Peakstone Realty TrustPKST
Peakstone Realty Trust Fair Value Disclosure
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 years ended December 31, 2025 and 2024.
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 December 31, 2025 and 2024:
| Assets/(Liabilities) | Total Fair Value | Quoted Prices in Active Markets for Identical Assets and Liabilities | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Mutual Funds Asset | $ | 10,941 | $ | 10,941 | $ | — | $ | — | ||||||||||||||||||
| Interest Rate Swap Liability | $ | (2,444) | $ | — | $ | (2,444) | $ | — | ||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Mutual Funds Asset | $ | 11,971 | $ | 11,971 | $ | — | $ | — | ||||||||||||||||||
| Interest Rate Swap Asset | $ | 15,974 | $ | — | $ | 15,974 | $ | — | ||||||||||||||||||
Nonrecurring Measurement - Real Estate Impairment
During the year ended December 31, 2025, the Company recorded real estate impairments from: i) continuing operations of $18.2 million related to four Office segment properties and one Industrial segment property and ii) discontinued operations of $345.5 million related to 19 Office Discontinued Operations Properties.
The following table summarizes the fair value assumptions for the real estate impairments for the year ended December 31, 2025:
| December 31, 2025 | ||||||||||||||||||||
Continuing Operations | Discontinued Operations | |||||||||||||||||||
Range of Inputs | Office Segment | Industrial Segment | Office Discontinued Operations Properties (1) | |||||||||||||||||
Estimated Selling Prices (Level 2 Inputs) | ||||||||||||||||||||
Number of Properties | 4 | 1 | 15 | |||||||||||||||||
Estimated selling price per square foot (2) | $44 - $234 | $150 | $74 - $209 | |||||||||||||||||
Discounted Cash Flows (Level 3 Inputs) | ||||||||||||||||||||
Number of Properties | — | — | 10 | |||||||||||||||||
| Market rent per square foot | N/A | N/A | $15 - $41 | |||||||||||||||||
| Terminal capitalization rates | N/A | N/A | 8.25% - 10.50% | |||||||||||||||||
| Discount rates | N/A | N/A | 10.00% - 12.50% | |||||||||||||||||
(1)Includes six Office Discontinued Operations Properties that are presented in both Level 2 and Level 3 inputs. These properties were impaired based on i) discounted cash flows as of June 30, 2025 and ii) further impaired based on estimated selling prices less closing costs (in accordance with held for sale guidance) as of September 30, 2025.
(2)Estimated selling prices per square foot were determined based on quoted market values or comparable property sales.
Nonrecurring Measurement - Goodwill Impairment
As of October 1, 2025, the Company performed its annual impairment evaluation of goodwill. There was no impairment of goodwill recorded for the year ended December 31, 2025.
As of December 31, 2025, the Company’s remaining goodwill balance was $68.4 million, all of which relates to the Industrial segment. Refer to Note 14, Segment Reporting, for allocation of goodwill presented for each segment.
Financial Instruments at Fair Value
Financial instruments as of December 31, 2025 and December 31, 2024 consisted of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, accrued expenses and other liabilities, and consolidated debt, as defined in Note 5, Debt. With the exception of the secured debt in the table below, the amounts of the financial instruments presented in the consolidated financial statements substantially approximate their fair value as of December 31, 2025 and December 31, 2024.
The fair value of the secured debt in the table below is estimated by discounting each loan’s principal balance over the remaining term of the loan using current borrowing rates available to the Company for debt instruments with similar terms and maturities. The Company determined that the secured 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.
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Fair Value | Carrying Value (1) | Fair Value | Carrying Value (1) | ||||||||||||||||||||
| BOA II Loan | $ | 87,474 | $ | 90,610 | $ | 226,870 | $ | 250,000 | |||||||||||||||
| Florida Mortgage Loan | 47,910 | 49,604 | 47,057 | 49,604 | |||||||||||||||||||
| Georgia Mortgage Loan | 37,318 | 37,722 | 36,381 | 37,722 | |||||||||||||||||||
| Illinois Mortgage Loan | 23,390 | 23,000 | 22,810 | 23,000 | |||||||||||||||||||
| Total Secured Debt | $ | 196,092 | $ | 200,936 | $ | 333,118 | $ | 360,326 | |||||||||||||||
(1)The carrying values do not include the debt premium/(discount) or deferred financing costs as of December 31, 2025 and December 31, 2024. See Note 5, Debt, for details.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2017 | Mar 9, 2018 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.