What changed in this filing

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Item 1. Business

2021-03-30 compared with 2020-03-27 · 108 added, 110 removed, 46 unchanged (83% of the section changed)

are an internally managed real estate corporation that owns properties leased to the United States Postal Service (“USPS”).

As of December 31, 2019, we owned a portfolio of 466 postal properties located in 44 states comprising approximately 1.4 million

net leasable interior square feet, all of which is leased to the USPS other than a de-minimis non-postal tenant that shares space

in a building leased to the USPS.

We believe that we are one of the largest owners and manager, measured by net leasable square

footage, of properties that are leased to the USPS.

The majority of our leases are modified double-net leases, whereby the USPS

is responsible for utilities and routine maintenance and reimburses the landlord for property taxes, while the landlord is responsible

for insurance, roof and structure.

We believe this structure helps insulate us from increases in certain operating expenses and

provides a more predictable cash flow.

leadership team, led by our chief executive officer, Andrew Spodek, has extensive experience in the acquisition and management

of properties leased to the USPS.

Spodek has been active in the acquisition and management of USPS-leased properties for over

Jeremy Garber, our president, treasurer and secretary, has significant experience in the real estate and finance industries,

including the property management of properties leased to the USPS.

In addition to our executive management team, our Board of

Directors has extensive experience in real estate and finance and with the USPS.

Our Board of Directors is led by our Chairman,

Patrick Donahoe, who completed his 39-year career with the USPS by serving as the 73 rd Postmaster General of the

United States from 2010 until his retirement in 2015.

The Company was organized

in the state of Maryland on November 19, 2018 and commenced operations upon completion of our initial public offering (“IPO”)

on May 17, 2019 and the related formation transactions (the “Formation Transactions”).

We will elect to be treated

as a real estate investment trust (“REIT”) for U.S.

federal income tax purposes, commencing with our short tax year

ended December 31, 2019, upon the filing of our tax returns for such year.

We conduct our business through a traditional UPREIT

structure in which our properties are owned by our Operating Partnership directly or through limited partnerships, limited liability

companies or other subsidiaries.

Upon completion of our IPO and the Formation Transactions, we owned and managed a portfolio of

271 postal properties located in 41 states, comprising 871,843 net leasable interior square feet and through our taxable REIT

subsidiary (“TRS”), Postal Realty Management TRS, LLC (“PRM”), we provide fee-based third party property

management services for an additional 403 postal properties currently leased to the USPS and owned by family members of Mr.

and their partners.

We are the sole general partner of our Operating Partnership through which our postal properties are directly

or indirectly owned.

As of December 31, 2019, we owned approximately 70.0% of the outstanding common units of limited partnership

interest in our Operating Partnership (each, an “OP Unit,”

and collectively, the “OP Units”) including

long term incentive units of our Operating Partnership (each, an “LTIP Unit”

and collectively, the “LTIP Units).

Our Board oversees our business and affairs.

closed our IPO on May 17, 2019, pursuant to which we sold 4,500,000 shares of our Class A common stock, par value $0.01 per share

(our “Class A common stock”), at a public offering price of $17.00 per share.

We raised $76.5 million in gross proceeds,

resulting in net proceeds to us of approximately $71.1 million after deducting approximately $5.4 million in underwriting discounts

and before giving effect to $6.4 million of other expenses relating to our IPO.

Class A common stock began trading on the New York Stock Exchange (the “NYSE”) under the symbol “PSTL”

on May 15, 2019.

In connection with the IPO and the Formation Transactions, we issued 1,333,112 OP Units, 637,058 shares

of Class A common stock and 27,206 shares of our Class B common stock, par value $0.01 per share (our “Class B common stock”

or “Voting Equivalency stock”), to Mr.

Spodek and affiliates in exchange for certain properties and interests.

completed our IPO on May 17, 2019 and raised $76.5 million in gross proceeds.

From the date we completed our IPO to the end of 2019, we acquired approximately $57.5 million of postal properties leased to the USPS, which is comprised of approximately 560,000 net leasable interior square feet.

We declared and paid an aggregate of $0.203 of dividends per share to our Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders.

entered into a credit agreement (the “Credit Agreement”) providing for a senior revolving credit facility (the “Credit

Facility”) with revolving commitments in an aggregate principal amount of $100.0 million and a four-year term through September

The Credit Agreement provides an accordion feature permitting expansion of the Credit Facility to $200.0 million, subject

to customary conditions.

Refer to Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

for a discussion of the exercise of a portion of the accordion feature in January 2020.

Concentration

We acquire and manage

postal properties and report our business as a single reportable segment.

As of December 31, 2019, all of our properties were leased

to a single tenant, the USPS other than a de-minimis non-postal tenant that shares space in a building leased to the USPS.

the discussions under Item 1A, “Risk Factors”

under the caption “Risks Related to the USPS.”

are an internally managed real estate corporation that owns properties leased primarily to the USPS.

We believe that we are one

of the largest owners and managers, measured by net leasable square footage, of properties that are leased to the USPS.

were organized in the state of Maryland on November 19, 2018 and commenced operations upon completion of our initial public offering,

or IPO, on May 17, 2019 and the related formation transactions, or the Formation Transactions.

Our Class A common stock trades

on the New York Stock Exchange, or the NYSE, under the symbol “PSTL”.

We elected to be taxed as a REIT for U.S.

income tax purposes, commencing with our short tax year ended December 31, 2019.

We conduct our business through a traditional

UPREIT structure in which our properties are owned by our Operating Partnership directly or through limited partnerships, limited

liability companies or other subsidiaries.

We are the sole general partner of our Operating Partnership through which our postal

properties are directly or indirectly owned.

As of December 31, 2020, we owned approximately 76.9% of the outstanding common units

of limited partnership interest in our Operating Partnership (each, an “OP Unit,”

and collectively, the “OP

Units”) including long term incentive units of our Operating Partnership (each, an “LTIP Unit”

and collectively,

the “LTIP Units).

Our Board of Directors oversees our business and affairs.

We make reference to the public reports of the USPS with the Postal Regulatory Commission, including the

audited financial statements of the USPS, available at www.usps.com or www.prc.gov.

Estate Investments

As of December 31,

2020, we had investments of approximately $259.8 million in 726 real estate properties (including one property accounted for as

a financing lease).

The properties are located in 47 states, totaling approximately 2.7 million net leasable interior square feet

in the aggregate and were 100% leased as of December 31, 2020 with a weighted average remaining lease term of approximately

As of December 31, 2020, we manage, through our taxable REIT subsidiary, or TRS, an additional 400 properties owned

by affiliates of our chief executive officer, Andrew Spodek.

We have a right of first offer to purchase 251 of our 400 managed

majority of our leases are modified double-net leases, whereby the USPS is responsible for utilities and routine maintenance and

reimburses the landlord for property taxes, while the landlord is responsible for insurance, roof and structure.

We believe this

structure helps insulate us from increases in certain operating expenses and provides a more predictable cash flow.

the overall opportunity for consolidation that exists within the postal logistics network is attractive, and we continue to execute

our strategy to acquire and consolidate postal properties that we believe will generate strong earnings for our stockholders.

We collected 100%

of our rents and maintained 100% occupancy.

acquired 261 properties primarily leased to the USPS totaling approximately 1.2 million net leasable interior square feet, for

approximately $130 million.

January 2020, we exercised a portion of the accordion feature on our senior revolving credit facility or the Credit Facility,

increasing our permitted borrowing capacity up to $150.0 million.

We further amended the credit agreement, as amended, the

Credit Agreement, with People’s United Bank, National Association, as described under Item 7.

Management’s Discussion

and Analysis of Financial Condition and Results of Operations—Factors that may Influence Future Results of Operations—

Indebtedness and Interest Expense.

In addition, we obtained approximately $44.0 million of fixed rate mortgage financing at a

weighted average rate of 3.25% and a weighted average term of 12.9 years as of December 31, 2020.

completed a follow-on offering of 3.5 million shares of our Class A common stock on July 20, 2020, raising $52.2 million in gross

In addition, we filed a $500 million shelf registration statement and entered into a $50 million at the market common

stock offering program, or ATM program.

We have increased our quarterly dividend from $0.17 for the fourth quarter 2019 dividend to $0.2175 for the fourth quarter 2020 dividend.

Our dividend per share has increased for the past six consecutive quarters and, although we expect to continue our policy of paying regular dividends, we cannot guarantee that we will maintain our current level of dividends, that we will continue our recent pattern of increasing dividends per share or what our actual dividend yield will be in any future period.

Concentration

For the year ended

December 31, 2019, we owned a portfolio of 466 postal properties located in 44 states.

As a percentage of our total rental revenues

of $8.9 million, we had notable concentrations in the following states:

Texas (10.5%), Pennsylvania (10.3%) and Massachusetts (9.7%).

Such geographical concentrations could expose the Company to certain downturns in the economies of those states or other changes

in such states’

respective real estate market conditions.

Any material changes in the current payments programs or regulatory,

economic, environmental or competitive conditions in any of these areas could have an effect on our overall business results.

the event of negative economic or other changes in any of these markets, our business, financial condition and results of operations,

our ability to make distributions to our shareholders and the trading price of our common shares may be adversely affected.

compete with other property owners in our markets that seek to acquire postal properties.

believe that our management’s experience and relationships in, and local knowledge of, the markets in which we operate gives

us a competitive advantage when seeking acquisitions.

However, some of our competitors may have greater resources than we do or

may have a more flexible capital structure when seeking to finance acquisitions.

We believe that our intensive management services

are attractive to the USPS and serve as a competitive advantage.

We acquire and manage postal properties and report our business

as a single reportable segment.

As of December 31, 2020, all of our properties are leased to a single tenant, the USPS, other than

the multi-tenant industrial facility located in Warrendale, PA.

The USPS occupies 73% of this property as a distribution facility.

See the discussions under Item 1A–Risk Factors under the caption –Risks Related to the USPS.

with various governmental regulations has an impact on our business, including our capital expenditures, earnings, and competitive

The impact of these governmental regulations can be material to our business.

We incur costs to monitor and take action

to comply with governmental regulations that are applicable to our business, which include, among others:

federal securities laws

and regulations;

REIT and other tax laws and regulations;

environmental and health and safety laws and regulations;

local zoning,

usage and other regulations relating to real property;

and the Americans with Disabilities Act of 1990, as amended, or the ADA.

properties must comply with Title III of the ADA to the extent that such properties are “public accommodations”

defined by the ADA.

The ADA may require removal of structural barriers to access by persons with disabilities in certain public

areas of our properties where such removal is readily achievable.

We believe the existing properties are in substantial compliance

with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA.

However, noncompliance with the ADA could result in imposition of fines or an award of damages to private litigants.

The obligation

to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations

as appropriate in this respect.

Capital Resource Management

of December 31, 2020, we employed 25 full-time employees.

All of our employees are employed by our corporate office in Cedarhurst,

Our employees are not members of any labor union, and we consider our relations with our employees to be satisfactory.

As of December 31, 2020, 24% of our employees, 20% of our

named executive officers and key employees (defined as all employees with a title of vice president and higher) and 20% of the

members of our Board of Directors were female.

endeavor to maintain workplaces that are free from discrimination or harassment on the basis of color, race, sex, national origin,

ethnicity, religion, age, disability, sexual orientation, gender identification or expression or any other status protected by

applicable law.

The basis for recruitment, hiring, development, training, compensation and advancement at the Company is qualifications,

performance, skills and experience.

We believe our employees are fairly compensated, and compensation and promotion decisions

are made without regard to gender, race and ethnicity.

Employees are routinely recognized for outstanding performance.

Health and Safety

response to the COVID-19 pandemic, we promptly transitioned all of our employees to remote working, without significant impact

to productivity.

We organized training programs to ensure that all employees were prepared to complete tasks remotely.

corporate office, we provide cleaning supplies and facial coverings to all employees and visitors who chose to work in the office,

among other safety measures to help reduce the potential transmission of the disease.

Environmental

33 unchanged sentences

We are not presently aware of any material adverse indoor air quality issues at our properties.

with Disabilities Act

properties must comply with Title III of the ADA to the extent that such properties are “public accommodations”

defined by the ADA.

The ADA may require removal of structural barriers to access by persons with disabilities in certain public

areas of our properties where such removal is readily achievable.

We believe the existing properties are in substantial compliance

with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA.

However, noncompliance with the ADA could result in imposition of fines or an award of damages to private litigants.

The obligation

to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations

as appropriate in this respect.

As of December 31,

2019, we had 21 full-time employees and no part time employees.

We believe that our relations with our employees are satisfactory.

of Reports Filed with the Securities and Exchange Commission

A copy of this Annual

Report on Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on Form 8-K and

any amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934,

as amended (the “Exchange Act”), are available, free of charge, on our Internet website (www.postalrealty.com).

of these reports are made available on our website as soon as reasonably practicable after they are electronically filed with

copy of this Annual Report on Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on

Form 8-K and any amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities

Exchange Act of 1934, as amended (the “Exchange Act”), are available, free of charge, on our Internet website (www.postalrealty.com).

All of these reports are made available on our website as soon as reasonably practicable after they are electronically filed with

or furnished to the Securities and Exchange Commission (the “SEC”).

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business