What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-29 · 204 added, 181 removed, 695 unchanged (36% of the section changed)

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Deloitte & Touche LLP , New York, New York , PCAOB ID# 34 )

Report of Independent Registered Public Accounting Firm ( 2022:

BDO USA, LLP, New York, New York, PCAOB ID# 243 )

Consolidated Balance Sheets as of December 31, 2024 and 2023

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Postal Realty Trust, Inc.

(the "Company") as of December 31, 2023, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for the year ended December 31, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Postal Realty Trust, Inc.

(the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the two years in the period ended December 31, 2024, and the related notes and the schedule listed in the Index at Item 8 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allocation of Purchase Price for Investments in Real Estate – Refer to Note 2 and Note 3 to the financial statements

Critical Audit Matter Description

Upon the acquisition of real estate, the Company allocates the purchase price of the real estate acquired based on the relative fair value of assets acquired and liabilities assumed at the date of acquisition.

Based on their nature, these acquisitions generally qualify as asset acquisitions.

Accordingly, the purchase price paid for assets acquired and liabilities assumed are allocated, based on their relative fair values, to land, building, in-place leases, and other intangible assets and assumed liabilities.

Valuation assumptions utilized in determining the relative fair values include comparable sales transactions, costs to replace certain assets, market-based rental revenues, discount rates, and terminal capitalization rates.

We identified the allocation of purchase price for investments in real estate as a critical audit matter because of the significant estimates management makes to determine the fair values of assets acquired and liabilities assumed.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management's assumptions.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the assessment of the Company’s allocation of purchase price for investments in real estate included the following, among others:

• We gained an understanding of the Company’s controls over the review of the purchase price allocation, including controls over the valuation methodology and assumptions for estimating the fair value of assets acquired and liabilities assumed.

• We developed a range of independent estimates for the assumptions used in the fair value estimate, including the discount rate, capitalization rate, and market-based rental revenues using external market sources and compared those to the assumptions used by management.

• We tested the allocation of the relative fair values to the assets acquired and liabilities assumed by comparing them to the average historical allocations determined by the Company to identify outliers for further investigation.

• With the assistance of our fair value specialists, for certain of the acquisitions we tested, we:

– Evaluated the reasonableness of the valuation and allocation methodology and related assumptions used by management, including discount rates, capitalization rates, market-based rental revenues, costs to replace certain assets and comparable sales transactions.

– Tested the mathematical accuracy of the calculations and compared the key inputs used in the projections to external market sources.

/s/ Deloitte & Touche LLP

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We have served as the Company's auditor since 2023.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

POSTAL REALTY TRUST, INC.

Cedarhurst, New York

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Postal Realty Trust, Inc.

(the “Company”) as of December 31, 2022, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows for the year then ended, and the related notes and schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO USA, LLP

We served as the Company's auditor from 2017 to 2023.

New York, New York

March 7, 2023

POSTAL REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

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General and administrative 16,008 14,654

Casualty and impairment losses, net 404 —

Depreciation and amortization 22,202 19,688

Total operating expenses 57,588 49,716

Gain on sale of real estate assets 2,393 —

Income from operations 21,177 13,996

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Net income $ 8,321 $ 4,583

Unrealized (loss) gain on derivative instruments

Unrealized gain (loss) on derivative instruments

735 ( 3,500 )

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Issuance of operating partnership units in connection with acquisition transactions — — — — — — 9,619 9,619

Shares issued upon redemption of operating partnership units 405,106 4 6,726 — — 6,730 ( 6,730 ) —

Cash redemption for non-controlling interests — — — — — — ( 558 ) ( 558 )

Issuance and amortization of equity-based compensation 153,006 1 3,493 — — 3,494 2,308 5,802

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— — — — ( 19,698 ) ( 19,698 ) ( 4,664 ) ( 24,362 )

Other comprehensive income — — — 6,720 — 6,720 1,529 8,249

Unrealized loss on derivative instruments — — — ( 2,865 ) — ( 2,865 ) ( 635 ) ( 3,500 )

Net income — — — — 3,709 3,709 874 4,583

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52,778 1 861 — — 862 ( 862 ) —

Cash redemption for non-controlling interests — — — — — — ( 558 ) ( 558 )

Issuance and amortization of equity-based compensation 118,887 1 3,313 — — 3,314 3,071 6,385

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— — — — ( 22,261 ) ( 22,261 ) ( 5,726 ) ( 27,987 )

Other comprehensive loss

— — — ( 2,865 ) — ( 2,865 ) ( 635 ) ( 3,500 )

Unrealized gain on derivative instruments — — — 609 — 609 126 735

Net income — — — — 6,596 6,596 1,725 8,321

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Depreciation and amortization 22,202 19,688

Write-off and amortization of deferred financing costs 686 596

Write-off and amortization of deferred financing costs and debt discounts

Amortization of above/below market leases ( 2,920 ) ( 2,411 )

Amortization of intangible liability ( 258 ) ( 140 )

Casualty and impairment losses

Gain on sale of real estate assets

Gain on insurance proceeds received for damage due to property

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Deferred rent receivable ( 1,097 ) ( 348 )

Deferred rent expense payable 3 8

Changes in assets and liabilities:

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Acquisition of real estate ( 82,027 ) ( 70,224 )

Investment in financing leases — ( 10 )

Proceeds from sale of real estate assets

Escrows for acquisition and construction deposits ( 307 ) ( 103 )

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Net increase (decrease) in Cash and Escrows and Reserves

825 ( 4,984 )

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

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$ 9,409 $ 9,619

Unrealized (loss) gain on interest rate swaps, net

Assumption of seller financing

Unrealized gain (loss) on derivative instruments

$ 735 $ ( 3,500 )

Reallocation of non-controlling interest $ 407 $ 3,369

Operating partnership units issue for business acquisition $ — $ 1,451

Reclassification of acquisition deposits included in prepaid expenses and other assets $ 210 $ 696

Shares issued upon redemption of operating partnership units

$ 862 $ 6,730

Reclassification of acquisition deposits and other deferred costs

Write-off of fixed assets no longer in service $ 88 $ 147

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Additionally, any income earned by the TRS and any other TRS the Company may form in the future will be subject to federal, state and local corporate income tax.

Pursuant to the Jumpstart Our Business Startups Act, the Company qualifies as an emerging growth company (“EGC”).

An EGC may choose, as the Company has done, to take advantage of the extended private company transition period provided for complying with new or revised accounting standards that may be issued by the Financial Accounting Standards Board (“FASB”) or the Securities and Exchange Commission.

Summary of Significant Accounting Policies

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The Company consolidates the Operating Partnership, a VIE in which the Company is considered the primary beneficiary.

The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the

The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

Substantially all of the assets and liabilities of the Company relate to the Operating Partnership.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

Substantially all of the assets and liabilities of the Company relate to the Operating Partnership.

A non-controlling interest is defined as the portion of the equity in an entity not attributable, directly or indirectly, to the Company.

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The Company leases its properties primarily to the USPS and reports its business as a single reportable segment.

The Company's Chief Executive Officer is the Chief Operating Decision Maker ("CODM") who allocates resources and assesses financial performance.

The CODM reviews net income and assesses the performance of the Company's current portfolio of properties primarily leased to the USPS and makes operating decisions accordingly.

Net income is used by the CODM in assessing the operating performance of the segment and to monitor budget versus actual results.

The measure of segment assets is reported on the Consolidated Balance Sheets as total assets.

As a result, the Company conducts its business as a single operating segment.

All expense categories on the consolidated statement of operations are significant.

As a part of his review as the CODM, the CEO also separately examines the equity-based compensation component of general and administrative expenses, which is also considered a significant segment expense.

Investments in Real Estate

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Real estate tax reserve

Total escrows and reserves $ 744 $ 632

Cash and escrows and reserves

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The Company recognizes estimated accrued interest and penalties related to uncertain tax positions in income tax expense.

Fair Value Measurements

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements

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

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As of December 31, 2024 and 2023, the fair value of the Company’s interest rate swap derivative assets was approximately $ 6.7 million and $ 6.4 million, respectively, included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets.

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

As of December 31, 2024 and 2023 , the fair value of the Company's interest rate swap derivative liabilities was approximately $ 0.3 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 December 31, 2024 and 2023.

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Derivatives and Hedging Activities for further details.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 current fair value, and (vi) it is unlikely that the disposal plan will significantly change or be withdrawn.

Following the classification of a 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.

There were no properties classified as held for sale as of December 31, 2024 and 2023.

Impairment of Long-Lived Assets

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An impairment loss is measured based on the excess of the asset’s carrying amount over its estimated fair value.

Impairment analyses will be based on current plans, intended holding periods and available market information at the

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

time the analyses are prepared.

Impairment analyses will be based on current plans, intended holding periods and available market information at the time the analyses are prepared.

If estimates of the projected future cash flows, anticipated holding periods or market conditions change, the evaluation of impairment losses may be different and such differences may be material.

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 years ended December 31, 2023 and 2022.

During the year ended December 31, 2024, based upon an accumulation of costs in excess of what was originally expected, the Company assessed the recoverability of the carrying amount of its real estate and related intangibles.

The assessment resulted in the remeasurement of one property, which was written down to its estimated fair value and was classified as Level 3 in the fair value hierarchy.

The Company's estimate of the fair value was based on a discounted cash flow analysis.

The Company used two significant unobservable inputs which was the cash flow discount rate ( 11.0 %) and the terminal capitalization rate ( 10.0 %).

The remeasurement resulted in an impairment loss of $ 0.1 million, which is included in "Casualty and impairment loss, net" in the Company's Consolidated Statements of Operations and Comprehensive Income.

No impairment was recorded during the year ended December 31, 2023.

Concentration of Credit Risks

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The Company accounts for equity-based compensation in accordance with ASC Topic 718 Compensation – Stock Compensation, which requires the Company to recognize an expense for the grant date fair value of equity-based awards.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Equity-classified stock awards granted to employees and non-employees that have a service condition and/or a market condition are measured at fair value at date of grant and remeasured at fair value only upon a modification of the award.

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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 December 31, 2023 and 2022, the Company had unvested restricted shares of Class A common stock, LTIP Units and certain restricted stock units (“RSUs"), which provide for non-

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

forfeitable rights to dividend and dividend-equivalent payments.

As of December 31, 2024 and 2023, the Company had unvested restricted shares of Class A common stock, 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.

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Earnings Per Share for further details.

Recently Adopted Accounting Pronouncements

In December 2022, the FASB issued ASU No.

2022-06, Deferral of the Sunset Date of Topic 848, which was issued to defer the sunset date of Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform to December 31, 2024.

2022-06 is effective immediately for all companies.

2022-06 had no impact on the Company's Consolidated Financial Statements for the years ended December 31, 2023 and December 31, 2022.

In September 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments and in November 2018 issued ASU No.

2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses.

The guidance changed how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The guidance replaced the previous "incurred loss" model with an "expected loss" approach.

The guidance also requires entities to disclose information about how they developed the allowances, including changes in the factors that influenced estimate of expected credit losses and the reasons for those changes.

2018-19 excludes operating lease receivables from the scope of this guidance.

This guidance became effective for the Company and was adopted by the Company on January 1, 2023.

The Company had two direct financing leases with a net investment balance aggregating approximately $ 16.0 million as of December 31, 2023 prior to any credit loss adjustment.

Historically, the Company has had no collection issues related to these direct financing leases and its other leases in which the Company is the lessor;

therefore, the Company assessed the probability of default on these leases based on the lessee’s status as an independent agency of the executive branch of the U.S.

federal government, financial condition and business prospects and the remaining term of the leases.

Based on the aforementioned, the Company did not recognize any credit loss adjustment for such leases.

Future Application of Accounting Standards

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.

2023-07 improves disclosures about public entities' reportable segments and addresses requests from investors for additional, more detailed information about a reportable segment's expenses.

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 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 Acquisitions

Recent Accounting Standards

In November 2023, the Financial Accounting Standards Board issued ASU 2023-07, Segment Reporting (Topics 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 improves current segment disclosures and requires additional disclosures of segment expenses.

The Company adopted the provisions of ASU 2023-07 as of December 31, 2024 which did not materially impact the Company’s consolidated financial statements, and the required segment disclosures are included above.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”).

The amendments in ASU 2024-03 apply to all public business entities and require disclosure of specified information about certain costs and expenses.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating the potential impact of adopting ASU 2024-03.

Real Estate Transactions

The following tables summarizes the Company’s acquisitions for the years ended December 31, 2024 and 2023.

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.

The purchase prices including transaction costs were allocated to the separately identifiable tangible and intangible assets and

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

liabilities based on their relative fair values at the date of acquisition.

The total purchase price including transaction costs was allocated as follows (in thousands, except for the number of properties):

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197 $ 24,109 $ 68,268 $ 533 $ 6,263 $ 112 $ ( 6,221 ) $ ( 269 ) $ 92,795

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Number of Properties Land Building and Improvements Tenant Improvements In-place lease intangibles Above- market leases Below- market leases Other (7)

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Explanatory Notes :

(1) Includes an intangible liability related to unfavorable operating leases with purchase options on two properties during the three months ended September 30, 2023 and an above market ground lease intangible liability on one property during the three months ended December 31, 2023 that is each included in “Accounts payable, accrued expenses and other” on the Consolidated Balance Sheets.

(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, and intangible liabilities related to unfavorable operating leases with purchase options on five properties during the three months ended December 31, 2024 that is included in “Accounts payable, accrued expenses and other, net" and "Prepaid expenses and other assets, net" on the Consolidated Balance Sheets, as applicable.

(2) Includes closing costs of approximately $ 0.3 million for the three months ended March 31, 2024, approximately $ 0.5 million for the three months ended June 30, 2024, approximately $ 0.4 million for the three months ended September 30, 2024 and approximately $ 0.7 million for the three months ended December 31, 2024.

(3) Includes the acquisition of 39 properties in various states for cash consideration in individual or portfolio transactions for a price of approximately $ 17.6 million, including closing costs.

(4) Includes the acquisition of 39 properties in various states in individual or portfolio transactions for a price of approximately $ 16.0 million, including closing costs, which was funded with both the issuance of OP Units to the sellers (valued at approximately $ 0.5 million using the share price of Class A common stock on the date of each issuance of such OP Units) and cash consideration.

(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 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.

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

Also, includes 36 properties acquired from a related party.

Related Party Transactions for further details.

(5) Includes the acquisition of 35 properties in various states 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 that is included in "Secured Borrowings, net." See Note 5.

Debt for further details.

(6) Includes the acquisition of 63 properties in various states in individual or portfolio transactions for a price of approximately $ 31.4 million, including closing costs, which was funded with both the issuance of OP Units to the sellers (valued at approximately $ 2.5 million using the share price of Class A common stock on the date of each issuance of such OP Units) and cash consideration.

The aggregate purchase price for the quarter includes several land parcels that the Company acquired for approximately $0.4 million, which may in the future be added to existing or future leases with the USPS or used for other purposes that are consistent with the Company’s investment strategy.

(7) Includes an intangible liability related to unfavorable operating leases on two properties during the three months ended March 31, 2022 that is included in “Accounts payable, accrued expenses and other” on the Consolidated Balance Sheets.

During the three months ended June 30, 2022, includes a below-market ground lease intangible asset.

(7) Includes an intangible liability related to unfavorable operating leases with purchase options on two properties during the three months ended September 30, 2023 and an above market ground lease intangible liability on one property during the three months ended December 31, 2023 that is each included in “Accounts payable, accrued expenses and other, net” on the Consolidated Balance Sheets.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) Includes closing costs of approximately $ 0.3 million for the three months ended March 31, 2023, approximately $ 0.2 million for the three months ended June 30, 2023, approximately $ 0.7 million for the three months ended September 30, 2023 and approximately $ 0.6 million for the three months ended December 31, 2023.

(9) Includes the acquisition of 50 properties in various states in individual or portfolio transactions for approximately $ 27.6 million, including closing costs, which was funded with both the issuance of OP Units to the sellers as non-cash consideration (valued at approximately $ 1.8 million using the share price of Class A common stock on the date of each issuance of such OP Units) and cash consideration.

(10) Includes the acquisition of 150 properties in various states in individual or portfolio transactions for approximately $ 56.7 million, including closing costs, which was funded with both the issuance of OP Units to the sellers as non-cash

(9) Includes the acquisition of 39 properties in various states for cash consideration in individual or portfolio transactions for approximately $ 17.6 million, including closing costs.

(10) Includes the acquisition of 39 properties in various states in individual or portfolio transactions for approximately $ 16.0 million, including closing costs, which was funded with both the issuance of OP Units to the sellers (valued at approximately $ 0.5 million using the share price of Class A common stock on the date of each issuance of such OP Units) and cash consideration.

(11) Includes the acquisition of 70 properties in various states in individual or portfolio transactions for approximately $ 24.8 million, including closing costs, which was funded with both the issuance of OP Units to the sellers (valued at approximately $ 2.8 million using the share price of Class A common stock on the date of each issuance of such OP Units) and cash consideration.

(12) Includes the acquisition of 75 properties in various states in individual or portfolio transactions for approximately $ 21.6 million, including closing costs, which was funded with both the issuance of OP Units to the sellers (valued at approximately $ 6.3 million using the share price of Class A common stock on the date of each issuance of such OP Units) and cash consideration.

The aggregate purchase price for the quarter includes several land parcels that the Company acquired for approximately $ 0.4 million, which may in the future be added to existing or future leases with the USPS or used for other purposes that are consistent with the Company’s investment strategy.

Sale of Real Estate

During the year ended December 31, 2024, the Company sold two real estate properties for net proceeds of $ 6.0 million and recorded a net gain of $ 2.4 million.

Casualty Loss

During the year ended December 31, 2024, the Company recorded a casualty loss of $ 0.3 million reflecting the net book value of such asset damaged as a result of vandalism included within "Casualty and impairment losses, net" in the Consolidated Statement of Operations and Comprehensive 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

consideration (valued at approximately $ 2.0 million using the share price of Class A common stock on the date of each issuance of such OP Units) and cash consideration.

(11) Includes the acquisition of 66 properties in various states in individual or portfolio transactions for approximately $ 21.3 million, including closing costs, which was funded with both the issuance of OP Units to the sellers as non-cash consideration (valued at approximately $ 4.7 million using the share price of Class A common stock on the date of each issuance of such OP Units) and cash consideration.

(12) Includes the acquisition of 54 properties in various states in individual or portfolio transactions for approximately $ 20.7 million, including closing costs, which was funded with both the issuance of OP Units to the sellers as non-cash consideration (valued at approximately $ 0.9 million using the share price of Class A common stock on the date of each issuance of such OP Units) and cash consideration.

Intangible Assets and Liabilities

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As of December 31, 2024, the weighted average amortization period for the Company’s intangible assets was approximately 3.0 years, 3.2 years and 9.1 years for in-place lease intangibles, above-market leases and below-market leases, respectively.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

9 unchanged sentences

$ 12,636 $ 305 $ ( 16,171 )

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

18 unchanged sentences

100 194 6.00 % January 2025

AIG – December 2020 (7)

30,225 30,225 2.80 % January 2031

Seller Financing - 2024 (8)

1,400 — 5.00 % September 2039

Total Principal 298,277 241,988

Unamortized deferred financing costs ( 1,360 ) ( 1,364 )

Unamortized debt discount ( 209 ) —

Total Debt $ 296,708 $ 240,624

Explanatory Notes:

(1) On August 9, 2021, the Company entered into the Credit Facilities, which initially included the $ 150.0 million Revolving Credit Facility and the $ 50.0 million 2021 Term Loan.

(1) On August 9, 2021, the Company had entered into the Credit Facilities, which initially included the $ 150.0 million Revolving Credit Facility and the $ 50.0 million 2021 Term Loan.

On May 11, 2022, the Company amended the Credit Facilities (the "First Amendment") to, among other things, add a new $ 75.0 million senior unsecured delayed draw term loan facility (the "2022 Term Loan" and, together with the 2021 Term Loan, the "Term Loans"), replace the LIBOR with the Secured Overnight Financing Rate ("SOFR") as the benchmark interest rate and allow for a decrease in the applicable margin by 0.02 % if the Company achieves certain sustainability targets.

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On July 24, 2023, the Company amended the Credit Facilities (the "Second Amendment") to, among other things, add a daily simple SOFR-based option to the term SOFR-based floating interest rate option as a benchmark rate for borrowings under the Credit Facilities and further exercised $ 35.0 million of accordion under the Term Loans.

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.

As of December 31, 2023, the accordion feature under the Term Loans has been fully exercised.

The Revolving Credit Facility matures in January 2026,

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 (i) $ 150.0 million under the Revolving Credit Facility and (ii) $ 50.0 million under the Term Loans, 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 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.

With respect to the Revolving Credit Facility, the Company will pay, if the usage is equal to or less than 50 %, an unused facility fee of 0.20 % per annum, or if the usage is greater than 50 %, an unused facility fee of 0.15 % per annum, in each case on the average daily unused

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

commitments under the Revolving Credit Facility.

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

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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.

(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 December 31, 2024 and 2023 was approximately 3.2 years and 4.2 years, respectively.

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Derivatives and Hedging Activities

As of December 31, 2023, 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 December 31, 2024, the Company had nine interest rate swaps with a total notional amount of $ 250.0 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)

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$ 10,000 6.049 % September 2023 February 2028

$ 40,000 5.271 % October 2024 February 2028

$ 10,000 5.552 % November 2024 February 2028

Explanatory Note :

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During the next twelve months, the Company estimates that an additional $ 2.9 million will be reclassified from “Accumulated other comprehensive 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 Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as cash flow 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 years ended December 31, 2024 and 2023 (in thousands):

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31,

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$ 5,074 $ ( 4,615 )

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

"Interest expense, net" presented in the Consolidated Statements of Operations and Comprehensive Income, in which the effects of cash flow hedges are recorded, totaled $ 12.8 million and $ 10.0 million for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 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 December 31, 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 $ 0.3 million, which is at their termination value.

Lessor Accounting

As of December 31, 2023, the Company's properties were leased primarily to the USPS, with leases expiring at various dates through May 31, 2031.

As of December 31, 2024, the Company's properties were leased primarily to the USPS, with leases expiring at various dates through February 28, 2035.

Certain leases had expired and were in holdover status as of December 31, 2024 as discussed below.

12 unchanged sentences

$ 73,143 $ 60,970

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Future minimum lease payments to be received as of December 31, 2024 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands) :(1)

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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.

(2) As of December 31, 2023, the leases at 81 of the Company's properties were expired, and the USPS was occupying such properties as a holdover tenant.

(2) As of December 31, 2024, the leases at seven 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.

Holdover rent is typically paid as the greater of estimated market rent or the rent amount due under the expired lease.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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.

Purchase Option Provisions

2 unchanged sentences

Investment in Financing Leases, Net

As of 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.

As of December 31, 2024 and 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 December 31, 2024 and 2023 are summarized in the table below (in thousands):

3 unchanged sentences

Investment in financing leases, net $ 15,951 $ 16,042

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue earned under direct financing leases for the years ended December 31, 2024 and 2023 were $ 1.0 million and $ 1.0 million, respectively, which is recorded in "Fee and other" in the Consolidated Statements of Operations and Comprehensive Income.

4 unchanged sentences

As of December 31, 2024, these leases had remaining terms, including renewal options, of 0.6 years to 58.0 years and a weighted average remaining lease term of 21.6 years.

Operating right of use ("ROU") assets and lease liabilities are included in “Prepaid expenses and other

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

assets, net” and “Accounts payable, accrued expenses and other, net” on the Consolidated Balance Sheets as follows (in thousands):

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):

As of December 31,

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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 each of the twelve months ended December 31, 2023 and 2022 was $ 0.2 million.

Operating lease expense for the years ended December 31, 2024 and 2023 were $ 0.3 million and $ 0.2 million, respectively.

Related Party Transactions for more details.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of December 31, 2024 for the next five years and thereafter are as follows (in thousands):

4 unchanged sentences

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

For the years ended December 31, 2023 and 2022, income tax expense and income tax benefit related to REAC was $ 0.1 million and 3,670 , respectively.

As of December 31, 2022, the Company’s Consolidated Balance Sheets reflected a liability for unrecognized tax benefits in the amount of $ 0.02 million primarily related to the utilization of certain loss carryforwards by United Postal Holdings, Inc.

("UPH") through May 16, 2019.

For the year ended December 31, 2022, the Company accrued interest and penalties of $ 0.01 million.

During the years ended December 31, 2023 and 2022, the Company reversed $ 0.02 million and

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ 0.2 million, respectively, of unrecognized tax benefits inclusive of interest and penalties due to the expiration of statute of limitations, with an offsetting adjustment to the indemnification asset.

For the years ended December 31, 2024 and 2023, income tax expense and income tax benefit related to REAC was $ 0.1 million and $ 0.1 million, respectively.

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

("UPH"), a portion of the Company's predecessor, agreed to reimburse the Company for unrecognized tax benefits primarily related to the utilization of certain loss carryforwards at UPH.

The Company recorded an indemnification asset in the same amount as the unrecognized tax benefits.

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

During the year ended December 31, 2023, the Company reversed $ 0.02 million of unrecognized tax benefits inclusive of interest and penalties due to the expiration of statute of limitations, with an offsetting adjustment to the indemnification asset.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):

For the Years Ended December 31,

For the Years Ended For the Year Ended December 31,

Gross unrecognized tax benefits, beginning of year $ 23

Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations ( 23 )

Total $ — $ 23

The Company and REAC are subject to examinations by federal and state and local tax authorities beginning with the short tax year ended December 31, 2019.

The Company and REAC are subject to examinations by federal and state and local tax authorities beginning with the tax year ended December 31, 2021.

UPH was subject to examinations by federal tax authorities for tax years 2018 through 2019.

Cash paid for taxes for each of the years ended December 31, 2024 and 2023 was $ 0.09 million and $ 0.05 million, respectively.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Related Party Transactions

4 unchanged sentences

Related Party Lease

On May 17, 2019, the Company entered into a lease for office space in Cedarhurst, New York with an entity affiliated with the Company’s CEO (the “Office Lease”).

In connection with the Company's IPO and the related formation transactions the Company entered into a lease for office space in Cedarhurst, New York with an entity affiliated with the Company’s CEO (the “Office Lease”).

Pursuant to the Office Lease, the monthly rent is $ 15,000 subject to escalations.

The term of the Office Lease is five years commencing on May 17, 2019 and will expire on May 16, 2024.

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

In May 2024, the Office Lease was extended to the December 31, 2024 at the same rental rate.

Rental expenses associated with the Office Lease for the years ended December 31, 2024 and 2023 were $ 0.2 million and $ 0.2 million, respectively, and was recorded in “General and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income.

1 unchanged sentence

For further details, see Note 7.

In December 2024, the Company entered into a new lease with the Company's CEO (the "2025 Office Lease").

Pursuant to the 2025 Office Lease, the monthly rent is $ 18,750 subject to escalations.

The term of the 2025 Office Lease is five years commencing on January 1, 2025 and will expire on December 31, 2029.

Right of First Offer Transactions

In connection with the Company's IPO and the related formation transactions, the Company entered into a Right of First Offer Agreement (the “ROFO Agreement”) with certain members of the family (the “Related Party”) of Andrew Spodek, the Company’s CEO.

Pursuant to the ROFO Agreement, the Company has the right of first offer to acquire from the Related Party 250 properties that are currently managed by the Company.

On May 30, 2024, the Company acquired from the Related Party a portfolio of 36 properties currently leased to the USPS for approximately $ 12.5 million in cash, excluding closing costs.

The transaction was approved by a special committee of the Company’s Board of Directors consisting of four independent directors.

The Company has a remaining right of first offer to purchase 214 of the 360 managed properties.

As disclosed above in Note 5.

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Stockholders’ Equity

On November 4, 2022, the Company entered into separate open market sale agreements with each of Jefferies LLC, BMO Capital Markets Corp., Janney Montgomery Scott LLC, Stifel, Nicolaus & Company, Incorporated and Truist Securities, Inc., as agents (the "ATM Program"), pursuant to which the Company may offer and sell, from time to time, shares of its Class A common stock having an aggregate sales price of up to $ 50.0 million.

On November 4, 2022, the Company entered into separate open market sale agreements for its at the market offering programs with each of Jefferies LLC, BMO Capital Markets Corp., Janney Montgomery Scott LLC, Stifel, Nicolaus & Company, Incorporated and Truist Securities, Inc., as agents (the "ATM Program"), pursuant to which the Company may offer and sell, from time to time, shares of its Class A common stock having an aggregate sales price of up to $ 50.0 million.

The agreements also provide that the Company may enter into one or more forward sale agreements under separate master forward confirmations and related supplemental confirmations with affiliates of certain agents.

On August 8, 2023, the Company amended the ATM Program to increase the aggregate offering amount under the program from up to $ 50.0 million to up to $ 150.0 million.

On November 4, 2024, the Company entered into separate open market sale agreements for the ATM Program with each of Mizuho Securities USA LLC (“Mizuho”) and M&T Securities, Inc.

(“M&T”), as additional sales agents, Mizuho Markets Americas LLC, as additional forward purchaser, and Mizuho, as additional forward seller (in its capacity as agent for its affiliated forward purchaser).

There was no change to the aggregate offering amount of $ 150.0 million.

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

6 unchanged sentences

Fees, issuance and other costs

( 944 ) ( 1,250 )

Net proceeds received

1 unchanged sentence

Average gross sales price per share $ 14.35 $ 14.94

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Explanatory Note:

1 unchanged sentence

Dividends and Distributions

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended December 31, 2024, the Company's Board of Directors approved and the Company declared and paid dividends or distributions, as applicable, of $ 28.0 million to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $ 0.96 per share or unit, as shown in the table below.

12 unchanged sentences

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 year ended December 31, 2023, the Company issued 143,288 LTIP Units to the Company's CEO for his 2022 incentive bonus, his election to defer 100 % of his 2023 annual salary and for long term incentive compensation, 75,489 LTIP Units to the Company’s president for his 2022 incentive bonus and his election to defer 50% of his 2023 annual salary, 57,057 LTIP Units to the Company's Chief Financial Officer for his 2022 incentive bonus and for long term incentive compensation, 40,635 LTIP Units to the Board of Directors for their annual retainers as compensation for their services as directors, 25,510 LTIP Units to an employee for his 2022 incentive bonus, his election to defer a portion of his 2023 annual salary and for long term incentive compensation and 8,447 LTIP Units to a consultant under the consultancy agreement with the Company.

During the year ended December 31, 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, 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.

In addition, during the years ended December 31, 2024 and 2023, the Company issued 664,182 and 693,648 OP Units, respectively, to certain contributors in connection with portfolio acquisitions (for further details, see Note 3.

Real Estate Acquisitions) and a business acquisition (for further details, see Note 13.

Business Acquisitions).

Real Estate Acquisitions).

As of December 31, 2024 and December 31, 2023, non-controlling interests consisted of 4,998,738 OP Units and 1,241,944 LTIP Units and 4,387,334 OP Units and 884,621 LTIP Units, respectively.

1 unchanged sentence

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 limited partner first receives the OP Units, such limited partner 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 such OP Units 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.

Beginning on or after the date which is 12 months after the date on which a person first became 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.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended December 31, 2024, 52,778 OP Units were redeemed for 52,778 shares of Class A common stock.

During the year ended December 31, 2023, 402,433 OP Units and 2,673 LTIP Units were redeemed for 405,106 shares of Class A common stock.

2 unchanged sentences

During the year ended December 31, 2023, 37,500 OP Units were also redeemed for cash for the total amount of $ 0.6 million.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

9 unchanged sentences

Granted 102,125 357,323 114,136 573,584 $ 14.29

Conversion to common stock

— ( 2,673 ) — ( 2,673 ) $ 18.02

Vesting of restricted shares and RSUs (5)

5 unchanged sentences

(2) The time-based restricted share awards granted to the Company's officers and employees typically vest in three annual installments or cliff vest at the end of three years , five years or eight years .

Also includes 5,336 shares of restricted stock granted to a consultant under the consultancy agreement with the Company, which shares will vest on February 28, 2025.

(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 25,510 LTIP Units granted to an employee of the Company, a portion of which vested on December 31, 2023 with the remaining to vest over three years or cliff vest at the end of eight years, 40,635 LTIP Units granted to the Company's independent directors that vest over three years or cliff vest at the end of three years and 8,447 LTIP Units granted to a consultant under the consultancy agreement with the Company, with 3,304 of such units vested on June 30, 2023 and 5,143 remaining to vest on June 30, 2024.

Also includes 51,940 LTIP Units granted to certain other employees of the Company, certain of which vested fully on date of grant with the remaining vesting over three years or cliff vest at the end of eight years , 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 4,545 LTIP Units granted to a consultant under the consultancy agreement with the Company, which shares will vest on June 30, 2025.

(4) Includes 79,296 RSUs granted to certain officers and employees of the Company during the year ended December 31, 2024 subject to the achievement of a service condition and a market condition.

1 unchanged sentence

The number of market-based RSUs is based on the number of shares issuable upon achievement of the market-based metric at target.

Also, includes 46,258 time-based RSUs issued for 2022 incentive bonuses to certain employees that vested fully on January 31, 2023, the date of grant, and 11,138 time-based RSUs granted to certain employees for their election to defer a portion of their 2023 salary that vested on December 31, 2023.

RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria.

(5) Includes 74,082 of restricted shares that vested and 29,384 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements.

Also, includes 34,841 time-based RSUs issued for 2023 incentive

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In February 2024, the Company issued 132,693 LTIP Units to the Company’s CEO for his 2023 incentive bonus and his election to defer 100 % of his 2024 annual salary, 51,490 LTIP Units to the Company’s president for his 2023 incentive bonus and 43,038 LTIP Units to the Company's Chief Financial Officer for his 2023 incentive bonus.

LTIP Units issued to the Company’s CEO, president and Chief Financial Officer in lieu of cash compensation will cliff vest on the eighth anniversary of February 1, 2024.

In addition, in February 2024, the Company issued 32,579 restricted shares of Class A common stock for annual grants to employees and consultants and 34,841 RSUs, 48,778 LTIP units and 31,883 restricted shares of Class A common stock to other employees for their 2023 incentive bonus.

bonuses to certain employees that vested fully on February 2, 2024, the date of grant.

RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria.

(5) Includes 66,921 of restricted shares and RSUs that vested and 45,023 shares of restricted shares and RSUs that were withheld to satisfy minimum statutory withholding requirements.

In January 2025, the Company issued 198,335 LTIP Units to the Company’s CEO for his 2024 incentive bonus and his election to defer 100 % of his 2025 annual salary and 90,909 LTIP Units to the Company’s President for his 2024 incentive bonus.

LTIP Units issued to the Company’s CEO and President in lieu of cash compensation will cliff vest on the eighth anniversary of February 1, 2025.

In addition, in January 2025, the Company issued 36,459 restricted shares of Class A common stock for annual grants to employees and 13,814 RSUs, 111,292 LTIP units and 10,286 restricted shares of Class A common stock to other employees for their 2024 incentive bonus.

RSUs reflect the right to receive shares of Class A common stock.

1 unchanged sentence

Certain restricted shares of Class A common stock issued to employees and consultants will vest in three equal, annual installments on each of the first three anniversaries of February 1, 2025, while other restricted shares of Class A common stock and LTIP Units issued to employees in lieu of cash compensation will cliff vest on the third, fifth or eighth anniversary of February 1, 2025.

The Company also issued 703 restricted shares of Class A common stock in February 2024 to certain employees for work anniversaries, which shares vested fully on the date of grant.

In February 2024, the Company also issued an aggregate of 33,253 LTIP Units, 31,625 of restricted shares of Class A common stock and 79,296 RSUs to certain officers of the Company.

The Company also issued 768 restricted shares of Class A common stock in January 2025 to certain employees for work anniversaries, which shares vested fully on the date of grant.

In January 2025, the Company also issued an aggregate of 44,574 LTIP Units and 28,668 of restricted shares of Class A common stock to certain officers and employees of the Company.

The LTIP Units and restricted shares of Class A common stock will vest in three equal, annual installments over the approximately three-year period ending February 1, 2028, subject to continued employment with the Company.

In February 2025, the Company issued 90,362 RSUs to certain officers and employees of the Company.

The RSUs are market-based awards and are subject to the achievement of performance-based hurdles relating to the Company’s 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, 2027.

Such RSU recipients may earn up to 200 % of the RSUs that were issued.

Upon vesting pursuant to the terms of the RSUs, the RSUs that vest will be settled in shares of Class A common stock and the recipients will be entitled to receive the distributions that would have been paid with respect to a share of Class A common stock (for each share that vests) on or after the date the RSUs were initially granted.

During the year ended December 31, 2020, the Company issued 38,672 RSUs (the “2020 Performance-Based Awards”) to certain employees that were market-based awards and subject to the achievement of performance-based hurdles relating to the Company’s absolute total stockholder return goals and continued employment with the Company over the approximately three-year performance period ended December 31, 2022.

2 unchanged sentences

In February 2024, the Company's CGC Committee 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 year ended December 31, 2022, the Company issued 47,005 RSUs (the “2022 Performance-Based Awards”) to certain employees that were market-based awards and subject to the achievement of performance-based hurdles relating to the Company’s absolute total stockholder return goals and continued employment with the Company over the approximately three-year performance period ended December 31, 2024.

In January 2025, the Company's CGC Committee determined that the Company's total stockholder return for such three-year performance period did not meet the threshold

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

performance hurdles for the 2022 Performance-Based Awards and, as a result, approved the cancellation of 47,005 RSUs for such awards.

During the year ended December 31, 2024, the Company recognized compensation expense of $ 5.8 million and $ 0.5 million in “General and administrative expenses” and "Property operating expenses" in the Consolidated Statements of Operations and Comprehensive Income, respectively, related to all awards.

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As of December 31, 2024, there was $ 16.4 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 4.8 years.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Employee Stock Purchase Plan

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There can be no assurance that definitive contracts will be entered into with respect to any matter covered by letters of intent, that the Company will close the transactions contemplated by such contracts on time, or that the Company will consummate any transaction contemplated by any definitive contract.

Business Acquisition

On March 4, 2022, the Company acquired a postal real estate consulting business and its employees through the issuance of 79,794 OP Units and $ 0.2 million in cash for an aggregate purchase price of approximately $ 1.7 million to complement the Company's core business of acquiring, managing, servicing and being a consolidator of postal properties.

In connection with the acquisition, the Company recorded an intangible asset related to the customer relationships and trade name of approximately $ 0.2 million in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets, which is being amortized over the estimated useful life of four years, and goodwill of approximately $ 1.5 million.

The goodwill recorded is deductible for income tax purposes.

All assets acquired in connection with the business acquisition were assigned to the Company’s single reportable segment.

The results of operations of this acquired business have been included in the Consolidated financial Statements since the acquisition date.

For the year ended December 31, 2022, the Company recorded revenue of $ 0.03 million and net loss of $ 0.09 million in connection with the acquired business.

Pro forma information has not been presented for this business acquisition because such information is not material to the financial statements.

Subsequent Events

In addition to the subsequent events discussed elsewhere in the notes to the Consolidated Financial Statements, the following events occurred subsequent to December 31, 2024:

The Company's Board of Directors approved, and on February 2, 2024, the Company declared a fourth quarter 2023 common stock dividend of $ 0.24 per share, which was paid on February 29, 2024 to stockholders of record as of February 16, 2024.

As of February 29, 2024, the Company had $ 211.0 million drawn on the Credit Facilities, with $ 75.0 million drawn on the 2021 Term Loan, $ 125.0 million drawn on the 2022 Term Loan and $ 11.0 million drawn on the Revolving Credit Facility.

As of February 29, 2024 and during the period subsequent to December 31, 2023, the Company issued 483,341 shares of its Class A common stock under the ATM Program for gross proceeds of approximately $ 6.9 million.

As of February 29, 2024 and during the period subsequent to December 31, 2023, the Company closed on the acquisitions of eight properties for approximately $ 4.5 million, excluding closing costs.

The Company's Board of Directors approved, and on January 30, 2025, the Company declared a fourth quarter 2024 common stock dividend of $ 0.2425 per share, which is payable on February 28, 2025 to stockholders of record as of February 14, 2025.

As of February 26, 2025, the Company had $ 26.0 million drawn on the Revolving Credit Facility.

As of February 26, 2025 and during the period subsequent to December 31, 2024, the Company closed on the acquisitions of 18 properties for approximately $ 8.4 million, excluding closing costs.

As of February 26, 2025, the Company sold one vacant property for a total sales price of approximately $ 0.8 million.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of February 29, 2024 and during the period subsequent to December 31, 2023, the Company had entered into definitive agreements to acquire twenty properties for approximately $ 13.9 million.

As of February 26, 2025 and during the period subsequent to December 31, 2024, the Company had entered into definitive agreements to acquire 15 properties for approximately $ 11.0 million.

The majority of these transactions are anticipated to close during the second and third quarters of 2025, subject to the satisfaction of customary closing conditions.

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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 8. Financial Statements and Supplementary Data