Postal Realty Trust Q2 Earnings Call Highlights

Postal Realty Trust raised its 2026 acquisition and adjusted funds from operations, or AFFO, guidance after reporting increased transaction activity, continued leasing progress and lower borrowing costs during the second quarter. Chief Executive Officer Andrew Spodek said the company closed $45 million of acquisitions during the quarter at a 7.3% weighted-average cash capitalization rate, representing its highest quarterly acquisition volume since June 2022. Through July, the company had acquired $88 million of properties at a 7.4% weighted-average cash cap rate. The company increased its full-year acquisition guidance to $150 million to $160 million, which Spodek said reflects visibility into a large pipeline of opportunities. Postal Realty Trust sold $110 million of equity through July, which management said positions it to fully fund its acquisition pipeline. Spodek said improved access to capital has broadened the company’s potential acquisition universe to include larger assets and portfolios with postal-related characteristics and growth potential. He highlighted a $9.6 million acquisition in San Diego, describing it as a facility west of Interstate 805 with a below-market lease and potential for future growth in coastal California. During the second quarter, Postal Realty Trust acquired 37 properties for $45 million and added 237,000 square feet to its portfolio. The acquired space included 20 last-mile post offices totaling 29,600 square feet, 16 flex properties totaling 141,500 square feet, and one industrial property totaling 62,000 square feet. In response to analyst questions, Spodek said industrial assets are not the company’s “bread and butter,” but it will pursue them when they are accretive from the outset and offer internal growth potential over the lease term. He said the company evaluates properties based on purchase basis, their importance to the Postal Service, day-one accretion and long-term growth prospects. Chief Financial Officer Steve Bakke said the company’s weighted-average cost of capital was approximately 6.0%, compared with acquisition cap rates of 7.3% during the quarter. He contrasted that with a roughly 7.3% weighted-average cost of capital and a 7.7% acquisition cap rate when he was joining the company last September. Postal Realty Trust reported second-quarter AFFO per share of $0.36, up $0.03 from both the first quarter and the year-ago period. Bakke noted that the prior-year quarter included approximately half a cent of earnings from one-time lump-sum catch-up payments, while such payments were de minimis in the latest quarter. The company raised its 2026 AFFO per share guidance by $0.01 to a range of $1.41 to $1.43. At the midpoint, the outlook implies 7.6% growth for the year, according to management.