Good day, and welcome to Peakstone Realty Trust's Third Quarter of 2025 Earnings Call and Webcast. [Operator Instructions] Also, please be aware that today's call is being recorded. I would now like to turn the call over to Steve Swett, Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us for Peakstone Realty Trust's Third Quarter 2025 Earnings Call and Webcast. Earlier today, we posted an earnings release, supplemental and updated investor presentation to the Investors page on our website at www.pkst.com. Please reach out to our Investor Relations team at ir@pkst.com with any questions. The company will be making forward-looking statements, which include any statements that are not historical facts, on today's webcast. Such forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, please see our annual report on Form 10-K and subsequent filings with the SEC. Additionally, on this call, the company may refer to certain non-GAAP financial measures such as funds from operations or funds from operations, adjusted funds from operations, EBITDAre, adjusted EBITDAre and same-store cash net operating income. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP numbers in the company's earnings release and filings with the SEC. On the call today are Mike Escalante, CEO and President; and Javier Bitar, CFO. With that, I'll hand the call over to Mike.

Good afternoon, and thank you for joining our call today. Our strategic transformation into an industrial-only REIT focused on growth in the industrial outdoor storage sector continues to advance. As of October 31, our Industrial portfolio generates more than 60% of our ABR. Through disciplined office sales, strong IOS leasing and targeted IOS acquisitions, we have strengthened our balance sheet, reducing debt by approximately $450 million and improving total leverage to 5.4x on a pro forma basis. With solid liquidity and a growing IOS investment pipeline, we remain confident in our strategy and our ability to continue creating value for shareholders. During and after the third quarter, we continued making progress on our office dispositions. As of October 31, we sold 12 office properties totaling approximately $363 million, leaving just 12 remaining office properties in our portfolio. Buyer interest, including from existing tenants, has been strong, and we expect to complete the sale of a majority of these properties by the end of this year with a few transactions potentially closing in the first quarter of 2026. Let me now turn to our IOS portfolio, where market fundamentals remain solid, characterized by strong tenant demand and persistent supply constraints. These dynamics continue to keep vacancies low and support healthy rent growth. Against that backdrop, we continue to deliver strong results across both our IOS operating and redevelopment portfolios. During the quarter, we executed new leases, renewals and proactive lease modifications across our IOS portfolio, generating more than $1 million of incremental IOS ABR. These transactions brought the IOS operating portfolio to 100% leased and overall achieved weighted average re-leasing spreads of 116% on a cash basis and 120% on a GAAP basis. Let me provide more detail on the transactions that drove these results. In Philadelphia, we signed a new…

Thanks, Mike. To begin, I'd like to explain a nuance to our reporting this quarter. The 16 remaining office properties we owned as of September 30, all of which were classified as held for sale and 11 of the office properties we sold prior to that date were classified as discontinued operations. As a result, these assets and related results are reported separately on our financial statements for all periods presented. Now I'll cover several key financial highlights for the quarter before turning to a few pro forma metrics that reflect activity completed after quarter end. For the quarter, total revenue was approximately $25.8 million from continuing operations, which excludes revenue from office discontinued operations of approximately $25.2 million. Net income attributable to common shareholders was approximately $3.5 million or $0.09 per share. FFO was approximately $18.3 million or $0.46 per share on a fully diluted basis. Core FFO was approximately $19.1 million or $0.48 per share on a fully diluted basis. AFFO was approximately $18.6 million or $0.47 per share on a fully diluted basis, and same-store cash NOI increased 3.7% compared to the same quarter last year. Moving on to our balance sheet. At quarter end, total liquidity was approximately $438 million, consisting of cash and available revolver capacity. Our cash balance, excluding restricted cash, was approximately $326 million, and available revolver capacity was approximately $112 million. We had approximately $1.05 billion of total debt outstanding, consisting of $800 million of unsecured debt on our credit facility and the remainder being nonrecourse secured mortgage debt. After deducting cash, our net debt was approximately $725 million. As of quarter end, 76% of our debt was fixed, including the effect of our forward starting floating to fixed interest rate swaps totaling $550 million, which converts SOFR on our unsecured debt…

Thanks, Javier. This quarter marks another milestone for Peakstone with industrial assets now generating 60% of our ABR. Our strategy remains focused on growth in the IOS sector supported by strong supply and demand fundamentals. Our IOS market insight, tenant relationships and execution capabilities position us to capture opportunity, drive growth and create value for our shareholders. With that, we'll now open the call for questions. Operator?

[Operator Instructions] And our first question here will come from Dan Byun with Bank of America.

From the prepared remarks, it sounds like you will pay down additional $250 million to $300 million of debt. When should we expect an acceleration in IOS acquisitions? Or are current levels a good run rate for that?

Yes. So Dan, thanks for joining the call. I think that the reality of what we have right now is, as you can tell and mentioned, we've got ample liquidity and our debt ratios are below long-term targets. So we'll continue to do disciplined -- we're going to be disciplined in our management of our growth and the strengthening of our balance sheet. So as you know, there's not a straight line in the way we've conducted that. But if you look all the way back to first quarter of this year, we were as high as 7:1. So we're pretty pleased with the fact that we've been able to reduce it down to a 5.4% ratio, which gives us a little bit of leeway there.

Got it. And congrats on bringing down your leverage below your goal here. I guess like just going back to the acquisitions, have you seen any increased competition for the IOS assets? And if so, like are you seeing the same private buyers or maybe even free players potentially?

Yes. I don't know that I would call it increased competition. I just think there's more acceptance. And I think the other way to look at it is that the lender community has been more accepting. I think I mentioned that last quarter as well. That seems to be perpetuating itself. So one of the things that we have in terms of our abilities to address these matters is the fact that we've got a very flexible balance sheet with which to respond. We've shown that we can take down something that was relatively large, not that we're aiming to do that necessarily. But those factors in combination with really our platform being national in scope allows us to see a lot of activity across the country and really take a very disciplined approach to that.

And our next question will come from Michael Goldsmith with UBS.

Another quarter of strong same-store NOI growth. As you implement your portfolio optimization, what do you see as a sustainable same-store NOI growth for the portfolio? And when do you think you could -- do you have enough visibility where you could start guiding around that?

Yes, Michael, we can appreciate that you're looking for that information. As you know, our business has been undergoing significant change and we are not providing guidance at this time. But I think we do provide a fair amount of information. We're very transparent. And so I think we provide you a fair amount of metrics. And if you look across our supplement and our IP to try and get you as much information as we can provide in that regard. We laid out in our IP, the growth that we have seen. And I think you've got the tools in essence to sort of put that together.

Got it. And another quarter of solid leasing with some nice lease spreads and strong escalations, but it also looks like you had to put a little bit of money in where one property was under redevelopment, another required a little bit of landlord work. So I'm just trying to understand kind of like the -- if there is like tenant improvement dollars or just to think about the return on the money that you're putting in and then in turn, the lease terms that you get out of that.

Yes. I think on balance, honestly, we've been surprised at how little money we've had to spend outside of our redevelopment opportunities and even inside of our redevelopment opportunities. So thus far, we've been able to achieve, in some of our leases, a fair number of deals with, frankly, no TI and very little downtime. So all said and done, the attributes that people have been mentioning about IOS, in our opinion, are frankly meeting the test of time. And certainly, that's proven out with our ability to operate the portfolio over the course of really a full year now. And so overall, I would tell you that we're quite happy with really what we've been able to achieve all the way across the board in terms of upticks in rents, lack of downtime, the interest in our sites and what we've been able to do on a proactive management basis. I could probably go on and on about that. But for now, I'll just leave it at that.

Our next question will come from Anthony Hau with Truist.

Congrats on the quarter. Mike, I might have misheard this earlier, but I think you mentioned that you guys have around -- you guys are going to have around $300 million to $350 million from office sales to pay down the debt. Is that additional $300 million of asset sales in the fourth quarter. Is that what you guys are gauging?

Yes. So yes, you heard that that's the net proceeds from the remaining 12 assets that we're selling.

In the range of $300 million to $350 million, Anthony. And with that, we said we would plan to pay down debt by somewhere in the range of $250 million to $300 million. So that is future sales.

Okay. So that's on top of the $160 million you guys already announced, right?

That's correct, yes.

Okay. And how confident are you guys in achieving that pricing range? Are there like any active LIs or notable like tenant interest that's supporting that valuation?

Yes, we're feeling pretty good about that, Anthony. Virtually, every asset is engaged at this point in time. And I think officially under control. We'd say that half of them are officially under control, but all of them are engaged.

And this will conclude our question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

Thank you very much. I appreciate all your time today. It's a very exciting quarter for us to be able to tell you and regale you with all of our successes across the board, really disciplined office sales, strong execution across our IOS leasing and the ability to put some targeted acquisitions to work in the IOS subsector. So all of that for us has really rewarded the investors with great third quarter results. So thank you, and we're looking forward to our future.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.