株探米国株
英語
エドガーで原本を確認する
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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________

FORM 10-Q
____________________________________________________
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission File Number: 001-41686
Peakstone Realty Trust
(Exact name of Registrant as specified in its charter)
________________________________________________
Maryland 46-4654479
(State or other jurisdiction of
incorporation or organization)		 (IRS Employer
Identification No.)

1520 E. Grand Ave
El Segundo, California 90245
(Address of principal executive offices)
(310) 606-3200
(Registrant’s telephone number)
N/A
(Former name, former address and former fiscal year, if changed from last report.)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common shares, $0.001 par value per share PKST New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.     Yes x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer   ☐
Non-accelerated filer ☒ Smaller reporting company   ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of November 9, 2023, there were 36,013,175 common shares outstanding.
1
Table of Contents
FORM 10-Q
PEAKSTONE REALTY TRUST
TABLE OF CONTENTS
    Page No.
Item 1. Financial Statements:
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
2
Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
The forward-looking statements contained in this Quarterly Report on Form 10-Q 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 our actual results to differ significantly from those expressed in any forward-looking statement. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: general economic and financial conditions; market volatility; inflation; any potential recession or threat of recession; interest rates; recent and ongoing disruption in the debt and banking markets; occupancy, rent deferrals and the financial condition of our tenants; whether work-from-home trends or other factors will impact the attractiveness of industrial and/or office assets; whether we will be successful in renewing leases as they expire; future financial and operating results, plans, objectives, expectations and intentions; expected sources of financing, including the ability to maintain the commitments under our revolving credit facility, and the availability and attractiveness of the terms of any such financing; legislative and regulatory changes that could adversely affect our business; our future capital expenditures, operating expenses, net income, operating income, cash flow and developments and trends of the real estate industry; whether we will be successful in the pursuit of our business plan, including any dispositions; whether we will succeed in our investment objectives; any fluctuation and/or volatility of the trading price of our common shares; risks associated with our dependence on key personnel whose continued service is not guaranteed; and other factors, including those risks disclosed in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and in our most recent Annual Report on Form 10-K.
While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future performance. The forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes after the date of this Quarterly Report on Form 10-Q, except as required by applicable law. We caution investors not to place undue reliance on any forward-looking statements, which are based only on information currently available to us.
Notice Regarding Non-GAAP Financial Measures. In addition to U.S. GAAP financial measures, this document contains and may refer to certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures and statements of why management believes these measures are useful to investors are included in this Appendix if the reconciliation is not presented on the page in which the measure is published.
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Available Information
We make available on the “SEC Filings” subpage of the investors section of our website (www.pkst.com) free of charge our quarterly reports on Form 10-Q, including this Quarterly Report on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, proxy statements, ownership reports on Forms 3, 4 and 5 and any amendments to those reports as soon as practicable after we electronically file such reports with the Securities and Exchange Commission (the “SEC”). Our electronically filed reports can also be obtained on the SEC’s internet site at http://www.sec.gov. Further, copies of our Code of Business Conduct and Ethics and the charters for the Audit, Compensation, and Nominating and Corporate Governance Committees of our Board of Trustees (the “Board”) are also available on the “Governance - Governance Documents” subpage of the “Investors” section of our website. We use our website (www.pkst.com) as a routine channel of distribution of company information, including press releases, presentations, and supplemental information, and as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our website in addition to following press releases, SEC filings, and public conference calls and webcasts. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.
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PART I. FINANCIAL INFORMATION
PEAKSTONE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except units and share amounts)
September 30, 2023 December 31, 2022
ASSETS
Cash and cash equivalents $ 364,446  $ 233,180 
Restricted cash 5,651  4,764 
Real estate:
Land 244,369  327,408 
Building and improvements 2,042,347  2,631,965 
Tenant origination and absorption cost 418,896  535,889 
Construction in progress 2,197  1,994 
Total real estate 2,707,809  3,497,256 
Less: accumulated depreciation and amortization (546,732) (644,639)
Total real estate, net 2,161,077  2,852,617 
Investments in unconsolidated entity —  178,647 
Intangible assets, net 30,572  33,861 
Deferred rent receivable 63,874  79,572 
Deferred leasing costs, net 17,087  26,507 
Goodwill 94,678  94,678 
Right of use assets 34,175  35,453 
Interest rate swap asset 39,687  41,404 
Other assets 28,962  31,877 
Real estate assets and other assets held for sale, net —  20,816 
Total assets $ 2,840,209  $ 3,633,376 
LIABILITIES AND EQUITY
Debt, net $ 1,442,003  $ 1,485,402 
Distributions payable 8,296  12,402 
Due to related parties 706  1,458 
Intangible liabilities, net 17,104  20,658 
Lease liability 46,368  46,519 
Accrued expenses and other liabilities 80,452  80,802 
Total liabilities 1,594,929  1,647,241 
Commitments and contingencies (Note 13)
Perpetual convertible preferred shares —  125,000 
Noncontrolling interests subject to redemption; zero and 61,788 units as of September 30, 2023 and December 31, 2022, respectively
 —  3,812 
Shareholders’ equity:
Common shares, $0.001 par value; shares authorized, 800,000,000; shares outstanding in the aggregate, 35,997,549 and 35,999,898 as of September 30, 2023 and December 31, 2022, respectively
36  36 
Additional paid-in capital 2,967,635  2,948,600 
Cumulative distributions (1,067,807) (1,036,678)
Accumulated deficit (807,965) (269,926)
Accumulated other comprehensive income 37,434  40,636 
Total shareholders’ equity 1,129,333  1,682,668 
Noncontrolling interests 115,947  174,655 
Total equity 1,245,280  1,857,323 
Total liabilities and equity $ 2,840,209  $ 3,633,376 
See accompanying notes.
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PEAKSTONE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except share and per share amounts)
  Three Months Ended September 30, Nine Months Ended September 30,
  2023 2022 2023 2022
Revenue:
Rental income $ 61,713  $ 101,330  $ 191,226  $ 340,592 
Expenses:
Property operating expense 7,829  13,716  21,858  43,094 
Property tax expense 5,077  9,737  16,444  31,252 
Property management fees 440  823  1,392  2,907 
General and administrative expenses 9,653  9,521  31,411  27,463 
Corporate operating expenses to related parties 257  140  975  1,065 
Depreciation and amortization 25,003  42,628  86,830  155,470 
Real estate impairment provision —  10,697  397,373  86,254 
Total expenses 48,259  87,262  556,283  347,505 
Income before other income (expenses) 13,454  14,068  (365,057) (6,913)
Other income (expenses):
Interest expense (16,126) (24,283) (49,208) (68,315)
Debt breakage cost —  (13,249) —  (13,249)
Other income (expense), net 3,654  (162) 7,613  (588)
Net loss from investment in unconsolidated entity (144,598) —  (176,767) — 
Net gain (loss) from disposition of assets 3,748  (95,513) 24,657  (95,513)
Transaction expenses (80) (234) (24,570) (8,662)
Net loss (139,948) (119,373) (583,332) (193,240)
Distributions to redeemable preferred shareholders —  (2,516) (2,375) (7,547)
Preferred units redemption —  —  (4,970) — 
Net loss attributable to noncontrolling interests 12,353  10,710  52,677  17,643 
Net loss attributable to controlling interests (127,595) (111,179) (538,000) (183,144)
Distributions to redeemable noncontrolling interests attributable to common shareholders —  (45) (36) (133)
Net loss attributable to common shareholders $ (127,595) $ (111,224) $ (538,036) $ (183,277)
Net loss attributable to common shareholders per share, basic and diluted $ (3.55) $ (3.08) $ (14.97) $ (5.08)
Weighted average number of common shares outstanding, basic and diluted 35,975,483  36,081,363  35,965,751  36,077,614 
Cash distributions declared per common share $ 0.23  $ 0.80  $ 0.87  $ 2.37 
See accompanying notes.
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PEAKSTONE REALTY TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited; in thousands)
Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Net loss $ (139,948) $ (119,373) $ (583,332) $ (193,240)
Other comprehensive income:
Equity in other comprehensive (loss) income of unconsolidated joint venture (1,797) —  (1,880) — 
Change in fair value of swap agreements (1,327) 20,851  (1,622) 64,471 
Total comprehensive loss (143,072) (98,522) (586,834) (128,769)
Distributions to redeemable preferred shareholders —  (2,516) (2,375) (7,547)
Preferred units redemption charge —  —  (4,970) — 
Distributions to redeemable noncontrolling interests attributable to common shareholders —  (44) (36) (133)
Comprehensive loss attributable to noncontrolling interests 12,629  8,878  52,976  11,977 
Comprehensive loss attributable to common shareholders $ (130,443) $ (92,204) $ (541,239) $ (124,472)
See accompanying notes.
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PEAKSTONE REALTY TRUST
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in thousands, except share data)
Common Shares Additional
Paid-In
Capital		 Cumulative
Distributions		 Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total
Shareholders Equity		 Non-
controlling
Interests		 Total
Equity
Shares Amount
Balance as of December 31, 2022 35,999,898  $ 36  $ 2,948,600  $ (1,036,678) $ (269,926) $ 40,636  $ 1,682,668  $ 174,655  $ 1,857,323 
Deferred equity compensation 13,620  —  2,556  —  —  —  2,556  —  2,556 
Shares acquired to satisfy employee tax withholding requirements on vesting RSUs (5,700) —  (381) —  —  —  (381) —  (381)
Cash distributions to common shareholders —  —  —  (14,873) —  —  (14,873) —  (14,873)
Repurchase of common shares (896) —  (60) —  —  —  (60) —  (60)
Reclass of noncontrolling interest subject to redemption —  —  —  —  —  —  —  10  10 
Distributions to noncontrolling interest —  —  —  —  —  —  —  (1,435) (1,435)
Distributions to noncontrolling interests subject to redemption —  —  —  —  —  —  —  (2) (2)
Offering costs —  —  (9) —  —  —  (9) —  (9)
Net income —  —  —  —  6,033  —  6,033  585  6,618 
Other comprehensive loss —  —  —  —  —  (6,789) (6,789) (656) (7,445)
Balance as of March 31, 2023 36,006,922  $ 36  $ 2,950,706  $ (1,051,551) $ (263,893) $ 33,847  $ 1,669,145  $ 173,157  $ 1,842,302 
Deferred equity compensation 33,092  —  4,034  —  —  —  4,034  —  4,034 
Shares acquired to satisfy employee tax withholding requirements on vesting RSUs (49,738) —  (1,069) —  —  —  (1,069) —  (1,069)
Cash distributions to common shareholders —  —  —  (8,117) —  —  (8,117) —  (8,117)
Reclass of noncontrolling interest subject to redemption —  —  —  —  —  —  —  —  — 
Share class conversion (69,988) —  —  —  —  —  —  —  — 
Exchange of noncontrolling interests 4,188  —  370  —  —  —  370  (370) — 
Reclass of redeemable non-controlling interest —  —  —  —  —  —  —  3,801  3,801 
Distributions to noncontrolling interest —  —  —  —  —  —  —  (776) (776)
Distributions to noncontrolling interests subject to redemption —  —  —  —  —  —  —  (1) (1)
Offering costs on preferred units —  —  4,970  —  —  —  4,970  —  4,970 
Net loss —  —  —  —  (416,476) —  (416,476) (40,909) (457,385)
Other comprehensive income —  —  —  —  —  6,435  6,435  632  7,067 
Balance as of June 30, 2023 35,924,476  $ 36  $ 2,959,011  $ (1,059,668) $ (680,369) $ 40,282  $ 1,259,292  $ 135,534  $ 1,394,826 
Deferred equity compensation —  —  2,444  —  —  —  2,444  —  2,444 
Shares acquired to satisfy employee tax withholding requirements on vesting RSUs —  —  —  —  —  —  —  —  — 
Cash distributions to common shareholders —  —  —  (8,139) —  —  (8,139) —  (8,139)
Share class conversion —  —  —  —  —  —  —  —  — 
Exchange of noncontrolling interests 73,073  —  6,180  —  —  —  6,180  (6,180) — 
Distributions to noncontrolling interest —  —  —  —  —  —  —  (778) (778)
Net loss —  —  —  —  (127,596) —  (127,596) (12,353) (139,949)
Other comprehensive loss —  —  —  —  —  (2,848) (2,848) (276) (3,124)
Balance as of September 30, 2023 35,997,549  $ 36  $ 2,967,635  $ (1,067,807) $ (807,965) $ 37,434  $ 1,129,333  $ 115,947  $ 1,245,280 
See accompanying notes.
  Common Shares Additional
Paid-In
Capital		 Cumulative
Distributions		 Accumulated Income Accumulated Other Comprehensive Loss Total
Shareholders Equity		 Non-
controlling
Interests		 Total
Equity
Shares Amount
Balance as of December 31, 2021 36,070,902  $ 36  $ 2,951,972  $ (922,562) $ 141,983  $ (18,708) $ 2,153,010  $ 218,653  $ 2,371,663 
Deferred equity compensation 14,248  —  1,757  —  —  —  1,757  —  1,757 
Shares acquired to satisfy employee tax withholding requirements on vesting RSUs (5,621) —  (459) —  —  —  (459) —  (459)
Cash distributions to common shareholders —  —  —  (28,073) —  —  (28,073) —  (28,073)
Reversal of shares for distribution reinvestment plan (2) —  —  —  —  —  —  —  — 
Reclass of noncontrolling interest subject to redemption —  —  —  —  —  —  —  99  99 
Distributions to noncontrolling interest —  —  —  —  —  —  —  (2,698) (2,698)
Distributions to noncontrolling interests subject to redemption —  —  —  —  —  —  —  (4) (4)
Offering costs —  —  (14) —  —  —  (14) —  (14)
Net income —  —  —  —  151  —  151  19  170 
Other comprehensive income —  —  —  —  —  30,912  30,912  2,979  33,891 
Balance of March 31, 2022 36,079,527  $ 36  $ 2,953,256  $ (950,635) $ 142,134  $ 12,204  $ 2,157,284  $ 219,048  $ 2,376,332 
Deferred equity compensation 2,756  —  1,685  —  —  —  1,685  —  1,685 
Cash distributions to common stockholders —  —  —  (28,393) —  —  (28,393) —  (28,393)
Distributions to noncontrolling interest —  —  —  —  —  —  —  (2,728) (2,728)
Distributions to noncontrolling interests subject to redemption —  —  —  —  —  —  —  (4) (4)
Offering costs —  —  (9) —  —  —  (9) —  (9)
Net loss —  —  —  —  (72,207) —  (72,207) (6,952) (79,159)
Other comprehensive income —  —  —  —  —  8,874  8,874  855  9,729 
Balance as of June 30, 2022 36,082,283  $ 36  $ 2,954,932  $ (979,028) $ 69,927  $ 21,078  $ 2,067,234  $ 210,219  $ 2,277,453 
Deferred equity compensation —  —  2,698  —  —  —  2,698  —  2,698 
Cash distributions to common stockholders —  —  —  (28,929) —  —  (28,929) —  (28,929)
Repurchase of common stock (74,850) —  (4,999) —  —  —  (4,999) —  (4,999)
Reclass of noncontrolling interest subject to redemption —  —  —  —  —  —  —  857  857 
Distributions to noncontrolling interest —  —  —  —  —  —  —  (2,758) (2,758)
Distributions to noncontrolling interests subject to redemption —  —  —  —  —  —  —  (4) (4)
Offering costs —  —  (13) —  —  —  (13) —  (13)
Net income —  —  —  —  (111,220) —  (111,220) (10,710) (121,930)
Other comprehensive income —  —  —  —  —  19,019  19,019  1,832  20,851 
Balance as of September 30, 2022 36,007,433  $ 36  $ 2,952,618  $ (1,007,957) $ (41,293) $ 40,097  $ 1,943,790  $ 199,436  $ 2,143,226 
See accompanying notes.
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PEAKSTONE REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
Nine Months Ended September 30,
  2023 2022
Operating Activities:
Net loss $ (583,332) $ (193,240)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation of building and building improvements 55,943  90,855 
Amortization of leasing costs and intangibles, including ground leasehold interests and leasing costs 32,005  65,733 
Amortization of below market leases, net (834) (1,282)
Amortization of deferred financing costs and debt premium 2,875  4,628 
Amortization of swap interest 94  94 
Deferred rent (6,453) (8,584)
Net (loss) gain from sale of depreciable operating properties (24,657) 95,513 
Net loss from investment in unconsolidated entity 176,767  — 
Gain from investments 52  180 
Impairment provision 397,373  86,254 
Share-based compensation 9,034  6,141 
Change in operating assets and liabilities:
Deferred leasing costs and other assets (4,491) (1,975)
Accrued expenses and other liabilities 5,029  (8,257)
Due to related parties, net (635) (712)
Net cash provided by operating activities 58,770  135,348 
Investing Activities:
Proceeds from disposition of properties 299,107  970,376 
Restricted reserves —  (337)
Payments for construction in progress (9,102) (13,715)
Purchase of investments (209) (221)
Investment in unconsolidated entities —  (34,558)
Net cash provided by investing activities 289,796  921,545 
Financing Activities:
Proceeds from borrowings - Credit Facility 400,000  — 
Principal payoff of secured indebtedness - Mortgage Debt (36,128) (469,777)
Principal pay down of indebtedness - Revolving Credit Facility —  (373,500)
Principal payoff of indebtedness - Term Loan (400,000) (200,000)
Principal amortization payments on secured indebtedness (5,449) (6,848)
Deferred financing costs (2,955) (2,724)
Offering costs (9) (35)
Redemption of preferred units (125,000) — 
Repurchase of common shares (4,443) — 
Distributions to noncontrolling interests (3,196) (8,360)
Distributions to preferred units subject to redemption (4,891) (7,547)
Distributions to common shareholders (32,668) (85,674)
Financing lease payment (224) (226)
Repurchase of common shares to satisfy employee tax withholding requirements (1,450) (459)
Net cash used in financing activities (216,413) (1,155,150)
Net increase in cash, cash equivalents and restricted cash 132,153  (98,257)
Cash, cash equivalents and restricted cash at the beginning of the period 237,944  186,140 
Cash, cash equivalents and restricted cash at the end of the period $ 370,097  $ 87,883 
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Supplemental Disclosures of Significant Non-Cash Transactions:
Decrease (increase) in fair value swap agreement $ (1,622) $ 64,471 
Accrued tenant obligations $ 551  $ 3,294 
Distributions payable to common shareholders $ 8,139  $ 9,386 
Distributions payable to noncontrolling interests $ 778  $ 915 
Exchange of noncontrolling interest to common stock $ 6,550  $ — 
Common share redemptions funded subsequent to period-end $ —  $ (5,000)
Operating lease right-of-use assets obtained in exchange for lease liabilities $ —  $ 1,358 
Accrued for construction in progress $ 1,173  $ 122 
Investment in unconsolidated entity $ —  $ 159,927 
Contribution to unconsolidated joint venture $ 1,960  $ — 
Shortfall Loan related to unconsolidated joint venture $ (1,960) $ — 
See accompanying notes.
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PEAKSTONE REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)

1.     Organization
Peakstone Realty Trust (“PKST” or the “Company”) is an internally managed, publicly traded real estate investment trust (“REIT”) that owns and operates a high-quality, newer-vintage portfolio of predominantly single-tenant industrial and office properties. The Company’s fiscal year-end is December 31.
PKST OP, L.P., our operating partnership (the “Operating Partnership”), owns directly and indirectly all of the Company’s assets. As of September 30, 2023, the Company owned approximately 91.2% of the outstanding common units of limited partnership interest in the Operating Partnership (“OP Units”).
As of September 30, 2023, the Company’s wholly-owned portfolio consisted of 73 properties located in 24 states with a weighted average remaining lease term of approximately 6.3 years.

2.     Basis of Presentation and Summary of Significant Accounting Policies
There have been no significant changes to the Company’s accounting policies since the Company filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2022. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”).
The accompanying unaudited consolidated financial statements of the Company are prepared by management on the accrual basis of accounting and in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and in conjunction with rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited consolidated financial statements include accounts and related adjustments, which are, in the opinion of management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim period. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. In addition, see the risk factors identified in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
The consolidated financial statements of the Company include all accounts of the Company, the Operating Partnership, and its consolidated subsidiaries. Intercompany transactions are shown on the consolidated statements if and to the extent to required pursuant to GAAP. With the exception of the Office Joint Venture (defined below), each property-owning entity is a wholly-owned subsidiary which is a special purpose entity (“SPE”). If a property is separately financed (i.e., not part of the borrowing base under our credit facility or a collateralized loan pool), the income from such property is generally not available to satisfy the debts or obligations of any other entity.
Use of Estimates
The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.
Per Share Data
The Company reports earnings per share for the period as (1) basic earnings per share computed by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period, and (2) diluted earnings per share computed by dividing net income (loss) attributable to common shareholders by the weighted
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PEAKSTONE REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
average number of outstanding common shares determined in the basic earnings per share computation plus the potential effect of any dilutive securities (e.g., OP Units and preferred shares, when considered convertible for purposes of computing diluted earnings per share). The effect of including OP Units and unvested time-based restricted share units using the treasury stock method was excluded from our calculation of weighted average common shares outstanding for diluted earnings per share, as the inclusion would have been anti-dilutive for the three and nine months ended September 30, 2023 and September 30, 2022. Total excluded shares related to the OP Units and unvested time-based restricted share units were 3,879,641 and 3,745,445 for the three and nine months ended September 30, 2023, respectively. Total excluded shares related to the OP Units and unvested time-based restricted share units were 3,785,135 and 3,755,708 for the three and nine months ended September 30, 2022, respectively.
Restricted Cash
As required by certain lease provisions or certain lenders in conjunction with an acquisition or debt financing, the Company assumed or funded reserves for specific property improvements and deferred maintenance, re-leasing costs, and taxes and insurance, which are included on the consolidated balance sheets as restricted cash. Additionally, an ongoing replacement reserve is funded by certain tenants pursuant to such tenant’s respective lease as follows:
Balance as of
September 30, 2023 December 31, 2022
Cash reserves $ 1,036  $ 4,262 
Restricted lockbox 4,615  502 
Total restricted cash $ 5,651  $ 4,764 

Impairment of Real Estate and Related Intangible Assets

In accordance with the provisions of the Impairment or Disposal of Long-Lived Assets Subsections of ASC 360, the Company assesses the carrying values of our respective long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable.

Recoverability of real estate assets is measured by comparison of the carrying amount of the asset to the estimated future undiscounted cash flows. To review real estate assets for recoverability, the Company considers current market conditions as well as the Company's intent with respect to holding or disposing of the asset. The intent with regard to the underlying assets might change as market conditions and other factors change. Fair value is determined through various valuation techniques, including discounted cash flow models, applying a capitalization rate to estimated net operating income of a property, and quoted market values and third party appraisals, where considered necessary. The use of projected future cash flows is based on assumptions that are consistent with estimates of future expectations and the strategic plan used to manage the Company's underlying business. If the Company’s analysis indicates that the carrying value of the real estate asset is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment charge for the amount by which the carrying value exceeds the current estimated fair value of the real estate property.

Projections of expected future undiscounted cash flows require management to estimate future market rental income amounts subsequent to the expiration of current lease agreements, property operating expenses, discount and capitalization rates, the number of months it takes to re-lease the property, and the number of years the property is held for investment. See Note 3, Real Estate, for further details.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
Impairment of Investments in Unconsolidated Entities
On a quarterly basis, the Company evaluates its equity method investment in an unconsolidated entity for a potential other-than-temporary impairment (“OTTI”). If the Company’s investment is other than temporarily impaired, it determines the fair value of its investment and records the impairment measured as the difference between its carrying amount and fair value. The impairment is recorded to net earnings or loss from investment in unconsolidated entities on the consolidated statement of operations. See Note 4, Investment in Unconsolidated Entities, for further details.
Segment Information
ASC 280, Segment Reporting, establishes standards for reporting financial and descriptive information about a public entity’s reportable segments. The Company internally evaluates all of the properties and interests therein as three reportable segments: Industrial, Office, and Other. Refer to Note 14, Segment Reporting, for further details.
Income Taxes
The Company has elected to be taxed as a REIT under the Internal Revenue Code (“Code”). To qualify as a REIT, the Company must meet certain organizational and operational requirements. The Company intends to adhere to these requirements and maintain its REIT status for the current year and subsequent years. As a REIT, the Company generally will not be subject to federal income taxes on taxable income that is distributed to shareholders. However, the Company may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed taxable income, if any. If the Company fails to qualify as a REIT in any taxable year, the Company will then be subject to federal income taxes on the taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect net income and net cash available for distribution to shareholders. As of September 30, 2023, the Company satisfied the REIT requirements and distributed all of its taxable income.
Pursuant to the Code, the Company has elected to treat Griffin Capital Essential Asset TRS, Inc. as a taxable REIT subsidiary (a “TRS”). In general, the TRS may perform non-customary services for the Company’s tenants and may engage in any real estate or non-real estate-related business. The TRS will be subject to corporate federal and state income tax.
Goodwill
Goodwill represents the excess of consideration paid over the fair value of underlying identifiable net assets of business acquired. The Company’s goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the goodwill might be impaired. On October 1 of each year, the Company performs a qualitative analysis to determine whether an impairment of goodwill exists prior to quantitatively determining the fair value of the reporting units in step one of the impairment test. If a quantitative assessment is deemed necessary, and to the extent the carrying amount of the reporting unit’s allocated goodwill exceeds the unit’s fair value, the Company recognizes an impairment of goodwill for the excess up to the amount of goodwill of that reporting unit.
Recently Issued Accounting Pronouncements
Changes to GAAP are established by the FASB in the form of an Accounting Standards Update (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. Other than the ASUs discussed below, the FASB has not recently issued any other ASUs that the Company expects to be applicable and have a material impact on the Company's financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
Adoption of New Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides temporary optional guidance that provides transition relief for reference rate reform, including optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform if certain criteria are met. ASU 2020-04 was effective upon issuance, and the provisions generally can be applied prospectively as of January 1, 2020 through December 31, 2023. During the first quarter of 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. The Company has subsequently elected to apply additional expedients related to contract modifications, changes in critical terms, and updates to the designated hedged risk(s) as qualifying changes have been made to applicable debt and anticipate to be made to derivative contracts. Application of these expedients preserves the presentation of derivatives and debt contracts consistent with past presentation. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which refines the scope of Topic 848 and clarifies some of its guidance. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848) to defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

3.     Real Estate
The following table summarizes the Company’s gross investment in real estate as of:
September 30, 2023 December 31, 2022
Land $ 244,369  $ 327,408 
Building and improvements 2,042,347  2,631,965 
Tenant origination and absorption cost 418,896  535,889 
Construction in progress 2,197  1,994 
Total real estate $ 2,707,809  $ 3,497,256 
Acquisitions of Real Estate
The Company had no acquisitions of real estate during the three and nine month periods ended September 30, 2023.
Dispositions of Real Estate
For the nine months ended September 30, 2023, the Company sold nine properties for gross disposition proceeds of approximately $308.7 million. The Company recognized a net gain of approximately $24.7 million, detailed in the table below:
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
Sale Date Segment Location Gross Proceeds Gain (Loss)
Three Months Ended March 31, 2023
January 6, 2023 Industrial Irvine, CA $ 40,000  $ 18,690 
February 16, 2023 Industrial Clinton, SC 19,300  7,109 
March 2, 2023 Office Herndon, VA 110,300  4,811 
Total 169,600  30,610 
Three Months Ended June 30, 2023
May 9, 2023 Other Lone Tree, CO 5,600  (301)
May 15, 2023 Office Houston, TX 62,300  (5,000)
June 8, 2023 Other Greenwood Village, CO 5,000  (5,200)
June 30, 2023 Office Andover, MA 23,700  100 
June 30, 2023 Office Andover, MA 34,200  700 
Total 130,800  (9,701)
Three Months Ended September 30, 2023
August 16, 2023 Other Rancho Cordova, CA 8,300  3,748 
Total 8,300  3,748 
Total for the Nine Months Ended September 30, 2023 $ 308,700  $ 24,657 
Real Estate Impairment
During the nine months ended September 30, 2023, in connection with the preparation and review of the financial statements, the Company recorded a real estate impairment provision of approximately $397.4 million on 16 properties, consisting of eight Office properties for $196.1 million and eight Other properties for $201.2 million. The impaired properties are located in the Southwest, Northeast, West, and Southeast regions of the United States. The impairment resulted from changes in the second quarter related to anticipated hold periods, estimated selling prices, and potential vacancies that impacted the recoverability of these assets. In determining the fair value of the properties, the Company considered Level 3 inputs. See Note 8, Fair Value Measurements, for details.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
Real Estate and Acquired Lease Intangibles
The following table summarizes the Company’s allocation of acquired and contributed real estate asset value to in-place lease valuation, tenant origination and absorption cost, and other intangibles, as of September 30, 2023 and December 31, 2022:
September 30, 2023 December 31, 2022
In-place lease valuation (above market) $ 23,042  $ 28,619 
In-place lease valuation (above market) - accumulated amortization (16,394) (19,799)
In-place lease valuation (above market), net 6,648  8,820 
Intangibles - other 32,028  32,028 
Intangibles - other - accumulated amortization (8,104) (6,987)
Intangibles - other, net 23,924  25,041 
Intangible assets, net $ 30,572  $ 33,861 
In-place lease valuation (below market) $ (44,840) $ (48,686)
Land leasehold interest (above market) (3,072) (3,072)
Intangibles - other (above market) (205) (258)
In-place lease valuation & land leasehold interest - accumulated amortization 31,013  31,358 
Intangible liabilities, net $ (17,104) $ (20,658)
Tenant origination and absorption cost $ 418,896  $ 535,889 
Tenant origination and absorption cost - accumulated amortization (224,061) (282,383)
Tenant origination and absorption cost, net $ 194,835  $ 253,506 
The amortization of the intangible assets and other leasing costs for the respective periods is as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Above and below market leases, net $ (421) $ (436) $ (834) $ (1,282)
Tenant origination and absorption cost $ 8,261  $ 15,427  $ 29,651  $ 60,826 
Ground lease amortization (below market) $ (98) $ (95) $ (290) $ (274)
Other leasing costs amortization $ 489  $ 1,028  $ 1,527  $ 4,064 

4.    Investments in Unconsolidated Entities
Office Joint Venture
On August 26, 2022, the Company completed the sale of a majority interest in a 41-property office portfolio (the “Initial JV Office Portfolio”) for a sale price of approximately $1.1 billion. On December 27, 2022, the Company completed a companion sale of a majority interest in a five-property office portfolio (“Companion JV Office Portfolio”, and together with the Initial JV Office Portfolio, the “JV Office Portfolio”) for a sale price of approximately $170.4 million.
In connection with the sale of the JV Office Portfolio, the Company, through its subsidiary GRT VAO OP, LLC (“GRT VAO Sub”), invested a combined $184.2 million for a 49% interest in a joint venture (the “Office Joint Venture”), through which it owns indirectly an approximate 49% interest in the JV Office Portfolio.
The Office Joint Venture is managed and accounted for by RVMC Capital LLC, an affiliate of Workspace Property Trust (the “Managing Member”). The Managing Member of the Office Joint Venture has general authority to manage the operations of the Office Joint Venture. The Managing Member also has day-to-day management authority over the Office Joint Venture,
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
subject to certain major decision rights held by another minority interest holder. The Managing Member may be removed from its management positions upon the occurrence of specified events.
GRT VAO Sub has approval rights over certain major decisions regarding actions by the Office Joint Venture, including certain fundamental decisions that the Office Joint Venture may approve. GRT VAO Sub’s obligation is generally limited to its initial contribution. GRT VAO Sub is not obligated to make any additional capital contributions beyond its initial capital contribution.
The Office Joint Venture, through various subsidiary borrowers, obtained acquisition financing for the Initial JV Office Portfolio comprised of (a) a $736.0 million mortgage loan (the “Initial JV Office Mortgage Loan”), and (b) a $194.8 million mezzanine loan (the “JV Office Mezzanine Loan”, and together with the JV Office Initial Mortgage Loan, the “Initial Office JV Loans”). The initial maturity date of the Initial Office JV Loans was September 9, 2023, subject to two, one-year extension options. The interest rates during the initial term of the Initial JV Office Mortgage Loan and the JV Office Mezzanine Loan were Term SOFR (1-month) (with a 3% interest rate cap on SOFR) + 3.635% (subject to a 0.25% increase during each extension term) and Term SOFR (1-month) with a 3% interest rate cap on SOFR + 6.574% (subject to a 0.25% increase during each extension term), respectively. The Office Joint Venture paid approximately $6.7 million for the interest rate caps.

During the quarter ended September 30, 2023, the Office Joint Venture exercised the first of two one-year extension options, extending the maturity date of the Initial Office JV Loans to September 9, 2024. The interest rates during the one-year extension terms of the Initial JV Office Mortgage Loan and the JV Office Mezzanine Loan are Term SOFR (1-month) (with a 4.4% interest rate cap on SOFR) + 3.885% and Term SOFR (1-month) + 6.824%, respectively. The Office Joint Venture paid approximately $9.6 million for the interest rate caps and funded a portion of the purchase by calling capital from its members (the “Capital Call”). GRT VAO Sub’s portion of the Capital Call was approximately $2.0 million. GRT VAO Sub is not obligated to and did not fund any amount of the Capital Call. In accordance with the Office Joint Venture’s governing documents, another member of the Office Joint Venture (the “Funding Member”) made an interest bearing loan to GRT VAO Sub in the principal amount of GRT VAO Sub’s portion of the Capital Call (the “Shortfall Loan”), the proceeds of which Shortfall Loan were used to fund GRT VAO Sub’s portion of the Capital Call. The Shortfall Loan is non-recourse to GRT VAO Sub and its affiliates and shall be repaid to the Funding Member solely out of (i) any distributions to which GRT VAO Sub is otherwise entitled under the Office Joint Venture’s governing documents and (ii) the proceeds from certain transfers which results in GRT VAO Sub and its affiliates no longer owning a direct or indirect equity interest in the Office Joint Venture.

The Office Joint Venture, through various subsidiary borrowers, also obtained acquisition financing for the Companion JV Office Portfolio, comprised of a $142.1 million mortgage loan, having an initial maturity date of January 6, 2024 (subject to two, one-year extension options), and an interest rate during the initial term of Term SOFR (1-month with a 4% interest rate cap on SOFR) + 4.25% (subject to a 0.25% increase during each extension term) (the “Companion Office JV Loan”, and together with the Initial Office JV Loans, the “Office JV Loans”).
The Company has not guaranteed any debt obligations and has not otherwise committed to providing financial support in respect of the Office JV Loans. In addition, the Company does not anticipate receiving any near-term cash flow distributions from the assets that are part of the JV Office Portfolio. Considering the Company’s limited economic exposure to the Office Joint Venture, the Company excludes interests in the assets in the Office Joint Venture from operating data.
The interests discussed above are deemed to be variable interests in variable interest entities ("VIE") and based on an evaluation of the variable interests against the criteria for consolidation, the Company determined that it is not the primary beneficiary of the investment, as the Company does not have power to direct the activities of the entities that most significantly affect their performance. As such, the interest in the VIE is recorded using the equity method of accounting in the accompanying consolidated financial statements. Under the equity method, the investments in the unconsolidated entities are stated at cost and adjusted for the Company’s share of net earnings or losses and reduced by distributions. Equity in earnings of real estate ventures is generally recognized based on the allocation of cash distributions upon liquidation of the investment at book value in accordance with the operating agreements. The Company records the net earnings or losses on investment on a one quarter lag. The Company's maximum exposure to losses associated with its unconsolidated investments is primarily limited to its initial contribution in the investments.
Impairment of Investment in Office Joint Venture
During the three months ended September 30, 2023, the Company recorded an OTTI of approximately $129.3 million for its investment in the Office Joint Venture, which represents a complete write-off of the Company’s remaining investment
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
balance. The impairment resulted from a decline in the fair value of the investment primarily due to increased future loan extension risk impacting the Company’s expectations on the recoverability of the investment. The impairment was recorded to “Net loss from investment in unconsolidated entity” on the consolidated statement of operations.

Summary of Investment in Office Joint Venture

The table below summarizes the Company’s investment in the unconsolidated Office Joint Venture, which the Company determined is related to corporate activities and is excluded from its segment reporting:
Office Joint Venture
Investment in Office Joint Venture
Balance at December 31, 2022 $ 178,647 
Contributions(1)
 1,960 
Shortfall Loan(1)
 (1,960)
Company’s share of net loss (48,659)
Company’s share of other comprehensive loss (654)
Impairment provision (2)
 (129,334)
Balance at September 30, 2023
 $ — 
(1)Amounts represent the deemed contribution and related Shortfall Loan between the Company’s subsidiary, GRT VAO Sub, and the Funding Member of the Office Joint Venture for the Capital Call. Refer to details above.
(2)Amount represents the impairment of the Company’s investment in the Office Joint Venture of $129.3 million. As of September 30, 2023, the Company also had a cumulative proportionate share of the Office Joint Venture’s accumulated other comprehensive income (“AOCI”) of $1.2 million, which was also written off in conjunction with the investment balance being impaired to zero. The write-off of the AOCI resulted in recognition of income, which was also recorded to “Net loss from investment in unconsolidated entity” for a total net loss of $128.1 million during the period.
The table below presents the condensed balance sheet for the unconsolidated Office Joint Venture:
September 30, 2023(1)
December 31, 2022 (2)
Assets
Real estate properties, net $ 1,099,915  $ 981,354 
Other assets 299,847  240,447 
Total Assets $ 1,399,762  $ 1,221,801 
Liabilities
Mortgages payable, net $ 1,051,178  $ 856,765 
Other liabilities 86,358  52,018 
Total Liabilities $ 1,137,536  $ 908,783 
(1)Amounts are as of June 30, 2023 due to the recording of the Office Joint Venture’s activity on a one quarter lag.
(2)Amounts are as of September 30, 2022 due to the recording of the Office Joint Venture’s activity on a one quarter lag.
The table below presents condensed statements of operations of the unconsolidated Office Joint Venture:
Three Months Ended September 30, Nine Months Ended September 30,
2023 (1)
2022 (2)
2023 (3)
2022 (2)
Total revenues $ 50,889  $ —  $ 145,595  $ — 
Expenses:
Operating expenses (16,838) —  (49,271) — 
General and administrative (1,699) —  (5,354) — 
Depreciation and amortization (17,074) —  (50,259) — 
Interest expense (51,721) —  (144,703) — 
Other expenses, net 2,782  —  4,665  — 
Total Expenses (84,550) —  (244,922) — 
Net Loss $ (33,661) $ —  $ (99,327) $ — 
(1)Amounts represent the period of April 1, 2023 to June 30, 2023 due to the recording of the Office Joint Venture’s activity on a one quarter lag.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
(2)No activity reported for the three and nine months ended September 30, 2022 as the Office Joint Venture was formed in August 2022 and reports activity on a one quarter lag.
(3)Amounts represent the period of October 1, 2022 to June 30, 2023 due to the recording of the Office Joint Venture’s activity on a one quarter lag.

5.     Debt
As of September 30, 2023 and December 31, 2022, the Company’s consolidated debt consisted of the following:
September 30, 2023 December 31, 2022
Contractual Interest 
Rate (1)
Loan
Maturity(2)
Effective Interest Rate(3)
Highway 94 Mortgage Loan $ 11,970  $ 12,740  3.75% August 2024 5.04%
Pepsi Bottling Ventures Mortgage Loan 17,540  17,836  3.69% October 2024 3.93%
AIG Loan II 120,556  122,328  4.15% November 2025 4.99%
BOA II Loan 250,000  250,000  4.32% May 2028 4.14%
AIG Loan 98,158  99,794  4.96% February 2029 5.09%
HealthSpring Mortgage Loan —  19,107  —% (4) — —%
Samsonite Mortgage Loan —  17,998  —% (5) — —%
Total Mortgage Debt 498,224  539,803 
Revolving Credit Facility 400,000  — 
SOF Rate + 1.30%
 (6) January 2026 (8) 6.95%
2025 Term Loan 400,000  400,000 
SOF Rate + 1.25%
 (6) December 2025 6.91%
2026 Term Loan 150,000  150,000 
SOF Rate + 1.25%
 (6) April 2026 6.75%
2024 Term Loan —  400,000  —% (7) — —%
Total Debt 1,448,224  1,489,803 
Unamortized Deferred Financing Costs and Discounts, net (6,221) (4,401)
Total Debt, net $ 1,442,003  $ 1,485,402 
(1)Including the effect of the interest rate swap agreements with a total notional amount of $750.0 million, the weighted average interest rate as of September 30, 2023 was 4.16% for both the Company’s fixed-rate and variable-rate debt combined and 3.73% for the Company’s fixed-rate debt only.
(2)Reflects the maturity dates as of September 30, 2023.
(3)Reflects the effective interest rate as of September 30, 2023 and includes the effect of amortization of discounts/premiums and deferred financing costs, but excludes the effect of the interest rate swaps.
(4)HealthSpring Mortgage Loan was paid off in full in March 2023 and had a contractual interest rate of 4.18%.
(5)Samsonite Mortgage Loan was paid off in full in September 2023 and had a contractual interest rate of 6.08%.
(6)The applicable SOFR as of September 30, 2023 (assuming a five day look-back per the credit facility agreement) was 5.31%, which excludes a 0.1% per annum index adjustment as required per the Fifth Amendment to the Second Amended and Restated Credit Agreement.
(7)2024 Term Loan was paid off in full in March 2023 using proceeds drawn from the Revolving Credit Facility, and had a contractual interest rate of SOFR + 1.40%.
(8)The Revolving Credit Facility has a maturity date of December 30, 2023 with a series of extension options to January 31, 2026. See discussion below.

Second Amended and Restated Credit Agreement
Pursuant to the Second Amended and Restated Credit Agreement dated as of April 30, 2019 (as amended by the First Amendment to the Second Amended and Restated Credit Agreement dated as of October 1, 2020 (the “First Amendment”), the Second Amendment to the Second Amended and Restated Credit Agreement dated as of December 18, 2020 (the “Second Amendment”), the Third Amendment to the Second Amended and Restated Credit Agreement dated as of July 14, 2021 (the “Third Amendment”), the Fourth Amendment to the Second Amended and Restated Credit Agreement dated as of April 28, 2022 (the “Fourth Amendment”), the Fifth Amendment to the Second Amended and Restated Credit Agreement dated as of September 28, 2022 (the “Fifth Amendment”), the Sixth Amendment to the Second Amended and Restated Credit Agreement dated as of November 30, 2022 (the “Sixth Amendment”), and the Seventh Amendment to the Amended and Restated Credit Agreement dated as of March 21, 2023 (the “Seventh Amendment”), and together with the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, and the Sixth Amendment, the “Second Amended and Restated Credit Agreement”)), with KeyBank National Association (“KeyBank”) as administrative agent, and a syndicate of lenders, the Operating Partnership, as the borrower, has been provided with a $1.3 billion credit facility consisting of a $750.0 million senior unsecured revolving credit facility (the “Revolving Credit Facility”) maturing in December 2023 (with a series of extension options to January 31, 2026, subject to the satisfaction of certain customary conditions), a
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
$400.0 million senior unsecured term loan maturing in December 2025 (the “$400M 2025 5-Year Term Loan”), and a $150.0 million senior unsecured term loan maturing in April 2026 (the “$150M 2026 7-Year Term Loan”) and, together with the Revolving Credit Facility and the $400M 2025 5-Year Term Loan, the “KeyBank Loans”). The Second Amended and Restated Credit Agreement also provides the option, subject to obtaining additional commitments from lenders and certain other customary conditions, to increase the commitments under the Revolving Credit Facility, to increase the existing term loans and/or incur new term loans by up to an additional $1.0 billion in the aggregate. As of September 30, 2023, the available undrawn capacity under the Revolving Credit Facility was $152.1 million.
The Second Amended and Restated Credit Agreement requires that the Operating Partnership maintain a pool of unencumbered real properties (each a “Pool Property” and collectively the “Pool Properties”) that meet certain requirements contained in the Second Amended and Restated Credit Agreement. The Second Amended and Restated Credit Agreement sets forth certain covenants relating to the Pool Properties, including, without limitation:
•there must be no less than 15 Pool Properties at any time;
•no greater than 15% of the aggregate pool value may be contributed by a single Pool Property or tenant;
•no greater than 15% of the aggregate pool value may be contributed by Pool Properties subject to ground leases;
•no greater than 20% of the aggregate pool value may be contributed by Pool Properties which are under development or assets under renovation;
•the minimum aggregate leasing percentage of all Pool Properties must be no less than 90%; and
•other limitations as determined by KeyBank upon further due diligence of the Pool Properties.
Borrowing availability under the Revolving Credit Facility is limited to the lesser of the maximum amount of all loans outstanding that would result in (i) an unsecured leverage ratio of no greater than 60%, or (ii) an unsecured interest coverage ratio of no less than 2.00:1.00.
Guarantors of the KeyBank Loans include the Company, each special purpose entity that owns a Pool Property, and each of the Operating Partnership’s other subsidiaries which owns a direct or indirect equity interest in a SPE that owns a Pool Property.
In addition to customary representations, warranties, covenants, and indemnities, the Second Amended and Restated Credit Agreement requires the Operating Partnership to comply with the following, which will be tested on a quarterly basis:
•a maximum consolidated leverage ratio of 60%, or, the ratio may increase, on two occasions, to 65% for up to four consecutive quarters after a material acquisition;
•a minimum consolidated tangible net worth of not less than the sum of (i) $1,000,000,000.00, plus (ii) (A) seventy-five percent (75%) of the net proceeds (gross proceeds less reasonable and customary costs of sale and issuance paid to persons not affiliates of any credit party) received by the Company or the Operating Partnership at any time from the issuance of shares (whether common, preferred or otherwise), after the effective date of the Seventh Amendment, plus (B) seventy-five percent (75%) of the amount of OP Units of the Operating Partnership issued after the effective date of the Seventh Amendment, minus (iii) seventy-five percent (75%) of the amount of any payments that are used to redeem shares (whether common, preferred or otherwise) of the Company or the Operating Partnership or to redeem OP Units after the effective date of the Seventh Amendment, minus (iv) any amounts paid for the redemption or retirement of, or any accrued return on, the preferred equity held by SHBNPP Global Professional Investment Type Private Real Estate Trust No. 13(H) (the “Preferred Holder”);
•a minimum consolidated fixed charge coverage ratio of not less than 1.50:1.00;
•a maximum total secured debt ratio of not greater than 40%, which ratio may increase, on two occasions, to 45% for four consecutive quarters after closing of a material acquisition that is financed with secured debt;
•a minimum unsecured interest coverage ratio of 2.00:1.00;
•a maximum total secured recourse debt ratio, excluding recourse obligations associated with interest rate hedges, of 10% of our total asset value;
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
•aggregate maximum unhedged variable rate debt of not greater than 30% of the Company's total asset value; and
•a maximum unsecured leverage ratio of 60%, or, the ratio may increase, on two occasions, up to 65% for up to four consecutive quarters after a material acquisition.
Furthermore, the activities of the Operating Partnership, the Company, and the Company's subsidiaries must be focused principally on the ownership, development, operation and management of office, industrial, manufacturing, warehouse, distribution or educational properties (or mixed uses thereof) and businesses reasonably related or ancillary thereto.
In addition, the Second Amended and Restated Credit Agreement prohibits any special distributions from extraordinary non-recurring income.
On October 31, 2023, the Company exercised its option to extend the Revolving Loan Maturity Date (as defined in the Second Amended and Restated Credit Agreement) to March 30, 2024, which extension will become effective upon the satisfaction or waiver of certain customary conditions.
Debt Covenant Compliance
Pursuant to the terms of the Company’s mortgage loans and the KeyBank Loans, the Operating Partnership, in consolidation with the Company, is subject to certain loan compliance covenants. The Company was in compliance with all of its debt covenants as of September 30, 2023.

6.     Interest Rate Contracts
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the values of which are determined by expected cash payments principally related to borrowings and interest rates. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company does not use derivatives for trading or speculative purposes.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
Derivative Instruments
The Company has entered into interest rate swap agreements to hedge the variable cash flows associated with its variable-rate debt, including the KeyBank Loans. The change in the fair value of derivatives designated and qualifying as cash flow hedges is initially recorded in accumulated other comprehensive income (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt.
The following table sets forth a summary of the interest rate swaps at September 30, 2023 and December 31, 2022:
Fair Value (1)
 Current Notional Amounts
Derivative Instrument Effective Date Maturity Date Interest Strike Rate September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022
Assets/(Liabilities):
Interest Rate Swap 3/10/2020 7/1/2025 0.83% $ 10,807  $ 12,391  $ 150,000  $ 150,000 
Interest Rate Swap 3/10/2020 7/1/2025 0.84% 7,199  8,244  100,000  100,000 
Interest Rate Swap 3/10/2020 7/1/2025 0.86% 5,370  6,145  75,000  75,000 
Interest Rate Swap 7/1/2020 7/1/2025 2.82% 4,818  4,331  125,000  125,000 
Interest Rate Swap 7/1/2020 7/1/2025 2.82% 3,841  3,444  100,000  100,000 
Interest Rate Swap 7/1/2020 7/1/2025 2.83% 3,838  3,441  100,000  100,000 
Interest Rate Swap 7/1/2020 7/1/2025 2.84% 3,814  3,408  100,000  100,000 
Total $ 39,687  $ 41,404  $ 750,000  $ 750,000 
(1)The Company records all derivative instruments on a gross basis in the consolidated balance sheets, and accordingly there are no offsetting amounts that net assets against liabilities. As of September 30, 2023, derivatives in an asset or liability position are included in the line item “Other assets” or “Interest rate swap liability” in the consolidated balance sheets at fair value. The SOF rate as of September 30, 2023 (effective date) was 5.43%.
The following table sets forth the impact of the interest rate swaps on the consolidated statements of operations for the periods presented:
Nine Months Ended September 30,
2023 2022
Interest Rate Swap in Cash Flow Hedging Relationship:
Amount of loss recognized in AOCI on derivatives $ (15,371) $ 59,179 
Amount of gain reclassified from AOCI into earnings under “Interest expense” $ 16,993  $ (5,292)
Total interest expense presented in the consolidated statement of operations in which the effects of cash flow hedges are recorded $ 49,208  $ 68,315 
During the twelve months subsequent to September 30, 2023, the Company estimates that an additional $25.5 million of its income will be recognized from AOCI into earnings.
Certain agreements with the derivative counterparties contain a provision that if the Company defaults on its credit facility indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender within a specified time period, then the Company could also be declared in default on its derivative obligations.
As of September 30, 2023 and December 31, 2022, there were no swaps in a liability position. As of September 30, 2023 and December 31, 2022, the Company had not posted any collateral related to these agreements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
7.     Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following as of September 30, 2023 and December 31, 2022:
September 30, 2023 December 31, 2022
Interest payable $ 16,700  $ 13,654 
Prepaid tenant rent 11,423  12,399 
Deferred compensation 9,176  8,913 
Real estate taxes payable 7,549  6,296 
Property operating expense payable 4,394  7,960 
Accrued construction in progress 1,173  35 
Accrued tenant improvements 551  620 
Redemptions payable —  4,383 
Other liabilities 29,486  26,542 
Total $ 80,452  $ 80,802 

8.     Fair Value Measurements
The Company is required to disclose fair value information about all financial instruments, for which it is practicable to estimate fair value, whether or not recognized in the consolidated balance sheets. The Company measures and discloses the estimated fair value of financial assets and liabilities utilizing a fair value hierarchy that distinguishes between data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. This hierarchy consists of three broad levels, as follows: (i) quoted prices in active markets for identical assets or liabilities, (ii) “significant other observable inputs,” and (iii) “significant unobservable inputs.” “Significant other observable inputs” can include quoted prices for similar assets or liabilities in active markets, as well as inputs that are observable for the asset or liability, such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. “Significant unobservable inputs” are typically based on an entity’s own assumptions, since there is little, if any, related market activity. In instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. There were no transfers between the levels in the fair value hierarchy during the nine months ended September 30, 2023 and the year ended December 31, 2022.
Recurring Measurements
The following table sets forth the assets and liabilities that the Company measures at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2023 and December 31, 2022:
Assets/(Liabilities) Total Fair Value Quoted Prices in Active Markets for Identical Assets and Liabilities Significant Other Observable Inputs Significant Unobservable Inputs
September 30, 2023
Interest Rate Swap Asset $ 39,687  $ —  $ 39,687  $ — 
Mutual Funds Asset $ 6,815  $ 6,815  $ —  $ — 
December 31, 2022
Interest Rate Swap Asset $ 41,404  $ —  $ 41,404  $ — 
Mutual Funds Asset $ 6,191  $ 6,191  $ —  $ — 
Nonrecurring Measurement - Real Estate Impairment
During the nine months ended September 30, 2023, in connection with the preparation and review of the financial statements, the Company recorded a real estate impairment provision of approximately $397.4 million on sixteen properties,
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
including eight Office and eight Other properties, located in the Southwest, Northeast, West, and Southeast regions of the United States. The impairment resulted from changes in the second quarter related to anticipated hold periods, estimated selling prices, and potential vacancies that impacted the recoverability of these assets.
In determining the fair value of the properties, (i) for thirteen assets, the Company performed discounted cash flow analyses based on assumptions primarily relating to market rent, discount rates, and terminal capitalization rates, and (ii) for three assets, the Company based its determination on an estimated selling price per square foot and a shortened hold period. The Company considered these inputs as Level 3 measurements within the fair value hierarchy. The following table is a summary of the quantitative information related to the non-recurring fair value measurement for the impairment of the Company's real estate properties for the nine months ended September 30, 2023:
Range of Inputs
Southwest Northeast West Southeast
Market rent (per square foot)
$16.00 - $27.00
$15.00 - $30.00
$21.00
$14.00
Discount rate
8.50% - 15.00%
8.00% - 15.00%
9.00%
15.00%
Terminal capitalization rate
8.00% - 10.50%
6.50% - 9.00%
8.50%
9.00%
Range of Inputs
Southwest Northeast West
Estimated selling price (per square foot) $235.00 $227.00 $30.00
Anticipated hold period
One year
One year
One year
Nonrecurring Measurement - Investment in Unconsolidated Entity Impairment
During the three months ended September 30, 2023, the Company recorded an OTTI of approximately $129.3 million for its investment in the Office Joint Venture, which represents a complete write-off of the Company’s remaining investment balance. The impairment resulted from a decline in the fair value of the investment primarily due to increased future loan extension risk impacting the Company’s expectations on the recoverability of the investment. In determining the fair value of the investment in the Office Joint Venture, the Company considered Level 3 inputs.
Financial Instruments at Fair Value
Financial instruments as of September 30, 2023 and December 31, 2022 consisted of cash and cash equivalents, restricted cash, accounts receivable, accrued expenses and other liabilities, and mortgage payable and other borrowings, as defined in Note 5, Debt. With the exception of the mortgage loans in the table below, the amounts of the financial instruments presented in the consolidated financial statements substantially approximate their fair value as of September 30, 2023 and December 31, 2022.
The fair value of the seven mortgage loans in the table below is estimated by discounting each loan’s principal balance over the remaining term of the mortgage using estimated current borrowing rates available to the Company for debt instruments with similar terms and maturities. The Company determined that the mortgage debt valuation in its entirety is classified in Level 2 of the fair value hierarchy, as the fair value is based on current pricing for debt with similar terms as the in-place debt.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
  September 30, 2023 December 31, 2022
  Fair Value
Carrying Value (1)
 Fair Value
Carrying Value (1)
BOA II Loan $ 214,374  $ 250,000  $ 226,361  $ 250,000 
AIG Loan II 109,010  120,556  111,872  122,328 
AIG Loan 76,658  98,158  89,526  99,794 
Samsonite Mortgage Loan —  —  17,998  17,998 
HealthSpring Mortgage Loan —  —  19,107  19,107 
Pepsi Bottling Ventures Mortgage Loan 16,994  17,540  17,014  17,836 
Highway 94 Mortgage Loan 11,970  11,970  11,941  12,740 
Total $ 429,006  $ 498,224  $ 493,819  $ 539,803 
(1)The carrying values do not include the debt premium/(discount) or deferred financing costs as of September 30, 2023 and December 31, 2022. See Note 5, Debt, for details.

9.     Equity
Common Equity
On April 13, 2023, the Company’s common Class T Shares, Class S shares, Class D shares, Class I shares, Class A shares, Class AA shares and Class AAA shares, were converted into Class E common shares (the “Conversion”) and all of our Class E common shares became listed (the “Listing”) on the New York Stock Exchange as “common shares”.
Prior to the Conversion, Class T shares, Class S shares, Class D shares, Class I shares, Class A shares, Class AA shares, Class AAA shares and Class E shares voted together as a single class, and each common share of each class was entitled to one vote on each matter submitted to a vote at a meeting of the Company’s shareholders; provided that with respect to any matter that would only have a material adverse effect on the rights of a particular class of common shares, only the holders of such affected class were entitled to a vote.
As a result of the Conversion and in connection with the Listing on April 13, 2023, all of our Class E common shares are now known as common shares.
As of September 30, 2023, the Company had received aggregate gross offering proceeds of approximately $2.8 billion from the sale of shares in private offerings, public offerings, the DRP (defined below) offerings and mergers (includes offerings by our predecessor, Griffin Capital Essential Asset REIT, Inc. (our “Predecessor”), our Predecessor’s merger with Signature Office REIT, Inc., and our Predecessor’s merger with certain other related entities (the “Predecessor Mergers”) and the acquisition of Cole Office & Industrial REIT (“CCIT II”) in a stock-for-stock transaction (the “CCIT II Merger”). As part of the $2.8 billion from the sale of shares, the Company issued (i) approximately 4,863,623 Class E shares in June 2015 upon the consummation of the merger with Signature Office REIT, Inc., (ii) 19,442,394 Class E shares in April 2019 upon consummation of the Predecessor Mergers in exchange for all outstanding shares of our Predecessor’s common stock at the time of the Predecessor Mergers, and (iii) 10,384,185 Class E shares in exchange for all the outstanding shares of CCIT II’s common stock at the time of the CCIT II Merger.
As of September 30, 2023, there were 35,997,549 common shares outstanding, including shares issued pursuant to the DRP, less shares redeemed pursuant to the SRP (defined below) and the self-tender offer, which occurred in May 2019 (the “Self-Tender Offer”).
ATM Program
In August 2023, the Company entered into an at-the-market equity offering (the “ATM”) pursuant to which the Company may sell common shares up to an aggregate purchase price of $200.0 million. The Company may sell such shares in amounts and at times to be determined by the Company from time to time, but the Company has no obligation to sell any of the shares. Actual sales, if any, will depend on a variety of factors to be determined by us from time to time, including, among other things, market conditions, the trading price of the Company’s common shares, capital needs, and the Company’s determinations of the appropriate sources of funding.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
During the three months ended September 30, 2023, the Company did not sell shares under the ATM program.
Distribution Reinvestment Plan
Prior to its termination on May 15, 2023, the Company adopted a Dividend Reinvestment Plan (the “DRP”), which allowed shareholders to have dividends and other distributions otherwise distributable to them invested in additional common shares. No sales commissions or dealer manager fees were paid on shares sold through the DRP, but the DRP shares were charged the applicable distribution fee payable with respect to all shares of the applicable class. The purchase price per share under the DRP was equal to the net asset value ("NAV") per share applicable to the class of shares purchased, calculated using the most recently published NAV available at the time of reinvestment. 
On May 22, 2023, the Company filed a post-effective amendment to the registration statement for the Company’s DRP to deregister to all of the common shares registered for sales that were not sold pursuant to such registration statement.
As of September 30, 2023 and September 30, 2022, the Company had issued approximately $341.1 million in shares pursuant to the DRP offerings.
Share Redemption Program
Prior to its termination upon the Listing on April 13, 2023, the Company had adopted a share redemption program (the “SRP”) that enabled shareholders to sell their shares to the Company in limited circumstances. The SRP was suspended on October 1, 2021 but resumed on a limited basis (i.e., limited to redemptions in connection with a holder’s death, disability, or incompetence) on August 5, 2022 with quarterly redemptions capped at $5.0 million. In addition, pursuant to the terms of the SRP, during any calendar year, with respect to each share class, the Company was permitted to redeem no more than 5% of the weighted-average number of shares of such class outstanding during the prior calendar year.
Under the SRP, the Company would redeem shares as of the last business day of each quarter at a price equal to the most recently published NAV per share for the applicable class prior to quarter end. During the nine months ended September 30, 2023, the Company redeemed 941 shares. The SRP was suspended again on March 7, 2023 and terminated in connection with the Listing.
The following table summarizes share redemption activity under the SRP during the three and nine months ended September 30, 2023 and 2022:
Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Shares of common shares redeemed —  74,850  941 
(1)
 74,850 
Weighted average price per share $ —  $ 66.78  $ 66.87  $ 66.78 
(1) Does not include shares withheld (i.e., forfeited) by employees to satisfy minimum statutory tax withholding requirements associated with the vesting of RSUs.
During the period beginning July 31, 2014 and through the termination of the SRP, the Company had redeemed 3,295,618 shares (excluding the Self-Tender Offer) of common shares for approximately $275.5 million at a weighted average price per share of $83.60 pursuant to the SRP.
Issuance of Restricted Share Units to Executive Officers, Employees and Board of Trustees
On April 5, 2023, the Compensation Committee of the Board approved the Peakstone Realty Trust Second Amended and Restated Employee and Long-Term Incentive Plan (the “Plan”) which amended and restated the Amended and Restated Employee and Trustee Long-Term Incentive Plan (the “Prior Plan”) to (1) change the name of the Prior Plan in connection with the Company’s name change, (2) expressly provide for the grant of profits interests (or “LTIP Units”) in the Operating Partnership and (3) make conforming entity name changes throughout. Otherwise, the Plan contains the same material terms as the Prior Plan. The Plan provides for the grant of share-based awards to the Company’s trustees, full-time employees and certain consultants that provide services to the Company or affiliated entities. Awards granted under the Plan may consist of
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
stock options, restricted shares, share appreciation rights, distribution equivalent rights, LTIP Units, and other equity-based awards.
The share-based awards are measured at fair value at issuance and recognized as compensation expense over the vesting period. The maximum number of shares authorized under the Plan is 777,778 shares. As of September 30, 2023, 166,868 shares were available for future issuance under the Plan.
As of September 30, 2023 and September 30, 2022, there was $11.0 million and $14.2 million, respectively, of unrecognized compensation expense remaining, which vests between three months and approximately 2.3 years.
Total compensation expense related to RSUs for the three months ended September 30, 2023 and September 30, 2022 was approximately $2.4 million and $2.7 million, respectively. Total compensation expense for the nine months ended September 30, 2023 and September 30, 2022 was approximately $9.0 million and $6.1 million, respectively.
The following table summarizes the activity of unvested shares of RSU awards for the periods presented:
Number of Unvested Shares of RSU Awards Weighted-Average Grant Date Fair Value per Share
Balance at December 31, 2021 169,846 
  Granted 116,749  $ 66.87 
  Forfeited (9,404) $ 80.38 
  Vested (119,056) $ 77.68 
Balance at December 31, 2022 158,135 
  Granted 166,321  $ 56.53 
  Forfeited (161) $ 62.17 
  Vested(1)
 (41,896) $ 70.32 
Balance at September 30, 2023
 282,399 
(1)    Total shares vested include 55,438 common shares that were withheld (i.e., forfeited) by employees during the nine months ended September 30, 2023 to satisfy minimum statutory tax with holdings requirements associated with the vesting of RSUs.

Full Redemption of Perpetual Convertible Preferred Shares
On April 10, 2023, the Company entered into a Redemption Agreement (the “Redemption Agreement”) with the Preferred Holder and Shinhan Asset Management Co., Ltd.
Pursuant to the Redemption Agreement, the Company redeemed from the Preferred Holder all 5,000,000 shares of “Series A Cumulative Perpetual Convertible Preferred Stock” (the “Series A Preferred Shares”) held by the Preferred Holder in exchange for (i) a redemption payment of $125.0 million, and (ii) the amount of accumulated and unpaid distributions of approximately $2.4 million, in accordance with the Articles Supplementary filed by the Company on April 30, 2019 (the “Articles Supplementary”). The Preferred Holder agreed to waive the Redemption Fee (as defined in the Articles Supplementary) in the amount of $1.9 million and any other payments in connection with the Series A Preferred Shares. The Redemption Agreement also terminated the Series A Cumulative Perpetual Convertible Stock Purchase Agreement dated as of August 8, 2018, by and between the Company and the Preferred Holder (the “Purchase Agreement”), and provided that any rights and privileges afforded to the Preferred Holder under the Purchase Agreement were terminated and canceled and of no further force or effect, including the Preferred Holder’s right to purchase, and the Company’s obligation to sell, the Second Tranche (as defined in the Purchase Agreement), and no party to the Purchase Agreement has any further obligations thereunder.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
10.     Noncontrolling Interests
Noncontrolling interests represent limited partnership interests in the Operating Partnership in which the Company is the general partner.
As of September 30, 2023, noncontrolling interests were approximately 8.8% of total shares and 8.9% of weighted average shares outstanding (both measures assuming OP Units were converted to common shares). The Company classified OP Units exchanged for limited partnership interests issued in conjunction with contributed assets and in connection with the internalization of management of the Company in December 2018 (the “Self-Administration Transaction”), as noncontrolling interests, which are presented as a component of permanent equity, except as discussed below.
Any noncontrolling interest that fails to qualify as permanent equity has been reclassified as temporary equity and adjusted to the greater of (a) the carrying amount or (b) its redemption value as of the end of the period in which the determination is made.
As of September 30, 2023, the limited partners of the Operating Partnership owned approximately 3.5 million OP Units, which were issued to then affiliated parties and unaffiliated third parties in exchange for the contribution of certain properties to the Company and in connection with the Self-Administration Transaction, and approximately 0.02 million OP Units were issued unrelated to property contributions.
As of September 30, 2023, all limited partners of the Operating Partnership (See Noncontrolling Interest Subject to Redemption below) had an Exchange Right (as defined below), pursuant to which, if exercised, the Operating Partnership would be required to redeem their OP Units for cash equal to the value of an equivalent number of common shares as calculated pursuant to the limited partnership agreement and applicable contribution agreement (the “Exchange Right”). If a limited partner of the Operating Partnership exercises an Exchange Right, the Company, as general partner of the Operating Partnership, may, in its sole and absolute discretion, elect to either (i) purchase the OP units for cash equal to the value of an equivalent number of common shares as calculated pursuant to the limited partnership agreement and applicable contribution agreement or (ii) purchase such limited partner’s OP Units by issuing common shares of the Company for the OP Units redeemed pursuant to the limited partnership agreement and applicable contribution agreement, subject to certain transfer and ownership limitations included in the Company’s charter and the limited partnership agreement.
The following summarizes the activity for noncontrolling interests recorded as equity for the nine months ended September 30, 2023 and year ended December 31, 2022:
Nine Months Ended September 30, 2023
Year Ended December 31, 2022
Beginning balance $ 174,655  $ 218,653 
Reclass of noncontrolling interest subject to redemption 10  957 
Exchange of noncontrolling interests (6,550) — 
Reclass of redeemable non-controlling interest 3,801  — 
Distributions to noncontrolling interests (2,990) (10,942)
Allocated distributions to noncontrolling interests subject to redemption (3) (17)
Allocated net loss (52,677) (39,714)
Allocated other comprehensive income (loss) (300) 5,718 
Ending balance $ 115,946  $ 174,655 
Noncontrolling interests subject to redemption
Prior to the Listing, OP Units issued pursuant to the Will Partners Contribution were not included in permanent equity on the consolidated balance sheets, because the limited partners holding these OP Units could cause the general partner to redeem the OP Units for the cash value, and the Company could not elect to purchase such limited partner’s OP Units by issuing common shares of the Company for the OP Units redeemed. Accordingly, prior to Listing, the general partner of the Operating Partnership did not control these redemptions and these OP Units were presented on the consolidated balance sheets as noncontrolling interest subject to redemption at their redeemable value, and the net income (loss) and distributions attributed to
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
these limited partners are allocated proportionately between common shareholders and other noncontrolling interests that are not considered redeemable.

Effective as of the Listing, and subsequently as of September 30, 2023, all OP Units are subject to the same redemption process as all other OP Units (i.e., can be redeemed for cash or, the Company can elect to purchase these OP Units by issuing common shares) as described above. The Company intends to redeem all OP Units for common shares.

Redemption of OP units from Self-Administration Transaction

In connection with the Self-Administration Transaction, Griffin Capital, LLC (“GC LLC”), an entity controlled by our former Executive Chairman, Kevin A. Shields, and an affiliate of our Predecessor’s sponsor, Griffin Capital Company, LLC “GCC LLC”), received OP units (approximately 2.7 million taking into effect the 9 to 1 reverse split) as consideration in exchange for the sale to our Predecessor of the advisory, asset management and property management business of Griffin Capital Real Estate Company, LLC (“GRECO”). GC LLC assigned approximately 50% of the OP units received in connection with the Self-Administration Transaction to then participants in GC LLC’s long-term incentive plan. Mr. Shields is the plan administrator of such long-term incentive plan.

As previously disclosed, certain of our current and former employees and executive officers, including Michael Escalante, our Chief Executive Officer, and Javier Bitar, our Chief Financial Officer and Treasurer, were employed by affiliates of GC LLC prior to the Self-Administration Transaction and are therefore participants in a long-term incentive plan of GC LLC that made grants to such participants in connection with services rendered prior to the Self-Administration Transaction. Participants in GC LLC’s long-term incentive plan, including Messrs. Escalante and Bitar, are entitled to receive distributions from the long-term incentive plan in the form of either cash, common shares, or other property, or a combination thereof, as elected by the plan administrator.

The Listing requires that certain awards under GC LLC’s long-term incentive plan be settled during the fourth quarter 2023 and in four annual installments thereafter, unless waived or modified. As described above, in connection with the settlement of GC LLC’s long-term incentive plan, the plan administrator may choose to distribute cash, common shares, or other property, or a combination thereof, as elected by the plan administrator. If the plan administrator elects to redeem the OP units GC LLC received in connection with the Self-Administration Transaction pursuant to the terms of our Operating Partnership’s operating agreement, we intend to satisfy such redemption request with our common shares. If such a redemption occurs in the fourth quarter of 2023 and the plan administrator determines to distribute only common shares to plan participants, then, pursuant to the terms of the GC LLC long-term incentive plan, GC LLC would distribute 56,266 common shares to Mr. Escalante and 2,000 common shares to Mr. Bitar in connection with the redemption in the fourth quarter of 2023. The redemption of OP units and distribution of common shares would have no economically dilutive effect on our common shareholders.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
11.     Related Party Transactions
Summarized below are the related party transaction costs receivable and payable by the Company as of September 30, 2023 and December 31, 2022:
Incurred for the Nine Months Ended Payable as of
September 30, September 30, December 31,
2023 2022 2023 2022
Expensed
Costs advanced by related party $ 85  $ 705  $ 48  $ 67 
Administrative reimbursement 975  1,066  38  522 
Assumed through Self-Administration Transaction/Mergers
Earn-out —  —  —  130 
Other
Distributions 2,381  6,498  620  739 
Total $ 3,441  $ 8,269  $ 706  $ 1,458 
Administrative Services Agreement
As of October 6, 2023, the ASA is terminated. In connection with the Self-Administration Transaction, the Company, Operating Partnership, Predecessor, and GRECO, on the one hand, and GCC LLC and GC LLC, on the other hand, entered into that certain Administrative Services Agreement dated December 14, 2018 (as amended, the “ASA”), pursuant to which GCC LLC and GC LLC provided certain operational and administrative services to the Company at cost. The Company paid GCC LLC a monthly amount based on the actual costs anticipated to be incurred by GCC LLC for the provision of such services until such items were terminated from the ASA. Such costs were reconciled periodically and a full review of the costs is performed at least annually. In addition, the Company directly paid or reimbursed GCC LLC for the actual cost of any reasonable third-party expenses incurred in connection with the provision of such services. On March 30, 2022, June 30, 2022, and March 21, 2023, the Company amended the ASA to reduce the scope of services provided, including removing the provision of office space and advisor services. On June 21, 2023, the Company delivered a partial termination notice under the ASA electing to terminate certain general corporate support services effective July 22, 2023. Following such amendments and such notice, GCC LLC and GC LLC were obligated to provide the Company with human resources support only, which services were terminable by the Company upon thirty (30) days’ prior written notice to GCC and GC LLC. On September 6, 2023, the Company delivered a termination notice under the ASA with respect to such human resources support services and, given those were the only remaining services, the ASA itself, automatically terminated effective October 6, 2023.

Office Sublease
On March 25, 2022, the Company executed a sublease agreement with GCC (the “El Segundo Sublease”) for the building located at 1520 E. Grand Ave, El Segundo, CA (the “Building”) which is the location of the Company’s corporate headquarters and where the Company conducts day-to-day business. The Building is part of a campus that contains other buildings and parking (the “Campus”). The El Segundo Sublease also entitles the Company to use certain common areas on the Campus.
Prior to the execution of the El Segundo Sublease, the Company paid GCC rent for the Building as part of the Administrative Services Agreement. The Campus is owned by GCPI, LLC (“GCPI”), and the Building is master leased by GCPI to GCC. GCC is the sublessor under the El Segundo Sublease.
The initial term of the El Segundo Sublease expires on June 30, 2024, unless the parties agree to further extend the term. The El Segundo Sublease provides for initial monthly base rent of approximately $0.05 million, subject to annual escalations of 3% as well as additional rent for certain operating expenses for the Building and portions of the Campus. As of September 30, 2023, the Company recorded a lease liability and a right-of-use asset for approximately $0.4 million relating to the El Segundo Sublease, which is included in Right of Use Asset and Lease Liability on the Company’s consolidated balance sheet.

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PEAKSTONE REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
12.     Leases
Lessor
The Company leases industrial and office space to tenants primarily under leases classified as non-cancelable operating leases that generally contain provisions for minimum base rents plus reimbursement for certain operating expenses. Total minimum lease payments are recognized in rental income on a straight-line basis over the term of the related lease and estimated reimbursements from tenants for real estate taxes, insurance, common area maintenance and other recoverable operating expenses are recognized in rental income in the period that the expenses are incurred.
The Company recognized $166.5 million and $277.7 million of lease income related to operating lease payments for the nine months ended September 30, 2023 and September 30, 2022, respectively.
The Company's current third-party tenant leases have expirations ranging from 2024 to 2044. The following table sets forth the undiscounted cash flows for future minimum base rents to be received under operating leases as of September 30, 2023:
As of September 30, 2023
Remaining 2023 $ 52,740 
2024 199,272 
2025 185,716 
2026 181,278 
2027 162,377 
Thereafter 708,591 
Total $ 1,489,974 
The future minimum base rents in the table above excludes tenant reimbursements of operating expenses, amortization of adjustments for deferred rent receivables and the amortization of above/below-market lease intangibles.
Lessee - Ground Leases
As of September 30, 2023, the Company is the tenant under (i) three ground leases classified as operating leases, and (ii) two ground leases classified as financing leases. Each of these ground leases were assigned to the Company as part of its acquisition of the applicable assets and no incremental costs were incurred for such ground leases. These ground leases are classified as non-cancelable and contain no renewal options.
Lessee - Office Leases
As of September 30, 2023, the Company is the tenant under the following two office space leases, each of which is classified as a non-cancelable operating lease: (i) the El Segundo Sublease described in Note 11, Related Party Transactions, above, and (ii) a lease for its office space in Chicago, Illinois, which expires on June 29, 2025, which is subject and subordinate to the rights of another tenant in the building.
For ground leases and operating leases, the Company incurred costs of approximately $2.9 million for the nine months ended September 30, 2023 and $3.1 million for the nine months ended September 30, 2022, which are included in “Property Operating Expense” in the accompanying consolidated statement of operations. Total cash paid for amounts included in the measurement of operating lease liabilities was $1.6 million for the nine months ended September 30, 2023 and $1.6 million for the nine months ended September 30, 2022.
The following table sets forth the weighted-average for the lease term and the discount rate as of September 30, 2023:
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PEAKSTONE REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amounts)
As of September 30, 2023
Lease Term and Discount Rate Operating Financing
Weighted-average remaining lease term in years
76.6 years
15.2 years
Weighted-average discount rate (1)
 4.89% 3.34  %
(1)Because the rate implicit in each of the Company's leases was not readily determinable, the Company used an incremental borrowing rate. In determining the Company's incremental borrowing rate for each lease, the Company considered recent rates on secured borrowings, observable risk-free interest rates and credit spreads correlating to the Company's creditworthiness, the impact of collateralization and the term of each of the Company's lease agreements.
Maturities of lease liabilities as of September 30, 2023 were as follows:
As of September 30, 2023
Operating Financing
Remaining 2023 $ 540  $ 343 
2024 1,909  360 
2025 1,570  365 
2026 1,504  375 
2027 1,527  381 
2028 1,595  386 
Thereafter 248,695  3,072 
Total undiscounted lease payments 257,340  5,282 
Less: imputed interest (214,243) (2,011)
Total lease liabilities $ 43,097  $ 3,271 

13.    Commitments and Contingencies
Litigation
From time to time, the Company may become subject to legal and regulatory proceedings, claims and litigation arising in the ordinary course of business. The Company is not a party to, nor is the Company aware of any material pending legal proceedings nor is any property of the Company subject to any material pending legal proceedings.
Capital Expenditures and Tenant Improvement Commitments
As of September 30, 2023, the Company had an aggregate remaining contractual commitment for repositioning, capital expenditure projects, leasing commissions and tenant improvements of approximately $17.9 million.

14.    Segment Reporting
In the fourth quarter of 2022, the Company evolved the management strategy of its real estate portfolio to focus on three different property types in order to provide clarity as to the value and operations associated with the assets within each group. As a result, the Company changed to three reportable segments: Industrial, Office, and Other. The Industrial segment consists of high-quality, well-located industrial properties with modern specifications. The Office segment consists of newer, high-quality, and business-essential office properties. The Other segment consists of vacant and non-core properties, together with other properties in the same cross-collateralized loan pools. This segment includes properties that are either non-stabilized, leased to tenants with shorter lease terms or are being evaluated for repositioning, re-leasing or potential sale. The Company recast its segment results for all prior periods presented to show the three reportable segments.
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PEAKSTONE REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amount)
The Company evaluates performance of each segment based on segment net operating income (“NOI”), which is defined as property revenue less property expenses. The Company excludes the following from Segment NOI because they are addressed on a corporate level: (i) the Office Joint Venture, (ii) interest expense, and (iii) general and administrative expenses. Segment NOI is not a measure of operating income or cash flows from operating activities, is not indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate segment profit measures in the same manner. The Company considers segment NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of our properties.
The following table presents segment NOI for the three and nine months ended September 30, 2023 and September 30, 2022 is as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Industrial NOI
Total Industrial revenues $ 13,934  $ 15,095  $ 42,508  $ 45,401 
Industrial operating expenses (1,884) (1,706) (5,510) (5,489)
Industrial NOI 12,050  13,389  36,998  39,912 
Office NOI
Total Office revenues 34,022  72,128  108,210  251,467 
Office operating expenses (6,102) (17,762) (18,518) (57,832)
Office NOI 27,920  54,366  89,692  193,635 
Other NOI
Total Other revenues 13,757  14,107  40,508  43,724 
Other operating expenses (5,360) (4,808) (15,666) (13,932)
Other NOI 8,397  9,299  24,842  29,792 
Total NOI $ 48,367  $ 77,054  $ 151,532  $ 263,339 
A reconciliation of net loss to NOI for the three and nine months ended September 30, 2023 and September 30, 2022 is as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Reconciliation of Net Loss to Total NOI
Net loss $ (139,948) $ (119,373) $ (583,332) $ (193,240)
General and administrative expenses 9,653  9,521  31,411  27,463 
Corporate operating expenses to related parties 257  140  975  1,065 
Real estate impairment provision —  10,697  397,373  86,254 
Depreciation and amortization 25,003  42,628  86,830  155,470 
Interest expense 16,126  24,283  49,208  68,315 
Other (income) expense, net (3,654) 162  (7,613) 588 
Net loss from investment in unconsolidated entity 144,598  —  176,767  — 
(Gain) loss from disposition of assets (3,748) 95,513  (24,657) 95,513 
Debt breakage costs —  13,249  —  13,249 
Transaction expenses 80  234  24,570  8,662 
Total NOI $ 48,367  $ 77,054  $ 151,532  $ 263,339 

The following table presents the Company’s goodwill for each of the segments as of September 30, 2023 and December 31, 2022:
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PEAKSTONE REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited; dollars in thousands unless otherwise noted and excluding per share amount)
September 30, December 31,
2023 2022
Goodwill
Industrial $ 68,373  $ 68,373 
Office —  — 
Other 26,305  26,305 
Total Goodwill $ 94,678  $ 94,678 
The following table presents the Company’s total real estate assets, net, which includes accumulated depreciation and amortization and excludes intangibles, for each segment as of the September 30, 2023 and December 31, 2022:
September 30, December 31,
2023 2022
Industrial Real Estate, net
Total real estate $ 740,790  $ 761,757 
Accumulated depreciation and amortization (146,047) (137,738)
Industrial real estate, net 594,743  624,019 
Office Real Estate, net
Total real estate 1,567,724  2,020,463 
Accumulated depreciation and amortization (279,852) (305,829)
Office real estate, net 1,287,872  1,714,634 
Other Real Estate, net
Total real estate 399,295  715,036 
Accumulated depreciation and amortization (120,833) (201,072)
Other real estate, net 278,462  513,964 
Total Real Estate, net $ 2,161,077  $ 2,852,617 
Total asset information by segment is not reported because the Company does not use this measure to assess performance or to make resource allocation decisions.

15.     Declaration of Distributions
On March 14, 2023, the Board declared an all-cash distribution for the month of March in the amount of $0.075 per common share. The Company paid such distribution on May 12, 2023 to shareholders of record as of May 2, 2023.
On June 20, 2023, the Board declared an all-cash distribution for the second quarter in the amount of $0.225 per common share. The Company paid such distribution on July 17, 2023 to shareholders of record as of June 30, 2023.

On August 2, 2023, the Board declared an all-cash distribution for the third quarter in the amount of $0.225 per common share. The Company paid such distribution on October 17, 2023 to shareholders of record as of September 30, 2023.

16.    Subsequent Events
On October 31, 2023, the Company exercised its option to extend the Revolving Loan Maturity Date (as defined in the Second Amended and Restated Credit Agreement) to March 30, 2024, which extension will become effective upon the satisfaction or waiver of certain customary conditions.
On November 7, 2023, the Board declared an all-cash distribution for the fourth quarter in the amount of $0.225 per common share. Such distribution is payable on or about January 17, 2024 to shareholders of record as of December 29, 2023.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the Company’s consolidated financial statements and the notes thereto contained in Part I of this Quarterly Report on Form 10-Q, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, Consolidated Financial Statements, and the notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Overview
Peakstone Realty Trust is an internally managed, publicly traded real estate investment trust (“REIT”) that owns and operates a high-quality, newer-vintage portfolio of predominantly single-tenant industrial and office properties. These assets are generally leased to creditworthy tenants under long-term net lease agreements with contractual rent escalations. The Company’s wholly-owned portfolio contains properties with key characteristics, including difficult-to-replicate locations and significant tenant investment in the building, which the Company believes make these properties more essential to the tenants.
PKST OP, L.P., our operating partnership (the “Operating Partnership”) owns, directly and indirectly all of the Company’s assets. As of September 30, 2023, the Company owned approximately 91.2% of the outstanding common units of limited partnership interest in the Operating Partnership (“OP Units”).
As of September 30, 2023, the Company’s wholly-owned portfolio (i) consisted of 73 properties located in 24 states with a weighted average remaining lease term of approximately 6.3 years, (ii) was 96.4% leased based on rentable square feet with an average economic occupancy of 95.9% comprised of Industrial (100%), Office (97.0%), and Other (83.1%), and (iii) generated approximately $202.9 million Annualized Base Rent (“ABR”), defined as contractual base rent (excluding abatement periods and deducting base year operating expenses for gross and modified gross leases) multiplied by 12 months.

Approximately 60.1% of the Company’s ABR is expected to be generated pursuant to leases with respect to which the tenant, the lease guarantor or a non-guarantor parent of the tenant has an investment grade credit rating from a Nationally Recognized Statistical Rating Organization (“NRSRO”) approved by the U.S. Securities and Exchange Commission (the “SEC”) (e.g., Moody’s Investors Service, Inc., S&P Global Ratings and/or Fitch Ratings Inc.) or a company with a non-NRSRO credit rating (e.g., Bloomberg’s default risk rating) that management believes is generally equivalent to an NRSRO investment grade rating. Management can provide no assurance as to the comparability of these ratings methodologies or that any particular rating for a company is indicative of the rating that a single NRSRO would provide in the event that it rated all companies for which the Company provides credit ratings; to the extent such companies are rated only by non-NRSRO ratings providers, such ratings providers may use methodologies that are different and less rigorous than those applied by NRSROs. In the context of the Company’s portfolio, references to “investment grade” include, and credit ratings provided by the Company may refer to, tenants, guarantors, and non-guarantor parent entities. There can be no assurance that such guarantors or non-guarantor parents of our tenants will satisfy our tenant’s lease obligations, and accordingly, any such credit ratings may not be indicative of the creditworthiness of such tenants.
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Revenue Concentration
By State:
The percentage of Annualized Base Rent as of September 30, 2023 by state, based on the respective in-place leases, is as follows (dollars in thousands):
State
Annualized Base Rent
(unaudited)
 Number of
Properties
Percentage of
Annualized Base
Rent
Arizona $ 23,280  7  11.5  %
New Jersey 19,490  5  9.6 
Colorado 16,402  4  8.1 
Ohio 13,207  5  6.5 
Texas 12,912  5  6.4 
Massachusetts 12,449  3  6.1 
California 12,271  2  6.0 
Alabama 10,307  2  5.1 
South Carolina 9,704  3  4.8 
North Carolina 9,005  6  4.4 
All Others (1)
 63,829  31  31.5 
Total $ 202,856  73  100.0  %
(1)     All others are 4.3% or less of Annualized Base Rent on an individual state basis.
By Industry:
The percentage of Annualized Base Rent as of September 30, 2023, by industry, based on the respective in-place leases, is as follows (dollars in thousands): 
Industry (1)
 Annualized Base Rent
 (unaudited)		 Number of
Lessees
Percentage of
Annualized Base Rent
Capital Goods $ 32,338  15  15.9  %
Consumer Services 21,597  5  10.6 
Materials 19,926  5  9.8 
Food, Beverage & Tobacco 16,677  3  8.2 
Health Care Equipment & Services 12,152  5  6.0 
Commercial & Professional Services 11,701  7  5.8 
Utilities 11,297  2  5.6 
Energy 10,535  3  5.2 
Retailing 9,727  2  4.8 
Technology Hardware & Equipment 9,029  3  4.5 
All Others (2)
 47,877  20  23.6 
Total $ 202,856  70  100.0  %
(1)     Industry classification based on the Global Industry Classification Standard.
(2)     All others account for less than 4.4% of total Annualized Base Rent on an individual industry basis.
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Top Ten Tenants:
No tenant or property based on the respective in-place leases, accounted for more than 5.7% of our Annualized Base Rent as of September 30, 2023. The percentage of Annualized Base Rent as of September 30, 2023, for the top 10 tenants, based on the respective in-place leases, is as follows (dollars in thousands):
Tenant Annualized Base Rent
(unaudited)
Percentage of
Annualized Base Rent
Keurig Dr. Pepper $ 11,532  5.7  %
Southern Company Services 9,224  4.5 
LPL Holdings 8,552  4.2 
Amazon 8,542  4.2 
Freeport McMoRan 7,867  3.9 
Maxar Technologies 7,723  3.8 
RH 7,487  3.7 
Wyndham Hotels & Resorts 7,392  3.6 
McKesson 6,123  3.0 
Travel & Leisure, Co. 5,826  2.9 
Total $ 80,268  39.5  %
Lease Expirations:
The tenant lease expirations by year based on Annualized Base Rent as of September 30, 2023 are as follows (dollars in thousands):
Year of Lease Expiration (1)
 Annualized Base Rent
(unaudited)		 Number of
Leases 		Approx. Square Feet
Percentage of
Annualized Base Rent
2023 $ —  —  —  —  %
2024 24,734  11  2,361,000  12.2 
2025 9,477  8  872,000  4.7 
2026 13,210  4  1,449,000  6.5 
2027 14,349  7  571,000  7.1 
2028 19,720  12  2,142,000  9.7 
>2028 121,366  39  10,055,000  59.8 
Vacant —  —  645,000  — 
Total $ 202,856  81  18,095,000  (2) 100.0  %
(1) Expirations that occur on the last day of the month are shown as expiring in the subsequent month.
(2)Excludes 4,500 square feet subject to leases with third parties for building amenities that do not generate net rent (e.g., health clubs and management offices).

Critical Accounting Estimates
The Company has established accounting estimates which conform to GAAP in the United States as contained in the FASB ASC. The preparation of the Company’s consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. If management’s judgment or interpretation of the facts and circumstances relating to the various transactions had been different, it is possible that different estimates would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may use different estimates and assumptions that may impact the comparability of the Company’s financial condition and results of operations to those companies.
For further information about the Company’s critical accounting estimates, refer to the consolidated financial statements and notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC.
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Recently Issued Accounting Pronouncements
See Note 2, Basis of Presentation and Summary of Significant Accounting Policies, to the consolidated financial statements.

Results of Operations
Overview
The Company’s results of operations are primarily impacted by the Company’s ability to re-lease space subject to expiring leases, and our ability to dispose of and purchase industrial and select office assets, all of which impact period-to-period comparisons.
Due to current remote and hybrid work practices, demand for office space nationwide has declined and may continue to decline. While we have seen some positive recent movement in return-to-office mandates from employers, office utilization remains down materially relative to pre-pandemic levels. In addition, the current challenging economic conditions and volatility in the capital markets (including bank failures) have adversely impacted commercial real estate overall and, in particular, the office sector. These market conditions and the potential for increased capital costs and availability of debt capital, among other things, have driven many companies to be more reticent in making office or other real estate related investments. Also, debt financing for real estate companies is now more difficult to arrange. All of these trends and uncertainties may adversely impact the Company’s business, financial condition, results of operations and cash flows.
Notwithstanding these trends and uncertainties, we believe we are positioning ourselves to provide attractive, risk-adjusted returns for our shareholders by leveraging the Company’s experienced, real estate-focused, cycle tested management team to pursue our strategy which includes:
•Owning and operating a stabilized portfolio of wholly-owned, high quality, newer-vintage single-tenant industrial and office properties located in diverse, strategic growth markets;
•In the near-term, operating a self-funded business plan in the near-term through the capital recycling and free cash flow; and
•Selectively acquiring high-quality industrial properties and, potentially, certain office assets.
For a discussion of material trends and uncertainties that have impacted or may impact the Company’s financial condition, results of operations or cash flows, see (i) the discussion in “Overview” above, and (ii) the risks highlighted in the “Risk Factors” section of the Company’s Annual Report on Form 10-K.
Segment Information
The Company internally evaluates all of the properties and interests therein as three reportable segments: Industrial, Office and Other. The Company evaluates performance of each segment based on segment net operating income (“NOI”), which is defined as property revenue less property expenses. The Company excludes the following from segment NOI because they are addressed on a corporate level: (i) the Office Joint Venture, (ii) interest expense, and (iii) general administrative expenses. Segment NOI is not a measure of operating income or cash flows from operating activities, is not indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate segment profit measures in the same manner. The Company considers segment NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of our properties.










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Reconciliation of Net Loss to Same Store NOI
Total net loss for the three months ended September 30, 2023 and September 30, 2022 was $139.9 million and $119.4 million, respectively. Total net loss for the nine months ended September 30, 2023 and September 30, 2022 was $583.3 million and $193.2 million, respectively. The following table reconciles net loss to Same Store NOI for the three and nine months ended September 30, 2023 and September 30, 2022 (dollars in thousands). Refer to the NOI, Cash NOI and Same Store Cash NOI section for further details:
Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Reconciliation of Net Loss to Same Store NOI
Net loss $ (139,948) $ (119,373) $ (583,332) $ (193,240)
General and administrative expenses 9,653  9,521  31,411  27,463 
Corporate operating expenses to related parties 257  140  975  1,065 
Real estate impairment provision —  10,697  397,373  86,254 
Depreciation and amortization 25,003  42,628  86,830  155,470 
Interest expense 16,126  24,283  49,208  68,315 
Debt breakage costs —  13,249  —  13,249 
Other (income) expense, net (3,654) 162  (7,613) 588 
Net loss from investment in unconsolidated entity 144,598  —  176,767  — 
(Gain) loss from disposition of assets (3,748) 95,513  (24,657) 95,513 
Transaction expenses 80  234  24,570  8,662 
Total NOI $ 48,367  $ 77,054  $ 151,532  $ 263,339 
Same Store Adjustments:
Recently acquired properties —  —  —  — 
Recently disposed properties 186  (27,657) (3,479) (107,853)
Total Same Store NOI $ 48,553  $ 49,397  $ 148,053  $ 155,486 
Same Store Analysis
Comparison of the Three Months Ended September 30, 2023 to the Three Months Ended September 30, 2022
For the three months ended September 30, 2023, our “Same Store” portfolio consisted of 73 properties, encompassing approximately 18.1 million square feet, and Annualized Base Rent as of September 30, 2023 of $202.9 million. The Company’s “Same Store” portfolio includes properties which were held for the full period for both periods presented. The following table provides a comparative summary of the results of operations for the 73 properties by segment for the three months ended September 30, 2023 and September 30, 2022 (dollars in thousands):
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Three Months Ended September 30,
2023 2022 Increase/
(Decrease)		 Percentage Change
Industrial Same Store NOI
Total Industrial revenues $ 13,934  $ 13,891  $ 43  —  %
Industrial operating expenses (1,885) (1,623) (262) 16  %
Industrial NOI 12,049  12,268  (219) (2) %
Office Same Store NOI
Total Office revenues 34,029  34,112  (83) —  %
Office operating expenses (6,081) (6,040) (41) 1  %
Office NOI 27,948  28,072  (124) —  %
Other Same Store NOI
Total Other revenues 13,754  13,008  746  6  %
Other operating expenses (5,198) (3,951) (1,247) 32  %
Other NOI 8,556  9,057  (501) (6) %
Total Same Store NOI $ 48,553  $ 49,397  $ (844) (2) %
NOI
Total Same Store NOI decreased by $0.8 million, or 2%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.
Industrial Same Store NOI decreased $0.2 million or 2% for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 . The decrease is primarily due to a decrease in recoveries from prior year common area management reconciliations.
Office Same Store NOI remained materially consistent for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.
Other Same Store NOI decreased $0.5 million, or 6%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. The decrease is primarily due to an increase of non-recoverable operating expenses at one property.
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Comparison of the Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022
For the nine months ended September 30, 2023, our “Same Store” portfolio consisted of 73 properties, encompassing approximately 18.1 million square feet, and Annualized Base Rent as of September 30, 2023 of $202.9 million. The Company’s “Same Store” portfolio includes properties which were held for the full period for both periods presented.
The following table provides a comparative summary of the results of operations for the 73 properties by segment for the nine months ended September 30, 2023 and September 30, 2022 (dollars in thousands):
Nine Months Ended September 30,
2023 2022 Increase/
(Decrease)		 Percentage Change
Industrial Same Store NOI
Total Industrial revenues $ 42,155  $ 41,776  $ 379  1  %
Industrial operating expenses (5,477) (5,231) (246) 5  %
Industrial NOI 36,678  36,545  133  —  %
Office Same Store NOI
Total Office revenues 102,172  108,228  (6,056) (6) %
Office operating expenses (17,024) (16,187) (837) 5  %
Office NOI 85,148  92,041  (6,893) (7) %
Other Same Store NOI
Total Other revenues 40,409  38,523  1,886  5  %
Other operating expenses (14,182) (11,623) (2,559) 22  %
Other NOI 26,227  26,900  (673) (3) %
Total Same Store NOI $ 148,053  $ 155,486  $ (7,433) (5) %
NOI
Same Store NOI decreased $7.4 million, or 5%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.
Industrial Same Store NOI remained materially consistent for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.
Office Same Store NOI decreased $6.9 million, or 7%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The decrease is primarily due to (i) a $6.1 million decrease in rental income, primarily related to an $8.3 million decrease in termination income related to the prior year, offset by a $2.2 million increase in rental income related to new leasing activity and increased occupancy at two properties and (ii) an $0.8 million increase in property operating expenses, primarily related to two properties.
Other Same Store NOI decreased $0.7 million, or 3%, primarily for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The decrease is primarily due to an increase in non-recoverable operating expenses at one property due to vacancy.

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Portfolio Analysis
Comparison of the Three Months Ended September 30, 2023 to the Three Months Ended September 30, 2022
Net Loss
For the three months ended September 30, 2023, the Company recorded a net loss of $139.9 million compared to a net loss of $119.4 million for the three months ended September 30, 2022. The reasons for the change are discussed below.
The following table reconciles net loss to NOI for the three months ended September 30, 2023 and September 30, 2022 (dollars in thousands):
Three Months Ended September 30,
2023 2022 Increase/(Decrease) Percentage
Change
Reconciliation of Net Loss to Total NOI
Net loss $ (139,948) $ (119,373) $ (20,575) 17  %
General and administrative expenses 9,653  9,521  132  1  %
Corporate operating expenses to related parties 257  140  117  84  %
Real estate impairment provision —  10,697  (10,697) (100) %
Depreciation and amortization 25,003  42,628  (17,625) (41) %
Interest expense 16,126  24,283  (8,157) (34) %
Debt breakage costs —  13,249  (13,249) (100) %
Other (income) expense, net (3,654) 162  (3,816) (2356) %
Net from investment in unconsolidated entity 144,598  —  144,598  100  %
Loss (gain) from disposition of assets (3,748) 95,513  (99,261) 100  %
Transaction expenses 80  234  (154) (66) %
Total NOI $ 48,367  $ 77,054  $ (28,687) (37) %
The following table provides further detail regarding segment NOI:
Three Months Ended September 30,
2023 2022 Increase/(Decrease) Percentage
Change
Industrial NOI
Industrial revenues $ 13,934  $ 15,095  $ (1,161) (8) %
Industrial operating expenses (1,884) (1,706) (178) 10  %
Industrial NOI 12,050  13,389  (1,339) (10) %
Office NOI
Office revenues 34,022  72,128  (38,106) (53) %
Office operating expenses (6,102) (17,762) 11,660  (66) %
Office NOI 27,920  54,366  (26,446) (49) %
Other NOI
Other revenues 13,757  14,107  (350) (2) %
Other operating expenses (5,360) (4,808) (552) 11  %
Other NOI 8,397  9,299  (902) (10) %
Total NOI $ 48,367  $ 77,054  $ (28,687) (37) %
NOI
Total NOI decreased by $28.7 million, or 37%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. The decrease is primarily due to the following:
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Office NOI decreased $26.4 million, or 49%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. The decrease is primarily due to the dispositions of 42 Office segment properties in the third quarter of 2022 and the disposition of four Office segment properties in 2023.
Other NOI decreased $0.9 million, or 10%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. The decrease is primarily due to (i) a $0.4 million decrease in revenue, primarily driven by a $0.8 million decrease in termination income related to the prior year and (ii) a $0.6 million increase in operating expense primarily due to increases in recoverable operating expense.
Industrial NOI decreased $1.3 million, or 10%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. The decrease is primarily due to the disposition of two industrial properties in January and February 2023.
General and Administrative Expense
General and administrative expense remained materially consistent for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.
Corporate Operating Expenses to Related Parties
Corporate operating expenses to related parties remained materially consistent for three months ended September 30, 2023 compared to the three months ended September 30, 2022.
Real Estate Impairment
Real estate impairment decreased approximately $10.7 million, or for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 due to no impairments recorded in the current quarter compared to impairments on one real estate asset in the same quarter last year.
Depreciation and Amortization
Depreciation and amortization decreased by approximately $17.6 million, the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to the disposition of 42 Office segment properties in August and September 2022 and 9 properties through 2023.
Interest Expense
Interest expense decreased approximately $8.2 million, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 and is primarily due to (i) the payoff of three mortgage loans and the 2023 Term Loan in September 2022, (ii) the payoff of one mortgage loan and 2024 Term Loan in March 2023, and (iii) offset by approximately $2.7 million of higher interest rates on unhedged variable debt and an increase in the Revolving Credit Facility balance.
Debt Breakage Costs
Debt breakage costs decreased approximately $13.2 million due to prepayments of the Midland Mortgage Loan and Bank of America Loan during the three months ended September 30, 2022.
Other Income, Net
The increase in other income, net of $3.8 million, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 is primarily due to an increase in interest income earned from money market accounts.
Net loss From Investment in Unconsolidated Entity
Net loss from investment in unconsolidated entity increased approximately $144.6 million for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 due to the Company’s investment in the Office Joint Venture, which was formed in August 2022. In September 2023, the Company recorded an OTTI of approximately $129.3 million for its investment in the Office Joint Venture, which represents a complete write-off of the Company’s remaining investment balance. The loss is also due to the Company’s proportionate share of (i) $51.7 million of interest expense, including $22.0 million of amortization of deferred financing costs, and (ii) $17.1 million of depreciation expense incurred by the Office Joint Venture.
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(Gain) Loss From Disposition of Assets
Gain from disposition of assets increased approximately $99.3 million for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. The increase is primarily due (i) to the gain of $3.7 million from the sale of one Other segment property during the three months ended September 30, 2023; offset by (ii) the net loss of $95.5 million from the sale of 42 Office segment properties during the three months ended September 30, 2022.
Transaction Expenses
Transaction expenses remained materially consistent for the three months ended September 30, 2023 compared to three months ended September 30, 2022.
Portfolio Comparison of the Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022
Net Loss
For the nine months ended September 30, 2023, the Company recorded a net loss of $583.3 million compared to a net loss of $193.2 million for the nine months ended September 30, 2022. The reasons for the change are discussed below.
The following table reconciles net loss to NOI for the nine months ended September 30, 2023 and September 30, 2022 (dollars in thousands):
Nine Months Ended September 30,
2023 2022 Increase/(Decrease) Percentage
Change
Reconciliation of Net Loss to Total NOI
Net loss $ (583,332) $ (193,240) $ (390,092) 202  %
General and administrative expenses 31,411  27,463  3,948  14  %
Corporate operating expenses to related parties 975  1,065  (90) (8) %
Real estate impairment provision 397,373  86,254  311,119  361  %
Depreciation and amortization 86,830  155,470  (68,640) (44) %
Interest expense 49,208  68,315  (19,107) (28) %
Debt breakage costs —  13,249  (13,249) (100) %
Other (income) expense, net (7,613) 588  (8,201) (1395) %
Net loss from investment in unconsolidated entity 176,767  —  176,767  100  %
(Gain) loss from disposition of assets (24,657) 95,513  (120,170) 100  %
Transaction expenses 24,570  8,662  15,908  184  %
Total NOI $ 151,532  $ 263,339  $ (111,807) (42) %
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The following table provides further detail regarding our segment NOI:
Nine Months Ended September 30,
2023 2022 Increase/(Decrease) Percentage
Change
Industrial NOI
Industrial revenues $ 42,508  $ 45,401  $ (2,893) (6) %
Industrial operating expenses (5,510) (5,489) (21) —  %
Industrial NOI 36,998  39,912  (2,914) (7) %
Office NOI
Office revenues 108,210  251,467  (143,257) (57) %
Office operating expenses (18,518) (57,832) 39,314  (68) %
Office NOI 89,692  193,635  (103,943) (54) %
Other NOI
Other revenues 40,508  43,724  (3,216) (7) %
Other operating expenses (15,666) (13,932) (1,734) 12  %
Other NOI 24,842  29,792  (4,950) (17) %
Total NOI $ 151,532  $ 263,339  $ (111,807) (42) %
NOI
Total NOI decreased by $111.8 million, or 42%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The decrease is primarily due to the following:
Office NOI decreased $103.9 million, or 54%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The decrease is primarily due to the dispositions of 48 Office properties in 2022 and four Office properties through the first three quarters of 2023.
Other NOI decreased $5.0 million, or 17%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The decrease is primarily due to (i) a $3.2 million revenue decrease due to lower termination income and a natural lease expiration at one property and (ii) a $1.7 million increase in operating expense primarily due to increases in recoverable utility, repair, and maintenance expense.
Industrial NOI decreased $2.9 million, or 7%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The decrease is primarily due to a $2.9 million decrease in rental revenue, as a result of the disposition of two industrial properties in January and February 2023.
General and Administrative Expense
General and administrative expense increased approximately $3.9 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The increase is primarily due to a (i) $2.4 million increase in employee severance expense, including $0.9 million in stock-based compensation and a $1.1 million severance cash payment and (ii) an $0.8 million increase in professional and service fees.
Corporate Operating Expenses to Related Parties
Corporate operating expenses to related parties remained materially consistent for the nine months ended nine months ended September 30, 2023 as nine months ended September 30, 2022.
Real Estate Impairment
Real estate impairment increased approximately $311.1 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 due to the impairment of sixteen real estate assets in 2023. The impairment was primarily related to changes during the three months ended September 30, 2023 related to anticipated hold periods, estimated selling prices, and potential vacancies.
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Depreciation and Amortization
Depreciation and amortization decreased by approximately $68.6 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 primarily due to the dispositions of 48 properties in 2022 and 9 properties in 2023.
Interest Expense
Interest expense decreased approximately $19.1 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 primarily due to (i) the payoff of three mortgage loans and the 2023 Term Loan in 2022, and (ii) the payoff of one mortgage loan and 2024 Term Loan in 2023; offset by (iii) an approximately $5.8 million increase due to higher interest rates on unhedged variable debt and an increase of the Revolving Credit Facility balance.
Debt Breakage Costs
Debt breakage costs decreased approximately $13.2 million due to prepayments of the Midland Mortgage Loan and Bank of America Loan during the nine months ended September 30, 2022.
Other Income, Net
The increase in other income, net of $8.2 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 is primarily due to an increase in interest income earned from money market accounts.
Net Loss From Investment in Unconsolidated Entity
Net loss from investment in unconsolidated entity, of which the Company recognizes its proportionate share, increased approximately $176.8 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 due to the Company’s investment in the Office Joint Venture, which was formed in August 2022. In September 2023, the Company recorded an OTTI of approximately $129.3 million for its investment in the Office Joint Venture, which represents a complete write-off of the Company’s remaining investment balance. The loss is also due to the Company’s proportionate share of (i) $144.7 million of interest expense, including $63.4 million of amortization of deferred financing costs, and (ii) $50.3 million of depreciation expense incurred by the Office Joint Venture.

Gain (Loss) From Disposition of Assets
Gain from disposition of assets increased approximately $120.2 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The increase is primarily due to the net gain of $24.7 million on disposition of two Industrial segment properties, four Office segment properties, and three Other segment properties in 2023 compared to the net loss of $95.5 million on the sale of 42 Office segment properties during the nine months ended September 30, 2022.
Transaction Expenses
Transaction expenses increased by approximately $15.9 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 primarily due to $24.6 million in banking, advisory, and other expenses related to the Listing compared to approximately $8.6 million related to transaction expenses in 2022.
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Funds from Operations and Adjusted Funds from Operations
Our reported results are presented in accordance with GAAP. We also disclose Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”) both of which are non-GAAP financial measures. We believe these two non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.
We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). FFO is defined as net income or loss computed in accordance with GAAP, excluding extraordinary items, as defined by GAAP, and gains and losses from sales of depreciable real estate assets, adding back impairment write-downs of depreciable real estate assets, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated partnerships, joint ventures and preferred distributions. Because FFO calculations exclude such items as depreciation and amortization of depreciable real estate assets and gains and losses from sales of depreciable real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods and between other REITs. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. It should be noted, however, that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do, making comparisons less meaningful.
Additionally, we use AFFO as a non-GAAP financial measure to evaluate our operating performance. AFFO excludes non-routine and certain non-cash items such as revenues in excess of cash received, amortization of share-based compensation net, deferred rent, amortization of in-place lease valuation, acquisition-related costs, financed termination fee, net of payments received, gain or loss from the extinguishment of debt, unrealized gains (losses) on derivative instruments, write-off transaction costs and other one-time transactions. FFO and AFFO have been revised to include amounts available to both common shareholders and limited partners for all periods presented.
AFFO is a measure used among our peer group. We also believe that AFFO is a recognized measure of sustainable operating performance by the REIT industry. Further, we believe AFFO is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies.
Management believes that AFFO is a beneficial indicator of our ongoing portfolio performance and ability to sustain our current distribution level. More specifically, AFFO isolates the financial results of our operations. AFFO, however, is not considered an appropriate measure of historical earnings as it excludes certain significant costs that are otherwise included in reported earnings. Further, since the measure is based on historical financial information, AFFO for the period presented may not be indicative of future results or our future ability to make or sustain distributions. By providing FFO and AFFO, we present information that assists investors in aligning their analysis with management’s analysis of long-term operating activities.
For all of these reasons, we believe the non-GAAP measures of FFO and AFFO, in addition to net income (loss) are helpful supplemental performance measures and useful to investors in evaluating the performance of our real estate portfolio. However, a material limitation associated with FFO and AFFO is that they are not indicative of our cash available to fund distributions since other uses of cash, such as capital expenditures at our properties and principal payments of debt, are not deducted when calculating FFO and AFFO. The use of AFFO as a measure of long-term operating performance on value is also limited if we do not continue to operate under our current business plan as noted above. FFO and AFFO should not be viewed as a more prominent measure of performance than net income (loss) and each should be reviewed in connection with GAAP measurements.
Neither the SEC, NAREIT, nor any other applicable regulatory body has opined on the acceptability of the adjustments contemplated to adjust FFO in order to calculate AFFO and its use as a non-GAAP performance measure. In the future, NAREIT may decide to standardize the allowable exclusions across the REIT industry, and we may have to adjust the calculation and characterization of this non-GAAP measure.
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Our calculation of FFO and AFFO is presented in the following table for the three and nine months ended September 30, 2023 and 2022 (dollars in thousands, except per share amounts):
  Three Months Ended September 30, Nine Months Ended September 30,
  2023 2022 2023 2022
Net loss $ (139,948) $ (119,373) $ (583,332) $ (193,240)
Adjustments:
Depreciation of building and improvements 16,351  26,268  55,943  90,855 
Amortization of leasing costs and intangibles 8,750  16,456  31,178  64,889 
Impairment provision, real estate —  10,697  397,373  86,254 
Equity interest of depreciation of building and improvements - unconsolidated entity 8,365  —  24,623  — 
(Gain) loss from disposition of assets, net (3,748) 95,513  (24,657) 95,513 
FFO (110,230) 29,561  (98,872) 144,271 
Distribution to redeemable preferred shareholders —  (2,516) (2,375) (7,548)
Preferred units redemption charge —  —  (4,970) — 
FFO attributable to common shareholders and limited partners $ (110,230) $ 27,045  $ (106,217) $ 136,723 
Reconciliation of FFO to AFFO:
FFO attributable to common shareholders and limited partners $ (110,230) $ 27,045  $ (106,217) $ 136,723 
Adjustments:
Revenues in excess of cash received, net (822) (3,521) (7,749) (10,208)
Amortization of share-based compensation 2,444  2,698  7,626  6,141 
Deferred rent - ground lease 428  490  1,296  1,518 
Unrealized loss (gain) on investments 89  22  52  180 
Amortization of above/(below) market rent, net (421) (436) (834) (1,282)
Amortization of debt premium/(discount), net 101  103  286  306 
Amortization of ground leasehold interests (98) (95) (291) (274)
Amortization of below tax benefit amortization 377  377  1,117  1,117 
Amortization of deferred financing costs 662  920  2,591  2,551 
Company’s share of amortization of deferred financing costs- unconsolidated entity 10,774  —  31,061  — 
Company’s share of revenues in excess of cash received (straight-line rents) - unconsolidated entity (631) —  (2,207) — 
Company’s share of amortization of above market rent - unconsolidated entity (218) —  (532) — 
Write-off of transaction costs 83  —  115  28 
Loss on debt breakage costs — write-off of deferred financing costs —  1,771  —  1,771 
Employee separation expense —  —  2,042  72 
Transaction expenses 80  234  24,570  8,663 
Debt breakage costs —  13,249  —  13,249 
Amortization of lease inducements —  105  150  458 
Preferred units redemption charge —  —  4,970  — 
Impairment provision, investment in unconsolidated entity 129,334  —  129,334  — 
Write-off of Company's share of accumulated other comprehensive income - unconsolidated entity (1,226) —  (1,226) — 
AFFO available to common shareholders and limited partners $ 30,726  $ 42,962  $ 86,154  $ 161,013 
FFO per share, basic and diluted $ (2.79) $ 0.68  $ (2.69) $ 3.45 
AFFO per share, basic and diluted $ 0.78  $ 1.08  $ 2.18  $ 4.06 
Weighted-average common shares outstanding - basic and diluted EPS 35,975,483  36,081,363  35,965,751  36,077,614 
Weighted-average OP Units 3,482,977  3,537,654  3,495,862  3,537,654 
Weighted-average common shares and OP Units outstanding - basic and diluted FFO/AFFO 39,458,460  39,619,017  39,461,613  39,615,268 
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NOI, Cash NOI and Same Store Cash NOI
Net operating income is a non-GAAP financial measure calculated as net (loss) income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding equity in the earnings of our unconsolidated real estate joint ventures, general and administrative expenses, interest expense, depreciation and amortization, impairment of real estate, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, investment income or loss and termination income. Net operating income on a cash basis (“Cash NOI”) is net operating income adjusted to exclude the effect of straight-line rent and amortization of acquired above- and below-market lease intangibles adjustments required by GAAP. Net operating income on a cash basis for our Same Store portfolio (“Same Store Cash NOI”) is Cash NOI for properties held for the entirety of all periods presented. We believe that NOI, Cash NOI and Same Store Cash NOI are helpful to investors as additional measures of operating performance because we believe they help both investors and management to understand the core operations of our properties excluding corporate and financing-related costs and non-cash depreciation and amortization. NOI, Cash NOI and Same Store Cash NOI are unlevered operating performance metrics of our properties and allow for a useful comparison of the operating performance of individual assets or groups of assets. These measures thereby provide an operating perspective not immediately apparent from GAAP income from operations or net income (loss). In addition, NOI, Cash NOI and Same Store Cash NOI are considered by many in the real estate industry to be useful starting points for determining the value of a real estate asset or group of assets.
Because NOI, Cash NOI and Same Store Cash NOI exclude depreciation and amortization and capture neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of NOI, Cash NOI and Same Store Cash NOI as measures of our performance is limited. Therefore, NOI, Cash NOI and Same Store Cash NOI should not be considered as alternatives to net (loss) income, as computed in accordance with GAAP. NOI, Cash NOI and Same Store Cash NOI may not be comparable to similarly titled measures of other companies.
Our calculation of each of NOI, Cash NOI and Same Store Cash NOI is presented in the following table for three and nine months ended September 30, 2023 and 2022 (dollars in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Reconciliation of Net Loss to Total NOI
Net loss $ (139,948) $ (119,373) $ (583,332) $ (193,240)
General and administrative expenses 9,653  9,521  31,411  27,463 
Corporate operating expenses to related parties 257  140  975  1,065 
Real estate impairment provision —  10,697  397,373  86,254 
Depreciation and amortization 25,003  42,628  86,830  155,470 
Interest expense 16,126  24,283  49,208  68,315 
Debt breakage costs —  13,249  —  13,249 
Other (income) expense, net (3,654) 162  (7,613) 588 
Loss from investment in unconsolidated entity 144,598  —  176,767  — 
(Gain) loss from disposition of assets (3,748) 95,513  (24,657) 95,513 
Transaction expenses 80  234  24,570  8,662 
Total NOI $ 48,367  $ 77,054  $ 151,532  $ 263,339 
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Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Cash NOI Adjustments
Industrial Segment:
Industrial NOI $ 12,050  $ 13,389  $ 36,998  $ 39,912 
Straight-line rents (52) (456) (276) (882)
Amortization of acquired lease intangibles (97) (87) (287) (276)
Deferred termination income —  —  (24) — 
Industrial cash NOI 11,901  12,846  36,411  38,754 
Office Segment:
Office NOI 27,920  54,366  89,692  193,635 
Straight-line rents (1,163) (2,239) (8,450) (7,423)
Amortization of acquired lease intangibles (137) (220) (106) (644)
Deferred termination income —  —  —  — 
Deferred ground/office lease 433  490  1,305  1,512 
Other intangible amortization 377  377  1,117  1,117 
Inducement amortization —  105  150  459 
Office Cash NOI 27,430  52,879  83,708  188,656 
Other Segment:
Other NOI 8,397  9,299  24,842  29,792 
Straight-line rents 393  (68) 1,001  370 
Amortization of acquired lease intangibles (187) (129) (441) (362)
Deferred termination income —  (758) —  (2,273)
Deferred ground/office lease (5) —  (9) 5 
Other Cash NOI 8,598  8,344  25,393  27,532 
Total Cash NOI $ 47,929  $ 74,069  $ 145,512  $ 254,942 
Same Store Cash NOI Adjustments
Industrial Segment:
Industrial Cash NOI $ 11,901  $ 12,846  $ 36,411  $ 38,754 
Cash net operating loss (income) for recently disposed properties —  (1,141) (307) (3,423)
Industrial Same Store Cash NOI 11,901  11,705  36,104  35,331 
Office Segment:
Office Cash NOI 27,430  52,879  83,708  188,656 
Cash net operating loss (income) for recently disposed properties 30  (26,570) (1,182) (101,000)
Same Store inducement amortization adjustment —  (105) (150) (459)
Office Same Store Cash NOI 27,460  26,204  82,376  87,197 
Other Segment:
Other Cash NOI 8,598  8,344  25,393  27,532 
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Cash net operating loss (income) for recently disposed properties 161  481  1,395  (776)
Other Same Store Cash NOI 8,759  8,825  26,788  26,756 
Total Same Store Cash NOI $ 48,120  $ 46,734  $ 145,268  $ 149,284 

Liquidity and Capital Resources
Property rental income is our primary source of operating cash flow and is dependent on a number of factors including occupancy levels and rental rates, as well as the ability and willingness of our tenants to pay rent. Our assets provide a relatively consistent level of cash flow that enables us to pay operating expenses, distributions, and debt service on our outstanding indebtedness. Generally, we anticipate that cash needs will be met from funds from operations and our Revolving Credit Facility. We anticipate that cash flows from continuing operations and proceeds from financings, together with existing cash balances, will be adequate to fund our business operations, debt amortization, capital expenditures, distributions and other requirements over the next 12 months and in the longer term. As of September 30, 2023, the available undrawn capacity under the Revolving Credit Facility was $152.1 million, an increase from the prior quarter primarily due to the addition of six unencumbered properties to the Revolving Credit Facility. Inclusive of cash and cash equivalents, our total liquidity is $516.6 million.
In August 2023, we entered into an at-the-market equity offering (the “ATM”) pursuant to which we may sell common shares up to an aggregate purchase price of $200.0 million. We may sell such shares in amounts and at times to be determined by us from time to time, but we have no obligation to sell any of the shares. Actual sales, if any, will depend on a variety of factors to be determined by us from time to time, including, among other things, market conditions, the trading price of our common shares, capital needs, and our determinations of the appropriate sources of funding. During the three months ended September 30, 2023, we did not sell shares under the ATM program.
Other Potential Future Sources
Other potential future sources of capital include proceeds from potential private or public offerings of our common shares or OP Units, proceeds from secured or unsecured financings, including debt assumed in a real estate acquisition transaction, proceeds from the sale of properties and undistributed funds from operations, and joint venture arrangements. To the extent we are not able to secure additional financing in the form of a credit facility or other third party source of liquidity, we will be heavily dependent upon our current financing and income from operations.
Financing Activities
Second Amended and Restated Credit Agreement
Pursuant to the Second Amended and Restated Credit Agreement, our Operating Partnership, as the borrower, has a $1.3 billion credit facility consisting of a $750.0 million senior unsecured revolving credit facility (the “Revolving Credit Facility”) maturing in December 2023 (with a series of extension options to January 31, 2026, subject to the satisfaction of certain customary conditions), a $400.0 million senior unsecured term loan maturing in December 2025 (the “$400M 2025 5-Year Term Loan”), and a $150.0 million senior unsecured term loan maturing in April 2026 (the “$150M 2026 7-Year Term Loan” and together with the Revolving Credit Facility and the $400M 2025 5-Year Term Loan, the “KeyBank Loans”). The Second Amended and Restated Credit Agreement also provides the option, subject to obtaining additional commitments from lenders and certain other customary conditions, to increase the commitments under the Revolving Credit Facility, increase the existing term loans and/or incur new term loans by up to an additional $1.0 billion in the aggregate.
On October 31, 2023, the Company exercised its option to extend the Revolving Loan Maturity Date (as defined in the Second Amended and Restated Credit Agreement) to March 30, 2024, which extension will become effective upon the satisfaction or waiver of certain customary conditions.
The interest rates for the KeyBank Loans vary based on our consolidated leverage ratio and ranges (a) in the case of the Revolving Credit Facility, from Adjusted SOFR plus 1.30% to Adjusted SOFR plus 2.20%, (b) in the case of each of the $400M 2025 5-Year Term Loan, and the $150M 2026 7-Year Term Loan from Adjusted SOFR plus 1.25% to Adjusted SOFR plus 2.15%. If our Operating Partnership obtains an investment grade rating of its senior unsecured long term debt from Standard & Poor’s Rating Services, Moody’s Investors Service, Inc., or Fitch, Inc., the applicable SOFR margin and base rate margin will vary based on such rating and range (i) in the case of the Revolving Credit Facility, from Adjusted SOFR plus 0.825% to Adjusted SOFR plus 1.55%, (ii) in the case of the $400M 2025 5-Year Term Loan and the $150M 2026 7-Year Term Loan, from Adjusted SOFR plus 0.90% to Adjusted SOFR plus 1.75%.
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The Second Amended and Restated Credit Agreement provides procedures for determining a replacement reference rate in the event that the benchmark index is discontinued.
Derivative Instruments
As discussed in Note 6, Interest Rate Contracts, to the consolidated financial statements, we entered into interest rate swap agreements to hedge the variable cash flows associated with our variable-rate debt, including our Second Amended and Restated Credit Agreement. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Derivatives were used to hedge the variable cash flows associated with existing variable-rate debt and forecasted issuances of debt. The ineffective portion of the change in the fair value of the derivatives is recognized directly in earnings.
The following table sets forth a summary of the interest rate swaps at September 30, 2023 and December 31, 2022 (dollars in thousands):
Fair Value (1)
 Current Notional Amounts
Derivative Instrument Effective Date Maturity Date Interest Strike Rate September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022
Assets/(Liabilities)
Interest Rate Swap 3/10/2020 7/1/2025 0.83% $ 10,807  $ 12,391  $ 150,000  $ 150,000 
Interest Rate Swap 3/10/2020 7/1/2025 0.84% 7,199  8,244  100,000  100,000 
Interest Rate Swap 3/10/2020 7/1/2025 0.86% 5,370  6,145  75,000  75,000 
Interest Rate Swap 7/1/2020 7/1/2025 2.82% 4,818  4,331  125,000  125,000 
Interest Rate Swap 7/1/2020 7/1/2025 2.82% 3,841  3,444  100,000  100,000 
Interest Rate Swap 7/1/2020 7/1/2025 2.83% 3,838  3,441  100,000  100,000 
Interest Rate Swap 7/1/2020 7/1/2025 2.84% 3,814  3,408  100,000  100,000 
Total $ 39,687  $ 41,404  $ 750,000  $ 750,000 
(1)We record all derivative instruments on a gross basis in the consolidated balance sheets, and accordingly, there are no offsetting amounts that net assets against liabilities. As of September 30, 2023, derivatives where in an asset/liability position are included in the line item “Interest rate swap assets” or “Interest rate swap liability,” in the consolidated balance sheets at fair value.
Common Equity
Distribution Reinvestment Plan
On July 17, 2020, we filed a registration statement on Form S-3 (the “DRP Registration Statement”) for the registration of up to $100 million in common shares pursuant to our distribution reinvestment plan (the “DRP”). On October 1, 2021, we announced a suspension of our DRP, effective October 11, 2021. As of September 30, 2023, we had sold 3,946,642 common shares for approximately $341.1 million under our DRP. On April 26, 2023, the Board approved a termination of the DRP, effective May 15, 2023. On May 22, 2023, we filed a post-effective amendment to the DRP Registration Statement to deregister all of the common shares registered for sale that were not sold pursuant to the DRP Registration Statement.
Share Redemption Program
Prior to its termination upon the Listing, the Company had adopted a share redemption program (“SRP”) that enabled shareholders to sell their shares to the Company in limited circumstances. The SRP was suspended on October 1, 2021 but resumed on a limited basis (i.e., limited to redemptions in connection with a holder’s death, disability or incompetence) on August 5, 2022 with quarterly redemptions capped at $5.0 million. In addition, pursuant to the terms of the SRP, during any calendar year, with respect to each share class, the Company was permitted to redeem no more than 5% of the weighted-average number of shares of such class outstanding during the prior calendar year. Under the SRP the Company would redeem shares as of the last business day of each quarter at a price equal to the most recently published NAV per share for the applicable class prior to quarter end. During the nine months ended September 30, 2023, the Company redeemed 941 shares. The SRP was suspended again on March 7, 2023 and terminated in connection with the Listing.
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Liquidity Requirements
Our principal liquidity needs for the next 12 months and in the longer term are to fund:
•normal recurring expenses;
•debt service and principal repayment obligations; including any maturing debt that we may be unable to refinance on attractive terms or at all;
•capital expenditures, including tenant improvements and leasing costs;
•distributions to common shareholders, and distributions to holders of OP Units; and
•possible acquisition of properties.
We expect to meet our long-term liquidity requirements through various sources of capital, as described above. The success of our business strategy will depend, to a significant degree, on our ability to access these various capital sources.
To qualify as a REIT, we must meet a number of organizational and operational requirements on a continuing basis, including the requirement that we annually distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gain, to our shareholders. As a result of this requirement, we cannot rely on retained earnings to fund our business needs to the same extent as other entities that are not REITs. If we do not have sufficient funds available to us from our operations to fund our business needs, we will need to find alternative ways to fund those needs. Such alternatives may include, among other things, divesting ourselves of properties (whether or not the sales price is optimal or otherwise meets our strategic long-term objectives), incurring additional indebtedness or issuing equity securities in public or private transactions, the availability and attractiveness of the terms of which cannot be assured.
The Company’s material cash requirements as of September 30, 2023 including the following contractual obligations are as follows (in thousands):
  Payments Due During the Years Ending December 31,
  Total   Remaining 2023 Thereafter
Outstanding debt obligations (1)
 $ 1,448,224  $ 1,524  $ 1,446,700 
Interest on outstanding debt obligations (2)
 252,094  21,484  230,610 
Ground lease obligations 263,676  719  262,957 
Total $ 1,963,994  $ 23,727  $ 1,940,267 
(1)Amounts only include principal payments. The payments on our mortgage debt do not include the premium/discount or debt financing costs.
(2)Projected interest payments are based on the outstanding principal amounts at September 30, 2023. Projected interest payments on the KeyBank Loans are based on the contractual interest rates in effect at September 30, 2023.
Capital Expenditures and Tenant Improvement Commitments
As of September 30, 2023, we also had aggregate remaining contractual commitments for repositioning, capital expenditure projects, leasing commitments and tenant improvements of approximately $17.9 million.
Summary of Cash Flows
We expect to meet our short-term operating liquidity requirements with operating cash flows generated from our properties and draws from our Revolving Credit Facility.
Our cash, cash equivalents and restricted cash balances increased by approximately $230.4 million during the nine months ended September 30, 2023 compared to the same period a year ago and were primarily used in or provided by the following (in thousands):
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Nine Months Ended September 30,
2023 2022 Increase (decrease)
Net cash provided by operating activities $ 58,770  $ 135,348  $ (76,578)
Net cash provided by investing activities $ 289,796  $ 921,545  $ (631,749)
Net cash used in financing activities $ (216,413) $ (1,155,150) $ 938,737 
Operating Activities. Cash flows provided by operating activities are primarily dependent on the occupancy level, the rental rates of our leases, the collectability of rent and recovery of operating expenses from our tenants, and the timing of acquisitions and dispositions. During the nine months ended September 30, 2023, we generated $58.8 million in cash from operating activities compared to $135.3 million for the nine months ended September 30, 2022. The decrease in cash from operating activities for the nine months ended September 30, 2023 was primarily due to the property dispositions that occurred in 2022 and 2023.
Investing Activities. Cash provided by investing activities for the nine months ended September 30, 2023 and 2022 consisted of the following (in thousands):
  Nine Months Ended September 30,
2023   2022 Increase (decrease)
Sources of cash (used in) provided by investing activities:
Proceeds from disposition of properties $ 299,107  $ 970,376  $ (671,269)
Distributions of capital from investment in unconsolidated entities —  —  — 
Total sources of cash provided by investing activities $ 299,107  $ 970,376  $ (671,269)
Uses of cash for investing activities:
Payments for construction in progress $ (9,102) $ (13,715) $ 4,613 
Purchase of investments (209) (221) 12 
Restricted reserves —  (337) 337 
Investment in unconsolidated entities —  (34,558) 34,558 
Total uses of cash used in investing activities $ (9,311) $ (48,831) $ 39,520 
 Net cash provided by investing activities $ 289,796  $ 921,545  $ (631,749)
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Financing Activities. Cash used in financing activities for the nine months ended September 30, 2023 and 2022 consisted of the following (in thousands):
Nine Months Ended September 30,
2023 2022 Increase (decrease)
Sources of cash provided by (used in) financing activities:
Proceeds from borrowings - Credit Facility $ 400,000  $ —  $ 400,000 
Proceeds from borrowings - Term Loan —  —  — 
Total sources of cash provided by financing activities $ 400,000  $ —  $ 400,000 
Uses of cash for financing activities:
Principal payoff of secured indebtedness - Mortgage Debt (36,128) (469,777) 433,649 
Principal pay down of indebtedness - Revolving Credit Facility —  (373,500) 373,500 
Principal payoff of indebtedness - Term Loan (400,000) (200,000) (200,000)
Principal amortization payments on secured indebtedness (5,449) (6,848) 1,399 
Offering costs (9) (35) 26 
Deferred financing costs (2,955) (2,724) (231)
Redemption of preferred units (125,000) —  (125,000)
Repurchase of common shares (4,443) —  (4,443)
Distributions to noncontrolling interests (3,196) (8,360) 5,164 
Distributions to preferred units subject to redemption (4,891) (7,547) 2,656 
Repurchase of common shares to satisfy employee tax withholding requirements (1,450) (459) (991)
Distributions to common shareholders (32,668) (85,674) 53,006 
Financing lease payment (224) (226) 2 
Total sources of cash used in financing activities $ (616,413) $ (1,155,150) $ 538,737 
 Net cash (used in) provided by financing activities $ (216,413) $ (1,155,150) $ 938,737 
Distributions
Distributions will be authorized at the discretion of our Board and paid to our shareholders as of the record date selected by our Board. We expect to pay distributions on a quarterly basis unless our results of operations, our general financial condition, general economic conditions, or other factors inhibit us from doing so. The funds we receive from operations that are available for distribution may be affected by a number of factors, including the following:
•our operating and interest expenses;
•the amount of distributions or dividends received by us from our indirect real estate investments;
•our ability to keep our properties occupied;
•our ability to maintain or increase rental rates;
•tenant improvements, capital expenditures and reserves for such expenditures;
•the issuance of additional shares; and
•financings, refinancings, debt repayment and limitations on distributions under our KeyBank Loans and/or other mortgage loans and debt.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market risks include risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market-sensitive instruments. We expect that one of the primary market risk to which we will be exposed is interest rate risk, including the risk of changes in the underlying rates on our variable rate debt. Our current indebtedness consists of the KeyBank Loans and other loans and property secured mortgages as described in Note 5, Debt, to our consolidated financial statements included in this Quarterly Report on Form 10-Q. These instruments were not entered into for trading purposes.
Our interest rate risk management objectives will be to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve our objectives, we may borrow at fixed rates or variable rates. We may also utilize a variety of financial instruments, including interest rate swap agreements, caps, floors, and other interest rate exchange contracts. We will not enter into these financial instruments for speculative purposes. The use of these types of instruments to hedge a portion of our exposure to changes in interest rates carries additional risks, such as counterparty credit risk and the legal enforceability of hedging contracts.
As of September 30, 2023, our debt consisted of approximately $1.2 billion in fixed rate debt (including the interest rate swaps) and approximately $200.0 million in variable rate debt (excluding unamortized deferred financing cost and discounts, net, of approximately $6.2 million). As of December 31, 2022, our debt consisted of approximately $1.3 billion in fixed rate debt (including the effect of interest rate swaps) and approximately $200.0 million in variable rate debt (excluding unamortized deferred financing cost and discounts, net, of approximately $4.4 million). Changes in interest rates have different impacts on the fixed and variable rate debt. A change in interest rates on fixed rate debt impacts its fair value but has no effect on interest incurred or cash flows. A change in interest rates on variable rate debt could affect the interest incurred and cash flows and its fair value.
Our future earnings and fair values relating to variable rate financial instruments are primarily dependent upon prevalent market rates of interest, such as SOFR. However, our interest rate swap agreements are intended to reduce the effects of interest rate changes. The effect of an increase of 100 basis points in interest rates, assuming a SOFR floor of 0%, on our variable-rate debt, including our KeyBank Loans, after considering the effect of our interest rate swap agreements, would decrease our future earnings and cash flows by approximately $2.0 million annually.
Interest rate risk amounts were determined by considering the impact of the above hypothetical interest rates on our financial instruments, which does not consider the effect of any change in overall economic activity that could occur. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of the evaluation, our chief executive officer and chief financial officer concluded that the disclosure controls and procedures were effective to provide reasonable assurance as of the end of the period covered by this Quarterly Report on Form 10-Q that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
None.

ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
During the nine months ended September 30, 2023, there were no sales of unregistered securities.
Forfeitures
During the three months ended September 30, 2023, no employees forfeited shares.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5. OTHER INFORMATION
During the three months ended September 30, 2023, no trustee or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” each term as defined in Item 408(a) of Regulation S-K.

ITEM 6. EXHIBITS
The following exhibits are included in this Quarterly Report on Form 10-Q for the period ended September 30, 2023 (and are numbered in accordance with Item 601 of Regulation S-K).
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Exhibit
No.		 Description
101*
The following Peakstone Realty Trust financial information for the period ended September 30, 2023 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Comprehensive (Loss) Income (unaudited), (iv) Consolidated Statements of Equity (unaudited), (v) Consolidated Statements of Cash Flows (unaudited) and (vi) Notes to Consolidated Financial Statements (unaudited).
104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
Filed herewith.
**
Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PEAKSTONE REALTY TRUST
(Registrant)
Dated: November 9, 2023 By:  
/s/ Javier F. Bitar
 
Javier F. Bitar
  On behalf of the Registrant and as Chief Financial Officer and Treasurer (Principal Financial Officer)
59
EX-10.1* 2 pkst-amendedandrestatedr.htm EX-10.1* pkst-amendedandrestatedr
Execution Version 1 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of August 2, 2023, is made by and among PEAKSTONE REALTY TRUST (formerly known as Griffin Capital Essential Asset REIT, Inc.), a Maryland real estate investment trust (the “Company”), PKST OP, L.P. (formerly known as Griffin Capital Essential Asset Operating Partnership, L.P.), a Delaware limited partnership (“Operating Partnership”), and GRIFFIN CAPITAL, LLC, a Delaware limited liability company (“GC LLC”). RECITALS WHEREAS, the Company, the Operating Partnership and GC LLC entered into that certain Registration Rights Agreement, dated as of December 14, 2018 (the “Original Agreement”); WHEREAS, the Company, the Operating Partnership and GC LLC desire to amend and restate the Original Agreement as set forth herein; WHEREAS, pursuant to Section 11(d) of the Original Agreement, any supplement, modification, waiver or termination of the Original Agreement must be executed in writing by the Company and any Holder (as defined herein); and WHEREAS, as of the date of this Agreement, GC LLC has not transferred or assigned any of its Registrable Shares (as defined herein) and, accordingly, GC LLC is the only Holder under the Original Agreement as of the date of this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which hereby is acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: Section 1. Definitions. In this Agreement, the following terms have the following respective meanings: “Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. “Agreement” has the meaning ascribed to it in the preamble. “Board” means the board of trustees of the Company.

 
2 “Business Day” means any day other than a Saturday, Sunday or any day on which banks located in the State of New York are authorized or required to be closed for the conduct of regular banking business. “Common Shares” means the Company’s common shares, par value $0.001 per share. “Company” has the meaning ascribed to it in the preamble hereof and includes the Company’s successors by merger, acquisition, reorganization or otherwise. “Contribution Agreement” means that certain Contribution Agreement, dated December 14, 2018, by and among the Company, the Operating Partnership, GC LLC and Griffin Capital Company, LLC. “Demand Registration” has the meaning ascribed to it in Section 2(a). “End of Suspension Notice” has the meaning ascribed to it in Section 4(c). “Exchange Act” means the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder. “FINRA” means the Financial Industry Regulatory Authority. “GC LLC Holder” means GC LLC and each other Holder who is an Affiliate of GC LLC controlled by Kevin Shields. “Holder” means each Person holding Registrable Shares, including (i) GC LLC Holder and (ii) each Person holding Registrable Shares as a result of a transfer, distribution or assignment to such Person of OP Units by GC LLC Holder, provided, if applicable, such transfer, distribution or assignment is made in accordance with Section 10 of this Agreement. For the avoidance of doubt, the term “Holder” shall include any Person holding OP Units that are or have been issued pursuant to the Contribution Agreement even if such Person has not exchanged such OP Units for Common Shares. “Indemnified Party” has the meaning ascribed to it in Section 8(a). “Indemnifying Party” has the meaning ascribed to it in Section 8(c). “Losses” has the meaning ascribed to it in Section 8(a). “Maximum Number of Shares” has the meaning ascribed to it in Section 2(b). “NYSE” means the New York Stock Exchange.

 
3 “Operating Partnership Agreement” means that certain Eighth Amended and Restated Limited Partnership Agreement of the Operating Partnership, as it may be amended from time to time. “OP Units” means units of limited partnership interest in the Operating Partnership. “Person” means any natural person, corporation, general partnership, limited partnership, limited liability company, proprietorship, joint venture, other business organization, trust, union, association or any federal, state, municipal or local government, any instrumentality, subdivision, court, administrative or regulatory agency or commission or other authority thereof, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority. “Piggyback Registration” has the meaning ascribed to it in Section 3(a). “Prospectus” means the prospectus included in any Resale Registration Statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A or 430B, as the case may be, under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Shares covered by such Resale Registration Statement and all other amendments and supplements to such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus. “Prospectus” shall also include any “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act, relating to the Registrable Shares. “Registrable Shares” means, with respect to any Holder, (i) the Common Shares that are issued or issuable to such Holder (including each Person who became a Holder as a result of a transfer, distribution or assignment to such Person of OP Units by GC LLC Holder) pursuant to the Operating Partnership Agreement in respect of the OP Units held by GC LLC Holder as of the date of this Agreement and (ii) any additional securities issued or issuable as a dividend or distribution on, in exchange for, or otherwise in respect of, such Common Shares (including as a result of combinations, recapitalizations, mergers, consolidations, reorganizations or otherwise); provided that such Common Shares shall cease to be Registrable Shares with respect to any Holder at the time such Common Shares (a) have been sold pursuant to a Resale Registration Statement, (b) have been sold pursuant to Rule 144, (c) may be sold pursuant to Rule 144 without limitation, restriction or condition (including any current public information requirement) thereunder (except, in the case of Registrable Shares held by GC LLC Holder, to the extent that GC LLC Holder holds any such Common Shares) or (d) have been sold to the Company or any of its subsidiaries. “Registration Expenses” means any and all expenses incident to the performance of or compliance with this Agreement, including (i) all fees of the SEC, the NYSE or such other exchange on which the Registrable Shares are listed from time to time, and FINRA, (ii) all fees and expenses incurred in connection with compliance with federal or state securities or blue sky laws (including any registration, listing and filing fees and reasonable fees and disbursements of counsel in connection with blue sky

 
4 qualification of any of the Registrable Shares and the preparation of a blue sky memorandum and compliance with the rules of FINRA and NYSE or other applicable exchange), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, duplicating, printing, delivering and distributing any Resale Registration Statement, any Prospectus, any amendments or supplements thereto, securities sales agreements, certificates and any other documents relating to the performance under and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing or inclusion of any of the Registrable Shares on the NYSE or other applicable exchange pursuant to Section 5(j), (v) the fees and disbursements of counsel for the Company and of the independent public accountants of the Company (including the expenses of any special audit, agreed upon procedures and “cold comfort” letters required by or incident to such performance), and (vi) any fees and disbursements customarily paid in issues and sales of securities (including the fees and expenses of any experts retained by the Company in connection with any Resale Registration Statement); provided, however, that Registration Expenses will exclude brokers’ or underwriters’ discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Shares by a Holder and the fees and disbursements of any counsel to the Holders other than as provided for in clause (ii) above. “Renewal Deadline” has the meaning ascribed to it in Section 2(f). “Resale Registration Statement” means any one or more registration statements of the Company filed under the Securities Act, whether pursuant to a Demand Registration, Piggyback Registration or otherwise, covering the resale of any of the Registrable Shares pursuant to the provisions of this Agreement, and all amendments and supplements to any such registration statements, including post-effective amendments and new registration statements, in each case including the prospectus contained therein, all exhibits thereto and all materials and documents incorporated by reference therein. “Rule 144” means Rule 144 under the Securities Act. “SEC” means the Securities and Exchange Commission. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. “Selling Expenses” means, if any, all underwriting or broker fees, discounts and selling commissions or similar fees or arrangements, fees of counsel to the selling Holder(s) (other than as specifically provided in the definition of “Registration Expenses” above) and transfer taxes allocable to the sale of the Registrable Shares included in the applicable offering. “Suspension Event” has the meaning ascribed to it in Section 4(c). “Suspension Notice” has the meaning ascribed to it in Section 4(c). Section 2. Demand Registration Rights.

 
5 (a) Subject to the provisions hereof, GC LLC Holder at any time may request registration for resale under the Securities Act of all or part of Registrable Shares (a “Demand Registration”) held by GC LLC Holder and, at GC LLC Holder’s sole discretion, Registrable Shares held by any other Holder by giving written notice thereof to the Company, which request will specify the number of shares of Registrable Shares to be offered by GC LLC Holder and, if included in such Demand Registration pursuant to this Section 2(a), the number of shares of Registrable Shares to be offered by any other Holder, whether the intended manner of sale will include or involve an underwritten offering and whether such Resale Registration Statement will be a “shelf” Resale Registration Statement under Rule 415 promulgated under the Securities Act). Subject to Sections 2(c) and 2(e) below and the last sentence of this Section 2(a), the Company will use commercially reasonable efforts (i) to file a Resale Registration Statement (which will be a “shelf” Resale Registration Statement under Rule 415 promulgated under the Securities Act if requested pursuant to GC LLC Holder’s’ request pursuant to the first sentence of this Section 2(a)) registering for resale such number of Registrable Shares as requested to be so registered within 30 days in the case of a registration on Form S-3 (and 60 days in the case of a registration on Form S-11 or such other appropriate form) after GC LLC Holder’s’ request therefor, and (ii) to cause such Resale Registration Statement to be declared effective by the SEC as soon as reasonably practicable thereafter. Notwithstanding the foregoing, the Company will not be required to effect a registration pursuant to this Section 2(a): (i) with respect to securities that are not Registrable Shares, or (ii) within 180 days after the effective date of a prior Demand Registration (other than any such registration on Form S-3) in respect of the Company’s Common Shares. If permitted under the Securities Act, such Resale Registration Statement will be one that is automatically effective upon filing. Notwithstanding anything to the contrary contained in this Section 2(a), if at the time the Company receives a request for a Demand Registration, the Company has an effective shelf registration statement, the Company may include all or part of the Registrable Shares covered by such request in such registration statement, including by virtue of including the Registrable Shares in a prospectus supplement to such shelf registration statement and filing such prospectus supplement pursuant to Rule 424(b)(7) under the Securities Act (in which event, the Company shall be deemed to have satisfied its registration obligation under this Section 2(a) with respect to such Demand Registration request and such shelf registration statement shall be deemed to be a Resale Registration Statement for purposes of this Agreement. (b) If such Demand Registration is in respect of an underwritten offering and the managing underwriters of the requested Demand Registration advise the Company and GC LLC Holder that in the reasonable opinion of the managing underwriters the number of shares of Common Shares proposed to be included in the Demand Registration exceeds the number of shares of Common Shares that can be sold in such underwritten offering without materially delaying or jeopardizing the success of the offering (including the offering price per share) (such number of shares, the “Maximum Number of Shares”), the

 
6 Company will include in such Demand Registration only such number of shares of Common Shares that, in the reasonable opinion of the managing underwriters, can be sold without materially delaying or jeopardizing the success of the offering (including the offering price per share), with such Maximum Number of Shares allocated (1) first, to the shares of Common Shares that GC LLC Holder and, if included in such Demand Registration pursuant to Section 2(a), any other Holder of Registrable Shares proposes to sell and (2) second, to the shares of Common Shares proposed to be included therein by any other Persons (including shares of Common Shares to be sold for the account of the Company or other holders of Common Shares) allocated among such Persons in such manner as they may agree. (c) If any of the Registrable Shares covered by a Demand Registration are to be sold in an underwritten offering, the Company shall have the right to (i) select the underwriters (and their roles) in the offering, provided that such underwriters are reasonably acceptable to GC LLC Holder; and (ii) determine the structure of the offering and negotiate the terms of any underwriting agreement as they relate to GC LLC Holder and, if included in such Demand Registration pursuant to Section 2(a), any other Holder, including the number of shares to be sold (if not all shares offered can be sold at the highest price offered by the underwriters), the offering price and underwriting discount; provided that such structure and terms are acceptable to GC LLC Holder, in its sole discretion. (d) Notwithstanding the foregoing, if the Board determines in its good faith judgment that the filing of a Demand Registration would (i) be seriously detrimental to the Company in that such registration would interfere with a material corporate transaction, or (ii) require the disclosure of material non-public information concerning the Company that at the time is not, in the good faith judgment of the Board, in the best interest of the Company to disclose and is not, in the opinion of the Company’s counsel, otherwise required to be disclosed, then (x) the Company will have the right to defer such filing for a period of not more than 60 days after receipt of any demand by GC LLC Holder, and (y) the Company will not exercise its right to defer a Demand Registration more than once in any 12-month period. The Company will give written notice of its determination to GC LLC Holder to defer the filing and of the fact the purpose for such deferral no longer exists, in each case, promptly after the occurrence thereof. (e) Upon the effectiveness of any Demand Registration, the Company will use commercially reasonable efforts to keep the Resale Registration Statement continuously effective until such time as all of the Registrable Shares covered by such Demand Registration have been sold pursuant to such Demand Registration. (f) If, by the third anniversary (the “Renewal Deadline”) of the initial effective date of a Resale Registration Statement filed pursuant to Section 2(a), any of the Registrable Shares remain unsold by GC LLC Holder or, if included in such Demand Registration pursuant to Section 2(a), any other Holder of Registrable Securities included on such registration statement, the Company will file, if it has not already done so and is eligible to do so, a new Resale Registration Statement covering the Registrable Shares included on the prior Resale Registration Statement; if at the Renewal Deadline the Company is not eligible to file an automatic shelf registration statement, the Company will, if it has not already done so,

 
7 file a new Resale Registration Statement and will use commercially reasonable efforts to cause such Resale Registration Statement to be declared effective within 180 days after the Renewal Deadline; and the Company will take all other action necessary or appropriate to permit public offering and sale of the Registrable Shares to continue as contemplated in the expired Resale Registration Statement. References herein to Resale Registration Statement shall include such new shelf registration statement. Section 3. Piggyback Registration. (a) If at any time the Company has registered, or has determined to register, any of its securities for its own account or for the account of other security holders of the Company on any registration form (other than Form S-4 or S-8) that permits the inclusion of the Registrable Shares (a “Piggyback Registration”), the Company will give GC LLC Holder written notice thereof promptly (but in no event less than five (5) Business Days prior to the anticipated filing date) and, subject to Section 3(b), will include in such registration all Registrable Shares to be offered by GC LLC Holder requested to be included therein pursuant to the written request of GC LLC Holder. (b) If a Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company, and the managing underwriters advise the Company and GC LLC Holder that, in the reasonable opinion of the managing underwriters, the number of shares of Common Shares proposed to be included in such registration exceeds the Maximum Number of Shares, the Company will include in such registration, unless otherwise agreed by the Company and GC LLC Holder, (i) first, the number of shares of Common Shares that the Company proposes to sell, and (ii) second, the Registrable Shares of GC LLC Holder. (c) If a Piggyback Registration is initiated as an underwritten registration on behalf of a holder of shares of Common Shares other than under this Agreement, and the managing underwriters advise the Company that, in the reasonable opinion of the managing underwriters, the number of shares of Common Shares proposed to be included in such registration exceeds the Maximum Number of Shares, then the Company will include in such registration, unless otherwise agreed by the Company and the holders (including GC LLC Holder), (i) first the number of shares of Common Shares requested to be included therein by the holder(s) requesting such registration, and (ii) second, (to the extent the amount of such shares of Common Shares to be sold by such other holders is less that the Maximum Number of Shares), the Registrable Shares requested to be included in such registration by GC LLC Holder and the shares of Common Shares requested to be included in such registration by other holders, pro rata among the GC LLC Holder and other holders on the basis of the number of Registrable Shares and other shares of Common Shares requested to be included by each such GC LLC Holder and other holder, respectively. (d) If any Piggyback Registration is a primary or secondary underwritten offering, the Company will have the right to select, in its sole discretion, the managing underwriter or underwriters to administer any such offering.

 
8 (e) The Company will not grant to any Person the right to request the Company to register any Common Shares in a Piggyback Registration unless such rights are consistent with the provisions of this Section 3. (f) Nothing in this Section 3 shall create any liability on the part of the Company to GC LLC Holder if the Company in its sole discretion decides not to file a registration statement previously proposed to be filed as described in Section 3(a) or to withdraw any such registration statement subsequent to its filing, regardless of any action whatsoever that GC LLC Holder may have taken, whether as a result of the issuance by the Company of any notice hereunder or otherwise. Furthermore, nothing in this Section 3 shall apply in the case of a registration by the Company of any of its securities for its own account on a registration statement in connection with an “at-the-market” offering (as defined in Rule 415 under the Securities Act). Section 4. Suspension. (a) Subject to the provisions of this Section 4 and a good faith determination by the Company that it is in the best interests of the Company to suspend the use of any Resale Registration Statement, following the effectiveness of such Resale Registration Statement (and the filings with any U.S. federal or state securities commission), the Company, by written notice to Holder, may direct Holder to suspend sales of the Registrable Shares pursuant to such Resale Registration Statement for such time periods as the Company reasonably may determine is necessary and advisable (but in no event for more than 30 days in any 90-day period or 90 days in any 365-day period), if any of the following events will occur: (i) an underwritten public offering of Common Shares by the Company if the Company is advised by the underwriters that the concurrent resale of the Registrable Shares by Holder pursuant to the Resale Registration Statement would have a material adverse effect on the Company’s offering, (ii) there is material non-public information regarding the Company that (A) the Company determines not to be in the Company’s best interest to disclose, (B) would, in the good faith determination of the Company, require a revision to the Resale Registration Statement so that it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (C) the Company is not otherwise required to disclose, or (iii) there is a significant bona fide business opportunity (including the acquisition or disposition of assets (other than in the ordinary course of business), including any significant merger, consolidation, tender offer or other similar transaction) available to the Company that the Company determines not to be in the Company’s best interests to disclose. (b) Upon the earlier to occur of (i) the Company delivering to Holder an End of Suspension Notice (as defined below), or (ii) the end of the maximum permissible suspension period, the Company will use commercially reasonable efforts to promptly amend or supplement the Resale Registration Statement so as to permit Holder to resume sales of the Registrable Shares as soon as possible. (c) In the case of an event that causes the Company to suspend the use of a Resale Registration Statement (a “Suspension Event”), the Company will give written notice (a “Suspension Notice”) to

 
9 Holder to suspend sales of the Registrable Shares, and such notice will state that such suspension will continue only for so long as the Suspension Event or its effect is continuing and the Company is taking all reasonable steps to terminate suspension of the effectiveness of the Resale Registration Statement as promptly as possible. Holder will not affect any sales of the Registrable Shares pursuant to such Resale Registration Statement (or such filings) at any time after it has received a Suspension Notice from the Company prior to receipt of an End of Suspension Notice (as defined below). If so directed by the Company, Holder will deliver to the Company (at the reasonable expense of the Company) all copies other than permanent file copies then in Holder’s possession of the Prospectus covering the Registrable Shares at the time of receipt of the Suspension Notice. Holder may recommence effecting sales of the Registrable Shares pursuant to the Resale Registration Statement (or such filings) following further notice to such effect (an “End of Suspension Notice”) from the Company, which End of Suspension Notice will be given by the Company to Holder in the manner described above promptly following the conclusion of any Suspension Event and its effect. Section 5. Registration Procedures. In connection with the obligations of the Company with respect to any registration pursuant to this Agreement, the Company will: (a) prepare and file with the SEC, as specified in this Agreement, each Resale Registration Statement, which will comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and use commercially reasonable efforts to cause any Resale Registration Statement to become and remain effective as set forth in Section 2; (b) subject to Section 4, (i) prepare and file with the SEC such amendments and post-effective amendments to each such Resale Registration Statement as may be necessary to keep such Resale Registration Statement effective for the period described in Section 2 hereof, (ii) cause each Prospectus contained therein to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 or any similar rule that may be adopted under the Securities Act, and (iii) comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by each Resale Registration Statement during the applicable period in accordance with the intended method or methods of distribution specified by Holder; (c) furnish to Holder, without charge, such number of copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as any such Holder may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Shares; the Company hereby consents to the use of such Prospectus, including each preliminary Prospectus, by Holder in connection with the offering and sale of the Registrable Shares covered by any such Prospectus; (d) use commercially reasonable efforts to register or qualify, or obtain exemption from registration or qualification for, all Registrable Shares by the time the applicable Resale Registration Statement is declared effective by the SEC under all applicable state securities or “blue sky” laws of such

 
10 domestic jurisdiction as Holder may reasonably request in writing, keep each such registration or qualification or exemption effective during the period such Resale Registration Statement is required to be kept effective pursuant to Section 2 and do any and all other acts and things that may be reasonably necessary or advisable to enable Holder to consummate the disposition in each such jurisdiction of such Registrable Shares owned by Holder; (e) notify Holder and, if requested, confirm such advice in writing (i) when such Resale Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (ii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of such Resale Registration Statement or the initiation of any proceedings for that purpose, (iii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to such Resale Registration Statement or related Prospectus or for additional information, and (iv) of the happening of any event during the period such Resale Registration Statement is effective as a result of which such Resale Registration Statement or the related Prospectus or any document incorporated by reference therein contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading (which information will be accompanied by an instruction to suspend the use of the Resale Registration Statement and the Prospectus until the requisite changes have been made); (f) during the period of time referred to in Section 2, use its best efforts to avoid the issuance of, or if issued, to obtain the withdrawal of, any order enjoining or suspending the use or effectiveness of a Resale Registration Statement or suspending the qualification (or exemption from qualification) of any of the Registrable Shares for sale in any jurisdiction, as promptly as practicable; (g) upon request, furnish to Holder, without charge, at least one conformed copy of such Resale Registration Statement and any post-effective amendment or supplement thereto (without documents incorporated therein by reference or exhibits thereto, unless requested); (h) except as provided in Section 4, upon the occurrence of any event contemplated by Section 5(e)(iv), use commercially reasonable efforts to promptly prepare a supplement or post-effective amendment to a Resale Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Shares, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and, upon request, promptly furnish to Holder a reasonable number of copies of each such supplement or post-effective amendment; (i) enter into customary agreements and take all other actions in connection therewith in order to expedite or facilitate the distribution of the Registrable Shares included in such Resale Registration Statement (including, without limitation, making appropriate officers of the Company available to participate in “road shows,” one-on-one meetings with institutional investors and other customary marketing activities);

 
11 (j) use commercially reasonable efforts (including seeking to cure the Company’s listing or inclusion application of any deficiencies cited by the exchange or market) to list or include all Registrable Shares on any securities exchange on which such Registrable Shares are then listed or included, and enter into such customary agreements including a supplemental listing application and indemnification agreement in customary form; (k) prepare and file in a timely manner all documents and reports required by the Exchange Act and, to the extent the Company’s obligation to file such reports pursuant to Section 15(d) of the Exchange Act expires prior to the expiration of the effectiveness period of the Resale Registration Statement as required by Section 2 hereof, the Company will register the Registrable Shares under the Exchange Act and maintain such registration through the effectiveness period required by Section 2; (l) (i) otherwise use commercially reasonable efforts to comply in all material respects with all applicable rules and regulations of the SEC, (ii) make generally available to its stockholders, as soon as reasonably practicable, earnings statements (which need not be audited) covering at least 12 months that satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder, and (iii) delay filing any Resale Registration Statement or Prospectus or amendment or supplement to such Resale Registration Statement or Prospectus to which Holder will have reasonably objected on the grounds that such Resale Registration Statement or Prospectus or amendment or supplement does not comply in all material respects with the requirements of the Securities Act, Holder having been furnished with a copy thereof at least two (2) Business Days prior to the filing thereof; provided, however, that the Company may file such Resale Registration Statement or Prospectus or amendment or supplement following such time as the Company will have made a good faith effort to resolve any such issue with Holder and will have advised Holder in writing of its reasonable belief that such filing complies in all material respects with the requirements of the Securities Act; (m) cause to be maintained a registrar and transfer agent for all Registrable Shares covered by any Resale Registration Statement from and after a date not later than the effective date of such Resale Registration Statement; (n) in connection with any sale or transfer of the Registrable Shares (whether or not pursuant to a Resale Registration Statement) that will result in the securities being delivered no longer constituting Registrable Shares, cooperate with Holder to facilitate the timely preparation and delivery of certificates representing the Registrable Shares to be sold, which certificates will not bear any transfer restrictive legends arising under federal or state securities laws, and to enable such Registrable Shares to be in such denominations and registered in such names as Holder may request at least three (3) Business Days prior to any sale of the Registrable Shares; (o) in connection with a public offering of Registrable Shares, whether or not such offering is an underwritten offering, use commercially reasonable efforts to obtain a “comfort” letter from the

 
12 independent public accountant for the Company and any acquisition target of the Company whose financial statements are required to be included or incorporated by reference in any Resale Registration Statement, in form and substance customarily given by independent certified public accountants in an underwritten public offering, addressed to the underwriters, if any, and to Holder; (p) execute and deliver all instruments and documents (including an underwriting agreement or placement agent agreement, as applicable in customary form) and take such other actions and obtain such certificates and opinions as sellers of the Registrable Shares being sold reasonably request in order to effect a public offering of such Registrable Shares and in such connection, whether or not an underwriting agreement is entered into and whether or not the offering is an underwritten offering, (i) make such representations and warranties to Holder and the underwriters, if any, with respect to the business of the Company and its subsidiaries, and the Resale Registration Statement and documents, if any, incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and, if true, confirm the same if and when requested, and (ii) use commercially reasonable efforts to furnish to Holder and the underwriters of such Registrable Shares opinions and negative assurance letters of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) will be reasonably satisfactory to the managing underwriters, if any, and counsels to Holder), covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and any such underwriters; and (q) upon reasonable request of Holder, the Company will file an amendment to any applicable Resale Registration Statement (or Prospectus supplement, as applicable), to update the information provided by Holder in connection with Holder’s disposition of Registrable Shares. Section 6. Required Information. (a) The Company may require Holder to furnish in writing to the Company such information regarding Holder and the proposed distribution of Registrable Shares by Holder as the Company may from time to time reasonably request in writing or as will be required to effect registration of the Registrable Shares. Holder further agrees to furnish promptly to the Company in writing all information required from time to time to make the information previously furnished by Holder not misleading. (b) Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Sections 5(e)(ii), 5(e)(iii) or 5(e)(iv) hereof, Holder will immediately discontinue disposition of Registrable Shares pursuant to a Resale Registration Statement until (i) any such stop order is vacated, or (ii) if an event described in Sections 5(e)(iii) or 5(e)(iv) occurs, Holder’s receipt of the copies of the supplemented or amended Prospectus. If so directed by the Company, Holder will deliver to the Company (at the reasonable expense of the Company) all copies, other than permanent file copies then in Holder’s possession, in its possession of the Prospectus covering such Registrable Shares current at the time of receipt of such notice.

 
13 Section 7. Registration Expenses. The Company will pay all Registration Expenses in connection with the registration of the Registrable Shares pursuant to this Agreement and any other actions that may be taken in connection with the registration contemplated herein. Holder will bear all Selling Expenses and any other expense relating to a registration of Registrable Shares pursuant to this Agreement and any other Selling Expenses relating to the sale or disposition of Holder’s Registrable Shares pursuant to any Resale Registration Statement. Section 8. Indemnification. (a) The Company will indemnify and hold harmless Holder, each Person who controls Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and the officers, directors, members, managers, stockholders, partners, limited partners, agents and employees of each of them (each an “Indemnified Party”), to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in the Resale Registration Statement or any Prospectus or in any amendment or supplement thereto or in any preliminary Prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, or (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement; in each case, except to the extent, but only to the extent, that (A) such untrue statement or omission is based upon information regarding Holder furnished in writing to the Company by or on behalf of Holder expressly for use therein, or (B) such information relates to Holder or Holder’s proposed method of distribution of the Registrable Shares and was approved in writing by or on behalf of Holder expressly for use in the Resale Registration Statement, such Prospectus or in any amendment or supplement thereto. (b) Holder will indemnify and hold harmless the Company, and the trustees of the Company, each officer of the Company who will sign a Resale Registration Statement, each underwriter, broker or other Person acting on behalf of the holders of securities included in a Resale Registration Statement, and each Person who controls any of the foregoing Persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) against any Losses, as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in a Resale Registration Statement or any Prospectus or in any amendment or supplement thereto or in any preliminary Prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, but only to the extent that (i) such untrue statement or omission is based upon information regarding Holder furnished in writing to the Company by or on behalf of Holder expressly for use therein, or (ii) such information relates to Holder or Holder’s proposed method of distribution of the Registrable Shares and was approved in writing by or on behalf of

 
14 Holder expressly for use in the Resale Registration Statement, such Prospectus or in any amendment or supplement thereto. (c) Each Indemnified Party under this Section 8 will give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, but the omission to so notify the Indemnifying Party will not relieve it from any liability which it may have to the Indemnified Party pursuant to the provisions of this Section 8 except to the extent of the actual damages suffered as a result of such delay in notification. The Indemnifying Party will assume the defense of such action, including the employment of counsel to be chosen by the Indemnifying Party to be reasonably satisfactory to the Indemnified Party, and payment of expenses. The Indemnified Party will have the right to employ its own counsel in any such case, but the legal fees and expenses of such counsel will be at the expense of the Indemnified Party, unless (i) the employment of such counsel will have been authorized in writing by the Indemnifying Party in connection with the defense of such action, (ii) the Indemnifying Party will not have employed counsel to take charge of the defense of such action or (iii) the Indemnified Party will have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to the Indemnifying Party (in which case the Indemnifying Party will not have the right to direct the defense of such action on behalf of the Indemnified Party), in any of which events such fees and expenses will be borne by the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, will, except with the consent of each Indemnified Party, consent to the entry of any judgment or enter into any settlement unless such judgment or settlement (i) includes as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation, and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Indemnified Party. (d) If the indemnification provided for in this Section 8 is unavailable to a party that would have been an Indemnified Party under this Section 8 in respect of any expenses, claims, losses, damages and liabilities referred to herein, then each party that would have been an Indemnifying Party hereunder will, in lieu of indemnifying such Indemnified Party, contribute to the amount paid or payable by such Indemnified Party as a result of such expenses, claims, losses, damages and liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand, and such Indemnified Party on the other, in connection with the statement or omission which resulted in such expenses, claims, losses, damages or liabilities, in reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or such Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and Holder agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable consideration referred to above in this Section 8(d).

 
15 (e) No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (f) In no event will any Holder be liable for any expenses, claims, losses, damages or liabilities pursuant to this Section 8 in excess of the net proceeds to Holder of any Registrable Shares sold by Holder in any relevant offering. Section 9. Rule 144. The Company shall, at the Company’s expense, for so long as any Holder holds any Registrable Shares, use commercially reasonable efforts to cooperate with Holder, as may be reasonably requested by Holder from time to time, to facilitate any proposed sale of Registrable Shares by Holder in accordance with the provisions of Rule 144, including by using commercially reasonable efforts (i) to comply with the current public information requirements of Rule 144 and (ii) to provide opinions of counsel as may be reasonably necessary in order for Holder to avail itself of such rule to allow Holder to sell such Registrable Shares without registration. Section 10. Transfer of Registration Rights. The rights and obligations of GC LLC under this Agreement (other than the limitation set forth in the second parenthetical of clause (c) of the definition of Registrable Shares, which shall only apply to Registrable Shares held by GC LLC Holder and no other transferee or assignee) may be transferred or otherwise assigned to a transferee or assignee of Registrable Shares, provided (i) such transferee or assignee becomes a party to this Agreement or agrees in writing to be subject to the terms hereof to the same extent as if such transferee or assignee were an original party hereunder, and (ii) the Company is given written notice by GC LLC of such transfer or assignment stating the name and address of such transferee or assignee and identifying the securities with regard to which such rights and obligations are being transferred or assigned. Section 11. Miscellaneous. (a) Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement and any claim, controversy or dispute arising under or related in any way to this Agreement, the relationship of the parties, the transactions contemplated by this Agreement and/or the interpretation and enforcement of the rights and duties of the parties hereunder or related in any way to the foregoing, will be governed by and construed in accordance with the laws of the State of Maryland without giving effect to any choice or conflict of law provision or rule (whether of the State of Maryland or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Maryland. EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF MARYLAND FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND AGREES THAT ALL CLAIMS IN RESPECT OF THE SUIT, ACTION OR OTHER PROCEEDING MAY BE HEARD AND DETERMINED IN ANY

 
16 SUCH COURT. EACH PARTY AGREES TO COMMENCE ANY SUCH SUIT, ACTION OR OTHER PROCEEDING IN ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF MARYLAND. EACH PARTY WAIVES ANY DEFENSE OF IMPROPER VENUE OR INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING SO BROUGHT AND WAIVES ANY BOND, SURETY, OR OTHER SECURITY THAT MIGHT BE REQUIRED OF ANY OTHER PARTY WITH RESPECT THERETO. ANY PARTY MAY MAKE SERVICE ON ANY OTHER PARTY BY SENDING OR DELIVERING A COPY OF THE PROCESS TO THE PARTY TO BE SERVED AT THE ADDRESS AND IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES IN SECTION 11(E). NOTHING IN THIS SECTION 11(A), HOWEVER, WILL AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AT EQUITY. EACH PARTY AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT WILL BE CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW OR AT EQUITY. EACH OF THE PARTIES HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS AND OBLIGATIONS. EACH OF THE PARTIES (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (II) ACKNOWLEDGES THAT SUCH OTHER PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN. (b) Entire Agreement. This Agreement, together with the Contribution Agreement, constitutes the full and entire understanding and agreement among the parties with regard to the subject hereof. (c) Interpretation and Usage. In this Agreement, unless there is a clear contrary intention: (i) when a reference is made to a section, an annex or a schedule, that reference is to a section, an annex or a schedule of or to this Agreement; (ii) the singular includes the plural and vice versa; (iii) reference to any agreement, document or instrument means that agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof; (iv) reference to any statute, rule, regulation or other law means that statute, rule, regulation or law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any law means that section or provision from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of that section or provision; (v) “hereunder,” “hereof,” “hereto,” and words of similar import will be deemed references to this Agreement as a whole and not to any

 
17 particular article, section or other provision of this Agreement; (vi) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term; (vii) references to agreements, documents or instruments will be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto; and (viii) the terms “writing,” “written” and words of similar import will be deemed to include communications and documents in e-mail, fax or any other similar electronic or documentary form. (d) Amendment. No supplement, modification, waiver or termination of this Agreement will be binding unless executed in writing by the Company and Holder. (e) Notices, etc. Any notice or other communication hereunder must be given in writing and either (a) delivered in Person, (b) transmitted by electronic mail or facsimile, (c) transmitted by telefax or telecommunications mechanism provided, that receipt is confirmed and any notice so given is also mailed as provided in the following clause (d), or (d) mailed by certified or registered mail, postage prepaid, return receipt requested as follows: If to GC LLC or GC LLC Holder, addressed to: Griffin Capital Company, LLC Griffin Capital Plaza 266 Kansas Street El Segundo, CA 90245 Attention: Kevin Shields; Mary Higgins; Danny Snell Email: shields@griffincapital.com; dsnell@griffincapital.com; mhiggins@griffincapital.com With a copy (which shall not constitute notice) to: Baker & McKenzie LLP 300 East Randolph Street, Suite 5000 Chicago, IL 60601 United States Attention: Daniel Cullen Email: daniel.cullen@bakermckenzie.com If to the Company, addressed to: Peakstone Realty Trust 1520 E. Grand Avenue El Segundo, CA 90245 Attention: Michael J. Escalante; Javier Bitar Email: mescalante@pkst.com; jbitar@pskt.com With a copy (which shall not constitute notice) to: Peakstone Realty Trust

 
18 150 N. Riverside Plaza, Suite 1950 Chicago, IL 60606 Attention: Nina Momtazee Sitzer Email: nsitzer@pkst.com Latham & Watkins LLP 355 S. Grand Avenue, Suite 100 Los Angeles, CA 90071 Attention: Julian T.H. Kleindorfer, Esq.; Lewis W. Kneib, Esq. Email: julian.kleindorfer@lw.com; lewis.kneib@lw.com or to such other address or to such other Person as each Party shall have last designated by such notice to the other Parties. Each such notice or other communication shall be effective (i) when delivered in Person, (ii) if given by telecommunication, when transmitted to the applicable number so specified in (or pursuant to) this Section 11(e) and an appropriate confirmation is received, and (iii) if given by mail, three (3) Business Days after delivery or the first attempted delivery, if properly addressed. (f) Counterparts. This Agreement may be executed in any number of counterparts, any of which may be executed and transmitted by facsimile, and each of which shall be deemed an original of this Agreement, and all of which, when taken together, shall be deemed to constitute one and the same Agreement. (g) Severability. If any provision of this Agreement is determined to be invalid, illegal or unenforceable by any governmental entity, the remaining provisions of this Agreement shall remain in full force and effect; provided that the essential terms and conditions of this Agreement for all parties remain valid, binding and enforceable. In the event of any such determination, the parties agree to negotiate in good faith to modify this Agreement to fulfill as closely as possible the original intent and purposes hereof. To the extent permitted by law, the parties hereby to the same extent waive any provision of law that renders any provision hereof prohibited or unenforceable in any respect. (h) Section Titles. Section titles are for descriptive purposes only and will not control or alter the meaning of this Agreement as set forth in the text. (i) Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and permitted assigns and will inure to the benefit of the parties hereto and their respective successors and permitted assigns. In the event that the Company or any of its successors or permitted assigns (i) consolidates or amalgamates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation, amalgamation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case as a condition thereto, the Company (or its successors or permitted assigns) shall cause such Person to assume the obligations of the Company set forth in this Agreement. If any successor or permitted assignee of GC LLC will acquire Registrable Shares in any manner, whether by operation of

 
19 law or otherwise, (a) such successor or permitted assignee will be entitled to all of the benefits of GC LLC under this Agreement and (b) such Registrable Shares will be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Shares such Person will be conclusively deemed to have agreed to be bound by all of the terms and provisions hereof. (j) Remedies; No Waiver. Each party acknowledges and agrees that the other parties would be irreparably damaged in the event that the covenants set forth in this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that each party hereto will be entitled to seek an injunction to specifically enforce the terms of this Agreement solely in the courts specified in Section 11(a), in addition to any other remedy to which such party may be entitled hereunder, at law or in equity. No failure or delay by a party in exercising any right or remedy provided by law or under this Agreement will impair such right or remedy or operate or be construed as a waiver or variation of it or preclude its exercise at any subsequent time and no single or partial exercise of any such right or remedy will preclude any further exercise of it or the exercise of any other remedy. (k) Attorneys’ Fees. If Holder brings an action to enforce its rights under this Agreement, the prevailing party in the action is entitled to recover its costs and expenses, including reasonable attorneys’ fees, incurred in connection with such action, including any appeal of such action. (l) Changes in Securities Laws. In the event any amendment, repeal or other change in the securities laws will render the provisions of this Agreement inapplicable, the Company will provide Holder with substantially similar rights to those granted under this Agreement and use its good faith efforts to cause such rights to be as comparable as possible to the rights granted to Holder hereunder. [Signatures appear on next page]

 




[Signature Page to Amended and Restated Registration Rights Agreement] IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above. GC LLC: GRIFFIN CAPITAL, LLC a Delaware limited liability company By: Kevin A. Shields Chief Executive Officer COMPANY: PEAKSTONE REALTY TRUST a Maryland real estate investment trust By: Michael J. Escalante Chief Executive Officer OPERATING PARTNERSHIP: PKST OP, L.P. a Delaware limited partnership By: PEAKSTONE REALTY TRUST Its General Partner By: Michael J. Escalante Chief Executive Officer

 
EX-10.2* 3 asa.htm EX-10.2* asa
1520 E. Grand Ave, El Segundo, CA 90245 | 310.606.3200 | pkst.com September 6, 2023 Via Personal Delivery and E-Mail Griffin Capital Company, LLC Griffin Capital, LLC Griffin Capital Plaza 266 Kansas Street El Segundo, CA 90245 Attention: Kevin A. Shields E-Mail: shields@griffincapital.com Re: Termination Notice for that certain Administrative Services Agreement dated December 14, 2018 (as amended, the “Agreement”), by and between Griffin Capital Company, LLC and Griffin Capital, LLC (collectively, the “Griffin Entities”), on the one hand, and Peakstone Realty Trust, PKST OP, L.P., Griffin Capital Essential Asset TRS, Inc. and Griffin Capital Real Estate Company, LLC (collectively, the “Company”), on the other hand. Dear Kevin: Reference is made to the Agreement. The Company hereby elects to terminate the “HR Support” Services as set forth on Schedule A to the Agreement effective October 6, 2023. This letter shall constitute the Company’s notice to the Griffin Entities of such termination pursuant to the Agreement, and more specifically Section (iii) of that certain letter agreement dated March 21, 2023, by and between the Griffin Entities and the Company. The Company has now terminated all Services under the Agreement. Accordingly, pursuant to Section 9.2(b) of the Agreement, the Agreement shall automatically terminate effective October 6, 2023. Sincerely, PEAKSTONE REALTY TRUST By: Name: Javier F. Bitar Its: Chief Financial Officer and Treasurer GRIFFIN CAPITAL ESSENTIAL ASSET TRS, INC. By: Name: Javier F. Bitar Title: Chief Financial Officer and Treasurer PKST OP, L.P. By: Peakstone Realty Trust, as General Partner of PKST OP, L.P. By: Name: Javier F. Bitar Title: Chief Financial Officer and Treasurer GRIFFIN CAPITAL REAL ESTATE COMPANY, LLC By: Name: Javier F. Bitar Title: Chief Financial Officer and Treasurer

 
EX-31.1 4 pkst9302023ex311_me.htm EX-31.1 Document

Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Michael J. Escalante, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Peakstone Realty Trust;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated: November 9, 2023 By: /s/ Michael J. Escalante
Michael J. Escalante
Chief Executive Officer and President
(Principal Executive Officer)


EX-31.2 5 pkst9302023ex312_jb.htm EX-31.2 Document

Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Javier F. Bitar, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Peakstone Realty Trust;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated: November 9, 2023 By: /s/ Javier F. Bitar
Javier F. Bitar
Chief Financial Officer and Treasurer
(Principal Financial Officer)


EX-32.1 6 pkst9302023ex321_me.htm EX-32.1 Document

Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Peakstone Realty Trust (the “Company”), in connection with the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023 (the “Report”), hereby certifies that:
(i)the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
(ii)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 9, 2023 By: /s/ Michael J. Escalante
Michael J. Escalante
Chief Executive Officer and President
(Principal Executive Officer)


EX-32.2 7 pkst9302023ex322_jb.htm EX-32.2 Document

Exhibit 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Peakstone Realty Trust (the “Company”), in connection with the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023 (the “Report”), hereby certifies that:
(i)the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
(ii)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 9, 2023 By: /s/ Javier F. Bitar
Javier F. Bitar
Chief Financial Officer and Treasurer
(Principal Financial Officer)