Q4 2023 Peakstone Realty Trust Earnings Call
Operator: Greetings and welcome. Earnings, Vectors, Contributions. At this time, all participants are on a list... A brief question and answer session will follow the formal presentation. If anyone should require operator assistance, please do not hesitate to contact us on, Please press star zero on your telephone. As a reminder, this conference is. It is now my pleasure. Kayla Lynch, Head of Investor Relations. Thank you. Thank you.
Greetings and welcome to Big Stone Realty Trust.
Fourthquarter 2022.
Conference call at this time, all participants opt in a listen only mode. A brief question and answer session was followed the formal presentation.
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As a reminder, this conference is being recorded.
It is now my pleasure to introduce you host Makayla Lynch head of Investor Relations.
Mrs Lynch you may begin.
Thank you good afternoon, and thank you for joining us for Pizza Stone Realty Trust fourth quarter, 20, twenty-three earnings call and webcast.
Kayla Lynch: Good afternoon, and thank you for joining us for Peakstone Realty Trust's fourth quarter 2023 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 irpkst.com with any questions. Please note the use of forward-looking statements by the company on this webcast. Statements made on this call may include statements which are not historical facts and are considered forward-looking.
Earlier today, we posted in earnings relief supplemental and updated investor presentation to the investors page on our website at Www Dot P. K S T Dot com. Please.
Please reach out to our Investor relations team at I R. At P. K S T dot com with any questions.
Please note that the use of forward looking statements by the company on this webcast statements made on this call may include statements, which are not historical facts and are considered forward looking.
Kayla Lynch: The company intends for all these forward-looking statements to be covered by the Safe Harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is making these statements for purposes of complying with those Safe Harbor provisions. Furthermore, the forward-looking statements 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 actual results to differ significantly from those expressed in any forward-looking statement and will be affected by a variety of risks and factors that are beyond the company's control, including, without limitation, those contained in our most recent annual report on Form 10-K or quarterly report on Form 10-Q filed with the SEC.
The company intends for all these forward looking statements to be covered by the safe Harbor provisions for forward looking statements contained in the private Securities Litigation Reform Act of 1995 and are making these statements for purposes of complying with those safe Harbor provisions.
Furthermore, the forward looking statements 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 actual results to differ significantly send those expressed in any forward looking statement and will be affected by a variety of Rick.
And factors that are beyond the company's control, including without limitation those contained in our most recent annual report on Form 10-K or quarterly report on Form 10-Q filed with the S. C C.
Kayla Lynch: We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in the underlying assumptions or factors of new information, data, or methods, future events, or other changes after the date of this call, except as required by applicable law. Additionally, on this call, the company may refer to certain non-GAAP financial measures such as funds from operations, adjusted funds from operations, EBITDA-RE, and adjusted EBITDA-RE. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP numbers in the company's filings with the SEC. On the call today are Mike Escalante, CEO and President, and Javier Batar, CFO. With that, I'll hand the call over to Mike.
We disclaim any obligation to publicly update or revised any forward looking statement to reflect changes in the underlying assumptions or factors of new information data or methods future events or other changes after the date of this call except as required by applicable law.
Additionally, on this call the company may refer to certain non-GAAP financial measures such as funds from operations adjusted funds from operations EBITDA Ari and adjusted EBITDA Ari you can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable gap numbers and the companies.
Filings with the S D C.
On the call today are Mike Escalade to a C E O and president and Javier Betar CFO with that I'll hand, the call over to Mike Mike.
Mike Escalante: Good afternoon, and thank you for joining our call today. Throughout 2023, we continued optimizing our portfolio and balance sheet. Despite challenging market conditions, we made meaningful progress on our Strategic Disposition Program, selling 11 assets for over $336 million in gross profit. Through these asset sales, we significantly reduced leverage and began to evolve our portfolio towards our industrial sector, ongoing proactive engagement with our high-quality tenant base throughout significant leasing activity, which virtually eliminated all near-term rollover. I want to spend a few minutes sharing highlights from the quarter and our full year.
Good afternoon, Thank you for joining a cult.
2023.
Tomorrow is in our portfolio in Belgium.
Despite challenging Martin solutions.
Progress on our strategic.
Mmm.
So it's rover.
Gross.
Mhm.
And began.
Portfolio.
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Ongoing pro-active engagement with our high quality.
Which.
Oh man.
I want to spend a few minutes.
From the corner.
Mike Escalante: We ended the year with a portfolio that is 96.4% leased and with a waltz of 6.5 years. During the quarter, we executed four leases totaling over one million square feet at weighted average gaps and cash-releasing spreads of 26% and 9%, respectively. Our leasing activity in the fourth quarter included two lease extensions in our industrial segment and two new leases in our office segment. In the industrial segment, our sole 2024 expiration was Samsonite, which leases the entirety of our Jacksonville, Florida asset, accounting for 8% of segment ABR. This key facility for Samsonite is located near the Port of Jacksonville, the primary port of entry for Samsonite's products.
We ended the year with a portfolio that is 96.4% loose.
6.5 years.
During the quarter, we executed for leases totaling over 1 million square feet.
Yeah.
26%.
One per cent respectively.
The fourth quarter included two weeks.
And our industrial segments.
And all of a sudden.
I mean, it's also.
Our soul 2024 expiration was Samson.
Which leases the entirety of our Jacksonville, Florida.
Tony for 8% a P R.
This keep facility for Sampson.
The court of Justice.
Primary port of entry.
Cause.
Mike Escalante: During the quarter, Samsonite exercised the first of its two five-year renewal options. The rent for the renewal term is a to-be-negotiated fair market rent with a floor of the expiring rent. As we work through negotiating the fair market rental increase with the tenant, for gap purposes, we've recorded the rent for the extension period equal to the expiring rent, resulting in a 14% gap and 0% cash release spread. We will provide additional detail on the fair market rent in the coming quarters. We also completed an early 10-year lease extension with Transnone, which leases the entirety of our Whippany, New Jersey property, accounting for 2% of Segment AVR. This important light manufacturing and assembly facility is used by the tenant to produce actuation solutions for the aerospace industry. The extension includes a rent increase effective June 2026, which is nearly two years earlier than rent was scheduled to increase under the original lease.
Mmm samsonite exercise the first of its too.
Cool.
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To be negotiated fair market room with a floor of the expiry month.
We work through negotiating the fair market rent will increase with the time.
For death purposes, we've recorded for the extension period equal to the expiring.
14 per cent.
And zero percent cash releasing spread.
We will provide additional detail on the fair market rent in the coming quarters.
We also completed an early 10 year lease extension.
The entirety of our Liberty, New Jersey property accounting for 2% a P. R.
This important light manufacturing and assembly facility is used.
Produce actuation fluency.
[laughter].
The extension includes a rent increase effective June 2026, which is nearly two years earlier than rent was scheduled to increase under the original news.
Mike Escalante: As of that date, the base rent will increase over $5.50 per square foot and escalate 3.5% annually thereafter, resulting in an outsized 91% gap and a 50% cash release spread. In the office segment at our Largo, Florida property, we completed a new 7.7-year full building lease commencing June 2024 with Spectrum, a subsidiary of Charter Communications. This lease was executed simultaneously with the early termination of the former lease with Paralon, which was scheduled to expire in March 2025. We collected a termination fee from Paralon of just under $1 million, which offsets 30% of the out-of-pocket costs associated with the new spectrum.
As of that date base rent will increase over $5.50 per square foot.
3.5% annually thereafter, resulting in outsize 91.
Gap and 50 per cent cash releasing spreads.
In the office segments.
Largo, Florida property, we completed a new seven seven year full building lease commencing June 2024 was spectrum.
City area of Char Charter communications.
This lease was executed simultaneously with the early termination of the former lease with Caroline which was scheduled to expire in March 2025.
Collected a termination fee prepare lawn of just under $1 million, which also 30 per cent of the out of pocket costs associated with the new spectrum.
Mike Escalante: The new lease includes 3% annual rent escalation and was executed at a 6% cap and negative 3% cash releasing spread compared to pair loans expiring rent at termination. We also completed a 9.4-year lease commencing March 2028 with the existing subtenant at our Pima Road asset in Scottsdale, Arizona. This subtenant is expanding on a direct basis concurrently with the expiration of its sublease.
The new lease includes three per cent annual rents escalation.
And was executed at a six per cent.
3% cashed, releasing spread compared to pair loans expiring rent a termination.
We also completed a nine four year lease commencing March 2028.
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And our payment wrote acid in Scottsdale, Arizona.
This subtenant is expanding on a direct basis concurrently with the expiration of a sublease.
Mike Escalante: The new lease includes 2.4% annual rent escalations and was executed at a 33% gap and 14% cash releasing spread. With these leases now signed, our only office segment lease expiration in 2024 expires in the fourth quarter, which accounts for only 50 basis points of total portfolio ADR. Turning to dispositions, our experience and industry connections further the ongoing successful execution of our strategic disposition program. For the year, we sold 11 properties for gross disposition proceeds of $335 million at an average cash cap rate for the stabilized assets of 7.6%. During the quarter, we sold two office assets for gross disposition proceeds of $27.2 million.
The newly this includes 2.4% annual rent Escalations and was executed at a 33 per cent gap and 14% cash releasing spread.
These leases no signs are only office segment, least exploration and 20th 24 expires in the fourth quarter.
Which accounts for only 50 basis points of total portfolio AVR.
Turning to dispositions are experienced an industry connections for the ongoing successful execution of our strategic disposition program for.
For the year, we sold 11 properties for gross disposition proceeds of $336 million.
An average cash cap right.
Stabilized assets of seven 6%.
During the quarter, we sold to offer sale sets for gross disposition proceeds of $27.2 million.
Mike Escalante: First, we sold one office segment property located in Tyler, Texas, for total proceeds of $21.4 million, inclusive of the lease termination fee received from the tenant. Our team creatively structured this deal, which required the simultaneous early termination of the existing lease and a zoning change in order to sell the asset to the new owner. We sold a second office property from our other segment, which is located in Houston, Texas, for gross proceeds of approximately $5.8 million. The property was subject to a lease expiring without renewal in January 2024. This property was security for one of our non-refunded AIG loans and was the first asset we have sold in this loan pool since we documented our agreement with AIG, which is intended to facilitate the dispositions of the mortgage properties under the loan, subsequent to year-end. We sold another office segment property located in Johnson, Iowa, to Corteva, the existing tenant, for gross proceeds of $30 million. At the time of the sale, Corteva's lease had 2.8 years remaining.
First we sold one office segment property located in Tyler, Texas.
For total proceeds of $21.4 million <unk>.
Inclusive of the lease termination fee received from the tennis.
Our team creatively structured this deal which required the simultaneous early termination of the existing lease and a zoning change in order to sell the assets.
New owner news.
We sold a second office property from our other segment, which is located in Houston, Texas for gross proceeds of approximately $5.8 million.
The property was subject to a lease expiring without renewal in January 2024.
Property with security from one of our nonrecourse AIG loans.
It was the first asset we've sold in this local since we documentary of our agreement with AIG, which is intended to facilitate the dispositions of the mortgage property is under the law.
Subsequent to your end.
We sold another office segment property located in Johnston, Iowa, Corteva existing tenants for gross proceeds of $30 million.
At the time of the sale or lease at 2.8 years for me.
The further disclosing we issued a one year note for one half of the purchase price or $15 million.
This asset was classified as held for sale at year end.
Mike Escalante: To further this closing, we issued a one-year note for one-half of the purchase price, or $15 million. This asset was classified as held for sale at year end. We have one other segment property classified as held for sale at year end, which relates to a purchase by the existing tenant. This asset is the Hitachi Energy Manufacturing Facility located in Jefferson City, Missouri.
We have one other segments property classified as held for sale at year end, which relates to a purchase by the existing tenants.
This asset is the Hitachi energy manufacturing facility located in Jefferson City, Missouri.
During the quarter, the tenant exercises fixed price purchase option to acquire the property for $26 $1 million.
The sale is scheduled to close towards the end of the first quarter of 2024.
At closing, we will pay off the balance of the secured debt relating to this asset being approximately $11 million.
Mike Escalante: During the quarter, the tenant exercised its fixed price purchase option to acquire the property for $26.1 million. The sale is scheduled to close at the end of the first quarter of 2024. At closing, we will pay off the balance of the secured debt relating to this asset, which is approximately $11 million. Overall, I am excited about the momentum our experienced team generated during the first year as a listed company. With that, I will turn the call over to Javier to review our financial... I'll be here.
Overall I am excited about the momentum our experienced team generated during the first year is Elizabeth Collins.
With that I'll turn the call over to Javier to review our financial results.
Thanks, Mike.
Leverage for consolidated portfolio improve one and a half turns from seven seven times, let the normalized <unk> at the start of last year to $6 two times a year and.
We ended the year with ample liquidity and balance sheet flexibility as we advance our business plan.
Turning to financial performance in the quarter.
Total revenue was $63.1 million.
Javier Batar: Thanks, Mike. Leverage for our consolidated portfolio improved one and a half times from 7.7 times net debt to normalized EBITDA RE at the start of last year to 6.2 times at year end. We end the year with ample liquidity and balance sheet flexibility as we advance our business plan. Turning to financial performance in the quarter, Total revenue was $63.1 million, and NOI was $50.3 million, inclusive of approximately $1 million of lease termination fees. Net loss attributed to common shareholders was approximately $19.9 million, or $0.55 per share, inclusive of two non-cash impairments.
Oh, I was $50.3 million inclusive of approximately $1 million of lease termination fee.
Net loss attributable to common shareholder votes, approximately $19.9 million or 55 cents per share inclusive of two non-cash impairment.
While a million dollars related to that now it's all Corteva property, Mike mentioned earlier and $16 million relating the goodwill associated with our other reporting segment.
Saint store cash NOI, what's approximately $48 to $1 billion, a 4.5% increase compared to the same quarter last year.
<unk> is defined by <unk> was approximately $11.3 million or 29 cents per share on a fully diluted basis.
Excluding the non-cash goodwill impairment <unk> for the quarter. It would have been 69 cents per share on a fully diluted basis.
Javier Batar: $12 million relating to the now-sold Corteva property Mike mentioned earlier, and $16 million relating to Goodwill associated with our other reporting segment. Same store cash NOI was approximately $48.2 million, a 4.5% increase compared to the same quarter last year. FFO as defined by Nareef was approximately $11.3 million or $0.29 per share on a fully diluted basis. Excluding the non-cash goodwill impairment, FFO for the quarter would have been $0.69 per share on a fully diluted basis. AFFO was approximately $31.7 million or $0.80 per share on a fully diluted basis, and exclusive of 1.7 million dollars of employee severance, G&A was approximately For full year 2023, AFFO is expected to be approximately $118.1 million, or $2.99 per share on a fully diluted basis.
<unk> with approximately $31.7 million or 80 cents per share on a fully diluted basis.
An exclusive of $1.7 million of employee severance.
Hey, what's approximately $10 million, which is consistent with our quarterly run rate for the year.
For full year 2023.
<unk> with approximately $119 $1 million or $2.99 per share on a fully diluted basis.
And Saint Star cash in Hawaii was approximately $189 $4 million, a 3.6% increase compared to the prior year.
Moving onto our balance sheet.
As of December 31, 2023.
We had approximately $392 million in cash and $159 million of available undrawn capacity on our revolver for total liquidity of approximately $551 million.
A significant portion of our cash is being held in money market accounts, earning interest in the 5% range.
Regarding our consolidated that we had approximately $1.44 billion outstanding and 15 of $950 million on our credit facility with the balance being secured mortgage debt.
Javier Batar: And think-store cash NOI was approximately $189.4 million, a 3.6% increase compared to the prior year. Moving on to our balance sheet. As of December 31, 2023, we had approximately $392 million in cash and $159 million of available undrawn capacity on our revolver for total liquidity of approximately $551 million. A significant portion of our cash is being held in money market accounts, earning interest in the 5% range. Regarding our consolidated debt, we had approximately $1.44 billion outstanding, consisting of $950 million on our credit facility, with the balance being secured mortgage debt. After deducting for cash, our net debt was approximately 1.05 billion dollars. Regarding our total outstanding debt, approximately 86 percent of it has fixed rates inclusive of interest rate swaps, which limits our exposure to near-term interest rate volatility. Including the effect of these interest rate swaps, the weighted average interest rate was 4.16 percent.
After deducting for cash net debt was approximately $1.05 billion.
Regarded aren't total outstanding debt approximately 86% has fixed rates.
<unk> of of interest rate swaps, which limits or exposure near.
Near term interest rate volatility.
Including the effect of these interest rate swaps the weighted average interest rate was 416%.
The interest rate swaps have a maturity date of July 2025.
The weighted average term to maturity was nearly three years, assuming all available extension under a credit facility or exercise.
And we have no significant debt maturities until the end of 2025.
During the quarter, we entered into an agreement with AIG relating to our non recourse AIG mortgage loans.
Which are secured by 12 of the 17 assets and our other segments.
As Mike mentioned earlier the agreement is intended to facilitate the disposition.
Of the mortgage properties under the alone without regard to the original release prices.
And support the repayment of both loans.
The agreement did not result in any changes to the loan amounts interest rates are maturity.
Finally for the fourth quarter, we paid a dividend of 22 and a half cents per comment share on January 17th 2024.
While the company expects to continue paying dividends on a quarterly basis.
Future dividend decisions will be made by the board of trustees.
Javier Batar: The interest rate swaps have a maturity date of July 2025. The weighted average term to maturity was nearly three years, assuming all available extensions under our credit facility are exercised, and we have no significant debt maturities until the end of 2025. During the quarter, we entered into an agreement with AIG relating to our non-recourse AIG mortgage loan, which is secured by 12 of the 17 assets in our other segment. As Mike mentioned earlier, the agreement is intended to facilitate the disposition of the mortgage properties under the loan without regard to the original release prices and support the repayment of both loans. The agreement did not result in any changes to the loan amount, interest rate, or maturity.
Now I'll turn the call back to Mike for closing remarks.
Thanks Javier.
Our fourth quarter and full year activity demonstrates our team's ability to execute our go forward strategy.
Our high quality assets in our collective expertise continue to be positive differentiators.
As we position our portfolio for growth and maximize value for our shareholders.
Our outlook on the industrial market remains positive.
Demonstrated by a leasing activity in the quarter.
Portfolio is well positioned to capture past and future rent growth and realized strongly leasing spreads.
We have strategically located industrial assets that are central to the business operations of our tenants and many of our tenants continued to invest significant new capital and their operations at our properties.
Mike Escalante: Finally, for the fourth quarter, we paid a dividend of $0.225 per common share on January 17, 2024. While the company expects to continue paying dividends on a quarterly basis, all future dividend decisions will be made by the Board of Trustees. Now I'll turn the call back to Mike for his closing remarks. Thanks, Javier. Our fourth quarter and full year activity demonstrates our team's ability to execute our go-forward strategy. Our high-quality assets and our collective expertise continue to be positive differentiators as we position our portfolio for growth and maximize value for our shareholders. Our outlook on the industrial market remains positive.
On the opposite side companies are more frequently making longer term decisions about their office occupancy requirements.
The two new office leases, we sign in the quarter illustrates this point.
We believe the quality of our tenants and the assets in her office segment or attribute settled provide stable cash flow with limited near term all over exposure.
As I mentioned in the release, we end of 2023 on a high note with a materially stronger cash position.
And enhance portfolio composition.
And continued operational excellence across our industrial and office segments.
We have entered the new year on solid footing and leasing momentum remains positive.
Mike Escalante: As demonstrated by our leasing activity in the quarter, our portfolio is well positioned to capture past and future rent growth and realize strong rental spread. We have strategically located industrial assets that are central to the business operations of our tenants, and many of our tenants continue to invest significant new capital in their operations at our properties. On the office side, companies are more frequently making longer-term decisions about their office occupancy requirements.
Thank you for your time today.
Look forward to seeing many of you at the upcoming conferences we.
We will now turn it over to the operator to take a few questions from analysts.
Operator.
Thank you.
Now be conducting a question and answer session if.
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Participants using speaker equipment, it may be necessary to pick up your handset before pressing the stop keys, one moment please call for questions.
Mike Escalante: The two new office leases we signed in the quarter illustrate this point. We believe the quality of our tenants and the assets in our office segment are attributes that will provide stable cash flow with limited near-term rollover exposure. As I mentioned in the release, we ended 2023 on a high note with a materially stronger cash position, Enhanced Portfolio Composition, and Continued Operational Excellence across our industrial and office sectors. We have entered the new year on solid footing, and leasing momentum remains positive. Thank you for your time today.
The first question comes from the line of Joshua.
With Bank of America. Please go ahead.
Hi, This is Pam green up on behalf of Josh.
He knew about you guys again my first question is about.
And the other segments just curious if you had any thoughts on how those may be playing out or the expiration is coming forward.
Operator: We look forward to seeing many of you at the upcoming conferences. We will now turn it over to the operator to take a few questions from analysts. Operator, Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone number. A confirmation tone will indicate your line is in question.
Having active conversations I'm in.
That area.
Yeah, Thanks, Sheryl and please give our best to Josh.
So you know a significant amount of our rollover actually does tie to our other category.
We don't spend a lot of time talking about what it is what we're doing in those specific areas, but suffice to say that we are spending significant time.
Operator: I'm going to press start. We would like to remove your questions from... practice, Speaker. It may be necessary to pick up your handset before pressing the start button.
With those properties and.
And as you know we just.
Fact that.
An agreement with AIG to facilitate the cell of all of the other properties.
Operator: One moment, please, while we poll for questions. The first question comes from the line of Joshua Dennerlein. Bank of America. Hi, this is Carol Granup on behalf of Josh. This question is about... 2024. I'm curious if you have any thoughts on how those may... http://www.realtor.com forward. Yeah, thanks Carol, and please give our best to Josh. A significant amount of our rollover actually does tie to our other category. We don't spend a lot of time talking about what it is that we're doing in those specific areas, but suffice to say that we are spending significant time with those properties, and, as you know, we just effected an agreement with AIG to facilitate the sale of all of the other properties associated with the AIG property. Also, in terms of the appetite that you're seeing for these, I know that you were able to sell right now We sold 11 properties over the year with $336 million of proceeds in our stabilized assets. The cap rate for our stabilized assets was 7.6%.
Properties associated with the AIG loans.
Great. Thank you and I guess also in terms of appetite that you're seeing.
Office assets.
Able to.
Few for sale right now can you just give a little bit more color on like the landscape that you're seeing.
Yeah. So you know, we're we had a great year right, we sold 11 properties over the year.
With $336 million of proceeds in our stabilized.
Cap rate for the.
The cabinet for our stabilize assets with 76%.
We're clearly selling opportunistically properties that don't alignment with our go forward plan.
And when you look at what we're seeing in the marketplace. It's obviously, becoming much more dependent on the ability to get credit so where someone at the winds of the marketplace clearly at the end of the year, we have some relief as a result of the feds.
Foot.
A little bit of that's been given back but what we're hearing from people is that the there's there's quite a few people who are.
Willing to be active in the marketplace, specifically from the equity side, and we'll see how things unfold as as the Feds picture becomes clearer.
Over the next couple of quarters.
Okay. Thank you that's it for me.
Thank you Carol.
Thank you.
Final question comes from the line of Anthony how.
Mike Escalante: You know, we're clearly selling opportunistically properties that don't align with our go-forward plan, and when you look at what we're seeing in the marketplace, it's obviously becoming much more dependent on the ability to get credit. So we're somewhat at the whims of the marketplace. Clearly, at the end of the year, we had some relief as a result of the Fed's intervention. A little bit of that's been given back, but what we're hearing from people is that there are quite a few people who are willing to be active in the marketplace, specifically on the equity side, and we'll see how things unfold as the Fed's picture becomes clearer over the next couple of years. Go to Beadaholique.com for all of your beading supply needs!
[noise] touristic Celtic's. Please go ahead.
Hi, Good afternoon. Thanks for taking my question you guys have.
Around like $400 million of cash on hand, what type of acquisition opportunities have you got the <unk> pipeline today, and what's stopping you definitely acquiring assets.
[noise] sure.
We'd like where we said in terms of our total cash position that affords those great flexibility.
And are on our balance sheet, we continue to focus on.
On our balance sheet on our strengthening our balance sheet.
At the appropriate time, we'll be looking at opportunities and the.
And the and on the investment side.
Operator: Thank you. The final question comes from the line of Anthony Howe, through its security. Good afternoon.
Is there like a target lavish metric that you're just looking at shapes before you start looking at acquisitions.
Mike Escalante: Thanks for taking my question. You know, you guys have around $400 million of cash on hand. What type of acquisition opportunities have you guys identified in the pipeline today? And what's stopping you guys from acquiring assets?
You know in terms of leverage we've indicated that we've made significant.
Headway from the beginning of last year through this year.
We're going to continue to allocate.
Mike Escalante: Look, we like where we sit in terms of our total cash position. It affords us great flexibility. In our balance sheet, we continue to focus on strengthening our balance sheet, and at the appropriate time, we'll be looking at..., on the. Is there like a target leverage metric that you guys are looking to achieve before you start looking at acquisitions? You know, in terms of leverage, we've indicated that we've made significant... Headway from the beginning of last year through this year. We're going to continue to allocate and look at strengthening our balance sheet in that regard. I think Javier's point is that we've got great optionality relative to keeping the cash on our balance sheet.
And look at putting strengthening our balance sheet in that regard.
I think Javier has pointed that we've got great optionality relative to keeping the cash on our on our balance sheet and we're going to continue to actively monitor the market.
We're going to continue to weigh our position overtime and weigh our options.
But.
But as we've told you our strategy is to evolve our portfolio towards our industrial segment.
Which we believe has favourable growth prospects and away from the office Ah segment.
So in terms of like the industrial.
And opportunities that you guys <unk>.
I'm sure they're looking at both.
Both these mostly be like infill locations in the Coco market or more of the the the the the.
Middle America was headed Midwest.
Like Big box assets.
Well as you as you know our own portfolio as it stands today is significantly geared toward.
Mike Escalante: We're going to continue to actively monitor the market. We're going to continue to weigh our position over time and weigh our options, www.realvision.com. But as we've told you, our strategy is to evolve our portfolio towards our industrial segment, which we believe has favorable growth prospects and away from the office. So, in terms of the industrial acquisition opportunities that you guys are potentially looking at, will these mostly be like infill locations in the coastal markets or more of middle America, let's say the Midwest, like Well, as you know, our portfolio as it stands today is significantly geared toward the coastal markets, which are predominantly geared toward those properties that have access to the ports, and I think, All you have to do is look at what we did relative to the Samsonite renewal and the Transdime renewals in terms of our performance there.
The coastal markets.
Which are predominantly.
Predominantly geared towards.
Those properties that have.
Access to the porch.
I think it's.
All you have to do is look at what we did a relative to the samsonite renewal and the trains dime renewals in terms of our performance there.
And in terms of the releasing spread that we were able to achieve so.
Clothing goes it performed quite well for us until I think that.
We will continue to look to to add.
Those types of properties.
For sure.
Okay and can you provide any color on the upcoming exploration of the tech data core belief in San Antonio.
We're not really ever providing guidance relative to our specific properties.
So.
Yeah.
No real guidance for you there.
Okay, but you guys are an active discussion will depend on about like you know potentially being noone beliefs right.
Mike Escalante: And in terms of the release spread that we were able to achieve, clearly, those have performed quite well for us, and so I think that we'll continue to look to add those types of properties, for sure. And can you provide any color on the upcoming exploration of the tech data core beliefs in San Antonio? We're not really ever providing guidance relative to our specific properties, www.realestate.com, So, no real guidance for you. Okay, but you guys are in active discussion with the tenant about, you know, potentially renewing the lease, right? I'm just curious about those discussions.
And just just curious what those discussions are how's it going.
Yeah, I think you know, we're very active with all of our with all of our cats and all of our buildings and.
You know I think if you look at the the 1 million square feet that we were able to achieve in terms of new leases and an extension our team has been very creative and being able to fulfill the order. If you will meet our needs along with their tenant needs.
We're very proactive in that regard.
And I think you can see that.
Relative to the Transdigm transaction, we were able to to do a in early extension.
Almost two years in advance of of what would have been a natural exploration there.
Mike Escalante: How are they going? I think we're very active with all of our tenants and all of our buildings. You know, I think if you look at the 1 million square feet that we were able to achieve in terms of new leases and extensions, our team has been very creative in being able to, you know, fulfill the order, if you will, meet our needs along with our tenants. We're very proactive in that regard, and I think you can see that, you know, relative to the trans time transaction, we were able to do an early extension, almost two years in advance of what would have been a natural exploration there, meet their needs and our needs, increase our rent, almost two years in advance of what it would have naturally expired at.
And meet their needs and our needs and you know increase our rent almost two years in advance of what it what it naturally expired at so.
I I really am proud of our team's ability to go out there and nurture the relationships with the Giants.
Be you know very active operators of our real estate.
And.
And push our leasing forward.
And his last one for me for Tyler, Texas asked that what was the termination income associate with the sale.
The the valuable.
The value of determination.
Yeah.
I don't think we've disclosed to that.
I think the best thing that I can tell you is that we.
Mike Escalante: I really am proud of our team's ability to go out there and nurture the relationships with the tenants, be..., you know, very active operators of our real estate, and push our leasing forward. And this last one for me, for the Tyler, Texas asset, what was the termination associated with the sale? So, the map, the volume, the value of determination?
We sold that for a combined 26.0 excuse me.
I'm off on that one.
I think that was one one point $21.4 million.
Okay.
And that was inclusive udell Eastern Asia.
Okay. Thank you.
Thank you.
Ladies and gentlemen, we have reached the end of question and answer session I would now like to turn the floor over to management for closing comments.
Mike Escalante: Yeah, and we've disclosed it. I think the best thing that I can tell you is that we... You know, we sold that for a combined 26 points. $21.4 million, and that was inclusive of the lease term.
[noise]. Thank you everyone for joining or our call again, we look forward to being in touch with you.
And.
Very very happy with the quarter and we look forward to a really fruitful 2024.
Operator: Okay, thank you. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to turn the floor over to Manager. Thank you everyone for joining our call. We are very, very happy with the quarter, and we look forward to a really fruitful 2025.
Thank you operator.
Thank you.
This concludes today's teleconference humid disconnect your lines at this time.
For your participation.
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