Postal Realty Trust Inc Q2 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: John Kim - BMO Capital Markets - Analyst : Thank you. Andrew, you mentioned in your prepared remarks, deal activity picking up in the second half of the year. For the same time, there is just continued bid ask to spread between buyers and sellers. So those two comments seem to conflict with each other. Could some of that activity spill over to next year?

Question: John Kim - BMO Capital Markets - Analyst : Okay. So that's based on your current pipeline and just the expected timing of current negotiations?

Question: John Kim - BMO Capital Markets - Analyst : Any thoughts on recent press on the Postal Service and their proposed 10-year plan and the potential impact it could have on rural post office going forward? If this is something that could impact your existing portfolio, or maybe provide some opportunities on that [publishing] side?

Question: John Kim - BMO Capital Markets - Analyst : That's great color. Thank you.

Question: Anthony Paolone - J.P. Morgan - Analyst : Thanks. Good morning. First of all, I guess, for Rob, the $0.27 in AFFO for the quarter, do you think that's a good run rate as we look ahead? Or do you think there are some puts and takes to call out there?

Question: Anthony Paolone - J.P. Morgan - Analyst : Okay. And then with regards to cap rates, I think you said 7.3% for the second quarter, I think 7.6% maybe for the first. And those are a bit north of where you were doing deals, I guess, over the last couple of years. And Andrew, you mentioned there's still a disconnect between buyer-seller expectations. So do you think there's still room for that number to go even higher before the markets fully adjusted? Or do you think this is where we should think of cap rates right now?

Question: Anthony Paolone - J.P. Morgan - Analyst : Okay. And then if I could sneak one more in. Just on the '23 expirations, can you remind us how much of the, I guess, 162 leases were the ones from 2022 that you plan to wrap up soon versus just regular '23 expirations?

Question: Anthony Paolone - J.P. Morgan - Analyst : Okay. Thank you.

Question: Jonathan Petersen - Jefferies - Analyst : No, great, thanks. Good morning, guys. I just wanted to talk a little more about your expenses. I think your OpEx was a little lower than the past couple of quarters. G&A was also a little lower. I think you talked about as the measures you take to reduce costs. Can you talk a little more about that, and what the cadence should be in those line items for the next few quarters?

Question: Jonathan Petersen - Jefferies - Analyst : Okay, got it. And then I was just curious -- I don't know if this is a totally fair question. But you guys recently redid your term loan and swapped out. I guess if you think about where we're at in the interest rate cycle, talking about your decision making to do swaps right now versus just riding floating rate debt and maybe interest rates go down.

Question: Jonathan Petersen - Jefferies - Analyst : Got it. Okay. And then maybe just one last one sticking with the balance sheet questions. On the ATM, your guy's issue was 11 million this quarter. So roughly two-thirds of your acquisition volume you issued on the ATM. Is that an ideal quarter, I guess, from a capital raise, from an equity perspective, like funding about two-thirds of acquisition costs with equity?

Question: Jonathan Petersen - Jefferies - Analyst : Okay. That's great. All very helpful. Thanks very much.

Question: Jonathan Petersen - Jefferies - Analyst : Got you. Okay. Thank you.

Question: Rob Stevenson - Janney Montgomery Scott - Analyst : Good morning, guys. So as the Post Office rolls out more electrical vehicles, how easy to get the extra power into your buildings to charge these? And is any CapEx related to putting EV charging in something that you guys will fund and wrap these costs into future leases? Or is the Postal Service going to have to fund all that stuff themselves? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2023 / 1:00PM, PSTL.N - Q2 2023 Postal Realty Trust Inc Earnings Call

Question: Rob Stevenson - Janney Montgomery Scott - Analyst : Okay. And I mean, to the extent that some of the facilities may also need fire suppression and some other stuff, is that also the same type of deal stuff that either they would have to fund, or you would look to do and ramp into the future leases?

Question: Rob Stevenson - Janney Montgomery Scott - Analyst : Okay. And then one for Rob. Rob, what's dictating the use going forward between the forwards and the traditional ATM. So I mean, the pricing looked basically without a penny or so of each other in the quarter. And so how are you determining whether to do forwards, whether to do just in place ATM issuance to fund the business going forward?

Question: Rob Stevenson - Janney Montgomery Scott - Analyst : Okay. Thanks, guys. Appreciate that.