Peakstone Plans Sale of Remaining Office Properties in Shift to Industrial
Peakstone Realty Trust is looking to exit office and operate solely as an industrial-only REIT. The announcement came from management on the REIT's third-quarter earnings call.
As part of the strategy, Mike Escalante, CEO and president of Peakstone, told analysts that it has completed the sale of 12 office properties for roughly $363 million, as of October 31st. That leaves just a dozen sector properties left inside Peakstone's portfolio.
"Buyer interest, including from existing tenants, has been strong, and we expect to complete the sale of a majority of these properties by the end of this year, with a few transactions potentially closing in the first quarter of 2026," Escalante predicted.
With the total proceeds expected to range between $300 million and $350 million, the company said that the transition will help strengthen its balance sheet and pay off debt. At the end of the third quarter, Peakstone was able to pay off another $240 million in debt, thanks to the sales.
Instead, Peakstone is now shifting its focus to industrial assets. More than 60 percent of its annual base rent came from its industrial portfolio, as of October 31.
While the Chicago-based firm sold three properties in the asset class for roughly $72 million in the third quarter, it highlighted strength in the industrial outdoor storage (IOS) segment. Peakstone's IOS portfolio was 100 percent leased, as of the third quarter, according to Peakstone. Additionally, Peakstone played a little offense and added three assets to the segment for about $58 million during the period.
"Market fundamentals remain solid, characterized by strong tenant demand and persistent supply constraints," Escalante said of the IOS portfolio.
"These dynamics continue to keep vacancies low and support healthy rent growth. Against that backdrop, we continue to deliver strong results across both our IOS operating and redevelopment portfolios."
Peakstone isn't the only investment firm that has shifted its concentration to industrial. EQT earlier this year announced its intentions to "primarily" focus on the asset class and logistics, while not pursuing additional investments in life sciences and office after shutting down its multifamily fund in a tough fundraising environment.
Source: GlobeSt/ALM