Financial Data and Key Metrics Changes - The company reported adjusted funds from operations (AFFO) per share of $0.33 for Q2 2025, leading to an increase in full-year 2025 AFFO guidance to a range of $1.24 to $1.26 per share, reflecting nearly 8% year-over-year growth [6][7][15] - Funds from operations (FFO) for the quarter were $0.35 per diluted share, with the increase in guidance attributed to lower operating expenses and effective cost management [15][17] Business Line Data and Key Metrics Changes - The company executed ten-year leases for 31% of its portfolio, with 55% of leases featuring annual rent escalations, enhancing revenue predictability [4][5] - The same store cash net operating income (NOI) guidance was updated to a range of 7% to 9%, up from a previous range of 4% to 6%, driven by successful re-leasing efforts and reduced expenses [10][15] Market Data and Key Metrics Changes - The company completed acquisitions of 127 properties year-to-date for over $60 million, with a weighted average cap rate of 7.8% [8][9] - The net debt to annualized adjusted EBITDA ratio decreased to 5.1 times, down from 5.2 times in 2024, indicating improved leverage [9][17] Company Strategy and Development Direction - The company is focused on acquiring new assets and improving cash flow, with a strategy to consolidate a fragmented market [11][19] - The management emphasized the importance of maintaining a strong balance sheet while pursuing growth opportunities through acquisitions [5][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the value of the portfolio and its alignment with the Postal Service's mission, highlighting the importance of their partnership [11] - The new Postmaster General's commitment to the Postal Service's role in American infrastructure was noted as a positive development for the company's future [10][11] Other Important Information - The company raised nearly $18 million in equity through an ATM offering, indicating strong market support [17] - A quarterly dividend of $0.025 per share was approved, representing a 1% increase from the previous year, and remains well covered by AFFO [17] Q&A Session Summary Question: Can you walk us through the pickup in the same store NOI guidance? - Management explained that the increase in same store NOI is due to a combination of revenue growth from re-leasing efforts and reduced expenses, leading to a revised guidance [22][23] Question: What is driving the step down in the run rate for AFFO? - Management clarified that operating expenses are variable and depend on project scope and timing, with historical expense trends informing annual budgeting [24][25] Question: Can you discuss the efficiencies being implemented in acquisitions? - Management confirmed that while acquisitions are made at or above a 7.5% cap rate, operational efficiencies are expected to increase stabilized yields through effective management and leasing processes [28][29]

Financial Data and Key Metrics Changes - The company reported funds from operations (FFO) of $0.28 and adjusted funds from operations (AFFO) of $0.32 per diluted share for Q1 2025, with a projected AFFO of $0.02 per share due to contractual rent escalations in 2025 [15][16] - The weighted average interest rate on outstanding debt was 4.4%, with a net debt to annualized adjusted EBITDA ratio remaining flat at 5.2 times [15][16] Business Line Data and Key Metrics Changes - The company acquired 36 properties for approximately $16 million at a 7.6% weighted average cap rate, adding about 100,000 net leasable square feet to the portfolio [14] - 32% of the portfolio will have ten-year lease durations, and 56% will contain annual rent escalations once all leases for 2025 and 2026 are executed [13] Market Data and Key Metrics Changes - The company anticipates acquisition volume for the year to be between $80 million and $90 million, maintaining a targeted cap rate of 7.5% or above [8][9] - The company has seen a strong acquisition pipeline and active dialogue with property owners, with 75% of acquisitions sourced off-market [10][9] Company Strategy and Development Direction - The company is focused on enhancing internal growth through efficient lease management and has established a programmatic approach with the Postal Service to secure leases ahead of expiration [5][6] - The company aims to strengthen its position as a market leader in postal real estate by acquiring new assets and improving cash flow [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the value of their properties to the Postal Service's mission and the visibility of cash flows, despite ongoing discussions regarding the Postal Service's budget and operations [11][20] - The company remains optimistic about future opportunities arising from potential changes in the Postal Service's operational focus [23] Other Important Information - The company raised approximately $3 million in equity through an ATM offering program and continues to prioritize decreasing cash G&A as a percentage of revenue [16][17] - A quarterly dividend of $0.02 per share was approved, representing a 1% increase from the previous year [17] Q&A Session Summary Question: Can you provide the gap in cash leasing spreads on the '25 lease renewals? - Management noted that they historically do not provide leasing spreads but have been sharing same-store numbers [19] Question: Can you elaborate on the productive conversations in Washington DC regarding DOGE and USPS support? - Management indicated that while they monitor developments, there has been no material change regarding the Postal Service and DOGE, and they continue to work efficiently with the leasing department [20][22] Question: What percentage of the overall portfolio is expected to have annual rent escalations by year-end? - Management clarified that 56% of the portfolio will contain rent escalations once all leases are executed [27] Question: What are the current cap rates in the marketplace? - Management stated that cap rates have remained steady, with expectations to close the year at or above a 7.5% capitalization rate [32] Question: Are external economic factors affecting acquisition volume? - Management confirmed that external factors like tariffs do not significantly impact acquisition volume, as sellers are motivated by various reasons [33] Question: How is the company underwriting properties in light of potential government reductions in real estate footprint? - Management emphasized the importance of acquiring properties that are critical to the Postal Service's operations, maintaining a high retention rate [35]