Postal Realty Trust, Inc.

Greetings and welcome to Postal Realty Trust's fourth quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the prepared remarks. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jordan Cooperstein, Vice President of FP&A Capital Markets. Welcome, Jordan. Thank you, Jordan.

Thank you, and good morning, everyone. Welcome to Postal Realty Trust's fourth quarter 2024 earnings conference call. On the call today, we have Andrew Spodek, Chief Executive Officer, Jeremy Garber, President, Robert Klein, Chief Financial Officer, and Matt Bramwine, Chief Accounting Officer. Please note, the company may use forward-looking statements on this conference call, which are 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, but not limited to, those contained in the company's latest 10-K and its other securities and exchange commission filings. The company does not assume It specifically disclaims any obligation 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, adjusted EBITDA, and net debt. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable gap 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 morning, and thank you for joining us today. I'd like to first review some of the key accomplishments of 2024 and describe why we entered 2025 with confidence in our ability to drive internal growth while we continue to pursue our acquisition-driven external growth plan. Our strong releasing performance, which was driven by our new streamlined process established with the Postal Service, contributed to full-year AFFO per share of $1.16, an increase of 8.4% year-over-year and greater than 9% above the street consensus at the start of 2024. As I mentioned on our Q3 earning call, we worked collaboratively with the Postal Service and arrived at a multi-tiered programmatic approach to the re-leasing process. This methodology, coupled with an increase in allocated Postal Service resources, has improved the timing and efficiency of re-releasing, which enabled us to provide actual same-store cash NOI figures for 23 and 24, as well as projection for 2025. With rents agreed to for our 2025 expirations, we can now update same-store cash NOI guidance for 2025 to be between 4% and 6% versus our prior guidance of at least 3%. But more importantly, keeping current with releasing provides us with the visibility to share AFFO guidance for the first time as a public company. As Rob will describe in more detail, we project 2025 full-year AFFO to be between $1.20 and $1.22 per share. Turning to our balance sheet, during the year, we added $50 million of commitments to our term loan maturing in February, 2028, and also increased our term loan accordion by $50 million. Further evidence of the supportive partnership we have with our lenders. In 2024, we acquired 197 properties for $91 million at a weighted average cap rate of 7.6%. We anticipate acquisition volume in 2025 to be $80 to $90 million and will continue to target a weighted average cap rate at or above 7.5%. Other successes in 2024 include our first meaningful dispositions as a public company. In October, the company sold two properties to two independent parties for total gross proceeds of $6.3 million, representing a weighted average exit cap rate of 4.9%. We purchased these properties for $3.6 million. While the two properties were quite different from each other, in both cases, a buyer approached us having been attracted to the steady cash flows and strong underlying real estate. The fundamentals of our business remain very strong as evidenced by our current occupancy of 99.8%. As a reminder, we have averaged a 99% lease retention rate with the Postal Service over the past 10 plus years through multiple presidential administrations, and repeated USPS organizational and leadership changes. We remain confident in the Postal Service's continued tenancy, as evidenced by their recent commitment to 10-year leases. As we like to remind shareholders, lease expenses represent only 1.5% of the Postal Service's total operating budget, and these buildings are the backbone of their delivery network. The Postal Service plays a critical and multifaceted role within the economy. providing a universal, affordable, reliable, and secure delivery network that reaches every address in the country. It drives commerce by facilitating the distribution of goods and documents, connecting businesses with customers, and supporting rural communities. The Postal Services Network is considered the largest, most intricate logistics network in the world, serving 169 million delivery points across the country, covering every state, city, and town six and often seven days a week. The Postal Service excels at delivering to rural addresses, which make up almost 60% of U.S. zip codes, because of its mature, on-the-ground, last-mile network, and it does so more cost-effectively than any other provider. Its logistics network, primarily comprised of its real estate footprint, is utilized by parcel delivery organizations, both large and small, making it a critical, irreplaceable piece of American infrastructure, and these are the buildings we're investing in. We continue to demonstrate the power of our internal growth story, coupled with significant runway to expand our portfolio through our unmatched relationships with postal property owners. The successes achieved this past year and our mutually beneficial relationship with our reliable tenant have us well positioned for the year ahead. I'll now turn the call over to Jeremy.