Greetings, and welcome to Postal Realty Trust Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jordan Cooperstein, Senior Vice President of Finance and Capital Market. Welcome, Jordan.

Thank you, and good morning, everyone. Welcome to Postal Realty Trust's Fourth Quarter 2025 Earnings Conference Call. On the call today, we have Andrew Spodek, Chief Executive Officer; Jeremy Garber, President; Steve Bakke, Chief Financial Officer; and Matt Brandwein, Chief Accounting Officer. 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. 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 regulatory 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. 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.

Good morning, and thank you for joining us today. In 2025, we exceeded expectations on all fronts. Our results reflect the stability and growth inherent in our portfolio of critical logistics infrastructure leased to the U.S. Postal Service and our unique operating approach. It was the successful execution of our business plan, coupled with the strength of the Postal Service's tenancy that enabled us to exceed our 2025 guidance. We're building on these results with the strong 2026 guidance we issued yesterday. Our business is benefiting more than ever from economies of scale resulting from the growth of our portfolio and the technology and systems investments we've made in recent years. We grew our asset base by approximately 20% last year, increasing our gross real estate value by 10x since IPO. Our access to capital to fund growth is deeper than it's ever been, bolstered by a BBB investment-grade rating from Kroll, KBRA. Our year-end liquidity rises to $271 million, including the revolver upsize we announced yesterday as well as the successful equity raising activity we have completed to date in the first quarter. Looking to the future, we have a strong pipeline of acquisitions to fuel our value creation machine. We generate substantial value through acquisitions by applying our efficient operating approach, marking rents to market and extending lease terms to 10 years with annual rent escalators. Our acquisition strategy remains unchanged for volume to be day 1 accretive and furnish meaningful growth over time. Based on our robust pipeline, we are introducing initial guidance of $115 million to $125 million at a mid-7% weighted average cap rate, fully funded by recent capital markets activity. As our cost of capital continues to improve and our pipeline of deals continues to expand, we will revisit acquisition guidance as needed in future quarters. 2025 brought with it changes at the Postal Service. A new Postmaster General took the reins in July and has been vocal about the value of the last mile. The launch of the auction process to broaden last mile access only reinforces what we've been saying for years. These real estate locations are the backbone of the U.S. Postal Service's delivery network. This infrastructure enables universal service across more than 170 million delivery points nationwide and is utilized 6 days a week by logistics providers and online retailers. As we like to remind investors, through government shutdowns, recessions and pandemics, the Postal Service pays 100% of the monthly rent 100% of the time. Lease expenses represent 1.5% of the Postal Service's total operating expenses, and they have remained in our building 99% of the time. I believe that in uncertain times, the consistency of the Postal Service's tenancy can be of even more value. I'm proud of our progress and our strong position to start the year. I'll now turn the call over to Steve.

Thanks, Andrew. Yesterday, we reported AFFO per share of $0.33 for the fourth quarter of 2025, bringing full year AFFO per share to $1.32. This was at the high end of our most recent guidance and represents growth of 13.8% for the year. Reviewing 2025 guidance items, acquisitions totaled $123.1 million, slightly ahead of our December guidance and nearly $40 million above the midpoint of our guidance at the start of the year. Full year cash G&A of $10.9 million came in slightly better than the guidance midpoint of $11 million. As a share of total revenue, cash G&A declined by nearly 130 basis points in 2025, an indicator of the scale efficiencies we are experiencing. Lastly, our 2025 same-store cash NOI performance was 8.9%. For 2026, we are providing AFFO per share guidance of $1.39 to $1.41, which represents 6.1% growth from last year at the midpoint. This is above our annual growth rate since 2020 of 5.8% per year. Guidance assumptions include the following: acquisitions of $115 million to $125 million; same-store cash NOI growth of 6.0% to 7.0% and cash G&A of $11.5 million to $12.5 million. For the first quarter, we expect recurring capital expenditures of approximately $125,000 to $200,000. Lastly, guidance includes approximately $0.05 per share of dilutive impact from forward equity calculated in accordance with the treasury stock method since the company's stock price is above the net price of outstanding forwards. Turning to sources and uses of capital. In 2025, we raised $55 million via ATM and OP unit issuance, $40 million via term loans, borrowed on our revolver and utilized retained cash flow to fund acquisitions. For 2026, as Andrew mentioned, we have fully funded the entirety of our acquisition guidance at the high end on a leverage-neutral basis through equity and…

Thank you, Steve. I will provide an update on our re-leasing efforts, followed by more detail on our fourth quarter acquisition activity. Starting with re-leasing. As of today, we have executed all new leases for properties that expired in 2025, except for 5 properties acquired during 2025 and 1 acquired in holdover status during 2026. The 5 properties acquired during 2025 have agreed upon rents and the leases are in lease production. As it relates to 2026 re-leasing, other than 4 recently acquired properties, all rents have been agreed upon and are currently in lease production. We are currently negotiating rents for the 2027 leases. All leases will have 3% escalators and the vast majority will have 10-year terms. Finally, as part of our shared goal with the USPS to get further ahead of expirations, we have already started discussions on the 2028, and we look forward to updating on our progress in the coming quarters. The rollout of 10-year terms and annual escalators in our leases continues to bolster the visibility and growth of our cash flow. 53% of our portfolio rent is subject to annual rent escalations and 37% consists of leases with 10-year terms based on executed and agreed-upon leases as of February 13. Inclusive of executed and agreed-upon rents for new leases through 2026, the weighted average lease term of our current portfolio will extend to over 5 years compared to 3 years when we went public. The company received no lump sum catch-up payments in the fourth quarter. As we look to 2026, aside from prospective acquisitions that are acquired in holdover status, lump sum catch-up payments should continue to diminish in frequency and value as we sign leases ahead of their expiration dates. Moving on to acquisitions. In 2025, we acquired 216 properties for $123 million, achieving our most recent 2025 guidance of over $120 million. The weighted average initial cash cap rate for last year's acquisitions was 7.7%. Unpacking fourth quarter acquisitions, we acquired 65 properties for approximately $29.1 million at a 7.5% weighted average initial cash cap rate, which added approximately 142,000 net leasable interior square feet to our portfolio. Fourth quarter acquisitions consisted of 55,000 square feet from 42 last mile post offices and 87,000 square feet from 23 flex properties. Our continued earnings momentum is driven by accretive acquisitions, a pipeline of near-term lease mark-to-market opportunities, a growing contribution from annual rent escalators and a disciplined approach to expenses. This concludes our prepared remarks. Operator, we would like to open the call for questions.

[Operator Instructions] Your first question comes from Anthony Paolone with JPMorgan.

You guys have Nahom on for Tony. I guess, could you guys expand on some of the color you guys gave on the transaction market and what's really stopping you guys from, I guess, turning the gas on, on this front? It seems that the midpoint of $120 million was more or less in line with what was completed in 2025.

Sure. I appreciate the question. So I feel very confident with where our pipeline is today. We -- our initial guidance for this year is over 40% higher than our initial guidance from last year. The pipeline is very strong. We are very confident in what this year is going to bring us. Happy to have our debt and equity accounted for. We're really at the strongest position that we've ever been in. And I'm hoping that as our cost of capital continues to get better, that our ability to grow our pipeline and our acquisitions will grow with it, and we'll keep you updated as the year progresses.

Got it. Okay. And I guess the second one for me is in the investor deck, you guys gave some good color and background on the post office. But could you guys expand on what you meant when you said the USPS' revenue model is evolving and they're pursuing competitive bidding processes?

Sure. This is Jeremy. So as you heard in Andrew's comments, the new PMG joined the Postal Service in July and announced last month that they were going to be allowing access to their last mile. When you go through our presentation, historically, you'll see we referenced the ability for the big logistics providers like UPS, FedEx, Amazon, DHL to actually enter the last mile and achieve better pricing. And what the Postal Service has recognized is the value embedded in that last mile and the revenue opportunity in the last mile and they have now opened up a process for others to participate in entering the last mile. And so that's what they've referenced. There's a portal where they're now accepting potential customers to bid for access. And as of their last commentary, there were over 1,200 requests for participation.

Next question, John Kim with BMO Capital Markets.

I was just wondering, your cost of capital has improved pretty meaningfully over the last few months, both on the equity side and with interest rates coming down as well. Does that change your investment strategy at all in terms of targeted yields and size of portfolios you may acquire?

So we're happy to see that our cost of capital has gotten better. And I've always stated that as our cost of capital gets better, our ability to acquire will get better with it. Our goal has been and continues to be to be day 1 accretive for our acquisition and our internal growth from there on. And that will continue to be our strategy going forward. As I said to -- in the previous question, I'm very excited about what this year is going to bring and where our cost of debt and equity are today and our ability to execute on our pipeline.

Okay. And then I wanted to ask about the '27 lease expirations. I think you mentioned you're still working through them and focusing on '28 as well. But what do you see is the most likely outcome in terms of how much of that rent will be renewed? Is there a upside or downside to that rent level of $59 million and anything else you could share in terms of likely outcome?

Yes. Thanks for the question. This is Steve. As it stands today, we expect all of that, all those leases to be renewed for the next couple of years. And looking at 2027, the setup is very similar to 2026. So I think that what you saw today from where we stand today should continue over 2027.

And how many -- just like how many different leases are there as part of the expirations?

I can pull up my supplemental, but it's in the sub -- it is 470 leases. Now it's important to note that a large portion of that, I think, 160 leases are a master lease that we're working through with the Postal Service at the current time.

Next question, Jon Petersen with Jefferies.

Okay. I was hoping on acquisitions. So when you guys acquire a property and then you apply your lease structure to it with the escalators and the 10-year term, can you quantify like what that unlocks for you on the underwriting side in terms of a higher IRR and how that makes you, I guess, more competitive in the acquisition market for underwriting deals?

Sure. So it's a great question. We haven't really articulated what the value of our rent spreads are or our mark-to-markets are. But they're substantial. And I would point you to our same-store numbers and where we are guiding our same-store for this coming year.

Yes. And just to add to Andrew's point, this is Steve. I think a shortcut you can use to back into an unlevered IRR is that initial yield we've been acquiring at the 7.5% cash cap rate. And then looking at our average trailing same-store NOI growth the last few years, which has been around 6%. It gets you to a 13% to 14% unlevered IRR.

Okay. All right. That's helpful. And then in the past, you guys have purchased warehouses that are leased to the USPS. Is that something that you might consider again if your cost of capital improves to a level that allows that to make sense?

Yes, that's a great question. We are always looking at the industrial market. It's not something that is what I refer to as the bread and butter of the business. We really focus the majority of our attention on flex and last mile facilities. But as our cost of capital continues to improve, our opportunity to purchase some of those industrial facilities definitely improves with it.

Okay. Maybe one last one for me for Jeremy. You mentioned earlier in response to another question about logistics providers entering the USPS' last mile. I guess, are there any real estate implications there that we should foresee with kind of more of the -- more supply chain going through the USPS last mile facilities?

In terms of the existing infrastructure and...

Medium, larger stores or different types of stores or anything like that?

Right. So what they identify is their delivery units, that's 22,000 out of the 30-plus thousand facilities that are out there. So those facilities are already built and equipped to handle that type of logistics.

I would like to turn the floor over to Andrew Spodek for closing remarks.

Thank you. With our debt and equity accounted for and a robust pipeline, we're in a stronger position than we have ever been as a public company to capitalize on the opportunity ahead. Looking forward to speaking to you all in the coming months. Thank you all for joining us.

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