$40M; “Other” ~10% of ABR; more held for sale	~$144M YTD office sales; maintain or accelerate pace	Strong execution, potential acceleration
Leverage/Balance Sheet	Target ~6x; swaps extended (forward starting)	Net debt/normalized EBITDAre 6.2x; 100% fixed via swaps	Pro forma ~6.8x; target ≤6x reiterated	Improving toward target
Cap rates/pricing	Borrowing base updates; industrial assets valued more favorably	Normalized cap rates vs 2021; set for growth	Office assets with >5 years term trading ~7.5%–12.5% cap rates; shorter term sold $50–$175/RSF	Market clarity improving
Debt swaps/interest	Added $550M forward swaps at 3.58% from Jul 1, 2025–Jul 1, 2029	100% fixed via existing swaps; weighted avg rate 3.95%	88% fixed post quarter end; weighted avg 4.4%; new forward swaps take effect 7/1/25	Hedge continuity
IOS tenant demand	N/A	Strong re‑leasing spreads; escalations rising	Demand steady; tenants willing to take “as-is” sites; reduced capex needs on some redevelopments	Robust, capex‑light opportunities
Acquisition pipeline	Liquidity ample to pursue opportunities	Foundation for expansion	Pipeline “good/full”; balanced approach with leverage discipline	Active but disciplined

Management Commentary

“We are making meaningful progress in our strategic shift to an industrial REIT, with growth in the industrial outdoor storage sector as a key component of our long-term plan” — CEO Michael Escalante .
“This full site 9.8-year lease…enabled us to drive a meaningful increase in our IOS ABR and quickly achieve in-place yields of 5.9% on a cash basis and 8.8% on a GAAP basis” — CEO on Everett IOS lease economics .
“Each FFO and core FFO were approximately $24.6 million or $0.62 per share…AFFO was approximately $24.8 million…Same-store cash NOI increased 5.8% for our Industrial segment and 3.1% in our Office segment” — CFO Javier Bitar .
“We believe that placing more emphasis on the IOS subsector will be a key driver of long-term value for shareholders” — CEO Michael Escalante .

Q&A Highlights

Leverage target and path: Management reaffirmed ~6x target; pro forma leverage improved to ~6.8x after post‑quarter sales; prior peak ~7.9x after IOS acquisition, then 7.5x at FY 2024; historical ability to delever via recycling capital noted .
Office dispositions pace and determinants: Case-by-case approach; strong tenant interest and attractive corporate debt cost vs real estate cap rates could support acceleration .
Office pricing guardrails: >5-year remaining term transacting at ~7.5%–12.5% cap rates on in-place NOI; <5-year term priced on NPV of remaining rent plus residual, ~$50–$175/RSF depending on asset/market .
IOS demand and capex: Demand unchanged; in some cases tenants accept “as-is” sites, reducing initial redevelopment capex outlays .
Acquisition pipeline/liquidity: Pipeline is full; management balancing growth with leverage discipline; liquidity sufficient for risk‑adjusted opportunities .

Estimates Context

Q1 2025 actuals vs Wall Street consensus (S&P Global):

Metric	Consensus*	Actual	Beat/Miss
Revenue ($USD)	$54,518,210*	$56,971,000	Beat (~$2.45M)
FFO / Share (REIT) ($)	$0.59399*	$0.62	Beat (~$0.026)
Primary EPS ($)	$(0.08468)*	$(1.35)	Miss (impairment-driven)
# of Estimates (Revenue / EPS)	3 / 3*	—	—

Values retrieved from S&P Global.*

Implications:

Investors should anchor on FFO/AFFO beats rather than GAAP EPS given the non‑cash impairment’s impact on EPS .
Consensus for upcoming quarters (Q2–Q4 2025) implies FFO/share in ~$0.54–$0.39 range and revenue ~$51.3M–$33.0M*, reflecting asset sale trajectory; continued IOS leasing and escalators could support upward revisions to FFO if dispositions and capex needs remain favorable*.

Key Takeaways for Investors

Mix shift toward industrial/IOS is accelerating and is a core stock catalyst; IOS escalators raised to 2.8% and full-site Everett lease materially increased IOS ABR .
Quarter featured a quality beat on FFO/share and revenue vs consensus*, while GAAP EPS miss was driven by non‑cash impairment tied to office sales strategy — not indicative of cash operating performance .
Disposition execution remains strong with ~$144M YTD office sales and potential acceleration; management indicates resilient buyer/tenant demand and clarified pricing guardrails .
Balance sheet steadily improving; pro forma leverage tracking toward ~6x with swaps rolling into a fresh $550M forward hedge at 3.58% from July 2025 .
Dividend maintained at $0.225; cash NOI and same‑store growth highlight durable cash generation through repositioning .
Near-term trading: Favorable FFO/revenue beats and IOS execution should support sentiment; watch for further office sale prints, IOS leasing updates, and leverage milestones.
Medium-term thesis: Industrial/IOS mix expansion, embedded escalators, and disciplined capital recycling underpin AFFO stability; acquisitions are likely selective and leverage-aware given the balanced pipeline .

Additional Data and Disclosures

Q1 2025 revenue composition: Industrial $24.0M (IOS $9.0M; Traditional Industrial $15.1M), Office $32.9M, Other $0 .
Net debt $1.156B; liquidity $286M; effective interest rate 4.41%; 82% fixed including swaps as of quarter end .
Post-quarter transactions reduced credit facility outstanding and improved pro forma liquidity metrics (cash ~$213M; available revolver ~$123M) .

Quotes and data sourced from Peakstone Realty Trust Q1 2025 8-K, exhibits, and earnings call transcript . Prior quarter references from Q3 2024/Q2 2024 filings and calls . Values retrieved from S&P Global for consensus.*

Peakstone Realty Trust (PKST)·Q1 2025 Earnings Summary