Postal Realty Trust(PSTL) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Postal Realty Trust, Inc.'s unaudited consolidated financial statements for Q1 2021 and Q1 2020 Consolidated Balance Sheets Total assets increased to $283.6 million from $258.9 million, while total liabilities decreased to $113.0 million from $139.2 million, leading to significant equity growth | (in $ thousands) | March 31, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $283,647 | $258,885 | | Total real estate properties, net | $256,104 | $233,856 | | Cash | $3,314 | $2,212 | | Total Liabilities | $113,047 | $139,246 | | Secured borrowings, net | $33,055 | $46,629 | | Revolving credit facility | $64,500 | $78,000 | | Total Equity | $170,600 | $119,639 | | Total Stockholders' Equity | $139,517 | $91,990 | Consolidated Statements of Operations Net income reached $126 thousand in Q1 2021, a turnaround from a $1.029 million net loss in Q1 2020, driven by a 71% revenue increase | (in $ thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total revenues | $8,865 | $5,198 | | Rental income | $8,487 | $4,902 | | Total operating expenses | $7,737 | $5,386 | | Income (loss) from operations | $1,128 | $(188) | | Net income (loss) | $126 | $(1,029) | | Net income (loss) attributable to common stockholders | $103 | $(677) | | Basic and Diluted EPS | $0.00 | $(0.14) | Consolidated Statements of Cash Flows Operating cash flow increased to $4.5 million, while investing activities used $25.9 million, and financing provided $22.6 million, resulting in a $1.2 million net cash increase | (in $ thousands) | For the Three Months Ended March 31, 2021 | For the Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,521 | $1,387 | | Net cash used in investing activities | $(25,945) | $(23,211) | | Acquisition of real estate | $(25,399) | $(22,411) | | Net cash provided by financing activities | $22,614 | $12,176 | | Net proceeds from issuance of shares | $53,725 | $— | | Repayments of secured borrowings | $(13,782) | $(27) | | Net increase (decrease) in Cash | $1,190 | $(9,648) | Notes to Consolidated Financial Statements Detailed notes cover organization, accounting policies, Q1 2021 property acquisitions, debt management, USPS lease agreements, equity changes, and subsequent events - As of March 31, 2021, the Company owned a portfolio of 780 postal properties located in 47 states, primarily leased to the United States Postal Service (USPS)[27] - In Q1 2021, the company acquired 54 postal properties for approximately $26.2 million, including closing costs, funded with borrowings under the Credit Facility[64][67] - In January 2021, the company completed a follow-on public offering of 3.74 million shares of Class A Common Stock, resulting in net proceeds of approximately $53.9 million[104] - Subsequent to quarter-end, the company acquired 16 additional postal properties for $6.1 million and declared a Q1 dividend of $0.22 per share[120][121] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2021 financial performance, revenue growth from acquisitions, liquidity, capital resources, and the strategy of managing USPS-leased properties Overview The REIT's portfolio includes 780 USPS-leased properties; Q1 2021 saw 54 acquisitions for $26.2 million and a $53.9 million follow-on offering - As of March 31, 2021, the portfolio consists of 780 owned postal properties in 47 states, with approximately 3.4 million net leasable interior square feet[131] - In Q1 2021, the company acquired 54 postal properties for approximately $26.2 million[131] - The January 2021 Follow-on Offering raised approximately $53.9 million in net proceeds from the sale of 3.74 million shares[134] Results of Operations Total revenues increased 71% to $8.9 million, driven by acquisitions, while operating expenses rose 44%, leading to $1.1 million income from operations | (in $ thousands) | For the Three Months Ended March 31, 2021 | For the Three Months Ended March 31, 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $8,865 | $5,198 | $3,667 | 71% | | Rental income | $8,487 | $4,902 | $3,585 | 73% | | Total operating expenses | $7,737 | $5,386 | $2,351 | 44% | | Property operating expenses | $910 | $407 | $503 | 124% | | Depreciation and amortization | $3,169 | $2,035 | $1,134 | 56% | | Income (loss) from operations | $1,128 | $(188) | $1,316 | (700)% | | Net income (loss) | $126 | $(1,029) | $1,155 | (112)% | - The increase in revenue and operating expenses is primarily attributable to the full impact of the 261 properties acquired in 2020 and the 54 properties acquired in Q1 2021[157][160][163] Liquidity and Capital Resources The company held $3.3 million cash, with $97.8 million total debt including $64.5 million on its revolving credit facility, funding growth via debt, equity, and property sales - As of March 31, 2021, the company had approximately $3.3 million of cash and $1.1 million of escrows and reserves[169] | Indebtedness (in $ thousands) | Outstanding Balance as of March 31, 2021 | Interest Rate at March 31, 2021 | | :--- | :--- | :--- | | Revolving Credit Facility | $64,500 | LIBOR+170bps | | AIG – December 2020 | $30,225 | 2.80% | | Other Secured Borrowings | $2,969 | 4.00% - 6.00% | | Total Principal | $97,754 | | - The company has a $150.0 million revolving credit facility, with $64.5 million outstanding as of March 31, 2021[171] Item 3. Quantitative and Qualitative Disclosures about Market Risk Primary market risk is interest rate fluctuation on $64.5 million variable-rate debt out of $97.8 million total, with potential use of derivatives to manage it - As of March 31, 2021, total indebtedness was approximately $97.8 million, consisting of $64.5 million of variable-rate debt and $33.3 million of fixed-rate debt[190] - A 0.50% (50 basis point) change in the one-month LIBOR rate would impact the company's annualized cash flows by approximately $0.3 million[190] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that as of the end of the period, the company's disclosure controls and procedures were effective[192] - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[193] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not involved in material litigation and anticipates no future routine litigation will materially impact its financial position - Management does not believe that any current or future routine litigation will materially affect the company's financial position or operations[196] Item 1A. Risk Factors No material changes to risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020 have occurred[197] Item 5. Other Information On May 14, 2021, the company terminated its open market sale agreement with D.A. Davidson & Co., part of its ATM program, with no shares sold - On May 14, 2021, the company terminated its open market sale agreement with D.A. Davidson & Co., effective immediately[200]