Postal Realty Trust's Q4 2024: Navigating Contradictions in Lease Agreements and Growth Dynamics

These are the key contradictions discussed in Postal Realty Trust's latest 2024 Q4 earnings call, specifically including: Impact of Postmaster General's Changes and Post Office Facility Status, Impact of Acquisitions and Leasing on Growth, Lease Duration and Negotiation Process, and Lease Spreads and Rent Growth.



Strong Financial Performance:
- Postal Realty Trust reported full-year AFFO per share of $1.16 in 2024, an increase of 8.4% year-over-year and 9% above street consensus.
- This growth was driven by strong re-leasing performance and improved timing and efficiency in the re-leasing process with the Postal Service.

Acquisition Activity and Portfolio Expansion:
- In 2024, the company acquired 197 properties for $91 million, with a weighted average cap rate of 7.6%.
- For 2025, the company anticipates acquisition volume between $80 million and $90 million, targeting a weighted average cap rate at or above 7.5%.
- The acquisition strategy aims to diversify the portfolio while maintaining a strong balance sheet.

Dividend Increase and Financial Stability:
- The company's Board of Directors approved a quarterly dividend of $0.2425 per share, up 1% from Q4 2023's dividend, marking the 7th consecutive year of dividend increases.
- The company maintains low leverage, minimizing exposure to variable rate debt, with a net debt to annualized adjusted EBITDA ratio of 5.2x at the end of the year.

Lease Execution and Revenue Growth:
- As of February 14, 2025, the company has executed leases for 95% of 2023 and 99% of 2024 expirations, with most agreements being 10-year leases with 3% annual rent escalations.
- The successful lease execution provides visibility into AFFO guidance for the first time as a public company, with a projected range of $1.20 to $1.22 per share for 2025.