Recently I have received a few questions on Peakstone Realty Trust (NYSE: PKST), formerly Griffin Realty Trust. Peakston recently went public, and the stock is up 7%, but investors face a loss of 50% or more.
This caused many to be confused about how they could have lost money. The short answer is that when Peakstone non traded reit shares were “reversed split,” the value was substantially less than the now public share value.
One of the problems with non-traded REITs is the company determines that value versus the market. I often see non-traded REITs having values that are 2x the value of what it actually is. Investors don’t know that until they sell.
Non-Traded REITs like Peakstone (sold as Griffin) can be a challenging and risky investment that is not normally recommended for retail investors lacking significant investment experience and net worth.
Table of Contents
What Can Investors With Losses Do?
Right now, I think most high net worth and institutional investors are forced to either hold on to Peakstone stock or sell it for a loss. However, if you are a regular investor and a financial advisor sold you Peakston (Griffin) REIT, you may be able to file a FINRA claim to recover losses.
I am not a lawyer, so I can’t give specific advice other than talk to a law firm that specializes in investments and understand the products like Peakstone.
However, I recommend investors call Haselkorn & Thibaut, an investment fraud law firm, for assistance. They have over five decades of experience and an impressive 98% success rate. Dial 1-888-779-0640 or visit their Peakstone Realty Trust webpage for a complimentary consultation on options for loss recovery.
In-Depth Look at Peakstone Realty Trust Once known as Griffin Realty Trust
Peakstone Realty Trust is a publicly listed, non-traded real estate investment trust (REIT) that previously operated under the name Griffin Capital Essential Asset REIT. The REIT, boasting a multi-billion dollar portfolio, owns and oversees a varied selection of strategically positioned, high-grade office and industrial properties.
These properties are primarily net leased to reliable and nationally recognized individual tenants. Peakstone Realty Trust adopted its current name in March 2023 before its listing on the New York Stock Exchange.
As of February 2023, Peakstone Realty Trust’s portfolio included:
- 79 properties are producing an annual in-place rent of $243 million.
- 24% of these properties consisted of industrial space.
- 76% were utilized as offices.
- The portfolio enjoyed a 95.1% occupancy rate.
With headquarters in El Segundo, California, Peakstone Realty Trust manages its assets using a net lease strategy, meaning tenants usually absorb the rental property costs, freeing the landlord from managing multiple bills.
Investment Risks with Peakstone Realty Trust
The Griffin Capital Essential Asset REIT II prospectus labels the stock as a high-risk investment. It states that investing in the common stock “carries substantial risks and should only be considered by those with adequate financial resources, interested in a relatively long-term investment, and not requiring liquidity from their investment.” The ability to sell your shares can be difficult as there may not be a public market for them initially, and there’s no guarantee one will be established.
The prospectus advises against this REIT for investors looking for short-term investments, guaranteed income, or liquidity. Additional eligibility criteria include a minimum net worth of $250,000, an annual gross income of $70,000, and a net worth of at least $70,000.
The decline in Peakstone Realty Trust’s Value?
In August 2022, Peakstone Realty Trust revealed that its updated net asset value had dropped to $7.42 per share from the previous year’s $9.10. The company attributed this decline to decreasing office property valuations, pointing out that its industrial buildings’ value had risen.
Why Did Peakstone Realty Trust Sell Its Properties?
In August 2022, Peakstone Realty Trust announced a “strategic monetization process.” This involved the creation of a new public company owning a selected portfolio of mainly industrial assets and some office assets. The trust planned to gradually sell its predominantly office assets and distribute net proceeds to shareholders. The final step would involve the complete liquidation and discontinuation of operations.
Public Listing of Peakstone Realty Trust Peakstone Realty Trust became public on the NYSE in March 2023. Before this listing, the company carried out a “1-for-9 reverse share split concerning each class of its common shares.” As of May 16, 2023, at 12:46 PM, its stock was trading at $21.20 a share.
Losses Incurred at Peakstone Realty Trust Investors may have experienced considerable losses since their initial investments in Peakstone Realty Trust. The company suspended its distribution rein
Rebrand and Go Public
In anticipation of its planned debut on the New York Stock Exchange (NYSE), Griffin Realty Trust rebranded itself as Peakstone Realty Trust (NYSE: PKST) in March 2023. Following this transition, Peakstone Realty Trust’s shares were successfully launched on the NYSE on April 13, 2023, trading under the ticker symbol “PKST.”
The REIT is an internally-managed real estate investment trust (REIT) that focuses on owning and operating a diversified portfolio of industrial and office properties. With a commitment to creating exceptional value for stakeholders, Peakstone Realty Trust aims to position itself strategically in the market and deliver long-term growth and stability.
This article provides a comprehensive overview of Peakstone Realty Trust, its financial performance, recent developments, and its impact on the real estate industry.
Recent Developments
Peakstone Realty Trust has been actively involved in several significant developments recently. On May 9, 2023, the company announced the sale of three properties for approximately $170 million, contributing to the ongoing deleveraging of its balance sheet. This strategic move demonstrates Peakstone Realty Trust’s focus on optimizing its portfolio and unlocking value for its investors.
However, many investors have lost substantial amounts of money due to the change. Haselkorn & Thibaut, an investor law firm, currently represents Peakstone Realty Trust investors that lost money. It is alleged that investors were not fully aware of the risks and liquidity issues when they bought it.
Initial Public Offering (IPO)
Peakstone Realty Trust’s initial public offering (IPO) made headlines in April 2023. The company experienced a significant surge in its stock price, with shares more than doubling from $8.00 to $18.61 on the New York Stock Exchange. This successful IPO reflects the market’s confidence in the company and its growth potential. However, it’s important to note that some market observers have expressed caution and skepticism regarding the strong pricing action of Peakstone Realty Trust’s IPO.
Financial Performance
Peakstone Realty Trust’s financial performance reflects its strong position in the market. In the fourth quarter of 2022, the company reported revenue of approximately $75.9 million, contributing to a total annual revenue of approximately $416.5 million for the year. However, in the first quarter of 2023, the company experienced a decline in Funds from Operations (FFO), reporting approximately $14.7 million compared to $53.2 million in the same quarter of the previous year. This decrease in FFO could be attributed to various market factors and the company’s operational challenges.
Form Q-10 Summary
Based on SEC filling, here are the key points:
- Shares and Capital: The company had 800,000,000 authorized common shares with a par value of $0.001. As of March 31, 2023, 36,006,922 shares were outstanding compared to 35,999,898 as of December 31, 2022. Additional paid-in capital stood at $2,950,706 in March 2023, up from $2,948,600 in December 2022.
- Share Split and Conversion: On March 10, 2023, the company executed a one-for-nine reverse share split without affecting the number of authorized common shares or the par value. On April 13, 2023, all classes of common shares, except Class E, were converted into Class E common shares and listed on the New York Stock Exchange.
- Cash Distributions: There were cash distributions to common shareholders amounting to $14,873 and $28,073 during different periods.
- Joint Venture: The company reported a net loss of $14,661 in the unconsolidated Office Joint Venture, resulting in a balance of $164,876 as of March 31, 2023.
- Loans: Various loans were reported, including a BOA II Loan of $250,000, an AIG Loan of $99,255, and a previously held HealthSpring Mortgage Loan that was no longer on the books as of the reported dates.
- Share Issuance and Redemption: The company issued around 4,863,623 shares upon the merger of Signature Office REIT, Inc. It also has a DRP offering with different classes of shares. A total of 941 common shares were redeemed in the three months ending March 2023.
- Long-Term Incentive Plan: The company issued RSUs under its Amended and Restated Employee and Trustee Long-Term Incentive Plan, with approximately 188,691 shares available for future issuance as of March 2023.
- Real Estate Assets: As of March 2023, the net value of industrial real estate assets was $740,421 after accounting for accumulated depreciation and amortization. The percentage of Annualized Base Rent was given for different states and sectors.
- Same Store Portfolio: For Q1 2023, the company reported rental income, property operating expense, and property tax expense for its Same Store portfolio.
- FFO and Adjustments: FFO attributable to common shareholders and limited partners was $14,720. There were several adjustments, including revenues in excess of cash received, amortization of share-based compensation, and others.
Conclusion
Peakstone Realty Trust is a reputable internally-managed REIT specializing in owning and operating industrial and office properties. With a focus on creating exceptional value for stakeholders, the company has established a diversified portfolio of high-quality properties.
Although the first quarter of 2023 saw a decline in FFO, the recent sale of properties and ongoing efforts to optimize the portfolio demonstrate Peakstone Realty Trust’s commitment to maximizing shareholder value.
