Postal Realty Trust, Inc. (NYSE:PSTL) Q4 2024 Earnings Conference Call February 28, 2025 9:00 AM ET Company Participants Jordan Cooperstein - Vice President of FP&A, Capital Markets Andrew Spodek - Chief Executive Officer Jeremy Garber - President Robert Klein - Chief Financial Officer Conference Call Participants Barry Oxford - Colliers Securities Steven Dumanski - Janney Montgomery Scott Michael Gorman - BTG Pactual Jonathan Petersen - Jefferies Operator Greetings, and welcome to Postal Realty Trust fourt ...

Corporate Information & Analyst Coverage | Key Management | | | --- | --- | | Andrew Spodek | Chief Executive Officer | | Jeremy Garber | President, Treasurer & Secretary | | Robert Klein | Chief Financial Officer | | Board of Directors | Board Responsibilities | | Patrick Donahoe | Chair of the Board, Member - Audit Committee | | Andrew Spodek | Chief Executive Officer, Director | | Barry Lefkowitz | Chair of Audit Committee, Member - Corporate Governance & Compensation Committee | | Anton Feingold | Chair ...

Portfolio and Acquisitions - Postal Realty Trust, Inc. provided an update on its portfolio, collections, acquisitions, and financial position for Q4 2024[4] - The company reported significant acquisitions throughout 2024, enhancing its overall portfolio[4] Financial Position - The press release includes a detailed analysis of the company's balance sheet at year-end 2024[4]

Real Estate Investments - As of December 31, 2024, the company had net investments of approximately $606.0 million in 1,703 real estate properties, with an occupancy rate of 99.6%[24] - In 2024, the company acquired 197 properties leased primarily to the USPS for approximately $90.8 million, totaling about 560,895 net leasable interior square feet[27] - The company sold two real estate properties for net proceeds of $6.0 million, recording a net gain of $2.4 million[27] - The company manages an additional 360 properties owned by its CEO and affiliates, with a right of first offer to purchase 214 of these properties[24] - As of December 31, 2024, the company owned a portfolio of 1,703 properties across 49 states and one territory, totaling approximately 6.4 million net leasable interior square feet[209] Financial Performance - The quarterly dividend increased from $0.2375 for Q4 2023 to $0.2425 for Q4 2024, continuing a pattern of annual increases since the IPO[28] - The company issued 1,420,791 shares of Class A common stock under its ATM Program during 2024, raising approximately $20.4 million in gross proceeds[27] - The company may incur significant maintenance and capital expenses under its leases, which could reduce cash available for distribution and impact financial performance[78] - The ability to pay dividends may be adversely affected by various factors, including financial performance and economic conditions[132] - The company must distribute at least 90% of its REIT taxable income annually to maintain its REIT qualification, which may limit its ability to fund future capital needs[106] USPS Dependency and Risks - The company is substantially dependent on the demand for leased postal properties, with nearly all revenue derived from properties leased to the USPS[49] - The USPS has been implementing operational reforms and cost reduction measures under its Ten-Year Plan, which may lead to facility consolidations and affect lease renewals[49] - The USPS has significant outstanding debt obligations and is subject to rising expenses, which could impact its ability to meet financial obligations and affect lease agreements[54][57] - The Postal Service Reform Act has alleviated some obligations for the USPS, but significant underfunded liabilities remain, particularly regarding retiree health benefits[55] - The company may experience adverse effects if the USPS becomes unable to meet its lease payments or defaults on its obligations[62] Competition and Market Conditions - Competition from package delivery service providers like FedEx, Amazon, and UPS is increasing, potentially diverting volume away from the USPS and impacting demand for leased properties[61] - The company faces significant competition for USPS-leased properties, which may hinder its ability to acquire desired properties at competitive prices[71] - The USPS's operational changes and potential litigation could lead to reputational harm and reduced demand for USPS services, adversely affecting the company's business[68] - Rising property taxes due to rate changes or reassessments could negatively impact the company's financial condition and ability to make distributions to stockholders[85] - An increase in USPS or U.S. government-owned real estate could lead to challenges in renewing leases and expanding the company's portfolio[84] Regulatory and Compliance Risks - Changes in U.S. federal government policies or USPS restructuring could materially affect lease renewal opportunities and overall business operations[59] - The company must comply with various covenants in its debt instruments, and failure to do so could result in defaults that adversely affect its financial condition and liquidity[91] - The company is required to monitor its investments in TRS to ensure compliance with ownership limitations[173] - Compliance with various federal, state, and local laws may incur significant costs and affect the timing and cost of future developments[119] - The company may incur additional costs to bring properties into compliance with the ADA and FHAA, which could adversely impact financial condition and cash flow[120] Economic and Market Risks - Inflation has significantly increased, impacting operating expenses, interest expenses, and real estate acquisition costs, which could adversely affect financial performance[186] - Rising interest rates may lead to decreased real estate valuations and negatively impact the company's market capitalization and trading price[187] - The company may face increased costs and reduced cash flow if it has to fund distributions from working capital or asset sales due to insufficient cash from operations[195] - An increase in market interest rates may adversely affect the market price of the company's Class A common stock, as investors may seek higher dividend yields[185] - The company may be forced to borrow funds during unfavorable market conditions to meet its distribution requirements, potentially affecting its financial condition[180] Cybersecurity and Technology Risks - The company may face risks related to cybersecurity and environmental, social, and governance factors that could affect its operations and market perception[60] - Cybersecurity risks pose a threat to the company's operations and financial condition, with potential disruptions and increased costs for protection measures[197] - The Audit Committee oversees cybersecurity and information technology risk exposures, holding quarterly meetings and receiving periodic reports from management and the managed service provider (MSP)[205] - The company employs a multidisciplinary Technology Committee to assess and manage cybersecurity threats and risks, meeting at least quarterly[205] - The company has not identified any material cybersecurity risks that have affected or are likely to affect its business, financial condition, or results of operations[204] Management and Governance - The company relies on key personnel for its growth strategies, and the loss of these individuals could negatively impact its business and market perception[96] - The company’s Board of Directors can change strategies and policies without stockholder approval, increasing the risk of default under debt obligations[153] - The company is classified as a "smaller reporting company," allowing it to rely on reduced disclosure requirements, which may affect investor perception of its common stock[152] - The company may issue additional OP Units to third parties without stockholder consent, which could dilute ownership and affect distributions to stockholders[156] - Certain provisions in the partnership agreement may delay or prevent unsolicited acquisitions, which could discourage potential offers[148] Environmental and Social Risks - Environmental liabilities could result in significant costs, including investigation and remediation of hazardous substances, which may exceed the value of the properties[109] - The company is exposed to risks from natural disasters and climate change, which could result in physical damage to properties and increased operational costs[113] - The company may face reputational damage and additional costs related to environmental, social, and governance (ESG) expectations from investors[199] - Increased use of AI and automation by tenants may lead to unforeseen changes in space requirements, potentially impacting revenues and operating margins[124] - The company may struggle to compete effectively in a rapidly changing marketplace due to competitors' access to advanced technology[129]

Postal Realty Trust (PSTL) came out with quarterly funds from operations (FFO) of $0.35 per share, beating the Zacks Consensus Estimate of $0.27 per share. This compares to FFO of $0.26 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an FFO surprise of 29.63%. A quarter ago, it was expected that this company would post FFO of $0.26 per share when it actually produced FFO of $0.30, delivering a surprise of 15.38%.Over the last four quarters, the compa ...

Core Insights - Postal Realty Trust, Inc. announced a strong operational year for 2024, with an AFFO of $1.16 per share, representing an 8.4% increase from 2023, and provided 2025 AFFO guidance of $1.20 to $1.22 per diluted share [4][15] Financial Performance - For the year ended December 31, 2024, total revenues increased to $76.4 million from $63.7 million in 2023, driven by a 20% increase in rental income [28] - Net income attributable to common shareholders for 2024 was $6.6 million, or $0.21 per diluted share, compared to $3.7 million, or $0.12 per diluted share in 2023 [28] - The Company raised its quarterly dividend to $0.2425 per share, marking the seventh consecutive year of dividend increases [12] Property Portfolio & Acquisitions - The Company's portfolio was 99.6% occupied, consisting of 1,703 properties across 49 states and one territory, with a weighted average rental rate of $10.60 per leasable square foot [5] - In 2024, the Company acquired 197 properties for approximately $91 million at an average capitalization rate of 7.6% [6][7] Leasing Activity - As of February 14, 2025, the Company executed 89 new leases representing 95% of the aggregate 2023 expired rent and 119 new leases representing 99% of the aggregate 2024 expired rent, all subject to 3% annual rent escalations [7][8] Balance Sheet & Capital Markets - As of December 31, 2024, the Company had approximately $2.4 million in cash and property-related reserves, with net debt of approximately $296 million at a weighted average interest rate of 4.35% [9] - The Company amended its credit facilities to add $50 million in commitments to a term loan maturing in February 2028 [10] Subsequent Events - Subsequent to the quarter end, the Company acquired 18 properties for approximately $8.4 million and had another 14 properties under definitive contracts totaling approximately $8.9 million [13]

Core Viewpoint - Postal Realty Trust, Inc. will report its financial results for the period ended December 31, 2024, on February 26, 2025, after market close [1] Group 1: Financial Reporting - The company will host a webcast and conference call to discuss the fourth quarter 2024 financial results on February 27, 2025, at 9:00 A.M. Eastern Time [2] - A telephonic replay of the call will be available starting at 1:00 P.M. Eastern Time on February 27, 2025, through March 13, 2025 [3] Group 2: Company Overview - Postal Realty Trust, Inc. is an internally managed real estate investment trust that owns and manages over 2,000 properties leased primarily to the USPS [4]

Core Points - Postal Realty Trust, Inc. has announced a quarterly dividend of $0.2425 per share, marking a 1.0% increase from the previous quarter's dividend [3] - The dividend will be payable on February 28, 2025, to stockholders of record as of February 14, 2025 [3] - The company has provided tax characteristics for its 2024 dividends, detailing the nature of cash dividends paid to Class A common stockholders [4] Dividend Details - The quarterly dividend for 2024 was consistently $0.2400 per share across four payments, with a total of $0.9600 for the year [4] - The breakdown of the 2024 dividends includes ordinary dividends of $0.6552, qualified dividends of $0.0088, and capital gain distributions totaling $0.2960 [4] Company Overview - Postal Realty Trust, Inc. is an internally managed real estate investment trust that owns and manages over 2,000 properties leased primarily to the United States Postal Service [6]

Core Points - Postal Realty Trust, Inc. has announced a quarterly dividend of $0.2425 per share, marking a 1.0% increase from the previous quarter [2] - This increase represents the seventh consecutive year of dividend growth for the company [2] - The dividend will be payable on February 28, 2025, to stockholders of record as of February 14, 2025 [2] Tax Characteristics of 2024 Dividends - The total cash dividends paid to Class A common stockholders for the tax year ended December 31, 2024, amounts to $0.9600 per share [3] - Breakdown of the total dividends includes $0.6552 as ordinary dividends, $0.0088 as qualified dividends, and $0.2960 as capital gain distributions [3] - The dividends are scheduled for payment on four different dates throughout 2024, each at $0.2400 per share [3][4] Company Overview - Postal Realty Trust, Inc. is an internally managed real estate investment trust that owns and manages over 2,000 properties primarily leased to the United States Postal Service (USPS) [5] - The properties range from last-mile post offices to industrial facilities [5]

Core Insights - Postal Realty Trust, Inc. (NYSE: PSTL) is perceived as a low-growth REIT focused on owning post offices, but it presents a compelling growth narrative for investors [1] Company Overview - The company operates in the real estate investment trust (REIT) sector, specifically owning properties related to postal services, which are often viewed as outdated [1] Investment Potential - Despite its traditional image, Postal Realty Trust offers a generous return to investors, indicating potential for growth and value appreciation [1]