Breaking News: Peakstone (PKST) acquires IOS portfolio from Alterra-JP Morgan for $490 million

BREAKING NEWS

Source: Peakstone Investor Relations

Peakstone Realty Trust (the "Company") (NYSE: PKST), a real estate investment trust focused on owning and operating industrial assets, announced yesterday that the Company has acquired a portfolio of 51 industrial outdoor storage (“IOS”) properties from a joint venture between Alterra IOS, and institutional investors advised by J.P. Morgan Asset Management in an off-market transaction valued at $490 million. The acquisition was funded by a combination of proceeds from the Company’s credit facility and cash on hand.

Here are the key financial highlights from Peakstone Realty Trust's acquisition of the Industrial Outdoor Storage (IOS) portfolio:

1. Acquisition Value: The total purchase price is $490 million, split across 51 properties, comprising 45 operating assets and 6 redevelopment assets​.

2. Projected Yield: The operating assets target a cap rate of 5.2%, with expected yield growth of approximately 7-7.5% for the operating assets and 7.5-8% for the redevelopment assets.

3. Annualized Base Rent (ABR): The portfolio’s in-place ABR for operating assets is approximately $22.1 million, with an estimated 70% mark-to-market opportunity to capture higher rents over time.

4. Redevelopment Potential: The six redevelopment properties cover 82 acres and are expected to deliver an additional $9-10.5 million in NOI once stabilized over the next 12-36 months.

5. Tenant Base and Lease Duration: The portfolio is nearly fully leased with a weighted average lease term (WALT) of 4.5 years, and approximately 47% of tenants are investment-grade rated, providing strong income stability​.

6. Geographic Concentration: The assets are concentrated in high-demand regions, particularly the Sunbelt and coastal areas. The top markets include Philadelphia (22.7% of ABR), Atlanta (13.1% of ABR), and Houston (8.0% of ABR), covering a total of 358 usable acres for operating assets​.

These financial points highlight the acquisition's growth potential and strategic value, with both immediate cash flow and long-term asset value appreciation in key logistics markets.

We’ll be sharing more details on the portfolio and what this means for the industry in upcoming IOS Daily newsletters.

OFFICIAL PRESS RELEASE

Source: Peakstone Investor Relations

Peakstone Realty Trust Acquires 51-Property Industrial Outdoor Storage Portfolio

11/04/2024

Acquires Assets from Alterra IOS and J.P. Morgan Asset Management

Establishes Presence in High-Growth Industrial Outdoor Storage Sector

Provides Significant Mark-to-Market Opportunity Over Time

Complements Existing Industrial Portfolio

Schedules Transaction Webcast for Tuesday, November 5, 2024, at 8:30 AM EST

EL SEGUNDO, Calif.--(BUSINESS WIRE)-- Peakstone Realty Trust (the "Company") (NYSE: PKST), a real estate investment trust focused on owning and operating industrial assets, announced today that the Company has acquired a portfolio of 51 industrial outdoor storage (“IOS”) properties from a joint venture between Alterra IOS, and institutional investors advised by J.P. Morgan Asset Management in an off-market transaction valued at $490 million. The acquisition was funded by a combination of proceeds from the Company’s credit facility and cash on hand.

The 51-property infill portfolio comprises 45 operating assets and six redevelopment sites. These assets span a total of 440 usable acres across 14 states and are strategically located near major supply chains and population centers. The operating portfolio has a WALT of 4.5 years ¹ and is approximately 100% leased ² to diversified, high-quality, primarily national and regional tenants.

Through this acquisition, Peakstone has expanded its overall industrial footprint and has established a significant presence in this emerging, high-growth sector. Industrial outdoor storage is characterized by favorable operating dynamics, significant supply constraints and minimal capital expenditure requirements. The Company has significantly enhanced its long-term growth profile with a potential 70% mark-to-market opportunity ³ on the IOS operating assets and the ability to achieve incremental yield through six redevelopment sites.

"We are pleased to announce our entry into the industrial outdoor storage sector,” said Michael Escalante, CEO of Peakstone. “This portfolio is highly complementary to our existing industrial business, and adds meaningful scale, breadth and growth opportunities in a sector with compelling operating fundamentals. We expect that favorable market trends will persist in the IOS sector, and will drive long-term value for shareholders. Looking forward, we are committed to shifting our portfolio more towards industrial, and we will be strategic about balancing industrial investments while reducing leverage.”

“Peakstone’s acquisition of this high-quality portfolio advances the institutionalization of the IOS asset class,” said Leo Addimando, CEO and Managing Partner of Alterra and Matt Pfeiffer, CIO and Managing Partner of Alterra. “We believe this transaction is a win-win, and that Peakstone is the right owner to build upon the success of these assets and drive further value.”

“This portfolio transaction represents an important milestone in the execution of one of our highest conviction strategies,” said Preston Meyer, Managing Director and Portfolio Manager at J.P. Morgan Asset Management.

Advisors

BofA Securities served as Peakstone’s exclusive financial advisor. O'Melveny & Myers LLP, Latham & Watkins LLP, and DLA Piper served as Peakstone’s legal counsel.