Postal Realty Trust Stock Price, News & Analysis

Postal Realty Trust, Inc. (NYSE: PSTL) is an internally managed real estate investment trust (REIT) that focuses on owning and managing properties leased primarily to the United States Postal Service (USPS). According to the company’s disclosures, its portfolio includes over 2,150–2,200 postal properties, ranging from last-mile post offices and flex properties to industrial facilities. The company generates the majority of its revenue from rental income received on these leased properties.

Postal Realty Trust is incorporated in Maryland and its Class A common stock trades on the New York Stock Exchange under the symbol PSTL. The company reports that its owned portfolio is highly occupied and spans 49 states and one U.S. territory, with millions of net leasable interior square feet under lease to the USPS. The business is structured as an internally managed REIT, meaning management and operations are conducted by employees of the REIT rather than an external manager.

Business model and property focus

The company states that it owns and manages postal properties leased primarily to the USPS. These assets include last-mile post offices, flex properties and industrial facilities. Rental income from these leases represents the majority of the company’s revenue. Postal Realty Trust reports that it has executed numerous long-term leases with the USPS, and that it works with the Postal Service on programmatic leasing, renewals and re-leasing of properties whose leases expire.

In its public communications, Postal Realty Trust highlights that it acquires properties leased to the USPS and adds them to its portfolio. For example, the company has disclosed acquisitions of dozens of USPS-leased properties in individual quarters, and hundreds of properties over a full year, at stated weighted average capitalization rates and rental rates per leasable square foot. These acquisitions have included both portfolios and individual properties, such as last-mile post offices and flex properties, as well as industrial postal facilities.

Growth through acquisitions and leasing

Postal Realty Trust describes a strategy of expanding its portfolio of owned and managed postal properties leased to the USPS. The company has reported acquiring properties across multiple quarters and years, often at specified capitalization rates and rental levels. It has also disclosed that it uses an at-the-market equity offering program and unsecured credit facilities to fund acquisitions and manage its capital structure.

The company has also discussed its work with the USPS on leasing, including fully executed new leases for properties with leases expiring in a given year and lump sum catch-up payments associated with increased rents. Postal Realty Trust reports that it focuses on maintaining a high occupancy rate across its portfolio and on executing leases with the USPS that may include multi-year terms and rent escalations, as described in its earnings releases.

Capital structure and credit facilities

Postal Realty Trust has entered into senior unsecured revolving credit facilities and term loan facilities, as described in its Form 8-K filings. The company has disclosed an amended and restated credit agreement that provides for a senior unsecured revolving credit facility and a term loan facility, including a delayed draw term loan. These facilities carry interest rates based on SOFR plus a margin that depends on the company’s consolidated leverage ratio, and they include maturity dates extending into the late 2020s and early 2030s, with extension options.

The company has also reported entering into interest rate swaps to fix the SOFR component of interest on portions of its borrowings, and has stated that a significant percentage of its debt outstanding is set to fixed rates when taking into account interest rate hedges. Postal Realty Trust has disclosed that it uses borrowings under its credit facilities for general corporate and working capital purposes, which may include repayment of indebtedness, real estate acquisitions and investments, and capital expenditures.

Financial metrics and REIT-specific measures

As a REIT, Postal Realty Trust reports funds from operations (FFO) and adjusted funds from operations (AFFO) in addition to net income. The company states that it calculates FFO in accordance with the current National Association of Real Estate Investment Trusts (NAREIT) definition, which adjusts net income for depreciation and amortization related to real estate, certain gains and losses on real estate, and impairment write-downs directly attributable to depreciable real estate.

The company also discloses its own methodology for calculating AFFO, starting from FFO and adjusting for recurring capital expenditures, acquisition-related expenses that are not capitalized, certain non-recurring expenses, and adding back non-cash items such as amortization of deferred financing fees, straight-line rent adjustments, non-real estate depreciation and amortization, non-cash compensation expense and casualty-related items. Postal Realty Trust notes that these non-GAAP measures are used by management and are widely used by other REITs as additional indicators of the ability to make capital investments, while emphasizing that they are not alternatives to net income under GAAP.

Portfolio characteristics

In its periodic updates, Postal Realty Trust has reported that its owned portfolio is substantially occupied and consists of more than 1,800–1,900 properties, with millions of net leasable interior square feet. The company provides breakdowns of weighted average rental rates per leasable square foot for last-mile and flex properties and for industrial properties. It also reports on acquisition activity by quarter, including the number of properties acquired, total acquisition cost excluding closing costs, net leasable interior square feet added, and weighted average capitalization rates.

The company has also disclosed specific portfolio transactions, such as the acquisition of a portfolio of 25 properties from a related party pursuant to a Right of First Offer Agreement entered into in connection with its initial public offering and related formation transactions. That portfolio comprised tens of thousands of net leasable interior square feet at a stated weighted average rental rate per leasable square foot, and was approved by a special committee of independent directors.

Corporate governance and management

Postal Realty Trust’s filings indicate that it is governed by a board of directors and that it has an executive management team that includes roles such as Chief Executive Officer, President, and Chief Financial Officer. The company has reported changes in its finance leadership, including the resignation of a prior Chief Financial Officer, the appointment of an interim Chief Financial Officer, and the subsequent appointment of a new Executive Vice President and Chief Financial Officer, with related employment and transition agreements described in its Form 8-K filings.

The company’s credit agreements and other filings describe customary covenants and financial maintenance requirements, including leverage and coverage ratios, as well as events of default that could make borrowings immediately due and payable. The company also notes that several lenders and their affiliates provide investment banking, commercial banking, fiduciary and advisory services to Postal Realty Trust and its subsidiaries.

Investor considerations

Investors researching PSTL stock can review the company’s earnings releases, conference call webcasts, and SEC filings for details on its rental income, portfolio occupancy, acquisition volume, credit facilities and non-GAAP performance metrics such as FFO and AFFO. Postal Realty Trust emphasizes in its disclosures that forward-looking statements are subject to risks and uncertainties, including USPS lease terminations or non-renewals, changes in demand for postal services, the financial condition of the USPS, real estate market conditions, capital market conditions and other factors identified in its risk factor disclosures.

As an NYSE-listed REIT focused on postal properties leased primarily to the USPS, Postal Realty Trust offers a specialized exposure within the real estate and finance and insurance sector. Its public communications describe a business centered on owning and managing postal properties, working with the USPS on leasing and renewals, and using a combination of equity offerings and unsecured credit facilities to fund acquisitions and manage its capital structure.