PSTL - Earnings call 3 2023 | Postal Realty Trust, Inc.

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Operator

Greetings, and welcome to Postal Realty Trust's Third Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jordan Cooperstein, Vice President of FP&A Capital Markets. Welcome, Jordan.

Jordan Cooperstein

morning, good and you, everyone. Thank Realty Welcome Conference Quarter Earnings Third to Postal Call. XXXX Trust's

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

Securities in variety provisions any of forward-looking control, in assume statements Please XX-K on Reform and the call, be a may of the update are affected Litigation Exchange company's are historical and its covered other this beyond including, events that Securities factors by forward-looking the considered are filings. harbor statements whether facts note by forward-looking new not statements a may limited those and XXXX. information, that are for does forward-looking. statements, statements of obligation conference contained Actual company and materially The not otherwise. not company the will any to the differ contained company's Private forward-looking described are but use result or statements which Commission and the as latest These in risks those future disclaims specifically Act safe and forward-looking to, results from

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

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

Andrew Spodek

for you thank today. and morning, us Good joining

the our asset period internal of at external XX an weighted top achieving strong efficiencies. base cap growth properties We U.S. marked demonstrated average X% by quarter third for drive Postal during the our the another and across stated Realty. postal rate, operating our quarter acquired and range. expanding to The ability We

to The we cap X.XX% year for optimistic continue transaction the weighted portfolio X.XX%. added between and we encouraging, the million year. and will our that properties work towards volumes our to through this Based $XX the be XXX XXXX end October to $XX through and acquisitions are our million, average of XX, in completed target full have rate continued increase on anticipate is

high differentiator our of The time. not rates even discussion and affirmatively niche Postal occupancy XXX% a for our where has flow are Realty. that services important monthly we their Postal facilities across shall remain rent characteristic we retention but serve, This the government open, Service cash note portfolio stated a predictability to of only significant on that is XXX% of market of as a uninterrupted. persists, will the It's shutdown remain receive their

judicious to our with be We deployment capital. continue of

to with debt Our annualized facility conservative and EBITDA undrawn, remains X.Xx. revolving credit leverage we've net maintained adjusted at completely

ourselves We attractive optimally arise, they on confident have to capitalize will. opportunities positioned that are and we

portfolio. over Our operation cities each growing pride managing has acquiring, XX small everything years take and operating and team in We in of asset in to big properties and the of between. network week. towns Postal they points management from our in distinct we enabling X invest serve infrastructure, a Service X reach American irreplaceable daily the to logistics million delivery people The American on days is experience XXX the the a through to basis

over cycle. our our landing, and will the now the its no or in business, landing, to hard face U.S. Regardless strength turn resilience and unique soft of proved growth. the are and exceedingly a has past economy opportunity whether for tenant future space of our niche economic confident I'll This the we Jeremy. present call in landing

Jeremy Garber

from mile approximately quarter of interior last properties. portfolio, square properties XX,XXX our square from third we inclusive XXXX, of feet XXX,XXX the feet leasable added In XX flex to net square XX and Andrew. you, XXX,XXX Thank feet

the quarter, our marking company. rent to properties XXXX received to also expiring market on the these an XX escalations exceptional the introducing Service, During while executed renewals with Service to we rents annual leases. Postal fully partner Postal is The

regarding expirations making discussions and the remain ongoing, are we XXXX Our lease progress.

maintained rate historical XX% weighted Rob We both third over average now quarter these a and of strategic reflecting over have the the results. years, past to they properties serve. the retention financial our I'll discuss to lease turn to postal service the importance call communities XX-plus the

Robert Klein

pleased us on Jeremy, you, discuss results. everyone, Thank quarter thank you, We're to third our today's and joining for call. financial

our exposure share. XXXX. to average quarter, $X.XX diluted debt variable Funds weighted maturities AFFO, low to was our prudently manage weighted FFO outstanding was and or share of average leverage our We've X.XX%, of or operations, from At funds balance maintaining and minimizing from debt third diluted X interest continued operations $X.XX the sheet per end adjusted had no years until a the rate maturity per of notable rate and a debt. by

completely the of credit and set Net QX, well borrowings to of was million below of $XXX ratio revolving Xx. EBITDA our end rates. X.Xx undrawn unsecured were was XXX% within fixed at senior adjusted Our all debt to facility annualized target

the last that we quarter. raised agreements end of we announced roughly sales forward call, $XX our program through entering ATM into our the subsequent million During by to second

credit forward million the acquisitions. revolving settled agreements, in facility October fund utilizing these sales $XX XX, proceeds of to As and repay the we

$XX,XXX. third quarter Recurring the was under CapEx $X.XX per square for foot at

in to foot. $X.XX As for XXXX we've anticipate be figure per prior discussed the square we around quarters,

prior to recurring complete projects R&M and to is our the CapEx expect guidance year-end, We CapEx and for and $XXX,XXX. quarter $XXX,XXX fourth additional between

and for do during expected and uptick $X.X million, in last between $X year. slight savings as expenses $X.X in to to efficiencies cost a quarter, reducing increase is We million came million is between expense we our the anticipate projected G&A quarter Cash total throughout and which million, guidance XXXX than an continue achieve our fourth XXXX. the and third $X.X lower over

related performed our of vendors. third-party primarily third is to increase projected additional further and timing as technology The in quarter hires, by work the investment compared the to

a expenses efficiencies. operating reminder, equity a the compensation, XXXX figures lower part are employees internal as reduce their electing and result of to of As receive third-party

XXXX our with the of as decline basis. on guidance will year, an cash a annual Consistent revenue percentage throughout G&A

Our a dividend. representing dividend XXXX Board of the share, from of $X.XXXX third per quarter X.X% a quarterly Directors approved increase

to business with Our continues times flows provide stable cash REIT model investors broader market. through the turbulent in

which thrive We with in will to acquisitions patience all exhibiting are business cycles. and markets, the capital prudence that continue reassure economic our investors across should

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

Operator

[Operator Instructions] question of line first Capital the Markets. from Our comes BMO Borden with Eric

Eric Borden

negotiation what in inning ongoing. kind things that trending the are terms tell process of you're you currently could and lease us to know mentioned just of But hoping in, the that process is I I you how date? was

Andrew Spodek

Sure, Eric.

as all vintage. executed year's it's And As you is we're process renewals the XXXX XXXX a the leases. encouraged takes time. that XXXX discussions. renewals, you an the through around by fully the saw the know, received, We process entire And completed

Our goal come up was with to a process. efficient more

through to love we the been XXXX, where achieve with we position that the our would As a allow be have working us we we towards that XXXX And year process out almost in sit will we're all closed to leases our hopeful here goals. done. of

Eric Borden

on I and either debt? from multiple cash, OP guys the just think know And the ATM units should we funding right mix How had the or fourth sources. equity, acquisition you helpful. about then That's for maybe the quarter. between

Robert Klein

Yes. Eric, Rob. this is

same have remains our that lot that I the think story we of the a toolbox. in tools

to to full do We continue our on We markets, is trades have watching vigilant our where be and undrawn. revolver ATM the viable stock if see makes sense.

those that. as of the then unit availability complete And those there the have rate accretive we they're So to OP are at we'll times, and cap do of yes, transactions. transactions,

we and as have still we prior quarters. that things in have use of as So load the equity we full debt can

Eric Borden

quarter one aware if NOI I is a Or that onetime OpEx sequentially. noticed just for run for in for Was last the then there me, we And be should rate XQ XQ? I cost may. of? decreased good any margins that third

Robert Klein

Yes.

was think There's any there that part can a cost I to. are and quarters reimbursements, or of in that for kind we and quarters. things those But quarter margin though decrease the the in cyclical may NOI. not of of X even increase bottom was together was decline in some do So don't there that also margin versus that an while in notice happen NOI prior tenant uptick line be happen the onetime quarter there you'll the really this always the expenses, other reason wasn't point affected that

reimbursement rate up, is increasing So we I well. probably think also but a good it as expenses is noticed, run as going

Operator

from comes the Rob question next line Janney. Stevenson with Our of

Robert Stevenson

debt is days? where these marginal your cost Rob, of

Robert Klein

facility on point our because it's gotten the a on some XX plus that's we X basis rate have revolver, we've XX, based reduction but initiatives. X ESG SOFR X our So on

basis plus to or SOFR depending plus term one we points adjustment the So went when which margin, it's really XX choose, that wherever SOFR, on daily we the SOFR.

Robert Stevenson

Okay.

guys you term? that's that that acquisitions debt are at So point would cheaper the financing line of the there's that not looking that anything is the provide this for primary any line over to -- rate at the be going in sort near you

Robert Klein

the debt. let's swap at lower. the Xs saying marginal, we're swap are cost. the -- the low So somewhere was rate for, X-year Obviously, I time. it, line, time variable that's When if be cost assuming current probably you're The that marginal would the to rates of out, your a that's the call you're drawing rates in at

Robert Stevenson

winds do guys plus the to of quarter, of while the are 'XX would that? your going float in for acquisitions you you $XX fourth see a terms what Or preference And million in Okay. that that do to if early rates? in be and happening up let

Robert Klein

our we debt, same our remains have fixed So determine line. as where swap sheet if as so looking borrowed rates fixed not then term, philosophy we have our typically debt. And kind to of we're acquisitions it arbitrage balance versus that, that rather going We'd to cost use an stay because we of that on revolver we floating. do out I longer tend is a to it's the debt in think fixed

if debt we're the markets. we're So route. the Obviously, going monitoring -- and that's

I ATM do monitoring mentioned be active and prior and done. open As have on question, of markets we that quarter the kind can an each unit we're to Eric transactions the

are other rate, there So cap et share use depending may sources equity cetera. we price, on just and

Robert Stevenson

stock make some how change then some Jeremy, you thinking quarter. Are are that to get or that your maintain you these you are is rates today? in acquisitions, step-ups going given spread acknowledging the of think near the $XX the there going to are of at on they can acquisitions during trading equation You side and up big where enough term OP cost today? the capital that of work? the up And And the did guys units equity that Andrew cap Okay. in your about

Andrew Spodek

a That's question. great

we flow, capital is stock we're purchasing. we're relation The it don't and unit with of valuable, getting always cost we're conversation, in units, partnership very we're So where is not our us. currency really say in but opportunistic yes, to it's from constantly the OP brings our so is operating what sellers evaluating interest and deal happy And today. as what take for price to

not use And it doing a so transactions that with today. of the many currency we're as

Operator

line comes next the Ki Kim Securities. from Our Bin of question with Truist

Ki Bin Kim

topic the if the you that is of to the just the kind bureaucratic fact curious negotiate really it dealing provide? the process. you right Is renewals a Or color back of of entity? describe to going hurdle? can rate? larger -- How much kind key would that large kind and Just you're rental any it trying lease with of Just

Andrew Spodek

is, Sure. is this Andrew.

XXX, a in complication to market leases that on rates think, it, a it's to year. layer in another it. that what layer I how right, we at properties' one Dealing negotiate given depending negotiating analyzing individual adds complicated particular the each with time, rolling XXX adds have of government agency are to and So general, and many

through just think it's think I particular going to don't I of a specific there's So hurdle it. the that's it. process

Ki Bin Kim

Is of year -- that G&A, Okay. -- this year? compared G&A next forward? year ballpark last that's kind $X we I about expect reasonable And think what in went to to terms up of can of I last any million. year, mean going idea expect

Robert Klein

increases next given plan recurring that onetime guidance year. believe But We for be next the coming that will don't year. do So the the in some quarter. no, in we we haven't to of

quarter the So look. how as we'll increase give be guidance you but to in going is next shouldn't the to 'XX large,

Operator

next Our of Ki Securities. line question from Truist Instructions] the with Kim [Operator Bin comes

Ki Bin Kim

That Yes. was quick turnaround. a

to kind on call. question cost the especially cap didn't kind of of want quick what's you I the of they it think I to seller fully expectations what Just we look capital rates like realize forward? where your a happening And kind acquisition up guess -- you would as can of embraced of to cost and buyers increased Have yourselves drift yields. peg to of hog environment? to do in terms capital? this new

Andrew Spodek

I It's answer. a do amount great great question, and a had I tremendous wish of We a volume.

seller's deal rates We're From hoping on every we're is cap. X% to X.X% are and it, change expectation of Can to be the different, a asset or particular which X% right? individual very getting a today, don't they're capital recognizing account having the game. is to that is shift. cap this closed can, into still to first closing as want recognize X.X% still I really are seller's they're they X.X% we negotiate big was half let's we X% best quarter because the of to move. market very different. of team quarter sellers working quarter quarter. a we that taking But But our year, a get cost where call within very to that quarter, you that not voicing the do this they basis. we assets next guess not on last did cap, I where expect cost higher. saying of those the it so cap market us, tell the part price, is pricing to bought And out shift? a these that the And that we want And an that's mix actually, so deals. that every to If well, around of our is We're their this the But possibly of capital be I itself. going in cap an we're the out anybody

Operator

line Petersen question with Our comes Jefferies. from of next the Jon

Jonathan Petersen

business. the office past, about store should curious know talked their that, just investments post I things fleet updated know make them upgrading or aware any on especially or different if relates your we there's where I was trends seeing as in I it the today, be there's maybe if that like you're of. to trucks of we don't designs

that you regard curious should of? are Just -- aware any in there's we your if trends be if that impacting that business

Andrew Spodek

So that their facilities, investing good which facilities business. I know believe it's of They heavily the in trends, directly their know own have been for but directly the I impacting that I that and are a don't thing there of modernization don't those impacting our business. operations is it's our properties.

Operator

from Our of JPMorgan. Tony the next question line comes Paolone with

Nahom Tesfazghi

line on is leases with holdup for guess renewals? You that X.X% the I escalators. some And have the the you forward, leases causing the negotiating Congrats types Nahom Tony are the with this XXXX USPS? in with executing going of similar of USPS on maybe morning. the

Jeremy Garber

been we're just at been facing on focused a and is we've the leases them over the off and for a basis of more this The going an we're efficient referenced, history. now, the experience with Andrew developing back This And time. postal is forth voluminous more has this years. and with service As takes process. number through right that And the process. some on many, many annual

So we to out. year this don't through in, go have year

Our to type our best the goal renewal. outcome is lease achieve any shareholders for on of

we where try that's can. our head are as as this to soon again, bring to goal so is And a to And we today.

Operator

the We CEO, I floor closing Andrew have session. reached to And for the back end comments. would Spodek, of to our like question-and-answer turn over

Andrew Spodek

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

Operator

This concludes you. today's Thank teleconference.

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

Postal Realty Trust (PSTL) 31 Oct 232023 Q3 Earnings call transcript