2025 PROXY STATEMENT - 1
POSTALREALTYTRUST.COM
POSTALREALTYTRUST.COM
POSTAL REALTY TRUST
2025 Annual Report
3267$/5($/7<75867&20
$SULO, 2025
Dear Fellow Stockholders:
2024 was an important year for Postal Realty Trust. We continued to execute our growth strategy and brought our
acquisition total to over $600 million since our 2019 IPO. Last year, we acquired 197 last-mile and flex properties for
approximately $91 million at a weighted average cap rate of 7.6%, exceeding our annual acquisition target. Additionally, we
continued to advance and accelerate our re-leasing progress with the United States Postal Service (“USPS”). While 2024 was, at
times, a challenging year as we navigated shifting trends in capital markets, we remained committed to our strategy of pursuing
sustainable growth with accretive acquisitions as well as internal growth driven by marking rents to market, incorporating
annual rent escalations in new leases and achieving operating efficiencies at the property level. In doing so, we were able to
deliver AFFO per share growth of ~8.4% while lowering our net debt to annualized adjusted EBITDA ratio year-over-year.1
During 2024, our portfolio occupancy remained above 99%. The USPS remains a reliable tenant, a critical part of our
nation’s infrastructure, and an important strategic partner to us. Their tenancy provides our company the reliable credit and
sustainable cash flows to deliver returns in all economic conditions. The strength of this partnership and our relationship was
critical in underwriting the important enhancements to our re-leasing process. Importantly, the new leases we signed contain 3%
annual rent escalations and include a mix of five and ten-year terms. The introduction of ten-year leases with rent escalations
further reinforces the commitment of the USPS to our properties. A meaningful portion of our portfolio is now tied to these new
terms, and this will continue to grow over time as we renegotiate expiring leases.
We maintained conservative leverage during the year while fueling our growth. At the end of 2024, our debt
outstanding had a weighted average interest rate of 4.35% and a weighted average maturity of 3 years. Net debt to annualized
adjusted EBITDA decreased from 5.6x at the end of 2023 to 5.2x at the end of 2024. Acquisitions were funded with a
combination of debt and equity (both common shares and Operating Partnership Units) as we were able to navigate a complex
market. As a result of this financial diligence and strong operating performance, we delivered quarterly dividend payments
aggregating to $0.96 per share on an annual basis, and we have increased our dividend each year we have been a public
company.
We remain confident in our long-term strategy and the opportunities afforded to us. Our successes in 2024 have
provided us with the visibility to provide AFFO guidance for the first time as a public company. With a proven track record of
external growth, exceptional internal growth, and a strong balance sheet, we remain well-positioned to deliver stockholder
value.
We are always thankful for the continued support of our stockholders and remain committed to honoring your
confidence in us. We look forward to sharing additional updates throughout the year.
Respectfully,
Andrew Spodek
1Each of “AFFO” and “net debt to annualized adjusted EBITDA” represent non-GAAP financial measures which are reconciled in the
“Comments on Regulation G” section below.
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POSTALREALTYTRUST.COM
Comments on Regulation G
An explanation of certain non-GAAP financial measures used in this Annual Report, including, Funds From Operation (“FFO”)
and Adjusted Funds From Operation (“AFFO”), Net Debt and Earnings before Interest Tax and Depreciation and Amortization
(“EBITDA”) and Adjusted EBITDA, as well as reconciliations of those non-GAAP financial measures, to the most directly comparable
GAAP financial measure, is included below.
We calculate FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”)
definition. NAREIT currently defines FFO as follows: net income (loss) (computed in accordance with GAAP) excluding depreciation
and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control,
and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to
decreases in the value of depreciable real estate held by an entity. Other REITs may not define FFO in accordance with the NAREIT
definition or may interpret the current NAREIT definition differently than we do and therefore our computation of FFO may not be
comparable to such other REITs.
We calculate AFFO by starting with FFO and adjusting for recurring capital expenditures (defined as all capital expenditures
and leasing costs that are recurring in nature, excluding expenditures that (i) are for items identified or existing at the time a property
was acquired or contributed (including through our formation transactions), (ii) are part of a strategic plan intended to increase the value
or revenue-generating ability of a property, (iii) are considered infrequent or extraordinary in nature, or (iv) for casualty damage),
acquisition-related expenses (defined as expenses that are incurred for investment purposes and business acquisitions and do not
correlate with the ongoing operations of our existing portfolio, including due diligence costs for acquisitions not consummated and
certain professional fees incurred that were directly related to completed acquisitions or dispositions and integration of acquired
business) that are not capitalized, and certain other non-recurring expenses and then adding back non-cash items including: write-off
and amortization of deferred financing fees, straight-line rent and other adjustments (including lump sum catch up amounts for increased
rents, net of any lease incentives), fair value lease adjustments, income/(expenses) on insurance recoveries from casualties, casualty
losses, non-real estate depreciation and amortization and non-cash components of compensation expense. AFFO is a non-GAAP
financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of
our operating performance. We believe that AFFO is widely used by other REITs and is helpful to investors as a meaningful additional
measure of our ability to make capital investments. Other REITs may not define AFFO in the same manner as we do and therefore our
calculation of AFFO may not be comparable to such other REITs.
We calculate Net Debt as total debt less cash and property-related reserves. Net Debt as of December 31, 2024 is calculated as
total debt of approximately $298 million less cash and property-related reserves of approximately $2.4 million. Net Debt as of
December 31, 2023 is calculated as total debt of approximately $242 million less cash and property-related reserves of approximately
$2.8 million.
We compute EBITDA as earnings before interest, income taxes, depreciation and amortization. We present EBITDA as it is a
measure commonly used in its industry and we believe that this measure is useful to investors and analysts because they provide
important supplemental information concerning its operating performance, exclusive of certain non-cash items and other costs. We use
EBITDA as a measure of its operating performance and not as a measure of liquidity. We compute Adjusted EBITDA by starting with
EBITDA and adjusting for acquisition-related expenses (as defined above) and certain other non-recurring expenses, gain on sale of real
estate assets, casualty and impairment losses, net and non-cash components of compensation expense. EBITDA and Adjusted EBITDA
POSTALREALTYTRUST.COM
are not measures of financial performance under GAAP. You should not consider EBITDA or Adjusted EBITDA as alternatives to net
income or cash flows from operating activities determined in accordance with GAAP. Additionally, our computations of EBITDA and
Adjusted EBITDA may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not
be comparable to similarly titled measures reported by other equity REITs
These metrics are non-GAAP financial measures and should not be viewed as an alternative measurement of our operating
performance to net income. Management believes that accounting for real estate assets in accordance with GAAP implicitly assumes
that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market
conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use
historical cost accounting to be insufficient by themselves. As a result, we believe that the additive use of FFO and AFFO, EBITDA and
Adjusted EBITDA together with the required GAAP presentation, is widely-used by our competitors and other REITs and provides a
more complete understanding of our performance and a more informed and appropriate basis on which to make investment decisions.
Reconciliation of Net Income to FFO and AFFO
Postal Realty Trust, Inc.
Reconciliation of Net Income to FFO and AFFO
(Unaudited, in thousands, except share data)
For the Twelve
Months Ended
December 31,
2024
For the Twelve
Months Ended
December 31, 2023
Net income
$ 8,321
$
4,583
Depreciation and amortization of real estate assets
22,095
19,584
Gain on sale of real estate assets
(2,393)
—
Impairment charges
68
—
FFO
$ 28,091
$
24,167
Recurring capital expenditures
(723)
(508)
Write-off and amortization of deferred financing fees and amortization of debt discount
749
686
Straight-line rent and other adjustments
1,585
(374)
Fair value lease adjustments
(3,178)
(2,551)
Acquisition-related and other expenses
396
624
Expenses (income) on insurance recoveries from casualties
(21)
(679)
Non-real estate depreciation and amortization
107
104
Casualty losses, net
336
—
Non-cash components of compensation expense
6,377
5,833
AFFO
$ 33,719
$
27,302
FFO per common share and common unit outstanding
$ 0.97
$
0.95
AFFO per common share and common unit outstanding
$ 1.16
$
1
.
07
Weighted average common shares and common units outstanding, basic and diluted
29,036,504
25,542,680
POSTALREALTYTRUST.COM
Reconciliation of EBITDA and Adjusted EBITDA
Postal Realty Trust, Inc.
Reconciliation of EBITDA and Adjusted EBITDA
(Unaudited, in thousands)
Reconciliation of Net Debt to Annualized Adjusted EBITDA
Postal Realty Trust, Inc.
Reconciliation of Net Debt to Annualized Adjusted EBITDA
(Unaudited, in thousands)
For the Quarter
Ended December
31, 2024
For the Quarter
Ended December
31, 2023
Net Debt
$295,831
$239,208
Annualized Adjusted EBITDA
56,488
43,036
Net Debt / Annualized Adjusted EBITDA
5.2x
5.6x
For the Three
Months Ended
December 31,
2024
For the Three
Months Ended
December 31, 2023
Net income
$ 5,685
$
1,484
Contractual interest expense
3,268
2,546
Write-off and amortization of deferred financing fees and amortization of debt discounts
206
182
Income tax expense
42
16
Depreciation and Amortization
5,627
$5,161
EBITDA
$ 14,828
$
9,349
Acquisition-related and other expenses
122
105
Casualty and impairment losses, net
188
—
Gain on sale of real estate assets
(2,393)
—
Non-cash components of compensation expense
1,377
1,305
Adjusted EBITDA
$ 14,122
$ 10,759
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