PSTL - Earnings call transcript Q2 2022 | Postal Realty Trust, Inc.

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Operator

Greetings and welcome to the Postal Realty Trust Inc., Second Quarter 2022 Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder this conference is being recorded. I will now like to join the conference over to your host Jordan Cooperstein, Vice President of FP&A Capital Markets. Please go ahead sir.

Jordan Cooperstein

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

Chief Act Matt Company’s On and Spodek, note Company the of Jeremy Klein, results on new Chief call will the Executive Officer, the control, today, future Those statements, statements its Officer; Garber, contained XX-K including we Company update use of this materially that President; not securities by Officer. assume of conference commission obligations Chief Accounting differ exchange statements as by Brandwein, have forward-looking by described specifically affected Andrew factors Financial Please whether provisions otherwise. forward-looking. from and the statements and a variety any without does historical facts not a in forward-looking Statements on limitation. These statements information, in Securities call. to those XXXX. filings. forward-looking disclaims are the made Harbor this Actual events be Litigation that of any call the are contained statements Reform covered or risks are The and forward-looking for may Company’s considered Safe in include forward-looking Private and the latest in beyond other the and may result are Robert

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

of now Trust. tabular call Realty comparable materials. earnings to a supplemental turn these find release to concurrently Company’s will Executive Spodek, GAAP that, Chief over can You the most financial the I Officer Andrew With reconciliation in Postal of non-GAAP measures measures the and

Andrew Spodek

joining morning us for today. you Good thank and

EBITDA. of and net leverage at Realty maintaining core to adjusted had conservative our our while to of share successful last ratios, comprised acquisitions that debt productive quarter X.X closing We are completing times and mile targets $XX.X pleased flex million quarter, annualized very a Postal the

first we capital accretively deployed proceeds the the from completed of During half this year, raise the November. in

leading market our point and has this cadence an approximately put contracts. fragmented We as highly market. of the for acquisitions, ahead vantage additional the of $XX million on $XX capitalize to completed have of historical we continue a have under million to This first half year, use us definitive

the X% will mix had the and postal we industry, determine complete and market real assets X% alongside volumes leased compression some the had of continued Cap the rate rate The X% the total in communicated expand. to recently, More starting assets opportunities to of As adjusting. weighted for to cap acquisition average previously was the properties and our estate broader market cap addressable these and network the is are service of we significant, where X% to range. rates rise in range is we seen year.

As the and of XX years experience, and we industry approach. deliberate with leader a been in over our dominant consistent share have market

consolidating of owner, to as network properties to this by Postal and laser irreplaceable and and shareholder growth in and in place realizing in unique manager the continuing our focused their consolidator largest execute our organic are market. service. creating goal logistics well-positioned our leased on We position of resilience value turn adds portfolio to on the The postal Service’s

acquisitions We volume already completed of attractive are pleased the with year-to-date. high

to well-positioned lease Postal balance to ready a we to inflationary our to drive Trust cycles. and favorable average in thoughtful in we and sheet, our structure sellers to growth pipeline, all our are rate execute see is market. and to the to growth encouraged buyers are sheet Realty We appropriate. by importantly, expansion throughout prudent the lease allow And conservative adjust be we’ll a continue starting current ability environment Most balance and environment and we cap team the have today’s and navigate as market cap the where the duration, with rates. continued and

will the operating to We active over continue to to approach turn call now be our metrics. discuss Jeremy to and disciplined acquisitions. I’ll employ a

Jeremy Garber

Andrew. you, Thank

basis, As the made through of XXX% environments. on significant we our fuel internal opportunity flow of robust rents cash collected market historically typical predictability mark XXX% an time reminder, quarters has our its which a payments with past, is tenant Realty. to Postal lease This economic in rent a five for differentiator USPS The of presents growth. on our rents all second an quarter. ongoing to year can Consistent

additional plus our continues to to process to Subsequent quarter notices and In the important diligence we flex of and properties received locations excluding identifying million, XXX for $XX contracts, $XX $X.X we retention XX that approximately postal million from due last and flex service. for we serve. XX average properties. have definitive postal This our Year-to-date, quarter million, net rate feet maintained lease and XX XX a acquired added feet feet reflects XXX,XXX properties placed both the to of high leasable historical the excluding end have acquired validate square portfolio, of XX, costs. These have postal the for XXXX, square of second these and by mile July to they past through service. from over the closing are costs. properties which rate properties closing XXX,XXX any the XX.X% years, communities under We inclusive weighted service square last importance XXX strategic acquisitions interior XXX,XXX termination an the approximately mile and not properties

made collections second a existing XXXX. the portfolio, of contributions XXXX, XXXX This financial second discuss from acquisitions strong quarter last quarter XX% from the with increase I’ll turn to For along results. Rob the the over from the months. over creative reflects of the our quarter in revenues to call produced XX we second now

Robert Klein

capital steps Jeremy. we’ve taken you, plan proactive well-positioned to to the continues growth execute our from Realty our Postal Thank further Trust be strengthen to on and structure.

quarter AFFO of consolidation second delivered $X.XX from the to funds We per or we funds per or financial operations diluted diluted adjusted strategy. of of and In continue share. operations share, from FFO XXXX, $X.XX our have the flexibility

with million reducing remaining down our term on $XX drew pay proceeds $XX were the loan, draw As exposure last in revolver. April drawers $XX and draw $XX the debt. over XX we to floating each $XX on February primarily million plus priced million points. to at executed subsequently discussed a further new quarter’s million. term million basis floating call, so on XXXX of both term for The This at in our was Concurrent points closing, with a basis we maturing loan XXX rate we delayed a used swap rate earnings and funded loan closed

ample with We available approximately have debt, was additional million of million rate debt XX% forward was on X.X X.XX%. debt floating on an fixed XXXX, we We of a million revolver with of million years. June maintained accordions had comprised Inclusive outstanding our our a weighted This conservative our all rate fixed of interest balance revolver. had $XXX of and was at sheet gross approximately average approximately and maturity $X average hedges our cash of in debt on facilities. $XX and million of rate and interest of and approximately rate a $XXX of $XXX as our weighted capacity XX, rate

of For and times X.X XX% adjusted and targets annualize second net EBITDA well debt enterprise was our to XXXX seven the quarter was leverage times net below to XX% value debt respectively.

invest to while mindful current the company environment. to in being scale continue business our We of our macroeconomic

But growth and We strategy. committed investment. competitive our our we people timing will in G&A the investments moat have made to remain of in and our judicious deepening be infrastructure, additional

call, our of focus progression revenue. a mirror we ratio investments in outlined As in our the cash G&A of these will portfolio on percentage the growth I last continue important as as to of

the figure serve should for XXXX. quarterly for quarter remaining of such reasonable G&A As cash the a quarters as run second rate the

approximately of this costs. from increased exceed it in foreseeable quarter we foot future, impact per continue square the we foot, anticipate resulted chain to $X.XX will While feel the supply $X.XX per and recurring for square as CapEx

annualized our share, to board from X.X% to has quarter an As was in our per in $X.XX prior quarters, the increase dividend a dividend. directors $XX.XX of quarterly XXXX which improved second increase

property strategy As discipline highly reliable ahead this continue like industry. allow with open the to us we’d coupled we consolidating conservative sheet fragmented predictable balance Operator, will cash our growth to our flows call questions. and for look tenant for

Operator

be Scott, you this will time, session. Thank and We have conducting we go question with the our Instructions] Janney ahead. much. question first lineup. Robert from very LLC, please [Operator answer At a Stevenson Montgomery

Robert Stevenson

today a a and just point, at bit little is Or talk marketplace product if to the much is bit changes etc? volume terms pricing there the and waiting about in good about to matter Can market is of out this it’s coming any morning, talked sellers little from coming expectation how but a in Good you of you where still they, guys. of such product price? a see starting volume waiting in you

Andrew Spodek

Rob. Hey Yes.

So marketplace fluid. very the is

are We to expand. rates cap continue watching

the I’ve of we I throughout typically that robust, sellers is seeing As feeling real selling. But we and we’re think a estate. pipeline we the But buyers movement and watching it. real disconnect seeing. interested is There’s general a lag amount estate are that before, are and sellers mentioned and tremendous in seeing between industry everybody

Robert Stevenson

today other terms Given and are that of a the these with for in the with react X, And are it’s how they’ve like leases are of How terms to terms? the the then market, than going inflation conversations past? representatives here? people, inherent the and estate Are you typical etc? Bells They real they the government their XX lease other question the they postal stuff? those Taco to been level been different I guess for in other sort last kind me, recognizing, sticking much years, conversations How acknowledging are a of? that slower and where try much little a your what that’s to and day in still other entity these negotiate is the stuff it’s service as days probably days of and acknowledging forward of all they for

Andrew Spodek

lease aware of work through we’re much as to work very term, the XXXX change our you real that And rents all XXXX to and know to and dialogue are they’re a inflation. market negotiating that looking is no opportunity mark us five They’re ongoing gives still There’s solve basis. in year having on we through as structure. the an renewals. which, we It

Robert Stevenson

Thanks, guys. time. Appreciate the

Operator

Thank you.

line have Please John We the from Peterson next go Jefferies. with of question ahead.

John Peterson

this modeling spreads leasing higher next and into higher rents. of guys. And I kind give inflation. pick lease successful of and you’d that been pushing indication on on up last have how purposes, Maybe in guess through you’ve think we renewals you year what just Good as the question historically? could assume should we and of I year can any mean, for morning, I balance like us achieved

Andrew Spodek

John again, goal our environment Yes, sure in the current we make leasing to capture our is spreads. that

As the we’ve you in well they’re there, And successful as with current know, renewals. the postal been service stated aware lease environment. of past negotiations in the I around

in with to able the We’re And constant confident current dialogue environment. we’re that something captures that we’ll them. be achieve

John Peterson

you Might from guidance capture some guys. multiyear try to more

thanks On the we balance G&A of for year. Robbie, G&A expect should color the side on for the where the

Just infrastructure next scale the up? over and is right business of comfortable able now reason to feeling think any opportunities scale thinking right to your guys Are be with about your G&A you expect your growth? there few additional the Or outsize years, now to as we

Robert Klein

scale Good in some things to year very done we’ve the thanks. feel question. to prepare comfortable really We this future. that ourselves Yes,

be will there foresee year. G&A, outsize growth last was growth So there I while year like over this in an don’t

John Peterson

the front know because I and And of buyers between bit, kind you asked little here a a you given volume? bit, a a acquisition about acquisition that great Rob it bit quarter. of sellers a the is would but seems then market, addressed loaded and ask bid announced you’d opportunities I the near quarter like already mean, volatility high that there’s lot know lot the last fair little kind was maybe the of widened in XQ have assume in quarter. I It terms less of actually little guys of kind year out. of to spread maybe assume is a but is had finally term, the of just the this I end in

Robert Klein

the really on depends It how reacts. market

move seeing We’re things quickly. relatively

their to midpoint deals have sellers range, rates have and We’re out pursue readjust If moved, pricing. at are deals our cap and getting the of to there. the recognize that they to seeking

We disconnect and itself. in the just have to price on it. It’s team place in the execute or about people platform the match that that correcting

John Peterson

all Thank you so That’s have much. got. I

Operator

BMO next Capital John question Kim line have Instructions] go Please We with Markets. from [Operator of you. Thank the ahead.

Unidentified Analyst

Hey Eric on it’s for guys, John.

on one quick a Just the pipeline.

in of just You kind acquisition I quarter. how acquisitions was sizable quarter? played large of of kind guys the the the acquisition curious into much closed of the amount

Andrew Spodek

flow in great It’s things particular year, What much out three tell a [Indiscernible] I amount attributable don’t break pretty that a that has did [Indiscernible] can as they and to as owner here. the board market very community helpful relationships you into and speak smoothly the everything that is deals in off question. we I deal been pipeline to we we way. that dollar was come [Indiscernible] help last can’t deals do move in to source the on and our them of close quarters helping the and market deals is relationships off have just continue and and their possible. bringing help

the a it’s as dollar And XXXX. looking we’re just but I can’t pipeline a So been. to amount closing ever great they’ve is out very helpful. been forward as them attribute strong very, particular to

Unidentified Analyst

I re-traded market, seeing the bid spread? of on the pipeline tightening guys deals the you ask the in then And are appreciate that. given being

Andrew Spodek

have. And come tremendous us move. it’s very, back environment. that deals, still strange the with We to still to that. even of We’ve re-trading that deals a of cap seen rates a be result But as re-traded a and very need amount

Unidentified Analyst

I leave appreciate it it. there. Thanks, guys. I’ll

Operator

and end the and answer I’d and closing have to Spodek the reached of Over you, question Thank you. remarks. sir. the session like Ladies turn call Andrew to to back for gentlemen, we

Andrew Spodek

this all call team On forward time for We months. you. you over of today. join connecting to for the myself with to look Thank us behalf you the coming the entire taking and thank

Operator

you much Ladies conference. sir. gentlemen. concludes Thank today’s very and This

disconnect this may You time. your participation. for Thank lines your at you

Postal Realty Trust (PSTL) 3 Aug 222022 Q2 Earnings call transcript