Peakstone Realty Trust filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Regulation FD Disclosure, Financial Statements and Exhibits

Entry into a Material Definitive Agreement.

Using cash on hand, the Operating Partnership reduced the outstanding principal balance of the 2025 Term Loan  from $400,000,000 to $210,000,000, and the maturity date of the reduced 2025 Term Loan was extended to July 25, 2028 (now, the “2028 Term Loan”);

The maturity date of the Operating Partnership’s revolving line of credit (“Revolver”) was extended by four years from the closing date of the Eighth Amendment to July 25, 2028;

The maximum commitment amount under the Revolver was reduced from $750,000,000 to $547,000,000, which amount is calculated based on the Company’s reported financial statements for June 30, 2024;

The Eighth Amendment also provides the option, subject to obtaining additional commitments from lenders and satisfying certain other customary conditions, to increase the commitments under the Revolver, to increase the outstanding principal balance under existing term loans and/or incur new term loans by up to approximately $400,000,000 in the aggregate (for a maximum facility size of $1.3 billion).

The interest rate with respect to drawn amounts under the Revolver can be based on either SOFR or Base Rate at the Operating Partnership’s election.  The Operating Partnership has currently elected SOFR (interest periods for SOFR may be daily, 1 month or 3 months, at the Operating Partnership’s election). The interest rate with respect to drawn amounts under the Revolver that constitute “SOFR Loans” (being all drawn amounts as of June 30, 2024) was increased by 0.35% from the rate in effect as of June 30, 2024 (such that the interest rate ranges between SOFR + 1.65% and SOFR + 2.55%, depending on the Company’s consolidated leverage ratio). With respect to any drawn amounts under the Revolver that are “Base Rate Loans” (being none as of June 30, 2024), the interest rate was increased by 0.35% from the rate in effect as of June 30, 2024 (such that the interest rate ranges between Base Rate + 0.65% and Base Rate + 1.55%, depending on the Company’s consolidated leverage ratio);

The interest rate with respect to the 2028 Term Loan can be based on either SOFR or Base Rate at the Operating Partnership’s election.  The Operating Partnership has currently elected SOFR.  The interest rate for any portion of the 2028 Term Loan that is a SOFR Loan (being all outstanding amounts as of June 30. 2024) increased by 0.35%, from the rate in effect as of June 30, 2024 (such that the interest rate ranges between SOFR + 1.60% and SOFR + 2.50%, depending on the Company’s consolidated leverage ratio).  The interest rate for any portion of the 2028 Term Loan that is a Base Rate Loan (being none as of June 30, 2024) increased by 0.35%, from the rate in effect as of June 30, 2024 (such that the interest rate ranges between Base Rate + 0.60% and Base Rate + 1.50%, depending on the Company’s consolidated leverage ratio);

The availability under the Revolver (the “Borrowing Base”) is based, in part, on a stipulated Capitalization Rate for the assets constituting Pool Properties. Prior to the Eighth Amendment, the Capitalization Rate was 7% for all of the Company’s Pool Properties (without regard to the type of asset). Pursuant to the Eighth Amendment, the Capitalization Rate for industrial assets is now 6% and the Capitalization Rate for office assets is now 8%;

The Borrowing Base was also redefined in the Eighth Amendment such that it is determined as the sum of:

for industrial assets, the lesser of (i) sixty percent (60%) of the value of all Pool Properties that are industrial properties calculated using the applicable Capitalization Rate (i.e., 6%, as noted above) and the annualized Net Operating Income for the prior quarter from all such Pool Properties that are industrial properties; or (ii) a loan amount which would provide a modified debt service coverage ratio for the industrial assets of 1.25:1.00 (based on an imputed interest rate equal to the greater of the 10-year U.S. Treasury rate plus 2.25%, and 5.0%, and imputed amortization on a 30-year schedule, see definition of Industrial UAP DSCR in the Eighth Amendment); and

for office assets, the lesser of (i) fifty percent (50%) of the value of all Pool Properties that are office properties calculated using the applicable Capitalization Rate (i.e., 8%, as noted above) and the annualized Net Operating Income for the prior quarter from all such Pool Properties that are office properties; or (ii) a loan amount which would provide a modified debt service coverage ratio for the office assets of 1.45:1.00 (based on an imputed interest rate equal to the greater of the 10-year U.S. Treasury rate plus 2.75%, and 6.5%, and imputed amortization on a 30-year schedule, see definition of Office UAP DSCR in the Eighth Amendment).

The Operating Partnership currently has floating to fixed SOFR interest rate swaps with a notional amount of $750,000,000 that mature on July 1, 2025. These have the effect of converting SOFR to a weighted average fixed rate of interest payable by the Operating Partnership of 1.97%. In connection with the Eighth Amendment, the Operating Partnership has entered into certain interest rate hedging instruments, in the form of forward-starting, floating to fixed SOFR interest rate swaps with a notional amount of $550,000,000. These swaps become effective July 1, 2025, and mature July 1, 2029 and have the effect of converting SOFR to a weighted average fixed rate of interest payable by the Operating Partnership of 3.58%. These hedges are in excess of the hedging requirements under the Amended Credit Agreement.

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

Regulation FD Disclosure.

Financial Statements and Exhibits.