Q1 2024 Postal Realty Trust Inc Earnings Call
Operator: Ladies and gentlemen, greetings and welcome to the Postal Realty Trust First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the prepared remarks. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jordan Cooperstein, Vice President of FP&A Capital Markets.
Ladies and gentlemen, greetings and welcome to the Postal Realty Trust first quarter 'twenty 'twenty full earnings conference call.
Operator: At this time all participants are in a listen only mode.
Operator: A question and answer session will follow the prepared remarks.
Operator: As a reminder, this conference is being recorded.
Speaker Change: I would now like to turn the conference Sylvia to your host Mr. Jordan Cooperstein, Vice President of F. B M. A capital market. Please go ahead Sir.
Jordan Cooperstein: Thank you and good morning everyone. Welcome to Postal Realty Trust's first quarter 2024 earnings conference call. On the call today, we have Andrew Spodek, Chief Executive Officer, Jeremy Garber, President, Robert Klein, Chief Financial Officer, and Matt Bramwein, Chief Accounting Officer. Please note that the company may use forward-looking statements on this conference call, which are statements that are not historical facts and are considered forward-looking. These forward-looking statements are covered by the Safe Harbor Provisions for Forward-Looking Statements contained in the Private Securities Litigation Reform Act of 1995.
Jordan Cooperstein: Thank you and good morning, everyone. Welcome to Postal Realty Trust first quarter 2024 earnings conference call on.
Jordan Cooperstein: On the call today, we have Andrew <unk>, Chief Executive Officer, Jeremy Garber, President, Robert Klein, Chief Financial Officer, and Matt Brown, <unk>, Chief Accounting Officer.
Jordan Cooperstein: Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond the company's control, including, but not limited to, those contained in the company's latest 10-K and its other securities and exchange commission filings. The company does not assume and specifically disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
Jordan Cooperstein: Please note the company May use forward looking statements on this conference call, which are statements that are not historical facts and are considered forward. Looking these forward looking statements are covered by the safe Harbor provisions for forward looking statements contained in the private Securities Litigation Reform Act of 1995.
Jordan Cooperstein: Actual results may differ materially from those described in the forward looking statements and won't be affected by a variety of risks and factors that are beyond the company's control, including but not limited to those contained in the company's latest 10-K and its other securities and Exchange Commission filings.
Jordan Cooperstein: The company does not assume it specifically disclaims any obligation to update any forward looking statements, whether as a result of new information future events or otherwise.
Jordan Cooperstein: Additionally, on this conference call, the company may refer to certain non-GAAP financial measures, such as funds from operations, adjusted funds from operations, adjusted EBITDA, and net debt. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP measures in the company's earnings release and supplemental materials. With that, I will now turn the call over to Andrew Spodek, Chief Executive Officer of Postal Realty Trust
Jordan Cooperstein: Additionally, on this conference call company may refer to certain non-GAAP financial measures such as funds. So operations adjusted funds from operations adjusted EBITDA and net debt.
Andrew Spodek: You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP measures in the company's earnings release and supplemental materials.
Andrew Spodek: That I will now turn the call over to Andrew <unk>, Chief Executive Officer of Postal Realty trusts.
Andrew Spodek: Good morning, and thank you for joining us. I'm pleased that our success in 2023 has continued into the current year. Our first quarter acquisition pace and weighted average cap rate were slightly ahead of the same period last year. We added 29 properties for $19 million at a weighted average cap rate of 7.8%, and our year-to-date activity has us on track to achieve our full year 2024 acquisitions guidance of $80 million at or above a 7.5% weighted average cap rate.
Andrew Spodek: Good morning, and thank you for joining us I'm pleased that our success in 2020 three has continued into the current year.
Andrew Spodek: Our first quarter acquisition pace and weighted average cap rate were slightly ahead of the same period last year.
Andrew Spodek: 29 properties for $19 million at a weighted average cap rate of seven 8% and our year to date activity has us on track to achieve our full year 2024 acquisitions guidance of $80 million at or above a seven 5% weighted average cap rate.
Andrew Spodek: While our transaction market is not immune to the current volatility and interest rates, I believe postal real estate sellers are less focused on movements in the 10-year Treasury as they are in more heavily brokered sectors. I'm encouraged by our active pipeline sourced from existing relationships and many new prospects, some of which we have tracked for many years. Postal Realty has demonstrated time and again that we remain disciplined in managing our balance sheet to ensure we are well positioned to pursue attractive opportunities as they arise. We raised almost $14 million of equity capital from a combination of common stock and operating partnership unit issuances, keeping our leverage well within our target range while maintaining ample availability on our evolving credit facility.
Andrew Spodek: While our transaction market is not immune to the current volatility in interest rates I believe the postal real estate sellers are less focus on movements in the 10 year treasury as they are in more heavily brokerage sectors.
Andrew Spodek: I'm encouraged by our active pipeline sourced from existing relationships and many new prospects some of which we have tracked for many years.
Andrew Spodek: Postal Realty has demonstrated time and again that we remain disciplined in managing our balance sheet to ensure we are well positioned to pursue attractive opportunities as they arise.
Andrew Spodek: We raised almost $14 million of equity capital from a combination of common stock and operating partnership unit issuances, keeping our leverage well within our target range, while maintaining ample availability on our revolving credit facility.
Andrew Spodek: Despite the uncertainty of the macro environment, our entire team remains focused on what we do best, acquiring postal real estate and improving the cash flow from assets under management. When sellers exchange property for operating partnership units, which they have done every year since our IPO, they are demonstrating that they trust us as the premier owner and operator in this niche space. This currency allows sellers the opportunity to maintain exposure to postal real estate and eliminate the day-to-day responsibilities of property management while deferring potential taxable gains.
Andrew Spodek: Spike the uncertainty of the macro environment, our entire team remains focus on what we do best acquiring postal real estate and improving the cash flow from assets under management.
Andrew Spodek: When sellers exchange property for operating partnership units, which they have done every year since our IPO. They are demonstrating that they trust we are the premier owner and operator in this niche space.
Andrew Spodek: This currency allows sellers the opportunity to maintain exposure to coastal real estate and eliminate the day to day responsibilities of property management, while deferring the potential taxable gains.
Andrew Spodek: Relationships are the backbone of this business. One of the many ways we stay in front of owners of our target asset is by developing strong, long-lasting connections. Last month, senior members of Postal Realty and I attended the 2024 Annual Association of United States Postal Less Sores Conference. I personally have attended this conference for most of my life.
Andrew Spodek: Relationships are there.
Andrew Spodek: The backbone of this business one of the many ways we stay in front of owners of our target asset is by developing strong long lasting connections.
Andrew Spodek: Last month's senior members of postal Realty and I attended the 'twenty 'twenty four annual association of United States Postal Lessors Conference.
Andrew Spodek: I personally attended this conference for most of my life, it's an opportunity to cultivate new relationships as well as maintain our long running dialogue with the owners.
Andrew Spodek: It's an opportunity to cultivate new relationships as well as maintain our long-running dialogue with owners. Due to these efforts, along with many others, roughly 75% of our acquisitions over the past few years have been sourced internally. And as the natural buyer, we believe we see all the important assets that come to market. We are confident in both our business and our tenants as we continue to collect 100% of our contractual rents and maintain high retention and occupancy rates, exemplifying the importance of this irreplaceable network.
Andrew Spodek: Due to these efforts along with many others roughly 75% of our acquisitions over the past few years have been sourced internally.
Andrew Spodek: And as the natural buyer, we believe we see all important assets that come to market.
Andrew Spodek: We are confident in both our business and our tenant as we continue to collect 100% of our contractual rents and maintain high retention and occupancy rates.
Andrew Spodek: Exemplifying the importance of this irreplaceable network.
Andrew Spodek: With no significant near-term debt maturities, predictable cash flows, industry leadership as the largest owner of postal properties, and a committed team, we are positioned for a successful 2024. I'll now turn the call over to Jeremy. Thank you, Andrew.
Andrew Spodek: With no significant near term debt maturities predictable cash flows industry leadership as the largest owner of coastal properties and a committed team we are positioned for a successful 2024.
Andrew Spodek: I'll now turn the call over to Jeremy.
Jeremy Garber: The first quarter was business as usual at Postal Realty as we remained focused on acquiring well-utilized, attractive, last mile and flex postal property. Our acquisitions during the quarter added 112,000 net leaseable interior square feet to our portfolio, inclusive of 26,000 square feet from 16 last mall properties and 86,000 square feet from 13 flex properties. Subsequent to quarter end, the company acquired six properties for $4.1 million and placed an additional 11 properties totaling $3.5 million under definitive contracts.
Jeremy: Thank you Andrew the first quarter was business as usual had posted a royalty as we remain focused on acquiring well utilize attractive last mile and flex postal properties.
Jeremy Garber: Our acquisitions during the quarter added 112000, net leasable interior square feet to our portfolio inclusive of 26000 square feet from 16 last small properties and 86000 square feet from 13 flex properties.
Jeremy Garber: Subsequent to quarter end the company acquired six properties for $4 1 million in place an additional 11 properties totaling $3 5 million under definitive contracts.
Jeremy Garber: As stated on prior calls, the company's business model generates consistent cash flow each quarter as our business remains stable and reliable through economic cycles. We have a long runway of opportunity ahead of us and are encouraged by our growth prospects as the largest owner in this space. We have maintained a 99% historical weighted average lease retention rate over the past 10 plus years, which reflects the strategic importance of these properties to both the Postal Service and the communities they serve.
Jeremy Garber: As stated on prior calls company's business model generates consistent cash flow each quarter as our business remains stable and reliable through economic cycles.
Jeremy Garber: Have a long runway of opportunity ahead of us and are encouraged by our growth prospects as the largest owner in this space.
Jeremy Garber: We have maintained a 99% historical weighted average lease retention rate over the past 10 plus years.
Jeremy Garber: Which reflects the strategic importance of these properties to both the postal service in the communities they serve.
Jeremy Garber: This validates our due diligence process in identifying locations that are vital to this crucial logistics network. We continue to work hard with the Postal Service to execute the expired leases and hope to provide an update on our next earnings call. I'll now turn the call over to Rob to discuss our first quarter 2024 financial results. Thank you, Jeremy.
Jeremy Garber: This validates our due diligence process and identifying locations that are vital to this crucial logistics network.
Rob: We continue to work hard with the postal service to execute the expired leases and hope to provide an update on our next earnings call.
Jeremy Garber: Now I'll turn the call over to Rob to discuss our first quarter 2024 financial results.
Robert B. Klein: Thank you, Jeremy, and thank you, everyone, for joining us on today's call. During the first quarter, we raised approximately $14 million in equity and continue to creatively acquire assets. We delivered funds from operations, or FFO, of $0.20 and adjusted funds from operations, or AFFO, of $0.25 per diluted share. We've maintained low leverage and minimized our exposure to variable rate debt. At the end of the first quarter, our debt outstanding had a weighted average interest rate of 4.22%, a weighted average maturity of four years, and no significant debt maturities until 2027.
Rob: Thank you Jeremy and thank you everyone for joining us on today's call.
Robert B. Klein: During the first quarter, we raised approximately $14 million of equity and continue to accretively acquire assets.
Robert B. Klein: We delivered funds from operations or <unk> of 'twenty.
Robert B. Klein: And adjusted funds from operations or <unk> of 25 per diluted share.
Robert B. Klein: We have maintained low leverage and minimized our exposure to variable rate debt.
Robert B. Klein: At the end of the first quarter, our debt outstanding at a weighted average interest rate of 4.22% a weighted average maturity of four years and no significant debt maturities until 2027.
Robert B. Klein: The company's $150 million senior unsecured revolving credit facility had $16 million outstanding, and fixed rate debt comprised 94% of all borrowings. Net debt to annualized adjusted EBITDA was 5.8 times, well within our target of below 7 times.
Robert B. Klein: The companys $150 million senior unsecured revolving credit facility at $16 million outstanding in fixed rate debt comprised 94% of all borrowings.
Robert B. Klein: Net debt to annualized adjusted EBITDA was five eight times well within our target of below seven times.
Robert B. Klein: During the first quarter, we issued approximately 576,000 shares of common stock through our ATM offering program at an average price of $14.25 per share, totaling gross proceeds of $8.2 million. Additionally, we issued nearly 412,000 common units in our operating partnership at a price of $14.05 per unit as part of consideration for a portfolio acquisition. Recurring CapEx was $150,000, within our anticipated range of $125,000 to $175,000. Looking forward to Q2, we anticipate the figure to be between $150,000 and $200,000, depending on the timing of the projects.
Robert B. Klein: During the first quarter, we issued approximately 576000 shares of common stock through our ATM offering program at an average price of $14 25 per share totaling gross proceeds of $8 2 million. Additionally.
Robert B. Klein: Additionally, we issued nearly 412000 common units in our operating partnership at a price of $14.05 per unit as part of consideration for our portfolio acquisition.
Robert B. Klein: Recurring capex was $150000 within our anticipated range of 125000 to $175000.
Robert B. Klein: Looking forward to Q2, we anticipate the figure to be between 150000 and $200000 depending on the timing of projects.
Robert B. Klein: Cash G&A expense came in within our stated range for the first quarter. Just as in prior years, we continue to prioritize decreasing cash G&A as a percentage of revenue on an annual basis. For the full year 2024, we expect total cash G&A expenses to be between $9.5 million and $9.8 million. Our Board of Directors has approved a quarterly dividend of $0.24 per share, representing a 1.1% increase from the Q1 2023 dividend. During the first quarter, we collected 100% of our contractual rent.
Robert B. Klein: Cash G&A expense came in within our stated range for the first quarter.
Robert B. Klein: Just as in prior years, we continue to prioritize decreasing cash G&A as a percentage of revenue on an annual basis.
Robert B. Klein: For the full year 2024, we expect total cash G&A expense to be between $9 5 million and $9 $8 million.
Robert B. Klein: Our board of Directors has approved a quarterly dividend of <unk> 24 per share representing a one 1% increase from the Q1 2023 dividend.
Robert B. Klein: During the first quarter, we collected 100% of our contractual rents this.
Operator: This predictability of cash flows remains a significant differentiator for our company in addition to our strong operations and proven track record of scaling the business. Thanks to our solid foundation and hard work, we continue to be the market leader in the postal real estate space as we execute our business plan of acquiring new assets and improving the cash flow from existing properties. That concludes our prepared remarks, and now we'd like to open the line to take any questions you may have. Operator.
Robert B. Klein: This predictability of cash flows remains a significant differentiator for our company. In addition to our strong operations and proven track record of scaling the business.
Operator: Thanks to our solid foundation and hard work, we continue to be the market leader in the postal real estate space as we execute our business plan of acquiring new assets and improving the cash flow from existing properties.
Speaker Change: That concludes our prepared remarks, and now we'd like to open the line to take any questions you may have.
Operator: Operator.
Speaker Change: Thank you.
Operator: Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. Ladies and gentlemen, we will wait for a moment while we poll you for questions. Our first question is from the line of Anthony Paolone with J.P. Morgan. Please go ahead.
Speaker Change: Ladies and gentlemen, we will now be conducting a question and answer session.
Anthony Paolone: If you would like to ask a question. Please press star and one on your telephone keypad.
Anthony Paolone: A confirmation tone will indicate your line is in the question queue you.
Operator: You May press star and two if you'd like to remove your question from the queue fault.
Anthony Paolone: All participants using speaker equipment, it may be necessary to pick up your handset before pressing the stock Keith.
Operator: Ladies and gentlemen, we will wait for a moment, while we poll for questions.
Anthony Paolone: Our first question is from the line of Anthony Powell alone with J P. Morgan. Please go ahead.
Anthony Paolone: Great, thanks, and good morning. I was just wondering if you could update us on just how negotiations are coming along with the 90-some-odd holdover leases and whether or not you anticipate new leases with contractual bumps the way you were able to achieve last year and or a step up in starting rents on the new leases.
Anthony Paolone: Great Thanks, and good morning.
Anthony Paolone: I guess I'm wondering if you could update us on just how that negotiations are coming along with the 90 some odd.
Anthony Paolone: Holdover leases and whether or not you anticipate.
Anthony Paolone: New leases with contractual bumps the way you were able to achieve last year and or.
Anthony Paolone: Step up in starting rents on the new leases.
Andrew Spodek: Hey Tony, this is Andrew. I wish I could say that we're completed with the negotiations, but this is still a fluid process. We're working very hard with the Postal Service to... resolve them and come to a mutually acceptable solution. Everything is going well. It's just taking longer than we would have anticipated, and we're working towards getting those avenue bumps, even though I can't commit to it actually being done until it's completed. And we hope to have a better update for you next quarter.
Speaker Change: Hey, Tony.
Andrew Spodek: This is Andrew.
Andrew Spodek: I wish I could say that were completed with the negotiations. This is still a fluid process, where we're working very hard with both service to two to resolve them and to come to.
Andrew Spodek: A mutually acceptable solution.
Andrew Spodek: Everything is going well, it's just taking longer than what we would have anticipated.
Andrew Spodek: And we're working towards getting those avenue of bumps, even I can't commit to it actually being done until its completed.
Andrew Spodek: And we hope to have a better update for you next quarter.
Andrew Spodek: Do you think, Andrew, that, like, the process there is changing so that, as we look out into future years, the negotiation and the process could, you know, just be a bit faster or smoother, or do you think this will always kind of be a, you know, giving the counterparty a tough process?
Speaker Change: Do you think Andrew that like the process. There is changing should that like as we look out into future years.
Andrew Spodek: The the negotiation and the process could you just be a bit faster smoother or do you think this will always kind of be a yeah.
Andrew Spodek: Given the counterparty a tough process.
Andrew Spodek: So.
Andrew Spodek: The answer is that we've had these types of situations in the past in my life dealing with the Postal Service, where it takes longer than anticipated to resolve these. We are currently working with the Postal Service to make it more efficient so that, in future years, we don't have these issues. And I'm hopeful that we'll get to that place, but I can't commit to it until it's been built. But regardless, we've been collecting our rents.
Andrew Spodek: The answer is that we've had these type of situations in the past over over my life of dealing with the full service, where it takes longer than anticipated to to resolve this we are currently working with full service to make it more efficient so that way in future years, we don't have these issues.
Andrew Spodek: And <unk>.
Andrew Spodek: Hopeful that we'll get to that place, but I can't commit to it until it's paid results.
Andrew Spodek: But regardless, we've been collecting a rents we will continue to collect our rents when we do resolve it did you pay.
Andrew Spodek: We will continue to collect our rents. When we do resolve it, they will pay the difference between the rents that we negotiated and when the leases expired. And so it's just a matter of trying to complete them as quickly.
Andrew Spodek: Difference in the rents that we negotiated.
Andrew Spodek: And when the leases had expired.
Andrew Spodek: And so it's just a matter of trying to complete them as quickly as possible.
Robert B. Klein: Okay. And then just last one for me, you mentioned the CapEx in the quarter and also what you anticipated for 2Q, but if you get these holdover releases over the finish line, do you anticipate, like in the back half of the year, having to spend anything incremental that would come along with that process that would be outside of that, you know, kind of $100,000, $200,000 range that you outlined for the quarter?
Speaker Change: Okay, and then just last one for me.
Robert B. Klein: You mentioned the Capex in the quarter and also what your anticipated for <unk>, but if you get these a holdover leases over the finish line do you anticipate like in the back half of the year, having to spend anything incremental that would come along with that process that that would be outside of that kind of 100 $200000 range that you outlined for quarter.
Robert B. Klein: Yeah, thanks Tony. This is Rob. I don't, we don't anticipate that the guidance change is based on acquisitions or on releasing really in the near term, so no that that guidance will hold, and next quarter we'll come forward with the guidance for the future.
Speaker Change: Yeah. Thanks Toni.
Rob: This is rob.
Rob: We don't anticipate that the guidance changes based on acquisitions or on re leasing really in the near term so that guidance will hold and next quarter, we'll come forward with what the guidance for future quarters.
Anthony Paolone: Okay, I got it. Thank you.
Speaker Change: Okay got it thank you.
Speaker Change: Thank you.
Speaker Change: Thank you, ladies and gentlemen, if you wish to ask a question. Please press star and one.
Operator: Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and 1. Our next question comes from the line of Stephen Domensky with Janey Montgomery Scout. Please go ahead.
Stephen Domensky: Our next question comes from the line of Steven Dominski with Janney Montgomery Scott. Please go ahead.
Stephen Domensky: Thank you. I know that the state of the transaction market was addressed earlier in the opening comments, so I just wanted to get more insight. Given the overall macro environment, how motivated are potential sellers currently? Where do you project an increase or decrease in the velocity of the acquisition pipeline going forward?
Stephen Domensky: Thank you I know that the state of the transaction market was addressed earlier in the opening comments. So I just wanted to get more insight with the overall macro environment, how motivated are potential sellers currently and.
Stephen Domensky: What where do you project any increase or decrease in the velocity of the acquisition pipeline going forward.
Stephen Domensky: Yeah.
Andrew Spodek: I appreciate the question. Sellers may be motivated, but they're not motivated to the extent that they are adjusting their cap rates across the entire market. We're still having to deal with sellers on a deal-by-deal basis to try to adjust cap rates to inch them up to places where we want to acquire them in an accretive way. I'm hopeful that the velocity of deals will pick up and we are able to adjust our guidance as the year progresses, but as of right now, we're maintaining our guidance of $80 million for the year.
Speaker Change: I appreciate the question.
Andrew Spodek: The others are.
Andrew Spodek: May be motivated, but they're not motivated to the extent that they are adjusting their cap rates across the entire market, we're still having to deal with sellers on a deal by deal basis to try to address cap rates to two inch them up to places, where we want to acquire than in an accretive way.
Andrew Spodek: I'm hopeful that the velocity of deals will pick up and we are able to adjust our guidance as the year progresses, but as of right now, we're maintaining our guidance of $80 million for the year.
Andrew Spodek: Thank you, Andrew. That's very helpful. And just another one regarding, I guess, more of the macro environment, is the higher-for-longer interest rate environment and the pullback in bank financing impacting the ability for a small owner to refinance postal assets when their current debt expires, or is having the USPS on the lease still the golden ticket, essentially?
Speaker Change: Thank you Andrea that's very helpful and just another one.
Andrew Spodek: And I guess more of the macro environment is the higher for longer interest rate environment and the pullback in the banks financing impacting the ability for a small owner to refinance wholesale assets when their current debt expires or is having the U S. P. S <unk> still.
Andrew Spodek: Still the Golden ticket essentially.
Andrew Spodek: So the postal real estate market, at least on the Flex and Last Mile facilities, is not a very heavily financed space. With that being said, if sellers do have mortgages that are coming due, they're able to refinance them, but obviously at a much higher rate. And so while that would normally be a motivating factor for people to consider selling, because it's not a heavily financed space, it's not typically a major driver of deals.
Andrew Spodek: So the the postal real estate market at least on the flex and last mile facilities is not a very heavily finance space.
Andrew Spodek: With that being said if sellers do have mortgages that are coming due they're able to refinance them, but obviously at a much higher rate.
Andrew Spodek: And so while that would normally be a motivating factor for people to consider selling because it's not a heavily finance space. It's not typically a major driver of deal flow.
Stephen Domensky: Got it. Thank you. That's very helpful. I appreciate it.
Speaker Change: Got it. Thank you that's very helpful. I appreciate it.
Speaker Change: Thank you.
Operator: Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and 1. Our next question is from the line of John Petersen with Jeffries. Please go ahead. Hey, good morning. I just wanted to, could you remind us what percent of your...
Speaker Change: Ladies and gentlemen, a reminder, if you wish to ask a question. Please press star and one.
Jonathan Michael Petersen: Our next question is from the line of Jon Petersen with Jefferies. Please go ahead.
Jonathan Michael Petersen: Hey, good morning, guys.
Jonathan Michael Petersen: I just wanted to, could you remind us what percent of your portfolio has annual escalators built in and where you expect that number to trend over the next, you know, as you renew all these leases over the next few years?
Jonathan Michael Petersen: Just wanted to could you remind us what percent of your portfolio has annual escalators built in where you expect that number to trend over the next you know as you renew all these leases over the next few years.
Jonathan Michael Petersen: Yes, John it's Jeremy it was the entire vintage of 2022 leases that expired.
Jonathan Michael Petersen: We put an escalator in place.
Operator: And we're working on DL23s and going forward right now.
Jonathan Michael Petersen: And we're working that deal 20, threes and going forward right now.
Operator: Yeah, so is the expectation, because these are typically five-year leases, so if we fast forward, you know, four years in the future, is the expectation you guys have that 100% of the portfolio will have annual escalators, or will there be kind of friction in future years in getting that in there now that inflation is coming down a bit?
Operator: So is the expectation as these are typically five year leases. So if we fast forward four years in the future is the expectation you guys have the 100% of the portfolio will have annualized gliders or will there be kind of friction in future years in getting that in there now that inflation is coming down a bit.
Operator: Yeah, I think it's a fluid kind of conversation that really depends on inflation and the cost to operate the properties, and so I can't commit to all the future leases having an escalator, but when it's appropriate, that's definitely something that we will be negotiating. All right, that's helpful, Colin. That's all.
Speaker Change: Yes, I think it's it's a fluid.
Operator: Kind of calling for station that really depends on inflation and the cost of operating properties.
Operator: And so I can't commit to all of future leases, having an escalator, but when it's appropriate that is definitely something that we will be negotiating for.
Operator: Got it. Okay. All right, that's helpful, Kolek. That's all for me.
Speaker Change: Got it Okay Alright, that's helpful color. That's all for me. Thank you.
Operator: Thank you. Thank you. Thank you, John.
Speaker Change: Thanks, Ken.
Operator: Okay.
Speaker Change: Thank you.
Andrew Spodek: As there are no further questions, I now hand the conference over to Andrew Spodek for his closing comments.
Operator: As there are no further questions I now hand, the conference over to Andrew for his closing comments.
Andrew Spodek: Andrew.
Andrew Spodek: On behalf of the entire team, we thank you for your support and taking the time to join us today. We're confident in our business model and the opportunity in this specialized market. The fundamentals of the business remain strong, and we look forward to what the future brings.
Andrew Spodek: On behalf of the entire team we thank you for your support and taking the time to join US today, we're confident in our business model and the opportunity in this specialized market.
Andrew Spodek: Fundamentals of the business remains strong and we look forward to what the future brings let's connect in the upcoming months. Thank you again for your time.
Operator: Let's connect in the upcoming months. Thank you again. Thank you. The Conference of Postal Services
Speaker Change: Thank you the conference of Postal Realty Trust has now concluded. Thank you for your participation you may now disconnect your lines.
Operator: Thank you. The conference of the Postal Reality Trust has now concluded. Thank you for your participation. You may now disconnect your lines.
Operator: ?? ?? ?? ??
Operator: Okay.
Operator: [music].
Operator: Hum.
Operator: Oh.
Operator: Uh-huh.
Operator: [music].
Operator: No.
Operator: Yeah.
Operator: Uh-huh.
Operator: [music].