Postal Realty Trust, Inc. 10-Q

Item 1. Financial Statements POSTAL REALTY TRUST, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except par value and share data) June 30, 2025 December 31, 2024 Assets Investments: Real estate properties, at cost: Land $ 140,831 $ 128,457 Building and improvements 554,644 512,248 Tenant improvements 7,874 7,501 Total real estate properties, at cost 703,349 648,206 Less: Accumulated depreciation ( 66,023 ) ( 58,175 ) Total real estate properties, net 637,326 590,031 Investment in financing leases, net 15,897 15,951 Total real estate investments, net 653,223 605,982 Cash 1,080 1,799 Escrow and reserves 1,007 744 Rent and other receivables 5,237 6,658 Prepaid expenses and other assets, net 9,848 14,519 Goodwill 1,536 1,536 Deferred rent receivable 3,880 2,639 In-place lease intangibles, net 13,123 12,636 Above market leases, net 251 305 Assets held for sale, net 637 — Total Assets $ 689,822 $ 646,818 Liabilities and Equity Liabilities: Term loans, net $ 249,012 $ 248,790 Revolving credit facility 46,000 14,000 Secured borrowings, net 33,823 33,918 Accounts payable, accrued expenses and other, net 17,367 16,441 Below market leases, net 19,066 16,171 Total Liabilities 365,268 329,320 Commitments and Contingencies Equity: Class A common stock, par value $ 0.01 per share; 500,000,000 shares authorized; 24,237,197 and 23,494,487 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 242 235 Class B common stock, par value $ 0.01 per share; 27,206 shares authorized; 27,206 shares issued and outstanding as of June 30, 2025 and December 31, 2024 — — Additional paid-in capital 318,914 310,031 Accumulated other comprehensive income 1,744 5,230 Accumulated deficit ( 70,098 ) ( 64,211 ) Total Stockholders’ Equity 250,802 251,285 Operating partnership unitholders’ non-controlling interests 73,752 66,213 Total Equity 324,554 317,498 Total Liabilities and Equity $ 689,822 $ 646,818 The accompanying notes are an integral part of these unaudited consolidated financial statements. 1 Table of Contents POSTAL REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) (in thousands, except share and per share data ) For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Revenues: Rental income $ 22,730 $ 17,364 $ 44,210 $ 33,969 Fee and other 621 686 1,291 1,369 Total revenues 23,351 18,050 45,501 35,338 Operating expenses: Real estate taxes 2,773 2,385 5,422 4,687 Property operating expenses 1,984 2,118 4,445 4,471 General and administrative 4,316 3,920 9,252 8,213 Casualty and impairment losses (gains), net ( 345 ) — ( 195 ) — Depreciation and amortization 5,914 5,518 11,538 10,819 Total operating expenses 14,642 13,941 30,462 28,190 Loss on sale of real estate assets — — ( 49 ) — Income from operations 8,709 4,109 14,990 7,148 Other income — 15 30 65 Interest expense, net: Contractual interest expense ( 3,817 ) ( 2,888 ) ( 7,254 ) ( 5,525 ) Write-off and amortization of deferred financing fees and amortization of debt discount ( 211 ) ( 181 ) ( 422 ) ( 362 ) Interest income 1 5 7 6 Total interest expense, net ( 4,027 ) ( 3,064 ) ( 7,669 ) ( 5,881 ) Income before income tax expense 4,682 1,060 7,351 1,332 Income tax expense ( 10 ) ( 28 ) ( 24 ) ( 44 ) Net income 4,672 1,032 7,327 1,288 Net income attributable to operating partnership unitholders’ non-controlling interests ( 1,058 ) ( 215 ) ( 1,631 ) ( 265 ) Net income attributable to common stockholders $ 3,614 $ 817 $ 5,696 $ 1,023 Net income per share: Basic and Diluted $ 0.12 $ 0.02 $ 0.19 $ 0.01 Weighted average common shares outstanding: Basic and Diluted 23,509,083 22,339,245 23,375,607 22,192,277 Comprehensive income: Net income $ 4,672 $ 1,032 $ 7,327 $ 1,288 Unrealized (loss) gain on derivative instruments ( 1,625 ) 14 ( 4,469 ) 2,833 Comprehensive income 3,047 1,046 2,858 4,121 Comprehensive income attributable to operating partnership unitholders’ non-controlling interests ( 690 ) ( 218 ) ( 648 ) ( 820 ) Comprehensive income attributable to common stockholders $ 2,357 $ 828 $ 2,210 $ 3,301 The accompanying notes are an integral part of these unaudited consolidated financial statements. 2 Table of Contents POSTAL REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) (in thousands, except share data) Number of shares of Common Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders’ equity Operating Partnership Unitholders’ Non-controlling Interests Total Equity Balance – December 31, 2024 23,521,693 $ 235 $ 310,031 $ 5,230 $ ( 64,211 ) $ 251,285 $ 66,213 $ 317,498 Net proceeds from sale of common stock 139,626 1 1,819 — — 1,820 — 1,820 Issuance of operating partnership units in connection with acquisition transactions — — — — — — 1,026 1,026 Issuance and amortization of equity-based compensation, net of forfeitures 77,623 1 817 — — 818 1,514 2,332 Issuance and amortization under the employee stock purchase plan ("ESPP") 5,527 — 77 — — 77 — 77 Restricted stock withholdings ( 21,092 ) — ( 277 ) — — ( 277 ) — ( 277 ) Dividends and distributions — — — — ( 5,761 ) ( 5,761 ) ( 1,621 ) ( 7,382 ) Unrealized loss on derivative instruments — — — ( 2,229 ) — ( 2,229 ) ( 615 ) ( 2,844 ) Net income — — — — 2,082 2,082 573 2,655 Reallocation of non-controlling interest — — ( 2,336 ) — — ( 2,336 ) 2,336 — Balance – March 31, 2025 23,723,377 $ 237 $ 310,131 $ 3,001 $ ( 67,890 ) $ 245,479 $ 69,426 $ 314,905 Net proceeds from sale of common stock 529,828 5 7,556 — — 7,561 — 7,561 Issuance of operating partnership units in connection with acquisition transactions — — — — — — 5,005 5,005 Shares issued upon redemption of operating partnership units 11,198 — 157 — — 157 ( 157 ) — Issuance and amortization of equity-based compensation, net of forfeitures — — 700 — — 700 870 1,570 Issuance and amortization under the ESPP — — 19 — — 19 — 19 Dividends and distributions — — — — ( 5,822 ) ( 5,822 ) ( 1,731 ) ( 7,553 ) Unrealized loss on derivative instruments — — — ( 1,257 ) — ( 1,257 ) ( 368 ) ( 1,625 ) Net income — — — — 3,614 3,614 1,058 4,672 Reallocation of non-controlling interest — — 351 — — 351 ( 351 ) — Balance – June 30, 2025 24,264,403 $ 242 $ 318,914 $ 1,744 $ ( 70,098 ) $ 250,802 $ 73,752 $ 324,554 Balance – December 31, 2023 21,960,211 $ 219 $ 287,268 $ 4,621 $ ( 48,546 ) $ 243,562 $ 58,063 $ 301,625 Net proceeds from sale of common stock 576,087 6 7,861 — — 7,867 — 7,867 3 Table of Contents Issuance of operating partnership units in connection with acquisition transactions — — — — — — 5,788 5,788 Issuance and amortization of equity-based compensation, net of forfeitures 120,941 1 1,147 — — 1,148 965 2,113 Issuance and amortization under the ESPP 5,137 — 77 — — 77 — 77 Restricted stock withholdings ( 27,919 ) — ( 396 ) — — ( 396 ) — ( 396 ) Dividends and distributions — — — — ( 5,520 ) ( 5,520 ) ( 1,339 ) ( 6,859 ) Unrealized gain on derivative instruments — — — 2,267 — 2,267 552 2,819 Net income — — — — 206 206 50 256 Reallocation of non-controlling interest — — ( 1,079 ) — — ( 1,079 ) 1,079 — Balance – March 31, 2024 22,634,457 $ 226 $ 294,878 $ 6,888 $ ( 53,860 ) $ 248,132 $ 65,158 $ 313,290 Net proceeds from sale of common stock 57,993 1 684 — — 685 — 685 Shares issued upon redemption of operating partnership units 52,778 1 861 — — 862 ( 862 ) — Issuance and amortization of equity-based compensation, net of forfeitures ( 316 ) — 722 — — 722 711 1,433 Issuance and amortization under the ESPP — — 6 — — 6 — 6 Dividends and distributions — — — — ( 5,490 ) ( 5,490 ) ( 1,438 ) ( 6,928 ) Unrealized gain on derivative instruments — — — 11 — 11 3 14 Net income — — — — 817 817 215 1,032 Reallocation of non-controlling interest — — ( 265 ) — — ( 265 ) 265 — Balance – June 30, 2024 22,744,912 $ 228 $ 296,886 $ 6,899 $ ( 58,533 ) $ 245,480 $ 64,052 $ 309,532 The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 Table of Contents POSTAL REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) For the Six Months Ended June 30, 2025 2024 Cash flows from operating activities: Net income $ 7,327 $ 1,288 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,538 10,819 Write-off and amortization of deferred financing fees and debt discounts 422 362 Amortization of above/below market leases ( 1,582 ) ( 1,423 ) Amortization of intangible liability ( 161 ) ( 119 ) Casualty and impairment losses 707 — Loss on sale of real estate assets 49 — Gain on insurance proceeds received for damage due to property ( 842 ) ( 22 ) Equity based compensation 3,945 3,565 Deferred rent receivable ( 1,241 ) ( 212 ) Other ( 10 ) ( 16 ) Changes in assets and liabilities: Rent and other receivables 1,475 770 Prepaid expenses and other assets 1,371 1,544 Accounts payable, accrued expenses and other ( 774 ) ( 270 ) Net cash provided by operating activities 22,224 16,286 Cash flows from investing activities: Acquisition of real estate ( 46,875 ) ( 41,775 ) Proceeds from sale of real estate assets 825 — Escrows for acquisition deposits ( 349 ) ( 221 ) Capital improvements ( 3,007 ) ( 1,568 ) Insurance proceeds related to property damage claims 842 22 Other investing activities ( 140 ) ( 75 ) Net cash used in investing activities ( 48,704 ) ( 43,617 ) Cash flows from financing activities: Repayments of secured borrowings ( 109 ) ( 103 ) Proceeds from revolving credit facility 55,000 48,000 Repayments of revolving credit facility ( 23,000 ) ( 15,000 ) Net proceeds from issuance of shares 9,510 8,552 Debt issuance costs ( 5 ) — Proceeds from issuance of ESPP shares 61 64 Value of shares withheld for payment of taxes related to employee stock compensation ( 331 ) ( 513 ) Dividends and distributions ( 14,935 ) ( 13,787 ) Other financing activities ( 167 ) ( 138 ) Net cash provided by financing activities 26,024 27,075 Net decrease in Cash and Escrows and Reserves ( 456 ) ( 256 ) Cash and Escrows and Reserves at the beginning of period 2,543 2,867 Cash and Escrow and Reserves at the end of period $ 2,087 $ 2,611 Supplemental Disclosure of Non-Cash Investing and Financing Activities Operating partnership units issued for property acquisitions 6,031 5,788 Unrealized (loss) gain on derivative instruments, net ( 4,469 ) 2,833 Reallocation of non-controlling interest 1,985 1,344 Transfer of investment properties, net to assets held for sale 637 — Reclassification of acquisition deposits included in prepaid expenses and other assets 312 147 Write-off of fixed assets no longer in service — 25 5 Table of Contents Accrued capital expenditures included in accounts payable and accrued expenses 902 120 Reclassification of construction deposits included in prepaid expenses and other assets 38 57 Right of use assets, net 93 25 Accrued costs of capital included in accounts payable and accrued expenses 131 130 Shares issued upon redemption of operating partnership units 157 862 The accompanying notes are an integral part of these unaudited consolidated financial statements. 6 Table of Contents POSTAL REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. Organization and Description of Business Postal Realty Trust, Inc. (the “Company”) was organized in the state of Maryland on November 19, 2018. On May 17, 2019, the Company completed its initial public offering (“IPO”) of the Company’s Class A common stock, par value $ 0.01 per share (the “Class A common stock”). The Company contributed the net proceeds from the IPO to Postal Realty LP, a Delaware limited partnership (the “Operating Partnership”), in exchange for common units of limited partnership interest in the Operating Partnership (the “OP Units”). Both the Company and the Operating Partnership commenced operations upon completion of the IPO and certain related formation transactions. Prior to the completion of the IPO and the formation transactions, the Company had no operations. The Company’s interest in the Operating Partnership entitles the Company to share in distributions from, and allocations of profits and losses of, the Operating Partnership in proportion to the Company’s percentage ownership of OP Units. As the sole general partner of the Operating Partnership, the Company has the exclusive power under the partnership agreement to manage and conduct the Operating Partnership’s business, subject to limited approval and voting rights of the limited partners. As of June 30, 2025, the Company held an approximately 77.3 % interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Company consolidates the financial position and results of operations of the Operating Partnership. The Operating Partnership is considered a variable interest entity (“VIE”) in which the Company is the primary beneficiary. As of June 30, 2025, the Company owned a portfolio of 1,806 properties located in 49 states and one territory. The Company’s properties are leased primarily to a single tenant, the United States Postal Service (the “USPS”). The Company also owns several, and may in the future further acquire, land parcels that may be added to existing or future leases with the USPS or used for other purposes that are consistent with the Company’s investment strategy. In addition, through its taxable REIT subsidiary (“TRS”), Real Estate Asset Counseling, LLC (“REAC”), the Company provides fee-based third-party property management services for an additional 358 postal properties, which are owned by Andrew Spodek, the Company's chief executive officer ("CEO"), and his affiliates, and certain advisory services to third-party owners of postal properties. Pursuant to the Company’s charter, the Company is currently authorized to issue up to 500,000,000 shares of Class A common stock, 27,206 shares of Class B common stock, $ 0.01 par value per share (the “Voting Equivalency stock”), and up to 100,000,000 shares of preferred stock. The Company elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the Company's short taxable year ended December 31, 2019, and intends to continue to qualify as a REIT. As a REIT, the Company generally will not be subject to federal income tax to the extent that it distributes its REIT taxable income for each tax year to its stockholders. REITs are subject to a number of organizational and operational requirements. 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. Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Consolidated Financial Statements include the financial position and results of operations of the Company, the Operating Partnership and its wholly owned subsidiaries. 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 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. Non-controlling interests are required to be presented as a separate component of equity in the Consolidated 7 Balance Sheets. Accordingly, the presentation of net income reflects the income attributed to controlling and non-controlling interests. The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial state ments. This interim financial information should be read in conjunction with the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2025. All material intercompany accounts and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. As discussed in the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, t he Company’s most significant assumptions and estimates are related to the valuation of investments in real estate properties and impairment of long-lived assets. Although management believes its estimates are reasonable, actual results could differ from those estimates. Offering and Other Costs Offering costs are recorded in “Total Stockholders’ Equity” on the Consolidated Balance Sheets as a reduction of additional paid-in capital. Segment Reporting 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. Interest income is not a significant component of interest expense, net. 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. Deferred Costs and Discounts Financing costs related to the issuance of the Company’s long-term debt, including the term loan facility component of the Company's existing credit facilities (the "Credit Facilities"), are deferred and amortized as an increase to interest expense over the term of the related debt instrument using the straight-line method, which approximates the effective-interest rate method, and are reported as a reduction of the related debt balance on the Consolidated Balance Sheets. Deferred financing costs related to the revolving credit facility component (the "Revolving Credit Facility") of the Credit Facilities are deferred and amortized as an increase to interest expense over the terms of the Revolving Credit Facility and are included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets. Debt discounts represent fair value adjustments to account for the difference between the stated rates and market rates of debt assumed or entered in connection with the Company’s property acquisitions. The debt discounts are amortized to interest expense over the term of the related loans using the straight-line method, which approximates the effective-interest rate method, and are reported as a reduction of the related debt balance on the Consolidated Balance Sheets. As of June 30, 2025 and December 31, 2024, the net unamortized debt discounts was $ 0.2 million. 8 Table of Contents POSTAL REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Reclassifications Certain prior period amounts have been reclassified to conform to the current period’s presentation. Cash and Escrows and Reserves Cash includes unrestricted cash with a maturity of three months or less. Escrows and reserves consist of restricted cash. The following table provides a reconciliation of cash and escrows and reserves reported within the Consolidated Balance Sheets and Consolidated Statements of Cash Flows: As of June 30, 2025 December 31, 2024 (in thousands) Cash $ 1,080 $ 1,799 Escrows and reserves: Maintenance reserve 476 422 Real estate tax reserve 405 225 ESPP reserve 126 97 Total escrows and reserves $ 1,007 $ 744 Cash and escrows and reserves $ 2,087 $ 2,543 Revenue Recognition The Company has operating lease agreements with tenants, some of which contain provisions for future rental increases. Rental income is recognized on a straight-line basis over the term of the lease. In addition, certain lease agreements provide for reimbursements from tenants for real estate taxes and other recoverable costs, which are recorded on an accrual basis as part of “Rental income” in the Consolidated Statements of Operations and Comprehensive Income. The Company’s determination of the probability to collect lease payments is impacted by numerous factors, including the Company's assessment of the tenant’s creditworthiness, economic conditions, historical experience with the tenant, future prospects for the tenant and the length of the lease term. If leases currently classified as probable of collection are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in rental income. For certain leases with lease incentive costs, such costs are included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets and amortized on a straight-line basis over the respective lease terms as a reduction of rental revenues. Fee and other primarily consists of (i) property management fees, (ii) income recognized from properties accounted for as financing leases and (iii) fees earned from providing advisory services to third-party owners of postal properties. The management fees arise from contractual agreements with entities that are affiliated with the Company’s CEO. Management fee income is recognized as earned under the respective agreements. Revenue from direct financing leases is recognized over the lease term using the effective interest rate method. At lease inception, the Company records an asset within "Investment in financing leases, net" on the Consolidated Balance Sheets, which represents the Company’s net investment in the direct financing lease. This initial net investment is determined by aggregating the total future minimum lease payments attributable to the direct financing lease and the estimated residual value of the property, if any, less unearned income. Over the lease term, the investment in the direct financing lease is reduced and interest is recognized as revenue in “Fee and other” in the Consolidated Statements of Operations and Comprehensive Income and produces a constant periodic rate of return on the "Investment in financing leases, net." Revenue from advisory services is generated from service contracts generally based on (i) time and expense arrangements (where the Company recognizes revenues based on hours incurred and contracted rates), (ii) fixed-fee arrangements (where the Company recognizes revenues earned to date by applying the proportional performance method) or (iii) performance-based or contingent arrangements (where the Company recognizes revenues at a point in time when the client receives the benefit of the promised service). Reimbursable expenses for the advisory services, including those relating to 9 travel, out-of-pocket expenses, outside consultants and other outside service costs, are generally included in revenues and in general and administrative expenses in the period in which the expense is incurred. Fair Value Measurements The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could have realized on disposition of the assets and liabilities as of June 30, 2025 and December 31, 2024. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash, escrows and reserves, receivables, prepaid expenses and other assets (excluding derivatives), accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of June 30, 2025 and December 31, 2024 due to their short maturities. The fair value of the Company’s borrowings under its Credit Facilities approximates carrying value because such borrowings are subject to a variable market rate, which reprices frequently. The fair value was determined using the Adjusted Term SOFR (as defined below) as of June 30, 2025 and December 31, 2024, plus an applicable spread under the Credit Facilities, a Level 2 classification in the fair value hierarchy. The fair value of the Company’s secured borrowings aggregated approximately $ 29.5 million and $ 28.7 million as compared to the principal balance of $ 34.2 million and $ 34.3 million as of June 30, 2025 and December 31, 2024, respectively. The fair value of the Company’s secured borrowings was categorized as a Level 3 fair value estimate (as provided by ASC 820, Fair Value Measurements and Disclosures) and was determined by discounting the future contractual interest and principal payments by a market rate. The Company's derivative assets and liabilities, comprised of interest rate swap derivative instruments entered into in connection with the Credit Facilities, are recorded at fair value based on a variety of observable inputs, including contractual terms, interest rate curves, yield curves, measure of volatility and correlations of such inputs. The Company measures its derivatives at fair value on a recurring basis based on the expected amount of future cash flows on a discounted basis and incorporating a measure of non-performance risk. The fair value of the Company's derivative assets and liabilities was categorized as a Level 2 fair value estimate (as provided by ASC 820, Fair Value Measurements and Disclosures). The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivative assets and liabilities. As of June 30, 2025 and December 31, 2024, the fair value of the Company’s interest rate swap derivative assets was approximately $ 3.1 million and $ 6.7 million, respectively, included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets. As of June 30, 2025 and December 31, 2024, the fair value of the Company's interest rate swap derivative liabilities was approximately $ 1.1 million and $ 0.3 million, respectively, included in "Accounts payable, accrued expenses and other, net" on the Consolidated Balance Sheets. Disclosures about fair value of assets and liabilities are based on pertinent information available to management as of June 30, 2025 and December 31, 2024. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since June 30, 2025 and current estimates of fair value may differ significantly from the amounts presented herein. Derivative Instruments and Hedging Activities In accordance with ASC 815, Derivatives and Hedging, the Company records all derivative instruments on the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. See Note 6. Derivatives and Hedging Activities for further details. Assets Held for Sale 10 Table of Contents POSTAL REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) The Company may sell properties from time to time for various reasons, including the exercise of purchase options by our tenants. The Company classifies long-lived assets as held for sale once certain criteria have been met. The Company classifies a real estate property, or portfolio, as held for sale when: (i) management has approved the disposal, (ii) the property is available for sale in its present condition, (iii) an active program to locate a buyer has been initiated, (iv) it is probable that the property will be disposed of within one year, (v) the property is being marketed at a reasonable price relative to its fair value, and (vi) it is unlikely that the disposal plan will significantly change or be withdrawn. Following the classification of a property as “held for sale,” no further depreciation or amortization is recorded on the assets and the assets are recorded at the lower of carrying value or fair market value, less cost to sell. The Company had one property classified as held for sale as of June 30, 2025 as a result of a tenant exercising a purchase option. No properties were classified as held for sale as of December 31, 2024. Impairment of Long-Lived Assets The carrying value of real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. 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 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. During the six months ended June 30, 2025, 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, based upon an accumulation of costs in excess of what was originally expected, and such property 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 losses (gains), net" in the Company's Consolidated Statements of Operations and Comprehensive Income. No impairments were recorded for the six months ended June 30, 2024. The Company uses the held for sale impairment model for our properties classified as held for sale, which is different from the held and used impairment model. Under the held for sale impairment model, an impairment charge is recognized if the carrying amount of the long-lived asset classified as held for sale exceeds its fair value less cost to sell. Because of these two different models, it is possible for a long-lived asset previously classified as held and used to require the recognition of an impairment charge upon classification as held for sale. The Company recorded an impairment of $ 0.2 million which is included in "Casualty and impairment losses (gains), net" in the Company's Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2025. Concentration of Credit Risks As of June 30, 2025, the Company’s properties were leased primarily to a single tenant, the USPS. For the six months ended June 30, 2025, approximately 10.6 % of the Company’s total rental income, or $ 4.7 million, was concentrated in Pennsylvania. For the six months ended June 30, 2024, approximately 12.2 % of the Company's total rental income, or $ 4.1 million, was concentrated in Pennsylvania. The ability of the USPS to honor the terms of its leases is dependent upon regulatory, economic, environmental or competitive conditions in Pennsylvania or other regions where the Company operates in and could have a material effect on the Company’s overall business results. The Company has deposited cash and maintains its bank deposits with large financial institutions in amounts that, from time to time, exceed federally insured limits. The Company has not experienced any losses in such accounts. Equity-Based Compensation 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. Equity-classified stock awards granted to employees and non-employees that have a service condition and/or a market condition 11 are measured at fair value at date of grant and remeasured at fair value only upon a modification of the award. The Company records forfeitures as a reduction of equity-based compensation expense as such forfeitures occur. The Company recognizes compensation expense on a straight-line basis over the requisite service period of each award, with the amount of compensation expense recognized at the end of a reporting period at least equal to the portion of fair value of the respective award at grant date or modification date, as applicable, that has vested through that date. For awards with a market condition, compensation cost is not reversed if a market condition is not met so long as the requisite service has been rendered, as a market condition does not represent a vesting condition. See Note 11. Stockholders’ Equity for further details. Insurance Accounting The Company carries liability insurance to mitigate its exposure to certain losses, including those relating to property damage and business interruption. The Company records the estimated amount of expected insurance proceeds for property damage and other losses incurred as an asset (typically a receivable from the insurer) and income up to the amount of the losses incurred when the amount is determinable and approved by the insurance company. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is not recorded in casualty and impairment losses (gains), net until the amount is determinable and approved by the insurance company. Insurance recoveries for business interruption for lost revenue or profit are accounted for as gain contingencies in their entirety, and therefore are not recorded in income until the amount is determinable and approved by the insurance company. Earnings Per Share The Company calculates earnings per share ("EPS") based upon the weighted average shares outstanding less issued and outstanding non-vested shares of Class A common stock. As of June 30, 2025 and 2024, the Company had unvested restricted shares of Class A common stock, long term incentive units of the Operating Partnership ("LTIP Units") and certain restricted stock units (“RSUs”), which provide for non-forfeitable rights to dividend and dividend equivalent payments. Accordingly, these unvested restricted shares of Class A common stock, LTIP Units and RSUs are considered participating securities and are included in the computation of basic and diluted EPS pursuant to the two-class method. Diluted EPS is calculated after giving effect to all potential dilutive shares outstanding during the period. See Note 10. Earnings Per Share for further details . Recent Accounting Standards 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. 12 Table of Contents POSTAL REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 3. Real Estate Transactions The following table summarizes the Company’s acquisitions for the six months ended June 30, 2025. 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 total purchase price including transaction costs was allocated as follows (in thousands, except for the number of properties): Three Months Ended Number of Properties Land Building and Improvements Tenant Improvements In-place lease intangibles Above- market leases Below- market leases Other (1) Total (2) 2025 March 31, 2025 (3) 36 $ 3,990 $ 12,579 $ 114 $ 1,192 $ — $ ( 1,415 ) $ ( 119 ) $ 16,341 June 30, 2025 (4) 68 $ 8,402 $ 28,473 $ 269 $ 2,775 $ 11 $ ( 3,131 ) $ 68 $ 36,867 Total 104 12,392 41,052 383 3,967 11 ( 4,546 ) ( 51 ) 53,208 Explanatory Notes : (1) Includes intangible liabilities related to unfavorable operating leases with purchase options on three properties during the three months ended March 31, 2025 and two properties during the three months ended June 30, 2025 that is included in “Accounts payable, accrued expenses and other, net" on the Consolidated Balance Sheets. Also, includes a below market ground lease intangible asset on four properties during the three months ended June 30, 2025 that is included in “Prepaid expenses and other assets, net" on the Consolidated Balance Sheets. (2) Includes closing costs of approximately $ 0.5 million for the three months ended March 31, 2025 and $ 1.0 million for the three months ended June 30, 2025. (3) Includes the acquisition of 36 properties in various states in individual or portfolio transactions for a price of approximately $ 16.3 million, including closing costs, which was funded with both the issuance of OP Units to the sellers (valued at approximately $ 1.0 million using the share price of Class A common stock on the date of the issuance of such OP units) and cash consideration. (4) Includes the acquisition of 68 properties in various states in individual or portfolio transactions for a price of approximately $ 36.9 million, including closing costs, which were funded with both the issuance of OP Units to the sellers (valued at approximately $ 5.0 million using the share price of Class A common stock on the date of each issuance of such OP units) and cash consideration. Sale of Real Estate During the six months ended June 30, 2025, the Company sold one real estate property for net proceeds of $ 0.8 million and recorded a loss of $ 0.05 million. Assets Held for Sale During the three and six months ended June 30, 2025 as a result of a tenant exercising a purchase option for one property, the Company reclassified the carrying value consisting of $ 0.1 million of land and $ 0.5 million of buildings and other real estate assets to "Assets held for sale, net" on the Company's Consolidated Balance Sheet and liabilities held for sale of $ 0.1 million is included as "Accounts payable, accrued expenses and other, net" on the Company's Consolidated Balance Sheet. Refer to Note 2, Impairment of Long-lived Assets for further discussion. Casualty and Impairment Losses (Gains), Net During the three and six months ended June 30, 2025, the Company recognized $ 0.1 million and $ 0.6 million, respectively, in gross charges primarily related to the estimated net book value of several properties damaged and related repairs, offset by an estimated $ 0.6 million and $ 1.0 million, respectively, of related insurance claims, resulting in a net recovery of $ 0.5 million and 13 $ 0.4 million, respectively, included within “Casualty and impairment losses (gains), net” on the Consolidated Statement of Operations and Comprehensive Income. The Company expects insurance proceeds to cover substantially all of such loss subject to applicable deductibles. 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 events. 14 Table of Contents POSTAL REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Note 4. Intangible Assets and Liabilities The following table summarizes the Company’s intangible assets and liabilities: As of Gross Asset (Liability) Accumulated Amortization Net Carrying Amount (in thousands) June 30, 2025: In-place lease intangibles $ 55,482 $ ( 42,359 ) $ 13,123 Above-market leases 805 ( 554 ) 251 Other intangibles ( 1,138 ) 438 ( 700 ) Below-market leases ( 33,595 ) 14,529 ( 19,066 ) December 31, 2024: In-place lease intangibles $ 51,630 $ ( 38,994 ) $ 12,636 Above-market leases 795 ( 490 ) 305 Other intangibles ( 1,262 ) 523 ( 739 ) Below-market leases ( 29,069 ) 12,898 ( 16,171 ) Amortization of in-place lease intangibles was $ 1.8 million and $ 3.5 million for the three and six months ended June 30, 2025, respectively, and $ 2.0 million and $ 3.8 million for the three and six months ended June 30, 2024, respectively. This amortization is included in “Depreciation and amortization” in the Consolidated Statements of Operations and Comprehensive Income. Amortization of acquired above-market leases was $ 0.03 million and $ 0.06 million for the three and six months ended June 30, 2025, respectively, and $ 0.04 million and $ 0.09 million for the three and six months ended June 30, 2024, respectively, and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive Income. Amortization of other intangibles was $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2025, respectively, and $ 0.1 million and $ 0.1 million for the three and six months ended June 30, 2024, respectively, and is included in "Rental income" in the Consolidated Statements of Operations and Comprehensive Income. Amortization of acquired below-market leases was $ 0.9 million and $ 1.6 million for the three and six months ended June 30, 2025, respectively, and $ 0.8 million and $ 1.5 million for the three and six months ended June 30, 2024, respectively, and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive Income. Future amortization/accretion of these intangibles is below (in thousands): Year Ending December 31, In-place lease intangibles Above-market leases Other intangibles Below-market leases 2025-Remaining $ 3,232 $ 59 $ ( 125 ) $ ( 1,713 ) 2026 4,609 95 ( 233 ) ( 2,931 ) 2027 2,537 50 ( 141 ) ( 2,394 ) 2028 1,425 24 ( 74 ) ( 1,965 ) 2029 809 18 ( 58 ) ( 1,693 ) Thereafter 511 5 ( 69 ) ( 8,370 ) Total $ 13,123 $ 251 $ ( 700 ) $ ( 19,066 ) 15 Note 5. Debt The following table summarizes the Company’s indebtedness as of June 30, 2025 and December 31, 2024 (dollars in thousands): Outstanding Balance as of June 30, 2025 Outstanding Balance as of December 31, 2024 Interest Rate at June 30, 2025 Maturity Date Revolving Credit Facility (1) $ 46,000 $ 14,000 SOFR+ 150 bps (2) January 2026 2021 Term Loan (1) 75,000 75,000 SOFR+ 145 bps (2) January 2027 2022 Term Loan (1) 175,000 175,000 SOFR+ 145 bps (2) February 2028 Secured Borrowings: Vision Bank (3) 1,409 1,409 3.69 % September 2041 First Oklahoma Bank (4) 290 299 3.63 % December 2037 Vision Bank – 2018 (5) 844 844 3.69 % September 2041 Seller Financing (6) — 100 — % January 2025 AIG (7) 30,225 30,225 2.80 % January 2031 Seller Financing - 2024 (8) 1,400 1,400 5.00 % September 2039 Total Principal 330,168 298,277 Unamortized deferred financing costs ( 1,128 ) ( 1,360 ) Unamortized debt discount ( 205 ) ( 209 ) Total Debt $ 328,835 $ 296,708 Explanatory Notes : (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. On December 6, 2022, the Company exercised $ 40.0 million of term loan accordion under the 2022 Term Loan. 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. On October 25, 2024, the Company amended the Credit Facilities (the "Third Amendment") to, among other things, increase 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 16 Table of Contents POSTAL REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) commitments under the Revolving Credit Facility. The Credit Facilities contain a number of customary financial and non-financial covenants. During the three and six months ended June 30, 2025, the Company incurred $ 0.05 million and $ 0.1 million, respectively, and during the three and six months ended June 30, 2024, the Company incurred $ 0.06 million and $ 0.1 million, respectively, of unused facility fees related to the Revolving Credit Facility. As of June 30, 2025, the Company was in compliance with all of the Credit Facilities’ debt covenants. (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. Spodek also provided a personal guarantee of payment for 50 % of the outstanding amount thereunder. 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 weekly average yield on United States Treasury securities adjusted to a constant maturity of five years , as made available to the Board of Governors of the Federal Reserve System (the "Five-Year Treasury Rate"), plus a margin of 2.75 %, with a minimum annual rate of 2.75 %. (4) The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.625 % for the first five years (ending in August 2026), then adjusting annually thereafter to a variable annual rate of Wall Street Journal Prime Rate with a minimum annual rate of 3.625 %. (5) The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. 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, the Company 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. As of January 2, 2025, the seller financing has been fully repaid. (7) 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, 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 June 30, 2025 and December 31, 2024 was approximately 2.5 years and 3.2 years, respectively. The scheduled principal repayments of indebtedness as of June 30, 2025 are as follows (in thousands): Year Ending December 31, Amount 2025 - Remaining $ 9 2026 (1) 46,637 2027 75,778 2028 175,804 2029 832 Thereafter 31,108 Total $ 330,168 17 Explanatory Note : (1) The Revolving Credit Facility matures in January 2026, which may be extended for two six-month periods. The Company is currently exploring various refinancing options (the "Refinancing") and believes that it will be successful in extending or Refinancing the Revolving Credit Facility. Note 6. Derivatives and Hedging Activities As of June 30, 2025, 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) Fixed Rate (1) Effective Date Maturity Date $ 50,000 2.291 % May 2022 January 2027 $ 25,000 4.237 % May 2022 February 2028 $ 25,000 4.237 % May 2022 February 2028 $ 25,000 4.810 % July 2022 February 2028 $ 40,000 4.952 % December 2022 February 2028 $ 25,000 5.756 % July 2023 January 2027 $ 10,000 6.069 % September 2023 February 2028 $ 40,000 5.291 % October 2024 February 2028 $ 10,000 5.572 % November 2024 February 2028 Explanatory Note : (1) Reflects the all-in effective interest rate for the specified portion of the Term Loans hedged by the interest rate swaps. The Company’s objectives in using the interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company uses the interest rate swaps as part of its interest rate risk management strategy. The interest rate swaps are designated as cash flow hedges, with any gain or loss recorded in “Accumulated other comprehensive income” on the Consolidated Balance Sheets and subsequently reclassified into interest expense as interest payments are made on the Credit Facilities. During the next twelve months, the Company estimates that an additional $ 2.2 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 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 three and six months ended June 30, 2025 and 2024 (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps) 2025 2024 2025 2024 Amount of (loss) gain recognized on derivative in "Accumulated other comprehensive income" $ ( 736 ) $ 1,341 $ ( 2,697 ) $ 5,491 Amount of income reclassified from "Accumulated other comprehensive income" into interest expense $ 889 $ 1,327 $ 1,772 $ 2,658 "Interest expense, net" presented in the Consolidated Statements of Operations and Comprehensive Income, in which the effects of cash flow hedges are recorded, totaled $ 4.0 million and $ 7.7 million for the three and six months ended June 30, 2025, respectively, and $ 3.1 million and $ 5.9 million for the three and six months ended June 30, 2024, respectively. As of June 30, 2025, the Company also had derivatives in a net liability position and did not post any collateral related to these agreements. If the Company had breached any of these provisions as of June 30, 2025, it could have been required to 18 Table of Contents POSTAL REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) settle its obligations under the agreements of any interest rate swap in a net liability position for approximately $ 1.1 million, which is at their termination value. Note 7. Leases Lessor Accounting As of June 30, 2025, the Company's properties were leased primarily to the USPS, with leases expiring at various dates through October 31, 2035. Certain leases had expired and were in holdover status as of June 30, 2025 as discussed below. Certain leases contain renewal, termination and/or purchase options exercisable at the lessee’s election. Therefore, such options are only recognized once they are deemed reasonably certain, typically at the time the option is exercised. All of the Company’s leases are operating leases with the exception of two that are direct financing leases. The Company's operating leases and direct financing leases are described below. Rental income related to the Company’s leases is recognized on a straight-line basis over the remaining lease term. The Company’s total revenue includes fixed base rental payments provided under the lease and variable payments which principally consist of tenant expense reimbursements for certain property operating expenses, including real estate taxes. The Company elected the practical expedient to account for its lease and non-lease components as a single combined operating lease component under Topic 842. As a result, rental income and tenant reimbursements were aggregated into a single line within rental income in the Consolidated Statements of Operations and Comprehensive Income. The following table represents rental revenue that the Company recognized related to its operating leases (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Fixed payments $ 20,055 $ 15,119 $ 38,716 $ 29,559 Variable payments 2,675 2,245 5,494 4,410 $ 22,730 $ 17,364 $ 44,210 $ 33,969 Future minimum lease payments to be received as of June 30, 2025 (excluding base rental payments from properties classified as held for sale under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands): Year Ending December 31, Amount (1)(2) 2025 - Remaining $ 37,160 2026 68,317 2027 53,537 2028 40,945 2029 30,463 Thereafter 84,724 Total $ 315,146 Explanatory Notes : (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 June 30, 2025, the leases at three 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. 19 Purchase Option Provisions As of June 30, 2025, operating leases for 90 of the Company’s properties provided the USPS with the option to purchase the underlying property either at fair market value or at fixed prices (1) , in each case as of dates set forth in the lease. As of June 30, 2025, 87 of these properties had an aggregate carrying value of approximately $ 66.0 million with an aggregate purchase option price of approximately $ 85.4 million and the remaining three properties had an aggregate carrying value of approximately $ 2.9 million with purchase options exercisable at fair market value. During the three and six months ended June 30, 2025, a tenant exercised a purchase option. Refer to Note 2, Assets Held for Sale for further discussion. Explanatory Notes : (1) Properties with more than one calculation method are categorized based on the lowest valuation method. Investment in Financing Leases, Net As of June 30, 2025 and December 31, 2024, financing leases for two of the Company's properties provide the USPS with the option to purchase the underlying property at fixed prices as of dates set forth in the lease agreement. The components of the Company’s net investment in financing leases as of June 30, 2025 and December 31, 2024 are summarized in the table below (in thousands): As of June 30, 2025 As of December 31, 2024 Total minimum lease payment receivable $ 30,372 $ 30,940 Less: unearned income ( 14,475 ) ( 14,989 ) Investment in financing leases, net $ 15,897 $ 15,951 Revenue earned under direct financing leases for each of the three and six months ended June 30, 2025 and 2024 were $ 0.3 million and $ 0.5 million, respectively, which is recorded in "Fee and other" in the Consolidated Statements of Operations and Comprehensive Income. Future lease payments to be received under the Company’s direct financing leases as of June 30, 2025 for the next five years and thereafter are as follows (in thousands): Year Ending December 31, Amount 2025 – Remaining $ 569 2026 1,137 2027 1,137 2028 1,137 2029 1,137 Thereafter 25,255 Total $ 30,372 Lessee Accounting As a lessee, the Company has ground and office leases which were classified as operating leases. As of June 30, 2025, these leases had remaining terms, including renewal options, of 0.1 years to 57.5 years and a weighted average remaining lease term of 18.5 years. Operating right-of-use ("ROU") assets and lease liabilities are included in “Prepaid expenses and other assets, net” and “Accounts payable, accrued expenses and other, net” on the Consolidated Balance Sheets as follows (in thousands): 20 Table of Contents POSTAL REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) As of June 30, 2025 As of December 31, 2024 ROU asset – operating leases $ 2,301 $ 2,188 Lease liability – operating leases $ 2,157 $ 2,165 The difference between the recorded ROU assets and lease liabilities is mainly due to the reclassification of the below market ground lease intangible asset which was included within the ROU assets recognized upon transition. Operating lease assets and liabilities are measured at the commencement date based on the present value of future lease payments. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a discount rate ranging from 4.25 % to 7.35 % based on the yield of its current borrowings in determining its lease liabilities. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option. Operating lease expense for the three and six months ended June 30, 2025 and 2024 was $ 0.09 million and $ 0.2 million, respectively, and $ 0.07 million and $ 0.1 million , respectively. See Note 9. Related Party Transactions for more details. Future minimum lease payments to be paid by the Company as a lessee for operating leases as of June 30, 2025 for the next five years and thereafter are as follows (in thousands): 2025 — Remaining $ 169 2026 338 2027 332 2028 333 2029 337 Thereafter 2,011 Total future minimum lease payments 3,520 Interest discount ( 1,363 ) Total $ 2,157 Note 8. Income Taxes TRS In connection with the IPO, the Company and REAC jointly elected to treat REAC as a TRS. REAC performs management services, including for properties the Company does not own, and advisory services to third-party owners of postal properties. REAC has generated income, resulting in federal and state corporate income tax liability for REAC. For the three and six months ended June 30, 2025, income tax expense related to REAC was zero and $ 0.01 million, respectively. For the three and six months ended June 30, 2024, income tax expense related to REAC was $ 0.02 million and $ 0.03 million, respectively. Note 9. Related Party Transactions Transition and General Release Agreement with Former Chief Financial Officer On June 18, 2025 (the "Transition Date"), Robert B. Klein announced his intention to resign from his role as Chief Financial Officer of the Company but continued as an employee of the Company through June 30, 2025 (the “Separation Date,” the period from the Transition Date to the Separation Date is referred to as the “Transition Period”). Subject to the terms of Transition and General Release Agreement dated June 18, 2025 between the Company and Mr. Klein (the “Transition Agreement”), Mr. Klein will provide consulting services to the Company beginning on the day following the Separation Date until the date the Company files its Form 10-Q for the period ending June 30, 2025 (the “Completion Date” and such period, the 21 “Consulting Period”). Mr. Klein will continue serving as the Company’s principal financial officer through the end of the Consulting Period. The Transition Agreement sets forth Mr. Klein’s separation benefits and the terms pursuant to which Mr. Klein will assist the Company in the transition of his roles through the Transition Period and the Consulting Period. During each of the Transition Period and the Consulting Period, Mr. Klein will continue to oversee and assist with the preparation of the Company’s Form 10-Q for the period ending on June 30, 2025 and, unless the Company determines otherwise, shall sign the Form 10-Q (and any related documentation) in his capacity as principal financial officer (the “Transition Support Duties”). In accordance with the Transition Agreement, during the Transition Period, subject to Mr. Klein’s performance of the Transition Support Duties, the Company will pay Mr. Klein his regular base salary, less applicable taxes, withholdings and deductions payable in accordance with the Company’s current payroll practices and Mr. Klein shall be entitled to continue to participate in any employee benefit plan that the Company has adopted or may adopt, until the Separation Date. As set forth in the Transition Agreement, pursuant to the terms of the Company's 2019 Equity Incentive Plan (the “Equity Plan”), including, but not limited to, the Alignment of Interest Program under the Equity Plan (the “AOI”), and the award agreements issued thereunder (the “Award Agreements” and collectively with the Equity Plan and AOI, the “Equity Plan Governing Documents”) Mr. Klein has been granted certain equity awards which remain outstanding, unconverted and unvested as of the Separation Date (the “Unvested Awards”). If Mr. Klein fully complies with the terms and conditions set forth in the Transition Agreement, including the execution of the supplemental release attached thereto and performance of the Transition Support Duties, the Company will pay Mr. Klein a gross amount equal to $ 500,000 , less applicable taxes, withholdings and deductions (the “Consideration”). The Company will pay the Consideration in part by accelerating the vesting of 28,000 Unvested Awards (as determined in the Company’s sole discretion) (the “Selected Awards”), with the remainder to be paid in cash. The terms governing the acceleration of the Selected Awards and the payment of the Consideration are described in the Transition Agreement. Notwithstanding anything to the contrary in any Equity Plan Governing Document, (i) Mr. Klein’s Unvested Awards, other than the Selected Awards, will automatically and immediately be cancelled and forfeited, and will lapse for no consideration, effective as of July 1, 2025, (ii) the Selected Awards will remain outstanding and eligible to vest following the Separation Date in accordance with the terms of the Transition Agreement and (iii) to the extent the Consideration is not earned, the Selected Awards will automatically and immediately be cancelled and forfeited and will lapse for no consideration, effective as of the Completion Date (or such earlier date as determined by the Company, in its sole discretion). Pursuant to the terms of the Transition Agreement, Mr. Klein will be subject to continued compliance with confidentiality, non-disparagement and cooperation covenants. In conjunction with the Company's search for a new Chief Financial Officer, the Company has retained an executive search firm that employs an immediately family member of one of our directors. Jeremy Garber, who immediately prior to Mr. Klein's resignation as Chief Financial Officer of the Company was the Company's President, Secretary and Treasurer, is serving as the interim Chief Financial Officer of the Company while the search for Mr. Klein's successor is completed. Management Fee Income On May 5, 2025, REAC entered into amendments to the management agreements (as amended, the “Amended Management Agreements”) pursuant to which the Company provides property management services to 362 properties, owned by family members and affiliates of Mr. Spodek. An additional property for which REAC provides management services to affiliates of Mr. Spodek was not amended by the Amended Management Agreements. The Amended Management Agreements provide that, as of April 1, 2025, the initial management fee to be received by REAC is equal to 4.0 % per annum of each property’s gross revenue, payable quarterly. Each successive April 1, the management fee will be increased to 102.5 % of the management fee previously in effect. The initial term of the Amended Management Agreements is through March 31, 2030 (the “Initial Term”), unless terminated earlier. After the Initial Term, the Amended Management Agreements will be automatically renewed for successive one-year terms, unless either party provides 30 days' advance notice of non-renewal. Furthermore, beginning October 1, 2025, the Amended Management Agreements may be terminated by either party at any time upon 60 days’ notice to the other party. The Amended Management Agreements also provide that, to the extent REAC provides services in connection with the financing of managed properties, REAC shall be entitled to an additional $ 5,000 fee per property being financed, whether such properties are financed individually, as part of a portfolio or pooled, provided that the total fees payable shall not exceed $ 50,000 per financing transaction. The Amended 22 Table of Contents POSTAL REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Management Agreements were unanimously approved by an independent Special Committee of the Company's Board of Directors (the "Board") consisting of all members of the Board other than Mr. Spodek. REAC recognized management fee income of $ 0.2 million and $ 0.6 million for the three and six months ended June 30, 2025, respectively, and $ 0.3 million and $ 0.7 million for the three and six months ended June 30, 2024, respectively, from various parties which were affiliated with the Company's CEO. These amounts are included in “Fee and other” in the Consolidated Statements of Operations and Comprehensive Income. Accrued management fees receivable of $ 0.2 million and $ 0.4 million as of June 30, 2025 and December 31, 2024, respectively, are included in “Rent and other receivables” on the Consolidated Balance Sheets. Related Party 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 “Prior Office Lease”). Pursuant to the Prior Office Lease, the monthly rent was $ 15,000 subject to escalations. The term of the Prior Office Lease was five years commencing on May 17, 2019 and expired on May 16, 2024. In May 2024, the Prior Office Lease was extended to December 31, 2024 at the same rental rate. In December 2024, the Company entered into a new lease with the Company's CEO (the "2025 Office Lease," and, collectively with the Prior Office Lease, the "Office Leases"). 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. The 2025 Office Lease was approved by a special committee of the Company’s Board of Directors consisting of four independent directors. Rental expenses associated with the Office Leases for the three and six months ended June 30, 2025 and 2024 were $ 0.06 million and $ 0.1 million, respectively, and $ 0.05 million and $ 0.1 million, respectively, and was recorded in “General and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income. The Company determined the Office Leases were an operating lease. For further details, see Note 7. Leases. 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 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 358 managed postal properties. Guarantees As disclosed above in Note 5. Debt, Mr. Spodek personally guaranteed a portion of or the entire amount outstanding under the Company's loans with First Oklahoma Bank and Vision Bank, totaling $ 1.8 million and $ 1.8 million as of June 30, 2025 and December 31, 2024, respectively. As a guarantor, Mr. Spodek's interests with respect to the amount of debt he is guaranteeing (and the terms of any repayment or default) may not align with the Company’s interests and could result in a conflict of interest. Note 10. Earnings Per Share EPS is calculated by dividing net income attributable to common stockholders by the weighted average number of shares outstanding for the period. The following table presents a reconciliation of income from operations used in the basic and diluted EPS calculations (dollars in thousands, except share and per share data). 23 For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Numerator for earnings per share – basic and diluted: Net income attributable to common stockholders $ 3,614 $ 817 $ 5,696 $ 1,023 Less: Income attributable to participating securities ( 702 ) ( 405 ) ( 1,293 ) ( 780 ) Numerator for earnings per share — basic and diluted $ 2,912 $ 412 $ 4,403 $ 243 Denominator for earnings per share – basic and diluted (1) 23,509,083 22,339,245 23,375,607 22,192,277 Basic and diluted net income per share $ 0.12 $ 0.02 $ 0.19 $ 0.01 Explanatory Note : (1) Diluted EPS reflects the potential dilution of the conversion of obligations and the assumed exercises of securities including the effects of restricted shares and RSUs issued under the Company’s 2019 Equity Incentive Plan (the “Plan”) (See Note 11. Stockholders’ Equity). The effect of such shares and RSUs would not be dilutive and were not included in the computation of weighted average number of shares outstanding for the periods presented in the table above. OP Units and LTIP Units are redeemable for cash or, at the Company’s option, shares of Class A common stock on an one -for-one basis. The income allocable to such OP Units and LTIP Units is allocated on this same basis and reflected as non-controlling interests in these unaudited Consolidated Financial Statements. As such, the assumed conversion of these OP Units and LTIP Units would have no net impact on the determination of diluted EPS. Note 11. Stockholders’ Equity 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. The following table summarizes the activity under the ATM Program for the period presented (dollars and shares issued in thousands, except per share amounts). During the three and six months ended June 30, 2025, 529,828 and 669,454 shares, respectively, were issued under the ATM program. During the three and six months ended June 30, 2024, 57,993 and 634,080 shares, respectively, were issued under the ATM program. As of June 30, 2025, the Company had approximately $ 83.9 million remaining that may be issued under the ATM Program. 24 Table of Contents POSTAL REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Shares issued 530 58 669 634 Gross proceeds received $ 7,805 $ 824 $ 9,788 $ 9,034 Fees, issuance and other costs ( 244 ) ( 139 ) ( 407 ) ( 482 ) Net proceeds received $ 7,561 $ 685 $ 9,381 $ 8,552 Average gross sales price per share $ 14.73 $ 14.20 $ 14.62 $ 14.25 Dividends and Distributions During the three and six months ended June 30, 2025, the Company's Board of Directors approved and the Company declared and paid dividends or distributions, as applicable, of $ 7.6 million and $ 14.9 million, respectively to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $ 0.2425 and $ 0.485 per share or unit, respectively as shown in the table below. Declaration Date Record Date Date Paid Amount Per Share or Unit January 30, 2025 February 14, 2025 February 28, 2025 $ 0.2425 April 21, 2025 May 1, 2025 May 30, 2025 $ 0.2425 Non-controlling Interests Non-controlling interests in the Company represent OP Units held by the Company's prior investors and certain sellers of properties to the Company and LTIP Units primarily issued to the Company’s employees and the Board of Directors in connection with the IPO and/or as a part of their compensation. During the six months ended June 30, 2025, the Company issued 219,335 LTIP Units to the Company’s CEO for his 2024 incentive bonus, his election to defer 100 % of his 2025 annual salary and for long term incentive compensation, 90,909 LTIP Units to the Company’s President for his 2024 incentive bonus, 12,952 LTIP Units to the Company's Principal Financial Officer for his long term incentive compensation, 46,944 LTIP Units in May 2025 to the Board of Directors for their annual retainers as compensation for their services and for long term incentive compensation and 121,913 LTIP Units to certain other employees for their 2024 incentive bonus and for long term incentive compensation. As of June 30, 2025 and December 31, 2024, non-controlling interests consisted of 5,463,804 OP Units and 1,722,799 LTIP Units and 4,998,738 OP Units and 1,241,944 LTIP Units, respectively. This represented approximately 22.7 % and 20.9 % of the outstanding Operating Partnership units as of June 30, 2025 and December 31, 2024, respectively. OP Units and shares of Class A common stock generally have the same economic characteristics, as they share equally in the total net income or loss and distributions of the Operating Partnership. Beginning on or after the date which is 12 months after the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will generally have the right, subject to the terms and conditions set forth in the partnership agreement, to require the Operating Partnership to redeem all or a portion of the OP Units held by such limited partner or assignee in exchange for cash, or at the Company's sole discretion, shares of Class A common stock, on an one -for-one basis determined in accordance with and subject to adjustment under the partnership agreement. During the six months ended June 30, 2025, 11,198 LTIP Units were redeemed for 11,198 OP Units (the "Converted Units"). The Converted United were then immediately redeemed for 11,198 shares of Class A common stock (such transaction, including the transaction governing the Converted Units, the "Conversion"). In connection with the Conversion, the Company adjusted the carrying value of non-controlling interests to reflect its share of the book value of the Operating Partnership reflecting the change in the Company’s ownership of the Operating Partnership. Such adjustments are recorded to additional paid-in capital as a reallocation of non-controlling interest in the Consolidated Statements of Changes in Equity. Operating Partnership unitholders are entitled to share in cash distributions from the Operating Partnership in proportion to their percentage ownership of OP Units. 25 Restricted Stock and Other Awards Pursuant to the Postal Realty Trust Inc., 2019 Equity Incentive Plan, (the "Plan"), the Company may grant equity incentive awards to its directors, officers, employees and consultants. As of June 30, 2025, the remaining shares available under the Plan for future issuance was 945,434 . The Plan provides for grants of stock options, stock awards, stock appreciation rights, performance units, incentive awards, other equity-based awards (including LTIP Units) and dividend equivalents in connection with the grant of performance units and other equity-based awards. The following table presents a summary of the Company's outstanding restricted shares of Class A common stock, LTIP Units and RSUs. The balance as of June 30, 2025 represents unvested restricted shares of Class A common stock and LTIP Units and RSUs that are outstanding, whether vested or not: Restricted Shares (1)(2) LTIP Units (3) RSUs (4) Total Shares/Units/RSUs Weighted Average Grant Date Fair Value Outstanding, as of January 1, 2025 505,342 1,241,944 346,946 2,094,232 $ 15.76 Granted 76,180 492,053 104,176 672,409 $ 12.88 Conversion to common stock — ( 11,198 ) — ( 11,198 ) $ 15.13 Vesting of restricted shares and RSUs (5) ( 54,375 ) — ( 1,442 ) ( 55,817 ) $ 15.33 Forfeited — — ( 47,005 ) ( 47,005 ) $ 12.28 Outstanding, as of June 30, 2025 527,147 1,722,799 402,675 2,652,621 $ 15.10 Explanatory Notes : (1) Represents restricted shares awards included in Class A common stock. (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 . (3) Includes 219,335 LTIP Units granted to the Company’s CEO, 90,909 LTIP Units granted to the Company’s President and 12,952 LTIP Units granted to the Company's Principal Financial Officer, which vest over three years or cliff vest at the end of eight years . Also, includes 46,944 LTIP Units granted to the Company's independent directors that vest over three years or cliff vest at the end of three years and 121,913 LTIP Units granted to certain other employees of the Company, certain of which vested fully on the date of grant with the remaining vesting over three years or cliff vest at the end of eight years . (4) Includes 90,362 RSUs granted to certain officers and employees of the Company during the six months ended June 30, 2025, subject to the achievement of a service condition and a market condition. Such RSUs are market-based awards and are subject to the achievement of performance-based hurdles relating to the Company’s specified absolute and relative total stockholder return goals and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2027. 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 13,814 time-based RSUs issued for 2024 incentive bonuses to certain employees that vested fully on February 1, 2025, the date of grant. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria. (5) Includes 34,725 of restricted shares and RSUs that vested and 21,092 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements. During the year ended December 31, 2021, the Company issued 46,714 RSUs (the “2021 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, 2023. In February 2024, the Company's Corporate Governance and Compensation Committee of the Board of Directors ("CGC Committee") determined that the Company's total 26 Table of Contents POSTAL REALTY TRUST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 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 performance hurdles for the 2022 Performance-Based Awards and, as a result, approved the cancellation of 47,005 RSUs for such awards. During the three and six months ended June 30, 2025, the Company recognized compensation expense of $ 1.5 million and $ 3.4 million, respectively, and during the three and six months ended June 30, 2024, the Company recognized compensation expense of $ 1.4 million and $ 3.2 million, respectively, in “General and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income related to all awards. During the three and six months ended June 30, 2025, the Company recognized compensation expense of $ 0.1 million and $ 0.5 million, respectively, and during the three and six months ended June 30, 2024, the Company recognized compensation expense of $ 0.1 million and $ 0.4 million, respectively, in "Property operating expenses" in the Consolidated Statements of Operations and Comprehensive Income related to all awards. As of June 30, 2025, there was $ 21.1 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 4.9 years. In July 2025, the Company issued 3,998 LTIP Units to a consultant under a consultancy agreement with the Company. Employee Stock Purchase Plan The Company's ESPP allows its employees to purchase shares of the Class A common stock at a discount. A total of 100,000 shares of Class A common stock was reserved for sale and authorized for issuance under the ESPP. The Code permits the Company to provide up to a 15 % discount on the lesser of the fair market value of such shares of Class A common stock at the beginning of the offering period and the close of the offering period. As of June 30, 2025 and December 31, 2024, 64,096 and 58,569 shares have been issued under the ESPP since commencement, respectively. During the three and six months ended June 30, 2025, the Company recognized compensation expense of $ 0.02 million and $ 0.04 million, respectively, and during the three and six months ended June 30, 2024, the Company recognized compensation expense of $ 0.01 million and $ 0.02 million, respectively, related to the ESPP. Note 12. Commitments and Contingencies As of June 30, 2025, the Company was not involved in any litigation nor, to its knowledge, is any litigation threatened against the Company that, in management’s opinion, would result in any material adverse effect on the Company’s financial position and results of operations, or which is not covered by insurance. In the ordinary course of the Company’s business, the Company enters into non-binding (except with regard to exclusivity and confidentiality) letters of intent indicating a willingness to negotiate for acquisitions. 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. Note 13. Subsequent Events In addition to the subsequent events discussed elsewhere in the notes to the unaudited Consolidated Financial Statements, the following events occurred subsequent to June 30, 2025: On July 1, 2025, 112,718 unvested LTIP Units, 40,623 unvested RSUs and 18,460 unvested shares of Class A common stock owned by Robert Klein, were cancelled pursuant to the Transition Agreement (the "Klein Award Cancellations"). 27 The Company's Board of Directors approved, and on July 20, 2025, the Company declared a second quarter 2025 common stock dividend of $ 0.2425 per share, which is payable on August 29, 2025 to stockholders of record as of July 31, 2025. As of August 4, 2025 , the Company had $ 48.0 million drawn on the Revolving Credit Facility. As of August 4, 2025 and d uring the period subsequent to June 30, 2025, the Company acquired 23 leased properties for approximately $ 8.4 million, excluding closing costs. As of August 4, 2025 and d uring the period subsequent to June 30, 2025, the Company issued 337,255 shares of its Class A common stock under the ATM Program for gross proceeds of approximately $ 5.0 million. As of August 4, 2025 and d uring the period subsequent to June 30, 2025, the Company had entered into definitive agreements to acquire 30 properties for approximately $ 10.4 million. However, the Company can provide no assurances that the acquisitions of these properties will be consummated on the terms and timing the Company expects, or at all. 28 Table of Contents