Earnings call transcript Q1 2023

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Operator

Greetings. And welcome to the Postal Realty Trust First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

conference recorded. this reminder, a is being As It Jordan Planning Cooperstein, my pleasure and your host, to introduce Vice and Markets. is Capital now Analysis President of Financial Thank you, sir.

begin. may You

Jordan Cooperstein

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

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

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

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

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

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

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

Andrew Spodek

joining us. and for Good morning thank you

for of of Postal above $XX.X of year. our to average X.X%, midpoint target properties range well X% marked million XX cap stated cap first a weighted quarter X%. The start added rate the to solid at the rate a Realty

still rate within quarter and mix on previously price and fluctuate we X% adjust is time weighted assets, in market range range. towards X% depending of to of our the to closer midpoint conditions, the a is and the may the their second the bid-ask to quarter-over-quarter, average it expectations. the There sellers trending cap geography As take have prospective mentioned, market continues spread for

that up pace second in the neighborhood the as the half will pick year. the will we’re million XXXX anticipate optimistic in We of of acquisitions be $XX

patient opportunities approach ample the to present We are remaining as in with transact environment, set accretive continuing our powder in current themselves. up to dry ourselves

with and to expired leases with I that renewals for current we a their agreed LOI Service We the am announce have in to to that non-binding for address environment. efforts Service new the Postal Postal our partnership the XXXX. pleased appreciate five-year inflationary

rent rents, these with make forward to to additional more the beyond. the process of Along lease and incorporate working able Postal to annual fixed Service an increase renewals. We annual escalations for renewal XXXX were the efficient to expirations to look we with X.X%

year in Directors estate reinvest decided and rates changes market. maintain Real to and dividend, structural elevated bolster backdrop, to to the the us lasting parts uncertainty Board of over change for period this liquidity. past as occurred interest the to to in our in that Against our potential adjust further of allowing the markets U.S. participants our continue business rapid of increase are the and a market the navigating

and continues by front our evidenced as in on in and unchanged set opportunity business The time tremendous of intact. The rent main XX% maintain historical are to of our retention occupancy pay long-term is and Service the us rate. drivers our Postal properties

demonstrate external attractive internal to delivering has cash to Realty and and growth, will flow consistent while investors. Postal continue

as capacity we and remain highly for financially growth We with are very managing strong and future fragmented operationally our debt a this in consolidate significant market. prudently position

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

Jeremy Garber

April properties square acquired interior and flex of XXXX, under to quarter end quarter net $X.X XX,XXX square leasable Andrew. the XXth, definitive portfolio, an Subsequent company of XX totaling feet additional first from inclusive from you, In and last-mile our Thank seven properties. million million square XX properties acquisitions XXX,XXX properties feet contracts. feet XX the to our XX,XXX through and for placed $X.X added

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

properties strategic weighted We they validates have locations retention process and both lease historical past are logistics due that which of communities our the vital rate these to to Postal maintained a Service network. this This diligence the in importance the average XX% the crucial years, reflects identifying over XX-plus serve.

As properties Andrew intent signed intent recently a highlighted, Service. non-binding net for lease of approximately for renewals XX comprising of the Postal letter renewals feet. The leasable interior with we square letter includes non-binding XXX,XXX

to future. Service in working are Postal execute the We renewals with hard these the near

over to to our quarter XXXX results. call the turn Rob now I’ll discuss financial first

Robert Klein

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

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

quarterly the above $X.XX CapEx basis guidance going for quarter our first per was square remains $X.XX per Recurring foot on forward. square and foot a

QX in from the some year of making same, is our Cash of line for investments G&A year. was environment full last assuming and to guidance conducive expense the XXXX for the remains QX the with deferred

their a percentage to largely G&A to is total XXXX, expense revenue Non-cash annual an the G&A Cash be anticipated electing quarters same of of as to when compensation. of on a to in decline receive basis. stock G&A restricted percentage more to higher employees part compared due should continue as

increase to to we non-binding earnings we the provide last growth Service, wanted our Given with will XXXX X.X%, Postal Same-store NOI to to X% to as agreed-upon reported update preliminary income on an LOI cash compared same-store the operating net figure XXXX. the call. our compared

credit minimizing quarter XXXX, the debt our and maintaining We rate our a of had had borrowings. facility of X.XX% leverage a outstanding five and average our million balance rate exposure variable unsecured all the interest weighted of outstanding company’s At managed comprised low debt. senior to $XX have of first maturity of prudently average and The debt revolving rate $XXX years. XX% by end sheet weighted fixed million

debt-to-annualized EBITDA quarter the times, within of was XXXX, X.X times. For our adjusted net X well first leverage target below

per quarter average first XXXX, the the an program million. and April price common issued gross share, $X.X offering of XX, of shares totaling In through stock its proceeds at XXX,XXX of at-the-market through approximately gross $XX.XX company

dividend for retain amount additional Directors environment, is this share. per company decided Our to a of has an the reinvest for to to annual Board of flow of to the review the and to in quarterly on The balance to growth, $X.XXXX cash sheet. in business increases believes In will it the continue future fortify prudent dividend the basis. Board our maintain Board Directors

flows of are the stable to properties, owner XXXX balance and cash value growth, With our we as well-maintained industry a strong well positioned beyond. postal leadership sheet, and internal largest enhance shareholder in

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

Operator

Instructions] Thank [Operator you. Thank you.

Please question first Our comes Rob your Janney. of line Stevenson state from question. the with

Rob Stevenson

Congress to Is to needed there Andrew, a any here or approval Good that? on take for LOI like non-binding is from what anything actual agreement? funding or an this here contractual morning, dependency guys.

Andrew Spodek

ability to process It’s has and to Congress. from that. It’s The like agree needed the to reviewing a documents, Nothing approval executing and Postal them an execute producing them. Service no LOI thing. No. leases. There’s

Rob Stevenson

get the Okay. expirations, be I is is your at agreement formally your paid, you this point? new happened repeated you mean, to and with midyear the reached given to And in is a or this following be them, or and in conversations that XXXX XXXX forward roadmap and XXXXs for year won’t something continue and different this relationship the have at XXXX point, with going where the XXXX,

Andrew Spodek

make towards the happen. both think process that I beyond like both to to more be that XXXXs to a I parties and committed trying we’re would and think and that efficient working

Rob Stevenson

Okay. Rob, then, just question for And you. one

the capital for How sort avenues you’re attractive On of basically Are is you I given more today? the costs, term happening only what’s there market that characterize the side? the good and at looking -- look debt the cetera, think debt today, structure? in when source where rate the are or mean, been you on the line fit that interest et you loan hedge that of other credit, side, better you out

Robert Klein

good Thanks. a loan source Good have plenty has revolver. Yeah. It We us. accordions question. well. as still We the it and is term not been reliable only still unexercised source, revolver on our on and room but our both the have for of

but us. We’ve to have for away secured doing select you our from for except exists. mortgages. It’s kind that of still still open remember market still But to is that market stayed instances, available that

that options equity And side, then, ATM, a whether OP offerings, have we’ve regular-way about, cetera. bunch different the common it’s on units, we talked of et of course,

feel side. like strong in equity capital a position we’re the on very debt we So and the

Rob Stevenson

versus on pricing the line is Where side secured today? your

Robert Klein

the haven’t that market the in We you market. so that we be little day, investigated in still believe bit, on -- of every volatility will the rates, term a to a and more it right swap changes mortgage period debt will have bunch that secured because of attractive for that now be time to the sheet stay that loan. whether we or the out revolver on on believe balance a for But

Rob Stevenson

Thank guys. you. Thanks, That’s helpful. Okay.

Andrew Spodek

Thank you.

Operator

BMO Capital with line Kim proceed comes question with the question. next Our from of John Markets. your Please

Eric Borden

on color just annual on or this morning. It’s the escalators XXXX the was Good standard I new of of I beyond it then and lease the hopefully rent appreciate going the in kind the and for expirations? guys. Hey, XXXX the curious, for X.X%. forward, is Eric John. is

Robert Klein

Yeah.

are the the we’re expiring dynamics, a touched things be took The efficient how we just on process Andrew at that same environment, towards consideration, the things as will conversations. and the market looking of assets into including for So, and XXXX beyond. more XXXX XXXX rents and lot rolling, looking

Eric Borden

was duration there change you in Okay. the about renewal any And thinking the That’s there? process guys how helpful. or are lease of

Robert Klein

all No. five The were XXXXs years. renewals on the

Eric Borden

payments Okay. I first And rent for Was me. the appreciate additional that. any catch-up in last one there quarter? then

Andrew Spodek

bit that. wasn’t period the kind was of depending substantial -- when There was take on it a I’ll stub rents QX. as new took There Yeah, as a place. of

Eric Borden

All you, it. guys. Appreciate Thank right.

Jeremy Garber

Thank you.

Operator

comes Gorman next Please with questions. the from Michael question Our line your with proceed of BTIG.

Michael Gorman

spread are just I talk but about to heavily Obviously, could side space. help other that morning. the a you maybe of markets, that if Good leverage bid-ask I aren’t Andrew, Thanks. sense from pressure was the of wondering compress. we’re the in catalysts get the there for Yeah. sellers there what more ton seeing your in other a out equation, minute levered

what later or kind and into year maybe So of as could else this XXXX? remaining be that of normalize the close balance spread over just catalyst curious the helps I’m XXXX that we

Andrew Spodek

typically a great heavily That’s of people financed very for have not and of question. owner Postal leverage decades. motivation you. not for a driver average is The Thank these assets a Yeah. is sell. space these so to assets owned This

life shift so And the sell. assets, in is the and driver are typically generational world in largest to what instability the people events, the market, drives the those the

Michael Gorman

same on if the a Okay. active on Great. for of kind I ATM That’s an Twos? appetite with versus Maybe of in helpful. of then you’re as especially just the discussed on Ones line, update and And you sellers, Thanks. handful OP they properties maybe quarter. have know units some that the the

Andrew Spodek

an for appetite units. partnership definitely still the There’s operating

willing option it. that income. have in that there’s appetite and depending to still left or a on good property no are is and our provide but for depreciable collect where We little trading them their at capital in an It’s not defer very tax no time, stock for want still basis our still always families definitely moment particular gains to

to us. it believe we will So be for a good currency continue very

Michael Gorman

just And sorry question the on especially terms you coming can where environment. guess leases you, last maybe get REIT decision it in the payout? this I then, which dividend but the the of understand Board I I’m is with obviously, in, missed you the new down how one I is, question -- Great. the if Okay. the Rob, before and minimums long hold to made dividend, in it, How for

Robert Klein

of we Look, question. return substantial good have a a that’s So on amount capital.

in don’t that’s constant. terms I of amount the a and So concern we’ve kept payout, remember, think it of

a we’re position still and So in we’re total strong a return focused.

a talking what healthy have have -- about concerns this about. that’s it still we for REIT if don’t any maintaining We you’re rules distribution. So

Michael Gorman

Exactly. Right.

guys. for Thanks color Great. Okay. the

Operator

Petersen [Operator Jon Instructions] proceed the comes your with question Our of with Please Jefferies. next question. line from

Jon Petersen

follow I Good up dividend Oh! Thank you. guys. to morning, wanted question. that just actually on

a do or do what another to you maybe way, below like, future? over the of while So how we it what ask think might do line so next growth in here you flow dividend kind few steady drives you expect for if think we preserve of holding earnings with grow kind can cash you guys years. more about increases about Are the or to it is, in where it

Andrew Spodek

Yeah.

We think it don’t covered been each grow this the have have grown public. over I it So dividend. philosophy We a be plan plan year still has time. we’ve since changed. to to We

I continue stand on think like They’re to the would an that. annual to behind Board this review to going basis.

this intent is yet So and time. to the it fluid dynamic, it’s is grow over

Jon Petersen

I then acquisitions And missed said top the you the Okay. first of the the think you call. cap in What right did at it, the quarter? it I rate was on

Robert Klein

X.X%.

Jon Petersen

you. right. All Thank Nice X.X%. me. all for Great. job. That’s

Andrew Spodek

Thank you.

Operator

for you I comments. appears now no Mr. like you. would the to we Spodek, it Thank back this at questions to time. turn floor have closing over further

Andrew Spodek

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

Operator

and conclude Ladies gentlemen, today’s teleconference. does this

this your and you your You have may disconnect lines Thank time. for wonderful at participation day. a

Postal Realty Trust (PSTL) 3 May 232023 Q1 Earnings call transcript