[10-Q] Postal Realty Trust, Inc. Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Postal Realty Trust (PSTL) reported Q3 2025 results showing higher rental-driven revenue and stronger profitability as the portfolio expanded. Total revenues were $24.3 million versus $19.7 million a year ago, and net income attributable to common stockholders was $3.8 million versus $1.1 million. Basic and diluted EPS were $0.13 versus $0.03.
The company added scale, owning 1,853 properties leased primarily to the USPS, and acquired 151 properties year-to-date for $96.6 million. Operating cash flow for the first nine months was $33.2 million, supporting growth and dividends, while investing cash outflows of $93.8 million reflected acquisitions. Financing inflows of $60.4 million included $34.8 million of equity and expanded borrowings.
On September 19, 2025, PSTL amended and restated its credit facilities, establishing a $150.0 million revolver (maturing November 2029) and a $290.0 million term loan structure, including a $115.0 million 2030 term loan (with $40.0 million new advances). Interest rate swaps totaling $290.0 million hedge term debt. As of November 4, 2025, Class A shares outstanding were 26,062,636.
Positive
- None.
Negative
- None.
Insights
Revenue and earnings improved on portfolio growth; leverage refinanced.
PSTL lifted Q3 revenue to
Debt structure was refreshed on
Watch credit facility covenants and swap roll-off dates; Pennsylvania represented
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2025
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _________ to _________
Commission File Number: 001-38903
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer | |||||||
| incorporation or organization) | Identification No.) | |||||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (516 ) 295-7820
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||||
| ☒ | Smaller reporting company | |||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of November 4, 2025, the registrant had 26,062,636 shares of Class A common stock outstanding.
Table of Contents
TABLE OF CONTENTS
| Page | ||||||||
PART I. FINANCIAL INFORMATION | ||||||||
Item 1. | Financial Statements | 1 | ||||||
Consolidated Balance Sheets (Unaudited) as of September 30, 2025 and December 31, 2024 | 1 | |||||||
Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024 | 2 | |||||||
Consolidated Statements of Changes in Equity (Unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024 | 3 | |||||||
Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2025 and 2024 | 6 | |||||||
Notes to Consolidated Financial Statements (Unaudited) | 8 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 29 | ||||||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 42 | ||||||
Item 4. | Controls and Procedures | 42 | ||||||
PART II. OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 43 | ||||||
Item 1A. | Risk Factors | 43 | ||||||
Item 2. | Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchase of Equity Securities | 43 | ||||||
Item 3. | Defaults Upon Senior Securities | 43 | ||||||
Item 4. | Mine Safety Disclosures | 43 | ||||||
Item 5. | Other Information | 43 | ||||||
Item 6. | Exhibits | 44 | ||||||
Signatures | 45 | |||||||
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
POSTAL REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except par value and share data)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Investments: | |||||||||||
| Real estate properties, at cost: | |||||||||||
| Land | $ | $ | |||||||||
| Building and improvements | |||||||||||
| Tenant improvements | |||||||||||
| Total real estate properties, at cost | |||||||||||
| Less: Accumulated depreciation | ( | ( | |||||||||
| Total real estate properties, net | |||||||||||
| Investment in financing leases, net | |||||||||||
| Total real estate investments, net | |||||||||||
| Cash | |||||||||||
| Escrow and reserves | |||||||||||
| Rent and other receivables | |||||||||||
| Prepaid expenses and other assets, net | |||||||||||
| Goodwill | |||||||||||
| Deferred rent receivable | |||||||||||
| In-place lease intangibles, net | |||||||||||
| Above market leases, net | |||||||||||
| Assets held for sale, net | |||||||||||
| Total Assets | $ | $ | |||||||||
| Liabilities and Equity | |||||||||||
| Liabilities: | |||||||||||
| Term loans, net | $ | $ | |||||||||
| Revolving credit facility | |||||||||||
| Secured borrowings, net | |||||||||||
| Accounts payable, accrued expenses and other, net | |||||||||||
| Below market leases, net | |||||||||||
| Total Liabilities | |||||||||||
| Commitments and Contingencies | |||||||||||
| Equity: | |||||||||||
Class A common stock, par value $ | |||||||||||
Class B common stock, par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive income | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total Stockholders’ Equity | |||||||||||
Operating partnership unitholders’ non-controlling interests | |||||||||||
| Total Equity | |||||||||||
| Total Liabilities and Equity | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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POSTAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except share and per share data)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Rental income | $ | $ | $ | $ | |||||||||||||||||||
| Fee and other | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Real estate taxes | |||||||||||||||||||||||
| Property operating expenses | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Casualty and impairment losses (gains), net | ( | ||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Loss on sale of real estate assets | ( | ||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||
| Other income | |||||||||||||||||||||||
| Interest expense, net: | |||||||||||||||||||||||
| Contractual interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Write-off and amortization of deferred financing fees and amortization of debt discount | ( | ( | ( | ( | |||||||||||||||||||
Loss on early extinguishment of debt | ( | ( | |||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Total interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
Income before income tax expense | |||||||||||||||||||||||
Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
| Net income | |||||||||||||||||||||||
Net income attributable to operating partnership unitholders’ non-controlling interests | ( | ( | ( | ( | |||||||||||||||||||
| Net income attributable to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Net income per share: | |||||||||||||||||||||||
| Basic and Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic and Diluted | |||||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
Unrealized loss on derivative instruments | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Comprehensive income (loss) attributable to operating partnership unitholders’ non-controlling interests | ( | ( | |||||||||||||||||||||
Comprehensive income (loss) attributable to common stockholders | $ | $ | ( | $ | $ | ( | |||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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POSTAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
(in thousands, except share data)
| Number of shares of Common Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders’ equity | Operating Partnership Unitholders’ Non-controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance – December 31, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net proceeds from sale of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of operating partnership units in connection with acquisition transactions | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance and amortization of equity-based compensation, net of forfeitures | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Issuance and amortization under the employee stock purchase plan ("ESPP") | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Restricted stock withholdings | ( | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Dividends and distributions | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Unrealized loss on derivative instruments | — | — | — | ( | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Reallocation of non-controlling interest | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Balance – March 31, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net proceeds from sale of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of operating partnership units in connection with acquisition transactions | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Shares issued upon redemption of operating partnership units | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Issuance and amortization of equity-based compensation, net of forfeitures | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Issuance and amortization under the ESPP | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Dividends and distributions | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Unrealized loss on derivative instruments | — | — | — | ( | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Reallocation of non-controlling interest | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance – June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net proceeds from sale of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of operating partnership units in connection with acquisition transactions | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
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Shares issued upon redemption of operating partnership units | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Issuance and amortization of equity-based compensation, net of forfeitures | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Issuance and amortization under the ESPP | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Restricted stock withholdings | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Dividends and distributions | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Unrealized loss on derivative instruments | — | — | — | ( | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Reallocation of non-controlling interest | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Balance – September 30, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Balance – December 31, 2023 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net proceeds from sale of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of operating partnership units in connection with acquisition transactions | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance and amortization of equity-based compensation, net of forfeitures | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance and amortization under the ESPP | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Restricted stock withholdings | ( | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Dividends and distributions | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Unrealized gain on derivative instruments | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Reallocation of non-controlling interest | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Balance – March 31, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net proceeds from sale of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Shares issued upon redemption of operating partnership units | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance and amortization of equity-based compensation, net of forfeitures | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Issuance and amortization under the ESPP | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Dividends and distributions | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Unrealized gain on derivative instruments | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Reallocation of non-controlling interest | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Balance – June 30, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
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| Net proceeds from sale of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of operating partnership units in connection with acquisition transactions | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance and amortization of equity-based compensation, net of forfeitures | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance and amortization under the ESPP | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Restricted stock withholdings | ( | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Dividends and distributions | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Unrealized loss on derivative instruments | — | — | — | ( | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Reallocation of non-controlling interest | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance – September 30, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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POSTAL REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
| For the Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Write-off and amortization of deferred financing fees and debt discounts | |||||||||||
| Amortization of above/below market leases | ( | ( | |||||||||
| Amortization of intangible liability | ( | ( | |||||||||
Loss on early extinguishment of debt | |||||||||||
| Casualty and impairment losses | |||||||||||
| Loss on sale of real estate assets | |||||||||||
| Gain on insurance proceeds received for damage due to property | ( | ( | |||||||||
| Equity based compensation | |||||||||||
| Deferred rent receivable | ( | ( | |||||||||
| Other | ( | ||||||||||
| Changes in assets and liabilities: | |||||||||||
| Rent and other receivables | ( | ( | |||||||||
| Prepaid expenses and other assets | |||||||||||
| Accounts payable, accrued expenses and other | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Acquisition of real estate | ( | ( | |||||||||
| Proceeds from sale of real estate assets | |||||||||||
| Escrows for acquisition deposits | ( | ( | |||||||||
| Capital improvements | ( | ( | |||||||||
| Insurance proceeds related to property damage claims | |||||||||||
| Other investing activities | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repayments of secured borrowings | ( | ( | |||||||||
| Proceeds from term loans | |||||||||||
| Proceeds from revolving credit facility | |||||||||||
| Repayments of revolving credit facility | ( | ( | |||||||||
| Net proceeds from issuance of shares | |||||||||||
| Debt issuance costs | ( | ( | |||||||||
| Proceeds from issuance of ESPP shares | |||||||||||
| Value of shares withheld for payment of taxes related to employee stock compensation | ( | ( | |||||||||
| Dividends and distributions | ( | ( | |||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Net decrease in Cash and Escrows and Reserves | ( | ( | |||||||||
| Cash and Escrows and Reserves at the beginning of period | |||||||||||
| Cash and Escrow and Reserves at the end of period | $ | $ | |||||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | |||||||||||
Operating partnership units issued for property acquisitions | |||||||||||
Unrealized loss on derivative instruments, net | ( | ( | |||||||||
| Reallocation of non-controlling interest | |||||||||||
| Reclassification of acquisition deposits included in prepaid expenses and other assets | |||||||||||
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| Accrued capital expenditures included in accounts payable and accrued expenses | |||||||||||
| Reclassification of construction deposits included in prepaid expenses and other assets | |||||||||||
| Accrued costs of capital included in accounts payable and accrued expenses | |||||||||||
| Transfer of investment properties, net to assets held for sale | |||||||||||
| Right of use assets, net | |||||||||||
Shares issued upon redemption of operating partnership units | |||||||||||
| Write-off of fixed assets no longer in service | |||||||||||
| Assumption of seller financing | |||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Organization and Description of Business
Postal Realty Trust, Inc. (the “Company”) was organized in the state of Maryland on November 19, 2018. On May 17, 2019, the Company completed its initial public offering (“IPO”) of the Company’s Class A common stock, par value $0.01 per share (the “Class A common stock”). The Company contributed the net proceeds from the IPO to Postal Realty LP, a Delaware limited partnership (the “Operating Partnership”), in exchange for common units of limited partnership interest in the Operating Partnership (the “OP Units”). Both the Company and the Operating Partnership commenced operations upon completion of the IPO and certain related formation transactions. Prior to the completion of the IPO and the formation transactions, the Company had no operations.
The Company’s interest in the Operating Partnership entitles the Company to share in distributions from, and allocations of profits and losses of, the Operating Partnership in proportion to the Company’s percentage ownership of OP Units. As the sole general partner of the Operating Partnership, the Company has the exclusive power under the partnership agreement to manage and conduct the Operating Partnership’s business, subject to limited approval and voting rights of the limited partners. As of September 30, 2025, the Company held an approximately 78.6 % interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Company consolidates the financial position and results of operations of the Operating Partnership. The Operating Partnership is considered a variable interest entity (“VIE”) in which the Company is the primary beneficiary.
As of September 30, 2025, the Company owned a portfolio of 1,853 properties located in 49 states and one territory. The Company’s properties are leased primarily to a single tenant, the United States Postal Service (the “USPS”). The Company also owns several, and may in the future further acquire, land parcels that may be added to existing or future leases with the USPS or used for other purposes that are consistent with the Company’s investment strategy.
In addition, through its taxable REIT subsidiary (“TRS”), Real Estate Asset Counseling, LLC (“REAC”), the Company provides fee-based third-party property management services for an additional 358 postal properties, which are owned by Andrew Spodek, the Company's chief executive officer ("CEO"), and his affiliates, and certain advisory services to third-party owners of postal properties.
Pursuant to the Company’s charter, the Company is currently authorized to issue up to 500,000,000 shares of Class A common stock, 27,206 shares of Class B common stock, $0.01 par value per share (the “Voting Equivalency stock”), and up to 100,000,000 shares of preferred stock.
The Company elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the Company's short taxable year ended December 31, 2019, and intends to continue to qualify as a REIT. As a REIT, the Company generally will not be subject to federal income tax to the extent that it distributes its REIT taxable income for each tax year to its stockholders. REITs are subject to a number of organizational and operational requirements. Additionally, any income earned by the TRS and any other TRS the Company may form in the future will be subject to federal, state and local corporate income tax.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited Consolidated Financial Statements include the financial position and results of operations of the Company, the Operating Partnership and its wholly owned subsidiaries.
The Company consolidates the Operating Partnership, a VIE in which the Company is considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. Substantially all of the assets and liabilities of the Company relate to the Operating Partnership.
A non-controlling interest is defined as the portion of the equity in an entity not attributable, directly or indirectly, to the Company. Non-controlling interests are required to be presented as a separate component of equity in the Consolidated
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Balance Sheets. Accordingly, the presentation of net income reflects the income attributed to controlling and non-controlling interests.
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.
This interim financial information should be read in conjunction with the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2025. All material intercompany accounts and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. As discussed in the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, the Company’s most significant assumptions and estimates are related to the valuation of investments in real estate properties and impairment of long-lived assets. Although management believes its estimates are reasonable, actual results could differ from those estimates.
Offering and Other Costs
Offering costs are recorded in “Total Stockholders’ Equity” on the Consolidated Balance Sheets as a reduction of additional paid-in capital.
Segment Reporting
Deferred Costs and Discounts
9
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period’s presentation.
Cash and Escrows and Reserves
| As of | |||||||||||
| September 30, 2025 | December 31, 2024 | ||||||||||
| (in thousands) | |||||||||||
Cash | $ | $ | |||||||||
Escrows and reserves: | |||||||||||
Maintenance reserve | |||||||||||
Real estate tax reserve | |||||||||||
ESPP reserve | |||||||||||
Total escrows and reserves | $ | $ | |||||||||
| Cash and escrows and reserves | $ | $ | |||||||||
Revenue Recognition
The Company has operating lease agreements with tenants, some of which contain provisions for future rental increases. Rental income is recognized on a straight-line basis over the term of the lease. In addition, certain lease agreements provide for reimbursements from tenants for real estate taxes and other recoverable costs, which are recorded on an accrual basis as part of “Rental income” in the Consolidated Statements of Operations and Comprehensive Income. The Company’s determination of the probability to collect lease payments is impacted by numerous factors, including the Company's assessment of the tenant’s creditworthiness, economic conditions, historical experience with the tenant, future prospects for the tenant and the length of the lease term. If leases currently classified as probable of collection are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in rental income. For certain leases with lease incentive costs, such costs are included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets and amortized on a straight-line basis over the respective lease terms as a reduction of rental revenues.
Fee and other primarily consists of (i) property management fees, (ii) income recognized from properties accounted for as financing leases and (iii) fees earned from providing advisory services to third-party owners of postal properties.
The management fees arise from contractual agreements with entities that are affiliated with the Company’s CEO. Management fee income is recognized as earned under the respective agreements.
Revenue from direct financing leases is recognized over the lease term using the effective interest rate method. At lease inception, the Company records an asset within "Investment in financing leases, net" on the Consolidated Balance Sheets, which represents the Company’s net investment in the direct financing lease. This initial net investment is determined by aggregating the total future minimum lease payments attributable to the direct financing lease and the estimated residual value of the property, if any, less unearned income. Over the lease term, the investment in the direct financing lease is reduced and interest is recognized as revenue in “Fee and other” in the Consolidated Statements of Operations and Comprehensive Income and produces a constant periodic rate of return on the "Investment in financing leases, net."
Revenue from advisory services is generated from service contracts generally based on (i) time and expense arrangements (where the Company recognizes revenues based on hours incurred and contracted rates), (ii) fixed-fee arrangements (where the Company recognizes revenues earned to date by applying the proportional performance method) or (iii) performance-based or contingent arrangements (where the Company recognizes revenues at a point in time when the client receives the benefit of the promised service). Reimbursable expenses for the advisory services, including those relating to
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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
travel, out-of-pocket expenses, outside consultants and other outside service costs, are generally included in revenues and in general and administrative expenses in the period in which the expense is incurred.
Fair Value Measurements
The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could have realized on disposition of the assets and liabilities as of September 30, 2025 and December 31, 2024. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash, escrows and reserves, receivables, prepaid expenses and other assets (excluding derivatives), accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of September 30, 2025 and December 31, 2024 due to their short maturities.
The fair value of the Company’s borrowings under its Credit Facilities approximates carrying value because such borrowings are subject to a variable market rate, which reprices frequently. The fair value was determined using the Adjusted Term SOFR (as defined below) as of September 30, 2025 and December 31, 2024, plus an applicable spread under the Credit Facilities, a Level 2 classification in the fair value hierarchy. The fair value of the Company’s secured borrowings aggregated approximately $29.8 million and $28.7 million as compared to the principal balance of $34.2 million and $34.3 million as of September 30, 2025 and December 31, 2024, respectively. The fair value of the Company’s secured borrowings was categorized as a Level 3 fair value estimate (as provided by ASC 820, Fair Value Measurements and Disclosures) and was determined by discounting the future contractual interest and principal payments by a market rate.
The Company's derivative assets and liabilities, comprised of interest rate swap derivative instruments entered into in connection with the Credit Facilities, are recorded at fair value based on a variety of observable inputs, including contractual terms, interest rate curves, yield curves, measure of volatility and correlations of such inputs. The Company measures its derivatives at fair value on a recurring basis based on the expected amount of future cash flows on a discounted basis and incorporating a measure of non-performance risk. The fair value of the Company's derivative assets and liabilities was categorized as a Level 2 fair value estimate (as provided by ASC 820, Fair Value Measurements and Disclosures). The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivative assets and liabilities. As of September 30, 2025 and December 31, 2024, the fair value of the Company’s interest rate swap derivative assets was approximately $2.6 million and $6.7 million, respectively, included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets. As of September 30, 2025 and December 31, 2024, the fair value of the Company's interest rate swap derivative liabilities was approximately $1.1 million and $0.3 million, respectively, included in "Accounts payable, accrued expenses and other, net" on the Consolidated Balance Sheets.
Disclosures about fair value of assets and liabilities are based on pertinent information available to management as of September 30, 2025 and December 31, 2024. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since September 30, 2025 and current estimates of fair value may differ significantly from the amounts presented herein.
Derivative Instruments and Hedging Activities
11
Assets Held for Sale
The Company may sell properties from time to time for various reasons, including the exercise of purchase options by our tenants. The Company classifies long-lived assets as held for sale once certain criteria have been met. The Company classifies a real estate property, or portfolio, as held for sale when: (i) management has approved the disposal, (ii) the property is available for sale in its present condition, (iii) an active program to locate a buyer has been initiated, (iv) it is probable that the property will be disposed of within one year, (v) the property is being marketed at a reasonable price relative to its fair value, and (vi) it is unlikely that the disposal plan will significantly change or be withdrawn. Following the classification of a property as “held for sale,” no further depreciation or amortization is recorded on the assets and the assets are recorded at the lower of carrying value or fair market value, less cost to sell. The Company had one property classified as held for sale as of September 30, 2025 as a result of a tenant exercising a purchase option. No properties were classified as held for sale as of December 31, 2024.
Impairment of Long-Lived Assets
The carrying value of real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the asset’s carrying amount over its estimated fair value. Impairment analyses will be based on current plans, intended holding periods and available market information at the time the analyses are prepared. If estimates of the projected future cash flows, anticipated holding periods or market conditions change, the evaluation of impairment losses may be different and such differences may be material. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.
During the nine months ended September 30, 2025, the Company assessed the recoverability of the carrying amount of its real estate and related intangibles. The assessment resulted in the remeasurement of one property, based upon an accumulation of costs in excess of what was originally expected, and such property was written down to its estimated fair value and was classified as Level 3 in the fair value hierarchy. The Company's estimate of the fair value was based on a discounted cash flow analysis. The Company used two significant unobservable inputs which was the cash flow discount rate (11.0 %) and the terminal capitalization rate (10.0 %). The remeasurement resulted in an impairment loss of $0.1 million, which is included in "Casualty and impairment losses (gains), net" in the Company's Consolidated Statements of Operations and Comprehensive Income. No
The Company uses the held for sale impairment model for our properties classified as held for sale, which is different from the held and used impairment model. Under the held for sale impairment model, an impairment charge is recognized if the carrying amount of the long-lived asset classified as held for sale exceeds its fair value less cost to sell. Because of these two different models, it is possible for a long-lived asset previously classified as held and used to require the recognition of an impairment charge upon classification as held for sale. The Company recorded an impairment of $0.2 million which is included in "Casualty and impairment losses (gains), net" in the Company's Consolidated Statements of Operations and Comprehensive Income for the nine months ended September 30, 2025.
Concentration of Credit Risks
As of September 30, 2025, the Company’s properties were leased primarily to a single tenant, the USPS. For the nine months ended September 30, 2025, approximately 10.4 % of the Company’s total rental income, or $7.1 million, was concentrated in Pennsylvania. For the nine months ended September 30, 2024, approximately 12.2 % of the Company's total rental income, or $6.4 million, was concentrated in Pennsylvania. The ability of the USPS to honor the terms of its leases is dependent upon regulatory, economic, environmental or competitive conditions in Pennsylvania or other regions where the Company operates in and could have a material effect on the Company’s overall business results.
The Company has deposited cash and maintains its bank deposits with large financial institutions in amounts that, from time to time, exceed federally insured limits. The Company has not experienced any losses in such accounts.
Equity-Based Compensation
The Company accounts for equity-based compensation in accordance with ASC Topic 718 Compensation – Stock Compensation, which requires the Company to recognize an expense for the grant date fair value of equity-based awards.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Equity-classified stock awards granted to employees and non-employees that have a service condition and/or a market condition are measured at fair value at date of grant and remeasured at fair value only upon a modification of the award. The Company records forfeitures as a reduction of equity-based compensation expense as such forfeitures occur.
The Company recognizes compensation expense on a straight-line basis over the requisite service period of each award, with the amount of compensation expense recognized at the end of a reporting period at least equal to the portion of fair value of the respective award at grant date or modification date, as applicable, that has vested through that date. For awards with a market condition, compensation cost is not reversed if a market condition is not met so long as the requisite service has been rendered, as a market condition does not represent a vesting condition.
See Note 11. Stockholders’ Equity for further details.
Insurance Accounting
The Company's property and casualty insurance policies mitigate its exposure to certain losses, including those relating to property damage and business interruption. The Company records the estimated amount of expected insurance proceeds for property damage and other losses incurred as an asset (typically a receivable from the insurer) and income up to the amount of the losses incurred when the amount is determinable and approved by the insurance company. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is not recorded in casualty and impairment losses (gains), net until the amount is determinable and approved by the insurance company. Insurance recoveries for business interruption for lost revenue or profit are accounted for as gain contingencies in their entirety, and therefore are not recorded in income until the amount is determinable and approved by the insurance company.
Earnings Per Share
Recent Accounting Standards
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The amendments in ASU 2024-03 apply to all public business entities and require disclosure of specified information about certain costs and expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the potential impact of adopting ASU 2024-03.
Note 3. Real Estate Transactions
The following table summarizes the Company’s acquisitions for the nine months ended September 30, 2025. The purchase prices including transaction costs were allocated to the separately identifiable tangible and intangible assets and liabilities based on their relative fair values at the date of acquisition. The total purchase price including transaction costs was allocated as follows (in thousands, except for the number of properties):
13
| Three Months Ended | Number of Properties | Land | Building and Improvements | Tenant Improvements | In-place lease intangibles | Above- market leases | Below- market leases | Other (1) | Total (2) | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2025 | (3) | $ | $ | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2025 | (4) | $ | $ | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2025 | (5) | $ | $ | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Explanatory Notes:
(1)Includes intangible liabilities related to unfavorable operating leases with purchase options on three properties during the three months ended March 31, 2025 and two properties during the three months ended June 30, 2025 that is included in “Accounts payable, accrued expenses and other, net" on the Consolidated Balance Sheets. Also, includes a below market ground lease intangible asset on four properties during the three months ended June 30, 2025 that is included in “Prepaid expenses and other assets, net" on the Consolidated Balance Sheets.
(2)Includes closing costs of approximately $0.5 million for the three months ended March 31, 2025, $1.0 million for the three months ended June 30, 2025 , and $1.1 million for the three months ended September 30, 2025.
(3)Includes the acquisition of 36 properties in various states in individual or portfolio transactions for a price of approximately $16.3 million, including closing costs, which was funded with both the issuance of OP Units to the sellers (valued at approximately $1.0 million using the share price of Class A common stock on the date of the issuance of such OP units) and cash consideration.
(4)Includes the acquisition of 68 properties in various states in individual or portfolio transactions for a price of approximately $36.9 million, including closing costs, which were funded with both the issuance of OP Units to the sellers (valued at approximately $5.0 million using the share price of Class A common stock on the date of each issuance of such OP units) and cash consideration.
(5)Includes the acquisition of 47 properties in various states in individual or portfolio transactions for a price of approximately $43.4 million, including closing costs, which were funded with both the issuance of OP Units to the sellers (valued at approximately $0.7 million using the share price of Class A common stock on the date of each issuance of such OP units) and cash consideration.
Sale of Real Estate
During the nine months ended September 30, 2025, the Company sold one real estate property for net proceeds of $0.8 million and recorded a loss of $0.05 million.
Assets Held for Sale
During the nine months ended September 30, 2025 as a result of a tenant exercising a purchase option for one property, the Company reclassified the carrying value consisting of $0.1 million of land and $0.5 million of buildings and other real estate assets to "Assets held for sale, net" on the Company's Consolidated Balance Sheets and liabilities held for sale of $0.1 million is included as "Accounts payable, accrued expenses and other, net" on the Company's Consolidated Balance Sheets. Refer to Note 2, Impairment of Long-lived Assets for further discussion.
Casualty and Impairment Losses (Gains), Net
During the three and nine months ended September 30, 2025, the Company recognized $0.1 million and $0.7 million, respectively, in gross charges primarily related to the estimated net book value of several properties damaged and related repairs, offset by an estimated $0.04 million and $1.1 million, respectively, of related insurance claims, resulting in a net loss of $0.1
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
million and a net gain of $0.3 million, respectively, included within “Casualty and impairment losses (gains), net” on the Consolidated Statement of Operations and Comprehensive Income. During the three and nine months ended September 30, 2024, the Company recorded a casualty loss of $0.2
To the extent insurance proceeds ultimately exceed the difference between replacement cost and net book value of the damaged assets and any related expenses incurred, the excess will be reflected as income in the period those amounts are determinable and approved by the insurance company.
Note 4. Intangible Assets and Liabilities
The following table summarizes the Company’s intangible assets and liabilities:
| As of | Gross Asset (Liability) | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| September 30, 2025: | ||||||||||||||||||||
In-place lease intangibles | $ | $ | ( | $ | ||||||||||||||||
Above-market leases | ( | |||||||||||||||||||
| Other intangibles | ( | ( | ||||||||||||||||||
Below-market leases | ( | ( | ||||||||||||||||||
| December 31, 2024: | ||||||||||||||||||||
In-place lease intangibles | $ | $ | ( | $ | ||||||||||||||||
Above-market leases | ( | |||||||||||||||||||
| Other intangibles | ( | ( | ||||||||||||||||||
Below-market leases | ( | ( | ||||||||||||||||||
Amortization of in-place lease intangibles was $1.8 million and $5.3 million for the three and nine months ended September 30, 2025, respectively, and $2.0 million and $5.8 million for the three and nine months ended September 30, 2024, respectively. This amortization is included in “Depreciation and amortization” in the Consolidated Statements of Operations and Comprehensive Income.
Amortization of acquired above-market leases was $0.03 million and $0.1 million for the three and nine months ended September 30, 2025, respectively, and $0.04 million and $0.1 million for the three and nine months ended September 30, 2024, respectively, and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive Income. Amortization of other intangibles was $0.1 million and $0.3 million for the three and nine months ended September 30, 2025, respectively, and $0.1 million and $0.2 million for the three and nine months ended September 30, 2024, respectively, and is included in "Rental income" in the Consolidated Statements of Operations and Comprehensive Income. Amortization of acquired below-market leases was $0.9 million and $2.6 million for the three and nine months ended September 30, 2025, respectively, and $0.8 million and $2.3 million for the three and nine months ended September 30, 2024, respectively, and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive Income.
15
Future amortization/accretion of these intangibles is below (in thousands):
| Year Ending December 31, | In-place lease intangibles | Above-market leases | Other intangibles | Below-market leases | ||||||||||||||||||||||
| 2025-Remaining | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||
| 2026 | ( | ( | ||||||||||||||||||||||||
| 2027 | ( | ( | ||||||||||||||||||||||||
| 2028 | ( | ( | ||||||||||||||||||||||||
| 2029 | ( | ( | ||||||||||||||||||||||||
Thereafter | ( | ( | ||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||
Note 5. Debt
The following table summarizes the Company’s indebtedness as of September 30, 2025 and December 31, 2024 (dollars in thousands):
| Outstanding Balance as of September 30, 2025 | Outstanding Balance as of December 31, 2024 | Interest Rate at September 30, 2025 | Maturity Date | ||||||||||||||||||||
Revolving Credit Facility(1) | $ | $ | SOFR+ | November 2029 | |||||||||||||||||||
2030 Term Loan (formerly 2021 Term Loan)(1) | SOFR+ | January 2030 | |||||||||||||||||||||
2028 Term Loan (formerly 2022 Term Loan)(1) | SOFR+ | February 2028 | |||||||||||||||||||||
| Secured Borrowings: | |||||||||||||||||||||||
Vision Bank(3) | % | September 2041 | |||||||||||||||||||||
First Oklahoma Bank(4) | % | December 2037 | |||||||||||||||||||||
Vision Bank – 2018(5) | % | September 2041 | |||||||||||||||||||||
Seller Financing(6) | % | January 2025 | |||||||||||||||||||||
AIG(7) | % | January 2031 | |||||||||||||||||||||
Seller Financing - 2024 (8) | % | September 2039 | |||||||||||||||||||||
| Total Principal | |||||||||||||||||||||||
| Unamortized deferred financing costs | ( | ( | |||||||||||||||||||||
| Unamortized debt discount | ( | ( | |||||||||||||||||||||
| Total Debt | $ | $ | |||||||||||||||||||||
Explanatory Notes:
(1)The Company entered into a Credit Agreement, on August 9, 2021, as amended from time-to-time (the "Prior Credit Facilities") which included a (i) $150.0 million Revolving Credit Facility. (ii) $75.0 million unsecured term loan and (iii) $175.0 million senior unsecured delayed draw term loan. On September 19, 2025 (the "CF Closing Date"), the Company amended and restated the Prior Credit Facilities in their entirety to provide for a (1) $150.0 million senior unsecured revolving credit facility (the "Revolving Credit Facility") and (2) $290 million term loan facility consisting of a (I) $175.0 million delayed drawn term loan (the "2028 Term Loan"), all of which was previously advanced to the Company under the Prior Credit Facilities and (II) $115.0 million senior unsecured term loan (the “2030 Term Loan,” and, collectively with the 2028 Term Loan, the "Term Loans"). The 2030 Term Loan consists of (x) the $75.0 million senior unsecured term loan previously advanced under the Prior Credit Facility which remained outstanding as of the CF Closing Date and (y) $40.0 million of new term loans advanced to the Company on the CF Closing Date.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
(2)The Credit Facilities include an accordion feature which permits the Company to borrow up to an additional (i) $150.0 million under the Revolving Credit Facility and (ii) $100.0 million under the Term Loans, subject to customary terms and conditions. The Revolving Credit Facility matures in November 2029, the 2030 Term Loan matures in January 2030 and the 2028 Term Loan matures in February 2028. Each of the Revolving Credit Facility and the 2030 Term Loan Facility may be extended for one twelve-month period at the Company's sole option. Borrowings under the Credit Facilities carry an interest rate of, (i) in the case of the Revolving Credit Facility, either a base rate plus a margin ranging from 0.5 % to 1.0 % per annum or Adjusted Term SOFR (as defined below) plus a margin ranging from 1.5 % to 2.0 % per annum, or (ii) in the case of the Term Loans, either a base rate plus a margin ranging from 0.45 % to 0.95 % per annum or Adjusted Term SOFR plus a margin ranging from 1.45 % to 1.95 % per annum, in each case depending on the Company's consolidated leverage ratio. With respect to the Revolving Credit Facility, the Company will pay, if the usage is equal to or less than 50 %, an unused facility fee of 0.20 % per annum, or if the usage is greater than 50 %, an unused facility fee of 0.15 % per annum, in each case on the average daily unused commitments under the Revolving Credit Facility. The Credit Facilities contain a number of customary financial and non-financial covenants.
During the three and nine months ended September 30, 2025, the Company incurred $0.05 million and $0.2 million, respectively, and during the three and nine months ended September 30, 2024, the Company incurred $0.05 million and $0.2 million, respectively, of unused facility fees related to the Revolving Credit Facility. As of September 30, 2025, the Company was in compliance with all of the Credit Facilities’ debt covenants. In addition, due to the amendment of the Credit Facilities, the Company recognized a loss on extinguishment of debt of $0.1 million, which is comprised of a $0.06 million loss from the write-off of unamortized debt issuance costs attributable to a previous creditor in the Revolving Credit Facility and 2030 Term Loan portions of our Prior Credit Facilities not participating in such respective portions of our current Credit Facilities and $0.08 million of third-party fees associated with the modification of our Term Loans.
(2)Based upon the applicable SOFR rate (subject to a 0 % floor), plus, solely for periods prior to the CF Closing Date, a SOFR adjustment of 0.10 % (such rate, as of any date of determination, the “Adjusted Term SOFR”). The Adjusted Term SOFR may also be decreased by 0.02 % if the Company achieves certain sustainability targets
(3)Five properties are collateralized under this loan and Mr. Spodek also provided a personal guarantee of payment for 50 % of the outstanding amount thereunder. The loan has a fixed interest rate of 3.69 % for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five-year period thereafter with principal and interest payments to the rate based on the five-year weekly average yield on United States Treasury securities adjusted to a constant maturity of five years , as made available to the Board of Governors of the Federal Reserve System (the "Five-Year Treasury Rate"), plus a margin of 2.75 %, with a minimum annual rate of 2.75 %.
(4)The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.625 % for the first five years (ending in August 2026), then adjusting annually thereafter to a variable annual rate of Wall Street Journal Prime Rate with a minimum annual rate of 3.625 %.
(5)The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.69 % for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five-year period thereafter with principal and interest payments to the rate based on the Five-Year Treasury Rate, plus a margin of 2.75 %, with a minimum annual rate of 2.75 %.
(6)In connection with the acquisition of a property, the Company obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $0.1 million with the first installment due on January 2, 2021 based on a 6.0 % interest rate per annum through January 2, 2025. As of January 2, 2025, the seller financing has been fully repaid.
(7)The loan is secured by a first mortgage lien on an industrial property located in Warrendale, Pennsylvania. The loan has a fixed interest rate of 2.80 % with interest-only payments for the first five years (ending in January 2026) and fixed payments of principal and interest thereafter based on a 30-year amortization schedule.
(8)In connection with the acquisition of two properties, the Company obtained seller financing secured by the properties in the amount of $1.4 million based on a fixed interest rate of 5.00 % with interest-only payments through September 1, 2039.
The weighted average maturity date for the Company's indebtedness as of September 30, 2025 and December 31, 2024 was approximately 3.5 years and 3.2 years, respectively.
17
The scheduled principal repayments of indebtedness as of September 30, 2025 are as follows (in thousands):
| Year Ending December 31, | Amount | |||||||||||||
| 2025 - Remaining | $ | |||||||||||||
| 2026 | ||||||||||||||
| 2027 | ||||||||||||||
| 2028 | ||||||||||||||
| 2029 | ||||||||||||||
| Thereafter | ||||||||||||||
Total | $ | |||||||||||||
Note 6. Derivatives and Hedging Activities
As of September 30, 2025, the Company had 11 interest rate swaps with a total notional amount of $290.0 million that are used to manage its interest rate risk and fix the SOFR component on the term loans of the Credit Facilities:
| Notional Amount ($ in thousands) | Fixed Rate (1) | Effective Date | Maturity Date | ||||||||||||||
| $ | May 2022 | January 2027 | |||||||||||||||
| $ | May 2022 | February 2028 | |||||||||||||||
| $ | May 2022 | February 2028 | |||||||||||||||
| $ | July 2022 | February 2028 | |||||||||||||||
| $ | December 2022 | February 2028 | |||||||||||||||
| $ | July 2023 | January 2027 | |||||||||||||||
| $ | September 2023 | February 2028 | |||||||||||||||
| $ | October 2024 | February 2028 | |||||||||||||||
| $ | November 2024 | February 2028 | |||||||||||||||
| $ | September 2025 | January 2030 | |||||||||||||||
| $ | September 2025 | January 2030 | |||||||||||||||
Explanatory Note:
(1)Reflects the all-in effective interest rate for the specified portion of the Term Loans hedged by the interest rate swaps.
The Company’s objectives in using the interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company uses the interest rate swaps as part of its interest rate risk management strategy. The interest rate swaps are designated as cash flow hedges, with any gain or loss recorded in “Accumulated other comprehensive income” on the Consolidated Balance Sheets and subsequently reclassified into interest expense as interest payments are made on the Credit Facilities. During the next twelve months, the Company estimates that an additional $1.8 million will be reclassified from “Accumulated other comprehensive income” as a decrease to interest expense.
The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as cash flow hedges.
The table below presents the effect of the Company’s interest rate swap derivative instruments in the Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2025 and 2024 (in thousands):
18
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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||
| Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||
Amount of (loss) gain recognized on derivative in "Accumulated other comprehensive income" | $ | $ | ( | $ | ( | $ | ||||||||||||||
Amount of income reclassified from "Accumulated other comprehensive income" into interest expense | $ | $ | $ | $ | ||||||||||||||||
"Interest expense, net" presented in the Consolidated Statements of Operations and Comprehensive Income, in which the effects of cash flow hedges are recorded, totaled $4.3 million and $11.9 million for the three and nine months ended September 30, 2025, respectively, and $3.4 million and $9.3 million for the three and nine months ended September 30, 2024, respectively.
As of September 30, 2025, the Company also had derivatives in a liability position and did not post any collateral related to these agreements. If the Company had breached any of these provisions as of September 30, 2025, it could have been required to settle its obligations under the agreements of any interest rate swap in a liability position for approximately $1.1 million, which is at their termination value.
Note 7. Leases
Lessor Accounting
As of September 30, 2025, the Company's properties were leased primarily to the USPS, with leases expiring at various dates through December 31, 2038. Certain leases had expired and were in holdover status as of September 30, 2025 as discussed below. Certain leases contain renewal, termination and/or purchase options exercisable at the lessee’s election. Therefore, such options are only recognized once they are deemed reasonably certain, typically at the time the option is exercised. All of the Company’s leases are operating leases with the exception of two that are direct financing leases. The Company's operating leases and direct financing leases are described below.
Rental income related to the Company’s leases is recognized on a straight-line basis over the remaining lease term. The Company’s total revenue includes fixed base rental payments provided under the lease and variable payments which principally consist of tenant expense reimbursements for certain property operating expenses, including real estate taxes. The Company elected the practical expedient to account for its lease and non-lease components as a single combined operating lease component under Topic 842. As a result, rental income and tenant reimbursements were aggregated into a single line within rental income in the Consolidated Statements of Operations and Comprehensive Income.
The following table represents rental revenue that the Company recognized related to its operating leases (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
Fixed payments | $ | $ | $ | $ | |||||||||||||||||||
Variable payments | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
19
Future minimum lease payments to be received as of September 30, 2025 (excluding base rental payments from properties classified as held for sale under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):
| Year Ending December 31, | Amount (1)(2) | |||||||
| 2025 - Remaining | $ | |||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
Thereafter | ||||||||
Total | $ | |||||||
Explanatory Notes:
(1)The above minimum lease payments to be received do not include reimbursements from tenants for real estate taxes and other reimbursed expenses.
(2)As of September 30, 2025, the lease at one of the Company's properties was expired and the USPS was occupying such property as a holdover tenant. As such, the above minimum lease payments to be received do not include payments under this holdover lease. Holdover rent is typically paid as the greater of estimated market rent or the rent amount due under the expired lease.
Purchase Option Provisions
As of September 30, 2025, operating leases for 91 of the Company’s properties provided the USPS with the option to purchase the underlying property either at fair market value or at fixed prices(1), in each case as of dates set forth in the lease. As of September 30, 2025, 87 of these properties had an aggregate carrying value of approximately $66.7 million with an aggregate purchase option price of approximately $88.4 million and the remaining four properties had an aggregate carrying value of approximately $3.8 million with purchase options exercisable at fair market value. During the nine months ended September 30, 2025, a tenant exercised a purchase option. Refer to Note 2, Assets Held for Sale for further discussion.
Explanatory Notes:
(1) Properties with more than one calculation method are categorized based on the lowest valuation method.
Investment in Financing Leases, Net
As of September 30, 2025 and December 31, 2024, financing leases for two The components of the Company’s net investment in financing leases as of September 30, 2025 and December 31, 2024 are summarized in the table below (in thousands):
As of September 30, 2025 | As of December 31, 2024 | ||||||||||
Total minimum lease payment receivable | $ | $ | |||||||||
Less: unearned income | ( | ( | |||||||||
| Investment in financing leases, net | $ | $ | |||||||||
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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Revenue earned under direct financing leases for each of the three and nine months ended September 30, 2025 and 2024 were $0.3 0.8
Future lease payments to be received under the Company’s direct financing leases as of September 30, 2025 for the next five years and thereafter are as follows (in thousands):
| Year Ending December 31, | Amount | |||||||
| 2025 – Remaining | $ | |||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
Thereafter | ||||||||
Total | $ | |||||||
Lessee Accounting
As a lessee, the Company has ground and office leases which were classified as operating leases. As of September 30, 2025, these leases had remaining terms, including renewal options, of 0.4 years to 57.3 years and a weighted average remaining lease term of 18.3 years. Operating right-of-use ("ROU") assets and lease liabilities are included in “Prepaid expenses and other assets, net” and “Accounts payable, accrued expenses and other, net” on the Consolidated Balance Sheets as follows (in thousands):
As of September 30, 2025 | As of December 31, 2024 | ||||||||||
ROU asset – operating leases | $ | $ | |||||||||
| Lease liability – operating leases | $ | $ | |||||||||
The difference between the recorded ROU assets and lease liabilities is mainly due to the reclassification of the below market ground lease intangible asset which was included within the ROU assets recognized upon transition.
Operating lease assets and liabilities are measured at the commencement date based on the present value of future lease payments. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a discount rate ranging from 4.25 % to 7.35 % based on the yield of its current borrowings in determining its lease liabilities.
Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.
Operating lease expense for the three and nine months ended September 30, 2025 and 2024 was $0.09 million and $0.3 million, respectively, and $0.07 million and $0.2 million, respectively. See Note 9. Related Party Transactions for more details.
21
Future minimum lease payments to be paid by the Company as a lessee for operating leases as of September 30, 2025 for the next five years and thereafter are as follows (in thousands):
| 2025 — Remaining | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
Thereafter | |||||
Total future minimum lease payments | |||||
Interest discount | ( | ||||
Total | $ | ||||
Note 8. Income Taxes
TRS
In connection with the IPO, the Company and REAC jointly elected to treat REAC as a TRS. REAC performs management services, including for properties the Company does not own, and advisory services to third-party owners of postal properties. REAC has generated income, resulting in federal and state corporate income tax liability for REAC. There was no income tax expense related to REAC for the three months ended September 30, 2025 and $0.01 million for the nine months ended September 30, 2025. For the three and nine months ended September 30, 2024, income tax expense related to REAC was $0.02 million and $0.05 million, respectively.
Note 9. Related Party Transactions
Management Fee Income
On May 5, 2025, REAC entered into amendments to the management agreements (as amended, the “Amended Management Agreements”) pursuant to which the Company provides property management services to 362 properties, owned by family members and affiliates of Mr. Spodek. An additional property for which REAC provides management services to affiliates of Mr. Spodek was not amended by the Amended Management Agreements.
The Amended Management Agreements provide that, as of April 1, 2025, the initial management fee to be received by REAC is equal to 4.0 % per annum of each property’s gross revenue, payable quarterly. Each successive April 1, the management fee will be increased to 102.5 % of the management fee previously in effect. The initial term of the Amended Management Agreements is through March 31, 2030 (the “Initial Term”), unless terminated earlier. After the Initial Term, the Amended Management Agreements will be automatically renewed for successive one-year terms, unless either party provides 30 days' advance notice of non-renewal. Furthermore, beginning October 1, 2025, the Amended Management Agreements may be terminated by either party at any time upon 60 days’ notice to the other party. The Amended Management Agreements also provide that, to the extent REAC provides services in connection with the financing of managed properties, REAC shall be entitled to an additional $5,000 fee per property being financed, whether such properties are financed individually, as part of a portfolio or pooled, provided that the total fees payable shall not exceed $50,000 per financing transaction. The Amended Management Agreements were unanimously approved by an independent Special Committee of the Company's Board of Directors (the "Board") consisting of all members of the Board other than Mr. Spodek.
REAC recognized management fee income of $0.2 million and $0.8 million for the three and nine months ended September 30, 2025, respectively, and $0.4 million and $1.0 million for the three and nine months ended September 30, 2024, respectively, from various parties which were affiliated with the Company's CEO. These amounts are included in “Fee and other” in the Consolidated Statements of Operations and Comprehensive Income. Accrued management fees receivable of $0.2 million and $0.4 million as of September 30, 2025 and December 31, 2024, respectively, are included in “Rent and other receivables” on the Consolidated Balance Sheets.
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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Related Party Lease
In connection with the Company's IPO and the related formation transactions, the Company entered into a lease for office space in Cedarhurst, New York with an entity affiliated with the Company’s CEO (the “Prior Office Lease”). Pursuant to the Prior Office Lease, the monthly rent was $15,000 subject to escalations. The term of the Prior Office Lease was five years commencing on May 17, 2019 and expired on May 16, 2024. In May 2024, the Prior Office Lease was extended to December 31, 2024 at the same rental rate. In December 2024, the Company entered into a new lease with the Company's CEO (the "2025 Office Lease," and, collectively with the Prior Office Lease, the "Office Leases"). Pursuant to the 2025 Office Lease, the monthly rent is $18,750 subject to escalations. The term of the 2025 Office Lease is five years commencing on January 1, 2025 and will expire on December 31, 2029. The 2025 Office Lease was approved by a special committee of the Company’s Board of Directors consisting of four independent directors. Rental expenses associated with the Office Leases for the three and nine months ended September 30, 2025 and 2024 were $0.06 million and $0.2 million, respectively, and $0.05 million and $0.1 million, respectively, and was recorded in “General and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income. The Company determined the Office Leases were an operating lease. For further details, see Note 7. Leases.
Right of First Offer Transactions
In connection with the Company's IPO and the related formation transactions, the Company entered into a Right of First Offer Agreement (the “ROFO Agreement”) with certain members of the family (the “Related Party”) of the Company’s CEO. Pursuant to the ROFO Agreement, the Company has the right of first offer to acquire from the Related Party 250 properties that are currently managed by the Company. On May 30, 2024, the Company acquired from the Related Party a portfolio of 36 properties currently leased to the USPS for approximately $12.5 million in cash, excluding closing costs. The transaction was approved by a special committee of the Company’s Board of Directors consisting of four independent directors. The Company has a remaining right of first offer to purchase 214 of 358 managed postal properties.
Guarantees
As disclosed above in Note 5. Debt, Mr. Spodek personally guaranteed a portion of or the entire amount outstanding under the Company's loans with First Oklahoma Bank and Vision Bank, totaling $1.8 million and $1.8 million as of September 30, 2025 and December 31, 2024, respectively. As a guarantor, Mr. Spodek's interests with respect to the amount of debt he is guaranteeing (and the terms of any repayment or default) may not align with the Company’s interests and could result in a conflict of interest.
Note 10. Earnings Per Share
EPS is calculated by dividing net income attributable to common stockholders by the weighted average number of shares outstanding for the period. The following table presents a reconciliation of income from operations used in the basic and diluted EPS calculations (dollars in thousands, except share and per share data).
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Numerator for earnings per share – basic and diluted: | |||||||||||||||||||||||
| Net income attributable to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Less: Income attributable to participating securities | ( | ( | ( | ( | |||||||||||||||||||
| Numerator for earnings per share — basic and diluted | $ | $ | $ | $ | |||||||||||||||||||
Denominator for earnings per share – basic and diluted (1) | |||||||||||||||||||||||
| Basic and diluted net income per share | $ | $ | $ | $ | |||||||||||||||||||
23
Explanatory Note:
(1) Diluted EPS reflects the potential dilution of the conversion of obligations and the assumed exercises of securities including the effects of restricted shares and RSUs issued under the Company’s 2019 Equity Incentive Plan (the “Plan”) (See Note 11. Stockholders’ Equity). The effect of such shares and RSUs would not be dilutive and were not included in the computation of weighted average number of shares outstanding for the periods presented in the table above. OP Units and LTIP Units are redeemable for cash or, at the Company’s option, shares of Class A common stock on an one -for-one basis. The income allocable to such OP Units and LTIP Units is allocated on this same basis and reflected as non-controlling interests in these unaudited Consolidated Financial Statements. As such, the assumed conversion of these OP Units and LTIP Units would have no net impact on the determination of diluted EPS.
Note 11. Stockholders’ Equity
ATM Program
On November 4, 2022, the Company entered into separate open market sale agreements for its at-the-market offering programs with each of Jefferies LLC, BMO Capital Markets Corp., Janney Montgomery Scott LLC, Stifel, Nicolaus & Company, Incorporated and Truist Securities, Inc., as agents (the "ATM Program"), pursuant to which the Company may offer and sell shares of its Class A common stock having an aggregate sales price of up to $50.0 million. The agreements also provide that the Company may enter into one or more forward sale agreements under separate master forward confirmations and related supplemental confirmations with affiliates of certain agents. On August 8, 2023, the Company amended the ATM Program to increase the aggregate offering amount under the program to $150.0 million. On November 4, 2024, the Company entered into separate open market sale agreements for the ATM Program with each of Mizuho Securities USA LLC (“Mizuho”) and M&T Securities, Inc. (“M&T”), as additional sales agents, and affiliates of Mizuho, as forward sellers.
The following table summarizes the activity under the ATM Program for the period presented (dollars and shares issued in thousands, except per share amounts). During the three and nine months ended September 30, 2025, 1,677,683 and 2,347,137 shares, respectively, were issued under the ATM program. During the three and nine months ended September 30, 2024, 601,266 and 1,235,346 shares, respectively, were issued under the ATM program. As of September 30, 2025, the Company had approximately $57.9 million remaining that may be issued under the ATM Program.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||
Shares issued | |||||||||||||||||
Gross proceeds received | $ | $ | $ | $ | |||||||||||||
| Fees, issuance and other costs | ( | ( | ( | ( | |||||||||||||
| Net proceeds received | $ | $ | $ | $ | |||||||||||||
| Average gross sales price per share | $ | $ | $ | $ | |||||||||||||
Dividends and Distributions
During the three and nine months ended September 30, 2025, the Company's Board of Directors approved and the Company declared and paid dividends or distributions, as applicable, of $7.7 million and $22.7 million, respectively to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $0.2425 and $0.7275 per share or unit, respectively as shown in the table below.
| Declaration Date | Record Date | Date Paid | Amount Per Share or Unit | |||||||||||||||||
| January 30, 2025 | February 14, 2025 | February 28, 2025 | $ | |||||||||||||||||
| April 21, 2025 | May 1, 2025 | May 30, 2025 | $ | |||||||||||||||||
| July 20, 2025 | July 31, 2025 | August 29, 2025 | $ | |||||||||||||||||
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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Non-controlling Interests
Non-controlling interests in the Company represent OP Units held by the Company's prior investors and certain sellers of properties to the Company and LTIP Units primarily issued to the Company’s employees and the Board of Directors in connection with the IPO and/or as a part of their compensation. During the nine months ended September 30, 2025, the Company issued 219,335 LTIP Units to the Company’s CEO for his 2024 incentive bonus, his election to defer 100 % of his 2025 annual salary and for long term incentive compensation, 90,909 LTIP Units to the Company’s President for his 2024 incentive bonus, 46,944 LTIP Units in May 2025 to the Board of Directors for their annual retainers as compensation for their services and for long term incentive compensation, 121,913 LTIP Units to certain other employees for their 2024 incentive bonus and for long term incentive compensation and 3,998 LTIP Units to a consultant under the consultancy agreement with the Company
As of September 30, 2025 and December 31, 2024, non-controlling interests consisted of 5,494,798 OP Units and 1,614,079 LTIP Units and 4,998,738 OP Units and 1,241,944 LTIP Units, respectively. This represented approximately 21.4 % and 20.9 % of the outstanding Operating Partnership units as of September 30, 2025 and December 31, 2024, respectively. OP Units and shares of Class A common stock generally have the same economic characteristics, as they share equally in the total net income or loss and distributions of the Operating Partnership. Beginning on or after the date which is 12 months after the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will generally have the right, subject to the terms and conditions set forth in the partnership agreement, to require the Operating Partnership to redeem all or a portion of the OP Units held by such limited partner or assignee in exchange for cash, or at the Company's sole discretion, shares of Class A common stock, on an one -for-one basis determined in accordance with and subject to adjustment under the partnership agreement.
During the nine months ended September 30, 2025, (i) 11,198 LTIP Units were redeemed for 11,198 OP Units (the "Converted LTIP Units") and (ii) 25,518 OP Units (inclusive of the Converted LTIP Units) were redeemed for 25,518 shares of Class A common stock. During the nine months ended September 30, 2024, 52,778 OP Units were redeemed for 52,778 shares of Class A common stock. For redemption of OP Units using shares of Class A common stock, the Company adjusted the carrying value of non-controlling interests to reflect its share of the book value of the Operating Partnership reflecting the change in the Company’s ownership of the Operating Partnership. Such adjustments are recorded to additional paid-in capital as a reallocation of non-controlling interest in the Consolidated Statements of Changes in Equity. Operating Partnership unitholders are entitled to share in cash distributions from the Operating Partnership in proportion to their percentage ownership of OP Units.
Restricted Stock and Other Awards
Pursuant to the Postal Realty Trust Inc. 2019 Equity Incentive Plan, (the "Plan"), the Company may grant equity incentive awards to its directors, officers, employees and consultants. As of September 30, 2025, the remaining shares available under the Plan for future issuance was 1,076,369 . The Plan provides for grants of stock options, stock awards, stock appreciation rights, performance units, incentive awards, other equity-based awards (including LTIP Units) and dividend equivalents in connection with the grant of performance units and other equity-based awards.
25
The following table presents a summary of the Company's outstanding restricted shares of Class A common stock, LTIP Units and RSUs. The balance as of September 30, 2025 represents unvested restricted shares of Class A common stock and LTIP Units and RSUs that are outstanding, whether vested or not:
Restricted Shares (1)(2) | LTIP Units (3) | RSUs (4) | Total Shares/Units/RSUs | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||||
Outstanding, as of January 1, 2025 | $ | ||||||||||||||||||||||||||||
Granted (5) | $ | ||||||||||||||||||||||||||||
| Conversion to common stock | ( | ( | $ | ||||||||||||||||||||||||||
Vesting of restricted shares and RSUs(6) | ( | ( | ( | $ | |||||||||||||||||||||||||
Forfeited (5) | ( | ( | ( | ( | $ | ||||||||||||||||||||||||
| Outstanding, as of September 30, 2025 | $ | ||||||||||||||||||||||||||||
Explanatory Notes:
(1)Represents restricted shares awards included in Class A common stock.
(2)The time-based restricted share awards granted to the Company's officers and employees typically vest in three annual installments or cliff vest at the end of three years , five years or eight years . 18,460 restricted shares were cancelled in connection with the departure of the Company's former Chief Financial Officer for his long term incentive compensation.
(3)Includes 219,335 LTIP Units granted to the Company’s CEO, 90,909 LTIP Units granted to the Company’s President and 12,952 LTIP Units granted to the Company's former Chief Financial Officer. Also, includes 46,944 LTIP Units granted to the Company's independent directors that vest over three years or cliff vest at the end of three years , 121,913 LTIP Units granted to certain other employees of the Company, certain of which vested fully on the date of grant with the remaining vesting over three years or cliff vest at the end of eight years , and 3,998 LTIP Units granted to a consultant under the consultancy agreement with the Company, which shares will vest on June 30, 2026. 112,718 LTIP Units were cancelled in connection with the departure of the Company's former Chief Financial Officer for his long term incentive compensation.
(4)Includes 90,362 RSUs granted to certain officers and employees of the Company during the nine months ended September 30, 2025, subject to the achievement of a service condition and a market condition. Such RSUs are market-based awards and are subject to the achievement of performance-based hurdles relating to the Company’s specified absolute and relative total stockholder return goals and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2027. The number of market-based RSUs is based on the number of shares issuable upon achievement of the market-based metric at target. Also, includes 13,814 time-based RSUs issued for 2024 incentive bonuses to certain employees that vested fully on February 1, 2025, the date of grant. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria. 40,623 RSUs were cancelled in connection with the departure of the Company's former Chief Financial Officer for his long term incentive compensation.
(5)Modified restricted shares are treated as forfeited and re-granted at their new fair value.
(6)Includes 64,741 of restricted shares and RSUs that vested and 22,201 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements.
During the year ended December 31, 2021, the Company issued 46,714 RSUs (the “2021 Performance-Based Awards”) to certain employees that were market-based awards and subject to the achievement of performance-based hurdles relating to the Company’s absolute total stockholder return goals and continued employment with the Company over the approximately three-year performance period ended December 31, 2023. In February 2024, the Company's Corporate Governance and Compensation Committee of the Board of Directors ("CGC Committee") determined that the Company's total stockholder return for such three-year performance period met the threshold performance hurdles for the 2021 Performance-
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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Based Awards and, as a result, approved the payout of (i) 23,357 RSUs for such awards, which were settled using the Company’s shares of Class A common stock, and (ii) their cash dividends for the three-year performance period.
During the year ended December 31, 2022, the Company issued 47,005 RSUs (the “2022 Performance-Based Awards”) to certain employees that were market-based awards and subject to the achievement of performance-based hurdles relating to the Company’s absolute total stockholder return goals and continued employment with the Company over the approximately three-year performance period ended December 31, 2024. In January 2025, the Company's CGC Committee determined that the Company's total stockholder return for such three-year performance period did not meet the threshold performance hurdles for the 2022 Performance-Based Awards and, as a result, approved the cancellation of 47,005 RSUs for such awards.
On June 18, 2025, the Company entered into a Transition and General Release Agreement with Robert B. Klein (the “Transition Agreement”), pursuant to which Mr. Klein expressed his intention to resign from his role as Chief Financial Officer of the Company but continued as an employee of the Company through June 30, 2025 (the “Separation Date,” the period from the Transition Date to the Separation Date is referred to as the “Transition Period”) and provide consulting services to the Company beginning on the day following the Separation Date until the date the Company files its Form 10-Q for the period ending June 30, 2025 (the “Completion Date” and such period, the “Consulting Period”). Mr. Klein continued serving as the Company’s principal financial officer through the end of the Consulting Period. Pursuant to the terms of the Transition Agreement, in the three and nine months ended September 30, 2025, Mr. Klein received a gross amount equal to $500,000 28,000 0.4 1.0
During the three and nine months ended September 30, 2025, the Company recognized compensation expense of $0.7 million and $4.2 million, respectively, and during the three and nine months ended September 30, 2024, the Company recognized compensation expense of $1.4 million and $4.5 million, respectively, in “General and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income related to all awards. During the three and nine months ended September 30, 2025, the Company recognized compensation expense of $0.1 million and $0.6 million, respectively, and during the three and nine months ended September 30, 2024, the Company recognized compensation expense of $0.1 million and $0.5 million, respectively, in "Property operating expenses" in the Consolidated Statements of Operations and Comprehensive Income related to all awards.
As of September 30, 2025, there was $17.7 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 4.7 years.
Employee Stock Purchase Plan
The Company's ESPP allows its employees to purchase shares of the Class A common stock at a discount. A total of 100,000 shares of Class A common stock was reserved for sale and authorized for issuance under the ESPP. The Code permits the Company to provide up to a 15 % discount on the lesser of the fair market value of such shares of Class A common stock at the beginning of the offering period and the close of the offering period. As of September 30, 2025 and December 31, 2024, 73,990 and 58,569 shares have been issued under the ESPP since commencement, respectively. During the three and nine months ended September 30, 2025, the Company recognized compensation expense of $0.01 million and $0.05 million, respectively, and during the three and nine months ended September 30, 2024, the Company recognized compensation expense of $0.02 million and $0.04 million, respectively, related to the ESPP.
Note 12. Commitments and Contingencies
As of September 30, 2025, the Company was not involved in any litigation nor, to its knowledge, is any litigation threatened against the Company that, in management’s opinion, would result in any material adverse effect on the Company’s financial position and results of operations, or which is not covered by insurance.
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In the ordinary course of the Company’s business, the Company enters into non-binding (except with regard to exclusivity and confidentiality) letters of intent indicating a willingness to negotiate for acquisitions. There can be no assurance that definitive contracts will be entered into with respect to any matter covered by letters of intent, that the Company will close the transactions contemplated by such contracts on time, or that the Company will consummate any transaction contemplated by any definitive contract.
Note 13. Subsequent Events
In addition to the subsequent events discussed elsewhere in the notes to the unaudited Consolidated Financial Statements, the following events occurred subsequent to September 30, 2025:
The Company's Board of Directors approved, and on October 21, 2025, the Company declared a third quarter 2025 common stock dividend of $0.2425 per share, which is payable on November 28, 2025 to stockholders of record as of November 4, 2025.
As of November 4, 2025, the Company had $28.0 million drawn on the Revolving Credit Facility.
As of November 4, 2025 and during the period subsequent to September 30, 2025, the Company acquired 19 leased properties for approximately $7.2 million, excluding closing costs.
As of November 4, 2025 and during the period subsequent to September 30, 2025, the Company issued 143,221 shares of its Class A common stock under the ATM Program for gross proceeds of approximately $2.2 million.
As of November 4, 2025 and during the period subsequent to September 30, 2025, the Company had entered into definitive agreements to acquire 13 properties for approximately $6.7 million. However, the Company can provide no assurances that the acquisitions of these properties will be consummated on the terms and timing the Company expects, or at all.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is based on, and should be read in conjunction with, the unaudited Consolidated Financial Statements and the related notes thereto of Postal Realty Trust, Inc. contained in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024.
As used in this section, unless the context otherwise requires, references to “we,” “our,” “us,” and “our company” refer to Postal Realty Trust, Inc., a Maryland corporation, together with our consolidated subsidiaries, including Postal Realty LP, a Delaware limited partnership, of which we are the sole general partner and which we refer to in this section as our Operating Partnership.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of federal securities laws. In particular, statements pertaining to our capital resources, acquisitions, property performance and results of operations contain forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
•change in the status of the United States Postal Service (“USPS”) as an independent agency of the executive branch of the U.S. federal government;
•change in the demand for postal services delivered by the USPS;
•our ability to come to an agreement with the USPS regarding new leases or lease renewals on the terms and timing we expect, or at all;
•the solvency and financial health of the USPS;
•defaults on, early terminations of or non-renewal of leases or actual, potential or threatened relocation, closure or consolidation of postal offices or delivery routes by the USPS;
•the competitive market in which we operate;
•changes in the availability of acquisition opportunities;
•our inability to successfully complete real estate acquisitions or dispositions on the terms and timing we expect, or at all;
•our failure to successfully operate developed and acquired properties;
•adverse economic or real estate developments, either nationally or in the markets in which our properties are located;
•decreased rental rates or increased vacancy rates;
•change in our business, financing or investment strategy or the markets in which we operate;
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•fluctuations in interest rates and increased operating costs, repair and maintenance expenses and capital expenditures for our properties;
•general economic conditions (including inflation, rising interest rates, uncertainty regarding ongoing conflict between Russia and Ukraine and their related impact on macroeconomic conditions);
•financial market fluctuations;
•our failure to generate sufficient cash flows to service our outstanding indebtedness;
•our failure to obtain necessary outside financing on favorable terms or at all;
•failure to hedge effectively against interest rate changes;
•our reliance on key personnel whose continued service is not guaranteed;
•the outcome of claims and litigation involving or affecting us;
•changes in real estate, taxation, zoning laws and other legislation and government activity and changes to real property tax rates and the taxation of real estate investment trusts (“REITs”) in general;
•operations through joint ventures and reliance on or disputes with co-venturers;
•cybersecurity threats;
•uncertainties and risks related to adverse weather conditions, natural disasters and climate change;
•exposure to liability relating to environmental and health and safety matters;
•governmental approvals, actions and initiatives, including the need for compliance with environmental requirements;
•lack or insufficient amounts of insurance;
•limitations imposed on our business in order to maintain our status as a REIT and our failure to maintain such status; and
•public health threats, such as the coronavirus (COVID-19) pandemic.
While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes after the date of this Quarterly Report on Form 10-Q, except as required by applicable law. You should not place undue reliance on any forward-looking statements that are based on information currently available to us or the third parties making the forward-looking statements. For a further discussion of these and other factors that could impact our future results, performance or transactions, you should carefully review and consider (i) the information contained under Item 1A titled “Risk Factors” herein and in our Annual Report on Form 10-K and (ii) such similar information as may be contained in our other reports and filings that we make with the Securities and Exchange Commission (the “SEC”).
Overview
Company
We were formed as a Maryland corporation on November 19, 2018 and commenced operations upon completion of our initial public offering and the related formation transactions. We conduct our business through a traditional UPREIT structure in which our properties are owned by our Operating Partnership directly or through limited partnerships, limited liability companies or other subsidiaries. During the nine months ended September 30, 2025, we acquired 151 properties leased to the USPS for approximately $96.6 million, including closing costs. As of September 30, 2025, our portfolio consists of 1,853
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owned properties, located in 49 states and one territory and comprising approximately 6.9 million net leasable interior square feet.
We are the sole general partner of our Operating Partnership through which our properties are directly or indirectly owned. As of November 4, 2025, we owned approximately 78.7% of outstanding common units of limited partnership interest in our Operating Partnership (the “OP Units”), including long term incentive units of our Operating Partnership (the “LTIP Units”). Our Board of Directors oversees our business and affairs.
ATM Program
On November 4, 2022, the Company entered into separate open market sale agreements for its at-the-market offering programs with each of Jefferies LLC, BMO Capital Markets Corp., Janney Montgomery Scott LLC, Stifel, Nicolaus & Company, Incorporated and Truist Securities, Inc., as agents (the "ATM Program"), pursuant to which the Company may offer and sell shares of its Class A common stock having an aggregate sales price of up to $50.0 million. The agreements also provide that the Company may enter into one or more forward sale agreements under separate master forward confirmations and related supplemental confirmations with affiliates of certain agents. On August 8, 2023, the Company amended the ATM Program to increase the aggregate offering amount under the program to $150.0 million. On November 4, 2024, the Company entered into separate open market sale agreements for the ATM Program with each of Mizuho Securities USA LLC (“Mizuho”) and M&T Securities, Inc. (“M&T”), as additional sales agents, and affiliates of Mizuho, as forward sellers. During the nine months ended September 30, 2025, 2,347,137 shares were issued under the ATM Program for approximately $35.8 million in gross proceeds. As of September 30, 2025, we had approximately $57.9 million of availability remaining under the ATM Program.
Executive Overview
We are an internally managed REIT with a focus on acquiring and managing properties leased primarily to the USPS, ranging from last-mile post offices to industrial facilities. We believe the overall opportunity for consolidation that exists within the postal logistics network is very attractive. We continue to execute our strategy to acquire and consolidate postal properties that we believe will generate strong earnings for our shareholders.
Geographic Concentration
As of September 30, 2025, we owned a portfolio of 1,853 properties located in 49 states and one territory and leased primarily to the USPS. For the nine months ended September 30, 2025, approximately 10.4% of our total rental income was concentrated in Pennsylvania.
Registrant Elections
We are a “smaller reporting company” as defined in Regulation S-K under the Securities Act and have elected to take advantage of certain scaled disclosures available to smaller reporting companies.
We have also elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), beginning with our short taxable year ended December 31, 2019 and intend to continue to qualify as a REIT. As long as we qualify as a REIT, we generally will not be subject to federal income tax to the extent that we distribute our taxable income for each tax year to our stockholders.
New Tax Legislation
Effective July 4, 2025, certain changes to U.S. tax law were approved that impact us and our stockholders. Among other changes, this legislation (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code, (ii) increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries ("TRSs") from 20% to 25% for taxable years beginning after December 31, 2025, and (iii) increases the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization and depletion from the definition of “adjusted taxable income” (i.e. based on EBITDA rather than EBIT) for taxable years beginning after December 31, 2024.
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Factors That May Influence Future Results of Operations
The USPS
We are dependent on the USPS’ financial and operational stability. The USPS is currently facing a variety of circumstances that are threatening its ability to fund its operations and other obligations as currently conducted without intervention by the federal government. The USPS is constrained by laws and regulations that restrict revenue sources and pricing, mandate certain expenses and cap its borrowing capacity. As a result, among other consequences, the USPS is unable to fund its mandated expenses and continues to be subject to mandated payments to its retirement system and benefits. While the USPS has recently undertaken, and proposes to undertake, a number of operational reforms and cost reduction measures, such as higher rates and slower deliveries for certain services and closure, relocation or consolidation of certain facilities and delivery routes, the USPS has taken the position such measures alone will not be sufficient to maintain its ability to meet all of its existing obligations when due or allow it to make the critical infrastructure investments that have been deferred in recent years. These measures have also led to significant criticism and litigation, which may result in reputational or financial harm or increased regulatory scrutiny of the USPS or reduced demand for its services. The occurrence of a regional epidemic or a global pandemic, such as the COVID-19 pandemic, and measures taken to prevent its spread may also have a material and unpredictable effect on the USPS’ operations and liquidity, including significant additional operating expenses caused by pandemic-related disruptions. Other geopolitical and economic factors have also created significant inflationary pressures resulting in higher compensation, benefits, transportation and fuel costs for the USPS. If the USPS becomes unable to meet its financial obligations or its revenue declines due to reduced demand for its services, the USPS may reduce its demand for leasing postal properties, which would have a material adverse effect on our business and operations. For additional information regarding the risks associated with the USPS, see the section entitled “Risk Factors - Risks Related to the USPS” under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024.
Revenues
We derive revenues primarily from rent and tenant reimbursements under leases with the USPS for our properties and fee and other from the management of postal properties owned by Andrew Spodek, our chief executive officer, and his affiliates managed by our TRS, income recognized from properties accounted for as financing leases and revenue from providing certain advisory services. Rental income represents the lease revenue recognized under the leases primarily with the USPS which includes the impact of above and below market lease intangibles as well as reimbursements to us made by our tenants for the real estate taxes paid at each property where tenants are responsible for such taxes under the leases. Certain of our leases include annual rent escalators. Fee and other principally represents (i) revenue our TRS received from postal properties owned by Mr. Spodek and his affiliates pursuant to the management agreements and is a percentage of the lease revenue for the managed properties, (ii) revenue our TRS received from providing advisory services to third-party owners of postal properties and (iii) income recognized from properties accounted for as financing leases. As of September 30, 2025, properties leased to our tenants had an average remaining lease term of approximately 4.0 years. Factors that could affect our rental income and fee and other in the future include, but are not limited to: (i) our ability to renew or replace expiring leases and management agreements; (ii) local, regional or national economic conditions; (iii) an oversupply of, or a reduction in demand for, postal space; (iv) changes in market rental rates; (v) changes to the USPS’ current property leasing program or form of lease; and (vi) our ability to provide adequate services and maintenance at our properties and managed properties.
Operating Expenses
We lease our properties primarily to the USPS. The majority of our leases are modified double-net leases, whereby the tenant is responsible for utilities, certain maintenance obligations and reimbursement of property taxes and the landlord is generally responsible for insurance, roof and structure. Thus, an increase in costs related to the landlord’s responsibilities under these leases could negatively influence our operating results. Refer to “Lease Renewal” below for further discussion.
Operating expenses generally consist of real estate taxes, property operating expenses, which consist of insurance, repairs and maintenance (other than those for which the tenant is responsible), property maintenance-related payroll and depreciation and amortization. Factors that may affect our ability to control these operating costs include but are not limited to: the cost of periodic repair, age and durability of our properties, renovation costs, landlord’s responsibilities under the leases, the cost of re-leasing space, inflation and the potential for liability under applicable laws. Recoveries from the tenant are recognized as revenue on an accrual basis over the periods in which the related expenditures are incurred. Tenant reimbursements and the related property operating expenses are recognized on a gross basis, because (i) generally, we are the primary obligor with respect to the real estate taxes and (ii) we bear the credit risk in the event the tenant does not reimburse the real estate taxes.
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The expenses of owning and operating a property are not necessarily reduced when circumstances, such as market factors and competition, cause a reduction in income from the property. If revenues drop, we may not be able to reduce our expenses accordingly. Costs associated with real estate investments generally will not be materially reduced even if a property is not fully occupied or other circumstances cause our revenues to decrease. As a result, if revenues decrease in the future, static operating costs may adversely affect our future cash flow and results of operations.
General and Administrative Expense
General and administrative expense represents personnel costs, professional fees, legal fees, insurance, consulting fees, information technology costs and other expenses related to our day-to-day activities of being a public company. While we expect that our general and administrative expenses will continue to rise as our portfolio grows, we expect that such expenses as a percentage of our revenues will decrease over time due to efficiencies and economies of scale.
Equity-Based Compensation Expense
All equity-based compensation expense is recognized in our Consolidated Statements of Operations and Comprehensive Income as components of general and administrative expense and property operating expenses. We issue share-based awards to align our directors' and employees’ interests with those of our investors.
Indebtedness and Interest Expense
Our Amended and Restated Credit Agreement, dated September 19, 2025 (the "Credit Facilities"), consists of a (i) $150.0 million senior unsecured revolving credit facility (the "Revolving Credit Facility") and (ii) $290.0 million term loan facility consisting of a (x) $115.0 million senior unsecured term loan (the "2030 Term Loan") and (y) $175.0 million senior unsecured delayed draw term loan (the "2028 Term Loan," and, collectively with the "2030 Term Loan", the "Term Loans.").
We intend to use the Credit Facilities for working capital purposes, which may include repayment of mortgage indebtedness, property acquisitions and other general corporate purposes. We amortize on a non-cash basis the deferred financing costs associated with our debt to interest expense using the straight-line method, which approximates the effective interest rate method over the terms of the related loans. Debt discounts represent fair value adjustments to account for the difference between the stated rates and market rates of debt assumed or entered in connection with our property acquisitions. The debt premiums discounts are amortized to interest expense over the term of the related loans using the straight-line method, which approximates the effective-interest rate method. Any changes to the debt structure, including debt financing associated with property acquisitions, could materially influence the operating results depending on the terms of any such indebtedness.
Income Tax Benefit (Expense)
As a REIT, we generally will not be subject to federal income tax on our net taxable income that we distribute currently to our stockholders. Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute each year at least 90% of their REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. If we fail to qualify for taxation as a REIT in any taxable year and do not qualify for certain statutory relief provisions, our income for that year will be taxed at regular corporate rates, and we would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. Even though we qualify as a REIT for federal income tax purposes, we may still be subject to state and local taxes on our income and assets and to federal income and excise taxes on our undistributed income. Additionally, any income earned by our existing TRS and any other TRS we may form in the future will be subject to federal, state and local corporate income tax.
Lease Renewal
As of the date of this report, the USPS had not vacated or notified us of its intention to vacate any properties. When a lease expires, the USPS becomes a holdover tenant on a month-to-month basis typically paying the greater of estimated market rent or the rent amount under the expired lease. As of November 4, 2025, two of the properties we own were being occupied by the USPS as a holdover tenant.
While we currently anticipate that we will renew the leases that have expired or will expire, there can be no guarantee that we will be successful in renewing these leases, obtaining positive rent renewal spreads or renewing the leases on terms comparable to those of the expiring leases. Even if we are able to renew these expired leases, the lease terms may not be comparable to those of the previous leases. If we are not successful, we will likely experience reduced occupancy, rental
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income and net operating income, as well as diminished borrowing capacity under our Credit Facilities, which could have a material adverse effect on our financial condition, results of operations and ability to make distributions to shareholders. Refer to “Risk Factors - Risks Related to the USPS” under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information regarding the risks associated with the USPS.
Results of Operations
Comparison of the Three Months Ended September 30, 2025 and the Three Months Ended September 30, 2024
| For the Three Months Ended September 30, | |||||||||||||||||||||||
| (Amounts in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Rental income | $ | 23,692 | $ | 18,772 | $ | 4,920 | 26.2 | % | |||||||||||||||
| Fee and other | 634 | 895 | (261) | (29.2) | % | ||||||||||||||||||
| Total revenues | 24,326 | 19,667 | 4,659 | 23.7 | % | ||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Real estate taxes | 2,865 | 2,487 | 378 | 15.2 | % | ||||||||||||||||||
| Property operating expenses | 2,355 | 2,536 | (181) | (7.1) | % | ||||||||||||||||||
| General and administrative | 3,751 | 3,884 | (133) | (3.4) | % | ||||||||||||||||||
Casualty and impairment losses, net | 97 | 216 | (119) | (55.1) | % | ||||||||||||||||||
| Depreciation and amortization | 6,109 | 5,756 | 353 | 6.1 | % | ||||||||||||||||||
| Total operating expenses | 15,177 | 14,879 | 298 | 2.0 | % | ||||||||||||||||||
| Income from operations | 9,149 | 4,788 | 4,361 | 91.1 | % | ||||||||||||||||||
| Other income | — | 9 | (9) | (100.0) | % | ||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Contractual interest expense | (3,903) | (3,246) | (657) | 20.2 | % | ||||||||||||||||||
| Write-off and amortization of deferred financing fees and amortization of debt discount | (215) | (180) | (35) | 19.4 | % | ||||||||||||||||||
| Loss on early extinguishment of debt | (142) | — | (142) | N/A | |||||||||||||||||||
| Interest income | — | 7 | (7) | (100.0) | % | ||||||||||||||||||
| Total interest expense, net | (4,260) | (3,419) | (841) | 24.6 | % | ||||||||||||||||||
Income before income tax expense | 4,889 | 1,378 | 3,511 | 254.8 | % | ||||||||||||||||||
Income tax expense | (6) | (29) | 23 | (79.3) | % | ||||||||||||||||||
| Net income | $ | 4,883 | $ | 1,349 | $ | 3,534 | 262.0 | % | |||||||||||||||
Revenues
Rental income – Rental income includes net rental income as well as the recovery of certain operating costs and property taxes from tenants. Rental income increased by $4.9 million to $23.7 million for the three months ended September 30, 2025 from $18.8 million for the three months ended September 30, 2024, primarily due to the volume of our acquisitions and the execution of new leases with annual escalations.
Fee and other – Fee and other revenue decreased by $0.3 million to $0.6 million for the three months ended September 30, 2025 from $0.9 million for the three months ended September 30, 2024, primarily due to a decrease in management fees and miscellaneous income.
Operating Expenses
Real estate taxes – Real estate taxes increased by $0.4 million to $2.9 million for the three months ended September 30, 2025 from $2.5 million for the three months ended September 30, 2024, primarily due to the volume of our acquisitions.
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Property operating expenses – Property operating expenses decreased by $0.2 million to $2.4 million for the three months ended September 30, 2025 from $2.5 million for the three months ended September 30, 2024. Property management expenses are included within property operating expenses and totaled $0.7 million for each of the three months ended September 30, 2025 and 2024. The decrease was primarily related to lower repairs and maintenance due to scope and timing.
General and administrative – General and administrative expenses decreased by $0.1 million to $3.8 million for the three months ended September 30, 2025 from $3.9 million for the three months ended September 30, 2024, primarily due to an increase in public-company related cost and a reversal of previously recognized compensation cost on the forfeited awards, offset by the reclassification to compensation expense of the amount of dividends and distributions previously charged to retained earnings and noncontrolling interest related to awards that are forfeited in connection with the departure of the Company's former Chief Financial Officer.
Casualty and impairment losses (gains), net - Casualty and impairment losses for the three months ended September 30, 2025 were $0.1 million which reflects $0.1 million in gross charges primarily related to the net book value of several properties damaged as a result of natural disasters and related repairs, offset by $0.04 million of related insurance claims resulting in a net loss of $0.1 million. Casualty and impairment losses (gains), net were $0.2 million for the three months ended September 30, 2024 which reflects $0.2 million in gross charges primarily related to the net book value for an asset damaged as a result of vandalism.
Depreciation and amortization – Depreciation and amortization expense increased by $0.4 million to $6.1 million for the three months ended September 30, 2025 from $5.8 million for three months ended September 30, 2024, primarily due to the volume of our acquisitions.
Total Interest Expense, Net
During the three months ended September 30, 2025, we incurred total interest expense, net of $4.3 million compared to $3.4 million for the three months ended September 30, 2024. The increase in interest expense was primarily due to an increase in net borrowings on our Credit Facilities (including the $40.0 million of term loan proceeds borrowed on September 19, 2025) and an increase of $0.1 million for loss on early extinguishment of debt which is comprised of a $0.06 million loss from the write-off of unamortized debt issuance costs attributable to a previous creditor in the Revolving Credit Facility and 2030 Term Loan portions of our Prior Credit Facilities not participating in such respective portions of our current Credit Facilities and $0.08 million of third-party fees associated with the modification of our Term Loans.
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Comparison of the Nine Months Ended September 30, 2025 and Nine Months Ended September 30, 2024
| For the Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Rental income | $ | 67,902 | $ | 52,740 | $ | 15,162 | 28.7 | % | |||||||||||||||
| Fee and other | 1,925 | 2,264 | (339) | (15.0) | % | ||||||||||||||||||
| Total revenues | 69,827 | 55,004 | 14,823 | 26.9 | % | ||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Real estate taxes | 8,287 | 7,174 | 1,113 | 15.5 | % | ||||||||||||||||||
| Property operating expenses | 6,800 | 7,007 | (207) | (3.0) | % | ||||||||||||||||||
| General and administrative | 13,003 | 12,094 | 909 | 7.5 | % | ||||||||||||||||||
Casualty and impairment (gains) losses, net | (98) | 216 | (314) | (145.4) | % | ||||||||||||||||||
| Depreciation and amortization | 17,647 | 16,575 | 1,072 | 6.5 | % | ||||||||||||||||||
| Total operating expenses | 45,639 | 43,066 | 2,573 | 6.0 | % | ||||||||||||||||||
| Loss on sale of real estate assets | (49) | — | (49) | N/A | |||||||||||||||||||
| Income from operations | 24,139 | 11,938 | 12,201 | 102.2 | % | ||||||||||||||||||
| Other income | 30 | 74 | (44) | (59.5) | % | ||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Contractual interest expense | (11,157) | (8,771) | (2,386) | 27.2 | % | ||||||||||||||||||
| Write-off and amortization of deferred financing fees | (637) | (543) | (94) | 17.3 | % | ||||||||||||||||||
| Loss on early extinguishment of debt | (142) | — | (142) | N/A | |||||||||||||||||||
| Interest income | 7 | 13 | (6) | (46.2) | % | ||||||||||||||||||
| Total interest expense, net | (11,929) | (9,301) | (2,628) | 28.3 | % | ||||||||||||||||||
| Income before income tax expense | 12,240 | 2,711 | 9,529 | 351.5 | % | ||||||||||||||||||
| Income tax expense | (30) | (73) | 43 | (58.9) | % | ||||||||||||||||||
| Net income | $ | 12,210 | $ | 2,638 | $ | 9,572 | 362.9 | % | |||||||||||||||
Revenues
Rental income – Rental income includes net rental income as well as the recovery of certain operating costs and property taxes from tenants. Rental income increased by $15.2 million to $67.9 million for the nine months ended September 30, 2025 from $52.7 million for the nine months ended September 30, 2024, primarily due to the volume of our acquisitions and the execution of new leases with annual escalations.
Fee and other – Fee and other revenue decreased by $0.3 million to $1.9 million for the nine months ended September 30, 2025 from $2.3 million for the nine months ended September 30, 2024, primarily due to a decrease in management fees and miscellaneous income.
Operating Expense
Real estate taxes – Real estate taxes increased by $1.1 million to $8.3 million for the nine months ended September 30, 2025 from $7.2 million for the nine months ended September 30, 2024, primarily due to the volume of our acquisitions.
Property operating expenses – Property operating expenses decreased by $0.2 million to $6.8 million for the nine months ended September 30, 2025 from $7.0 million for the nine months ended September 30, 2024. Property management
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expenses are included within property operating expenses and totaled $2.3 million for each of the nine months ended September 30, 2025 and 2024. The decrease was primarily related to lower repairs and maintenance due to scope and timing.
General and administrative – General and administrative expenses increased by $0.9 million to $13.0 million for the nine months ended September 30, 2025 from $12.1 million for the nine months ended September 30, 2024, primarily due to an increase in public-company related costs, an increase in net compensation costs and the reclassification to compensation cost of the amount of dividends and distributions previously charged to retained earnings and noncontrolling interest related to awards that were forfeited. This is offset by the reversal of previously recognized compensation cost on the forfeited awards in connection with the departure of the Company's former Chief Financial Officer.
Casualty and impairment (gains) losses, net - Casualty and impairment gains for the nine months ended September 30, 2025 were $0.1 million which reflects $0.7 million in gross charges primarily related to the net book value of several properties damaged as a result of natural disasters and related repairs, offset by $1.1 million of related insurance claims resulting in a net gain of $0.3 million offset by $0.2 million for an impairment on an asset that was reclassified to Assets Held for Sale. Casualty and impairment losses (gain), net were $0.2 million for the nine months ended September 30, 2024 for an asset damaged as a result of vandalism.
Depreciation and amortization – Depreciation and amortization expense increased by $1.1 million to $17.6 million for the nine months ended September 30, 2025 from $16.6 million for the nine months ended September 30, 2024, primarily due to the volume of our acquisitions.
Total Interest Expense, Net
During the nine months ended September 30, 2025, we incurred total interest expense, net of $11.9 million compared to $9.3 million for the nine months ended September 30, 2024. The increase in interest expense is primarily related due to additional borrowings under the Credit Facilities and to an increase in net borrowings on our Credit Facilities ((including the $40.0 million of term loan proceeds borrowed on September 19, 2025) and an increase of $0.1 million for loss on early extinguishment of debt which is comprised of a $0.06 million loss from the write-off of unamortized debt issuance costs attributable to a previous creditor in the Revolving Credit Facility and 2030 Term Loan portions of our Prior Credit Facilities not participating in such respective portions of our current Credit Facilities and $0.08 million of third-party fees associated with the modification of our Term Loans.
Cash Flows
Comparison of the Nine Months Ended September 30, 2025 and the Nine Months Ended September 30, 2024
We had $1.9 million of cash and $0.4 million of escrows and reserves as of September 30, 2025 compared to $1.0 million of cash and $0.5 million of escrows and reserves as of September 30, 2024.
Cash flows from operating activities – Net cash provided by operating activities increased by $8.9 million to $33.2 million for the nine months ended September 30, 2025 compared to $24.3 million for the same period in 2024. The increase is primarily due to the volume of our acquisitions and the execution of new leases with annual rent escalations all of which have generated additional rental income and related changes in working capital, as well as the timing of certain receivables and payables.
Cash flows used in investing activities – Net cash used in investing activities for the nine months ended September 30, 2025 primarily consisted of $89.6 million of acquisitions and $5.9 million of escrow deposits for acquisitions, capital improvements and other investing activities offset by $1.7 million in proceeds received from the sale of real estate assets and property damage claims. Net cash used in investing activities for the nine months ended September 30, 2024 primarily consisted of $53.2 million of acquisitions and $2.7 million of escrow deposits for acquisitions, capital improvements and other investing activities.
Cash flows from financing activities – Net cash provided by financing activities increased by $30.2 million to $60.4 million for the nine months ended September 30, 2025 compared to $30.2 million for the nine months ended September 30, 2024. The increase was primarily related to an increase in net borrowings on our Credit Facilities of $16.0 million (including the $40.0 million of term loan proceeds borrowed on September 19, 2025) and higher net proceeds received from the issuance of shares. This is offset by debt issuance costs on our Credit Facility and a increase in the payment of dividends and distributions for the nine months ended September 30, 2025.
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Liquidity and Capital Resources
We had approximately $1.9 million of cash and $0.4 million of escrows and reserves as of September 30, 2025.
Revolving Credit Facility and Term Loans
On September 19, 2025 (the "CF Closing Date"), we amended and restated our Credit Facilities in their entirety, with Truist Bank, as administrative agent, and Truist Securities, M&T Bank and JPMorgan Chase Bank, N.A.,as joint lead arrangers and joint book runners. Additional participants in the Credit Facilities include Mizuho Bank Ltd., Bank of Montreal, Stifel Bank & Trust and TriState Capital Bank. The Credit Facilities provide for the Revolving Credit Facility and Term Loans. The 2030 Term Loan consists of (1) a $75 million term loan previously advanced to the Company under its prior credit facility which remained outstanding as of the CF Closing Date and (2) $40 million of new term loans advanced to the Company on the CF Closing Date. As of September 30, 2025, we had $315.0 million of aggregate principal amount outstanding under our Credit Facilities, with $115.0 million drawn on the 2030 Term Loan, $175.0 million drawn on the 2028 Term Loan and $25.0 million drawn on the Revolving Credit Facility.
The Credit Facilities include an accordion feature which permit us to borrow up to an additional (i) $150.0 million under the Revolving Credit Facility and (ii) $100.0 million under the Term Loans, subject to customary terms and conditions. The Revolving Credit Facility matures in November 2029, the 2030 Term Loan matures in January 2030 and the 2028 Term Loan matures in February 2028. Each of the Revolving Credit Facility and the 2030 Term Loan Facility may be extended for one 12-month period at the Company's sole option. Borrowings under the Credit Facilities carry an interest rate of, (i) in the case of the Revolving Credit Facility, either a base rate plus a margin ranging from 0.5% to 1.0% per annum or Adjusted Term SOFR (as defined below) plus a margin ranging from 1.5% to 2.0% per annum, or (ii) in the case of the Term Loans, either a base rate plus a margin ranging from 0.45% to 0.95% per annum or Adjusted Term SOFR plus a margin ranging from 1.45% to 1.95% per annum, in each case depending on a consolidated leverage ratio. With respect to the Revolving Credit Facility, we will pay, if the usage is equal to or less than 50%, an unused facility fee of 0.20% per annum, or if the usage is greater than 50%, an unused facility fee of 0.15% per annum, in each case on the average daily unused commitments under the Revolving Credit Facility.
The Credit Facilities are guaranteed, jointly and severally, by us and certain of our indirect subsidiaries and contain customary covenants that, among other things, restrict, subject to certain exceptions, our ability to incur indebtedness, grant liens on assets, make certain types of investments, engage in acquisitions, mergers or consolidations, sell assets, enter into certain transactions with affiliates and pay dividends or make distributions. The Credit Facilities require compliance with consolidated financial maintenance covenants to be tested quarterly, including a minimum fixed charge coverage ratio, maximum total leverage ratio, minimum tangible net worth, maximum secured leverage ratio, maximum unsecured leverage ratio, minimum unsecured debt service coverage ratio and maximum secured recourse leverage ratio. The Credit Facilities also contain certain customary events of default, including the failure to make timely payments under the Credit Facilities, any event or condition that makes other material indebtedness due prior to its scheduled maturity, the failure to satisfy certain covenants and specified events of bankruptcy and insolvency. As of September 30, 2025, we were in compliance with all of the Credit Facilities’ debt covenants.
As of September 30, 2025, we had eleven interest rate swaps with a total notional amount of $290.0 million that are used to manage our interest rate risk and fix the SOFR component on the Term Loans of the Credit Facilities (together, the "Interest Rate Swaps"). See Note 6. Derivatives and Hedging Activities in the Notes to our unaudited Consolidated Financial Statements included under Item 1 herein for further details regarding the Interest Rate Swaps.
Capital Resources and Financing Strategy
Our short-term liquidity requirements primarily consist of operating expenses and other expenditures associated with our properties, distributions to our limited partners and distributions to our stockholders required to qualify for REIT status, capital expenditures and property acquisitions. We expect to meet our short-term liquidity requirements through net cash provided by operations, cash, borrowings under our Credit Facilities and the potential issuance of securities. We have an effective shelf registration statement on file with the SEC under which we may issue equity financing through the instruments and on the terms most attractive to us at such time, including through our $150.0 million ATM Program.
Our long-term liquidity requirements primarily consist of funds necessary for the repayment of debt at maturity, distributions to our limited partners and distributions to our stockholders required to qualify for REIT status, property acquisitions and non-recurring capital improvements. We expect to meet our long-term liquidity requirements with net cash from operations, long-term indebtedness including our Credit Facilities and mortgage financing, the issuance of equity and debt
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securities and proceeds from select sales of our properties. We also may fund property acquisitions and non-recurring capital improvements using our Credit Facilities pending permanent property-level financing.
We believe we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional debt and the issuance of additional equity securities. However, in the future, there may be a number of factors that could have a material and adverse effect on our ability to access these capital sources, including unfavorable conditions in the overall equity and credit markets, our degree of leverage, our unencumbered asset base, borrowing restrictions imposed by our lenders, general market conditions for REITs, our operating performance, liquidity and market perceptions about us. The success of our business strategy will depend, to a significant degree, on our ability to access these various capital sources. In addition, we continuously evaluate possible acquisitions of postal properties, which largely depend on, among other things, the market for owning and leasing postal properties and the terms on which the USPS will enter into new or renewed leases.
To maintain our qualification as a REIT, we must make distributions to our stockholders aggregating annually at least 90% of our REIT taxable income determined without regard to the deduction for dividends paid and excluding capital gains. As a result of this requirement, we cannot rely on retained earnings to fund our business needs to the same extent as other entities that are not REITs. If we do not have sufficient funds available to us from our operations to fund our business needs, we will need to find alternative ways to fund those needs. Such alternatives may include, among other things, divesting ourselves of properties (whether or not the sales price is optimal or otherwise meets our strategic long-term objectives), incurring indebtedness or issuing equity securities in public or private transactions, the availability and attractiveness of the terms of which cannot be assured.
Material Capital Improvement Projects
The Company is currently undertaking capital improvement projects for two properties it owns in Pauline, Kansas (the "Pauline CIP”). The Pauline CIP is expected to cost an additional $0.8 million to $1.6 million, a majority of which is expected to be incurred in the fourth quarter of 2025. Currently, the Company expects that a portion of the costs associated with the Pauline CIP will be offset by the receipt of insurance proceeds, of which $0.4 million was received in October 2025.
Consolidated Indebtedness
As of September 30, 2025, we had approximately $349.2 million of outstanding consolidated principal indebtedness. The following table sets forth information as of September 30, 2025 with respect to our outstanding indebtedness (in thousands):
Outstanding Balance as of September 30, 2025 | Interest Rate at September 30, 2025 | Maturity Date | |||||||||||||||
Revolving Credit Facility(1)(2) | $ | 25,000 | SOFR+150 bps(3) | November 2029 | |||||||||||||
2030 Term Loan(1)(2) | 115,000 | SOFR+145 bps(3) | January 2030 | ||||||||||||||
2028 Term Loan(1) | 175,000 | SOFR+145 bps(3) | February 2028 | ||||||||||||||
| Secured Borrowings: | |||||||||||||||||
Vision Bank(4) | 1,409 | 3.69 | % | September 2041 | |||||||||||||
First Oklahoma Bank(5) | 285 | 3.63 | % | December 2037 | |||||||||||||
Vision Bank – 2018(6) | 844 | 3.69 | % | September 2041 | |||||||||||||
AIG(7) | 30,225 | 2.80 | % | January 2031 | |||||||||||||
Seller Financing - 2024(8) | 1,400 | 5.00 | % | September 2039 | |||||||||||||
| Total Principal | $ | 349,163 | |||||||||||||||
Explanatory Notes:
(1)See above under "—Revolving Credit Facility and Term Loans" for details regarding the Credit Facilities. During the three and nine months ended September 30, 2025, we incurred $0.05 million and $0.2 million of unused facility fees related to the Revolving Credit Facility, respectively.
(2)The Revolving Credit Facility matures in November 2029 and the 2030 Term Loan matures in January 2030, each of which may be extended for one twelve-month period at the Company's sole option.
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(3)Based upon the applicable SOFR rate (subject to a 0% floor).
(4)Five properties are collateralized under this loan and Mr. Spodek also provided a personal guarantee of payment for 50% of the outstanding amount thereunder. The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five-year period thereafter with principal and interest payments to the rate based on the five-year weekly average yield on United States Treasury securities adjusted to a constant maturity of five years, as made available to the Board of Governors of the Federal Reserve System (the "Five-Year Treasury Rate"), plus a margin of 2.75%, with a minimum annual rate of 2.75%.
(5)The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.625% for the first five years (ending in August 2026), then adjusting annually thereafter to a variable annual rate of Wall Street Journal Prime Rate with a minimum annual rate of 3.625%.
(6)The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five-year period thereafter with principal and interest payments to the rate based on the Five-Year Treasury Rate, plus a margin of 2.75%, with a minimum annual rate of 2.75%.
(7)The loan is secured by a first mortgage lien on an industrial property located in Warrendale, Pennsylvania. The loan has a fixed interest rate of 2.80% with interest-only payments for the first five years (ending in January 2026) and fixed payments of principal and interest thereafter based on a 30-year amortization schedule.
(8)In connection with the acquisition of two properties, the Company obtained seller financing secured by the properties in the amount of $1.4 million based on a fixed interest rate of 5.00% with interest-only payments through September 1, 2039.
Secured Borrowings as of September 30, 2025
As of September 30, 2025, we had approximately $34.2 million of secured borrowings outstanding, all of which are currently fixed-rate debt with a weighted average interest rate of 2.96% per annum.
Dividends
To maintain our qualification as a REIT, we are required to pay dividends to stockholders at least equal to 90% of our REIT taxable income determined without regard to the deduction for dividends paid and excluding net capital gains. During the three and nine months ended September 30, 2025, we paid cash dividends of $0.2425 per share, and $0.7275 per share, respectively. Our Board of Directors approved, and on October 21, 2025, we declared a third quarter 2025 common stock dividend of $0.2425 per share, which will be paid on November 28, 2025 to stockholders of record as of November 4, 2025.
Inflation
Because most of our leases provide for fixed annual rental payments without annual rent escalations, our rental revenues are fixed while our property operating expenses are subject to inflationary increases. A majority of our leases provide for tenant reimbursement of real estate taxes and thus the tenant must reimburse us for real estate taxes. We believe that if inflation increases expenses over time, increases in lease renewal rates will materially offset such increase.
Share Repurchase Program
On February 25, 2025 (the "SRP Date"), the Board of Directors authorized the creation of a share repurchase program (the “Share Repurchase Program”) pursuant to which we may repurchase up to $25.0 million of our Class A common stock. Repurchases of our Class A common stock conducted under the Share Repurchase Program may be made through open market transactions, block trades or other methods designed to comply with Rule 10b-18 of the Exchange Act. No shares of our Class A common stock were repurchased pursuant to the Share Repurchase Program for the three months ended September 30, 2025 and the dollar value of Class A common stock shares that remains available to be repurchased under the Share Repurchase Program is $25.0 million. The Share Repurchase Program does not obligate us to repurchase any specific dollar amount, or to acquire any specific number, of shares of our Class A common stock and may be suspended or discontinued at any time at the discretion of the Board of Directors.
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Subsequent Real Estate Acquisitions
As of November 4, 2025 and during the period subsequent to September 30, 2025, we have acquired 19 properties in individual or portfolio transactions for an aggregate of approximately $7.2 million, excluding closing costs.
Critical Accounting Estimates
Refer to the heading titled “Critical Accounting Estimates” under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of our critical accounting estimates.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss from adverse changes in market prices and interest rates. Our future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Our primary market risk results from our indebtedness, which bears interest at both fixed and variable rates. As of September 30, 2025, our indebtedness was approximately $349.2 million, consisting of approximately $315.0 million of variable-rate debt and approximately $34.2 million of fixed-rate debt. Of the $315.0 million variable-rate debt, $290.0 million relates to the Term Loans, which have been fixed through the Interest Rate Swaps. When factoring in the Term Loans as fixed-rate debt through the Interest Rate Swaps, as of September 30, 2025, approximately $25.0 million of our indebtedness was variable-rate debt and approximately $324.2 million was fixed-rate debt. Assuming no increase in the amount of our outstanding variable-rate indebtedness, if the one-month Adjusted Term SOFR were to increase or decrease by 1.0%, our cash flows would decrease or increase by approximately $0.25 million on an annualized basis.
Subject to maintaining our status as a REIT for federal income tax purposes, we manage our market risk on variable rate debt through the use of interest rate swaps that fix the rate on all or a portion of our variable rate debt for varying periods up to maturity, such as the Interest Rate Swaps. In the future, we may use other derivative instruments such as interest cap agreements to, in effect, cap the interest rate on all or a portion of the debt for varying periods up to maturity. This in turn, reduces the risks of variability of cash flows created by variable rate debt and mitigates the risk of increases in interest rates. Our objective when undertaking such arrangements will be to reduce our floating rate exposure. However, we provide no assurance that our efforts to manage interest rate volatility will successfully mitigate the risks of such volatility in our portfolio and we do not intend to enter into hedging arrangements for speculative purposes.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the rules and regulations of the SEC and that such information is accumulated and communicated to management, including our Chief Executive Officer (Principal Executive Officer), Chief Financial Officer and our Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
We have carried out an evaluation, under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial Officer, regarding the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Principal Executive Officer and Principal Financial Officer have concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports filed or submitted under the Exchange Act (i) is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may in the future be party to various claims and routine litigation arising in the ordinary course of business. Our management does not believe that any such litigation will materially affect our financial position or operations.
Item 1A. Risk Factors
There have been no material changes from the risk factors disclosed in the section entitled “Risk Factors” under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
The following table presents information with respect to purchases of common stock we made during the three months ended September 30, 2025. The table reflects shares withheld from employees to satisfy certain tax obligations due in connection with grants of stock under the Plan. The Plan provides for the withholding of shares to satisfy tax obligations. It does not specify a maximum number of shares that can be withheld for this purpose. The shares of common stock withheld to satisfy tax withholding obligations may be deemed to be "issuer purchases" of shares that are required to be disclosed pursuant to this Item.
Shares Purchased / Withheld from Employee Awards During the Three Months Ended September 30, 2025 | ||||||||||||||
| Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans | Approximate Dollar Value (in millions) of Shares That May Yet be Purchased Under the Plan | ||||||||||
July 1 - July 31, 2025 | — | $ | — | — | $ | — | ||||||||
August 1 - August 31, 2025 | 1,109 | $ | 15.38 | 1,109 | $ | — | ||||||||
September 1 - September 30, 2025 | — | $ | — | — | $ | — | ||||||||
As disclosed in Part I, Item 2 above, during the three months ended September 30, 2025, no shares of our Class A common stock were repurchased pursuant to the Share Repurchase Program from the SRP Date to the period ended September 30, 2025. As of September 30, 2025, the dollar value of Class A common stock shares that remains available to be repurchased under the Share Repurchase Program is $25.0 million.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
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Item 6. Exhibits
| Exhibit | Exhibit Description | |||||||
| 10.1 | Amended and Restated Credit Agreement, dated September 19, 2025, by and among Postal Realty LP, Postal Realty Trust, Inc., the certain subsidiaries from time-to-time party thereto as guarantors, Truist Bank, as administrative agent, and the several banks and financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on September 22, 2025). | |||||||
| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | |||||||
| 31.2 | Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | |||||||
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | |||||||
| 32.2 | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | |||||||
| 101.INS | INSTANCE DOCUMENT** | |||||||
| 101.SCH | SCHEMA DOCUMENT** | |||||||
| 101.CAL | CALCULATION LINKBASE DOCUMENT** | |||||||
| 101.LAB | LABELS LINKBASE DOCUMENT** | |||||||
| 101.PRE | PRESENTATION LINKBASE DOCUMENT** | |||||||
| 101.DEF | DEFINITION LINKBASE DOCUMENT** | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
* Exhibits filed with this report.
** Submitted electronically herewith. Attached as Exhibit 101 to this report are the following documents formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive Income; (iii) Consolidated Statements of Changes in Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| POSTAL REALTY TRUST, INC. | ||||||||
| Date: November 4, 2025 | By: | /s/ Andrew Spodek | ||||||
| Andrew Spodek | ||||||||
| Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
| Date: November 4, 2025 | By: | /s/ Jeremy Garber | ||||||
| Jeremy Garber | ||||||||
| Principal Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
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FAQ
How did PSTL’s Q3 2025 revenue and earnings change year over year?
Total revenues were $24.3 million vs. $19.7 million; net income to common stockholders was $3.8 million vs. $1.1 million; EPS $0.13 vs. $0.03.
How many properties does PSTL own and who are the tenants?
PSTL owned 1,853 properties as of September 30, 2025, leased primarily to the United States Postal Service.
What acquisitions did PSTL complete in 2025 year-to-date?
PSTL acquired 151 properties for $96.6 million, including $43.4 million in Q3.
What were PSTL’s cash flows for the first nine months of 2025?
Operating cash flow was $33.2 million; investing used $93.8 million (acquisitions); financing provided $60.4 million.
What changes did PSTL make to its credit facilities in Q3 2025?
On Sept. 19, 2025, PSTL set a $150.0 million revolver (maturing Nov. 2029) and $290.0 million term loans, including a new $115.0 million 2030 term loan.
How is PSTL managing interest rate risk?
PSTL has 11 interest rate swaps with $290.0 million notional designated as cash flow hedges on term loans.
How many Class A shares are outstanding for PSTL?
As of November 4, 2025, PSTL had 26,062,636 Class A shares outstanding.
Postal Realty Trust
NYSE:PSTL
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364.93M
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70.42%
0.86%
REIT - Office
Real Estate Investment Trusts
United States
CEDARHURST