Postal Realty Trust (PSTL) 2 Mar 232022 Q4 Earnings call transcript

Greetings and welcome to Postal Realty Trust Fourth Quarter and Full Year 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the prepared remarks.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. of Markets. President Vice Cooperstein, FP&A Capital Jordan Please go ahead.

and the full Postal you. XXXX Good Trust to everyone morning, and Thank Realty welcome fourth conference call. earnings year quarter

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

considered made statements forward-looking not may call include Reform covered that are Please of the Safe for on this statements note Harbor the forward-looking this of Act in forward-looking on company facts forward-looking. and by the statements are historical XXXX. by Litigation are the use conference These call. Statements provisions Securities Private statements contained

Exchange and may will beyond the as factors other not forward-looking statements, materially to and differ limitation, whether its assume described latest those otherwise. company’s statements events of specifically or control, Securities update results disclaims and does including be in contained XX-K a and by filings. company’s obligation without in a information, the the new risks any that and Actual The affected those future are from company forward-looking of result any variety Commission

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

You the supplemental and materials. non-GAAP these most a in can to company’s find earnings release tabular financial currently measures measures reconciliation of the comparable GAAP

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

This remain XXXX. of capital in XXX properties to Good acquisitions $XXX have IPO acquiring encouraged now of our by year acquisitions positioning $XXX amidst surpassed the The sheet. quarter strategic we uncertain strength million. as completed our markets challenging as Even XXXX of and and macroeconomic fourth marked the Postal’s million environment, balance the morning you we our portfolio over since and the our caps solid strong finish for thank us. year joining target, growth another for we in

last different terms quarter, discussed to are a we valuation dramatically ago we in deal and assumptions. of navigating and compared as year As environment flow expected, as a

Given for over adjust prospective rates interest the past taking to time is their significant upward year, price shift it expectations. in sellers the

to continue present with dry ourselves going take forward. advantage ample opportunities to powder approach, our accretive up patient setting of We themselves in be that

As to in management debt past we a over our have highlighted the maturities low the grow year, with variable and repeatedly no to and our position puts rates, sheet notable minimal conservative until portfolio exposure us great leverage, proactive balance of XXXX.

that call. outlook provide across near-term impacted we are quarter, detail expectations shared. have volume higher our We on more growth recently most will later in the rates. cap our of at transacted Rob portfolio, year, in second demonstrating strong and half fourth also which the with previously organic the the In and line This the we

XXXX, the to continuing approach with quarters. we Looking same are measured recent as in

remained higher near-term sellers to to adjust and there their volume. pricing slow continue As reduced be yielding properties, will we pursue

are we XXXX the when optimistic of $XX in the that will of could second acquisitions have visibility year. this spread and limited acquisitions be bid/ask up in anticipate million resolve, While pick neighborhood our the will on half we

very the Looking growth, we robust when drivers to and future are in financially for opportunity strong attractive rate remains be main of further, capacity operationally us themselves. higher in significant our irrespective the of acquisitive position With out and present unchanged, the business environment. opportunities of are front a interest

call to I to operating will Jeremy our now metrics. turn the over discuss

Thank you, Andrew.

of December interior weighted comprise rents per of XXX,XXX properties foot have net $XXX as XXX These for acquired square $XX.XX company XXXX. rate feet the approximately average a X.X%. on of excluding and approximately costs XX, XXXX, year closing square based million, average a cap full at leasable leasable weighted the For in rate rental place properties

to In properties acquired quarter last XX leasable of inclusive XX,XXX acquisitions we square closing square feet added XXX,XXX the feet excluding $XX and net portfolio, XX,XXX properties. costs. from interior flex XX These feet properties fourth mile from approximately for our XX million, XXXX, of square

of our fourth As all investors, keeping we a time tenant In significant often has our with track flow our predictability contractual consistently remind payments for made This of our rents rent its differentiator XXX% remains collected we this in record, all periods. company. economic cash on throughout the of quarter.

acquisitions rental last accretive produced contributions compared continued as a the reflecting the we to over from the year in as full For XX% months. growth our the in XX XXXX, well full income year made portfolio, XXXX, increase existing

serve. continues our network. crucial this logistics high are XXXX. termination to they lease maintained This a not diligence locations due reflects XX in have any receive these plus the both communities identifying the We strategic and validate past the to of notices rate the of retention to XX% vital importance which in Service average process over that did historical properties rate We Postal the weighted years,

than of and While negotiations the are a catch-up payment lump-sum the holdover market amount the pass leases increased agreed determined rent from ongoing, to was XXXX USPS rent and due payable that lease the of greater the the under still for expiration. renewal lease in the rents expired date recognition leases

going holdover these until We properties increased leases will forward the new receive are continue executed. to on rents

full to over discuss I fourth ‘XX Rob year our call quarter and the results. will turn financial now to

for you you, Thank everyone Jeremy call. joining and on us today’s thank

we funds $X.XX delivered adjusted fourth per or share AFFO operations, diluted from quarter, of FFO and funds operations of or $X.XX. from the For

and quarters. The Recurring lump-sum with the per related partially the just AFFO the year are square to quarter payments was increased and recurring fourth FFO future we anticipate of quarter numbers rents for earnings lower level around $X.XX CapEx CapEx For full combined it fourth $X.XX. and for catch-up to discussed. Jeremy diluted foot this delivered XXXX, strong we per remain $X.XX of share

expenditures additional historically. detail we to As this added CapEx capital into our falling have recurring we of breakdown find and more the of versus CapEx supplemental quarter non-recurring on our our total the bucket,

guidance QX our G&A cash for line in last with per quarter, QX. was relatively As

million be last expect XXXX. $X.X increase is environment Going the forward, is million, to make the representing $X This cash assuming over year. $X.X conducive internal XXXX full the to deferred investments year some we G&A from million an million to of for $X.X approximately of of to

continue to expect cash of We basis. an G&A percentage to decline as on a annual revenue

to provide XXXX. year our NOI comparing XXXX, order of X% our In growth the XX, same-store quantifying internal under increased Reflecting December properties year net we operating as same-store when of the additional transparency, income. of are full full cash ownership to XXXX through

market we have executed based USPS’s lease leases XXXX Once an rents we ongoing, remain negotiations the with the on provide renewals. the this with While is finalized for Postal these update figure. Service, recently the most determined will

the weighted XXXX, of year the years. our rates $XX to was of and completely average $XXX of at XX, revolving entirety only and had X.X At of fourth X.XX% was fixed February end a At weighted undrawn end, average maturity XXXX, set unsecured of quarter a debt outstanding senior facility million interest million of as the rate credit outstanding.

adjusted XXXX, and value to For quarter enterprise the debt XX% targets within annualized below fourth leverage XX.X% debt respectively. net Xx was X.Xx and was EBITDA of our net to

the the at-the-market by program, low over Given past variable for an units common the acquired quarter sheet the interest and gross $X.X our stock issued in maintaining partnership consideration operating rates million leverage part our common managed our $XX.XX Through of as at property shares price during we for average of gross XX,XXX of proceeds. XXX,XXX shift approximately of minimizing in to rate balance have year, our significant prudently exposure we debt. at

a balance a industry of strong a are Our X.X% sheet, Board stable the dividend Postal of dividend leadership quarter shareholder Directors the largest value growth, well-positioned Properties, $XX.XX has XXXX in from since to With approved internal This well-maintained and increase cash fourth the the of amount every IPO. and our our dividend of continuing XXXX share. the enhance quarterly represents we owner quarter history as in per flows beyond. increasing

our concludes for to like Operator, would remarks. questions. This prepared the open we call

Janney you. Stevenson from Scott. first comes Please Our of go the question [Operator Rob line Instructions] Thank ahead. from Montgomery

the reason I the and changes Good it of or in – talking same-store there that X% aren’t you was acquisition given years there given that going that foreseeable of just the guess Rob isn’t portfolio morning, Jeremy, NOI how XXXX. X% Is was really it pools are good any Is guys. about the size change the to future? believe as bigger being much much it added a subsequent for now? you in run-rate any that, to reason to were

Rob. Thanks,

completed that not moment, forward, giving latest USPS’s are same-store based NOI on rental. this are guidance on the we this at the So we not going is

to forward number. look a can and we guidance we getting about run-rates so talk point, that At finalized may like. look what And

occupied partially are vacancy, assets the have basis vacant is some point? assets you XX of then or And at Okay. those do totally this points

and a of only about of percent we annualized X.X% and the rent. that’s that So, square rent asset portion vacant one that’s footage of is. minimal roughly It’s our have X.X% very our

the it if lease hold you something did vacant Postal not what’s you you up that? would And Is as it You try to sell to it’s move that for leased to would you if And sell are and that the going going something are plans it to else? then on? that, Service? or

have right are out now So that – we property – we lease. for

not that to The small will up it’s said, it amount of or to particular terrific depending why lease market But is attempting which concern who leasing, are on tremendous it’s vacant. success, a whether had a ends still terribly being we property, ours. not keep determine of it big tenant haven’t that property it. sell but is We in thankfully, the With that area. it’s the decide is

time. guys. Thanks, Alright. Okay. Appreciate the

Thank you.

Rob. Thanks,

Thank you.

Please the Our BMO question from ahead. Markets. Borden Eric of from go next line comes Capital

resets, one-time boost go Good Hey, impact if or forward? quantify of I payment you we if was I payments. what’s catch-up any just the could the guys. the catch-up help the to hoping rent hoping and was could kind going morning.

Yes.

we but will been in QX ‘XX. So of quantify it the $XXX,XXX lump-sum the until further so impact complete that’s negotiations really QX. our We far we roughly for can’t have impact yet payment what be, in of of accounted

and Okay. can in per rent And lease completed ‘XX just acquisitions a foot then mix expirations, to kind square That’s XQ helpful. class similar there? rent the lease about what’s and And the reset, to-date? current then assume the expirations of the ‘XX quarter the on asset thinking the we

all role class ‘XX flex ‘XX, last of mostly have the mix, terms industrial facilities, And properties, typically, and I largest So, class is believe in while asset portfolio. in has because asset mile there. we property I that’s in believe that flex is an the our our

dispersed to it is asset are foot the particular to into in the really not relates I correlate translate has acquisitions, entire that square and that foot what correlation. will speak where market wouldn’t to to comparing that we price per As country it’s And the per an is assets, them. on translating price the Every good buying to building. square throughout very is that portfolio for depending

That’s levers, Well, the you think just think and should mean on I credit, side, it’s helpful. have ATM allocation mix about have leverages issue reasonable? the hit maybe the funding full you acquisitions Okay. you one, And for XXXX? last you reduced, line capital and multiple of OP where then we can how the

fortunate question. a I the feel are very sources us. to mentioned all position where you good things we It’s like some are other available in and a

So, source and markets while of capital cost out keeping consideration in well. we are the capital the as to of scanning constantly capital figure leverage best

us at XX. units we offering well. correctly undrawn, mentioned, facility as and to or February market, looking transact and you drawn ATM OP only source constantly are as sellers yes, at for sellers, attract are $XX with the our million those of mostly is as And times a great So

continue most the all to So, use access keeping and what us, in we and again, efficient is have low-leveraged position. ourselves will to those a for capital

dry have powder, we after always think acquisitions can we be are always we So, the attractive. going and

guys. Thanks Okay.

you. Thank

you. Thank

of question ahead. next Anthony from go Please line Our JPMorgan. the Paolone comes from

Like one Great. Thank these I guess be and I are good the will here? leases there will of you what leases, be related holdover maybe all more or on guess length? or and XX, same happen combined, some morning. the that new will to leases, individual

renewed. We through go process get to there but Yes. of are I an for is mean vintage, individual process that try leases. standalone our each renewal individual entire renewal year’s leases

And while, year into sort a and accumulation the we it out, then these like later Okay. for X% we some going leases same Should holdover like, sort how or take expiring thinking percent ‘XX. seems another big about batch of if in of getting anticipate these of point at forward? the the ‘XX, done process we just a in of even should so

Tony. Andrew, is This

to as ‘XX little My already differently at to than productive. look taken. efficient quicker are it and not. resolve I a can started hopes more we on hopes my this are that So, the the conversations make ‘XXs have how have

hopes and things Postal And the these that so to get better. with work are some and we my Service change can results quicker

Okay. X.X% cap last you just had mentioned the year. And XXXX rates then for the transactions one, the on full

terms mix last know where Just of bit sit is the changed also but year? it a recently, those factor, color in additional any over I well more as a

am Yes. The world and its to changed continuing hoping I has change.

to We doing are push But push targeting of like our moving much are to. would rates as up we we everything Sellers we range. midpoint as are cap as them can up possible. cap – quickly as not the

seeking deals X% X% is in range the quoted our So, to be X%, range. we but to are

Thank you. Okay.

you. Thank

Oxford Please from [Operator comes ahead. Instructions] Our next Barry line of Colliers. go question from

Great. Thanks guys.

we catch four XQ of quarters? look it. in don’t going up, then the working wouldn’t XQ catch-ups, very just from or whether XQ and and know to going XQ XQ it’s that the XQ still or or to we Just one standpoint, We through these of is take – kind kind just to be lump-sum going and it’s be if on a are modeling like of to see build

Yes. Barry. Good question,

in new you So, lease determination it being rent. a are will it, or are of we the another negotiations than on higher finalize that currently as tell there paid, payment. factors be depends there can’t executed, rents of still lump-sum stated, are I then timing rents. rents is the either because the when on when and the If that is those variety we to

complete So, that It’s that year. tell individual QX. can’t if will each you negotiation. just this be be we lease going about to I QX, it’s when all

Right.

move as then a inflation-adjusted, like guys how today? kind of you talking And right conversations, of are structure to that are of your conversations have those lack to have long better sort of indicated now, as lease Okay. as would having about and we you for leases, going been word you

Those conversations recognizes the and world about Service, The else Postal speaks every hears about how are Everybody it fluid. in still ongoing. is. relatively It’s everybody like prevalent inflation it day. today Service Postal labor the with great and we in degree recognize contracts, a its something on and trying dealing factor the lease. into all is we it And to it’s are so

a million are are guidance $XX guys acquisition is just side, you but And lot there more a is lot with are range, product? back million, you or seeing the product, a than I do of holding it not also you in you then great. don’t of think the you – But like the the also the pricing, Okay, on seeing can is combination $XX that. of the of

out The Everything haven’t So, They The have right. market disconnect sellers, their there. is holds there. patient the there. correct. the is buyers, have still we out to us, is news things out, be everything is and and is properties for The that We good and pre-IPO, problem adjusted the we to there. wait true. are opportunity still the pricing. to-date done today out just The set opportunity between

Perfect.

Okay. Thanks helpful That’s so guys. much.

Thank you.

Yes.

Thank you.

line comes Petersen question the Jefferies. go from next Jon Please Our ahead. from of

way infrastructure than years? over the I games I in Great. got am investment wondering year redevelopment terms the we – had see next few any real the that own like seen have in update over of opportunities, they by Post has Thanks. of we guess through. there investment of that of more them just coming Office Good there their the was if last should there investments. years in of talk on few expecting, if we morning. build business and Last in estate curious been was kind their you funding, be kind any your in I

moving Yes, release, awards at put I are fleet. are with and to out yesterday, They just a electrify think interesting. they own their the their pace. that forward modernize They moving

place. about, to a continue participate, they conversations in has out how opportunities thinking that know, As be can will there And rolling plan and something move in XX-year hopefully we their but we it’s the as Postmaster haven’t been plan. we forward about you direct are

you. Alright. me. all great. Thank Okay. That’s That’s for

Thanks.

now [Operator Instructions] remarks. gentlemen, to conference further the there over are would Andrew no hand since and closing Spodek Ladies questions for I

the On thank continued the today. us to team, time over the join look of Thank you for support you. to behalf forward your taking months. entire you coming next and We connecting with

Thank your for you. concluded. The Realty Postal now you conference Trust Thank Inc. has of participation.

your now lines. disconnect may You