8-K
Postal Realty Trust, Inc. (PSTL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliestevent reported): March 25, 2020
Postal Realty Trust, Inc.
(Exact Name of Registrant as Specified inCharter)
| Maryland | 001-38903 | 83-2586114 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission<br><br> <br>File Number) | (I.R.S. Employer<br><br> <br>Identification No.) |
75 Columbia Avenue
Cedarhurst, NY 11516
(Address of Principal Executive Offices, and Zip Code)
(516) 295-7820
Registrant’s Telephone Number, Including Area Code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
|---|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| --- | --- | |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| --- | --- | |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under<br> the Exchange Act (17 CFR 240.13e-4(c)) | |
| --- | --- | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| Class A Common Stock, par value $0.01 per share | PSTL | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and FinancialCondition.
Postal Realty Trust, Inc. (the “Company”) issued a press release on March 25, 2020 announcing its financial results for the fiscal year ended December 31, 2019. A copy of the press release is furnished herewith and attached hereto as Exhibit 99.1.
The information in this Item 2.02 and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act except as set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release of Postal Realty Trust, Inc., dated March 25, 2020 |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| POSTAL REALTY TRUST, INC. | ||
|---|---|---|
| Date: March 25, 2020 | By: | /s/ Jeremy Garber |
| Name:<br><br> <br>Title: | Jeremy Garber<br>President, Treasurer and Secretary |
2
Exhibit 99.1
POSTAL REALTY TRUST, INC. REPORTS FOURTH QUARTER 2019 RESULTS
- Completed $88 Million of Acquisitions sinceMay 2019 IPO -
- Doubled Revenue, Properties and SquareFootage Owned -
- Increased Rental Revenue 31% Quarter-Over-Quarter-
- Increased Quarterly Dividend by 21% -
Cedarhurst, New York, March 25,2020 (Businesswire) — Postal Realty Trust, Inc. (NYSE: PSTL) (the “Company”), an internally managed real estate investment trust that owns properties leased to the United States Postal Service (“USPS”), today announced results for the quarter and year-ended December 31, 2019.
“Since our IPO, less than a year ago, we completed approximately $88 million in acquisitions, which doubled our revenue, properties owned and square footage,” stated Andrew Spodek, Postal Realty Trust, Inc.’s Chief Executive Officer. “We take great pride in the ability to offer our shareholders a highly visible, U.S. Government-backed revenue stream generated by a mission critical service, the Postal Service. We believe the growth of our portfolio and the creditworthiness of our tenant positions us to grow our earnings and dividend in 2020 and beyond. Current macro-economic challenges notwithstanding, we are confident about the long-term prospects for Postal Realty. Our portfolio is fully occupied, highly geographically diversified and provides a strong risk-adjusted return for our shareholders.”
Mr. Spodek concluded, “Through my 10b5-1 purchasing plan, I have been acquiring shares in the open market over the last several weeks in compliance with the federal securities laws. I have a high conviction on the strength of the business model and am further aligning myself with our shareholders.”
Property Portfolio
During the fourth quarter ended December 31, 2019, the Company completed $46.4 million in acquisitions comprised of 447,657 net leasable interior square feet and increased rental revenue 31% quarter-over-quarter. Subsequent to the fourth quarter end, the Company closed $30.2 million of acquisitions comprising 268,146 net leasable interior square feet. As of March 25, 2020, the Company’s portfolio is 100% occupied, comprised of 549 properties across 45 states with approximately 1.7 million net leasable interior square feet and a weighted average rental rate of $9.66 per square leasable square foot.
In addition, the Company has entered into definitive agreements to acquire $11.5 million of properties; these transactions are anticipated to close during the second and third quarters subject to the satisfaction of customary closing conditions.
Balance Sheet
As of December 31, 2019, the Company had cash of $12.5 million on the balance sheet and $57.2 million of debt that carried a weighted average interest rate of 3.5% and a fixed charge coverage ratio of 4.0x. The Company’s net debt to annualized adjusted EBITDA ratio was 5.7x.
On January 30, 2020, the Company increased the size of its credit facility from $100 million to $150 million by exercising $50 million of the $100 million accordion feature on its revolving credit facility.
Dividend
On February 28, 2020, the Company paid a quarterly dividend of $0.17 per share of Class A common stock, representing a 21% increase compared to the prior quarter and an annualized dividend of $0.68 per share.
Webcast and Conference Call Details
Postal Realty Trust will host a webcast and conference call to discuss the fourth quarter 2019 financial results on March 25, 2020 at 5:00 P.M. Eastern Time. A live audio webcast of the conference call will be available on the Company’s investor website at https://investor.postalrealtytrust.com/QuarterlyResults. To participate in the conference call, callers from the United States and Canada should dial-in ten minutes prior to the scheduled call time at 1-877-407-9208. International callers should dial 1-201-493-6784.
Replay
A telephonic replay of the call will also be available from 8:00 P.M. Eastern Time on Wednesday, March 25, 2020, through 11:59 P.M. Eastern Time on Wednesday, April 8, 2020, by dialing 1-844-512-2921 in the United States and Canada or 1-412-317-6671 internationally and entering passcode 13697994.
Non-GAAP Supplemental Financial Information
An explanation of certain non-GAAP financial measures used in this press release, including, FFO and AFFO, as well as reconciliations of those non-GAAP financial measures, to the most directly comparable GAAP financial measure, is included below.
The Company calculates 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.
The Company calculates AFFO by starting with FFO and adjusting for recurring capital expenditures (defined as all capital expenditures that are recurring in nature, excluding capital improvements that are incurred in connection with the acquisition of a property or obtaining a lease or lease renewal) and acquisition related expenses (defined as acquisition-related expenses that are incurred for investment purposes and do not correlate with the ongoing operations of our existing portfolio, including due diligence costs for acquisitions not consummated and certain auditing and accounting fees incurred that were directly related to completed acquisitions or dispositions) that are not capitalized and then adding back non-cash items including: non-real estate depreciation, loss on extinguishment of debt, write-off and amortization of debt issuance costs, straight-line rent adjustments, fair value lease adjustments 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.
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, 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.
2
Forward-Looking and Cautionary Statements
This press release contains “forward-looking statements.” Forward-looking statements include statements regarding the proposed public offering and other statements identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements, including, among others, statements regarding the Company’s ability to obtain financing, the Company’s expected capitalization rates and the Company’s ability to close on pending transactions on the terms or timing it expects, if at all, are based on the Company’s current expectations and assumptions regarding capital market conditions, the Company’s business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the USPS’s terminations or non-renewals of leases, changes in demand for postal services delivered by the USPS, the solvency and financial health of the USPS, competitive, financial market and regulatory conditions, disruption in market, economic and financial conditions as a result of the ongoing COVID-19 pandemic, general real estate market conditions, the Company’s competitive environment and other factors set forth under “Risk Factors” in the Company’s filings with the Securities and Exchange Commission. Any forward-looking statement made in this press release speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
About Postal Realty Trust, Inc.
Postal Realty Trust, Inc. is an internally managed real estate investment trust that owns properties leased to the USPS. The Company believes it is one of the largest owners and managers measured by net leasable square footage of properties that are leased to the USPS.
Contact:
Investor Relations and Media Relations
Email: [email protected]
Phone: 516-232-8900
3
Postal Realty Trust, Inc. and PredecessorConsolidated and Combined Consolidated Statements of OperationsFor the Three and Twelve Months Ended December 31, 2019 and 2018
| Predecessor | Predecessor | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months ended December 31, 2019 | Three Months ended December 31, 2018 | Twelve Months ended December 31, 2019 | Twelve Months ended December 31, 2018 | |||||||||
| Revenues | ||||||||||||
| Rental income | $ | 3,129,972 | $ | 1,462,378 | $ | 8,865,868 | $ | 5,662,145 | ||||
| Tenant reimbursements | 458,617 | 224,039 | 1,311,121 | 892,541 | ||||||||
| Fee and other income | 270,270 | 268,132 | 1,112,367 | 1,130,449 | ||||||||
| Total revenues | 3,858,859 | 1,954,549 | 11,289,356 | 7,685,135 | ||||||||
| Operating expenses | ||||||||||||
| Real estate taxes | 486,775 | 230,830 | 1,366,892 | 919,783 | ||||||||
| Property operating expenses | 385,647 | 309,486 | 1,207,486 | 948,775 | ||||||||
| General and administrative | 1,876,291 | 323,960 | 4,846,392 | 1,410,344 | ||||||||
| Depreciation and amortization | 1,485,506 | 468,662 | 3,800,059 | 1,832,237 | ||||||||
| Total operating expenses | 4,234,219 | 1,332,938 | 11,220,829 | 5,111,139 | ||||||||
| Income (loss) from operations | (375,360 | ) | 621,611 | 68,527 | 2,573,996 | |||||||
| Interest expense, net: | ||||||||||||
| Contractual interest expense | (463,365 | ) | (366,192 | ) | (1,098,788 | ) | (1,478,545 | ) | ||||
| Write-off and amortization of deferred financing costs | (233,205 | ) | (3,181 | ) | (242,763 | ) | (12,556 | ) | ||||
| Loss on extinguishment of debt | - | - | (185,586 | ) | - | |||||||
| Interest income | 2,534 | 1,134 | 5,928 | 4,504 | ||||||||
| Total interest expense, net | (694,036 | ) | (368,239 | ) | (1,521,209 | ) | (1,486,597 | ) | ||||
| Income (loss) before income tax (expense) benefit | (1,069,396 | ) | 253,372 | (1,452,682 | ) | 1,087,399 | ||||||
| Income tax (expense) benefit | - | (22,979 | ) | (39,749 | ) | 60,763 | ||||||
| Net income (loss) | (1,069,396 | ) | 230,393 | (1,492,431 | ) | 1,148,162 | ||||||
| Less: Net income attributable to noncontrolling interest in properties | - | (2,691 | ) | (4,336 | ) | (12,153 | ) | |||||
| Net income attributable to predecessor and Affiliates Predecessor | - | 227,702 | (463,414 | ) | 1,136,009 | |||||||
| Net loss attributable to Operating Partnership unitholders’ noncontrolling interests | 271,948 | 462,968 | ||||||||||
| Net income (loss) attributable to common stockholders | $ | (797,448 | ) | $ | (1,497,213 | ) | ||||||
| Net income (loss) per share (basic and diluted) | $ | (0.16 | ) | $ | (0.30 | ) | ||||||
| Weighted average common shares outstanding (basic and diluted) | 5,164,264 | 5,164,264 |
4
Postal Realty Trust, Inc. and PredecessorConsolidated and Combined Consolidated Balance Sheets
| Predecessor, | |||||
|---|---|---|---|---|---|
| December 31, 2018 | |||||
| ASSETS | |||||
| Real Estate Properties | |||||
| Land | 25,147,732 | $ | 7,239,213 | ||
| Buildings and improvements | 92,873,637 | 29,550,076 | |||
| Tenant improvements | 2,562,293 | 1,646,215 | |||
| Total real estate properties | 120,583,662 | 38,435,504 | |||
| Less: accumulated depreciation | (8,813,579 | ) | (7,121,532 | ) | |
| Total real estate, net | 111,770,083 | 31,313,972 | |||
| Cash | 12,475,537 | 262,926 | |||
| Rent and other receivables | 1,710,314 | 601,670 | |||
| Prepaid expenses and other assets | 2,752,862 | 146,014 | |||
| Escrows and reserves | 708,066 | 598,949 | |||
| Deferred rent receivable | 33,344 | 14,060 | |||
| In-place lease intangibles (net of accumulated amortization | |||||
| of 6,472,157 and 4,388,699, respectively) | 7,315,867 | 2,735,927 | |||
| Above market leases (net of accumulated amortization | |||||
| of 18,496 and 8,688, respectively) | 22,124 | 10,914 | |||
| Total assets | 136,788,197 | $ | 35,684,432 | ||
| LIABILITIES AND EQUITY (DEFICIT) | |||||
| Liabilities | |||||
| Secured borrowings, net | 3,211,004 | $ | 34,792,419 | ||
| Revolving credit facility | 54,000,000 | - | |||
| Accounts payable, accrued expenses and other | 3,152,799 | 1,869,084 | |||
| Below market leases (net of accumulated amortization | |||||
| of 2,071,182 and 1,525,540, respectively) | 6,601,119 | 3,842,495 | |||
| Deferred tax liability, net | - | 793,847 | |||
| Total liabilities | 66,964,922 | $ | 41,297,845 | ||
| Commitments and contingencies | |||||
| Equity (deficit) | |||||
| Common stock, | |||||
| PSTL - .01 par value per share | |||||
| Class A, 500,000,000 shares authorized, 5,285,904 shares issued and outstanding | 52,859 | - | |||
| Class B, 27,206 shares authorized, 27,206 shares issued and outstanding | 272 | - | |||
| UPH - no par, 1,000 shares authorized, 1,000 shares issued and outstanding | - | 4,000,000 | |||
| NPM - no par, 200 shares authorized, issued and outstanding | 200 | ||||
| Additional paid-in capital | 51,396,226 | 3,441,493 | |||
| Accumulated deficit | (2,575,754 | ) | (11,003,876 | ) | |
| Member's deficit | - | (2,095,823 | ) | ||
| Total Stockholders' and Predecessor Equity | 48,873,603 | (5,658,006 | ) | ||
| Operating Partnership unitholders' noncontrolling interests | 20,949,672 | - | |||
| Noncontrolling interest in properties | - | 44,593 | |||
| Total equity (deficit) | 69,823,275 | (5,613,413 | ) | ||
| Total liabilities and equity (deficit) | 136,788,197 | $ | 35,684,432 |
All values are in US Dollars.
5
Postal Realty Trust, Inc.Reconciliation of Net Income (Loss) to FFO and AFFOFor the Three Months Ended December 31, 2019
| Three Months Ended December 31, 2019 | |||
|---|---|---|---|
| Net Income (loss) | $ | (1,069,396 | ) |
| Depreciation and amortization of real estate assets | 1,485,506 | ||
| FFO | $ | 416,110 | |
| Recurring capital expenditures | (60,893 | ) | |
| Acquisition related expenses | 444,544 | ||
| Write-off and amortization of debt issuance costs | 233,205 | ||
| Straight-line rent adjustments | 1,125 | ||
| Amortization of above and below market leases | (209,058 | ) | |
| Non-cash stock compensation expense | 411,652 | ||
| AFFO | $ | 1,236,685 | |
| FFO per common share and common unit outstanding | $ | 0.06 | |
| AFFO per common share and common unit outstanding | $ | 0.17 | |
| Weighted average common shares and common units outstanding | 7,124,638 |
6