Postal Realty Trust, Inc.

Greetings and welcome to Postal Reality Trust's 3rd Quarter 2025 Earnings Call. At this time, all participants and the 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 and good morning, everyone. Welcome to Postal Realty Trust's third quarter 2025 earnings conference call. On the call today, we have Andrew Spodek, Chief Executive Officer, Jeremy Garber, President, Steve Bakke, 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 regulatory filings. The company does not assume and 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, a 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 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 morning, and thanks for joining us today. Our strong third quarter results build on the last several quarters momentum as we continue to solidify our position as the leading owner of US Postal Real Estate. Our team remains highly focused on three areas of our business to create value for shareholders. First, driving organic growth within our portfolio through programmatic leasing with the Postal Service. Second, sourcing and executing postal property acquisitions that are accretive day one to per share earnings and which become significantly more accretive over time. And third, deepening our access to capital to fund accretive growth. These three pillars form the foundation of our high-quality portfolio leased to the Postal Service, which provides a critical, universal service to all Americans that is mandated in the Constitution. This service was not interrupted during the most recent federal government shutdown, and our rental payments have been unaffected. As we like to remind investors, lease expenses represent only 1.5% of the Postal Service's total operating budget, and these real estate locations are the backbone of their entire delivery network, enabling it to provide universal service across 169 million delivery points nationwide. Turning to third quarter results, the team's success executing on the aforementioned three pillars resulted in the company reporting AFFO of $0.33 per share, or growth of 10% compared to last year. In addition, we are increasing 2025 AFFO guidance by $0.06, which represents annual growth of 13% at the midpoint. Looking at per share AFFO growth from 2022 through 2025, our guidance implies compound annual growth of 9% over the three-year period. Starting with leasing, we have worked with the Postal Service to create a highly efficient and repeatable framework to negotiate, process, and execute new leases across both our existing portfolio and future acquisitions. This approach has yielded important benefits for both parties. For postal realty, this framework has improved the predictability of our long-term revenue growth, with our new leases offering a mix of 10-year term and 3% annual rent escalations. We are also now able to anticipate rental rate timing and ranges for future lease commencement further in advance than ever before. Starting this year, greater revenue visibility enabled us to provide annual AFFO per share guidance to investors for the first time, and we will do so again for 2026, on our fourth quarter call. Another benefit of this efficient programmatic leasing approach is that paired with our unmatched ability to manage, operate, and administer a diverse portfolio of over 2,200 postal properties nationally, we serve as a highly responsive single contact point for the Postal Service. Based on our success advancing our new leasing approach and driving property operating efficiencies, we are updating our 2025 same-store cash NOI guidance to a range of 8.5% to 9.5% from our prior guidance of 7% to 9%. Moving to external growth, we were active in the quarter, completing $42.3 million of acquisitions at a weighted average cash cap rate of 7.7%. This brings closed volume through October 17th to just over $100 million. Based on this and on what we see in the pipeline for the remainder of the year, we are now guiding 2025 acquisitions to meet or exceed $110 million. A highlight of our third quarter activity was the acquisition of a high-quality flex property at a prime location in Newtonville, Massachusetts, an affluent suburb just west of Boston. Consistent with the 75% of our portfolio that has been internally sourced, this was an off-market opportunity that came through a relationship form over many years. We were able to purchase this property accretively using a mix of debt and equity capital. We closed on the property for $23.5 million. The initial cash cap rate is 7.6% and will increase to 8.3% in three years. When our cost of capital aligns with an opportunity, we are prepared to move thoughtfully and efficiently to add strong assets to our portfolio. Our capital allocation approach generates accretion day one. and enables us to make progress on two important long-term goals. The first is to deliver increasing value to the U.S. Postal Service as an efficient single point of contact for their real estate needs. The second is to drive consistent, healthy, organic growth for shareholders by finding mark-to-market opportunities coupled with enhancing leases with both annual rent escalators and extending their length. Acquisitions have and will continue to be a critical part of our long-term value creation strategy. Lastly, I would like to address a key addition to our leadership team that we announced in late September. As of October 27, Steve Bakke has now officially stepped into the role of Chief Financial Officer. I can tell you his contributions have been immediate. Steve joins us from Realty Income, where he was SVP of Corporate Finance. His deep perspective in capital markets, corporate finance, and strategy will help further Postal Realty's mission. In addition, Steve is energized and committed to ensure the research community and our current and future investors understand the simplicity, visibility, and earning power of Postal Realty Trust. We are very excited to welcome Steve, and I will now turn the call over to him to go through our third quarter financial results.