Executive Summary

PKST delivered a transitional Q3 as it reclassified the Office segment into discontinued operations, reported industrial-only continuing operations revenue of $25.8m, GAAP EPS of $0.09, and FFO/share of $0.46 while reducing pro forma leverage to 5.4x and maintaining ample liquidity ($438m) .
Results missed S&P Global consensus on revenue and per-share measures given the accounting shift: revenue $25.8m vs $48.98m consensus*, FFO/share $0.46 vs $0.533*; management emphasized the move to an industrial-only REIT and balance sheet de-risking as the narrative for value creation .
IOS leasing remained strong (portfolio 100% leased; cash/GAAP re-leasing spreads 116%/120%) with three IOS acquisitions (~$57.7–$58m) and select industrial asset sales; office monetization progressed with $247m sold in Q3 and $116m post-quarter .
Capital trajectory catalysts: expected $300–$350m of remaining office sale proceeds and planned $250–$300m of additional debt paydown; dividend held at $0.10 for Q3 (paid) and Q4 (declared) as cash flows rebase to the industrial portfolio .

What Went Well and What Went Wrong

What Went Well
- IOS operating portfolio reached 100% leased with robust spreads (116% cash, 120% GAAP) driven by Philadelphia, Houston, and Norcross leasing; Savannah redevelopment leased with 4% escalators .
- Strategic repositioning advanced: industrial assets now >60% of ABR post-quarter; $450m debt reduction since earlier in the year; pro forma net debt/Adj. EBITDAre at 5.4x, below the 6x target .
- Select acquisitions and dispositions improved portfolio quality: three IOS assets (~$57.7–$58m) added; three traditional industrial assets sold for ~$71.6–$72m at a 6.9% combined cap rate .
What Went Wrong
- Reported results screened as “misses” versus Street due to the reclassification of the Office segment to discontinued operations; continuing ops revenue ($25.8m) fell well below consensus ($48.98m)* and FFO/share also trailed ($0.46 vs $0.533*) .
- GAAP comparability friction: Q2 included outsized non-cash impairments (office) and Q3 moved office to discontinued ops, creating noisy quarter-to-quarter and consensus comparisons .
- No formal operating guidance; investors must rely on disclosed metrics and management commentary during a multi-quarter transformation .

Financial Results

Note on comparability: Beginning Q3 2025, the Office segment was classified as discontinued operations; Q3 revenue below reflects continuing operations (industrial). Earlier quarters include total revenue. Where possible, we also show Industrial Segment revenue for apples-to-apples.

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Industrial Segment Revenue ($m)	$14.918	$24.033	$24.380	$25.800
Total Revenue ($m)	$54.960	$56.971	$54.026	n/a (continuing ops only)
Net Income (Loss) Attrib. to Common ($m)	$(24.395)	$(49.382)	$(265.300)	$3.499
GAAP EPS	$(0.67)	$(1.35)	$(7.22)	$0.09
FFO / Share	$0.58	$0.62	$0.60	$0.46
Core FFO / Share	$0.61	$0.62	$0.60	$0.48
AFFO / Share	$0.65	$0.62	$0.61	$0.47

Segment performance – Q3 2025 (Industrial only):

Metric	IOS	Traditional Industrial	Total Industrial
Revenue ($m)	$11.484	$14.316	$25.800
NOI ($m)	$10.245	$12.275	$22.520
Cash NOI ($m)	$5.179	$12.488	$17.667

Operating and balance sheet KPIs:

KPI	Q3 2025
IOS operating portfolio leased	100%
Re-leasing spreads (cash/GAAP)	116% / 120%
Same-store cash NOI ($m)	$11.390 (+3.7% YoY)
Liquidity	$438m (cash + revolver)
Cash (excl. restricted)	$326.1m
Total Debt	$1,050.8m
Net Debt	$724.7m
Net Debt / Adj. EBITDAre	5.4x (pro forma)
Q3 dividend / Q4 declared	$0.10 / $0.10

Estimate context (S&P Global consensus; star denotes SPGI):

Metric	Q1 2025	Q2 2025	Q3 2025	Q4 2025
Revenue Consensus Mean ($m)	54.518*	51.299*	48.983*	32.979*
Primary EPS Consensus Mean ($)	-0.0847*	-0.0466*	0.2122*	0.0228*
FFO / Share (REIT) Consensus Mean ($)	0.5940*	0.5416*	0.5326*	0.3920*

Values retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Q3 2025	$0.225 (Q2 paid)	$0.10 (paid 10/17)	Lowered
Dividend per share	Q4 2025	$0.10 (Q3 baseline)	$0.10 (payable 1/19/26)	Maintained
Office Disposition Proceeds	H2’25–Q1’26	n/a	$300–$350m expected	New outlook
Planned Debt Paydown	H2’25–Q1’26	n/a	$250–$300m planned	New outlook
Leverage Target	Ongoing	≤6.0x (target)	5.4x pro forma achieved	Improved below target
Formal Operating Guidance	FY/Qtr	Not provided	Not providing guidance	Unchanged

Earnings Call Themes & Trends

Topic	Q1 2025 (prior)	Q2 2025 (prior)	Q3 2025 (current)	Trend
Strategy: Shift to Industrial/IOS	10% QoQ IOS ABR growth; Everett 37-acre IOS fully leased; $144m office sales YTD	Acceleration signaled; industrial ~65% of net book value; more office sales and leverage reduction; dividend reset to $0.10	Industrial ABR >60% post-quarter; disciplined IOS acquisitions; 5.4x pro forma leverage	Continued execution and de-risking
IOS Leasing/Fundamentals	Early traction; rising escalators to 2.8% (IOS)	Savannah redevelopment leased; growth via IOS leasing and acquisitions	100% leased; 116%/120% cash/GAAP spreads; low TI/downtime	Strong demand, constrained supply
Office Monetization	$144m sales YTD	$158m Q2, $24m post-Q2; $286m impairment to align values with expected sale outcomes	$247m in Q3; $116m post-quarter; remaining 12 assets engaged; $300–$350m proceeds expected	Accelerating pipeline, improved visibility
Leverage & Liquidity	Net Debt/Adj. EBITDAre 7.0x; liquidity $286m	~6.6x pro forma post-Q2; liquidity $356m	5.4x pro forma; liquidity $438m	Down to/below target
Dividend Policy	$0.225 paid (Q1)	Reset to $0.10 (Q3 payment)	$0.10 paid (Q3) and declared (Q4)	Rebased to industrial
Guidance	None	None	None; management cites transparency via metrics	Unchanged

Management Commentary

“Our strategic transformation into an industrial-only REIT focused on growth in the industrial outdoor storage sector continues to advance… industrial portfolio generates more than 60% of our ABR” .
“Through disciplined office sales, strong IOS leasing, and targeted IOS acquisitions, we have strengthened our balance sheet… improving total leverage to 5.4 times on a pro forma basis” .
“These transactions brought the IOS operating portfolio to 100% leased… weighted average re-leasing spreads of 116% on a cash basis and 120% on a GAAP basis” .
“Total proceeds… expected to range from $300 million–$350 million… use approximately $250 million–$300 million to pay down debt” .
“We are not providing guidance at this time” .

Q&A Highlights

Capital allocation balance: management expects additional $250–$300m of debt paydown while remaining selective on IOS acquisitions; leverage has fallen to 5.4x from ~7x in Q1 .
Competitive dynamics: IOS buyer acceptance and lender receptivity improving; PKST cites a flexible balance sheet and national platform as advantages .
Office sales visibility: “virtually every asset is engaged,” with ~half “officially under control,” underpinning the $300–$350m proceeds outlook .
Same-store NOI/Guidance: PKST reiterated it is not guiding but believes disclosures provide transparency for modeling .
Leasing economics: low tenant improvement spend and minimal downtime observed in IOS; attributes of IOS are “meeting the test of time” .

Estimates Context

Revenue missed S&P Global consensus due to the discontinued ops reclassification: Q3 revenue (continuing ops) $25.8m vs $48.98m consensus* . Values retrieved from S&P Global.
FFO/share trailed S&P consensus: Q3 FFO/share $0.46 vs $0.533* . Values retrieved from S&P Global.
GAAP EPS vs S&P “Primary EPS”: Company reported GAAP EPS $0.09, while S&P’s Primary EPS actual tracks at approximately -$0.042 with a 0.2122* consensus; methodology and scope differences (e.g., discontinued ops, normalization) likely explain the divergence . Values retrieved from S&P Global.

Key Takeaways for Investors

Transition narrative remains intact: PKST is rapidly becoming an industrial/IOS pure play, with >60% of ABR now industrial and IOS fundamentals (full occupancy, high spreads) supporting internal growth .
Balance sheet de-risking is a near-term catalyst: $300–$350m expected office proceeds and $250–$300m targeted debt reduction could further compress leverage below the 5.4x pro forma level and reduce interest costs .
Reported “misses” vs consensus should be viewed through the reclassification lens; going forward, Street models likely need to align to continuing (industrial) operations to avoid revenue/FFO discontinuities .
Dividend reset appears sustainable within the industrial cash flow profile; Q4 dividend maintained at $0.10 implies stability during the portfolio transition .
External growth remains selective but actionable: pipeline breadth and improving lender receptivity support disciplined IOS acquisitions without sacrificing deleveraging .
Watch same-store industrial NOI and IOS redevelopment conversions as key proof points for internal growth, alongside progress on office sale closings and revolver paydowns .
Near-term trading setup: clarity on office monetization timing/pricing and additional debt paydowns are likely stock drivers; conversely, any slippage in sales or IOS leasing could weigh on sentiment .

Citations:

Q3 2025 earnings call transcript ; duplicate transcript -
Q3 2025 8-K press release and supplemental -
Q2 2025 8-K press release and supplemental -; Q2 call -
Q1 2025 8-K press release and supplemental -

S&P Global estimates (starred values) retrieved via GetEstimates. Values retrieved from S&P Global.

Peakstone Realty Trust (PKST)·Q3 2025 Earnings Summary