Postal Realty Trust Inc Q3 2023 Earnings Call Transcript

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

Question: Eric Borden - BMO Capital Markets - Analyst : Hey, guys, good morning out there. I know you mentioned that your lease negotiation process is currently ongoing, but I was just hoping that you could tell us kind of what inning you're in, in terms of the process, and how things are trending to date?

Question: Eric Borden - BMO Capital Markets - Analyst : Thank you. That's helpful. And then maybe just on the acquisition funding for the fourth quarter, I know you guys have multiple sources. How should we think about the right mix between cash equity either from the ATM or OP units and debt?

Question: Eric Borden - BMO Capital Markets - Analyst : Thank you. And last one for me, if I may. I just noticed that NOI margins decreased sequentially. Was there any one-time cost and OpEx for the third quarter with that we should be aware of or is 3Q a good run rate for 4Q?

Question: Eric Borden - BMO Capital Markets - Analyst : All right. Thanks very much.

Question: Rob Stevenson - Janney Montgomery Scott LLC - Analyst : Good morning. Rob, where is your marginal cost of debt these days?

Question: Rob Stevenson - Janney Montgomery Scott LLC - Analyst : Okay. So there's not anything that you guys are looking at that will provide you any sort of a cheaper rate over the line at this point, that the line's going to be the primary debt financing for acquisitions over in the near term?

Question: Rob Stevenson - Janney Montgomery Scott LLC - Analyst : Okay. And if you guys do $20 million-plus of acquisitions in the fourth quarter, would that be your preference to do that? Or are you going to let that float for a while and see what winds up happening and early '24 in terms of rates?

Question: Rob Stevenson - Janney Montgomery Scott LLC - Analyst : Okay. And then, Andrew, Jeremy, how you guys thinking about the equity side of the equation at 13 and change where your stock is trading today? You did some OP units during the quarter. Are there big step-ups in some of these acquisitions that you think that you can get in the near term to make that work? And acknowledging that your cap rates are going up on acquisitions, are they going up enough to maintain the spread given the cost of capital today?

Question: Rob Stevenson - Janney Montgomery Scott LLC - Analyst : Okay. Thanks, guys. Appreciate the time.

Question: Ki Bin Kim - Truist Securities - Analyst : Thank you. Good morning. Just going back to the topic of the lease renewals and that process, how would you describe the kind of key hurdle? Is that the fact that you're dealing with a kind of large, much larger bureaucratic entity? Or is it really just trying to negotiate the right rental rate? Just curious, if any kind of color you can provide.

Question: Ki Bin Kim - Truist Securities - Analyst : Okay. And in terms of G&A, any kind of ballpark idea of what we can expect going forward? I think last year, I mean, this year compared to last year, G&A went up about $2 million. Is that something that's reasonable to expect next year?

Question: Ki Bin Kim - Truist Securities - Analyst : Okay. Thank you.

Question: Ki Bin Kim - Truist Securities - Analyst : Yeah. That was a quick turnaround. Just a quick question on the acquisition yields. I didn't want to hang up the call. Yeah, I guess, where would you peg a seller expectations to this kind of new cost of capital environment? Have they kind of fully embraced it and realize what's happening to substitute buyers like yourselves in terms of the increased cost of capital? And what do you think cap rates can kind of drift to as we look forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 31, 2023 / 1:00PM, PSTL.N - Q3 2023 Postal Realty Trust Inc Earnings Call

Question: Ki Bin Kim - Truist Securities - Analyst : Okay. Thank you.

Question: Jon Petersen - Jefferies - Analyst : Great. Thanks. Good morning, guys. I'm just curious if there's any, maybe updated trends on where you're seeing the post office to make investments today, especially as it relates to your business? I know in the past, we've talked about them upgrading their fleet of trucks, or I don't know if there's different store design or like that that we should be aware. I'm just curious if there's any trends in that regard bit of that or impact in your business that we should be aware of?

Question: Jon Petersen - Jefferies - Analyst : Okay. All right, thank you. That's all I got.

Question: Nahum Wanhan - JPMorgan - Analyst : Good morning, guys. You have [Nahum Wanhan] for Tony this morning. Congrats on executing the 2022 leases deal cut with the USPS, with the 2.5% escalators. I guess going forward, are you negotiating similar types of leases with USPS and is that maybe causing some of the holdup in renewals?

Question: Nahum Wanhan - JPMorgan - Analyst : Got it. Thank you. That's it for me.