Postal Realty Trust(US:PSTL)2025-08-04 21:20PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements for Q2 and H1 2025, including balance sheets, operations, equity, and cash flows, with notes on policies and items Consolidated Financial Statements Company assets grew to $689.8 million, with Q2 2025 revenues up 29.4% to $23.4 million and net income surging to $3.6 million Consolidated Balance Sheet Highlights | | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $689,822 | $646,818 | | Total Liabilities | $365,268 | $329,320 | | Total Equity | $324,554 | $317,498 | Consolidated Statements of Operations Highlights | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $23,351 | $18,050 | $45,501 | $35,338 | | Income from operations | $8,709 | $4,109 | $14,990 | $7,148 | | Net income attributable to common stockholders | $3,614 | $817 | $5,696 | $1,023 | | Basic and Diluted EPS | $0.12 | $0.02 | $0.19 | $0.01 | Consolidated Statements of Cash Flows Highlights | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $22,224 | $16,286 | | Net cash used in investing activities | ($48,704) | ($43,617) | | Net cash provided by financing activities | $26,024 | $27,075 | Note 1 & 2: Organization and Accounting Policies The company operates as a REIT, owning and managing properties leased to USPS, with financial statements prepared under GAAP - As of June 30, 2025, the Company owned a portfolio of 1,806 properties located in 49 states and one territory, primarily leased to the USPS30 - The Company operates as a single reportable segment, with the CEO acting as the Chief Operating Decision Maker who reviews net income to assess performance42 - For the six months ended June 30, 2025, approximately 10.6% of the Company's total rental income was concentrated in Pennsylvania62 Note 3: Real Estate Transactions In H1 2025, the company acquired 104 properties for $53.2 million and sold one property for $0.8 million Property Acquisition Summary | Period | Number of Properties Acquired | Total Cost (in thousands) | | :--- | :--- | :--- | | Q1 2025 | 36 | $16,341 | | Q2 2025 | 68 | $36,867 | | Total H1 2025 | 104 | $53,208 | - During the six months ended June 30, 2025, the Company sold one real estate property for net proceeds of $0.8 million and recorded a loss of $0.05 million74 Note 5: Debt As of June 30, 2025, total principal indebtedness was $330.2 million, comprising credit facilities, term loans, and secured borrowings Debt Outstanding | Debt Instrument | Outstanding Balance (June 30, 2025) (in USD) | | :--- | :--- | | Revolving Credit Facility | $46,000,000 | | 2021 Term Loan | $75,000,000 | | 2022 Term Loan | $175,000,000 | | Secured Borrowings | $34,168,000 | | Total Principal | $330,168,000 | Note 6: Derivatives and Hedging Activities The company uses nine interest rate swaps with a $250.0 million notional amount to hedge variable-rate term loans, recording fair value changes in OCI - The company has nine interest rate swaps with a total notional amount of $250.0 million to manage interest rate risk on its term loans93 - The swaps are designated as cash flow hedges, with gains or losses recorded in 'Accumulated other comprehensive income' and reclassified to interest expense as payments are made95 Note 7: Leases The company primarily acts as a lessor to USPS, with $315.1 million in future minimum lease payments, and also leases certain ground and office spaces Future Minimum Lease Payments | Year Ending December 31, | Future Minimum Lease Payments (in thousands) | | :--- | :--- | | 2025 - Remaining | $37,160 | | 2026 | $68,317 | | 2027 | $53,537 | | 2028 | $40,945 | | 2029 | $30,463 | | Thereafter | $84,724 | | Total | $315,146 | Note 9: Related Party Transactions Details include a $500,000 payment to the former CFO, $0.6 million in management fees to a CEO-affiliated entity, and CEO personal loan guarantees - A Transition and General Release Agreement was made with former CFO Robert B. Klein, providing for a gross consideration of $500,000, paid partly by accelerating the vesting of 28,000 equity awards114117 - The company's TRS, REAC, has amended management agreements with affiliates of CEO Andrew Spodek, earning $0.6 million in management fees for the six months ended June 30, 2025120124 - CEO Andrew Spodek has personally guaranteed company loans totaling $1.8 million as of June 30, 2025127 Note 11: Stockholders' Equity The company issued 669,454 shares for $9.4 million via ATM, declared $0.2425 per share dividends, and has $21.1 million in unrecognized equity compensation cost ATM Program Activity | ATM Program Activity | Six Months Ended June 30, 2025 (in USD) | | :--- | :--- | | Shares issued | 669,454 | | Gross proceeds received | $9,788,000 | | Net proceeds received | $9,381,000 | | Average gross sales price per share | $14.62 | - The company declared and paid dividends of $0.2425 per share for Q1 2025 and Q2 2025134135 - As of June 30, 2025, there was $21.1 million of total unrecognized compensation cost related to unvested equity awards, expected to be recognized over a weighted average period of 4.9 years148 Note 13: Subsequent Events Post-quarter, the company acquired 23 properties for $8.4 million, issued $5.0 million in ATM stock, and declared its Q2 dividend - Declared a Q2 2025 dividend of $0.2425 per share, payable on August 29, 2025154 - Subsequent to quarter-end (as of August 4, 2025), acquired 23 properties for approximately $8.4 million155 - Subsequent to quarter-end (as of August 4, 2025), issued 337,255 shares under the ATM Program for gross proceeds of approximately $5.0 million155 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses revenue growth from acquisitions, operational factors, liquidity, capital resources, and debt structure, focusing on USPS and future funding Overview and Key Factors An internally managed REIT, the company's performance depends on USPS stability, lease renewals, expense control, and interest expense management for its 1,806 properties - During the six months ended June 30, 2025, the company acquired 104 properties leased to the USPS for approximately $53.2 million163165 - The company is dependent on the USPS's financial and operational stability, which faces challenges that could impact its ability to fund operations without government intervention173 - The majority of leases are modified double-net, where the tenant is responsible for utilities and property tax reimbursement, while the landlord covers insurance, roof, and structure175 Results of Operations Q2 2025 revenues increased 29.4% to $23.4 million and net income grew 352.7% to $4.7 million, driven by acquisitions Financial Performance for Three Months Ended June 30 | (Amounts in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Rental income | $22,730 | $17,364 | 30.9% | | Total revenues | $23,351 | $18,050 | 29.4% | | Income from operations | $8,709 | $4,109 | 111.9% | | Net income | $4,672 | $1,032 | 352.7% | Financial Performance for Six Months Ended June 30 | (Amounts in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Rental income | $44,210 | $33,969 | 30.1% | | Total revenues | $45,501 | $35,338 | 28.8% | | Income from operations | $14,990 | $7,148 | 109.7% | | Net income | $7,327 | $1,288 | 468.9% | Liquidity and Capital Resources Primary liquidity sources are cash from operations, credit facilities, and the ATM program, with $1.1 million cash and $296.0 million outstanding credit as of June 30, 2025 - As of June 30, 2025, the company had $296.0 million of aggregate principal outstanding under its Credit Facilities, including $46.0 million drawn on the Revolving Credit Facility208 - Short-term liquidity needs are met through cash from operations, borrowings under credit facilities, and potential securities issuance via its $150.0 million ATM Program213 - On February 25, 2025, the Board authorized a $25.0 million Share Repurchase Program. No shares were repurchased under this program during the three months ended June 30, 2025225 Item 3. Quantitative and Qualitative Disclosures about Market Risk Primary market risk is interest rate risk on $46.0 million of variable-rate debt, with a 1% SOFR change impacting annualized cash flows by $0.5 million - The company's primary market risk is from interest rates on its indebtedness229 - As of June 30, 2025, after accounting for interest rate swaps on its $250.0 million Term Loans, approximately $46.0 million of the company's total $330.2 million indebtedness was variable-rate debt229 - A hypothetical 1.0% increase or decrease in the one-month Adjusted Term SOFR would result in an approximate $0.5 million decrease or increase in annualized cash flows229 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - An evaluation of disclosure controls and procedures, led by the Principal Executive Officer and Principal Financial Officer, concluded that they were effective as of the end of the period covered by the report232 - There were no changes in the company's internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls233 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not involved in any litigation expected to materially adversely affect its financial position or operations - Management does not believe that any current or pending litigation will materially affect the company's financial position or operations235 Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes have occurred from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024236 Other Items (Items 2, 3, 4, 5) This section reports no unregistered equity sales, no defaults on senior securities, no mine safety disclosures, and no other information - The company reports no unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, or other information for the period237238239240 Item 6. Exhibits Lists filed exhibits, including the former CFO's transition agreement, officer certifications, and XBRL data files - Exhibits filed with the report include the Transition and General Release Agreement with former CFO Robert Klein, CEO and PFO certifications (Sections 302 and 906), and XBRL data files241