What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-14 compared with 2021-03-30 · 11 added, 647 removed, 2 unchanged (100% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Class A common

stock trades on the NYSE under the symbol “PSTL”.

As of March 30, 2021, there were 13,326,514 shares of Class A common

stock issued and outstanding and three stockholders of record.

This number of stockholders of record does not represent the actual

number of beneficial owners of our Class A common stock because shares of our Class A common stock are frequently held in “street

by securities dealers and others for the benefit of beneficial owners who may vote the shares.

In addition, as of

March 30, 2021, there were 27,206 shares of Voting Equivalency stock issued and outstanding and 2,987,063 OP Units and LTIP units

held by limited partners other than the Company outstanding.

All shares of Voting Equivalency stock issued and outstanding are

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our Class A common stock trades on the NYSE under the symbol “PSTL”.

As of March 11, 2022, there were 18,765,423 shares of Class A common stock issued and outstanding and three stockholders of record.

This number of stockholders of record does not represent the actual number of beneficial owners of our Class A common stock because shares of our Class A common stock are frequently held in “street name” by securities dealers and others for the benefit of beneficial owners who may vote the shares.

In addition, as of March 11, 2022, there were 27,206 shares of Voting Equivalency stock issued and outstanding and 4,145,591 OP Units and LTIP units held by limited partners other than the Company outstanding.

All shares of Voting Equivalency stock issued and outstanding are held by Mr.

Spodek and his affiliates.

No public trading market exists for such shares.

We intend to continue

to declare quarterly dividends on our Class A common stock.

The actual amount and timing of dividends, however, will be at the

discretion of our Board of Directors and will depend upon our financial condition in addition to the requirements of the Code,

and no assurance can be given as to the amounts or timing of future distributions.

Authorized for Issuance Under Equity Compensation Plans

information required by Item 5 is incorporated by reference to our Definitive Proxy Statement for our 2021 annual stockholders’

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis is based on, and should be read in conjunction with, the Consolidated and Combined Consolidated

Financial Statements and the related notes thereto of the Company as of and for the year ended December 31, 2020 and as of

December 31, 2019 and of the Company and the Company’s accounting Predecessor for the year ended December 31, 2019.

used in this section, unless the context otherwise requires, references to “we,”

“our,”

“us,”

and “our company”

refer to Postal Realty Trust, Inc., a Maryland corporation, together with our consolidated subsidiaries,

including Postal Realty LP, a Delaware limited partnership (“our Operating Partnership”), of which we are the sole

general partner and which we refer to in this section as our Operating Partnership.

to the closing of our IPO on May 17, 2019, Andrew Spodek, our chief executive officer and a member of our Board of Directors,

directly or indirectly controlled 190 properties owned by the Predecessor that were contributed as part of the Formation Transactions.

Of these 190 properties, 140 were held indirectly by our Predecessor through a series of holding companies, which we refer to

collectively as “UPH.”

The remaining 50 properties were owned by Mr.

Spodek through 12 limited liability companies

and one limited partnership, which we refer to collectively as the “Spodek LLCs.”

References to our Predecessor consist

of UPH, the Spodek LLCs and Nationwide Postal Management, Inc., a property management company whose management business we acquired

in the Formation Transactions, collectively.

management’s discussion and analysis of financial condition and results of operations contains forward-looking statements

that involve risks, uncertainties and assumptions.

See “Cautionary Statement Regarding Forward-Looking Statements”

for a discussion of the risks, uncertainties and assumptions associated with those statements.

Our actual results may differ materially

from those expressed or implied in the forward-looking statements as a result of various factors, including, but not limited to,

those in “Risk Factors”

and included in other portions of this report.

were formed as a Maryland corporation on November 19, 2018 and commenced operations upon completion of our IPO and the related

Formation Transactions.

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.

At the completion

of our IPO and the Formation Transactions, we owned a portfolio of 271 postal properties located in 41 states comprising approximately

of 872,000 net leasable interior square feet, all of which were leased to the USPS.

For the year ended December 31, 2020, we acquired

261 postal properties leased primarily to the USPS for approximately $130 million, excluding closing costs.

As of December 31,

2020, our portfolio consists of 726 owned postal properties, located in 47 states and comprising approximately 2.7 million net

leasable interior square feet.

following charts show certain statistics of our portfolio as of December 31, 2020:

Portfolio by %

of Aggregate Interior Square Feet

Portfolio by % of Aggregate Gross Rent

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

As of March 30, 2021, we own approximately 81.8% of our outstanding OP Units, including LTIP Units.

Our Board of Directors oversees

our business and affairs.

on Offering and ATM Program

July 15, 2020, we priced a public offering of 3.5 million shares of our Class A common stock, or the July Follow-on Offering,

at $13.00 per share.

On July 17, 2020, the underwriters purchased an additional 521,840 shares pursuant to a 30-day option to

purchase up to an additional 525,000 shares at $13.00 per share, or the July Additional Shares.

The July Follow-on Offering,

including the July Additional Shares, closed on July 20, 2020 resulting in $52.2 million in gross proceeds, and

approximately $49.4 million in net proceeds after deducting approximately $2.9 million in underwriting discounts and before

giving effect to $0.9 million in other estimated expenses relating to the July Follow-on Offering.

December 14, 2020, we entered into separate open market sale with each of Jefferies LLC, Stifel, Nicolaus & Company, Incorporated,

BMO Capital Markets Corp., Janney Montgomery Scott LLC and D.A.

Davidson & Co., pursuant to which we may offer and sell, from

time to time, shares our Class A common stock having an aggregate sales price of up to $50,000,000.

As of December 31, 2020, we

had $50.0 million of availability remaining under the ATM Program.

to the open market sale agreements, shares of our Class A common stock may be offered and sold through the sales agents in transactions

that are deemed to be “at the market”

offerings as defined in Rule 415 under the Securities Act of 1933, including

sales made directly on the NYSE or sales made to or through a market maker other than on an exchange or, subject to the terms

of a written notice from us, in privately negotiated transactions.

are an internally managed REIT with a focus on acquiring and managing properties primarily leased to the USPS.

We believe the

overall opportunity for consolidation that exists within the postal logistics network is very attractive.

We continue to execute

our strategy to acquire and consolidate postal properties that will generate strong earnings for our shareholders.

Concentration

As of December 31, 2020, we owned a portfolio of 726 postal

properties located in 47 states leased primarily to the USPS.

For the year ended December 31, 2020, 10.0% of our total of rental

income was concentrated in Pennsylvania.

Such geographical concentration could expose the Company to certain downturns in the economies

of those states or other changes in such states’

respective real estate market conditions.

Any material changes in the current

payments programs or regulatory, economic, environmental or competitive conditions in any of these areas could have an effect on

our overall business results.

In the event of negative economic or other changes in any of these markets, our business, financial

condition and results of operations, our ability to make distributions to our shareholders and the trading price of our common

shares may be adversely affected.

Growth Company

are an “emerging growth company,”

as defined in the Jumpstart Our Business Startups Act of 2012, or 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.

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.

In other words, an emerging growth company can delay the adoption of certain accounting standards until

those standards would otherwise apply to private companies.

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.”

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 $1.07 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

under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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.”

elected to be treated as a REIT under the Code beginning with our short taxable year ending December 31, 2019.

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.

That May Influence Future Results of Operations

are dependent on the USPS’s financial and operational stability.

The USPS is currently facing a variety of circumstances

that are threatening its ability to fund its operations and other obligations as currently conducted without intervention by the

federal government.

The USPS is constrained by laws and regulations that restrict

revenue sources, mandate certain expenses and cap its borrowing capacity.

As a result, the USPS is unable to fund its mandated

expenses and continues to be subject to mandated payments to its retirement system and health benefits for current workers and

The USPS has taken the position that productivity improvements and cost reduction measures alone without legislative

and regulatory intervention will not be sufficient to maintain the ability to meet all of its existing obligations when due.

although the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as amended by Public Law 116-260, the Consolidated Appropriations

Act, 2021, includes a $10.0 billion loan to the USPS, there can be no assurances that this financing will be sufficient to sustain

USPS operations in light of current shortfalls resulting from reduced mail volumes.

ongoing COVID-19 pandemic and measures being taken to prevent its spread has resulted in a reduction in foot traffic in many public

places, including postal properties.

A continued reduction in the use of in-person services may reduce the demand for postal properties

by the USPS and our results of operations could decline as a result.

The ongoing COVID-19 pandemic has also caused a decline in

mail volume, particularly in advertising conducted through the mail, which may adversely affect the USPS’s financial condition,

and therefore the demand for postal properties.

Continued reduction or permanent changes to mail volume could reduce demand for

postal properties and materially adversely affect our result of operations.

as a result of the proposed and executed operational, managerial and strategic changes within the USPS and the ongoing COVID-19

pandemic, which significantly increased the number of absentee ballots utilized for the 2020 presidential election, the USPS is

the focal point of recent litigation.

As of the date of this report, several lawsuits have been filed against Mr.

DeJoy, the USPS

and former President Donald Trump pertaining to operational changes at the USPS, mail delays and mail-in voting for the 2020 presidential

If, as a result of any backlogs, political rhetoric or litigation, the USPS suffers reputational or financial harm or

an increase in regulatory scrutiny, the demand for USPS services may decline, which may lead to reduced demand for USPS properties.

The results of these changes or any future changes could lead to additional delays or financing shortfalls for the USPS.

We derive revenues primarily from rent and tenant reimbursements

under leases with the USPS for our properties, and fee and other income under the management agreements with respect to the postal

properties owned by Mr.

Spodek, his family members and their partners managed by PRM, our TRS.

Rental income represents the lease

revenue recognized under leases with the USPS which includes the impact of above and below market lease intangibles.

Tenant reimbursements

primarily represents payments made by the USPS under the leases to reimburse us for the majority of real estate taxes paid at each

Fee and other income principally represent revenue PRM receives from postal properties owned by Mr.

Spodek, his family

members and their partners pursuant to the management agreements and is a percentage of the lease revenue for the managed property.

As of December 31, 2020, all properties leased to the USPS had an average remaining lease term of 3.7 years.

Factors that could

affect our rental income, tenant reimbursement and fee and other income in the future include, but are not limited to:

ability to renew or replace expiring leases and management agreements;

(ii) local, regional or national economic conditions;

an oversupply of, or a reduction in demand for, postal space;

(iv) changes in market rental rates;

(v) changes to the USPS’s

current property leasing program or form of lease;

and (vi) our ability to provide adequate services and maintenance at our properties

and managed properties.

lease our properties to the USPS.

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

utilities, routine maintenance and the reimbursement of property taxes and the landlord is responsible for insurance and roof

and structure.

Thus, an increase in costs related to the landlord’s responsibilities under these leases could negatively

influence our operating results.

Refer to “Lease Renewal”

for further discussion.

expenses generally consist of real estate taxes, property operating expenses, which consist of insurance, repairs and maintenance

(other than those for which the tenant is responsible), property maintenance-related payroll and depreciation and amortization.

Factors that may affect our ability to control these operating costs include but are not limited to:

the cost of periodic repair,

renovation costs, the cost of re-leasing space 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.

Tenant reimbursements

and 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.

expenses of owning and operating a property are not necessarily reduced when circumstances, such as market factors and competition,

cause a reduction in income from the property.

If revenues drop, we may not be able to reduce our expenses accordingly.

associated with real estate investments generally will not be materially reduced even if a property is not fully occupied or other

circumstances cause our revenues to decrease.

As a result, if revenues decrease in the future, static operating costs may adversely

affect our future cash flow and results of operations.

and Administrative

and administrative expense represents personnel costs, professional fees, legal fees, insurance, consulting fees, portfolio servicing

costs and other expenses related to corporate governance, filing reports with the SEC and the NYSE, and other compliance matters.

Our Predecessor was privately owned and historically did not incur costs that we incur as a public company.

In addition, while

we expect that our general and administrative expenses will continue to rise as our portfolio grows, we expect that such expenses

as a percentage of our revenues will decrease over time due to efficiencies and economies of scale.

Compensation Expense

equity-based compensation expense is recognized in our consolidated statements of operations as components of general

and administrative expense and property operating expenses.

We issue share-based awards to align our employees’

with those of our investors.

and Amortization

and amortization expense relate primarily to depreciation on properties and improvements and to amortization of certain lease

and Interest Expense

Interest expense for our Predecessor related primarily to three

mortgage loans payable and related party interest-only promissory notes, See Note 5—Debt of the accompanying financial statements

for further details.

As a result of the Formation Transactions, we assumed certain indebtedness of the Predecessor, a portion of

which was repaid without penalty using a portion of the net proceeds from our IPO.

On September 27, 2019, we entered into a credit

agreement, as amended the Credit Agreement with People’s United Bank, National Association, individually and as administrative

agent, BMO Capital Markets Corp., as syndication agent, and certain other lenders.

The Credit Agreement provides for a senior revolving

credit facility with revolving commitments in an aggregate principal amount of $100.0 million and, subject to customary conditions,

the option to increase the aggregate lending commitments under the agreement by up to $100.0 million, or the Accordion Feature.

On January 30, 2020, we amended the Credit Agreement in order to exercise a portion of the Accordion Feature to increase

the maximum amount available under the Credit Facility to $150.0 million, subject to the borrowing base properties identified therein

remaining unencumbered and subject to an executed lease.

On June 25, 2020, the Company further amended the Credit Agreement to

revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive

covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment).

On November 24, 2020, we amended the Credit

Agreement to revise, among other items, certain definitions and borrowing base calculations to allow Leases other than the USPS

at a Real Property subject to certain limitations (as defined in such amendment).

As of December 31, 2020, the leases at 15 of our properties

were expired and the USPS was occupying such properties as a holdover tenant, thereby excluding such properties from being part

of the borrowing base under our Credit Facility.

Subsequent to December 31, 2020, we executed all leases for these 15 properties.

We intend to use the Credit Facility for working capital purposes, which may include repayment of mortgage indebtedness, property

acquisitions and other general corporate purposes.

Consistent with the method adopted by our Predecessor, we amortize on a non-cash

basis the deferred financing costs associated with its debt to interest expense using the straight-line method, which approximates

the effective interest rate method over the terms of the related loans.

Any changes to the debt structure, including debt financing

associated with property acquisitions, could materially influence the operating results depending on the terms of any such indebtedness.

Tax Benefit (Expense)

a REIT, we generally will not be subject to federal income tax on our net taxable income that we distribute currently to our stockholders.

Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute

each year at least 90% of their REIT taxable income, determined without regard to the deduction for dividends paid and excluding

any net capital gains.

If we fail to qualify for taxation as a REIT in any taxable year and do not qualify for certain statutory

relief provisions, our income for that year will be taxed at regular corporate rates, and we would be disqualified from taxation

as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT.

Even though we qualify as

a REIT for federal income tax purposes, we may still be subject to state and local taxes on our income and assets and to federal

income and excise taxes on our undistributed income.

Additionally, any income earned by PRM and any other TRS we form in the future,

will be subject to federal, state and local corporate income tax.

As of December 31, 2020, the leases at 15 of our properties

were expired and the USPS was occupying such properties as a holdover tenant.

See “Item 2.

Properties—

Lease Expiration

Schedule”.

As of March 30, 2021, 11 leases were in holdover status representing $0.2 million of annual rental revenue.

might not be successful in renewing the leases that are in holdover status or that are expiring in 2021, or obtaining positive

rent renewal spreads, or even renewing the leases on terms comparable to those of the expiring leases.

If we are not successful,

we will likely experience reduced occupancy, traffic, rental revenue and net operating income, which could have a material adverse

effect on our financial condition, results of operations and ability to make distributions to shareholders.

of Operations

of the year ended December 31, 2020 and December 31, 2019

Our results of operations

for the year ended December 31, 2020 include our consolidated results for the year ended December 31, 2020.

Our results of

operations for the year ended December 31, 2019 include our consolidated results for the period from our IPO on May 17, 2019 through

December 31, 2019 and combined consolidated results of our Predecessor for the period from January 1, 2019 through May

We incurred a net loss of $0.6 million in 2020 and a loss of $2.0 million since the completion of our IPO on May

17, 2019 through December 31, 2019, which includes the loss on early extinguishment of our Predecessor’s debt of $0.2 million

and equity-based compensation of approximately $1.0 million.

See Note 3—Real Estate Acquisitions of the accompanying financial

statements for information regarding our real estate acquisition activity during the years ended December 31, 2020 and 2019.

For the Year Ended December 31,

Rental income

Tenant reimbursements

Fee and other income

Total revenues

Operating expenses

Real estate taxes

Property operating expenses

General and administrative

Depreciation and amortization

Total operating expenses

Income from operations

Interest expense, net

Contractual interest expense

Write-off and amortization of deferred financing fees

Loss on extinguishment of debt

Interest income

Total interest expense, net

Loss before income tax expense

Income tax expense

$ (1,492,431 )

Total revenues increased

by $13.4 million for the year ended December 31, 2020 compared to the year ended December 31, 2019.

The increase in revenue is

attributable to the properties that we acquired in connection with the Formation Transactions being part of our portfolio for all

of 2020 and the effects of the properties that we acquired since the completion of our IPO.

Rental income

Rental income increased $11.4 million year over year primarily due to the properties that we acquired in connection with

the Formation Transactions being part of our portfolio for all of 2020 and the effects of the properties that we acquired since

the completion of our IPO.

Tenant reimbursements

Tenant reimbursements increased $1.7 million for the year ended December 31, 2020 compared to the year ended December

31, 2019 primarily due to the properties that we acquired in connection with the Formation Transactions being part of our portfolio

for all of 2020 and the effects of the properties that we acquired since the completion of our IPO.

Fee and other income .

Other revenue increased by $0.2 million, to $1.4 million for the year ended December 31, 2020 compared to the year ended December

31, 2019 primarily due to higher insurance recoveries for the year ended December 31, 2020, offset by lower miscellaneous income.

Real estate taxes

Real estate taxes increased by $1.7 million for the year ended December 31, 2020 compared to the year ended December 31,

2019 as a result of the properties that we acquired in connection with the Formation Transactions being part of our portfolio for

all of 2020 and the effects of the properties that we acquired since the completion of our IPO.

Property operating

expenses –

Property operating expenses increased by $0.7 million to $1.9 million for December 31, 2020 from $1.2 million

for the year ended December 31, 2019.

Property management expenses are included within property operating expenses and increased

by $0.1 million to $0.8 million for the year ended December 31, 2020 from $0.7 million for the year ended December 31, 2019.

remainder of the increase of $0.6 million is related to expenses related to repairs and maintenance and insurance that we were

acquired in connection with the Formation Transactions being part of our portfolio for all of 2020 and the effects of the properties

that we acquired since the completion of our IPO.

and administrative –

General and administrative expenses increased by $3.4 million to $8.2 million for the year ended

December 31, 2020 from $4.8 million for the year ended December 31, 2019, primarily due to higher professional fees and increased

personnel and investor relations expenses as a result of being a public company.

In addition, equity-based compensation expense

increased by $1.2 million for year ended December 31, 2020 compared to the year ended December 31, 2019, due to additional equity-based

compensation expense for awards that have been granted since our IPO.

Depreciation and

amortization –

Depreciation and amortization expense increased by $5.4 million to $9.2 million for the year ended December

31, 2020 from $3.8 million for the year ended December 31, 2019, and is primarily related to the properties that we acquired as

part of the Formation Transactions being part of our portfolio for all of 2020 and the effects of the properties that we acquired

since the completion of our IPO.

Interest Expense, Net

During the year ended

December 31, 2020, we incurred total interest expense, net of $2.8 million compared to $1.5 million for the year ended December

The increase in interest expense is primarily related to the interest incurred on increased borrowings from the Credit

Facility entered into in September 2019 and the amortization of deferred financing costs related to the Credit Facility.

This increase

is offset by a loss on early extinguishment of debt of $0.2 million incurred in connection with the IPO during the year ended December

of the year ended December 31, 2020 and the year ended December 31, 2019

Company had $2.2 million of cash and $1.1 million of escrows and reserves as of December 31, 2020 compared to $12.5 million of

cash and $0.7 million of escrows and reserves as of December 31, 2019.

Cash flow from operating

activities –

Net cash provided by operating activities increased by $6.5 million to $9.4 million for the year ended

December 31, 2020 compared to $2.9 million for the same period in 2019.

The increase is primarily due to the addition

of postal properties that were acquired since the IPO, all of which have generated additional rental income and related changes

in working capital.

Cash flow to investing

activities –

Net cash used in investing activities increased by $53.5 million to $126.2 million for the year ended December 31,

2020 compared to $72.7 million for the same period in 2019.

The increase was primarily due to the 261 postal properties that

we acquired during 2020.

Cash flow from financing

activities –

Net cash provided by financing activities increased by $24.7 million to $106.8 million for the year ended

December 31, 2020 compared to $82.1 million provided by the same period in 2019.

The increase was primarily related to

higher net borrowings during the year ended December 31, 2020 offset by lower proceeds from equity offerings and higher payments

of dividends since our IPO.

and Capital Resources

of Liquidity and Capital Resources

had approximately $2.2 million of cash and $1.1 million of escrows and reserves as of December 31, 2020.

of December 31, 2020, we had $78.0 million outstanding under our Credit Facility.

On January 30, 2020, we exercised the accordion

feature on the Credit Facility to increase permitted borrowings to $150.0 million from $100.0 million subject to the borrowing

base properties identified therein remaining unencumbered and subject to an executed lease.

On June 25, 2020, the Company further

amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available

capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment).

November 24, 2020, we amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations

to allow Leases other than the USPS at a Real Property subject to certain limitations (as defined in such amendment).

to use our Credit Facility for working capital purposes, which may include repayment of indebtedness, property acquisitions and

other general corporate purposes.

As of December 31, 2020, the leases at 15 of our properties had expired and the USPS was occupying

such properties as a holdover tenant, thereby excluding such properties from being part of the borrowing base under our Credit

Credit Facility is guaranteed, jointly and severally, by the Company and certain indirect subsidiaries of the Company, or the

Subsidiary Guarantors, and includes a pledge of equity interests in the Subsidiary Guarantors.

The Credit Agreement contains customary

covenants that, among other things, restrict, subject to certain exceptions, the ability to incur indebtedness, grant liens on

assets, make certain types of investments, engage in acquisitions, mergers or consolidations, sell assets, enter into hedging

transactions, enter into certain transactions with affiliates and make distributions.

The Credit Agreement requires compliance

with consolidated financial maintenance covenants to be tested quarterly, including a maximum consolidated secured indebtedness

ratio, maximum consolidated leverage ratio, minimum consolidated fixed charge coverage ratio, minimum consolidated tangible net

worth, maximum dividend payout ratio, maximum consolidated unsecured leverage ratio, and minimum debt service coverage ratio.

The Credit Agreement also contains certain customary events of default, including the failure to make timely payments under the

Credit Facility, 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.

short-term liquidity requirements primarily consist of operating expenses and other expenditures associated with our properties,

distributions to our limited partners and distributions to our stockholders required to qualify for REIT status, capital expenditures

and, potentially, acquisitions.

We expect to meet our short-term liquidity requirements through net cash provided by operations,

cash, borrowings under our Credit Facility and the potential issuance of securities.

long-term liquidity requirements primarily consist of funds necessary for the repayment of debt at maturity, property acquisitions

and non-recurring capital improvements.

We expect to meet our long-term liquidity requirements with net cash from operations,

long-term indebtedness including our Credit Facility and mortgage financing, the issuance of equity and debt securities and proceeds

from select sales of our properties.

We also may fund property acquisitions and non-recurring capital improvements using our Credit

Facility pending permanent property-level financing.

believe we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of

additional debt and the issuance of additional equity securities.

However, in the future, there may be a number of factors that

could have a material and adverse effect on our ability to access these capital sources, including unfavorable conditions in the

overall equity and credit markets, our degree of leverage, our unencumbered asset base, borrowing restrictions imposed by our

lenders, general market conditions for REITs, our operating performance, liquidity and market perceptions about us.

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

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.

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.

As a result of

this requirement, we cannot rely on retained earnings to fund our business needs to the same extent as other entities that are

If we do not have sufficient funds available to us from our operations to fund our business needs, we will need to

find alternative ways to fund those needs.

Such alternatives may include, among other things, divesting ourselves of properties

(whether or not the sales price is optimal or otherwise meets our strategic long-term objectives), incurring indebtedness or issuing

equity securities in public or private transactions, the availability and attractiveness of the terms of which cannot be assured.

of December 31, 2020, we had approximately $125.0 million of outstanding consolidated principal indebtedness.

The following table

sets forth information as of December 31, 2020 and 2019 with respect to the outstanding indebtedness of the Company:

Maturity Date

Credit Facility (1)

LIBOR+170bps (2)

September 2023

Vision Bank (3)

September 2036

First Oklahoma Bank (4)

December 2037

Vision Bank –

Seller Financing (6)

First Oklahoma Bank –

April 2020 (7)

First Oklahoma Bank –

June 2020 (8)

AIG-December 2020 (9)

Total Principal

$ 125,035,656

September 27, 2019, we entered into our Credit Agreement, which provides for revolving commitments in an aggregate principal

amount of a $100.0 million and an accordion feature that permits us to borrow up to $200.0 million, subject to customary

During the three months ended March 31, 2020, we amended the Credit Agreement in order to exercise a portion our

accordion feature to increase permitted borrowings to $150.0 million from $100.0 million, subject to the borrowing base properties

identified therein remaining unencumbered and subject to an enforceable lease.

As of December 31, 2020, $150.0 million in

aggregate principal amount under the Credit Facility was authorized and $78.0 million was drawn.

Our ability to borrow under

the Credit Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants.

December 31, 2020, we were in compliance with all of the Credit Facility’s debt covenants.

of December 31, 2020, the one-month LIBOR rate was 0.15%.

properties are collateralized under this loan as of December 31, 2020 with Mr.

Spodek as the guarantor.

On September 8, 2021

and every five years thereafter, the interest rate will reset at a variable annual rate of Wall Street Journal Prime Rate

(“Prime”) + 0.5%.

loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr.

rate resets on December 31, 2022 to Prime + 0.25%.

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

rate resets on January 31, 2023 to Prime + 0.5%.

connection with the acquisition of a property, we obtained seller financing secured by the property in the amount $0.4 million

requiring five annual payments of principal and interest of $105,661 with the first installment due on January 2, 2021 based

on a 6.0% interest rate per annum through January 2, 2025.

(7) In connection with the purchase of a 13-building portfolio,

we obtained $4.5 million of mortgage financing, at a fixed interest rate of 4.25% with interest only for the first 18 months, which

resets in November 2026 to the greater of Prime or 4.25%.

loan is collateralized by first mortgage liens on 22 properties.

The interest rate resets in January 2027 to the greater of Prime

loan is secured by a cross-collateralized and cross-defaulted first mortgage lien on the Industrial Property.

a fixed interest rate of 2.80% with interest-only payments for the first five years and fixed payments of principal and interest

thereafter based on a 30-year amortization schedule.

Borrowings as of December 31, 2020

of December 31, 2020, we had approximately $47.0 million of secured borrowings outstanding, all of which is fixed rate debt with

a weighted average interest rate of 3.34% per annum.

During the year ended December 31, 2020, we obtained mortgage loans in the

aggregate amount of $44.0 million.

Obligations and Other Long-Term Liabilities

following table provides information with respect to our commitments as of December 31, 2020, including any guaranteed or

minimum commitments under contractual obligations.

Payments Due by Period

Contractual Obligations

Credit facility

Principal payments on mortgage loans

Interest payments (1)

Operating lease obligations (2)

$ 147,536,541

amounts shown relate to (i) interest on the $78.0 million outstanding under the Credit Facility as of December 31, 2020 at LIBOR

plus 1.70%, (ii) assuming the amount outstanding under the Credit Facility remains at the December 31, 2020 level of $78.0 million,

an unused facility fee under the Credit Facility of 0.25% through the remainder of the term and (iii) interest on the outstanding

mortgage loans.

lease obligations relate to the lease for our corporate headquarters and two ground leases at certain of our properties .

qualify and 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.

year ended December 31, 2020, we paid cash dividends of $0.79 per share.

Financing Activity

On February 3, 2021,

we repaid the First Oklahoma Bank-April 2020 and First Oklahoma Bank-June 2020 with proceeds from a borrowing from our Credit Facility.

The Company had net credit facility activity of $10.5 million during the period subsequent to December 31, 2020.

As of the date

of this report, the Company had $67.5 million drawn on its credit facility.

Real Estate Acquisitions

Subsequent to December

31, 2020, we have acquired 54 postal properties in individual or small portfolio transactions for approximately $25.7 million.

January 11, 2021, we priced a public offering of 3,250,000 shares of our Class A common stock, or the January Follow-on Offering,

at $15.25 per share.

On January 12, 2021, the underwriters purchased an additional 487,500 shares pursuant to a 30-day option

to purchase up to an additional 487,500 shares at $15.25 per share, or the January Additional Shares.

The January Follow-on Offering,

including the January Additional Shares, closed on January 14, 2021 resulting in $57.0 million in gross proceeds, and approximately

$53.9 million in net proceeds after deducting approximately $3.1 million in underwriting discounts and before giving effect to

$0.3 million in other estimated expenses relating to the January Follow-on Offering.

January 28, 2021, our Board of Directors approved and we declared a fourth quarter common stock dividend of $0.2175 per share

which was paid on February 26, 2021 to stockholders of record on February 12, 2021.

Off-Balance Sheet

of December 31, 2020, we did not have any off-balance sheet arrangements.

Accounting Policies and Estimates

discussion and analysis of our financial condition and results of operations are based upon the historical consolidated and combined

consolidated financial statements of the Company and our Predecessor that have been prepared in accordance with GAAP.

The preparation

of these financial statements requires us to exercise our best judgment in making estimates that affect the reported amounts of

assets, liabilities, revenues and expenses.

We base our estimates on historical experience and other assumptions that we believe

to be reasonable under the circumstances.

We evaluate our estimates on an ongoing basis, based upon current available information.

Actual results could differ from these estimates.

Consolidated Financial Statements are prepared in conformity with GAAP and the rules and regulations of the SEC.

the Consolidated Financial Statements, management is required to exercise judgment and make assumptions and estimates that may

impact the carrying value of assets and liabilities and the reported amounts of revenues and expenses.

Actual results could differ

from those estimates.

Set forth below is a summary of our accounting policies that we believe are critical to the preparation

of our Consolidated Financial Statements.

Our accounting policies are more fully discussed in Note 2.

Summary of Significant Accounting

Policies in the Notes to the Consolidated and Combined Consolidated Financial Statements.

an “emerging growth company,”

we intend to avail ourselves of the extended transition periods for adopting new or

revised accounting standards that would otherwise apply to us as a public reporting company, although, subject to certain restrictions

we may elect to stop availing ourselves of these exceptions in the future even while we remain an “emerging growth company.”

As a result, our financial statements may not be comparable to those of other public reporting companies that either are not emerging

growth companies or that are emerging growth companies but have opted not to avail themselves of these provisions of the JOBS

Act and investors may deem our securities a less attractive investment relative to those other companies, which could adversely

affect our stock price.

of Presentation

accompanying Consolidated and Combined Consolidated Financial Statements include the financial position and results of operations

of the Company, its Predecessor, the Operating Partnership and its wholly owned subsidiaries.

The Predecessor represents a combination

of certain entities holding interests in real estate that were commonly controlled prior to the Formation Transactions.

their common control, the financial statements of the separate Predecessor entities which owned the properties and the management

company are presented on a combined consolidated basis.

The effects of all significant intercompany balances and transactions

have been eliminated.

have consolidated the Operating Partnership, a VIE in which we are 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

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

Non-controlling interests are required to be presented as a separate component of equity in the Consolidated Balance Sheets.

the presentation of net income (loss) reflects the income attributed to controlling and non-controlling interests.

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.

Although management believes its estimates are reasonable, actual results could

differ from those estimates.

in Real Estate

the acquisition of real estate, the purchase price is allocated based upon the relative fair value of the assets acquired and

liabilities assumed.

The allocation of the purchase price to the relative fair value of the tangible assets of an acquired property

is derived by valuing the property as if it were vacant.

All real estate acquisitions in the periods presented qualified as asset

acquisitions and, as such, acquisition-related fees and acquisition-related expenses related to these asset acquisitions are capitalized

as part of the acquisition.

in real estate generally include land, buildings, tenant improvements and identified intangible assets, such as in-place lease

intangibles and above or below-market lease intangibles.

Direct and certain indirect costs clearly associated with the development,

construction, leasing or expansion of real estate assets are capitalized as a cost of the property.

Repairs and maintenance costs

are expensed as incurred.

have 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 “Tenant reimbursement revenue”

on our Consolidated and Combined Consolidated Statement of Operations.

and other income primarily consist of property management fees.

These fees arise from contractual agreements with entities that

are affiliated with our chief executive officer.

Management fee income is recognized as earned under the respective agreements.

Non-controlling

interests represent OP Units held by the Predecessor’s prior investors and certain sellers of acquisition portfolios and

LTIP Units primarily held by our chief executive officer.

Upon completion of the IPO and the Formation Transactions, the Operating

Partnership issued 1,333,112 OP Units to the Predecessor’s prior investors as partial consideration for the contribution

of their interest in the Predecessor to the Operating Partnership and 114,706 LTIP Units to our chief executive officer.

During the year ended December 31, 2020, we granted 94,303 LTIP

units to our chief executive officer.

during the years ended December 31, 2020 and 2019, we issued 483,333 and 824,350 OP Units, respectively to certain contributors

in connection with portfolio acquisitions.

Accounting Pronouncements

a discussion of our adoption of new accounting pronouncements, please see Note 2.

Summary of Significant Accountant Principles

of to the accompanying Consolidated and Combined Consolidated Financial Statements.

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.

A majority of our leases provide for tenant reimbursement

of real estate taxes and thus the tenant must reimburse us for real estate taxes.

We believe that if inflation increases expenses

over time, increases in lease renewal rates will materially offset such increase.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

REALTY TRUST, INC.

TO FINANCIAL STATEMENTS

We intend to continue to declare quarterly dividends on our Class A common stock.

The actual amount and timing of dividends, however, will be at the discretion of our Board of Directors and will depend upon our financial condition in addition to the requirements of the Code, and no assurance can be given as to the amounts or timing of future distributions.

Securities Authorized for Issuance Under Equity Compensation Plans

The information required by Item 5 is incorporated by reference to our Definitive Proxy Statement for our 2022 annual stockholders’ meeting.

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity