Q4 2024 Postal Realty Trust Inc Earnings Call
Prepared remarks as a reminder, this conference is being recorded.
Speaker Change: Now I'd like to turn the conference over to your host Mr. Jordan Cooperstein, Vice President of F. B M. A capital markets welcome Jonathan.
Speaker Change: Thank you and good morning, everyone welcome to Postal Realty Trust fourth quarter 2024 earnings conference call on.
Speaker Change: On our call today, we have Andrew <unk>, Chief Executive Officer, Jeremy Garber, President, Robert Klein, Chief Financial Officer, and Matt, Brian White, Chief Accounting Officer.
Speaker Change: 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.
Speaker Change: Forward looking statements are covered by the safe Harbor provisions for forward looking statements contained in the private Securities Litigation Reform Act of 1995.
Speaker Change: 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.
Speaker Change: The company does not assume it specifically disclaims any obligation to update any forward looking statements, whether as a result of newer clinicians future events or otherwise.
Speaker Change: 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 supplement.
Andrew <unk>: Materials with that I will now turn the call over to Andrew <unk>, Chief Executive Officer of Postal Realty trusts.
Andrew <unk>: Good morning, and thank you for joining us today.
Andrew <unk>: I'd like to first review some of the key accomplishments of 2024 and describe why we enter 2025 with confidence in our ability to drive internal growth. While we continue to pursue our acquisition driven external growth plan.
Andrew <unk>: Our strong re leasing performance, which was driven by a new streamline process established with the postal service contributed to full year <unk> per share of $1 16, an increase of eight 4% year over year and greater than 9% above the street consensus at the start of 2024.
Andrew <unk>: As I mentioned on our Q3, earning call we work collaboratively with the postal service and arrived at a multi tiered programmatic approach to the re leasing process. This methodology, coupled with an increase in allocated postal service resources has improved the timing and efficiency of releasing which enabled us to provide actual same store cash.
Andrew <unk>: NOI figures for 'twenty three 'twenty four.
Andrew <unk>: As well as projections for 2025.
Andrew <unk>: With rents agreed to for our 2025 explorations. We can now update same store cash NOI guidance for 2025 to be between 4% and 6% versus our prior guidance of at least 3%, but more importantly, keeping current with re leasing provides us with the visibility to share <unk> guidance for the first time as a public company as.
Rob: Rob will describe in more detail, we project 2025 full year <unk> to be between $1 20, and $1 22 per share.
Rob: Turning to our balance sheet during the year, we added $50 million of commitments to our term loan maturing in February 2028, and also increased our term loan accordion by $50 million.
Rob: Further evidence of the supportive partnership we have with our lenders.
Rob: In 2024, we acquired 197 properties for $91 million at a weighted average cap rate of seven 6%, we anticipate acquisition volume in 2025 to be $80 million to $90 million and we will continue to target a weighted average cap rate at or above seven 5%.
Greetings and welcome to Boston Realty Trust fourth quarter 2024 earnings call.
At this time all participants are in a listen only mode.
Speaker Change: <unk> 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 F. P. M. A.
Rob: Other successes in 2024 include our first meaningful dispositions as public company in October the company sold two properties to two independent parties for total gross proceeds of $6 3 million <unk>.
Speaker Change: Capital markets welcome Josh.
Rob: Representing a weighted average exit cap rate of four 9%.
Speaker Change: Thank you and good morning, everyone. Welcome to Postal Realty Trust fourth quarter 2024 earnings conference call on the call today, we have Andrew <unk>, Chief Executive Officer, Jeremy Garber, President, Robert Klein, Chief Financial Officer, and Matt <unk>, Chief Accounting Officer.
Rob: We purchased these properties for $3 $6 million.
Rob: While the two properties were quite different from each other in both cases, a buyer approached us having been attracted to the steady cash flows and strong underlying real estate.
Rob: The fundamentals of our business remain very strong as evidenced by our current occupancy of 99, 8%.
Speaker Change: 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.
Rob: As a reminder, we have average of 99% lease retention rate with the postal service over the past 10, plus years through multiple presidential administrations and repeated USPS organizational and leadership changes.
Speaker Change: 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.
Speaker Change: 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.
Rob: We remain confident in the postal services continued tenancy as evidenced by their recent commitment to 10 year leases.
Rob: As we like to remind shareholders lease expenses represent only one 5% of the postal services total operating budget and these buildings are the backbone of their delivery network.
Speaker Change: 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.
Rob: The postal service plays a critical and multifaceted role within the economy, providing a universal affordable reliable and secure delivery network that reaches every address in the country.
Speaker Change: 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.
Rob: It drives commerce by facilitating the distribution of goods and documents connecting businesses with customers and supporting rural communities.
Rob: The postal Service's network is considered the largest most intricate logistics network in the world serving $169 million delivery points across the country covering every state city and town six and often seven days a week.
Speaker Change: With that I will now turn the call over to Ed <unk>, Chief Executive Officer of Postal Realty Trust.
Rob: The postal service excels of delivery to rule addresses which make up almost 60% of USD codes.
Ed: Good morning, and thank you for joining us today.
Rob: Cause of fits mature on the ground last mile network and it does so more cost effectively than any other provider.
Ed: I'd like to first review some of the key accomplishments of 2024 and describe why we enter 2025 with confidence in our ability to drive internal growth. While we continue to pursue our acquisition driven external growth plans.
Rob: It's logistics network, primarily comprised of its real estate footprint is utilized by parcel delivery organizations, both large and small making it a critical irreplaceable piece of American infrastructure and these are the buildings were investing them.
Ed: Our strong re leasing performance, which was driven by our new streamlined process established the postal service contributed to full year <unk> per share of $1 16, an increase of eight 4% year over year and greater than 9% above the street consensus at the start of 2024.
Rob: We continued to demonstrate the power of our internal growth story, coupled with significant runway to expand our portfolio through our unmatched relationships with postal property owners.
Ed: As I mentioned on our Q3 earnings call, we work collaboratively with the postal service and arrived at a multi tiered programmatic approach to the re leasing process.
Rob: The successes achieved this past year and our mutually beneficial relationship with our reliable tenant have us well positioned for the year ahead.
Jeremy: Now I'll turn the call over to Jeremy.
Ed: This methodology, coupled with an increase in allocated postal service resources has improved the timing and efficiency of releasing which enabled us to provide actual same store cash NOI figures for 'twenty three 'twenty four.
Jeremy: Thank you Andrew.
Jeremy: Except for some recent 2024 acquisitions rents for all expired leases and those set to expire in 2025 have been agreed upon with lease production almost complete.
Ed: As well as projections for 2025.
Jeremy: The majority of agreed upon leases are 10 years in duration and all contain 3% annual rent Escalations. These.
Ed: With rents agreed to for our 'twenty twenty-five explorations. We can now update same store cash NOI guidance for 2025 to be between 4% and 6% versus our prior guidance of at least 3%, but more importantly, keeping current with re leasing provides us with the visibility to share a F O guidance for the first time as a public company as.
Jeremy: These longer term leases demonstrate the postal service's commitment to remaining in our buildings and underscore the importance of the facilities to this crucial logistics network.
Jeremy: The total net lump sum catch up payment received by the company during the fourth quarter was $1 $5 million as of February 14th the company received $400000 in 2025.
Ed: Rob will describe in more detail, we project 2025 for full year <unk> to be between $1 20, and $1 22 per share.
Ed: Turning to our balance sheet during the year, we added $50 million of commitments to our term loan maturing in February 2028, and also increased our term loan accordion by $50 million.
Looking only at our executed leases, 31% of the portfolio contained annual rent Escalations and a 11% have 10 year lease terms.
Further evidence of the supportive partnership we have with our lenders.
Jeremy: If we include the 2025 explorations with the agreed upon rents these figures increased by approximately another 10% or.
Ed: In 'twenty 'twenty four we acquired 197 properties for $91 million at a weighted average cap rate of seven 6%.
Jeremy: Our focus continues to be on lease execution for the 2025 explorations as well as turning to the negotiation of brands for the 2026 explorations.
Ed: We anticipate acquisition volume in 2025 to be $80 million to $90 million and we'll continue to target a weighted average cap rate at or above seven 5%.
Jeremy: In the fourth quarter of 2024, we acquired 63 properties for $31 million, which added approximately 176000 net leasable interior square feet to our portfolio inclusive of 60000 square feet from 40 last mile post offices and 100 <unk>.
Ed: Other successes in 'twenty 'twenty four include our first meaningful dispositions as public company in October the company sold two properties to two independent parties for total gross proceeds of $6 $3 million, representing a weighted average exit cap rate of four 9%.
Ed: We purchased these properties for $3 $6 million.
Jeremy: 17000 square feet from 23 reflects properties. This brought our 2020 for acquisition total to $91 million comprised of 197 properties and 571000 square feet.
Ed: While the two properties were quite different from each other in both cases, a buyer approached us havent been attracted to the steady cash flows and strong underlying real estate.
Ed: The fundamentals of our business remain very strong as evidenced by our current occupancy of 99, 8%.
Jeremy: Subsequent to quarter end and through February 14th we acquired 18 properties for $8 $4 million and placed an additional 14 properties totaling $8 $9 million under definitive contracts. Additionally, we had one disposition of a vacant property in Indiana, which was sold out.
Ed: As a reminder, we have averaged a 99% lease retention rate with the postal service over the past 10, plus years through multiple presidential administrations and repeated USPS organizational and leadership changes.
Ed: We remain confident in the postal services continued tenancy as evidenced by their recent commitment to 10 year leases.
Jeremy: After realizing a marginal profit, leaving us with one remaining vacancy across our portfolio up seven 720 properties I'll now turn the call over to Rob to discuss our fourth quarter financial results.
Ed: As we like to remind shareholders lease expenses represent only one 5% of the postal services total operating budget and these buildings are the backbone of their delivery network.
Rob: Thank you Jeremy and thank you everyone for joining us on today's call. We're pleased to discuss our fourth quarter financial results.
Ed: The postal service plays a critical and multifaceted role within the economy, providing a universal affordable reliable and secure delivery network that reaches every address in the country.
Rob: Funds from operations or <unk> was <unk> 30 per diluted share and adjusted funds from operations or <unk> was <unk> 35 per diluted share.
Ed: It drives commerce by facilitating the distribution of goods and documents connecting businesses with customers and supporting rural communities.
Rob: Our board of directors approved a quarterly dividend of $24 five per share up 1% from Q4 2023 years dividend.
Ed: The postal Service's network is considered the largest most intricate logistics network in the world serving $169 million delivery points across the country covering every state city and town six and often seven days a week.
Rob: This is the seventh consecutive year the dividend has increased.
Rob: Additionally, they have approved the common stock repurchase program for up to $25 million. This is a tool we are pleased to have available.
Ed: The postal service excels at delivery to rural addresses which make up almost 60% of U S. ZIP codes because of this mature on the ground last mile network and it does so more cost effectively than any other provider.
Rob: We've continued to manage our balance sheet prudently by maintaining a low leverage and minimizing our exposure to variable rate debt.
Rob: At the end of the fourth quarter, our debt outstanding had a weighted average interest rate of 435%.
Ed: It's logistics network, primarily comprised of its real estate footprint is utilized by parcel delivery organizations, both large and small making it a critical irreplaceable piece of American infrastructure and these are the buildings were investing them.
Rob: A weighted average maturity of three years and no significant debt maturities until 2027.
Our $150 million senior unsecured revolving credit facility had $136 million Undrawn and 95% of all borrowings were set to fixed rates.
Ed: We continued to demonstrate the power of our of our internal growth story, coupled with significant runway to expand our portfolio through our unmatched relationships with postal property owners.
Rob: Net debt to annualized adjusted EBITDA ratio was five two times at the end of the year and our success in re leasing contributed to the de levering from the end of 2023.
Ed: The successes achieved this past year and our mutually beneficial relationship with our reliable tenant have us well positioned for the year ahead.
Ed: I'll now turn the call over to Jeremy.
Jeremy Garber: Thank you Andrew.
Rob: In addition to our 2025 guidance, we are updating our 2023 and 2020 for same store cash NOI growth to account for additional executed leases.
Except for some recent 'twenty 'twenty four acquisitions rents for all expired leases and those set to expire in 2025 have been agreed upon with lease production almost complete.
Rob: Our same store cash NOI growth for 2023 was five 5% and 2024 was four 4%.
Jeremy Garber: The majority of agreed upon leases are 10 years in duration and all contain 3% annual rent Escalations. These.
Rob: Along with these newly executed leases were planning some capital projects at some of these assets in 2025, and we'll provide further updates as the year progresses.
Jeremy Garber: These longer term leases demonstrate the postal service's commitment to remaining in our buildings and underscore the importance of the facilities to this crucial logistics network.
Rob: 2024 cash G&A expense came in within our expected range and it continued to decline as a percentage of revenue on an annual basis.
Jeremy Garber: The total net lump sum catch up payment received by the company during the fourth quarter was $1 $5 million as of February 14th the company received $400000 in 2025.
Rob: Recurring capex for the fourth quarter was $184000 as we completed projects prior to year end.
Jeremy Garber: Looking only at our executed leases, 31% of the portfolio contained annual rent Escalations and 11% have 10 year lease terms.
Rob: Looking forward to Q1 2025, we anticipate the figure to be around $100000.
Rob: As Andrew stated our <unk> guidance for this year is between $1 20, and $1 22 per diluted share.
Jeremy Garber: If we include the 2025 exploration with the agreed upon rent these figures increased by approximately another 10%.
Rob: Some of the base assumptions behind this include acquisitions, ranging from $80 million to $90 million same.
Jeremy Garber: Our focus continues to be on lease execution for the 20th twenty-five explorations as well as turning to the negotiation of brands for the 2026 explorations.
Rob: Same store NOI growth between four and 6% and cash G&A expense between 10, five and $11 million.
Jeremy Garber: In the fourth quarter of 2024, we acquired 63 properties for $31 million, which added approximately 176000 net leasable interior square feet to our portfolio.
One of the key drivers to our earnings is our internal growth story account.
Rob: Accounting only for leases that have been executed we have $701 4 million and $1 8 million of contractual rent escalations that will be realized in 2025, 2026 and 2027, respectively.
Jeremy Garber: <unk> above 60000 square feet from 40 last small post offices and 117000 square feet from twenty-three flex properties.
Jeremy Garber: Brought our 'twenty 'twenty four acquisition total to $91 million comprised of 197 properties and 571000 square feet.
Rob: With 48% of current leases expiring over that same period.
Rob: The opportunity for further contractual rent increases through marking rents to market and additional rent escalations is powerful youll see further detail on this and our latest investor presentation on pages six and seven.
Jeremy Garber: Subsequent to quarter end and through February 14th we acquired 18 properties for $8 $4 million and placed an additional 14 properties totaling $8 $9 million under definitive contracts. Additionally, we had one disposition of a vacant property in Indiana, which was sold after we.
Rob: Our business provides investors with reliable cash flows each quarter, driven by our internal growth as well as by acquisitions.
Rob: A recent re leasing successes will provide revenue increases year over year, and we remain confident that our acquisition pipeline will continue to enhance our earnings going forward.
Realizing a marginal profit, leaving us with one remaining vacancy across our portfolio up 1700, and 20 properties I'll now turn the call over to Rob to discuss our fourth quarter financial results.
Rob: This concludes our prepared remarks, operator wed like to open the call for questions.
Rob: Okay.
Rob: Thank you Jeremy and thank you everyone for joining us on today's call.
Rob: Thank you.
Rob: We will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Rob: We're pleased to discuss our fourth quarter financial results.
Rob: Funds from operations or <unk> was 30 cents per diluted share and adjusted funds from operations or <unk> was 35 cents per diluted share.
Rob: A confirmation tone will indicate your line is in the question queue.
Rob: Start to if you would like to remove your questions from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment. Please poll for questions.
Rob: Our board of directors approved a quarterly dividend of <unk> 24.25 per share up 1% from Q4 2023 years dividend.
Speaker Change: The first question comes from the line of Barry, Oxford with Colliers. Please go ahead.
Rob: This is the seventh consecutive year the dividend has increased.
Rob: Additionally, they have approved the common stock repurchase program for up to $25 million. This is a tool we are pleased to have available.
Rob: Okay.
Speaker Change: Great. Thanks, guys.
Andrew <unk>: Andrew I think this is more of a question for you we changed.
Speaker Change: Postmaster General we have a new one when you look at your leases I'm not talking about the leases that are kind of signed and executed but going forward as you're signing new leases.
Rob: We've continued to manage our balance sheet prudently by maintaining a low leverage minimizing our exposure to variable rate debt.
Rob: At the end of the fourth quarter, our debt outstanding at a weighted average interest rate of 4.35%.
Speaker Change: Have they indicated that theyre going to sign the same type of leases or are they obligated to sign.
Rob: Our weighted average maturity of three years and no significant debt maturities until 2027.
Speaker Change: The same type of leases that you currently.
Rob: Our $150 million senior unsecured revolving credit facility had $136 million Undrawn and 95% of all borrowings were set to fixed rates.
Speaker Change: Have in place and are getting signed.
Barry Oxford: Hey, Barry.
Barry Oxford: Yes, Jim New Postmaster General whoever that may be I don't believe changes anything about our lease documents.
Rob: Net debt to annualized adjusted EBITDA ratio was five two times at the end of the year and our success in re leasing contributed to the Delevering from the end of 2023.
Barry Oxford: We are constantly executing.
Barry Oxford: And moving forward the process of trying to get as ahead of our leases as possible and we've been working with the postal service very well to do that.
Barry Oxford: I don't believe there'll be a change in the document and I.
Rob: Two our 2025 guidance, we are updating our 2023 and 2020 for same store cash NOI growth to account for additional executed leases.
Barry Oxford: I very much don't believe that the postmaster general.
Barry Oxford: <unk> is focused on this at all.
Barry Oxford: Because of the low expense that it represents.
Barry Oxford: That's right all of the lease lines.
Rob: Our same store cash NOI growth for 2023 was five 5% and 2024 was four 4%.
Barry Oxford: <unk> represents one 5% of their total operating expenses.
Barry Oxford: So I don't think that this is.
Barry Oxford: A very very big focus.
Rob: Along with these newly executed leases were planning some capital projects at some of these assets in 2025, and we will provide further updates as the year progresses.
Barry Oxford: Great. Thanks, guys.
Barry Oxford: Okay.
Barry Oxford: Thank you.
Speaker Change: Our next question comes from the line of Steven <unk> with Janney. Please go ahead.
Rob: 'twenty 'twenty four cash G&A expense came in within our expected range and it continued to decline as a percentage of revenue on an annual basis.
Speaker Change: Thank you yesterday, the postal service released an update that it projects to save $36 billion over the course of the next 10 years. So one of the proposed cost cutting measures verbatim from the Texas to eliminate unnecessary facilities do you have any insight if the aforementioned facilities referred to processing centers alright.
Rob: Recurring capex for the fourth quarter was $184000 as we completed projects prior to year end.
Rob: Looking forward to Q1 2025, we anticipate the figure to be around $100000.
Speaker Change: Or also post offices.
Speaker Change: I appreciate the question.
Rob: As Andrew stated our <unk> guidance for this year is between $1 20, and $1 22 per diluted share.
Speaker Change: The postal service is constantly going through cost cutting and efficiency extra.
Rob: Some of the base assumptions behind this include acquisitions, ranging from $80 million to $90 million.
Speaker Change: Exercises.
Speaker Change: From everything that I understand and as you can imagine we track the postal Service's press releases and we're talking to them everyday all day.
Rob: Same store NOI growth between four and 6% and.
Rob: Cash G&A expense between 10, five and $11 million.
We don't believe that there is any changes to the infrastructure as it relates to the postal facilities.
Rob: One of the key drivers to our earnings is our internal growth story.
Especially the ones that we invest in the postal service every statement that I've heard them heard them make included in that in that press release itself was that they don't believe theres going be any disruption or change to their retail network.
Rob: Accounting only for leases that had been executed we have 700001 4 million and $1 8 million of contractual rent escalations that will be realized in 2025, 2026 and 2027, respectively.
Speaker Change: Thank you that's very helpful and I guess just to add onto that so with the postal service imposes a limitation of the regional transportation optimization initiative How's that.
Rob: With 48% of current leases expiring over that same period.
Rob: The opportunity for further contractual rent increases through marking rents to market and additional rent escalations is powerful you'll see further detail on this in our latest investor presentation on pages six and seven.
Speaker Change: Did your acquisition or as a matter of strategy. If it has at all.
Speaker Change: So in general when we look at the acquisition of assets primary to any underwriting is.
Our business provides investors with reliable cash flows each quarter, driven by our internal growth as well as by acquisitions.
Speaker Change: Our view and belief that those properties are critical to the postal service or needed for them to delivery to the 169 million delivery points that they do on a daily basis.
Rob: A recent re leasing successes will provide revenue increases year over year, and we remain confident that our acquisition pipeline will continue to enhance our earnings going forward.
Speaker Change: And we've taken into account shifts and changes in the postal service and the way they're utilizing those buildings in that that that would take into account any any shifts in our regional center or a local or National center.
Rob: This.
Rob: <unk> our prepared remarks.
Rob: Operator, we'd like to open the call for questions.
Rob: Okay.
Rob: Thank you.
Speaker Change: And so that's taken into account when we look to buy properties.
Speaker Change: We'll now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Thank you Andrew I appreciate it.
Andrew <unk>: Thank you.
Speaker Change: Yeah.
Speaker Change: A confirmation tone will indicate your line is in the question queue you might start to if you would like to remove your questions from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the stock East one moment. Please while we poll for questions.
Michael Gorman: Thank you next question comes from the line of Michael Gorman with BTG Pactual. Please go ahead.
Michael Gorman: Yes. Thanks. Good morning appreciate the the guidance Rob I just wanted to make sure that I've got everything square.
Michael Gorman: 4% to 6% same store next year at the midpoint of F O. It looks just a touch over 4%.
Speaker Change: The first question comes from the line of Barry, Oxford with Colliers Pease go ahead.
Speaker Change: Looks like some of that's coming out from the G&A line are going our cash G&A going up and in 25 are there any other kind of offsets to the internal growth and the growth through acquisitions that we should be thinking about as we think about 2025 growth.
Great. Thanks, guys. Andrew I think this is more of a question for you we changed the postmaster General we have a new one when you look at your leases I'm not talking about the leases that are kind of signed and executed but going forward as you're signing new leases.
Michael Gorman: No.
Michael Gorman: That's really it is obviously it is a dynamic business and what's what.
Speaker Change: They indicated that theyre going to sign the same type of leases or are they obligated to sign the same type of leases that you currently you.
Michael Gorman: A little bit dynamic about it is particular recurring capex things along those lines that can be adjustments from <unk> to <unk>, but in general yes, I mean, I think we've given you the largest drivers of component and obviously acquisitions can affect the top and the bottom line as well in the current year.
Speaker Change: You now have in place and are getting signed.
Speaker Change: Hey, Barry Yeah, Jim New Postmaster General whoever that may be a I don't believe changes anything about our lease documents.
Speaker Change: Okay, Great and I think maybe Andrew you've kind of talked about this in the past just given the scale of the business and the quality of the platform now that youre seeing a little bit more of our current same store NOI process with the post office can you give us a sense for kind of how what you're seeing from properties in your portfolio compare with properties before you're big.
We are constantly executing and moving forward the process of trying to get as ahead of our leases as possible and we've been working with the postal service very well to do that I don't believe there'll be a change in the document and I I I very much don't believe that the postmaster General is focused on this at all.
Speaker Change: Them onto the platform like what's a typical post office facility in private hands doing before youre able to bring it onto your lease structure and into your platform. Thanks.
Speaker Change: Because of the low expense that it represents.
Speaker Change: Correct right all of the lease rounds are only represent one 5% of their total operating expenses are and so I don't think that this is a very very big focus.
Speaker Change: No I appreciate the question so in general.
Speaker Change: Im a firm believer that that this platform adds value it adds value in economies of scale, it adds value and operation and administration of the properties and the leases.
Speaker Change: Great. Thanks, guys.
Speaker Change: Okay.
Speaker Change: Thank you.
Unnamed Moderator: Our next question comes from the line of Steven demand ski with Janney. Please go ahead.
Speaker Change: And in negotiation with leases executing documents really across the board from from when it enters our domain.
Speaker Change: Thank you yesterday, the postal service released an update that our projects to save $36 billion over the course of the next 10 years.
Speaker Change: Through our ownership period.
Speaker Change: And I think that just continues as we continue to scale the business.
Speaker Change: So one of the proposed cost cutting measures verbatim from the Texas to eliminate unnecessary facilities.
Speaker Change: Great. Thank you.
Speaker Change: Do you have any insight if the aforementioned facilities refer to processing centers or are also post offices.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: There are no further questions, ladies and gentlemen, VF reached the end of question and answer session.
Speaker Change: I appreciate the question.
Speaker Change: We have a question.
Speaker Change: The postal service is constantly going through cost cutting and efficiency.
Jon Petersen: It is from the line of Jon Petersen.
Speaker Change: From Jefferies.
Speaker Change: Please go ahead.
Speaker Change: <unk>.
Jon Petersen: Alright, let me sneak this one in.
Speaker Change: From everything that I understand and as you can imagine we track the postal Service's press releases and we're talking to them everyday all day.
Jon Petersen: So I'm just I want to make sure I understand how much catch up rent payments were in the fourth quarter top line revenue and how do we think about like what our run rate is into next year.
Speaker Change: We don't believe that there is any changes to the infrastructure as it relates to the postal facilities.
Jon Petersen: Yes so.
Especially the ones that we invest in the postal service every statement that I've heard them heard them make included in that in that press release itself was that they don't believe there's going be any disruption or change to their retail network.
Jon Petersen: Let's take the second the second question is I think it's more important than then for everyone to understand.
Jon Petersen: We now have if you look at our exploration schedule. We can show you now the run rate for this year based on all the leases, where we're pretty much caught up at this point with 95% of the 'twenty threes and 99% of the 24 leases all executed.
Speaker Change: Thank you that's very helpful and I guess just to add onto that so with the postal service imposes a limitation of the regional transportation optimization initiative, how how's that.
So I think that's the important line to look at and then excuse me.
Speaker Change: Did your acquisition or as a matter of strategy. If it has at all.
Speaker Change: Yeah.
Jon Petersen: The contractual rent escalators, which we've outlined now in our presentation, which gives you a little bit of flavor into this coming year and the success from the leasing and how it how it carries forward.
Speaker Change: So in general when we look at the acquisition of assets primary to any underwriting is.
Speaker Change: Our view and belief that those properties are critical to the postal service or needed for them to delivery to the 169 million delivery points that they do on a daily basis.
Speaker Change: Okay, Alright, great Thats helpful. Thank you.
Jon Petersen: Mhm.
Speaker Change: Thank you as there are no further questions, ladies and gentlemen, we have reached the end of question and answer session I would now like to turn the floor over to Andrew <unk> for closing comments.
Speaker Change: And we've taken into account shifts and changes in the postal service and the way they're utilizing those buildings in that that that would take into account any any shifts in our regional center or a local or National center.
Speaker Change: Thank you and on behalf of the entire team we want to thank you all for your continued support and taking the time for joining US today looking forward to following up with you.
Speaker Change: And so that's taken into account when we look to buy properties.
In the next couple of days and weeks.
Angela: Thank you Angela I appreciate it.
Speaker Change: Thank you.
Speaker Change: Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
Speaker Change: Yes.
Unnamed Moderator: Thank you next question comes from the line of Michael Gorman with BTG Pactual. Please go ahead.
Michael Gorman: Yeah. Thanks. Good morning appreciate the the guidance Rob I just wanted to make sure that I've got everything square.
Michael Gorman: 4% to 6% same store next year at the midpoint F O looks just a touch over 4% it looks like some of that's coming out from the G&A line are going our cash G&A going up and in 25 are there any other kind of offsets to the internal growth and the growth through acquisitions that we should be thinking of.
Michael Gorman: As we think about 'twenty twenty-five growth.
Michael Gorman: Yeah.
Michael Gorman: No I mean, that's that's really it does obviously it is a dynamic business and what's what's a.
Michael Gorman: A little bit dynamic about it is particular recurring.
Michael Gorman: Recurring capex things along those lines that can be adjustments from <unk> to <unk>.
Michael Gorman: But in general, Yes, I mean, I think we've given you the largest drivers of component and obviously acquisitions can affect the top and the bottom line as well in the current year.
Michael Gorman: Okay, Great and I think maybe Andrew you've kind of talked about this in the past just given the scale of the business and the quality of the platform now that youre seeing a little bit more of our current same store NOI process with the post office can you give us a sense for kind of how what you're seeing from properties in your portfolio compare with properties before you baked.
Michael Gorman: Them onto the platform like what what's a typical post office facility in private hands doing before you're able to bring it onto your lease structure and into your platform. Thanks.
Michael Gorman: No I appreciate the question so in general I I'm I'm, a firm believer that that this platform adds value. It adds value in economies of scale. It adds value in operation and administration of the properties and the leases.
Michael Gorman: And in negotiation with leases executing documents really across the board from from when it enters our domain.
Michael Gorman: Through our ownership period.
Michael Gorman: And I think that just continues as we continue to scale the business.
Speaker Change: Great. Thank you.
Michael Gorman: Okay.
Michael Gorman: Thank you.
Unnamed Moderator: As there are no further questions, ladies and gentlemen, we have reached the end of question and answer session.
Speaker Change: We have a question up.
Speaker Change: It's from the line of Jon Petersen.
Speaker Change: From Jefferies.
Speaker Change: Please go ahead.
Speaker Change: Let me sneak this one in so I'm just I want to make sure I understand how much catch up rent payments were in the fourth quarter top line revenue and how do we think about like what our run rate is.
Speaker Change: Into next year.
Speaker Change: Yeah. So.
Speaker Change: We are well, let's take the second the second question because I think it's more important than then for everyone to understand we now have you know if you look at our exploration schedule. We can show you now the run rate for this year based on all the leases, where we're pretty much caught up at this point with 95% of the 'twenty threes and 99% of the 24 leases.
Speaker Change: All executed.
Speaker Change: And so.
Speaker Change: I think that's the important line to look at and then excuse me the.
Speaker Change: The contractual rent escalators, which we've outlined now in our presentation, which gives you a little bit of flavor into this coming year and the success from the leasing and how it how it carries forward.
Speaker Change: Okay, Alright, great Thats helpful. Thank you.
Speaker Change: Mhm.
Speaker Change: Thank you as.
Speaker Change: There are no further questions, ladies and gentlemen, we have reached the end of question and answer session I would now like to turn the floor over to Andrew <unk> for closing comments.
Thank you and on behalf of the entire team we want to thank you all for your continued support and taking the time for joining US today looking forward to following up with you.
Speaker Change: In the next couple of days and weeks.
Speaker Change: Thank you <unk>.
Todays teleconference. You may disconnect your lines at this time, thank you for your participation.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].