Executive Summary

Q4 2024 delivered solid internal growth and external accretion: total revenues rose to $21.368M (+25.7% YoY), Diluted EPS reached $0.17, and AFFO per diluted share was $0.35; management introduced FY2025 AFFO guidance of $1.20–$1.22 per share and updated 2025 same-store cash NOI growth to 4–6% from “at least 3%” previously .
Leasing execution accelerated with 10-year terms and 3% annual rent escalations; USPS executed leases covering 95% of 2023 and 99% of 2024 expired rent as of Feb 14, 2025, supporting internal growth visibility .
Balance sheet remained conservative: net debt ≈$296M, 95% fixed-rate, weighted average interest 4.35%, revolver availability of $136M; the Board authorized a $25M buyback and raised the dividend to $0.2425 per share .
Stock reaction catalysts: initial AFFO guidance, upward revision of same-store NOI outlook, buyback authorization, and visible lease escalators with 10-year terms .

What Went Well and What Went Wrong

What Went Well

Re-leasing momentum and pricing power: “successful re-leasing including 3% annual rent escalations and the introduction of 10-year lease terms fueling our internal growth,” underpinning AFFO of $1.16 per share (+8.4% YoY) and 2025 AFFO guidance of $1.20–$1.22 . CEO: “Postal Realty is well positioned for continued internal and external growth” .
Strength in same-store metrics and guidance: 2023 same-store cash NOI growth 5.5%; 2024 was 4.4%; 2025 updated to 4–6% (from prior “≥3%”), highlighting operating visibility and lease escalators .
Balance sheet and capital markets execution: term loan commitments increased by $50M; swaps fixed rates through Feb 2028; ending Q4 with 95% fixed-rate debt and $136M revolver undrawn . CFO emphasized low leverage and deleveraging driven by re-leasing success .

What Went Wrong

Non-GAAP reliance and lease timing effects: revenue included lump-sum catch-up rent; CFO clarified run-rate should reflect a near-complete execution of 2023/2024 leases (95%/99%), implying quarterly variability as leases are finalized .
Cash G&A expected to increase in 2025 ($10.5–$11.0M), partially offsetting internal growth; AFFO growth at midpoint “just a touch over 4%” was discussed in Q&A as G&A normalizes .
Macro USPS questions persist: analysts probed USPS cost-cutting plans and network changes; management reiterated confidence and noted lease expense is ~1.5% of USPS operating budget, but uncertainty around USPS initiatives remains a monitoring item .

Financial Results

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Total Revenues ($USD Millions)	$17.001	$18.050	$19.667	$21.368
Net Income Attributable to Common ($USD Millions)	$1.184	$0.817	$1.071	$4.505
Diluted EPS ($USD)	$0.04	$0.02	$0.03	$0.17
FFO per diluted share ($USD)	N/A	$0.23	$0.24	$0.30
AFFO per diluted share ($USD)	N/A	$0.26	$0.30	$0.35
Net Debt ($USD Millions)	N/A	~$272	~$277	~$296

Margins (calculated from cited figures):

Margin	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Net Income Margin %	7.0% (1.184/17.001)	4.5% (0.817/18.050)	5.4% (1.071/19.667)	21.1% (4.505/21.368)

KPIs and Portfolio

KPI	Q2 2024	Q3 2024	Q4 2024
Properties (count)	1,607	1,642	1,703
Occupancy (%)	99.6%	99.6%	99.6%
Net Leasable Interior SF (Millions)	~6.2	~6.3	~6.4
Weighted Avg Rental Rate ($/SF)	$9.67	$10.11	$10.60
Last-mile/Flex Rental Rate ($/SF)	$11.78	$12.32	$12.81
Industrial Rental Rate ($/SF)	$3.57	$3.57	$3.83
Acquisitions ($USD Millions)	$28.3 (70 properties)	$13.3 (35 properties)	$30.7 (63 properties)
Lump-sum Catch-up Rent (Quarter)	$0.326M (2023 leases)	$1.351M (2024 leases; mix qtr+Oct)	$1.5M (Q4); $0.4M received in 2025 to date
Dividend per share (declared)	$0.24	$0.24	$0.2425 (declared Jan 30, 2025)

Estimate comparison: S&P Global Wall Street consensus for Q4 2024 EPS/revenue was unavailable at the time of this analysis due to SPGI request limits. Management noted FY2024 AFFO per share of $1.16 was “greater than 9% above the Street consensus at the start of 2024” . Values retrieved from S&P Global were unavailable.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
AFFO per diluted share	FY 2025	N/A	$1.20–$1.22	Introduced
Same-store cash NOI growth	FY 2025	≥3% (Q3 call)	4%–6% (Q4 call)	Raised
Investment volume	FY 2025	N/A	$80–$90M	Introduced
Cash G&A expense	FY 2025	$9.5–$9.8M (FY2024 actual guidance)	$10.5–$11.0M	Increased
Dividend per share (quarterly)	Q1 2025	$0.24 (Q3 declared)	$0.2425	Raised
Share Repurchase Authorization	Open	N/A	Up to $25M	New program

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Re-leasing process & escalators	Q2: receiving executed 2023 leases with 3% escalations; process fluid . Q3: agreed rents for 2023/2024; more resources at USPS; early 10-year terms .	95% of 2023 and 99% of 2024 expired rent executed; 3% escalations; 10-year terms widespread .	Strengthening, improved timing/visibility
Same-store cash NOI outlook	Q3: 2023 >4%; 2024 ≥3.25%; 2025 ≥3% .	Updated to 4%–6% for 2025; 2023 5.5%, 2024 4.4% .	Upward revision
External growth (acquisitions/dispositions)	Q2: acquired $28.3M; targeting ≥7.5% cap rate . Q3: lighter quarter but maintained $90M target; first sizable dispositions at 4.9% exit cap .	Q4: acquired $30.7M; FY2024 $91M at 7.6% cap; 2025 target $80–$90M .	Consistent at/above 7.5% cap rate
Balance sheet & rates	Q2: 85% fixed; WAI 4.48% . Q3: swaps lower WAI to ~4.36%; 98% fixed post October .	95% fixed; WAI 4.35%; additional swaps at 5.27–5.55% for term loan .	Stable, prudent
USPS network/macro	Q3: political change not impacting leases .	Management sees minimal impact from USPS cost-cutting on retail network; lease expense ~1.5% of USPS budget .	Stable tenant backdrop

Management Commentary

CEO: “2024 was a strong operational year…successful re-leasing including 3% annual rent escalations and the introduction of 10-year lease terms fueling our internal growth… AFFO guidance… $1.20 to $1.22 per diluted share for 2025” .
CEO on USPS stability: “lease expenses represent only 1.5% of the Postal Service's total operating budget… these buildings are the backbone of their delivery network” .
CFO: “Funds from operations… $0.30 per diluted share and adjusted funds from operations… $0.35 per diluted share… Board… approved a common stock repurchase program for up to $25 million” .
President: “rents for all expired leases and those set to expire in 2025 have been agreed upon… majority… 10 years… all contain 3% annual rent escalations” .

Q&A Highlights

USPS leadership and lease forms: New Postmaster General not expected to change lease documents; leases are a small cost component (~1.5% of USPS operating expenses) .
USPS cost-cutting plans: Management does not expect disruption to retail network; continues to underwrite assets as critical to USPS delivery network .
2025 growth drivers: CFO cited G&A normalization and recurring CapEx dynamics; acquisitions can affect top/bottom line; internal escalators detailed for 2025–2027 ($0.7M, $1.4M, $1.8M contractual escalations) .
Catch-up rent mechanics: CFO guided to focus on run-rate given lease execution completeness (95%/99%), rather than one-time catch-ups in Q4 .

Estimates Context

S&P Global consensus for Q4 2024 EPS and revenue was unavailable at the time of analysis due to SPGI request limits; therefore, explicit beat/miss vs Street for Q4 cannot be provided. Management indicated FY2024 AFFO per share of $1.16 was “greater than 9% above the Street consensus at the start of 2024” . Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

Internal growth is now anchored by 3% annual rent escalations and 10-year lease terms on a growing share of the portfolio; 2025 same-store cash NOI raised to 4–6% .
Initial 2025 AFFO guidance ($1.20–$1.22) sets a tangible earnings framework; monitor pace of acquisitions ($80–$90M target) and Cash G&A ($10.5–$11.0M) as key drivers .
Balance sheet prudence (95% fixed-rate debt, WAI 4.35%, ample revolver capacity) plus the $25M buyback authorization provide downside support and potential capital deployment optionality .
Quarterly reported revenues can include catch-up rent; focus on normalized run-rate given high completion of 2023/2024 leases (95%/99%), which should reduce volatility .
External growth maintains attractive entry yields (FY2024 acquisitions at 7.6% cap), with demonstrated ability to recycle at sub-5% exit cap when opportunistic bids appear .
USPS macro noise bears monitoring, but management reiterates stability of the retail network and highlights lease costs as a small budget component, underpinning retention and long-term occupancy .
Near-term trading implications: potential positive reaction to guidance introduction and buyback; medium-term thesis leverages visible escalators, disciplined acquisitions, and operating leverage as leasing mix shifts to longer duration .

Postal Realty Trust, Inc. (PSTL)·Q4 2024 Earnings Summary