- Earnings call transcript Q3 2022

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Operator

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

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

Jordan Cooperstein

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

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

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

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

Andrew Spodek

Good us. and thanks for joining morning

Realty short our on with is variable Realty lease executing and flows rents. Postal for low Postal stable that shareholder growing growth is supported by With share continual further to business executing XXXX, value. the continue tenant model and anchored and enhanced exposure well third to maturities to continue quarter a had goal leverage, pleased mark-to-market are of our credit strategy. our and we are strong which positioned situated We creating debt allows cash ideally term balance sheet duration, to rates, our from our organic with of no notable until growth minimal is

maintaining this highly year. accretive consolidate to third In acquisition mile market already last the ratios. beginning of acquisitions, leverage approximately continue target sourcing our million we to core quarter, at We year-to-date while value our $XXX opportunities, of $XX through our fragmented and bringing flex the million, the particularly conservative property, completed that achieving

gap quarter, last quarter, seeing as rate the capitalize and emerge. we concerns likely third will which continue volume buyers the In to higher discussed higher attractive we they into quarter positioned the As footing targeted rates prior impacted find This between fourth remain have to macro slowly cap well transaction, close we as quarters. relative opportunities the on to to sellers. adjust try and cap been market we to

Network. largest and the of the Logistics manager owner, Services’ are Irreplaceable We consolidator Postal

the However, growth plenty our early we are in of runway still and innings ahead. story have of

time, experience over differentiators. team which strong cycle-tested of has management of built relationships believe and a years network Our XX meaningful over are we

prudent to to external our this the in in growth We Jeremy manner to initiatives accretive continue call stewards it by capital appropriate growth and and environment. I’ll and internal our deploy metrics. will are discuss be over operating and both now of encouraged dynamic to turn drive

Jeremy Garber

Thank you, Andrew.

In of rent well third quarter Realty. with contributions As third strong increase of cash Postal portfolio, in all our on we the reflecting XXXX, from the This in as the we from payments all of economic quarter. rents a has we to for third existing a the as made like quarter Consistent throughout made XXXX, tenant environment. rental a differentiator of collected our months. remind historically XX produced investors, past, the income predictability XX% its significant quarters our acquisitions XXX% last flow over time is of accretive

for net additional an closing We have XX.X% Service the to Postal they on over have a costs. properties we from properties by of $X XXX,XXX to Service. mile the we portfolio, due financial rate Postal weighted notices identifying years, added leasable validate Subsequent now These XXXX, inclusive average the not continues acquired XXth, that XX-plus any lease $XX excluding serve. our maintained quarter and million last XX over retention the strategic vital square to these properties end through our to to rate XXXX October and which diligence I’ll we $X.X contracts. the received are of of acquired importance definitive our XX million. XXX,XXX communities high from call to process both quarter for acquisitions locations Rob have In the XX,XXX XX reflects Service. these feet results. the termination approximately interior XX This properties. discuss square to Year-to-date, We historical feet Postal properties past turn quarter properties, feet placed of flex and square third million, third and the seven

Robert Klein

today’s Jeremy Touching you, on for what joining call. us and and everyone you, Thank discussed. Jeremy both thank upon Andrew

productive We to opportunities. remain as capitalize of to external another on the results well are growth we positioned pleased quarter deliver

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

of of only We interest million our hedges, debt average of rate as with maturity debt XX, of interest Inclusive have X.X fixed $XXX floating gross approximately $XX sheet, X.XX% was years. our revolver. and had was rate rate weighted of a our outstanding debt on of all at XX% approximately and a rate XXXX, maintained and weighted we conservative September million a balance average

XXXX. highlighted As notable have earlier we no call, the Andrew maturities on debt until

our with on on accordions undrawn strong million Our revolver, million of liquidity of million facilities, $XXX position cash. our approximately $X and is $XXX

X.X guidance XXXX. of came spreading projects, savings we QX anticipate $X.XX future to to per will annualized enterprise quarter as and For $X.XX and below it third the to CapEx of net as square in per times Recurring be debt for under on value G&A targets foot well our assets. continue timing third the our times net foot as Cash in was square out costs into cost we respectively. below was closer our XXXX, debt was in to quarter well quarters some EBITDA prior intentionally XX%, based leverage due X and XX.X%, adjusted in to invest

run for remains a continue of QX. basis as and Our G&A QX cash a revenues rate annual on still guidance an that is believe will percentage to good decline we

Our Board quarterly increase XXXX from our our third continues of history This X.X% approved quarter $X.XXXX, increase has dividend to annualized which an a share, Directors dividend. to per in $X.XX of economic increasing quarter climate, our therefore, since believe our We is and ability IPO. Realty confident every to for we Postal execute in resilience the dividend remain strategy. through uniquely positioned

predictable stakeholders. call market-tested continue we’d collections XXX% Operator, Our remarks. sheet, rent conservative of to questions. will steadfast the team, This us balance that to a like experienced for deliver history to flows, and a our provide value open cash our for allow foundation concludes and prepared management

Operator

Janney. [Operator Instructions] Our first Stevenson Rob question of comes from

Rob Stevenson

realize smaller stabilize. and some for have investors estate to prices seems like and everything Across been else guys. from back debt to have real the class, unless the event the of to have all it asset that market last seem morning, pulled sort the Good changed facing assets waiting

bunch – be today pricing? sellers a reasonable you there’s that of as in to terms as business, transaction of well given relative terms of the past know out market there in in availability of your to how assets ability are to You smaller the for market seeing players quarters guys

Andrew Spodek

just Hey, Rob. everybody not as assets months very for it Yeah couple change are time. kind today to was ago. expectations to through their available, knows, where we’re be seeing pricing of of supposed sellers strange The a where so is living relative a we’re

patiently are we the execute we walking trying where to cap get sellers on so up, want them. rates And to to

that always a asset that, and rates news in different is of good stated wide. cap our the range sizes class the of know asset we’ve always that asset You types and is we’ve bought different range

the we range, to ability we’ve of to thankfully, trying which do. been execute at have our is the higher end what so And

Rob Stevenson

willing Okay. renewals for need And then they and with know how representatives the are their the on we the to acknowledge you – rent Service, Postal recent increases going forward? and conversations environment potentially inflationary higher

Jeremy Garber

Jeremy. Hey, Rob. Yeah. It’s

us to leases confident with discussions a to of will on prior So a we’ve our USPS we and XX new X%. achieve inflationary that allow result deliver are growth XXXX we’re have the shared adjustment, in productive as annual expiring our NOI introducing an been focused we we’ll X% know calls in that you continue of to to concept on continue

Rob Stevenson

today And forward, seeing you Okay. data for for financing the to where me, Rob, know and last when are you guys of comes one et Where then you want you portfolio guys market source best your to that a look if there’s on, bid that cetera? is availability pricing today? you best

Robert Klein

Rob. Het,

our has that’s to the a you out access I availability you of really in when you offerings, at tried or lot in So – to can when is units. things a balance turn then afloat through an the credit higher through a know fixed to to common keep yeah good and it’s proportion be the debt want. rate rate markets and we think facility ways of rates when sheet a operating good everything multiple can swap capital through ATM But conservative. are as attractive a spread, on equity know know it’s you active partnership we’re fortunate And of we’ve side, know maintain we have regular mix we

I market across access the super you So, the dynamic. is Board. we’ve And as know, feel like got

so move down our price so and share rates does does [technical difficulty] pipeline. So our a and up and lot

sources. game, know, it’s really have you all we’re to day-to-day a these access to lucky and So

Rob Stevenson

Okay. Appreciate time. Thanks, guys. the

Andrew Spodek

Thank you.

Operator

next of Paolone The Morgan. from question J.P. comes Tony

Unidentified Participant

Good morning, guys.

this could you the cash willing curious for guess question, maybe rather guys current You just a I to morning. less OP I’m have just are line seen buyers speak instead? acquisitions you on to little my trade conditions Tony [inaudible] on have and guess rather first if I opting market for units if accept

Andrew Spodek

question. the Appreciate

So, we in actually the operating currency. still sellers partnership see interested unit very

given just in is currency trading, still quarter, but the much where proactive that the over in our very been haven’t past the there. interest was We very price stock currency using

Unidentified Participant

Got it.

guess, drag inflation on from the the expenses, we a should I expect is, And for properties? responsible operating company is thanks. maybe where Okay, given your

Robert Klein

It’s look, it’s overcomes to ability the facing, of mark question. with expenses, you And CapEx whether our which market short-term a know, do rents the it’s those because everybody’s or have operating but something duration of operating you we good know, expense leases, the increases. to

see don’t I being a drag, than it was net-net it’s know you but prior it years. in So challenging more definitely

Unidentified Participant

Okay. Thanks, the Appreciate guys. time.

Andrew Spodek

Thank you.

Operator

comes question next BMO. of The from John Kim

John Kim

industrial, has Thanks. you cap could at? stayed you if wondering other Good about that rates so you industrial helped Year-to-date morning. appetites it know look acquisitions far more I lower two the from in studying versus talk was you pricing, away

Andrew Spodek

Yeah.

we’re current the not and our haven’t really we’re do. it’s deals do current the good current in the environment, Thankfully, industrial cap if have that those in deals lower on the that And still looking that exceeded the believe it’s pretty unless though looking environment. environment, of assets even to lower assets, target for and looked our we range. priced particular moved, fit we’ve asset in of really in the the end has deals have be and they’re not a So those the the rates class we for are to year range, at for market focused that right unless been portfolio we not frothy at the been some on

John Kim

a our performance even In now with there or individual par portfolio premium our at this asset current discount? trading still on sales or environment, potentially

Andrew Spodek

the in general, sellers most environment. are to least are – we’ve owners larger adjust assets more of the or the current seen sophisticated to at owners larger willing the So, less

typically are lower our the So end assets portfolios trading of and range. those those at

John Kim

inflation you some more of kind know were adjustment right. question was I for you there growth. that offset number talking renewals Okay. about up, difficulty] potential impact of a pressures also was saying to in to than upside you final that rental but wondering sense be coming were potential And makes that I maintained know on inflationary X% inflation my if you X% in lease to [technical guess this organic there just

Jeremy Garber

current we overcome our trying we and the we’re ramped really rates The and how is lease additional You time element over inflationary the year know go spend to achieve that you have as an call to us introduce and reviewing comps markets past through renewals, it, that allow a half. environment. to just things on trying rate know, lease here, a adjustment just given up –

going over the to continue delivered. growth described, an So will that’s I we’re historically why as which adjustment achieve us, we’re confident, NOI market to allow that to rents deliver we’ve

John Kim

be can based that local wondering Or share? on it be would CPI details you more capped? [Technical is any that just difficulty] And would geography? there

Jeremy Garber

the At USPS is Yeah. live, going haven’t on moment, the agreed conversation we that is with adjustment to how work.

I have to don’t information at moment. So more you give any the

John Kim

you Thank much. very Okay.

Andrew Spodek

Thank you.

Operator

The Oxford Barry next Colliers. question from comes of

Barry Oxford

rate of guys typically, to adjustments would information you doesn’t some kind years? government the years? rate, so fixed more much five that you Or want do – a think to don’t kind too it might you year-to-year? would Great. for leases, I for if but five on adjustment, inflationary give were so, move of that know adjustment do the rate And of blended want flat sort you inflation have be an

Jeremy Garber

Barry Jeremy. again, Yeah, it’s

– right You're

Barry Oxford

Yeah.

Jeremy Garber

Historically five that been these year have leases. flat

know continue know haven’t we probably You think they fluid. concluded and be I the embedded. to to outcome going with adjustment that a – But similar I again, achieve you conversations we’re

soon as a have we definitive we will that. agreement, as So share

Barry Oxford

was a going And into great. How comp? a item another about how little ex G&A we we that. should G&A XQ think versus with should about we on Okay. as a lower Great, as lot quick non-cash XQ. G&A should the question forward ‘XX? but think How lower, not lower, think here little line far

Robert Klein

Barry, good your is it QX about think you a more I remarks this know I question – we of in prepared kind that believe QX in rate run is I think to respect. alluded roll the forward? But question how that and good for does that

Barry Oxford

Correct. Right.

Robert Klein

that guidance, than where earlier million XXXX. $X was this year earlier on that reported G&A projections this $X yeah to That million increase know to to given I’d closer $X.X so probably some earlier given $X.X we puts – of we’ve our increase the You million and projected $XXX,XXX this guidance year. on based an over guidance last year million, by new initial year us for cash based lighter our

of is And expenses the projected most XXXX some conducive to reduction of that’s due but in really of throughout as ’XX, be to environment to spent it’s as long it.

Barry Oxford

it. Got

caller. all that I for have, guys. thanks – thanks Okay, That’s

Andrew Spodek

Thanks, Thanks. Barry.

Barry Oxford

Yep.

Operator

of Jon The Petersen next question comes from Jefferies.

Jon Petersen

Great, thank you.

were you asked to mentioned you I and sources you know think that’s ATM capital know Rob earlier potential you you. the when about of open

make to ATM looking terms way or to you new opposite or you know, So, maybe if we price market what could ATM talk about that from kind two to you where the sense know makes different you pricing angles to, today’s – move acquisitions do equity like to issuance? price cap stock maybe the in – where it do stock have sense rates what need issuance do today’s what of makes stock at is see you know price like know of

Robert Klein

Yeah.

we we equity we of use be a know and to but use – want And where it’s we’re to is. our do know, it our pipeline you a the higher content the when higher more you the accretive and for always that analysis, pipeline attractive, looking be acquisition As to capital. we when price issue have we stock

still cap where prices we’ve kind And has accretive acquisitions but manner. so do Andrew we even the guidance executed, and at an rates of that it’s given where and today’s for dynamic, that’s in are can

Jon Petersen

XXXX. you costs details Okay, on were could spread spread some that us some in prepared And G&A some GNA, you think on of mentioned costs the into just you then you what ‘XX? your more you maybe give got those it. I just, into Can I if Rob remarks know,

Robert Klein

some it of this You it’s of know et – a a this blend this a being know really these year. talked that ourselves that blend year, you using do to hires, know internally. and of our you projects done some all we information of and had some and infrastructure, internally, to the We’ve that about that – improve some there’s planning increase next next year earlier to we cetera. to harness of pushed some bit we’re we’re know of year that little projects year related that gets of some It’s you IT,

Jon Petersen

great. so Okay. you that’s All right, Thank much.

Andrew Spodek

Thanks.

Operator

question Stevenson a from We have follow-up Rob Janney. of

Rob Stevenson

been have you. questions answered, thank My

Operator

does us That Mr. you. I closing for turn our to bring Thank end question-and-answer of session. the – like to conference Spodek remarks. would to Andrew over now back

Andrew Spodek

all Have the today. over entire thank with behalf to everybody. your join forward look months. the on And coming to you. you continued Thank day, and and support a team, you us connecting of for myself the We taking for great time

Operator

Thank you, and you That for now may gentlemen. today’s teleconference. Thank your lines. concludes you your and ladies participation disconnect

Postal Realty Trust (PSTL) 2 Nov 222022 Q3 Earnings call transcript