Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 11, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Postal Realty Trust, Inc. | |
Entity Central Index Key | 0001759774 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Current Reporting Status | Yes | |
Entity File Number | 001-38903 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | MD | |
Entity Common Stock, Shares Outstanding | 9,449,352 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Real estate properties, at cost: | ||
Land | $ 38,603,504 | $ 25,147,732 |
Building and improvements | 144,763,204 | 92,873,637 |
Tenant improvements | 3,227,454 | 2,562,293 |
Total real estate properties, at cost | 186,594,162 | 120,583,662 |
Less: Accumulated depreciation | (11,875,852) | (8,813,579) |
Total real estate properties, net | 174,718,310 | 111,770,083 |
Investment in financing lease, net | 516,164 | |
Total investments | 175,234,474 | 111,770,083 |
Cash | 7,786,677 | 12,475,537 |
Rent and other receivables | 2,728,818 | 1,710,314 |
Prepaid expenses and other assets, net | 3,669,503 | 2,752,862 |
Escrow and reserves | 694,910 | 708,066 |
Deferred rent receivable | 145,690 | 33,344 |
In-place lease intangibles, net | 9,349,264 | 7,315,867 |
Above market leases, net | 54,667 | 22,124 |
Total Assets | 199,664,003 | 136,788,197 |
Liabilities: | ||
Secured borrowings, net | 16,599,366 | 3,211,004 |
Revolving credit facility | 49,000,000 | 54,000,000 |
Accounts payable, accrued expenses and other | 4,537,644 | 3,152,799 |
Below market leases, net | 8,379,874 | 6,601,119 |
Total Liabilities | 78,516,884 | 66,964,922 |
Equity: | ||
Class A common stock, par value $0.01 per share; 500,000,000 shares authorized, 9,449,352 and 5,285,904 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 94,494 | 52,859 |
Class B common stock, par value $0.01 per share; 27,206 shares authorized: 27,206 shares issued and outstanding as of September 30, 2020 and December 31, 2019 | 272 | 272 |
Additional paid-in capital | 101,303,229 | 51,396,226 |
Accumulated deficit | (8,246,422) | (2,575,754) |
Total Stockholders' Equity | 93,151,573 | 48,873,603 |
Operating Partnership unitholders' non-controlling interests | 27,995,546 | 20,949,672 |
Total Equity | 121,147,119 | 69,823,275 |
Total Liabilities and Equity | $ 199,664,003 | $ 136,788,197 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Class A | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 9,449,352 | 5,285,904 |
Common stock, shares outstanding | 9,449,352 | 5,285,904 |
Class B | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 27,206 | 27,206 |
Common stock, shares issued | 27,206 | 27,206 |
Common stock, shares outstanding | 27,206 | 27,206 |
Consolidated and Combined Conso
Consolidated and Combined Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||||
Revenues: | |||||||
Rental income | $ 5,270,143 | $ 2,387,082 | $ 14,211,317 | $ 5,735,896 | |||
Tenant reimbursements | 743,622 | 342,419 | 1,997,716 | 852,504 | |||
Fee and other income | 282,703 | 278,846 | 890,008 | 842,097 | |||
Total revenues | 6,296,468 | 3,008,347 | 17,099,041 | 7,430,497 | |||
Operating expenses: | |||||||
Real estate taxes | 797,996 | 353,663 | 2,136,805 | 880,117 | |||
Property operating expenses | 460,033 | 332,892 | 1,261,515 | 821,839 | |||
General and administrative | 2,027,284 | 1,601,727 | 6,245,732 | 2,970,101 | |||
Depreciation and amortization | 2,394,332 | 1,066,338 | 6,590,982 | 2,314,553 | |||
Total operating expenses | 5,679,645 | 3,354,620 | 16,235,034 | 6,986,610 | |||
Income (loss) from operations | 616,823 | (346,273) | 864,007 | 443,887 | |||
Interest expense, net: | |||||||
Contractual interest expense | (484,272) | (48,916) | (1,757,413) | (635,423) | |||
Write-off and amortization of deferred financing fees | (123,650) | (4,523) | (343,511) | (9,558) | |||
Loss on early extinguishment of predecessor debt | (185,586) | ||||||
Interest income | 668 | 1,136 | 2,155 | 3,394 | |||
Total interest expense, net | (607,254) | (52,303) | (2,098,769) | (827,173) | |||
Income (loss) before income tax expense | 9,569 | (398,576) | (1,234,762) | (383,286) | |||
Income tax (expense) benefit | (29,754) | 6,259 | (44,876) | (39,749) | |||
Net loss | (20,185) | (392,317) | (1,279,638) | (423,035) | |||
Net income attributable to non-controlling interest in properties | (4,336) | ||||||
Net income attributable to Predecessor | (463,414) | ||||||
Net (income) loss attributable to Operating Partnership unitholders’ non-controlling interests | 5,001 | 84,348 | 436,149 | 191,020 | |||
Net loss attributable to common stockholders | $ (15,184) | $ (307,969) | $ (843,489) | $ (699,765) | |||
Net loss per share: | |||||||
Basic and Diluted | $ (0.01) | $ (0.06) | $ (0.18) | $ (0.14) | |||
Weighted average common shares outstanding: | |||||||
Basic and Diluted | 8,425,708 | [1] | 5,164,264 | [1] | 6,276,145 | 5,164,264 | [1] |
[1] | The combined statements of operations prior to May 17, 2019 represents the activity of the Predecessor and EPS was not applicable. |
Consolidated and Combined Con_2
Consolidated and Combined Consolidated Statements of Changes in Equity (Deficit) (Unaudited) - USD ($) | Common Stock | Common StockPredecessor | Additional Paid-in Capital | Additional Paid-in CapitalPredecessor | Accumulated Equity (Deficit) | Accumulated Equity (Deficit)Predecessor | Member's Equity (Deficit) | Member's Equity (Deficit)Predecessor | Total Stockholders' & Predecessor equity | Total Stockholders' & Predecessor equityPredecessor | Operating Partnership unitholders' non-controlling interests | Operating Partnership unitholders' non-controlling interestsPredecessor | Non-controlling interests in properties | Non-controlling interests in propertiesPredecessor | Total | Predecessor |
Beginning Balance at Dec. 31, 2018 | $ 4,000,200 | $ 3,441,493 | $ (11,003,876) | $ (2,095,823) | $ (5,658,006) | $ 44,593 | $ (5,613,413) | |||||||||
Net income (loss) | (173,554) | 427,787 | 254,233 | 2,843 | 257,076 | |||||||||||
Capital contributions | 397,121 | 1,377,758 | 1,774,879 | 1,774,879 | ||||||||||||
Distributions and dividends | (150,000) | (1,067,515) | (1,217,515) | (521) | (1,218,036) | |||||||||||
Ending Balance at Mar. 31, 2019 | 4,000,200 | 3,688,614 | (11,177,430) | (1,357,793) | (4,846,409) | 46,915 | (4,799,494) | |||||||||
Beginning Balance at Dec. 31, 2018 | 4,000,200 | 3,441,493 | (11,003,876) | (2,095,823) | (5,658,006) | 44,593 | (5,613,413) | |||||||||
Net income (loss) | 467,750 | |||||||||||||||
Ending Balance at May. 16, 2019 | $ 4,000,200 | $ 3,139,423 | $ (11,174,220) | $ (1,168,623) | $ (5,203,220) | $ 42,741 | $ (5,160,479) | |||||||||
Ending Balance, Shares at May. 16, 2019 | ||||||||||||||||
Beginning Balance at Dec. 31, 2018 | $ 4,000,200 | 3,441,493 | (11,003,876) | (2,095,823) | (5,658,006) | 44,593 | (5,613,413) | |||||||||
Net income (loss) | (423,035) | |||||||||||||||
Ending Balance at Sep. 30, 2019 | $ 53,131 | 46,502,630 | (1,034,471) | 45,521,290 | 12,467,615 | 57,988,905 | ||||||||||
Ending Balance, Shares at Sep. 30, 2019 | 5,313,110 | |||||||||||||||
Beginning Balance at Mar. 31, 2019 | $ 4,000,200 | 3,688,614 | (11,177,430) | (1,357,793) | (4,846,409) | 46,915 | (4,799,494) | |||||||||
Net income (loss) | 3,210 | 205,971 | 209,181 | 1,493 | 210,674 | |||||||||||
Capital contributions | 293,373 | 293,373 | 293,373 | |||||||||||||
Distributions and dividends | (549,191) | (310,174) | (859,365) | (5,667) | (865,032) | |||||||||||
Ending Balance at May. 16, 2019 | 4,000,200 | 3,139,423 | (11,174,220) | (1,168,623) | (5,203,220) | 42,741 | (5,160,479) | |||||||||
Ending Balance, Shares at May. 16, 2019 | ||||||||||||||||
Issuance and amortization of equity-based compensation | $ 1,485 | 126,755 | 128,240 | 62,103 | 190,343 | |||||||||||
Issuance and amortization of equity-based compensation, Shares | 148,529 | |||||||||||||||
Dividends declared | (334,706) | (334,706) | (91,213) | (425,919) | ||||||||||||
Net income (loss) | (391,796) | (391,796) | (106,672) | (498,468) | ||||||||||||
Reallocation of non-controlling interest | 10,117,974 | 10,117,974 | (10,117,974) | |||||||||||||
Net proceeds from sale of Common Stock | $ 45,000 | 64,665,261 | 64,710,261 | 64,710,261 | ||||||||||||
Net proceeds from sale of Common Stock, Shares | 4,500,000 | |||||||||||||||
Formation transactions | $ (3,993,557) | (31,798,499) | 11,174,220 | 1,168,623 | (23,449,213) | 22,662,907 | (42,741) | (829,047) | ||||||||
Formation transactions, Shares | 664,264 | |||||||||||||||
Ending Balance at Jun. 30, 2019 | $ 53,128 | 46,250,914 | (726,502) | 45,577,540 | 12,409,152 | 57,986,692 | ||||||||||
Ending Balance, Shares at Jun. 30, 2019 | 5,312,793 | |||||||||||||||
Beginning Balance at May. 16, 2019 | 4,000,200 | 3,139,423 | (11,174,220) | (1,168,623) | (5,203,220) | 42,741 | (5,160,479) | |||||||||
Beginning Balance, Shares at May. 16, 2019 | ||||||||||||||||
Ending Balance at Sep. 30, 2019 | $ 53,131 | 46,502,630 | (1,034,471) | 45,521,290 | 12,467,615 | 57,988,905 | ||||||||||
Ending Balance, Shares at Sep. 30, 2019 | 5,313,110 | |||||||||||||||
Beginning Balance at Jun. 30, 2019 | $ 53,128 | 46,250,914 | (726,502) | 45,577,540 | 12,409,152 | 57,986,692 | ||||||||||
Beginning Balance, Shares at Jun. 30, 2019 | 5,312,793 | |||||||||||||||
Issuance and amortization of equity-based compensation | $ 3 | 262,181 | 262,184 | 132,346 | 394,530 | |||||||||||
Issuance and amortization of equity-based compensation, Shares | 317 | |||||||||||||||
Net income (loss) | (307,969) | (307,969) | (84,348) | (392,317) | (392,317) | |||||||||||
Reallocation of non-controlling interest | (10,465) | (10,465) | 10,465 | |||||||||||||
Ending Balance at Sep. 30, 2019 | $ 53,131 | $ 46,502,630 | $ (1,034,471) | $ 45,521,290 | $ 12,467,615 | $ 57,988,905 | ||||||||||
Ending Balance, Shares at Sep. 30, 2019 | 5,313,110 | |||||||||||||||
Beginning Balance at Dec. 31, 2019 | $ 53,131 | 51,396,226 | (2,575,754) | 48,873,603 | 20,949,672 | 69,823,275 | ||||||||||
Beginning Balance, Shares at Dec. 31, 2019 | 5,313,110 | |||||||||||||||
Issuance and amortization of equity-based compensation | $ 1,035 | 519,215 | 520,250 | 185,015 | 705,265 | |||||||||||
Issuance and amortization of equity-based compensation, Shares | 103,463 | |||||||||||||||
Issuance and amortization under the Employee Stock Purchase Plan ("ESPP") | $ 35 | 53,160 | 53,195 | 53,195 | ||||||||||||
Issuance and amortization under the Employee Stock Purchase Plan ("ESPP"), Shares | 3,538 | |||||||||||||||
Dividends declared | (923,348) | (923,348) | (478,385) | (1,401,733) | ||||||||||||
Net income (loss) | (677,755) | (677,755) | (352,071) | (1,029,826) | ||||||||||||
Reallocation of non-controlling interest | 2,218,990 | 2,218,990 | (2,218,990) | |||||||||||||
Issuance of OP Units in connection with transaction | 7,921,828 | 7,921,828 | ||||||||||||||
Issuance of OP Units in connection with transaction, Shares | ||||||||||||||||
Ending Balance at Mar. 31, 2020 | $ 54,201 | 54,187,591 | (4,176,857) | 50,064,935 | 26,007,069 | 76,072,004 | ||||||||||
Ending Balance, Shares at Mar. 31, 2020 | 5,420,111 | |||||||||||||||
Beginning Balance at Dec. 31, 2019 | $ 53,131 | 51,396,226 | (2,575,754) | 48,873,603 | 20,949,672 | 69,823,275 | ||||||||||
Beginning Balance, Shares at Dec. 31, 2019 | 5,313,110 | |||||||||||||||
Net income (loss) | (1,279,638) | |||||||||||||||
Ending Balance at Sep. 30, 2020 | $ 94,766 | 101,303,229 | (8,246,422) | 93,151,573 | 27,995,546 | 121,147,119 | ||||||||||
Ending Balance, Shares at Sep. 30, 2020 | 9,476,557 | |||||||||||||||
Beginning Balance at Mar. 31, 2020 | $ 54,201 | 54,187,591 | (4,176,857) | 50,064,935 | 26,007,069 | 76,072,004 | ||||||||||
Beginning Balance, Shares at Mar. 31, 2020 | 5,420,111 | |||||||||||||||
Issuance and amortization of equity-based compensation | $ 423 | 351,248 | 351,671 | 181,352 | 533,023 | |||||||||||
Issuance and amortization of equity-based compensation, Shares | 42,297 | |||||||||||||||
Amortization under ESPP | 1,557 | 1,557 | 1,557 | |||||||||||||
Amortization under ESPP, Shares | ||||||||||||||||
Restricted stock withholding | $ (113) | (182,402) | (182,515) | (182,515) | ||||||||||||
Restricted stock withholding, Shares | (11,342) | |||||||||||||||
Dividends declared | (1,088,706) | (1,088,706) | (565,547) | (1,654,253) | ||||||||||||
Net income (loss) | (150,550) | (150,550) | (79,077) | (229,627) | ||||||||||||
Reallocation of non-controlling interest | (6,049) | (6,049) | 6,049 | |||||||||||||
Ending Balance at Jun. 30, 2020 | $ 54,511 | 54,351,945 | (5,416,113) | 48,990,343 | 25,549,846 | 74,540,189 | ||||||||||
Ending Balance, Shares at Jun. 30, 2020 | 5,451,066 | |||||||||||||||
Dividends declared | (1,947,481) | (1,947,481) | (585,295) | (2,532,776) | ||||||||||||
Net income (loss) | (15,184) | (15,184) | (5,001) | (20,185) | ||||||||||||
Reallocation of non-controlling interest | (2,845,205) | (2,845,205) | 2,845,205 | |||||||||||||
Net proceeds from sale of Common Stock | $ 40,218 | 49,368,086 | (867,644) | 48,540,660 | 48,540,660 | |||||||||||
Net proceeds from sale of Common Stock, Shares | 4,021,840 | |||||||||||||||
Amortization of equity-based compensation | 367,315 | 367,315 | 190,791 | 558,106 | ||||||||||||
Issuance and amortization under ESPP | $ 37 | 61,088 | 61,125 | 61,125 | ||||||||||||
Issuance and amortization under ESPP, shares | 3,651 | |||||||||||||||
Ending Balance at Sep. 30, 2020 | $ 94,766 | $ 101,303,229 | $ (8,246,422) | $ 93,151,573 | $ 27,995,546 | $ 121,147,119 | ||||||||||
Ending Balance, Shares at Sep. 30, 2020 | 9,476,557 |
Consolidated and Combined Con_3
Consolidated and Combined Consolidated Statements of Changes in Equity (Deficit) (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | ||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | |
Statement of Stockholders' Equity [Abstract] | |||
Dividends declared per share | $ 0.205 | $ 0.20 | $ 0.17 |
Consolidated and Combined Con_4
Consolidated and Combined Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (1,279,638) | $ (423,035) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation | 3,151,376 | 1,074,793 |
Amortization of in-place intangibles | 3,439,606 | 1,239,760 |
Write-off and amortization of deferred financing costs | 343,511 | 9,558 |
Amortization of above/below market leases | (932,250) | (326,776) |
Amortization of intangible liability | (6,686) | |
Equity based compensation | 1,818,291 | 584,873 |
Loss on extinguishment debt | 185,586 | |
Deferred rent receivable | (112,346) | (17,627) |
Deferred rent expense payable | 13,305 | (41,374) |
Deferred tax liability | (65,895) | |
Changes in assets and liabilities: | ||
Rent and other receivables | (1,018,504) | (802,618) |
Prepaid expenses and other assets | (284,602) | (260,038) |
Due to affiliates | 8,569 | |
Accounts payable, accrued expenses and other | 821,287 | 935,122 |
Net cash provided by operating activities | 5,953,350 | 2,100,898 |
Cash flows from investing activities: | ||
Acquisition of real estate | (60,144,554) | (38,925,771) |
Investment in financing lease, net | (516,164) | |
Escrows for acquisition and construction deposits | (330,951) | (410,000) |
Capital improvements | (549,019) | (105,116) |
Other investing activities | (22,300) | |
Net cash used in investing activities | (61,562,988) | (39,440,887) |
Cash flows from financing activities: | ||
Proceeds from secured borrowings | 13,674,311 | 445,000 |
Repayments of secured borrowings | (81,645) | (32,191,238) |
Proceeds from revolving credit facility | 43,500,000 | 17,000,000 |
Repayments of revolving credit facility | (48,500,000) | |
Proceeds from other financing activity | 557,000 | |
Repayments from other financing activity | (347,290) | |
Net proceeds from issuance of shares | 48,567,985 | 66,624,167 |
Other formation transactions | (2,007,417) | |
Debt issuance costs | (767,990) | (1,371,931) |
Proceeds from issuance of ESPP shares | 93,867 | |
Shares withheld for payment of taxes on restricted share vesting | (182,402) | |
Contributions from partners and members | 2,068,252 | |
Distributions and dividends | (5,588,761) | (2,508,962) |
Other financing activities | (17,453) | |
Net cash provided by financing activities | 50,907,622 | 48,057,871 |
Net (decrease) increase in Cash and Escrows and Reserves | (4,702,016) | 10,717,882 |
Cash and Escrows and Reserves at the beginning of period | 13,183,603 | 861,875 |
Cash and Escrow and Reserves at the end of period | $ 8,481,587 | $ 11,579,757 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization and Description of Business [Abstract] | |
Organization and Description of Business | Note 1. Organization and Description of Business Postal Realty Trust, Inc. (the "Company" "we", "us", or "our") 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 (our "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 (each, an "OP Unit," and collectively, the "OP Units"). Both the Company and the Operating Partnership commenced operations upon completion of the IPO and certain related formation transactions (the "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, 2020, the Company held an approximately 76.9% 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 we are the primary beneficiary. Our Predecessor (the "Predecessor") is a combination of limited liability companies (the "LLCs"), one C-Corporation ("UPH"), one S-Corporation ("NPM") and one limited partnership. The entities that comprise the Predecessor were majority owned and controlled by Mr. Andrew Spodek and his affiliates and were acquired by contribution to, or merger with, the Company and the Operating Partnership. The Predecessor does not represent a legal entity. The Predecessor and its related assets and liabilities were under common control and were contributed to the Operating Partnership in connection with the Company's IPO. For the periods prior to May 17, 2019, the Predecessor, through the LLCs, UPH and the limited partnership, owned 190 post office properties in 33 states. NPM was formed on November 17, 2004, for the purpose of managing commercial real estate properties. As of September 30, 2020, the Company owned a portfolio of 691 postal properties located in 47 states. Our properties were leased to a single tenant, the United States Postal Service (the "USPS"). In addition, through its taxable REIT subsidiary ("TRS"), Postal Realty Management TRS, LLC ("PRM"), the Company provides fee-based third party property management services for an additional 400 postal properties, which are owned by Mr. Spodek and his affiliates, his family members and their partners. The Company, until May 15, 2019, was authorized to issue up to 600,000,000 shares of common stock, par value $0.01 per share. On May 15, 2019, in connection with the IPO, the Company amended its articles of incorporation such that 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 (our "Class B common stock" or "Voting Equivalency stock"), and up to 100,000,000 shares of preferred stock. The Company believes it has been organized in conformity with, and has operated in a manner that has enabled it to meet, the requirements or qualification as a real estate investment trust ("REIT") under the Code, and the Company elected to be taxed as a REIT under the Code beginning with its short taxable year ended December 31, 2019. 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. Pursuant to the Jumpstart Our Business Startups Act (the "JOBS Act"), the Company qualifies as an emerging growth company ("EGC"). An EGC may choose, as we have done, to take advantage of the extended private company transition period provided for complying with new or revised accounting standards that may be issued by the Financial Accounting Standards Board ("FASB") or the Securities and Exchange Commission (the "SEC"). |
The Company's IPO and Formation
The Company's IPO and Formation Transactions | 9 Months Ended |
Sep. 30, 2020 | |
The Company's Initial Public Offering and Formation Transactions [Abstract] | |
The Company's IPO and Formation Transactions | Note 2. The Company's IPO and Formation Transactions Both the Company and the Operating Partnership commenced operations upon completion of the IPO and the Formation Transactions on May 17, 2019. The Company's operations are carried out primarily through the Operating Partnership and the wholly owned subsidiaries of the Operating Partnership. On May 17, 2019, the Company completed its IPO, pursuant to which it sold 4,500,000 shares of its Class A common stock at a public offering price of $17.00 per share. The Company raised $76.5 million in gross proceeds, resulting in net proceeds of approximately $71.1 million after deducting approximately $5.4 million in underwriting discounts and before giving effect to $6.4 million in other expenses relating to the IPO. The Company's Class A common stock began trading on the New York Stock Exchange under the symbol "PSTL" on May 15, 2019. In connection with the IPO and Formation Transactions, the Company, through its Operating Partnership, used a portion of the net proceeds to repay approximately $31.7 million of outstanding indebtedness related to the Predecessor. Pursuant to the Formation Transactions, the Company, directly or through the Operating Partnership, acquired the entities that comprise the Predecessor. The initial properties and other interests were contributed in exchange for 1,333,112 OP Units, 637,058 shares of Class A common stock, 27,206 shares of Voting Equivalency stock and $1.9 million of cash. In addition, the Operating Partnership purchased 81 post office properties (the "Acquisition Properties") in exchange for $26.9 million in cash, including approximately $1.0 million paid to Mr. Spodek, the Company's chief executive officer and a director for his non-controlling ownership in nine of the Acquisition Properties. The Company's results of operations for the three and nine months ended September 30, 2019 reflect the results of operations of the Predecessor together with the Company, while the financial condition as of December 31, 2019 and September 30, 2020 reflects solely the Company. References in these notes to consolidated financial statements to "Postal Realty Trust, Inc." signify the Company for the period after the completion of the IPO and the Formation Transactions and the Predecessor for all prior periods. The following is a summary of the Predecessor Statement of Operations for the period from January 1, 2019 through May 16, 2019, and the Company's Statement of Operations for the period from May 17, 2019 through September 30, 2019. These amounts are included in the Consolidated and Combined Consolidated Statement of Operations herein for the nine months ended September 30, 2019. Predecessor Postal Realty January 1, May 17, 2019 2019 through through May 16, September 30, 2019 2019 Revenues: Rental income $ 2,249,355 $ 3,486,541 Tenant reimbursements 348,075 504,429 Fee and other income 427,959 414,138 Total revenues 3,025,389 4,405,108 Operating Expenses: Real estate taxes 358,693 521,424 Property operating expenses 357,779 464,060 General and administrative 501,204 2,468,897 Depreciation and amortization 725,756 1,588,797 Total operating expenses 1,943,432 5,043,178 Income (loss) from operations 1,081,957 (638,070 ) Interest expense, net: Contractual interest expense (570,819 ) (64,604 ) Amortization of deferred financing costs (4,773 ) (4,785 ) Loss on early extinguishment of Predecessor debt - (185,586 ) Interest income 1,134 2,260 Total interest expense, net (574,458 ) (252,715 ) Income (loss) before income tax expense 507,499 (890,785 ) Income tax expense (39,749 ) - Net income (loss) 467,750 (890,785 ) Less: Net income attributable to noncontrolling interest in properties (4,336 ) - Net income attributable to Predecessor $ 463,414 - Net loss attributable to Operating Partnership unitholders' noncontrolling interests 191,020 Net loss attributable to common stockholders $ (699,765 ) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Consolidated and Combined Consolidated Financial Statements include the financial position and results of operations of the Company and its Predecessor, the Operating Partnership and its wholly owned subsidiaries. The Company did not have any operations from the date of formation to May 17, 2019. The Predecessor represents a combination of certain entities holding interests in real estate that were commonly controlled prior to the Formation Transactions. Due to their common control, the financial statements of the separate Predecessor entities which owned the properties and the management company are presented on a combined consolidated basis. The effects of all significant intercompany balances and transactions have been eliminated. 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. 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 Balance Sheets. Accordingly, the presentation of net income (loss) reflects the income attributed to controlling and non-controlling interests. The accompanying consolidated and combined 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 and combined consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. 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, 2020. 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. Although management believes its estimates are reasonable, actual results could differ from those estimates. Reclassifications Certain prior period amounts have been reclassified to conform to the current period's presentation. Cash and Escrows and Reserves Cash includes unrestricted cash with a maturity of three months or less. Escrows and reserves consist of restricted cash. The following table provides a reconciliation of cash and escrows and reserves reported within the Company's Consolidated Balance Sheets and Consolidated and Combined Consolidated Statements of Cash Flows: As of September 30, December 31, Cash $ 7,786,677 $ 12,475,537 Escrows and reserves: Maintenance reserve 665,494 663,339 ESPP reserve 29,416 44,727 Cash and escrows and reserves $ 8,481,587 $ 13,183,603 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 "Tenant reimbursement revenue" on the Company's Consolidated and Combined Consolidated Statement of Operations. Fee and other income primarily consist of property management fees. These 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. The Company carries liability insurance to 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 receipt of insurance proceeds is deemed probable. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is not recorded in fee and other income until the proceeds are received. 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 proceeds are received. Revenue from direct financing leases is recognized over the lease term using the effective interest rate method. At lease inception, we record an asset within investments on the Company's 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 income is recognized as revenue in "Fee and other income" on the Company's Consolidated and Combined Consolidated Statement of Operations and produces a constant periodic rate of return on the investment in direct financing lease, net. Fair Value of Financial Instruments 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 realize on disposition of the assets and liabilities as of September 30, 2020 and December 31, 2019. 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, accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of September 30, 2020 and December 31, 2019 due to their short maturities. As of September 30, 2020, the Company had an investment in a direct financing lease with a carrying value of $0.5 million and an effective interest rate of 7.89%. The carrying value of the investment in a direct financing lease approximated the fair market value as of September 30, 2020. The fair value of the Company's debt was categorized as a Level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value of the Company's borrowings under its Credit Facility approximates carrying value. The fair value of the Company's secured borrowings aggregated approximately $16.9 million and $3.2 million as compared to the principal balance of $16.8 million and $3.2 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of the Company's debt was categorized as a Level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value of these financial instruments was determined by using a discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of the mortgage debt was determined by discounting the future contractual interest and principal payments by a market rate. Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of September 30, 2020 and December 31, 2019. 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, 2020 and current estimates of fair value may differ significantly from the amounts presented herein. Impairment 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. No impairments were recorded during the three and nine months ended September 30, 2020 and 2019. Concentration of Credit Risks As of September 30, 2020, the Company's properties were leased to a single tenant, the USPS. For the nine months ended September 30, 2020, no state had a concentration of rental income over 10% as a percentage of total rental income. For the nine months ended September 30, 2019, our total rental income of $5.7 million was concentrated in the following states: Texas (11.5%), Massachusetts (11.1%) and Pennsylvania (10.7%). The ability of the USPS to honor the terms of their leases is dependent upon regulatory, economic, environmental or competitive conditions in any of these areas and could have an effect on our overall business results. The Company has deposited cash and maintains its bank deposits with large financial institutions in amounts that 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. 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 will record forfeitures as they 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 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. Stockholder's Equity for further details. Earnings per Share The Company calculates net loss per share based upon the weighted average shares outstanding less issued and outstanding non-vested shares of Class A common stock for the period beginning May 17, 2019. Diluted earnings per share is calculated after giving effect to all potential dilutive shares outstanding during the period. There were 2,855,102 potentially dilutive shares outstanding related to the issuance of OP Units and LTIP Units held by non-controlling interests as of September 30, 2020. Future Application of Accounting Standards In February 2016, the FASB issued ASU 2016-02, Leases; in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases — Targeted Improvements; and in December 2018, the FASB issued ASU 2018-20, Narrow-Scope Improvements for Lessors. This group of ASUs is collectively referred to as Topic 842. Topic 842 supersedes the existing standards for lease accounting (Topic 840, Leases). Topic 842 will be effective for the Company on January 1, 2021 as a result of its classification as an emerging growth company. The Company expects to elect the practical expedients provided by Topic 842, including: the package of practical expedients that allows an entity not to reassess upon adoption (i) whether an expired or existing contract contains a lease, (ii) whether a lease classification related to expired or existing lease arrangements, and (iii) whether costs incurred on expired or existing leases qualify as initial direct costs, and as a lessor, the practical expedient not to separate certain non-lease components, such as common area maintenance, from the lease component if the timing and pattern of transfer are the same for the non-lease component and associated lease component, and the lease component would be classified as an operating lease if accounted for separately. Topic 842 requires lessees to record most leases on their balance sheet through a right-of-use ("ROU") model, in which a lessee records a ROU asset and a lease liability on their balance sheet. Leases that are less than 12 months do not need to be accounted for under the ROU model. Lessees will account for leases as financing or operating leases, with the classification affecting the timing and pattern of expense recognition in the income statement. Lease expense will be recognized based on the effective interest method for leases accounted for as finance leases and on a straight-line basis over the term of the lease for leases accounted for as operating leases. As of September 30, 2020, the Company was the lessee under one office lease and two ground leases that would require accounting under the ROU model. The accounting by a lessor under Topic 842 is largely unchanged from that of Topic 840. Under Topic 842, lessors will continue to account for leases as a sales-type, direct-financing, or operating. A lease will be treated as a sale if it is considered to transfer control of the underlying asset to the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control. Otherwise, the lease is treated as an operating lease. Topic 842 requires accounting for a transaction as a financing in a sale leaseback in certain circumstances, including when the seller-lessee is provided an option to purchase the property from the landlord at the tenant's option. The Company expects that this provision could change the accounting for these types of leases in the future. Topic 842 also includes the concept of separating lease and non-lease components. Under Topic 842, non-lease components, such as common area maintenance, would be accounted for under Topic 606 and separated from the lease payments. However, the Company will elect the lessor practical expedient allowing the Company to not separate these components when certain conditions are met. Upon adoption of Topic 842, the Company expects to combine tenant reimbursements with rental income on its consolidated statements of operations. In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses Codification Improvements to Topic 326, Financial Instruments - Credit Losses |
Real Estate Acquisitions
Real Estate Acquisitions | 9 Months Ended |
Sep. 30, 2020 | |
Real Estate [Abstract] | |
Real Estate Acquisitions | Note 4. Real Estate Acquisitions The following tables summarizes the Company's acquisitions for the nine months ended September 30, 2020. 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: Three Months Ended Number Land Building Tenant In-place Above- Below- Other (1) Total (2) March 31, 2020 (3)(4)(5) 83 $ 4,825,507 $ 24,572,597 $ 293,726 $ 2,477,174 $ 7,148 $ (1,616,080 ) $ (34,098 ) $ 30,525,974 June 30, 2020 (6) 19 2,555,428 7,344,021 54,894 692,705 - (38,934 ) - 10,608,114 September 30, 2020 (7) 122 6,074,837 19,426,255 316,541 2,300,575 37,290 (1,067,886 ) (33,386 ) 27,054,226 224 $ 13,455,772 $ 51,342,873 $ 665,161 $ 5,470,454 $ 44,438 $ (2,722,900 ) $ (67,484 ) $ 68,188,314 Explanatory Notes: (1) Includes an intangible liability related to unfavorable operating leases on three properties that is included in "Accounts Payable, accrued expenses and other" on the Company's Consolidated Balance Sheets. (2) Includes acquisition costs of $0.3 million for the three months ended March 31, 2020, $0.2 million for the three months ended June 30, 2020 and $0.8 million for the three months ended September 30, 2020. (3) Includes the acquisition of a 21-building portfolio leased to the USPS. The contract purchase price for the portfolio was $13.8 million, exclusive of closing costs, and giving effect to 483,333 OP Units issued to the sellers at a value of $17.00 per unit. The closing price of the Company's common stock on January 10, 2020 was $16.39; therefore, total consideration at closing, including closing costs, was approximately $13.6 million of which $7.9 million represented the non-cash consideration (the value of the OP Units) issued to the sellers. (4) Includes the acquisition of a 42-building portfolio leased to the USPS. The aggregate purchase price of such portfolio was approximately $8.8 million, including closing costs, which was funded with borrowings under our Credit Facility. (5) Includes the acquisition of 20 postal properties in individual or smaller portfolio transactions for approximately $8.1 million, including closing costs. (6) Includes the acquisition of a 13-building portfolio leased to the USPS in various states for approximately $7.2 million, including closing costs. In addition, the Company purchased six postal properties in individual or smaller portfolio transactions for approximately $3.4 million, including closing costs. (7) Includes the acquisition of 122 postal properties in various states in individual or portfolio transactions for approximately $27.1 million, including closing costs, which was funded with borrowings under our Credit Facility. In addition, the Company closed on one postal property which is a direct financing lease and is included in "Investment in financing lease, net" on the Company's Consolidated Balance Sheets. |
Intangible Assets and Liabiliti
Intangible Assets and Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Intangible Assets and Liabilities [Abstract] | |
Intangible Assets and Liabilities | Note 5. Intangible Assets and Liabilities The following table summarizes our intangible assets and liabilities as a result of the application of acquisition accounting: As of Gross Asset Accumulated Net September 30, 2020: In-place lease intangibles $ 19,261,027 $ (9,911,763 ) $ 9,349,264 Above-market leases 85,058 (30,391 ) 54,667 Below-market leases (11,395,201 ) 3,015,327 (8,379,874 ) December 31, 2019: In-place lease intangibles $ 13,788,024 $ (6,472,157 ) $ 7,315,867 Above-market leases 40,620 (18,496 ) 22,124 Below-market leases (8,672,301 ) 2,071,182 (6,601,119 ) Amortization of in-place lease intangibles was $1.2 million and $3.4 million for the three and nine months ended September 30, 2020, respectively and $0.6 million and $1.2 million for the three and nine months ended September 30, 2019, respectively. This amortization is included in "Depreciation and amortization" on the Company's Consolidated and Combined Consolidated Statements of Operations. Amortization of acquired above market leases was $5,213 and $11,895 for the three and nine months ended September 30, 2020, respectively, and $2,865 and $7,851 for the three and nine months ended September 30, 2019, respectively and is included in "Rental income" on the Company's Consolidated and Combined Consolidated Statements of Operations. Amortization of acquired below market leases was $0.3 million and $0.9 million for the three and nine months ended September 30, 2020, respectively, and $0.1 million and $0.3 million for the three and nine months ended September 30, 2019, respectively, and is included in "Rental income" on the Company's Consolidated and Combined Consolidated Statements of Operations. Future amortization/accretion of these intangibles is below: Year Ending December 31, In-place lease Above-market Below-market 2020 – Remaining $ 1,097,772 $ 4,549 $ (326,537 ) 2021 3,687,350 15,544 (1,291,010 ) 2022 2,099,279 13,260 (1,147,910 ) 2023 1,273,981 10,626 (1,021,341 ) 2024 649,954 7,889 (857,151 ) Thereafter 540,928 2,799 (3,735,925 ) Total $ 9,349,264 $ 54,667 $ (8,379,874 ) |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Note 6. Debt The following table summarizes the Company's indebtedness as of September 30, 2020 and December 31, 2019: Outstanding Outstanding Interest Rate Maturity Date Revolving Credit Facility (1) $ 49,000,000 $ 54,000,000 LIBOR+170bps (2) September 2023 Vision Bank (3) 1,474,909 1,522,672 4.00 % September 2036 First Oklahoma Bank (4) 367,618 378,005 4.50 % December 2037 Vision Bank – 2018 (5) 876,890 900,385 5.00 % January 2038 Seller Financing (6) 445,000 445,000 6.00 % January 2025 First Oklahoma Bank – April 2020 (7) 4,522,311 - 4.25 % April 2040 First Oklahoma Bank – June 2020 (8) 9,152,000 - 4.25 % June 2040 Total Principal 65,838,728 57,246,062 Unamortized deferred financing costs (239,362 ) (35,058 ) Total Debt $ 65,599,366 $ 57,211,004 Explanatory Notes: (1) On September 27, 2019, the Company entered into a credit agreement (as amended, the "Credit Agreement") with People's United Bank, National Association, individually and as administrative agent, BMO Capital Markets Corp., as syndication agent, and certain other lenders. The Credit Agreement provides for revolving commitments in an aggregate principal amount of $100.0 million with an accordion feature ("the Accordion Feature") that permits the Company to borrow up to an additional $100.0 million for an aggregate total of $200.0 million, subject to customary terms and conditions, and a maturity date of September 27, 2023. On January 30, 2020, the Company amended the Credit Agreement in order to exercise a portion of the Accordion Feature to increase the maximum amount available under the Credit Facility to $150.0 million, subject to the borrowing base properties identified therein remaining unencumbered and subject to an enforceable lease. On June 25, 2020, the Company further amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment). The interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.7% to 1.4% per annum or LIBOR plus a margin ranging from 1.7% to 2.4% per annum, each based on a consolidated leverage ratio. In addition, the Company will pay, for the period through and including the calendar quarter ended March 31, 2020, an unused facility fee on the revolving commitments under the Credit Facility of 0.75% per annum for the first $100 million and 0.25% per annum for the portion of revolving commitments exceeding $100.0 million, and for the period thereafter, an unused facility fee of 0.25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Credit Facility. During the three and nine months ended September 30, 2020, the Company incurred $0.1 million and $0.3 million, respectively, of unused fees related to the Credit Facility. The Company's ability to borrow under the Credit Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of September 30, 2020, the Company was in compliance with all of the Credit Facility's debt covenants. (2) As of September 30, 2020, the one-month LIBOR rate was 0.15%. (3) Five properties are collateralized under this loan as of September 30, 2020 with Mr. Spodek as the guarantor. On September 8, 2021 and every five years thereafter, the interest rate will reset at a variable annual rate of Wall Street Journal Prime Rate ("Prime") + 0.5%. (4) The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. Interest rate resets on December 31, 2022 to Prime + 0.25%. (5) The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. Interest rate resets on January 31, 2023 to Prime + 0.5%. (6) In connection with the acquisition of a property, we obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $105,661 with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025. (7) In connection with the purchase of a 13-building portfolio, the Company obtained $4.5 million of mortgage financing, at a fixed interest rate of 4.25% with interest only for the first 18 months, which resets in November 2026 to the greater of Prime or 4.25%. (8) The loan is collateralized by first mortgage liens on 22 properties. Interest rates resets in January 2027 to the greater of Prime or 4.25%. The weighted average maturity date for our secured borrowing as of September 30, 2020 and December 31, 2019 was 18.8 years and 15.7 years, respectively. The scheduled principal repayments of indebtedness as of September 30, 2020 are as follows: Year Ending December 31, Amount 2020 – Remaining $ 28,073 2021 220,497 2022 701,228 2023 49,735,838 2024 767,608 Thereafter 14,385,484 Total $ 65,838,728 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases, Operating [Abstract] | |
Leases | Note 7. Leases As of September 30, 2020, all of our rental income is paid by a single tenant, the USPS. Certain leases have expired and the balance expire at various dates through November 30, 2029. Future minimum lease payments to be received as of September 30, 2020 under non-cancellable operating leases for the next five years and thereafter are as follows: (1) Year Ending December 31, Amount 2020 – Remaining (2) $ 4,394,175 2021 (3) 16,938,459 2022 13,371,159 2023 10,679,959 2024 7,734,855 Thereafter 10,165,377 Total $ 63,283,984 Explanatory Notes: (1) The above minimum lease payments to be received do not include reimbursements from the USPS for real estate taxes. (2) As of September 30, 2020, the leases at 58 of our properties were expired, and the USPS was occupying such properties as a holdover tenant. In addition, the lease at one of our properties is a month to month lease. Holdover rent is typically paid as the greater of estimated market rent or the rent amount due under the expired lease. (3) The Company has received notice on one property which the USPS intends to vacate in August 2021. Direct Financing Lease As of September 30, 2020, the Company has one direct financing lease agreement related to one of its postal properties. The components of the Company's net investment in financing lease as of September 30, 2020 are summarized in the table below: As of September 30, Total minimum lease payment receivable $ 1,021,466 Less: unearned income (505,302 ) Investment in financing lease, net $ 516,164 Future lease payments to be received under the Company's direct financing lease as of September 30, 2020 for the next five years and thereafter are as follows: Year Ending December 31, Amount 2020 – Remaining $ 11,375 2021 45,500 2022 45,500 2023 45,500 2024 45,500 Thereafter 828,091 Total $ 1,021,466 Ground Lease During the nine months ended September 30, 2020, the Company assumed an operating ground lease at two acquired properties which includes rent escalations throughout the lease term (including renewal options). Ground lease expense is included in "Property Operating Expenses" on the Company's Consolidated and Combined Consolidated Statements of Operations. The table below presents the future minimum ground lease payments as of September 30, 2020. Year Ending December 31, Amount 2020 – Remaining $ 5,904 2021 23,600 2022 23,600 2023 23,600 2024 24,160 Thereafter 1,175,290 Total $ 1,276,154 Impact of COVID-19 On March 11, 2020, the World Health Organization declared the outbreak of a coronavirus (COVID-19) a pandemic. The resulting restrictions on travel and quarantines imposed have had a negative impact on the U.S. economy and business activity globally, the full impact of which is not yet known and may result in an adverse impact to the Company's tenant and operating results. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8. Income Taxes Income tax expense related to UPH for the three and nine months ended September 30, 2019 was $0 and $39,749 at an effective tax rate of 13.4%. The effective tax rate for the three months and nine months ended September 30, 2019 differs from the statutory rate of 21% due to certain entities included in the combined consolidated financial statements that are not subject to tax at the entity level, state taxes and interest and penalties from unrecognized tax benefits primarily related to the utilization of loss carryforwards. During the three and nine months ended September 30, 2020, the Company recorded a benefit of $0 and $0.01 million, respectively, due to finalizing certain state taxes filings of UPH. In connection with the IPO, the Company and PRM jointly elected to treat PRM as a TRS. PRM performs management services, including for properties the Company does not own. PRM generates income, resulting in federal and state corporate income tax liability for PRM. For the three and nine months ended September 30, 2020, income tax expense related to PRM was $0.02 million and $0.05 million, respectively. During the three and nine months ended September 30, 2020, the Company recorded income tax expense of $0.01 million related to certain state taxes. The Company has unrecognized tax benefits as of September 30, 2020 of $0.4 million which is inclusive of interest and penalties and a corresponding indemnification asset which is recorded in prepaid expenses and other assets on the consolidated balance sheet. During the three months ended September 30, 2020, the Company reversed $0.1 million of unrecognized tax benefits and the corresponding indemnification asset due to the expiration of statute of limitations. In connection with the IPO, the indirect sole shareholder of UPH agreed to reimburse the Company for unrecognized tax benefits primarily related to the utilization of certain loss carryforwards at UPH. The Company recorded an indemnification asset in the same amount as the unrecognized tax benefits. The indirect sole shareholder of UPH will be responsible for all tax related matters related to UPH. On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act was enacted to provide economic relief to companies and individuals in response to the COVID-19 pandemic. Included in the CARES Act are tax provisions which increase allowable interest expense deductions for 2019 and 2020 and increase the ability for taxpayers to use net operating losses. While we do not expect these provisions to have a material impact on the Company’s taxable income or tax liabilities, we will continue to analyze the provisions of the CARES Act and related guidance as it is published. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 9. Related Party Transactions Management Fee Income PRM recognized management fee income of $0.3 million and $0.8 million for the three and nine months ended September 30, 2020, respectively and the Predecessor recognized management fee income of $0.4 million for the nine months ended September 30, 2019 from various properties which were affiliated with Mr. Spodek. Following the IPO, PRM recognized management fee income of $0.2 million and $0.4 million for the three and nine months ended September 30, 2019, respectively from various properties which are affiliated with the Company's CEO. These amounts are included in "Fee and other income" on the Company's Consolidated and Combined Consolidated Statements of Operations. Accrued management fees receivable of $0.3 million and $0.08 million as of September 30, 2020 and December 31, 2019, respectively, are included in "Rents and other receivables" on the Company's Consolidated Balance Sheets. Related Party Lease On October 1, 2018, the Predecessor entered into a lease for office space in Cedarhurst, New York with an entity affiliated with the Predecessor (the "Office Lease"). Pursuant to the Office Lease, the monthly rent was $15,000 subject to escalations. The term of the Office Lease was five years commencing on October 1, 2018 (with rent commencing on January 1, 2019) and was set to expire on September 30, 2023. In connection with the IPO, the Office Lease was terminated. On May 17, 2019, the Company entered into a new lease for office space in Cedarhurst, New York with an entity affiliated with the Company's CEO (the "New Lease"). Pursuant to the New Lease, the monthly rent is $15,000 subject to escalations. The term of the New Lease is five years commencing on May 17, 2019 and will expire on May 16, 2024. Rental expenses associated with the office lease for the three and nine months ended September 30, 2020 was $0.05 million and $0.1 million, respectively, was recorded in "General and administrative expenses" on the Company's Consolidated and Combined Consolidated Statements of Operations. The following table represents the Company's future rental payments related to the New Lease: Year Ending December 31, Amount 2020 – Remaining $ 46,350 2021 188,869 2022 194,535 2023 200,371 2024 76,244 Total $ 706,369 Transfer of Real Property On May 28, 2020, the Company completed the separation of deed and transfer of the real property attributable to a de minimis non-postal tenant that shares space in a building leased to the USPS. At the time of the IPO a property located in Milwaukee, WI, a portion of which is leased to the USPS, was contributed to the Company. It was intended that the non-postal portion of the property would revert back to an entity affiliated with Mr. Spodek once a separation of the deed was completed. The portion of the property leased to the USPS remains owned by a wholly owned subsidiary of the Operating Partnership. The independent members of our Board of Directors ratified the no consideration transfer. Guarantees Mr. Spodek, our chief executive officer, has personally guaranteed our loans with First Oklahoma Bank that were obtained prior to 2020 and Vision Bank, totaling $2.7 million. As a guarantor, Mr. Spodek's interests with respect to the debt he is guaranteeing (and the terms of any repayment or default) may not align with our interests and could result in a conflict of interest. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 10. Earnings Per Share Earnings per share ("EPS") is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of shares outstanding for the period. The following table presents a reconciliation of income (loss) from operations used in the basic and diluted EPS calculations. (1) For the Three Months Ended For the Nine Months Ended 2020 2019 2020 2019 Numerator for earnings per share – basic and diluted: Net loss attributable to common stockholders $ (15,184 ) $ (307,969 ) $ (843,489 ) $ (699,765 ) Less: Income attributable to participating securities (105,829 ) — (266,680 ) (16,715 ) Numerator for earnings per share — basic and diluted $ (121,013 ) $ (307,969 ) $ (1,110,169 ) $ (716,480 ) Denominator for earnings per share – basic and diluted 8,425,708 5,164,264 6,276,145 5,164,264 Basic and diluted earnings per share $ (0.01 ) $ (0.06 ) $ (0.18 ) $ (0.14 ) Explanatory Note: (1) The combined statements of operations prior to May 17, 2019 represents the activity of the Predecessor and EPS was not applicable. |
Stockholder's Equity
Stockholder's Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholder's Equity | Note 11. Stockholder's Equity The Company issued 4.5 million shares of Class A common stock in conjunction with the IPO resulting in net proceeds of approximately $71.1 million after deducting approximately $5.4 million in underwriting discounts and before giving effect to $6.4 million in other expenses relating to the IPO. In addition, the Company issued 637,058 shares of Class A common stock and 27,206 shares of Voting Equivalency stock in connection with the Formation Transactions. Each outstanding share of Voting Equivalency stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote, including the election of directors, and holders of shares of Class A common stock and Voting Equivalency stock will vote together as a single class. Shares of Voting Equivalency stock are convertible into shares of Class A common stock, on a one-for-one basis, at the election of the holder at any time. Additionally, one share of Voting Equivalency stock will automatically convert into one share of Class A common stock for each 49 OP Units transferred (including by the exercise of redemption rights afforded with respect to OP Units) to a person other than a permitted transferee. This ratio is a function of the fact that each share of Voting Equivalency stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote and maintains the voting proportion of holders of Voting Equivalency stock with the holder's economic interest in our Company. On July 15, 2020, the Company priced a public offering of 3.5 million shares of its Class A Common Stock (the "Follow-on Offering") at $13.00 per share. On July 17, 2020, the underwriters purchased an additional 521,840 shares pursuant to a 30-day option to purchase up to an additional 525,000 shares at $13.00 per share (the "Additional Shares"). The Follow-on Offering, including the Additional Shares, closed on July 20, 2020 resulting in $52.2 million in gross proceeds, and approximately $49.4 million in net proceeds after deducting approximately $2.9 million in underwriting discounts and before giving effect to $0.9 million in other estimated expenses relating to the Follow-on Offering. Dividends During the three and nine months ended September 30, 2020, the Board approved and the Company declared and paid dividends of $2.5 million and $5.6 million, respectively, to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $0.575 per share as shown in the table below. Declaration Date Record Date Date Paid Amount Per Share January 30, 2020 February 14, 2020 February 28, 2020 $0.17 April 30, 2020 May 11, 2020 May 29, 2020 $0.20 July 30, 2020 August 14, 2020 August 31, 2020 $0.205 Non-controlling Interests Non-controlling interests in the Company represent OP Units held by the Predecessor's prior investors and certain sellers of properties to the Company and LTIP Units primarily issued to the Company's CEO in connection with the IPO and in lieu of cash compensation. During the nine months ended September 30, 2020, the Company issued 483,333 OP Units in January 2020 in connection with a portfolio that the Company acquired, 53,230 LTIP Units in February 2020 to the Company's CEO for his 2019 incentive bonus, 13,708 LTIP Units in March 2020 to the Company's CEO and 27,365 LTIP Units in May 2020 to the Company's CEO for his salary for the period of May 18, 2020 to December 31, 2020. As of September 30, 2020, and December 31, 2019, non-controlling interests consisted of 2,640,795 OP Units and 214,307 LTIP Units and 2,157,462 OP Units and 120,004 LTIP Units, respectively. This represented approximately 23.1% and 30.0% of the outstanding Operating Partnership units as of September 30, 2020 and December 31, 2019, respectively. Operating Partnership units and shares of common stock have essentially the same economic characteristics, as they share equally in the total net income or loss distributions of the Operating Partnership. Beginning on or after the date which is 12 months after the later of (i) the completion of the IPO or (ii) the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will 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, in shares of the Company's Class A common stock, on a one-for-one basis determined in accordance with and subject to adjustment under the partnership agreement. The 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 Company's 2019 Equity Incentive Plan (the "Equity Incentive Plan" or the "Plan"), the Company may grant equity incentive awards to its directors, officers, employees and consultants. The maximum number of shares of Class A Common Stock that were authorized for issuance under the Plan were 541,584. On April 27, 2020, the Board of Directors amended the Equity Incentive Plan to increase the total number of shares of Class A common stock that may be issued under the Plan from 541,584 shares to 1,291,584 shares. The stockholders approved such amendment on June 26, 2020. As of September 30, 2020, the remaining shares available under the Plan for future issuance was 751,697. 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. The following table presents a summary of restricted stock, LTIP Units and RSUs. The balance as of September 30, 2020 represents unvested shares of restricted stock and LTIP Units and RSUs that are outstanding, whether vested or not: Restricted (1)(2) LTIP (3) Restricted (4) Total Weighted Outstanding, as of January 1, 2020 148,847 120,003 — 268,850 $ 16.96 Granted 146,348 94,303 62,096 302,747 $ 14.20 Vesting of restricted shares (5) (61,181 ) — — (61,181 ) $ 17.00 Forfeited (588 ) — — (588 ) $ 17.00 Outstanding, as of September 30, 2020 233,426 214,306 62,096 509,828 $ 15.35 Explanatory Notes: (1) Represents restricted shares awards included in common stock. (2) The time-based restricted share awards granted to our officers and employees typically vest in three annual installments or cliff vest at the end of eight years. The time-based restricted share awards granted to our directors' vest over one to three years. (3) LTIP units to our officers and employees typically vest over three to eight years. During the nine months ended September 30, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award and 13,708 LTIPs to the Company's CEO. In May 2020, pursuant to the Plan, the Company issued 27,365 LTIP Units to the Company's CEO in lieu of his salary payable for the period from the one-year anniversary of the IPO to December 31, 2020. LTIP Units issued to the Company's CEO in lieu of cash compensation cliff vest on the eighth anniversary of the date of grant. (4) Includes 38,672 RSUs granted to certain officers of the Company during the nine months ended September 30, 2020 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 hurdles relating to the Company's absolute total stockholder return and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2022. 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 13,253 time-based RSUs issued for 2019 incentive bonuses to certain employees that vested fully on February 14, 2020, the date of grant and 10,171 time-based RSUs granted to certain employees for their election to defer 2020 salary that vest on December 31, 2020. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria. (5) Includes 49,839 of restricted shares that vested and 11,342 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements. During the three and nine months ended September 30, 2020, the Company recognized compensation expense of $0.6 million and $1.8 million, respectively, and during the three and nine months ended September 30, 2019 the Company recognized $0.4 million and $0.6 million, respectively, related to all awards. The fair value of restricted shares that vested during the nine months ended September 30, 2020 was $1.0 million. As of September 30, 2020, there was $6.1 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 4.0 years. Employee Stock Purchase Plan In connection with the IPO, the Company established the Postal Realty Trust, Inc. 2019 Qualified Employee Stock Purchase Plan ("ESPP"), which allows the Company's employees to purchase shares of the Company's Class A common stock at a discount. A total of 100,000 shares of Class A common stock will be reserved for sale and authorized for issuance under the ESPP. The Code permits us to provide up to a 15% discount on the lesser of the fair market value of such shares of stock at the beginning of the offering period and the close of the offering period. As of September 30, 2020, 7,189 shares have been issued under the ESPP since commencement. During the three and nine months ended September 30, 2020, the Company recognized compensation expense of $11,795 and $21,897. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12. Commitments and Contingencies As of September 30, 2020, the Company was not involved in any litigation nor to its knowledge is any litigation threatened against the Predecessor or the Company, as applicable, that, in management's opinion, would result in any material adverse effect on the Company's financial position, or which is not covered by insurance. 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. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13. Subsequent Events On October 30, 2020, the Company borrowed an additional $3.0 million under the Credit Facility. As of the date of this report, the Company has $52.0 million drawn on its Credit Facility. On October 30, 2020, the Company’s Board of Directors approved, and the Company declared a third quarter common stock dividend of $0.215 per share which is payable on November 30, 2020 to stockholders of record as of November 16, 2020. As of November 11, 2020, the Company closed on the acquisitions of 14 postal properties for approximately $8.0 million during the period subsequent to September 30, 2020. As of November 11, 2020, the Company had entered into agreements to acquire 12 postal properties for approximately $10.1 million. The majority of these transactions are anticipated to close during the fourth quarter of 2020, subject to the satisfaction of customary closing conditions. Furthermore, the Company has signed a material agreement for an industrial building in Warrendale, Pennsylvania for $47.0 million. The USPS occupies 73% of this property as a distribution facility. The Company is currently performing formal due diligence procedures customary for this transaction and cannot provide assurance as to the timing of when, or on what terms, the transaction will close, if at all. Current Lease Renewal and Revised USPS Lease Form As of November 11, 2020, we have executed 29 leases with respect to the total of all leases that have expired in 2019 or 2020, or will expire in 2020. As of the same date, the leases at 52 of our properties (consisting of one lease for which the lease expired in 2018 which we acquired in July 2020, 15 properties for which leases expired in 2019, including six leases that expired as of the date of our acquisition, and 36 properties for which leases expired in 2020) were expired and the USPS is occupying such properties as a holdover tenant, aggregating approximately $2.5 million in annualized rental income. As of November 11, 2020, the USPS has not vacated any of these 52 properties. The Company has received all holdover rent on a month-to-month basis, with the USPS typically paying the greater of estimated market rent or the rent amount under the expired lease. The USPS has adopted a revised form of our modified double-net lease, which transfers the responsibility for additional maintenance expenses and obligations to the landlord, including some components of plumbing and electrical systems. As of November 11, 2020, we have entered into 29 leases reflecting this revised form, including an addendum, as applicable, to its revised form of lease for leases acquiring annual rent in excess of $25,000, pursuant to which documentation requirements are streamlined and some of the new responsibilities placed on the landlord by the USPS’ revised form of our modified double-net lease would be mitigated for leases |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Consolidated and Combined Consolidated Financial Statements include the financial position and results of operations of the Company and its Predecessor, the Operating Partnership and its wholly owned subsidiaries. The Company did not have any operations from the date of formation to May 17, 2019. The Predecessor represents a combination of certain entities holding interests in real estate that were commonly controlled prior to the Formation Transactions. Due to their common control, the financial statements of the separate Predecessor entities which owned the properties and the management company are presented on a combined consolidated basis. The effects of all significant intercompany balances and transactions have been eliminated. 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. 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 Balance Sheets. Accordingly, the presentation of net income (loss) reflects the income attributed to controlling and non-controlling interests. The accompanying consolidated and combined 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 and combined consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. 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, 2020. All material intercompany accounts and transactions have been eliminated. |
Use of Estimates | 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. Although management believes its estimates are reasonable, actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period's presentation. |
Cash and Escrows and Reserves | Cash and Escrows and Reserves Cash includes unrestricted cash with a maturity of three months or less. Escrows and reserves consist of restricted cash. The following table provides a reconciliation of cash and escrows and reserves reported within the Company's Consolidated Balance Sheets and Consolidated and Combined Consolidated Statements of Cash Flows: As of September 30, December 31, Cash $ 7,786,677 $ 12,475,537 Escrows and reserves: Maintenance reserve 665,494 663,339 ESPP reserve 29,416 44,727 Cash and escrows and reserves $ 8,481,587 $ 13,183,603 |
Revenue Recognition | 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 "Tenant reimbursement revenue" on the Company's Consolidated and Combined Consolidated Statement of Operations. Fee and other income primarily consist of property management fees. These 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. The Company carries liability insurance to 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 receipt of insurance proceeds is deemed probable. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is not recorded in fee and other income until the proceeds are received. 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 proceeds are received. Revenue from direct financing leases is recognized over the lease term using the effective interest rate method. At lease inception, we record an asset within investments on the Company's 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 income is recognized as revenue in "Fee and other income" on the Company's Consolidated and Combined Consolidated Statement of Operations and produces a constant periodic rate of return on the investment in direct financing lease, net. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments 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 realize on disposition of the assets and liabilities as of September 30, 2020 and December 31, 2019. 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, accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of September 30, 2020 and December 31, 2019 due to their short maturities. As of September 30, 2020, the Company had an investment in a direct financing lease with a carrying value of $0.5 million and an effective interest rate of 7.89%. The carrying value of the investment in a direct financing lease approximated the fair market value as of September 30, 2020. The fair value of the Company's debt was categorized as a Level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value of the Company's borrowings under its Credit Facility approximates carrying value. The fair value of the Company's secured borrowings aggregated approximately $16.9 million and $3.2 million as compared to the principal balance of $16.8 million and $3.2 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of the Company's debt was categorized as a Level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value of these financial instruments was determined by using a discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of the mortgage debt was determined by discounting the future contractual interest and principal payments by a market rate. Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of September 30, 2020 and December 31, 2019. 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, 2020 and current estimates of fair value may differ significantly from the amounts presented herein. |
Impairment | Impairment 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. No impairments were recorded during the three and nine months ended September 30, 2020 and 2019. |
Concentration of Credit Risks | Concentration of Credit Risks As of September 30, 2020, the Company's properties were leased to a single tenant, the USPS. For the nine months ended September 30, 2020, no state had a concentration of rental income over 10% as a percentage of total rental income. For the nine months ended September 30, 2019, our total rental income of $5.7 million was concentrated in the following states: Texas (11.5%), Massachusetts (11.1%) and Pennsylvania (10.7%). The ability of the USPS to honor the terms of their leases is dependent upon regulatory, economic, environmental or competitive conditions in any of these areas and could have an effect on our overall business results. The Company has deposited cash and maintains its bank deposits with large financial institutions in amounts that exceed federally insured limits. The Company has not experienced any losses in such accounts. |
Equity Based Compensation | 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. 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 will record forfeitures as they 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 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. Stockholder's Equity for further details. |
Earnings per Share | Earnings per Share The Company calculates net loss per share based upon the weighted average shares outstanding less issued and outstanding non-vested shares of Class A common stock for the period beginning May 17, 2019. Diluted earnings per share is calculated after giving effect to all potential dilutive shares outstanding during the period. There were 2,855,102 potentially dilutive shares outstanding related to the issuance of OP Units and LTIP Units held by non-controlling interests as of September 30, 2020. |
Future Application of Accounting Standards | Future Application of Accounting Standards In February 2016, the FASB issued ASU 2016-02, Leases; in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases — Targeted Improvements; and in December 2018, the FASB issued ASU 2018-20, Narrow-Scope Improvements for Lessors. This group of ASUs is collectively referred to as Topic 842. Topic 842 supersedes the existing standards for lease accounting (Topic 840, Leases). Topic 842 will be effective for the Company on January 1, 2021 as a result of its classification as an emerging growth company. The Company expects to elect the practical expedients provided by Topic 842, including: the package of practical expedients that allows an entity not to reassess upon adoption (i) whether an expired or existing contract contains a lease, (ii) whether a lease classification related to expired or existing lease arrangements, and (iii) whether costs incurred on expired or existing leases qualify as initial direct costs, and as a lessor, the practical expedient not to separate certain non-lease components, such as common area maintenance, from the lease component if the timing and pattern of transfer are the same for the non-lease component and associated lease component, and the lease component would be classified as an operating lease if accounted for separately. Topic 842 requires lessees to record most leases on their balance sheet through a right-of-use ("ROU") model, in which a lessee records a ROU asset and a lease liability on their balance sheet. Leases that are less than 12 months do not need to be accounted for under the ROU model. Lessees will account for leases as financing or operating leases, with the classification affecting the timing and pattern of expense recognition in the income statement. Lease expense will be recognized based on the effective interest method for leases accounted for as finance leases and on a straight-line basis over the term of the lease for leases accounted for as operating leases. As of September 30, 2020, the Company was the lessee under one office lease and two ground leases that would require accounting under the ROU model. The accounting by a lessor under Topic 842 is largely unchanged from that of Topic 840. Under Topic 842, lessors will continue to account for leases as a sales-type, direct-financing, or operating. A lease will be treated as a sale if it is considered to transfer control of the underlying asset to the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control. Otherwise, the lease is treated as an operating lease. Topic 842 requires accounting for a transaction as a financing in a sale leaseback in certain circumstances, including when the seller-lessee is provided an option to purchase the property from the landlord at the tenant's option. The Company expects that this provision could change the accounting for these types of leases in the future. Topic 842 also includes the concept of separating lease and non-lease components. Under Topic 842, non-lease components, such as common area maintenance, would be accounted for under Topic 606 and separated from the lease payments. However, the Company will elect the lessor practical expedient allowing the Company to not separate these components when certain conditions are met. Upon adoption of Topic 842, the Company expects to combine tenant reimbursements with rental income on its consolidated statements of operations. In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses Codification Improvements to Topic 326, Financial Instruments - Credit Losses |
The Company's IPO and Formati_2
The Company's IPO and Formation Transactions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
The Company's Initial Public Offering and Formation Transactions [Abstract] | |
Schedule of predecessor statement of operations | Predecessor Postal Realty January 1, May 17, 2019 2019 through through May 16, September 30, 2019 2019 Revenues: Rental income $ 2,249,355 $ 3,486,541 Tenant reimbursements 348,075 504,429 Fee and other income 427,959 414,138 Total revenues 3,025,389 4,405,108 Operating Expenses: Real estate taxes 358,693 521,424 Property operating expenses 357,779 464,060 General and administrative 501,204 2,468,897 Depreciation and amortization 725,756 1,588,797 Total operating expenses 1,943,432 5,043,178 Income (loss) from operations 1,081,957 (638,070 ) Interest expense, net: Contractual interest expense (570,819 ) (64,604 ) Amortization of deferred financing costs (4,773 ) (4,785 ) Loss on early extinguishment of Predecessor debt - (185,586 ) Interest income 1,134 2,260 Total interest expense, net (574,458 ) (252,715 ) Income (loss) before income tax expense 507,499 (890,785 ) Income tax expense (39,749 ) - Net income (loss) 467,750 (890,785 ) Less: Net income attributable to noncontrolling interest in properties (4,336 ) - Net income attributable to Predecessor $ 463,414 - Net loss attributable to Operating Partnership unitholders' noncontrolling interests 191,020 Net loss attributable to common stockholders $ (699,765 ) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of cash and escrows and reserves | As of September 30, December 31, Cash $ 7,786,677 $ 12,475,537 Escrows and reserves: Maintenance reserve 665,494 663,339 ESPP reserve 29,416 44,727 Cash and escrows and reserves $ 8,481,587 $ 13,183,603 |
Real Estate Acquisitions (Table
Real Estate Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Real Estate [Abstract] | |
Schedule total purchase price including transaction costs | Three Months Ended Number Land Building Tenant In-place Above- Below- Other (1) Total (2) March 31, 2020 (3)(4)(5) 83 $ 4,825,507 $ 24,572,597 $ 293,726 $ 2,477,174 $ 7,148 $ (1,616,080 ) $ (34,098 ) $ 30,525,974 June 30, 2020 (6) 19 2,555,428 7,344,021 54,894 692,705 - (38,934 ) - 10,608,114 September 30, 2020 (7) 122 6,074,837 19,426,255 316,541 2,300,575 37,290 (1,067,886 ) (33,386 ) 27,054,226 224 $ 13,455,772 $ 51,342,873 $ 665,161 $ 5,470,454 $ 44,438 $ (2,722,900 ) $ (67,484 ) $ 68,188,314 Explanatory Notes: (1) Includes an intangible liability related to unfavorable operating leases on three properties that is included in "Accounts Payable, accrued expenses and other" on the Company's Consolidated Balance Sheets. (2) Includes acquisition costs of $0.3 million for the three months ended March 31, 2020, $0.2 million for the three months ended June 30, 2020 and $0.8 million for the three months ended September 30, 2020. (3) Includes the acquisition of a 21-building portfolio leased to the USPS. The contract purchase price for the portfolio was $13.8 million, exclusive of closing costs, and giving effect to 483,333 OP Units issued to the sellers at a value of $17.00 per unit. The closing price of the Company's common stock on January 10, 2020 was $16.39; therefore, total consideration at closing, including closing costs, was approximately $13.6 million of which $7.9 million represented the non-cash consideration (the value of the OP Units) issued to the sellers. (4) Includes the acquisition of a 42-building portfolio leased to the USPS. The aggregate purchase price of such portfolio was approximately $8.8 million, including closing costs, which was funded with borrowings under our Credit Facility. (5) Includes the acquisition of 20 postal properties in individual or smaller portfolio transactions for approximately $8.1 million, including closing costs. (6) Includes the acquisition of a 13-building portfolio leased to the USPS in various states for approximately $7.2 million, including closing costs. In addition, the Company purchased six postal properties in individual or smaller portfolio transactions for approximately $3.4 million, including closing costs. (7) Includes the acquisition of 122 postal properties in various states in individual or portfolio transactions for approximately $27.1 million, including closing costs, which was funded with borrowings under our Credit Facility. In addition, the Company closed on one postal property which is a direct financing lease and is included in "Investment in financing lease, net" on the Company's Consolidated Balance Sheets. |
Intangible Assets and Liabili_2
Intangible Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Intangible Assets and Liabilities [Abstract] | |
Schedule of intangible assets and liabilities | As of Gross Asset Accumulated Net September 30, 2020: In-place lease intangibles $ 19,261,027 $ (9,911,763 ) $ 9,349,264 Above-market leases 85,058 (30,391 ) 54,667 Below-market leases (11,395,201 ) 3,015,327 (8,379,874 ) December 31, 2019: In-place lease intangibles $ 13,788,024 $ (6,472,157 ) $ 7,315,867 Above-market leases 40,620 (18,496 ) 22,124 Below-market leases (8,672,301 ) 2,071,182 (6,601,119 ) |
Schedule of future amortization | Year Ending December 31, In-place lease Above-market Below-market 2020 – Remaining $ 1,097,772 $ 4,549 $ (326,537 ) 2021 3,687,350 15,544 (1,291,010 ) 2022 2,099,279 13,260 (1,147,910 ) 2023 1,273,981 10,626 (1,021,341 ) 2024 649,954 7,889 (857,151 ) Thereafter 540,928 2,799 (3,735,925 ) Total $ 9,349,264 $ 54,667 $ (8,379,874 ) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of principal balances of mortgage loans payable | Outstanding Outstanding Interest Rate Maturity Date Revolving Credit Facility (1) $ 49,000,000 $ 54,000,000 LIBOR+170bps (2) September 2023 Vision Bank (3) 1,474,909 1,522,672 4.00 % September 2036 First Oklahoma Bank (4) 367,618 378,005 4.50 % December 2037 Vision Bank – 2018 (5) 876,890 900,385 5.00 % January 2038 Seller Financing (6) 445,000 445,000 6.00 % January 2025 First Oklahoma Bank – April 2020 (7) 4,522,311 - 4.25 % April 2040 First Oklahoma Bank – June 2020 (8) 9,152,000 - 4.25 % June 2040 Total Principal 65,838,728 57,246,062 Unamortized deferred financing costs (239,362 ) (35,058 ) Total Debt $ 65,599,366 $ 57,211,004 Explanatory Notes: (1) On September 27, 2019, the Company entered into a credit agreement (as amended, the "Credit Agreement") with People's United Bank, National Association, individually and as administrative agent, BMO Capital Markets Corp., as syndication agent, and certain other lenders. The Credit Agreement provides for revolving commitments in an aggregate principal amount of $100.0 million with an accordion feature ("the Accordion Feature") that permits the Company to borrow up to an additional $100.0 million for an aggregate total of $200.0 million, subject to customary terms and conditions, and a maturity date of September 27, 2023. On January 30, 2020, the Company amended the Credit Agreement in order to exercise a portion of the Accordion Feature to increase the maximum amount available under the Credit Facility to $150.0 million, subject to the borrowing base properties identified therein remaining unencumbered and subject to an enforceable lease. On June 25, 2020, the Company further amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment). The interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.7% to 1.4% per annum or LIBOR plus a margin ranging from 1.7% to 2.4% per annum, each based on a consolidated leverage ratio. In addition, the Company will pay, for the period through and including the calendar quarter ended March 31, 2020, an unused facility fee on the revolving commitments under the Credit Facility of 0.75% per annum for the first $100 million and 0.25% per annum for the portion of revolving commitments exceeding $100.0 million, and for the period thereafter, an unused facility fee of 0.25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Credit Facility. During the three and nine months ended September 30, 2020, the Company incurred $0.1 million and $0.3 million, respectively, of unused fees related to the Credit Facility. The Company's ability to borrow under the Credit Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of September 30, 2020, the Company was in compliance with all of the Credit Facility's debt covenants. (2) As of September 30, 2020, the one-month LIBOR rate was 0.15%. (3) Five properties are collateralized under this loan as of September 30, 2020 with Mr. Spodek as the guarantor. On September 8, 2021 and every five years thereafter, the interest rate will reset at a variable annual rate of Wall Street Journal Prime Rate ("Prime") + 0.5%. (4) The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. Interest rate resets on December 31, 2022 to Prime + 0.25%. (5) The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. Interest rate resets on January 31, 2023 to Prime + 0.5%. (6) In connection with the acquisition of a property, we obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $105,661 with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025. (7) In connection with the purchase of a 13-building portfolio, the Company obtained $4.5 million of mortgage financing, at a fixed interest rate of 4.25% with interest only for the first 18 months, which resets in November 2026 to the greater of Prime or 4.25%. (8) The loan is collateralized by first mortgage liens on 22 properties. Interest rates resets in January 2027 to the greater of Prime or 4.25%. |
Schedule of Principal payments of mortgage loans payable | Year Ending December 31, Amount 2020 – Remaining $ 28,073 2021 220,497 2022 701,228 2023 49,735,838 2024 767,608 Thereafter 14,385,484 Total $ 65,838,728 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases, Operating [Abstract] | |
Schedule of future minimum rental income | Year Ending December 31, Amount 2020 – Remaining (2) $ 4,394,175 2021 (3) 16,938,459 2022 13,371,159 2023 10,679,959 2024 7,734,855 Thereafter 10,165,377 Total $ 63,283,984 Explanatory Notes: (1) The above minimum lease payments to be received do not include reimbursements from the USPS for real estate taxes. (2) As of September 30, 2020, the leases at 58 of our properties were expired, and the USPS was occupying such properties as a holdover tenant. In addition, the lease at one of our properties is a month to month lease. Holdover rent is typically paid as the greater of estimated market rent or the rent amount due under the expired lease. (3) The Company has received notice on one property which the USPS intends to vacate in August 2021. |
Schedule of direct financing lease | As of September 30, Total minimum lease payment receivable $ 1,021,466 Less: unearned income (505,302 ) Investment in financing lease, net $ 516,164 |
Schedule of direct financing future lease payments | Year Ending December 31, Amount 2020 – Remaining $ 11,375 2021 45,500 2022 45,500 2023 45,500 2024 45,500 Thereafter 828,091 Total $ 1,021,466 |
Schedule of future ground lease lease | Year Ending December 31, Amount 2020 – Remaining $ 5,904 2021 23,600 2022 23,600 2023 23,600 2024 24,160 Thereafter 1,175,290 Total $ 1,276,154 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of future minimum rental payments | Year Ending December 31, Amount 2020 – Remaining $ 46,350 2021 188,869 2022 194,535 2023 200,371 2024 76,244 Total $ 706,369 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of weighted average shares basic and dilutive earnings per share | For the Three Months Ended For the Nine Months Ended 2020 2019 2020 2019 Numerator for earnings per share – basic and diluted: Net loss attributable to common stockholders $ (15,184 ) $ (307,969 ) $ (843,489 ) $ (699,765 ) Less: Income attributable to participating securities (105,829 ) — (266,680 ) (16,715 ) Numerator for earnings per share — basic and diluted $ (121,013 ) $ (307,969 ) $ (1,110,169 ) $ (716,480 ) Denominator for earnings per share – basic and diluted 8,425,708 5,164,264 6,276,145 5,164,264 Basic and diluted earnings per share $ (0.01 ) $ (0.06 ) $ (0.18 ) $ (0.14 ) Explanatory Note: (1) The combined statements of operations prior to May 17, 2019 represents the activity of the Predecessor and EPS was not applicable. |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of dividends declared | Declaration Date Record Date Date Paid Amount Per Share January 30, 2020 February 14, 2020 February 28, 2020 $0.17 April 30, 2020 May 11, 2020 May 29, 2020 $0.20 July 30, 2020 August 14, 2020 August 31, 2020 $0.205 |
Schedule of unvested equity | Restricted (1)(2) LTIP (3) Restricted (4) Total Weighted Outstanding, as of January 1, 2020 148,847 120,003 — 268,850 $ 16.96 Granted 146,348 94,303 62,096 302,747 $ 14.20 Vesting of restricted shares (5) (61,181 ) — — (61,181 ) $ 17.00 Forfeited (588 ) — — (588 ) $ 17.00 Outstanding, as of September 30, 2020 233,426 214,306 62,096 509,828 $ 15.35 Explanatory Notes: (1) Represents restricted shares awards included in common stock. (2) The time-based restricted share awards granted to our officers and employees typically vest in three annual installments or cliff vest at the end of eight years. The time-based restricted share awards granted to our directors' vest over one to three years. (3) LTIP units to our officers and employees typically vest over three to eight years. During the nine months ended September 30, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award and 13,708 LTIPs to the Company's CEO. In May 2020, pursuant to the Plan, the Company issued 27,365 LTIP Units to the Company's CEO in lieu of his salary payable for the period from the one-year anniversary of the IPO to December 31, 2020. LTIP Units issued to the Company's CEO in lieu of cash compensation cliff vest on the eighth anniversary of the date of grant. (4) Includes 38,672 RSUs granted to certain officers of the Company during the nine months ended September 30, 2020 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 hurdles relating to the Company's absolute total stockholder return and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2022. 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 13,253 time-based RSUs issued for 2019 incentive bonuses to certain employees that vested fully on February 14, 2020, the date of grant and 10,171 time-based RSUs granted to certain employees for their election to defer 2020 salary that vest on December 31, 2020. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria. (5) Includes 49,839 of restricted shares that vested and 11,342 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements. |
Organization and Description _2
Organization and Description of Business (Details Narrative) | 9 Months Ended | ||
Sep. 30, 2020propertiesStates$ / sharesshares | Dec. 31, 2019$ / sharesshares | May 15, 2019$ / sharesshares | |
Business Description and Basis of Presentation [Line Item] | |||
Common stock, shares authorized | 600,000,000 | ||
Common stock, par value | $ / shares | $ 0.01 | ||
Percentage of interest in operating partnership | 76.90% | ||
IPO [Member] | |||
Business Description and Basis of Presentation [Line Item] | |||
Common stock, shares authorized | 500,000,000 | ||
Common stock, par value | $ / shares | $ 0.01 | ||
Preferred stock, shares authorized | 100,000,000 | ||
Class A [Member] | |||
Business Description and Basis of Presentation [Line Item] | |||
Common stock, shares authorized | 500,000,000 | 500,000,000 | |
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | |
Common stock, shares issued | 9,449,352 | 5,285,904 | |
Class B [Member] | |||
Business Description and Basis of Presentation [Line Item] | |||
Common stock, shares authorized | 27,206 | 27,206 | |
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | |
Common stock, shares issued | 27,206 | 27,206 | |
Postal Realty Management [Member] | |||
Business Description and Basis of Presentation [Line Item] | |||
Number of properties managed | properties | 400 | ||
USPS [Member] | |||
Business Description and Basis of Presentation [Line Item] | |||
Number of properties | properties | 691 | ||
Number of States | States | 47 | ||
Postal Realty Trust, Inc. [Member] | |||
Business Description and Basis of Presentation [Line Item] | |||
Organization date | Nov. 19, 2018 | ||
NPM [Member] | |||
Business Description and Basis of Presentation [Line Item] | |||
Formation date | Nov. 17, 2004 | ||
LLCs, UPH and the limited partnership [Member] | Predecessor [Member] | |||
Business Description and Basis of Presentation [Line Item] | |||
Description of post office properties | For the periods prior to May 17, 2019, the Predecessor, through the LLCs, UPH and the limited partnership, owned 190 post office properties in 33 states. |
The Company's IPO and Formati_3
The Company's IPO and Formation Transactions (Details) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | ||||||
Jun. 30, 2019 | May 16, 2019 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2019 | May 16, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Revenues | ||||||||||||
Rental income | $ 5,270,143 | $ 2,387,082 | $ 14,211,317 | $ 5,735,896 | ||||||||
Tenant reimbursements | 743,622 | 342,419 | 1,997,716 | 852,504 | ||||||||
Fee and other income | 282,703 | 278,846 | 890,008 | 842,097 | ||||||||
Total revenues | 6,296,468 | 3,008,347 | 17,099,041 | 7,430,497 | ||||||||
Operating Expenses: | ||||||||||||
Real estate taxes | 797,996 | 353,663 | 2,136,805 | 880,117 | ||||||||
Property operating expenses | 460,033 | 332,892 | 1,261,515 | 821,839 | ||||||||
General and administrative | 2,027,284 | 1,601,727 | 6,245,732 | 2,970,101 | ||||||||
Depreciation and amortization | 2,394,332 | 1,066,338 | 6,590,982 | 2,314,553 | ||||||||
Total operating expenses | 5,679,645 | 3,354,620 | 16,235,034 | 6,986,610 | ||||||||
Income (loss) from operations | 616,823 | (346,273) | 864,007 | 443,887 | ||||||||
Interest expense, net: | ||||||||||||
Contractual interest expense | (484,272) | (48,916) | (1,757,413) | (635,423) | ||||||||
Amortization of deferred financing costs | (123,650) | (4,523) | (343,511) | (9,558) | ||||||||
Loss on early extinguishment of Predecessor debt | (185,586) | |||||||||||
Interest income | 668 | 1,136 | 2,155 | 3,394 | ||||||||
Total interest expense, net | (607,254) | (52,303) | (2,098,769) | (827,173) | ||||||||
Income (loss) before income tax expense | 9,569 | (398,576) | (1,234,762) | (383,286) | ||||||||
Net income (loss) | (20,185) | $ (229,627) | $ (1,029,826) | (392,317) | (1,279,638) | (423,035) | ||||||
Less: | ||||||||||||
Net loss attributable to common stockholders | [1] | $ (15,184) | (307,969) | $ (843,489) | $ (699,765) | |||||||
Postal Realty Trust, Inc. | ||||||||||||
Revenues | ||||||||||||
Rental income | $ 3,486,541 | |||||||||||
Tenant reimbursements | 504,429 | |||||||||||
Fee and other income | 414,138 | |||||||||||
Total revenues | 4,405,108 | |||||||||||
Operating Expenses: | ||||||||||||
Real estate taxes | 521,424 | |||||||||||
Property operating expenses | 464,060 | |||||||||||
General and administrative | 2,468,897 | |||||||||||
Depreciation and amortization | 1,588,797 | |||||||||||
Total operating expenses | 5,043,178 | |||||||||||
Income (loss) from operations | (638,070) | |||||||||||
Interest expense, net: | ||||||||||||
Contractual interest expense | (64,604) | |||||||||||
Amortization of deferred financing costs | (4,785) | |||||||||||
Loss on early extinguishment of Predecessor debt | (185,586) | |||||||||||
Interest income | 2,260 | |||||||||||
Total interest expense, net | (252,715) | |||||||||||
Income (loss) before income tax expense | (890,785) | |||||||||||
Income tax expense | ||||||||||||
Net income (loss) | (890,785) | |||||||||||
Less: | ||||||||||||
Net income attributable to noncontrolling interest in properties | ||||||||||||
Net income attributable to Predecessor | ||||||||||||
Net loss attributable to Operating Partnership unitholders' noncontrolling interests | 191,020 | |||||||||||
Net loss attributable to common stockholders | $ (699,765) | |||||||||||
Predecessor [Member] | ||||||||||||
Revenues | ||||||||||||
Rental income | $ 2,249,355 | |||||||||||
Tenant reimbursements | 348,075 | |||||||||||
Fee and other income | 427,959 | |||||||||||
Total revenues | 3,025,389 | |||||||||||
Operating Expenses: | ||||||||||||
Real estate taxes | 358,693 | |||||||||||
Property operating expenses | 357,779 | |||||||||||
General and administrative | 501,204 | |||||||||||
Depreciation and amortization | 725,756 | |||||||||||
Total operating expenses | 1,943,432 | |||||||||||
Income (loss) from operations | 1,081,957 | |||||||||||
Interest expense, net: | ||||||||||||
Contractual interest expense | (570,819) | |||||||||||
Amortization of deferred financing costs | (4,773) | |||||||||||
Loss on early extinguishment of Predecessor debt | ||||||||||||
Interest income | 1,134 | |||||||||||
Total interest expense, net | (574,458) | |||||||||||
Income (loss) before income tax expense | 507,499 | |||||||||||
Income tax expense | (39,749) | |||||||||||
Net income (loss) | $ (498,468) | $ 210,674 | $ (392,317) | $ 257,076 | 467,750 | |||||||
Less: | ||||||||||||
Net income attributable to noncontrolling interest in properties | (4,336) | |||||||||||
Net income attributable to Predecessor | $ 463,414 | |||||||||||
[1] | The combined statements of operations prior to May 17, 2019 represents the activity of the Predecessor and EPS was not applicable. |
The Company's IPO and Formati_4
The Company's IPO and Formation Transactions (Details Narrative) - IPO [Member] - USD ($) | May 15, 2019 | Sep. 30, 2020 |
The Company's Initial Public Offering and Formation Transactions (Textual) | ||
Sold IPO | 4,500,000 | |
Public offering price | $ 17 | |
Gross proceeds from initial public offering | $ 76,500,000 | |
Net proceeds of initial public offering | 71,100,000 | $ 71,100,000 |
Underwriting discounts | 5,400,000 | |
Repayment of outstanding indebtedness | $ 31,700,000 | |
Formation transactions, description | The initial properties and other interests were contributed in exchange for 1,333,112 OP Units, 637,058 shares of Class A common stock, 27,206 shares of Voting Equivalency stock and $1.9 million of cash. In addition, the Operating Partnership purchased 81 post office properties (the "Acquisition Properties") in exchange for $26.9 million in cash, including approximately $1.0 million paid to Mr. Spodek, the Company's chief executive officer and a director for his non-controlling ownership in nine of the Acquisition Properties. | |
Other expenses | $ 6,400,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Cash | $ 7,786,677 | $ 12,475,537 | ||
Escrows and reserves: | ||||
Maintenance reserve | 665,494 | 663,339 | ||
ESPP reserve | 29,416 | 44,727 | ||
Cash and escrows and reserves | $ 8,481,587 | $ 13,183,603 | $ 11,579,757 | $ 861,875 |
Predecessor [Member] | ||||
Escrows and reserves: | ||||
Cash and escrows and reserves | $ 861,875 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies (Textual) | |||
Potentially dilutive shares outstanding | 2,855,102 | ||
Secured borrowings | $ 16,800,000 | $ 3,200,000 | |
Principal balance | $ 16,800,000 | $ 3,200,000 | |
Concentration of credit risks, description | The Company’s properties were leased to a single tenant, the USPS. For the nine months ended September 30, 2020, no state had a concentration of rental income over 10% as a percentage of total rental income. | For the nine months ended September 30, 2019, our total rental income of $5.7 million was concentrated in the following states: Texas (11.5%), Massachusetts (11.1%) and Pennsylvania (10.7%). | |
Investment in a direct financing lease | $ 1,021,466 | ||
Investment effective interest rate | 7.89% |
Real Estate Acquisitions (Detai
Real Estate Acquisitions (Details) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020USD ($)properties | [2] | Jun. 30, 2020USD ($)properties | Mar. 31, 2020USD ($)properties | [4],[5],[6] | Sep. 30, 2020USD ($)properties | |||
Total purchase price | $ 27,054,226 | [1] | $ 10,608,114 | [1],[3] | $ 30,525,974 | [1] | $ 68,188,314 | |
Number of Properties | properties | 122 | 19 | [3] | 83 | 224 | |||
Land [Member] | ||||||||
Total purchase price | $ 6,074,837 | $ 2,555,428 | [3] | $ 4,825,507 | $ 13,455,772 | |||
Building and Improvements [Member] | ||||||||
Total purchase price | 19,426,255 | 7,344,021 | [3] | 24,572,597 | 51,342,873 | |||
Tenant Improvements [Member] | ||||||||
Total purchase price | 316,541 | 54,894 | [3] | 293,726 | 665,161 | |||
In-place lease intangibles [Member] | ||||||||
Total purchase price | 2,300,575 | 692,705 | [3] | 2,477,174 | 5,470,454 | |||
Above-market leases [Member] | ||||||||
Total purchase price | 37,290 | [3] | 7,148 | 44,438 | ||||
Below-market leases [Member] | ||||||||
Total purchase price | (1,067,886) | (38,934) | [3] | (1,616,080) | (2,722,900) | |||
Other [Member] | ||||||||
Total purchase price | [7] | $ (33,386) | $ (34,098) | $ (67,484) | ||||
[1] | Includes acquisition costs of $0.3 million for the three months ended March 31, 2020, $0.2 million for the three months ended June 30, 2020 and $0.8 million for the three months ended September 30, 2020. | |||||||
[2] | Includes the acquisition of 122 postal properties in various states in individual or portfolio transactions for approximately $27.1 million, including closing costs, which was funded with borrowings under our Credit Facility. In addition, the Company closed on one postal property which is a direct financing lease and is included in "Investment in financing lease, net" on the Company's Consolidated Balance Sheets. | |||||||
[3] | Includes the acquisition of a 13-building portfolio leased to the USPS in various states for approximately $7.2 million, including closing costs. In addition, the Company purchased six postal properties in individual or smaller portfolio transactions for approximately $3.4 million, including closing costs. | |||||||
[4] | Includes the acquisition of 20 postal properties in individual or smaller portfolio transactions for approximately $8.1 million, including closing costs. | |||||||
[5] | Includes the acquisition of a 21-building portfolio leased to the USPS. The contract purchase price for the portfolio was $13.8 million, exclusive of closing costs, and giving effect to 483,333 OP Units issued to the sellers at a value of $17.00 per unit. The closing price of the Company's common stock on January 10, 2020 was $16.39; therefore, total consideration at closing, including closing costs, was approximately $13.6 million of which $7.9 million represented the non-cash consideration (the value of the OP Units) issued to the sellers. | |||||||
[6] | Includes the acquisition of a 42-building portfolio leased to the USPS. The aggregate purchase price of such portfolio was approximately $8.8 million, including closing costs, which was funded with borrowings under our Credit Facility. | |||||||
[7] | Includes an intangible liability related to unfavorable operating leases on three properties that is included in "Accounts Payable, accrued expenses and other" on the Company's Consolidated Balance Sheets. |
Real Estate Acquisitions (Det_2
Real Estate Acquisitions (Details Narrative) | 3 Months Ended | ||
Sep. 30, 2020USD ($)properties | Jun. 30, 2020USD ($)properties | Mar. 31, 2020USD ($)properties | |
Real Estate Acquisitions (Textual) | |||
Acquisition costs | $ 800,000 | $ 200,000 | $ 300,000 |
Acquisition of portfolio acquired, description | The contract purchase price for the portfolio was $13.8 million, exclusive of closing costs, and giving effect to 483,333 OP Units issued to the sellers at a value of $17.00 per unit. The closing price of the Company's common stock on January 10, 2020 was $16.39; therefore, total consideration at closing, including closing costs, was approximately $13.6 million of which $7.9 million represented the non-cash consideration (the value of the OP Units) issued to the sellers. | ||
Number of postal properties | properties | 6 | ||
Number of acquired postal property | properties | 122 | 13 | 42 |
Acquired, Postal Properties, including closing costs | $ 27,000,000 | $ 7,200,000 | $ 8,800,000 |
Acquired, Postal Properties in individual or smaller portfolio transactions, including closing costs | $ 8,100,000 | ||
Additional acquired, Postal Properties, including closing costs | $ 3,400,000 |
Intangible Assets and Liabili_3
Intangible Assets and Liabilities (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
In-place lease intangibles [Member] | ||
Gross Asset (Liability) | $ 19,261,027 | $ 13,788,024 |
Accumulated (Amortization)/Accretion | (9,911,763) | (6,472,157) |
Net Carrying Amount | 9,349,264 | 7,315,867 |
Above-market leases [Member] | ||
Gross Asset (Liability) | 85,058 | 40,620 |
Accumulated (Amortization)/Accretion | (30,391) | (18,496) |
Net Carrying Amount | 54,667 | 22,124 |
Below-market leases [Member] | ||
Gross Asset (Liability) | (11,395,201) | (8,672,301) |
Accumulated (Amortization)/Accretion | 3,015,327 | 2,071,182 |
Net Carrying Amount | $ (8,379,874) | $ (6,601,119) |
Intangible Assets and Liabili_4
Intangible Assets and Liabilities (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Total | $ 9,349,264 | $ 7,315,867 |
In-place lease intangibles [Member] | ||
2020 - Remaining | 1,097,772 | |
2021 | 3,687,350 | |
2022 | 2,099,279 | |
2023 | 1,273,981 | |
2024 | 649,954 | |
Thereafter | 540,928 | |
Total | 9,349,264 | |
Above-market leases [Member] | ||
2020 - Remaining | 4,549 | |
2021 | 15,544 | |
2022 | 13,260 | |
2023 | 10,626 | |
2024 | 7,889 | |
Thereafter | 2,799 | |
Total | 54,667 | |
Below-market leases [Member] | ||
2020 - Remaining | (326,537) | |
2021 | (1,291,010) | |
2022 | (1,147,910) | |
2023 | (1,021,341) | |
2024 | (857,151) | |
Thereafter | (3,735,925) | |
Total | $ (8,379,874) |
Intangible Assets and Liabili_5
Intangible Assets and Liabilities (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Intangible Assets and Liabilities (Textual) | ||||
Amortization of in-place intangibles | $ 1,200,000 | $ 600,000 | $ 3,439,606 | $ 1,239,760 |
Amortization of acquired above market leases | 5,213 | 2,865 | 11,895 | 7,851 |
Amortization of acquired below market leases | $ 300,000 | $ 100,000 | $ 900,000 | $ 300,000 |
Debt (Details)
Debt (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2019 | ||
Mortgage level debt | $ 16,599,366 | $ 3,211,004 | |
Revolving credit facility | 49,000,000 | 54,000,000 | |
Total Principal | 65,838,728 | 57,246,062 | |
Unamortized deferred financing costs | (239,362) | (35,058) | |
Total Debt | 65,599,366 | 57,211,004 | |
Revolving Credit Facility [Member] | |||
Revolving credit facility | $ 49,000,000 | 54,000,000 | |
Interest Rate, description | [1] | LIBOR+170bps | |
Maturity Date | [2] | Sep. 30, 2023 | |
Vision Bank [Member] | |||
Mortgage level debt | [3] | $ 1,474,909 | 1,522,672 |
Interest Rate | [3] | 4.00% | |
Maturity Date | [3] | Sep. 30, 2036 | |
First Oklahoma Bank [Member] | |||
Mortgage level debt | [4] | $ 367,618 | 378,005 |
Interest Rate | [4] | 4.50% | |
Maturity Date | [4] | Dec. 31, 2037 | |
Vision Bank - 2018 [Member] | |||
Mortgage level debt | [5] | $ 876,890 | 900,385 |
Interest Rate | [5] | 5.00% | |
Maturity Date | [5] | Jan. 31, 2038 | |
Seller Financing [Member] | |||
Mortgage level debt | [6] | $ 445,000 | 445,000 |
Interest Rate | [6] | 6.00% | |
Maturity Date | [6] | Jan. 31, 2025 | |
First Oklahoma Bank - April 2020 [Member] | |||
Mortgage level debt | [7] | $ 4,522,311 | |
Interest Rate | [7] | 4.25% | |
Interest Rate, description | which resets in November 2026 to the greater of Prime or 4.25%. | ||
Maturity Date | [7] | Apr. 30, 2040 | |
First Oklahoma Bank- June 2020 [Member] | |||
Mortgage level debt | [8] | $ 9,152,000 | |
Interest Rate | [8] | 4.25% | |
Maturity Date | [8] | Jun. 30, 2040 | |
[1] | As of September 30, 2020, the one-month LIBOR rate was 0.15%. | ||
[2] | On September 27, 2019, the Company entered into a credit agreement (as amended, the "Credit Agreement") with People's United Bank, National Association, individually and as administrative agent, BMO Capital Markets Corp., as syndication agent, and certain other lenders. The Credit Agreement provides for revolving commitments in an aggregate principal amount of $100.0 million with an accordion feature ("the Accordion Feature") that permits the Company to borrow up to an additional $100.0 million for an aggregate total of $200.0 million, subject to customary terms and conditions, and a maturity date of September 27, 2023. On January 30, 2020, the Company amended the Credit Agreement in order to exercise a portion of the Accordion Feature to increase the maximum amount available under the Credit Facility to $150.0 million, subject to the borrowing base properties identified therein remaining unencumbered and subject to an enforceable lease. In May 2020, the Company determined that it had overdrawn its Credit Facility by approximately $5.1 million. The Company satisfied such amount with a portion of the proceeds from the First Oklahoma Bank-June 2020 secured mortgage financing. On June 25, 2020, the Company further amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment). The interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.7% to 1.4% per annum or LIBOR plus a margin ranging from 1.7% to 2.4% per annum, each based on a consolidated leverage ratio. In addition, the Company will pay, for the period through and including the calendar quarter ended March 31, 2020, an unused facility fee on the revolving commitments under the Credit Facility of 0.75% per annum for the first $100 million and 0.25% per annum for the portion of revolving commitments exceeding $100.0 million, and for the period thereafter, an unused facility fee of 0.25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Credit Facility. During the three and six months ended June 30, 2020, the Company incurred $0.1 million and $0.2 million, respectively, of unused fees related to the Credit Facility. The Company's ability to borrow under the Credit Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of June 30, 2020, the Company was in compliance with all of the Credit Facility's debt covenants. | ||
[3] | Five properties are collateralized under this loan as of September 30, 2020 with Mr. Spodek as the guarantor. On September 8, 2021 and every five years thereafter, the interest rate will reset at a variable annual rate of Wall Street Journal Prime Rate (''Prime'') + 0.5%. | ||
[4] | The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. Interest rate resets on December 31, 2022 to Prime + 0.25%. | ||
[5] | The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. Interest rate resets on January 31, 2023 to Prime + 0.5%. | ||
[6] | In connection with the acquisition of a property, we obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $105,661 with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025. | ||
[7] | In connection with the purchase of a 13-building portfolio, the Company obtained $4.5 million of mortgage financing, at a fixed interest rate of 4.25% with interest only for the first 18 months, which resets in November 2026 to the greater of Prime or 4.25%. | ||
[8] | The loan is collateralized by first mortgage liens on 22 properties. Interest rates resets in January 2027 to the greater of Prime or 4.25%. |
Debt (Details 1)
Debt (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
2020 - Remaining | $ 28,073 | |
2021 | 220,497 | |
2022 | 701,228 | |
2023 | 49,735,838 | |
2024 | 767,608 | |
Thereafter | 14,385,484 | |
Total | $ 65,838,728 | $ 57,246,062 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Sep. 27, 2019 | Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | Jan. 30, 2020 |
Mortgage Loans Payable (Textual) | |||||
Weighted average maturity date for secured borrowing | 18 years 9 months 18 days | 15 years 8 months 12 days | |||
Revolving Credit Facility [Member] | |||||
Mortgage Loans Payable (Textual) | |||||
Revolving credit facility | $ 100,000,000 | ||||
Maximum borrowing facility | $ 200,000,000 | ||||
Credit facility, maturity | Sep. 27, 2023 | ||||
Interest rate, description | The interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.7% to 1.4% per annum or LIBOR plus a margin ranging from 1.7% to 2.4% per annum, each based on a consolidated leverage ratio. In addition, the Company will pay, for the period through and including the calendar quarter ended March 31, 2020, an unused facility fee on the revolving commitments under the Credit Facility of 0.75% per annum for the first $100 million and 0.25% per annum for the portion of revolving commitments exceeding $100.0 million, and for the period thereafter, an unused facility fee of 0.25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Credit Facility. | ||||
Percentage of interest rate | 0.15% | ||||
Unused facility fee | $ 100,000 | $ 300,000 | |||
Maximum increase in borrowing capacity | $ 100,000,000 | ||||
Maximum amount available to borrow under the credit facility, subject to borrowing base properties | $ 150,000,000 | ||||
First Oklahoma Bank [Member] | |||||
Mortgage Loans Payable (Textual) | |||||
Debt, description | The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. Interest rate resets on December 31, 2022 to Prime + 0.25%. | ||||
Vision Bank [Member] | |||||
Mortgage Loans Payable (Textual) | |||||
Interest rate, description | Five properties are collateralized under this loan as of September 30, 2020 with Mr. Spodek as the guarantor. On September 8, 2021 and every five years thereafter, the interest rate will reset at a variable annual rate of Wall Street Journal Prime Rate (“Prime”) + 0.5%. | ||||
Vision Bank - 2018 [Member] | |||||
Mortgage Loans Payable (Textual) | |||||
Debt, description | The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. Interest rate resets on January 31, 2023 to Prime + 0.5%. | ||||
Seller Financing [Member] | |||||
Mortgage Loans Payable (Textual) | |||||
Payment frequency, description | We obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $105,661 with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025. | ||||
First Oklahoma Bank - April 2020 [Member] | |||||
Mortgage Loans Payable (Textual) | |||||
Maximum borrowing facility | $ 4,500,000 | $ 4,500,000 | |||
Interest rate, description | which resets in November 2026 to the greater of Prime or 4.25%. | ||||
Percentage of interest rate | 4.25% | ||||
First Oklahoma Bank- June 2020 [Member] | |||||
Mortgage Loans Payable (Textual) | |||||
Percentage of interest rate | 4.25% |
Leases (Details)
Leases (Details) | Sep. 30, 2020USD ($) | [2] |
Leases, Operating [Abstract] | ||
2020 - Remaining | $ 4,394,175 | [1] |
2021 | 16,938,459 | [3] |
2022 | 13,371,159 | |
2023 | 10,679,959 | |
2024 | 7,734,855 | |
Thereafter | 10,165,377 | |
Total | $ 63,283,984 | |
[1] | As of September 30, 2020, the leases at 58 of our properties were expired, and the USPS was occupying such properties as a holdover tenant. In addition, the lease at one of our properties is a month to month lease. Holdover rent is typically paid as the greater of estimated market rent or the rent amount due under the expired lease. | |
[2] | The above minimum lease payments to be received do not include reimbursements from the USPS for real estate taxes. | |
[3] | The Company has received notice on one property which the USPS intends to vacate in August 2021. |
Leases (Details 1)
Leases (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Leases, Operating [Abstract] | ||
Total minimum lease payment receivable | $ 1,021,466 | |
Less: unearned income | (505,302) | |
Investment in financing lease, net | $ 516,164 |
Leases (Details 2)
Leases (Details 2) | Sep. 30, 2020USD ($) |
Direct Financing Lease [Abstract] | |
2020 - Remaining | $ 11,375 |
2021 | 45,500 |
2022 | 45,500 |
2023 | 45,500 |
2024 | 45,500 |
Thereafter | 828,091 |
Total | $ 1,021,466 |
Leases (Details 3)
Leases (Details 3) | Sep. 30, 2020USD ($) |
Leases, Operating [Abstract] | |
2020 - Remaining | $ 5,904 |
2021 | 23,600 |
2022 | 23,600 |
2023 | 23,600 |
2024 | 24,160 |
Thereafter | 1,175,290 |
Total | $ 1,276,154 |
Leases (Details Narrative)
Leases (Details Narrative) | 9 Months Ended |
Sep. 30, 2020properties | |
Leases, Operating [Textual] | |
Lease expiration, description | Certain leases have expired and the balance expire at various dates through November 30, 2029. |
Number of holdover properties | 58 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Unrecognized tax benefits | $ 400,000 | $ 400,000 | ||
Unrecognized tax benefits reversed | 100,000 | |||
Income tax (expense) benefit | 29,754 | $ (6,259) | 44,876 | $ 39,749 |
State taxes | 10,000 | 10,000 | ||
Benefit due to finalizing tax filing related to UPH | 0 | 10,000 | ||
Postal Realty Management [Member] | ||||
Income tax (expense) benefit | $ 20,000 | $ 50,000 | ||
Predecessor [Member] | ||||
Effective tax rate | 13.40% | |||
Income tax (expense) benefit | $ 0 | $ 39,749 | ||
Statutory rate | 21.00% |
Related Party Transactions (Det
Related Party Transactions (Details) | Sep. 30, 2020USD ($) |
Related Party Transactions [Abstract] | |
2020 - Remaining | $ 46,350 |
2021 | 188,869 |
2022 | 194,535 |
2023 | 200,371 |
2024 | 76,244 |
Total | $ 706,369 |
Related Party Transactions (D_2
Related Party Transactions (Details Narrative) - USD ($) | Oct. 01, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Related Party Transactions (Line Items) | ||||||
Guarantees, description | Mr. Spodek, our chief executive officer, has personally guaranteed our loans with First Oklahoma Bank that were obtained prior to 2020 and Vision Bank, totaling $2.7 million. As a guarantor, Mr. Spodek's interests with respect to the debt he is guaranteeing (and the terms of any repayment or default) may not align with our interests and could result in a conflict of interest. | |||||
Postal Realty Management [Member] | ||||||
Related Party Transactions (Line Items) | ||||||
Management fee income | $ 300,000 | $ 200,000 | $ 800,000 | $ 400,000 | ||
Accrued management fees receivable | 300,000 | 300,000 | $ 80,000 | |||
Office Lease 2 [Member] | ||||||
Related Party Transactions (Line Items) | ||||||
Rental expenses | $ 50,000 | $ 100,000 | ||||
Lease terms, description | Pursuant to the New Lease, the monthly rent is $15,000 subject to escalations. The term of the New Lease is five years commencing on May 17, 2019 and will expire on May 16, 2024. | |||||
Predecessor [Member] | Office Lease 1 [Member] | ||||||
Related Party Transactions (Line Items) | ||||||
Monthly rent amount | $ 15,000 | |||||
Lease term | 5 years | |||||
Lease expire date | Sep. 30, 2023 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |||||
Numerator for earnings per share - basic and diluted: | ||||||||
Net loss attributable to common stockholders | [1] | $ (15,184) | $ (307,969) | $ (843,489) | $ (699,765) | |||
Less: Income attributable to participating securities | [1] | (105,829) | (266,680) | (16,715) | ||||
Numerator for earnings per share - basic and diluted | [1] | $ (121,013) | $ (307,969) | $ (1,110,169) | $ (716,480) | |||
Denominator for earnings per share - basic and diluted | 8,425,708 | [1] | 5,164,264 | [1] | 6,276,145 | 5,164,264 | [1] | |
Basic and diluted earnings per share | [1] | $ (0.01) | $ (0.06) | $ (0.18) | $ (0.14) | |||
[1] | The combined statements of operations prior to May 17, 2019 represents the activity of the Predecessor and EPS was not applicable. |
Stockholder's Equity (Details)
Stockholder's Equity (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | |
Amount Per Share | $ 0.205 | $ 0.20 | $ 0.17 | |
January 30, 2020 [Member] | ||||
Declaration Date | Jan. 30, 2020 | |||
Record Date | Feb. 14, 2020 | |||
Date Paid | Feb. 28, 2020 | |||
Amount Per Share | $ 0.17 | |||
April 30, 2020 [Member] | ||||
Declaration Date | Apr. 30, 2020 | |||
Record Date | May 11, 2020 | |||
Date Paid | May 29, 2020 | |||
Amount Per Share | $ 0.20 | |||
July 30, 2020 [Member] | ||||
Declaration Date | Jul. 30, 2020 | |||
Record Date | Aug. 14, 2020 | |||
Date Paid | Aug. 31, 2020 | |||
Amount Per Share | $ 0.205 |
Stockholder's Equity (Details 1
Stockholder's Equity (Details 1) | 9 Months Ended | |
Sep. 30, 2020$ / sharesshares | ||
Outstanding, at beginning of period | 268,850 | |
Granted | 302,747 | |
Vesting of restricted shares | (61,181) | [1] |
Forfeited | (588) | |
Outstanding, at end of period | 509,828 | |
Weighted Average Grant Date Fair Value | ||
Outstanding, at beginning of period | $ / shares | $ 16.96 | |
Granted | $ / shares | 14.20 | |
Vesting of restricted shares | $ / shares | 17 | |
Forfeited | $ / shares | 17 | |
Outstanding, at end of period | $ / shares | $ 15.35 | |
Restricted Shares [Member] | ||
Outstanding, at beginning of period | 148,847 | [2],[3] |
Granted | 146,348 | [2],[3] |
Vesting of restricted shares | (61,181) | [1],[2],[3] |
Forfeited | (588) | [2],[3] |
Outstanding, at end of period | 233,426 | [2],[3] |
LTIP Units [Member] | ||
Outstanding, at beginning of period | 120,003 | [4] |
Granted | 94,303 | [4] |
Vesting of restricted shares | [1],[4] | |
Forfeited | [4] | |
Outstanding, at end of period | 214,306 | [4] |
Restricted Stock Units (RSUs) [Member] | ||
Outstanding, at beginning of period | [5] | |
Granted | 62,096 | [5] |
Vesting of restricted shares | [1],[5] | |
Forfeited | [5] | |
Outstanding, at end of period | 62,096 | [5] |
[1] | Includes 49,839 of restricted shares that vested and 11,342 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements. | |
[2] | Represents restricted shares awards included in common stock. | |
[3] | The time-based restricted share awards granted to our officers and employees typically vest in three annual installments or cliff vest at the end of eight years. The time-based restricted share awards granted to our directors' vest over one to three years. | |
[4] | LTIP units to our officers and employees typically vest over three to eight years. During the six months ended June 30, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award and 13,708 LTIPs to the Company's CEO. In May 2020, pursuant to the Plan, the Company issued 27,365 LTIP Units to the Company's CEO in lieu of his salary payable for the period from the one-year anniversary of the IPO to December 31, 2020. LTIP Units issued to the Company's CEO in lieu of cash compensation cliff vest on the eighth anniversary of the date of grant. | |
[5] | Includes 38,672 RSUs granted to certain officers of the Company during the six months ended June 30, 2020 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 hurdles relating to the Company's absolute total stockholder return and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2022. 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 13,253 time-based RSUs issued for 2019 incentive bonuses to certain employees that vested fully on February 14, 2020, the date of grant and 10,171 time-based RSUs granted to certain employees for their election to defer 2020 salary that vest on December 31, 2020. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria. |
Stockholder's Equity (Details N
Stockholder's Equity (Details Narrative) - USD ($) | Jul. 15, 2020 | May 15, 2019 | Apr. 27, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Class of Stock [Line Items] | ||||||||
Non-controlling interests OP Units | 2,640,795 | 2,640,795 | 2,157,462 | |||||
Non-controlling interests LTIP Units | 214,307 | 214,307 | 120,004 | |||||
Outstanding partnership percentage | 23.10% | 23.10% | 30.00% | |||||
Remaining shares available for future issuance | 751,697 | 751,697 | ||||||
Maximum number of restricted shares | 541,584 | 541,584 | ||||||
Equity Incentive Plan, description | The Board of Directors amended the Equity Incentive Plan to increase the total number of shares of Class A common stock that may be issued under the Plan from 541,584 shares to 1,291,584 shares. | |||||||
Dividends paid | $ 2,500,000 | $ 5,600,000 | ||||||
Total unrecognized compensation cost related to unvested awards | 6,100,000 | 6,100,000 | ||||||
Total recognized compensation expense | $ 600,000 | $ 400,000 | $ 1,800,000 | $ 600,000 | ||||
Expected to be recognized over a weighted average period | 4 years | |||||||
Stock based compensation plans vesting period | 5 years | |||||||
Fair vale of restricted shares | $ 1,000,000 | |||||||
Follow on public offering, description | The Company priced a public offering of 3.5 million shares of its Class A Common Stock (the “Follow-on Offering”) at $13.00 per share. On July 17, 2020, the underwriters purchased an additional 521,840 shares pursuant to a 30-day option to purchase up to an additional 525,000 shares at $13.00 per share (the “Additional Shares”). The Follow-on Offering, including the Additional Shares, closed on July 20, 2020 resulting in $52.2 million in gross proceeds, and approximately $49.4 million in net proceeds after deducting approximately $2.9 million in underwriting discounts and before giving effect to $0.9 million in other estimated expenses relating to the Follow-on Offering. | |||||||
Class A [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Stockholder's Equity shares issued | 27,206 | |||||||
Minimum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Maximum number of restricted shares | 541,584 | |||||||
Maximum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Maximum number of restricted shares | 1,291,584 | |||||||
LTIP Units [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Amount Per Share | $ 0.575 | $ 0.575 | ||||||
IPO [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Stockholder's Equity shares issued | 4,500,000 | |||||||
Stockholder's Equity net proceeds | $ 71,100,000 | $ 71,100,000 | ||||||
Stockholder underwriting discount | $ 5,400,000 | |||||||
Common stock voting rights | Each outstanding share of Voting Equivalency stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote, including the election of directors, and holders of shares of Class A common stock and Voting Equivalency stock will vote together as a single class. Shares of Voting Equivalency stock are convertible into shares of Class A common stock, on a one-for-one basis, at the election of the holder at any time. Additionally, one share of Voting Equivalency stock will automatically convert into one share of Class A common stock for each 49 OP Units transferred (including by the exercise of redemption rights afforded with respect to OP Units) to a person other than a permitted transferee. This ratio is a function of the fact that each share of Voting Equivalency stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote and maintains the voting proportion of holders of Voting Equivalency stock with the holder's economic interest in our Company. | |||||||
Other expenses | $ 6,400,000 | |||||||
IPO [Member] | Class A [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Stockholder's Equity shares issued | 637,058 | |||||||
Non-controlling Interest [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
OPU and LTIP, description | The Company issued 483,333 OP Units in January 2020 in connection with a portfolio that the Company acquired, 53,230 LTIP Units in February 2020 to the Company’s CEO for his 2019 incentive bonus, 13,708 LTIP Units in March 2020 to the Company’s CEO and 27,365 LTIP Units in May 2020 to the Company’s CEO for his salary for the period of May 18, 2020 to December 31, 2020. | |||||||
Restricted Stock and Other Awards [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Granted to issue restricted shares | 38,672 | |||||||
Restricted shares and LTIP Issued | Includes 13,253 time-based RSUs issued for 2019 incentive bonuses to certain employees that vested fully on February 14, 2020, the date of grant and 10,171 time-based RSUs granted to certain employees for their election to defer 2020 salary that vest on December 31, 2020. RSUs reflect the right to receive shares of Class A common stock. | |||||||
Restricted Stock and Other Awards [Member] | Other Employees [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
LTIP Units, description | LTIP units to our officers and employees typically vest over three to eight years. During the nine months ended September 30, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award and 13,708 LTIPs to the Company’s CEO. In May 2020, pursuant to the Plan, the Company issued 27,365 LTIP Units to the Company’s CEO in lieu of his salary payable for the period from the one-year anniversary of the IPO to December 31, 2020. LTIP Units issued to the Company’s CEO in lieu of cash compensation cliff vest on the eighth anniversary of the date of grant. | |||||||
Vesting of Restricted Shares [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Granted to issue restricted shares | 49,839 | |||||||
Restricted shares withheld | 11,342 | |||||||
Employee Stock Purchase Plan [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Equity Incentive Plan, description | The Code permits us to provide up to a 15% discount on the lesser of the fair market value of such shares of stock at the beginning of the offering period and the close of the offering period. | |||||||
Total recognized compensation expense | $ 11,795 | $ 21,897 | ||||||
Total shares of common stock will be reserved for sale and authorized for issuance | 100,000 | 100,000 | ||||||
Granted to issue restricted shares | 7,189 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Nov. 11, 2020propertiesLeases | Jul. 15, 2020 | Oct. 30, 2020USD ($)$ / shares | Nov. 12, 2020USD ($) |
Subsequent Event [Line Items] | ||||
Follow on public offering, description | The Company priced a public offering of 3.5 million shares of its Class A Common Stock (the “Follow-on Offering”) at $13.00 per share. On July 17, 2020, the underwriters purchased an additional 521,840 shares pursuant to a 30-day option to purchase up to an additional 525,000 shares at $13.00 per share (the “Additional Shares”). The Follow-on Offering, including the Additional Shares, closed on July 20, 2020 resulting in $52.2 million in gross proceeds, and approximately $49.4 million in net proceeds after deducting approximately $2.9 million in underwriting discounts and before giving effect to $0.9 million in other estimated expenses relating to the Follow-on Offering. | |||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Current lease renewal and revised USPS lease form, description | The USPS is occupying such properties as a holdover tenant, aggregating approximately $2.5 million in annualized rental income. As of November 11, 2020, the USPS has not vacated any of these 52 properties. The Company has received all holdover rent on a month-to-month basis, with the USPS typically paying the greater of estimated market rent or the rent amount under the expired lease.The USPS has adopted a revised form of our modified double-net lease, which transfers the responsibility for additional maintenance expenses and obligations to the landlord, including some components of plumbing and electrical systems. As of November 11, 2020, we have entered into 29 leases reflecting this revised form, including an addendum, as applicable, to its revised form of lease for leases acquiring annual rent in excess of $25,000, pursuant to which documentation requirements are streamlined and some of the new responsibilities placed on the landlord by the USPS’ revised form of our modified double-net lease would be mitigated for leases that expired in 2019 or 2020, or will expire in 2020. | |||
Acquisition of properties, description | The Company closed on the acquisitions of 14 postal properties for approximately $8.0 million during the period subsequent to September 30, 2020. | |||
Acquisition agreement, description | The Company had entered into agreements to acquire 12 postal properties for approximately $10.1 million. The majority of these transactions are anticipated to close during the fourth quarter of 2020, subject to the satisfaction of customary closing conditions. Furthermore, the Company has signed a material agreement for an industrial building in Warrendale, Pennsylvania for $47.0 million. The USPS occupies 73% of this property as a distribution facility. | |||
Line of credit additional borrowings | $ | $ 3,000,000 | |||
Common stock dividend per share | $ / shares | $ 0.215 | |||
Common stock dividend paid | Nov. 30, 2020 | |||
Common stock dividend record | Nov. 16, 2020 | |||
Number of leases executed | Leases | 29 | |||
Number of lease properties in holdover that expired in 2018 | 1 | |||
Number of lease properties in holdover that expired in 2019 | 15 | |||
Number of lease properties in holdover that expired in 2020 | 36 | |||
Total properties in holdover | 52 | |||
Amount drawn on credit facility | $ | $ 52,000,000 |