Good afternoon. At this time, I would like to welcome everyone to the Postal Realty Trust Second Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. I’ll now turn the call over to Mr. Blaine Willenborg, Vice President of Business Development and Capital Markets. Please begin your conference.

Thank you. Good afternoon, everyone, and welcome to the Postal Realty Trust second quarter earnings conference call. On the call today, we have Andrew Spodek, Chief Executive Officer; Jeremy Garber, President; 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 may include statements that are not historical facts and are considered forward-looking, including, among others, statements related to the COVID-19 pandemic and its effects on our business, the terms and timing of our pending acquisitions and the status of our ongoing negotiations with the Postal Service. 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 from those described in the forward-looking statements and will be affected by a variety of risk factors that are beyond the Company's control, including, without limitation, those contained in the Company's 10-K filed on March 27, 2020, and its other Securities and Exchange Commission 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, the company may refer to certain non-GAAP financial measures such as funds from operations and adjusted funds from operations. 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 in filings with the Securities and Exchange Commission. Additional information may be found on the Investor Relations page on our website. With that, I will turn the call over to Andrew Spodek, Chief Executive Officer of Postal Realty Trust.

Good afternoon, and thank you for joining Postal Realty Trust's second quarter 2020 earnings call. As the country begins to advance into different phases of reopening, we hope you and your loved ones continue to stay safe. We would also like to thank all the first responders and Postal Service employees for their hard work and commitment since the pandemic began. Our company is currently maintaining an optional work-from-home policy, as we want to respect what is best for each of our team members and their safety. I am pleased to report our company produced strong results in the first half of the year. As a team, we've been able to maintain our health and well-being throughout this crisis. In addition to this, the pandemic has not had any impact on our business’s stable revenue stream. Our rent collection remains unchanged with receiving 100% of our rents in July, as we have every month since our IPO. As a result, we've been able to raise our dividend every quarter. In July, we raised our dividend by 2.5% to $0.82 per share on an annual basis. Our acquisition activity in 2020 has continued to show progress, having closed on approximately 200 properties for approximately $65 million and over 585,000 net leasable interior square feet, all within our stated average cap rate range of 7% to 9%. As we previously communicated, as a result of the pandemic, we proactively and prudently paused our pipeline in the second quarter and took this opportunity to amend our line of credit and successfully completed our first follow-on equity offering. We resumed our acquisition activity in the third quarter, and even with the slowdown, we are on pace to achieve our acquisition goal of $100 million for 2020. Our continued ability to access the capital markets, amend our credit facility, and execute on our acquisition plan in the current environment further highlights the strength of our business model. Having now reported four quarters, it has been extremely rewarding to see our pre-IPO thesis play out firsthand. We welcome our new shareholders that joined us through our first follow-on and thank our initial shareholders for their continued support. We are very much aligned with you. The Board and I are deferring 100% of our cash salaries for 2020 and remain committed to growing shareholder value. I will now turn the call over to Jeremy to discuss our second quarter results.

Thank you, Andrew. And thank you all for joining us this evening. Turning to our financial results, we reported a GAAP net loss of approximately $150,000 in the quarter. FFO for the quarter was $0.23 per share, which includes acquisition-related expenses of approximately $50,000. AFFO for the quarter was $0.26 per share. Moving on to the balance sheet, at June 30, 2020, we had $4.9 million of cash and $84.3 million of debt. During the quarter, we amended our credit facility to allow additional properties to be eligible for the borrowing base and increased the advance rate on our properties from 50% to 60%. We also entered into two mortgages during the second quarter, the first closed in April and was for $4.5 million on 13 properties. The second closed in June for $9.2 million on 22 properties. Both mortgages carry a fixed 4.25% interest rate, are interest-only for the first 18 months, and mature in 2040. In the quarter, our weighted average interest rate on all of our debts was 2.35% at the end of the quarter, with a fixed charge coverage ratio of 5.6 times and a net debt to adjusted EBITDA ratio of 6.2 times. After the quarter ended, we completed a follow-on equity offering; the proceeds from the offering were $52.2 million and were used to pay down a portion of our line of credit and to acquire additional properties. We estimate that the combination of additional capacity on our line of credit and our equity raise offers us in excess of $100 million of acquisition capacity before consideration for any OP unit transactions. After the close of the second quarter, we acquired an additional $23.4 million of assets. The acquisitions are comprised of 98 buildings with approximately 250,000 interior net leasable square feet. We currently have $3.7 million in definitive agreements, the majority of which are expected to close by the end of the third quarter. As Andrew shared, we are on pace to reach our $100 million acquisition targets for this year. Our property cash flows and acquisition activity provide the fuel for our quarterly dividend. On July 30, the Board declared a quarterly dividend of $0.205 for the second quarter, which equates to $0.82 per share annually or a 2.5% increase. This is our second dividend increase in 2020 and our fifth dividend increase since our May 2019 IPO. I wanted to take this opportunity to provide some additional color on our business, as we have now been public for a year. As Andrew mentioned earlier, on July 20, we closed on our first follow-on equity offering, where we sold 4,021,840 common shares, bringing our total shares and OP units outstanding to 12,355,084, and our weighted average shares and units outstanding for the quarter to approximately 11.5 million. Let me turn to an update on leasing. As we have previously shared, the Postal Service rolled out our new lease form that we have been negotiating. We have a letter of intent on 80 of 90 properties with lease expirations in 2020 or prior. Of the 10 remaining expirations, 6 are from new acquisitions this year. We are working diligently with USPS to get all these resolved by the end of the year. We would like to provide additional perspective on our rental revenue, which increased 8% from last quarter to $4.6 million. For the 19 properties acquired in the second quarter, the partial quarter rent was $155,000 and would have been $220,000 if all the transactions closed on April 1. Tenant reimbursements comprised of real estate tax reimbursements for approximately $653,000 for the quarter. This line item will typically increase in tandem with our real estate tax expense because the majority of our leases require reimbursement for real estate taxes. Through acquisitions, we’ve inherited properties that do not provide the reimbursements of taxes. Currently, this equates to a $45,000 quarterly mismatch of tax reimbursement. As we continue to acquire, there may be properties where the taxes are not reimbursed. As these leases roll, we are hopeful to be able to adjust the lease terms for tax reimbursement. With respect to fee and other income, the majority comes from our property management income via TRS. This line item may vary because of one-time other income items. In the second quarter, this line item included an incremental $50,000 from an insurance claim that we do not expect to recur. Moving to expenses, total expenses in the quarter were $5.2 million versus $5.4 million for the prior quarter. G&A in the quarter was $1.9 million as compared to $2.3 million for the prior quarter. Our G&A is comprised of three components and we think it is important to understand each. The first is what we call recurring G&A that includes our salaries, bonuses, benefits, rent, and other public company costs. This amount for the quarter was $1.3 million. This does not include incremental professional fees related to substantial growth in our portfolio. We anticipate this to be relatively flat for each of Q3 and Q4. The second component is our equity-based compensation, which for the second quarter was approximately $535,000. We anticipate this figure will be in the range of approximately $550,000 to approximately $600,000 for each of Q3 and Q4. Finally, the last component which can vary based on our transactional activity is our expenses associated with acquisitions. In the quarter, those costs were approximately $50,000. We believe that for modeling purposes $100,000 to $150,000 is appropriate for each of Q3 and Q4. Interest expense in the quarter was approximately $660,000, down 20.7% from the first quarter of 2020 due to interest rate decline and a decrease in our unused fee. This figure includes our line of credit and interest, our used fee, our fixed mortgage interest, and our non-cash financing costs. Our recurring CapEx for the quarter increased in Q2 2020, and we expect it to continue to go up as we acquire more properties. This quarter it was approximately $125,000 or $0.28 per square foot on an annualized basis. We believe this additional detail provides a more refined framework for how we are currently looking at the business for the remainder of the year. As we approach 2021, we may update some of these items as our business progresses in its second year of operation. I will now turn it back to Andrew for some closing remarks.

The Postal Service remains as resilient as ever through the current crisis. They deliver medications, social security checks, and other necessities and as the leading last mile delivery service for online purchases, proving to be a key essential business. We have received all rents for our 100% occupied portfolio. Recently, there have been numerous news stories around the Postal Service, mostly surrounding their balance sheet and cash flow issues. We understand that articles such as these can raise questions and we want to provide perspective on two main points. The first is the critical importance of the network of facilities to the delivery industry and the American people. The Postal Service is currently the third largest employer in the United States, employing over 600,000 people and delivering to 160 million delivery points every day. The Postal Service has and continues to enable millions of Americans to stay and work from home. This new adjustment has become the norm for so many people, and would be far more difficult had it not been for the daily commitment of deliveries by the Postal Service. The second is the importance of the network of post offices to the Postal Service. With total gross rent accounting for only 1.3% of their annual expenses, the network is a very small cost that is the backbone of the entire business itself. This network of facilities ensures that the Postal Service's last mile delivery dominance is due to this network that all Americans have comfort in knowing they can receive mail or any online purchases wherever they choose to live. Though the Postal Service may have its competitors, none have the infrastructure in place to compete in this regard. In closing, all of our hard work is clearly aimed at growing both our company and shareholder value. Jeremy and I extend our gratitude to the team for their accomplishments and to our shareholders for their support. We would now like to open the call to any questions.

Thank you. We will now move into the question and answer session. Our first question comes from Rob Stevenson with Janney Montgomery Scott. Please go ahead with your question.

Hi, good afternoon or evening, everyone. Andrew, could you provide some insights on the acquisition pipeline related to the $3.7 million you currently have under agreement? Are there any portfolio deals involved, and do you think people are being influenced by potential changes in the 1031 exchange rules?

Sure, Rob. So as we've articulated, we've completed approximately $65 million as of today and are well on our way to accomplish our goal of $100 million for 2020. We have approximately $40 million in various stages of LoI contract and diligence and we're hoping to close the lion's share of those by the end of the year. In terms of sellers and motivations, we've been getting a tremendous response from the seller community, motivated by a lot of things, some of which is probably the 1031 exchange in the upcoming elections.

Okay. And is there a significant portion of the deals that you're talking to right now involving OP units or most people just wanting cash at this point?

We are constantly in communication with various owners and families that are interested in the use of OP units as a means of currency, but we don't have anything specifically in the pipeline that is attributable to the use of units.

Okay. And then any assets currently the two that are known move-outs for the post office at this point, or you expect that everything to the post office to renew everything at the moment?

As of right now we're 100% occupied. We don't expect any vacancies for 2020.

Okay, and then one last question for me. Jeremy, what prompted the SEC filings this morning regarding registration?

From this morning or this afternoon?

It seems the information came through around 9 o'clock this morning on my system, and I'm interested in understanding the focus of the equity offering. What is the main takeaway from those SEC filings?

I'll let Matt speak about the filings. We didn't observe much activity, so I'll allow him to comment.

Hi, this is Matt. I'm not aware of any filings that have come through this morning related to that.

Was the SEC correspondence released primarily concerning registration statements? This morning around 9:05 a.m., there appeared to be about six of them on the EDGAR system. I was curious about what prompted that.

I will follow up offline. If that's easier.

Yes. Let's do that if you don't mind.

Okay. Thanks, guys. Appreciate it.

Thanks. Thanks, Rob.

Thank you. Our next question comes from Michael Gorman with BTIG. Please go ahead with your question.

Yes, thanks. Good evening. Andrew maybe just to follow up on the acquisition pipeline and the OP units specifically obviously the capital markets have been pretty choppy. Can you just talk about your appetite for OP unit deals here obviously the stocks moved up pretty nicely from the offering price versus the seller appetites for OP units in the conversations that you're having?

So the OP unit currency is very valuable to certain families of which are very typical in the postal space. The owners that have owned their assets for decades have very little or no depreciable basis and no shelter of their income, and a sale would trigger a big capital gain. And so, we continue to have a lot of interest in using those units as currency. But, these transactions are typically complicated with various family members involved with different motivations and different things, and so they're not as quick and efficient as everybody would like. We do have an appetite to do those transactions and we believe the owner and seller community does have an appetite as well.

Can you provide insights on the 98 acquisitions you completed after the quarter ended? Are these deals smaller in size compared to your previous transactions and the current portfolio? Considering the themes at play, how does gross interior square footage influence your underwriting process or portfolio construction?

So every deal has to speak for itself. And we evaluate and underwrite each deal very, very specifically. And so, I don't think that there was anything terribly different as it relates to the portfolio that we closed this quarter than the quarters prior. Sometimes just by nature, if there's a group of buildings that were built or owned by a particular family or owner, they may be similar in size or have a concentration in a particular state, because that's where the owners were based. But when you look at it overall, they fall within our general parameters.

Okay, great. And then maybe Jeremy one last one on the mortgages that were done in the quarter, both at the same interest rate, were there any other differences in terms of the LTVs equivalent or anything different between the two mortgages, the one in April and the one in June?

No, they're with the same provider, so all terms are consistent.

Great, thank you very much.

Thank you.

Thank you. Our next question comes from line of Frank Lee with BMO Capital Markets. Please proceed with your question.

Hey, good afternoon, guys. Hi, Andrew. For the acquisition closed in the third quarter, can you talk about how pricing compared versus the deals they've done early in the year prior to the pandemic, and if any OP units were issued to help fund the deals? Thanks.

Thanks, Frank. The pricing fell within the parameters that we look at. So those parameters are still in the 7 to 9 cap rate range. They don't vary drastically for deals that we did prior to the pandemic. We do see some slight pricing changes, but nothing really drastic. Again, we really try to look at every deal and every transaction in their specific way. And so there's nothing terribly unique about the ones that we closed versus the ones we have in the pipeline versus the ones that we closed the quarter prior.

Okay, and then second question has, now that you've completed the follow-on and cemented the credit facility, how should we think about using proper level mortgages to help fund your growth plans?

So for the time being, we're going to be mostly utilizing our line of credit. The interest rate environment is such that it's very, very compelling rates and it's the easiest and most efficient way to execute on our growth plan. As we continue down the road and continue to acquire properties. We are looking at putting specific mortgages on either properties or pools of properties, but this is not something that we're undertaking right now.

Okay, that's all I have. Thank you.

Thank you.

Thank you. Our next question comes from Craig Kucera with Wunderlich Securities. Please go ahead with your question.

Yes. Hi, good evening, guys. I just want to circle back to the commentary on the leases that are still sort of being negotiated and work through the language with the USPS. I guess in late June, I think about 1 million 9 was sort of on a month-to-month basis, it sounds like, and that was with 43 leases. Do you have a sense of what the current rent is on those? I think you mentioned 80 to 90 were, you sort of had a LoI on?

So just to clarify before Jeremy gives you the dollar amounts, we have agreed to lease terms and we're in the process of just processing and turning around documentation on those leases. While that is happening, we are being paid our rent; there are no arrears. And there has been no notification of any reason not to renew or have any vacancies for the year. So this has been more of an administrative paperwork processing than anything else.

Did the process improve from where we were a quarter or so ago in terms of the language, or are we still in the same place?

So things have improved in that we've agreed to language now. It's just a matter of processing all the documentation to fully execute leases. The Postal Service is still a government agency. This is still a relatively new process for them and for us, and so there's quality control on all ends and so this just doesn't happen as quickly as we would like it to.

Okay. While we wait for Jeremy, do you have any thoughts on the situation at the post office last Friday where several senior-level officials were let go? What is your perspective on what is happening?

So in general, I try not to apply on the Postal Service and the way they operate their business. What I do believe is that when a new Postmaster General comes in, they have their own ideas and thoughts on what needs to be changed and typically that translates into employment changes. So I'm very hopeful and confident that the new Postmaster General will be looking at the Postal Service as a business and try to effectuate changes to make it better for the American people. He's a person that comes from the private sector and has experience in the logistics business and hopefully the advantage point will be helpful once he applies it to the Postal Service. More than that, I can't speak to the particular people that were let go or why they were.

Okay, that's my last question, Jeremy. If you don't have it, I can circle back to this evening.

Yes. All right. I do. So the value of the leases in holdover currently is around $2.4 million.

Okay, great. Thanks guys.

In annual rent.

Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Spodek for any final comments.

Thank you very much. On behalf of Jeremy and myself and the entire Postal Realty Trust team, we just want to thank you for joining us today. We hope everyone out there is safe and healthy during these unprecedented times.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.