Postal Realty Trust (PSTL) 15 May 202020 Q1 Earnings call transcript

Good afternoon. My name is David, and I will be your conference operator today. At this time, I would like to welcome everyone to the Postal Realty Trust First Quarter Conference Call. [Operator Instructions].

Thank you. Mr. of conference. and President may Markets, Vice your begin Willenborg, Business Capital Development you Blaine

Good everyone, you. First Thank afternoon, Quarter Realty the Earnings Trust Postal Conference Call. and welcome to

Chief today, have and call Brandwein, Officer. Accounting Chief Jeremy the On Matt Andrew Spodek, Garber, Executive we President; Officer;

to Private effects on Please note year are Act Reform statements XX-K differ for those our are a without control, The the company's does forward-looking future assume status ongoing are that dated our Securities safe contained related by including, specifically business, its others, and risk Securities forward-looking statements timing not the facts its described contained and for Actual and in the update with of forward-looking by the covered of forward-looking, variety and and the company's the factors in be a the conference may to including, of limitation, the of XXXX. Litigation any those events pending this statements of result by statements as beyond company of disclaims terms are on that the otherwise. will from provisions may COVID-XX Postal obligation made new statements not negotiations forward-looking or Commission Exchange whether December any XX, and XXXX, Statements include use statements filings. harbor and the other results acquisitions considered These the Service. among and call. on statements forward-looking our pandemic company the this call historical in affected information,

non-GAAP from as from the operations. call, operations this and certain on conference may such funds company funds refer adjusted measures Additionally, financial to

earnings the these Commission. and a non-GAAP release Exchange in tabular most filings company's the reconciliation to You can comparable the with and GAAP find Securities measures currently measures financial of

the be may found on on Investor website. page information Relations Additional our

Realty Postal Spodek, to I of Executive With Chief call Officer Trust. the will over turn Andrew that,

Good like Quarter loved joining We Postal unprecedented sincere Realty these to forge responders bravery as for First admire and grateful. afternoon, your are through and ones working across and to Trust's give to each Call. healthy Earnings ahead the you would continue XXXX safe thank and you times. hope all We We country. day the employees postal are your also thanks and incredibly first our we

observe At social of support to distancing health to Postal the we Realty, and employees. guidelines continue our welfare

Our American essential work of the States home pandemic, business of our continues essentials medical our people. operate and the and the as other the ability to United remotely. recent stimulus we has given continued service safely to Their health. last-mile the an supplies focus on communities checks, remains to Service efficiently months such delivery as Throughout stay Postal items

the held has the the caused, the struggles pandemic absolute. While with uncertainty Service's public has commitment Postal

face of Our business States its this our revenue around from a and in stream believe the United We of makes federal the shareholders more is XXX% from the an rental stable company we portfolio agency focused of agency, benefit this occupied Postal and continuous believe payments pandemic. government. Realty

I address in the news of now weeks. would recent of the like some coverage to Postal Service

to plays supply the the handling While for purchases. chain reach network acknowledge facilities is the the The be It mail. carrier must that of is country online service XX% the world's Service mandate should is we of the Postal Postal the noted the is leading they we basis where certainly points throughout It XXX XX,XXX its over regardless result reaching only industry. approximately also in the of that and Americans a million infrastructure all and while a serves financial the that of delivery nation's live. delivery appreciate that is delivery for it constitutional critical Service concerns, which a essential role

This excited by fully We also we've and opportunities that the believe marks lie our in and stages made anniversary progress since ahead. business the are our next many model We're company. short week by energized time. the public a in becoming X-year such a

only AFFO same the reinforce per energy. Xx results share and with basis. our In allowed the total the payment on in the of to the Our span number to May doubled we dividend This square success year, a upcoming IPO has our since an covered of us footage $X.XX rental growing revenue the an properties, annualized raise portfolio. have our

initial reaching make As to goals. and to continue covering we our dividend forward look and we further acquisitions business, grow our

the the environment COVID-XX, can we stable start relative shareholders something revenue our count that on. believe business' our to some presents is headwinds Although to of the certainly current year due stream

While XX defensive XX other acquisitions totaling have end million. for during XXXX, take first quarter completed to approximately have subsequent quarter an additional properties had we properties measures the million of $XX $XX landlords closed approximately to of and

and our grow. our by flow of first of continues current public end for capability effectively highly confidence that the the In we a our going motivations as we this acquisition postal to cash the target plan, market. year could consolidate of of the our properties year fragmented on since public in we company. midst reaching a initial primary approximately the shown to million One have was execute IPO, environment, our believe our Even $XXX business

these Postal I entered our The for lease, expired. leases responsibility properties with will expenses for net which landlord. transfers leases of Service double to lease and our revised Service. update of a an modified with the additional maintenance have have leases renewed the now we on the has that To revised date, provide obligations any or form into Postal adopted not

expenses. are the not a the all with comprised net of our specific are double majority for responsibility to lease, leases uniform modified our of While in portfolio of the leases respect

through doubled As increased. have size, inherited have the have leases the of we we in variations acquisitions

of take incremental the into will new XX-plus operations our or not requiring to our that Service the our margin. Postal change lease Given of the we materially consequence operating entering years responsibilities, responsibilities, expense-related on form, varying believe with experience and us

rate rental XX in on properties XX Currently, XXXX. with its XXX,XXX that these to monthly higher approximately leases comprise XX had month-to-month the any Service vacated leases are XX lease at The holdover feet on expired us not XX These in the properties these our the vacate interior notified expiration. million XX of of $X.X leases annualized in has paying properties properties rate revenue. and XXXX, rental expired expired of have effect intention square or of us these rental are Postal in approximately and the To facilities. date, X.X% that time of generate than a basis.

going new our may anticipate expenses operating we and adopt forward, initial leasing the lease property we costs As form increase.

to the However, the neutralized our additional impact of through we these resulting expenses expenses offset also rates rental expect in additional generally income. change our that ability to minimal net by be our would

where terms the incremental be lease to on mitigated. of us addendum some have We that Service preliminary responsibilities were to Postal of a agreed the transferred to are

also have rental to in of remain XX that terms preliminary for XXXX leases for expired the on rates XXXX, We expirations. the XX agreed we in negotiation and

into could on any the documentation new any with lease we with Service not timing. expectation enter entered the there terms our and leases, to into reflect no that Postal will be or We definitive guarantee respect that have

to the that will optimistic that end. leases and working be are We diligently holdover are resolved, we

Year-to-date, we value. properties in no with have have management believe of $XX creating compensation government our fully additional we are disruption portfolio long-term rents. and our closed we agency-backed acquisitions, team portion our growing and million cash XXX% a summary, we with stock. our of have pipeline We In in occupied a of place. compensation its over in shareholders and on structure, Through the a is taking aligned focus opportunities

quarter turn now our the will to over discuss to I Jeremy call first results.

Andrew. you, Thank

on X was for quarter, The of purchase transactions XXX,XXX company's interior over net rental $XX.XX units square a was portfolios. with million, approximately for portfolio of highlight the XX of leasable a of including properties weighted half first OP the $XX.X XX-property issuance price. the totaling per the we foot. for rate closed One acquisition million square average feet of $XX.X During these approximately

for we million. properties X%. the of square interior we $XX feet XX-property leasable an that our approximately These for XX,XXX a comprising postal X% were XX end, additional portfolio between to range rate completed million. acquisitions The and second net acquisition cap at completed acquired was Subsequent quarter target $X.X

which to our on Moving acquisition-related expenses $XXX,XXX for quarter share, the approximately per was includes results. of of $XXX,XXX financial and approximately per quarter $X.XX $X.XX share. FFO compensation. for the AFFO was stock-based nonrecurring

million Moving XXXX, had of cash At March on we debt. million $X.X and $XX.X of balance to the sheet. XX,

facility, including subject During we increased exercising feature. undrawn the on capacity our accordion borrowing under to restrictions our line to million of the $XXX financial million borrowing of Please additional is available credit by our credit our certain in note all $XX capacity base. restrictions quarter,

availability. added to the referred left working amendment fund borrowing be increase currently our an through currently Furthermore, to availability on have Andrew are The that pipeline. XX credit to We we to line lease yet earlier our properties a limited to cannot facility of is until executed. capacity our

the for growth using properties, property XX million available on meantime, of properties closing other includes the select mortgage our level to holdover XX support This In have weeks. the we plan, mortgages coming in on including options. $X.X a

have as use form ability sellers a our units by are we of currency. In experienced, addition, OP as attracted to

come the our of acquisitions $XXX has completed fact, the since approximate from units. In of million OP of IPO, XX% consideration

OP on as heavily of thesis. remiss While the as not we this if point expect a do in rely we capability in be units did would out point our to consolidation not future, we differentiation

well to disruption. cash without as us forward, believe policy Looking operate prudent as we stable dividend flow allows our our

growth. ahead additional support public that available look we will we with being company, anniversary our of us have sources further to to anticipate we As our X-year capital a

our Directors goal This XX% our an scaling record of grow of increase payable our our fully dividend. our of that make since per sure third Subsequent on to our dividend IPO, from our May May reflects approved to the was dividend prior is shareholders we and share on declared end, it XX. we The dividend to as $X.XX increase of dividend covered our and platform represents quarter quarterly and XX, Board increase AFFO. intent by a also XXXX,

rental We quarter our rate square weighted feet per acquisitions, foot. million of we leasable average own per million feet square Inclusive net square of of owning square rate post-quarter a foot. weighted with X.X $X.XX net a the $X.XX ended with X.X leasable currently average

Our pipeline on and focused success. acquisition very building remains remain past on active, our we

expect towards market the the second of However, weighted our based to transaction on half year. activity be current conditions, we

A final note.

and Our to it remotely Form by our tomorrow. team work completing get to XX-Q filed continues in order diligently on

granted an and quarter, this option. extension we given However, if has that this the public is COVID-XX, take obligations not will for by challenges of for the filing presented possible companies SEC certain advantage

I that, to the open call With would like questions. for

Instructions]. [Operator

the Davidson. line from comes of Barry question D.A. Your Oxford first with

-- Looking at then you was the mean could acquisition your acquisitions, XXXX? give us if back-end target you to have rates meet or sort guys you -- post pricing, to Does have going you are of be going office it been on weighted. on And that looking change said experienced cap you're that there for also, -- the buildings currently the at? in any buildings the i.e., the

Thanks, Barry. is question. the Andrew. This appreciate I

some have We in seen adjustments pricing cap rates.

target we lay forward. The strong We we'd towards important The we coming a the be the and acquisitions thoughtful to interest approach Street, are it provided just the very, need out. are that in lot We we that and but have of that it's about about current selling. in to very the thoughtful prudent previously people a how good of is news environment working pipeline

are So sell "I environment." saying, the of into this kind none of and back to pulling sellers want don't

those of that having that seeing are least given I In around we're just selling Luckily, a sellers, sellers, seeing pause just going we're think our on growing. of that's more that us. types in and with their at even in both and some types others different pipeline interested taking interest this environment, selling, is everything tremendous consideration of are different

Your next question comes Zucker Aegis. with of from Ben the line

able in changes structure? of in you you the Andrew, some were I I'm prepared interested were USPS about and cost-sharing you that And X couldn't going in your typical step-up fact saying change or your quarter. could information pick you of rates over strong additional lease were catch-up another quickly as to a you the if to most just above like review every increases the that rental on expenses remarks what in I should up understand this pickup the reset be this in because guess whether beyond offset is by lease the Congratulations years get structure.

the appreciate I question.

in the with to properties was And lease account the provide their they're taken both or parties effect on the when responsibility is taken And so document is going shift that -- additional that into the only account negotiating have the into lease all for expired. lease. takes new new

statement be And so bottom parties recognize will rental of be prepared part was my taken revenue, adverse there shift, both the referencing any the don't account what we into that and the since was as believe line. it will effect to that

Got you.

Okay. -- related kind really helpful. the the time things, be as guess view imminent or is strong got to an to own? line you maybe it COVID tenant. or the environment, wondering, actual of of properties notwithstanding very you the I I'm threat to that general the seems anything a acquisition like That's extension like from just USPS continues that there see just your you risk the company of

government-backed Service the that believe is No, a tenant. I very strong, obviously, I don't. Postal

secured the current is don't by the just change given acquisitions environment, the stream real of business. in government. U.S. from the see And we to pace the aside underlying the slowing rental pipeline any Our

the think office have dividend. in a like the the next some news it ballots mail for And I we're prudent Well, maybe job post election, that's in just for good of road. step-up company be post guys the with if guess, I managing another kind the the moving done along you sounds the to towards is, yet down for office going and need

Agreed.

Janney. from Your comes next line Rob question the Stevenson of with

that mean it terms thought $X.XX may Andrew, the here? their I be the fact dividend period of that at the is deliberations for forward just guys you I slowed days? in some going what know acquisitions here Board's thoughts given rate. these the time, what's the the Board on run increased to of

came out allow public. our before meeting a cash dividend looking support the in at Board pay we're to dividend Rob, out positioned philosophy this a business that it's to We the Jeremy. our midst of we I flows the last of went environment. that set hope in well. covered you're uniquely AFFO. doing per us And and stable we by We're

a continue as And ratio. go-forward on basis, to long so so, we that that support can pay out we'll

I to time But we obviously by we're really those provide were a the the is because dividend, -- the not that now ready our had the forward, continue pace. of to dividend acquisition acquisition our pace IPO, is opportunity right think by at and, that, to and And driven as driven of and targets looking in continue pay hope the Board our I targets think our the position that a growth the view they're to to a forward-looking well. with grow view. goal dividend growth felt

Okay. at first price units that XXX,XXX the were OP then was the what the quarter? issued And

struck that were through were with of as deals all at done issuance, IPO our So prior they $XX. OP price

that subsequent OP been any million Okay. was the units or And under there there end $XX in any X.X you've has that done -- the you quarter to contract? have

No.

environment preferred capital the reopens? I market are of about thoughts sort are, issuing your how Okay. when me. And given that one from just and rates last what then mean low

that we're So The weigh positioned to focus our this focused management being our we as path believe is in think at the we time, best stake, really market options. take we but enter moment presenting a end best thoughtful was significant markets know, of didn't market, in continue And And -- prudent. has and decision opportunities wouldn't the the us you day, of we we're a so so our at shareholders. for shareholders. the to time, haven't preserving And interest that at any on what listen, capital for about are is on always opportunities differently. we this are are where made companies and

[Operator Instructions].

comes BMO. of next Lee line the Frank from Your question with

OP on sell environment. Just to out the want Have contract changes to were terms in versus terms any units? of to what touch due you any And were acquisitions, pandemic? take agreements that acquisition of definitive are willing there in in the seen in that or sellers cash

question. the appreciate I

of I'll result environment being the change any in question the or sell the current not right? No, changed had have of a answer time, contracts So out that we the second a with exception to delay keep the that's as And getting that's that is going I out there. for as time. important many and this Everything back us company I think is to new an on is companies everybody. something unprecedented And first.

of and kind in to back step way thoughtful like so And handle the themselves things let things. more out play slower and manner a seems right to

people results we're They and cash a their think pricing they conversations. reevaluate properties, their the through I standpoint, a seeing their go that OP something in what versus like standpoint of investments, things. From states, when we're going and reevaluate all unit that through,

And so hopefully, that -- I the you people's will OP can thoughts as these give specific us. answer, progresses, result time And with resulting but cash they're homes, in in tell in a conversations when happening can't from that and the they standpoint standpoint. I you are the deals both

Okay. then adjustments were mentioned already? ones in were already that deals reflected deals. in post terms you pricing The those seeing first pricing that made new some of already you're And those quarter, the

buying on ones closed So are in stated that And that the will everything rate seeing been in they're that baked. not is deals are we've already. year. pretty our range. reflected we're we've pricing adjustment fully the cap Those in in further happen that The

Ed Your next Groshans question comes of from with Height the line Capital.

Congrats million. $XX.X about quarter. Jeremy, on you this talked outstanding debt

feature. a leases the are of that finalized. Then with at does future? the talked about the in properties you're the was the have to being capacity restrictions not bit using view able the looking negotiated a to use line to of You until that do being Or XX just at fund and on discussion line. almost a Is of accordion there the on that transactions

provide has place question. sort availability. in facility are leases full the some us of of that the on put the Ed, accessing that thanks we've covenants one holdover joining and appreciate context, for and restrictions To component just the the restrictions

just are holdovers. restrictions around other leverage There and like things of isn't it the sort So that. covenants and built-in

So It flow into is function it's market. a in of built deal facility. the not

that yield, coming current you're early a going up so pace IPO on slow down? on, get $XX, of to if And the X%. Does on feel Excellent. and looking price your then you yield the we're X%? year, like X target on to -- of there's at still pandemic congrats us lead there's Do that, Is pipeline to there? dividend

about our dividend to pipeline. So as is approach acquisition talked be dividend we by in thoughtful about how driven we've need Board's and environment policy, the acquisition to prudent and pace. about the And talked we this

acquisition at management the moment, of to can't driven are covered. few the is focused with so Clearly, with terms a be year. dividend rolls providing guidance in where that in the I how out moves provide on the yield Board the of the remainder the And cycle that, next any And over quarters. by it's again, going

with comes of Your final line question the from Ben Aegis. Zucker

just I quick a leverage. question company had regarding

expect just that like quickly. there the your thinking longer-term of of kind of real XX% just I where was the but think right range remind it me something to in And in then ask question about is light was, any of strength current or given of leverage response goals debt now wouldn't just that around part to tenant change longer-term your stated anything to wanted kind just was environment? could kind net of long-term you leverage I is? my enterprise First to value.

a Yes, also targeted that We've not opportunity, said but leverage articulated to problem. to And we've leverage as move. dividend policy. It -- articulated conservative. as so terms and is and we've the XX%, It of many talks our take what is, what levels, to the Happy talks XX% you Ben, around questions on that no is strategy referenced. stabilizing the our you depending in leverage could have. environment and timing

time. There Mr. the at call are back I over no this turn further Spodek. questions to will

hope everybody, asked thank that And that and our in I time, analysts to dialed you, I those safe their the to earnings. thank everybody research Thank and stays thank questions. listen everybody you you, all all for healthy. to and

today's concludes Ladies and conference gentlemen, Thank you for participating. call. this

now disconnect. may You