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Published: 2025-02-27 00:00:00 ET
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EX-99.1 2 ea023227201ex99-1_postal.htm PRESS RELEASE OF POSTAL REALTY TRUST, INC., DATED FEBRUARY 26, 2025

Exhibit 99.1

 

 

POSTAL REALTY TRUST, INC. REPORTS FOURTH QUARTER AND YEAR END 2024 RESULTS

 

- Introduces 2025 AFFO Guidance of $1.20 to $1.22 per diluted share -

- Executed New Leases with 3% Annual Rent Escalations & Ten-Year Term -

- 2024 Acquisitions of $91 Million at an Average Capitalization Rate of 7.6% -

- Raised Dividend per share for Seventh Consecutive Year -

 

Cedarhurst, New York, February 26, 2025 (GLOBE NEWSWIRE) — Postal Realty Trust, Inc. (NYSE: PSTL) (the “Company”), an internally managed real estate investment trust that owns and manages over 2,000 properties leased primarily to the United States Postal Service (the “USPS”), ranging from last-mile post offices to industrial facilities, today announced results for the quarter and year ended December 31, 2024.

 

Highlights for the Quarter Ended December 31, 2024

 

  Acquired 63 USPS properties for approximately $30.7 million, excluding closing costs
    
  Net income attributable to common shareholders was $4.5 million, or $0.17 per diluted share
    
  Funds from Operations (“FFO”) was $9.0 million, or $0.30 per diluted share
    
  Adjusted Funds from Operations (“AFFO”) was $10.6 million, or $0.35 per diluted share
    
  Subsequent to quarter end, the Company raised the quarterly dividend to $0.2425 per share, a 1.0% increase over the fourth quarter 2023 dividend

 

Highlights for the Year Ended December 31, 2024

 

  Acquired 197 properties for approximately $91 million in 2024, excluding closing costs
    
  Rental income increased 20.0% from 2023 to 2024, reflecting internal growth and acquisitions
    
  Net income attributable to common shareholders was $6.6 million, or $0.21 per diluted share
    
  FFO was $28.1 million, or $0.97 per diluted share
    
  AFFO was $33.7 million, or $1.16 per diluted share
    
  Paid aggregate dividends of $0.96 per share for calendar year 2024
    
  Added $50 million to the term loan maturing in February 2028 and increased the term loan accordion feature under the credit facilities by $50 million
    
  Executed new leases for 95% of the 2023 and 99% of the 2024 aggregate expired rent as of February 14, 2025 and remaining leases are in process
    
  Agreed to new rents on all negotiated leases with the USPS for leases that expired and those set to expire in 2025 except for some recent 2024 acquisitions

 

“2024 was a strong operational year for the Company defined by successful re-leasing including 3% annual rent escalations and the introduction of 10-year lease terms fueling our internal growth,” said Andrew Spodek, Chief Executive Officer. “I am pleased that this contributed to 2024 AFFO of $1.16 per share, an 8.4% increase from 2023. Our success during 2024 has provided us with the visibility to provide AFFO guidance for the first time as a public company of $1.20 to $1.22 per diluted share for 2025. Postal Realty is well positioned for continued internal and external growth, and we remain confident in the strength of our partnership with the Postal Service.”

 

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Property Portfolio & Acquisitions

 

The Company’s owned portfolio was 99.6% occupied, comprised of 1,703 properties across 49 states and one territory with approximately 6.4 million net leasable interior square feet and a weighted average rental rate of $10.60 per leasable square foot based on rents in place as of December 31, 2024. The weighted average rental rate consisted of $12.81 per leasable square foot on last-mile and flex properties and $3.83 on industrial properties.

 

During the fourth quarter, the Company acquired 63 last-mile and flex properties leased to the USPS for approximately $30.7 million, excluding closing costs, comprising approximately 176,000 net leasable interior square feet at a weighted average rental rate of $13.75 per leasable square foot based on rents in place as of December 31, 2024.

 

Leasing

 

As of February 14, 2025, the Company had received 89 fully executed new leases from the USPS representing 95% of the aggregate 2023 expired rent and 119 fully executed new leases from the USPS representing 99% of the aggregate 2024 expired rent. All executed leases were subject to 3% annual rent escalations. The total net lump sum catch-up payment received from the USPS related to the 2023 leases was approximately $3.0 million, comprised of $2.6 million for leases executed during 2024 and $0.4 million for leases executed subsequent to quarter end. The total net lump sum catch-up payment received from the USPS related to the 2024 leases was approximately $0.4 million, comprised of $0.4 million for leases executed during 2024. The Company has agreed to rents for new leases with the USPS for leases expired and those set to expire in 2025 not subject to renewal options.

 

Balance Sheet & Capital Markets Activity

 

As of December 31, 2024, the Company had approximately $2.4 million of cash and property-related reserves, and approximately $296 million of net debt with a weighted average interest rate of 4.35%. At the end of the fourth quarter, 95% of the Company’s debt outstanding was set to fixed rates (when taking into account interest rate hedges), and the Company’s $150 million revolving credit facility had $136 million undrawn.

 

On October 25, 2024, the Company amended its credit facilities to, among other things, add $50.0 of commitments to the term maturing in February 2028, increase the accordion feature under the credit facilities for term loans to $50.0 million and replace Bank of Montreal with Truist Bank as the administrative agent. $40.0 million was drawn by the Company on the closing date of the transaction and $10.0 million remained undrawn and available on a delayed-draw basis. In connection with the $40.0 million draw, the Company also entered into an interest rate swap that effectively fixed the interest rate through February 2028 at a current rate of 5.27%. On November 21, 2024, the Company drew $10.0 million on the term loan maturing in February 2028. In connection with the draw, the Company entered into an interest rate swap that effectively fixed the interest rate through February 2028 at a current rate of 5.55%. The proceeds from the draws were used to repay the outstanding balance on the revolving credit facility.

 

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During the year, the Company issued 1,420,791 shares of common stock through its at-the-market equity offering program at an average price of $14.35 per share for total gross proceeds of $20.4 million. Additionally, the Company issued 664,182 common units in its operating partnership as part of the consideration for acquisitions at an average price per unit of $14.17.

 

Dividend

 

On January 30, 2025, the Company declared a quarterly dividend of $0.2425 per share of Class A common stock. The dividend equates to $0.97 per share on an annualized basis. The dividend will be paid on February 28, 2025 to stockholders of record as of the close of business on February 14, 2025.

 

Subsequent Events

 

Subsequent to quarter end and through February 14, 2025, the Company acquired 18 properties comprising approximately 53,000 net leasable interior square feet for approximately $8.4 million, excluding closing costs. The Company had another 14 properties totaling approximately $8.9 million under definitive contracts.

 

The Company also announced today that its Board of Directors approved a common stock repurchase program (the “Program”). Under the Program, the Company may acquire shares of the Company’s Class A Common Stock, $0.01 par value per share (“Class A Common Stock”), in the open market, from time to time, in block trades, or otherwise, for a total purchase price of up to $25,000,000 all in accordance with U.S. securities laws and regulations, including Rule 10b-18 under the U.S. Securities Exchange Act of 1934, as amended. The Program does not require the Company to repurchase any dollar amount or number of shares of Class A Common Stock and may be suspended or discontinued at any time.

 

2025 Guidance

 

The Company currently expects 2025 AFFO per share on a fully diluted basis to be within a range of $1.20 to $1.22. The guidance range includes an estimate for investment volume of $80 to $90 million, and Cash G&A expense of $10.5 million to $11.0 million.

 

Note: The Company does not provide guidance with respect to the most directly comparable GAAP financial measure or provide reconciliations to GAAP from its forward-looking non-GAAP financial measure of AFFO per share guidance due to the inherent difficulty of forecasting the effect, timing and significance of certain amounts in the reconciliation that would be required by Item 10(e)(1)(i)(B) of Regulation S-K. Examples of these amounts include impairments of assets, gains and losses from sales of assets, and depreciation and amortization from new acquisitions or developments. In addition, certain non-recurring items may also significantly affect net income but are generally adjusted for in AFFO. Based on our historical experience, the dollar amounts of these items could be significant, and could have a material impact on the Company’s GAAP results for the guidance period.

 

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Webcast and Conference Call Details

 

The Company will host a webcast and conference call to discuss the fourth quarter 2024 financial results on Thursday, February 27, 2025, at 9:00 A.M. Eastern Time. A live audio webcast of the conference call will be available on the Company’s investor website at https://investor.postalrealtytrust.com/Investors/events-and-presentations/default.aspx. To participate in the conference call, callers from the United States and Canada should dial-in ten minutes prior to the scheduled call time at 1-877-407-9208. International callers should dial 1-201-493-6784.

 

Replay

 

A telephonic replay of the call will be available starting at 1:00 P.M. Eastern Time on Thursday, February 27, 2025, through 11:59 P.M. Eastern Time on Thursday, March 13, 2025, by dialing 1-844-512-2921 in the United States and Canada or 1-412-317-6671 internationally. The passcode for the replay is 13750499.

 

Non-GAAP Supplemental Financial Information

 

An explanation of certain non-GAAP financial measures used in this press release, including, FFO, AFFO and net debt, as well as reconciliations of those non-GAAP financial measures, to the most directly comparable GAAP financial measure, is included below.

 

The Company calculates FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. NAREIT currently defines FFO as follows: net income (loss) (computed in accordance with GAAP) excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by an entity. Other REITs may not define FFO in accordance with the NAREIT definition or may interpret the current NAREIT definition differently than the Company does and therefore the Company’s computation of FFO may not be comparable to such other REITs.

 

The Company calculates AFFO by starting with FFO and adjusting for recurring capital expenditures (defined as all capital expenditures and leasing costs that are recurring in nature, excluding expenditures that (i) are for items identified or existing at the time a property was acquired or contributed (including through the Company’s formation transactions), (ii) are part of a strategic plan intended to increase the value or revenue-generating ability of a property, (iii) are considered infrequent or extraordinary in nature, or (iv) for casualty damage), acquisition-related expenses (defined as expenses that are incurred for investment purposes and business acquisitions and do not correlate with the ongoing operations of the Company’s existing portfolio, including due diligence costs for acquisitions not consummated and certain professional fees incurred that were directly related to completed acquisitions or dispositions and integration of acquired business) that are not capitalized, and certain other non-recurring expenses and then adding back non-cash items including: write-off and amortization of deferred financing fees, straight-line rent and other adjustments (including lump sum catch up amounts for increased rents, net of any lease incentives), fair value lease adjustments, income/(expenses) on insurance recoveries from casualties, casualty losses, non-real estate depreciation and amortization and non-cash components of compensation expense. AFFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of the Company’s operating performance. The Company believes that AFFO is widely used by other REITs and is helpful to investors as a meaningful additional measure of the Company’s ability to make capital investments. Other REITs may not define AFFO in the same manner as the Company does and therefore the Company’s calculation of AFFO may not be comparable to such other REITs.

 

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The Company calculates its net debt as total debt less cash and property-related reserves. Net debt as of December 31, 2024 is calculated as total debt of approximately $298 million less cash and property-related reserves of approximately $2.4 million.

 

These metrics are non-GAAP financial measures and should not be viewed as an alternative measurement of the Company’s operating performance to net income. Management believes that accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, the Company believes that the additive use of FFO and AFFO, together with the required GAAP presentation, is widely-used by the Company’s competitors and other REITs and provides a more complete understanding of the Company’s performance and a more informed and appropriate basis on which to make investment decisions.

 

Forward-Looking and Cautionary Statements

 

This press release contains “forward-looking statements.” Forward-looking statements include statements identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements, including, among others, our 2025 guidance, statements regarding the Company’s anticipated growth and ability to obtain financing and close on pending transactions on the terms or timing it expects, if at all, are based on the Company’s current expectations and assumptions regarding capital market conditions, the Company’s business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the USPS’s terminations or non-renewals of leases, changes in demand for postal services delivered by the USPS, the solvency and financial health of the USPS, competitive, financial market and regulatory conditions, disruption in market, general real estate market conditions, the Company’s competitive environment and other factors set forth under “Risk Factors” in the Company’s filings with the Securities and Exchange Commission. Any forward-looking statement made in this press release speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

About Postal Realty Trust, Inc.

 

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. More information is available at postalrealtytrust.com.

 

Contact:

 

Investor Relations and Media Relations

Email: Investorrelations@postalrealtytrust.com

Phone: 516-232-8900

 

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Postal Realty Trust, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

 

   For the Three Months
Ended December 31,
   For the Twelve Months
Ended December 31,
 
   2024   2023   2024   2023 
Revenues:            
Rental income  $20,403   $16,271   $73,143   $60,970 
Fee and other   965    730    3,229    2,742 
Total revenues   21,368    17,001    76,372    63,712 
Operating expenses:                    
Real estate taxes   2,676    2,448    9,850    8,549 
Property operating expenses   2,117    1,870    9,124    6,825 
General and administrative   3,912    3,533    16,008    14,654 
Casualty and impairment losses, net   188        404     
Depreciation and amortization   5,627    5,151    22,202    19,688 
Total operating expenses   14,520    13,002    57,588    49,716 
                     
Gain on sale of real estate assets   2,393        2,393     
                     
Income from operations   9,241    3,999    21,177    13,996 
                     
Other (expense)/income   (53)   195    21    679 
                     
Interest expense, net:                    
Contractual interest expense   (3,270)   (2,546)   (12,041)   (9,339)
Write-off and amortization of deferred financing fees   (204)   (182)   (746)   (686)
Interest income   13    4    26    5 
Total interest expense, net   (3,461)   (2,724)   (12,761)   (10,020)
                     
Income before income tax expense   5,727    1,470    8,437    4,655 
Income tax expense   (42)   (16)   (116)   (72)
                     
Net income   5,685    1,454    8,321    4,583 
Net income attributable to operating partnership unitholders’ non-controlling interests   (1,180)   (270)   (1,725)   (874)
                     
Net income attributable to common stockholders  $4,505   $1,184   $6,596   $3,709 
                     
Net income per share:                    
Basic and Diluted  $0.17   $0.04   $0.21   $0.12 
                     
Weighted average common shares outstanding:                    
Basic and Diluted   23,130,477    21,396,955    22,565,155    20,145,151 

 

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Postal Realty Trust, Inc.

Consolidated Balance Sheets

(In thousands, except par value and share data)

 

   December 31,
2024
   December 31,
2023
 
Assets        
Investments:        
Real estate properties, at cost:        
Land  $128,457   $106,074 
Building and improvements   512,248    443,470 
Tenant improvements   7,501    6,977 
Total real estate properties, at cost   648,206    556,521 
Less: Accumulated depreciation   (58,175)   (43,791)
Total real estate properties, net   590,031    512,730 
Investment in financing leases, net   15,951    16,042 
Total real estate investments, net   605,982    528,772 
Cash   1,799    2,235 
Escrow and reserves   744    632 
Rent and other receivables   6,658    4,750 
Prepaid expenses and other assets, net   14,519    13,369 
Goodwill   1,536    1,536 
Deferred rent receivable   2,639    1,542 
In-place lease intangibles, net   12,636    14,154 
Above market leases, net   305    355 
Total Assets  $646,818   $567,345 
           
Liabilities and Equity          
Liabilities:          
Term loans, net  $248,790   $198,801 
Revolving credit facility   14,000    9,000 
Secured borrowings, net   33,918    32,823 
Accounts payable, accrued expenses and other, net   16,441    11,996 
Below market leases, net   16,171    13,100 
Total Liabilities   329,320    265,720 
           
Commitments and Contingencies          
           
Equity:          
Class A common stock, par value $0.01 per share; 500,000,000 shares authorized, 23,494,487 and 21,933,005 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively   235    219 
Class B common stock, par value $0.01 per share; 27,206 shares authorized, 27,206 shares issued and outstanding as of December 31, 2024 and December 31, 2023        
Additional paid-in capital   310,031    287,268 
Accumulated other comprehensive income   5,230    4,621 
Accumulated deficit   (64,211)   (48,546)
Total Stockholders’ Equity   251,285    243,562 
Operating partnership unitholders’ non-controlling interests   66,213    58,063 
Total Equity   317,498    301,625 
Total Liabilities and Equity  $646,818   $567,345 

 

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Postal Realty Trust, Inc.

Reconciliation of Net Income to FFO and AFFO

(Unaudited)

(In thousands, except share data)

 

   For the Three
Months Ended December 31,
2024
   For the Twelve
Months Ended December 31,
2024
 
Net income  $5,685   $8,321 
Depreciation and amortization of real estate assets   5,600    22,095 
Gain on sale of real estate assets   (2,393)   (2,393)
Impairment charges   68    68 
FFO  $8,960   $28,091 
Recurring capital expenditures   (184)   (723)
Write-off and amortization of deferred financing fees and amortization of debt discount   206    749 
Straight-line rent and other adjustments   719    1,585 
Fair value lease adjustments   (808)   (3,178)
Acquisition-related and other expenses   122    396 
Expenses (income) on insurance recoveries from casualties   53    (21)
Non-real estate depreciation and amortization   27    107 
Casualty losses, net   120    336 
Non-cash components of compensation expense   1,377    6,377 
AFFO  $10,592   $33,719 
FFO per common share and common unit outstanding  $0.30   $0.97 
AFFO per common share and common unit outstanding  $0.35   $1.16 
Weighted average common shares and common units outstanding, basic and diluted   29,860,647    29,036,504 

 

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