Postal Realty (NYSE:PSTL) Trust (PRT) showcased robust performance in Q3 2023, driven by the acquisition of 70 Postal properties, and is now targeting a portfolio worth $80 million. The company reported Funds From Operations (FFO) of $0.25 per diluted share and Adjusted Funds From Operations (AFFO) of $0.27 per diluted share for the quarter. PRT also maintained high retention and occupancy rates, with a conservative leverage ratio and no significant debt maturities until 2027.
Key takeaways from the call:
- PRT acquired 70 Postal properties at an average cap rate of 8% in Q3, bringing the total new properties to 153 for $58 million.
- The company expects a weighted average cap rate between 7.25% and 7.75% for the full year 2023.
- PRT's discussions with the Postal Service on lease expirations for 2023 are ongoing, with a historical lease retention rate of 99%.
- The company's Board of Directors approved a quarterly dividend of $23.75 per share, a 1.1% increase from Q3 2022.
- PRT's revolving credit facility is entirely undrawn, and the company expects recurring CapEx for 2023 to be around $0.02 per square foot.
- The company is monitoring the markets and may use equity for financing, depending on various factors.
During the call, executives noted the company's cost of debt and debt financing for acquisitions, including a 2 basis point reduction due to ESG initiatives. They also discussed the complexities of negotiating a large number of leases with a government agency, such as the Postal Service, and are working on developing a more efficient process for lease renewals.
The company also noted that while the Post Office's modernization efforts are positive for their operations, it may not directly impact PRT's properties. The CEO expressed gratitude for the support and concluded the call.
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