Buy Thesis - Postal Realty (PSTL) is significantly undervalued compared to its growth rate and business model cleanliness, with a warranted AFFO multiple of 18X, suggesting a potential stock price increase of about 50% from the current $15.36 to $23.58 [1][38] Valuation Multiples - As of November 6, 2025, PSTL is trading at various valuation multiples: P/LTM FFO at 12.00, P/NTM FFO at 12.13, P/LTM AFFO at 11.46, and P/NAV at 75.96%, indicating it is trading well below the value of its underlying properties [3][4] - An 11X forward AFFO multiple is typical for REITs facing low growth, high risk, or high debt, none of which apply to Postal Realty, which has shown over 8% annual AFFO/share growth since 2021 [4][7] Market Obscurity - PSTL's low trading multiple is attributed to its obscurity, with a market float of just under $400 million and being the only publicly traded company in its niche of post office leasing [7][8] - The lack of public peers and predecessors has resulted in limited analytical coverage, making it difficult for larger institutions to invest [9][10] Business Model and Growth - Postal Realty has a dominant market share in post office real estate, controlling over 10% of the total addressable market (TAM) [13] - The company has improved its lease negotiation process, resulting in predictable long-term revenue growth with new leases offering 10-year terms and 3% annual rent escalations [21] - PSTL has maintained 100% rent collection and consistent rental income growth despite concerns over government restructuring and budget cuts [22] Acquisition Strategy - In 2025, PSTL successfully sourced over $100 million in acquisitions, demonstrating a robust pipeline for growth [23][25] - The company has a blended cost of capital between 6% and 7%, allowing for healthy acquisition spreads [31] Financial Metrics - PSTL's AFFO/share growth rate is approximately 8% annually, supported by 3% escalators on new leases and strong acquisition performance [26][27] - The company maintains a clean balance sheet with a debt to EBITDA ratio of 5.2X and a fixed charge coverage ratio of 4.2X, indicating favorable financial health [27][36] Summary of Business Strengths - The combination of a strong business model, clean balance sheet, and high growth potential justifies a higher AFFO multiple of about 18X, with an estimated fair value of $23.58 for 2025 AFFO [38]