Postal Realty Trust, Inc S-3, filed Dec 2, 2020

Postal Realty Trust, Inc. (PSTL)

S-3 2020-12-02

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		Emerging growth company	☒

	PAGE
ABOUT THIS PROSPECTUS	ii
INCORPORATION BY REFERENCE OF INFORMATION FILED WITH THE SEC	iii
WHERE YOU CAN FIND MORE INFORMATION	iv
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	v
POSTAL REALTY TRUST, INC.	1
RISK FACTORS	2
USE OF PROCEEDS	3
DESCRIPTION OF CAPITAL STOCK	4
DESCRIPTION OF WARRANTS	10
DESCRIPTION OF UNITS	11
LEGAL OWNERSHIP OF SECURITIES	12
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS	15
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS	20
PLAN OF DISTRIBUTION	46
LEGAL MATTERS	49
EXPERTS	50

	●	our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 27, 2020;
	●	our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020, filed with the SEC on June 26, 2020, August 14, 2020 and November 13, 2020, respectively;
	●	the information specifically incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2019 from our Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 29, 2020;
	●	our Current Reports on Form 8-K, filed with the SEC on January 13, 2020, February 4, 2020, April 29, 2020, May 15, 2020, July 1, 2020, July 21, 2020, November 10, 2020, December 1, 2020 and December 2, 2020, and Current Report on Form 8-K/A, filed with the SEC on February 6, 2020; and
	●	the description of our Class A common stock contained in our Registration Statement on Form 8-A filed with the SEC on May 7, 2019.

	●	change in the status of the United States Postal Service (the “USPS”) as an independent agency of the executive branch of the U.S. federal government;
	●	change in the demand for postal services delivered by the USPS;
	●	our ability to come to an agreement with the USPS regarding new leases;
	●	the solvency and financial health of the USPS;
	●	defaults on, early terminations of or non-renewal of leases by the USPS;
	●	the competitive market in which we operate;
	●	changes in the availability of acquisition opportunities;
	●	our inability to successfully complete real estate acquisitions or dispositions on the terms and timing we expect, or at all;
	●	our failure to successfully operate developed and acquired properties;
	●	adverse economic or real estate developments, either nationally or in the markets in which our properties are located;
	●	decreased rental rates or increased vacancy rates;
	●	change in our business, financing or investment strategy or the markets in which we operate;
	●	fluctuations in mortgage rates and increased operating costs;
	●	changes in the method pursuant to which reference rates are determined and the phasing out of the London Interbank Offered Rate after 2021;
	●	general economic conditions;
	●	financial market fluctuations;
	●	our failure to generate sufficient cash flows to service our outstanding indebtedness;
	●	our failure to obtain necessary outside financing on favorable terms or at all;
	●	failure to hedge effectively against interest rate changes;
	●	our reliance on key personnel whose continued service is not guaranteed;
	●	the outcome of claims and litigation involving or affecting us;
	●	changes in real estate, taxation and zoning laws and other legislation and government activity and changes to real property tax rates and the taxation of REITs in general;

	●	operations through joint ventures and reliance on or disputes with co-venturers;
	●	cybersecurity threats;
	●	environmental uncertainties and risks related to adverse weather conditions and natural disasters;
	●	governmental approvals, actions and initiatives, including the need for compliance with environmental requirements;
	●	lack or insufficient amounts of insurance;
	●	limitations imposed on our business in order to maintain our status as a REIT and our failure to maintain such status; and
	●	public health threats such as the novel coronavirus COVID-19.

	●	the designation and par value of the preferred stock;
	●	the voting rights, if any, of the preferred stock;
	●	the number of shares of preferred stock offered, the liquidation preference per share of preferred stock and the offering price of the preferred stock;
	●	the distribution rate(s), period(s) and payment date(s) or method(s) of calculation applicable to the preferred stock;
	●	whether distributions will be cumulative or non-cumulative and, if cumulative, the date(s) from which distributions on the preferred stock will cumulate;
	●	the procedures for any auction and remarketing for the preferred stock, if applicable;
	●	the provision for a sinking fund, if any, for the preferred stock;
	●	the provision for, and any restriction on, redemption, if applicable, of the preferred stock;
	●	the provision for, and any restriction on, repurchase, if applicable, of the preferred stock;
	●	the terms and provisions, if any, upon which the preferred stock will be convertible into Class A common stock, including the conversion price (or manner or calculation) and conversion period;
	●	the terms under which the rights of the preferred stock may be modified, if applicable;
	●	the relative ranking and preferences of the preferred stock as to distribution rights and rights upon the liquidation, dissolution or winding up of our affairs;
	●	any limitation on issuance of any other series of preferred stock, including any series of preferred stock ranking senior to or on parity with the series of preferred stock as to distribution rights and rights upon the liquidation, dissolution or winding up of our affairs;
	●	any listing of the preferred stock on any securities exchange;
	●	if appropriate, a discussion of any additional material federal income tax considerations applicable to the preferred stock;
	●	information with respect to book-entry procedures, if applicable;
	●	in addition to those restrictions described below, any other restrictions on the ownership and transfer of the preferred stock; and
	●	any additional rights, preferences, privileges or restrictions of the preferred stock.

	●	beneficially or constructively owning or transferring shares of our capital stock if such ownership or transfer would result in our being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a year);
	●	transferring shares of our capital stock if such transfer would result in our capital stock being owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code);
	●	beneficially or constructively owning shares of our capital stock to the extent such beneficial or constructive ownership would cause us to constructively own ten percent or more of the ownership interests in a tenant (other than a taxable REIT subsidiary (a “TRS”)) of our real property within the meaning of Section 856(d)(2)(B) of the Code; or
	●	beneficially or constructively owning or transferring shares of our capital stock if such beneficial or constructive ownership or transfer would otherwise cause us to fail to qualify as a REIT under the Code.

	●	the title of the equity warrants;
	●	the aggregate number of the equity warrants outstanding;
	●	the price or prices at which the equity warrants will be issued;
	●	the type and number of securities purchasable upon exercise of the equity warrants;
	●	the date, if any, on and after which the equity warrants and the related securities will be separately transferable;
	●	the price at which each security purchasable upon exercise of the equity warrants may be purchased;
	●	the provisions, if any, for changes to or adjustments in the exercise price;
	●	the date on which the right to exercise the equity warrants shall commence and the date on which such right shall expire;
	●	the minimum or maximum amount of equity warrants that may be exercised at any one time;
	●	information with respect to book-entry procedures, if any;
	●	any anti-dilution protection;
	●	a discussion of certain federal income tax considerations applicable to the equity warrants; and
	●	any other terms of the equity warrants, including terms, procedures and limitations relating to the transferability, exercise and exchange of such warrants.

	●	the title of any series of units;
	●	identification and description of the separate constituent securities comprising the units;
	●	the price or prices at which the units will be issued;
	●	the date, if any, on and after which the constituent securities comprising the units will be separately transferable;
	●	information with respect to any book-entry procedures;
	●	a discussion of certain federal income tax considerations applicable to the units; and
	●	any other terms of the units and their constituent securities.

	●	how it handles securities payments and notices;
	●	whether it imposes fees or charges;
	●	how it would handle a request for the holders’ consent, if ever required;
	●	whether and how you can instruct it to send you securities registered in your own name so you can be a holder, if that is permitted in the future;
	●	how it would exercise rights under the securities if there were a default or other event triggering the need for holders to act to protect their interests; and
	●	if the securities are in book-entry form, how the depositary’s rules and procedures will affect these matters.

	●	an investor cannot cause the securities to be registered in his or her name, and cannot obtain non-global certificates for his or her interest in the securities, except in the special situations we describe below;
	●	an investor will be an indirect holder and must look to his or her own bank or broker for payments on the securities and protection of his or her legal rights relating to the securities, as described above;
	●	an investor may not be able to sell interests in the securities to some insurance companies and to other institutions that are required by law to own their securities in non-book-entry form;

	●	an investor may not be able to pledge his or her interest in a global security in circumstances where certificates representing the securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective;
	●	the depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating to an investor’s interest in a global security. We and any applicable trustee have no responsibility for any aspect of the depositary’s actions or for its records of ownership interests in a global security. We and the trustee also do not supervise the depositary in any way;
	●	the depositary may, and we understand that DTC will, require that those who purchase and sell interests in a global security within its book-entry system use immediately available funds, and your broker or bank may require you to do so as well; and
	●	financial institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest in a global security, may also have their own policies affecting payments, notices and other matters relating to the securities. There may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not responsible for the actions of any of those intermediaries.

	●	if the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security and we do not appoint another institution to act as depositary within 90 days;
	●	if we notify any applicable trustee that we wish to terminate that global security; or
	●	if an event of default has occurred with regard to securities represented by that global security and has not been cured or waived.

	●	the corporation’s board of directors will be divided into three classes;
	●	the affirmative vote of two-thirds of the votes cast in the election of directors generally is required to remove a director;
	●	the number of directors may be fixed only by vote of the directors;
	●	a vacancy on its board of directors be filled only by the remaining directors and that directors elected to fill a vacancy will serve for the remainder of the full term of the class of directors in which the vacancy occurred; and
	●	the request of stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting is required for the calling of a special meeting of stockholders.

	●	supermajority vote and cause requirements for removal of directors;
	●	requirement that stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting must act together to make a written request before our stockholders can require us to call a special meeting of stockholders;
	●	provisions that vacancies on our Board of Directors may be filled only by the remaining directors for the full term of the directorship in which the vacancy occurred;
	●	the power of our Board of Directors, without stockholder approval, to increase or decrease the aggregate number of authorized shares of stock or the number of shares of any class or series of stock; provided that our board may not increase the number of shares of Voting Equivalency stock that we have authority to issue or reclassify any shares of our capital stock as Voting Equivalency stock without the approval of the holders of a majority of the outstanding shares of Class A common stock (voting as a separate class);
	●	the power of our Board of Directors to cause us to issue additional shares of stock of any class or series and to fix the terms of one or more classes or series of stock without stockholder approval;
	●	the restrictions on ownership and transfer of our stock; and
	●	advance notice requirements for director nominations and stockholder proposals.

	●	the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty;
	●	the director or officer actually received an improper personal benefit in money, property or services; or
	●	in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

	●	any present or former director or officer of our company who is made, or threatened to be made, a party to the proceeding by reason of his or her service in that capacity; or
	●	any individual who, while a director or officer of our company and at our request, serves or has served as a director, officer, partner, trustee, member, manager, employee or agent of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made, or threatened to be made, a party to the proceeding by reason of his or her service in that capacity.

	●	insurance companies;
	●	tax-exempt organizations (except to the limited extent discussed in “—Taxation of Tax-Exempt Stockholders” below);
	●	financial institutions or broker-dealers;
	●	non-U.S. individuals and foreign corporations (except to the limited extent discussed in “—Taxation of Non-U.S. Stockholders” below);
	●	U.S. expatriates;
	●	persons who mark-to-market our securities;
	●	subchapter S corporations;
	●	U.S. stockholders (as defined below) whose functional currency is not the U.S. dollar;
	●	regulated investment companies and REITs;
	●	trusts and estates;
	●	holders who receive our securities through the exercise of employee stock options or otherwise as compensation;
	●	persons holding our securities as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment;
	●	persons subject to the alternative minimum tax provisions of the Code; and
	●	persons holding our securities through a partnership or similar pass-through entity.

	1.	It is managed by one or more trustees or directors.
	2.	Its beneficial ownership is evidenced by transferable shares, or by transferable certificates of beneficial interest.
	3.	It would be taxable as a domestic corporation, but for the REIT provisions of the federal income tax laws.
	4.	It is neither a financial institution nor an insurance company subject to special provisions of the federal income tax laws.
	5.	At least 100 persons are beneficial owners of its shares or ownership certificates.
	6.	Not more than 50% in value of its outstanding shares or ownership certificates is owned, directly or indirectly, by five or fewer individuals, which the Code defines to include certain entities, during the last half of any taxable year.
	7.	It elects to be a REIT, or has made such election for a previous taxable year, and satisfies all relevant filing and other administrative requirements established by the IRS that must be met to elect and maintain REIT status.
	8.	It meets certain other qualification tests, described below, regarding the nature of its income and assets and the amount of its distributions to stockholders.
	9.	It uses a calendar year for federal income tax purposes and complies with the recordkeeping requirements of the federal income tax laws.

	●	rents from real property;
	●	interest on debt secured by mortgages on real property, or on interests in real property, and interest on debt secured by mortgages on both real and personal property if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property;
	●	dividends or other distributions on, and gain from the sale of, shares in other REITs;
	●	gain from the sale of real estate assets;
	●	income and gain derived from foreclosure property;
	●	amounts (other than amounts the determination of which depends in whole or in part on the income or profits of any person) received or accrued as consideration for entering into agreements (i) to make loans secured by mortgages on real property or on interests in real property or (ii) to purchase or lease real property (including interests in real property and interests in mortgages on real property); and
	●	income derived from the temporary investment of new capital that is attributable to the issuance of our stock or a public offering of our debt with a maturity date of at least five years and that we receive during the one-year period beginning on the date on which we received such new capital.

	●	First, the rent must not be based, in whole or in part, on the income or profits of any person, but may be based on a fixed percentage or percentages of receipts or sales.
	●	Second, neither we nor a direct or indirect owner of 10% or more of our stock may own, actually or constructively, 10% or more of a tenant from whom we receive rent, other than a TRS.
	●	Third, if the rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total rent received under the lease, then the rent attributable to personal property will qualify as rents from real property. However, if the 15% threshold is exceeded, the rent attributable to personal property will not qualify as rents from real property.
	●	Fourth, we generally must not operate or manage our real property or furnish or render services to our sole tenant, other than through an “independent contractor” who is adequately compensated and from whom we do not derive revenue. Furthermore, we may own up to 100% of the stock of a TRS which may provide customary and noncustomary services to our sole tenant without tainting our rental income for the related properties. However, we need not provide services through an “independent contractor” or a TRS, but instead may provide services directly to our sole tenant, if the services are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not considered to be provided for the tenants’ convenience. In addition, we may provide a minimal amount of “noncustomary” services to the tenants of a property, other than through an independent contractor or a TRS, as long as our income from the services (valued at not less than 150% of our direct cost of performing such services) does not exceed 1% of our income from the related property.

	●	are fixed at the time the leases are entered into;
	●	are not renegotiated during the term of the leases in a manner that has the effect of basing rent on income or profits; and
	●	conform with normal business practice.

	●	an amount that is based on a fixed percentage or percentages of receipts or sales; and
	●	an amount that is based on the income or profits of a debtor, as long as the debtor derives substantially all of its income from the real property securing the debt from leasing substantially all of its interest in the property, and only to the extent that the amounts received by the debtor would be qualifying “rents from real property” if received directly by a REIT.

	●	the REIT has held the property for not less than two years;
	●	the aggregate expenditures made by the REIT, or any partner of the REIT, during the two-year period preceding the date of the sale that are includable in the basis of the property do not exceed 30% of the selling price of the property;
	●	either (i) during the year in question, the REIT did not make more than seven sales of property other than foreclosure property or sales to which Section 1031 or 1033 of the Code applies, (ii) the aggregate adjusted bases of all such properties sold by the REIT during the year did not exceed 10% of the aggregate bases of all of the assets of the REIT at the beginning of the year, (iii) the aggregate fair market value of all such properties sold by the REIT during the year did not exceed 10% of the aggregate fair market value of all of the assets of the REIT at the beginning of the year, (iv) (a) the aggregate adjusted bases of all such properties sold by the REIT during the year did not exceed 20% of the aggregate adjusted bases of all property of the REIT at the beginning of the year and (b) the 3-year average percentage of properties sold by the REIT compared to all the REIT’s properties (measured by adjusted bases) taking into account the current and two prior years did not exceed 10%, or (v) (a) the aggregate fair market value of all such properties sold by the REIT during the year did not exceed 20% of the aggregate fair market value of all property of the REIT at the beginning of the year and (b) the 3-year average percentage of properties sold by the REIT compared to all the REIT’s properties (measured by fair market value) taking into account the current and two prior years did not exceed 10%;
	●	in the case of property not acquired through foreclosure or lease termination, the REIT has held the property for at least two years for the production of rental income; and
	●	if the REIT has made more than seven sales of non-foreclosure property during the taxable year, substantially all of the marketing and development expenditures with respect to the property were made through an independent contractor from whom the REIT derives no income or a TRS.

	●	that is acquired by a REIT as the result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or default was imminent on a lease of such property or on indebtedness that such property secured;
	●	for which the related loan was acquired by the REIT at a time when the default was not imminent or anticipated; and
	●	for which the REIT makes a proper election to treat the property as foreclosure property.

	●	on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test, or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after such day that will give rise to income that does not qualify for purposes of the 75% gross income test;
	●	on which any construction takes place on the property, other than completion of a building or any other improvement, where more than 10% of the construction was completed before default became imminent; or
	●	which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income, or a TRS.

	●	our failure to meet those tests is due to reasonable cause and not to willful neglect; and
	●	following such failure for any taxable year, we file a schedule of the sources of our income in accordance with regulations prescribed by the Secretary of the Treasury.

	●	cash or cash items, including certain receivables and, in certain circumstances, foreign currencies;
	●	U.S. government securities;
	●	interests in real property, including leaseholds and options to acquire real property and leaseholds, and personal property to the extent such personal property is leased in connection with real property and rents attributable to such personal property are treated as “rents from real property”;
	●	interests in mortgage loans secured by real property;
	●	interests in mortgage loans secured by both real property and personal property if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property;
	●	stock in other REITs and debt instruments issued by “publicly offered REITs”; and
	●	investments in stock or debt instruments during the one-year period following our receipt of new capital that we raise through equity offerings or public offerings of debt with at least a five-year term.

	●	we satisfied the asset tests at the end of the preceding calendar quarter; and
	●	the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition of one or more non-qualifying assets.

	●	85% of our REIT ordinary income for such year,
	●	95% of our REIT capital gain income for such year, and
	●	any undistributed taxable income from prior periods,

	●	a citizen or resident of the United States;
	●	a corporation (including an entity treated as a corporation for federal income tax purposes) created or organized in or under the laws of the United States, any of its states or the District of Columbia;
	●	an estate whose income is subject to federal income taxation regardless of its source; or
	●	any trust if (i) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) it has a valid election in place to be treated as a U.S. person.

	●	the percentage of our dividends that the tax-exempt trust must treat as UBTI is at least 5%;
	●	we qualify as a REIT by reason of the modification of the rule requiring that no more than 50% of our capital stock be owned by five or fewer individuals that allows the beneficiaries of the pension trust to be treated as holding our capital stock in proportion to their actuarial interests in the pension trust; and
	●	either:

	●	one pension trust owns more than 25% of the value of our capital stock; or
	●	a group of pension trusts individually holding more than 10% of the value of our capital stock collectively owns more than 50% of the value of our capital stock.

	●	a lower treaty rate applies and the non-U.S. stockholder files an IRS Form W-8BEN or W-8BEN-E, as applicable, evidencing eligibility for that reduced rate with us;
	●	the non-U.S. stockholder files an IRS Form W-8ECI with us claiming that the distribution is effectively connected income; or
	●	the distribution is treated as attributable to a sale of a USRPI under FIRPTA (discussed below).

	●	that class of our capital stock is treated as being regularly traded under applicable Treasury regulations on an established securities market; and
	●	the non-U.S. stockholder owned, actually or constructively, 10% or less of that class of our capital stock at all times during a specified testing period.

	●	the gain is effectively connected with the non-U.S. stockholder’s U.S. trade or business, in which case the non-U.S. stockholder will be subject to the same treatment as U.S. stockholders with respect to such gain; or
	●	the non-U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, in which case the non-U.S. stockholder will incur a 30% tax on his or her capital gains.

	●	is a corporation or qualifies for certain other exempt categories and, when required, demonstrates this fact; or
	●	provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.