Greetings and welcome to the Postal Realty Trust Incorporated Second Quarter 2019 Earnings Call. At this time, all participants are in a listen only mode. The question-and-answer session will follow the presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Brad Cohen, Investor Relations. Please proceed.

Thank you. Good afternoon everyone and welcome to Postal Realty Trust second quarter earnings conference call. On the call today, we have Mr. Andrew Spodek, Chief Executive Officer; Mr. Jeremy Garber, President; Matt Brandwein, Chief Accounting Officer; and Blaine Willenborg, Vice President of Business Development and Capital Markets. Please note the use of forward-looking statements by the Company on this conference call. Statements made on this call may include statements which are not historical facts and are considered forward-looking. The Company intends these forward-looking statements to be covered by the Safe Harbor provisions for forward-looking statements, contained in the Private Securities Litigation Reform Act of 1995, and is making the statements for purpose of complying with those Safe Harbor provisions. Furthermore, 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 without limitation those contained in the Company's 10-Q for the quarterly period ended June 30, 2019 and its other Securities and Exchange Commission filings. The Company assumes no obligations of a publicly any forward looking statements, whether as a result of new information, future events or otherwise. Additionally, this conference call, on this conference call the Company may refer certain non-GAAP financial measures such as funds from operations and adjusted funds from operations. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP numbers in the Company's earnings release and in filings with the Securities and Exchange Commission. Additional information really may be found on the investor relations page of the Company's website at www.postalrealtytrust.com. I would now like to turn the call over to Mr. Andrew Spodek, Chief Executive Officer of Postal Realty Trust.

Thanks Brad. Good evening everyone. Welcome and thank you for joining us today for our inaugural earnings conference call following our successful IPO on May 17th. We're very appreciative of the support of our investors and we look forward to executing the strategy we articulated on the road show in an effort to create material value for our shareholders over time. I would also like to take a moment to thank our Board for their enthusiasm and for their guidance as we move forward with Postal Realty's growth strategy. We are particularly fortunate to have Pat Donahue as Chairman of the Board. From today 2010 to 2015, he was the 73rd Postmaster General of the United States Postal Service. Pat spent his 39-year of career with the Postal Service and is particularly insightful and knowledgeable on the sector. Allow me now to briefly review our history and strategic objectives. As some of you may already know, Postal Realty Trust is an internally managed public REIT that focuses on owning, operating and managing properties leased to the Postal Service. As of today, we own and manage 274 properties in 42 states. Our portfolio is a 100% of leased and provide stable returns. Over the last 10 years, we have achieved the renewal rate of approximately 98% through our managed and owned properties. We have numerous competitive advantages that include a large market opportunity, a highly fragmented market with favorable demographics, a proven management team with a record of long-term success in the industry, and a pipeline of accretive acquisitions at attractive cap rates. Let them now provide you a little insight into the postal service's real estate network. There are approximately 31,000 post offices throughout the country, 23,000 of which are owned by the private investors, of those 23,000 approximately 16,000…

Thank you, Andrew. Before jumping into our financial results, let me take a few minutes to update you on our current portfolio, IPO use of proceeds, our balance sheet and anticipated credits facility. Including the acquisitions we completed in July, we now own 274 properties which accounts for approximately 900,000 square feet. The weighted average lease term for the portfolio is three years and our portfolio occupancy is 100%. On May 17th, we completed our IPO where we raised $76.5 million of equity by issuing 4.5 million shares. The net proceeds of our IPO were $71.1 million before giving effect to other expenses related to the IPO. In addition to the 5.2 million shares we have outstanding, we also have 1.3 million OP Units and 0.3 million units shares and issued in connection with our IPO, which brings our fully diluted share accounts to approximately 6.8 million. Proceeds of our IPO were used to purchase 81 properties and to pay down $31.7 million of property level debt, creating a clean balance sheet post IPO with only $2.9 million in debt. The Company has signed a non-binding term sheet with People's United Bank as lead arranger, lender, administrative agent and bookrunner for a $100 million credit facility. We have paid a good faith deposit related to the new facility and we anticipate closing the line around the end of the third quarter. Now, let me touch on our financial results. It is important to remember that Postal Realty was public for only 45 days in the second quarter. So, the results are not indicative of the portfolio's full earnings power. From January 1 to May 16 and for all periods in 2018, the results only reflect our predecessor. For the second quarter of 2019, revenue was $1.9 million, FFO per share…

[Operator Instructions] And with that, we have our first question coming from the line of Rob Stevenson with Janney. Please proceed with your question.

Jeremy, can you talk about what the line of credit yield or the LIBOR spread is going to wind up being on that transaction?

Yes, Rob. Currently, the term sheet cost for a spread of 170.

And you said that that will be closed and available to you by the end of the third quarter?

That's what we're working towards.

And then, beyond the 5.4 million is the, any of the 43.7, is that stuff in multiple deals? I mean, is some of that stuff because you've got 11 and change of cash, at a little, to basically be closing until the line gets put in place? I mean, how much capacity do you have to get this to get any deals closed before the line closes?

This is Andrew. Those deals that we refer to as the deals that we spoke about in the prospectus originally, those are three deals that account for that 43 and change of [indiscernible]. We don't anticipate closing on those deals before the line is put in place [indiscernible] for purpose.

In turns to the acquisition, you said that the $4.4 million you did in July was $7 million to $9 million, or 7% to 9%. Is 5.4 and the 43.7 is that also in that range?

Yes, everything we're doing and everything we're acquiring is within that range.

And then any market focus in terms of the acquisitions you did in July or the pending stuff?

No, no, I go with the deal.

Okay. And then, Andrew, when is the board set to discuss and declare the third quarter dividend?

This is Jeremy. The board will convene at the end of September.

Thank you. Our next question comes from one of Jeremy Metz with BMO Capital Markets. Please proceed with your question.

Hey, guys. I am with Frank Lee here. You gave a good update on the pipeline. You finished the diligence here in a few that you mentioned. You got more in the works. Andrew, I'm just wondering now that you've been public a bit here. You're gaining some different access to capital. Have you found a different receptivity to your proposition? And is the shadow pipeline seeing significant uptick here as a result?

Yes, I see tremendous feedback. Since we've been public, I hadn't seen such a strong pipeline ever before.

And then, you didn't mention anything in your opening remarks on the ROFO properties at 265. So actually you can get a -- give a little bit of an update there? I recognize there's obviously pieces that are clearly not in your control, but just how should we think about the next big steps in the process there? When are those and therefore what's your best guess, on timing there one way or the other?

So, as we discussed on the road show, those properties are not going to be available, even come in for 18 months. And so that would be the earliest.

Do you still feel like 18 months of a good expectation, or there's a like a drag on or is that's what you like to say at this point?

I really don't know, I just know that that would be the earliest that they would be available to be put.

Alright, and I think Frank had a question here as well.

Yes, hi, I guys. Just want to follow up on the additional $100 million in discussions. Could we expect any of these to close in 2019? Or are these more kind of teed on '20 event?

I think that some of them will close in 2019. But again, that's those are all in different stages. And so it's hard to speak to it because there are so many deals and so many owners that everything has its problems that it needs to go through, but I wouldn't be surprised that some of that does close by the end of the year.

Okay, and then lastly, just want to get your initial thoughts on FedEx recent decision to not renew the contract for Amazon ground deliveries. And what you think this means for USPS?

Sure, so you know, we can talk for FedEx, but clearly you're seeing the headlines coming through Amazon, FedEx, and UPS. There clearly is a focus on the last mile, which is our core business. So whether FedEx pulls capacity, EPS announcing that they're going to add capacity to the postal services last mile. We don't think that has any impact on our business plan and the future of the critical last mile.

And our next question comes from a line of Craig Kucera with B. Riley. Please proceed with your question.

I wanted to talk about the acquisitions that you closed already here in July. I think they're pushing toward $12 rents. Is there room for those to move up to market or are those relatively close to current market?

So, you have to understand that every building is indicative and the rents that, that PMS building are typically indicative of the markets that those buildings existed. And so, the property that we look for and the properties that we purchase, properties that are within if not below what the market that those properties are situated, and so we believe that all of the property that buy, the rents can be increased.

And I think, kind of a follow-up on the pipeline and sort of what you guys are working through. At the time of the IPO, I think you thought that you could readout to some of the larger holders of portfolios within the private side is generating additional deal flow. Have you gone down that path yet and how those discussions gone?

Yes, we have come down that path and continue go down that path and a lot of those conversations are going very, very well.

And what is the receptivity as far as OP Units? Are those attracted to some of these larger portfolio holders that you're talking to?

Yes, they are. That remains a topic of conversation with some of the large postal owners.

And one more for me. Now that you're public, I think at the time of the going on the road show and the IPO. You thought that, potentially the U.S. postal services and owner might potentially look to sell assets to you. Has that any of those discussions occurred just yet or are you still working through more of the private holders at this point in time?

No, still working through the private owners. What I had said on the road show was that I believe that if and when the full service does visit, the idea of selling that facility that I would definitely be in a position to be fine. That's not a conversation that we had or that are happening today and so we focus on the private owners.

[Operator Instructions] And with that, our final question comes from Barry Oxford with DA Davidson. Please proceed with your question.

Just a quick one from me. Andrew, when you look at the possible for sale market, right now, post offices, just kind of the possibilities out there? How is the strength of that, versus maybe a year or two ago as far as possible hits?

As far as possible, what I'm sorry to [indiscernible]

As far as possible hit targets to acquire, not saying you're going to acquire them but just possible hits.

So I think the pipeline is stronger than ever. I think that the reception that we've heard in the scene from, from sellers of post offices is greater than I've ever seen before.

So you're not worried about having to close on acquisitions as we moved throughout this year in 2020? There's plenty of ships shots on goal for lack of a better word.

Yes. No, I think we're just getting started here. Yes.

Right, Andrew, what I'm trying to do is just kind of get a sense of the possible, targets out there that you've got enough product that you're looking at that you can complete years acquisition goals this year and next year?

Oh, yes, I don't think that that accomplishing those goals as going to be a problem at all. I think the market is tremendous. The Postal Service on the 23,000 or so buildings that they leased, they pay approximately a billion dollars in revenue. So depending on how you want to calculate a cap rate, that's let's called the $10 billion plus market. And so, I don't see I don't see the market opportunity be there.

Thank you. It seems that there are no other questions in the queue at this time. I would now like to turn the call back over to Mr. Spodek for any closing remarks.

I just wanted to thank you all for joining us today. We really appreciate your interest in Postal Realty. And we look forward to updating you on our progress on our next call. Thanks and have a great evening.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time and we thank all of you for your participation.