What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-11-04 · 76 added, 125 removed, 206 unchanged (49% of the section changed)

25 unchanged sentences

• change in our business, financing or investment strategy or the markets in which we operate;

• fluctuations in interest rates;

• increased operating costs, repair and maintenance expenses and capital expenditures for our properties;

• fluctuations in interest rates and increased operating costs, repair and maintenance expenses and capital expenditures for our properties;

• general economic conditions (including inflation, rising interest rates, uncertainty regarding ongoing conflict between Russia and Ukraine and their related impact on macroeconomic conditions);

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We conduct our business through a traditional UPREIT structure in which our properties are owned by our Operating Partnership directly or through limited partnerships, limited liability companies or other subsidiaries.

During the nine months ended September 30, 2024, we acquired 134 properties leased to the USPS for approximately $61.4 million, including closing costs.

As of September 30, 2024, our portfolio consists of 1,642

During the three months ended March 31, 2025, we acquired 36 properties leased to the USPS for approximately $16.3 million, including closing costs.

As of March 31, 2025, our portfolio consists of 1,738

owned properties, located in 49 states and one territory and comprising approximately 6.5 million net leasable interior square feet.

We are the sole general partner of our Operating Partnership through which our properties are directly or indirectly owned.

As of November 4, 2024, we owned approximately 79.1% of outstanding common units of limited partnership interest in our Operating Partnership (the “OP Units”), including long term incentive units of our Operating Partnership (the “LTIP Units”).

As of April 30, 2025, we owned approximately 78.0% of outstanding common units of limited partnership interest in our Operating Partnership (the “OP Units”), including long term incentive units of our Operating Partnership (the “LTIP Units”).

Our Board of Directors oversees our business and affairs.

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

The agreements also provide that we 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, we 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.

During the nine months ended September 30, 2024, 1,235,346 shares were issued under the ATM Program for approximately $17.7 million in gross proceeds.

As of September 30, 2024, we had approximately $96.4 million of availability remaining under the ATM Program.

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 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 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, and affiliates of Mizuho, as forward sellers.

During the three months ended March 31, 2025, 139,626 shares were issued under the ATM Program for approximately $2.0 million in gross proceeds.

As of March 31, 2025, we had approximately $91.7 million of availability remaining under the ATM Program.

Executive Overview

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Geographic Concentration

As of September 30, 2024, we owned a portfolio of 1,642 properties located in 49 states and one territory and leased primarily to the USPS.

For the nine months ended September 30, 2024, approximately 12.2% of our total rental income was concentrated in Pennsylvania.

Emerging Growth Company

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

In addition, the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards.

We have availed ourselves of these exemptions;

although, subject to certain restrictions, we may elect to stop availing ourselves of these exemptions in the future even while we remain an “emerging growth company.”

We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenue equals or exceeds $1.235 billion (subject to periodic adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our IPO, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt or (iv) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

We are also a “smaller reporting company” as defined in Regulation S-K under the Securities Act and have elected to take advantage of certain scaled disclosures available to smaller reporting companies.

We may continue to be a smaller reporting company even after we are no longer an “emerging growth company.”

We elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), beginning with our short taxable year ended December 31, 2019 and intend to continue to qualify as a REIT.

As of March 31, 2025, we owned a portfolio of 1,738 properties located in 49 states and one territory and leased primarily to the USPS.

For the three months ended March 31, 2025, approximately 11.0% of our total rental income was concentrated in Pennsylvania.

Registrant Elections

We are a “smaller reporting company” as defined in Regulation S-K under the Securities Act and have elected to take advantage of certain scaled disclosures available to smaller reporting companies.

We have also elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), beginning with our short taxable year ended December 31, 2019 and intend to continue to qualify as a REIT.

As long as we qualify as a REIT, we generally will not be subject to federal income tax to the extent that we distribute our taxable income for each tax year to our stockholders.

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While the USPS has recently undertaken, and proposes to undertake, a number of operational reforms and cost reduction measures, such as higher rates and slower deliveries for certain services and closure, relocation or consolidation of certain facilities and delivery routes, the USPS has taken the position such measures alone will not be sufficient to maintain its ability to meet all of its existing obligations when due or allow it to make the critical infrastructure investments that have been deferred in recent years.

These measures have also led to significant criticism and litigation, which may result in reputational or financial harm or increased regulatory scrutiny of the USPS or reduced demand for its services.

These measures have also led to significant criticism and litigation, which may result in reputational or financial harm or

increased regulatory scrutiny of the USPS or reduced demand for its services.

The occurrence of a regional epidemic or a global pandemic, such as the COVID-19 pandemic, and measures taken to prevent its spread may also have a material and unpredictable effect on the USPS’ operations and liquidity, including significant additional operating expenses caused by pandemic-related disruptions.

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Spodek and his affiliates pursuant to the management agreements and is a percentage of the lease revenue for the managed properties, (ii) revenue our TRS received from providing advisory services to third-party owners of postal properties and (iii) income recognized from properties accounted for as financing leases.

As of September 30, 2024, properties leased to our tenants had an average remaining lease term of approximately three years.

As of March 31, 2025, properties leased to our tenants had an average remaining lease term of approximately 4.0 years.

Factors that could affect our rental income and fee and other in the future include, but are not limited to:

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the cost of periodic repair, age and durability of our properties, renovation costs, landlord’s responsibilities under the leases, the cost of re-leasing space, inflation and the potential for liability under applicable laws.

Recoveries from the tenant are recognized

as revenue on an accrual basis over the periods in which the related expenditures are incurred.

Recoveries from the tenant are recognized as revenue on an accrual basis over the periods in which the related expenditures are incurred.

Tenant reimbursements and the related property operating expenses are recognized on a gross basis, because (i) generally, we are the primary obligor with respect to the real estate taxes and (ii) we bear the credit risk in the event the tenant does not reimburse the real estate taxes.

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Indebtedness and Interest Expense

Our credit facilities (the "Credit Facilities") consist of a $150.0 million senior unsecured revolving credit facility (the "Revolving Credit Facility"), a $75.0 million senior unsecured term loan facility (the "2021 Term Loan") and a $125.0 million senior unsecured term loan facility (the "2022 Term Loan").

On October 25, 2024, we amended the Credit Facilities (the "Third Amendment") to, among other things, replaces 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 we further exercised $40.0 million under the 2022 Term Loan, and on a delayed-draw basis, $10.0 million.

Our credit facilities (the "Credit Facilities"), including the Third Amendment to the Credit Facilities (the "Third Amendment") consist of a $150.0 million senior unsecured revolving credit facility (the "Revolving Credit Facility"), a $75.0 million senior unsecured term loan facility (the "2021 Term Loan") and a $175.0 million senior unsecured term loan facility (the "2022 Term Loan").

In addition, the Third Amendment increases the 2022 Term Loan commitments in an aggregate principal amount of up to $50.0 million.

We intend to use the Credit Facilities for working capital purposes, which may include repayment of mortgage indebtedness, property acquisitions and other general corporate purposes.

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Lease Renewal

As of November 4, 2024, the leases at 17 of our properties, representing approximately 500,000 net leasable interior square feet, had expired and the USPS was occupying such properties as a holdover tenant.

As of April 30, 2025, the leases at seven of our properties, representing approximately 29,000 net leasable interior square feet, had expired and the USPS was occupying such properties as a holdover tenant.

As of the date of this report, the USPS had not vacated or notified us of its intention to vacate any of these properties.

When a lease expires, the USPS becomes

a holdover tenant on a month-to-month basis typically paying the greater of estimated market rent or the rent amount under the expired lease.

When a lease expires, the USPS becomes a holdover tenant on a month-to-month basis typically paying the greater of estimated market rent or the rent amount under the expired lease.

While we currently anticipate that we will renew the leases that have expired or will expire, there can be no guarantee that we will be successful in renewing these leases, obtaining positive rent renewal spreads or renewing the leases on terms comparable to those of the expiring leases.

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Results of Operations

Comparison of the Three Months Ended September 30, 2024 and the Three Months Ended September 30, 2023

Comparison of the Three Months Ended March 31, 2025 and the Three Months Ended March 31, 2024

For the Three Months Ended

September 30,

(Amounts in thousands) 2025 2024 $ Change % Change

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Total operating expenses 15,820 14,248 1,572 11.0 %

Loss on sale of real estate assets (49) — (49) N/A

Income from operations 6,281 3,039 3,242 106.7 %

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Contractual interest expense (3,437) (2,637) (800) 30.3 %

Write-off and amortization of deferred financing fees (180) (174) (6) 3.4 %

Interest income 7 — 7 N/A

Write-off and amortization of deferred financing fees and amortization of debt discount (211) (181) (30) 16.6 %

Interest income 6 1 5 500.0 %

Total interest expense, net (3,642) (2,817) (825) 29.3 %

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Rental income – Rental income includes net rental income as well as the recovery of certain operating costs and property taxes from tenants.

Rental income increased by $3.4 million to $18.8 million for the three months ended September 30, 2024 from $15.4 million for the three months ended September 30, 2023, primarily due to the volume of our acquisitions.

Fee and other – Fee and other revenue increased by $0.2 million to $0.9 million for the three months ended September 30, 2024 from $0.7 million for the three months ended September 30, 2023, primarily due to an increase in income received from advisory services and an increase in management fees.

Rental income increased by $4.9 million to $21.5 million for the three months ended March 31, 2025 from $16.6 million for the three months ended March 31, 2024, primarily due to the volume of our acquisitions and the execution of new leases with annual escalations.

Operating Expenses

Real estate taxes – Real estate taxes increased by $0.4 million to $2.5 million for the three months ended September 30, 2024 from $2.1 million for the three months ended September 30, 2023, primarily due to the volume of our acquisitions.

Property operating expenses – Property operating expenses increased by $0.6 million to $2.5 million for the three months ended September 30, 2024 from $1.9 million for the three months ended September 30, 2023.

Property management expenses are included within property operating expenses and increased by $0.1 million to $0.7 million for the three months ended September 30, 2024 from $0.6 million for the three months ended September 30, 2023.

The remainder of the increase in property operating expenses of $0.5 million was related to an increase in insurance and repair and maintenance expenses.

General and administrative – General and administrative expenses increased by $0.5 million to $3.9 million for the three months ended September 30, 2024 from $3.4 million for the three months ended September 30, 2023, primarily due to an increase in net compensation costs, partially offset by a decrease in public company-related expenses.

Casualty and impairment losses - Casualty and impairment losses for the three months ended September 30, 2024 was $0.2 million which reflects a casualty loss of $0.2 million for an asset damaged as a result of vandalism.

No casualty and impairment losses occurred for the three months ended September 30, 2023.

Depreciation and amortization – Depreciation and amortization expense increased by $0.9 million to $5.8 million for the three months ended September 30, 2024 from $4.9 million for three months ended September 30, 2023, primarily due to the volume of our acquisitions.

Real estate taxes – Real estate taxes increased by $0.3 million to $2.6 million for the three months ended March 31, 2025 from $2.3 million for the three months ended March 31, 2024, primarily due to the volume of our acquisitions.

Property operating expenses – Property operating expenses increased by $0.1 million to $2.5 million for the three months ended March 31, 2025 from $2.4 million for the three months ended March 31, 2024.

Property management expenses are included within property operating expenses and increased by $0.1 million to $1.0 million for the three months ended March 31, 2025 from $0.9 million for the three months ended March 31, 2024.

General and administrative – General and administrative expenses increased by $0.6 million to $4.9 million for the three months ended March 31, 2025 from $4.3 million for the three months ended March 31, 2024, primarily due to an increase in net compensation costs, partially offset by a decrease in public company-related expenses.

Casualty and impairment losses, net - Casualty and impairment losses for the three months ended March 31, 2025 was $0.2 million which reflects $0.5 million in gross charges primarily related to the net book value of two properties damaged as a result of natural disasters and related repairs, partially offset by $0.4 million of related insurance claims that the Company believes is probable it will recover resulting in a net charge of $0.1 million and $0.1 million for an impairment on an asset.

No casualty and impairment losses occurred for the three months ended March 31, 2024.

Depreciation and amortization – Depreciation and amortization expense increased by $0.3 million to $5.6 million for the three months ended March 31, 2025 from $5.3 million for three months ended March 31, 2024, primarily due to the volume of our acquisitions.

Other income primarily includes insurance recoveries related to property damage claims.

Other income decreased by $0.2 million to $0.01 million for the three months ended September 30, 2024 from $0.2 million for the three months ended September 30, 2023, primarily due to a decrease in property related insurance recoveries from claims.

Other income decreased by $0.02 million to $0.03 million for the three months ended March 31, 2025 from $0.05 million for the three months ended March 31, 2024, primarily due to a decrease in property related insurance recoveries from claims.

Total Interest Expense, Net

During the three months ended September 30, 2024, we incurred total interest expense, net of $3.4 million compared to $2.6 million for the three months ended September 30, 2023.

During the three months ended March 31, 2025, we incurred total interest expense, net of $3.6 million compared to $2.8 million for the three months ended March 31, 2024.

The increase in interest expense was primarily due to additional borrowings under the Credit Facilities and increased interest rates.

Comparison of the Nine Months Ended September 30, 2024 and Nine Months Ended September 30, 2023

For the Nine Months Ended

September 30,

2024 2023 $ Change % Change

Rental income $ 52,740 $ 44,699 $ 8,041 18.0 %

Fee and other 2,264 2,012 252 12.5 %

Total revenues 55,004 46,711 8,293 17.8 %

Operating expenses

Real estate taxes 7,174 6,101 1,073 17.6 %

Property operating expenses 7,007 4,955 2,052 41.4 %

General and administrative 12,094 11,121 973 8.7 %

Casualty and impairment losses, net 216 — 216 N/A

Depreciation and amortization 16,575 14,537 2,038 14.0 %

Total operating expenses 43,066 36,714 6,352 17.3 %

Income from operations 11,938 9,997 1,941 19.4 %

Other income 74 485 (411) (84.7) %

Interest expense, net

Contractual interest expense (8,771) (6,793) (1,978) 29.1 %

Write-off and amortization of deferred financing fees (543) (504) (39) 7.7 %

Interest income 13 1 12 1,200.0 %

Total interest expense, net (9,301) (7,296) (2,005) 27.5 %

Income before income tax expense 2,711 3,186 (475) (14.9) %

Income tax expense (73) (56) (17) 30.4 %

Net income $ 2,638 $ 3,130 $ (492) (15.7) %

Rental income – Rental income includes net rental income as well as the recovery of certain operating costs and property taxes from tenants.

Rental income increased by $8.0 million to $52.7 million for the nine months ended September 30, 2024 from $44.7 million for the nine months ended September 30, 2023, primarily due to the volume of our acquisitions.

Fee and other – Fee and other revenue increased by $0.3 million to $2.3 million for the nine months ended September 30, 2024 from $2.0 million for the nine months ended September 30, 2024, primarily due to an increase in income received from advisory services and an increase in management fees.

Operating Expense

Real estate taxes – Real estate taxes increased by $1.1 million to $7.2 million for the nine months ended September 30, 2024 from $6.1 million for the nine months ended September 30, 2023, primarily due to the volume of our acquisitions.

Property operating expenses – Property operating expenses increased by $2.0 million to $7.0 million for the nine months ended September 30, 2024 from $5.0 million for the nine months ended September 30, 2023.

Property management expenses are included within property operating expenses and increased by $0.4 million to $2.3 million for the nine months ended September 30, 2024 from $1.9 million for the nine months ended September 30, 2023.

The remainder of the increase of $1.7 million is related to expenses for repairs and maintenance and insurance, which increase is due to the volume of our acquisitions.

General and administrative – General and administrative expenses increased by $1.0 million to $12.1 million for the nine months ended September 30, 2024 from $11.1 million for the nine months ended September 30, 2023 primarily due to an increase in net compensation costs, partially offset by a decrease in public company-related expenses.

Casualty and impairment losses - Casualty and impairment losses for the nine months ended September 30, 2024 was $0.2 million which reflects a casualty loss of $0.2 million for an asset damaged as a result of vandalism.

No casualty and impairment losses occurred for the nine months ended September 30, 2023.

Depreciation and amortization – Depreciation and amortization expense increased by $2.1 million to $16.6 million for the nine months ended September 30, 2024 from $14.5 million for the nine months ended September 30, 2023, primarily due to the volume of our acquisitions.

Other income primarily includes insurance recoveries related to property damage claims.

Other income decreased by $0.4 million to $0.1 million for the nine months ended September 30, 2024 from $0.5 million for the nine months ended September 30, 2023, primarily due to lower insurance recoveries.

Total Interest Expense, Net

During the nine months ended September 30, 2024, we incurred total interest expense, net of $9.3 million compared to $7.3 million for the nine months ended September 30, 2023.

The increase in interest expense is primarily related due to additional borrowings under the Credit Facilities and increased interest rates.

Comparison of the Nine Months Ended September 30, 2024 and the Nine Months Ended September 30, 2023

We had $1.0 million of cash and $0.5 million of escrows and reserves as of September 30, 2024 compared to $2.5 million of cash and $0.4 million of escrows and reserves as of September 30, 2023.

Cash flows from operating activities – Net cash provided by operating activities increased by $3.0 million to $24.3 million for the nine months ended September 30, 2024 compared to $21.3 million for the same period in 2023.

The increase is primarily due to the volume our acquisitions, all of which have generated additional rental income and related changes in working capital, as well as the timing of certain receivables and payables.

Cash flows used in investing activities – Net cash used in investing activities for the nine months ended September 30, 2024 primarily consisted of $53.2 million of acquisitions and $2.7 million of escrow deposits for acquisitions, capital improvements and other investing activities.

Net cash used in investing activities for the nine months ended September 30, 2023 primarily consisted of $54.9 million of acquisitions and $2.4 million of escrow deposits for acquisitions, capital improvements and other investing activities.

Cash flows from financing activities – Net cash provided by financing activities decreased by $6.2 million to $30.2 million for the nine months ended September 30, 2024 compared to $36.4 million for the nine months ended September 30, 2023.

The decrease was primarily related to a decrease in net proceeds received from issuance of shares during the same period partially offset by an increase in the payment of dividends and distributions during the nine months ended September 30, 2024.

Comparison of the Three Months Ended March 31, 2025 and the Three Months Ended March 31, 2024

We had $0.6 million of cash and $0.9 million of escrows and reserves as of March 31, 2025 compared to $1.9 million of cash and $0.8 million of escrows and reserves as of March 31, 2024.

Cash flows from operating activities – Net cash provided by operating activities increased by $4.4 million to $10.8 million for the three months ended March 31, 2025 compared to $6.4 million for the same period in 2024.

The increase is primarily due to the volume of our acquisitions and the execution of new leases with annual rent escalations all of which have generated additional rental income and related changes in working capital, as well as the timing of certain receivables and payables.

Cash flows used in investing activities – Net cash used in investing activities for the three months ended March 31, 2025 primarily consisted of $15.1 million of acquisitions and $1.4 million of escrow deposits for acquisitions, capital improvements and other investing activities offset by $0.8 million in proceeds received from the sale of real estate assets.

Net cash used in investing activities for the three months ended March 31, 2024 primarily consisted of $13.0 million of acquisitions and $0.9 million of escrow deposits for acquisitions, capital improvements and other investing activities.

Cash flows from financing activities – Net cash provided by financing activities decreased by $3.3 million to $4.0 million for the three months ended March 31, 2025 compared to $7.3 million for the three months ended March 31, 2024.

The decrease was primarily related to a decrease in net proceeds received from issuance of shares and an increase in the payment of dividends and distributions partially offset by an increase in borrowings from the Revolving Credit Facility.

Liquidity and Capital Resources

We had approximately $1.0 million of cash and $0.5 million of escrows and reserves as of September 30, 2024.

We had approximately $0.6 million of cash and $0.9 million of escrows and reserves as of March 31, 2025.

Revolving Credit Facility and Term Loans

We have entered into the Credit Facilities, which include the $150.0 million Revolving Credit Facility.

the 2021 Term Loan and the 2022 Term Loan (and, together with the 2021 Term Loan, the "Term Loans") , with Bank of Montreal, as administrative agent, and BMO Capital Markets Corp., M&T Bank, JPMorgan Chase Bank, N.A.

On August 9, 2021, we entered into the Credit Facilities, which initially included the $150.0 million Revolving Credit Facility and the $50.0 million 2021 Term Loan, with Bank of Montreal, as administrative agent, and BMO Capital Markets Corp., M&T Bank, JPMorgan Chase Bank, N.A.

and Truist Securities, Inc.

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Additional participants in the Credit Facilities include Stifel Bank & Trust and TriState Capital Bank.

On October 25, 2024, we entered into the Third Amendment, replacing Bank of Montreal as the administrative agent with Truist Bank and further exercised $40.0 million of term loan accordion under the 2022 Term Loan and, on a delayed-draw basis, $10.0 million of 2022 Term Loan.

As of September 30, 2024, we had $244.0 million of aggregate principal amount outstanding under our Credit Facilities, with $75.0 million drawn on the 2021 Term Loan, $125.0 million drawn on the 2022 Term Loan and $44.0 million drawn on the Revolving Credit Facility.

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

On May 11, 2022, we entered into the First Amendment to, among other things, add the 2022 Term Loan (and, together with the 2021 Term Loan, the "Term Loans").

On December 6, 2022, we exercised $40.0 million of accordion feature under the 2022 Term Loan.

On July 24, 2023, we entered into the Second Amendment and further exercised $35.0 million of accordion under the Term Loans.

On October 25, 2024, we entered into the Third Amendment and increased our commitments on the 2022 Term Loan and further

exercised $50.0 million.

As of March 31, 2025, we had $274.0 million of aggregate principal amount outstanding under our Credit Facilities, with $75.0 million drawn on the 2021 Term Loan, $175.0 million drawn on the 2022 Term Loan and $24.0 million drawn on the Revolving Credit Facility.

The Credit Facilities include an accordion feature which permit us 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.

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The Credit Facilities also contain certain customary events of default, including the failure to make timely payments under the Credit Facilities, any event or condition that makes other material indebtedness due prior to its scheduled maturity, the failure to satisfy certain covenants and specified events of bankruptcy and insolvency.

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

As of September 30, 2024, we had seven interest rate swaps with a total notional amount of $200.0 million that are used to manage our interest rate risk and fix the SOFR component on the Term Loans of the Credit Facilities (together, the "Interest Rate Swaps").

As of March 31, 2025, we were in compliance with all of the Credit Facilities’ debt covenants.

As of March 31, 2025, we had nine interest rate swaps with a total notional amount of $250.0 million that are used to manage our interest rate risk and fix the SOFR component on the Term Loans of the Credit Facilities (together, the "Interest Rate Swaps").

Derivatives and Hedging Activities in the Notes to our unaudited Consolidated Financial Statements included under Item 1 herein for further details regarding the Interest Rate Swaps.

On October 25, 2024, in connection with the exercise of $40.0 million term loan accordion under the 2022 Term Loan, we 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%.

Capital Resources and Financing Strategy

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The success of our business strategy will depend, to a significant degree, on our ability to access these various capital sources.

In addition, we continuously evaluate possible acquisitions of postal properties, which largely depend on, among other

things, the market for owning and leasing postal properties and the terms on which the USPS will enter into new or renewed leases.

In addition, we continuously evaluate possible acquisitions of postal properties, which largely depend on, among other things, the market for owning and leasing postal properties and the terms on which the USPS will enter into new or renewed leases.

To maintain our qualification as a REIT, we must make distributions to our stockholders aggregating annually at least 90% of our REIT taxable income determined without regard to the deduction for dividends paid and excluding capital gains.

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Consolidated Indebtedness

As of September 30, 2024, we had approximately $278.3 million of outstanding consolidated principal indebtedness.

The following table sets forth information as of September 30, 2024 with respect to our outstanding indebtedness (in thousands):

Balance as of September 30, 2024

Rate at September 30, 2024

As of March 31, 2025, we had approximately $308.2 million of outstanding consolidated principal indebtedness.

The following table sets forth information as of March 31, 2025 with respect to our outstanding indebtedness (in thousands):

Balance as of March 31, 2025

Rate at March 31, 2025

Revolving Credit Facility (1)

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844 3.69 % September 2041

Seller Financing (6)

30,225 2.80 % January 2031

Seller Financing - 2024 (7)

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(1) See above under "— Revolving Credit Facility and Term Loans " for details regarding the Credit Facilities.

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

(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 our 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.

During the three months ended March 31, 2025, we incurred $0.06 million of unused facility fees related to the Revolving Credit Facility, respectively.

(2) Based upon the applicable SOFR rate plus a SOFR adjustment of 0.10%, subject to a 0% floor (the “Adjusted Term SOFR”) .

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

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(5) The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr.

The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026),

then adjusting every subsequent five-year period thereafter with principal and interest payments to the rate based on the Five-Year Treasury Rate, plus a margin of 2.75%, with a minimum annual rate of 2.75%.

(6) In connection with the acquisition of a property, we obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $0.1 million with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025.

The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five-year period thereafter with principal and interest payments to the rate based on the Five-Year Treasury Rate, plus a margin of 2.75%, with a minimum annual rate of 2.75%.

(6) The loan is secured by a first mortgage lien on an industrial property located in Warrendale, Pennsylvania.

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, we 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.

Secured Borrowings as of September 30, 2024

As of September 30, 2024, we had approximately $34.3 million of secured borrowings outstanding, all of which are currently fixed-rate debt with a weighted average interest rate of 2.96% per annum.

(7) 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.

Secured Borrowings as of March 31, 2025

As of March 31, 2025, we had approximately $34.2 million of secured borrowings outstanding, all of which are currently fixed-rate debt with a weighted average interest rate of 2.96% per annum.

To maintain our qualification as a REIT, we are required to pay dividends to stockholders at least equal to 90% of our REIT taxable income determined without regard to the deduction for dividends paid and excluding net capital gains.

During the three and nine months ended September 30, 2024, we paid cash dividends of $0.24 and $0.72 per share, respectively.

Our Board of Directors approved, and o n October 22, 2024 , we declared a third quarter 2024 common stock dividend of $0.24 per share, which will be paid on November 29, 2024 to stockholders of record as of November 4, 2024.

During the three months ended March 31, 2025, we paid cash dividends of $0.2425 per share.

Our Board of Directors approved, and o n April 21, 2025 , we declared a first quarter 2025 common stock dividend of $0.2425 per share, which will be paid on May 30, 2025 to stockholders of record as of May 1, 2025.

Because most of our leases provide for fixed annual rental payments without annual rent escalations, our rental revenues are fixed while our property operating expenses are subject to inflationary increases.

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We believe that if inflation increases expenses over time, increases in lease renewal rates will materially offset such increase.

Share Repurchase Program

On February 25, 2025 (the "SRP Date"), the Board of Directors authorized the creation of a share repurchase program (the “Share Repurchase Program”) pursuant to which we may repurchase up to $25.0 million of our Class A common stock.

Repurchases of our Class A common stock conducted under the Share Repurchase Program may be made through open market transactions, block trades or other methods designed to comply with Rule 10b-18 of the Exchange Act.

No shares of our Class A common stock were repurchased pursuant to the Share Repurchase Program from the SRP Date to the period ended March 31, 2025 and the dollar value of Class A common stock shares that remains available to be repurchased under the Share Repurchase Program is $25.0 million.

The Share Repurchase Program does not obligate us to repurchase any specific dollar amount, or to acquire any specific number, of shares of our Class A common stock and may be suspended or discontinued at any time at the discretion of the Board of Directors.

Subsequent Real Estate Acquisitions

As of November 4, 2024 and d uring the period s ubsequent to September 30, 2024, we have acquired 13 properties in individual or portfolio transactions for an aggregate of approximately $4.2 million, excluding closing costs.

As of April 30, 2025 and d uring the period s ubsequent to March 31, 2025, we have acquired 25 properties in individual or portfolio transactions for an aggregate of approximately $12.7 million, excluding closing costs.

Critical Accounting Estimates

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What changed 10-Q

Item 2. Management’s Discussion and Analysis