Peakstone Realty TrustPKST
Peakstone Realty Trust Leases Disclosure
Leases
Lessor
The Company, as Lessor, leases industrial properties to tenants primarily under non-cancelable operating leases that generally contain provisions for minimum base rents plus reimbursement for certain operating expenses including, without limitation, real estate taxes, insurance, common area maintenance (“Recoverable Operating Expenses”).
Total minimum annual lease payments are recognized in rental income on a straight-line basis over the term of the related lease. On a quarterly basis, we perform an assessment of the collectability of operating lease receivables on a tenant-by-tenant basis, which includes reviewing the age and nature of our receivables, the payment history and financial condition of the tenant, our assessment of the tenant’s ability to meet its lease obligations and the status of negotiations of any disputes with the tenant. Any changes in the collectability assessment for an operating lease is recognized as an adjustment, which can be a reduction or increase, to rental income in the consolidated statements of operations.
Estimated reimbursements from tenants for Recoverable Operating Expenses are recognized in rental income in the period that the expenses are incurred.
For its continuing operations properties, the Company recognized $92.7 million, $100.1 million and $121.4 million of related to operating lease payments for the years ended December 31, 2025, 2024 and 2023 respectively.
For its Office Discontinued Operations Properties, the Company recognized $84.0 million, $99.8 million, and $98.1 million of lease income related to operating lease payments for the years ended December 31, 2025, 2024 and 2023 respectively. These amounts are included within income from discontinued operations within the consolidated statements of operations.
The Company's current third-party tenant leases have expirations ranging from 2026 to 2038. The following table (i) sets forth undiscounted cash flows for future contractual base rents to be received under operating leases as of December 31, 2025 and (ii) excludes estimated reimbursements of Recoverable Operating Expenses:
| Expirations | December 31, 2025 | ||||
2026 | $ | 76,015 | |||
2027 | 70,571 | ||||
2028 | 62,978 | ||||
2029 | 54,484 | ||||
2030 | 42,757 | ||||
| Thereafter | 74,382 | ||||
| Total | $ | 381,187 | |||
Lessee - Corporate Office Leases
As of December 31, 2025, the Operating Partnership or a wholly-owned subsidiary is the tenant (lessee) under the following two corporate 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 (“Chicago Office Lease”).
For corporate office leases in which the Company is a lessee, the Company incurred costs of approximately $0.7 million and $0.5 million for the years ended December 31, 2025 and 2024, respectively, which are included in “Corporate operating expenses to related parties” and “General and administrative expenses” as applicable, in the accompanying consolidated statement of operations. Total cash paid for amounts included in the measurement of operating lease liabilities for the corporate office leases was $0.7 million and $0.5 million for the years ended December 31, 2025 and 2024, respectively.
The following table sets forth the weighted-average for the lease term and the discount rate for the office leases in which the Company is a lessee as of December 31, 2025:
| As of December 31, 2025 | |||||
| Lease Term and Discount Rate | Operating - Office Leases | ||||
| Weighted-average remaining lease term in years | 4.6 | ||||
Weighted-average discount rate (1) | 7.68% | ||||
(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 at the commencement of each lease, the Company considered 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.
Lessee - Maturities of Lease Liabilities
The maturities of lease liabilities for the Company’s operating leases as of December 31, 2025 were as follows:
| As of December 31, 2025 | |||||
Operating Leases | |||||
| 2026 | $ | 476 | |||
| 2027 | 238 | ||||
| 2028 | 243 | ||||
| 2029 | 250 | ||||
| 2030 | 256 | ||||
| Thereafter | 128 | ||||
| Total undiscounted lease payments | 1,591 | ||||
| Less imputed interest | (257) | ||||
| Total lease liabilities | $ | 1,334 | |||
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.