Postal Realty Trust (PSTL) 17th Annual Midwest IDEAS Conference summary

Business model and market opportunity

• Focuses on acquiring and aggregating leased postal facilities from a fragmented ownership base, targeting a $15 billion market with 80% still available for acquisition.

• Operates primarily in last mile and flex assets, with some industrial properties, and remains agnostic to asset type and location.

• Postal Service leases are a minor expense (1.5%) in their $80 billion annual budget, making lease costs less likely to be targeted for cuts.

• Management and board compensation is heavily equity-based, aligning interests with shareholders; insiders own 13-14% of the float.

• Growth strategy is disciplined, prioritizing accretive acquisitions and sustainable earnings growth over rapid expansion.

Lease structure and earnings momentum

• Secured 10-year leases with 3% annual escalators on renewals through 2027, shifting from previous five-year flat leases.

• Approximately 45% of the portfolio now benefits from annual escalators, up from none in 2022, driving predictable internal earnings growth.

• Mark-to-market lease renewals and escalators are expected to deliver 6.5% same-store cash revenue growth in 2027, with 75% from mark-to-market and 25% from escalators.

• Dividend payout ratio has decreased from 100% to 70% of AFFO, with a target of 65% to improve cost of capital and support future growth.

• Retained earnings and disciplined payout policy are expected to add 2% to AFFO per share growth annually.

Financial position and capital deployment

• Maintains a low-leverage balance sheet, currently at 4.6x debt-to-EBITDA, below the updated 5.5x target.

• Has $50 million in raised equity not yet in the share count, providing flexibility for future acquisitions.

• Improved cost of capital since 2021 enables more accretive acquisitions and supports multi-pronged growth.

• Guidance for 2024 acquisitions increased to $150 million, marking the largest year since IPO.

• Growth is paced intentionally, with acquisition volume governed by cost of capital and focus on day-one accretion.