Peakstone Realty Trust (PKST) Earnings Call Transcript & Summary

Hello. Welcome to our presentation of Peakstone Realty Trust. My name is Michael Escalante, I'm the CEO, and I'm joined today by Javier Bitar, our CFO. We're very excited to present a compelling investment opportunity in Peakstone Realty Trust. You'll see on this page, a table of content, which includes a listing summary, an overview of Peakstone, and then we'll take a deeper dive into our segmentation of industrial and office followed by the introduction of our team and their value creation capabilities, and then we'll finish up with a capitalization overview presented by Javier. So we're happy to announce that we've recently rebranded Peakstone Realty Trust. The Peakstone name was selected as a means of conveying that we have a solid foundation, and we believe the company has an elevated future. While we are -- soon to be a newly listed company, we have been a public filer since 2009, so that's almost 13 years. And we've been producing Ks, Qs since -- having independent directors and dealing with Sarbanes-Oxley and the like. So this is not really a new area for us in that regard. So what is Peakstone? The company is primarily comprised of single-tenant net lease industrial and office properties. We believe that we have a high-quality portfolio of new vintage well-located assets. That are strategically located in high-growth markets. We believe we're differentiated in that we have a self-funded business plan. This is not an IPO, and we're not diluting equity in the near term in that regard. And finally, we have an experienced cycle-tested team of what I would call [ dyed-in-the-wool ] real estate operators. We will be traded on the New York Stock Exchange under the ticker symbol PKST. We expect to be listing on April 13. We recently adjusted our share count with a reverse stock split. And we'll have 39.5 million shares outstanding. Our first dividend will be a monthly dividend. We will follow that with quarterly dividends or after. Our annual rate is said at $0.90 per share adjusted for the split and our record date will be as of May 2. So the question of the day, why listing now? Clearly, we're sitting in the face of some public markets that are quite challenging. We believe that the listing best positions the company for future growth and provides liquidity for our shareholders. I mentioned earlier, we've been public since 2009, we've really raised the lion's share of our equity in 2012 to 2015. We really marketed ourselves as a finite life fund, and we told our investors at that time that we would be looking for liquidity in a 7- to 10-year time frame. So 7 years plus 2015 or 10 years on 2012, that puts us squarely in 2022. So we're right on target with what we anticipated. But -- we are looking to provide liquidity, an opportunity for liquidity for our existing shareholders. And we're hopeful that many of them will stay with us, and we expect many of them to stay with us given what we've seen historically for situations like ours. Secondly and probably most importantly, we believe that there's retained embedded upside in our existing portfolio. And we still need time to unlock the intrinsic value. Certainly, going to the public markets will allow us to take advantage of the fact that we have some -- we have some really large industrial properties with below market in-place rents. So we have some positive re-leasing spreads that can be utilized to increase the underlying intrinsic value of the properties going forward. As a listed company, we're looking to be able to access additional sources of capital that we wouldn't in the private world. Obviously, the public markets are much more efficient at providing access to both debt and equity. And we believe if we present ourselves correctly that we should be able to do that at the low end of the scale. And then lastly, we believe that this opportunity, all wrapped together provides a very attractive investment opportunity certainly for new investors and for all of our old investors that will stay along with us. On the right-hand side of this particular slide, you can see 6 examples of office and industrial properties. We have put these photo samples throughout the book, pay attention to them, if you would. We believe we're proud of what we own. You'll see that they are high-quality assets. And furthermore, we provided some property tear sheets at the back of this presentation as well. So we believe Peakstone provides a compelling investment opportunity for the following reasons. Again, the wholly-owned portfolio that we have is high-quality, newer-vintage portfolio, predominantly single-tenant industrial and office properties that are located in diverse strategic growth markets. The second part about our compelling investment opportunity, I've said before, self-funded business model through capital recycling and free cash flow. This provides us the tools to do what we need to do, and we believe we have the relationships to accomplish our goals. As an example, and leaning on our relationships, we were -- we recently announced the extension of our revolving credit facility, which is going to provide us improved flexibility going forward. And that was as a result of our relationships with our many banking relationships. We're certainly looking to target an investment-grade balance sheet going forward, primarily through continued delevering. And we hope to move our asset concentration in the future towards a greater amount of industrial over time. And as I mentioned before, we are very proud of our experience cycle-tested team. We have a very strong alignment, and we very much are real estate operators in terms of our mindset. We have deep relationships. I can tell you that our team is a very skilled team, highly capable. Our entire team are all owners from the executives down to our entry-level members. And I think it's worth noting that my ownership in the company as a representation of my portfolio, my personal investment portfolio, this is the biggest investment in my personal portfolio. Moving on to the next page. On here, we're going to try and simplify the picture of what is contained within -- what is contained within the organization. I'm going to digress for one second because we're really aiming for some transparency. We want to provide you the data and the tools to underwrite what we keep commonly referring to as intrinsic value. So that would be private market valuations would be sort of the what we're trying to achieve there. And what we've done in that regard, as you'll see in our appendix, we've done 2 things. We've detailed all of the assets with some detailed information. We've also provided property-by-property tear sheets that gives you sort of chapter reverse of the property, the locations of photos, maps, et cetera. So there's a lot of detail that you'll get. But I don't think most people -- most public companies don't produce. And also, we -- behind the scenes, we haven't been publishing them, but we've been producing supplementals and we'll continue to do that on a quarterly basis. So really trying to provide you all the tools necessary to understand the underlying value that we have in our portfolio. And we break our portfolio down into 4 pillars of value. So in total, starting on the left-hand side, you can see that we have 78 properties, 19 million rentable square feet, roughly $212 million run rate ABR, we're 95% leased overall and 61% investment-grade tenants. And moving to the right, we have 2 -- what I would call, 2 stabilized segments. One is the industrial segment. The second is the office segment. I'll give you some key elements there. From a cash flow or ABR or NOI standpoint, industrial is roughly 25% by those metrics, but I think it's a greater percentage by value if you consider cap rates overall. It's 100% leased, 7.1-year WALT and 59% leased to investment-grade tenants. I mean, we have secular tailwinds in the industrial segment, and we have a high-quality, well-located industrial properties with modern specifications. We have 20% rollover through 2026, and we should be able to take advantage of those secular tailwinds. Moving on to office, greater percentage of NOI. But in the current market, we would say that the valuation is probably not 55% in total. What we like most about our office properties, we've got newer high-quality business essential assets with longer WALT at 8.4 years. And what we believe that does is that allows us to sort of bridge over the cycle issues that we have and the headwinds that exist in the marketplace. But we're going to get paid rents, 67% of that portfolio is leased to investment-grade tenants. The other segment is something that requires a little bit greater detail. We've got a slide set aside for that specifically. It's about 20% of our portfolio in terms of cash flow. And we've got some focused attention that we need to put in place on this grouping of assets because it includes really our vacant assets, some noncore assets together with other assets that are in the same cross collateralized loan pools. These are good assets. We've got 21 assets in total, 8 of them are stand-alone sit on our revolver. And 13 of them are cross-collateralized. And therefore, we need to deal with some renewals of the cross-collateralized assets. In the context of that -- in essence, we've got really good properties that are swedged up against other properties that need some assistance, again, focused attention and our teams are in the best position to do that. I'm going to provide a little bit of context in this slide relative to public market value and some recent sales that we've had, just to give you some, I don't know, a place to benchmark valuations overall. Our industrial segment, we believe that the comparable market trades in the public market are 4.5% implied cap rates to maybe as high as 6%. We've only had 1 sale of a recent asset, but we were able to sell one of our properties where someone came in and look at the idea of taking a creative office building and converting it to an industrial reconversion, if you will. And that traded at a 5.5% cap rate. On our office segment, we've had sales from -- anywhere from 7.3% to around 8% cap rates, the Amazon Dallas facility in Northern Virginia traded at a 7.3% cap rate. And I think you'll be surprised. We sold 5 -- roughly a 5-year WALT transactions in Birmingham, Alabama at a 7.7% cap rate. So that will give you some perspective of where our assets that we're walking away from or we chose to sell in this marketplace for the right reasons, and that's where they were priced. The third segment, the other segment, the 8 assets that are stand-alone. One of the ways you can look at that is if you were to just take sort of a broad swath across them. We think that the minimum conservative value is roughly $100 million there and the 13 assets that are crossed, they have option value because there's debt in place, and we need to do some things with those assets to create value. So the last portion of our overall valuation is the office JV. I mean there's also cash that we have on the balance sheet. But the office JV is on our books at $100 million -- roughly $180 million. We did that transaction in conjunction with a very notable sovereign wealth fund. On the next page, you'll see this map, we've mapped out where our properties are. You can see the states. 23 states, 33 markets, roughly 74% of our ABR is coming from coastal in Sunbelt markets. Some people call them, the Smile states. We can certainly spend more -- you can spend more time on looking at this map after the presentation. On our next page, I'm going to spend a little time here walking through our business plan. We're looking to optimize our portfolio and our balance sheet. So it's not like we're starting today. We've actually been engaged in executing on our business plan. And we've got some 3 really key milestones that we achieved. We did the JV with the sovereign wealth fund I mentioned. We sold 46 office properties, created significant cash proceeds, roughly $1 billion was generated, and we used that to delever our portfolio. We closed 4 dispositions of wholly owned assets since Q3 of '22. It's roughly $200 million worth of properties. And 7.1% weighted average cash rate -- cash cap rate, as I mentioned earlier. And then I also mentioned that we extended our $750 million revolver by repaying a $400 million loan that was coming in -- coming due in 2024, and that extended our maturity date through 2026. So very happy to get that done. Our revolver had previously been completely undrawn. So we have the flexibility to do that, and we were able to provide care to our lenders in that regard. So with that's today, where are we going? Probably a fair amount of questions about the redemption that's coming with our convertible preferred shares. We're actively involved in discussions with the preferred shareholders to $125 million. We have that available. I think our -- I think this plan actually shows that we use that money and pay that down either way, it's due in August of 2023, but we're hoping to get that accomplished soon. And so that's the level set of where we stand today. Our go-forward strategy, really looking at the 3 bubbles or 3 circles, we're going to maintain a stabilized portfolio of high-quality, well-located real estate to generate consistent cash flow. We've got strong rental rate growth potential and great properties there. Again, self-funded ability to execute the plan. We will be selectively selling off office assets if it makes sense. There's no need for outside capital. We will invest additional capital in existing assets where warranted. Finally, we would also be looking to actually build upon our existing portfolio by selectively acquiring high-quality industrial assets. That's going to be the right deals at the right time. Clearly, we have the benefit of secular tailwinds and mark-to-market opportunities that we find compelling currently, and we'll see where we go with that. So moving on to the next page. So we need to maximize shareholder value. How are we going to achieve that? That's clearly our primary long-term objective. We have 5 important guideposts that we're looking to. We really are intending to improve our per share metrics through both internal and external growth. As you can see, we're going to engage in a multichannel investment strategy across the risk and capital spectrum. I'll show you how we've done that in the past in the industrial markets specifically, future focus on distribution warehouse assets with market-leading building specifications. And we will continue to selectively own business essential, Class A, single-tenant office with long lease durations. And of course, we're looking to maximize our balance sheet flexibility by targeting an investment-grade rating. I'll just say that we're not rated to any assets. We will make prudent choices for capital allocation. And I think that will be true up and down these 5 guideposts as we go forward. I'm really excited to talk to you about our team. I would love to introduce them as a team to you at some point in the future. Any time you come to our headquarters I'd love to take that opportunity. I'm very proud of who they are and their capabilities, their experience, knowledge and relationships. They have a proven real estate and capital markets experience. They have extensive knowledge of the existing portfolio. We have a broad network of long-standing industry relationships. You can see on the left, we're a fully integrated team in the sense of all of the capabilities in the pinwheel to the left. And we do not believe that real estate is a commodity business. We believe that relationships matter. And reputation matters. And then we have to build off of our prior business, which has been an impeccable track record with the buyers and sellers of assets across the country. Our team is a highly experienced executive management team. We averaged 34 years of real estate experience, and we have experienced operating public companies. Javier, previously was involved with Maguire Properties. I was involved with Trizec Properties. If you look at our 9 senior real estate professionals, they average 23 years of experience and the whole team taken together, our entire senior team has roughly 9 years of experience working together. Okay. From here, I'd like to take a deeper dive and talk to you in more detail about our industrial and office segments. Again, about value creation capabilities. And then again, Javier will finish with the capitalization overview. So I'm going to go forward 2 pages. I think what you see on this page here is that we deliberately constructed our portfolio with the following traits. We're looking for modern, high-quality buildings with market-leading specifications. We're looking for difficult to replicate locations or high-growth markets. We're looking for assets that are essential to tenant operations. And we love properties where the tenant has invested significant monies on top of our own. So at the upper left-hand corner, you'll see the PepsiCo property. PepsiCo is the parent. They purchased Quaker Oats with the intention of really getting at Gatorade. This property here is located along the I-4 corridor between Tampa and Orlando, it was built in 2018. It's cross-dot is 36-foot clear and has abundant trailer and car parking. So that meets our market-leading specification. In the upper right, you'll see our Roush R&D facility. This is a critical engineering firm where they do prototype testing for Ford Motor Company, in particular, at this location. This property is located directly across from The Ford Motor Proving Ground and literally down the street from the state-of-the-art wind tunnel that Ford just invested in. On the lower left-hand side, you'll see what we call MISO, which stands for Midcontinent Independent System Operator. They're responsible for operating the electric grid through a network operations center. This is the best submarket in the state. Our building is connected to their command center. This facility is responsible for overseeing the flow of electricity of 45 million people, every 24/7. That's 15 states plus the Manitoba territory in Canada. In the lower right-hand corner, you'll see the Pepsi Bottling Ventures facility in Winston-Salem. It's a production facility and a distribution facility. The tenant has invested 3x what we invested in the property. Almost over $100 million is our estimate. This is a facility that produces and distributes Aquafina water and it has a production capacity -- annual production capacity of reportedly approaching 400 million bottles per year. Again, we are very interested in investing our properties in high-growth markets. You can see it broken out for industrial segments and our office segment markets. Furthermore, we're excited about the diversification that we have across industries as well as geography. We've actually read studies that show that the best diversification occurs over industrial diversification rather than just geography. We have both. Looking at the names of our tenants and the logos, you'll see that we have many blue-chip household names I think notably, when you look at the left-hand side of the industrial segment, 54% of our tenants are comprised of S&P 500 companies and roughly the same number for our office properties as well. We have long-term leases generally. We will be looking at shorter duration leases in our industrial to take advantage of the secular tailwinds again. But on a long-term lease, much of our value comes from getting paid rent. We carefully review our credit, the industries, the underlying business and our tenant selection. And as you can see that we have a very high investment rating I have alluded to before. One of the ways that showed up for us was during the COVID years, I guess, we were able to achieve 100% rent collections as an indication of what that means. Moving on to the next page. This is 2 histograms identifying our rollover for each of our industrial and office segments. I think we have the best of both worlds. We have 21% ratio rolling over in the -- through 2026 of industrial, that's soon enough to take advantage of the secular tailwinds. On the office side, we have 8.4 years of WALT, and that's long enough to ride out the storm. It also is long enough to have liquidity for assets to the extent people are interested in buying those types of properties, which we still believe is a fairly active marketplace. Little more detail provides a comparison of our portfolio to a grouping of our peers. You can see we have significant differential in our buildings, our properties, if you will, meet the needs of today's tenancy. Particularly, it's a younger portfolio, newer portfolio, roughly 50% newer, if you will, as compared to the grouping of peers that we've identified in the industrial world. We have modern attributes that are attractive to tenancy. We showed this in the context of CoStar ratings. We have more -- we have a much higher percentage of 4-plus stars, which is their system, it's a 1 through 5 scale. So it's at the higher end of the spectrum there. We have institutional clear heights, if you will. There's a minimum, I think that most institutions are interested in. And I think that minimum today is roughly 32 feet in height. It doesn't mean we don't have 28 clear or 30 clear, but we have to be -- we have to understand why that's the case. And we certainly have been looking at the higher end, more often than that. Our average property size is at the higher end or the bigger end. We believe this is an indication that's more difficult to replicate that asset. We certainly are mindful of the visibility in the underwriting process. And sometimes, we might actually find that we can get greater rent like converting the property to a multi-tenant configuration. Those are all decisions we have to make over time. I think it's important to point out that we have -- we've tactically assembled our industrial with an eye towards logistics infrastructure. In this page, we see ports, but we certainly look at highways and intermodals as well. Roughly 50% of our portfolio is near the top U.S. ports. You can see here on the page, it's pretty well set out. We believe that's very important on a distribution basis because up to 70% of our industrial tenants operating costs on the distribution side comes mainly from the cost of moving goods around. So only 5% comes from rent and therefore, location matters even more so. And then last on the industrial portfolio I've referred to intrinsic -- embedded intrinsic value. We show here that we're basically got 19% upside overall in the portfolio, and we gave you some -- two prime examples of very large properties, the RH facility is 1.5 million square feet, 64% re-leasing spread relative to current market -- current market and in-place rents. And I think that will only continue to widen with future and continued market rental rate growth. Switching to our office segment. Again, I want to really hone in on average age, dramatic differential in price. We think it's a key determinant of performance, specifically as it relates to CapEx, 11 years of age, we're really exposed to minimum capital expenditures for probably 10, 12, 15 years. When you get out to 23 years and you look at our peer average, that's right in the center of the fairway for a CapEx storm and the possibility of obsolescence. So we believe that's a meaningful differentiator. We also have a significant differential for newer assets. We believe newer assets are getting the lion's share of absorption and pricing power in today's marketplace. I mentioned the WALT earlier at 8.4 years and again, the investment-grade tenancy. In a post-COVID hybrid work-from-home world, attracting talent is pretty much important and happens in the office world through newer, higher-quality amenitized properties, and that equates to higher occupancy and better rents. A little more granular view is on the next page, you can see where we've actually identified selected individual peers that you might be familiar with again, in the 2 columns that we've shown, we have vastly superior statistics leading to lower CapEx and higher valuations. On the right-hand side, smattering of some of our headquarters facilities and why we think the headquarters matters is that provides stickiness upon renewal, generally speaking. These were all -- in large part, these were all brand new facility, not all of them, but most of these are brand-new facilities for them -- for the tenant at the time. So high-quality properties built to their needs. Just a quick view of good demographics equals population growth, education, income equals demand and absorption and future rent growth. We believe the peak zone stands out in these 2 areas, as you can see here, you can go back and look at that later. I've been wanting to talk about our team in terms of the valuation creation capabilities. I'm going to walk through and close on the next 3 slides with some detailed examples. So we have proven experience in executing a versatile investment strategies. I would wager that most management teams really don't have the ability to fire on all 6 cylinders, if you will, that we've shown here. So everyone's doing property and portfolio acquisitions, everyone says they do repositioning and development. Certainly, joint ventures are part of the parcel, but when you look at the right-hand side, you'll see that we've employed tax deferred strategies to access assets. We've been engaged in very major corporate M&A transactions, which I think is extremely unique. In those cases, we were able to get outside boards of directors, if you will, to accept our currency and our management team going forward instead of their own by way of example. And then lastly, we have proactive asset management. This team that we have is cycle-tested to have insight, experience, relationships and the creativity to source, structure and execute on multiple transaction types. I can tell you this is what we do as a firm. This team, this is who we are as a firm, and this is exactly where we thrive in the real estate world, if you will, and I'm going to move to the next page to do a deeper dive, as I promised on the other section to show you how we're involved in active asset management. I think I'd like to point out again the fact that we're trying to provide transparency. We believe everyone has another category, they just would rather not talk about it and really sort of embedded in the portfolio. I think our view is we'd rather get it head on. This other segment, if you will, is going to require focused attention, as I mentioned earlier. So 21 assets, mostly office, and they fall into the 4 categories that we have identified here. 8 of them are stand-alone non-crossed assets, 13 are cross collateralize and some of the assets sort of fall into multiple categories. So starting in the left-hand corner, we have vacant buildings. We have roughly 6 buildings that are vacant, and those provide an opportunity for us to look at it on a -- do a return on cost evaluation. Do we think spending more money will provide us the proper return for the risk that's required there? Or do we believe someone else has another view? We also have short-term WALT properties. In this case, one of these property located are shown here, we think that there is an opportunity to renew a tenant, for example. That's going to require that we probably invest additional CapEx into the facility. But we believe that we're going to be doing that with the intent of creating significant value increase. Thirdly, we have cross collateralized assets. So those are subject to $220 million of loans. You can see the 2 AIG loans on the right-hand side -- lower right-hand side of the slide, in 2 separate pools. There are some assets in there that fall into the FERC Category 1, Category 2 and Category 4 and they happen to be cross-collateralized. So there's work that needs to be done there. And then the last section is partially leased assets, again, kind of akin to the vacant buildings. Do we spend more money? Or do we sell it as is? We're -- and so showing you these portfolios and highlighting it, this segment, excuse me, it's really our chance to show you that we're good stewards of capital. And I can assure you that we're on top of these assets and providing them with the proper amount of attention to create value going forward. I'm going to close with this last slide before handing it over to Javier. This is where we actually have demonstrated case studies, if you will, of value creation opportunities that we executed on already with our portfolio. This is showing our team's capabilities. We have the Amazon Arlington Heights facility that is now a conversion to a delivery station last mile facility. This is a repositioning. It was an R&D building that was occupied by a tenant and we converted to industrial. They were 7.5 years remaining on it. We were able to negotiate a termination fee that was roughly $5 million greater than the actual cost to replicate -- to reposition the asset, and we did so with no downtime. We enhanced our credit and we enhance the credit -- the capital value. I can go in much more detail with you at some later point. Second one is the Southern Company property located in Birmingham. This is leased to a tenant that's the dominant utility in the Southeastern United States. 9 million customers, over 3 states, $70 billion market capitalization, clearly an investment grade company, at a rent that's way below market, and the reason it's way below market is because the tenant invested all the money required to undertake the redevelopment under our guidance. We did this back in 2016. It was a very complicated overhaul of an existing building. The curtain wall was largely replaced excluding the roof, which was recoated with a long-duration coating. We redid the entire HVAC system, and we redid the vertical transportation in the property. We executed on a 28-year lease with an investment-grade tenant and very proud of that facility and the ability for us to execute. The last one is the RH or Restoration Hardware property in Patterson. I could talk to you for an hour about this property. But effectively, it was a build-to-suit. It was a JV. We provide financing, and we did a forward takeout. We ultimately bought the property for an effective price of roughly $100 million. And I think today, it's safe to say that it's worth probably in excess of $150 million. This is the largest warehouse for Restoration Hardware in the United States that serves the entire Western U.S. from Chicago. And they wanted to go here because of access to the Port of Oakland because they wanted to get away from Long Beach and Los Angeles because of the backups and strikes and what have you. This is a very complicated transaction where we actually assisted with a leading developer who had a relationship with a tenant moved to the site, identified the land, cleared the land of some trees that were being farmed on that location, and we're actually adjacent to a couple of other Amazon facilities. So we're much more than just capital allocators, if you will, we're [ dyed-in-the-wool ] real estate people. I'm going to turn it over to Javier and then Javier -- I'll finish up after again. Javier?

Thanks, Mike. I'll take a few minutes now to walk you through our capitalization overview. On the next slide is our balance sheet and liquidity overview. Starting on the left side of the page are our debt balances as of 12/31/22. And as you move to the right in the next 3 columns, we have activity during the quarter, which includes net proceeds from the sale of 3 assets, the payoff of one of our secured loans and projected transaction costs to complete the [ listing ]. And in the third column, the payoff of our 2024 term loan with a draw on our revolver pursuant to the most recent facility amendment that extended our revolver to 2026. In the next column -- shows -- you'll see our adjusted balance is taken yet all of this activity into account. And then finally, you'll see a column there showing the potential redemption of our preferred shares with the final box column on the right showing the pro forma leverage after the preferred redemption. Starting on the top of that column, we see the current outstanding secured debt balance of $521 million with a weighted average maturity of 4.4 years at a weighted average fixed rate of 4.43%, as shown on the right side of the page. Below that, you'll see our outstanding facility balances totaling $950 million with $750 million swap through July of 2025, at a blended LIBOR rate of approximately 2% plus our facility spread. The rate shown on the right side of the page is the effective rate taken into account the swaps. The sum of all of the unsecured and secured debt totaled $1.47 billion and as shown in the line titled total consolidated debt. By the way this balance was over 2 -- this was over $2.5 billion as of June of 2022. And we -- as Mike mentioned, we've paid off over $1 billion in the last 9 months. Net cash and cash equivalents as of 12/31/22 after the adjustments I mentioned earlier, totaled $229 million and offsets total consolidated debt to arrive at net consolidated debt of $1.24 billion highlighted in that light blue row. Below that is our pro rata debt from the workspace JV, which totals $526 million. Note that Peakstone has no guarantee related to the debt and no obligation to contribute capital to the JV. For debt compliance purposes, we exclude the JV debt and associated EBITDA. And for reporting purposes, we show net debt pro rata to normalized EBITDAre and net debt plus preferred to normalized EBITDAre and these calculations include the JV debt and associated EBITDA and is reflected under the caption leverage metrics shown on this page. Starting on the right side of the page, we have our debt maturity schedule as of 12/31/22, as adjusted by the recent -- this amendment extending the maturity of our revolver and the payoff of the 2024 term loan. Only one small loan matures in September of 2023 for $18 million. And in 2024, we have 2 additional small loans that are secured in mature for a total of $31 million. In 2025, we have a $122 million portfolio loan maturing in November of 2025 and a $400 million term loan matured in December of 2025. And in 2026, our revolver matures as well as 1 term loan for $150 million. As we have done in the past, it's our practice to work with our relationship banks well in advance of these maturities to recast and extend our facilities. In 2028, on the same schedule, we have a $250 million secured portfolio loan maturing. And last on the schedule is a portfolio loan maturing in 2029. This portfolio loan, along with the $122 million loan that matures in 2025 and secure properties that are in the other segment that Mike described. Moving on to the right side of the page. Of our total debt, 35% is secured and 65% is unsecured and only 14% of our total debt is floating rate debt, taking into account our swaps. Last on the page, you'll note on the top right-hand side is our total liquidity of approximately $469 million consisting of $229 million cash from the prior page after the potential reduction of the preferred plus $240 million of undrawn capacity on our revolver. We provided our NAV or net asset value building blocks, starting on the left with last quarter annualized cash NOI as a proxy for cash flow for each of the 3 reporting segments. And on the right side, you can see our cash balances, the book value of our JV interest, net assets and liabilities as well as our consolidated debt after the potential redemption of the preferred. You may note that last quarter annualized NOI is below ABR as presented at one of the earlier slides by Mike. We believe that ABR or annualized base rent represents a more normalized cash in NOI as it excludes carry costs for vacant buildings, free rent and other concessions during the quarter. The amount of this -- on this page take into account the recent sales, the small loan payoff, as I mentioned in my prior remarks. With that financial recap, I'll now turn it back over to Mike.

Thank you, Javier. So in my almost 40-year career, I've observed that some of the most compelling investment opportunities seem to have taken root in the most challenging times. I should have known better when I joined The Yarmouth Group in October of 1987, that Black Monday would be the second week on the job. So been there, done that. I want to reiterate the fact that Peakstone provides a very compelling investment opportunity. And in the backdrop of the markets as they are, our portfolio is constructed on a solid foundation. We have great assets in growing markets. We have creditworthy rent paying tenants. Our WALT gives us the best of both worlds for industrial and office and our team is experienced and cycle-tested and able to handle anything that's thrown their way. We are very excited for the future of Peakstone. We, the team, we are not sellers. We invite our current investors to stay the course with us. And we invite new investors to join us along our future. We thank you for your time, and we look forward to spending more time with you in the future. Thank you.