Postal Realty Trust, Inc.

Greetings and welcome to the Postal Realty Trust third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Mr. Jordan Cooperstein, Vice President of FPNA Capital Markets. Thank you, sir. You may begin your presentation.

Thank you. Good afternoon, everyone, and welcome to the Postal Realty Trust Third Quarter Earnings Conference Call. On the call today, we have Andrew Sodeck, Chief Executive Officer, Jeremy Garber, President, Robert Klein, Chief Financial Officer, and Matt Brandwein, Chief Accounting Officer. Please note the use of forward-looking statements by the company on this conference call. Statements made on this call include statements that are not historical facts and are considered forward-looking. These forward-looking statements are covered by the Safe Harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond the company's control, including, without limitation, those contained in the company's 10-K filed on March 30, 2021, and its other Securities and Exchange Commission filings. The company does not assume and specifically disclaims any obligations to update any forward-looking statements, whether as a result of new information, future events, or otherwise. Additionally, on this conference call, the company may refer to certain non-GAAP financial measures, such as funds from operations, adjusted funds from operations, and adjusted EBITDA. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP measures in the company's earnings release and supplemental materials. With that, I will now turn the call over to Andrew Spodek, Chief Executive Officer of Postal Realty Trust.

Good afternoon, and thank you for joining us today. I'm excited to share another successful quarter of execution on our strategic plan, acquiring accretive assets leased to the Postal Service and delivering stable cash flows from our in-place rents. This quarter, we further strengthened our balance sheet, providing additional financial flexibility to support the company's ongoing growth. As the leading industry consolidator of properties leased to the Postal Service, we continue to source attractive acquisition opportunities. In the third quarter and through November 2nd, we added 74 properties to our portfolio for approximately $37 million, bringing total acquisitions for the year to 199 postal properties for approximately $93 million, on pace to meet or exceed our $100 million target for the year. Since our IPO, we have more than tripled our property count, quadrupled our annualized rental income, and nearly grown our square footage by five times. However, our portfolio still represents under 5% of the square footage leased to the USPS, providing plenty of runway for additional growth. Given our network, reputation as a transaction partner, and our financial flexibility, we remain confident in executing on our strategy. Subsequent to quarter end, we acquired a $15 million, 575,000 square foot mission-critical industrial property in downtown Milwaukee, fully occupied by the Postal Service. Its purchase price represents a cap rate below our targeted range. As we continue to pursue opportunities, we may find other high-quality, mission-critical assets that could be below our targeted range. But we remain confident in our due diligence process that any new assets will add value to our portfolio. I want to reiterate that we operate in a large market that is ripe for consolidation, given it's highly fragmented and largely owned by private individuals. Postal Realty continue to see tremendous interest from potential sellers who understand the value proposition of working with us. With our financial capacity, proven track record, and our ability to offer multiple sources of consideration, we expect to continue to be the natural buyer of assets leased to the Postal Service. The characteristics of postal properties that first enticed us to start investing in these assets decades ago are as relevant as ever. The Postal Service pays their rent, they rarely relocate, and the lease structure allows us to operate these buildings all over the country without the need for any on-site personnel. The USPS has an irreplaceable logistics network and remains critical infrastructure as it supports the ever-growing e-commerce industry and need for last-mile delivery. We have an experienced team, stable and secure cash flows, a proven ability to effectively own and operate properties, and a robust pipeline, all of which supports our confidence to create value for our stakeholders.