What changed in this filing

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Item 1. Financial Statements

2024-11-04 compared with 2024-08-06 · 221 added, 134 removed, 581 unchanged (38% of the section changed)

3 unchanged sentences

(In thousands, except par value and share data)

September 30,

2024 December 31, 2023

16 unchanged sentences

Above market leases, net 270 355

Assets held for sale, net 3,657 —

Total Assets $ 615,055 $ 567,345

9 unchanged sentences

500,000,000 shares authorized;

22,717,706 and 21,933,005 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

23,313,185 and 21,933,005 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Class B common stock, par value $ 0.01 per share;

27,206 shares authorized;

27,206 shares issued and outstanding as of June 30, 2024 and December 31, 2023

27,206 shares issued and outstanding as of September 30, 2024 and December 31, 2023

Additional paid-in capital 306,006 287,268

8 unchanged sentences

POSTAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(in thousands, except share and per share data )

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

6 unchanged sentences

General and administrative 3,884 3,352 12,094 11,121

Casualty and impairment losses, net 216 — 216 —

Depreciation and amortization 5,756 4,919 16,575 14,537

19 unchanged sentences

Basic and Diluted 22,737,484 20,277,417 22,375,339 19,712,504

Comprehensive income:

Comprehensive (loss) income:

Net income $ 1,349 $ 1,436 $ 2,638 $ 3,130

Unrealized gain on derivative instruments 14 3,399 2,833 562

Comprehensive income 1,046 4,660 4,121 2,256

Comprehensive income attributable to operating partnership unitholders’ non-controlling interests ( 218 ) ( 921 ) ( 820 ) ( 448 )

Comprehensive income attributable to common stockholders $ 828 $ 3,739 $ 3,301 $ 1,808

Unrealized (loss) gain on derivative instruments ( 5,775 ) 2,070 ( 2,942 ) 2,632

Comprehensive (loss) income ( 4,426 ) 3,506 ( 304 ) 5,762

Comprehensive income (loss) attributable to operating partnership unitholders’ non-controlling interests 913 ( 660 ) 95 ( 1,108 )

Comprehensive (loss) income attributable to common stockholders $ ( 3,513 ) $ 2,846 $ ( 209 ) $ 4,654

The accompanying notes are an integral part of these unaudited consolidated financial statements.

32 unchanged sentences

Balance – June 30, 2024 22,744,912 $ 228 $ 296,886 $ 6,899 $ ( 58,533 ) $ 245,480 $ 64,052 $ 309,532

Net proceeds from sale of common stock 601,266 5 8,374 — — 8,379 — 8,379

Issuance of operating partnership units in connection with acquisition transactions

— — — — — — 1,122 1,122

Issuance and amortization of equity-based compensation, net of forfeitures ( 1,738 ) — 719 — 40 759 697 1,456

Issuance and amortization under the ESPP

8,912 — 118 — — 118 — 118

Restricted stock withholdings ( 12,961 ) — ( 184 ) — — ( 184 ) — ( 184 )

Dividends and distributions — — — — ( 5,579 ) ( 5,579 ) ( 1,452 ) ( 7,031 )

Unrealized loss on derivative instruments — — — ( 4,583 ) — ( 4,583 ) ( 1,192 ) ( 5,775 )

Net income — — — — 1,071 1,071 278 1,349

Reallocation of non-controlling interest — — 93 — — 93 ( 93 ) —

Balance – September 30, 2024 23,340,391 $ 233 $ 306,006 $ 2,316 $ ( 63,001 ) $ 245,554 $ 63,412 $ 308,966

Balance – December 31, 2022 19,555,272 $ 195 $ 254,107 $ 7,486 $ ( 32,557 ) $ 229,231 $ 54,480 $ 283,711

22 unchanged sentences

Balance – June 30, 2023 20,029,975 $ 200 $ 258,331 $ 7,934 $ ( 40,754 ) $ 225,711 $ 55,859 $ 281,570

Net proceeds from sale of common stock 1,114,997 11 16,178 — — 16,189 — 16,189

Issuance of OP Units in connection with acquisition transactions — — — — — — 2,753 2,753

Shares issued upon redemption of OP Units 379,635 4 6,271 — — 6,275 ( 6,275 ) —

Issuance and amortization of equity-based compensation, net of forfeitures 7,205 — 718 — — 718 591 1,309

Issuance and amortization under ESPP 8,364 — 116 — — 116 — 116

Dividends and distributions — — — — ( 4,941 ) ( 4,941 ) ( 1,167 ) ( 6,108 )

Unrealized gain on derivative instruments — — — 1,680 — 1,680 390 2,070

Net income — — — — 1,166 1,166 270 1,436

Reallocation of non-controlling interest — — ( 2,029 ) — — ( 2,029 ) 2,029 —

Balance – September 30, 2023 21,540,176 $ 215 $ 279,585 $ 9,614 $ ( 44,529 ) $ 244,885 $ 54,450 $ 299,335

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2 unchanged sentences

(in thousands)

For the Six Months Ended

For the Nine Months Ended

September 30,

Cash flows from operating activities:

3 unchanged sentences

Amortization of in-place intangibles 5,797 5,283

Write-off and amortization of deferred financing fees 362 330

Write-off and amortization of deferred financing fees and amortization of debt discounts 544 504

Amortization of above/below market leases ( 2,188 ) ( 1,776 )

Amortization of intangible liability ( 181 ) ( 79 )

Casualty and impairment losses 216 —

Gain on insurance proceeds received for damage due to property ( 40 ) ( 441 )

Equity based compensation 5,000 4,529

Reclassification of cumulative dividends paid on forfeited awards 40 —

Deferred rent receivable ( 462 ) ( 249 )

15 unchanged sentences

Repayments of secured borrowings ( 107 ) ( 101 )

Proceeds from term loans — 35,000

Proceeds from revolving credit facility 57,000 49,000

3 unchanged sentences

Deferred offering costs — ( 107 )

Debt issuance costs ( 5 ) ( 261 )

Proceeds from issuance of ESPP shares 163 182

4 unchanged sentences

Net (decrease) increase in Cash and Escrows and Reserves

( 1,360 ) 845

Cash and Escrows and Reserves at the beginning of period 2,867 2,042

4 unchanged sentences

Operating partnership units issued for property acquisitions

Unrealized gain on interest rate swaps, net 2,833 562

Transfer of investment properties, net to assets held for sale 3,657 —

Assumption of seller financing 1,400 —

Unrealized (loss) gain on interest rate swaps, net ( 2,942 ) 2,632

Accrued capital expenditures included in accounts payable and accrued expenses 202 229

16 unchanged sentences

As the sole general partner of the Operating Partnership, the Company has the exclusive power under the partnership agreement to manage and conduct the Operating Partnership’s business, subject to limited approval and voting rights of the limited partners.

As of June 30, 2024, the Company held an approximately 79.3 % interest in the Operating Partnership.

As of September 30, 2024, the Company held an approximately 79.5 % interest in the Operating Partnership.

As the sole general partner and the majority interest holder, the Company consolidates the financial position and results of operations of the Operating Partnership.

The Operating Partnership is considered a variable interest entity (“VIE”) in which the Company is the primary beneficiary.

As of June 30, 2024, the Company owned a portfolio of 1,607 properties located in 49 states and one territory.

As of September 30, 2024, the Company owned a portfolio of 1,642 properties located in 49 states and one territory.

The Company’s properties are leased primarily to a single tenant, the United States Postal Service (the “USPS”).

32 unchanged sentences

Offering costs are recorded in “Total Stockholders’ Equity” on the Consolidated Balance Sheets as a reduction of additional paid-in capital.

Deferred Costs

Deferred Costs and Discounts

Financing costs related to the issuance of the Company’s long-term debt, including the term loan facility component of the Company's existing credit facilities (the "Credit Facilities"), are deferred and amortized as an increase to interest expense over the term of the related debt instrument using the straight-line method, which approximates the effective-interest rate method, and are reported as a reduction of the related debt balance on the Consolidated Balance Sheets.

Deferred financing costs related to the revolving credit facility component (the "Revolving Credit Facility") of the Credit Facilities are deferred and amortized as an increase to interest expense over the terms of the Revolving Credit Facility and are included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets.

Debt discounts represent fair value adjustments to account for the difference between the stated rates and market rates of debt assumed or entered in connection with the Company’s property acquisitions.

The debt discounts are amortized to interest expense over the term of the related loans using the straight-line method, which approximates the effective-interest rate method, and are reported as a reduction of the related debt balance on the Consolidated Balance Sheets.

As of September 30, 2024, the net unamortized debt discounts was $0.2 million.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period’s presentation.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cash and Escrows and Reserves

2 unchanged sentences

The following table provides a reconciliation of cash and escrows and reserves reported within the Consolidated Balance Sheets and Consolidated Statements of Cash Flows:

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30,

2024 December 31,

9 unchanged sentences

Rental income is recognized on a straight-line basis over the term of the lease.

In addition, certain lease agreements provide for reimbursements from tenants for real estate taxes and other recoverable costs, which are recorded on an accrual basis as part of “Rental income” in the Consolidated Statements of Operations and Comprehensive Income.

The Company’s determination of the probability to collect lease payments is impacted by numerous factors, including the Company's assessment of the tenant’s creditworthiness, economic conditions, historical experience with the tenant, future prospects for the tenant and the length of the lease term.

7 unchanged sentences

This initial net investment is determined by aggregating the total future minimum lease payments attributable to the direct financing lease and the estimated residual value of the property, if any, less unearned income.

Over the lease term, the investment in the direct financing lease is reduced and interest is recognized as revenue in “Fee and other” in the Consolidated Statements of Operations and Comprehensive Income and produces a constant periodic rate of return on the "Investment in financing leases, net."

Over the lease term, the investment in the direct financing lease is reduced and interest is recognized as revenue in “Fee and other” in the Consolidated Statements of Operations and Comprehensive (Loss) Income and produces a constant periodic rate of return on the "Investment in financing leases, net."

Revenue from advisory services is generated from service contracts generally based on (i) time and expense arrangements (where the Company recognizes revenues based on hours incurred and contracted rates), (ii) fixed-fee arrangements (where the Company recognizes revenues earned to date by applying the proportional performance method) or (iii) performance-based or contingent arrangements (where the Company recognizes revenues at a point in time when the client receives the benefit of the promised service).

1 unchanged sentence

Fair Value Measurements

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies.

However, considerable judgment is necessary to interpret market data and develop estimated fair value.

Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could have realized on disposition of the assets and liabilities as of June 30, 2024 and December 31, 2023.

Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could have realized on disposition of the assets and liabilities as of September 30, 2024 and December 31, 2023.

The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

escrows and reserves, receivables, prepaid expenses and other assets (excluding derivatives), accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of June 30, 2024 and December 31, 2023 due to their short maturities.

Cash, escrows and reserves, receivables, prepaid expenses and other assets (excluding derivatives), accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of September 30, 2024 and December 31, 2023 due to their short maturities.

The fair value of the Company’s borrowings under its Credit Facilities approximates carrying value because such borrowings are subject to a variable market rate, which reprices frequently.

The fair value was determined using the Adjusted Term SOFR (as defined below) as of June 30, 2024 and December 31, 2023, plus an applicable spread under the Credit Facilities, a Level 2 classification in the fair value hierarchy.

The fair value of the Company’s secured borrowings aggregated approximately $ 27.5 million and $ 28.0 million as compared to the principal balance of $ 32.9 million and $ 33.0 million as of June 30, 2024 and December 31, 2023, respectively.

The fair value was determined using the Adjusted Term SOFR (as defined below) as of September 30, 2024 and December 31, 2023, plus an applicable spread under the Credit Facilities, a Level 2 classification in the fair value hierarchy.

The fair value of the Company’s secured borrowings aggregated approximately $ 29.7 million and $ 28.0 million as compared to the principal balance of $ 34.3 million and $ 33.0 million as of September 30, 2024 and December 31, 2023, respectively.

The fair value of the Company’s secured borrowings was categorized as a Level 3 fair value estimate (as provided by ASC 820, Fair Value Measurements and Disclosures) and was determined by discounting the future contractual interest and principal payments by a market rate.

3 unchanged sentences

The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivative assets and liabilities.

As of June 30, 2024 and December 31, 2023, the fair value of the Company’s interest rate swap derivative assets was approximately $ 8.7 million and $ 6.4 million, respectively, included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets.

As of June 30, 2024 and December 31, 2023, the fair value of the Company's interest rate swap derivative liabilities was approximately $ 0.1 million and $ 0.7 million, respectively, included in "Accounts payable, accrued expenses and other, net" on the Consolidated Balance Sheets.

Disclosures about fair value of assets and liabilities are based on pertinent information available to management as of June 30, 2024 and December 31, 2023.

Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since June 30, 2024 and current estimates of fair value may differ significantly from the amounts presented herein.

As of September 30, 2024 and December 31, 2023, the fair value of the Company’s interest rate swap derivative assets was approximately $ 3.8 million and $ 6.4 million, respectively, included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets.

As of September 30, 2024 and December 31, 2023, the fair value of the Company's interest rate swap derivative liabilities was approximately $ 1.1 million and $ 0.7 million, respectively, included in "Accounts payable, accrued expenses and other, net" on the Consolidated Balance Sheets.

Disclosures about fair value of assets and liabilities are based on pertinent information available to management as of September 30, 2024 and December 31, 2023.

Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since September 30, 2024 and current estimates of fair value may differ significantly from the amounts presented herein.

Derivative Instruments and Hedging Activities

5 unchanged sentences

Derivatives and Hedging Activities for further details.

Assets Held for Sale

The Company may sell properties from time to time for various reasons, including the exercise of purchase options by our tenants.

The Company classifies long-lived assets as held for sale once certain criteria have been met.

The Company classifies a real estate property, or portfolio, as held for sale when:

(i) management has approved the disposal, (ii) the property is available for sale in its present condition, (iii) an active program to locate a buyer has been initiated, (iv) it is probable that the property will be disposed of within one year, (v) the property is being marketed at a reasonable price relative to its fair value, and (vi) it is unlikely that the disposal plan will significantly change or be withdrawn.

Following the classification of a

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

property as “held for sale,” no further depreciation or amortization is recorded on the assets and the assets are recorded at the lower of carrying value or fair market value, less cost to sell.

The Company had two properties classified as held for sale as of September 30, 2024.

There were no properties classified as held for sale as of December 31, 2023.

Impairment of Long-Lived Assets

5 unchanged sentences

The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.

No impairments were recorded during the three and six months ended June 30, 2024 and 2023.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

No impairments were recorded during the three and nine months ended September 30, 2024 and 2023.

Concentration of Credit Risks

As of June 30, 2024, the Company’s properties were leased primarily to a single tenant, the USPS.

For the six months ended June 30, 2024, approximately 12.2 % of the Company’s total rental income, or $ 4.1 million, was concentrated in Pennsylvania.

For the six months ended June 30, 2023, approximately 13.3 % of the Company's total rental income, or $ 3.9 million, was concentrated in Pennsylvania.

As of September 30, 2024, the Company’s properties were leased primarily to a single tenant, the USPS.

For the nine months ended September 30, 2024, approximately 12.2 % of the Company’s total rental income, or $ 6.4 million, was concentrated in Pennsylvania.

For the nine months ended September 30, 2023, approximately 13.5 % of the Company's total rental income, or $ 6.0 million, was concentrated in Pennsylvania.

The ability of the USPS to honor the terms of its leases is dependent upon regulatory, economic, environmental or competitive conditions in Pennsylvania or other regions where the Company operates in and could have a material effect on the Company’s overall business results.

13 unchanged sentences

Insurance recoveries for business interruption for lost revenue or profit are accounted for as gain contingencies in their entirety, and therefore are not recorded in income until the amount is determinable and approved by the insurance company.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Earnings Per Share

The Company calculates earnings per share ("EPS") based upon the weighted average shares outstanding less issued and outstanding non-vested shares of Class A common stock.

As of June 30, 2024 and 2023, the Company had unvested restricted shares of Class A common stock, long term incentive units of the Operating Partnership ("LTIP Units") and certain restricted stock units (“RSUs”), which provide for non-forfeitable rights to dividend and dividend equivalent payments.

As of September 30, 2024 and 2023, the Company had unvested restricted shares of Class A common stock, long term incentive units of the Operating Partnership ("LTIP Units") and certain restricted stock units (“RSUs”), which provide for non-forfeitable rights to dividend and dividend equivalent payments.

Accordingly, these unvested restricted shares of Class A common stock, LTIP Units and RSUs are considered participating securities and are included in the computation of basic and diluted EPS pursuant to the two-class method.

6 unchanged sentences

The provisions in this amendment are applicable to public entities with a single reportable segment.

The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

December 15, 2024, with early adoption permitted.

The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company has one reportable segment and continues to evaluate additional disclosures that may be required for entities with a single reportable segment.

Real Estate Transactions

The following tables summarizes the Company’s acquisitions for the six months ended June 30, 2024.

The following tables summarizes the Company’s acquisitions for the nine months ended September 30, 2024.

The purchase prices including transaction costs were allocated to the separately identifiable tangible and intangible assets and liabilities based on their relative fair values at the date of acquisition.

6 unchanged sentences

leases Below-

leases Other (1)

March 31, 2024 (3) 29 $ 6,442 $ 12,362 $ 98 $ 1,372 $ 34 $ ( 1,442 ) $ — $ 18,866

June 30, 2024 (4) 70 $ 6,191 $ 21,955 $ 144 $ 1,733 $ 11 $ ( 1,237 ) $ — $ 28,797

September 30, 2024 (5) 35 $ 2,313 $ 11,263 $ 122 $ 1,111 $ — $ ( 1,015 ) $ ( 34 ) $ 13,760

Total 134 $ 14,946 $ 45,580 $ 364 $ 4,216 $ 45 $ ( 3,694 ) $ ( 34 ) $ 61,423

Explanatory Notes :

(1) Includes closing costs of approximately $ 0.3 million for the three months ended March 31, 2024 and $ 0.5 million for the three months ended June 30, 2024.

(1) Includes an intangible liability related to unfavorable operating leases with purchase options on one property and a below market ground lease intangible asset on one property during the three months ended September 30, 2024 that is included in “Accounts payable, accrued expenses and other" and "Prepaid expenses and other assets, net" on the Consolidated Balance Sheets, respectively.

(2) Includes closing costs of approximately $ 0.3 million for the three months ended March 31, 2024, $ 0.5 million for the three months ended June 30, 2024 and $ 0.4 million for the three months ended September 30, 2024.

The total for the three months ended September 30, 2024 includes a debt discount on two properties that is included in "Secured Borrowings, net."

(3) Includes the acquisition of 29 properties in various states for cash consideration in individual or portfolio transactions for a price of approximately $ 18.9 million, including closing costs, which was funded with both the issuance of OP Units to the sellers (valued at approximately $ 5.8 million using the share price of Class A common stock on the date of each issuance of such OP Units) and cash consideration.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(4) Includes the acquisition of 70 properties in various states for cash consideration in individual or portfolio transactions for a price of approximately $ 28.8 million, including closing costs, which was funded with cash consideration.

1 unchanged sentence

Related Party Transactions for further details.

In addition, during the six months ended June 30, 2024, the Company sold one property with an immaterial net book value, which transaction was completed in April 2024.

(5) Includes the acquisition of 35 properties in various states for cash consideration in individual or portfolio transactions for a price of approximately $ 13.8 million, including closing costs, which was funded with both the issuance of OP Units to the sellers (valued at approximately $ 1.1 million using the share price of Class A common stock on the date of each issuance of such OP Units) and cash consideration.

Also includes, a debt discount on two properties during three months ended September 30, 2024 that is included in "Secured Borrowings, net." See Note 5.

Debt for further details.

In addition, during the nine months ended September 30, 2024, the Company sold one property with an immaterial net book value, which transaction was completed in April 2024.

Assets Held for Sale

During the three and nine months ended September 30, 2024, the Company committed to plans to dispose of two properties with an aggregate carrying balance of $ 3.7 million, consisting of $ 1.7 million of land and $ 2.0 million of buildings and other real estate assets and classified those properties as "Assets held for sale, net" on the Company's Consolidated Balance Sheet.

Subsequent to quarter end, the Company sold the two assets for an aggregate $ 6.3 million to two independent buyers.

Casualty Loss

During the three and nine months ended September 30, 2024, the Company recorded a casualty loss of $ 0.2 million reflecting the net book value of such asset damaged as a result of vandalism included within "Casualty and impairment losses" in the Consolidated Statement of Operations and Comprehensive (Loss) Income.

The Company expects insurance proceeds to cover substantially all of such loss subject to applicable deductibles.

The Company has comprehensive all risk property insurance coverage on its property subject to the casualty loss, including for business interruption, with a $ 1.5 million limit of liability, subject to conditions, exclusions, deductibles and sub-limits.

To the extent insurance proceeds ultimately exceed the difference between replacement cost and net book value of the damaged assets and any related expenses incurred, the excess will be reflected as income in the period those amounts are determinable and approved by the insurance company.

No determination has been made as to the total amount of timing of insurance payments that may be received as a result of the event.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Intangible Assets and Liabilities

3 unchanged sentences

(in thousands)

June 30, 2024:

September 30, 2024:

In-place lease intangibles

11 unchanged sentences

( 22,940 ) 9,840 ( 13,100 )

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Amortization of in-place lease intangibles was $ 2.0 million and $ 3.8 million for the three and six months ended June 30, 2024, respectively, and $ 1.8 million and $ 3.5 million for the three and six months ended June 30, 2023, respectively.

This amortization is included in “Depreciation and amortization” in the Consolidated Statements of Operations and Comprehensive Income.

Amortization of acquired above-market leases was $ 0.04 million and $ 0.09 million for the three and six months ended June 30, 2024, respectively, and $ 0.04 million and $ 0.08 million for the three and six months ended June 30, 2023, respectively, and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive Income.

Amortization of acquired below-market leases was $ 0.8 million and $ 1.5 million for the three and six months ended June 30, 2024, respectively, and $ 0.6 million and $ 1.3 million for the three and six months ended June 30, 2023, respectively, and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive Income.

Amortization of in-place lease intangibles was $ 2.0 million and $ 5.8 million for the three and nine months ended September 30, 2024, respectively, and $ 1.7 million and $ 5.3 million for the three and nine months ended September 30, 2023, respectively.

This amortization is included in “Depreciation and amortization” in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Amortization of acquired above-market leases was $ 0.04 million and $ 0.1 million for each of the three and nine months ended September 30, 2024 and 2023, and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Amortization of acquired below-market leases was $ 0.8 million and $ 2.3 million for the three and nine months ended September 30, 2024, respectively, and $ 0.6 million and $ 1.9 million for the three and nine months ended September 30, 2023, respectively, and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Future amortization/accretion of these intangibles is below (in thousands):

9 unchanged sentences

$ 12,392 $ 270 $ ( 14,408 )

The following table summarizes the Company’s indebtedness as of June 30, 2024 and December 31, 2023 (dollars in thousands):

Outstanding Balance as of

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the Company’s indebtedness as of September 30, 2024 and December 31, 2023 (dollars in thousands):

Balance as of

September 30,

2024 Outstanding

1 unchanged sentence

2023 Interest

September 30,

2024 Maturity Date

16 unchanged sentences

30,225 30,225 2.80 % January 2031

Seller Financing - 2024 (8)

1,400 — 5.00 % September 2039

Total Principal 278,281 241,988

Unamortized deferred financing costs ( 1,104 ) ( 1,364 )

Unamortized debt discount ( 211 ) —

Total Debt $ 276,966 $ 240,624

1 unchanged sentence

(1) The Company have entered into the Credit Facilities, which include the $ 150.0 million Revolving Credit Facility, the $ 75.0 million senior unsecured term loan facility (the "2021 Term Loan") and the $ 125.0 million senior unsecured term loan facility (the "2022 Term Loan").

On October 25, 2024, the Company amended the Credit Facilities (the "Third Amendment") to, among other things, replace the Bank of Montreal with Truist Bank as the administrative agent, letter of credit issuer and swingline lender.

In addition, the Third Amendment increases the 2022 Term Loan commitments in an aggregate principal amount of up to $50.0 million in which the Company further exercised $ 40.0 million under the 2022 Term Loan, and on a delayed-draw basis, $10.0 million.

The Credit Facilities include an accordion feature which permits the Company to borrow up to an additional $ 150.0 million under the Revolving Credit Facility, subject to customary terms and conditions.

The Revolving Credit Facility matures in January 2026, which may be extended for two six-month periods subject to

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

customary conditions, the 2021 Term Loan matures in January 2027 and the 2022 Term Loan matures in February 2028.

The Revolving Credit Facility matures in January 2026, which may be extended for two six-month periods subject to customary conditions, the 2021 Term Loan matures in January 2027 and the 2022 Term Loan matures in February 2028.

Borrowings under the Credit Facilities carry an interest rate of, (i) in the case of the Revolving Credit Facility, either a base rate plus a margin ranging from 0.5 % to 1.0 % per annum or Adjusted Term SOFR (as defined below) plus a margin ranging from 1.5 % to 2.0 % per annum, or (ii) in the case of the Term Loans, either a base rate plus a margin ranging from 0.45 % to 0.95 % per annum or Adjusted Term SOFR plus a margin ranging from 1.45 % to 1.95 % per annum, in each case depending on the Company's consolidated leverage ratio.

1 unchanged sentence

The Credit Facilities contain a number of customary financial and non-financial covenants.

During the three and six months ended June 30, 2024, the Company incurred $ 0.06 million and $ 0.1 million, respectively, and during the three and six months ended June 30, 2023, the Company incurred $ 0.07 million and $ 0.1 million, respectively, of unused facility fees related to the Revolving Credit Facility.

As of June 30, 2024, the Company was in compliance with all of the Credit Facilities’ debt covenants.

During the three and nine months ended September 30, 2024, the Company incurred $ 0.05 million and $ 0.2 million, respectively, and during the three and nine months ended September 30, 2023, the Company incurred $ 0.07 million and $ 0.2 million, respectively, of unused facility fees related to the Revolving Credit Facility.

As of September 30, 2024, the Company was in compliance with all of the Credit Facilities’ debt covenants.

(2) Based upon the one-month Adjusted Term SOFR, which is the applicable Term Secured Overnight Financing Rate plus an adjustment of 0.10 %, subject to a 0 % floor (the “Adjusted Term SOFR”) .

Upon the Company's achievement of certain sustainability targets for 2023, the applicable margins for the Credit Facilities were reduced by 0.02 % for the year ending December 31, 2024, which is reflected in the margins noted in the table above.

Upon the Company's achievement of certain

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

sustainability targets for 2023, the applicable margins for the Credit Facilities were reduced by 0.02 % for the year ending December 31, 2024, which is reflected in the margins noted in the table above.

(3) Five properties are collateralized under this loan and Mr.

8 unchanged sentences

The loan has a fixed interest rate of 2.80 % with interest-only payments for the first five years (ending in January 2026) and fixed payments of principal and interest thereafter based on a 30-year amortization schedule.

The weighted average maturity date for the Company's indebtedness as of June 30, 2024 and December 31, 2023 was approximately 3.5 years and 4.2 years, respectively.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The scheduled principal repayments of indebtedness as of June 30, 2024 are as follows (in thousands):

(8) In connection with the acquisition of two properties, the Company obtained seller financing secured by the properties in the amount of $ 1.4 million based on a fixed interest rate of 5.00 % with interest-only payments through September 1, 2039.

The weighted average maturity date for the Company's indebtedness as of September 30, 2024 and December 31, 2023 was approximately 3.3 years and 4.2 years, respectively.

The scheduled principal repayments of indebtedness as of September 30, 2024 are as follows (in thousands):

Year Ending December 31, Amount

2024 - Remaining $ 5

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Derivatives and Hedging Activities

As of June 30, 2024, the Company had seven interest rate swaps with a total notional amount of $ 200.0 million that are used to manage its interest rate risk and fix the SOFR component on the term loans of the Credit Facilities:

As of September 30, 2024, the Company had seven interest rate swaps with a total notional amount of $ 200.0 million that are used to manage its interest rate risk and fix the SOFR component on the term loans of the Credit Facilities:

Notional Amount ($ in thousands) Fixed Rate (1)

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(1) Reflects the all-in effective interest rate for the specified portion of the Term Loans hedged by the interest rate swaps.

On October 25, 2024, in connection with the exercise of the $ 40.0 million term loan accordion under the 2022 Term Loan, the Company further entered into an interest rate swap that effectively fixed the interest rate on the additional $ 40.0 million of the 2022 Term Loan through February 2028 at 5.3705 %.

The Company’s objectives in using the interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.

To accomplish these objectives, the Company uses the interest rate swaps as part of its interest rate risk management strategy.

The interest rate swaps are designated as cash flow hedges, with any gain or loss recorded in “Accumulated other comprehensive income” on the Consolidated Balance Sheets and subsequently reclassified into interest expense as interest payments are made on the Credit Facilities.

During the next twelve months, the Company estimates that an additional $ 4.4 million will be reclassified from “Accumulated other comprehensive income” as a decrease to interest expense.

The interest rate swaps are designated as cash flow hedges, with any gain or loss recorded in “Accumulated other comprehensive (loss) income” on the Consolidated Balance Sheets and subsequently reclassified into interest expense as interest payments are made on the Credit Facilities.

During the next twelve months, the Company estimates that an additional $ 2.2 million will be reclassified from “Accumulated other comprehensive (loss) income” as a decrease to interest expense.

The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges.

The table below presents the effect of the Company’s interest rate swap derivative instruments in the Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2024 and 2023 (in thousands):

The table below presents the effect of the Company’s interest rate swap derivative instruments in the Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and nine months ended September 30, 2024 and 2023 (in thousands):

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps) 2024 2023 2024 2023

Amount of gain recognized on derivative in "Accumulated other comprehensive income"

Amount of (loss) gain recognized on derivative in "Accumulated other comprehensive (loss) income"

$ ( 4,456 ) $ 3,345 $ 1,035 $ 5,897

Amount of income reclassified from "Accumulated other comprehensive income" into interest expense

Amount of income reclassified from "Accumulated other comprehensive (loss) income" into interest expense

$ 1,319 $ 1,275 $ 3,977 $ 3,265

"Interest expense, net" presented in the Consolidated Statements of Operations and Comprehensive (Loss) Income, in which the effects of cash flow hedges are recorded, totaled $ 3.4 million and $ 9.3 million for the three and nine months ended September 30, 2024, respectively and $ 2.6 million and $ 7.3 million for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, the Company also had derivatives in a net liability position and did not post any collateral related to these agreements.

If the Company had breached any of these provisions as of September 30, 2024, it could have been required to settle its obligations under the agreements of any interest rate swap in a net liability position for approximately $ 1.1 million, which is at their termination value.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

"Interest expense, net" presented in the Consolidated Statements of Operations and Comprehensive Income, in which the effects of cash flow hedges are recorded, totaled $ 3.1 million and $ 5.9 million for the three and six months ended June 30, 2024, respectively and $ 2.5 million and $ 4.7 million for the three and six months ended June 30, 2023, respectively.

As of June 30, 2024, the Company also had derivatives in a net liability position and did not post any collateral related to these agreements.

If the Company had breached any of these provisions as of June 30, 2024, it could have been required to settle its obligations under the agreements of any interest rate swap in a net liability position for approximately $ 0.1 million, which is at their termination value.

Lessor Accounting

As of June 30, 2024, the Company's properties were leased primarily to the USPS, with leases expiring at various dates through June 30, 2032.

Certain leases had expired and were in holdover status as of June 30, 2024 as discussed below.

As of September 30, 2024, the Company's properties were leased primarily to the USPS, with leases expiring at various dates through December 31, 2034.

Certain leases had expired and were in holdover status as of September 30, 2024 as discussed below.

Certain leases contain renewal, termination and/or purchase options exercisable at the lessee’s election.

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The Company elected the practical expedient to account for its lease and non-lease components as a single combined operating lease component under Topic 842.

As a result, rental income and tenant reimbursements were aggregated into a single line within rental income in the Consolidated Statements of Operations and Comprehensive Income.

As a result, rental income and tenant reimbursements were aggregated into a single line within rental income in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

The following table represents rental revenue that the Company recognized related to its operating leases (in thousands):

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

4 unchanged sentences

$ 18,772 $ 15,438 $ 52,740 $ 44,699

Future minimum lease payments to be received as of June 30, 2024 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):

Future minimum lease payments to be received as of September 30, 2024 (excluding base rental payments from properties classified as held for sale under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):

Year Ending December 31, Amount (1)(2)(3)

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(1) The above minimum lease payments to be received do not include reimbursements from tenants for real estate taxes and other reimbursed expenses.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(2) As of June 30, 2024, the leases at 87 of the Company's properties were expired and the USPS was occupying such properties as a holdover tenant.

(2) As of September 30, 2024, the leases at 24 of the Company's properties were expired and the USPS was occupying such properties as a holdover tenant.

As such, the above minimum lease payments to be received do not include payments under these holdover leases.

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(3) In August 2023, the Company received notice from the USPS to terminate the lease for one property, which termination became effective in February 2024.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Purchase Option Provisions

As of June 30, 2024, operating leases for 75 of the Company’s properties provided the USPS with the option to purchase the underlying property either at fair market value or at fixed prices, in each case as of dates set forth in the lease agreement.

As of June 30, 2024, 71 of these properties had an aggregate carrying value of approximately $ 52.8 million with an aggregate purchase option price of approximately $ 68.2 million and the remaining four properties had an aggregate carrying value of approximately $ 3.3 million with purchase options exercisable at fair market value.

As of September 30, 2024, operating leases for 76 of the Company’s properties provided the USPS with the option to purchase the underlying property either at fair market value or at fixed prices, in each case as of dates set forth in the lease agreement.

As of September 30, 2024, 72 of these properties had an aggregate carrying value of approximately $ 54.5 million with an aggregate purchase option price of approximately $ 71.1 million and the remaining four properties had an aggregate carrying value of approximately $ 3.3 million with purchase options exercisable at fair market value.

Investment in Financing Leases, Net

As of June 30, 2024 and December 31, 2023, financing leases for two of the Company's properties provide the USPS with the option to purchase the underlying property at fixed prices as of dates set forth in the lease agreement.

The components of the Company’s net investment in financing leases as of June 30, 2024 and December 31, 2023 are summarized in the table below (in thousands):

As of September 30, 2024 and December 31, 2023, financing leases for two of the Company's properties provide the USPS with the option to purchase the underlying property at fixed prices as of dates set forth in the lease agreement.

The components of the Company’s net investment in financing leases as of September 30, 2024 and December 31, 2023 are summarized in the table below (in thousands):

September 30,

Total minimum lease payment receivable

3 unchanged sentences

Investment in financing leases, net $ 15,973 $ 16,042

Revenue earned under direct financing leases for each of the three and six months ended June 30, 2024 and 2023 were $ 0.3 million and $ 0.5 million, which is recorded in "Fee and other" in the Consolidated Statements of Operations and Comprehensive Income.

Future lease payments to be received under the Company’s direct financing leases as of June 30, 2024 for the next five years and thereafter are as follows (in thousands):

Revenue earned under direct financing leases for each of the three and nine months ended September 30, 2024 and 2023 were $ 0.3 million and $ 0.8 million, which is recorded in "Fee and other" in the Consolidated Statements of Operations and Comprehensive Income.

Future lease payments to be received under the Company’s direct financing leases as of September 30, 2024 for the next five years and thereafter are as follows (in thousands):

Year Ending December 31, Amount

(in thousands)

2024 – Remaining $ 284

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As a lessee, the Company has ground and office leases which were classified as operating leases.

As of June 30, 2024, these leases had remaining terms, including renewal options, of 1.1 years to 58.5 years and a weighted average remaining lease term of 23.8 years.

As of September 30, 2024, these leases had remaining terms, including renewal options, of 0.8 years to 58.3 years and a weighted average remaining lease term of 23.2 years.

Operating right-of-use ("ROU") assets and lease liabilities are included in “Prepaid expenses and other assets, net” and “Accounts payable, accrued expenses and other, net” on the Consolidated Balance Sheets as follows (in thousands):

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30,

ROU asset – operating leases

$ 1,199 $ 967

Lease liability – operating leases $ 1,171 $ 994

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The difference between the recorded ROU assets and lease liabilities is mainly due to the reclassification of the below market ground lease intangible asset which was included within the ROU assets recognized upon transition.

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The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

Operating lease expense for the three and six months ended June 30, 2024 was $ 0.07 million and $ 0.1 million, respectively.

Operating lease expense for the three and six months ended June 30, 2023 was $ 0.06 million and $ 0.1 million, respectively.

Operating lease expense for the three and nine months ended September 30, 2024 was $ 0.07 million and $ 0.2 million, respectively.

Operating lease expense for the three and nine months ended September 30, 2023 was $ 0.05 million and $ 0.2 million, respectively.

Related Party Transactions for more details.

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of June 30, 2024 for the next five years and thereafter are as follows (in thousands):

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of September 30, 2024 for the next five years and thereafter are as follows (in thousands):

2024 — Remaining $ 35

4 unchanged sentences

REAC generates income, resulting in federal and state corporate income tax liability for REAC.

For the three and six months ended June 30, 2024, income tax expense related to REAC was $ 0.02 million and $ 0.03 million, respectively.

For the three and six months ended June 30, 2023, income tax expense related to REAC was $ 0.01 million and $ 0.03 million, respectively.

For the three and nine months ended September 30, 2024, income tax expense related to REAC was $ 0.02 million and $ 0.05 million, respectively.

For the three and nine months ended September 30, 2023, income tax expense related to REAC was $ 0.02 million and $ 0.05 million, respectively.

In connection with the IPO, the indirect sole shareholder of United Postal Holdings, Inc.

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The indirect sole shareholder of UPH will be responsible for all tax related matters related to UPH.

As of December 31, 2022, the Company had remaining unrecognized tax benefits of $ 0.02 million, which were inclusive of interest and penalties, and a corresponding indemnification asset, which were included in "Prepaid expenses and

During the nine months ended September 30, 2023, the Company reversed the remaining $ 0.02 million of unrecognized tax benefits and the corresponding indemnification asset due to the expiration of statute of limitations.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

other assets, net" on the Consolidated Balance Sheets.

During the six months ended June 30, 2023, the Company reversed the remaining $ 0.02 million of unrecognized tax benefits and the corresponding indemnification asset due to the expiration of statute of limitations.

Related Party Transactions

Management Fee Income

REAC recognized management fee income of $ 0.3 million and $ 0.7 million for the three and six months ended June 30, 2024, respectively, and $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2023, respectively, from various parties which were affiliated with the Company's CEO.

These amounts are included in “Fee and other” in the Consolidated Statements of Operations and Comprehensive Income.

Accrued management fees receivable of $ 0.3 million and $ 0.3 million as of June 30, 2024 and December 31, 2023, respectively, are included in “Rent and other receivables” on the Consolidated Balance Sheets.

REAC recognized management fee income of $ 0.4 million and $ 1.0 million for the three and nine months ended September 30, 2024, respectively, and $ 0.4 million and $ 1.0 million for the three and nine months ended September 30, 2023, respectively, from various parties which were affiliated with the Company's CEO.

These amounts are included in “Fee and other” in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Accrued management fees receivable of $ 0.4 million and $ 0.3 million as of September 30, 2024 and December 31, 2023, respectively, are included in “Rent and other receivables” on the Consolidated Balance Sheets.

Related Party Lease

2 unchanged sentences

The term of the Office Lease was five years commencing on May 17, 2019 and expired on May 16, 2024.

Rental expenses associated with the Office Lease for each of the three and six months ended June 30, 2024 and 2023 were $ 0.05 million and $ 0.1 million, respectively, and was recorded in “General and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income.

In May 2024, the Office Lease was extended to the end of 2024 at the same rental rate.

Rental expenses associated with the Office Lease for each of the three and nine months ended September 30, 2024 and 2023 were $ 0.05 million and $ 0.1 million, respectively, and was recorded in “General and administrative expenses” in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

The Company determined this Office Lease was an operating lease.

For further details, see Note 7.

In May 2024, the Office Lease was extended to the end of 2024 at the same rental rate.

Right of First Offer Transactions

4 unchanged sentences

As disclosed above in Note 5.

Spodek personally guaranteed a portion of or the entire amount outstanding under the Company's loans with First Oklahoma Bank and Vision Bank, totaling $ 1.9 million and $ 1.9 million as of June 30, 2024 and December 31, 2023, respectively.

As a guarantor, Mr.

6 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

18 unchanged sentences

The following table summarizes the activity under the ATM Program for the period presented (dollars and shares issued in thousands, except per share amounts).

During the three and six months ended June 30, 2024, 57,993 and 634,080 shares were issued under the ATM program.

During the three and six months ended June 30, 2023, 265,225 and 320,307 shares were issued under the ATM program.

As of June 30, 2024, the Company had approximately $ 105.0 million remaining that may be issued under the ATM Program.

During the three and nine months ended September 30, 2024, 601,266 and 1,235,346 shares were issued under the ATM program.

During the three and nine months ended September 30, 2023, 1,114,997 and 1,435,304 shares were issued under the ATM program.

As of September 30, 2024, the Company had approximately $ 96.4 million remaining that may be issued under the ATM Program.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

9 unchanged sentences

Dividends and Distributions

During the three and six months ended June 30, 2024, the Company's Board of Directors approved and the Company declared and paid dividends or distributions, as applicable, of $ 6.9 million and $ 13.7 million, respectively to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $ 0.24 per share or unit and $ 0.48 per share or unit, respectively, as shown in the table below.

During the three and nine months ended September 30, 2024, the Company's Board of Directors approved and the Company declared and paid dividends or distributions, as applicable, of $ 7.0 million and $ 20.8 million, respectively to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $ 0.24 per share or unit and $ 0.72 per share or unit, respectively, as shown in the table below.

Declaration Date Record Date Date Paid Amount Per Share or Unit

1 unchanged sentence

April 30, 2024 May 8, 2024 May 31, 2024 $ 0.24

July 23, 2024 August 2, 2024 August 30, 2024 $ 0.24

Non-controlling Interests

Non-controlling interests in the Company represent OP Units held by the Company's prior investors and certain sellers of properties to the Company and LTIP Units primarily issued to the Company’s employees and the Board of Directors in connection with the IPO and/or as a part of their compensation.

During the six months ended June 30, 2024, the Company issued 151,916 LTIP Units to the Company’s CEO for his 2023 incentive bonus, his election to defer 100 % of his 2024 annual salary and for long term incentive compensation, 51,490 LTIP Units to the Company’s President for his 2023 incentive bonus, 53,906 LTIP Units to the Company's Chief Financial Officer for his 2023 incentive bonus and for long term incentive compensation, 43,526 LTIP Units in May 2024 to the Board of Directors for their annual retainers as compensation for their services as directors and for long term incentive compensation and 51,940 LTIP Units to certain other employees for their 2023 incentive bonus and for long term incentive compensation.

As of June 30, 2024 and December 31, 2023, non-controlling interests consisted of 4,746,540 OP Units and 1,237,399 LTIP Units and 4,387,334 OP Units and 884,621 LTIP Units, respectively.

This represented approximately 20.7 % and 19.3 % of the outstanding Operating Partnership units as of June 30, 2024 and December 31, 2023, respectively.

During the nine months ended September 30, 2024, the Company issued 151,916 LTIP Units to the Company’s CEO for his 2023 incentive bonus, his election to defer 100 % of his 2024 annual salary and for long term incentive compensation, 51,490 LTIP Units to the Company’s President for his 2023 incentive bonus, 53,906 LTIP Units to the Company's Chief Financial Officer for his 2023 incentive bonus and for long term incentive compensation, 43,526 LTIP Units in May 2024 to the Board of Directors for their annual retainers as compensation for their services as directors and for long term incentive compensation and 51,940 LTIP Units to certain other employees for their 2023 incentive bonus and for long term incentive compensation and 4,545 LTIP Units to a consultant under the consultancy agreement with the Company.

As of September 30, 2024 and December 31, 2023, non-controlling interests consisted of 4,827,324 OP Units and 1,241,944 LTIP Units and 4,387,334 OP Units and 884,621 LTIP Units, respectively.

This represented approximately 20.5 % and 19.3 % of the outstanding Operating Partnership units as of September 30, 2024 and December 31, 2023, respectively.

OP Units and shares of Class A common stock generally have the same economic characteristics, as they share equally in the total net income or loss and distributions of the Operating Partnership.

Beginning on or after the date which is 12 months after the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will generally have the right, subject to the terms and conditions set forth in the partnership agreement, to require the Operating Partnership to redeem all or a portion of the OP Units held by such limited partner or assignee in exchange for cash, or at the Company's sole discretion, shares of Class A common stock, on an one -for-one basis determined in accordance with and subject to adjustment under the partnership agreement.

During the six months ended June 30, 2024, 52,778 OP Units were redeemed for 52,778 shares of Class A common stock.

For redemption of OP Units using shares of Class A common stock, the Company adjusted the carrying value of non-controlling interests to reflect its share of the book value of the Operating Partnership reflecting the change in the Company’s ownership of the Operating Partnership.

During the nine months ended September 30, 2024, 52,778 OP Units were redeemed for 52,778 shares of Class A common stock.

During the nine months ended September 30, 2023, 402,433 OP Units were redeemed for 402,433 shares of Class A common stock.For redemption of OP Units using shares of Class A common stock, the Company adjusted the carrying value of non-controlling interests to reflect its share of the book value of the Operating Partnership reflecting the change in the Company’s ownership of the Operating Partnership.

Such adjustments are recorded to additional paid-in capital as a reallocation of non-controlling interest in the Consolidated Statements of Changes in Equity.

During the nine months ended September 30, 2023, 37,500 OP Units were also redeemed for cash for the total amount of $ 0.6 million.

The Operating Partnership unitholders are entitled to share in cash distributions from the Operating Partnership in proportion to their percentage ownership of OP Units.

1 unchanged sentence

Pursuant to the Company’s Plan, the Company may grant equity incentive awards to its directors, officers, employees and consultants.

As of June 30, 2024, the remaining shares available under the Plan for future issuance was 1,021,972 .

As of September 30, 2024, the remaining shares available under the Plan for future issuance was 1,058,475 .

The Plan provides for grants of stock options, stock awards, stock appreciation rights, performance units, incentive awards, other equity-based awards (including LTIP Units) and dividend equivalents in connection with the grant of performance units and other equity-based awards.

2 unchanged sentences

The following table presents a summary of the Company's outstanding restricted shares of Class A common stock, LTIP Units and RSUs.

The balance as of June 30, 2024 represents unvested restricted shares of Class A common stock and LTIP Units and RSUs that are outstanding, whether vested or not:

The balance as of September 30, 2024 represents unvested restricted shares of Class A common stock and LTIP Units and RSUs that are outstanding, whether vested or not:

Shares (1)(2)

6 unchanged sentences

( 33,784 ) — ( 28,383 ) ( 62,167 ) $ 14.02

Outstanding, as of June 30, 2024 552,832 1,237,399 378,320 2,168,551 $ 15.76

Outstanding, as of September 30, 2024 515,162 1,241,944 346,946 2,104,052 $ 15.77

Explanatory Notes :

3 unchanged sentences

(3) Includes 151,916 LTIP Units granted to the Company’s CEO, 51,490 LTIP Units granted to the Company’s President and 53,906 LTIP Units granted to the Company's Chief Financial Officer, which vest over three years or cliff vest at the end of eight years .

Also, includes 43,526 LTIP Units granted to the Company's independent directors that vest over three years or cliff vest at the end of three years and 51,940 LTIP Units granted to certain other employees of the Company, certain of which vested fully on the date of grant with the remaining vesting over three years or cliff vest at the end of eight years .

(4) Includes 79,296 RSUs granted to certain officers and employees of the Company during the six months ended June 30, 2024, subject to the achievement of a service condition and a market condition.

(4) Includes 79,296 RSUs granted to certain officers and employees of the Company during the nine months ended September 30, 2024, subject to the achievement of a service condition and a market condition.

Such RSUs are market-based awards and are subject to the achievement of performance-based hurdles relating to the Company’s specified absolute and relative total stockholder return goals and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2026.

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In February 2024, the Company's Corporate Governance and Compensation Committee of the Board of Directors determined that the Company's total stockholder return for such three-year performance period met the threshold performance hurdles for the 2021 Performance-Based Awards and, as a result, approved the payout of (i) 23,357 RSUs for such awards, which were settled using the Company’s shares of Class A common stock, and (ii) their cash dividends for the three-year performance period.

During the three and six months ended June 30, 2024, the Company recognized compensation expense of $ 1.4 million and $ 3.2 million, respectively, and during the three and six months ended June 30, 2023, the Company recognized compensation expense of $ 1.2 million and $ 2.8 million, respectively, in “General and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income related to all awards.

During the three and six months ended June 30, 2024, the Company recognized compensation expense of $ 0.1 million and $ 0.4 million, respectively, and during

During the three and nine months ended September 30, 2024, the Company recognized compensation expense of $ 1.4 million and $ 4.5 million, respectively, and during the three and nine months ended September 30, 2023, the Company recognized compensation expense of $ 1.2 million and $ 4.1 million, respectively, in “General and administrative expenses” in

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

the three and six months ended June 30, 2023, the Company recognized compensation expense of $ 0.1 million and $ 0.4 million, respectively, in "Property operating expenses" in the Consolidated Statements of Operations and Comprehensive Income related to all awards.

As of June 30, 2024, there was $ 19.6 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 5.0 years.

In July 2024, the Company issued 4,545 LTIP Units to a consultant under the consultancy agreement with the Company.

the Consolidated Statements of Operations and Comprehensive (Loss) Income related to all awards.

During the three and nine months ended September 30, 2024, the Company recognized compensation expense of $ 0.1 million and $ 0.5 million, respectively, and during the three and nine months ended September 30, 2023, the Company recognized compensation expense of $ 0.1 million and $ 0.5 million, respectively, in "Property operating expenses" in the Consolidated Statements of Operations and Comprehensive (Loss) Income related to all awards.

As of September 30, 2024, there was $ 17.8 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 4.9 years.

Employee Stock Purchase Plan

2 unchanged sentences

The Code permits the Company to provide up to a 15 % discount on the lesser of the fair market value of such shares of Class A common stock at the beginning of the offering period and the close of the offering period.

As of June 30, 2024 and December 31, 2023, 49,657 and 44,520 shares have been issued under the ESPP since commencement, respectively.

During the three and six months ended June 30, 2024 , the Company recognized compensation expense of $ 0.01 million and $ 0.02 million, respectively and during the three and six months ended June 30, 2023, the Company recognized compensation expense of $ 0.01 million and $ 0.02 million, respectively, related to the ESPP.

As of September 30, 2024 and December 31, 2023, 58,569 and 44,520 shares have been issued under the ESPP since commencement, respectively.

During the three and nine months ended September 30, 2024 , the Company recognized compensation expense of $ 0.02 million and $ 0.04 million, respectively and during the three and nine months ended September 30, 2023, the Company recognized compensation expense of $ 0.01 million and $ 0.03 million, respectively, related to the ESPP.

Commitments and Contingencies

As of June 30, 2024, the Company was not involved in any litigation nor, to its knowledge, is any litigation threatened against the Company that, in management’s opinion, would result in any material adverse effect on the Company’s financial position and results of operations, or which is not covered by insurance.

As of September 30, 2024, the Company was not involved in any litigation nor, to its knowledge, is any litigation threatened against the Company that, in management’s opinion, would result in any material adverse effect on the Company’s financial position and results of operations, or which is not covered by insurance.

In the ordinary course of the Company’s business, the Company enters into non-binding (except with regard to exclusivity and confidentiality) letters of intent indicating a willingness to negotiate for acquisitions.

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Subsequent Events

In addition to the subsequent events discussed elsewhere in the notes to the unaudited Consolidated Financial Statements, the following events occurred subsequent to June 30, 2024:

The Company's Board of Directors approved, and on July 23, 2024, the Company declared a second quarter 2024 common stock dividend of $ 0.24 per share, which is payable on August 30, 2024 to stockholders of record as of August 2, 2024.

As of August 6, 2024 , the Company had $ 39.0 million drawn on the Revolving Credit Facility.

As of August 6, 2024 and d uring the period subsequent to June 30, 2024, the Company acquired nine leased properties for approximately $ 3.4 million, excluding closing costs.

As of August 6, 2024 and d uring the period subsequent to June 30, 2024, the Company issued 306,708 shares of its Class A common stock under the ATM Program for gross proceeds of approximately $ 4.4 million.

As of August 6, 2024 and d uring the period subsequent to June 30, 2024, the Company had entered into definitive agreements to acquire 16 properties for approximately $ 4.7 million.

In addition to the subsequent events discussed elsewhere in the notes to the unaudited Consolidated Financial Statements, the following events occurred subsequent to September 30, 2024:

The Company's Board of Directors approved, and on October 22, 2024, the Company declared a third quarter 2024 common stock dividend of $ 0.24 per share, which is payable on November 29, 2024 to stockholders of record as of November 4, 2024.

On October 25, 2024, the Company entered into the Third Amendment to the Credit Facilities.

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As of November 4, 2024 , the Company had $ 7.0 million drawn on the Revolving Credit Facility.

As of November 4, 2024 and d uring the period subsequent to September 30, 2024, the Company acquired 13 leased properties for approximately $ 4.2 million, excluding closing costs.

As of November 4, 2024 and d uring the period subsequent to September 30, 2024, the Company issued 140,179 shares of its Class A common stock under the ATM Program for gross proceeds of approximately $ 2.0 million.

As of November 4, 2024 and d uring the period subsequent to September 30, 2024, the Company had entered into definitive agreements to acquire 29 properties for approximately $ 10.6 million.

However, the Company can provide no assurances that the acquisitions of these properties will be consummated on the terms and timing the Company expects, or at all.

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-Q

Item 1. Financial Statements